ORIX Jreit Inc. · TSE:8954
ORIX Jreit — 17th Fiscal Period Earnings Presentation
44 slides from ORIX Jreit's earnings presentation, Oct 21, 2010
Slide 1: 17th Fiscal Period Results (ended August 31, 2010)
October 21, 2010 ORIX Asset Management Corporation 0 (ended August 31, 2010)
Slide 2: External growth, internal growth and finance strategy highlights
1 External Growth ・Acquired properties/replaced assets for greater stability and profitability Acquired 8 properties and sold 4 properties, realizing approx. ¥27.5 billion in external growth ・Established new growth strategy to promote a diversified JREIT (Planning to recommence investment in resid
Slide 3: Summary of Results for the 17th Fiscal Period
Summary of Results for the 17 Fiscal Period (Ended August 31, 2010)
Slide 4: 17th period results versus forecast
3 Item 17th period (Aug 2010) Income-Boosting Factoｒs (million yen) Change (Million Yen) Forecast Actual ・ Contribution from unforseen acquisition + 22 of one property Operating Revenues 11,522 11,701 179 ・ Contribution from unforeseen sale of two + 57 properties Operating ・ Disparity in forecast ut
Slide 5: 17th period results versus 16th period
th th 4 Item 16th period 17th period Income-boosting Factors (million yen) Change (Million Yen) (Feb 2010) (Aug 2010) ・Contribution from 7 properties acquired + 721 ・Contribution from 4 properties sold + 863 Operating Revenues 9,790 11,701 1,911 ・Decrease in depreciation expenses from + 37 existing
Slide 6: 18th and 19th period forecasts
5 Item 17th Period 18th Period Forecast Change 19th Period Forecast Change (Million Yen) Aug 2010 Feb 2011 17th to 18th Aug 2011 18th to 19th Operating Revenues 11,701 10,632 ▲ 1,069 10,789 157 Operating Income 5,887 4,771 ▲ 1,116 4,615 ▲ 155 Net Income 4,308 3,269 ▲ 1,038 3,071 ▲ 198 Distribution p
Slide 7: Operating Conditions During the Fiscal Period
Operating Conditions During the 17 Fiscal Period (Ended August 2010)
Slide 8: External growth policy: acquisitions and sales
7 ・Outlook for office leasing market remains unclear Current Conditions ・Cap rates becoming more stabilized in real estate market, providing good opportunity for external growth External Growth Policy Stepping up asset replacement and property acquisition for greater stability and profitability Resu
Slide 9: Exceptional handling of taxation for in-advance land acquisition
[Reference] Application of Exceptional Handling of Taxation in the Event of In-Advance Acquisition of Land, etc. in 2009 and 2010 for Future Use 8 Conditions OJR’s Case (1) Acquisition of land, etc., in 2009 or 2010 Acquired 2 properties below in FP15 (ended Aug. 2009) ORIX Real Estate Omiya Nishi S
Slide 10: Acquired property: Meguro building
9 ■Excellent location for convenient transport and high profile ・Six minutes’ walk from Meguro station with access to a number of lines: JR, Tokyo Metro, Toei subway, and Tokyu lines ・Close to Meguro Dori and Yamanote Dori avenues; easy access to Meguro ramp of Metropolitan Expressway Route No. 2 Me
Slide 11: Acquired property: Sapporo building
10 ■Located in Sapporo City’s Chuo Ward, at the heart of Hokkaido ・Chuo Ward in Sapporo City is the center of politics, economics, and culture in Hokkaido. It is Hokkaido’s premier business area where a large number of government offices and branches of financial institutions and major companies are
Slide 12: OX Tamachi Building and Omiya Shimocho 1-chome Building
11 OX Tamachi Building Omiya Shimocho 1-chome Building Location Omiya-ku, Location Minato-ku, Saitama-City, Tokyo Saitama Acquired March 29, 2010 Acquired March 29, 2010 Price ¥6,730 million Price ¥3,750 million Built January 1986 Built August 2009 Floors 10 floors Floors 8 floors Land Area 1,061.21
Slide 13: Sakai Logistics Center North Building and Kobe property
12 Sakai Logistics Center North Building ① ② ③ ④ ⑤ Location Sakai-ku, Location Tarumi-ku, Sakai-City, Kobe-City, Osaka Hyogo Acquired March 30, 2010 Acquired March 5, 2010 Price ¥10,200 million Price ¥3,260 million Built July 2009 Land Area 59,940.76㎡ Floors 4 floors Bought O. M. One from Land Area
Slide 14: aune Kohoku and aune Makuhari
13 aune Makuhari Location Tsuzuki-ku, Location Mihama-ku, Yokohama-City, Chiba-City, Kanagawa Chiba Acquired March 10, 2010 Acquired March 10, 2010 Price ¥4,000 million Price ¥3,600 million Built March 2008 Built February 2008 Floors 7 floors 2 B Floors 6 floors 1 B Land Area 1,267.47㎡ Land Area 2,0
Slide 15: Rent revision status and office rent levels
14 Rent RentRevision RevisionStatus Status(by (byFloor FloorArea) Area) Revision-Based Rent Trends Floor area covered Rent increase (existing tenant) Lease renewals by lease renewals Rent increase (new tenant) Rent adjustment (monthly and new leases base) （％） New leases during each fiscal No change
Slide 16: Occupancy rates and tenanted/vacated area
15 FP17: Occupancy rates maintained at a certain level despite rising vacancy rates in the market FP18: Tenant cancellations increased in Oct 2010, but afterwards the area and number of cancellations became stabilized throughout the period Occupancy Rates and Tenanted / Vacated Area （％） All Offices
Slide 17: Portfolio diversification by property type
16 Due to high occupancy rates and strong profitability, non-office use contributes to improving portfolio stability Portfolio Diversification (as of the end of 17th period) Trends in Occupancy Rates by Property Type (Acquisition Price Basis) Offices Logistics Retail Hotel Other Non-office propertie
Slide 18: Leasing NOI yield trends
17 Leasing NOI yield, all properties Leasing NOI yield of the 27 properties continuously Leasing NOI yield of newly acquired properties held from the end of the 6th fiscal period through to in the initial fiscal period of acquisition (based on the account settlement announcement day of the 17th the
Slide 19: Interest-bearing debt and loan-to-value ratio
18 Outstanding Interest-Bearing Debt, Loan-to-Value Ratio Composition of Interest- Investment bearing Debt as of Oct. Corporation Short-term 20, 2010 Borrowing 16th End 17th End Oct. 20, 2010 Bond (billion yen) 13.8 Outstanding Interest- 17.0 bearing Debt (¥ million) 138,437 144,868 149,105 (11.4%)
Slide 20: Credit ratings, bonds and list of lenders
19 Credit Ratings S&P Long-term rating: A-, Short-term rating: A-2 Outlook: Stable R&I Issuer rating: A+ Rating outlook: Stable Commitment Line Commitment line of debt set at ¥15.0 billion in total provided by three financial institutions Investment Corporation Bond Balance Interest Issued Redemptio
Slide 21: Unrealized gain/loss on appraisal values
20 8th 9th 10th 11th 12th 13th 14th 15th 16th 17th (End of (End of (End of (End of (End of (End of (End of (End of (End of (End of Feb 2006) Aug 2006) Feb 2007) Aug 2007) Feb 2008) Aug 2008) Feb 2009) Aug 2009) Feb 2010) Aug 2010) Number of properties 39 41 40 44 43 47 48 49 49 52 Appraisal value (b
Slide 22: Unitholder composition
21 16th 17th Change Unitholder Share Share Share 個人・その他 Individuals, etc. 金融機関 Finance 証券会社 Securities Categories Units Units Units （ %） （ %） （ %） その他法人 Other Corp. 外国法人等 Overseas Individuals, etc. 41,133 16.35 45,323 18.01 4,190 10.19 Finance 127,897 50.83 133,163 52.92 5,266 4.12 1.16% 2.53% Major
Slide 23: Future Policies and Strategies
Future Policies and Strategies
Slide 24: Building a solid portfolio adaptable to environmental changes
23 (1) Flexible/mobile external growth strategy, keeping step with changes in the environment Change in portfolio policy (minimum office investment, recommencement of investment in residential) (2) Step up pace of external growth Aiming at 500 billion yen in assets, increasing stability and liquidit
Slide 25: Change in portfolio construction policy
24 ・Portfolio construction policy has been changed. It is to increase the scope for a diversification of property use, which is the strength of a diversified JREIT, and to establish a business structure that can make flexible and mobile acquisition of real estate for various uses with different prof
Slide 26: Stepping up the pace of external growth
25 • Stepping up pace of external growth by broadening the investment range • Expanding asset size, in order to reduce risk related to individual properties or tenants (to enhance stability) and to increase liquidity in JREIT market OJR External Growth Trends (Acquisition price basis) Target: (billi
Slide 27: Investment and management policy by sector
Formulate and Implement Investment / Management Policy based on Cash Flow Features of Each Sector 26 • ORIX Group has the expertise and business network cultivated in the finance business and the real estate development/management skills fostered as a developer. Will apply these to asset management.
Slide 28: Integration of ORIX Group expertise
27 Financial services business Real estate-related business Development, leasing and investment of Development, office buildings Real estate leasing and investment of finance logistics facilities Development, ＯＡＭ Development, leasing and operation and investment of rehabilitation retail facilities o
Slide 29: History of ORIX Group's real estate business
28 History of ORIX Group’s Real Estate Business Balance of Leased Real Estate Assets in Real Estate Segment (billion yen) Business network/expertise cultivated in financial business Office 331.0 Office Logistics Retail Residential Logistics 51.2 1985 1986: Dormitory rental Retail 173.4 Business begi
Slide 30: Strengths of Group's residential business
29 Strengths of Group’s Residential Business Daikyo Group’s Comprehensive Strength Total housing management leveraging Group capabilities Condominium sales: Main Group company Development Extensive experience in development, DAIKYO capabilities including large-scale towers INCORPORATED Brokerage and
Slide 31: Overview of ORIX Group real estate business - retail facilities
[Reference] Overview of ORIX Group Real Estate Business - Retail Facilities 30 Strengths of ORIX Group’s Retail Facility Related Business Retail facilities-related business being developed mainly by ORIX Real Estate Location and commercial Leasing capabilities area analysis capabilities • Investment
Slide 32: Appendix
Appendix
Slide 33: Operating results
32 13th Period 14th Period 15th Period 16th Period 17th Period Millions of yen Aug 2008 Feb 2009 Aug 2009 Feb 2010 Aug 2010 Operating Revenues 10,052 10,522 11,465 9,790 11,701 Operating Income 4,713 5,039 5,838 4,502 5,887 Net Income 3,818 4,016 4,761 3,344 4,308 Unitholders' Capital 137,814 137,81
Slide 34: Appraisal value of properties at end of 17th fiscal period (1)
33 Appraisal value of properties at the end of the 17th fiscal period (1) ※Area symbol: ● 3 Central Tokyo Wards ▲ Remaining Tokyo Wards ■ Other Parts of the Greater Tokyo Area ★ Other Areas End of the 17th Fiscal Period Change from the 16th Period Type Area Property Book value Appraisal CR Gain/loss
Slide 35: Appraisal value of properties at end of 17th fiscal period (2)
34 Appraisal value of properties at the end of the 16th fiscal period (2) End of the 17th Fiscal Period Change from the 16th Period Type Area Property Book value Appraisal CR Gain/loss Change % Change CR Change Chg gain/Loss （\million） （\million） （\million） (\million) (\million) ■ Koshigaya Logistic
Slide 36: Comparison with the 16th fiscal period
35 Comparison with the 16th Fiscal Period Change in Type NCF Change CR CR Change Appraisal Offices -2.7% -3.1% 5.0% 0.0% Logistics Facilities 0.2% 0.2% 5.6% 0.0% Retail Facilities -0.5% -0.4% 4.6% 0.0% Hotels 1.5% 1.4% 6.4% 0.0% Others (Residentials) -0.2% -0.6% 6.0% 0.0% Total -2.2% -2.4% 5.2% 0.0%
Slide 37: List of all real estate held
36 List of all real estate held by ORIX JREIT as of October 20, 2010 Acquisition Acquisition GFA Price Ratio GFA Price Ratio Ty pe Area Name of building Address (㎡) Year Built (JPY mn) (%) Ty pe Area Name of building Address (㎡) Year Built (JPY mn) (%) Aoyama Suncrest Bldg. Minato-ku, Tokyo 2,768.55
Slide 38: Portfolio Map
Portfolio Map 37 AP Yanan Nivonbashi Eat uiking e Chyo ward ee FO es i a ithe Grove towaa AL é Fouts Tok ga neve Mia Aetna Bing Aofea 26 Bang | a try Pk Ae Nat Azabu Sage \ Round fess Minami Azabu ound oroS Mita ‘Minato ward ‘9px shiva 2-chome Buling } e Biside Stirogane _/Gx Tansch Buldng (© (be ac
Slide 39: Sale and acquisition property size, price and building age
38 Average Sales/Acquisition Price after IPO Property Size (Floor area) Under 3,000 m2 Under 3,000 m2 8.3% 7.35 13.6% Over 15,000 m2 Over 15,000 m2 Billion yen 40.3% 28.8% Average Average 15,734 23,256 3,000 m2 to ㎡ ㎡ 3.07 15,000 m2 3,000 m2 to Billion yen 46.0% 15,000 m2 62.9% Sale Sales Acquisitio
Slide 40: Portfolio by area and type
39 Area Type Other Area Others Others 2.1% Hotels Retail Hotels 1.2% Other Area 4.1% facilities 4.9% Other Parts of the 16.0% 15.1% 5.2% Greater Tokyo Area 17.3% 3 Central Retail facilities Logistics 3 Central Other Parts of the facilities Tokyo Greater Tokyo Area Tokyo 1.5% Wards 10.5% Wards 19.3%
Slide 41: Top tenants
40 Top 10 Tenants as of 17th Period End (Reference) As of 16th Period End Share of Total Share of Total Rented Space Rented Space Name of Tenant Sector Property Name Rented Space Name of Tenant Rented Space (㎡) (㎡) （ ％） （％） NIPPON EXPRESS Co., Trans- Sakai Logistics Center 1 64,004.80 14.3 1 SENKO C
Slide 42: Depreciation, CAPEX and cash balance
41 13th Period 14th Period 15th Period 16th Period 17th Period (Million yen) Aug 2008 Feb 2009 Aug 2009 Feb 2010 Aug 2010 Depreciation 1,773 1,874 1,910 1,896 2,069 Repair and Maintenance Costs 143 112 124 91 159 CAPEX 159 69 272 82 78 Cash and Cash Equivalents 20,843 22,016 8,444 27,558 12,251 Depr
Slide 43: Disclaimer
42 This document provides supplementary information intended to be helpful in understanding the financial situation, and was prepared and released solely with the intent of providing information. This document should not be construed as an offer or solicitation to buy or sell any specific product, i
Slide 44: Asset management company and investor notices
43 When an investor accepts solicitation for subscription or buys or sells OJR’s investment units/investment securities, the investor may be required to pay fees set by the securities dealer in addition to the actual price of the investment units or investment securities (for instance, brokerage com
ORIX JREIT — 17th Fiscal Period Earnings Presentation on 6ix