Climate Change Data

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Difficult Japanese economic conditions.
• Concerns regarding deflation, employment conditions, corporate performance, and the impact of the Great East Japan Earthquake on the real estate market.
• Intense competition for acquisitions of relatively new residences in popular Tokyo areas.

Mitigation Strategies

• Acquisition of 24 new properties to increase portfolio earnings, secure stable cash flow, and diversify risks (earthquake and economic).
• Expansion of investments to major regional cities (Kansai and Chubu areas) to reduce earthquake and economic risks.
• Efforts to maintain and improve occupancy rates and rent levels.
• Flexible review of leasing strategies to eliminate vacancy periods and establish new responses.
• Repair construction completed within 20 days after tenant exit to quickly lease units.
• Daily research on residential and office rental markets to enhance leasing approach.
• Comprehensive supervision and direction of property management companies and regular reviews of their management ability.
• Selection of PM companies that appropriately match the unique characteristics of each property.
• Comprehensive cost control measures.
• Utilizing the Asset Manager’s independent network of leasing companies and support from Fortress for diverse market information.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environment
• Society
• Governance

Environmental Achievements

• Implementation of energy-saving renovations in portfolio (AMR, BEMS, LED lighting, high-efficiency equipment, gas generation, inverters, on-site renewable energy); Water-saving renovations (water-saving toilets, showers, on-site wastewater treatment)

Social Achievements

• Three properties designated as "Tsunami Evacuation Buildings"; Established various benefit programs for employees, including rental PCs for remote work, telework/staggered work system, telework allowance, and vaccine leave; Regular performance appraisals and feedback processes; Respect for human rights and promotion of diversity; Employee satisfaction survey

Governance Achievements

• Two supervisory directors (an attorney and a certified public accountant) oversee the executive officer’s duties; CIM has a compliance officer and a compliance committee with an outside expert (an attorney) to ensure compliance with laws and regulations and transactions with sponsor-related parties

Climate Goals & Targets

Environmental Challenges

• Substantial rent reductions from MyStays Hotel Management Co., Ltd. due to low occupancy rates caused by COVID-19; Low occupancy rates in Cayman Islands hotels due to government restrictions on tourism; Unexpectedly low hotel occupancy around Tokyo Olympics venues due to spectator restrictions; Resurgence of COVID-19 infections in Japan

Mitigation Strategies

• Used retained earnings to pay a dividend of JPY 15 per unit; Sold one retail property and used proceeds to repay borrowings; Implemented initiatives to maximize hotel revenues under "With Corona" environment; Prioritized recovery of occupancy rate in residential portfolio; Strengthened lender relationships; Implemented cost reduction measures in hotels; Focused on stimulating existing and creating new demand in hotels; Implemented various strategies for further growth and financial stability, including asset recycling and internal growth

Supply Chain Management

Responsible Procurement

• Sustainable Procurement Policy

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRESB Real Estate Assessment

Third-party Assurance: Ernst & Young ShinNihon LLC (Japanese financial statements only, English translation unaudited)

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Acquired CASBEE Certification for Buildings for two hotels and Certification for CASBEE for Real Estate for two residential properties.
• Acquired BELS Certification for seven hotels, bringing the total to 15.
• Received a “2-Star” GRESB Rating and a “Green Star” designation in the 2022 GRESB Real Estate Assessment.
• Acquired “Green 1 (F)”, the highest rating on Japan Credit Rating Agency, Ltd. (JCR)’s Green Finance Framework Evaluation.

Social Achievements

• Expanded the unitholder benefit program, extending the stay period by two months.
• Conducted tenant satisfaction surveys for residential properties.
• Provided sustainability-focused training for all officers and employees.

Governance Achievements

• Established a “Sustainability Policy” and implemented various ESG-friendly initiatives.
• Implemented a robust compliance structure with oversight from supervisory directors and a compliance committee.

Climate Goals & Targets

Environmental Challenges

• Rising global energy prices and overall inflation.
• Slowdown in overseas economies potentially impacting domestic economic growth.
• Recovery of inbound tourism from China, which accounted for 30% of inbound travelers in 2019, is still ongoing.

Mitigation Strategies

• Actively promoting efforts to acquire new demand under the environment of "Post-Corona" and flexibly responding to changes in the external environment.
• Implementing various strategies for further growth and financial stability, including external growth, asset recycling, internal growth at hotels and residential properties, and diversification of funding sources.
• Continuous efforts to reduce fixed costs and strategies to maximize GOPPAR (GOP per the number of rooms available for sale).

Supply Chain Management

Responsible Procurement

• Sustainable Procurement Policy
• Green Lease contracts with tenants

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRESB

Certifications: CASBEE, BELS

Third-party Assurance: Ernst & Young ShinNihon LLC (Japanese financial statements only)

Awards & Recognition

• 2-Star GRESB Rating
• Green Star designation (GRESB)
• Green 1 (F) rating (JCR)