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.

May 15, 2019
IssuerIchigo Office REIT Investment Corporation (“Ichigo Office,” 8975)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative: Yoshihiro Takatsuka, Executive Director
www.ichigo-office.co.jp/english
Asset Management Company
Ichigo Investment Advisors Co., Ltd.
Representative: Hiroshi Iwai, President
Inquiries: Hiroto Tajitsu, Head of Administration
Tel: +81-3-3502-4891

Acquisition of TK Equity Interest in Unizo Tachikawa Building
Ichigo Office decided today to acquire a TK (tokumei kumiai) equity interest in the Unizo
Tachikawa Building in Tokyo.
1. Acquisition Summary
Legal Form of Asset

TK equity interest in trust beneficiary interest in real estate(juekiken)

Asset Name

Tachikawa Holdings GK TK equity interest1

Underlying Real Estate Unizo Tachikawa Building
JPY 50,000,000 (plus ancillary acquisition costs) to acquire
Investment Amount
4.35% ownership
May 15, 2019
Contract Date

1

Closing Date

May 16, 2019

Financing Method

Cash-on-handSettlement Method

Lump-sum payment

Tachikawa Holdings GK is the TK Operator. For details, please refer to the TK
Operator Profile under Section 3 “Asset Summary.”

2. Acquisition Rationale
As a specialized office REIT, Ichigo Office continues to execute on its strategy to growshareholder value by focusing its portfolio on high-quality office assets. Consistent withthis strategy to drive durable growth, Ichigo Office is acquiring via the equity interest a
stake in the Unizo Tachikawa Building, a high-quality, mid-size Tokyo office asset withupside potential.
In addition to the equity interest, Ichigo Office has acquired a preferential negotiationright to increase its investment in the Unizo Tachikawa Building. (N.B. The preferential
negotiation right gives Ichigo Office the option, not the obligation, to increase its
1investment.) The equity interest is forecast to yield 5.8% and expected to generate stablerental income and drive further dividend increases for Ichigo Office shareholders.1
Please refer to Section 6 “Details of the Unizo Tachikawa Building” for additional asset
details.
1

The equity interest forecast yield is based on an NOI forecast by Daiwa Real EstateAppraisal Co., Ltd. as of April 1, 2019, minus administrative, management, andborrowing expenses as calculated by Ichigo Investment Advisors (IIA), multiplied by
Ichigo Office’s ownership in the TK equity (4.35%), and divided by the acquisition
price.

3. Asset Summary
A. TK Overview
TK Operator
TK Agreement
PeriodTotal TK Investment
AmountTachikawa Holdings GK
Through May 31, 2021 (expected)
JPY 1,150 million
Tachikawa Holdings GK
Trust beneficiaryinterest in realestate (juekiken)
JPY 4,040 million1

Non-recourse loan (senior)
JPY 2,290 million2
Non-recourse loan (mezzanine)
JPY 600 million3
TK equity interest
JPY 1,150 million4

1

TK Agreement
Details

The amount includes acquisition costs, TK organization
costs, and reserves. The appraisal value calculated by
Daiwa Real Estate Appraisal Co., Ltd. as of April 1,
2019 is JPY 3,930 million.
2
Non-recourse loan (senior) from SMBC (expected)
3
Non-recourse loan (mezzanine) from Sumitomo Mitsui
Finance and Leasing Co., Ltd. (expected)
4
Ichigo Office will invest JPY 50 million (4.35%) in the
TK equity interest. Other expected TK equity holders
include domestic companies and financial institutions
that do not have any material capital, personnel, ortransactional relationship with Ichigo Office or IIA. In
addition, the TK equity holders are not interested parties
as defined in the Enforcement Ordinance of theInvestment Trust and Investment Corporation Law or
the internal rules of the asset management company.
(Note 1) SMBC Trust Bank Ltd. is expected to become
the asset manager of the TK Operator, and is not a
related party as defined in the Enforcement Ordinanceof the Investment Trust and Investment Corporation
Law or the internal rules of IIA.
2

(Note 2) SMBC Nikko Securities Inc. is expected to
become the private placement agent of the TK equity
interest.
Calculation Period:
Quarterly (March-May; June-August; SeptemberNovember; December-February). However, the first
calculation period runs from the acquisition date of the TK
equity interests until end of May 2019.
Repayment of Capital:
The TK Operator will repay each equity holder theinvested amount at the end of the TK agreement period. If
losses are generated in a calculation period (including
losses on sales), equity holders shall be distributed pro rata
the losses according to their investment ratios in eachcalculation period within the amount of losses. In the casewhere the cumulative loss exceeds the total equity
contribution, the loss is limited to the equity contribution.
The remainder of the losses will be borne by the TK
Operator.

Preferential
Negotiation Right

Description

Preferential negotiation right for
acquisition of the trust beneficiary interestor underlying real estate

Exercise
Period ofPreferential
Negotiation
Right

From May 17, 2019 to May 16, 2021

ConditionsofPreferential
Negotiation
Right

If Ichigo Office offers to acquire the trust
beneficiary interest at a price equivalent
to or above the Acquisition Price, the TK
Operator shall be obligated to sell to
Ichigo Office unless the price offered by
Ichigo Office is not rational for the TK
Operator relative to its expected IRR.
Acquisition Price:
JPY 3,830 million (excluding tax)3

B. TK Operator Profile
Name

Tachikawa Holdings GK

Address

2-7-1 Nihonbashi, Chuo-ku, Tokyo

Representative

Paid-In CapitalManaging Member: Ippan Shadan Hojin Tachikawa Holdings
Manager: Shogo Kikuchi
1. Investment in trust beneficiary interests in real estate(juekiken)
2. Acquisition, development, holding, disposition, leasing, andmanagement of real estate
3. Other businesses relating to the aforementioned businesses
JPY 100,000

TK Equity Holders

Undisclosed1

Establishment Date

April 18, 2019

Total Assets

JPY 4,040 million (expected)

Net Assets

JPY 100,000

Relationship to
Ichigo Office orAsset Management
Company

The TK Operator does not have any material capital, personnel,
or transactional relationship with Ichigo Office or IIA. The TK
Operator is not a related party as defined in the Enforcement
Ordinance of the Investment Trust and Investment Corporation
Law or the internal rules of the asset management company.

Business

1

The other TK equity holders did not provide consent to disclose their names.

4. Acquisition Schedule
Contract Date

May 15, 2019

Acquisition Date

May 16, 2019 (expected)

Settlement Date

May 17, 2019 (expected)

5. Earnings Outlook
The impact of this acquisition on Ichigo Office’s October 2019 fiscal period earnings
announced on December 14, 2018 is minimal, and therefore the forecast is unchanged.

4

6. Details of the Unizo Tachikawa Building(1) Location
The Unizo Tachikawa Building is located in the Tachikawa area of Tokyo, which has
rapidly developed as a business and retail center in suburban Tokyo.
The building is located near Tachikawa Station on the JR Chuo Line, allowing easy
access to central Tokyo via major stations such as Shinjuku and Tokyo.
The northern side of Tachikawa Station, where the building is located, is a commercial
district with many large-size office buildings that is in high demand as a location forbranch offices and sale offices of companies doing business in the area.
(2) Features
The Unizo Tachikawa Building is a mid-size office building located within an eightminute walk from Tachikawa Station on the JR Chuo Line and a seven-minute walkfrom Tachikawa Kita Station on the Tama Toshi Monorail Line.
Each floor is sub-divisible with a standard floor plate of 145 tsubo (c. 480m2). The
building has OA sub-floors and individual air conditioning units, and there are twoelevators and 58 parking spaces. These features meet the requirements of tenants in thearea.
The building is currently occupied by an IT company, an insurance company, a realestate management company, and the call center of a TSE-listed company.
(3) Building and Location

5

Asset Name
Form of Ownership
Trustee
Period of Trust Contract
Location
Property Right
Area
Land
ZoningCoverage Ratio
Floor Area Ratio
Property Right
Use
Building Structure
Total Floor Area
Date Built
Appraiser
Appraisal Value

Asset Overview
Unizo Tachikawa Building
Trust beneficiary interest in real estate (juekiken)
Mizuho Trust & Banking Co., Ltd.
February 22, 2006 – March 31, 2025
1-21-1 Akebonocho, Tachikawa, Tokyo
Freehold
1,784.89m2(1) Retail (2) Neighborhood Commercial(1) 80% (2) 80%(1) 500% (2) 300%
Freehold
Office, retail, parking, storage
Steel Reinforced Concrete, Reinforced Concrete B3/7F
7,642.37m2
December 14, 1992
Daiwa Real Estate Appraisal Co., Ltd.
JPY 3,930 million
April 1, 2019

Appraisal Date
Value by Direct Capitalization
JPY 4,060 million
MethodKimura Architects & Associates
Architect1
Joint Venture of Taisei Corporation and Penta-Ocean
Builder1
Construction
Structural Designer1
Kimura Architects & Associates
1
Inspection Agency
Tachikawa Municipal Government
PML (Assessor)
5.00% (Sompo Risk Management & Health Care Inc.)

A right of pledge is expected to be established for the trust
beneficiary interest, with the lender of the non-recourse loan
Collateral
to the TK operator as the pledgee. Also, an agreement is
expected to be signed to assign the lender as the mortgagee forthe underlying real estate.
Tenant & Lease Overview (as of April 30, 2019)
Number of Tenants
15
Monthly Rental Income
JPY 16.635 million
Tenant Security Deposits
JPY 109.412 million
2
Leasable Area
4,879.78m2
Leased Area2
4,879.78m2
Apr 2017 Oct 2017 Apr 2018 Oct 2018 Apr 2019
Occupancy
100%
100%
100%
100%
100%
Property Management
Dai-ichi Building Co., Ltd. (expected)
Company
Tachikawa Holdings GK (expected)
Master Lease Company
Pass-through (expected)
Master Lease Type6

Special Items
1. Pursuant to Article 42, Paragraph 2 of the Building Standards Act, 11.47m2 of land at thenorthwest side of the property is designated as a road.
2. A report by Earth-Appraisal Co., Ltd. indicates that although asbestos was detected in thepaint coating used for the outdoor staircase, there is no risk of the asbestos becoming
airborne during normal use given that there are no significant damages and the coating is ingood condition.
3. A tenant lease (leased area: 149.51m2) was terminated on April 30, 2019, and occupancy
after the termination is 96.9%.
1

The names of the architect, builder, structural designer, and inspection agency are those
as of when the building was built.

7

Appraisal Details
Asset Name
Appraisal Value
Appraiser
Appraisal Date

Appraisal Value
Value by Direct Capitalization
MethodIncomeMaximum Obtainable
Rental Income
Vacancy Loss
Expenses
Administrative andMaintenance Expenses
Utility Expenses
Repair Expenses
PM FeeLeasing Brokerage Fees
Taxes
Insurance Premiums
Other Expenses
Net Operating Income(NOI)
Income on Investment of
Deposits Received
CapitalExpenditure
Net Profit
Cap Rate
Value via DCF Method
Discount Rate
Terminal Cap Rate

Unizo Tachikawa Building
JPY 3,930,000,000
Daiwa Real Estate Appraisal Co., Ltd.
April 1, 2019
Amount (JPY)
Note
Based on a DCF valuation, and
3,930,000,000 verified using a direct capitalization
valuation
4,060,000,000
254,661,243
Based on an analysis of potential rental
266,527,128 income, common area service income,parking lot income, and other income
11,865,885 Based on long-term vacancy rates
66,154,332
14,170,800 Based on actual amounts
21,256,272 Based on actual amounts
3,854,800 Based on engineering reports
Based on a new fee quote from the
3,953,430
property management company
Based on tenant acquisition costs for
1,361,123
similar assets
20,506,000 Based on FY2018 actual amounts
Based on a quote from an insurance
520,500
company
531,407 Based on past actual amounts
188,506,911
1,204,522 Based on a 1.0% investment yield
15,092,100 Based on engineering reports
174,619,333
Based on transactions of similar assets
and a comprehensive assessment of the
4.3%
asset’s location, its specificcharacteristics, and market trends
3,880,000,000
Based on transactions of similar assets
and the current yield of financial
4.1%
assets, taking into consideration theasset’s specific characteristics
4.5% Based upon risk-adjusted NOI

8

Value via Cost Approach
Land
Building

3,360,000,000
70.4%
29.6%
Notes

None

7. Seller Profile
Name

The seller, a domestic unrelated to Ichigo Office, did notprovide consent to disclose its name.

Relationship with Ichigo
Office or IIA

The seller does not have any material capital, personnel, ortransactional relationship with Ichigo Office or IIA. In
addition, the seller is not a related party as defined in the
Enforcement Ordinance of the Investment Trust andInvestment Corporation Law or the internal rules of the AssetManagement Company.

8. Broker Profile
N/A

9Portfolio Reference Information
Post-Acquisition Portfolio
Asset Name

Area1

Acquisition
Price2(JPY million)% ofPortfolio3

O-02 Ichigo Nishisando Building

Central Tokyo

3,254

1.6

O-03 Ichigo Mita Building

Central Tokyo

2,740

1.3

O-04 Ichigo Nanpeidai Building

Central Tokyo

1,920

0.9

O-05 Ichigo Hanzomon Building

Central Tokyo

1,550

0.8

O-06 Ichigo Hijirizaka Building

Central Tokyo

1,200

0.6

O-07 Ichigo Shibuya Kamiyamacho Building

Central Tokyo

1,505

0.7

O-08 Ichigo Akasaka 5 Chome Building

Central Tokyo

735

0.4

O-09 Ichigo Shibakoen Building

Central Tokyo

1,100

0.5

O-10 Ichigo Ebisu Nishi Building

Central Tokyo

1,917

0.9

O-11 Ichigo Ginza 612 Building

Central Tokyo

1,773

0.9

O-12 Ichigo Uchikanda Building

Central Tokyo

1,140

0.6

O-14 Ichigo Yotsuya 4 Chome Building

Central Tokyo

550

0.3

O-15 Ichigo Tameike Building

Central Tokyo

580

0.3

O-16 Ichigo Jimbocho Building

Central Tokyo

1,820

0.9

O-17 Ichigo Hakozaki Building

Central Tokyo

1,150

0.6

O-18 Ichigo Kudan 2 Chome Building

Central Tokyo

763

0.4

O-19 Ichigo Kudan 3 Chome Building

Central Tokyo

844

0.4

O-20 Ichigo Gotanda Building

Central Tokyo

5,060

2.5

O-21 Ichigo Shin Yokohama Building

Tokyo Metro Area

1,816

0.9

O-22 Ichigo Minami Ikebukuro Building

Tokyo Metro Area

1,460

0.7

O-23 Ichigo Nakano North Building

Tokyo Metro Area

764

0.4

O-24 Ichigo Eitai Building

Tokyo Metro Area

1,490

0.7

O-26 Ichigo Ikejiri Building

Tokyo Metro Area

2,030

1.0

O-27 Ichigo Nishi Ikebukuro Building

Tokyo Metro Area

639

0.3

O-28 Ichigo Nishi Gotanda Building

Central Tokyo

765

0.4

O-29 Ichigo Kichijoji Building

2,160

1.1

4,705

2.3

6,710

3.3

O-38 Ichigo Toyamaeki Nishi Building

Tokyo Metro Area
Four Major Regional
CitiesFour Major Regional
CitiesOther Regional Cities

1,645

0.8

O-39 Ichigo Mirai Shinkin Building

Other Regional Cities

1,158

0.6

O-42 Ichigo Takamatsu Building

Other Regional Cities

3,010

1.5

O-46 Ichigo Kanda Nishikicho Building

Central Tokyo

2,130

1.0

O-47 Ichigo Akihabara North Building

Central Tokyo

5,500

2.7

No.

O-34 Ichigo Sakae Building
O-37 Ichigo Marunouchi Building

10

No.

Area1

Asset Name

Acquisition
Price2(JPY million)% ofPortfolio3

1,940

1.0

2,210

1.1

O-49 Ichigo Kanda Ogawamachi Building

Four Major Regional
CitiesCentral Tokyo

O-50 Ichigo Hatchobori Building

Central Tokyo

1,905

0.9

O-51 Ebisu Green GlassCentral Tokyo

5,900

2.9

O-52 Ichigo Omori Building

Central Tokyo

3,850

1.9

O-53 Ichigo Takadanobaba Building

Central Tokyo

1,580

0.8

O-54 Ichigo Omiya Building

Tokyo Metro Area

3,430

1.7

O-55 Ichigo Sagamihara Building

Tokyo Metro Area

1,174

0.6

O-56 Ichigo Ofuna Building

Tokyo Metro Area

2,000

1.0

O-57 Ichigo Sendai East Building

Other Regional Cities

1,840

0.9

O-58 Ichigo Kumamoto Building

Other Regional Cities

1,450

0.7

O-59 Ichigo Jingumae Building

Central Tokyo

7,200

3.5

O-60 Ichigo Shibuya Dogenzaka Building

Central Tokyo

3,650

1.8

O-61 Ichigo Hiroo Building

Central Tokyo

3,960

2.0

O-62 Ichigo Sasazuka Building

Central Tokyo

4,780

2.4

O-63 Ichigo Nihonbashi East Building

Central Tokyo

4,700

2.3

O-64 Ichigo Sakurabashi Building

Central Tokyo

2,500

1.2

O-65 Ichigo Shinkawa Building

Central Tokyo

2,360

1.2

O-66 Ichigo Kudan Building

Central Tokyo

3,190

1.6

O-67 Ichigo Higashi Gotanda Building

Central Tokyo

3,660

1.8

O-68 Axior Mita

Central Tokyo

1,800

0.9

O-69 Ichigo Higashi Ikebukuro Building

Tokyo Metro Area

4,570

2.3

O-70 Koriyama Big-i (Office Section)

Other Regional Cities

1,660

0.8

O-71 Ichigo Kawasaki Building

Tokyo Metro Area

1,750

0.9

O-72 Ichigo Shibuya East Building

Central Tokyo

1,350

0.7

O-73 Ichigo Ningyocho Building

1,450

0.7

2,190

1.1

1,380

0.7

2,000

1.0

O-77 Ichigo Ikenohata Building

Central Tokyo
Four Major Regional
CitiesFour Major Regional
CitiesFour Major Regional
CitiesTokyo Metro Area

5,130

2.5

O-78 Ichigo Ikebukuro East Building

Tokyo Metro Area

3,010

1.5

O-79 Ichigo Motoazabu Building

Central Tokyo

1,890

0.9

O-80 Ichigo Otsuka Building

Tokyo Metro Area
Four Major Regional
Cities

2,740

1.3

3,420

1.7

O-48 Ichigo Sakaisuji Honmachi Building

O-74 Ichigo Nishi Honmachi Building
O-75 Ichigo Hakata Building
O-76 Ichigo Nishiki First Building

O-81 Ichigo Nagoya Building

11

No.

Area1

Asset Name

Acquisition
Price2(JPY million)% ofPortfolio3

2,340

1.2

1,330

0.7

1,040

0.5

3,500

1.7

O-85 Ichigo Shibuya Udagawacho Building

Four Major Regional
CitiesFour Major Regional
CitiesFour Major Regional
CitiesCentral Tokyo

O-86 Win Gotanda Building

Central Tokyo

3,100

1.5

O-87 Ichigo Hongo Building

Tokyo Metro Area

2,300

1.1

O-88 Oimachi Center Building

Central Tokyo

1,680

0.8

O-89 Win Gotanda Building 2

Central Tokyo

3,300

1.6

O-90 MIF Building

2,200

1.1

1,900

0.9

O-92 Ichigo Minami Otsuka Building

Central Tokyo
Four Major Regional
CitiesTokyo Metro Area

2,780

1.4

O-93 Ichigo Nogizaka Building

Central Tokyo

3,315

1.6

Subtotal - Office (79 Assets)

191,987

94.6

O-82 Ichigo Fushimi Building
O-83 Ichigo Nishiki Building
O-84 Ichigo Minami Morimachi Building

O-91 Ichigo Uchi Honmachi Building

Z-02

Ichigo Fiesta Shibuya Building

Central Tokyo

1,970

1.0

Z-09

Konami Sports Club Izumi Fuchu

Other Regional Cities

1,210

0.6

Z-10

Ichigo Shibuya Bunkamura Dori Building

Central Tokyo

2,400

1.2

Z-11

Twicere Yokohama Isogo (Retail Section)

Tokyo Metro Area

1,620

0.8

Z-12

Lions Square Kawaguchi

Tokyo Metro Area

2,430

1.2

Z-14

Ichigo Kamata Building

Tokyo Metro Area

1,400

0.7

Subtotal - Other (6 Assets)

11,030

5.4

Total (85 Assets)

203,017

100.0

50

–

TK Equity Investment Tachikawa Holdings GK TK Equity Interest
1

Central Tokyo refers to Chiyoda, Minato, Chuo, Shinjuku, Shibuya, and Shinagawa Wards. Tokyo Metro
Area refers to Tokyo (excluding the six wards above), Kanagawa, Chiba, and Saitama Prefectures. Four
Major Regional Cities refers to Osaka, Nagoya, Fukuoka, and Sapporo.
2
Acquisition Price excludes incidental expenses such as consumption taxes and other fees.
3% of Portfolio is based upon acquisition price.

12