Notice of Asset Acquisition
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August 8, 2008 To whom it may concern: <Investment Corporation> Japan Real Estate Investment Corporation Taketo Yamazaki, Executive Director (TSE code: 8952) <Asset Management Company> Japan Real Estate Asset Management Co., Ltd. Kazuhiko Arahata, CEO & President Contact: Toku Kimura, General Manager, Planning Department Phone: +81-3-3211-7921 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. 2 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. 3 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. 4 (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