Sekisui House Reit : Notice Concerning Acquisition of Asset (Equity Interest in an Anonymous Association)

July 28, 2022

Real Estate Investment Trust Securities Issuer

Sekisui House Reit, Inc.

Representative:	Atsuhiro Kida, Executive Director
	(Securities Code: 3309)
Asset Management Company
Sekisui House Asset Management, Ltd.
Representative:	Toru Abe,
	President & Representative Director
Inquiries:	Koichi Saito, Chief Manager,
	Investor Relations Department
	TEL: [phone] (main)

Notice Concerning Acquisition of Asset (Equity Interest in an Anonymous Association)

Sekisui House Reit, Inc. ("SHR") hereby announces that Sekisui House Asset Management, Ltd. ("SHAM"), to which SHR entrusts management of its assets, has decided today for SHR to acquire the following asset (equity interest in an anonymous association) (hereinafter referred to as the "Asset Acquisition") as described below.

1. Summary of the Asset Acquisition

	Asset name		Underlying asset	Location	Planned investment price	Planned
		(Equity interest ratio)	acquisition date
	Equity interest in				Minato-ku,	480 million yen
anonymous association	Akasaka Garden City (Note)	August 1, 2022
Tokyo	(12.4%)
Godo Kaisha Gemini1
a.	Type of specified asset	: Equity interest in an anonymous association with trust
				beneficiary interest in trust asset which is comprised of domestic
				real estate as the investment asset
b.	Sale and purchase		:	July 28, 2022
	contract date
c.	Brokerage		:	Not applicable
d.	Acquisition financing	:	Own funds
e.	Settlement method		: Payment of entire amount on the planned acquisition date

(Note) "Underlying asset" refers to 34.55% quasi co-ownership interest of the trust beneficiary interest in real estate regarding the compartmentalized ownership interest in all of the exclusively-owned portions of the 1st floor underground through 4th floor above ground and 11th floor through 19th floor above ground of the "Akasaka Garden City" building (hereinafter referred to as the "Property"), as well as the accompanying right of site (ratio of right of site: 662,768/1,000,000 (or approximately 66.3%)), and has not yet been acquired by SHR. The same applies hereinafter. Of the Property, SHR holds 65.45% quasi co-ownership interest of the trust beneficiary interest in real estate regarding the compartmentalized ownership interest in all of the exclusively-owned portions of the 1st floor underground through 4th floor above ground and 11th floor to 19th floor above ground as well as the accompanying right of site (ratio of right of site: 662,768/1,000,000 (approximately 66.3%)), and the trust beneficiary interest in real estate regarding the compartmentalized ownership interest in all of the exclusively-owned portions of the 5th to 9th floor as well as the accompanying right of site (ratio of right of site) : 273,490/1,000,000 (approximately 27.3%), and 96.05% quasi co-ownership interest of the trust beneficiary interest in real estate regarding the compartmentalized ownership interest in all of the exclusively- owned portions of the 10th floor and the accompanying right of site (ratio of right of site: 54,698/1,000,000 (approximately 5.5%)).

2. Reason for the Asset Acquisition

SHR conducts the Asset Acquisition based on the targets and policies of asset management stipulated in its Articles of Incorporation, with the aim of enhancing the "Office Building" portfolio in the medium- to long-term and securing external growth opportunities.

The real estate subject to the trust beneficiary interest, which will be the investment asset of the "equity interest

Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shall prevail.

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in anonymous association Godo Kaisha Gemini1" (the "Anonymous Association Equity"), is a part of "Akasaka Garden City" which SHR owns a portion of.

SHR is scheduled to acquire preferential negotiation rights regarding the acquisition of the trust beneficiary interests related to underlying asset by acquiring an investment stake in the Anonymous Association Equity. SHR believes that enhancing the "Office Building" portfolio by acquiring an environmentally-friendlylarge-scale office building in the future and securing growth potential through external growth will contribute to strengthening the earnings base from a medium-tolong-term perspective. Such preferential negotiation rights will be held by SHR as a right and SHR will not be obligated to acquire the underlying asset (however, acquisition by SHR is not guaranteed.). In addition, by acquiring the Anonymous Association Equity, SHR expects to receive dividend income distributed from profits generated by the real estate property-related operating income of the underlying asset.

The characteristics of the Property that were focused on when deciding to acquire the investment stake in the Anonymous Association Equity are as follows.

1. Location characteristics
   The Property is located in the commercial district in the vicinity of Akasaka Goyochi, along the street near Aoyama Street, approximately eight-minute walk from each of Akasaka-mitsuke Station (where two lines are available), Nagata-cho Station (where three lines are available) and Aoyama-itchome Station (where three lines are available), and approximately nine-minute walk from Akasaka station, which altogether enables the use of seven subway lines of Tokyo Metro Ginza Line, Marunouchi Line, Hanzomon Line, Yurakucho Line, Namboku Line, Chiyoda Line and Toei Oedo Line. It has excellent location condition with high accessibility.
   The "Akasaka" area where the Property is located is a highly-concentrated business district in the center of Tokyo, adjacent to Kasumigaseki area and Nagata-cho area, where many government offices are located. The area also has a strong commercial aspect, with various restaurants, shops and a commercial complex such as Akasaka Sacas. Luxury flats and hotels, and embassies are located in the area as well, which adds class to the district, too. The environment is great for offices and many foreign-owned corporations have their offices in the area. A high tenant demand is expected from various business companies including IT, broadcasting, advertising and apparel.
2. Property characteristics
   The Property is a high-quality office building completed in 2006, with a facade that takes advantage of the natural color of gemstone materials. The standard floor area is approximately 470 tsubo of dividable, regular-shaped spaces without pillars, which allows a high multiplicity of uses. With the ceiling height of 2,800mm and the raised floor of 100mm, the space is open and bright, and it is equipped with telecommunication facilities compatible with various media including fiber optic line (private line) and metal line (public line).
   In addition, the Property is an environmentally-friendly office building equipped with deep window sills that reduce the entry of direct sunlight into the room, Low-edouble-glazed glass (highly-insulatingmulti-layer glass) that has lesser solar heat gain coefficient than standard glass and controls the indoor temperature change caused by sunlight, four air-conditioning zones in one floor and double-layer roller blinds.
   For Akasaka Garden City (part of the owned portion of SHR and the portion of the underlying asset as well), it has received the "S Rank" rating, which is the highest ranking of the four-tier rating of Certification for CASBEE for Real Estate (Note). Moreover, in case of an emergency, the building above ground has rigid-frame iron structure with a seismic control device that is reputable for its resistance to earthquakes. An accumulator battery is installed for the emergency light in common space in case of power failure due to emergency and an emergency generator will operate to maintain the minimum necessary operation of the building when the power cannot be restored soon. It also gives consideration to the business continuity plans (BCPs) of tenants, for whom continuous supply

of electricity is necessary, with spaces for generators (maximum: 500 kVA) for providing power in case of disaster.

(Note) "Certification for CASBEE for Real Estate" is developed with the aim of utilizing the results of environmental evaluation of buildings in CASBEE (Comprehensive Assessment System for Built Environment Efficiency/ "Comprehensive Assessment System for Building Environmental Performance" for real estate evaluation. It is scored in five evaluation categories: "1. Energy/Global Warming Gas", "2.

Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shall prevail.

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Water", "3. Resource Use/Safety", "4. Biodiversity/Site" and "5. Indoor Environment". It is then graded "S Rank", "A Rank", "B+ Rank" or "B Rank". CASBEE is also a comprehensive assessment of building qualities, including consideration for indoor comfort and landscape, as well as environmental considerations, such as energy conservation and the use of materials and equipment with low environmental impact.

3. Description of the Anonymous Association Equity

1. Summary of the anonymous association to be invested in

Business operator name	Godo Kaisha Gemini1
Planned acquisition date	August 1, 2022
Type of specified asset	Anonymous association investment
Effective period of anonymous	From July 28, 2022 to May 6, 2027
association agreement
Total amount of investments in	3,880 million yen
anonymous association, etc.
Planned investment price	480 million yen (Equity interest ratio 12.4%)
	・Summary of the anonymous association investment
		Godo Kaisha Gemini1
		Trust beneficiary interest in		Non-recourse loans
		real estate, etc.		(Senior loan)
		17,923 million yen		11,500 million yen
				Non-recourse loans
				(Mezzanine loan)
				2,100 million yen
				Non-recourse loans
				(Other loan)
				443 million yen
				Anonymous association
				investment, etc.
				3,880 million yen
	(Note 1) Trust beneficiary interest in real estate, etc. include expenses for obtaining trust
		beneficiary interest related to the underlying asset, and costs for establishing
Summary of the anonymous		the anonymous association, etc. The real estate appraisal value (as of July 1,
	2022) is 17,000 million yen.
association agreement	(Note 2) Of the Anonymous association investment, etc., SHR plans to invest 480 million
		yen (12.4%).
	(Note 3) Mitsubishi UFJ Trust and Banking Corporation is scheduled to become the asset
		manager of the Godo Kaisha Gemini1.
	・Calculation period
		The three-month period will be from February 1 to the end of April,
		from May 1 to the end of July, from August 1 to the end of October, and
		from November 1 to the end of January in the following year.
		However, the first calculation period will be from July 28, 2022 to the
		end of October, 2022.
	・Distribution of profits and losses
		In the event any profit arises in each calculation period, the business
		operator will distribute it to the investors in accordance with the
		investment ratio on the end of each calculation period. In addition, in
		the event any loss occurs during each calculation period, the business
		operator will, up to the amount of the loss, distribute such loss to the
		investors in accordance with the investment ratio on the end of each

Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shall prevail.

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	calculation period. However, in the event that the cumulative amount
	of losses to be distributed to equity investors exceeds the total
	amount of equity investment, the entire portion in excess will be
	distributed to the business operator.
	・Description of rights
	The right to negotiate preferential purchase in the trust beneficiary
Summary of preferential	interest related to the underlying asset to be acquired by the business
operator on August 2, 2022, by the end of February 2027.
negotiating rights
・Purchase price
	A reasonable amount with a base price of 16,300 million yen agreed
	upon by Godo Kaisha Gemini1 and SHR.

1. Summary of the underlying asset

Property name		Akasaka Garden City
Type of specified asset	34.55% of quasi co-ownership interest in real estate trust beneficiary
interest
Trustee		Sumitomo Mitsui Trust Bank, Limited
Period of trust contract	From July 28, 2006 to June 30, 2029
Appraisal value (Date of value)	17,000 million yen (July 1, 2022) (Note 1)
Appraiser		Tanizawa General Appraisal Institute, Inc.
Location		4-15-1, Akasaka, Minato-ku, Tokyo
		Lot	4-1500-1 Akasaka, Minato-ku, Tokyo
		Site area	6,888.97 m2 (Note 2)
		Use district	Commercial district, Category 1 residential district
Land		Building coverage	80% / 60%
		ratio
		Floor area ratio	700% / 500% / 400% / 300%
		Type of ownership	Right of site (co-ownership interest)
		Use	Office, Retail
		Construction	January 2006
		completion
Building
	Structure/Floors	S, SRC, RC / B2F / 19F (Note 2)
		Total floor area	46,776.76 m2 (Note 2)
		Type of ownership	Compartmentalized ownership interest
Collateral		A pledge will be established with the lender of the non-recourse loan
	to Godo Kaisha Gemini1, the business operator, as the pledgee.
			Status of leasing and management
Leasable area		6,584.17 m2 (Note 3)
Leased area		5,778.81 m2 (Note 3)
Occupancy rate	87.8%
Number of tenants	1 (17)
Monthly rent		52,519 thousand yen (Note 1)
Leasehold and security deposits	479,025 thousand yen (Note 1)
Property management company	Kenedix Property Design, Inc. (planned) (Note 4)
Master lease company	Sekisui House, Ltd. (planned)
Master lease type	Pass-through type (planned)
Contract period	From August 2, 2022 to June 30, 2029 (planned)

Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shall prevail.

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Outline of building engineering report (Note 5)

Building replacement cost		5,287 million yen
Repair	Emergency repair		－
Short-term repair		－
expense
Long-term repair		23,801 thousand yen
Investigator			Japan Constructive Inspect Association, Inc.
		Outline of earthquake PML appraisal
PML value		2.3%
Investigator		Japan Constructive Inspect Association, Inc.
	Building designer, constructor, building inspector
Building designer	NIHON SEKKEI INC.
Structure designer	NIHON SEKKEI INC.
Constructor		KAJIMA CORPORATION
Building inspector	JAPAN ERI CO., LTD., The Building Center of Japan
			Matters of special note

・Along with the disposition of the trust beneficiary interest of the underlying asset from Sekisui House, Ltd. ("Sekisui House") to Godo Kaisha Gemini1, the contractual status and rights and obligations of Sekisui House under the quasi co-owners agreement between Sekisui House, SHR, and Sumitomo Mitsui Trust Bank, Limited will be assumed by Godo Kaisha Gemini1 (collectively referred to as the "Agreement" in this section). Preferential negotiating rights will be agreed upon between the two parties.

The outline of the Agreement is as follows.

a. In the event that Godo Kaisha Gemini1 or SHR seeks to dispose of the quasi co-ownership interest to a third party, the party seeking to dispose (the "offeror" in this section) must notify the other party (the "counterparty" in this section) of the terms and conditions and other information related to the concerned disposition before any negotiations of disposition take place with a third party and, if the counterparty requests consultations concerning purchase of the quasi co-ownership interest, the offeror shall hold consultations on the terms and conditions of disposition in good faith with the counterparty and no negotiations concerning disposition of the quasi co-ownership interest shall take place with a third party during the prescribed consultation period. Furthermore, only if an offer to acquire is not made to the offeror from the counterparty within the prescribed consultation period or if consultations fail to reach an agreement may the offeror be entitled to dispose the quasi co-ownership interest to a third party; provided, however, that the terms and conditions of the concerned disposition shall not be of more advantageous content to the third party than the terms and conditions notified to the counterparty above.

b. In the event of failure to perform the obligations provided for in the Agreement, Godo Kaisha Gemini1 or SHR shall be entitled to notify the other party that the obligations be performed and, if the concerned obligations are not performed within the prescribed period, to request that the quasi co-ownership interest held by the other party be disposed with compensation.

c. In order for Godo Kaisha Gemini1 or SHR to dispose or transfer to a third party, provide as collateral or otherwise dispose of its quasi co-ownership interest without undergoing the procedures described in a. above, it shall obtain consent from the counterparty.

d. In the event that Godo Kaisha Gemini1 or SHR is to dispose part of the quasi co-ownership interest not to the counterparty but to a third party, the third party shall succeed to the status under the Agreement to the extent of the ratio of quasi co-ownership interest subject to the concerned disposition.

e. Certain matters including disposal of trust beneficiary, establishment of mortgage or lien, repair work which exceeds certain amount and change of agreements executed by trustee in connection with the Property need mutual agreement between SHR and Godo Kaisha Gemini1.

f. In the event that co-ownership interest in the Property is returned from trustee to beneficiary in kind, claims on division of co-ownership parts in accordance with Article 256 of the Civil Code (Act No. 89 of 1896, as amended) will not be made for five years from the effective return date.

Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shall prevail.

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