Investor Presentaiton
Example of Ichigo's Value-Add Earnings Model
5.5% NOI Yield, JPY 2B Purchase, LTV 75%, 1.5% Interest Rate, JPY 50M
Capex, 15% Increase in NOI, 3-Year Value-Add Period
Value-Add Steps: Improved exterior & interior, tenant services and seismic
strengthening; increased energy efficiency; found quality tenants; etc.
Asset
JPY
2.0B
Debt
JPY1.5B
Equity
JPY 0.5B
NOI at Acquisition
(JPY 110M NOI/year) - (JPY 22.5M interest/year)
(JPY 22.5M interest/year) = JPY 87.5M NOI/year
NOI Initial Investment = 17.5% NOI return during investment period
NOI after Value-Add
(JPY 126.5M NOI/year) - (JPY 22.5M interest/year) = JPY 104M NOI/year
NOI Total Investment (JPY 500M + JPY 50M) = 18.9% NOI return during
investment period
Value-Add for Capital Gain
The 15% increase in NOI at an equivalent cap rate increases the exit price by
15%: JPY 2B * 115% = JPY 2.3B
JPY 2.3B (JPY 2B + JPY 50M) = JPY 250M capital gain
Result
Value-Add (Capex JPY 50M)
JPY 550M investment generates JPY 512M over 3 years
->
31.1% p.a.
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