IIF to Acquire and Lease Six Properties in Japan
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Industrial & Infrastructure Fund Investment Corporation (Tokyo Stock Exchange Company Code: 3249) News Release – February 25, 2015 IIF to Acquire and Lease Six Properties in Japan Mitsubishi Corp. - UBS Realty Inc., an asset management company, to which Industrial & Infrastructure Fund Investment Corporation (“IIF”) entrusts its asset management, announced today that it has decided to acquire and lease the following domestic real estate and trust beneficiary interests in real estate as outlined below. 1. Summary of Anticipated Acquisitions (the “Anticipated Acquisitions”) Annual rent Property Anticipated Appraisal (excludes NOI yield NOI yield Anticipated (Note 2) (before (after number Property name Location Seller acquisition price value consumption acquisition (Note 1) (¥ million) (¥ million) tax) depreciation) depreciation) date (Note 3) (Note 3) (¥ million) IIF Sagamihara R&D Center Sagamihara-shi, March 20, F-7 NEC Corporation (Note 5) (Note 4) Kanagawa 3,100 3,460 – 7.7% 6.9% 2015 IIF Shinagawa IT Solution Shinagawa-ku, March 17, I-8 SPC(Note 5) (Note 5) Center Tokyo 7,200 7,520 – 4.4% 3.9% 2015 IIF Izumiotsu e-shop Logistics Izumiotsu-shi March 20, L-26 Center SPC(Note 5) (Note 5) Osaka 4,000 4,220 – 5.6% 5.6% 2015 (land with leasehold interest) Marubeni IIF Izumisano Food Processing Izumisano-shi, March 24, L-27 Logistics (Note 5) and Logistics Center Osaka 860 999 – 6.8% 5.2% 2015 Corporation Kyotanabe-shi, SBS Holdings, April 1, L-28 IIF Kyotanabe Logistics Center (Note 5) Kyoto Inc. (Note 6) 5,730 6,350 – 6.1% 5.0% 2015 IIF Fukuoka Koga Vehicle Koga-shi, Fukuda L-29 Logistics Center (Note 5) May 29, Fukuoka Corporation 860 959 – 6.3% 6.3% (land with leasehold interest) 2015 Total 6 Properties – 21,750 23,508 1,585 5.7% (Note 7) 5.1% (Note 7) Portfolio before and after Anticipated Acquisitions As of the end of December After Anticipated Anticipated Acquisitions 2014 (15th fiscal period) Acquisitions Number of properties 36 ＋ 6 ＝ 42 Total (anticipated) acquisition 182,089 million yen ＋ 21,750 million yen ＝ 203,839 million yen price Average NOI yield (Note 3) 5.9% 5.7% 5.9% Average NOI yield 4.8% 5.1% 4.9% after depreciation (Note 3) (Total appraisal value) - - +1,758 million yen - (Total acquisition price) (Note 3) (Note 1) "Property number" classifies existing properties and properties to be acquired through the Anticipated Acquisitions (“Anticipated Properties”) into three categories, L (logistics facilities), F (manufacturing and research and development facilities) and I (infrastructure facilities). (Note 2) IIF will assign property names to the respective properties after the Anticipated Acquisitions. (Note 3) For “NOI yield”, “NOI yield after depreciation”, “Average NOI yield”, “Average NOI yield after depreciation” and “(Total appraisal value) - (Total acquisition price)”, please refer to “[Reference]: Definitions of individual calculation formulas” below. (Note 4) NEC Corporation is currently expected to approve the sale of IIF Sagamihara R&D Center at the board of directors’ meeting scheduled to be held on February 27, 2015. If the board of directors of NEC Corporation does not approve the sale of IIF Sagamihara R&D Center, our acquisition of the property may be delayed from the anticipated acquisition date of March 20, 2015, or we may fail to complete the acquisition at all. Note: This press release is intended as general information for the press regarding IIF’s acquisition and lease of real estate and trust beneficiary interests in real estate in Japan, and has not been prepared for the purpose of solicitation of investment. 1 (Note 5) IIF has not obtained the necessary permission from the lessee and seller to disclose this information. (Note 6) Actual seller is GK SBS Logifund 1, although IIF will acquire this property through an SPC bridge structure. (Note 7) Average NOI yield and average NOI yield after depreciation with respect to the Anticipated Acquisitions. 2. Rationale for Acquisition and Lease IIF decided to acquire the Anticipated Properties based on its judgment that the characteristics of the properties are aligned with IIF’s investment strategies, specifically, the acquisition of quality assets which would contribute to increase cash distributions per unit. We expect the average NOI yield after depreciation of our portfolio will improve to 4.9% after the Anticipated Acquisitions. The forecast distributions per unit for the 16th fiscal period (ending June 30, 2015) is JPY 8,625 and in the 17th fiscal period (ending December 31, 2015), which will include the profit from the Anticipated Properties on a full-term basis, is JPY 9,139, whereas the cash distributions per unit in the 15th fiscal period (ended in December 2014) is expected to be JPY 16,911 (calculated figure after unit split is JPY 8,455 (Note)). With regard to the forecast for the 16th fiscal period (ending June 30, 2015) and 17th fiscal period (ending December 31, 2015), please see the press release titled “Notice Concerning Forecasts of Operating Results and Distributions for the June 2015 (16th) and December 2015 (17th) Fiscal Periods” announced today. In deciding whether to acquire the six properties, we evaluated the properties mainly in terms of profitability, long-term usability and versatility. Please refer to section “3. Summary of Anticipated Acquisitions and Leases”. With regard to the reasons for the lease of the Anticipated Acquisitions, we are of the view that each tenant of the Anticipated Acquisitions meets the tenant selection criteria set forth in the “Report on the Management Structure and System of the Issuer of REIT Units and Related Parties”, which we submitted on September 30, 2014. With regard to the reasons for the lease of the individual properties, please refer to section “3. Summary of Anticipated Acquisitions and Leases” (Note) With a record date of December 31, 2014 and effective as of January 1, 2015, we conducted a two-for-one split of our units. Note: This press release is intended as general information for the press regarding IIF’s acquisition and lease of real estate and trust beneficiary interests in real estate in Japan, and has not been prepared for the purpose of solicitation of investment. 2 3. Summary of Anticipated Acquisitions and Leases 【IIF Sagamihara R&D Center】 (1) Summary of Property Trust beneficiary right in real Type of asset Evaluator Nippon Kanzai Co., Ltd. estate Anticipated acquisition date March 20, 2015 Evaluation date November 5, 2014 Anticipated acquisition Immediate price 3,100 million yen 0 yen Summary of repair cost Date of trust beneficiary building Short-term March 20, 2015 0 yen rights set structure repair cost Sumitomo Mitsui Trust Bank, evaluation Long-term Trustee 506,920,000 yen Limited repair cost Repair cost for the forthcoming Trust period end March 19, 2025 12 years 42,243,000 yen (annualized average) Location 3-41-1, Minamihashimoto, Chuo-ku, Sagamihara-shi, Kanagawa Land area 26,441.81 m2 Main building: Steel-framed reinforced concrete, flat roof / 6-story above ground Zoning Restricted industrial area Attached building 1: 1-story; steel-framed with galvanized Designated floor area steel sheet roofing ratio / building-to-land 200% / 70% (Note) Attached building 2: 1-story; concrete block structure with ratio Structure galvanized steel sheet roofing /stories Attached building 4: Lightweight 1-story; steel-framed with galvanized steel sheet roofing Attached building 5: Steel-framed reinforced concrete, flat Type of possession Ownership roof / 3 stories above ground Attached building 6: 1-story; steel-framed with galvanized steel sheet roofing Construction Earthquake PML 8.5% July 1, 1989 date Gross Floor 2 Area 19,423.65 m Main building: Office Attached building 1: Security guard station Collateral note None Type of Attached building 2: Waste disposal area building Attached building 4: Office Attached building 5: Training institute Attached building 6: Security guard station ・ IIF requested KK Field Partners to conduct a soil and environmental survey prior to purchasing this property. According to such survey, concrete factories and factories of general contractors, etc. were located on the subject land in the past and the possibility of soil contamination cannot be denied considering the treatment and storage of the specified hazardous substances on the subject land. However, in the sampling study of the soil and soil gas conducted on the subject land, the relevant standards were satisfied in all areas where the study was conducted. Therefore, it is considered that the past use of the land has not caused any soil contamination or, if it has, such contamination is relatively minor. Because of the geological condition, where the surface layer of soil is not easily penetrated by contamination, even if the soil contamination had occurred to the subject land, it is considered to be unlikely to cause health hazards, since the soil contamination is unlikely to occur in the deep portion of the land and so there is a small possibility that it will affect the ground water. In addition, although the northern part of the subject land is not entirely paved, the users’ scope of use of the land is Others limited, and the surface layer of the southern part is almost completely covered with buildings, pavement or plants so the soil will not disperse into the air; therefore, it is unlikely that the health risks will occur around the subject land. ・ With respect to the following matters, the seller agrees to cure the defects, at the responsibility and expense of the seller, before the acquisition of this property by IIF. ・ The confirmations of boundaries are not executed with respect to a part of the neighboring land. ・ Roofs, sheds, etc. are built on a part of this property without obtaining construction confirmation application, etc. ・ Outdoor advertisements are placed on the southern and eastern walls of this property without obtaining Outdoor Signage Permits, etc.