Last Updated: June 1, 2012

Real Estates
1.

Introduction
The securitization of real estates has developed on the back of the diversification of fund raising
methods and mounting needs for improvement in financial standing in Japan and is broadening its base inrecent years helped by frequent use of the scheme to take advantage of leverage by real estate funds, etc
for their investment fund raising purposes.
In assigning credit ratings to real estate securitization products, it is imperative to adopt theassessment methods that take into consideration the customs and systems of real-estate transactions basedon the attributes of properties to be securitized. Hereinafter, points for the assessment, ways of thinking,and things to keep in mind for scheme formation, etc. are described for Japan Credit Rating Agency, Ltd.
(JCR) to assign credit ratings to real-estate securitization instruments. JCR will arbitrarily readjust its
rating methods in response to changes in the environment surrounding the securitization of real estates,
including economic trends, real-estate market conditions and legal and tax systems.

2.

Assessment of Real Estate Prices
The point to be considered to begin with in formulating a real estate securitization scheme is how toassess the values (the present values and future values) of real estates to be securitized. Points and waysof thinking adopted by JCR when it assesses the real estates to be securitized are described here first.
This report consistently lays out JCR’s view points, as a credit rating company, in assessing the values ofreal estates to be securitized, and does not describe methods of general real estate appraisal.

(1) Points for the assessment(i) Analysis of the market
The analysis of the subject real estates and the real estate market in their neighborhood is themost important point for assuming cash flows of a securitization scheme and assessing its asset
values. JCR tries its best to analyze and assume market conditions at the time of securitization andmarket trends up to the time of debt redemption as accurately as possible by checking the items asfollows.
(a) Conditions of location (roads, transportation access, etc.)(b) Conditions of locations and properties to compete with (ones existing or under planning)(c) Conditions of lot utilization in the neighborhood, tenant occupancy conditions(d) Supply/demand conditions of tenants (lease conditions, level of vacancy rate), sales information(e) Various economic indexes for the market trend, information of indexes, etc.
(f) Historical data (changes of rents/vacancy rates, lease periods, statuses of inquiry by tenants, etc.)
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(ii) Qualities of the subject real estates
Profitability and grades of the subject real estates are very important for making judgment of
their qualities and competitiveness. The necessity of maintenance, management and renewals, etc. ofbuildings, actual plans for them and accruing expenses are also the factors to be judged to assume
future cash flows as well as asset values of the properties. Basically, JCR makes it a rule to examine
the following items, but JCR practically requests the engineering reports, which were preparedmainly by construction companies or design companies to be submitted, and does the research about
their contents and confirm them after conducting the field examination. *1*1

If there are many items to be researched for securitization, it could end up with spot
investigation of samples.

(a) Environment (including disaster risks such as earthquakes, conditions of contamination, etc.)(b) Shape and dimension of lands (lots)(c) Contractor and maintenance provider of buildings (construction, facilities)(d) Grades of buildings, maintenance system of electricity, gas, water supply and drainage, and air
conditioning(e) Economic life and age of building- Economic life of building shall be economically usable remaining number of years assessedby an appraisal or engineering report(f) Maintenance cost(g) Necessity of big scale renovation (capital expenditure) and future plan
- Whether cash flows are sufficiently secured or not is to be verified for the future plan basedon historical data and engineering report(iii) Qualities of asset management and property management
In cases of offices and commercial facilities, asset management for the securitization scheme
shall be performed by real estate companies, trust and banking corporations, affiliated companies oforiginators, etc. The assessment of whether each company (including companies performing
businesses such as property management (commissioned companies)) has ability to respond to roles
they are supposed to play for each assignment is very important, and JCR checks the following
matters.
(a) The past results, performances (the number of properties managed, the number of personnel incharge, and their experiences, ability to deal with tenants, building maintenance ability, planningability for big scale renovation, market research ability)- Hardware side renovation is considered to be basically performed according to a plan in anengineering report which is prepared by the expert, but aspect of operating real estate
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business (know-how and abilities to prevent the decline of property value and to formulate aplan to scheme the maintenance and enhancement of competitiveness) is considered to
become an important factor in determining selling price in the future.
(b) Stability of financial conditions(c) Capital ties, etc. with parties related to the scheme(iv) Tenant statuses (in cases of office buildings and commercial facilities)
One of the most important points to be noted in assigning credit ratings is to make sure to keep
the quality of tenants high for preventing the sharp rise in vacancy ratio and significant decline in rent
level. Although it is desirable that the diversification of tenants is assured (industry types, scales, andothers) for measures against vacancy in the future, it is also important to adequately control thebalance between such diversification and qualities of properties as a whole. From these view points,
JCR conducts investigations of the following items and makes assumption of variability and trends ofrental income based on their results. In case of existing properties, however, basically the submissionof historical data since the time of completion is requested (data for 3 ~ 5 years in case of oldproperties is desirable).
(a) The number of tenants (dispersion) and their quality- It is desirable for tenants to be dispersed so that rental income from one tenant is not too
much.
- Credit capability of each tenant is basically one of criteria for assessing risks of nonpayment
or delay in payment of rents, but rent to be not paid is covered by deposit usually, andproperties with high versatility are considered not to be influenced so much by vacancy risks(excluding particularly subleased properties or commercial facilities with a single tenant withlow substitutability).
(b) Rent level, rent revision status- If the level of rent is found deviated from prevailing market rents by the result of research onthem, assessment values could be calculated after readjustment of rent is considered.
- With regard to the future scenario including revised prediction of rental income, theassessment is made reflecting the future outlooks after the consistency with market rent
trends are checked and details of lease contracts are confirmed.
(c) Lease period, the next review(d) Conditions regarding burden of expenses, etc. specified in a lease contract(e) Conditions to lease review and terminate a contract (the existence of options)(f) Descriptions of businesses, financial conditions and management policies of tenants(g) Tenants’ purposes of utilization and how tenants regard the properties (whether they are likely tomove out)

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(2) Real estate appraisal report(i) Scrutiny of real estate appraisal report
JCR receives an appraisal report submitted for real estates to be securitized and checks its
contents. It is desirable that there are detailed descriptions of appraisal methods and contents (forexample, assumptions of future rent and cash-flow, as such) by a real estate appraiser in charge.
- Scrutiny is to be conducted for the future vacancy rate and tenant supply/demand trends
based on historical data and market analysis results(ii) Check points(a) Whether rental income in the appraisal report is set up for each property current assignment withprevailing market conditions or results being taken into consideration (rent, vacancy rate) is tobe checked.
- Concerning the prevailing market conditions, as it is not easy to obtain appropriate data forevery case, they may be limited to the extent assumed from real estate appraisal reports orother information sources.
(b) Whether repair costs (including big scale renovation and/or capital expenditure) are set up
appropriately based on engineering reports prepared by third-party specialists (generalcontractors, designing companies, etc.) is to be checked. *2(c) Whether management expenses (management fees, maintenance fees, etc.) are set up based on
the past performances in principle, or according to general case, is to be checked.
(d) Whether taxes and public dues are set up based on revised trends for assessed values of fixed
assets is to be checked.
(e) Whether casualty insurance premiums are set up based on the amount estimated by insurancecompanies is to be checked. (compared with similar case, as such)(f) Whether the ratio of expense to income is on the appropriate level compared with that of generalcase is to be checked.
(g) Whether the assumption of the total future cash flows of the subject real estates are set up on theappropriate level based on the above (a) through (f) is to be checked.
(h) Whether a discount rate, the terminal cap rate and capitalization rate is set up on the levelsufficiently reflecting various risks for the subject real estates is to be checked.
(i) Whether appraisal prices are set up in an appropriate level by proper methods based on theabove (g) and (h) is to be checked.
*2

Scenarios are generally set up based on the configuration made in the engineering reports, etc.,
so that cash flows are leveling during a certain period, but if in case they are not, reasons forthat are to be scrutinized. Although it is regarded as natural, the same is true for the casewhere there are any questions about the configuration level itself.
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(3) Assessment by JCR(i) Cash flow analysis
JCR conducts cash flow analysis based on a real estate appraisal report prepared by a real estateappraiser. In analyzing cash flows, risk analysis is also conducted adding factors of the individual
subject property including general factors of real estate markets (natural factors, social factors,
economic factors and administrative factors). In another word, it is necessary to conduct the analysis
getting understanding of volatilities of cash flows of the subject real estates taking both macro andmicro approaches.
Main examples of risk factors for this cash flow analysis are as follows.
· Risks for rents deviating from assumed rents→Due to a decrease in marketability, excessive supply and the deterioration of economic
environment· Vacancy rate rising risks→Due to obsolescence of function, emergence of competitive properties· Cost rising risks→Due to temporary repair, rising outsourcing expenses, rising interest rate
· Business interrupts risk due to disasters, etc.
· Risks for selling price falling below assumed price because of lacking liquidity in the property
market.
· Marketability declining risk due to the revision of laws, as such.
(ii) Determination of assessed priceReal estate prices are assessed based on cash flows obtained by the above works mainly using
income capitalization approach, also taking into cost approach price, etc.
JCR takes a stance to basically concurrently use direct capitalization or DCF method for earning
properties. In determining final assessed price, which one of the above mentioned methods is to be
adopted, will be determined taking attributes of each property (rent, vacancy rate, trend of NCF, etc.)
into account.
(iii) Reflection on rating
Judgment on rating of the subject obligation is made after the loan to value ratio (LTV: describedin details in Section 4), etc. is calculated based on the assessed price.
In case of an external credit enhancing type scheme, credit rating is assigned based on obligation
performing ability of a party enhancing credit (option-writer, guaranty companies, etc.) after due
diligence of the performance of such credit enhancing agreement is conducted.

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(iv) Follow-up of asset value trends
JCR requires that fluctuation of the subject property’s price be reviewed once every year inprinciple and data and materials for such review be submitted and reported to JCR. If redemption risk
is deemed increasing for the subject obligations due to material changes in conditions of the subject
property (withdrawal of main tenants, sharp decline in land prices or rent in the neighborhood, etc.),
JCR will arbitrarily request that related data and materials be submitted and reported, and provide
investors with information including designation of a credit monitor and revise of credit ratings, andpromptly disclose its result as well.
3.

Redemption Risk for Obligations and Credit Enhancing Measures, etc.
In a securitization scheme, credit enhancing measures, etc. are incorporated to avoid risks offluctuation (decrease) of capacity utilization profit (net profit during a period based on rent income), or
disposition proceeds (or refinance proceeds) which is a source of fund to redeem obligations. In assessing
credit rating, to what extent the risks concerning repayment of principal and interest for obligations are
mitigated by such credit enhancing measures established for the scheme will be judged.

(1) Assumed risks
The following risks are assumed against capacity utilization profit and disposition prices.
(i) Risks related to capacity utilization profit(a) Risks of delinquency in rent payment and nonpayment(b) Risk of rent reduction(c) Risk of rising vacancy rate
- It is impossible to completely avoid the risks of the above (b) and (c) under the current Landand House Lease Law. In case of properties with high substitutability in that substitutetenants can be acquired at any time, however, it will be assumed to reduce such risk to someextent.
(d) Risk of increasing business management cost (cost for renovation, taxes and public dues,
insurance premium, administration cost, etc.)(e) Risk that makes continuation of business impossible (loss or damage of buildings due toearthquake as such)(ii) Risks related to disposition price(a) Risk that is making the selling impossible with assumed price within disposition period(b) Risk that is making the selling impossible (loss or damage of buildings due to earthquake assuch)(2) Design in structuring, credit enhancing measures, etc.
Internal credit enhancing measures ((a) ~ (d) below), external credit enhancing measures ((e)
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below) and design in structuring ((f) and (g) below) can be thought of as means to avoid risks
mentioned in the above (1). What types of and to what extent such credit enhancing measures areneeded is to be investigated corresponding to rating of the subject obligation or credit capability ofparties related to the securitization scheme.
(a) Setup of LTV (details are described in the Section 4)(b) Amortization from the cash flow in terms. (partial redemption)(c) Setup of cash reserve (reserve at initial stage or during a period)(d) Setup of trigger clauses (additional capital contribution, suspension of equity dividend,
redemption before maturity, etc.)(e) Guaranties by persons related to the scheme or third persons (external credit enhancement
measures, utilization of insurance), etc.
(f) Design of lease contract (prohibition of termination before maturity, special agreement
prohibiting request for rent reduction or penalty, tenant obligation to bear operation costs, etc.)(g) Exit strategy (setting up the plan who should make strategies related to selling or refinance,
assurance to have enough time before the implementation of disposition or refinance)
4.

Setup of Loan to Value (LTV)(1) LTV Concept(i) LTV is a rate of “loan principal amount (limiting to the obligations with rank the same as or prior to
the subject obligation)” to “asset value” of the subject real estate at the time of receiving theborrowing. In the real estate securitization scheme, it’s possible to make a judgment to an extent in
the future price fluctuation if risk is covered, by making the setup of a cushion related to the subject
obligation using LTV the credit enhancing measure against asset value fluctuation risk. Therefore,
LTV becomes a significantly important index in assigning credit rating corresponding to theassuredness of the payment of principal and interest amounts of obligations.
(ii) It is considered normally difficult to borrow money for a period exceeding 10 years in the current
real estate securitization market, and it is not so practical to assume a loan (borrowing) considering
the profit generated during a period of real estate business (capacity utilization profit) alone as theredemption source of funds. Accordingly, in calculating LTV, it is necessary to assume cash flows
including both (a) “capacity utilization profit” and (b) “amount of disposition (or fund raised byrefinancing to redeem obligations) necessary to be secured by the time of redemption”.
(iii) LTV is setup with various risks assumed to arise for the subject real estate (fall of land price, decline
in rent income, deterioration of buildings, etc.) being taken into consideration, and with thepossibility that the above mentioned “capacity utilization profit” and “future amount of disposition”
will fluctuate (decrease) before the redemption being made is reflected.
(iv) The level of LTV is arbitrarily reviewed depending upon changes in (a) domestic economic trends(related to financial environment in particular), (b) nation-wide land price trends, and (c) laws and7/14
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regulations, etc.
(2) Method of LTV calculation(i) Setup of “Standard Value” for LTV
JCR sets up the “standard value” (Figure 1) of LTV for each rating category under the following
premises.
(a) “Standard value” indicates an upper limit (boundary) for each rating category. As ratings for the
subject obligations, however, such values are classified by a symbol of “+” and “-” which shows
relative location in the same category.
(b) JCR makes it a rule to setup the standard value for LTV only for the rating of “BBB” or higher,
and in case where borrowings rated “BB” or lower is implemented, rating will be judged forsuch individual case at the rating committee.
(c) Schemes and asset types are setup according to the followings.
(01) Internal credit enhancing type(02) Single class(03) Plural number of properties(04) Plural number of tenants(05) Use purpose: Office(d) In case of a scheme for which assuredness of principal and interest payment of issued bonddepends on liability performing ability of external credit enhancing entity (insurer, etc.), ratingof such credit enhancing entity is made a cap for a rating of the debt generally.
(Figure 1) LTV Standard value for each rating category
Rating categories

AAA

AA

A

BBB

LTV

~ 30%

~ 45%

~ 55%

~ 70%

(ii) LTV setup for each rating
JCR sets up LTV criteria for each rating based on the (Figure 1) after making the following
adjustments.
(a) JCR classifies attributes of assets in (i) use purpose (office, residence, commercial facilities,etc.), (ii) the number of properties, and (iii) area and/or locations, and it will be adjusted foreach category corresponding to risk caused by the conversion of real estates to money inaccordance with their liquidity. If a positive factor is found in case of comparing attribute of thesubject real estate with condition mentioned in the above (i) (c), numerical value of LTV will
be bigger. On the contrary if minus factor is found the numerical value of LTV will become
smaller [the first stage].
(b) JCR further considers adjusting LTV taking into account factors exerting influence on the
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disposition of the subject real estate (degree of dispersion of properties’ locations, degree ofdispersion of tenants, credibility of tenants, supply/demand trend for substituting tenants,
possibility of use change, statuses of competitive properties, etc.) [The second stage].
(c) JCR further considers adjusting LTV depending on the characteristics of the debt. To be more
specific, the treatment on the contract, e.g. (i) the conditions of principal repayment from cash
flow in terms (partial redemption) ,(ii) setting the trigger by the LTV and/or DSCR test, (iii)
other treatment, like the setting the scenario to exit (to dispose the properties, etc.) to ensure thecertainty of repayment of the debt.
It should be noted that concerning with the securitization of real estate recently, especially in theFund scheme, the treatments in the above (C) were usually adopted. In such case, the actual applied
LTV, after adjusted from the Standard value, are shown below.
(Figure 2) LTV adjusted from Standard value for each rating category
Rating categories
LTV

AAA

AA

A

BBB

Around 35%

45~50%

Around 55%

Not so muchexceed 70%(3) Concept in case where multi-class type borrowing of obligation is madeIn case of multi-class type borrowings for which plural number of borrowings of obligations withdifferent ratings are made, obligations of a class (excluding equity portion) playing a credit enhancingrole are supposed to cover principal redemption risk of senior class obligations. As risk of the juniorclasses playing credit enhancing role increases (due to condensation of the risk) comparing with asingle-type issuing obligations only with the same rating level, there may besome cases where it isnecessary to make adjustments for the entire amount borrowed or rating levels of junior classes. JCR
judges those kinds of risks depending on the right of the junior debtors in the contract.
5.

Setup of Disposition Period (Refinance Concept)(1) In case of assuming the disposition of the subject real estates, the setup of appropriate period for
disposition becomes very important. Because, the possibility of redemption of obligations will likely
be influenced depending on how the period is set up.
(2) If a period for disposition is set up short, a buyer is likely to have advantages at the stage of pricenegotiation, which may cause a decrease in amount received by a seller side. On the contrary, if theperiod is carelessly set up too long, caution should be paid to risk of even missing disposing
opportunity.

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(3) Appropriate target period for disposition itself may change depending on the market environment, but
it should be normally from one year to two years. Such disposition period will be adjusted andreexamined corresponding to attributes (use, districts, scales, etc.), qualities (potential for diversion,
statuses of legal regulations, ranges of buyers, etc.), and exit strategies, e.g. the disposing methods ofproperties. If the debt would be redeemed by refinancing way (not to dispose the properties), the same
point of view should be needed.
6.

Casualty Insurance(1) Included in types of insurance related to operation of real estate businesses are (i) fire insurance, (ii)machinery insurance, (iii) general liability insurance, and in addition to them there are also (iv)earthquake insurance and (v) profit insurance.
(2) For the real estate securitization scheme, it is desirable to purchase earthquake insurance to cover riskof decline in property value due to seismic damages (particularly for buildings designed on old
quake-resistance standards). In setting up premiums for earthquake insurance, JCR will confirm
detailed computation of probable maximum loss (PML) of buildings due to earthquakes, etc. made byprofessional companies. The probability of occurrence of secondary disaster is needed to be examined
as well in case of special situation.
(3) Profit insurance could be set up depending on the details of a scheme and level of rating, but it should
consistently be considered as one of additional credit enhancing measures.
(4) Generally, insurance company underwriting the insurance should be vested with insurance amountpaying ability rating of (i) “rating of level three notches below of the rating of the subject obligation or
higher” and of (ii) “BBB” or higher from JCR. And, such measure is desirable to be taken so that theprovision requiring to change insurance company if its rating is downgraded is to be specified inadvance.
7.

Legal Points at Issue and Rating Assessment Concept
In formulating a real estate securitization scheme, it is necessary to pay sufficient caution to realestate transaction practices and systems, etc., inherent to Japan. Described hereinafter are several points
at issue and concepts in assessing ratings.

(1) Points at issue for the Land and House Lease Law
Usually, it is impossible to avoid the risks against request for rent deduction or offer for
terminating Japanese Normal Lease contract (futsu-syaku) by tenants under the current Land and House
Lease Law. Therefore, in analyzing cash flows, it is difficult to assume that current rent income will befollowed to the future.
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If the contract between tenant was set by Fixed Term Building Lease (teiki syakka keiyaku),theoffer for termination shall be limited, but special provision in the lease contract regarding rent, or
possibility of termination by the default of the tenant, etc., should be taken into account for judgment.
Anyway, a certain degree of risk is to be examined and it should be factored into standard scenario.
(2) Treatment of security deposit
Many of security monies deposited by tenants are supposed to be reserved for events such as
bankruptcies of tenants until the termination of lease contract. Therefore such security deposit cannot becounted as cash reserves for enhancing credit or liquidity in the securitization scheme. In case wheresuch security deposit is not reserved and released to the seller, etc., that amount is deducted in assessing
the net asset value of property. With regard to monies deposited in accordance with a contract
positioned as loan agreement in which a loan provides to the seller from a tenant in nominal term of
construction cooperation fund or deposit with the provision of depreciable deposit, etc., its position of alease after the securitization shall be investigated separately.
(3) Points at issue for lease contract
Attention is to be paid to see whether any factors destabilizing a securitization scheme in the future
are existing due to right/obligation relationship between parties concerned (e.g., case where an existing
lease contract is used as is in securitizing existing properties, or where there are any differences for a
sub-lease assignment between agreements between lessor and lessee and those between sub-lessor andsub-lessee).
(4) Interests among investors
If there are senior and junior relationships among investors exemplified by a case wheremulti-class obligations are existing, conflict of interest among investors could arise in relation to thedisposition of properties made at the time when future asset values decline. To avoid such troubles,
detailed rules and agreements among lenders concerning selling price or period of selling are necessary
to be established in advance.
(5) Bankruptcy remoteness of SPC
From a view point of securing bankruptcy remoteness of a Special Purpose Company (SPC)(severance of influence from bankruptcy of parties involved with the scheme), it is desirable that
directors are elected from among third persons other than parties related to the scheme and capital ties
are severed as well. But even if there are capital ties between directors and parties involved with thescheme, these problems may be cleared by establishing operational standards that require certain
measures be taken to virtually assure the bankruptcy remoteness of a SPC (e.g., certain numbers of
directors are to be elected from among third parties and articles of incorporation require resolution of
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board of directors be adopted unanimously). *3*3

It is considered necessary to formulate measures so that a SPC will not suffer any economic
losses due to the occurrence of actual functional incompetence and losses of investors causedby emphasis added to formal bankruptcy remoteness.

8.

Rating Systems
Ratings of real estate securitization products are indicated by a rating symbol based on JCR’s general
rating system. To products with maturity of longer than one year, long-term ratings (AAA ~ D) and to
those with maturity of one year or shorter, short-term ratings (J-1+ ~ NJ) are assigned. There areclassifications indicated by symbols of plus (+) and minus (-) in rating symbols of “AA” through “B” toindicate comparative positions in the same category.

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[Necessary materials (In general)]
1.

Information materials in general(1) Schedule table(2) Term sheet (briefing documents)

2.

Legal materials(1) Agreements related to the scheme (real estate sales agreement, real estate management consignment
agreement, real estate lease contract (including land, buildings, parking spaces, and other ancillaryfacilities), agreements related to a SPC (domestic, Cayman)(2) Real estate securitization plan
(3) Legal opinion regarding the securitization, Tax/Accounting opinion (arbitrarily)

3.

Materials Related to Land and Buildings(1) Materials related to titles of land and houses (register held by legal affairs bureau, recorded map,
acreage survey map, drawing of building, ground plan for each floor)(2) Time of and price for land acquisition(3) Materials related to building permits (notification of building certification and certificate ofinspection)(4) Land map and materials related to dimension (measured drawing, or boundary fixation map)
(5) Drawing and specifications of building (completion drawing and construction schedule for building
and facilities)(6) Pamphlets of building (which indicate interior facilities: OA floor, individual ventilation, security
system twenty-four hour basis)

4.

Materials Related to due Diligence of Building(1) Engineering report (building deterioration diagnosis, renovation cost, long-term renovation cost(capital expenditure), reacquisition cost, compliance diagnosis, etc.)(2) Quake-resistance diagnosis report (Is value, PML, possibility of ground liquefaction, etc.)(3) Environment diagnosis report (dangerous articles and waste materials such as asbestos or PCB, land
contamination, etc.)(4) Others (If needed, e.g. contractor and construction cost, construction period, renovating company,
renovation cost, renovation period, contractor for periodic renovation, the present building
management company (including outsource company), history of suffering natural disasters andhistory of accompanying renovation)

5.

Real Estate Appraisal Report
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6.

Materials related to Estimated Profit on Real Estate(1) Business income and expense plan(2) Earning results of the subject real estate (annual historical data for the last five years or so, at least
for three years)(3) Market report (condition of location, competitive building or location, supply/demand trend,competitiveness in areas where the subject building is located, contract completion conditions for
similar buildings, assumed contract completion conditions for the subject building)(4) Rent-roll (the past and present tenant lists, contracted rent, statuses of revising rent, actual leasing
contract, etc.)(5) Materials related to tenants (lines of businesses, financial conditions, use purpose, position for suchcompany (possibility to move), credit research report, etc.)(6) Vacating and moving-in trends of tenants in the future (existence and non-existence of vacating
pre-notice or request for reduction of rent, tenants likely to vacate, or inquiries for vacancies)(7) Tax notice for fixed asset tax and city planning tax for land, buildings and depreciable properties(which describes assessed values, standard taxable values, amount of tax payment)

7.

Materials Related to Property Manager(1) Company Profile(2) Past performance (number of buildings managed, performance for leasing ability, and/or
maintenance ability, etc.)(3) Financial conditions

8.

Casualty insurance(1) Types of insurance presently covered and insurance company(2) Insured subjects and details of insurance (for each type)(3) Insured amount (for each type)(4) Annual insurance premium (for each type)Because of the possibility of human or mechanical error as well as other factors in the information herein, JCR makes no representation or
warranty, express or implied, as to accuracy, results, adequacy, timeliness, completeness or merchantability, or fitness for any particular purpose,with respect to any such information, and is not responsible for any errors or omissions, or for results obtained from the use of such information.
Under no circumstances will JCR be liable for any special, indirect, incidental or consequential damages of any kind caused by the use of any suchinformation, including but not limited to, lost opportunity or lost money, whether in contract, tort, strict liability or otherwise, and whether suchdamages are foreseeable or unforeseeable. Information herein is statements of opinion, and not statements of fact as to credit risk decisions or
recommendations regarding decisions to purchase, sell or hold any securities such as individual bonds or commercial paper. JCR retains all rights
pertaining to this document. Any reproduction, adaptation, alteration, etc. of this document, is prohibited, whether or not wholly or partly, without
prior consent of JCR.

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza,
Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026

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