GOR Announces Acquisition and Leasing of a Property (Yokohama

Press Release 17 July 2014 REIT Issuer: Global One Real Estate Investment Corp. Securities Code: 8958
Representative: Yoichiro Kitajima, Executive Director
Asset Manager: Global Alliance Realty Co., Ltd.
Representative: Masanori Yamauchi, President and CEO
Contact: Yoshitaka Shibata
Executive Officer
REIT Management Department
REIT Finance Department
Tel: +81‐3‐3262‐1494
GOR Announces Acquisition and Leasing of a Property (Yokohama Plaza Building) 17 July 2014 ‐ Global One Real Estate Investment Corp. (“GOR”) announces today that Global Alliance Realty Co., Ltd. (“GAR”), the Asset Manager to which GOR entrusts the management of its assets, decided to acquire trust beneficial interests in the Yokohama Plaza Building (hereinafter referred to as “Yokohama Plaza Building,” or the “Subject Property”) as outlined below. In addition, details concerning the leasing of the Subject Property are provided in 3. (2) below. 1.
Outline of acquisition 1) Type of assets :
Trust beneficial interests in real estate (for details, please see “3. Property description”) 2) Name of building :
Yokohama Plaza Building 3) Trustee :
Mitsubishi UFJ Trust and Banking Corporation 4) Trust period :
01 August 2014 – 31 July 2024 (scheduled) 5) Purchase price :
17,950,000,000 yen (Note) 6) Scheduled acquisition date :
01 August 2014 7) Seller :
LAND BUSINESS CO., LTD. (for details, please see “4. Seller profile”) 8) Funds of acquisition :
Borrowings (Note) The purchase price represents the price described in the purchase agreement, excluding acquisition expenses, city planning tax and property tax, consumption tax and local consumption tax. 2.
Reason for acquisition The purpose of the acquisition of the above‐mentioned trust beneficial interests is to ensure steady growth and stable income of the portfolio properties, according to the “Investment Policies and Investment Targets,” as stipulated in the Articles of Incorporation. The key determinant factors of the acquisition include: 1) District potential The City of Yokohama, in which the Subject Property is located, is an ordinance‐designated city with a population of 3.7 million, which makes it the second largest city in Japan. It is also one of Japan’s key centers for corporate activity, placing fourth in terms of the number of listed companies headquartered there and second in terms of the number of foreign companies located there, and the Yokohama economy is supported by broad‐based and robust demand. Downtown Yokohama, which is the area around Yokohama Station, is a thriving district with strong demand from tenants that draw customers, such as temporary‐staffing agencies and private schools of various types. The area can therefore be deemed to offer great potential as a location for office buildings. 2) Location potential The Subject Property is part of “Yokohama Portside” a new urban redevelopment project. The nearest station, Yokohama Station, is a five‐minute walk, and served by a total of nine lines (Note), including JR, Keikyu, Tokyu, and Minatomirai lines. It also offers convenient access to major roads such as the Yokohane Expressway and National Route 1, making it a highly convenient location for both road and rail transport. In the vicinity of the Subject Property are numerous customer‐attracting commercial facilities, such as Yokohama Sogo and Yokohama Bay Quarter, and high‐rise condominium buildings, making the area a vibrant mix of business, commercial, and residential flavors. As well as being highly convenient, the location of the Subject Property offers urban functionality and a well‐balanced environment, with one side facing the sea. The site can therefore be deemed to offer a lot of potential. (Note) The lines serving the station are JR (Tokaido Line, Yokosuka Line, Keihin‐Tohoku Line/Negishi Line, Yokohama Line), Keikyu Electric Railway (Main Line), Tokyu Electric Railway (Toyoko Line), Sagami Railway (Main Line), Yokohama Municipal Subway (Blue Line), and Yokohama Minatomirai Railway (Minatomirai Line).
3) Property specifications The Subject Property is a four‐year‐old building with one storey below ground and 12 above. Its lease specifications are standard floor space of approximately 356 tsubo (1,177 square meters), an effective ceiling height of 3,000 mm, and free access floor of 100 mm. It is also highly vibration resistant, featuring viscous damping walls that absorb vibration in the event of earthquakes. Furthermore, it has space for installing an emergency power generator for exclusive use by tenants, enabling it to meet BCP (business continuity planning) needs, which have recently become an important factor in tenants’ selection of offices. 4) Improving portfolio quality The Subject Property houses a total of 20 companies as tenants, and because of its strong competitiveness, has an occupancy ratio of 100%. Moreover, because contracts with some large tenants are in the form of long‐term lease agreements, we believe that it will provide a stable source of revenue. We therefore feel that its acquisition will reinforce the revenue‐earning capability and stability of GOR’s portfolio. The Subject Property is also Newer, which will reduce the average age of the real estate in the portfolio and help achieve one of the objectives of our portfolio reorganization strategy, which is to improve quality. 3.
Property description (1) Type of specified assets, its name and location, etc. Name of building Yokohama Plaza Building Type of specified assets Trust beneficial interests in real estate Location Residence indication:
Land Ownership Ownership Land area 2,720.30 sqm Ownership Ownership Use Office, retail and parking Floor area 19,968.20 sqm Year built February 2010 Structure Construction firm 12‐story plus 1 basement level S, SRC with a flat roof Vibration‐damping structure (viscous damping walls installed) Takenaka Corporation First‐class Architect Office
Takenaka Corporation Appraisal value 17,980 million yen Appraiser Japan Real Estate Institute Date of appraisal 05 June 2014 Appraisal rate etc. DC method / cap rate 4.8% DCF method / discount rate 4.5% DCF method / terminal cap rate 5.0% Building 2‐6 Kinkoucho, Kanagawa‐ku, Yokohama City, Kanagawa
Land number: 2‐6 Kinkoucho, Kanagawa‐ku, Yokohama City, Kanagawa
Form of structure Designer Appraisal outline Acquisition price 17,950,000,000 yen Engineering report PML 4.4% : Analysis conducted by OYO RMS Corporation, dated 25 June 2014 CAPEX 157,289 thousand yen over 12 years: (annual average: 13,107 thousand yen): based on the estimates in the ER conducted by Tokyo Marine & Nichido Risk Consulting Co., Ltd., as of July 2014 Collateral None (2) Tenant profile, leasing status Number of tenants 20 Total rent per month 77 million yen Security deposit 781 million yen Total rentable area 14,222.53 sqm Total leased area 14,222.53 sqm Occupancy ratio 100 % Expected NOI 812 million yen (Note 1) “Area,”“use,”“floor area,”“year built,” and “structure” are shown based on the registration, unless otherwise stated. (Note 2) PML is a probable maximum loss in the event of a major earthquake. While the definition may vary depending on the region, the PML used herein is a loss rate to assess damage, calculated by dividing the loss amount by the replacement cost. The figure is based on the assumption that the building will be in use for 50 years and that the largest expected earthquake has a 10% probability of occurring every 50 years within the recurrence range of 475 years. (Note 3) “NOI” means net operating income, the amount of the total rental revenue less property‐related expenses (excluded depreciation and amortization costs). “Expected NOI” is an expected annualized number excluding extraordinary factors for the first year of acquisition. In calculating the “Expected NOI,” the occupancy ratio is assumed to be 100%. 4.
Seller profile Company name LAND BUSINESS CO., LTD. Location of head office Kasumigaseki Building 3‐2‐5 Kasumigaseki, Chiyoda‐ku, Tokyo Representative Yutaka Ide, President Business x
Capital Leasing business (real‐estate leasing business, contract asset‐management business) x
Investment and other business (investment in real‐estate‐related assets such as office buildings and residences, other business) 4,969 million yen (as of 31 March 2014) Date incorporated 13 February 1985 Net assets 15,798 million yen (as of 31 March 2014) Total assets 56,403 million yen (as of 31 March 2014) Relationships with GOR/GAR Capital relationships Personnel relationships Business relationships Whether related party There are no capital relationships of note between the GOR/GAR and the seller.
There are no personnel relationships of note between the GOR/GAR and the seller.
There are no business relationships of note between the GOR/GAR and the seller.
The seller is not a related party of GOR/GAR. 5.
The Subject Property’s ownership situation Since the seller of the Subject Property has no special relationship with GOR/GAR, the description is omitted. 6.
Outline of the intermediation (1) Overview of the Intermediary Name Sumitomo Real Estate Sales Co., Ltd.
Address 2‐4‐1 Nishi‐Shinjuku, Shinjuku‐ku, Tokyo
Representative Toshikazu Tanaka, President
x
Real‐estate purchase/sale and leasing agency business Main businesses x
Contract selling business in purchase/sale of real estate x
Real‐estate leasing business
Capital 2,970 million yen (as of 31 March 2014)
Date incorporated
01 March 1975
Relationships with GOR/GAR There are no capital relationships of note between the GOR/GAR Capital relationships and the intermediary.
Personnel There are no personnel relationships of note between the relationships GOR/GAR and the intermediary.
Business There are no business relationships of note between the GOR/GAR relationships and the intermediary.
Whether related Party The intermediary is not a related party of GOR/GAR. (2) Breakdown and value of the intermediation commission Intermediation commission remains undisclosed as we have yet to receive permission to disclose it from the intermediary. 7.
Payment method GOR is scheduled to make a lump sum payment at the time of acquisition using debt financing. 8.
Acquisition schedule 17 July 2014 •
Declares the acquisition •
Concludes an agreement to purchase the trust beneficiary interests in real estate 01 August 2014 •
Makes a payment •
Acquires the trust beneficiary interests in real estate 9.
Earnings forecasts As a result of the acquisition of the Subject Property, operating revenue and operating profit for the real‐estate leasing business for the six‐month period ending September 2014 are expected to increase by 172 million yen and 104 million yen, respectively. Earnings forecasts for the six‐month period ending September 2014 will be announced as soon as they have been compiled. These include details of real‐estate leasing income from other assets, projected borrowing costs relating to the acquisition of the Subject Property and a revised figure for the amount of reversal of the reduction reserve. About GOR: Global One Real Estate Investment Corporation (“GOR”) is a Japanese Real Estate Investment Trust (J‐REIT) listed on the Tokyo Stock Exchange (TSE: 8958) with the ultimate goal of pursuing maximum returns for unitholders. GOR cautiously selects prime properties at prime locations with an eye on “strong and sustainable competitiveness in the marketplace.” The three key watchwords in selecting properties are: (1) CLOSER ‐ easily accessible from nearby train stations; (2) NEWER ‐ newly or recently built; and (3) LARGER ‐ large office buildings with extensive office space. For more information about GOR, please visit: http://www.go‐reit.co.jp/eng/ Note: This document is the English version of “Press Release” that is written in Japanese. The English version is understood to be a translation of the Japanese version and is supplied as a convenience to investors who prefer to use English. This document, containing forward‐looking statements, is not intended to be a solicitation of any particular investment transaction. Investors should consult with their own investment advisors regarding the appropriateness of investing in any of the securities or investment strategies. <Attachments> <Ref. 1> Building photo <Ref. 2> Access <Ref. 3> List of assets after acquisition <Ref. 4> Portfolio data after acquisition <Ref. 1> Building photo <Ref. 2> Access <Ref. 3> List of assets after acquisition* * Kintetsu Shin‐Nagoya Building (the remaining 33% co‐ownership), which will be transferred, is excluded. Total floor Name of Property Type of area (location) ownership (sqm) (Note 1) Otemachi First Square (Chiyoda‐ku, Tokyo) Hirakawacho Mori Tower (Chiyoda‐ku, Tokyo) Ginza First Building (Chuo‐ku, Tokyo) TK Minami‐Aoyama Building (Minato‐ku, Tokyo) ARK Hills Sengokuyama Mori Tower (Minato‐ku, Tokyo) Arca Central (Sumida‐ku, Tokyo) Condo ownership (Trust beneficial interest)
Condo Ownership (Trust beneficial interest)
Condo Ownership (Trust beneficial interest)
Ownership (Trust beneficial interest) Condo Ownership (Trust beneficial interest)
Condo Ownership (Trust beneficial interest)
Gross rentable area (sqm) year (Note 3) price (million yen)
(Note 2) 141,228.06
8,168.28
51,094.82
9,843.52
12,479.45
7,697.78
20,958.79
13,741.76
140,667.09
3,963.61
Feb 1992 Dec 2009 Aug 1998 May 2003 Aug (Note 4) 22.6 23,495 4.8 18,200 16.1 12,282 11.3 35,000 2.1 8,423 17.5 15,391 4.6 17,950 12.5 22,700 7.8 7,834 11.6 161,276 2012 49,753.92
15,746.41
Mar 1997 Yokohama Plaza Building (Kanagawa‐ku, Yokohama City, Kanagawa) Ownership (Trust beneficial interest) 19,968.20
Meiji Yasuda Life Insurance Saitama (Chuo‐ku, Saitama City, Saitama) 50% Co ownership (Trust beneficial interest)
78,897.42
21,704.32
Yodoyabashi Flex Tower (Chuo‐ku, Osaka City, Osaka) Ownership (Trust beneficial interest) 10,997.50
7,394.47
─ 526,045.25
102,482.68
Total Year built Acquisition Age 14,222.53
Feb 2010 Mar 2002 Nov 2006 ─ (Note 1) ” Total floor area” indicates the total floor area of the building regardless of the type of ownership. However, with regard to Arca Central, of the four buildings registered, the floor space of each building is described based on the completion drawing. (Note 2) “Gross rentable area” indicates the area owned by GOR. (Note 3) “Age year” of each property refers to the number of years as of 01 August 2014, which is rounded to one decimal place. In addition, “Total” of the age year means the average age of the portfolio properties (weighted average value of the total rentable area). (Note 4) “Acquisition price” refers to the value (described in the purchase agreement), excluding acquisition expenses (such as brokerage fees and taxes and public dues). The acquisition price of Arca Central means the anticipated value, which further excludes the maintenance charges on the management association to be succeeded from the seller. The amount is rounded down to the nearest million yen. <Ref.4 > Portfolio data after acquisition* * Kintetsu Shin‐Nagoya Building (the remaining 33% co‐ownership), which will be transferred, is excluded. Indicators Number of properties Total acquisition price Average invested amount per property Unit Million yen
Million yen
Before acquisition After acquisition As of 31 July 2014 (scheduled) 8 9 143,326 161,276 17,915 17,919 Average rentable area per property sqm 11,032 11,386 Average age of building (Note) Year 12.7 11.6 % 2.1 2.1 Portfolio PML (Note) “Average age of building” is the weighted average value of the gross rentable area. In particular, the average age before acquisition refers to the age as of 31 July 2014, and the average age after acquisition represents the age as of 01 August 2014, inclusive of Yokohama Plaza Building to be acquired.

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