19-D-0229

June 13, 2019
Green Finance Evaluation b y Japan Credit Rating Agenc y, Ltd.
Japan Credit Rating Agency, Ltd. (JCR) announces the following Green Finance Evaluation Results.

JCR Assigned Green 1 (F)to the Green Finance Framework
by ORIX JREIT Inc.
S u b j e c t:

Green Finance Framework of ORIX JREIT Inc.

<Green Finance Framework Evaluation Results>
Overall evaluation

Green 1(F)Evaluation of Greenness(use of proceeds)
Evaluation on Management, Operation
and Transparency

g1(F)
m1(F)

Chapter 1: Evaluation Overview
ORIX JREIT Inc. (OJR) is Japan's first diversified Real Estate Investment Trust (J-REIT) established on
September 10, 2001 and listed on the Tokyo Stock Exchange (Real Estate Investment Trust Securities Market) on
June 12, 2002. OJR invests in logistics facilities, commercial facilities, housing, and hotels, with office buildings in
the Tokyo metropolitan area at its core. As of the end of March 2019, OJR's assets were worth JPY 663.5 billion on
an acquisition price basis.
ORIX Asset Management Co., Ltd. (OAM), the asset management company of OJR, is a wholly-owned
subsidiary of ORIX Corporation (ORIX). ORIX was founded in 1964 as Orient Leasing Co., Ltd., and has beenworking to capture revenue opportunities while expanding the scope of its operations. ORIX and its group companies(ORIX Group) currently consist of six business segments: Corporate Financial Services, Maintenance Leasing, Real
Estate, Investment, Retail and Overseas. In 1986, the company entered the single-person dormitory rental business. It
now invests in office buildings, rental condominiums, commercial facilities, and logistics facilities. It also operates
hotels, inns, aquariums, and residential properties for the elderly. It also manages the assets of Real Estate Investment
Trust (REIT), and provides real estate investment advisory services.
Since OAM's main officers and employees are seconded from ORIX, ORIX Group's experience and know-how,including its real estate business, are passed on to OAM. In addition, OJR acquired approximately 90% (JPY 312.1
billion) of properties acquired during the past five and a half years from properties owned by the ORIX Group, andinvests from a wealth of pipelines leveraging its strong relationship with the sponsor.
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Utilizing the support from the ORIX Group, OJR is achieving both external and internal growth while leveraging
its strengths as a diversified J-REIT.
The subject of the evaluation is the Green Finance Framework established by the OAM to limit proceeds by theInvestment Corporation by means of bonds, loans, etc. to use of proceeds with environmental improvement effects.
JCR evaluates whether the framework meets the Green Bond Principles (2018), Green Bond Guidelines (2017) andGreen Loan Principles.1
In order to achieve stable growth in unitholder value, which is the investment policy of OJR, OAM has
established the "ESG Policy" in asset management and it is stated that it will implement asset management inconsideration of E (Environment), S (Society) and G (Governance).
Under the Green Finance Framework established by OJR states as follows,
1. Proceeds to acquire or planning to acquire environmental certification that meets the "Eligibility Criteria"
established by the OJR
2. Proceeds for Repair work, etc.
or proceeds will be used to repay the loan or to redeem investment corporation bonds that have already been
issued.
JCR considers that the allocation of proceeds through green bonds or green loans to finance the new acquisition or
refinancing of green eligible assets that meet the eligibility criteria will contribute to "1. Reduction of environmentalload and formation of a recycle-based society", "2. Collaboration with stakeholders", "3. Enhancing health, comfort
for tenants, executives and employees", "4. Risk management and compliance," and "6. Promotion of information
disclosure and visualization of ESG" as stated in the "ESG Policy" of OJR.
In addition, among the classifications of the Green Bond Principles, these proceeds are classified as "Greenbuildings which meet regional, national or internationally recognised standards or certifications." and "Energy
efficiency."
OJR defines green buildings as "Green Eligible Assets" that are eligible for green bonds’ use of proceeds under theGreen Finance Framework as properties that have acquired or are expected to acquire either three stars or higher in
DBJ Green Building Certification, B+ or higher in CASBEE Certification, three stars or higher in BELS
Certification, or LEED assessment Silver or higher. JCR evaluates that the definition of "Green Eligible Assets"
established by OJR covers buildings with environmental improvement effects.
In March 2018, OAM, the Asset Management Company of OJR, established the "Sustainability Committee" todiscuss ESG-related issues under the leadership of management. In addition, active discussions were held at theworking level below the general manager. OJR also conducts environmental assessments and acquires various
certifications for acquired properties, and the number of properties that it acquires is on the rise. In addition, JCR
confirmed a robust management and operation system and high transparency for OJR. For example, OJR has inhouse experts on properties and the environment, and has established checkpoints on the environment when
acquiring properties. In addition, OJR conducts internal and external audits on a regular basis.
As a result, JCR assigns "g1 (F)" for "Evaluation of Greenness (Use of Proceeds)" and "m1 (F)" for "Evaluation
on Management, Operation and Transparency". Consequently, JCR assigns "Green1 (F)" as an overall evaluation
results to the Framework. Detailed evaluation results are discussed in the next chapter. JCR has also evaluated thatthe framework meets the standards for the Green Bond Principles, the Green Bond Guidelines of the Ministry of theEnvironment of Japan, and the Green Loan Principles.
1

The Gr een B ond Pr i nci pl es, t he Gr een B ond Gui deli nes and t he Gr een Loa n Pr i nc ipl es a r e not a ny r estr ai ni ng
pri nc ip l es a nd ar e not vol unt aril y p ubl is hed b y t he Int er nati onal Cap ita l Mar k et s As s ociat i on ( ICMA) , Mi ni str yof Envi r on ment of Ja pa n, t he Loa n Mark et Ass oc iat i on ( LMA) a nd t he As ia-P aci fic Loan Mark et Ass ocia ti on(AP LMA), r es p ect i vel y. However, J CR eva l ua t es t hes e pr i nc ipl es a nd gui del i nes on a gl obal l y uni fi ed b asi s a t
t his t i me.
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Chapter 2: Current Status of the project on each evaluation factor and JCR's
evaluations
Evaluation Phase 1: Greenness Evaluation
JCR assigns "g1 (F)", the highest grade, to "Evaluation phase 1: Greenness Evaluation".
Rationale: 100% use of proceeds of the Framework will be allocated to a green project,considering the factors described below.
(1) JCR's key consideration in this factor
In this section, JCR first assesses whether the Green Eligible Criteria set out in the Framework are green projects
with clear environmental improvement effects. Next, JCR assesses whether an internal department/division whichis exclusively in charge of environment issues or a third party agency prove it sufficiently and have taken
necessarily workaround or mitigation measures, in case of possibility on use of proceeds has negative impact on
the environment. Finally, JCR confirms consistency with the Sustainable Development Goals (SDGs).

(2) Assessment Framework and JCR Evaluation<The Framework for Use of Proceeds>
OJR defines use of proceeds under the Green Finance Framework.
Proceed from Green Bond or Green Loan meet either of the following eligibility criteria:(1) Proceeds for new acquisition of Green Eligible Assets,(2) Proceeds for Repair work etc.
Or used to repay borrowings (including green loans) or redeem investment corporation bonds (including
green bonds) that have already been issued.
(Eligibility Criteria)(1)Green Eligible Assets
Any of the following certifications or recertification is an asset that has been acquired or is expected to beacquired in the future.
DBJ Green Building Certification: Three Stars or more (top to third)
BELS Certification: Three stars or more (top to third)
CASBEE Certification: B+ or higher (top to third)
LEED Certification: Silver or higher (top to third)(2) Repair work, etc.
Either of the following must be met
Refurbishment work intended to improve at least one level of star or rank in any of the above (1) Green
Eligible Asset Certifications
Renovation work that can reduce energy consumption, CO2 emissions, or water consumption by 10% or
more
Installation or acquire of equipment related to renewable energy<Evaluation of JCR for this framework>a.

On the environmental improvement effects of the projecti. The eligibility criteria set out in the Framework for funding are green buildings which meet regional,
national or internationally recognised standards or certifications, renovations to reduce energy use,
CO2 emissions, or water use, and facilities related to renewable energy, which are highly effective in
improving the environment.
The tertiary industries, such as offices and commercial facilities, which OJR mainly invests in are thesecond highest energy consumption sector in Japan in terms of final energy consumption after manufacturing
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in the enterprises and other sectors. The final energy consumption of the tertiary industry in Japan in 2016 is
2,135 Petajoules (peta is 10 to 15th power). JCR believes that improving the efficiency of energy
consumption in this sector contributes to the reduction of final energy consumption in Japan and contributes
to E (Environment) initiatives in ESG activities.2
The following is JCR's evaluation of the OJR's Green Eligible Criteria.
I.

Evaluation of Green Eligible Assets
1. DBJ Green Building
A certification provided by DBJ (Development Bank of Japan) that evaluates properties withenvironmental and social considerations. The evaluation results are expressed as the number of stars, and theevaluation axis is "Buildings with consideration for the environment and society. “It evaluates the three major
categories of "Ecology (environment)", "Amenity (comfort) & Risk Management (crime and disasterprevention)" and "Community (community and landscape)" and "Partnership (cooperation withstakeholders)". Evaluation is represented by five stars (the best class in Japan), four stars (exceptionally high),
three stars (excellent), two stars (high), and one star (satisfactory). Although the evaluation is not specificallyfocused on environmental performance, it is highly recognized in Japan and has a certain evaluation item withregard to environmental performance. Therefore, JCR considers this certification to be equivalent to theGreen Project Classification of "green buildings which meet regional, national or internationally recognised
standards or certifications" defined in the Green Bond Principles. However, since the certification is not
limited to environmental performance, JCR believes that it is desirable to confirm the evaluation ofenvironmental performance individually.
DBJ Green Building certification is based not only on the environmental performance of the target
property, but also on comprehensive evaluations that include the comfort of tenants, risk management such as
disaster prevention and crime prevention, consideration for the surrounding environment and communities,
and cooperation with stakeholders. The scoring system integrates and designs specific "excellent initiatives"
for the environment and society, and there are many properties that do not reach the evaluation target in thereal estate market. High evaluation requires that buildings be designed with appropriate consideration not
only for the environment but also for all stakeholders involved in buildings.
By the end of November 2018, the number of DBJ Green building applications had climbed to 1,166, of
which only 635 had acquired one star or more certification. From the above, it can be seen that, although thenumber of applications is limited, the eligible criteria are narrowed down to properties with highenvironmental performance among buildings aiming to acquire certification. JCR considers that it isappropriate to use three stars or more as an Eligible Criteria because it targets properties with highenvironmental performance.
2. BELS (Building Energy Conservation Performance Indication System)
BELS is English acronym for Building-housing Energy-efficiency Labeling System. BELS is a building
energy efficiency performance indicator system under which third-party assessment bodies evaluate andaccredit the energy efficiency performance of new and existing buildings. The outer skin performance(performance standards and specification standards) and primary energy consumption (performance standards
and specification standards) are subject to evaluation, and the evaluation results are expressed in stars
according to the achievement values of the energy efficiency standards. High evaluation requires excellent
2

Sourc e: Agenc y f or Na t ural Res ourc es a nd Energy, 2017 Annua l Rep or t on Energy. Exc l udi ng tr a nsp ort ati on
and energy c onvers i on b us i ness es .
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https://www.jcr.co.jp/enenergy-efficiency performance. In BELS, this ranking is based on BEI (Building Energy Index). The numberof stars is divided from one to five by BEI. BEI is a measure of energy efficiency performance that uses thedesigned primary energy consumption as the molecular weight and the standard primary energy consumption
as the denominator, and is compared with the standard value. One star is the existing energy saving standard,
two stars is the energy saving standard, and three stars are the guiding standard. Buildings with BELS threestar or higher specified by OJR as eligible criteria are considered appropriate based on energy efficiency
performance (non-residential: BEI value of 0.8 or less) that exceeds the guiding standard.
3. CASBEE (Comprehensive Assessment System for Built Environment Efficiency)
CASBEE is English acronym for Comprehensive Assessment System for Built Environment Efficiency.
This is a method for evaluating and rating the environmental performance of buildings. In April 2001, theComprehensive Environmental Evaluation Research Committee for buildings was established as a joint
project with industry, government, and academia with the support of the Housing Bureau of the Ministry ofLand, Infrastructure, Transport and Tourism. Since then, the committee has been continuously conducting
development and maintenance. In addition to CASBEE for Buildings, CASBEE for Urban Development,
assessment tools include CASBEE for Real Estate developed for the real estate market with the purpose of
showing environmental performance in an easy-to-understand manner.
The assessment results are divided into five grades: S rank (excellent), A rank (very good), B+ rank (good),B-rank (slightly poor), and C-rank (poor) (CASBEE for Real Estate is classified into four grades: S rank
(excellent), A rank (very good), B+ rank (good), and B rank (satisfying essential items)). Assessment
methodologies use performance in the four areas of energy consumption, resource circulation, local
environment, and indoor environment in buildings that are reconstructed and quantified from the viewpointsof environmental quality of buildings (Q = Quality) and environmental impact of buildings (L = Load).
Evaluation is based on the value of BEE (Built Environment Efficiency) with L as the denominator and Q as
the numerator. In addition to environmental considerations, such as energy conservation and the use ofmaterials and equipment with low environmental impact, consideration for indoor comfort and landscape isalso necessary in order to obtain a high evaluation. Therefore, the overall quality of the building is required.
Buildings of B+ or higher specified by OJR as eligible criteria have a BEE of 1.0 or higher, indicating that theenvironmental quality of the building is greater than the environmental impact of the building, and JCR
considers that this standard is appropriate.
4. LEEDThe Environmental Performance Assessment System for Construction and Urban Environments developed
and operated by the U.S. Green Building Council (USGBC), a non-profit organization. As of the year 2018,
there are buildings certified in more than 160 countries or regions. The LEED is an acronym for Leadership in
Energy and Environment Design. The draft was published in 1996 and is updated once every few years.
There are five types of certification: BD+C (Building Design and Construction), ID+C (Interior Design
and Construction), O+M (Operation and Maintenance), ND (Neighborhood Development), and HOMES(Home).
The authentication level is represented by the sum of the points earned for each item and is from above
Platinum (80 points or more), Gold (60-79 points), Silver (50-59 points), and Certified (40-49 points). As foritems related to energy efficiency, it is often a prerequisite for the evaluation that points are high or alreadyachieved, and energy efficiency is high, which is considered necessary in order to obtain a high certificationlevel. Therefore, it is considered appropriate for OJR to set the standard as the certification level for buildingsthat have achieved high energy efficiency is higher than the Silver that OJR considers eligible.
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https://www.jcr.co.jp/enBased on the above, JCR considers the eligibility criteria set forth in OJR's Green Finance Framework.
(1) Green Eligible Assets are properties that meet certain evaluation standards under various certifications,and JCR considers it appropriate to set standards by OJR as described above. As of the end of August 2018,
OJR had 25 green eligible assets (of which 13 were DBJ Green Building certification, 9 were CASBEE
certified, 9 were BELS certified, and multiple certified are counted as 1). The number of such cases has
increased with including 4 CASBEE accreditation certifications and 5 BELS accreditation certifications since
the announcement of the previous fiscal year's financial results. JCR considers these cases to be one example
of OJR's environmental efforts.
II.

Evaluation of Repair work, etc.
Repair work is defined as renovation work to improve the environmental performance of the subject

property or installation or acquire of equipment related to renewable energy. JCR assesses that specificenvironmental improvement effects can be expected by setting a clear goal of raising the level of certification
for renovation work, which is a eligible criteria. In addition, the goal of reducing energy consumption, CO2
emissions, or water consumption by at least 10% is not very high when compared to global levels, but it isconsidered reasonable to set a target value in the current Japanese green building market.
Based on the above, JCR considers the eligibility criteria presented in the Framework to be appropriate andeffective in improving the environment.

Ii. Uses of proceeds fall under the categories of "Green buildings which meet regional, national orinternationally recognised standards or certifications." and "Energy Efficiency" among the green
projects defined in the Green Bond Principles or the Ministry of the Environment's Green Bond
Guidelines.
b. Negative impact on the environment
OAM, the asset management company of the OJR, conducts due diligence when acquiring properties. In
conducting due diligence, the Company receives due diligence reports from real estate evaluation companies
in the registration lists selected independently by OAM in advance, and also conducts checks by setting up
items related to the environment in the checklists by OAM. In the due diligence, JCR confirmed that if there
is a concern that the subject property may have a negative impact on the environment, the term of acquisition
is to be corrected by the seller.

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https://www.jcr.co.jp/enc.

Consistency with SDGs goals and targets
This project is classified as energy efficiency and green buildings which meet regional, national orinternationally recognised standards or certifications. JCR evaluated the project as contributing to thefollowing SDGs objectives and targets, referring to the SDGs mapping of the ICMA.
Goal 7: Ensure access to affordable, reliable, sustainable, and modern energy for all.
Target 7.3. By 2030, double the global rate of improvement in energy efficiency.

Goal 9: Build resilient infrastructure,industrialization and foster innovation.

promoteinclusiveandsustainable

Target 9.4. By 2030, upgrade infrastructure and retrofit industries to make themsustainable, with increased resource-use efficiency and greater adoption of clean andenvironmentally sound technologies and industrial processes, with all countries taking
action in accordance with their respective capabilities.
Goal 11: Make cities and human settlements inclusive, safe, resilient and sustainable.
Target 11.6. By 2030, reduce the adverse per capita environmental impact of cities,
including by paying special attention to air quality and municipal and other waste
management.

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Evaluation Phase 2: Evaluation on Management, Operation and Transparency
JCR assigns "m1(F)", the highest rating on JCR evaluation Phase 2: Evaluation on Management
and Operation and Transparency.
Rationale: These projects will be allocated the funding and implemented the businesses asplanned through a firmly equipped management and operation system and high transparency as
described below.

1 . A p p r o p r i a t e n e s s a n d Tr a n s p a r e n c y c o n c e r n i n g s e l e c t i o n s t a n d a r d a n d
processes of the use of proceeds(1) JCR's key consideration in this factor
In this section, JCR confirms that the objectives to be achieved through the green finance, the criteria for
selecting green projects, the appropriateness of the process, and the series of processes are appropriately
disclosed to investors.

(2) Current status of evaluation targets and JCR evaluation
a.

Goal

<The Framework for Green Finance Issuance Objectives>
OAM, OJR's asset management company, aims to achieve stable growth in unitholder value, which is theinvestment philosophy of OJR, and has established an ESG policy for the implementation of asset
management with consideration for the environment, society and governance, which is publicly available on
the website.
[ESG Policy]"1. Reduction of environmental load and formation of a recycle-based society""2. Collaboration with stakeholders""3. Enhancing health, comfort for tenants, executives and employees""4. Risk management and compliance""5. ESG education/enlightenment activities ""6. Promotion of information disclosure and visualization of ESG"In accordance with the above ESG policy, numerical targets, specific initiatives, and organizational
structure are established in the "Energy Usage/Greenhouse Gas Emission Reduction Policy", "Water
Conservation Policy" and "Waste Weight Management Policy" and various policies are implemented. As an
example of specific initiatives, OAM has concluded a PM contract with a property management (PM)company that manages properties to implement environmentally conscious management, and every year it
receives reports on energy data from PM Service contractors. In these ways, OAM is taking measures thattake the environment into consideration.
We believe that green finance (green bonds and green loans) contributes to the realization of the above
ESG policy.

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<Evaluation of JCR for the Framework>
The ESG policies are properly disclosed on the OJR's website. JCR considers the ESG Policy, numericaltargets, specific initiatives, and organizational structure to be consistent with the Green Finance
Implementation Policy and appropriate.
b. Selection Criteria<The Framework for Selection Criteria>
The Evaluation and Selection of Eligibility Criteria and the Appropriation of Proceeds to Meet the
Eligibility Criteria shall be reviewed and discussed by the Sustainability Committee, which shall consist of the
management team including the President and CEO, and finally determined by the Investment Committee.
<Evaluation of JCR for the Framework>
The criteria for selecting the use of proceeds in OJR's green finance are as described in "Evaluation Phase
1: Evaluation of Greenness." JCR evaluates the selection criteria for buildings with environmental
improvement effects.
The selection criteria are first reviewed and discussed by the Sustainability Committee of OAM. The
Sustainability Committee is an advisory body chaired by the President and CEO and composed of executive
officers in charge, but has no decision-making authority. The Sustainability Committee meets at least fourtimes a year to share important information and progress.
The sustainability committee considers and deliberations selection criteria by management. In addition to
the involvement of management in selection criteria, the management of the representative director andpresident, executive officers, and outside committee members are involved in decision-making by the OAM
Investment Committee. Therefore, JCR evaluates that it is highly likely that the evaluation, selection, andfunding of "Eligible Criteria" will be applied in accordance with the OJR's ESG policy.
c.

Processes<The Framework for Processes>
The selection of the use of proceeds is proposed by OAM's Finance and IR Department and decided by the
OAM Investment Committee, which is attended by the President and CEO and OAM Executive Officers.
<Evaluation of JCR for the Framework>
The purpose of use of proceeds selected in accordance with "b. Selection Standard" above is ultimately
determined by a resolution of the Investment Committee, which is attended by management. JCR evaluatesthat decisions have been made by management through an appropriate selection process.

The target setting and selection standard for the issuance of Green Bonds, etc. by OJR are to be disclosed
in the Shelf Registration Supplements, etc. and the outline in this Evaluation Report at the time of the issuanceof bonds, thereby ensuring transparency to investors.

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2 . A p p r o p r i a t e n e s s a n d Tr a n s p a r e n c y o f m a n a g e m e n t o f t h e p r o c e e d s(1) JCR's key consideration in this factor
It is generally assumed that the management method of the proceeds varies status on the issuer or borrower.
JCR Confirm whether proceeds procured through the issuance of green finance are appropriated to the green
projects and whether a mechanism and internal system are in place to enable easy tracking and management of
the appropriation of proceeds.
JCR also attaches importance to evaluating the management and operation of the unallocated proceeds, as wellas to confirming that the proceeds from the bonds will be allocated to the green projects at an early stage.

(2) Current status of evaluation targets and JCR evaluation<The Framework for proceeds management>aProceeds from green bonds or green loans will be allocated for projects that meet either the eligibility
criteria set out in the Green Finance Framework.

b

The maximum amount of debt (hereinafter referred to as "Green Eligible Debt") calculated by multiplying
the total acquisition price of Green Eligible Assets by the actual ratio of interest-bearing debt to total assets
shall be the procurement limit of Green Finance. Even if the Green Eligible Assets of the above-mentioned
project funded by the proceeds are sold or excluded from the eligibility criteria as Green Assets, theproceeds management shall continue as Green Finance provided that the proceeds through such Green Bondor Green Loan remain within the Green Finance procurement ceiling.

c

The total amount of proceeds through Green Bonds or Green Loans is early,(1) Funds for new acquisition of Green Eligible Assets,(2) Funds for Repair work,or funds for repayment of borrowings (including green loans) or redemption of investment corporation
bonds (including green bonds) that have already been issued. If not appropriated temporarily, managed as
cash or cash equivalents.

<Evaluation of JCR for the Framework>
The OJR's Green Finance Framework intends to manage the portfolio by calculating the amount of Green
Eligible Debt from the total amount of Green Eligible Assets and setting the procurement limit for Green Finance.
JCR believes that it is not a problem because it is taken as a market practice that other investment corporations
also manage their portfolios as Green Eligible Debt. However, JCR believes that it is desirable to link properties
where funds will be appropriated at the time of individual fund procurement through green bonds or green loans
in green finance.
In addition, the proceeds by Green Bonds or Green Loans are allocated to the new acquisition of assets
classified as eligible assets, repayment of borrowings of properties meeting existing eligibility criteria, orredemption of bonds by the General Affairs and Accounting Manager who prepares instructions for disbursementin advance at the Finance and IR Department and manages the receipts and disbursements. Deposit management
is conducted through the main account of the trust bank, which is the asset custody bank. A copy of the passbook
is collected from the trust bank, which is the asset custody company, and after checking it, it is registered in theinternal financial system by the Finance and Investor Relations Department.
It is also envisaged that OAM's Audit Office will conduct an audit at least once a year to determine whether
proceeds through green finance were appropriated to the target assets. In addition, JCR confirmed that thesebooks are subject to external audits at the end of each fiscal year, and that they are properly maintained.
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https://www.jcr.co.jp/enAs a result of the above confirmation, JCR evaluates that the adequacy and transparency of fund management
by OJR is high.

3.

Reporting(1) JCR's key consideration in this factor
In this section, JCR evaluates whether the disclosure system for investors, etc. before and after the issuance ofgreen finance is planned in a detailed and effective manner at the time of the issuance of green finance.

(2) Current status of evaluation targets and JCR evaluation<The Framework for Reporting System>(Reporting on the proceeds allocation)aOnce a year, the allocation status (including allocated and unallocated amounts by category meeting theeligibility criteria) is disseminated on the website until all proceeds from Green Bond or Green Loan areallocated.

b

Annually disclosing on the website that green finance balances do not exceed Green Eligible Debt as long as
there are outstanding green finance balances.

(Impact reporting for environmental benefits)a

As long as Green Bonds or Green Loans exist, the status of certification of each Green Eligible Asset
allocated to the proceeds, the evaluation of certification, and the whole indicators of Green Eligible Assets
are disclosed on the website once a year.
Energy consumption/CO2 emissions/water consumptionb

For renovation work, as long as there are Green Bonds or Green Loans, the following indicators aredisclosed on the website once a year after completion of construction.
Energy consumption, CO2 emissions, or water consumption (before renovation/after renovation)<Evaluation of JCR for the Framework>(Reporting on proceeds allocation)
The purpose of proceeds under this framework includes "Repair work, etc." and it is assumed that the period
until the proceeds are fully allocated will extend for a long period of time. OJR discloses the allocation status on
its website once a year until the proceeds are fully allocated. It is also assumed that the OJR will disclose any
undistributed proceeds.
(Impact reporting for environmental benefits)OJR plans to report on the environmental improvement effects of individual Green Eligible Assets, assessmentof certification, and the whole of Green Eligible Assets. The company also plans to report on the environmental
improvement effects of renovated properties before and after renovation. JCR evaluates the frequency of
disclosures and disclosures to be appropriate in light of the Green Bond Principles and the Green Loan Principles.
Disclosure items have already been published on the OJR website. In the future, they will be created anddisclosed on the special website featured in Green Finance. In addition, ESG reports will be produced and theeffects of environmental improvement will be disclosed in the ESG reports.

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4. Organization's environmental efforts(1) JCR's key consideration in this factor
In this section, JCR evaluates whether the issuer's management positions environmental issues as a highpriority management issue, and whether the green finance policy, process and the criteria for selecting green
projects are clearly defined through the establishment of a department specializing in the environmental field or
through the assistance of external organizations.

(2) Current status of evaluation targets and JCR evaluation
In order to achieve stable growth in unitholder value, OAM has formulated the ESG Policy in order toimplement the ESG-conscious asset management policy.
In response to increasing awareness of ESG among overseas investors, the company has adopted amanagement stance that considers ESG. As noted above, the "Sustainability Committee" has been held since
March 2018, chaired by the president and CEO and comprised of executive officers in charge, and has alreadyheld five meetings. Before the Sustainability Committee was held, various issues related to ESG were discussed
at a meeting where department heads and lower levels of relevant departments met and discussed.
In addition, as part of its efforts, OJR has obtained GRESB real estate appraisals and acquiring various
certifications, such as DBJ Green Building, CASBEE, and BELS, for the acquired properties, both of which are
published on its own website. In the GRESB Real Estate Assessment, OJR has been awarded the Green Star for
the fourth consecutive year to businesses that have excellent “Management and Policy” and “Implementation andmeasurement”, both of which are the two evaluation criteria in the sustainability assessment. JCR considers thisas indicating that OJR's sustainability initiatives are highly evaluated by third parties. JCR also assesses that the
number of properties certified is increasing indicate OJR's stance on the environment.
In addition, OJR has been a corporate member of Green Building Japan, a LEED public organization in Japan,
since August 2018. OJR aims to collaborate with people who aim to create a sustainable society through its
activities.
OAM has two first-class architects in the Business Promotion Department, one CASBEE Assessor, and one
first class architect in the Investment Management Department. In addition, OAM has departments and humanresources with specialized knowledge of properties and the environment. For example, employees withqualifications related to the environment are qualified as Energy Management Personnel, and the Supervisor of
the Risk Management & Compliance Department has been active as an expert on environmental issues in Japanfor many years. In addition, environmental consulting is carried out in cooperation with internal and external
specialists, such as by requesting external specialists.
JCR considers environmental issues to be a high priority for the management of these organizations, and thatdepartments with expert knowledge are clearly involved as organizations in the selection of green financeprocurement policies and processes and green projects.
(Reference) GRESB Real Estate Assessment
GRESB is a benchmark established in 2009 that measures and evaluates the degree of consideration given to
ESG by companies that holding and manages real estate and infrastructure. GRESB is an acronym for Global Real
Estate Sustainability Benchmark. From 2016, the evaluation results are shown on a five-star scale (five stars, fourstars, three stars, two stars, and one star). Companies that have made excellent initiatives are given "Green Star"
separately from the five-point rating. From J-REIT, 38 investment corporations have participated in the evaluation
as of 2018.
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■Evaluation result
Based on JCR Green Finance Evaluation Method, JCR assigns "g1 (F)" for "Evaluation of Greenness (Use ofProceeds)" and "m1 (F)" for "Evaluation on Management, Operation and Transparency ". Consequently, JCR
assigns "Green1 (F)" as an overall evaluation. The Framework is considered to meet the standards for the items
required by the Green Bond Principles, Green Loan Principle and the Green Bond Guideline of the Ministry of theEnvironment of Japan.
[JCR Green Finance Framework Evaluation matrix]
Management, Operation and Transparency

Greenness

m1(F)

m2(F)

m3(F)

m4(F)

m5(F)

g1(F)

Green 1(F)Green 2(F)Green 3(F)Green 4(F)Green 5(F)g2(F)

Green 2(F)Green 2(F)Green 3(F)Green 4(F)Green 5(F)g3(F)

Green 3(F)Green 3(F)Green 4(F)Green 5(F)g4(F)

Green 4(F)Green 4(F)g5(F)

Green 5(F)Green 5(F)Green 5(F)Not
Qualified

Not

Not

QualifiedQualified

Not

Not

Not

QualifiedQualifiedQualified■ Evaluation Subject
Issuer/Borrower: ORIX JREIT Inc. (Security Code: 8954)[Assignment]
TargetGreen Finance Framework

Evaluation

JCR Green Finance Framework Evaluation
Evaluation of Greenness
Management, Operation and Transparency:Green 1(F):g1(F):m1(F)

Analysts in charge of this evaluation: Atsuko Kajiwara and Kosuke Kajiwara

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Important explanation on the evaluation of the Green Finance Framework
1. Assumptions, Significance, and Limitations of JCR Green Finance Framework Evaluation
JCR Green Finance Framework Evaluation provided by Japan Credit Rating Agency, Ltd. (JCR) evaluates the policies set
forth in the Green Finance Framework, and presents JCR's overall opinion at this time on the suitability of the Green Project as
defined by JCR and the extent of efforts to ensure management, operation, and transparency regarding the use of funds.
Therefore, it is not intended to perform specific environmental improvement effects, management and operational systems, andtransparency evaluations, etc. of the use of funds for individual bonds or borrowings, etc. implemented based on the said policy.
In cases where green finance evaluations are granted for individual bonds or individual borrowings based on the framework, it isnecessary to perform a separate evaluation. JCR Green Finance Framework Evaluation does not demonstrate the environmental
improvement effects of individual bonds or borrowing implemented under this framework, and does not assume any
responsibility for the environmental improvement effects. In principle, JCR does not directly measure the environmental
improvement effects of funds procured under the Green Finance Framework, although JCR confirms matters that arequantitatively and qualitatively measured by the issuer or by a third party requested by the issuer.
2. Methods used in the conduct of this evaluation
The methods used in this evaluation are listed on JCR website (Sustainable Finance & ESG in https://www.jcr.co.jp/en)) as
JCR Green Finance Evaluation Method.
3. Relationship with Acts Related to Credit Rating Business
JCR Green Financial framework Evaluation is determined and provided by JCR as a related business, which is different fromthe activities related to the credit rating business.
4. Relationship with Credit Ratings
The Assessment differs from the Credit Rating and does not promise to provide or make available for inspection apredetermined Credit Rating.
5. Independence in Evaluation of JCR Green Finance Framework
There is no conflicts of interest related to capital or human resources relationships between the subject of this evaluation and
JCR.
■Disclaimers

The information contained in this document has been obtained by JCR from the Issuer and from accurate and reliable sources. Provided, however, that suchinformation may be erroneous due to human, mechanical or other reasons. Accordingly, JCR makes no representation or warranty, express or implied, as to theaccuracy, results, accuracy, timeliness, completeness, marketability, or fitness for a particular purpose of such information, and JCR assumes no responsibility forany error, omission, or result of using such information. In no event shall JCR be liable for any special, indirect, incidental or consequential damages of any kind,including opportunity loss, monetary loss, which may arise from any use of such information, whether contractual, tort, negligence or other cause of liability, andwhether or not such damages are foreseeable or unforeseeable. JCR Green Bond Evaluation does not express any opinion on the various risks (credit risk, pricefluctuation risk, market liquidity risk, etc.) associated with the green bond, which is the subject to the evaluation. JCR Green Bond Evaluation is a comprehensive
statement of opinion at the present time of JCR and is not a statement of fact and does not make any recommendations regarding risk judgment or the decision topurchase, sell or hold individual bonds, commercial paper, etc. JCR Green Bond Evaluations may be changed, suspended, or withdrawn due to changes in
information, lack of information, or other reasons. All rights to this document, including data from JCR Green Bond Evaluation, are held by JCR. Reproduction,
adaptation, modification or alteration of this document, in whole or in part, including data from JCR Green Bond Evaluation, without the permission of JCR is
prohibited.

■Glossary

JCR Green Finance Framework Evaluation evaluates the extent to which funds procured under the framework will be used for Green Projects as defined by JCR,
and the degree of management, operation, and transparency initiatives related to the use of Green Finance. The ratings are graded on a five-point scale and are
displayed using the Green1(F), Green2(F), Green3(F), Green4(F), and Green5(F) rating symbols in order of rank.

■Status of registration as an external assessor of green finance・ Ministry of the Environment's external green bond reviewer registration
・ ICMA (registered as an observer with the International Capital Markets Association)■Status of registration as a credit rating agency, etc.
・ Credit Rating Agency: the Commissioner of the Financial Services Agency (Rating) No.1
・ EU Certified Credit Rating Agency
・ NRSRO: JCR has registered with the following four of the five credit rating classes of the Securities and Exchange Commission's NRSRO(Nationally RecognizedStatistical Rating Organization. (1)Financial institutions, broker dealers, (2) insurance companies, (3) general business corporations, and (4) government and local
governments. If the disclosure is subject to Section 17 g-7(a) of the Securities and Exchange Commission Rule, such disclosure is attached to the news releases
posted on JCR website (https://www.jcr.co.jp/en).

■ For further information, contact

Information Service Dept. TEL: 03-3544-7013 FAX: 03-3544-7026

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026

Copyright © Japan Credit Rating Agency, Ltd. All rights reserved.

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