Disclaimers

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information under Article 23 of the European Alternative Investment Fund Managers Directive (European Directive 2011/61/EU) (the "AIFMD") as implemented in their respective jurisdictions. Accordingly, you should not use this document for any other purpose.

Netherlands

The units of Japan Excellent, Inc. ("JEI" or the "AIF") are being marketed in the Netherlands under Section 1:13b of the Netherlands Financial Supervision Act (Wet op het financieel toezicht, or the "Wft"). In accordance with this provision, Japan Excellent Asset Management Co., Ltd. (the "AIFM") has notified the Dutch Authority for the Financial Markets (Authoriteit Financiële Markten, the "AFM") of its intention to offer these units in the Netherlands. The units of JEI will not, directly or indirectly, be offered, sold, transferred or delivered in the Netherlands, except to or by individuals or entities that are qualified investors (gekwalificeerde beleggers) within the meaning of Article 1:1 of the Wft. As a consequence, neither the AIFM nor JEI is subject to the license requirement for investment institutions (beleggingsinstellingen) or their managers pursuant to the Wft. Consequently, the AIFM and CSIF are only subject to the supervision of the Dutch Central Bank (De Nederlandsche Bank, "DNB") or the AFM for the compliance with the ongoing regulatory requirements as referred to in the Dutch law implementation of article 42 of the AIFMD. According to Article 23 prospectus is not subject to approval by the AFM. No approved prospectus is required to be published in the Netherlands pursuant to Article 3 of the Regulation (EU) 2017/1129 (the "Prospectus Regulation") as amended and applicable in the Netherlands.

United Kingdom

Units of JEI are being marketed in the United Kingdom pursuant to Article 59 of the United Kingdom Alternative Investment Fund Managers Regulations 2013. In accordance with this provision, the AIFM has notified the Financial Conduct Authority (the "FCA") of its intention to offer these units in the United Kingdom.

For the purposes of the United Kingdom Financial Services and Markets Act 2000 (as amended, "FSMA") JEI is an unregulated collective investment scheme which has not been authorized by the FCA.

Accordingly, any communication of an invitation or inducement to invest in JEI may only be made to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, or "the Order"; or (ii) high net worth companies falling within Articles 49(2)(a) to (d) of the Order and other persons to whom it may lawfully be communicated (all such persons referred to under (i) and (ii) of this paragraph, together being referred to as "Relevant Persons").

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In the United Kingdom, this document and its contents are directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons. The transmission of this document and its contents in the United Kingdom to any person other than a Relevant Person is unauthorized and may contravene the FSMA and other United Kingdom securities laws and regulations.

Prohibition of Sales to UK Retail Investors

In addition to the restrictions under the AIFMD, as retained by the United Kingdom in its domestic laws, the Units of JEI are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom. For these purposes of this provision, a "retail investor" means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 ("EUWA"); or (ii) a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129, as it forms part of domestic law by virtue of the EUWA; and the expression "offer" includes the communication in any form and by any means of sufficient information on the terms of the offer and the international units to be offered so as to enable an investor to decide to purchase or subscribe the international units.

Consequently no key information document required by Regulation (EU) No 1286/2014, as it forms part of domestic law by virtue of the EUWA (the "UK PRIIPs Regulation"), for offering or selling the international units or otherwise making them available to retail investors in the United Kingdom has been prepared and therefore offering or selling the international units or otherwise making them available to any retail investor in the United Kingdom may be unlawful under the UK PRIIPs Regulation.

European Economic Area

In addition to the restrictions under the AIFMD, the Units of JEI are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area ("EEA"). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"), including any client, beneficiary, principal, or similar of any person acting as a trustee, agent, nominee, or similar; (ii) a customer within the meaning of Directive (EU) 2016/97, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Regulation, as amended. Consequently no key information document has been prepared required by Regulation (EU) No 1286/2014 (the "PRIIPs Regulation") for offering or selling the Units of JEI or otherwise making them available to retail investors in the EEA. Therefore offering or selling the Units of JEI or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.

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Article 23 (1)(a)

Objectives of the AIF

Japan Excellent, Inc.'s objective is to achieve stable growth and maximize unitholders'

value from a medium- to long-term perspective by making investments primarily in office

buildings located in the Tokyo metropolitan area and other large cities in Japan.

Investment strategy

JEI aims to invest 90% or more of its portfolio by acquisition price in office buildings in the

six central wards of Tokyo and other major metropolitan areas and 10% or less in other

types of real estate such as retail properties in cities with populations of over one million

and residential properties in Tokyo. JEI's investment policies provide that 80% or more of

its portfolio by acquisition price be office buildings located in core areas that include

Tokyo and its vicinity, central Osaka, central Nagoya and central Fukuoka, and that 20% or

less be office buildings located in other areas of Osaka, Nagoya and Fukuoka or other

government-designated cities.

In building its portfolio, JEI seeks to achieve a favorable balance in terms of geographic

distribution, property size and types of tenants with a view to generating stable revenues

even under changing economic conditions and market volatility. JEI uses multiple

acquisition channels, including the support of NIPPON STEEL KOWA REAL ESTATE CO., LTD.

and The Dai-ichi Life Insurance Company, Limited (the "Core Sponsors") which have

significant expertise in office property development and other real estate business.

JEI's basic policy is to hold properties it has acquired in the medium- to long-term. JEI may

also, after careful selection and risk mitigation, invest in properties under development.

Types of assets the AIF

Real estate, trust beneficiary interests in real estate, real estate securities, specified assets

may invest in

and other assets.

Techniques it may

JEI makes investments primarily in office buildings in the Tokyo metropolitan area and

employ and all

other large cities in Japan with the aim of achieving stable growth and maximizing

associated risks

unitholders' value from a medium- to long-term perspective. The principal risks with

respect to investment in JEI are as follows:

any adverse conditions in the Japanese economy could adversely affect JEI;

JEI may not be able to acquire properties to execute its growth and investment

strategy in a manner that is accretive to earnings;

illiquidity in the real estate market may limit JEI's ability to grow or adjust its portfolio;

the past experience of Japan Excellent Asset Management Co., Ltd. (the "Asset

Manager" or "AIFM") in the Japanese real estate market is not an indicator or

guarantee of the future results;

JEI's reliance on the Core Sponsors, the Asset Manager and third party service

providers could have a material adverse effect on its business;

there are potential conflicts of interest between JEI and the Core Sponsors as well as

the Asset Manager;

JEI's revenues largely comprise leasing revenues from the portfolio properties, which

may be negatively affected by factors including vacancies, decreases in rent, and late

or missed payments by tenants;

JEI invests primarily in office properties, the market for which may be affected by

macro-economic trends and other forces which JEI cannot control;

JEI faces significant competition in seeking tenants and it may be difficult to find

replacement tenants;

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or a solicitation of any offer to buy the units of Japan Excellent, Inc.

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  • increases in prevailing market interest rates may increase JEI's interest expense and may result in a decline in the market price of JEI's units;
  • JEI may suffer large losses if any of its properties incurs damage from a natural or man-made disaster such as an earthquake, fire, flood, tsunami or typhoon;
  • due to the concentration of JEI's portfolio in the Tokyo metropolitan area, JEI's business is highly susceptible to circumstances and developments that may adversely impact that area;
  • any inability to obtain financing for future acquisitions could adversely affect the growth of JEI's portfolio;
  • JEI's failure to satisfy a complex series of requirements pursuant to Japanese tax regulations would disqualify JEI from certain taxation benefits and significantly reduce the cash distributions to the unitholders; and
  • the ownership rights in some of JEI's properties may be declared invalid or limited.

In addition, JEI is subject to the following risks:

  • risks related to increasing operating costs;
  • risks related to JEI's dependence on the efforts of the Asset Manager's key personnel;
  • risks related to the restrictive covenants under debt financing arrangements;
  • risks related to entering into forward commitment contracts;
  • risks related to third party leasehold interests in the land underlying JEI's properties;
  • risks related to holding property in the form of stratified ownership (kubun shoyū) interests or co-ownership interests (kyōyū-mochibun);
  • risks related to properties not in operation (including properties under development);
  • risks related to the defective title, design, construction or other defects or problems in the properties;
  • risks related to suffering impairment losses relating to the properties;
  • risks related to decreases in tenant leasehold deposits and/or security deposits;
  • risks related to tenants' default as a result of financial difficulty or insolvency;
  • risks related to the insolvency of master lessees;
  • risks related to relying on expert appraisals and engineering, environmental and seismic reports as well as industry and market data;
  • risks related to the presence of hazardous or toxic substances in JEI's properties, or the failure to properly remediate such substances;
  • risks related to strict environmental liability for the properties;
  • risks related to potential amendment of applicable administrative laws and local ordinances;
  • risks related to holding interests in Japanese anonymous association (tokumei kumiai);
  • risks related to holding properties through trust beneficiary interests;
  • risks related to JEI's tight supervision by regulatory authorities and compliance with applicable rules and regulations;
  • risks related to the possibility that tax authorities may disagree with the Asset Manager's interpretations of the Japanese tax laws and regulations;
  • risks related to being unable to benefit from reductions in certain real estate taxes enjoyed by qualified J-REITs;

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or a solicitation of any offer to buy the units of Japan Excellent, Inc.

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risks related to changes in Japanese tax laws; and

the risk of dilution as a result of further issuances of units.

Any applicable

JEI is subject to investment restrictions under Japanese laws and regulations, including the

investment restrictions

Act on Investment Trusts and Investment Corporations (the "ITA") and the Financial

Instruments and Exchange Act (the "FIEA"). These restrictions require that JEI must invest

primarily in specified assets as defined in the ITA. Specified assets include, but are not

limited to, securities, real estate, leaseholds of real estate, and surface rights (chijō-ken)

(i.e. the right to use land for the purpose of having a structure on it), as well as trust

beneficiary interests in securities, real estate, leaseholds of real estate and surface rights.

Furthermore, under the listing rules of the Tokyo Stock Exchange, any listed J-REIT such as

JEI must invest substantially all of its assets in real estate, real estate-related assets and

liquid assets as provided by the listing requirements. Real estate in this context includes,

but is not limited to, real estate, leaseholds of real estate, surface rights, and trust

beneficiary interests for these assets, and real estate-related assets in this context include,

but are not limited to, anonymous association (tokumei kumiai) interests for investment in

real estate. A J-REIT that lists its units on the Tokyo Stock Exchange must also comply with

the Investment Trusts Association, Japan rules, which require the J-REIT to invest more

than 50% of its assets in real estate and asset backed securities investing primarily in real

estate, which include, but are not limited to, real estate, leaseholds of real estate, surface

rights or trust beneficiary interests for real estate, surface rights or leaseholds of land.

Pursuant to the ITA, investment corporations may not independently develop land for

housing or to construct buildings, but may outsource such activities in certain

circumstances.

In addition, the basic investment policy of JEI is set out in JEI's Articles of Incorporation.

Moreover, the Asset Manager has established investment guidelines to provide more

detailed policies based on this basic policy. However, the Asset Manager may amend or

revise these investment guidelines from time to time without a vote of JEI's unitholders or

JEI's approval.

Circumstances in

JEI may borrow funds (including through the call money market) or issue investment

which the AIF may use

corporation bonds (including short-term bonds) for the purpose of funding property

leverage

acquisitions, conducting repairs, paying cash distributions, providing funds for the

administration of JEI, repaying obligations (including repayment of tenant leasehold or

security deposits and of obligations related to loans and investment corporation bonds)

and other activities.

The types and sources

JEI currently has outstanding fixed-ratelong-term loans and outstanding investment

of leverage permitted

corporation bonds, as well as access to a commitment line, all of which are unsecured and

and associated risks

unguaranteed. JEI may be subject to restrictive covenants in connection with any

indebtedness that may restrict JEI's operations and limit its ability to make cash

distributions to unitholders, to dispose of properties or to acquire additional properties.

Furthermore, if JEI were to violate such restrictive covenants, for example with regard to

the maintenance of debt service coverage or loan-to-value ratios, lenders may be entitled

to require JEI to collateralize portfolio properties or demand that the entire outstanding

balance be paid ahead of scheduled payments. Further, in the event of an increase in

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or a solicitation of any offer to buy the units of Japan Excellent, Inc.

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Japan Excellent Inc. published this content on 30 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 August 2022 01:16:20 UTC.