Financial Policy
Top REIT shall issue new investment units, borrow capital and issue investment corporation bonds for acquisitions of properties as well as payment for repairs, maintenance or dividends, management of Top REIT and repayment of debt (including deposits, borrowings and debt related to investment corporation bonds). The following is a description of the key elements of our financial policy.
1. Issuing New Investment Units
Top REIT shall issue new investment units after considering the dilution effect on existing units, capital market trends, the economic environment, timing of new asset acquisitions, configuration of Top REIT's capital, impact on existing investors and other factors.
2. Borrowing Funds and Issuing Investment Corporation Bonds
Top REIT shall borrow funds and issue investment corporation bonds after considering interest rate trends, financing costs, the method of payments of interest, source of capital, timing of financing, schedule for debt repayment or redemption and other factors.
3. Loan to Value
The ceiling on the ratio of the amount of outstanding loans and investment corporation bonds to the amount of gross assets of Top REIT is 60%. However, the ceiling may be temporarily exceeded in the process of acquiring new assets.
4. Providing Collateral
Top REIT may provide the assets it owns as collateral when raising capital.
5. Establishing Commitment Lines, etc.
Top REIT may enter into commitment line agreements and establish other borrowing facility or loan reservation contracts for the prompt procurement of funds for acquisition of additional assets, repayment of deposits from tenants and other purposes.
6. Derivatives Trading
Top REIT may enter into derivatives trading for the purpose of hedging interest rate fluctuation risks and reducing interest to be paid related to borrowings and other procured capital.
Dividend Policy
As a rule, Top REIT shall pay dividends in accordance with the following policy.
Distribution of Profits
- (1) The total amount of monies to be distributed to unitholders (hereafter, “payable dividends”) shall be the profit calculated pursuant to the generally accepted accounting principles of Japan.
- (2) In principle, the distribution amount shall be an amount determined by Top REIT to the effect that it will distribute in excess of 90/100 of the distributable income as stipulated under Article 67-15 of the Special Taxation Measures Law (Law No. 26 of 1957, as amended); (hereafter, "distributable income").
Distribution of Monies in Excess of Profits
Top REIT may distribute monies in excess of profits when the amount of payable dividends is less than 90/100 of the distributable income or when Top REIT determines that such a payment is appropriate. Such amount shall not exceed the maximum amount stipulated under the rules of The Investment Trusts Association, Japan.
However, when the distributed amount of monies does not satisfy the requirements of the special taxation provisions applicable to Top REIT, it may distribute the amount of monies it decides for the purpose of satisfying such requirements.
Top REIT emphasizes stable payment of dividends. However, when monies distributed in excess of profit make it necessary for the individual investors receiving such distribution to personally calculate capital gains and losses for tax purposes, Top REIT shall not distribute to the investor monies in excess of profits. Nonetheless, there are cases where monies in excess of profits are distributed in accordance with the above distribution policy when the Board of Directors of Top REIT decides that the distribution of monies in excess of profit is necessary for the purpose of satisfying requirements of the special taxation provisions, etc.
Distribution Method
Dividends shall be paid in cash and generally within three months from the end of the corresponding fiscal period to the unitholders or pledgees registered in the List of Unitholders as of the end of the fiscal period.
Forfeiture of Dividends
Top REIT shall be exempt from payment obligation of any dividends unclaimed for a period of three full years after the date on which such dividends first become payable. No interest will accrue to unpaid dividends in arrears.
Rules of The Investment Trusts Association, Japan
In addition to the above, Top REIT shall comply with the rules of The Investment Trusts Association, Japan concerning the distribution of monies.
