Report on the Management Structure and System of the Issuer of Real Estate Investment Trust Units and Related Parties

Transcription

1 1 July 28, 2016 Report on the Management Structure and System of the Issuer of Real Estate Investment Trust Units and Related Parties Kenedix Office Investment Corporation (Securities Code: 8972) Naokatsu Uchida, Executive Director Asset Management Company: Kenedix Real Estate Fund Management, Inc. Ryosuke Homma, CEO and President Inquiries: TEL.: Basic Information (1) Basic Policy Concerning Compliance 1 Kenedix Office Investment Corporation s basic policy concerning compliance, points of concern and characteristics of management structure, etc. as an investment corporation. The Board of Directors of Kenedix Office Investment Corporation is comprised of one Executive Director and three Supervisory Directors. The position of Executive Director is concurrently held by the Director and COO, General Manager of Office REIT division of Kenedix Real Estate Fund Management, Inc. ( the Asset Management Company ). As mentioned below, the Supervisory Directors are experts, including a lawyer, a certified public accountant and a real estate appraiser, and are third parties who are not special related parties to the Asset Management Company. The Investment Corporation has prepared various rules and regulations, such as the Board of Directors regulations and management rules on insider trading etc. At the same time, we hold Board of Directors meetings, which have in principle been held regularly once a month and we also hold provisional Board of Directors meetings when necessary. As such, the Investment Corporation has been able to and continues to make sound decisions. Furthermore, the Asset Management Company gives reports on the state of the execution of the asset management business at the Investment Corporation s Board of Directors meetings. In addition, by providing enough information so that the Board of Directors may make decisions, the Asset Management Company is striving to assist in the appropriate functioning of the Investment Corporation s check-and-balance system over the Asset Management Company. 2 The Asset Management Company s basic policy concerning compliance, points of concern and characteristics of management structure, etc. as an asset management company. The Asset Management Company has explicitly declared the following points concerning the basic policy of its compliance regulations: * We fully recognize insufficiencies in carrying out strict compliance may undermine our management base, and consider the thorough execution of compliance as our high priority issue. * We are aware that we hold responsibility as an asset management company for striving to produce value from our businesses sought by society, and we will proactively and tirelessly strive towards ensuring compliance in order to enhance the qualitative and quantitative value of our businesses. * By contributing to the development of the economy and society through the operation of compliance activities, we aim to raise the evaluation we receive from investors and to establish credibility from society at large. Furthermore, in the abovementioned regulations, we have made the following provisions concerning the respective roles played by the Board of Directors, the Compliance Committee and the Compliance Officer in the promotion of compliance.

2 2 (Board of Directors) i. The Board of Directors is the decision-making body over basic matters pertaining to the promotion of compliance company-wide. ii. The Board of Directors is able to request reports as necessary from the Compliance Officer and the Compliance Committee concerning the state of promoting compliance. iii. The Board of Directors resolves following appointments. (1) The External Commission Member for the Compliance Committee (2) The External Commission Member for the each division Asset Management Committee (3) Compliance Officer (Compliance Committee) i. The Compliance Committee, which is headed by the Compliance Officer, holds discussions and makes resolutions concerning matters related to overall compliance. The specific separation of deliberation and matters to be resolved is as set forth by organizational rules and Compliance Committee rules. ii. As head of the Compliance Committee, the Compliance Officer governs matters concerning the Asset Management Company compliance. Other important matters concerning compliance are holds discussions and makes resolutions at the Compliance Committee, which are then reported to the Board of Directors. (Compliance Officer) i. The Compliance Officer establishes the internal compliance system and also strives to cultivate a corporate culture that fosters compliance with laws, regulations and rules. The specific separation of duties, etc. is as set forth by organizational rules. ii. The Compliance Officer confirms that the prescribed documents have been prepared when a corresponding each division establishes or revises management guidelines, asset management plans, etc., or a provision concerning the acquisition of individual assets is submitted, etc. After confirming that the prescribed documents have been prepared, the Compliance Officer conducts a preliminary assessment of whether or not important compliance issues exist, such as violations of laws and regulations. iii. As head of the Compliance Committee, the Compliance Officer governs matters concerning the Asset Management Company compliance. Moreover, overviews of the operations, etc. of the Compliance Officer or Compliance Department and Compliance Committee are as shown in the following table. Compliance Officer/Compliance Department Separation of Duties i. Items related to overall control of compliance, including drafting compliance programs and compliance manuals ii. Items related to establishment, amendment and abolishment of various company regulations, rules, etc. and verification of the observance status iii. Items related to verification of the observance status for laws, regulations and ordinances concerning overall business iv. Items related to overall control of handling of complaints v. Items related to management of important information related to firms, insider trading, etc. vi. Items related to overall control of the information management vii. Items related to risk management viii. Items related to individual management of compliance risks and administrative risks ix. Items related to negotiations, etc. between regulatory authorities for matters of business duties x. Other incidental items

3 3 Compliance Committee Board CEO and President, Compliance Officer (Chair), Director (full-time) and External Commission Member (Note 1) Content of a. Matters concerning asset management of the Investment Corporation Deliberation i. Items related to transactions with related parties (Note 2) or between the Asset Management Company and the Investment Corporation (Note 3) that fall under the asset management business (the KDO Asset Management Business ) consigned to the Asset Management Company by the Investment Corporation ii. Items related to transactions conditionally approved in the management guidelines of the Office REIT Division or non-regulated transactions that fall under the KDO Asset Management Business iii. Items related to management policies concerning the KDO Asset Management Business (development and changes, etc. of the Office REIT Division s management guidelines, asset management plans, medium-term business plans and annual business plans) iv. Items related to KDO Asset Management Business transactions that exceed the acquisition amount range stipulated in the annual asset management business plan v. Other items incidental or related to the above items Other matters i. Items related to internal compliance and the compliance system ii. Items related to the acquisition of shares, investment units, etc. by executives and employees, etc. stipulated in its management rules on insider trading, etc. iii. Items related to establishment, amendment and abolishment of various company regulations, rules, etc. iv. Items related to compliance concerning other items stipulated by the compliance officer as needed Notes: Deliberation Method v. Other items incidental or related to the above items i. Requires more than two-thirds of Committee members to be present. However, the Compliance Officer and the External Commission Member must attend. ii. A resolution is passed by a unanimous vote. However, Director (full-time) in charge of specific Division has no voting right for asset management related matters other than in charge of self. Moreover, if a unanimous vote is not obtained, then the Compliance Officer returns the provision to the division that proposed it. 1. As of the date of this document, the External Commission Member is a lawyer who is not a related party to the Asset Management Company entrusts asset management business to the Investment Corporation or the Asset Management Company entrusts asset management business to the party. Please refer to Item 2-(3) 2 (iii) for the personal history, etc. 2. Please refer to Item 2-(3) 1 (ii) for the related parties. 3. Please refer to Item 2-(3) 1 (iii) for the transactions with related parties or between the Asset Management Company and the Investment Corporation. (2) Details of the Investment Corporation s Main Investors As of April 30, 2016 Name Relationship with the Investment Corporation, the Asset Management Company or sponsors and the background for holding units Number of Investment Units owned Ratio (%) (Note) Japan Trustee Services Bank, Ltd. (Trust Account) Not applicable 65, Trust and Custody Services Bank, Ltd. (Securities Investment Trust Account) Not applicable 57, The Master Trust Bank of Japan, Ltd. (Trust Account) Not applicable 43, Nomura Bank (Luxembourg) S.A. Not applicable 23,

4 4 The Nomura Trust and Banking Co., Ltd. (Investment Trust Account) Not applicable 19, The Bank of New York Mellon SA/NV 10 Not applicable 11, State Street Bank and Trust Company Not applicable 8, State Street Bank and Trust Company Not applicable 6, MSIP CLIENT SECURITIES Not applicable 5, State Street Bank and Trust Company Not applicable 5, Total of , Note: The ratio is rounded down to the second decimal place. (3) Major Shareholders of the Asset Management Company Kenedix, Inc, Name As of July 28, 2016 Relationship with the Investment Corporation, the Asset Management Company Number of Stocks or sponsors and the background for holding units (units) Ratio (%) The parent company and the sponsor company of the Asset Management Company. The sponsor, the Investment Corporation and the Asset Management 4, Company has concluded the Memorandum of Understanding. Total of 1 4, (4) Investment Policies and Investment Target Please refer to Kenedix Office Investment Corporation s Securities Report for the twenty-first fiscal period (Japanese version only). (4)-2 Matters Concerning Tenant Selection Standards In relation to tenant selection standards for real estate etc. the Investment Corporation determines a tenant s occupancy after comprehensively considering its attributes, credibility, line of business, purpose of use, lease terms and conditions, and possible turnover, etc. (4)-3 Matters Concerning Investment in Overseas Real Estate The Investment Corporation shall not invest in overseas real estate. (5) Matters Concerning Sponsors 1 Principal Activities of Sponsor Company Group (as of March 31, 2016) The Asset Management Company s sponsor company group consists of Kenedix Inc., which is the sponsor company, 53 subsidiaries (including non-consolidated) and 14 related companies. Out of these, the following is information concerning 4 consolidated subsidiaries and 6 equity method affiliates. Moreover, most of the other subsidiaries and affiliates are investment vehicles (tokumei-kumiai operators), etc. (Note). The core businesses of the Kenedix Group include asset management business, property management business and property operation business and real estate investment business. As such, the Kenedix Group provides general and comprehensive investment services to customers/investors by catering to the entire investment process, which includes the following: investment strategy proposals/investment advices regarding real estate, loans backed by real estate and other assets, and asset management by operation/management of investment business.

5 5 Kenedix, Inc. s consolidated subsidiaries Consolidated Subsidiary Kenedix Real Estate Fund Management, Inc. Space Design, Inc. Kenedix Property Management, Inc. Japan Senior Living Partners, Inc. Other 40 companies Main Description of Business Asset management business and operation business of real estate investment trust Entrust real estate related operational business, etc. Real estate trading, building management and operation related consulting business Asset management company for Japan Senior Living Investment Corporation Kenedix, Inc. and its Equity-method Affiliates Equity-method Affiliates Mitsui & Co., Logistics Partners Ltd. Asset One Co., Ltd. CRES Co., Ltd. KW Multi-Family Management Group, LLC. KENEDIX Private Investment Corporation Premier REIT Advisors Co., Ltd. Other 8 companies Main Description of Business Asset Management Company for Japan Logistics Fund, Inc. Undertaking the real estate research business, etc. for Kenedix, Inc. Undertaking the real estate brokerage business and assessing collateralized real estate for assessing the debt in bond investment management business for Kenedix, Inc. Finding projects and conducting asset management for investments in U.S. real estate by Kenedix, Inc. Investment Corporation under the Investment Trusts and Investment Corporations Law (Private REIT) Asset Management Company for Premier Investment Corporation Note: Investment vehicle: A typical Investment Vehicle utilized by the Kenedix Group is the mainly limited liability company as defined by the Companies Act of Japan. A limited liability company etc. established by Kenedix, Inc. or Kenedix Real Estate Fund Management, Inc. concludes tokumei-kumiai contracts with customers/investors, originates the tokumei-kumiai and carries out the investment business with the limited liability company etc. as the tokumei-kumiai operator and the customers/investors as participants in the tokumei-kumiai.

6 6 Structure of the Group Company (as of March 31, 2016) Asset Management Business Property Management Business Property Operation Business Real Estate Investment Business Kenedix, Inc. (Consolidated Subsidiary) (Consolidated Subsidiary) Kenedix Real Estate Fund Management, Inc. Tokumei-Kumiai / Operators of Tokumei-Kumiai Japan Senior Living Partners, Inc. (Equity-method Affiliates) Mitsui & Co., Logistics Partners Ltd. KW Multi-Family Management Group, LLC Premier REIT Advisors Co., Ltd. (Consolidated Subsidiary) Kenedix Property Management, Inc. (Consolidated Subsidiary) Space Design, Inc. (Equity-method Affiliates) Asset One Co., Ltd. CRES Co., Ltd. KENEDIX Private Investment Corporation 2 Agreements Concerning Supply on Properties and Information Provision with Sponsor Company Groups i. Support from Kenedix, Inc. in the Provision of Investment Properties (i). Provision of Property Sales Information Acquired by Kenedix, Inc. In the event that Kenedix, Inc. obtains sales information (hereinafter, Property Sales Information ) on properties, etc. owned or managed by parties other than respective parties of the Memorandum of Understanding (hereinafter, Support-line Memorandum of Understanding ), and in its reasonable opinion, meets the Investment Corporation s investment criteria, Kenedix, Inc. has agreed to provide information regarding such properties, etc. to the Asset Management Company no later than the time it provides such information to parties other than the Asset Management Company, unless otherwise prohibited by law or regulations or contracts to which it is a party. (ii). Information regarding Property Sales Owned by Kenedix, Inc. In the event that Kenedix, Inc. considers disposing of a property, etc. that is owned or planned to be acquired by Kenedix, Inc., its wholly owned entity (including silent partnership, but not limited to this), a fund fully financed by Kenedix, Inc. (including silent partnership, but not limited to this), or a fund fully financed by a wholly owned entity (excluding properties, etc. held in response to warehousing holding requests made by the Asset Management

7 7 Company, as defined in iii.), and in its reasonable opinion, meets the Investment Corporation s investment criteria, Kenedix, Inc. has agreed to provide information regarding such properties, etc. to the Asset Management Company no later than the time it provides such real estate information etc. to parties other than the Asset Management Company, unless the sale to the Investment Corporation is prohibited by law or regulations or contracts to which it is a party. (iii). Property Sales Owned by Kenedix Private Placement Funds In the event that Kenedix, Inc. disposes of a property that is owned by a real estate investment fund (excluding warehousing function funds defined in the following ii.) for which it serves as the asset management company and, in its reasonable opinion, meets the Investment Corporation s investment criteria, Kenedix, Inc. has agreed to provide information regarding such property to the Asset Management Company no later than the time it provides such information to parties other than the Asset Management Company, unless otherwise prohibited by law or regulations or contracts to which it is a party. ii. Disposition of Property by a Warehousing Function Fund As for properties, etc. owned or managed by parties other than respective parties of the Support-line Memorandum of Understanding, the Asset Management Company may request Kenedix, Inc. to originate a real estate investment fund for the purpose of securing future opportunities for the Investment Corporation to acquire properties. In the event that Kenedix, Inc. receives such a request from the Asset Management Company, it shall consider said request in good faith. In the event that Kenedix, Inc. accepts a request set forth under the abovementioned paragraph, it shall originate a Warehousing Function Fund for which it will serve as the asset management company and acquire properties, etc. relating to said request set forth under the abovementioned paragraph at said fund. In the event that Kenedix, Inc. disposes of properties owned by the Warehousing Function Fund ( Warehousing Function Fund Properties ), it shall observe the following provisions. (a) When selling Warehousing Function Fund Properties, Kenedix, Inc. shall first offer them to the Asset Management Company for sale to the Investment Corporation. (b) After Kenedix, Inc. extends the offer of sale to the Asset Management Company set forth under (a), it shall discuss sales and purchase terms for the Warehousing Function Fund Properties with the Asset Management Company in good faith. (c) In the event that Kenedix, Inc. do not reach an agreement concerning the sales and purchase of the Warehousing Function Fund Properties after holding discussions as set forth under (b) or falls under certain conditions (hereinafter, Reasons for Selling to a Third-Party ), Kenedix, Inc. may offer such Warehousing Function Fund Properties to a third-party after giving the Asset Management Company notice it will extend such offer of the Pre-Acquisition Services Fund Properties to a party other than the Asset Management Company. Agreements on details of disposition procedures or reasons for selling to a third-party set forth under (c) shall separately be concluded between the contracting parties of the Support-Line Memorandum of Understanding and the Warehousing Function Fund, after such details have been determined for each Warehousing Function Fund that will be originated. iii. The Warehousing Function Offered by Kenedix The Asset Management Company may request Kenedix, Inc. to purchase and hold a property owned or managed by parties other than the respective parties of the Support-Line Memorandum of Understanding with a view to reselling it to the Investment Corporation. In the event that Kenedix, Inc. receives such a request from the Asset Management Company, it shall consider said request in good faith. In the event that Kenedix, Inc. has accepted such a request, Kenedix, Inc. will purchase the property directly or indirectly through its subsidiaries. In the event of Kenedix, Inc. purchasing the property, the Asset Management Company is granted a first option to purchase such property for one year following the acquisition, and Kenedix, Inc. may not offer such property to any party other than the Asset Management Company during such period. In

8 8 addition, in the event when the Asset Management Company makes an offer for the Investment Corporation to purchase the property during such period, Kenedix, Inc. must comply with the offer. iv. Others The Support-Line Memorandum of Understanding is to be valid for one year after this memorandum is signed. The Support-Line Memorandum of Understanding will be extended automatically for one year under the same terms after each year unless any entity that signed this memorandum notifies all other entities that signed this memorandum no later than 30 days prior to the expiration date of the intent not to renew the memorandum. In addition, if the Investment Corporation acquires real estate, etc. as a result of information provided, etc. based on the Support-Line Memorandum of Understanding, whether or not to pay brokerage fees and the amount of these fees will be determined by separate discussions for each transaction based on laws and regulations, customary business practices and the nature of services provided. v. Other Support-Line Memorandum of Understanding The Asset Management Company provides asset management services to not only the Investment Corporation but also Kenedix Residential Investment Corporation, Kenedix Private Investment Corporation, Kenedix Retail REIT Corporation and other Real Estate Funds, etc. from which asset management business is consigned. Kenedix, Inc. and the Asset Management Company have executed the Support-Line Memorandum of Understanding similar to the above with Kenedix Residential Investment Corporation, Kenedix Private Investment Corporation, Kenedix Retail REIT Corporation and other Real Estate Funds, etc. from which asset management business is consigned. Moreover, the Support-Line Memorandum of Understanding approves in advance that, with regard to the information about the sale of real estate, etc. and warehoused real estate, etc. provided by Kenedix, Inc. based on the Support-Line Memorandum of Understanding, if the Asset Management Company decides to not acquire the relevant assets for the Investment Corporation after investigating acquisition loyally with the due care of a prudent manager (hereafter, the real estate, etc. that is decided not to be acquired is referred to as the real estate, etc. not to be acquired ), other funds (including but not limited to investment corporations) to which the Asset Management Company provides asset management services may investigate the real estate, etc. not to be acquired and, based on the investigation, may acquire it (however, if other funds have acquired the real estate, etc. not to be acquired and the Investment Corporation had issued a purchase confirmation letter for the relevant real estate, etc. not to be acquired, the Asset Management Company shall report the acquisition to the Investment Corporation without delay). Furthermore, the Asset Management Company has established a Pipeline Meeting in order to prevent arbitrary allocation of the information about the sale of real estate, etc., prevent conflicts of interest arising between funds, and secure loyalty to each fund in conducting operations, and has adopted rules on preferential rights to study property information. For the outline of the rules, please refer to Kenedix Office Investment Corporation s Securities Report for the twenty-second fiscal period (Japanese version only). As stated above, there is a possibility that the investment targets overlap between the Investment Corporation and Kenedix, Inc., which manages privately placed funds. However, the Asset Management Company believes that segregation is possible as the basic risk-return profiles of customer investors are different between the privately place funds and the Investment Corporation, and the information is provided in accordance with the priority set forth in the above-mentioned Support-Line Memorandum of Understanding. Furthermore, while Kenedix, Inc. has executed an agreement related to support for the acquisition of logistics real estate with Mitsui & Co., Logistics Partners Ltd. and Japan Logistics Fund, Inc., logistics properties are not included in the investment targets of the Investment Corporation. In addition, Kenedix, Inc. has acquired part of the shares (shareholding ratio: 30%) of Premier REIT Advisors Co., Ltd., which is entrusted with the asset management of Premier Investment Corporation, a J-REIT that has an investment target that partially overlaps with the Investment Corporation, on October 30, Furthermore, the Investment Corporation and the Asset Management Company judged that there will be no special impact on property acquisition opportunities of the Investment Corporation associated with the share acquisition, as the Asset Management Company receives sales information on properties, etc. obtained by Kenedix, Inc. at the same time as parties other than the Asset Management Company based on the Support-line Memorandum of Understanding. Moreover, the Investment Corporation and the Asset Management Company

9 9 evaluated that there will be no special impact on property acquisition opportunities of the Investment Corporation, although Kenedix, Inc. has executed sponsor support agreements with listed J-REIT company, Japan Senior Living Investment Corporation, and Japan Senior Living Partners, Inc., which have an investment target that partially overlaps with the Investment Corporation. 2. Management Structure and System of the Investment Corporation and the Asset Management Company (1) Investment Corporation 1 Directors of the Investment Corporation As of July 28, 2016 Title Name Brief Personal History (Note) Reason for Selection April 1990 April 1995 April 1998 April 2005 October 2007 November 2007 June 2009 Joined The Mitsubishi Trust Banking Corporation, Kyoto Branch Transferred to Business Development Division Transferred to Real Estate Division Transferred to Real Estate Project Origination Division Joined MAC Advisers Inc. Joined MAC Investment Management Inc. as a CEO Joined Joint Asset Management Co., Ltd. as a CEO Naokatsu Uchida was selected based on expectations due to his knowledge and experience concerning the financial and real estate business Executive Director Naokatsu Uchida January 2010 January 2011 February 2012 March 2012 October 2013 February 2014 Kenedix REIT Management, Inc., Financial Planning Division Assigned as a Senior Manager of Financial Planning Division Assigned as a CEO and President Assigned as an Executive Director of Kenedix Realty Investment Corporation (currently Kenedix Office Investment Corporation) (current position) Assigned as a Director and COO, KRI General Manager of Fund Division of Kenedix Real Estate Fund Management, Inc. Assigned as a Director and COO, General Manager of Office REIT Division of Alternate Executive Director Supervisory Director Hikaru Teramoto Shiro Toba April 1994 October 1996 January 1998 August 1998 July 2000 April 2001 August 2004 July 2006 September 2007 June 2010 June 2012 August 2012 October 2013 February 2014 October 1989 March 1993 January 1997 May 2002 Kenedix Real Estate Fund Management, Inc. (current position) Joined The Sakura Bank, Ltd., Kannai Branch Transferred to Yokohama Branch Transferred to Personal Planning Division Transferred to Shiba Branch External assignment to Sakura Securities Co., Ltd., Structured Finance Division External assignment to Daiwa Securities SMBC Co., Ltd.(Later employment transferred), Structured Finance Department Transferred to Corporate Planning Department Transferred to Corporate Finance Department 1 Joined Goldman Sachs Japan Co., Ltd., Investment Banking Division Joined Goldman Sachs Realty Japan Co., Ltd., Disposition and Sourcing Joined Kenedix, Inc. Temporary transferred to Kenedix REIT Management, Inc., General Manager of Financial Planning Division Director and General Manager of Financial Planning Division Kenedix Real Estate Fund Management, Inc., General Manager of Planning Department, KRI Fund Division Kenedix Real Estate Fund Management, Inc., General Manager of Planning Department, Office REIT Division (current position) Joined Chuo Shinko Audit Corporation Became a Japanese certified public accountant Established Toba Public Accounting Office (current position) Became a Japanese certified tax accountant Hikaru Teramoto was selected based on decisions due to his business background etc. Shiro Toba was selected based on expectations due to his knowledge and

10 10 Title Name Brief Personal History (Note) Reason for Selection April 2004 January 2005 Supervisory Director Shiro Toba May 2005 Assigned as a Director of Majestec Corporation (current position) Assigned as a Representative Director of Minori Accounting Co., Ltd. (current position) Assigned as a Supervisory Director of Kenedix Realty Investment Corporation (currently Kenedix Office Investment Corporation) (current position) experience as a expertise concerning accounting and tax Supervisory Director Yoshihiro Morishima April 1974 July 1977 October 1982 January 1985 March 1985 February 1992 February 1994 October 1996 February 1999 October 2000 April 2001 April 2002 September 2003 April 2006 April 2011 March 2012 February 2014 Other concurrent positions held that are not conflicts of interest: 38 corporations including Minori Accounting Co., Ltd. Joined The Mitsubishi Trust Banking Corporation, Machida Branch Transferred to Real Estate Division Transferred to Gotanda Branch Transferred to Shibuya Branch Registered as the real estate appraiser Transferred to Real Estate Division Transferred to Takamatsu Branch as a Vice President External assignment to Ryoushin Jyutaku Hanbai Kabushikigaisha as an Executive Director / Senior Sales Director Assigned as a General Manager of Tokyo Business Division VI, Mitsubishi Trust Banking Corporation Transferred to Real Estate Appraisal Division as a General Manager Guest Professor of Faculty of Real Estate Sciences Department of Real Estate Sciences, Meikai University Transferred to Real Estate Consulting Division as a General Manager of Mitsubishi Trust Banking Corporation Left the Mitsubishi Trust Banking Corporation Adviser of Tokyo Association of Real Estate Appraisers (current position) Officer of Morishima Consulting Office of Real Estate Assigned as a Supervisory Director of Kenedix Realty Investment Corporation (currently Kenedix Office Investment Corporation) (current position) Assigned as President of Y.K. Island Forest (current position) Yoshihiro Morishima was selected based on expectations due to his knowledge and experience concerning the financial and real estate business Supervisory Director Takahiro Seki April 1989 April 1990 January 1991 April 1997 November 2000 May 2001 February 2002 June 2002 February 2014 Other concurrent positions held that are not conflicts of interest: 2 corporations including Y.K. Ireland Forest etc. Joined Goldman Sachs (Japan) Corp. Joined S.G.Warburg Securities (Japan) Inc. Left S.G.Warburg Securities (Japan) Inc. Became a member of Tokyo Bar Association Law Offices of Kataoka & Kobayashi, Associate Assigned as an Executive Officer and Head of Legal Office, GE Fleet Services Corporation Assigned as a director and Head of Legal Office Became Associate, Miyakezaka Sogo Law Offices Became Partner (current Position) Assigned as a Supervisory Director of Kenedix Office Investment Corporation (current position) Takahiro Seki was selected based on expectations due to his knowledge and experience as a expertise concerning law Other concurrent positions held that are not conflicts of interest: 1 corporation including Miyakezaka Sogo Law Offices

11 11 Note: Corporate names are in principle stated at that time. With regards to the Investment Corporation, Corporate names are stated at that time of the appointments and noted them as of the date of this document in brackets. 2 Reasons why Executive Director of the Investment Corporation concurrently holding the position of executives and regular employees of the Asset Management Company and measures for relationships involving conflicts of interests Title of the Asset Name Management Company Naokatsu Uchida Director and COO, General Manager of Office REIT Division Reasons for Concurrent Position (1) Necessity of Concurrent Position The majority of decisions made for the Investment Corporation are made based on judgments made by the Asset Management Company due to the consignment of asset management to the Asset Management Company. Therefore, close cooperation and information sharing are required between the management of the Investment Corporation and the management of the Asset Management Company. Furthermore, the following are duties of Executive Directors of the Investment Corporation and information sharing is vital in order for them to fulfill their duties. 1 Executive Directors must obtain approval from the Board of Directors meeting for executing certain operations (Article 109, Paragraph 2 of the Investment Trust Law). These operations include concluding asset management agreements, payment of expenses for managing assets, such as asset management fees, and matters related to the operations of the Asset Management Company. By holding a concurrent position, we believe he is able to give accurate and sufficient explanations to the Board of Directors and thus assist the Board of Directors in making sound decisions. 2 Executive Directors must report the state of executing business to the Board of Directors (Article 109, Paragraph 3 of the Investment Trust Law). By holding a concurrent position, we believe he is able to give detailed and precise reports to the Board of Directors. 3Executive Directors are accountable for giving explanation to unitholders at the General Meeting of Unitholders (Article 94, Paragraph 1 of the Investment Trust Law and Article 314 of the Company Law). As we mentioned above, the Asset Management Company is entrusted with the asset management of the Investment Corporation and acts as an Asset Management Company. Therefore, we believe that his concurrent position as a Director of the Asset Management Company and as an Executive Director of the Investment Corporation will enable him to give accurate and sufficient explanations to unitholders. 4 Since the Asset Management Company has been entrusted with operations set forth in agreements, it must report the state of entrusted matters to the Investment Corporation, which is the investment corporation. Therefore, we believe that holding concurrent position will enable him to sufficiently carry out these responsibilities. As we mentioned above, in view of the agreements made between the Asset Management Company and the Investment Corporation, as well Measures for Relationships involving Conflicts of Interests (1) The Asset Management Company has Office REIT Division Relatedparty Transaction Rules, which set forth that transactions of acquisition and disposition of assets with related parties must be given approval by the Investment Corporation Board of Directors in the form of a resolution and consent by Executive Director. In order to propose the matter to the Board of Directors, it must first be given approval of resolution by the Compliance Committee and the KDO Asset Management Committee. According to the rules, in order for a proposal to pass the Compliance Committee, it must be given unanimous approval by all members of the Committee, including the External Commission Member (a lawyer who is a third party but who is not a related party). Furthermore, related-party transactions that are given official approval are immediately disclosed. (2) In the event the Investment Corporation engages, under instruction of the Asset Management Company, in the purchase and sale of specified assets and other transactions stipulated in the Enforcement Regulation for the Investment Trusts and Investment Corporations Law (Government Ordinance No. 480 of 2000, including amendments thereafter; hereafter, the Investment Trust Enforcement Regulation ) with the Asset Management Company or directors or executive officers of the Asset Management Company, other

12 12 Naokatsu Uchida Director and COO, General Manager of Office REIT Division as the nature of duties of the Executive Directors of the Investment Corporation, we believe that his concurrent position as the Representative Director of the Asset Management Company and as an Executive Director of the Investment Corporation will enable him to carry out appropriate and sound management with expedition. Therefore, the concurrent position is highly necessary. (2) Capacity for Holding Concurrent Position Special conflicts of interest are not seen to arise as a result of the Representative Director of the Asset Management Company concurrently holding position of Executive Director of the Investment Corporation, who makes decisions for the Investment Corporation. Moreover, Executive Director, Naokatsu Uchida has about 17 years of financial experience working in a financial institution named Mitsubishi UFJ Trust and Banking Corporation (former Mitsubishi Trust and Banking Corporation). He then joined as a CEO of asset management company of a real estate private fund. Due to his experience in real estate finance backed by financial knowledge earned prior to his entrance, we expect him to conduct management using his wide range of knowledge and experience. investment corporations to which the Asset Management Company provides asset management services, related parties and other parties stipulated in the Investment Trust Enforcement Regulation, the Asset Management Company shall, pursuant to the provisions of the Ordinance for Enforcement of the Investment Trusts and Investment Corporations (Ordinance of the Prime Minister's Office No. 129 of 2000, including amendments thereafter; hereafter, the Investment Trust Enforcement Ordinance ), provide a written report describing matters relating to the aforementioned transactions to the Investment Corporation, other investment corporations to which the Asset Management Company provides asset management services (limited to those that invest in similar asset types as the relevant specified assets) and other parties stipulated in the Investment Trust Enforcement Regulation. Other than the provision of reports as set forth in the Investment Trust Law, the Asset Management Company provides reports at the Board of Directors meetings of the Investment Corporation about the content of related-party transactions, etc. 3 Other Relationships involving Conflicts of Interest due to other positions held simultaneously by Directors for the Investment Corporation (excluding contents mentioned above 2) Each Director has no relation or trade involving conflicts of interest.

13 13 (2) Asset Management Company 1 Directors of the Asset Management Company As of July 28, 2016 Title Full-time/Part-time Name Brief Personal History (Company names etc. at that time) President and Representative Director (Full-time) Director and COO, General Manager of Residential REIT Division (Full-time) Director and COO, General Manager of Office REIT Division (Full-time) Ryosuke Homma Akira Tanaka Naokatsu Uchida April 1968 April 1973 February 1979 June 1986 June 1992 September 1994 October 1996 November 2003 March 2007 March 2010 March 2013 October 2013 April 1987 September 2000 January 2004 September 2006 April 2008 December 2009 February 2010 March 2010 August 2011 November 2011 October 2013 February 2014 January 2016 February 2016 Mitsubishi Corporation Mitsubishi Company (Thailand) Ltd. Baghdad Office, Mitsubishi Corporation Overseas Construction Department, Mitsubishi Corporation Los Angeles Office, Mitsubishi International Corporation President & CEO, MC Realty, Inc. CEO and President, Kennedy-Wilson Japan Co., Ltd. CEO and President, KW Pension Fund Advisors Co., Ltd. Chairman and Representative Director, Kenedix, Inc. Chairman and Director, Kenedix, Inc. Adviser, Kenedix, Inc (current position) President and Representative Director, Kenedix Real Estate Fund Management, Inc. (current position) Yasuda Trust & Banking Co., Ltd. Kennedy-Wilson Japan Co., Ltd. Director and COO, KW Pension Fund Advisors Co., Ltd. Executive Officer and General Manager of Strategic Investment Department, Kenedix, Inc. Senior Executive Officer and General Manager of Strategic Investment Department, Kenedix, Inc. Director, Kenedix Asset Management, Inc. President and Representative Director, Kenedix Advisors, Inc. Director, Kenedix, Inc. Representative Director, Kenedix Residential Partners, Inc. Executive Director, Kenedix Residential Investment Corporation (current position) Director and COO, KDR General Manager of Fund Division, Kenedix Real Estate Fund Management, Inc. Assigned as a Director and COO, General Manager of Residential REIT Division of Kenedix Real Estate Fund Management, Inc. Assigned as a Director and COO, General Manager of Residential REIT Division and General Manager of Planning Department, Residential REIT Division of Kenedix Real Estate Fund Management, Inc. Assigned as a Director and COO, General Manager of Residential REIT Division of Kenedix Real Estate Fund Management, Inc. (current position) Please refer to above (1) Investment Corporation 1Directors of the Investment Corporation. Concurrent Positions External Assignment Executive Director, Kenedix Residential Investment Corporation (concurrent position) External assignment from Kenedix, Inc. Executive Director of Kenedix Office Investment Corporation (concurrent position) External assignment from Kenedix, Inc. -

14 14 Director and COO, General Manager of Retail REIT Division (Full-time) Director (Part-time) Statutory Auditor (Part-time) Akihiro Asano Masahiko Tajima Haruo Funabashi April 1994 January 2001 January 2004 January 2009 January 2013 March 2014 September 2014 October 2014 April 1988 July 1994 October 1996 June 1998 July 2000 May 2005 June 2007 February 2012 October 2013 March 2014 May 2014 March 2015 July 1969 June 1988 May 1989 March 1995 July 1997 June 1998 June 2000 July 2001 February 2003 May 2004 October 2004 October 2004 March 2005 June 2009 September 2013 Mitsubishi Corporation, Development & Construction Division Seconded to Mitsubishi Corp, - UBS Realty Inc. Kenedy-Wilson Japan Co., Ltd., Investment Department Mitsui & Co., Logistics Partners Ltd. Outside Director Head of Strategic Investment Team. 1 of Kenedix, Inc. Executive Officer, General Manager of Strategic Investment Department, Head of Strategic Investment Team. 1 Kenedix Real Estate Fund Management, Inc. Director and COO, General Manager of Retail REIT Division (current position) Executive Director, Kenedix Retail REIT Corporation (current position) The Mitsui Trust and Banking Co., Ltd. Business Affairs Department Credit Planning Department Securities Department Structured Finance Department, Sumitomo Life Insurance Company Joined Kenedix, Inc. Seconded to Kenedix REIT Management, Inc. as General Manager of Financial Planning Division, Director and General Manager of Financial Planning Division Executive Officer and General Manager of Corporate Planning Department, Kenedix, Inc. Director, Kenedix Real Estate Fund Management, Inc. (current position) Director of Space Design Inc. (current position) Director, Head of Corporate Planning Department, Kenedix, Inc. Director of Japan Senior Living Partners, Ltd. (current position) Director & CFO, Head of Corporate Planning Department, Kenedix, Inc. (current position) Joined Ministry of Finance Assigned as Deputy Financial Commissioner, Ministry of Finance Counselor, Japanese Embassy in France Assigned as Commissioner, Tokyo Customs Assigned as Deputy Commissioner, National Tax Administration Assigned as Secretary General, Securities and Exchange Surveillance Commission Assigned as Director General, Minister s Secretariat, National Land Agency Assigned as Vice-Minister for Land and Hokkaido Development, Ministry of Land, Infrastructure and Transport Chief Executive Officer, Sirius Institute Inc. (current position) Visiting Professor, Graduate School of International Corporate Strategy, Hitotsubashi University Corporate Auditor, KW REIT Management, Inc. Corporate Auditor, KW Pension Fund Advisors Co., Ltd. Corporate Auditor, Kennedy-Wilson Japan Co., Ltd. (current position) Director, The Dai-ichi Mutual Life Insurance Company (current position) Outside Director, MORIMOTO Co., Ltd. (current position) Executive Director of Kenedix Retail REIT Corporation (concurrent position) External assignment from Kenedix, Inc. Director of Space Design Inc. (concurrent position) Director & CFO, Head of Corporate Planning Department, Kenedix, Inc. (concurrent position) Director of Japan Senior Living Partners, Ltd. (concurrent position) Chief Executive Officer, Sirius Institute Inc. (concurrent position) Corporate Auditor, Kenedix, Inc. (concurrent position) Director, The Dai-ichi Life Insurance Company, Limited (concurrent position) Outside Director, MORIMOTO Co., Ltd. (concurrent position) Outside Director, Hitachi Capital Corporation (concurrent position)

15 15 Statutory Auditor (Part-time) Statutory Auditor (Part-time) Statutory Auditor (Part-time) Haruo Funabashi Tetsuo Ueda Shintaro Kanno October 2013 June 2015 June 2016 April 1979 February 2004 June 2006 April 2008 October 2008 March 2010 October 2013 December 2013 March 2014 March 2014 May 2014 October 1994 March 2001 June 2001 March 2003 April 2004 October 2013 November 2015 Statutory Auditor, Kenedix Real Estate Fund Management, Inc. (current position) Outside Director, Hitachi Capital Corporation (current position) Outside Director, SMBC Trust Bank Ltd. (current position) Joined The Daiwa Bank, Limited General Manager, Hiroshima Branch, The Daiwa Bank, Limited General Manager, Ueno Branch, The Daiwa Bank, Limited General Manager, Business Management Department, Kenedix Advisors, Inc. General Manager of General Administration Department and Compliance Officer, Kenedix Advisors, Inc. General Manager, General Administration and Human Resources Division, Kenedix, Inc. and General Manager, General Administration Department, Kenedix Advisors, Inc. General Manager, General Administration and Human Resources Division, Kenedix, Inc. General Manager assigned to General Administration and Human Resources Division, Kenedix, Inc. Appointed Auditor, Kenedix, Inc. Appointed Auditor, Kenedix Real Estate Fund Management, Inc. (current position) Appointed Auditor of Japan Senior Living Partners, Ltd. (current position) Tohmatsu & Co. Akasaka Houwa Accounting Firm Statutory Auditor, Kennedy-Wilson Japan Co., Ltd. (current position) Established Shintaro Kanno Accounting Firm (current position) Statutory Auditor, KW Pension Fund Advisors Co., Ltd. Statutory Auditor, Kenedix Real Estate Fund Management, Inc. (current position) Statutory Auditor, MARSH Co., Ltd. (current position) Outside Director, SMBC Trust Bank Ltd. (concurrent position) Statutory Auditor, Kenedix Inc. (concurrent position) Auditor, Japan Senior Living Partners, Ltd. (concurrent position) Statutory Auditor, Kenedix Inc. (concurrent position) Shintaro Kanno Accounting Firm (concurrent position) Statutory Auditor, MARSH Co., Ltd. (concurrent position) 2 Status of Employees at the Asset Management Company As of July 28, 2016 Loan Employees Received Number of Employees Concurrent Positions with Previous Company Kenedix, Inc concurrent positions (Internal Audit) Sumitomo Mitsui Finance and Lease Co., Ltd. 1 ITOCHU Corporation 1 Total Number of Loan Employees 95 Total Number of Employees in the Asset Management Company (Note) 95 Note: The number of employees excludes representative director, outside director, statutory auditor and temporary staff.

16 16 3 Management Structure of the Investment Corporation and the Asset Management Company Organization chart and outline of each operation are as follows. The Asset Management Corporation Organization Chart Office REIT Div. Asset Investment Dept. Corporate Auditors Internal Audit Dept. Office REIT Division Asset Management Committee Asset Management Dept. Planning Dept. Residential REIT Div. Asset Investment Dept. Shareholders Meeting Board of Directors CEO and President Private REIT Div. Residential REIT Division Asset Management Committee Private REIT Division Asset Management Committee Asset Management Dept. Planning Dept. Investment Management Dept. Planning Dept. Compliance Committee Compliance Officer / Compliance Dept. Retail REIT Div. Private Fund Div. Finance & Accounting Dept. Retail REIT Division Asset Management Committee Private Fund Division Asset Management Committee Asset Investment Dept. Fund Management Dept. Planning Dept. Investment Management Dept. Business Administration Dept.

17 17 The Asset Management Company executes investment management operations based on the above organization. The operations of the Asset Management Company are divided into respective sections comprising the Asset Investment Department, Asset Management Department and Planning Department of the Office REIT Division in charge of the Investment Corporation and the Finance & Accounting Department and Business Administration Department that are common departments, as well as the Compliance Officer/ Compliance Department and the Internal Audit Department. The Asset Investment Department, Asset Management Department and Planning Department are headed by the Director and General Manager of Office REIT Division while the Finance & Accounting Department and Business Administration Department are headed by the General Managers in charge of the common departments. Furthermore, we have established the Office REIT Division Asset Management Committee ( KDO Asset Management Committee ) that is the body for discussing matters related to asset management, as well as a Compliance Committee which is the body responsible for discussing compliance matters. Moreover, please refer to 1. (1) above concerning the Compliance Officer/ Compliance Department and Compliance Committee. Outline of Each Organization in the Asset Management Company The principal operations for each organization are as follows. Although the organizations and institutions indicated above are engaged in the asset management and other operations for Kenedix Residential Investment Corporation, Kenedix Private Investment Corporation, Kenedix Retail REIT Corporation and other privately placed funds as well as in the asset management of the Investment Corporation, the following descriptions are primarily for items related to the asset management of the Investment Corporation.