Industrial & Infrastructure Fund Investment Corporation (Tokyo Stock Exchange Company Code: 3249) News Release - January 24, 2017
IIF to Acquire and Lease Eleven Properties in JapanMitsubishi Corp.-UBS Realty Inc., an asset manager, 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.
Summary of Anticipated Acquisitions (the "Anticipated Acquisitions")
Property number
(Note 1)
Property name(Note2)
Location
Seller
Anticipated acquisition price
(¥ million)
Appraisal value
(¥ million)
NOI yield (before depreciation)
(Note 3)
NOI yield (after depreciation)
(Note 3)
Anticipated acquisition date
F-11
IIF Yokosuka Technology Center
Yokosuka-shi, Kanagawa
Komatsu NTC Ltd.
(Note 4)
4,000
4,430
7.2 %
6.6 %
February 20,
2017
F-12
IIF Shonan Technology Center
Koza-gun, Kanagawa
Komatsu NTC Ltd.
(Note 4)
1,200
1,320
6.6 %
6.2 %
February 20,
2017
L-31
IIF Osaka Konohana Logistics Center (49% Co-ownership Interest)
Osaka-shi, Osaka
SPC(Note 4) (Note 5)
4,263
4,340
4.9 %
4.1 %
February 20,
2017
L-34
IIF Fukuoka Hakozaki Logistics Center I (60% Co-ownership Interest)
Fukuoka-shi, Fukuoka
SPC(Note 4) (Note 5)
3,115
3,170
4.5 %
3.5 %
February 20,
2017
L-35
IIF Fukuoka Hakozaki Logistics Center II (60% Co-ownership Interest)
Fukuoka-shi, Fukuoka
SPC(Note 4) (Note 5)
5,451
5,530
4.4 %
3.6 %
February 20,
2017
L-36
IIF Itabashi Logistics Center
(60% Co-ownership Interest)
Itabashi-ku, Tokyo
SPC(Note 4) (Note 5)
1,031
1,070
4.4 %
3.7 %
February 20,
2017
L-37
IIF Sendai Taiwa Logistics Center
Kurokawa-gun, Miyagi
Godo Kaisha Industrial Asset Holdings 4
1,480
1,560
6.0 %
4.8 %
February 21,
2017
L-38
IIF Ota Logistics Center
Ota-shi, Gunma
Sumitomo Mitsui Finance and Leasing Company, Limited
1,010
1,140
6.6 %
5.7 %
February 21,
2017
L-39
IIF Osaka Suminoe Logistics Center I (75% Co-ownership Interest)
Osaka-shi, Osaka
Business Company in Japan(Note 4) (Note 5) (Note 6)
9,075
10,100
4.2 %
3.3 %
March 21,
2017
L-40
IIF Osaka Suminoe Logistics Center II (75% Co-ownership Interest)
Osaka-shi, Osaka
Business Company in Japan (Note 4) (Note 5) (Note 6)
1,905
2,000
4.7 %
4.1 %
March 21,
2017
L-41
IIF Morioka Logistics Center II
Shiwa-gun, Iwate
Business Company in Japan (Note 5)
1,302
1,490
6.3 %
5.6 %
May 1,
2017
Total annual rent
(excluding consumption tax) 1,897 millionyen
(Note 1) "Property number" numbers and classifies properties owned by IIF into three categories, L (logistics facilities), F (manufacturing and research and development
facilities) and I (infrastructure facilities).
(Note 2) The property names that IIF will be using after the Anticipated Acquisitions. These properties do not have registered names as of the date of this news release.
(Note 3) For "NOI yield (before depreciation)" and "NOI yield (after depreciation)", please refer to "Reference: Definitions of Individual Calculation Formulas" at the end of this news release.
(Note 4) IIF will acquire this property by using a bridging function, which will be through a business company in Japan. (IIF has not obtained the necessary permission from the bridge seller to disclose its name and thus IIF sets out the information "business company in Japan" based on its nature.) The same shall apply hereinafter. With respect to IIF Osaka Suminoe Logistics Center I (75% co-ownership interest) and IIF Osaka Suminoe Logistics Center II (75% co-ownership interest), the company is different from the original seller.
(Note 5) IIF has not obtained the necessary permission from the seller to disclose its name and thus IIF sets out the information "SPC" or "business company in Japan" based on its nature.
(Note 6) A business company in Japan, the current owner of IIF Osaka Suminoe Logistics Center I and IIF Osaka Suminoe Logistics Center II, is currently scheduled to approve the sale of IIF Osaka Suminoe Logistics Center I and IIF Osaka Suminoe Logistics Center II at the board of directors' meeting to be held on January 26, 2017. The building of IIF Osaka Suminoe Logistics Center I is scheduled to be acquired by the current owner from a third party, before the seller to IIF acquires the building from the current owner. Furthermore, approval of the sale from the board of directors of the current owner at a meeting is a closing condition of the obligations of the seller pursuant to the purchase and sale agreements. If the board of directors of the current owner does not approve the sale of IIF Osaka Suminoe Logistics Center I and IIF Osaka Suminoe Logistics Center II, or if the meeting of the board of directors is postponed, we may be unable to acquire these properties in accordance with the current plan.
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.
In deciding whether to acquire the eleven 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, 2016. With regard to the reasons for the lease of the individual properties, please refer to section "3. Summary of Anticipated Acquisitions and Leases."
Summary of Anticipated Acquisitions and Leases
【IIF Yokosuka Technology Center】
Summary of Property
Type of asset
Trust beneficiary right in real estate
Summary of building structure evaluation
Evaluator
Tokyo Bldg-Tech Center Co., Ltd.
Anticipated acquisition date
February 20, 2017
Evaluation date
August 31, 2016
Anticipated acquisition price
4,000 million yen
Immediate repair cost
0 yen
Date of trust beneficiary rights set
September 1, 2016
Short-term repair cost
0 yen
Trustee
Mitsubishi UFJ Trust and Banking Corporation
Long-term repair cost
521,610,000 yen
Trust period end
February 28, 2027
Repair cost for the forthcoming 12 years (annualized average)
43,467,000 yen
Location
1-15, Shinmei-cho, Yokosuka-shi, Kanagawa, Japan
Land area
27,000.03 m2
Structure
/stories
Main building: 4-story steel structure with flat roof Annex 1: 2-story steel structure with flat roof Annex 2: 2-story steel structure with flat roof
Annex 3: 1-story reinforced concrete structure with galvanized steel sheet roof
Annex 4: 1-story reinforced concrete structure with galvanized steel sheet roof
Annex 5: 2-story steel structure with galvanized alloy steel sheet roof
Annex 6: 1-story steel structure with galvanized steel sheet roof
Annex 7: 1-story reinforced concrete structure with galvanized alloy steel sheet roof
Annex 8: 1-story steel structure with galvanized alloy steel sheet roof
Zoning
Restricted industrial area
Designated floor area ratio / building-to-land ratio
200 % / 60 %
Type of possession
Ownership
Earthquake PML
5.0 %
Construction date
Main building: November 30, 1995
Annex 1: November 30, 1995, April 14, 1998 (extension)
Annex 2: November 30, 1995, April 14, 1998 (extension)
Annex 3: November 30, 1995
Annex 4: November 30, 1995
Annex 5: July 18, 1996, August 23, 2005 (extension)
Annex 6: April 14, 1998
Annex 7: September 29, 2004
Annex 8: March 20, 2007
Collateral note
None
Gross Floor Area
13,779.77 m2
(Main building: 3,071.55 m2, Annex 1: 1,728.81 m2, Annex 2:
3,517.59 m2, Annex 3: 66.35 m2, Annex 4: 59.88 m2, Annex 5:
4,620.25 m2, Annex 6: 471.95 m2, Annex 7: 58.93 m2, Annex
8: 184.46 m2)
Type of building
Plant and office, etc.
Others
IIF requested E&E Solutions Inc. to conduct a soil and environmental survey prior to purchasing this property. According to this survey, it is unlikely that the subject land has a critical issue concerning its soil or underground water contamination, and that any soil or underground contamination or any material damage to health is caused in the future.
Description of Leases Relating to Anticipated Acquisitions
Tenant(s)
Number of tenant(s)
Total leased area (occupancy rate)
Annual rent (excluding consumption tax)
Period of contract
Deposit
Nikon Corporation
1
13,779.77 m2
(100 %)
Not disclosed (Note)
10 years
(from September 1, 2016
until August 31, 2026)
Not disclosed
(Note)
Revision of rent or termination during the lease period
Contract Type: Other type of building lease (futsu tatemono chintaishaku keiyaku) Contract Renewal and Revision:
・ Rent shall not be revised in principle.
・ The lessee is not allowed to terminate the lease agreement before the fifth anniversary of the delivery date. However, on or after the fifth
anniversary of the delivery date, the lessee may terminate the lease agreement by notifying the lessor in writing at least eighteen months before the scheduled date of such termination
・ On or after the fifth anniversary of the delivery date, the lessee may send a written notice of intention of termination. In such case, the lessee and the lessor shall hold consultations about such termination before twelve months prior to the scheduled date of such termination (the
"Consultation Period", and such period may be extended or shortened upon mutual consent), and the lease agreement shall not be terminated if the lessee does not send a notice of termination to the lessor before the expiration of the Consultation Period. In such cases, the termination date of the lease agreement shall be (i) the first anniversary of the date when such notice of termination is received by the lessor, or (ii) the termination date of the lease agreement as specified by the lessee in such post-consultation notice of termination, whichever comes later
・ Save that either the lessor or the lessee notifies the other party of its intention not to renew the lease agreement, in writing, at least eighteen months before the expiry of the lease period, the lease agreement shall be renewed from the next day of the expiry thereof for five years' term
Other:
・ N/A
(Note) IIF has not obtained the necessary permission from the lessee to disclose this information.
Reasons for the Acquisition and Lease
-
Acquisition Highlights
Production plant of core precision equipment products of Nikon Corporation ("Nikon")
Versatile facility suitable for manufacturing and assembly of variety of products, with good access to central Tokyo
New acquisition through CRE (Note) proposal supported by the IIF's past track record of acquisition, and IIF's first investment in a production plant which includes a building
(Note) CRE is the term often used to describe a relatively new strategic approach increasingly employed by Japanese corporations to re-evaluate the benefits of owning real estate and to manage their real estate needs more efficiently so as to maximize corporate value.
-
Continuity (Likelihood of Long-term Use by Current Tenant)
Production plant of Nikon's precision equipment business, engaging in manufacturing of units and parts for industry-leading flat panel display ("FPD") lithography systems
The tenants have been continually making a series of capital investments since the opening in 2004 as "Yokosuka Branch of Yokohama Plant". The operation has been conducted as "Yokosuka Plant" since 2012
- Versatility (Versatility as a Real Estate Asset)
Located in Kurihama Techno Park, where plants of major domestic manufacturers are concentrated and which is within walking distance of the closest station and in proximity to an expressway interchange
Highly-versatile plant facilities which can meet the needs of various industries' manufacturing plants as plants with eave heights of about 11 m that are equipped with open ceiling space and cranes
The fact that Nikon rents the property as a plant from Komatsu NTC Ltd., ("Komatsu NTC"), the seller and former user of the property, demonstrates the versatility of the property which can be adapted for various types of tenants from different industries
-
Acquisition Highlights
Industrial & Infrastructure Fund Investment Corporation published this content on 24 January 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 25 January 2017 09:16:03 UTC.
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