Disclaimers
This document has been prepared solely for the purpose of providing U.K. and Dutch
investors with certain information under Article 23 of the European Alternative
Investment Fund Managers Directive (European Directive 2011/61/EU) (the “AIFMD”) as
implemented in their respective jurisdictions. Accordingly, you should not use thisdocument for any other purpose.
Netherlands
The units of Comforia Residential REIT, Inc. (“CRR” or the “AIF”) are being marketed in
the Netherlands under Section 1:13b of the Dutch Financial Supervision Act (Wet op het
financieel toezicht, or the “Wft”). In accordance with this provision, TLC REITManagement Inc.(“TRM” or the “AIFM”) has submitted a notification with the Dutch
Authority for the Financial Markets. The units of CRR will not, directly or indirectly, beoffered, sold, transferred or delivered in the Netherlands, except to or by individuals or
entities that are qualified investors (gekwalificeerde beleggers) within the meaning of
Article 1:1 of the Wft, and as a consequence neither the AIFM nor CRR is subject to thelicense requirement pursuant to the Wft. Consequently, neither the AIFM nor CRR is
subject to supervision of the Dutch Central Bank (De Nederlandsche Bank, “DNB”) or the
Netherlands Authority for Financial Markets (Autoriteit Financiële Markten, the “AFM”)
and this Article 23 AIFMD Prospectus is not subject to approval by the AFM. No
approved prospectus is required to be published in the Netherlands pursuant to Article 3 of
the Regulation (EU) 2017/1129 (the “Prospectus Regulation”) as amended and applicablein the Netherlands. The AIFM is therefore solely subject to limited ongoing regulatory
requirements as referred to in Article 42 of the AIFMD.
United Kingdom
Units of CRR are being marketed in the United Kingdom pursuant to Article 59 of theUnited Kingdom Alternative Investment Fund Managers Regulations 2013. In accordancewith this provision, the AIFM has notified the Financial Conduct Authority (the “FCA”)
of its intention to offer these units in the United Kingdom. For the purposes of the United
Kingdom Financial Services and Markets Act 2000 (as amended, “FSMA”) CRR is an
unregulated collective investment scheme which has not been authorized by the FCA.
Accordingly, any communication of an invitation or inducement to invest in CRR may
only be made to (i) investment professionals falling within Article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, or “the1

Order”; or (ii) high net worth companies falling within Articles 49(2)(a) to (d) of the Orderand other persons to whom it may lawfully be communicated (all such persons referred tounder (i) and (ii) of this paragraph, together being referred to as “Relevant Persons”).
In the United Kingdom, this document and its contents are directed only at Relevant
Persons and must not be acted on or relied on by persons who are not Relevant Persons.
The transmission of this document and its contents in the United Kingdom to any person
other than a Relevant Person is unauthorized and may contravene the FSMA and other
United Kingdom securities laws and regulations.
Prohibition of Sales to UK Retail Investors
In addition to the restrictions under the AIFMD, as retained by the United Kingdom in its
domestic laws, the Units of CRR are not intended to be offered, sold or otherwise madeavailable to and should not be offered, sold or otherwise made available to any retailinvestor in the United Kingdom. For these purposes of this provision, a “retail investor”
means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article
2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of theEuropean Union (Withdrawal) Act 2018 (“EUWA”); or (ii) a customer within the meaningof the provisions of the FSMA and any rules or regulations made under the FSMA to
implement Directive (EU) 2016/97, where that customer would not qualify as aprofessional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014
as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as
defined in Article 2 of Regulation (EU) 2017/1129, as it forms part of domestic law byvirtue of the EUWA; and the expression “offer” includes the communication in any formand by any means of sufficient information on the terms of the offer and the international
units to be offered so as to enable an investor to decide to purchase or subscribe theinternational units.
Consequently no key information document required by Regulation (EU) No 1286/2014,as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”), foroffering or selling the international units or otherwise making them available to retailinvestors in the United Kingdom has been prepared and therefore offering or selling theinternational units or otherwise making them available to any retail investor in the United
Kingdom may be unlawful under the UK PRIIPs Regulation.
European Economic Area
In addition to the restrictions under the AIFMD, the Units of CRR are not intended to beoffered, sold or otherwise made available to and should not be offered, sold or otherwise
made available to any retail investor in the European Economic Area (“EEA”). For these2

purposes, a retail investor means a person who is one (or more) of: (i) a retail client as
defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID II”);(ii) a customer within the meaning of Directive (EU) 2016/97, where that customer would
not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or(iii) not a qualified investor as defined in the Prospectus Regulation, as amended.
Consequently no key information document required by Regulation (EU) No 1286/2014(the “PRIIPs Regulation”) for offering or selling the Units of CRR or otherwise making
them available to retail investors in the EEA has been prepared and therefore offering or
selling the Units of CRR or otherwise making them available to any retail investor in the
EEA may be unlawful under the PRIIPs Regulation.

3

Article 23 (1)(a)Objectives of the AIF

CRR invests primarily in rental residences, mainly in the Tokyo metropolitan area, for singles
and small families, as well as assets that we refer to as “operational” assets, which arerental residences such as nursing care homes, residences with service provision and student
dormitory, which generally are leased to or managed by professional operators withnecessary management capability and credit pursuant to lease or management contracts.
We acquire rental residences developed or managed as “Comforia” series properties from
TOKYU FUDOSAN HOLDINGS Group companies, and other properties that match the
Comforia concept from entities outside the TOKYU FUDOSAN HOLDINGS Group.
Comforia series properties are rental residential properties, which offer comfort beyond
residents’ expectations and more than mere convenience in many ways, in order to benefit
residents who wishes to live freely and affluently in urban communities.

Investment strategy

CRR aims to maximize unitholders’ value in the medium to long term through acquisition ofquality properties and management of the portfolio effectively to maintain and improve its
value by utilizing the value chain and know-how of the TOKYU FUDOSAN HOLDINGS Group
companies.
Backed by TRM’s Sponsor Support Agreement with Tokyu Land Corporation (the “Sponsor”)
regarding management of properties and Support Agreements with seven TOKYU FUDOSANHOLDINGS Group companies (the “Support Companies”), CRR leverages the strength of theSponsor and the Support Companies for CRR’s external and internal growth.
In addition, officers and employees of the AIFM are mainly persons with years ofexperiences in development, operation and management of residential properties andmanagement of funds investing in residential properties. Supported by TOKYU FUDOSANHOLDINGS Group companies’ proprietary know-how regarding property acquisitions,information network and provision of information regarding properties, CRR aims tobroaden its information pipeline and choose timing for property acquisition flexibly in orderto acquire competitive properties.
Also, CRR looks to select TOKYU FUDOSAN HOLDINGS Group companies whose corebusinesses are operation and management of real estate as property managers to maintainand improve the value of its portfolio.

Types of assets the AIF

Real estate, including trust beneficiary interests in real estate, securities backed by real

may invest in

estate, specified assets and other assets.

4Techniques it may

CRR focuses on investing in residential properties in the Greater Tokyo Area as well as other

employ and all

major urban areas, which CRR anticipates will contribute to the expansion of the total asset

associated risks

value and diversification of its portfolio. Also, CRR leverages TOKYU FUDOSAN HOLDINGSGroup’s value-chain and know-how to pursue both external and internal growth.
The principal risks with respect to investment in CRR are as follows:

any adverse conditions in the Japanese economy could adversely affect CRR’s
properties, including through the spread of COVID-19, which may have a significant,long-term adverse impact on economic activities;

CRR may not close all or any of its anticipated acquisitions of properties;

CRR may not complete the expected debt financing, in which case CRR may not be able
to acquire some or all of the properties CRR anticipates acquiring, or CRR may beforced to accept alternative financing with less advantageous terms;



CRR may face significant competition in acquiring properties and may not be able toacquire ones to execute its growth and investment strategy in a manner that isaccretive to earnings;

Illiquidity in the real estate market may limit CRR’s ability to grow or adjust its
portfolio;the past experience of Tokyu Land Corporation in the Japanese real estate market is
not an indicator or guarantee of CRR’s future results;

CRR’s reliance on Tokyu Land Corporation, other TOKYU FUDOSAN HOLDINGS Group
companies and other entities could have a material adverse effect on CRR’s business;there are potential conflicts of interest between CRR and certain Tokyu Fudosan
Holdings Group companies, including the AIFM;

CRR may face significant competition in seeking tenants and it may be difficult to findreplacement tenants;

increases in prevailing market interest rates may increase CRR’s interest expense andmay result in a decline in the market price of CRR’s units;

CRR may suffer large losses if any of its properties incurs damage from a natural or
man-made disaster or acts of violence or war;

most of the properties in CRR’s portfolio may be concentrated in the Tokyo
metropolitan area;the concentration of residential properties in CRR’s portfolio may entail risks
uncommon to other J-REITs that invest in a broader range of real estate or real estaterelated assets;

any inability to obtain financing for future acquisitions could adversely affect thegrowth of CRR’s portfolio;5

CRR’s failure to satisfy a complex series of requirements pursuant to Japanese tax
regulations would disqualify CRR from certain taxation benefits and significantly reduce
its cash distributions to its unitholders;

CRR’s ownership rights in some of its properties may be declared invalid or limited; andthere are conflicts of interest between CRR and certain other investment corporations
managed or advised by the AIFM.

In addition, CRR is subject to the following risks:risks related to investments in operational rental residences;

risks related to nursing care homes;risks related to changes of investment policy of CRR;

risks related to increasing operating costs;

risks related to the restrictive covenants under debt financing arrangement;risks related to Asset Manager;risks related to property managers;risks related to dependence on the efforts of the AIFM’s or property managers’ key
personnel;risks related to acquisition and disposition of properties;risks related to entering into forward commitment contracts;risks related to third party leasehold interests in the land;

risks related to holding the property in the form of stratified ownership (kubun shoyū)interests or co-ownership interests (kyōyū-mochibun);risks related to holding the lands in which third parties hold leasehold interests andown the buildings (sokochi);risks related to properties under development;risks related to lease agreements;risks related to holding the property through trust beneficiary interests;risks related to the defective title, design, construction or other defects or problems in
the properties including non-conformity to agreements;risks related to suffering impairment losses relating to the properties;risks related to decreasing tenant leasehold deposits and/or security deposits;risks related to tenant default as a result of financial difficulty or insolvency;risks related to master lease;risks related to insolvency of seller of properties CRR intends to acquire;risks related to relying on expert appraisals and engineering, environmental andseismic reports as well as industry and market data;risks related to the presence of hazardous or toxic substances in the properties, or the
failure to properly remediate such substances;6

risks related to the strict environmental liabilities for the properties;risks related to the insider trading regulations;risks related to the amendment of the applicable administrative laws and local
ordinances;

risks related to investments in anonymous associations (tokumei kumiai);risks related to the tight supervision by the regulatory authorities;risks related to the tax authorities’ disagreement with the AIFM’s interpretations of theJapanese tax laws and regulations;risks related to being unable to benefit from reductions in certain real estate taxes
enjoyed by qualified J-REITs; andrisks related to changes in Japanese tax laws.

Any applicable

CRR is subject to investment restrictions under Japanese laws and regulations (e.g., the Act

investment restrictions

on Investment Trusts and Investment Corporations (the “ITA”), the Financial Instruments
and Exchange Act (the “FIEA”)) as well as its articles of incorporation.
CRR must invest primarily in specified assets as defined in the ITA. Specified assets include,
but are not limited to, securities, real estate, leaseholds of real estate, surface rights (chijōken) (i.e., right to use land for the purpose of having a structure on it) or trust beneficiaryinterests for securities or real estate, leaseholds of real estate or surface rights.
Furthermore, a listed J-REIT must invest substantially all of its assets in real estate, realestate-related assets and liquid assets as provided by the listing requirements. Real estatein this context includes, but is not limited to, real estate, leaseholds of real estate, surface
rights, and trust beneficiary interests for these assets, and real estate-related assets in thiscontext include, but not limited to, anonymous association (tokumei kumiai) interests forinvestment in real estate.
Pursuant to the ITA, investment corporations may not independently develop land for
housing or to construct buildings, but may outsource such activities in certain
circumstances.
Investment restrictions CRR places in its articles of incorporation are as follows:(1) Restrictions relating to monetary claims and securities
CRR shall not make investments in monetary claims and securities in a proactive
manner. When CRR makes investments in these assets, CRR shall consider safeness,
liquidity or the relationship with specified assets.
(2) Restrictions relating to derivatives transactions

7

CRR will invest in rights associated with derivatives transactions only for the
purpose of hedging against interest risks arising from CRR’s liabilities, and otherrelated risks.
The investment by the AIF must be made in accordance with the basic investment policy as
set out in its articles of incorporation.
Circumstances in which

CRR may take out loans or issue long-term or short-term investment corporation bonds for

the AIF may use

the purpose of investing in properties, facility investment, paying cash distributions, raisingleverageworking capital, repaying obligations (including repayment of tenant leasehold or security
deposits, and obligations related to loans or long-term or short-term investment
corporation bonds) and other activities.

The types and sources

Loans or investment corporation bonds: CRR currently does not have any outstandingof leverage permitted

guarantees and may be subject to restrictive covenants in connection with any future

and associated risks

indebtedness that may restrict the operations and limit the ability to make cash
distributions to unitholders, to dispose of the properties or to acquire additional properties.
Furthermore, CRR may violate restrictive covenants contained in the loan agreements CRR
executes, such as the maintenance of debt service coverage or loan-to-value, or LTV ratios,
which may entitle the lenders to require CRR to collateralize the properties or demand thatthe entire outstanding balance be paid. Further, in the event of an increase in interest rates,to the extent that CRR has any debt with unhedged floating rates of interest or CRR incurs
new debt, interest payments may increase, which in turn could reduce the amount of cash
available for distributions to unitholders. Higher interest rates may also limit the capacity
for short- and long-term borrowings, which would in turn limit the ability to acquire
properties, and could cause the market price of the units to decline.

Any restrictions on

The maximum amount of each loan and investment corporation bond issuance will be ¥1leveragetrillion, and the aggregate amount of all such debt will not exceed ¥1 trillion.

Any restrictions on

No applicable arrangements.

collateral and asset
reuse arrangements
Maximum level of

CRR has set an upper limit of 60% as a general rule for its LTV ratio in order to operate withleverage which thea stable financial condition. CRR may, however, temporarily exceed such level as a result of

AIFM is entitled toproperty acquisitions, decline of appraisal value or other events.

employ on behalf of
the AIF
Article 23(1) (b)Procedure by which theAmendment of the articles of incorporation - Amendment requires a quorum of a majority

AIF may change itsof the total issued units and at least a two-thirds vote of the voting rights represented at
the meeting. Unitholders should note, however, that under the ITA and CRR’s articles of8investment strategy /incorporation, unitholders who do not attend and exercise their voting rights at a generalinvestment policy

meeting of unitholders are deemed to be in agreement with proposals submitted at themeeting, except in cases where contrary proposals are also being submitted.
Additionally, the guidelines of the AIFM, which provide more detailed policies within CRR’s
overall investment strategy and policy, can be modified without such formal amendment of
the articles of incorporation.

Article 23(1) (c)Description of the main

The AIFM has entered into the Sponsor Support Agreement with Tokyu Land Corporation

legal implications of the and Support Agreements with Tokyu Livable, Inc., Tokyu Community Corp., Tokyu Housing
contractual relationship Lease Corporation, TOKYU E-LIFE DESIGN Inc., EWEL, Inc., TOKYU SPORTS OASIS Inc. andentered into for the

National Students Information Center Co., Ltd., respectively.

purpose of investment,
including jurisdiction,

All of the above agreements are governed by Japanese law.

applicable law, and theexistence or not of any

CRR is not involved in or threatened by any legal arbitration, administrative or otherlegal instruments

proceedings, the results of which might, individually or in the aggregate, be material.

providing for therecognition and

CRR is a corporate-type investment trust in the form of investment corporation (tōshi hōjin)enforcement ofprovided for under the ITA. Therefore, the relationship between CRR and its unitholders is

judgments in thegoverned by CRR’s articles of incorporation (as opposed to individual agreements), which

territory where the AIF

can be amended from time to time upon resolution of a general unitholders’ meeting. CRR’s

is establishedarticles of incorporation stipulate rules relating to general unitholders meetings, including
the convocation, setting of record date, exercise of voting rights, resolutions and election of
CRR’s directors.
The relationship between CRR and its unitholders is also governed by, and is subject to theprovisions of, Japanese law, including the ITA.
The courts in Japan would recognize as a valid and final judgment any final and conclusive
civil judgment for monetary claims (which, for this purpose, are limited to those of a purely
civil nature and do not include monetary claims of the nature of criminal or administrative
sanction, such as punitive damages, even though they take the form of civil claims) against
CRR obtained in a foreign court provided that (i) the jurisdiction of such foreign court isadmitted under the laws of Japan, (ii) CRR has received service of process for thecommencement of the relevant proceedings, otherwise than by a public notice or any
method comparable thereto, or has appeared without any reservation before such foreign
court, (iii) neither such judgment nor the relevant proceeding is repugnant to public policy
as applied in Japan, and (iv) there exists reciprocity as to the recognition by such foreign

9court of a final judgment obtained in a Japanese court and (v) there is no conflicting
judgment on the subject matter by any Japanese court.
Article 23(1) (d)The identity of the• AIFM (Asset Manager): TLC REIT Management Inc.

AIFM, AIF's depositary,

The AIFM provides services related to asset management, financing of the AIF, reporting

auditor and any otherto the AIF, asset management planning for the AIF, and other matters delegated by theservice providers and a

AIF.

description of their• Auditor: Ernst & Young ShinNihon LLC

duties and the

The Auditor audits financial statements, prepares audit reports, and reports to theinvestors' rights

supervisory directors if it finds any misconduct or any material fact that is in violation oftheretolaws and regulations or the articles of incorporation with regard to execution of theduties of the executive director.
• Custodian, General Administrator (for administration) and Transfer Agent: Mitsubishi UFJ
Trust and Banking Corporation
The Custodian provides administrative services related to custody of assets. The General
Administrator (for administration) provides administrative services related to
management of institutions. The Transfer Agent provides administrative services related
to unitholders registry, payments of cash distributions to unitholders, issuance of theinvestment units, and addressing unitholders’ claims, offers and notices.
• General Administrator (accounting, etc.): Reiwa Accounting Holdings Co., Ltd.
The General Administrator provides administrative services related to accounting, etc.
• General Administrator (tax): Reiwakaikeisha Tax Corporation
The General Administrator provides administrative services related to tax payments.
• General Administrator (Corporate Bonds): Sumitomo Mitsui Trust Bank, Limited and
MUFG Bank, Ltd.
The General Administrators provides administrative services in connection with the AIF’s
investment corporation bonds.
Service providers owe contractual obligations under their respective agreements with the
AIF or the AIFM, as the case may be. In addition, the FIEA provides that the Asset Manager
owes the AIF a fiduciary duty and must conduct its activities as the Asset Manager in goodfaith. The FIEA also prohibits the Asset Manager from engaging in certain specified conduct,
including entering into transactions outside the ordinary course of business or with relatedparties of the Asset Manager that are contrary to or violate the AIF’s interests. Pursuant to
the ITA, the unitholders have the right to approve the execution or termination of the asset
management agreement at a general meeting of unitholders.

Article 23(1) (e)10Description of how the

Not applicable.

AIFM complies with therequirements to coverprofessional liability
risks (own funds /professional indemnity
insurance)
Article 23(1) (f)Description of any

Not applicable. There is no delegation of such functions beyond the AIFM, which isdelegated management responsible for portfolio and risk management, and the Custodian, which is responsible forfunction such as

safekeeping activities.

portfolio management
or risk management
and of any safekeeping
function delegated by
the depositary, theidentification of thedelegate and any
conflicts of interest
that may arise fromsuch delegations
Article 23(1) (g)Description of the AIF’s

CRR makes investment decisions in accordance with its articles of incorporation and based

valuation procedure

on its investment strategies and the results of due diligence, including the valuation ofand pricing

properties and consideration of the property appraisal value. CRR shall evaluate assets inmethodology, including

accordance with its Article of Incorporation.

the methods used in

The methods and standards that CRR uses for the evaluation of assets shall be based on thevaluing hard-to-value

Regulations Concerning the Calculations of Investment Corporations, as well as theassetsRegulations Concerning Real Estate Investment Trusts and Real Estate Investment
Corporations and other regulations stipulated by ITA, in addition to Japanese GAAP. J-REITs
may only use the valuation methods prescribed in the rules of the Investment Trusts
Association, Japan, which emphasize market price valuation.
Regarding hard-to-value assets, such assets comprise tenant security deposits including
trust accounts. Security deposits from tenants are not subject to fair value disclosure
because they are not marketable, and actual deposit period is not estimable as leases may
be cancelled, renewed or re‐signed even if a lease term is set in the lease contract. This11

makes a reasonable estimate of future cash flows difficult. Valuation of such hard to value
assets is included in the notes to our financial statements.
Article 23(1) (h)Description of the AIF’s

CRR seeks to manage the capital resources and liquidity sources to provide adequate funds

liquidity risk

for current and future financial obligations and other cash needs and acquisitions. Funds

management, includingfrom loans and investment corporation bonds are primarily used for acquiring assets and toredemption rights inrepay interest‐bearing debt.

normal and exceptional

CRR’s liquidity risks are managed and limited through diversification of credit sources andcircumstances andconsidering multilateral fundraising including utilization of excess funds and financing fromexisting redemption

the capital markets such as issuance of units. Also, CRR has entered into a commitment line

arrangements withagreement with credit line of ¥13.5 billion and uncommitted line of credit loan master

investors

agreement with credit line of ¥9 billion, both with multiple banks. The unused amount ofsuch committed and uncommitted line was ¥22.5 billion in total as of March 31, 2024.
As CRR is a closed-end investment corporation, unitholders are not entitled to request theredemption of their investment.

Article 23(1) (i)Description of all fees,

Compensation: The articles of incorporation provide that the AIF may pay its executive

charges and expenses

officer up to ¥700 thousand per month and each of its supervisory officers up to ¥700

and a maximum

thousand per month. The board of officers is responsible for determining a reasonableamount which iscompensation amount for the executive officer and each of the supervisory officers.

directly / indirectly
borne by the investors

Asset Manager:•

Asset Management Fee: The AIF pays to the AIFM an asset management fee as follows:
1. Type 1 management fee: Asset-based fee
The AIF pays to the AIFM a type 1 management fee for each fiscal period. This type1 asset management fee of up to 0.2% per year of the AIF’s total assets (as stated in
the AIF’s balance sheet at the end of the immediately preceding fiscal period
prepared in accordance with Japanese GAAP) is payable by the AIF within the fiscal
period. The fee is paid by the end of the fiscal period.
2. Type 2 management fee: DPU-based fee
The AIF pays to the AIFM a type 2 management fee for each fiscal period. This type2 management fee of up to 5.4% per each fiscal period of the AIF’s management
cash flow, which is equal to ordinary profit and loss before deducting the type 2
management fee (as stated in the AIF’s profit and loss statement for the applicablefiscal period prepared in accordance with Japanese GAAP) added by the amount ofamortization such as depreciation allowance and deferred asset and deducted byprofit and loss on sale and from appraisal (excluding the amount to be booked as

12extraordinary gain or loss) is payable without delay following the approval of thefinancial statements for the applicable fiscal period.
3. Type 3 management fee: Acquisition / Disposition fees
For each new property the AIF acquires or each property the AIF dispose of, theAIFM receives a type 3 management fee, which is equal to 1%, or to 0.5% in case ofa transaction with a related party (excluding acquisition of assets from the AIFM’s
parent or special purpose company that temporarily holds the assets to betransferred to the AIF), of the purchase or sale price (excluding national and local
consumption taxes and expenses), payable by the end of the month immediately
following the month of such acquisition or disposition.
4. Type 4 management fee: Merger fee
For each new property the AIF acquires in connection with a merger of the AIF, theAIFM receives a type 4 management fee, which is equal to 0.5% of the appraisal
value as of the merger date with respect to a new property acquired by the AIF in
connection with a merger (excluding national and local consumption taxes andexpenses), payable by the end of the end of the month immediately following themonth of the such merger.
5. Type 5 management fee: Incentive fee
The AIF pays to the AIFM a type 5 management fee for each fiscal period. This type
5 management fee is payable without delay following the approval of the financial
statements for the applicable fiscal period, and is calculated as follows:
Type 5 management fee = AIF’s management cash flow x AIF’s management cash
flow growth rate per unit x 10%, where AIF’s management cash flow growth rate is
calculated as AIF’s management cash flow per unit for the applicable fiscal period
divided by AIF’s management cash flow per unit for the previous business period.
Custodian:Custodian Fee:
The AIF pays to the Custodian a custodian fee of up to the amount calculated based on
the following table plus taxes, including consumption tax, by the end of the month
immediately following the end of each fiscal period; provide, however, that the AIF and
the Custodian may change the amount of the custodian fee upon consultation in casewhere the amount of the custodian fee becomes unreasonable as a result of thefluctuations in economic circumstances.
Amount of assets:

Calculation method:13¥10 billion or less

¥7,000,000

More than ¥10 billion and¥7,000,000 + (amount of asset – ¥10¥50 billion or lessbillion) x 0.050%

More than ¥50 billion and¥27,000,000 + (amount of asset – ¥50¥100 billion or lessbillion) x 0.040%

More than ¥100 billion and¥47,000,000 + (amount of asset – ¥100

¥200 billion or lessbillion) x 0.035%

More than ¥200 billion and¥82,000,000 + (amount of asset – ¥200

¥300 billion or lessbillion) x 0.030%

More than ¥300 billion and¥112,000,000 + (amount of asset – ¥300

¥500 billion or lessbillion) x 0.025%

More than ¥500 billion¥162,000,000 + (amount of asset – ¥500
billion) x 0.020%

General Administrators (for administration):
General Administrators Fee:
The AIF pays to the General Administrators (for administration) a general administrators
fee for each three-month period ending January, April, July and October of up to theamount calculated based on the following table plus taxes, including consumption tax,
by the end of the month immediately following the end of the relevant three-month
period; provide, however, that the AIF and the General Administrators (Operation of
the administrative instruments) may change the amount of the general administrators
fee upon consultation in case where the amount of the general administrators fee
becomes unreasonable as a result of the fluctuations in economic circumstances.
Amount of assets (as stated in the AIF’s

Calculation method:balance sheet at the end of the fiscal
period immediately preceding the startof the three-month period:¥10 billion or less

¥11,000,000

More than ¥10 billion and¥11,000,000 + (amount of asset – ¥10¥50 billion or lessbillion) x 0.080%

More than ¥50 billion and¥43,000,000 + (amount of asset – ¥50¥100 billion or lessbillion) x 0.060%

More than ¥100 billion and¥73,000,000 + (amount of asset – ¥100

¥200 billion or lessbillion) x 0.055%

More than ¥200 billion and¥128,000,000 + (amount of asset – ¥200

¥300 billion or lessbillion) x 0.040%

14

More than ¥300 billion and¥168,000,000 + (amount of asset – ¥300

¥500 billion or lessbillion) x 0.035%

More than ¥500 billion¥238,000,000 + (amount of asset – ¥500
billion) x 0.030%

Transfer Agent:Transfer Agent Fee (Standard Fee):
The AIF pays fees for administrative services related to the management of unit holders’list. The monthly fee is one-sixth of the sum of the fees calculated per unit holder as
provided below based on the total number of unit holders as of the latest notification to
all the unitholders, provided that the minimum monthly amount is set at ¥220,000.
Number of Investors:

Fees per Investor

first 5,000 Investors

390 yenover 5,000 and not more than 10,000

330 yenover 10,000 and not more than 30,000

280 yenover 30,000 and not more than 50,000

230 yenover 50,000 and not more than 100,000

180 yenover 100,001 and over

150 yenAdministration of Distributions Fee:
The AIF pays fees for the calculation of distributions, creation of distribution records,
preparation of payment receipts, preparation of wire transfer notices and wire transfertape, organization and calculation of receipts creation of payment voucher of
distributions and application of special tax rates. The amount for such fees isdetermined based on the total number of unitholders and calculated according to thetable below, provided that the minimum amount is set at ¥350,000. With respect todistributions made to a specified bank account, we incur an additional charge of ¥130
per distribution made.
Number of Investors:

Fees per Investor
receiving distribution

first 5,000 Investors

120 yenover 5,000 and not more than 10,000

105 yenover 10,000 and not more than 30,000

90 yenover 30,000 and not more than 50,000

75 yenover 50,000 and not more than 100,000

60 yenover 100,001 and over

50 yen15

Auditor:
Auditor Fee:
The AIF pays the Independent Auditor up to ¥20 million per fiscal period by the end ofeach of the three-month periods ending January, April, July and October. The board of
officers is responsible for determining the compensation amount for the independent
auditor.
Article 23(1) (j)Description of theUnder Article 77 paragraph 4 of the ITA, which applies the requirements of Article 109

AIFM's procedure to

paragraph 1 of the Companies Act to investment corporations, investment corporations are

ensure fair treatment

required to treat unitholders equally depending on the number and content of units held. Inof investors and details

addition, upon liquidation, the allotment of residual assets to unitholders is required to beof any preferential

made equally depending on the number units held under Article 77 paragraph 2 item 2 andtreatment received by

Article 158 of the ITA.

investors, including
detailing the type ofinvestors and theirlegal or economic links
with the AIF or AIFM
Article 23(1) (k)The latest annual

Additional information may be found in our most recent annual report prepared inreport referred to inaccordance with Article 22 of the AIFMD, which is available at the Asset Manager’s office

Article 22(1)located at 21‐1 Dogenzaka 1‐chome, Shibuya‐ku, Tokyo.

Article 23(1) (l)The procedure and

CRR is authorized under the articles of incorporation to issue up to 8,000,000 units. Its units

conditions for the issue

have been listed on the Tokyo Stock Exchange since February 6, 2013. Secondary market

and sale of the units

sales and transfers of units will be conducted in accordance with the rules of the Tokyo
Stock Exchange. Unit prices on the Tokyo Stock Exchange are determined on a real-timebasis by the equilibrium between bids and offers. The Tokyo Stock Exchange sets daily pricelimits, which limit the maximum range of fluctuation within a single trading day. Daily pricelimits are set according to the previous day’s closing price or special quote.

Article 23(1) (m)Latest net asset value

CRR’s unit’s latest market price is publicly available at the Tokyo Stock Exchange or fromof the AIF or latest

financial information venders (including Reuters), which can be viewed atmarket price of the unit

http://www.reuters.com/finance/stocks/overview?symbol=3282.T

or share of the AIF
Article 23(1) (n)16Details of the historical

The units of CRR were listed on the Tokyo Stock Exchange on February 6, 2013.

performance of the AIF, The performance of the units for the most recent five fiscal periods is as follows.
where available
Fiscal period
23rd fiscal period

Total Assets

Total Net Assets

Net Assets per unit

(JPY million)(JPY million)(base value) (JPY)282,277

135,237

195,149

300,510142,063

198,417

303,392

142,230

198,650

318,577

148,121200,983

326,106

154,697

204,128(From August 1, 2021 toJanuary 31, 2022)
24th fiscal period(From February 1, 2022
to July 31, 2022)
25th fiscal period(From August 1, 2022 toJanuary 31, 2023)
26th fiscal period(From February 1, 2023
to July 31, 2023)
27th fiscal period(From August 1, 2023 toJanuary 31, 2024)
Article 23(1) (o)Identity of the prime

No applicable prime broker.

broker, any material
arrangements of the
AIF with its prime
brokers, how conflictsof interest aremanaged with theprime broker and theprovision in thecontract with thedepositary on thepossibility of transfer
and reuse of AIF assets,
and information about
any transfer of liability
to the prime broker
that may exist

17Article 23(1) (p)Description of how and

The AIFM will disclose the matters described in Articles 23(4) and 23(5) periodically throughwhen periodic

the AIF Internet website and other public disclosures.

disclosures will bemade in relation toleverage, liquidity andrisk profile of theassets, pursuant to
Articles 23(4) and 23(5)Article 23(2)The AIFM shall inform

Not applicable.

the investors before
they invest in the AIF of
any arrangement madeby the depositary tocontractually discharge
itself of liability inaccordance with Article
21(13)The AIFM shall also

Not applicable.

inform investors of any
changes with respect todepositary liability
without delay
Article 23(4)(a)Percentage of the AIF's assets which are

There are no assets that are subject to special arrangements arising fromsubject to special arrangements arising

their illiquid nature.

from their illiquid nature. The
percentage shall be calculated as the
net value of those assets subject tospecial arrangements divided by the net
asset value of the AIF concerned
Overview of any special arrangements,

There are no such special arrangements.

including whether they relate to side
pockets, gates or other arrangements

18

Valuation methodology applied to

There are no such special arrangements.

assets which are subject to sucharrangements
How management and performance

There are no such special arrangements.

fees apply to such assets
Article 23(4)(b)Any new arrangements for managing

Any new arrangements or change in applicable arrangements will be

the liquidity of the AIF

disclosed at an appropriate time.

For each AIF that the AIFM manages

Any new arrangements or change in applicable arrangements will bethat is not an unleveraged closed-end

disclosed at an appropriate time.

AIF, notify to investors whenever they
make changes to its liquidity
management systems (which enable an
AIFM to monitor the liquidity risk of the
AIF and to ensure the liquidity profile ofthe investments of the AIF complies
with its underlying obligations) that arematerial in accordance with Article
106(1) of Regulation (EU) No 231/2013(i.e., there is a substantial likelihoodthat a reasonable investor, becoming
aware of such information, would
reconsider its investment in the AIF,
including because such information
could impact an investor’s ability to
exercise its rights in relation to its
investment, or otherwise prejudice theinterests of one or more investors in
the AIF).
Immediately notify investors where

Any new arrangements or change in applicable arrangements will bethey activate gates, side pockets ordisclosed at an appropriate time.

similar special arrangements or where
they decide to suspend redemptions
Overview of changes to liquidity

Any new arrangements or change in applicable arrangements will bearrangements, even if not special

disclosed at an appropriate time.

arrangements

19

Terms of redemption and

CRR is a closed-end investment corporation, and unitholders are notcircumstances where management

entitled to request the redemption of their investment.

discretion applies, where relevant
Also any voting or other restrictions

There are no voting or other restrictions on the rights attaching to units.

exercisable, the length of any lock-up or
any provision concerning ‘first in line’ or‘pro-rating’ on gates and suspensions
shall be included
Article 23(4)(c)
The current risk profile of the AIF and

The appropriateness and effectiveness of the risk management structure

the risk management systems

are regularly evaluated and enhanced by the AIFM.

employed by the AIFM to manage thoserisks

Funds from debts and investment corporation bonds are mainly used for
asset acquisition or debt repayment, etc. These are exposed to liquidity risk
at the time of repayment. However, the liquidity risk is controlled throughsuch measures as maintaining and strengthening the capacity to procure
funds from the capital market via capital raising, along with securing
several fund procurement sources and diversifying repayment deadlines,
and establishing commitment lines from credit facilities of CRR’s mainbanks totaling ¥13.5 billion (or ¥22.5 billion, including uncommitted credit
lines) (no amount had been drawn down as of March 31, 2024).
Debt with a floating interest rate is exposed to interest rate fluctuation
risks, but the impact that interest rate rises have on the operations islimited by keeping the LTV at low levels, maintaining the proportion of debt
that is long-term fixed-rate debt at high levels, and setting a procurement
limit depending on the economic and financial environment, terms of leaseagreements with tenants, asset holding period and other factors.
Furthermore, derivative transactions (interest rate swap transactions) areavailable as hedging instruments to mitigate the risks of rises in floatinginterest rates.
Tenant leasehold and security deposits are deposits from tenants and are
exposed to liquidity risks arising from tenants moving out of properties, but
the liquidity risk is controlled through such measures as preparing monthly
fund management plans.

20

TRM serves as the asset manager for Activia Properties Inc. (“API”), a Tokyo
Stock Exchange-listed J-REIT, and Broadia Private REIT Inc. (“BPR”), a
private REIT, as well as CRR. API and BPR invest in retail and officeproperties, and CRR and BPR invest in rental and serviced residential
properties. CRR’s acquisition is subject to TRM’s Regulations on Priority of
Property Information to Consider, which are internal rules that stipulate
the order in which potential acquisitions are considered among CRR, API
and BPR. TRM also holds acquisition priority review meetings of compliancemanagers to verify that the stipulated order of priority is complied with.
Measures to assess the sensitivity of

No such measures have been implemented.

the AIF’s portfolio to the most relevantrisks to which the AIF is or could be
exposedIf risk limits set by the AIFM have been

No such situation has occurred.

or are likely to be exceeded and wherethese risk limits have been exceeded a
description of the circumstances andthe remedial measures taken
Article 23(5)(a)Any changes to the maximum amountAny new arrangements or change in applicable arrangements will beof leverage which the AIFM may employ disclosed at an appropriate time.
on behalf of the AIF, calculated inaccordance with the gross andcommitment methods. This shall
include the original and revised
maximum level of leverage calculated inaccordance with Articles 7 and 8 ofRegulation (EU) No 231/2013, whereby
the level of leverage shall be calculated
as the relevant exposure divided by the
net asset value of the AIF
Any right of the reuse of collateral or

No such right or guarantee exists.

any guarantee granted under theleveraging agreement, including thenature of the rights granted for thereuse of collateral and the nature of theguarantees granted21

Details of any change in service

Any new arrangements or change in applicable arrangements will be

providers relating to the above

disclosed at an appropriate time.

Article 23(5)(b)Information on the total amount of

The aggregated amount of debt with interest is JPY 172,029 million as ofleverage employed by the AIF

March 31, 2024.

calculated in accordance with the grossand commitment methods

22