Every fiscal period, the following Operation and Management Policy for all of JEI’s assets is established and the assets will be managed systematically.

1. Property management company selection policy
   In selecting property management companies, companies thought to be best suited will be selected, upon comprehensive considerations made on the basis of experience, track record, credit worthiness, organization, structure, compensation levels, leasing capability, initiatives taken to increase tenant satisfaction, etc. In addition to the above, management continuity after property acquisitions (the ability to maintain good relations with existing tenants, etc.) will also be considered sufficiently.
   In principle, outsourcing periods for property management companies is one year. Agreement renewals upon termination shall be decided by the Asset Management Company based on performance evaluations.
2. Property management company management policy
   The Asset Management Company manages property management companies so that they can conduct appropriate operations by providing instructions to establish management structures that suit the characteristics of various investment assets.
3. Property management company evaluation
   The Asset Management Company regularly (principally once annually) evaluates the performance of property management companies. When the performance does not meet the expectations of the asset management company, instructions shall be given to the property management company to change or improve operations, and in some cases, the property management company may be changed.

1. Tenant selection criteria
   In selecting tenants, selections shall be made based on the tenant selection criteria established by the Asset Management Company, by considering the tenant’s credit worthiness and rent payment capacity as well as the existence of membership or connections with antisocial forces or organizations.
2. Master lease agreements
   As for type of contract for the leasing of JEI’s investment assets, where possible and in principle, a property management company will become the lessee (master lease company) as an intermediary, between JEI or the trustee and the tenants, who will profit from the actual use of the building. In principle, JEI’s investment assets will be leased to master lease companies (master lease agreements). This is because the property management company can be expected to be more self-directed and active in tenant leasing and building management operations, as making the property management company the master lease company would foster a structure of centralized management and operations, and would position the property management company as an interested party between JEI and the tenants who will profit from the actual use of the building.

1. Property insurance
   In order to secure indemnification for damages to a third party for property damages due to disasters, accidents, etc., or accidents against people or objects, considerations for appropriate property insurance (fire insurance, liability insurance, etc.) will be made for individual investment properties. Content of insurance shall be regularly reviewed to constantly maintain optimal insurance.
2. Earthquake insurance
   As for earthquake insurance, the probable maximum loss (PML) due of the entire portfolio will be compared between the impact of disasters and the insurance premium. Considerations for earthquake insurance shall be made individually for properties where PML exceeds 20%.

1. Stable growth of rental revenues
   Asset Management Company forms annual leasing and management plans for each property and, based on those plans, engages in agile and strategic leasing activities in order to ensure stable revenue in medium-to-long term.
2. Well-planned maintenance and property management
   For expenditures necessary to maintain buildings, in order to manage properties at lower costs with appropriate quality, Asset Management Company reviews routine property management expenses such as maintenance, cleaning, and building security expenses by verifying unit costs for each property. When considered to permanently improve management quality and reduce expenditures, management efficiency will be made such as the collective entrustment of maintenance, cleaning, and building security operations, as well as outsourcing management of multiple properties to a single company.
   In addition, property management is carried out based on the medium- to long-term repair plan. The medium-to long-term repair plan is constantly updated and reviewed based on annual considerations of operational conditions, and is implemented systematically understanding capital expenditure in the medium- to long-term.
   Capital expenditures are made in line with the annual repair plan, based on the medium- to long-term repair plan, upon considering JEI’s management conditions, etc. Principally, capital expenditure such as repairs, renewal, and improvements are decided upon in light of depreciation of the entire portfolio and the medium- to long-term repair plan.
   Moreover, by updating key equipment such as implementing energy-saving systems that contribute to permanent reduction of expenditures, it aims to reduce utility expenses and outsourcing costs.

From the perspectives of risk diversification, revenue expansion, scale of economy, etc., JEI makes it a policy to engage in expanding investment properties in a forward-looking manner. Specifically, JEI aims for growth while securing stable revenues mainly from properties provided by sponsors. Simultaneously, it will pursue investment opportunities utilizing various channels, mainly on the highly specialized personnel seconded from the sponsors, all the while utilizing this specialization to develop acquisition activities of competitive investment assets.