Green Finance

The Investment Corporation (“KDO”) has positioned sustainability improvement initiatives aimed at realizing a sustainable society as an important business management issue to fulfill its corporate social responsibility, and promoted efforts on the green finance from the thought that the utilizing green finance enables more committed efforts to improve sustainability and further contribution to development of the domestic market by offering opportunities to the universe of investors and lenders who take active stance towards ESG investment.

What is Green Finance?

Finance through green bonds and green loans by companies, local governments, or other organizations to raise funds for domestic and overseas green projects, which is a project contributing to environmental solution, are called green finance. As main characteristics of green finance, proceeds are allocated exclusively to green projects, and are tracked and managed in a reliable manner, ensuring transparency by reporting after the implementation of the finance.

Green Finance Framework

KDO has established the "Green Finance Framework", a basic policy for green finance, and shall follow the framework when implementing green finance.

1. Use of Proceeds
Use of net proceeds from green finance is limited to finance the acquisition of assets that meet Eligibility Criteria 1 stated below, the repayment of borrowings, and the redemption of investment corporation bonds, and construction and/or facility refurbishments for energy saving that meet Eligibility Criteria 2.

2. Project Evaluation and Selection Process
The Sustainability Office, which is a secretariat for the Sustainability Committee established in Kenedix Real Estate Fund Management, Inc. (“KFM”) and the Office REIT Department, which handles operations related to KFM’s asset management, act as the center of operations relating to sustainability, including green projects that meet the criteria for the allocation of proceeds (“Eligible Green Projects”).

The Sustainability Committee is chaired by the President & CEO of KFM and comprises members from Head of each REIT department including Head of Office REIT Department, Compliance Officer, and Head of Finance & Accounting Division, etc. The Committee examines and monitors sustainability policies and targets and various initiatives, taking into consideration social situations and the asset management status of KFM, KDO, and each of the investment corporations which entrust KFM with asset management.

The approval of the Asset Management Committee of KFM’s Office REIT Department is required for the selection of an Eligible Green Project, while the evaluation and use of proceeds from Eligible Green Projects, alignment of use of proceeds with Eligibility Criteria, prospects of the status of allocation of net proceeds after allocating proceeds to Eligible Green Projects, etc. are reported to Sustainability Committee.

3. Management of Proceeds and Unallocated Proceeds
KFM properly implements internal controls regarding net proceeds and unallocated proceeds.
Net proceeds and unallocated proceeds are managed in exclusive deposit and withdrawal accounts for green finance, separately from other funds (any unallocated proceeds are managed under cash and cash equivalents pending full allocation of net proceeds), and recording of fund transfers and confirmation of outstanding balance are conducted regularly.

4. Reporting
Allocation Reporting
Net proceeds from green finance will be promptly used to acquire eligible green assets or to refinance borrowings or investment corporation bonds required for green projects, only after checking that these projects are linked with payments of expenditures for energy saving related construction, etc. that is recognized as having an effect exceeding predetermined criteria. The status of any unallocated proceeds will be disclosed on this website on an annual basis, with respect to the period until the entire amount of net proceeds is allocated to projects that meet the Eligible Criteria or the period until green finance is redeemed or repaid.

The sum of green finance outstanding amounts will be managed by setting the level of eligible green finance debt as of the end of the immediately preceding fiscal period as the upper limit.

• The upper limit amount
  of green finance
• ＝
• Aggregate amount
  of acquisition price of
  Eligible Green Assets
• ×
• Total asset LTV
• ＋
• Total investment in
  Eligibility Criteria 2

Impact Reporting
KDO discloses the following indicators throughout the life of the green finance.

[Eligibility Criteria 1]
- Number and certifications of Eligible Green Assets - Aggregate amount of total floor area of Eligible Green Assets - Energy consumption, Water consumption and CO2 emission of Eligible Green Assets (where KDO has energy control authority)

[Eligibility Criteria 2]
- In the cases in which construction or facility refurbishments that are expected to result in improvements in terms of energy saving or environmental benefits are implemented, energy consumption, water consumption or estimated reduction rate (percentage) of greenhouse gas emission, etc. before and after the construction or refurbishments - In the cases in which facilities related to renewable energy are installed or acquired, anticipated annual energy production related to the said facilities

Reporting based on Green Finance Framework

Allocation Reporting (Balance of Green Finance and Allocation Status of Proceeds)

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Impact Reporting (Reporting on Energy Consumption, etc. Indicators)

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Status of Green Finance

	Funds	Procurement date	Repayment date/ Redemption date	Allocation
10th Series Unsecured Investment Corporation Bonds	2,000 million yen	February 15, 2019	February 15, 2024	allocated
12th Series Unsecured Investment Corporation Bonds	1,000 million yen	October 20, 2020	October 18, 2030	allocated
Total amount of green bonds (a)	3,000 million yen
Green Loans (197-A～M)	8,400 million yen	August 31, 2022	～August 31, 2029	allocated
Green Loans (198-B)	500 million yen	October 31, 2022	April 30, 2026	allocated
Green Loan (199)	1,000 million yen	February 28, 2023	February 29, 2028	allocated
Green Loan (200-A and B)	3,800 million yen	March 13, 2023	～March 31, 2031	allocated
Green Loan (201)	500 million yen	June 30, 2023	June 30, 2026	allocated
Green Loan (202-B)	500 million yen	July 31, 2023	July 31, 2029	allocated
Green Loan (203-B)	1,300 million yen	August 31, 2023	August 31, 2026	allocated
Total amount of green loans (b)	16,000 million yen
Total amount of green finance (a+b)	19,000 million yen