Basic Operational Policies within the Investment Corporation Asset Management Business
(Customer-Oriented Business Operational Policies)
Basic Operational Policies within the Investment Corporation Asset Management Business
Revised at January 31, 2023
Tokyu Real Estate Investment Management Inc. (hereinafter referred to as “the Company”) has established these policies as the basic philosophy and principles of asset management and manages business based on these policies.
These policies are in accordance with the Principles of Customer-Oriented Business Conduct published by the Financial Services Agency on March 30, 2017, and will be revised as necessary to further improve business operations.
Operational Philosophy
The Company will use its extensive knowledge of TOKYU CORPORATION, etc., (Note) offices and commercial facilities to provide attractive investment products that meet the needs of investors, through adequate dialogue with our customers (meaning TOKYU REIT, Inc., and its investors, and the same applies hereinafter).
Furthermore, we recognize the importance of environmental and social considerations in real estate investment management, and through collaboration with TOKYU CORPORATION, etc. we will work to reduce our burden on the environment and to achieve a sustainable society, as part of our corporate social responsibility.
Operational Policies
The Company aims for stable portfolio management placing importance on the following in order to earn the trust and confidence of all our customers and to improve asset value and grow profit per investment unit from a medium- to long-term perspective.
- “Dynamic” asset management that reflects changes in the environment
- Acquisition of “carefully selected” properties based on our knowledge of offices and commercial facilities, etc.
- “Maximization” of operational performance using our thorough knowledge of investment target areas and individual properties
- “Sound” fund management based on low-leverage financial strategies
- Investment management compensation structure linked to investor value that places the Company “in the same boat as investors”
- “Ongoing” dialogue with investors and "timely and appropriate" disclosure
Processes x Human Resources
The Company will work to improve the quality of our processes and human resources, aiming to achieve a higher level of operational policy.
Processes
• Maintain and improve appropriate processes
To ensure appropriate investor protection, the Company aims to develop and manage processes that ensure highly effective governance, placing importance on the following.
- Governance designed to promote actions in the best interests of customers and the fair treatment of customers
- Internal controls to thoroughly ensure compliance and risk management
- Management of conflicts of interest to achieve both sponsor collaboration and independence
Human Resources
• Human Resource Allocation and Development
Based on the recognition that human resources are the cornerstone of asset management, the Company will allocate and develop adequate human resources in terms of both “quality” and “quantity,” placing importance on the following, thereby strengthening our organizational ability to pursue the best interests of customers.
- “Integrity and ethics”
- “Assessment capabilities” backed by deep knowledge and insight into investment target areas and real estate
- Sufficient “ability to engage in dialogue” with stakeholders
- “Tokyu Corporation and its subsidiaries” refers to any of the following: (a) Tokyu Corporation; (b) A subsidiary of Tokyu Corporation, and (c) A tokutei mokuteki kaisha (TMK) or special purpose entity (SPE) that was established based on the intention of Tokyu Corporation or a subsidiary of Tokyu Corporation and where the share of investment by silent partnership or other investment shares in that entity by the respective company exceeds 50%.
Implementation Status of Operational Policies
The Company acts as set out below, in accordance with the above Operational Policies, when engaging in asset management activities for Tokyu REIT, Inc. (hereinafter referred to as “Tokyu REIT”).
Operational Policies
1. “Dynamic” asset management that reflects changes in the environment
The Company pursues asset management activities in accordance with the Long-Term Investment Management Strategy (Surf Plan) and the Capital Reinvestment Model with the aim of maximizing Tokyu REIT investor value.
◆ Long-Term Investment Management Strategy (Surf Plan)
【TOKYU REIT Website, External Growth Policy]
◆ Capital Reinvestment Model
[TOKYU REIT Website, Collaboration with Tokyu Corporation and its subsidiaries]
◆ Tokyu REIT Distributions per Unit
[TOKYU REIT Website, Distributions]
2. Acquisition of “carefully selected” properties based on our knowledge of offices and commercial facilities, etc.
Using its extensive knowledge of the offices, commercial facilities, etc., of Tokyu Corporation, etc., and in accordance with the Tokyu REIT Basic Policy of investing in highly competitive properties in areas with growth potential, the Company focuses investment activities in the five central wards of Tokyo and areas served by Tokyu rail lines, applying certain fixed criteria regarding location, property type, size of investment, and other factors.
◆ Tokyu REIT External Growth Policy
[TOKYU REIT Website, External Growth Policy]
◆ Tokyu REIT Portfolio
[TOKYU REIT Website, Properties]
[TOKYU REIT Website, Portfolio Map]
[TOKYU REIT Website, Use Allocation/Area Allocation]
3. “Maximization” of operational performance using our thorough knowledge of investment target areas and individual properties
To maximize the asset value of Tokyu REIT in the medium- to long-term, the Company works to maintain and improve the market competitiveness of properties and undertakes appropriate risk management.
◆Tokyu REIT Internal Growth Policy
[TOKYU REIT Website, Internal Growth Policy]
◆Tokyu REIT Management Performance
[TOKYU REIT Website, Occupancy Rate]
[TOKYU REIT Website, Various Data]
4. “Sound” fund management based on low-leverage financial strategies
The Company works to maximize Tokyu REIT’s investor value through external growth, reducing funding costs, and minimizing expenditure, based on stability, flexibility and efficiency.
◆Tokyu REIT Financing Policy
[TOKYU REIT Website, Financing Policy]
◆Tokyu REIT Financial Data
[TOKYU REIT Website, Financial]
5. Investment management compensation structure linked to investor value that places the Company “in the same boat as investors”
The Company and Tokyu REIT have adopted an asset management compensation structure linked to three performance indicators which is designed to “place them in the same boat as investors” and prevent conflicts of interest.
◆ Asset Management Compensation Structure
[TOKYU REIT Website, Investment Management Fee]
◆ Asset Management Compensation Record
[TOKYU REIT Website, Investment Management Fee (Since IPO)]
6. “Ongoing” dialogue with investors and "timely and appropriate" disclosure
In accordance with the Tokyu REIT disclosure policy, the Company seeks to engage in ongoing dialogue with investors and to carry out information disclosure and provision in a manner that is timely, appropriate, accurate and fair.
◆Tokyu REIT Disclosure Policy
[TOKYU REIT Website, Disclosure Policy]
◆Tokyu REIT Disclosure Record
[TOKYU REIT Website, News Release]
[TOKYU REIT Website, IR Library]
[TOKYU REIT Website, Social Contribution](See “Information Disclosure to and Dialogue with Stakeholders”)
Processes x Human Resources
1. Maintain and improve appropriate processes
(1) Governance
The Company regards good governance as the foundation of competitiveness and a contributor to growth in investor value.
To ensure that investment securities issued by Tokyu REIT can serve as global financial products attractive to all investors, both in Japan and overseas, we are working to design and put in place a system of governance that can stand up to evaluations based on global standards, becoming the base of our surefooted business management.
(2) Compliance and risk management
◆Compliance
The Company has formulated internal regulations including a Tokyu REIM Code of Conduct, a Basic Compliance Policy, Compliance Regulations, the Tokyu REIM Compliance Manual and a Compliance Program. These regulations are stringently applied not only in connection with requirements such as compliance with ethical standards, laws and ordinances, and market regulations (including global regulations that apply to the Company), but also specifically to ensure the appropriate management of corporate and personal data and the reliability of financial reporting and other forms of disclosure.
◆Risk management
To maintain and maximize Tokyu REIT’s investor value, the Company understands that it is essential to accurately identify and monitor a wide range of internal and external risks relating to our investment corporation asset management business and to undertake efficient and optimal management of these risks from a company-wide perspective. Accordingly the Company has formulated a Basic Risk Management Policy and Risk Management Regulations, which are applied in operational practice.
(3) Management of conflicts of interest
To prevent conflicts of interest in transactions with interested parties, the Company has formulated Regulations for Transactions with Interested Parties, a voluntary set of rules consisting of basic principles and specific regulations.
[TOKYU REIT Website, Governance]
2. Human Resource Allocation and Development
Based on the recognition that human resources are the cornerstone of asset management, the Company will allocate and develop adequate human resources in terms of both “quality” and "quantity," placing importance on the following, thereby strengthening our organizational ability to pursue the best interests of customers.
[TOKYU REIT Website, Social Contribution](See “Allocation and Development of Personnel Sufficient in Both Quality and Quantity”)