PRINCIPAL ADVERSE IMPACT STATEMENT
Product Name: Advance Residence Investment Corporation
The following is the adverse sustainability impact statement of Advance Residence Investment Corporation(“ADR”) pursuant to Regulation (EU) 2019/2088 (“SFDR”). ADR has no employees in accordance with theprohibition on having employees under the Act on Investment Trusts and Investment Corporations of Japan andrelies on ITOCHU REIT Management Co., Ltd. (the “Asset Manager”), to manage and operate the properties
in ADR’s portfolio. ADR and the Asset Manager are hereinafter referred to collectively as “we,” “us” or “our”,
unless noted otherwise. While "fiscal year" or “FY” refers to the calendar year after January 2023, until 2022
references to “fiscal year” or “FY” are to the 12 months began or beginning April 1 of the year specified in linewith the fiscal year of the Asset Manager, unless noted otherwise.
Please note that SFDR requirements, including the scope of their application to issuers outside the European
Economic Area, continue to evolve. We are therefore taking a principles-based approach to compliance with the
SFDR disclosure standards, which are subject to change.
1. Summary
Pursuant to Article 4 of the Delegated Regulation C(2022)1931 supplementing SFDR (the “SFDR DelegatedRegulation”), ADR is required to publish on its website the information referred to therein covering the periodof one calendar year. From January 2023 we refer to data for one calendar year, but until 2022 we refer todata from April to March of the following year, since The Asset Manager does not operate based on acalendar year, but operates based on fiscal year ending in March of every year.
A recalculation and translation of the data through 2022 into the reference period of one calendar year would
most likely lead to inaccuracies and would therefore provide a potentially less accurate overview of therequired information than using the approved and validated data for the period from April 1, to March 31.
This reference period is sufficiently compatible with, and shows results that do not materially differ from, thosethat would be produced using the calendar year-based reference period noted in the SFDR DelegatedRegulation.
We consider principal adverse impacts of our investment decisions on sustainability factors. The present
statement is our consolidated statement of the principal adverse impacts on sustainability factors (“PAI”). The
statement covers the reference period from January, 2023 to December 31, 2023. The statement will be
reviewed at least once during every six months.
We believe that our sustainability initiatives are essential for our sustainable growth. We improve long-term
returns of investors and contribute to the realization of sustainable society and urban development byimplementing initiatives that address social issues. Under our sustainability policies and framework, we, incollaboration with the Asset Manager, take actions on climate change, including energy conservation, and being
resilient in times of disasters.
We use the definition of PAI as described in Recital 20 of SFDR being “those impacts of investment decisions
and advice that result in negative effects on sustainability factors,” with sustainability factors referring toenvironmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters
as defined in article 2 (24) of SFDR.
We believe that investment decisions that negatively affect climate or other environment-related resources, or
have negative implications for society, can have a significant impact to risk and value creation for ADR’sunitholders. To this end, we consider PAI of our investment decisions throughout all major steps of theinvestment decision and property management process throughout the lifecycle of the properties in our portfolio.

2. Description of principal adverse sustainability impacts
Nearly all types of economic activity have the potential to impact various PAI indicators, both positively andadversely. We aim to manage the risk connected to PAI from our investment decisions in several ways, including
general screening criteria, due diligence and our ESG initiatives. Some of the PAI indicators listed below are
currently already being monitored and reported. As the availability of data improves, it is our intention that moreindicators will be added.
Table 1
Description of the principal adverse impacts on sustainability factors
ADR does not invest in investee companies, but invests in real estate. As adverse sustainability indicators 1-16
as contained in Table 1 of Annex 1 of the SFDR Delegated Regulation pertain to investee companies, these are
not included in this PAI statement, which pertains to real estate investments.
Indicators applicable to investments in real estate assets

Adversesustainability
indicator

Fossilfuels

17.
Exposure
to fossil
fuels
through
real estate
assetsEnergyefficiency

18.
Exposure
to energyinefficient
real estate
assetsMetricShare ofinvestments inreal estate
assets involvedin theextraction,
storage,transport or
manufacture offossil fuels
Share ofinvestments inenergyinefficient realestate assets

Impact in
2023

Impact in
2022

Explanation

N/A

N/A

ADR does notinvest in realestate assets
involved in theextraction,
storage,transport or
manufacture offossil fuels.

As of January
31, 2024,
68.6% of
ADR’s
properties
were not“Eligible
Green Assets”(as defined to
the right)
based on total
gross floor
area.

As of January
31, 2023,
71.4% of
ADR’s
properties
were not“Eligible
Green Assets”(as defined to
the right)
based on total
gross floorarea.

To track theenvironmental
performance of
ADR’sproperties, werely oncertifications
issued by thirdparty
organizations,such as theGreen Building
certification oftheDevelopment
Bank of Japan(“DBJ”),
Comprehensive
Assessment
System for
Built

Actions taken,
and actions
planned andtargets set for
the next
reference
periodN/A

We implement
as appropriate
measures toreduce theirenvironmental
impactfollowingacquisition,
including by
obtaining
environmental
certifications
such as DBJ
Green Building
certification or
CASBEE forReal Estatecertification
andimplementing
eco-friendly

Environment
Efficiency(“CASBEE”)
certification,and otherequivalentcertifications.
We call ADR’sproperties thathave acquired
one of (i) DBJ
Green Building
Certification(three-stars or
better), (ii)
CASBEE forReal Estatecertification(B+ rank or
better) and (iii)BELS
certification(three-stars or
better) as“Eligible Green
Assets.”equipment suchas LED
lighting.
We plan to obtainenvironmental
certifications for
30% or more of
the properties in
ADR’s portfolio
by FY2030,
based on total
gross floor area.

Table 2
Additional climate and other environment-related indicators
We do not invest in investee companies but in real estate. As additional climate and other environment-related
indicators 1-17 as contained in Table 2 of Annex 1 of the SFDR Delegated Regulation pertain to investee
companies, these are not included in this PAI statement, which pertains to real estate investments.
Adversesustainab
ility
impactAdverse impact on sustainability factors (qualitative or quantitative)

MetricIndicators applicable to investments in real estate assets
Greenhouse gasemissions

18. GHG emissions

Scope 1
Scope 2
Scope 3Total

Unit(t-CO2)(t-CO2)(t-CO2)(t-CO2)

FY2023188
052,10852,296FY2022188
047,30747,495

FY2021230
23
253

FY2020
221
6,831
7,052

FY2019
239
7,880
8,119

We aim to reduce the combined amount of Scope 1 and Scope 2 GHG emissions of
ADR’s properties by 51% by FY2030 compared to the level in FY2018. In addition,
as a long-term target, ADR aims to achieve net zero GHG emissions for ADR’sproperties by FY2050.

Scope 1GHG
emissionsgenerated byreal estate
assetsScope 2GHG
emissionsgenerated byreal estate
assetsFrom 1January2023, ScopeEnergyconsumpti
on

19. Energy consumption intensity

Total energy
consumption
Energyconsumption
intensity

Unit
(MWh)

FY2023
15,306FY2022
14,274FY2021
15,266FY202015,354FY201915,536

(MWh/
m 2)

0.081

0.077

0.082

0.083

0.086

3 GHG
emissionsgenerated byreal estate
assetsTotal GHG
emissionsgenerated byreal estate
assetsEnergyconsumption
in GWh ofowned realestate assets
per squaremeter

We aim to reduce energy consumption intensity at ADR’s properties by 20% by
FY2030 compared to the level in FY2018.

Table 3
Additional indicators for social and employee, respect for human rights, anti-corruption and anti-bribery
matters
ADR has no employees in accordance with the prohibition on having employees under the Act on Investment
Trusts and Investment Corporations of Japan, and relies on the Asset Manager to manage and operate theproperties in ADR’s portfolio. Accordingly, additional indicators for social and employee, respect for humanrights, anti-corruption and anti-bribery matters in this PAI statement pertain to the Asset Manager and thetenants of the properties in ADR’s portfolio, to the extent available.
SOCIAL AND EMPLOYEE, RESPECT FOR HUMAN RIGHTS, ANTI-CORRUPTION AND ANTIBRIBERY MATTERS
Adversesustainability
impactAdverse sustainability impact (qualitative or quantitative)

MetricIndicators applicable to investments to the Asset Manager or tenantsSocial andemployeematters

4. Lack of a supplier code of conduct
The Asset Manager has established a Sustainability Procurement
Policy to implement procurement-related aspects of the
Sustainability Policy with cooperation from its suppliers. Since
2016, at the time of entry selection of a property manager and areal estate appraisal company and thereafter annually inaccordance to the Green Procurement Policy, we take into
consideration their environmental and social initiatives, such aswhether to respect human rights and secure appropriate work
environment for employees.

Share of investments ininvestee companies
without any suppliercode of conduct (against
unsafe working
conditions, precarious
work, child labor andforced labor)
We have provided theGreen Procurement
Guideline to all ofproperty managers andIn addition, in March 2018, we established the Sustainability
Procurement Guidelines, which contain key elements of theGreen Procurement Policy, and we provide them to our property
managers and building managers.
Moreover, we include green lease clauses concerning energy andwater conservation in lease agreements with tenants to promotesaving energy and water.

building managers aswell as main suppliers.
Based on surveys
conducted on all ofproperty managers andreal estate appraisal
companies in November
2023, we have confirmedthat they have compliedwith laws, regulations
and internal rules
including employeerelated and corporate
ethics-related policies.
As of January 31,
2024,66.7% of ourtenants (based on thenumber of rental units)
have executed leaseagreements with green
lease clauses.

Human Rights

9. Lack of a human rights policy
We established a Human Rights Policy in February 2021 andconduct measures to prevent harassment, including complianceprograms and external trainings.
In addition, the Asset Manager has established the Green
Procurement Policy. Since 2016, at the time of entry selection ofa property manager and a real estate appraisal company andthereafter annually in accordance to the Green Procurement
Policy, we take into consideration their environmental and social
initiatives, such as whether they respect human rights and haveestablished appropriate work environment for their employees.
In addition, in March 2018, we established the Sustainability
Procurement Guidelines, and we provide them to our property
managers and building managers.

Share of investments inentities without a humanrights policy
All of employees of theAsset Manager areprotected under the
Human Rights Policy of
our sponsor group.
We have provided theSustainability
Procurement Guidelines
to all of property
managers and building
managers as well as main
suppliers.
Based on surveys
conducted on all ofproperty managers andreal estate appraisal
companies in November
2023, we have confirmedthat they have compliedwith laws, regulations
and internal rules,
including human rightsrelated policies, and havepromoted diversity andwork-life balance.

Anti-corruption
and anti-bribery

13. Operations and suppliers at significant risk of incidents offorced or compulsory labor
We established the Human Rights Policy in February 2021, andsupport international standards such as Universal Declaration of
Human Rights and promote measures to promote human rights.
We strictly comply with labor-related laws and regulations toensure that our work environment is appropriate for all of theAsset Manager’s employees.
In addition, the Asset Manager has established the Sustainability
Procurement Policy. Since 2016, at the time of entry selection ofa property manager and a real estate appraisal company andthereafter annually in accordance to the Sustainability
Procurement Policy, we take into consideration theirenvironmental and social initiatives, such as whether they respecthuman rights and have established appropriate work environment
for their employees.
In addition, in March 2018, we established the Green
Procurement Guidelines, and we provide them to our property
managers and building managers.

Share of the investments
in investee companies
exposed to operations
and suppliers at
significant risk ofincidents of forced orcompulsory labor interms of geographic
areas and/or the type ofoperation
In FY2023, there was nobreach of labor-relatedlaws, regulations or
standards within the
Asset Manager.
Based on surveys
conducted on all ofproperty managers andreal estate appraisal
companies in November
2023, we have confirmedthat they have compliedwith laws, regulations
and internal rules
including labor-related
policies, and have foundno forced or compulsory
labor.

For descriptions of actions which ADR takes and will take with respect to the PAI indicators, please refer to our
ESG website with respect to ADR: https://www.adr-reit.com/en/sustain/
3. Description of policies to identify and prioritize principal adverse sustainability impacts
Subject to data availability, we monitor the selected PAI indicators for the existing properties in our portfolio.
ADR has sometimes established a green finance framework to provide investors with investment opportunities
of environmental significance. Funds raised through green bonds or green loans will be used to acquire properties
that are classified as Eligible Green Assets or that meet the following eligible criteria: eligible renovation work
includes (i) construction work and equipment renovation work contributing to energy conservation andenvironmental improvement, or (ii) renovation works aim to reduce energy consumption, CO2 emissions or
water consumption by 10% or more.
For further information, please refer to our ESG website: https://www.adr-reit.com/en/sustain/
4. Engagement policies
Due diligence and screening
Prior to our investment in a property, we conduct due diligence on the property, including environment
assessment such as land pollution and evaluation of earthquake resistance and PML. Furthermore, we review

each property’s Green Building certification at the time of acquisition to confirm the status of acquiring thecertificates.
The Asset Manager’s investment decision-making process involves assessment of material ESG-related risks
identified through due diligence review, including legal compliance, land pollution, environmental risks andother factors. With each acquisition opportunity, we review these ESG-related due diligence findings and risk
assessment. These findings and assessment are required to be considered by the Asset Manager’s Investment
Committee before a final decision is made on the investment by ADR’s Board of Directors.
In addition, we monitor and track energy consumption, greenhouse gas emissions, water usage and waste
amounts at the properties in ADR’s portfolio.
Engagement
We have executed lease agreements, which include clauses concerning energy and water conservation andrequiring tenants to collaborate. In addition, we have inserted green lease clause in a management services
contract (including renewal one) with a property manager.
To create sustainable society through asset management, the Asset Manager has established a Sustainability
Procurement Policy to implement procurement-related aspects of the Sustainability Policy with cooperation fromits suppliers. Since FY2016, major suppliers, including all property managers that the Asset Manager uses, havebeen evaluated at the time of entry into a contract with the Asset Manager and thereafter annually in accordance
to the Sustainability Procurement Policy, on how they address sustainability issues. The Asset Manager considers
suppliers’ engagement in sustainability when it selects a supplier in addition to its quality, price, credibility andservices offered. In addition, we includes a criterion concerning initiatives taken on environment when we selecta property manager.
5. References to international standards
The Asset Manager became a signatory as a supporter to the Financial Stability Board’s Task Force on Climaterelated Financial Disclosures (“TCFD”) established by the Financial Stability Board and joined the Japan TCFD
Consortium in March 2020. Moreover, the Asset Manager supports international norms on human rights, suchas the Universal Declaration of Human Rights, Declaration on Basic Principles and Rights in Labor declared by
the International Labor Organization (ILO) and the United Nations Global Compact. In addition, the AssetManager will respect human rights based on the Guiding Principles on Business and Human Rights establishedby the United Nations.
6. Historical comparison
See Table 1 and Table 2 above.