Indications pursuant to Article 37 of the Financial Instruments and Exchange Law
Investment Risks
When concluding a silent partnership (Tokumei Kumiai – “TK”) investment contract on real estate beneficial interest in trust with the operator of a TK, please take heed of the following risks:
(1) The TK operator plans to use TK equity to invest in beneficial interests in trust of real properties with fluctuating prices as trust estate. The principal of your equity interest in the TK is not guaranteed. Any and all profits generated or losses incurred from investment in these real properties will be attributable to you.
(2) Your equity interest itself in the TK or the trust dividend from your real estate beneficial interest in trust to be acquired through use of TK equity may decrease in step with fluctuations of prices and other indexes in the real estate market, or a loss causing your equity interest in the TK to become deficient or causing your initial principal to disappear may arise as a result of a decline in the value of the relevant beneficial interest.
(3) Your equity interest itself in the TK or the trust dividend from your real estate beneficial interest in trust to be acquired through use of TK equity may decrease in step with changes in the credit standing of the parties associated with the TK investment business or the trust, or a loss causing your equity interest in the TK to become deficient or causing your initial principal to disappear may arise as a result of a decline in the value of the relevant beneficial interest. In addition, if any change occurs in the conditions of the business or assets of the TK operator, a similar loss may arise as a result of fluctuations in the price of your equity interest in the TK.
(4) Trust dividend may decrease, and hence the dividend associated with your equity interest in the TK may decrease or a loss may arise, depending upon the operational state (vacancy rate) of the real properties in trust, upon changes in rent levels (including those attributable to the market rates prevailing in the neighboring areas and those attributable to causes inherent in the real properties in trust), upon changes in tenants or sub-tenants, upon whether or not the real properties in trust are leasable, upon changes in costs and expenses necessary for the leasing business or in taxes or other public dues, or upon other similar causes. If any problem occurs with the trust estate, the beneficiaries may be required to contribute additional funds.
(5) If you suffer any loss as a result of our failure to perform our debt obligations, we shall be liable for compensating you for such a loss. However, please note that, if we are without sufficient financial resources, we may not be able to fulfill this obligation.
(6) If the trust estate suffers any loss due to the negligence of the trustee, the trustee shall be liable for compensating you for such a loss. However, please note that, if the trustee is without sufficient financial resources, the trustee may not be able to fulfill this obligation. You may also be requested to waive your right to claim for compensation.
Charges and Fees
If the TK investment contract is concluded by and between you and the TK operator, we expect to collect a fee (hereinafter referred to as the “AM Fee”) from the operator, and this fee as part of the costs and expenses of the TK is to be borne indirectly by you in accordance with the percentage of your equity contribution. In principle, the AM Fee will be the sum total of the amounts calculated according to the types of fees listed below, but may be based on types of fees and calculation methods that are different from those listed below because the types of fees and calculation methods are to be determined on the basis of negotiations for individual assets management contracts:
(1) Fee associated with acquisition of property: 1.0% of acquisition price (tax not included)
(2) Fee associated with management of property: 0.5% of acquisition price (tax not included)
(3) Fee associated with sale of property: 1.0% of sale price (tax not included)
Pursuant to the provisions of the TK contract, the TK operator expects to receive an Operator’s Fee, and this fee as part of the costs and expenses of the TK is to be borne indirectly by you in accordance with the percentage of your equity contribution. The amount of the Operator’s Fee will be determined on the basis of negotiations to be held prior to conclusion of the TK contract.
Various costs and expenses will be incurred in association with the acquisition and possession by the TK operator of the real estate beneficial interests in trust. The main types of these costs and expenses include: Fees paid to lawyers, accountants, arrangers, asset managers, and similar parties for preparation, examination, setting up, maintenance, and dissolution of the fund structure and related documents; fees paid to real estate appraisers, companies preparing engineering reports, and surveying companies designated under the Soil Contamination Countermeasures Act for performance of due diligence on the properties; brokerage fees paid to brokers; loan fees, interest, interest cap cost, and similar fees paid to financial institutions providing non-recourse loans; fees paid to the securities company for handling of private placement; trust fees paid to the trust bank; entrustment fees paid to the administrative agent; audit fees paid to auditing firm; tax and accounting expenses; entrustment fees paid to property manager; building management expenses; costs and expenses associated with engineering works, repairs, and such like of the properties; insurance premiums; utilities charges; registration charges; and fixed property tax, city planning tax, depreciable property tax and other public dues. These costs and expenses, as part of the costs and expenses of the TK, are to be borne indirectly by you in accordance with the percentage of your equity contribution.
As the amount, upper limit and calculation method for each type of these charges, fees, costs and expenses that you would bear directly or indirectly in accordance with the percentage share of your equity contribution will be determined individually in consideration of the scale, attributes, and other characteristics of the properties or the fund either through the process of structuring a fund or on the basis of necessary negotiations, they have not yet been finalized. Hence, except for the overview indicated herein, we are unable to describe the relevant details at the moment.
Miscellaneous Matters
This site is intended to showcase an overview of the company.
For the risks, charges, and other information described herein, we assume a silent partnership contract covering a commonplace real estate fund. As risks, charges, and other factors associated with investments in real estate funds vary from one fund to another, we would like you to make your investment judgment at your risk by making sure you verify and carefully review pre-trade materials, contractual documents, and annual business plans, etc. for individual funds delivered by us or sales company in advance.
The funds described in this site indicate an overview of the results of our investment advisory activities and, as such, are neither being offered for subscription nor available for fresh investments. The funds described herein do not promise any future investment performance in any manner.
Sumisho Realty Management Co., Ltd.
Financial Instruments Firm Registration No. 1807 (Kinsho) issued by the Director of Kanto Local Finance Bureau
