Investment Policies

Investment standards

The asset management company establishes the management guideline as follows.

Property Selection Criteria

Property selections will be made through comprehensive judgments based on scale, location,construction, facilities, specifications and so on. The details of the relevant criteria are set forth in the following table. Though such consideration will involve the study of the criteria included in the following table, it is possible that not all of the following criteria will be satisfied when NUD acquires or intends to acquire operating assets.

Scale

Office buildings
In principle, office buildings with leasable floor space of approximately 2,000㎡ or more, and standard floor sizes of approximately 300㎡ or more, are the investment targets.
Residential properties
In principle, residential properties of the sizes indicated in the table below are the investment targets.

	Dedicated Use Area per Rental Unit	Number of Rental Units
Wide	80㎡ or more	10 or more
Family	60㎡ or more	20 or more
DINKs	40 - 80㎡	20 or more
Single	25 - 40㎡	30 or more

Location

Condition of roadways, access to primary means of transport (e.g., passenger trains), numbers of users of primary means of transport
Location and accessibility of convenience facilities, commercial facilities, public offices, and recreational facilities, status of usage of neighboring and nearby land, and future indicators (all of which are specific to residential properties)
Status of sunlight, vistas, views, noise, etc. (all of which are specific to residential properties)
Area's name value, reputation, scale, etc.

Construction,
facilities and
specifications

For both office buildings and residential properties: Design, primary structure, building age, construction companies, etc.
Conditions of interior and exterior components
Office buildings: Configuration of rental floors, free-access floors (e.g., OA floors), subdivision measures, ceiling heights, electrical capacity, air-conditioning system, floor load, illuminance, security measures, water supply and drainage facilities, elevator facilities, parking, other common facilities, etc.
Residential properties: Configuration of rental rooms, floor plans, ceiling heights, security measures, broadcast reception equipment, water supply and drainage facilities, elevator facilities, parking for cars and bicycles, assembly rooms, other common facilities, etc.

Earthquake resistance

Achievement of abilities in line with new earthquake-resistant construction standards (the earthquake-resistant construction standards based on the Building Standards Act revised in 1981) or equivalent or higher standards
In principle, the probable maximum loss (PML) value caused by an earthquake should be less than 20%. Reinforcement work for earthquake resistance or other similar measures must be taken for a property with a PML of 20% or more for acquiring the property.

Property management

Compliance with applicable laws and regulations (specifically, the Fire Service Act, City Planning Act and other building-related laws and regulations), etc.
Estimates of future maintenance and repair expenses (for the next ten years or so) based on building condition reports
Quality of property management, existence or non-existence of and terms of management bylaws, and the quality and financial credibility of a property management company

Environment, ground characteristics, etc.

Status of use and management of hazardous materials such as asbestos, chlorofluorocarbons, and PCBs
Soil quality, land use history, status of soil contamination, etc.

Policy for Investment in Development Projects

NUD shall, in principle, acquire investment assets that provide or promise stable rental income or similar earnings. NUD does not intend to acquire undeveloped land and construct buildings thereon. However, with regard to an investment property being constructed by a third party, NUD may decide on investing in it even before completion if, for example, it is determined that such property under construction is capable enough to securely attract tenants after completion and risks regarding completion and delivery have been minimized. In this case, the investment determination shall be made by comparing the benefits of acquiring such an investment asset with the negative impact of not earning rental income over the period until the asset begins to generate such income, as well as other risks possibly borne by NUD in connection with acquiring the investment asset.