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Industrial & Infrastructure to buy 10 Japanese assets for ¥21.4B

Industrial & Infrastructure Fund Investment Corp. agreed to acquire 10 properties across Japan for approximately ¥21.36 billion through the issuance of new investment units, loans and cash reserves.

The industrial real estate investment trust will buy the 23,107-square-meter IIF Hiroshima Manufacturing Center in Hiroshima and the 19,458-square-meter IIF Totsuka Manufacturing Center in Kanagawa from Metal One Corp. and MITSUIKE CORP., respectively, on March 8.

The company also expects to conduct the purchase of the 64,328-square-meter IIF Atsugi Manufacturing Center in Kanagawa; a 40% co-ownership interest in IIF Itabashi Logistics Center in Tokyo; a 25% co-ownership interest each in IIF Osaka Suminoe Logistics Center I and II in Osaka; the IIF Sapporo Logistics Center in Hokkaido; the 20,000-square-meter IIF Hitachinaka Port Logistics Center in Ibaraki; IIF Koriyama Logistics Center in Fukushima and the 33,000-square-meter IIF Kobe Nishi Logistics Center in Hyogo.

The fully occupied properties will change hands March 8, March 9, March 29 and April 2.

To fund a portion of the acquisition costs, Industrial & Infrastructure will borrow ¥7.3 billion of new loans for an 8.1-year average borrowing period. The trust will also refinance ¥5.00 billion and ¥8.50 billion of loans Feb. 27 and March 9, respectively. Interest rates on the loans, provided by a consortium of banks, are yet to be determined.

Additionally, the company will raise capital for the asset purchases through the issuance of 109,800 investment units, with 53,600 units offered under a domestic public offering and 56,200 units purchased by overseas underwriters. Of the total units making up the overseas offering, underwriters will be granted the right to purchase up to 107,200 units as additional units. The issue price of the offering will be determined at a board of directors' meeting, to be held on a date between Feb. 28 and March 2.

Separately, a long-term commitment-type term loan contract with Development Bank of Japan Inc. for up to ¥10.00 billion was renewed before its March 15 expiration date. Under the new agreement, the trust may draw down the amount from March 16 until March 15, 2022. Proceeds from the agreement will be used to acquire investment assets, repay debt as well as carry out property renovations and refurbishments, among other uses.

In another release, Industrial & Infrastructure projected to pay out ¥2,688 and ¥2,655 as per-unit distribution, excluding distributions in excess of retained earnings per unit, for the six-month periods ending July 31 and Jan. 31, 2019, respectively.

The trust forecasts net income and ordinary income of roughly ¥4.57 billion during the six months ending July 31. For the subsequent period, the figures are expected to amount to roughly ¥4.52 billion. Operating income during the two respective fiscal periods is estimated at ¥5.52 billion and ¥5.47 billion, while operating revenue is slated to equal ¥9.68 billion and ¥9.71 billion.

As of Feb. 19, US$1 was equivalent to ¥106.58.