Opportunities in a Recovering Real Estate Market

Japan Real Estate Market Summary
In the beginning of 2010, there is urgency with some property holders to
refinance by the Japanese fiscal year end in March. For this reason, buyers
can expect a boost in 2-4% net cap rate in a mostly opportunistic B and C class properties
and a few A class properties.
Opportunities in prime properties held by institutional investors and REITs are rare however
available. (Please inquire for property profiles.)

Sellers that are rushing to refinance often require quick decisions since time
is of the essence. The “rush to refinance” pattern is often seen to begin
towards the end of January, peaking in mid February with due diligence, negotiations
and closing quickly following before March 31st.
Asterisk Realty witnessed a strong example of this in early 2009 when buyers
took advantage of the opportunities that were provided by an increasing number
of distressed property holders.

Office

Market Status
Office properties are becoming more appealing to buyers since there are evidently
less tenants moving around hunting for better lease conditions. Tenancy is becoming
increasingly stable and rents have stabilized from dropping which are signs of
optimistic times to come.
In other news, A-class office buildings acquisition opportunities remain rare and limited
at this time. However we may see a few offers this year that will appeal to mostly core investors.

Market Cap rate (Central Tokyo Only)
*Office buildings in Tokyo 5 wards prime areas,built in about 5yrs, lot size is more than 5 billion JPY, cap rate is about 4.50-5.00%
*Office buildings in Tokyo 5 wards prime areas,built in about 10yrs, lot size is more than 5 billion JPY, cap rate is about 5.00-5.50%
*Smaller size office buildings (lot size : less than 1 billion JPY) : cap rate is 6.50 - 8.00%

Selected Properties

1.Central Tokyo Office Building (Aoyama / Shibuya)
Completed : 2006
No. of floor: 10F + B1F
Building Area : 3,240m2m2
NRA : 2,400m2
Occupancy : 80%
Asking Price : JPY 2,800,000,000-
Net Operating Income / Cap Rate : present NOI : 7.10% / maximum NOI : 8.80%
*seller should sell until end of February

2.Central Tokyo Office Building (Okachimachi / Ueno / Akihabara)
Completed : 1986
NRA: 2,900m2
Occupancy : 100%
Estimated bottom price : JPY 1,400,000,000-
Net Operating Income / Cap Rate : 10.8 % at JPY 1,400,000,000-
*seller should sell until end of March

Residential

Market Status
Residential properties remain the most popular market for investors as
high occupancy rates can be expected in Tokyo. Like office properties,
there is less shifting around of tenants seeking better lease terms which is especially evident in
high grade luxury apartments. Currently, there is a good number of off market A grade, prime location residential properties with stable tenancy.

Market Cap rate(Central Tokyo Only)
*Residential buildings in Tokyo 5 wards + Meguro & Bunkyo wards prime areas,built in about 5yrs, lot size is more than 4 billion JPY, cap rate is about 5.00-5.50%
*Residential buildings in Tokyo 5 wards + Meguro & Bunkyo wards prime areas,built in about 10yrs, lot size is more than 4 billion JPY, cap rate is about 5.50-6.00%
*Residential buildings in Tokyo 5 wards + Meguro & Bunkyo wards prime areas,built in about 10yrs, lot size is less than 1 billion JPY, cap rate is about 6.00 - 7.00%

Selected Properties

1.Central Tokyo + Yokohama Prime Residential Bulk Deal
NO. of properties in a bulk : 13
Completed : 2004-2006
NO. of unit: 10 - 140 units
Average Occupancy : 90%
Location : Prime locations in Tokyo central 5 wards + Yokohama
Asking price: JPY 28,500,000,000-
Net Operating Income / Cap Rate : 5.90%

2.Central Tokyo A-Grade Residential (Roppongi / Akasaka)
Completed : 1986
NO. of unit : 18 (100% occupancy)
NRA: 4,400m2
Asking price: JPY 4,400,000,000-
Net Operating Income / Cap Rate : 5.80%
*Luxury residential / unit size 140 - 250m2

Hotel

Market Status
The downward trend of hotel occupancy rate seems to have found support and is recovering.
Occupancy rate was 80.90% in Tokyo as of November. 2009(latest report)
Hotel market transactions have been fairly slow because of difficulties in debt financing.
Some five star, world class hotels may appeal to buyers who negotiate with sellers that
are willing to compromise selling terms due to financial distress.
There are a couple of great chances to buy world class hotels in Tokyo presently.
In addition to world class hotels, there are also a number of small to medium sized, limited service hotels and ryokans for sale, giving buyers a variety to choose from.

Market Statistics (latest / November. 2009)
*Tokyo Hotel : ADR - USD 255.74-  /  RevPAR - USD 200.58-  /  Occ.rate - 78.40% (HNN),  80.90% (Hotel&Restaurant magazine)
*Japan Hotel : ADR - USD 150.52-  /  RevPAR - USD 110.06-  /  Occ.rate - 73.10%(HNN)
*more details are available at  “Hotel market view”

Selected Properties

1.Brand new limited service hotel in Kyoto
Completed : 2009
Type : Limited service hotel
Access : 1 min to Kyoto station
No. of rooms : 200+
Occupancy :　unknown
Asking price: JPY 7,500,000,000-
*in front of Kyoto station, trophy hotel in Kyoto.
*average occupancy rate was 95.6% in Kyoto as of November. 2009 (latest report)

2.Limited service hotel in Osaka
Completed : 2007
Type : Limited service hotel
Occupancy : 90%
No. of guest rooms : 140+
Asking Price : JPY 5,000,000,000-
*prime location in Osaka.
*average occupancy rate was 79.5% in Osaka as of November. 2009 (latest report)

3.Full service hotels in Tokyo
available upon inquiry.

(We are dealing development sites for luxury resort development such as destination club and etc,, too. please contact us for resort development in Japan.)

Financing / Debt Market

Lenders are primarily focusing on lending towards A-class properties
and properties with a maximum LTV of 50-55% on senior loans.
The interest rate is about LIBOR + 200-300 basis points for A and B class office buildings in Tokyo.

Asterisk Realty is a first class private Japanese real estate brokerage that markets high net worth Japanese properties to international investors seeking advisory on property development, ownership, investment and occupation.

Superb off-market properties are rarely seen in the open market even during times of financial hardship. However there is a door way into the discrete market where conservative Japanese property owners welcome trusted and accredited “outside buyers”. Asterisk Realty is an exclusive gateway to build trust with foreign investment interest and introduce the best of the best off-market properties.

Please contact us for superb investment opportunities in Japan.

Contact : info@asteriskrealty.jp