Initiatives for Sustainability

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Basic Policy / Sustainability Committee

Environmental Policies

The Investment Corporation and the officers and employees of Kenedix Real Estate Fund Management, Inc. (KFM), the Asset Management Company for the Investment Corporation, has established the following environmental policies and had environment-friendly investment management operations in accordance with the policies, proactively using certification and assessment systems by external institutions.

1. Compliance with Environmental Laws and Regulations
KFM will promote environment-friendly investment management operations by adhering to environmental laws and regulations.
2. Promotion of Energy Conservation Measures
KFM will systematically advance energy conservation measures at its managed properties, maintaining a strong awareness of the importance of natural and energy resources.
3. Reduction of Environmental Burden
KFM will undertake initiatives to reduce CO2 and waste emissions as well as promote recycling at its managed properties, underscoring its commitment to alleviating its environmental burden. In addition, KFM will take sufficient care when handling harmful substances and environmental pollutants.
4. Disclosure of Environmental Information
KFM will work to disclose necessary information to a variety of concerned parties, including investors, tenants and business partners, in such areas as its environmental policies and measures.
5. Environmental Education
KFM will take steps to improve the environmental consciousness of its officers and employees through internal education.

Sustainability committee

The initiatives for sustainability are promoted under the leadership of the Sustainability Committee established in the Asset Management Company.
The Sustainability Committee consists of the Head of Office REIT Department as the chairperson of the Committee, and the Heads of each Division in Office REIT Department, the compliance officer, the Head of Finance & Accounting Department and the Head of Business Administration Department as members. The Committee holds meetings every three months in principle to discuss policies, targets, approaches on sustainability issues and monitors the progress. What is discussed at the Sustainability Committee is reported to the Asset Management Committee at the Asset Management Company, and the proposals are executed upon approval of the management. The results are also reported to the Investment Corporation's Board of Directors.

Acquisition of External Rating

Acquisition of Rating in GRESB Real Estate Assessment

What is GRESB Assessment?

GRESB (Global Real Estate Sustainability Benchmark) is an annual benchmark assessment established primarily by major European pension fund groups in 2009 that measures sustainability performances in the real estate sector. GRESB attracts a lot of attention because leading institutional investors have joined the high-visibility survey and used GRESB to select and dialogue with investment targets. Therefore, there are many real estate companies, REITs and private funds worldwide that annually participate in the GRESB Real Estate Assessment.

GRESBThe Investment Corporation received a "Green Star" rating in the 2017 GRESB Real Estate Assessment for the sixth consecutive year. "Green Star" ratings are awarded to the participants who carry out the excellent efforts on both "management and policy" and "implementation and measurement" in terms of sustainability.
The Investment Corporation also earned the highest-rated "5 Stars" (five star scale) in GRESB Rating, which is calculated globally relative to the performance of reporting entities.
For evaluated efforts of the Investment Corporation, please refer to the following press release.

September 13, 2017
PDFNotice Concerning Acquisition of "Green Star" rating in the GRESB Real Estate Assessment : Acquired the Highest-rated "5 Stars" in GRESB Rating (306KB)

For more details concerning GRESB Survey

Environmental Certification and Assessment

The number of properties that acquired certifications and ratio of floor area

The number of
properties
Floor area(㎡) Ratio(%)(Note)
Properties that acquired
environmental certifications
19 231,727.04 34.58
DBJ Green Building Certification 17 223,701.19 33.38
CASBEE Certification 6 52,942.43 7.90
BELS Certification 2 22,858.51 3.41

※as of December 31, 2017

Note: The ratios are percentages of each floor area to the gross floor area of properties owned by the Investment Corporation (670,134.15m2, calculated on a pro-rata basis of ownership ratio for compartmentalized ownership, etc.).

Acquisition of Certification for CASBEE for Real Estate

What is Certification for CASBEE for Real Estate?

CASBEE is an evaluation system for rating the environmental performance of buildings, developed under the auspices of the Ministry of Land, Infrastructure, Transport and Tourism. The system rates the overall environmental performance of buildings from two perspectives; the evaluation of the environmental quality and performance of buildings themselves and the external environmental load of buildings.

CASBEE

For more details concerning CASBEE

Certified Results

ARK Mori Bldg., KDX Toranomon 1chome Bldg. and KDX Kobayashi-Doshomachi Bldg. were ranked S, the highest rating, by CASBEE

Property Name Certification Rank Acquisition Date of Certification
ARK Mori Building S July 12, 2013
KDX Kobayashi-Doshomachi Building S July 12, 2013
KDX Toranomon 1chome Building S September 20, 2016
KDX Shinjuku Building A July 12, 2013
KDX Gotanda Building A July 12, 2013
KDX Karasuma Building A July 12, 2013

Acquisition of DBJ Green Building Certification

What is the DBJ Green Building Certification?

DBJ Green Building Certification Program was launched by Development Bank of Japan Inc. (DBJ) for the purpose of supporting the properties which give proper care to environment and society (Green Building).
The program evaluates, certifies and supports properties which are required by society and economy. It makes comprehensive assessment of properties, while evaluating various factors which range from properties' environmental features to their communication with stakeholders, such as disaster prevention and proper care for surrounding communities.
Furthermore there are 5 levels, "five stars", "four stars", "three stars", "two stars", "one star" as the certification ranks.

Properties with
the best class
environmental and
social awareness
(five stars)
Properties with
exceptionally high
environmental and
social awareness
(four stars)
Properties with
excellent
environmental and
social awareness
(three stars)
Properties with
high
environmental and
social awareness
(two stars)
Properties with
satisfactory
environmental and
social awareness
(one star)
five stars four stars three stars two stars one star

Certified fiscal year at the time of acquisition is listed for each certification rank.

For more details concerning the DBJ Green Building Certification

Certified Results

The Investment Corporation received the certification for the following properties based on the DBJ Green Building Certification System.
The total number of properties that acquired DBJ Green Building Certification reaches 18 among the Investment Corporation's properties after the acquisition.

Property Name Certification Rank Acquisition Date
of Certification
KDX Toranomon 1chome Building five stars(five stars) March 30, 2016
KDX Harumi Building four stars(four stars) June 9, 2011
KDX Musashi-Kosugi Building four stars(four stars) March 18, 2014
KDX Nagoya Sakae Building three stars(three stars) June 9, 2011
KDX Kobayashi-Doshomachi Building three stars(three stars) June 9, 2011
KDX Higashi Umeda Building three stars(three stars) March 28, 2012
KDX Sakura-dori Building two stars(two stars) March 30, 2016
KDX Iidabashi Square two stars(two stars) October 31, 2016
Senri Life Science Center Building two stars(two stars) October 31, 2016
KDX Ikebukuro Building two stars(two stars) April 28, 2017
KDX Shibuya Nanpeidai Building two stars(two stars) April 2, 2018
KDX Karasuma Building one star(one star) December 26, 2012
KDX Shinjuku Building one star(one star) December 26, 2012
KDX Fuchu Building one star(one star) October 31, 2016
KDX Yokohama Building one star(one star) October 31, 2016
KDX Nagoya Nichigin-mae Building one star(one star) April 28, 2017
KDX Nishi-Shinbashi Building one star(one star) April 28, 2017
Ginza 4chome Tower one star(one star) April 28, 2017

BELS Certification

What is BELS?

BELS (Building-Housing Energy-efficiency Labeling System) is the third-party certification system to rate houses and buildings in accordance with duty to make effort to label energy saving performance in the Act on Improving Energy Consumption Performance for Architectural Structures. Houses and buildings are evaluated based on the value of BEI (Building Energy Index) derived from the primary energy consumption based on the government-designated energy consumption performance standard of architectural structures.
The evaluation and indication based on the system shall be implemented by the registered organizations as operators of BELS operations, which fall under registered housing performance evaluation organizations that are members of the evaluation association, designated construction confirmation authorities or registered building research agencies.
Evaluation result is indicated by the number of stars (1-5).

BELS評価

Certified Results

Based on the evaluation of JAPAN ERI CO.,LTD., The Investment Corporation received the certification for the following properties.

Property Name Evaluation Acquisition Date
of Certification
KDX Musashi-Kosugi Building ※ ★★★ October 22, 2014
KDX Iidabashi Square ★★★ Aplil 25, 2016

※It was the first acquisition of certification as the J-REIT's owned property.

Debt Financing Based on the DBJ Disaster Preparedness Rating

DBJ防災格付2011The DBJ Disaster Preparedness Rating is a financing scheme in which companies are assessed and screened for excellence in their initiatives to hedge against disaster and secure business continuity based on the proprietary assessment system developed by the Development Bank of Japan (DBJ), financing conditions for them are then determined in accordance with the assessment.
The Investment Corporation has undertaken debt financing from the DBJ based on the DBJ Disaster Preparedness Rating, as the first J-REIT.

Debt Financing Based on SMBC Sustainable Building Assessment Loan

SMBCSMBC Sustainable Building Assessment Loan is a financing product based on the assessment of buildings owned or constructed by companies for such factors as 1) their environmental performance on energy, water, materials and other issues, 2) initiatives on risk management, including earthquake resistance, business continuity planning (BCP) and business continuity management (BCM), to secure sustainability, and 3) management policies and implementation to promote 1) and 2). Assessments are made based on the proprietary criteria prepared by Sumitomo Mitsui Banking Corporation (SMBC) and CSR Design and Landscape Co., Ltd.
The Investment Corporation has undertaken debt financing from SMBC based on its SMBC Sustainable Building Assessment Loan, as the first J-REIT.

Initiatives for Environment

Sustainability Goals

The Asset Management Company has established "the Energy Conservation Measures Committee" and "the Sustainability Committee" based on "the Environmental Policies" to advance measures for sustainability, and has developed energy reduction targets (medium- to long-term targets) and target management measures as follows:

1. Reduction targets for energy consumption (medium- to long-term targets)

Reduce the energy intensity(Note) by an annual average rate of 1% or more in five years in accordance with the Act on Rationalizing Energy Use (the Energy Saving Act)
Set individual targets for properties subject to local regulations on measures to cope with global warming

Note: Unit energy consumption is calculated by dividing total energy use equivalent to crude oil (kl/year) by total occupancy floor area (m2/year).

2. Management measures to achieve targets

Hold "the Energy Conservation Measures Committee" and "the Sustainability Committee" meetings on a semiannual basis in principle to manage the progress and results of medium- to long-term targets, identify the factors for change in energy use.

Performance

Overview of unit energy consumption against reduction targets

The actual performance was slightly below the target for five years from FY2012 to FY2016.
KDO has been promoting initiatives such as active investment in Green Lease and energy saving retrofit to achieve the reduction target of 1% for 5 years from FY2013 to FY2017 and year after.

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Specific Efforts

Efforts to improve the environmental performance of buildings through renovation and refurbishment

Fully renovated following the move-out of the tenant that had occupied the whole building (completed in April 2016)

・Review of floor plan for multi-tenants
・Upgrading of common/private area
・Introduction of grid ceiling in private area
・HVAC renewal to enhance energy efficiency
・Installation of LED lightings in common/private area
・Renewal of sanitation facilities to more water-efficient equipment.

Achieved two stars in DBJ Green Building Certification and three stars in BELS Certification

Occupancy rate reached approx. 50% about one month after the renovation and full about six months after. The building successfully filled vacancies at an excellent pace.

Conducted a large-scale renovation as countermeasures against aging deterioration of the building and obsolescence of the design to raise competitiveness (completed in October 2016)

・Upgrading of common area
・Full renovation of rental conference rooms, community space, etc.
・HVAC renewal to enhance energy-efficiency
・Installation of LED lightings in common area, etc.

Achieved one star in DBJ Green Building Certification

Increased newly contracted rents by 15% after the renovation

Installation of LED lightings

We are encouraging reduction of electricity consumption at each of our owned properties from the perspective of environmental consideration and cost reduction. Our efforts include converting lighting in common area / tenant area and emergency lights (including emergency guide lights) to LED to actively promote reduction of light bulb replacement costs and electricity expenses. As of December 2017, installation of LED lightings in common area (including partial installation) is completed at 90 properties (93.75% on the basis of the number of properties). We will continue to convert lightings in common area and tenant area by promoting Green Lease where possible.

Entering into Green Lease Agreements and subsequent efforts

KDO is actively entering into Green Lease Agreements to promote energy-conservation and environmentally-friendly measures in cooperation between building owners and tenants.
At KDX Akihabara Building, KDO conducted LED lighting installation works for a part of a tenant office space at the expense of KDO based on the Agreement. A certain ratio of the highly reduced amount of electricity charges and maintenance costs (costs for exchanging fluorescent bulbs) has been paid from the tenants in return as Green Lease fee.

Green Lease?

Green Lease means an agreement specifying that building owners and tenants shall cooperate with each other to reduce environmental burden. The agreement contains provisions to facilitate renovation toward more environmentally-friendly office buildings by reducing building owners' investment burden through sharing the economic merits generated as a result of energy-saving renovation works among building owners and tenants. It also contains an agreement to streamline operations for energy saving, water saving and enhancing indoor conditions.

Initiatives for Society

Tenant Satisfaction (CS) survey

Together with J.D. Power Asia Pacific, we implement CS survey on hardware (e.g. facility and equipment) and software (e.g. response to tenants) for existing tenants in office buildings (people in charge of general affairs and employees) on a biennial basis

CS survey overview

Timing 6th survey August 2015
(21st fiscal period)
7th survey August 2017
(25th fiscal period)
# of properties 85 properties 89 properties
# of distributions Person in charge: 884
Employee: 4,736
Person in charge: 973
Employee: 5,052
Collection rate Person in charge: 82%
Employee: 78%
Person in charge: 81%
Employee: 81%

7th CS survey results: reasons of satisfaction (Note)

Tenant needs have a broad range on both of hardware and software. The Investment Coporation seeks to understand tenant needs through the tenant satisfaction (CS) survey on a regular basis and enhance the satisfaction level by making equipment replacement and renovation works based on the survey result.

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Intention for continuous occupancy (Note)

Our tenants' intention for continuous occupancy reached a record high of 96% due to various measures based on the CS survey result. Especially, the rate of tenants who "definitely want to stay" increased by 6% from the previous survey, leading to high occupancy rate of 99.1% as of the end of October 2017.

・The ratio of tenants with intention for continuous occupancy increased by 5% from the previous survey

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Intention for continuous occupancy by building age (Note)

High intention for continuous occupancy of 90% or more was confirmed regardless of building age.
The Investment Corporation ensures maintenance and enhancement of property competitiveness to by utilizing the expertise amassed through management of mid-sized office buildings, and implementing effective repair and renovation works in a planned way with an awareness of our tenants' satisfaction level.

・Confirmed high intention for continuous occupancy regardless of building age

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Note: Result on survey that interviewed people in charge of general affairs

Contribution to local communities

Cooperation to Campaign for United Nations Refugee Support


Senri Life Science Center Building
The Investment Corporation supports Japan for UNHCR that is the official support contact point in Japan on behalf of UNHCR, a refugee support organization of United Nations. Specifically, the Investment Corporation provides the association with vacant space in its own properties for free for use in "Campaign for United Nations Refugee Support”.

About Japan for UNHCR

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Cooperating with communities in bicycle sharing

We have agreed to provide a part of the property with municipalities and its vendors and operate it as a port for bicycle sharing based on agreements to enhance public space and health/wellbeing.
It is expected to make many positive impacts such as enhancement of attractiveness of city with improved convenience of movement, vitalization of community/tourism, measure to reduce left bicycles, reduction of CO2 emissions with shift from automobile to bicycle, improvement of environmental awareness, promotion of health. We continuously monitor monthly operation status and use frequency.

Installation of AEDs

AEDs are installed at the entrance of each property.
They are available not only for the tenants but for neighboring communities as well, which is displayed on the AED stickers and registered in the administrative map.

Resilience

Emergency kit box in elevator

As more tenants are anticipating disasters such as earthquake, KDO has been placing boxes of emergency kit in the elevators since the 24th fiscal period (2017/4) and its numbers has reached 152 in 75 properties as of December 2017.

Free access to Wi-Fi

Focusing on business continuity, "Hikari Station" Wi-Fi routers are installed at our owned properties for the purpose of improving the internet environments to make them more disaster-resistant.
Free access to the internet via a wireless network is provided in case of an emergency to support tenants for business continuity. At ordinary times, tenants and visitors can access the wireless internet via Wi-Fi for a certain time for free.

Human Capital Development

The Investment Corporation is not allowed to hire employees under the provisions of the Act on Investment Trusts and Investment Corporations, and the Asset Management Company's employees substantially manage its assets. Kenedix Real Estate Fund Management, Inc., the asset management company for the Investment Corporation, has the policy that human resources are crucial for sophisticated investment management and has undertaken various initiatives to promote it. Please refer to the Asset Management Company's website for details.

The Asset Management Company website:http://kenedix-fm.com/en/sustainability.html#emp