Daiwa Securities Living Investment : Notice Concerning Acquisition of Asset (Splendide Kinshicho1)(585KB)

English Translation

The following is an English translation of the Japanese original press release and is being provided for information purposes only.

March 22, 2023

To All Concerned Parties

REIT Issuer: Daiwa Securities Living Investment Corporation

6-2-1 Ginza, Chuo-ku, Tokyo 104-0061

Yoshio Urata, Executive Director

(Securities Code: 8986)

Asset Manager: Daiwa Real Estate Asset Management Co. Ltd.

Yoshiki Nishigaki, President and Chief Executive Officer

Inquiries: Kentaro Azumi, General Manager, Corporate Division

Tel: [phone]

Notice Concerning Acquisition of Asset (Splendide Kinshicho Ⅰ )

Daiwa Securities Living Investment Corporation (hereinafter referred to as the "Investment Corporation") hereby announces that Daiwa Real Estate Asset Management Co. Ltd. (hereinafter referred to as the "Asset Manager"), the asset manager of the Investment Corporation, has resolved to acquire the asset (hereafter the "Asset to Be Acquired") described below.

I. General Outline of the Acquisition

A general outline of the Asset to Be Acquired is detailed in the table below. As of March 22, 2023, the Investment Corporation has concluded real estate purchase agreements with the seller for the Asset to Be Acquired, which is scheduled for acquisition on April 3, 2023.

Name of property

Location

Property type (Note 1)

Anticipated

acquisition price

(A)

(JPY thousand) (Note2) (Note 3)

Appraisal value (as of Feb. 2023)

(B)

(JPY thousand)

(Note 3)

Difference between

anticipated

acquisition price and

appraisal value

(B)-(A)

(JPY thousand)

((A)/(B)) (Note 3)

Seller

Splendide	Sumida-ku,	Residence
Kinshicho Ⅰ
Tokyo	(Studio)
(Note 4)

(Note 1) Studio means residences with 1R, 1K, 1DK, or 1LDK.

850,000

886,000

36,000

(95.9%)

Ookanda

Kensetsu

Co., Ltd.

(Note 2) Anticipated acquisition price does not include acquisition expenses, adjustments to property tax and city planning tax, and consumption tax and local consumption tax. The same applies hereinafter.

(Note 3) Amounts are rounded to the nearest unit and percentages are rounded to the first decimal place. Unless stated otherwise, the same applies hereinafter.

(Note 4) The name of the property will be changed to "Gran Casa Kinshicho" on May 1, 2023.

(Note 5) The intermediary of the Acquisition does not correspond to the interested party.

• Reason for the Acquisition and Leasing

Based on the asset management objectives and policies set forth in the Investment Corporations Agreement, we have decided to acquire the Asset to Be Acquired in order to diversify and enhance the portfolio to achieve asset size growth and secure stable earnings.

The tenants of the Asset to Be Acquired meet the tenant selection criteria outlined in the Investment Corporation's Management System Report dated December 21, 2022.

• Details of Asset to Be Acquired and Leasing

The details of the Asset to Be Acquired are summarized in the following individual property tables. The description of the items mentioned in the individual property tables is as follows.

a. Explanation of Overview of Properties

1. " Location (residential indication)" is stated based on the residential indication in principle. Where residential indication is not shown, building location (if there is more than one, the location of one of the buildings) is shown in accordance with either the housing number indication or the registry (including the Registration Record; the same applies hereinafter).

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English Translation

The following is an English translation of the Japanese original press release and is being provided for information purposes only.

1. "Form of ownership" for both Land and Building refers the type of rights held by the Investment Corporation for real estate and by the Trustee for real estate trust beneficiary interests.
2. "Zoning" for Land refers to the types of use districts stipulated by Item 1, Paragraph 1, Article 8 of the City Planning Act (Law No. 100 of 1968, including later amendments) (hereinafter referred to as the "City Planning Act").
3. "Area" for Land is shown in accordance with the registry and may not correspond to the current reality.
4. "FAR" for Land refers to the ratio of the sum of the floor space of the building to the land area as stipulated in Article 52 of the Building Standards Act (Law No. 201 of 1950, including later amendments) (hereinafter referred to as the "Building Standards Act"), and the upper limit of floor-to-area ratio (designated floor-to-area ratio) as determined by city planning according to the use area. The designated floor-to-area ratio can be mitigated, increased, or reduced due to the width of roads connected to the site and other reasons, and may differ from the floor-to-area ratio that is actually in use.
5. "Building-to-landratio" for Land shows the ratio of the building area to the land area as stipulated in Article 53 of the Building Standards Act, and the upper limit of building-to-land ratio (designated building-to-land ratio) as determined by city planning according to the use area. The designated building-to-land ratio can be mitigated, increased, or reduced due to fireproofed structures in a fire prevention districts and other factors, and may differ from the building- to-land ratio that is actually in use.
6. "Use" for Building refers to the building type recorded in the registry.
7. "Structure/Floors" for Building is based on records in the registry.
8. "Number of leasable units" (in the case of residence) indicates the number of units that can be leased as of February 28, 2023 for the Asset to Be Acquired.
9. "Number of leasable compartments" (in case of healthcare facilities) indicates the number of compartments of a building where a lease contract has been concluded, and includes retail stores, offices, etc., if any.
10. "Total floor area" for Building is based on records in the registry and does not include the floor area of annexed buildings.
11. "Construction completion" for Building refers to the date of completion recorded in the registry.
12. "Estimated emergency repair expenses," "Estimated short-term repair expenses," and "Estimated long-term repair expenses" are rounded down to the thousands, while ratios are rounded to the first decimal place.
13. "PML" data was acquired from Tokyo Marine dR Co., Ltd. in February 2023.
14. "Property manager" is the property management company entrusted with, or scheduled to be entrusted with the property management operations.
15. "Master lessee" is the party that has, or is scheduled to enter into a master lease agreement concerning the asset in question.
16. "Type of master lease" is either "Pass through" or "Guaranteed rent" "Pass through" is a master lease agreement where the master lessee passes on the rent equivalent to rent paid by the end tenant, and "Guaranteed rent" is a master lease agreement in which the master lessee pays a fixed rent.
17. "Real estate rent revenue" is the monthly rental income (rent, common service fee, parking lot income, etc.) rounded down to less than 1,000 yen based on the figures and information available as of February 28, 2023, of the Asset to Be Acquired.
18. "Lease and guarantee deposits, etc." are the lease or guarantee deposits (residences, retail stores, offices, parking lots, etc.) rounded down to less than 1,000 yen based on the figures and information available as of February 28, 2023, of the Asset to Be Acquired.
19. "Leasable area" shows the leasable area of each of the Asset to Be Acquired as of February 28, 2023, excluding area used by storage spaces, parking spaces, custodian areas, signboards, vending machines, antennas and other spaces leased to the lessee in addition to their main use, or other areas leased for the maintenance and supervision of the relevant property (including loan for use). Furthermore, leasable area is calculated using the center line of the wall, and includes the meter boxes and pipe spaces allotted to each unit.
20. "Number of tenants" shows the leasable area of each of the Asset to Be Acquired as of February 28, 2023, and shall be one if a master lease agreement has been concluded with a master lessee.
21. "Total leased area" is the sum of the area leased through lease agreements with end tenants (however, in cases where properties are wholly leased to realtors through guaranteed rent agreements or where a master lessee wholly leases it to another company, lease agreements where properties are wholly leased to a lessee) at the Asset to Be Acquired that are in effect as of February 28, 2023.
22. "Occupancy rate" is the figure obtained by dividing the total leased area by the leasable area for the Asset to Be Acquired as of February 28, 2023, rounded down to the first decimal place.
23. The "Collateral" section denote if there is collateral to be borne by the Investment Corporation for the asset to be acquired, or if there is collateral to be borne after the acquisition.
24. The "Features" sections have been prepared based on the analyses of the Asset Manager and the appraisal reports of the real estate appraiser concerning the Asset to Be Acquired.
25. The "Special Notes" section denotes important factors upon considering the rights, appraisal values, the impact on profitability and disposability, etc., concerning the Asset to Be Acquired.

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English Translation

The following is an English translation of the Japanese original press release and is being provided for information purposes only.

Overview of the Property

Category of anticipated

Real Estate

property for acquisition

Scheduled acquisition price

JPY 850 million

Scheduled acquisition date

April 3, 2023

Appraisal value

JPY 886 million

Appraisal firm

Tanizawa Sogo Appraisal

(appraisal date)

(as of February 1, 2023)

Co., Ltd.

Location

4-4-16, Midori, Sumida-ku, Tokyo

(Residential indication)

Approximately 650 meters from Kikukawa Station on the Toei Subway Shinjuku Line

Access

Approximately 950 meters from Kinshicho Station on the JR Sobu Line and Tokyo Metro

Hanzomon Line

Land

Form of ownership

Ownership

Zoning

Commercial districts

Area

193.29m²

FAR/Building-to-land ratio

400%／80%

Form of ownership

Ownership

Use

Condominium

Building

Structure/Floors

RC, 9-story building with

Number of leasable units

24 units

flat roof

Total floor area

895.57 m²

Construction completion

August 2, 2021

Building

engineer

Shinwa Construction. Co., Ltd.

Constructor

Shinwa Construction. Co., Ltd.

Building inspection agency

J Architecture Inspection Center (JAIC)

Estimated emergency

JPY 0 thousand

Estimated short-term

JPY 0 thousand

repair expenses

repair expenses

Estimated long-term repair

JPY 8,436 thousand

PML

5.9%

expenses

Property manager

Shinwa Construction. Co., Ltd.

Master lessee

G.K. Japan Rental Housing

Type of master lease

Pass through

Overview of Leasing

Real estate rent revenue

JPY 2,949 thousand

Lease and guarantee deposits

JPY 0 thousand

Total leasable area

740.48m²

Number of tenants

1

Total leased area

682.03m²

Occupancy rate

92.1%

Collateral

None

Features

Site features:

This property is a 1R/1DK condominium completed in August 2021, located an 8-miunte walk from Kikukawa Station on

the Toei Subway Shinjuku Line and a 12-minute walk from Kinshicho Station on the JR Sobu line. With good access to

central Tokyo, this property is expected to have stable demand mainly from singles.

Property features:

The property is a 9-story reinforced concrete building, consisting of 8 of 1R units and 16 of 1DK units. In addition to

common facilities such as auto-locking door, intercom with monitor, security camera, delivery box, etc., in-house facilities

such as bathroom dryer, warm water washing toilet seat, and internet connection are standard equipment in each unit. It is

a property that provides high-quality and comfortable living to residents.

Special Notes

None

IV. Profile of the Counterparty

（1）

Company Name

Ookanda Kensetsu Co., Ltd.

（2）

Location

1-11-1, Marunouchi, Chiyoda-ku, Tokyo

（3）

Title and Name of

Satoshi Nakamura

Representative

（4）

Description of

Contracting, design, construction and supervision of civil engineering and

Business

construction work and construction incidental to buildings

（5）

Amount of Capital

20 million yen

（6）

Date of

April 16, 2014

Incorporation

（7）

Net Assets

216 million yen

（8）

Total Assets

1,131 million yen

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English Translation

The following is an English translation of the Japanese original press release and is being provided for information purposes only.

Major

（9） Shareholders and Shinwa Construction. Co., Ltd. (100%) Ownership Ratio

（10） Relationship between the seller and the Investment Corporation/Asset Manager

				There is no capital relationship required to be disclosed between the Investment
		Capital		Corporation/Asset Manager and the seller. In addition, there is no capital
			relationship required to be disclosed between the affiliated parties and the
		Relationship
			affiliated companies of the Investment Corporation/Asset Manager and the
				affiliated parties and the affiliated companies of the seller.
				There is no personnel relationship required to be disclosed between the
		Personnel		Investment Corporation/Asset Manager and the seller. In addition, there is no
			personnel relationship required to be disclosed between the affiliated parties and
		Relationship
			the affiliated companies of the Investment Corporation/Asset Manager and the
				affiliated parties and the affiliated companies of the seller.
				There is no business relationship required to be disclosed between the Investment
		Business		Corporation/Asset Manager and the seller. In addition, there is no business
			relationship required to be disclosed between the affiliated parties and the
		Relationship
			affiliated companies of the Investment Corporation/Asset Manager and the
				affiliated parties and the affiliated companies of the seller.
		Status of		The seller is not classified as related party with Investment Corporation/Asset
		Classification as
			Manager
		Related Party

V. Profile of the Property Seller

The seller of the anticipated property is not classified as a special related party of the Investment Corporation and the Asset Manager.

VI. Funds for Acquisition

Own funds

Ⅶ. Acquisition Schedule

• Decision of acquisition and conclusion of purchase agreement: March 22, 2023
• Payment and delivery: April 3, 2023

Ⅷ. Payment Method, Etc.

Lump-sum payment at the time of transaction.

Ⅸ. Future Prospects

The Acquisition will have only a slight impact on the asset management condition for the fiscal period ending March 31, 2023 (October 1, 2022 to March 31, 2023) and the fiscal period ending September 30, 2023 (April 1, 2023 to September 30, 2023), and there is no change in the asset management forecast.

Ⅹ. Summary of Appraisal Report

Property name

Appraisal value Appraiser Date of appraisal

Splendide Kinshicho Ⅰ

886,000,000 yen

Tanizawa Sogo Appraisal Co., Ltd.

February 1, 2023

Item

Details

Outline, etc.

Value indicated by income approach

886,000

Assessed by using the standardized net income value using the DCF method and by

JPY thousand

conducting verification from the net income value using the direct capitalization

method

Value indicated by the direct capitalization

JPY thousand

912,000

Assessed by capitalizing the standardized net income, which is recognized to be

method

stable over the medium to long term, with the capitalization yield

(1) Total Operating Income: (a) - (b)

JPY thousand

41,564

－

Rental revenue: Revenue that can be earned on an ordinary basis by leasing or

contracting the operation of all or part of the subject property (assuming full

Rental revenues including

40,323

(a)

JPY thousand

occupancy)

common service fees

Common service fee revenue: Among the expenses required on a recurring basis

for the maintenance, management, and operation of the subject property, revenue

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English Translation

The following is an English translation of the Japanese original press release and is being provided for information purposes only.

collected through contracts with lessees related to common areas (assuming full

occupancy)

180

Income generated by leasing the parking lot attached to the subject property to

Parking fees

JPY thousand

tenants, etc. and income generated by renting the parking lot by the hour

(assuming the lot is full)

2,415

Other revenue such as non-refundablelump-sum payments such as key money

Other revenues

JPY thousand

and renewal fees, bicycle parking lot registration fees, installation fees of trunk

room, sign board and electric kick board port.

Losses from vacancies

JPY thousand

1,353

Decrease in each income based on the projected occurrence of vacancy and

(b)

replacement period, etc.

Bad debt losses

JPY thousand

0

Decrease in each income based on the projected occurrence of bad debt

(2)

Total

Operating Expenses

JPY thousand

9,197

－

2,979

Expenses required on a recurring basis for the maintenance and management of

Operation costs

JPY thousand

the subject property, including building and facility management, security,

cleaning, etc.

Utilities

JPY thousand

266

Expenses required for electricity, water, gas, district heating and cooling heat

source, etc. in the operation of the subject property

Of the amount paid for repair or improvement of buildings, facilities, etc. related

Repairs and maintenance

JPY thousand

805

to the subject property, the cost required for ordinary maintenance and

expense

management of the said buildings, facilities, etc. or to restore the partially

damaged buildings, facilities, etc. to their original state.

Property management fees

JPY thousand

1,018

Expenses for the management of the subject property

1,234

Expenses required for intermediary services and advertising, etc. when recruiting

Tenant promotion fees, etc.

JPY thousand

new tenants, as well as expenses required for the renewal of tenant lease contracts

and re-signing of lease contracts.

Taxes and public dues

JPY thousand

1,861

Property tax (land, buildings, depreciable assets), city planning tax (land and

buildings)

75

Charges for fire insurance for the subject property and attached facilities, liability

Nonlife insurance

JPY thousand

insurance to cover damage to third parties, etc. due to defects or accidents in the

management of the subject property, etc.

Other expenses

JPY thousand

955

Other expenses such as Internet usage fees and neighborhood association fees

(3)

Net

Operating Income (NOI):

JPY thousand

32,367

－

(1) - (2)

(4) Lump-Sum Investment Return

JPY thousand

30

Investment income is recorded assuming an investment yield of 1.0%.

492

Expenses for repair or improvement of buildings, facilities, etc. related to the

(5) Capital Expenditure

JPY thousand

subject property that are recognized to increase the value of the said buildings,

facilities, etc. or increase their durability

(6) Net Cash Flow (NCF): (3) + (4) - (5)

JPY thousand

31,905

－

(7) Capitalization Rate

(%)

3.5

Assessed by comprehensively considering the subject property's location,

building conditions, and contract conditions.

Value indicated by DCF method

JPY thousand

875,000

－

3.6

Assessed by comparing with transaction examples of similar properties and by

Discount rate

(%)

adding the individual characteristics of the property to the yield of the financial

assets.

Terminal capitalization rate

(%)

3.7

Assessed by taking into account the nature of the net income employed for the

capitalization yield, future uncertainty, liquidity, marketability, etc.

Value

indicated by cost approach

JPY thousand

869,000

－

Land ratio

(%)

72.0

－

Property ratio

(%)

28.0

－

Other items of note by appraiser

None.

URL:https://www.daiwa-securities-living.co.jp/en/

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