Sustainability

Ⅴ. Corporate Governance

A. Corporate Governance and Compliance Framework

ADIM which manages ADR’s assets, has established a corporate governance framework by setting up investment and compliance committees to oversee the execution of corporate governance and defined its commitments to its fiduciary duty.

With the framework in place, ADIM endeavors to manage risks, to comply to laws and regulations and ensure fair handling of transactions with conflict of interest,

Please refer here for details on the compliance framework.
Please refer here on measures to insure fair handling of transactions with conflict of interests.

1. Sustainability Committee

ADIM has established a sustainability committee in order to institutionally take measures to improve sustainability. The committee will meet once every quarter to set targets, decide on measures, monitor external ratings on its ESG performance and monitor its progress on reaching the targets thereby improving its long-term asset value. The targets set by the committee will be authorized by the Representative Director and semi-annually reported to the board of directors on its progress.

2. Established a Dedicated Sustainability Team

In ADIM, in April 2019, we established a dedicated “Sustainability Team” to promote activities to improve sustainability.

The team has been established to run the Sustainability Promotion Committee and aims to improve the asset value of ADR over the medium and long term.

3. Management Fee Structure

The asset management fee paid from ADR to ADIM is calculated as shown on the table below.

In accordance to the article of incorporation of ADR and asset management entrustment contract, the fee will in part be linked to NOI and net income per unit to strengthen the alignment of the ADIM’s interest to unit-holders’ interest.

Asset Management Coupled to NOI*1and Adjusted EPU*2

*1 NOI
Gross Operating income minus Gross Operating Expense (excluding depreciation and loss from fixed asset retirement
*2 Adjusted EPU
Net Income excluding AM Fee III divided by number of outstanding asset at the fiscal period end.

B. Disclosure

In order to ensure disclosure transparency, in addition to statutory disclosures, ADR will disclose information it deems useful and valuable on timely bases in an easy-to-understand form. Specifically, ADR will actively disclose information on its website in addition to disclosing on the Tokyo Stock Exchanges disclosure system (TDnet).

Please click here to read the disclosures.
Please refer here for information on investor meetings and conferences.

2018 Investor Relations Activities

Types of Meetings/Conferences

No. of meetings attended

Individual Investor Conference Attendance

26

Institutional Investors

Fiscal Period Conference Call

2

Conference Attendance

6

One-on-one Meetings with Institutional Investors

188

C. Legal and Regulatory Restrictions

  1. The executive director and the supervisory directors of ADR are not allowed to transact ADR units for itself or for a third-party in accordance to ADR’s bylaw on insider trading.
  2. If the executive director and the supervisory directors of ADR commit illegal or improper acts or make improper profits, they are punishable not only by law but by accordance to ADR’s bylaw on claw back rule on compensations.
  3. Rights of unit-holders are defined in the “Act on Investment Trust and Investment Corporations” and “Articles of Incorporation of Investment Corporation”. For detail please refer to ADR’s financial report (in Japanese only) submitted to the Financial Services Agency.
  4. The compensation to the directors of ADR is restricted by the Articles of Incorporation of ADR, in which payment rules are laid down.

D. Sponsor's Sustainability Policy

ITOCHU Corporation the main sponsor of ADIM, has defined its direction on promoting sustainability in the “Basic Policy of Promotion Sustainability” and has formulated the “Sustainability Action Plan” which identifies important issues on sustainability. And they promote sustainability by holding a review board semi-annually to put the program under the PDCA cycle system.

For details, please refer here.