PRINCIPAL ADVERSE IMPACT STATEMENT
The following is the adverse sustainability impact statement of Nippon Accommodations
Fund (“NAF”) pursuant to Regulation (EU) 2019/2088 (“SFDR”). NAF has no employees inaccordance with the prohibition on having employees under the Act on Investment Trusts andInvestment Corporations of Japan and relies on Mitsui Fudosan Accommodations FundManagement Co., Ltd. (the “Asset Manager”), to manage and operate the properties in our
portfolio. NAF and the Asset Manager are hereinafter referred to collectively as “we”, “us”
or “our”. References to “fiscal year” or “FY” are to the 12 months began or beginning
April 1 of the year specified in line with the fiscal year of the Asset Manager, unless noted
otherwise.
1. Summary
We consider principal adverse impacts of our investment decisions on sustainability factors.
The present statement is our consolidated statement on the principal adverse impacts onsustainability factors (“PAI”). This statement on PAI covers the reference period from March
1, 2022 to August 31, 2022. The statement will be reviewed at least once during every six
months.
We believe that our sustainability initiatives are essential for our sustainable growth. We
improve mid and long-term returns of investors and contribute to the realization ofsustainable society and urban development by implementing initiatives that address ongoingsocial and lifestyle changes. Under our sustainability policies, we, in collaboration with theAsset Manager, take actions on climate change, including energy saving and reduction of
CO2 emissions, introduction of renewable energy, and preserving water environment andpromoting resource saving and waste reduction.
We use the definition of PAI as described in Recital 20 of SFDR being “those impacts ofinvestment decisions and advice that result in negative effects on sustainability factors”, withsustainability factors referring to environmental, social and employee matters, respect forhuman rights, anti‐corruption and anti‐bribery matters as defined in Article 2 (24) of SFDR.
We believe that investment decisions that negatively affect climate or other environmentrelated resources, or have negative implications for society, can have a significant impact torisk and value creation for our unitholders. To this end, we consider PAI of our investment
decisions throughout all major steps of the investment decision and property management
process throughout the lifecycle of the properties in our portfolio.
Please note that SFDR requirements, including the scope of their application to issuersoutside the European Economic Area, continue to evolve. We are therefore taking a
principles-based approach to compliance with the SFDR disclosure standards, which are
subject to change.
2. Description of principal adverse sustainability impacts
Nearly all types of economic activity have the potential to impact various PAI indicators,
both positively and adversely. We aim to manage the risk connected to PAI from ourinvestment decisions in several ways, including general screening criteria, due diligence andour ESG initiatives. Some of the PAI indicators listed below are currently already beingmonitored and reported. As the availability of data improves, it is our intention that moreindicators will be added.
Table 1
Principal adverse sustainability impacts statement

NAF does not invest in investee companies, but invests in real estate. As adverse sustainability indicators
1-16 as contained in Table 1 of Annex 1 of the draft Delegated Regulation pertain to investee companies,
these are not included in this PAI statement, which pertains to real estate investments.
Indicators applicable to investments in real estate assets
Adversesustainability
indicator

MetricImpact in
2022

Impact in
2021

Explanation

Actions taken,
and actions
planned andtargets set for
the next
reference
periodFossilfuels

17.
Exposure
to fossil
fuels
throughrealestateassetsShare ofinvestme
nts in realestateassetsinvolvedin theextraction, storage,transportormanufact
ure offossil
fuels

N/A

N/A

We do not invest inreal estate assets
involved in theextraction, storage,transport or
manufacture of fossil
fuels.

N/A

Energyefficiency18.
Exposure
toenergyinefficien
t realestateassetsShare ofinvestme
nts inenergyinefficien
t realestateassets

As of August
31, 2022,
69.5% of ourproperties
were not“eligible green
assets” (asdefined to theright) based ongross floor
area.

As of August
31, 2021,
72.5% of ourproperties
were not“eligible green
assets” (asdefined to theright) based ongross floorarea.

To track theenvironmental
performance of ourproperties, we rely on
certifications issued bythird-party
organizations, such as
the Development Bankof Japan’s (“DBJ”)
Green Building
Certification,
Comprehensive
Assessment System
for Built Environment
Efficiency(“CASBEE”)
certification, and otherequivalentcertifications. With
respect to DBJ
certifications, we

We implement
as appropriate
measures toreduce theirenvironmental
impactfollowingacquisition,
including by
obtaining
environmental
certifications
such as DBJ or
CASBEE.
We have set a
goal ofincreasing thenumber of
eligible green

consider a property tohave sufficientenvironmental
certification if it
received 3 stars or
higher out of DBJ’s
five-star ranking
system. With respect
to CASBEE, weconsider a property tohave sufficientenvironmental
certification if it
received B+ Rank orhigher out of the
CASBEE ranking
system featuring Rank
S (excellent), Rank A(very good), Rank B+(good), Rank B(slightly inferior) and
Rank C (inferior). We
call our property thatreceives the sufficientlevel of any suchcertifications an“eligible green asset”.

assets by one
per year.

Table 2
Additional climate and other environment-related indicators
NAF does not invest in investee companies, but invests in real estate. As additional climate and otherenvironment-related indicators 1-17 as contained in Table 2 of Annex 1 of the draft Delegated Regulation
pertain to investee companies, these are not included in this PAI statement, which pertains to real estate
investments.

Adversesustainability
impactAdverse sustainability impact (qualitative or
quantitative)

MetricIndicators applicable to investments in real estate assets
Climatechange18. GHG emissions
Scope 1 GHG emissions generated by real estate
properties were 0 t-CO2 (from 2015 to 2021).
Scope 2 GHG emissions generated by real estate
properties were 5,038 t-CO2 (in 2015), 4,958 t-CO2 (in2016), 4,509 t-CO2 (in 2017), 4,183 t-CO2 (in 2018),
3,297 t-CO2 (in 2019), 2,640 t-CO2 (in 2020), 3,356 tCO2 (in 2021). Total GHG emissions generated by realestate properties were 5,038 t-CO2 (in 2015), 4,958 t-

Scope 1 GHG emissions
generated by real estate assets
Scope 2 GHG emissions
generated by real estate assets
From 1 January 2023, Scope 3
GHG emissions generated byreal estate assets

CO2 (in 2016), 4,509 t-CO2 (in 2017), 4,183 t-CO2 (in2018), 3,297 t-CO2 (in 2019), 2,640 t-CO2 (in 2020)
3,356 t-CO2 (in 2021).
Scope 3 GHG emissions generated by real estate
properties are not applicable.

Total GHG emissions
generated by real estate assets

We aim to reduce CO2 emissions intensity of common
areas of our properties by 50% by 2030 from the level in2015.
We had installed LED lighting in the common areas of
114 properties as of August 31, 2022. We also utilize
renewable energy from solar panels, and two of ourproperties were equipped with solar panels as of August
31, 2022.

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

MetricIndicators applicable to investments to the Asset Manager or tenantsSocial andemployeematters

4. Lack of a supplier code of conduct
We require our tenants and our property manager toimplement social and environmental policies and measures.
We have raised tenants’ awareness of environmental issues
by providing tenants with energy saving techniques withguidebooks and other information available on our website.
We conduct periodic review of our suppliers’ social andenvironmental initiatives. We evaluate our property
manager once a year to confirm if it has an organizational
structure to carry out its property management businessappropriately.

Share of investments ininvestee companies
without any supplier codeof conduct (against unsafe
working conditions,precarious work, childlabor and forced labor)
Because all of our tenants
are individuals, they do nothave any “supplier code of
conduct” per se. However,as of November 25, 2022,
tenants in 94.8% of ourproperties (based on thenumber of properties) wererequired to save energy

and water to mitigate theburden on the environment
under their leaseagreements with us.
6. Insufficient whistleblower protection
We allow employees to consult directly with the Chief
Compliance Officer or outside consultants when they
become aware of any compliance problem. The Chief
Compliance Officer or the outside consultants, as the casemay be, are required to keep such communication
confidential, except that they are allowed to consult eachother. They investigate the facts of each case, report to the
President, responsible officers and/or report to theCompliance Committee as needed, and give feedback to theemployee. Employees are protected under the
Whistleblower Protection Act of Japan, and shall not betreated unfavorably by the Company for the fact of making
such consultations.
Human Rights

12. Operations and suppliers at significant risk of incidents
of child labor
We evaluate our property manager once a year to confirm if
it has an organizational structure to carry out its property
management business appropriately, and we review whether
any child labor is used in its business.

Share of investments inentities without policies on
the protection ofwhistleblowers
All of the Asset Manager’s
officers and employees areprovided whistleblower
protection.

Share of investments ininvestee companies
exposed to operations andsuppliers at significant riskof incidents of child labor
exposed to hazardous workin terms of geographic
areas or type of operation
Property Manager: None,to the best of ourknowledge

13. Operations and suppliers at significant risk of incidents
of forced or compulsory labor
We evaluate our property manager once a year to confirm if
it has an organizational structure to carry out its property
management business appropriately, and we review whether
any forced or compulsory labor is used for its business

Share of the investments ininvestee companies
exposed to operations andsuppliers at significant riskof incidents of forced orcompulsory labor in terms
in terms of geographic
areas and/or the type ofoperation
Property Manager: None,to the best of ourknowledge

For descriptions of actions which NAF takes and will take with respect to the PAI indicators,
please refer to our ESG website with respect to NAF: https://www.naf-r.jp/english/esg/21.html.

3. Description of policies to identify and prioritize principal adverse sustainability
impacts
Subject to data availability, we monitor the selected PAI indicators for the existing properties
in our portfolio.
Prior to our investment in a property, we conduct due diligence review of the property,
including not only profitability, but also environmental features, which includes selected PAI
indicators. The due diligence findings related to selected PAI indicators are reported andreviewed prior to the investment decision.
We have a Green Finance Framework, which received the highest rank “Green 1(F)” by
Japan Credit Rating Agency, Ltd. (“JCR”) on June 18, 2020. JCR evaluates green bondissuance or green loan borrowing policies for the purpose of ensuring compliance with theInternational Capital Markets Association’s (ICMA) International Green Bond Principles, theLoan Market Association’s Green Loan Principles or the Guidelines for Green Bonds
established by the Ministry of the Environment of Japan. Our Green Finance Framework is
consist from (1) use of proceeds, (2) eligibility criteria, (3) process for project evaluation andselection, (4) management of proceeds, (5) reporting. When we select properties forinvestment in connection with our green bonds or green loans, the properties need to meet theeligibility criteria. We consider a property to be a eligible green asset if it obtained or willobtain either of the following certifications: 3, 4, or 5 Stars under the DBJ Green Building
Certification; 3 Stars, 4 Stars, or 5 Stars under the BELS Certification; B+, A, or S rank under
the CASBEE certification for Real Estate; or rating of an equivalent level to the above underanother green building certification.
For further information, please refer to our ESG website: https://www.naf-r.jp/english/esg/21.html.
4. Engagement policies
Due diligence and screening
Prior to our investment in a property, the Asset Manager conducts due diligence review of theproperty, including its environment and soil. Specifically, we investigate whether there are
any harmful substances such as asbestos in buildings, and we review the history of its land
use and as appropriate retain experts to investigate soil contamination.
At the properties we operate, we set numerical targets for our entire facilities and monitor theamount of energy consumption, electricity consumption as well as the amount of CO2
emissions of common areas of our properties in order to reduce our environmental burden.
Engagement
We require our property manager and other business partners including our tenants tounderstand and collaborate on our initiatives concerning sustainability and establish
environmental and social measures and policies.
We conduct periodic review of our suppliers’ environmental and social initiatives. We
evaluate our property manager once a year to confirm if it has an organizational structure tocarry out its property management business appropriately. In particular, we monitor thefollowing aspects of our property manager: (1) operational specifications, reported data andtypes of meetings held, (2) the personnel system, appropriateness of the number of business
units each person is in charge and any changes in the organizational system, and (3)compliance status.
We outsource property management of our properties to Mitsui Fudosan Residential Lease
Co., Ltd., which has proactively worked on environmental issues, and observes the Mitsui
Fudosan Group’s environmental policy and collaborates with us in implementing
environmental initiatives.
Through the above collaboration, we have raised tenants’ awareness of environmental issues
by providing tenants with energy saving techniques with guidebooks and other information
available on our website, and have implemented other measures to reduce the environmentalload of our properties.
Also under lease agreements with our tenants of rental apartments, which as of November 25,
2022 accounted for over 90% of our entire portfolio] (based on the number of properties), we
require the tenants to save energy and water to mitigate the burden on the environment.
5. References to international standards
We support for the United Nations’ Sustainable Development Goals (“SDGs”) and in
February 2020, we identified for ourselves a set of material ESG issues that we believe must
be addressed to meet global standards to contribute to SDGs. The Asset Manager also
expressed its support for the recommendations of the Task Force on Climate-Related
Financial Disclosures (“TCFD”) in September 2021, and also joined the TCFD Consortium,
an organization made up of Japanese companies that support the recommendations.
6. Historical comparison
See Table 1, Table 2 above.