Notice Concerning Acquisition of Property and Lease Contract (Blumer HAT Kobe)

Transcription

1 Translation of Japanese Original To All Concerned Parties March 31, REIT Issuer: Kenedix Retail REIT Corporation Representative: Akihiro Asano, Executive Director (Securities Code: 3453) Asset Manager: Kenedix Real Estate Fund Management, Inc. Representative: Ryosuke Homma, CEO and President Contact: Koichiro Nobata, General Manager of Planning Department, Retail REIT Division TEL: Notice Concerning Acquisition of Property and Lease Contract (Blumer HAT Kobe) Kenedix Retail REIT Corporation ( KRR ) announced today that Kenedix Real Estate Fund Management, Inc. ( the Asset Manager ), the asset manager for KRR, has decided to acquire and lease the following property as follows. 1. Outline of the acquisition (1) Type of acquisition: Trust beneficiary interest in real estate (2) Property name: Blumer HAT Kobe (3) Acquisition price: 11,000 million yen (4) Seller: Please refer to Item 4. Seller s profile for details (5) Date of contract: March 31, (6) Acquisition date: April 16, (7) Acquisition funds: Borrowings and cash on hand (Note) (8) Settlement method: Payment in full at settlement (Note) Please refer to press release Notice Concerning the Borrowings and Execution of Interest Rate Swap for details 2. Reason for acquisition The acquisition is made to diversify and enhance the portfolio to realize the growth of asset size and secure stable revenues, in accordance with KRR s investment targets ( focused investment in neighborhood, community and other shopping centers for daily needs ) and policies as set forth in its Articles of Incorporation. In addition, KRR believes that the tenants of the property are in accordance with the criteria set forth for tenants, including tenant category, credit, use, lease contract, possibilities of tenant reshuffle, etc. In acquiring the property, KRR especially evaluated the following points. (1) Features of the property This property was opened in October 2005 as a core retail property in the redevelopment area of HAT Kobe Area, which is a symbol town of reconstruction after the Kobe earthquake. The property is an NSC (Note), featuring approximately 40 tenants, including supermarkets (grocery), clothing stores, a baby goods store on the first floor, and a cinema complex, commercial goods stores, restaurants, service businesses on the second floor. (Note) Neighborhood shopping centers, or NSC, are typically shopping centers with a supermarket as an anchor or core tenant and several specialty store tenants, with a retail trade area of approximately a three to five km radius. 1

2 (2) Overview of the surrounding area a. Location and access Hat Kobe Area, where the property is located, is approximately 2 km east of Sannomiya, the center of Kobe. Nada Station of JR Tokaido Main Line and Iwaya Station of Hanshin Line, the nearest stations from the property, are one station and two stations from Sannomiya Station, respectively. Because of its accessibility from Sannomiya, residential developments are active in the area. In addition, Hanshin Highway and National Route 2 north of the property make it easily accessible by car. b. Characteristics of the surrounding area The surrounding area has a residential population of approximately 38,000 people within a 1 km radius, 175,000 people within a 3 km radius, and 357,000 people within a 5 km radius, increasing from 2005, according to the national census of The property especially enjoys the high density population within a 1 km radius. In addition, the location can attract daytime population of workers from nearby offices and other facilities. 3. Details of the property O-4 Blumer HAT Kobe Property name Blumer HAT Kobe Property type (Note 1) Type of specified asset Trustee NSC Trust beneficiary interest in real estate Sumitomo Mitsui Trust Bank, Ltd. Trust period April 16, to July 31, 2035 (Note 2) Current owner Previous owner Location Land Building Architect Form of ownership Fukoku Mutual Life Insurance Company Domestic financial institution Wakinohama Kaigandori, Chuo-ku, Kobe, Hyogo Proprietary ownership Land area 19, m 2 Zoning Building coverage ratio 80% Floor-area ratio 600% Form of ownership Commercial area Proprietary ownership Gross floor area 50, m 2 Date constructed September 13, 2005 Use Construction company Structure/No. of floors Construction confirmation authority Retail, theater, amusement, parking lot S / 5 above-ground floors Obayashi Corporation Obayashi Corporation Center of International Architectural Standard Co., Ltd. Master lessee after acquisition Keihan Ryutsu Systems Co., Ltd. Type of master lease after acquisition Pass-through type PM after acquisition Kenedix Real Estate Fund Management, Inc. Sub-PM after acquisition Keihan Ryutsu Systems Co., Ltd. PML 4.69% Acquisition price 11,000 million yen Appraisal value (as of) 11,200 million yen (March 1, ) Real estate appraiser Daiwa Real Estate Appraisal Co., Ltd. Appraisal NOI yield 5.3% (Note 3) 2

3 Collateral None Lease summary (as of March 31, ) Number of tenants 1 (43) (Note 4) Annual rent 638,870 thousand yen (Note 5) Tenant deposits 833 million yen (Note 6) Leased area 24, m 2 Remarks Leasable area 24, m 2 Occupancy rate 99.5% A piece of land southwest of the property owned by the City of Kobe is used as a passageway of the property, under an agreement between the seller and the City of Kobe. Others Notes: 1. Properties are categorized into the following five types of retail properties: NSC (Neighborhood Shopping Center), SM (Supermarket), CSC (Community Shopping Center), Urban Station-Front SC (Urban Station-Front Shopping Center) and SS (Specialty Store). 2. Although the property is not in trust as of March 31,, the current owner institutes trust in real estate on the planned acquisition date and KRR acquires the trust beneficiary interest in real estate on the same date. 3. Appraisal NOI yield represents the value calculated using the following formula, rounded down to the first decimal point. Appraisal NOI Acquisition price (Appraisal NOI is the net operating income calculated by subtracting the operating expenses from the operating revenue in the appraisal report.) 4. The number of tenants as of March 31, is shown. Since the master lease is a pass-through type, the number of end-tenants is shown in parentheses. 5. Annual rent indicates the fixed rent (including common area charges) as of March 31, multiplied by 12 and rounded down to the nearest thousand yen. 6. The amount of tenant deposits is as of March 31,, rounded down to the nearest million yen. 4. Details of seller O-4 Blumer HAT Kobe Company name Fukoku Mutual Life Insurance Company Address Uchisaiwaicho Chiyoda-ku, Tokyo Name and title of representative Yoshiteru Yoneyama, President Description of business Life insurance business, etc. Capital 116 billion yen Incorporation November 1923 Net assets Undisclosed as KRR has not obtained the seller s consent. Total assets 6,214.7 billion yen Major shareholders (Shareholding ratios) n/a 3

4 Relationship between KRR/the Asset Manager and the seller No special capital relationship between KRR/the Asset Manager and the seller. Capital relationship Also, no special capital relationship between the related parties/affiliates of KRR/the Asset Manager and the related parties/affiliates of the seller. No special personnel relationship between KRR/the Asset Manager and the Personnel relationship seller. No special business relationship between KRR/the Asset Manager and the Business relationship seller. Related party transactions The seller is not deemed a related party under either the Investment Trust Law or the Retail REIT Division s Internal Regulations on Related Party Transactions of the Asset Manager. 5. Status of property acquirer, etc. Details are omitted due to the seller (current owner) of the property is not a special related party of KRR or the Asset Manager. 6. Details of brokerage Company name Sumitomo Mitsui Trust Bank, Ltd. Address Marunouchi, Chiyoda-ku, Tokyo Name and title of Hitoshi Tsunekage, President representative Description of business Trust business, etc. Capital 342 billion yen Incorporation July 28, 1925 Brokerage fee Not disclosed as consent has not been obtained from the brokerage firm Relationship between KRR/the Asset Manager and the brokerage firm No special capital relationship between KRR/the Asset Manager and the Capital relationship brokerage firm. Also, no special capital relationship between the related parties/affiliates of KRR/the Asset Manager and the related parties/affiliates of the brokerage firm. Personnel relationship No special personnel relationship between KRR/the Asset Manager and the brokerage firm. Business relationship No special business relationship between KRR/the Asset Manager and the brokerage firm. Related party transactions The brokerage firm is not deemed a related party under either the Investment Trust Law or the Retail REIT Division s Internal Regulations on Related Party Transactions of the Asset Manager. 7. Transactions with related parties KRR will conclude a property management agreement with the Asset Manager. Fees to the Asset Manager regarding the property are at the same level as that of existing properties. [Details of property management fee] Property management fee (annual): 1.5% of the property s revenue plus onsite staffing costs Fee associated with the management of construction projects: Construction price Less than 1 million yen Fee None 4

5 1 million yen to less than2 million yen 6% 2 million yen to less than5 million yen 120,000 yen + 5% of the price over 2 million yen 5 million yen to less than10 million yen 270,000 yen + 4% of the price over 5 million yen 10 million yen to less than100 million yen 470,000 yen + 3% of the price over 10 million yen 100 million yen or more Amount agreed upon by the parties In the transaction, the Asset Manager, pursuant to Investment Trust Act and its Retail REIT Division s Internal Regulations on Related Party Transactions, worked to fully comply with statutory and other regulatory requirements. Furthermore, the Asset Manager submitted the transaction for deliberation and resolution by the Compliance Committee. Following the approval by the Compliance Committee, the transaction was submitted to its Retail REIT Division s Asset Management Committee for resolution. The Asset Manager submits a written notice concerning the transaction with related parties to KRR in accordance with the Investment Trust Law. 8. Acquisition schedule Date of determination of acquisition / March 31, execution of purchase agreement Scheduled payment date / delivery date April 16, 9. Outlook Please see Notice Concerning Revisions to Forecasts of Financial Results for the Fiscal Periods ending September 30, and March 31, 2016 released today, for the outlook of the fiscal periods ending September 30, and March 31, 2016 after the acquisition. 10. Summary of real estate appraisal report (The numbers are in yen unless otherwise noted) O-4 Blumer HAT Kobe Appraisal value 11,200,000,000 Summary of real estate appraisal report Appraiser Daiwa Real Estate Appraisal Co., Ltd. Date of appraisal March 1, Item Content Basis Income capitalization approach value 11,200,000,000 Calculated using DCF method, with result checked by using direct-capitalization method Value based on direct capitalization method 11,300,000,000 Calculated by dividing the stabilized NCF by the cap rate (1) Gross operating revenue 1,016,486,071 Effective gross operating revenue 1,029,324,640 Loss from vacancy, etc. 12,838,569 Calculated based on the fair rent level that is expected to be stable over the medium term Calculated based on the occupancy rate level that is expected to be stable over the medium term (2) Operating expenses 438,819,677 Calculated by comparing the expected maintenance expenses for Maintenance expenses 93,070,000 the property and the maintenance expense levels for comparable properties Utility expenses 158,025,000 Calculated considering vacancy Repair expenses 12,887,333 Calculated based on the average annual repair expenses described in engineering report 5

6 (3) PM fees 39,011,566 Tenant recruit expenses, etc. 3,854,168 Calculated based on anticipated PM fees for the property and the PM fee rates for comparable properties Calculated based on tenant recruit expense levels for comparable properties Taxes and dues 96,595,600 Calculated based on the actual taxes and dues for 2014 Insurance premium 3,930,010 Calculated based on comparison with comparable properties Other expenses 31,446,000 Net operating income (NOI= (1)-(2)) 577,666,394 Calculated based on actual sales promotion expenses in the past (4) Profit from security deposits 16,604,882 Calculated on assumption of 2.0% yield (5) Capital expenditure 15,484,967 (6) Net cash flow (NCF=(3)+(4)-(5)) 578,786,309 (7) Cap rate 5.10% Value based on DCF method 11,200,000,000 Discount rate 4.90% Terminal cap rate 5.30% Value based on cost method 14,900,000,000 Ratio of land 72.60% Ratio of building 27.40% year The average annual renovation expenses described in the engineering report plus CM fees Calculated based on overall evaluation of the location, building specifications and contract terms of the property Calculated based on transactions of comparable properties and by taking into account the uniqueness of properties as financial assets in terms of investment yield Calculated by taking into account the characteristics of the NCF used for the cap rate and future uncertainties/ liquidity/ marketability of the property Adjustments in estimated value and considerations taken into account in determining appraisal value The property is within a walking distance from Kasuganomichi Station and Iwaya Station of Hanshin Line. There are also major roads near the property, making it easy to access by car. The property is in the area developed after the earthquake in Kobe, and there is a concentration of retail stores in the area. In addition, there are offices and other facilities near the property, making it possible for the property to attract consumers on weekdays and weekends. All these factors were taken into account in determining the appraisal value. Note: KRR website address: This notice is the English translation of the Japanese announcement on March 31,. However, no assurance or warranties are given for the completeness or accuracy of this English translation. Attached materials Reference material 1. Summary of building condition investigation reports Reference material 2. Property photographs and maps Reference material 3. Property portfolio of KRR 6

7 Reference material 1. Summary of building condition investigation reports Property No. Property name O-4 Blumer HAT Kobe Investigation company Tokio Marine & Nichido Risk Consulting Co., Ltd. Investigation performed in Repairs, maintenance and renovation expenses Required over the next 12 years (thousand yen) (Note) Required within one year (thousand yen) (Note) Mar. 326,565 3,959 (Note) Of the Repairs, maintenance and renovation expenses, Required over the next 12 years represents the total expenses required during the next 12 years from the date of the investigation report and Required within one year represents the total expenses required within 1 year from the date of the investigation report. All figures are truncated to thousand of yen as in the investigation reports. The investigation company above undertakes buildings assessments for the property as follows: -a diagnosis of building deterioration -formulation of a short-term and long-term repair and maintenance plan -assessment of legal compliance with related laws -analyses of existence of hazardous substances and soil environment 7

8 Reference material 2. Property photographs and maps 8

9 Reference material 3. Property portfolio of KRR No. Type (Note1) T-1 CSC T-2 T-3 T-4 Urban Station- Front SC Urban Station- Front SC Urban Station- Front SC Property name Fululu Garden Yachiyo Location Yachiyo, Chiba MONA Shin-Urayasu Urayasu, Chiba Passaggio Nishiarai Daikanyama Address Dixsept Adachi ward, Tokyo Shibuya ward, Tokyo T-5 NSC Unicus Ina Kitaadachi-gun, Saitama T-6 NSC Yorktown Kita-Kaname Hiratsuka, Kanagawa T-7 NSC Unicus Yoshikawa Yoshikawa, Saitama T-8 SS Sports Club Renaissance Fujimidai Nerima ward, Tokyo O-1 NSC Blumer Maitamon Kobe, Hyogo O-2 SM O-3 NSC Life Takadono (Land) Piago Kahma Home Center Omihachiman Osaka, Osaka Omihachiman, Shiga O-4 NSC Blumer HAT Kobe Kobe, Hyogo N-1 SS N-2 NSC N-3 SS Kahma Home Center Nakagawa Tomita (Land) Valor Ichinomiya-Nishi K s Denki Nakagawa Tomita (Land) Nagoya, Aichi Ichinomiya, Aichi Nagoya, Aichi F-1 SM Sunny Noma Fukuoka, Fukuoka R-1 NSC Roseo Mito Mito, Ibaraki R-2 SS R-3 SS K s Denki Aomori Honten Super Sports Xebio Aomori-Chuo Aomori, Aomori Aomori, Aomori Acquisition date Apr. 16, Acquisition price (million yen) (Note 2) Appraisal value (million yen) Share (%) (Note 3) 14,848 15, ,063 8, ,850 6, ,390 5, ,379 4, ,000 4, ,600 3, ,586 2, ,389 8, ,685 2, ,140 2, ,000 11, ,311 2, ,174 2, ,497 1, ,675 9, ,469 1, Total 91,843 93, Note: 1. Properties are categorized into the following five types of retail properties for daily needs: NSC (Neighborhood Shopping Center), SM (Supermarket), CSC (Community Shopping Center), Urban Station-Front SC (Urban Station-Front Shopping Center) and SS (Specialty Store) 2. Acquisition price represents the purchase price of each trust beneficiary interest specified in purchase agreement in relation to the acquisition of each property (excluding acquisition costs, adjustment in property tax and city-planning tax, and consumption tax; and rounded down to the nearest one million yen) 3. Share represents the percentage of the acquisition price for each property in the total acquisition price, rounded down to the first decimal point 9