Pipeline Support for Property Acquisition

As of March 4, 2011, a memorandum relating to the purchase and sale of real estate (the Memorandum") was concluded between Tokyu Corporation, TOKYU REIT and the asset management company ("Tokyu REIM").
The Memorandum was concluded to define the codes of conduct regarding the selling and purchasing of real estate assets (refers collectively to real estate, trust beneficiary interest in real estate, silent partnership interests pertaining to real estate, asset-backed securities, etc.; hereafter the same.), provision of information, etc. carried out between Tokyu Corporation (and its subsidiaries) and TOKYU REIT. Doing so is vital in securing opportunities for TOKYU REIT in the stable and continuous acquisition and sales of real estate assets, in enabling Tokyu REIM to follow its duty of loyalty towards TOKYU REIT and as a measure to avoid conflicts of interest. This would help secure trust from and benefit for investors of TOKYU REIT which, in turn, would help secure trust from third parties who are considering to sell real estate assets to Tokyu Corporation and its subsidiaries, or TOKYU REIT. Furthermore, securing the trust from and benefit for investors of TOKYU REIT and securing the trust from third parties would be in the best interests of Tokyu Corporation and its subsidiaries.

TOKYU REIT has separately entered into a memorandum relating to the provision of opportunities to acquire owned real estate assets with Tokyu Land Corporation.
For additional information, please refer to the press release dated March 4, 2011.

Notice Concerning Conclusion of Memorandums Regarding Sponsor's Structure

An overview of the Memorandum is as follows

  1. In principle, Tokyu Corporation and its subsidiaries, TOKYU REIT and Tokyu REIM may freely and individually sell or purchase real estate assets. In the event that Tokyu Corporation, TOKYU REIT, or Tokyu REIM obtains information concerning opportunities to purchase real estate assets from a third party ("Investment Opportunities"), each may decide how to handle the said information at their own discretion and do not bear responsibility for providing it to the other parties.
  2. In the event Tokyu Corporation or Tokyu REIM decides to cease pursuing Investment Opportunities concerning certain real estate assets at its own discretion, and in the event it reasonably judges that the said real estate assets may meet investment criteria of the other party, Tokyu Corporation or Tokyu REIM shall provide information it has obtained concerning the said real estate assets at its earliest convenience to the other party (however, this shall not apply to cases where it cannot obtain prior consent from the information source).
  3. In the event Tokyu Corporation intends to sell real estate assets which TOKYU REIT may invest in, it shall first make a written offer to sell it to TOKYU REIT through Tokyu REIM, and in the event Tokyu REIM and Tokyu Corporation basically agree on purchasing terms and conditions, Tokyu Corporation and Tokyu REIM shall hold discussions towards concluding a purchase agreement in good faith. In the event a purchase agreement is not concluded within a certain period of time, Tokyu Corporation may make an offer to sell it to a third party (however, in the event the sales price presented to the third party is the same or lower than the purchase price presented to Tokyu REIM, and Tokyu Corporation has the intention of selling the said real estate assets as of that moment, Tokyu Corporation must make an offer to sell the said real estate assets to Tokyu REIM once again). Tokyu Corporation has the right not to apply this rule under certain conditions.
  4. In the event Tokyu REIM intends to sell real estate assets which were sold to TOKYU REIT from Tokyu Corporation and its subsidiaries or a warehousing SPC after the Memorandum is concluded, it shall first make an offer to sell it to Tokyu Corporation, and in the event Tokyu Corporation and Tokyu REIM basically agree on purchasing terms and conditions, Tokyu Corporation and Tokyu REIM shall hold discussions towards concluding a purchase agreement in good faith. In the event a purchase agreement is not concluded within a certain period of time, Tokyu REIM may make an offer to sell it to a third party (however, in the event the sales price presented to the third party is the same or lower than the purchase price presented by Tokyu Corporation, and Tokyu REIM has the intention of selling the said real estate assets as of that moment, Tokyu REIM must make an offer to sell the said real estate assets to Tokyu Corporation once again). Tokyu REIM has the right not to apply this rule under certain conditions. Moreover, only this rule number (iv) shall apply even in the event Tokyu REIM ceases to be the asset management company of TOKYU REIT.
  5. Under certain conditions, such as TOKYU REIT facing difficulties in directly acquiring real estate assets due to time constraints in carrying out a transaction, TOKYU REIT and Tokyu REIM may make requests for warehousing (Note) to Tokyu Corporation. In the event Tokyu Corporation intends to conduct warehousing, Tokyu Corporation shall make its utmost effort to acquire the said real estate assets by itself, or through its subsidiary or a warehousing SPC, and in the event an acquisition of the said real estate assets has been made, it shall own them for a certain period of time. Following that, it shall first conduct negotiations with Tokyu REIM concerning transfer of the said real estate assets to TOKYU REIT. In addition, the acquisition price to be paid by TOKYU REIT to the entity that conducted the warehousing shall be the fair price which is agreed on between TOKYU REIT and the entity that conducted the warehousing at the time of concluding the purchase agreement.
    (Note) "Warehousing" refers to the act of Tokyu Corporation and its subsidiaries or a warehousing SPC acquiring investment properties solely for the purpose of owning it until the time it sells it to TOKYU REIT in the future.
  6. In the event Tokyu REIM requests cooperation from Tokyu Corporation's consolidated subsidiaries in accordance with the above procedures to TOKYU REIT and Tokyu REIM, Tokyu Corporation shall have the consolidated subsidiaries provide cooperation which Tokyu REIM requires.
  7. No time limit is set for the Memorandum. However, the Memorandum shall immediately cease to be effective in the event Tokyu REIM ceases to be the asset management company of TOKYU REIT, except for rule (iv) above.

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