3D’s Request to Sapporo Shareholders

Sapporo is considering specific methods to divest its real estate
It is our understanding that the real estate divestiture strategy will be announced later this fiscal year
To maximize corporate value, selecting an appropriate real estate divestiture strategy is extremely important
Under such circumstances, and after much research and consultation with real estate industry experts, we have developed a specific real estate divestiture strategy that we believe can maximize Sapporo’s corporate value
We ask that shareholders review our materials and join us in supporting Sapporo’s review process by sharing their perspectives regarding the best path forward for the Company

Real estate divestiture strategy by 3D

We believe that two structures for divesting Sapporo’s real estate holdings are effective for maximizing corporate value: a tax-qualified spin-off and a complete sale of selected, individual properties
- Possible divestiture methods include spin-offs, property sales and partial sales or capital increases of the real estate holding company
- Of these, partial sales and capital increases of the real estate holding company would theoretically greatly reduce the contribution of the real estate to corporate value

We believe that spinning off properties with high NAV growth rates and selling properties with low NAV growth rates will maximize corporate value
- Properties with high NAV growth rates may be given high NAV multiples after listing, but properties with low NAV growth rates are expected to remain to have low NAV multiples
- Properties with high NAV growth rates and significant potential for value appreciation include Yebisu Garden Place, Lion Ginza 7-chome and Shinjuku Lion

We assume that Sapporo’s real estate holding company, Sapporo Real Estate Development, can be listed in a tax-qualified spin-off
- The selection of the properties to be sold will be based on Sapporo’s financial plan, the viability of Sapporo Real Estate Development as a listed company and the financial plan of Sapporo Real Estate Development, and the selected properties will be sold before and after the listing

If Sapporo divests it real estate using this strategy, we believe its market capitalization will increase from the current 440.1 billion yen to 722.0 billion yen, an upside of approximately 65%
- Alcoholic Beverages and Food & Beverage Business Holding Company (330.1 billion yen): Calculated based on this fiscal year’s estimated EBITDA (including corporate expenses) and EV/EBITDA multiples of domestic and overseas competitors in the alcoholic beverages business and estimated sales and EV/Sales of Dydo Drinco Incorporated in the food and beverages business
- Real estate holding company after spin-off (265.8 billion yen): Calculated by applying a NAV multiple based on estimated future NAV growth rate to NAV based on third-party real estate appraisal value and Net Debt
- Cash and cash equivalents generated by the sale of properties (126.2 billion yen): Calculated based on third-party real estate appraisal value, excluding taxation of gains on sales