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 shown on the table below paid from ADR to ADIM will take effect from February 1, 2020.

It is because of simplifying the fee structure and strengthening the link between ADR’sperformance and unitholders’ interests to the amount of fees paid to the asset management company.

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 profit excluding AM Fee III / Number of investment units issued as of the closing date of the accounting term

*3 Adjusted FFO per Unit=(Net profit excluding AM Fee II + depreciation expense - gains on transfer of real estate + losses on transfer on real estate + impairment losses) / Number of investment units issued as of the closing date of the accounting term.

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.