While effectively utilizing the value chain of the TOKYU FUDOSAN HOLDINGS Group, we maintain and improve the governance system to emphasize unitholder value, by developing a decision-making flow in asset management for impartiality and by aligning the interests of unitholders with those of TOKYU LAND CORPORATION.
1. Matters concerning the governance of the Investment Corporation
The organization of the Investment Corporation consists of a unitholders’ meeting comprising unitholders, a Board of Directors which includes an executive director and two supervisory directors, and an auditor.
The Investment Corporation is operated by the Board of Directors, including one executive director and two supervisory directors. At the Board of Directors meetings, reports are made on approvals as stipulated by laws and regulations and on the asset management operations, with the Asset Management Company and general administrators in attendance. The supervisory directors consist of one lawyer and one certified public accountant/tax accountant. They supervise the executive director’s execution of duties from their respective professional viewpoints. The Investment Corporation has established regulations on the prevention of insider trading to bar any violation of insider trading regulations by the directors.
At the Board of Directors meetings, the supervisory directors receive reports from the executive director, the Asset Management Company, and general administrators on the operation and the management of assets of the Investment Corporation, as well as the progress of general administration and matters concerning compliance and risk management. The supervisory directors also request reports on these matters, if needed. The auditor performs audits of financial statements of the Investment Corporation and gives an audit report at the Board of Directors meeting attended by the supervisory directors prior to the approval of the financial statements. In the event that the auditor discovers any illegal act by the executive director or material fact that violates laws or regulations, he or she has a duty to report this to the supervisory directors.
The Investment Corporation receives reports from the Asset Management Company at the Board of Directors meetings, as needed, on the management of the assets of the Investment Corporation as well as on internal audits and compliance by the Asset Management Company. The Investment Corporation is also designed to receive reports at the Board of Directors meetings from the general administrators and asset custodian on the execution of their duties and internal audits on a regular basis or as needed.
2. Operational system of the Investment Corporation
The management of assets of the Investment Corporation is entrusted to TLC REIT Management Inc., the Asset Management Company.
The Asset Management Company operations are segregated into Activia Management Division, Comforia Management Division, Broadia Management Division, Corporate Planning & Administration Department, Finance & Accounting Department, Asset Investment Department, Environmental Engineering Department, Internal Audit Department and Compliance Department. Operation of the Investment Corporation is mainly operated by Comforia Management Division.
Investment Committee will deliberate management of assets, Compliance Committee to deliberate compliance, and Acquisition Priority Review Meeting to check the process for decision of the Order of Prioritized Consideration relating to properties to consider acquisition.
For details of the the Asset Management Company organization, please refer to the "Asset Management Company"page.
3. Situation of the establishment of a decision-making body of the Asset Management Company and a risk management system concerning investment
(1) Decision-making flow in acquisition of assets
- If the candidate acquisition asset is a healthcare facility, advice from external experts should be secured.
- If the candidate acquisition asset is a healthcare facility, deliberations will be held after receiving an account of the content of reports, etc. created by external experts and, if necessary, the Investment Committee meetings will be attended by the external experts as observers and their opinions will be heard.
- Compliance Officer may order suspension of deliberations.
- This approval may be made before or after Investment Committee resolution.
The Asset Investment Department selects assets and drafts an acquisition plan (If the candidate acquisition asset is a healthcare facility, advice from external experts should be secured.). The acquisition plan drafted by the Asset Investment Department is submitted by the Manager of the Asset Investment Department to the Investment Committee as a proposal after being examined and approved by the Compliance Officer. The acquisition plan is then approved by the Chief Division Officer after deliberation and decision by the Investment Committee.
If the Chief Division Officer approves the acquisition plan, this means that it has been decided at the Asset Management Company and will be reported to the Investment Corporation and the Board of Directors.
In case the transaction falls under a transaction with an related party provided in the Regulations on Transactions with Related Parties, the transaction will be deliberated upon and resolved by the Compliance Committee prior to resolution of the Investment Committee, and then approved by the Chief Division Officer. After the acquisition plans approved by the Chief Division Officer, the plan will be approved by the investment corporation’s board of directors. The order of the resolution by the Investment Committee and approval by the Investment Corporation’s Board of Directors may be reversed.
(2) risk management system concerning investment
The Asset Management Company will comply with the “management guidelines” prepared by the Asset Management Company and reported to the Board of Directors of the Investment Corporation. The Asset Management Company performs compliance and risk management in accordance with their compliance and risk management regulations.
The Asset Management Company makes every effort to prevent insider trading (including transactions similar to insider trading) by directors and employees by taking into consideration the establishment of an internal structure to sufficiently respond to the introduction of insider trading restrictions related to investment corporations and developing insider trading regulations for the prevention of insider trading.
The Asset Management Company performs risk management from a different perspective by establishing an Investment Committee and Compliance Committee, which deliberate annual management plans and matters concerning acquisitions and sales.
At the Asset Management Company, the Compliance Officer, who supervises compliance, also monitors the compliance situation.
To manage risks, the Asset Management Company designates the Compliance Department as the risk management division and understand where the Investment Corporation’s risks are and their types before taking appropriate measures to ensure that the responsible persons of each Management Division understand and acknowledge these details.
The Asset Management Company has established an internal system concerning compliance and measures to respond to compliance issues. It has also prepare a compliance manual that stipulates the basic compliance policy and the code of conduct of directors and employees as well as provide regular compliance training.
The Asset Management Company has established Internal Audit Regulations to ensure appropriate operations and pursues efficient operation in an effort to establish an appropriate self-inspection system.
4. Transactions with related parties
In carrying out entrustment-based agency services for transactions under the Real Estate Brokerage Act and operations as an asset management company under the Act on Investment Trusts and Investment Corporations, the Asset Management Company has established Regulations on Transactions with Ralated Parties, which are voluntary rules to prevent damage to the interests of the Investment Corporation through transactions with “related parties” who have certain relationships with the Asset Management Company and to ensure that the Asset Management Company performs its operations in compliance with applicable laws and the asset management agreement.
5. Establishment of Regulations on Priority of Property Information to Consider
the Asset Management Company undertake asset management operations not only for the Investment Corporation(“CRR”) but also for Activia Properties Inc. (“API”) and Broadia Private REIT, Inc.(“BPR”)
Among investment corporations, for whom the Asset Management Company undertakes management operations, API invests mainly in retail properties and offices while CRR invests mainly in rental residences and serviced rental residences. Therefore, API and CRR will not compete for acquiring the same properties. However, it is possible that CRR and BPR may compete for acquiring rental residences and serviced rental residences.