HOME » Policy & Strategy » Distribution Policy

Distribution Policy

Invincible Investment Corporation (hereinafter "INV") conforms to the policies set out below with regards to cash distributions to unitholders or registered pledgees of investment units listed or recorded in the registry of unitholders at the end of each fiscal period.

  1. (1)   Distribution of Profits
    Distributable amounts generated from management of INV's assets (hereinafter "distributable amounts") refers to the amount of profits calculated in conformity with the provisions of the Law Concerning Investment Trusts and Investment Corporations (hereinafter "the Law") or generally accepted accounting principles in Japan (Article 17, Item 1 of the Articles of Incorporation of INV).
    INV determines the amount of distribution, which must be an amount that exceeds 90% of the amount of INV's distributable income as stipulated in Article 67, Item 15 of the Act on Special Measures Concerning Taxation in principle (hereinafter "distributable income") (or the relevant amount after modification if there is any modification to the calculation of the said amount due to revisions to the law, etc.) (However, the amount may not exceed the distributable amount.). If, however, a deficiency account for tax purposes arises or income for tax purposes does not arise due to the carried-over deduction of a deficiency account, INV shall determine the amount of distribution on a rational basis. In addition, INV can accumulate reserves and allowances from the distributable income amount that are deemed to be necessary for maintaining its investment assets and improving or increasing the value of assets such as long-term reserve for maintenance, payment reserve, reserve for distribution, and other similar reserves, etc. (Article 17, Item 2 of the Articles of Incorporation of INV).
    Any retained earnings not allocated for dividends will be managed based on INV's investment asset targets and policies (Article 17, Item 3 of the Articles of Incorporation of INV).
  2. (2)   Cash Distribution Exceeding Profits
    If INV determines it to be appropriate by taking into account trends in the economic environment, the real estate market, the leasing market, the real estate investment trust market and other markets or the impact that INV's asset acquisition and financing activities may have on the amount of distribution per unit, or if INV can avoid being imposed of taxation such as corporate tax, etc. thereon, INV may, in compliance with the provisions of the Investment Trust Act, make distributions of funds in excess of the Distributable Amount to unitholders, by adding an amount determined by INV, up to the amount prescribed in the rules of the Investment Trusts Association, Japan, pursuant to the calculation statement concerning the distribution of funds that has been approved under the Investment Trust Act. (Article 17, Item 4 of the Articles of Incorporation of INV).

(I) Basic Policy
In addition to distribution of profits, INV may make distribution in excess of profits (hereinafter the "Excess Profit Distribution") to be determined each fiscal period, not on a continuing basis, in accordance with the following basic policy.

(i) INV will consider making the Excess Profit Distribution in the event of a. or b. below, and, will, in principle, not make the Excess Profit Distribution in other circumstances.

  • If INV determines it to be appropriate by taking into account trends in the economic environment, the real estate market, the leasing market, the real estate investment trust market and other markets or the impact that the INV's asset acquisition and financing activities may have on the amount of distribution per unit.
  • If INV can avoid being imposed of taxation such as corporate tax, etc. thereon.

(ii) The amount of Cash Distribution Exceeding Profit will be determined within the limit of the amount equivalent to 60% of the amount calculated by deducting the total accumulated depreciation amount recorded as of the end of the previous fiscal period from the total accumulated depreciation amount calculated as of the end of the relevant fiscal period for which such distribution is to be made (Note).

(Note)
Per the applicable standards set by the Investment Trusts Association of Japan, a closed-end investment corporation may make the Cash Distribution Exceeding Profit within a limit not exceeding: (a) in respect of the distributions of amount equivalent to the increased portion of the reserves for temporary difference adjustments when the difference between accounting and tax treatment arises, the full amount of such increased portion; and (b) in respect of the other Cash Distribution Exceeding Profit (ordinary type of Cash Distribution Exceeding Profit), 60% of the amount calculated by deducting the total accumulated depreciation amount recorded as of the end of the previous fiscal period from the total accumulated depreciation amount calculated as of the end of the relevant fiscal period.

(iii) With respect to implementation of the Excess Profit Distribution and determination of the Excess Profit Distribution amount, INV is to carefully consider the following: (i) securing funds necessary to maintain the value, etc. of INV's investment assets; (ii) the LTV level (Note) is to not exceed 60% following the Excess Profit Distribution; and (iii) securing liquidity following the Excess Profit Distribution.

(Note)
LTV level (%) = a / b x 100%
a = total outstanding balance of interest-bearing debt at fiscal end
b = total assets at fiscal end - expected distribution amount

(II) Approval Process for Excess Profit Distribution
In the event INV decides to make the Excess Profit Distribution, CIM is to present its executive officers with drafts of financial statements, asset management report and financial documents relating to cash distributions as well as any accompanying statement, in each case for the fiscal period immediately preceding the fiscal period in which such distribution is to be made. In presenting such drafts, the General Manager of the Finance Department of CIM, in accordance with "(I) Basic Policy" above, is to prepare a proposal taking into account matters affecting cash flow such as medium to long term capital requirements, etc. (e.g., long-term repair plans) and other necessary matters, and will seek the approval of the President and CEO of CIM. Furthermore, in the event INV decides to make the Cash Distribution Exceeding Profit, the resolution approving the financial accounts by the Board of Directors of INV shall be made in the order prescribe below:

  • (i) Approval of the complete set of financial statements
  • (ii) Approval of the amount of profit distribution
  • (iii) Approval of the Cash Distribution Exceeding Profit in the amount within the increased amount in the reserve for temporary difference adjustments (limited to the case where INV makes such Cash Distribution Exceeding Profit)
  • (iv) Approval of the other Cash Distribution Exceeding Profit (limited to the case where INV makes such Cash Distribution Exceeding Profit)

(3)  Methods of Distribution
Distributions shall be paid in cash and based on the number of investment units held to unitholders who are listed or recorded in the registry of unitholders on the closing date of each fiscal period, or to registered pledgees of investment units (Article 17, Item 5 of the Articles of Incorporation of INV).
(4)  Statutory Limitation for Dividends
INV will be exempted from its obligation to pay distributions to unitholders or registered pledgees of investment units after a lapse of three years from the commencement date of payment. No interest will accrue with respect to unpaid distributions (Article 17, Item 6 of the Articles of Incorporation of INV).

In addition to (1) through (4) above, INV shall comply with the rules of The Investment Trusts Association, Japan, etc. in cash distributions.