For Immediate Release
January 29, 2015
Advance Residence Investment Corporation (Securities Code: 3269)
3-26 Kanda Nishiki-cho, Chiyoda-ku, Tokyo
Kenji Kousaka, Executive Director
Asset Management Company: AD Investment Management Co., Ltd.
Kenji Kousaka, President
Inquiries: Tomoyuki Kimura, Director, General Manager Corporate Management Department
TEL. +81-3-3518-0480
Follow-up Summary of the Property Replacements
Because Advance Residence Investment Corporation (ADR) announced today its decision to additionally acquire nine properties in the press release titled "Notice Concerning Acquisition of Investment Assets (RESIDIA Minami-Shinagawa and 8 Other Properties)," ADR would like to give a follow-up on the press release titled "Summary of the Property Replacements" dated December 25,
2014. The follow-up in the attachment will comprehensively detail the significance and the expected effects on the performance of the fund from the series of replacement executed or announced during the fiscal period ending January 2015 (the asset replacements).
Please refer to the attachment "The Effect of the Property Replacements".
ADR will announce management performance for fiscal period ending January 2015 and forecasts for fiscal period ending July 2015 and January 2016 after reviewing forecast assumptions in March 12,
2015, when announcing the results for the fiscal period result ending January 2015.
• The Effect of the Property Replacements
* The original Japanese version of this material is released today to the Kabuto Club (the press club of the Tokyo Stock Exchange), the Ministry of Land, Infrastructure, Transport and Tourism Press Club, and the Ministry of Land, Infrastructure, Transport and Tourism Press Club for Construction Publications.
* URL: http://www.adr-reit.com/en/
[Provisional Translation Only]
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.
1
The Effect of the Property Replacements January 29, 2015 Advance Residence Investment CorporationExecutive Summary 1
Improvement in the quality of portfolioAcquisitions Dispositions |
Number of properties 34 6 |
Total acquisition price（Note 1） 35.8 bn yen 29.3 bn yen |
NOI yield（Note 2） 5.7% 4.4% |
Yield after depreciation（Note 3） 4.7% 3.5% |
Unrealized profit and loss（Note 4） Profit：3.5 bn yen Loss：4.0 bn yen |
Building Age（Note 5） 6.8 yrs 17.4 yrs |
Replaced Assets
Announced
Today
To-be-Acquired Assets
Property replacements executed in FP Jan 2015
Acquisition ： 25 Properties
Disposition ： 6 Properties
Properties to be acquired in FP July 2015
Acquisition ： 9 Properties
Refer to Page 2 for details Refer to Page 3 for details
Acquisition
25 Properties 22.2 billion yen（Note 1）
Disposition
6 Properties 29.3 billion yen（Note 1）
Recently Built and High yield profitability Aged or Relatively Low Yield
Ex. RESIDIA Shin-Osaka
（Note 6）
Annualized NOI bn yen
Ex. Tokyo Student-House Hiyoshidai
（Note 6）
Annualized NOI bn yen
NOI Yield
5.9 %
NOI Yield
4.4 %
（Note 2）
（Note 2）
Building Age
7.3 yrs
Building Age
17.4 yrs
（Note 5）
（Note 5）
Major Regional Cities
（Note 2）
NOI Yield：6.4 %
Tokyo 23 Wards
（Note 2）
NOI Yield：5.2 %
52 %
Acquisition
Price
11 %
38 %
Tokyo
Metropolitan Area
（Note 2）
NOI Yield：6.4 %
Avoiding Competition using Various Sources
・Sourcing properties from sponsors
・Utilizing Bridge Funds
・Utilizing ADR's own sourcing routes
Executed Dispositions
by taking advantage of the Active Market
Total Gains on Sales is estimated to be 692 million yen
（532 yen per unit）
External Growth After FP Jan 2015 3
Aiming to improve EPS managing Acquisition capacity
Appraisal LTV
after the Property Replacement
（Note 7）
Acquisition Capacity
（Note 7）
28.3 bn yen
To-be-Acquired Assets in FP July 2015
Candidate for Acquisition
In Future
Announced
Today
Recently Built
and located in Tokyo 23 Wards
（Note 1）
properties bn yen
Developed by ITOCHU Group Properties
（Note 8）
25 properties mainly in Tokyo 23 wards
Ex. Chester Court Ochanomizu
（Note 6）
Annualized NOI bn yen
Direct Sourcing from Market
（Note 2）
NOI Yield
（Note 5）
Building age
5.2 %
6.0 yrs
Information Rich Sourcing Networks
About 100 cases of property information every month
Portfolio
As of
July 31, 2014
Property Replacements in FP Jan 2015
Acquisition Disposition
As of
Jan 31,
2015
To-be- acquired Assets
After the Property
Replacement
No. of properties 221 25 6
240 9
249 (+ 28)
Asset under
management（Note 1） 417.6 bn yen 22.2 bn yen 29.3 bn yen
NOI Yield（Note 2） 5.6 ％ 5.9 ％ 4.4 ％
410.5 bn yen
5.7 ％
13.6 bn yen
5.2 ％
424.1 bn yen (+ 6.5 bn yen)
5.7 ％ (+ 0.1pt)
Yield after
depreciation（Note 3） 4.4 % 4.8 ％ 3.5 %
4.5 ％
4.5 ％
4.5 ％ (+ 0.1pt)
Unrealized profit and loss (Note 4)
35.2 bn yen 2.3 bn yen
△4.0 bn yen
(Loss)
41.6 bn yen
1.2 bn yen
(Profit)
42.8 bn yen (+ 7.5 bn yen)
Building Age（Note 5） 9.4 yrs 7.3 yrs 17.4 yrs
9.2 yrs
6.0 yrs
9.3 yrs (△ 0.1 yrs)
Other Key Performance
Indicators
FP
July 2014
FP Jan 2015
Revised Forecast
FP Jan 2015
（Estimate）
After the Property
Replacement
NAV per unit（Note 4） 182,367 yen
Acquired
16 Properties
Disposed
183,081 yen
Acquired
9 Properties
Disposed
187,236 yen
Acquired
9 Properties
188,163 yen (+5,796 yen)
Appraisal LTV（Note 7） 50.1 ％
1 property
51.3 ％
5 properties 48.7 ％
50.1 ％ (-)
Earnings per unit 4,523 yen 5,100 yen *
Dividend per unit 4,593 yen 5,130 yen *
• Management performance for FP Jan 2015 will be announced in March 12, 2015.
• The management performance forecast for FP ending July 2015 remains unchanged from the published forecast because the effect of the property replacement will be small.
An official forecast for FP ending July 2015 will be announced on March 12, 2015.
* Figures from the revised forecast announced on November 28, 2014 is listed in the FP Jan 2015 revised forecast for earnings per unit and dividend per unit.
The figures should not constituted as cruising speed figures. Because the figures include one-off gains from sales. There has also been additional 18 property acquisitions and 5 property dispositions since
the announcements of the forecast.
Note 5
※Monetary amounts are rounded down. Other figures are rounded at the second decimal place.
(Note 1) Based on the acquisition price. Disposition amount uses appraisal price of February 2010 for properties held by Nippon Residential Investment Corporation before the merger.
(Note 2) NOI Yield for FP Jan 2015 and after the property replacements are calculated as;
(Total Annualized Actual NOI for FP July 2014 Portfolio + Total Annual NOI listed in the appraisal of the acquired (to- be-acquired) properties at the time of acquisition - Total FP July 2014 Annualized Actual NOI for the disposed properties) ÷ (Book value of the portfolio at the end of FP July 2014 + Total Acquisition price of the acquired (to-be-acquired) properties - Book value of the disposed properties at the end of FP July 2014)
(Note 3) The yield after depreciation of the acquired (to-be-acquired) assets are calculated by dividing the total annualized appraisal NOI at acquisition minus depreciation, by the total acquisition price.
Depreciation of the to-be-acquired assets are estimated using same straight-line method as the portfolio.
The yield after depreciation for the disposed properties is calculated by dividing the total FP July 2014 annualized actual NOI minus FP July 2014 annualized depreciation, by the total July 2014 fiscal-end book value of the disposed properties.
The yield after depreciation for the existing portfolio at the end of July 2014 is calculated by dividing the total annualized actual NOI minus annualized actual depreciation by the total July 2014 fiscal-end book value.
The yield after depreciation for FP January 2015 and after the property replacements uses the same figures and calculated by the same method mentioned above, adjusted by adding the figures for the acquired (to-be-acquired) properties and subtracting the figures for the disposed properties.
(Note 4) NAV per Unit = (FP end net asset + FP end unrealized gain or loss - dividend amount for the FP) ÷ FP end number of issued and outstanding units.
The unrealized gain or loss for the existing portfolio at the end of July 2014 is calculated as follows. (FP end appraisal value - FP end book value)
The unrealized gain or loss for the to-be-acquired asset from the end of July 2014 is calculated as follows. (appraisal value at acquisition - acquisition price) There is unrealized profit if the figure is positive. There is unrealized loss if the figure is negative.
(Note 5) The building age for the acquired (to-be-acquired) properties are as of the acquisition date. The building age for the disposed properties are as of the disposition date. The average building age is an acquisition price (historical acquisition price) weighted average.
FP July 2014 building age is the historical price weighted building age of the total portfolio at the end of the fiscal period.
FP January 2015 building age is the historical price weighted building age of the total portfolio at the end of the fiscal period.
The Building age after the property replacements is a historical acquisition price weighted average age of the buildings as of April 14, 2015.
(Note 6) The NOI listed for the acquired properties is the total sum of annual NOI listed in the appraisal at acquisition. The NOI listed for the disposed properties is the sum of the annualized actual NOI for FP July 2014.
(Note 7) Appraisal LTV = (Outstanding amount of loans at the fiscal period end + Outstanding amount of bonds) ÷ Total appraisal value
Acquisition capacity is a maximum of asset that ADR can acquire at Appraisal LTV of 53%, using only debts. 53% is the upper limit of the guideline LTV of upper
40%to 53% which ADR would like to maintain for the time being.
(Note 8) "Itochu Group development properties" are rental apartment property under development by Itochu Corporation and Itochu Property Development Ltd. as of this publication date. ADR is under no obligation to acquire the properties.
Reference 6
■Press Release related to the Property Replacement
(1) Notice Concerning Acquisition of Investment Asset (RESIDIA Shin-Osaka) announced on Apr.25 2014 (2) Notice Concerning Acquisition of Investment Asset > announced on Sep.24 2014 (3) Notice Concerning Acquisition of Investment Asset > announced on Nov.7 2014 (4) Notice Concerning Acquisition of Investment Assets > announced on Nov.28 2014 (5) Notice Concerning Acquisition of Investment Assets > announced on Dec.15 2014 (6) Notice Concerning Acquisition of Investment Assets > announced on Jan.29 2015(7) Notice Concerning Disposition of Investment Asset > announced on Nov.28 2014 (8) Notice Concerning Disposition of Investment Assets> announced on Dec.25 2014 (9) Notice Concerning The Revision of Management Performance Forecast and Dividend for the Fiscal Period Ending January 2015 (the Ninth FP) announced on Nov.28 2014(10) Notice Concerning Early Repayment of Loans announced on Dec.25 2014
✴ This material contain forward looking statements on future operating results, plans, business objectives and strategies of the company.
✴ Forward looking statements provide current expectations of future events based on number assumptions and include statement that do not directly relate to any historical or current facts. Forward looking statements are not guarantees of future performance and the company's actual results may differ significantly from the results discussed in the forward--looking statements.
✴ This material is based on Japanese GAAP unless otherwise stated.
✴ This material was not created for the purpose of soliciting investment in the company. Investments should be based on your own judgment and responsibility.
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