Notice Concerning Renovation Plan of Kyoto Family, Kyoto Prefecture

Transcription

1 Japan Retail Fund Investment Corporation (Tokyo Stock Exchange Company Code: 8953) News Release September 10, 2010 Notice Concerning Renovation Plan of Kyoto Family, Kyoto Prefecture Japan Retail Fund Investment Corporation (TSE: 8953) announced today that we reached a mutual decision with the main tenant, AEON RETAIL Co., Ltd. ( the Tenant ), at the property Kyoto Family*, Kyoto-city, Kyoto Prefecture ( the Property ), to change the lease, reducing the amount of space to be leased by The Tenant. Furthermore, we decided to undertake renovation of this part of the Property and introduce new tenants, as outlined below. 1. Details of Renovation Under our Medium-term Business Policy, with regard to certain master lease properties (Note 1), JRF has for some time considered plans for maintaining and improving the medium- to long-term property value. To achieve this, we will ask the tenant of such properties to return part or all of the leased area. We will then convert the properties into direct lease properties (Note 2), in which we lease returned space directly to multiple strong and specialized tenants that are supported by many consumers. In addition, depending on the situation, we may ask the main tenants of direct lease properties that have the majority of the floor space to return part of the leased areas, we will then lease to new tenants. with the aim of revitalizing the facilities. Kyoto Family has been operated as a direct lease property, and maintained robust sales as a community-based commercial facility. However, new style leases with many of the specialty stores expired at the end of December Taking advantage of this, JRF has reviewed the tenant mix and has been partially repairing the interior common areas since the beginning of 2010 in order to raise the value of the property. Specifically, we leased the first floor to UNIQLO Co., Ltd. and Mister Donut, established a new food court on the 3rd floor, and improved the rest rooms and entrance. The lease (old style leases) with the main tenant expired at the end of December 2009, and was renewed for another year with no change in the terms. However, we have been discussing with the tenant about new lease terms and measures for further revitalizing the entire Property. We have concluded that to revitalize the entire property, it is crucial to have the tenant return part of the area leased to JUSCO, and lease that space (about 15% of the gross leasable area) to a new tenant. This time, both parties have agreed on this partial return. We have also agreed to change the period of the lease contract, which had been automatically renewed every year, to expire in September 30, In addition, we have agreed to revise the rent and other terms considering that sales efficiency is higher on the first floor than on the second floor. Further, we will introduce rent based on percentage of sales in addition to base rents, and such rent will be determined every six months. Note 1: A master lease property is leased to a single tenant (master lease company), and this tenant subleases to each end tenant. Note 2: With a direct lease property, we conclude lease contracts directly with each tenant in the property.

2 2. Description of renovation 1) Overview of renovation [Description of the Property] Property name Kyoto Family Location 1-1 Ikejiricho, Yamanouchi, Ukyuo-ku, Kyoto-city, Kyoto Main tenant (company) name JUSCO (AEON RETAIL Co., Ltd.) Total leasable area of all of the Property (A) 25,277.38m 2 (as of the end of July 2010) Present Lease area of the Tenant (B) 13,731.39m 2 (private area : 8,442.28m 2 ) Total leasable area of all of the Property After 20,005.35m 2 (Note*) (A-B+C+D) reconfiguration Lease area of the Tenant (C) 5,415.46m 2 (private area only) Note: In disclosing the entire property s area, JRF had included the exclusive area and the common area in the contract area under an agreement with the Tenant, regarding the space leased to JUSCO. However, with the recent change in the contract, only the exclusive area leased to the Tenant will become the contract area, and thus the gross leasable area of the entire property will be reduced. [Description of renovation] New tenant Lease area (D) Expense for renovation (estimate) [Forecasts for after renovation] (all of the Property) Annual sales target Prospective annual rental income Prospective NOI (annual) Large specialty store (JRF has agreed with a new tenant to conclude a fixed-term lease. However, at present we cannot disclose the tenant s name and type of business because the tenant has requested us not to.) 3,043.90m 2 (Percentage of space in the Property leased by the new tenant 15.2%) Approximately 75 million yen (Construction for renovating the building, equipment, etc.) 12 billion yen (target in 2011) (Annual sales results in 2009 : 10.3 billion yen) Approximately 1.25 billion yen (Annual rental income results : approximately 1.24 billion yen from March 2009 to February 2010) Approximately 460 million yen (We expect NOI to increase by about 5 million yen compared with the NOI estimated assuming the present contract with the tenant would be maintained.) 2) Direction of renovation As part of our medium-to long-term strategy, JFR will implement this renovation, following the large-scale renovation announced in the release dated July 13, 2010, Notice Concerning Renovation Plan and Changing Tenant of Ito-Yokado Narumi, Aichi Prefecture*. We will increase the property s ability to attract customers by repositioning it into a new category of center. Specifically, we will partially convert the area leased to the main tenant into specialty stores, and accommodate a large competitive specialty shop on the second floor in space slated to be returned. In relation to this returned space, the new tenant will conduct renovation work on the sales space on the first floor at its own expense. We expect this to enhance particularly the zones of food, pharmaceuticals and miscellaneous household goods, which are the property s strengths. Given the customer-attracting effects caused by this series of renovations, we project the overall NOI level will be higher than if the present contract with the tenant were to be maintained. 3) Schedule of renovation (scheduled) September 20, 2010 Late September - early October 2010 Late October 2010 Closing of 2 nd floor of JUSCO Opening of 1 st floor in JUSCO after renovation Opening of large specialty store on 2 nd floor in space returned by JUSCO

3 3. Future Outlook for JRF This renovation and replacement of the tenant is expected to have no immediate impact on the forecast of operating results for the 17 th Fiscal Period (March 1, 2010 August 31, 2010), and the impact is expected to be very slight on the operating results for the 18 th Fiscal Period (September 1, 2010 February 28, 2011), so we are not changing our forecasts. If there are material changes in the renovation plan, we will disclose them.

4 [Reference ] Image of the floor of The Property 1F Opening JUSCO after renovation (by AEON RETAIL Co., Ltd.) (scheduled to be opened in late September - early October 2010) 2F Opened UNIQLO (March 2010) Opened Mister Donut (March 2010) Closeing of JUSCO (scheduled on 20 September 2010 [Part of returning and renovation of this time] Opening large spatiality store (scheduled late October 2010) 3F Opened the Food Court (June 2010) Photo of the property and map

5 About JRF: Japan Retail Fund Investment Corporation ("JRF") is the third listed Japanese Real Estate Investment Trust and the first J-REIT to focus exclusively on retail properties. As of the date of this release, JRF owns 59 properties containing approximately 2.7 million square meters of leasable space. Please refer to our website at for further details. Contacts: For further information relating to this press release as well as the Fund and its Asset Manager, please feel free to contact Mr. Fuminori Imanishi (Telephone Number: ), Head of Retail Division at Mitsubishi Corp.-UBS Realty Inc., Asset Manager for Japan Retail Fund. Investor Relations: Telephone Number: This translation is for informational purposes only, and the Japanese language release should be referred to as the original.