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DAIWA SECURITIES LIVING INVESTMENT CORPORATION

(8986)
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Daiwa Securities Living Investment : Notice Concerning Acquisition of Asset (Gran Casa Itabashi EAST)

06/22/2021 | 04:19am EDT

English Translation

The following is an English translation of the Japanese original press release and is being provided for information purposes only.

June 22, 2021

To All Concerned Parties

REIT Issuer: Daiwa Securities Living Investment Corporation

6-2-1 Ginza, Chuo-ku, Tokyo 104-0061

Ikuo Shoda, Executive Director

(Securities Code: 8986)

Asset Manager: Daiwa Real Estate Asset Management Co. Ltd.

Toshio Fukushima, President and Chief Executive Officer

Inquiries: Takashi Chiba, General Manager, Corporate Division

Tel: +81-3-6757-9680

Notice Concerning Acquisition of Asset (Gran Casa Itabashi EAST)

Daiwa Securities Living Investment Corporation (hereinafter referred to as the "Investment Corporation") hereby announces that Daiwa Real Estate Asset Management Co. Ltd. (hereinafter referred to as the "Asset Manager"), the asset manager of the Investment Corporation, has resolved to acquire the asset (hereafter the "Asset to Be Acquired") described below.

I. General Outline of the Acquisition

Difference between

Anticipated

Appraisal value

anticipated acquisition

price and appraisal

Property

acquisition price

(as of June 2021)

value

Name of property

Location

type

(A)

(B)

(B)-(A)

(Note 1)

(JPY thousand)

(JPY thousand)

(JPY thousand)

(Note2) (Note 3)

(Note 3)

((A)/(B))

(Note 3)

Gran Casa Itabashi

Kita-ku, Tokyo

Residence

955,000

989,000

34,000

EAST (Note 4)

(Studio)

(96.6%)

(Note 1) Studio means residences with 1R, 1K, 1DK, or 1LDK.

(Note 2) Anticipated acquisition price does not include acquisition expenses, adjustments to property tax and city planning tax, and consumption tax and local consumption tax. The same applies hereinafter.

(Note 3) Amounts are rounded to the nearest unit and percentages are rounded to the first decimal place. Unless stated otherwise, the same applies hereinafter.

(Note 4) The current name of the property is not disclosed because the consent of the seller has not been obtained. The name will be changed to "Gran Casa Itabashi EAST" on June 23, 2021.

(Note 5) The intermediary of the Acquisition does not correspond to the interested party.

  • Reason for the Acquisition and Leasing

Based on the asset management objectives and policies set forth in the Investment Corporations Agreement, we have decided to acquire the Asset to Be Acquired in order to diversify and enhance the portfolio to achieve asset size growth and secure stable earnings.

  • Details of Asset to Be Acquired and Leasing

The details of the Asset to Be Acquired are summarized in the following individual property tables. The description of the items mentioned in the individual property tables is as follows.

a. Explanation of Overview of Properties

  1. Where residential indication is not shown under "Residential indication" for Location, the building location is shown in accordance with either the housing number indication or the registry (including the Registration Record. The same applies hereinafter).
  2. "Form of ownership" for both Land and Building refers the type of rights held by the Investment Corporation for real estate and by the Trustee for real estate trust beneficiary interests.
  3. "Zoning" for Land refers to the types of use districts stipulated by Item 1, Paragraph 1, Article 8 of the City Planning Act (Law No. 100 of 1968, including later amendments) (hereinafter referred to as the "City Planning Act").
  4. "Area" for Land is shown in accordance with the registry and may not correspond to the current reality.
  5. "FAR" for Land refers to the ratio of the sum of the floor space of the building to the land area as stipulated in Article 52 of the Building Standards Act (Law No. 201 of 1950, including later amendments) (hereinafter referred to as the

English Translation

The following is an English translation of the Japanese original press release and is being provided for information purposes only.

"Building Standards Act"), and the upper limit of floor-to-area ratio (designated floor-to-area ratio) as determined by city planning according to the use area. The designated floor-to-area ratio can be mitigated, increased, or reduced due to the width of roads connected to the site and other reasons, and may differ from the floor-to-area ratio that is actually in use.

  1. "Building-to-landratio" for Land shows the ratio of the building area to the land area as stipulated in Article 53 of the Building Standards Act, and the upper limit of building-to-land ratio (designated building-to-land ratio) as determined by city planning according to the use area. The designated building-to-land ratio can be mitigated, increased, or reduced due to fireproofed structures in a fire prevention districts and other factors, and may differ from the building- to-land ratio that is actually in use.
  2. "Use" for Building refers to the building type recorded in the registry.
  3. "Structure/Floors" for Building is based on records in the registry.
  4. "Number of leasable units" indicates the number of units that can be leased as of May 31, 2021, for the Asset to Be Acquired (only recorded for residences).
  5. "Number of leasable compartments" indicates the number of compartments of a building where a lease contract has been concluded, and includes retail stores, offices, etc., if any (only recorded for healthcare facilities).
  6. "Total floor area" for Building is based on records in the registry and does not include the floor area of annexed buildings.
  7. "Construction completion" for Building refers to the date of completion recorded in the registry.
  8. "Estimated emergency repair expenses," "Estimated short-term repair expenses," and "Estimated long-term repair expenses" are rounded down to the thousands, while ratios are rounded to the first decimal place.
  9. "PML" data was acquired from Tokyo Marine & Nichido Risk Consulting Co., Ltd. in May 2021.
  10. "Property manager" is the property management company entrusted with, or scheduled to be entrusted with the property management operations.
  11. "Master lessee" is the party that has, or is scheduled to enter into a master lease agreement concerning the asset in question.
  12. "Type of master lease" is either "Pass through" or "Guaranteed rent." "Pass through" is a master lease agreement where the master lessee passes on the rent equivalent to rent paid by the end tenant, and "Guaranteed rent" is a master lease agreement in which the master lessee pays a fixed rent.
  13. "Real estate rent revenue" is the monthly rental income (rent, common service fee, parking lot income, etc.) rounded down to less than 1,000 yen based on the figures and information available as of May 31, 2021, of the Asset to Be Acquired.
  14. "Lease and guarantee deposits, etc." are the lease or guarantee deposits (residences, retail stores, offices, parking lots, etc.) rounded down to less than 1,000 yen based on the figures and information available as of May 31, 2021, of the Asset to Be Acquired.
  15. "Leasable area" shows the leasable area of each of the Asset to Be Acquired as of May 31, 2021, excluding area used by storage spaces, parking spaces, custodian areas, signboards, vending machines, antennas and other spaces leased to the lessee in addition to their main use, or other areas leased for the maintenance and supervision of the relevant property (including loan for use). Furthermore, leasable area is calculated using the center line of the wall, and includes the meter boxes and pipe spaces allotted to each unit.
  16. "Number of tenants" shall be 1 if a master lease agreement has been concluded with a master lessee.
  17. "Total leased area" is the sum of the area leased through lease agreements with end tenants (however, in cases where properties are wholly leased to realtors through guaranteed rent agreements or where a master lessee wholly leases it to another company, lease agreements where properties are wholly leased to a lessee) at the Asset to Be Acquired that are in effect as of May 31, 2021.
  18. "Occupancy rate" is the figure obtained by dividing the total leased area by the leasable area for the Asset to Be Acquired as of May 31, 2021.
  19. The "Features" sections have been prepared based on the analyses of the Asset Manager and the appraisal reports of the real estate appraiser concerning the Asset to Be Acquired.
  20. The "Special Notes" section denotes important factors upon considering the rights, appraisal values, the impact on profitability and disposability, etc., concerning the Asset to Be Acquired.

Overview of the Property

Category of anticipated

Trust beneficiary interests

property for acquisition

Trustee (scheduled)

Mitsubishi UFJ Trust and Banking Corporation

Trust agreement period

From January 22, 2021 to December 31, 2031

Scheduled acquisition price

JPY 955 million

Scheduled acquisition date

June 23, 2021

Appraisal value

JPY 989 million

Appraisal firm

DAIWA REAL ESTATE

(appraisal date)

(as of June 1, 2021)

APPRAISAL CO.,LTD.

Location

7-20-2, Takinogawa, Kita-ku, Tokyo

(Residential indication)

English Translation

The following is an English translation of the Japanese original press release and is being provided for information purposes only.

Access

Approximately 450 meters from Itabashi Station on the JR Saikyo Line

Form of ownership

Ownership

Zoning

Neighborhood commercial

Land

districts

Area

236.70 m²

FAR/Building-to-land ratio

400%80%

Form of ownership

Ownership

Use

Condominium

Building

Structure/Floors

RC, 10-story building with

Number of leasable units

34 units

flat roof

Total floor area

1,080.22 m²

Construction completion

January 5, 2021

Building

engineer

Seiwa Corporation First-class

architect office

Constructor

Seiwa Corporation

Building inspection agency

J Architecture Inspection Center

Estimated emergency

JPY 0 thousand

Estimated short-term

JPY 0 thousand

repair expenses

repair expenses

Estimated long-term repair

JPY 9,173 thousand

PML

5.6%

expenses

Property manager

Tokyu Housing Lease Corporation

Master lessee

G.K. Japan Rental Housing

Type of master lease

Pass through

Overview of Leasing

Real estate rent revenue

JPY 823 thousand

Lease and guarantee deposits

JPY 1,193 thousand

Total leasable area

934.40 m²

Number of tenants

1

Total leased area

188.52 m²

Occupancy rate

20.2%

Collateral

None

Features

Site features:

The property is a condominium completed in January 2021, located a 6-minute walk from Itabashi Station on the JR Saikyo Line. It has good access to Ikebukuro, Shinjuku, and Shibuya. It is also possible to use the Toei Subway Mita Line Nishisugamo station, located a 12-minute walk, and has excellent access to business districts such as Otemachi and Hibiya. The property is located in the good residential area with convenience facilities such as retail stores and parks. There is a stable need from single people who commute to the city center with an emphasis on transportation access and living convenience.

Property features:

The property is the 10-story reinforced concrete structure, consisting of 1K(32 units) and 2LDK(2 units). In addition to being equipped with common facilities such as an auto lock, intercom with monitor, security camera, delivery box, bathroom dryer, hot water washing toilet seat, etc., each unit is equipped with an Internet line as standard equipment. The property provides an attractive life that makes full use of IoT technology, such as a non-contact locking system compatible with smartphones and ceiling lighting with a built-in voice AI.

Special Notes

None

IV. Profile of the Counterparty

The seller of the asset to be acquired is a domestic company, whose name is not disclosed because the seller's consent has not been obtained. There are no capital, human, or business relationships between the Investment Corporation or the Asset Manager and the seller. The seller is not related party of the Investment Corporation or the Asset Manager.

The seller does not fall under the category of interested persons under the Order for Enforcement of the Act on Investment Trusts and Investment Corporations, nor does it fall under the category of interested party, etc. under the internal rules on dealings with interested parties of the Asset Manager.

V. Profile of the Property Seller

The seller of the anticipated property is not classified as a special related party of the Investment Corporation and the Asset Manager.

VI. Funds for Acquisition

Own funds

English Translation

The following is an English translation of the Japanese original press release and is being provided for information purposes only.

VII. Acquisition Schedule

  • Decision of acquisition and conclusion of purchase agreement: June 22, 2021
  • Payment and delivery: June 23, 2021

Ⅷ. Payment Method, Etc.

Lump-sum payment at the time of transaction.

Ⅸ. Future Prospects

The Acquisition will have only a slight impact on the asset management condition in the fiscal period ending September 30, 2021 (from April 1, 2021 to September 30, 2021) and the fiscal period ending March 31, 2022 (from October 1, 2021 to March 31, 2022), and there is no change in the asset management forecast.

X. Summary of Appraisal Report

Property name

Gran Casa Itabashi EAST

Appraisal value

989,000,000 yen

Appraiser

DAIWA REAL ESTATE APPRAISAL CO.,LTD.

Date of appraisal

June 1, 2021

Item

Details

Outline, etc.

Value indicated by income approach

JPY

989,000

Value indicated by the direct capitalization

JPY

1,030,000

method

(1) Total Operating Income: (a) - (b)

JPY

47,800

Taking into account mid- to long-term competitiveness of the property based on

Rental revenues including

JPY

47,904

the level and movements of new rents of similar properties in the same supply-

common service fees

demand area, posted assumed standardized revenues from the rental units and

common service fees of the property.

(a)

Parking fees

JPY

21

Taking into account assumed vacancy rates of such parking space of the property

based on lease cases.

Posted key money and other revenues by applying the number of months for each

Other revenues

JPY

1,312

tenant based on assessed tenants change and vacancy rates.

Renewal fee revenue was assessed and recorded, based on the consideration of

renewal ratios and vacancy ratios.

Posted loss from vacant units, etc. by assessing vacancy rates in relation to

revenues from rental units that are deemed to be stable over a mid- to long-term

(b)

Losses from vacancies

JPY

1,437

period, common service fees and parking space revenues and by taking into

account competitiveness, etc. of the property based on standardized vacancy rates

of similar properties.

Bad debt losses

JPY

0

Not posted because bad debt losses are deemed to be secured by key money, etc.

(2)

Total

Operating Expenses

JPY

8,989

Operation costs

JPY

2,472

Posted operation costs by assessing the level of operation costs for similar

properties.

Utilities

JPY

340

Posted utility costs by assessing the level of utility costs for similar properties.

Posted repairs and maintenance expenses by assessing the level of repairs and

Repairs and maintenance

JPY

606

maintenance expenses for similar properties.

expense

Assessed and posted tenant change costs, taking into account tenant change and

vacancy rates.

Property management fees

JPY

697

Posted property management fees by assessing the level of property management

fees for similar properties.

Posted secretarial costs associated with solicitation for new tenants for rental units

Tenant promotion fees, etc.

JPY

1,291

and parking space by assessing the portion to which the assumed tenant change

rate would apply, taking into account the level of secretarial costs associated with

solicitation for new tenants of similar properties.

LandAssessed and posted Taxes and public dues by the tax registered book for

Taxes and public dues

JPY

2,553

fiscal year 2021.

PropertyPosted taxes and public dues, by assessing from a mid- to long-term

perspective the assumed amount of taxes for the year which is 11 years after

construction based on the replacement value of the planned building.

Nonlife insurance

JPY

63

Assessed in reference to the level of non-life insurance premiums for similar

properties.

Other expenses

JPY

965

Posted internet expenses and miscellaneous expenses, etc. by assessing the level

of these for similar properties.

(3)

Net

Operating Income (NOI):

JPY

38,810

(1) - (2)

By comprehensively taking into account the actual situation of investing lump

(4) Lump-Sum Investment Return

JPY

35

sum paid, etc. from both investment and funding perspectives and assuming

investment yields, posted an amount calculated by multiplying said assumed

investment yields by an amount equivalent to assumed key money in custody, etc.

(5) Capital Expenditure

JPY

811

Posted by assessing the level of renewal expenses for similar properties with

taking into account assumed CM fees.

(6) Net Cash Flow (NCF): (3) + (4) - (5)

JPY

38,033

English Translation

The following is an English translation of the Japanese original press release and is being provided for information purposes only.

(7) Capitalization Rate

(%)

3.7

Value indicated by DCF method

JPY

972,000

Assessed the discount rate, taking into account discount rates used in transactions

Discount rate

(%)

3.5

of similar properties, comparison with yields from other financial instruments and

so forth.

Assessed terminal capitalization rate, taking into account factors such as the

Terminal capitalization rate

(%)

3.9

marketability of the property at the maturity of the holding period in relation to

capitalization rate.

Value

indicated by cost approach

JPY

984,000

Land ratio

(%)

67.0

Property ratio

(%)

33.0

Other items of note by appraiser

None.

URL: https://www.daiwa-securities-living.co.jp/en/

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Japan Rental Housing Investments Inc. published this content on 22 June 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 June 2021 08:18:06 UTC.


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Akira Yamanouchi Chairman
Kouhei Yabuta Supervisory Officer
Jun Nagamine Supervisory Officer
Ikuo Shoda Executive Officer