Notice concerning Acquisition of Asset (Nisseki Shibuya Building)

Transcription

1 This translation of the original Japanese notice is provided solely for information purposes. Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail. REIT Issuer: Daiwa Office Investment Corporation (Stock Code No.: 8976) Representative: Nobuaki Omura, Executive Director September 20, 2013 Asset Manager: Daiwa Real Estate Asset Management Co., Ltd. Representative: Akira Yamanouchi, President and Representative Director Inquiries to: Yuji Shinotsuka, Vice President and Representative Director (Tel: ) Notice concerning Acquisition of Asset (Nisseki Shibuya Building) We hereby announce that today Daiwa Office Investment Corporation (the Investment Corporation ) determined to acquire a trust beneficial interest in real estate (the Acquisition ) as follows. 1. Summary of Asset to be Acquired Type of Assets Trust beneficial interest in real estate Property Name Nisseki Shibuya Building (the Property ) Location Shibuya Shibuya-ku, Tokyo Acquisition Price 7,000 million yen (Excluding acquisition costs, consumption tax, etc.) Date of Conclusion of Purchase Agreement September 20, 2013 Date of Delivery (scheduled) September 27, 2013 Seller E Buildings Limited Liability Company (the Seller ) Funding for Acquisition Loans announced today (Note 1) and cash in hand Payment Method Lump-sum payment at the time of delivery Intermediary Mitsubishi UFJ Trust and Banking Corporation (the Intermediary ) (Note 1) Please refer to the press release Notice Concerning Borrowing of Funds announced today. 2. Reason for Acquisition We believe that the Property is appropriate to the basic policy for the asset management set forth in the Articles of Incorporation of the Investment Corporation and the management policy of the Investment Corporation. We decided to acquire the Property because we appreciate the rarity and profitability of the Property. (1) Location of the Property: The Property is located within about a 4-minute walk from the Shibuya Station, the largest class terminal in central Tokyo which has multiple accessibility to JR, Tokyo Metro, Tokyu and Keio lines and is superior in traffic convenience. A major business, commercial and hotel complex directly connected to the Shibuya Station can be used for walk-through to the station. The Property is situated at the corner location of the cross-point of Miyamasuzaka and Route 246, Aoyama Dori with a high level of visibility and awareness. The Shibuya area centered around the Shibuya Station is a symbolic commercial area of Japan which is good in traffic convenience and highly concentrated with retail stores including commercial 1

2 facilities targeting young generation, restaurants, offices, hotels etc. Moreover, the neighboring areas such as Omotesando, Aoyama, Ebisu and Daikanyama also have many retail stores targeting young generation, therefore the Shibuya area has an attribution to act as a base to transmit culture and trends. As a result, we analyze that the area has relatively high needs for acquiring personnel and has strong demands for office buildings mainly from vibrant IT and media contents related industries. Furthermore, surrounding the Shibuya Station, the Shibuya Station Area, the Shibuya Station South Area and the Dogenzaka Area are planned to be redeveloped and large-scale business/commercial complex station building is scheduled to open in the future. By further enhancing its convenience, we expect the areas greater development. (2) Building Facilities: The Property is provided with 12 stories above ground and 1 below, the total floor area of 8, m2 (2, tsubo), m2 ( tsubo) of standard floor space, 2,550mm of ceiling height for a standard floor (including OA floor of 100mm) and sufficient specs like individual air-conditioning. Though 25 years after its completion, managements of proper maintenance has been made and by implementing systematic replacement of facilities, we believe that the Property will maintain equivalent competitiveness compared to the surrounding competitive properties after acquisition. By the acquisition of the Property, the assets under management (Based on acquisition price) of the Investment Corporation will be 352,786 million yen which exceeds the assets under management of 350,000 million yen for the first time since the establishment of the Investment Corporation. An expansion of assets is one of the most important issues of the Investment Corporation and we will try to increase our presence in the J-REIT market by improvement of profitability through expansion of assets. 3. Details of the Property to be Acquired Property Name Nisseki Shibuya Building Type of Specified Assets Trust beneficial interest in real estate Trustee (scheduled) Mitsubishi UFJ Trust and Banking Corporation Trust Period From September 27, 2013 to September 8, 2023 Location (Lot Number) Shibuya Shibuya-ku, Tokyo and other 2 lots Use Office, Gas Station, Parking lot Ownership Form (i) Land: Ownership (ii) Building: Ownership Site Area 1, m2 (officially registered) Total Floor Area 8, m2 (officially registered) Structure Steel construction with 12stories above ground and 1 below (Description in the register book) Construction Date December 21, 1988 Building Engineer JX Engineering Corporation (Formerly Nisseki Engineering Corporation) Constructor JX Engineering Corporation (Formerly Nisseki Engineering Corporation) JX Engineering Corporation (Formerly Nisseki Engineering Structural-design Engineer Corporation) 2

3 Floor Height/Ceiling Height 3,650 mm (for standard floor) / 2,550 mm (for standard floor) Air-conditioning System/OA Laying Individual air-conditioning / OA-capable floor Building Inspection Agency Tokyo Prefecture Engineering Due Diligence Company TOKIO MARINE & NICHIDO RISK CONSULTING Co., Ltd. Soil Contamination Risk Survey Company TOKIO MARINE & NICHIDO RISK CONSULTING Co., Ltd. Probable Maximum Loss Level (Assessor) 6.60% (Sompo Japan Nipponkoa Risk Management Inc.) Acquisition Price 7,000 million yen (excluding acquisition costs and consumption tax, etc.) Appraisal Value (Appraisal Date) 7,190 million yen (as of August 31, 2013) Appraiser Japan Real Estate Institute Collateral None Summary of Tenants Total Number of Tenants 1 (As of scheduled delivery date) (Note 1) Rent Revenue Not disclosed (Note 2) Security Deposit and Guaranty Not disclosed (Note 2) Total Leased Floor Space 6, m2 (estimated as of the scheduled delivery date) (Note 3) Total Leasable Floor Space 6, m2 (Note 3) March 31, % Trend in occupancy rates March 31, % the last 5 years March 31, % (Note 2) March 31, % Scheduled delivery date 100.0% Expected NOI (NOI Yield) 324 million yen (4.8%) (Note 4) (1) Superficies is set partially to the underground portion of the land of the Property (Lot number : 16-3, Site area : m2 ) for Tokyo Metro Co., Ltd. The superficies was set in 1936 to possess the underground railroad facility and the contract detail is equivalent to sectional superficies. (2) The Investment Corporation has concluded with the affected parties on a memorandum of the amendment/termination of the master lease agreement with JX Nippon Real Estate Corporation on the same day as the date of conclusion of purchase agreement. The master lease agreement has been Other Relevant Information agreed to terminate on March 31, Based on the master lease agreement, the rent will be received from JX Nippon Real Estate Corporation until termination and from then on the rent will be received from end tenants based on each lease contracts. (3) According to the due diligence report form Tokio Marine & Nichido Risk Consulting Co., Ltd., the review materials for the former gas station before construction of the Property can not be verified and an existence of a leakage of benzene and lead included in the gasoline used at the time is unclear, so it is valued that it can not deny the possibility of soil contamination at the region. However the same due 3

4 diligence report values that currently the whole surface of the ground of the Property has been coated so there is a low risk of pollutants spread on the periphery and low risk of occurrence of health hazards and there is no problem of continuous use on the current status. On acquisition of the Property, assuming occurrence of soil contamination on the land of the Property, a preliminary cost estimation to convey the contaminated soil outside the site has been assessed and the Acquisition Price has been fixed with the cost taken into consideration. (Note1) According to the master lease agreement, the Property is tenanted to JX Nippon Real Estate Corporation in a block and JX Nippon Real Estate Corporation subleases to nine end tenants. (Note2) The figures are not disclosed by the related persons request. (Note3) The figures for the total leased floor space, total leasable floor space and trend in occupancy rates of the end tenants are based on the data from the Seller. (Note4) The figure is the expected annual amounts based after the termination of master lease agreement with JX Nippon Real Estate Corporation on April 1, The expected balance is based on the leasing agreements with the end tenants provided by the Seller and taking into account of taxes imposed, and calculated on the assumption that the expected occupancy rate is 100.0%. (These figures are not official forecasts.) 4. Details of the Seller (1) Company Name E Buildings Limited Liability Company (2) Location Marunouchi Chiyoda-ku, Tokyo (3) Executive Member / General Incorporated Associations E Title and Name of Buildings Representative Administrator / Ryutaro Uchiyama (4) 1. Purchase, possession and disposition of real estate 2. Rental and management of real estate Description of Business 3. Purchase, possession and disposition of real estate trust beneficiary 4. All operations incidental or relating to the preceding article (5) Amount of Capital 1,000,000 yen (6) Date of Incorporation July 23, 2007 (7) Relationship with the Investment Corporation/Asset Manager There is no capital relationship required to be stated between the Investment Corporation/Asset Manager and the Capital Relationship Intermediary. Also, the affiliated parties and the affiliated companies of the Seller do not fall under the Capital Relationship of the Investment Corporation/Asset Manager. There is no personnel relationship required to be stated between the Investment Corporation/Asset Manager and the Personnel Relationship Intermediary. Also, the affiliated parties and the affiliated companies of the Seller do not fall under the Personnel Relationship of the Investment Corporation/Asset Manager. There is no business relationship required to be stated between the Investment Corporation/Asset Manager and the Business Relationship Intermediary. Also, the affiliated parties and the affiliated companies of the Seller do not fall under the Business Relationship of the Investment Corporation/Asset Manager. Status of Classification as The Seller does not fall under the Related Party of the 4

5 Related Party Investment Corporation/Asset Manager. Also, the affiliated parties and the affiliated companies of the Intermediary do not fall under the Related Persons of the Investment Corporation/Asset Manager. 5. Status of Owners etc. of Properties The acquisition of the trust beneficial interest is not an acquisition from any persons having a special interest in the Investment Corporation or the Asset Manager. 6. Status of Intermediary (1) Summary of Intermediary (1) Company Name Mitsubishi UFJ Trust and Banking Corporation (2) Location Marunouchi Chiyoda-ku, Tokyo (3) Title and Name of Representative President Tatsuo Wakabayashi (4) Description of Business Retail banking business, corporate business, trust assets business, real estate business, stock transfer agency business, and markets and global business, etc. (5) Amount of Capital 324,279 million yen (as of March 31, 2013) (6) Date of Incorporation March 10, 1927 (7) Relationship with the Investment Corporation/Asset Manager There is no capital relationship required to be stated between the Investment Corporation/Asset Manager and the Intermediary. Capital Relationship Also, the affiliated persons and the affiliated companies of the Intermediary do not fall under the Capital Relationship of the Investment Corporation/Asset Manager. There is no personnel relationship required to be stated between the Investment Corporation/Asset Manager and the Intermediary. Personnel Relationship Also, the affiliated persons and the affiliated companies of the Intermediary do not fall under the Personnel Relationship of the Investment Corporation/Asset Manager. The Intermediary falls under the Borrowing Institution of the Business Relationship Investment Corporation. There is no business relationship required to be stated between the Investment Corporation/Asset Manager and the Intermediary. The Intermediary does not fall under the Related Persons of the Investment Corporation/Asset Manager. Also, the affiliated Whether or not to be the persons and the affiliated companies of the Intermediary do not Related Persons fall under the Related Persons of the Investment Corporation/Asset Manager. (2) Breakdown and amount of intermediary commission The intermediary commission for the Acquisition is not disclosed due to the request of the intermediary. 5

6 7. Acquisition Schedule Date of Determination of the Acquisition September 20, 2013 Date of Execution of Purchase Agreement September 20, 2013 Scheduled Payment Date September 27, 2013 Scheduled Delivery Date September 27, Future Prospects The impact of the Acquisition on the fiscal period ending November 2013(16th Fiscal Period) and the fiscal period ending May 2014 (17th Fiscal Period) is limited. The earnings forecasts in 16th Fiscal Period and 17th Fiscal Period are unchanged. - End - 6

7 Reference Material 1 Summary of Appraisal Report Appraiser Japan Real Estate Institute Appraisal Date August 31, 2013 Appraised Value 7,190 million yen Items (million yen) (Note 1) Income Approach Value 7,190 Direct Capitalization Value 7,320 (1) Operating Revenue (a-b) 464 a. Potential Annual Rent Revenue 478 b. Amount of Loss due to Vacancy 13 (2) Operating Expenses (c+d+e+f) 132 c. Maintenance and Operation Cost (including cost of management, utility and PM fee) 90 d. Taxes and Public Charges 41 e. Non-life Insurance Premium 0 f. Other Expenses 0 (3) Net Operating Revenue 331 (4) Profit from deposits/guarantees, etc. 7 (5) Capital Expenditures 24 (6) Net Revenue ( (3)+(4)-(5)) 314 Capitalization Rate 4.3% Discounted Cash Flow Value 7,050 Discount Rate 4.1% Terminal Capitalization Rate 4.5% Integrated Value by Using Cost Method 7,750 Ratio of Land 91.6% Ratio of Building 8.4% (Note 1) The above revenue and expenses are based on the appraisal report and is not the revenue and expenses forecasted by the Investment Corporation or the Asset Manager. 7

8 Reference Material 2 Photograph / Map < External View > 8

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10 Reference Material 3 Portfolio Overview after Acquisition of the Property Region Five Central Wards of Tokyo (Note 1) Name of Property Date of (Scheduled) Acquisition Acquisition Price (million yen) Investment Ratio (Note 4) Daiwa Ginza Oct 21, , % Daiwa Ginza Annex Oct 21, , % Daiwa Shibaura Oct 21, , % Daiwa Minami-Aoyama Oct 21, , % Daiwa Sarugakucho Oct 21, 2005/ Mar 30, , % Daiwa A Hamamatsucho Oct 21, , % Daiwa Jingumae Oct 21, , % Daiwa Shibadaimon Oct 21, , % Daiwa Misakicho Oct 21, , % Daiwa Shimbashi 510 Oct 21, , % Daiwa Tsukijiekimae Jan 27, , % Daiwa Tsukiji Jan 27, , % Daiwa Tsukiji 616 Mar 24, , % Daiwa Tsukishima Mar 24, , % Nihombashi MS Bldg. May 1, , % Daiwa Azabudai May 1, , % Daiwa Shibuya SS May 1, , % Daiwa Nihombashi Honcho Jul 31, , % Daiwa Ginza 1-chome Jul 31, , % Daiwa Kyobashi Jul 31, , % Sunline Building No. 7 Oct 6, 2006/ Mar 29/ May 29, , % Daiwa Onarimon Dec 1, , % Shinjuku Maynds Tower Jul 13/ Nov 26, , % SHIBUYA EDGE Jul 13, , % Daiwa Kodenmacho Aug 31, , % Daiwa Jimbocho Mar 10, , % Daiwa Nishi-Shimbashi Aug 13, , % Daiwa Kudan Sep 2, , % Daiwa Kayabacho Building Mar 25, , % Jimbocho Place Mar 29, , % E SPACE TOWER Jul 8, , % Nihonbashi Hongokucho Tosei Building May 11, , % shinyon curumu Dec 3, 2012/ Apr 12, , % Tousen Dogenzaka Daini Building Jul 3, , % Akasaka Business Place August 9, , % Nisseki Shibuya Building September 27, 2013 (scheduled) 7, % Total Number of Properties located in Five Central Wards of Tokyo: , % 10

11 Greater Tokyo (Note 2) Daiwa Kinshicho Oct 21, , % Daiwa Higashi-Ikebukuro Oct 21, , % Benex S-3 May 1, , % Daiwa Shinagawa North Jul 13, , % West Park Osaki Sep 18, , % Kamiooka Eye Mark Building Mar 1, , % Total Number of Properties located in Greater Tokyo: 6 22, % Regional Daiwa Minami-Senba Aug 31, , % Major Cities (Note 3) Honshu Meieki Building Feb 1, , % Total Number of Properties located in Regional Major Cities: 2 10, % Total Number of Properties: , % (Note 1) (Note 2) (Note 3) (Note 4) Five Central Wards of Tokyo means Chiyoda-ku, Chuo-ku, Minato-ku, Shinjuku-ku and Shibuya-ku. Greater Tokyo means Tokyo excluding the Five Central Wards of Tokyo, Kanagawa, Chiba and Saitama Prefectures. Regional Major Cities means Osaka area (i.e., Osaka, Kyoto and Hyogo Prefectures), Nagoya area (Aichi, Mie and Gifu Prefectures), ordinance-designated cities and core cities under Local Autonomy Act. Figures in the Investment Ratio columns represent the percentage of the (scheduled) acquisition price of each property to the aggregate amount of the (scheduled) acquisition price, and are rounded to the nearest first decimal place. Please note that adding up of the investment ratio of the properties may not exactly match the investment ratio for each investment regions or for the overall portfolio. * Website URL of the Investment Corporation: 11