DISTRIBUTIONS
In order to receive favorable tax treatment available to J-REITs under the Special Taxation Measures Law, we must distribute in excess of 90% of our distributable income as defined in the Special Taxation Measures Law, which differs slightly from retained earnings under Japanese GAAP. Our articles of incorporation require that we make cash distributions to our unitholders in excess of 90% of our distributable income. Our articles of incorporation also permit us to distribute cash to our unitholders in excess of retained earnings in the event that the amount of retained earnings does not exceed 90% of our distributable income or we determine it is appropriate, up to the amount of our retained earnings plus depreciation on our fixed assets for the relevant fiscal period. Our articles of incorporation further permit us to distribute cash in any amount, if the amount determined pursuant to the above provision still does not exceed 90% of our distributable income or we determine it is appropriate. Any amount distributed in excess of our net income shall be deducted from retained earnings first and then from unitholders' equity. Such distributions are likely to create complex Japanese tax issues, especially for Japanese resident individual unitholders.
