September 29, 2016
For Immediate Release
Real Estate Investment Trust Securities Issuer:
Comforia Residential REIT, Inc
2-6-21 Minami-Aoyama,Minato-ku,TokyoHiroyuki Tohmata, Executive Director(Code: 3282)
Asset Management Company:
TLC Comforia Investment Management INC.
Hiroyuki Tohmata, President & CEOInquiries:
Kentaro Yoshikawa, General Managerof Finance & Accounting department(TEL: +81-3-5770-5710)

Notice Concerning Merger ofTLC Comforia Investment Management INC., Asset Manager
TLC Comforia Investment Management INC. (hereinafter referred to as “TCI”), asset manager, to whom Comforia
Residential REIT, Inc. (hereinafter referred to as “CRR”) entrusts its asset management operations, determined to enter intomerger and acquisition agreement (hereinafter referred to as the “Merger”) with TLC Activia Investment Management Inc.,(hereinafter referred to as “TAIM”) today as follows. Also dated today, TCI determined to conclude absorption-type split
agreement with Tokyu Land Capital Management Inc. (hereinafter referred to as “TLCM” and altogether with TCI, TAIM
and TLCM, the “Three Asset Managers”) to succeed part of the business (hereinafter referred to as the “Corporation Split”
and altogether with the Merger, the “Reorganization”).
The Reorganization is related to the Three Asset Managers, and is not related to each investment corporation, from whom
the Three Asset Managers undertake management operations.
1.

The Objective of the Reorganization

It has been 15 years since J-REIT Market was launched in September 2001. The market now has 56 J-REITs and its asset
size has grown to about 15 trillion yen.
Under such circumstances, Tokyu Land Corporation Group (corporate group under Tokyu Land Corporation (hereinafterreferred to as “TLC”), parent company of the Three Asset Managers, and others) has the following three asset managers:
TAIM that undertakes management for Activia Properties Inc.(hereinafter referred to as “API”), listed investment
corporation with retail properties and offices as its major investment target; TCI that undertakes management for CRR,
listed investment corporation with rental residences and serviced rental residences as its major investment target; andTLCM that undertakes management for Broadia Private REIT Inc. (hereinafter referred to as “BPR”), non-listed
investment corporation of comprehensive REIT with diverse asset types such as offices and retail properties, rental
residences as well as logistic properties as its major target. In the meantime, by accumulating their own expertise andexperience on management, the Three Asset Managers now have the total assets under management (hereinafter referred toas “AUM”) worth over ¥600 billion.
Under these circumstances, the Three Asset Managers determined to carry out the Reorganization to enhance a value ofunitholders of each investment corporation through integration of asset management business, which will makesophisticated asset management operations and expand chances of acquiring properties.

1As to the Reorganization, absorption-type merger takes place with TCI as a surviving company and TAIM as an absorbedcompany. Also, absorption-type split takes place with TLCM as absorption-split company and TCI as absorption-type split
succeeding company. Trade name of TCI after the Reorganization will be TLC REIT Management Inc. (hereinafter referredto as “TRM”).
2.

Effects of the Reorganization

Through the Reorganization, the asset manager expects the following effects:(1) Sophisticated asset management operations
Identical functions of the Three Asset Managers will be integrated into one function, so that management expertise,
which used to be spread in the Three Asset Managers, could be consolidated to make more sophisticated asset
management (financing, property acquisition and property management and others) and compliance operations.
(2) Expansion of chances of acquiring properties
After the Reorganization, TRM’s AUM is expected to be over ¥600 billion, which enhance the asset manager’s
footprint in the market and increase chances of acquiring properties. By undertaking asset management operationsof multiple investment corporations and managing wide range of asset types of properties such as logistic properties
in addition to retail properties, offices and rental residences, and utilizing diverse ways of investments such as joint
bidding and investments, chances of acquiring properties will be expanding.
(3) Further development in HRs
For becoming further professional group, trainings and education for employees of the asset managers will beunified to raise expertise.
3.

Prevention of conflicts of interest
Through the Reorganization, TRM will undertake asset management operations for API, CRR and BPR.
Among investment corporations, for whom TRM undertakes management operations, API invests mainly in retailproperties and offices while CRR invests mainly in rental residences and serviced rental residences. Therefore, APIand CRR will not compete for acquiring the same properties. However, it is possible that API and BPR may compete
for acquiring retail properties and offices, and CRR and BPR may compete for acquiring rental residences andserviced rental residences.
Therefore, for properties to consider acquisition, the asset manager will be subjected to Order of Prioritized
Consideration according to “Regulations on Priority of Property Information to Consider” newly establishedassociated with the Reorganization. “Acquisition Priority Review Meeting” composed of compliance managers andothers will be set up to verify Order of Prioritized Consideration. In such a way, conflicts of interest between each
investment corporation will be prevented.
(1) Property information provided by sponsor① Property information on offices and retail properties (*1)
1st Priority: API
2nd Priority: BPR② Property information on rental residences and serviced rental residences (*2)
1st Priority: CRR
2nd Priority: BPR③ Property information on logistics properties
BPR
(*1)

This includes accommodation facilities (hotel) and parking lots. The same shall apply hereafter.

(*2)

This includes homes for seniors, service apartments, condominiums for students such as dormitories.
The same shall apply hereafter.
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(2) Property information provided by a third party
Investment target

Gross floor area (*)

Order of Prioritized Consideration
1st Priority: API

3,000 m2 or more

2nd Priority: BPR

Retail properties & offices

1st Priority: BPR

Less than 3,000 m2

Rental residences & serviced rental
residences2nd Priority: API
1st Priority: CRR

1,500 m2 or more

2nd Priority: BPR
1st Priority: BPR

Less than 1,500 m2

Logistics properties

2nd Priority: CRR-BPR(*) Calculated based on floor area on property register.
Notwithstanding the above (1) and (2), in case of specific investment corporation holds first negotiation right to and / orsectional ownership on anticipated properties, and for other cases, the relevant investment corporation should begranted 1st Priority. In case of an investment corporation is designated as acquirer by the seller and for other cases,
relevant investment corporation shall be granted to consider acquisition without holding and deliberation of Acquisition
Priority Review Meeting.
4.

Summary of the Reorganization
AMerger of TCI and TAIM (the Merger)(1) Schedule of the Merger
Date of the Board’s resolution

September 29, 2016

Date of the agreement

September 29, 2016

Date of Shareholders’ Meeting (*)

November 1, 2016 (planned)

Date of the Merger

April 1, 2017 (planned)

Date of registering the Merger

Early April 2017 (planned)

Date of filing with Prime Minister

Early April 2017 (planned)(*) This is held by TAIM alone (given simplified merger for TCI, this does not need to be held by TCI.).
(2) Type of the Merger
The Merger is absorption-type merger with TCI as a surviving firm, and TAIM will be dissolved. The Merger falls
into simplified merger as provided by Article 796, Paragraph 2 of Companies Act.
(3) Details on share allocation for the Merger
Since the Merger falls into merger between TLC’s wholly owned subsidiaries, TCI as surviving company does notallocate shares.
(4) Overview of the Merger’s companies (as of Sep. 29, 2016)(1)

Company(2)

Location(3)

Representative’s title &Name

Absorption-type merger’s

Absorption-type merger’s absorbed

surviving company

company

TLC Comforia Investment

TLC Activia Investment Management

Management INC. (TCI)

Inc. (TAIM)

Minami Aoyama 2-6-21, Minato-ku,

Minami Aoyama 1-1-1, Minato-ku,

Tokyo

Tokyo

President & CEO: Hiroyuki Tohmata

President & CEO: Michie Kawai3(4)Business details

Investment management business andInvestment management business andoperation of investment corporation’s

operation of investment corporation’s

administrative instruments

administrative instruments(5)

Capital stock¥200 million¥300 million(6)

Incorporation

October 6, 2009

November 15, 2010(7)

Net assets¥887 million¥2,433 million(as of the end of March, 2016)(as of the end of March 2016)(8)

Total assets¥1,010 million¥2,900 million(as of the end of March 2016)(as of the end of March 2016)

Tokyu Land Corp. (100%)

Tokyu Land Corp. (100%)

Major shareholder & its(9)holding stake(10)

Relationship between CRR / TCI and TAIM
Capital relationshipGroup firm under the identical parent company
Yutaro Tanaka assumes the title of director (non-executive) of both TCI and TAIM.

Personal relationship

Akira Yamaguchi assumes the title of statutory auditor (non-executive) of both TCIand TAIM

Business relationship
Related party(11)

Not applicable
Since parent company of both TCI and TAIM is TLC, TAIM falls into a related
party of TCI.

Management performance and financial conditions in the last twelve months
FY ended March 2016

FY ended March 2016

Net assets¥887 million¥2,433 million

Total assets¥1.010 million¥2,900 million

Sales¥764 million¥1.668 million

Operating income¥331 million¥999 million

Ordinary income¥331 million¥1,001 million

Current net income¥226 million¥671 million

B

Succeeding part of business to TCI as a result of TLCM’s absorption-type split (the Corporation Split)(1) Schedule of the Corporation Split
Date of the Board’s resolution

September 29, 2016

Date of the agreement

September 29, 2016

Date of holding Shareholders’ Meeting (*)

November 1, 2016 (planned)

Date of the Corporation Split

April 1, 2017 (planned)

Date of registering the Corporation Split

Early April, 2017 (planned)Date of filing with Prime Minister

Early April, 2017 (planned)(*) This is held by TLCM alone (given simplified split for TCI, this does not need to be held by TCI.).
(2) Type of the Corporation Split
The Corporation Split is absorption-type split with TLCM as splitting company and TCI as absorption-type split
succeeding company. For TCI, the Corporation Split falls into simplified split as provided by Article 796, Paragraph
2 of Companies Act.
(3) Details on share allocation for the Corporation Split
Since the Corporation Split falls into split between TLC’s wholly owned subsidiaries, a surviving company does notallocate shares as consideration.

4(4) Rights entitled to and obligations imposed on succeeding company
Succeeding company will succeed rights and obligations on business on BPR’s asset management and HR & labor.
Even after the Corporation Split, TLCM continues to operate other businesses.
(5) Prospect of fulfilling obligations
Relating to the Corporation Split, there should be no issue on the prospect of obligations that TCI should fulfill.
(6) Overview of the Corporation Split’s companies<Overview of TCI (as of September 29, 2016)>
See 4. A. (4) in the above.
<Overview of TLCM (as of September 29, 2016)>(1)

CompanyTokyu Land Capital Management Inc. (TLCM)(2)

Location

Minami Aoyama 2-6-21, Minato-ku, Tokyo(3)

Representative’s title &Name

President & CEO: Hitoshi Maehara
Investment management business and operation of investment corporation’s(4)

Business details(5)

Capital stock¥300 million(6)

Incorporation

February 15, 2007

(7)

Net assets¥3,495 million (as of the end of March 2016)(8)

Total assets¥3,650 million (as of the end of March 2016)(9)(10)

Major shareholder & its
holding stake

administrative instruments

Tokyu Land Corp. (100%)

Relationship between CRR / TCI and TLCM
Capital relationshipGroup firm under the identical parent company
Yutaro Tanaka assumes the title of director (non-executive) of both TLCM and TCI.

Personal relationship

Akira Yamaguchi assumes the title of statutory auditor (non-executive) of both
TLCM and TCI.

Business relationship
Related party(11)

Not applicable
Since parent company of both TLCM and TCI is TLC, TLCM falls into a relatedparty of TCI.

Management performance and financial conditions in the last twelve months
FY ended March 2016

Net assets¥3,495 million

Total assets¥3,650 million

Sales¥1,886 million

Operating income¥999 million

Ordinary income¥1,002 million

Current net income¥667 million5(7) Overview of business to split①

Business details on divisions to split
Business on BPR’s asset management and HR & labor②

Management performance of divisions to split
Since the division to succeed the above business is one arm of TLCM’s, there is no management
performance of this division.

③Line items of the associated assets, liabilities and book values to splitNot disclosed since this split is between TLC’s wholly owned subsidiaries.

5.

Conditions after the Reorganization
Absorption-type merger’s surviving company
(1)

Name

(2)

Location(3)

6.

Representative’s title &Name

TLC REIT Management Inc.
(TCI will change its trade name as of April 1, 2017)
TBD
TBD
Investment management business and operation of investment corporation’s(4)

Business details(5)

Capital stock¥200 million(6)

Fiscal periodMarch(7)

Net assetsTBD(8)

Total assets

TBD

administrative instruments

Outlook(1) Change on asset management agreement with CRR
Nothing will be changed.
(2) Change of asset managers’ structure after the Reorganization
TRM’s organizational chart will be as shown below. Under the organizational chart below, TRM operates
investment management business, and actual operations are segregated into Activia Management Division,
Comforia Management Division, Broadia Management Division, Corporate Planning & Administration
Department, Finance & Accounting Department, Asset Investment Department, Internal Audit Department andCompliance Department. Investment Committee will deliberate management of assets, Compliance Committee todeliberate compliance, and Acquisition Priority Review Meeting to check the process for decision of the Order ofPrioritized Consideration relating to properties to consider acquisition.

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<TRM’s Organizational Chart (planned)>
Shareholders’ Meeting
Statutory Auditor
Board

Investment Committee

Compliance Committee
President & CEOAcquisition Priority
Review Meeting
Internal Audit Dept.

Compliance Dept.

Activia
Management
Div.

Corporate Planning &Administration Dept.

Finance & Accounting
Dept.

Asset Investment Dept.

StrategicManagement
Dept.

AssetManagement
Dept.

Comforia
ManagementDiv.

StrategicManagement
Dept.

Asset
Management
Dept.

Broadia
ManagementDiv.

Strategic
Management
Dept.

AssetManagement
Dept.

(3) Change of decision-making structure for investment management from the Reorganization
In case of TRM attempts to acquire properties according to each investment corporation’s investment policies, as a
general rule, responsible department drafts acquisition plan, and Compliance Manager checks an issue on
compliance with laws and ordinances before an approval. Then, Investment Committee deliberates and makes aresolution, followed by a final approval by each Management Division’s Manager. For a certain transactions withrelated parties, as a general rule, prior to Investment Committee’s deliberation and approval, Compliance Committee
deliberates and makes a resolution. Please see decision-making flow shown below for details.

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<Decision-making flow on acquisition of assets (planned)>

Report to investment corporationｘｘ

ｘｘ

Report to the Boardｘｘ

Prior approval by the investment corporation’s executive committee*This approval may be made before or after Investment Committee resolution.

ｘｘ

In case of related-party transactions
and other necessary cases

ｘｘApproval by each Management Division Manager

ｘｘInvestment Committee deliberation and resolution* Compliance Manager may order suspension of deliberations

Compliance Committee deliberation and resolution

In case of related-party transactions
and other necessary cases

Approval by Compliance Manager

Proposal by responsible department

ｘｘｘｘｘｘ(4) Change of rules on compliance and related parties relating to the Reorganization
See the above “3.Prevention of conflicts of interest” for rules on conflicts of interest concerning the Order ofPrioritized Consideration of properties.
(5) Change of CRR’s investment policy relating to the Reorganization
Nothing will be changed.
(6) Change of agreement with sponsor relating to the Reorganization
No material change of supports granted to CRR will be made. Associated with the Reorganization, however, weconsider concluding new sponsor support agreement.
(7) Ongoing listing of investment corporation
CRR will continue to be listed.
(8) Policies
For this matter, we will file necessary statements required under Financial Instruments and Exchange Act, Building
Lots and Buildings Transaction Business Act and other applicable laws, ordinances and rules. Undecided items thatare subjected to disclosure will be disclosed upon the determination.
(9) Management Conditions
This will give no impact on management conditions of CRR.

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*Distribution of this material: This material is distributed to “Kabuto Club” (a media correspondents’ club at the Tokyo
Stock Exchange, Inc.), the press club at the Ministry of Land, Infrastructure, Transport and Tourism and the press club forconstructing trade newspapers at the Ministry of Land, Infrastructure, Transport and Tourism.
*CRR’s webpage URL: http://www.comforia-reit.co.jp/english

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