|
July 10 , 2000
Takenaka to Handle DD Operations
in First Securitization Conditional Tenders for National Property
Standardization of DD (Due Diligence) Reports Gathering
Momentum
Takenaka Corporation (Head Office: Osaka, President:
Toichi Takenaka, capital: 50 billion yen ) handled the building diagnoses
for eight condominiums and other buildings subject to the first securitization
conditional tenders for national property, for which the Kanto Regional
Finance Bureau announced tenders on June 9. These are prepared as documentation
disclosing information about the property in question, and as such as
viewed by applicant companies, but they are also used as documentation
for the issue of securities. Recently the securitization
of real estate (*1) introduced as a method to sell assets as a
government initiative, is expected to result in increased momentum for
the standardization of reports, which was a pending issue in due
diligence (*2) operations which are rapidly increasing in the private
sector as leading cases.
The deadline for tenders (disclosure) for the securitization conditional
tender on this occasion is September 11.
- *1: Securitization
of real estate .
-
The issue of securities and resultant procurement
of funds achieved based on the expected profits generated from real estate
such as land and buildings. Real estate securitized products can be broadly
divided into debt and equity. Debt is profits such as rent for offices
or housing, while equity is a fixed amount paid to investors according
to profits when a property is sold.
- *2: Due Diligence.
- This is an investigation carried out to forecast the
future cashflow of real estate, and is a series of work that calculates
the appropriate value of that cashflow. Due diligence can be broadly divided
into the following categories: (1) physical and environmental investigations
carried out by construction companies and so forth, (2) economic investigations
carried out by real estate appraisers, and (3) legal investigations carried
out by lawyers. It is all the more important that assessments be made
from an impartial perspective as a third party because investors take
due diligence reports into account when making investment decisions.
The physical and environmental investigations of buildings
that Takenaka carries out are based on the guidelines of the Building
& Equipment Life Cycle Association. The investigations comprise: (1) Building
diagnoses that survey the state of deterioration and future forecast repair
expenses, (2) Damage forecasts that survey earthquake risk, and (3) Environmental
assessments that survey soil pollution and asbestos, etc., and are carried
out on the following eight items.
- Survey of geographical conditions
- Calculation of short-term repair expenses and probable future upgrading
reserves by building deterioration diagnosis surveys
- Survey of building earthquake resistance
- Calculation of probable maximum loss rate caused by earthquake
- Calculation of replacement cost
- Situational surveys (illegality, response to guidance from authorities)
- Site environmental survey
- Surveys of hazardous substances contained in buildings
The securitization of real estate is expected to be
utilized more in the future due to the provision of accounting standards
and related legislation and heightened needs for the effective utilization
caused by demands to slim down corporate assets and the increasing mobility
of ownership of land.
Takenaka, which has a track record of due diligence reports on some 200
buildings over the two-year period from March 1998, is further promoting
the optimization and improving the efficiency of building diagnoses and
surveys in due diligence from the standpoint of a building expert, and
is working to create and diffuse high-quality impartial reports, thereby
contributing to the stimulation of the stock market in the construction
sector, and improving Takenaka's readiness.
|