Revitalization of an Aging Leasehold Condominium through Land Sale and Value Exchange

Asahi Kasei Homes Corporation (Headquarters: Chiyoda-ku, Tokyo; President and Representative Director: Yuji Owaku) announces its participation as a business partner and purchaser in the revitalization of the Shin-Nagahama Danchi (Chuo-ku, Fukuoka City, Fukuoka Prefecture) condominium, utilizing the condominium land sale system stipulated in the Act on Smooth Facilitation of Condominium Reconstruction (Note 1), and has commenced demolition work. Note 1: Official name is "Act on Smooth Facilitation of Condominium Reconstruction" ≪Key Points of this Condominium Revitalization≫ - Commercialization of a highly difficult project through the use of multiple systems The project resolved complex issues including old seismic standards, leasehold rights, mixed-use, and numerous rental tenants by utilizing multiple systems. - Utilization of the condominium land sale system for a leasehold condominium Consensus was built by selling the building and leasehold rights based on a resolution and consolidating rights with the purchaser, enabling the reconstruction of an aging condominium. - Streamlining of rights (conversion to ownership) through value exchange of subsoil and leasehold rights A portion of the subsoil and leasehold rights were exchanged at equivalent value, and the subdivided land was owned separately, expanding options after development. ■History of Shin-Nagahama Danchi Shin-Nagahama Danchi (hereinafter "this condominium") was a condominium with leasehold land use rights (landowner: Fukuoka Prefectural Housing Supply Corporation). The majority of the building was owned in condominium by the Fukuoka Prefectural Housing Supply Corporation and provided as public rental housing, while there were also six other unit owners, resulting in a complex ownership structure. The building was constructed in 1957 (Showa 32) under old seismic standards and did not meet current seismic standards. Furthermore, management rules were not established, and planned repairs were not carried out, leading to issues in maintenance and safety. In response to this situation, concerns about building deterioration and earthquake risk were shared at a meeting in 2022, along with the recognition that future maintenance would be difficult, prompting discussions toward reconstruction or land sale. 2022/12: Selection of our company as business partner 2023/3: Resolution to promote condominium land sale passed at meeting 2023/6: Resolution to apply for "certification of necessity for removal" (Note 2) passed at meeting 2023/8: Obtained "certification of necessity for removal" from Fukuoka City 2024/1: Obtained "certification of purchase plan" from Fukuoka City designating our company as the prospective purchaser 2024/3: Resolution for condominium land sale passed at meeting 2025/7: Approval for establishment of condominium land sale association 2026/6: Commencement of demolition work 2030/8: Scheduled building completion Note 2: Official name is "Certification of Necessity for Removal" ■Shin-Nagahama Danchi Overview Location: 33-ban, Nagahama 2-chome, Chuo-ku, Fukuoka City (lot number); 4, Nagahama 2-chome, Chuo-ku, Fukuoka City (residential address) Type of Land Use Right: Leasehold Site Area: 1,969.89 m² (as per registry) Structure/Scale: Reinforced concrete, 6 stories above ground Total Floor Area: 5,506.87 m² (as per registry) Total Units: 124 units (80 residential units, 44 commercial spaces) Year of Completion: 1957 (Showa 32) ■Challenges and Solutions for this Condominium Revitalization Since this condominium is a leasehold condominium, a rights conversion type reconstruction under the Act on Smooth Facilitation of Condominium Reconstruction would, in principle, result in the condominium remaining a leasehold condominium after reconstruction. Converting to ownership required rights adjustments with unanimous consent, making consensus-building highly difficult. Additionally, the landowner was the Fukuoka Prefectural Housing Supply Corporation, necessitating the integrated organization of institutional, contractual, and rights aspects for the reconstruction. Considering these challenges, after confirming consensus with the landowner and unit owners and ensuring consistency in contracts and legal aspects, this project utilizes the condominium land sale system. Our company, as the purchaser, first acquires the condominium (building) and leasehold rights, demolishes the existing building, and then acquires a portion of the subsoil through a value exchange of the leasehold rights and subsoil. This scheme allowed for smooth revitalization by leveraging expertise in both reconstruction and leasehold matters, despite the project's high difficulty. ① Utilize the condominium land sale system to sell the condominium and leasehold rights to our company ② Our company and the landowner (Fukuoka Prefectural Housing Supply Corporation) exchange the subsoil and leasehold at equivalent value, reorganizing into two ownership parcels ③ Our company constructs and sells condominium units on the owned land ■Asahi Kasei Homes' Initiatives in Condominium Reconstruction Our company has been engaged in the condominium reconstruction business since 2000 and established a specialized research institute, the "Condominium Reconstruction Research Institute," in 2011. As of June 1, 2026, we have a track record of 82 reconstruction projects based on signed business agreements. Leveraging the know-how accumulated over many years, we are committed to providing optimal solutions and disseminating information for condominium revitalization, which is a social issue. Moving forward, we will continue to discuss with stakeholders from a forward-looking perspective and contribute to realizing "safe and comfortable homes" and maintaining and enhancing asset value.