ORIX JREIT Announces Acquisition of Shibaura Island Air Tower

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ORIX JREIT Announces Acquisition of Shibaura Island Air Tower

[Provisional Translation Only]

This English translation of the original Japanese document is provided solely for information purposes. Should

there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

For Immediate Release

REIT Issuer:

ORIX JREIT Inc. (TSE: 8954)

Takeshi Sato

President and Executive Director

Asset Management Company:

ORIX Asset Management Corporation

Hiroshi Yasuda

President and CEO

Inquiries:

Hisao Namiki

Director and Executive Officer

TEL:+81 3 3435 3285

ORIX JREIT Announces Acquisition of Shibaura Island Air Tower

TOKYO, July 21, 2011—ORIX JREIT Inc. (“OJR”) announced that it would acquire Shibaura Island Air

Tower. The details of the acquisition are outlined below.

1. Acquisition Summary

Asset to be acquired Real estate trust beneficial interest

Acquisition price

¥ 6,030,000,000 (excluding national and local consumption taxes)

Scheduled acquisition date July 28, 2011

Current owner and seller Shibaura Island Apartment Limited

Anticipated funding method

Loan proceeds (scheduled)*

*Please refer to the press release “ORIX JREIT Announces New Debt Financing,”

which was published on today.

Payment terms

100 % on transfer

2. Purpose of the Acquisition

OJR has been upgrading the quality of its portfolio through asset replacement with the aim of

maintaining and increasing the level of distributions over the medium to long term. It has also been

working to expand the scale of its assets by investing selectively in real estate with stable cash flow and

outstanding earning potential. As part of this external growth strategy, OJR has decided to acquire this

property.

It is a residential property, which is relatively unaffected by economic trends compared to other

segments, and the range of fluctuation in rents is small. OJR believes that the features of the location and

the specifications of the property will enable stable operation over the medium to long-term.

Summary of Property

Shibaura Island Air Tower (hereafter “the property”) comprises two buildings—the 48-storied Air

Tower rental apartment building, and the Air Terrace, a two-storied retail building occupied by a

supermarket and restaurant etc. OJR will acquire real estate trust beneficiary interest equivalent to a 23%

co-ownership interest in the property.

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Location

The property is an eight-minute walk from JR Tamachi Station, a nine-minute walk from

Shibaura-futo Station on the New Transit Yurikamome line and Mita Station on the Toei Subway line.

The property is situated on Shibaura Island, which offers excellent access to business and commercial

districts in central Tokyo. The Shibaura Island area, developed under the concept of an island with water

and greenery, is bordered by canals. The community plan was developed through government and

private sector collaboration, and the island features extensive lifestyle facilities including a supermarket,

a group of medical clinics, and a fitness club. The island also features extensive public facilities

including a kindergarten, a preschool, a park and public space, and is ringed by a walking path. The

community offers both lifestyle amenities and a good environment to live in.

Buildings, facilities, and tenants

Air Tower

The Air Tower having 48 stories above ground is a recently built residential tower, completed in

2007. The tower features 871 rentable units and a range of floor plans from one-room studio

apartments to three-bedroom apartments, to satisfy broad needs ranging from single persons to

double-income couples with no children (DINKs) and families with children.

Furthermore, in addition to the security arrangement including 24-hour on-site management and

night-time security patrols within the area, the communal facilities for residents’ common use

include a wine cellar and storage room, as well as a concierge counter, café, theatre room and party

room in the clubhouse building that is connected via an aerial walkway.

Air Terrace

The 2-storied Air Terrace is directly linked to the second storey of the Air Tower, the rental residential

building, via an aerial walkway and is occupied by six tenants, including a supermarket, clinic,

childcare facility and restaurant etc.

3. Summary of Property for Acquisition

Air Tower

Specified asset category Real estate trust beneficial interest

Trustee

The Sumitomo Trust and Banking Company, Limited.

Term of trust agreement June 28, 2007 – June 27, 2017

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Air Terrace

Address

22-1, Shibaura 4-chome, Minato-ku, 22-2, Shibaura 4-chome, Minato-ku,

Tokyo

Tokyo

Registered usage

Residential, retail, parking, parking for

bicycles

Retail

Land: 11,280.97 m2(land area for entire building site)

Registered area

Building: 78,333.26 m2

(total floor area)

Building: 3,426.74 m2

(total floor area)

Registered construction

Reinforced concrete, steel frame flat Steel-reinforced concrete, flat roof, 2

roof, 48 floors

floors

Registered completion date March 1, 2007

Type of ownership

Previous owner

Acquisition price

Appraised value ¥6,033,000,000

Appraisal date June 1, 2011

Appraiser

Land: Fixed-term leasehold quasi co-ownership

(23% quasi co-ownership interest)

Building: Ownership (23% co-ownership interest)

Shibaura Island Apartment Limited

¥6,030,000,000 (excluding national and local consumption taxes)

Chuo Real Estate Appraisal Co., Ltd.

Scheduled acquisition date July 28, 2011

Public transit access

Approx. 8 minutes’ walk from Tamachi Station on JR Line,

Approx. 9 minutes’ walk from Shibaura-futo Station on NEW TRANSIT


Usage restrictions

Architects

Structural engineers

General contractors

YURIKAMOME,

Approx. 9 minutes’ walk from Mita Station on Toei Subway Line

Type 2 residential zone, Fire zone, high-rise residential attraction district

KAJIMA CORPORATION

KAJIMA CORPORATION

KAJIMA CORPORATION

Building inspection agency The Building Center of Japan

Main facilities and

specifications

Earthquake resistance

Collateral

Elevators: 14, Parking: 401-car parking

spaces, Others: Automatic door locks,

intercom with camera monitor

(Residential) PML 5 %

(Clubhouse) PML 10 %

Elevators: 2, Parking: 42-car parking

spaces

PML 10 %

PML shows the estimated cost of recovering the building in the event of an earthquake. The

figure is based on the probability of an earthquake that may occur every 475 years, and shows the

percentage of the construction costs to the replacement value. This seismic risk analysis was done

by Shimizu Corporation.

None

Agreements

•All of the land concerned is owned by the Urban Renaissance Agency (hereafter

“the land owner”). The registered right of site for the building is a right of lease of

land (hereafter “land lease right”) based on a fixed term land lease right contract as

stipulated in Article 22 of the Act on Land and Building Lease. The land lease right

for the contract can be summarized as follows:

1. Purpose of leasing: For ownership of buildings used for management of rental

housing, etc.

2. Period of contract: 70 years, starting from March 31, 2004 and ending on March

30, 2074 (duration not to be extended through renewal of the contract or building

construction)

3. Rent payable: ¥27,694,000 / month*

4. Security deposit: ¥1,443,741,000*

Special notes

5. Other:

a. The lessee should return the land to the land owner in its original state at the end

of the land lease period. The lessee cannot request the land owner to purchase the

buildings.

b. It is stipulated that, in each base year (once every three years in principle) of the

fixed asset tax, the rent payable shall be adjusted by an amount that is equivalent to

increases or decreases in taxes and public dues that are imposed on the land, and

also be proportionally revised to reflect changes in the consumer price index. It is

also stipulated that, should there be any increases or decreases in taxes and public

dues for the land in years other than the base year, the rent payable shall be revised

by the amount of such increases or decreases.

c. It is stipulated that the security deposit shall be proportionally revised to reflect

changes in the consumer price index, in each base year (once every three years in

principle) of the fixed asset tax.

d. Starting from thirty years after signing the contract and until one year prior to the

day the land lease period expires, OJR reserves the right to propose to the land

owner to buy the land, if it is agreed upon by all quasi co-owners of the land lease

rights. If the land owner consents to the proposal, the land owner shall stipulate the

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price, payment method for the amount, and other terms of sale. The land owner

shall offer the first opportunity to buy the land to the lessees, when selling the land.

e. It is prohibited to sell the land lease right, or to divide or partially sell the quasi

co-ownership interest in the land lease right or building co-ownership interest,

without the written consent of the land owner. It is also prohibited to separately sell

the land lease right, building ownership right, or right to demand the return of

security deposits for the site.

f. If the land owner rescinds the agreement due to violation of the agreement by the

lessee, the lessee has a duty to pay a penalty of ¥1,250,000,000* (which shall be

adjusted according to changes in the consumer price index).

* Figures are for the entire property. OJR pays an amount in proportion to its

co-ownership interest (23%) in the property.

•The main agreements with other co-owners concerning beneficial interest and the

administration, management and disposition of the property, are as follows:

1. If the beneficial interests are sold in the future, OJR shall first offer other

co-owners the opportunity for negotiations, further to which OJR must obtain the

consent of trustees and all other co-owners regarding the purchaser. When a trustee

attempts to give its consent to the sale of beneficial interest, it is necessary to obtain

the prior written consent of the land owner.

2. When pledging beneficial interest as collateral, except in the case of pledge

creation to a qualified institutional investor, it is necessary to obtain the consent of

trustees and all co-owners.

3. All co-owners must agree on the following matters:

a. Cancellation of the trust agreement, and change or variation of trust beneficiaries

b. Approval of the purchaser for the selling of beneficial interest, or the other party for

other dispositions

c. Instructions to trustees for the sale of co-ownership interests in properties that

comprise the trust property, and for other dispositions

d. Proposal to the land owner for the sale of land based on the fixed-term land lease

right contract for the property; instructions to trustees for the signing and execution of

the land sale contract with the land owner in case of such sale

4. The following matters are to be decided by majority decision with other co-owners,

in proportion to the co-ownership interest:

a. Decide the details concerning annual business plans

b. Decide on major repairs or facility upgrades, etc.

c. Decide on changes to the entrustment policy for the property management company;

change or dismissal of the property management company; cancellation or termination

of the contract with the property management company; or conclusion or renewal of the

contract with the property management company or changes to the contents of the

contract, on any other grounds

d. Dismissal or appointment of the operations manager

e. Other important matters concerning the property

5. Jointly with other co-owners, OJR entrusts the following tasks to the operations

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manager: proposal of annual business plan prepared by the property management

company; implementation of administration and management for the property

based on the annual business plan decided by OJR and other co-owners in

accordance with the preceding Paragraph 4; and instructions to trustees made in

accordance with the preceding Paragraphs 3 and 4.

•Sectional superficies have been established for part of the land, for the purpose of

granting the ownership of public sewage facilities to the Tokyo Metropolis

government, under a contract to establish sectional superficies dated August 29,

2001 signed between the Urban Development Center (previous entity owing the

land) and the Tokyo Metropolis government. The provisions stipulated in the

contract are inherited by the Urban Renaissance Agency (current land owner),

which inherits all rights and obligations of the Urban Development Center.

•Sectional superficies have been established for part of the land, for the purpose of

granting the ownership of public sewage facilities to the Tokyo Metropolitan

government, under a contract to establish sectional superficies dated August 29,

2001 signed between the Urban Development Corporation (previous entity owning

the land) and the Tokyo Metropolitan government and another contract to amend

the established sectional superficies dated March 26, 2003. The provisions

stipulated in the contract are inherited by the Urban Renaissance Agency (current

landowner), which inherits all rights and obligations of the Urban Development

Corporation.

Residential: 871 units

(Studio: 176 units, 1DK: 76 units,

1LDK: 297 units, 2LDK: 205 units,

lTotal rentable units

Store: 6 lots

3LDK: 117 units)

Store: 2 lots

Other: 1 lot

No. of tenants

1(as of June 30, 2010)

* Total of master lessees having a master lease agreement with the trustee.

Gross rental income* ¥ 47 million / month (excluding car parking spaces, etc., as of June 30, 2011)

Security deposits

None

Total rent space* 11,795.80m 2 (as of June 30, 2011)

Total rentable space* 13,097.69m 2 (as of June 30, 2011)

Occupancy rate 90.1% (as of June 30, 2011)

Forecast Net Operating

Income (NOI) *

¥393 million annually

*Note: Forecast Net Operating Income (NOI) represents the anticipated revenue/expenditure

balance under ordinary occupancy for a regular operation period based on the terms of

the lease contract terms and conditions, etc. on the scheduled date of acquisition, but

excluding extraordinary factors that may occur during the first year of acquisition. The

NOI calculation assumptions are as below. (These figures are not what OJR expects for

the current fiscal year.)

1) Occupancy rate:95.0%

2) Taxes:Taxes are calculated on the tax base amount for fiscal 2011, and on the

assumption that the term of the special measures to reduce the fixed asset tax

on new residential buildings has expired.

* The gross rental income, total rent space, total rentable space, and forecast net operating income (NOI) shown are proportional to

OJR’s share of ownership in the property, and are not for the entire property.

4. Profile of Owner / Seller *As of July 19, 2011

Company Name Shibaura Island Apartment Limited

Address

2-3, Marunouchi 3-chome, Chiyoda-ku, Tokyo

Representative

Shinji Arakawa

Operations

Acquisition, holding, sale, and management of real estate trust beneficial interest, etc.

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Shareholders’ Equity

¥ 3 million

Date of establishment March 5, 2004

Total assets

Total net assets

Not disclosed

Not disclosed

Major shareholder Shibaura Island Apartment Holdings Foundation 100%

Relationships with OJR or its asset management company

Capital relationships

Personal relationships

There is no capital relationship that requires reporting between OJR and the

company in question. ORIX Real Estate Corporation, which is a “related party”

stipulated in Japan’s Law Concerning Investment Trusts and Investment

Corporations (hereinafter, “the Investment Trust Law”), has an anonymous

association investment in the company in question. ORIX Real Estate Corporation

is a subsidiary of ORIX Corporation, which is the parent company of ORIX Asset

Management Corporation (hereinafter, “OAM”)

There is no personal relationship that requires reporting between OJR or OAM

and the company in question.

Business relationships

Applicability to

related parties

There is no business relationship that requires reporting between OJR or OAM

and the company in question.

The company in question is not a “related party” for OJR. ORIX Real Estate

Investment Advisors Corporation (a “related party” of OAM as stipulated in the

Investment Trust Law) is contracted to provide asset management for the

company in question. Shibaura Island Apartment Limited should be treated as a

“related party” as stipulated in the “Affiliated Company Transaction Regulations,”

which are in-house regulations of OAM.

5. Information regarding Ownership

Previous Owner

Company Name Shibaura Island Apartment Limited

Special relationships

Refer to Section 4. “Profile of Owner/Seller” above

involved

Background to and New development

reason for acquisition (Construction completed in March 2007)

Acquisition date ―

Acquisition price


6. Intermediary(same for two properties)

None

7. Payment(same for two properties)

Funding method : Loan proceeds (scheduled)*

*Please refer to the press release “ORIX JREIT Announces New Debt Financing,” which was

published on today.

Payment terms : 100% on transfer

8. Related-Party Transactions

OJR will acquire this property from Shibaura Island Apartment Limited. In accordance with the Affiliated

Company Transaction Regulations, which are in-house regulations of the asset management company, the

transactions in question have been approved by OJR’s board of directors after being examined by the Risk

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Management and Compliance Committee and the board of directors at OAM. See 4. “Profile of

Owner/Seller” for a summary of the related parties.

9. Schedule

July 21, 2011 (scheduled): Execution of sale and purchase contract for the properties

July 28, 2011 (scheduled): Settlement and transfer of the properties

10. Future Outlook

The acquisition of this property will only make a minor impact on the financial results for the period

ending August 2011 (19 th fiscal period: March 1, 2011 – August 31, 2011) and the period ending February

2012 (20 th fiscal period: September 1, 2011 - February 29, 2012). Therefore, the forecast financial results for

19 th fiscal period and 20 th fiscal period remain unchanged from those announced in the press release “ORIX

JREIT Revises Earnings Forecast for the 19th Fiscal Period (Ending August 31, 2011) and 20th Fiscal

Period (Ending February 29, 2012),” which was published on May 9, 2011.

Addendums

I. Property photo and map

II. Appraisal summary

III. Portfolio summary after acquisition of two properties

The original Japanese version of this material 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 Press Club for Construction Publications.

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I. Property photo and map

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Ⅱ. Appraisal summary

Appraisal

1) Appraised Value ¥ 6,033,000,000-

2) Appraisal Date June 1, 2011

3) Appraiser Chuo Real Estate Appraisal Co., Ltd.

Valuations by method

1) Cost Method………………………………… ¥ 3,312,000,000-

2) Income Method

i. DCF value ………………………………….. ¥ 6,033,000,000-

Discount Rate………………………………. 5.0 %

Terminal Capitalization Rate ……………… 5.9 %

ii. DC Value…………………………………… ¥ 6,047,000,000-

Capitalization Rate…………………………. 5.4 %

Reference: Estimated valuations for entire property

1) Cost Method………………………………… ¥ 14,400,000,000-

2) Income Method

i. DCF value ………………………………….. ¥ 26,230,000,000-

ii. DC Value…………………………………… ¥ 26,290,000,000-

Income projection

The following figures are for fiscal year income based on the income approach (direct capitalization

approach) shown on the appraisal documents for the overall property. The figures are not projections

made by ORIX JREIT Inc. or ORIX Asset Management Corporation.

(In millions of yen)

(1) Gross revenue (a-b) 2,748

a. Effective gross revenue 2,957

b. Vacancy loss 209

(2) Total costs (c+d+e+f) 1,228

c. Management /maintenance fee

(management fee, utility expenses, PM fees, etc.) 684

d. Taxes 165

e. Casualty insurance premium 8

f. Other costs 368

(3) Net revenue (1-2) 1,520

(4) Lump sum revenue, etc. -28

(5) Capital expenditure 72

(6) Net income (3+4-5) 1,419

*Above figures are for the entire property, and are not adjusted for OJR’s ownership share (23%

co-ownership interest).

Long Term Projected Repairs

According to the Engineering Report by Nikken Sekkei Construction Management, Inc.

maintenance costs over the next 12 years will be ¥ 1,468,650,000.

*Above figures are for the entire property, and are not adjusted for OJR’s ownership share (23%

co-ownership interest).

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Ⅲ. Portfolio summary after acquisition of Shibaura Island Air Tower

Property

Acquisition

Percentage of Total

Date

Price(¥million) Acquisition Cost

Offices 6 central Aoyama Suncrest Building December 1. 2001 3,356 1.0

Tokyo wards Round-Cross Ichi-bancho December 1. 2001 3,900 1.2

Round-Cross Nishi Shinjuku December 1. 2001 2,650 0.8

Beside Shirogane December 21. 2001 1,300 0.4

DT Gaien December 21. 2001 2,430 0.7

Nihonbashi East Building December 21. 2001 1,720 0.5

Yoyogi Forest Building December 21. 2001 1,473 0.4

Round-Cross Minami Azabu December 21. 2001 1,394 0.4

Round-Cross Akasaka January 10. 2002 2,624 0.8

Round-Cross Mita January 10. 2002 1,748 0.5

Shiba Daimon Building January 10. 2002 2,195 0.6

Round-Cross Tsukiji January 10. 2002 3,378 1.0

ORIX Shiba 2-chome Building September 29. 2003 7,500 2.2

Aoyama 246 Building March 3. 2004 5,200 1.5

Round-Cross Shinjuku April 28. 2006 8,020 2.4

Seafort Square Center Building

September 30. 2005

April 28. 2006

18,000 5.3

ORIX Akasaka 2-chome Building

June 26 . 2006

December 4. 2006

21,860

6.5

Round-Cross Shinjuku 5-chome April 26. 2007 4,500 1.3

Nihonbashi Honcho 1-chome Building March 28. 2007 10,500 3.1

ST WORLD Building March 28. 2008 3,500 1.0

ORIX Suidobashi Building March 28. 2008 3,000 0.9

ORIX Shinagawa Building June 27. 2008 15,200 4.5

ORIX Real Estate Nishi Shinjuku Building March 27. 2009 13,600 4.0

OX Tamachi Building March 29. 2010 6,730 2.0

Subtotal 145,778 43.1

Remaining Carrot Tower December 1. 2001 5,479 1.6

Tokyo wards Toyo MK Building December 1. 2001 5,270 1.6

Beside Kiba December 21. 2001 2,450 0.7

ORIX Ikebukuro Building April 18. 2003 9,577 2.8

Round-Cross Kamata March 1. 2006 5,640 1.7

KN Jiyugaoka Plaza May 30. 2007 3,110 0.9

ORIX Meguro Building July 29. 2010 6,350 1.9

Akihabara Business Center June 1. 2011 5,060 1.5

Subtotal 42,936 12.7

Other parts of Neo City Mitaka December 1. 2001 2,200 0.6

the greater Tokyo area Round-Cross Kawasaki April 27. 2004 4,130 1.2

Omiya Miyacho Building March 27. 2009 4,400 1.3

Omiya Shimocho 1-chome Building March 29. 2010 3,750 1.1

Subtotal 14,480 4.3

Other areas Nagoya Itochu Building September 29. 2003 4,500 1.3

ORIX Koraibashi Building April 27. 2005 5,560 1.6

Lunar Sendai June 28. 2007 8,500 2.5

ORIX Nagoya Nishiki Building March 29. 2010 12,500 3.7

ORE Sapporo Building October 1. 2010 4,250 1.3

Subtotal 35,310 10.4

Offices Total 238,504 70.5

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Property

Acquisition

Percentage of Total

Date

Price(¥million) Acquisition Cost

Logistics Other parts of Koshigaya Logistics Center April 28. 2006 4,000 1.2

Facilities the greater Tokyo area Toda Logistics Center March 28. 2008 9,600 2.8

Ichikawa Logistics Center September 29. 2008 8,300 2.5

Subtotal 21,900 6.5

Other areas Sakai Logistics Center North Building March 30. 2010 10,200 3.0

Other areas Komaki Logistics Center June 30. 2011 2,700 0.8

Subtotal 12,900 3.8

Logistics Facilities Total 34,800 10.3

Retail 6 central Nihon Jisho Minami Aoyama Building October 31. 2003 2,548 0.8

Facilities Tokyo wards CUBE Daikanyama March 31. 2004 2,435 0.7

Subtotal 4,983 1.5

Other parts of aune Kohoku March 10. 2010 4,000 1.2

the greater Tokyo area aune Makuhari March 10. 2010 3,600 1.1

Maruetsu Sagamino March 1. 2011 2,350 0.7

Subtotal 9,950 2.9

Other areas Kobe Momoyamadai Shopping Center (Site) March 5. 2010 3,260 1.0

Okayama Kume Retail Facility January 31. 2011 2,750 0.8

Subtotal 6,010 1.8

Retail Facilities Total 20,943 6.2

6 central Park Axis Nishi Azabu Stage December 1. 2001 1,219 0.4

Tokyo wards Shibaura Island Bloom Tower January 31. 2011 5,550 1.6

Residential

We Will Hatchobori June 1. 2011 2,370 0.7

* Shibaura Island Air Tower July 28, 2011(scheduled) 6,030 1.8

Subtotal 15,169 4.5

Remaining Belle Face Hongo Yumicho June 1. 2011 3,340 1.0

Tokyo wards Belle Face Kamata June 1. 2011 3,550 1.0

Subtotal 6,890 2.0

Other areas Belle Face Osaka Shinmachi June 1. 2011 3,684 1.1

Belle Face Amagasaki June 1. 2011 3,440 1.0

Subtotal 7,124 2.1

Residential Total 29,183 8.6

Others

Other parts of Cross Gate January 10. 2002 15,040 4.4

the greater Tokyo area Subtotal 15,040 4.4

Others Total 15,040 4.4

* Newly acquired Grand Total building 62 properties 338,470 100.0

Notes :

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. “Percentage of total acquisition cost” refers to the acquisition price of each property under management as a proportion of total acquisition price.

3. 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 rounding.

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