Sustainability
Management

Materiality

Stakeholder
Engagement

Initiatives forEnvironment

Initiatives forSociety

Governance

GRI Standards
Disclaimer

Green Bonds

Contents
Editorial Policy
Message from Management
Corporate Profile

1
2
2

Sustainability Management

Sustainability Policy
Sustainability Promotion System
ESG Assessment by Third-Party Institutions

3
4
5

Materiality

JHR’s Materiality
Process to Define Materiality

7
8

Stakeholder Engagement

9

Initiatives for Environment

Basic Policy
Environmental Target
Environmental Performance Data
Actual Cases of Initiatives for Environment
Initiatives for Climate Change

10
10
10
11
14

Initiatives for Society

Basic Policy
Initiatives for Unitholders
Initiatives for Local Communities/Contribution to
Regional Revitalization (Cooperation with Lessees, etc.)
Initiatives for Hotels
Initiatives for Employees

19
19
19

GovernanceCorporate GovernanceCompliance
Risk Management

25
29
32

Green Bonds

Basic Policy
Compliance of Eligible Criteria of Green Bonds
Use of Procured Funds
Management of Procured Funds
Reporting
Summary of the Issued Green Bonds

34
34
34
34
34
35

GRI Standards Comparison Table
Disclaimer

20
21

Editorial Policy
Japan Hotel REIT Investment Corporation (JHR) and its asset managementcompany Japan Hotel REIT Advisors Co., Ltd. (JHRA) are promoting initiatives

relating to the environment (E), society (S), and governance (G) with the aimof improving unitholder value in the medium to long term. This report has
been published for the purpose of reporting on the approach to ESG adopted
by JHR and JHRA and related initiatives to investors and other stakeholders.

Period Covered by Report
This report is based on the fiscal year from 1 January 2022 to 31 December
2022, but it also includes details relating to other fiscal years.
Guidelines, Etc. Used as Reference
GRI (Global Reporting Initiative) Standard
Inquiries about This ReportJapan Hotel REIT Advisors Co., Ltd.
Ebisu Neonato 4F, 4-1-18 Ebisu, Shibuya-ku, Tokyo
Phone: 03-6422-0530
URL: https://www.jhrth.co.jp/en/

36
41

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Sustainability
Management

Materiality

Stakeholder
Engagement

Initiatives forEnvironment

Initiatives forSociety

Governance

GRI Standards
Disclaimer

Green Bonds

Message from Management

Corporate Profile

JHR’s Sustainability Approach

Investment Corporation

Japan Hotel REIT Investment Corporation (JHR) and Japan Hotel REIT Advisors(JHRA), believing that sound management which enabling us to co-exist inharmony with society and the environment will contribute to improve
unitholder value over the medium to long term, are making efforts to enhancesustainability through consideration of ESG (Environment, Social, &Governance) issues.
JHR and JHRA established a Sustainability Policy in December 2017 and are
pursuing a series of measures relating to ESG, including reduction of ourenvironmental impact, consideration of all our stakeholders, etc.
In December 2021, in order to further enhance our ESG initiatives, we defined
our materiality and are promoting measures to address various issues.
Moreover, we believe that appropriate disclosure of these initiatives andbuilding a relationship of trust with our stakeholders will lead to JHR’s growthover the medium to long term.

Corporate NameJapan Hotel REIT Investment Corporation

Location

Ebisu Neonato, 4-1-18, Ebisu, Shibuya-ku, Tokyo

Representative

Kaname Masuda, Executive Director

Listing Date

June 14,2006

Fiscal Period

12 months from January 1st through the end of
DecemberContact

Japan Hotel REIT Advisors Co., Ltd.

Executive Director

President & CEO

Japan Hotel REIT Investment Corporation

Japan Hotel REIT Advisors Co., Ltd.

Kaname Masuda

Asset Management Company
Company NameJapan Hotel REIT Advisors Co., Ltd.

Location

Ebisu Neonato 4F, 4-1-18 Ebisu, Shibuya-ku, Tokyo

Representative

Hisashi Furukawa, President & CEO

Establishment

August 10, 2004

Capital

JPY300M

Shareholders

SCJ One (S) Pte. Ltd.(*)
87.6%
Kyoritsu Maintenance Co., Ltd. 10.3%
ORIX Corporation
2.1%

Registration andLicenses

Building Lots and Buildings Transaction Business
Operator, Governor of Tokyo (4) No. 83613
Discretionary Transaction Agent by Minister of Land,
Infrastructure, Transport and Tourism No. 38
Financial Instruments Trading Company, Director-Generalof Kanto Local Finance Bureau No. 334
Member of The Investment Trusts Association, Japan
Member of The Japan Investment Advisers Association(*) SCJ One (S) Pte. Ltd. is a corporation belonging to SC CAPITAL PARTNERS Group.

Hisashi Furukawa

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Sustainability
Management

Materiality

Stakeholder
Engagement

Initiatives forEnvironment

Initiatives forSociety

GovernanceGreen Bonds

GRI Standards
Disclaimer

Sustainability Management
Sustainability Policy●Monitoring and improvement of environmental performance in our
portfolio
We promote monitoring environmental performance such as energy
consumption, etc. in our portfolio. Also, we share our goals with hotel
lessees and operators, and strive to continuously improve environmental
performance through optimizing operations and management as well as
through facility renovation, etc. Furthermore, we seek assessment from third
parties where appropriate.
We take environmental risks into consideration to make investment decisions
and to monitor operations of our portfolio.
●Promotion of comfortable, healthy, secure and safe hotels
We care safety, health and barrier-free access etc. of our hotels andpromote initiatives to have stronger resilience against natural disaster, etc.
We take safety, health and well-being factors into consideration uponmaking investment decisions and monitoring operations of hotels in our
portfolio.

●Initiatives for our officers and employees
We establish work environment that allows diverse ways of working withwork-life balance into consideration. We also consistently provide
opportunities of professional education and training, with the aim to improveabilities and skills of our employees and raise awareness on sustainability.
●Compliance as corporate citizens
We comply with related laws and regulations as well as social norms, etc.
and promote ethical and sincere business activities. Additionally, we strive to
reduce governance risks through respecting fundamental human rights at
our business and through establishing a proper compliance system.
●Improvement of transparency and engagement with our stakeholders
We disclose financial information as well as ESG related information in atimely and appropriate manner. We will sincerely listen to voices andopinions from our stakeholders through interactive communication, andutilize them to improve our initiatives.

●Promotion of ESG in value chains
We ask our hotels to understand and to cooperate on sustainability initiatives.
At the same time, we promote procurement of products and services withenvironmental and social considerations.
●Consideration for and contribution to local communities
We strive to contribute to the sustainable development of local community
through cooperation with hotel lessees and operators as well as
communication and collaboration with local residents and local governments
in surrounding communities where hotels are located.

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Materiality

Stakeholder
Engagement

Initiatives forEnvironment

Initiatives forSociety

Governance

GRI Standards
Disclaimer

Green Bonds

Sustainability Management
Sustainability Promotion System
In order to carry out initiatives based on the Sustainability Policy in an ongoing,organized manner, JHRA has established ESG Promotion Committee anddeveloped the system shown below.
ESG Promotion Committee consist of management members and officers andemployees chosen from various groups involved in promoting ESG, with the
President & CEO acting as the chief executive and the Board Director & Head ofFinance and Planning Division acting as the operating officer.
System Overview

Annual Schedule

ESG Promotion Committee
Contents

Members●Setting specific targets,considering measures●Assessing status of progress●Holding sustainability training

Frequency●In principle, held once
on quarterly basis

Contents

Frequency●As needed

Reporting

JHR Boardof
Directors

Jul-Sep

Oct-Dec

Check
Progress

Check
Progress

Check
Progress

Evaluating
implementation/
Setting targets fornext year

Frequency of Meetings and trainings

Decisionmaking andexecution
based on
JHRA'sapprovingauthorities

Members●Operating officer:
Board Director & Head ofFinance and Planning Division●Compliance Office●Personnel & Administration Group●Planning Group●Public REIT Group●Finance Group●Accounting Group

ESG
Promotion
Committee

Apr-JunImplementation

Measures●Chief Executive:
President & CEO●Operating officer:
Board Director & Head ofFinance and Planning Division●Management members●ESG team members

ESG Team Meetings●Proposing targets,considering measures●Verification of
implementation status

Jan-MarSharing

FY2019FY2020

FY2021

FY2022

ESG
Promotion
Committee

4

2

4

4

Trainings for
Officers andEmployees

1

1

3

3

All officers
andemployees

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Materiality

Stakeholder
Engagement

Initiatives forEnvironment

Initiatives forSociety

GovernanceGreen Bonds

GRI Standards
Disclaimer

Sustainability Management
ESG Assessment by Third-Party Institutions
Acquisition of GRESB Real Estate Assessment
The GRESB is an annual benchmarking program to evaluate Environment,
Social and Governance (ESG) considerations of property companies and realestate funds, established in 2009 primarily by major European pension fundgroups which took the lead in Principles for Responsible Investment (PRI). The
GRESB Real Estate Assessment is distinguished by its comprehensive
evaluation of initiatives for sustainability of property companies, REITs and realestate funds, not of individual properties.
JHR participated in GRESB Real Estate Assessment from 2018 and has
acquired “Green Star” for five consecutive years.
JHR also selected for “Sector Leader” of Asian Hotel Sector for threeconsecutive years as a participant with the highest result.

Acquisition of SMBC Environmental Assessment"SMBC Environmental Assessment Loan" is a loan which SMBC set condition ofloan based on assessment on status of environmental considerations by the
corporation based on environmental assessment standards developed
independently by SMBC and the Japan Research Institute, Limited.
JHR has received an "A" grade under the assessment due to initiatives forenvironmental considerations. This grade is obtained in recognition of our
implementation of excellent initiatives for environmental considerations in asset
management.

In particular, the following factors are highly rated in the assessment.
• JHR and JHRA have formulated a Sustainability Policy which clearly states
their position of considering the environment and stakeholders such as local
communities in their asset management.
• As well as conversion to the LEDs in lightning fixtures and introduction ofwater-saving devices in our major hotels, JHR promotes initiatives to reduce
environmental impact alongside with lessees, including adding the Green
Lease clause in the fixed term lease agreements with the HMJ Group hotels(*),
the major hotel group of JHR.
• JHR actively promotes to acquire third-party certifications such as BELS
(Building-Housing Energy-efficiency Labeling System) to confirm credibility
and objectivity of initiatives for reduction of environmental impact inproperties owned by JHR.
(*) Stating numbers for hotels leased to Hotel Management Japan Co., Ltd. and its subsidiaries (hereinafter
called "HMJ Group Hotels") owned by JHR at end of each period.

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Management

Stakeholder
Engagement

Materiality

Initiatives forEnvironment

Initiatives forSociety

GovernanceGreen Bonds

GRI Standards
Disclaimer

Sustainability Management
Timeline of Achievements
2017

DecemberEstablishment of Sustainability
Policy2018

February

Two properties—Hotel Nikko
Alivila and Mercure Hotel
Okinawa Naha—became the first
J-REIT-owned hotels(*1) toacquire BELS(*2) certification

March

2021

Hotel Nikko Alivila

July

Received an “A” rating indicating
excellent environmentallyfriendly management, in the
SMBC Environmental
Assessment Loan(*3)

2020

2022

Issued Hotel Green Bonds(nickname) and used the
procured funds to carry out
construction works to saveenergySeptember Acquired “3 star” in GRESB
ratingApril

The Hilton Tokyo Odaiba became
the first existing hotel to acquirea CASBEE “B+ (good)” building
certification

NovemberAcquired “4 star” in GRESB
ratingSelected as “Sector Leader” ofAsian Hotel Sector

Oriental Hotel
Fukuoka Hakata Station

As a result of construction works
to save energy which carried out
by using procured funds throughthe issuing of green bonds, theOriental Hotel Fukuoka Hakata
Station acquired CASBEE“B+ (good)” building certification

Mercure Hotel
Okinawa Naha

September Participated in GRESB Real
Estate Assessment for the firsttime
Acquired “4 star” in GRESB
rating2019

June

Okinawa Marriott
Resort & Spa(*4)

October

Acquired “4 star” in GRESB
ratingSelected as “Sector Leader” ofAsian Hotel Sector

November

JHRA stated its expression of
support for the TCFD
recommendations

October

Acquired “4 star” in GRESB
ratingSelected as “Sector Leader” ofAsian Hotel Sector

Oriental Hotel
Fukuoka Hakata Station(*1) Based on research by JHRA based on public information.
(*2) BELS (Building-Housing Energy-Efficiency Labeling System) is a display system of energy conservation
performance of a building set by Ministry of Land, Infrastructure, Transport and Tourism.
(*3) "SMBC Environmental Assessment Loan" is a loan which SMBC set condition of loan based on assessment
on status of environmental considerations by the corporation based on environmental assessment
standards developed independently by SMBC and the Japan Research Institute, Limited.
(*4) Name of properties is as of the date when the construction works were implemented.

Hilton Tokyo Odaiba

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Materiality

Stakeholder
Engagement

Initiatives forEnvironment

Initiatives forSociety

Governance

GRI Standards
Disclaimer

Green Bonds

Materiality
JHR’s Materiality
Believing that sound management enabling us to co-exist in harmony with society
and the environment will contribute to improved unitholder value over the medium
to long term, JHR is making efforts to enhance sustainability through considerationof ESG (Environment, Social, & Governance) issues.
From the dual standpoints of stakeholders’ expectations and impact on ourbusiness, JHR has defined our materiality(key issues), in terms of ESG-related issues
that are of particular importance to us, as
shown below.
Moreover, we will revise the materiality as
needed, based on the changes in social
issues and needs due to change of the times.

Materiality
Tackling climatechangeOverview/Goals

Related SDGs (*)• Tracking environmental performance,such as energy consumption• Continuous improvement ofenvironmental performance• Reducing energy-derived CO2
emissions intensity by at least 1% peryear for 5 years (term of first plan:
April 2018 - March 2023)• Promoting acquisition of assessments(green building certifications, etc.) by
third-party institutions• Reducing consumption of clean waterby using well water and reusing graywater as recycled water• Promoting waste reduction andrecycling

Overview/Goals

Communication
with stakeholders
such as local
communities• Building favorable relationships with all
stakeholders, including unitholders,hotel users (guests), hotel lessees,
hotel operators, business partners
including property managementcompanies, local communities, andofficers and employees of JHRA
• Conducting tenant satisfaction surveys
continuously

Ensuring safety/
peace of mind andpromoting wellbeing at hotels• Considering safety, health, well-being
and barrier-free access, etc. in hotels• Promoting initiatives to increase
resilience to natural disasters, etc.
• Consider from aspect of health, wellbeing, safety, and welfare when
making investment decisions andmonitoring operations of hotels

Creating pleasant
workplaces• Establishing a work environment thatenables diverse working styles withwork-life balance in mind
• Continuously providing opportunities
for professional education and training
with the aim of improving
skills/abilities and enhancing
sustainability-related awarenessImplementing
thorough corporate
governance• Complying not just with laws andregulations but with social norms• Promoting ethical and honest businesspractices• Reducing governance risks by
preparation of a compliance system

Proactive
information
disclosure anddialogue• Timely, appropriate disclosure of notjust financial information but also ESGrelated information• Two-way communication withstakeholders in order to use their
feedback/opinions in improving
various initiatives

SocialEnvironment

Reducing water
consumption andwaste

Materiality

Governance

Related SDGs(*) The SDGs (an acronym of Sustainable Development Goals) are international goals aimed at creating a better and more sustainable world by 2030. The SDGs were adopted at a U.N. Summit in September 2015.
They consist of 17 goals and 169 targets.

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Stakeholder
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Initiatives forEnvironment

Initiatives forSociety

GovernanceGreen Bonds

GRI Standards
Disclaimer

Materiality
Process to Define Materiality

JHR’s Materiality Matrix

Step 1

Identification of socially important issues
Extensively identifying socially important issues which
expected by stakeholders through referring to global
ESG assessments and frameworks such as the SASB
Standards, GRI Standards, and Sustainable
Development Goals (SDGs), as well as the cases of
initiatives by other J-REITs, etc.

Step 2
Assessment/prioritization of socially important
issues (creation of matrix)

Assessing and analyzing the identified socially
important issues in terms of their importance tostakeholders and their impact to JHR, thenprioritizing them.

Step 3

Management-level discussion/validation/
definition of materiality
Validating the prioritized social issues at ESG
Promotion Meetings and defining materiality.
Reporting it to JHR’s Board of Directors.

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Management

Materiality

Stakeholder
Engagement

Initiatives forEnvironment

Initiatives forSociety

GovernanceGreen Bonds

GRI Standards
Disclaimer

Stakeholder Engagement
JHR’s business activities are carried out in collaboration
with many stakeholders, and we recognize that fulfillingthe social responsibility required to our company isessential to conduct our sustainable business activities.
JHR and JHRA build favorable relationships throughcommunication with their various stakeholders, including
unitholders, hotel users (guests), hotel lessees, hotel
operators, business partners including property managers,
local communities, and officers and employees of JHRA,
and fulfill the social obligations expected by each of them.

Approach to Stakeholders

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Initiatives forEnvironment

Initiatives forSociety

GovernanceGreen Bonds

GRI Standards
Disclaimer

Initiatives for Environment
Basic Policy

Environmental Performance Data

In response to effective usage of limited resources and aggravation of climatechange issue, JHR and JHRA work on monitoring environmental performance,such as energy consumption, CO2 emissions, water consumption and amountof waste generated, etc. and strive to improve them continuously.

Environmental Performance data of HMJ Group Hotels as of the end of eachfiscal year is as follows.

Environmental Target
We have set targets to reduce GHG emissions intensity (*1) for long term
until 2050.
• 30% reduction of GHG emissions per floor area in our portfolio (GHG
emissions intensity) compared to FY2017(*2).
• To monitor and manage progress towards long term target and tocomprehend the causes of variance in emissions at the "ESG Promotion
Committee" of JHRA.
(*1) The GHG emissions of JHR fall under Scope 3 emissions, Category 13: leased assets (downstream)
because the hotels in our portfolio are managed by lessees of hotels, etc.
(*2) The GHG emissions intensity for the baseline year, FY2017 (April 2017 – March 2018) was 0.135(t-CO2/m2).

April 2018
April 2019
April 2020
April 2021
～March 2019 ～March 2020 ～March 2021 ～March 2022

Unit
Number of properties

13

14

14

16

㎡

372,607.95

437,515.71

437,515.71

463,368.64

MWh139,056

163,812110,837

129,780

Emissions
intensity

MWh/㎡

0.37320.37440.25330.2801

EmissionstCO2

47,63351,54736,187

41,219Emissions
intensity

tCO2/㎡0.12780.11780.08270.0890

Usage

thousand
㎥

1,476

1,509

770

877

Emissions
intensity

thousand㎥/㎥

0.00400.00340.00180.0019Emissions

ｔ

3,458

4,879

2,898

2,825

Emissions
intensity

ｔ/㎡

0.00930.01120.00660.0061

Recycled
Amount

ｔ

876

1,689

1,125

1,035

Recycle
Ratio

%

25%

35%

39%

37%

Total floor area
Usage
Energy

CO2

Water

Waste

(*3) Amount of CO2 emissions are calculated based on "Institution of calculation, reporting and disclosure ofamount of emissions by greenhouse effect gas" established by Ministry of the Environment.
(*4) Numbers may change due to revision of aggregation method.

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Stakeholder
Engagement

Initiatives forEnvironment

Initiatives forSociety

Governance

GRI Standards
Disclaimer

Green Bonds

Initiatives for Environment
Actual Cases of Initiatives for Environment●Switching to LED Lighting
We are striving to reduce electricity consumption by switching fromconventional lighting to LED lighting at some of the hotels in our portfolio.

●Green Leases
In order to promote environmentally friendly initiatives in our portfolio, we
have signed green leases provisions such as providing energy data with thelessees of HMJ Group hotels, which is one of our major hotel groups. JHR
analyzes data of energy, etc. provided by hotels and considers renovation to
improve environmental performance and works to optimize operation offacilities management. In case of HMJ Group hotels, they can reduce utility
expenses through improvement of environmental performance.
Achievement of green lease provision (end of FY2022)

Oriental Hotel Hiroshima

No. of Properties

Proportion of Total
Floor Area

16

60.5％

Oriental Hotel Okinawa Resort & Spa●Introduction of water-saving devices
We strive to reduce water consumption through installing water-saving
devices for a restroom, a tap in the kitchen, etc. to adjust water use amountproperly.
●Renewal of air conditioners
We reduce electricity consumption by installing inverter control devices on
air conditioners for better operational efficiency.
●Reuse of water
Several of our hotels reduce clean water consumption by using well waterinstead. Some of our hotels in Okinawa are working on to reduce cleanwater consumption by reusing gray water as recycled water.

●Green Building Certifications by third-party institutions
In order to confirm the credibility and objectivity of our initiatives
aimed at reducing our environmental impact, we have obtained green
building certifications from third-party institutions.
Achievement of certification from third-party institutions
Fiscal Year
No. of properties newly
acquired certifications
Cumulative ratio in portfolio(based on total floor area)

FY2019FY2020

FY2021

FY2022

－

1

1

－

6.3%

14.7%

17.2%

17.2%

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Initiatives forEnvironment

Initiatives forSociety

Governance

GRI Standards
Disclaimer

Green Bonds

Initiatives for Environment■CASBEE Certification for Buildings“Comprehensive Assessment System for Built Environment Efficiency(CASBEE)” is a method for evaluating and rating the environmental
performance of buildings. It is a system to comprehensively evaluate thequality of buildings, including interior comfort and landscape considerations, aswell as environmental considerations such as energy conservation and the useof materials and equipment with low environmental loads.
CASBEE for Buildings (Existing Buildings) is an evaluation method whichtargets buildings with an operational record of at least one year after
completion, and assesses buildings based on annual performance of operations,deterioration of buildings and interior environments. Assessment results by
CASBEE are indicated in a scale with the following five ranks: “S: Superior,” “A:
Very Good,” “B+: Good,” “B-: Slightly Poor,” and “C: Poor.”
See here for details of CASBEE
http://www.ibec.or.jp/CASBEE/english/index.htm

Oriental Hotel Fukuoka Hakata Station
Location

4-23, Hakataeki Chuogai,
Hakata-ku, Fukuoka-shi,
Fukuoka

Acreage

2,163.42 sqm

Total Floor
Space

18,105.42 sqm

Structures
and Stories

SRC/12 stories above
ground with 3 stories below
groundBuilding
Completion

CASBEE for
Buildings(Existing
Buildings) Rank
B+ (Good)

Jul. 1985

Hilton Tokyo Odaiba
Location

1-9-1, Daiba, Minato-ku,
TokyoAcreage

18,825.30 sqm

Total Floor
Space

64,907.76 sqm

Structures
and Stories

S/SRC with flat roof,
14 stories above groundand 1 story below ground

Building
Completion

Jan. 1996■BELS (Building-Housing Energy-efficiency Labeling System) Evaluation"BELS" is a public valuation and display system under a guideline by the
Ministry of Land, Infrastructure, Transport and Tourism to evaluate the energy
conservation performance of each building, which was launched in April 2014.
A third-party institution verifies the energy performance of a building by
evaluating its primary energy consumption and labels the performance of both
new and existing buildings. The evaluation result is graded on five scales basedon energy performance (from one star "★" to five stars "★★★★★.")
See here for details of BELS (Japanese only)
https://www.hyoukakyoukai.or.jp/bels/info.html

Hotel Nikko Alivila
Location

Nakagami-gun Okinawa

Acreage

65,850.05 sqm

Total Floor
Space

38,024.98 sqm

Structures
and Stories

SRC/10 stories above
ground with 1 story below
groundBuilding
Completion

Apr. 1994

Evaluator:
JAPAN ERI
CO.,LTD.

Mercure Okinawa Naha
Location

Naha city Okinawa

Acreage

2,860.69 sqm

Total Floor
Space

10,884.25 sqm

Structures
and Stories

RC/14 stories above
groundBuilding
Completion

Aug. 2009

Evaluator:
JAPAN ERI
CO.,LTD.

CASBEE for
Buildings(Existing
Buildings) Rank
B+ (Good)

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Materiality

Stakeholder
Engagement

Initiatives forEnvironment

Initiatives forSociety

GovernanceGreen Bonds

GRI Standards
Disclaimer

Initiatives for Environment●Investing in Mixed-Use Buildings
We are investing in mixed-use facilities that fall within the scope of our asset
management, as stipulated in the Articles of Incorporation.
Active Intercity Hiroshima(Sheraton Grand Hotel Hiroshima)
High-rise hotel and office tower within
Active Intercity Hiroshima, a mixed-use
facility comprised of hotels, offices, andcommercial facilities located next to JR
Hiroshima Station.

Mercure Hotel Yokosuka
High-rise hotel within Bay Square Yokosuka
Ichibankan in Yokosuka City. Bay Square
Yokosuka Ichibankan is a landmark mixedused facility consist of hotel, Yokosuka Arts
Theatre, Yokosuka Industrial Community
Plaza, etc.

●Investing in Urban Redevelopment
We are investing in urban redevelopment projects.
Oriental Hotel Fukuoka Hakata Station
Hotel located next to the JR Hakata Station
Chikushi Exit rotary and connected to the
Hakata Station subway station via an
underground passage. In the vicinity of
Hakata Station, a station-front plaza
redevelopment project is under way, forwhich we carried out renovation work
including for a corridor extending from theunderground passage to the abovegroundentrance/exit.

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Engagement

Initiatives forEnvironment

Initiatives forSociety

Governance

GRI Standards
Disclaimer

Green Bonds

Initiatives for Environment
Initiatives for Climate Change
Our (JHR) Awareness of Climate Change
In 1992, "United Nations Framework Convention on Climate Change(hereinafter called "Convention")," with the ultimate goal of stabilizing theconcentration of greenhouse gases in the atmosphere was adopted, and it wasagreed to take action against climate change worldwide. Based on theConvention, the Conference of the Parties to the United Nations Framework
Convention on Climate Change (hereinafter called "COP"), was held every year
since 1995. At COP 21 in 2015, all 196 countries, including developed anddeveloping countries, which are members of the Convention, adopted the"Paris Agreement", which sets a common reduction target (strive to limit
global warming to well below 2℃ and make additional effort to limit it to 1.5℃).
As a result, recognition and initiatives of tasks for climate change became more
concrete.
Japan has also been actively working on climate change issues and announced
in 2020 that Japan will reduce greenhouse gas emissions to virtually zero by2050 (hereinafter called "Carbon Neutral Declaration") based on the Paris
Agreement. Carbon neutrality is also positioned as a basic principle in "Act on
Promotion of Global Warming Countermeasures," and it is expected toaccelerate decarbonization initiatives, investments, and innovation as well as tofurther promote decarbonization initiatives utilizing renewable energy in local
areas and decarbonization management by companies.
JHR believes that the climate change action, which are being discussed as a
global initiative, are not restrictions on economic growth but are key togenerate a major shift in industrial structure and strong growth throughdrastically transforming the economy and society, encouraging investment andimproving productivity. Therefore, JHR recognizes that properly identifying,assessing, and managing the "risks" and "opportunities" caused by climatechange is essential to enhancing business resilience and ensuring oursustainability, and has positioned action to climate change as one of ourmaterialities (key issues).

Expression of Support for the TCFD Recommendations
by the Asset Management Company
TCFD is the "Task Force on Climate-related Financial Disclosures" establishedby the Financial Stability Board (FSB) in 2015 to encourage companies todisclose appropriate information and to encourage investors and others tomake appropriate investment decisions, and recommended disclosure themes
within the framework in its final report in 2017.
Based on the recognition that "climate change will cause dramatic changes in
the natural environment and social structure and is important issue that will
have a significant impact on the management of investment corporations,"
JHRA, which is asset management company of JHR, judged that it is importantto promote disclosure based on the TCFD recommendations and expressed its
support for the TCFD recommendations in November 2021.
At the same time, JHRA joined the TCFD Consortium, an organization ofJapanese companies that support the TCFD recommendations.
Through the activities of the TCFD Consortium, JHRA promotes the study ofeffective information disclosure and initiatives to link the disclosed information
to appropriate investment decisions by financial institutions, etc., while striving
to expand appropriate information disclosure of JHR.
<Disclosure framework of TCFD>
Recommended
Disclosure themes

Description(Summary)

Governance

Strategy

Risk management

Metrics and Targets

The organization's
governance aroundclimate-relatedrisks andopportunities

The actual andpotential impacts ofclimate-related risks
and opportunities on
the organization's
businesses, strategy,
and financial
planning

The processes usedby the organization
to identify, assess,and manage
climate-relatedrisks

The metrics andtargets used toassess and manage
relevant climaterelated risks andopportunities

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Initiatives for Environment
Initiatives for Four Disclosure Themes Recommended by TCFD
●Governance
JHR has established the following governance structure to address climaterelated risks and opportunities.
• The chief executive officer for Climate-related issues shall be the President,
who is the chief executive officer for Sustainability Promotion.
• The executive officer responsible for management of climate-related issues
shall be the Managing Director, head of Finance and Planning Division, whois the executive officer responsible for management of sustainability
promotion.
• The ESG promotion committee shall consider specific goals and measures,cooperate in implementing measures, and monitor progress for the
purpose of promoting sustainability, including environmental considerations.
The ESG Promotion Committee consists of the chief executive officer, theexecutive officer, management members and ESG team meeting members.
• The ESG Promotion Committee shall determine and implement mattersrelated to action to climate change, including identification and assessmentof climate change impacts, monitor progress in initiatives to manage risks
and opportunities, and the setting of metrics and targets.

●Strategy
In order to examine the impact of climate-related risks and opportunities on
the JHR's business, strategy and financial plan, we conducted scenario
analysis using the 4℃ and 1.5℃ scenarios. In the scenario analysis, we referto the Fifth Assessment Report published by the IPCC (Intergovernmental
Panel on Climate Change of the United Nations) and World Energy Outlook
2020 published by the IEA (International Energy Agency) to analyze theimpact on JHR's business by measures such as Japanese government's"Carbon Neutral Declaration" in mind for the transition of the social economy
to decarbonization and the increasingly serious and frequent occurrence of
natural disasters due to the progress of climate change.

Reference Scenarios
Scenario

Transition risk

Physical risk

4℃ Scenarios

STEPS (IEA WEO2020)

RCP8.5(IPCC Fifth Assessment Report)

1.5℃ Scenarios

NZE2050 (IEA WEO2020)

RCP2.6(IPCC Fifth Assessment Report)

For an overview of the responsible persons and the ESG Promotion
Committee above, please refer to "Sustainability Promotion System"within Sustainability Management.

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Initiatives for Environment• Global Outlook based on Scenario Analysis
1.5℃ Scenarios:
Various laws and regulations will be enforced to achieve a decarbonized society.
Scenario with lower physical risks due to reduced greenhouse gas emissions
compared to 4℃ scenarios, but higher transition risks toward a decarbonizedsociety.

4℃ Scenarios:
Enforcement of various laws and regulations to achieve a decarbonized society
to be stagnant, and there is no significant change from the present state. The
scenarios with high physical risk due to no reduction in greenhouse gas
emissions compared to 1.5℃ scenarios, but low risk of transition toward adecarbonized society.

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Initiatives for Environment• Climate-related risks and opportunities(short-, medium- and long-term climate-related risks andopportunities and financial impacts)
For each of the above 4℃ and 1.5℃ scenarios, we have evaluated themagnitude of the financial impacts on JHR which will be caused by theidentified risks and opportunities. For each scenario, we evaluated the impact
in the years 2025 (short-term), 2030 (medium-term) and 2050 (long-term) on
a scale of large, medium and small.
The accuracy of this assessment is not guaranteed, as it is a relative impact
assessed based on a qualitative analysis and includes various factors such as
uncertain assumptions and unknown risks over the medium to long term. A
summary of the results is shown in the table below.
<Financial Impact Based on Scenario Analysis>(*) "Transition risk" and "physical risk" are as follows.
"Transition risk": Business impacts arising from the social economy's transition to a low-carbon, decarbonized economy- Policy and Legal Risks: Risks arising from tightening of regulations to promote decarbonization through policies and regulations- Technology risks: Risks associated with the development of new low-carbon and decarbonization technologies and theirmainstreaming- Market risks: Risks related to markets, such as energy price volatility and changes in demand for services- Reputational risks: Risks associated with a deterioration of reputation among stakeholders, including customers, the public,
employees, and investors"Physical risks": Business impacts resulting from progress of climate change and shifts from traditional climate patterns and phenomena- Acute physical risks: Risks arising from sudden weather phenomena such as typhoons and floods- Chronic physical risks: Risks arising from long-term changes in climate patterns that may cause rising sea level or chronic heat waves

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Initiatives for Environment●Risk Management• Premise of Risk Management(Identification and Assessment of Risks)
At JHRA, which is entrusted with asset management of JHR's assets, ESG Promotion
Committee mainly plays a central role. ESG Promotion Committee identifies and assessclimate-related risks as well as consider and decide business strategies to manage risks andcountermeasures as one of the ESG issues. The processes of identification and assessment
are as follows.
① Under the direction of the executive officer responsible for management of climate-related
issues, an internal ESG team (hereinafter called "ESG Team"), which formulates goals,
studies measures, and monitors their implementation status with respect to ESG-related
issues, identifies and assess climate-related risks to JHR.
② ESG Team identifies and assess climate-related risks based on the classification of"Transition risks" and "Physical risks" and report the results (progress) at the ESG
Promotion Committee.
③ ESG Promotion Committee deliberates on climate-related risks and prioritized measures tomanage climate-related risk which judged to be corresponded as priority based on the resultsof the ESG Team's identification and assessment of climate-related risks, including theirpotential to materialize and their financial impact and other factors. In addition, when climaterelated opportunities are reported, the team prioritizes them within the business strategy.
For an overview of ESG Promotion Committee and ESG Team, please refer to "Sustainability
Management.“• Management of climate-related risks
The processes for managing the assessed climate-related risks are as follows.
① The executive officer responsible for management of climate-related issues will instruct the
ESG team to formulate an action for the key climate-related risk factors that ESG Promotion
Committee has decided to prioritize correspondence.
② Depending on its content, the action formulated by ESG team will be decided andimplemented based on the necessary decision-making system within the asset
management company including ESG Promotion Committee.
③ Regarding the action decided on, ESG team summarizes the status of the progress and theimpact by the action, and reports to ESG Promotion Committee. ESG Promotion Committee
appropriately manages the risk through management of progress of the action and provide
instructions on the formulation of new measures, etc. based on the report by ESG Team.
For an overview of Risk management, please refer to "Governance."●Metrics and Targets
Based on the recognition that solving environmental issues represented by climate change is
one of the most important management issues for stable medium- and long-term growth of the
JHR, we are promoting low carbonization of our portfolio and energy use efficiency throughenvironmental and energy-saving measures.

• Greenhouse Gas (GHG) emissions
JHR has set a target to reduce GHG emissions intensity by 30% until 2050 (compared to
FY2017) as a long-term goal.
Since the properties owned by JHR are managed by hotel lessees, etc. and their GHG
emissions fall under Scope 3, Category 13, Leased Assets (downstream), the sum of directemissions from fuel consumption (Scope 1) at the properties and indirect emissions fromconsumption of purchased electricity, etc., which converted final energy consumption into
annual CO2 emissions (Scope 2) reported by the hotel lessees, etc. are used as GHG
emissions for JHR.
The GHG emissions are calculated as follows.

①Scope 1CO2 emissions are calculated by multiplying the calorific value of each type of fuel (gas,heavy oil, kerosene, etc.) burned on-site by the "carbon emission conversion factor foreach fuel type × 44/12."②Scope 2
Calculated only for electricity and the heat supplied from offsite sources (district heating
and cooling, etc.). CO2 emissions are calculated by multiplying each consumption by theemission factor for respective suppliers or by the emission factor specified by thegovernment.

• Others
JHR is striving to reduce GHG emissions and take the following environmental measures andothers at the properties it owns, aiming to build a portfolio that make reduction ofenvironmental impact compatible with consideration of all stakeholders, including hotel guests.
• We have a plan in place to eliminate the use of specified CFCs (CFC) and alternative CFCs
(HCFC, HFC) in short period by identifying the refrigerants used in the air-conditioning
equipment of all properties owned by JHR.
• With regard to ODP and GWP, we aim to figure out the ODP and GWP of all refrigerants
used in our properties.
• Upon renewal of air conditioning equipment, we make selection of equipment withconsideration to ODP and GWP usage.

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Initiatives for Society
Basic Policy
JHR and JHRA endeavor to build sound relationships with our stakeholders
including unitholders, hotel guests, hotel lessees, hotel operators, business
partners including property managers, local communities, officers andemployees of the JHRA and others, and to fulfill our social responsibility
expected by each of them.

Initiatives for Unitholders●Proactive IR activities
General Meeting of Unitholders and Briefing for unitholders: once in every
two years
Financial Results Briefing for institutional investors: twice a year (including
mid-term Financial Result Briefing)
We proactively participate in conference for investors in Japan and overseas.

Initiatives for Local Communities/
Contribution to Regional Revitalization(Cooperation with Lessees, etc.)
Considering the Health and Safety of Local Communities
Initiatives to cope with COVID-19• Provided 7 hotels to date as facilities for accommodation and care of patients• Introducing automatic check-in machines as a countermeasure to COVID-19(Utilize DX –Digital Transformation)• Providing vaccinations to officers and employees of HMJ Group hotels (including part-time andtemporary staff) who want them, as well as their families• Providing hotel banquet rooms as workplace vaccination sites and group vaccination sites• Installing acrylic boards as a countermeasure for airborne droplets and installing automatic
thermometers●Proactive information disclosure
We actively disclose information using various communication tools (Financial
Results Briefing, Asset Management Report and Press Release, etc.).
Moreover, we disclose business result of our major hotels through press
release every month.
●Benefits program for unitholders
JHR has introduced benefits program for unitholders to obtain a better
understanding of our hotels, improve unitholders’ satisfaction and expand
the investor base. We also carry out a questionnaire survey to unitholder
who used hotel under the program to obtain feedback to our hotels.

Supporting Cultural and Artistic Activities and Child-Rearing
in Local Communities
Oriental Hotel tokyo bay
Setting forth a corporate policy as "Hotel which is friendly to Earth, local community and family"
Oriental Hotel tokyo bay proactively engages in events of local communities such as Shin-urayasu
festival and disaster preparedness to communicate with local residents. Oriental Hotel tokyo bay
also supports art and cultural activities in local community
through hosting a free annual Christmas chapel concert andsetting an oriental gallery.
Moreover, the hotel is dedicated to support childcare suchas cooperation with after-childbirth support project of
Urayasu City and received first Kids Design Award as a hotel.

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Initiatives for Society
Preserving the Local Environment
Hotel Nikko Alivila
Hotel Nikko Alivila holds up "Eco-friendly
resort." The hotel participates in"Churaumi clean-up operation in Yomitan"
hosted by Yomitan Village in Okinawa
every year. Nirai Beach is located in frontof Hotel Nikko Alivila, which is famous for
its one of the best transparency in
Okinawa’s main island. Hotel staffs clean
the beach every morning and implement
beach preservation activities. As a result of
these activities, laying of eggs, and natural
hatching by sea turtles are observed in thebeach. Hotel Nikko Alivila is a member of
the Sea Turtle Association of Japan.

Initiatives for Hotels
Improvements to Hotel Employees’ Work Environment
Introducing COVID-19 countermeasures and creating practical, relaxing back-ofhouse areas where employees can work comfortably.

Safety Measures for Local Communities
Oriental Hotel Okinawa Resort & Spa
Oriental Hotel Okinawa Resort & Spa
endeavors to work on medical issues inlocal areas through donating to MESH
support, an incorporated non-profit
organization which operates a helicopter
emergency medical service (a private air
ambulance) in northern area of Okinawa,a medically depopulated area. Oriental
Hotel Okinawa Resort & Spa also aims to
support community through invitation ofprimary school pupils to its pool fordemonstration of life-saving training incase of disaster by water.

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Initiatives for Employees
In order to maintain its professional expertise and continue performing stable asset
management, JHRA believes it must be a company at which highly motivated,
exceptional human resources are able to achieve excellent performance over the longterm. It provides an appealing, pleasant work environment where exceptional
employees remain highly motivated to enhance their quality and have incentives tocontinue working there in the medium to long term.

Initiatives for HR Development
Viewing human resources as its most important asset, JHRA supports employees’
career development by implementing various development programs that enable eachindividual to grow through their work while expressing their individuality and achieving
personal fulfillment.

●HR development (professional skills development)
With the aim of cultivating REIT and real estate management professionals, werecommend and support the acquisition of professional certifications such as ARES
(Association for Real Estate Securitization) Certified Master (an educational
program that systematically teaches practical, specialized knowledge in the realestate and finance fields) for all officers and employees, and throughout the year,
the company covers the full cost of participation in training and seminars relating
to practical knowledge, industry trends, complying with laws, etc.

Certification Holders(As of December 31,2022)• Real Estate Broker: 15 employees• Real Estate Appraiser: 2 employees• Certified Building Administrator: 3 employees• Official Real Estate Consulting Master: 2 employees• ARES Certified Master: 11 employees●HR development (general skills development)
In order to support efforts aimed at acquiring the specialized expertise andqualifications required to carry out the responsibilities of their position and improvetheir skills, we offer training programs conducted by external organizations to all
employees, as well as supporting expenses for personal development using theCafeteria Plan program.

Initiatives for Employee Health and Well-being
With the purpose of ensuring employees’ mental and physical health and establishing a
comfortable work environment, JHRA promotes work-life balance and initiatives toimprove mental and physical health and pursues initiatives to enhance job satisfaction.

●Establishment of Health Committee
Even though the size of our workplace does not oblige us to establish under the
Industrial Safety and Health Act, we have established a Health Committee with theaim of improving Standards of labor health for employees and maintaining andpromoting wellness. The committee, which meets once a month, reviews matters
including status of work by all employees and the well-being and safety of the work
environment, and after meetings, advice from an occupational health physician is
distributed to all employees.

●Encouraging regular health checks, flu shots, etc.
In general, we subsidize costs related to regular health checks/screenings once a
year and costs related to flu shots and we encourage employees to take health checkand vaccinations by these measures. Moreover, we implement a system that enables
those who desire it to consult with occupational health physician about mental healthissues as needed.

●Establishment of employee consultation service
For the purpose of protecting employees’ human rights and strengthening
compliance management as well as for prevention, early detection, and correction of
conduct that violates laws and regulations, fraud, harassment, etc., we have set up
whistleblowing regulations that apply to all employees and established an employee
consulting service. We set the Compliance Office as an in-house contact point and an
external lawyer as an external contact point. Employees may report or consult with
consulting service anonymously.

●Consideration of human rights, diversity, and equality of opportunities
Our in-house regulations stipulate that acts of discrimination based on ethnicity,religion, gender, age, origin, nationality, etc., shall not be allowed. Through activities
such as compliance training, we promote respect for various perspectives and values
and pursue awareness activities to eliminate discrimination and harassment.

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Initiatives for Society●Preparation of environment where senior personnel can be active
We have introduced a re-employment system for employees aged 60 and over who
wish to continue working. We have established a labor environment where seniorpersonnel may remain active after the official retirement age by leveraging their work
experience and expertise.

●Preparation of office environment
Our offices are amply equipped with common spaces that promote communication
between employees, and spaces are also provided for individuals to rest.
Furthermore, we are taking steps to implement a comfortable work environment,such as hiring an external specialist company to perform periodic air cleaning
maintenance in order to ensure excellent air quality.

●Pension plans and fund installment program under NISA at workplace(Employee Stock Purchase Plan)
To help employees build up assets for the future and enjoy a comfortable standard ofliving after retirement, we have introduced a defined contribution pension plan
(401k) as well as a defined benefit pension plan and other measures.
Furthermore, with the purpose of maintaining officers’ and employees’ motivation forimproving unitholder value over the medium to long term by having the same
perspective as unitholders, we have introduced fund installment program under NISA
at workplace for all officers and employees, under which the company provides
contributions equal to a certain percentage of individuals’ contributions as anincentive. We made possible to acquire investment units of JHR by officers andemployees under the program while paying attention to insider information.

●Implementation of various benefits(programs for all officers and employees)• Sick leave (Leave which may be taken separately from annual paid vacation)• Length-of-service compensation program• Congratulatory/condolence payment program• Cooperating with welfare service providers• Flex hours, etc.

Communication with Employees
JHRA pursues a two-way dialogue between management and employees onmatters such as working styles and strives to create job satisfaction and makework more pleasant.
●Conducting employee satisfaction surveys
In order to establish more favorable relations between management andemployees, we conduct a regular employee satisfaction survey. Based on thesurvey results, we consider and implement improvement measures, as wellas using proposals for improvement obtained from employees during
workshops, with the aim of becoming a better company through two-way
communication between management and employees.
●Target management and performance evaluation process
Superiors and their subordinates together review the status of the targets set
by employees at the start of the fiscal year and their performance during theyear through regular communication. At the end of the year, employees’
achievement of their targets, performance, and use of their skills arereviewed and a follow-up meeting is held. We have instituted a PDCA
process whereby areas for improvement are shared during the meeting anddiscussed with the aim of taking the next steps, and targets for the next year
and mid- to long-term targets are set. Moreover, in the process, allemployees set ESG-related targets. These targets are managed and thestatus of related initiatives is reviewed and evaluated.
●Individual meetings with top executive
As a venue for consultation and discussion about the details of individual
employees’ assignment, career plan, workplace-related concerns, etc., top
executive hold one-on-one meetings with all employees once a year. Top
executive listen to employees’ voices and use them as a reference for theaim of supporting each employee’s personal fulfillment and creating a more
pleasant work environment.

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Basic Employee Data
Basic data on JHRA’s employees is shown below.
■Data related to Employees (as of the end of each fiscal year) (*1)
1. Basic Data on Employees

3. Health and safety of employees, etc.

Item

FY2020

FY2021

FY2022

40

36

41

Male

27 (68％)24 (67％)28 (68％)

Female13 (33％)

12 (33％)

13 (32％)

Number of employees

By gender (ratio)

Average length of service

5 years 3 months 5 years 7 months 5 years 7 months

Number of seconded employee (*2)

0

1

1

2. Promoting of Diversity
Item

FY2020

FY2021

FY2022

7

7

7

Male

7 (100％)6 (86％)

6 (86％)

Female0 (0％)

1 (14％)

1 (14％)

11

12

13

Male

11 (100％)

11 (92％)10 (77％)

Female0 (0％)

1 (8％)

3 (23％)

3

2

2

Number of Directors(*3)

Item

FY2020

FY2021

FY2022

52%

57%

66%

Number of Health Committee
Meetings Held

7

12

11

Number of interviews withindustrial physicians

3

21

8

Number of employees took parental
leave (Number of male employees
took parental leave)

0

0

3 (1)

Number of employees took
nursing leave

0

0

0

Number of occupational accidents

0

0

0

Percentage of paid leave taken(*4)（*1）Representative director, part-time directors and auditors are excluded.
（*2）Secondee is from a third party mainly for the training purpose and not from any sponsor-related party.
（*3）Representative director, part-time directors and auditors are included.
（*4）Exclude employees joined the company during the year.

By gender (ratio)
Number of employees in managerial
position (Head and Deputy Head ofGroup or above)
By gender (ratio)
Number of employees
over 60 years old

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Initiatives under Impact of COVID-19
The COVID-19 pandemic has significantly impacted daily life, social activities,
and business, prompting reconsideration of how employees work andcommunicate. JHRA is striving to ensure employees’ safety and peace of mind
in the context under the pandemic, and we have implemented various
initiatives aimed at making work more flexible and comfortable.
●Implementing a flexible work system
Flexible work system, recommending staggered commuting times, setting
and managing attendance rate, rotation system to work at office,establishing behavioral guidelines based on the pandemic situation,
recommending online meetings, etc.
●Changing office specifications
Introducing an online meeting system for all conference rooms, practicing
social distancing of seats while attending meetings, setting limits on thenumber of people using conference rooms, installing partitions, etc.
●Employee health management
Conducting regular PCR tests (voluntary), providing workplace vaccinations(voluntary), installing air purifiers and clinical thermometer, distributing
infection prevention gear (e.g., disinfectant spray, masks) to all officers andemployees, etc.
●Ensuring the well-being of working from home
Loaning laptops and cell phones, subsidizing the cost of buying monitors andheadsets, etc.

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GovernanceCorporate Governance
JHR’s Governing Bodies
Based on the Act on Investment Trusts and Investment Corporations (“the Investment
Trusts Act”), organizational management of JHR is handled by the General Meeting ofUnitholders, which is comprised of unitholders, and the Board of Directors, including one
Executive Director (male) and three Supervisory Directors (two male, one female), and an
accounting auditor.

Executive Director and Supervisory Directors●Status and term of directors
The Executive Director executes the business of JHR, represents the company, andpossesses the authority to perform any acts in or out of court relating to the businessof JHR.
The Supervisory Directors possess the authority to supervise the execution of the
Executive Directors’ duties. They may request reports relating to the status of JHR’sbusiness and assets from not only the Executive Director but also administrative
agents, the asset management company, and the asset custody company, and they
may also conduct any investigations that are required.
With regard to the status of the Executive Director and Supervisory Directors, refer to
Executive Director and Supervisory Directors were elected by resolution of general
meeting of unitholders and term of office is two years following their appointment.

●Independence of directors
In order to secure high independency of Executive Director and Supervisory Directors
from JHRA and its sponsor-related parties, JHR elects person without any relation
with JHRA and its sponsor-related parties as its Executive Director and Supervisory
Directors since April 1, 2012.
In cases of vacancy of the position of Executive Director or a shortfall in the number
of Executive Director as stipulated by laws and regulations, representative director of
JHRA may temporarily take position of Executive Director of JHR.

●Reasons for Appointment of Directors and Board of Directors Meeting
Attendance Record
The directors were elected by a resolution of the General Meeting of Unitholders
based on the reasons below, with the condition that they must not conflict with anyof the reasons for disqualification stipulated in various laws and regulations, including
the Investment Trusts Act (Article 98, 100, and 200 of the Investment Trusts Act,
Article 244 of the Ordinance for Enforcement of the Investment Trusts Act). The
Executive Director and Supervisory Directors consist of third parties who have no
special interest with JHR.

Name

Reasons for Appointment

GenderBoard of Directors
Meeting
Attendance Record(*)

KanameMasudaPossesses high experience and knowledge
as a professional of law with central focus
on corporate law. Familiar with uniquemechanism and structure of a J-REIT
through his practical experience andpossesses considerable insight ofmanagement.

Male

100%
(13/13 meetings)

TetsuyaMishiku

Expected to supervise investment
corporation management from various
standpoints including specific field based on
the high experience, knowledge etc. he has
acquired as a legal expert with central focus
on compliance-related matters.

Male

84.6%
(11/13 meetings)

Supervisory
Director

HirotoKashii

Expected to supervise investment
corporation management from various
standpoints including particular field basedon his high experience and knowledge insectors such as finance, hotel, and asset
management.

Male

100%
(13/13 meetings)

Supervisory
Director

MayumiUmezawa

Expected to supervise management fromvarious standpoints including specific field
based on the high experience andknowledge as professional of accounting.

Female92.3%(12/13 meetings)

Title of Officer

Executive
Director

Supervisory
Director(*) Shows the attendance record at board of directors meetings held during the 23rd fiscal
period (ended December 2022).

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Governance
Remuneration of Directors●Remuneration of Executive Director and Supervisory Directors
As stipulated in JHR’s Articles of Incorporation, the amount of remuneration for the
Executive Director and Supervisory Directors shall be determined by the Board of
Directors, with a maximum of 800,000 yen/month per person for the Executive
Director and a maximum of 500,000 yen/month per person for the Supervisory
Directors. The remuneration amount for each director is as shown in the table below.
Position

Name

Total Remuneration for Each
Position in the 23rd Fiscal Period(Ended December 2022)

Executive
Director

Kaname Masuda

6,600,000 yen

Supervisory
Director

Tetsuya Mishiku

3,600,000 yen

Supervisory
Director

Hiroto Kashii

3,600,000 yen

Supervisory
Director

Mayumi Umezawa

3,600,000 yen●Fees paid to JHRA
Since JHR is prohibited from hiring employees based on the provisions of the Investment
Trusts Act, it entrusts asset management to JHRA without hiring any personnel.
In accordance with the asset management contract signed between the two parties, JHR
pays asset management fees to JHRA. The types of fees, methods of calculating them,and total amounts are as shown below.
(Calculation Methods)
Fee Type

Fee Calculation Method

Management
fee 1

On the final day of March, June, and September in each business period and the fiscal year-end of eachbusiness period (the “calculation reference dates”), JHR shall pay the amount obtained by multiplying its
total assets by a rate it has agreed separately with JHRA, up to a maximum of 0.35% per annum, on a daily
pro-rated basis for the number of days between the previous calculation reference date (which is notincluded) and the current calculation reference date (which is included), taking one year to be 365 days androunding down to the nearest yen.

Management
fee 2

JHR shall pay the amount calculated by multiplying its NOI (Net Operating Income) for each business period
by a rate it has agreed separately with JHRA, up to a maximum of 1.0%, rounded down to the nearest yen.

Management
fee 3

JHR shall pay the amount calculated by multiplying the amount obtained by dividing the total dividend
amount for a given business period before deducting
management fee 3 by the total number of investment units issued as of the last day in December in that
period (rounded down to the nearest yen) by a coefficient that it has agreed separately with JHRA, up to a
maximum of 43,000 (however, if the investment units were split, the figure will be 43,000 multiplied by the
split ratio, and if the investment units were split multiple times, the same process will be repeated).

Acquisition fee

If real estate related assets, etc. (this refers to assets indicated in Article 28-2 through 28-4 of the Articles
of Incorporation; the same applies hereinafter) are acquired, JHR shall pay the amount obtained bymultiplying the acquisition price of the applicable real estate related assets, etc. (excluding amounts
corresponding to consumption tax, etc. (as defined in Article 39 of the Articles of Incorporation; the same
applies hereinafter) and expenses associated with acquisition) by a rate that it has agreed separately with
JHRA, up to a maximum of 0.75% (rounded down to the nearest yen). However, if the applicable realestate related assets, etc. are acquired from a sponsor-related parties, the rate to be applied shall be
reduced by 0.25% from the rate to be applied in the case of acquisition from a non-sponsor-related parties.

Disposition fee

In the event of real estate related asset, etc. are disposed, JHR shall pay the amount obtained bymultiplying the disposition price of the applicable real estate related assets, etc. (excluding amounts
corresponding to consumption tax, etc. and expenses associated with disposition) by a rate that it has
agreed separately with JHRA, up to a maximum of 0.5% (rounded down to the nearest yen).
However, in the case of disposition of the applicable real estate related assets, etc. to a sponsor-relatedparties, the rate to be applied shall be reduced by 0.25% from the rate to be applied in the case of
disposition to a non-sponsor-related parties.

Merger fee

In a merger carried out by JHR, if JHRA investigates and evaluates the holdings of the other party in themerger and performs other merger-related tasks and assets belonging to the other party are thensucceeded by JHR as a result of the merger, JHR shall pay JHRA a merger fee based on the provisions of theasset management contract signed between the two parties. The fee involved shall be the total of theamount obtained by multiplying the appraisal value of the real estate related assets, etc., succeeded by JHRat the time of the merger by a rate agreed separately with JHRA (rounded down to the nearest yen), up toa maximum of 0.25%, and the corresponding consumption tax on this amount.

●Remuneration of Accounting Auditor
The amount of remuneration for the Accounting Auditor shall be determined by the
Board of Directors, with a maximum of 30,000,000 yen per business period. The
remuneration amount for the Accounting Auditor is as shown in the table below.
Title
Accounting
AuditorCompany Name
KPMG AZSA LLC

Remuneration for the 23rd Fiscal Period(Ended December 2022)
26,750,000 yen(*)Remuneration for the independent auditor includes fees for services other than those stipulated in Article 2,paragraph 1 of the Certified Public Accountants Act amounting to ¥1,750 thousand, such as preparation of
comfort letters associated with the issuance of investment corporation bonds.

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Governance(Fee Amounts)(Unit: Thousands of Yen)

Fee Type

21st Fiscal Period(Ended December 2020)

22nd Fiscal Period(Ended December 2021)

23rd Fiscal Period(Ended December 2022)

Management
fee 11,396,056

1,367,633

1,352,064

Managementfee 265,47963,667

109,633

Management
fee 3

17,845

15,91029,627

Sub Total

1,479,381

1,447,210

1,491,325

Acquisition
fees

7,647

5,654

―

Dispositionfees

42,61556,500―Merger fees

―

―

―

1,529,644

1,509,365

1,491,325

Total

Initiatives to Prevent Conflicts of Interest
JHRA believes that managing conflicts of interest in a strict manner is essential
to gain trust from the unitholders of JHR and has formulated a decision-making
process that is stricter than what is required by laws and regulations. In
particular, in addition to interested person, etc. stipulated by laws andregulations, JHRA stipulates that “sponsor-related parties” include JHRA’s
shareholders, their subsidiaries, etc. and stipulates detailed standards andprocedures pertaining to transactions between “sponsor-related parties”
and JHR.
JHRA stipulates that, in cases where JHR conducts prescribed transactions with“sponsor-related parties,” resolution at a board of directors' meeting andresolution at JHR’s board of directors' meeting are required in addition todeliberation and approval at the Investment and Operation Committee andCompliance Committee.

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Disclaimer

GovernanceDecision-Making Process for Acquisition or
Disposition of Assets under Management
JHR’s decision-making process for acquiring or disposing assets undermanagement is shown in the right chart.
With regard to transactions with “sponsor-related parties,” JHR and JHRA haveset decision-making rules stricter than what is required by laws and regulations.
In order to manage conflicts of interest, we strive for compliance with “armslength rules” and transparency. Furthermore, if an asset under management isacquired from or sold to "sponsor-related parties," compensation to be paid to
JHRA will be reduced in accordance with provisions of the Articles ofIncorporation.
Beside such, all transactions with "sponsor-related parties," including theconclusion of lease contracts, amendment of lease contracts and ordering of
construction work, generally require the same decision-making process astransactions with "sponsor-related parties", along with attention paid to thefairness of the content by means of obtaining estimates from third parties andsuch.

(*1) The board of directors consists of third-party members who do not have any relationship with sponsorrelated parties.
(*2) JHRA stipulates that the compliance committee in principle requires an attendance of an outside specialist(attorney). The outside specialist is authorized to dismiss a proposal.
(*3) In case of acquisition or disposition of assets between JHR and a client whom JHRA advices, such client willbe treated as “sponsor-related parties”. Moreover, JHRA stipulates that resolution on the said transaction at
Investment and Operation Committee needs an attendance of an external expert (real estate appraiser),who has dismissal rights of proposed resolution.

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Disclaimer

GovernanceCompliance
Compliance Initiatives and System
To ensure appropriate asset management, sound and appropriate execution ofoperations, and protection of investors, JHR and JHRA have established a compliancerelated management system. JHRA has positioned thorough compliance and businessethics issues such as anti-corruption, as the most important management issues, andhave established a system for deliberation, decision-making, and management ofvarious compliance-related matters under the authority and responsibility of the Boardof Directors, the Compliance Committee, the President and Representative Director,
and the Compliance Officer, respectively. Specifically, we have developed a Code ofCompliance that stipulates basic policies for corporate ethics and behavioral guidelines
for officers and employees and strives to maintain and implement compliance, carry out
sincere and fair corporate activities, and ensure sound management based on selfdiscipline. Moreover, recognizing the importance of compliance, it has formulated aCompliance Manual, which stipulates standards of conduct for ensuring that complianceis implemented and achieved by officers and employees in day-to-day business
operations, and a Compliance Program, which provides a practical plan for
implementing compliance.

Anti-Corruption Initiatives andInitiatives against Anti-Social Forces
To prevent corruption and eliminate anti-social forces, JHRA ensures that all officers andemployees (including contract and temporary employees, etc.; the same applies throughout
this section) have a thorough understanding of related matters by conducting compliancetraining and other activities, as well as verifying implementation by conducting internal
audits and administrative inspections, etc., each year.
●Anti-Corruption Initiatives
JHRA stipulates in its Code of Compliance, and Compliance Manual and Rules of
Employment that all its officers and employees are required to eliminate any mixtureof public and private affairs, and are prohibited from providing favors, benefits, etc.
to civil servants of Japan or other countries or persons deemed as such, in
accordance with Japanese and international laws. Furthermore, it stipulates thatregardless of whether business-related transactions take place, it is prohibited toprovide or accept favors, benefits, etc. that exceed the scope of courtesy based onsocially accepted conventions.
Specifically, in order to ensure the fairness of transactions, each officer and employee
is required to confirm and declare at the time of application for transactions that thetransaction does not unfairly benefit himself/herself or a third party.
Based on the internal audits, administrative inspections, and so forth that it has
conducted to date, JHRA has not found any favors or gifts that contravene therelevant laws. Moreover, there have been no violations of corruption-related laws oradministrative sanctions.
Also, there are no violations of laws and regulations nor administrative actions
charged by administrative bodies related to corrupt practices.
For details on internal audits, please refer to "Internal Audit" in Risk Management below.
●Initiatives to Eliminate Anti-Social Forces
JHRA has formulated and published a Basic Policy Against Anti-Social Forces andstrives to maintain the trust of all stakeholders and ensure sound operations andappropriate management by observing the policy. Furthermore, an organizational
system has been established and implemented through the Code of Compliance
Committee and Regulations for Handling Anti-Social Forces which stipulate various
procedures for severing any ties involving dealings with anti-social forces and prohibit
providing payoffs to anti-social forces. The following is an overview of theorganizational system:• A compliance officer is in charge of handling anti-social forces and severing any newties with such forces and supervises JHRA’s overall establishment of system.
• Each department acts as section responsible to handle initial reaction for anti-social
forces and supervises the handling of individual cases.
• The compliance officer reports to the Compliance Committee and Board of Directors
as needed with regard to the status of initiatives to sever and prevent ties with antisocial forces.
• The Compliance Committee and Board of Directors receive reports on the status ofinitiatives to sever and prevent ties with anti-social forces and grant approval for
JHRA’s specific and general initiatives and policies toward anti-social forces
respectively as needed.

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Disclaimer

GovernanceInitiatives Relating to Anti-Money Laundering andCountering the Financing of Terrorism
In recent years, the importance of countermeasures to anti-money laundering andfinancing of terrorism (hereinafter referred to as “money laundering, etc.”) as an issue
that needs to be addressed by both Japan and global society has been growing. In
collaboration with the relevant government ministries and agencies, financial
institutions, etc. have been striving to maintain sound financial systems by enhancing
their management systems for cutting off the flow of funds connected with criminals,
terrorists, etc. (i.e., money laundering).
Recognizing the importance of countermeasures for money laundering, etc., JHRA
complies with the relevant laws and regulations, including the Act on Prevention ofTransfer of Criminal Proceeds. Moreover, in accordance with the Guidelines for AntiMoney Laundering and Combating the Financing of Terrorism developed and publishedby the Financial Services Agency in February 2018 and a risk-based approach, JHRA
has established a risk management system that makes it possible to implement
appropriate measures in a timely manner.
JHRA has formulated Regulations Concerning the Implementation of Verification to
Execute Transactions, Etc. Based on the regulation, various verification procedures are
implemented and audit and other activities on the procedures are conducted by asupervising officer (compliance officer).

Establishment of Whistleblower System
With an aim to contribute to strengthening compliance management, JHRA has
established Regulation of Whistleblower. As such, JHRA has established a whistleblower
system that allows its officers and employees (including contract and temporary
employees) to report or discuss fraudulent acts.
"Regulation of Whistleblower" target any organizational or individual fraudulent acts
including any harassment (including cases where fraudulent acts may occur) as the
subject for reports or consultation (hereinafter called "Whistleblowing, etc."). Based on
the Whistleblower Protection Act and company regulation, the regulation stipulates
protection of whistleblower who reported or consulted (including prohibition ofdisadvantageous treatment, responding to anonymous reports, keeping the content
confidential and elimination of conflicts of interest, etc.) as well as procedures to find andcorrect reported fraudulent acts (including research method, disposition of those who
conduct fraudulent acts and following up with the whistleblowers.). Furthermore, in
addition to assignment of Compliance Office as an in-house contact point (the President
and Representative Director is the internal contact point for reporting of fraudulent acts,
etc. by officers and employees of the Compliance Office), an external attorney who has no
business relationship with JHRA is appointed as the reporting contact point in order tosecure effectiveness of the whistleblower system. The contact information of each contact
point is made known to all officers and employees through compliance trainings, and is
explained to new employees in particular during the compliance training provided at thetime they join the company.
In the specific process to handle reports, etc., when contact point received a report,
etc., each contact point will consider the necessity of an investigation fairly, impartially,
and in good faith, and will promptly notify the whistleblower of the results of theconsideration and future actions against the case. And report the results of theinvestigation by the person in charge of the investigation to the whistleblower and theCompliance Committee.
If the investigation reveals fraudulent acts, corrective measures and measures toprevent recurrence are promptly taken, and the results of the corrective measures arereported to the Compliance Committee. Those involved in such fraudulent acts will beappropriately handled including punishment under the Rules of Employment etc., andreporting to administrative agencies, etc., if necessary.
Furthermore, even after the completion of the process, JHRA shall follow up sufficiently
to protect the whistleblower, for example, by confirming that the fraudulent acts inquestion have been resolved and that the whistleblower has not been subjected to any
disadvantageous treatment because of the reporting.

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Governance
Implementation of In-House Training
JHRA implements regular compliance training for all officers and employees (including
contract and temporary employees, etc.; the same applies throughout this section).
The Compliance Program stipulates that compliance training must be conducted on aregular basis each year, and the status of progress and results of its implementation
are reported to the Compliance Committee on semi-annual basis.
The subject matter of compliance training will be determined based on who isparticipating (new hires all officers and employees, Investment Division officers andemployees, etc.), and JHRA fosters a stronger compliance culture by verifying andimplementing training that focuses on more timely topics based on trends ofamendments to laws and regulations and the results of internal audits, etc.
Training conducted in recent years is shown below.
No. ofTimes

Main Topics

19• Fair disclosure rules• Points to be considered in case of property acquisition anddisposition• Financial regulations and compliance in the real estate investment
management industry

FY201920• Dealing with harassment and introduction of whistleblower system• Civil Code amendments• Conditions of System management required for financial
instruments business operators

FY20207• Appropriate management of personal information• Compliance Manual

FY202115• Customer-oriented business conduct and transactions withconflict-of-interest• JHRA’s risk management system• Reporting, quick resolution, and recurrence prevention of clericalerrors

FY202214• Whistleblower system• Case studies of violation of laws and regulations• Insider trading regulations

Fiscal Year

FY2018ESG REPORT

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Green Bonds

GovernanceRisk Management
Approach to Risk Management●Establishment of Risk Management System
JHRA, to which JHR entrusts asset management, has established a risk management
system for the purpose of ensuring sound management, performing appropriate risk
management as a financial instruments business operator, and fulfilling its obligations.

●Basic Risk Management Policy
JHRA’s Board of Directors has formulated a basic risk management policy based on
its management policy and strategic objectives and supervises the development of an
appropriate risk management system. The basic risk management policy is asfollows:① In order to ensure sound management and fulfill its fiduciary responsibilities as afinancial instrument business operator, JHRA strives to develop a risk management
system based on recognition that appropriate management and control of risks
that occur in the course of its business operations are essential issues inmanagement.
② In order to perform appropriate risk management, JHRA shall establish
organizations that can exercise mutual check-and-balance , as well as provide
appropriate staffing, develop a training system, and implement appropriate
measures to prevent accidents.
③ Given that there are always intrinsic risks in day-to-day business operations, all of
JHRA’s officers and employees shall recognize that they need to play a role in risk
management and implement operation with understanding of its importance.

●Risk Management System with focus on 3 Lines of Defense
In recent years, led by financial institutions, publicly listed corporations, etc., risk
management systems that focus on a “three lines of defense”-based approach havebeen developed. JHRA has also adopted this approach.
Specifically, as the “first line of defense,” the groups implementing/executing tasks
become the risk owners. Heads of groups/offices assess, supervise, and control risks
that occur in their tasks, as the risk management officers. Next, as the “second lineof defense,” the Compliance Office monitors risks and implements measures tocontrol them. The compliance officer serves as chief risk management officer,
supervising overall risk management for JHRA and providing the required guidance
and oversight as the person in charge. Finally, in the “third line of defense,” thevalidity of the processes created by the first and second lines of defense is evaluatedand verified through internal audits and administrative inspections.
As JHR’s asset management company, JHRA, based on the “three lines of defense”
approach, remains aware that there are always intrinsic risks in its day-to-day
business operations, and all officers and employees execute their duties while
recognizing that they play a role in risk management.
●Risk Management Implementation Processes
JHRA stipulates the risk management implementation processes and specificprocedures in its Code of Risk Management and detailed rules relating to the code.
The risk management implementation processes consist of the seven items below,
with a risk management sheet used to comprehensively implement each process.
① Development of annual risk management plan
② Risk identification③ Risk analysis/evaluation④ Additional control planning/implementation⑤ Finalization/approval of risk management sheet⑥ Monitoring through internal audits and administrative inspections⑦ Improvement of risk management status

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GovernanceInternal Audit
Based on the Code of Internal Audit, JHRA conducts internal audits in order to verify
and evaluate whether its risk management is functioning effectively. Internal audits are
conducted at least once per year, and JHRA has been conducting them every year since
its establishment.

●Scope and Method of Internal Audits and Improvement of Designated
Items
JHRA’s internal audits are performed for all organizations and operations. Specifically,risks associated with all organizations and operations are assessed in an integrated
manner by using the Risk Management Sheet. Then verification and evaluation isconducted based on the internal audit to determine whether the controls for thoserisks are functioning effectively.
Once the internal audit is completed, the compliance officer, who serves as the chief
controller of internal audit, reports the audit results to the President, Compliance
Committee, and the audited departments. Furthermore, if the internal audit deems it
necessary, the results will also be reported to the Board of Directors.
The chief controller of internal audit shall verify the status of improvements tomatters designated in internal audits with the audited departments and report theresults to the President and Compliance Committee. Moreover, if the chief controllerof internal audit deems it necessary, the results will also be reported to the Board of
Directors.

Crisis Management
Recognizing that crises caused by natural disasters, various criminal activities, system
failures, and so forth may have a severe impact on JHR’s management and asset
management activities in the form of economic loss, significant obstruction ofoperations, etc., JHRA has formulated Code of Crisis Management and Contingency
Plans and implements various measures to minimize damage and ensure employees’safety and peace of mind in the event of a crisis.

●Major measures related to Crisis Management• Creation of BCP (business continuity planning) manual• Implementation of BCP training (once every year)• Introduction of safety verification system and implementation of simulation training(4 times per year)• Distribution of emergency kit to employees• Storage of reserve supplies

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Disclaimer

Green Bonds

Green Bonds
Basic Policy

ReportingAs part of the initiatives to enhance sustainability, JHR issued twelfth unsecured
investment corporation bonds of JHR (hereinafter “Green Bonds”) in July 2019. JHR
and the Asset Management Company believe that the issuance of the Green Bonds andexpansion of fund procurement from investors interested in ESG investment will not
only lead to strengthen the financing base of JHR, but also it will contribute to the
expansion of the market of ESG investment.

Under the framework of the Green Bonds, JHR discloses the allocation status of thefunds procured by the Green Bonds and KPIs related to the effects on environmental
improvement once a year on the website until the redemption date of the Green Bonds.

Compliance of Eligible Criteria of Green Bonds① Each index after the renovation of Oriental Hotel Fukuoka Hakata Station
Water consumption (㎥)Energy consumption (MW/h)

CO2 emissions (t-CO2)

19,334

2,402

1,181

(*) The figures above are the aggregated numbers from April 2020 through March 2021.

② The allocation status of the funds and the usage of the proceeds

In order to meet the eligible criteria for the Green Bonds issued, JHR manages procured
funds and limits the use of funds as follows.

Name of Property(*1)

July 2019 to
September 2019-

Use of Procured Funds① Part of funds to refinance renovation cost of Oriental Hotel Fukuoka Hakata Station(formerly Hotel Centraza Hakata)
Covers renovation cost which meet following criteria• Funds for investments and construction works of equipment which have effects to reduce CO 2
emissions such as air conditioners and electric facilities• Funds for investment and construction works of equipment which can contribute toenvironment other than reduction of CO2 emissions such reduction of water usage② Funds for construction works of renovation etc. of other hotels• Funds for renewal of air conditioner, etc. which can reduce CO2 emissions at least 10%

Management of Procured Funds
Among the proceeds procured by the Green Bonds, “①Funds for repayment forrenovation cost of Oriental Hotel Fukuoka Hakata Station (JPY1,600 million)” wasalready allocated to the repayment on July 31, 2019. On the other hand, “②Funds forconstructions for renovation etc. of the other hotels (JPY400 million)” was separately
managed by a leger and was held by cash or cash equivalents until they are all
allocated by the end of January 2021.

Date

Oriental Hotel Fukuoka
Hakata Station

July 2019

Amount(unit: JPY M)
15
1,600

Usage of the funds

CO2 emissions
reduction rate(estimated)(*2)

Cost of issuance of the Green Bonds, etc.

―

Repayment of the loans related to therenovation cost

▲16.0%

Okinawa Marriott
Resort & Spa

October 201929

Construction works for renewal of airconditioning system (renovation of restaurant)▲46.4%

Okinawa Marriott
Resort & Spa

October 201913

Construction works for converting to LED lights(renovation of restaurant)▲74.9%

Okinawa Marriott
Resort & Spa

October 201910

Construction works for renewal of washing andsterilizing equipment (renovation of restaurant)▲44.6%

HOTEL ASCENT FUKUOKA

May 2020

100

Construction works for renewal of heat source
equipment▲10.2%

Dormy Inn Kumamoto

July 2020

74

Construction works for replacement of air
conditioning equipment▲12.8%

Hilton Tokyo Bay

August 2020

57

Construction works for renewal of fan coil units
in guest rooms▲27.2%

Hilton Nagoya

January 2021

57

Construction works for renewal of elevators▲20.0%

Chisun Hotel Kamata

January 2021

15

Construction works for replacement of control
panel for elevator▲18.1%

Hakata Nakasu
Washington Hotel Plaza

January 2021

13

Construction works for renewal andmaintenance of fan coils▲33.2%

International Garden Hotel
NaritaJanuary 2021

45

Construction works for renewal of outdoor air
conditioning equipment▲16.0%

Total
Remaining amount

2,026
ー

(*1) Name of properties are the name when funds are allocated.
(*2) The figures of CO2 emissions reduction rates are estimated by the Asset Management Company basedon expert reports.

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Green Bonds
Construction works to save energy in large-scale renovations
for Oriental Hotel Fukuoka Hakata Station<Before><After>Summary of the Issued Green Bonds
Name

Twelfth unsecured investment corporation bonds of JHR(Pari passu covenants between investment corporation bonds are attached)(Green Bonds)(Nickname: Hotel Green Bonds)

Issue amount

JPY2BnInterest rate

0.400%/year

Issue dateJuly 31, 2019

Redemption dateJuly 31, 2024

Construction works to save energy in restaurant renovations
at Okinawa Marriott Resort & Spa (after renovation)<Entrance><Interior>

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GRI Standards Comparison Table〈Universal Standard〉
Disclosure

Location or reason for omission

Page

GRI2: General Disclosures
1. The organization and its reporting practices
2-1

Organizational details

About JHR > Corporate Overview and History
About JHR > Asset Management Company

22-2

Entities included in the organization’s sustainability reporting

About JHR > Corporate Overview and History
About JHR > Asset Management Company

22-3Reporting period, frequency and contact point

No cases experienced.

1

2-4

Restatements of information

No cases experienced.

No cases experienced.

2-5

External assuranceー

2-6

Activities, value chain and other business relationships

About JHR > Our Organizationー2-7

Employees

ESG > Initiatives for Society

23

2-8

Workers who are not employees

ESG > Initiatives for Society

23

2-9

Governance structure and composition

ESG > Governance

25

2-10

Nomination and selection of the highest governance body

ESG > Governance

25

2-11

Chair of the highest governance body

ESG > Governance

25

2-12

Role of the highest governance body in overseeing the management of impacts

ESG > Sustainability Management

4

2-13

Delegation of responsibility for managing impacts

ESG > Sustainability Management

4

2-14

Role of the highest governance body in sustainability reporting

ー

ー

2-15

Conflicts of interest

ESG > Governance

27

2-16

Communication of critical concerns

ESG > Governance

30

2-17

Collective knowledge of the highest governance body

ESG > Governance

31

2-18

Evaluation of the performance of the highest governance body

ー

ー

2-19

Remuneration policies

ESG > Governance

26

2-20

Process to determine remuneration

ESG > Governance

26

2-21

Annual total compensation ratio

ー

ー

2-22

Statement on sustainable development strategy

ー

ー

2-23

Policy commitments

ー

ー

2-24

Embedding policy commitments

ー

ー

2-25

Processes to remediate negative impacts

ー

ー

2-26

Mechanisms for seeking advice and raising concerns

ー

ー

2-27

Compliance with laws and regulations

ー

ー

2-28

Membership associations

ー

ー

2-29

Approach to stakeholder engagement

ESG > Stakeholder Engagement

9

2-30

Collective bargaining agreements

ー

ー

ー

2. Activities and workers

3. Governance

4. Strategy, policies and practices

5. Stakeholder engagement

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GRI Standards Comparison Table〈Universal Standard〉
Disclosure

Location or reason for omission

Page

GRI3: Material Topics
8

3-1

Process to determine material topics

ESG > Materiality

3-2

List of material topics

ESG > Materiality

7

3-3Management of material topics

ー

ー

ー

ー

201-1

Direct economic value generated and distributed

Portfolio Summary

201-2

Financial implications and other risks and opportunities due to climate change

ESG > Initiatives for Environment

201-3

Defined benefit plan obligations and other retirement plans

ー

ー

201-4

Financial assistance received from government

ー

ー

202-1

Ratios of standard entry level wage by gender compared to local minimum wage

ー

ー

202-2

Proportion of senior management hired from the local community

ー

ー

203-1

Infrastructure investments and services supported

ー

ー

203-2

Significant indirect economic impacts

ー

ー

204-1

Proportion of spending on local suppliers

ー

ー

205-1

Operations assessed for risks related to corruption

ESG > Governance

29

205-2

Communication and training about anti-corruption policies and procedures

ESG > Governance

29

205-3

Confirmed incidents of corruption and actions taken

ー

ー

206-1

Legal actions for anti-competitive behavior, anti-trust, and monopoly practices

ー

ー

207-1

Approach to tax

ー

ー

207-2

Tax governance, control, and risk management

ー

ー

207-3

Stakeholder engagement and management of concerns related to tax

ー

ー

207-4

Country-by-country reporting

ー

ー

301-1

Materials used by weight or volume

ESG > Initiatives for Environment

10

301-2

Recycled input materials used

ESG > Initiatives for Environment

10

301-3

Reclaimed products and their packaging materialsーー〈Topic Standard〉
GRI200: Economic
201

202

203

Economic Performance

ー
15-17

Market Presence

Indirect Economic Impacts

204

Procurement Practices

205

Anti-corruption

206

Anti-competitive Behavior

207

Tax

GRI300: Environmental

301

Materials

ESG REPORT37

Sustainability
Management

Materiality

Stakeholder
Engagement

Initiatives forEnvironment

Initiatives forSociety

GovernanceGreen Bonds

GRI Standards
Disclaimer

GRI Standards Comparison Table〈Topic Standard〉
Disclosure
302

303

304

305

306

308

Location or reason for omission

Page

Energy10302-1

Energy consumption within the organization

ESG > Initiatives for Environment

302-2

Energy consumption outside of the organization

ー

ー

302-3

Energy intensity

ESG > Initiatives for Environment

10

302-4

Reduction of energy consumption

ESG > Initiatives for Environment

10

302-5

Reductions in energy requirements of products and services

ー

ー

303-1

Interactions with water as a shared resource

ー

ー

303-2

ー

ー

303-3

Management of water discharge-related impacts

Water withdrawal

ESG > Initiatives for Environment

10

303-4

Water discharge

ー

ー

303-5

Water consumption

ー

ー

304-1

Operational sites owned, leased, managed in, or adjacent to, protected areas and areasof high biodiversity value outside protected areas

ー

ー

304-2

Significant impacts of activities, products and services on biodiversity

ー

ー

304-3

Habitats protected or restored

ー

ー

304-4

IUCN Red List species and national conservation list species with habitats in areas affected byoperations

ー

ー

305-1

Direct (Scope 1) GHG emissions

ESG > Initiatives for Environment

10

305-2

Energy indirect (Scope 2) GHG emissions

ESG > Initiatives for Environment

10

305-3

Other indirect (Scope 3) GHG emissions

ESG > Initiatives for Environment

10

305-4

GHG emissions intensity

ESG > Initiatives for Environment

10

305-5

Reduction of GHG emissions

ESG > Initiatives for Environment

10,18

305-6

Emissions of ozone-depleting substances (ODS)

ESG > Initiatives for Environment

18

305-7

Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions

ー

ー

306-1

Waste generation and significant waste-related impacts

ー

ー

306-2

Management of significant waste-related impacts

ー

ー

306-3

Waste generated

ESG > Initiatives for Environment

10

306-4

Waste diverted from disposal

ー

ー

306-5

Waste directed to disposal

ESG > Initiatives for Environment

10

308-1

New suppliers that were screened using environmental criteria

ー

ー

308-2

Negative environmental impacts in the supply chain and actions takenーー

Water and Effluents

Biodiversity

Emissions

Waste

Supplier Environmental Assessment

ESG REPORT38

Sustainability
Management

Materiality

Stakeholder
Engagement

Initiatives forEnvironment

Initiatives forSociety

GovernanceGreen Bonds

GRI Standards
Disclaimer

GRI Standards Comparison Table〈Topic Standard〉
Disclosure

Location or reason for omission

Page

GRI400: Social
401 Employment

402

Labor/Management Relations

403

Occupational Health and Safety

401-1

New employee hires and employee turnover

ESG > Initiatives for Society

23

401-2

Benefits provided to full-time employees that are not provided to temporary or part-time
employees

ー

ー

401-3

Parental leave

ESG > Initiatives for Society

23

402-1

Minimum notice periods regarding operational changes

ー

ー

403-1

Occupational health and safety management system

ー

ー

403-2

Hazard identification, risk assessment, and incident investigation

ー

403-3

Occupational health services

ESG > Initiatives for Society

21-22
21-22

Worker participation, consultation, and communication on occupational health and safety

ESG > Initiatives for Society

403-5

Worker training on occupational health and safety

ー

403-6

Promotion of worker health

ESG > Initiatives for Society

403-7

Prevention and mitigation of occupational health and safety impacts directly linked bybusiness relationships

ー

ー

403-8

Workers covered by an occupational health and safety management system

ー

ー

403-9

Work-related injuries

ーー403-10 Work-related ill health

ー

ー

404-1

Average hours of training per year per employee

ー

ー

404-2

Programs for upgrading employee skills and transition assistance programs

ESG > Initiatives for Society

21

404-3

Percentage of employees receiving regular performance and career development reviews

ー

ー

405-1

Diversity of governance bodies and employees

ESG > Initiatives for Society

405-2

Ratio of basic salary and remuneration of women to men

ー

ー

406-1

Incidents of discrimination and corrective actions taken

ー

ー

403-4

404

405

ー

ー

21-22

Training and Education

Diversity and Equal Opportunity406

Non-discrimination

407

Freedom of Association and Collective Bargaining

408

Child Labor

409

Forced or Compulsory Labor

410

Security Practices

21,23

407-1

Operations and suppliers in which the right to freedom of association and collective
bargaining may be at risk

ー

ー

408-1

Operations and suppliers at significant risk for incidents of child labor

ー

ー

409-1

Operations and suppliers at significant risk for incidents of forced or compulsory labor

ー

ー

410-1

Security personnel trained in human rights policies or proceduresーー

ESG REPORT

39

Sustainability
Management

Materiality

Stakeholder
Engagement

Initiatives forEnvironment

Initiatives forSociety

GovernanceGreen Bonds

GRI Standards
Disclaimer

GRI Standards Comparison Table〈Topic Standard〉
Disclosure
411

Rights of Indigenous Peoples

413

Local Communities

414

Public Policy

416

Customer Health and Safety

418

Page
No cases experienced.

411-1

Incidents of violations involving rights of indigenous peoples

No cases experienced.

413-1

Operations with local community engagement, impact assessments, and development
programs

ー

ー

413-2

Operations with significant actual and potential negative impacts on local communities

ー

ー

414-1

New suppliers that were screened using social criteria

ー

ー

414-2

Negative social impacts in the supply chain and actions taken

ー

ー

415-1

Political contributions

ー

ー

416-1

Assessment of the health and safety impacts of product and service categories

ー

ー

416-2

Incidents of non-compliance concerning the health and safety impacts of products
and services

ー

ー

417-1

Requirements for product and service information and labeling

ー

ー

417-2

Incidents of non-compliance concerning product and service information and labeling

ー

ー

417-3

Incidents of non-compliance concerning marketing communications

ー

ー

418-1

Substantiated complaints concerning breaches of customer privacy and losses of customer
data

ー

ー

Supplier Social Assessment

415

417

Location or reason for omission

Marketing and Labeling

Customer Privacy

ESG REPORT

40

Sustainability
Management

Materiality

Stakeholder
Engagement

Initiatives forEnvironment

Initiatives forSociety

GovernanceGreen Bonds

GRI Standards
Disclaimer

Disclaimer
This material is prepared and provided solely for the purpose of providing
information and not to offer, solicit, or do business, etc. with specific products
including purchase of investment units, investment unit subscription rights, orinvestment corporation bonds of Japan Hotel REIT Investment Corporation("JHR") or any other particular products. If any discrepancy is identified
between this translation and the Japanese original, the Japanese original
shall prevail.
This material is neither a disclosure document nor an investment reportrequired under or prepared pursuant to the Financial Instruments andExchange Act, Act on Investment Trusts and Investment Corporations andrelated government ordinances, Cabinet Office regulations, listing rules by
Tokyo Stock Exchange, Regulations of The Investment Trusts Association,
Japan, or other related rules and regulations.
This material contains forward-looking statements about financial conditions,operational results, and businesses of JHR, as well as plans and intentions of JHR
and its asset management company, Japan Hotel REIT Advisors Co., Ltd("JHRA"). Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause actual results or performanceof JHR to materially differ from those expressed or implied forecasts. Those
forecasts are made based on JHR's present and future business strategies andassumptions relating to the political and economic circumstances surrounding
JHR in the future.
Every effort has been made to ensure the accuracy of the information
contained in this material. However, there can be no assurance that the
information is accurate, complete, appropriate or fair. The information may berevised or retracted without prior notice.
Regarding the offering and trading of investment units, investment unit
subscription rights or investment corporation bonds, financial institutions
may charge you pre-determined handling fees and other charges aside fromthe price of the investment units, investment unit subscription rights orinvestment corporation bonds. Since neither JHR nor JHRA handles the offeringand trading of investment units, investment unit subscription rights or investment
corporation bonds, please ask financial institutions for the amount, upper limit,
and calculation methods of such fees and other charges.

JHR mainly invests in real estate-related assets, primarily hotels which are
subject to change in values. Therefore, unitholders, holders of investment unit
subscription rights and investment corporation bonds may suffer losses due toeconomic conditions of the real estate market or securities market, economic
situations including interest rate environment, the nature of investment units,
investment unit subscription rights, and investment corporation bonds,
dependency on mechanisms and related persons of investment corporations,changes in legal systems related to real estate (include tax regulations,building regulations and others), damage caused to the real estate-related
assets by natural disasters, fluctuation in prices or profitability of the realestate-related assets, nature of the trust beneficiary rights under management,delisting of the investment units, or worsening financial position or insolvency
of JHR. For details, please refer to the Articles of Incorporation, Securities
Registration Statement, Annual Securities Report and Extraordinary Report, etc.
of JHR.
The contents of this material may not be copied or reproduced without ourprior permission.

Japan Hotel REIT Advisors Co., Ltd.
Financial Instruments Trading Company
Director-General of Kanto Local Finance Bureau No. 334
Member of The Investment Trust Association, Japan
Member of The Japan Investment Advisers Association

ESG REPORT41