• Corporate Governance
• Compliance
• Risk Management

Corporate Governance

SLR delegates asset management to Sumisho Realty Management (hereinafter referred to as the “SRM"). Recognizing that the business of managing the assets of SLR is tantamount to managing the assets of unitholders of SLR, SRM verifies compliance with laws and regulations and establishes rules for carrying out asset management decision-making procedures, to execute business operations properly and fairly.

Structure

Organization of SRM

Name of committee		Overview
Board of Directors		Matters concerning shares and the General Meeting of Shareholders Matters concerning organization and personnel Matters concerning finance and accounting Disposal and receipt by transfer of important properties, and loan of large amounts Matters concerning the Directors, Board of Directors and Executive officers Other execution of important business Matters delegated to the Board of Directors based on resolutions adopted by　shareholders’ meetings Other matters stipulated in laws and regulations or the Articles of Incorporation, or matters deemed necessary by the Board of Directors or President & CEO
	Members	Chairperson：President & CEO Members：All directors
	Frequency of meetings	At least once every three months
J-REIT Investment Committee		Enactment, revision or repeal of the J-REIT Investment Committee Rules Enactment or revision of the Asset Management Guidelines, which are the basic policy for management of the assets of the Investment Corporation Enactment or revision (excluding minor changes) of the Asset Administration Plan for the Investment Corporation stipulated in the rules of the Japan Investment Trusts Association Enactment or revision of the annual management and administration plan of the Investment Corporation Decisions on the acquisition or sale of managed assets by the Investment Corporation and changes to such decisions Decisions on the lease (excludes lease with annual rent payments of 100 million yen or less; also excludes the extension or renewal of such lease agreements (where the rent before and after extension or before and after renewal is the aforementioned amount or less) and administration (excludes administration relating to urgent repair work and transactions with an order amount of 30 million yen or less) of the managed assets of the Investment Corporation not stipulated in the annual management and administration plan and changes to such decisions Matters concerning the fund procurement of the Investment Corporation Matters concerning enactment of the basic distributions policy of the Investment Corporation and changes thereto Deliberations and resolutions on transactions between the Investment Corporation and interested parties stipulated in the Related Party Transaction Rules of the Asset Management Company Other important matters for making investment decisions on behalf of the Investment Corporation Other matters deemed necessary by the Committee Chairperson in relation to investment corporation asset management business
	Members	Chairperson：President & CEO Members：J-REIT Business Dept. GM, REIT Management Dept. GM, Corporate Division GM, Compliance Dept. GM and outside member (The outside member shall be a real estate appraiser with no interest in the Asset Management Company. An alternate outside member may be elected where necessary and, if an accident or some other unavoidable reason prevents the outside member from attending the committee meeting, the alternate outside member shall serve on the Committee in place of the outside member.)
Compliance & Risk Management Committee		Enactment and revision of Compliance Manual Enactment and revision of Compliance Program Enactment, revision or repeal of Compliance Regulations, Risk Management Regulations and other internal rules adopted by resolution of the Compliance & Risk Management Committee Approval for transactions with interested parties for which approval of the Compliance & Risk Management Committee is considered necessary in accordance with the Related Party Transaction Rules of the Asset Management Company Matters resolved by the J-REIT Investment Committee which the Compliance Dept. GM has judged to pose a problem in relation to compliance and which might pose a problem in relation to compliance or risk management Decisions on improvement measures and preventative measures to be taken in response to acts which are or might be inappropriate in relation to compliance or risk management, and revisions thereto Approval of measures to deal with serious complaints or accidents Other matters about which the Compliance Dept. GM has raised doubts in relation to compliance or risk management and which may pose a problem in relation to compliance or risk management Other matters considered to require approval of the Compliance & Risk Management Committee in accordance with internal rules Important compliance-related matters equivalent to the foregoing
	Members	Chairperson：Compliance Dept. GM Members：President & CEO, Corporate Division GM, outside member(The outside member shall be an attorney-at-law with no interest in the Asset Management Company.) An alternate outside member may be elected where necessary and, if an accident or some other unavoidable reason prevents the outside member from attending the committee meeting, the alternate outside member shall serve on the Committee in place of the outside member.
	Frequency of meetings	At least once every three months

Criteria / Reasons for election

In selecting candidates for director, appointments are made based on the following election ground, through a resolution of the General Meeting of Unitholders, on the assumption that they do not fall under any of the grounds for disqualification set forth in various laws and regulations including the Investment Trust Act (Articles 98 and 100 of the Investment Trust Act, Article 244 of the Ordinance for Enforcement of the Investment Trust Act).

As of August 1, 2024

Compensation, etc. of an Executive Director and Supervisory Directors

The compensation of an executive director and supervisory directors is an amount not exceeding 500,000 yen a month per executive director and 500,000 yen a month per supervisory director, with the specific amounts determined at Board of Directors meetings.

Asset Management Fees for the Asset Management Company

Management fees for the asset management Company comprise asset management fee 1, asset management fee 2, asset management fee 3, acquisition fee, transfer fee and merger fee. How to calculate asset management fees are following.

Structure of asset management fees	Calculation methods
Asset management fee 1	AUM ×0.2% (maximum)
Asset management fee 2	NOI ×5.0% (maximum)
Asset management fee 3	Profit before tax (before asset management fee) × EPU (Profit before tax (before asset management fee)) per unit ×0.002%(maximum)
Acquisition fee	Acquisition price ×1.0% (maximum)
Disposition fee	Disposition price × 1.0% (maximum)
Merger fee	Appraisal value of assets to be succeeded × 1.0% (maximum)

Rotation Rule

In order to avoid conflicts of interest with private REIT and private funds that SRM is entrusted to manage, the "rotation rule" is adopted for information on logistics facilities and industrial real estate, in which SLR is the first to consider acquiring such properties.

Employee investment unit ownership program

SRM introduced an investment unit ownership program for its employees for SLR’s investment units. This program further the interests of SLR’s unitholders with the employees of SRM.

Same-boat investment in the Investment Corporation by Sumitomo Corporation

Through same-boat investment by Sumitomo Corporation, SLR seeks to further align the interests of the Sumitomo Corporation with those of unitholders and aims to improve unitholder value based on a relationship of trust with Sumitomo Corporation. As of November 30, 2024, Sumitomo Corporation holds 24,500 units (approximately 3.36%) of SLR's investment units.

Compliance

Basic Policy for Compliance

Sumisho Realty Management Co., Ltd., the asset management company, has adopted the position and management structure below as it aims to completely comply with all applicable laws and regulations.
SRM understands the importance of SLR's asset management business, where SRM manages the assets of SLR, as a business managing the funds of SLR's unitholders. To build an appropriate management structure, SRM established the Compliance Department in charge of compliance matters and appointed a Head of Compliance responsible for supervising compliance matters, thereby ensuring the effectiveness of the internal supervision of compliance in the other departments. In addition, SRM has established the Compliance & Risk Management Committee as a part of its establishment of a multilayered compliance system.

Compliance structure

Organizations	Major roles
Board of Directors	The Board of Directors will seek full compliance as the administrative body ultimately responsible for the execution of business, receive reports on matters approved by the Compliance & Risk Management Committee, etc., and adopt resolutions regarding important compliance matters.
Compliance & Risk Management Committee	The Compliance & Risk Management Committee carries out the tasks set out in the Compliance & Risk Management Committee Regulations in cooperation with the Board of Directors, the Head of Compliance, and the Compliance Department.
The Head of Compliance	As the person responsible for supervising the compliance matters of SRM, the Head of Compliance will seek to establish a compliance system and foster an awareness of legal compliance at SRM. To that end, the Head of Compliance will always monitor compliance with laws and regulations in the execution of business in SRM's management of assets for SLR and will monitor and oversee compliance with laws and regulations in the day-to-day execution of business.
Compliance Office	The Compliance Department is in charge of compliance matters at SRM.

Establishment and Implementation of a Compliance Manual

SRM has created a Compliance Manual to ensure compliance.
The Compliance Manual will be revised as necessary. SRM will check the need for revisions to the Compliance Manual, such as revisions in response to new or revised laws or regulations, and will revise the Compliance Manual as needed. Following any revision of the manual, SRM will make the revision known to all officers and employees.

Internal Reporting System

When compliance issues arise, they will be reported and handled through the established channels. In addition to the normal established channels, the SRM has established a system that enables employees who notice issues to report them directly to a contact point when the established channels are difficult for some reason.

Responding to Compliance Violations

Article 12 of SMR's Compliance Regulations stipulate that if officers and employees, etc. become aware of any violation of laws or regulations or an action that is likely to violate laws or regulations at SMR, they shall report the violation or action immediately to the Head of Compliance or the Compliance Department.

Response to Anti-Social Forces

SRM has established regulations banning all relationships with anti-social forces. The regulations stipulate that the Compliance Department shall supervise the establishment of a system that prohibits all relationships with anti-social forces and deals with anti-social forces at SRM and that the Head of Compliance has supervisory responsibility over this. The regulations also stipulate that SRM shall provide internal training to officers and employees on guidelines for handling anti-social forces and the management of information about anti-social forces to increase their awareness.
In addition, SRM has declared its basic policy on anti-social forces to prohibit all relationships with anti-social forces. SRM strives to develop a system that prohibits all relationships with anti-social forces. It has established regulations on Anti-Money Laundering and Combating Financing of Terrorism and the reporting of suspicious transactions to set standards for the verification of customers' identities at the time of transactions, the preservation of transaction records, and the reporting of suspicious transactions under the Criminal Proceeds Transfer Prevention Act, the Order for Enforcement of the Act, and the Ordinance for Enforcement of the Act.

Anti-Corruption

As a member of the Sumitomo Corporation Group, SRM is engaged in initiatives to prevent bribery when entertaining business partners or giving gifts.
Specifically, we prohibit bribery and detail the prevention of illicit payments to foreign government officials in the Compliance Manual and have established guidelines regarding the prohibition of bribery and guidelines regarding the prevention of illicit payments to foreign government officials. In the Compliance Manual, we have established entertainment and gift giving procedures which lay out detailed rules.

Prohibition of political contributions

As a member of the Sumitomo Corporation Group, we are engaged in initiatives to prevent illegal political contributions.
Specifically, in the Compliance Manual, we set out political contribution, entertainment and gift giving procedures, and in each of those sections, we have established guidelines prohibiting illegal political contributions. Our compliance program also prohibits illegal political contributions.

Risk Management

Basic Risk Management Basic Policy

One of SRM's management priorities is being fully aware of its responsibility to accurately identify and manage an array of risks, particularly those related to asset management, and to execute its businesses in the most effective way possible as an entity specializing in asset management and investment advisory. Another priority is to be fully aware of its responsibility to appropriately manage and control risks related to the possible impairment of assets under management and the potential harm to the interests of customers resulting from inadequate risk management according to the characteristics of the operations and risks. Considering these priorities, SRM takes steps to develop its risk management system.

Risk Management System

SRM has established Compliance Regulations, Compliance & Risk Management Committee Regulations, and Risk Management Regulations and has developed a system for legal compliance to conduct business under laws and regulations and to protect investors and ensure proper business activities.
Specifically, SRM understands the importance of SLR's asset management business, in which SRM manages the assets of SLR, as a business managing the funds of SLR's unitholders. To build an appropriate management structure, SRM's Compliance Department is the department in charge of compliance matters and SRM has appointed a Head of Compliance to be the person responsible for supervising compliance matters, ensuring the effectiveness of the internal supervision of compliance in the other departments. In addition, SRM has established the Compliance & Risk Management Committee as a part of its establishment of a multilayered compliance system.

Organizations	Major roles
Board of Directors	The Board of Directors will seek to fully implement compliance as the administrative body ultimately responsible for the execution of business, receive reports regarding matters approved by the Compliance & Risk Management Committee, etc., and adopt resolutions on important matters related to risk management.
Investment Committee and Head of Compliance	If the Head of Compliance decides that there are any problems in terms of compliance in the proceedings or other procedures at Listed REIT Investment Committee meetings or discussions at the meetings, the Head of Compliance is able to stop discussions or prevent the passage of resolutions.
Compliance Committee	The Compliance & Risk Management Committee carries out the tasks set out in the Compliance & Risk Management Committee Regulations in cooperation with the Board of Directors, the Head of Compliance, and the Compliance Department.
Compliance Office	The Compliance Department is in charge of risk management matters at SRM.

BCP Response

SRM's business continuity plan (BCP) sets out the roles of the emergency task force to support the fast recovery of priority operations and procedures for the activities of the task force to prevent confusion caused by disasters, including sudden crises (earthquakes, fires, etc.) and progressive crises (flooding, typhoons) and to mitigate damage after a disaster. The BCP also sets procedures for the verification of damage to the properties managed by SRM, the sharing of information with parties involved, and the consideration of disclosure to customers.

Cyber Security

SRM is aware of the importance of cyber security and has developed the arrangements necessary for the BCP (development of an organization, formulation of internal rules, a system to monitor cyber attacks, and the reporting of cyber attacks). SRM regularly provides training for all officers and employees.

Safety Confirmation System

SRM has introduced a dedicated system for early safety confirmation. In the event of a large earthquake, information will be distributed to all officers and employees. The same system is used for disasters other than earthquakes.