Astro Japan Property : Settlement of dispute with JPTD/JPTA interest rate swap counterparty

ASX/Media Release

20 March 2014

Astro Japan Property Group (ASX: AJA) today announced the settlement of a dispute relating to interest rate swap arrangements between two of its Japanese special purpose companies, JPT Direct Co., Ltd. (JPTD) and JPT August Co., Ltd. (JPTA), and the swap counterparty, a European investment bank.
The dispute arose from structuring of the discounted settlement of senior secured loans to JPTD
and JPTA completed in July, 2013 and the counterparty's position as a subordinated creditor. The counterparty claimed that JPTD and JPTA were liable for the full amount, as set out in the
segment balance sheet of AJA's half year consolidated financial statements, of $7,703,000 in
respect of terminated derivative financial instruments, together with accumulated interest amounting to $2,970,000, in total $10,673,000.
As had been noted in AJA's consolidated financial statements, on the basis of Japanese legal advice, these amounts had been in dispute, and at the most recent balance date, discussions were still ongoing with the counterparty to try to resolve the matter. Pending resolution of the dispute, AJA and its auditors had determined that the appropriate approach was to continue to reflect the
full liability in AJA's consolidated accounts.
The terms of the settlement involved the payment to the counterparty of ¥480,000,000 (A$5.2 million approx. at A$=¥92) in full and final settlement of the counterparty's claims. The payment of this amount has been made from existing AJA cash reserves.
Mr Eric Lucas, Senior Advisor to AJA,said "Settlement resolves uncertainty around a complex legal analysis and the potential for substantial legal costs over a protracted period, and results in the removal of provisional liens which the counterparty has imposed on JPTD's two property assets. These liens have negatively affected tenant relations and precluded sales activity.
The payment of the agreed settlement amount and consequent elimination of the liability to payment of the full amount of the claim results in an increase in NTA of nearly 8 cents per security, or about 1.5% of AJA's most recent stated NTA."

Eric Lucas John Pettigrew

Senior Advisor Chief Financial Officer

Phone: +61 2 8987 3900 (Australia) Phone: +61 2 8987 3902

+81 3 3238 1671 (Japan)

Astro Japan Property Group is a listed property group which invests in the Japan real estate market. It currently holds interests in a portfolio comprising 33 retail, office and residential properties. Asset management services in Japan are generally undertaken by Spring Investment Co., Ltd.

AJA is a stapled entity comprising Astro Japan Property Trust (ARSN 112 799 854) and Astro Japan Property Group Limited (ABN 25 135 381 663). For further information please visit our website: www.astrojapanproperty.com.

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