Governance
Organization of CRE REIT
CRE REIT has the general meeting of unitholders, executive director, supervisory directors, the board of directors, and accounting auditor as its organs. The executive director executes the business of the CRE REIT and represents CRE REIT. The supervisory directors supervise the executive director in the execution of their duties. The board of directors, which consists of the executive director and the supervisory directors, makes important decisions concerning the execution of certain operations of CRE REIT, such as approving the execution of certain important duties by the executive director and approving financial statements and other documents. Furthermore, CRE REIT has an accounting auditor who conducts accounting audits. All of these executive director, supervisory directors, and accounting auditor are elected at the general meeting of unitholders.
Board of Directors
Reason for Election and Attendance Rate of Directors
| Position | Name | Gender | Initial appointment date |
Reason for election | Attendance rate of board (Note) |
|---|---|---|---|---|---|
| Executive Director | Tsuyoshi Ito | Male | May 2016 | Mr. Tsuyoshi Ito is expected to execute his duties from a broad perspective based on his extensive knowledge and experience in real estate management. | 100.0% |
| Supervisory Director | Kensuke Isobe | Male | May 2016 | Mr. Kensuke Isobe has no vested interest in CRE REIT and the Asset Manager, and is expected to supervise the management from a broad perspective based on his knowledge and experience as an attorney at law. | 100.0% |
| Supervisory Director | Kenichi Nakamura | Male | May 2016 | Mr. Kenichi Nakamura has no vested interest in CRE REIT and the Asset Manager, and is expected to supervise the management from a broad perspective based on his knowledge and experience as an expert of accounting and tax. | 100.0% |
| （Note） | Attendance rate is based on 11 board meetings held from January 2023 to December 2023. |
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Personal History of Directors
Please refer to “Overview of CRE Logistics REIT – Corporate Profile”
Skills Matrix of Directors
| Position | Name | Real estate / Asset management |
Legal / Compliance |
Accounting / Tax |
Finance |
|---|---|---|---|---|---|
| Executive Director | Tsuyoshi Ito | ○ | ○ | ||
| Supervisory Director | Kensuke Isobe | ○ | |||
| Supervisory Director | Kenichi Nakamura | ○ |
Director’s Remuneration
The criteria and timing of payment of the director’s remuneration of CRE REIT are as follows.
| Position | The criteria and timing of payment |
|---|---|
| Executive Director | CRE REIT shall pay monthly remuneration to executive directors at an amount decided by the board of directors, up to an amount equivalent to 250,000 yen per month for each executive director, no later than the last day of the relevant month. |
| Supervisory Director | CRE REIT shall pay monthly remuneration to supervisory directors at an amount decided by the board of directors, up to an amount equivalent to 250,000 yen per month for each executive director, no later than the last day of the relevant month. |
The actual amount of remuneration is as follows.
| Position | Name | Total amount of remuneration (Thousand yen) |
|
|---|---|---|---|
| FP 2023/ 6 | FP 2023/ 12 | ||
| Executive Director | Tsuyoshi Ito | 1,500 | 1,500 |
| Supervisory Director | Kensuke Isobe | 1,500 | 1,500 |
| Supervisory Director | Kenichi Nakamura | 1,500 | 1,500 |
Accounting Auditor
| Company name | Continuing auditor tenure | |
|---|---|---|
| Accounting Auditor | PricewaterhouseCoopers Japan LLC | From May 2016 to the present |
Asset Management Fee
CRE REIT and the Asset Manager amended Articles of Incorporation at the general meeting of unitholders held on September 28, 2022 and revised fee structure from the fiscal period ending June 2023 in order to increase the linkage with unitholder interests. By decreasing the rate of management fee 1 based on total asset and unifying management fee 2 based on income before income taxes and management fee 3 based on earnings per unit, the linkage with earnings per unit has increased.
Asset Management Fee Structure
| Management Fee 1 | Total assets × 0.3% |
|---|---|
| Management Fee 2 | Income before income taxes × Earnings per unit × 0.0019% |
| Acquisition Fee | Acquisition cost × 1.0% (0.5% in case of transactions with interested party) |
The Actual Amount of Fee
| Total amount of fee (Thousand yen) | ||
|---|---|---|
| FP 2023/ 6 | FP 2023/ 12 | |
| Management Fee 1 | 226,594 | 245,376 |
| Management Fee 2 | 138,682 | 165,513 |
| Total Management Fee | 365,277 | 410,889 |
| Acquisition Fee | 112,530 | ― |
Compliance
Basic Policy on Compliance
The Asset Manager shall strictly comply with laws and regulations, internal regulations, etc., strive to maintain sound and appropriate business operations and ensure the trust of customers (including the unitholders of CRE REIT which the Asset Manager provides asset management services. The same shall apply hereunder).
From the perspective of ensuring appropriate business operations, the Asset Manager shall establish internal regulations that provide for basic policies on legal compliance, practical implementation plans, a code of conduct, etc. It shall emphasize compliance without relying heavily on revenue targets, provide internal education to executives and employees, explain its significance to them and examine the status of compliance. If any inappropriate treatment, etc. is identified, it shall review internal regulations and devise necessary measures, including the revision of compliance regulations, to prevent the reoccurrence of similar incidents.
If an incident of misconduct occurs, it shall promptly be reported to the compliance department, the executives and the regulatory authorities in accordance with the compliance regulations. Remedial measures ensuring the appropriate functioning of internal checking and the prevention of reoccurrence shall be examined and responsibilities shall be clarified.
Compliance Initiatives
At the Asset Manager, the board, the president, the compliance department, the compliance officer, and the compliance committee determine and verify various matters concerning compliance under their respective authority and responsibility.
The Asset Manager has established a "Compliance Manual" that defines the compliance-related principles, as well as internal regulations to control major risks related to compliance. The Asset Manager strives to prevent problems by maintaining and thoroughly informing all executives and employees through periodic training etc. In addition, the Asset Manager has established monitoring and consultation systems, including internal audits and whistle-blower system, to detect and correct problems as early as possible.
The status of these initiatives is reported to the board and used for periodic risk assessments.
Appropriate Management of Conflict of Interests
In managing the assets of CRE REIT, the Asset Manager shall appropriately identify and manage interested parties in order to avoid customers’ interests from being harmed by acts involving a conflict of interest. Regarding transactions with interested parties, the Asset Manager shall follow strict screening procedures in accordance with prescribed rules.
When reviewing a transaction with interested parties, the compliance committee shall be the first to examine a transaction with interested parties. The committee shall ensure objectivity and confirm that there are no problems regarding the legality and fairness of the transaction. Only after the matter is approved and a resolution passed by the compliance committee will the matter be submitted to the investment committee and the board of directors for discussion and resolution. Moreover, these transactions shall be contingent upon the prior consent of CRE REIT based on the approval of the board of directors of CRE REIT, which includes lawyers and certified public accountants as supervising officers. In this manner, transactions with interested parties may be implemented after strict screening procedures.
Anti-Bribery and Corruption
The Asset Manager has established a "Compliance Manual" that defines the compliance-related principles and strives to prevent such conduct by stipulating the severance of relationships with antisocial forces, moderate entertainment and gifts, prohibition of acts involving a conflict of interest, prohibition of insider trading, etc.
When a compliance violation or suspicious fact is recognized, it is prescribed to report that matter immediately to the compliance officer, and when the compliance officer deems it must be promptly reported to the compliance officer, who will take appropriate action if deemed necessary in light of laws, regulations, and other rules and regulations.
The Asset Manager conducts compliance training for all full-time executives and employees (including contract employees, etc.) four times a year to alert them to the prevention of fraud.
Internal Audits
The Asset Manager has established "Internal Audit Regulations," and the manager of the internal audit office is responsible for internal audits, which are conducted at least once a year, covering all organizations of the Asset Manager and the overall operations of the Asset Manager.
The internal audit manager compiles the audit report promptly after the completion of the audit, reports it to the board, and communicates the audit results to the responsible person in each department. The responsible person in each department must prepare an improvement plan for matters suggested as a result of the internal audit and submit it to the manager of the internal audit, who reports the contents of the plan to the board and the executives and employees of the Asset Manager.
Whistle-Blower System
In accordance with the Whistle-Blower Protection Act, all executives and employees (including contract employees, etc.) of the Asset Manager may report or consult with the reception desk set up in the compliance department when they learn of or have suspicions about problematic activities, such as organizational or individual violations of laws, regulations, or internal rules at the Asset Manager. The Asset Manager strives for early detection and correction of fraud, etc., and thereby strengthens compliance management.
Whistle-blowers are protected by prohibitions against prejudicial treatment, etc. in accordance with the Whistle-blower Protection Act and internal regulations.
If an investigation or an evaluation reveals a violation of laws, regulations, internal rules, or other problematic conduct, the Asset Manager will promptly take corrective and recurrence-prevention measures.
Independence of the Asset Manager
The Asset Manager was established as an independent asset management company, and all full-time executives and employees are employed by the Asset Manager.
CRE is not involved in their recruitment or personnel evaluation.
| Category | Number of persons | |
|---|---|---|
| Of which, employees seconded from CRE |
||
| Full-time executives | 2 | ― |
| Employees | 16 | ― |
| Total | 18 | ― |
| （Note） | As of December 31, 2023. |
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