Climate Change Data

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Damage to the Kumamoto Inter Community SC property due to the Kumamoto earthquake in April 2016.

Mitigation Strategies

• The property is insured against earthquake damage. The extent of the damage and the cost of repairs are under investigation.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Energy conservation
• Climate change risks
• Recycling
• Well-being and safety
• Green building certifications

Environmental Achievements

• Six properties obtained DBJ Green Building Certification as of the end of 2017.
• Implementation of environmentally conscious facility operation, including mist generating systems for cooling and tree planting at Park Place Oita.

Social Achievements

• Not disclosed

Governance Achievements

• Introduction of a Sustainability Policy on January 29, 2018, incorporating ESG into real estate investment management.

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: DBJ Green Building Certification

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Governance Achievements

• Signed the Principles for Responsible Investment (PRI)

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: PRI

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Canal City Hakata was granted the 6th Green Social Contribution Award for environmental improvement and community contributions.

Social Achievements

• Fukuoka Realty Co., Ltd. was certified as a “Fukuoka ‘Work Style Reform’ Promotion Company” for initiatives in employee training, self-development, career goal support, skill development, working hour reduction, and flexible time off.
• Implemented measures to enhance customer satisfaction at Konoha Mall Hashimoto (e.g., new playground equipment, improved parking lot control system).

Governance Achievements

• Fukuoka Realty Co., Ltd. formulated a basic policy on customer-oriented business conduct, adopting all seven principles set forth by the Financial Services Agency.
• Issued the 3rd Unsecured Investment Corporation Bonds to diversify financing methods and extend debt maturity.

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: DBJ Green Building Certification (for several properties)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• 6th Green Social Contribution Award (Canal City Hakata)

Environmental Metrics

ESG Focus Areas

• Energy Efficiency
• Climate Change
• Green Building Certification
• Sustainability

Environmental Achievements

• Canal City Hakata obtained DBJ Green Building 5-star certification, demonstrating high environmental performance. The building incorporates features such as CO2 sensor-based ventilation control, LED lighting, and a water reuse system.
• 68.7% of the company's total floor area has environmental certifications as of March 31, 2019.

Social Achievements

• Not disclosed

Governance Achievements

• Strong management and governance structure, with board involvement in project selection and approval. Internal and external audits are conducted on fund disbursement procedures.
• The company signed the Principles for Responsible Investment (PRI) in 2018.

Climate Goals & Targets

Environmental Challenges

• Potential risks such as building defects, flaws, and conflicts with local residents.

Mitigation Strategies

• Obtaining engineering reports, conducting building inspections and environmental risk checks, using checklists to verify the absence of conflicts with local residents, and conducting property surveys.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Green Loan Principles, Ministry of the Environment's Green Bond Guidelines

Certifications: DBJ Green Building Certification, GRESB Green Star

Third-party Assurance: Japan Credit Rating Agency (JCR)

UN Sustainable Development Goals

• SDG 7: Affordable and Clean Energy
• SDG 9: Industry, Innovation and Infrastructure
• SDG 11: Sustainable Cities and Communities

The project contributes to these SDGs through energy efficiency improvements and the use of green building certifications.

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Established the Sustainability Promotion Committee and Sustainability Promotion Office to oversee ESG initiatives, including GRESB Real Estate Assessment (Green Star and 4 Star ratings), Principles for Responsible Investment (PRI), and Principles for Financial Action for the 21st Century (PFA21).

Climate Goals & Targets

Environmental Challenges

• Decreased number of visitors at retail properties and lower guestroom occupancy rates at hotels due to the COVID-19 pandemic.

Mitigation Strategies

• Continued efforts to reinforce competitive advantages and customer drawing ability at Canal City Hakata and other major retail properties, and to increase the earning power of office buildings in Fukuoka City through such measures as upward revision of rents, while focusing on maintaining and increasing the occupancy rate of its owned properties.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRESB

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Energy Conservation
• Climate Change
• Recycling
• Well-being and Safety
• Green Building Certifications
• Employee Enlightenment
• Collaboration with Tenants and Suppliers
• Sustainability Management

Environmental Achievements

• Green building certification rate (total floor space basis) 79.8%
• Reduction of electricity usage and water consumption at properties owned
• Installation of solar panels on rooftops of LOGICITY Hisayama and LOGICITY Minato Kashii to generate renewable energy
• Conversion to LED lighting in several properties to reduce energy consumption
• Rainwater reuse system and kitchen wastewater recycling at Canal City Hakata and Konoha Mall Hashimoto

Social Achievements

• Implementation of COVID-19 tenant support measures (rent exemptions and payment deferrals, hosting of a bento (box lunch) market, etc.)
• Participation in local clean-up activities *284 times in total (as of October 15, 2020)
• Human resource exchanges with sponsors (4 people dispatched to sponsors, 2 people accepted from sponsors)
• Average paid leave acquisition rate (FY2019) 70.9%
• Improvements made to the employee lounge environment at Park Place Oita (September 2020)

Governance Achievements

• Revised management fees to increase linkage between asset management fees and investor profits
• Established a Sustainability Promotion Committee to promote sustainability initiatives
• Formulated a basic policy to realize customer-oriented business operations
• Established a Basic Policy on Compliance, as well as compliance regulations and other internal rules to prevent any conflict of interest
• Regular compliance training for employees

Climate Goals & Targets

Environmental Challenges

• Increase in vacancy rates
• Decrease in rent
• Increase in interest rates
• Fluctuations in the investment unit price
• Risk of increase in interest payment due to increase in interest rates
• Buildings may be lost, suffer deterioration or damage due to natural disasters
• Increase in property management costs due to more stringent environmental laws and regulations
• Risk of damage to health of building users due to the presence of toxic substances
• Increase in expenses required for large-scale repairs due to the deterioration of properties
• Possibility of tenants vacating and a reduction in rent due to a loss of property competitiveness
• As FRCʼs properties owned are concentrated in Fukuoka and Kyushu, the vacancy rate may increase due to a worsening economic situation in that region
• Possibility of adverse effects on profits due to overall consumer consumption as well as other overall trends in the retail industry
• Possibility of a limitation on rights with respect to properties owned due to new laws and regulations
• Risk of leakage of personal and confidential information due to delays in strengthening cyber security systems
• Violations of organizational laws and regulations
• Conflicts of interest
• Risk that such external factors as infectious diseases and epidemics may interfere with the normal operation and management of FRCʼs properties
• Decrease in rental income from real estate due to a downturn in visitors

Mitigation Strategies

• Consider extending lease agreement terms, fixing of rent, etc. according to property characteristics
• Appropriate occupancy screening when tenants move in as well as monitoring of operating status and thorough credit management during the lease period
• Deposits and security deposits against rent delinquency, etc., collateral by means of guarantor companies, etc.
• Treat deterioration in real estate market as opportunity to acquire excellent properties and execute strategic investments through appropriate financial management utilizing information-gathering ability
• Long-term fixing of interest-bearing debt and repayment period limit diversification
• Conservative interest-bearing debt management and commitment lines to ensure flexibility and agility in funding
• Conducting of proactive IR activities
• Consider that it is possible to purchase insurance at a relatively low cost compared with other areas, arrange earthquake insurance coverage for all properties
• Improve resilience by engaging in a variety of activities. This includes conducting disaster drills at each property, stockpiling emergency food supplies, strengthening flood countermeasures, and formulating a business continuity plan (BCP)
• Work to maintain and improve environmental performance through renovation opportunities for properties owned; acquire Green Building certification, etc.
• Aim to reduce vacancy rates by pursuing healthful and comfortable conditions in properties owned and by increasing leasing demand for properties with high environmental performance
• Conduct thorough physical investigations at the time of property acquisition; property acquisition after confirming the presence or absence of toxic substances and taking of measures
• Maintain/improve property competitiveness through appropriate maintenance and repair work, value-up investment, and extending the number of service life years
• Based on an understanding of real estate market trends, capital market environment, etc., in the event that the strategic holding of a property becomes less significant from the perspective of property performance, competitiveness, and future profitability, consider replacement of that property if it is determined that selling it is in the interest of unitholders
• Invest in various types of properties to reduce the risk of portfolio fluctuation by diversifying rental market cycles and tenant industries
• In retail facilities, such as Canal City Hakata/Canal City Hakata・B, operate bustling facilities by replacing tenants and providing new experience value, etc., thereby reducing the risk of profit fluctuation by dispersing tenants
• In addition to receiving information from Fukuoka Realty’s affiliated organizations, tax accountants, law firms, etc., participate in external training, obtain information, and take measures to reduce any impact from an early stage
• Strengthen confidential information management
• Prevent violations of laws and regulations, transactions involving conflicts of interest, etc. through deliberations and audits by the Compliance Assessment Committee
• Improve employees’ awareness toward compliance by conducting regular compliance training
• Improve organizational strength and increase employee loyalty by hiring and fostering excellent human resources
• Improve employee motivation by realizing work-life balance and the stabilization of work through health management
• Implement infectious disease countermeasures and promote a safe and secure facility environment for tenants, tenant employees, and consumers
• Set up satellite offices at the Asset management company and introduce a telework system with a view to ensuring business continuity

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Flooding
• Severe weather

Transition Risks

• Increase in property management costs due to more stringent environmental laws and regulations

Opportunities

• Aim to reduce vacancy rates by pursuing healthful and comfortable conditions in properties owned and by increasing leasing demand for properties with high environmental performance

Reporting Standards

Frameworks Used: International Integrated Reporting Framework (IIRC), Guidance for Collaborative Value Creation of Japan’s Ministry of Economy, Trade and Industry (METI), GRESB

Certifications: DBJ Green Building Certification, BELS

Awards & Recognition

• Sixth Annual Green Social Contribution Award (2018)

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• LED implementation in various properties for energy saving
• Renewable energy introduction at Logicity Minato Kashii and Logicity Hisayama
• Renewal of rooftop greening at Canal City Hakata
• Improved flood control measures at Canal City Hakata

Social Achievements

• Various infection control measures for tenants and employees
• Support for tenant restaurants (Canal Bento Market)
• Establishment of a satellite office in Tenjin, Fukuoka
• Promotion of flexible work styles (telecommuting, staggered commuting, etc.)
• Employee training programs (compliance, ESG, etc.)

Governance Achievements

• Revision of asset management reward system to enhance alignment with investor profits
• Establishment of internal rules for compliance and conflict of interest prevention
• Third-party evaluation by external experts (appraisals, market reports, engineering reports)

Climate Goals & Targets

Environmental Challenges

• Impact of the COVID-19 pandemic on commercial facilities, resulting in temporary closures and rent reductions
• Decreased float rent in hotels due to COVID-19

Mitigation Strategies

• Temporary rent reductions and payment deferrals for affected tenants
• Individual contract revisions considering tenant business conditions
• Infection control measures (disinfectants, social distancing, etc.)
• Support for tenant restaurants (Canal Bento Market)
• Cost reduction measures

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Typhoons and localized heavy rain leading to river flooding

Reporting Standards

Frameworks Used: GRI, IIRC International , GRESB

Certifications: DBJ Green Building, BELS

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced energy consumption and water consumption in some properties (quantified data available in the data section, but not explicitly stated as a percentage reduction)
• Achieved Green Star 4-star rating in GRESB 2021
• Implemented various environmental initiatives such as rainwater reuse system, food waste recycling, and LED lighting upgrades.

Social Achievements

• Launched various initiatives for employee well-being, including flexible work arrangements, training programs, and support for childcare and eldercare.
• Implemented COVID-19 prevention measures in properties, including providing vaccination support to tenants.
• Engaged in community activities, such as cleaning activities and participation in local events.

Governance Achievements

• Established a Sustainability Promotion Committee.
• Revised asset management fee structure to better align with investor interests.
• Implemented measures to prevent conflicts of interest.

Climate Goals & Targets

Environmental Challenges

• Natural disasters (earthquakes, typhoons, floods)
• Economic downturns impacting occupancy rates and rental income
• Environmental risks (soil contamination, hazardous materials)
• Human resource risks (skill degradation, dependence on key personnel)
• Pandemic risks (reduced foot traffic, operational disruptions)
• Regulatory and tax changes
• Cybersecurity risks
• Concentration of properties in Fukuoka and Kyushu region

Mitigation Strategies

• Comprehensive earthquake insurance coverage for all properties
• Disaster preparedness measures (training, emergency supplies)
• Tenant screening and credit management
• Environmental performance improvements through building renovations
• Thorough due diligence during property acquisitions
• COVID-19 prevention measures (disinfection, vaccination support)
• Remote work and satellite office setup
• Employee training and development programs
• Strengthened cybersecurity measures
• Diversification of property portfolio and tenant mix

Supply Chain Management

Responsible Procurement

• Collaboration with property management companies and other key suppliers.

Climate-Related Risks & Opportunities

Physical Risks

• Natural disasters (earthquakes, typhoons, floods)

Transition Risks

• Regulatory changes related to environmental performance

Opportunities

• Increased demand for environmentally friendly properties

Reporting Standards

Frameworks Used: International Integrated Reporting Council (IIRC) framework, GRESB

Certifications: DBJ Green Building Certification

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced electricity usage by 8.84% and water consumption by 31.14% compared to the period ended February 2019.
• 77.8% of properties have obtained DBJ Green Building Certification, aiming for 85% by 2030.
• Targeting a 35% reduction in CO2 emissions by 2030 relative to 2019.
• Established a Policy on Climate Change and Resilience and endorsed TCFD recommendations.

Social Achievements

• Registered as a “master” under Fukuoka City’s well-being & SDGs registration system.
• Recognized by Fukuoka City as a company actively promoting work-style reform.
• Average tenure of permanent employees is 9 years and 4 months.
• Full-time personnel gender ratio: Male: 43.9%, Female: 56.1%.

Governance Achievements

• Adopted all seven principles of the Financial Services Agency’s Principles for Customer-Oriented Business Conduct.
• Formulated Policies for Customer-Oriented Business Operations.
• Established a Sustainability Promotion Committee.
• Established strict rules for transactions with stakeholders to prevent conflicts of interest.

Climate Goals & Targets

Environmental Challenges

• Climate change risks (physical and transition risks)
• Maintaining environmental compliance and acquiring certifications
• Managing conflicts of interest in transactions with stakeholders

Mitigation Strategies

• Climate change scenario analysis to identify risks, opportunities, and financial impacts.
• Implementing energy-saving initiatives (LED lighting conversion).
• Procuring green finance (green loans, sustainability-linked loans).
• Establishing internal policies and committees to manage conflicts of interest and ensure compliance.

Supply Chain Management

Responsible Procurement

• Careful selection process for new properties considering environmental performance.

Climate-Related Risks & Opportunities

Physical Risks

• Flooding
• Typhoons/heavy rain
• Rising temperatures

Transition Risks

• Increased taxation on CO2 emissions
• Stricter energy-saving standards
• Increased financing costs for properties with poor environmental performance
• Decreased investor appetite

Opportunities

• Introduction of renewable energy
• Attracting tenants with low-emission facilities
• Expanding investor base through green bonds

Reporting Standards

Frameworks Used: GRESB

Certifications: DBJ Green Building Certification, BELS

Environmental Metrics

ESG Focus Areas

• Governance
• Social
• Economic

Social Achievements

• Programs for upgrading employee skills and transition assistance programs

Governance Achievements

• Communication and training about anti-corruption policies and procedures
• No significant regulatory violations occurred during the reporting period.

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards