Post-Merger Status of New Investment Corporation August 2010

Transcription

1 Post-Merger Status of New Investment Corporation August

2 Major Events after Execution of the Merger Agreement March 26, 2010 May 28, 2010 Execution of the merger agreement Decision on JRH investment unit split Decision on capital increase by way of third-party allotment JRH/PRI general meeting of investors held June 18, 2010 June 30, 2010 Execution of merger financing agreement (see p. 4-5 for explanation of details) Payment for third-party allotment July 1, 2010 Effective date of merger Effective date of unit split July 2, 2010 July 26, 2010 August 16, 2010 September 30, 2010 Prepayment of entire amount of all public-private fund loans Signing of the transfer agreement for Hilltop Yokohama Negishi: Settlement scheduled for September 17 (see p. 6-7 for explanation of details) Revision of management performance forecasts in relation to the determination of negative goodwill (see p for explanation of details) Arrival of the first fiscal period end after the merger JRH stands for Japan Rental Housing Investments Inc., MAM for Mi-Casa Asset Management Inc., PRI for Prospect Reit Investment Corporation and PRA for Prospect Reit Advisors, Co., Ltd. 1

3 Major Events of the Investment Corporation Japan Rental Housing Investments Inc. (JRH) is working towards a new growth track. Final stage of revitalization of the Investment Corporation (Establishment of foundation for growth track) Return to the same steady growth track Towards a new growth track 7th fiscal period 8th fiscal period (Oct Mar. 2010) 9th fiscal period (fiscal period under review: Apr Sep. 2010) Investment t Corporation Aug, 21, 2009 Announcement of capital increase by way of third-party allotment for the Investment Corporation (6 bn yen) Oct. 9, 2009 Upgrade of R&I ratings (BB to BBB-) Oct. 2, 2009 Completion of third-party allotment for the Investment Corporation (6 bn yen) Nov. 19, 2009 Completion of redemption of investment corporation bonds (4 bn yen) Oct. 26, 2010 Mar. 26, 2010 Letter of intent regarding merger with Merger PRI agreement with Apr. 1, 2010 PRI Early termination of fixed-term building lease agreement and change of master lease company Feb. 26, 2010 Mar. 26, 2010 Letter of intent Subscribers to thirdparty allotment regarding capital increase by way of decided third-party allotment and property (5 bn yen) (5 bn yen) management Feb. 26, 2010 Completion of redemption of investment corporation bonds (3.8 bn yen) Mar. 25, 2010 Acquisition of 3 new properties and new borrowings made (3.8 bn yen) company for Isogo Flat (name changed to Hilltop Yokohama Negishi on May 1) May 28, 2010 JRH/PRI general meeting of investors held July 1, 2010 Merger with PRI comes into effect; Unit split comes into effect; Upgrade of R&I ratings (BBB- to BBB) Jun. 30, 2010 Payment for thirdparty allotment (5 bn yen) Jun. 18, 2010 Execution of merger financing agreement Promotion of replacement of portfolio assets = > Jul. 26, 2010 Signing of the transfer agreement for Hilltop Yokohama Negishi (scheduled to be transferred on Sep. 17) Jul. 2, 2010 Completion of repayment of loans from the Real Estate Market Stabilization Fund Account succeeded from the former PRI Sep. Asset ma anagement co ompany Dec. Mar. Jun. Sep. Aug. 12, 2009 Chief Executive Officer replaced; Start of new organization structure for the asset management company Feb. 26, 2010 Letter of intent regarding integration ti with PRI Mar. 26, 2010 Integration agreement with ihpri July 1, 2010 Integration with PRI comes into effect 2

4 Asset Size after the Merger (Definite Value) Investments by area Total: 186 properties *After the sale of Hilltop Yokohama Negishi, the Kanto area will have 1 fewer property, making the total 185. Figures inside the grey box represent the total for the area Tohoku 10 Hokkaido 15 Chugoku, 1.4% Ratio of asset size by area <Increase in ratio of properties in 23 wards of Tokyo> 48.5% Tokai, 8.5% Kinki, 13.5% Kanto, 16.8% (Excluding 23 wards of Tokyo) Kyushu, 3.0% Hokkaido, Tohoku, 4.7% 2.6% Shinetsu, 1.1% 23 wards, 48.5% Kyushu 7 Chugoku 2 Kinki 37 Shinetsu Rti Ratio of asset size by type 3 <Decrease in ratio of 23 wards of premium properties> Tokyo 9.1% Tokai 23 Kanto 30 Excluding 23 wards of Tokyo 59 Asset size (acquisition price comparison): Definite value Family, 39.4% Premiu m, 9.1% Studio, 51.5% 5% Former JRH Former PRI JRH after Merger Acquisition price Number of Acquisition price Number of Acquisition price Number of (million yen) Ratio properties (million yen) Ratio properties (million yen) Ratio properties Studio 54, % 89 27, % 29 81, % 118 Family 36, % 38 25, % 23 62, % 61 Premium 14, % , % 7 Total 105, % , % , % 186 *After the sale of Hilltop Yokohama Negishi, the asset size for Family type will decrease by 5,290 million yen and the asset size of JRH after the merger will be 153,078 million yen. 3

5 1. Merger Financing Lender composition and comparison of borrowing amounts (as of July 2) Unit: million yen Total after refinancing - Total before refinancing Through new loans from the JRH Former PRI JRH + former JRH + former PRI Bank before before PRI before after refinancing Bank of Tokyo-Mitsubishi UFJ refinancing refinancing refinancing (after merger) and Sumitomo Mitsui Banking (4,880 million yen) and the Aozora Bank, Ltd. 8,868 14,356 23,225 23,225 - capital increase by way of third- The Bank of Tokyo-Mitsubishi UFJ, Ltd. 10,238-10,238 13, ,928 party allotment (5,000 million yen), JRH made a prepayment of the entire amount of borrowings from the Real Estate Market Stabilization Fund Sumitomo Mitsui Banking Corporation 4,323 5,351 9,674 11,626 1,952 The Norinchukin Bank 5,443-5,443 5,443 - Resona Bank, Limited 4,423-4,423 4,423 - The Chuo Mitsui Trust and Banking Co., Ltd. 3,191-3,191 3,191 - Shinsei Bank, Limited 3,050-3,050 3,050 - The Sumitomo Trust and Banking Co., Ltd. 2, ,942 2,942 - The Norinchukin Trust and Banking Co., Ltd. - 2,581 2,581 2,581 - The Musashino Bank, Ltd. 1, ,522 2,522 - Mitsubishi UFJ Trust and Banking Corporation 2,161-2,161 2,161 - Mitsui Sumitomo Insurance Co., Ltd NTT Finance Corporation Trustee, The Sumitomo Trust and Banking Co., Ltd. (Real Estate Market Stabilization Fund Account) Borrowing period - 9,880 9, ,880 Total 46,385 34,270 80,656 *75,656-5,000 *Through h a part of the transfer proceeds from Hilltop Yokohama Negishi on September 17, JRH is scheduling to make a prepayment of a part of borrowings Extending the average borrowing gperiod and average remaining period JRH before refinancing JRH after refinancing, before merger JRH after merger (as of July 2) Average borrowing period 2.5 years 2.7 years 3.0 years Average remaining period (As of July 1) years 2.5 years 4

6 Extension and diversification of secured loans JRH The entire amount of 15,268 million yen in borrowings whose payment is due on June 22 was refinanced with existing financial institutions at a borrowing period of 3 years Former PRI Of the 34,270 million yen in total borrowings before refinancing, 26,268 million yen was refinanced with existing financial institutions at a borrowing period of 3 years or 4 years (executed on June 30 and July 2) Before refinancing 35,000 30,000 25,000 20, ,000 10,000 5,000 35, ,618 After refinancing 25,000 20,000 15,000 10, ,000 15,268 16,433 Before refinancing 4,358 15,294 10,833 3,850 Unit: million yen Former JRH Former PRI ,433 After refinancing 2,581 10,833 19,118 Unit: million yen Former JRH 30,000 14,110 Former PRI ,158 LTV before and after the merger JRH before refinancing (before merger) JRH after merger (as of July 2) LTV based on appraisal value 53.1% 53.9% LTV based on book value* 41.4% 4% 45.8% *Before the merger: LTV based on book value = Interest-bearing debt / (Interest-bearing debt + Unitholders capital) After the merger: LTV based on book value = Interest-bearing debt / (Interest-bearing debt + Unitholders capital + Investment surplus + Negative goodwill) 5

7 2. Transfer Agreement for Hilltop Yokohama Negishi Signing date of transfer agreement: July 26, 2010; Delivery date : September 17, 2010 (Planned) In line with the termination of the sub lease agreement at Hilltop Yokohama Negishi (name changed from Isogo Flat on May 1, 2010) and the change to a pass through management arrangement (a structure where the master lease company does not provide a guarantee of rent), JRH planned to collaborate with the property management company Shimizu Comprehensive Development to diligently conduct leasing activities. However, as the buyer bid to acquire the property at a level that was close to the property s book value, a judgment was reached that the transfer of the property would be the most appropriate course for JRH based on a comprehensive viewpoint and on the results of a comparative review of the initial projections (income and expense projections in light of the prospects for future leasing activities) and the transfer, and thus decided on the transfer. Property number Property name Area classification Location Use F Hilltop Yokohama Negishi Three major metropolitan areas , , , , Maruyama, Isogu-ku, Yokohama-shi, Kanagawa Residence Rental apartment category Family Total number of leasable units 279 Total leasable floor area 25,013.14m 2 Type of structure RC building with flat roof Completion date August 8, 1990 Book value (as of end of March 2010) 5,203,387 thousand yen (Note 1) 5,100,000 thousand Transfer price (excluding national and local consumption tax) (Note 2) Appraisal value (as of end of March 2010) 4,560,000 thousand yen Appraiser Morii Appraisal & Investment Consulting, Inc. (Note 1) Repair work has been conducted on the concerned property since April 1, Due to a portion of the concerned repair work being capital revenue, the book value as of the time of the sale and the concerned amount do not match. (Note 2) Transfer price - Book value equals -103,387 thousand yen, but in addition to the transfer price, 320,500 thousand yen will be received from the buyer as money for the repair work mentioned in Note 1. As a result, a loss on the sale is not expected. 6

8 JRH and Former PRI s Occupancy Rate (Floor Space Basis) (Occupancy rates without Hilltop Yokohama Negishi are reference values.) Overall occupancy rates for JRH Overall occupancy rates for former PRI 98.00% % % % % % % Occupancy rate % 82.00% 80.00% Occupancy rate without Hilltop Yokohama Negishi Former PRI 78.00% Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 <Occupancy rate for JRH properties (does not include former PRI properties)> In line with the termination of the sub lease agreement at Hilltop Yokohama Negishi and the change to a pass through management arrangement, JRH planned to collaborate with the property management company to conduct leasing activities. JRH thus began construction work from April 2010 to restore all units to their original state. Therefore, the occupancy rate was 0% until June. After the property is transferred on September 17, 2010, the overall occupancy rate is projected to return to its normal level. <Occupancy rate for former PRI properties> The occupancy rate for former PRI is moving stably between 92% to 93%. In the future, by improving our leasing system, we believe the occupancy rate can be raised. 7

9 3. Revision of Management Performance Forecasts in Line with Determination of Negative Goodwill Determination of appraisal value of former PRI properties as of the merger (as of July 1, 2010) Previous appraisal value (as of January 31, 2010) 56,841,200 thousand yen -3,888,700 thousand yen (-6.8%) Current appraisal value (as of July 1, 2010) 52,952,500 thousand yen Previous appraisal value (as of January 31, 2010) Current appraisal value (as of July 1, 2010) Difference from previous appraisal value Period-overperiod Studio type (thousand yen) 28,936,600 27,122,500-1,814, % Family type (thousand yen) 27,904,600 25,830,000-2,074, % Total (thousand yen) 56,841,200 52,952,500-3,888, % Determination of negative goodwill (Unit: million yen) Book value of assets Assets assumed Unrealized profit/ loss Liabilities assumed Net assets succeeded Book value of liabilities Negative goodwill Fair value of investment units issued Other miscellaneous merger expenses (1) Net assets succeeded from PRI (fair value) a + b + c Current definite value Estimate announced as of May 25 Difference 19,503 22,848-3,345 a. Total assets succeeded 55,372 b. Property acquisition costs 72 c. Total liabilities succeeded - 35,941 (2) Consideration for the merger (fair value of investment units issued) 6,682 6, (3) Other miscellaneous merger expenses Negative goodwill (1) (2) (3) 12,343 15,919-3,576 Unrealized profit/loss Unrealized profit/loss *The above figures are unaudited and so may vary from the final figures. 8

10 Forecasts for the fiscal period under review (ninth fiscal period ) (Announced in The financial report for the eighth fiscal period (as of March 31,2010), dated May 24, 2010 and business performance revised on August 16.) (Unit: million yen) Financial Report as of May 24 (9th fiscal period forecasts) Business performance revisions as of Aug. 16 (9th fiscal period forecasts) Actual results of the previous fiscal period (8th fiscal period ) Operating revenues 4,657 4,728 (1.5%) 3,528 Operating income 1,527 1,569 (2.7%) 1,301 Ordinary income (3.6%) 682 Net income 16,584 13,032 (-21.4%) 679 Distribution per unit (yen) 500 yen (2,000 yen) 517 yen (2,071 yen) (3.4%) 2,910 yen Number of investment units of JRH 1,330,800 units (332,700 units) 1,330,800 units (332,700 units) ( - ) 233,340 units (Note 1) Figures are rounded off to the nearest unit. (Note 2) Percentages are rounded to the first decimal place. (Note 3) Distribution per unit for the ninth fiscal period forecasts in parentheses represent figures before the investment unit split. (Note 4) Figures in parentheses under Business performance revisions as of August 16 represent changes from the Financial Report announced on May 24. <Revisions to business performance forecasts as of August 16, 2010> In accordance with the merger with Prospect Reit Investment Corporation (hereafter, PRI ), JRH obtained the property appraisal for all properties owned by PRI as of the date of the merger (July 1, 2010). It was found that the appraisal values were below the appraisal values as of January 31, 2010 and, as a result, gains from negative goodwill were revised from the initially projected 15,919 million yen to 12,343 million yen. Due to this, there will be a difference in the management performance forecasts for the fiscal period ending September 30, 2010 from originally i released forecasts. We therefore made revisions i on August 16. Reference: Reason for the increase in operating revenues: Due to posting a gain on the sale of Hilltop Yokohama Negishi. Reason for the increase in operating expenses: Mainly due to posting additional construction costs for properties succeeded from PRI. Reason for the increase in expenses resulting from subtracting ordinary income from operating income: Mainly due to conducting a lump-sum amortization of financing charges which were scheduled to be amortized in the future, by making a prepayment of borrowings in line with the sale of Hilltop Yokohama Negishi. 9

11 Review of the ongoing basis In line with the determination of negative goodwill, and based on the assumption of the ninth fiscal period forecasts of business performance revisions as of August 16, JRH reviewed ongoing net income. As a result, we revised the forecast of 1, million yen announced last time (at the analysts meeting for the fiscal period ended March 31, 2010 (eighth fiscal period) held on May 25, 2010) to 1,359 million yen. The major reasons for the difference between the ninth fiscal period forecasts and ongoing forecasts are a net increase of 255 million yen in relation to the dissolution of temporary causes for profit decline during the ninth fiscal period*, a net increase of 304 million yen based on a semi-annual contribution to revenues due to the merger and 110 million yen from improvement of financing charges in line with the determination of merger financing. Moreover, figures of said ongoing basis are based on the assumption that there will be no changes to the 185 properties, which excludes Hilltop Yokohama Negishi, and on the assumption that there will be no changes to the number of investment units outstanding of 1,330,800 units, which is the number of investment units after the merger. Ongoing gbasis Profit decline due to JRH s Hilltop, etc. Negative goodwill 12,343 million yen Total: 13,032 million yen Negative goodwill 12,343 million yen Dissolution of temporary causes for profit decline during the ninth fiscal period* 255 million yen Contribution from PRI due to merger (3 months) 304 million yen Due to reduction of financing charges 110 million yen 10 million yen 679 million yen -319 million yen +329 million yen Contribution from PRI due to merger (3 months) 689 million yen *Temporary causes for profit decline during the ninth fiscal period: Construction costs to restore all units of Hilltop Yokohama Negishi to their original state, etc. 228 million yen Gain on sale of real estate for Hilltop Yokohama Negishi, etc. -76 million yen Removal of finance-related costs in line with the prepayment of borrowings 61 million yen Other 42 million yen 1,359 million yen** Actual results of the 8th fiscal period 9th fiscal period forecasts (business performance revisions as of Aug. 16) **Ongoing net income forecasted at the analysts meeting for the eighth fiscal period held on May 25: 1,189 million yen 10

12 Reference: Comparison image of actual results of eighth fiscal period on an ongoing basis Ongoing basis Due to reduction of financing charges 110 million yen Decline on an ongoing basis due to transfer of Hilltop, etc. Due to merger 633 million yen 679 million yen -63 million yen 1,359 million yen ** Actual results of the eighth fiscal period **Ongoing net income forecasted at the analysts meeting for the eighth fiscal period held on May 25: 1,189million yen 11

13 4. Future Growth Strategy JRH s new growth track (strengthening the financial base / securing funds for growth) Establishment of foundation to return to the same steady growth track Execution of capital increase by way of third-party allotment (June 30, 2010) JRH/PRI merger comes into effect (July 1, 2010) JRH/PRI refinancing is completed (June 22, June 30, July 2, 2010) Upgrade of R&I ratings: BBB- to BBB (July 1, 2010) Discussion on expansion of assets by purchasing new properties, mainly in central Tokyo, and selling some local / small-sized properties (replacement of portfolio assets through use of negative goodwill) Focusing effort on further improving ratings Participation in planning the next reorganization Discussion of investment corporation bonds and public offerings (PO) 12

14 Appendix 13

15 Future Growth Strategy (Appendix) 1. Management Policies Basic portfolio concept - A collection of properties with good revenue based on a combination of income (revenue Criteria for the fiscal period) + capital Acquisition policy Profitability: NOI and earning capacity based on analysis financing and JRH costs Potential: Rent level and occupancy rate, volatility after passage of time (building age), supply of and demand for competing properties, location and household trends Superiority: Location, building age and size of property Liquidity: Past record of acquisitions and sales, price per property (profit/loss on disposal) Investment in high quality assets in major metropolitan areas, especially Tokyo - Expeditious replacement of 1 to 3 billion yen per property, Studio and Family unit types properties in view of market conditions Sale policy Strategic decision-making from the viewpoint of real estate market trends and the entire portfolio Based on analysis of profitability, local characteristics, size of property, operational efficiency, etc. Utilization of negative goodwill if loss on sale cannot be avoided 14

16 2. External Growth Expansion of asset size Purchasing of new properties Area: Major cities, especially the 23 wards of Tokyo Type: Family and Studio (excluding premium) Building age: Newly-completed properties Price: Around 1 to 3 billion yen per property NOI yield: An estimate of around 6.0% on average Discussion of merger opportunities amidst the J-REIT reorganizations taking place Expansion of the portfolio, especially in the Tokyo area Target for total assets: 200 billion yen to 250 billion yen (billion yen) 3,000 2,500 2,000 1,500 1, Sep Mar Jul Asset size (JRH) Asset size (PRI) No. of properties (JRH) No. of properties (PRI) (no. of properties) (Note) Bar graph: Acquisition price; Line graph: Number of properties 15

17 3. Internal Growth JRH will conduct the items on the right, from the viewpoint of raising the profitability of existing properties and cost reductions. Raising profitability Further strengthening ties with property management companies -Locally-based marketing and speedy acquisition of on-site information to achieve high occupancy rates -Acquisition of information of appropriate rent levels in each market -Thoroughly ensure expeditious and agile communication with property management companies -Speedy correction of marketing strategy Leasing activities conducted based on stronger relationships with property management companies Lateral spread of successful examples shared between asset managers (confirmation of property p conditions through the use of checklists, etc.) Raising the value of properties through renovations and raising rents Expanding sources of income (installment of vending machines or cellular phone antenna bases, sub leasing of empty parking spaces, etc.) Expanding the property options available to end users through increased area portfolios Provision of value-added services (alliances with home-cleaning companies or car sharing) Cost reductions Take advantage of the portfolio expansion to review and reorganize property management companies in an aim to improve efficiency and reduce costs Obtainvolume discounts by concentrating on a lower number of building management companies Selection of companies for repairs or construction work; cost reduction by concentrating on a lower number Cost reduction by reviewing other costs on an Investment Corporation level 16

18 4. Financial Strategy Debt ratio We will flexibly implement financial strategies depending on the financial standing and financial base of JRH. We will aim to diversify financing sources by increasing the number of partner financial institutions and by issuing investment corporation bonds. Book-value LTV (Interest-bearing debt / (Interest-bearing debt + Unitholders capital)) on an ongoing basis: Target is 45% to 50% Debt-financing strategy Establish a stable bank formation Secure and maintain appropriate financing charges: Economic conditions based on LTV, asset size, earning capacity, management capability, sponsor support, etc. Diversify payment due dates: Reduction of refinancing risk Extend borrowing periods: While keeping in mind cost increases resulting from extensions, reduce refinancing risk (an agile response to the risk of interest rates rising in view of financial conditions) Upon achieving an upgrade from the current rating (BBB), consider resuming issuance of investment corporation bonds Equity-financing strategy Depending on the actual results of the new JRH after the merger and in view of market conditions, also consider conducting issuances of new investment units through public offerings. 17

19 Profile of JRH and the Asset Management Company As of July 1, 2010, the Master Group (Note) was the largest investor, owning approximately 42.6% of the investment units issued by JRH. (Furthermore, as of July 1, 2010, the Master Group owned 98.0% of the stock issued by the asset management company. It has also assigned external board directors to provide management support to JRH.) Structure of JRH Master Company Group OCM Netherlands Opportunities Coöperatief U.A. (Netherlands) Advice 100% 100% AppleRingo Holdings B.V. AppleRingo Investments B.V. Ringo Residential Tokutei Mokuteki Kaisha 87.4 % 10.6 % 170,456 units 12.8% Total of 568,073 units 42.6% 397,617 units 29.8% Asset management agreement The Bank of Tokyo-Mitsubishi UFJ, Ltd. 0.9 % Sumitomo Mitsui Banking Corporation 0.9 % (Note) The Master Company Group includes OCM Netherlands Opportunities Coöperatief U.A. (hereafter, the Master Company ) and the subsidiaries directly or indirectly whollyowned by the Master Company. The Master Company receives advice from Oaktree Capital Management L.P. (hereafter, Oaktree ). Oaktree, which provides advice to the Master Company, is a leading investment management corporation, managing approximately $78 billion in assets (as of the end of December 2009) and providing management and advice in relation to alternative and cutting-edge investments. Oaktree manages and provides investment advice on investment products, including distressed debt, high-yield debt, convertible bonds, private equity (including investments in energy and infrastructure), real estate, securities in emerging market, Japanese stocks and mezzanine finance, emphasizing opportunistic, solid risk management. Headquartered in Los Angeles, Oaktree was established in 1995 by a team that came together in the mid-1980s. As of the end of March 2010, it had 14 offices and approximately 680 employees worldwide. It has achieved solid results from various investment properties, including real estate investment in the Japanese market, since the establishment of its Tokyo office in

20 Organization of MAM Name Established Permits / Licenses President & CEO Executive Officer Location of head office Business Shareholders (holdings) Mi-Casa Asset Management Inc. February 25, 2005 September 30, 2007 Registered Financial Instruments Firm (Registration Number: Director of the Kanto Local Finance Bureau No. 416) Yutaka Higashino Satoshi Nakamura (Asset Management Department) and Tetsu Kasuga (Business Management Department) Shinbashi, Minato-ku, Tokyo, Japan Asset management AppleRingo Holdings B.V % AppleRingo Investments B.V % The Bank of Tokyo-Mitsubishi UFJ, Ltd. 0.9 % Sumitomo Mitsui Banking Corporation 0.9 % Organizational chart Shareholders Meeting Corporate Auditors Investment Committee Board of Directors President & CEO Compliance Committee Compliance Office Executive Executive Officer Officer 16 people 9 people Asset Business Management Management Department Department 室 2 people As of May 1, 2009, the Executive Officer System was introduced and new Executive Officers were appointed. As of August 12, 2009, there e was a change in the President & CEO and a director. As of October 30, 2009, there was a change in directors. As of July 1, 2010, the total number of executives and employees reached 28 (full-time). 19

21 The purpose for this document is to provide information and is not for soliciting investment activities or recommending specific securities. In the event of purchasing investment units of Japan Rental Housing Investments Inc., please contact your securities company. Information contained in this document is not disclosed material or a management report requested based on the Financial Instruments and Exchange Act, the Investment Trusts and Investment Corporations Law, related ordinances, rules, regulations and listing regulations of the Tokyo Stock Exchange and other related rules and regulations, nor is it based on the aforementioned. The contents t of this document includes statements t t of future forecasts. However, these are based on information available as of fthe current date and on certain assumptions and judgments. Unknown risks and uncertainties are inherent to such statements and it is feared that such risks, uncertainties, assumptions and other factors may impact such forecasts. Therefore, such future forecasts are not meant to guarantee the future performance, business results, financial content, etc. of JRH. Actual results may greatly differ from the future performance, business results and financial content expressly or unexpressly shown by the existence of statements concerning such future forecasts. The content of this document have been rechecked, but JRH does not guarantee the accuracy, certainty, appropriateness or fairness of said content. Furthermore, please be forewarned that the content may be changed or deleted without warning. Copying, transcribing, etc. the content shown in this document without obtaining prior approval is prohibited. [Contact] Business Management Department, Mi-Casa Asset Management Inc. Registered Financial Instruments Firm (Registration Number: Director of the Kanto Local Finance Bureau No. 416) / Member of the Investment Trusts Association, Japan) Tel:

22 21