For Immediate Release

Transcription

1 For Immediate Release ORIX JREIT Announces Asset Acquisition SENDAI HARVEST BLDG. REIT Issuer: ORIX JREIT Inc. (TSE: 8954) Hiroshi Yasuda President and Executive Director Asset Management Company: ORIX Asset Management Corporation Yoshitaka Kamemoto President and CEO Inquiries: Keiji Hashimoto General Manager Corporate Planning Department TEL: TOKYO, June 9, 2014 ORIX JREIT Inc. ( OJR ) announces the decision made at its board meeting held on June 9, 2014 to acquire the following assets. Details are described below. 1. Acquisition Summary SENDAI HARVEST BLDG. Asset to be acquired : (Note 1) Real estate trust beneficial interest Scheduled acquisition price : 2,000,000,000 (excluding national and local consumption taxes, etc.) Scheduled purchase and sale agreement : June 20, 2014 Scheduled acquisition date : June 20, 2014 Current owner and seller Funding method : RW2 Tokutei Mokuteki Kaisha : Borrowings (scheduled) (Note 2) and cash on hand Payment terms : 100% on delivery 1. As of today, no trust has been established for the property, OJR plans to establish trusts for it upon acquiring it. 2. Details of the borrowings shall be announced at a later date, as soon as it is determined. Reference: Overview Profitability etc. of the Acquisition Property Property Type Area Seller Scheduled acquisition date Scheduled acquisition yen Appraisal yen (1/2) vs. Appraisal Value (%) NOI (Note 2) Yeild (%) Yeild after Depreciation (Note 3) (%) SENDAI HARVEST BLDG. Retail Facility Other Areas Sponsor (Note 1) June 20, ,000 2, % 5.8% (Note 4) Existing Portfolio The Sponsor shows ORIX Group including ORIX Corporation and its group companies. 2. The acquisition property to be scheduled "NOI Yield is calculated by using the formula: Net revenue in the direct capitalization approach method recorded in the appraisal report / Scheduled acquisition price; the figure is rounded to the nearest first decimal place. 3. The acquisition property to be scheduled " Yield after Depreciation is calculated by using the formula: ( Net revenue in 1/10

2 the direct capitalization approach method recorded in the appraisal report Depreciation assumed by OJR)/ Scheduled acquisition price; the figure is rounded to the nearest first decimal place. 4. Existing portfolio is the total of properties owned as of August 31, 2013 and sixteen properties MG Shirokanedai Building, Cross Avenue Harajuku, AEON TOWN Sendai-Izumiosawa (Land), GRAN MART Tegata, Kanazawa Kohrinbo myatria, Clio Fujisawaekimae, J-ONE SQUARE, Cross Mall Shimonoseki-Chofu, SHIBUYA PINE Bldg., MG Ichigaya Building, JouLe SHIBUYA, intervillage OH! MAGARI, Valor Suzuka Shopping Center, The Kitahama PLAZA, West Park Tower IKEBUKURO and myatria Higashijujo acquired after September 1, Existing properties NOI Yield and Yield after Depreciation are calculated by the sum of the actual figures for properties owned as of August 31, 2013 and the figures for the sixteen properties acquired after September 1, 2013 calculated based on the appraisal reports at the acquisition time. 2. Purpose of the Acquisition The current economic environment surrounding OJR is considered to be in the economic recovery phase period moving toward inflation with further economic boost expected from the Abenomics economic growth strategies and expansion of various investment activities and consumption brought on by Tokyo s successful bid to host the Olympic Games and such. However the amount and timing of inflation in the period moving toward inflation is thought to be difficult to forecast. Flexibly responding to such changes in the environment, OJR promotes the following growth strategies from the perspective of aiming for stable growth of unitholders value by improving the portfolio s profitability and stability. i ii iii Taking the liquidity and growth into consideration while keeping the investment ratio mainly in offices and in greater Tokyo area, OJR will also acquire properties with the growth potential and/or with the profitability and stability, regardless of property types, in order to enhance the stable growth of unitholders value, by taking an advantage of a diversified portfolio REIT. Proceed carefully the screened investments by utilizing the ORIX Synergy (Note1) expertise in various property types and its nationwide networks, OJR will seek higher profitability while managing risks under any investment environment. For any of property types, through our Direct PM (Note2) taking the features of properties and tenants into consideration, OJR will improve the tenant satisfaction by utilizing the strategic CAPEX and strengthening the tenant relationship, etc., in order to realize the improvement of contract lease conditions. In accordance with the above growth strategy, utilizing the pipeline of the sponsor, OJR decided to acquire one urban-type retail facility with both stability and growth potential located close to Sendai station, which boasts the largest number of passengers in the Tohoku region. Acquisition of the property is believed that the profitability and stability can be maintained and improved through the expertise and nationwide network of the ORIX Group such as ORIX Synergy, direct PM (Note), etc. OJR will continuously endeavor to increase the portfolio s profitability and stability, even in a market environment of intensifying competition for acquisitions, with the aim of realizing the stable growth of unitholders value in the future. 1. ORIX Synergy shows cooperative relationship of OJR and ORIX Group. 2. Direct PM is the support of property management operations by OJR s asset management company, ORIX Asset Management Corporation ( OAM ), through leasing activities, adding of value to properties and other means while utilizing the ORIX synergy. 3.Summary of Acquisition Property SENDAI HARVEST BLDG. (Note 1) Specified asset category Real estate trust beneficial interest Trustee Sumitomo Mitsui Trust Bank, Limited. Term of trust agreement June 20, 2014 June 19, 2024 Address Registered usage Registered area 1-3, Chuo-3-chome, Aoba-ku, Sendai-shi, Miyagi Retail Land: m 2 Building: 3, m 2 (total floor area) Registered construction Steel-frame, reinforced steel, reinforced concrete, flat roof, 7 floors with 1 2/10

3 underground floor Registered completion date November, 1987 Type of ownership Previous owner Scheduled acquisition price Fee simple ownership RW2 Tokutei Mokuteki Kaisha Appraised value 2,090,000,000 Appraisal date May 1, 2014 Appraiser Scheduled acquisition date June 20, 2014 Public transit access Usage restrictions Architect Structural engineer General contractor Building inspection agency Main facilities and specifications Earthquake resistance Collateral Special notes Special features of the property 2,000,000,000 (excluding national and local consumption taxes, etc.) Chuo Real Estate Appraisal Co., Ltd. Approx. 4-minute walk from Sendai Station on JR Approx. 1-minute walk from Sendai Station on Sendai municipal Subway Line Commercial zone, Fire zone Kume Sekkei Co., Ltd. / Yayoi Sekkei Co., Ltd. Kume Sekkei Co., Ltd. Tokai Kogyo Co., Ltd. Government inspection Elevator: 2 Escalator:10 Parking: 5 vehicles (Remote place) PML: 1% (based on Sompo Japan Nipponkoa Risk Management, Inc. (Note 2) report) None None No. of tenants 10 (as of April 30, 2014) Gross rental income Sendai Station (including Aoba-dori Station) is the largest station in Tohoku region with daily passengers of approx. 270,000 utilizing the station. Furthermore, the Subway Tozai Line is planned to open in As Sendai Station has local bus terminals along with railways, the station-front is a transportation hub of Sendai City in various aspects such as for commuting to work/school, shopping, business trips and sightseeing. The property boasts excellent accessibility through a pedestrian deck from JR Sendai Station to neighboring areas, and stands in an area that is very vibrant both during the daytime and at night. As to the facilities, escalators connecting to the middle level floors allow for smooth flow of people in the building even during the busiest hours, thus it is competitive in terms of convenience. In addition to a hamburger shop chain with one of the highest store sales in the Tohoku region, 10 tenants, mainly restaurants, including a family restaurant, izakaya, kappo (traditional Japanese cuisine) occupy the building. The wide range of customers targeted by the tenants is proof of the vibrancy of the trade area. 12million per month (excluding car parking space etc., as of April 30, (Note 3) 2014) (Note 3) Security deposits 163million (as of April 30, 2014) Total rent space 2, m 2 (as of April 30, 2014) Total rentable space 2, m 2 (as of April 30, 2014) Occupancy rate 100.0% (as of April 30, 2014) Assumed net operating income (NOI) 132million per annum (Note) The net operating income (NOI) represents the assumed revenue/expenditure balance under stabilized occupancy, based on the terms of the lease contract, 3/10 (Note 3)

4 etc. at the scheduled acquisition date, but excluding extraordinary factors that may occur during the first year of acquisition. The preconditions are as below; these figures are not what OJR expects for the current fiscal year. 1) Occupancy rate: 97.5% 2) Taxes: Taxes are calculated on the standard tax amount for fiscal As of today, no trust has been established for the property, OJR plans to establish trusts for it upon acquiring it. 2. PML (Probable Maximum Loss) shows the ratio (%) of cost of recovering a building after it is damaged to its state before the damage occurred against repurchase price, when assuming an earthquake that may occur once in 475 years in average in probability statistics (recurrence interval of 475 years). The earthquake risk of a building is evaluated based on the event risk curve that shows the relationship of amount of expected loss (horizontal axis) and probability for the loss to exceed the year (vertical axis). However, the risk curve has variability because loss evaluation comes with uncertainties in earthquake resistance performance of the building, behavior of earthquake vibration, etc. Accordingly, the above PML figures use the risk curve with credibility level of 90%, and are rounded to the nearest whole number. 3. Figures are rounded down to the nearest million yen. 4/10

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6 4. Profile of Owner/Seller (as of May 26, 2014) Company name RW2 Tokutei Mokuteki Kaisha ( the Company ) 4-1, Nihombashi 1-chome, Chuo-ku, Tokyo Address Nihombashi 1-chome Building Representative Representative: Akira Sugai Businesses regarding the acquisition of specified assets that follows the asset Primary business securitization plan under the Act on Securitization of Assets, and the management and disposal of the specified assets. Shareholders equity 2,311 million Date of establishment April 10, 2007 Relationships with OJR or its asset management company There is no capital relationship required for reporting between OJR or OAM and the Company. However, ORIX Corporation, the parent company of Capital relationship OAM (a related party of OAM as stipulated in the Act on Investment Trusts and Investment Corporations (the Investment Trusts Act )), has a specified and preferred equity investments in the Company. Personal relationships There is no personal relationship required for reporting between OJR or OAM and the Company. Business relationships Applicability to related parties There is no business relationship required for reporting between OJR or OAM and the Company. The Company does not fall under the definition of OJR s related party. However, ORIX Real Estate Investment Advisors Corporation (a related party of OAM as stipulated in the Investment Trust Act) to which the Company entrusts asset management, and the Company, fall under the definition of related party as stipulated in the Affiliated Company Transaction Regulations which are the in-house regulations of OAM. 5. Information of previous Ownership, etc. Previous owner Owner before previous owner Company name RW2 Tokutei Mokuteki Kaisha Not a party having special relationship of interest Special relationships Refer to Section 4 Profile of involved Owner/Seller above - Background to and reason for Acquired for the purpose of acquisition investment and management - Acquisition date June 27, Acquisition price Omitted, as previous owner held - property for over a year 6.Profile of Intermediary None 7.Transaction with Related-Party, etc. In accordance with the Affiliated Company Transaction Regulations, which are internal rules of OAM, the said transactions have been approved by OJR s board of directors after being deliberated by the Risk Management and Compliance Committee and the board of directors at OAM. OJR will acquire the property from RW2 Tokutei Mokuteki Kaisha, for a summary of this related party, etc. please see 4. Profile of Owner/Seller above. 6/10

7 8.Future Outlook The Property acquisition has a minor impact on the financial results for the 25th fiscal period (from March 1, 2014 through August 31, 2014) and the 26th fiscal period (from September 1, 2014 through February 28, 2014), accordingly the financial forecasts in the Financial Results for the 24th fiscal period (from September 1, 2013 through February 28, 2014) announced on April 11, 2014 are unchanged. Reference Materials I. Appraisal summary II. Portfolio summary after acquisition of the property 1. This is the English translation of original Japanese documents and is provided solely for information purposes. If there are any discrepancies between the translation and the Japanese original, the latter shall prevail. 2. The original Japanese version of this announcement is being distributed today to the Kabuto Club, the Ministry of Land, Infrastructure, Transport and Tourism Press Club, and the Ministry of Land, Infrastructure, Transport and Tourism Construction Specialty Publication Press Club 7/10

8 I. Appraisal summary Appraised value ( In millions of yen) Appraised value 2,090 Appraisal date May 1, 2014 Appraiser Valuations by method (In millions of yen) Chuo Real Estate Appraisal Co., Ltd. Cost Method 1,280 Income Method DCF value 2,090 Net operating income for the first fiscal year in the DCF method 135 Net income for the first fiscal year in the DCF method 121 Discount Rate (%) 5.2 Terminal Capitalization Rate (%) 5.8 DC Value 2,130 Net income in the DC method 117 Capitalization Rate (%) 5.5 Income projection (In millions of yen) (Note) (1) Gross revenue (a-b) 202 a. Effective gross revenue 207 b. Vacancy loss 5 (2) Total costs (c+d+e+f) 70 c. Management /maintenance fee (management fee, utility expenses, 59 PM fees, etc.) d. Taxes 9 e. Casualty insurance premium 0 f. Other costs 1 (3) Net revenue (1-2) 131 (4) Lump sum revenue 2 (5) Capital expenditure 16 (6) Net income (3+4-5) 117 The income projection is anticipated revenue/expenditure balance for the fiscal year based on the income approach (direct capitalization approach) shown on the Appraisal Report. Long-Term Projected Repairs According to the engineering report, the maintenance and renewal cost over the next 12 years following the survey date is as follows. Property name Company name SENDAI HARVEST BLDG. TOKIO MARINE & NICHIDO RISK CONSULTING Co., Ltd. Maintenance and renewal cost (In millions of yen) 222 8/10

9 II. Portfolio summary after acquisition of the property Property (Note 2) Acquisition % to (Note 1) Date Price( million) Total Acquisition Price Offices 6 Central Aoyama Suncrest Building December , Tokyo Wards Round-Cross Ichi-bancho December , Round-Cross Nishi Shinjuku December , DT Gaien December , Nihonbashi East Building December , Yoyogi Forest Building December , Round-Cross Minami Azabu December , Round-Cross Akasaka January , Round-Cross Mita January , Shiba Daimon Building January , Round-Cross Tsukiji January , ORIX Shiba 2-chome Building September , Aoyama 246 Building March , Round-Cross Shinjuku April , Seafort Square Center Building September April , ORIX Akasaka 2-chome Building June December , Round-Cross Shinjuku 5-chome April , Nihonbashi Honcho 1-chome Building March , Round-Cross Shibuya March , ORIX Suidobashi Building March , ORIX Shinagawa Building June , ORIX Real Estate Nishi Shinjuku Building March , OX Tamachi Building March , MG Shirokanedai Building November , SHIBUYA PINE Bldg. March , MG Ichigaya Building April , Subtotal 159, Remaining Carrot Tower December , Tokyo Wards Toyo MK Building December , Beside Kiba December , ORIX Ikebukuro Building April , Round-Cross Kamata March , KN Jiyugaoka Plaza May , ORIX Meguro Building July , Akihabara Business Center June , Subtotal 42, Other Parts of Neo City Mitaka December , the Greater Tokyo Area Round-Cross Kawasaki April , Omiya Miyacho Building March , Omiya Shimocho 1-chome Building March , Subtotal 14, Other Areas Nagoya Itochu Building September , ORIX Koraibashi Building April , Lunar Sendai June , ORIX Nagoya Nishiki Building September , ORE Sapporo Building October , ORIX Kobe Sannomiya Building September , Subtotal 39, Offices Total 256, /10

10 Property (Note 2) Acquisition % to (Note 1) Date Price( million) Total Acquisition Price Logistics Other Parts of Toda Logistics Center March , Facilities the Greater Tokyo Area Ichikawa Logistics Center September , Subtotal 17, Other Areas Sakai Logistics Center North Building March , Komaki Logistics Center June , Subtotal 12, Logistics Facilities Total 30, Retail 6 Central Nihon Jisho Minami Aoyama Building October , Facilities Tokyo Wards CUBE Daikanyama March , aune Yurakucho April , Cross Avenue Harajuku November , J-ONE SQUARE January , JouLe SHIBUYA April , Subtotal 28, Other Parts of aune Kohoku March , the Greater Tokyo Area aune Makuhari March , Maruetsu Sagamino March , CROSS GARDEN KAWASAKI March , Tecc Land Totsuka (Land) April , Clio Fujisawaekimae December , Subtotal 32, Other Areas Kobe Momoyamadai Shopping Center (Land) March , Okayama Kume Retail Facility January , Home Center Musashi Sendai Izumi (Land) January , aune Sapporo Ekimae June , Morioka Minami Shopping Center Sansa July , The Kitahama PLAZA (Co-Ownership:80%) April , The Kitahama PLAZA (Co-Ownership:20%) March GRAN MART Tegata November , AEON TOWN Sendai-Izumiosawa(Land) November , Cross Mall Shimonoseki-Chofu January , intervillage OH! MAGARI(Note3) April , Valor Suzuka Shopping Center April , SENDAI HARVEST BLDG. June 20, 2014(sheduled) 2, Subtotal 35, Retail Facilities Total 96, Apartment 6 Central Park Axis Nishi Azabu Stage December , We Will Hatchobori June , Shibaura Island Air Tower July , Belle Face Togoshi Statio May , Belle Face Meguro October , Subtotal 15, Remaining Belle Face Kamata June , Tokyo Wards Belle Face Hongo Yumicho June , Belle Face Mishuku March , West Park Tower IKEBUKURO April , myatria Higashijujo April , Subtotal 32, Other Areas Belle Face Osaka Shinmachi June , Belle Face Amagasaki June , Belle Face Miyamachi April , Belle Face Bansui-street April Kanazawa Kohrinbo myatria November , Subtotal 11, Residential Total 59, Others Other Parts of Cross Gate January , the Greater Tokyo Area GOOD TIME LIVING Shin-urayasu September , Subtotal 16, Others Total 16, Grand Total 89 properties 459, Newly acquired property 1. Acquisition price above refers to sale price (fractions rounded down) specified in the sale and purchase contract. Consumption taxes are not included in the price. 2. Fractions are rounded to two decimal places for the Percentage of total acquisition cost. Totals for the Percentage of total acquisition cost may not tally as a result of this rounding. 10/10