Daiwa
House
REIT

Leveraging comprehensive strengths of Daiwa House Groupand aiming to continuously increase unitholder value

Sustainability Report 2024

Index

Message from the Management

Special Features

Message from the Management Special Feature 1: TNFD 

11Climate Change 

20Special Feature 1: TNFD
(LEAP Approach) 

12

Information Disclosure Based on TCFD
Recommendations (Strategy) 

21

13

Information Disclosure Based on TCFD
Recommendations (Metrics and Targets) 

22

Environmental Certifications 

23

Finance

Environmental Conservation 

24

Sustainability-Linked Bonds 40

Waste Management/Pollution Prevention 

24Green Finance 

41

Sustainability Finance 

42

2

Sustainability
Sustainability Policy 

3

Sustainability Promotion System 

4Materiality 

5Supported Initiatives 

8Leading-edge ESG-related Initiatives (1) 

9Leading-edge ESG-related Initiatives (2) 

10Editorial Policy
This report describes the overall efforts of Daiwa House REIT
Investment Corporation (hereinafter referred to as “DHR”) and
its asset manager, Daiwa House Asset Management Co., Ltd.
(hereinafter referred to as the “Asset Manager”) to contribute to therealization of a sustainable society and to maximize unitholder value
over the medium to long term.
This report has been prepared based on information on the website
as of August 2024. For the latest information thereafter, please referto the website, which will be updated as needed.
This report contains forward-looking statements, but thesestatements are based on judgments made with information available
at the time each material was prepared, and are not guarantees of
future financial results.
Yen amounts of less than the units indicated are truncated in thisreport.

Environment

Special Feature 1: TNFD
(Strategy - Heatmap Image) Special Feature 1: TNFD
(Strategy - Methodology for
Analyzing Nature-related
Dependencies and Impacts) 

14Special Feature 1: TNFD
(Scenario Analysis Process, Business
15
Impact and Response Measures) Special Feature 1: TNFD
(Metrics and Targets) 

16

Special Feature 2: Human Capital 

17Special Feature 2: Human Capital(Health Management) 

18

GovernanceCompliance 

32

Corporate Governance 

33

Risk Management 

36SocialDiversity, Equity, and Inclusion 

26

Relevant Data

Human Rights and Labor Standards 27

Relevant Data 

Initiatives for Local Community 

28

Initiatives for Tenants and Supply Chain 

29

Investor Relations Initiatives 30: August 2024 (Issue frequency: Annually, Next issue: August 2025
(subject to change))
Coverage: In general, Daiwa House REIT Investment Corporation and Daiwa
House Asset Management Co., Ltd.
Period: April 2023–March 2024 (including details of activities before orafter as necessary)
Reference Guidelines : GRI “Sustainability Reporting Standards”
Ministry of the Environment “Environmental Reporting Guidelines
2018”
Task Force on Climate-related Financial Disclosures (TCFD) “Final
Report: Recommendations of the Task Force on Climate-related
Financial Disclosures”
Taskforce on Nature-related Financial Disclosures (TNFD) “Final
Recommendations v1.0”
Third Party Verification : Verification and assurance based on International Standard on
and Assurance
Assurance Engagements (ISAE) 3000 “Assurance Engagements
Other than Audits or Reviews of Historical Financial Information”
Verification and assurance based on International Standard on
Assurance Engagements (ISAE) 3410 “Assurance Engagementson Greenhouse Gas Statements”

43

Issue Date

GRI Content Index

1

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Environme

Sustainability Report 2024

Message from
the Management

Sustainability

SPecial Features

Environment

SocialGovernance

FinanceRelevant Data

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Message from the Management
when it comes to addressing issues of climate change and disclosing
information in that regard. For the second consecutive year, DHR was

Tsuyoshi Saito

Koichi Tsuchida

Executive Director
Daiwa House REIT
Investment Corporation

President and CEO
Daiwa House AssetManagement Co., Ltd.

awarded the highest rating of 5 Stars for the 2023 GRESB Real Estate
Assessment, and was also selected as Global Listed Sector Leader in thelisted diversified real estate sector and as “Regional Sector Leader” in the
Asia/diversified real estate sector. DHR was selected for the first time as acomponent company of the Dow Jones Sustainability Asia/Pacific Index,
covering the Asia-Pacific region in the Dow Jones Sustainability Indices, aleading global equity index on sustainability.
DHR was also awarded the Best Recommendation Award in GovernanceCategory in the ARES ESG Award 2023 sponsored by the Association

DHR will work to continuously increase unitholder value by ensuring stable revenue andfor Real Estate Securitization (hereinafter “ARES”) in recognition of DHR’s

steady growth of its assets over the medium to long term by fully utilizing Daiwa House

introduction of sustainability index-linked asset management fees as anGroup’s comprehensive strengths and knowhow regarding real-estate development.

investment chain.

effective initiative to expand and universalize ESG investment through the
At the Fifth ESG Finance Awards Japan, DHR was recognized as an
Environmentally Sustainable Company for the second consecutive year
as a company meeting certain standards in terms of level of disclosure
fulfillment, and became the first J-REIT awarded “Progressive Company in

Daiwa House REIT Investment Corporation’s Sustainability Policy and Strategy

of biodiversity, (4) reducing asset management risk through the Asset

Environmental Disclosure,” as a company with a high degree of disclosure

Aiming to ensure stable revenue and steady growth of assets
over the medium to long term, we will strive to manage
assets in a manner that embraces ESG considerations while
appropriately disclosing such performance

Manager’s human capital and health management, and (5) committing to

improvement and expected to make further progress.

increasing social value by introducing sustainability index-linked fees.
This constitutes our Sustainability Report, prepared for providing an
opportunity for unitholders and other stakeholders to learn more about
the various ESG initiatives and approaches implemented by DHR and

Biodiversity Initiatives

Daiwa House REIT Investment Corporation and its asset manager, Daiwa

the Asset Manager thus far. Going forward, DHR will continue striving toHouse Asset Management Co., Ltd., share the Daiwa House Group’s

further enhance its ESG initiatives with respect to its real estate investment

basic approach of “Creating Dreams, Building Hearts.” To attain amanagement business, while endeavoring to appropriately disclose suchsustainable society, it is essential that we include environmental, social, andperformance.

We believe climate change and biodiversity are importantsocial issues that must be addressed. By joining initiatives
related to the above and gathering information, we willcontinue to actively work on solving social issues.

governance (“ESG”) considerations in real estate investment management
In August 2023, the Asset Manager became the first J-REIT asset manager

operations. We also believe that this will contribute to ensuring stableto join the TNFD Forum, which endorses the philosophy of the Taskforce

revenue and achieving steady asset growth over the medium to long term,
which is DHR’s basic policy. As such, the Asset Manager established theAcquiring External Evaluation

on Nature-related Financial Disclosures (TNFD) and supports its activities.

Sustainability Policy in April 2017, and has been applying it to its real estate

We aim to acquire external evaluation and improveassessment results in order to achieve greater objectivity andreliability with respect to our sustainability initiatives

Additionally, in December 2023, DHR became the first J-REIT to register as

investment management business.
Additionally, DHR’s growth strategy calls for efforts to increase unitholder
value by combining business (economic) value and social (non-financial)a TNFD Adopter, indicating its intention to make disclosures based on the
TNFD Recommendations.
In January 2024, DHR also referenced the final TNFD Recommendation

value. Strategies to increase social (non-financial) value include (1) improving

DHR was recognized as a climate change A List company for the third

Version v1.0 issued by the TNFD in September 2023 and disclosed

ESG ratings from GRESB, CDP, and other third-party organizations, (2)consecutive year under the 2023 CDP Climate Change Program, receiving

information on its approach and current initiatives regarding natural capital

reducing greenhouse gas (GHG) emissions, (3) promoting the conservation

the highest score of A in recognition of our high standards internationallyand biodiversity in line with the TNFD Recommendations.

2

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Message from
the Management

Sustainability

Environment

SPecial Features

SocialGovernance

FinanceRelevant Data

Back

Sustainability Policy
Policy and Basic Approach
Sustainability Policy
The Daiwa House Group’s basic approach is “Creating Dreams,
Building Hearts.” As a group that co-creates value for individuals,
communities and people’s lifestyles, the Daiwa House Group aims
to build trusting relationships with stakeholders and contributeto society through its businesses, and to realize a sustainable
society by meeting the challenge of achieving “zero environmental
impacts.” Daiwa House Asset Management Co., Ltd. shares the
Daiwa House Group’s basic approach as DHR’s asset manager,
and considers that including consideration for ESG in its real estate
investment management operations contributes to DHR’s basic
policy of ensuring stable revenue and steady growth of assets
over the medium to long term. Therefore, we have established thefollowing “Sustainability Policy” to guide our real estate investment
management.

1. Prevention of global warming

5. E stablishment of an internal framework and initiatives for employees

We will promote energy conservation measures through the installationof energy conservation equipment and so forth to realize a carbonfree society. We will also consider introduction of renewable energy
power generation facilities and acquisition of properties that have such
equipment installed.

2. Harmony with the natural environment (preservation of biodiversity)
We will aim for a society that is able to pass on abundant natural
resources to future generations in order to protect and improve natural
capital. We will also promote planting and management considering
harmony with the surrounding environment.

We will establish an internal framework for promoting sustainability
and take steps to develop human resources by conducting regulareducation and training for employees. We will also aim to create
workplaces where people can work safely and healthily, andworkplaces where diverse employees can work flexibly. (Note 1)

6. Building of trusting relationships with external stakeholders
We will aim to build trusting relationships with external stakeholders
and we will work on our suppliers to enhance the satisfaction of tenantcustomers and promote CSR in our supply chain. We will undertakeneighborhood co-existence activities with local residents. (Note 2)

3. Conservation of natural resources (protecting water resources, reducing waste)

7. Promotion of communication through information disclosure

We will work towards the realization of a recycling-oriented society bypromoting water conservation measures through the installation of water
conservation equipment. We will also promote 3R activities (reduce,reuse, and recycle) for resources.

We will proactively disclose ESG-related information and utilize
dialogues with stakeholders, such as investors, in our futurebusiness activities. Furthermore, we will aim for continuous
acquisition of Green Building Certification. (Note 2)

8. Compliance with laws and regulations, and risk management

4. Prevention of chemical pollution
We will aim to realize a society where people and ecosystems do not
suffer adverse effects from chemical substances by promoting reduction,
substitution, and appropriate management of harmful chemical substances
when managing real estate, and taking efforts to minimize risks.

We will comply with ESG-related laws and regulations. Moreover, we
will strive to implement appropriate risk management, such as giving
consideration for the environmental and social impacts in risk evaluations
when acquiring real estate and promoting awareness of human rights.

(Note 1) Sustainability training is provided in order for employees to understand the impact of their business activities on the environment.
(Note 2) Training and engagements are conducted to raise the awareness of internal and external stakeholders on environmental management policies and environmental impacts.

 ompliance with Environmental Laws
C
and Regulations

The Asset Manager confirms the following items when considering a property acquisition.
Item

Confirmation details

Disaster risk
(excluding seismic motion)• Risk of flooding, landslides, tsunamis, liquefaction, etc.
In particular, flooding risks are identified based on elevation and ground floor elevation
Status of response during design/construction, if necessary• Status of response to flooding risk, if any

Environmental certifications• Acquisition of environmental certifications (BELS, CASBEE, DBJ Green Building Certification, LEED, etc.)

Energy data
Green lease agreements
Compliance with environmental
laws and regulations• Usage of energy data (electricity, gas, water, and waste)• Impact on portfolio (if data can be acquired)• Status of green lease agreements• Compliance with environmental laws and regulations such as the Building Energy Conservation Act, Energy
Conservation Act, Fluorocarbon Emissions Control Act, Tokyo Metropolitan Environmental Security Ordinance andother local government ordinances regarding global warming, Waste Disposal Act, etc.

The property acquisition process is subject to internal audits and third-party reviews after acquisitions. (FY2023)

3

Based on reports from property management (PM) companies andbuilding management (BM) companies regarding environmental laws
and regulations pertaining to DHR’s business activities, DHR has
confirmed that there are no omissions of reporting or violations oflaws and regulations.
There were no guidance matters or lawsuits from the relevant
authorities regarding violations, etc. (FY2023)

ForwardMessage from
the Management

Sustainability Report 2024

Sustainability

SPecial Features

Environment

SocialGovernance

Finance

Back

Relevant Data

Sustainability Promotion System
Sustainability Promotion System, Supervision by Board of Directors, and Role of Top Management
DHR

Sustainability Committee

Board of Directors• Deliberates and resolves on sustainabilityrelated policy and strategy development• Deliberates and resolves on execution ofsustainability-related operations

Asset Manager

Organizational chart

General Meeting of
Shareholders

Corporate Auditor

Sustainability Committee

Supervision by Board of Directors
Board of Directors

Committee head : President and CEO
Operating officer : General Manager, Sustainability Promotion
Department
Executing officer : Head of Daiwa House REIT Division, Head of
Private Fund Division
Members: All full-time Directors, Heads of Division, General
Managers (excluding Compliance Officer), andother selected officers and employees

Observers: Outside Expert Advisor, Compliance Officer

Frequency of
meetings: At least once a month

Function and role : Deliberations and approvals regarding sustainabilityrelated policy and strategy development andexecution of sustainability-related operations, andreporting to the Board of Directors and the DHR
Board of Directors as appropriate

Number of meetings held
Fiscal year ended March 2024
Sustainability Committee

12 times

Sustainability Committee

Compliance Committee

Daiwa House REIT Investment
Management Committee

Private Fund Investment
Management Committee

Sustainability Promotion
Department

Compliance Officer
Compliance Department

Fund Management
Department

Administration andAccounting Department

Investment Department
Asset Management
Department

Receives and monitors reports from the Sustainability
Committee on sustainability-related matters(considerations for climate-related, biodiversity,and other global environmental issues and risk
management for natural disasters, etc.)

Role of President and CEO

President and CEO

Daiwa House REIT
DivisionRole of Board of Directors
Receives and monitors reports from the Sustainability
Committee and the Board of Directors of theAsset Manager on sustainability-related matters(considerations for climate-related, biodiversity, andother global environmental issues and risk management
for natural disasters, etc.)

Fund Management
Department

Private Fund Division

As the Chief Executive on sustainability-related
matters at Board of Directors and the Chief Executiveof the Sustainability Committee, provides final
approval of various goals and measures, evaluates
the status of efforts, and gives instructions for review

Number of Reports on Sustainability-related Matters
Fiscal year ended March 2024

Asset Management
Department

Board of Directors

12 times

DHR Board of Directors

12 times

Main Items Reported and Resolved (Fiscal Year Ended March 2024)
Sustainability Committee

Asset Manager Board of Directors and DHR Board of Directors(Reports)(Monthly Reports)

Sustainability implementation plan and results, annual sustainability-related work schedule, sustainability reporting, ESG website
updates, sustainability assessment, hazard map response policy, submission of GRESB Rating response and receipt of rating
results, submission of CDP Climate Change Program response and receipt of rating results, submission of S&P Global Corporate
Sustainability Assessment (CSA) response and receipt of assessment results, submission of PRI (2023) Annual Report andreceipt of assessment, status of acquisition of environmental certifications, selection for the CDP Supplier Engagement Rating
Leaderboard, application and certification for the 2024 Health & Productivity Management Outstanding Organization (SME
Category), selection for “Environmentally Sustainable Company” and “Progressive Company in Environmental Disclosure” at the
ESG Finance Awards Japan, sustainability assessment (outside expert advisor), Best Recommendation Award at the ARES ESG
Awards 2023, TNFD (Nature-related Financial Disclosure Task Force) disclosures, and financing (sustainability linked loans)

Sustainability budget and performance management, climate change-related matters, external evaluation-related matters,
environmental certification of portfolio properties, seminar attendance, etc.

(Individual Reports)
Sustainability budgeting, hazard map response policy, ESG website renewal, sustainability reporting, status of green leaseagreements, status of environmental performance, questions from investors regarding ESG-related initiatives in investor
relations, status of “Principles for Customer-Oriented Business Operations” initiatives, risk assessment sheet on climate change,
participation in initiatives, status of climate change initiatives, status of internal training, introduction of wellness leave system,
introduction of flextime system, TNFD (Task Force on Nature-related Financial Disclosure) disclosures, results of internal audits
by the Sustainability Promotion Department, human resource development/training plans/results, sustainability assessment byoutside expert advisors, and organization of health checkup events(Resolutions)
Participation in the TNFD Forum, registration as a TNFD Adopter, revision of the EMS Operations Manual, revision of the GHG
Emission Reduction Policy, revision of the Sustainable Procurement Policy, and financing (green loans)(Resolutions)
Financing (green loans, sustainability-linked loans), payment of sustainability index-linked fees

4

ForwardMessage from
the Management

Sustainability Report 2024

Sustainability

Environment

SPecial Features

SocialGovernance

FinanceRelevant Data

Back

Materiality
Materiality Identification Process
DHR and the Asset Manager use the following process for materiality identification in order to identify and assess the dependency on external stakeholders related to business activities, products and services, and their supply
chains as well as the impact of the dependency.

Step

1

Extracting sustainability
issuesStep

We extract sustainability issues(materialities) related to DHR and theAsset Manager based on various
global ESG assessments, sustainability
disclosure standards, SDGs, and thestatus of other companies in the same
industry

2

Setting priority rankings

We set priority rankings from theextracted issues by verifying the stateof DHR’s disclosure and response andthrough interviews with management of
the Asset Manager.

Step

3

Confirming validity

Step

We implement reviews by third parties(consulting companies, outside
expert advisors of the Sustainability
Committee of the Asset Manager, etc.)
of our “selection process,” “identified
materiality,” “KPIs and targets,” etc., toensure objectivity

4

Discussions and approval
by management

We identify sustainability issues(materialities) that are important to
DHR and the Asset Manager throughdiscussions by the Sustainability
Committee on prioritized issues

Step

5

Setting and monitoring KPIs,
targets, and indicators

We discuss the relationships between
opportunities and risks associated withsustainable growth at monthly Sustainability
Committee meetings, and we set, monitor,and disclose KPIs, quantitative targets, andmanagement indicators as appropriate toresolve key issues

Quantitative indicators related to key issues are used to assess the dependency and impact of DHR and the Asset Manager on stakeholders.
We have a system in place to review the materiality analysis annually and report to the Sustainability Committee, Compliance Committee, and Board of Directors of the Asset Manager, as well as to the Board of Directors of DHR.
We set KPIs, targets, or indicators (management items) related to materiality, and we monitor and disclose their progress every year. Our commitment is reinforced by linking the remuneration of the Executive Officer of DHR and
the Board of Directors of the Asset Manager to the relevant targets or assessment indicators.
Priority issues

Response to climatechangeManagement items

GHG emissions

Subjects

DHR

Targets/KPIsi) 	Reduce total GHG emissions (Scope1+2) by 42% (compared to FY2020) by
FY2030*SBT (February 2022)ii) 	Achieve net zero total GHG emissions(value chain) by FY2050

Reasons for selecting management items, targets, and KPIs

Results

Assessment of the impact of the performance on
DHR, the Asset Manager, and stakeholders

Strategies to achieve targets

Selected this item with the intention of reducing GHG
emissions, which have been a major factor behind climatechange, thought to be the cause of the increase in climate
disasters in recent years occurring around the world andacross Japan.

i) Reduction by 97.4%(FY2023)ii) –i) GHG emissions are decreasing due to thepromotion of energy-saving measures, theintroduction of renewable energy and thepurchase of non-fossil certificates.
ii) –• Promoting ZEB conversion of portfolio properties• Setting internal carbon pricing to use as an incentive
for low-carbon promotion works, guidelines forinvestment decision making, and a reference index to
identify risks of future rising costs• Purchase of non-fossil certificates• Investing in solar power generation equipment• Promotion of LED lighting

Selected in consideration of the impact on business fromrising biodiversity needs of customers.

2 properties(As of March 31, 2024)

Although the number of certifications acquiredis still small, we will capitalize on the knowledge
gained from the certification process in our future
activities.

• Considering the impact on local ecosystems,
mainly for properties located in high-priority areas
for biodiversity conservation, using native tree
species instead of invasive alien species, andimplementing environmentally friendly maintenanceand management*SBT (August 2022)

Environment

Response tobiodiversity

Biodiversity-related
certifications

DHR

5 or more properties to have obtained
biodiversity-related certification by FY2030

Promoting theacquisition ofenvironmental
certifications for
portfolio properties

Green building
certifications

DHR

An environmental certification acquisition
ratio (based on a gross floor area) of 75%
or higher by FY2030

Selected to increase the objectivity and reliability of theinitiatives in reducing the environmental burden of portfolio
properties and improve the asset value over the medium tolong term.

73.7%(As of March 31, 2024)

The target was achieved ahead of schedule andhas been reset to “75% or more by FY2030.”• Promoting energy-saving through initiatives such as
the conversion to LED lighting and the adoption of
power-saving air conditioning equipment and water
conservation equipment

Implementing initiatives
to cooperate withtenants to reduce
environmental impact

Percentage of green
lease agreements
signedDHR

Increase the percentage of green leaseagreements (based on a gross floor area)
to 100% by FY2030

Selected the percentage of green lease agreements signed(based on a gross floor area) with the aim of cooperating withtenants to improve the environmental performance of theportfolio properties.

99.7%(As of March 31, 2024)

A new target has been set to achieve “100% by
FY2030.”• Promoting a higher contract conclusion rate byhaving the Asset Manager’s staff in charge ofasset management and sponsor’s staff in chargeof properties conduct negotiations with tenants inaddition to the negotiations carried out by the staff ofproperty management companies

Efficient use of water
resources at portfolio
properties

Water consumption

DHR

Reduce consumption rate to theconsumption intensity of FY2017 (baseyear) (0.8205 m3/m2) or less(10-year period from 2018 to 2027)

Selected because the water supply is expected to become
unstable as a result of climate change, and it is becoming
more important to conserve aquatic environments aroundthe world.

0.5693 m3/m2(FY2023)

While the intensity is decreasing compared tothe base year (FY2017) due to the installation ofwater conservation equipment, the total amountis increasing due to an increase in the numberof portfolio properties and an increase in the
coverage ratio.

• Effective use of rainwater, groundwater, and greywater• Adoption of water conservation equipment• Monitoring real estate investments in areas with highor very high water stress

Reducing waste andincreasing recycling
rates at portfolio
properties

Waste recycling rate

DHR

Improve recycling rate to the rate of FY2017(base year) (54.2%) or higher(10-year period from 2018 to 2027)

Selected because the increasing world population and otherfactors are triggering a substantial rise in consumption of
global natural resources, and resource depletion and thenegative impacts of waste on the environment are becoming
more severe.

71.5%(FY2023)

While the recycling rate is increasing compared tothe base year (FY2017) due to the promotion ofrecycling, the total amount of waste is increasing
due to an increase in the number of portfolio
properties and an increase in the coverage ratio.

• Displaying posters to promote recycling• Promoting recycling through sorting5

Related SDGs

ForwardMessage from
the Management

Sustainability Report 2024

Sustainability

SPecial Features

Environment

SocialGovernance

FinanceRelevant Data

Back

Materiality

Priority issues

Enhancing employee
engagement

Developing Human
Resources

Promoting a healthy,
comfortable working
environment and worklife balanceSocialManagement items

Subjects

Targets/KPIs

eNPS score

Asset
Manager

Improve the score to -8 or higher (FY2030)

Turnover

Asset
Manager

Improve the percentage to 0% (FY2030)

Average tenure of
employees

AssetManager

Improve the average tenure to 10 years ormore (FY2030)

i)	Per capita training
hours for officers
and employeesii)	Per capita training
cost for officers
and employees

AssetManager

No quantitative targets: confirmation item

Percentage of male
employees taking
childcare leave

Asset
Manager

Improve the percentage to 100% (FY2030)

Percentage of paid
leave taken

AssetManager

Improve the percentage to 85% (FY2030)

Monthly average
overtime hours

Asset
Manager

No quantitative targets: confirmation item

Ratio of female
officers

DHR

No quantitative targets: confirmation item

Ratio of female
managers

AssetManageri)	Improve the percentage of female
managers (senior manager and above) to
39% or more (FY2030)ii)	Improve the percentage of female line
managers (group leader and above) to
20% or more (FY2030)

Number of reports
about laborrelated issues,
discrimination,harassment, etc.

Asset
Manager

No quantitative targets: confirmation item

Promotion of diversity

Respect for humanrights

Improvement in thehealth, comfort, andconvenience of tenants

Tenant satisfaction
surveysInvestment
Corporation

Conducted approximately once every
3 years
No quantitative targets: confirmation item

Results

Assessment of the impact of the performance on
DHR, the Asset Manager, and stakeholders-13(FY2023)

Continues to be highly rated.

4.3%(FY2023)

Although turnover has risen compared to FY2022,
it still remains low.

6.0 years(FY2023)

Although the average tenure has shortened due
to an increase in new hires as a result of businessexpansion, turnover has remained low.

Selected this item because we believe it is important todevelop human resources to support the growth of DHR and
the Asset Manager.

i)	33.8 hours perperson annuallyii)	¥33,701 per person
annually(FY2023)

Training hours and training cost have maintained
a high level. Officers and employees of the AssetManager serve as instructors, preparing training
materials and tests, and conduct effective training,such as proprietary training.

Selected this item because we believe that sharing theburdens of childcare and housework, which tend to fall
disproportionately on the shoulders of the female partner,
will help to address the issue of the declining birthrate byincreasing women’s willingness to have children and continue
working. It will also lead to work-style reform at the AssetManager.

100%(FY2023)

We have achieved a high level.

• We are supporting male officers and employees whotake childcare leave by providing a childcare leave
benefits (100,000–300,000 yen) corresponding to thenumber of days of childcare leave taken.

74.9%(FY2023)

The introduction of flextime system in October
2023 enabled flexible work styles, bringing thepercentage of paid leave taken to 74.9%.

• We are encouraging employees to take paid leavethrough the introduction of planned annual paid leave,
paid leave by the hour, wellness leave, home holidays(planned quarterly paid leave), and other programs

14.4 hours(FY2023)

The introduction of flextime system in October 2023
enabled flexible work styles, bringing the averageamount of overtime to 14.4 hours per month.

• The introduction of a flextime system• Monitoring and reporting to the Asset Manager’s
Health Committee, Sustainability Committee,
Compliance Committee, and Board of Directors, aswell as the DHR Board of Directors, all of which meeton a monthly basis

33.3%(FY2023)

Stayed at the same level with FY2022 result

Reasons for selecting management items, targets, and KPIs

Selected this item as a key indicator to gauge employee
satisfaction, ease of working, and job satisfaction based on
our belief that it is the Asset Manager’s “human resources”
that supports the stable and continuous growth of DHR.
Engaged in this initiative to build a better workplaceenvironment by conducting a third-party eNPS survey
targeting officers and employees (including fixed-term,
temporary, and part-time employees) to explain the scoresand provide feedback.

Selected this item out of our belief in the importance ofaccommodating diverse work styles and being considerateof employees’ health and lifestyles—such as by improving
working hours, days off, and ensuring employees actually
use their days of annual leave—if we are to achieve work-lifebalance.

Given the challenges presented by the diminishing workforce
resulting from the declining birthrate and aging population,
selected this item because we believe it is essential to expand
opportunities for women to play an active role and increase
the working population in order to raise corporate productivity.

Strategies to achieve targets• Increase the salary levels of employees and establish
a wellness leave system, childcare leave benefits,
return-to-work benefits, and a program to provide
allowance for replacing work of coworkers on longterm leave, with the aim of achieving a good balance
between job satisfaction and ease of work
• In an attempt to strengthen our commitment
to achieving our goals, we have established aremuneration structure whereby the remunerationof directors at the Asset Manager is linked to the“employee engagement with the company” score in
the “Engagement Survey” conducted annually by the
Daiwa House Group––• Provide corporate management training for female
leaders• Create an environment in which men and womencan share the burdens of housework, childcare, etc.,
and strike a balance between life events and building
a career• Support female officers and employees who return towork after taking childcare leave by providing returnto-work benefits (300,000–1,000,000 yen) based on
the time when they returned to worki) 21.4%ii) 6.3%(FY2023)i) Improved from 20.7% (FY2022 result).
ii) Improved from 0% (FY2022 result).

Selected the number of reports as a confirmation item
because we believe it is an important indicator to measureemployee satisfaction and comfort of working, and because
we believe it contributes to the development of a society inwhich human rights are respected through business.

1(FY2023)

The Asset Manager had no significant labor-related
issues, discrimination, or harassment that would
influence stakeholders.

–

Selected in the belief that increasing tenant satisfaction leads
to stable and improved property-operating performance.

Around 71% of tenants
gave their property a“7” or higher out of anevaluation scale up to
11 overall, and around
62% of tenants gave
their property a “7” orhigher as to whether
they would recommend
the property to others(in February 2022).

We received a positive evaluation according
to questionnaires given out to 119 residential
properties (8,386 units) by a third-party
organization.

–

6

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Materiality

Priority issues

Management items

Subjects

Targets/KPIs

Reasons for selecting management items, targets, and KPIs

Results

Assessment of the impact of the performance on
DHR, the Asset Manager, and stakeholders

Strategies to achieve targets

Number ofcompliance training
held

Asset
Manager

No quantitative targets: confirmation item

Selected this item as a confirmation item in the belief that all
officers and employees (including fixed-term, temporary, andpart-time employees) need to undergo compliance training on
a continual basis to ensure a high level of awareness of theneed for their actions to be undertaken in the best interestsof investors.

13(FY2023)

We are continually working to improve theknowledge and cultivate mindsets aboutcompliance among officers and employees throughinternal and external compliance training.

–

Number of risk
assessments
carried out

AssetManager

No quantitative targets: confirmation item

Conducted risk assessments and set the number of times
as a confirmation item in order to accurately understand thevarious risks inherent in the operations of the Asset Manager
and to properly manage the losses that may arise from therealization of these risks.

3(FY2023)

We have reported the results of the risk
management self-checking and verification to
the Asset Manager’s Compliance Committee and
Board of Directors, as well as the DHR Board of
Directors, and have a system in which the initiatives
are functioning effectively.

–

No quantitative targets: confirmation item

Adopted an online safety confirmation system and set the
number of times that safety confirmation system drills havebeen conducted as a confirmation item to swiftly ascertain the
post-disaster status and safety of officers and employees at
the time of disaster as part of corporate crisis management.

1(FY2023)

In addition to the safety confirmation, we havecreated an “Emergency Response Manual,” drafted
a “BCP: Initial Response Manual,” and taken
other measures to develop a system to ensure
the continuity of DHR business operations in theevent of natural disasters such as large-scale
earthquakes, as well as accidents, crimes, etc.

–

16 (Note)(FY2023)

Whenever any faults are detected, we arepresented with corrective and remedial measuresthat prompt appropriate and concrete actions.

–

Number of times
safety confirmation
drills held

Asset
Manager

Construction of aninternal control system
and BCP response

Governance
Stakeholder
engagement andtimely and appropriate
information disclosure

Reinforcement ofgovernance

Number of internal
audits carried out

AssetManager

No quantitative targets: confirmation item

Conducted internal audits to examine and assess whether
the operations of each of the Asset Manager’s departments
are legitimate and in compliance with laws, regulations andthe company’s internal regulations and policies, etc. In
addition, based on the results of internal audits, we makerecommendations for improvements and greater efficiency tothe audited departments, thereby contributing to ensuring theappropriateness of the Asset Manager’s operations and thesoundness of its management. Therefore, we have set the
number of internal audits carried out as a confirmation item.

Number of external
inspections ofinternal management
systems

Asset
Manager

No quantitative targets: confirmation item

Commissioned a third-party organization to investigate
whether the Asset Manager’s internal control systems havebeen properly constructed and are functioning effectively andappropriately, and set the number of external inspections ofinternal control systems as a confirmation item.

2(FY2023)

We have reported the contents of the survey results
to the Asset Manager’s Compliance Committee and
Board of Directors, as well as the DHR Board of
Directors, and have a system in which the initiatives
for improvement are functioning effectively.

–

No quantitative targets: confirmation item

Selected the number of times such drills are conducted asa confirmation item by regularly conducting “targeted email
attack drills” in which we send fake targeted attack emails
to officers and employees to check whether they are able tocorrectly identify suspicious emails and evade the attacks,
as well as to see whether there are any problems with thereporting and communication system for suspicious emails.

1(FY2023)

We participated in the Daiwa House Group joint“targeted email attack drills,” and have shared andconfirmed the results with the entire Asset Manager
company, including the President and CEO.

–No quantitative targets: confirmation item

Selected the number of IR activities as a confirmation item
because we seek to meet society’s needs through active
disclosure and dialogue with investors and unitholders.

219(FY2023)

Opinions and requests pertaining to sustainability
received through dialogue with unitholders andinvestors are reported to the Board of Directors of
the Asset Manager and the DHR Board of Directors
twice annually, and management personnel provide
timely and appropriate feedback in an effort tofurther increase our corporate value.

–

No quantitative targets: confirmation item

Selected the overall evaluation as a confirmation item
because we receive an evaluation of each item (committee
operation, governance, commitment from management,internal permeation and education, etc. to officers andemployees, materiality, targets and performance related
to energy, information disclosure, engagement, concrete
initiatives, and participation in various initiatives) as well as an
overall evaluation and general comments from outside expert
advisors of the Sustainability Committee, which meets monthly
at the Asset Manager.

Perfect 5/5 points(FY2023)

Although we received a positive evaluation from theoutside expert adviser who participated in all 12
meetings of the Sustainability Committee held in
FY2023, we also received feedback that “It would
be good to consider a process to periodicallyreview the materialities.” For this reason, we
have reviewed the materialities and disclosed theinformation this time.

–

Number of targetedemail attack drills
for officers andemployees

AssetManagerNumber ofcompleted IR
activities (including
online meetings
and telephone/web
conferences)

Asset
Manager

Sustainability
assessment byexternal expert
advisors

AssetManager(Note) The figure shown is the total number of audits conducted for each department and the theme-based audits.

7

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Relevant Data

Supported Initiatives
DHR and the Asset Manager believe climate change; human rights; diversity, equity, and inclusion; and biodiversity are particularly important social issues to address to attain a sustainable society. By joining the initiatives related
to the above, we will continue to actively work on solving social issues.

United Nations Global Compact(UNGC)

United Nations Global Compact (UNGC)

Principles for Responsible Investment (PRI)

Task Force on Climate-related Financial
Disclosures (TCFD)

TCFD Consortium

Japan Climate Initiative (JCI)

Human rights

Diversity and inclusion

Overall ESG

Climate Change

Climate Change

Climate Change

Climate Change

Biodiversity(Asset Manager)(Asset Manager)(Asset Manager)(DHR/Asset Manager)(Asset Manager)
First in J-REITs

First in J-REITs

First in J-REITs

World Wide Fund for
Nature (WWF) Japan

Principles for Financial Action forthe 21st Century

Science Based Targets

RE Action – Declaring 100% Renewable

Race to Zero

Climate Change

Climate Change

Climate Change

Climate Change

(DHR)

(DHR)

(DHR)

(Asset Manager)

First in J-REITs

Japan Business Initiative for Biodiversity(JBIB)First in J-REITs

First in J-REITs

New

30 by 30 Alliance for Biodiversity

World Wide Fund for Nature (WWF) Japan
Climate Change

Biodiversity(Asset Manager)

First in J-REITs

New

TNFD Forum

TNFD Early Adopter

Eco Action 21

Biodiversity

Biodiversity

Biodiversity

Biodiversity

Environmental management system(Asset Manager)(Asset Manager)(Asset Manager)(DHR)(DHR/Asset Manager)

For overviews of individual initiatives, click the relevant organization’s logo to visit its website.

(Note) “DHR” and “Asset Manager” represent Daiwa House REIT Investment Corporation and Daiwa House Asset Management Co., Ltd., respectively

8

ForwardSustainability Report 2024

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SocialGovernance

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Forward

Leading-edge ESG-related Initiatives (1)• The first J-REIT to be named on Supplier
Engagement Rating Leaderboard• F or the first time, DHR was awarded
the highest rating of “5 Stars” andselected as “Regional Sector Leader”
in the Asia/listed diversified realestate sector• Selected for the fourth consecutive year

External certifications and evaluations

February2021• F or the first time, DHR was selected
as “Global Listed Sector Leader” inthe listed diversified real estate sector• The first J-REIT to be named on “A List”(highest recognition) in CDP Climate Change
Program•T he first J-REIT to be named an
Environmentally Sustainable Company
in the ESG Finance Awards Japan• Certified for the third consecutive year•O
 nly J-REIT to be selected for thesecond consecutive year

December2021• The first J-REIT to acquire the highest
ZEB rating

March
2022

October
2022

March
2023

•F
 or the first time, DHR was included in“Dow Jones Sustainability Asia/PacificIndex”

October2023•T he first J-REIT to be certified by
Science Based Targets initiative(SBTi)• F
 or the first time, DHR was awarded
the “Best Recommendation Award inGovernance Category” in the “ARESESG Award 2023”

December
2023•F or the first time, the Asset Manager wascertified as one of the “Bright 500,” thetop 500 corporations in the “2023 Health& Productivity Management Outstanding
Organizations (SME category)”• Information disclosure based on
TCFD Recommendations•C ertified for the second consecutive year

DPL Nagareyama III(Note) In chronological order of the date of announcements

9• The first J-REIT to be nameda “Progressive Company inEnvironmental Disclosure” in the
ESG Finance Awards Japan

January2024

February
2024

April
2024

• For the first time, the Asset Manager
submitted a PRI annual report
Policy, Governance, Strategy
Real Estate
Confidence-Building MeasuresSustainability Report 2024

Message from
the Management

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SocialGovernance

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Relevant Data

Leading-edge ESG-related Initiatives (2)• The first J-REIT to purchase FIT nonfossil certificates in the renewableenergy value trading market• The first asset manager of a J-REIT to join theJapan Business Initiative for Biodiversity (JBIB)
and the 30 by 30 Alliance for Biodiversity (AssetManager)•T he first J-REIT to register as a “TNFD
Adopter”

Achieved zero Scope 2 emissions
from electricity•T he first J-REIT to disclose naturerelated information aligned with the “TNFD
Recommendations”
Supplementary explanatory materials

Leading-edge initiatives•T he first asset manager of a J-REIT to join the
TNFD Forum (Asset Manager)

October
2021

March
2022

April
2022

January2023

November2023•T he first J-REIT to join “Race to ZERO” and “RE
Action – Declaring 100% Renewable”•J oined/signed on to total of 9 initiatives related toclimate change, human rights, diversity and inclusion,and biodiversity• The first J-REIT to introduce
Sustainability Index-linked Fees
Reduction in
GHG emissions
GRESB Rating
CDP Score

April
2024

• The first asset manager of a J-REIT to join the
Secured Meter Data Sharing Association
Significantly improved electricity data acquisition
rate for exclusive areas of residential properties
Improved Electricity Data Acquisition Rate

Asset management
fees are calculated
according to the degree ofachievement of each index• For the first time, DHR disclosed the Summary of Resolutions of
the General Meeting of Unitholders (Reference) on its website• Also linked to remuneration for Executive
Director of DHR(Note) In chronological order of the date of announcements

January2024

Summary of Resolutions of the General Meeting of Unitholders (Reference)

10

ForwardMessage from
the Management

Sustainability Report 2024

Sustainability

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Environment

SocialGovernance

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Special Feature 1: TNFD
Policy and Approach to Natural Capital
DHR and the Asset Manager share the Daiwa House Group’s
basic approach of “Creating Dreams, Building Hearts.” Toattain a sustainable society, it is essential that we include
environmental, social, and governance considerations in realestate investment management operations. We also believethat this will contribute to DHR’s basic policy of ensuring stablerevenue and achieving steady asset growth over the medium
to long term. As such, the Asset Manager established theSustainability Policy in April 2017, and has been applying it to its
real estate investment management business.
Our lives and economic activity are underpinned by the gifts ofnature, which we receive through the ecosystem—the foundationof biodiversity. While the environmental issue of loss of natural
capital, including biodiversity, may increase risks in the value
chain, contributing to solving environmental issues throughbusiness can also lead to sustainable growth. Addressing climatechange, reducing overconsumption, engaging in sustainableproduction, investing in biodiversity, and promoting otherinitiatives in the context of the business activities of DHR and
the Asset Manager should contribute to the pursuit of nature
positivity and increase our competitiveness.

Various Initiatives

General Requirements
The following “General Requirements” have been added in the TNFD to the TCFD framework.

Application of materiality

Geographic location• Identify material issues (materialities), including natural capital
related to sustainability, through the process below• We take into consideration the geographic location,
which is the interface between our portfolio and nature
throughout the value chain, since the nature-related risks
and opportunities in DHR’s direct operations depend on thegeographic location of the real estate and nature interface.

Step 1 Extracting sustainability issues
Sustainability issues related to DHR were extracted using various
global ESG assessments, sustainability disclosure standards, andthe SDGs

Step 2 Setting priority rankings
We set priority rankings from the extracted issues by verifying thestate of DHR’s disclosure and response and through interviews
with management of the Asset Manager

Step 3 Confirming validity
To ensure objectivity, an external consulting company reviewed our“selection process” and “identified materialities”

Step 4 Discussions and approval by management
Reports to the Compliance Committee, the Asset Manager’s
Board of Directors, and DHR’s Board of Directors after discussion
at the Sustainability Committee

TNFD Adopter“TNFD Adopter” refers to a company ororganization that has registered on the TNFD
website their intention to disclose informationaligned with the TNFD Recommendations.

JBIB
JBIB, established in April 2008, is a networkof corporations actively working to conserve
biodiversity.

30by3030by30 is a goal to effectively conserve atleast 30% of the land and oceans as healthy
ecosystems by 2030.

Timeline• Given that nature-related risks and opportunities often occur
over the medium to long term, the timeline is set as follows(1) Short-term: 1 year or less(2) Medium-term: 1 to 10 years

TNFD Forum“TNFD Forum” is an international organizationthat establishes a framework for disclosing theimpact of nature-related risks and opportunities
on a company’s finances.

• When disclosing information by geographic location,
information is subdivided and aggregated, taking into
account the characteristics of the information and its
usefulness to users(3) Long-term: 10 to 30 years

Scope of disclosure• Scope of nature-related assessments and disclosures(1) Direct operations: Real estate management
Top 100 properties in the portfolio based on
acquisition price (80.1% coverage)(2) Upstream value chain: Construction (reference)(3) Downstream value chain: Not covered at this time
• Process for determining the scope of nature-related
assessments and disclosures
Reports to the Compliance Committee, the Asset Manager’s
Board of Directors, and DHR’s Board of Directors after discussion
at the Sustainability Committee

11

Engagement• Daiwa House Group shall strive to have dialogues andconsultations with the stakeholders so as to understand theinfluence that our business activities may bear upon humanrights from the viewpoint of those affected and to address
and improve it.
Stakeholder Engagement

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Special Feature 1: TNFD (LEAP Approach)
In line with the LEAP (Locate, Evaluate, Assess, Prepare) approach designed to assess nature-related risks and opportunities as outlined by the TNFD, DHR identified and analyzed nature-related dependencies and impacts (Note)on DHR’s operations, as well as identified and evaluated nature-related risks and opportunities. As a result of the assessment, DHR has considered measures to address material issues and implemented controls such as setting
metrics and targets.

Locate the interface with nature

Response by DHR

L1 Scope of the business model and value chain

Utilizes information on the location of the properties owned by DHR

L2 Dependency and impact screening

Utilizes available mapping tools to identify if DHR’s properties are located in areas of high ecological damage, areas of high biodiversity importance, areas of water stress, and areas ofmaterial dependency or impact

L3 Interface with nature

Utilizes available mapping tools to identify the interface between DHR’s properties and nature

L4 Interface with sensitive locations

Identifies uses of properties owned by DHR that have contact with nature in priority areas

Evaluate dependencies and impacts
dentification of environmental assets,
E1 Iecosystemservices, and impact drivers

Response by DHR

Identifies potential dependencies and impacts and lists 15 dependency items and seven impact items.

E2 Identification of dependencies and impacts
E3 Dependency and impact measurement
E4 Impact materiality assessment

Assess risks and opportunities
A1 Identification of risks and opportunities
djustment of existing risk mitigation and risk
A2 A
and opportunity management
isk and opportunity measurement andA3 Rprioritization

A4 Risk and opportunity materiality assessment

Prepare to respond and report

Dependency: Confirmed a high score for “Resources” and high dependence
Impact: Confirmed a high score for “GHG” and high impact

Response by DHR
Identifies physical risk, transition risk, and market, financing, and resilience opportunities

Incorporates responses to nature-related risks and opportunities into the risk reduction and risk/opportunity management processes developed in alignment with the TCFD
Recommendations

Conducts a materiality assessment of the identified risks and opportunities based on a matrix of materiality for DHR and materiality for stakeholders

Response by DHR

P1 Strategy and resource allocation plans

Develops strategies and responses to mitigate risks and seize opportunities for the identified material risks and opportunities

P2 Target setting and performance management

Sets a target for the obtainment of biodiversity-related certifications in addition to climate-related targets in addition to climate-related targets, and discloses progress in the
Sustainability Report and website. In the future, considers setting targets based on guidance from the Science Based Targets Network (hereinafter “SBTN”)

P3 Reporting
P4 Presentation

Reports to the Compliance Committee, the Asset Manager’s Board of Directors, and DHR’s Board of Directors after discussion at the Sustainability Committee
This disclosure is based on the TNFD recommendations, and in the future, we are considering integrating it with previous disclosures based on the TCFD recommendations.

(Note) “ Dependencies” are aspects of environmental assets and ecosystem services that a person or an organization relies on to function.
“Impacts” refer to a change in the state of nature (quality or quantity), which may result in changes to the capacity of nature to provide social and economic functions. Impacts can be positive or negative. Impacts are the result of an organization’s or another company’s actions.

12

ForwardMessage from
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Sustainability Report 2024

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Finance

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Relevant Data

ForwardSpecial Feature 1: TNFD (Strategy - Heatmap Image)
Creation and Utilization of a Heatmap of Dependencies and Impacts on Nature• DHR has developed a heatmap using ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) and the SBTN Materiality Screening Tool developed by UNEP (United Nations Environment Programme) and hasorganized the degree of nature-related dependencies and impacts in real estate management (direct operations) and construction (upstream) into five levels.
• Using the organized results and following the LEAP (Locate, Evaluate, Assess, Prepare) approach, we have identified and analyzed nature-related dependencies and impacts on DHR’s operations, as well as identified andevaluated nature-related risks and opportunities.

Heatmap of Dependencies
Confirmed a high dependency on surface water in real estate management (direct operations)
Direct physical use in business processes: HighMitigates (adverse) impacts on
business processes

Enables business processes and parts thereof: Medium: Low: Very Low, N/A

Protection from business process disruptions
Pest control

Terrain stabilizationand erosion control

Flood and storm
control

Disease control

Climate regulation

Mitigation of mass
flow rate

Mitigation of
sensory impacts

Filtration

Pollution diluted by
the atmosphere/
ecosystems

Bioremediation

Water quality

Water volume
control

Ventilation

Soil quality

Pollination

Nursery grounds

Construction

Ground water

Upstream

Surface water

Real estate
management

Genetic materials

Direct operations

Fibers and othermaterials

SectorLabor by working
animals

Stage ofvalue chain: Very High

Heatmap of Impacts
Confirmed a very high impact on “Terrestrial ecosystem use” and high impacts on “Solid waste” and “GHG emissions” in real estate management (direct operations)

13

Climate change

Invasive species/
othersDisturbance (suchas noise)VH

Use of otherresources

VH

Use of water
resources

Construction

Solid waste

Upstream

Resource use
Water pollution

VH

Soil pollution

Real estate
management

Non-GHG air
pollution

Terrestrial
ecosystem use

Direct operations

Marine ecosystemuse

SectorFreshwater
ecosystem use

Stage ofvalue chain

Pollution

GHG Emissions

Land/freshwater/sea use change

Message from
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Sustainability Report 2024

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Relevant Data

ForwardSpecial Feature 1: TNFD (Strategy - Methodology for Analyzing Nature-related Dependencies and Impacts)
Analyzing Nature-related Dependencies and Impacts
The aforementioned heatmap was used as a reference to analyze the nature-related dependencies and impacts of the top 100 properties (80.1% coverage) based on acquisition price as high-priority properties for DHR.

Methodology for Analyzing Nature-related Dependencies
Evaluation item
Ecological status of
the property area

Dependency
statusOverallevaluation(dependency)

Evaluation method

Methodology for Analyzing Nature-related Impacts
Evaluation item

(Note 1) E valuated using the WWF Risk Filter Suite, whichassesses the state of ecosystems.

(1) Ecological integrity (Note 1)(Note 2) T he area surrounding the property (within a 1 km
radius) was evaluated based on (1) Whether or not it
is designated as a nature conservation area, (2) The
number of plant species listed in the Red Data Book,(3) The number of bird species listed in the Red Data
Book, and (4) The number of useful plant species.

(2) Ecological importance (Note 2)(3) Water stress (Note 3)

EnergyAmount used (Note 4)

Water

Amount used (Note 5)

Resources

Land area of the property is scored and evaluated (Note 6)

EnergyAmount used (Note 4)

Water

Water use and water stress are scored and evaluatedResources

Land area of the property is scored and evaluated (Note 6)

Evaluation method

Waste

Amount of waste (Note 7)

GHG

GHG emissions (Note 8)

Impact status

State of ecosystemservices/crisis(Note 3) E valuated using the WRI Aqueduct indicator, whichassesses the amount of water resources.

Overall evaluation(impact)(Note 4) E valuated based on annual electricity consumption.
(Note 5) E valuated based on annual water consumption.

Ecological integrity and importance are scored andevaluated
Waste

Ecological integrity, importance, and amount of waste
are scored and evaluatedGHG

Ecological integrity, importance, and GHG emissions
are scored and evaluated(Note 6) E valuated based on land area.

Results of Nature-related Dependency Analysis

The results of the analysis confirmed a high score (high impact) for GHG.
The results of the analysis of the top ten properties based on acquisition price and the top 100 properties
based on acquisition price (80.1% coverage) in terms of nature-related impacts are as follows.

Dependency
Asset class

Property nameLocation(millions of yen)

Ecological status of
the property area
Ecologicalintegrity

Ecologicalimportance

Water stress

ImpactDependency status
EnergyWater

Amount used Amount used

Resources
Scoredevaluation

Overall evaluation (dependency)
EnergyAmount used

Water
Scoredevaluation

Asset class

Resources

Property nameAcquisition
price

Scoredevaluation

iias Tsukuba

34,120

Tsukuba City,
Ibaraki

Retailiias Tsukuba

34,120

Tsukuba City,
IbarakiLogistics

DPL Nagareyama I

32,600Nagareyama
City, Chiba

Logistics

DPL Nagareyama I

32,600Nagareyama
City, Chiba

Logistics

DPL Nagareyama III

32,000Nagareyama
City, Chiba

Logistics

DPL Nagareyama III

32,000Nagareyama
City, Chiba

28,800Hiroshima City,
Hiroshima

Other

GRANODE Hiroshima

28,800Hiroshima City,
Hiroshima

Logistics

D Project Urayasu II

26,000

Urayasu City,
Chiba

GRANODE Hiroshima

Unevaluated UnevaluatedUnevaluated

Logistics

D Project Urayasu II

26,000

Urayasu City,
Chiba

Logistics

DPL Misato

16,831

Misato City,
Saitama

Logistics

DPL Misato

16,831

Misato City,
Saitama

Logistics

D Project Hachioji

15,400Hachioji City,Tokyo

Logistics

D Project Hachioji

15,400Hachioji City,Tokyo

Logistics

D Project Hiratsuka

15,200

Hiratsuka City,
Kanagawa

Logistics

D Project Hiratsuka

15,200

Hiratsuka City,
Kanagawa

Logistics

DPL Fukuoka Kasuya

13,300Kasuya District,Fukuoka

Logistics

DPL Fukuoka Kasuya

13,300Kasuya District,Fukuoka

Logistics

D Project Itabashi Shingashi

12,300Itabashi Ward,
Tokyo

Logistics

D Project Itabashi Shingashi

12,300Itabashi Ward,Tokyo

Average score of 100 properties

2.8

1.8

2.0

1.6

1.3

2.6

1.6

1.8

2.6

Average score of 100 properties

14

State of ecosystemservices/crisis

Impact status

Location(millions of yen)

RetailOther(Note 8) E valuated based on annual GHG emissions
assuming Scope 1.

Results of Nature-related Impact Analysis

The results of the analysis confirmed a high score (high dependency) for resources.
The results of the analysis of the top ten properties based on acquisition price and the top 100 properties
based on acquisition price (80.1% coverage) in terms of nature-related dependencies are as follows.

Acquisition
price(Note 7) E valuated based on annual amount of waste,assuming that the waste is disposed of in
the vicinity.

Waste

GHG

Amount of waste

Emissions

UnevaluatedUnevaluated

1.3

1.8

Overall evaluation (impact)
Waste

GHG

Scored evaluation

Scored evaluation

Scored evaluation

1.6

1.9

2.2

Message from
the Management

Sustainability Report 2024

Sustainability

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Environment

SocialGovernance

FinanceRelevant Data

Back

Special Feature 1: TNFD (Scenario Analysis Process, Business Impact and Response Measures)
Process of Nature-related Scenario Analysis
Based on the analysis of the LEAP approach, scenario analysis is conducted to evaluate the impact on DHR’s business under different scenarios and to assess strategic resilience to nature-related risks and opportunities.

Scenario Analysis Process

Step

1

Identify material nature-relatedrisks and opportunities• Identify nature-related risks and opportunities• Assess nature-related risks and opportunities andidentify material risks and opportunities

Step

2

Set nature-related scenarios• Identify relevant scenarios based on the informationin Step 1 and other factors• Set nature-related scenarios (social image)

Step

3

Evaluate impact on
business in each scenario

Step

4

Evaluate strategic resilienceto nature-related risks andopportunities and consider
additional measures•E valuate the resilience of DHR’s strategies tonature-related risks and opportunities•A ssess the materiality for DHR and its stakeholders(rated on a scale from(high) to(low)depending on the level of materiality)•C onsider additional measures•A nalyze the impact on business in each scenario
based on each scenario set in Step 2 and thematerial nature-related risks and opportunities
together with related parameters identified in Step 1• Set parameters related to material risks andopportunities

Overview of Anticipated Scenarios
Scenario A

Transition risk

High

Physical risk

Low

A scenario in which efforts in policy, institutional, andfinancial aspects of biodiversity conservation arestrengthened and promoted, while nature destruction andloss of ecosystem services are curbed. Transition risk ishigher than in Scenario B, but physical risk is lower.

Scenario B

Transition risk

Low

Physical Risk

High

A scenario in which efforts in policy, institutional, andfinancial aspects of biodiversity conservation fail to makeprogress, resulting in the further destruction of nature andthe loss of ecosystem services. Transition risk is lower thanin Scenario A, but physical risk is higher.

Impact on Business and Countermeasures
Classification

Type

Physical

Acute

Risk
Transition

MarketBusiness impact

Description of risks and opportunities

Scenario A Scenario B

Increased repair costs of buildings and exteriors due to extreme weather conditions, as well asdegradation and cessation of natural ecosystem functions, etc.

Large

Decreased rent income due to increased natural disasters

Large

Large

Increased non-life insurance premiums due to increased natural disasters

MediumMediumBusiness risks, exclusion from the supply chain, and risks of lower earnings if unable to respondto the rising biodiversity needs of customers (e.g., obtaining biodiversity-related environmental
certifications (JHEP, ABINC, etc.))

Large

Large

MediumMediumReputation Declined investment unit prices and increased funding costs due to delays in biodiversity response

Opportunities

Large

MarketIncreased business opportunities, avoiding exclusion from the supply chain, and increased
earnings opportunities when responding to the rising biodiversity needs of customers (e.g.,
obtaining biodiversity-related environmental certifications (JHEP, ABINC, etc.))

Large

Large

Funding

Increased investment unit prices and decreased funding costs due to biodiversity response

MediumMediumResilience

Enhanced resilience and reduction of future cost incurrence risks and business risks by enhanced
response to biodiversity

Large

Large

15

Countermeasures•R eplanting with mainly native species•T ake appropriate measures such as insurance coverage based on risk assessment•P erform waterproofing, exterior wall, and sealing work ahead of schedule• Install sandbags, water stop plates, and tide plates•O btain biodiversity-related environmental certifications that evaluate and certify ourcontribution to biodiversity conservation•O btain green building certifications•D isclose information on environmental performance• Improve ESG ratings• Implement sustainable finance• Take appropriate measures such as insurance coverage based on risk assessment• Perform waterproofing, exterior wall, and sealing work ahead of schedule• Install sandbags, water stop plates, and tide plates• Diversify portfolio and financing sources

ForwardMessage from
the Management

Sustainability Report 2024

Sustainability

Environment

SPecial Features

SocialGovernance

FinanceRelevant Data

Back

Special Feature 1: TNFD (Metrics and Targets)
Metrics and Targets and Initiatives to Achieve Targets• DHR has established and is working to achieve quantitative metrics and targets for nature-related risks/opportunities and dependencies/impacts that are considered to be material in business operations.
• DHR has set a target for the obtainment of biodiversity-related certifications in addition to climate-related targets and will disclose progress in the Sustainability Report and on the website.
Risk and Impact Management• DHR will consider setting targets based on the guidance of the Science Based Targets Network (SBTN) in the future.
TNFD TCFD

Category
Risk





Opportunities

Market

Subject of management

Metrics

TargetInitiatives to achieve the target

Impact on businessfrom rising biodiversity
needs of customers

Biodiversity-related
certifications

Increase the number of certified properties
from two in FY2023 to five or more in FY2030

Energy consumption

Energy consumption intensity(gross floor area basis)

Reduce by 10% in FY2027
with FY2017 as the base year

Dependency•C onsidering the impact on local ecosystems, mainly for properties located in high-priority areas
for biodiversity conservation, using native tree species instead of invasive alien species, andimplementing environmentally friendly maintenance and management• Introduction of smart meters• Promoting ZEB conversion of portfolio properties• Setting internal carbon pricing to be used as an incentive for low-carbon promotion works, guidelines
for investment decision making, and a reference index to identify risks of future rising costs• Investing in solar power generation equipment



Water consumption

Water consumption intensity(gross floor area basis)

Reduce to below the intensity in FY2027
with FY2017 as the base year

• Effective use of rainwater, groundwater, and greywater• Adoption of water conservation equipment• Monitoring real estate investments in areas with high or very high water stress

Waste discharge

Recycling rate

Exceed the rate of FY2017 in FY2027,
with FY2017 as the base year

• Displaying posters to promote recycling• Promoting recycling through sorting

GHG emissions

Reduce total emissions by 42% in FY2030
with FY2020 as the base year
Net zero in FY2050

Impact

GHG emissions•P romoting ZEB conversion of portfolio properties• Setting internal carbon pricing to be used as an incentive for low-carbon promotion works, guidelines
for investment decision making, and a reference index to identify risks of future rising costs•P urchase of non-fossil certificates• Investing in solar power generation equipment• Promotion of LED lighting

Metrics and Targets: Obtaining Biodiversity-related Certifications
Obtaining JHEP Certification (Royal Parks Toyosu)

Obtaining ABINC Certification (Royal Parks Hanakoganei)

Overview of JHEP certification

Overview of ABINC certification

JHEP is a certification system to objectively and quantitatively
evaluate and certify the degree of contribution to biodiversity
conservation. JHEP compares biodiversity values before and after a
project, and if the values after a project are equal to or greater thanthose before a project, it is certified by a third-party organization
as a project that contributes to biodiversity, with evaluation rank
represented on a six-tier (AAA to B+) scale.
Please see below for the details of JHEP certification.

ABINC is a system to evaluate and certify biodiversity-friendly
initiatives based on the Guideline for Offices Promoting Symbiosis
with Life Forms developed by the Japan Business Initiative for
Biodiversity (JBIB), and no evaluation rank is assigned.
Please see below for the details of ABINC certification.

Website for JHEP certification: https://www.ecosys.or.jp/certification/jhep/index.html•A diverse environment is maintained, with woodlands, grasslands, and waterside areas, as well as
relatively large trees.
•A rain garden has been created, and efforts are being made to consider rainwater circulation.

Website for ABINC certification: https://www3.abinc.or.jp/

Points highlighted in ABINC certification

Points highlighted in JHEP certification• While the subject property is surrounded by commercial areas and offices, there is an abundance ofgreenery on the exterior and rooftop.
• No species on the List of Invasive Alien Species for the Prevention of Ecosystem Damage or unevaluatedalien species are being used, and there are no plans to use them in the future.

Please see below for the details of Royal Parks Hanakoganei’s evaluation.
ABINC certified properties in the 14th evaluation: https://www3.abinc.or.jp/facility/14th_creature_facilites/

Please see below for the details of Royal Parks Toyosu’s evaluation.
Audit report of JHEP certification: https://www.ecosys.or.jp/certification/jhep/case/case111report.pdf
Case study of JHEP certification: https://www.ecosys.or.jp/certification/jhep/case/case111.pdf

16

ForwardMessage from
the Management

Sustainability Report 2024

Sustainability

SPecial Features

Environment

SocialGovernance

Finance

Back

Relevant Data

ForwardSpecial Feature 2: Human Capital
Target Management and Performance
Evaluation Program

Policy and Basic Approach

Support for Operational Skills
Development and Training

The Daiwa House Group Company Philosophy (Corporate Creed) statesthat “a company’s progress depends directly on ensuring a good working
environment for its employees.” We believe that ensuring safe, healthy
workplaces for our employees is essential for creating environments thatencourage the growth of each employee and leverage their capabilities.
Given the lack of workers due to the declining birthrate and aging
population, people leaving the workplace to care for aging parents, andother problems, the human resources situation in Japan has become
quite serious.
The Asset Manager will continue to advance work-style reforms,
introduce new systems responding to changing social conditions andits own situation, and transform internal organizations and managementwith the aim of achieving maximized work performance and a safe andhealthy work environment both physically and mentally for all employees.

The Asset Manager has introduced and implemented a target
management and performance evaluation program semiannually to (1)foster communication between superiors and subordinates, (2) strengthen
human resource development, (3) increase motivation with respect toroles and results (performance), and (4) clarify evaluation criteria and gain
better understanding of evaluations. Employee performance evaluations
are determined by evaluation of performance benchmarked against
individualized targets, evaluation of skills/conduct and a complianceevaluation. The issues for improvement are shared through the performance
review and follow-up interviews. Additionally, “ESG initiatives in response tosocietal demands” was added as a performance evaluation criterion fromthe second half of fiscal year ended March 2019.

5 Pillars of Human Capital Initiatives

The Asset Manager provides training to help new employees acquire
operational knowledge as quickly as possible.

Human resource
development

Improvement incorporate value• Announce that humanresource development isbeing promoted

Maximization ofhuman capital value• Establish a workplace thatis conducive to learning• Carry out training andpromote the acquisition of
professional qualifications
after clarifying the skills
required based on rank anddepartment

Work styles

Health and productivity
management• Invest in the health of
employees to revitalize theorganization, including
invigorating employees andincreasing productivity

Diversity,
Equity & Inclusion• Promote various work styles
that are not tied to specifictimes or places for work-lifebalanceEngagement• Enhance the engagement of
the organization bystrengthening therelationship of mutual trust
between the Company andits employees as well as theemployees themselves

Qualification
Real Estate Transaction Agent
ARES (Association for Real Estate
Securitization) Certified Master

Target for fiscal year
ending March 2031
100%

43.8%

50%

33.8 hours/person/year¥33,701/person/year

Relevant Data (2 of 2)

The Asset Manager enlists the help of outside experts to provide training
to officers and employees (including fixed-term employees, temporary
employees and part-time employees).

Highly Effective In-house Training Programs

Training System and Schedule
The Asset Manager conducts training for all officers and employees, as well as by title and post (including contract employees, temporary employees, and parttime employees), to develop the problem-solving skills of each individual and to improve their knowledge of business operations, human rights, harassment, andinformation security. The training system and annual schedule for FY2023 were as follows.
First Quarter
4

Second Quarter

5

6

7

Third Quarter

8

9

10

11

Fourth Quarter
12

1

2

3

(1) Internal training (Understanding and learning operational knowledge, for assistant managers and associates)12 sessions (9 sessions (ESG, account settlement, Public Offering, private funds, etc.) + 3 sessions (Directors as instructors))(3) For new
employees(3) For new
employees

OJT trainers(assistant managers)

OJT trainers(assistant managers)

Young employees(associates)(3) For new
employees(2) Sustainability(Outside Expert
Advisor)(3) For new
employees(3) For new
employees(3) For new
employees

Compliance training
Compliance training

Compliance

Compliance training

Information security

Information security

Training for all employees
Sustainability

Training on waste(AM and PM companies jointly)

Other

Sustainability
Sustainability

Sustainability

Sustainability

Human rights andharassment

Market report for all assets(appraisal company)

Training Hours and Expenses for Officers andEmployees (Fiscal Year Ended March 2024)
Training hours
Training expense

Training on Operational
Expertise

In addition to face-to-face training by external instructors, the Asset Manager conducts face-to-face and e-learning training by officers and employees.
In terms of training content, we do not limit ourselves to training that “we want employees to receive,” but also conduct proprietary training that “employees want
to receive” by having officers and employees serve as instructors and prepare training materials and tests based on questionnaires of employees who will receive
the training. In FY2023, 12 training sessions with officers and employees as lecturers were held on themes such as the financial results of DHR and the AssetManager, human capital and health management, J-REIT financing, sustainability reports, positioning of private funds and differences with listed REITs, comparison
with other REITs, external assessments, human rights and labor, etc.

Level-based training

Fiscal year ended
March 2024
86.3%

The Asset Manager has established a system for providing funding for theregistration and renewal of professional qualifications and a system forproviding congratulatory payments for acquiring professional qualifications
to encourage the acquisition of knowledge, qualifications, and licenses. The
purpose is to increase the motivation of all employees (including fixed-term
employees, temporary employees, and part-time employees) with respect
to self-development, improve their abilities and talents, continuously andsteadily secure human resources with the specialized skills necessary
to contribute to the achievement of business objectives, and assess theenvironmental friendliness of DHR’s properties.

New Employee Training Program

Training for young employees
Training for new employees

KPIs and Main Initiatives

Relevant Data (2 of 2)

Workshop on reading appraisal reports
Market report for all assets

Logistics market report
Logistics market report
Logistics seminar

Training for PM companies (3 sessions)
Compliance training for
PM companies

Health seminar forworking women

Compliance training for
PM companies

Healthcare
workshop

Training bysponsored officers=Instructor is officer or employee of the Asset Manager

17

Seminar onbalancing nursing
care and work

=External instructor=E-LearningSustainability Report 2024

Message from
the Management

Sustainability

SPecial Features

Environment

SocialGovernance

FinanceRelevant Data

Back

Special Feature 2: Human Capital (Health Management)
Health Management Promotion System

Policy and Basic Approach
The Asset Manager formulates the Sustainability Policy, underwhich it will establish an internal framework for promoting
sustainability, take steps to develop human resources byconducting regular education and training for employees, and aim
to create workplaces where people can work safely and healthily,
and workplaces where diverse employees can work flexibly.
Based on this philosophy and policy, initiatives to promote
employee health will improve their vitality and productivity andotherwise invigorate the entire organization, leading to improved
business performance and greater value for the organization.

Health Declaration (September 2022)•P romote work-life balance• Improve health literacy•P romote regular health checkups (especially secondary
checkups for individuals who have not gotten them)•P revent the spread of disease thoroughly

KPIs and Main Initiatives
The Asset Manager aims to fulfill a Health Declaration bystrengthening the health management system and throughmeasures to enable each and every employee to work with ahigh level of health awareness so that they can stay healthy andactive over the long term.
Item

Fiscal year ended Target for fiscal year
March 2024
ending March 2031

Percentage of personnel who had
health checkups

100%

100%

Percentage of personnel who
received metabolic syndromespecific health guidance

100%

100%

Percentage of personnel who had
secondary examinations

100%

100%

Percentage of personnel who had
stress checks

100%

100%

The Sustainability Committee is an official body with the President
and CEO as the Committee Head and the General Manager of
the Sustainability Promotion Department as the operating officer.
The committee meets at least once a month and deliberates andresolves on policy, strategy development, and operations related tosustainability, which includes health management. The committee
also reports on these matters to the Board of Directors as necessary.

Establishment of Health Committee
The Asset Manager has established a Health Committee that meets
monthly to exchange opinions on the workplace environment andlearn about health with the industrial physician in order to prevent
health problems among officers and employees and maintain andpromote their health.

Promoting Regular Health Checkups(Especially Secondary Checkups for
Individuals Who Have Not Gotten Them)
The Asset Manager aims to have 100% of employees get regular
health checkups, and is committed to thorough follow-up in the formof working with health insurance associations and workplaces topromote secondary examinations, checking the status of treatment
and whether employees have received health guidance, and more.
Due to these efforts, 100% of employees got examinations andreceived metabolic syndrome-specific health guidance for the fiscal
year ended March 2024.

Collaborative Efforts with Health
Insurance Associations to Improve on
Health-related Issues
The Daiwa House Group worked with health insurance associations
to introduce a Health Analysis System in a proactive effort to promote
employee health. The system analyzes employee health in organizational
units and based on attributes, and the results are used to identify
organizational issues (areas of improvement in employees’ lifestyles).
Specifically, 11 items from health checkup results (including BMI, waist
measurement, blood pressure (systolic and diastolic), triglycerides, etc.)
and 10 items from interviews during the checkups (smoking habits,
exercise habits, breakfast habits, frequency and volume of alcohol
consumption, sleep habits, etc.) are assigned point values, which allow
the averages to be compared within companies and the Group to give
people an easy way to see what needs to be improved.

18

Conducting Health Check Events
Health-check event hosted by the specialist vender was held with theaim of improving health consciousness of officers and employees. Bonedensity, vascular age, and muscle score were measured, and in the
post-event questionnaire, 61% of respondents answered “I strongly
agree” to the question, “Will what you learned in the event help you
maintain your health in the future?” while
39% responded “I agree,” and to thequestion, “Could this event be a catalyst
for you to improve your lifestyle?” 44%answered “I strongly agree,” while 54%
answered “I agree.”Mental Health Care Initiatives
The Asset Manager conducts stress checks once a year for the
purpose of preventing mental disorders. The stress check screening
rate was 100% in the fiscal year ended March 2024.

“2024 Health & Productivity Management
Outstanding Organization (SME Category)”and “Bright 500”
For the second consecutive year, the Asset Manager was certified as2024 Health & Productivity Management Outstanding Organization(SME category) by the Ministry of Economy, Trade and Industry inrecognition of its various efforts in the field of health management
such as management philosophy and guidelines and organizational
structure, its measures to maintain and promote employee health,and its initiatives regarding legal compliance and risk management,
etc. In addition, for the second consecutive year, the Asset Manager
was certified as one of the “Bright 500,” the top 500 corporations in
the Health & Productivity Management Outstanding Organizations(SME category) in recognition of its community-based messaging
regarding health management initiatives, and the number of compliant
items in the evaluation items of health management. Roughly 16,700
companies were certified as Health & Productivity Management
Outstanding Organizations in the SME category in 2024.

Initiatives for Health Management

ForwardEnvironment

Climate Change 

20

Information Disclosure Based on TCFD Recommendations (Strategy) 

21

Information Disclosure Based on TCFD Recommendations (Metrics and Targets) 

22

Environmental Certifications 

23

Environmental Conservation 

24

Waste Management/Pollution Prevention 

24

Message from
the Management

Sustainability Report 2024

Sustainability

SPecial Features

Environment

SocialGovernance

FinanceRelevant Data

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Climate Change
Information Disclosure Based on TCFD Recommendations

Policy and Basic Approach
In recent years, climatic disasters, thought to be caused byclimate change, are occurring globally and in all regions ofJapan. To mitigate the effects of these events, the parties of
the UNFCCC adopted the Paris Agreement—an international
treaty aiming to achieve net zero GHG emissions—at the 21st
UN Climate Change Conference (COP21) in 2015. In October
2020, the Japanese government declared that Japan would
realize carbon neutrality by 2050, and in October 2021, revised
its target for the fiscal year 2030 to an ambitious 46% reduction
in GHG emissions compared to the fiscal year 2013. Companies
and other organizations now face the crucial task of actively
shifting to renewable energy sources.
At COP27 held in Egypt in November 2022, the parties of
the UNFCCC voiced the world’s unwavering commitment to
reducing GHG emissions to achieve the 1.5°C target.
Supporting these trends, DHR has set targets for achieving
net zero GHG emissions by the fiscal year ending March 2051,
becoming the first J-REIT to receive certification from the
Science Based Targets initiative (SBTi) that these targets are
consistent with the levels required by the Paris Agreement andare based on scientific evidence.

• The Asset Manager supports TCFD Recommendations and promotes risk management and initiatives related to climate change.
• Information disclosure is based on the amended TCFD Recommendations and new guidance in October 2021.

Item• The Asset Manager established the “Regulations Concerning the System for Promoting Sustainability” and rules on topics such as internal framework,
collaboration with stakeholders and information disclosure policy to secure an appropriate system for promoting sustainability.
• The Board of Directors receives and monitors reports from the Sustainability Committee on considerations for climate-related and other global environmental
issues and risk management for natural disasters, etc.

GovernanceItem

Coverage

Base year Target year

• The Sustainability Committee deliberates and resolves on sustainability-related policy and strategy development such as addressing climate-related issues
and execution of sustainability-related operations.

Strategy

All properties

2020

2030

SBT (February 2022)

GHG emissions(Scope 3)

Properties withdata available

2020

2030

Calculate and reduce
total emissions

GHG emissions(value chain)

All properties

2020

2050

SBT (August 2022)

Intermediate target-42%
Long-term target
Net zero2020(Base year)

2030

2050

• Understanding the risks and opportunities for DHR in the future due to unusual weather caused by climate change and increasing social demands forclimate change measures, the Asset Manager verified and analyzed the effectiveness of the current climate change measures.
• In accordance with the TCFD Recommendations, the Asset Manager conducted analysis based on multiple scenarios of below 2°C scenario and 4°C
scenario and formulated a roadmap for achieving the targets certified by SBTi.

• While recognizing climate change risk as one of the risks that could pose a significant impact on business in the medium to long term, the Asset Manager
sees such risk as areas of potential and manages the risk by incorporating it in our overall risk management process. The Asset Manager has establishedthe “Risk Management Regulations” and “Risk Management Implementation Guidelines” as internal regulations in order to accurately identify risks andopportunities inherent in business, including those that are climate change-related, develop a system for appropriately managing potential losses and profits
when the identified risks and opportunities are realized, ensure the soundness of management and operate business in a fair manner.

TargetReduce total emissions
by 42%• As the Chief Executive related to climate-related issues at the Board of Directors and the Chief Executive of the Sustainability Committee, the President andCEO of the Asset Manager provides final approval of various climate-related goals and measures, evaluates the status of efforts, and gives instructions forreview.
• The Sustainability Committee, which was established in May 2017, was raised to a formal committee in April 2022 and must be held at least once a month.
An outside expert advisor who has a high level of insight and expertise in sustainability was also appointed.

KPIs and Main Initiatives
GHG emissions(Scope 1 and 2)

Contents

Risk
Management• The Board of Directors shall oversee the development of an appropriate risk management system based on the “Risk Management Policy” after considering
where and what the risk is based on the strategic goals set separately by the Board of Directors.
• The President and CEO shall be responsible for all risks in accordance with the provisions of the “Daiwa House Group Risk Management Regulations,”
develop an appropriate risk management system and be responsible for promoting and implementing risk management.

SBT (February 2022)

Net zero• The Compliance Officer, who is responsible for risk management, shall establish methods including measurement, monitoring and management based on
the type of risk along with the risk management policy and shall develop internal regulations to ensure the effectiveness of these methods.

• DHR set targets of reducing total GHG emissions by 42% in the fiscal year ending March 2031 compared to the fiscal year ended March 2021 and became
the first J-REIT certified by SBTi for its SBT 1.5°C targets. In addition, DHR set long-term targets of net zero emissions in the fiscal year ending March 2051.

SBT

Metrics andTargets• Internal carbon price is set at ¥20,000 / t-CO2 and used as an incentive for low-carbon promotion works, guidelines for investment decision making and areference index to identify risks of rising costs.
• We are promoting the acquisition of third-party external certifications and evaluations to increase the objectivity and reliability of our initiatives to reduce
environmental impact at portfolio properties and improve the asset value over the medium to long term. Our policy is to increase the percentage ofproperties with environmental certification (based on gross floor area) to 75% or more by the fiscal year ending March 2031.

20

ForwardSustainability Report 2024

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the Management

Sustainability

Environment

SPecial Features

SocialGovernance

FinanceRelevant Data

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Information Disclosure Based on TCFD Recommendations (Strategy)
Roadmap for Reduction of Emissions and Achievement of Targets Certified by SBTi
• DHR has set long-term targets of reducing total GHG emissions by 42% in the fiscal year ending March 2031 compared to the fiscal year ended March 2021 and net zero in the fiscal year ending March 2051 and formulated aroadmap that includes reduction rates by measure to achieve the goals.

2020 (Base year)

2030

2040

Graph legend

2050

Emissions reduction target / measure mix

GHG emissions in case ofno countermeasures(1) Reduction of power consumption(2) Switch to energy derived from renewable energy(3) Introduction of renewable energy equipment andutilization of non-fossil certificates(4) Scope 1, 2, and 3 emissions(1)

Asset size
expansion
Increasedemissions

Substantiallyzeroemissions(2)Intermediate target

-42%

(3)

(4)

Long-term target

Target GHG
emissions

Increased emissions by asset size expansion

+33%

+67%

Emissions reduction rate (vs Fiscal year ended March 2021)

-42%

-100%

Reduction rate by measure(1) Reduction of power consumption-11%

Switch to LED lighting equipment
Update to high-efficiency air conditioning equipment

-50%

-38%

GHG reduction by better energy mix
Switch to a power company with a low emission factor (t-CO2/kWh)-65%(2) Switch to energy derived from renewable energy(3) Introduction of renewable energy equipment and utilization of non-fossil certificates-26%

Utilization of green power certificates and non-fossil certificates
Investment in solar power generation equipment / switching existing equipment to own use
Switch from fossil fuels to alternative energy

21

-52%

ForwardMessage from
the Management

Sustainability Report 2024

Sustainability

Environment

SPecial Features

SocialGovernance

Finance

Back

Relevant Data

ForwardInformation Disclosure Based on TCFD Recommendations (Metrics and Targets)
GHG Emissions of Portfolio Properties (Scope 1, 2, and 3)
Item
Number ofproperties

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
March 2021
March 2022
March 2023
March 2024
201

211

215

223

117,736244

97,1337,208

259

126,072

190

89,924-27.5%(vs Fiscal year ended March 2018)

0%

-20%

-35%

125,882

FY endedMar. 2018(Base)FY endedMar. 2020

FY endedMar. 2021

FY endedMar. 2022

FY endedMar. 2023

FY endedMar. 2024

FY endingMar. 2028(Target)Membership in the Secured Meter
Data Sharing Association

GHG Emissions and Energy-related Targets• DHR set targets of reducing total GHG emissions by 42% in the fiscal year ending
March 2031 compared to the fiscal year ended March 2021 and achieving net zero
emissions by the fiscal year ending March 2051, and became the first J-REIT toobtain SBTi certification for its SBT 1.5°C targets.

TargetFirst J-REIT
asset manager• The Asset Manager became the first J-REIT asset manager to join the Secured
Meter Data Sharing Association in June 2023
• Due to the revision of the Electricity Business Act, the provision of electricity data
held by general power transmission and distribution companies began in October
2023 under the certified association system•O btained electricity statistics data for FY2022 and FY2023 for properties owned by DHR
Significantly improved electricity data acquisition rate for exclusive areas ofresidential properties

Percentage of Residential
Properties in the Portfolio
by Floor Area

= Common area

= Private area

= Unobtained

Significantly
improved

18.9%

40.9%

99.1%

<Before membership><After membership>

Long-term target

Net zero2020(Base year)

Coverage

Base year Target year

2030

2050

TargetEnergyProperties with
consumption data available

2017

2027

Reduce consumption
intensity by 10%

Water
Properties with
consumption data available

2017

2027

Reduce intensity to below
the level of base FY

Waste
Properties withmanagement data available

2017

2027

Improve recycling rate

Number of portfolio
properties (Note 2)

Number of properties Percentage of properties
with LED lighting (Note 3)with LED lighting

Logistics
Residential

68
129

64
122

94.1%
94.6%

Retail
Hotel

16
7

15
7

93.8%
100.0%

Other assets
Total

6
226

4
212

66.7%
93.8%

As of March 31, 2024

Solar Power Generation• Solar panels have been installed on the rooftops oflogistics and retail properties owned by DHR, and
DHR utilizes the renewable energy they generate.

Solar power generationequipment installations

Powergenerated

9.2%(vs Fiscal year ended March 2023)

Number of properties

Power generated in fiscal
year ended March 2024

22 properties

21,628 MWh*Amount of power generated is calculated only for properties with solar power generationequipment for which the requisite data are available.

22(Note 3) The number of properties in which LED lighting has been installed in at least half the area of common
areas (in properties with common areas) or at least half the area of the entire property (in properties
leased as an entire building with no common areas).

Introduction of High-efficiency Facilities
and Equipment
Air conditioning and ventilation systems were replaced with high-efficient ones atproperties such as D Project Hachioji.
Smart Grid/Smart Building Technology
At FOLEO Otsu Ichiriyama, a computerized power grid control and automation system has
been introduced to manage and support energy supply.

Exterior Wall/Roof Insulation
In properties such as Castalia Jinbocho, walls and roofs are highly insulated to protect thebuilding against outside temperatures and increase energy efficiency.

Electricity Data Acquisition Rate for
Residential Properties (FY2023)

SBT

-42%

93.8%

(Note 1) T he number of properties is as of March 31, 2024. (Note 2) E xcludes land properties.

Improved Electricity Data Acquisition Rate

98,951LED
conversion
rate•D HR is promoting conversion to LED lighting at its
properties, in an effort to reduce energy consumption.

Target
level

-15%

-30%

*Market-based

Item

Promotion of LED Lighting

Status of conversion to LED lighting

-5%

-25%

99,210117,491

Scope 3(t-CO2)(reduction rate of intensity (MWh/m2))

Reduction rate ofintensity in fiscal year
ended March 2024

-10%

= Scope 1 and 2 (t-CO2)= Scope 3 (t-CO2)

Scope 1+2
(t-CO2)

Energy Consumption

Relevant Data (1 of 2)

Window Renovation
At Castalia Tower Shinagawa Seaside, insulation film is applied to the windows to improvethe building’s thermal insulation.

Purchase of Non-fossil Certificates
DHR participated in the renewable energy value trading market, which allows
consumers and intermediaries to purchase FIT non-fossil certificates, and in the fiscal
year ended March 2024 procured 25.0 million kWh FIT non-fossil certificates throughan intermediary (Whole Energy, Inc.) (hereinafter referred to as the “Procurement”).
Expected reduction effect of CO2 emissions by the Procurement was approx.
12,988 tons (t-CO2 equivalent), and all of the DHR’s electricity-derived GHG
emissions (Scope 2) for the fiscal year ended March 2024 were offset alongside theintroduction of 100% net zero renewable energy at the properties owned by DHR.

Internal Carbon Pricing
Carbon Price
Internal carbon price is set at ¥20,000 / t-CO2 and used as an incentive for lowcarbon promotion works, guidelines for investment decision making and a reference
index to identify risks of rising costs.
Information Disclosure Based on TCFD Recommendations (Metrics and Targets)Sustainability Report 2024

Message from
the Management

Sustainability

SPecial Features

Environment

SocialGovernance

FinanceRelevant Data

Back

Forward

Certified area
(gross floor area*3)

Area in whole portfolio*2(gross floor area*3)

Percentage ofcertified properties(gross floor area basis)

Environmental Certifications
Policy and Basic Approach
To increase the objectivity and reliability of DHR’s initiatives in
reducing the environmental burden of properties, DHR intends
to increase medium- to long-term asset value and pursue theacquisition of third-party external certifications and evaluations.
Even at DHR’s properties without any environmental
certifications, through initiatives such as conversion to LED
lighting and the introduction of energy-saving air conditioning andwater saving equipment, DHR works to reduce its environmental
impact by promoting energy savings and proper sorting anddisposal of waste.

KPIs and Main Initiatives
DHR plans to increase the percentage of properties withenvironmental certification (gross floor area basis) to 75% ormore by the fiscal year ending March 2031.
DHR is proactively working to obtain environmental certifications
for its many ongoing efforts to realize a sustainable society inaddition to improving environmental performance, for example
through converting to LED lighting at its properties.
Additionally, because the Asset Manager has asked its sponsor
to consider acquiring BELS Certification, CASBEE Certificationfor Buildings, and other environmental certifications for theirproperties in the development stage, more properties are
certified before DHR acquires them.

Percentage of Properties That Have Obtained
Environmental Certifications in the Entire Portfolio

73.7%(gross floor area basis)

Status of Environmental Certifications
Number ofPercentage of certified properties
Number ofcertified properties portfolio properties*2 (based on number of properties)
Total of properties that haveobtained environmental
certifications

77

226

34.1%

2,719,495.85 m2

3,691,483.60 m2

73.7%

DBJ Green Building
Certification

15

226

6.6%

946,659.48 m2

3,691,483.60 m2

25.6%

CASBEE for Real Estate
Certification

45

226

19.9%

1,706,462.21 m2

3,691,483.60 m2

46.2%

BELS Certification

62

226

27.4%

2,303,901.60 m2

3,691,483.60 m2

62.4%(ZEB Certification portion)

8

226

3.5%

558,451.29 m2

3,691,483.60 m2

15.1%

LEED

1

226

0.4%

120,229.08 m2

3,691,483.60 m2

3.3%

JHEP Certification

1

226

0.4%

26,997.13 m2

3,691,483.60 m2

0.7%

ABINC Certification

1

226

0.4%

24,604.09 m2

3,691,483.60 m2

0.7%

JHEP
Certification

ABINC
Certification*1 The number of certifications is as of March 31, 2024.
*2 Excludes land properties.
*3 Gross floor area is based on the floor area provided on the inspection certificate of each property.
*4 The percentage of properties that have obtained environmental certifications is rounded to the first decimal place.

DBJ Green Building
Certification

CASBEE for Real
Estate Certification

BELS
Certification

ZEB
Certification

62 properties

8 properties

Relevant Data (1 of 2)

LEED
Certification

Target 75%(Fiscal year ending March 2031)

Actual 73.7%(As of March 31, 2024)

15 properties

45 properties

5 stars : 7 properties
4 stars : 4 properties
3 stars : 4 properties

S : 24 properties
A : 20 properties
B+ : 1 property

23: 16 properties “ZEB”: 1 property: 11 properties ZEB Ready : 7 properties: 9 properties: 18 properties: 8 properties

1 property

1 property

1 property

Certified : 1 property

A : 1 property* There is noevaluation rating forthis certification.

Sustainability Report 2024

Message from
the Management

Sustainability

Environment

SPecial Features

SocialGovernance

Finance

Back

Relevant Data

ForwardEnvironmental Conservation
Policy and Basic Approach
The water supply is expected to become unstable as a result of climatechange; it is becoming more important to conserve aquatic environments
around the world. As water risks are highly influenced by local factors, DHR
evaluates water stress at its properties and uses hazard maps to assess therisk of water damage. DHR also promotes efforts to reduce water consumption
at its properties to ensure that water resources are available for continued use.

Target Reduce consumption rate to the consumption intensity offiscal year ended March 2018 (base year) or less(10-year period from 2018 to 2027)

Actual 0.5693 m3/m2
Fiscal year ended
March 2024 actual

Improved Water Consumption Data Acquisition Rate

Adoption of Water Conservation Equipment

Each private area in residential properties is equipped with a water meter for tenants.
While awareness of water consumption among tenants was high, it was difficult for
DHR, as the owner, to grasp the amount of water consumed. We have significantly
improved the acquisition rate of water consumption data in the private areas of ourresidential properties by requesting the Waterworks Bureau for information on water
consumption in the private areas.

DHR is introducing water conservation equipment at the time of renewal of facilities
or equipment at its properties in an effort to reduce water consumption.

Percentage of Residential
Properties in the Portfolio
by Floor Area

= Common area

= Private area

= Unobtained

Significantly
improved

Fiscal year ended March 2018(base year) actual

18.9%

0.8205 m /m
3

Acquisition Rate of Water Consumption Datafor Residential Properties (FY2023)

34.7%

90.0%

<Previously><After requesting information>

2

As of March 31, 2024

Waste Management/Pollution Prevention
Policy and Basic Approach
The increasing world population and other factors are triggering a substantial
rise in consumption of global natural resources; resource depletion and thenegative impacts of waste on the environment are becoming more severe.
The “2030 Agenda for Sustainable Development” adopted at the United
Nations Summit in 2015 calls for a “vast reduction in waste by 2030.” Interest
is mounting in the “circular economy,” in Japan and abroad, in which products
and other items of value are continuously recycled and reused. DHR is taking
steps to reduce waste and increase recycling rates at portfolio properties.

Pollution Prevention
Before acquiring any property, DHR shall conduct detailed environmental due
diligence on the matters listed below. During the due diligence process, DHR
comprehensively assesses the property’s investment value, weighing its impact on
DHR’s overall portfolio, contribution to expected increase in value and other relevant
considerations while consulting a fair real-estate appraisal by a third party with
sufficient skill and experience in due diligence studies.

a. Soil and ground conditions, buried objects, soil contamination, etc.
b. Status with respect to hazardous substances (asbestos, PCBs, etc.)
Furthermore, DHR maintains the proper processing and procedures in accordancewith laws and regulations for any chemical substances present on its properties tostrictly handle all chemical substances in the most thorough manner to ensure noleaks or emissions.

Water Stress
DHR does not own any properties in regions where the water stress is “high” or“extremely high.”

Water Consumption

Relevant Data (1 of 2)(reduction rate of intensity (m3/m2))
0%
-10%
-20%
-30%
-40%
-50%
-60%

Targetlevel

FY endedMar. 2018(Base)FY endedMar. 2020

FY endedMar. 2021

FY endedMar. 2022

FY endedMar. 2023

FY endedMar. 2024

FY endingMar. 2028(Target)The main factor for the increase in intensity of fiscal year ended March 2023 and fiscal year ended
March 2024 was the increased acquisition rate of water consumption data in residential properties.

KPIs and Main Initiatives
Resource Recycling

Chemicals and Pollution Prevention

Target Improve recycling rate to the rate of fiscal year ended
March 2018 (base year) or higher(10-year period from 2018 to 2027)

Target Reduce the number of environmental risk incidents (e.g.,

Actual

71.5%

Fiscal year ended
March 2024 actual

Fiscal year ended March 2018(base year) actual

violations of environmental laws and regulations) to zero.

(FY2023 results)

54.2%

The Asset Manager considers chemical substance and pollution prevention to beimportant, and to strengthen its commitment to resolving sustainability issues andimproving governance, the Asset Manager has implemented a compensation system
in which the occurrence of environmental risk incidents (violations of environmental
laws and regulations, etc.) is evaluated with regard to the compensation of the AssetManager’s Directors.

Soil Contamination Countermeasures“FOLEO Ome Imai” was built on the land of a former electronic component
production plant. Even though the soil contamination had been verified, construction
work was conducted by properly excavating and removing the soil. DHR acquired
the property after confirming that the topsoil survey for all specific hazardous
chemicals after the construction work showed none of the substances weredetected and all were in compliance with regulatory standards.

24

0ActualWaste Management

Relevant Data (1 of 2)(recycling rate)
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Targetlevel

FY endedMar. 2018(Base)FY endedMar. 2020

FY endedMar. 2021

FY endedMar. 2022

FY endedMar. 2023

FY endedMar. 2024

FY endingMar. 2028(Target)SocialDiversity, Equity, and Inclusion 

26

Human Rights and Labor Standards 

27

Initiatives for Local Community 

28

Initiatives for Tenants and Supply Chain 

29

Investor Relations Initiatives 30

Sustainability Report 2024

Message from
the Management

Sustainability

SPecial Features

Environment

SocialGovernance

FinanceRelevant Data

Back

Diversity, Equity, and Inclusion
Conduct Employee Engagement Surveys

Policy and Basic Approach
For the Daiwa House Group to grow into a corporate capableof contributing to the world, it is important to respond flexibly todiverse values and ongoing changes in society, and to create
new value to allow us to discover potential markets. Toward that
end, we must foster a workplace climate that makes it possible
to capitalize on the perspectives and creativity stemming from
employees’ diverse values, gender, age, ethnicity, language,
culture, disabilities, lifestyles, and other attributes in order to form
organizations that generate new ideas without being held backby outdated notions and preconceptions.
We are making efforts to promote active participation by womenand otherwise strengthen diversity-based management so that a
broader range of people can flourish in the future.

KPIs and Main Initiatives
Item

Fiscal year ended Target for fiscal year
March 2024
ending March 2031

Percentage of female line managers(group leader and above)

21.4%

6.3%

39%

Work styles (work-life balance)
Percentage of male employees
taking childcare leave
Percentage of paid leave taken

100%

74.9%

100%

85%

Turnover4.3%

0%

Accumulated paidvacation

Unused annual paid vacation days accumulate up to 20
days per year to a maximum of 100 days. Employees
may use their accumulated paid vacation days as
personal injury/sick leave, maternity/paternity leave, family
caregiving leave or community co-creation leave

Family caregiving leave Five days per year to care for ill family members (paid leave)
Five days per year to participate in activities that contributeto society, training for such activities, etc. (paid leave)

6.0 years

10 years

-13

-8

•F
 rom the perspective of diversity, the name and details of the former “menstrual
leave” were revised so that both male and female employees can take the leave.
Scope of coverage

Average tenure of employees

eNPS score(the purpose of the leave does not need to be specified at the time of application)• Menstrual leave(*1) • Fertility treatment• Secondary medical and gynecological checkups andexaminations related to health checkups• Vaccination*1 Periods or hours beyond the limit may be taken as unpaid leave.
*2 Granted in addition to annual paid leave.

26

Return-to-work benefits

Less than 3 months after childbirth

1 million yen

More than 3 months,
but less than 1 year after childbirth

500,000 yen

More than 1 year after childbirth

300,000 yen

Provision of Childcare Leave Benefits•P romoting male employees to take childcare leave
Number of days of childcare leave taken

Up to five days per year separately from annual paidvacation to promote employees’ health, etc.

Introduction of Wellness Leave System

Engagement

Provision of Return-to-work Benefits

Eligibility: male employees who have taken childcare leave
Contents:

Overview

Special paid vacation

Community
co-creation leave• 300,000 yen per newborn as congratulatory money for childbirth

Leave duration

The Daiwa House Group recognizes the importance of promoting good
health among its workforce and thereby improving labor productivity
through consistent measures to eliminate excessively long working
hours and help employees manage their health. Based on such
recognition, the Asset Manager has introduced employee leave/vacation
programs such as the ones below, in addition to celebratory event leave,
bereavement leave, maternity/paternity leave, childcare leave*, childcaregiving leave and elder caregiving leave* for all employees.

20%

Provision of Childbirth Benefits

Eligibility: female employees who have taken childcare leave and returned
to work
Contents:

Benefits and Welfare

Item• Start and end times are set between 7:30 to 21:00 on a daily basis.
• Minimum of 1 hour and maximum of 12.5 hours of work per day (no core
hours are set).
• Accommodating flexible work styles by allowing voluntary breaks (time taken
off from work during scheduled working hours and returning to work again)• Promoting the return of female employees to work after maternity leave*Surveys and analyses are outsourced to third-party institutions.

*Contract workers can also take advantage of these programs.

Diversity, equity, and inclusion
Percentage of female managers(senior manager and above)

The Asset Manager recognizes human resources as its greatest
asset and participates in the Engagement Survey conducted by the
Daiwa House Group* every year to verify how well the Principles ofCorporate Ethics and Code of Conduct are being practiced in theworkplace and the employment satisfaction level.
In addition, the compensation of the Asset Manager’s Directors is
subject to the “Employee Engagement with the Company” scorefrom the Engagement Survey, with the aim of achieving sustainablegrowth in corporate value.

Introduction of Flextime System

Maximum days
15 days/year(paid leave)(*2)

Childcare leave benefits

30 days or more

300,000 yen

10 to less than 30 days

200,000 yen

1 to less than 10 days

100,000 yen

Introduction of Allowance for Replacing Work of Coworkers on
Long-term Leave• Provided to employees who perform work as substitutes during theabsence of persons on long-term leave, such as childcare leave, caregiver
leave and medical leave• Promotes a greater sense of understanding and unity overall in theworkplace by easing the concerns of persons on long-term leave
regarding the burden placed on their coworkers and by appropriately
compensating the employees who support the workplace in their absence• Payments to coworkers providing support are up to a maximum monthly
amount of 50,000 yen per person and are limited to the amount of
unpaid bonuses for the person on leave and to the period during which a
replacement worker has not been employed

ForwardMessage from
the Management

Sustainability Report 2024

Sustainability

SPecial Features

Environment

SocialGovernance

FinanceRelevant Data

Back

Human Rights and Labor Standards
Human Rights Due Diligence Process

Policy and Basic Approach
The Daiwa House Group Principles of Corporate Ethics stipulate“We respect basic human rights and the dignity of all people,
and do not discriminate against anyone on the grounds of race,
nationality, ethnicity, gender, sexual orientation, sexual identity,
disability, age, creed, or social status.” In January 2018, thegroup established the Human Rights Policy of Daiwa HouseGroup with an understanding of the corporate responsibility ofrespecting human rights as set forth in the UN Guiding Principles
on Business and Human Rights. After receiving advice fromoutside experts, this policy was established by resolution of the
Daiwa House Board of Directors in December 2017.
Human Rights Policy of Daiwa House GroupKPIs and Main Initiatives
Relevant training (fiscal year ended March 2024)
Times held (days)

Total hours/person

1

1

0

0

Training on human rights
and diversity
Training on bullying andharassment

The Asset Manager identifies potential risk areas related to therespect for human rights for DHR, the Asset Manager, contractors,
and activities related to the value chain and business through the“risk assessment sheet,” which is updated annually. Furthermore,preventive measures, control assessments, and response measures
are formulated after evaluating risks, taking into account thelikelihood of risk occurrence and the degree of impact.
In the “risk assessment sheet,” we identify and manage risks
related to health and safety (employees, suppliers, contractors, andcommunities), child labor, freedom of association, labor management(forced labor), and compensation by identifying risk items related tohuman rights. Groups exposed to human rights-related risks include
employees, women, children, and communities.
The General Managers of each department of the Asset Manager
conducts a self-check of the risk management status twice a year,
and the Compliance Officer reports the results of the self-checks andverifications to the President and CEO, the Compliance Committee,
and the Board of Directors of the Asset Manager twice a year.
Approach on the Promotion of Respect for Human Rights

Overwork
At the Asset Manager, anyone who works more than 80 hours ofovertime per month is required to have a health examination by anindustrial physician.

Payment of Wages Above Minimum Wageand Equal Pay for Equal Work
The Asset Manager pays wages above the minimum wage provided
for in laws and regulations and a wage that contributes to improving
the standard of living by taking into account the commodity prices.
Our compensation system also maintains equal pay for equal workand ensures no wage gap between genders. The Asset Manager
has established an evaluation-linked monetary compensation system
by post classification and conducted appropriate assessmentsof performance. Bonuses are paid twice a year in the summer
and the winter, and the amount is determined according to work
performance. In the fiscal year ended March 2024, the averageannual salary paid by the Asset Manager was ¥10,641 thousand*.
*Average for full-time employees not including officers, fixed-term employees, or employees on
external assignment

Relevant Data (2 of 2)

Labor-related Violations and Accidents

Number of cases in which the Asset Manager
received reports and took corrective action

Labor/Management Relations

Fiscal year ended
March 2022

Fiscal year ended
March 2023

Fiscal year ended
March 2024

0

0

1

Number of reports about labor-related issues,
discrimination, harassment, etc.
Fiscal year ended
March 2022

Fiscal year ended
March 2023

Fiscal year ended
March 2024

0

0

1

The Asset Manager has not yet organized a labor union but does
recognize the constitutional right of every employee to have “freedomof association.” DHR has also signed and made a commitment
to adhering to the United Nations Global Compact, one of whose
principles is “the freedom of association and the effective recognitionof the right to collective bargaining.”
Labor-management relations at the Asset Manager have been
harmonious, and there have been no large-scale mergers,
acquisitions, or layoffs in the past three years.
In addition, the Asset Manager has entered into a labor-managementagreement on overtime work (36 Agreement) with its employees,
and striven to maintain the health of its employees by appropriately
managing working hours.

27

The Asset Manager had no significant labor-related violations or
accidents that would influence stakeholders. (Fiscal year ended
March 2024)

ForwardSustainability Report 2024

Message from
the Management

Sustainability

SPecial Features

Environment

SocialGovernance

FinanceRelevant Data

Back

Initiatives for Local Community
Policy and Basic Approach
DHR and the Asset Manager provide safe and comfortable
spaces at portfolio properties in an effort to enhance ourcompetitiveness and improve our value. We also focus on
business continuity plans (BCPs) and promote efforts withdisaster resilience in mind in addition to promoting job creation torevitalize local communities.
We intend to continue working with the members of local
communities to solve social issues with the ultimate aim of
becoming a company worthy of their trust.

Disaster Relief/Resilience
ACROSSMALL Shinkamagaya
The city of Kamagaya, Chiba, where “ACROSSMALL Shinkamagaya”
is located, registers as “emergency communal wells” the wells thatcan provide well water to local residents when tap water supply
is cut off in the event of a major
earthquake or other disasters. In
agreement with the intent of thisprogram, DHR has registered thegroundwater used at the property
as an emergency communal well.

FOLEO Ome Imai

Support for Community Activities
Some retail properties owned by DHR host events as one form of
support for community activities.
The Asset Manager supports community co-creation activities;
partly through “Community Co-Creation Leave Program,” it hasestablished to facilitate employees’ participation in activities that
contribute to society, training for such activities, and other suchendeavors. Community co-creation activities supported by the AssetManager include (1) preservation of the natural environment (litter
pickup activities, recycling movements), (2) education and youth
development (school visits, experiential learning programs, athleticcoaching), (3) social welfare (elder/juvenile/disabled welfare), (4)international cooperation (overseas volunteering, foreign language
interpreting, etc.), (5) volunteer training and required credentialing
programs (classes in invalid care skills, sign language), (6) community
outreach (neighborhood association events), and (7) disaster relief
activities.

Castalia Meguro Kamurozaka
To make effective use of the party room (about 65 m2), the AssetManager consulted with Shinagawa Ward Council of Social Welfare
and started providing the place to hold a children’s cafeteria in
December 2022. The children’s cafeteria is a social welfare activity thatprovides a warm social gathering place forthe children and residents of the community,
as well as inexpensive and nutritious meals.
DHR and the Asset Manager support local
activities by acting as a bridge between local
residents, children, and organizers of thechildren’s cafeteria.

DHR has entered into an “Agreement on Cooperation in Providing
Parking Lots in Event of Disaster” with Ome City, Tokyo. Thisagreement stipulates that the parking lot of the FOLEO Ome Imaicommercial facility will be opened free of charge to local residents
and others as an emergency evacuation site for vehicles of local
residents and others in the event of a disaster (linear precipitation
zone, typhoon, or other heavy rainfall event that has occurred or is
likely to occur) in the area of Ome City.
The property has 209 flat parking spaces and 143 rooftop parking
spaces, of which approximately 70 rooftop parking spaces are
subject to being free of charge.
The property is located near the Ome Interchange on the Ken-O
Expressway, with the JR Ome Line to the west and the JR HachikoLine to the east, in an area with a concentration of large-scalecommercial facilities and excellent access. In addition, according to
the “Ome City Disaster Prevention Map,” the property is outside theexpected inundation zone in the event of storm and flood disasters,
making it a suitable emergency evacuation site. By taking advantageof these characteristics of the property, we aim to contribute to the
local community by collaborating with the local government regarding
measures against storm and flood disasters, etc.

Countermeasures Against Large-scale Flooding
DPL Nagareyama I
DHR has entered into an “Agreement on Use as Temporary
Evacuation Facility in Event of Disaster” with Nagareyama City,
Chiba. This agreement allows the city to use DHR property DPL
Nagareyama I as a temporary evacuation facility for nearby residents
and others in the event of large-scale flooding or other disaster.
The purpose of this agreement is to ensure safety in the event that28

the Edogawa River, which runs through the city, overflows due totorrential rains, etc., by temporarily taking in nearby residents andemployees of companies in the Nagareyama Industrial Park until anevacuation center can be opened.
The latest BCP measures have been implemented at DPL
Nagareyama I, including a seismic isolation structure and back-up
power supply. The on-site parking lot, vehicle passageways on eachfloor (total floor area of 3,000 m2 per floor), the cafeteria, and daycare
center can serve as temporary shelters for up to 1,200 people in theevent of a disaster, and it also keeps emergency supplies for 500
people.
In addition, there are ramps for accessing the vehicle passagewayson each floor, and these can be used by evacuees arriving by car to
get to the top floors while remaining in their cars. This allows quick
evacuation, and with evacuees remaining in their cars, it can preventthe spread of infectious disease.

Business Continuity Plan (BCP)
DHR has enhanced BCP response from a wide range of perspectives
so that tenants, users, and people in the local community can use
these safe and comfortable facilities.

D Project Machida, D Project Kuki III, DPL Misato,
and DPL Nagareyama I
Seismic isolation structures* have been put in place not only tominimize load and facility damage in the event of a disaster but also
to maintain building functions. These seismic isolation structures
reduce vibrations to suppress shaking on upper floors and allow
operations to restart in a short time.
*The seismic isolation structure reduces the transmission of seismic forces to the building byinstalling rubber laminations or other seismic isolators between the ground and the building.

GRANODE Hiroshima
In addition to the installation of a seismic structure*, GRANDOE
Hiroshima has emergency power generators that can supply 72
hours of power as well as a generator space for tenants.
*The seismic structure reduces shaking by installing dampers, etc., to absorb the shaking
within the building.

ForwardMessage from
the Management

Sustainability Report 2024

Sustainability

SPecial Features

Environment

SocialGovernance

FinanceRelevant Data

Back

Initiatives for Tenants and Supply Chain
Policy and Basic Approach
DHR and the Asset Manager believe that the improvementof the workplace environment leading to tenant health andwellbeing is essential not only to ensure tenant satisfaction andmaintain rental income, but also to manage tenant welfare risks
arising from the use of the building. We believe that healthybuilding features not only have a direct impact on tenant
health and comfort but also have indirect impacts, such asincreasing intellectual productivity, which in turn increases tenantsatisfaction and engagement.

KPIs and Main Initiatives
Aiming to improve the environmental performance of properties
through a collaborative effort with tenants, DHR is promoting
the introduction of green leases. In a green lease agreement, thebuilding owner and the tenants jointly cooperate by proactively
entering into agreements and memorandums of understanding
regarding the reduction of the environmental burden of theproperty, such as through energy savings, and the improvement of
the workplace environment leading to tenant health and wellbeing,
and by putting the details of these undertakings into practice.

Percentage of Green Lease Agreements Signed
99.3%

222 properties(As of March 31,
2024)

Target 100%
(FY2030)

Actual 99.3%(As of March 31, 2024)

Tenant Health and Well-Being Initiatives
In some of the properties owned by DHR, we are implementing thefollowing energy-saving and other measures to reduce environmental
impact and improve the working environment for the health and wellbeing of tenants.
• Indoor air quality • Water quality • Lighting control and daylight utilization• Physical exercise • Thermal environment comfort • Noise control• Medical and mental health • Accessibility • Humidity • Illuminance

Tenant Engagement Programs
DHR and the Asset Manager promote sustainability initiatives
in cooperation with tenants of its properties. By distributing asustainability guide that summarizes information such as theSustainability Policy of the Asset Manager and environmental
certifications to tenants and posting it at the properties, we share thesocial issues with the tenants
and promote initiatives.
At some properties for which
a green lease agreement has
been concluded, DHR regularly
confers with tenants in theaim of sharing environmental
information and reduction
Sustainability Guidetargets.
Sustainability Policy

Initiatives to Increase Tenant Satisfaction
DHR regularly conducts surveys to grasp tenants’ needs andsatisfaction in the belief that increasing tenant satisfaction leads tostable and improved property-operating performance.
The questionnaire results are shared with property managementcompanies and used to improve building and facility specifications
and services.

Supply Chain Management
Daiwa House Group conducts business with the belief that its
suppliers are important business partners. Daiwa House Group
believes that we can provide quality that satisfies our customers byforming an extensive supply chain that includes manufacturers ofmaterial and equipment, construction, and after-sale services.
The requirements of institutional investors and NGOs for companies
to engage in environmental and social initiatives have expanded toinclude not only the company and corporate group but also supply
chain management. Even in international rules and stock exchange
guidelines, the requirements for group CSR procurement initiatives
and informational disclosure are becoming even stricter. The era
the world is entering demands satisfying both social factors such as

29

human rights considerations and expectations for quality and price tobe competitive.
The Daiwa House Group strives to realize a sustainable society
through the promotion of CSR procurement together with its
suppliers.

Supply Chain Sustainability Guidelines
Our Supply Chain Sustainability Guidelines set forth seven social andenvironmental principles via a “Business Partner Code of Conduct.”
In addition, based on this code of conduct, our “Corporate Activity
Guidelines” elucidate 42 specific social and environmental items.
The “Business activities with high ethical standards” requirement in
the “Business Partner Code of Conduct” stipulates that business
partners are expected to act ethically and in full compliance with laws
and regulations.
Where the code of conduct requires “considerations for occupationalsafety and health,” business partners are expected to concern
themselves about health and safety, by preventing industrial
accidents, assiduously managing sanitation and hygiene, and being
prepared for unforeseeable events like natural disasters. Our section
on “fair business activities” requires our business partners to takeanti-corruption measures in order to keep business free of graft
and corruption. Furthermore, the section on “respecting humanrights” outright disavows forced labor, child labor, harassment andinfringements of human rights by way of discrimination, etc.
The Asset Manager requires the property management companies
to implement the Supply Chain Sustainability Guidelines, whichis reflected in the annual assessment of property managementcompanies.
Supply Chain Sustainability Guidelines

Supplier-related Violations and Accidents
There were neither significant supplier-related violations nor accidents
at DHR’s properties that would affect stakeholders. (Fiscal year
ended March 2024)

ForwardSustainability Report 2024

Message from
the Management

Sustainability

SPecial Features

Environment

SocialGovernance

FinanceRelevant Data

Back

Investor Relations Initiatives
Disclosure Policy

Policy and Basic Approach

Information Disclosure System

DHR endeavors to ensure transparency in its asset management
operations and disclose information that is easy to understandin a fair, timely, and accurate manner so that investors canmake investment decisions in accord with the principle of selfresponsibility. DHR discloses information in compliance withthe rules set forth by the Financial Instruments and ExchangeAct, the Act on Investment Trusts and Investment Corporations(hereinafter referred to as the “Investment Trusts Act”), the Tokyo
Stock Exchange, and Investment Trusts Association, Japan, etc.
DHR also endeavors to proactively disclose even information notlegally or otherwise required for disclosure if the information isdeemed likely to influence investors’ investment decisions.

As for DHR’s timely disclosures, the Fund Management Department of the Daiwa House REIT Division of the Asset Manager is the department
responsible for disclosing information, and the General Manager of the department is responsible for handling information. Additionally, in orderto monitor the appropriateness of timely disclosure operations, the Compliance Department verifies the disclosure materials along with the time,date, and method of disclosure, and other relevant items immediately following timely disclosure. The result is then reported to the DHR Board of
Directors.

Method of Timely Disclosure
Timely disclosures are carried out by posting the information on the Timely Disclosure network (TDnet). Disclosure materials are also posted on
DHR’s website on the same day.

Feedback on Opinions Received through IR Activities
Opinions and requests pertaining to our sustainability initiative received through dialogue with unitholders and investors are reported to theBoard of Directors of the Asset Manager and the DHR Board of Directors twice annually, and timely and appropriate feedback is provided to the
management personnel in an effort to further increase our corporate value.

KPIs and Main Initiatives
Completed IR Activities(including online meetings and telephone/web conferences)(April 2023–March 2024)

Results briefings for domestic institutional
investors and analysts

IR meetings for domestic institutional investors
and analysts

2 times

165 times

IR Activities
The following is DHR’s IR schedule.
•C losing: February, August•A nnouncement of financial results: April, October•R esults briefings: April, October emi-Annual Report sent out: May, November•S
Disclosure materials

General Meeting of Unitholders
IR meetings for international institutional investors

52 times

DHR disclosed “Summary of Resolutions of the 14th General Meeting of Unitholders (Reference)” relating to the 14th General Meeting of Unitholders
held in November 2023 as the first initiative for DHR.
Disclosure materials

30

ForwardGovernanceCompliance 

32

Corporate Governance 

33

Risk Management 36

Sustainability Report 2024

Message from
the Management

Sustainability

SPecial Features

Environment

SocialGovernance

Finance

Back

Relevant Data

ForwardCompliance
Policy and Basic Approach
The Asset Manager has established the following compliancerelated guidelines in its internal Compliance Manual.
1. The Asset Manager is committed to thorough compliance as

System for Promoting Compliance
The Asset Manager realizes compliance through the following system.
Organization/Title and post

Main role

Board of Directors(1) E stablish and revise compliance manuals and compliance programs as the decision-making body on fundamental matters related
to promoting compliance.
(2) Ask for reports on progress made on compliance from the Compliance Officer as necessary.

a fundamental management principle based on the realizationthat trust is its greatest asset and a keen awareness thatcompliance deficiencies can impair trust and, in turn, evenCompliance Committee
President and CEO

Compliance Officer(1) Conduct overall compliance planning, drafting, and promotion as the head of compliance.
(2) P romptly report to the President and CEO and provide necessary suggestions or instructions to relevant departments wheneverproblems in the context of compliance arise or are likely to arise.
(3) Independently review from a compliance standpoint transactions and decisions pertaining to management of DHR’s assets, as an entity
independent of the Asset Manager’s other internal organizations, without being influenced by other internal organizations’ judgments.

Compliance Department

Engage in work related to compliance promotion, internal audits, verification of risk management, and more under the supervisionof the Compliance Officer

undermine its management foundation.
2. Recognizing the importance of its societal mission andresponsibilities in the national economy as an asset manager
that manages investment corporations’ assets, the AssetManager will ensure compliance proactively and unremittingly.
3. By putting compliance into practice, the Asset Manager will

In principle, convened monthly and as necessary by the Compliance Officer for discussion of the agenda from the standpoint of compliance.
(1) Supervise introduction of basic compliance policies and programs.
(2) Report to the Board of Directors on progress made on compliance at least every quarter and as necessary.

contribute to the sound development of the economy andsociety, thereby elevating our reputation among investors andbroadly gaining societal trust.

Establishment and Practical
Implementation of Compliance Manual
The Asset Manager has established a Compliance Manual in theaim of increasing the soundness and reliability of its management
and organization as an asset manager that manages DHR’s asset
management operations and, in turn, earning the trust of unitholders
and society by prescribing not only fundamental compliance-related
principles by which its officers and employees should abide but also
specific practical matters.

Basic Policy on Fair Trade
The Daiwa House Group’s “Daiwa House Group Principles ofCorporate Ethics and Code of Conduct” clearly state that “we shallfollow the principles of competition in a fair and free market” and“we shall not engage in any acts that impede the principles of free
and fair competition, such as cartels and bid riggings, or exchange
information, or hold any meetings or contacts that could lead tosuspicion of such acts,” and all officers and employees share theawareness to comply with the Antimonopoly Act (Act on Prohibitionof Private Monopolization and Maintenance of Fair Trade) and the
Subcontract Act (Act Against Delay in Payment of Subcontract
Proceeds, etc. to Subcontractors).

32

Neither DHR nor the Asset Manager makes any contributions
or disbursements to political campaigns, political organizations,lobbyists, or lobbying groups.
Fiscal year Fiscal year Fiscal year Fiscal year Fiscal year
ended
ended
ended
ended
ended
March
March
March
March
March
2020
2021
2022
2023
2024

Total contributions to and expenditures onpolitical campaigns, political organizations,lobbyists, lobbying groups, etc. (yen)

0

0

0

0

0

Conducting Compliance Assessments
The Asset Manager considers the following factors regarding
employee compliance when evaluating performance (compensation).
<Evaluation 1> Understanding and implementing the Compliance Manualand Compliance Program<Evaluation 2> (1) Appropriate information management,(2) Response to antisocial forces,(3) Response to interested party transactions

Issues Concerning the Asset Manager
No material issues related to bribery, corruption, discrimination,harassment, private customer data, conflicts of interest, money
laundering, and insider trading affecting stakeholders have occurredat the Asset Manager (FY2023).

Sustainability Report 2024

Message from
the Management

Sustainability

Environment

SPecial Features

SocialGovernance

Finance

Back

Relevant Data

ForwardCorporate Governance
DHR Directors (As of March 31, 2024)

Management Structure
Compliance
Committee

Female director ratio

Average tenure33%

4.3 years

Chair: Compliance Officer
Members: Full-time Directors, officers and employees designated by the President approved by the Chair, outside experts

Members
Function and role

Daiwa HouseREIT Investment
Management
Committee

Sustainability Committee

Deliberating and resolving on compliance in the context of operational and internal management
Chair: Head of Daiwa House REIT Division
Members: F ull-time Directors (except those in charge of the Private Fund Division), General Manager of the Investment
Department, General Managers of the Fund Management Department and Asset Management Department of
the Daiwa House REIT Division, officers, and employees designated by the President approved by the Chair, andoutside experts
Observer: Compliance Officer

Members

Function and role

Deliberating and resolving on the validity and other attributes of DHR’s asset management operations

Outside Expert Advisor of the Sustainability Committee
The Asset Manager has appointed an outside expert advisor who has extensive knowledge and experience in sustainability to the Sustainability Committee.
Name

GenderMain concurrent positions

Attendance at Sustainability Committee
meetings in the 35th & 36th periods

Emi Matsukawa

Femalepersonnel

Representative Director, General Incorporated Association Collective Action
Outside Advisor, PRONEXUS Inc.
Senior Manager, General Incorporated Association CDP Worldwide-Japan

100% (12/12)

Handling of Conflict-of-interest Transactions
Policy and Management Structure for
Addressing Conflict-of-interest Transactions

Attendance

Rejection
Discarded

Approval

Rejection
Discarded

Decision on acquisition

RemandDisagreement

Specialresolution

DHR Board of Directors

Disagreement

Unanimous
approval

Report on results Attendanceof deliberation

Board of Directors

Unanimous
approval

AttendanceCompliance Committee

Presentation of
investment value
analysis results

Attendance

Daiwa House REIT Investment
Management Committee

33

Compliance Officer

RemandDaiwa House REIT Division
Investment Department

The Daiwa House Group could significantly influence thedecision-making of the Asset Manager and DHR. It is a
close partner with the deepest understanding of the basic
concepts of DHR. DHR recognizes that proper coordination
with these companies is a means to carry out our asset
management operations more effectively.
On the other hand, close relationships among companies
are in fact conducive to acts that potentially pose conflicts ofinterest. Recognizing that preventing conflicts of interest with
the Daiwa House Group and other interested parties is oneof the top compliance priorities in the asset management
operations, DHR and the Asset Manager have establishedthe following control system.

Flow of Decision-making with respect to Acquiring
Assets from Interested Parties

Message from
the Management

Sustainability Report 2024

Sustainability

Environment

SPecial Features

SocialGovernance

FinanceRelevant Data

Back

Corporate Governance

DHR Directors: Status and Remuneration
We promote a diverse Board of Directors at DHR based on the idea that diversity is important.
The maximum monthly compensation for an Executive Director shall be ¥800,000, and that for a Supervisory Director shall be ¥350,000. The Board of Directors will determine the compensation amounts deemed reasonable inlight of trends in general commodity prices, wages, and the like.
The criteria for payment of compensation of Executive Directors and Supervisory Directors are stipulated in the regulations, and any changes must be approved at a General Meeting of Unitholders.

Title and post

Name

GenderIndependent
officer(Note 1)

Executive
Director

Supervisory
Director

Supervisory
Director

Executive
Director

Tsuyoshi
Saito

HiroshiIshikawa

Junko
KogayuToshiharu
Asada

Male
personnel

Malepersonnel

Femalepersonnel

Malepersonnel

Experience & expertise (Note 2)
Corporate
Real EstateManagement











Legal &
Risk
Compliance Management













Main
qualifications

Attendance at Board of
Directors meetings in
the 35th & 36th periods

Director remuneration in
the 35th & 36th periods



Tsuyoshi Saito has a wealth of experience in overallbank management and finance, as well as extensive
knowledge of domestic and international financial andeconomic conditions. He was elected as Executive
Director based on his appropriate judgment pertaining to
execution of business operations as well as his characterand knowledge. There is no special interest relationshipbetween him and DHR.

–

100%
(4/4)

¥1,260 thousand(including ¥60 thousandin sustainability
index-linked fees)

Hiroshi Ishikawa is familiar with laws and regulations as
an attorney-at-law. In addition, he has experience as an
outside director at a listed company. He was elected
as Supervisory Director based on the judgment that hepossesses the good character and knowledge necessary
to supervise the execution of duties by Executive Director
as a Supervisory Director and to perform his duties as amember of the DHR Board of Directors.

Attorney100%(14/14)¥4,200 thousandJunko Kogayu is familiar with accounting and tax matters
as a certified public accountant and tax accountant. In
addition, she has experience as an outside director and audit& supervisory committee member at a listed company. She
was elected as Supervisory Director based on the judgmentthat she possesses the good character and knowledge
necessary to supervise the execution of duties by Executive
Director as a Supervisory Director and to perform her duties
as a member of the DHR Board of Directors.

Certified public
accountant,
tax accountant

100%(14/14)¥4,200 thousand

Toshiharu Asada has a wealth of operational experienceand knowledge not only in general finance but also inreal estate. He was elected as Executive Director basedon his appropriate judgment pertaining to executionof business operations as well as his character andknowledge.

–100%(10/10)¥3,780 thousand(including ¥180 thousandin sustainability
index-linked fees)

Sustainability









Finance &Accounting

Reason for election(Note 1) The Supervisory Directors of DHR are “independent officers” who are not in conflict with the criteria for independence from Executive Officers and the Asset Manager as stipulated in the Investment Trusts Act.
(Note 2) The table shows the leading skills at which each Director excels compared to others, not necessarily all of their knowledge and experience.
(Note 3) The Executive Director and Supervisory Directors do not hold investment units of DHR under their own or another person’s name.
(Note 4) Former Executive Director Toshiharu Asada retired on November 30, 2023, and on December 1, 2023, Tsuyoshi Saito was newly appointed as Executive Director.
(Note 5) In regard to the liability set forth in Article 115-6, Paragraph 1 of the Investment Trusts Act, if a Director has acted in good faith and has not been grossly negligent in performing their duties, and it is deemed necessary considering the underlying facts, the status of the Director’s performance of theirduties, and other such circumstances, DHR may exempt them from liability to the extent allowed by law by resolution of the Board of Directors.

34

ForwardMessage from
the Management

Sustainability Report 2024

Sustainability

Environment

SPecial Features

SocialGovernance

FinanceRelevant Data

Back

Corporate Governance

Sustainability Index-linked Fees

Compensation of the Asset Manager

In November 2021, DHR introduced a provision to fluctuate the amount of asset management fees to the
Asset Manager in conjunction with the sustainability indices as the first initiative in J-REITs for the purposeof increasing unitholder value by encouraging the reduction of GHG emissions of DHR properties andenhancing the external evaluations of its sustainability initiatives.
This is to increase or decrease the amount of asset management fees based on the sum of indexed GHG
emissions reduction ratio, GRESB Rating, and CDP Score multiplied by the total assets of DHR, and is
aimed at strengthening the commitment to solving sustainability issues and improving governance.
Furthermore, remuneration for Executive Director of DHR and remuneration for directors of the AssetManager are also linked to sustainability indices including GHG emissions reduction ratio, GRESB Rating,and CDP Score.

Amount of compensation
Name

Management fee 1(linked to assets)

Management fee 2Management fee 2

NOI ×(linked to NOI)

(linked to sustainability indices)

0.18%

Total

Ernst & Young
ShinNihon LLC

Method of Calculating Sustainability Index Multiple

0.8(a): GHG emissions intensity in fiscal year ended March 2018 (April 2017 - March 2018) 0.0556 (t-CO2/m2)(b): GHG emissions intensity in the immediately preceding fiscal year (April - March) (t-CO2/m2)

1.0

D0.6

D
0.7

C0.8

C
0.9

1.1

B1.0

¥1,042,789 thousand¥71,928 thousand¥71,833 thousand¥20,585 thousand¥33,380 thousand¥1,937,402 thousand¥1,965,950 thousand

Compensation based on
auditing duties
Compensation based on
non-auditing duties

B
1.1(Note 2) The continuous auditing period is from June 2005 to the present.
(Note 3) Compensation is for preparation of comfort letters.

1.2

A1.2

35th period(Fiscal period ended
August 31, 2023)

36th period(Fiscal period ended
February 29, 2024)¥17,500 thousand¥18,000 thousand¥– thousand (Note 3)¥17,500 thousand¥2,100 thousand (Note 3)¥20,100 thousand(Note 1) Dismissal or non-reappointment of the Independent Auditor shall be discussed at DHR’s Board of Directors pursuant to the provisions of
the Investment Trusts Act for dismissal, taking into full account all relevant factors for non-reappointment such as the quality of audits andcompensation for audits.

* Multiple is determined based on the assessment in the immediately preceding fiscal period.

CDP ScoreMultiple

Description of compensation

Total* GHG emissions reduction ratio: ((b) - (a)) / (a)0.9¥1,020,652 thousand

Amount of compensation
Name(Note 4) The upper limit is 0.004% for the index (3) of Management fee 3.

GRESB Rating
Multiple¥817,946 thousand

The amount of compensation for the Independent Auditor shall be determined by the Board of Directors,
and the maximum shall be ¥25,000 thousand per fiscal period subject to audit.

0.008%× Reduction in GHG emissions(Note 3)
(2) Total assets × 0.002%
× GRESB Rating(Note 4)
(3) Total assets × 0.002%
× CDP Score

1 - GHG Emissions
Reduction Ratio¥824,235 thousand

Compensation of the Audit Firm

4.5% (Note 1)(Note 1) The upper limit is 0.4% for Management fee 1 and 5.0% for Management fee 2.
(Note 2) The upper limit is 0.012% for the index (1) of Management fee 3.
(Note 3) The upper limit is 0.004% for the index (2) of Management fee 3.

GHG

36th period(Fiscal period ended
February 29, 2024)(Note 1)

(Note 2)

(1) Total assets ×Management fee 3

Management fee 3(linked to sustainability indices)

Acquisition/disposition fees

Total assets ×(linked to assets)(linked to NOI)

Daiwa House AssetManagement Co., Ltd.

Asset Management Fee StructureManagement fee 1

Description of compensation

35th period(Fiscal period ended
August 31, 2023)

A
1.3* Multiple is determined based on the assessment in the immediately preceding fiscal period.

35

ForwardSustainability Report 2024

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the Management

Sustainability

SPecial Features

Environment

SocialGovernance

FinanceRelevant Data

Back

Risk Management
Risk Management System
The Asset Manager has prescribed Risk Management Regulations and Risk Management Implementation Guidelines regarding various risks that arise in the course of managing DHR’s assets. It endeavors to manage risk
based on a fundamental policy of comprehensively and accurately identifying risks, qualitatively and quantitatively measuring and appropriately assessing the identified risks’ impacts on operations, formulating risk prevention
measures, monitoring risk management status on an ongoing basis and formulating procedures for responding to risks when they surface.

Board of Directors• Review risk management policies on a regular basis
or as necessary in response to changes in strategic
objectives, etc.
• If deemed necessary, give instructions to theCompliance Officer on how to improve risk
management methods, etc.

Role of President and CEO• Report on the status of risk management to theBoard of Directors on a regular basis or as needed.
• If deemed necessary, request reports from officers
and employees on the status of risks and risk
management, or instruct the Compliance Officer on
how to improve risk management methods, etc.

Organizational chart

Compliance Committee

General Meeting of
Shareholders• Discuss and approve the planning, formulation,
promotion, and verification of the overall risk
management of the Asset Manager

Corporate Auditor
Board of Directors
Sustainability Committee

Compliance Committee

Daiwa House REIT Investment
Management Committee

Private Fund Investment
Management Committee
President and CEO

Sustainability Promotion
Department

Compliance Officer
Compliance Department

Each department• As the person responsible for risk management ineach department, the General Manager of eachdepartment monitors the risk status of the businessunder his or her jurisdiction at an appropriate
frequency and reports the appropriate results to theCompliance Officer at an appropriate frequency.

Response Process When Risk
Information Is Discovered
At the Asset Manager, the process is such that officers
and employees proactively identify and report potential
risks throughout the organization.

Daiwa HouseREIT Division

Fund Management
Department

Risk finder

Administration
and Accounting
Department

Investment
Department

Asset Management
Department

Fund Management
Department

Reports immediately

Private Fund
Division

Asset Management
Department• As the person responsible for the risk managementof the Asset Manager, the Compliance Officer
establishes methods including measurement,
monitoring, and management based on the typeof risk along with the risk management policy andshall develop internal regulations to ensure theeffectiveness of these methods• Report risk information, including the management
status of the risk management system, to the
President and CEO as well as the Board of Directors
on a regular basis or as needed• Verify the appropriateness and effectiveness of therisk management system and the implementation ofrisk countermeasures through internal audits, andreport the results to the Compliance Officer.

General Manager of the Department

Directs countermeasures
General Manager of Department
where risk information was discovered

36

Role of Compliance Officer

Compliance Department(Responsible for risk management) Compliance Officer

Directs initial response• Receive reports from the Compliance Officer as
appropriate on the identification of risk items foreach department and business, evaluation of risk
items, status of proactive measures and controls forrisks, control evaluation and residual risk evaluation,
establishment of additional risk control measures, andverification of risk items and risk control measures.

Reports immediately

President and CEO

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SocialGovernance

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Risk Management

Risk Management Process
The Asset Manager’s risk management is based on the identification, recognition, measurement, monitoring, and reporting of risks in each department, as well as the maintenance of a response system. The risk management
process is as follows.
Evaluation of risk item
Status of proactive measures andcontrols for risks• Each department evaluates risk items, taking into account the likelihood of risk occurrence and the degree of impact• Each department lists the preventive measures that should be taken to prevent each applicable risk item in advance and the status of the current controls in place

Assessment of controls and residual risks• Each department evaluates the control situation and the resulting residual risks

Setting additional risk control measures• Each General Manager establishes additional risk control measures for risk items with a residual risk evaluation level of four or higher

Verifying risk items andrisk control measures
Reporting on risk management• The Compliance Department verifies that each operation is properly implemented• The Compliance Officer compiles the results of their work and reports to the President and CEO in June of each year, as well as to the Compliance Committee and the Board of Directors as appropriate.

Self-checking andverifying risk management• Each General Manager conducts a self-check of risk management status at the end of July and January of each year to determine the progress and effectiveness of implementation.
• The Compliance Department compiles the results of their work, and monitors, verifies, and proposes improvements to the status of countermeasures in each department.
• The Compliance Officer reports to the President and CEO in September and March of each year on the results of each department’s self-check and verification, and also reports to the Compliance
Committee and the Board of Directors as appropriate.

Directions for improving risk
management, etc.

• The President and CEO, the Compliance Committee, and the Board of Directors direct the General Managers of each department to make improvements as necessary based on the results of self-checks.
• The Compliance Officer reports the results of improvements to the President and CEO as necessary, and to the Compliance Committee and the Board of Directors as appropriate.

Reflection in the risk assessment sheet,etc.

• The Compliance Department and each department will reflect the results of self-checks and the status of improvements based on the previous article in the risk assessment sheet as appropriate andutilize them for risk management in the next fiscal year.
High

(6)

(7)

(3)

(4)

(5)

Low

(1)

(2)

(3)

Mid

High

Low

(5)

Mid

(Level of impact)

High

Each department will evaluate risk items, taking into account thelikelihood of risk occurrence and the degree of impact.
The risk evaluation criteria, which consider both the likelihood of
occurrence and the degree of impact, are as shown on the right,
with the impact weighted slightly higher.

Low

Low

(Likelihood of occurrence)

37

High

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Risk Management

Information Security
The Asset Manager recognizes the proper management of
information as an important management challenge and has
established an information security policy as a basic policy to ensure
information security. This policy implements the following items:
1. Preparation of an information security management system
2. Appointment of an information security manager
3. Establishment of internal regulations
4. Information security education
5. Reinforcement of management systems of outsourcing companies
6. Implementation of ongoing improvements
Additionally, the Asset Manager has established IT management
Regulations, which define specific procedures for handlinginformation devices to safely and smoothly manage information
devices and secure the confidentiality and completeness of data, withan aim to fully protect the information handled by the Asset Manager.

Conducting Drills to Respond to Targeted Email Attacks
The Asset Manager draws attention to suspicious emails throughinformation security training conducted each period. However, in aneffort to improve awareness among all officers and employees in amore practical way, the Asset Manager conducts drills for responding
to targeted email attacks. If an officer or employee opens the email
and then opens an attachment or clicks on an embedded link, they
are shown educational content about targeted emails in an effort toverify and improve their awareness of information security.

Receiving Regular Reports from Outside Contractors
on Information Device Operation and Management

Governance on Information Security/Cyber Security
IT-related management (information and cyber security) is
handled by the Asset Manager’s Administration and Accounting
Department, with the Managing Director and General Managerof the Administration and Accounting Department as the person
responsible for IT control.
The person responsible for IT control is responsible for the following
matters.
(1) Supervision of IT-related operations(2) Overall IT management and maintenance rovide guidance and advice to each department on the(3) P
introduction of IT and promote its use(4) Other matters related to the handling of IT
The person responsible for IT control shall verify the IT-related
management system at least once every three months and report
the status of the management system to the Compliance Officer
at each verification. In the event that deficiencies are found in the
IT-related management system, the person responsible for IT control,in consultation with the Compliance Officer, shall review the IT-related
management system.
Decisions and changes in the basic policy of the system architecture
are subject to the approval of the Board of Directors.
Risks related to information and cyber security are handled by the
Administration and Accounting Department, which assesses risks
using the risk assessment sheet and reports on control measuresand other matters to the Compliance Committee, of which theManaging Director and General Manager of the Administration andAccounting Department is a member, as well as to the Board of
Directors and the DHR’s Board of Directors.

The Asset Manager has established IT management Regulations
and Information Device Operation and Management Guidelines, andwhen it contracts the operation and management of information
devices to an outside contractor, the person responsible for IT control(General Manager of the Administration and Accounting Department)
receives quarterly reports on information device operation from thecontractor.

Internal Rules on Information Security/Cyber Security
At the Asset Manager, the internal rules require that, depending on
the circumstances, an employee be reprimanded, reduced in pay,barred from work, suspended, or demoted/reduced in rank, if any of
the following applies to the employee.
(1) L eaking or attempting to leak Company secrets outside theCompany, or obtaining Company or other company secrets
through improper means(2) U sing company computers in violation of company regulations
or other instructions, infecting them with computer viruses orotherwise interfering with business operations, or using them forunauthorized purposes outside of work and similarly interferingwith business operations(3) U nauthorized entry into the Company’s network or hacking
activities(4) U sing the Internet or e-mail for inappropriate purposes with anaccount lent by the Company

Conducting Third-party Vulnerability Analyses
At the Asset Manager, third-party vulnerability analyses conductedat the Daiwa House Group are conducted twice a year to confirm
the current security status and implement appropriate measuresin response to current issues, thereby mitigating risks such as
information leaks.

Information Security-related Problems
There were no serious problems related to information security at theAsset Manager that would influence stakeholders. (Fiscal year ended
March 2024)
Information Security Declaration (Basic Policy)

38

ForwardFinance

Sustainability-Linked Bonds 40Green Finance 

41

Sustainability Finance 42

Sustainability Report 2024

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ForwardSustainability-Linked Bonds
Overview of DHR Sustainability-Linked Bonds

Policy and Basic Approach

Overview

Business value (economic value)

Name
Issue date

Structure
Rate adjusted according to SPT judgment

18th Unsecured Investment Corporation Bonds(Sustainability-Linked Bonds)(also referred to as “DHR Sustainability-Linked Bonds”)
May 25, 2022

Issue amount ¥4 billion

Social value (non-financial value)Term

7 years

SPT

DHR to be named on “A List” (highest recognition) in CDP
Climate Change Program

SPT
achieved

Interest rate decreases
after judgment+0.025%

CDP score of “B” or lower+0.010%

CDP score of “A-”

-0.025%

CDP score of “A”(May 26, 2022–May 25, 2023)

Interest rate after SPT assessment: Based on level ofachievement as shown on the table below

Schedule of SPT judgments and adjustments to interest rates(on and after May 26, 2023)

2023

2024

Apr.
Judgment

Duration of post-judgment adjusted interest rate
Repeat until redemption

Assessment of
Qualification

Bond
FeaturesFirst-everIssuing entity

E
S

Annual performance-type

CDP Climate Change Program

G

Finance

KPI
18th Unsecured Investment Corporation Bonds(Sustainability-Linked Bonds)(also referred to as “DHR Sustainability-Linked Bonds”)• By achieving growth in both business and social value, thesebonds will further advance the growth strategy of DHR—tomaximize unitholder value

Investors

Interest
payment• They are a new initiative wherein the results of sustainability
initiatives are reflected in the form of economic value, namely
the bonds’ interest rate

Investment• Sustainability-Linked Bonds have conditions that depend onwhether the prescribed sustainability target has been achieved

Interest rates
adjustedaccording to
SPT judgments

The CDP Climate Change Program assesses thelevel of companies and cities’ efforts to combat
climate change. The CDP scores applicants’
responses to a questionnaire based on quantitativeand qualitative criteria and provides its final
assessment in the form of one of nine grades (A, A-,
B, B-, C, C-, D, D-, F).

SPTDHR named on “A List”(highest recognition)

DHR chose this SPT based on the belief that using the
CDP Climate Change Program—recognized as a highquality external evaluation that reflects the latest global
trends and what stakeholders want—for the SPT
would contribute to improving unitholder value throughthe promotion of the sustainability initiatives of DHR.

Here are the names of investors that havedeclared their intent to invest in these
Sustainability-Linked Bonds.

40

Verification organization
Verification ofconformity, etc.

Third-party
written
opinionMay Interest payment

Mar.

Jan.

Feb.

Dec.

Oct.

Nov. Interest payment

Sept.

Sustainable
Finance

A ratingJuly

A rating

2025
Aug.

Judgment

Duration of post-judgment adjusted interest rate

• Sustainability Performance Target (SPT): A prescribed sustainabilityrelated target.

June

Apr.

May Interest payment

Mar.

Jan.

Feb.

Dec.

Oct.

Judgment

Nov. Interest payment

Sept.

July

Aug.

June

Apr.

May Interest payment

Interest rate
0.550% per annumA(-2.5 bp from initial interest rate)
0.585% per annum
A(+1 bp from initial interest rate)
0.600% per annum
B, B-, C, C-, D, D-, F(+2.5 bp from initial interest rate)Mar.

CDP ScoreJan.

Interest rateFeb.

• DHR’s sustainability initiatives in the context of investment
corporation bonds include issuing environment-related green
bonds since 2019 and sustainability bonds, which are related
to both the environment and society, in 2021. Additionally, as
a new sustainability initiative in the context of finance, DHR
issued Sustainability-Linked Bonds in 2022.
• DHR will continue to promote sustainability initiatives andmeet demand from experienced ESG investors with the aimof further expanding the investor base and securing a stablemeans of financing.

Annualjudgment

Interest rate increases
after judgment

Initial interest rate: 0.575% per annum

Maximization of unitholder value
Issuance of Our First Sustainability-Linked Bonds
to Promote ESG Strategy in Terms of FinanceInitialinterest rate

SPT notachieved

For DHR to issue these Sustainability-Linked
Bonds, it undergoes verifications by theJapan Credit Rating Agency, Ltd. (JCR) of its
conformity to “Green Loan and Sustainability
Linked Loan Guidelines (2020 Version)”
by Japan’s Ministry of the Environment,“Sustainability-Linked Bond Principles (2020
Version)” by the International Capital Market
Association (ICMA), and the like.

Sustainability Report 2024

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Green Finance
The Daiwa House Group’s basic approach is “Creating Dreams, Building Hearts.” As a group that co-creates value for individuals, communities and people’s lifestyles, the group aims to build trust relationships with stakeholders
and contribute to society through its businesses, and to realize a sustainable society by meeting the challenge of achieving “zero environmental impacts.”
DHR shares the basic stance of the Daiwa House Group and engages in Green and Sustainability Finance to further promote real estate investment management that considers ESG.

Green Finance Framework

ReportingThird-party Evaluation

Reporting on Status of Green Finance Fund Allocation

DHR has obtained a rating of “Green 1 (F)” for our Green Finance

Balance (millions of yen)

Framework. This is the highest rating offered in JCR Green Finance
Framework Evaluations conducted by the third party, Japan Credit Rating

Green Finance

28,500

Green Bonds

15,000Agency, Ltd. (JCR).

Green Loans

13,500For details on this evaluation, see the JCR website athttps://www.jcr.co.jp/greenfinance/* Balance as of February 29, 2024.

The following table provides information about DHR’s status of fund allocation regarding Green Finance.

Green Bonds

Eligibility Criteria

NameFunds procured through Green Bonds or Green Loans are applied to theacquisition of eligible green assets that meet the eligibility criteria below,
refinancing of those funds or funding or refinancing renovation work.
Green Finance Eligibility Criteria

Management of Financing
The eligible green debt amount is calculated by multiplying the sum of
the total acquisition price of eligible green assets and the total amount ofrenovation work that meets the eligibility criterion 2 (total amount of eligible
green assets) by the interest-bearing debt to total assets ratio (LTV) as of theend of the most recent fiscal period. This is the maximum amount for Green
Finance.
Period36th period(Fiscal period ended February 29, 2024)

Total amount of eligible green assets¥393,819 million

LTV

42.8%

Eligible green debt amount¥168,555 million

Outstanding issue(millions of yen)

9th Unsecured Investment
Corporation Bonds
10th Unsecured Investment
Corporation Bonds
11th Unsecured Investment
Corporation Bonds
12th Unsecured Investment
Corporation Bonds
14th Unsecured Investment
Corporation Bonds

Interest rate

Issue date

Unallocated amount(millions of yen)

Maturity

6,000

0.53%

November 25, 2019

November 22, 2029

—

2,400

0.34%

May 27, 2020

May 27, 2025

—

1,600

0.64%

May 27, 2020

May 27, 2030

—

1,000

1.00%

May 27, 2020

May 25, 2040

—

4,000

0.50%

April 15, 2021

April 15, 2031—

Third-party evaluation
JCR Green Bond Evaluation“Green 1”
JCR Green Bond Evaluation“Green 1”
JCR Green Bond Evaluation“Green 1”
JCR Green Bond Evaluation“Green 1”
JCR Green Bond Evaluation“Green 1”

Green Loans
Loans executedand outstanding(millions of yen)Interest
rate

Borrowingdate

Repayment
date

Unallocatedamount(millions of yen)

Third-party evaluation

10,5000.56419%

September 3,
2021

August 29,
2031—

JCR Green Loan Evaluation“Green 1”

The Dai-ichi Life Insurance Company, Limited

1,000

1.40000%

September 29, September 30,
2023
2033

—

JCR Green Loan Evaluation“Green 1”

SBI Shinsei Bank, Limited

1,000

1.30087%

October 2,
2023

March 31, 2032—

JCR Green Loan Evaluation“Green 1”

Kansai Mirai Bank, Limited

1,000

1.30087%

October 2,
2023

March 31, 2032—

JCR Green Loan Evaluation“Green 1”

LenderSumitomo Mitsui Banking Corporation
MUFG Bank, Ltd.
The Development Bank of Japan Inc.
SBI Shinsei Bank, Limited
Kansai Mirai Bank, Limited
The Bank of Kyoto, Ltd.

Sumitomo Mitsui Trust Bank, Limited
Mizuho Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.
The Yamanashi Chuo Bank, Ltd.
Shinkin Central BankThe Yamaguchi Bank, Ltd.

Impact Reporting
DHR will annually disclose the following indicators on its website for as long as the funds procured through green finance are outstanding.
•N umber and type of environmental certifications of portfolio assets•W ater consumption•E lectric power consumption(energy consumption)

Environmental Certifications41• CO2 emissions (GHG emissions)
Relevant Data (1 of 2)

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ForwardSustainability Finance
Sustainability Finance Framework

ReportingThird-party Evaluation

Reporting on Status of Sustainability Finance Fund Allocation

DHR has obtained a rating of “SU1 (F)” for our Sustainability Finance

Balance (millions of yen)

Framework. This is the highest rating offered in JCR Sustainability

Sustainability Finance

4,000

Finance Framework Evaluations conducted by the third party, Japan

Sustainability Bonds

4,000

Sustainability Loans—

Credit Rating Agency, Ltd. (JCR).

* Balance as of February 29, 2024.

The following table provides information about DHR’s status of fund allocation regarding Sustainability Finance.

For details on this evaluation, see the JCR website athttps://www.jcr.co.jp/greenfinance/

Sustainability Bonds

Eligibility Criteria
Funds procured through Sustainability Bonds or Sustainability Loans
are applied to the acquisition of eligible sustainability assets that meetthe sustainability eligibility criteria below or refinancing of those funds.

Name

Outstanding issue(millions of yen)Interest
rate

Issue date

Maturity

Unallocated amount(millions of yen)

Third-party evaluation

15th Unsecured Investment
Corporation Bonds

3,000

0.40%

November 17, 2021

November 17, 2031—

JCR Sustainability Bond Evaluation “SU1”16th Unsecured Investment
Corporation Bonds

1,000

0.66%

November 17, 2021

November 17, 2036—

JCR Sustainability Bond Evaluation “SU1”Impact Reporting
DHR will annually disclose the following indicators on its website for as long as the funds procured through sustainability finance are outstanding.

Sustainability Finance Eligibility Criteria

1. Environment improvement effect• Number and type of environmental certifications of acquired assets

Management of Financing— Water usage (water consumption)— Power usage (energy consumption)

Environmental Certifications

The eligible sustainability debt amount is calculated by multiplying
the sum of the total acquisition price of eligible sustainability assets

2. Social benefit

by the interest-bearing debt to total assets ratio (LTV) as of the end(1) Output index

amount for Sustainability Finance.
Period36th period(Fiscal period ended February 29, 2024)

Total amount ofsustainability eligible assets¥120,990 million

Total number of indices

Number of sustainability eligible assets

7

Eligible sustainability debt amount

42.8%¥51,784 million

Relevant Data (1 of 2)(2) Outcome index(i) Local disaster prevention
and resilience(As of February 29, 2024)

Index

Total numberof indices

Number of properties that have concluded disasterprevention agreements with local governments, etc.

3

Number of properties that provide an evacuation
shelter in the event of a disaster3

Number of other properties contributing to local
disaster prevention
LTV• CO2 emissions (GHG emissions)(As of February 29, 2024)

Indexof the most recent fiscal period. This is the maximum procurement• Specific consumption(ii) C are and medical services Number of units available at facilities for senior citizens
for senior citizens andNumber of medical facility tenants
people with disabilities

Index

Total numberof indices(iii) S upport for child rearing

Number of children acceptableat certified childcare facilities

433(iv) J ob creation for projects
to help resolve local social
issuesEmployment status of local
residents at applicable facilities

1

3
156
14

(3) Impact
Co-creation of value for individuals, communities, and people’s lifestyles by revitalizing local environments and building safe and secure local
communities

42

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Relevant Data

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Relevant Data (1 of 2)
GHG Emissions of DHR
Scope 1
Scope 2 (market-based)
Scope 3
Total GHG emissions

Status of Environmental Certifications for the Portfolio

Unit: t-CO2

Logistics properties

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
March 2021
March 2022
March 2023
March 2024
115
551
525
364
7,094
61
48
0
114,932
137,720
145,313
161,698
121,141
138,332
145,886
162,062

GHG Emissions by Category (Scope 3)
Boundary: DHR, owned properties

Unit: t-CO2

1. Purchased goods and services
2. Capital goods
3. Fuel- and energy-related activities not included in Scope 1 or Scope 2
Upstream 4. Upstream transportation and distribution
5. Waste generated in operations
6. Business travel
7. Employee commuting
Downstream 13. Downstream leased assets

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
March 2020
March 2021
March 2022
March 2023
March 2024
202
160
45
8,609
9,651
14,906
18,31029,694
8,443
13,115
990
1,067
1,124
1,095
1,137
3
3
2
2
2
24
130
164
156
204
0
0
0
0
0
0
0
0
0
0
83,053
95,263
106,690127,008
137,588

GHG Emissions of Portfolio Properties
Number of properties
Scope 1
Scope 2 (location-based)
Scope 2 (market-based)
Scope 3 (only from fuel/electricity consumption
associated with tenant-managed assets)
Scope 1+Scope 2 (location-based)
Scope 1+Scope 2 (market-based)
Scope 1+Scope 2 (location-based) + Scope 3
Scope 1+Scope 2 (market-based) + Scope 3
Scope 1+Scope 2 (location-based) + Scope 3
Emission intensity (t-CO2/m2)
Reduction rate of intensity

Unit: t-CO2

Fiscal year ended
March 2018 (Base year)
143 properties

Not calculated

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
March 2020
March 2021
March 2022
March 2023
March 2024
190 properties 201 properties 211 properties 215 properties 223 properties
197
115
198
197
190
6,465
6,597
6,648
6,559
6,889
7,725
7,094
61
48
0
78,14789,924

98,951

117,491

125,882

34,336
Not calculated

6,661
7,921
84,80886,068

6,712
7,208
96,636
97,133

6,847
259
105,798
99,2106,755
244
124,246
117,736

7,079
190
132,961
126,072

0.05560.04200.0397

0.03680.03850.0384—-24.5%-28.6%-33.8%-30.8%-30.9%

Energy consumption * Coverage is the proportion of electric or gas usage that can be tracked for the target areas.
Number of properties
Total amount (MWh)Consumption intensity (MWh/m2)
Reduction rate of intensity
Coverage*

Fiscal year ended
Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
March 2020
March 2021
March 2022
March 2023
March 2024
March 2018 (Base year)
143 properties 190 properties 201 properties 211 properties 215 properties 223 properties
76,440190,299
209,212
256,078
315,383
332,592
0.12530.09430.08580.08900.09140.0908—-24.7%-31.5%-29.0%-27.1%-27.5%
28.4%
67.0%
76.3%
80.0%
95.8%
99.2%

Water consumption
Number of properties
Total amount (m3)Consumption intensity (m3/m2)
Reduction rate of intensity
Coverage

Fiscal year ended
March 2018 (Base year)
142 properties
391,6370.8205—
22.2%

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
March 2020
March 2021
March 2022
March 2023
March 2024
190 properties 200 properties 211 properties 214 properties 222 properties
900,955
852,793927,080
2,006,203
2,048,582
0.42960.35030.33070.59250.5693-47.6%-57.3%-59.7%-27.8%-30.6%
69.6%
76.2%
77.9%
94.1%
97.5%

Fiscal year ended
March 2018 (Base year)
6 properties
1,203
54.2%
6.9%

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
March 2020
March 2021
March 2022
March 2023
March 2024
44 properties
55 properties
66 properties
75 properties
87 properties
12,99014,445
20,91022,40524,722
77.0%
79.7%
78.7%
74.9%
71.5%
43.5%
55.0%
56.4%
60.7%
73.2%

Waste management
Number of properties
Total amount (t)Recycling rate
Coverage

Environmental performance

Third-party verification report

43

Property
number

Property name

LB-001
LB-002
LB-006
LB-008
LB-009
LB-011
LB-015
LB-019
LB-020
LB-021
LB-025
LB-026
LB-027
LB-028
LB-029LB-030
LB-031
LB-033
LB-035
LB-037
LB-038
LB-043
LB-044
LB-045
LB-049
LB-050
LB-051
LB-053
LB-054
LB-055
LB-056
LB-057
LB-059LB-060
LB-062
LB-065
LB-066
LB-067LM-001
LM-002
LM-003LM-004LM-005LM-006LM-007RE-001
RE-013RE-021
RE-039RE-043RE-045RE-059RE-077
RE-081
RE-088RE-089
RE-094
RE-107
RE-109RE-110
RE-112
RE-118
RE-138
RE-141
RE-142
RM-001
RM-008RM-009RM-010
RM-012
RR-004HO-003HO-004HO-005
OT-003
OT-005
OT-006

D Project Machida
D Project Hachioji
D Project Urayasu II
D Project Noda
D Project Inuyama
D Project Neyagawa
D Project Tsuchiura
D Project Tosu
D Project Kuki I
D Project Kuki II
D Project Fukuoka Hakozaki
D Project Kuki III
D Project Kuki IV
D Project Kuki V
D Project Kuki VI
D Project Yashio
D Project Nishiyodogawa
D Project Hibiki Nada
D Project Kawagoe III
D Project Urayasu III
D Project Tomisato
D Project Tatebayashi
D Project Kakegawa
D Project Hiroshima Seifu
D Project Chibakita
D Project Matsudo II
D Project Tomisato II
D Project Sendai Izumi II
D Project Kaminokawa
D Project Fuji
D Project Tosu III
D Project Kitahachioji I
D Project Kitahachioji III
D Project Itabashi Shingashi
D Project Kuki VIII
D Project Wako A
D Project Hiratsuka
D Project Kadoma I
DPL Misato
DPL Fukuoka Kasuya
DPL Kitakyushu
DPL Nagareyama I
DPL Shin-Narashino
DPL Nagareyama III
DPL Urayasu III
Qiz Ebisu
Castalia Nishi Azabu Kasumicho
Castalia Yoyogi Uehara
Castalia Takanawa
Shibaura Island Bloom Tower
Castalia Hatsudai II
Castalia Tower Shinagawa Seaside
Castalia Monzennakacho II
Royal Parks Toyosu
Castalia Nakameguro
Castalia Meguro Chojyamaru
Royal Parks SEASIRRoyal Parks Hanakoganei
Royal Parks Wakabadai
Pacific Royal Court Minatomirai Urban Tower
Royal Parks Musashikosugi
Castalia Abeno
Royal Parks Namba
Castalia Ningyocho III
Royal Parks Umejima
ACROSSMALL Shinkamagaya
FOLEO Ome Imai
FOLEO Otsu Ichiriyama
FOLEO Hakata
iias TsukubaSports Depo and GOLF5 Kokurahigashi IC Store
Daiwa Roynet Hotel Nagoya Shinkansenguchi
AMANEK Kanazawa
Candeo Hotels Nagasaki Shinchi Chinatown
Naha Shin-Toshin Center Building (Daiwa Roynet Hotel Naha-Omoromachi)
Nursery Room Berry Bear Omori Nishi Welcia Ota Omori Nishi StoreGRANODE Hiroshima

Residential properties

Retail properties(As of March 31, 2024)
Hotel properties
Other assets

ZEB ReadyZEB ReadyZEB ReadyZEB ReadyZEB ReadyZEB ReadyZEB Ready“ZEB”

CertifiedA

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Relevant Data

Relevant Data (2 of 2)
Personnel Data

Health Data

Item
Fiscal year ended March 2020 Fiscal year ended March 2021 Fiscal year ended March 2022 Fiscal year ended March 2023 Fiscal year ended March 2024
Total personnel*1
60
59
64
70
69
Male personnel / percentage of total
42 / 70.0%
40 / 67.8%
39 / 60.9%
45 / 64.3%
44 / 63.8%
Female personnel / percentage of total
18 / 30.0%
19 / 32.2%
25 / 39.1%
25 / 35.7%
25 / 36.2%
22
27
28
29
28
Manager*1 *2
Male personnel / percentage of total
21 / 95.5%
24 / 88.9%
23 / 82.1%
23 / 79.3%
22 / 78.6%
Female personnel / percentage of total
1 / 4.5%
3 / 11.1%
5 / 17.9%
6 / 20.7%
6 / 21.4%
5*5
0
10
New hires2
13*5
Male personnel / percentage of total
2 / 100%
4 / 31%
5 / 100%
0 / 0%
5 / 50.0%
Female personnel / percentage of total
0 / 0%
9 / 69%0 / 0%
0 / 0%
5 / 50.0%
Job leavers
7
2
2
1
3
Turnover*3
11.7%
3.4%
3.1%
1.4%
4.3%
Monthly average overtime hours
12.8 hours
13.6 hours
15.4 hours
16.5 hours
14.4 hours
Average tenure
4.8 years
5.1 years
5.0 years
5.6 years
6.0 years
Male personnel
4.8 years
5.2 years
5.4 years
5.5 years
6.1 years
Female personnel
4.8 years
4.7 years
4.3 years
5.6 years
5.9 years
Percentage of personnel who had stress checks
100.0%
100.0%
100.0%
100.0%
100.0%
Number of employees who took parental leave /
1/1
3/1
3/2
8/5
6/3
number of employees who returned to work
Male personnel
1/1
1/1
0/0
5/5
1/1
Female personnel
0/0
2/0
3/2
3/0
5/2
Return rate
0.0%
33.3%
66.7%
62.5%
50.0%
M&As
0
0
0
0
0
Employee lay offs
0
0
0
0
0
Number of employees who took elder caregiving leave
0
0
0
1
4
Number of employees aged 60 and older
0
1
1
2
4
Number of employees who are foreign nationals
0
0
0
0
0
Number of employees belonging to ethnic minorities
0
0
0
0
0
Number of employees with disabilities
0
0
0
0
0
Average days of annual paid vacation taken /12.5 days / 66.3% 13.1 days / 71.7% 13.1 days / 71.3% 13.6 days / 72.4% 14.6 days / 74.9%
paid vacation usage rate
Percentage of personnel who had health checkup
100.0%
100.0%
100.0%
100.0%
100.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Occupational accident frequency rate*4

Item
Percentage of personnel who had regular health checkups
Percentage of personnel who received metabolic syndrome-specific health guidance*1
Percentage of smokers
Percentage of personnel who exercise regularly*2
Percentage of personnel who drink alcohol responsibly*3
Percentage of personnel who get sufficient sleep*1 Percentage of personnel who completed metabolic syndrome-specific health guidance based on the results of their regular health checkups*2 Percentage of personnel who exercise for at least 30 minutes at least twice a week for at least one year
*3 Percentage of personnel who drink less than 180 mL of alcoholic beverage (the appropriate amount) when they drink

Individual Health Management Measures
Item
Result (fiscal year ended March 2024)
Radio calisthenics
245 times
Distributing free passes to sports clubs
100 passes

Item
Sales
Turnover*1
Monthly average overtime hours*1 Turnover is the ratio of job leavers to total personnel using total personnel as of April 1 of each fiscal year.
Sales, turnover, and monthly average overtime hours were identified as data that would show the benefits of health management on corporate management. Althoughmonthly average overtime hours have gone up, sales have increased and turnover has decreased, demonstrating the benefits of the initiatives.

Training on Operational Expertise

Percentage of personnel with remarks on their health checkups

Item
Unit: Number of training sessions

Prevention of Corruption
Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
March 2020
March 2021
March 2022
March 2023
March 2024
Total political contributions (yen)
0
0
0
0
0
Number of incidents related to fraud or corruption
0
0
0
0
0
Number of dismissals or termination related to fraud or corruption
0
0
0
0
0
Costs of fines, penalties, and settlements related to fraud or corruption (yen)
0
0
0
0
0
Item

Item

Number of the Asset Manager Employees with Qualifications (Total of 80 officers and employees as of March 31, 2024)
Item
CASBEE Accredited Professional for Buildings

2

CASBEE Accredited Professional for Real Estate

4

Certified Internal Auditor

2

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
March 2020
March 2021
March 2022
March 2023
March 2024
63.7%
49.1%
53.4%
54.4%
48.5%

The percentage of personnel with remarks on their health checkups was identified as data that would show improvement on health issues. The figure of 48.5% for the fiscal
year ended March 2024 represents a 15.2 percentage point improvement on the figure for the fiscal year ended March 2020, demonstrating the benefits of the initiatives.

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
Item
March 2018
March 2019
March 2020
March 2021
March 2022
March 2023
March 2024
Sustainability training
1
1
1
1
1
4
4
Training for general managers and above
0
0
1
0
0
1
2
Training for senior managers and group leaders
0
0
1
0
0
4
0
Middle-management employee training
0
0
0
0
0
6
0
OJT trainer training
0
0
0
0
5
7
2
Young employee training
0
0
0
0
1
2
2
Real estate market training
4
5
5
5
4
4
6
New employee training
5
3
4
5
4
2
7
Other training
3
4
4
18
1
9
12
Architectural training
18
0
0
10
0
9
3

Office Building Manager

Amount invested—¥330 thousand

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
March 2020
March 2021
March 2022
March 2023
March 2024
¥3,498 million ¥4,187 million ¥4,500 million ¥4,456 million ¥5,135 million
11.7%
3.4%
3.1%
1.4%
4.3%
12.8 hours
13.6 hours
15.4 hours
16.5 hours
14.4 hours

Data on Improvement on Health Issues

Number of people
with qualifications*
12

Participation rate
100%—

Data Showing the Benefits of Health Management on Corporate Management*1 Headcounts are as of April 1 of each fiscal year. *2 Senior manager and above.
*3 Turnover is the ratio of job leavers to total personnel using total personnel as of April 1 of each fiscal year.
*4 Occupational accident frequency rate = (occupational injuries/fatalities ÷ total actual hours worked) × 1,000,000*5 This figure includes a new graduate hired as an employee.

Number of people
Itemwith qualifications*
ARES (Association for Real Estate Securitization) Certified Master
35
Real Estate Transaction Agent
69
Real Estate Appraiser
2First-Class Architect
2
Certified Real Estate Consulting Master9

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
March 2021
March 2022
March 2023
March 2024
100%
100%
100%
100%
100%
N/A
100%
100%
18%
10%
9%
14%
29%
19%
20%
33%
51%
62%
51%
48%
76%
85%
77%
81%

Compliance training

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
March 2020
March 2021
March 2022
March 2023
March 2024
9 times
12 times
12 times
12 times
13 times

Information Security* Includes Personnel
who have Passed
the credentialing
exam but are notyet credentialed.

Item
Information security training

44

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
March 2020
March 2021
March 2022
March 2023
March 2024
2 times
2 times
2 times
2 times
2 times

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• Please inquire with a securities company to purchase DHR investment shares. Please be advised that any investment decisions
ultimately must be made based on your own decision and at your own responsibility.
• This report is not a disclosure document or investment report based on the Financial Instruments and Exchange Act, the Act on
Investment Trusts and Investment Corporations, or the listing rules of the Tokyo Stock Exchange.
• The data, analysis, and other information in this report are based on the results of a certain period in the past and do not guarantee
future operational results, fluctuations, etc. Furthermore, this report includes statements regarding future performance, but suchstatements do not guarantee future performance. Moreover, the value of real estate investment trusts may fall below the investment
principal due to fluctuations in the prices and profitability of the real estate under management.
• No guarantee is provided as to the accuracy or completeness of the information provided in this report. Note also that the information is
subject to change or deletion without prior notice.
• DHR and the Asset Manager accept no liability whatsoever for the results of investment actions taken based on this report.
• Copying, reproduction, etc. of the information published in this document without prior consent is prohibited.

Inquiries: Fund Management Department, Daiwa House REIT Division, Daiwa House Asset Management Co., Ltd. Tel: +81-3-3595-1265