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