ORIX JREIT : Announces Disposition of Properties “Beside Kiba” and “Cross Residence Kanazawa Kohrinbo”

For Immediate Release

REIT Issuer:

ORIX JREIT Inc. (TSE: 8954)

Hiroshi Miura

Executive Director

Asset Management Company:

ORIX Asset Management Corporation

Yoshitaka Kamemoto

President and CEO Inquiries:

Shinji Yamana

Executive Officer and CFO

TEL：[phone]

ORIX JREIT Announces Disposition of Properties "Beside Kiba" and "Cross Residence Kanazawa Kohrinbo"

TOKYO, March 31, 2022 - ORIX JREIT Inc. ("OJR") announced that our asset management company, ORIX Asset Management Corporation ("OAM"), passed a resolution on the disposition of properties described below.

1．Disposition Summary

Property name	Beside Kiba	Cross Residence Kanazawa Kohrinbo
Specified asset category	Real estate trust beneficiary interest (Scheduled) (Note 2)	Real estate trust beneficiary interest
Type	Office	Residential property
Area	Remaining Tokyo Wards (Note 3) (Koto-ku, Tokyo)	Other areas (Note 4) (Kanazawa-shi, Ishikawa)
Disposition price	4,135 million yen	3,525.8 million yen
Appraisal value	2,990 million yen	2,760 million yen
Book value	1,800 million yen (Note 5,6)	2,046 million yen (Note 5,6)
Estimated gain/ｌoss on disposition	2,186 million yen (Note 5,6)	1,345 million yen (Note 5,6)
Buyer	Not-disclosed (Note 7)	Hoosiers Co.,LTD
Contract date	March 31, 2022	March 31, 2022
Disposition date	June 1, 2022 (Note 8)	February 1, 2023 (Note 8)
Existence of intermediary	Yes	Yes

Notes:

• 1. "Property" refers to each property or collectively to all the properties indicated above. "Disposition" refers to the disposition of the Property.

• 2. As of today, no trust has been established for the Property. OJR plans to establish trust for the Property upon the Disposition.

• 3. "Remaining Tokyo Wards" refers to the remaining Tokyo wards other than the "6 central Tokyo wards (Chiyoda, Chuo,

  Minato, Shibuya, Shinagawa and Shinjuku wards)."

• 4. "Other areas" refers to areas other than the Greater Tokyo Area (Tokyo, Kanagawa, Saitama and Chiba prefectures)

• 5. Figures are rounded down to the nearest million yen.

• 6. Book value is an estimate as of the disposition date. Estimated gain or loss on disposition is pro forma amount based on the book value and assumed disposition expenses. The amounts are subject to change.

• 7. The buyer is not disclosed because the consent of the buyer could not be obtained, including information on the type of company.

• 8. Each purchase and sale agreement pertaining to the Disposition (hereinafter collectively the "Purchase and Sale Agreement") falls under the category of Forward Commitment as provided in the Comprehensive Guideline for Supervision of Financial Instruments Business Operators, etc. set by the Financial Services Agency since it is a postdated purchase and sale agreement where the settlement and delivery of the property will be conducted later than one month after the conclusion of such agreement.

In this regard, the Purchase and Sale Agreement stipulates cancellation provisions as follows:

• i. In the event either the seller or the purchaser commits material breach of the Purchase and Sale Agreement (such party is hereinafter the "Breaching Party"), the other party (hereinafter the "Terminating Party") shall set a certain reasonable period and demand the Breaching Party to perform its obligations within such period. If the Breaching Party fails to remedy its breach within such period, the Terminating Party may terminate the Purchase and Sale Agreement. Provided, however, that in case it is evident that it is impossible to remedy its breach within a reasonable period, the Terminating Party may immediately terminate the Purchase and Sale Agreement without notice.

• ii. In the event the Purchase and Sale Agreement is terminated due to the reason mentioned in i) above, the Breaching Party shall immediately pay the amount equivalent to 20% of the total amount of the Disposition price of the property to be disposed to the Terminating Party as a penalty. Even if the damage incurred or born by the Terminating Party exceeds the amount of the penalty, the Terminating Party may not claim an amount in excess of the penalty to the Breaching Party. Even if the amount of such damage is less than the amount of the penalty, the Breaching Party may not claim a reduction of the penalty.

2．Future Outlook

This Disposition is part of our asset reshuffling strategy to enhance portfolio quality. Gain on the Dispositions will be recognized during the 41st Fiscal Period ending August 31, 2022, and the 42nd Fiscal Period ending February 28, 2023 respectively, with due consideration of DPU.

For details, please refer to the press release "ORIX JREIT Announces Revisions to Earnings and Distribution Forecasts for the 41st Fiscal Period ending August 31, 2022" and Earnings and Distribution Forecasts for the 42nd Fiscal Period ending February 28, 2023" announced today.

Furthermore, proceeds from the Disposition will be used for various initiatives that contribute to the stable growth in unitholder value, such as future property acquisition and the repayment of loans.

3．Reason for the Disposition

OJR has been promoting the selective disposition of properties with concerns over future competitiveness or relatively low profitability and thus have been implementing an asset reshuffling strategy focused on enhancing portfolio quality to achieve stable growth of unitholder value. Under this policy and management strategy, we decided to dispose the Property.

• (1) Beside Kiba

  •  This property was owned since 2002 upon listing and is now in its 31st year since Construction. Thus, we estimate that a considerable amount of additional repair costs is to be incurred in the future.

  •  In addition, although the property is currently fully occupied, as it is situated in an unaccommodating office location, we believe maintaining future competitiveness to be a concern.

• (2) Cross Residence Kanazawa Kohrinbo

  •  Despite this property being a high grade residential property, leasing has been competitive due to the increased supply of newly built condominiums available for rent. The amenities and specifications of this property have thus become inferior to those competing properties due to its age (15 years old). With the weakened occupancy, there is a concern of declining competitiveness in the future.

4. Summary of the Property

(1) Beside Kiba

Property name	Beside Kiba
Type of ownership	Full ownership
Address	2-17-16 Kiba, Koto-ku, Tokyo (Note1)
Appraisal value (Date of value)	2,990 million yen (as of February 28, 2022)
Summary of rental status as of January 31, 2022 Number of tenants Gross rental income excluding parking Security deposits 6 13 million yen per month (Note2) 147 million yen (Note2)

including parking
Total rent space	4,758.03 m2
Total rentable space	4,758.03 m2
Occupancy rate during past 5 years	August 2017	August 2018	August 2019	August 2020	August 2021
84.5%	100%	100%	100%	100%
Special notes	None

(2) Cross Residence Kanazawa Kohrinbo

Property name	Cross Residence Kanazawa Kohrinbo
Type of ownership	Full ownership
Address	2-4-3 Kohrinbo, Kanazawa-shi, Ishikawa (Note1)
Appraisal value (Date of value)	2,760 million yen (as of February 28, 2022)
Summary of rental status as of January 31, 2022 Residential: 1 (pass through-type master lease agreement) Number of tenants Gross rental income excluding parking Security deposits including parking Total rent space Total rentable space Retail: 3 16 million yen per month (Note2) 82 million yen (Note2) 5,928.48 m2 6,680.44 m2
Occupancy rate during past 5 years	August 2017	August 2018	August 2019	August 2020	August 2021
90.5%	93.2%	85.7%	84.4%	83.6%
Special notes	None

Notes:

• 1. The "Address" column shows the residence indication if there is, and if there is none, the building address recorded in the registry. Accordingly, the address may differ from the lot number recorded in the registry.

• 2. Figures are rounded down to the nearest million yen.

5. Profile of the Buyer

(1) Beside Kiba

The buyer is not disclosed because the consent of the buyer could not be obtained, including information on the type of company. The buyer is not a "related party" to OJR nor OAM.

(2) Cross Residence Kanazawa Kohrinbo

As of March 1, 2022

Company name Address Representative Primary BusinessHoosiers Co.,LTD

2-2-3 Marunouchi, Chiyoda-ku, Tokyo CEO Eiichi Ogawa

Real estate transaction, intermediation, leasing, management and consulting, etc

Capital

Date of establishment Net Assets

2.4 billion yen December 21, 1994 19 billion yen

(As of March 31, 2021) Total Assets

51 billion yen

(As of March 31, 2021) Major shareholders (As of March 31, 2021) Relationships with OJR or OAM

Hoosiers Holdings 100%

Capital relationship

There is no capital relationship required for reporting among OJR or OAM and the Company.

Personal relationship

There is no personal relationship required for reporting among OJR or OAM and the Company.

Business relationship	There is no business relationship required for reporting among OJR or OAM and the Company.
Applicable to related party	The Company does not fall under "related party" of OJR nor OAM.

6. Payment terms

• (1) Beside Kiba

  Settlement terms: 100% on delivery

• (2) Cross Residence Kanazawa Kohrinbo

  Settlement terms: 10% on execution of purchase and sales agreement, 90% on delivery

7. Appraisal Summary (1) Beside Kiba

Name of asset

Beside Kiba

Date of value	February 28, 2022
Appraisal value (In thousands of yen)	2,990,000
Appraiser	Tanizawa Sogo Appraisal Co., Ltd.

(In thousands of yen)

Item	Content	Grounds
Income Approach Value Valuation by the Direct Capitalization Method (1) Gross Operating Revenue [(a)-(g)] (a) Effective gross revenue [(b)＋(c)＋(d)＋(e)＋(f)] (b) Rental income (c) CAM income (d) Utility reimbursement (e) Parking Fee income (f) Other income (g) Vacancy loss (2) Operating Expenses Maintenance Expense Utility Expense Repair Expense Property Management Fee Tenant Advertisement Cost Tax and Public Dues Casualty Insurance Other Expenses (3) Net Operating Income [(1)-(2)] (4)Profit from Managing Security Deposit (5)Capital Expenditure (6)Net Revenue [(3)+(4)-(5)] (7)Cap Rate DCF Method Discount Rate Terminal Cap Rate	2,990,000	We estimated the value indicated by the Income Approach mainly based on the value indicated by the DCF Method, also verified it by the value indicated by the DC Method.
3,040,000
189,797
200,721	Assessed Rental income, Utility Fee income, Parking Fee income, which are considered to be stable levels, based on the competitiveness of subject property, the trends of track record, market trends, the lease evidences, and so on.
169,290	Assessed the market rent taking into account the lease evidences and so on.
0
23,980	Assessed based on the trends of track record, and so on.
6,300	Assessed based on the trends of track record, and so on.
1,150	Assessed based on the trends of track record, and so on.
10,923	Assessed based on the vacancy rate deemed to be a stable level, taking into account the competitiveness of subject property, the trends of track record, market trends, and so on.
56,841
12,561	Assessed based on the trends of track record, BM fee-related materials , and the level of similar properties, and so on.
22,838	Assessed based on the trends of track record, and so on.
3,875	Assessed based on Engineering Report, the level of similar properties, and so on.
2,338	Assessed based on Property Management Contract, the level of similar properties, and so on.
1,579	Assessed based on the turnover rate deemed to be a stable level, taking into account the competitiveness of the subject property, the trends of track record, market trends, and so on.
12,609	Assessed based on taxable materials.
279	Assessed based on insurance materials and the level of similar properties, and so on.
759	Assessed based on the trends of track record, and so on.
132,956
1,616	Assessed investment yield as 1.0%.
10,075	Assessed based on Engineering Report, the level of similar properties, and so on.
124,498
4.1%	Assessed by taking into account the use of the subject property, its location and building conditions, market trends, the comparable evidences, the type of lease, the relations of rights, and so on.
2,970,000
4.2%	Assessed by taking into account the use of the subject property its location and building conditions, the level of funding costs, market trends, the type of lease, the relations of rights, and so on.
4.3%	Assessed by taking into account future uncertainty and other factors in the capitalization rate at the date of value.
Cost Approach Ratio of Land Ratio of Building	2,750,000
73.2%
26.8%

Additional considerations made in the reconciliation of evaluation

The market participants make decisions focusing on the stability of income, growth potential, liquidity at the resale, and other factors. The value indicated by the Income Approach reflected this process is highly normative. Accordingly, we determined the final opinion of value by the value indicated by the Income Approach.