Translation Purposes Only. June 28, For Immediate Release

Transcription

1 Translation Purposes Only For Immediate Release June 28, 2012 REIT Issuer HEIWA REAL ESTATE REIT, Inc Atago, Minato-ku, Tokyo Masaaki Higashihara, Executive Director (Securities Code: 8966) Asset Management Company HEIWA REAL ESTATE Asset Management CO., LTD. Takaya Ichikawa, President & Representative Director Inquiries: Shinya Ito, General Manager, IR Department TEL Asset Management Company Execution of Agreement to Change Letter of Agreement for Cooperative Business Alliance and Change in Internal Rules Management Guidelines HEIWA REAL ESTATE REIT, Inc. (the Corporation ) announced that HEIWA REAL ESTATE Asset Management CO., LTD. (the Asset Management Company ) decided at a meeting of the board of directors held today concerning the Letter of Agreement for Cooperative Business Alliance (the Letter ) executed with Heiwa Real Estate Co., Ltd. ( Heiwa Real Estate ) on October 1, 2010 to execute an Agreement to Change Letter of Agreement for Cooperative Business Alliance (the Change Agreement ) on June 28, 2012, as well as to change the internal rules of the Asset Management Company known as the HEIWA REAL ESTATE REIT, Inc. Management Guidelines (the Management Guidelines ) on June 28, Details 1. Execution of Agreement to Change Letter of Agreement for Cooperative Business Alliance Based on the Letter executed with Heiwa Real Estate, in the aspect of external growth, the Asset Management Company acquired Of-26 HIROKOJI AQUA PLACE by taking advantage of the warehousing function of Heiwa Real Estate in March 2012 and, in the aspect of internal growth, the Asset Management Company consolidated some of the companies to which it entrusts property management services to Heiwa Real Estate in October 2011, and, even in the financial aspect, the Asset Management Company receives total support. In these and other ways, the Asset Management Company is conducting management for the Corporation while receiving multifaceted support from Heiwa Real Estate. The execution of the Change Agreement this time is aimed at increasingly strengthening the structure of collaboration with Heiwa Real Estate for maximum utilization of Heiwa Real Estate s comprehensive experience and know-how concerning real estate in order to realize the Corporation s basic policy of securing steady growth in managed assets and stable medium- to long-term profits. The Change Agreement makes provisions with regard to the following initiatives while paying due heed to the issue of conflicts of interest

2 1 Grant of right of first refusal concerning sale of properties held or developed by Heiwa Real Estate and its subsidiaries (the Heiwa Real Estate Group ) 2 Preferential information provision concerning properties for which brokerage is handled by Heiwa Real Estate 3 Consideration of advance acquisition by Heiwa Real Estate of properties in view of sale to the Corporation 4 Consideration of acquisition by Heiwa Real Estate upon sale of properties by the Corporation 5 Property management services by the Heiwa Real Estate Group 6 Consideration of co-ownership / unit ownership by Heiwa Real Estate of properties held and properties to be acquired by the Corporation 7 Consideration of additional acquisition of investment units by Heiwa Real Estate upon follow-on offering of investment units 8 Support services concerning investment, leasing, financing, etc. of the Corporation 9 Dispatch of personnel 2. Change in HEIWA REAL ESTATE REIT, Inc. Management Guidelines Since Heiwa Real Estate became the sole sponsor with the acquisition of 100% of Asset Management Company shares in October 2009, in the business aspect, the Corporation has been improving the profitability and enhancing the quality of the portfolio by acquiring properties based on the supply of properties held by and warehousing function of Heiwa Real Estate as well as by utilizing the leasing ability, tenant relations, information channels and building operation and administration capabilities of Heiwa Real Estate and, in the financial aspect, the Corporation has been striving to improve borrowing terms and conditions, such as reduction of financial costs, and establish a stable financial base while also receiving support from Heiwa Real Estate. Change is being made in the Management Guidelines in order to further deepen such initiatives so that Heiwa Real Estate s and the Heiwa Real Estate Group companies know-how can be applied to asset management services for the Corporation in view of early and steady realization of the Corporation s basic policy of securing steady growth in managed assets and stable medium- to long-term profits hereafter. The change in the Management Guidelines is outlined as follows: (1) Further strengthening of the structure of support from Heiwa Real Estate and the Heiwa Real Estate Group In view of making the most of the experience, know-how and other comprehensive strengths concerning real estate of the Asset Management Company s parent company Heiwa Real Estate and the Heiwa Real Estate Group, the content of II. Basic Policy was changed and change was made so that the content incorporates the content of the Agreement to Change Letter of Agreement for Cooperative Business Alliance mentioned in 1. above. (2) Change in investment standards, etc. 1 Concerning investment in exceptional assets, it is currently limited to when acquisition is in the form of a portfolio of real estate, etc., but the decision was made to no longer limit it to when acquisition is in the form of a portfolio because acquisition of silent partnership investment interests is also anticipated. 2 Concerning investment ratios of the portfolio, the ratios of investment in the Primary and Secondary, which had been set for each of offices and residences, were unified. The following are the main portions of change. (The portions of change are underlined. *Excerpts of only the major portions) - 2 -

3 Ⅱ. Basic Policy Existing Ⅱ. Basic Policy Revised (newly established) 3. Utilization of the comprehensive strengths of the Heiwa Real Estate Group The Company aims for realization of the Basic Policy through maximum utilization of the Heiwa Real Estate Group s experience and know-how pertaining to leasing management and real estate development. Under the management policy of provision of a comfortable office environment and living space that is truly satisfactory to the people living in such space, Heiwa Real Estate has established an extensive track record in the leasing business of stock exchange buildings and other office buildings and residences as well as the real estate development business and housing development business. Engaging in comprehensive business pertaining to real estate ranging from development of real estate to long-term holding and operation and administration of such real estate, Heiwa Real Estate has leasing ability, tenant relations building, information channels, building operation and administration capabilities and other experience and know-how in raising the profitability of real estate and maintaining and enhancing the asset value of such that it has accumulated through such business. As such, the Company will proactively utilize such experience and know-how of Heiwa Real Estate in asset management for the Corporation that is premised on medium- to long-term holding of managed assets. (1) Provision of property information from the Heiwa Real Estate Group In light of the Business Alliance Letter granting the Company the following rights and positions, the Company will collect an even larger volume and greater variety of information concerning properties (hereafter, real estate, etc. provided in the Corporation bylaws shall be referred to as properties in 3. (1) through (4)) that will contribute to securing stable medium- to long-term profits by utilizing the Heiwa Real Estate Group s information sources in addition to the Company s own information sources. a. Properties held or developed by the Heiwa Real Estate Group Of the properties held by the Heiwa Real Estate Group, properties held by SPCs to which the Heiwa Real Estate Group provides asset management services, or properties being developed or are to be developed by the Heiwa Real Estate Group (hereafter, collectively referred to as properties held or - 3 -

4 - 4 - developed by the Heiwa Real Estate Group ), in cases of intentions to sell properties that generally conform to the investment standards of the Corporation, with the exception of certain cases, Heiwa Real Estate shall preferentially provide to the Corporation via the Company information pertaining to the concerned properties. In addition, in cases where the Heiwa Real Estate Group and the Company reaches a basic agreement on purchase/sale terms and conditions for properties held or developed by the Heiwa Real Estate Group, with the exception of certain cases, Heiwa Real Estate shall make utmost efforts toward execution of a purchase/sale agreement between the Heiwa Real Estate Group and the Corporation. b. Properties brokered by Heiwa Real Estate For properties that generally conform to the investment standards of the Corporation, in cases of entrustment with the brokerage for the concerned properties from the owner or other parties concerned with such properties, with the exception of cases where information cannot be provided due to the wishes, etc. of owners, etc., Heiwa Real Estate shall provide the concerned information to the Company promptly (same time as disclosure to third parties at the latest). (2) Warehousing function, etc., of Heiwa Real Estate In light of the Business Alliance Letter stating that, in cases where it is difficult for the Corporation to directly acquire properties due to time constraints, etc., the Company shall be able to ask Heiwa Real Estate for advance acquisition or acquisition of the concerned properties by Heiwa Real Estate itself or via third parties, the Company will strive to seize agile property acquisition opportunities for the Corporation. In addition, in light of the Business Alliance Letter stating that, for properties held and properties to be acquired by the Corporation, the Company shall be able to ask Heiwa Real Estate for co-ownership or unit ownership and, in cases of intentions to sell properties held by the Corporation, the Company shall be able to ask Heiwa Real Estate for acquisition of the concerned properties, the Company will conduct agile

5 - 5 - acquisition and sale of properties (including replacement of managed assets) for securing stable medium- to long-term profits in the portfolio. (3) Property management services by the Heiwa Real Estate Group In order to proactively utilize the Heiwa Real Estate Group s wealth of property management capabilities ranging from leasing services (tenant marketing; broker marketing) to management services (tenant management; building management) as well as repair and maintenance work services (planning; construction work; management), etc., in cases where the Corporation newly acquires properties that have office as the main use (hereafter, referred to as office buildings, etc. in (3)) or in cases where the companies to which property management services are entrusted for office buildings, etc. already held by the Corporation are to be changed, property management services shall be entrusted to the Heiwa Real Estate Group as a rule; provided, however, that this shall not apply in cases where, by the standards for selection of property management companies mentioned later in IV. 5., the Company deems that not entrusting property management services to the Heiwa Real Estate Group serves in favor of the Corporation. In addition, in light of the Business Alliance Letter stating that, in cases where the Company recognizes that there are grounds for reasonably deeming that continued entrustment of property management services to the companies to which it entrusts property management services (hereafter, referred to as existing property management companies in (3)) would be difficult for office buildings, etc. held by the Corporation or in cases where the Company deems that there are probable grounds for such, where the Company asks for the concerned entrustment of property management services, Heiwa Real Estate shall make utmost efforts to accept the entrustment of the concerned property management services promptly, the Company will strive to secure continuity of property management services for office buildings, etc. held by the Corporation (4) Other support from Heiwa Real Estate In addition to (1) through (3) above, the Company aims for realization of the Basic Policy through the following support from Heiwa Real Estate provided in the Business Alliance Letter. 1 Support services associated with acquisition, such as due diligence, concerning properties to be acquired by the Corporation 2 Support services associated with management,

6 leasing, renewal, development, etc. of properties held or properties to be acquired by the Corporation 3 Support services concerning leasing of properties held by the Corporation 4 Support services concerning the Corporation s financial policy and financial management 5 Support services concerning introduction of financial institutions and other fund procurement, etc. 6 Support concerning operation and administration of asset management services (hereafter, referred to as the services in (4)) and other services entrusted from the Corporation 7 Provision of market information concerning purchase/sale, development and leasing of real estate, etc. as well as other market information related to the services 8 Dispatch of personnel as required in performing the services within a reasonable scope Ⅲ. Strategy 2. Assets that are investment targets (3) in exceptional assets In cases where investment is to be considered in acquisitions in the form of a portfolio of real estate, etc. where the concerned portfolio is comprised mainly of offices and residences as stipulated in the Management Guidelines and that serve to realize the Basic Policy, even if there are properties other than the uses stipulated in the Management Guidelines, exceptional investment shall be able to be made if the properties generally meet the investment standards of the Management Guidelines other than uses and the investment amount of such is within the scope of 5% or less of the entire portfolio (on an acquisition price basis). 3. Building of diversified portfolio (2) Office and residence portfolio building policy (portion in between omitted) Ⅲ. Strategy 2. Assets that are investment targets (3) in exceptional assets Of the assets that are targets of asset management provided in each paragraph of Article 26 of the Corporation bylaws, concerning assets other than offices and residences (in cases where the managed asset is a sokochi (ownership of land with land leasehold right), then including cases where use of the building on the concerned sokochi is office or residence), in cases where the investment standards of the Management Guidelines are generally met in points other than use, exceptional investment shall be able to be made when the investment amount of such is within the scope of 5% or less of the entire portfolio (on an acquisition price basis). 3. Building of diversified portfolio (2) Office and residence portfolio building policy (portion in between omitted) - 6 -

7 < ratios of the portfolio (on an acquisition price basis)> Offices Residences 50% as a rule (30%~70%) 50% as a rule (30%~70%) Primary Primary 70%~ 60%~ Secondary Regional ~30% * Secondary Regional ~40% * in regional office buildings, regional residences and exceptional assets shall total 30% or less of the entire portfolio (portion remaining omitted) * < ratios of the portfolio (on an acquisition price basis)> Exceptional Offices Residences assets 50% as a rule (30~70%) 50% as a rule (30~70%) 5% or less of the entire portfolio Primary 60~100% 60~100% * Secondary 0~40% 0~40% * Regional * * * * in regional offices, regional residences and exceptional assets shall total 30% or less of the entire portfolio (portion remaining omitted) 3. Future Outlook The execution of the Change Agreement and change in the Management Guidelines will have no impact on the management status for the fiscal period ended May * Distribution: Kabuto Club, Ministry of Land, Infrastructure, Transport and Tourism Press Club, and Ministry of Land, Infrastructure, Transport and Tourism Press Club for Construction Publications * Corporation Website: