NPR’s Corporate Governance

Organization of NPR

In accordance with the “Act on Investment Trusts and Investment Corporations (ITA)” of Japan, NPR is incorporated as a Japanese real estate investment trust, or a J-REIT, and governed by unit holders’ meetings and a Board of Directors who represent the interests of our unit holders. Pursuant to the ITA, J-REITs are not permitted to have any employees and are required to outsource all asset management operations. NPR has entered into an asset management agreement with Prologis REIT Management K.K., the Asset Manager, a joint stock company incorporated under Japanese law. Also, under ITA, J-REITs’ corporate activities are required to be audited by designated third-party accountants.

General Meeting of Unit Holders

General meetings of unit holders are held in accordance with the ITA and our articles of incorporation. In the case of unit holders residing outside of Japan, we send this notice to their standing proxy or mailing address in Japan.
Our articles of incorporation stipulate that our general meetings of unit holders shall be convened on or after August 1 every two years without delay. The articles of incorporation direct us to ensure that a general unit holder meeting is held no later than 25 months after the previous general meeting that was held in accordance with the relevant provisions of our articles of incorporation. Except as otherwise provided by law or by our articles of incorporation, unit holders may adopt a resolution at a general meeting of unit holders by a majority vote cast. Under the ITA and our articles of incorporation, unit holders who do not attend and exercise their voting rights at a general meeting of unit holders are deemed to be in agreement with proposals submitted at the meeting, except in cases where contrary proposals are also being submitted. Accordingly, unit holders who do not properly exercise their voting rights may have their votes counted in favor of the proposals submitted at the meeting, regardless of their wishes.
Amendment of the investment policies set forth in our articles of incorporation requires a vote of our unit holders. However, such investment policies are subject only to broad principles, and the manner in which we implement our investment objectives may be determined by the Board of Directors or delegated by the Board of Directors to the Asset Manager without a vote of our unit holders. Because of this broad authority, strategies for implementing our investment objectives may be changed without the vote of our unit holders in a way that could be inconsistent with the expectations of our unit holders.

Executive, Supervisory Directors and Board of Directors

Our articles of incorporation require that we have one or more executive directors and two or more supervisory directors.
Our articles of incorporation also require that we have at least one more supervisory director than the number of executive directors.
The Board of Directors is currently comprised of one executive director and three supervisory directors. All directors are elected at general meetings of our unit holders. The executive director represents NPR and has responsibility for the administration of NPR’s affairs. The supervisory directors are entirely independent of the Asset Manager and its shareholder, the Prologis Group. The supervisory directors have a statutory duty to review the executive director’s administration of NPR’s affairs. Our executive director and supervisory directors work together to ensure that we comply with tax and other legal and regulatory requirements, including those arising under the ITA and related to J-REIT regulatory provisions. Certain responsibilities of the executive director set out in the ITA, such as convening general meetings of unit holders and entering into or terminating the asset management agreement, require a resolution of the Board of Directors. The quorum for a resolution is a majority of the members of the Board of Directors, and the adoption of a resolution requires a majority of the votes present. If any director has a conflict of interest with respect to a proposed resolution, the director is not counted for purposes of achieving a quorum, and he or she is disqualified from voting.

Independent Auditors

Under the ITA, we must appoint independent auditors, which must be either certified public accountants or a public accounting firm, by resolution at a general meeting of unit holders, except for the first independent auditors that were appointed at our incorporation. KPMG AZSA LLC (KPMG) is our current independent auditor.
KPMG conducts their audit in accordance with auditing standards generally accepted in Japan. KPMG is independent of NPR in accordance with the ethical requirements that are relevant to their audit of the financial statements in Japan, and KPMG fulfills their other ethical responsibilities in accordance with these requirements. KPMG audits the financial statements of NPR for every fiscal period and provides an opinion as to fair representation, in all material respects, of the financial statement in accordance with accounting principles generally accepted in Japan. Also, KPMG makes an opinion that they believe that the audit evidence we provide is sufficient and appropriate to provide a basis for their opinion.

Management and Oversight by Our Board of Directors and Supervisory Directors

Our business is operated by the Board of Directors, which consists of one executive director and three supervisory directors. We currently hold a board meeting generally once a month. At board meetings, our executive director will report on the Asset Manager’s operations and other matters. Each of our supervisory directors will receive such a report from the executive director, and request, if deemed necessary, reports regarding asset management operations from the Asset Manager. Executive and supervisory directors may request the officers and personnel of the Asset Manager, custodian and general administrator to attend board meetings and provide explanations regarding the Asset Manager’s operations.

Responsibilities of Supervisory Directors and Auditors for the Financial Statements

Supervisory directors and KPMG are responsible for overseeing the executive director’s performance and NPR’s financial reporting process. KPMG is also responsible for providing reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes their opinion for every fiscal period.

Executive and Supervisory Directors

Our Executive Director is Mr. Masahiro Sakashita and our Supervisory Directors are Mr. Yoichiro Hamaoka, Ms. Mami Tazaki and Mr. Kuninori Oku. Our articles of incorporation allow us to pay our executive director up to ¥1,000,000 per month and our supervisory directors up to ¥500,000 per month. The Board of Directors is responsible for determining a reasonable compensation amount for our executive director and our supervisory directors, taking into account general price and wage movements.
Our supervisory directors have no special interests with the Asset Manager and the Prologis Group, therefore they are able to supervise and review the administration of NPR independently.
The following table summarizes key information pertaining to the directors: their remuneration, tenure, skillsets, etc.:

Title	Name	Gender	Number of Units Owned	Attendance at Board of Directors’ Meetings (Since September 2020)	Remuneration for Most Recent 6 Month Period (Thousand yen)	Tenure
Executive Director	Masahiro Sakashita	Male	45	10 times out of 10 （100%）	-	8 years 6 months
Supervisory Director	Yoichiro Hamaoka	Male	0	10 times out of 10 （100%）	2,400	8 years 6 months
Supervisory Director	Mami Tazaki	Female	0	10 times out of 10 （100%）	2,400	2 years 8 months
Supervisory Director	Kuninori Oku	Male	0	10 times out of 10 （100%）	2,400	9 months

Title	Name	Knowledge, Skills and Experience
		Executive Management	Real Estate Management	Real Estate Investment	Finance/ Accounting	Audit/ Risk Management	Legal/ Compliance
Executive Director	Masahiro Sakashita	〇	〇	〇	〇
Supervisory Director	Yoichiro Hamaoka	〇	〇	〇		〇
Supervisory Director	Mami Tazaki				〇	〇
Supervisory Director	Kuninori Oku					〇	〇

• As of May 31, 2021

Please see the link below for the biographies of the directors.

VIEW BIOGRAPHIES OF NPR‘S BOARD OF DIRECTORS

Same Boat Investment by the Prologis Group

We believe that the interests of the Prologis Group and our unit holders are aligned in that the Prologis Group currently holds approximately 15% of our units and will purchase an additional 15% of the units to be sold in the future follow-on offerings. Since our listing, the Prologis Group has consistently and publicly expressed its intent to hold our units for the long-term. We believe that the Prologis Group’s investment in us will contribute to improvement of unit holder value by strengthening the support we receive from the Prologis Group.

• As of May 31, 2021

Organizational and Governance Structure of the Asset Manager

Prologis REIT Management K.K. (PLDRM) is acting as NPR’s asset manager based on the bilateral asset management agreement between NPR and PLDRM in accordance with the legal requirement under the ITA. The scope of PLDRM’s role is broad; examples are property acquisitions and disposition, operations/management of NPR’s portfolio, financing and investor relations, reporting to NPR’s board and other ancillary administrative work.
PLDRM is a wholly owned subsidiary of the Prologis Group and governed by its own board of directors and organizations described the below chart. In addition, there are two committees which govern certain areas of PLDRM’s corporate actions in connection with its asset management functions. The Investment Committee is responsible for discussing and approving PLDRM’s asset management plans, as well as NPR’s various transactions such as investments, dispositions and capital raising. The Compliance Committee is responsible for discussing and approving various compliance matters related to PLDRM’s corporate actions in certain areas, such as related-party transactions, and its governance. Both the Investment Committee and the Compliance Committee are required to have at least one independent committee member who has veto rights to the proposed agenda.
Our compliance Officer is Mr. Ryuji Murakami and he is responsible for legal compliance, planning and promoting our compliance affairs. The compliance officer reviews PLDRM’s administration from the viewpoint of compliance, and if there are some compliance issues that could occur, he has the authority to give necessary opinions or instructions to the officers and personnel of the Asset Manager.

Please see the link below for the biographies of the directors.

VIEW BIOGRAPHIES OF PLDRM'S BOARD OF DIRECTORS, COMPLIANCE OFFICER AND INDEPENDENT COMMITTEE MEMBERS