TRANSLATION January 26, 2016 Real Estate Investment Trust
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TRANSLATION January 26, 2016 Real Estate Investment Trust Securities Issuer Sekisui House SI Residential Investment Corporation 3-1-31 Minami-Aoyama, Minato-ku, Tokyo Representative: Osamu Minami, Executive Director (Securities Code: 8973) Asset Management Company Sekisui House SI Asset Management, Ltd. 3-1-31 Minami-Aoyama, Minato-ku, Tokyo Representative: Osamu Minami, President Inquiries: Yoshiya Sasaki, General Manager IR & Financial Affairs Department TEL: +81-3-5770-8973 (main) Notice Concerning Acquisition of Trust Beneficiary Interest in Domestic Real Estate (Prime Maison YOKOHAMA NIHON-ODORI) Sekisui House SI Residential Investment Corporation (the “Investment Corporation”) hereby announces that Sekisui House SI Asset Management, Ltd., to which the Investment Corporation entrusts management of its assets (the “Asset Management Company”) decided today for the Investment Corporation to acquire the asset as described below. Furthermore, in deciding to acquire the asset, consent of the Investment Corporation based on approval by the Board of Directors of the Investment Corporation was obtained in accordance with rules and regulations concerning related party transactions of the Asset Management Company. 1. Overview of Acquisition Prime Maison YOKOHAMA NIHON-ODORI described below, which the Investment Corporation has decided to acquire, is a high quality rental residential property which was planned/developed through a property planning meeting. The meeting is held by the section in charge of development (Development Department) at Sekisui House, Ltd. (“Sekisui House”), the main sponsor of the Investment Corporation, and a person in charge from the acquisition section (Real Estate Investment Department) at the Asset Management Company participates as an observer. (1) Name of property: Prime Maison YOKOHAMA NIHON-ODORI (2) Type of property (planned): Trust beneficiary interest, trust asset of which is comprised mainly of real estate (3) Planned acquisition price: 4,270,000,000 yen (Note 1) (4) Date of conclusion of sales contract: January 26, 2016 (5) Planned date of acquisition: January 29, 2016 (6) Seller: Sekisui House (7) Funds for acquisition: Acquisition through borrowing (Note 2) and cash on hand is planned (Note 1) The planned acquisition price does not include miscellaneous acquisition related expenses, fixed asset tax, city planning tax, consumption tax and local consumption tax. (Note 2) For details of borrowing, please refer to press release titled “Notice Concerning Borrowing of Funds” separately announced today. 2. Background of Acquisition To best utilize its strength of Sekisui House being a leading company in the housing industry, the Investment Corporation, in June 2014, shifted its investment target to only “residential properties” and set a policy to consider sales of retail properties held by the Investment Corporation at an appropriate timing, while working to operate them stably for the time being. Based on this policy, the Investment Corporation disposed four retail properties on November 30, 2015, which are susceptible to the effect of consumption structure, consumption behavior, etc. due to economic trend and demographic movement, by taking advantage of a favorable opportunity in the real estate transaction market and reduced future investment risks. In addition, the Investment Corporation conducted early repayment of existing borrowings (total of 8.2 billion yen) with proceeds from the disposition realizing further expansion of borrowing capacity by lowering LTV This translation is for informational purpose only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shall prevail. 1 at the same time. (Note) The acquisition of the residential property this time is conducted utilizing the borrowing capacity which was expanded by the aforementioned early repayment, and thus the Investment Corporation believes the acquisition will contribute to securing a stable cash distribution and further strengthening of the stability of the profit base of the portfolio from a medium- to long-term perspective. (Note) For details of the above “disposition of four retail properties” and “early repayment of existing borrowings (total of 8.2 billion yen)”, please refer to “Notice Concerning Assignment of Trust Beneficiary Interests in Domestic Real Estate and Termination of Leases (RINKU HAGURAZAKI Plaza and 3 Other Properties)”, “Notice Concerning Repayment (Early Repayment) of Loan” and “Supplementary Materials to the Press Release Dated November 30, 2015” announced on November 30, 2015. 3. Reason for Acquisition The Investment Corporation will acquire this property to secure stable earnings and enhance the residential portfolio in Greater Tokyo / Major Urban Areas, based on the asset management objectives and policies set forth in its Articles of Incorporation. The characteristics of the property are as follows. The property is a rental apartment comprised of single and compact type units with offices and a shop, situated approximately a two-minute walk from Nihon-odori Station on the Minatomirai Line of Yokohama Minatomirai Railway. In addition to a good proximity to the closest station, it is approximately a six-minute ride to Yokohama Station. Furthermore, Shibuya Station is approximately 40 minutes away using the directly operated Tokyu Toyoko Line and it is also possible to travel to Ikebukuro Station via the Fukutoshin Line. The property is also located approximately a ten-minute walk from Kannai Station on the JR Negishi Line and Yokohama Municipal Subway Blue Line, while from Kannai Station to Tokyo Station takes approximately 40 minutes. Therefore, the property offers use of multiple lines boasting high transport convenience. Furthermore, the area offers daily convenience with a retail facility housing, a supermarket and daily goods stores, as well as convenient facilities such as a post office, clinics and banks all located within about a ten-minute walk. Moreover, the surrounding area has buildings of incorporated associations, incorporated foundations, financial institutions, etc. in addition to buildings of many administrative agencies including the Kanagawa prefectural office and the courthouse and the prosecutors office. Many public facilities such as Yokohama Park and Yamashita Park as well as cultural facilities such as museums and theaters are also found in the area. Given these characteristics, demand is expected to come primarily from singles, DINKS, etc. seeking convenience such as proximity to central Tokyo, to the closest station or to their offices. 4. Description of Property to be Acquired Overview of specified asset (trust beneficiary interest) Mizuho Trust & Banking Trustee (planned) Trust expiration date (planned) January 31, 2026 Co., Ltd. (Address) 1-4 Honcho, Naka-ku, Yokohama-shi, Kanagawa and other Location (Lot) 1-4 Honcho, Naka-ku, Yokohama-shi, Kanagawa and other 1 lot Ownership form Proprietorship Ownership form Proprietorship Office, shop, apartment Zoning commercial district Use complex Site area (m2) 887.06 Total floor area (m2) 8,196.14 Land Building Floor-area ratio Structure and 800% RC, 13F/B1F (zoning designation) number of floors Building-to-land ratio Construction 80% June 27, 2014 (zoning designation) completion date Planned acquisition price 4,270,000 Collateral None (thousand yen) Overview of leasing and management Total leasable floor area (m2) 5,461.13 Total number of tenants 1 126 (except 1 shop and Total leased floor area (m2) 5,328.17 Number of leasable units 10 offices) Occupancy rate 122 (except 1 shop and 97.6% Number of leased units (based on floor area) 10 offices) This translation is for informational purpose only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shall prevail. 2 Monthly rent revenue Deposit (thousand yen) 74,557 20,370 (thousand yen) Property manager (planned) Sekiwa Real Estate, Lessee (planned) Sekiwa Real Estate, Ltd. Ltd. Master lease agreement, Contract expiration date (planned) January 28, 2018 Leasing method (planned) pass-through type Overview of building engineering report (building condition Overview of appraisal report evaluation), etc. Appraisal by Morii Appraisal method Appraisal & Investment Evaluation company ERI SOLUTION CO., LTD. Consulting, Inc. Appraisal value (thousand yen) 4,690,000 Urgent 0 Repair costs Date of appraisal December 1, 2015 Within 1 year 1,650 (thousand yen) 2 to 12 years 69,100 Building replacement value 2,207,000 (thousand yen) Probable maximum loss (PML) 4.60% Special Notations 1. The building-to-land ratio of the property in trust is essentially 80%, but due to the mitigation of fireproof building in the commercial district, fire-protection district, it is set at 100%. [Explanation] 1. The “Trustee (planned)” column indicates a planned trustee having agreed to accept a trust as of today in respect of the property to be acquired. 2. In the “Location” column, the “Address” is the residence indication or what is indicated in the location column (if there are multiple location, then one of these location) in the registry of the building (including registration record; the same applies hereafter) for the property for which residence indication has not yet been implemented and the “Lot” is the lot stated in the land registry (if there are multiple lots, then one of these lots), respectively. 3. The “Ownership form” columns of land and building indicate the type of right that the trustee