JAPAN Law and Practice Contributed by: Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
4.5 Right of Appeal Against an Authority’s Decision
• the TMK structure; and • the J-REIT structure.
Theoretically, it is not impossible to litigate against an authority’s decision, although litiga - tion of this type is not commonly seen in prac - tice. 4.6 Agreements With Local or Governmental Authorities Unless the development project involves a prop - erty or facility that is currently or was previously owned by a governmental body, it is not com - mon to enter into agreements with governmental bodies to facilitate a development project. 4.7 Enforcement of Restrictions on Development and Designated Use The contractor of a building under construction in violation of the Construction Standards Law or the City Planning Law, or the owner of a building that has been so constructed, may be ordered to suspend the construction or to demolish or refurbish the building, or ensure the building complies with the relevant legal requirements. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets Generally speaking, real property tends to be owned directly by joint stock companies ( kabu - shiki kaisha or KK), which is the most popular form of corporate entity available under the Companies Law. When it comes to real estate investment, there are three typical investment structures, each of which uses a different type of entity to acquire property: • the GK-TK structure;
Of these three structures, the GK-TK structure and the TMK structure are primarily used to acquire a specific asset or portfolio identified at the outset. The TMK structure is more often preferred by non-Japanese investors. However, the J-REIT is used as a going concern vehicle for real estate investment, the asset port - folio for which can be continually expanded or replaced with new assets. The main features of each structure are dis - cussed below. GK-TK Structure A GK-TK structure usually involves three types of vehicles: • the fund is formed as a limited liability com - pany ( godo kaisha or GK); • the GK is to acquire and hold one or more TBIs in a real estate trust (property trust); and • the GK obtains quasi-equity investment from a TK investor under a TK agreement and takes out a loan from a third-party financial institution. A GK is one of the ordinary corporate forms available under the Companies Law, with all equity holders (members) of the GK bearing limited liability. For tax and other regulatory or practical reasons, real property is often traded under trust arrange - ments in Japan, ie, property is acquired in the form of a TBI rather than an outright purchase of the property. In that case, the real property is owned by the trustee of the property trust (usu -
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