NEWS RELEASE
January 27, 2020
For Immediate Release

Investment Corporation
Japan Real Estate Investment Corporation
Yutaka Yanagisawa, Executive Director(TSE code: 8952)
Asset Management Company
Japan Real Estate Asset Management Co., Ltd.
Naoki Umeda, President & CEO
Contact: Masaru Motooka
Executive Officer & General Manager Planning
Department
Phone: +81‐3‐3211‐7951

Announcement of Acquisition of Domestic Real estate andDisposition of Trust Beneficial Interest in
Domestic Real Estate with partial Leasehold included
Japan Real Estate Investment Corporation (“JRE”) hereby announces that Japan Real Estate AssetManagement Co., Ltd. (“JRE‐AM”), an asset management company to which JRE entrusts the asset
investment, has decided today to acquire and dispose of domestic real estates (mutual trading) as follows:≪Properties to be acquired and disposed of≫Property to be acquired

Property to be disposed ofName of property

Seavans S Building

Kodenmacho
Shin‐Nihonbashi Building

Location

Minato‐ku, Tokyo

Chuo‐ku, Tokyo

Acquisition/disposition price¥ 5,400 million¥ 3,450 million

Date of contract (scheduled)

January 31, 2020

Date of transfer (scheduled)

January 31, 20201≪Purpose of the acquisition and disposition≫

JRE‐AM has decided to acquire and dispose of the properties after considering its current and future
portfolio strategies, while comprehensively taking into account the characteristics of the properties, theprofitability of the portfolio, and the trend of the real estate market, in conformity with “the basic policy ofasset management” and “the investment stance” set forth in the articles of incorporation of JRE.
JRE acquired Kodenmacho Shin‐Nihonbashi Building (“Kodenmacho Bldg.”), the property to be disposed of,which is 28 years old, at the time of its listing on the Tokyo Stock Exchange in 2001. Since the acquisition, it
has been maintaining a high occupancy rate and steady profitability.
By way of background, JRE‐AM recently learned of the planned sale of Seavans S Bldg., the property to beacquired, and came to know the firm intention of its owner to buy Kodenmacho Bld. In the wake of these,
the both sides had been negotiating with each other so that this trade can be of mutual benefit.
Consequently, JRE‐AM decided to enter into the trade agreement because: i) the counterparty offered tobuy Kodenmacho Bldg. for a price in excess of both its book value and appraisal value; and ii) JRE‐AM
determined that Seavans S Bld. will be competitive and continue to deliver a steady net operating income
on a medium‐to long‐term basis.
While making the decision, JRE‐AM appreciated Seavans S Bld. especially for the following points:(1) State‐of‐the‐art specification
Although constructed in the same year as Kodenmacho Bldg., Seavans S Bldg. underwent a large renovation
work in 2012. Thanks to that, the building is equipped with the latest specifications and its interior looks as
attractive as those of fairly new buildings.
(2) Superior location
This property has excellent access to domestic and international transportation, such as Haneda Airport,
lying close to Hamamatsucho station on JR Lines and Tokyo Monorail Line. When walking there from
Hamamatsucho station, the pedestrian deck brings you to the close proximity, which provides
walker‐friendly access.
(3) Future prospects
Seavans S Bldg., having been maintaining a high occupancy rate, will likely continue to enjoy stable rental
demand in the future due to the aforesaid advantages. Furthermore, JRE‐AM deemed that Seavans S Bldg.
will maintain stable net operating income due to housing a number of good‐standing companies.

≪Property to be acquired : Seavans S Building≫

1. Outline of the acquisition
Name of property
Acquisition price
SellerBrokerage
Date of decision
Date of contract (scheduled)
Date of transfer (scheduled)
Date of payment (scheduled)

Seavans S Building¥ 5,400 million
Undisclosed ( see item 3 below)
Yes (not an interested party)
January 27, 2020
January 31, 2020
January 31, 2020January 31, 202022.

Description of the property to be acquired
Seavans S Building
Name of property
Type of specified assets
Type of ownership

Domestic real estate

LandOwnership pertaining to the following:
Seller‐owned land lot; co‐ownership interest of 44,363/100,000

Building

Co‐ownership interest of sectional ownership (Seavans S Bldg.
business interest: 13.45%)
・for 16th through 22nd floor (13,932.31 m2) : 42.86%
・for 9th through 10th floor (3,980.66 m2): 9.473%

Location (Building address)
Usage

1‐2‐3, Shibaura, Minato‐ku, TokyoOfficesAreaTypical floor area

26,468.49 m2 ( the area stated in the real property registry)
167,807.32m2 (the gross floor area stated in the real property registry)
S/RC/SRC structure with flat roof, 24 stories above the ground and 2
basement levels
2,012 m2

Completion
Matters related to earthquake
resistanceMortgage
Appraisal value( Date of value)
Appraisal institution

January 1991
PML: 1.7% ( based on the seismic risk assessment report by Tokio
Marine & Nichido Risk Consulting Co., Ltd.)Yes (to be released before the transfer)¥ 7,140 million(as of January 1, 2020)
Daiwa Real Estate Appraisal Co., Ltd.

Land
Building
Structure

Outline of lease
Total number of tenants
Total leasing businessincome14¥ 557 million per year

Total rented area

No receipt of security deposits based on Agreement between theco‐owners
6,074 m2

Net rentable area

6,074 m2

Security deposit

Occupancy rate

Special notes

March 15, 2018

100.0%

September 15, 2018

100.0%March 15, 2019100.0%

September 15, 2019100.0%

Scheduled date of acquisition

100.0%

・The boundary confirmation has not been completed.
・According to a survey report prepared by Tokio Marine & Nichido
Risk Consulting Co., Ltd., the land‐use history research found thatthe possibility of soil contamination cannot be denied; however, arisk of health hazard is deemed low.

3(Note)・JRE, upon acquisition of the property, will lease the whole owned space to a master lessee inaccordance with a joint operating agreement, in which the master lessee will then sublease it tothird parties under the master lease contract of a pass‐through type.
・JRE’s business balance is calculated by multiplying that of the whole Seavans S Bldg. by JRE’s
business interest in it (13.45%).
・”Area” represents ones stated in the real property registry, which is subject to the whole building
and site comprised of Seavans S Blds., N Bldg., and AMALL.
・“Structure” and “Completion” show the same ones as in the real property registry. “Usage”,
however, indicates the main one, among those listed in the real property registry.
・”Total leasing business income”, “Total rented area”, and “Net rentable area” represent the figures
derived by multiplying the ones pertaining to the whole Seavans S Bldg. by JRE’s business interest
in it.
・”Total number of tenants”," “Total rented area”, “Net rentable area” are forecasts as of thescheduled acquisition date.
・”Total number of tenants” and “Occupancy rate” are the ones pertaining to the whole Seavans SBldg.
・As for “Security deposit”, they are centrally managed by the master lessee under the master lease
contract.
・”Outline of lease” are based on the data provided by the seller.
・NOI (Net Operating Income): ¥ 313 million a year (an estimated amount)・Depreciation: ¥ 60 million a year (an estimated amount)

3. Outline of seller
Although the seller is a domestic corporate entity, its consent to disclose information is not obtained.
Note that the said entity does not fall under interested parties of JRE or JRE‐AM.

4. Status of owners, etc. of the property
This property is not acquired from one that falls under interested parties of JRE or JRE‐AM.

5. Summary of appraisal report
Name of property
Appraisal value
Appraisal institution
Date of value

Seavans S Building¥ 7,140 million
Daiwa Real Estate Appraisal Co., Ltd.
January 1, 2020

ItemValue indicated by the income approach
Value indicated by the direct
capitalization method(1) Operating Income [①‐②]AmountDescription

7,140,000

Indicated by putting more weight on the DCF method,which weaves fluctuation of the future net cash flows into
the value, while employing the direct capitalization
method for verification

7,290,000
509,107①Potential rental income

536,057②Vacancy Loss

26,950(2)Operating expenses

191,703
4

Recorded on the basis of new rent levels of comparable
properties, etc.
Recorded on the basis of average vacancy rates ofcomparable properties, etc.Maintenance and management
fee
Property management fee

Estimated on the basis of the contract for the property
management fee, while referring to expenses incurred inprevious years for the maintenance management fee

74,815(Note)

Estimated on the basis of expenses incurred in previousyears, taking into account JRE’s business interest, etc.
Estimated according to the average annual expense statedin the engineering report

Utilities expenses

62,233

Repair expenses

3,974

Leasing Cost
Property tax and city planning
tax

3,623

Estimated in light of cases of comparable properties40,224

Estimated on the basis of the taxes levied for fiscal year
2019

Insurance Premium

1,139

Other expenses

5,693

Estimated on the basis of expenses incurred in previousyears, taking into account JRE’s business interest, etc.
Estimated on the basis of expenses incurred in previousyears(3) Net Operating Income [(1)‐(2)](4) Operating profit on lump‐sum
payments

317,404
0

Excluded from consideration in accordance with the MLcontract(5) Capital expenditure

33,050Estimated according to the re‐procurement prices shownin the engineering report(6) Net Cash Flow [(3)+(4)－(5)]284,353(7) Capitalization rate

3.9%

Value indicated by the DCF method

7,080,000

Discount rate

3.7%

Terminal capitalization rate

4.1%

Value indicated by the cost approach
Land ratio
Building ratio

Estimated referring to market capitalization rates ofcomparable properties

Estimated comparing with the discount rates pertaining totrading comparable properties and the yields of otherfinancial instruments
Estimated on the basis of the capitalization rate, while
taking into account the marketability of the subject
property at the termination of its retention period

6,360,000
85.2%
14.8%

* In thousands of yen (Amounts are rounded down to the nearest thousand yen)

Any special considerations in thereconciliation between indicatedvalues and determination of the final
appraisal value

Nothing in particularNote: The property management company did not consent to us disclosing the property management fee. If the fee forthe subject property is disclosed, it might potentially affect other deals done by the company, which could affect
JRE in effective delegation of property management services under our policy on property maintenance andmanagement. This could in turn undermine the interests of our unit holders. Accordingly, themaintenance‐management fee and property management fee are shown in the total amount for presentation.

≪Property to be disposed of : Kodenmacho Shin‐Nihonbashi Building≫

1. Outline of the disposition
Name of property
Disposition price
Estimated book value
Estimated gain on disposition
BuyerBrokerage
Date of decision
Date of contract (scheduled)
Date of transfer (scheduled)

Kodenmacho Shin‐Nihonbashi Building¥ 3,450 million¥ 2,714 million¥ 586 million
Undisclosed ( see item 3 below)
Yes (not an interested party)
January 27, 2020
January 31, 2020
January 31, 20205

Date of payment (scheduled)

January 31, 2020

・ The disposition price excludes disposition expenses, the adjustment amounts of theproperty tax and city planning tax, and the consumption tax.
(Notes)・ The estimated book value is the book value estimated as of today calculated by theasset management company on the basis of capital expenditures scheduled anddepreciation estimated up to the date of transfer.
・ The estimated gain on disposition represents an approximate amount because
disposition expenses are partially yet to be determined.

2. Outline of the property to be disposed
Name of property

Kodenmacho Shin‐Nihonbashi Building

Type of specified assets

Beneficial interest in real estate and leasehold trusts

Type of ownership
Land

Ownership ( with partial leasehold included )Building

Ownership

Location (Building address)

4‐9, Nihonbashi‐Kodenmacho, Chuo‐ku, Tokyo

Completion

November 1991

Usage
Appraisal value( Date of value)
Appraisal institution

Offices and stores¥ 2,970 million(as of January 1, 2020)
Daiwa Real Estate Appraisal Co., Ltd.

Outline of lease
Total number of tenants

10Total rental income¥ 120 million (for the September 2019 period)

Security deposit¥ 177 million

Total rented area

3,897 m2

Net rentable area

3,897 m2

Occupancy rate

September 30, 2017100.0%March 31, 2018

100.0%

September 30, 2018

100.0%March 31, 2019100.0%

September 30, 2019100.0%

Special notes

Regarding the leasehold interest in part of the said land, its contract
is to expire in 2021.

(Note)
・The stated usage indicates the main usage, among those listed in the real property registry.
・The figures in “outline of lease” are the ones as of the last day of the fiscal period ended
September 30, 2019.

3. Outline of buyer
The same as the above‐mentioned seller

64. Summary of appraisal report
Name of property
Appraisal value
Appraisal institution
Date of value

Kodenmacho Shin‐Nihonbashi Building¥ 2,970 million
Daiwa Real Estate Appraisal Co., Ltd.
January 1, 2020

Item

AmountDescription

Value indicated by the income approach

2,970,000

Indicated by putting more weight on the DCF method,which weaves fluctuation of the future net cash flows into
the value, while employing the direct capitalization
method for verification

Value indicated by the direct
capitalization method(1) Operating Income [①‐②]3,050,000
224,607①Potential rental income

236,568②Vacancy Loss

11,961(2)Operating expenses
Maintenance and management
fee
Property management fee

Recorded on the basis of new rent levels of comparable
properties, etc.
Recorded on the basis of average vacancy rates ofcomparable properties, etc.

85,06428,296

Estimated referring to expenses incurred in previous years
for the maintenance and management fee and cases ofcomparable properties for PM fee
Estimated on the basis of expenses incurred in previous
years, taking into account occupancy rates
Estimated according to the average annual expense statedin the engineering report

Utilities expenses

18,200

Repair expenses

5,685

Leasing Cost
Property tax and city planning
tax

1,307

Estimated in light of cases of comparable properties

24,253

Estimated on the basis of the taxes levied for fiscal year
2019

Insurance Premium

350

Estimated taking into consideration the current insurance
premium rate and those for comparable properties

Other expenses(3) Net Operating Income [(1)‐(2)](4) Operating profit on lump‐sumpayments

6,971
139,542
1,554

Estimated under the assumption of an interest rate of 1%(5) Capital expenditure

19,079Estimated according to the re‐procurement prices shownin the engineering report(6) Net Cash Flow [(3)+(4)－(5)]122,017(7) Capitalization rate

4.0%

Value indicated by the DCF method

2,940,000

Discount rate

3.8%

Terminal capitalization rate

4.2%

Value indicated by the cost approach
Land ratio
Building ratio

Estimated referring to market capitalization rates ofcomparable properties

Estimated drawing on market capitalization rates ofcomparable properties
Estimated on the basis of the capitalization rate, while
taking into account the marketability of the subject
property

2,840,000
83.8%
16.2%

* In thousands of yen (Amounts are rounded down to the nearest thousand yen)

Any special considerations in thereconciliation between indicatedvalues and determination of the final
appraisal value

Nothing in particular7Note: The property management company did not consent to us disclosing the property management fee. If the fee forthe subject property is disclosed, it might potentially affect other deals done by the company, which could affect
JRE in effective delegation of property management services under our policy on property maintenance andmanagement. This could in turn undermine the interests of our unit holders. Accordingly, themaintenance‐management fee and property management fee are shown in the total amount for presentation.

≪Settlement method≫

1) Acquisition fundThe proceeds from the disposition and Cash reserves
2) Settlement method
A lump‐sum payment at the time of transfer≪Future outlook≫
JRE does not make any revision to the operating performance forecasts for the fiscal periods ending March 31,
2020 (from October 1, 2019 to March 31, 2020) and September 30, 2020 (from April 1 to September 30, 2020)
because this disposition and acquisition will likely have only a marginal effect on the performance.

To stabilize its future dividends, JRE intends to internally retain the gain on the disposition as reserve for
reduction entry within the maximum amount by applying “special provisions for taxation in cases ofrepurchase of specified assets” stipulated in Article 65‐7 of the Act on Special Measures Concerning
Taxation.

This is the English translation of the announcement in Japanese dated January 27, 2020.
No assurance or warranties are given for the completeness or accuracy of this English translation.
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(Reference) map of Seavans S Building(Reference) Exterior of Seavans S Building

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