Governance / Compliance and Risk Management

◆Compliance

• Approach to Compliance

＜TOKYU REIT＞
Recognizing its social responsibility and pubic mission as a listed real estate investment trust corporation, TOKYU REIT has established its own “Compliance Policy” and designs and develops governance with the aim of securing the confidence of investors and other stakeholders through compliance with ethics, laws and regulations, market rules (including global regulations applicable to TOKYU REIT), guidelines of the competent authorities, internal rules of TOKYU REIT, etc., in other words, thorough implementation of compliance.

＜Tokyu REIM＞
Tokyu REIM has established “Tokyu REIM Code of Conduct,” “Basic Policy for Compliance,” “Compliance Rules,” “Tokyu REIM Compliance Manual,” “Compliance Program” and other internal rules, and implements thorough compliance of ethics, laws and regulations, market rules (including global regulations applicable to Tokyu REIM), etc., particularly focusing on proper management of information on corporations and personal information, securement of credibility on disclosure of financial reports and such.

• Compliance Standards

　
・Chief Compliance Officer (CCO)
The Chief Compliance Officer (CCO) oversees compliance operations, as well as managing the compliance consultation desk, etc. Furthermore, based on the “Compliance and Risk Management Committee Regulations,” the CCO ensures that important matters related to compliance and risk management (including matters deemed necessary by the executive officer in charge of compliance or the the executive director of the committee) and matters related to transactions with interested parties are appropriately brought to the attention of the Compliance and Risk Management Committee.

・Compliance Program
Each fiscal year, a compliance program is created as a practical plan relating to compliance, and based on this program, various compliance-related measures are implemented. Furthermore, the status of the program’s execution and achievement is checked on a regular basis, and if revising the details is necessary, they will be revised as appropriate.

・Tokyu REIM Compliance Manual
To enhance officer and employee understanding of the basic approach to executing duties and of the relevant laws, regulations, internal rules, etc. that should be followed, the company has created the “Tokyu REIM Compliance Manual” as a handbook for fostering awareness among all officers and employees. The aim is for the knowledge and awareness acquired through this manual to help prevent compliance violations by officers and employees and further enhance the approach to compliance.

・Internal Compliance Training
To ensure the effectiveness of ethics and laws, market rules (including global regulations that apply to Tokyu REIM), internal rules, etc., internal training is conducted as appropriate, through which the company strives to enhance and strengthen its approach to compliance, foster compliance awareness among officers and employees, etc.

Please refer to this page, about other matters related to compliance training.

   Compliance training（FY2024）

・Compliance Consultation Desk
With the aim of supplementing its compliance approach, Tokyu REIM strives to proactively prevent behavior that violates compliance, take measures to rapidly address violations, and prevent their recurrence, including the establishment of a compliance consultation desk and harassment consultation desk in accordance with the Whistleblower Protection Act (Act No. 122 of 2004, as well as subsequent amendments). All officers and employees (including temporary employees) and retirees may consult an internal or external (sponsor, external lawyer) compliance consultation desk or harassment desk about matters such as conduct that violates compliance. To protect consulting parties, the “Compliance Rules” stipulate that anonymous reporting is allowed, that they shall not be subject to dismissal or other unfavorable treatment, and that appropriate measures shall be taken to ensure that the consulting party’s work environment does not become worse due to consulting the consultation desk.

＜Number of Reports/Consultations Received by Compliance Consultation Desk＞

 (Note 1) With the aim of rapidly detecting and correcting compliance issues, including fraud and scandals, the sponsor Tokyu Corporation has established an internal whistleblowing contact point, the “Tokyu Corporation Helpline,” and promotes awareness of it. Along with an internal contact point, the “Tokyu Corporation Helpline” offers contact points such as a law firm, which handle reports and consultations from Tokyu Group employees (including suppliers), etc.
 (Note 2) Not yet announced as of June 2025.

＜Number of Cases Received by Harassment Consultation Desk (Including External Contact Points)＞

・Compliance Checks
The Chief Compliance Officer (CCO) and Compliance Office verify the status of compliance with the law, internal rules, etc. in the execution of business and, in the execution of daily business, also perform compliance checks when transactions of various kinds are conducted, including when TOKYU REIT conducts a transaction with a party related to Tokyu REIM, when formulating and revising internal rules, etc.

・Compliance interviews
With the aim of sharing attitudes and perceptions related to compliance between the Chief Compliance Officer (CCO) and officers and employees, compliance interviews are conducted with all officers and employees (including temporary staff) once a year, which are intended to lead to enhanced compliance awareness and business improvements. The opinions solicited in these interviews are used for revising internal rules and business processes and considering various compliance-related measures, such as determining topics for compliance training.

◆Risk Management
In order to maintain and maximize TOKYU REIT’s unitholder value, Tokyu REIM recognizes that it is essential to accurately identify various internal and external risks related to management of TOKYU REIT’s assets and manage those risks using methods that are reasonable and optimal from a company-wide perspective. It has therefore established a “Basic Policy for Risk Management” and “Risk Management Rules” that it implements.

• “Three Lines of Defense” in Risk Management
  We appropriately manage risk through an operational structure based on the concept of “Three Lines of Defense.”
  

• Annual Risk Management Cycle

（※）Procedure for establishing risk response plans

• Crisis Management
  Recognizing that occurrence of natural disasters, accidents, and other risks has a material impact on its business operation and execution of management of TOKYU REIT’s assets due to economic loss, loss of credibility, significant obstacles in business operation, etc. caused by such risks, Tokyu REIM has established and operates its own “Basic Policy for Crisis Management” and “Crisis Management Rules” to minimize damage upon occurrence of risks and continuously fulfill its social responsibility and public mission as a company.
  
  ＜Examples of Initiatives＞
  　・Establishment of Crisis Management Committee
  　・Establishment of BCP and preparation of crisis management manual
  　・Preparation of stockpile, medicine, etc.
  　・Execution of large-scale earthquake drills, safety confirmation drills, crisis management headquarters drills and first aid drills
  　　
  　　Crisis management headquarters drill (2024)
  　
  　　
  　　First aid drill (2025)

◆Major initiatives

• Response to Insider Trading Regulations
  Tokyu REIM has established “Rules for Prevention of Insider Trading, Etc.” and builds and operates systems to prevent insider trading through proper management of information on corporations and such.

• Prevention of Money Laundering and Terrorist Financing
  Recognizing that countermeasures against money laundering and terrorist financing are one of the most important management issues, we have established a "Basic Policy on Countermeasures against Money Laundering and Terrorist Financing" and are building an internal organizational structure and management structure for our contractors and business partners.

• Information Security
  Tokyu REIM has established and operates its own “Basic Policy on Information Security” to ensure protection of information assets and their proper use.
  
  ＜Examples of Initiatives＞
  ・Establishment of an appropriate structure for system risk management
  ・Development of safety measures to deter/prevent unauthorized access, unauthorized acquisition of information, information leakage, etc.
  ・Execution of initial response and business continuity training in the event of a system outage
  　
  　Initial response and business continuity training in the event of a system outage（2023）

• Complaint System
  Based on the financial sector's alternative dispute resolution system, we have a system in place for the resolution of complaints and disputes.

• Coping with Seismic Disasters
  With the aim of developing a portfolio that is resilient to earthquakes, as a criterion for investing in individual properties, TOKYU REIT requires as a rule that they comply with new earthquake resistance standards (Note) and that the buildings have either completed anti-seismic reinforcement work or have a PML of less than 15%. Furthermore, it manages the portfolio so that the PML is 10% or less, and if this figure is exceeded, it will consider obtaining earthquake insurance.

  （Note）The new earthquake resistance standards are the earthquake resistant design standards based on the Building Standards Act, which was revised in 1981 with the aim to prevent buildings from collapsing even from earthquakes with seismic intensity of six and secure safety for human lives. Buildings that obtained building confirmation in June 1981 and after are understood to satisfy the new earthquake resistance standards. In fact, there were almost no reports of collapsing of buildings that were designed in accordance with the new earthquake resistance standards from the Great Hanshin Earthquake in 1995 and the Great East Japan Earthquake in 2011, in which a seismic intensity of seven was actually observed.

  Please refer to this page regarding the status of the latest portfolio PML (Presentation Material)

• Measures to Prevent Bribery and Corruption
  The “Work Regulations” and “Tokyu REIM Compliance Manual” stipulate that the company shall not engage in actions such as providing gifts and entertainment, gambling, etc. and that in the event of illicit or improper money or goods being given or received in relation to its business, the perpetrator shall be subject to strict disciplinary measures.
  Furthermore, the Tokyu Group takes steps to prevent corruption based on the Tokyu Group Compliance Guidelines and individual companies’ codes of conduct. In May 2022, the sponsor Tokyu Corporation also established an “Anti-Corruption Policy” that applies to the company and its consolidated subsidiaries. This stipulates that “corruption” which abuses the professional authority or position of oneself or a third party, including bribery (Note 1), conflicts of interest (Note 2), embezzlement, extortion of favors, and bid-rigging, is strictly prohibited and that corruption related to suppliers, etc. of Tokyu Corporation and its consolidated subsidiaries will not be tolerated.

  Anti-Corruption Policy 1.Basic Policy 　Tokyu Corporation (the “Company”) and its consolidated subsidiaries prohibit any and all so-called corrupt acts that abuse personal or a third party’s authority or position in the course of duty, such as bribery(Note 1), conflict of interest(Note 2), embezzlement, forcing others to give advantage, and bid-rigging, and do not approve corrupt acts related to business partners, etc. of the Company and its consolidated subsidiaries. Please refer to this page regarding Tokyu Corporation’s Anti-Corruption Policy.

  （Note 1）Refers to the provision or receipt of gifts, loans, rewards, remuneration, or other benefits from any person whomsoever that goes beyond the scope of laws, regulations, or social norms for the purpose of inducing actions that are unauthorized, illegal, or a breach of trust while carrying out business. So-called “facilitation payments” are also not allowed, regardless of the amount, if they are in violation of laws, regulations, etc.
  （Note 2）Refers to a person affiliated with the relevant company (officer, employee, etc.) acting privately and inappropriately to advance their personal interests in a manner that conflicts with the company’s interests.

  
  

• Prohibiting Transactions with Antisocial Forces
  Tokyu REIM recognizes that blocking and eliminating all relations with antisocial forces is essential to fulfilling its social responsibility and public mission as a financial instruments business operator and real estate broker. It has therefore formulated a Basic Policies against Antisocial Forces. As part of its efforts, it screens potential transaction partners beforehand for relations with antisocial forces. In addition to this, once a year, it conducts an antisocial forces monitoring survey of suppliers.
  Furthermore, it aims to promote thorough awareness among all officers and employees by covering methods of dealing with antisocial forces in compliance training targeting them, etc.

◆Surveying Status of Compliance Initiatives at Outsourcing Contractors
To survey the state of compliance initiatives at outsourcing contractors of TOKYU REIT, surveys about the following items are conducted with major outsourcing contractors on a regular basis, with the aim of supervising their activities.