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KDXR has acknowledged the importance of ESG consideration in real estate management and identified the enhancement of sustainability as one of the material topics for its business to realize a sustainable society as a corporate responsibility. Furthermore, we believe that we will contribute to enhancement of sustainability finance by providing investment and financing opportunities to investors and lenders, and by expanding the number of investors and lenders that are eligible for sustainability finance.
KDXR has formulated the Sustainability Finance Framework as of June 18, 2024 by revising the scope of the Green Finance Framework developed in August 2022. With the formulation of this Framework, KDXR will be able to implement not only sustainability finance, but also green finance and social finance. This framework includes the Green Finance Framework formulated by former Kenedix Retail REIT Corporation, as well as the Social Finance Framework formulated by Kenedix Residential Next Investment Corporation, which was no longer available due to the merger.
- Sustainability Finance Framework
- Reporting based on Sustainability Finance Framework
- Status of Finance
Sustainability Finance Framework
1. Use of Proceeds
Criteria Eligible for Sustainability FinanceSustainability finance refers to finance that includes both uses of proceeds which satisfy the eligibility criteria for green finance and social finance, respectively.
The use of proceeds raised through sustainability finance is limited to finance the acquisition of assets that meet Green and Social Eligibility Criteria described below and refinancing of such acquisition proceeds.
The use of proceeds procured through green finance is limited to finance the followings: (1) the acquisition of assets that satisfy Green Eligibility Criteria 1 stated below and refinancing of such acquisition proceeds (the repayment of borrowings and the redemption of investment corporation bonds, including short-term investment corporation bonds); funding or (2) construction and/or refurbishments that meet Eligibility Criteria 2.
Green Eligibility Criteria (1)
| Type | Validity Period | Eligibility Rank |
|---|---|---|
| DBJ Green Building Certification | Three years from the certification obtained date | 3 stars or above |
| CASBEE for Real Estate | Five years from the certification obtained date | B+ rank or higher |
| BELS Evaluation, including non-residence and ZEB Newly acquired on or after April 1, 2024 |
- |
|
| BELS Evaluation, including non-residence and ZEB Already acquired on or before March 31, 2024 |
- | 3 or more; however, for logistics facilities, BEI shall be less than 0.75. |
|
BELS Evaluation, including residence and ZEH Newly acquired on or after April 1, 2024 |
- |
|
| BELS Evaluation, including residence and ZEH Already acquired on or before March 31, 2024 |
3 or more |
Green Eligibility Criteria (2)
- Renovation work, including facilities, to reduce energy consumption, water consumption and GHG emissions or improve other environmental benefits in real estate managed, which shall be effective to reduce consumption or emissions by 30 percent or more compared to the previous levels.
- Facility refurbishments that improve the evaluation level by one or more in any of the certification specified in the Eligibility Criteria (1)
- Introduction or acquisition of facilities related to renewables
The use of proceeds procured through social finance is limited to finance the acquisition of assets that satisfy Social Eligibility Criteria stated below and refinancing of such acquisition proceeds (the repayment of borrowings and the redemption of investment corporation bonds, including short-term investment corporation bonds).
Social Eligibility Criteria
| Senior Living Facilities |
|
|---|---|
| Medical Facilities |
|
Please refer to "Healthcare Facilities" in the list of portfolios for assets eligible for social finance.
2. Project Evaluation and Selection Process
The Sustainability Department, which is a secretariat for the Sustainability Committee established in the Asset Management Company and the Listed REIT Department, which handles operations related to the Asset Management Company’s asset management, will act as the center of operations relating to sustainability, including the Eligible Green Projects.
Chaired by the president & CEO of the Asset Management Company, the Sustainability Committee consists of Head of Listed REIT Department, Head of Private REIT Department, Head of Strategic Planning Department, Head of Strategic Planning of each REIT Department, Head of Asset Management Division of each REIT Department, Head of Portfolio Management Division of Listed REIT Department, Compliance Officer, Head of Finance & Accounting Department, Head of Corporate Administration Department and other members. The Committee has examined and monitored sustainability policies, targets and various initiatives with regard to sustainability while taking into consideration social situations or the asset management status of the Asset Management Company, KDXR and Private REIT.
The selection of Eligible Project requires the approval of the Asset Management Committee of Listed REIT Department of the Asset Management Company, which reports to the Sustainability Committee on the evaluation and use of proceeds of Eligible Project, alignment of use of proceeds with Eligibility Criteria or prospects of the status of allocation of net proceeds after allocating proceeds to Eligible Project.
3. Management of Proceeds and Unallocated Proceeds
The Asset Management Company properly implements internal controls regarding net proceeds and unallocated proceeds.
The proceeds and unallocated proceeds will be managed separately from other proceeds in separate accounts for deposits and withdrawals exclusively for sustainability finance, green finance and social finance, and the proceeds transferred will be recorded and the balances will be checked on a regular basis.
4. Reporting
Allocation Reporting
The proceeds procured through sustainability finance, green finance and social finance will be confirmed whether these are linked to the acquisition of green eligible assets and social eligible assets or refinancing thereof and investment corporation bonds required for the acquisition, or will be tied to the expenditure on energy-saving construction and other costs that are recognized as effective beyond certain standards, and then the allocation will be promptly made. The status of any unallocated proceeds will be disclosed on this website on an annual basis, with respect to the period until the entire amount of net proceeds is allocated to projects that meet the Eligible Criteria or the period until the finance is redeemed or repaid.
The sum of green finance or social finance outstanding amounts will be managed by setting the level of eligible finance debt as of the end of the immediately preceding fiscal period as the upper limit.
The upper limit amount of green finance
= Aggregate amount of acquisition price of Eligible Green Assets × Total asset LTV + Total investment in Eligibility Criteria 2
The upper limit amount of social finance
= Aggregate amount of acquisition price of Eligible Social Assets × Total asset LTV
We disclose the following indicators throughout the life of the finance.
Green Eligibility Criteria (1)
- Number and certification of Eligible Green Assets
- Aggregate amount of total floor area of Eligible Green Assets
- Energy consumption, water consumption and GHG emission of Eligible Green Assets where KDXR has energy control authority
Green Eligibility Criteria (2)
- In the cases in which construction or facility refurbishments that are expected to result in improvements in terms of energy saving or environmental benefits are implemented, an estimated reduction rate (percentage) of energy consumption, water consumption or GHG emissions before and after the construction or refurbishments
- In the cases in which facilities related to renewable energy are installed or acquired, anticipated annual energy production related to the said facilities
Social Eligibility Criteria
The following output, outcome and income indicators will be annually released.
| Output Indicator |
Overview of building and lease However, in case that the operator’s consent has not been obtained, the information is not disclosed. |
|---|---|
| Outcome Indicator |
|
| Impact (Qualitative Targets) | By linking capital market needs with healthcare facilities operators' needs, KDRX will promote the provision of superior healthcare facilities and contribute to the promotion of socially beneficial capital investments. |
Third-party evaluation of the Sustainability Finance Framework
Japan Credit Rating Agency, Ltd. (JCR)
PDF
Reporting based on Sustainability Finance Framework
Allocation Reporting
1. Allocation Reporting of Green Finance
As of April 30, 2024
The balance of green finance does not exceed the upper limit amount of green finance. In addition, there is no unallocated proceeds.
The upper limit amount of green finance is calculated based on the figures as of April 30, 2024.
2. Allocation Reporting of Social Finance
As of April 30, 2024
The balance of social finance does not exceed the upper limit amount of green finance. In addition, there is no unallocated proceeds.
The upper limit amount of social finance is calculated based on the figures as of April 30, 2024
Impact Reporting
1. Indicators for Green Eligibility Criteria
As of April 30, 2024
| Note 1: | A property that has multiple environmental certifications is counted as one. |
|---|---|
| Note 2: | Calculated based on KDXR's interest ratio for buildings, of which KDXR has compartmentalized ownership, etc. |
| Note: | Calculated based on the data from April 2023 to March 2024. |
|---|
2. Indicators for Social Eligibility Criteria
＜Output Indicator＞- Overview of building and lease
- Overview of operations (Number of rooms, capacity, occupancy and utilization rate)
- Earnings performance of owned healthcare facilities (details of expenses and NOI)
- Overview of operator
- Appraisal value as of the end of the fiscal period
Note: In case that the operator’s consent has not been obtained, the information is not disclosed.
Please refer to Social Finance Impact Report.PDF
J-REIT and Healthcare Market Size（Acquisition Price)
- Japan Real Estate Securitization Association “ARES J-REIT Databook（May 2024) “
AUM of Healthcare Facilities
| Note: | Figures for periods prior to July 2023 are for the former Kenedix Residential Next Investment Corporation. |
|---|
By linking capital market needs with healthcare facilities operators' needs, KDXR will promote the provision of superior healthcare facilities and contribute to the promotion of socially beneficial capital investments.
Status of Finance
Green Finance
| Funds (Millions of Yen) |
Procurement Date |
Repayment Date/ Redemption Date |
Allocation | |
|---|---|---|---|---|
| 12th Series Unsecured Bonds Former Kenedix Office Investment Corporation |
1,000 | Oct. 20, 2020 | Oct. 18, 2030 | Allocated |
| 7th Series Unsecured Bonds Former Kenedix Retail REIT Investment Corporation |
2,000 | Jan. 28, 2022 | Jan. 28, 2032 | Allocated |
| 8th Series Unsecured Bonds Former Kenedix Retail REIT Investment Corporation |
2,000 | Jun. 22, 2022 | Oct. 29, 2027 | Allocated |
| Total Amount of Green Bonds (a) | 5,000 | |||
| Green Loan (Series 46-A1) (Former Kenedix Retail REIT Investment Corporation) |
2,600 | Feb. 10, 2022 | Jan. 31, 2029 | Allocated |
|---|---|---|---|---|
| Green Loan (Series 46-A2) (Former Kenedix Retail REIT Investment Corporation) |
600 | Feb. 10, 2022 | Jan. 31, 2029 | Allocated |
| Green Loan (Series 46-A3) (Former Kenedix Retail REIT Investment Corporation) |
400 | Feb. 10, 2022 | Jan. 31, 2029 | Allocated |
| Green Loan (Series 46-A4) (Former Kenedix Retail REIT Investment Corporation) |
400 | Feb. 10, 2022 | Jan. 31, 2029 | Allocated |
| Green Loan (Series 46-A5) (Former Kenedix Retail REIT Investment Corporation) |
300 | Feb. 10, 2022 | Jan. 31, 2029 | Allocated |
| Green Loan (Series 46-A6) (Former Kenedix Retail REIT Investment Corporation) |
300 | Feb. 10, 2022 | Jan. 31, 2029 | Allocated |
| Green Loan (Series 46-B) (Former Kenedix Retail REIT Investment Corporation) |
800 | Feb. 10, 2022 | Jan. 31, 2029 | Allocated |
| Green Loan (Series 46-C) (Former Kenedix Retail REIT Investment Corporation) |
1,600 | Feb. 10, 2022 | Jan. 31, 2031 | Allocated |
| Green Loan (Series 48-A) (Former Kenedix Retail REIT Investment Corporation) |
600 | Aug. 31, 2022 | Feb. 28, 2027 | Allocated |
| Green Loan (Series 48-B1) (Former Kenedix Retail REIT Investment Corporation) |
950 | Aug. 31, 2022 | Aug. 31, 2029 | Allocated |
| Green Loan (Series 48-B2) (Former Kenedix Retail REIT Investment Corporation) |
500 | Aug. 31, 2022 | Aug. 31, 2029 | Allocated |
| Green Loan (52-A1) (Former Kenedix Retail REIT Investment Corporation) |
600 | Mar. 31, 2023 | Mar. 31, 2024 | Allocated |
| Green Loan (52-A2) (Former Kenedix Retail REIT Investment Corporation) |
400 | Mar. 31, 2023 | Mar. 31, 2024 | Allocated |
| Green Loan (52-A3) (Former Kenedix Retail REIT Investment Corporation) |
400 | Mar. 31, 2023 | Mar. 31, 2024 | Allocated |
| Green Loan (52-B) (Former Kenedix Retail REIT Investment Corporation) |
500 | Mar. 31, 2023 | Mar. 31, 2026 | Allocated |
| Green Loan (52-C) (Former Kenedix Retail REIT Investment Corporation) |
1,350 | Mar. 31, 2023 | Mar. 31, 2027 | Allocated |
| Green Loan (52-D) (Former Kenedix Retail REIT Investment Corporation) |
1,500 | Mar. 31, 2023 | Sep. 30, 2028 | Allocated |
| Green Loan (52-E1) (Former Kenedix Retail REIT Investment Corporation) |
1,500 | Mar. 31, 2023 | Sep. 30, 2029 | Allocated |
| Green Loan (52-E2) (Former Kenedix Retail REIT Investment Corporation) |
600 | Mar. 31, 2023 | Sep. 30, 2029 | Allocated |
| Green Loan (52-F) (Former Kenedix Retail REIT Investment Corporation) |
150 | Mar. 31, 2023 | Mar. 31, 2030 | Allocated |
| Green Loan (54) (Former Kenedix Retail REIT Investment Corporation) |
500 | Sep. 29, 2023 | Sep. 30, 2028 | Allocated |
| Green Loan (197-E) (Former Kenedix Office Investment Corporation) |
500 | Aug. 31, 2022 | Aug. 31, 2025 | Allocated |
| Green Loan (197-G) (Former Kenedix Office Investment Corporation) |
2,400 | Aug. 31, 2022 | Aug. 31, 2027 | Allocated |
| Green Loan (197-H) (Former Kenedix Office Investment Corporation) |
1,000 | Aug. 31, 2022 | Aug. 31, 2027 | Allocated |
| Green Loan (197-I) (Former Kenedix Office Investment Corporation) |
300 | Aug. 31, 2022 | Aug. 31, 2027 | Allocated |
| Green Loan (197-K1) (Former Kenedix Office Investment Corporation) |
1,000 | Aug. 31, 2022 | Aug. 31, 2029 | Allocated |
| Green Loan (197-K2) (Former Kenedix Office Investment Corporation) |
500 | Aug. 31, 2022 | Aug. 31, 2029 | Allocated |
| Green Loan (197-K3) (Former Kenedix Office Investment Corporation) |
500 | Aug. 31, 2022 | Aug. 31, 2029 | Allocated |
| Green Loan (197-K4) (Former Kenedix Office Investment Corporation) |
500 | Aug. 31, 2022 | Aug. 31, 2029 | Allocated |
| Green Loan (197-K5) (Former Kenedix Office Investment Corporation) |
200 | Aug. 31, 2022 | Aug. 31, 2029 | Allocated |
| Green Loan (197-M1) (Former Kenedix Office Investment Corporation) |
1,000 | Aug. 31, 2022 | Aug. 31, 2029 | Allocated |
| Green Loan (197-M2) (Former Kenedix Office Investment Corporation) |
500 | Aug. 31, 2022 | Aug. 31, 2029 | Allocated |
| Green Loan (198-B) (Former Kenedix Office Investment Corporation) |
500 | Oct. 31, 2022 | Apr. 30, 2026 | Allocated |
| Green Loan (199) (Former Kenedix Office Investment Corporation) |
1,000 | Feb. 28, 2023 | Feb. 29, 2028 | Allocated |
| Green Loan (200-A) (Former Kenedix Office Investment Corporation) |
2,000 | Mar. 13, 2023 | Mar. 31, 2030 | Allocated |
| Green Loan (200-B) (Former Kenedix Office Investment Corporation) |
1,800 | Mar. 13, 2023 | Mar. 31, 2031 | Allocated |
| Green Loan (201) (Former Kenedix Office Investment Corporation) |
500 | Jun. 30, 2023 | Jun. 30, 2026 | Allocated |
| Green Loan (202-B) (Former Kenedix Office Investment Corporation) |
500 | Jul. 31, 2023 | Jul. 31, 2029 | Allocated |
| Green Loan (203-B1) (Former Kenedix Office Investment Corporation) |
2,000 | Aug. 31, 2023 | Aug. 31, 2026 | Allocated |
| Green Loan (203-B2) (Former Kenedix Office Investment Corporation) |
300 | Aug. 31, 2023 | Aug. 31, 2026 | Allocated |
| Green Loan (0001-B) | 1,200 | Nov. 1, 2023 | Nov. 30, 2024 | Allocated |
| Green Loan (0001-C) | 1,000 | Nov. 1, 2023 | Oct. 31, 2026 | Allocated |
| Green Loan (0001-D1) | 1,000 | Nov. 1, 2023 | Oct. 31, 2027 | Allocated |
| Green Loan (0001-D2) | 1,000 | Nov. 1, 2023 | Oct. 31, 2027 | Allocated |
| Green Loan (0001-E) | 1,000 | Nov. 1, 2023 | Apr. 30, 2028 | Allocated |
| Green Loan (0001-F1) | 1,000 | Nov. 1, 2023 | Oct. 31, 2028 | Allocated |
| Green Loan (0001-F2) | 500 | Nov. 1, 2023 | Oct. 31, 2028 | Allocated |
| Green Loan (0007-A1) | 1,200 | Jan. 31, 2024 | Oct. 31, 2027 | Allocated |
| Green Loan (0007-B) | 750 | Jan. 31, 2024 | Oct. 31, 2028 | Allocated |
| Green Loan (0007-C1) | 1,000 | Jan. 31, 2024 | Jan. 31, 2029 | Allocated |
| Green Loan (0007-E1) | 1,000 | Jan. 31, 2024 | Jan. 31, 2031 | Allocated |
| Green Loan (0009) | 2,000 | Feb. 15, 2024 | Oct. 31, 2029 | Allocated |
| Green Loan (0010-A) | 2,500 | Feb. 29, 2024 | Apr. 30, 2027 | Allocated |
| Green Loan (0010-B1) | 2,700 | Feb. 29, 2024 | Apr. 30, 2029 | Allocated |
| Green Loan (0010-C1) | 1,500 | Feb. 29, 2024 | Oct. 31, 2029 | Allocated |
| Green Loan (0011-A) | 2,000 | Mar. 25, 2024 | Oct. 31, 2029 | Allocated |
| Green Loan (0011-B) | 3,000 | Mar. 25, 2024 | Apr. 30, 2030 | Allocated |
| Green Loan (0012-A) | 1,000 | Mar. 29, 2024 | Apr. 30, 2029 | Allocated |
| Green Loan (0012-B) | 1,400 | Mar. 29, 2024 | Oct. 31, 2030 | Allocated |
| Green Loan (0013-A2) | 300 | Apr.30,2024 | Apr.30,2025 | Allocated |
| Green Loan (0013-C) | 1,000 | Apr.30,2024 | Apr.30,2028 | Allocated |
| Green Loan (0013-D1) | 2,000 | Apr.30,2024 | Apr.30,2029 | Allocated |
| Green Loan (0013-D2) | 1,000 | Apr.30,2024 | Apr.30,2029 | Allocated |
| Green Loan (0013-E) | 1,100 | Apr.30,2024 | Oct.31,2030 | Allocated |
| Green Loan (0013-F1) | 4,600 | Apr.30,2024 | Apr.30,2031 | Allocated |
| Green Loan (0013-F2) | 2,000 | Apr.30,2024 | Apr.30,2031 | Allocated |
| Green Loan (0013-F3) | 1,000 | Apr.30,2024 | Apr.30,2031 | Allocated |
| Total Amount of Green Loans (b) | 73,300 | |||
| Total Amount of Green Finance (a+b) | 78,300 | |||
Social Finance
| Funds | Procurement date |
Repayment date/ Redemption date |
Allocation | |
|---|---|---|---|---|
| 6th Series Unsecured Bonds Former Kenedix Residential Next Investment Corporation |
2,000 | Dec. 20, 2019 | Dec. 20, 2029 | Allocated |
| 7th Series Unsecured Bonds Former Kenedix Residential Next Investment Corporation |
1,700 | May 31, 2021 | May 31, 2031 | Allocated |
| Total Amount of Social Bonds （c） | 3,700 | |||
| Social Loan (55-A) (Former Kenedix Residential Next Investment Corporation) |
1,000 | Jul. 30, 2021 | Jul. 31, 2024 | Allocated |
|---|---|---|---|---|
| Social Loan (60-D) (Former Kenedix Residential Next Investment Corporation) |
1,000 | Dec. 10, 2021 | May 31, 2029 | Allocated |
| Social Loan (68-D) (Former Kenedix Residential Next Investment Corporation) |
1,100 | Jul. 29, 2022 | Jul. 31, 2027 | Allocated |
| Social Loan (73) (Former Kenedix Residential Next Investment Corporation) |
1,300 | Dec. 13, 2022 | Nov. 30, 2026 | Allocated |
| Social Loan (75) (Former Kenedix Residential Next Investment Corporation) |
500 | Jan. 31, 2023 | Jan. 31, 2028 | Allocated |
| Social Loan (81-A) (Former Kenedix Residential Next Investment Corporation) |
200 | Jul. 31, 2023 | Jul. 31, 2026 | Allocated |
| Social Loan (81-B) (Former Kenedix Residential Next Investment Corporation) |
600 | Jul. 31, 2023 | Jan. 31, 2028 | Allocated |
| Social Loan (81-C1) (Former Kenedix Residential Next Investment Corporation) |
400 | Jul. 31, 2023 | Jul. 31, 2028 | Allocated |
| Social Loan (82-B1) (Former Kenedix Residential Next Investment Corporation) |
300 | Jul. 31, 2023 | Jul. 31, 2026 | Allocated |
| Social Loan (82-B2) (Former Kenedix Residential Next Investment Corporation) |
300 | Jul. 31, 2023 | Jul. 31, 2026 | Allocated |
| Social Loan (82-B3) (Former Kenedix Residential Next Investment Corporation) |
200 | Jul. 31, 2023 | Jul. 31, 2026 | Allocated |
| Social Loan (82-C) (Former Kenedix Residential Next Investment Corporation) |
500 | Jul. 31, 2023 | Jul. 31, 2029 | Allocated |
| Social Loan (84-A) (Former Kenedix Residential Next Investment Corporation) |
1,000 | Aug. 31, 2023 | Aug. 31, 2024 | Allocated |
| Social Loan (84-E) (Former Kenedix Residential Next Investment Corporation) |
1,000 | Aug. 31, 2023 | Aug. 31, 2030 | Allocated |
| Total Amount of Social Loan (d) | 9,400 | |||
| Total Amount of Social Finance (c+d) | 13,100 | |||