Financing Policy

The basic financing principles that TOKYU REIT uses in determining our optimal financing arrangements are stability, flexibility and efficiency. TOKYU REIT maximizes unitholders' interests by reducing capital costs, enhancing external growth and minimizing expenses. To ensure stability, TOKYU REIT maintains a sound financial condition with a relatively low level of loans-to-value (LTV) and long-term debt financing. TOKYU REIT enters debt financing arrangements with more than one financial institution with varying repayment schedules in order to minimize refinancing risks. To ensure flexibility, TOKYU REIT establishes a financing system that enables TOKYU REIT to acquire new properties in a timely manner. TOKYU REIT also manages its cash efficiently and procures low financing costs.

TOKYU REIT uses an appropriate mix of equity and debt financing and cash management to achieve a long-term stable growth of assets and cash flow. Additional equity issues are considered in light of market conditions and taking into account the impact of dilution on existing unitholders. TOKYU REIT may acquire treasury investment units for retirement in order to improve capital efficiency. With respect to debt finance, TOKYU REIT maximizes the benefits of the stability offered by long-term financing and the flexibility offered by short-term funding. TOKYU REIT's initial financing was short-term, but that thereafter TOKYU REIT re-financed using a mix of secured and unsecured short- and long-term debt. TOKYU REIT may establish commitment lines and intend to obtain financings that are secured by operational assets. TOKYU REIT obtains loans from banks and other qualified institutional investors, as defined in the SEL, or TOKYU REIT may issue bonds to raise funds from time to time, up to a maximum aggregate amount of debt financing of 1 Yen trillion pursuant to its articles of incorporation. In addition, TOKYU REIT may enter into derivative finance transactions and financial futures transactions in order to hedge risks arising from fluctuations of interest rate. TOKYU REIT may conduct repayment, redemption or retirement by purchase of loans or investment corporation bonds of which repayment dates or redemption dates have not arrived, in order to improve capital efficiency and financial soundness, etc. In principle, TOKYU REIT maintains the aggregate value of its long-term and short-term debt and outstanding bonds. In addition, TOKYU REIT may use security deposits and guarantee money as a source of funds.

Fund procurement shall be conducted pursuant to the internal rules of the asset management company, with consideration for the above basic policy and financial strategy.

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