Internal Growth Policy

In the selection of tenants, efforts shall be made to select prime tenants by utilizing property management companies, along with considering appropriate leasing terms and conditions, etc. based on identifying market trends through such means as regularly obtaining market reports from external organizations.
Conclusions of lease agreements with tenants shall be comprehensively determined by Tokyu REIM, which has been entrusted with investment management by TOKYU REIT, by conducting an investigation of creditworthiness and for any affiliation with antisocial forces and by taking into consideration the rent level, deposit amount, lease agreement period, type of contract and other leasing terms and conditions, etc. in accordance with internal rules, etc., including the investment management plans that are decided at meetings of Tokyu REIM’s Board of Directors. In addition, regarding creditworthiness, tenants’ financial situation, corporate size, capital relationship, etc. shall be considered and, in the case of retail properties, whether the business type/category matches the location and property size and whether it is in harmony with other tenants shall also be taken into consideration.
Furthermore, a condition shall be that leasing terms and conditions exceed the contract terms and conditions provided in the investment management plans. In addition, in cases where taking into the consideration market trends, tenants’ creditworthiness, contract area, vacancy rate, etc. General Manager, Portfolio Management concludes reasonably that contracting is deemed to be ideal even if the terms and conditions fall short of the contract terms and conditions stated in the investment management plans, the decision shall be made by resolution of Tokyu REIM’s Board of Directors after going through the process similar to that for formulation and amendment of the plans.
In addition, cases of property leasing to related parties shall be based on appropriate leasing terms and conditions and require prior approval of TOKYU REIT’s Board of Directors.

With an aim to maximize asset value from a medium- to long-term perspective, TOKYU REIT shall conduct appropriate risk management while striving to maintain/improve market competitiveness of the property.

（a）Leasing operations

In an aim to maximize the cash flows of each property from a medium- to long-term perspective, TOKYU REIT shall strive to enhance tenant satisfaction by implementing the following.

• Tenant marketing by assessing market trends
• Duly ascertaining tenant needs by establishing trust relationships with tenants

（b）Management operations

TOKYU REIT shall strive to reduce real estate management cost, etc. and maintain/enhance asset value by conducting appropriate and efficient management operations.

（c）Repairs and maintenance/capital expenditure

TOKYU REIT shall conduct repairs and maintenance, or expend capital after having prepared an appropriate efficient repair and maintenance plan for each property

（d）Selection of property management companies

In principle, TOKYU REIT shall select property management companies from Tokyu Corporation taking into account their strength in tenant marketing, which is based on their familiarity with local areas, and their information network with respect to tenants, as well as cost reductions due to economies of scale. However, TOKYU REIT shall not be hindered from selecting companies other than Tokyu Corporation as the property management company, depending on the respective property’s characteristics, continuity of management, or other factors.
In the said case, PM outsourcing terms and conditions with Tokyu Corporation, etc. and other related parties shall be pursuant to Rules on Related-Party Transactions.

（e）Renewal of property management contracts

1. Performance checks shall regularly be conducted by the asset management company. In the event the company does not meet criteria set forth by the asset management company, the contract shall not be renewed.
2. With regards to the rates of fees at the time of renewal, their adequacy is verified in advance by comprehensively taking into account their operations, marketability of the fee, etc. In the said case, PM contract renewal terms and conditions and such with Tokyu Corporation, etc. and other related parties shall be pursuant to Rules on Related-Party Transactions.

（f）Placement of insurance such as non-life insurance

In order to avert the risk of buildings receiving damage as a result of disasters, accidents, etc., earnings decreasing, or receiving requests for indemnity from a third party, TOKYU REIT shall, in principle, place fire insurance, rent insurance and liability insurance on real estate it owns.Earthquake insurance enrollment shall be determined by comprehensively taking into account the insurance premium, deductible, cash reserve, etc.

TOKYU REIT has established an “Environmental Policy” and recognizes the importance of environmental consideration in its property investment and management. Based on the awareness of social corporate responsibility, TOKYU REIT continues to work towards reducing environmental impact and helping transition to a sustainable society.

A.Implementation of Environmentally-friendly Operation

1. Reduce Energy Consumption and Green House Gas (“GHG”) Emissions
2. Reduce Water Consumption and Waste
3. Pursue Health, Safety and Well-Being

B.Management Structure to Ensure Environmental Consideration

1. Management Structure as a Responsible Corporation
2. Collaboration with our stakeholders

Participating in the GRESB (Note 1) Real Estate Assessment since 2014, TOKYU REIT acquired “Green Star” every year since 2015. Furthermore, TOKYU REIT acquired CASBEE (Comprehensive Assessment System for Built Environment Efficiency) (Note 2) for 17 properties, BELS (Building-Housing Energy-efficiency Labeling System) (Note 3) for 2 properties, LEED (Note 4) for 1 property and JHEP (Japan Habitat Evaluation and Certification Program) (Note 5) for 1 property at the end of March 2024. 
Please refer to this page, about more information on TOKYU REIT’s Environmental Certification.

(Note 1) GRESB is an annual benchmarking assessment to measure ESG (Environmental, Social and Governance) integration of real estate companies and funds, as well as the name of organization which runs the assessment. It was founded in 2009 by a group of major European pension funds who played leading roles in launching Principles for Responsible Investment (PRI).
(Note 2) An assessment and rating method of the comprehensive environmental performance of buildings developed by the Institute for Built Environment and Carbon Neutral for SDGs (IBECs) under the leadership of the Ministry of Land, Infrastructure, Transport and Tourism. It is a system for comprehensively assessing the quality of buildings not only from the aspect of environmental consideration such as energy saving and the use of materials with little environmental burden but also of consideration to the interior comfort and scenic aesthetics.
(Note 3) The third-party certification system to rate houses and buildings in accordance with duty to make effort to label energy saving performance in the Act on Improving Energy Consumption Performance for Architectural Structures. Houses and buildings are evaluated based on the value of BEI (Building Energy Index) derived from the primary energy consumption based on the government-designated energy consumption performance standard of architectural structures.
(Note 4) An environmental performance assessment system for built environments (buildings and urban environments) developed and implemented by the non-profit organization United States Green Building Council (USGBC), with assessment for certification conducted by Green Business Certification Inc. (GBCI). This system certifies buildings that have a positive impact on people’s health and promote renewable clean energy while reducing costs and resource consumption.
(Note 5) A version of HEP (Habitat Evaluation Procedures – a technique for quantitatively assessing environments as living environments for creatures). This environmental assessment method developed by the United States federal government was revamped by the Ecosystem Conservation Society – Japan to make it suitable for Japan and established in 2008. It is a unique certification system in Japan that objectively and quantitatively assesses and certifies the extent to which a project contributes to preserving biodiversity and enables it to be visualized.