Financial Impact

Policy andRegulation

TechnologyRisks and Opportunities in Real EstateManagementClassification

Tighter taxation of greenhouse gas emissions
by introducing a carbon tax

risk

Increased tax burden on greenhouse gas emissions
from owned properties

Small

Small

Small

Small

MediumLarge

Tightening of energy conservation standards inexisting real estaterisk

Increased cost of renovation to comply with thestandards, and fines imposed in some cases

Small

Small

Small

Small

MediumLarge

Stricter emissions reporting requirements
under the Energy Conservation Law

risk

Increased expenses, such as payment of fees tooutside vendors to meet reporting requirements

Small

Small

Small

Small

MediumMediumCompliance with overseas laws and regulations

risk

Risk of sanctions due to violations of laws andregulations
Loss of reputation with investors due to delayed
response

Small

Small

Small

Small

MediumMedium ・Further discussions with foreign law attorneys and foreign investors

Evolution and diffusion of renewable energy
and energy-saving technologies

risk

Increased costs of introducing new technology forowned properties to prevent becoming
technologically outdated

Small

Small

Small

Small

MediumMediumDetails of Impact

4℃ scenario

1.5℃ scenario

Short-term Medium-term Long-term

Short-term Medium-term Long-term

Risk Management, Countermeasures, and Initiatives

Evolution and diffusion of renewable energy
and energy-saving technologies

Reduction of utility costs through improved
Opportunity
environmental performance

Small

Small

Small

Small

MediumMediumIntroduction of on-site renewable energy

Opportunity Reduction of externally procured utility costs

Small

Small

Small

Small

MediumMedium・Introduction of energy-saving equipment and facilities
・Introduction of renewable energy
・Promoting awareness of energy conservation among property users
・Monitoring energy consumption and conducting energy conservationassessment
・Promoting acquisition of environmental certifications
・Replacing properties with ones that have higher environmentalperformance

・Utilization of outside consultants who are knowledgeable in the fieldof renewable energy and energy-saving technologies
・Employing the experienced in-house engineers
・Utilization of businesses that provide products and services that takeadvantage of cutting-edge technologies

Introduction of environmental performance andother criteria into real estate appraisals

risk

Lower appraisal value and NAV (Net Asset Value)
when environmental performance is low

Small

Small

Small

Small

MediumMediumDeterioration of financing conditions for market
participants not addressing climate change

risk

Rising financing costs

Small

Small

Small

Small

MediumMediumUtilization of Green Bonds
Increased funding volume and lower funding costsby addressing and appealing to investors who careabout environmental issues

Small

Small

Small

Small

MediumMedium ・Introduction of energy-saving equipment and facilities

Transition risks

Developing new investors

Opportunity

MarketReputation

Rising utility costs (including externallyprocured renewable energy)

risk

Increase in expenses

Small

Small

Small

Small

MediumLarge

Change in tenants and/or occupants demand,
where they may choose properties with lower
environmental impact or avoid nonenvironmentally friendly properties

risk

Difficulty in attracting new tenants/occupants anddecrease in rent income due to lower retention

Small

Small

Small

Small

MediumMediumChanges in the procurement environment formaterials and human resources due toincreasing emphasis on environmental
performance and environmental considerations

risk

Increased expenses due to higher costsLack of materials with high environmental
performance
Difficulty in hiring human resources due toinsufficient environmental considerations

Small

Small

Small

Small

MediumMediumDecrease in a brand value of properties due todelays in addressing climate change

risk

Decrease in rent premium due to decrease in abrand value

Small

Small

Small

Small

MediumMediumrisk

Increased costs to meet needs of hotel guests andresidential occupants and losing customers due to
unaddressed needs

Small

Small

Small

Small

Medium

Large

Opportunity

Increased revenues due to higher room rates andrents, and acquisition of new customers

Small

Small

Small

Small

MediumMediumrisk

Increased repair and insurance costs, lost sales
opportunities, and lower occupancy rates

Medium

Large

Large

MediumMediumMediumChanges in demand from hotel guests andresidential occupants, where they may avoid
properties with inadequate climate changeadaptation)
Developing new customers by continuously
providing low-emission facilities, specifications,and services that adapt to change of theirpreferences
Wind damage to property caused by typhoon

・Introduction of renewable energy
・Promoting awareness of energy conservation among property users
・Monitoring energy consumption and conducting energy conservationassessment
・Promoting acquisition of environmental certifications
・Replacing properties with ones that have higher environmental
performance・Implementing green finance・Improvement of ESG ratings
・Enhancing disclosure of climate change-related information such as
TCFD・Conducting satisfaction surveys and make improvements according
to survey results・Strengthening information sharing and collaboration with hotel
operators and property management companies
・Strengthening sustainability-related initiatives and appeals at ownedproperties

・Implementing disaster prevention and mitigation measures
・Area diversification of portfolio

AcuteInundation due to internal flooding and floodingof nearby rivers caused by torrential rains

risk

Same as above

Flooding of properties with low elevation due tosea level riserisk

Increasing demand for air conditioning due toincrease in extreme weather conditions such as
extremely hot and cold days

Impacts of climate change on resort areas

Medium

Large

Large

MediumMediumMediumLarge-scale renovation (raising) costs incurred

Small

Medium

Large

Small

Small

Small

・Implementing disaster prevention and mitigation measures
・Area diversification of portfolio
・Considering sales of properties based on the level of impact

risk

Increase in utilities, maintenance-related expenses,
and repair costs

Small

Medium

Large

Small

Small

Small

・Installation of high-efficiency air conditioning equipment

risk

Decrease in travel demand and lower occupancy
rates due to events adversely affecting tourism
resources in the resort area

Medium

Large

Large

Small

Small

Small

・Area diversification of portfolio
・Considering sales of properties based on the level of impact

Small

Small

Small

Small

MediumMediumPhysical risks
ChronicResilience

Contributing to local communities
Preservation of natural environment

Improving disaster resilience of areas whereOpportunity properties are locatedEnhancing attractiveness to customers as a region*Due to uncertainties and unknown risks in future projections, the accuracy of the above assessment of financial impact cannot be guaranteed.

・Deepening relationships with local communities through participation
in local events, etc.
・Participating in local environmental preservation activities