NEWS RELEASE
24-D-0533

July 22, 2024
Japan Credit Rating Agency, Ltd. (hereinafter referred to as "JCR") will announce Green Finance Framework Evaluation Results asfollows:

Nippon Accommodations Fund Inc.
G r e e n F i n a n c e F ra m e w o r k
Affirmation
Overall
Evaluation

Green
Evaluation（Use of Proceeds）

Management,
Operation andTransparency Evaluation

Green 1(F)

g1(F)

m1(F)

Issuer/Borrower

Nippon Accommodations Fund Inc.
(Security code : 3226)

Subject

Nippon Accommodations Fund Inc.
Green Finance Framework

Evaluation Overview
Nippon Accommodations Fund Inc. ﴾hereinafter referred as “NAF”﴿ is a J-REIT whose maininvestment target is rental apartments, which is sponsored by Mitsui Fudosan Co., Ltd.,﴾hereinafter referred as “Mitsui Fudosan”﴿. NAF was established in October 2005 and listed on
the Real Estate Investment Trust Market of the Tokyo Stock Exchange in August, 2006. Mitsui
Fudosan Accommodations Fund Management Co., Ltd. ﴾hereinafter referred as “this AssetManagement Company”﴿ who is wholly owned by Mitsui Fudosan is responsible for NAF's asset

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management operations. The current portfolio1consists of 136 properties including 118 rental
apartments and 18 hospitality facilities, such as dormitories/corporate housing, service
apartments, senior residences and hotels. The total asset size is 342.1 billion yen on an
acquisition price basis.
NAF’s basic policy is to secure stable earnings and steady growth in the investment assets fromthe medium- and long-term view, aiming to maximize the value of unitholders. NAF has
intended to realize a high-quality portfolio and management structure that makes maximum useof the value chain in the Mitsui Fudosan Group. NAF has recognized that the promotion ofsustainability, including the environment, is consistent with its basic policy, and therefore it
regards the efforts on the promotion of sustainability as key management issues and has policies
and organizational structure in place so as to work on these initiatives as an organization.
The subject of this evaluation is a Green Finance Framework ﴾hereinafter referred to as "thisFramework”﴿ defined so as to use proceeds financed through green bonds and green loans﴾hereinafter referred to as "green finance"﴿ by NAF exclusively for projects with environmental
benefits. JCR has evaluated whether this Framework has been aligned with the Green Bond
Principles 2 , the Green Loan Principles 3 , the Green Bond Guidelines 4 and the Green Loan
Guidelines 5 . These principles and guidelines are voluntarily published by the International
Capital-Marketing Association ﴾hereinafter referred to as "ICMA"﴿, Loan Market Association
﴾hereinafter referred to as LMA﴿ and the Ministry of Environment, respectively, and are not legally
regulated based on evidences. JCR however refers to these principles and guidelines as domestic
and global unified standards as of this moment.
JCR assigned "Green1 ﴾F﴿" as an overall evaluation to NAF's Framework as a result of its Green
Finance Framework Evaluation on June 18, 2020. JCR is to review this Framework as NAF updated
it in response to the amendments to the Building-Housing Energy-efficiency Labeling System﴾hereinafter referred to as "BELS"﴿ and the introduction of the new BELS standards, which cameinto effect in April 2024.
NAF intended to use the proceeds to acquire green buildings with a certain level of certificationor higher or to refinance existing borrowings procured so as to acquire such assets in thisFramework as of June 2020. The eligibility criteria on green buildings refer to properties thathave obtained or renewed, or will obtain or renew any of the following certifications: 3 stars ormore under DBJ Green Building Certification, 3 stars or more under BELS Certification or B+ rankor higher under Certification for CASBEE. JCR has evaluated that the eligibility criteria defined by
NAF are projects with environmental benefits.
Then, NAF changed the eligibility rank of BELS certification and clarified the scope of CASBEE
certification for the aforementioned green building criteria in July 2024 in light of which JCR has
evaluated the green building criteria after the change will continuously have environmental
benefits.
As of February 29, 2024.
ICMA ﴾2021, with June 2022 Appendix 1﴿ Green Bond Principles
https://www.icmagroup.org/sustainable-finance/the-principles-guidelines-and-handbooks/green-bond-principles-gbp/
3
LMA, Asia Pacific Loan Market Association ﴾APLMA﴿, Loan Syndications and Trading Association ﴾LSTA﴿ ﴾2023﴿ Green Loan
Principle
https://www.lsta.org/content/green-loan-principles/4
Ministry of the Environment ﴾2022﴿ Green Bond Guidelines
https://www.env.go.jp/content/000062495.pdf
5Ministry of the Environment ﴾2022﴿ Green Loan Guidelines
https://www.env.go.jp/content/000062495.pdf
1
2

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NAF has intended to raise green finance with clear environmental targets as with the previous
evaluation. NAF will continue to appropriately identify and manage adverse environmental
impacts and take appropriate measures as necessary in making decisions for investments inprojects. NAF still has a structure in place to make evaluation/approval in the Investment
Committee after making plans and verification in accordance with the process outlined in theframework when selecting projects. The management of proceeds procured through green
finance still has appropriately established. All reporting details previously disclosed have beenadequate and information based on this Framework will be continuously disclosed hereafter,
which ensures the adequacy and transparency in the disclosed contents. Accordingly, JCR has
confirmed that NAF has established its management and operation structure for green finance,
which is appropriate and highly transparent as with the previous evaluation.
Consequently, JCR assigned "g1﴾F﴿" for "Green Evaluation ﴾Use of Proceeds﴿," "m1﴾F﴿" for"Management, Operation and Transparency Evaluation" and "Green 1﴾F﴿" for “JCR Green Finance
Framework Evaluation ﴾Overall Evaluation﴿” based on JCR Green Finance Evaluation
Methodology.
JCR has evaluated that this Framework has met the standards for the items required in the Green
Bond Principles, the Green Loan Principles, and the Green Bond Guidelines and the Green Loan
Guidelines formulated by Ministry of the Environment.

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Table of Contents■ Review Items■ Review ContentsI.

Use of Proceeds

II.

Selection Criteria and Processes for Use of Proceeds

III.

Management of Proceeds

IV. ReportingV.

Organizational Sustainability Initiatives■ Review Results ﴾Conclusion﴿

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Review Items
In this section, JCR will describe items that shall be confirmed in reviewing the framework. JCR
will mainly confirm items whose details have been changed since the previous evaluation in thereview as follows:1﴿ Use of Proceeds
Whether the category of eligible criteria and use of proceeds of green finance continuously havegreenness after the changes are made.
2﴿ Selection Criteria and Processes for Use of Proceeds
Whether the goals to be achieved through green finance and the selection criteria of green
projects and their processes are continuously appropriate.
3﴿ Management of Proceeds
Whether the proceeds raised through green finance are certainly allocated to green projects,
and whether there are a scheme and an internal structure in which the allocation can be easily
tracked and managed.
4﴿ Reporting
Whether the reporting structure for green finance are still properly developed and operated.
5﴿ Organizational Sustainability Initiatives
Whether the management of the issuer continues to highly prioritize sustainability as a material
managerial issue.

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Review Contents
I. The Use of Proceeds
NAF has stipulated the use of proceeds in this Framework as follows: ﴾the changes made thistime are in bold.﴿ The only framework after the changes were made is excerpted and stated.
The Framework for Use of Proceeds
NAF plans to apply the proceeds from green finance to proceeds for acquisition of eligible green
assets ﴾defined in “Eligibility criteria” below﴿ and proceeds for repayment of existing loans orredemption of investment corporation bonds that were procured for acquisition of eligible green
assets.
Eligibility Criteria
Assets for which any of the following certifications from a third-party certification body﴾hereinafter referred to as “green building certification”﴿ has been or will be obtained ﴾hereinafterreferred to “eligible green assets”﴿.
・DBJ Green Building Certification: 3 Stars, 4 Stars or 5 Stars
・BELS Evaluation: the following levelsi﴿ FY 2016 standard : 3 Stars to 5 Stars ﴾excluding non-conforming buildings*﴿
* Factories ﴾including logistics warehouses﴿ with a BEI over 0.75
ii﴿ FY 2024 standard :・Non-residential: Level 4 to Level 6
・Residences with renewable energy facilities: Level 3 to Level 6
・Residences without renewable energy facilities: Level 3 to Level 4・CASBEE Evaluation Certification ﴾excluding municipal version CASBEE﴿: B+ Rank, A Rank or
S RankEvaluation by JCR to the Framework
Of the environmental certification for buildings required by the eligibility criteria defined in thisFramework, NFA has changed the eligibility rank of the BELS certification and clarified the scopeof the CASBEE certification.
An overview of the BELS whose descriptions were changed, which will have effects on thecontents in this Framework and an outline of the CASBEE certification whose scope was clarified
are described below. JCR has evaluated that the standards stipulated in the revised eligibility
criteria including the aforementioned have covered properties that can be expected to havecontinuously significant environmental benefits.
BELS ﴾Building-Housing Energy-efficiency Labeling System﴿
BELS is an acronym standing for Building-Housing Energy-Efficiency Labeling System and is asystem in which energy-saving performance is evaluated and certified by a third-party evaluation
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organization for new and existing buildings. The envelope performance and primary energy
consumption are subject to evaluation, and it is required to have excellent energy-saving
performance for high evaluation. The evaluation results are classified by level based on Building
Energy Index ﴾hereinafter referred to as "BEI"﴿. BEI is a criteria to measure energy-saving
performance relative to a reference value, with design primary energy consumption as thenumerator and reference primary energy consumption as the denominator. Evaluation is madeon a five point scale ranging from one star to five stars under the conventional standard ﴾2016
standard﴿, and two stars satisfy the energy conservation standard.
The energy conservation standard has tightened for large non-residential buildings whose area
is 2,000 m2 or more since the revised Building Energy Efficiency Act came into effect on April 1,
2024. The new energy conservation standard varies depending upon the building use: 25 percent
or more reduction for factories, including logistics facilities and 20 percent or more reduction
for offices, schools, hotels or department stores. Based on this revision, the BELS at the time ofsale and lease was enhanced in April 2024, and a new standard ﴾2024 standard﴿ was introducedin BELS. Under the new standards, residential and non-residential buildings with renewableenergy facilities will be assessed on a scale of 7 from Level 6 ﴾an energy consumption reduction
rate of 50 percent or more﴿ to Level 0 ﴾an energy consumption reduction rate of less than 0
percent﴿ while residential buildings without renewable energy facilities will be assessed on ascale of 5 from Level 4 ﴾an energy consumption reduction rate of 30 percent or more﴿ to Level 0
﴾an energy consumption reduction rate of less than 0 percent﴿. Under the new standard, BELS
Level 4 or above ﴾an energy consumption reduction rate of between 30 percent and 40 percent﴿is provided to buildings that meet the energy conservation standard of all non-residentialbuildings and an induction standard is applied to some uses. For residential buildings, theprevious standards remain unchanged; the energy consumption reduction rate is 0 percent ormore under the energy-saving standard and 20 percent or more under the induction standard.
BELS's criteria applied by NAF are to be energy efficient ﴾Residence: the BEI value of 0.8 or less,Non-residence: the BEI value of 0.75 or less﴿; therefore, JCR has evaluated that the criteria havebeen appropriate as the use of proceeds.
CASBEE ﴾Integrated Built Environment Performance Evaluation System﴿
CASBEE is an acronym standing for Comprehensive Assessment System for Built Environment
Efficiency and is a method to evaluate and rate the environmental performance of buildings. In
April 2001, a comprehensive environmental evaluation research committee for buildings wasestablished as an industry-academia-government collaboration project with the support of the
Housing Bureau of the Ministry of Land, Infrastructure, Transport and Tourism and has been
continuously developed and maintained since then. The evaluation tools include CASBEE for
Construction, CASBEE for Cities or CASBEE for Real Estate that was developed for real estatemarket to show environmental performance in an easy-to-understand manner.
CASBEE for New Construction is evaluated with the value of BEE ﴾Built Environment Efficiency﴿
with L ﴾L means Load﴿ as the denominator and Q ﴾Q refers to Quality﴿ as the numerator after thereconstruction from the viewpoint of environmental quality of buildings and environmentalloads of buildings for the evaluation items in the four areas: energy consumption, resource
recycling, regional environment and indoor environment. The evaluation results are categorized
into five as follows: Rank S ﴾excellent﴿, Rank A ﴾very good﴿, Rank B + ﴾good﴿, Rank B - ﴾slightly
inferior﴿ and Rank C ﴾inferior﴿. CASBEE for Real Estate falls under four categories as follows: Rank

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S ﴾excellent﴿, Rank A ﴾very good﴿, Rank B + ﴾good﴿ and Rank B ﴾satisfied with items required﴿. In
order to be highly evaluated, consideration for indoor comfort or landscape is required inaddition to concern for the environment, such as energy saving or using equipment with a low
environmental burden, and integrated buildings with high quality are required.
CASBEE for Real Estate has been developed to utilize the results of environmental evaluation ofbuildings in CASBEE when evaluating real estate, and the evaluation criteria have beenformulated to focus on items that are highly correlated to real estate evaluation. CASBEE for Realestate includes the following five evaluation items: 1. Energy/GHG, 2. Water, 3. Resourceuse/safety, 4. Biodiversity/site and 5. Indoor environment. The evaluation method shall: ﴾1﴿ bealigned with major global weighted evaluation tools, ﴾2﴿ be a point-addition scoring system, ﴾3﴿
have 5 required items and 16 adding items, with a perfect score of 100 points and ﴾4﴿ be excluded
from evaluation if required items are not satisfied.
The certification defined as the eligibility criteria by NAF is, in particular, expected to include
CASBEE for New Construction and CASBEE for Real Estate. In the criteria concerned, suchcertification requires evaluation of Rank B + or higher and the building with the said certificationlevel equivalent to BEE 1.0 or higher with respect to CASBEE for New Construction and its
environmental quality clearly exceeds its environmental burdens. In case of CASBEE for Real
Estate, a building has efficiency equivalent to Rank B + in the conventional CASBEE for
Construction although the measurement is not based on BEE. Accordingly, JCR has evaluatedthat the certification level defined in the criteria concerned has generally had environmental
benefits and the use of proceeds have been appropriate.

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II. Selection Criteria and Processes for Use of Proceeds
The selection criteria and processes for the use of proceeds stipulated in this Framework by NAF
are as follows: ﴾no particular changes have been made except for minor ones since the previous
evaluation.﴿
This Framework for the Processes (Excerpt)
Selection Criteria
In the selection criteria for the target projects for which the proceeds procured through green
finance will be used, as stated earlier, the proceeds will be exclusively applied to the acquisitionof green eligible assets, repayment of existing borrowings financed to acquire such assets or theappropriation of proceeds to redeem investment corporation bonds.
Selection Processes
The decision-making process from planning to implementation of green finance is as follows:
1. Planning of green finance
Financial Team under the Financial Division who is responsible for general financing operations
for NAF will plan and examine green finance.
2. Verification and planning of the eligibility for green finance
The Office will verify the eligibility on the target project in terms of the green finance planned by
the Financial Team, and if no problem is found, the Office will draw up a plan for deliberation in
the Investment Committee.
3. Evaluation and approval of the eligibility for green finance
The green finance planned by the Office will be evaluated for the eligibility on the target projectthrough deliberation in the Investment Committee and then approval will be given.
4. Implementation of green finance
After approval is given in the Investment Committee, a green loan will be made through final
decision by Chief Financial Officer. A green bond will be issued with approval by the Investment
Committee and the Board of Directors of NFA ﴾or with the final decision by the Executive Directorof NAF if authorization is given by a comprehensive resolution﴿.

Evaluation by JCR to the Framework
JCR has evaluated that the appropriateness of the selection criteria and their processes in thisFramework was adequate upon the previous evaluation and that it has been continuously proper
after confirming that no change has been made in these issues in response to the revision madein this Framework.

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III. Management of Proceeds
How to manage proceeds defined by NAF in this Framework is as follows: ﴾no particular changes
have been made in the contents since the previous evaluation.﴿
The Framework for Management of Proceeds ﴾Excerpt﴿
Person responsible for managing proceeds
A person in charge of managing the proceeds raised through green finance refers to Finance Team
General Manager ﴾hereinafter referred to as the "FINGM"﴿ who will manage and disclose theallocation of the proceeds.
Portfolio management approach
The amount of debts calculated by multiplying the total acquisition price of eligible green assets
in NAF's portfolio by the ratio of interest-bearing debts to total assets ﴾refers to LTV at year-end
that is calculable upon confirmation﴿ ﴾hereinafter referred to as "an amount of eligible green
debts"﴿ will be set as the upper limit amount for green finance and managed so that the balanceof green finance does not exceed the amount of eligible green debts.
NAF will concretely confirm that the balance of green finance does not exceed the amount ofgreen eligible debts at the following timing:
・When green finance is planning and examining
・When a green eligible asset is expected to decrease ﴾e.g. when green eligible assets are sold,or when the eligibility criteria are no longer met due to changes in evaluation of green
building certification or because green building certification becomes due﴿・Upon annual regular check ﴾based on figures as of the end of February every year﴿After the review, in cases where the balance of green finance is likely to exceed the amount ofgreen eligible debts, appropriate measures will be taken; for instance, to increase green eligible
assets for instance; however, if it is not avoidable, plans of green finance and sale of green eligible
assets are postponed.
In order to keep transparency in the information disclosure on the allocation of proceeds raised
through green finance, the results of annual regular confirmation will be published on NAF
website.
Individual property management approach
FINGM is responsible for managing the proceeds procured through green finance and is in chargeof a series of practical tasks, including formulation of allocation plans to target projects,
procedures of remittance and management of allocation.
﴾1﴿ Proceeds allocation plan
FINGM will map out plans to appropriate the proceeds in the green finance to the target projects
﴾e.g. amounts to be allocated, dates to transfer ﴾allocate﴿ and remittees ﴾allocatees﴿, and theallocation plan needs to be drawn up by the Office and approved by the Investment Committee.
﴾2﴿ How to appropriate proceeds in case of new acquisition
The proceeds raised will be held as cash in NAF's banking deposit account ﴾hereinafter referred
to as "the main account"﴿ and, in principle, will be allocated to the target projects via bank transfer.
FINGM will take a remittance procedure by issuing a voucher to transfer money to the AssetManagement Company; General Manager of Corporate Operation Team will approve it and10/18
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complete the procedure by sending the voucher to the Asset Custodian and then the remittancewill be made on the scheduled remittance date.
﴾3﴿ Management of unallocated proceeds
The proceeds raised through green finance will be fully allocated to the target projects withinaround six months based on the allocation plan, and any unallocated proceeds are expected to
be temporary.
Unallocated proceeds, if any, will be managed as cash or cash equivalents. Specifically, the balanceof the main account of NFA will be confirmed whether it exceeds the amount of unallocatedproceeds at the end of each month which will be repeated until the allocation is complete.
﴾4﴿ Report on proceeds allocation
FINGM will report on the allocation of proceeds in the Investment Committee annually held at
the end of February. In cases where there are any unallocated proceeds, FINGM will re-report on
the allocation plan that has already been formulated so as to explicitly confirm the time when the
allocation will be completed.
﴾5﴿ Internal Control
In order to appropriate proceeds, approval is required for a remittance instruction by a
responsible person in another team in NAF, and the actual remittance procedure is taken by atrust bank who is the Asset Custodian; therefore, internal checks will be functioned andprocedures can be tracked and managed.
In cases where there are any unallocated proceeds, the Trust Bank who is the Asset Custodian
manages the main account, internal checks will be functioned and the account balance can betracked and managed as well.
Furthermore, the green finance framework has been established as NAF's internal regulations andis subject to internal audit headed by the Chief Compliance Officer and then to be audited
whether green finance-related operations have been adequately carried out in accordance with
its internal regulations.
﴾6﴿ Sale of eligible green assets
NAF, in principle, will not sell any projects ﴾green eligible assets﴿ to which proceeds from green
finance will be allocated.
Even if green eligible assets decrease ﴾e.g. when green eligible assets are sold, or when theeligibility criteria are no longer met due to changes in evaluation of green building certification
or because green building certification becomes due﴿, as stated previously, the balance of green
finance is required to confirm whether it does not exceed the amount of green eligible debts;
therefore, the green finance is to be continuously kept and the proceeds will not be allocated toother projects.
However, in cases where a project with full allocation does not satisfy the eligibility criteria due
to its sale from the perspective of transparency in information disclosure, NAF will consider
adding explanations in its press releases on the sale so as to indicate that the green financebalance exceeds the green eligible debts and that the green finance is to be continuously kept
from the perspective of a portfolio management approach.

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Evaluation by JCR to the Framework
JCR has evaluated that the cash management described in this Framework was appropriate upon
the previous evaluation. JCR has also confirmed that no change has been made to these issues
in response to the revision made in this Framework, which has been continuously adequate.

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IV. Reporting
The reporting stipulated in this Framework by NAF are as follows: ﴾no particular changes havebeen made since the previous evaluation.﴿
The Framework for reporting (Excerpt)
Allocation Reporting
The following items will be disclosed on a section specially set up for ESG on the NAF website as at
the end of February of each year so long as the balance of green finance is outstanding.
・Total acquisition price of eligible green assets
・Ratio of interest-bearing debt to total assets
・Amount of eligible green debt
・Balance of green finance outstanding
Impact Reporting
The following items will be annually disclosed on a section specially set up for ESG on the NAF
website so long as the balance of green finance is outstanding.
・Acquisition of green building certification ﴾number of properties, total floor area and certified
percentage based on total floor space﴿・ Property name, green building certification class, evaluation and certification acquisition
﴾renewal date﴿ of each green eligible asset
・Energy ﴾electricity﴿ consumption and intensity
・Energy-oriented CO2 emissions and intensity
・Water consumption and intensity

Evaluation by JCR to the Framework
JCR has evaluated that the reporting stated in this Framework was proper upon the previous
evaluation. JCR has confirmed that no particular changes have been made to the reporting
contents in response to the recent revision made in this Framework and has evaluated that it
has been continuously adequate.
JCR has confirmed that NAF's reporting results to date have been appropriately carriedout6based on this Framework on a section specially set up for ESG on the NAF website.

6

Proceeds allocation/portfolio management
https://www.naf-r.jp/esg/finance/sustainability-finance.html
Acquisition of green building certification
https://www.naf-r.jp/esg/concept/initiatives-certifications.html
Changes in actual environmental performancehttps://www.naf-r.jp/esg/environmental/performance.html
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V. Organizational Sustainability Initiatives
NAF has been working on the environment in accordance with the "Sustainability Policy" establishedby this Asset Management Company in April 2016 as well as the "Group Environmental Policy" definedby the Mitsui Fudosan Group. NAF will examine its organizational environmental initiatives for the
Mitsui Fudosan Group and NAF as follows:
Mitsui Fudosan Group's Sustainability Initiatives
The Mitsui Fudosan Group has set forth its group vision based on "Mitsui Fudosan is committed tosocial and economic development as well as global environmental preservation under its GROUP DNA,the meaning of "&"; to generate new value through cooperation, coexistence and co-creation, Mitsui
Fudosan forges ahead, innovating." Under the above-cited group vision, the Mitsui Fudosan Group
has listed the promotion of "sustainability management" toward contribution to a sustainable society
and has come out with measures in the Group long-term vision, "& INNOVATION 2030" formulated
in April 20247.With respect to environmental initiatives, guided by the Group Environmental Policy,
the Group has engaged in the three core environmental activities of load reduction ﴾reducing theimpact of its products and services on the environment﴿, quality improvement ﴾enhancing safety,
security and comfort while ensuring sustainability﴿ and cooperation ﴾collaborating and cooperatingwith various stakeholders﴿ in an integrated manner8.
Respective companies in the Mitsui Fudosan Group and especially respective investment corporations
who are sponsored by Mitsui Fudosan have been working on environmental initiatives taking into
account characteristics of investment target assets while being based on the initiatives of the Mitsui
Fudosan Group as noted above.
NAF's Sustainability Initiatives
This Asset Management Company has established a Sustainability Policy in consideration of thecharacteristics of its investment assets, which will primarily invest in rental apartments based on theGroup Environmental Policy defined by the Mitsui Fudosan Group. This Asset Management Company
has set forth its basic policy under which it strives to work to ensure asset management operations
that consider reducing the environmental load and collaborating with various internal and external
stakeholders in its Policy. In February, 2020, this Asset Management Company also identified
materiality to ensure its effectiveness. The materiality is composed of the following eight themes,
advocating "Promoting Energy Efficiency and CO2 Emissions Reduction ﴾Act against Climate Change﴿"on the ground of financing procured through green finance and green building initiatives.

Mitsui Fudosan website
https://www.mitsuifudosan.co.jp/corporate/innovation2030/pdf/innovation2030.pdf
8Mitsui Fudosan website
https://www.mitsuifudosan.co.jp/esg_csr/environment/01.html
7

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Table 1: Materiality set forth by NAF19
・Promote Energy Efficiency and CO2 Emissions Reduction (Act against Climate Change)
Environment

・Acquire External Certification and Assessment on Sustainability
・Build Partnership with Property Companies and Operators
・Develop Human Capital and Raise Sustainability Awareness among the Company's Employees
・Enhance Tenant Satisfaction, Safety and Comfort

Society・Contribute to Community Development
・Utilization of Regional Revitalization Support Tax System (Corporate Version Hometown Tax
Donation) by the Asset Management Company

Governance・Ensure Fairness and Transparency of Corporate Governance

CEO, as a responsible officer, made a statement that the organization will commit to the sustainability
issues and the Sustainability Promotion Office consist of cross-organizational members has set
objectives and formulated implementation plans in this Asset Management Company.
In-house architects, as technical specialists, have been involved in all technical aspects of the assets
under management, including the environment, and this Asset Management Company has
established a structure to work on the environment from an objective and professional perspective;
for instance, using external consultants to promote sustainability. In this manner, this AssetManagement Company has established its structure to utilize internal and external knowledge onsustainability so as to make its management decisions.
This Asset Management Company and NAF have set several quantitative targets for theirenvironmental initiatives, and they specifically have set three goals as follows: ﴾1﴿ Energy-oriented CO2
emissions10: With actual consumption11of 2015 as the base, 50 percent decrease in amount used by
FY 2030, ﴾2﴿ Water consumption: With actual consumption of 2015 as the base, no increase in amountused by FY 2030, and ﴾3﴿ Green Building certified percentage: 40 percent12. In apartments, the main
properties managed by NAF, in general, as tenant-owned areas account for the majority of the total
floor space, owners need to get involved in and collaborate with their tenants so as to promotedecarbonization; therefore, the efforts are not easily made. Under such circumstances, NAF has
continuously engaged in various activities ﴾responding to special provisions upon conclusion of leaseagreements13or enlightening via a section specially set up for ESG on the NAF website14﴿ to educate
tenants on energy conservation in collaboration with property management companies as well as totake feasible measures as owners, including the conversion to LED lightening. Accordingly, the efforts
toward the environment made by this Asset Management Company and NAF can be commendable
as its progress has been steadily made in results of respective indicators15.

Section specially set up for ESG on the NAF website
https://www.naf-r.jp/esg/concept/materiality.html
10
Based on intensity
11
Based on intensity
12
Total floor space
13
Striving to make tenants aware environmental considerations by specifying the request not to excessively use power, waterand gas in lease agreements of buildings.
14
Making efforts to distribute brochures for residents, arousing awareness for waste segregation and management throughexplaining important concerns upon agreement or displaying posters in common areas.
15
Section specially set up for ESG on the NAF website
https://www.naf-r.jp/esg/environmental/performance.html
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In September, 2021, this Asset Management Company and NAF additionally expressed its
endorsement of the Task Force on Climate-related Financial Disclosures ﴾TCFD﴿ Recommendations
and has implemented information disclosures based on the recommendations16, bearing in mind thatthey will enhance information disclosure on responding to the impacts and risks of climate changethat wield on business activities in a medium- to long-term. This Asset Management Company and
NAF have regularly participated in the GRESB Real Estate Assessment and most recently received
Three Stars and Green Star ratings.
Accordingly, JCR has evaluated that the management of this Asset Management Company and NAF
have positioned environmental issues as highly prioritized managerial issues and that they haveclearly defined their green bond procurement policies/processes and green project selection criteria
in collaboration with departments with specialized knowledge.

16

Section specially set up for ESG on the NAF website
https://www.naf-r.jp/esg/environmental/climate-change.html
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Review Result (Conclusion)
JCR has confirmed that the contents in this Framework, including the changes made, areexpected to have significant environmental benefits in the green projects for which the proceeds
will be used. This Framework has met the criteria for the items required in the Green Bond
Principles, the Green Loan Principles, the Green Bond Guidelines and the Green Loan Guidelines.

Management, Operation and Transparency Evaluation

Green Evaluation

m1(F)

m2(F)

m3(F)

m4(F)

m5(F)

g1(F)

Green 1(F)Green 2(F)Green 3(F)Green 4(F)Green 5(F)g2(F)

Green 2(F)Green 2(F)Green 3(F)Green 4(F)Green 5(F)g3(F)

Green 3(F)Green 3(F)Green 4(F)Green 5(F)

N/A

g4(F)

Green 4(F)Green 4(F)Green 5(F)

N/A

N/A

g5(F)

Green 5(F)Green 5(F)

N/A

N/A

N/A

(Responsible analysts for this evaluation) Fuyuki Tamagawa, Yuki Nagayasu

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Important Explanation on this Evaluation
1. Assumptions, Significance and Limitations of JCR Green Finance Framework Evaluation
JCR Green Finance Framework Evaluation, which is granted and assigned by Japan Credit Rating Agency, Ltd. (hereinafterreferred to as "JCR") is a comprehensive statement of JCR's current opinion on the alignment with green projects as defined by
JCR and the extent of the initiatives to ensure management, operations and transparency on the use of proceeds with policies set
forth by the Green Finance Framework as the target evaluation. Therefore, it is not intended to evaluate the specific environmental
benefits, management/operation systems and transparency of individual bonds or borrowings to be executed based on thesepolicies concerned. In cases where a green finance evaluation is granted or assigned to an individual bond or borrowing based on
the said framework, a separate evaluation is required. JCR Green Finance Framework Evaluation neither proves environmental
benefits from the individual bond or borrowing executed based on the framework concerned nor does it assume responsibility forany environment benefits. JCR, in principle, will not directly measure environmental benefits of proceeds financed through theGreen Finance Framework although JCR will confirm the items measured quantitatively and qualitatively by the issuer and/or
borrower (hereinafter an issuer and borrower are collectively referred to as "a fundraiser") or a third party requested by thefundraiser. Green equity may also be included in the evaluation only if all assets, in case of investment corporations, fall undergreen projects.
2. Methodology Used in this Evaluation
The methodology used to make this evaluation is posted as "JCR Green Finance Evaluation Methodology" in the "Sustainable
Finance/ESGs" section on the JCR's website at https://www.jcr.co.jp/en/.
3. Relation with Conduct of Credit Rating Activities
The conduct of assigning and providing JCR Green Finance Framework Evaluation is performed by JCR as its related businessand is different from the conduct of credit rating activities.
4. Relation with Credit RatingThis evaluation is different from a credit rating and is not committed to providing a predetermined credit rating or making available
for inspection.
5. Impartiality in Evaluating JCR Green Finance Framework
There are neither capital ties nor personnel relationships that could create a conflict of interest between this evaluation and JCR.
■Disclaimer
The information contained in this document was obtained by JCR from fundraisers and accurate and reliable sources. Such information however may be mistaken for
artificial, mechanical or other reasons. Therefore, JCR does not make any representation or warranties, express or implied, as to the accuracy, result, eligibility, timeliness,completeness, marketability or fitness for any particular purpose of such information, and JCR assumes no responsibility for any errors, omissions or consequences using
such information. JCR shall not be liable for any loss of opportunity and extraordinary, indirect, incidental or consequential damages of any kind including any loss ofmoney, which may result from any use of such information under any circumstances, whether contractual liability, tort liability, negligence or other causes of liability,
and whether such damage is foreseeable or unforeseeable. JCR Green Finance Evaluation does not express any opinion on various risks (credit risk, price fluctuation
risk or market liquidity risk) on the green finance that is subject to evaluation. JCR Green Finance Evaluation is a comprehensive statement of JCR's current opinion anddoes neither represent facts nor make any recommendation regarding risk assessments or decision on the purchase, sale or hold of individual bonds or commercial papers.
JCR Green Finance Evaluation may be modified, suspended or withdrawn due to changes in information or lack of information. All rights pertaining to this document
including data from JCR Green Finance Evaluation are reserved by JCR. All or part of this document including data from JCR Green Finance Evaluation is prohibitedfrom being reproduced, modified or otherwise altered without the permission of JCR.

■Terminology
JCR Green Finance Framework Evaluation: The assessment of the extent to which proceeds financed based on the Green Finance Framework are allocated to green
projects as defined by JCR and of the degree of management, operation and transparency on the use of proceeds for the said Green Finance. The evaluation is made ona scale of five in the order from top to bottom with evaluation symbols of Green 1 (F), Green 2 (F), Green 3 (F), Green 4 (F) and Green 5 (F.)■Status of Registration as an External Evaluator of Sustainability Finance・Ministry of the Environment: Registered as an external reviewer for Green Finance・ICMA (observer registration as an external evaluator with the International Capital Markets Association)
・UNEP FI Positive Impact Financial Principles Working Group Member
・Climate Bonds Initiative Approved Verifier■Other Registration Status as Credit Rating Agency
・Credit Rating Agency: the Commissioner of Financial Services Agency (Credit Rating) No. 1
・EU Certified Credit Rating Agency
・NRSRO: JCR has registered with the following four of the five credit rating classes of Nationally Recognized Statistical Rating Organization ("NRSRO") as definedby the U.S. Securities and Exchange Commission: (1) financial institutions, broker/dealers, (2) insurance companies, (3) general business corporations and (4)government and local governments. In cases where disclosure is required based on Rule 17g-7(a) of the Securities and Exchange Act, such disclosure is attached toNews Release posted on the JCR's home page at https://www.jcr.co.jp/en/.

■For all other inquiries, please contact us below
TEL: 03-3544-7013 FAX: 03-3544-7026
Information Service Department

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026

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