Tosei Reit aims to further strengthen ESG initiatives through fund procurement implemented by conducting green finance as well as strengthen the fund procurement base through the expansion of the base of investors interested in ESG investments.

What Is Green Finance?

Green finance refers to the procurement of funds using green bonds and green loans for the purpose of allocating them to the renovation work of specified assets or projects meeting the eligible criteria (the “eligible green assets”), new acquisition of such assets or refinancing of borrowings and investment corporation bonds required for such renovation work or acquisition.

Overview of the Green Finance Framework

Tosei Reit believes that “Revive/use existing real estate,” which it sets as a goal, is one of the methods to solve environmental issues. We are contributing to long-term utilization of buildings as well as improvement of energy efficiency by converting lighting to LEDs and replacing equipment and devices at old buildings to those highly effective in terms of energy-saving and water-saving.
Tosei Reit formulated the “Green Finance Framework” limiting the use of funds to environmental initiatives in order to accelerate the above initiatives in response to the expectations of all the stakeholders toward solving its ESG issues.

●Eligible criteria

（i）Renovation work
Must be renovation work at an owned asset of Tosei Reit meeting any of the following:

1.	Renovation work intending to improve the number of stars or the grade/rank by one or more for any green building certification (to be defined in “(ii) Green building” below), renew certification or acquire certification
2.	Renovation work that can reduce either CO2 emissions, energy consumption or water consumption by 30% or more
3.	Installation or acquisition of equipment related to renewable energy (solar power generation)
4.	Renovation work for the purpose of other improvements that are beneficial in terms of environmental aspects (those with an improvement effect of 30% from conventional figures)

（ii）Green building
Assets for which any of the following certifications or re-certifications from a third-party certification body has been or will be obtained. However, in the case the asset has already obtained a certification or re-certification, such must be effective at present.

1.	DBJ Green Building Certification: 5 Stars, 4 Stars or 3 Stars
2.	BELS: 5 Stars, 4 Stars or 3 Stars
3.	CASBEE: S, A or B+ Rank
4.	LEED: Platinum, Gold or Silver
5.	BREEAM: Outstanding, Excellent or Very Good
6.	Certification from a third-party other than above but at the same level with the above

●Assessment by External Institutions
For eligibility of the Framework, Tosei Reit has been assigned “Green 1 (F),” the highest evaluation grade in the “JCR Green Finance Framework Evaluation” by Japan Credit Rating Agency, Ltd. (“JCR”).
For details, please refer to the assessment results of the Green Finance Framework by JCR.
https://www.jcr.co.jp/en/greenfinance/

●Use of proceeds
Funds procured through green financing (the “proceeds”) shall be allocated to facilities and other renovation work meeting the eligible criteria (i) above, acquisition of green buildings meeting the eligible criteria (ii) above or refinancing of borrowings and investment corporation bonds required for such renovation work or acquisition.

●Process for project evaluation and selection
As for the due diligence of the target assets to be acquired using funds from green finance (the “target assets”), such will be conducted by the Investment Management Department of the Asset Management Company. As for the congruence between the target assets and eligible criteria, the ESG Committee which has the Head of REIT Division of the Asset Management Company as the committee chairperson evaluates and makes decisions on the selection based on information including contents of the due diligence.
As for acquisition of target assets and renovation work expenses or procurement of funds for concerned costs, such will be submitted to the head of the Risk & Compliance Office by the Treasury & Planning Department of the Asset Management Company. After being examined and resolved by the Risk & Compliance Committee, it will be submitted to the Investment Management Committee of the REIT Division. After being resolved by the Investment Management Committee, it will be proposed to the Board of Directors of Tosei Reit and will be ultimately decided with the approval of the Board of Directors of Tosei Reit.

●Management of proceeds
The person in charge at the Treasury & Planning Department of the Asset Management Company will allocate the proceeds for the use described in “Eligible criteria” above at an early state. However, in case the proceeds are not allocated for the time being, follow-up management will be conducted so the proceeds will be allocated for the use.
In the case a target asset to which the proceeds were allocated will be sold, or in the case a target asset no longer meets the eligible criteria, the temporarily generated unallocated proceeds will be re-allocated to other assets or projects meeting the eligible criteria. Furthermore, in the case unallocated proceeds are generated, the proceeds will be managed as cash or cash equivalents until the proceeds are allocated or re-allocated.

Reporting

As of October 31, 2023

●Allocation Status of Funds
Allocation status of funds Regarding Tosei Reit’s Green Finance is as follows.

●Impact Reporting
Please click here for Environmental Performance.