• Services Provided by the Asset Manager
• Organization of the Asset Manager
• Investment Policies and Procedures of the Asset Manager
• Investment Management Guidelines
• Asset Management Plan
• Acquisition and Disposition of Properties
• Investment Committee
• Compliance Committee

Pacific Commercial Corporation, a Japanese joint stock corporation incorporated on February 9, 2005, is our Asset Manager. The Asset Manager is a wholly-owned subsidiary of Pacific Holding, Inc.

The Asset Manager is licensed under the Financial Instruments and Exchange Law as an asset manager for J-REITs.

Services Provided by the Asset Manager

Pursuant to the asset management agreement, the Asset Manager provides the following services to us:

• Investment Management. The Asset Manager formulates and executes our investment strategy based on our basic investment policy with respect to portfolio composition, geographic diversification and other investment characteristics.
• Oversight of Property Management. The Asset Manager selects, directs and supervises our property managers.
• Property Acquisition, Maintenance and Disposition. The Asset Manager is responsible for identifying acquisition targets, purchasing properties, restructuring tenant lease terms (where appropriate), property maintenance and property dispositions.
• Investor Relations, Financial Reporting and Regulatory Filings. The Asset Manager is responsible for investor relations, including periodic disclosure with respect to our business, properties and financial performance. The Asset Manager is also responsible for our regulatory filings.
• Finance and Accounting. The Asset Manager is responsible for financial and accounting matters, including capital budgeting and financing our acquisitions and day-to-day operations.

Organization of the Asset Manager

Investment Policies and Procedures of the Asset Manager

The Asset Manager prepares investment management guidelines, or the Investment Management Guidelines, which set forth general principles for its asset management operations, including investment policies, rules for transactions with related parties and disclosure policies. The Asset Manager also prepares an asset management plan which it reviews and modifies from time to time. The Asset Manager selects investment properties and makes investment decisions with reference to these plans and procedures.

Investment Management Guidelines

The Investment Management Guidelines are drafted jointly by the Asset Manager's Investment Structuring Division and the Asset Management Divisions 1 and 2, and are submitted to the Asset Manager's compliance officer for approval. Upon the determination by the compliance officer that such Investment Management Guidelines comply with applicable laws and regulations, the J-REIT rules of the Investment Trusts Association, our articles of incorporation and the Asset Manager's internal rules, the Investment Management Guidelines are submitted to the Investment Committee. If the compliance officer has an opinion in respect of the guidelines, such opinion is attached to the Investment Management Guidelines upon submission to the Investment Committee. The guidelines are submitted to the Compliance Committee for deliberation when the compliance officer deems it necessary, and upon approval by a unanimous vote of the members of the Compliance Committee attending the meeting, the compliance officer submits a report concerning the details and process of deliberation at the Compliance Committee to the Investment Committee. Upon approval by the Investment Committee, the Investment Management Guidelines are submitted to our board of directors to obtain prior approval by a majority vote of all of the directors. The Investment Management Guidelines are then submitted to the Asset Manager's board of directors for deliberation and are adopted by resolution of a majority vote of the Asset Manager's board of directors in attendance. The chairman of the Investment Committee will submit any dissenting opinions upon submission of the results of the Investment Committee's resolution to the Asset Manager's board of directors. Changes to the Investment Management Guidelines are adopted through the same process.

While the Investment Management Guidelines are in principle subject to annual review and amendment, they may not be amended in a given year depending on the result of the annual review. The Investment Management Guidelines may also be reviewed when investment conditions change significantly.

If approval is not obtained at any point or if any problems are identified in the procedure described above for the adoption of or amendment to the Investment Management Guidelines, the proposal for adoption or amendment will be returned to the division that drafted them.

Asset Management Plan

The Asset Manager drafts an asset management plan based upon the Investment Management Guidelines and the J-REIT rules of the Investment Trusts Association. The Asset Manager acquires and disposes of assets and operates and manages assets in accordance with the asset management plan.

The Asset Manager's Investment Structuring Division and the Asset Management Divisions 1 and 2 collaborate with the Financial Planning Division to formulate the asset management plan, which is submitted to the compliance officer for approval. Upon the determination of the compliance officer that the plan complies with applicable laws and regulations, the J-REIT rules of the Investment Trusts Association, our articles of incorporation and the Asset Manager's internal rules, the plan is submitted to the Investment Committee. If the compliance officer has an opinion in respect of the asset management plan, such opinion will be attached to the plan upon submission to the Investment Committee. The asset management plan is submitted to the Compliance Committee for deliberation when the compliance officer deems it necessary, and upon approval by a unanimous vote of committee members in attendance at the Compliance Committee, the compliance officer submits a report concerning the details and process of deliberation at the Compliance Committee to the Investment Committee. Upon approval by the Investment Committee following deliberation, the asset management plan is submitted to the Asset Manager's board of directors for deliberation and is adopted by resolution of the Asset Manager's board of directors. The chairman of the Investment Committee will submit any dissenting opinions upon submission of the results of the Investment Committee's resolution to the Asset Manager's board of directors.

The asset management plan is subject to annual review. If any change becomes necessary to the asset management plan during its term, the Investment Structuring Division, the Asset Management Divisions 1, 2 and the Financial Planning Division will propose an amendment to the plan and such amendment will be adopted in the same manner as all other asset management plans.

If approval is not obtained at any point, or if any problems are identified in the procedure described above for the adoption of or amendment to the asset management plan, the proposal for adoption or amendment will be returned to the division that drafted them.

Acquisition and Disposition of Properties

Prior to acquiring properties, the Investment Structuring Division will conduct due diligence pursuant to the Investment Management Guidelines and identify eligible properties. Properties that have been determined to be eligible will be reviewed by the compliance officer for compliance with applicable laws and regulations, the J-REIT rules of the Investment Trusts Association, our articles of incorporation and the Asset Manager's internal rules. The acquisition plan for such property will then be submitted to the Investment Committee for review. If the compliance officer has an opinion regarding the proposed acquisition plan, such opinion will be attached to the acquisition plan upon submission to the Investment Committee. If the compliance officer deems it necessary, deliberation will be held by the Compliance Committee and after a unanimous vote of committee members in attendance has been obtained, the compliance officer will submit a report setting forth the details of such deliberation to the Investment Committee. Upon approval by the Investment Committee following deliberation, the acquisition plan is submitted to the Asset Manager's board of directors and is adopted by a resolution of the Asset Manager's board of directors. If dissenting opinions are raised within the Investment Committee, the chairman of the Investment Committee will submit such opinions to the Asset Manager's board of directors.

A meeting of the Compliance Committee will be convened when acquiring properties from related parties. If a unanimous resolution of committee members in attendance is passed by the Compliance Committee upon review of such acquisition plan, the compliance officer will submit a report setting forth the details and process of the deliberations of the Compliance Committee to the Investment Committee. Upon approval by the Investment Committee by majority vote, the acquisition plan will be submitted to the Asset Manager's board of directors for approval. The president and chief executive officer of the Asset Manager, who is the chairman of the Investment Committee, will report the details and process of the deliberations of the Investment Committee along with any dissenting opinions that are raised within the Investment Committee to the Asset Manager's board of directors. The president and chief executive officer of the Asset Manager will report any resolution adopted by the Asset Manager's board of directors relating to the acquisition of properties from related parties to our board of directors.

Decisions to dispose of properties or to dispose of properties to related parties are determined in the same manner as the foregoing acquisition procedures.
If approval is not obtained at any point in the foregoing procedure for the acquisition or disposition of properties or any problems are identified therewith, such proposal will be returned to the division that drafted them.

Investment Committee

The Investment Committee consists of the Asset Manager's president and chief executive officer, who acts as chairman of the committee, full-time directors, the general managers of the Investment Structuring Division, the Asset Management Divisions 1, 2 and the Financial Planning Division and the compliance officer. The Investment Committee discusses and adopts resolutions relating to investment policies, the acquisition, disposition and management of investment assets and any other related matters.

A meeting may be held so long as a quorum of two-thirds of the total committee members is present (if a member of the committee holds more than one position, only one such position may be counted towards the quorum) with the mandatory attendance of the compliance officer. The chairman of the committee obtains and communicates the opinions of the absent committee members to the committee and reflects such opinions in the deliberations of the committee. If the opinions of the absent committee members cannot be obtained, as a general rule, a meeting of the committee will not be convened; however, when the chairman determines that a meeting must be held due to extenuating circumstances, the chairman of the committee may hold a meeting if one or more outside experts attend such meeting.

Resolutions of the Investment Committee require the consent of a majority of the attendees.

Compliance Committee

The Compliance Committee consists of the compliance officer, who acts as chairman of the committee, full-time directors who are not responsible for the resolution under deliberation and outside committee members appointed by the president and chief executive officer after approval from the chairman of the committee. As of the date of this offering memorandum, a real estate appraiser has been appointed as an outside committee member for the Compliance Committee.

The Compliance Committee discusses and passes resolutions relating to transactions involving related parties, compliance-related issues concerning matters under deliberation by the Investment Committee or the Asset Manager's board of directors that the compliance officer requires to be discussed and passed on by the Compliance Committee, any other compliance-related matter that the compliance officer requires to be discussed and passed on by the Compliance Committee, the risk and risk management positions relating to the asset management and any other related matters.

As a general rule, the Compliance Committee requires attendance of all of its members. If full attendance cannot be obtained, a meeting may be held so long as a quorum of two-thirds of the total members is present. The chairman of the committee obtains and communicates the opinions of absent committee members to the committee and reflects such opinions in the deliberations of the committee. If the opinions of absent committee members cannot be obtained, as a general rule, a meeting will not be convened; however, when the chairman determines that a meeting must be held due to extenuating circumstances, the chairman of the committee may hold a meeting if one or more outside committee members attend such meeting.

The chairman may, as necessary, request the attendance of other persons, including outside experts, and may obtain the opinions of such persons. In addition, the chairman may obtain legal and other opinions to assist in the deliberations.

Resolutions of the Compliance Committee require the unanimous consent of the attendees.