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.

February 17, 2022

Issuer

Ichigo Office REIT Investment Corporation ("Ichigo Office," 8975) 1-1-1Uchisaiwaicho, Chiyoda-ku,Tokyo

Representative: Yoshihiro Takatsuka, Executive Director

www.ichigo-office.co.jp/en

Asset Management Company

Ichigo Investment Advisors Co., Ltd.

Representative: Hiroshi Iwai, President

Inquiries: Norio Nagamine, Head of Ichigo Office

Tel: +81-3-3502-4891

Sale of Portfolio Asset (Ichigo Akasaka 5 Chome Building)

Ichigo Office today decided to sell one of its assets, the Ichigo Akasaka 5 Chome Building.

1. Asset Sale Summary

Asset Number

O-08

Asset Name

Ichigo Akasaka 5 Chome Building

Asset Type

Office

Date Built

May 17, 1988

Form of Ownership

Real Estate

Acquisition Date

November 1, 2011

Buyer1

A Third-Party Japanese Company

Sale Price2 (A)

JPY 1,720 million

Book Value3 (B)

JPY 727 million

Sale Price vs.

Book Value

JPY 993 million

(A) - (B)

Appraisal Value4

JPY 878 million

Contract Date

February 17, 2022

Closing Date

February 18, 2022

Legal Form of

Sale of Real Estate

Transaction

  1. The buyer did not provide consent to disclose its name.
  2. Sale Price is the sale price of the asset excluding incidental expenses such as fees and property, city planning, and consumption taxes.

1

  1. Book Value is an estimate based upon the most recent book value (October 2021 fiscal period-end), adjusted for expected capital expenditures and depreciation through the Closing Date. Sale Price vs. Book Value is the difference between the sale price and book value of the asset (i.e., the Sale Price is higher than Book Value).
  2. Appraisal Value is calculated by the Japan Real Estate Institute as of October 31, 2021, pursuant to both the appraisal guidelines of Ichigo Investment Advisors Co., Ltd. ("IIA") and the rules of the Investment Trusts Association of Japan.

2. Sales Rationale

Ichigo Office continues to work to improve the quality of its portfolio and drive earnings by focusing its portfolio on high-quality,mid-size office assets that generate stable cash flow.

After receiving an offer from the buyer for a price that is 2.3 times book value and 1.9 times recent appraisal value, Ichigo Office decided that the sale of this office building, located in Minato-ku, Tokyo, would be positive for its shareholders in light of an anticipated increase in capital expenditures required for upgrades and the uncertain outlook for rents from tenants in the area.

This asset sale is forecast to generate a gain on sale of JPY 938 million in the April 2022 fiscal period. Ichigo Office will distribute 100% of this as a dividend to its shareholders.

Ichigo Office will use the proceeds from this asset sale for strategic investments such as asset acquisitions and value-add capex with the intent to offset any loss of rental income from this asset sale and therefore maintain portfolio earnings and dividends.

2

3. Details of the Ichigo Akasaka 5 Chome Building

Asset Overview

Asset Name

Ichigo Akasaka 5 Chome Building

Form of Ownership

Real Estate

Location

5-4-9 Akasaka, Minato-ku, Tokyo

Property Right

Freehold

Land

Area

119.16m2

Zoning

Commercial

Coverage Ratio

80%

Floor Area Ratio

600%

Property Right

Freehold

Use

Office, Retail

Building

Structure

Steel Reinforced Concrete, 8 floors & 1 basement floor

Total Floor Area

791.97m2

Date Built

May 17, 1988

Number of

Tenants

9 (as of January 31, 2022)

Monthly Rental Income

JPY 4.466 million (as of January 31, 2022)

Tenant Security Deposits

JPY 49.578 million (as of January 31, 2022)

Leasable Area2

683.52m2 (as of January 31, 2022)

Leased Area2

683.52m2 (as of January 31, 2022)

Occupancy

Apr 2020

Oct 2020

Apr 2021

Oct 2021

Jan 2022

100%

100%

100%

100%

100%

Acquisition Price

JPY 735 million

Appraisal

Appraiser

Japan Real Estate Institute

Appraisal Date

October 31, 2021

Value

Appraisal Value

JPY 878 million

3

Appraisal Details

Asset Name

Ichigo Akasaka 5 Chome Building

Appraisal Value

JPY 878,000,000

Appraiser

Japan Real Estate Institute

Appraisal Date

October 31, 2021

Amount (JPY)

Note

Calculated using an income approach,

Appraisal Value

878,000,000

with a DCF valuation as a basis and

verified using a direct capitalization

valuation

Value by Direct Capitalization

888,000,000

Method

Income

51,977,000

Based on expected long-term, stable

Maximum Obtainable

54,341,000

rental income, common area service

Rental Income

income, parking lot income, and other

income

Vacancy Loss

2,364,000

Based on long-term, normalized

vacancy rates

Expenses

15,920,000

Administrative and

Based on an analysis of expenses of

3,350,000

similar assets and historical actual

Maintenance Expenses

amounts

Utility Expenses

3,800,000

Based on historical actual amounts and

reference to similar assets

Repair Expenses

1,501,000

Based on engineering reports and

reference to similar assets

PM Fee

1,445,000

Based on existing contractual fees and

reference to similar assets

Based on expected turnover rate and

Leasing Brokerage Fees

345,000

historical actual amounts, and

reference to similar assets

Taxes

5,386,000

Based on FY2021 actual amounts

Insurance Premiums

93,000

Based on historical actual amounts and

reference to similar assets

Other Expenses

-

Net Operating Income

36,057,000

(NOI)

Income on Investment of

422,000

Based on a 1.0% investment yield

Deposits Received

Capital

3,610,000

Based on engineering reports and

Expenditure

reference to similar assets

Net Profit

32,869,000

Based on transactions of similar assets

while taking into account the asset's

Cap Rate

3.7%

location and specific characteristics,

rights, and terms and conditions of the

contract

4

Value via DCF Method

867,000,000

Based on yields of similar assets and

Discount Rate

3.5%

financial assets, taking into

consideration the asset's location and

specific characteristics

Terminal Cap Rate

3.9%

Cap rate adjusted for uncertainties

Value via Cost Approach

804,000,000

Based upon the value recorded in the

Ratio of Land

89.9%

government land assessment

(koujikakaku) and transactions of

similar assets

Based upon the replacement cost

Ratio of Building

10.1%

specified in engineering reports and

depreciation

Notes

None

4. Buyer Profile

Name

The buyer, a third-party Japanese company, did not

provide consent to disclose its name.

The buyer does not have any material capital,

Relationship with

personnel, or transactional relationships with Ichigo

Office or IIA. In addition, the buyer is not a related

Ichigo Office or IIA

party as defined in the Enforcement Ordinance of the

Investment Trust and Investment Corporation Law or

the internal rules of IIA.

5. Broker Profile

Name

Nomura Securities Co., Ltd.

Address

1-13-1 Nihonbashi, Chuo-ku, Tokyo

Representative

Kentaro Okuda, President & Representative Director

Principal Business

Securities business

Capital

JPY 10 billion (as of March 31, 2021)

Establishment Date

May 7, 2001

The broker does not have any material capital,

Relationship with

personnel, or transactional relationships with Ichigo

Office or IIA. In addition, the broker is not a related

Ichigo Office or IIA

party as defined in the Enforcement Ordinance of the

Investment Trust and Investment Corporation Law.

Brokerage Fee

The broker did not provide consent to disclose

the fee.

5

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

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

Ichigo Office REIT Investment Corporation published this content on 17 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 February 2022 06:03:16 UTC.