PRINCIPAL ADVERSE IMPACT STATEMENT
The following is the adverse sustainability impact statement of Activia Properties Inc. (“API”)
and Comforia Residential REIT, Inc. (“CRR”) pursuant to Regulation (EU) 2019/2088(“SFDR”). We have no employees in accordance with the prohibition on having employees
under the Act on Investment Trusts and Investment Corporations of Japan and rely on TLC REITManagement Inc. (the “Asset Manager”), to manage and operate the properties in our portfolio.
API, CRR and the Asset Manager are hereinafter referred to collectively as “we”, “us” or“our”.
1. Summary
We consider principal adverse impacts of our investment decisions on sustainability factors. The
present statement is our consolidated statement of the principal adverse impacts on sustainability
factors (“PAI”). The statement covers the reference period from January 1, 2023 to December
31, 2023. The statement will be reviewed at least once during every year.
We believe that our sustainability initiatives are essential for our sustainable growth. We
improve long-term returns of investors and contribute to the realization of sustainable society
and urban development by implementing initiatives that address social issues. Under oursustainability policies and framework, we, in collaboration with the Asset Manager, take actions
on climate change, including energy conservation, use of renewable energy, and being resilientin times of disasters.
We use the definition of PAI as described in Recital 20 of SFDR being “those impacts ofinvestment decisions and advice that result in negative effects on sustainability factors”, withsustainability factors referring to environmental, social and employee matters, respect for humanrights, anti‐corruption and anti‐bribery matters as defined in article 2 (24) of SFDR.
We believe that investment decisions that negatively affect climate or other environment-relatedresources, or have negative implications for society, can have a significant impact to risk andvalue creation for our unitholders. To this end, we consider PAI of our investment decisions
throughout all major steps of the investment decision and property management process
throughout the lifecycle of the properties in our portfolio.
Please note that SFDR requirements, including the scope of their application to issuers outside
the European Economic Area, continue to evolve. We are therefore taking a principles-based
approach to compliance with the SFDR disclosure standards, which are subject to change.
2. Description of principal adverse sustainability impacts
Nearly all types of economic activity have the potential to impact various PAI indicators, both
positively and adversely. We aim to manage the risk connected to PAI from our investment
decisions in several ways, including general screening criteria, due diligence and our ESG
initiatives. Some of the PAI indicators listed below are currently already being monitored andreported. As the availability of data improves, it is our intention that more indicators will be
added.

Table 1
Principal adverse sustainability impacts statement
Indicators applicable to investments in real estate assets

Adversesustainability
indicator

MetricImpact in 2023

Impact in 2022

Explanation

Actionstaken

Fossilfuels

17.
Exposure tofossilfuels
throughrealestateassetsShare ofinvestme
nts inrealestateassetsinvolvedin theextraction,storage,transportormanufact
ure offossil
fuels

N/A

N/A

We do not invest inreal estate assets
involved in theextraction, storage,transport or
manufacture of fossil
fuels.

N/A

Energyefficiency

18.
Exposure toenergyineffici
ent real
estateassetsShare ofinvestme
nts inenergyinefficien
t realestateassets

As of November 30,

2023,
approximately 26%of the properties inAPI’s portfolio
based on gross floorarea were notgreen-certified.

As of November
30, 2022,
approximately 28%of the properties inAPI’s portfolio
based on gross floorarea were notgreen-certified.

As of January 31,
2024,
approximately
72.8% of theproperties in CRR’s
portfolio based ongross floor area
were not greencertified.

As of January 31,
2023,
approximately
76.8% of theproperties in CRR’s
portfolio based ongross floor area
were not greencertified.

We use Building
Energy-efficiency
Labeling System(“BELS”),
Comprehensive
Assessment System
for Built
Environment
Efficiency(“CASBEE”), or
Development Bank ofJapan (“DBJ”) Green
Building Certification
for the environmental
certification of theproperties in our
portfolio. We also
track and monitor
these property-level
environmental
certifications toassess theenvironmental
performance of ourportfolio. We
consider a property as“green-certified” if it,
receives one or moreWe
implement asappropriatemeasuresto reduce
theirenvironm
ental
impactfollowingacquisition,includingbyobtaining
environm
ental
certificati
ons such
as BELSrankingsystem,the
CASBEErankingstars in the BELS
ranking system,
receives one or morestars in the CASBEE
ranking system or
receives one or morestars in the DBJ
Green Building
Certification ranking
system.

system or
the DBJGreen
Building
Certificat
ionrankingsystem,installingLED
lightingand
introducingrenewable energy.

Table 2
Additional climate and other environment-related indicators
Adversesustainability
impactAdverse sustainability impact (qualitative or quantitative)

MetricIndicators applicable to investments in real estate assets 1

Climatechange18. GHG emissions
Total GHG emissions intensity generated by our properties was asfollows:- API: 0.089 t-CO2/m2 (in FY2018), 0.083 t-CO2/m2 (in FY2019), 0.07
t-CO2/m2 (in FY2020), 0.07 t-CO2/m2 (in FY2021), 0.06t-CO2/m2 (inFY2022).
- CRR: 0.038 t-CO2/m2 (in FY2020), 0.036 t-CO2/m2 (in FY2021),
0.039 t-CO2/m2 (in FY2022) and 0.026 t-CO2/m2 (in FY2023),
according to market-based emissions calculation.
API and CRR both track and monitor GHG emissions intensity,
calculated in accordance with the GHG Emissions Accounting,
Reporting and Disclosure System established by the Ministry of theEnvironment of Japan. API aims to achieve100％ reduction of CO2
emissions generated by electricity by the end of March 2026, relative toa FY2015 baseline, and CRR aims to reduce the CO2 emissions
intensity of their properties by 40% by FY2030 compared to the level in
FY2020, as announced in CRR’s Sustainability Report 2023.

Scope 1 GHG
emissionsgenerated byreal estate assets
Scope 2 GHG
emissionsgenerated byreal estate assets
From 1 January2023, Scope 3
GHG emissions
generated byreal estate assets
Total GHG
emissionsgenerated byreal estate assets

Total GHG emissions intensity and energy consumption intensity are calculated over a one-year period from April
to the following March for API and from February to the following January for CRR.

1

Climatechange19. Energy consumption intensity
Energy consumption intensity of our properties was as follows:- API: 0.22 MWh/m² (in FY2018), 0.21 MWh/m² (in FY2019), 0.20
MWh/m² (in FY2020) , 0.19 MWh/m² (in FY2021) ,0.19 MWh/m² (inFY2022).
- CRR: 0.091 MWh/m² (in FY2020), 0.092 MWh/m² (in FY2021), 0.093
MWh/m² (in FY2022), 0.092MWh/m² (in FY2023).
API and CRR both track and monitor energy use and energy use
intensity, and each aim to achieve a medium- to long-term target of 1%
average annual reduction in energy use intensity in their portfolios.

Energyconsumption in
GWh of owned
real estate assets
per square meter

Table 3
Additional indicators for social and employee, respect for human rights, anti-corruption and antibribery matters
SOCIAL AND EMPLOYEE, RESPECT FOR HUMAN RIGHTS, ANTI-CORRUPTION AND ANTIBRIBERY MATTERS
Adversesustainability
impactAdverse sustainability impact (qualitative or quantitative)

MetricIndicators applicable to investments to the Asset Manager or tenantsSocial andemployeematters

4. Lack of a supplier code of conduct
As part of the Tokyu Fudosan Holdings Group, the AssetManager has adopted the Group’s sustainable procurement policythat requires suppliers to carry out environment-friendly
procurement, with various standards applicable not only tobiodiversity protection, resource usage, and waste treatment, butalso to social aspects including human rights protection and labor
conditions.

5. Lack of grievance/complaints handling mechanism related to
employee matters
The Asset Manager makes effort to maintain and improve tenantsatisfaction. We regularly conduct tenant surveys to understandtheir needs and complaints regarding property management andoperation.

Share of investments ininvestee companies
without any suppliercode of conduct (against
unsafe working
conditions, precarious
work, child labor andforced labor)
The Asset Manager has
adopted a supplier codeof conduct of the Tokyu
Fudosan Holdings Group
which includes policies
against unsafe working
conditions, precarious
work, child labor andforced labor.
Share of investments ininvestee companies
without any
grievance/complaints
handling mechanism
related to employee
matters

It also conducts periodic employee satisfaction survey to trackprogress made against annual targets and the medium- to longterm vision, to create a highly productive organization where all
employees are satisfied with their jobs and maximize theirabilities for organizational execution, and to deepen the mutual
understanding between the company and employees.

The Asset Manager has
grievance/complaints
handling mechanisms
available to some of its
tenants and all of its
employees.

6. Insufficient whistleblower protection

Share of investments inentities without policies
on the protection ofwhistleblowers

The Asset Manager has established the Compliance Helpline
Counter that all officers and employees can use to report andconsult on compliance matters including harassment andbullying; the counter allows them to directly report to the General
Manager of the Compliance Department of the Company,
General Manager of Legal Affairs Department, Tokyu Land
Corporation, General Manager of Group Legal Affairs
Department, Tokyu Fudosan Holdings Group, or outside counsel.
Human Rights

9. Lack of a human rights policy
The Tokyu Fudosan Holdings Group recognizes that respecting
the human rights of employees and all stakeholders involved inits businesses is an essential requirement for a company with
global operations and what is expected from all companies. In
December 2019, the Tokyu Fudosan Holdings Group establisheda human rights policy consistent with the Universal Declarationof Human Rights and other international human rights doctrines
and works with its suppliers to conduct business activities thatfully respect human rights.

All of the AssetManager’s officers andemployees are provided
whistleblower protection.
Share of investments inentities without a humanrights policy
The Asset Manager has
adopted the human rights
policy of Tokyu Fudosan
Holdings Group.

In 2016, the Tokyu Fudosan Holdings Group signed to join the
Global Compact, an organization that works voluntarily with theUnited Nations and private companies and organizations to build
a healthy global society and create a global framework forsustainable growth. The Tokyu Fudosan Holdings Group aims tosolve social problems and contribute to building a sustainable
society in accordance with the Global Compact’s 10 principles infour areas related to human rights, labor, environment, and anticorruption.
The Asset Manager complies with both the human rights policy
and the Global Compact’s principles.

For descriptions of actions which the Asset Manager takes and will take with respect to the PAI
indicators, please refer to our ESG website with respect to:
API: https://www.activia-reit.co.jp/en/sustainability/index.html
CRR: https://www.comforia-reit.co.jp/en/sustainability/index.html

3. Description of policies to identify and prioritize principal adverse sustainability impacts
Subject to data availability, we monitor the selected PAI indicators for the existing properties inour portfolio.
Prior to our investment in a property, we conduct due diligence review of the property, including
ESG due diligence, which includes selected PAI indicators. The due diligence findings related to
selected PAI indicators are reported and reviewed prior to the investment decision.
We have established the Sustainability Promotion Council, which holds quarterly meetings todeliberate and decide upon matters concerning the promotion of ESG such as passing resolutions
for basic ESG policies, annual plans for ESG promotion, annual activities planning andreporting, and initiatives for various ESG measures under our portfolio management strategy. At
these meetings, the Sustainability Department will make proposals on specific steps toward
implementing and achieving ESG goals to the members of the Council, which includes directors(excluding part-time directors), chief division officers of all the divisions, general managers of
the Environmental Engineering Department and Sustainability Department, and the complianceofficer. President & CEO of the Asset Manager serves as the Chief Sustainability Officer as wellas the Chairman of the Sustainability Promotion Council and has the authority to make final
decisions on such proposals.
From time to time, we issue investment corporation bonds earmarked for use in certain projects
serving as countermeasures against global warming or providing environmental benefits under
our green bond framework, which is generally aligned with the Green Bond Principles, avoluntary guideline of International Capital Market Association. Our green bond framework
requires the proceeds from our green bonds to be allocated to funds for (i) acquisition of the“Eligible Green Projects” or (ii) refurbishments fulfilling certain “Eligibility Criteria”, or (iii)
refinancing the existing loans/investment corporation bonds which have been allocated toacquire Eligible Green Projects or refurbishments meeting Eligibility Criteria.
For further information, please refer to our ESG website:
API: https://www.activia-reit.co.jp/en/sustainability/index.html
CRR: https://www.comforia-reit.co.jp/en/sustainability/index.html
4. Engagement policies
Due diligence and screening
Prior to our investment in a property, the Asset Manager conducts due diligence review of theproperty, including environment assessment and evaluation of risks related to building safety,
future prospects, and location. As a result of due diligence review, if there is a risk of a negativeenvironmental impact, such as due to soil contaminants or other harmful substances ornoncompliance with law aimed at reducing energy consumption or greenhouse gas emissions, wewill take measures to avoid or mitigate the risk.
In addition, we monitor and track energy consumption, greenhouse gas emissions, water usage
and waste amounts at our properties.

Engagement
We have established green procurement standards and require our suppliers to work with us toensure that the financing is environmentally responsible, including with respect to energy
conservation, reduction of pollutants, and preservation of biodiversity.
We have also adopted the sustainable procurement policy of Tokyu Fudosan Holdings Groupand are seeking to work with stakeholders such as design companies, construction companies
and customers, to seek their understanding of our sustainability efforts.
In addition, we include certain information-sharing and cooperation clauses in the lease contracts
with our tenants in order to monitor energy consumption, respond to environmental regulations,and obtain and improve ESG certifications for properties in our portfolio.
5. References to international standards
The Asset Manager has decided to support the recommendations of the Task Force on Climate
related Financial Disclosures (“TCFD”) and also joined the TCFD Consortium, a group of
domestic companies that supports TCFD recommendations in January 2022. The Asset Manager
signed the PRI, which is six principles proposed in 2006 by then Secretary General of the United
Nations as a guide for members of the financial sector, and the international network of investors
working toward the fulfillment of the principles.