Advance Residence Investment : Information under Article 23 of European Alternative Investment Fund Managers Directive (AIFMD) for U.K. and Dutch Investors（※英文のみ）

Disclaimer

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information under Article 23 of the European Alternative Investment Fund Managers Directive (European Directive 2011/61/EU) (the "AIFMD") as implemented in their respective jurisdictions. Accordingly, you should not use this document for any other purpose.

Netherlands

The units of Advance Residence Investment Corporation ("ADR" or the "AIF") are being marketed in the Netherlands under Section 1:13b of the Dutch Financial Supervision Act (Wet op het financieel toezicht, or the "Wft"). In accordance with this provision, ITOCHU REIT Management Co., Ltd. (former AD Investment Management Co., Ltd.) (the "AIFM") has submitted a notification with the Dutch Authority for the Financial Markets (Authoriteit Financiële Markten, the "AFM") of its intention to offer these units in the Netherlands. The units of ADR will not, directly or indirectly, be offered, sold, transferred or delivered in the Netherlands, except to or by individuals or entities that are qualified investors (gekwalificeerde beleggers) within the meaning of Article 1:1 of the Wft. As a consequence neither the AIFM nor ADR is subject to the license requirement for investment institutions (beleggingsinstellingen) or their managers pursuant to the Wft. Consequently, the AIFM and CSIF are only subject to supervision of the Dutch Central Bank (De Nederlandsche Bank, "DNB") or the AFM for the compliance with the ongoing regulatory requirements as referred to in the Dutch law implementation of article 42 of the AIFMD. This Article 23 AIFMD Prospectus is not subject to approval by the AFM. No approved prospectus is required to be published in the Netherlands pursuant to Article 3 of the Regulation (EU) 2017/1129 (the "Prospectus Regulation") as amended and applicable in the Netherlands.

United Kingdom

Units of ADR are being marketed in the United Kingdom pursuant to Article 59 of the United Kingdom Alternative Investment Fund Managers Regulations 2013. In accordance with this provision, the AIFM has notified the Financial Conduct Authority (the "FCA") of its intention to offer these units in the United Kingdom.

For the purposes of the United Kingdom Financial Services and Markets Act 2000 ("FSMA"), ADR is an unregulated collective investment scheme which has not been authorized by the FCA.

Accordingly, any communication of an invitation or inducement to invest in ADR may only be made to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, or the "Order"; or (ii) high net worth companies falling within Articles 49(2)(a) to (d) of the Order and other persons to whom it may lawfully be communicated (all such persons referred to under (i) and (ii) of this paragraph, together being referred to as "Relevant Persons").

In the United Kingdom, this document and its contents are directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons. The transmission of this document and its contents in the United Kingdom to any person other than a Relevant Person is unauthorized and may contravene the FSMA and other United Kingdom securities laws and regulations.

Prohibition of Sales to UK Retail Investors

In addition to the restrictions under the AIFMD, as retained by the United Kingdom in its domestic laws, the Units of ADR are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom. For these purposes of this provision, a "retail investor" means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 ("EUWA"); or (ii) a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129, as it forms part of domestic law by virtue of the EUWA; and the expression "offer" includes the communication in any form and by any means of sufficient information on the terms of the offer and the international units to be offered so as to enable an investor to decide to purchase or subscribe the international units.

Consequently no key information document required by Regulation (EU) No 1286/2014, as it forms part of domestic law by virtue of the EUWA (the "UK PRIIPs Regulation"), for

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offering or selling the international units or otherwise making them available to retail investors in the United Kingdom has been prepared and therefore offering or selling the international units or otherwise making them available to any retail investor in the United Kingdom may be unlawful under the UK PRIIPs Regulation.

European Economic Area

In addition to the restrictions under the AIFMD, the units of ADR are not intended, from 1 January 2018, to be offered, sold or otherwise made available to and, with effect from such date, should not be offered, sold or otherwise made available to any retail investor in the European Economic Area ("EEA"). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as amended, (the "MiFID II") , including any client, beneficiary, principal, or similar of any person acting as a trustee, agent, nominee, or similar; (ii) a customer within the meaning of Directive (EU) 2016/97, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Regulation, as amended. Consequently no key information document required by Regulation (EU) No 1286/2014 (the "PRIIPs Regulation") for offering or selling the units of ADR or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the units of ADR or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.

Transaction Summary

ADR's asset manager, AD Investment Management Co., Ltd. ("ADIM"), executed a merger agreement on January 27, 2022 between ADIM and ITOCHU REIT Management Co., Ltd. ("IRM") on June 1, 2022 through an absorption-type merger, with ADIM as the surviving entity (the "Merger").

Since the shareholders of ADIM and IRM and their respective shareholding percentages remain the same, the Merger did not involve the delivery of new shares or other assets as consideration. Following the completion of the Merger, ADIM changed its corporate name to "ITOCHU REIT Management Co., Ltd."

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Article 23 (1)(a)
Objectives of the AIF	Advance Residence Investment Corporation seeks to maximize unitholder value, aiming to
	secure stable profits and achieve asset growth over the medium and long term by
	investing in Japanese domestic real estate primarily used for residential purposes with a
	focus on diversifying its investments among regions.
Investment strategy	ADR's investment strategy is to maximize unitholders' value by utilizing ITOCHU Group's
	and other supporting companies' networks, knowledge and human resources in areas
	concerning leasing, property sourcing and facility management.
Types of assets the AIF	Real estate, trust beneficiary interests in real estate, real estate securities, specified assets
may invest in	and other assets.
Techniques it may	ADR focuses on investing in residential properties which ADR anticipates will provide
employ and all	steady rental revenue especially in Tokyo and other urban areas where there will be
associated risks	continued population growth even though the population as a whole is expected to
	decline.

The principal risks with respect to investment in ADR are as follows:

• any adverse conditions in the Japanese economy could adversely affect ADR;
• ADR may not be able to acquire properties to execute the growth and investment strategy in a manner that is accretive to earnings;
• illiquidity in the real estate market may limit the ability to grow or adjust the portfolio;
• the past experience of the Asset Manager (the "AIFM") in the Japanese real estate market is not an indicator or guarantee of the future results;
• ADR's reliance on ITOCHU Group, the AIFM and other third party service providers could have a material adverse effect on business;
• the AIFM operating multiple funds;
• there are potential conflicts of interest between ADR and ITOCHU Group as well as the AIFM;
• ADR's revenues largely comprise leasing revenues from the portfolio properties, which may be negatively affected by vacancies, decreases in rent, and late or missed payments by tenants;
• ADR faces significant competition in seeking tenants and it may be difficult to find replacement tenants;
• increases in interest rates may increase the interest expense and may result in a decline in the market price of the units;
• ADR may suffer large losses if any of the properties incurs damage from a natural or man-made disaster;

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• about 70% of the properties in the portfolio are concentrated in Tokyo metropolitan area;
• any inability to obtain financing for future acquisitions could adversely affect the growth of the portfolio;
• ADR's failure to satisfy a complex series of requirements pursuant to Japanese tax regulations would disqualify ADR from certain taxation benefits and significantly reduce the cash distributions to the unitholders; and
• the ownership rights in some of the properties may be declared invalid or limited. In addition, we are subject to the following risks:
• risks related to increasing operating costs;
• risks related to ADR's dependence on the efforts of the AIFM's key personnel;
• risks related to the restrictive covenants under debt financing arrangement;
• risks related to entering into forward commitment contracts;
• risks related to third party leasehold interests in the land underlying ADR's properties;
• risks related to holding the property in the form of stratified ownership (kubun shoyū) interests or co-ownership interests (kyōyū-mochibun);
• risks related to holding the property through trust beneficiary interests;
• risks related to properties not in operation (including properties under development);
• risks related to the defective title, design, construction or other defects or problems in the properties;
• risks related to affect by infectious diseases and plagues;
• risks related to suffering impairment losses relating to the properties;
• risks related to decreasing tenant leasehold deposits and/or security deposits;
• risks related to tenants' default as a result of financial difficulty or insolvency;
• risks related to the insolvency of master lessor;
• risks related to relying on expert appraisals and engineering, environmental and seismic reports as well as industry and market data;
• risks related to the presence of hazardous or toxic substances in the properties, or the failure to properly remediate such substances;
• risks related to the strict environmental liabilities for the properties;
• risks related to the insider trading regulations;
• risks related to the amendment of the applicable administrative laws and local ordinances;
• risks related to infringing third party's intellectual property right;
• risks related to holding interests in properties through preferred shares of special purpose companies (tokutei mokuteki kaisha);

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