Sustainability Management

Sustainability Finance

Type of Sustainability Finance and Use of Funds

INDEX

Aiming for sound management that can coexist with the environment and society, United Urban and Marubeni REIT Advisors Co., Ltd. (“MRA”) have been engaged in real estate investment and management with consideration for ESG.
UUR has implemented various initiatives, such as being the first J-REIT to raise funds through a Green Trust Loan and issuing Sustainability Bonds. In order to further expand the investor base interested in sustainable investment, strengthen the foundation for additional fundraising, and implement agile sustainability finance, UUR formulated the Sustainability Finance Framework (hereinafter referred to as "the Framework") in June 2023.
For the status of all interest-bearing debt of United Urban, please refer to “Financial Information” of the United Urban’s website

Type of Sustainability Finance and Use of Funds

With assets that meet the eligibility criteria (described below) set in the Framework being underlined, United Urban may conduct financing (borrowing and issuance of investment corporation bonds; the same shall apply hereafter) as defined below. Each type of financing is collectively referred to as “Sustainability Finance, etc.”.

(i) Green Finance

  • Funds to acquire assets that meet Green Eligibility Criteria A (“Eligible Green Assets”)
  • Refinancing funds for the assets above
  • Funds to renovate assets that satisfy Green Eligibility Criteria B

(ii) Social Finance

  • Funds to acquire assets that meet Social Eligibility Criteria (“Eligible Social Assets”)
  • Refinancing funds for the assets above

(iii) Sustainability Finance

  • Combined financing of Green Finance and Social Finance
Click here for the status of funding in Sustainability Finance
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Eligibility Criteria

Eligibility Criteria

The eligibility criteria set in the Framework are as follows.

Green Eligibility Criteria

A. Eligible Green Assets

Assets that have already acquired or are expected to acquire certifications below (collectively named as “Environmental Certification”).

  1. DBJ Green Building Certification: 3 stars or more
  2. CASBEE Appraisal (Japan): B+ rank or higher
  3. BELS Certification (Japan): 3 stars or more
  4. LEED Certification (The U.S.): Silver or higher

B. Renovation Work

Construction works that meet the following criterion and have been completed within the past 3 years from the date of financing or are expected to be completed.

  • Renovation works to acquire Environmental Certification as stipulated in “A. Eligible Green Assets” or to improve the existing certification level by 1 level or more
  • Renovation works to reduce energy consumption, CO2 and other greenhouse gases or water consumption by at least 30%
  • Introduction or acquisition of equipment related to renewable energy

Social Eligibility Criteria

Assets offering the following benefits en bloc.

  1. Healthcare facilities, etc.: Facilities and housing that provide quality nursing care services and other welfare services to the elderly
    e. g., Private nursing home, serviced elderly housing, other elderly care facilities and houses
  2. Childcare facilities, etc.: Facilities that provide quality childcare services to children
    e. g., Nursery school, afterschool nursery facility
  3. Medical facilities, etc.: Facilities that provide people in the community with desired quality medical care services and health-contributing services
    e. g., Hospitals, clinics, medical malls
  4. Public housing under lease, etc.: Facilities where a public (administrative) institution becomes a lessee and provides an affordable living environment to tenants (sublessees)
    e. g., Municipality-rented public housing

Management of Procured Funds

UUR shall manage the amount of procurement, such as sustainability financing, etc., so as not to exceed the limit amount. In case that the procurement amount exceeds the limit, the difference will be managed separately in cash or cash equivalents.
The maximum amounts for Green Finance and Social Finance shall be calculated by the following formula (all figures are as of the end of the latest fiscal period). The amount of procurement of Sustainability Finance, a combined financing of Green Finance and Social Finance, shall be proportionately included in the amount of procurement of each financing and shall be managed so as not to exceed each limit.
The fund proceeds will be used for the set projects within 6 months after procurement. Until then, the proceeds will be separately managed in cash or cash equivalents.

Green finance limit calculation formula

Green finance limit = Book value of Eligible Green Assets x Total asset LTV (Note) + Funds for renovation work that satisfies Eligible Green Criteria B

Social finance limit calculation formula

Social finance limit = Book value of Eligible Social Assets x Total asset LTV (Note)

  • (Note)Total assets LTV = Interest-bearing debt/Total assets
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Fund Status by ESG Finance

Fund Status by ESG Finance

Green loans

This table can be viewed by scrolling sideways.
(As of November 30, 2023)
Classification Lender Balance
(Millions of yen)		 Interest
Rate		 Drawdown
Date		 Maturity
Date		 Remarks
Long-term Sumitomo Mitsui Banking Corporation 2,000 JBA 3-month Japanese yen TIBOR+0.25% Sep. 20,
2023		 Sep. 20,
2028		 Unsecured
Unguaranteed
Floating interest rate
(Note 1)
Long-term Sumitomo Mitsui Banking Corporation 2,000 1.13750% p.a. Sep. 20,
2023		 Sep. 22,
2031		 Unsecured
Unguaranteed
Fixed interest rate
(Note 1)
Long-term Sumitomo Mitsui Trust Bank, Limited (Trust Account) 5,000 1.29850% p.a. (Note 2) Sep. 29,
2023		 Sep. 30,
2032		 Unsecured
Unguaranteed
Fixed interest rate (Note 2)
(Note 1)
Jointly Operated Designated Money Trust
Long-term Sumitomo Mitsui Trust Bank, Limited (Trust Account) 5,000 1.38850% p.a. (Note 2) Sep. 29,
2023		 Sep. 30,
2033		 Unsecured
Unguaranteed
Fixed interest rate (Note 2)
(Note 1)
Jointly Operated Designated Money Trust
Total 14,000
  • Note 1:Borrowings under the sustainability finance framework.
  • Note 2:It is a borrowing with floating interest rate. However, the interest rate for this borrowing is, in effect, fixed due to the execution of an interest rate swap agreement. The adjusted interest rate in consideration of swap transactions is stated.

Green Trust

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(As of November 30, 2023)
Classification
(Note 1)		 Lender Balance
(Millions of yen)(Note 2)		 Interest
Rate		 Drawdown
Date		 Maturity
Date		 Remarks
Long-term Sumitomo Mitsui Trust Bank, Limited (Trust Account) 2,500 0.29000% p.a. Mar. 29,
2019		 Mar. 29,
2024		 Unsecured
Unguaranteed
Fixed interest rate
Green Loan Evaluation: Green1 (JCR)
Jointly Operated Designated Money Trust
Long-term Sumitomo Mitsui Trust Bank, Limited (Trust Account) 2,000 0.39000% p.a. Mar. 29,
2019		 Mar. 31,
2026		 Unsecured
Unguaranteed
Fixed interest rate
Green Loan Evaluation: Green1 (JCR)
Jointly Operated Designated Money Trust
Total 4,500
  • Note 1:Borrowings are classified by term. In principle, short-term borrowings are borrowings with a repayment date of less than one year from the drawdown date, medium-term borrowings are those with a repayment date of between one and five years from the drawdown date, and long-term borrowings are those with a repayment date in excess of five years.
  • Note 2:Balances are rounded down to the nearest million yen.
  • Note 3:Green Trust is the Joint Money Trust of loan which will be invested in acquisition of the existing and/or new “Eligible Green Assets”, or repayment of the existing debts that have already been used for acquisition of the Eligible Green Assets. Green Trust complies with the international lines of the “Green Bond Principles” and “Green Loan Principles”.

Green Bond

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(As of November 30, 2023)
Name Issue
Date		 Issue
Amount
(Millions of yen)		 Interest
Rate		 Term Redemption
Date		 Remarks
Series 19 of Unsecured Corporate Bonds
(with pari passu conditions among corporate bonds)
(Green Bonds)		 May 23,
2019		 10,000 0.448% p.a. 7 years May 22,
2026		 Unsecured /
Unguaranteed
Rating: AA (JCR)
Green Bond Evaluation: Green1 (JCR)
For retail investors
Series 23 of Unsecured Corporate Bonds
(with pari passu conditions among specified corporate bonds)
(Green Bonds)		 Oct. 17,
2023		 7,000 0.460% p.a. 3 years Oct. 16,
2026		 Unsecured /
Unguaranteed
Rating: AA (JCR)
Green Bonds (Note)
For institutional investors
Total 17,000
  • Note:Corporate bonds based on the sustainability finance framework.

Sustainability Bond

This table can be viewed by scrolling sideways.
(As of November 30, 2023)
Name Issue
Date		 Issue
Amount
(Millions of yen)		 Interest
Rate		 Term Redemption
Date		 Remarks
Series 22 of Unsecured Corporate Bonds
(with pari passu conditions among specified corporate bonds)
(Sustainability Bonds)		 Oct. 28,
2021		 3,500 0.400% p.a. 10 years Oct. 28,
2031		 Unsecured
Unguaranteed
Rating: AA (JCR)
Sustainability Bond Evaluation: SU 1 (JCR)
For institutional investors
Total 3,500
  • Note:The series of 22 Unsecured Corporate Bonds consists of refinancing funds for eligible green assets (3 billion yen) and acquisition and development funds for eligible social assets (0.5 billion yen).
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Fund Status Report

Fund Status Report

If green finance or social finance remains a balance, United Urban is to announce the following KPIs on United Urban's website.

  1. Report on fund status
    At least once a year, the total funds raised, the total unallocated funds, and the limits of green finance and social finance will be made public.
    For information on how to manage funds when the total funds raised exceed the established limit, please refer to “Managing Funds Raised.”
    • Green Finance
      (As of November 30, 2023)
      Total amount of funds raised(Note) JPN 38,500 million
      Total amount of unallocated funds -
      Maximum amount JPN 177,828 million
      • Note:Of the funds (JPN 3.5 billion) raised through the series 22 of Unsecured Corporate Bonds (Sustainability Bonds), the amount raised to allocate for refinancing eligible green assets (JPN 3 billion) is included.
    • Social Finance
      (As of November 30, 2023)
      Total amount of funds raised(Note) JPN 500 million
      Total amount of unallocated funds -
      Maximum amount JPN 727 million
      • Note:Of the funds (JPN 3.5 billion) raised through the series 22 of Unsecured Corporate Bonds (Sustainability Bonds), the amount raised to allocate for the acquisition and development of eligible social assets (JPN 0.5 billion) is included.
  2. Report on environmental and social improvement effects
    Regarding environmental and social improvement effects, United Urban will disclose the following effects at least once a year as practicable as possible until the balance of Sustainability Financing, etc. becomes zero. In case approvals of operators, etc. cannot be obtained, the effects may not be disclosed.
    1. Reporting on Environmental Improvement Effects
      • Number of properties and acquisition price of Eligible Green Assets
      • Quantitative indicators on Eligible Green Assets, i.e., energy consumption, CO2 emissions and water consumption
      • When applied for renovation work, one of the indicators of energy consumption, CO2 emissions or water consumption before and after renovation work
      Period Ended November 30, 2022 (December 2021 - November 2022)
      Number of Eligible Green Assets Acquisition Price
      (Millions of yen)      		 Electricity Consumption
      (GJ)(Note)      		 Water Consumptions
      (thousand m3)(Note)      		 CO2 Emissions (thousand t-CO2)(Note)
      Scope 1 Scope 2 Scope 3
      68 402,195 484,488 1,078 3 21 44
      • Note:Limited to those United Urban has energy management authority.
    2. Reporting of Social Improvement Effects
      <Output Indicators>*

      Property names and the property usages subject to social financing

      <Outcome Indicators>*

      Capacity of each property subject to social financing

      • *Regarding Output indicators and outcome indicators, we will only announce information on properties for which use of funds social finance.
      <Output KPI and Outcome KPI>
      Output KPI Outcome KPI
      Property No. Property Name Property Usage Capacity(Note)
      E20 Granda Miyanomori Healthcare facility
      (Private elderly housing)      		 71
      • Note:Data and information are provided by the facility operator.
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External Evaluation

External Evaluation

Each sustainability finance has received a third-party evaluation from Japan Credit Rating Agency, Inc. (JCR). Please see the JCR’s website for the details of this evaluation.

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Positive Impact Finance

Positive Impact Finance

UUR has implemented the borrowing which UUR utilizes the positive impact finance scheme provided by Sumitomo Mitsui Trust Bank, Limited ("SMTB"). The borrowing is loan by SMTB based on the Principles for Positive Impact Finance (Note 1) advocated by the United Nations Environment Program Finance Initiative ("UNEP FI") (Note 2) and tis model framework (an investment and loan framework for business companies with no restrictions on the use of funds and a framework for real estate investment).
For the borrowing, UUR has received qualitative and quantitative evaluations from SMTB regarding the themes which UUR will make contributions to achievement of the SDGs as per the following table.
In addition, SMTB has obtained a third-party opinion (Note 3) from Japan Credit Rating Agency, Ltd. on compliance of the evaluation's procedures with the Principles for Positive Impact Finance and rationality of the assessment metrics used.

What is Positive Impact Finance (PIF)?

PIF is a finance initiative where a financial institution comprehensively analyzes and evaluates the impacts (both positive and negative) of a company’s activities on the economy, society and the environment.
In PIF, targets are set by the company to alleviate negative impacts and maximize positive ones. And the financial institution focuses on successive engagement with the company in order to ensure the realization of these targets by the company. Specifically, the financial institution uses degree of the company’s contribution to the SDGs achievement as assessment metrics and conducts monitoring based on their publicly disclosed information.

(As of November 30, 2023)
Total amount of funds raised JPN 10,000 million
  • (Note 1)Positive Impact Finance Principles: A financial framework for achieving the SDGs (Sustainable Development Goals) formulated by United Nations Environment Program Finance Initiative (UNEP FI) in January 2017. Companies disclose their contribution to the achievement of the SDGs as KPIs, and banks assess the positive impact and provide funding, leading to efforts to increase the positive impact or reduce the negative impact of the companies receiving the funds.
    As responsible financial institutions, lending banks ensure that impact continues by monitoring metrics.
  • (Note 2)United Nations Environment Program Finance Initiative (UNEP FI): The United Nations Environment Program (UNEP) is a subsidiary agency of the United Nations established in 1972 as the implementing agency of the “Declaration on the Human Environment” and the "International Program of Action on the Environment. UNEP FI is a broad and close partnership between UNEP and over 200 global financial institutions. Since its establishment in 1992, UNEP FI has worked with financial institutions, policymakers, and regulators to transform the financial system into one that integrates economic development and ESG (environmental, social and governance) considerations.
  • (Note 3)For the third-party opinion on compliance with the Principles for Positive Impact Finance and the rationality of the evaluation indicators used, please see the website of Japan Credit Rating Agency, Ltd.
  • (Note 4)For a summary of the positive impact assessment and the results of the monitoring, please refer to the SMTB website.
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