Basic policy

Equity finance	New investment units will be issued for the purpose of increasing AUM and enhancing profitability upon factoring in key variables such as LTV(Note1), dilution of existing investment units and unit price, as well as prevailing financial and economic market conditions.
Debt finance	Debt fund-raising initiatives will factor in the Upon making borrowings and issuing investment corporation bonds (including short-term investment corporation bonds), due consideration will be given to the balance between the mobility of fund procurement and financial stability as well as to the characteristics of the property. Specifically, fund procurement means (loans/investment corporation bonds), the ratio of long-term loans, ratio of loans with fixed interest rates, diversification of maturity, unsecured or secured, etc. will be discussed.
LTV	To operate at a conservative level with an upper limit of 50% for LTV in principle.
Cash management	Effective and proper cash management will be conducted by accurately understanding demand for funds in the portfolio through constant monitoring.(Note2)

• LTV (loan-to-value) ratio means the proportion of the balance of its borrowings and outstanding corporate bonds issued against its total assets
• One of the distinguishing characteristics of investing in leasehold land (sokochi) is the absence of depreciation expenses which means that cash cannot be accumulated as much compared to a standard real estate portfolio of land and buildings. Nonetheless, ESCON REIT intends to accurately calculate accumulated cash from both leasehold land and building assets to implement effective and proper cash management.

Distribution in excess of profits

If ESCON REIT determines it to be appropriate by taking into account trends in the economic environment, the real estate market, and the prevailing circumstances of our assets-under-management and financial profile, ESCON REIT may make distributions of funds in excess of the distributable amount to unitholders (hereinafter "Cash Distribution Exceeding Profit"), by adding an amount determined by ESCON REIT, up to the amount prescribed in the rules of the Investment Trusts Association, Japan. As a general rule, ESCON REIT has no intentions to make Cash Distributions Exceeding Profit. However, in the event that a significant drop in distributable amount caused by extraordinary events is observed, ESCON REIT will decide whether to implement Cash Distributions Exceeding Profit after giving due consideration to capital expenditures and cash on hand.