Acquisition of Asset (HIROKOJI AQUA PLACE)

Transcription

1 Translation Purposes Only For Immediate Release March 28, 2012 REIT Issuer HEIWA REAL ESTATE REIT, Inc Atago, Minato-ku, Tokyo Masaaki Higashihara, Executive Director (Securities Code: 8966) Asset Management Company HEIWA REAL ESTATE Asset Management CO., LTD. Takaya Ichikawa, President & Representative Director Inquiries: Shinya Ito, General Manager, IR Department TEL Acquisition of Asset (HIROKOJI AQUA PLACE) HEIWA REAL ESTATE REIT, Inc. (the Investment Corporation ) announced today the following decision to acquire Hirokoji Aqua Place (the Property ) Details 1. Overview of the Acquisition (1) Property Name HIROKOJI AQUA PLACE (2) Type of Asset to be Acquired Trust beneficial interest (real estate in Japan) (3) Investment Category Regional city office building (4) Investment Area Regional investment area (Nagoya-shi, Aichi) (5) Acquisition Price (Planned) 2,930,000,000 (Note) (6) Agreement Execution Date (Planned) March 30, 2012 (7) Planned Acquisition Date (Delivery Date) March 30, 2012 (8) Seller HEIWA REAL ESTATE Co., Ltd. (9) Acquisition Financing Cash on hand and borrowings (10) Settlement Method Settlement in lump-sum at time of delivery (11) Trustee Mizuho Trust & Banking Co., Ltd. (12) Trust period From December 27, 2011 to November 30, 2021 (Note) Acquisition price (planned) is the price described in the trust beneficial interest transaction agreement (consumption tax not included), and excludes acquisition costs, fixed property tax, and city planning tax, etc

2 2. Reasons for the Acquisition and Property Characteristics The Investment Corporation will acquire the Property pursuant to the Asset Management Target and Policy set forth in its bylaws. Since October 2009, when Heiwa Real Estate Co., Ltd. (hereinafter, Heiwa Real Estate ) became the sole sponsor of the Asset Management Company by acquiring its entire shares, the Investment Corporation had been pursuing restructuring of foundation for growth as stage 1. In October 2010, the Investment Corporation merged with Japan REIT, and worked to enhance the profitability and quality of its portfolio in terms of business operations and to improve loan terms and conditions, including reduction in financial costs, and establish a stable financial base in terms of financial operations. In June 2011, the Investment Corporation started initiatives for further improvement both in business and financial operations, in pursuit of stage 2 dubbed as Towards the Path of Re-Growth. As part of these endeavors, the Investment Corporation has decided to acquire the Property by taking advantage of the warehousing function of Heiwa Real Estate, based on the memorandum on business cooperation executed between Heiwa Real Estate and the asset management company. The Investment Corporation believes that the acquisition of the Property should be beneficial as it increases the investment ratio of office properties in view of the balance of the entire portfolio and promotes geographical diversification. The Property is a relatively new, mid-sized office building completed in May 2008 with a total floor space of 9, m 2. Facing Hirokoji-dori, a major street in Nagoya City, it features sufficient competitiveness in building specifications in comparison with neighboring properties. In addition, Heiwa Real Estate has a branch in Nagoya City, making it possible for the Investment Corporation to entrust property management operations to Heiwa Real Estate and utilize its leasing ability, tenant relations, information channels and building operation and administration capabilities. It is also expected the Property will produce relatively high yields. Considering these points, the Investment Corporation has judged the Property will contribute to the improvement of the profitability and quality of the portfolio, and decided on its acquisition. The characteristics of the Property are explained below. (1) Location (2) Building The Property is approximately four minutes walk from Shinsakae Station on the Nagoya City Subway Higashiyama Line and approximately seven minutes walk from Takaoka Station on the Nagoya City Subway Sakura-Dori Line, providing high convenience that allows use of two stations on two subway lines. The Property also commands high visibility as it faces Hirokoji-dori. The Shinsakae district has few relatively new office buildings while offering high convenience of public transport including subways and expressways. As such, the location allows expectations for demand for office space. The Property has a leasable floor space of approximately 733 m 2 (approximately 221 tsubos) on a standard floor, and features a ceiling height of 2,700 mm (standard floor), an OA-compatible floor with a height of 100mm (standard floor), individually controlled air conditioners on each floor, three elevators, smoking rooms on each floor (standard floor), parking space for 145 vehicles and low emissivity glass, etc. It is well-equipped for competitiveness as a relatively new, mid-sized office building. Furthermore, the acquisition of the Property will change the property composition by property type from 33.83% for office, 62.94% for residence and 3.23% for hotel to 35.30% for office, 61.54% for residence and 3.16% for hotel. Going forward, the Investment Corporation will continue to pursue both profitability of office properties and stability of residential properties, a characteristic of a compound portfolio comprising office and residential properties, working to expand the asset size and enhance profitability

3 3. Acquisition Asset Details Property Name Location (Note 1) Land Building HIROKOJI AQUA PLACE (Residential address) Shinsakae, Naka-ku, Nagoya-shi, Aichi (Lot number) 507 and 514 Shinsakae, Naka-ku, Nagoya-shi, Aichi Form of Ownership Ownership Area (Note 1) 1, m 2 Use District (Note 2) Commercial district Building Coverage Ratio (Note 3) % Floor Area Ratio (Note 3) % % Form of Ownership Trust beneficial interest Use (Note 1) Office, store and parking Structure / Floors (Note 1) Steel-framed, flat roof, 11 floors above ground Steel-framed, zinc-coated steel sheets, one-story building Total Floor Space (Note 1) 9, m 2 (Note 4) Construction Completion Date (Note 1) May 2008 Construction Client Venus Treasure Godo Kaisha Constructor Architect Structural Designer Building Certification Property Management Company (Planned) Master Lease Company (Planned) Master Lease Type (Planned) Grant of Security Interests Lease Status (Note 5) Assumed NOI (Note 8) Overview of Building Status Survey Report Overview of Real Estate Appraisal Report (Note 9) Present After Acquisition Kajima Corporation KOKUBU SEKKEI KOKUBU SEKKEI Bureau Veritas Japan Heiwa Real Estate Co., Ltd. Heiwa Real Estate Co., Ltd. Pass through None Total Number of Tenants 6 Total Leasable Floor Space 7, m 2 Yes (planned to establish revolving pledge) Total Leased Floor Space 6, m 2 Monthly Rent (Including Common Expenses) 19,541,319 Tenant Leasehold and Security Deposits 85,408,710 Occupancy Rate(based on floor space) 83.58% (Note 6) [92.70%] (Note 7) (1) 21st Fiscal Period 42,983 thousand (2) Annual assumption (Yield) 215,509 thousand (7.35%) Survey Agent Tokyo Bldg-Tech Center Co., Ltd. Survey Date January 20, 2012 Replacement Value 2,471,000,000 PML Value 10.6% Long-term Maintenance and Repair Cost (Within ,340,000 Years) Appraiser Tanizawa Sogo Appraisal Co., Ltd. Value Date January 31, 2012 Appraisal Value 3,710,000,000

4 (Note 1) Location (excluding Indication of Residential Address), Parcel Area, Use, Structure/Floors, Total Floor Space and Construction Completion Date are as stated in the real estate registry. (Note 2) Use District is the type of use district as listed in Article 8, Paragraph 1, Item 1of the City Planning Act. (Note 3) Building Coverage Ratio is the ratio of the building area of the building to the site area as stipulated in Article 53 of the Building Standards Act, and Floor Area Ratio is the ratio of the total floor space of the building to the site area as stipulated in Article 52 of the Building Standards Act. Furthermore, the floor area ratio is 800% for the area up to 30m from the border of the road north to the land of the Property, and 500% for the area beyond 30m. The weighted average floor area ratio of the two areas is %. (Note 4) The figure includes the parking lot ( m 2 ), which is annexed to the Property. (Note 5) Lease Status indicates figures as of March 28, (Note 6) Occupancy Rate indicates the figure as of March 28, (Note 7) [Occupancy Rate] indicates the figure that reflects the following events as assumed as of March 28, (1) An agreement was executed with a tenant (leased floor space: m 2 ) as of February 27, 2012 concerning its move-in as of April 1, (2) An agreement was executed with a tenant (leased floor space: m 2 ) as of March 15, 2012 concerning its move-in as of May 1, (3) An agreement was executed with a tenant (leased floor space: m 2 ) as of March 23, 2012 concerning its move-in as of June 18, (4) A notice of cancellation was received from a tenant (leased floor space: m 2 ) concerning its move-out as of April 20, (Note 8) Of the Assumed NOI, (1) is the assumed figure for the 21st fiscal period on the assumption that there will be no new move-in or move-out, except for the move-in and move-out of tenants as described in (Note 7), from the above lease status for the period from March 30, 2012, the planned acquisition date of the Property, to May 31, 2012, which is the last day of the 21st fiscal period, and with an anticipated period-end occupancy rate of 85.74%. (2) is the assumed annual figure excluding special factors concerning operation cost, etc. and at a stable occupancy rate of the Property at 90%. (Note 9) For more details, please refer to (Attachment 1) Summary of Real Estate Appraisal Report. 4. Seller Profile (1) Name Heiwa Real Estate Co., Ltd. (2) Head Office Address 1-10 Nihonbashi Kabuto-cho, Chuo-ku, Tokyo (3) Representative Sadao Yoshino, President, Director 1. Leasing 2. Housing development (4) Line of Business 3. Real estate development 4. Other businesses (5) Capital Stock 21,492 million (Note) (6) Date of Incorporation July 1947 (7) Consolidated Net Assets 73,010 million (Note) (8) Consolidated Total Assets 296,058 million (Note) (9) (10) Major Shareholders and Shareholding Ratio Relationship with the Investment Corporation and Asset Management Company Mitsubishi Estate Co., Ltd % Japan Trustee Services Bank, Ltd. (Trust Account) 4.40% The Master Trust Bank of Japan, Ltd. (Trust Account) 3.88% GOLDMAN SACHS INTERNATIONAL 2.45% (Note) Capital relationship The seller owns 102,292 units (14.69% of total investment units outstanding) of the Investment Corporation s investment units as of November 30, In addition, the seller owns 4,968 shares (100% of total shares outstanding) of the Asset Management Company s shares, and falls within the scope of interested persons, etc. as defined in the Financial Instruments and Exchange Act and Act on Investment Trusts and Investment Corporations

5 (Note) Figures are as of March 31, Personnel Relationship Business Relationship Whether or Not a Related Party Of the officers and employees of the Asset Management Company, two persons (excluding part-time directors) are dispatched from the seller as of March 28, No transaction concerning acquisition or transfer of assets was conducted between the Seller and the Investment Corporation or the Asset Management Company in the fiscal period ended November As described above, the seller is a major unitholder of the Investment Corporation, and falls under the category of interested persons, etc. of the Asset Management Company. 5. Broker Profile N/A 6. Acquirer s Profile Name Relationship with specially-interested party Background and Reason of Acquisition, etc. Investment Corporation HEIWA REAL ESTATE REIT, Inc. - Please refer to the above 1. Overview of the Acquisition and 2. Reasons for the Acquisition and Property Characteristics. Previous Owner Heiwa Real Estate Co., Ltd. Please refer to the above 4. Seller Profile, (10) Relationship with the Investment Corporation and Asset Management Company Acquisition for warehousing purposes 2,850 million Acquisition Price 2,930 million - (excluding related expenses) Acquisition Date March 30, 2012 (Planned) December 27, Owner before Previous Owner Party not falling within the scope of specially-interested parties Transactions with Interested Persons, etc. (Asset Acquisition and Consignment of Property Management Operations) In addition to interested persons, etc. as defined in the Financial Instruments and Exchange Act and Act on Investment Trusts and Investment Corporations, the Asset Management Company regulates transactions involving conflicts of interest with interested parties, stipulating in its internal regulations that an interested party shall refer collectively to: (i) A company, etc. that holds more than 10% of the voting rights of all shareholders of the Asset Management Company; (ii) A company, etc. in which more than 50% of the voting rights of all its shareholders are held by (i); or (iii) A company, etc. to which (i) or (ii) provides advice, etc. on the management and administration of its assets

6 Since Heiwa Real Estate, which is the seller of the Property and the consignee of its property management operations, falls under the scope of the interested party category, the Board of Directors meeting held today decided on the transaction after obtaining unanimous consent at the Asset Management Company s Investment Committee, Compliance Committee and the Board of Directors meeting, pursuant to the internal rules of the Asset Management Company. 8. Management Status Outlook The acquisition of the Property will have minimal impact on the Investment Corporation s earnings performance, and no change is made to the management status forecast for the fiscal period ending May 2012 (the 21st fiscal period from December 1, 2011 to May 31, 2012). * Distribution: Kabuto Club, Ministry of Land, Infrastructure, Transport and Tourism Press Club, and Ministry of Land, Infrastructure, Transport and Tourism Press Club for Construction Publications * Investment Corporation Website: [Attachment] (Attachment 1) Summary of Real Estate Appraisal Report (Attachment 2) Photo and Map of Location of the Property (Attachment 3) Portfolio List After the Acquisition of the Property - 6 -

7 (Attachment 1) Summary of Real Estate Appraisal Report Appraiser (Unit: yen) Tanizawa Sogo Appraisal Co., Ltd. Valuation date January 31, 2012 Appraisal value 3,710,000,000 Value indicated by the income approach 3,710,000,000 Value indicated by the income approach (direct capitalization method) 3,780,000,000 Effective gross income 319,763,098 Potential gross income 247,958,570 Other income 71,804,528 Operating expenses 95,960,434 Net operating income (NOI) 223,802,664 Interest of refundable security deposits 2,753,419 Capital expenditures 3,825,000 Net cash flow (NCF) 222,731,083 Capitalization rate 5.9% Value indicated by the income approach (discounted cash flow method) 3,680,000,000 Discount rate 6.1% Terminal capitalization rate 6.2% Value indicated by the cost approach 3,390,000,

8 (Attachment 2) Photo and Map of Location of the Property Of-26 HIROKOJI AQUA PLACE Façade - 8 -

9 Entrance Inside Lease Space Map of Location - 9 -

10 Offices Residences (Attachment 3) Portfolio List After the Acquisition of the Property Investment Acquisition Investment Property Property Name Location Area Price Ratio No. (Note 1) (million yen) (%) Of-01 Asahi Life Insurance Gotanda Building Shinagawa-ku, Tokyo I 1, Of-05 Suitengu Heiwa Building Chuo-ku, Tokyo I 1, Of-06 NV Tomioka Building Koto-ku, Tokyo I 2, Of-07 Hamamatsucho SS Building Minato-ku, Tokyo I 1, Of-08 Kokusai Tameike Building Minato-ku, Tokyo I 2, Of-09 Grace Building Sengakujimae Minato-ku, Tokyo I 1, Of-10 Nisso Dai 15 Building Yokohama-shi, Kanagawa II 1, Of-11 Nihonbashi Daiichi Building Chuo-ku, Tokyo I 2, Of-12 Hatchobori SF Building Chuo-ku, Tokyo I 3, Of-13 Shibuya AX Hills Shibuya-ku, Tokyo I 1, Of-14 KCA Building Chiyoda-ku, Tokyo I 1, Of-15 Daiwa Nakameguro Building Meguro-ku, Tokyo I 2, Of-16 Anwa Tsukasacho Building Chiyoda-ku, Tokyo I 1, Of-17 Hatchobori MF Building Chuo-ku, Tokyo I 1, Of-18 M2 Harajuku Shibuya-ku, Tokyo I 3, Of-20 Funabashi Face Building Funabashi-shi, Chiba II 3, Of-21 Adesso Nishiazabu Minato-ku, Tokyo I Of-22 CIC Toranomon Building Minato-ku, Tokyo I 1, Of-23 Aria Ikebukuro Toshima-ku, Tokyo I 1, Of-24 CIC Yushima Building Bunkyo-ku, Tokyo I 1, Of-25 Kayabacho Heiwa Building Chuo-ku, Tokyo I 4, Of-26 HIROKOJI AQUA PLACE Nagoya-shi, Aichi III 2, Office Subtotal 46, Re-03 Concord Ichikawa Ichikawa-shi, Chiba II Re-05 CIC Meguro Meguro-ku, Tokyo I Re-09 Regulus Higashikasai Edogawa-ku, Tokyo I Re-11 Mirum Wakabayashi Koen Setagaya-ku, Tokyo I 3, Re-12 Mirum Himonya Meguro-ku, Tokyo I 1, Re-14 Main Stage Minami Azabu III Minato-ku, Tokyo I 1, Re-15 Cosmos Gracia Azabujuban Minato-ku, Tokyo I 1, Re-16 Advantage Gakugeidaigaku Meguro-ku, Tokyo I 1, Re-17 Hermitage Higashikanda Chiyoda-ku, Tokyo I 1, Re-18 Hermitage Higashinihonbashi Chuo-ku, Tokyo I 1, Re-19 Hermitage Nerima Nerima-ku, Tokyo I Re-20 Landstage Shirokane Takanawa Minato-ku, Tokyo I 4, Re-21 Urbyl Berger Meidaimae Setagaya-ku, Tokyo I 1, Re-22 Joy City Nihonbashi Chuo-ku, Tokyo I 1, Re-23 Grefas Kamishakujii Nerima-ku, Tokyo I Re-24 T&G KINSHICHO MANSION Sumida-ku, Tokyo I 1, Re-25 Glenpark Ginza EAST Chuo-ku, Tokyo I 5, Re-26 Glenpark Shin-yokohama Yokohama-shi, Kanagawa II 3, Re-29 Residence Mukogaoka Bunkyo-ku, Tokyo I 2, Re-30 Residence Higashimagome Ota-ku, Tokyo I 1, Re-31 Glenpark Gakugeidaigaku Meguro-ku, Tokyo I 1, Re-33 Advance Kameido Koto-ku, Tokyo I 1, Re-34 Vante Tanashi Nishitokyo-shi, Tokyo II Re-35 Shiba-koen Minato-ku, Tokyo I

11 Residence Re-36 Mita Minato-ku, Tokyo I 1, Re-37 Takanawa Minato-ku, Tokyo I Re-38 La Residence de Shirokanedai Minato-ku, Tokyo I Re-39 Ginzahigashi Chuo-ku, Tokyo I 1, Re-40 Hatchobori II Chuo-ku, Tokyo I 1, Re-41 Hatchobori III Chuo-ku, Tokyo I Re-42 Ginza Chuo-ku, Tokyo I Re-43 TOUR JAUNE Komazawa-koen Setagaya-ku, Tokyo I 6, Re-44 Umeda TOWER Osaka-shi, Osaka III 1, Re-45 Nakanoshima Osaka-shi, Osaka III Re-46 Awaza Osaka-shi, Osaka III Re-47 Marunouchi Nagoya-shi, Aichi III Re-48 Re-49 Hirao Kawaramachi Nijo Fukuoka-shi, Fukuoka III 1, Kyoto-shi, Kyoto III Re-50 Minami 6 Jyo Sapporo-shi, Hokkaido III Re-51 Tenjinminami Fukuoka-shi, Fukuoka III Re-52 Tenjinhigashi Fukuoka-shi, Fukuoka III Re-53 Shijyo Kawaramachi Kyoto-shi, Kyoto III 1, Re-54 La Residence de Sendagi Bunkyo-ku, Tokyo I Re-55 Sendagi Bunkyo-ku, Tokyo I Re-56 Komazawa-koen Setagaya-ku, Tokyo I Re-57 Musashikoyama Shinagawa-ku, Tokyo I Re-58 Kokubunji Kokubunji-ku, Tokyo II Re-59 Hisayaodori Nagoya-shi, Aichi III 1, Re-60 Karasuma Kuramaguchi Kyoto-shi, Kyoto III Re-61 Nishishinjuku WEST Shinjuku-ku, Tokyo I 1, Re-62 Nishishinjuku EAST Shinjuku-ku, Tokyo I 1, Re-63 Higashishinjuku Shinjuku-ku, Tokyo I 1, Re-64 Higashishinsaibashi Osaka-shi, Osaka III Re-65 Kitayobancho Sendai-shi, Miyagi III Re-66 Atagobashi Sendai-shi, Miyagi III Re-67 Fukuoka-shi, Kyudaibyoin-mae Fukuoka III Re-68 Asakusabashi Taito-ku, Tokyo I Re-69 Ichibancho Sendai-shi, Miyagi III Re-70 Higashinakano Nakano-ku, Tokyo I Re-71 Re-72 Re-73 Minami 5 Jyo Sapporo-shi, Hokkaido III Waseda First Square Shinjuku-ku, Tokyo I 2, Waseda Second Square Shinjuku-ku, Tokyo I Residence Subtotal 81,

12 Hotels Ho-01 Super Hotel Osaka Tennoji Osaka-shi, Osaka III 1, Ho-02 Super Hotel Kyoto Karasumagojyo Kyoto-shi, Kyoto III Ho-03 Super Hotel Saitama Omiya Saitama-shi, Saitama II 1, Ho-04 Super Hotel Sendai Hirose-dori Sendai-shi, Miyagi III 1, Hotels Subtotal 4, Portfolio Total 132, (Note 1) The Investment Area column entries are in accordance with the following basis: Investment in the Primary Investment Area (Tokyo 23 Wards) is entered as I, investment in the Secondary Investment Area (Tokyo (other than the Primary Investment Area), and major urban areas of Kanagawa Prefecture, Chiba Prefecture and Saitama Prefecture) is entered as II, and investment in the Regional Investment Area (major urban areas of government-ordinance-designated cities other than the Primary and Secondary Investment Areas) is entered as III