Summary of Investor Presentation
0
for the Merger
April 15, 2016
Rationale of the Merger
1 through the shift to a "diversified REIT"
2 through "scale enhancement"
3
Acceleration of growth leveraging the value chain of "Daiwa House Group's integrated capabilities""Creating Dreams, Building Hearts"
Maximizing unitholder value based on secured cash flow and
improved and stable distribution through solid growth of portfolio
1
Merger scheme and Schedule
Merger Overview
REIT | |
Asset management agreement |
Merger
Daiwa House Residential Investment Corporation re-named as: Daiwa House REIT Investment Corporation | |
New asset manager: | Asset management agreement |
The Merged REIT:
Asset manager
Asset management agreement
Daiwa House Asset Management Co., Ltd.
Merger
Merger ratio
1 : 2.2
Merger scheme (REIT)
Daiwa House REIT Investment Corporation unitholders' meeting (planned)
May 27
Merger schedule
Merger method
The merger will be an absorption-type merger wherein Daiwa House Residential is to be the surviving corporation;
Daiwa House REIT is to be the absorbed corporation.
Execution of the merger agreements
(between corresponding REITs and the asset managers)
April 15, 2016
Unitholders' meeting resolution
Requirement: Approval (Note 2) (by extraordinary resolution (Note 1)) of the merger agreement at unitholders' meetings of the respective REITs
(The unitholders' meeting resolutions of Daiwa House Residential and Daiwa House REIT, respectively, are required for the merger to be effective.)
Daiwa House REIT Investment Corporation delisting date (planned)
August 29
Daiwa House Residential Investment Corporation unitholders' meeting (planned)
June 17
Effective date of the merger (planned)
September 1
(Note 1) Attendance by the unitholders who hold a majority of the issued units and approval by two-thirds or more of the voting rights represented by the unitholders present at the meeting are required.
When there is no contradictory agenda item, the unitholder will be deemed to have approved the proposals submitted to the general meeting of unitholders.
(Note 2) For the surviving corporation, approval of the agenda item regarding the article changes (extraordinary resolution) shall be required; for the absorbed corporation, approval of the agenda item
(Note 2) regarding termination of the asset management agreement (ordinary resolution (Note 3)) shall be required.
(Note 3) Approval by a majority of the voting rights represented by the unitholders present at the meeting.
When there is no contradictory agenda item, the unitholder will be deemed to have approved the proposals submitted to the general meeting of unitholders.
(Note 4) The unitholders' meeting record date for Daiwa House REIT Investment Corporation is Feb. 29, 2016.
The unitholders' meeting record date for Daiwa House Residential Investment Corporation is scheduled
on May 6, 2016. 2
Positioning in the J-REIT market in terms of asset size
Daiwa House Residential (Note)
Daiwa House REIT (Note)
(Bn yen)
1,200
1,101.9
(Bn yen)
500
400
300
200
100
0
433.6
No. 3 of 9 residential J-REITs
298.7 256.3
220.2
200.7
(Bn yen)
500
400
300
200
100
0
447.1
No. 4 of 5 logistics J-REITs
384.6
212.6 206.3
161.4
Advance
Nippon
Daiwa
Japan
Sekisui
Nippon
GLP Japan
Daiwa House
LaSalle
1,000
800
923.6
859.0
Residence Accommodations
Fund
807.3
House Residential
Rental Housing
House
SI Residential
Prologis REIT
Logistics Fund
REIT
LOGIPORT
600 575.4574.8
No.7
506.8
447.1
400
200
No.19 256.3
No. 27
206.3
0
Nippon
Building Fund
Japan Real Estate
Japan Retail Fund
Nomura Real Estate Master Fund
United Urban
ORIX JREIT
The Merged REIT Nippon Prologis
REIT
Daiwa House Residential
Daiwa House REIT
(Note) The total value of acquisition prices as of Mar. 31, 2016 for each corporation's portfolio (including properties for anticipated acquisition or disposition) is presented.
The figure for Daiwa House REIT includes anticipated acquisition of D Project Tosu extension in Jun. 2016.
The Merged REIT's asset size is the sum of "Daiwa House Residential's acquisition price as of the end of the period ending Feb. 2016" , "Daiwa House REIT's appraisal value as of the end of the period ending Feb. 2016" and "anticipated acquisition price of six anticipated acquisitions"
Digits below one hundred million yen are truncated for the amounts of each corporation's asset size. 3
Growth record and future target
Stand-alone growth of the investment corporations
Mainly acquire properties developed by Daiwa House Group, and aim 800 billion yen in asset size
Further accelerated growth as the Merged REIT
(Bn yen)
800
Asset size (acquisition price) BLife
Daiwa House Residential Daiwa House REIT
IPO of Daiwa House REIT
Merger of the investment corporations
800
Bn yen
600
400
Merger of BLife and New City Residence
Renamed to
Daiwa House Residential
327.1 338.1348.9
114.5 117.0119.0
379.5385.1
144.1147.5
451.3 460.1 462.7
195.9 203.7 206.3
506.8
Steady growth
200
32.051.1
192.6 192.1 192.1 210.2211.0
212.6 221.0 229.9 235.3 237.6 255.3 256.3 256.3
0
end of
end of
end of
end of
end of
end of
end of
end of
end of
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end of
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end of
after
Nov. 2006
Nov.2009
Aug. 2010 Feb. 2011
Aug. 2011 Feb. 2012
Aug. 2012
Feb. 2013
Aug. 2013
Feb. 2014
Aug. 2014
Feb. 2015
Aug. 2015
Feb. 2016
Aug. 2016 acquisition
of six new
(planned)
properties (planned)
(Note) Since digits below one hundred million yen are truncated for the asset size of Daiwa House Residential and Daiwa House REIT, the total amount of each total asset size displayed may not fit in the sum of above figures.
The Merged REIT's asset size is the sum of "Daiwa House Residential's acquisition price as of the end of the period ending Feb. 2016", "Daiwa House REIT's appraisal value as of the end of Feb. 2016" and "anticipated acquisition price of six anticipated acquisitions"
4
Investment policies of the Merged REIT
Investment targets
Portfolio post merger
Asset type diversity (acquisition price basis) (Note)
Logistics properties (BTS type and multi-tenant type)
Residential properties (compact / family)
Commercial properties (mall / roadside / urban)
Hotels
Logistics properties (34 properties) 194,108 mil yen 38.3%
Core Assets
Other assetsOffice buildings
20% or less Healthcare facilities, etc. 98.1%Core assets
80% or more
Residential properties (142 properties) 258,339 mil yen
51.0%
Commercial properties (10 properties)
44,810 mil yen
8.8%
Investment areas Portfolio post merger
Others
(3 properties)
9,630 mil yen
1.9%
The three major metropolitan areas
Area diversity (acquisition price basis) (Note)
Greater Tokyo area
70% or more
The three major metropolitan Areas
86.9%72.4%
Greater Nagoya area
4.6%
Greater Osaka area
9.9%
Others
13.1%
The three major metropolitan areas: Greater Tokyo area, Greater Nagoya area and Greater Osaka area Greater Tokyo area: Tokyo, Kanagawa, Saitama and Chiba Prefecture
Greater Nagoya area: Aichi, Gifu and Mie Prefecture
Greater Osaka area: Osaka, Kyoto, Hyogo, Nara and Shiga Prefecture
(Note) Pro Forma figures in consideration of the six anticipated acquisitions announced on April 15, 2016
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Overview of new anticipated acquisitions
The Merged REIT plans to acquire six properties consisting of logistics, residential, commercial facilities and hotel, etc.
(Note 1), from Daiwa House Group
Property name | Naha Shin-Toshin Center Building (Daiwa Roynet Hotel Naha-Omoromachi) | D Project Hibiki Nada | D Project Morioka II | Castalia Ningyocho III | Royal Parks Umejima | Sports Depo and GOLF5 Kokurahigashi IC Store | Total anticipated acquisition price 17,210mil yen |
Use | Multi-use complex (Note1) (office/hotel/commercial) | Logistics | Logistics | Residential | Residential | Commercial | |
Anticipated acquisition price | 7,600 mil yen | 2,080 mil yen | 1,280 mil yen | 2,000 mil yen | 2,020 mil yen | 2,230 mil yen | Total appraisal value 17,580mil yen |
Appraisal value | 7,600 mil yen | 2,100 mil yen | 1,300 mil yen | 2,170 mil yen | 2,150 mil yen | 2,260 mil yen | |
Acquisition date (planned) | Sep. 2016 | Sep. 2016 | Sep. 2016 | Sep. 2016 | Sep. 2016 | Sep. 2016 | |
Appraisal NOI yield (Note2) | 5.9% | 6.3% | 6.3% | 4.9% | 6.9% | 6.8% | |
Average Appraisal NOI yield 6.1% | |||||||
Location | Naha City, Okinawa | Kitakyushu City, Fukuoka | Takizawa City, Iwate | Chuo Ward, Tokyo | Adachi Ward, Tokyo | Kitakyushu City, Fukuoka | |
Access | 5-min. walk from Okinawa urban monorail "Omoromachi" Sta. | 8.5km from Shinwakato Expressway "Kitahama" IC | 6km from Tohoku Expressway "Morioka" IC | 3-min. walk from Tokyo Metro "Ningyocho" Sta. | 5-min. walk from Tobu Skytree line "Umejima" Sta. | 0.5km from Kyusyu Expressway "Kokurahigashi" IC | |
Construction date | Jul. 2011 | Sep. 2008 | Oct. 2015 | Oct. 2014 | Sep. 2010 | Oct. 2007 | Occupancy rate 100.0% |
Occupancy rate (Note3) | 100.0% | 100.0% | 100.0% | 99.0% | 100.0% | 100.0% | |
Land area | 7,880.42㎡(Note4) | 39,659.00㎡ | 14,355.00㎡ | 529.80㎡ | 4,217.10㎡ | 6,789.55㎡ | |
Gross floor area | 34,180.43㎡(Note4) | 19,967.90㎡ | 4,289.89㎡ | 3,754.28㎡ | 7,913.65㎡ | 6,506.99㎡ |
(Note 1) The property includes office and commercial facilities as well as hotel rooms; its use is categorized as "other." The merged REIT will acquire 50% quasi-co-ownership interest of the trust beneficial interest in real estate. (Note 2) "Net operating income" (direct capitalization method) in the real estate appraisal reports divided by "anticipated acquisition price".
(Note 3) Occupancy rate as of Feb. 29, 2016. (Note 4) The figure of the entire property is shown.
<Naha Shin-Toshin Center Building
<Sports Depo and GOLF5
(Daiwa Roynet Hotel Naha-Omoromachi) > <Castalia Ningyocho III> <Royal Parks Umejima> Kokurahigashi IC Store>
<D Project Hibiki Nada> <D Project Morioka II>
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Overview of the Merged REIT
Daiwa House REIT (Note 1)
Anticipated acquisitions (Note 1)
(as of Apr. 15, 2016)
Daiwa House Residential (Note 1) | ||
Portfolio | Asset size (acquisition price basis) | 256,349 mil yen |
Number of properties | 142 properties | |
Total assets | 258,590 mil yen | |
NOI yield | 5.5% | |
Average age | 10.3 years | |
Occupancy rate | 96.0% | |
Finance | LTV | 54.8% |
Interest-bearing debt | 141,663 mil yen | |
Rating | AA- (JCR) A+ (R&I) | |
Unitholder value | NAV per unit | 191,454 yen |
Net assets per unit | 148,707 yen | |
Forecast period ending Aug. 2016 | ||
Forecast DPU (Note 8) | 4,510 yen | |
Forecast DPU after the merger-ratio adjustment (Note 9) | 4,510 yen |
The Merged REIT (Note2)
(outlook as of Sep. 28, 2016)
206,363 mil yen 17,210 mil yen
506,887 mil yen (Note3)
41 properties 6 properties 189 properties
Logistics Properties | 194,108 mil yen 34 properties |
Residential Properties | 258,339 mil yen 142 properties |
Commercial Properties | 44,810 mil yen 10 properties |
Others | 9,630 mil yen 3 properties |
506,887 mil yen 189 properties | |
Asset size (Note 3) | |
222,081 mil yen - 569,230 mil yen (Note4)
5.9% 6.1% (Note 5) 5.4% (Note 6)
6.8 years 4.9 years 8.5 years
99.95% 100.0% 98.7%
45.9% 44.6%
(48.4%) (Note 7)
102,000 mil yen 253,663 mil yen
AA- (JCR) -
394,784 yen 213,643 yen
310,353 yen 195,610 yen
Forecast
period ending Aug. 2016
Forecast
period ending Aug. 2017
4,700 yen | |
Increase Rate (Note 10) | for Daiwa House for Daiwa House Residential REIT +4.2% +14.9% |
9,000 yen
Adjusted by merger ratio (1 : 2.2)
4,090 yen
* Notes on this page are listed at the bottom of the next page.
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Forecasts of the Merged REIT
23rd period (ending Aug. 2017) Forecasts
Variation vs 22nd period
(ending Feb. 2017)
22nd period (ending Feb. 2017) Forecasts
17,386 mil yen 17,501 mil yen + 114 mil yen
Operating revenues | |
Operating income | |
Amortization of Goodwill | |
Operating income | |
Ordinary income | |
Net income | |
Reversal of retained earnings | |
Total distribution |
11,184 mil yen 10,328 mil yen - 855 mil yen
1,113 mil yen 1,113 mil yen 0 mil yen
6,202 mil yen 7,172 mil yen + 970 mil yen
5,018 mil yen 6,027 mil yen + 1,009 mil yen
5,017 mil yen
6,027 mil yen
+ 1,009 mil yen
2,046 mil yen 1,113 mil yen - 933 mil yen
7,064 mil yen
7,140 mil yen
+ 75 mil yen
Net income per unit (A) |
Reversal of retained earnings per unit (B) |
DPU (A)+(B) |
3,302 yen 3,967 yen + 665 yen
1,347 yen 732 yen - 615 yen
4,650 yen
4,700 yen
+ 50 yen
Number of properties held
189 properties 189 properties
* Notes of the previous page
(Note 1) Financial figures for the period ended Feb. 2016 or those as of Feb. 29, 2016 of Daiwa House Residential and Daiwa House REIT. (The figure for Daiwa House REIT includes anticipated acquisition of D Project Tosu extension in Jun. 2016) (Note 2) Pro forma figures, including borrowing and repayment, in consideration of the six anticipated acquisitions announced on April 15, 2016.
(Note 3) Based on the purchase method, with Daiwa House Residential being the acquiring entity, Daiwa House REIT's assets are to be obtained at appraisal value. Therefore, the total amount of Daiwa House Residential acquisition price plus Daiwa House REIT's appraisal value in the period ended Feb. 2016 as well as the total amount of the anticipated acquisitions is presented.
(Note 4) Total assets include goodwill of 44,544 mil yen (forecast).
(Note 5) NOI yield of the anticipated acquisitions are based on appraisal NOI yields.
(Note 6) NOI yield is calculated based on actual NOI in the period ending Feb.2016 and appraisal NOI.
(Note 7) The figure inside the parentheses presents a trial calculation figure: The Merged REIT's "total assets" minus "positive goodwill of 44,544 mil yen (forecast)." (Note 8) Forecast DPU represent the forecast figures of Daiwa House Residential and Daiwa House REIT announced on April 15, 2016.
(Note 9) Forecast DPU (4,510 yen for Daiwa House Residential and 9,000 yen for Daiwa House REIT) announced on April 15, 2016 adjusted by the merger ratio.
(Note 10) Figures are calculated as follows: "Forecast DPU in the period ending August 2017 of the Merged REIT" divided by "Forecast DPU after the merger-ratio adjustment in the period ending Aug 2016." 8
Disclaimer
This document is provided for information purposes only and is not intended as a solicitation to invest or a recommendation to trade in a specific security. Please contact a financial product brokerage company if you are interested in purchasing the
investment units of Daiwa House Residential Investment Corporation ("DHI") and Daiwa House REIT Investment Corporation ("DHR") .
This document is not a disclosure document or investment report required under and made in accordance with the Financial Instruments and Exchange Act, the Act on Investment Trusts and Investment Corporations and related cabinet orders and cabinet office ordinances, or under the Tokyo Stock Exchange's securities listing rules or any other related rules.
The contents of this document include forward-looking statements based on certain assumptions and judgments using information currently available to DHI and DHR. These forward-looking statements are not a guarantee of DHI's or DHR's future results, business performance and financial position.
DHI and DHR endeavor to ensure the contents of this document are as accurate as possible. However, DHI and DHR cannot guarantee the accuracy, reliability, adequacy or the accessibility of the information herein. DHI and DHR reserve the right to change or delete information without prior notice.
Duplication or reproduction of any item presented as information herein without the prior consent of DHI and DHR is strictly prohibited.
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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 06:36:30 UTC
Original Document: http://www.daiwahouse-resi-reit.co.jp/file/en-ir_news-c3157324618033601c4388e46023c5040738909f.pdf