Japan Retail Fund Investment Corporation (Tokyo Stock Exchange Company Code: 8953) News Release February 7, 2011 JRF to Acquire Equity (anonymous association) in Shinsaibashi, Osaka Japan Retail Fund Investment Corporation (TSE: 8953) announced today the planned acquisition a property in Shinsaibashi, Osaka as outlined below. 1. Summary of Acquisition 1) Type of asset : Equity interest in anonymous association whose investment asset is beneficial interest in properties held in trust 2) Asset name : anonymous association 3) Property held in trust : (tentative name) Retail Shinsaibashi-suji Building 4) The amount of contributions : 340 million yen (in anonymous association 30.2%) 5) Completion date of contract : February 8, 2011 (scheduled) 6) Acquire date of Equity : February 9, 2011 (scheduled) 7) Acquisition funds : Internal cash 2. Reasons for Acquisition By acquiring the above-mentioned equity interest in anonymous association, the Investment Corporation shall receive distribution of profit with rent income, etc. from lessee, as a dividend resource for each computation period that ends on the last day of March, June, September and December (expected dividend yield: 10.0%). Following the acquisition of the said equity interest in anonymous association, the Investment Corporation shall be granted beneficial interest in property held in trust or preferential negotiating rights regarding the bottom land which is regarded as property held in trust (for details, please refer to 3. Summary of Property (1) Outline of anonymous association which is the investment target and others described below). The Investment Trust shall hold the aforementioned preferential negotiating rights as its right, and it shall not undertake obligations to acquire the said beneficial interest or property. In making a decision to acquire the said equity interest in anonymous association, the Investment Corporation valued the following points which is property held in trust. (1) Condition of location Located in the Shinsaibashi district, a major shopping district in Osaka, and only a two-minute walk from the Shinsaibashi subway station, the property is situated at a corner intersection between the Shisaibashisuji Shopping Center and Unagidaniminami-Dori, one of the busiest areas in Shinsaibashi. In close vicinity is Daimaru Osaka Shinsaibashi Store North Bldg. (Annex) which opened in November 2009, and UNIQLO Shinsaibashi was subsequently opened in October 2010. UNIQLO Shinsaibashi is the first global flagship store to open in Japan and is overall the fifth flagship store globally. Additionally, in March 2010, the first H&M store in the Kansai region moved into Luz Shinsaibashi, located in the Namba district. This area is expected to continue to grow and attract even more customers in the future. (2) Lessee (tenant) and Profitability The second store in the Osaka area, following the Umeda store was opened in the property, and offers fashion brands mainly targeted at young shoppers. The store carries a wide array of men s apparel such as suits, dress shirts, neckties, casual clothing and offers ladies fashion apparel as well. Japan Retail Fund Investment Corporation believes that the property is situated in a competitive location and also offers a very attractive rate of return levels for a property in the Osaka - Kansai region, and has consequently decided to acquire an interest in the Special Purpose Company. (Please refer to the Summary of Appraisal for more details) (Note) Expected dividend yield is calculated by dividing the expected annual dividend by the investment amount of 340 million yen and by rounding the result to one decimal place.
3. Summary of Property (1) Outline of anonymous association which is the investment target Agent name Validity period of anonymous association contract Total asset of investment by anonymous association etc. Until October 30, 2012 1,125 million yen Summary of anonymous association as follows; Trust beneficially interest in real estate etc. 4,425 million yen (Note 1) Non-recourse debt 3,300 million yen Equity interest in anonymous association etc. (Note 2) 1,125 million yen Outline of anonymous association (Note 1) Appraisal value is 4,560 million yen as of January 15, 2011. (Note 2) Of the equity interest in the anonymous association, the Investment Corporation shall make an investment of 340 million yen (investment stake of 30.2%). The investment amount was determined in consideration of factors that affect other prices in reference to the property appraisal value. (Note 3) Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. is the financial advisor in setting up the anonymous association. Calculation period: Three-month periods each year from January 1 to March 31, April 1 to June 30, July 1 to September 30, and October 1 to December 31. Note, however, the initial computation period starts from the date of the contract to March 31, 2011. Distribution of profit and loss: If profits from the said business are generated in each computation period, investors shall be distributed all the profits in accordance with their investment ratios in each computation period. If losses from the said business are generated in each computation period, investors shall be distributed the losses according to their investment ratios in each computation period within the amount of losses from the said business. The total amount of capital contribution shall be the limit of distribution of losses if the cumulative amount of losses distributed to investors exceeds the total amount of capital contributions, and any excess losses will be distributed to operator. Others Preferential negotiating rights that will be granted following the acquisition of equity interest in anonymous association Rights to preferentially negotiate for acquisition of beneficial interest on February 10, 2011 Description of right (scheduled) (cf. Description in (2) below) which operator plans to acquire or property held in trust. Excise period of preferential negotiating rights Until April 30, 2012 Terms of price in preferential negotiation Acquiring over 4,380 million yen
(2)Summary of beneficial interest in properties held in trust Type of specific asset Trust beneficially interests in real estate Beneficiary of trust Mizuho Trust & Banking Co., Ltd. Period of trust contract February 10, 2011 February 10, 2021 Location 3-24, Shinsaibashi-suji 1-chome, Chuo-ku, Osaka-shi, Osaka (Note 1) Area 252.76 m 2 (Note 2) Land Zoning Commercial zone (Note 3) Type of possession Ownership (sole) Structure / stories 4 stories and 1 basement floor with steel flame flat and alloy plated steel roof (Note 2) Total floor space 994.73 m 2 (Note2) Designated floor area ratio / building-to-land ratio 488% / 100% Type Store (Note 2) Building Type of possession Ownership (sole) Construction completion November 6, 2009 (Note 2) Designer Constructor TAISEI CORPORATION : Senior Registered Architect Office TAISEI CORPORATION Kansai Branch Institution to confirm on The Building Center of Japan construction PML : 7.1% Note on (based on the joint search report of earthquake risk by Engineering & Risk Services earthquake resistance Corporation and OYO RMS Corporation) Appraisal value 4,560million yen (as of January 15, 2011) Appraisal Firm CB Richard Ellis K.K. Description of tenant Number of 1 tenants Rent - Security and deposit - Lease area - Leasable area - Transition in occupancy ratio 100% Term of contract - Type of contract - Revision of rent - Cancelation before ended - contract period Expenses - Collateral note None Other Note None (Note 1) In Location we note the address indicated officially, or in the official register (Note 2) In Area, Structure and stories, Total floor space, Type, Construction completion, we note as recorded in the official register (Note 3) In Zoning we note the type provided in Section 1-1, Article 8 of City Planning Act (Note 4)Tenant has not agreed to disclosure of details on Description of tenant
(3) Profile of Agent which anonymous association invests Name Location Nihonbashi 1-chome Building, 4-1, Nihonbashi 1-chome, Chuo-ku, Tokyo Name and Job title of Representatives Executive Director: General corporation Surf Investment Administrator: Keiichi Omura Business 1. Acquisition, possession and disposal of beneficial interest in property in trust 2. Acquisition, possession, disposal, leasing, and management of property 3. Any businesses incidental or related to the above-mentioned businesses Capital 500 thousand yen Date Established January 21, 2011 Relationship with JRF or asset manager There is no capital, personal trade relationship between the Investment Corporation/the Asset Management Company and Retail Shinsaibashi Capital relationship Godo Kaisha. In addition, there is no noteworthy capital, personal or trade Personal relationship relationship between affiliated companies of the Investment Corporation/the Trade relationship Asset Management Company and those of Retail Shinsaibashi Godo Kaisha. does not meet the condition of interested party of the Investment Corporation/the Asset Management Company. In Interested party addition, interested parties of do not meet the condition of those of the Investment Corporation and the Asset Management Company. (4) Broker None 4. Future Outlook of JRF This transaction has slight impact on our operating results for the 18 th Fiscal Period ended February 28, 2011 and the 19 th Fiscal Period ended August 31, 2011, so we are not revising the forecast of our operating results in the Financial Results of the Six Months Ended August 31, 2010 dated October 13, 2010
Attachment Photo and Map (Note) As tenant has not agreed to disclosure of the photo, we take off detail of a tenant in a part of the above photo. Summary of Appraisal Appraisal firm CB Richard Ellis K.K Appraisal value 4,560 million yen Appraisal date January15, 2011 Value based on direct capitalization method 4,550 million yen Direct cap rate 5.1% Value based on DCF method Integrated value based on cost method Discount rate 4.7% Terminal cap rate 5.2% Proportion of land 87.1% Proportion of building 12.9% 4,560million yen 3,720million yen 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 2.7million square meters of leasable space. Please refer to our website at http://www.jrf-reit.com/english/index.html 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: 81-3-5293-7080), Head of Retail Division at Mitsubishi Corp.-UBS Realty Inc., Asset Manager for Japan Retail Fund. Investor Relations: Telephone Number: 81-3-5293-7081 This translation is for informational purposes only, and the Japanese language release should be referred to as the original.