iif to acquire and lease eleven properties in japan...iif to acquire and lease eleven properties in...

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Note: This press release is intended as general information for the press regarding IIF’s acquisition and lease of real estate and trust beneficiary interests in real estate in Japan, and has not been prepared for the purpose of solicitation of investment.

Industrial & Infrastructure Fund Investment Corporation (Tokyo Stock Exchange Company Code: 3249) News Release – January 24, 2017

IIF to Acquire and Lease Eleven Properties in Japan

Mitsubishi Corp.-UBS Realty Inc., an asset manager, to which Industrial & Infrastructure Fund Investment

Corporation (“IIF”) entrusts its asset management, announced today that it has decided to acquire and lease the following domestic real estate and trust beneficiary interests in real estate as outlined below.

1. Summary of Anticipated Acquisitions (the “Anticipated Acquisitions”)

Property number

(Note 1) Property name(Note 2) Location Seller

Anticipated acquisition

price (¥ million)

Appraisal value

(¥ million)

NOI yield (before

depreciation)

(Note 3)

NOI yield (after

depreciation)

(Note 3)

Anticipated acquisition date

F-11 IIF Yokosuka Technology Center

Yokosuka-shi, Kanagawa

Komatsu NTC Ltd. (Note 4) 4,000 4,430 7.2 % 6.6 %

February 20, 2017

F-12 IIF Shonan Technology Center

Koza-gun, Kanagawa

Komatsu NTC Ltd. (Note 4) 1,200 1,320 6.6 % 6.2 %

February 20, 2017

L-31 IIF Osaka Konohana Logistics Center (49% Co-ownership Interest)

Osaka-shi, Osaka

SPC(Note 4) (Note 5) 4,263 4,340 4.9 % 4.1 %February 20,

2017

L-34

IIF Fukuoka Hakozaki Logistics Center I (60% Co-ownership Interest)

Fukuoka-shi, Fukuoka


2017

L-35

IIF Fukuoka Hakozaki Logistics Center II (60% Co-ownership Interest)

Fukuoka-shi, Fukuoka


2017

L-36

IIF Itabashi Logistics Center (60% Co-ownership Interest)

Itabashi-ku, Tokyo


2017

L-37 IIF Sendai Taiwa Logistics Center

Kurokawa-gun, Miyagi

Godo Kaisha Industrial Asset Holdings 4

1,480 1,560 6.0 % 4.8 %February 21,

2017

L-38 IIF Ota Logistics Center Ota-shi, Gunma

Sumitomo Mitsui Finance and Leasing Company, Limited

1,010 1,140 6.6 % 5.7 %February 21,

2017

L-39

IIF Osaka Suminoe Logistics Center I (75% Co-ownership Interest)

Osaka-shi, Osaka

Business Company in Japan (Note 4) (Note 5) (Note 6) 9,075 10,100 4.2 % 3.3 %

March 21, 2017

L-40

IIF Osaka Suminoe Logistics Center II (75% Co-ownership Interest)

Osaka-shi, Osaka

Business Company in Japan (Note 4) (Note 5) (Note 6) 1,905 2,000 4.7 % 4.1 %

March 21, 2017

L-41 IIF Morioka Logistics Center II

Shiwa-gun, Iwate

Business Company in Japan (Note 5) 1,302 1,490 6.3 % 5.6 %

May 1,

2017

Total annual rent (excluding consumption tax)

1,897 million yen

(Note 1) "Property number" numbers and classifies properties owned by IIF into three categories, L (logistics facilities), F (manufacturing and research and development

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facilities) and I (infrastructure facilities).

(Note 2) The property names that IIF will be using after the Anticipated Acquisitions. These properties do not have registered names as of the date of this news release.

(Note 3) For “NOI yield (before depreciation)” and “NOI yield (after depreciation)”, please refer to “Reference: Definitions of Individual Calculation Formulas” at the end of

this news release.

(Note 4) IIF will acquire this property by using a bridging function, which will be through a business company in Japan. (IIF has not obtained the necessary permission from

the bridge seller to disclose its name and thus IIF sets out the information “business company in Japan” based on its nature.) The same shall apply hereinafter. With

respect to IIF Osaka Suminoe Logistics Center I (75% co-ownership interest) and IIF Osaka Suminoe Logistics Center II (75% co-ownership interest), the company

is different from the original seller.

(Note 5) IIF has not obtained the necessary permission from the seller to disclose its name and thus IIF sets out the information “SPC” or “business company in Japan” based

on its nature.

(Note 6) A business company in Japan, the current owner of IIF Osaka Suminoe Logistics Center I and IIF Osaka Suminoe Logistics Center II, is currently scheduled to

approve the sale of IIF Osaka Suminoe Logistics Center I and IIF Osaka Suminoe Logistics Center II at the board of directors’ meeting to be held on January 26,

2017. The building of IIF Osaka Suminoe Logistics Center I is scheduled to be acquired by the current owner from a third party, before the seller to IIF acquires the

building from the current owner. Furthermore, approval of the sale from the board of directors of the current owner at a meeting is a closing condition of the

obligations of the seller pursuant to the purchase and sale agreements. If the board of directors of the current owner does not approve the sale of IIF Osaka Suminoe

Logistics Center I and IIF Osaka Suminoe Logistics Center II, or if the meeting of the board of directors is postponed, we may be unable to acquire these

properties in accordance with the current plan.

2. Rationale for Acquisition and Lease

IIF decided to acquire the anticipated properties based on its judgment that the characteristics of the properties are aligned with IIF’s investment

strategies, specifically, the acquisition of quality assets which would contribute to increase cash distributions per unit.

In deciding whether to acquire the eleven properties, we evaluated the properties mainly in terms of profitability, long-term usability and versatility.

Please refer to section “3. Summary of Anticipated Acquisitions and Leases”.

With regard to the reasons for the lease of the Anticipated Acquisitions, we are of the view that each tenant of the Anticipated Acquisitions meets the

tenant selection criteria set forth in the “Report on the Management Structure and System of the Issuer of REIT Units and Related Parties”, which we

submitted on September 30, 2016. With regard to the reasons for the lease of the individual properties, please refer to section “3. Summary of

Anticipated Acquisitions and Leases.”

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3. Summary of Anticipated Acquisitions and Leases

【IIF Yokosuka Technology Center】

(1) Summary of Property

Type of asset Trust beneficiary right in real

estate

Summary of building structure evaluation

Evaluator Tokyo Bldg-Tech Center Co., Ltd.

Anticipated acquisition date February 20, 2017 Evaluation date August 31, 2016

Anticipated acquisition price 4,000 million yen

Immediate

repair cost 0 yen

Date of trust beneficiary rights set

September 1, 2016 Short-term repair cost 0 yen

Trustee Mitsubishi UFJ Trust and

Banking Corporation

Long-term repair cost 521,610,000 yen

Trust period end February 28, 2027

Repair cost for the forthcoming 12 years (annualized average)

43,467,000 yen

Location 1-15, Shinmei-cho, Yokosuka-shi, Kanagawa, Japan

Land area 27,000.03 m2

Structure /stories

Main building: 4-story steel structure with flat roof Annex 1: 2-story steel structure with flat roof Annex 2: 2-story steel structure with flat roof Annex 3: 1-story reinforced concrete structure with galvanized steel sheet roof Annex 4: 1-story reinforced concrete structure with galvanized steel sheet roof Annex 5: 2-story steel structure with galvanized alloy steel sheet roof Annex 6: 1-story steel structure with galvanized steel sheet roof Annex 7: 1-story reinforced concrete structure with galvanized alloy steel sheet roof Annex 8: 1-story steel structure with galvanized alloy steel sheet roof

Zoning Restricted industrial area

Designated floor area ratio / building-to-land ratio

200 % / 60 %

Type of possession Ownership

Earthquake PML 5.0 % Construction date

Main building: November 30, 1995 Annex 1: November 30, 1995, April 14, 1998 (extension) Annex 2: November 30, 1995, April 14, 1998 (extension) Annex 3: November 30, 1995 Annex 4: November 30, 1995 Annex 5: July 18, 1996, August 23, 2005 (extension) Annex 6: April 14, 1998 Annex 7: September 29, 2004 Annex 8: March 20, 2007

Collateral note None

Gross Floor Area

13,779.77 m2

(Main building: 3,071.55 m2, Annex 1: 1,728.81 m2, Annex 2:

3,517.59 m2, Annex 3: 66.35 m2, Annex 4: 59.88 m2, Annex 5:

4,620.25 m2, Annex 6: 471.95 m2, Annex 7: 58.93 m2, Annex

8: 184.46 m2) Type of building Plant and office, etc.

Others

・ IIF requested E&E Solutions Inc. to conduct a soil and environmental survey prior to purchasing this property. According to this survey, it is unlikely that the subject land has a critical issue concerning its soil or underground water contamination, and that any soil or underground contamination or any material damage to health is caused in the future.

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(2) Description of Leases Relating to Anticipated Acquisitions

Tenant(s) Number of tenant(s)

Total leased area (occupancy rate)

Annual rent (excluding consumption tax)

Period of contract Deposit

Nikon Corporation 1 13,779.77 m2

(100 %) Not disclosed (Note)

10 years (from September 1, 2016

until August 31, 2026)

Not disclosed (Note)

Revision of rent or termination during the lease period

Contract Type: Other type of building lease (futsu tatemono chintaishaku keiyaku) Contract Renewal and Revision: ・ Rent shall not be revised in principle. ・ The lessee is not allowed to terminate the lease agreement before the fifth anniversary of the delivery date. However, on or after the fifth

anniversary of the delivery date, the lessee may terminate the lease agreement by notifying the lessor in writing at least eighteen months before the scheduled date of such termination

・ On or after the fifth anniversary of the delivery date, the lessee may send a written notice of intention of termination. In such case, the lessee and the lessor shall hold consultations about such termination before twelve months prior to the scheduled date of such termination (the “Consultation Period”, and such period may be extended or shortened upon mutual consent), and the lease agreement shall not be terminated if the lessee does not send a notice of termination to the lessor before the expiration of the Consultation Period. In such cases, the termination date of the lease agreement shall be (i) the first anniversary of the date when such notice of termination is received by the lessor, or (ii) the termination date of the lease agreement as specified by the lessee in such post-consultation notice of termination, whichever comes later

・ Save that either the lessor or the lessee notifies the other party of its intention not to renew the lease agreement, in writing, at least eighteen months before the expiry of the lease period, the lease agreement shall be renewed from the next day of the expiry thereof for five years’ term

Other: ・ N/A

(Note) IIF has not obtained the necessary permission from the lessee to disclose this information.

(3) Reasons for the Acquisition and Lease

Acquisition Highlights • Production plant of core precision equipment products of Nikon Corporation (“Nikon”) • Versatile facility suitable for manufacturing and assembly of variety of products, with good access to central Tokyo • New acquisition through CRE (Note) proposal supported by the IIF’s past track record of acquisition, and IIF’s first investment in a production

plant which includes a building (Note) CRE is the term often used to describe a relatively new strategic approach increasingly employed by Japanese corporations to re-evaluate the benefits of

owning real estate and to manage their real estate needs more efficiently so as to maximize corporate value.

Continuity (Likelihood of Long-term Use by Current Tenant)

• Production plant of Nikon’s precision equipment business, engaging in manufacturing of units and parts for industry-leading flat panel display

(“FPD”) lithography systems

• The tenants have been continually making a series of capital investments since the opening in 2004 as “Yokosuka Branch of Yokohama Plant”.

The operation has been conducted as “Yokosuka Plant” since 2012

Versatility (Versatility as a Real Estate Asset)

<Location>

• Located in Kurihama Techno Park, where plants of major domestic manufacturers are concentrated and which is within walking distance of

the closest station and in proximity to an expressway interchange

<Facilities>

• Highly-versatile plant facilities which can meet the needs of various industries’ manufacturing plants as plants with eave heights of about 11

m that are equipped with open ceiling space and cranes

• The fact that Nikon rents the property as a plant from Komatsu NTC Ltd., (“Komatsu NTC”), the seller and former user of the property,

demonstrates the versatility of the property which can be adapted for various types of tenants from different industries

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■Location with traffic convenience accessible to wider areas As IIF Yokosuka Technology Center is located in an industrial area in Kanagawa Prefecture, which is close to expressway interchanges and railway stations and provides good access to Yokohama Port and Haneda Airport, IIF considers that the location holds attraction for companies engaging not only in domestic operations but also in overseas activities. Also, the property offers Nikon convenient access to its headquarters in Shinagawa and other plants in Kanagawa.

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■ Acquisition of plant playing key roles in manufacturing Nikon’s FPD lithography systems FPD lithography systems manufacturing is one of the core operations within the precision equipment business of Nikon where the

company has the largest share in the global market (FY2016/3) (Note). IIF expects Nikon to continue using this facility as a FPD

lithography systems manufacturing plant supporting its highly-advanced technologies.

(Note) Nikon’s estimates for the period ended in March 2016 on unit bases Source: Nikon’s website

■Nikon Business Mix

■Nikon’s Global Share in FPD Lithography Systems Market

■Trends of Japanese FPD Manufacturing Equipment Sales

22.2%

63.2%

Precision EquipmentBusiness

Imaging ProductsBusiness

(Key products) • FPD lithography

systems• Semiconductor

lithography systems

Nikon55%

01,0002,0003,0004,0005,000

FY2011 FY2012 FY2013 FY2014 FY2015

(¥100 mn)

Note: Calculated based on consolidated sales of Nikon for

the period ended in March 2016 Source: Nikon’s website

Note: Nikon’s estimates for the period ended in March 2016 on unit bases

Source: Nikon’s website

Source: Semiconductor Equipment Association of Japan. “Market Forecast Report Semiconductor and FPD Manufacturing Equipment” released on January 2017

■Operations at IIF Yokosuka Technology Center

Source: Images are reprinted from Nikon’s website

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【IIF Shonan Technology Center】



estate


Evaluator Tokio Marine & Nichido Risk Consulting

Co., Ltd. Anticipated acquisition date February 20, 2017 Evaluation date June 27, 2016


Immediate

repair cost 0 yen


September 1, 2016 Short-term repair cost 0 yen

Trustee Mitsubishi UFJ Trust and

Banking Corporation




15,260,000 yen

Location 2001-13, Ichinomiya 6-chome, Samukawa-cho, Koza-gun, Kanagawa, Japan


Structure /stories

Main building: 2-story steel structure with galvanized steel sheet roof Annex 1: 3-story reinforced concrete structure with flat roof Annex 2: 1-story concrete block structure with galvanized steel sheet roof Annex 3: 1-story concrete block structure with galvanized steel sheet roof



200 % / 60 %


Earthquake PML 4.8 % Construction date July 31, 1994


Gross Floor Area

7,244.71 m2 (Main building: 5,030.15m2, Annex 1:

2,095.05m2, Annex 2: 52.35m2, Annex 3: 67.16m2) Type of building Plant and office, etc.

Others

・ IIF requested E&E Solutions Inc. to conduct a soil and environmental survey prior to purchasing this property. According to this survey, it is unlikely that the subject land has a major issue concerning its soil or underground water contamination, and the possibility of any impact on the environment from soil and underground contamination in the subject land is low, and there is little risk that any material soil or underground contamination or any material damage to health will arise in the future.

・ A part of the subject land is leased to Tokyo Electric Power Co., Inc. (“TEPCO”) for the purpose of setting up supporters for power transmission lines and the trustee consents to TEPCO’s entering into the subject land during its maintenance works, etc. of such power transmission lines.

(2)Description of Leases Relating to Anticipated Acquisitions





Nikon Corporation 1 7,244.71 m2


10 years (from September 1, 2016

until August 31, 2026)



Contract Type: Other type of building lease (futsu tatemono chintaishaku keiyaku) Contract Renewal and Revision: ・ Rent shall not be revised in principle ・ The lessee is not allowed to terminate the lease agreement before the third anniversary of the delivery date. However, on or after the third

anniversary of the delivery date, the lessee may terminate the lease agreement by notifying the lessor in writing at least eighteen months before the scheduled date of such termination

・ On or after the third anniversary of the delivery date, the lessee may send a written notice of intention of termination. In such case, the lessee and the lessor shall hold consultations about such termination before twelve months prior to the scheduled date of such termination (the “Consultation Period”, and such period may be extended or shortened upon mutual consent), and the lease agreement shall not be terminated if the lessee does not send a notice of termination to the lessor before the expiration of the Consultation Period. In such cases, the termination date of the lease agreement shall be (i) the first anniversary of the date when such notice of termination is received by the lessor, or (ii) the termination date of the lease agreement as specified by the lessee in such post-consultation notice of termination, whichever comes later

・ Save that either the lessor or the lessee notifies the other party of its intention not to renew the lease agreement at least eighteen months before the expiry of the lease period, the lease agreement shall be renewed from the next day of the expiry thereof for five years’ term

Other: ・ N/A


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Acquisition Highlights • Production plant of core precision equipment products in association with the high-end glass production business of Nikon • Highly-versatile facility suitable for manufacturing and assembly of variety of products for various industries, with good access to central

Tokyo • New acquisition through CRE proposal supported by the IIF’s past track record of acquisition, and IIF’s first investment in a production plant

which includes a building Continuity (Likelihood of Long-term Use by Current Tenant) • Started operation in 2006 as the Shonan Branch of Nikon’s Sagamihara Plant, engaging in development and manufacturing of high-precision

glass materials and optical parts for FPD Photomask (Note) to contribute to Nikon’s core businesses (Note) FPD photomasks are original substrates on which fine circuit patterns are etched on glass plates by lighting on FPD lithography systems.


<Location>

• Located in an industrial complex packed with large-scale manufacturing plants and logistics facilities, which provides good traffic accessibility because it is within walking distance of the nearest station and very close to expressway interchanges

<Facilities>

• One-story plant that has an eave height of about 11 m and is equipped with a crane; the facility is spacious with pillar intervals of 6 m x 10 m • This property can serve various kinds of tenants from different industries, as evidenced by the fact that Nikon rents the property as its own

plant from the seller and former user of this property, Komatsu NTC.

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■Location with traffic convenience accessible to wider areas

As IIF Shonan Technology Center is located in an industrial area in Kanagawa Prefecture, which is close to expressway interchanges

and railway stations and provides good access to Yokohama Port and Haneda Airport, IIF considers the location holds attraction for

companies engaging not only in domestic operations but also in overseas activities. Also, the property offers Nikon convenient access to

its headquarters in Shinagawa and other plants in Kanagawa.

【Acquisition of IIF Yokosuka Technology Center and IIF Shonan Technology Center】

■ Acquisition based on CRE proposal to the seller, Komatsu NTC, and the tenant, Nikon

• Wanted to continue to use as a production site because of this property’s versatility in facility and location

• Previously occupied both of the properties as a plant, which was later relocated to and consolidated into its Toyama Plant (Head Office)

• Wanted to explore ways to improve capital efficiency through sales of its non-core assets

Offering solutions

Komatsu NTC

Nikon

■Illustrative Transaction Scheme

(Before acquisition) (Post acquisition)

Use as its own plants

Komatsu NTC

Nikon

(Original state prior to Nikon tenancy)

NikonTenant

BuildingBuilding

Komatsu NTCLand

Komatsu NTC

Komatsu NTCLand Land

Tenant

Building

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【IIF Fukuoka Hakozaki Logistics Center I (60% Co-ownership Interest)】



estate


Evaluator Nippon Kanzai Co., Ltd.

Anticipated acquisition date February 20, 2017 Evaluation date June 2, 2016


Immediate

repair cost 0 yen


February 28, 2007 Short-term repair cost 0 yen

Trustee Sumitomo Mitsui Trust Bank,

Limited




9,457,000 yen

Location 38-11, Hakozakifuto 4-chome, Higashi-ku, Fukuoka-shi, Fukuoka, Japan


Structure /stories

4-story reinforced concrete structure with galvanized alloy steel sheet roof

Zoning Semi-industrial area


200 % / 60 %


Earthquake PML 0.4 % Construction date February 18, 2008


Gross Floor Area 24,771.74 m2

Type of building Warehouse

Others

・ IIF requested KK Field Partners to conduct a soil and environmental survey prior to purchasing this property. According to this survey, under the present circumstances, it is unlikely that health risks will occur at and around the subject land. It is also believed that the possibility of harm to human health via ground water is low and that the possibility that any health risks stemming from soil contamination via direct intake is low.

・ IIF is scheduled to execute an agreement with other co-ownership interest holders and with the trustee in acquiring this property. The main contents of the relevant agreement are as follows: －Decisions on certain important matters shall be made upon unanimous consent from co-ownership interest

holders. If such decisions are not made within a specified period, it shall be considered that co-ownership interest holders determine not to approve the relevant matter. With respect to the other matters, the co-ownership interest holder whose ownership ratio is the largest shall make a decision

－Any co-ownership interest holder may not transfer or dispose of all or part of its co-ownership interest without prior consent of other co-ownership interest holders (provided, however, that other co-ownership interest holders may not withhold or reject provision of such consent without rational reason, save that a third party to which the interest is transferred is considered as anti-social forces)

－If any co-ownership interest holder disposes of its co-ownership interest and any other co-ownership interest holder wishes to purchase such interest, the holder shall give priority to the relevant other co-ownership interest holder in negotiations over transfer. If such co-ownership interest holder transfers the relevant interest to any other third party at a lower price notified to the relevant other co-ownership interest holder during the negotiations, the relevant other co-ownership interest holder is eligible to purchase the relevant interest at such lower price.

(Note) This property is located in a waterfront area

(Note) IIF intends to acquire a 60% co-ownership interest of the trust beneficiary right in real estate of this property; however, all information described in the above

table is for this property as a whole except for "anticipated acquisition price". The same shall apply hereinafter.

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(2) Description of Leases, etc. Relating to Anticipated Acquisitions





Sagawa Express Co.,

Ltd. 1

4,499.14 m2 (18.0 %)

Not disclosed (Note) 3 years

(from August 1, 2015 until July 31, 2018)


Fukuoka Soko Co., Ltd. (i)

1 12,557.37 m2

(50.2 %) Not disclosed (Note)

10 years (from March 21, 2008 until March 20, 2018)


Fukuoka Soko Co., Ltd. (ii)

1 7,943.26 m2


3 years (from August 1, 2015 until July 31, 2018)


Total 3 24,999.77m2

(100 %) Not disclosed (Note) －



Sagawa Express Co., Ltd. Contract Type: Fixed-term building lease Contract Renewal and Revision: ・ Notwithstanding the provisions provided in Article 32 of the Land and Building Lease Law, (Act No. 90 of October 4, 1991; as amended) (the

“Land and Building Lease Law”) , the lessee may not request any decrease in rent ・ Neither the lessor nor the lessee may terminate the lease agreement during the lease period ・ The lessee may terminate the lease agreement before the expiry date by paying the relevant amount of rent for the remaining period from the

termination date to the expiry date to the lessor as penalty charges Fukuoka Soko Co., Ltd. (i) Contract Type: Fixed-term building lease Contract Renewal and Revision: ・ Rent may be revised upon consultation on or after the fifth anniversary of the delivery date and the subsequent fifth anniversary ・ The lessor or the lessee may not cancel or terminate the lease agreement during the lease period ・ The lessee may terminate the lease agreement before the expiry by paying the relevant amount of rent for the remaining period from the date of

mid-term cancellation or mid-term termination to the expiry date, calculated based on the original rent as well as a month’s original rent, to the lessor

Fukuoka Soko Co., Ltd. (ii) Contract Type: Fixed-term building lease Contract Renewal and Revision: ・ Notwithstanding the provisions provided in Article 32 of the Land and Building Lease Law, neither the lessor or the lessee may request any

increase or decrease in rent ・ Neither the lessor nor the lessee may terminate the lease agreement during the lease period ・ The lessee may terminate the lease agreement before the expiry date by paying the relevant amount of rent for the remaining period from the

termination date to the expiry date to the lessor as penalty charges

Other: ・ N/A


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Acquisition Highlights • Large and highly-versatile logistics facilities which enable tenants to handle a variety of goods, with other advantages such as good access to

the port, airport and expressways and proximity to the Hakata area


• The tenant has continued occupying the facility since completion as its primary facility in the Kyushu region


<Location>

• 24/7-accessible Fukuoka/Hakozaki waterfront area, convenient for transport due to its proximity to the interchange, port of Hakata, Fukuoka

airport and railway cargo terminal station, where manufacturing plants and logistics facilities are concentrated

• Proximity to urban districts and several residential areas within commuting distance enables the tenant to secure workforce easily

<Facilities>

• High-grade multi-tenant logistics facility built in 2008, equipped with four freight elevators and four vertical conveyers

• Double-sided truck berths on the 1st floor enable cross-docking operation

■ Logistics facilities at prime locations in close vicinity to Hakata area and with convenient access to the port,

airport and expressways

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【IIF Fukuoka Hakozaki Logistics Center II (60% Co-ownership Interest)】



estate



Anticipated acquisition date February 20, 2017 Evaluation date June 2, 2016


Immediate

repair cost 0 yen


March 27, 2008 Short-term repair cost 0 yen


Limited




10,903,000 yen

Location 5-1, Hakozakifuto 4-chome, Higashi-ku, Fukuoka-shi, Fukuoka, Japan


Structure /stories

4-story reinforced concrete structure with galvanized steel sheet roof



200 % / 60 %


Earthquake PML 0.2 % Construction date March 12, 2008



Type of building Warehouse and cargo loading/unloading place

Others

・ IIF requested KK Field Partners to conduct a soil and environmental survey prior to purchasing this property. According to this survey, arsenic elution amounts exceeded the regulatory standards, however, under the present circumstances, it is unlikely that health risks will occur at and around the subject land via ground water, and the possibility of any health risks stemming from soil contamination via direct intake is low.

・ IIF is scheduled to execute an agreement with other co-ownership interest holders and with the trustee in acquiring this property. The main contents of the relevant agreement are as follows:

－Decisions on certain important matters shall be made upon unanimous consent from co-ownership interest holders. If such decisions are not made within a specified period, it shall be considered that co-ownership interest holders determine not to approve the relevant matter. With respect to the other matters, the co-ownership interest holder whose ownership ratio is the largest shall make a decision



(Note) This property is located in a waterfront area

(Note) IIF intends to acquire a 60% co-ownership interest of the trust beneficiary right in real estate of this property; however, all information described in the above

table is for this property as a whole except for "anticipated acquisition price". The same shall apply hereinafter.

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SENKO Co., Ltd. 1 10,682.31 m2


5 years (from August 1, 2016

until July 31 2021)


MITSUI-SOKO

Supply Chain

Solutions, Inc.

1 3,933.20 m2


5 years (from April 1, 2015

until March 31, 2020)


Nippon Express Co.,

Ltd. 1

6,535.96 m2


5 years (from June 1, 2015 until May 31, 2020)


NTT LOGISCO Inc. 1 21,080.17 m2


10 years (from January 1, 2011

until December 31, 2020)


Total 4 42,231.64 m2

(100 %) Not disclosed (Note) －



SENKO Co., Ltd. Contract Type: Fixed-term building lease Contract Renewal and Revision: ・ Notwithstanding the provisions provided in Article 32 of the Land and Building Lease Law, the lessee may not request any decrease in rent ・ Neither the lessor nor the lessee may terminate the lease agreement during the lease period ・ The lessee may terminate the lease agreement before the expiry date by paying the relevant amount of rent for the remaining period from the

termination date to the expiry date to the lessor as penalty charges

MITSUI-SOKO Supply Chain Solutions, Inc. ・ Same as above Nippon Express Co., Ltd. Contract Type: Fixed-term building lease Contract Renewal and Revision: ・ Notwithstanding the provisions provided in Article 32 of the Land and Building Lease Law, the lessor or the lessee may not request any

increase or decrease in rent ・ Neither the lessor nor the lessee may terminate the lease agreement during the lease period ・ The lessee may terminate the lease agreement before the expiry date by paying the relevant amount of rent for the remaining period from the

termination date to the expiry date to the lessor as penalty charges NTT LOGISCO Inc. Contract Type: Fixed-term building lease Contract Renewal and Revision: ・ Upon agreement between the lessor and the lessee on that Article 32 of the Land and Building Lease Law is not applied to the lease agreement,

the right to request an increase or a decrease in rent according to the above provisions is ruled out ・ Neither the lessor nor the lessee may terminate the lease agreement during the lease period; provided, however, that, the lessor or the lessee may

terminate the lease agreement before the expiry date if the lessee pays the relevant amount of rent for the remaining period from the date of mid-term termination to the expiry date, calculated based on the rent as at such mid-term termination

Other: ・ N/A


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Acquisition Highlights • Large and highly-versatile logistics facilities which enable tenants to handle a variety of goods, with other advantages such as good access to

the port, airport and expressways and proximity to the Hakata area • Acquisition with a view to potential extension

Continuity (Likelihood of Long-term Use by Current Tenants)

• The tenant is highly likely to continue occupying the facility using it as its primary facility in the Kyushu region


<Location>

• 24/7-accessible Fukuoka/Hakozaki waterfront area, convenient for transport due to its proximity to the interchange, port of Hakata, Fukuoka

airport and railway cargo terminal station, where manufacturing plants and logistics facilities are concentrated

• Proximity to urban districts and several residential areas within commuting distance enables the tenant to secure workforce easily

<Facilities>

• Facility built in 2008 and equipped with three freight elevators and three vertical conveyers enabling the tenant to handle many type of cargo

• Floor-plate shaped space on the 1st floor which can be partitioned into up to four sections and is equipped with double-sided truck berths

16


■ Logistics facilities at prime locations in close vicinity to Hakata area and with convenient access to the port, airport and expressways

■ Acquisition with a view to potential extension (IIF Fukuoka Hakozaki Logistics Center II) An extension project is now under way on the premises of IIF Fukuoka Hakozaki Logistics Center II and a non-binding letter of

agreement (Note) concerning the project has already been executed as of today. (Note) The letter of agreement is non-binding, and we do not have any definitive plan for acquiring the building once the extension is completed. Also, the extension may not

be completed as scheduled, or the building may not be rent as scheduled after the extension is completed. Further, there is no assurance that we will be able to acquire the building subject to the extension.

【Expected image of the extension after completion】【Expected Layout of the extension】

This picture is an expected image of extension after completion and it might differ from the actual building.

Outline of Project Agreement (Letter of Agreement) (Note)

• The seller of this property and IIF have agreed on the Letter of Agreement regarding the transfer of the extension building to IIF based on the condition of issuance of the confirmation letter of extension building and the leases with the potential tenants etc. The seller and the potential tenants have agreed on the preliminary fixed term lease as of January 6, 2017.

• Plans to build a building on the land by the end of February 2018 • The date of transfer will be determined on the consultation between the seller and IIF• Overview of the building

Use: Warehouse and officeStructure: 3-storied steel constructionTotal floor area: approx. 10,000m2

(Note) The letter of agreement is non-binding, and we do not have any definitive plan for acquiring the building once the extension is completed. Also, theextension may not be completed as scheduled, or the building may not be rent as scheduled after the extension is completed. Further, there is noassurance that we will be able to acquire the building subject to the extension.

17


【Acquisition of IIF Fukuoka Hakozaki Logistics Center I (60% Co-ownership Interest) and IIF Fukuoka Hakozaki Logistics Center II (60% Co-ownership Interest)】 ■ Actual rent levels for logistics facilities in Fukuoka remain high as population and trade volumes are

demonstrating positive trends

【Historical trade volume at Hakata port and Fukuoka airport (left axis) and population (right axis) in Fukuoka (Note) 】

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2010 2011 2012 2013 2014 2015

(mn)(¥ mn)Export Import Population

Source: As to export and import, “Overview of Economy in Fukuoka City (October 2016)”, Economy, Tourism & Culture Bureau,

Fukuoka City. As to population, “Historical Population in Fukuoka (October 2016)” Fukuoka Planning and Coordination Bureau, Fukuoka City

(Note) The population is as at October 1 each year.

【Average Asking Rent for Logistics Facilities in Fukuoka City】

(¥/tsubo) Average asking rent

2013 2014 2015 2016

5,000

4,000

3,000

2,000

1,000

0Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Source: CBRE Japan

18


【IIF Itabashi Logistics Center (60% Co-ownership Interest)】



estate



Anticipated acquisition date February 20, 2017 Evaluation date May 31, 2016


Immediate

repair cost 0 yen


May 31, 2007 Short-term repair cost 0 yen

Trustee Mizuho Trust & Banking Co.,

Ltd.




2,892,000 yen

Location 28-3, Higashi-Sakashita 2-chome, Itabashi-ku, Tokyo, Japan


Structure /stories

4-story steel structure with galvanized steel sheet roof



200 % / 60 %


Earthquake PML 5.8 % Construction date May 18, 2007


Gross floor area 5,057.68 m2

Type of building Warehouse

Others

・ IIF requested KK Field Partners to conduct a soil and environmental survey prior to purchasing this property. According to this survey, under the present circumstances, it is unlikely that health risks will occur at and around the subject land. It is also believed that the possibility of harm to human health via ground water is low and that the possibility of any health risks stemming from soil contamination via direct intake is low.

・ IIF is scheduled to execute an agreement with other co-ownership interest holders and with the trustee in acquiring this property. The main contents of the relevant agreement are as follows: －Decisions on certain important matters shall be made upon unanimous consent from co-ownership interest

holders. If such decisions are not made within a specified period, it shall be considered that co-ownership interest holders determine not to approve the relevant matter. With respect to the other matters, the co-ownership interest holder whose ownership ratio is the largest shall make a decision



(Note) IIF intends to acquire a 60% co-ownership interest of the trust beneficiary right in real estate of this property; however, all information described in the above table

is for this property as a whole except for "anticipated acquisition price". The same shall apply hereinafter.






Higashi Twenty One Co., Ltd.

1 5,057.68 m2

(100 %) Not disclosed(Note)

20 years (from May 31, 2007 until May 31, 2027)


Revision of rent or termination during the lease periodContract Type: Other type of building lease (futsu tatemono chintaishaku keiyaku) Contract Renewal and Revision: ・ The rent may be revised upon mutual agreement after three years have elapsed since the commencement date of the lease period, and every

three years subsequently, if there are material fluctuations in prices, taxes and other dues imposed on land and buildings, rents of the surrounding land and buildings, or other economic conditions

・ The lease agreement may be renewed upon mutual agreement six months prior to the expiry date of the lease agreement

19


・ The lessee may not terminate the lease agreement until ten years have elapsed since the commencement date of the lease period ・ The lessee shall pay the relevant amount of rent to be paid from the lessee to the lessor from the month which includes the scheduled date of

termination thereof to May 31, 2017 to the lessor as penalty charges, if the lessee terminates the lease agreement at the lessee’s convenience before ten years have elapsed since the commencement date of the lease period

・ From June 1, 2017, the lessee may terminate the lease agreement without paying termination fees, by giving the lessor six months’ advance written notice

・ Rent specified in this agreement shall remain unchanged for three years following the commencement date of the lease period. Other: ・ N/A


20


(3) Reasons for the Acquisition and Lease Continuity (Likelihood of Long-term Use by Current Tenant)

• The facility built on the premise that the tenant would occupy and utilize it as its primary base of 3PL(Note) operation, as “Tokyo Sogo

Butsuryu Center (Tokyo Integrated Logistics Center)”

• Strong continuity backed by a fixed-term building lease contract of 20 years (which will expire in 2027) (Note) 3PL (Third Party Logistics) is a business providing logistics services to consigners who outsource such logistics functions in their business operations.


<Location>

• Collection and delivery station in northern Tokyo, located in the Tokyo-Gaikan Expressway Area and having good access to the National

Route 17 and the Metropolitan Expressway Route No.5 Ikebukuro Line

<Facilities>

• Specifications of floor load and ceiling height provide versatility as an urban-type distribution center

■ Actual rent is steady and vacancy rate remains low in logistics facilities in Tokyo-Gaikan Expressway Area

【Historical Rent Trends (yoy %)(1)】【Historical Vacancy Rate Trends of Logistics Facilities in the Metropolitan Area (2)】

2014

2015

2016

2017

(2.0)%

(1.0)%

0.0%

1.0%

2.0%

GaikandoArea

TokyoBay Area

Route16 Area

Ken-O-DoArea

GaikandoArea

E E E E

GaikanExpressway

Area

Tokyo BayArea

National Route

16 Area

Ken-O Expressway

Area

0%

5%

10%

15%

20%

25%

30%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2014 2015 2016 2017

Forecast

S

Source: CBRE Japan Source: CBRE Japan

(Note 1) Figures for 2016 and after are not actual values and are represented by estimates as of October 2016 based on the CBRE survey: thus, these figures may differ from actual values

(Note 2) Figures for 4Q 2016 and after are not actual values and are represented by estimates as of October 2016 based on the CBRE survey: thus, these figures may differ from actual values.

21


【IIF Osaka Suminoe Logistics Center I (75% Co-ownership Interest)】



estate



Co., Ltd. Anticipated acquisition date March 21, 2017 Evaluation date November 23, 2016


Immediate

repair cost 0 yen




Limited


Trust period end March 31, 2027


16,036,000 yen

Location 10-34, Shibatani 1-chome, Suminoe-ku, Osaka-shi, Osaka, Japan., etc.


Structure /stories

Main building: 6-story steel structure with galvanized alloy steel sheet roof Annex 1: 1-story steel structure with galvanized alloy steel sheet roof Annex 2: 1-story steel structure with galvanized alloy steel sheet roof



200 % / 60 %





Type of building

Main building: Warehouse and office Annex 1: Garbage storage Annex 2: Guard office

Others

・ IIF requested Land Solution Inc. to conduct a soil and environmental survey prior to purchasing this property. According to this survey, soil contamination containing lead, the content and elution amounts of which exceeded the regulatory standards, was found in the past survey conducted at the subject land, and the respective effects are evaluated as follows:

- There is no possibility of the risk of harm to human health arising from soil contamination via ground water

- The possibility of the risk of harm to human health arising from soil contamination via direct intake cannot be denied in general. However, most of the bare ground is currently used as bicycle parking or as planted area, and entry to the area is limited so it is evaluated that the risk of material damage to health is low.

・ Servitude is established for some of the subject land (3,128.38 m2) for the purpose of passing through the relevant land

・ The seller and IIF have agreed that the following defects should be resolved as the responsibility and at the expense of the seller, before the acquisition of this property by IIF.

- Any application for confirmation on enlargement of the property has not been provided although bicycle parking with a floor area of more than 10 m2 was additionally constructed

- Any application for confirmation on enlargement of the property has not been provided although a mezzanine floor was constructed at the warehouse on the 3rd floor and two elevators were installed


- Decisions on certain important matters shall be made upon unanimous consent from co-ownership interest holders. If such decisions are not made within a specified period, it shall be considered that co-ownership interest holders determine not to approve the relevant matter. With respect to the other matters, the co-ownership interest holder whose ownership ratio is the largest shall make a decision

- Any co-ownership interest holder may not transfer or dispose of all or part of its co-ownership interest without prior consent of other co-ownership interest holders (provided, however, that other co-ownership interest holders may not withhold or reject provision of such consent without rational reason, save that a third party to which the interest is transferred is considered as anti-social forces)

- If any co-ownership interest holder disposes of its co-ownership interest and any other co-ownership interest holder wishes to purchase such interest, the holder shall give priority to the relevant other co-ownership interest holder in negotiations over transfer. If such co-ownership interest holder transfers the relevant interest to any other third party at a lower price notified to the relevant other co-ownership interest holder during the negotiations, the relevant other co-ownership interest holder is eligible to purchase the relevant interest at such lower price.

22



is for this property as a whole except for "anticipated acquisition price". Hereinafter the same.






Toshiba Logistics

Corporation 1

52,201.30 m2 (100 %)

Not disclosed (Note) 20 years

(from March 31, 2006 until March 30, 2026)



Contract Type: Fixed-term building lease Contract Renewal and Revision: ・ Rent may be revised upon consultation, in consideration of economic conditions, etc. ・ Rent may be revised every three years upon consultation after ten years have passed since the commencement date of the lease period ・ The lessee may not apply for any mid-term termination for ten years since the commencement date of the lease period and may cancel the

agreement on one year’s written notice after ten years have passed Other: ・ As of today, the land owner rents the property as a whole from the building owner, and then subleases the property as a whole to Toshiba

Logistics Corporation. After IIF acquires the real estate beneficiary right regarding this property, the trustee will succeed to the status of a lessor in the lease agreement executed between the building owner as of today and Toshiba Logistics Corporation.


23



Acquisition Highlights • Acquired logistics facilities in favorable locations in the Osaka waterfront area, which is close to both Osaka city center and the industrial area,

and provides good traffic access through expressways and railways


• Continuity evidenced by the fixed-term building lease contract of 20 years (from March 31, 2006 until March 30, 2026)

• The tenant’s logistics hub covering Western Japan as a warehouse for home appliances


• Located in favorable location for both land transportation and marine transportation as it is approximately 2.3 km from the closest expressway

interchange and approximately 5 km from Osaka Nanko Container Wharf. The area is designated as a restricted industrial zone which allows

for 24-hour operations

• Rare large-scale logistics facility with high specification and market-competitiveness

<Location>

• Distribution hub located in an area adjacent to Osaka City, the center of consumption in the Kansai district

• Capability to distribute not only to Central Osaka but also to wider Kansai area

• Location with good transportation

• No problem with securing labor force for the work in the facility

• A restricted industrial zone which allows 24-hour operations

<Facilities>

• Two exits and truck berths on the east, west and north faces on the first floor

• Floor plan focusing on distribution efficiency

• Two freight elevators and 10 vertical conveyers, and effective ceiling height of about 6 m

• Floor loading capabilities of about 1.5 t/m2

Highly versatile inner specification

Efficient structure with three sided truck berth

24


■ Location proximate to large consumption area with an advantage in securing labor force based on enhanced traffic access

25


【IIF Osaka Suminoe Logistics Center II (75% Co-ownership Interest)】



estate



Co., Ltd. Anticipated acquisition date March 21, 2017 Evaluation date November 23, 2016


Immediate

repair cost 0 yen




Limited


Trust period end March 31, 2027


10,910,000 yen

Location 10-20, Shibatani 1-chome, Suminoe-ku, Osaka-shi, Osaka, Japan., etc.


Structure /stories 5-story steel structure with galvanized steel sheet roof



200 % / 60 %


Earthquake PML 3.9 % Construction date July 10, 1991



Type of building Warehouse and office

Others

・ IIF requested Land Solution Inc. to conduct a soil and environmental survey prior to purchasing this property. According to this survey, the subject land contains residual fluorine and its chemical compounds at levels slightly lower than or the same level as the regulatory standards. However, the possibility of the risk of harm to human health arising from soil contamination leaked through groundwater can be denied. It has also been evaluated that the risk of immediate material damage to health via direct intake is low since it is confirmed that entry to bare ground is limited.

・ The seller and IIF have agreed that the following defects should be resolved as the responsibility and at the expense of the seller, before the acquisition of this property by IIF.

- Any Outdoor Signage Permit has not been obtained although the area of the outside advertisement on the exterior wall exceeds 7 m2

- It is not confirmed whether the roof of the rest stop additionally constructed in the exterior area is made of non-combustible material

- Any application for confirmation on enlargement of the property has not been provided although bicycle parking with a floor area of more than 10 m2 was additionally constructed. Also, it has not been confirmed that the roof of the bicycle parking is made of non-combustible material

- It has not been confirmed whether the space of the office extended on the 1st floor is appropriately partitioned from the warehouse area

- The extended office on the 1st floor is not equipped with the required natural smoke exhauster equipment- The meeting room built in part of the office on the 1st floor is not equipped with the required natural

smoke exhauster equipment - The required natural smoke exhauster equipment is not installed in the rest space on the 2nd floor, which

was extended - Any application for confirmation on enlargement has not been provided although the space above the

extended office on the 1st floor is used as a warehouse and is regarded as an addition - No television antenna or underlying mount is installed within 1.5 m from the lightning protection system


- Decisions on certain important matters shall be made upon unanimous consent from co-ownership interest holders. If such decisions are not made within a specified period, it shall be considered that co-ownership interest holders determine not to approve the relevant matter. With respect to the other matters, the co-ownership interest holder whose ownership ratio is the largest shall make a decision

- Any co-ownership interest holder may not transfer or dispose of all or part of its co-ownership interest without prior consent of other co-ownership interest holders (provided, however, that other co-ownership interest holders may not withhold or reject provision of such consent without rational reason, save that a third party to which the interest is transferred is considered as anti-social forces)

26


- If any co-ownership interest holder disposes of its co-ownership interest and any other co-ownership interest holder wishes to purchase such interest, the holder shall give priority to the relevant other co-ownership interest holder in negotiations over transfer. If such co-ownership interest holder transfers the relevant interest to any other third party at a lower price notified to the relevant other co-ownership interest holder during the negotiations, the relevant other co-ownership interest holder is eligible to purchase the relevant interest at such lower price.








Toshiba Logistics

Corporation 1

12,299.76 m2 (100 %)

Not disclosed (Note) 1.0 year

(from September 1, 2016 until August 31, 2017)



Contract Type: Other type of building lease (futsu tatemono chintaishaku keiyaku) Contract Renewal and Revision: ・ Rent shall not be revised during the lease period. However, the rent may be revised upon consultation between the lessor and the lessee during

the lease period if it is expressly considered that the rent is not at a proper level because of tax revisions with regard to the property and the subject land and other increase or decrease in public dues, comparisons with rents of similar properties in the neighborhood and rapid changes in economic conditions, etc.

・ The lease agreement may be terminated if either the lessor or the lessee gives written notice three months before the date of the expiry. ・ The lease agreement will be automatically renewed for one year period unless otherwise either party has manifested a different intention. Other: ・ N/A



Acquisition Highlights • Acquired logistics facilities in favorable locations in the Osaka waterfront area, which is close to both Osaka city center and the industrial area,

and provides good traffic access through expressways and railways


• Tenant’s hub of domestic transportation as a warehouse for semiconductors as well as a base for export


<Location>

• Located in favorable location for both land transportation and marine transportation as it is approximately 2.1 km from the closest expressway

interchange and approximately 5 km from Osaka Nanko Container Wharf. The area is designated as a restricted industrial zone which allows

the 24-hour operations

• Walking distance from Kitakagaya Station of the Osaka Municipal Subway Yotsubashi Line and easy to secure labor force from the adjacent

residential area

• Located in an area adjacent to Osaka City, the center of consumption in the Kansai district

• Capability to distribute not only to Central Osaka but also to wider Kansai area

<Facilities>

• One exit

• Truck berth on the south face on the 1st floor

• 1 freight elevator and 3 vertical conveyers

• Effective ceiling height of about 6 m

• Floor loading capacity of 2.0 t/m2 on the 1st floor, 1.0 t/m2 on the 2nd floor through 4th floor

• Standard type as logistics warehouse

27



28


【IIF Osaka Konohana Logistics Center (49% Co-ownership Interest)】



estate



Anticipated acquisition date February 20, 2017 Evaluation date May 17, 2016


Immediate

repair cost 0 yen


June 26, 2015 Short-term repair cost 0 yen


Limited




36,763,000 yen

Location 21-6, Shimaya 4-chome, Konohana-ku, Osaka-shi, Osaka, Japan


Structure /stories

Main building: 7-story steel structure with galvanized steel sheet roof Annex 1: 1-story steel structure with flat roof Annex 2: 1-story concrete block structure with galvanized steel sheet roof Annex 3: 1-story concrete block structure with galvanized steel sheet roof



200 % / 60 %


Earthquake PML 9.6 % Construction date January 7, 1991


Gross Floor Area

34,159.61 m2 (Main building: 34,046.74 m2,

Annex 1: 92.45 m2, Annex 2: 10.21 m2, Annex 3: 10.21 m2) Type of building Office and warehouse, etc.

Others

・ IIF requested KK Field Partners to conduct a soil and environmental survey prior to purchasing this property. According to this survey, we have confirmed that the subject land was contaminated by hexavalent chromium, lead and fluorine in the soil, while fluorine and boron were found in the underground water. Moreover, while oil content was confirmed in part of the soil and underground water, their respective impact is assessed as follows. - While soil contamination has been confirmed in the subject land, the possibility of health risks occurring

from directly ingesting soil contamination is deemed to be small, because buildings are covered with concrete, etc. areas other than buildings are covered with asphalt, etc., and the soil survey conducted on the soil in planted areas has confirmed no contamination.

- While the materials confirmed to be contaminating underground water are fluorine and boron, there is no facility or house, etc., which uses underground water for drinking within a certain range (surrounding areas approximately 250 m from the subject land) to which underground water containing such materials can reach. Accordingly, under the current conditions, the possibility of damaging the health of people through underground water is deemed to be small.








Sagawa Express Co., Ltd.

1 46,262.20 m2


36.3 years (from November 16, 1990 until February 28, 2027)



Contract Type: Other type of building lease (futsu tatemono chintaishaku keiyaku) Contract Renewal and Revision: ・ Rent may be revised upon consultation between the lessor and the lessee, in the event of any significant change in economic conditions and

revision of public dues, etc. ・ Neither the lessor nor the lessee may terminate the lease agreement until the end of February 2027 (the “Termination Prohibition Period”). If the

lessee requests termination during the Termination Prohibition Period, the lessee shall make an immediate lump-sum payment, as a penalty to the lessor, for the amount equivalent to the total rent from the date of cancellation to the expiry date of the Termination Prohibition Period.

Other: N/A


29



Acquisition Highlights

• Acquired logistics facilities in favorable locations in the Osaka waterfront area, which is close to both Osaka city center and the industrial area, and provides good traffic access through expressways and railways


• Sagawa Express has been using continually as a key site in the Kansai area

• As JR Ajikawaguchi Station of the JR Yumesaki Line, one out of four JR cargo terminals in Osaka, from where the supercargo trains

dedicated to Sagawa Express Co., Ltd. operates a round trip daily between Ajikawaguchi Station and the JR Tokyo Cargo Terminal (in Yashio,

Shinagawa-ku), and as the facility is located very close to Ajikawaguchi Station; the facility is considered as Sagawa Express’s important base

in the Kansai area

• A large-scale renewal was conducted by the tenant in 2015

• High degree of continuity supported by a lease agreement with a lease term of about 36 years (from November 16, 1990 to February 28, 2027,

non-cancellable during the lease term)


<Location>

Highly-convenient prime location

• Good location near the exit of an expressway and a cargo station, approximately 6 km from Osaka city center

• The location, in a leading industrial district in Osaka City with logistics and manufacturing properties concentrated in the surrounding area,

allows for 24-hour operations

• Shin-Osaka Post Office located next to the facility supports its perception as a prime location as a logistics base

• Within walking distance from Ajikawaguchi Station of the JR Yumesaki Line, providing greater advantages in securing workforce

<Facilities>

Logistics facility tailored to the lessee’s specifications

• Logistics facility tailored to the lessee’s specifications, equipped with the material handling equipment installed by the lessee itself

• A versatile facility that can be used as a logistics base that specializes in cargo collection and delivery; it has a building specification for

several floors dedicated to delivery functions and distribution processing


30


■ Acquisition of IIF Osaka Suminoe Logistics Center I, IIF Osaka Suminoe Logistics Center II and IIF Osaka Konohana Logistics Center

【New Supply of Logistics Facilities in the Greater Osaka(1)】【Historical Trends in the Rent Index for Large Multitenant Logistics Facilities in the Greater Osaka】

0

50,000

100,000

150,000

200,000

250,000

300,000

2014 2015 2016 2017Bay Area In‐land Area

(Tsubo)

Forecast

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2013 2014 2015 2016

Yen/Tsubo

Source: CBRE Japan, July 2016 Source: CBRE Japan (2016 Q3)

【Five Most Important Points for Establishing Logistics Facilities(2)】

0%

10%

20%

30%

40%

50%

60%

70%

80%

WorkforceAvailability

Floor Height - Nolower than 5.5m

Floor Load - No

less than 1.5t/㎡Affluent Numberof Track Berths

Eaves for RainShielding

As of Jan. 2015： n=144

Source: CBRE Japan

(Note1) Figures for 2016 and after are not actual values and are represented by estimates as of July 2016 based on the CBRE survey: thus, these figures may differ from actual

values

(Note2) The chart shows the results of the answer to the question about what was/were valued in planning to establish a new logistics facility asked by CBRE Japan as a part of

the CBRE’s questionnaire directed at 144 logistics companies (in January 2015 with multiple answers allowed)

31


【IIF Sendai Taiwa Logistics Center】



estate


Evaluator ERI Solution Co., Ltd.

Anticipated acquisition date February 21, 2017 Evaluation date January 10, 2017


Immediate

repair cost 0 yen




Limited




5,110,000 yen

Location 3-15, Maino 2-chome, Taiwa-cho, Kurokawa-gun, Miyagi, Japan


Structure /stories

Building 1: Steel structure with galvanized steel sheet roof Building 2: 1-story wooden construction with galvanized steel sheet roof



200 % / 60 %


Earthquake PML 2.4 % Construction date January 31, 2006


Gross Floor Area 11,990.24 m2 (Building 1: 11,960.43 m2, Building 2: 29.81 m)

Type of building

Building 1: Warehouse and office

Building 2: Lounge and bathroom

Others ・ IIF requested KK Field Partners to conduct a soil and environmental survey prior to purchasing this property. According to the judgment of this survey, the possibility of soil contamination is low.






MIYAGO LOGISTICS

1 15,290.75 m2


3 years (from March 1, 2016

until February 28, 2019)



Contract Type: Other type of building lease (futsu tatemono chintaishaku keiyaku) Contract Renewal and Revision: ・ If the lessor and the lessee agree to continue the lease agreement by six months before the expiry of the lease period, a new agreement shall be

prepared by such expiry. ・ If the lessee wishes to terminate the lease agreement, the lessee must provide the lessor a written notice at least six months prior to the desired

date of termination. Other: ・ N/A


32



Continuity (Likelihood of Long-term Use by Current Tenant) • Key logistics base supporting the national distribution network of the end-tenant, a group company of a major beverage manufacturer • Low-floor warehouse equipped with wide truck yards helping truck movements, which is well-suited to cargo owners handling beverages and

other heavy goods


<Location>

• Broad-area distribution hub in Tohoku with good traffic access, located just about 500 m from the Taiwa IC of Tohoku Expressway

<Facilities>

• Rain canopy placed between two warehouses allowing for all-weather efficient operations

33


【IIF Ota Logistics Center】


Type of asset Real estate


Evaluator Japan ERI Solution Co., Ltd. Anticipated acquisition date February 21, 2017 Evaluation date November 21, 2016


Immediate

repair cost 100,000 yen


- Short-term repair cost 0 yen

Trustee - Long-term repair cost 55,850,000 yen

Trust period end -


4,654,000 yen

Location 236-1, Anyoji-cho, Ota-shi, Gunma, Japan


Structure /stories

Main building: 2-story steel structure with aluminum roof Annex: 1-story concrete block structure with galvanized steel sheet roof

Zoning Urbanization control area


200 % / 70 %


Earthquake PML 7.0% Construction date February 28, 2006



Type of building

Main building: Office and warehouse Annex: Storeroom

Others

・ IIF requested KK Field Partners to conduct a soil and environmental survey prior to purchasing this property. According to this survey, it is unlikely that the subject land has soil contamination.

・ According to the evaluation of the building conditions, defects were pointed out in the report on the result of the inspection of fire-safety measures. Emergency repair costs of 100,000 yen were recorded as remedial expenses. The seller shall be responsible for remedying such defects by the anticipated acquisition date.






Meitetsu

Transportation Co.,

Ltd.

1 6,900.01 m2

(100 %) Not disclosed(Note)

20 years (from March 1, 2006

until February 28, 2026)



Contract Type: Fixed-term building lease Contract Renewal and Revision: ・ Rent shall not be revised during the period ・ However, with regard to expenses included in the rent, in the event of any change in public dues (including those imposed on the land) or other

expenses incurred by the lessee, or any change in public dues imposed on the building owing to any construction work or equipment implemented or installed newly or additionally by the lessee, the lessor shall offer new rent revised according to such change and then revise the rent

・ Neither the lessor nor the lessee may terminate the lease agreement during the lease period. If the lessee sends a written request for termination to the lessor with whichever of the following terms at least six months prior to the desired date of termination and the lessor agrees with such terms, the lease agreement may be terminated:

(i) The lessee finds a third party that will execute the lease agreement of the building on the same terms upon approval of the lessor; or (ii) The lessee pays an amount equivalent to the rent payable for the remaining period by the expiry of the lease agreement, and performs

the lessee’s obligations in vacating the building. Other: ・ Utilities expenses, maintenance and management fee, repair expenses and renewal expenses shall be incurred by the lessee.

(Note) IIF has not obtained the necessary permission from the lessee to disclose this information

34




• If the lease agreement is terminated before the expiry, the lessee shall be obliged to (i) arrange an alternative tenant under the same terms and

conditions or to (ii) pay penalty charges

• An important base in the northern Kanto area from which direct transportation routes operate to 26 destinations from Tohoku to Osaka

• One-story facility dedicated to special loading motor truck transportation, equipped with goods disposal space at the center of the building and

north-south double-sided truck berths

• Continuity based on a long-term contract of 20 years (from March 1, 2006 until February 28, 2026, non-cancellable during lease term)


<Location>

• Location facing National Route 17, Jobu-Doro, which is easy to connect to Isesaki IC of Kita-Kanto Expressway and Tokyo area

• One-story facility equipped with freight sorting space at the center of the building and north-south double-sided truck berths for the

distribution efficiency

<Facilities>

• A large number of parking lots, which are key factors to secure workforce

35


【IIF Morioka Logistics Center II】



estate


Evaluator ERI Solution Co., Ltd.

Anticipated acquisition date May 1, 2017 Evaluation date November 18, 2016


Immediate

repair cost 260,000 yen


October 31, 2016 Short-term repair cost 0 yen


Limited


Trust period end May 31, 2027


4,505,000 yen

Location 4-15, Ryutsu Center Minami 2-chome, Yahaba-cho, Shiwa-gun, Iwate, Japan


Structure /stories 1-story steel structure with galvanized steel sheet roof



200 % / 60 %





Type of building Warehouse and office

Others

・ IIF requested KK Field Partners to conduct a soil and environmental survey prior to purchasing this property. According to this survey, it is considered that any soil contamination is unlikely to be found on the subject land.

・ In addition, the seller and IIF have agreed that the following defects should be resolved as the responsibility and at the expense of the seller, before the acquisition of this property by IIF. - No fireproof compartment is set in the warehouse, in which a prefabricated house and an office are placed - A container and a prefabricated house, both categorized as buildings which require an application for

approval of construction, have been confirmed in the exterior of the east section






MIYAGO

LOGISTICS 1

12,383.30 m2 (100 %)

Not disclosed (Note) 3.0 years

(from May 1, 2017 until April 30, 2020)



Contract Type: Fixed-term building lease Contract Renewal and Revision: Rent shall not be revised during the lease period The lessee may terminate the lease agreement before the expiry date with six months written notice to the lessor and by paying, on the

termination date, the relevant amount of rent for the remaining period from the termination date to the expiry date (based on the monthly rent of the month including the termination date) in a lump sum to the lessor as penalty charges

Other: ・ N/A


36




• A fixed-term building lease contract will be executed with MIYAGO LOGISTICS, a major 3PL operator based in Tohoku

• An important base covering broader northern Tohoku areas for the end-tenant, a group company of a major home center


<Location>

• Location in Morioka area, a major logistics hub of Tohoku, enabling efficient distribution to three northern prefectures: Aomori, Akita and

Iwate

<Facilities>

• Shape and specifications tailored to regional characteristics, as evidenced by indoor truck berths which allow for efficient operation even in

snow conditions

37


<Reference> <Designer/Constructor/Confirmation and Inspection Organization for Anticipated Acquisitions>

Property name Designer Structure designer Constructor Confirmation and

Inspection Organization

IIF Yokosuka

Technology Center

Shimizu Corporation/ Nikken Sekkei Ltd.

Shimizu Corporation/ Nikken Sekkei Ltd.

Shimizu Corporation

Yokosuka-shi/ Tokyo Bldg-Tech Center

Co., Ltd.

IIF Shonan Technology

Center Nikken Sekkei Ltd. Nikken Sekkei Ltd.

The Zenitaka Corporation

Shonan Building Center

IIF Fukuoka Hakozaki

Logistics Center I

(60% Co-ownership

Interest)

Kyushu Branch of Taisei Corporation First-Class

Registered Architects Office Taisei Corporation Taisei Corporation Japan ERI Co., Ltd.

IIF Fukuoka Hakozaki

Logistics Center II

(60% Co-ownership

Interest)

Takenaka Corporation First-Class Registered Architects

Kyushu Office Takenaka Corporation

Takenaka Corporation

Japan ERI Co., Ltd.

IIF Itabashi

Logistics Center

(60% Co-ownership

Interest)

Nippon Steel Engineering Co., Ltd. First-Class Registered

Architects Office

Nippon Steel Engineering Co., Ltd. First-Class Registered

Architects Office

Nittoh Koei Co., Ltd.

UHEC (Toshi-kyojyu Hyoka Center)

IIF Osaka Suminoe

Logistics Center I

(75% Co-ownership

Interest)

Sumitomo Mitsui Construction Co., Ltd. First-Class Registered

Architects Office

Sumitomo Mitsui Construction Co., Ltd. First-Class Registered

Architects Office

Osaka Branch of Sumitomo Mitsui Construction Co.,

Ltd.

Center of International Architectural

Standard

IIF Osaka Suminoe

Logistics Center II

(75% Co-ownership

Interest)

Makoto Sekkei Jimusho Makoto Sekkei Jimusho Toyo Construction Osaka-shi

IIF Osaka Konohana

Logistics Center

(49% Co-ownership

Interest)

Sagawa Co., Ltd. Sagawa Co., Ltd. JV of Shimizu

Corporation and Sagawa Co., Ltd.

Osaka-shi

IIF Sendai Taiwa

Logistics Center Konno Sekkei Jimusho Konno Sekkei Jimusho

Tohoku Branch of Matsui Kensetsu

K.K. Miyagi-Pref.

IIF Ota

Logistics Center

Kobe Branch of Daiwa House Industry Co., Ltd. First-Class Registered Architects Office

Kobe Branch of Daiwa House Industry Co., Ltd. First-Class Registered Architects Office

Gunma Branch of Daiwa House

Industry Co., Ltd.

Bureau Veritas Japan Co., Ltd.

IIF Morioka

Logistics Center II Kuji Sekkei Kuji Sekkei

Hokoku Construction Co.,

Ltd. Iwate-Pref.

(Note) Each name of the designer, structure designer, constructor, and confirmation and inspection organization above refers to the name at the time of obtainment of the

certificate of inspection upon completion of the relevant property or trust property or when such property was a newly constructed building.

38


4. Profile of Seller

(1) IIF Yokosuka Technology Center

Although the seller is a domestic business company, the seller’s profile cannot be disclosed as we have not obtained consent

from the seller with respect to disclosure. There are no capital, personal or business relationships to note between IIF / the asset

manager and the seller, and there are no capital, personal or business relationships to note between interested parties and affiliated

companies of IIF / the asset manager and those of the seller. The seller does not fall under the category of related parties of IIF / the

asset manager and none of the related parties and affiliated companies of the seller fall under the category of related parties of IIF / the

asset manager.

(2) IIF Shonan Technology Center






asset manager.

(3) IIF Fukuoka Hakozaki Logistics Center I (60% Co-ownership Interest)






asset manager.

(4) IIF Fukuoka Hakozaki Logistics Center II (60% Co-ownership Interest)






asset manager.

(5) IIF Itabashi Logistics Center (60% Co-ownership Interest)






asset manager.

(6) IIF Osaka Suminoe Logistics Center I (75% Co-ownership Interest)






asset manager.

(7) IIF Osaka Suminoe Logistics Center II (75% Co-ownership Interest)


39






asset manager.

(8) IIF Osaka Konohana Logistics Center (49% Co-ownership Interest) Although the seller is domestic business company, the seller’s profile cannot be disclosed as we have not obtained consent





asset manager.

(9) IIF Sendai Taiwa Logistics Center

(1) Name Godo Kaisha Industrial Asset Holdings 4

(2) Location 7-1, Nihonbashi 2-chome, Chuo-ku, Tokyo

(3) Name and Job Title of Representatives

Executive Director: General Incorporated Association (Ippan Shadan Hojin) TMM Asset Holdings Administrator: Hidenobu Sugaya

(4) Business 1. Acquisition, possession and disposal of trust beneficiary rights in property 2. Acquisition, possession, disposal, leasing and management of property 3. Any businesses incidental or related to the above-mentioned businesses

(5) Capital 500 thousand yen (as of December 31, 2016)

(6) Date Established July 2011

(7) Net Assets 254 thousand yen

(8) Total Assets 1,763,624 thousand yen

(9) Major Shareholders and Ratio of Shares Held

General Incorporated Association (Ippan Shadan Hojin) TMM Asset Holdings 100%

(10) Relationship with IIF or Asset Manager

Capital Relationship

There is no capital relationship to note between IIF / the asset manager and the relevant company. In addition, there are no noteworthy capital relationships between interested parties and affiliated companies of IIF / the asset manager and those of the relevant company.

Personal Relationship There is no personal relationship to note between IIF / the asset manager and the relevant company.

Trade Relationship There is no trade relationship to note between IIF / the asset manager and the relevant company.

Interested Party The relevant company does not fall under the category of a related party of IIF / the asset manager. In addition, none of the related parties and affiliated companies of the relevant company fall under the category of the related parties of IIF/ the asset manager.

40


(10) IIF Ota Logistics Center

(1) Name Sumitomo Mitsui Finance and Leasing Company, Limited

(2) Location 3-2, Marunouchi 1-chome, Chiyoda-ku, Tokyo

(3) Name and Job Title of Representatives

President: Yoshinori Kawamura

(4) Business Leasing business

(5) Capital 15 billion yen (as of March 31, 2016)

(6) Date Established February 1963

(7) Net Assets 728.8 billion yen (Consolidated) (as of March 31, 2016)

(8) Total Assets 4,736.8 billion yen (Consolidated) (as of March 31, 2016)

(9) Major Shareholders and Ratio of Shares Held

Sumitomo Mitsui Financial Group, Inc. 60% Sumitomo Corporation 40% (Based on self-owned shareholdings excluded)

(10) Relationship with IIF or Asset Manager

Capital Relationship There is no capital relationship to note between IIF / the asset manager and the company. In addition, there are no noteworthy capital relationships between interested parties and affiliated companies of IIF/the asset manager and those of the company.

Personal Relationship There is no personal relationship to note between IIF / the asset manager and the company.

Trade Relationship There is no trade relationship to note between IIF / the asset manager and the company.

Interested Party The company does not fall under the category of a related party of IIF / the asset manager. In addition, none of the related parties and affiliated companies of the company fall under the category of the related parties of IIF/ the asset manager.

(11) IIF Morioka Logistics Center II






asset manager.

41


5. Profile of Buyer, etc.

With respect to the Anticipated Acquisitions, there are no acquisitions from sellers with whom IIF / the asset manager have conflicting

interests.

6. Broker

There is no brokerage in connection with the above acquisitions.

7. Means of Payment

The Anticipated Acquisitions will be financed by issuance of new investment units, loans and through cash reserves. Please refer to

“IIF to Issue New Investment Units and Conduct Secondary Offering of Investment Units” and “Notice Concerning New Debt

Financing and Refinancing Associated with Early Repayment” announced today.

IIF plans to conduct a lump-sum settlement upon delivery for all properties.

8. Date of Acquisitions

Property name Effective date of acquisition

agreement (scheduled) Payment date Date of delivery of property

IIF Yokosuka Technology Center January 24, 2017 February 20, 2017 February 20, 2017

IIF Shonan Technology Center January 24, 2017 February 20, 2017 February 20, 2017

IIF Fukuoka Hakozaki Logistics

Center I (60% Co-ownership

Interest)

January 24, 2017 February 20, 2017 February 20, 2017

IIF Fukuoka Hakozaki Logistics

Center II (60% Co-ownership

Interest)


IIF Itabashi Logistics Center

(60% Co-ownership Interest) January 24, 2017 February 20, 2017 February 20, 2017

IIF Osaka Konohana Logistics

Center (49% Co-ownership

Interest)


IIF Sendai Taiwa Logistics Center January 24, 2017 February 21, 2017 February 21, 2017

IIF Ota Logistics Center January 24, 2017 February 21, 2017 February 21, 2017

IIF Osaka Suminoe Logistics

Center I (75% Co-ownership

Interest)(Note)

January 24, 2017 March 21, 2017 March 21, 2017

IIF Osaka Suminoe Logistics

Center II (75% Co-ownership

Interest) (Note)

January 24, 2017 March 21, 2017 March 21, 2017

IIF Morioka Logistics Center II January 24, 2017 May 1, 2017 May 1, 2017

(Note) A business company in Japan, the current owner of IIF Osaka Suminoe Logistics Center I and IIF Osaka Suminoe Logistics Center II, is scheduled to pass a resolution

on sale of the properties to the seller at a board of directors’ meeting to be held on January 26, 2017. The building of IIF Osaka Suminoe Logistics Center I is scheduled

to be acquired by the current owner from a third party, before the seller acquires the building from the current owner. IIF has entered into a sales agreement subject to a

condition precedent that such resolution on sale to the seller is passed by the current owner. Therefore, if the board of directors of the current owner votes against such

sale of the properties or the meeting of the board of directors is postponed, IIF may not be able to acquire the properties as scheduled. There is no capital, personal or

trade relationship to note between IIF / the asset manager and the relevant current owner. There is no capital, personal or trade relationship to note between related

parties and affiliates of IIF / the asset manager and those of the relevant current owner. None of the related parties and affiliated companies of the relevant current

owner fall under the category of the related parties of IIF/ the asset manager.

9. Matters relating to Forward Commitment Contracts (1) Anticipated Acquisitions that falls under a Forward Commitment Contract

The purchase and sale agreements concerning the acquisition of IIF Morioka Logistics Center II, IIF Osaka Suminoe Logistics

Center I (75% co-ownership interest) and IIF Osaka Suminoe Logistics Center II (75% co-ownership interest) falls within the

definition of forward commitment contract under the guidelines of the FSA’s comprehensive guidelines for the supervision of financial

instruments business operators. A forward commitment contract is defined as any purchase and sale agreement or other type of

agreement that is signed a month or more in advance of the actual date of the settlement or delivery pursuant to the agreement.

(2) Effect on IIF’s Financial Condition due to any Failure of IIF to comply with a Forward Commitment Contract, etc.

42


With regard to the sale and purchase agreement concerning IIF Morioka Logistics Center II , IIF Osaka Suminoe Logistics Center

I (75% co-ownership interest) and IIF Osaka Suminoe Logistics Center II (75% co-ownership interest), if there is a violation of the

agreed terms of the purchase and sale agreements or a breach of the representations and warrantees by IIF and it is clear that the

purpose of the purchase and sale agreements can no longer be achieved as a result, the seller may demand an amount equivalent to

20% of the total purchase price (excluding an amount equivalent to building consumption taxes) from IIF as a penalty. However, under

the relevant sale and purchase agreement, IIF’s obligation to pay the purchase price is conditioned upon the completion of the

fundraising (including but not limited to the capital increase; the same shall apply hereinafter) necessary for the payment of the

acquisition price.

10. Future Outlook of IIF

Please refer to the “Notice Concerning Forecasts of Operating Results and Distributions for July 2017 (20th) and January 2018 (21st)

Fiscal Periods” announced today for the forecast of IIF’s operating performance for the 20th fiscal period ending in July 2017 (January 1,

2017 - July 31, 2017) and the 21st fiscal period ending in January 2018 (August 1, 2017 – January 31, 2018).

11. Summary of Appraisal Report

(1) IIF Yokosuka Technology Center Appraisal firm CBRE K.K. Appraisal value 4,430 million yen Appraisal value as of: December 1, 2016

Item Details Summary

Indicated value by income approach 4,430 million yen Value based on direct capitalization 4,490 million yen

Operating income Not disclosed

(Note)

Potential total income Not disclosedVacancy loss Not disclosed

Operating expenses Not disclosedMaintenance and management fee

Not disclosed

Utility expenses Not disclosedRepair expenses Not disclosedPM fee Not disclosedLeasing cost Not disclosedProperty tax Not disclosedProperty insurance premium Not disclosedOther expenses Not disclosed

Net operating income 290 million yen Operating profit on lump-sum payments

0 million yen

Capital expenditures 39 million yen Net income 251 million yen Capitalization rate 5.6%

DCF method 4,430 million yen Discount rate 5.3% Terminal capitalization rate 5.7%

Indicated value by cost approach 2,720 million yen Proportion of land 83.9% Proportion of building 16.1%

Other matters that the appraisal firm considered upon conducting the appraisal

Not applicable

(Note) As actual figures are used in this valuation, the asset manager has deemed that disclosing this information would have an adverse effect on IIF and may eventually

harm the interests of the unitholders. Therefore, this information is not disclosed.

43


(2) IIF Shonan Technology Center Appraisal firm CBRE K.K. Appraisal value 1,320 million yen Appraisal value as of: December 1, 2016




(Note)



Not disclosed



0 million yen





Not applicable



44


(iii) IIF Fukuoka Hakozaki Logistics Center I (60% Co-ownership Interest)

(i) Appraisal value of additional acquisition (60% Co-ownership Interest) Appraisal firm CBRE K.K. Appraisal value 3,170 million yen Appraisal value as of: December 1, 2016

(Note) Appraisal value for the 60% co-ownership interest is calculated by multiplying 60% to the appraisal value of the entire property indicated below.

(ii) Appraisal value of the entire property Appraisal firm CBRE K.K. Appraisal value 5,290 million yen Appraisal value as of: December 1, 2016


Indicated value by income approach 5,290 million yen Including the value of photovoltaic facility, 240 million yen

Value based on direct capitalization 5,020 million yen Excluding the value of photovoltaic facility


(Note)



Not disclosed



0 million yen


DCF method 5,050 million yen Excluding the value of photovoltaic facility

Discount rate 4.2% Terminal capitalization rate 4.6%

Indicated value by cost approach 3,620 million yen Including the value of photovoltaic facilityProportion of land 65.1% Proportion of building 34.9%


Not applicable



45


(4) IIF Fukuoka Hakozaki Logistics Center II (60% Co-ownership Interest)





Indicated value by income approach 9,210 million yen Including the value of photovoltaic facility, 446 million yen

Value based on direct capitalization 8,920 million yen Excluding the value of photovoltaic facility


(Note)



Not disclosed



1 million yen


DCF method 8,870 million yen Excluding the value of photovoltaic facility

Discount rate 4.2% Terminal capitalization rate 4.6%

Indicated value by cost approach 7,600 million yen Including the value of photovoltaic facilityProportion of land 74.2% Proportion of building 25.8%


The appraisal value for the entire property has been assessed by subtracting the cost for removal of the soil contamination.



46


(5) IIF Itabashi Logistics Center (60% Co-ownership Interest)







(Note)



Not disclosed



0 million yen





Not applicable



47


(6) IIF Osaka Konohana Logistics Center (49% Co-ownership Interest)







(Note)



Not disclosed



2 million yen





The appraisal value for the entire property has been assessed by subtracting the cost for removal of the soil contamination.



48


(7) IIF Sendai Taiwa Logistics Center Appraisal firm Japan Real Estate Institute Appraisal value 1,560 million yen Appraisal value as of: December 1, 2016




(Note)



Not disclosed



0 million yen




Other matters that the appraisal firm noted upon conducting the appraisal

Not applicable

(Note) As the actual figures are used in this valuation, the asset manager has deemed that disclosing this information would have an adverse effect on IIF and may

eventually harm the interests of the unitholders. Therefore, this information is not disclosed.

49


(8) IIF Ota Logistics Center Appraisal firm The Tanizawa Sogo Appraisal Co., Ltd. Appraisal value 1,140 million yen Appraisal value as of: December 1, 2016




(Note)



Not disclosed



0 million yen


DCF method 1,150 million yen Discount rate 5.5% 5.5% (until 9 years), 5.7% (after 10 years)Terminal capitalization rate 5.8%



Not applicable



50


(9) IIF Osaka Suminoe Logistics Center I (75% Co-ownership Interest)

(i) Appraisal value of additional acquisition (75% Co-ownership Interest) Appraisal firm The Tanizawa Sogo Appraisal Co., Ltd. Appraisal value 10,100 million yen Appraisal value as of: December 1, 2016

(Note) Appraisal value for the 75% co-ownership interest is calculated by multiplying 75% to the value equivalent to this property’s appraisal value indicated below.

(ii) Appraisal value of the entire property Appraisal firm The Tanizawa Sogo Appraisal Co., Ltd. Appraisal equivalent value 13,500 million yen Appraisal value as of: December 1, 2016




(Note)



Not disclosed



3 million yen





The appraisal equivalent value for the entire property has been assessed by subtracting the cost for removal of the soil contamination.

(Note) As the actual figures are used in this valuation, the asset manager has deemed that disclosing this information would have an adverse effect on IIF and may

eventually harm the interests of the unitholders. Therefore, this information is not disclosed.

51


(10) IIF Osaka Suminoe Logistics Center II (75% Co-ownership Interest)

(i) Appraisal value of additional acquisition (75% Co-ownership Interest) Appraisal firm The Tanizawa Sogo Appraisal Co., Ltd. Appraisal value 2,000 million yen Appraisal value as of: December 1, 2016

(Note) Appraisal value for the 75% co-ownership interest is calculated by multiplying 75% to the value equivalent to this property’s appraisal value indicated below.

(ii) Appraisal value of the entire property Appraisal firm The Tanizawa Sogo Appraisal Co., Ltd. Appraisal equivalent value 2,660 million yen Appraisal value as of: December 1, 2016




(Note)



Not disclosed



0 million yen





Not applicable



52


(11) IIF Morioka Logistics Center II Appraisal firm CBRE K.K. Appraisal value 1,490 million yen Appraisal value as of: December 1, 2016




(Note)



Not disclosed



0 million yen





Not applicable



53


■The Properties Acquired since 17th fiscal period ended December 31, 2015 and Anticipated Acquisitions

Asset categories

Property name

(Anticipated) acquisition price

(thousand yen)

Appraisal value(thousand

yen) (Note 1)

NOI yield (before

depreciation) (Note 2)

NOI yield (after

depreciation)

(Note 2) Period of contract (Note 4)

(contract type) (Note 5)

(Anticipated) acquisition

date

Difference between appraisal and (anticipated) acquisition price

(thousand yen) (Note 2)

(Ratio of difference between appraisal and (anticipated)

acquisition price) (Note 2)

(Reference) NOI yield

based on direct capitalization

(before depreciation)

(Note 3)

(Reference) NOI yield

based on direct capitalization

(after depreciation)

(Note 3) Manufacturing

and research

and development

facilities

IIF Urayasu Machinery Maintenance Center

(land with leasehold interest)

1,300,776 1,670,000 6.1% 6.1% 49.0 years March

31, 2016 369,224 (28.4%) (6.1%) (6.1%) (Fixed-term)

IIF Kakegawa Manufacturing Center

(land with leasehold interest)

1,540,000 1,770,000 5.6% 5.6% 30.0 years April

15, 2016 230,000 (14.9%) (5.6%) (5.6%) (Fixed-term)

IIF Yokohama Shinyamashita R&D Center

(Note 6)

3,810,000 4,150,000 5.4% 4.3% 20.0 years

March 1, 2016/

July 1, 2016 340,000 (8.9%) (5.4%) (4.3%) (Fixed-term)

IIF Yokosuka Technology Center

4,000,000 4,430,000 7.2% 6.6% 10.0 years February 20, 2017

430,000 (10.8%) (7.3%) (6.7%) (Other)

IIF Shonan Technology Center

1,200,000 1,320,000 6.6％ 6.2％ 10.0 years February 20, 2017

120,000 (10.0%) (6.8%) (6.4%) (Other)

Infrastructure facilities

IIF Higashimatsuyama Gas Tank Maintenance Center (land with leasehold interest)

690,000 746,000 5.3% 5.3% 30.1 years November

13, 2015 56,000 (8.1%) (5.3%) (5.3%) (Fixed-term)

Logistics facilities IIF Fukuoka Higashi

Logistics Center

1,860,000 2,030,000 5.5% 5.0% 15.0 years January

18, 2016 170,000 (9.1%) (5.5%) (5.0%) (Fixed-term)

IIF Osaka Konohana Logistics Center

(51% Co-ownership Interest)

4,437,000 4,510,000 4.9% 4.1% 36.3 years July

1, 2016 73,000 (1.6%) (4.9%) (4.1%) (Other)

IIF Kazo Logistics Center

2,361,700 2,570,000 5.6% 4.9% 10.0 years September

1, 2016 208,300 (8.8%) (5.6%) (4.9%) (Fixed-term)

IIF Hamura Logistics Center

820,000 864,000 5.4% 4.4% 8.0 years December

22, 2016 44,000 (5.4%) (5.4%) (4.4%) (Fixed-term)

IIF Fukuoka Hakozaki Logistics Center I


3,115,000 3,170,000 4.5% 3.5% 10.0 years

(Note 7) February 20, 2017

55,000 (1.8%) (4.9%) (4.0%) (Fixed-term)

(Note 7)

IIF Fukuoka Hakozaki Logistics Center II


5,451,000 5,530,000 4.4% 3.6% 10.0 years

(Note 7) February 20, 2017

79,000 (1.4%) (5.0%) (4.2%) (Fixed-term)

(Note 7)

Anticipated Acquisition




54


(Note 1) For properties which are already acquired, appraisal values are as of December 31, 2016 (the 19th) and for properties which are anticipated to be acquired, please refer to

“11. Summary of Appraisal Report” in previous page. The same shall apply hereafter. Appraisal firm for IIF Fukuoka Higashi Logistics Center, IIF Yokohama Shinyamashita R&D Center, IIF Osaka Konohana Logistics Center and IIF Kazo Logistics Center is CBRE Japan, appraisal firm for IIF Urayasu Machinery Maintenance Center (land with leasehold interest) and IIF Higashimatsuyama Gas Tank Maintenance Center (land with leasehold interest) is Japan Real Estate Institute and appraisal firm for IIF Kakegawa Manufacturing Center (land with leasehold interest) and IIF Hamura Logistics Center is The Tanizawa Sogo Appraisal Co., Ltd. Anticipated acquisitions are as stated previously.

(Note 2) For “NOI yield (before depreciation)”, “NOI yield (after depreciation)”, “difference between appraisal and (anticipated) acquisition price” and “ratio of difference between appraisal and (anticipated) acquisition price”, please refer to “Reference: Definitions of Individual Calculation Formulas” at the end of this new release.

(Note 3) For “NOI yield based on direct capitalization”, it is calculated in the same method with “NOI yield (before depreciation)”, “NOI yield (after depreciation)” except that net operating income based on the direct capitalization method as stated in the appraisal report is divided by an (anticipated) acquisition price; however, with regard to IIF Kakegawa Manufacturing Center (land with leasehold interest) and IIF Higashimatsuyama Gas Tank Maintenance Center (land with leasehold interest), the rates are calculated by dividing DCF-based net operating income for the 10th year because these two properties were not calculated based on the direct capitalization method. Also, with regard to IIF Fukuoka Hakozaki Logistics Center I (60% co-ownership interest) and IIF Fukuoka Hakozaki Logistics Center II (60% co-ownership interest), the rates are calculated by dividing DCF-based net operating income for the 10th year because solar panels are installed on these properties and are not subject to appraisals based on the direct capitalization method.

(Note 4) Period of contract is the period between lease start date and lease termination date, and is different from the period between the anticipated acquisition date and lease termination date (i.e., lease remaining period). Average period of contract is weighted average based on annual rent. For IIF Fukuoka Hakozaki Logistics Center I (60% co-ownership interest) and IIF Fukuoka Hakozaki Logistics Center II (60% co-ownership interest), the data listed is only for major tenants.

(Note 5) “Fixed-term” refers “teiki-shakuchi keiyaku or teiki-tatemono chintaishaku keiyaku”, and “Other” refers other lease agreements. (Note 6) IIF acquired a 0.3% co-ownership interest on March 1, 2016 and acquired the remaining 99.7% co-ownership interest on July 1, 2016. (Note 7) The data listed is only for major tenants. (Note 8) The data listed is for the lease agreement with prospective tenants who are scheduled to enter into this property on May 1, 2017, the expected date of the acquisition of the

property, and is different from the data for lease agreements with current tenants. (Note 9) “Average NOI yield (before depreciation)”, “average NOI yield (after depreciation)” and “average ratio of difference between appraisal and (anticipated) acquisition price”

for properties which were acquired since the 17th fiscal period from July 1 to December 31, 2015, or expected to be acquired are calculated as follows. The same shall apply hereafter.

Average NOI Yield (before depreciation) = total NOI÷ total (anticipated) acquisition price Average NOI yield (after depreciation) = (total NOI - total depreciation) ÷ total (anticipated) acquisition price Average ratio of difference between appraisal and (anticipated) acquisition price = total difference between appraisal and (anticipated) acquisition price ÷ total

(anticipated) acquisition price Average NOI yield (after depreciation) for properties acquired since the 17th fiscal period from July 1 to December 31, 2015, or expected to be acquired is calculated based

on the appraisal report and would be different from the actual number after IIF’s acquisition.

IIF Itabashi

Logistics Center (60% Co-ownership Interest)

1,031,000 1,070,000 4.4% 3.7% 20.0 years February 20, 2017

39,000 (3.8%) (4.9%) (4.2%) (Other)

IIF Osaka Konohana Logistics Center


4,263,000 4,340,000 4.9％ 4.1％ 36.3 years February 20, 2017

77,000 (1.8%) (4.9%) (4.1%) (Other)

IIF Sendai Taiwa Logistics Center

1,480,000 1,560,000 6.0％ 4.8％ 3.0 years February 21, 2017

80,000 (5.4%) (6.0%) (4.8%) (Other)

IIF Ota Logistics Center

1,010,000 1,140,000 6.6％ 5.7％ 20.0 years February 21, 2017

130,000 (12.9%) (6.5%) (5.6%) (Fixed-term)

IIF Osaka Suminoe Logistics Center I


9,075,000 10,100,000 4.2% 3.3% 20.0 years

March 21, 2017

1,025,000 (11.3%) (5.3%) (4.4%) (Fixed-term)

IIF Osaka Suminoe Logistics Center II


1,905,000 2,000,000 4.7% 4.1% 1.0 year March

21, 2017 95,000 (5.0%) (5.3%) (4.6%) (Other)

IIF Morioka Logistics Center II

1,302,000 1,490,000 6.3% 5.6% 3.0 years

(Note 8) May 1, 2017

188,000 (14.4%) (7.3%) (6.6%) (Fixed-term)

(Note 8)

Total / Average(Note 9)

50,651,476 54,460,000 5.1% 4.4% 18.1 years

3,808,524 (7.5%) (5.5%) (4.8%)






Anticipated Additional Acquisition


55


■The Properties after Anticipated Acquisitions

Asset type Property number

Property name Anticipated

acquisition price (million yen)

Rate of investment(Note 1)

(%)

Logistics facilities

L-1 IIF Shinonome Logistics Center (Note 2) 13,700 5.6

L-4 IIF Noda Logistics Center 6,500 2.6

L-5 IIF Shinsuna Logistics Center 5,300 2.1

L-6 IIF Atsugi Logistics Center 2,100 0.9

L-7 IIF Koshigaya Logistics Center 2,000 0.8

L-8 IIF Nishinomiya Logistics Center 2,159 0.9

L-9 IIF Narashino Logistics Center (land with leasehold interest) 1,190 0.5

L-10 IIF Narashino Logistics Center II 4,550 1.8

L-11 IIF Atsugi Logistics Center II 3,100 1.3

L-12 IIF Yokohama Tsuzuki Logistics Center 2,350 1.0

L-13 IIF Saitama Logistics Center 1,490 0.6

L-14 IIF Nagoya Logistics Center 1,050 0.4

L-15 IIF Atsugi Logistics Center III 2,290 0.9

L-16 IIF Kawaguchi Logistics Center 1,770 0.7

L-17 IIF Kobe Logistics Center 5,193 2.1

L-18 IIF Higasahi-Osaka Logistics Center 2,280 0.9

L-19 IIF Kashiwa Logistics Center 1,810 0.7

L-20 IIF Misato Logistics Center 3,550 1.4

L-21 IIF Iruma Logistics Center 3,184 1.3

L-22 IIF Tosu Logistics Center 1,570 0.6

L-23 IIF Inzai Logistics Center 1,060 0.4

L-24 IIF Morioka Logistics Center 600 0.2

L-25 IIF Hiroshima Logistics Center 3,540 1.4

L-26 IIF Izumiotsu e-shop Logistics Center (land with leasehold interest) 4,000 1.6

L-27 IIF Izumisano Food Processing and Logistics Center 860 0.3

L-28 IIF Kyotanabe Logistics Center 5,730 2.3

L-29 IIF Fukuoka Koga Vehicle Logistics Center (land with leasehold interest)

860 0.3

L-30 IIF Fukuoka Higashi Logistics Center 1,860 0.8

L-31 IIF Osaka Konohana Logistics Center (Note 3) 8,700 3.5

L-32 IIF Kazo Logistics Center 2,361 1.0

L-33 IIF Hamura Logistics Center 820 0.3

L-34 IIF Fukuoka Hakozaki Logistics Center I (Note 4) 3,115 1.3

L-35 IIF Fukuoka Hakozaki Logistics Center II (Note 5) 5,451 2.2

L-36 IIF Itabashi Logistics Center 1,031 0.4

L-37 IIF Sendai Taiwa Logistics Center 1,480 0.6

L-38 IIF Ota Logistics Center 1,010 0.4

L-39 IIF Osaka Suminoe Logistics Center I (Note 6) 9,075 3.7

L-40 IIF Osaka Suminoe Logistics Center II (Note 7) 1,905 0.8

L-41 IIF Morioka Logistics Center II 1,302 0.5

Subtotal 121,897 49.4

56


Manufacturing, research and development facilities

F-1 IIF Totsuka Technology Center (land with leasehold interest) 4,500 1.8

F-2 IIF Yokohama Tsuzuki Technology Center 1,100 0.4

F-3 IIF Mitaka Card Center 8,700 3.5

F-5 IIF Kamata R&D Center 7,200 2.9

F-6 IIF Kawasaki Science Center 2,168 0.9

F-7 IIF Sagamihara R&D Center 3,100 1.3

F-8 IIF Yokohama Shinyamashita R&D Center 3,810 1.5

F-9 IIF Kakegawa Manufacturing Center (land with leasehold interest) 1,540 0.6

F-10 IIF Urayasu Machinery Maintenance Center (land with leasehold interest)

1,300 0.5

F-11 IIF Yokosuka Technology Center 4,000 1.6

F-12 IIF Shonan Technology Center 1,200 0.5

Subtotal 38,618 15.7

Infrastructure facilities

I-1 IIF Kobe District Heating and Cooling Center 18,100 7.3

I-2 IIF Haneda Airport Maintenance Center 41,110 16.7

I-3 IIF Zama IT Solution Center 5,384 2.2

I-4 IIF Shinagawa Data Center 4,900 2.0

I-5 IIF Osaka Toyonaka Data Center 5,600 2.3

I-6 IIF Osaka Nanko IT Solution Center 1,150 0.5

I-7 IIF Nagoya Port Tank Terminal (land with leasehold interest) 1,900 0.8

I-8 IIF Shinagawa IT Solution Center 7,200 2.9

I-9 IIF Higashimatsuyama Gas Tank Maintenance Center (land with leasehold interest)

690 0.3

Subtotal 86,034 34.9

Total 246,549 100.0

(Note 1) Rounded to the first decimal place.

(Note 2) 53% of IIF Shinonome Logistics Center’s joint trust beneficiary interests in real estate are held by IIF.

(Note 3) 51% of IIF Osaka Konohana Logistics Center’s joint trust beneficiary interests in real estate are held by IIF, and the remaining 49% will be acquired additionally.

(Note 4) 60% of IIF Fukuoka Hakozaki Logistics Center I’s joint trust beneficiary interests in real estate will be acquired by IIF.

(Note 5) 60% of IIF Fukuoka Hakozaki Logistics Center II’s joint trust beneficiary interests in real estate will be acquired by IIF.

(Note 6) 75% of IIF Osaka Suminoe Logistics Center I’s joint trust beneficiary interests in real estate will be acquired by IIF.

(Note 7) 75% of IIF Osaka Suminoe Logistics Center II’s joint trust beneficiary interests in real estate will be acquired by IIF.

57


Reference: Definitions of Individual Calculation Formulas

Regarding “NOI yield (before depreciation)”, “NOI yield (after depreciation)”, “difference between appraisal and (anticipated)

acquisition Price” and “Ratio of difference between appraisal and (anticipated) acquisition price” referred to in Note 3 on Page 2, and in

Page 53 to 54, please see below. ○ “NOI yield (before depreciation)”:

NOI yield (before depreciation) of the (anticipated) acquisitions is calculated as follows. NOI Yield (before depreciation)＝NOI* ÷ (anticipated) acquisition price** *Except as individually noted, the figure used for the calculation of NOI (before depreciation) is the first year net revenue (if special

circumstances are expected in the first year, the second year net revenue is used) (based on a discounted cash flow (DCF) method calculation) described in the appraisal report of each of the (anticipated) properties. This is the same in “NOI yield (after depreciation)”.

**Anticipated acquisition price is as set forth in the relevant purchase agreement for each property (excluding acquisition-related costs, fixed asset tax, urban planning tax and consumption tax). This assumption is the same for other calculations below.

○ “NOI yield (after depreciation)”:

NOI yield (after depreciation) of the (anticipated) acquisitions is calculated as follow. NOI yield (after depreciation)＝(NOI - depreciation*) ÷ (Anticipated) acquisition price

*Depreciation is calculated based on the straight-line method according to durable years in the same way as IIF’s existing properties in the portfolio. This assumption is the same for other calculations below.

○ “Difference between appraisal and (anticipated) acquisition price” and “ratio of difference between appraisal value and (anticipated) acquisition price”:

“Difference between appraisal and (anticipated) acquisition price” is defined as the difference between the appraisal value and the (anticipated) acquisition price. You should be aware that IIF may be unable to capture the difference. “Ratio of difference between appraisal value and (anticipated) acquisition price” is calculated by dividing difference between appraisal and (anticipated) acquisition price by the (anticipated) acquisition price.

Reference: Other press releases announced today:

“IIF to Issue New Investment Units and Conduct Secondary Offering of Investment Units”

“Notice Concerning New Debt Financing and Refinancing Associated with Early Repayment”

“Notice Concerning Forecasts of Operating Results and Distributions for the July 2017 (20th) and January 2018 (21st) Fiscal Periods”

About IIF: Industrial and Infrastructure Fund Investment Corporation (“IIF”) is the first J-REIT to focus on acquiring and operating both industrial and

infrastructure properties in Japan－properties that play a vital role in the Japanese economy, and for which IIF expects to see stable demand in the mid to

long term. With respect to industrial properties, IIF intends to invest in a diverse portfolio of properties, including manufacturing and research and

development facilities.

Please refer to our website at http://www.iif-reit.com/english/

Contact: For further information relating to this news release as well as IIF and its Asset Manager, please feel free to contact Mr. Toshiaki Fukai

(Telephone Number: +81-3-5293-7090), Head of Industrial Division at Mitsubishi Corp. -UBS Realty, Inc., Asset Manager for Industrial & Infrastructure

Fund Investment Corporation.

Investor Relations: Telephone Number: +81-3-5293-7091

E-mail: [email protected]

This English language release is for informational purposes only, and the Japanese language release should be referred to as the original.

iif to acquire and lease eleven properties in japan...iif to acquire and lease eleven properties in...

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