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MarketScreener Homepage  >  Equities  >  Tokyo  >  Japan Retail Fund Investment Corporation    8953   JP3039710003

JAPAN RETAIL FUND INVESTMENT CORPORATION

(8953)
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Japan Retail Fund Investment : Notice Concerning Disposition of Trust Beneficiary Right in Ito-Yokado Kawasaki (Main Building and Annex)(183.3KB)

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07/26/2018 | 03:06am EST

July 26, 2018

To all concerned parties:

Investment Corporation

Japan Retail Fund Investment Corporation (Tokyo Stock Exchange Company Code: 8953

Representative: Shuichi Namba, Executive Director

URL:http://www.jrf-reit.com/english/

Asset Management Company

Mitsubishi Corp.-UBS Realty Inc.

Representative: Katsuhisa Sakai, President & CEOInquiries:Keita Araki, Head of Retail Division

TEL: +81-3-5293-7081

Notice Concerning Disposition of Trust Beneficiary Right in Ito-Yokado Kawasaki (Main Building and Annex)

Japan Retail Fund Investment Corporation ("JRF") announced today that Mitsubishi Corp. - UBS Realty Inc., JRF's asset manager (the "Asset Manager"), determined to dispose of the trust beneficiary right in Ito-Yokado Kawasaki (Main Building and Annex) (the "Property") as outlined below.

1.

Overview of Disposition

1)

Property name

Ito-Yokado Kawasaki (Main Building and Annex)

2)

Type of asset

Trust beneficiary right in real estate

3)

Disposition price

13,500 million yen

4)

Book value (Note 1)

13,540 million yen

5)

Difference between disposition price and book value (Note 1)

▲40 million yen

6)

Purchaser

Not disclosed (Note 2)

7)

Completion date of contract

July 27, 2018 (scheduled)

8)

Disposition date

August 1, 2018 (scheduled)

(Note 1) Book value refers to the estimated figures as of the end of the fiscal period ended August 2018 (the 33rd period). (Note 2) Not disclosed as the purchaser has not agreed to the disclosure.

Reason for Disposition

Highlights

  • 1. Dispose of a GMS type(note 1) asset with a risk of deterioration of thecompetitive market environment at a level above appraisal value by leveraging the current favorable real estate market conditions

  • 2. Dispose of an asset whose NOI yield after depreciation is below the portfolio average and has limited margin for upsides

The Property is a GMS type asset with Ito-Yokado as the main tenant. Although it is located in a high population density area and has abundant commercial volume, a supermarket opened in a nearby commercial facility and other competitors may open, which is expected to cause further deterioration of the competitive market environment. In addition, the Property is financially constrained with an NOI yield after depreciation of 2.9% in the February 2018 (32nd) fiscal period, which is below JRF's portfolio average of 3.7%, and unrealized losses.

Although the Property has an extensive primary trade area and a certain degree of tenant substitutability, the margin for upsides is limited. JRF concluded that the most appropriate course of action would be to leverage the current favorable real estate market conditions and dispose of the asset at a price above its appraised value and decided to sell the Property.

JRF, through its portfolio management, seeks to optimize the composition of its assets in line with the changes in Japan's demographics, consumption structure and behavior, and aims to increase the unitholder value by enhancing the profitability and stability of its portfolio.

In light of the favorable real estate market, JRF will continue to dispose of assets whose relative locational advantage is declining, primarily GMS type assets, and use the proceeds from the sales to acquire superior properties, primarily urban type assets, and optimize its portfolio.

(Note 2) and Ito-Yokado ML GMS Type Property Tenant Rents (Reference)>

(Note 1) "GMS type" refers to a shopping center that has a GMS as the anchor tenant in addition to other specialty store tenants.

GMS stands for General Merchandise Stores, which are large-scale supermarkets that sell a wide variety of daily-needs products.

(Note 2) "Ito-Yokado ML" refers to the total annual rent of Ito-Yokado, which is a master-lease tenant, expressed as a percentage of the total annual rent of all of the properties in our portfolio.

Property Summary (Note)

Property name (Property Number)

Ito-Yokado Kawasaki (S-1)

Type of asset

Trust beneficiary right in real estate

Trust beneficiary

Main: Sumitomo Mitsui Trust Bank, Limited Annex: Resona Bank, Limited.

Trust period

Main: June 8, 2020

Annex: December 26, 2020

Use

Retail/Office/Parking

Location (address)

Main: 2-1, Oda-sakae 2-chome, Kawasaki-ku, Kawasaki-shi, Kanagawa Annex: 1-2, Oda-sakae 2-chome, Kawasaki-ku, Kawasaki-shi, Kanagawa

Land

Land area

Main: 40,205.81 Annex: 10,558.40

Type of possession

Ownership

Zoning

Neighborhood commercial district, quasi-residential district

Building

Structure / stories

6 stories above ground, SRC-structure / steel frame with flat roof, etc.

Total floor area

Main50,795.60 Annex11,922.08

Type of possession

Ownership

Completion date

Main: May 31, 2000

Annex: May 31, 2001

Appraisal value

13,030 million yen (as of February 28,2018)

Appraiser

Japan Real Estate Institute

Tenant Summary

(as of end of June 2018)

Number of tenants (main tenants)

5 (Ito-Yokado)

Annual rent

882 million yen

Tenant leasehold / security deposit

665 million yen

Total leased area

65,313.47

Total leasable area

65,313.47

Occupancy rate (based on leased area)

End of February 2016

End of August 2016

End of February 2017

End of August 2017

End of February 2018

100.0%

100.0%

100.0%

100.0%

100.0%

Collateral conditions

A mortgage is assigned to the land and the building in order to secure the obligation to refund the tenant leasehold and security deposit to Ito-Yokado Co., Ltd. and Alpen Co., Ltd.

Special notes

A city planning project will be conducted on a portion of the land

(approximately 1,395 m2) as a city planning road, and thus, that portion of

the land is subject to building restrictions under the City Planning Act. The

building was constructed premised on those building restrictions.

JRF contributed a portion of the outdoor parking space located on the land

(1,121.13 m2) to Kawasaki-shi on March 30, 2015 when road development

conducted as a part of the district plan led by Kawasaki-shi was completed. In its relationship with the purchaser, JRF bears a duty to correct, under its

own responsibility and at its own expense, indications in the Engineering

Report regarding the Property.

Figures of less than one hundred yen are rounded down, and percentages are rounded to the nearest second decimal place. "Location" represents the address of each property or the registered address of the building.

"Land area" and "Total floor area" are based on descriptions in registry books. Also, land area refers to area following the contribution to Kawasaki-shi.

"Zoning" represents the classification of land by its use, stipulated in Section 1-1, Article 8 of the City Planning Act.

(Note) Other than items where the Main Building and the Annex are specified individually, the particulars and figures refer to the entire Property.

  • 4. Overview of Purchaser

    The purchaser is a domestic company but we have not obtained the necessary permission from the purchaser to disclose its name and other related information. There are no capital, personal or business relationships to note between JRF/the Asset Manager and the purchaser. In addition, the purchaser does not fall under the category of a related party of JRF/the Asset Manager.

  • 5. Overview of Brokerage

    The broker is a domestic corporate entity but we have not obtained the necessary permission from the broker to disclose its name and other related information. There are no capital or personal relationships to note between JRF/the Asset Manager and the broker. In addition, the broker does not fall under the category of a related party of JRF/the Asset Manager.

  • 6. Means of Payment

    Full payment at the time of transfer

  • 7. Disposition Schedule

    Decision-making date

    July 26, 2018

    Disposition contract signing date

    July 27, 2018

    (Scheduled)

    Payment date

    August 1, 2018

    (Scheduled)

    Property transfer date

    August 1, 2018

    (Scheduled)

  • 8. Future Outlook

    There will be minimal impact on our operating results for the August 2018 fiscal period (from March 1, 2018 to August 31, 2018) and February 2019 fiscal period (from September 1, 2018 to February 28, 2019); thus, we have made no revision to our forecasts.

Appraisal Report Summary

Property name

Ito-Yokado Kawasaki Main Building, Ito-Yokado Kawasaki Annex

Appraiser

Japan Real Estate Institute

Main

Annex

Total (Note1)

Appraisal value

10,100 million yen

2,930 million yen

13,030 million yen

Appraisal date

February 28, 2018

February 28, 2018

-

Item

Main

Annex

Total (Note1)

Indicated value by income approach

10,100 million yen

2,930 million yen

13,030 million yen

DC method

10,200 million yen

2,950 million yen

13,150 million yen

Operating income

697 million yen

218 million yen

915 million yen

Effective gross income

697 million yen

218 million yen

915 million yen

Losses from vacancy, etc.

0 yen

0 yen

0 yen

Operational cost

142 million yen

49 million yen

192 million yen

Maintenance and management fee

0 million yen

5 million yen

5 million yen

Utility cost

0 yen

0 million yen

0 million yen

Repair expenses

16 million yen

5 million yen

22 million yen

Property manager fee

Not disclosed (Note 2)

Not disclosed (Note 2)

Not disclosed (Note 2)

Leasing cost

0 yen

0 yen

0 yen

Property tax

121 million yen

33 million yen

155 million yen

Insurance premium

Not disclosed (Note 2)

Not disclosed (Note 2)

Not disclosed (Note 2)

Other expenses

4 million yen

3 million yen

7 million yen

Net operating income

554 million yen

168 million yen

723 million yen

Operating profit on lump-sum payments

5 million yen

1 million yen

6 million yen

Capital expenditure

39 million yen

13 million yen

52 million yen

Net cash flow

520 million yen

156 million yen

676 million yen

Capitalization rate

5.1%

5.3%

-

DCF method

10,000 million yen

2,910 million yen

12,910 million yen

Discount rate

4.7%

5.0%

-

Terminal capitalization rate

5.4%

5.5%

-

Indicated value by cost approach

11,100 million yen

2,920 million yen

14,020 million yen

Land ratio

77.2%

74.5%

-

Building ratio

22.8%

25.5%

-

Other matters of consideration

N/A

N/A

-

(Note 1) For reference purposes, the total amounts of the appraisal values and items of the Main Building and the Annex shown in the respective appraisal reports are provided.

(Note 2) As the disclosure of this item may negatively affect JRF's competitiveness and business to the detriment of its unitholders, the Asset

Manager has decided not to disclose this information here, and have included it under "Other expenses" instead.

This English language release is for informational purposes only, and the Japanese language release should be referred to as the original.

Disclaimer

Japan Retail Fund Investment Corporation published this content on 26 July 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 26 July 2018 07:05:01 UTC

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Financials (JPY)
Sales 2020 67 907 M
EBIT 2020 26 738 M
Net income 2020 25 672 M
Debt 2020 401 B
Yield 2020 3,64%
P/E ratio 2020 25,3x
P/E ratio 2021 25,8x
EV / Sales2020 15,5x
EV / Sales2021 19,2x
Capitalization 650 B
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Last Close Price 248 200,00  
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Managers
NameTitle
Shuichi Namba Executive Director
Masahiko Nishida Supervisory Officer
Masaharu Usuki Supervisory Officer
Keita Araki Investor Relations Contact
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