Distribution Policy

Japan Rental Housing Investments, Inc. (“the Investment Corporation”) shall in principle conduct distributions according to the following policy.

1. Distribution of Income

(1) Distributable amount from asset management of the Investment Corporation (“the Distributable Amount”) shall be calculated by adding or subtracting gains or losses from the sale or purchasing of assets, and profits or losses from redemption, deducting miscellaneous costs (including depreciation), interest expenses, asset management fees, etc., compensating for the amount equal to losses carried forward, if any, and adding the amount equal to profits carried forward, if any, to the following: rent, common expenses, parking fees, ancillary revenue, facility usage fees, facility installment fees, late charges, or termination penalties accompanying the termination of lease contracts produced by real estate (including real estate that backs trust beneficiary rights or any other assets acquired by the Investment Corporation), any money similar to the aforementioned, income, interests, or dividend income produced from other rental businesses, or any other similar income. Moreover, in the event this amount results in a loss, any undistributed amount shall be carried forward to the next fiscal period.

(2) In the event of distributing cash with the income amount as the limit, the cash distribution amount shall be the amount decided on by the Investment Corporation which exceeds the equivalent of 90% (should this amount be amended by laws and regulations, etc., then it shall be the amount set forth after those amendments) of the distributable income of the Investment Corporation as set forth by Article 67-15 of the Special Taxation Measures Law (Law No. 26 of 1957; including any amendments made thereafter.). Moreover, the Investment Corporation reserves the right to accumulate funds as long-term reserve funds for repairs which it deems as necessary for the maintenance or value enhancement of assets under management, reserve fund for payment, reserve for dividends, or any other similar reserves, provisions, etc.

2. Distribution in Excess of Income

In accordance with provisions set forth in Article 137, Paragraph 1, of the Law Concerning Investment Trusts and Investment Corporations of Japan (“Investment Trust Law”), in the event the Board of Directors judges that conducting distributions in excess of income is appropriate, the Investment Corporation may distribute cash distributions in excess of income to unitholders based on accounting statements of cash distributions which have received approval according to Article 131, Paragraph 2 of the Investment Trust Law. In the event the Investment Corporation conducts cash distributions in excess of income, it shall consider the income for the relevant fiscal period plus the depreciation amount posted for the relevant fiscal period as the limit. However, in the event the said cash distributions do not exceed 90% of the equivalent of the distributable amount of the relevant fiscal period set forth by Article 39-32-3 of the Enforcement Order of the Special Taxation Measures Law (Law No. 43 of 1957; including any amendments), the Investment Corporation may distribute cash distributions exceeding the Distributable Amount, but only up to an amount that is equivalent to 91% of the said statutory distributable amount.

The Investment Corporation emphasizes stable payment of cash distributions. However, with regards to distributions in excess of income, so long as personal unitholders are required to calculate transfer losses or profits as defined by the tax system every time the said individual receives such a payment, the Investment Corporation shall not distribute cash distributions which exceed income to unitholders. An exception is the case where the Board of Directors of the Investment Corporation judges that distributions in excess of income is necessary in order to fulfill requirements for the Investment Corporation to receive special tax treatment, it may at times distribute cash distributions exceeding income in accordance with the abovementioned distribution policy.

3. Distribution Method of Cash Distributions

Distributions of cash shall be made to unitholders. In principle, it shall be distributed within 3 months after the relevant fiscal period ends in accordance with the number of investment units held by unitholders or registered investment unit pledgees described or recorded in the final unitholder registry of the relevant fiscal period.

4.Statute of Limitation on the Right to Dividend Payment

If a full 3 years have passed since the start date of payment of cash distributions without a unitholder having received the said payment, the Investment Corporation shall no longer be obligated to pay those cash distributions. In addition, the Investment Corporation shall not add interest to unpaid distributions.

5. Other

Additionally, when conducting cash distribution, the Investment Corporation shall comply with the “Regulations Concerning Real Estate Investment Trusts and Real Estate Investment Corporations” stipulated by the Investment Trusts Association of Japan (enacted on March 16, 2001; including any amendments).

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