Basic Financial Policy

EII makes it a basic policy to build a stable and sound financial base with an aim to maintain and enhance earnings and secure steady growth over a medium to long term.

Equity financing	When conducting public offerings, EII will do so by taking into account the economic environment, market trends, LTV(Note), and the acquisition dates of investment assets, among other factors, while giving consideration to dilution of the investment units.
Debt financing	EII will efficiently procure funds by building a bank formation centered on major financial institutions, keeping a balance of borrowing periods among long- and short-term loans and interest types among fixed- and variable-interest loans, while working to diversify repayment dates. In terms of LTV, EII will conduct financial operations to keep it within an appropriate level, paying attention to securing additional borrowing capacity. In addition, EII will proactively work to diversify fund procurement methods, including issuance of investment corporation bonds.
LTV level	EII will ensure financial soundness by setting the upper limit at 70% in principle while paying attention to securing additional borrowing capacity. However, it may temporarily exceed 70% due to acquisition of new assets or changes in asset evaluation. For the time being, EII will conduct management conservatively to keep the level at around 60%, considering the portfolio size, etc.

• “LTV” refers to the ratio of total interest-bearing debt to total assets of EII. The same shall apply hereinafter.

Cash Distributions in Excess of Earnings (Refunds of Investment) and the Acquisition of Treasury Investment Units

Since many of solar power generation facilities in which EII invests are located in areas other than in cities, where land prices are relatively cheap, the ratio of depreciable assets in the entire assets is expected to be relatively higher than that of other common J-REITs; and thus we expect to post high depreciation as a result. On the other hand, capital expenditures and repair expenses for solar power generation facilities tend to be lower compared with depreciation due to the characteristics of assets. EII has the policy of distributing cash in excess of earnings (refunds of investment) ^{(Note 1)} in every calculation period as a rule up to the amount specified in the rules of The Investment Trusts Association, Japan so long as it does not negatively affect the financial state of EII.

EII will internally reserve cash and deposits within the scope deemed appropriate in order to respond to reinvestment (new investment, reserve based on the long-term repair plan and capital expenditure plan necessary for maintenance and improvement of properties held, etc.) and disposal of facilities, and aim to deliver return to investors using surplus funds after internally reserving such funds, in principle.

• For the time being, EII maintains a policy of distributing cash in excess of earnings (refunds of investment) in every calculation period up to the amount equivalent to 50% of depreciation for the relevant calculation period.
• The above is only an image and does not show actual amounts of distributions and cash distribution in excess of earnings (refunds of investment) nor the ratio of acquisition value of treasury investment units and such.