9th Fiscal Period Semi-Annual ReportFrom May 1, 2018 to October 31, 2018
(Securities Code: 3298)
Invesco Office J-REIT, Inc.
6-10-1, Roppongi, Minato-ku Tokyohttp://www.invesco-reit.co.jp/en/
Invesco Office J-REIT, Inc.
FP1(Actual)
FP2(Actual)
FP3(Actual)
FP4(Actual)
FP5(Actual)
FP7(Actual)
FP8(Actual)
FP9(Actual)
FP10(Forecast)
FP6(Actual)
(¥)
0200400
800600
125 325 321 337 341 454 370 439 379400
We would like to express our sincere gratitude for your continued support and business with Invesco Office J-REIT, Inc. (hereinafter referred to as the “Investment Corporation”).
The Investment Corporation was listed on the Tokyo Stock Exchange on June 5, 2014, with the fundamental goal of maximizing investor value by making focused investments in large-scale office buildings located in metropolitan areas.
The Investment Corporation has completed its ninth fiscal period (ended October 31, 2018; hereinafter referred to as “FP9”), and we are pleased to report the following results.
Operating results for FP9 included operating revenues of 8,625 million yen, operating income of 4,339 million yen, ordinary income of 3,799 million yen and net income of 3,797 million yen. Distributions per unit (hereinafter referred to as “DPU”) came to 439 yen. On the asset management front, the occupancy rate for the overall portfolio was 98.0% as of the end of October 2018, due to steady leasing activities for vacant spaces in the portfolio assets.
Meanwhile, the Investment Corporation raised approximately 28,400 million yen by means of capital increases through a public offering and a third-party allotment in May 2018, the beginning of FP9. The Investment Corporation steadily pursued external growth and achieved an asset size of 200,000 million yen, which was its medium and long-term target. Such external growth was achieved with the acquisition of the IBF Planning Building, which was acquired using proceeds from the sale of the Sendai Honmachi Building, as well as the acquisition of the Nishi Shinjuku Prime Square, the Kojimachi Crystal City, the Prime Tower Shin-Urayasu and the Techno Wave 100 using proceeds from capital increase and new borrowings.
With your support, we look forward to continuing to work diligently to build a strong portfolio by making focused investments in large-scale office buildings located in metropolitan areas, while maximizing investor value by securing stable earnings over the medium and long-term and steadily enhancing the value of assets.
We ask for the continued support and encouragement of our investors as we pursue these goals.
Yugo Minemura Yasuyuki TsujiExecutive Director,
Invesco Office J-REIT, Inc.Representative in Japan,
Invesco Global Real Estate Asia Pacific, Inc.
To Our Unitholders Financial Highlights
As of the end of October 2018
Distributions
Financial Summary
¥3,797 million ¥15,591Net Income NAV per Unit (Note)
¥8,625 million
¥439
Operating Revenues
FP9 Actual DPU
¥245,448 million
¥379
Total Assets
FP10 DPU Forecast
¥4,339 million
Operating Income
¥110,378 million
Net Assets
¥3,799 million
Ordinary Income
¥12,770Net Asset per Unit
Changes in DPU
Table of Contents
(Note 1) As the Investment Corporation has not made cash distribution in excess of retained earnings, actual DPU and DPU forecast for FP10 described above do not include any portion of the amount in excess of retained earnings.
(Note 2) The Investment Corporation implemented an eight-for-one unit split with February 28, 2018 as the record date and March 1, 2018 as the effective date. For comparison, DPU for FP1 to FP7 described in the graph above are equivalent to figures which divides the actual DPU for each fiscal period by 8.
(Note) NAV per unit is calculated dividing net asset value (which includes the difference between book value and appraisal value of investment assets) by the number of outstanding investment units.
To Our Unitholders/Overview of Invesco Office J-REIT, Inc.
Financial Highlights ···································· 1
Current Major Events and Future Growth Strategy ·········································· 2
ESG Initiatives ·············································· 3
Further Diversification in the Portfolio ······ 4
External Growth··········································· 6
New Portfolio Properties in FP9 ··········· 7
Internal Growth ········································· 10
Overview of Portfolio Properties ······· 12
Overview of Portfolio Data··················· 14
Portfolio Properties ································· 15
Financial Information ······························ 20
Investment Unit Information ··············· 21
IR Activities for Retail Investors ········ 21
Asset Management Report ·················· 22
Balance Sheets ········································· 50
Statements of Income ···························· 52
Statements of Changes in Net Assets ···· 53
Statements of Cash Distributions ······ 55
Statements of Cash Flows ···················· 56
Notes to Financial Statements ··········· 57
Independent Auditor’s Report ············ 80
Overview of Invesco Group ·················· 81
Overview of Invesco Office J-REIT, Inc.1 Focused investment in large-scale office buildings in metropolitan areas
The Investment Corporation believes that metropolitan areas—centers for economic activity where companies and labor concentrate—have relatively large size of office building markets, and consequently, there are abundant investment opportunities and relatively high leasing demand can be expected.
Large-scale office buildings are believed to enjoy relatively high and stable rents paid by quality corporate tenants with ample rent payment capacity.
2 Asset management that leverages the Invesco Group’s high levels of specialization Invesco Group is one of the world’s leading independent asset managers and provides global management capabilities.
Invesco Real Estate, one business division of the Invesco Group, has accumulated asset management expertise by engaging in management of global real property direct investment and investment in real estate-related products such as publicly traded real property securities on a world-leading scale.
3 Asset management by an independent asset manager with an ample track record The Asset Manager has conducted real property investment and asset management in Japan for the past 19 years, has accumulative investment amount of approximately ¥1.2 trillion, and has experience in investment and managing as many as 128 properties.
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Invesco Office J-REIT, Inc.
Current Major Events and Future Growth Strategy ESG Initiatives
Medium-term goalsAfter 4.5 years from IPO in 2014, stabilized DPU improved by ¥101 or 38.7% and AUM increased by ¥141.8bn to 2.8 times. As its medium-term goal, the Investment Corporation aims to achieve stabilized DPU of ¥ 400 – 430.
Issuance of green bonds (Note)
In December 2018, the Investment Corporation issued green bonds by using the subsidy scheme established by the Ministry of the Environment, Japan and it was the first case for J-REITs to use such scheme. The overview of the issuance is described below. The proceeds from the issuance of green bonds was used to prepay the part of loan which the Investment Corporation borrowed to acquire Ebisu Prime Square, an eligible green property.
GRESB participationGRESB (Global Real Estate Sustainability Benchmark) was established by a group of European pension funds in order to assess the environment, society and governance (ESG) performance of the real estate sector. Invesco Group has been a member of GRESB since 2014. IOJ is preparing to join GRESB for the first time in 2019.
Green building certificationsAs one of the environmental initiatives, the Investment Corporation acquired green building certificates such as Comprehensive Assessment System for Built Environment Efficiency (CASBEE) or DBJ Green Building Certification Program by Development Bank of Japan, Inc. for the assets described below.
Nagoya Prime Central Tower
Rank S
As of January 26, 2015
Asset size
Top 5 tenant ratio
Credit rating (JCR)
NAV per unit
LTV book value
Index inclusion
¥300 - 400bn¥220.4bn at the end of FP9 (10/2018)
Up to 10%18.7% at the end of FP9 (10/2018)
AAA+ (positive) as of November 28, 2018
¥16,000 - ¥19,000¥15,591 at the end of FP9 (10/2018)
Up to 50%49.4% at the end of FP9 (10/2018)
TSE REIT Core IndexNot included at the end of FP9 (10/2018)
Medium term goal DPU target (stabilized base) : ¥400 — ¥430Adjusted FP10 (4/2019) DPU forecast (Note) : ¥365
Aiming to further improve investor value and valuation by conducting timely and effective active management initiatives
Key drivers to achieve the medium term goal
CASBEE real estate certification DBJ green building certificationThe Comprehensive Assessment System for Bui l t Environment Efficiency (“CASBEE”) is a system for comprehensively assessing and ranking the environmental performance of buildings based on a five evaluation scoring model (S rank, A rank, B+ rank, B− rank and C rank; excellent order) with regards to aspects such as the enhancement of environmental performance including consideration for the landscape, on top of the aspect of environmental consideration such as energy saving and recycling with a lower environmental burden.
The DBJ Green Building Certification System is a grading system which certifies high quality buildings that meet various stakeholders’ social requirements, such as environmental design, security and disaster prevention based on a five evaluation scoring model (from 5 stars to 1 star; excellent order) originally developed by DBJ. This system aims to promote the expansion of “Green Building” techniques which lead to a sustainable environment.
CS Tower
Rank A
As of September 5, 2014
ORTO Yokohama
Rank A
As of October 29, 2015
Tokyo Nissan Nishi-Gotanda Bldg.
Rank A
As of December 25, 2015
Nishi-Shinjuku Prime Square
Rank A
As of November 30, 2018
Prime Tower Shin-Urayasu
Rank B+
As of November 30, 2018
Ebisu Prime Square
3 Stars
As of February 27, 2017
32.8%of the portfolio (by floor area) has achieved a green building
certification
NameIssuance
DateIssued amount
(¥ million)Term
Interest rate (%)
Redemption date
Fourth Series Unsecured Investment Corporation Bond (Green Bond)
December 13, 2018
5,500 5 years 0.580December 13,
2023
(Note) Excluded property tax effects from FP10 DPU forecast.
(Note) Green bonds are a type of bond instrument issued by corporations and local municipalities, for the purpose of allocating the proceeds to domestic/international green projects (that have the effect of improving the environment, such as renewable energy business, construction or renovation of eco-friendly buildings, projects to prevent and manage environmental pollution etc.). The proceeds of green bonds are 1) allocated to green projects only, 2) tracked and 3) secured transparency through reporting after the issuance.
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Invesco Office J-REIT, Inc.
Further Diversification in the Portfolio
IPO FP1(End of October 2014)
FP2(End of April 2015)
FP3(End of October 2015)
FP4(End of April 2016)
FP5(End of October 2016)
December 2016 FP6(End of April 2017)
FP7(End of October 2017)
FP8(End of April 2018)
FP9(End of October 2018)
Number of owned asset 5 5 5 8 8 13 12 14 14 14 18
Asset size 78.6 78.6 78.6 104.9 104.9 154.2 144.9 161.9 161.9 159.9 220.4
Ebisu Prime Square
Harumi Island Triton Square Office Tower Z
Cs Tower, Cs Tower Annex
Queen's Square Yokohama Nagoya Prime Central Tower
Listed in May 2014
Aqua Dojima East
Kinshicho Prime Tower
Asset acquired in 2017 ¥17bn
Nishi-Shinjuku Prime Square
Kojimachi Crystal City
Prime Tower Shin-Urayasu
Techno Wave 100
IBF Planning Building
The 3rd public offering in May 2018The Investment Corporation aims to expand asset size which leads to improvement of investor value.
Hakata Prime East
Sun Towers Center Building
Akiba CO Building
Sendai Honcho Building
Shinagawa Seaside East Tower
The 2nd public offering in May 2016
Sendai Honcho Building
Asset disposed during FP9(Co-ownership 60%)
Asset disposed during FP8(Co-ownership 40%)
Tokyo Nissan Nishi Gotanda Building
ORTO Yokohama
Nishi Shinjuku KF Building
The 1st public offering in May 2015
Harumi Island Triton Square Office Tower Z
Asset disposed in December 2016
Achieved asset size of ¥100bn
(Note) Asset size is based on acquisition price.
Expansion of asset under managementAchieved asset size of ¥200bn
asset size of ¥78.6bn
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Invesco Office J-REIT, Inc.
FP8 (Note 1)
(As of the end of April 2018)FP9 (Note 1)
(As of the end of October 31, 2018)
No. of properties 14 properties 18 properties
Total purchase price ¥159.9 billion ¥220.4 billion
Average occupancy rate 99.6% 98.0%
NOI yield (Note2) 5.2% 4.9%
NOI yield after depreciation (Note2) 4.2% 4.1%
Diversification by Tenants (Note3)
Diversification in Area (Note 4)
LTV 49.6% 49.4%
The third public offering after IPOThe Investment Corporation acquired 5 new properties with acquisition price of 63.5 billion yen in total through public offering at the beginning of FP9, the third time after IPO, as well as asset replacement. Through these acquisitions, the Investment Corporation enhanced property and tenant diversification with steady portfolio expansion.
External Growth
Change in Portfolio and LTV
(Note 1) Regarding “Sendai Honcho Building”, the Investment Corporation disposed of 40% co-ownership interest of the trust beneficiary interests related to the property on April 18, 2018 and 60% co-ownership interest on May 17, 2018. The information for the end of FP8 shown above includes Sendai Honcho Building (co-ownership of 60%, however the information regarding tenant diversification shows the information for the entire building). On the other hand, the information for the end of FP9 does not include Sendai Honcho Building.
(Note 2) NOI is calculated by using the annualized actual NOI for each fiscal period. NOI yield is calculated by dividing total NOI by total acquisition price. However, we have applied adjustment to treat certain capitalized property-related taxes as expenses.
(Note 3) Tenant ratio is based on leased area and the ratio based on monthly rental income is shown in parentheses.(Note 4) Investment ratio is based on the acquisition price.
Top 10 tenant ratio36.0% (29.1%)
Top 10 tenant ratio28.7% (23.3%)
Top 10 tenant 36.0%Others 64.0%
Top 10 tenant 28.7%Others 71.3%
New Portfol io Properties in FP9
Nishi-Shinjuku Prime Square
Tokyo Metro Marunouchi Line
Toei OedoLine
Shinjuku Sta.
Seibu-Shinjuku Sta.
Nishi-Shinjuku Prime Square Higashi-Shinjuku Sta.
Nishi-Shinjuku Sta.
Shinjuku-Nishiguchi Sta.
Tochomae Sta.
Shin-Okubo Sta.Okubo Sta.
Chuo Main Line
Yamanote Line
Kanda River
To
kyo
Met
ro F
uk
uto
shin
Lin
e
Residential Address 7-5-25, Nishi-Shinjuku, Shinjuku-ku, Tokyo
Date of Building November 1988
Gross Floor Area of the whole building 36,899.18 sqm
Ownership Structure (Land) Ownership
Ownership Structure (Building) Ownership
23 wards of Tokyo 66.8%
Tokyo metropolitan area other than the above 18.2%
Other major urban areas 13.1%
Other investment target regions 1.9%
23 wards of Tokyo 68.8%
Tokyo metropolitan area other than the above 16.3%
Other major urban areas 9.5%
Other investment target regions 5.4%
Investment ratio of Tokyo metropolitan area
85.0%
Investment ratio of Tokyo metropolitan area
85.1%
Total number of tenants
445
Total number of tenants
528
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Invesco Office J-REIT, Inc.
New Portfol io Properties in FP9
Residential Address 4-8-1, Kojimachi, Chiyoda-ku, Tokyo
Date of Building September 1992 (New construction)January 1998 (Enlargement)
Gross Floor Area of the whole building 21,634.87 sqm
Ownership Structure (Land) Co-ownership, Right of site (co-ownership)
Ownership Structure (Building)
Compartmentalized ownership (co-ownership interest of some part of compartmentalized ownership) (Note)
Residential Address 1-1-25, Shin Urashimacho, Kanagawa-ku, Yokohama-shi, Kanagawa
Date of Building July 1990
Gross Floor Area of the whole building 50,463.88 sqm
Ownership Structure (Land) Ownership (co-ownership)
Ownership Structure (Building) Co-ownership of compartmentalized ownership
Residential Address 1-5-2, Irifune, Urayasu-shi, Chiba
Date of Building October 1990
Gross Floor Area of the whole building 76,767.24 sqm
Ownership Structure (Land) Right of site
Ownership Structure (Building) Compartmentalized ownership (Note)
Residential Address 3-38-14, Sendagaya, Shibuya-ku, Tokyo
Date of Building January 2008
Gross Floor Area of the whole building 2,190.49 sqm
Ownership Structure (Land) Ownership
Ownership Structure (Building) Ownership
Prime Tower Shin-Urayasu IBF Planning Building
Shinjuku-dori St.
Sophia Univ.
Kojimachi Sta.
Kojimachi Crystal City
Yotsuya Sta.
Tokyo Metro Yurakucho Line
Nippon Television St.
Chuo
Mai
n Li
ne
Tokyo Metro Nanboku Line
Keiyo Line
Prime Tower Shin-Urayasu
Shin-Urayasu Sta.
Toky
o Bay
road
Sakai River
Metro
polita
n Exp
ress
way W
anga
n Line
Kojimachi Crystal City Techno Wave 100
(Note) The compartmentalized ownership which the Investment Corporation owns through the trustee is the whole office tower of Shin-Urayasu Prime Tower and the floor area of the exclusive use space is 38,421.81 sqm based on real estate registry.
Daiichikeihin-dori St.Yokohama Line
Techno Wave 100
Yokohama Sta.
Tammachi Sta.
Higashi-hakuraku Sta.
Higashi-kanagawa Sta.
KanagawaSta.
Kanagawa-Shinmachi Sta.
Metropo
litan E
xpress
way Ka
nagaw
a
Route
No.1 Yo
kohane
LineKe
ikyu M
ain Li
ne
Dainike
ihin-do
ri St.
Toka
ido M
ain L
ine
Tokyu Toyoko Line
Koyasu Sta.
Shinjuku Sta. Shinjuku Sanchome Sta.Tochomae Sta.
Yoyogi Sta.Sendagaya Sta.
Shinjuku GyoenNational Garden
Chuo Main Line
Kita-Sando Sta.
Harajuku Sta.
Meiji Jingumae Sta.
IBF Planning Building
Yamanote Line
Yoyogi Park
Meiji Jingu
Omote-Sando Sta.
Gaiemmae Sta.
Toky
o M
etro
Fuku
tosh
in L
ine
Meiji Jingu Gaien
(Note) The exclusive use area, which the Investment Corporation owns through the trustee, is consisted of a part of the second basement to the ground floor, from the 2nd floor to 6th floor (co-ownership of compartmentalized ownership), and the 7th floor to 14th floor of Kojimachi Crystal City East Tower. The total area of the exclusive use area is 5,969.15 sqm based on the management bylaws.
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Invesco Office J-REIT, Inc.
Internal Growth
Successful in Leasing and Occupancy ImprovementsThe occupancy rate of the entire portfolio resulted 98.0% as of the end of October 31, 2018 (end of FP9). As for the occupancy rate for FP9, the average occupancy rate maintained 98.4% as the leasing situation improved in Sun Towers Center Building and the vacant spaces of Nishi-Shinjuku KF Building and Aqua Dojima East were filled.
For FP10, the Investment Corporation intends to focus on leasing of ORTO Yokohama, Prime Tower Shin-Urayasu and Techno Wave 100. The occupancy rate for entire portfolio is expected to be lower than that of FP9. The expected average occupancy rate for the entire portfolio for FP10 is 97.9%. The Investment Corporation aims to improve the occupancy rate by continuing proactive leasing activities.
Leasing initiatives and future plan for newly acquired assets
(%)
85
90
95
100(m2)
0
15,000
12,000
9,000
6,000
3,000
FP8 2018May June July August September October November December
(Forecast)
2019January
(Forecast)February(Forecast)
March(Forecast)
April(Forecast)
(Month)
FP898.9%
FP998.4%
FP10 (Estimated)97.9%
Portfolio average occupancy rate during fiscal period
Leasing Achievements and Occupancy
Summary for Lease Renewal Status and Portfolio Average RentThe Investment Corporation renewed 82 contracts in FP9 of which 29 contracts (33.6% of total leased area renewed in FP9) were renewed with upward revisions and the average rent increased by 6.5% from FP8. In addition, 53 contracts (66.4% of total leased area renewed in FP9) were renewed with the same rent.
Aiming to continuously raise rents in FP10 due to potential for further upward rent revisions for the tenants whose rent is lower than the market price to improve rental revenue.
Move-in Move-out Actual occupancy rate Estimated occupancy rate
(%)
0
50
100
FP7 FP8 FP9
14.0%(11 contracts)
84.4%(34 contracts)
23.6%(14 contracts)
76.4%(56 contracts)
33.6%(29 contracts)
66.4%(53 contracts)
1.6%(2 contracts)
(¥/ tsubo) (%)
14,500
15,000
15,500
16,000
17,000
16,500
-2.0
0.0
2.0
4.0
8.0
6.0
FP8 (13 assets) (Note 2) FP9 (13 assets) (Note 2)
15,718
17,161
15,638
16,804
6.9
8.4
Lease Renewal Status (Leased Area Basis) Average Rent at the end of Fiscal Period (including CAM)
Upward revision Flat Downward revision Portfolio average rent Market rent (Note 1) Rent gap
Proactive Asset Managemento Occupancy rate is expected to improve to 94.7% in January 2019 which represents a 7.3% improvement from pre-acquisition occupancy rate forecast.
o Aim to further improvement of occupancy with further active management.
Property value enhancemento Creating comfortable work environments through renovating common area.
o Newly built Shin-Urashima bridge improves the car access to the property and accessibility is expected to be enhanced.
Proactive Asset Managemento Occupancy rate is expected to improve to 95.6% in December 2018 which represents a 10.5% improvement from pre-acquisition occupancy rate forecast.
Cost controlo Achieved a 17% cost reduction in building maintenance costs from December 2018 through a competitive bidding.
o In anticipation of an increase in insurance premiums, the Investment Corporation seeks a blanket insurance for al l properties (Note) through a competitive bidding process.
o By introducing multiple location policy through the blanket insurance, the annual insurance cost is expected to be reduced by 19%.
LocationLeasable
areaOccupancy rate
7 mins walk from Keikyu Main Line “Kanagawa Shinmachi” station
22,085.89 sqm
87.3% as of November 30, 2018
LocationLeasable
areaOccupancy rate
Directly connected to JR Keiyo Line and JR Musashino Line “Shin-Urayasu” station
22,240.39 sqm
94.9% as of November 30, 2018
(Note 1) Market rent above represents contract rent for a typical floor of assets managed by the Investment Corporation evaluated by CBRE.(Note 2) For comparison, the five assets acquired and the one asset disposed in FP9 are excluded.
(Note) Pre-acquisition occupancy rate forecast is described in the Securities Registration Statement filed in April 2018.
(Note) Pre-acquisition occupancy rate forecast is described in the Securities Registration Statement filed in April 2018.
(Note) Excludes Tokyo Nissan Nishi-Gotanda Building which is covered under co-owner’s insurance policy.
Techno Wave 100
Achieving a 19% annual reduction (estimated)
Prime Tower Shin-Urayasu
Operating expense reduction
(approximately ¥4.7mm reduction per annum)
Occupancy rate forecast
Occupancy rate forecast
87.4%pre-acquisition (Note)
85.1%pre-acquisition (Note)
94.7%in Jan. 2019
95.6%in Dec. 2018
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Invesco Office J-REIT, Inc.
515
13
No. Property LocationPurchase
price(¥ million)
Appraisalvalue (Note 1)
(¥ million)
Investment ratio (Note 2)
(%)
14 Kinshicho Prime Tower Koto-ku, Tokyo 15,145 16,600 6.9
15 Aqua Dojima East Osaka-shi, Osaka 1,910 2,060 0.9
16 Nishi-Shinjuku Prime Square Shinjuku-ku, Tokyo 34,835 38,300 15.8
17 Kojimachi Crystal City Chiyoda-ku, Tokyo 6,405 7,070 2.9
18 Prime Tower Shin-Urayasu Urayasu-shi, Chiba 11,860 12,400 5.4
19 Techno Wave 100 Yokohama-shi, Kanagawa 6,900 7,160 3.1
20 IBF Planning Building Shibuya-ku, Tokyo 3,500 3,670 1.6
Total 220,462 251,502 100.0
Portfolio Map
NagoyaFukuoka
Osaka
Overview of Portfolio Properties As of the end of FP9
No. Property LocationPurchase
price(¥ million)
Appraisalvalue (Note 1)
(¥ million)
Investment ratio (Note 2)
(%)
1 Ebisu Prime Square Shibuya-ku, Tokyo 25,014 27,832 11.3
3 CS Tower / CS Tower Annex Taito-ku, Tokyo 13,700 18,300 6.2
4 Queen's Square Yokohama Yokohama-shi, Kanagawa 16,034 19,400 7.3
5 Nagoya Prime Central Tower Nagoya-shi, Aichi 14,600 19,800 6.6
6 Tokyo Nissan Nishi-Gotanda Building Shinagawa-ku, Tokyo 6,700 7,670 3.0
7 ORTO Yokohama Yokohama-shi, Kanagawa 13,000 14,600 5.9
8 Nishi-Shinjuku KF Building Shinjuku-ku, Tokyo 6,600 7,160 3.0
9 Shinagawa Seaside East Tower Shinagawa-ku, Tokyo 25,066 27,300 11.4
10 Akiba CO Building Chiyoda-ku, Tokyo 8,078 9,580 3.7
11 Sun Towers Center Building Setagaya-ku, Tokyo 6,615 7,770 3.0
13 Hakata Prime East Fukuoka-shi, Fukuoka 4,500 4,830 2.0
Property summary
(Note 1) Appraisal value are as of the end of October 2018.(Note 2) The investment ratio is based on the acquisition price. As percentage of investment ratio is rounded to the second decimal place, total of the ratio may not be 100%.
16
11
9
18
3
TokyoMetropolitan Area
1410
1720
168
4
Yokohama
719
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Invesco Office J-REIT, Inc.
Portfol io Properties
Ebisu Prime Square
CS Tower / CS Tower Annex
1
3
Ebisu Sta.JR Ebisu Sta.
Tokyo Metro Hibiya Line
JR Line
Meiji St.
Komazawa St.
Ebisu Prime Square
Shibuya-bashi
Residential Address 1-1-7/39/40, Hiroo, Shibuya-ku, Tokyo
Date of Building January 31, 1997
Gross Floor Area of the whole building 67,581.00 sqm
Ownership Structure (Land)
Ownership rights (quasi-co-ownership interests of the trust beneficial interests: 49%)
Ownership Structure (Building)
Ownership rights (quasi-co-ownership interest of the trust beneficial interests: 49%)
Residential Address 5-20-8/6, Asakusabashi, Taito-ku, Tokyo
Date of Building August 31, 1991
Gross Floor Area of the whole building 32,996.92 sqm (Note)
Ownership Structure (Land) Rights to site
Ownership Structure (Building)
Compartmentalized ownership (co-ownership interests of some part of the compartmentalized ownership)
Asakusabashi Sta.
Iwamotocho Sta.
Kiyosubashi-dori St.
Akihabara Sta.
JR Akihabara Sta.
Bakurocho Sta.
CS Tower/CS Tower Annex
Kuramaebashi-dori St.
JR Sobu Line
Kanda River
JR Line
Tokyo Metro Hibiya Line
Toei Shinjuku Line
Portfolio Diversification
Diversification in Area (Note1) Diversification by Tenants (Note2)
23 wards of Tokyo
68.8%
Tokyo metropolitan area other than the above
16.3%
Other major urban areas
9.5%
Other investment target regions
5.4%
Diversification by Size Diversification by Asset Type
Gross Floor Area of over
10,000 sqm or above 89.7%
Gross Floor Area of less than
10,000 sqm 10.3%
Top10 tenants
28.7% (23.3%) Others
71.3% (76.7%)
Office
86.4%
Retail
7.5%
Hotel
4.1%
Residential
1.7%
Other
0.2%
¥220.4 billion
Acquisition Price
98.0%
Average Portfolio Occupancy Rate
¥12.2 billion
Average Acquisition Price per Property
4.9%
Average NOI Yield
2.72%
Portfolio PML
59,621.78 sqm
Average Gross Floor Area per Property
(Note 1)
(Note 2)
As of the end of October 2018
As of the end of October 2018
(Note 1) NOI is calculated by using the annualized actual NOI for each fiscal period. NOI yield is calculated by dividing total NOI by total acquisition price. However, we have applied adjustments to treat certain capitalized property-related taxes as expenses.
(Note 2 ) Average gross floor area is the average of the gross floor area of the whole building as indicated in the registry. For each asset's gross floor area of the whole building in the registry, please refer to the information on “Gross Floor Area of the whole building" in “New Portfolio Properties in FP9” and “Portfolio Properties” section.
(Note 1) Investment ratio is based on the purchase price.(Note 2) Tenant ratio based on leased area and the ratio based on monthly rental income is shown in parentheses.
(Note) This section states the structure/ stories and gross floor area of the whole building including this property, inclusive of those corresponding to the interests of the other compartmentalized owners and co-owners.
Overview of Portfolio Data As of the end of FP9
Total number of tenants
528
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Invesco Office J-REIT, Inc.
Portfol io Properties
Residential Address
2-27-8, Meieki, Nishi-ku, Nagoya, Aichi Prefecture
Date of Building March 18, 2009
Gross Floor Area of the whole building 59,602.89 sqm (Note)
Ownership Structure (Land)
Ownership rights (co-ownership interests)
Ownership Structure (Building)
(Office) Compartmentalized ownership(Parking lot) Interests acquired for the common spaces under the regulations and the common spaces of the condominium
(Note) The gross floor area of the whole building for the parking space of Nagoya Prime Central Tower.
Residential Address
4-32-1/9, Nishi-Gotanda, Shinagawa-ku, Tokyo
Date of Building
April 25, 1990 (completed renewal works in 2010)
Gross Floor Area of the whole building
21,404.84 sqm (Note)
Ownership Structure (Land)
Rights to site
Ownership Structure (Building)
Compartmentalized ownership
(Note) The structure/number of stories and the gross floor area are stated for the whole building that make up the subject property and the area includes common areas as well as other exclusive use areas of a condominium.
Residential Address
2-3-2/3/4/5/7/8/9, Minatomirai, Nishi-ku, Yokohama, Kanagawa
Date of Building June 30, 1997
Gross Floor Area of the whole building
498,282.77 sqm (Note)
Ownership Structure (Land)
Ownership rights (co-ownership interests)
Ownership Structure (Building)
Compartmentalized ownership (co-ownership interests)
Nagoya Prime Central Tower5
Tokyo Nissan Nishi-Gotanda Building6
4 Queen’s Square Yokohama
(Note) The area of the entire building of Queen’s Square Yokohama recorded on the registry is stated here.
Residential Address
8-14-24, Nishi-Shinjuku, Shinjuku-ku, Tokyo
Date of Building January 29, 1993
Gross Floor Area of the whole building
9,828.37 sqm (Note)
Ownership Structure (Land)
Rights to site
Ownership Structure (Building)
Compartmentalized ownership (Note)
(Note) Although ownership structure for the subject property is compartmentalized ownership, the seller owns the entire compartmentalized ownerships of the subject property though the trustee.
Residential Address
4-12-8, Higashi-Shinagawa, Shinagawa-ku, Tokyo
Date of Building August 31, 2004
Gross Floor Area of the whole building
43,014.06 sqm
Ownership Structure (Land)
Ownership
Ownership Structure (Building)
Ownership
Residential Address
1-2-4/5, Shin-Koyasu, Kanagawa-ku, Yokohama, Kanagawa
Date of Building November 30, 2000
Gross Floor Area of the whole building
57,261.81 sqm (Note)
Ownership Structure (Land)
Rights to site
Ownership Structure (Building)
Compartmentalized ownership (co-ownership interests of some part of the compartmentalized ownership)
Nishi-Shinjuku KF Building8
Shinagawa Seaside East Tower9
7 ORTO Yokohama
(Note) The structure/number of stories and the gross floor area are stated as total spaces of office building, commercial building, parking Garage and the area includes common areas as well as other exclusive use space of a condominium.
Minatomirai Line
Minatomirai Sta.
Queen’s Square Yokohama
Kokusai Center Sta.
Nagoya Prime Central Tower
JR Nagoya Sta.
Nagoya Sta.
Meitetsu Nagoya Sta.
Kintetsu Nagoya Sta.
Meitetsu Nagoya Main Line
JR Line
Nagoya City Subway
Higashiyama Line
Nagoya City Subway
Sakura-dori Line
Meguro Sta.
Fudo-Mae Sta.
Gotanda Sta.Central Circular Route
Yamate-dori St.
Metropolitan Expressway
Route No.2 Meguro Line
JR Yamanote
Line
Tokyu Meguro Line
Tokyo Nissan Nishi-Gotanda Building
Toei Asakusa Line
Koyasu Sta.
Shin-Koyasu Sta. Keikyu-Shin-Koyasu Sta.
Daiichi Keihin Rd.
Daini Keihin Rd.
Keikyu LineJR Keihin-Tohoku Line
JR Yokoham
a Line ORTO Yokohama
JR Shinjuku Sta.
Tochomae Sta.
Shinjuku Nishiguchi Sta.
Nishi-Shinjuku Sta.
Ome Kaido St.
Nishi-Shinjuku KF Building
Toei Oedo Line
Tokyo Metro Marunouchi Line
JR Line
Shinagawa SeasideEast Tower
National Route N
o.357
Daiichi Keihin Rd.
ShinagawaSeaside Sta.
Rinkai Line of theTokyo Waterfront AreaRapid Transit
TokyoMonorail
Oimachi Sta.
Samezu Sta.
Aomono-yokocho Sta.
Metropolitan Expressw
ayRoute N
o.1 Haneda Line
Keikyu Line
Tokaido Line
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Invesco Office J-REIT, Inc.
Portfol io Properties
Residential Address
2-11-22, Sangen-jaya, Setagaya-ku, Tokyo
Date of Building June 22, 1992
Gross Floor Area of the whole building
25,577.35 sqm
Ownership Structure (Land)
Ownership (compartmentalized ownership) (Note)
Ownership Structure (Building)
Compartmentalized ownership
(Note) The land of the Property is owned partially by each compartmentalized owner and the compartmentalized owners agree to use other compartmentalized owners’ land each other.
Residential Address
2-10-35, Hakataeki-Higashi, Hakata-ku, Fukuoka-shi, Fukuoka
Date of Building April 22, 1992
Gross Floor Area of the whole building
9,213.20 sqm
Ownership Structure (Land)
Ownership
Ownership Structure (Building)
Compartmentalized ownership (Note)
(Note) Although ownership structure for the subject property is compartmentalized ownership, the seller owns the entire compartmentalized ownerships of the subject property though the trustee.
Residential Address
3-16-12 Soto-Kanda, Chiyoda-ku, Tokyo
Date of Building May 23, 2000
Gross Floor Area of the whole building
6,957.74 sqm
Ownership Structure (Land)
Ownership
Ownership Structure (Building)
Ownership
Sun Towers Center Building11
Hakata Prime East13
10 Akiba CO Building
Akiba CO Building
Kuramaebashi-dori St.Suehirocho Sta.
JR Akihabara Sta.
AkihabaraDai Building
Akihabara UDX
Sobu Line
Ginza Subw
ay Line
Tsukuba Express
Yamanote Line,
Keihin-Tohoku Line
Chuo-dori St.
Sun TowersCenter Building
Sangen-jaya Sta.
Sangen-jaya Sta.
Carrot Tower
Metropolitan ExpresswayRoute No.3 Shibuya Line
Setagaya-dori St.
National Route No.246
National Route No.246
Tokyu Den-en-toshi Line
Tokyu Den-en-toshi LineTokyu Setagaya Line
Subway Kuko Line
Nakahie Park Dori St.
Chikushi Dori St.
HakataSta.
Hakata Prime EastNakahieParkNakahiePark
Sanyo-Shinkansen LineKyusyu-Shinkansen LineJR Line
KinshichoPrime Tower
Kameido Sta.Kinshicho Sta.
Kinshi Park
Sobu Line
Metropolitan Expressway
Route No.7 Komatsugawa Line
Hanzom
on Subway Line
Keiyo Road
Kuramaebashi-dori St.
KinshichoExit
Watanabebashi Sta. Oebashi Sta.
Yodoyabashi Sta.
Naniwabashi Sta.
Osaka Sta.
Umeda Sta.
Nishi-Umeda Sta. Higashi-Umeda Sta.
Kitashinchi Sta.
Aqua Dojima East
Osaka City Hall
Hanshin Expressway RouteNo.1 Loop Line
Mido-suji Ave.
Tokaido Line
Osaka Loop Line
Yotsubashi-sujiAve.
Kinshicho Prime Tower14
Aqua Dojima East15
Residential Address 1-5-7, Kameido, Koutou-ku, Tokyo
Date of Building August 31, 1994
Gross Floor Area of the whole building 28,789.18 sqm
Ownership Structure (Land) Ownership
Ownership Structure (Building) Ownership
Residential Address 1-4-4, Dojimahama, Kita-ku, Osaka-shi, Osaka
Date of Building April 21, 1993
Gross Floor Area of the whole building 24,726.19 sqm
Ownership Structure (Land) Ownership (compartmentalized ownership) (Note)
Ownership Structure (Building) Co-ownership of compartmentalized ownership
(Note) The land of the Property is owned partially by each compartmentalized owner and the compartmentalized owners agree to use other compartmentalized owners' land each other.
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Invesco Office J-REIT, Inc.
FP10 FP11 FP12 FP13 FP14 FP15 FP16 FP17 FP18 FP19 FP20
(¥mn)
0
5,000
10,000
15,000
25,000
20,000
4,50012,000 13,350 10,600 12,900 12,550 13,500
1,800
15,50012,000
5,500
5,500
1,600
Investment Unit Information
IR Activities for Retail Investors
Unitholders Composition
(Note) The bond rating is for the first, second, third and fourth series bonds.
Breakdown by Units (Units) Total 8,643,356 Breakdown by Unitholders (Unitholders) Total 22,851 Domestic individuals
1,632,306 (18.9%) Financial institutions
(including financial instruments business operators)
3,864,324 (44.7%) Domestic corporations
240,286 (2.8%) Foreign corporations and individuals
2,906,440 (33.6%)
Domestic individuals
22,180 (97.1%) Financial institutions
(including financial instruments business operators)
89 (0.4%) Domestic corporations
347 (1.5%) Foreign corporations and individuals
235 (1.0%)
Investment Unit Price (Closing price: ¥) Trading Volume (No. of units)
Financial Stability and FlexibilityThe fundamental policy of Investment Corporation is the conduct of stable and sound financial management to ensure stable income over the medium to long term together with steady growth in asset value. In regard to borrowings, the Investment Corporation will seek stable financial management through building diversified bank formation centered on leading Japanese financial institutions.
Diversification of Debt Maturities
Lender’s Diversification
Citibank, N.A., Tokyo Branch 4.7%
Development Bank of Japan Inc. 4.2%
The Nishi-Nippon City Bank, Ltd. 3.3%
The Bank of Fukuoka, Ltd. 2.3%
ORIX Bank Corporation 0.9%
Nippon Life Insurance Company 0.9%
49.4%
LTV
2.6 years
Average remaining years
96.3%
Long-term loan ratio
Fixed interest rate ratio
95.5%
¥121.3 billion
Interest bearing debt
Average borrowing rate
0.56%
Details of Credit Rating
Rating Agency Subject Rating Rating Outlook
Japan Credit Rating Agency, Ltd. (JCR)
Long-term Issuer Rating A+ Positive
Bond Rating (Note) A+ —
Borrowings Corporate Bonds for Institutional Investors Corporate Bonds for Retail Investors
Status of Credit RatingCurrent credit rating of the Investment Corporation is as follows.
Trend of Investment Unit PriceThe trend of the Investment Corporation's investment unit price at Tokyo Stock Exchange since June 5, 2014 is as follows. The data is as of December 14, 2018.
The Investment Corporation proactively participates in IR events to spread understanding among retail investors.
As of the end of December 28, 2018
As of the end of December 28, 2018
As of the end of October 2018
18,000
16,000
14,000
12,000
10,000
0
1,100,000
300,000
400,000
200,000
100,000
0June 29,
2018December 29,
2017December 14,
2018June 30,
2017December 30,
2016June 30,
2016December 30,
2015June 30,
2015December 30,
2014IPO
(Note) As percentage of unitholders ratio is rounded to the third decimal place, total of the ratio may not be 100%.
(Note) The Investment Corporation implemented an eight-for-one unit split with February 28, 2018 as the record date and March 1, 2018 as the effective date. For comparison, the investment unit prices from IPO to February 23, 2018 described in the graph above are equivalent to figures which divides the investment unit prices from IPO to February 23, 2018 by 8. Also, trading volume from IPO to February 23, 2018 is 8 times of the actual trading volume.
Financial Information As of December 28, 2018
Sumitomo Mitsui Banking Corporation 23.9%
MUFG Bank, Ltd. 19.8%
Sumitomo Mitsui Trust Bank, Ltd. 11.9%
Mizuho Bank, Ltd. 9.6%
Resona Bank, Ltd. 8.4%
Shinsei Bank Limited 5.4%
Aozora Bank, Ltd. 4.7%
Seminars for retail investors (actual)
Broadcasted on Radio NIKKEI “Morning Market Square Asazai” (available on-demand broadcasting)
http://www.radionikkei.jp/podcasting/asazai/2018/07/player-2018725.html
September 21, 2018 J-REIT Fair 2018
November 24, 2018 J-REIT Fan 2018 Fall
January 17, 2019 J-REIT Seminar in Osaka
J-REIT Fan 2018 Fall on November 24, 2018
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Invesco Office J-REIT, Inc.
Asset Management Report
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66 67
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68 69
Invesco Office J-REIT, Inc.
70 71
Invesco Office J-REIT, Inc.
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Invesco Office J-REIT, Inc.
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Invesco Office J-REIT, Inc.
The Invesco Group sets its mission as helping investors worldwide achieve their financial objectives, and is a world-leading independent asset manager that provides global investment management capabilities. The Invesco Group engages in business on a global scale and has offices in more than 20 countries. As of the end of September 2018, the balance of assets under management of Invesco Group was US$980.9 billion (approximately ¥111.4 trillion) (Note).
Invesco Ltd. is publicly traded on the NYSE. The credit rating agencies listed below have assigned the ratings indicated to Invesco Ltd.
Rating Company RatingMoody’s Investors Service A2 Stable
Standard & Poor’s BBB+/Stable
Fitch Ratings A- Positive
Invesco Real Estate, one business division of the Invesco Group, places priority on core asset management, but also has experience with value-added asset management and opportunistic asset management. Having experience with leasing and renewals as well as property sales and acquisitions and leverage control, Invesco Real Estate possesses diverse real estate management know-how.
Invesco Real Estate manages real estate and securities through 21 offices in 16 countries worldwide with assets under management of US$64.1billion (approximately ¥7.2 trillion) (Note) as of the end of September 2018.(Note) The yen amounts for assets under management presented above have been converted from U.S. dollars using the exchange rate as of the end of September 2018 (US$1 = ¥113.55).
Invesco Real Estate's Investment Properties
1 Office:Washington DC, USA
2 Office:San Francisco, CA, USA
3 Multiple Complex:Frankfurt, Germany
4 Retail:Seoul, South Korea
5 Retail:Las Vegas, NV, USA
6 Office:London, UK
7 Logistics:Melbourne, Australia
Overview of Invesco Group
Breakdown of Invesco Real Estate’s Asset Under Management (As of the end of September 2018)
North America
US$31.0 billion 48% Europe
US$11.5 billion 18% Asia
US$6.0 billion 9% Publicly traded real property securities
US$15.6 billion 24%
Real property direct investment
US$48.5 billion 76% Publicly traded real property securities
US$15.6 billion 24%
(Note) As percentage of asset under management is rounded total of the ratio may not be 100%.
1
5
3 42
6 7
80 81
Invesco Office J-REIT, Inc.