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  2. Features of NIPPON REIT
  3. Management Structure Focused on Unitholders’ Interests

Management Structure Focused on Unitholders’ Interests

Management Fee System Linked to Distribution per Unit

NIPPON REIT adopts an asset management fee system in which part of the fees to be paid to the Asset Management Company based on the Articles of Incorporation and the asset management agreement is linked to distribution per unit. We believe that adoption of such an asset management fee system should give an incentive to the Asset Management Company to work to maximize the unitholder value of NIPPON REIT.

■Asset management fees for the fiscal period starting on July 1, 2014

<Asset management fee 1 and asset management fee 2>

Calculation method
Asset management fee 1 Total assets of the immediately preceding fiscal period × annual rate of 0.35% (maximum rate)
Asset management fee 2 NOI × DPU volatility (Note 1) × 2.5% (maximum rate)
(Note 1) “DPU volatility” is a figure calculated by using the following formula
DPU volatility
However, when the adjusted distribution per unit for the preceding fiscal period is null, the DPU volatility is deemed to be 1. Moreover, when the DPU volatility for the preceding fiscal period was 0.75 or less and the DPU volatility for the current fiscal period calculated by using the above formula surpassed 1, the DPU volatility is deemed to be 1.
(Note 2) “Adjusted distribution per unit” is the amount obtained by dividing the distributable amount before deducting fees and compensations (Note 3) for a certain fiscal period by the number of investment units issued and outstanding as of the settlement date for the fiscal period (rounded down to the nearest one yen).
(Note 3) “Distributable amount before deducting fees and compensations” is the amount of income before income taxes for the fiscal period calculated in accordance with the accounting practices generally accepted in Japan (on the condition that the asset management fee 2 and gain or loss on sale of specified assets are not added to or subtracted from the amount).

<Acquisition fee and disposition fee>

Calculation method
Acquisition fee Acquisition price (Note 1) × 1.0% (maximum rate)
*Acquisition from interested parties: acquisition price × 0.5% (maximum rate)
Disposition fee
(Note 2)
Transfer price (Note 3) × 1.0% (maximum rate)
*Transfer to interested parties: transfer price × 0.5% (maximum rate)
(Note 1) Consumption taxes and acquisition expenses are excluded.
(Note 2) Disposition fee shall be paid only when gain on sale of specified assets is accrued.
(Note 3) Consumption taxes and transfer expenses are excluded.

Same-Boat Investment by the Sponsors

Sojitz Corporation, the main sponsor Owns 15,500 of NIPPON REIT’s investment units

Sojitz, Cushman and Agility have declared in the sponsor support agreement that, when they acquire the investment units issued by NIPPON REIT, they intend to continue owning the units for the time being unless there are special circumstances.

Decision-Making Process Securing Third-Party Monitoring Function

<Decision-making process regarding Transaction of Assets under Management with interested parties>

(Note 1) We note that the following transactions must be approved by the Board of Officers of NIPPON REIT but do not require the consent of NIPPON REIT.
・Transactions other that those stipulated in Article 201-2 (1) of the Act on Investment Trusts and Investment Corporations (Investment Trust Act)
・Transactions stipulated in Article 245-2 of the enforcement regulations in the Investment Trust Act
(Note 2) The Board of Directors makes a decision after confirming that each procedure has been appropriately completed.

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