ESG ReportFebruary 2019

MC-UBS Group
Brand Message

The Logo
Symbol markThe logo evokes the idea of buildings and land
while representing both the "M" of Mitsubishi
Corporation and the "U" of UBS A.G. The logo
expresses the focus of our group, born from the
combined expertise and experience of the two
firms in real estate and finance.

Mission, Vision &Core Values

MISSION"Always Create New Value for People, the Community, and the World"
Through real estate investment management, we create new demand in our society
and new value that exceed people’s expectations.

VISION
We strive to be the leading group of professionals, trusted by people,
the community, and the world.

CORE VALUES
M Mastery
We act proactively and professionally and adhere to the highest standardsof compliance and discipline.

C

Challenge
We always challenge the unprecedented.

U

UniquenessWe think outside the box and dare to be original.

B

Belief in ourselves
We believe in ourselves and are committed to our "MCUBSR" values.

S

Stewardship and Sensitivity
 e take our dialogue with investors seriously, and fulfill our fiduciary duty.
W
We are sensitive to changes in the world and respond to them appropriately.

R

Respect
We respect our colleagues and partners so that we can all work with pride and a smile.

Corporate Profile
Corporate name:
Mitsubishi Corp.-UBS Realty Inc.
Capital fund:¥500 million
Shareholder composition: Mitsubishi Corporation 51%, UBS Asset Management AG 49%
Offices:	Head office	Tokyo Building 7-3, Marunouchi 2-chome,
Chiyoda-ku, Tokyo 100-6420, Japan	Kansai office	Herbis ENT Office Tower, 25th floor, 2-22, Umeda
2-chome, Kita-ku, Osaka-shi, Osaka 530-8602, Japan

Certifications

Euronext® Reitsmarket GRESBGlobal Sustainable NR Index

Contents

2

Message from the President

4

Sustainability Strategy

The MC-UBS Group and all of the funds undermanagement by the Group are actively engaged inpractices that promote sustainability within the
J-REIT industry, information on which they disclose
to stakeholders. For this term, information pertaining to sustainability published on the websites ofeach management company and investment
corporation has been consolidated in this document,
ESG Report February 2019, in order to provide aclear explanation of our initiatives as a Group.
ESG Report February 2019 serves as an
informative tool for stakeholders with a high levelof interest in sustainability and therefore makes
reference to GRI standards. This report has beenreviewed by CSR Design Green Investment AdvisoryCo., Ltd., which has expertise in sustainability
pertaining to the real estate sector, on mattersconcerning materiality.
Going forward, we hope to gather opinionsfrom those who read this report in order to further
improve subsequent reports. In addition, we hopethat this report can be used as an effective means tomaintain a dialogue with our stakeholders.

21	Communication with
Stakeholders

6	ESG Materiality and the SDGs
8

23	Communication with Tenants

Sustainability Strategy

Creating a Positive Impact

10	Supported Initiatives
11

Social22	Communication with
Local Communities

4

Editorial Policy

20

25

Employees

28

IR Activities

Environmental
12	Environmental Approvals and
Evaluations for Group Assets
13

Climate Change

14

Energy16

Water / Waste

29

32

17	Pollution Prevention /Building Safety
18

Biodiversity

19

The Green Bond

Month of issuance: February 2019
Frequency of updates: Once annually
Reference guidelines: GRI standards
The GRI Guidelines Index will be posted at the endof February 2019.
Contact Information
Tel: +81-3-5293-7000 (main)
E-mail: contact-us_mcubs@mc-ubs.com

ESG Report February 20191

Corporate Governance30

Corporate Governance

31

Compliance

Investment Corporation Overview

Message from the President

The MC-UBS Group is committed
to furthering its ESG activities
for the benefit of
all of its stakeholders.

My name is Katsuji Okamoto, president & CEO ofreal estate investment corporations. As an industry leader,

Mitsubishi Corp. -UBS Realty Inc. (MCUBS).

we put utmost importance on dialogue with our unithold-

MCUBS is an asset management company established iners. In addition, we have received international recognition

2000 in the initial days of the J-REIT market as a joint ven-for our pioneering initiatives on sustainability, specifically inture between Mitsubishi Corporation, one of Japan’s lead-the field of environmental, social, and governance (ESG)

ing trading companies, and UBS AG, one of the world’s

issues that have become a focus in recent years. For exam-

leading financial groups. The MC-UBS Group is one ofple, we became the first J-REIT asset management company

Japan’s largest asset management companies, drawing on

to sign up to the Principles for Responsible Investment (PRI)

its organizational capabilities as a team of professionals toand the United Nations Environment Programme Financemanage three J-REITs: Japan Retail Fund Investment

Initiative (UNEP FI). Furthermore, as pages 11 to 31 of the

Corporation (JRF), which focuses on retail properties;

report will show, the active ESG efforts of our J-REITs haveIndustrial & Infrastructure Fund Investment Corporation

been evaluated, and as of December 31, 2018, all three(IIF), which focuses on both industrial and infrastructure

J-REITs number among the eight listed on the MSCI Japan

properties; and MCUBS MidCity Investment Corporation

ESG Select Leaders Index, adopted by the Government(MidCity),* which invests mainly in office buildings.

Pension Investment Fund (GPIF), with favorable reviews.

1

With more than ¥1.44 trillion*2 in total assets under

Against this backdrop, the MC-UBS Group has engaged

management by our three J-REITs, we are in the top tier ofin dialogue with our unitholders and discovered that, withJapanese asset management companies dealing in listed

information regarding its ESG initiatives being spread over

ESG Report February 20192

two management companies and three investment corpora-

Looking to the future, we are committed to making further

tions, it was difficult to follow all of our activities. Also,

advances as one of Japan’s leading asset management

while it is true that the Sustainability Committee, of which I

companies for listed real estate investment corporations.

am chairperson, shares our sustainability policy and over-This growth will be driven by well articulated Group initia-

sees activities throughout the Group, I believe we need atives that take full account of our environmental and social

method to convey our Groupwide policy to unitholders

responsibilities. We ask for your continued support andinstead of only relying on the IR activities of each fund.

understanding in our endeavors.

To this end, in this term we have compiled the ESG activi-*1 T he asset management company of MCUBS MidCity Investment Corporation is
MCUBS MidCity Inc., a subsidiary of MCUBS.
*2 A
 s of December 31, 2018ties across the entire Group and published them in this ESG
report for the term, with the hope of sharing the Group’s
basic ESG approach and activities with all of our stakeholders, including our unitholders.
Pages 4 to 10 explain our sustainability strategy and primarily look at the MC-UBS Group approach to sustainability
in terms of the “what”—what aspects we are responding

February 2019

to—and the “why”—why these responses are necessary.
From page 11 onward, we break down the “E,” “S,” and“G” of ESG and answer the question of “how” by looking
at specific examples of our efforts. With this being our firstreport, there may be some inadequacies in content, information, and composition, but I hope that it will help you

Katsuji Okamoto

better understand the ESG efforts of the MC-UBS Group.

President & CEOGroup Organizational Chart 
The sponsors of the MC-UBS Group, Mitsubishi Corporation

Through this manner of business, we can contribute to inves-and UBS AG, carry with them knowledge of and experience intors, contribute to the growth and development of domestic

the real estate and financial markets, respectively, cultivatedand overseas investment markets, and contribute to the real

over many years. With this as our base, we would like to build

estate market. This goal forms the basic management policy ofreal estate investment trusts and provide an abundance ofour business.

investment opportunities for investors in Japan and overseas.

First REIT specializing in retail properties in Japan

Asset Management Company

Asset Management

Mitsubishi Corp.-UBS Realty Inc. (MCUBS)

Japan Retail Fund Investment Corporation (JRF)
First REIT specializing in industrial properties in Japan
Industrial & Infrastructure Fund Investment
Corporation (IIF)

Asset Management
Subsidiary

Asset Management

Asset Management Company
MCUBS MidCity Inc.

REIT focusing on the three major metropolitan areas(Tokyo, Osaka, Nagoya)MCUBS MidCity Investment Corporation (MidCity)

ESG Report February 20193

Sustainability Strategy

Sustainability Strategy
The MC-UBS Group’s Vision for Sustainability
Supported by the funds procured from investors and other

The Group has formulated the Environmental Charter

parties, the MC-UBS Group manages various types of prop-

and the Responsible Property Investment Policy as a clarifi-

erties, including commercial facilities, industrial facilities,

cation of its strategies and policies. In doing so, the Groupand offices. Amid the rising level of interest from global

is integrating ESG considerations into its investment andinvestors toward environmental, social, and governanceasset management processes. The Group is also working to(ESG) factors, the Group is undertaking ESG-related initia-

incorporate ESG within its Mission, Vision & Core Values

tives based on an awareness shared across the organization.

with the aim of establishing a shared awareness of ESG
across the entire Group.

Environmental Charter
MCUBS
WEB

MidCity

Responsible Property Investment Policy
See page 11.

https://www.mcubs-midcity.com/en/

MCUBS

https://www.mc-ubs.com/english/

MidCityhttps://www.mcubs-midcity.com/en/

WEB

sustainability/policy.html

sustainability/invest.html

sustainability/policy.html

Our Sustainability Targets
Mitsubishi Corp.-UBS Realty lnc. (MCUBS) has set the following sustainability targets to realize its vision for sustainability.
1. Installation of solar power panels and other environmentally friendly facilities to improve the profitability of assets
2. Monitoring of energy consumption
3. Monitoring of ESG activities of funds under management through participation in surveys conducted by GRESB and otherexternal evaluation institutions, after which survey results are utilized to make further improvements

Collaboration between Mitsubishi Corporation and UBS AG
Our Sustainability Committee keeps in close communication

Meanwhile, our other sponsor, UBS AG, is engaging

with our sponsor, Mitsubishi Corporation. Starting with thein advanced ESG activities on a global scale. By having

adoption of a sustainability strategy based on Mitsubishi’s

employees seconded to the Company from UBS participate

Three Principles, this communication has led to the sharing

in our Sustainability Committee, we are able to learn aboutof know-how and examples of successful initiatives between

examples of global initiatives and acquire relevant knowl-

the Company and Mitsubishi. In addition, examples of ouredge, which we then leverage within our own sustainability

Green Buildings were showcased in Mitsubishi’s ESG Data

activities. Furthermore, we mutually share know-how andBook 2018, issued in December 2018.

expertise with UBS, and examples of the MC-UBS Group’s
initiatives have been introduced as best practices in the CSR
reports published by UBS.

ESG Report February 20194

Sustainability Promotion StructureWith the increase in ESG-related demand from global

Corporation (IIF), and asset management companies. In

stakeholders, MCUBS established the Sustainability Com-

2015, we welcomed MCUBS MidCity Inc. into the Groupmittee in 2013 to further promote responsible property

and integrated employees from the company into our Sus-

investment (RPI) across the organization. During the same

tainability Committee. By doing so, we have been able toyear, the Company commenced initiatives regarding theshare information on sustainability with MCUBS MidCity

sustainability of Japan Retail Fund Investment Corporation

Investment Corporation (MidCity) and across the organiza-(JRF), Industrial & Infrastructure Fund Investment

tion while examining efforts to resolve issues together.

Monitoring Activities by the Sustainability Committee
MCUBS discusses sustainability activities carried out duringmake improvements as appropriate to initiatives deemed tothe current fiscal year at meetings of the Sustainability

be lacking based on the results of these discussions.

Committee. In the following fiscal year, the Company will

Organizational Chart of the Sustainability Committee
Retail Division(JRF)
Sustainability Committee
Committee chair: President
Secretariat: Research, Marketing and ESG Department

Industrial Division(IIF)
MidCity

Main Members of the Sustainability Committee
Committee chair:

President of MCUBS

Committee members:	MCUBS: Vice President, General Manager of Retail Division, General Manager of Industrial Division,
General Manager of Corporate Division, etc.
MCUBS MidCity Inc.: President and Vice President
Observers:		Full-Time Corporate Auditors, Division Managers, and Directors in Charge of Investment
and Investor Relations, etc.
Secretariat:

Research, Marketing and ESG Department

Frequency of Meetings

Main Examination Items

The Sustainability Committee meets approximately four times a• Sustainability targets and plans for each fiscal year

year. In addition, subcommittee meetings are held at an appropri-• Reports on activities related to the United Nations

ate frequency, where more detailed discussion takes place from aEnvironment Programme Finance Initiative and Principles forpractical and operational standpoint.

Responsible Investment• Reports on the ESG activities of each fund• Discussions on the certifications received by each fund• Discussions on the issuance of Green Bonds

ESG Report February 20195

Sustainability Strategy

ESG Materiality and the SDGs
Through the meetings of the Sustainability Committee, the MC-UBS Group has examined its vision and targets forsustainability and carried out efforts toward their realization. As the level of interest toward ESG is rising, we haveidentified and visualized ESG material issues related to sustainability (materiality). By doing so, we have further
clarified the dialogue we hold with global stakeholders and the efforts we pursue in collaboration with otherorganizations. These issues were identified based on the Group’s Corporate Philosophy and Environmental Charterbut also incorporate the ideas of the Sustainable Development Goals (SDGs), globally shared goals promoted by
the United Nations.

ESG Materiality Selection Process
STEP• Identification of Sustainability Issues

1	We compiled lists of sustainability issues related to REITs based on the SDGs, global ESG disclosure criteria, and benchmark studies by overseas companies in the same industry.

STEP• Establishment of Priority Order

2	We established an order of priority for the issues we identified by taking into account their levelof importance to asset management companies, each fund under the Company’s management,
overseas companies in the same industries, and external organizations.

STEP• Confirmation of Validity3	To ensure objectivity, we underwent a review by CSR Design Green Investment Advisory, Co., Ltd.
regarding our ESG materiality and its selection process.

STEP• Discussion and Approval by Senior Management

4

The Company’s Sustainability Committee discussed and approved the selected ESG materiality.

Through the ESG materiality selection process detailed above,

Next, in addition to responding to climate change andwe have identified the following ESG materiality as having aenergy efficiency, we must work together with our tenants

high level of importance to the MC-UBS Group at this time.

and local community members to address the issues ofFirst, as a real estate asset management company, it isefficient water use and waste disposal. By doing so, we will

absolutely essential that MCUBS ensures the quality of thework to establish partnerships and build green communities.

buildings it manages through certifications and other

Going forward, after further clarifying the level of priority

means and addresses issues related to climate change andof these issues and working to visualize them, we will strive

energy efficiency. Accordingly, we will aim to improve theto achieve their resolution while promoting dialogue withamenities and convenience of our buildings. Also, we will

all of our stakeholders.

cultivate employees who can realize this aim for our buildings and work to improve their level of satisfaction.

List of Sustainability Issues
 esponse to sustainability certifications
RBuilding resilienceResponse to climate change
Energy efficiency
Ensuring of health and well-being ofand convenience for people (tenants)

E mployee cultivation and level of satisfactionEfficient water use
Waste disposal
Partnership with tenants
Collaboration with local communities

ESG Report February 20196B iodiversity in areas surrounding
our buildings
E mployee diversityC omplianceS upply chain management

Our ESG Materiality and Closely Related SDGs
Level of importance

Most important ESG materiality

Closely related SDGs

Response to sustainability certifications

Building resilience

Response to climate change

Energy efficiency

Ensuring of health and well-being of and convenience for people (tenants)

Employee cultivation and level of satisfaction

Level of importanceImportant ESG materiality

Closely related SDGs

Efficient water use

Waste disposal

Partnership with tenants

Collaboration with local communities

Review by Expert Institutions (Excerpt)
We believe that the ESG materiality selected by the MCUBS Group is appropriate for a real estate
management group. Below, we offer some issues we feel that the MCUBS Group should examine, including efforts we hope the Group pursues going forward.
Selection Process When determining the order of priority, we think that the MCUBS Group should clarify how theissues it selects reflect the opinions of its external stakeholders as well as how these issues relate
to the materiality selected by its parent company. In addition, after selecting the materiality, it isextremely important that the Group establishes key performance indicators (KPIs) for these issues
and conducts operating and monitoring activities based on these KPIs. We therefore hope that
the Group examines the establishment of such KPIs in the near future.
ESG Materiality We recognize that the importance of promoting people’s health and well-being will become moresignificant going forward. Accordingly, we sincerely hope that the MCUBS Group leads the J-REIT
sector in accomplishing this goal. Furthermore, in terms of sustainability certifications, we would likethe Group to understand that these certifications include elements that relate to not only environmental performance but also to building resilience as well as the health and well-being of people.

ESG Report February 20197

Ryuichi Horie
President & CEO
CSR Design Green
Investment Advisory,Co., Ltd.

Sustainability Strategy

Creating a Positive Impact
Reopening of the Oyama Yuen Harvest Walk Shopping Center
JRF reopened the Oyama Yuen Harvest Walk shopping center, one of its properties located in Oyama, Tochigi
Prefecture, in October 2017 after renovations.

Overview
J RF implemented environmentally friendly initiatives such as
planting local native species, carrying out greening ofsidewalks, implementing measures against rainwater, etc.
T his renewal provided a community venue for residents inliving near the commercial facility and strengthened club
activities for local high schools and universities, as well asheightening responses to disasters.
T he parking lot was renovated with a new outdoor square.
We added facilities to make this square more of a communal
place by incorporating a playground that utilizes prefectural
timber and increasing appeal through tree planting, etc.
We significantly changed the parking lot flow lines
separete from the facility renewal, reducing congestion on
the national highway.

Positive Impact
Improvement in profitability (Economic)
 onsideration for the environment through greening
C(Environment)
Improvement of environmental performance of facilities(Environment)
Channeling rainwater aboveground by introducing permeable pavement and strengthening disaster-preparedness­measures (Environment/Society)P roviding community space for visitors, including local­residents (Society) educing congestion on national highways by changing
Rparking lot flow lines (Society)This property was erected on the site of the Oyama

Benimaru supermarket, a promenade, and a shopping mall.

Amusement Park, a familiar spot that was representative

The property also features 2,000 parking spaces, plus anof the Northern Kanto region for half a century and was

additional 1,000 spaces for bicycles, roughly 70 medium- toclosed in February 2005. Oyama Yuen Harvest Walk con-large-sized stores (including specialty shops), and an eight-

sists of six buildings, including a home center, a York

screen cinema complex.

Property details

WEB

JRF

https://www.jrf-reit.com/english/portfolio/s-24.html

ESG Report February 20198

Acquisition of OTA Techno COREIn January 2019, IIF decided on an impact investment project (a silent partnership, herein referred to as the“Tokumei Kumiai”) related to the OTA Techno CORE building. This is the first case of a J-REIT making such an
agreement based on the Principles for Positive Impact Finance.

Measures Based on the Sustainable Development Goals (SDGs)
and the Principles for Positive Impact Finance
The investment is in line with the materiality of the SDGs,
which is emphasized by MCUBS and will contribute to thecreation of a sustainable society.
Furthermore, a third-party opinion has been obtained
stating that the project is in accordance with the Principles
for Positive Impact* of the United Nations Environment
Programme Finance Initiative (UNEP FI).
* Principles adopted in January 2017 by members of the United Nations Environment Programme Finance Initiative (UNEPFI), namely, financial institutions, to achievesustainable development and the SDGs as a series of shared principles for financing that will lead to efforts to maximize the positive impact on the economy, society,and the environment while addressing any negative impacts thereon.

Measures for the Creation of a Sustainable Society
OTA Techno CORE
Providing space to work

Dividends

Payment of rent
HR development
supportEquity investment in
the Tokumei Kumiai

Ota-ku, TokyoIIF•  A manufacturing industry hub in Tokyo•  The only J-REIT that specializes in industrial properties•  An accumulation of human resources, including engineers
and craftsmen•  Established track record of acquiring manufacturing and
R&D facilities

ResultSite secured to develop bothhuman resources and thesuccession of technologies topromote industry over the
medium to long term

Measures in support of regional economic
development from the Perspective ofReal Estate investment (PRE)Cooperation with J-REIT as along-term owner

Property details

WEB

IIF

https://www.iif-reit.com/upd3/irpr_news/pdf/xjs0065C35967E1A8F97.pdf

ESG Report February 20199

ResultHave secured high profitability
over the medium term
Have ensured future acquisition
opportunities

Sustainability Strategy

Supported Initiatives

Principles for Responsible Investment (PRI)

Signatory since August 2013
First J-REIT asset managerIn solidarity with the fundamental ideas of the PRI, MCUBS became a signatory inAugust 2013. MCUBS is the first J-REIT asset manager to become a signatory of the
PRI. In addition, MCUBS has been active as a member of UNEP FI’s Property Working
Group (PWG) since 2016.

Montreal Carbon Pledge

Signatory since September 30, 2015
First J-REIT asset manager

MCUBS became the first J-REIT asset manager to sign the Montreal Carbon Pledge on
September 30, 2015. Since then, MCUBS has continued to disclose the amount of CO2
emissions through its corporate website and works on the reduction of its
environmental impact for a sustainable society.

United Nations Environment ProgrammeFinance Initiative (UNEP FI)Signatory since October 2016
First J-REIT asset manager

Acknowledging the proactive sustainability initiatives of MCUBS, UNEP FI invited
MCUBS to participate in the UNEP FI’s Property Working Group (PWG). MCUBS became
the first J-REIT asset manager to both sign up to UNEP FI and join the PWG of theinitiative in October 2016. PWG is a working group consisting of 20 major real estate
investors around the world, with MCUBS being the third member from Japan.
Through becoming a signatory, for the asset management of each investment
corporation, MCUBS is sharing best practice cases globally and continues striving to
reduce its environmental load and realize a sustainable society.

United Nations Global Compact
(UN Global Compact)

Signatory since October 2016
First J-REIT asset manager

MCUBS became the first J-REIT asset manager to sign up to the UN Global Compact in
October 2016. As a signatory and respecting the principles of the UN Global Compact,
MCUBS has further strengthened its corporate governance in the areas of humanrights, labor, the environment, and anti-corruption, based on its corporate mission to“always create new value for people, the community, and the world.”

Principles for Financial Action toward a Sustainable Society(Principles for Financial Action for the 21st Century) Signatory since June 2013
In solidarity with these principles put forth by the Ministry of the Environment, MCUBS
became a signatory in June 2013.
MCUBS MidCity Inc. became a signatory in February 2016.

Japan Association for UNHCR
For five consecutive years, MCUBS has received a letter of appreciation from the Japan
Association for UNHCR (United Nations High Commissioner for Refugees), which closely
coordinates with UNHCR Representation in Japan, for making JRF’s vacant space fromexisting properties available to the Campaign for United Nations Refugee Support Activities
free of charge.
MCUBS will continue to hold a high level of interest in reducing its environmental load
and making contributions to local society.
MCUBS MidCity Inc. has also supported the UNHCR since 2016.

ESG Report February 201910

ENVIRONMENTAL

Environmental Charter
The MC-UBS Group formulated the Environmental Charter, which sets out our environmental principles and action plans.
MCUBS then formally established it in June 2013.

Environmental Charter
At Mitsubishi Corp.-UBS Realty Inc., we consider the Earth itself to be our most important stakeholder and are continuously working
toward the realization of a sustainable society through our business activities.
• We will strive to reduce greenhouse gas emissions by continuously implementing new efficiency measures and embracing
new technologies.
• We will promote the sustainable use of natural resources including energy, minerals, food stocks, and water throughout our global
business operations.
• We recognize the critical importance of what ecosystems can provide and are committed to protecting ecosystems and mitigating
any potential impacts on biodiversity.
• We will strive to create and enhance environmental benefits by undertaking conservation activities and reducing
our environmental footprint.
• We will continue to actively engage and work with our various stakeholders openly and transparently and disclose informationon the environmental impacts of our business operations in an appropriate and timely manner.
• We will conduct all of our activities in compliance with environmental laws while adhering to international rules and social standards.

MCUBS MidCity Inc. established the Environmental Charter in December 2015, which sets out our environmental principles
and action plans.

ESG Report February 201911

Environmental

E nvironmental Approvals and Evaluations
for Group Assets
At the MC-UBS Group, we make active efforts to achieve sustainability, but we also believe in the importance ofacquiring positive ratings and appropriate certifications for these efforts. To meet the demand of investors,
tenants, and other stakeholders worldwide, we acquire a wide range of domestic and overseas certifications, fromperformance assessments of individual buildings to evaluations of entire funds.

Conditions Regarding the Acquisition of Certifications
We have received several positive overall ratings of our

first J-REIT to participate in the CDP (formerly, the Carbon

funds under management from GRESB (Global Real Estate

Disclosure Project) climate change program in 2016.
Regarding performance evaluations on real estate, we

Sustainability Benchmark), the current global standard forreal assets. Our funds received certification in their early

have acquired certifications for CASBEE for Real Estate,stages, including IIF, which became the first J-REIT to be

DBJ Green Building, and BELS. For further details, please

selected as a Sector Leader in 2013. In 2018, JRF, IIF, andsee below.

MidCity each received the highest ranking given by GRESB,

Going forward, the MC-UBS Group will maintain its

the Green Star, for the fourth, sixth, and third consecutive

policy of improving the ratings of its overall funds underyears, respectively. In addition, JRF was named Sector Leader

management while increasing its proportion of properties

for the Asian business sector. In addition, JRF became thewith certifications from external parties.
As of December 10, 2018

JRF
GRESB

Real Estate Rating
Green Star:
5 stars
Sector Leader

IIF(fourth consecutive year)

Public Disclosure RatingA

CDP Climate Change ProgramC		

Certification for CASBEE for Real Estate

S :	11 properties(first rating acquired in 2015)
A :	1 property(first rating acquired in 2015)

Real Estate Rating
Green Star:
4 stars(sixth consecutive year)

MidCity
Real Estate Rating
Green Star:	(third consecutive year)
5 stars

Public Disclosure RatingA

Public Disclosure RatingA

S :	1 property(first rating acquired in 2018)
A :	5 properties(first rating acquired in 2014)
B+ :	2 properties(first rating acquired in 2016)

A :	1 property(first rating acquired in 2008)(second consecutive year)

Includes properties subject to reporting system of local municipalities
DBJ Green Building Certification

5 stars: 1 property (first rating acquired in 2015)
4 stars: 7 properties (first rating acquired in 2014)
3 stars: 5 properties (first rating acquired in 2014)
2 stars: 4 properties (first rating acquired in 2014)
1 star: 2 properties (first rating acquired in 2016)

5 stars:	1 property(first rating acquired in 2015)
4 stars:	4 properties(first rating acquired in 2015)

4 stars:	4 properties(first rating acquired in 2012)

BELS Certification

4 stars: 1 property (first rating acquired in 2017)

5 stars:	2 properties(first rating acquired in 2016)
4 stars:	2 properties(first rating acquired in 2014)
2 stars:	4 properties(first rating acquired in 2016)

3 stars:	1 property(first rating acquired in 2016)
2 stars:	2 properties(first rating acquired in 2016)

Detailed examples of our environmental approval and evaluation
JRF
WEB

IIF
MidCityhttps://www.jrf-reit.com/english/sustainability/environment/index.html

https://www.iif-reit.com/english/sustainability/environment/index.html
https://www.midcity-reit.com/en/sustainability/evaluation

ESG Report February 201912

Climate Change
As of the end of December 2018, the MC-UBS Group is one of Japan’s largest real estate management companies
and operates real estate covering 190 properties with a total acquisition value of approximately ¥1.4 trillion. With
climate change becoming a growing problem with each passing year, we are implementing environmentallyfriendly and energy-saving measures for our properties and making efforts toward more efficient energy use inorder to show greater consideration for the environment and lessen our environmental impact. To lower CO2
emissions, one of the risk factors for climate change, we are moving forward with a system that will assess andmanage emissions across our entire portfolio. In particular, JRF, a J-REIT with the largest commercial facility REIT, isthe first in Japan to take part in the CDP (formerly, the Carbon Disclosure Project), and has been actively
promoting its efforts since joining in 2016.

CO2 Emissions
JRF

IIF

(Thousand tCO2)(tCO2/m )2

250

MidCity(Thousand tCO2)

0.20(tCO2/m )
2

150

142

0.5

(Thousand tCO2)
50

133
205

196

200

(tCO2/m2)
0.20

43

44

0.16

120

0.4

40

0.12

90

0.3

30

0.12

100

0.08

60

0.2

20

0.08

50

0.04

30

0.1

10

0.04

0

0

0

0

0.16

0.13
150

0.09

0

0.08

2017

2016

(FY)

CO2 emissions
CO2 emissions per unit (right axis)

0.19
0.16

2017

2016

(FY)

CO2 emissions
CO2 emissions per unit (right axis)

2016

0.13

2017

CO2 emissions
CO2 emissions per unit (right axis)

Environmental Performance Data
Data and emissions per unit are calculated based on the total leasable floor area (after considerations for rate of occupancy).
Data collection rate 
JRF

Aggregation period 

CO2 emissions and energy amount

JRF

2017: March 2017–February 2018

IIF

2017: January 2017–December 2017

MidCity

2017: January 2017–December 20172017 92.7%

2016: March 2016–February 20172016 88.4%
Water consumption

2016: January 2016–December 20162017 92.7%
2016 90.1%

2016: January 2016–December 2016

Waste generated
2017 88.5%
2016 99.1%
IIF

2017 100%  2016 100%

MidCity2017 100%  2016 100%

For examples of the environmental initiatives for each fund, please refer to the links below.
JRF
WEB

IIF
MidCityhttps://www.jrf-reit.com/english/sustainability/environment/index.html
https://www.iif-reit.com/english/sustainability/environment/index.html
https://www.midcity-reit.com/en/sustainability/environment

ESG Report February 2019

13

0

(FY)

Environmental

EnergyThe MC-UBS Group implements environmentally friendly and energy-saving measures and makes efforts toward
more efficient energy use for the properties held by each investment corporation under management to show
greater consideration for the environment and lessen its environmental impact. We collectively manage energy,
fuel, and water consumption and analyze the accumulated data, which is both accurate and highly transparent toactively manage reduction of energy use.

Energy Consumption
JRF

IIF

MidCity(Mwh)(kwh/m2)(Mwh)(kwh/m2)(Mwh)(kwh/m2)

400,000250

180,000

300

100,000

350

200

144,000

240

80,000358,745

347,921320,000

162.21149.54240,000

150

108,000

160,000

100

80,00050

0139,627
125,801

2017

2016

73,727228.77177.4675,862280226.67180

60,000210

72,000120

40,000140

36,00060

20,000

70

0

0

(FY)

Energy consumption
Energy consumption per unit (right axis)

159.02

2017

2016

0

0

(FY)

Energy consumption
Energy consumption per unit (right axis)

2016

2017

0

(FY)

Energy consumption
Energy consumption per unit (right axis)

Fuel Consumption
JRF(kwh/m2)

120,000

96,000100

94,973

MidCity

IIF

(Mwh)

(m3)

(m3/m2)
688,304

700,000

1.5

(Mwh)

(kwh/m2)

40,000150

35,016

609,829

98,89180

560,000

1.2

32,00031,80698.69

72,00060

420,000

48,00040

24,000

20

42.94

0

2016

0.86

104.63120

0.9

24,00090

280,000

0.6

16,00060

140,000

0.3

8,000

30

0.78

42.50

2017

0

Fuel consumption (fuel only)
Fuel consumption per unit (right axis)

0

(FY)

2017

2016

0

Gas consumption (gas only)
Gas consumption per unit (right axis)

ESG Report February 2019

14

0

(FY)

2016

2017

0

(FY)

Fuel/gas consumption
Fuel/gas consumption per unit (right axis)

Initiatives

LED Lighting 

JRF

Switching from conventional incandescent lighting to LED

the long term. JRF actively promotes the use of LED lighting,lighting reduces labor required for maintenance and also

which reduces electricity consumption through its highreduces the cost of purchasing parts and equipment overluminous efficiency.

Properties

GYRE
La Porte Aoyama
KAWASAKI Le FRONT
mozo wonder city
Kyoto Family
plus 23 other properties
mozo wonder city

Solar Power 

IIF

Solar panels are installed on the roofs of facility buildings to

IIF Kobe Logistics Centersave energy by using renewable sources.

Properties

IIF Kobe Logistics Center
IIF Misato Logistics Center
IIF Tosu Logistics CenterIIF Iruma Logistics Center
IIF Fukuoka Hakozaki Logistics Center IIplus 5 other properties
IIF Tosu Logistics Center

Green Lease 

MidCity

A “green lease” refers to an agreement made via a contract

arrangement. For example, MidCity has borne the costs ofof memorandum between building owners and tenants to

installing LED lighting in its facilities, which allows tenants tocooperate toward reducing environmental impact andenjoy lower energy fees inmaking a more environmentally friendly facility throughexchange for paying MidCity avarious means, including energy conservation on properties.

fixed green lease payment.

Green leases are entered into on a voluntary basis, withboth parties agreeing to uphold the terms of theProperty

Twin 21
Twin 21

ESG Report February 201915

Environmental

Water
The MC-UBS Group strives for sustainable resource use. The Group makes active efforts to utilize water resources
effectively as part of a greater effort toward sustainable resource use. JRF returns over 6,000m2 of rainwater togroundwater every year through means such as permeable pavement, while IIF works with tenants to promote
effective water use by utilizing on-site well water pumped from 100m underground, drawn using an automaticwater supply apparatus.

Water Use
JRF

IIF

(Thousand m3)(m3/m2)

2,500

2.0

700

1.6

560

1.2

420

1,000

0.8

280

500

0.4

140

0

0

2,172

1,500

0.95

0

(m3/m2)

2,073

2,000

0.89

2017

2016

MidCity(Thousand m3)

543

362

(Thousand m3)

1.5

700

1.2

560

0.9

420

0.6

280

0.3

140

0

0

(m3/m2)
5

542

519

4

3

0.62

(FY)

Water use
Water use per unit (right axis)

0.51

2017

2016

(FY)

Water use
Water use per unit (right axis)

2

1.62

1.61

1

2017

2016

0

(FY)

Water use
Water use per unit (right axis)

Waste
The MC-UBS Group has been making efforts to minimize the amount of waste produced by its properties, monitor
the amount of waste generated, and appropriately manage waste production.

Waste and Recycling Rate
JRF

IIF

(t)

MidCity(t)35,00032,77428,000

(%)
6,000

4,800

26,12821,0003,600

14,000

2,400

10.6

8.4

(t)

(%)

15.0

6,000

12.0

4,800

9.0

3,600

6.0

2,400

80.0

61.6

48.0

5,666

4,607

0

1,200

2016

Total waste

2017

0

(FY)

3.0

2016

102

94

2017

Volume of non-hazardous waste
Volume of hazardous waste
Recycling rate (right axis)

ESG Report February 2019

16

32.0

3,778

3,505
7,000

64.0

57.2

0

1,200

0

(FY)

16.0

199

2016

245

2017

Volume of non-hazardous waste
Volume of hazardous waste
Recycling rate (right axis)

0

(FY)

Pollution Prevention
The MC-UBS Group strives to create and enhance environmental benefits by undertaking conservation activities
and reducing its environmental footprint.

Assessments When Acquiring Real Estate Properties
When acquiring real estate properties, MCUBS takes various

Pre-Investment Assessment Workflow

environmental factors into consideration before making invest-

Phase 1: Historical record review

ment decisions: property inspections, land history investiga-*1

tions, and other related research on environmental risk factors.

Phase 1’: Interviews

During soil and environmental investigations, third-party*2

experts perform environmental pollution investigations. Prior

Phase 2: Soil and groundwater contamination survey(Determining presence or absence of problems by surveying the soil)

to executing any purchase agreement, IIF will have experts
conduct a soil and environmental contamination survey to

No concerns

assist it in assessing a property’s environmental risks. IIF will
use the pre-investment assessment workflow chart indicated*3
Adjustoffer price*4
Phase 3:Site remediation

RejectInvestment Committee

on the right to determine whether the investment would be

Purchase agreement / Closing

appropriate.
When acquiring real estate properties, MCUBS MidCity
Inc. conducts soil contamination surveys and other researchin accordance with MCUBS’ environmental measures and*1	If we are unable to determine solely from a review of historical records that there is no riskof soil contamination or that no other environmental contamination exists (for example, amanufacturing facility that utilized toxic or other hazardous substances in the past), we willconduct interviews with the seller.
*2	If we are unable to determine from interviews with the seller that there is no risk of soil
or other environmental contamination, we will conduct a soil and groundwater contamination survey.
*3	If a contamination concern exists, but the necessary remediation would be technically or
economically infeasible (for example, remediation is extremely difficult due to structures
existing above the contaminated area), we will recommend a price adjustment.
*4	If, after discussions with the seller, remediation is deemed technically and economicallyfeasible, we will conduct site remediation or require the seller to do so.

analyzes various environmental factors before making
investment decisions.
Concerning soil contamination, its property acquisition
manual stipulates that investment targets shall be, in principle,
properties “that are very unlikely to have soil contamination orthat cannot eliminate the possibility of having soil contamination but are very unlikely to carry environmental damage risk.”

Building Safety
The MC-UBS Group is working to maintain the safety of its buildings by conducting building and earthquake risk
assessments at the time of acquisition as well as collecting engineering reports on a regular basis.

Seismic Reinforcements 

Measuring Air Environment 

JRF

MidCity

JRF conducts a building and earthquake risk assessment at

Asbestos is a naturally occurring mineral fiber sometimes

the time of property acquisition, and calculates earthquake

called sekimen or ishiwata, and breathing it is highly likely torisk in held properties whenever standards are revised.

be hazardous to health, thus implementation of some mea-

When necessary, secondary assessments are performed assures is required. MidCity measures the air environment once

well. When results of those assessments conclude thata year to confirm the dispersal status of asbestos.

earthquake-resistant reinforcement construction is required,
we make environmentally conscious choices that will provide the necessary seismic retrofitting while minimizing
waste. At the same time, we also work to reduce CO2 emissions and energy consumption in the updated facility.

ESG Report February 201917

Environmental

Biodiversity
The MC-UBS Group recognizes the critical importance of what ecosystems can provide and is committed toprotecting ecosystems and mitigating any potential impacts on biodiversity.

Examples of Initiatives

Greening of Facilities 

JRF

In addition to energy savings, the greening of facilities creates pleasant spaces for customers and allows them to relax and enjoy
the colors and fragrances of the natural surroundings.

Greening of main entrances and wall surfacesof parking lots
The greening of main entrances and wall surfaces of parking lots
mitigates outdoor temperature increases by means of transpiration by plants and also provides relaxation and comfort throughits visual impact, in addition to energy savings and the suppression of temperature increases due to solar radiation.
La Porte Aoyama

Greening of rooftops and entrances
The greening of rooftops and entrances and the bedding ofvarious flowers and plants throughout the year creates a visuallyappealing environment for customers. JRF can also expect tobenefit from such greening as it encourages shopping by customers who come to various events that are held in open spaces
on a regular basis.
Nara Family

Establishing Green Zones Protection of Native Species

IIF

IIF creates green zones at each of its properties to help reduce

When planting at our proper-

the heat island effect and the amount of CO2 emissions.

ties, MidCity makes sure to

MidCitytransplant any native plantsthat were replaced to newareas and promote the greening of our properties with

Total greening area

consideration given to
biodiversity.

7.8ha(78,000m2)

IIF Noda Logistics Center

M-City Akasaka 1-chome Bldg.

ESG Report February 201918

The Green BondAs part of its efforts to maintain sustainability for the environment and society as a whole, JRF has issued the Green
Bond, the first such issuance from a J-REIT. Through the issuance of the Green Bond, JRF conducts investment
contributing to the implementation and realization of a sustainable environment and society.

About the Green Bond
The Green Bond Framework Overview
1. Project evaluation/selection
With regard to the Green Bond issuance process, which is based on the Green Bond Principles, MCUBS selects new or existing properties (“Eligible Green Projects”) from its portfolio, which satisfy the eligibility criteria*1 of MC-UBS’ Sustainability Committee, as subject
assets for the Green Bond.
*1 To be eligible for Green Bond proceeds, Eligible Green Projects must meet one of the following eligibility criteria:• On the payment date of each investment corporation bond, buildings that have received 3, 4, or 5 stars under the DBJ Green Building Certification Program within two years
preceding the Green Bond issuance date, and/or buildings that are expected to receive the certification after issuance. At the time of reporting, buildings that meet the same
criteria as of the end of February of each year.
• On the payment date of each investment corporation bond, buildings that have received B+, A, or S rank under the CASBEE Certification Rank within two years preceding theGreen Bond issuance date, and/or buildings that are expected to receive the certification after issuance. At the time of reporting, buildings that meet the same criteria as ofthe end of February of each year.

2. Use of proceeds
The Green Bond totaling the same amount will be allocated toward one or more of the following.
The acquisition of existing and/or new Eligible Green Projects.
The refinancing of existing debts that have already been allocated to Eligible Green Projects.
The redemption of the issued investment corporation bonds (including Green Bonds) required to acquire Eligible Green Projects.
3. Management of Green Bond proceeds
JRF has an internal process in place to track and monitor the amount of outstanding Green Bond proceeds and the allocation thereof,
which is in line with market practice. The maximum outstanding amount of the proceeds (“Debts of Eligible Green Projects”) is calculated by multiplying the total book value of Eligible Green Projects by JRF’s interest-bearing liabilities ratio (44.2% as of the end of
August 2018).
The maximum outstanding amount of Green Bond proceeds is ¥142.9 billion, and JRF currently issues ¥8 billion (as of the end of
May 2018).

Second-Party Opinion
JRF has obtained a second-party opinion
from Sustainalytics, an ESG rating agency, forthe eligibility of Green Bond*2 proceeds. For
more information, please refer to the secondparty opinion.
*2	Green Bond eligibility entails a Green Bond framework that aligns with the four pillars (use of proceeds, project evaluation and selection, managementof proceeds, and reporting) of the Green Bond
Principles 2017.

WEBhttps://www.jrf-reit.com/english/
sustainability/environment/

The Green Bond Summary
The 1st Green Bond (The 12th Unsecured Investment
Corporation Bonds)

日本リテールファンド投資法人
グリーンボンド
フレームワークの概要及びセカンドオピニオン
評価概要
サステイナリティクスは、日本リテールファンド投資法人（以下、「JRF」) のグリーンボンドフレームワークは信頼性及び透明性が高く、グリーンボンド原則 2017 の 4 つの要件に適合しているとの意見を表明します。 サステイナリティクスが、この評価に際して考慮したのは以下の
要素です。

評価日
本件の資金使途の対象となるグリーンビルディ
ングは、グリーンボンド原則 2017 における環境改善効果を有する適格プ
ロジェクトとして認定されています。 JRF は、 DBJ Green Building 認証、又は CASBEE 不動産評価認証をグリーンビルディングの適格性の判定に使用します。

Issued Amount (million yen)

8,000

Interest Rate

0.210%

2018 年 4 月 16 日

発行体所在地日本

レポートセクション
はじめに ........................................................ 2
発行体概要 ................................................... 2

対象物件の評価・選定
及び環境/社会的リスクへの対応プロセスは、経営幹部レベルの役員(資産運用会社の社長) が議長を務めるサステナビリティ・コミッティを通じて実施されています。サステイナリティクスは、経営幹部レベルの役員が関与していることは、マーケット・ベスト・プラクティスであると評価しています。

フレームワークの概要 .................................... 4

Assessment*3

サステイナリティクスのオピニオン .......... 7
参考資料 ..................................................... 10

JRF はマーケット・プラクティスに沿って、調達資金の充当状況及び発行残高の管理とモニタリングを行う内部プロセスを整備しています。
JRF はマーケット・プラクティスに沿って、グリーンボ
ンドの調達資金が充当される対象物件の電力使用量、燃料使用量、水使用量及び CO2 排出量等の環境性能指標を年次で報告します。

Ankita Shukla (ニューヨーク)
Senior Associate, Advisory Services
ankita.shukla@ sustainalytics.com(+1) 617 603 3329

Issue Date

Wakako Mizuta (東京)
Associate, Advisory Services
wakako.mizuta@ sustainalytics.com(+81) 3 4578 7516
JangBoo Lee (東京)
Associate, Advisory Services
jangboo.lee@ sustainalytics.com(+81) 3 4578 7516

Maturity Date
Remarks© Sustainalytics 2018sustain_secop201804_1.pdf

Green Bond details

JRF

May 25, 2018
May 25, 2023
Unsecured, Unguaranteed*3 Assessment is a rating opinion provided by R&I with regard to the extent to which theGreen Bond proceeds are used to invest in projects that resolve environmental issues.

Framework Overview and
Second-Party Opinion

i36ilc000000340e-att/

WEB

GA1

本件に関するお問い合わせは、下記の担当チームまでご連絡ください。

https://www.jrf-reit.com/english/sustainability/environment/index.html

ESG Report February 201919

SOCIAL

ESG Report February 201920

SocialCommunication with Stakeholders
The MC-UBS Group is an asset management company with listed REITs, meaning its stakeholders cover a wide
range of roles, from investors, lenders and bondholders, to tenants making use of its properties and service
providers related to property management (PM) and building management (BM), to members of the surrounding
community, and to various government administrations. Furthermore, we consider our employees to be
stakeholders just as important as those mentioned above.
We believe that it is our mission to build long-lasting relationships with this wide variety of stakeholders andto continue sustainable management of the Group.
Employees•  Improving worker health and benefits (counselingservices from outside experts such as medical
examinations, lectures by industrial doctors,
establishment of the Health Committee, improved
employee benefits, etc.)•  Establishing a positive work environment•  Cultivating human resources (qualification acquisition support, providing training, etc.)•  Providing employee opinion polls

Efforts to further
enhance thecompany

Tenants and service providers(PM / BM / engineers, etc.)•  Working on energy-saving and CO2
reduction measures•  Holding periodic workshops

Cooperation inconsiderationof sustainability

MC-UBS GroupJRF• Conducting tenant satisfaction survey•  Holding briefing sessions on financial results and giving presentations
to investors•  Operating websites and preparing
communication tools (asset management reports, etc.)

IIF•  Improving energy efficiency(Installing LED lighting, solar powersystem, etc.)

Local communities

Proactive
disclosure
activities

Investors, lenders, andbondholders

MidCity•  Responding to environmental certification system

Cooperation withlocal governments as
the owners andmanagers offacilities

Continued contributions to local
communities•  Participating in local cleanup activities•  Organizing facility visits in cooperation with tenants

Governments•  Participating in town planning project led by municipality•  Developing and disseminating
demonstration projects promotedby the government•  Providing spaces for community
events•  Obtaining “Comprehensive
Assessment System for Built
Environment Efficiency”(CASBEE) ratings•  Providing open public spaces andplanting trees

Detailed examples of our initiatives
JRF
WEB

IIF
MidCityhttps://www.jrf-reit.com/english/sustainability/society/index.html

https://www.iif-reit.com/english/sustainability/society/index.html

https://www.midcity-reit.com/en/sustainability/communication

ESG Report February 201921

SocialCommunication with Local Communities
The MC-UBS Group works to create important bonds with local communities by implementing disaster prevention
measures and performing activities that contribute to society at every one of its wide range of properties.

Initiatives by FundJRF

JRF carries out day-to-day management of its properties

other communal spaces. We have also opened up thebased on the Property Management Policy so that custom-­rooftop of our Abiko Shopping Plaza as one of the largest

ers can shop safely, and is mindful of making contributions

viewing spots during fireworks festivals, as part of ourto society and local communities. We aim to provide com-continuous effort to provide safe spaces for the local com-

mercial facilities that exist as part of the local community bymunity and to coordinate with local events. Through thesehaving our properties fulfill a role as hubs for disaster pre-efforts, we are working to create an environment where

vention activities in areas where disasters are prone to occur.

local residents see our facilities as part of their community.

We have introduced “Park & Ride Shopping” at mozo
wonder city as an effort to alleviate traffic jams in thesurrounding area and to be environmentally friendly. We
cooperate with nearby railway companies and offer benefits to customers who visit the shopping center by train
after parking in a designated parking lot.
To provide peace of mind to our customers, we haveadded greenery to our facilities and opened up parks andAbiko Shopping PlazaIIF

IIF provides neighboring communities and governmentswith spaces and public open spaces at the real estate properties it owns. In addition, we provide tours of our facilities
and other services to ensure that local residents are awareof the functions performed by our properties in the area.

IIF Haneda Airport
Maintenance Center

MidCityAt MidCity, we actively utilize the property as a space for
local events and community exchange so that locals andvisitors, in addition to resident office workers, can enjoy it.
In the summer, G-Square Shibuya Dogenzaka holds an
Uchimizu (water-sprinkling) event, co-sponsored by the
Tokyo Metropolitan Government, working to create an

Flower event at Twin 21

environmentally friendly office building.

Uchimizu (water-sprinkling)
event at G-Square Shibuya
Dogenzaka

ESG Report February 201922

Communication with Tenants
The MC-UBS Group operates a wide variety of properties, including retail facilities, industrial facilities, and officebuildings, which means the needs of our tenants are also diverse. We make efforts in consideration of our tenants’safety and the facility environment, but we promote measures that consider the global environment as well.

Tenant Risk Management
The MC-UBS Group is a company that invests in JapaneseSpecifically, we are contributing to the occupational healthreal estate. Japan is prone to earthquakes, and we thus

and safety of our tenants through efforts such as monitor-

promote disaster prevention measures for tenants of ouring the implementation of disaster-preparedness drills.

investee properties from an investor point of view.

Initiatives by FundJRF

JRF services more than 960 tenants over roughly 100 prop-

Therefore, a win-win relationship is created between JRF

erties. Despite this large number, JRF proactively takes

and tenants.

measures to save energy and reduce CO2 emissions at theIn addition, certain properties held by JRF—mozo wonder

properties it owns. For example, JRF improves the environ-city, Nara Family, Abiko Shopping Plaza, G-Bldg. Jiyugaoka

mental efficiency of properties. In some cases, it makes

01, Narupark, and Oyama Yuen Harvest Walk—participatedinitial investments and recovers the investment costs fromin the CO2 Reduction/Light-Down Campaign, sponsored by

the monthly rent payments collected from tenants, while

the Ministry of the Environment.

tenants save utility costs without any capital outlay.
IIF

IIF provides lifeline equipment including portable storage

Utilizing this concept, we have met the demand frombatteries, disposable toilets, and emergency lighting in its

tenants for lowered costs by converting to LED lighting

properties as a disaster countermeasure aimed at tenants.

in an effort to lower electricity costs and, by extension,

By providing value to tenants, IIF continues to manage its

electricity bills. As a result of these efforts, tenants andportfolio using its “3C Management Cycle,” which is

IIF have been able to conclude a green lease agreement.

designed to realize internal growth through stable, long-

IIF holds periodic tenant workshops. Workshops actively

term management that goes beyond the norm. The threeselect sustainability themes so that IIF and its tenants, who“Cs” of the 3C Management Cycle are Communicate:are long-term stakeholders, can better understandacquire an accurate understanding of tenant needs throughresponses to climate change and disaster countermeasures.

close communication with tenants; Customize: strategicallyWith the understanding and cooperation of tenants, a

put forth customized proposals according to individual

large number of tenants participate in the workshops, andneeds; and Create: employ a concept of portfolio manage-

the workshops serve as a foundation for IIF’s cooperation

ment that creates unitholder value through long-term,with tenants in their commitment to sustainability.

superior property management while creating value thatmeets the needs of tenants.

ESG Report February 201923

SocialCommunication with Tenants

MidCity

MidCity conducts a tenant satisfaction survey once a year.

office buildings by improving the surrounding environments

Based on the results of the survey, MidCity puts forthand enhancing the convenience of building facilities andefforts to create comfortable spaces for those working inequipment as well as safety.

Tenant Satisfaction Survey
Survey item	Survey period: Oct. 18, 2017 to Nov. 13, 2017

Sample: 349 tenants

Survey conducted by: Kanden CS Forum Inc.
Survey Findings—Level of CSI*1
2017

2013

2014

2015

2016
Total

(East Japan)(Osaka)Surrounding environment

79.7

82.3

73.7

72.4

71.9

69.1

74.7

Behavior of FM (property management firm)

76.9

78.4

78.4

78.8

79.5

76.8

81.5

Comfort level of building

57.2

58.6

55.3

54.5

56.8

54.8

58.8

Manners of management firm’s staff

74.2

75.2

75.1

74.7

74.8

74.3

75.3

Behavior of PM (property management)

71.6

72.5

72.8

73.0

72.4

68.9

74.9

Measures for safety

69.7

70.4

69.2

66.3

68.3

65.4

71.2

Quality of common area

66.8

67.4

65.7

64.3

64.5

63.2

65.9

Usability of building facilities and equipment

67.4

67.9

66.5

67.5

65.4

63.0

67.1

Cleanliness of building

72.0

71.3

70.3

69.6

69.9

68.3

71.4

Factors*1 CSI: Abbreviation for Customer Satisfaction Index. We had building facilities, services, and others evaluated by customers, and the gap between each item’s needs (expectations) andsatisfaction was weighed before calculating each item’s evaluation with a full score of 100.
Properties targeted in the survey:
2013-2014: Twin 21, Matsushita IMP Bldg., MID Imabashi Bldg., Kitahama MID Bldg., MID Nishihommachi Bldg., Midosuji MID Bldg., MID Midosujikawaramachi Bldg., Higobashi MID Bldg.
2015:
T win 21, Matsushita IMP Bldg., MID Imabashi Bldg., Kitahama MID Bldg., MID Nishihommachi Bldg., Midosuji MID Bldg., MID Midosujikawaramachi Bldg., Higobashi MID Bldg.,
G-Square Shibuya Dogenzaka, Yokohama Creation Square, Cube Kawasaki
2016:
Twin 21, Matsushita IMP Bldg., MID Imabashi Bldg., Kitahama MID Bldg., MID Nishihommachi Bldg., Midosuji MID Bldg., MID Midosujikawaramachi Bldg., Higobashi MID Bldg.,
G-Square Shibuya Dogenzaka, Yokohama Creation Square, Cube Kawasaki, Higashi-Nihombashi Green Bldg.
2017:
Twin 21, Matsushita IMP Bldg., MID Imabashi Bldg., Kitahama MID Bldg., MID Nishihommachi Bldg., Higobashi MID Bldg., G-Square Shibuya Dogenzaka, Shibuya
Sakuragaoka Square, Yokohama Creation Square, Cube Kawasaki, Higashi-Nihombashi Green Bldg., Sasazuka Center Bldg., Sendai Capital Tower

ESG Report February 201924

Employees
The MC-UBS Group considers its employees to be its most important management resource and essential forcarrying out its activities.
We are actively working to create conditions where each and every employee can perform their work in a
lively manner and to cultivate them accordingly. In addition, we regularly conduct employee opinion polls withthe aim of building an even better company.

Work Environment
The MC-UBS Group is working to ensure that all employees can work with peace of mind and to improve the benefits it
provides to them.
Improving Employee Health and Benefits 
Exceeding the legal requirements in Japan for employee

not only do we completely supply a social insurance system,

health and safety, including labor and risk management,

we have also introduced an original retirement pension

the MC-UBS Group has prepared an original monitoring

system and have entered into general welfare group term

framework that encompasses the entire Company, and islife insurance, group long-term income compensation

enhancing its system for managing working hours. We also

insurance, and member welfare services.

provide various wellness programs to maintain and improve

In terms of work-life balance, the MC-UBS Group also

the mental and physical health of our employees and theiroffers support and welfare services to help employees whofamilies. Specifically, health checkups, influenza immuniza-

are starting families and raising children. Furthermore, wetion shots, various counseling services (EAP) by external

promote and strengthen the success of women’s careers.

experts, and health-based lectures by industrial physicians
are being implemented. We have also established the

New hires

Women in managerial posts(Employees who joined between
January 1 and December 1, 2017)

Health Committee that meets once a month to exchange

Men
Women

opinions on working conditions alongside industrial doctors, and to gain health-related insight. In doing so, we are

Total workforce
Men
Women

supporting employees in the preservation of their health.
To improve the benefits we provide to our employees,

76.2%
23.8%
64.6%
35.4%

Women

20.7%

(results of MCUBS-wide survey)

Establishing a Positive Work Environment 
In January 2018, MCUBS renovated its office space andaddition, we have gone 70% paperless, reducing the needcreated an environment that allows employees to workfor cabinet space. This move, combined with improved com-

comfortably and actively. Natural light enters the work

munication that includes using electronics to host meetings,

space through windows and plants have been arranged

has reduced printing and paper costs for the Company.

throughout this new, bright office. Employees’ desks are

Furthermore, we periodically conduct environmental checks

larger than those at a standard Japanese office,* and weto provide comfortable working conditions for employees.

have upgraded communal spaces to promote communica-* Desk width per person is 1,200mm in a standard Japanese office (as of December
2018, according to the website of Kokuyo Co., Ltd.).

tion with fellow co-workers. We have also incorporated rest
areas where employees can relax and refresh themselves. In

ESG Report February 201925

Social

Employees

Human Capital Development—Job-Specific Development Training Programs
Support for Acquiring Further Qualifications In order to cultivate professional human resources in real

specialized knowledge in the fields of real estate andestate finance, the MC-UBS Group encourages employees

finance). Moreover, employees are also encouraged toto pursue higher qualifications by providing financial assis-

undergo training and participate in seminars after obtaining

tance and training opportunities.

this qualification. Employees are also dispatched as lecturers

Specifically, the MC-UBS Group is actively utilizing thewhen requested by ARES.

specialist qualification system by the Association for RealThe Company also covers some or all of the costs ofEstate Securitization (ARES), of which we are an official

work-related training and tests for obtaining qualifications

member. The Company covers the costs for employees toand maintaining them. As a result, several employees are

obtain the ARES Certified Master qualification (educational

taking on the challenge of improving their qualifications.

program enabling systematic learning of practical

The number of employees with qualifications at MCUBS is shown below.
 eal estate transaction specialists
R
ARES Certified MastersLicensed senior architects

41
64
9

As of December 31, 2018

 eal estate appraisers
R
CMAs
Lawyers

3
7
2

 PAs
C
Tax accountants
MBAs

2
2
3

Improved Training 
The MC-UBS Group has improved employee training bymanagement training, which includes inviting outside

instituting a variety of programs aimed at enhancing occu-­lecturers to provide interviewer training.
In addition, we conduct seminars in order to raisepational expertise and leadership skills. Employees in managerial positions are dispatched to various leadership­awareness of sustainability, and offer improved training

programs, such as the Program for Leadership Development

to increase understanding of compliance and IT literacy.

by Mitsubishi Corporation (training over a total of five days

We also provide support several times a year throughin which skills as a manager can be obtained in coordina-e-learning so that employees are aware of the latest

tion with overseas business schools). Furthermore, we sup-­information and can utilize it effectively.

port employees after they enter the Company by providing

Employee Satisfaction
As part of our engagement, the MC-UBS Group has mea-

overtime, we facilitate long-term leave and are taking steps

sured employee satisfaction on an annual basis since 2011.

to increase the rate that paid leave is used.

The resulting metrics are used to improve the Company. In
addition to an emphasis on measures aimed at reducing

ESG Report February 201926

Measures for Health and Well-Being
Space and Interior

Sound

Interiors decorated with a clear concept, including spaces that incorporate natureSoundproofed spaces where people can­concentrate on their work

Light

Exercise

Office that actively incorporates natural light

Community area with dimmable lighting

Furniture that is adjustable to various healthconscious configurations

Rest

In-office cafeteria

In-office, furnished rest area for employees

Spaces to Move and Communicate

Telecommunications

Rooms for groups to gather and discuss locatednear the entrance and in the corridor

An upgraded telecommunications system thatallows employees to use the Internet away fromtheir desks

Maintenance

Satisfaction

Programs

Regular air quality inspections

Regular worker satisfaction surveys regarding
office environment

Use of local events to promote communicationand exchange between employees

ESG Report February 201927

A teleconferencing system that allows for meetings with outside groups, including branch offices

SocialIR Activities
The three investment corporations managed by the MC-UBS Group, JRF, IIF, and MidCity, strive to explain theirinvestment policies to individual and institutional investors in an accurate and prompt manner. In doing so, we
aim to maximize our value to our unitholders.

Listing on ESG Indices
MSCI Japan ESG Select Leaders Index 
MSCI, an American stock index provider listed on the

JRF, IIF, and MidCity, all funds of the MC-UBS Group, havebeen listed on the index since its establishment in 2017.

New York Stock Exchange, launched a new index called
the MSCI Japan ESG Select Leaders Index, taking into
account high environmental, social, and governance(ESG) performance.
The index covers the top 500 equities by market capitalization size, and selects 251 equities based on their ESG

Index launched in June 2017

evaluations. In addition, the Government Pension

Incorporation

JRF

Incorporated since June 2017

Japan ESG Select Leaders Index as one of its ESG indices

IIF

Incorporated since June 2017and commenced passive investment tracking the index.

MidCity

Investment Fund (GPIF) announced that it has selected MSCI

Incorporated since December 2018

Euronext® Reitsmarket GRESB Global Sustainable NR Index
This is an index created by Reitsmarket, a real estate

the Global sector, as of the establishment of this index

investment trust research company of Luxembourg, in col-on June 7.

laboration with GRESB and Euronext, to invest in the top
30 REITs according to the score prepared by GRESB. The

Euronext® Reitsmarket GRESBGlobal Sustainable NR Index

index was set up on June 7, 2018.
More than six REITs have been selected from respective

Index launched in June 2018

areas in North America, Europe, and Asia Pacific, andIncorporation

JRF accounts for the second-largest composition ratio in

JRF

Incorporated since June 2018

Award from External Party
JIRA Best IR Award for Encouragement
In November 2018, MCUBS MidCity Inc., received the “Bestactivities. This year marked the 23rd year since the start of

IR Award for Encouragement” at the 2018 IR Awards orga-

the IR Awards. Of the JIRA member companies, 299 pub-

nized by the Japan Investor Relations Association (JIRA).

licly traded companies applied for the 2018 IR Awards and

The Japan Investor Relations Association is the only

a total of 14 companies were selected and received awards.

privately run non-profit organization working for the proliferation and improvement of investor relations (IR) activities
in Japan. The IR Awards are designed to recognize companies that have been highly accredited in the investmentcommunity for their understanding and promotion of IR

For IR information pertaining to each fund
JRF
WEB

IIF
MidCityhttps://www.jrf-reit.com/english/sustainability/society/index.html
https://www.iif-reit.com/english/sustainability/society/index.html
https://www.midcity-reit.com/en/ir/

ESG Report February 201928

CORPORATE
GOVERNANCE

As asset management companies, MCUBS and MCUBS MidCity Inc. receive asset management consignments from JRF, IIF,
and MidCity and are committed to upholding their fiduciary duties to investment corporations.

ESG Report February 201929

Corporate GovernanceCorporate Governance
MCUBS, JRF, and IIF employ the following decision-making process.

Decision-Making Process
Mitsubishi Corp.-UBS Realty Inc., the asset manager of JRF

relating to stakeholder transactions of the Asset Manager

and IIF (hereinafter, the “Asset Manager”), has four com-must first be approved by the Compliance Committee

mittees: the Investment Committee, the Risk Management

before they are submitted to the Investment Committee

Committee (the Risk Management Committee acting as an(excluding “Minor Transactions,” as stipulated in theadvisory board to facilitate decision-making, not a

Regulations for Transactions with Stakeholders). In addition,

decision-maker), the Compliance Committee, and thesubsequent to approval by the Board of Directors of theCompensation Committee.

Asset Manager, approval from our board of directors is

In the course of making decisions regarding investment

required prior to a transaction involving the acquisition,

policy and standards, operation and management policy

disposal, or lending of securities or real estate between us

and standards, budget and financing, as well as the acquisi-

and a related party (as defined in Article 201-1 of thetion, disposal, or operation and management of assets for

Investment Trust Act) of the Asset Manager, except certain

each investment corporation, a proposal will be submittedof such transactions determined not to have a significant

to the Asset Manager’s Board of Directors for approval in

impact on each investment corporation under theaccordance with rules of the Board of Directors. Proposals

Ordinance for Enforcement of the Investment Trust Act.
Front Division*1
iProposalii
The president

Rejection of or sending back agenda*2iii
Approval by theInvestment Committee*3iii
Approval by theInvestment Committee
and Board of Directors*4iii
Approval by theCompliance Committee, Investment
Committee, and Board of Directors
Transaction with a related party as
defined in Article 201-2 of the ITA*5

iv
Consent of the investment corporation based on approval by the board of the investment corporation*5*1 The Retail Division or Industrial Division is referred to as the Front Division.
*2	With regard to matters relating to the acquisition, disposition, operation and management of assets, the approval of the Investment Committee will be obtained based on the Guidelines
for the Investment Committee.
*3	With regard to investment policy and standards, operation and management policy and standards, budget and financing, etc., for each investment corporation, the approval of theInvestment Committee and the Board of Directors will be obtained in accordance with the Guidelines for the Investment Committee and the Rules for the Board of Directors.
*4	With regard to matters relating to transactions with stakeholders stipulated in the Regulations for Transactions with Stakeholders, the approval of the Compliance Committee, theInvestment Committee, and the Board of Directors will be obtained in accordance with the Regulations for Transactions with Stakeholders, the Guidelines for the Investment Committee,
and the Rules for the Board of Directors. In the case of Minor Transactions, approval by the Compliance Committee and the Board of Directors is not required.
*5	In the case of transactions determined not to have a significant impact on assets of the investment corporation under the Ordinance for Enforcement of the Investment Trust Act,
consent of each investment corporation based on approval by its board of directors is not required.

For information regarding the organization of MCUBS MidCity Inc., please visit the website below.
WEB

https://www.mcubs-midcity.com/en/org/

For information regarding corporate governance for each fund, please visit the websites below.
JRF
WEB

IIF
MidCityhttps://www.jrf-reit.com/english/sustainability/governance/index.html

https://www.iif-reit.com/english/sustainability/governance/index.html
https://www.midcity-reit.com/en/structure/governance

ESG Report February 201930

Compliance
MCUBS has established the Basic Compliance Policy as stated below.

Basic Policy
Mitsubishi Corp.-UBS Realty Inc. (hereinafter, “the Assethighly public nature and also assume the social responsibil-

Manager”) and each Investment Corporation are striving toity of extensively making contributions to the economy

ensure the appropriateness of asset management and theand society.

soundness and adequateness of operations, as well as theGiven such a business environment and in view of the fact

protection of investors at the discretion and responsibility ofthat the Asset Manager is a joint venture company between

each entity, by strengthening and facilitating maximum

a Japanese company and a foreign financial institution, andfunctioning of the internal control system based on

characteristically has an international corporate culture, it

the highest quality standards of laws and regulations under

has developed the following compliance system with thethe real estate investment fund system. In addition, theaim of achieving a high level of compliance in the industry.

Investment Corporation and the Asset Manager are of a

In order to ensure that the performance of duties by directors and employees of the Asset Manager complies with laws and regulations and the articles of incorporation, the Asset Manager shall establish the Compliance Office, which shall seek to, in operation
with the Compliance Office, develop the system for directors and employees to act in compliance with laws and regulations, thearticles of incorporation and social norms, and identify problems thereof.
The Risk Management Committee shall identify administrative risks, system risks, and any other risks relating to the business operations of the Asset Manager and investment corporations on a regular basis.
Based on the “Whistle-Blowing Rules,” the Asset Manager shall avoid any disadvantageous treatment on a whistle-blower. Any
whistle-blower is entitled to appropriate protection and may contact the internal inquiry counter. The employees may contact external legal counsel, using the “MC Group Lawyers’ Opinion Box,” which is designated as the external inquiry counter for consultation
and reporting.* By such means, the Asset Manager shall prevent violations of laws and regulations or the articles of incorporation
and, if any such violation has occurred, shall seek to quickly gather information and address it.
* The Confidentiality Legal Counsel will confirm the affiliation of whistle-blowers, but will not disclose their name or organizational position to the Compliance Administration
Office without their consent.

If any violation of laws and regulations or the articles of incorporation has been discovered, the Compliance Office shall, pursuant to the“Administrative Incident Handling Rules,” investigate the cause of such violation and handle and settle it, and then establish measures.
(As of January 1, 2019)

For information regarding corporate governance for each fund, please visit the websites below.
JRF
WEB

IIF
MidCityhttps://www.jrf-reit.com/english/sustainability/governance/index.html

https://www.iif-reit.com/english/sustainability/governance/index.html
https://www.midcity-reit.com/en/structure/compliance

ESG Report February 201931

Investment Corporation Overview

Japan Retail Fund Investment Corporation

J RF

After becoming Japan’s first retail facility-specialized REIT listed on the Tokyo Stock Exchange, the Japan Retail Fund (JRF) has
grown to become one of the largest REITs in Japan. JRF has a large number of retail facilities mainly in Tokyo, Osaka, andNagoya, which are located in representative commercial districts, around stations used by large numbers of passengers, andaround stations in highly populated areas.
Characteristics of the REIT
1. Opportunity to see the actual properties
while shopping in them
2. Portfolio stability supported by diversified
asset portfolio with top-class scale in Japan

G-Bldg. Midosuji 01

GYRE

Industrial & Infrastructure Fund Investment Corporation

IIF

Listed on the Tokyo Stock Exchange, the Industrial & Infrastructure Fund (IIF) is a unique REIT that focuses on industrial
properties in Japan. IIF invests in real estate anticipated for stable use over the medium to long term while upholding aphilosophy of investing in social infrastructure as a source for generating Japan’s economic strength and supporting industrial
activities in Japan through real estate.
Characteristics of the REIT
1. Investing in properties that play a vital rolein industrial activities across a broad rangeof sectors
2. Stable cash flows based on lease­agreements over 10 years

IIF Haneda Airport Maintenance Center

MidCity

IIF Yokosuka Technology Center

MCUBS MidCity Investment Corporation

MidCity is a REIT focusing on office properties located in the three major metropolitan areas. After joining the MC-UBS Group
in 2015, its distribution per unit has grown at the fastest pace among office J-REITs. It aims to continuously improve
unitholder value.
Characteristics of the REIT
1. Has higher portfolio weight in Osaka
compared with other office J-REITs.
Expanded its geographical focus to thethree major metropolitan areas of Tokyo,
Osaka, and Nagoya in order to capture
more opportunities to invest in high-quality
office properties
2. Utilizing the MC-UBS Group network, aims
to acquire properties selectively throughvarious methods and to improve asset
value and profitability
Twin 21

Yokohama i-land Tower

ESG Report February 2019

32

JRF

TSE codeCore
Major types ofproperties

Fund listing8953

2002/3/12

Prime

Retail properties located in representative commercial districts in Japan

Major stations

Retail properties located around stations used by large numbersof passengers

Residential station

Retail properties located around stations in highly populated areas

Secondarycore

Suburban mall

Large-scale shopping malls located in suburban areas

Value-added

High-yield retail properties with room for upsideSub

GMS / Roadside

GMS / Roadside shopping facilities

Portfolio details
WEB

https://www.jrf-reit.com/english/portfolio/map.html

IIF

TSE code

Major types ofproperties

Fund listing3249

2007/10/18

Logistics facilities

Facilities used to provide intercompany distribution and sales
distribution services, including transportation, shipping, storage, stockpiling, cargo handling, packaging, sorting, distribution processing, andinformation functions

Manufacturing and R&D facilities

Facilities for research and development, raw material procurement,
stockpiling, storage, manufacturing, production, assembly and processing, recycling, and other purposes

Infrastructure facilities

Facilities developed as bases for industrial activity, such as transportation, communication, energy, water, and public facilities

Portfolio details
WEB

https://www.iif-reit.com/english/portfolio/map.html

MidCity

TSE code

Fund listing

3227

More than 70% of the portfolio is invested in office properties. The
remaining 30% is invested mainly in hotels and serviced apartments.

Focus on three major metropolitan areas

More than 70% of the portfolio is invested in properties in prime
locations in Tokyo, Osaka, and Nagoya where strong tenant demandis expected. Additionally, less than 30% of the portfolio is invested
in properties located in government-designated cities and othermajor cities in which stable revenues are expected in the medium tolong term.

Building specifications attracting tenants

Holding properties with superior building specifications to satisfy awide range of demand from tenants of all sizes, such as flexible
office layout and parking lots. The locations of properties vary, fromclose to major stations to nearby neighbor stations ideal forback-office functions.

Major types ofproperties

Portfolio details
WEB

2006/8/29

Focus on office properties

https://www.midcity-reit.com/en/portfolio/

ESG Report February 201933

Disclaimer• This document may contain information such as statements on future performance, plans, management targets, and strategies.
Such statements with regard to the future are based on current hypotheses and assumptions about future events and trends of thebusiness environment. However, these hypotheses and assumptions are not necessarily correct. Actual results may vary significantly
due to various factors.
• Unless otherwise specified, this document was created based on Japanese generally accepted accounting principles.
• Japan Retail Fund Investment Corporation, Industrial & Infrastructure Fund Investment Corporation, MCUBS MidCity Investment
Corporation, and Mitsubishi Corp.-UBS Realty Inc. (MCUBSR) shall not be liable for any errors, inaccuracies, loss or damage, or for
any actions taken in reliance thereon, or undertake any obligation to publicly update the information contained in this document
after the publication date thereof.
Asset Management Company: Mitsubishi Corp.-UBS Realty Inc.
(Financial Instrument Firm under License No. 403 of the Director of the Kanto Local Finance Bureau)
Asset Management Company: MCUBS MidCity Inc.
(Financial Instrument Firm under License No. 2888 of the Director of the Kanto Local Finance Bureau)