Corporate Governance
NIPPON REIT’s Governance
Based on the Act on Investment Trusts and Investment Corporations (the “Investment Trust Act”), the organization operating NIPPON REIT consists of a General Meeting of Unitholders, a Board of Directors comprising no more than two Executive Officers and no more than three Supervisory Officers (the number of Supervisory Officers shall be at least one more than the number of Executive Officers), and an Accounting Auditor.
Status of Executive Officer and Supervising Officers
Candidates for Executive Officers and Supervisory Officers are selected on the premise that they do not fall under any grounds for disqualification as stipulated in the Investment Trust Act and other applicable laws and regulations. Such officers are appointed by resolution of the General Meeting of Unitholders in accordance with the Articles of Incorporation of the investment corporation.
Based on Article 109 of the Act, the executive officer executes the duties of NIPPON REIT and represents NIPPON REIT.
Based on Article 111 of the Act, supervisory officers supervise the executive officer's execution of duties. Moreover, in line with Article 100 of the Act, a person who has a personal interest in NIPPON REIT or SRA cannot be appointed as a Supervisory Officer.
| Title | Name | Reason for appointment | Attendance at Board Meetings (CY2025) |
|---|---|---|---|
| Executive Officer | Yasushi Iwasa | It is expected that management will be conducted from a broad perspective based on extensive knowledge and experience in the financial and real estate industries. |
100% (16/16) |
| Supervising Officer | Yasuhiro Shimada | It is expected that management oversight will be exercised from a broad perspective based on professional knowledge and experience in legal affairs. |
100% (11/11) (Note 1) |
| Supervising Officer | Hisashi Yahagi | It is expected that management oversight will be exercised from a broad perspective based on professional knowledge and experience in accounting. |
100% (11/11) (Note 1) |
| Supervising Officer | Toshimitsu Morishita | It is expected that management oversight will be exercised from a broad perspective based on professional knowledge and experience in legal affairs. |
100% (5/5) (Note 2) |
| Supervising Officer | Shigeki Matsuishi | It is expected that management oversight will be exercised from a broad perspective based on professional knowledge and experience in accounting. |
100% (5/5) (Note 2) |
| Supervising Officer | Noriko Higuchi | It is expected that management oversight will be exercised from a broad perspective based on professional knowledge and experience in the real estate field. |
100% (5/5) (Note 2) |
- As the Supervising Officers resigned effective September 30, 2025, the attendance record shown reflects the period during their term of office.
- The attendance record shown reflects the period from October 1, 2025 onward.
Remuneration of Executive Officers and Supervising Officers
The monthly remuneration for the Executive Officers of NIPPON REIT is set at a maximum of JPY 800,000, and the monthly remuneration for each Supervising Officer is set at a maximum of JPY 500,000. The specific monthly remuneration amounts are determined by resolution of the Board of Officers. For further details, please refer to Article 21 of the Articles of Incorporation of the Investment Corporation. The Articles of Incorporation of the Investment Corporation may be amended upon resolution of the unitholders’ meeting.
| Title | Name | Major concurrent position | Total Remuneration per title (27th Period) (thousand yen) |
|---|---|---|---|
| Executive Officer | Yasushi Iwasa | President & CEO, SBI REIT Advisors Co., Ltd. | - (Note 1) |
| Supervising Officer | Yasuhiro Shimada | Partner, Tsubame Law Offices | 600 (Note 2) |
| Supervising Officer | Hisashi Yahagi | Representative Council, Toranomon Partners | 600 (Note 2) |
| Supervising Officer | Toshimitsu Morishita | Attorney, Nihombashi Forum Law Office | 750 (Note 3) |
| Supervising Officer | Shigeki Matsuishi | Shunwa Partners Tax Corporation | 750 (Note 3) |
| Supervising Officer | Noriko Higuchi | Real Estate Appraiser, Assort Sogo Office Co., Ltd. | 750 (Note 3) |
- Executive Officer Yasushi Iwasa also serves as President & CEO of SRA and does not receive compensation from NIPPON REIT.
- As they stepped down on September 30, 2025, the compensation amounts for their respective terms of office are listed.
- As they assumed office on October 1, 2025, the compensation amounts for the periods thereafter are listed.
Remuneration of Accounting Auditor
The remuneration of the accounting auditor shall be an amount determined by resolution of the Board of Officers, with an upper limit of ¥20 million for each fiscal period subject to audit.
| Name | Details of the Remuneration | Remuneration Fiscal Period ended December 31, 2025 (thousand yen) |
|---|---|---|
| KPMG AZSA LLC | Remuneration based on auditing work | 15,000 |
- The remuneration of the accounting auditor includes remuneration for the audit of English-language financial statements. Remuneration based on non-auditing work paid to entities belonging to the same network as KPMG AZSA LLC was 10,720 thousand yen.
Asset Management Structure of NIPPON REIT
The asset management of NIPPON REIT is entrusted to SBI REIT Advisors Co., Ltd. (SRA), which serves as the asset management company.
Pursuant to the Asset Management Agreement between NIPPON REIT and SRA, asset management operations are carried out under the management structure illustrated below.
The organizational structure of SRA is as follows.
Overview of Each Organization
| Name of the Committee | Overview | |
|---|---|---|
| Investment Committee | Matters for Deliberation |
|
| Members |
Chairperson: President & CEO Members: Directors, one or more external committee members, Senior General Manager of Investment Management Division, Senior General Manager of Finance & Planning Division, Compliance Officer, and Deputy Senior General Manager of Investment Management Division (limited to cases where authority related to the division’s assigned investment management operations has been delegated). |
|
| Frequency of Meetings |
In principle, the committee meets once a month However, meetings may be held as needed. |
|
| Compliance Committee | Matters for Deliberation |
|
| Members |
Chairperson: Compliance Officer Members: President & CEO, one or more external committee members and directors. |
|
| Frequency of Meetings |
In principle, the committee meets once a month However, meetings may be held as needed. |
|
Asset Management Fee Structure for SRA
NRT adopts an asset management fee system in which part of the fees to be paid to SRA 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 SRA to work to maximize the unitholder value of NRT.
<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
|
||
|---|---|---|---|
| (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). In calculating adjusted distribution per unit, proper adjustment shall be made in the case of holding its own investment units that have not been disposed of or retired in the accounting period for the business period in which it acquired its investment units and, in the case of increasing the total number of investment units outstanding by splitting own investment units or conducting a gratis allocation of new shares through subscription rights. | ||
| (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, consumption tax not subject to deductions, etc. 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) | This means the amount paid for the purchase in the case of a purchase, the appraised value of the asset transferred through exchange in the case of an exchange and the amount contributed in the case of capital contribution, excluding consumption taxes and acquisition expenses |
|---|---|
| (Note 2) | Disposition fee shall be paid only when gain on sale of specified assets is accrued. |
| (Note 3) | This means the amount paid for the sale in the case of a sale and the appraised value of the asset transferred through exchange in the case of an exchange, excluding consumption taxes and transfer expenses |
<Merger Fee>
| Calculation Method | |
|---|---|
| Merger Fee | 1.0% of the appraised value of real estate and other assets held by the merged investment corporation (maximum rate) |
Same-Boat Investment by the Sponsors
SBI Holdings, Cushman and Agility have declared in the sponsor support agreement that, when they acquire the investment units issued by NRT, they intend to continue owning the units for the time being unless there are special circumstances occurred.
| SBI Holdings | Owns 64,200 investment units of NIPPON REIT |
|---|
Compliance
Basic Compliance Policy
- NIPPON REIT and SRA fully recognize that any lapse in compliance could undermine the management foundations of both entities, and therefore regard strict adherence to compliance as a fundamental principle of management.
- As a firm engaged in the financial instruments business, SRA recognizes its responsibility to strive to realize the value of its operations as expected by society, and will actively and continuously engage in compliance efforts to enhance the quality and quantity of that value.
- By carrying out compliance activities, NIPPON REIT and SRA contribute to economic and social development, thereby enhancing their reputation among investors and establishing broad trust within society.
Compliance Promotion Structure
To implement the basic principles regarding compliance set forth above, NIPPON REIT has established the following operational framework within SRA.
Organizational Structure
SRA has established a Board of Directors, a Compliance Committee, and a Compliance Officer as the organizational bodies responsible for promoting compliance, and maintains the Compliance Officer as an independent compliance function separate from other departments. In addition, external experts with no conflicts of interest with SRA serve as outside members of the Compliance Committee. The Compliance Committee may not be convened unless the Compliance Officer and at least one outside member are present, and resolutions of the Compliance Committee are made by unanimous consent of all members present. Furthermore, SRA has established an Investment Committee, of which the Compliance Officer is a member, and has granted the Compliance Officer the authority to order the suspension of deliberations and the return of agenda items if he or she determines that there are compliance concerns during deliberations.
Establishment of Internal Regulations
To put its fundamental approach to compliance into practice, SRA has established compliance regulations to ensure that its officers and employees strictly comply with laws and regulations, conduct business activities with integrity and fairness, and maintain sound management based on self-discipline. Furthermore, based on these regulations, SRA has formulated a Compliance Manual, which sets forth specific requirements to be observed and fundamental principles for compliance activities to be implemented in order to ensure thorough compliance, as well as a Compliance Program, which serves as a concrete implementation plan. SRA strives to establish a corporate culture in which officers and employees comply with the various laws, regulations, internal rules, contracts, and social norms listed in the Compliance Manual when performing their duties, and to ensure that internal audit and self-inspection functions operate effectively. In addition, SRA formulates a Compliance Program for each fiscal year. The Compliance Program is drafted by the Compliance Officer, deliberated by the Compliance Committee, and resolved by the Board of Officers. Furthermore, the Compliance Officer reports on the progress of the Compliance Program to the Board of Officers on a regular basis (at least once every three months).
| Organization | Primary Roles |
|---|---|
| Board of Officers |
|
| Compliance Committee |
The Compliance Committee, chaired by the Compliance Officer, deliberates on and resolves matters related to compliance in general, and reports to the Investment Committee or the Board of Officers.
|
| President & CEO | The President & CEO, together with the Compliance Officer, serves as the Chief Ethics Officer and other designated roles within the SBI Group, overseeing all aspects of corporate ethics and compliance operations. |
| Compliance Officer |
|
Compliance Training
To ensure compliance, SRA conducts regular training for all executives and employees.
As part of our specific implementation plan, we formulate a compliance program for each fiscal year.
Decision-Making Process Securing Third-Party Monitoring Function
<Decision-making process regarding Transaction of Assets under Management with interested parties>
- 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 than 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
Prevention of Fraudulent and Corrupt Practices by the Asset Management Company
SRA recognizes its social responsibility in conducting asset management operations for NIPPON REIT and performs its duties based on strict compliance with laws and regulations and a high standard of ethical conduct. In order to prevent fraudulent and corrupt practices, SRA thoroughly implements the following policies as set forth in its Compliance Manual and Rules for the Prevention of Corrupt Practices:
- Compliance with Laws and Internal Rules: SRA complies with the major laws and regulations applicable to it as a Financial Instruments Business Operator and does not engage in any prohibited conduct.
- Elimination of Bribery and Improper Transactions: SRA strictly prohibits any lending or borrowing of money, excessive gifts or entertainment, and the provision of money or other benefits to anti-social forces.
- Ensuring Fair Competition: SRA eliminates any unjust discrimination in transaction terms or practices that restrict fair competition.
- Thorough Information Management: Personal and corporate information is properly managed, and misuse of such information is prevented.
- Prevention of Money Laundering: Measures are taken to prevent money laundering and the receipt of proceeds derived from criminal activities.
- Ensuring Transparency: The anti-corruption policy is communicated to officers and employees, and regular training is conducted.
SRA will continuously strengthen its efforts to prevent corrupt practices in order to protect the trust of its stakeholders and contribute to the sound development of financial markets. In addition, there were no cases during fiscal year 2025 in which disciplinary action was taken due to violations of the Rules for the Prevention of Corrupt Practices at SRA.
Establishment of a Framework for the Elimination of Anti-Social Forces
In order to appropriately sever any relationships between SRA and NIPPON REIT, on the one hand, and anti-social forces on the other, and to ensure the soundness and appropriateness of its management, SRA has established the Rules for Responding to Anti-Social Forces and the Implementation Manual for the Rules for Responding to Anti-Social Forces. Based on the fundamental principles of “resolutely excluding anti-social forces that pose a threat to the order and safety of civil society with firm conviction” and “recognizing the severance of relationships with anti-social forces not merely as an ethical issue, but as a critical matter of legal compliance and risk management necessary to ensure the proper conduct of business operations,” the Asset Management Company is committed to establishing and maintaining an organizational framework for the elimination of anti-social forces.
Risk Management
Basic Policy
SRA sets forth fundamental matters concerning risk management in its Risk Management Rules with the objective of ensuring sound management by appropriately managing and operating risks. Through the practice of effective risk management, SRA seeks to ensure business continuity and stable, sustainable growth. In addition, SRA has established the Risk Management Guidelines, which prescribe specific rules and procedures for risk management, and is committed to achieving highly effective risk management.
- SRA will ensure business continuity and stable, sustainable growth through the ongoing practice of risk management.
- As a financial instruments business operator engaged in asset management for NIPPON REIT, SRA fully recognizes its public mission and social responsibility. Based on the asset management agreement, SRA conducts management aimed at optimizing risk and return in order to meet the expectations of NIPPON REIT and its unitholders.
- Taking into account its management policies and strategic objectives, SRA conducts sound and appropriate business operations. With respect to risks arising from such operations, SRA endeavors to appropriately control them by establishing an earnings and risk management framework that is consistent with the management policies of NIPPON REIT and aligned with strategic objectives.
Risk Management Framework
Risk management is overseen by the Compliance Officer. With respect to risks associated with business operations, each department responsible for the relevant operations fully recognizes the risks involved and conducts its activities under appropriate risk management procedures.
Each department reports the status of its key risks to the Compliance Officer at least once every three months. The Compliance Officer then reports such matters to the Compliance Committee.
In addition, the Compliance Officer monitors, evaluates, and analyzes the status of each risk, in principle, once every six months. Where necessary, the Compliance Officer provides recommendations or instructions to the relevant departments and reports the results to the Compliance Committee and the Board of Directors.
Based on such reports, the Compliance Committee and the Board of Directors deliberate on and resolve matters as necessary and provide appropriate instructions.
Business Continuity Plan (BCP)
SRA has established a Business Continuity Plan (BCP) with the objective of ensuring the appropriate continuation and operation of its business in the event of emergencies—such as large-scale earthquakes, outbreaks of infectious diseases, or system failures (including cyberattacks)—while prioritizing the safety of its officers, employees, and their families.
Information Security
SRA has established the Information Security Rules with the objective of continuously maintaining and enhancing the overall level of information security across the Company by defining its organizational structure for information security management, the scope of related activities, and an outline of internal audits. These rules are designed to ensure the confidentiality, integrity, and availability of information assets and to appropriately protect such information assets. In addition, SRA has established the Information Systems Management Rules, which set forth the fundamental principles regarding information systems that must be observed by both users and administrators of information systems.
Internal Audit
SRA has established the Internal Audit Rules and has developed a framework for conducting internal audits. Internal audits of the Asset Management Company are overseen by the Compliance Officer. SRA maintains the Compliance Officer as an organization independent from other divisions and departments, and all organizations and functions within the Company are subject to internal audits.
At the beginning of each fiscal year, the Compliance Officer prepares an outline of the annual internal audit plan and submits it for deliberation and resolution by the Compliance Committee, followed by deliberation and resolution by the Board of Directors. Upon approval by the Board of Directors, the Compliance Officer is authorized to determine the specific timing, scope, and methods of the internal audits in accordance with the approved plan.
Internal audits are, in principle, conducted for each organization at a frequency of once every six months. However, the Compliance Officer may conduct ad hoc internal audits when deemed necessary. In addition, if specially instructed by the President & CEO, a special audit will be conducted.