Compliance Structure

The Asset Manager is committed to honest and fair corporate activities, not only in strict compliance with all laws and regulations related to its operations, various regulations, bylaws and market rules but also in full awareness of social norms.

Controls for Transactions Involving Conflicts of Interest

(1) Investment and Management Decision-Making Process

The Asset Manager shall select assets in which to invest that are in line with the investment policy and rules on prevention of conflicts of interest provided in the management guidelines, and decide on acquisition of assets in accordance with the decision-making process.

(2) Rules on Prevention of Conflicts of Interest

Compliance with Laws, Regulations, Etc.

In cases where transactions may be at risk of conflicts of interest concerning the financial instruments business or other related operations, The Asset Manager shall comply with the Financial Instruments and Exchange Act, the Act on Investment Trusts and Investment Corporations and other related laws and regulations, and the separately provided rules on prevention of conflicts of interest.

Interested Parties

Interested parties provided in the rules on prevention of conflicts of interest shall refer to the following parties:

Interested persons, etc. as provided in the Act on Investment Trusts and Investment Corporations
Shareholders of the asset management company holding 5% or more of the asset management company shares issued and outstanding, and subsidiaries of the asset management company
Special purpose companies where parties falling under i. or ii. above have majority equity investment, silent partnership investment or preferred equity investment, or have executives or employees serving as executives
Customers entrusting parties falling under the Asset Manager, i. or ii. above with asset management operations pertaining to property acquisition, sale, etc.

Transactions with Interested Parties

The rules on prevention of conflicts of interest provide the following terms and conditions individually for each of the following transactions:

Asset Acquisition
In case of acquiring real estate or real estate trust beneficiary rights from interested parties, the acquisition price shall be at 100% or less of the appraisal value as appraised by a real estate appraiser. In the case of other assets, the acquisition shall be made at fair value price. However, if the fair value measurement is not applicable, the acquisition shall be at the value reasonably estimated by an expert independent from the Asset Manager.
Other
In also cases other than asset acquisition, such as asset sale, asset leasing, entrustment of property management operations, entrustment of intermediation operations for real estate acquisition, sale or leasing and placement of construction orders, where such involves interested persons, the transaction shall be in line with the rules on prevention of conflicts of interest.

Prevention of Conflicts of Interest among Funds

In case of competition over a property acquisition opportunity among the Investment Corporation and other funds, etc. managed by the Asset Manager, conflicts of interest among the Investment Corporations and other funds, etc. shall be prevented by first granting the Investment Corporation the preferential right to consider the acquisition. The acquisition opportunity will be available to the other funds, etc. only when the Investment Corporation decides not to exercise the concerned preferential right.

Furthermore, in the case of rental residences, the Asset Manager shall prevent arbitrary distribution of property information and avoid conflicts of interest among Daiwa Residential Private Investment Corporation, Daiwa Securities Living Investment Corporation and other funds, etc. by establishing the "Rotation Rule."