Items to be reviewed in investment decision
In deciding each of investments, Hankyu Hanshin REIT, Inc. shall conduct analyses based on objective research data, such as market research, and make a forecast of future cash flow for income and expenditures of portfolio properties. In addition, Hankyu Hanshin REIT shall take into account the potential effects of the said portfolio properties on the overall portfolio, and shall conduct thorough due diligence in accordance with the following investment criteria for a comprehensive review.
※This table can be scrolled horizontally.
|Retail-use facility||Office-use facility||Complex facility|
|Site Location||Urban type||Located in urban sites with a concentration of city functions||Located in urban sites with a concentration of offices
Hankyu Hanshin REIT shall make a decision after comprehensive consideration of the above factors, as well as trends in rent markets, convenience, visibility, among others.
|For complex facilities, which combine retail-and office-use zones, Hankyu Hanshin REIT shall make a decision after comprehensive consideration of the criteria for both zones.|
|Suburban type||Located in suburban sites|
|Hankyu Hanshin REIT shall make a decision after comprehensive consideration of the above factors, as well as the current/future market areas, population, number of households, traffic access such as flow lines and commuting time, the status of competitors, and other factors.|
|Traffic Access||Urban type||Within walking distance from commuter hubs||Within walking distance from commuter hubs|
|Suburban type||In general, within 30 minutes distance from commuter hubs|
|Total Floor Area||Urban type||In principle, 500m² or larger||In principle, 3,300m² (about 1,000 tsubo) or larger|
|Suburban type||In principle, 3,300m² (about 1,000 tsubo) or larger|
|Amount of Investment||In principle, one billion yen or more
(purchase price only; does not include expenses and others ancillary to the purchase).
|In principle, one billion yen or more (purchase price only; does not include expenses and others ancillary to the purchase).|
|Building Age||In principle, 30 years or less
However, if a facility fulfills the functions necessary for its use, or is considered to be able to fulfill such functions by post-acquisition improvements, Hankyu Hanshin REIT shall be able to acquire a property that is more than 30 years old.
|In principle, 30 years or less
However, if the facility's building quality is improved by major repairs and others, or is expected to be improved by post-acquisition improvements, Hankyu Hanshin REIT shall be able to acquire a property that is more than 30 years old.
|Condition for Properties with a Core Tenant||The core tenant must be a listed company or a corporation that has comparable credit standing, and the property must be able to be converted into other uses or sold at the time the core tenant moves out. Core tenant refers to a tenant that occupies 30% or more of a property's leasable area.|
|Occupancy Rate||In principle, the occupancy rate shall be 80% or more. However, Hankyu Hanshin REIT shall be able to invest in a property with less than 80% occupancy rate if it determines, on a basis of market research or other methods, that there is an adequate chance of an increase in the occupancy rate in the future. With respect to market research, Hankyu Hanshin REIT shall, as necessary, commission an independent third-party institution.|
|Tenants||Tenants shall have credit of a certain level or more, or shall provide sufficient deposits, among meeting other conditions. Confirmation shall be made or contractual measures shall be taken to ensure prevention of transactions with anti-social forces.|
|Rights and Other Matters||
|Equipment Conditions||With respect to equipment of investment-target facilities, such equipment is required to be equivalent to or above the standard that meets tenant needs in the use of the facility, as well as versatile and easily convertible. Hankyu Hanshin REIT shall conduct detailed examinations (due diligence) on the management of such equipment and to use the results as a basis for Hankyu Hanshin REIT's evaluation, and examine risk factors.|
|Acquisition Price||Hankyu Hanshin REIT shall determine the acquisition price on a case-by-case basis based on real estate appraiser's appraisal value, and by taking into account the investment criteria. However, in the case of the transaction with the interested parties, Hankyu Hanshin REIT shall comply with criteria and procedures set forth in our Conflict of Interest Transactions Rules.|
|Earthquake-Resistance Capacity||In principle, PML* of individual property shall be 20% or less. However, investment shall be possible if it is expected that the property is able to fulfill requirements through post-acquisition work to strengthen earthquake resistance and others.|
|Environmental Analysis||With respect to toxic substance investigation for investment-target facilities, Hankyu Hanshin REIT shall conduct a careful investigation and shall review individual cases by taking into account the condition of use and other factors. Hankyu Hanshin REIT shall only invest in a property that has been determined to have no or little possibility of soil contamination as a result of the land history investigation, or a property in which measures necessary for land improvement etc. have been made.|
|Property use||If a hotel-use portion is included in a retail-use zone, it can only be an investment target if the facility allows for the conclusion of a lease agreement that contains provision that enables Hankyu Hanshin REIT to avoid the management and operational risks of the hotel. Also, the share of the hotel-use portion with respect to the entire assets under management of Hankyu Hanshin REIT shall not exceed 20% in principle. Moreover, the tenants of the hotel-use portion shall be prudently selected based on consideration of all-round creditworthiness, including operational capacity and experience as a hotel operator, financial position, and recognition of brand.|
- Although there is no single precise definition of PML (Probable Maximum Loss), in this website PML refers to the percentage of the expected amount of loss that may result from a large earthquake that occurs once every 475 years (annual exceedance probability: 0.21%) to the replacement cost (the cost of rebuilding the existing building at the time of the investigation). However, the expected amount of loss shall be the direct loss of building only (structural parts, non-structural parts, and construction equipment) caused by seismic movements, and shall not include secondary damage such as damage to equipment, furniture, or fixtures, or post-quake losses caused by water or fire, compensation for victims, operating loss caused by suspension of operation, and other losses.
Investment in properties under development
Hankyu Hanshin REIT shall in principle invest in real properties and other properties that are being used for lease at the time of acquisition, and shall not regard non-operating real properties and others as an investment target. However, even if a property is still non-operative, or under contemplation or construction, Hankyu Hanshin REIT may invest in the property if it is determined that sufficient tenants can be secured after completion, and that a stable income can be expected after the start of operation.
Investment in real estate-backed securities
Hankyu Hanshin REIT shall consider investing in real estate-backed securities if one of the following conditions is fulfilled:
- Sufficient stability in income from the securities can be expected; or,
- Acquisition of the underlying real estate (facility) of the securities can be considered at the time of redeeming the securities (or at the end of the scheme).