translation purpose only - hulic-reit.co.jp · disclaimer: this press release was prepared to...

Disclaimer: This press release was prepared to notify the general public about Hulic Reit’s acquisition and leasing of properties and is not intended as a solicitation for investment in Hulic Reit.

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October 14, 2014

To All Concerned Parties Name of REIT Issuer Hulic Reit, Inc. 2-26-9 Hatchobori, Chuo-ku, Tokyo, Japan Eiji Tokita, Executive Officer (TSE Code: 3295) Contact: Asset Management Company Hulic Reit Management Co., Ltd. Eiji Tokita, Representative Director, President and CEO Kazukai Chokki, Director, General Manager of Corporate Planning and Administration Department Tel: +81-3-6222-7250

Notice Regarding the Acquisition and Leasing of Properties

Hulic Reit Management Co., Ltd. (hereinafter referred to as “Hulic Reit Management”), which is

entrusted with the management of the assets of Hulic Reit, Inc. (hereinafter referred to as “Hulic Reit”),

hereby announces that it has today made the decision to acquire and lease the following properties

(hereinafter referred to as “Anticipated Properties”). 1．Overview of the properties

Category Property Location Anticipated Acquisition

Date (1)

Anticipated Acquisition

Price (millions of yen) (2)

Seller

Tokyo Com

mercial P

roperties

Office

properties

Ochanomizu Sola City Chiyoda, Tokyo

November 7, 2014

22,854 Hulic Co., Ltd. (3)

Higashi Ueno Building Taito, Tokyo

October 16, 2014

2,670 - (4)

Office Properties Subtotal

- - 25,524 -

Retail properties

Shinjuku Gates Building Shinjuku, Tokyo

October 16, 2014

5,550 TMK Sonic Investments 6 (3)

Yokohama Yamashitacho Building

Yokohama, Kanagawa

October 16, 2014

4,850 Hulic Co., Ltd. (3)

Retail Properties Subtotal

- - 10,400 -

Tokyo Commercial Properties Subtotal

- - 35,924 -

Next

Generation

Assets

Netw

ork C

enters

Chiba Network Center Inzai, Chiba

December 16, 2014

7,060 Godo Kaisha NC2 Funding

Sapporo Network CenterSapporo, Hokkaido

December 16, 2014

2,510 Godo Kaisha NC2 Funding

Keihanna Network Center

Kizugawa, Kyoto

October 16, 2014

1,250 Hulic Co., Ltd. (3)

Translation Purpose Only


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Next Generation Assets Subtotal

- - 10,820 -

Total - - 46,774 -

(1) “Anticipated Acquisition Date” is the anticipated date of acquisition stated in the relevant purchase and sale agreement. However, the anticipated acquisition date for Ochanomizu Sola City may change subject to the payment date (hereinafter referred to as “Payment Date”) for the new investment units described in “Notice Concerning the Issuance of New Investment Units and Secondary Public Offering” announced today.

(2) "Anticipated Acquisition Price” is the sales price listed in the relevant purchase and sale agreement for each of the Anticipated Properties, rounded down to the nearest one million yen. The sales price does not include consumption or local taxes or the costs and expenses related to the acquisition.

(3) Among the sellers listed above, Hulic Co., Ltd. and TMK Sonic Investments 6 are interested parties of Hulic Reit Management (as defined in Article 201 of the Act on Investment Trusts and Investment Corporations (1951 Act No. 198; including subsequent revisions) and Article 123 of the Order for Enforcement of the Act on Investment Trusts and Investment Corporations (2000 Cabinet Order No. 480; including subsequent revisions)), and fall under related parties with respect to the Regulations on Transaction with Interested Parties of Hulic Reit Management.

(4) We have not received consent from the seller of the Higashi Ueno Building, a domestic company, to disclose its identity. The seller of such property is not a related party of either Hulic Reit or Hulic Reit Management.

(1) Execution Date of Purchase and Sale Agreement: October 14, 2014 (2) Anticipated Acquisition Date: Refer to “Anticipated Acquisition Date” in the table above. (3) Acquired from : Refer to “4. Overview of Sellers” below. (4) Acquisition Funds : To be funded from the proceeds from the issuance of new investment units (Note

1) and borrowings (Note 2) resolved at the Hulic Reit’s board of directors meetings on October 14, 2014, and cash on hand.

(5) Settlement method : Full payment upon delivery (6) NOI (3) : 2,101 million yen (total for 7 properties)

(Note 1) For details, refer to “Notice Concerning the Issuance of New Investment Units and Secondary Public Offering.”

(Note 2) For details, refer to “Notice concerning the Borrowing of Funds” announced today. (Note 3) “NOI” is the net operating income (rounded to the nearest million) of the relevant

property calculated using the direct capitalization method as shown on the relevant appraisal report.

2．Reason for acquisition and leasing

In accordance with the basic policies of Hulic Reit, the purpose to acquire Anticipated Properties is to

improve the portfolio. Hulic Reit believes that the acquisition of Anticipated Properties, which increases

the portfolio of Hulic Reit to 28 properties and the total (anticipated) acquisition price to 148.2 billion

yen, will promote a diversification of the properties in the portfolio as well as tenants, as well as

improving the stability of cash flow.

Based on the criteria set forth by Hulic Reit for its selection of tenants, market trends are surveyed and

assessed, and appropriate rental conditions are reviewed for individual properties. Additionally, Hulic

Reit maximizes the use of the property management company in selecting superior tenants. When

executing lease agreements with tenants, Hulic Reit Management verifies, in accordance with its internal


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rules, a tenant’s trustworthiness and relationship with any anti-social forces, and tenants are chosen based

on a comprehensive decision on rent levels, the type and term of the lease agreement and the potential for

renewal. The lessees of the Anticipated Properties have been determined to be appropriate based on

Hulic Reit’s criteria for tenant selection.

3．Overview of Anticipated Properties Individual overviews of each of the Anticipate Properties to be acquired by Hulic Reit can be found in the tables below (hereinafter referred to as the “Individual Property Tables”). Definitions of the terms used in the Individual Property Tables are provided below for reference. Please refer to the following explanations of the terms that are used in the Individual Property Tables. The information included in each table is as of August 31, 2014, unless otherwise noted. a. Explanation of the “Overview of Trust Beneficiary Rights” column The “Trustee,” “Date trust initiated,” and “Expiration date of trust period” list, as of today, the trustee, date trust initiated, and expiration date of trust period for each of the Acquired Properties at the point of acquisition. b. Explanation of the "Nearest station" column The time required to reach a station on foot appearing in the “Nearest station” column has been calculated as one minute per 80 meters of distance in accordance with the “Fair Competition Code on Real Estate Labeling” (Fair Trade Commission Announcement No. 23; 2005) and the “Enforcement Regulation on the Fair Competition Code on Real Estate Labeling” (Fair Trade Commission Approval No. 107; 2005). c. Explanation of the “Address (domicile)” column The “Address (domicile)” column contains the domicile for each property. In addition, if the domicile is not indicated, the building address on the registry is given (for those that have multiple addresses, one address is provided). d. Explanation of the “Land” column i) The “Lot number” column contains information in the land registry. ii) The “Building-to-land ratio” and “floor-area ratio” columns contain the quantitative value (maximum value) stipulated in accordance with the Building Standards Act (1950 Act No. 201; including subsequent revisions), City Planning Act (1968 Act. No. 100; including subsequent revisions. Hereinafter, “City Planning Act”) and other relevant laws and ordinances. For certain Anticipated Properties, certain restrictions or easing of restrictions may be applied to building-to-land ratio and floor-area ratio. iii) The “Zoning” column contains the zoning category from Article 8-1-1 of the City Planning Act. iv) The “Site area” column contains the registered site area, but this may not match actual conditions. Additionally, site area lists the area of the entire building regardless of whether or not it is jointly owned. v) The “Type of ownership” column contains the type of rights retained or anticipated to be attained toward each of the Anticipated Properties. e. Explanation of the “Building” column i) The “Completed” column contains the registered completion date of new construction. ii) The “Construction” and “Number of floors” column contain the registered information. iii) The “Use” column contains the primary registered categories of the building. iv) The “Total floor space” column contains the registered total floor space. Additionally, total floor space lists the floor space of the entire building regardless of whether or not it is jointly owned.


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v) The “Number of parking spaces” column contains the number of parking spaces located onsite for each of the Anticipated Properties (including parking spaces located inside the building) as of the date of this notice. Also in cases of acquiring a stratified ownership or trust co-ownership interest in the Anticipated Properties, the column contains the total number of parking spaces for the entirety of such Anticipated Properties. vi) The “Type of ownership” column contains the type of rights retained or anticipated to be attained toward each of the Anticipated Properties. f. Explanation of the “PM company” column The “PM company” column contains the property management (PM) company with which a property management agreement has been concluded and is currently in effect or is anticipated to be executed for each of the Anticipated Properties. g. Explanation of the “Master lease company” column The “Master lease company” column contains the company with which a master lease agreement has been concluded and is currently in effect or is anticipated to be executed for each of the Anticipated Properties. h. Explanation of the “PML value” column The “PML value” column contains the Probable Maximum Loss (PML) due to an earthquake, and contains the PML value from the “Report on Earthquake PML Valuation,” which was prepared by Sompo Japan Nipponkoa Risk Management in October 2014. As part of its due diligence when acquiring an asset for management, Hulic Reit requested Sompo Japan Nipponkoa Risk Management Inc. to evaluate earthquake risk analyses. These analyses evaluate a building’s seismic performance using an independent structural analysis method based on the building’s structural drawings and structural calculation sheets by comparing the details of the structural calculation sheet and finding the applicable building’s final earthquake performance metric. The earthquake vulnerability of an individual building detected through this evaluation is considered when calculating the building’s PML value from an earthquake, in accordance with the overall evaluation results, including earthquake hazards and ground conditions. i. Explanation of the “Lease summary” column The “Lease summary” column contains details of lease agreements in effect as of August 31, 2014, unless otherwise noted, for each of the Anticipated Properties, based on quantitative data and information received from the current owner or current beneficiary rights holder of each of the Anticipated Properties. i) The “Total leasable area” column contains the total floor space for each of the Anticipated Properties that can be leased based on the building’s lease agreements or the building structural drawings as of August 31, 2014. ii) The “Occupancy rate” column contains the ratio obtained by dividing the leased area of the Anticipated Properties by the total leasable area. The second decimal place has been rounded down. The data from this column is based on information as of August 31, 2014. iii) The “Main tenant” column provides the name of the tenant with the largest leased space among the total leased space of each of the Anticipated Properties. For properties with a fixed master lease that receive predetermined lease payments regardless of fluctuations in the amount of lease payments paid by the end tenant in their master lease agreement, the name of the master lease company is given. iv) The “Number of tenants” column contains the number of tenants for each of the Anticipated Properties based on the lease agreements for each of the Anticipated Properties as of August 31, 2014. However, in cases where a master lease agreement has been concluded for Anticipated Properties, for properties with a pass-through master lease that receive lease payments from end tenants, in principle, without modification, the total number of end tenants is given, and for properties with a fixed master lease that receive predetermined lease payments regardless of fluctuations in the amount of lease


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payments paid by the end tenant, the number of tenants as tenants for the master lease only is given. For these properties, the number of tenants calculated using the number of tenants based on lease agreements between the master lease company and end tenants is given in parentheses. v) The “Total lease income (annualized)” column contains the total lease income shown in lease agreements related to each of the Anticipated Properties as of August 31, 2014 (limited only to tenants that have already moved in as of that day) annualized by multiplying the monthly lease income (including common service fees; limited only to rental fees and excludes storage, signs, and fees for using parking; does not take into consideration ongoing free rent) by 12 and rounding down to the nearest million (this is the total amount for those Anticipated Properties for which there are multiple lease agreements, and does not include consumption tax). In cases where a master lease agreement has been concluded for the Anticipated Properties, for properties with a pass-through master lease that receive lease payments from end tenants, the monthly lease income in the lease agreement concluded with the end tenant is given, and for properties with a fixed master lease that receive predetermined lease payments regardless of fluctuations in the amount of lease payments paid by the end tenant, the annualized amount calculated by multiplying each monthly lease income in the master lease agreement by 12 is given. In addition, the “Total lease income (annualized)” column is left blank in cases where the end tenant and related parties have not provided consent to disclosure. vi) The “Lease and guarantee deposits” column contains the total lease and guarantee deposits required based on each lease agreement related to each of the Anticipated Properties as of August 31, 2014, rounded down to the nearest million. In cases where a master lease agreement has been concluded for the Anticipated Properties, the total lease and guarantee deposits in the lease agreement concluded with the end client rounded down to the nearest one million is given.

The “Lease and guarantee” column is left blank in cases where the end tenant and related parties have not provided consent to disclosure.

Even if a termination or application for termination is made in accordance with the lease agreement with the end tenant, in cases where the contract has been carried over as of August 31, 2014, an agreement with the applicable end tenant is considered to be in existence and the “Occupancy rate,” “Number of tenants,” “Total lease income (annualized),” and “Lease and guarantee” is given.

j. Explanation of the “Special remarks” column The “Special remarks” column contains matters considered important for the use or rights related to each of the Anticipated Properties as well as other matters considered important to impacts on the Anticipated Properties’ appraisal value, profitability, and marketability (disposability), based, in principle, on information as of August 31, 2014.

Among the Anticipated Properties, with respect to Ochanomizu Sola City, if Hulic Reit wishes to dispose of its trust co-ownership interest in the property, Hulic Reit shall provide other co-owners, including the sponsor, a prior notice that it wishes to dispose of its co-ownership interest, and if no agreement is reached regarding the purchase of such co-ownership interest within 30 days of the other co-owners receiving such notice, Hulic Reit shall become a seller under an agreement among the co-owners which allows for the sale of the co-ownership interest to third parties.

Ochanomizu Sola City

Property Ochanomizu Sola City Category Tokyo commercial property (office) Specified assets category Trust beneficiary rights Anticipated Acquisition Price 22,854 million yen Trustee Mizuho Trust & Banking Co., Ltd. Date trust initiated July 31, 2008 Expiration date of trust period March 31, 2024

Nearest Station Shin-Ochanomizu Station on the Tokyo Metro Chiyoda Line, Tokyo Metro (0-minute walk)

Address (domicile) 4-6 Kanda Surugadai, Chiyoda-ku, Tokyo


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Anticipated Acquisition Date November 7, 2014 (Note 1)

Land

Lot number 4-6-1 Kanda Surugadai, Chiyoda-ku, Tokyo Building-to-land ratio 100% (Note 2) Floor-area ratio 970% (Note 3) Zoning Commercial area Site area 9,681.02 m2 Type of ownership Proprietary ownership (trust co-ownership interest 13%)

Building

Completed February 2013 Construction S Number of floors B2/23F Use Office, retail, and parking lot Total floor space 98,897.25 m2 (Note 4) Number of parking spaces

248

Type of ownership Proprietary ownership (trust co-ownership interest 13%) Collateral None

PM company Taisei Corporation、Yasuda Real Estate Co., Ltd, and Taisei-Yuraku Real Estate Co., Ltd.

Master lease company Taisei Corporation Appraisal value 23,010 million yen (Note 5) (as of) (August 31, 2014) Appraisal firm Japan Real Estate Institute PML value 1.56% Lease summary Total leasable area 8,341.21 m2 (Note 5) Occupancy rate 91.4% Main tenant Nippon Paper Industries Co., Ltd.

Total number of tenants 26 (Note 6) Total lease income (annualized) - Lease and guarantee deposits -

Special remarks Superficies right retained by Tokyo Metro Co., Ltd. applies to certain parts of this property’s land for the purpose of laying subway tracks.

Notes: (1) Anticipated acquisition date is subject to change based on the actual Payment Date. (2) The designated building-to-land ratio of the property is 80%, but because the building is a fire-proof

building located within a fire prevention district, the applicable building-to-land ratio is 100%. (3) The designated floor-area ratio of the land of the property is regulated to not exceed 600% within

30m of the southwest road and within 20m of the northeast road, and 500% for over 30m from the southwest road and for over 20m from the northeast road, but because this property has been designated as a special urban revitalization district, the restrictions on the floor-area ratio has been eased to 970%.

(4) Total floor space does not include 41.44 m2 of annexed buildings. (5) Appraisal value and total leasable area are in proportion to the pro rata share of the trust

co-ownership interest (13%) that Hulic Reit intends to acquire. (6) Total number of tenants contains the number of tenants for all buildings.


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Higashi Ueno Building

Property Higashi Ueno Building Category Tokyo commercial property (office) Specified assets category Trust beneficiary rights Anticipated Acquisition Price 2,670 million yen Trustee Sumitomo Mitsui Trust Bank, Limited Date Trust Initiated September 5, 2014 Expiration date of trust period October 31, 2024

Nearest Station Shin-okachimachi Station on the Toei Oedo Subway Line and the Tsukbua Express Line (2-minute walk)

Address (domicile) 1-7-15 Higashi Ueno, Taito-ku, Tokyo Anticipated Acquisition Date October 16, 2014

Land

Lot number 1-15-1 Higashi Ueno, Taito-ku, Tokyo Building-to-land ratio 100% (Note 1) Floor-area ratio 600%, 500% (Note 2) Zoning Commercial area Site area 689.23 m2 Type of ownership Proprietary ownership

Building

Completed July 1988 Construction RC Number of floors 8F Use Retail, office, and parking lot Total floor space 3,914.50 m2 Number of parking spaces

32

Type of ownership Proprietary ownership Collateral None PM company Hulic Co., Ltd. Master lease company Hulic Co., Ltd. Appraisal value 2,740 million yen (as of) (August 31, 2014) Appraisal firm Japan Real Estate Institute PML value 6.26% Lease summary Total leasable area 3,262.08 m2 Occupancy rate 82.1% Main tenant The Tokyo Tomin Bank, Limited

Total number of tenants 9 Total lease income (annualized) 154 million yen Lease and guarantee deposits 125 million yen

Special remarks None Notes: (1) The designated building-to-land ratio of the property is 80%, but because the building is a fire-proof

building located within a fire prevention district, the applicable building-to-land ratio is 100%. (2) 600% for up to 30m from the south road; 500% for the area beyond that.


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Shinjuku Gates Building Property Shinjuku Gates Building Category Tokyo commercial property (retail) Specified assets category Trust beneficiary rights Anticipated Acquisition Price 5,550 million yen Trustee Sumitomo Mitsui Trust Bank, Limited Date Trust Initiated July 30, 2010 Expiration date of trust period October 31, 2024

Nearest Station Shinjuku-sanchome Station on the Tokyo Metro Marunouchi Line and Fukutoshin Line (1-minute walk)

Address (domicile) 3-17-2 Shinjuku, Shinjuku-ku, Tokyo Anticipated Acquisition Date October 16, 2014

Land

Lot number 3-17-4 Shinjuku, Shinjuku-ku, Tokyo Building-to-land ratio 100% (Note) Floor-area ratio 800% Zoning Commercial area Site area 250.78 m2 Type of ownership Leasehold interest

Building

Completed June 1983 Construction S/SRC/RC Number of floors B1/7F Use Retail and office Total floor space 1,493.90 m2 Number of parking spaces

-

Type of ownership Proprietary ownership Collateral None PM company Hulic Co., Ltd. Master lease company Hulic Co., Ltd. Appraisal value 5,600 million yen (as of) (August 31, 2014) Appraisal firm Japan Real Estate Institute PML value 7.47% Lease summary Total leasable area 1,351.15 m2 Occupancy rate 100.0% Main tenant H.I.S. Co., Ltd.


Special remarks None (Note) The designated building-to-land ratio of the property is 80%, but because the building is a fire-proof

building located within a fire prevention district, the applicable building-to-land ratio is 100%.


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Yokohama Yamashitacho Building Property Yokohama Yamashitacho Building Category Tokyo commercial property (retail) Specified assets category Trust beneficiary rights Anticipated Acquisition Price 4,850 million yen Trustee Mitsubishi UFJ Trust and Banking Corporation Date Trust Initiated September 25, 2013 Expiration date of trust period October 31, 2024

Nearest Station Motomachi-Chukagai Station on the Yokohama Kosoku Tetsudo Minato Mirai Line (1-minute walk)

Address (domicile) 36-1 Yamashitacho, Naka-ku, Yokohama-shi, Kanagawa Anticipated Acquisition Date October 16, 2014

Land

Lot number 36-1 Yamashitacho, Naka-ku, Yokohama-shi, Kanagawa Building-to-land ratio 100% (Note) Floor-area ratio 600% Zoning Commercial area Site area 1,350.57 m2 Type of ownership Proprietary ownership

Building

Completed February 1993 Construction RC Number of floors B2/7F Use Retail Total floor space 8,583.54 m2 Number of parking spaces

48

Type of ownership Proprietary ownership Collateral None PM company Hulic Co., Ltd. Master lease company Hulic Co., Ltd. Appraisal value 4,860 million yen (as of) (August 31, 2014) Appraisal firm Japan Real Estate Institute PML value 9.42% Lease summary Total leasable area 8,958.70 m2 Occupancy rate 100.0% Main tenant Barneys Japan K.K.

Total number of tenants 1 Total lease income (annualized) - Lease and guarantee deposits -

Special remarks None (Note) The designated building-to-land ratio of the property is 80%, but because the building is a fire-proof

building located within a fire prevention district, the applicable building-to-land ratio is 100%.


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Chiba Network Center Property Chiba Network Center Category Next generation asset (network center) Specified assets category Trust beneficiary rights Anticipated Acquisition Price 7,060 million yen Trustee Mizuho Trust & Banking Co., Ltd. Date Trust Initiated March 27, 2008 Expiration date of trust period October 31, 2024 Address (domicile) 1-1-1 Muzaigakuendai, Inzai-shi, Chiba Anticipated Acquisition Date December 16, 2014

Land

Lot number 1-1-1 Muzaigakuendai, Inzai-shi, Chiba Building-to-land ratio 70% (Note 1) Floor-area ratio 200% Zoning Category 2 residential district Site area 12,441.19 m2 Type of ownership Proprietary ownership

Building

Completed June 1995 Construction RC Number of floors B2/8F Use Telecommunications building Total floor space 23,338 m2 (Note 2) Number of parking spaces

80

Type of ownership Proprietary ownership Collateral None PM company Hulic Co., Ltd. Master lease company - Appraisal value 7,090 million yen (as of) (August 31, 2014) Appraisal firm Japan Real Estate Institute PML value 5.50% Lease summary Total leasable area 23,338.00 m2 Occupancy rate 100.0% Main tenant SoftBank Telecom Corp.


Special remarks None Notes: (1) The designated building-to-land ratio for this property is 60%, but because of the added calculation

for being corner lot, the applicable building-to-land ratio is 70%. (2) Total floor space does not include 336.34 m2 in annexed buildings.


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Sapporo Network Center Property Sapporo Network Center Category Next generation asset (network center) Specified assets category Trust beneficiary rights Anticipated Acquisition Price 2,510 million yen Trustee Mizuho Trust & Banking Co., Ltd. Date Trust Initiated May 22, 2008 Expiration date of trust period October 31, 2024 Address (domicile) 2 4-1 Kita 9 Jonishi, Kita-ku, Sapporo, Hokkaido Anticipated Acquisition Date December 16, 2014

Land

Lot number 2 4-1 Kita 9 Jonishi, Kita-ku, Sapporo, Hokkaido Building-to-land ratio 90% (Note 1) Floor-area ratio 400% Zoning Commercial area Site area 3,136.45 m2 Type of ownership Proprietary ownership

Building

Completed January 2002 Construction S Number of floors 5F Use Office, telecommunications equipment Total floor space 9,793.57 m2 (Note 2) Number of parking spaces

35



Special remarks None Notes: (1) The designated building-to-land ratio for this property is 80%, but because of the added calculation

for being corner lot, the applicable building-to-land ratio is 90%. (2) Total floor space does not include 38.54 m2 in annexed buildings.


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Keihanna Network Center Property Keihanna Network Center Category Next generation asset (network center) Specified assets category Trust beneficiary rights Anticipated Acquisition Price 1,250 million yen Trustee Mizuho Trust & Banking Co., Ltd. Date Trust Initiated November 6, 2007 Expiration date of trust period October 31, 2024 Address (domicile) 113-1 Kumomura Kizu, Kizugawa-shi, Kyoto Anticipated Acquisition Date October 16, 2014

Land

Lot number 113-1 Kumomura Kizu, Kizugawa-shi, Kyoto Building-to-land ratio 60% Floor-area ratio 200% Zoning Semi-industrial area Site area 7,691.62 m2 Type of ownership Proprietary ownership

Building

Completed June 2001 Construction S/RC/S Number of floors 3F Use Office, mechanical room, and garage Total floor space 9,273.44 m2 Number of parking spaces

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Special remarks None


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4．Overview of the seller

Ochanomizu Sola City, Yokohama Yamashitacho Building, Keihanna Network Center Name Hulic Co., Ltd. Location 7-3 Nihonbashi, Odenmacho, Chuo-ku, Tokyo, Japan Name and title of representative

Saburo Nishiura, President and Chief Executive Officer

Business lines Real estate holding, leasing, sales, and brokerage Paid-in capital 22,279 million yen (as of June 30, 2014) Date of incorporation March 26, 1957 Net assets 169,914 million yen (as of December 31, 2013) Total assets 700,720 million yen (as of December 31, 2013) Relationship with Hulic Reit and asset management company

Capital relationship

As of August 31, 2014, Hulic Co., Ltd. holds 12.5% of the investment units issued by Hulic Reit. Additionally, Hulic Co., Ltd. is the parent company (100% ownership interest) of Hulic Reit Management, and as such falls under an interested party as set forth in the Act on Investment Trusts and Investment Corporations.

Personnel relationship

As of today, some employees of Hulic Reit Management are seconded from Hulic Co., Ltd.

Transactional relationship

Hulic Co., Ltd. has entered into a master lease and property management agreement with Hulic Reit for each Anticipated Property as the trust assignee related to each of the Anticipated Property. In addition, Hulic Co., Ltd. has concluded a sponsor support agreement and trademark licensing agreement with Hulic Reit and its asset management company.

Applicable status as

a related party

Hulic Co., Ltd. corresponds to a related party of Hulic Reit. In addition, as noted above, Hulic Co., Ltd. corresponds to an interested party in accordance with the Investment Trust and Investment Corporation Act.


Higashi Ueno Building will be acquired from a domestic company whose identity cannot be disclosed

as Hulic Reit has not obtained consent for the disclosure. As of today, the party from whom the property

will be acquired has no capital, personnel or transactional relationship to be noted between either Hulic

Reit or Hulic Reit Management, and such party is also not a related person of either Hulic Reit or Hulic

Reit Management.

Shinjuku Gates Building Name TMK Sonic Investments 6 Location 3-22-10-201 Toranomon, Minato-ku, Tokyo, Japan Name and title of representative

Kiyohiko Ide, Director

Business lines 1. Operations related to assignment of specified assets in accordance with asset liquidity plans in accordance with laws pertaining to the liquidity of assets, as well as the management and disposal thereof. 2. Operations incidental to the liquidity of specified assets in the previous paragraph.

Paid-in capital 350 million yen (as of September 2014) Date of incorporation March 26, 2010 Net assets 3,262 million yen (as of June 30, 2014) (Note)


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Total assets 4,770 million yen (as of June 30, 2014) (Note) Relationship with Hulic Reit and asset management company


TMK Sonic Investments 6 has no capital relationship to list between itself and either Hulic Reit or Hulic Reit Management. Hulic Co., Ltd., the parent company (100% ownership ratio) of Hulic Reit Management, has made preferred equity investment in TMK Sonic Investments 6.


TMK Sonic Investments 6 has no personnel relationship to list between itself and either Hulic Reit or Hulic Reit Management.


TMK Sonic Investments 6 has no transactional relationship to list between itself and either Hulic Reit or Hulic Reit Management.


a related party

Although TMK Sonic Investments 6 does not fall under a related party of either Hulic Reit or Hulic Reit Management, it does fall under an interested person of Hulic Reit Management as set forth in the Investment Trust and Investment Corporation Act.

Note: Net assets and total assets have been rounded down to the nearest one million yen.

Chiba Network Center, Sapporo Network Center Name Godo Kaisha NC2 Funding Location 1-9-13 Nihonbashihoncho, Chuo-ku, Tokyo, Japan Name and title of representative

Godo Kaisha NC2 Funding, Representative Member Eiji Saito, Executive Officer

Business lines 1. Acquisition, holding, and disposal of real estate trust beneficiary rights 2. Acquisition, holding, disposal, leasing, and management of real estate 3. All operations related or incidental to the preceding item

Paid-in capital 10 million yen (as of September 30, 2014) Date of incorporation November 1, 2009 Net assets - (Note) Total assets - (Note) Relationship with Hulic Reit and asset management company


Godo Kaisha NC2 Funding has no capital relationship to list between itself and either Hulic Reit or Hulic Reit Management. Hulic Co., Ltd., the parent company of and 100% owner of Hulic Reit Management, has made an investment in anonymous association in Godo Kaisha NC2 Funding.


Godo Kaisha NC2 Funding has no personnel relationship to list between itself and either Hulic Reit or Hulic Reit Management.


Godo Kaisha NC2 Funding has no transactional relationship to list between itself and either Hulic Reit or Hulic Reit Management.


a related party

Godo Kaisha NC2 Funding does not fall under a related party of either Hulic Reit or Hulic Reit Management. In addition, this is a special purpose company in which Hulic. Co., Ltd., the parent company and a100% owner of Hulic Reit Management, has made an investment in anonymous association

Note: Hulic Reit has no obtained the seller’s consent to disclose the information.

5．Transactions with stakeholders

(1) Hulic. Co., Ltd., the parent company of Hulic Reit Management, is the seller of Ochanomizu Sola City, Yokohama Yamashitacho Building, and Keihannna Network Center, and TMK Sonic Investments 6, the seller of Shinjuku Gates Building, is a specified subsidiary of Hulic Co., Ltd.,


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the parent company of Hulic Reit Management. These sellers correspond to an interested party as stipulated in the Investment Trust and Investment Corporation Act (1951 Act No. 198; including subsequent revisions) and the Enforcement Ordinance on the Investment Trust and Investment Corporation Act (2000 Cabinet Order No. 480; including subsequent revisions) and also corresponds to an interested party according to the asset management company’s Regulations on Transactions with Interested Parties. As a result, the decision-making procedures stipulated in the asset management company’s Regulations on Transactions with Interested Parties has been carried out between the asset management company and both Hulic Co., Ltd. and TMK Sonic Investments 6 for transactions involving the acquisition of each of the Anticipated Properties.

(2) Hulic Reit Management Co., Ltd. has carried out the decision-making procedures stipulated in the Regulations on Transactions with Interested Parties for causing the trustee of the Anticipated Properties to execute the master lease and property management agreement with Hulic Co., Ltd., with respect to Higashi Ueno Building and Shinjuku Gates Building, and for causing the trustee of the Anticipated Properties to execute the property management agreement with Hulic Co., Ltd. with respect to Chiba Network Center, Sapporo Network Center, and Keihanna Network Center.

(3) Hulic Build Co., Ltd., the intermediary of Chiba Network Center and Sapporo Network Center as noted in “7. Overview of the intermediary" below, corresponds to an interested party under the Regulations on Transactions with Interested Parties, and therefore Hulic Reit Management has carried out the decision-making procedures stipulated in the Regulations on Transactions with Interested Parties.

6．Status of the property acquirer

The acquisition of properties from persons with a special vested interest is as follows. The table

below contains the (1) name of the company/person, (2) relationship with the person with a special

vested interest, and (3) background/reason for the acquisition, among other information.

Property name (Address)

Previous owner/trustee Second previous

owner/trustee Third previous owner/trustee

(1), (2), (3) Acquisition (Transfer) Price

Acquisition (Transfer) Timing





Ochanomizu Sola City 4-6 Kanda Surugadai, Chiyoda-ku, Tokyo

1 Hulic Co., Ltd. (2) Parent company of Hulic Reit Management (3) Background and reason for acquisition (1) This property was jointly developed by investors in the TMK, including Hulic Co., Ltd., and trust co-ownership interest (Note) was acquired corresponding to the ratio of investment. (2) Hulic Co., Ltd. is benefitting from the sale of a portion of its trust beneficiary rights to Hulic Reit.

1 Surugadai Development TMK (2) Equity-method affiliated of Hulic Co., Ltd., parent company of Hulic Reit Management 3

(Land) Acquired for investment management purposes (Building) Development

(Land) Excluding those with a special vested interest (Building) None

Amount equivalent to Omitted, as held for over -


16

Property name (Address)

Previous owner/trustee Second previous

owner/trustee Third previous owner/trustee

development costs one year July 2014 - -

Shinjuku Gates Building 3-17-2 Shinjuku, Shinjuku-ku, Tokyo

1 TMK Sonic Investments 6 (2) Specified subsidiary of Hulic Co., Ltd., parent company of Hulic Reit Management (3) Acquired for investment management purposes

Excluding those with a special vested interest

-

Omitted, as held for over one year

- -

July 2012 - - Yokohama Yamashitacho Building 36-1 Yamashitacho, Naka-ku, Yokohama-shi, Kanagawa

1 Hulic Co., Ltd. (2) Parent company of Hulic Reit Management (3) Acquired for investment management purposes


-

4,750 million yen - -

September 2014 - -

Keihanna Network Center 113-1 Kumomura Kizu, Kizugawa-shi, Kyoto

(1) Hulic Co., Ltd. (2) Parent company of Hulic Reit Management (3) Acquired for investment management purposes


-

1,038 million yen - - January 2014 - -

Note: The amount of investment corresponding to the trust co-ownership interest acquired by Hulic Co., Ltd. is equivalent to the development costs. 7．Overview of intermediary

An overview of the intermediary for Chiba Network Center and Sapporo Network Center is as follows.

Overview of intermediary

1 Company name Hulic Build Co., Ltd. (2) Location 6-7 Nihonbashi Kabutocho, Chuo-ku, Tokyo, Japan (3) Name and title of

representative Masahiko Chiba, Representative Director

(4)

Business lines

1． Operation, management, and administration of parking lots 2． Contracting of advertisements and promotions, outsourcing of

advertisements 3． Possession, purchase and sale, leasing, and management of real estate 4． Purchase and sale, rental, brokerage, and consulting operations for real

estate 5． Type II Financial Instruments Business 6． Contracting, planning, design, supervisory, surveying, and consulting

operations for architecture


17

7． Contracting of civil engineering

5 Paid-in capital 90 million yen 6 Date of incorporation April 2, 2001 (7) Relationship with Hulic Reit and asset management company


Hulic Build Co., Ltd. has no capital relationship to list between itself and either Hulic Reit or Hulic Reit Management. Hulic Build Co., Ltd. is a 100% subsidiary of Hulic Co., Ltd., and corresponds to an interested party.


Hulic Build Co., Ltd. has no personnel relationship to list between itself and either Hulic Reit or Hulic Reit Management. In addition, there are no notable personnel relationships between persons related to or affiliated companies of Hulic Build Co., Ltd. and those of either Hulic Reit or Hulic Reit Management.

Transactional

relationship

For the fiscal period ended August 31, 2014, Hulic Build Co., Ltd. and Hulic Reit had transactions related to repair works for the properties owned by Hulic Reit. In addition, Hulic Build Co., Ltd. and Hulic Reit Management had transactions, such as those related to repair works and fixtures and fittings, for the office building that Hulic Reit and Hulic Reit Management are in. There are no notable transactional relationships between persons related to or affiliated companies of Hulic Build Co., Ltd. and those of either Hulic Reit or Hulic Reit Management.

Applicable status as a related party

Although Hulic Build Co., Ltd. does not fall under a related party of either Hulic Reit or Hulic Reit Management, it does fall under an interested person as noted above.

(2) Amount of fees for intermediary 287 million yen (excluding consumption tax and local consumption tax)

8．Acquisition schedule

Property

Acquisition

Decision

Date

Execution

Date of

Purchase

and Sale

Agreement

Payment Date Anticipated

Acquisition Date

Ochanomizu Sola City

(Note)

October 14,

2014

October 14,

2014

November 7, 2014 November 7, 2014

Higashi Ueno Building October 16, 2014 October 16, 2014

Shinjuku Gates Building October 16, 2014 October 16, 2014

Yokohama Yamashitacho

Building October 16, 2014 October 16, 2014

Chiba Network Center December 16, 2014 December 16, 2014

Sapporo Network Center December 16, 2014 December 16, 2014

Keihanna Network Center October 16, 2014 October 16, 2014 Note: The settlement and anticipated acquisition date of Ochanomizu Sola City is subject to change based

on the actual Payment Date


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9．Items related to forward commitment

(1) Anticipated Properties that fall under forward commitment (Note)

Property Execution Date of Purchase

and Sale Agreement Anticipated Acquisition Date

Chiba Network Center October 14, 2014 December 16, 2014

Sapporo Network Center Note: “Forward commitment” means purchase and sales agreements in which settlement and the transfer of

a property takes place one month or more after the execution date of the purchase and sale agreement, as well as similar agreements.

(2) Effect on finances of Hulic Reit when forward commitment cannot be fulfilled

Under the Trust Beneficiary Interest Purchase and Sale Agreement (the “Agreement”) for Chiba

Network Center and Sapporo Network Center, if either Hulic Reit or the seller breaches the

provisions of the Agreement, the other party may terminate the Agreement and request, as a penalty,

an amount equivalent to 20% of the sales price of the trust beneficiary interests under such

terminated Agreement.

However, the purchase and sale of the relevant Anticipated Property as set forth in the Agreement

includes a covenant whereby the completion of the procurement of necessary funds is a condition

precedent for Hulic Reit's acquisition of such Anticipated Property. As such, if Hulic Reit cannot

procure the funds for acquisition, the Agreement may be terminated, and Hulic Reit will have no

obligation to pay the seller any penalty for the cancellation or termination of the Agreement, except

in cases where the cancellation or termination is attributable to Hulic Reit.

10．Future outlook

Please refer to the “Notice Concerning Revision to the Forecasts of Financial Results for the Fiscal

Period Ending February 28, 2015 and Announcement of Forecasts of Financial Results for the Fiscal

Period Ending August 31, 2015” announced today for more information about forecasts for financial

results for the fiscal period ending February 28, 2015 (September 1, 2014 to February 28, 2015) and

the fiscal period ending August 31, 2015 (November 7, 2015 to August 31, 2015) in light of the

acquisition of Anticipated Properties. This press release distributed to: The Tokyo Stock Exchange Press Club (Kabuto Club), Ministry of Land, Infrastructure, Transport and Tourism (MLIT) Press Club and MLIT Press Club for Construction Publications Attachments

Reference Attachment 1 Overview of Appraisal Report

Reference Attachment 2 Overview of Building Inspection Report

Reference Attachment 3 Portfolio List after Acquiring the Anticipated Properties


19

Attachments

Reference Attachment 1 Overview of Appraisal Report

Category Property Appraisal company

Appraisal value

(millions of yen) (Note 1)

Value indicated by

cost approach

(millions of yen)

Value indicated by income approach (millions of yen)

NOI yield (%) (Note

3) Direct

capitalization price

Cap rate (%)

DCF price Discount rate (%)

Terminal cap rate

(%)

NOI (Note 2)

Tokyo Com

mercial P

roperties

Office properties

Ochanomizu Sola City (Note 4)

Japan Real Estate Institute

23,010 18,720 23,270 3.9 22,750 3.6 4.0 894 3.9



2,740 2,300 2,780 4.6 2,700 4.4 4.8 133 5.0

Subtotal - 25,750 21,020 26,050 - 25,450 - - 1,027 4.0

Retail properties

Shinjuku Gates Building


5,600 5,160 5,710 4.0 5,480 3.6 4.2 227 4.1

Yokohama Yamashitacho Building


4,860 3,220 4,910 5.2 4,810 5.0 5.4 257 5.3

Subtotal - 10,460 8,380 10,620 - 10,290 - - 484 4.7

Tokyo Commercial Properties Subtotal

- 36,210 29,400 36,670 - 35,740 - - 1,511 4.2

Next G

eneration A

ssets

Netw

ork Centers

Chiba Network Center


7,090 4,800 7,130 5.3 7,040 5.1 5.5 379 5.4

Sapporo Network Center


2,530 2,300 2,540 5.4 2,520 5.2 5.6 139 5.5

Keihanna Network Center


1,260 1,220 1,260 5.7 1,250 5.5 5.9 72 5.8

Next Generation Assets Subtotal

- 10,880 8,320 10,930 - 10,810 - - 590 5.5

Total - 47,090 37,720 47,600 - 46,550 - - 2,101 4.5

(1) Values as of August 31, 2014. (2) “NOI” contains the net operating income rounded off to the nearest million for properties calculated

using the direct capitalization price method shown on the appraisal report. NOI represents income prior to depreciation and differs from Net Cash Flow (NCF), which adds operating income including deposits and subtracts capital expenditures from NOI.

(3) “NOI yield” contains NOI divided by the anticipated acquisition price rounded to the second decimal place. This figure has been calculated by the asset management company and is not found on the real estate appraisal report.

(4) Figures for Ochanomizu Sola City are in proportion to the pro rata share of the trust co-ownership interest (13%) that Hulic Rent intends to acquire.


20

Reference Attachment 2 Overview of Building Inspection Report

Property Inspection company Inspection performed

on

Cost of urgent/short-term

repairs (millions of yen)

(Note 1)

Cost of long-term

repairs (millions of

yen) (Note 2)

Ochanomizu Sola City (Note 3) ERI SOLUTION CO., LTD. September 2014 0 6

Higashi Ueno Building ERI SOLUTION CO., LTD. August 2014 0 12

Shinjuku Gates Building ERI SOLUTION CO., LTD. September 2014 0 2

Yokohama Yamashitacho Building Tokyo Bldg-Tech Center Co., Ltd. September 2014 0 10

Chiba Network Center Tokyo Bldg-Tech Center Co., Ltd. September 2014 0 8

Sapporo Network Center Tokyo Bldg-Tech Center Co., Ltd. September 2014 0 4

Keihanna Network Center NIPPON KANZAI Co., Ltd. September 2014 0 2

(1) “Cost of urgent/short-term repairs” contains the cost of updating work and urgent repairs generally required within one year as shown on the Building Inspection Report.

(2) “Cost of long-term repairs” contains the average annual amount rounded to the nearest million yen for the costs appearing on the Building Inspection Report as updating work forecast over the next 12-year period.

(3) The cost of urgent/short-term as well as long-term repairs for Ochanomizu Sola City is in proportion to the pro rata share of the trust co-ownership interest (13%) that Hulic Rent intends to acquire.


21

Reference Attachment 3 Portfolio List after Acquiring the Anticipated Properties

Category Property Location

(Anticipated) Acquisition

(million yen) (Note 1)

Investment ratio (%) (Note 2)

(Anticipated) acquisition date

(Note 3)

Tokyo Com

mercial P

roperties

Office properties

Hulic Kamiyacho Building Minato Ward, Tokyo

20,100 (Note 4)

13.6 February 7, 2014

Hulic Kudan Building (Land) Chiyoda Ward, Tokyo

11,100 7.5 February 7, 2014

Toranomon First Garden Minato Ward, Tokyo

8,623 (Note 4)

5.8 February 7, 2014

Rapiros Roppongi Minato Ward, Tokyo

5,160 (Note 4)


Hulic Takadanobaba Building Toshima Ward, Tokyo

3,900 2.6 February 7, 2014

Hulic Kanda Building Chiyoda Ward, Tokyo

3,780 2.6 February 7, 2014

Hulic Kandabashi Building Chiyoda Ward, Tokyo

2,500 1.7 February 7, 2014

Hulic Kakigaracho Building Chuo Ward, Tokyo

2,210 1.5 February 7, 2014

Ochanomizu Sola City Chiyoda Ward, Tokyo

22,854 (Note 4)

15.4 November 7, 2014

(Note 5)

Higashi Ueno Building Taito Ward, Tokyo

2,670 1.8 October 16, 2014

Subtotal - 82,897 55.9 -

Retail properties

Oimachi Redevelopment Building (#2) Shinagawa Ward, Tokyo

9,456 6.4 February 7, 2014

Oimachi Redevelopment Building (#1) Shinagawa Ward, Tokyo

6,166 (Note 4)


Dining Square Akihabara Building Chiyoda Ward, Tokyo

3,200 2.2 February 7, 2014

Hulic Jingumae Building Shibuya Ward, Tokyo

2,660 1.8 February 7, 2014

Shinjuku Gates Building Shinjuku Ward, Tokyo

5,550 3.7 October 16, 2014

Yokohama Yamashitacho Building Yokohama City, Kanagawa

4,850 3.3 October 16, 2014

Subtotal - 31,882 21.5 -

Tokyo Commercial Properties Subtotal - 114,779 77.5 -

Next G

eneration Assets

Private nursing hom

es

Aria Matsubara Setagaya Ward, Tokyo

3,244 2.2 February 7, 2014

Trust Garden Yoganomori Setagaya Ward, Tokyo

5,390 3.6 February 7, 2014

Trust Garden Sakurashimachi Setagaya Ward, Tokyo

2,850 1.9 February 7, 2014

Trust Garden Suginami Miyamae Suginami Ward, Tokyo

2,760 1.9 February 7, 2014

Subtotal - 14,244 9.6 -


22

Netw

ork Centers

Ikebukuro Network Center Toshima Ward, Tokyo

4,570 3.1 February 7, 2014

Tabata Network Center Kita Ward, Tokyo

1,355 0.9 February 7, 2014

Hiroshima Network Center

Hiroshima City, Hiroshima Prefecture

1,080 0.7 February 7, 2014

Atsuta Network Center Nagoya City, Aichi Prefecture

1,015 0.7 February 7, 2014

Nagano Network Center Nagano City, Nagano Prefecture

305 0.2 February 7, 2014

Chiba Network Center Inzai, Chiba 7,060 4.8 December 16, 2014

Sapporo Network Center Sapporo, Hokkaido

2,510 1.7 December 16, 2014

Keihanna Network Center Kizugawa, Kyoto

1,250 0.8 October 16, 2014

Subtotal - 19,145 12.9 -

Next Generation Properties Subtotal - 33,389 22.5 -

Total - 148,168 100.0 -

(1) "(Anticipated) Acquisition Price” lists the acquisition price listed in the relevant purchase and sale agreement for each of the properties, rounded to the nearest one million yen. The acquisition price does not include consumption or local taxes or the costs and expenses related to the acquisition.

(2) “Investment ratio” contains the percentage of the (anticipated) acquisition price of each acquired asset and each of the Anticipated Properties compared to the total (anticipated) acquisition price rounded to the second decimal place.

(3) “(Anticipated) Acquisition date” contains the acquisition date stated in the purchase and sale agreement.

(4) The (anticipated) acquisition price of Hulic Kamiyacho Building, Toranomon First Garden, Rapiros Roppongi and Oimachi Redevelopment Building (#1), and Ochanomizu Sola City contains the amount equivalent to the ownership interest in each property acquired by Hulic Reit.

(5) The anticipated acquisition date for Ochanomizu Sola City is subject to change based on the actual Payment Date.

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