Frontier Real Estate Investment Corporation : Notice Concerning Acquisition of Investment Asset((Provisional name)Kohnan Kawasaki-minami (Land interest))

Translation for Reference Purposes Only

For Immediate Release

January 10, 2014

6-8-7 Ginza, Chuo-ku, Tokyo Frontier Real Estate Investment Corporation Hirohiko Kamei, Executive Director (Securities Code: 8964)

Asset Management Company: Mitsui Fudosan Frontier REIT Management Inc.

Hiroshi Tanaka

Chief Executive Officer and Representative Director

Inquiries: Mitsui Fudosan Frontier REIT Management Inc.

Tatsu Makino

Vice President, Finance Division and Director

Tel: [phone]

Notice Concerning Acquisition of Investment Asset

Frontier Real Estate Investment Corporation (the "Investment Corporation") today announced its decision to acquire an investment asset. Brief details are as follows.
1. Planned Acquisition Details
(1) Type of Acquired Asset: Trust beneficiary rights in a real estate property
(2) Property Name: (Provisional name)Kohnan Kawasaki-minami (Land interest)
(3) Acquisition Price: ¥7,000 million*
(4) Contract Date: January 10, 2014
(5) Acquisition Date: January 31, 2014 (Delivery and clearance date) (6) Seller: Not disclosed**
(7) Acquisition Financing: Self-financing
(8) Payment Method: Single payment at the time of delivery

* Acquisition price does not include acquisition cost, real property tax, city planning tax, etc.

** Seller is not disclosed as the Investment Corporation did not obtain the consent.

2. Rationale
The proposed acquisition of the Property is in line with the Investment Corporation's "basic asset management policy" and "investment stance" as provided in its Articles of Incorporation. In its decision to acquire the Property, Mitsui Fudosan Frontier REIT Management Inc., the Investment Corporation's asset management company (the "Asset Management Company") considered, inter alia, the following factors:
(1) Acquisition of the land interest of a retail facility before opening date

A home center is scheduled to be constructed and managed by Kohnan Shoji Co., Ltd, whilst construction work not started at the date of contract. However, a fixed term land lease for business purposes has been agreed upon between the trustee and Kohnan Shoji Co., Ltd and rent has already

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begun from January 1, 2014. Also, the Building Certificate under the Building Standard Law has already been received as of December 26, 2013 and rent is agreed to be doubled from October 1,

2014 at the latest. Therefore, the risk regarding the completion of the building and the opening of the facility having a significant impact on the Investment Corporation's financial results is considered to be minimal. Additionally, being able to start negotiation under conditions where acquisition date will be before facility opening date, it is considered that the acquisition was committed smoothly and rationally for the Investment Corporation, utilizing the Asset Management Company's original resources.

(2) Location
The Property is located in Kawasaki Ward, Kawasaki City, Kanagawa Prefecture, and is approximately a 12-minute walk from Kawasaki-Shinmachi Station on the JR Nambu Line and 15-minute walk from Hama-Kawasaki Station on the JR Nambu Line. It is adjacent to Ito Yokado Kawasaki Store and Sports Depo Kawasaki Store and large-scaled condominiums. The trade area population is sufficient at
14,000 within a 500m radius, 54,000 within a 1km radius and 308,000 within a 3km radius, and is on an increasing trend.
(3) Features of the Facility built on the Property
A three-story retail facility is scheduled to be constructed by Kohnan Shoji Co., Ltd on the Property. It is a retail facility that will be occupied by home center Kohnan as the core tenant on the first floor, and a total of 15 shops such as electronics retailer Nojima, along with one-price shops, general merchandise shops and shoe shops etc on the second floor. The third floor is planned to be parking space.
3. Property Details
(1) Real Estate Details

Type of Acquisition Asset	Trust beneficiary rights in a real estate property
Trustee	Mizuho Trust & Banking Co., Ltd.
Trust Contract Period	until January 30, 2036
Address (as described in the real estate register)	2-1-1 Odasakae, Kawasaki-ku, Kawasaki-shi, Kanagawa
Land	Lot Area	23,485.49m2 (registered)
Land	Use	Neighboring commercial district
Land	Plot Ratio	200%
Land	Building to Land Ratio	90%
Land	Ownership	Proprietary ownership of land with fixed term land lease right for business purposes
Acquisition Price	¥7,000 million
Appraisal Value	¥7,260 million
Appraiser	Morii Appraisal & Investment Consulting, Inc.
Probable Maximum Loss (PML)	- *
Collateral	None
Note	1. As a result of soil environment assessment of the land from 2006 to 2007 by Kawasaki City, traces of tetrachloroethlyene, arsenic, boron and lead were confirmed on the site and in some of the ground water that exceeds the standards stipulated in the Soil Contamination Countermeasures Act. In 2011, it was designated by Kawasaki City as an Area for which Notification is Required Upon Change to Form or Nature as a result of filing by Kanagawa Prefecture, the owner in 2011. The Seller is currently conducting

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soil contamination countermeasure work. The Investment Corporation has reached an agreement with the Seller that the Seller shall bear all responsibilities and expenses for the soil contamination countermeasure work until the area designation is lifted. Thus, it is deemed that there will be no additional expenses for the Investment Corporation concerning the soil contamination countermeasure work.

2. A home center is scheduled to be constructed and managed by Kohnan Shoji Co., Ltd. Construction is planned to start mid to late January, and the retail facility to open in the beginning of October, 2014.

* PML is not calculated as it is an acquisition of land interest only.

(2) Lease Details

Lessor	Mizuho Trust & Banking Co., Ltd.
Lessee	Kohnan Shoji Co., Ltd.
Type of Contract	Fixed term land lease for business purposes
Contract Term	23 years (From January 31, 2013 until January 30, 2036)
Annual Rent*	Not disclosed*
Revisions of Rent	Not changeable
Termination during the Contract Term	Not cancellable
Security Deposit	Not disclosed**
Guarantee Deposit	None
Number of Tenants	1
Total Leasable Floor Space	23,485.49 m2
Total Leased Floor Space	23,485.49 m2
Occupation Rate	100% ((Total Leased Space)/(Total Leasable Space))

* Annual Rent is not disclosed as the Investment Corporation did not obtain lessee's consent.

Rent has already been applied beginning from January 1,2014 and will be doubled on the earlier date of either

October 1, 2014 or retail facility opening date.

** Security Deposit is not disclosed as the Investment Corporation did not obtain lessee's consent.
4. The Significance of the Acquisition
The acquisition of the Property is based on the Investment Corporation's investment policy, the objective of which is to ensure stable earnings over the medium to long term. The acquisition of the Property will expand the size of the Investment Corporation and maintain and improve the quality of the existing portfolio by diversifying and decentralizing the portfolio.
5. Seller Profile
The seller is a domestic institution, but is undisclosed as permission to disclose its name, etc. has not been obtained.
6. Status of the Seller
The acquisition is not one from a related party of the Investment Corporation and/or the Asset
Management Company with capital, personnel and/or business relationships etc.

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7. Broker Profile
Not applicable
8. Outlook
The impact resulting from the acquisition of the Property on the Investment Corporation's operating forecasts for the 20th fiscal period ending June 30, 2014 is minimal. However, it is planned to be reviewed including the impact of the acquisition and to be released on February 14, 2014, the same time as the operation results for the 19th fiscal period ending December 31, 2013.
Attachments
1. Summary of Property Appraisal
2. Map Indicating Location of the Planned Acquisition Property / CG and Photographs of the Property
3. Overview of the Investment Portfolio following the Acquisition of the Property

This document is released to media organizations through the "Kabuto Club" (the press club of the Tokyo Stock Exchange), the Ministry of Land, Infrastructure, Transport and Tourism Press Club, and the Press Club for the Ministry of Land, Infrastructure, Transport and Tourism Construction Paper.

Frontier Real Estate Investment Corporation website: http://www.frontier-reit.co.jp/eng/

Disclaimer

This information was originally publicized in the original Japanese language and has been translated for reference purposes only. Frontier Real Estate Investment Corporation guarantees neither the completeness nor the accuracy of this English translation. For complete and accurate information, please refer to the press release in Japanese. In addition, this press release is not prepared as an inducement or invitation for investment. All readers are advised to consult their own investment advisors before investing in the Investment Corporation. Investment decisions are made at the investor's sole discretion and responsibility and are made at their own risk. The Investment Corporation and its affiliates disclaim any responsibility or liability for the consequence of investment in the Investment Corporation.

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Attachment 1: Summary of Property Appraisal

Appraiser	Morii Appraisal & lnvestment Consulting, l ne.
Appraisal Value	li7,260,000,000
Date of Appraisal	December 31, 2013
DCF Val	ue	li7 260 ODO ODO
DCF Val	l Discount Rate	5.1%

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Attachment 2:

Map Indicating Location of the Planned Acquisition Property, Photographs and CG of the Property

Project Road

Scheduled Road