Managing Your Investment

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Premier REIT Advisors Co., Ltd. (PRA) was established on July 17, 2001 through investments by Ken Corporation Ltd., which excels in planning and managing luxury rental residences, and The Chuo Mitsui Trust and Banking Company Limited, which was a forerunner in structured finance efforts among Japanese banks, and other sponsors. (Paid in capital: 300 million yen)

On March 17, 2008, SOHGOH REAL ESTATE CO., LTD., which engages in the condominium development business, joined as one of the principal sponsors. PRA has received active support in various aspects, including real estate management and operation, supply of properties, dispatching of human resources, and fund procurement, from the three principal sponsors, while accumulating skills for asset management. Subsequently, on May 14, 2010, PRA decided to drastically change the composition of its stockholders by habing NTT Urban Development Corporation, one of the representative real estate companies in Japan, come on board as a principal sponsor, holding 53.1% of its shares.

Impacted by the deterioration in global economic conditions after the subprime mortgage crisis and the credit crunch that occurred in parallel, the Japanese REIT market, which had been on a growth trajectory until then, was suddenly restricted from expanding the assets thorough acquiring new properties, and suffered tremendously even in refinancing existing loans. Presently, it is in the process of gradual recovery from the damages, but the credibility of the sponsors of the asset management companies that manage assets of REITs have drawn attention since the chaotic times. While REITs whose asset managers’ have sponsors that are assessed as superior were able to operate stably even in the deteriorated environment, including asset expansion, REITs without such sponsors had difficulty operating stably and there is an example ending in bankruptcy. As two of PRA’s principal sponsors (Ken Corporation Ltd. and SOHGOH REAL ESTATE CO., LTD.) are unlisted companies, the market assessed that the background of PRA’s sponsors was unclear. Therefore, PRA was subjected to restrictions in terms of asset management, although the restrictions weren’t extreme.

The above drastic change in shareholder composition is a measure we took in order to eliminate such a low assessment and to prepare for the coming investment opportunity in a market environment where signs of recovery are getting stronger.

PRA will strive to maintain the portfolio of PIC in the most appropriate state through various economic environments, while maximizing the profits of all of PIC’s investors over the medium to long term.

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