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Sustainability Policy

■ Sustainability Policy

Mitsui Fudosan Accommodations Fund Management Co., Ltd., to which Nippon Accommodations Fund Inc. ("NAF") entrusts management operations of its assets, has established the "Sustainability Policy" of its own.

1.Basic Policy

Mitsui Fudosan Accommodations Fund Management Co., Ltd. ("the Company"), as the asset management company for Nippon Accommodations Fund Inc., in recognition of the importance of initiatives for sustainability including environmental and social considerations for carrying out asset management activities, strives to achieve asset management activities giving consideration to reduction of environmental load and diversified affiliations and collaborations with various internal and external stakeholders, in line with the "Group Environmental Policy" and "Policy for Social Contribution Initiatives" established by the Mitsui Fudosan Group.
Moreover, as an asset management company of an investment corporation, based on the recognition of the importance of corporate governance, the Company strives to ensure thorough compliance and establish a structure for risk management, and implement necessary measures.

2.Reduction of Environmental Load

(i) Promoting energy saving and reduction of CO2 emissions
By promoting efficient use of energy in asset management activities and pursuing introduction of energy-saving facilities, etc., the Company endeavors to reduce CO2 emissions through energy saving.

(ii) Preserving water environment and promoting resource saving and waste reduction
The Company aims to preserve the water environment by initiatives for saving water and introduction of water-saving devices. The Company also makes an effort to promote reduction of harmful substances, resource saving and waste reduction.

3.Collaborations with Various Internal and External Entities

(i) Officers and employees
The Company recognizes that human resources are the most valuable assets and strives to create an employee-friendly and healthy work environment in order for individual officers and employees to fully exert their capabilities as well as to promote initiatives for human resource development through training support and other measures. In addition, the Company aims to improve awareness of sustainability by continuously providing training sessions and awareness programs for its officers and employees.

(ii) Tenants
The Company strives to implement disaster prevention measures by improving response times during emergencies and strengthening preparedness during normal times in rental apartments, the major assets for which it manages investments, in an effort to enhance safety and security of the properties.
At the same time, the Company aims to improve customer satisfaction by enhancing the level of tenants' comfort.

(iii) Supply chains
The Company requires its property management companies and other business partners to understand and collaborate on its initiatives concerning sustainability and to establish structures and implement measures for environmental and social considerations, in an effort to promote initiatives in its supply chains.

(iv) Local community
As a member of the local community, the Company endeavors to contribute to the vitalization and development of the local communities where assets it manages are located.

4. Initiatives for Governance

(i) Thorough compliance
The Company has established an organizational structure that should secure compliance with laws and regulations and implement fair transactions at any time. At the same time, the Company works to ensure that its officers and employees will act based on high ethical values and win the trust of its stakeholders.

(ii) Establishment of risk management structure
The Company has established a proper risk management structure to appropriately manage a variety of risks, to avoid or minimize risks in conducting asset management.

5. Information Disclosure to Stakeholders such as Investors

The Company endeavors to actively disclose this Policy and its initiatives and performance to stakeholders such as investors.

■ The Mitsui Fudosan Group's Social Contribution/Environmental Initiatives

Mitsui Fudosan Co., Ltd., the parent company of the Asset Management Company, has established "The Group Environmental Policy" and "Policy for Social Contribution Initiatives" regarding the Mitsui Fudosan Group's social contribution/environmental initiatives under the group statement of "Bring affluence and comfort to urban living"
Please refer to "ESG Report" for the Mitsui Fudosan Group's social and environmental initiatives.

■ In-House Structure for Promotion of Sustainability

The Asset Management Company has established the "Sustainability Promotion Office" (the "Office") in order to implement the "Sustainability Policy."
The Office is comprised of four general managers from each team as well as personnel appointed by the general managers and holds regular meetings every quarter, in principle, to set objectives and formulate implementation plans concerning NAF's promotion of sustainability.
Objectives and implementation plans formulated by the Office are deliberated and decided upon at the Investment Committee, which includes the President & CEO of the Asset Management Company who is a member of the Committee and the ultimate decision maker, and the decided objectives and implementation plans are shared throughout the Office with all officers and employees.
Furthermore, the Office reports on the progress status of objectives and implementation plans at the Investment Committee twice a year, in principle, and receives a review on management.

■ GRESB Real Estate Assessment

The GRESB holds an annual benchmark survey for evaluating environmental, social and governance (ESG) considerations in the real estate sector, established in 2009 primarily by a group of major European pension funds. The GRESB Real Estate Assessment is distinguished by its comprehensive evaluation of sustainability efforts of real estate companies and REITs, etc., and not of individual properties.
In the 2018 GRESB Assessment, NAF received a "Green Star" rating since it is highly evaluated in both demensions "Management & Policy" and "Implementation & Measurement" with regards to activities for environmental consideration and sustainability.

GRESB2017

NAF will disclose its ESG information to investors through GRESB Assessment while utilizing the Assessment results as an opportunity to improve its initiatives.

■ Basic Philosophy on Environmental Consideration

Mitsui Fudosan Accommodations Fund Management Co., Ltd., the asset management company of NAF, provides its basic philosophy on environmental consideration, as described below, in its "Sustainability Policy."

・Promoting energy saving and reduction of CO2 emissions
By promoting efficient use of energy in asset management activities and pursuing introduction of energy-saving facilities, etc., the Company endeavors to reduce CO2 emissions through energy saving.

・Preserving water environment and promoting resource saving and waste reduction
The Company aims to preserve the water environment by initiatives for saving water and introduction of water-saving devices. The Company also makes an effort to promote reduction of harmful substances, resource saving and waste reduction.

■ Environmental Target

NAF continually grasps the energy consumption, etc. at common areas of portfolio properties to the best extent possible and measures the achievement against the target.

Indicator (based on intensity) Target
Energy consumption, energy-originated CO2 emissions With 2015 as the base year, annual reduction of 1% on average over 5 years
Water consumption With 2015 as the base year, no increase in consumption over 5 years
■ Environmental Management System/PDCA Cycle

The Asset Management Company established its own Environment Management System and implements PDCA cycle every year in order to manage the environmental load of its real estate portfolio such as energy consumption, CO2 emissions, water consumption, etc. and achieve its targets.

■ Understanding Environmental Risks at Assets Under Management

Regarding due diligence for new investments, NAF obtains an understanding of environmental risks by utilizing external experts and uses this information in its investment decisions. In addition, periodic monitoring of environmental risks is conducted for existing assets under management.

■ Improvement of Environmental Performance through Building/Facility Renovations/Retrofits

NAF advances initiatives for its assets under management such as switching to LED lighting and air-conditioning system retrofit work, thereby improving the energy saving capabilities of its portfolio properties.

地下駐車場におけるLED導入事例共用部空調改修事例
■ Introduction of Renewable Energy

NAF utilizes renewable energy in solar generation at some of the assets under management.

■ Initiatives for Environmental Consideration in Collaboration with Property Management Company

NAF entrusts the property management of its assets under management to Mitsui Fudosan Residential Lease Co., Ltd. The company has proactively worked on environmental consideration, etc. under the Group Environmental Policy set forth by the Mitsui Fudosan Group, and has promoted initiatives for environmental consideration in collaboration with NAF.
Initiatives for Social Contribution/Environment (Mitsui Fudosan Residential Lease Co., Ltd. website) Japanese only

■ Initiatives for Environmental Consideration in Collaboration with Tenants

Collaborating with Mitsui Fudosan Residential Lease Co., Ltd., the property management company, NAF has raised tenant awareness to save energy by distributing a guidebook upon a tenant's move-in, providing information through its website and other measures to promote reduction of environmental load in exclusive areas at NAF's portfolio properties.
Guide to Housing and Daily Living (Mitsui Fudosan Residential Lease Co., Ltd. website) Japanese only
There Go the Specially-Assigned Investigators, Eco G-Men! (Mitsui Fudosan Residential Lease Co., Ltd. website) Japanese only

■ Initiatives for Environmental Consideration in Supply Chain

Upon selecting/evaluating a supplier, which is important in NAF's asset management, NAF keeps in mind to promote sustainability throughout its supply chain by confirming the supplier's initiatives on environment/social consideration, etc. as well.

■ Environmental Performance
Indicator (based on intensity) 2015 2016 2017 2018 Change
(compared to 2015)
Electricity consumption (kWh/㎡) 48.38 47.32 44.49 42.96 -11.2%
Energy-originated CO2 emissions (t/㎡) 0.0249 0.0243 0.0220 0.0209 -15.8%
Water consumption (㎥/㎡) 0.1198 0.1169 0.1163 0.1169 -2.4%
* Results are actual figures for the common areas in "rental apartments" among assets under management.
For co-ownership properties, the figures are according to the ownership ratio.
* Each of the intensity figures are calculated upon adjustment with the ownership period of each asset.
* CO2 emissions figures are calculated by the Asset Management Company using the adjusted emissions coefficient for each electric power supplier announced by the Ministry of the Environment.
■ Initiatives for Green Building Certification

Green building certifications are granted by third parties regarding initiatives for the reduction of environmental load of buildings, improvement of comfort of users, etc. to assure high performance.
In an aim to increase the credibility and objectivity of its efforts to reduce environmental load as well as increase the value of its buildings in the mid-to-long-term, NAF endeavors to utilize green building certifications from third parties.

■ DBJ Green Building Certification

DBJ Green Building Certification Program was launched by the Development Bank of Japan Inc. ("DBJ") in April 2011 for the purpose of supporting the properties which give proper care to environment and society (Green Building). The program evaluates and certifies properties which are required by society and economy. It makes comprehensive assessment of properties, while evaluating various factors which range from properties' environmental features to their communication with stakeholders, such as disaster prevention and proper care for surrounding communities.

Please click here for details of the DBJ Green Building Certification

Properties with DBJ Green Building certification (As of February 28, 2019)

Name of property Location Certification rank
Okawabata Apartment Communities Chuo-ku, Tokyo
Properties with excellent
environmental & social awareness
Park Axis Toyosu Koto-ku, Tokyo
Properties with exceptionally high
environmental & social awareness
Park Cube Nishigahara Stage Kita-ku, Tokyo
Properties with exceptionally high
environmental & social awareness
■ Basic Philosophy on Social Consideration

Mitsui Fudosan Accommodations Fund Management Co., Ltd, the asset management company of NAF, provides its philosophy on social consideration, as described below, in its "Sustainability Policy."

・Officers and employees
The Company recognizes that human resources are the most valuable assets and strives to create an employee-friendly and healthy work environment in order for individual officers and employees to fully exert their capabilities as well as to promote initiatives for human resource development through training support and other measures. In addition, the Company aims to improve awareness of sustainability by continuously providing training sessions and awareness programs for its officers and employees.

・Tenants
The Company strives to implement disaster prevention measures by improving response times during emergencies and strengthening preparedness during normal times in rental apartments, the major assets for which it manages investments, in an effort to enhance safety and security of the properties. At the same time, the Company aims to improve customer satisfaction by enhancing the level of tenants' comfort.

・Supply chains
The Company requires its property management companies and other business partners to understand and collaborate on its initiatives concerning sustainability and to establish structures and implement measures for environmental and social considerations, in an effort to promote initiatives in its supply chains.

・Local community
As a member of the local community, the Company endeavors to contribute to the vitalization and development of the local communities where assets it manages are located.

■ Initiatives for Employees of the Asset Management Company

The Asset Management Company recognizes that human resources are its most valuable assets and has implemented various initiatives for its employees. For more details, please click here.
Furthermore, being a member of the Mitsui Fudosan Group, the Asset Management Company has received highly expertized personnel from the group companies.
Our Efforts for Employees (&EARTH REPORT/website of Mitsui Fudosan Co., Ltd.)

■ Initiatives to Improve Tenant Satisfaction

The Asset Management Company strives to improve the security, safety and comfort of NAF's assets under management and to improve tenant satisfaction.

Investment in High-Quality Rental Apartments

With regard to rental apartments, NAF's primary assets under management, we build our portfolio by placing the Park Axis series planned and developed by the Mitsui Fudosan Group at the core of brand strategy along with the Park Cube series which is similar in quality with the Park Axis series.
In order to enhance recognition and familiarity of the Park Axis and Park Cube series as high-quality residence brands in the rental apartment market, the Asset Management Company develops its brand strategy, including provision of superior quality over the long term to tenants, by collaborating with the Mitsui Fudosan Group.
Mitsui Rental Housing Park Axis Series (RESIDENT FIRST CO., LTD. website) Japanese only

Renovation of Common Areas

In order to maintain the asset value of assets under management over the long term, upgrading and renovations are implemented as necessary.

パークアクシス六本木檜町公園  エントランスホールリニューアル パークアクシス日本橋ステージ  エレベーターホールリニューアル

Provision of Security and Safety

NAF entrusts the property management of its assets under management to Mitsui Fudosan Residential Lease Co., Ltd. NAF collaborates with the company in conducting the following initiatives to improve security and safety for tenants.

We have set up a toll-free number exclusively for tenants and respond to trouble concerning building facilities such as water leakage around-the-clock all year.
Mitsui customer support center C-desk (Mitsui Fudosan Residential Lease Co., Ltd. website) Japanese only

We strive to provide information for security and safety to tenants by distributing disaster-response handbooks to tenants, in addition to opening a website offering information on local governments and disaster prevention to help them prepare for earthquakes and other disasters in advance.
Information for Security and Safety (Mitsui Fudosan Residential Lease Co., Ltd. website) Japanese only

Tenant Satisfaction Surveys

Mitsui Fudosan Residential Lease Co., Ltd, the property management company, conducts periodic tenant satisfaction surveys in the form of questionnaires to improve management operations.

■ Supply Chain Initiatives

Upon selecting/evaluating a supplier, which is important in NAF's asset management, NAF keeps in mind to promote sustainability throughout its supply chain by confirming the supplier's initiatives on social consideration/environment, etc. as well.
Furthermore, Mitsui Fudosan Residential Lease Co., Ltd, the property management company, has a basic policy of prioritizing business continuity and early restoration in light of its social responsibility as a company that continually supplies buildings securely and safely. Such stance was recognized and the company acquired "Resilience Certification" backed by the Japanese Cabinet Secretariat in August 2016.
News release concerning acquisition of Resilience Certification (Mitsui Fudosan Residential Lease Co., Ltd. website) Japanese only

■ Initiatives for Local Community

As a member of a local community, NAF endeavors to contribute to the vitalization of local communities where assets it manages are located as well as the development of the region.

Cooperation in Local Events

At the Okawabata Apartment Communities, NAF has proactively cooperated in activities of the management association and strives to contribute to formation of a local community.

パークアクシス六本木檜町公園  エントランスホールリニューアルパークアクシス日本橋ステージ エレベーターホールリニューアル

Installation of Share-Bicycle Ports

NAF has cooperated in installing bicycle ports for bicycle-sharing services at some of its assets under management, contributing to reduction of CO2 emissions as well as to promoting health in the areas.

パークアクシス六本木檜町公園  エントランスホールリニューアルパークアクシス日本橋ステージ  エレベーターホールリニューアル

Shibaura Sanbashi Canal Cruise (Shibaura Cruise Program)

At Shibaura Island Air Tower, an asset under management, NAF has cooperated in/co-sponsored the "Canal Renaissance Program for Promoting Waterfront Vitalization" by Bureau of Port and Harbor, Tokyo Metropolitan Government, and contributed to revitalization of local communities, etc.
Shibaura Cruise Program (external website) Japanese only

■ Basic Philosophy on Governance

Mitsui Fudosan Accommodations Fund Management Co., Ltd., the asset management company of NAF, provides its basic philosophy on governance, as described below, in its "Sustainability Policy."

・Thorough compliance
The Company has established an organizational structure that should secure compliance with laws and regulations and implement fair transactions at any time. At the same time, the Company works to ensure that its officers and employees will act based on high ethical values and win the trust of its stakeholders.

・Establishment of risk management structure
The Company has established a proper risk management structure to appropriately manage a variety of risks, to avoid or minimize risks in conducting asset management.

■ Governance Structure

It is stipulated that the number of executive directors of NAF shall be no less than one, and the number of supervisory directors of NAF shall be no less than two (provided, however, that the number of supervisory directors shall exceed the number of executive directors). Please click here to see the composition of the Board of Directors.
The organization of NAF consists of the General Meeting of unitholders composed of unitholders, two Executive Directors, three Supervisory Directors, the Board of Directors composed of all Directors and Independent Auditors. For details please refer to "Corporate Structure, 1) Matters Related to Corporate Governance (Excerpts from the Securities Report)".

■ Management Structure

NAF entrusts its asset management to Mitsui Fudosan Accommodations Fund Management Co., Ltd., its asset management company. The Asset Management Company is engaged in services under the following management structure in accordance with the Asset Management Agreement with NAF.

For details of Management Structure, please refer to "Corporate Structure, 3) Management Structure of NAF (Excerpts from the Securities Report)."

■ Fair Transactions

The Asset Management Company conducts fair transactions and does not inhibit free competition.

■ Prevention of Bribery and Corruption

The Asset Management Company recognizes bribery and corruption as a material risk that significantly damages the trust of society. The Asset Management Company does not give, directly or indirectly, monetary or other profits or benefits whether small or large in amount, nor offer or promise such, to public officials or those alike, for the purpose of gaining illegal profits on business activities, in Japan or abroad.
Furthermore, the Asset Management Company maintains a healthy relationship with stakeholders and refrains from excessive business entertainment or gift-sending that could raise suspicion or distrust.

■ Compliance

It is a basic policy that NAF and the Asset Management Company establish an organizational structure that should secure compliance with laws and regulations and implementation of fair transactions at any time, and work to ensure that its officers and employees will act based on high ethical values and win the trust of its stakeholders.
Furthermore, the Asset Management Company recognizes the significance of its role in managing the funds of unitholders. Therefore, in order to establish an appropriate management structure, the Asset Management Company has appointed a full-time Chief Compliance Officer (CCO) to head compliance operations and has also established a Compliance Committee, which, with the CCO as chairperson, deliberates and approves transactions that could cause conflicts of interest as well as important compliance matters including legal compliance.

■ Information Security

Information leakage damages the credibility of the company and causes grave inconvenience to unitholders and other stakeholders.
Based on the information management rules set forth in the internal rules and such, the Asset Management Company appropriately protects and manages information that it handles in its business and maintains a high level of information security system management.

■ Internal Audits

The Chief Compliance Officer (CCO) conducts internal audits across all sections and businesses to confirm whether the business and operation of each section is carried out appropriately and efficiently in accordance with laws and regulations as well as other rules and bylaws, based on the internal audit rules set forth in the internal rules. The results of audits are reported to the relevant teams audited and to the Compliance Committee and the Board of Directors.

■ Risk Management

NAF and the Asset Management Company aim to avoid and minimize risks in investment and management of its assets under management.
For details please refer to "Investment Risks, (2) Risk Management System for Investment Risks (Excerpts from the Securities Report)".