External Growth Strategy

Strategy of Vigorously Selective Investments Focusing on Quality for Each Asset Type

JPR makes vigorously selective investments in high-quality properties. It screens from a wide variety of choices ranging from large-scale office properties with a total floor space of 30,000m2 or more to medium-sized office properties with a total floor space of around 3,000m2, which can be consistently competitive against properties of asset types and categories that differ in terms of areas, sizes and use, etc.
For office properties, certain time lags arise in the impact of the leasing market conditions, depending on the differences in terms of the size and grade, etc. As such, the diversification effect is expected for a portfolio comprising office properties with a wide variety of sizes. Moreover, although large-scale office properties are relatively more advantageous in terms of market competitiveness, they have lower liquidity in the transaction market. As such, if they are set as the sole investment target, the possibility of obtaining opportunities for external growth will be rather limited.
JPR will work on vigorously selective investments with a focus on the quality of properties, intending to secure the diversification effect and the opportunities for external growth, so that it can build a portfolio that should realize stable growth over a long term.

Major Investment Standards*

Office properties Focus on locations, specifications and renovation potential, etc. that secure high stability of earnings
  • To be judged with a focus on buildings with a minimum total floor space of approximately 3,300m2 (approximately 1,000 tsubo)
  • To be judged on a case-by-case basis, in consideration of such specifications as the ceiling height, divisibility of floors and air-conditioning systems
Retail properties Focus on such locations as the front of terminal stations in highly bustling areas, where relatively high profitability can be expected, and tenant replaceability, among other factors
  • Judgement to be made comprehensively as to the locality due to location characteristics, the trade zone size, the typical size for each business type, future prospects and other factors
  • Judgment to be made comprehensively as to versatility and potential for conversion to other building use, visitors' access and other factors
Earthquake resistance Properties must meet the new earthquake resistance standards, etc.
  • Buildings that meet the new earthquake resistance standards or have undergone earthquake resistance reinforcement work (however, including buildings that can undergo earthquake resistance reinforcement work even if such work is not yet performed at the time of acquisition)
Tenants Focus on diversification status and replaceability
  • For office properties, a single tenant shall occupy 50% or less per property as a rule
  • If the figure surpasses 50%, replicability after the tenant moves out and other factors shall be comprehensively considered
Investment judgment benchmarks Focus on NOI yields
  • Set up assumed NOI yields for each category in terms of areas and asset classes
  • Properties that are judged to be contributing to the stability of cash flows over a medium to long term and quality improvement of the entire fund, on the assumption that their NOI yields will not fall below the criteria for the fiscal period as a rule

*For details of this matter, please refer to the “Investment Policies” and “Investment Targets” based on JPR’s Articles of Incorporation.

COLUMN

Implementation of Due Diligence

Judge Whether Properties are Appropriate for Acquisition
Upon judging whether to acquire properties, JPR takes due diligence procedures to properly evaluate the asset value.
The due diligence procedures evaluate the building performance and earthquake risks of the subject real estate, and check a variety of aspects such as abidance to laws and regulations, risk analyses and appropriateness of the price. Major investigation items are as follows.

  • Real estate appraisals
  • Office market surveys
  • Surveys on lands and buildings
  • Investigations on titles and rights
  • Investigations on contracts
  • Engineering reports including environmental surveys
  • Due diligence advisory surveys
  • On-site investigations of properties by employees in charge based on the check sheet
  • Earthquake risk evaluations
  • Surveys of commerce
  • Earthquake resistance diagnoses
  • Credit checks of tenants, etc.