Operating System Focused on Unitholder Return
Aligning unitholder return with the interests of the Hulic Group
Hulic Reit, Inc. (Hulic Reit) has built a system that aligns unitholder return with Hulic’s interests and in which Hulic Reit and Hulic can collaborate in business operations.
Investment Support from Hulic (“Same-Boat Investment”)
Hulic has expressed to Hulic REIT Management Co., Ltd. (Hulic REIT Management), that when Hulic Reit issues new investment units, it will give consideration in good faith to acquisition of a portion of the new investment units, and that when Hulic holds Hulic Reit investment units, it will seek to retain the held investment units except under special circumstances.
Co-ownership of Properties with the Sponsor
It is Hulic Reit’s policy to consider co-ownership with Hulic as needed in view of the size and individual characteristics of the property.
Management Fee System of Asset Management Company
In addition to management fees linked to the total assets of Hulic Reit. Hulic REIT Management has introduced a system of management fees linked to the value of cash distributions per investment unit.
|Management fee||Method of calculation|
|Management fee I||Total value of assets at end of the immediately previous fiscal period × 0.50% (maximum %)|
|Management fee Ⅱ||Cash distributions per investment unit before deduction of management fee II × operating income before deduction of management fee II × 0.004% (maximum %)|
|Acquisition fee||Acquisition price × 1.0% (maximum %)
*0.5% (maximum %) in the case of acquisition from an interested party
|Transfer fee||Transfer price × 1.0% (maximum %)
*0.5% (maximum %) in the case of transfer to an interested party
*No fee is paid in cases where no gain no transfer is generated on the transfer.
*In the case the transfer fee before adjustment exceeds the gain on transfer, the gain on transfer shall be the transfer fee.
|Merger fee||Total valuation amount of the real estate-related assets held by the other party to the merger × 1.0% (maximum %)
* Only applicable when Hulic REIT Management conducts a survey or assessment on the assets, etc. held by the other party or other work related to the merger for the interests of Hulic Reit and the merger takes effect.
Remuneration System for Employees and Officers of the Asset Management Company
In its remuneration system for employees and officers, Hulic REIT Management Co., Ltd. has introduced a system of incentive bonuses partially linked to cash distributions per investment unit.
In addition, a compensation system linked with the performance of Hulic Reit's unit price relative to the TSE REIT Index has been introduced for the main directors of Hulic REIT Management.
Investment Unit Ownership Program for Directors and Employees
An investment unit ownership program has been adopted for the officers and employees of Hulic REIT Management and Hulic
Adopting operating systems to prevent conflicts of interest and ensure objectivity
Hulic REIT Management appoints outside experts to both its Investment Committee and Compliance Committee. Upon resolution on asset acquisition, etc. from interested parties, the Investment Committee requires a majority of the committee members including external members to agree, and the Compliance Committee requires a majority of the committee members in attendance, including external members and the Compliance Officer, to agree.
Decision-making procedure for interested party transactions involving acquisition, sale, leasing, or management of operating assets
Adoption of voluntary rules to prevent transactions involving a conflict of interest
Regarding transactions with interested parties, Hulic Reit applies the general rules outlined below and works to prevent transactions where a conflict of interest might arise.
|Property acquisition||No acquisition is made at above the appraisal value (excluding acquisition costs) (Note 1).|
|Property transfer||No transfer is made at below the appraisal value (excluding transfer costs).|
|Property leasing||Properties are leased on terms considered appropriate based on an overall decision made after researching the market price, rates in the surrounding area, standard leasing terms for the property type, and other relevant factors.|
|Outsourcing of property
|Outsourcing is undertaken on terms considered appropriate in accordance with the conditions stipulated in the operational guidelines, following due consideration of management performance and efficiency, and after taking account of the content of the services provided, the total volume of the operations, and other relevant factors. The outsourcing fees are determined based on market levels, the content of the services provided, the total volume of the operations, and other relevant factors.|
|Outsourcing of property purchase, sale, and leasing to agencies||Outsourcing is undertaken on terms considered appropriate and at fees within the range stipulated in the Building Lots and Buildings Transaction Business Act, after taking account of the content of the services provided and other relevant factors.|
|Commissioning of construction work, etc. (Note 2)||Construction work, etc., is commissioned on terms considered appropriate based on an overall consideration of the price, content, and other aspects of third-party estimates.|
- In cases where the interested party has incurred costs, for instance by temporarily creating a special-purpose company on the understanding that the interested party is to transfer the property to the investment corporation, the costs may be added to the appraisal value at the time of acquisition.
- However, this does not apply where the estimate price is \10 million or below or in cases where urgent action is required.