Collective Support from Sponsor Companies
Asset Management Company, through its asset management services for JEI, pursues to maximize JEI's unitholder value in cooperation with its sponsor companies that specialize in variety of real estate businesses including development, leasing and property management, and that have extensive expertise in financial businesses.
A. Sponsor Companies with Strengths in Real Estate and Finance
Nippon Steel Kowa Real Estate and The Dai-ichi Life Insurance Company have agreed to establishing, a partnership structure, etc. that includes cooperating with JEI’s asset management and sending executives and stuff to the Asset Management Company, etc., under the Agreement on REIT Operations.
On this agreement, the Asset Management Company receives funds from the sponsor companies who each have strengths in real estate and finance, and, in addition, will receive various support on the operations, knowhow, etc., of the sponsor companies related to human resources, property acquisition, pipeline and warehousing functions, financial knowhow of financial sponsor, the macro economy, etc. research such as the economy, interest rates, and foreign currency trends, etc.
B. Core Sponsors with Track Records in Office Building Development, Investment, Management
Nippon Steel Kowa Real Estate and The Dai-ichi Life Insurance Company have been designated as core sponsors, and the Asset Management Company is able to receive the human resources, as well as knowhow regarding real estate development, management, risk management capacities, etc., and it can also receive support for expanding investment opportunities and management aiming for asset value increases. The Asset Management Company also receives personnel, etc., from The Dai-ichi Building Co., Ltd. Mizuho Trust & Banking Co., Ltd. and Mizuho Bank, Ltd. in addition to the two core sponsors.
C. Collaborate with and Utilize the Relationships with Sponsor Companies
Since its establishment, JEI has collaborated with and utilized the relationships of the Asset Management Company’s sponsor companies to expand and enhance the portfolio.
Portfolio Comprised Mainly of Office Buildings in Major Metropolitan Areas
JEI invests primarily in office buildings located in major metropolitan areas and pursues portfolio management that seeks stability and expansion of revenues by acquiring properties with selected investment closely monitoring real estate market trends.
JEI invests in office buildings over 90% of its portfolio
|Use (*1)||Investment Ratio in Portfolio (*2)|
|Office buildings||90% or more|
|Others (Commercial facilities, Residence, etc.)||10% or less|
- The use is determined based on the majority of the use of leasable floor space in respective real estate related assets. The total acquisition price of respective real estate related assets is accounted for in the calculation of investment ratio.
- Investment ratio in portfolio is the percentage of total acquisition price of real estate related assets by use against the total acquisition price of the entire portfolio. There may be cases, however, in which the investment ratios by use of real estate related assets owned by JEI temporarily deviate from the above stated ratios due to economic conditions, real estate market conditions, and other factors related to individual properties.
The six central wards of Tokyo and other major metropolitan areas are the target investment areas
|Target Investment Areas||Investment Ratio in Portfolio (*2)|
||80% or more|
||50% or more of the core areas|
||50% or less of the core areas|
||50% or less of the core areas|
||20% or less|
Commercial facilities and Residence, etc.
|Commercial facilities||Real estate located in the central districts of cities with populations of 1 million people or more at the time of investment decisions|
|Residence||Real estate located in Tokyo|
- Central Osaka refers to the areas within about a 10-minute walk from JR Osaka Station, Umeda Station (Hankyu Railway, Hanshin Electric Railway, and Osaka Metro), Yodoyabashi Station (Osaka Metro) or Hommachi Station (Osaka Metro), respectively. Central Nagoya refers to the areas within about a 10-minute walk from Nagoya Station (JR, Nagoya City Subway, and Nagoya Railroad), Fushimi Station (Nagoya City Subway), or Sakae Station (Nagoya City Subway and Nagoya Railroad), respectively. Central Fukuoka refers to the areas within about a 10-minute walk from Hakata Station (JR and Fukuoka City Subway), Tenjin Station (Fukuoka City Subway) and Nishitetsu Fukuoka Station (Nishi-Nippon Railroad), respectively. They are, however, not always in line with administrative districts.
- Investment Ratio in Portfolio is the percentage of total acquisition price of real estate related assets that belong to particular use against the total acquisition price of the entire portfolio. There may be cases, however, in which the investment ratio by use of real estate related assets owned by JEI temporarily deviate from the above stated ratios due to economic conditions, real estate market conditions, and other factors related to individual properties.
Specific Criteria for Investment
Investment decision will be made upon comprehensively analyzing and considering target investment real estate scale, specifications, profitability, holding risks, etc., upon sufficiently understanding locational characteristics and related real estate market trends, etc.,
In addition, after acquisition, the enhancement of competitiveness is made by conducting continuous and effective investment in facilities to maintain and improve the asset value and competitiveness, and by conducting various measures and cost reduction measures to expand revenues.
|Property scale||In principle, total floor area to be approximately 1,000 tsubo (approx. 3,305.79 ㎡) or more, and leasable floor area for a standard floor to be approximately 100 tsubo (approx. 330.58 ㎡) or more|
|Quake resistance||Complying with the new earthquake-resistance standards or meeting equivalent or superior earthquake- resistance standards|
|Profitability||Prospect of stable revenue streams in the long run|
|Tenant composition||Comprehensively consider tenant creditworthiness, conditions of lease agreements, substitutability, etc.|
|Environmental||Decide taking the following into consideration|
|Other||Make considerations to keep the amount for each investment at 30% or less of the entire portfolio|
Policies on Holding Periods and Sale
The basic policy is to hold properties for the medium- to-long term. The sale of individual assets is decided upon comprehensively in consideration of portfolio composition, medium- to long-term real estate market conditions, revenue forecasts, asset value changes and forecast, the future and stability of the area, expected capital expenditures on the real estate’s degradation or deterioration, etc., in addition to the impact, etc., that a sale could have on business results.
Developmental Project Initiatives
JEI engages in developmental projects by carefully selecting investment opportunities while not limiting projects to properties already occupied.
However, developmental projects are to be acquired upon minimizing risks and confirming that tenants would be secured sufficiently upon the completion of construction, in addition to taking measures to reduce completion and delivery risks, development risks, etc. In order to do this, sponsor companies’ knowhow specialized in finance and real estate is utilized as necessary, and various financial methods and the latest investment technologies that can be utilized in the real estate market are also considered.
Property Survey (Due Diligence) Standards
When acquiring properties, decisions are made by considering the compatibility with the investment policies and property selection standards, upon reviewing real estate appraisal documents, price investigation reports, building condition survey reports, earthquake risk survey reports, market reports, and other various reports, etc. prepared by external experts. In addition, JEI also checks to see if there are any major issues such as violations of relevant laws and regulations, etc., related to real estate.
Furthermore, earthquake-resistance standards and earthquake risk examinations and surveys are conducted for all property acquisitions.