IIF to Acquire Equity (anonymous association) in Kyoto

Transcription

1 Industrial & Infrastructure Fund Investment Corporation (Tokyo Stock Exchange Company Code: 3249) News Release December 12, 2013 IIF to Acquire Equity (anonymous association) in Kyoto Industrial & Infrastructure Fund Investment Corporation (TSE: 3249) (hereinafter, IIF ) announced today the planned acquisition of an equity interest in an anonymous association whose investment asset is a property in Kyoto as outlined below. 1. Summary of Acquisition 1) Type of asset Equity interest in an anonymous association whose investment asset is trust beneficiary right 2) Asset name Tokumei Kumiai investment in Limited Liability Company SBS Logi Fund 1 (hereinafter referred to as SLF1) (Note 1) 3) Property held in trust Kyo-tanabe Logistics Center (Note 2) 4) Amount of contributions 10 million yen (1.25% of anonymous association equity interests) 5) Contract execution date December 12, ) Acquisition date December 12, ) Acquisition funds Internal cash (Note 1) For more details of the anonymous association, please see 3 (1) Outline of anonymous association which is (the investment target) (Note 2) SLF1 will acquire 51% of the quasi-co-ownership interests of the trust beneficiary rights relating to the property held in trust. After the acquisition, SLF1 will be a co-owner with Yugen Kaisha Shimbashi Capital, the prior owner of the 51% quasi-co-ownership interests, and will be able to exercise preferential purchase rights to acquire the remaining 49% quasi-co-ownership interests from Yugen Kaisha Shimbashi Capital during the period from June 1, 2014 to November 30, (For more details, please see 3 (1) Outline of anonymous association (the investment target) 2. Reasons for Acquisition IIF s decision to acquire the equity interests in the anonymous association is based on our judgment that the acquisition, the attainment of preferential purchase rights in connection with the acquisition, and the characteristics of the properties held in trust are aligned with IIF s investment strategies (avoiding competition through CRE solutions on and acquisitions of quality assets potentially contributing to increasing distributions per unit). This acquisition marks the first time in which IIF will acquire an equity interest in an anonymous association, utilizing an anonymous association fund structure. The acquisition was made possible by way of IIF proposing a CRE solution to SBS Holdings Inc., a major logistics company and the de facto seller of the property, and we intend to establish an acquisition pipeline with SBS Holdings Inc. with respect to certain of their state-of-the-art logistics facilities which may be securitized in the future. With respect to our decision to acquire the anonymous association, IIF evaluated the properties mainly in terms of profitability, continuity and versatility. Going forward, IIF will continue to focus on acquiring properties by avoiding competition by formulating various strategic CRE solutions to potential sellers. Our decision-making process with respect to the acquisition focused on the following points in particular. 1

2 Acquisition Highlights -Large logistics facility in a location suited for logistics purposes in Kyoto Prefecture, where such locations are scarce. The location is also near Osaka and Kyoto, which are among the largest consumption areas in Japan - Continuity as the headquarters and key logistics hub covering the western region of Japan for the tenant Takara Butsuryu System Co., Ltd., the logistics subsidiary of Takara Shuzo Co., Ltd., a famous liquor company based in Kyoto. -High-specification facility with 24-hour operational capability, three berths (maximum 15m long) on three sides of the facility, floor weight capacity of 2.0 ton/m2, and 5.8m maximum ceiling height Continuity - Currently houses a logistics facility that began operations in 2007 and is used by Takara Butsuryu System Co., Ltd., whose parent company is Takara Shuzo Co., Ltd., a Kyoto based liquor company, as its headquarters and key logistics hub covering the western region of Japan - Convenient location for the tenant, near the Takara Shuzo factory in Kyoto Fushimi - The tenant has made certain amounts of capital expenditures, such as the installation of air conditioning, a fixed temperature warehouse, and a truck washing area located on the site; the tenant is obligated to restore the site to its original condition upon vacating the premises Versatility <Location> Excellent location for logistics services with convenient access to major consumption areas of the Kansai region - Located adjacent to Osaka and Kyoto, the area is capable of covering major cities within the Kansai region and retains potential as a wide-area distribution center covering the Kinki region. - High versatility as industrial real estate enabling 24-hour operations, in an area where a considerable number of logistics and industrial facilities are located (Osumi Industrial District). <Facilities> Features versatile specifications and allows high efficiency work within the facility -On site building layout provides easy truck access, and the facility has berths on three sides that are equipped with visors, the longest of which is 15m, and can be operated in inclement weather. - Floor weight capacity of 2.0 ton/m2, and ceiling height of 5.5m (1st Floor) 5.8m (2nd Floor), facilitating loading of various cargo - High specification vertical transportation including 2 freight elevators and five vertical conveyors (owned by the tenant) 2

3 Photo and Map 3 track berths to park 57 tracks Visor length maximum 15m Ceiling height 5.5m-5.8m Width between pillars 11.7m 11.7m Floor weight capacity 2.0t/m Source :Pasco Corporation (Note) Mitsubishi Corp.-UBS Realty Inc. ( Asset Management Company ), which is entrusted asset management of IIF, created this map based on the data of Market Planner GIS provided by Pasco Corporation. 3

4 3. Summary of Property (1) Outline of anonymous association (the investment target) Agent name Tokumei Kumiai investment in Limited Liability Company SBS Logi Fund 1 Until November 30, 2016 Effective term of However, if such day is not a business day, the next business day (provided, however, if such anonymous day falls in the following month, the previous business day) will be the last day of the effective association contract term. Furthermore, if all of the non-recourse debt is not paid, the effective term will be extended until such debt is fully paid.) Total amount of contributions in the 800 million yen anonymous association Schedule and structure December 13, 2013 June 1, 2014 to November 30, 2016 November 30, 2016 November 30, SLF1 will acquire 51% of the trust beneficiary right in real estate (Note1) - Exercise period of preferential purchase rights (SLF1 will acquire the remaining 49% of the trust beneficiary rights from the co-owner (Yugen Kaisha Shimbashi Capital)(Note 2)(Note 3) - Scheduled payment date of non-recourse debt of SLF1 - Scheduled final payment date of non-recourse debt of SLF1 (Note1) Pursuant to the project agreement undertaken by SLF1, IIF holds a preferential purchase right to acquire the trust beneficiary rights which SLF1 holds (51% quasi-co-ownership until SLF1 acquires the remaining 49% of the trust beneficiary rights from the co-owner) (Note 2) SLF1 is expected to hold a preferential purchase right concerning the 49% quasi-co-ownership of the trust beneficiary rights from June 1, 2014 to November 30, 2016 over the co-owner. SLF1, co-owner, BMS Asset Management and A-MAX will enter into an inter-beneficiary agreement with respect to the trust beneficiary rights, pursuant to which, if SLF1 exercises its preferential purchase right, the co-owner is obligated to negotiate with SLF1 for the sale of the 49% quasi-co-ownership interest. If both parties reach an agreement after such negotiation, SLF1 will acquire the quasi-co-ownership interest, however, if both parties are not able to reach an agreement, IIF will receive the preferential purchase right.. (Note 3) If SLF1 acquires the 49% quasi-co-ownership of the trust beneficiary rights, IIF in principle will not acquire ownership interests in the anonymous association. Outline of the scheme and anonymous association Summary of anonymous association as follows; Tokumei Kumiai investment in Limited Liability Company SBS Logi Fund 1 Trust beneficiary rights in real estate etc. 3,150 million yen (Note 4) Non-recourse debt 2,350 million yen Equity interest in anonymous association etc. 800 million yen (Note 4) SLF1 is scheduled to acquire a 51% quasi-co-ownership of the trust beneficiary rights on December 13, Furthermore, the above mentioned amount includes acquisition costs of trust beneficiary rights and the cost of establishing the anonymous partnership (rounded down to the nearest million yen). (Note 5) As of November 30, 2013, the appraisal value of the property subject to the 51% quasi-co-ownership of the trust beneficiary rights is 3,120 million yen. (Note 6) IIF intends to contribute 10 million yen or 1.25% of total funds invested in the Godo Kaisha through the anonymous association. Such equity interest in which IIF plans to contribute is valued at 12.2 million yen as of November 30, The contribution amount has been determined based on the appraisal value of the property as well as other factors that could affect the pricing. (Note 7) BMS Asset Management K.K. is expected to be the asset manager of SLF1.BMS Asset Management K.K. will recomission part of the asset management business to A-MAX Co., Ltd. IIF and Asset Management Company, do not have a particular relationship with the above mentioned companies. (Note 8) Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. is the financial advisor in setting up the anonymous association. Calculation period: Three-month periods each year from February 1 to April 30, May 1 to July 31, August 1 to October 31, and November 1 to January 31. Note, however, the initial computation period starts from the date of the contract to April 30, Should the contract terminate, the final date for the computation period would be the termination date. 4

5 Outline of the scheme and anonymous association Others Distribution of profit and loss: If profits from the said business are generated during each computation period, profits for such computation period shall be distributed to investors in proportion to each investor s investment ratios for such computation period. If losses from the said business are generated during each computation period, losses for such computation period shall be distributed to investors in proportion to each investor s investment ratios for such computation period. If the cumulative amount of losses distributed to investors exceeds the total amount of capital contribution, the distribution of losses shall be limited to the total capital contribution, and any excess losses will be distributed to the operator. The details of the preferential purchase right to be granted following the acquisition of an equity interest in anonymous association are below. (1) The preferential purchase right regarding the 49% interest of the trust beneficial right The right to preferentially purchase the acquisition of 49% of Description of right the beneficial interest is defined within the agreement relating Exercise subject and period of preferential purchase right Terms of price in preferential purchase to quasi-co-ownership interests of the trust beneficiary rights. SLF1 will hold the preferential purchase right during the exercise period between June 1, 2014 and November 30, However, the preferential purchase right will be transferred to IIF when: (a) SLF1 provides notice in writing that it will not exercise the preferential purchase right during the exercise period, or (b) SLF1 cannot complete the acquisition or when it becomes clear it cannot complete the acquisition When exercising the preferential purchase right of the trust beneficiary rights, the purchase price should exceed the price defined in the agreement relating to quasi-co-ownership interests of the trust beneficiary rights. (If the sale price cannot be determined as objectively reasonable as compared to the appraisal value provided in the most recent appraisal report, the price will be such value agreed between SLF1 and other co-owners.) (2) IIF s preferential purchase rights over the trust beneficiary rights held by SLF1 Pursuant to the project contract SLF1 has executed, IIF has preferential purchase rights over the acquisition of trust Description of right beneficiary rights (however, this only applies to the 51% interest of the quasi-co-ownership until SLF1 acquires the remaining 49%). Exercise period of Pursuant to with the project contract executed by SLF1, SLF1 is required to send a letter of exercise of preferential purchase preferential purchase right stating the desired date of acquisition (a date falling right between the end of March 2015 and the end of September 2016). Pursuant to the project contract SLF1 has executed, the acquisition price of the trust beneficial interest owned by Terms of price in SLF1 shall be set at an amount that can achieve the designated preferential purchase target yield of the anonymous association. The price is to be set at a rational amount that has been agreed between the owner of the preferential purchase right and SLF1. 5

6 (2) Profile of agent that invests in the anonymous association Name Tokumei Kumiai investment in Limited Liability Company SBS Logi Fund 1 (SLF1) Location 9-13, Nihonbashi Honcho 1-chome, Chuo-ku, Tokyo Name and Job title of Executive Director: General Incorporated Association (Ippan Shada Hojin) SLF Representatives Administrator (Shokumu Shikkou Sya): Masami Mikami 1. Acquisition, possession and disposal of trust beneficiary rights in property Business 2. Acquisition, possession, disposal, leasing, and management of property 3. Any businesses incidental or related to the above-mentioned businesses Capital 100 thousand yen Date Established November 21, 2013 Relationship with IIF or asset manager There is no capital or personal trade relationships between the Investment Capital relationship Corporation/the Asset Management Company and SLF1. In addition, there are no Personal relationship noteworthy capital, personal or trade relationships between affiliated companies of Trade relationship the Investment Corporation/the Asset Management Company and those of SLF1. SLF1 is not an interested party to the Investment Corporation/the Asset Management Interested party Company. In addition, interested parties of SLF1 are not interested parties of the Investment Corporation and the Asset Management Company. (3)Summary of beneficial interest in property held in trust Type of specific asset Trust beneficiary rights in real estate Beneficiary of trust Mitsubishi UFJ Trust and Banking Corporation Period of trust contract March 24, 2006 December 31, 2023 Location 55-13, Osumi-hama, Kyotanabe city, Kyoto (Note 1) Area 25, m 2 (Note 1) Land Zoning Restricted Industrial area (Note 2) Type of possession Ownership Structure / stories 4-stories; steel-framed with galvanized alloy steel sheet roofing (Note 1) Total floor space 33,243.99m 2 (Note 1) Designated floor area ratio / building-to-land ratio 200% / 60% Type Warehouse (Note 1) Building Type of possession Ownership Construction completion March 2007 (Note 1) Designer Kajima Corporation Constructor Kajima Corporation Institution to confirm on construction Kyoto Organization of Confirmation & Inspection PML : 5.6% Note on earthquake (based on the joint search report of earthquake risk by Engineering & Risk Services Corporation resistance and OYO RMS Corporation) Appraisal value 3,120 million yen (as of November 30, 2013) (Calculated by 51% of the total) 12.2 million yen (as of November 30, 2013) (Calculated by the portions of IIF) Appraisal Firm CBRE K.K. Present Owner Yugen Kaisha Shimbashi Capital Number of tenants 1 (Tenant: Takara Butsuryu System Co., Ltd.) Rent Not disclosed (Note 3) Security and deposit Not disclosed (Note 3) Lease area 33, m 2 Leasable area 33, m 2 Transition in occupancy ratio 100% Term of contract March 30, 2007 December 31, 2017 Description of tenant 6

7 Type of contract Revision of rent Cancelation before ended contract period Collateral note Other Note General lease contract of building For every 2 years, upon mutual consultation, parties may revise rents reflecting the change in economy conditions, taxes and other material changes in the economic situation. By expressing its intention by the end of June 2017, the contract can be terminated at the end of December 2017, on the condition that the tenant pays the relevant amount of rent from the date of contract termination to the end of December None The beneficiary rights are quasi-co-ownership rights with SLF1 and Yugen Kaisha Shimbashi Capital, and SLF1 expects to enter into an inter-beneficiary agreement between IIF, BMS Asset Management Co., Ltd., and A-MAX Co., Ltd.. Prior to the planned acquisition, SLF1 has requested that Field Partners conduct a soil and environmental survey. As a result, it has been confirmed that the probability of soil contamination in this property is low. (Note 1) Location represents the address of the property or noted in the registry book. Descriptions of Land, Structure / stories, Total floor space, Type and Construction completion are based on the registry books. (Note 2) Descriptions of Zoning are the types of use districts provided in Section 1-1, Article 8 of the City Planning Act. (Note 3) IIF has not obtained the necessary permission from the lessee to disclose this information. 4. Broker None 5. Future Outlook of IIF This transaction has negligible impact on our operating results for the 13th Fiscal Period ended December 31, 2013, therefore we are not revising the forecast of our operating results in the Financial Results. (Reference) Summary of Appraisal (based on 51% of the trust beneficiary rights Appraisal firm CBRE K.K. Appraisal value 3,120 million yen (Note) Appraisal date November 30, 2013 Value based on direct capitalization method 6,160 million yen Direct cap rate 5.6 % Value based on DCF method 6,120 million yen Discount rate 5.4 % Terminal cap rate 5.8 % Integrated value based on cost method 4,210 million yen Proportion of land 60.6 % Proportion of building 39.4 % (Note)Appraisal value is calculated by multiplying 51% quasi-co-ownership interest of the trust beneficiary rights to the value of the building and land of the property. About IIF: Industrial and Infrastructure Fund Investment Corporation ( IIF ) is the first J-REIT focused 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 Contacts: For the further information relating to this press release as well as the Fund and its Asset Manager, please feel free to contact Mr. Toshiaki Fukai (Telephone Number: ), Head of Industrial Division at Mitsubishi Corp.-UBS Realty, Inc., Asset Manager for Industrial & Infrastructure Fund Investment Corporation. Investor Relations: Telephone Number: iif-3249.ir@mc-ubs.com It is for informational purposes only, and the Japanese language release should be referred to as the original. 7