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News Release
July 03, 2006
Whole building lease system
Daito Trust Construction (president: Moritaka Asada) would like to announce introduction of "whole building lease system" and it is available to new construction contracts after July 3rd, 2006. The reason of implementation of the new system is that conventional services of Daito Kyosaikai (wholly owned subsidiary) apply to the revised insurance business law enacted April 1st 2006.
Daito Kyosaikai is applying for government approval as a "special certified insurance company" in accordance with amended insurance business law.

1. Background of lease system implementation
Daito Trust Construction provides comprehensive services including consulting, design and construction, tenant recruiting, building management and rent guarantee for vacant units. Rent guarantee system is a core part of our business practice because owners consider vacant units to be a significant profit risk.
Daito Trust Construction established Kyosaikai Co., Ltd. to provide the unique service of rent guarantee. The previous insurance business law had not covered the rent guarantee system, however, we founded it might applies to the revised law enacted on April 1st 2006.
We considered many issues which may occur when transforming Kyosaikai into an insurance company, such as setting insurance fees, insurance coverage, operating costs and the effect on tenant recruiting. As a result, Daito Trust Construction decided to start "whole building lease system" implementing a common rent guarantee practice, instead of providing conventional services.

2. Summary of "whole building lease system"
Under the whole building lease system, Daito Building Management Co., Ltd, wholly owned subsidiary, leases entire buildings from the owners as indicated below.

1) When Daito Trust Construction make a construction contract with
   landowners, Daito Building Management explains about "whole building
   lease system".
2) Daito Building Management makes an agreement of whole building leasing
    with owner(s) (building owner) before the completion of construction.
    Rent payment to the owner(s) (building owner) starts 3 months after
    completion.
3) The period of whole building lease contract is 30 years after the building
    completion. It will to be renewed biennially. Lease fee is fixed for the first
    10 years and after first revision assessed every 5 years.
4) Daito Building Management sublets units to residents provided by
    Daito Trust Construction intermediates.
3. Feature of the whole building lease system
The main feature of our new system is that it reduces fluctuations of income and expenditures for rental apartment businesses compare to other companies.
1) Rental income
30 years lease period and 10 years fixed lease fee provides owner(s) with a long-term stable income.
2) Burden of costs
Daito Building Management takes on payment costs for cleaning, repairing and replacement in order to reduce owner's burden. Costs include below.
- Room improvement costs when residents leave
- Roof or outer wall repairment costs
Daito Trust Construction will continue to support owners in order to maintain rental apartment business by strengthening Trust Construction System and managing buildings on behalf of owners.

4. Units under the management of Daito Kyosaikai
Daito Kyosaikai has more than 420,000 member units. In order to transfer to the new system, Kyosaikai will continue providing its current services until March 2008 by applying for government approval as a "special certified insurance company" in accordance with amended insurance business law.
In order to provide conventional services to 43,500 members (owners), it is creating a transition plan based on the whole building lease system.

a) Insurance business law revision
Revised the definition of insurance business and regulated the insurance business for specific groups of clients.

b) Special certified insurance company
Companies which were not regulated by law are approved to continue business for 2 years after the date of revision. Special certified insurance companies have to report their operation to prime minister in 6 months.

5. Impact on the financial results for fiscal 2006
The new "whole building lease system" is going to be applied from July 3rd 2006. As it takes approximately one year from contract conclusion to the building completion, there is no changes in interim and annual financial forecasts for the year ending March 2007 announced on May 2nd 2006.
Copyright 2006 Daito Trust Construction Co., Ltd.