Make The World
More Sustainable
[Provisional Translation Only]
This English translation of the original Japanese document is provided solely for information purposes. Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.
May 20, 2024
Issuer
Ichigo Office REIT Investment Corporation ("Ichigo Office," 8975) 2-6-1Marunouchi, Chiyoda-ku,Tokyo
Representative: Keisuke Chiba, Executive Director
www.ichigo-office.co.jp/en
Asset Management Company
Ichigo Investment Advisors Co., Ltd.
Representative: Hiroshi Iwai, President
Inquiries: Yuji Kamo, Head of Ichigo Office
Tel: +81-3-4485-5231
Acquisition of Six Office Assets
Ichigo Office decided today to acquire three office assets in central Tokyo and three in central Fukuoka.
Because the seller of the Ichigo Hakata Gion Building, Ichigo Tenjin North Building, Ichigo Gotanda West Building, and Ichigo Otemachi North Building is a related party as defined in the Investment Trust and Investment Corporation Law (1951 Law No. 198 and including afterward revisions, "Investment Law"), Ichigo Office carefully reviewed and approved these four asset acquisitions at today's Board of Directors meeting.
1. Asset Acquisition Summary
Total appraisal value: JPY 16.18 billion, Total acquisition price: JPY 15.466 billion
Asset Number | O-102 | O-103 | |
Ichigo Akihabara East | Ichigo Hakata Meiji Dori | ||
Asset Name1 | |||
Building | Building | ||
Asset Type | Office | ||
Date Built | March 1988 | October 2007 | |
Legal Form of Asset | Trust beneficiary interest in real estate (juekiken) | ||
Appraisal Value2,3 | JPY 3,370 million | JPY 3,460 million | |
Acquisition Price4 | JPY 3,240 million | JPY 3,080 million | |
Seller | GK Kizuna1 | ||
Broker | None | ||
Contract Date | May 20, 2024 | ||
Closing Date | May 30, 2024 (expected) | ||
Financing Method | New Share Issuance via Third-Party Allotment, | ||
Loans, & Cash-on-hand | |||
Settlement Method | Lump-sum payment | ||
Disclaimer: This release has been prepared for the purpose of announcing to the public certain matters relating toasset acquisitions, and has not been prepared for the purpose of solicitation of investment.
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Asset Number | O-104 | O-105 | O-106 | O-107 |
Ichigo Hakata | Ichigo Tenjin | Ichigo Gotanda | Ichigo Otemachi | |
Asset Name1 | ||||
Gion Building | North Building | West Building | North Building | |
Asset Type | Office | |||
Date Built | February 2009 | October 1985 | March 1985 | February 2008 |
Legal Form of Asset | Trust beneficiary interest in real estate (juekiken) | |||
Appraisal Value2,3 | JPY 1,710 million | JPY 1,570 million | JPY 4,010 million | JPY 2,060 million |
Acquisition Price4 | JPY 1,700 million | JPY 1,550 million | JPY 3,950 million | JPY 1,946 million |
Seller | Ichigo Estate | |||
Broker | None | |||
Contract Date | May 20, 2024 | |||
Closing Date | May 30, 2024 (expected) | |||
Financing Method | New Share Issuance via Third-Party Allotment, Loans, & Cash-on-hand | |||
Settlement Method | Lump-sum payment | |||
- Ichigo Office will change the building names from the Ogaku Building, FORECAST Hakata Gion Building, Tenjin First Building, and COCORO Gotanda to the Ichigo Akihabara East Building, Ichigo Hakata Gion Building, Ichigo Tenjin North Building, and Ichigo Gotanda West Building, respectively, after the acquisitions. For purposes of this release, the buildings are referred to as the Ichigo Akihabara East Building, Ichigo Hakata Gion Building, Ichigo Tenjin North Building, and Ichigo Gotanda West Building.
- Appraisal Values for the Ichigo Akihabara East Building, Ichigo Hakata Meiji Dori Building, Ichigo Tenjin North Building, Ichigo Gotanda West Building, and Ichigo Otemachi North Building are calculated by Tanizawa Sogo Appraisal as of May 1, 2024, and are in compliance with the appraisal guidelines of Ichigo Investment Advisors ("IIA") as well as the rules of the Investment Trusts Association of Japan.
- Appraisal Value for the Ichigo Hakata Gion Building is calculated by Daiwa Real Estate Appraisal as of May 1, 2024, and is in compliance with the appraisal guidelines of IIA as well as the rules of the Investment Trusts Association of Japan.
- Acquisition Price excludes incidental expenses such as fees and property, city planning, and consumption taxes.
- Please refer to today's release "Issuance of New Shares via Third-Party Allotment" for details.
- Please refer to today's release "New Loans for Acquisition of Office Assets" for details.
Disclaimer: This release has been prepared for the purpose of announcing to the public certain matters relating toasset acquisitions, and has not been prepared for the purpose of solicitation of investment.
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2. Acquisition Rationale
Ichigo Office has a target of consistently generating total returns to shareholders of greater than 8% per annum, and believes that the acquisition of high-qualitymid-size office assets with earnings upside and increasing asset values via value-add capex is essential to achieve this target.
As announced on April 26, 2024, Ichigo Office sold the Ichigo Ofuna Building on April 26, 2024 and is selling the Ichigo Kudan 2 Chome Building on October 31, 2024, and is using the proceeds from the sales to finance the acquisition of six office assets (three in central Tokyo and three in central Fukuoka) with earnings upside.
As a result of the asset sales and acquisitions, Ichigo Office's portfolio will consist of 89 office assets, comprising 97.8% of the portfolio. Post-acquisition, Ichigo Office will draw upon its operational capabilities to carry out value-add activities at the newly acquired office assets to drive higher NAV per share, tenant satisfaction, and earnings growth.
Ichigo Office has developed value-add plans for the newly acquired office assets in line with each asset's location and characteristics, as detailed in today's release "April 26th Asset Sales & Today's Asset Acquisitions Supplementary Material."
Ichigo Office's sponsor Ichigo (2337) is strengthening its sponsor commitment to its listed J-REITs and solar power producer to drive growth and shareholder value. Of the assets being acquired, Ichigo Office is acquiring the Ichigo Akihabara East Building and Ichigo Hakata Meiji Dori Building by exercising the preferential negotiation right it received to acquire underlying assets of the bridge fund created with the support of Ichigo and its subsidiary Ichigo Estate, and is acquiring the Ichigo Hakata Gion Building, Ichigo Tenjin North Building, Ichigo Gotanda West Building, and Ichigo Otemachi North Building from Ichigo Estate.
The existing tenants of the assets being acquired satisfy the tenant standard stated in the "Financial Report (Yuka Shoken Hokokusho)" (Japanese only) disclosed on January 29, 2024.
Please refer to Section 3 "Acquisition Details" below for additional details on each asset's features and characteristics that underpinned the acquisition decision.
Disclaimer: This release has been prepared for the purpose of announcing to the public certain matters relating toasset acquisitions, and has not been prepared for the purpose of solicitation of investment.
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3. Acquisition Details Notes to Acquisition Details
- The location and description of each office are based on information obtained by IIA via real estate appraisal reports, building evaluation reports, market reports, and publicly available information on the builders' websites.
- Legal Form of Asset is a type of specified real estate asset.
- Trustee refers to the trustee as of today or the expected trustee.
- Period of Trust Contract refers to the trust period specified under the trust contract as of Ichigo Office's acquisition date.
- Location refers to the postal address (or the location in the real estate registry (if multiple locations are available, one of the multiple locations) if a postal address is not available) of the office.
- Land and Building Property Rights refer to the type of right to be acquired by Ichigo Office or the trustee.
- Land Area is the land area in the real estate registry.
- Zoning is the type of zoning stipulated in the City Planning Act Article 8, Clause 1, Item 1.
- Coverage Ratio is the ratio of the building to the land stipulated in the Building Standards Act Article 53, Clause 1, and is determined for each zone for city planning purposes. An asset may have more than one coverage ratio.
- Floor Area Ratio is the ratio of the building area to the land area stipulated in the Building Standards Act Article 52, and is determined for each zone for city planning purposes. An asset may have more than one floor area ratio.
- Building Use refers to the main use included in the real estate registry.
- Building Structure refers to the structure mentioned in the real estate registry. The following abbreviations are used with regards to structure: RC stands for reinforced concrete; SRC for steel-reinforced concrete; F for number of floors; and B for basement.
- Total Floor Area refers to the total floor area in the real estate registry, and includes the area of attached buildings.
- Date Built refers to the date built in the real estate registry.
- Appraiser refers to the author of the real estate appraisal report
- Appraisal Value, Appraisal Date, and Value by Direct Capitalization Method are based on the real estate appraisal report from the Appraiser.
- Names of the architect, builder, structural designer, and inspection agency are those as of when the building was built.
- Collateral refers to whether there is collateral after Ichigo Office's acquisition.
- Lease Details refer to the tenant lease contracts for each office, excluding the Number of Tenants.
- Number of Tenants, Rental Income, Deposit, Leasable Area, and Leased Area are based on the lease contract and any other relevant memoranda of understanding effective as of each office's acquisition date.
- Property Management Company refers to the property management companies appointed to provide property management services for each office as of each office's acquisition date.
- Master Lease Company refers to the master lease companies appointed to provide master lease services for each office as of each office's acquisition date.
- Master Lease Type refers to the main type of master lease contract. Pass-through refers to when the rent amount paid by the tenant to the master lease company is equal to the rent paid by the master lease company, and Rent Guarantee refers to when the master lease company pays a guaranteed rent, both under a master lease contract effective as of each office's acquisition date.
- Special Items include items that significantly impact real estate rights and use, value, earnings, and disposal as of May 13, 2024.
Disclaimer: This release has been prepared for the purpose of announcing to the public certain matters relating toasset acquisitions, and has not been prepared for the purpose of solicitation of investment.
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(1) Ichigo Akihabara East Building
1. Location
The Ichigo Akihabara East Building is located near Akihabara Station on the JR Yamanote, Sobu, and Keihin Tohoku Lines, the Tsukuba Express Line, and the Tokyo Metro Hibiya Line, which offers convenient access to the Tokyo Metropolitan area and various places within Tokyo. The area around the station developed as an electric town with stores selling home electronics and electronic devices, and more recently, has become a leading Japanese sub-culture hub that attracts both domestic shoppers and tourists.
The Showa Dori area on the east side of Akihabara Station is an attractive Central Business District (CBD) and home to many mid-size office and retail buildings.
2. Building Features
The Ichigo Akihabara East Building is a mid-size office building located within a three- minute walk from Akihabara Station on the JR Yamanote and other JR Lines and a one- minute walk from Akihabara Station on the Tokyo Metro Hibiya Line.
The standard floor plate is 90 tsubo (297m2), and the building has OA sub-floors, individual air conditioning units, and 24 parking spaces, therefore catering to the needs of the average tenant.
The building is currently occupied by an IT company, a temp agency, and a franchise coffee shop.
3. Building Photos and Location Map
Disclaimer: This release has been prepared for the purpose of announcing to the public certain matters relating toasset acquisitions, and has not been prepared for the purpose of solicitation of investment.
5
Asset Overview | |||||||||||
Asset Name | Ichigo Akihabara East Building | ||||||||||
Form of Ownership | Trust beneficiary interest in real estate (juekiken) | ||||||||||
Trustee | Sumitomo Mitsui Trust Bank, Ltd. | ||||||||||
Period of Trust Contract | February 28, 2005 - May 31, 2034 (expected) | ||||||||||
Location | 2-19 Kandasakumacho, Chiyoda-ku, Tokyo | ||||||||||
Property Right | Freehold | ||||||||||
Land | Area | 421.21m2 | |||||||||
Zoning | Commercial | ||||||||||
Coverage Ratio | 80% | ||||||||||
Floor Area Ratio | 800% (600% for part of the building) | ||||||||||
Property Right | Freehold | ||||||||||
Use | Office, Parking lot | ||||||||||
Building | Structure | Steel Reinforced Concrete, B1F/8F | |||||||||
Total Floor Area | 2,776.30m2 | ||||||||||
Date Built | March 22, 1988 | ||||||||||
Appraiser | Tanizawa Sogo Appraisal Co., Ltd. | ||||||||||
Appraisal Value | JPY 3,370 million | ||||||||||
Appraisal Date | May 1, 2024 | ||||||||||
Value by Direct Capitalization | JPY 3,550 million | ||||||||||
Method | |||||||||||
Architect | NAOI Architecture & Design Office | ||||||||||
Builder | Sampei Construction Co., Ltd. | ||||||||||
Structural Designer | NAOI Architecture & Design Office | ||||||||||
Inspection Agency | Chiyoda Ward | ||||||||||
Seismic PML (Assessor) | 6.9% (Sompo Risk Management Inc.) | ||||||||||
Collateral | None | ||||||||||
Lease Details (as of March 31, 2024) | |||||||||||
Number of Tenants | 4 | ||||||||||
Monthly Rental Income | JPY 11.193 million | ||||||||||
Tenant Security Deposits | JPY 103.076 million | ||||||||||
Leasable Area | 2,100.93m2 | ||||||||||
Leased Area | 2,100.93m2 | ||||||||||
Occupancy | Apr 2022 | Oct 2022 | Apr 2023 | Oct 2023 | Mar 2024 | ||||||
100% | 100% | 100% | 100% | 100% | |||||||
Property Management | Ken Corporation Co., Ltd. | ||||||||||
Company | |||||||||||
Master Lease Company | Ichigo Office | ||||||||||
Master Lease Type | Pass-through |
Disclaimer: This release has been prepared for the purpose of announcing to the public certain matters relating toasset acquisitions, and has not been prepared for the purpose of solicitation of investment.
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Special Items
The boundary line between the road and the south side of the building has yet to be determined. The south-side boundary line is expected to be pushed back towards the building by 20~30cm from the L-shaped gutter along the road and any future reconstruction must be planned within the finalized boundary, which is estimated to have an area of 414.65m2.
Disclaimer: This release has been prepared for the purpose of announcing to the public certain matters relating toasset acquisitions, and has not been prepared for the purpose of solicitation of investment.
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Appraisal Details
Asset Name | Ichigo Akihabara East Building | ||||||||
Appraisal Value | JPY 3,370,000,000 | ||||||||
Appraiser | Tanizawa Sogo Appraisal Co., Ltd. | ||||||||
Appraisal Date | May 1, 2024 | ||||||||
Amount (JPY) | Note | ||||||||
Calculated using an income approach, | |||||||||
Appraisal Value | 3,370,000,000 | with a DCF valuation as a basis and | |||||||
verified using a direct capitalization | |||||||||
valuation | |||||||||
Value by Direct Capitalization | 3,550,000,000 | ||||||||
Method | |||||||||
Income | 167,248,132 | ||||||||
Based on expected long-term, stable | |||||||||
Maximum Obtainable | 177,864,349 | rental income, common area service | |||||||
Rental Income | income, parking lot income, and other | ||||||||
income | |||||||||
Vacancy Loss | 10,616,217 | Based on long-term, normalized | |||||||
vacancy rates | |||||||||
Expenses | 38,978,713 | ||||||||
Administrative and | 9,529,818 | Based on historical actual amounts | |||||||
Maintenance Expenses | |||||||||
Utility Expenses | 10,134,886 | Based on historical actual amounts | |||||||
Based on engineering reports, | |||||||||
reference to similar assets, and a 3:7 | |||||||||
Repair Expenses | 3,430,000 | (Repair Expenses: Capital | |||||||
Expenditure) allocation based on the | |||||||||
Corporate Tax Law Basic Interpretive | |||||||||
Regulations | |||||||||
PM Fee | 2,187,844 | Based on existing contractual fees | |||||||
Leasing Brokerage Fees | 1,168,314 | Based on assumption that 10% of | |||||||
tenants will change annually | |||||||||
Taxes | 11,367,300 | Based on FY2023 actual amounts | |||||||
Insurance Premiums | 324,310 | Based on quotes from insurance | |||||||
companies | |||||||||
Other Expenses | 836,241 | Based on historical actual amounts | |||||||
Net Operating Income | 128,269,419 | ||||||||
(NOI) | |||||||||
Income on Investment of | 704,889 | Based on a 1.0% investment yield | |||||||
Deposits Received | |||||||||
Based on engineering reports, | |||||||||
reference to similar assets, and a 3:7 | |||||||||
Capital | 8,330,000 | (Repair Expenses: Capital | |||||||
Expenditure | Expenditure) allocation based on the | ||||||||
Corporate Tax Law Basic Interpretive | |||||||||
Regulations |
Disclaimer: This release has been prepared for the purpose of announcing to the public certain matters relating toasset acquisitions, and has not been prepared for the purpose of solicitation of investment.
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Net Profit | 120,644,308 | |||
Cap Rate | 3.4% | Based on transactions of similar assets | ||
located in nearby areas | ||||
Value via DCF Method | 3,290,000,000 | |||
Discount Rate | 3.5% | Base rate adjusted for individual risks | ||
assuming a holding period of ten years | ||||
Terminal Cap Rate | 3.6% | Cap rate adjusted for uncertainties | ||
Value via Cost Approach | 3,900,000,000 | |||
Ratio of Land | 93.3% | Land value divided by total land and | ||
building value | ||||
Ratio of Building | 6.7% | Building value divided by total land | ||
and building value | ||||
Notes | ||||
None |
Note: Appraisal NOI Yield: 4.0% (calculated by dividing NOI by Acquisition Price)
Disclaimer: This release has been prepared for the purpose of announcing to the public certain matters relating toasset acquisitions, and has not been prepared for the purpose of solicitation of investment.
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(2) Ichigo Hakata Meiji Dori Building
1. Location
The Ichigo Hakata Meiji Dori Building is located in the Gofukucho area adjacent to Fukuoka's prime CBDs, the Hakata Station area and the Tenjin area. The area offers convenient access to public transportation, including multiple subway lines and bus routes.
Along Taihaku Dori and Meiji Dori, both major thoroughfares in the Gofukucho area, is a commercial district with many high-rise office buildings.
The Gofukucho area is expected to see continued growth as recent years has seen new buildings built in the vicinity along with ongoing new building constructions and redevelopment projects.
2. Building Features
The Ichigo Hakata Meiji Dori Building is a mid-size office building located within a one-minute walk from Gofukucho Station on the Fukuoka City Subway Hakozaki Line and a four-minute walk from Nakasu Kawabata Station on the Kuko Line.
The standard floor plate is 155 tsubo (512m2) with a ceiling height of 2.9 meters, and the building has OA sub-floors, individual air conditioning units, and 30 parking spaces, therefore catering to the needs of the average tenant.
The building is currently occupied by a lighting equipment manufacturer, a financial services company, and a pharmaceutical company.
3. Building Photos and Location Map
Disclaimer: This release has been prepared for the purpose of announcing to the public certain matters relating toasset acquisitions, and has not been prepared for the purpose of solicitation of investment.
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Disclaimer
Ichigo Office REIT Investment Corporation published this content on 20 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 May 2024 07:20:07 UTC.