August 8, 2008
To whom it may concern:
Notice of Asset Acquisition
Announcement is hereby made that on August 8, 2008, Japan Real Estate Investment Corporation (the “Company”) decided to acquire the following asset and concluded an agreement for the acquisition of trust beneficiary right thereof.
1. Outline of the acquisition 1) Asset to be acquired: Trust beneficiary right in trust of real estate 2) Name of asset: Shin-Fujita Building 3)Trustee Mizuho Trust & Banking Co., Ltd. (Note) 4) Term of trust agreement From September 30, 2005 to September 29, 2010 (Note) 5) Acquisition price: ¥ 24,000 million 6) Scheduled acquisition date: September 1, 2008 7) Seller: DOJIMA INVESTMENT YUGEN-GAISHA 8) Method of Settlement: Lump sum payment at closing of acquisition 9) Acquisition funds: Loans and own funds (scheduled) Note: The Company plans to acquire the above trust beneficiary right after changing the trustee to The Sumitomo Trust & Banking Co., Ltd. as of September 1, 2008. As for the trust agreement, the company plans to extend it through July 31, 2013.
2. Reason for the acquisition The Company will acquire the asset based on the basic policies and investment attitude for acquisition under the Articles of Incorporation of the Company. In particular, the following points have been highly evaluated in the determination of the acquisition.
(1) Superior location ・The Dojima area, where the property is situated, is adjacent to the Umeda area, which boasts the highest concentration of businesses in Osaka. In recent years, major developments have taken place in Dojima, with the area growing even more as a business district. In particular, it offers convenient access by train; 9 minutes walking distance 1
from JR Osaka Station, a terminal station, and Hanshin Main Line’s Umeda Station, and 5 minutes walking distance from JR Kitashinchi Station and Osaka Municipal Subway Yotsubashi Line’s Nishi-Umeda Station. It is also only 5 minutes walking distance from Watanabebashi Station of Keihan Electric Railway Nakanoshima Line, which is scheduled to launch operations in October 2008.
(2) Competitiveness in terms of its size and specifications ・With a total floor space of 45,411 m2 and standard floor area of 1,455 m2, the property has superior size for the area. ・The property is expected to maintain its competitive edge as a rental office building over the long run, with its high-grade specifications catered to the needs of tenants, artistic exterior design of the building, and lavish open space allocated within the property site.
(3) Large-sized property in a regional major city, with diversified tenants ・Of all the properties held by the Company, this property is the largest among the properties located in major cities other than those located in Tokyo Metropolitan Area, while the Company has secured 38 tenants, a relatively large number of tenants, as of the scheduled acquisition date. Therefore, the property is expected to contribute stable revenue.
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3. Details of the asset to be acquired The relevant information is as set out below; provided that the information on “area,” “structure” and “completion date” is derived from the land registry and “usage” described below is among the main usages listed in the land registry.
(1) Details of the real property that will be the asset held in trust
Location 2-20 Dojima, Kita-ku, Osaka City, Osaka Prefecture and Address shown in Land 4 other lots land registry Building 2-20 Dojima, Kita-ku, Osaka City, Osaka Prefecture and others Address 2-4-27 Dojima, Kita-ku, Osaka City, Osaka Prefecture Usage Office, Shop Area Land 6,159.61 m2
Building 45,411.31 m2 Steel-framed , steel-framed reinforced concrete structure, flat roof Structure Above ground: 21 floors Below ground: 2 floors Completion date April, 1995 Architect Taisei Corporation First-class Registered Architect Office Constructor Taisei Corporation Building confirmation Osaka City and inspection body Type of ownership Land Ownership Building Ownership Acquisition price ¥ 24,000 million Appraisal value ¥ 25,200 million (Appraisal institution) (Daiwa Real Estate Appraisal Co., Ltd.) (Evaluation method） (Capitalization method: as of July 1, 2008) 4.0 % (Based on an earthquake risk assessment report issued by Tokio Marine PML value & Nichido Risk Consulting Co., Ltd.） Right of pledge is registered on the trust beneficiary right in trust of real estate. Collateral (The right of pledge is scheduled to be released on the acquisition date.) Property management Mitsubishi Jisho Property Management Co., Ltd. (Note 2) company（Note 1) Note 1: The property management company to be entrusted after the acquisition shall be described.
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Note 2: Outline of the property management company Corporate name Mitsubishi Jisho Property Management Co., Ltd. Address of the registered head 3-3-1 Marunouchi, Chiyoda-ku, Tokyo office Representative Yutaka Hayashi, President Paid-in capital ¥60 million (as of March 31, 2008) Major shareholder Mitsubishi Estate Co., Ltd. (as of March 31, 2008) Principal business General management of buildings Relationship with the Company Mitsubishi Estate Co., Ltd., a major shareholder that holds a 36 % or the asset management stake of Japan Real Estate Asset Management Co., Ltd. (the asset company management company), to which the Company entrusts the management of its assets, hold a 100 % stake in Mitsubishi Jisho Property Management Co., Ltd.(“Mitsubishi Jisho Property Management” ) Mitsubishi Jisho Property Management does not fall within the related party of the asset management company under the Cabinet Order of the Enforcement of Law Concerning Investment Trusts and Investment Corporations of Japan, but falls within the related party under the internal rules of the asset management company.
(2) Tenant details
Total number of tenants 38 Total leasable space 28,414 m2 Total leased space 25,266 m2 March 31, 2006 95.2% March 31, 2007 97.3% Trend in occupancy rates March 31, 2008 90.2% Scheduled acquisition date 88.9% NOI（Net Operating Income） ¥ 1,269 million per year - Total number of tenants, total leasable space, total leased space and occupancy rate on the scheduled acquisition date are projections as of the scheduled acquisition date. (Notes) - NOI is the estimated amount under normal operation based on the terms and conditions of lease agreements as of the scheduled acquisition date, etc. * Estimated occupancy rate: 94.8 % - The above figures (except NOI) are based on the data provided by the seller.
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(3) Specifications for rental floor space Ceiling height 2,600 mm Standard floor area 1,455 m2 Office automation floor 100 mm Electric capacity 50VA/m2 Air conditioning system Individual air conditioning (maximum 4 zones per floor) Floor load 500 kg/m2 Others Around-the-clock entry and exit
(4) Outline of the engineering report i. Outline of repair items Date of report July 2, 2008 Preparer of report Shimizu Corporation Repairing expenses/Capital expenditure for Repairing expenses ¥ 27 million the next 15 years Capital expenditure ¥ 171 million (Annual average ) Total ¥ 199 million
ii. Description concerning utilization status of asbestos (Description on the possible use of asbestos） Sprayed materials with asbestos None
4. Outline of seller Corporate name DOJIMA INVESTMENT YUGEN-GAISHA Address of the registered head c/o The Tokyo Kyodo Accounting Office, 3-2-3 Marunouchi, office Chiyoda-ku, Tokyo Representative Takeshi Morita, Director Paid-in capital ¥3 million (as of May 31, 2008) Major shareholder MJIA YUGEN SEKININ CHUKAN HOJIN holds a 100% stake in DOJIMA INVESTMENT YUGEN-GAISHA Principal business Acquisition, holding and disposal of real estate trust beneficial rights, etc. Relationship with the Company Mitsubishi Estate Co., Ltd., a major shareholder that holds a or the asset management 36 % stake of Japan Real Estate Asset Management Co., Ltd. company (the asset management company), to which the Company entrusts the management of its assets, has invested in DOJIMA INVESTMENT YUGEN-GAISHA (“DOJIMA INVESTMENT”) in accordance with a Tokumei Kumiai Agreement. Mitsubishi Jisho Investment Advisors Inc., in which Mitsubishi Estate Co., Ltd. holds a 75% stake and Mitsubishi Real Estate Services Co., Ltd., a 100% subsidiary of Mitsubishi Estate Co., Ltd. holds the remaining 25% stake, provides investment advisory service to DOJIMA INVESTMENT. DOJIMA INVESTMENT does not fall within the related party of the asset management company under the Cabinet Order of the Enforcement of Law Concerning Investment Trusts and Investment Corporations of Japan, and the internal rules of the asset management company. 5
5. Outline of the brokerage (1) Broker: OFFICE TAKE CO., LTD. (2) Relationship with the Company or the asset management company: None (3)Commission: The information on brokerage commission is not disclosed because the permission of the broker has not been obtained.
6. Acquisition schedule August 8, 2008 The acquisition of the asset was determined. Execution of agreement for the acquisition of trust beneficiary right September 1, 2008 Closing of acquisition (scheduled)
As the impact on the Company’s management performance for the fiscal period from April 1, 2008 to September 30, 2008 is minimal, no revision of the forecast performance will be made.
This notice is the English translation of the announcement in Japanese dated August 8, 2008 on our website. However, no assurance or warranties are given for the completeness or accuracy of this English translation.
Reference materials (attachments) • Outline of appraisal report • Photo: Outside view of Shin-Fujita Building • Information map • List of all the assets of the Company after the acquisition of this asset
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(Reference) Outline of appraisal report
Appraisal value ¥ 25,200,000 thousand Appraisal institution Daiwa Real Estate Appraisal Co., Ltd. Date of appraisal July 1, 2008
Item Value/% Capitalized value ¥ 25,200,000 thousand Value in direct capitalization method ¥ 26,000,000 thousand Net cash flow ¥ 1,220,129 thousand Cap rate 4.7% Value in DCF method ¥ 24,800,000 thousand Discount rate 4.4% Terminal cap rate 4.9% Integration value ¥ 16,800,000 thousand Percentage for land 55.2% Percentage for building 44.8% * Values below a thousand yen are cut off.
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(Reference) Photo: Outside view of Shin-Fujita Building
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(Reference) Information map
9 List of all the assets of the Company after the acquisition of this asset
Acquisition date or Acquisition Percentage Percentage Area Name Location Type of asset scheduled acquisition price of portfolio by area date (thousand yen) Chiyoda-ku, Genki Medical Plaza Real property October 31, 2002 5,000,000 0.9% Tokyo Chiyoda-ku, Kitanomaru Square Real property February 24, 2006 81,555,500 15.0% Tokyo
Chiyoda-ku, MD Kanda Building Real property May 31, 2002 9,520,000 1.8% Tokyo
Chiyoda-ku, Kandabashi Park Building Real property August 15, 2002 4,810,000 0.9% Tokyo Chiyoda-ku, Nibancho Garden Real property April 1, 2005 14,700,000 2.7% Tokyo
Mitsubishi UFJ Trust and Banking Chiyoda-ku, Real property March 28, 2007 44,700,000 8.2% Building Tokyo Chiyoda-ku, Burex Kojimachi Building Real property July 29, 2005 7,000,000 1.3% Tokyo January 31, 2005 10,200,000 Chiyoda-ku, Sanno Grand Building Real property April 3, 2006 10,700,000 3.8% Tokyo Total 20,900,000 Chiyoda-ku, Yurakucho Denki Building Real property August 1, 2003 7,200,000 1.3% Tokyo Trust beneficiary Kodenmacho Shin-Nihonbashi Chuo-ku, Tokyo right in trust of September 25, 2001 3,173,000 0.6% Building real estate
Burex Kyobashi Building Chuo-ku, Tokyo Real property July 22, 2002 5,250,000 1.0%
Ginza Sanwa Building Chuo-ku, Tokyo Real property March 10, 2005 16,830,000 3.1%
Ryoshin Ginza East Mirror Building Chuo-ku, Tokyo Real property March 15, 2005 5,353,500 1.0% (Note ) Harumi Center Building Chuo-ku, Tokyo Real property December 18, 2007 26,800,000 4.9%
Minato-ku, Aoyama Crystal Building Real property March 14, 2003 7,680,000 1.4% Tokyo Trust beneficiary Minato-ku, Shiba 2Chome Daimon Building right in trust of September 10, 2001 4,859,000 0.9% Tokyo Tokyo real estate metropolitan Trust beneficiary area Minato-ku, Cosmo Kanasugibashi Building right in trust of September 25, 2001 2,808,000 0.5% 71.5% Tokyo (23 wards) real estate Shinjuku-ku, Shinwa Building Real property September 1, 2004 7,830,000 1.4% Tokyo Shinjuku-ku, Tokyo Opera City Building Real property September 13, 2005 9,350,000 1.7% Tokyo Trust beneficiary Shinagawa-ku, Takanawadai Building right in trust of September 25, 2001 2,738,000 0.5% Tokyo real estate Shinagawa-ku, Higashi-Gotanda 1Chome Building Real property November 1, 2004 5,500,000 1.0% Tokyo Trust beneficiary Omori-Eki Higashiguchi Building Ota-ku, Tokyo right in trust of September 10, 2001 5,123,000 0.9% real estate Shibuya-ku, Nippon Brunswick Building Real property March 24, 2004 6,670,000 1.2% Tokyo Shibuya-ku, Yoyogi 1Chome Building Real property April 1, 2004 8,700,000 1.6% Tokyo Shibuya-ku, da Vinci Harajuku Real property November 22, 2002 4,885,000 0.9% Tokyo Shibuya-ku, Jingumae Media Square Building Real property October 9, 2003 12,200,000 2.2% Tokyo Shibuya-ku, Shibuya Cross Tower Real property November 30, 2001 34,600,000 6.4% Tokyo November 14, 2003 3,740,000 Shibuya-ku Ebisu Neonato Real property 0.8% Tokyo April 1, 2004 360,000 Total 4,100,000 Nakano-ku Harmony Tower Real property February 28, 2005 8,500,000 1.6% Tokyo Trust beneficiary Toshima-ku, Otsuka Higashi-Ikebukuro Building right in trust of September 25, 2001 3,541,000 0.7% Tokyo real estate Trust beneficiary Toshima-ku, Ikebukuro 2Chome Building right in trust of September 25, 2001 1,728,000 0.3% Tokyo real estate Toshima-ku, Ikebukuro YS Building Real property August 2, 2004 4,500,000 0.8% Tokyo
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March 31, 2005 3,300,000 Hachioji City, Hachioji First Square Real property 1.0% Tokyo March 19, 2008 2,379,112 Total 5,679,112 Saitama City, September 25, 2001 1,232,000 Saitama Urawa Building Saitama Real property October 11, 2001 1,342,000 0.5% Tokyo Prefecture Total 2,574,000 metropolitan area Yokohama City, 9.8% (excluding MM Park Building Kanagawa Real property March 24, 2008 37,400,000 6.9% 23 wards) Prefecture Kawasaki City, Trust beneficiary Kawasaki Isago Building Kanagawa right in trust of September 25, 2001 3,375,000 0.6% Prefecture real estate Kawasaki City, Musahi Kosugi STM Building Kanagawa Real property March 25, 2008 4,000,000 0.7% Prefecture
Total: Tokyo metropolitan area 441,132,112 81.2% 81.2% Sapporo City, Hokkaido 8 • 3 Square Kita Building Real property June 1, 2007 7,100,000 1.3% 1.3% Hokkaido Sendai City, Jozenji Park Building Miyagi Real property January 31, 2005 1,000,000 0.2% Tohoku Prefecture 0.8% region Sendai City, Trust beneficiary September 25, 2001 2,924,000 Sendai Honcho Honma Miyagi right in trust of 0.6% Building June 28, 2006 250,000 Prefecture real estate Total 3,174,000 Kanazawa City, February 28, 2002 2,880,000 Hokuriku Kanazawa Park Building Ishikawa Real property 0.8% 0.8% region March 3, 2003 1,700,000 Prefecture Total 4,580,000 October 2, 2006 3,850,000 Nagoya City, Nishiki Park Building Real property 0.9% Aichi Prefecture November 1, 2006 1,300,000 Total 5,150,000 Chubu Nagoya City, Hirokoji Sakae Building Real property September 22, 2006 1,680,000 0.3% 4.3% region Aichi Prefecture Nagoya City, Nagoya Hirokoji Building Real property September 10, 2001 14, 533,000 2.7% Aichi Prefecture Nagoya City, Nagoya Misono Building Real property August 8, 2003 1,865,000 0.3% Aichi Prefecture Kyoto City, Kyoto Shijo Kawaramachi Building Kyoto Real property December 20, 2001 2,650,000 0.5% Prefecture Osaka City, Trust beneficiary Shin-Fujita Building Osaka right in trust of September 1, 2008 24,000,000 4.4% Prefecture real estate Kinki region Osaka City, September 25, 2001 2,264,000 8.3% Sakaisujihonmachi Building Osaka Real property December 26, 2003 1,900,000 0.8% Prefecture Total 4,164,000 Osaka City, Trust beneficiary September 25, 2001 6,934,000 Midosuji Daiwa Building Osaka right in trust of February 28, 2002 7,380,000 2.6% Prefecture real estate Total 14,314,000 Okayama City, Lit City Building Okayama Real property February 1, 2006 4,650,000 0.9% Chugoku Prefecture 1.4% region Hiroshima City, March 25, 2004 1,320,000 NHK Hiroshima Broadcasting Hiroshima Real property 0.5% Center Building March 3, 2008 1,450,000 Prefecture Total 2,770,000 Fukuoka City, Tosei Tenjin Building Fukuoka Real property September 25, 2001 1,550,000 0.3% Prefecture Fukuoka City, Kyushu Tenjin Crystal Building Real property June 1, 2005 5,000,000 0.9% 1.9% region Fukuoka Prefecture Fukuoka City, Trust beneficiary Hinode Tenjin Building Fukuoka right in trust of September 10, 2001 3,657,000 0.7% Prefecture real estate
Total: Other major cities 101,837,000 18.8% 18.8%
Total: Portfolio 542,969,112 100.0% 100.0%
(Note) In addition to the investment assets outlined in the above list, the Company acquired land and a building adjacent to Ryoshin Ginza East Mirror Building at the price of ¥1,800 million as of July 4, 2008. Furthermore, the Company plans to dismantle the acquired building and then construct extension to Ryoshin Ginza East Mirror Building.
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