Make The World
More Sustainable[Provisional Translation Only]
This English translation of the original Japanese document is provided solely for information purposes.
Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

June 15, 2020
IssuerIchigo Office REIT Investment Corporation (“Ichigo Office,” 8975)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative: Yoshihiro Takatsuka, Executive Director
www.ichigo-office.co.jp/english
Asset Management Company
Ichigo Investment Advisors Co., Ltd.
Representative: Hiroshi Iwai, President
Inquiries: Sanae Hiraoka, Head of Ichigo OfficeTel: +81-3-3502-4891

Proposed Amendments to Articles of Incorporationand Election of Directors
Ichigo Office’s Board of Directors has decided to submit the following proposals toamend its Articles of Incorporation (AOI) and elect Directors at its July 18, 2020
Shareholder Meeting. The amended AOI and the election of Directors will become
effective upon shareholder approval at the Shareholder Meeting.
1. Purpose of the Proposed Amendments to the AOI
a. Drive increased shareholder value by implementing a simplified, no fixed fee,
performance-fee only asset management structure effective November 1, 2020, thebeginning of Ichigo Office’s April 2021 fiscal period. (Article 41 and Attachments).
Specifically, Ichigo Office proposes to:(1) Eliminate the “Asset Management Fee I” on total assets under management(AUM);(2) Eliminate the “Asset Management Fee II” on cash flow and total dividends;(3) Introduce an “NOI & Dividend Performance Fee” of 0.0054% directly linked toshareholder value creation;(4) Eliminate the “Asset Acquisition Fee”;(5) Eliminate the “Asset Sale Fee”;(6) Introduce a “Gains on Sale Performance Fee” of 15% directly linked toshareholder value creation. (The fee has a high-water mark, such that it will only
be paid if the cumulative sum of all of Ichigo Office’s Gains/Losses on Sales todate are positive.)(7) Eliminate the “Performance Fee” for maintaining or increasing cash flow per
share for six consecutive fiscal periods;(8) Eliminate the “Merger Fee” for mergers where Ichigo Office is the surviving
entity;(9) Introduce a “Gains on Merger Performance Fee” of 15% directly linked toshareholder value creation. (The fee has a high-water mark, such that it will only
be paid if the merger share price is higher than net assets per share.)1

(10) Introduce a “Gains on REIT TOB Sale Performance Fee” of 15% directly linked
to shareholder value creation. (The fee has a high-water mark, such that it will
only be paid if the TOB share price is higher than net assets per share.)b. Pursuant to Article 93, Clause 1 of the Act on Investment Trusts and Investment
Corporations, Ichigo Office has a “Deemed Approval” provision in Article 15 of its
Articles of Incorporation (AOI), under which if a shareholder does not vote at ashareholder meeting, the shareholder will be deemed to have approved proposals
submitted at the shareholder meeting (excluding cases where there are competing
proposals with respect to the same agenda item).
However, because it is difficult to submit alternative proposals under a Deemed
Approval system, and proposals that significantly impact shareholders and theInvestment Corporation’s governance structure or that may pose conflicts of interests
between shareholders and Ichigo Office’s directors and asset management company
may be approved under a Deemed Approval system without sufficient shareholder
deliberation and support from a majority of shareholders, and given the current debatewith respect to shareholder proposals by minority shareholders, Ichigo Office proposes
amendments to limit the scope of the Deemed Approval system such that it will not
apply to certain proposals that have been clearly opposed in advance by minority
shareholders or the Investment Corporation.
Such proposals include: 1) the appointment or dismissal of the Executive Director orSupervisory Directors; 2) the execution or termination of asset management agreementswith the asset management company; 3) the dissolution of the Investment Corporation;4) reverse share splits; 5) the waiving of liability of the Executive Director, Supervisory
Directors, or External Auditors; and 6) the approval of absorption-type andconsolidation-type (new entity) mergers.
To ensure fairness and transparency in the application of these rules, both minority
shareholders and the Investment Corporation will be able to register opposition toshareholder meeting proposals. Minority shareholders can submit a notice of opposition
to the Investment Corporation (or if the convener of the shareholder meeting is not the
Executive Director or Supervisory Directors, then to the Investment Corporation and theshareholder meeting convener), and the Investment Corporation can notify its
opposition in shareholder meeting materials or on its website.
In summary, Ichigo Office thus proposes to:
Define exceptions to the Deemed Approval system, and amend the Deemed Approvalsystem rules to reflect the necessary changes. (Article 15)
c. Clarify and modify language (Article 9, Clause 2; Article 30, Clause 1)

2

Proposed Amendments to Asset Management Fee Structure
Fee

AM Fee Structure

BeforeAfter

Asset SizeBased

AM Fee I
Asset
Acquisition Fee
Asset Sale Fee

Total Asset Value * Fee

0.25%

–

Acquisition Price * Fee

0.5%

–

Sale Price * Fee

0.5%

–

Merger Fee

Appraised RE Value * Fee

0.5%

–

Recurring CF * Fee

2.0%

–

Total Dividends * Fee

2.0%

–

30.0%

–

AM Fee II

Eliminated(CF per Share of Current
Performance Fee

Period － CF per Share ofPrevious Period) * No. of
Shares Outstanding * Fee

Earnings-BasedNOI & Dividend
Performance Fee

DPS * NOI * Fee–

0.0054%

Gains on Sale
Performance Fee

Gains on Sale * Fee

–

15.0%

–

15.0%

–

15.0%

Gains on Merger per Share
Gains on Merger
Performance Fee(Merger Price － Net Assets
per Share) * No. of Shares

New

Outstanding * Fee
Gains on REIT TOB Sale per
Gains on REITTOB Sale
Performance Fee

Share (TOB Price － Net
Assets per Share) * No. of
Shares Purchased in TOB * Fee

AM Fee Structure Comparison
5-Year Cumulative AM Fees (October 2015 to April 2020)
8,009
844
108

(JPY million)- 4.2%

7,670■ AM Fee I■ AM Fee II■ Asset Acquisition Fee■ Asset Sale Fee■ Performance Fee■ NOI & Dividend Performance Fee■ Gains on Sale Performance Fee

528

391
1,464

7,142
5,201

Before Change

After Change(Estimate)3

(Amended areas underlined)
Current
Article 9

After Amendment

Shareholder Meeting Convocation

Article 9

Shareholder Meeting Convocation

1. (omitted)

1. (no change)

2. A Shareholder Meeting is to be called
without delay on July 1, 2016 or thereafter,
and thereafter bi-annually without delay on
July 1 or thereafter.

2. (Note: A minor Japanese language change
was made which is immaterial to theEnglish translation.)

3. – 4. (omitted)

3. – 4. (no change)

Article 15 Deemed Approval

Article 15 Deemed Approval

1. – 2. (omitted)

1. – 2. (no change)(NEW)

3. Clause 2 above is not applicable toproposals regarding the following if (i) aminority shareholder owning at least 1% of
total shares outstanding for at least six
consecutive months submits a notice of
opposition to the Investment Corporation(or if the convener of the shareholder
meeting is not the Executive Director or a
Supervisory Director, then to theInvestment Corporation and the shareholder
meeting convener) within two weeks of theearlier of the date that the Investment
Corporation announces the proposals on its
website or the date the convener announces
the proposal; or (ii) the Investment
Corporation expresses opposition to the
proposals in shareholding meeting materials
or on its website.
(1) the appointment or dismissal of the
Executive Director or Supervisory
Directors;(2) the execution or termination of asset
management agreements with the AssetManagement Company;(3) the dissolution of the Investment
Corporation;(4) reverse share splits;(5) the waiving of the liability of the
Executive Director, Supervisory
Directors, or External Auditors; and(6) approval for absorption-type andconsolidation-type (new entity) mergers.
4. Clauses 1 and 2 above are not applicable toproposals regarding amendments to Article
15.
4

Current
Article 30 Investment Policy

After Amendment
Article 30 Investment Policy

1. The Investment Corporation primarily
invests in real estate and real estate
securities (as defined in Article 31, Clause
2) of real estate used as offices locatedprimarily in central Tokyo, but also in thegreater Tokyo metropolitan area,
ordinance-designated cities, and prefectural
capital cities. Real estate and real estate
securities of real estate other than offices
owned as of September 5, 2015 remain
acceptable investments by the Investment
Corporation.

(Note: A minor Japanese language change
was made which is immaterial to the English
translation.)

2. – 5. (omitted)

2. – 5. (no change)(NEW)

Supplement
Article 41 Effective Date of Amendments
The amendments in the Attachments will takeeffect on November 1, 2020. This Article
shall be deleted after the amendments takeeffect.

Attachments

Attachments

Asset Management Fee Structure

Asset Management Fee Structure

The Investment Corporation shall pay thedesignated fees to the financial instruments
dealer in which it entrusts the management ofassets (the “Asset Management Company”),
in accordance with the payment calculation
method and timing specified below.

The Investment Corporation shall pay thedesignated asset management fees to thefinancial instruments dealer in which it
entrusts the management of assets (the “AssetManagement Company”), in accordance withthe payment calculation method and timing
specified below.

The Investment Corporation shall pay thedesignated fees, corresponding consumption
tax, and local consumption tax to the AssetManagement Company. In cases where thecalculated figure generates a fraction smaller
than JPY 1, the fraction shall be rounded off.

The Investment Corporation shall pay thedesignated asset management fees,
corresponding consumption tax, and local
consumption tax to the Asset Management
Company. In cases where the calculation
generates a negative figure, it shall be treatedas a zero; when it generates a fraction smaller
than JPY 1, the fraction shall be rounded off.

1. Asset Management Fee I(deleted)

Asset Management Fee I is incurred for
management of assets during the period fromthe day following the end of the previous
fiscal period until three months after the endof the relevant fiscal period (“Calculation
Period I”) and for the period starting from the5Current
day following the end of Calculation Period I
until the next fiscal period (“Calculation
Period II”), and is calculated as follows:
50% of the total amount calculated bymultiplying the total assets of the Investment
Corporation, the calculation of which is
described below, by up to 0.25%, as agreed
upon with the Asset Management Company.

After Amendment

The total assets of the Investment Corporation
during Calculation Period I are the total assets
figure recorded in the balance sheet of the
fiscal period immediately prior to Calculation
Period I (as approved at a board of directors
meeting per the Investment Trust andInvestment Corporation Act).
The total assets of the Investment Corporation
during Calculation Period II are the total
assets recorded in the balance sheet of the
fiscal period immediately prior to Calculation
Period II, adding the acquisition price1 of realestate assets acquired by the Investment
Corporation during Calculation Period I, anddeducting the book value2 in the fiscal period
immediately prior to Calculation Period I of
real estate assets sold during Calculation
Period I.
1

The acquisition price recorded in thecontract minus expenses related to theacquisition, consumption tax, and local
consumption tax

2

The acquisition price in cases where the realestate asset is not recorded in the balance
sheet during the relevant fiscal period

The Asset Management Fee I incurred during
Calculation Period I shall be paid within threemonths from the last day of Calculation
Period I, and the Asset Management Fee I
incurred during Calculation Period II shall be
paid within three months from the last day of
Calculation Period II.
2. Asset Management Fee II(deleted)(a) Recurring Cash Flow Basis
Calculated by multiplying the period-end
recurring cash flow by up to 2.0%. Recurring
cash flow (“CF”) is the recurring profit/loss in
the Income Statement plus depreciation and6Current
losses on disposal of fixed assets plus gains
on sales of assets and valuation profit/loss(excluding extraordinary profit/loss). In
addition, with regards to the calculation ofAsset Management Fee II, the basis of
calculation is the CF before deduction ofAsset Management Fee I, Asset Management
Fee II, and Performance Fee.

After Amendment(b) Total Dividend Basis
Calculated by multiplying the period’s total
dividends by up to 2.0%. Total dividends isthe amount stated in Ichigo Office’s Dividend
Statement.
Payment shall be made within three months ofthe end of the Investment Corporation’s
relevant fiscal period.
1. NOI & Dividend Performance Fee(NEW)

The NOI & Dividend Performance Fee iscalculated by: 1) dividing the Investment
Corporation’s distributable earnings3 (before
the deduction of the NOI & Dividend
Performance Fee) in the relevant fiscal period
by total shares outstanding in the same period
to generate the Dividend per Share (DPS); 2)
multiplying the DPS in 1) by Net Operating
Income (NOI), calculated as total rental
income minus total rent-related expenses(excluding depreciation and losses on disposalof fixed assets) of the relevant fiscal period;and 3) multiplying the amount in 2) by
0.0054%.
NOI & Dividend Performance Fee = DPS(before the deduction of the NOI & Dividend
Performance Fee) * NOI * 0.0054%
3

Per the dividend policy specified in Article
37, distributable earnings are calculated as
pre-tax net income (before the deduction of
the NOI & Dividend Performance Fee andapplicable consumption taxes) plus any
reversal of reserves and allowances, minus
any reserves, allowances, and retained
amounts.

However, if the NOI & Dividend
Performance Fee need be calculated before
calculating the Dividend (i.e., if there arereserves, allowances, or other retained
amounts that would require doing so), it will7

Current

After Amendment
be calculated using a reasonably estimatedDividend in line with this provision’s
objectives. (No adjustment will be made toreconcile differences between this calculated
amount and the final amount, if any.)
When the Investment Corporation holds
treasury shares during the relevant fiscal
period, the total number of shares outstanding
shall be reduced by the number of treasury
shares held; in the event that a stock split or areverse stock split has been implemented, thetotal number of shares outstanding insubsequent periods shall be adjusted by theratio of the stock split or of the reverse stock
split.
Payment shall be made within three months ofthe end of the Investment Corporation’s
relevant fiscal period.

3. Asset Acquisition Fee(deleted)

When the Investment Corporation acquires areal estate asset, an Asset Acquisition Fee
shall be calculated by multiplying theacquisition price by 0.5%, except in cases
where the asset is acquired from a related
party of the Investment Corporation, in whichcase, the Asset Acquisition Fee shall becalculated by multiplying the acquisition priceby 0.25%.
The Asset Acquisition Fee payment date shallbe within one month from the end of the monthin which the asset was acquired (i.e., fromwhen the transfer of property rights becomes
effective).
4. Asset Sale Fee(deleted)

When the Investment Corporation sells a realestate asset, an Asset Sale Fee shall becalculated by multiplying the sale price by
0.5%, except in cases where the asset is soldto a related party of the Investment
Corporation, in which case, the Asset Sale Fee
shall be calculated by multiplying the saleprice by 0.25%.
The Asset Sale Fee payment date shall bewithin one month from the end of the month inwhich the asset was sold (i.e., from when thetransfer of property rights becomes effective).
8

Current

After Amendment
2. Gains on Sale Performance Fee(NEW)

When the Investment Corporation sells a realestate asset during the relevant fiscal period
and Gains on Sale are generated, a Gains on
Sale Performance Fee shall be calculated bymultiplying the Gains on Sale (before thededuction of the Gains on Sale PerformanceFee) by 15%.
Gains on Sale Performance Fee = Gains on
Sale of a real estate asset (before the deductionof the Gains on Sale Performance Fee) * 15%
However, in cases where the Investment
Corporation’s cumulative sum of all Gains on
Sale of real estate assets minus the sum of all
losses on such sales through the relevant fiscal
period is negative, the Gains on Sale
Performance Fee shall be zero.
The Gains on Sale Performance Fee payment
date shall be within three months of therelevant fiscal period.
5. Performance Fee(deleted)(1) When (i) the cash flow per share stays thesame as or increases from the previous
period for six consecutive periods(including the period when fee iscalculated), and (ii) the cash flow per
share of the period when fee is calculated
increased from the previous period, thefee shall be calculated as follows:
Performance fee = (cash flow per share of
the current period – cash flow per share of
the previous period) * total number ofshares outstanding in the current period *30.0%(2) If the condition set forth in (1)(i) is notmet, but cash flow per share is above thesimple average of cash flow per share of
the latest six periods and the condition set
forth in (1)(ii) is met, the fee shall becalculated as follows:
Performance fee = (cash flow per share of
the current period – simple average ofcash flow per share of the latest six
consecutive periods) * total number ofshares outstanding in the current period *30.0%
9Current(3) With respect to (1) and (2) above, cash
flow per share shall be calculated by
dividing cash flow before the performancefee deduction by the total number ofshares outstanding of each period.
Furthermore, when the Investment
Corporation holds treasury shares in the
period of calculation, the total number ofshares outstanding shall be reduced by the
number of treasury shares held, and in theevent that a stock split or a reverse stock
split has been done within the preceding
six periods, the total number of shares
outstanding of ensuing periods shall be
adjusted by the relevant stock split orreverse stock split ratio.

After Amendment

Payment shall be made within three months ofthe end of the Investment Corporation’s
relevant fiscal period.
(deleted)

6. Merger Fee
With regards to mergers by theInvestment Corporation, in cases where theAsset Management Company conducts
research, valuation, and other operations
related to the merger and the Investment
Corporation is the succeeding entity in themerger, the fee shall be 0.5% times theappraised value of the real estate or real estate
securities the Investment Corporationacquires via the merger.
The payment date shall be determined uponnegotiation between the Investment
Corporation and the Asset Management
Company.

3. Gains on Merger Performance Fee(NEW)

When the Investment Corporation merges
with another investment corporation, theGains on Merger Performance Fee shall becalculated by multiplying the merger price pershare minus net assets per share at the time of
the merger (as defined below) by the numberof shares outstanding and multiplying by
15%.
Gains on Merger Performance Fee = Gains per
Share (Merger Price – Net Assets per Share) *Number of Shares Outstanding * 15%
However, where the Gains per Share is10Current

After Amendment
negative, the Gains on Merger PerformanceFee shall be zero.
The Gains on Merger Performance Fee arises
when the Investment Corporation merges withanother investment corporation either via a
new merged entity or absorption-type merger,
in response to a merger proposal from theother investment corporation (including cases
both where the Investment Corporation issurviving entity or the extinguished entity inan absorption-type merger). “Net Assets per
Share at the time of the merger” refers to net
assets at the time the merger is approved at
the Shareholder Meeting divided by the
number of shares outstanding at that time.
The Gains on Merger Performance Fee isbased upon the merger price, which is theappraised value of the real estate assets of theInvestment Corporation used in thecalculation of the merger ratio at the time of
the merger. When the above (before deductionof the Gains on Merger Performance Fee)
exceeds the value of the real estate assets on
the Investment Corporation’s balance sheet atthe time of the merger, 15% of the excess
amount will be the fee to the AssetManagement Company. The calculation shallbe made with due consideration of such
purpose.
The Gains on Merger Performance Fee willarise on the date the merger is approved at theshareholder meeting, and the payment dateshall be within one month of the merger date.
4. Gains on REIT TOB Sale Performance Fee
When the Investment Corporation is acquiredby a third party via a TOB, the Gains on REITTOB Sale Performance Fee shall becalculated by multiplying the TOB price pershare minus net assets per share at the time of
the TOB by the number of shares purchasedby the third-party via the TOB andmultiplying by 15%.
Gains on REIT TOB Sale Performance Fee =Gains per Share (TOB Price – Net Assets per
Share) * Number of Shares Purchased in TOB* 15%
However, where the Gains per Share isnegative, the Gains on REIT TOB Sale
11

Current

After Amendment
Performance Fee shall be zero.
The Gains on REIT TOB Sale Performance
Fee arises when the Investment Corporation’sshares are acquired by a third party via a
TOB. “Net Assets per Share at the time of theacquisition” refers to net assets at the time theacquisition is approved at the Shareholder
Meeting divided by the number of shares
outstanding at that time.
The Gains on REIT TOB Sale Performance
Fee will arise on the date the acquisition isapproved at the shareholder meeting, and thepayment date shall be within one month of theacquisition date.

122. Election of Directors
Due to the expiration of the Directors’ current terms of office as of this Shareholder
Meeting, Ichigo Office’s Board of Directors is proposing the re-election of Executive
Director Yoshihiro Takatsuka and Supervisory Directors Takaaki Fukunaga andMasahiro Terada.
To ensure the availability of the minimum number of Directors required by law, Ichigo
Office’s Board of Directors is also proposing the election of a new Alternative
Executive Director and a new Alternative Supervisory Director.
Career Summaries of Director Candidates
Title

Name
(Birth Date)

Career Summary, Positions, Responsibilities, andImportant Concurrent Positions
April 1978
April 1985
December 1996
December 2000
August 2007

Executive
Director(Candidate)

Yoshihiro Takatsuka(September 21, 1955)

July 2010
September 2010
September 2011
February 2015
October 1998
October 2004
October 2005
September 2010
January 2011

Supervisory
Director(Candidate)

Takaaki Fukunaga(October 29, 1972)

October 2014

December 2015
February 2017
March 201713

Joined Bank of Tokyo, Ltd.
Joined Salomon Brothers Asia Securities,
Ltd.
Joined Chase Securities Company
Joined Nikko Citigroup Securities Limited
Joined Credit Suisse Securities Japan
LimitedEstablished R’s Consulting as the
President (current)
Joined Ichigo Office and appointed
Executive Director (current)
Joined Oct Advisors Inc. as Partner(current)
Appointed Director of Oct Advisors Inc.
(current)
Joined KPMG Tokyo
Established Fukunaga C.P.A. Office as
Representative (current)
Joined Global Solutions Consulting Co.,
Ltd. and appointed Representative
Director (current)
Joined Ichigo Office and appointed
Supervisory Director (current)
Joined GreenOak Investment Management
K.K. and appointed external Corporate
Auditor (current)
Joined Ticket Guard Small Amount &Short Term Insurance Co., Ltd. (presently
AWP Ticket Guard Small Amount & ShortTerm Insurance Co., Ltd.) and appointed
external Corporate Auditor (current)
Joined PP Japan Co., Ltd. and appointed
Corporate Auditor (current)
Joined Retailer’s Sphere Co., Ltd. andappointed Corporate Auditor (current)
Joined GMO Registry, Inc. and appointed
external Corporate Auditor (current)

Name(Birth Date)

Title

Career Summary, Positions, Responsibilities, andImportant Concurrent Positions
April 1996
May 1998
May 2000

Supervisory
Director(Candidate)

Masahiro Terada(May 7, 1968)
August 2002
September 2003
August 2004
January 2006
October 2011
October 2006

Alternative
Executive
Director(Candidate)

January 2010
Keisuke Chiba(September 10, 1979)

September 2014
May 2016
December 2019

December 2012
Alternative
Supervisory
Director(Candidate)

January 2013
Nagahisa Kita
(April 15, 1984)

April 2015
January 2018
January 2020

Qualified as Attorney at Law (Daini
Tokyo Bar Association)
Joined Daiwa Securities Co., Ltd.
(presently Daiwa Securities Group Inc.) as
an in-house counsel
Joined Morgan Stanley Japan Limited(presently Morgan Stanley MUFG
Securities Co., Ltd.) as an in-housecounselAttended Duke University School of Law
Joined Nixon Peabody LLP as a visiting
attorney
Joined City-Yuwa Partners
Appointed Partner (current)
Joined Ichigo Office and appointed
Supervisory Director (current)
Qualified as Attorney at Law (Tokyo Bar
Association)
Joined Atsumi & Partners (presently
Atsumi & Sakai)
Sent on loan to the legal department of
Mitsui & Co., Ltd.
Joined Hokuto Law OfficeAppointed Partner (current)
Appointed Director at SDS Holdings Co.,
Ltd. (current)
Appointed Director at Shodensya Co.,
Ltd. (current)
Qualified as Attorney at Law (Tokyo Bar
Association)
Joined Midosuji Legal Profession
Corporation
Joined Partners Law Office
Established AQ Law Office as
Representative Officer
Joined Toranomon Daiichi Law Office as
Partner (current)

Note: The Director candidates are not related parties of Ichigo Office or its asset
management company, and they hold no Ichigo Office shares.
3. Schedule
June 15, 2020
July 2, 2020
July 18, 2020

Board of Directors Resolution
Distribution of Shareholder Meeting Materials (expected)
Shareholder Meeting (expected)

14