Governance
- TRIM's management structure
- Investment management decision-making organs
- Transactions with interested parties
- Internal Audit
- Compliance and corporate ethics
- Placement of helplines
- System to protect whistleblowers
- Prevention of Corruption and Bribery
- Prevention of Transactions with Anti-Social Forces
- Risk Management
- Information security
TRIM strives to increase management transparency and awareness of corporate ethics while making timely decisions and executing operations efficiently. By thoroughly implementing and reinforcing corporate governance, we aim to improve unitholder value for Japan Prime Realty Investment Corporation (JPR), which entrusts management of its assets to us.
TRIM's management structure
TRIM's organizational framework is as shown below.
as of December 31, 2023
| Title | Name | Attendance at meetings of Board of Directors in 2023 |
|---|---|---|
| President & CEO | Yoshihiro Jozaki | 16/16 (100%) |
| Director, General Manager of Investment Management Division1 | Noboru Kuboniwa | 16/16 (100%) |
| Director, General Manager of Investment Management Division2 | Yoshio Goto | 14/14 (100%) (Note1) |
| Director, General Manager, Finance and Administration Division | Yoshinaga Nomura | 16/16 (100%) |
| Director | Yutaka Onuma | 15/16 (93.8%) |
| Director | Takayuki Noguchi | 6/6 (100％) (Note2) |
| Auditors | Masamitsu Kurebayashi | 16/16 (100%) |
| Auditors | Rikiya Fujikubo | 6/6 (100%) (Note3) |
| Auditors | Isao Jinno | 8/9 (88.9%) (Note4) |
- Organizational changes were implemented on February 1, 2023. Yoshio Goto was appointed Director, General Manager of Investment Management Division 2.
- On April 26, 2023, director Takayuki Noguchi stepped down.
- On April 26, 2023, auditor Rikiya Fujikubo stepped down.
- On April 27, 2023, Isao Jinno become an auditor.
Investment management decision-making organs
TRIM has established an Investment Committee to make decisions related to investment management.The committee consists of the President and CEO, general managers who proposed the motion, the General Manager of Finance and Administration Division and special members. Special committee membership is entrusted to third parties with no interest in TRIM or JPR. Currently, external real estate appraisers are selected.The committee is also attended by the Compliance Officer to enhance checks in view of legal compliance of agenda items.The InvestmentCommittee decides on matters related to investment management targets and policies of the investment corporation, matters related to operational planning and execution, and individual matters relating to the acquisition, sale or management of individual assets.
With regard to asset acquisition or sale, the procedure of having decisions made by the Investment Committee with special members in attendance is necessary, and decisions are only made after rigorous deliberations.Additionally, the Due Diligence Subcommittee—one of the committee’s subordinate organizations—convenes in advance to enhance the investigation of due diligence matters.Matters concerning transactions with interested parties require the agreement of all committee members including special members, reflecting the caution with which the committee makes its decisions.
The Compliance Subcommittee meets immediately before the meetings of each committee to examine whether the decisions made by each committee and their decision-making procedures are in violation of applicable laws and regulations, rules, the Articles of Incorporation of JPR, internal rules, etc. The Compliance Officer issues a report on the subcommittee’s findings, before the discussions of each committee.In addition, the Compliance Officer instructs the general managers of each division and department to submit proposals or reports to the Board of Directors of TRIM and the Board of Directors of JPR, according to the applicable rules and regulations, etc.
Decision-making bodies and method of resolution
| Organization | Method of Resolution |
|---|---|
| Board of Directors | A resolution is passed by a majority vote of Directors present |
| Investment Policy Committee | Resolutions are passed by a majority vote of the members (President and CEO, general managers of divisions responsible for investment management, General Manager of Finance and Administration Division, and special members (certified outside real estate appraisers). However, for matters concerning the acquisition or transfer of an asset where the transaction involves an interested party, the agreement of all members including special members is required. * If the other party to the transaction is an interested party in the acquisition or sale of assets, the resolution is resolved with the approval of all members. |
| Compliance Committee | Resolutions are passed when a majority of members (President and CEO, general managers of divisions responsible for investment management, General Manager of Finance and Administration Division, General Manager of Compliance Office and special members [independent outside experts who have attorney’s license]) are in attendance and agree. * All members must be in attendance for resolutions on interested party transactions and matters concerning forward commitment projects. |
The decision-making organs for property acquisitions are as shown below. Decisions on whether to acquire new investment properties are made via a stringent process.
- In addition to the above, there may be cases where approval by the Board of Directors and consent by JPR are required as designated in the Investmet Trusts Act.
- The chart shows the general decision-making mechanism. Depending on the nature of the proposed acquisition, the order of the procedures may change or certain meetings may not be held.
Asset Management Fee
| Jun. '23 Fiscal Period (Jan. - Jun. 2023) |
Dec. '23 Fiscal Period (Jul. - Dec. 2023) |
|
|---|---|---|
| Management fee 1 | 244 million yen | 248 million yen |
| Management fee 2 | 207 million yen | 209 million yen |
| Management fee 3 | 306 million yen | 251 million yen |
| Management fee 4・5 | 82 million yen | － million yen |
Effective January 2024 (fiscal period ending June 30, 2024), compensation on the basis of the sustainability index was introduced as part of the asset management fees which JPR pays TRIM. This is a mechanism for converting JPR’s achievement in the rate of reduction of GHG emissions, environmental certification, and GRESB assessment into an index, which will be used as a multiplier. Combined with the remuneration linked with gains on the sale of real estate assets which was also introduced this time, it is intended to improve alignment with unitholders’ interests.
Standards for calculating the asset management fees until the fiscal period ended December 31, 2023
| Item | Calculation of compensation |
|---|---|
| Management fee 1 (Asset-linked fee) |
Total acquisition price×0.05％ |
| Management fee 2 (Revenue-linked fee) |
Total revenue×1.2％ |
| Management fee 3 (Cash distribution-linked fee) |
Distributable base amount (including gains/losses on real estate sales, etc.)×3.8％×Rate of fluctuation of distributable base amount per unit |
| Management fee 4/5 (Acquisition/ Merger fee) (Sale fee) |
Sale price×0.5％ |
Standards for calculating the asset management fees introduced in the fiscal period ending June 30, 2024
| Item | Calculation of compensation |
|---|---|
| Management fee 1 (Asset-linked fee) |
Total acquisition price(Note 1)×0.045％＋fees based on sustainability indicators ((ⅰ) to (ⅲ) below) (ⅰ) GHG emissions: Total acquisition price×0.002％×a multiplier in Table 1 (ⅱ) Environmental certification: Acquisition price×0.001％×a multiplier in Table 2 (ⅲ) GRESB Assessment: Total acquisition price×0.001％×a multiplier in Table 3 |
| Management fee 2 (Revenue-linked fee) |
Total revenue×1.2％ |
| Management fee 3 (Cash distribution-linked fee) |
Distributable base amount (excluding gains/losses on real estate sales, etc.)×3.8％×Rate of fluctuation of distributable base amount per unit(Note 2) |
| Management fee 4 (Acquisition/ Merger fee) |
Acquisition price×1.0％ (0.5% when acquired from related parties) |
| Management fee 5 (Sale fee) |
Gain on sale of property×12.5％(Note 3) |
- Total acquisition price means the total amount of the acquisition prices of portfolio assets at the end of the immediately preceding fiscal period.
- The lower bound of the rate of variation of the basic distributable amount per unit shall be 80% and the upper bound shall be 120%.
- The amount obtained when the sale prices is multiplied by 0.5% shall be the minimum fee.
(Table 1)
| Multiplier | 1＋GHG (green house gas) emissions reduction rate |
|---|
(Table 2)
| Environmental certification(Note 1) | ★～★★★ (includes uncertified assets） |
★★★★ | ★★★★★ |
|---|---|---|---|
| Multiplier | 1.0 | 1.1 | 1.2 |
- The environmental certification comprises the DBJ Green Building certification, CASBEE for Real Estate, and BELS certification.
(Table 3)
| GRESB Assessment | ★ | ★★ | ★★★ | ★★★★ | ★★★★★ |
|---|---|---|---|---|---|
| Multiplier | 0.8 | 0.9 | 1.0 | 1.1 | 1.2 |
Transactions with interested parties
In the asset management of JPR, the interests of JPR may conflict with the interests of TRIM’s sponsor.To prevent JPR from suffering a loss in such cases, JPR and TRIM have organized a more rigorous system to prevent conflicts of interest than those provided for by laws and regulations.
●JPR’s system for preventing conflicts of interest
JPR’s Board of Directors’ Regulations include provisions prohibiting executive officers and supervising officers from taking part in any resolution at a meeting of the Board of Directors in which they have an interest.
●TRIM’s system for preventing conflicts of interest
For the transactions described in (1) to (6) below, between JPR and interested parties, the Compliance Committee (with membership consisting of the President & CEO, General Manager of the Finance and Administration Division, General Manager of the Investment Management Division 1, General Manager of the Investment Management Division 2, General Manager of the Compliance Office, and special committee members) meets once a month, in principle, to examine and verify the validity and rationality of the transactions in question.An outside attorney has been appointed as a special member of the Compliance Committee.
In order for a transaction approved by the Compliance Committee to be carried out, the priorconsent of JPR’s Board of Directors is required. Transactions are thus subject to multiple effective reviews before being carried out.
Through such internal and external checks such as examination, verification, and prior approval, we have established a strict monitoring system for transactions with conflicts of interest.
- (1)Acquisition of properties or assets from interested parties
- (2)Sale of properties or assets to interested parties
- (3)Consignment of property management to interested parties
- (4)Brokerage or agency by interested parties for transactions
- (5)Placement of orders for construction works (costing over 10 million yen) to interested parties
- (6)Leasing of properties to interested parties (Note)
- Leasing of properties to interested parties refers to cases where the increase or decrease in the amount of revision or fixing of rent is less than the average rent (excluding interested parties) for the property when (1) a new lease agreement is concluded with an interested party and (2) when the lease agreement is renewed.
Internal Audit
In line with its corporate philosophy commitments of "sincerity and responsibility to customers," "sincerity and responsibility to the workforce," "sincerity and responsibility to society" and "sincerity and responsibility to shareholders," TRIM sees being worthy of the trust of its stakeholders as fundamental to its activities and develops a framework for ensuring business is conducted appropriately in accordance with laws, regulations and rules and the Basic Policy for Internal Control established by Tokyo Tatemono, the sponsor.
TRIM has established Internal Audit Regulations, setting out basic matters concerning the internal audit framework and the planning, implementation, reporting and follow-up of internal audits to facilitate and increase the effectiveness of internal audit activities. Internal audits will be conducted all the business operations for corruptions, wrongdoings, or violation of ethical regulations, etc,. Under the President & CEO, the Compliance Office general manager is the person in charge of internal audits, and when an issue is discovered, the Compliance Office general manager, issues recommendations for improvement and instructions to the department in question. Audit results are reported to the Board of Directors of the asset management company.
Internal audits are carried out once a year. A framework for using the services of a specialist outside organization to evaluate certain audit operations has also been introduced.
Compliance and corporate ethics
Compliance and corporate ethics are indispensable for JPR's sustainable growth.
TRIM ensures assets are properly managed and operations are sound and proper. It will fulfill its responsibility under laws and regulations and meet the expectations of and live up to the trust of JPR, its unitholders, tenants and a variety of other stakeholders.
Basic Policy on Compliance by TRIM
In an effort to correctly recognize social and public duties within asset management for investment corporations, and maintain and enhance the trust of investors and society, Tokyo Tatemono Realty Investment Management, Inc. (TRIM) shall follow the following basic policy as a code of conduct for its officers and employees in order to ensure that every member of the company adheres to the utmost professional ethics, abides by laws and regulations, and implements sound business operations with integrity.
- In conducting operations of asset management for investment corporations, our officers and employees shall abide by public and voluntary regulations set forth in laws and regulations related to the relevant operations, government and ministerial ordinances, voluntary rules of the industry and internal rules on its own (hereinafter, the laws and regulations, etc.).
- Our officers and employees shall fully understand the purposes and substance of the laws and regulations stated in the above item and, when their actions, although seemingly compliant with the provisions of laws and regulations, etc., have deviated from the purposes and substance of the provisions, they shall strictly refrain from taking such actions.
- Our officers and employees shall recognize that progress in financial liberalization and greater relaxation of restrictions on asset management, etc. would increase and diversify risks as well as require business management to more closely observe the principle of self-responsibility. With such recognition, they shall endeavor to thoroughly implement risk management.
- Our officers and employees shall endeavor to enhance their asset management and risk management capabilities for implementing operations of asset management for investment corporations so as to maintain and enhance the trust imparted by investors and society. Each division and group of TRIM shall work to establish a system that helps reinforce the capabilities of its members in order to achieve the purposes of such operations.
- Our officers and employees shall recognize that securing fair and free competition is indispensable for the continuity and sound development of TRIM, and shall avoid any behavior that hampers fair competition, such as industry meetings to restrict competition, consent with other companies intended to restrict trade, restraint of business activities of suppliers or client companies by taking advantage of a superior position in business, and unjust discrimination in transaction terms and conditions.
- Our officers and employees shall fully recognize the importance of protecting personal information and, when handling customer data and other internal information possessed by the company, implement appropriate and stringent control of such information in accordance with the internal rules.
- Whether business or personal, we will oppose with firm resolve any demand, including provision of donations and contributions and subscription of information magazines as well as provision of money and other articles, from anti-social forces that threaten the order and safety of civil society.
- We will prevent any laundering of money generated from criminal behavior.
- We will work to utilize the company's assets and expenses fairly and efficiently, and will not make inappropriate, unjust or inefficient use of them, such as confusing business and private use and spending for unnecessary items or matters.
- We will not engage in any acts of bribery involving Japanese or foreign public employees or persons equivalent thereto, such as offering or promising to offer them money or any other tangible or intangible benefits, directly or indirectly, to acquire an illicit gain from business perspectives. We will not engage in any other acts of corruption such as an embezzlement, fraud or deceit.
- We will maintain a transparent and healthy relationship with government and administrative bodies and refrain from making political donations in principle.
- We will abide by the employment regulations, labor agreements and other rules to secure a sound, efficient and comfortable workplace environment. Moreover, our officers and employees shall not engage, among themselves, in 1) lending money or similar behavior and 2) sending courteous gifts beyond the extent deemed appropriate under normal social conventions.
- We understand that it is unacceptable, by the standards of society, to engage in discriminatory behavior based on nationality, sex, gender identity, sexual orientation, birthplace, religion, belief, illness or physical features, or sexual harassment. In addition, we will never permit child or forced labor in any country or region.
- Fully understanding that we are involved in business of a highly public nature, we will maintain efforts to enhance our ethical view in our social life and act with a good sense of social being.
Organization to Promote Compliance
TRIM promotes compliance through the following organization.
- At present, the Compliance Committee has called on an outside attorney as its special member.
- In an effort to strengthen its compliance system, TRIM receives advice from outside advisers with regard to the enhancement of internal control.
- The Compliance Officer is authorized to suspend the execution of actions that conflict with relevant regulations including laws regulations and internal rules.
Conducting compliance and corporate ethics training
TRIM periodically provides training for all of its officers and employees including contract employees so that they can be informed on matters of compliance and corporate ethics. TRIM has been taking steps to instill an awareness of legal compliance and corporate ethics, such as making training generally compulsory for all officers and employees and giving them questionnaires and tests after training sessions to ensure their understanding (note that TRIM does not have part-time or unsupervised contract employees).
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| Number of times | 12 | 8 | 8 | 8 | 11 |
| Participation rate (%) | 100 | 99.1 | 97.7 | 98.6 | 98.4 |
Placement of helplines
The Tokyo Tatemono Group has established the Tokyo Tatemono Group Helpline, a common helpline used by the Group's employees. The helpline helps prevent compliance violations, including violations of laws and regulations, bribery, wrongdoing and harassment. To address violations as quickly as possible, the helpline receives whistleblower reports and requests for consultation. All employees (including part-time employees) and former employees of the Group, temporary employees dispatched to the Group and employees of outsourcing companies may use the helpline anonymously or using their own name. In accordance with the spirit of the Whistleblower Protection Act, the whistleblower’s privacy is protected. The whistleblower will not be treated detrimentally because of their whistleblower report.
Whistleblower reports will be reported to Tokyo Tatemono’s Legal & Compliance, and the departments of TRIM and other Group companies responsible for the reported matters will investigate the matters and check facts. If any major problems, such as compliance violations, are identified as a result of these inspections, rigorous measures will be taken, including measures to correct the situation and prevent recurrence, in accordance with TRIM’s compliance regulations. Tokyo Tatemono’s Risk Management Committee will be convened to address more serious problems.
Tokyo Tatemono Group Compliance Codes of Conduct
System to protect whistleblowers
TRIM has implemented Whistleblowing Regulations in compliance with the Whistleblower Protection Act. These regulations set forth matters related to reporting wrongdoing by whistle-blowers who find it. The objective of these regulations is to enhance the organization’s ability to rectify issues and minimize losses. To properly protect whistle-blowers, these regulations set out the following rules.
・The Company shall properly protect whistleblowers etc. and prohibit the detrimental treatment of them due to reporting or cooperation in investigations. The Company shall take appropriate measures to prevent their detrimental treatment.
・The employees, etc. must not treat whistleblowers, etc. detrimentally due to reporting or cooperation in investigations. They shall not attempt to identify whistleblowers, etc.
・The people handling a whistleblower report or who have knowledge of its contents are required to maintain confidentiality and must not disclose it to any third party without a justifiable reason.
・If any violations are found, the Company shall promptly take the necessary corrective, remedial and preventive actions and shall provide guidance, instructions, punishments, etc. in accordance with regulations.
If anyone retaliates against whistleblowers or people who cooperate in investigations, they shall be in violation of the regulations and subject to strict punishment. The Company provides ongoing training to ensure that this system is fully understood and implemented and to detect and resolve any problems as quickly as possible.
Number of consultations and reports at TRIM (from April to March of the following year)
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| Number of contacts | 0 | 1 | 0 | 1 | 1 |
Prevention of Corruption and Bribery
The Tokyo Tatemono Group’s Compliance Charter says, “We adhere to laws, regulations, and other rules and engage in fair, sound corporate activities.” To realize the promise of the charter, the Group has established the Tokyo Tatemono Group Bribery Prevention Guidelines to ensure its practice of fair and sound corporate activities in compliance with laws and regulations. Based on these guidelines, it has been working to prevent bribery, corruption and other similar acts. Specific example initiatives include the provision of necessary training programs to ensure that the guidelines for action specified in the Compliance Manual and Tokyo Tatemono Group Bribery Prevention Guidelines are fully understood and implemented.
TRIM’s policy for the prevention of corruption and bribery (Article x and xi of the Basic Policy on Compliance) is shown below.
- We will not engage in any acts of bribery involving Japanese or foreign public employees or persons equivalent thereto, such as offering or promising to offer them money or any other tangible or intangible benefits, directly or indirectly, to acquire an illicit gain from business perspectives. We will not engage in any other acts of corruption such as an embezzlement, fraud or deceit.
- We will maintain a transparent and healthy relationship with government and administrative bodies and refrain from making political donations in principle.
In addition, TRIM's Compliance Manual and other rules stipulate that workforce members shall not engage in bribery, money laundering or other wrongdoing. Any workforce member engaging in wrongdoing will be severely punished. Accordingly, follow-up checks on entertainment and the receiving of gifts in dealings with business partners must are conducted to make sure that there are no examples of inappropriate conduct. Any inappropriate conduct is dealt with through appropriate measures in accordance with regulations.
To date, TRIM has not incurred any fines or penalties related to corruption.
| Item | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Number of cases of wrongdoing and corruption | － | － | － | － | － |
| Number of punishments and dismissals due to wrongdoing and corruption | － | － | － | － | － |
| Expenses related to fines, penalties and settlements resulting from wrongdoing and corruption | － | － | － | － | － |
| Amount of political donations | － | － | － | － | － |
Prevention of Transactions with Anti-Social Forces
TRIM shall not have any relations whatsoever with anti-social activities and anti-social forces that threaten the order and safety of civil society and hamper economic activities. Any unjust demand from anti-social forces, including the provision of donations and contributions as well as the provision of money and other articles will be firmly opposed.
Moreover, TRIM has established "rules for facing anti-social forces" with the aim of preventing the company from being damaged by anti-social forces and to help it perform its social responsibilities. Under the rules, TRIM endeavors to eliminate anti-social forces through constant, close coordination with such external specialized institutions as the police and lawyers.
Risk Management
To increase unitholder value, we have established an effective management system and are working to ensure thorough and continuous monitoring to appropriately manage risks that may affect our operations. Our policy is to endeavor to strengthen risk management to respond effectively and accurately to recent changes in social conditions and increasingly diverse and complex risks.
JPR's risk management system
It is stipulated that JPR’s executive officers shall hold Board of Directors meetings at least once every three months, and in reality, meetings are held roughly once a month as a rule.In addition to matters stipulated by laws and regulations, the Board of Directors also makes detailed reports on certain transactions with interested parties, as well as the state of JPR’s operations and execution of business by TRIM.Through these procedures, the supervising officers, who are in a position that is independent of JPR and TRIM stakeholders, maintain a system that allows them to accurately monitor the state of business execution by executive officers.
JPR has the right to receive reports from TRIM and to examine TRIM’s account books and other documents. By exercising these rights, JPR maintains a structure that enables it to monitor TRIM’s execution of operations.In addition, JPR strives to prevent activities such as insider trading by officers through the establishment of insider trading regulations.
TRIM's risk management system
As the organization and framework for engaging in risk management, TRIM positions the President and CEO as the ultimate person in charge of risk management, the General Manager of Compliance Office as the person responsible for overseeing risk management (The Compliance Office is the department responsible for overseeing risk management) and the general managers of each division, department and office as risk management officers.
To enhance the effectiveness of risk management, a Risk Management Committee has been established as a deliberative body regarding risk management. In principle the committee convenes quarterly. The committee is chaired by the President and CEO, and its members comprise the General Manager of Investment Management Division 1, General Manager of Investment Management Division 2, General Manager of Finance and Administration Division, General Manager of Compliance Office, and an outside attorney as a special member.
The Risk Management Committee mainly deliberates over the following matters.
- Formulation, revision and elimination of basic policies, regulations and internal rules on risk management
- Development of the organizational structure for risk management
- The formulation and modification of risk management plans
- The identification, evaluation, handing, monitoring and improvement status of risk management
- Responses to newly emerging risks
- Enhancing the level of regular risk management practices
- Rasing awareness of risk management among officers and employees
- Other matters related to risk management
Details, progress, and results of the committee's deliberations are reported to the Board of Directors.
As a rule, TRIM monitors and manages operation- and management-related risks through multiple verification systems at different levels.
-
Compliance with operation guidelines
TRIM has established portfolio operation standards and investment standards in its operation guidelines. It strives to manage risks relating to real estate and real estate trust beneficiary rights by adhering to such guidelines. -
Clarification of the decision-making process
In addition to clarifying the decision-making process for important matters related to the investment
corporation’s asset management by establishing the Investment Committee rules, we strive to manage risks by establishing objective business procedures, such as preparing administrative procedures for real estate surveys, acquisitions, operation management, and other business processes. -
Preventing conflicts of interest
TRIM has established compliance regulations and compliance manuals to help ensure compliance and prevent any conflicts of interest. Prior to the Investment Committee, the Compliance Subcommittee checks compliance with laws and regulations, and the Compliance Committee confirms whether or not there are any conflicts of interest in transactions with interested parties, to prevent the risk of legal violations and conflicts of interest. -
Prevention of insider trading and management of forward commitment
TRIM aims to prevent activities such as insider trading by its officers and employees through the establishment of insider trading regulations. TRIM has established a forward commitment manual, and when making forward commitments, it strives in particular to manage risk through a process involving careful reviews and thorough deliberation.
Information security
To continuously conduct its business securely, TRIM strives to make appropriate use of information and prevent unauthorized access and information loss/leakage. In managing information, it implements safety measures to counter various threats (damage, accident, mishandling, unauthorized use, destruction, theft, and leakage). It has also put recovery measures in place in the event that problems occur and has established a contingency plan for dealing with any damage.
TRIM has also made security management preparations and has established a department to oversee information management. This department ensures the validity of information management and protection through regular inspections and has developed safety measures and steps to be taken if problems occur.