Sustainability Report

Published in October 2023

Table of contents
Top Message・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・2

Chapter 1 Sustainability Policy and Promotion System
1

Sustainability Policy・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・3

2

Sustainability Promotion System ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・4

3

Materiality ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・6

Chapter 2 Environmental Initiatives
1

Recognition of Climate Change (Background)・・・・・・・・・・・・・・・・・・・・・・・・・・・7

2

Support for the TCFD Recommendations ・・・・・・・・・・・・・・・・・・・・・・・・・・・・7

3

Governance ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・7

4Strategy・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・7

5

Risk Management・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・8

6Metrics and Targets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・9

7Energy Consumption and Intensity ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・9

8Energy Management ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・99Water Resource Initiatives ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・12

10 Waste Management ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・13
11

External Certifications ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 14

12 Green Finance ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・16

Chapter 3 Social Initiatives
1

Relationships with the Local Communities・・・・・・・・・・・・・・・・・・・・・・・・・・・・19

2

Relationships with Tenants ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・21

3

Initiatives towards Employees of HHRAM・・・・・・・・・・・・・・・・・・・・・・・・・・・・22

4

Securing Safety and Security ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・29

5

Safety and Security of Customers and Tenant Employees ・・・・・・・・・・・・・・・・・・・・・31

6

Safety and Security of HHRAM's Employees・・・・・・・・・・・・・・・・・・・・・・・・・・・32

7

Initiatives towards Property Management Companies and Suppliers ・・・・・・・・・・・・・・・・32

8

Dialogue with Unitholders and Investors・・・・・・・・・・・・・・・・・・・・・・・・・・・・・33

Chapter 4 Governance Initiatives
1

Corporate Governance・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・35

2Compliance・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・41

On this report, Hankyu Hanshin REIT, Inc. is indicated as “HHR” and Hankyu Hanshin REIT Asset Management, Inc. is indicated as “HHRAM”.

1

Top Message

Yoshiaki Shiraki
Executive Director,
Hankyu Hanshin REIT, Inc.

Welcome to the fifth edition of our Sustainability Report. The report outlines the various ESG-related measures
undertaken by Hankyu Hanshin REIT to date and seeks to make our ESG concept widely known to our unitholders
and other stakeholders.
Our Sustainability Policy has been continuously developed since it was established when the first edition of thereport was published. Having many discussions with parties involved to identify “ESG Issues (materiality),” which
are especially important for Hankyu Hanshin REIT, based upon impact on our businesses and performance aswell as expectations from our stakeholders, we finally decided priority themes and newly established policies todeal with the issues in December, 2022.
Especially in the environmental (E) area, climate change has become a significant risk in the economic field sincemeteorological disasters, including torrential rains and heat waves, started to be seen in recent years. Hankyu
Hanshin REIT, therefore, identified “risks” and “opportunities” for our real estate investment management
operations in December 2022, which led us to announce our support for the Task Force on Climate-related
Financial Disclosures (TCFD), and then join the consortium.
In addition, as the metrics, we set our target of reducing greenhouse gas emissions for fiscal 2030 as “35%(compared to fiscal 2018),” with the target now on track to be achieved through various efforts. Furthermore, wewill also accelerate our efforts to realize carbon neutrality (net zero) by fiscal 2050.
As the environment increasingly changes, it is necessary for us to flexibly deal with the issues to make our societysustainable. In order to continuously achieve sustainable growth, we, Hankyu Hanshin REIT, will also continue totackle ESG issues from a medium-to-long-term perspective as well as build relationships of mutual trust with all
stakeholders and strive to improve unitholder value.

2

Chapter 1

Sustainability Policy and Promotion System

1. Sustainability Policy
Hankyu Hanshin REIT, Inc. (hereafter "HHR") and Hankyu Hanshin REIT Asset Management, Inc. (hereafter"HHRAM") recognize that it is essential for their medium-to-long-term competitiveness and the continued growthof the investor value of HHR to act with consideration of environmental, social and governance (hereafter "ESG")
issues, and aim to practice them through real estate investment management by establishing the "Sustainability
Policy" that conforms to the management philosophy and the concept of social contribution and environmental
conservation of the Hankyu Hanshin Holdings Group.
①Realization of "a city in which we want to live now and in the future" that can contribute to thesustainable development
We aim to contribute to the sustainable development of society and towns through business activities that takeenvironmental and social issues into consideration through dialogue and collaboration with tenants and local
communities.
②Conservation of the global environment
We aim to conserve the global environment such as a shift to a decarbonized society by initiatives for energyconservation and renewable energy, and realization of a recycling-based society by initiatives for water saving,waste reduction and such through our real estate investment management business.
③Environmental and social considerations in collaboration with stakeholders
We seek the cooperation of with suppliers involved in the management and renovation of real estate, andcollaborate and strengthen engagement with tenants to reduce the environmental burden of our properties
and promote social considerations.
④Respect and development of human resources
Each and every executive and employee involved in our business is our irreplaceable asset. We strive tocreate a healthy working environment that can maximize the diversity of personality and ability of ouremployees, and aim to improve our business competitiveness through proactive talent development.
⑤Enlightenment on ESG
Our executives and employees deepen their understanding and ability to practice ESG consideration throughour continuous implementation of education and enlightenment activities.
⑥Compliance with integrity
We promote compliance not only to observe the minimum required legal compliance but also to maintain our
integrity with the aim to meet the expectations of all our stakeholders such as investors, tenants, local
communities, suppliers, executives and employees.
⑦Ensure ESG information disclosure and transparency
We strive to disclose information on ESG to our stakeholders in a timely and appropriate manner, and toensure transparency through acquiring external evaluations such as environmental certifications.

32. Sustainability Promotion System
In order to put the "Sustainability Policy" into practice, HHRAM has established the "Sustainability Promotion
System Regulations," with the purpose of establishing various policies concerning sustainability. The
Sustainability Promotion System Regulations establishes basic policies, etc., for internal systems, collaboration
with external stakeholders, and information disclosure. Within this system, the "Sustainability Promotion
Committee" has been set up for decision-making processes related to sustainability.
The Sustainability Promotion Committee is comprised of the President and Representative Director, who acts as
the Committee Head, the Director in charge, who acts as the Committee's Operating Officer, full-time Directors,
and Department or Office General Managers. The Committee meets at least once every three months (fourtimes in fiscal 2022, four times scheduled also for fiscal 2023).
In addition to considering and drafting various policies, targets, response to climate change, response to DEI*,
and other diversified measures concerning sustainability, the Sustainability Promotion Committee also reports
appropriate information to the Executive Meeting of HHR. As for our governance structure, please refer to “1.
Corporate Governance” in “Chapter 4 Governance Initiatives.”*DEI stands for diversity, equity and inclusion.

Sustainability Promotion System
Sustainability Promotion Committee
Committee Head(President and Representative
Director)
Executive OfficeDirectors

Internal Audit Department
Compliance Department

Investment Planning
Department

Investment
Management
Department 1

Investment
Management
Department 2

PM
BM

4

Financial and IR
Department

Corporate Operations
Department

Conceptual Diagram of the Environmental Management System (EMS) based on the PDCA cycle

 Establishment of Sustainability Policy Understanding environmental burden andstatus of initiatives
 Compilation of legislation concerning theenvironment
 Establishment of environmental targets andenvironmental activity planning Management review
 Instructions for improvement
Act

Plan

Review・improvement

Scheduling

Check

Do

Examination・
forecast and result
management

Execution

 Execution and management
 Education and training Confirmation on status of initiatives
 Forecast and result analysis,correction, and prevention

53. Materiality
HHR and HHRAM will contribute to the achievement of the SDGs (Sustainable Development Goals) and theachievement of medium-to-long-term growth of HHR through initiatives for the following material issues(Materiality).

E(Environment)

S(Social)G(Governance)

Important theme
Promotion of environmental
conservation

Action policy
Promote environmental conservation
activities that contribute to the realizationof a decarbonized society and arecycling-oriented society

Success of each employee

Foster a corporate culture enabling
employees to maximize their individual
personalities and abilities, and promote
next-generation training

Improvement of well-being ofcustomers (tenants, etc.)

Promote the improvement of ES and CS,
and pursue the improvement ofsatisfaction

Contribution to thedevelopment of local
communities

Contribute to urban development throughcollaboration and co-creation with local
communities

Implementation of thoroughcompliance and risk
management

Strengthen risk response and ensurecompliance regarding interested party
transactions, etc.

Promotion of information disclosure to stakeholders

Adhere to transparency through timely
and appropriate disclosure of financial
and non-financial information anddialogues

6

SDGs

Chapter 2

Environmental Initiatives

1. Recognition of Climate Change (Background)
We understand that climate change issues as stated in the Paris Agreement (2015) and IPCC Special Report(2018) are anticipated to bring drastic changes to the natural environment and social structures, which
represents one of the challenges that gives impact on the asset management of HHR. Therefore, we recognizethat our earnest efforts to address these issues will contribute to securing our sustainable profitability on a
medium-to-long-term basis, and maximizing unitholder value.

２. Support for the TCFD Recommendations
In December 2022, HHRAM announced its support for the TCFD (Task Force on Climate-related Financial
Disclosures*) recommendations and joined the TCFD Consortium, an organization consisting of Japanesesupporting companies, thereby further promoting the initiatives concerning climate change and improving
information disclosure based on the TCFD recommendations.

*TCFD was established by the Financial Stability Board (FSB) upon request of G20 with the aim of considering
climate-related information disclosures and actions to be taken by financial institutions, and has announced its
recommendations for understanding and disclosing “Governance,” “Strategy,” “Risk Management” and “Metrics
and Targets” concerning climate change-related risks and opportunities.

３. GovernanceFor the sustainability promotion system (including measures against climate change) of HHRAM, please refer to“2. Sustainability Promotion System” in “Chapter 1, Sustainability Policy and Promotion System,” previously
described.

４. Strategy
Item
Transition
risk

Policy andlegal
regulations

Time
frame
Short to
long
term

Risk

Opportunity

Carbon tax andcarbon pricing• Cost of facility operations will
increase due to a rise inelectricity and fuel costs andothers.
• Renovation and repair costs will
increase due to a rise inconstruction materials prices
and tighter regulations onbuildings such as ZEB and ZEH(*1).

• The introduction of renewableenergy to avoid the impact ofcarbon tax, etc. will be
accelerated, which willcontribute to a rise in evaluation
by tenants.

Carbonemission trading• Properties which can hardly takeenergy-saving measures will
have to bear the cost ofpurchasing carbon emission
allowances.

-

Mediumterm

Response to
GHG (*2)
emission
regulations by
ZEB and
ZEH(*1).

• Renovation costs will increase
for renewal work due to thenecessity of introducing devices
and equipment with higher
environmental performance.

• Conversion of buildings into
ZEB will contribute to a
reduction of operation costs
and enhancement ofcompetitive edge bydifferentiation.

Mediumterm(*1) ZEB: Zero Energy Building, ZEH:
Zero Energy House(*2) GHG: Greenhouse Gas

7

Item
Transition
risk

Physical
risk

Risk

Opportunity• Renovation costs will be
reduced when newtechnologies will bedisseminated and the prices ofenergy-saving facilities andrenewable energy materials will
decline.
• By introducing newtechnologies, it is expected thatthe costs of facility operation
including electricity and fuelcosts will be reduced to acertain degree.
-

Time
frame
Mediumterm

Technology

Disseminationof new
technology• Renovation costs will increase
due to the introduction of newtechnologies for energy saving
and renewable energy.

MarketChanges inenergy mix, etc.

• With the social requirement for
raising the renewal energy ratio
growing, the construction cost to
be borne at the introduction
stage will squeeze profits

Reputation

Change intenants’ tastes• Deterioration of asset value andbrand value (declines in rent or
occupancy rate) is possible if wecannot meet the needs oftenants for buildings or retailfacilities with environmental
performance.

• Our competitive edge will bemaintained and strengthened if
we can meet the needs oftenants for buildings, houses
and retail facilities with highenvironmental performance.

Mediumto longterm

Investors’ keyevaluation
points• A delay in ESG measures anddisclosure will cause adeterioration of evaluation by
investors, leading to an increasein fund procurement costs.

• A transition to low-carbon andenvironment-friendly properties
will enable us to secure newhighly ESG-conscious investors
and a reduction in fundprocurement costs.

Short to
long
term

Acute

Extremeweather(Intensified
damage fromnaturaldisasters)• Due to typhoons becoming
larger and more intense, retailfacilities tend to temporarilysuspend operation, resulting indecreases in visitors and sales.
• Inundation inside a levee, etc.
may increase the possibility ofdamage to our properties.

Short tolong
term

Chronic

Rise in averagetemperature• Costs for enhancing airconditioning capability will
increase in order to respond to
the rise in average temperature.
• Costs of renovation will increase
due to degradation of work
efficiency in the extremely hot
weather in summer.

• Since demand for disasterresistant buildings, etc. withmeasures for BCP and people
who are unable to return home
after disasters is increasing, we
will be able to strengthen ourcompetitive edge and increase
sales if we can provide facilities
that can meet those needs.
-

Rise in sea level• The possibility of occurrence ofdamage is expected to increase
due to inundation of ourproperties from tidal waves, etc.

-

Long
term

Mediumto longterm

Mediumto longterm

5. Risk Management●HHRAM has established a department responsible for risk management in normal times which conducts annual

risk assessments. The investigation covers a wide range of risks related to climate change (natural disasters,etc.), accidents, information management, legal compliance and other organizational operations, etc. As torisks peculiar to each business, the relevant responsible department establishes appropriate countermeasuresby identifying and analyzing them.

●With respect to climate change-related risks, we also conduct risk assessment from the viewpoints of possibilityof occurrence and the degree of impact. Furthermore, we monitor the status of countermeasures once a year.

●The Sustainability Promotion Committee also deliberates (once in three months) on climate change-relatedrisks and their impact on business, etc. as necessary, and if changes are needed from the current content,such changes are reflected in the company-wide risk management by including them in a risk survey form
which is used in the risk assessment.

8

6. Metrics and Targets
The following environmental targets toward carbon neutrality and net-zero emissions by 2050 were established at the
Sustainability Promotion Committee meeting held in December 2022.

① GHG emissions: To be reduced by 35% by fiscal 2030
② Energy consumption: To be reduced by 1% annually③ Water consumption: To be reduced by 10% by fiscal 2030
* The intensity, and base year is fiscal 2018.
For the fiscal 2050 target (long-term target), we will accelerate various initiatives for carbon neutrality and netzero emissions.

7. Energy Consumption and Intensity
Energy consumption

Consumption (MWh)Water consumption

Intensity・year)
Intensity YoY
Intensity comparedwith base year
Consumption (㎥)Fiscal 2018

Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

184,420

192,396

168,614161,297

162,361

587

578

503

492

513

-

98.5%

87.0%

97.9%

104.3%

-

98.5%

85.7%

83.9%

87.5%

470,414491,095

321,767

322,214397,122

1.477

1.478

0.959

0.979

1.256

-

100.1%

64.9%

102.0%

128.3%(kWh/m2

Intensity (㎥/m2・Greenhouse gas
emissionsyear)
Intensity YoY
Intensity comparedwith base year
Emissions (t)-100.1%

64.9%

66.3%

85.0%

29,47926,612

22,12722,21019,619Intensity (t/m2・year)

0.094

0.080

0.066

0.068

0.062

-

85.4%

82.3%

103.0%

91.3%

-

85.4%

70.3%

72.4%

66.1%

Intensity YoY
Intensity comparedwith base year

*As of October 1, 2023
*Data retention rate: 100% (Fiscal 2022; excluding site properties; figures for properties under co-ownership are derived by multiplying theownership interest; data difficult to compile due to direct contracts with tenants or other reasons are partially excluded from gas consumption
figures)*The figures after the conversion into primary energy are used for energy consumption*Greenhouse gas emissions include Scope 3 (Category 13: emissions coming from downstream leased assets)

8. Energy Management①Established the Energy Conservation Policy
Based on the "Energy Conservation Policy" established in March 2019, HHR and HHRAM will continually seek
to understand the energy consumption levels of the portfolio and measure the rate of achievement against thetargeted values. Considerations for operational improvements and equipment investments will be made forenergy inefficient properties, and we will continually aim to reduce energy consumption across the entire
portfolio.
●Initiatives through equipment renovation
For measures that require equipment investments such as switching to LED lighting and switching to highefficiency air conditioning, measures that are the most cost-effective will be prioritized based on consideration of
the lifecycle costs, etc.

9

●Initiatives through operational improvement
HHR promotes initiatives in collaboration with property management companies and tenants, such as inspection
to ensure that electricity and gas are turned off after store hours, that lights at places such as corridors,
warehouses, and meeting rooms, are turned off when nobody is there or the places are not in use, thatappropriate temperatures are set for air-conditioners in common areas, that appropriate temperatures are set for
hot water for hand-washing as well as toilet seat heaters in the summer season, and that appropriately reducing
the number of lights that are on in common use areas (backyard).
②Application of leading project to reduce carbon footprint in housing / buildings
A leading project to reduce carbon footprint in housing / buildings is a
project that is selected after the government solicits entries of housing /building projects to become leading projects for carbon footprint
reduction, and offers support for them from its budget by subsidizing partof the projects’ cost, such as maintenance costs. GRAND FRONTOSAKA was chosen as the leading project in 2009. Its "organizing an
integrated water and green network over multiple city blocks", "adoptionof highly effective carbon footprint reduction technology" and "building a
GRAND FRONT OSAKA
sustainable management system" initiatives were adopted to realize its
environment-friendly design such as extensive greenery on the rooftops
and in the surrounding city blocks, natural ventilation system andadoption of a solar power system.
③Utilization of renewable energies●Introducing electricity completely from renewable energies
All the electricity used at GRAND FRONT OSAKA, not only for common
areas but also for exclusive areas for its tenants, is already generated
from renewable energy sources, which are free of CO2.

GRAND FRONT OSAKA●Implementation of solar power generator facilities
Solar panels have been installed above the south parking lot of HANKYUNISHINOMIYA GARDENS (along Yamate Kansen), and the power
generated is used to illuminate the lights. Solar panels have been also
installed on the roof of HEP Five, and the clean natural energy is used tolight up the Ferris wheel. A monitor indicating the quantity of energy
generated by the sunlight has been set up in the atrium on the first floor.
Furthermore, amount of energy generated and consumed are as follows.
Property
nameFiscal 2018

Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

HEP Five

18,054kWh

18,197kWh

18,432 kWh

17,473kWh

18,394kWh*As of October 1, 2023

10

Solar panels

●Installation of wind turbine generator system
At HANKYU NISHINOMIYA GARDENS, hybrid-type generators thatcombines savonius wind turbines with solar panels have been installed,
and the power generated is used to illuminate the rooftop lights.

Savonius wind turbines with solar panels④Switching to LED lighting
From the perspective of energy-saving measures, HHR promotes switching to LED lighting at each portfolio
property. HHR has already almost upgraded all the common area lights excluding the lights in the backyard at
HEP Five, Dew Hankyu Yamada, and Kitano Hankyu Building, and all the exclusive area lights at Shiodome East
Side Building and Ueroku F Building to LED lighting, while sequentially upgrading mainly common area lights inother buildings.
⑤Countermeasures against urban heat islands
As a countermeasure against urban heat islands that occur in the summer, we have installed a fountain and mist
spraying system in the roof-top garden of HANKYU NISHINOMIYA GARDENS, water sprinklers on the roofs ofcinema complexes, a mist spraying system at the main entrance of HEP Five, and water facilities such as
cascades and a mist projection system at the Umekita Plaza of GRAND FRONT OSAKA. These havecontributed to cutting CO2 emissions by reducing the load placed on air conditioners.

Mist spraying system

Fountains⑥Promoting green walls and planting vegetation in urban areas
At GRAND FRONT OSAKA, there is the 500-meter-long "Icho Namiki" (row of ginkgo trees) that encircles thebuilding, and the "Keyaki Namiki" (row of zelkova trees) that runs east-west between the South Building and theNorth Building. The 4,000 m2 garden on the north side of the North Building is a space where people canexperience the changes in the four seasons, and people enjoy walks in the garden throughout the year.
Moreover, on the roof of the 9th floor of the South Building and the North Building, there is a rooftop garden
totaling more than 10,000 m2. This space creates a place where office workers can exchange ideas.
In addition, the Sky Garden on the rooftop of HANKYU NISHINOMIYA GARDENS is a space of relaxation for
those who visit. This is because vegetation indigenous to the Rokko mountain range is planted in the gardensuch as trees, cherry trees, and fruit trees, based on the facility concept of "harmony with the naturalenvironment".

11

Row of ginkgo trees

Rooftop garden

Sky garden⑦Collaboration with tenants●Promotion of green lease agreements
Green lease agreements are agreements in the form of a contract or memorandum, etc. voluntarily entered into
by building owners and tenants and concern reduction of environmental load through energy conservation at realestate and improvement of working environment, as well as implementation of their content. HHR will strive toincrease the number of agreements that have green leases in their clauses.
●Case of concluded green lease agreement
As of May 2023, agreements with a green lease clause have been concluded with tenants, who have a strong
interest in sustainability among twelve properties owned by HHR. The provisions of the agreements for the main
properties include the following:(1) Suppression of amount of energy and water used in area leased by the tenant, suppression of waste
generated and promotion of waste-sorting on a daily basis, and establishment of system for voluntary
management of such;(2) Suppression of amount of energy and water used in construction work in area leased by the tenant and when
procuring goods, suppression of waste generated and introduction of environmentally friendly materials;(3) Cooperation toward sustainability promotion measures (obtaining certifications, exchanging information on
amounts of energy usage, water usage and waste generated, and keeping and improving comfort inbuilding).

9. Water Resource Initiatives①Established the Water Conservation Policy
Based on the "Water Conservation Policy" established in March 2019, HHR and HHRAM will continually seek tounderstand the water consumption levels of the portfolio and measure the rate of achievement against thetargeted values. Considerations for operational improvements and equipment investments will be made for water
resource inefficient properties, and we will continually aim to reduce water consumption across the entire
portfolio.
●Initiatives through equipment renovation
For measures that require equipment investments such as switching to water conservation equipment andinstalling water-saving devices, measures that are the most cost-effective will be prioritized based upon
consideration of the lifecycle costs, etc.
●Initiatives through operational improvement
Water conservation is strived for in collaboration with property management companies and tenants throughmeasures such as saving water during cleaning and checking for water leaks in washrooms and toilets during
patrol.
②Reusing rainwater
At HANKYU NISHINOMIYA GARDENS, GRAND FRONT OSAKA, and METS OZONE, rainwater is stored andreused as sprinkling water for plants and for flushing toilets.
12③Installation of kitchen wastewater pretreatment equipment
By preparing kitchen wastewater pretreatment equipment at HANKYU NISHINOMIYA GARDENS, the pollutants
found in kitchen wastewater produced by cafés and restaurants are reduced by processing it with mixedmicrobial communities, before draining it into public sewage systems. As a result, HANKYU NISHINOMIYAGARDENS is able to maintain water quality that falls well within the wastewater standards for sewage systemsof Nishinomiya City.

10. Waste Management①Waste Management
HHR and HHRAM regularly seek to understand the figures submitted by the waste disposal operators of theportfolio.
②Charging by waste amountAt HANKYU NISHINOMIYA GARDENS and GRAND FRONT OSAKA, the waste disposed by each tenant ismeasured on an exclusive measurement device, and a fee is assessed based on the quantity of waste
produced. This system has contributed to the suppression of waste generated by tenants.

③Thorough waste sorting and recycling
At Dew Hankyu Yamada and HEP Five, etc., recycling is conducted thoroughly by sorting cardboard, paper,
cans, glass bottles, and plastic bottles.

④Using recycled trash bags
At HANKYU NISHINOMIYA GARDENS, recycled trash bags, which are made partly from plastic cups collected
at Hanshin Koshien Stadium run by Hanshin Electric Railway, are used to collect garbage brought from common
use areas. This activity contributes to HHR’s recycling-oriented efforts.

1311. External Certifications①Acquisition of “2 Stars” and "Green Star" Rating in GRESB Real Estate Assessment
GRESB is an annual benchmarking assessment to measure ESG (Environmental, Social and Governance)
integration of real estate companies and funds. In the 2023 GRESB Real Estate Assessment, HHR received a “2Stars” in GRESB Rating, which is based on GRESB Overall Score and its quintile position relative to global
participants. It also won a “Green Star” designation for the fifth consecutive year by achieving high performanceboth in “Management Component” that evaluates policies and organizational structure for ESG promotion, and“Performance Component” that assesses environmental performance and tenant engagement of properties
owned. HHR also received the highest “A Level” for the GRESB Public Disclosure, which assess the width of
ESG disclosure, for the fourth consecutive year.

②Acquisition of DBJ Green Building Certification
DBJ Green Building Certification is a program which Development Bank of Japan grants certifications after
assessing properties in five ranks, from the perspective of environmental and social considerations.
In the future, HHR will continue to work to expand the number of certified properties.

Properties with the best classenvironmental & social awareness

HANKYU NISHINOMIYA GARDENS

Properties with exceptionally highenvironmental & social awareness

HEP Five

14

Kitano Hankyu Building

Dew Hankyu Yamada

Shiodome East Side Building

Hankyu Corporation Head
Office Building

Properties with excellent
environmental & social awareness③Acquisition of Certification for CASBEE for Real Estate
Certification for CASBEE for Real Estate is an evaluation system that evaluates and ranks buildings andstructures in terms of their environmental performance by using CASBEE (Comprehensive Assessment System
for Built Environment Efficiency). CASBEE is designed to comprehensively assess the quality of a building,including not only consideration of environmental practices that include using materials and equipment that saveenergy or achieve smaller environmental loads, but also consideration of interior comfort and scenic aesthetics.

S Rank（Excellent）

SHIBAURA RENASITE TOWER

S Rank（Excellent）
GRAND FRONT OSAKA(Tower A of South Building,Tower B and C of North Building)15

A Rank（Very good）

GRAND FRONT OSAKA(Umekita Plaza)④Ration of properties that have received environmental certifications
The percentage of properties that received green building
certifications in the entire portfolio is 60.0% (based on total floorarea).
*As of October 1, 2023

12. Green Finance
HHR has established Green Finance Framework (hereafter the “Green Finance Framework”) that complies with theGreen Bond Principles 2018, the Green Bond Guidelines 2020, the Green Loan Principles, and the Green Loan
and Sustainability Linked Loan Guidelines 2020 for the implementation of green finance.
①Green Finance Framework●Use of Proceeds
The proceeds of green finance are allocated to the acquisition of Eligible Green Assets (Note) or implementation ofrenovation work or the refinancing or reimbursement of borrowings (including green loans) or investment
corporation bonds (including green bonds) which have been allocated to such.
Note: Assets that meet the following eligibility criteria●Eligibility Criteria(1) Eligible Green Assets
The criteria apply to assets for which any of the following green building certifications was obtained or
renewed within 36 months prior to the payment date of green bonds or the execution date of green loans or
the reporting date based on the Green Finance Framework, or will be obtained or renewed in the future.
・DBJ Green Building Certification: 3 Stars, 4 Stars or 5 Stars
・Certification for CASBEE for Real Estate: B+, A or S Rank
・BELS Certification: 3 Stars, 4 Stars or 5 Stars
・LEED Certification: Silver, Gold or Platinum16

(2) Renovation Work
The criteria apply to renovation work aiming to meet any of the following standards which were completed within
36 months prior to the payment date of green bonds or the execution date of green loans, or will be completed
in the future.
・Improvement of 1 step or higher in the number of Star or the Rank of any of the above-mentioned green
building certifications.
・Reduction of 10% or more in any of carbon dioxide emissions, energy consumption or water consumption.
・Any other renovation work pursuing effective improvement in terms of the environment (in which a reduction of
10% or more in the volume of consumption or emissions is expected compared with conventional methods).
・Introduction or acquisition of renewable energy-related facilities.
●Management of Procured Funds
The maximum amount of green finance is set at an amount arrived at by multiplying the sum of total acquisition
price of Eligible Green Assets owned by HHR and amount of expenditure for renovation work that meet theeligibility criteria by the ratio of interest-bearing debt to total assets (hereafter, “Eligible Green Debt Amount”).
HHR will conduct manage so that the balance of the proceeds of green finance will not exceed Eligible Green
Debt Amount.
87,916

Total acquisition price of Eligible Green Assets (millions of yen)

45.8

Ratio of interest-bearing debt to total assets（％）

40,265

Eligible Green Debt Amount (millions of yen)
*The figures are as of May 31, 2023.

●Assessment by External Institution
HHR has acquired Green1 (F), the highest ranking in the JCR Green Finance Framework Evaluation byassessment institution Japan Credit Rating Agency, Ltd. (JCR) concerning the eligibility of its green financeframework. For the content and other details of the JCR Green Finance Framework Evaluation, please refer tothe following website.
JCR Green Finance Framework Evaluation: https://www.jcr.co.jp/en/greenfinance/②Status of Finance●Balance of green bonds issued
The balance of green bond issued is 2,000 million yen (as of October 1, 2023)
Issue
amount(millions ofyen）Hankyu Hanshin
REIT Fourth Series ofUnsecured
Investment
Corporation Bonds
Hankyu Hanshin
REIT Fifth Series ofUnsecured
Investment
Corporation Bonds

1,000

1,000

Interest
rate

0.300％
Per
annum

0.540％
Per
annum

Issue date

Redemption
date

Use of proceeds

October 28, October 28,
2020
2025

Repayment of the loans (including theloans from subsequent refinancing) thatwere required for acquisition of
Shiodome East Side Building, an Eligible
Green Asset under the Green Finance
Framework.

October 28, October 28,
2020
2030

Repayment of the loans (including theloans from subsequent refinancing) thatwere required for acquisition of
Shiodome East Side Building, an Eligible
Green Asset under the Green Finance
Framework.

17

③Impact reporting

HHR discloses the status of acquisition of certifications, assessment of certifications and the following indicators foreach eligible green asset once a year.
●Property names of Eligible Green Assets and status of acquisition of environmental certifications(as of October 1, 2023)

Property nameAcquisition price(millions of yen)

DBJ Green Building

CASBEEBELS

LEED

HANKYU NISHINOMIYAGARDENS

18,300

★★★★★

－

－

－

HEP Five

6,468

★★★★

－

－

－

Kitano Hankyu Building

7,740

★★★

－

－

－

Dew Hankyu Yamada

6,930

★★★

－

－

－

19,025

★★★

－

－

－

10,200

★★★

－

－

－

3,475

－

S

－

－

6,566

－

S

－

－

－

S

－

－

－

A

－

－

Shiodome East Side
Building
Hankyu Corporation Head
Office Building
SHIBAURA RENASITE
TOWER
GRAND FRONT OSAKA(North Building)
GRAND FRONT OSAKA(South Building)
GRAND FRONT OSAKA(Umekita Plaza)

9,212

Total

87,916●Quantitative indicators of Eligible Green Assets
Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

Energy consumption (MWh)114,742

102,832

97,466

101,814

Water consumption (m2)279,260

195,083

181,232

219,486

Greenhouse gas emissions (t)15,946

13,713

13,577

12,219*As of October 1, 2023
*Each figure is disclosed to the extent possible, showing the total of all figures from target properties owned in each fiscal year.
*The figures after the conversion into primary energy are used for energy consumption

18

Chapter 3

Social Initiatives

1. Relationships with the Local Communities①Participating in locally hosted events
Umekita Plaza of GRAND FRONT OSAKA is the site where the Umeda Yukata Matsuri, a summer event in the
Umeda area, is hosted, and in addition to hosting Bon festival dances and customer participation-type Uchimizu
events, it is also the site where “UMEDA MEETS HEART,” a winter event in the area and project to transmit
positive messages from Umeda with a motif of “Heart,” is implemented.
The Umeda Yukata Matsuri, run by Umeda Area Management Alliance (Osaka Station District) as part of theiractivities, is a local event aimed at further improving the area's attractiveness, under the theme of "yukata,"
which is a part of traditional Japanese culture.
We also offer the open space of Hankyu Corporation Head Office Building as event sites for locally hosted
events such as the Umeda Yukata Matsuriand and the 1000000 People's Candle Night@OSAKA CITY
Chayamachi Slowday.

Umeda Yukata Matsuri②Offering venues for holding of local events
HHR is offering spaces at properties it owns to support the holding of local events.
●Dew Hankyu Yamada
Playing a role in supporting local industries and drawing customers to local
markets, by providing market spaces for start-ups who are planning to open
their businesses in the surrounding communities, and holding market events
at its common areas on a regular basis.

●GRAND FRONT OSAKA
Regularly holding live music events for free as a joint project with a radio station, and providing the SpringX
program, which offers online venues for practical learning opportunities and start-up support.

19

③Cooperating with nearby local communities
METS OZONE makes community-based contributions by holding Kids
Marché, where local groups provide workshops, goods sales, and otheropportunities for children.

Kitano Hankyu Building deepens the relationship with the local community
by exhibiting, at a temporary section, art works local art students havecreated.

④Introducing a bike sharing system
Kitano Hankyu Building has introduced a bike sharing system operated
by DOCOMO BIKESHARE, INC. and contributes to reducing theenvironmental load by mitigating traffic congestion in the city center.
Moreover, this also contributes to the development of local industry astransportation infrastructure for commuting, business, and tourism.

⑤Implementing a park-and-ride
Dew Hankyu Yamada has implemented a park-and-ride on its rooftop
parking lot. A park-and-ride, is a method of commuting whereby people
park their automobiles in parking lots with public transport connections,and transfer to public transportations such as railways and fixed-routebusses. It is a transportation policy that is promoted as a way to mitigate
traffic congestion in city centers and tourist sites, suppress traffic pollution,and reduce illegal parking, etc.
Dew Hankyu Yamada⑥Supporting sales promotions of tenants and startups
On the first floor below ground at HEP Five, the "FIVE LAB" has been set
up to support startups, which is a pop-up space that collects anddispatches popular contents, and provides opportunities for creators andEC shops to make sales at special events. In fact, some members who
had participated in those events became official tenants by opening theirown shops. HEP Five has also established a photo studio for SNS and livecommerce to support the sales promotions of tenants.
⑦Participating in the Hankyu Hanshin Mirai no Yume Machi Project
Our sponsor, Hankyu Hanshin Holdings Group conducts the Hankyu Hanshin Mirai no Yume Machi Project, andthe employees of HHRAM also participate in this project.

20

[Overview of Hankyu Hanshin Mirai no Yume Machiroject]https://www.hankyu-hanshin.co.jp/yume-machi/top.html (in Japanese)

2. Relationships with Tenants①Employee satisfaction surveys
With the cooperation of a property management company, we conduct regular employee satisfaction surveys at
the properties owned by HHR listed below, and aim to improve employee satisfaction and increase the value offacilities, through improvements based on the survey results.
Properties with employee satisfaction surveys:
HEP Five, Dew Hankyu Yamada, METS OZONE, GRAND FRONT OSAKA②Training for employees of tenants
We conduct various video and offline training sessions at HEP Five,
aimed at making the site attractive and selected by customers. In fiscal
2023, training courses to learn how to develop social media skills andhow to deal with customer complaints are scheduled at GRAND FRONTOSAKA while training courses to improve customer service at HANKYUNISHINOMIYA GARDENS.

HANKYU NISHINOMIYA GARDENS and GRAND FRONT OSAKA have sent participant to the national customer
service role playing contest hosted by Japan Council of Shopping Centers. In addition to improving the skills of
the employees, we work to improve the enjoyability of customers who use the facilities.
③Providing building environments that makes it easy to work
Shiodome East Side Building and SHIBAURA RENASITE TOWER have prepared an environment where
employees can easily purchase lunch within the building, and works to improve tenant satisfaction. In addition,
shelves and cupboards for use when changing clothes have been installed in the ladies' rooms at Shiodome
East Side Building, supporting the comfortable office work of female employees who work there. SHIBAURARENASITE TOWER provides opportunities to connect with tenants by holding regional food fairs at the entranceof the building.

Shiodome East Side Building

SHIBAURA RENASITE TOWER
21

HEP Five renovated its employee cafeteria in fiscal 2019 and has a meeting space where employees cancommunicate with one another, in addition to a space for charging devices. In addition, HANKYU NISHINOMIYAGARDENS established a female powder room in the employee lounge to provide and support an environment
where tenant employees can work comfortably.

HEP Five

HANKYU NISHINOMIYA GARDENS④Installation of Tokuho (Foods for Specified Health Uses) Drink
Vending Machines
Tokuho (Foods for Specified Health Uses) drink vending machines are
installed at Shiodome East Side Building. In establishing an environment
where vegetable juice and healthy drinks have been made readily available,
the health of tenant workers is promoted.

⑤Award history
HEP Five has received the ES Award multiple times at the Developer Award and Tenant Award event hosted by
SENKEN SHIMBUN CO., LTD. In addition, HANKYU NISHINOMIYA GARDENS received the Gold Award at theJapan SC Awards in 2013 as the first retail facility ever to receive the award outside of the Tokyo metropolitan
area while it also received the Developer Award Chosen by Tenants at the 25th (fiscal 2022) Developer Awardand Tenant Award event hosted by SENKEN SHIMBUN CO., LTD., which was received for three years in a row,and four times in total with the award at the 19th event in fiscal 2016.

3. Initiatives towards Employees of HHRAM
Due to the provisions of the Act on Investment Trusts and Investment Corporations (hereafter "Investment Trust
Act"), HHR cannot hire employees. As such, its assets are managed by the employees of HHRAM. We believethat each and every employee related to the business is an indispensable asset, and in addition to working tocreate a healthy work environment where employees can maximize their various personalities and abilities, italso aims to improve business competitiveness through proactive personnel development.
①Health management●The purpose of health management and how to deal with problems
Hankyu Hanshin Holdings Group has promoted health management while holding "respect for people" as one ofits most important values, and believes that the health of its employees and their families is the cornerstone of
the company's future.
HHRAM does not have many employees, so that our business could easily be affected even when only one ofthem cannot fully perform due to his or her poor health condition. With the "Health Declaration” established in
September, 2019, we have promoted health management, aiming at improvement of productivity andrevitalization of the workplace by improving the health awareness of all employees and making the workplace
more comfortable so they can work with enthusiasm.
22

Health Declaration
As the only REIT management company in the group, Hankyu Hanshin REIT Asset Management Company aims to contributeto the development of a safer and more comfortable town by providing funds for the development and growth of officebuildings and retail facilities through the securitization of real estate properties mainly in the Kansai Region.
In order to deliver “safety and comfort”, which is the group’s management philosophy, as well as “dream and excitement” toeveryone, it is important for the employees and their families to be healthy and each employee to demonstrate theirindividuality and skills to the maximum extent in a “Heartful & Joyful” work environment.
We will make efforts in health management with the motto of “making people and the town vigorous forever!” to realize suchgoal.
Hankyu Hanshin REIT Asset Management Company declares that it will strive to proactively support everyone's health andcreate a work environment where employees can work enthusiastically under the “Hankyu Hanshin Wellness Challenge” setby Hankyu Hanshin Holdings Group.
September 1, 2019
Yoshiaki Shiraki
President and Representative Director,
Health Management Promotion Officer,
Hankyu Hanshin REIT Asset Management, Inc.

HHRAM Health Declaration: https://www.hhram.co.jp/health.html●Initiatives by project team
We implement programs promoting health each fiscal year under a health management project team and thosepromoting communication between employees. Conducting a survey of employees’ health revealed some healthissues mainly related to diet and exercise. To solve the problems, we set up a cross-functional special projectteam, and carried out various events under the themes of diet, exercise, and improving communication, with
unanimous approval, including of board members, through internal discussions. Here are some examples.
<Main initiatives implemented until now>

• Vegetable Catering Service introduced to offices
•
•
•
•
•
•
•

Morning activities
Radio Gymnastics Time (twice a day)
“Arukatsu” walking events (for four months every year)
Property inspection tours (once a year)
Health courses by outside lecturers (two or three times a year)
Background music for working introduced to offices
Portable aroma diffuser units brought to offices●Effect of introducing Health Management
Along with various initiatives for Health Management, we have also promoted flexible working as described in“③Work-life balance” later.
“Arukatsu” walking events, for example, started with the goal of 5,000 steps with a 50% of participation rate, but
at the latest event in fiscal 2022, the participation rate increased to 100% and the average number of steps wasapproximately 8,500, showing a significant increase.
In fact, the employee survey in fiscal 2022 shows better result from each question than that in fiscal 2021: 70%
to 86% for not being unexpectedly absent or unable to work due to health condition; 40% to 48 % for walking for
more than 60 minutes a day; 70% to 92% for being satisfied with communication at the office. As for employees
who participated in a breakfast event, the awareness of breakfast increased by 64% after the event. In addition,
the average monthly overtime working hours in fiscal 2022 were two hours less than in fiscal 2021 (nine hours).
Meanwhile, we have been focusing on stimulating staff engagement by taking some measures to deal with
communication failures due to COVID-19, which will contribute to improving our business relationships andproductivity.
23

It is also clear to us that increasing opportunities to cooperate with outside companies and communities throughHealth Management are quite beneficial to us: collaborating with Tokyo Fudosangyo Health Insurance Society
on organizing seminars and other various activities; letting our employees speak at outside seminars as
lecturers; our initiatives being introduced on the web sites of both the Ministry of Health, Labour and Welfare,and the Ministry of Economy, Trade, and Industry.
●Recognized as 2023 Certified Health & Productivity Management Organization Bright 500 (SME
category)
The Certified Health & Productivity Management Organization Recognition
Program is a program under which the Ministry of Economy, Trade andIndustry examines large enterprises, SMEs and other organizations that are
engaging in health-conscious activities in collaboration with health insurance
society members and promoting such activities led by the Nippon Kenko
Kaigi, and recognizes outstanding enterprises engaging in efforts for healthand productivity management.
*”Bright 500” is given to the top 500 enterprises among the “2023 CertifiedHealth & Productivity Management Outstanding Organizations (SME
Category)” demonstrating “further outstanding health and productivity
management” and “expansion of efforts to regional areas.”●Received a Special Award for the spin-off project of the Osaka Wellness Action Award, Wellness
Activity 10 at Workplace (March, 2021)
The Osaka Wellness Action Awards aim to promote and disseminate independent and proactive health andproductivity management, and HHRAM was recognized as an organization that is proactively engaged in
activities for health and productivity management in Osaka and for promoting health in the workplace and acrossthe region②Work environment●Personnel development
We have put various training policies in place with the purpose of improving the skills of our employees.
Beginning with the specialized skills needed for real estate investment management operations, we also provide
seminars for employees to acquire sophisticated business manners and to improve their communication abilities,
along with thematic seminars by invited outside experts as lecturers such as on compliance and sustainability.
In addition, we have also implemented an incentive system to for employees to acquire qualifications for
professional personnel development. Especially for specialized qualifications recognized as necessary for theasset management business, including the Association for Real Estate Securitization (ARES) Certified Master,
we pay the necessary expenses for employees who take training courses and examinations of suchqualifications, or maintain the qualifications they have acquired. For your information, the ARES Certified Mastersystem is an educational program through which you can learn a variety of specific, practical knowledge related
to the real estate and financial industries systematically.
The table below shows the number of employees who have acquired each qualification.
24

As of October 1, 2023
Name

NumberReal Estate Appraiser

2

ARES Certified Master

20

Real Estate Transaction Agent

23

Certified Building Administrator

12

Shopping Center Business Administrator

1

Certified Public Accountant

1

First-class Architect

1

Second-class Architect

1

Building Mechanical and Electrical Engineer
Certiﬁed Member Analyst of the Securities
Analysts Association of Japan (CMA)

1
1●Group training system
Hankyu Hanshin Holdings offers the group training system to all employees who have reached importantmilestones, for example, when entering the company, and when taking up a new management post. HHR
employees can also take part in the training sessions. In addition, Hankyu Hanshin Holdings has a personnel
and accounting company for all group employees, Hankyu Hanshin Business Associates, which plans andconducts seminars to support all group companies with human resource development throughout the year at
Hankyu Hanshin Manabi-ba seminars, and Hankyu Hanshin Business School. The group training system,
therefore, creates opportunities for group employees to develop their own self-awareness as a group member
and strengthen cooperation with other group companies, and to improve themselves through competition bytaking part in a group seminar for job ranking or personnel development.
●Management by Objectives (MBO)
All employees including contract ones are expected to develop their own ability through various business
operations with MBO strategies applied. Among them are goal setting together with their supervisor, and having
a year-end interview for evaluation feedback from their supervisor. In addition, regular interviews are scheduled
for employees to get appropriate support from their own supervisor. The MBO system gives them varied career
paths, engaging in job rotation if necessary.
●Office environment
Upon office expansion, a collaboration space was added after taking employee opinions into consideration. The
new space will promote ease of work and communication.

●Employee questionnaires (once a year)
In cooperation with group companies of Hankyu Hanshin Holdings, we conduct two surveys every other year:
the Employee Satisfaction Survey to improve employee engagement, and the Working Environment Survey toprevent harassment in the workplace and educate employees on harassment.
25

③Work-life balance●Introduction of flextime system
With the purpose of improving productivity, the flextime system (without core time) was introduced starting inAugust 2019, which gives employees the choice of when they will work, including daily start and end times, andenables them to work efficiently while balancing life and work.
Combined with the flextime system, a work interval system was also introduced, which sets a certain interval oftime between the time employees leave work until they can start again. In this way, we are also making
considerations to prevent long work hours.
●Introduction of high-performance notebook PCs and in-house wireless LAN
Along with introduction of a flextime system, office PCs were replaced with high-performance notebook PCs, andin-house wireless LAN was set up. As a result, employees were enabled to select their workplace and working
hours more freely, productivity was improved, and paperless meetings, etc. were achieved.
●Enabling remote work
With the purpose of realizing smooth progress in business while considering the health of employees amid the
spread of COVID-19, we allowed our employees to select remote work as an option.
In addition to introducing secure remote-access services for safe access from outside the office, the target ofweb-conferencing system users was expanded to all employees of HHRAM. Currently, remote work has beeneffectively established, which shows that flexible work arrangements have been fully introduced to ouremployees.
●Digitalization of decision-making flow
We responded to remote work by preparing approval documents, decision-making documents and instructions
as well as digitalized the decision-making flow, and made efforts to enhance and improve the efficiency of
productivity.
●Health management
By conducting regular health examinations and covering the costs of influenza vaccinations, we are engaged inmaintaining and improving the health of our employees.
●Welfare program
As part of creating a comfortable workplace where employees can work safely and securely, HHRAM provides
all employees with the following systems, other than “maternity leave before and after childbirth,” “childcare
leave,” “paternity leave,” “child medical care leave,” “family care leave,” “congratulation or condolence leave,”and other leaves:・Cafeteria plan (Multiple-choice welfare service program)・Sukoyaka leave (Reserved annual paid leave)
・Special sick leave (Employees who get sick or injured for a private reason may be granted up to five working
days per year when they use up all their leave days specified in both annual paid leave and reserved annual
paid leave.)
・System to balance medical treatment and working life (Employees who receive medical treatment whileworking may be granted a flexible working style: shorter working hours, shorter working days, and remotework.)
・Rehabilitation system for the return-to-work process (Mainly absentees due to mental health problems may be
eligible for the system as a support to return to work sooner.)26

④Diversity●Respecting human rights, preventing harassment
We respect the diversity of each and every employee and believe that mutual acceptance is indispensable tosustainable growth, and the sponsor group takes initiative as one body by conducting human rights training,
conducting surveys, and increasing the number of consultation service counters.
Employees can anonymously receive a counselor’s advice or report harassment, and it is clearly stated that theprivacy of the counselee shall be protected, and they shall not be subject to discriminatory treatment due to suchconsultation or reporting.
In addition to counselling, HHRAM establishes a consultation counter for corporate ethics (Note) as part of theinternal whistleblowing system for harassment and human rights abuse.
Note: Please refer to “④Establishing a consultation counter of corporate ethics” at “7. Initiatives towards Property Management
Companies and Suppliers.”●Human Rights Policy

HHRAM shares “Basic Philosophy and Policy on Respect for Human Rights” by the Hankyu Hanshin HoldingsGroup which was revised in April, 2023. (The following is translation of the excerpt from the Hankyu Hanshin
Holdings Group’s website.)
The mission of the Hankyu Hanshin Holdings Group is to realize our customers’ happy lives and contribute to
the society by providing them with “safety and comfort” as well as “dreams and excitement.” To accomplish
our mission, we believe that we should respect the human rights of all the stakeholders, including customers,clients, shareholders, the local community, and our staff members who are in charge of our businesses, based
upon the belief that we shall coexist with all people as a member of society. Our Basic Philosophy and Policy
on Respect for Human Rights are well established so that every one of us can recognize and become
conscious of human rights as our own affair by enhancing the sense of human rights to think and behave
accordingly. In fact, our Philosophy and Policy is stipulated based on the United Nations Guiding Principles on
Business and Human Rights.
Hankyu Hanshin Holdings Group Basic Philosophy and Policy on Respect for Human Rights“Basic Philosophy on Respect for Human Rights”
By respecting the human rights of all people involved in our business activities, we contribute to the creationof an affluent society free from discrimination and the infringement of human rights based on birth, race,
nationality, religion, creed, sex, sexual orientation and gender identity, age, disability, etc.
“Basic Policy on Respect for Human Rights”
1. Compliance with laws and regulations related to respect for human rights
We will endeavor to comply with human rights laws and regulations applicable in the countries and regions inwhich we operate and will support and respect international human rights norms such as the International Billof Human Rights (Universal Declaration of Human Rights and International Covenants on Human Rights) andthe ILO Declaration on Fundamental Principles and Rights at Work* issued by the International Labour
Organization (ILO).
* The core labour standards include freedom of association and recognition of the right to collective
bargaining, prohibition of forced labour, prohibition of child labour, prohibition of discrimination in respect of
employment and occupation, and a safe and healthy working environment.
2. Scope of application
This philosophy and policy apply to all officers and employees of the Hankyu Hanshin Holdings Group. We
also will try to gain the understanding and support of stakeholders in this philosophy and policy, and we hope
to work together to proceed with respect for human rights.
27

3. Human rights due diligence
In order to fulfill our responsibility to respect human rights, we will continue to implement human rights due
diligence and work to avoid and reduce negative impacts on human rights.
4. Remedy and correction
Upon our knowledge of any directly caused, and/or the contributing of, adverse impacts on human rights
through our business activities, we will implement or cooperate in remedies and corrections throughappropriate means.
5. Dialogues with stakeholders
We seek to gain insights through dialogue with outside experts, listen to the opinions of our stakeholders, andstrive to respond responsibly.
6. Education and AwarenessWe will continue to provide the necessary education and awareness to ensure that this philosophy and policy
are carried out in our business activities.
7. Creating a safe and satisfying work environment
In order to respect the human rights of each employee, we will endeavor to maintain fairness and equality inall treatment, starting with the hiring process. We will also promote the creation of a work environment where
officers and employees can recognize each other's differences and make full use of their individuality andtalent.
8. Information disclosure
We will disclose information on our efforts to respect human rights in a timely and appropriate manner.
●Promoting women's success
We are creating an environment where female employees are able to realize their potential and succeed as partof our diversity acceptance measures.
⑤System to grant incentives to employees●The performance-based annual salary system has been partially introduced. This is due to making
responsibility for performance clearer and granting incentives to certain employees.
●The unitholders accumulated investment system has been introduced since March 2012. This is mainly
because we want to make it possible to improve medium-to-long-term investor value by raising employees’
awareness of the improvement and continued growth of HHR’s business performance.

28

●Personnel data
As of October
1, 202137

As of October
1, 202237

As of October
1, 2023
39

Male

18

17

20

Female

19

20

19

37

37

39

Number of regular employees

17

16

23

Male

4

3

8

Female13

13

15

Number of seconded employees

18

16

15

Male

14

12

12

Female443Number of contract employees

2

5

1

Male

0

2

0

Female

2

3

1

11

12

10

Male

10

12

10

Female

1

0

0

2

5

3

Male

0

2

3

Female2

30

Average length of service (Note 1)

3.6 years

4.0 years

4.0 years

Paid holiday acquisition rate (Note 2)

71.5%

61.1%

74.2%

Health examination rate (Note 3)

100%

100%

100%

Number of employees on childcare leave (cumulative)

0 (1)

0 (1)

0 (1)

Number of employees on family care leave (cumulative)

0 (0)

0 (0)

0 (0)

Attendance rate for sustainability training (Note 3)

100%

100%

100%

Attendance rate for compliance training (Note 3)

100%

100%

100%

Personnel Data
Number of all employees

Number of employees (by type of employment)

Number of management level employees

Number of new employees

Note1: Average number of years when the employees have worked (as for seconded employees, based upon the date when they were officially accepted)
Note 2: Total actual results of regular employees and contract employees (Oct. 1, 2022 - Sep. 30, 2023) and seconded employees (Sep. 1, 2022 - Aug. 31, 2023).
Note 3: Actual result of each fiscal year

4. Securing Safety and Security①Safety and security of owned properties
Ever since the Great East Japan Earthquake (2011), interest in the seismic resistance of buildings has risen
extremely high. In order to secure business continuity in the face of natural disasters and epidemics, etc., HHR
has prepared various measures to minimize damage and speed up recovery.
②Preparing for seismic risks - utilizing PML value
The probable maximum loss (PML) refers to the forecasted maximum loss that could be incurred due to an
earthquake.
The PML is indicated by the ratio of forecasted replacement costs assuming maximum material losses against
the largest earthquake that can be expected during the use-period of a building (475-year return period = 10%
chance of exceedance in 50 years), and the lower the ratio, the lower the expected losses. When deciding upon
the acquisition of a property, HHR will check its PML value and will not acquire the property if the PML value
29

does not meet a certain standard.
*For the PML values of each property in the portfolio, please refer to the materials for analyst briefing on the "Disclosure Materials" of our website. .
Disclosure Materials: https://www.hankyuhanshinreit.co.jp/eng/ir/disclosure.html③Systematic repairs and CAPEX
HHR conducts repairs systematically according to the age of properties, etc., in an effort to prevent unforeseen
accidents and minimize damages during disasters.

Waterproofing work on the roof of
Takatsuki-Josai Shopping Center

Repairing the exterior wall at Dew Hankyu
YamadaHeat source renewal work at LAXA
Osaka

④Providing lifelines and disaster protection centers
HHR's properties provide lifelines and disaster protection centers to its customers during natural disasters.
●Takatsuki-Josai Shopping Center
It has a disaster cooperation agreement with Takatsuki
City, and will provide the parking space on the site asa temporary evacuation space for local residents andas a base for vehicles in the case of a disaster.

●HEP Five
It has first-aid kits, disaster prevention equipment for
stranded commuters, those who are temporarily
prevented from returning home, and has been
designated as a temporary evacuation site based onthe "Plan to Secure Underground Evacuation Space in
Umeda."●Dew Hankyu Yamada, Takatsuki-Josai Shopping Center
These properties will provide food and disaster prevention goods, etc., to local residents in the case of adisaster.
●GRAND FRONT OSAKA
Based upon the agreement with Osaka City on the acceptance of commuters who cannot return home in theevent of disasters, the facility shall temporally accept stranded commuters to the possible extent.

30

5. Safety and Security of Customers and Tenant Employees①Conducting fire drills
Fire drills are conducted at HHR's properties in accordance with the Fire Services Act, which includes training on
how to use fire extinguishers and first aid measures, etc., with the assumption that these will be put into practice.

②Storing emergency goods
At some of HHR's properties, emergency goods boxes have been set up, which can be used if one was to belocked in an elevator during an emergency. At HEP Five and Kitano Hankyu Building, disaster prevention
equipment, to be used by people who are prevented from returning home, are stored in disaster prevention
chairs installed on every floor of the buildings.

③Providing menstrual hygiene products for free
At HEP Five, OiTr, a dispenser to provide sanitary pads free of charge,
has been installed in some of the toilet rooms. We have been promoting
this initiative to realize a society where menstrual hygiene products arereadily available in each toilet room, just like toilet rolls.

④Installing rat proof ultrasound equipment
At Shiodome East Side Building, rat proof ultrasound equipment has
been installed. By installing these devices, rats are kept away without
using poison for unnecessary killing, and we provide a safe andenjoyable office environment to tenant employees.

31

⑤Setting up baby rooms
At GRAND FRONT OSAKA and HANKYU NISHINOMIYA GARDENS,
baby rooms with a baby bed, a breastfeeding booth, and otherequipment installed are set up for customers with babies to visit theplaces without any stress. This shows how we make our facilities betterfor child-rearing generations.

6. Safety and Security of HHRAM's Employees①Promoting disaster prevention and BCP measures
Under the policy that human resources are its most important corporate resource, HHRAM conducts various
initiatives to secure the safety and security of employees.
●Establishment of business continuity plan (BCP)●Establishment of “Initial Response Manual for Large-Scale Disasters (Earthquakes)” and “Initial Response
Manual for Large-Scale Disasters (Typhoons/Advance Response)”●Establishment of initial response manual for outbreak of a new type of influenza and other diseases●Implementation of safety confirmation system and simulation training●Implementation of disasterprevention drills(the representative participates in the
training and gives explanations)●Distribution of disaster prevention
goods and storage of emergency
goods

７．Initiatives towards Property Management Companies and Suppliers①Establishment of Sustainable Procurement Policy
Based on the "Sustainable Procurement Policy” established in March 2019, HHR and HHRAM have beenpromoting initiatives that focus on sustainability issues in the supply chains of HHR and HHRAM. For thispurpose, the status of sustainability initiatives, including introducing an environmental management system or its
equivalent, promoting respect for human rights and diversity, establishing a system for corporate ethics, andengaging in community activities, is taken into consideration as one of the criteria for selecting and evaluating
property management companies and suppliers.

32

②Continuous evaluation of property management companies
The period of the property management entrustment agreements concluded with parties HHR entrusts withproperty management of properties it owns is one year as a general rule, and HHR evaluates the management
results of property management companies by the end of the agreement period. In the continuous evaluation
since fiscal 2019, HHR evaluated the sustainability initiatives at properties it owns carried out by property
management companies.
③Implementation of sustainability training
In order to establish a mindset on sustainability and reinforce the collaboration system, HHR invites outside
experts once a year as lecturers and implements sustainability training for HHRAM employees along withpersons in charge of properties working at parties HHR entrusts with property management of properties it owns.
<Main training themes from fiscal 2020 to 2022>
 Review of CSR, SDGs, and ESG
 Positive impact investing GRESB and its implementation
 Case studies of property management companies and our tenants initiatives
 Climate change and Task Force on Climate-related Financial Disclosures (TCFD)
 Growing interest in social issues (health, well-being, and DEI)
④Establishment of consultation counter of corporate ethics
HHRAM has established a corporate ethics consultation counter to accept whistleblowing about behaviors thatare contrary to related laws, regulations, and corporate ethics, and facts that may be so, based upon
Whistleblower Protection Act. This counter is available for not only HHRAM employees but also staff members
and managers from property management companies, suppliers, and other organizations which have acontinuous relationship with HHRAM, and its existence is widely publicized. It also accepts anonymous
consultations and reports, and guarantees that there shall be no disadvantageous treatment on the basis ofconsulting, and that the whistleblowers’ personal information shall be protected.

8. Dialogue with Unitholders and Investors①Regarding information disclosure
Recognizing sufficiently that replete information disclosure can largely impact the development and success or
failure of the real estate investment trust market, HHR will stand in our unitholders' shoes and disclose
information from the perspective of "timeliness" and "fairness".
●Information will be disclosed in line with the details and methods outlined in the Financial Instruments andExchange Act, in the Investment Trust Act, by the Tokyo Stock Exchange, Inc., and by The Investment Trusts
Association, Japan.
●A system for the accurate and timely collection of information has been established, and we work to disclose
information to our unitholders while making considerations for transparency and comprehensibility.
●We work to proactively disclose information that is deemed important for making investment decisions, even for
information that is not indicated in information disclosure legislation.

33

②Status of IR activities
We work to disclose information in a timely manner through our website including statutory disclosure
documents, press releases, financial results information (financial statements, financial results, materials foranalyst briefing), characteristics of managed assets, and performance status, etc.
Each fiscal period, we hold an analyst briefing on the operating status and the financial outlook, etc., fordomestic institutional investors, lenders, and other interested parties. In addition, we hold approximately 50 oneon-one meetings (including conference calls, online meetings) for institutional investors.
For our overseas investors, we hold six IR events a year, focusing mainly on North America, Europe, Australia,
and Asia, and hold approximately 30 one-on-one meetings (including online meetings). In addition, we also
proactively participate in conferences held by securities companies in Japan.
For our individual investors, we hold a meeting updating our operational status in Tokyo and Osaka once a year
(institutional investors can also participate). Moreover, we also proactively participate in private investors
seminars held by the Association for Real Estate Securitization, the Tokyo Stock Exchange, and securities
companies, etc.

34Chapter 4

Governance Initiatives

1. Corporate Governance①Matters concerning corporate governance●Details of the Organization
HHR shall have at least one Executive Director(s) and at least two Supervisory Directors (and at least one
more Supervisory Director than the number of Executive Directors).
As of the date of this document, the organization of HHR is comprised of the General Unitholders’ Meetingfeaturing unitholders, in addition to one Executive Director, two Supervisory Directors, the Executive Meeting,which includes all Executive Directors and Supervisory Directors, as well as the Accounting Auditor.
a. General Unitholders’ Meeting
Certain matters concerning HHR, as stipulated under the Investment Trust Act or the Articles ofIncorporation, shall be resolved at a General Unitholders’ Meeting, comprised of unitholders.
b. Executive Director, Supervisory Director and Executive Meeting
In addition to undertaking the executive management of HHR, the Executive Director has the authority totake any judicial or extra-judicial acts related to the business of HHR on behalf of HHR. However, theapproval of the Executive Meeting is required for certain duties stipulated in the Investment Trust Act, suchas providing consent for cancelling the asset management services agreement originating from HHRAM,
convening of the General Unitholders’ Meeting, entrusting administrative work to general administrative
service providers, concluding asset management services agreements and asset custody entrustment
agreements, and other duties. Supervisory Directors have the authority to oversee the Executive Director’s
execution of duties. Executive Meeting, in addition to having the authority to approve the execution ofcertain duties as stated above, has the authority as stipulated in the Investment Trust Act and the Articles ofIncorporation to oversee the Executive Director’s execution of duties.
c. Accounting Auditor
HHR has designated KPMG AZSA LLC as the Accounting Auditor. The Accounting Auditor shall audit HHR’s
calculation documents, etc. Furthermore, the Accounting Auditor shall report to Supervisory Directors in theevent a fraudulent act or material fact violating any law or the Articles of Incorporation concerning theexecution of duties of the Executive Director is detected and shall execute other duties stipulated by laws.
●Internal Audit and Supervision Organization by Supervisory Directors, Personnel and Procedures
The rules of the Executive Meeting of HHR indicate that the Executive Meeting shall be held at least once
every three months, and in practice, these meetings are convened roughly once a month.
The Executive Meeting is comprised of, in addition to one Executive Director and two Supervisory Directors,
the President and Representative Director and Directors of HHRAM, and has established the internal audit
structure by confirming the status of HHRAM’s asset management operations.
As of the date of this document, one attorney and one certified public accountant are appointed as
Supervisory Directors, and based on their operational experience and insight, they supervise the Executive
Director’s execution of duties from various viewpoints.
●Mutual Cooperation between Internal Audit, Supervision by Supervisory Directors and Accounting
Audit
Each Supervisory Director receives reports concerning asset management and compliance from the Executive
Director and HHRAM at the Executive Meeting of HHR.
On the other hand, the Accounting Auditor cooperates with the Supervisory Directors by regularly hosting audit
briefing sessions, etc. for the Supervisory Directors. In addition, in the execution of their tasks, if the
Accounting Auditor detects a fraudulent act or material fact violating any law or the Articles of Incorporation
concerning the Executive Director’s execution of duties and other duties stipulated by laws, the Accounting
Auditor has the responsibility to report this to the Supervisory Directors.
35

As of October 1, 2023
Investment Corporation

General administrator
Asset custodian
Administrator of unitholders’ register
Administrator of special account
Mitsubishi UFJ Trust and Banking
Corporation

Hankyu Hanshin REIT, Inc.

②

Hankyu Hanshin Holdings, Inc.

General Unitholders’ Meeting

Executive Meeting
Executive Director: Yoshiaki Shiraki
Supervisory Director: Motofumi Suzuki
Supervisory Director: Hiroumi Shioji

General administrator of investment
corporation bonds

Hankyu Hanshin REIT Asset Management,
Inc.’s ultimate parent company(Wholly owned)③
MUFG Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited

Accounting Auditor
KPMG AZSA LLC

Real estate information service
companies
Hankyu Corporation
Hanshin Electric Railway Co., Ltd.
Hankyu Hanshin Properties Corp.
Hankyu Hanshin Real Estate
Investment Advisors, Inc.

Hankyu Hanshin REIT AssetManagement, Inc.’s parent company
Hankyu Hanshin Properties Corp.

①
Asset Management Company④

Hankyu Hanshin REIT AssetManagement, Inc.

(Wholly owned)①Asset management services agreement②Administrative agency agreement/asset custody agreement/agreement on administration of unitholders’ register/special
account management agreement③Financial agency agreement/Fiscal, issuing and payment agency agreement④Information sharing-related agreement②Organization of HHRAM
Asset management of HHR has been entrusted to HHRAM.
HHRAM shall engage in operations relating to asset management entrusted by HHR based on the aboveorganizational structure.
The Board of Directors of HHRAM acts as the decision-making body for important matters concerning themanagement of HHRAM, and in addition to making decisions regarding management policy and basic mattersconcerning the execution of duties, it also supervises the duties of the directors. The operations of HHRAM are
assigned to the respective departments including the Investment Planning Department, Investment Management
Department 1, Investment Management Department 2, Financial and IR Department, Corporate Operations
Department, Compliance Department, and the Internal Audit Department, and each of these departments aresupervised by a Director in charge and Department or Office General Manager.
The Investment Management Committee has been established as the organization responsible for conducting
deliberation and making decisions concerning asset management and management evaluation, andfurthermore, the Compliance Committee has been established as the organization responsible for deliberationand decisions concerning conflict-of-interest transactions, etc., as well as consultation for matters related tocompliance, etc.

36General Meeting of Shareholders
Auditors
Board of Directors

President and Representative Director
Internal Audit Department
Compliance Committee

Investment Management Committee
Compliance Department

Investment Planning
Department

Investment Management
Department 1

Investment Management
Department 2

Financial and IR
Department

Corporate Operations
Department

As of October 1, 2023
Corporate Data
Trade nameHankyu Hanshin REIT Asset Management, Inc.

Headquarters

19F, Applause Tower, 19-19, Chayamachi, Kita-ku, Osaka 530-0013, Japan

EstablishedMarch 15, 2004

Paid-in capital

JPY 300 mn

Shareholder

Hankyu Hanshin Properties Corp. (100%)

Number of officers andemployees

43 (full-time workers only)

Executive officers

President & Representative Director

Yoshiaki Shiraki

Managing Director

Toyoshige Okazaki

Director

Takahito Emoto

Director

Toshiaki Hirano

Director

Toshihiko Mori

Director (part-time)

Noriyuki Yagi

Director (part-time)

Takanobu Yabuuchi

Auditor (part-time)

Yorio Fujita

Auditor (part-time)

Ken Kitano

Financial instruments trading business (investment management business)
・Financial product trader:Principal businesses

Director-General of the Kinki Finance Bureau Ministry of Finance (Kinsho) No. 44
・Building Lots and Buildings Transaction Business License:. The Governor of Osaka Prefecture (4) No. 50641
・Approval of discretionary dealing trustee, etc.:
No. 23 by Minister of Land, Infrastructure, Transport and Tourism

37

③Decision-making structure for investment management
HHRAM establishes Regulations for Asset Management and the asset management guidelines, and sets forthbasic approaches to investment management including investment policy, rules on transactions involving
interested parties, and disclosure policy, etc.
Furthermore, HHRAM establishes asset management plans in accordance with the asset management
guidelines, and makes decisions on acquisitions and other matters concerning asset management according
to the investment policy and rules on conflict-of-interest transactions set forth in the asset management
guidelines.
●Decision-Making Flow for Asset Managementi. Concerning decision-making on execution of duties concerning asset management, each related
department shall draft a proposal on execution of duties, which is then placed on the agenda of theInvestment Management Committee. If the proposal fails to obtain the approval of the Investment
Management Committee, or if the Compliance Officer recognizes compliance issues within the proposal,
the proposal shall be referred back to the department where the proposal originated.
ii. Upon approval by the Investment Management Committee, if (i) the proposal falls under a transaction
involving conflicts of interest, or if (ii) the Compliance Officer fails to determine clearly whether the details
deliberated or the deliberation process of the Investment Management Committee observed the laws andthe Articles of Incorporation or whether there were compliance issues, and requests deliberation, it shallbe placed on the agenda of the Compliance Committee and deliberated.
iii. In the case of ii. (i) above, if approved by the Compliance Committee the proposal shall be submitted to
the President and Representative Director. If not approved by the Compliance Committee because
compliance issues are recognized, it shall be referred back to the department where the proposal
originated.
iv. In the case of ii. (ii) above, the Compliance Committee shall only be regarded as an advisory organ.
Upon deliberation by the Compliance Committee, all opinions of the members and observers, including
minority opinions, shall be presented to the President and Representative Director and the Board of
Directors.
v. Upon approval by the President and Representative Director, whether a resolution by the Board of
Directors will be needed is based on the Board of Directors’ standards for placing items on the agenda,
defined separately (the necessity of placing it on the agenda is also subject to decisions of compliance.).
If not approved by the President and Representative Director or the Board of Directors, it shall be referredback to the department where the proposal originated.
vi. In the case of ii. (i) above, if the proposal falls under an acquisition, transfer, or transaction for securities
or real estate (excluding transactions under Article 245-2 of Regulation for Enforcement of the Investment
Trusts Act.), the consent of HHR must be confirmed in addition to the obtainment of approval of the
Executive Meeting.

38

<In the case a transaction involves conflicts of interest (ii. (i) above)>

Department where proposal originates
Referred back if compliance issues are recognized

Rejection/referred backAttendance
Investment Management Committee

Compliance officer

Approval
Compliance Committee
Approval
President and Representative Director
Placed on agenda (in the case ofimportant execution of duties)

Execution
Placed on agenda(Note)

Board of Directors
Approval(Note)

Execution
Executive Meeting of HHR

Execution
Note: In the case of acquisition, transfer, or leasing of securities or real estate(Excluding transactions under Article 245-2 of Regulation for Enforcement of the Investment Trust Act.)<In the case the Compliance Officer fails to determine clearly whether the details deliberated or the deliberation
process in the Investment Management Committee observed the laws and Articles of Incorporation or fails todetermine clearly where there were compliance issues, and requires the members for deliberation (ii. (ii) above)>

Department where proposal originates

Rejection/referred back

Referred back if compliance issues are recognized

Investment Management Committee
Approval

AttendanceCompliance officer

In the case compliance issues fail to be clearly determined

Report of all opinions including
minority opinions
President and Representative Director
Placed on agenda (in the case ofimportant execution of duties)

Compliance Committee

Execution
Report of all opinions including
minority opinions

Board of Directors

Execution

39

<In the case it does not meet neither ii. (i) or (ii) above>
Department where proposal originates

Rejection/referred back

Referred back if compliance issues are recognized
Attendance

Investment Management Committee

Compliance officer

Approval
President and Representative Director
Placed on agenda (in the case ofimportant execution of duties)

Execution

Board of Directors

Execution④Status of risk management system concerning investment management
HHRAM has established basic matters concerning investment management as the asset management
guidelines, including the investment policy, rules on transactions with interested parties, distribution policy, anddisclosure policy, etc. based on the asset management services agreement concluded with HHR and the
Articles of Incorporation of HHR. By following these Operational Guidelines, HHRAM endeavors to manage
risks concerning investment management.
As for specific risk management, a basic plan for risk management shall be established each fiscal year basedon the risk management rules and the risk management manual, upon understanding and analyzing risks ineach department such as risks concerning acquisition and transfer of assets, risks coinciding with operation
management, risks concerning funds procurement, office work risk, etc. In addition, upon making decisions
concerning asset management, deliberations are held at the Investment Management Committee andCompliance Committee as necessary, and important matters are deliberated or reported to the Board of
Directors. Separately from this, based on the regulations for internal auditing, the Internal Audit Department,
which has the right to audit all departments, shall regularly check the management system and response
status towards risks, etc., and report these results to the Board of Directors.
For conflict-of-interest transactions, in addition to deliberations by the Compliance Committee, the Compliance
Officer shall attend the meetings of the Investment Management Committee, confirm whether conflicts ofinterest exist or not, and by obtaining the agreement of the Compliance Officer on all requests for managerial
decisions, endeavor to prevent conflicts of interest and violations of laws, etc.
In addition, HHRAM has established the compliance manual and compliance program as basic policies foraction. Based on the above, the Compliance Department conducts compliance check and education.

40

⑤Asset management remuneration system
The asset management remuneration system has been changed for the purpose of improving investor value.
By heightening the linkage between the amount of asset management remuneration and the interest ofinvestors, HHRAM will have an incentive to improve the quality of the portfolio.
NameCalculation method

Management Remuneration 1

Total assets at end of previous fiscal period × 0.15％

Management Remuneration 2

Distributable amount per unit during the concerned operating period × NOI × 0.0011％

Remuneration upon acquisition

Acquisition price of real estate-related assets × 0.5％

Remuneration upon transfer

Transfer price of real estate-related assets × 0.5％

Remuneration upon merger

Appraisal value of assets to succeed × 0.5％ (maximum)*The above asset management remuneration system was approved at the 11th General Unitholders' Meeting of HHR held on August 25,
2020. Furthermore, the effective date for remuneration upon acquisition, remuneration upon transfer, and remuneration upon merger is
September 1, 2020, and that for management remuneration 1 and 2 is December 1, 2020.

2. Compliance①Basic policies concerning compliance (excerpted from the original text )Hankyu Hanshin REIT, Inc. (hereafter "HHR") and Hankyu Hanshin REIT Asset Management, Inc. (hereafter"HHRAM"), the asset management company that HHR has selected to manage its assets, strive to contributeto social and economic development through engagement with business partners, those using our properties,
local communities and such considering the public nature of real estate investment trusts, while responding to
the expectations of unitholders by complying with laws and regulations and sincerely acting in accordance withcorporate ethics. In order to achieve this goal, HHR and HHRAM have prepared the following compliancearrangements as the most important business agenda.
(1) HHRHHR is aware of the importance of comprehensive compliance and regularly conducts discussions concerningcompliance issues at its Executive Meetings. At these meetings, which are held roughly once a month, in
addition to deliberating matters for resolution, we receive detailed reports on the operations of HHR andHHRAM (defined in (2) below). We also receive reports on the deliberation process for matters deliberated
and determined by the Compliance Committee of HHRAM. Through these reporting procedures, we ensurethat the Supervisory Directors are able to obtain information appropriately and confirm the status of businessexecution by the Executive Director. In addition, we have prepared a decision-making letter for matters to be
decided exclusively by the Executive Director to make the decision-making process more visible and facilitate
ex-post verification. Furthermore, two experts from outside the company who are not considered interested
parties of the sponsor company have been appointed as Supervisory Directors for the purpose of improving
HHR's supervisory and check functions.

41

(2) HHRAM
HHRAM, for the purpose of ensuring legitimate and fair management of overall operations and to prevent
fraudulent practices, and toward robust growth of HHRAM and HHR and the drastic protection of unitholders,the Compliance Department has been formed independently from the execution of duties division as anorganization that fulfills the check function. The Compliance Department formulates a compliance manual andcompliance program as a basic action guideline, ensures awareness of compliance requirements inaccordance with the compliance program implementation plan, verifies the status of compliance and cultivatesawareness in a systematic manner.
Additionally, as the organization responsible for compliance issues concerning asset management, it hasestablished a Compliance Committee for the purpose of determining the propriety of transactions involving
conflicts of interest in accordance with applicable rules and regulations. The Compliance Committee appoints
invited experts, and at present comprises one attorney and one certified public accountant that are notconsidered interested parties of HHRAM or the sponsor company. These two outside experts and theCompliance Officers attend the Compliance Committee meetings, and on the condition that no less than threefourths of all the committee members including the committee chair are present, deliberation and decisions
concerning conflict of interest issues are made with approval of all attendees. Furthermore, in addition to
Auditors and part-time Directors, observers with the endorsement of the committee chair and the approval of
the committee may be present at the Compliance Committee meetings and offer opinions (the observer is not
permitted to participate in resolutions).
The Investment Management Committee exists as the organization responsible for deliberation and decisions
concerning asset management and operational evaluation, and the participation of a member of theCompliance Department appointed by a Compliance Officer or Compliance Committee in the Investment
Management Committee is required (the member must be the assistant to the General Manager of theCompliance Department), and this person is responsible for confirming that there are no compliance issues
concerning matters for resolution or the resolution process.
Additionally, the content of a request for decision concerning execution of duties, which serves as a letter ofintent, is closely inspected under required consensual decision making by Compliance Officers prior to a final
determination.
②Establishment of a structure for the elimination of anti-social forces
HHRAM has formulated a compliance manual to serve as the basic policies to which all executives andemployees are required to adhere, and ensuring practice in accordance with the compliance manual is one of
the key responsibilities of HHRAM. The code of behavior in the Compliance Manual stipulates "Resoluteconfrontation of anti-social forces and associations" and sets forth HHRAM's basic stance concerning theelimination of anti-social forces.

42

③Compliance and internal audit systems of HHRAM

Build robust compliance and internal audit systems by systematically ensuring multiple check
functions based on the basic policy for building internal control systems

Constituent member
Implementation

Compliance System

Directors, Auditors(Note)

Decision criteria
A majority of Directors in attendance, and approval of amajority of the attending Directors are required.

Board of Directors

Constituent member

President &Representative Director

Chairman: Compliance Officer
Committee members: President & Representative Director,
full-time Directors and outside experts
Observers: Auditors and part-time Directors (do notparticipate in resolutions) as well as otherpersons recommended by the Chairman andapproved by the Committee.

Decision criteria

Compliance Committee

Approval of all of the attending committee members is
required, and under the condition that 3/4 or more of allcommittee members (counting the Chairman) haveattended, including the Compliance Officer and two outside
experts

Constituent member
Investment Management
Committee

Chairman: President & Representative Director
Vice chairman: full-time Directors designated by the
ChairmanCommittee members: full-time Directors and equivalent
Directors (excluding the Compliance Officer),and Department or Office General Managers

Proposals by Department/Office Develop a compliance system as themost important management issue basedon the basic policy concerningcompliance.
 Achieve comprehensive compliance by
establishing a Compliance Officer and aCompliance Department.
 The Compliance Committee, including
outside experts, deliberates on conflict-ofinterest transactions. (Note) The Compliance Officer attends theInvestment Management Committee
meeting and checks for complianceissues Appoint a person to be in charge ofpreventing improper requests andeliminating anti-social forces

Internal Audit System• Establish PDCA cycle for improving
operations in each department/office bysystematically implementing the internal
audit every fiscal year based on theannual internal audit plan.
• Utilize external consulting entity to secure
independence of internal audit andrealize a highly effective internal audit

Decision criteria
Approval of all of the attending committee members is
required, and under the condition 3/4 or more of allcommittee members (counting the Chairman and theVice Chairman) have attended, including the Chairman,
with the Compliance Officer also present

Note: Any conflict-of-interest transactions which meet certain standards shall be approved at an Executive Meeting of HHR.

43

④Compliance training
HHRAM invites outside lecturers to conduct training targeting all of its officers and employees with the purposeof having them observe compliance and developing an awareness. In addition, training for managers andtransferees is also provided by in-house lecturers in a timely manner.
<Major themes in fiscal 2022 (provided by outside lecturers)>
 Customer-oriented business conduct, Conflict-of-interest transactions
 Insider trading regulations, Corporation-related information
 Securities monitoring Money laundering
 Acts including Financial Instruments and Exchange Act, and Act on Investment Trusts andInvestment Corporations⑤Risk monitoring by HHRAM
HHRAM strives to enable accurate prevention activities for various risks surrounding business and appropriate
response activities for crises when risks become apparent based on the risk management regulations and risk
management manuals established by HHRAM.

Overall Operation

Conflict-of-Interest
Transaction

Phase 1(Each department) Business execution in line withinternal regulations
 Preparation and storage ofnegotiation records↓
Checked appropriately at theInvestment Management Committee(held every week) Risk management in PDCA cycle inthe medium-term management plan
 Review of work flow and proceduresof business execution (twice a year) Preparation and confirmation of risk
assessment sheet (once a year)

Phase 2(Compliance Department)

Phase 3(Internal Audit Department)

 Deliberation at the Compliance
Committee– Verification of the appropriatenessof transaction conditions andbackground of negotiation, etc.
– Approval of all of the attending
committee members is required

 Establishment of basic plan on risk
management
 Monitoring of the status of risk
occurrence and response Reporting at the Compliance
Committee (twice a year)Compliance Committee
Board of Directors of HHRAM

Executive Meeting of HHR・Conducting internal audit once a
year(Co-sourcing to the audit
corporation which is a third-party
organization)
 Immediately following up on thematters that are pointed out Reporting the results of audit andimprovement Compliance Committee Board of Directors of HHRAM
 Executive Meeting of HHR⑥Declaration of fiduciary duty
HHRAM has established the basic policy for customer-oriented business conduct (hereafter “the Basic Policy)
in order to further implement the customer-oriented business conduct considering the importance of stableasset formation for investors.
[Announcement and Smooth Promotion of Basic Policy regarding Customer-Oriented Business Conduct]
HHRAM will announce the Basic Policy on its website and work for smooth promotion of the policy while
periodically confirming the progress. In addition, the implementation status will be verified through internal
audit by an external third party as needed, and any issues identified will be corrected without delay.
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[Pursuit of the Investors’ Best Interest]
HHRAM will maintain a high level of expertise and professional ethics as an asset management company ofa J-REIT, and conduct its business in an honest and fair manner for its investors in order to pursue theirbest interest.
HHRAM will endeavor to establish such an attitude towards business operations as its corporate culture.
[Appropriate Management of Conflicts of Interest]
To prevent unjustly damaging the interest of investors, HHRAM will accurately grasp potential conflicts ofinterest with the sponsor group, etc. If there is a potential conflict of interest with regards to transactions,
HHRAM will appropriately manage such conflict of interest by having the Compliance Department verify thetransaction prior to execution pursuant to laws and regulations as well as internal rules, and, whennecessary, having the Compliance Committee that includes outside experts deliberate in advance while also
obtaining prior approval at HHR’s Executive Meeting.
[Clarification of Management Fees]
HHRAM will work to disclose detailed information on management fees, etc. paid to HHRAM by HHR,
including description of the services for which such fees are incurred, in an easy-to-understand manner forinvestors.
[Provision of Important Information that is Easily Understandable]
HHRAM will, as an asset management company of a J-REIT, strive to provide important information
regarding HHR and the asset management carried out by HHRAM, in a timely and easily understandable
manner for investors.
[Provision of Services Suitable for Investors]
HHRAM will make efforts to grasp the investors’ requirements for HHR and strive to provide services
suitable for such requirements.
*HHRAM does not directly recommend or sell financial instruments and services to investors.
[Establishment of Framework for Appropriately Motivating its Employees]
HHRAM will periodically and continuously provide training programs on compliance, etc. to all employees
for the sound development of the real estate securitization market, to make constant improvements.
Furthermore, HHRAM will properly evaluate the efforts of each employee on compliance and work to further
raise awareness.
HHRAM will develop a framework to provide a compliance program every year in accordance with thecompliance manual in order to steadily implement measures for customer-oriented business conduct andcompliance with the Basic Policy, and strive to establish appropriate structures for governance andexecution of business.
The details of the governance structure, basic policy, management policy (growth policy, financial policy,
distribution policy, etc.) and such of HHR, which entrusts management of its assets to HHRAM, areavailable on HHR’s website, etc.

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⑦Efforts to prevent corrupt practices
HHRAM has been working to prevent corruption based upon the Anti-Corruption Policy stipulated by Hankyu
Hanshin Holdings, Inc., our parent company. (The below is excerpted from the website of Hankyu Hanshin
Holdings, Inc.)
Anti-Corruption Policy
1. Preventing Bribery and Other Corrupt Practices
All officers and employees of Hankyu Hanshin Holdings Group shall comply with all applicable laws in force
in the countries where they operate and shall work to prevent corrupt practices. As used here, “corrupt
practices” means practices in which officers or employees abuse the power entrusted to them to gain an
illicit advantage or to commit an act that is contrary to law or ethical standards. Examples of corrupt
practices include bribery, unfair trade practices (including abusing a superior bargaining position to exploit
a weaker party), and insider trading. Officers and employees of Hankyu Hanshin Holdings Group shallobserve the following anti-bribery rules:(1) All officers and employees of Hankyu Hanshin Holdings Group shall on no account give, offer, or
promise any money, privilege, hospitality, objects of value, or any other benefit or advantage to public
officials, whether directly or indirectly. As used here, “public officials” includes persons who serve a roleanalogous to that of a public official. Additionally, officers and employees shall on no account accept
any privilege, hospitality, objects of value, or any other benefit or advantage beyond that which can bejustified as business practice or within social norms.
(2) Whenever officers or employees of Hankyu Hanshin Holdings Group pay money to public officials, theyshall accurately record the payment and properly manage the record.
2. Organizational Support for Combatting Corrupt Practices
Hankyu Hanshin Holdings Group shall provide training to ensure that its officers and employees fully
understand this policy. Member organizations of the Hankyu Hanshin Holdings Group shall provide anticorruption guidelines that are relevant to their business profile.
3. Organizational Response to Corrupt Practices
Hankyu Hanshin Holdings Group shall provide information about, and facilitate the use of, the Corporate
Ethics Consultation Desk, a means by which any of the Group’s officers or employees, or any trading
partners or other interested parties, can swiftly report any violations or suspected violations. The Groupshall address any reports swiftly and effectively.
Effective March 1, 2022
Hankyu Hanshin Holdings, Inc.

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Scope of report
Scope of subjects

Hankyu Hanshin REIT, Inc.
Hankyu Hanshin REIT Asset Management, Inc. (the asset management company ofHankyu Hanshin REIT, Inc.)
Partly includes Hankyu Hanshin Holdings, Inc. and Hankyu Hanshin Properties Corp.,
the parent company of the asset management company.

Frequency of report

Published annually in principle

Fiscal year

April through March of the following year.
Fiscal 2022 indicates the period from April, 2022 through March, 2023.

Disclaimer
This material includes forward-looking statements based on present assumptions and future outlook.
Actual results may differ from the forward-looking statement values due to various factors. Since
investment securities of HHR are closed-end type which do not make redemption of units demanded byunitholders, the only means for unitholders to convert the investment securities is to sell to third parties.
Market value of the investment securities is affected by supply/demand at the exchange and also
fluctuates affected by interest rate environment, economic situations, real estate market trends andvarious other factors surrounding the market. Therefore, the unitholders may not be able to sell theinvestment securities at the price of acquisition incurring loss.
This material is not intended as a solicitation to acquire investment securities of HHR nor is it intended asa solicitation to sign contracts relating to transactions of other financial instruments. When undertaking
any investment, please do so based on your own judgment and responsibility as an investor.
Before purchasing investment securities of HHR, please consult with a securities company that is a “TypeI Financial Instruments Business Operator.”
This material is an English translation of the original, which was issued in the Japanese language.
There are sections that display property names in abbreviated form.

Hankyu Hanshin REIT Asset Management, Inc.
Financial and IR Department
Address

19-19 Chayamachi, Kitaku, Osaka

EmailIR_PR@hhram.co.jp

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