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NEWS RELEASE


Apr 15, 2016


R&I View: Daiwa House Residential Investment To Merge With Peer Limited rating impact


Daiwa House Residential Investment Corp. (Sec. Code: 8984, Issuer Rating: A+, DHI) announced on April 15 that it has entered into a merger agreement with Daiwa House REIT Investment Corp. (Sec. Code: 3263). The merger is scheduled to take effect on September 1.

DHI's asset size is expected to substantially expand to around 500 billion yen. Its position in the REIT industry will improve, and a transformation into a diversified REIT will likely increase its investment opportunities and make it easier to replace assets.

After the merger, DHI's portfolio, which consists primarily of residential properties in Tokyo's 23 wards, will be a diversified one that includes logistics and retail facilities located in suburban areas. A majority of logistics and retail assets to be added are very competitive, relatively new properties developed by its sponsor, and basically operate under long-term leasing contracts with tenants. DHI can thus expect stable cash flow from those properties.

Since the Daiwa House Group will continue to manage assets, there would be no major changes in the operating structure. The Daiwa House Group has an extensive track record not only in residential but in logistics and retail properties.

The LTV ratio (calculated after subtracting goodwill from total assets) after the merger is estimated to be in the upper 40% range, which is somewhat lower than DHI's LTV level at normal times. The debt profile will likely consist mainly of long-term fixed-rate borrowings, as it does now.

Based on these considerations, R&I has judged that the merger will have only a limited impact on the rating though a significant expansion in the asset size is a positive factor.


Lead Rating Analyst: Fumihiko Matsuda


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■Media Contact : Corporate Planning Division (Public Relations) TEL. +81-(0)3-3276-3438

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Daiwa House Residential Investment Corporation issued this content on 15 April 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 15 April 2016 09:45:27 UTC

Original Document: https://www.r-i.co.jp/eng/body/sf/news_new_release/2016/04/news_new_release_20160415-1826_01.pdf