Sustainability Report 2024
April 2024

SUSTAINABILITY
Contents
Message from the President ........................................................................................................................... 2
REITs Managed by KFM .................................................................................................................................. 3
Sustainability Promotion Structure................................................................................................................. 5
Material Issues ................................................................................................................................................ 7
Sustainability Policies ..................................................................................................................................... 9
Sustainability Policies -Contribution to a Sustainable Environment- ......................................................... 10
Environmental Policies and External Ratings............................................................................................... 10
Reduction of Energy Consumption and CO2 Emissions (Climate Change Initiatives) ................................ 14
Reduction of Water Consumption and Waste Materials .............................................................................. 28
Biodiversity .................................................................................................................................................... 30
Stakeholder Engagement to Improve Property Performance ...................................................................... 32
Other Initiatives related to Environment ...................................................................................................... 33
Sustainability Policies -Our Commitment to a Diverse Society- ................................................................. 34
Providing Properties with Environmental and Social Considerations ......................................................... 34
Improving Resilience ..................................................................................................................................... 37
Initiatives for an Aging Society with Fewer Children ................................................................................... 38
Other Initiatives related to Contributions to Society.................................................................................... 39
Sustainable Policies -Stakeholder Engagement-......................................................................................... 40
Continuous Improvement of Customer Satisfaction .................................................................................... 40
Community Engagement ............................................................................................................................... 41
Managing Conflicts of Interests.................................................................................................................... 44
Other Initiatives related to Stakeholders...................................................................................................... 45
Sustainability Policies -Attractive Working Environment- ........................................................................... 46
Recruiting, Employee Retention and Career Advancement ......................................................................... 46
Health and Wellbeing of Employees ............................................................................................................. 51
Diversity and Equal Opportunities ................................................................................................................ 57
Other Initiatives related to Attractive Working Environment ....................................................................... 60
Sustainability Policies -Responsible Organization- ..................................................................................... 61
Governance.................................................................................................................................................... 61
Compliance .................................................................................................................................................... 62
Risk Management ......................................................................................................................................... 70
Commitment to Responsible Investments ................................................................................................... 73
Other Initiatives related to Governance ....................................................................................................... 74
Relevant Data (Employment) ........................................................................................................................ 75
Relevant Data (System Use, etc.) ................................................................................................................. 77
Editorial Policy ............................................................................................................................................... 79

1

SUSTAINABILITY
Message from the President
Kenedix Real Estate Fund Management, Inc. (KFM) is entrusted with the management of KDX Realty
Investment Corporation, a listed REIT, and Kenedix Private Investment Corporation, a private REIT. KFM
invests in and manages a diverse range of asset classes, including office buildings, residential properties,
retail facilities, and logistics facilities, and is one of the leading REITʼs asset management companies inJapan, with assets under management exceeding 1.37 trillion yen and over 380 properties undermanagement.
We recognize that the assets we manage have a significant impact on the environment and society. Basedon this recognition, we believe that our efforts toward the realization of a sustainable society will contributeto the improvement of unitholders' profits over the medium to long term, and at the same time, it is a social
responsibility that we should fulfill. To this end, we have positioned sustainability initiatives as one of our
key management issues and established a "Sustainability Policy". Based on this policy, we will strive tocontribute to a sustainable environment and a diverse society.
We will continue to strive to be a REIT management company that earns the unwavering trust and supportof our stakeholders and society as a whole, including local communities, by achieving stable unitholder
returns over the medium to long term and contributing to the realization of a sustainable society.
We appreciate your continued support and encouragement.

Akihiro Asano
President & CEO, Kenedix Real Estate Fund Management, Inc.

2

Initiatives for Sustainability

REITs Managed by KFM
Kenedix Real Estate Fund Management, Inc. (the “Asset Management Company” or KFM) manages one JREIT and one private REIT. Overviews and characteristics of each REIT are as follows.
In this report, some of the initiatives of the Kenedix Group, Inc. are included.
KDX Realty Investment Corporation (KDXR) (AUM 1.1 trillion yen as of March 31, 2024)
On November 1, 2023, Kenedix Office Investment Corporation, Kenedix Residential Next Investment
Corporation and Kenedix Retail Investment Corporation merged into a new J-REIT. As of March 31, 2024.
KDXRʼs portfolio is comprised of 353 properties with AUM of over 1.1 trillion yen which ranks third in asset
size and first in the number of properties among all J-REITs. KDXR has invested in mid-sized office buildings,
residential properties, shopping centers for daily needs and will further expand its investment target sectors
to actively acquire in logistics facilities and hotels.

Office / KDX MusashiKosugi Building

Residential / River City 21 East
Towers Ⅱ

3

Retail / Apita Terrace Yokohama
Tsunashima

Initiatives for Sustainability
Kenedix Private Investment Corporation (KPI) (AUM 186.6 billion yen as of March 31, 2024)
KPI is a private REIT that aims to generate long-term stable income without being directly affected by thefinancial and capital markets. Its portfolio is mainly comprised of office buildings in the Tokyo metropolitanarea, and is also diversified into logistics centers, shopping centers, and residential properties. With the
deep support of its sponsors, including the Kenedix Group, KPI has achieved continuous growth.

Office / Toyosu Grand
Square4Initiatives for Sustainability
Sustainability Promotion Structure
Sustainability Committee
The initiatives for sustainability are promoted under the leadership of the Sustainability Committeeorganized by the Asset Management Company.
The Sustainability Committee is chaired by the President & CEO (Chief Sustainability Officer), and consistsof the following members.

5Initiatives for Sustainability

6Initiatives for Sustainability
Material Issues
Kenedix Inc., the parent company of the Asst Management Company, has established material issues inorder to identify subjects that are critical for achieving sustained growth of the Kenedix Group along withstakeholders and society. We will make commitment to find solutions to these issues both in business andsociety by making initiatives that reflect the opportunities and risks associated with each issue. Furthermore,
we intend to contribute to achieving the SDGs by carrying measures for our materiality.

Process of Defining Materiality

7

Initiatives for Sustainability
Kenedix Groupʼs Materiality
Key Areas and Applicable SDGs

Materiality
Reduction

Contribution to a Sustainable Environmentofenergyconsumption

andCO2 emissions
Reduction of water consumption and wastematerials
Collaboration with tenants for environmental
initiatives
Providing properties with environmental andCommitment to a Diverse Societysocial considerations
Improving resilience / climate adaptation
Initiatives for an aging society with fewer
childrenContinuous

Stakeholder Engagement

improvementofcustomersatisfaction
Community engagement
Managing conflicts of interests

Attractive Working Environment

Recruiting,

employeeretention

andadvancement
Health and wellbeing of employees
Diversity and equal opportunities
Responsible Organization

Compliance
Risk management
Commitment to responsible investments

8

careerInitiatives for Sustainability
Sustainability Policies
In response to the establishment of materiality in the Kenedix Group, we have set comprehensive
Sustainability Policies regarding ESG. The Kenedix Group will adhere to the Sustainability Policies topromote specific initiatives towards materiality.

9Environment (Contribution to a Sustainable Environment)

Sustainability Policies -Contribution to a Sustainable EnvironmentImproving the environmental performance of the properties we manage is one of our social missions. We
will lower the environmental impact and make contribution to environmental sustainability by constantly
reducing the negative environmental impact of these properties, such as energy consumption, CO2
emissions, water consumption and the generation of waste materials. We also have activities for the proper
management of hazardous substances and reduction in their use.

Environmental Policies and External Ratings
Environmental Policies
The officers and employees of the Asset Management Company will undertake investment management
operations in accordance with the following environmental policies. The Asset Management Company
supports the international goals set forth in the Paris Agreement and is committed to continuously makeefforts to mitigation and adaption of climate change. We also endeavor to contribute to the shift towards a
circular economy by using resources efficiently.

10

Environment (Contribution to a Sustainable Environment)

External ratings
GRESB Real Estate Assessment
GRESB is a benchmark system for assessing the sustainability performance of the real estate sector,
established in 2009 primarily by a group of major European pension funds. Leading institutional investors
participate in the GRESB assessment to utilize it in implementing their real estate investment andmanagement processes.
A high degree of attention has been paid to the GRESB survey, as it is used by institutional investors when
they select investment targets and on other occasions. The GRESB survey, which is conducted each year, isparticipated in by many real estate companies, REITs and real estate private funds from around the world.
11

Environment (Contribution to a Sustainable Environment)
Numerous programs exist for the certification of environmentally responsible real estate. But the GRESBReal Estate Assessment is the only one that is a benchmark for individual real estate companies and funds.
Comparative evaluations of overall scores on a global scale are used to determine GRESB ratings, which gofrom one to five stars.
Ratings for each REIT are shown below. All four REITs were awarded a “Green Star” designation by achieving
high performance both in “Management Component” that evaluates policies and organizational structure
for ESG promotion, and “Performance Component” that assesses environmental performance and tenant
engagement of properties owned.
(Reference) The results for FY2023 are as follows.
Kenedix Office
Investment Corporation

Kenedix
Residential Next
Investment Corporation

Kenedix Retail REIT
Corporation

Kenedix Private
Investment
Corporation

Note: Kenedix Office Investment Corporation, Kenedix Residential Next Investment Corporation and
Kenedix Retail REIT Investment Corporation merged on November 1, 2023, with Kenedix Office Investment
Corporation as the surviving corporation, and changed its name to KDX Realty Investment Corporation.

Overview of Environmental Certifications
As a pioneer in the sustainability field in the REIT industry, we will continue to advance environmental andenergy conservation measures as well as efficient energy use for our portfolio and proactively acquired thefollowing certifications and assessment to promote initiatives for sustainability.

12Environment (Contribution to a Sustainable Environment)
Environmental Certifications and Valuations
KDX Realty Investment Corporation(As of March 31, 2024)
Number of

Certified Floor Area

Ratio

Certified Properties(㎡)(%)(Note 2)

Environmental Certified Building

118

1,496,448.53

63.9

83

859,462.52

36.7

1

12,280.77

0.5

BELS Certification

8

140,165.81

6.0

DBJ Green Building Certification

44

648,860.20

27.7

ResReal Certification

5

90,690.39

3.9(Note 1)
CASBEE Certification for Real
EstateCASBEE Certification for Wellness
OfficeNote 1: If a property has multiple environmental certifications, it is counted as one property.
Note 2: The ratio of floor area of certified properties to the total floor area of properties owned by KDXR (2,342,815.69
m2, calculated on a pro-rata basis of ownership ratio for compartmentalized ownership).

Kenedix Private Investment Corporation(As of March 31, 2024)
Number of Certified

Certified Floor Area

Properties(㎡)

Environmental Certified

Ratio
(%)

(Note)

7

314,401.06

51.1

6

140,902.48

38.2

1

47,564.70

12.9

Building
CASBEE Certification
for Real Estate
DBJ Green Building
Certification
Note: The ratio of floor area of certified properties to the total floor area of properties owned by KPI calculated on a
pro-rata basis of ownership ratio for compartmentalized ownership.

For more details of REIT's overview, please refer to the following links.
＞KDX Realty Investment Corporation＞Kenedix Private Investment Corporation (only in Japanese)13

Environment (Contribution to a Sustainable Environment)
Reduction of Energy Consumption and CO2 Emissions(Climate Change Initiatives)
Basic views
Global warming, as the main factor for a climate change, has been the primal topic at international meetings
so far and in 2015 Paris Agreement has adopted a new framework. In this agreement, one of the goals is tokeep the increase in global average temperature to well below 2℃, preferably to 1.5℃, compared to preindustrial levels. In addition, at COP26 in 2021, the Glasgow Climate Pact was agreed that the 1.5℃ target
remains in sight and scales up action on dealing with climate impacts. Each REIT and the Asset Managementcompany recognize that efforts to climate change is the most important issue for our business activities andproperties under management.
Reduction of energy consumption and CO₂ emissions is one of our material issues. We are making acontribution to environmental sustainability by using our business activities and property management
operations for continuously cutting energy consumption and CO ₂ emissions in order to lower ourenvironmental impact.

Support for TCFD recommendations
The Asset Management Company expressed
support for the recommendations of the Task
Force on Climate-related Financial Disclosures(“TCFD”) and also joined the TCFD consortium, a group of domestic companies that support TCFD
recommendations in October 2021.
TCFD is an international initiative established by the Financial Stability Board (“FSB”) at the request of theG20 for the purpose of discussing the disclosures of Climate-related financial information and the responses
by financial institutions. TCFD publishes recommendations for companies to disclose their governance,

14

Environment (Contribution to a Sustainable Environment)
strategy, risk management, and metrics and targets for Climate-related risk and opportunities.
On the other hand, TCFD Consortium is a group of companies and financial institutions that support the
TCFD recommendations. The consortium was established with a view to further discussion on effective
corporate

disclosuresof

Climate-related

information and initiatives to link disclosed
information to appropriate investment decisions
on the part of financial institutions and otherorganizations.
Each REIT and the Asset Management Company
will work to expand information disclosure based on TCFD and continue to actively promote ESG(Environment, Social and Governance) initiatives based on “Sustainability Policies” established by the AssetManagement Company.

GovernanceFor further details concerning governance for climate change, please refer to Sustainability Management
System.

Strategy
Scenario Analysis
The Asset Management Company conducted a scenario analysis to identify the risks and opportunities for
REITs to be posed by the climate change, and to assess their potential impact on REITs business. World
outlook of each scenario is provided below. The analysis was conducted with reference to future climate
projections and energy trends published by international organizations.

15

Environment (Contribution to a Sustainable Environment)

16

Environment (Contribution to a Sustainable Environment)(Major reference sources)

4℃ Scenario

Transition risks

Physical risks

IEA (International Energy Agency)

IPCC (Intergovernmental Panel on Climate

World Energy Outlook 2020 STEPS

Change)Fifth Assessment Report RCP8.5

1.5℃ Scenario

IEA (International Energy Agency)

IPCC (Intergovernmental Panel on Climate

NZE2050

Change)Fifth Assessment Report RCP2.6

Financial Impact based on Scenario Analysis
The Asset management Company examined the mid-term (2030) and long-term (2050) impacts of the risks,
opportunities, and financial impacts for the REITs for each of the world outlook in the 4°C and 1.5°C
scenario described above. The summary of the evaluation is as follows.

17

Environment (Contribution to a Sustainable Environment)
Risks and Opportunities

Financial impact
4℃ Scenario

Category

FactorCO2 emission regulation
Introduction of CO2

Policy and legal

MediumLong

Medium

Long

term

term

term

term

to improve energy

measure to comply withefficiency ofinternational frameworks

existing

incur costs and risks

properties

risks and opportunities

Low

Low

Low

Mid

Carbon tax

to comply withinternational frameworks
incur costs and risks
related to CO2 emissions.

Increase incarbon tax costs
acquisition costs
of non-fossil

Transition Risks and Opportunities

introduction oftechnologies

new technology

Further technology

Decrease in utility

advancement will result

costs due toachievement of energysaving and renewableenergy.

Low

Mid

High

Low

Low

Mid

Mid

and financial
institutions

due toenergy-saving,
introduction of

Low

Low

Low

Low

Low

Low

Mid

Mid

renewable energy,

improvement of theenvironmental
performance ofproperties.
Focus on environmental

Introduction of・

Acquisition of non-due to low

fossil certificates,

Energy-saving in・

Acquisition ofexisting properties

ZEB/ZEH
properties

・Conversion ofexisting properties
to ZEB/ZEH

ZEB/ZEH, etc.
financing costs

renewable energy

・

conversion to

Low

Low

Low

Low

valuation

・Energy-saving in・

Acquisition ofexisting properties
environmental
certifications

Investors and financial
institutions will value

GHG reduction

etc.

Increase in
Evaluation by investors

Establishment of・

certificates, etc.

renewable energy

and effective

Low

Increase in

Increase in costs

in lower installation costs

energy-saving intargets

Advancement ofenergy-saving and

Improvement ofexisting properties

・

related to CO2 emissions.

carbon tax as a measure

Markets

Measures to address

・

Increase in costs

emission regulations as a

The introduction ofTechnology

1.5℃ Scenario

・

Decrease infinancing costs
due to high

Low

Low

Low

Environmental

improvecertification will be

evaluation

financial
institutions

Increase in costof actions toengagement withinvestors andLowvaluation

certification

Improvement of

Low

Low

Low

Low

・

Utilization of green

・Acquisition offinanceenvironmental
certifications

18

Environment (Contribution to a Sustainable Environment)
required for portfolio
evaluation by investors
and financial institutions
as well as property
selection by tenants.

Increase inacquisition costsof environmental

Low

Low

Low

Low

Low

Low

Mid

Mid

certifications
Low

Tenant behavior change
due to environmental
orientation

Environmental
performance ofproperties will becomevalued due to regulation
compliance and changing
Reputationpreferences.

properties
becoming
stranded
Maintain and・Energy-saving in・

Acquisition ofoccupancy rates
by improving

existing properties
environmental
certifications

improve
Low

Low

Mid

Mid

Mid

Mid

Low

Low

Mid

Mid

Low

Low

Engagement・Due diligence on・Flood risk analysis

・

Improvement of・Engagement

・Energy-saving in

Low resilience
properties

Disaster prevention

stranded

aspect of properties will

Maintain andbecome valued due toincreasing disasters
caused by risingtemperatures and sea
level.

becoming

improveoccupancy rates
by improving
resiliencemeasures

Intensification of heavy

Increase in

rains

costs

The frequency of

Decrease inrains and torrential
Physical Risks and Opportunities

・

environmental

due to disaster-

prevention orientation

property damage will
increase due to severewind and extreme flood.
Rise in sea level
Chronic rise in sea level.
Chronic

performance

performance
Tenant behavior change

Acuteenvironmental

Rise in averagetemperature

Chronic rise in averagetemperatures.

disaster recovery

rental income
during the

Mid

Mid

Low

Low

Mid

Mid

Low

Low

Low

Low

Low

Low

Low

Low

Low

Low

acquisitionof properties
resilience

recovery period
Increase in costs
to cope with sea
level rise
Increase in utility
costs during
summerexisting properties

Note: The financial impact (low, mid, or high) of each scenario is formulated through discussions based on qualitative andquantitative perspectives at the Asset Management Company. The red color of the financial impact in each scenario
represents risk items, and the green color represents opportunity items. This evaluation will continue to be reviewed andupdated as necessary based on new external and internal factors that have arisen and close examination of thequantitative impact.

19

Environment (Contribution to a Sustainable Environment)
Risk Management
Risk Management System for Climate Change
Each REIT Department of the Asset Management Company and the Sustainability Committee identifies andevaluates the sustainability and ESG-related risks of the REITs and the Asset Management Company. Thesesustainability and ESG-related risks are managed on a daily basis by each department in charge, andimportant risks are analyzed and reviewed regularly by the Sustainability Committee under the supervisionof the Chair of the Sustainability Committee, and are managed appropriately. In addition, these risks areincorporated into the organization’s overall risk management by sharing them with relevant parties asnecessary.

Metrics and Targets
KPIs related to Climate Change
Responding to climate change is one of the important social issues, and initiatives for climate change
countermeasures are accelerating domestically and internationally. Each REIT has set GHG emission
reduction goal (KPI) as follows in order to actively promote the reduction of environmental impact andcontribute to sustainability of environment through the mid- to long-term reduction of GHG emission in our
portfolio.
KDX Realty Investment Corporation
2030 Targets
GHG

Emission

2050 Targets(2022 baseline)

Reduction

Total amount: 42% reduction

Targets (Note１)

Per unit: 42% reduction (Note 2)
Scope 1 and 2

Net-zero
Scope 1, 2 and 3

Note 1: GHG emission for each fiscal year is estimated by the Asset Management Company using emission factors(adjusted emission factors) by electric utility in "Greenhouse Gas Emissions Calculation, Reporting, andPublication System” of the Ministry of the Environment. The figures are the total of Scope 1, 2 and 3, and thecalculation methods of GHG emissions after FY2021 and prior to FY2020 are different.
Scope 1: Direct emission from fuel combustion
Scope 2: Indirect emissions from the use of externally procured electricity and heat
Scope 3: Total emissions minus Scope 1 and Scope 2
Note 2: The intensity is calculated by dividing the GHG emission for each year by the total floor area, considering theoccupancy rate of each owned property.

20Environment (Contribution to a Sustainable Environment)
KDXR has obtained Science Based Targets (SBT) certification for the above GHG emission reduction targets.
For further details concerning Science Based Targets(SBT), Please refer to Awards and Initiatives.

Kenedix Private Investment Corporation

GHG Emission Reduction

2030 Target

2050 Target

30% reduction

Net-zeroTargets(2016 Baseline(Per Unit))

Process to Promote Sustainability / PDCA Cycle
Each REIT has established PDCA process as below to achieve the mid- to long-term goal on reduction in
GHG emissions, energy consumption and others, and been monitoring and assessing environmental
performance on energy consumption at the Sustainability Committee held on regular basis.

21

Environment (Contribution to a Sustainable Environment)

22

Environment (Contribution to a Sustainable Environment)
Environmental Performance (KDX Realty Investment Corporation)
GHG Emissions
2022(Baseline)
GHG emission (t-CO₂) (Note 1)

100,349

Scope 1

1,592

Scope 240,036

Scope 3 (Category 13)

48,720Intensity (t-CO₂/㎡) (Note 2)

0.055

Note 1:

GHG emission for each fiscal year is estimated by the Asset Management Company using emission
factors (adjusted emission factors) by electric utility in "Greenhouse Gas Emissions Calculation, Reporting,and Publication System” of the Ministry of the Environment.
Scope 1: Direct emission from fuel combustion
Scope 2: Indirect emissions from the use of externally procured electricity and heat
Scope 3: Total emissions minus Scope 1 and Scope 2

Note 2: The intensity is calculated by dividing the GHG emission for each year by the total floor area, considering
the occupancy rate of each owned property.

Energy and Water Consumption
2022

Energy Consumption

472,800

Intensity (MWh/㎡) (Note)

0.240

Water consumption (㎥)2,502,296

Intensity (㎥/㎡) (Note)

1.273

23

Environment (Contribution to a Sustainable Environment)

Note: The intensity is calculated by dividing each consumption by the total floor area, considering the occupancy rate ofeach property.

Environmental Performance (Kenedix Private Investment Corporation)
GHG Emissions

2022
Intensity (t-CO2/㎡)

0.00655

Change from previous year (%)

98.2

Reduction rate from base year (FY2016) (%)

11.8

GHG emission

Total amount (t-Co2)

13,133Note 1: The data covers major properties for which data can be obtained.
Note 2: Each data is the actual value calculated by multiplying the percentage of ownership for co-owned and quasi
co-owned properties and the percentage of site rights for condominium-owned properties.
Note 3: The intensity is calculated by dividing the GHG emission for each year by the total floor area, considering
the occupancy rate of each owned property.
Note 4: GHG emissions for each fiscal year are estimated by the Asset Management company using emission
factors (adjusted emission factors) by electric utility company in the Ministry of the Environment's"Greenhouse Gas Emissions Calculation, Reporting and Publication System.

Energy and Water Consumption

2022

EnergyConsumption

Intensity (GJ/㎡)I

0.13704

Intensity(kL/㎡)

0.00354

24

Environment (Contribution to a Sustainable Environment)
Change from previous year(%)
Energy consumption(GJ)274,690

Energy consumption (kL)7,087

Intensity(㎥/㎡)
Water Consumption

Waste Weight

100.0

0.04313

Change from previous year(%)

109.3

Water consumption (㎥)86,453

Intensity (t/㎡)

0.00034

Change from previous year(%)
Waste weight (t)

104.1

686

Note 1: The data covers major properties for which data can be obtained.
Note 2: Each data is the actual value calculated by multiplying the percentage of ownership for coowned and quasi co-owned properties and the percentage of site rights for condominiumowned properties.
Note 3: The intensity is calculated by dividing each consumption by the total floor area, considering
the occupancy rate of each property.

Reduction of Environmental Burden
Each REIT and the Asset Management Company will address the issue of climate change through the
reduction of energy consumption and CO2 emissions of the properties under management. Although therange of efforts differs depending on the use of the properties under management, the management periodof the funds, investors, etc., each REIT has taken various approaches.
Installation of LED Lightings
We promote to convert lightings in common area, tenant area, etc. and emergency lights (including
emergency guide lights) to LED to actively promote reduction of electricity consumption.

25

Environment (Contribution to a Sustainable Environment)
Solar Panel Installation
We installed solar panels at our properties and consume generated electricity in-house (or sell externally at
the Tenri Distribution Center) to decrease GHG emissions.

Unicus Ina(Power generation capacity:
334.53kW)

Tenri Distribution Center(Power generation capacity:
100.00kW)

Kawamachi Yahagi Mall
(Power generation capacity:

Apita Terrace Yokohama
Tsunashima

302.40kW）(Power generation capacity:
25.26kW）

Monenosato Mall

Yumemachi Narashinodai Mall

(Power generation capacity:(Power generation capacity:

525.00kW）

234.35kW）

Iias Kasugai(Power generation capacity:
824.76kW）

26

Environment (Contribution to a Sustainable Environment)

Note: The figures of Power generation results are for the period August 2022 to July 2023.

Promotion of Greening
We plant bushes, flowering plants and other greening at building entrances, open areas of building sites,
rooftops and other locations. Rooftop greening at retail facilities creates a relaxing space for people and has
the added benefit of preventing the reflection of sunshine, which helps hold down summer heat in large
cities.

Remote Surveillance of Road Heating
We have installed remote surveillance systems for snow melting equipment at four residential properties in
Sapporo. Remote surveillance has significantly reduced the cost of fuel for keeping outdoor areas free ofsnow.
Installing Secure Lockers for Deliveries
Secure lockers for parcels eliminate the need for delivery companies to return to a property when a resident
is not home the first time. This reduces transportation GHG emissions and wasted working time for drivers.

27

Environment (Contribution to a Sustainable Environment)
The 8th Yokohama Global Warming Prevention Award
The Yokohama Global Warming Prevention Award is awarded to companies
that have achieved outstanding results in terms of significant reductions of
GHG emissions in the Yokohama City Global Warming Prevention Plan
System. The eighth annual award was given to six out of the 310 applicants
who submitted their reports in 2021. G.K. YMM Investment has submitted thereport as a representative of the building and was awarded as one of the six
awardees.
G.K. YMM Investment is a core fund SPC, for which

our group company isentrusted asset management, and invests in a portion of the shares in the
Mitsubishijuko Yokohama Building. The Mitsubishijuko Yokohama Building has been jointly managed by
KDX Realty Investment Corporation, Kenedix Private Investment Corporation and G.K. YMM Investment
since 2018.

Reduction of Water Consumption and Waste Materials
Basic Views
Although there is no imminent water supply crisis in Japan, climate change and population growth threaten
the viability of water supplies worldwide. We recognize that ensuring water sources is critical to our businessas well considering the steady increase in global water consumption.
Progress concerning the proper treatment of waste materials and the effective use of natural resources inJapan is continuing as people become increasingly aware of the importance of 3R (reduce, reuse andrecycle) activities. Japan is focusing more and more on recycling resources as much as possible rather thanmass consumption. Due to growing limitations on natural resources worldwide, there is a need for evenmore qualitative initiatives to go along with quantitative measures for lowering the volume of wastematerials.
As an organization that provides asset management services for many types of properties which are used
as a place to work or live, the Asset Management Company has significant obligations to use a diverse arrayof activities for using real estate to cut water consumption and the generation of waste materials.
The reduction of water consumption and waste materials is one of our material issues. We are constantly
seeking ways to use our business activities and properties to cut water use and the amount of wastematerials produced. We are also lowering our environmental impact and contributing to environmental
sustainability by properly managing hazardous substances and eliminating their use wherever possible.
28

Environment (Contribution to a Sustainable Environment)
Water Conservation Initiatives
Updating of Water-Efficient Equipment
We are working to reduce water consumption by introducing toilets with water-saving functions andinstalling rainwater tanks in our properties.
Rain Garden at Yokohama Connect Square
Kenedix, Inc. has promoted a large-scale development project in the
37th district of the Yokohama Minato Mirai Central District incollaboration with partner companies. In this project, rainwater is first
stored during rainfall and gradually infiltrated to recharge groundwater.
The landscape changes with the weather and seasons.

Initiatives for Reduction of Waste Materials
Waste Material Reduction and Sorting
By cooperating with property management companies used for portfolio properties, we contact tenants ofoffice buildings, retail facilities, residential properties and other properties to urge them to reduce theamount of waste materials and dispose of items properly for each category of waste materials.

Proper Measures for Hazardous Substances, Soil Contamination and other
Materials Requiring Special Handling
Before acquiring a property and in conjunction with other transactions, we thoroughly examine properties
by receiving an engineering report that covers the building's structure and facilities, including environmental
items. We also receive an earthquake probable maximum loss assessment, a soil contamination survey andother information. These activities ensure that the building complies with laws and regulations.
The engineering report includes a confirmation that a building is free of asbestos, PCBs and fluorocarbons.
If any hazardous substances are discovered, appropriate actions are taken, such as by establishing countermeasures, managing or disposing of these substances, in accordance with laws and regulations.
29

Environment (Contribution to a Sustainable Environment)
If a property we plan to acquire has soil contamination, we make the investment only after the completionof soil contamination counter-measures.

Brownfield Development at Yokohama Connect Square
Kenedix, Inc. has completed a large-scale development projectin the 37th district of Yokohama Minato Mirai Central District incollaboration with our partner companies. For this project, weare contributing approximately 1 billion yen to take appropriate
measures to deal with soil contamination such as removal ofcontaminated soil and installation of water shielding walls, etc.

Biodiversity
Basic Views
Protecting biodiversity and using real estate projects to create urban areas are normally conflicting activities
that involve trade-offs. Each REIT and the Asset Management Company has a commitment to managing
real estate while giving substantial considerations for protecting biodiversity, which is critical to combatingclimate change. Biodiversity also plays a key role in the creation of pleasant environments for the tenants
and residents of our buildings as well as everyone living in the surrounding areas.

Consideration for Biodiversity
JHEP Certification (Note)KDX Residence Tsudanuma and KDX Residence Tsudanuma Ⅱacquired AA certification.
Note: The JHEP certification is a system for quantitatively evaluating and certifying activities that contribute to theconservation and restoration of biodiversity based on the Habitat Evaluation Procedures (HEP).
>For more detail Concerning JHEP

30

Environment (Contribution to a Sustainable Environment)
ABINC Certification
Hibiya Parkfront, which is where our head office is located, has received ABINC
certification (urban/SC version) from the Association for Business Innovation in
Harmony with Nature and Community (ABINC). This building, which Kenedix, Inc.
developed as a joint venture, was received this recognition due to its measures toprotect biodiversity.

Birdbath at Yokohama Connect Square
Yokohama Connect Square, which Kenedix, Inc. was engaged in the development andwhich was completed in January 2023, has birdbaths that serve as watering andbathing areas for wild birds.

31

Environment (Contribution to a Sustainable Environment)
Stakeholder Engagement to Improve Property Performance
Basic Views
As each REIT and the Asset Management Company are continuously making effort to realize sustainable
environment, we think it is crucial to cooperate with our tenants who constantly use our properties. We areaiming to cooperate by taking initiatives to raise awareness and promoting green lease that allow bothowner and tenant to share economic merit to achieve sustainable environment.
Collaboration with environmental initiatives is one of our material issues. We have been making contribution
through promoting tenant cooperation and cooperating with each stakeholder such as property managementcompanies who actually manage the building and employees of the Kenedix Group who manage theproperties.

Green Lease
Each REIT conducted LED lighting installation works for a part of a tenant property space at the expense of
the REIT based on the Agreement. A certain ratio of the highly reduced amount of electricity charges andmaintenance costs (costs for exchanging fluorescent bulbs) has been paid from the tenants in return asGreen Lease fee.
What is Green Lease？
It is an agreement specifying that property owners and tenants shall cooperate with each other to reduce
environmental burden. The agreement contains provisions to facilitate renovation toward moreenvironmental-friendly properties by reducing property ownersʼ investment burden through sharing the
economic merits generated as a result of energy-saving renovation works among property owners andtenants. It also contains an agreement to streamline operations for energy saving, water saving andenhancing indoor conditions.

Introducing Green Lease with Clause for Environmental Cooperation
KDX Realty Investment Corporation and Kenedix Private Investment Corporation have promoted including
clause to cooperate to improve environmental performance of the property, comfort and productivity oftenant into its based contract.

32

Environment (Contribution to a Sustainable Environment)
Cooperation with Property Management Companies
Each REIT and the Asset Management Company are engaging with property management companies toshare their vision, policies of sustainability and when making contract with a new tenant, property
management companies explain these ideas to tenants to achieve their cooperation.

Education to Employees on Green Building
The Asset Management Company provides annual sustainability training by external specialists to improveawareness and knowledge on green building for its employees.

Green Finance
KDX Realty Investment Corporation and Kenedix Private Investment Corporation want to contribute to thedevelopment of the domestic market using green finance. The green finance enables more committed
efforts to improve sustainability and further contribution to development of the domestic market by financing
opportunities to the universe of investors who take active stance towards ESG investment.
What is Green Finance？
Finance through green bonds and green loans by companies, local governments, or other organizations toraise funds for domestic and overseas green projects, which is a project contributing to environmental
solution, are called green finance. As main characteristics of green finance, proceeds are allocatedexclusively to green projects, and are tracked and managed in a reliable manner, ensuring transparency byreporting after the implementation of the finance.

Other Initiatives related to Environment
Each REIT is engaged in various initiatives related to environment.
For more details, please refer to the following links.
＞KDX Realty Investment Corporation＞Kenedix Private Investment Corporation (only in Japanese)33Social (Our Commitment to a Diverse Society)
Sustainability Policies -Our Commitment to a Diverse SocietyWe contribute to the diversity of society while taking into account the social impact of our properties. We
are committed to maintaining safety, confidence, good health, comfort and diversity regarding our tenants
and the communities where we operate.

Providing Properties with Environmental and Social
Considerations
Basic Views
Providing properties with environmental and social considerations is one of our material issues. Throughour investments in various types of properties, we are making a contribution to lowering the overall
environmental impact of society, providing greater convenience and achieving other forms of progress.

Investments in Various Types of Properties through REITs
Each REIT provides investment management in a diverse range of targeted sectors. The operation of eachone reflects the characteristics of its respective market sector, resulting in highly transparent asset
management.
REITs are based on the premise that real estate will be owned and operated for a long-term. Therefore,
investment and property management activities take into account environmental and social issues. Adopting
this stance enables these REITs to help invigorate communities, provide greater convenience, supply
pleasant and productive workplaces, and create safe and secure places to live.

Investment in the CCRC Project Property
The concept of CCRC (Continuing Care Retirement Community) originallyoriginated in the United States, but the Japanese version of CCRC wasdevised to extend healthy life expectancy in Japan as well as to improvethe environment as a regional revitalization.
Kenedix Private Investment Corporation owns a commercial facility
located in local city that is promoting CCRC business. The area includes multigeneration apartments,

34

Social (Our Commitment to a Diverse Society)nursing homes with nursing care, kindergarten, and bakery café & community spaces in the parks.
An organization that works to enhance the attractiveness of the surrounding area has been formed. Kenedix
Private Investment Corporation, in cooperation with the tenants and other members of the organization tofoster a community of diverse generations, promotes to increase the attractiveness of the region and createa related population.

Investments in Flexible/Mixed Use Properties
KDX Realty Investment Corporation and Kenedix Private Investment Corporation also invest in large, multipurpose properties such as “office buildings and residential properties designed to meet the needs of retailtenants on lower floors,”“properties with multi-uses, such as stores and medical clinics, that are directly

linked to a railway station.” By utilizing areas of our building sites set aside for public use and providing
properties for a broad range of applications, we contribute to tenants and residents of our buildings as well
as everyone living in the surrounding area.

Flexible and Agile Response to Existing Buildings
Expertise acquired since the start of real estate securitization in Japan enables us to recognize the potential
value of existing buildings, we acquired in the real estate market and produce the greatest possible value
by taking flexible and agile actions.

On-site Expansion of Existing Properties
KDX Realty Investment Corporation has expanded a recycle store building at
Roseo Mito, two restaurant buildings at Unix Ina, and a restaurant building
and a lounge building at Yokohama Kamigo Distribution Center. KDX Realty
Investment Corporation strives to enhance the value of properties throughurban redevelopment.

Urban Redevelopment Project
Kenedix, Inc. takes part in urban redevelopment projects through its real estate development funds andother schemes.

35Social (Our Commitment to a Diverse Society)
Cooperation with Re-Seed
Kenedix, Inc. is participating in a hotel redevelopment project in the Roppongi
district of Tokyo and will operate the property after its completion. This is a joint
project with Real Estate Sustainability & Energy Efficiency Diffusion
Organization (Re-Seed), which promotes the construction of high-quality
buildings that can withstand earthquakes and are environmentally responsible.
The previous building was replaced by a quality structure with outstanding
environmental and other characteristics. This project uses a sophisticatedbusiness structure. Kenedix, Inc. received certification under the Real Estate Specified Joint Enterprise Act
and are using a special business scheme designated by this act.
Reuse of Underground Piles
At Kenedix, Inc., redevelopment projects in central Tokyo, the foundation pilesof previous buildings have been reused in order to eliminate the cost of removal
and replacement as well as the need to dispose of these piles. After aconfirmation of their safety and structural integrity, existing piles have been used
for the redevelopment of the former Shinsei Bank head office site in Hibiya, hotel
redevelopment projects in Roppongi and Ginza, and other projects.
Urban Redevelopment of Aging Condominium through Condominium Site Sale Program and Real
Estate Securitization Scheme
The number of aging condominiums and the shortage of manpower for
management associations is expected to increase significantly. There areurgent needs to restrain deterioration, optimize the management andmaintenance of condominiums in order to prevent harm to the surroundingarea, and strengthen efforts to revitalize condominiums that are aging anddifficult to maintain and repair.
Kenedix, Inc. has developed an office building after the dismantlement of the 50-year-old condominium withformer earthquake-resistant standards in front of Kichijoji Station by utilizing "condominium site saleprogram" based on the Act on Facilitation of Reconstruction of Condominiums and real estate securitization
scheme. This is the first Project in Japan utilizing a real estate securitization scheme to form a fund for theacquisition of the Existing Building. The project was made possible by procuring a non-recourse loan for the
project to resolve cost issues and by inviting quality investor.

36

Social (Our Commitment to a Diverse Society)Social Finance
KDX Realty Investment Corporation further enhances initiatives for sustainability through the issuance ofbonds and borrowing, which are limited use that make a high degree of contribution to society, and also
aims to contribute to the development of the domestic social finance market by providing investment
opportunities to and collaborating with financial institutions who are proactively conducting ESG investment
and financing. In December 2019, KDX Realty Investment Corporation issued the J-REITʼs first social bonds
with total amount of 2 billion yen.
What is a Social Bond?
Social bond refers to bonds for which the entire amount of the procured funds is allocated only to initial
partial or full investment into new or existing eligible social projects or reflecting and is compliant with thefour core requirements of the social bond principles (use of procured funds, evaluation and selection
process of project, management of procured funds and reporting.)

Improving Resilience
Basic Views
Improving resilience/climate adaption is one of our material issues. We have been making various initiatives
to prepared for emergency situations in our properties for the safety and security of tenantsʼ employees,
visitors and local communities.

Improving Resilience for Disaster
Emergency kit box in elevator
KDXR has been placing boxes of emergency kit in the elevators incase of disaster and machine trouble.

37

Social (Our Commitment to a Diverse Society)
Distribution of Emergency Action Manual Handbook
KDX Realty Investment Corporation published a pocket-sized,
portable emergency action manual handbook and distributed totenants for emergencies including major earthquakes. The
handbook contains various helpful information in an emergency
such as response to major earthquakes, emergency relief activities
and how to use AED.

Disaster Response Vending MachineSome properties owned by KDX Realty Investment Corporation
have disaster relief vending machines and SDGs promotion
vending machines. In the event of a power outage due todisaster, etc., beverages in the vending machines can beprovided free of charge as relief beverages.

Verification of Earthquake Resistance
Before acquiring a property and in conjunction with other transactions, each REIT receives an engineering
report that covers the building, various equipment, environmental properties and other items. We use thisreport to confirm the building's resistance to earthquakes. If a building does not meet the standards, we
complete the purchase only after the completion of seismic reinforcement work. We also receive a probablemaximum loss report prior to acquiring a building. This allows us to determine the maximum risk exposure
associated with an earthquake.

Initiatives for an Aging Society with Fewer Children
Basic Views
Japan's population has been declining since 2008 as the country's population becomes older and the numberof children falls. As the already large number of older people continues to climb, the shortage of healthcare
facilities will become an even more serious problem. On the other hand, we also recognize that the waitlisted children for childcare facilities in urban areas due to womenʼs advancement in society and lack ofnursery teachers is also a social issue. Initiatives for an aging society with fewer children are one of ourmaterial issues. KDX Investment Corporation invests in residential facilities with healthcare and childcare
38

Social (Our Commitment to a Diverse Society)facilities, healthcare facilities and using other activities to meet the needs of Japan's aging population.

Management of Healthcare Facilities
KDX Realty Investment Corporation has invested in healthcare facilities in order to help meet the growing
demand for healthcare.
Healthcare investments cover a variety of business sectors. Acquisitions include fee-based homes for theelderly and serviced housing for the elderly as well as investments in senior living intermediate nursing
home, which is the first as a J-REIT. KDX Realty Investment Corporation is dedicated to growing along withthe operators of properties it owns by providing the best solutions for their business and facility
management issues and other needs. KDX Realty Investment Corporation fully understands the philosophy,business operations and other characteristics of these partners. Operators of properties fully understand
KDX Realty Investment Corporation's investment philosophy, management policies and other guidelines.
This mutual understanding results in business partner relationships that go well beyond the conventionalboundaries of ties between a building owner and a tenant.

Commitment to Barrier-Free Access
Office buildings, shopping centers and other real estate at the Kenedix Group have facilities for easy
accessibility for everyone regardless of physical limitations.

Other Initiatives related to Contributions to Society
Each REIT is engaged in various initiatives related to Contributions to Society.
For more details, please refer to the following links.
＞KDX Realty Investment Corporation＞Kenedix Private Investment Corporation (only in Japanese)39Social (Stakeholder Engagement)
Sustainable Policies -Stakeholder EngagementWe manage our properties as a responsible real estate asset management company by stressing theimportance of engagement with our stakeholders such as investors, tenants, business partners,
communities and property management companies.

Continuous Improvement of Customer Satisfaction
Basic Views
The continuous improvement of customer satisfaction is one of our material issues. One key customer
category is the tenants and residents of the properties we manage. We are also dedicated to increasing thesatisfaction of the each REITʼs investors. Most important to achieving customer satisfaction are the qualityof the properties we acquire and the performance of our funds. We work closely with property managementcompanies and other business partners in order to improve property quality and fund returns.

Tenant Satisfaction Survey
The Asset Management Company conducts satisfaction survey for tenants in office buildings, shopping
centers and healthcare facilities (the person in charge of general affairs and employees, and residents)
regarding building facilities and operational services. This survey is undertaken by a third party andconducted every two years as a general rule.
Consecutive survey enables us to capture the tenant needs and quickly respond by renewal of facilities orimplement refurbishment and receive strong intention to stay in the same building from tenants.

Initiatives for Unitholders
We hold regular meetings with the broad range of institutional investors all over Japan and overseas. Direct
engagement with these investors gives them a better understanding of our funds and allow us to hearsuggestions, requests and other thoughts of these investors.
In addition, KDX Realty Investment Corporation, holds earnings announcement information meetings forsecurities analysts in each fiscal period. Moreover, KDX Realty Investment Corporation participates in
information meetings for individual investors as needed in order to maintain direct lines of communication
with these investors.
KDX Private Investment Corporation holds an advisory committee and provides opportunities for the40

Social (Stakeholder Engagement)
unitholders to voice opinions when conducting property acquisitions and sales.

Engagement with Business Partners
To properly share information such as the status of properties and improvements, we meet on a regularbasis with the property and building management companies that oversee our real estate holdings. When
there is a natural disaster or other emergency, we use our close ties with these companies for quickly
determining building damage and performing on-site management. Each REIT periodically evaluates theperformance of the property management companies they use and hold discussions about theirperformance. This creates an appropriate level of pressure on both parties to do their best at all times. Withno obligations or restrictions involving affiliations with other companies or groups, the Asset Management
Company has the flexibility to make investments and manage every property in the best possible way.

Community Engagement
Basic Views
We have identified “Community engagement” as material topic and taking various unique initiatives to makepositive contribution to the local communities.

Collaboration with Local Communities
KDX Realty Investment Corporation entered into agreements with Yoshikawa City, Ina Town, Konosu City
and Ashikaga City under which a part of its properties under management, Unicus Yoshikawa, Unicus Ina,
Unicus Konosu and Ashiko Town Ashikaga, respectively, can be used as a temporary shelter at times of
emergency.

41

Social (Stakeholder Engagement)
Community Engagement through Managed Properties
Local Events at Our Properties
KDX Realty Investment Corporation is making efforts to enliven local communities by holding communityparticipating events at its properties.

SDGs Event at Our Property
As part of its community contribution activities, KDX Realty Investment
Corporation held an event to create a Christmas tree using local tenryu cedar
trees at one of its properties, Sun Street Hamakita. This event not only
increased the interest towards local forestry industry, but also contributed toraising awareness to SDGs.
Clothing Recycling Event at Our Properties“BRING,” a clothing recycling project, washeld at our retail facilities owned by KDX
Realty Investment Corporation.

Support for the Activities of Japan for UNHCRKDX Realty Investment Corporation has been supporting Japan for
UNHCR, which is the official contact point in Japan on behalf of UNHCR, arefugee support organization of United Nations, by providing common
areas of its properties as locations for fund-raising activities to support
refugees, showing their advertising video on the digital signages of ourproperties both for free. The letter of appreciation was given by Japan for
UNHCR to KDX Realty Investment Corporation.
42

Social (Stakeholder Engagement)

Initiatives for Art Project
Kenedix Private Investment Corporation offers open space of its officebuilding free of charge as a place to exhibit artworks for communitysponsored art events, providing workers and residents in theneighborhood with a place to relax and have fun.

Community Engagement by the Kenedix Group
Education and Academic Support Activities
・J-REIT Study Session for University Students
We have provided J-REIT study session for university students to learn
basic knowledge about J-REITs and structures of real estate funds.

・High School Student Work Experience
We provided work experience opportunities for high school students. In
addition to the tour of our office, they learned about the structure of realestate, real estate funds, and the current status of womenʼs empowerment.

Culture, Art and Sports Support Activities
・Sponsorship of Hibiya Music Festival
The Hibiya Music Festival is a “borderless music festival that anyone canjoin for free,” held at Hibiya Park, a central park in Tokyo. Kenedix, Inc. cosponsors the Hibiya Music Festival, which is held in the Hibiya Park next toour office.

43

Social (Stakeholder Engagement)
Donations and sponsorship for sports
Kenedix, Inc. sponsors the Japan Rowing Championships and Japan Ice
Hockey Championships, and others.

International Exchange Activities

・Support for the Mindanao Children's Library
The Kenedix Group donates supplies to the Mindanao Childrenʼs
Library in the Philippines on a regular basis. Employees of groupcompanies donate shoes, apparel, stationery supplies and other items
that they no longer need. Children who receive these recycled items
send a message of thanks to Kenedix every year.

Reconstruction Support Activities
・Matching Donations
In the event of a disaster such as earthquake, heavy rain or typhoon, etc., theKenedix Group conducts a matching donation program to support reconstruction
activities. With this program, the Kenedix Group adds a certain amount to every
donation that employees made to an eligible disaster relief charity.

Managing Conflicts of Interests
Basic Views
The real estate operations of the Kenedix Group encompass a broad spectrum of stakeholders as well as alarge number and variety of properties owned by various investment funds. The immense scale of these
activities creates the risk of conflicts of interest. Preventing this problem requires managing assets while
exercising care to prevent conflicts involving transactions between Kenedix funds and other activities.

44

Social (Stakeholder Engagement)
Managing conflicts of interests is one of our material issues. The Kenedix Compliance Manual has policies
for specific measures aimed at preventing these conflicts and protecting the assets of the Kenedix Group.
We have compliance and other training programs for reinforcing the commitment of employees to prevent
conflicts of interests.

Other Initiatives related to Stakeholders
Each REIT is engaged in various initiatives related to stakeholders.
For more details, please refer to the following links.
＞KDX Realty Investment Corporation＞Kenedix Private Investment Corporation (only in Japanese)45

Social (Attractive Working Environment)
Sustainability Policies -Attractive Working EnvironmentWe aim to maintain an attractive working environment by implementing measures for employees' health andwellbeing and for diversity and equal opportunities. To enable employees to realize their full potential, we
will provide a variety of training programs and other educational opportunities.

Recruiting, Employee Retention and Career Advancement
Basic Views
Recruiting, employee retention and career advancement is one of our material issues. We have many
programs to develop the skills of our people and are always seeking ways to upgrade training and othereducational activities so that all our employees can realize their full potential. Employees receive theopportunities to discuss whether they are satisfied with their jobs and their career plans twice a year, which
are used to improve the efficiency of the operation and distribution of personnel at the most desirable place.
The REITs are not allowed to hire employees under the provisions of the Act on Investment Trusts andInvestment Corporations, and the Asset Management Companyʼs employees substantially manage its
assets.

Workforce Diversity and Stability
The Asset Management Company is operated by employees seconded from its parent company, Kenedix,
Inc. utilizes the know-how, expertise, philosophy and human networks cultivated by the Kenedix Group. In
addition, the Asset Management Company continues to recruit new employees so that it can secure
appropriate human capital in a timely manner in accordance with business conditions and environmental
changes. (Newly recruited employees are hired by Kenedix, Inc. and seconded to the Asset Management
Company.)
Moreover, to forecast hiring needs and proactively develop new pools of talent, Kenedix, Inc. has adopted areferral recruitment strategy (an employee placement system whereby current officers and employees areencouraged to recommend personnel suited to the Kenedix Group, such as acquaintances and friends) in
February 2021 in addition to regular new graduate recruitment and mid-career recruitment.
By securing various human resources, Kenedix, Inc. promotes sustainability management as a real estate
asset management company. The Kenedix Group have never conducted lay-offs or other employment
adjustment since their establishment in 1995.
Number of Personnel Seconded from the Sponsor (Kenedix, Inc.) to the Asset Management Company
46

Social (Attractive Working Environment)
As of December 31, 2023
111

Total Benefits Package
The Asset Management Company strives to create a comfortable working environment through various
benefit programs for all of its employees (including contract and part-time employees)

Human
Resource

Programs

Scope

Contents

Training program

All employees

DevelopmentAllows employees to take various training courses
required for their job level
Subsidizes the registration, maintenance, andrenewal costs of recommended and supported

Subsidy for
qualification

All employees

acquisition

qualifications

in

full.

In

addition,separate

providedforincentive

payments

areacquisitionofcertaintherecommended

qualifications
Childcare

Maternity leave,and Nursing

childcare leave andAll employees

Leave and absence to care for children

child nursing leave
Subsidy forchildcare

Subsidy for transportation to daycare centers, etc.
All employeestransportation
Nursing care leavechildrenAll employees

Non-statutory
nursing care leavecare leave
Shorter working
hour
SupportDiverseWorkingfor

Flexible working
hours

Leave and absence to care for a family member inneed of nursing care
Leave to care for a family member in need of

All employees

systemSpecial nursing

for employees who care for multiple preschool

nursing care for a period exceeding one year in
combination with nursing care leave
In addition to nursing care leave, a total of 10 days

All employeesof paid special leave for nursing care is granted
for each person requiring nursing care.

All employees

Allows employees to shorten their working hours
for the purpose of childcare or nursing care
Allows employees to flexibly choose their start

All employees

and end times for their workday according topersonal convenience

Style

Allows employees to work from home or in a
Remote work

All employees

shared office, etc. for greater flexibility in working
style

47

Social (Attractive Working Environment)
Annual paid leavein excess ofstatutory

All employees

20 days of paid leave at a flat rate (monthly rate
for the first year of employment)

requirements
Consecutive leave

Refreshment leave

All employeesInadditiontoregularannualpaid

leave,

employees are granted consecutive leave
Refreshment leave is granted every 10 years ofRegularcontinuous service, and a commemorative service

employees

reward is provided to those who take the leave.
Allows employees to take annual paid leave, child

Hourly paid leave

All employees

nursing care leave, and nursing care leave in onehour increments

Human Resource Development System
At Kenedix, Inc., originally hired employees as new graduates are assigned to one-month entry training andthen rotate several times in six years to make them grow up to human resources that have broad insight.
Furthermore, to continuously improve the operational skills of employees, the company provides externalseminars that are structured for specific job categories, such as managers, mid-level employees and new
employees.

Examples of Human Resource Development Programs by Position and Level

Employee Talent Development Training Percentage
48

Social (Attractive Working Environment)
2020

2021

2022

2023

32.2%

93.4%

82.9%

76.5%

Note 1: In 2020, the figure declined sharply due to the COVID-19 pandemic. The figure rebounded in 2021 by utilizing
online training.
Note 2: These figures are based on individuals who work at the Asset Management Company.

Training Cost per Employee
2020

2021

2022

2023

30,944 yen

59,606 yen

65,933 yen

65,393 yen

Note: Calculated for employees directly employed by Kenedix, Inc.

Training Programs
Managerial / Ledership Development Training Program
The Asset Management Company utilizes the Kenedix, Inc. training programs and requires employees inmanagerial positions to attend external seminars on managerial and leadership development training.
Job-specific Skill Development Training Program
The Kenedix Group provides seminars arranged by a third party for specific job categories, such as managers,
mid-level employees and new employees to give them opportunities to acquire the skills required at eachlevel.
Self-development Program
The Kenedix Group provides opportunities to all of its employees to attend seminars and trainings arrangedby third parties to acquire specialist knowledge or skills required for their jobs.
English Language Training
The Kenedix Group provides English language training by teachers from educational institutions toemployees who apply for these classes. Students participate in discussions every week. An online-speaking
program is also available so employees can utilize this opportunity with more flexibility.
Training Program Provided by Professor
For those who applied, the Asset Management Company provides the opportunities to participate in the49

Social (Attractive Working Environment)
training program provided by Professor Chihiro Shimizu who is specialized in big data analysis and realestate economics at Nihon University (at the time ). Also, the company invites the professor for regularteach-ins for employees on real estate.
Study Abroad Program
The Kenedix Group provides opportunities to obtain a broad range of knowledge, personal connections andinternational viewpoints by sending employees to study in oversea graduate schools where they acquire
skills to become the next generation of management.

Encouragement to Obtain Professional Certifications
To keep the status of leading company with professionals that provide high quality services, it is encouraged
for its employees to obtain various certifications to develop capability and career and improve organizational
power. All the executives and employees, including contract employees, are eligible to receive full subsidies
for registration, maintenance, and renewal costs of recommended or supported certifications, with the aimof promoting skill development and career formation of employees who are the future leaders of thecompany and improving the vitality of the organization. In addition, additional incentives are provided forthe acquisition of certain recommended certifications to promote the acquisition thereof by executives andemployees.
Qualified Individuals(As of December 31, 2023)

Real estate notaries

73

Certified real estate consulting masters

11

ARES certified masters

33

Chartered members of SAAJ

6

Licensed senior architects

5

Certified public accountants

1

Real estate appraisers

3

Certified public accountants(USCPA)

3

Certified building administrators

11

Tax accountants0

Persons Eligible for Subsidy
All executives and employees, including contract employees.
Detail of Subsidy
All registration, maintenance and renewal costs for recommended and supported qualifications.
Separate incentive payments for acquisition of certain recommended qualifications.

50

Social (Attractive Working Environment)Internal Job Application Program
The Kenedix Group has internal job application program to provide its employees with the opportunity todemonstrate the best of their ability and to exploit human resource within the company. Employees areallowed to apply for the jobs they wish and design their own career.

Evaluation System to Encourage Employeesʼ Career Development
Employees performance is evaluated through objectives management evaluations. Managers interview
individuals to discuss their performance and career opportunities at the beginning, half year and end of the
fiscal year. At the fiscal year end, all employees undergo an evaluation of achievement of contribution
responsibility. The supervisor evaluates the performance of each employee in terms of their contribution
responsibilities and the degree to which they have achieved them, and the results are fed back to theemployee after reflecting the assessment results of the Personnel Evaluation Committee.

Engagement Survey
We conduct regular engagement surveys every year as a measure to make the Kenedix Group a rewarding
place to work and a company of choice for our employees. By measuring employee satisfaction, we areworking to strengthen engagement by continuously examining improvement measures to realize an
attractive workplace. Based on the results of the survey, we take organizational issues seriously, analyze
them, and respond to them.
2022

2023

Engagement rating

BBB

A

Engagement score

55.4

59.3

Health and Wellbeing of Employees
Basic Views
The health and wellbeing of employees is one of our material issues. We have been promoting initiatives tomaintain work / life balance, provide working environment that is pleasant and advantageous in soft andhard to maximize employee's ability. In addition, the company has prepared the non-salary benefits for allof its employees to reflect a variety of personal needs.

51Social (Attractive Working Environment)
Work Style Reform
We have been improving its working environment by encouraging employees to take paid holiday, reducing
overtime work and introducing various internal rules to allow flexible work style.
Paid Vacation in Excess of Statutory Requirements
20 days of paid vacation are granted to all employees after their second year of employment (the first yearof employment, the number of days is granted according to the length of employment)
Promoting the Use of Paid Vacation Days
On top of annual paid leave, we have a program that allows employees to take consecutive days off.
Department managers encourage the people they supervise to go on an extended vacation and to use all of
their annual leave.
In addition, in the year following the attainment of 10, 20 or 30 years of continuous service as a regular
employee, refreshment leave is granted, which is added to the number of consecutive days off, and arewards for commemoration of service is provided to those who take refreshment leave.
Hourly Paid Leave
We have an hourly paid leave system that allows employees to choose a flexible working style. Annual paid
leave, sick/injured childcare leave and elderly parent care extended leave can all be taken in one-hour
increments.
Flexible Working Hours
All employees can choose different start and end times for their workday except a core-time from 10 a.m.
to 3 p.m. to enhance their working arrangements.
Remote WorkAll employees can work from home or in a shared office for their greater flexibility in working style.
Initiatives to Reduce Overtime WorkManagers in each department are monitoring working hours in their team and adjusting workloads of
employees to minimize overtime. If an employee has worked more than certain hours, a check-up by doctor
shall be arranged upon employee's request, reported to the Health Committee.

Health and Wellbeing
We have been endorsing health management to support health of employees and preparing comfortableworking environment through establishing rules as follows.

52

Social (Attractive Working Environment)
Health Committee
Kenedix, Inc. has established health committee and organized monthly meeting to discuss and takemeasures to promote health and prevent disorder for its employees. Also the committee sends email every
month to all employees on relevant topics to enlighten them on health and wellbeing.
Annual Physical Check-up
All employees including contract employees are to receive annual physical health checkup by doctor at thecompanyʼs expense.
Mental Health CareAll employees have access to counseling service provided by the company where employees are allowed toreport any personal issues or issues regarding the company to external counselors, in order to raise theirmental literacy. Newsletter with relevant topics on mental health is sent every month to notify of this service.
In addition, the company provides annual stress check to all employees including contract employees toprevent illness of which result are provided to each employee and, if necessary, checkup by doctor isarranged.
Diverse Working Styles
We make the working environment more flexible and provide a variety of working styles and options to suiteach individual.

Positive Working Environment for Workers
The Asset Management Company is located at “Hibiya Parkfront”, the building Kenedix, Inc. participated inits development. The transportation of the building is excellent since it is directly connected to 2 metro
stations, Kasumigaseki and Uchisaiwaicho, through the neighboring building. Taking advantage of its rare
location near Hibiya Park, abundant trees are planted inside and outside the building under the concept ofan “office in the park”. In addition, by providing services and facilities to support office workers, the building
53

Social (Attractive Working Environment)
has become an ideal office where “people can feel nature and work comfortably”.
Harmonization with the Nature of Hibiya
Park
In order to harmonize with Hibiya Park, thelandscape was developed for greening with over
100 plants and trees. Trees and plants are also
placed inside the building to achieve park-like

1F Entrance hallcomfortable space in the building.

21F Sky garden

Hibiya Centrium Unified with Landscape in Hibiya ParkTo protect biodiversity, over 100 kinds of trees and plants were selected after
thorough examination of landscape in Hibiya Park. The area has become theoasis for tenants and workers from the nearby office.

Introduction of an Activity-Based Workplace (ABW)

Hibiya Centrium

We have redesigned our head office to realize a new way of working by adopting an Activity-Based
Workplace (ABW), in which employees can choose where they work according to the nature of their work,without fixed seating. The “activity-based type,” which has been attracting attention in Japan following
Europe, the U.S., and Asia, is a development of the free-address type, with the same features of a designatedworkplace shared by all employees without fixed seating, but with a variety of seating and spacearrangements, allowing employees to choose an environment that suits their working style and work content.
Since the Kenedix Group handles highly confidential information such as client asset management andpersonal information, it clearly separates the space for each group company and the space shared by theentire company, and adopts ABW for the company-wide shared space, while introducing a flextime system
to support diverse employee work styles.

54

Social (Attractive Working Environment)

Open table seats
Open-air seating for casualchit-chat and lunch time.

Café counter
Freshly ground coffee isserved, and employees canstand around and talk in acafé-like atmosphere.

BOX seats
Box seating for four persons
enables casual meeting.

Booth
Users can use the facility for
telephone calls or web
conference on alone, withoutworrying about surroundingeyes and sounds.

Standing desk
It can improve excessive sitting andchange posture to amplify healthand improve concentration.

High concentration area
Employees can work alone
in a quiet and calm
environment to improvetheir work efficiency.

Use of Workcations
The Kenedix Group uses “PerkUP Karuizawa” as a base for team building and other activities in a scenic
area of Japan far from big cities.

55

Social (Attractive Working Environment)
Investment Unit Ownership Program (ESOP)
We have introduced investment unit ownership program (ESOP) for KDX Realty Investment Corporation for
the employees and senior executive officers. The purpose of the introduction of the program is to promotewelfare benefits by providing opportunities to acquire the Kenedix Group REITʼs investment units andfacilitating their wealth building as well as to enhance unitholder value over the medium-to long-term bypromoting further alignment of interests with the Kenedix Group REITʼs unitholders. In addition, the program
allows for the purchase of investment units through payroll deductions and provides a 10% incentive on thepurchase amount.

Other Initiatives
Employees Meeting
Employees meetings, both online and off-site, are held to promote interaction among group employees. All
employees of the Kenedix Group participate in the meetings and share various topics such as messages
from the president, introductions of each department, and awards for projects implemented during the fiscal
year in order to promote friendship.
Proposal Project
We have implemented a project to solicit a variety of proposals that will contribute to the achievement of
the Mid-term Management Plan, positive working and contribution to society from all employees of theKenedix Group. Winners are selected through employee voting, and those proposals deemed desirable tobe promoted as a project are promoted toward realization with resources, etc., provided by the company.
“Kolet,” the newly built single-family properties for rent, was commercialized through this proposal project.
In addition, various initiatives are underway to contribute to positive working and contribution to society,such as group exchange party, measures to improve the rate of paid leave used, the introduction of officemusic and the provision of study sessions to university students.
Support for Group Activities Outside of Work
Kenedix Group subsidizes for group activities such as futsal or golf, which help employees make personalconnections beyond his/her job scope.
Certification of Health & Productivity Management Outstanding Organizations
Through the implementation of various initiatives related to health management, etc., Kenedix, Inc. and theAsset Management Company have been certified as a “health & productivity management outstandingorganization 2024 (large enterprise category)” by Nippon Kenko Kaigi, which recognizes organizations thatpractice excellent health & productivity management.
56

Social (Attractive Working Environment)Thecertifiedhealth&productivity

management

outstandingorganizations recognition program is a program that recognizes large
corporations,

small

and

medium-sizedcompanies,

and

other

corporations that practice particularly excellent health management as"organizations that think about employee health management from amanagerial perspective and engage in it strategically," based on
initiatives that meet local health issues and health promotion initiatives
promoted by Nippon Kenko Kaigi.

Diversity and Equal Opportunities
Basic Views
The Asset Management Company has established diversity and equal opportunities as one of its material
issues. We promote various initiatives related to diversity, equity & inclusion. Also, we welcome diversity
regarding race, religion, creed, gender, age, sexual orientation, disabilities and nationality and respect therights of individuals. We are dedicated to operating workplaces where all people at the Kenedix Group canrealize their full potential.

Respect for Human Rights, Prevention of All Forms of Discrimination andHarassment
We recognize the ILO (International Labor Organization) declaration on fundamental principles and rights
at work, including the elimination of discrimination, prohibition of forced labor, prohibition of child labor,
freedom of association, and the right to collective bargaining, as important social issues, and we are also
working to prevent overwork and pay wages that exceed the minimum wage. In addition, we are thoroughly
prohibiting harassment, and we provide training for all officers and employees on how to deal withharassment.

Promotion of Women Employeesʼ Activities
We believe that it is important to revitalize the workplace through the participation of a diverse range of
employees. In addition, from the perspective of effectively utilizing human resources to cope with the future
decline in the working-age population, we are particularly promoting the activities of women. In order for
women to realize their full potential, we have established a workplace environment that is easy for women57

Social (Attractive Working Environment)
to work in, as well as systems to support childbirth and childcare, and we aim to become a company where
women and their families can play an even more active role.
Women's Activity Promotion ProjectAs a result of an internal proposal project, we have established a project team for the promotion of women's
activities across the Kenedix Group. This project conducted a company-wide questionnaire on women's
activities to summarize the issues and future measures to be taken by the Kenedix Group, and conductedtraining for all employees, executives, managers, and female employees on diversity to foster understandingof diversity in the company. In addition, based on these trainings and other activities, the Kenedix Group
executives formulated the "Kenedix Declaration of Conduct for the Promotion of Female Advancement andImprovement of the Workplace Environment.
In January 2024, this project team was re-launched as the diversity promotion project team, and is now
engaged in various activities with a greater emphasis on diversity.
Kenedix Declaration of Conduct for the Promotion of Women Advancement and Improvement of the
Workplace Environment
Each and every one of our employees is the source of Kenedixʼs corporate value. We respect the abilities ofall employees and aim to create a workplace environment where they can work with peace of mind.
1)

We will create a workplace where all employees, regardless of gender, occupation, or age, can improvetheir skills and fully demonstrate their individual abilities.

2)

We will create a workplace where employees can respect each other and freely and openly exchange
opinions regardless of hierarchy, departments, age, or gender.

3)

We will provide opportunities for motivated women employees to gain a wide range of work experience.

General Business Owner Action Plan based on the Law for the Promotion of Women's Activity
In order to create an employment environment in which all employees, regardless of gender, can improvetheir skills and fully demonstrate their individual abilities, we have established the following action plan.
Targets
1)

Increase the percentage of female employees in management positions to at least 15% by the end of2025, with a view to achieving 20% by the end of 2030.

2)

Continue to have 100% of female employees take childcare leave, and increase the number of male
employees taking childcare leave.

58

Social (Attractive Working Environment)
Initiatives
1)

Training and career support for female employees
・Promotion of measures through the Women's Activity Promotion Project2)

Creation of a workplace environment for flexible and efficient work and leave styles
・Introduce a permanent telework system
・Promote flexible and efficient work styles by use of PerkUP Karuizawa, shared offices, etc.
・Promote the use of various types of leave, including annual paid leave

3)

Establishment and dissemination of an environment that facilitates the use of childcare leave
・Promote internal awareness of childcare-related programs
・Gathering information on case studies of other companies, etc.

Employment System for Seniors
From the perspective of revitalizing the workplace through the participation of diverse employees andeffectively utilizing human resources in response to the future decline in the working-age population, we
have established a system for rehiring employees who have reached retirement age of 60 until the age of65, we expect that the knowledge and expertise of our senior employees, who have been at the forefront of
the real estate asset management industry since its dawn, will be passed on to the organization.

Support for Employees through their Life Event
We have prepared various programs to support employees to work through their life event such as having
children or nursing elderly.
Childbirth and Childcare
We have a number of programs for women during a pregnancy, such as time off for medical check-ups,
working hours that avoid times when trains are most crowded, and days off for good health. At childbirthand afterward, we provide time off for women and their husbands. Employees can receive time off for thecare of a baby or when a preschool age child is sick or requires other care. We also offer flexible working
time so employees can care for family members. For example, employees can limit overtime and late-nightassignments, reduce working hours, or use staggered hours. There is also a subsidy for expenses for childrelated transportation needs before and after work and a discounted babysitter service.

59

Social (Attractive Working Environment)
Nursing Elderly
Employees taking care of an elderly parent or other relative can use extra days off or extended leave. We
also limit overtime and late-night assignments, reduce working hours, or use staggered hours so that anindividual can fulfill family responsibilities. Support for nursing care goes beyond requirements byproviding more than the legally mandated time off and special days off to care for an elderly parent orother relative.

Other Initiatives related to Attractive Working Environment
Each REIT is engaged in various initiatives related to s Attractive Working Environment.
For more details, please refer to the following links.
＞KDX Realty Investment Corporation＞Kenedix Private Investment Corporation (only in Japanese)60Governance (Responsible Organization)
Sustainability Policies -Responsible OrganizationWe ensure compliance and sound risk management in our entire business activities. We are committed toresponsible property investment by a responsible organization by aligning with global ESG initiatives andproactively disclosing ESG information.

Governance
Governance of the REIT
In addition to the General Meeting of Unitholders, which is composed of unitholders, the organization ofeach REIT consists of the Board of Directors, which is composed of an Executive Officer and Supervisory
Directors, and an Independent Auditor. The number of supervisory directors must be the number of
executive directors plus one or more.
The Board of Directors of each REIT is required to meet at least once every three months. In actual
operations, Board of Directors meetings are held about once a month in principle. At Board of Directors
meetings, the Executive Director reports on the operational status of the Asset Manager and the General
Administrator. The directors and employees of the Asset Management Company and the General
Administrator also provide detailed reports on the status of business execution as needed. The Independent
Auditor is EY Ernst & Young ShinNihon LLC.
The Executive Director is responsible for the execution of each REIT’s businesses and is authorized to takeany judicial or out-of-court actions with respect to each REIT’s operations. The Supervisory Directors havethe authority to supervise the execution of duties by the Executive Director.

Operational Structure
Each REIT has entrusted the management of its assets to the Asset Management Company, in accordancewith the provisions of the Investment Trust Act. The Asset Management Company manages each REITʼsassets under an asset management contract with each REIT.
The organizational chart of the Asset Management Company is as follows.

61

Governance (Responsible Organization)

Compliance
Basic Views
Strict compliance with laws, regulations and other guidelines is positioned as a vital element of the
management of each REIT and the Asset Management Company based on the awareness that complianceproblems are a significant risk regarding business operations.
We have a responsibility to use business operations to create the types of value that meet social
requirements. We have extensive and constant compliance programs in order to achieve qualitative andquantitative improvements of the value of our business operations.

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Governance (Responsible Organization)
By implementing a rigorous compliance program, we are determined to contribute to economic and social
advancement and, as a result, earn the admiration of investors and the trust of the public.
Compliance is one of our material issues and the entire group has a strong commitment to compliance.

Board of Directors (KFM)
Committee

The Committee is chaired by the President and consists of all directors.

Members
Frequency ofAt least once every three months. However, meetings may be held as needed.

Meetings
TenureUntil the close of the general meeting of unitholders relating to the last fiscal
year ending within two years after the election

Resolution

Resolutions of the Board of Directors shall be adopted by a majority of the

Methodvotes of the directors present at a meeting where a majority of the directors
who are entitled to participate in the voting are present. Directors with special
interests may not participate in the voting.

Matters to be
Resolved

・

Matters concerning KFMʼs General Meeting of Shareholders

・

Matters related to shares and bonds, etc.

・Matters related to the Board of Directors, officers, and important
employees

Compliance
System・Matters related to the organization, rules, etc.

・Matters concerning KFMʼs business・

Disposition and transfer of important assets

・Matters related to significant borrowings

・Approval of internal audit (inspection) plans and improvement plans, etc.

・

The Board of Directors determines the basic policy for complianceactivities as well as other basic items concerning compliance. The Boardof Directors can ask the Compliance Officer and Compliance Committee
to submit reports as needed concerning the status of compliance63Governance (Responsible Organization)
activities.
・The Compliance Officer submits proposals for the establishment of acompliance manual and a compliance program, as well as revisions. These
proposals are first examined and approved by the Compliance Committee.
The proposals then go to the Board of Directors for final approval.

・As a rule, a compliance program is established for every fiscal year andthe Compliance Officer regularly submits progress reports to thecompliance committee and the Board of Directors. In addition, theCompliance Officer submits internal audit reports and clerical accident
reports in a timely manner or periodically.

・

The Board of Directors makes decisions on appointments of the following
important positions regarding the management of REIT assets by KFM.
Individuals who are selected must have outstanding character andknowledge along with the skills needed to perform the assigned duties.
1) Outside member of the Compliance Committee
2) Outside members of the asset management committees of eachdepartment3)Compliance Officer
In addition, the outside members of the asset management committees ofeach department must be certified real estate appraisers and the outside
member of the Compliance Committee must be either an attorney or acertified public accountant.

Compliance Officer
The Compliance Officer works on the establishment of compliance system in the Asset Management
Company and the creation of a corporate culture that abides by laws and regulations, as well as rules.
The Compliance Officer ensures that the necessary relevant documents are prepared in conjunction withthe presentation of such an agenda as the establishment/change of management guidelines and asset
management plans for the respective departments and the acquisition of individual assets, and conducts
preliminary examinations regarding whether there are any serious problems in terms of compliance, suchas the violation of laws and regulations.
The Compliance Officer also administers matters regarding compliance in the Asset Management Company
as a chairperson of the Compliance Committee. Specifically, the Compliance Officer is assigned with duties
64Governance (Responsible Organization)such as drafting and improvement of compliance manuals and compliance programs, as well as periodical
instructions and trainings to executives and employees and the inspection of compliance with laws andregulations, based on compliance programs.

Compliance Committee
Chair

Compliance Officer

Committee

The President and Representative Director, the Compliance Officer, theMembers

director(s) (if any) in charge of the proposals to be discussed by theCommittee who currently holds such position, and the external committee
members

Functions
Roles

Deliberations and resolutions on matters related to overall compliance・The Compliance Committee examines all other important matters involving
compliance and reaches decisions, which are reported to the Board of
Directors.
・The compliance manual and compliance program proposals submitted by theCompliance Officer are examined and approved by the Compliance Committee.
The proposals then go to the Board of Directors for final approval. As a rule,
a compliance program is established for every fiscal year and the Compliance
Officer promptly submits progress reports to the Board of Directors.

Decision-making process
The Asset Management Company manages the assets of each REIT under a discretionary asset
management contract with each REIT. In this role, the Asset Management Company establishes asset
management guidelines, investment policies, related party transaction rules, distribution policies, disclosure
policies and other basic policies regarding the asset management of each REIT.
For the asset management of each REIT, the Asset Management Company prepares an asset management
plan and other documents (in addition to the asset management plan, medium-term and annual businessplans) in accordance with the asset management guidelines. Based on the investment policy stipulated in
the asset management guidelines and the related party transaction rules, properties to be acquired or soldare selected and the transactions are subsequently executed.
Transactions with related parties as prescribed in the Investment Trust Act and related parties as prescribedin the Related Party Transaction Rules require the approval of the REITʻs Board of Directors and based on65Governance (Responsible Organization)
this resolution, the agreement of the REITʼs Executive Director. However, this requirement does not apply
for certain types of transactions.

Responding to Anti-Social Forces
The Asset Management Company has prepared a Manual for Responding to Anti-social Forces and thePrevention of Transfers of Criminal Proceeds. To reject relationships of any kind with anti-social forces, theAsset Management Company has a resolute stance for refusing to deal with criminal and other anti-social
forces.
The Asset Management Company confirms that buyers and sellers of properties, tenants, business partners,
and other transaction counterparties are not anti-social forces. In addition, the Asset Management Company
requires all contracts to include provisions for refusing to deal with anti-social forces and performing
confirmations in accordance with the Act on Prevention of Transfer of Criminal Proceeds when conducting
transactions. Consequently, the Asset Management Company is taking concrete actions for the purpose of
preventing relationships with anti-social forces.

Measures against Money Laundering and Terrorist Financing
The Asset Management Company has prepared a Manual for Responding to Anti-social Forces and thePrevention of Transfers of Criminal Proceeds and properly performs confirmations in accordance with the
Act on Prevention of Transfer of Criminal Proceeds when conducting transactions. These activities are used
to confirm the identities of transaction counterparties as well as their attributes, business activities andpurpose of the transaction. Risk identification, evaluation and reduction measures are implemented fromthe perspective of the risk-based approach specified in the Guidelines Concerning Money Laundering and
Financing of Terrorism of the Financial Services Agency.

Anti-bribery and Anti-Corruption Policy
Strict compliance with laws, regulations and other guidelines is positioned as a vital element of the
management of Kenedix based on the awareness that compliance problems are significant risks regarding
business operations. The Asset Management Company strives to prevent corruption by establishing specificpolicies on “Prohibition of bribery”, “Prohibition of embezzlement, fraud, theft, and other criminal acts” and“Prohibition of insider trading” in our “Employment Regulations” and “Compliance Manual”. Any violation ofthese policies will be subject to disciplinary action in accordance with the “Employment Regulations”.
Furthermore, compliance awareness is raised by regular training on a wide range of legal and complianceissues through compliance training for new employees and for all officers and employees (including
temporary employees).
In fiscal year 2023, there were no cases of “Incidents related to fraud or corruption”, “Dismissals or66

Governance (Responsible Organization)
termination related to fraud or corruption”, “Costs of fines, penalties, or settlements related to fraud or
corruption” in the Kenedix Group. Moreover, there were no record of political contributions.
Entertainment/Hospitality and Prohibition of Bribery
The Asset Management Company has set rules such as “Prohibition of entertaining clients and giving gifts
to public service officials”, “Prohibition of requesting entertaining clients and giving gifts from business
partners beyond a reasonable range”, and “Prior approval when providing entertaining clients or giving gifts”.
We are committed to prevent the corruption in accordance with the National Public Service Ethics Law, theNational Public Service Ethics Code and regulations.
We regularly verify that each entertainment and hospitality is properly conducted by internal rules, and therecords of such activities are kept and monitored. The operation of these anti-corruption & bribery rules issubject to internal audit.
Due Diligence on New Business Partners and Brokers
The Asset Management Company conducts due diligence by checking the anti-social forces and information
management systems for the “transactions with new business partners and brokers, others”. In addition,
the Compliance Manual stipulates the rule of “prohibition of bribery, others at the time of selecting business
partners, others.”
Response to Violation Occurrence
Employees are required to report to the department head and the Compliance Officer when one discovers
a compliance problem such as bribery, or receives a suggestion from others of existence of a complianceproblem, or is concerned regarding possible compliance violation. If the Compliance Officer deems it
necessaryin compliance with various laws, regulations and rules, the Compliance Officer reports to the

President & CEO, the Compliance Committee, the Board of Directors, and appropriate action will be taken.
The employees (including directors, regular employees, contract employees, temporary employees, parttime employees, dispatched employees and workers stationed within our company on subcontracting, those
who have made a report within one year from leaving the company) may also utilize the whistleblowing
system, which allows anonymous reporting.

Whistle-Blowing System
The Asset Management Company has a whistleblowing system for the prevention and rapid discovery ofincidents caused by violations of laws and regulations and other improper conduct, the improvement of selfcleansing processes, the control of reputational risk exposure, and the retention of public trust. Our whistleblowing policy applies to all the employees including directors, full-time employee, elderly employee, contact
employee, part-time employee, assigned / temporary employee from the other company, and former
67

Governance (Responsible Organization)
employee left within 1 year of the termination date.
Reporting, Investigation and Disciplinary Processes
If violation of law (including internal company policies) occurs or could occur and if the matter has not beensatisfactorily resolved by ordinary procedures, the company accepts reports, declarations, and consultations
from internal and external contacts. Anonymous reporting is also accepted.
The person in charge of handling whistleblowing shall conduct fair and impartial investigation. The
respondent will be provided with the opportunity to present a defense and the fair hearing is held with
relevant persons in compliance with the obligation of confidentiality.
The person in charge of handling whistleblowing reports all results from investigations to the director in
charge of compliance and the president, as well as to the board of directors and the council of corporate
auditors, including the results of notifications to the whistleblower. The head of the department to which
the accused belongs take appropriate action such as immediate order to stop action in violation of law.
Based on the report, disciplinary action and all the other appropriate measures to correct such as criminal
prosecution, claims for damages or measures to prevent recurrence shall be taken.
Prohibition of Unfair Treatment
Whistleblowers and those who cooperate with them, as well as those who cooperate with investigations
based on the reports, are subject to protection under the whistleblowing system and the Whistleblower
Protection Act, and any unfair treatment against the whistleblower are prohibited.

Internal Audit
In order to enhance internal control functions, the Asset Management Company conducts internal auditsannually, covering the operations of all departments and utilizing outside experts.
The Head of the Internal Audit Department of the Asset Management Company prepares an internal audit
plan, which complies with the Internal Audit Rules, as a person in charge of internal audits. After the plan
is approved by the Board of Directors, audits are performed in accordance with the plan. Internal audit
reports accurately reflecting issues found and raised during audits are prepared. The person in charge ofinternal audits shares such an internal audit report with the President & CEO and the Board of Directors
without delay. Departments that were audited establish a plan for making improvements without delay,
factoring in the significance of issues raised, and take the necessary actions. The person in charge ofinternal audits appropriately oversees progress with improvements at departments that were audited,confirms that improvements have been completed and reflects these activities in the subsequent internal
audit plan. To confirm the suitability of the business processes of the Asset Management Company or forsome other reason as needed, the Board of Directors or the person in charge of internal audits can, at theirdiscretion, ask for an external audit by outside experts.
68Governance (Responsible Organization)
Compliance Training
To ensure that everyone is aware of the importance of compliance, the Asset Management Company
provides compliance training for new employees when they first join the company as well as for all
executives and employees, including temporary employees.
Compliance Training Held in 2023
Training Content

Date of training

Attendance rate

Prevention of Insider Trading

Jan. 2023

96.4%

Prevention of Harassment

Feb. 2023

98.6%

Notes on Handling of Personal Information(1)Mar. 2023

99.3%

Notes on Handling of Personal Information(2)May 2023

100.0%

Jun. 2023

96.6%Management of Conflicts of Interests

Sep. 2023

93.0%

Statutory Books

Oct. 2023

89.4%

Prevention of Harassment

Nov. 2023

99.3%

Cases of Administrative Penalties, others

Nov. 2023

92.9%

Financial Regulation and Customer-Oriented Business
Management

Policy for Customer-Oriented Business Conduct
The Asset Management Company is firmly committed to the asset management of each REIT with theobjective of maximizing value for investors. As part of these activities, the Asset Management Company has
adopted the Principles for Customer-Oriented Business Conduct announced on March 30, 2017 by the
Financial Services Agency and has established policies for activities that comply with these principles. For
details, please visit the following website:
For more details, please refer to the following link.
Principles for Customer-Oriented Business Conduct | Kenedix Real Estate Fund Management Inc. (kenedixfm.com)
69Governance (Responsible Organization)
Managing Conflicts of Interests
Managing conflicts of interest is one of our material issues. The Compliance Manual and other internal rules,
etc. has specific policies for the prevention of these conflicts and protection of the companyʼs assets.
Compliance and other training programs give employees a thorough understanding of conflicts of interest andhow to prevent them. In addition, we have Related Party Transaction Rules that include processes for making
decisions, basic views concerning these transactions and other guidelines. The objective is to prevent
transactions with related parties (executives, major shareholders and others) and between these related parties
from being detrimental to shareholder value.

Proper Information Management Among the Kenedix GroupThe Kenedix Group provides asset management services for REITs and multiple of funds on behalf of investors.
Kenedix, Inc. has signed a memorandum with the Asset Management Company and the REITs managed by the
Asset Management Company and with Kenedix Investment Partners, Inc. concerning the provision of real estateand other information by Kenedix, Inc. The proper provision of information by Kenedix, Inc and group companies
along with the determination of the types of support supplied by the Kenedix Group (and disclosure of thisinformation) ensures the transparency and suitability of the operations of funds and other similar entities.
Rule Concerning Conflicts of Interest Among REITs
Since the Asset Management Company manages a J-REIT and a private REIT, it has established a pipeline
committee, that is chaired by the Compliance Officer, and adopted internal guidelines in order to prevent the
improper allocation of acquisition opportunities as well as prohibition of concurrent serve as several generalmanagers of REIT management departments, and thus, managing conflicts of interests among the REITs.
By managing these rules appropriately and smoothly, it strives to implement appropriate measures for conflictsof interest, such as preventing arbitrary distribution of real estate sales information and preventing conflicts ofinterest among the REITs managed by the Asset Management Company.

Risk Management
Basic Views
Risk management is one of our material issues. There are many activities for the proper oversight and controlof risk factors.

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Governance (Responsible Organization)
Risk Management System
The Asset Management Company stipulates risk management policies, risk management divisions, risk
management methods, etc. in its “Risk Management Rules” for the purpose of ensuring soundmanagement and appropriate risk management as an investment management company.
The main risks are defined as investment management risk, real estate management risk, financial risk,
legal compliance risk, administrative risk, system risk, and business continuity risk, and a separate
management department is designated for each risk.
Each risk management department continuously monitors the status of each risk and, in the event that asignificant risk has materialized or is likely to materialize, promptly submits a proposal to the Board of
Directors regarding the nature of the risk and the policy for dealing with it.
Each risk management department reviews the items, contents, and response policies of each risk
approximately once every two years. The Board of Directors, fully aware of the location and nature of theserisks, will oversee the formulation of risk management policies and the development of an appropriate risk
management system considering the strategic objectives.
The Board of Directors shall fully recognize the importance of the risk management department and shalltake appropriate measures to ensure that the risk management policy is well known within the AssetManagement Company. The Board of Directors will also hold discussions on the risk management system
as necessary. The Compliance Officer will oversee the practical management of each risk and support therole of the Board of Directors.

Crisis and Disaster Response System
The Kenedix Group has Crisis Management Rules and Disaster Response Rules for natural disasters,
incidents, accidents and other problems that have a major impact on business activities or society overall
and are detrimental to corporate value. The General Administration and Human Resources Department ofKenedix, Inc. is responsible for crisis management and disaster response activities. This department
establishes an emergency response headquarters to take actions as needed when problem occurs.
In accordance with the Kenedix Group Business Continuity Plan, disaster response drills are held
periodically, there are measures in place to resume business operations quickly following a disaster orother problem, and other measures to be prepared for a crisis. We periodically reexamine this plan andmake revisions as needed.
We also use the following measures to be prepared for a disaster.

71

Governance (Responsible Organization)
1. Storage of disaster response kits with food, water and other supplies for executives and employees atbusiness sites
2. A safety confirmation system for quickly determining the status of executives and employees after adisaster
3. Back-up servers in several locations to protect data

Information Security
The Asset Management Company has established “Information Management and Protection Regulations”
and strives for appropriate information management and protection at the Company by stipulating
management methods, management systems, etc. for information handled in the course of business.
For information security management, the Asset Management Company has appointed a Chief Information
Management Officer. The Chief Information Management Officer is appointed by the President andRepresentative Director, and the Compliance Officer assists the Chief Information Management Officer.
In addition, under the supervision of the Chief Information Management Officer, an information manager has
been appointed to effectively implement measures related to the management and protection of theCompanyʼs information. The Information Manager in each department is the head of the department and is
responsible for the management and protection of information in each department.
Protection of Personal Information
The Asset Management Company stipulates in its Compliance Manual that its officers and employees fullyrecognize the importance of protecting information and privacy, and ensure appropriate and strict
management in accordance with internal rules for the handling of confidential business information, personal
information, and other internal information, and also ensures that officers and employees are fully aware of
the protection of personal information through compliance training, etc. In addition, we ensure that all
executives and employees are fully aware of the need to protect personal information through compliancetraining and other means.

In addition, each REIT and the Asset Management Company have established a “Personal Information
Protection Policy” and “Regulations Concerning Protection of Personal Information” to protect and properly
manage personal information.

Information Security
The Kenedix Group has established “IT System Security Rules” which specifies the minimum level of72

Governance (Responsible Organization)measures that employees and others must use for the proper use of information and operation of IT systems.
The objectives are preventing leaks, damage, losses and other problems involving information, operating IT
systems properly, and minimizing any losses or other damage caused by some accidents.
Responding to Cyber Incident
The Kenedix Group has prepared the Cyber Incident Response Standards and provided a system andprocedures for responding to various incidents (including system downtime, malfunction, inadequacy,
malware infection, information leakage, unauthorized use, etc.; hereinafter referred to as "Cyber Incident")
where cyber security risks are manifested or realized in the cyber security field such as information securityrelated accidents and cyber attacks. The following is the response system and procedures for cyber incidents.
the General Administration and Human Resources Department of Kenedix, Inc. is designed as leaddepartment for information systems, and oversees and manages operations related to cyber incident response.
In addition, the Kenedix Group has prepared cyber incident response procedures, and under the response
system according to the cyber incident level, we strive to minimize damage in the event of cyber incidents,
and to restore damaged operations quickly and efficiently.

Commitment to Responsible Investments
Basic Views
A commitment to responsible investments is one of the Kenedix material issues. We are committed tobuilding a stronger infrastructure for achieving both sustained growth and social responsibility.

Signing on to the PRI
The PRI is a set of principles established for the financial industry
in 2006 under the leadership of the United Nations SecretaryGeneral of the time, Kofi Annan. PRI comprises six principles. The
PRI encourages the incorporation of ESG issues (Environment,
Socialand

Governance)

into

investment

decision-making

processes, with the aim to help companies enhance long-term
investment performance and better fulfill their fiduciary duty.
Kenedix, Inc. has signed on to the PRI and is ambitious to become a real estate asset management company
that commit responsible investment through the practice of PRI.

73

Governance (Responsible Organization)
Signing on to the PFA21
The PFA21 (Principles for Financial Action for the 21st Century) has
been established by drafting committee with participation ofvarious financial institutions in October 2011 as the action
guidelines of financial institutions who seek to fulfill their
responsibilities and roles required for the formation of asustainable society. Signing financial institutions will implement
initiatives based on the seven principles as much as possible basedon their own businesses. It has been positioned as a starting point to collaborate without being restrictedby business categories, scale or region. Kenedix, Inc. and the Asset Management Companay have signed
on to the PFA 21 and are ambitious to become a real estate asset management company that commits to
responsible investment through the practice of the PFA21.

Kenedix Group's Investment in Group REIT
Kenedix, Inc. holds a portion of the investment units of the listed REIT and the private REIT managed by the
Asset Management Companay. This aligns Kenedix Groupʼs interest with unitholdersʼ interests of each REIT.

Other Initiatives related to Governance
Each REIT is engaged in various initiatives related to Governacnce.
For more details, please refer to the following links.
＞KDX Realty Investment Corporation＞Kenedix Private Investment Corporation (only in Japanese)74

Relevant Data
Relevant Data (Employment)
2020

2021

2022

2023

93(42.4)

101(41.9)116(42.1)

111(41.9)

Men(average age)66(42.0)70(41.6)

76(42.1)

72(41.8)

Women(average age)27(43.2)

31(42.6)40(42.0)39(42.1)

29.0%

30.7%

34.5%

35.1%

351

367

7.1

6.7

6.3

7.0

Men

6.9

6.7

6.6

7.4

Women

7.7

6.6

5.7

6.4

Difference

11.6%

-1.5%

-13.6%

15

30

44

55

(3/12)(5/25)(3/41)(4/51)

12

23

25

40

(3/9)

(5/18)(2/23)(3/37)

3

7

19

15

(0/3)

(0/7)

(1/18)(1/14)

20.0%

23.3%

43.2%

27.3%

(0%/25.0%)(0%/28.0%)(33.3%/43.9%)(25.0%/27.5%)

8.2%

12.0%

3.5%

8.3%

25

29

32

29

Men

25

29

29

26

Women

0

0

3

3

Number of employees(average age)

Note 1

Pct. of females in employees
Number of employees

347［consolidated］
Average number of consecutive

381

years at the Kenedix Group Note 1((Women－Men)/Men)
Number of
newly hired employees

Note 2-13.5%(new graduate hires / mid-careerhires)
Men(new graduate hires / midcareer hires)
Women(new graduate hires / midcareer hires)
Pct. of women in newly hired
employees(new graduate hires / midcareer hires)
Pct. of turnover Note 1
Number of managers Note 1

75

Relevant Data
Pct. of female managers

0%

0%

9.4%

10.3%

7

7

7

7

Men

7

7

7

7

Women

0

0

0

0

0%

0%

0%

0%

Number of directorsNote 1

Pct. of female directors

Note 1: These figures are based on individuals who work at the Asset Management Company.
Note 2: These figures are based on individuals who are working at the Kenedix Group companies and employed directly
by Kenedix, Inc.

76

Relevant Data
Relevant Data (System Use, etc.)
2020
Number of employees
using childbirth leave Note

2021

2022

2023

2

5

4

2

(0/2)

(0/5)

(0/4)

(0/2)

8

8

9

7

(2/6)

(0/8)

(2/7)

(1/6)

100%

87.5%

100%

100%

(-/100%)(-/87.5%)(100%/100%)(100%/100%)

1

0

1

0

(0/1)

(0/0)

(0/1)

(0/0)

6

9

8

9

(3/3)

(3/6)

(3/5)

(3/6)

1

0

0

0

(0/1)

(0/0)

(0/0)

(0/0)

0

0

0

0

(0/0)

(0/0)

(0/0)

(0/0)

3

1

0

0

(0/3)

(0/1)

(0/0)

(0/0)

0

0

0

0

(0/0)

(0/0)

(0/0)

(0/0)

(Men / Women)
Number of employees
using childcare leave Note
(Men / Women)
Pct. of employees
returning to work after childcare
leave Note
(Men / Women)
Number of employees
using shortened working hours forchildcare Note
(Men / Women)
Number of employees
using staggered working hours forchildcare Note
(Men / Women)
Number of employees
using sick/injured childcare leave
Note(Men / Women)
Number of employees
usingelderlyextended leave

parentcare

Note(Men / Women)
Number of employees
using elderly parent care singleday leave Note
(Men / Women)
Number of employees
using shortened working hours to77

Relevant Data
care for an elderly parent Note
(Men / Women)
Number of employees

2

1

1

1

(1/1)

(1/0)

(1/0)

(1/0)

10.4

9.4

10.6

11.7

58.6%

54.5%

63.9%

71.9%

14.3

18.1

22.7

22.3

Training expense per employee Note

\30,944\59,606\65,933\65,393

Pct. of employees receiving a

100%

100%

100%

100%

0

0

0

0

using staggered working hours tocare for an elderly parent

Note(Men / Women)
Average number of days of paid
leave used

Note

Pct. of paid leave used Note
Overtime hours, per month, perperson Note

health check-up

Note

Number of work-related fatalities
Note

Note: These figures are based on individuals who are working at the Kenedix group companies and employed directly by
Kenedix, Inc.

78

Editorial Policy
The purpose of this publication is to provide all stakeholders with information about the sustainability
policies and activities of the Kenedix Group. We hope this information gives you a better understanding of
our commitment and goals involving sustainability.

Publication Date
April 2024

Period Covered by This Report
January 1, 2023 to December 31, 2023
Some information concerns activities prior to 2023.

Scope of Reporting
KDX Realty Investment Corporation
Kenedix Private Investment Corporation

Guideline Used for Reference
GRI (Global Reporting Initiative) “GRI Standards”

Department in Charge of Production
Sustainability Department, Kenedix Real Estate Fund Management, Inc.
E-mail: kfm_sustainability@kenedix-fm.com

79