REIT Issuer: Teruo Ozaki Executive Director ORIX … · Deluxe Room . Disclaimer: ......

Disclaimer: This document is not an offer to sell or a solicitation of any offer to buy the securities of OJR (the “Investment Corporation”) in the United States or elsewhere.

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REIT Issuer: ORIX JREIT Inc. (TSE: 8954) Teruo Ozaki Executive Director Asset Management Company: ORIX Asset Management Corporation Yoshitaka Kamemoto President and CEO Inquiries: Shinji Yamana Executive Officer TEL：+81 3 5418 4858

ORIX JREIT Announces Property Acquisition � � � ��

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1. Summary of the Property

Property Type Area (Note2)

Seller (Note3)

Price to be acquired (million

yen)

Appraisal Value

(million yen)

NOI Yield (Note4)

(%)

Yield after Depreciation

(Note5) (%)

Hotel Universal Port Hotels and

Others

Other Areas (Osaka-shi,

Osaka) Sponsor 34,000 34,100 5.8 4.3

Existing Portfolio(Note6) - 5.1 4.1

Notes: 1. “Property” refers to the property to be acquired in the above. 2. “Other Areas” refers to areas other than the “6 Central Tokyo Wards,” “Remaining Tokyo Wards” and “Other Parts of the Greater Tokyo Area”.

“6 Central Tokyo Wards” refers to Chiyoda, Chuo, Minato, Shinjuku, Shibuya and Shinagawa wards and “Remaining Tokyo Wards” refers to the remaining Tokyo wards other than the “6 Central Tokyo Wards.” “Other Parts of the Greater Tokyo Area” refers to parts of Tokyo other than the “6 Central Tokyo Wards” and “Remaining Tokyo Wards,” Kanagawa, Saitama and Chiba Prefectures.

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�� “ORIX Synergy” refers to the cooperative relationship between OAM and Sponsor.

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3. Property features (a) Location/Property features � ��

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�� Note: The Average Daily Rate(ADR) represents the amount calculated by dividing the total revenue from the hotel accommodation division during a certain period

excluding service fees by the total number of rooms sold during the same period. And figure of "ADR" is rounded off to less than 100 yen.

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12.7

13.914.6

10

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FY 2015 FY 2016 FY 2017

Annual Attendance at USJ��

A special floor offering luxurious hotel stays with elevator restriction using a dedicated room key, early check-in, an exclusive check-in corner, and breakfast in a priority area.

Premium floor

Corner Palace

These rooms meet a variety of accommodation needs with rooms for families with children, rooms that boldly incorporate USJ character motifs, and rooms with bunk beds for large groups.

A wide variety of concept rooms

WAKU WAKU Wonder Room

These floors offer a park side view enabling visitors to continue enjoying USJ, or harbor side views overlooking Osaka bay area. Some rooms can be connected to accommodate up to eight guests.

Regular floors

Deluxe Room


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Note: TripAdvisor is a website on the internet containing travel related reviews, and operated by an affiliate company of TripAdvisor, Inc. (a US corporation

listed on the Nasdaq Stock Market) (the Japanese-language website is hereinafter referred to as “TripAdvisor”). According to explanations provided on the TripAdvisor website, the rankings of “Travelers’ Choice Awards for Hotels” are determined using TripAdvisor’s original algorithm, based on the number of reviews and scores collected over the past 12 months from travelers around the world. The “TripAdvisor Best Breakfast Hotels in Japan 2017” ranking is, according to the explanations provided, based on reviews written in Japanese which were submitted to TripAdvisor from January to December of 2016. From these reviews, words associated with “breakfast” were picked out, which were then classified into favorable and negative feedback, scored according to the total numbers, frequency, and other factors, and determined using TripAdvisor’s original algorithm. The “Certificate of Excellence,” according to TripAdvisor website, is based on the quality, quantity, and recency of travelers’ reviews submitted to TripAdvisor during a 12-month period, with additional consideration given to such factors as the number of years in operation and popularity ranking, and decided on using TripAdvisor’s original algorithm. It is explained that the award winners must maintain an overall TripAdvisor bubble rating of at least four out of five, must have a minimum number of reviews, and must have been listed on TripAdvisor for at least 12 months. It is also explained that the “Hall of Fame” award recognizes facilities which have received the “Certificate of Excellence” for five consecutive years.

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Source: Prepared by OAM based on news releases by ORIX Group and USJ Co., Ltd.

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1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Jan. - Dec.2017

Sales amount

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Main New Attractions

At USJ including

scheduled ones

July 2014 The Wizarding

World of Harry Potter TM

March 2016 The Flying

DINOSAUR April 2017 MINIONS

PARK

2018 Spring UNIVERSAL SPECTACLE

NIGHT PARADE 〜Best of Holly wood〜（Scheduled）

Until 2020 SUPER NINTENDO

WORLD Investment amount over 60 billion yen

(Scheduled)

ADR Approx.

21,900yen

Guest room occupancy

rate Approx. 93%

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� (b) Tenant features � ��

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Note: The Gross Operating Profit (GOP) represents the amount calculated by deducting costs related to hotel operations such as management commission, labor cost, utilities charge, advertising and others from hotel sales.

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�� ： February 26, 2018

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�� ： April 2, 2018(Note 1)

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�� ： Proceeds from the issuance of new investment units through public offering(Note2), proceeds from the issuance of new investment units through public offering and third-party allotment resolved at OJR board meeting as of February 10, 2017(Note3) and cash on hand

�� ： 100% on delivery Notes 1: The trust beneficial interest sale and purchase agreement for Property to be acquired (the “Purchase and Sales Agreements”) fall under the

category of Forward Commitment, etc. as provided in the Comprehensive Guideline for Supervision of Financial Instruments Business Operators, etc. set by the Financial Services Agency as they are postdated Purchase and Sales Agreements where the settlement and delivery of the properties are to take place one month or more after the conclusion of agreement and such.

� Financial Impact on OJR in the Event that it Fails to Fulfill the Forward Commitment, Etc.

In this regard, the Purchase and Sales Agreements have cancellation provisions that set forth the following conditions. i. When either the seller or the buyer breaches the provisions of the Purchase and Sales Agreement (such a party referred to as the

“Breaching Party”), the counterparty shall set a certain period and demand the Breaching Party to meet its obligations within the period. If the Breaching Party fails to correct its violations within that period, the counterparty shall be able to cancel the Purchase and Sales Agreement.

ii. When either the seller or the buyer breaches the provisions of the Purchase and Sales Agreement, the Breaching Party shall be obliged to compensate or indemnify for the resulting damages, etc. of the counterparty within the scope of an equivalent cause-and-effect relationship.

2: For details, please refer to the press release “ORIX JREIT Announces Issue of New Investment Units and Secondary Offering of Units” to be announced at a later date.

3: For details, please refer to the press release “ORIX JREIT Announces the Pricing for the Issue of New Investment Units and Secondary Offering” as of February 20, 2017 and “ORIX JREIT Announces the Determination of the Number of New Investment Units to be Issued through Third Party Allotment” as of March 23, 2017.

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（��） �� 5-year fixed-term

lease ayreement


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Public transit access ��

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Elevator: 9 Parking: 148 Hotel guest rooms: 600 rooms (��、��

��、�� Earthquake resistance (with or without earthquake insurance) (Note 1)

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��after the Acquisition

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�� A: Fixed rent: 1,050 �� B: Variable rent (Sales-linked rent): The variable rent will be calculated and received by OJR by the method below, based on the sales amount for each half-year period (the “Sales”), which period is defined as the first half-year from April to Septemper and the second half-year from October to March of the following year. <Base Amount> 517.5 million yen 1) In case the Sales is more than 3,450 million yen: Add Base Amount, 80 million yen and 17% of the amount obtained by deducting 3,450 million yen from the Sales. 2) In case the Sales is more than 3,050 million yen but is not more than 3,450 million yen: Add Base Amount and 20% of the amount obtained by deducting 3,050 million yen from the Sales. 3) In case the Sales is 3,050 million yen: Base Amount 4) In case the Sales is 2,650 million yen or more but less than 3,050 million yen: Add Base Amount and then subtract 20% of the amount obtained by deducting the Sales from 3,050 million yen. 5) In case the Sales is less than 2,650 million yen: Add Base Amount and then subtract 17% of the amount obtained by deducting the Sales from 2,650 million yen. The variable rent for each of the first half-year period and the second half-year period is calculated separately, and no adjustments are made throughout the relevant year. In addition, in case the variable rent as calculated above includes any fraction of less than one (1) yen, such fraction is rounded up to one (1) yen, and the minimum variable rent is zero.


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-Rent receiving method- A: Fixed rent: OJR will receive one twelfth (1/12) of the annual fixed rent each month. B: Variable rent: OJR will receive the variable rent at (i) the end of June and (ii) the end of December of each year. <Calculation period regarding variable rent> (i) Variable rent to be received at the end of June will be calculated based on the Sales for the period from October of the preceding year to March of the current year. (ii) Variable rent to be received at the end of December will be calculated based on the Sales for the period from April to September of the current year. Please note that, with respect to the variable rent which OJR will receive in the fiscal period ending August 31, 2018, normally no variable rent would accrue, because OJR will not own the Property during such calculation period regarding the variable rent; however, in order to stabilize cash distributions, it has been agreed that OJR shall receive 200 million yen, in addition to the fixed rent for such period and that 200 million yen shall be deducted from the variable rent which OJR would receive in the fiscal period ending February 28, 2019. If the amount obtained by deducting 200 million yen from the variable rent for the fiscal period ending February 28, 2019 is zero yen or less, no variable rent shall accrue for the fiscal period ending February 28, 2019.

�� ¥350 million ��

�� 35,437.45�� excluding parking and others

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�� 100% (as of November 30th, 2017)(Note3)� ��

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¥1,903 million per annum ��

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Notes 1: PML (Probable Maximum Loss) shows the ratio (%) of cost of recovering a building after the damage to its state before the

damage occurred against replacement cost, when assuming an earthquake that may occur once in 475 years in average in probability statistics (recurrence interval of 475 years). The earthquake risk of a building is evaluated based on the event risk curve that shows the relationship of amount of expected loss (horizontal axis) and probability for the loss to exceed the year (vertical axis). However, the risk curve has variability because loss evaluation comes with uncertainties in earthquake resistance performance of the building, behavior of earthquake vibration, etc. Accordingly, the above PML figures use the risk curve with credibility level of 90%, and are rounded to the nearest whole number.

2: Figures are rounded down to the nearest million yen. 3: OJR plans to conclude 5-year fixed-term lease agreement with the lessee (hotel management company) described in the column

of Gross rental income after the acquisition and occupancy rate after the acquisition is supposed to be 100%.


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��ending August 31, 2018 ��ending February 28, 2019�

(million yen)

Salse amount of hotelhalf-year period

(X)Base amount

Adding andSubtructing

(a)

Adding andSubtructing

(b)

1) more than 3,450 517.5 + 80 + (X-3,450)×17%

2)more than 3,050 but not

more than3,450517.5 + (X-3,050)×20%

3) Base 3,050 517.5

4)2,650 or more but less

than 3,050517.5 - (3,050-X)×20%

5) less than 2,650 517.5 - 80 - (2,650-X)×17%

900

950

1,000

1,050

1,100

1,150

1,200

2,500 2,550 2,600 2,650 2,700 2,750 2,800 2,850 2,900 2,950 3,000 3,050 3,100 3,150 3,200 3,250 3,300 3,350 3,400 3,450 3,500 3,550 3,600

Hotel sales amount per fiscal period (million yen)

5) 4) 2) 1)

A range of hotel sales amount per half year estimatedby OAM for the fixed term building lease agreement

(i.e., five years after the acquisition)

Rents (fixed and variable rent) to be received by OJR per fiscal period

(million yen)

The minimum hotel sales amount and rent estimated by OAM for five years after the acquisition is 2,941 million yen, and 1,020 million yen, respectively.

The maximum hotel sales amount and rent estimated by OAM for five years after the acquisition is 3,276 million yen, and 1,087 million yen, respectively.

Stabilized hotel sales amount and rent estimated by OAM is 3,118 million yen and 1,056 million yen, respectively.

Stabilized hotel sales amount and rent stated in the appraisal report is 3,174 million yen and 1,067 million yen, respectively.

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��The above pie chart represents the ratio of “Fixed rent” and “Variable rent” in the portfolio overall. Figures are rounded to one

decimal place. “Fixed rent” in properties continuously owned by OJR from the first day in the 30th fiscal period ended February 28, 2017 to the last day in the 31st fiscal period ended August 31, 2017 is calculated according to monthly rents which stand for the total of monthly rents and common service fees as well as management fees stipulated in agreements as of November 30, 2017. “Variable rent” in the property is calculated by dividing the total of actual variable rents, including sales-linked rent from the 30th fiscal period ended February 28, 2017 to the 31st fiscal period ended August 31, 2017, by twelve. In addition, “Fixed rent” and “Variable rent” in properties acquired from the 30th fiscal period ended February 28, 2017 to the 31st fiscal period ended August 31, 2017 is calculated by dividing fixed rents calculated according to monthly rents stipulated in agreements as of November 30, 2017 by twelve, and by dividing “variable rent” in properties according to the direct capitalization method indicated in the appraisal reports as of the end of the 31st fiscal period ended on August 31, 2017 by twelve, respectively. ��

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Offices53.7%

Retail Facilities

16.5%

Residential Properties

10.2%

Logistics Facilities

5.5%

Hotels and Others14.1%

Greater Tokyo Area70.2%

6 Central Tokyo Wards

40.7%

Remaining Tokyo Wards

10.6%

Other Parts of the Grteater Tokyo Area

18.9%

Other Areas29.8%

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Fixed rent96.5%

Variable rent3.5%


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Name of Property

Date of Value

Appraisal Value (In thousands of yen)

Appraiser

(In thousands of yen)Content Grounds

Capitalization Method 34,100,000

Valuation by the Direct 34,600,000

(2)Gross Operating Revenue [(1)-(g)-(h)] 2,137,960

2,134,957

Fixed rent 1,050,000

Variable rent 1,084,957

0

2,134,957

(d)Utility Expense Income 0Utility expense income is not recorded as the lessee will directly pay utility expensepursuant to the lease agreement to be entered.

(e) Parking Lot Income 0 Parking lot income is not recorded as it is included in the rent revenue.

(f)Other Revenue 3,003 Base-station antenna income is included as other revenue.

(1)Potential Gross Revenue　[(c)+(d)+(e)+(f)] 2,137,960

100%

(g)Vacancy Loss 0

(h)Credit Loss 0Recording of credit loss is judged to be unnecessary considering the status of the lessee,etc.

177,261

0Maintenance expenses comprised of cleaning expenses, facility management expenses andsecurity expenses are not recorded as it shall be borne by the lessee pursuant to the leaseagreement to be entered.

0Utility expenses are not recorded as it shall be borne by the lessee pursuant to the leaseagreement to be entered.

72,435Recorded considering management plans in the future and the fee level of similar propertiesas well as annual average amount of renewal maintenance fees in the engineering report byreference to the past actual records.

8,814

Property management fee, the commission paid to the subcontractor that controls tenantand building management businesses, is recorded considering the fee rate of similarproperties and the specific characteristics of the subject property upon referring fees basedon the property management agreement to be entered.

0Tenant advertisement cost is not recorded judging cost incurred upon tenant replacementor renewal should be considered in cap rate as the building is leased to one tenant for longterm pursuant to the lease agreement to be entered.

Land 10,341 Recorded based on the documents related to tax and public dues.

Building 79,424 Recorded based on the documents related to tax and public dues.

Depreciation Assets 4,063 Recorded based on the documents related to tax and public dues.

2,184Recorded considering the insurance fee based on the insurance contract to be entered aswell as the rate of insurance fees of similar buildings

0 None.

(a)Effective Gross RevenueRecorded rent revenue considering that the rent level calculated based on the rent level andthe content of the lease agreement to be entered and attribute of lessee can be achievedstably over the medium to long term.Referrence: Annual sales amount that should be assumption of the rent level is calculated6,349,787 thousand yen.

(b)Common Service Fees Revenue

Hotel Universal Port

January 1, 2018

34,100,000

Japan Real Estate Institute

Item

(p)Other Expenses

(c)　[(a)+(b)]

Hotel Occupancy RateAs for building leasing related to hotel, it is common to enter contracts under theassumption that management will be conducted over the long term. No vacancy loss isrecorded as the vacancy risk associated with tenant departure is considered appropriategiven the cap-rate adapted.

(3)Operating Expenses [(i)+(j)+(k)+(l)+(m)+(n)+(o)+(p)]

(i)Maintenance Expenses

(j)Utility Expenses

(k)Repair Expenses

(l)Property Management Fee

(m)Tenant Advertisement Cost

(n)Tax and Public Dues

(o)Casualty Insurance


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1,960,699

3,500

Assessed by multiplying the remaining amount of the deposit according to the fixed-termlease agreement to be entered by its management yield. Management yield consideredappropriate for fund management during the deposit period is assessed as 1.0% withconsideration to the interest rate levels of both fund management and procurement.

170,739

Renewal costs necessary for functional maintenance of buildings actually incur irregularlybut are calculated under an assumption that expected expenditure is accumulated everyterm on average, considering the level of capital expenditure and age of similar propertiesand annual average amount of repair and renewal costs in the engineering report.

305,000

Renewal costs necessary for functional maintenance of FF&E actually incur irregularly butare calculated under an assumption that expected expenditure is accumulated every termon average, considering the level of FF&E reserve and plans on strategic investment insimilar properties.

1,488,460

4.3%

Cap rate is assessed considering uncertainty in the future and transaction yields of similarproperties with adjustment for spread arising from the competitiveness as a hotel such aslocational condition and building conditions including age, gross floor area and equipmentlevel of the subject property as well as terms and conditions of contracts, rights of the landand building and other conditions based on the base rate in each area which is set by theappraiser.

33,500,000

4.1%Calculated comprehensively considering specific characteristics of the subject property byreferring to investment yields for transactions of similar properties and others.

4.5%

Assessed comprehensively considering future trends of investment yields, risks in thesubject property as an investment target, general forecasts for economic growth rate andtrends in property prices and rents, etc. by referring to transaction yields of similarproperties and others.

13,500,000

60.2%

39.8% Including furniture, fixtures, and equipment

(4)Net Operating Income [(2)-(3)]

(q)Profit from Managing Security Deposit

(s)FF&E Reserve

(5)Net Revenue [(4)+(q)-(r)-(s)]

(6)Cap Rate

Determined using the Income Approach Value with the Cost Approach Value used only for referenceconsidering that the Income Approach Value is more convincing because the price determination process isaccurately reproduced with respect to earnings.

(r)Capital Expenditure

Discount Rate

Terminal Cap Rate

Cost Approach

Ratio of Land

Ratio of Building

Any special considerations made in the reconciliation ofestimated value

DCF Method

REIT Issuer: Teruo Ozaki Executive Director ORIX … · Deluxe Room . Disclaimer: ......

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Transcript of REIT Issuer: Teruo Ozaki Executive Director ORIX … · Deluxe Room . Disclaimer: ......