Samty Residential Investment : Notice Concerning Acquisition and Disposition of Properties

February 25, 2022

For Translation Purposes Only

Real Estate Investment Trust Securities Issuer:

Samty Residential Investment Corporation 1-8-3 Marunouchi, Chiyoda-ku, Tokyo Masafumi Takahashi, Executive Director

(Securities Code: 3459)

Asset Management Company

Samty Asset Management Co., Ltd. Masafumi Takahashi, Representative Director Inquiries: Hidekazu Nizawa

Director

Head of Business Management Division

Phone: + 81-3-5220-3841

Notice Concerning Acquisition and Disposition of Properties

Samty Residential Investment Corporation ("Samty Residential") announces that Samty Asset Management Co., Ltd. (the "Asset Management Company"), to which Samty Residential entrusts management of its portfolio assets, decided today to acquire the following three properties (the "Assets to Be Acquired") (the "Acquisition") and to dispose of the following four properties (the "Assets to Be Sold") (the "Disposition"; the Acquisition and the Disposition are collectively referred to as the "Transaction"). Details are as follows.

As Samty Co., Ltd. (below, "Samty"), the seller of the Assets to Be Acquired and the buyer of some of the Assets to Be Sold, falls under the category of an interested party, etc. as defined under the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951, as amended; the "Investment Trusts Act"), the Asset Management Company obtained the consent of Samty Residential based on the approval at Samty Residential's Board of Directors meeting held on February 25, 2022, pursuant to the Investment Trusts Act.

1.

Overview of the Assets to Be Acquired and the Assets to be Sold

(1) Overview of the Assets to Be Acquired

Area	Property number	Property name(Note 1)	Location	Planned acquisition price(Note 2) (million yen)	Date of conclusion of agreement	Planned date of acquisition	Seller	Acquisition fund (Note 3）	Settlement method
Major regional cities	A-86	S-FORT Taisho riviere	Taisho-ku, Osaka-shi	1,000	February 25, 2022	February 28, 2022	Samty	Cash on hand	Lump-sum upon delivery
Other Regional cities	B-47	S-RESIDENCE Senrioka	Settsu-shi, Osaka	1,012
Tokyo Metropolis	C-39	S-RESIDENCE Kitasenju reiz	Adachi-ku, Tokyo	1,200
Total	3,212

(Note 1)	Although the names of some of the properties are as follows, they will be changed to the above names promptly after the acquisition of the
Asset to Be Acquired.
(Note 2)	Planned acquisition price is the amount that will be required for the acquisition of the Asset to Be Acquired excluding various costs such as
commissions for mediation of transaction, taxes and public dues, etc. (the amount of the price of purchase of the real estate, etc. indicated in
the purchase agreement, etc.). Amounts of less than 1 million yen are rounded down.
(Note 3)	Funds obtained from the sale of the Assets to Be Sold and cash on hand will be used for the acquisition.
Disclaimer	This translation is for informational purposes only. Neither Samty Residential Investment Corporation nor Samty Asset Management Co., Ltd. guarantees
the accuracy or completeness of the translation. If there is any discrepancy between the Japanese version and the English translation, the Japanese
version shall prevail.

Property number	Current property name
A-86	SAMTY Taisho River Terrace

(2) Overview of the Assets to Be Sold

Property number	Property name	Buyer(Note 1)	Date of conclusion of agreement	Planned disposition date	Planned disposition price(Note 2) (million yen)	Assumed book value (Note 3) (million yen)	Difference between planned disposition price and assumed book value (million yen)
A-16	S-FORT Gakuenmae	Samty	2022 February 25	February 28, 2022	523	444	78
A-21	S-FORT Kamiotai	Non-disclosed	March 24, 2022	864	736	127
C-03	S-FORT Itabashi Shimura	Samty	February 28, 2022	740	626	113
C-05	S-FORT Noborito	760	638	121
Total	2,887	2,446	440

(Note 1) S-FORT Kamiotai is not disclosed because the consent of the buyer could not be obtained.

(Note 2） Planned disposition price is the amount that will be required for the disposition of the Asset to Be Sold excluding various costs such as commissions for mediation of transaction, taxes and public dues, etc. (the amount of the price of purchase of the real estate, etc. indicated in the purchase agreement, etc.).

(Note 3) The assumed book value is the assumed book value as of the planned disposition date. This is subject to change in the future before the planned disposition date.

(Note 4) A lump-sum payment is scheduled to be made on the planned disposition date. The funds obtained from the disposition will be allocated to the acquisition of the Assets to Be Acquired.

2.

Reason for the Transaction

Samty Residential is aiming to build a portfolio that pursues "Stability" (diversified investments in strictly selected residential properties nationwide), "Growth potential" (expansion of the portfolio size by continually investing in new properties centered on major regional cities), and "Profitability" (realization of expected high returns by investing in carefully screened residential properties located in major regional cities) through investment in residences mainly in major regional cities.

Samty Residential has been working to improve the quality of its portfolio from a medium- to long-term perspective by expanding the scale of its assets and at the same time continuously replacing assets. Through the acquisition of three properties and the sale of four properties, this Transaction aims to improve the quality of the portfolio and realize unrealized gains as follows.

As the NOI yields after depreciation for all of the Assets to be Sold had been low compared to the entire portfolio, we had been considering the buyer for the Assets to Be Sold as assets for which disposition would be ideal from a medium- to long-term perspective. In addition to considering that the buyer presented offers exceeding the appraisal values, the acquisition of the Assets to be Acquired will enable us to maintain and stabilize the profitability of the entire portfolio even after the disposition of the Assets to be Sold, so we decided to dispose of the Assets to be Sold at this time, judging that it would contribute to the interests of unitholders to realize unrealized gains. It is our policy to distribute the entire amount of disposition profits, and we plan to use the proceeds from the disposition to fund the acquisition of the Assets to be Acquired and working capital.

On the other hand, the Assets to be Acquired are assets subject to asset management as stipulated in the Articles of Incorporation of Samty Residential and are a group of properties owned by the sponsor, Samty. Considering that stable cash flows that would contribute to the profitability of the entire portfolio can be expected in comprehensive consideration of the individuality of each property, including the location and building age, Samty Residential deemed that the Acquisition would serve to improve portfolio quality in themedium to long term. For the details of the Asset to Be Acquired and the points assessed, please refer to the following "3. Details of the Asset to Be Acquired and Asset to Be Sold." In line with the acquisition of the Asset to Be Acquired, Samty Residential has selected their lessees based on the matters concerning criteria for selecting tenants set forth by Samty Residential (for details of the criteria, please refer to "Report on the Management Structure and System of the Issuer of Real Estate Investment Trust Units and Related Parties" dated November 15, 2021 (Japanese only)).

Note the Transaction will expand the portfolio to 159 properties for a total (planned) acquisition price of 147.6 billion yen. Furthermore, the investment ratio by area after the Transaction is projected to be 73.4% for regional cities (46.8% for major regional cities and 26.6% for other regional cities) and 26.6% for the Tokyo Metropolis based on the (planned) acquisition price.

3.

Details of the Assets to Be Acquired and the Assets to Be Sold

The details of the Assets to Be Acquired and the Assets to Be Sold are as shown in the table below. However, the information in "Leased area," "Occupancy rate," "Monthly rental revenue," and "Security and guarantee deposits" are as of the end of January 2022. Furthermore, the following tables may refer to real estate that are the Assets to Be Acquired and the Assets to Be Sold or real estate that are the trust assets of real estate trust beneficiary interest as the "Property." Please refer to the following terms with regard to the tables.

•  "Location" is based on the residential address. However, for properties that have no residential address, the building address or building location on the certificate of the registered matters is indicated. In addition, "Site area" of land, and "Use," "Completion date," "Structure and floors," and "Total floor area" of buildings are based on information in the certificate of the registered matters, and may not necessarily be identical with the present state of said real estate.

•  "Planned acquisition price" is the amount required for the acquisition of the Asset to Be Acquired excluding various costs such as commissions for mediation of transaction, taxes and public dues, etc. (the amount of the price of purchase of the real estate, etc. indicated in the purchase agreement, etc.). Amounts of less than 1 million yen are rounded down.

•  "Trustee" indicates the trustee or planned trustee of trust pertaining to the real estate trust beneficiary interest.

•  "Building coverage ratio" is, in principle, the ratio of the building area of the building designated in Article 53, Paragraph 1 of the Building Standards Act to its site area, and represents the maximum value of the building coverage ratio provided in city plans in accordance with zoning, etc. Such a maximum value of the building coverage ratio may be relaxed, increased, or decreased due to being a fire-resistant building within a fire prevention district and for other reasons, and may be different from the building coverage ratio that is actually applied.

•  "Floor area ratio" is, in principle, the ratio of the total floor area of the building to the site area designated in Article 52, Paragraph 1 of the Building Standards Act, and represents the maximum value of the floor area ratio provided in city plans in accordance with zoning, etc. Such a maximum value of the floor area ratio may be relaxed, increased, or decreased due to the width of roads connecting to the site area and for other reasons, and may be different from the floor area ratio that is actually applied.

•  "Zoning" is the type of zoning listed in Article 8, Paragraph 1, Item 1 of the City Planning Act (Act No. 100 of 1968, as amended; the "City Planning Act").

•  "Total floor area" is the floor area for the entire building (excluding that of attached buildings).

•  "Number of leasable units" is the number of units that can be leased as of the end of January 2022 (including number of stores, etc. if any).

•  "Property management company" is the property management company to which property management is entrusted or planned to be entrusted with regard to the real estate.

•  "Master lease company" is the lessee that has concluded or planned to conclude a master lease agreement with the owner of the real estate.

•  "Master lease type" indicates whether a pass-through-type master lease agreement or a fixed-rent-type master lease agreement is concluded.

•  "Probable maximum loss (PML value)" is the value calculated in the evaluation of seismic risk analysis conducted by Tokio Marine dR Co., Ltd. as requested as part of due diligence upon acquisition of the real estate trust beneficiary interest by Samty Residential. Furthermore, "Probable maximum loss (PML value)" refers to the extent of the damage that would be incurred due to the largest earthquake (a large earthquake with the likelihood of occurring once in 475 years = a large earthquake with a 10% likelihood of occurring once in 50 years) foreseen during the assumed useful life (50 years being the useful life of an ordinary building) as a ratio (%) of the replacement value for the foreseeable restoration costs of the damage.

•  "Total leasable area" is the total floor area of residences and shops, etc. that is practically leasable to end-tenants (if the common area, etc. is leased, the concerned area is also included). Total leasable area is not based on the real estate registry, but by the floor area stated in the lease agreement or the floor area calculated from the building as-built drawing, etc., and may not necessarily be identical to the floor area stated in the real estate registry.

•  "Leased area" is the area (the area indicated in lease agreements) for which lease agreements are actually concluded with end-tenants, and a lease is conducted if the type of master lease as of the end of January 2022 is a pass-through-type master lease agreement. However, the indicated figure includes only the area of residences and shops, etc. (or the area of the entire units if all the units are leased in a lump-sum), and excludes the leased area of parking lots, etc.

•  "Occupancy rate" is the rate of leased area to leasable area, rounded to the first decimal place.

•  "Number of tenants" is the number of tenants with which Samty Residential or the trustee has a direct rental contract relationship. Therefore, when the master lease company subleases each unit to end-tenants due to the introduction of a master lease, the total number of tenants is shown as 1; that is, the number of end-tenants of the sublease is excluded. Furthermore, even if the managed asset is leased by the master lease company, when there are end-tenants who do not accept the master lease, the end-tenants and Samty Residential or the trustee have a direct rental contract relationship. In those cases, however, the number of end-tenants in question is not included in the number of tenants either.

•  When the type of master lease is a pass-through-type master lease agreement, "Monthly rental revenue" is the total monthly rent as of the end of January 2022 (including common area expenses, but not fees for incidental facilities such as parking lots or trunk rooms) stated in the lease agreement concluded by the master lease company, or the owners of each real estate or trust real estate, with end-tenants. Amounts are rounded down to the nearest thousand yen. Consumption tax and other taxes are excluded.

•  "Security and guarantee deposits" is the total amount of balance of security and guarantee deposits remaining as of the end of January 2022 based on lease agreements concluded with end-tenants, rounded down to the nearest thousand yen. However, if such does not need to be refunded based on special policy conditions such as deductions from deposits and non-refundable deposit in a lease agreement, such an amount is excluded.

•  "Characteristics of the property" are the basic nature, characteristics, etc. of the real estate with reference to the real estate appraisal report and considering the results of surveys independently conducted by the Asset Management Company.

•  "Special remarks" are matters recognized as important as of the end of January 2022 in terms of the rights and use, etc. of the real estate, including the following matters, as well as consideration of the degree of impact on the appraisal value, profitability, and disposition of real estate.

  • i. Significant limitation or restriction by laws, ordinances, rules, and regulations

  • ii. Significant burdens or limitations on rights, etc.

  • iii. Significant cases where there are architectural structures crossing the boundaries of the concerned property, etc. and cases where there are issues with boundary confirmation, etc., and related arrangements, etc.

  • iv. Significant agreements, arrangements, etc. made with co-owners or sectional owners

•  Unless otherwise stated, percentage figures in the abovementioned sections are rounded to the first decimal place. As such, figures may not necessarily add up to 100%.

•  Regarding monetary amounts in the abovementioned sections, planned acquisition prices and appraisal values are rounded down to the nearest million yen and other amounts are rounded down to the nearest thousand yen.

[Assets to Be Acquired]

A-86 S-FORT Taisho riviere

Property name	S-FORT Taisho riviere
Location	3-1-5 Sangenyaniishi, Taisho-ku, Osaka-shi, Osaka
Type of specified asset	Real estate trust beneficiary interest
Planned acquisition price	1,000 million yen
Trustee	Mitsubishi UFJ Trust and Banking Corporation
Trust establishment date	February 28, 2022
Trust expiration date	February 28, 2032
Planned acquisition date	February 28, 2022
Land	Type of ownership	Ownership
Site area	786.29 m2(Note)
Building coverage ratio	80%
Floor area ratio	200%
Zoning	Semi-industrial district
Building	Type of ownership	Ownership
Use	Apartment
Total floor area	1,664.78 m²
Completion date	February 2, 2021
Structure and floors	Reinforced concrete structure, flat roof, 12 floors
Number of leasable units	66
Collateral	None
Property management company	Samty Property Management Co., Ltd.
Master lease company	Samty Property Management Co., Ltd.
Master lease type	Pass-through lease
Appraisal value (date of value)	1,010 million yen (January 1, 2022)
Real estate appraiser	The Tanizawa Sogo Appraisal Co., Ltd.
Probable maximum loss (PML value)	8.7%
Overview of leasing Total leasable area Leased area Number of tenants Monthly rental revenue Security and guarantee deposits Occupancy rate
1,524.60 m²
1,479.17 m²
1
4,433 thousand yen
900 thousand yen
September 2021	October 2021	November 2021	December 2021	January 2022
98.4%	100.0%	100.0%	98.5%	97.0%
Characteristics of the property	The Property is about a 7-minute walk from Taisho Station on the JR Osaka Loop Line, and has single-type units. It is about a 10-minute ride to Osaka Station and about a 5-minute ride to Tennoji Station on the same line, providing convenient access to the commercial center and major business districts. In addition, there is a lot of greenery along the riverside of the Shirinashi River and the Kizu River, and there are many convenience stores and other stores selling daily necessities in the surrounding area, as well as well-developed commercial facilities such as large shopping malls and large supermarkets nearby, making the property excellent in terms of living environment and convenience. With such characteristics, the property has an excellent living environment and convenience, and is believed to be highly competitive in the leasing market shared with areas of similar supply and demand.
Special remarks	Not applicable.

(Note)

Includes the portion (approx. 9 m2) set back from the road boundary in accordance with the proviso of Article 7 of the former City Building Act.