GOR Announces Acquisition of a Property (Arca Central)

Transcription

1 Press Release 20 March 2014 REIT Issuer: Global One Real Estate Investment Corp. Securities Code: 8958 Representative: Yoichiro Kitajima, Executive Director Asset Manager: Global Alliance Realty Co., Ltd. Representative: Masanori Yamauchi, President and CEO Contact: Yoshitaka Shibata Executive Officer, General Manager of REIT Finance Department Tel: GOR Announces Acquisition of a Property (Arca Central) 20 March 2014 Global One Real Estate Investment Corp. ( GOR ) announced today that it has decided to acquire trust beneficial interests in the Arca Central (hereinafter referred to as Arca Central, or the Subject Property ) as outlined below. 1. Outline of acquisition 1) Type of assets : Trust beneficial interests in real estate (for details, please see 3. Property description ) 2) Name of building : Arca Central 3) Trustee : Mitsubishi UFJ Trust and Banking Corporation 4) Trust period : 28 March March 2024 (changed period, scheduled) 5) Purchase price : 15,031,349,684 yen (Note) 6) Scheduled acquisition date : 28 March ) Seller : Istanbul Asset Tokutei Mokuteki Kaisha (for details, please see 4. Seller profile ) 8) Funds of acquisition : Borrowings and funds on hand

2 (Note) The purchase price listed above is computed as the trade value of 16,010,000,000 yen described in the purchase agreement (excluding acquisition expenses, city planning tax and property tax, consumption tax and local consumption tax) less maintenance charges on the management association of 978,650,316 yen which will be succeeded from the seller. 2. Reason for acquisition The purpose of the acquisition of the above mentioned trust beneficial interests is to ensure steady growth and stable income of the portfolio properties, according to the Investment Policies and Investment Targets, as stipulated in the Articles of Incorporation. The key determinant factors of the acquisition include: 1) District potential The Kinshicho district, where the Subject Property is located, serves as a center for office space in the Joto area, and has developed remarkably in recent years. This district is now even better positioned due to the effects of the opening Tokyo Sky Tree and the development of the neighboring areas. In addition, there is a wide variety of companies having headquarters or branch offices in this district, in fields such as insurance, pharmaceuticals, real estate, communications, consumer credit and manufacturing. Tenant demand in the district is consistently strong due to easy access to central Tokyo (just eight minutes to JR Tokyo Station by train) and is convenient for daily living. In addition, given that this area also serves as a sales and marketing management base for the western part of Chiba Prefecture, demand is well diversified for a wide range of tenants even in a time of fluctuating market conditions. Therefore, the district potential is rather high. 2) Location potential The Subject Property is conveniently located in terms of public transportation: a 3 minute walk from JR Kinshicho Station; a 4 minute walk from Tokyo Metro Kinshicho Station (Hanzomon line); and close to Kinshicho Exit on the Komatsugawa Line of the Metropolitan Expressway. In addition, the Subject Property is located in the center of a redevelopment area that symbolizes the Kinshicho district. This redevelopment area (Arca Towers) has various urban functions, such as commercial (Arca Kit), culture (Triphony Hall) and accommodation (Tobu Hotel) as well as residential (Arca Habita etc.). Therefore, the location potential is rather high.

3 3) Property specifications and portfolio attributes in relation to three key elements: Closer, Newer and Larger The Subject Property is a large scale building, with 22 stories above ground and 3 below, and was completed in March The Subject Property has standard floor space of approximately 420 tsubo (1,388 square meters), an effective ceiling height of 2,700 mm and free access floor of 60mm. The Subject Property is 17 years old, which is older than the average age of properties in the GOR s portfolio. However, the Subject Property has an extremely high relative competitiveness in the Kinshicho area where there are few new properties. However, in the light of enabling effective use of GOR s substantial borrowing capacity for acquisition opportunities in the amount of 30,000 million yen or more*, which is obtained by selling Sphere Tower Tennoz and Kintetsu Shin Nagoya Building, GOR determined that it should be necessary to allocate the funds to high yielding assets like the Subject Property, without solely allocating money to low yielding assets that are new and located in the central area of Tokyo. Furthermore, the Subject Property is relatively well diversified in terms of tenants, and accordingly, there is almost no divergence in rent between existing and new tenants. Therefore, there is little concern for back filling with the Subject Property, as was seen when tenants exited the floors of Sphere Tower Tennoz. In addition, there is little concern about a worsening supply/demand balance, as was seen in the case of Kintetsu Shin Nagoya Building. Furthermore, with regard to the age of the Subject Property, GOR considers it possible to improve the Newer element in this building through proper renewal, as seen in the case of Otemachi First Square. By so doing, GOR strongly believes that it will be able to enhance and improve its competitiveness. * Our pro forma calculation suggests that our borrowing capacity would be approximately 30,000 million yen under the LTV ratio of 50% after the repayment of borrowings using the sales proceeds of Sphere Tower Tennoz and Kintetsu Shin Nagoya Building.

4 3. Property description (1) Type of specified assets, its name and location, etc. Name of building Type of specified assets Arca Central Trust beneficial interests in real estate Location Residence indication: 1 2 1, Kinshi, Sumida ku, Tokyo Land number: 1 35, Kinshi, Sumida ku, Tokyo Land Ownership Co ownership of the site, registered as Land area Shikichi Ken (Note 2) Total land area: 18, sqm (entire Third Block) Building Ownership Condo ownership Use Office Floor area Total floor area of 4 buildings (Note 3) 163, sqm Total floor area of Arca Central 49, sqm (Completion drawing) Of which, the footprint to be acquired (Note 4) 15, sqm Year built March 1997 Structure (Total 4 buildings) Steel reinforced concrete structure, steel reinforced concrete flat roof, 24 stories above ground and 3 below (Arca Central) Steel construction (partially steel reinforced concrete, reinforced concrete), flat roof, 22 floors above ground, 3 floors below ground, and 1 penthouse floor (Completion drawing) License / approval of Structural strength It falls under the tall building structure with a height of more than 60 meters. Acquired the rating from the Tall Building Structure Appraisal Committee (certified by the Minister of Land, Infrastructure and Transport) Designer Construction firm Nikken Sekkei, Ltd. Takenaka Corporation, Kajima Corporation, Obayashi Corporation, Toda Corporation,

5 Fujita Corporation, Tada Corporation, Fuji Corporation and Tobu Yachida. Construction JV Appraisal outline Appraisal value 16,600 million yen Appraiser Daiwa Real Estate Appraisal Co., Ltd. Date of appraisal 20 February 2014 Appraisal rate etc. DC method / cap rate 4.4% DCF method / discount rate 4.2% DCF method / terminal cap rate 4.6% Acquisition price 15,031,349,684 yen Engineering report PML 2.2% : Analysis conducted by OYO RMS Corporation, dated 28 February 2014 CAPEX 575,346,000 yen over 12 years: (annual average: 47,945,000 yen): based on the estimates in the ER conducted by Tokyo Marine & Nichido Risk Consulting Co., Ltd., as of March 2014 Collateral None Notes Unit owners holding each individual ownership space have organized the Kinshicho Third Block Management Association, a subordinate body called Four Buildings Management Association and a further subordinated organization called Arca Central Management Association. In addition, the Kinshicho Third Block Management Rules are defined as commonly applicable to these three associations. (2) Tenant profile, leasing status Number of tenants 19 Total rent per month 84 million yen Security deposit 560 million yen Total rentable area 15, sqm Total leased area 14, sqm Occupancy ratio 95.9 % Since the vacant rooms are expected to be fully occupied, the occupancy ratio will become 100% in June Expected NOI 710 million yen (Note 1) Area, use, floor area, year built, and structure are shown based on the registration,

6 unless otherwise stated. (Note 2) The Shikichi Ken, set on the site of the Subject Property, is owned by the Trustee at the rate of 19,780,690/100,000,000. (Note 3) In addition to Arca Central, the registered building also includes Tobu Hotel, Triphony Hall and Arca West. (Note 4) The ownership interest in the Subject Property to be purchased is equivalent to approximately 19.8% of the entire co ownership interest owned by Third Block in accordance with the Management Rules of these management associations, and approximately 56.1% of the co ownership interest owned by Arca Central. (Note 5) PML is a probable maximum loss in the event of a major earthquake. While the definition may vary depending on the region, the PML used herein is a loss rate to assess damage, calculated by dividing the loss amount by the replacement cost. The figure is based on the assumption that the building will be in use for 50 years and that the largest expected earthquake has a 10% probability of occurring every 50 years within the recurrence range of 475 years. (Note 6) NOI means net operating income, the amount of the total rental revenue less property related expenses (excluded depreciation and amortization costs). Expected NOI is an expected annualized number excluding extraordinary factors for the first year of acquisition. In calculating the Expected NOI, the occupancy ratio is assumed to be 96%.

7 4. Seller profile Company name Location of head office Representative Istanbul Asset Tokutei Mokuteki Kaisha , Toranomon Sanchome, Minato ku, Tokyo Kiyohiko Ide, Board Member Business 1. Purchase, management, development and/or sale of a specific asset in accordance with the Law Concerning Securitization of Assets 2. Other operations related to the aforementioned operations Capital Specific equity: 300,000 yen Preferred equity: 3,385,500 thousand yen Incorporation 09 July 2012 Major shareholder Major shareholder remains undisclosed as we have yet to receive permission to disclose it from the seller. Relationships with GOR/GAR Capital relationships Personnel relationships Business relationships Whether related party There are no capital relationships of note between the GOR/GAR and the seller. There are no personnel relationships of note between the GOR/GAR and the seller. There are no business relationships of note between the GOR/GAR and the seller. The seller is not a related party of GOR/GAR. 5. The Subject Property s ownership situation Since the seller of the Subject Property has no special relationship with GOR/GAR, the description is omitted. 6. Outline of the intermediation (1) Overview of the Intermediary Name Address Representative Main businesses Sumitomo Mitsui Trust Bank, Ltd Marunouchi, Chiyoda ku, Tokyo Hitoshi Tsunekage, President Trust business, banking business and other services (including sale and purchase, etc. of beneficial interest in trust and intermediary services for the buying and selling of real estate) Capital 342,037 million yen (As of 31 March 2013) Date incorporated 28 July 1925 Relationships with GOR/GAR Capital relationships There are no capital relationships of note between the GOR/GAR and the intermediary.

8 Personnel relationships Business relationships Whether related Party There are no personnel relationships of note between the GOR/GAR and the intermediary. The intermediary is a trustee of Yodoyabashi Flex Tower, which is owned by GOR. The intermediary is not a related party of GOR/GAR. Name Address Representative Main businesses Capital Savills Japan Co., Ltd Azabudai, Minato ku, Tokyo Christian Mancini, Representative Director Financial instruments business (Type II Financial Instruments Business), real estate agency/brokerage business, real estate management, and real estate appraisal million yen Date incorporated 23 August 2004 Relationships with GOR/GAR Capital relationships Personnel relationships Business relationships There are no capital relationships of note between the GOR/GAR and the intermediary. There are no personnel relationships of note between the GOR/GAR and the intermediary. There are no business relationships of note between the GOR/GAR and the intermediary. Whether related Party The intermediary is not a related party of GOR/GAR. (2) Breakdown and value of the intermediation commission Intermediation commission remains undisclosed as we have yet to receive permission to disclose it from the intermediary. 7. Payment method GOR is scheduled to make a lump sum payment at the time of acquisition using a combination of funds on hand and debt financing. Details of the debt financing will be announced when determined. 8. Acquisition schedule 20 March 2014 Declares the acquisition Concludes an agreement to purchase the trust beneficiary interests in real estate 28 March 2014 Makes a payment Acquires the trust beneficiary interests in real estate

9 9. Earnings forecasts Since the impact on business performance for the six month period ending March 2014 is minimal, there is no revision of forecasts on business performance for the six month period ending March 2014 due to the decision of the acquisition of trust beneficial interests in Arca Central. About GOR: Global One Real Estate Investment Corporation ( GOR ) is a Japanese Real Estate Investment Trust (J REIT) listed on the Tokyo Stock Exchange (TSE: 8958) with the ultimate goal of pursuing maximum returns for unitholders. GOR cautiously selects prime properties at prime locations with an eye on strong and sustainable competitiveness in the marketplace. The three key watchwords in selecting properties are: (1) CLOSER easily accessible from nearby train stations; (2) NEWER newly or recently built; and (3) LARGER large office buildings with extensive office space. For more information about GOR, please visit: reit.co.jp/eng/ Note: This document is the English version of Press Release that is written in Japanese. The English version is understood to be a translation of the Japanese version and is supplied as a convenience to investors who prefer to use English. This document, containing forward looking statements, is not intended to be a solicitation of any particular investment transaction. Investors should consult with their own investment advisors regarding the appropriateness of investing in any of the securities or investment strategies. <Attachments> <Ref. 1> Building photo <Ref. 2> Access <Ref. 3> Diagrammatic view <Ref. 4> List of assets after acquisition <Ref. 5> Portfolio data after acquisition

10 <Ref. 1> Building photo

11 <Ref. 2> Access

12 <Ref. 3> Diagrammatic view 22 F 21 F 20 F 19 F 18 F 17 F 16 F 15 F 14 F 13 F Office 12 F 11 F 10 F 9F 8F 7F 6F 5F 4F 3F 2F Entrance 1F B1 F B2 F B3 F School, Retail Office Area owned by GOR

13 <Ref. 4> List of assets after acquisition* * Kintetsu Shin Nagoya Building, which will be transferred, is excluded. Name of Property (location) Otemachi First Square (Chiyoda ku, Tokyo) Hirakawacho Mori Tower (Chiyoda ku, Tokyo) Ginza First Building (Chuo ku, Tokyo) TK Minami Aoyama Building (Minato ku, Tokyo) ARK Hills Sengokuyama Mori Tower (Minato ku, Tokyo) ARCA CENTRAL (Sumida ku, Tokyo) Meiji Yasuda Life Insurance Saitama (Chuo ku, Saitama City, Saitama) Yodoyabashi Flex Tower (Chuo ku, Osaka City, Osaka) Type of ownership Condo ownership Condo Ownership Condo Ownership Ownership Condo Ownership Condo Ownership 50% Co ownership Ownership Total floor area (sqm) (Note 1) Gross rentable area (sqm) (Note 2) 141, , , , , , , , , , , , , , , , Year built Feb 1992 Dec 2009 Aug 1998 May 2003 Aug 2012 Mar 1997 Mar 2002 Nov 2006 Acquisition Age price year (million yen) (Note 3) (Note 4) , , , , , , , ,834 Total 506, , ,966 (Note 1) Total floor area indicates the total floor area of the building regardless of the type of ownership. However, with regard to Arca Central, of the four buildings registered, the floor space of each building is described based on the completion drawing. (Note 2) Gross rentable area indicates the area owned by GOR. (Note 3) Age year of each property refers to the number of years as of 28 March 2014, which is rounded to one decimal place, including Arca Central to be acquired. In addition, Total of the age year means the average age of the portfolio properties (weighted average value of the total rentable area). (Note 4) Acquisition price refers to the value (described in the purchase agreement), excluding acquisition expenses (such as brokerage fees and taxes and public dues). The acquisition price of Arca Central means the anticipated value, which further excludes the maintenance charges on the management association to be succeeded from the seller. The amount is rounded down to the nearest million yen.

14 <Ref.5 > Portfolio data after acquisition* * Kintetsu Shin Nagoya Building, which will be transferred, is excluded. Indicators Unit Before acquisition As of 27 March 2014 After acquisition (scheduled) Number of properties 7 8 Total acquisition price Average invested amount per property Million yen Million yen 127, ,966 18,276 17,870 Average rentable area per property sqm 10,371 10,987 Average age of building (Note) Year Portfolio PML % (Note) Average age of building is the weighted average value of the gross rentable area. In particular, the average age before acquisition refers to the age as of 27 March 2014, and the average age after acquisition represents the age as of 28 March 2014, inclusive of Arca Central to be acquired.