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Contribution to a sustainable environment

Sustainability policies
-Contribution to a sustainable environment-

Improving the environmental performance of the properties we manage is one of our social missions. We will lower the environmental impact and make contribution to environmental sustainability by constantly reducing the negative environmental impact of these properties, such as energy consumption, CO2 emissions, water consumption and the generation of waste materials. We also have activities for the proper management of hazardous substances and reduction in their use.

Environmental policies and external ratings

Environmental policies

In accordance with the Kenedix sustainability policies, we are dedicated to using our business activities to play a role in the achievement of environmental sustainability.

The three listed REITs where Kenedix is the main sponsor (Kenedix Office Investment Corporation, Kenedix Residential Next Investment Corporation, Kenedix Retail REIT Corporation) and Kenedix Real Estate Fund Management, Inc.(KFM), which manages the assets of these REITs, are also part of this commitment. While conducting the long-term and stable asset management, all these companies are further increasing their environmental programs based on the following environmental policies in addition to the sustainability policies and have been conducted invest management with consideration for the environment.

1. Compliance with Environmental Laws and Regulations
KFM will promote environment-friendly investment management operations by adhering to environmental laws and regulations.
2. Promotion of Energy Conservation Measures
KFM will systematically advance energy conservation measures at our managed properties, maintaining a strong awareness of the importance of natural and energy resources.
3. Reduction of Environmental Burden
KFM will undertake initiatives to reduce CO2 and waste emissions as well as promote recycling at its managed properties, understanding its commitment to alleviating its environmental burden. In addition, KFM will take sufficient care when handling harmful substances and environmental pollutants.
4. Disclosure of Environmental Information
KFM will work to disclose necessary information to a variety of concerned parties, including investors, tenants and business partners, in such areas as its environmental policies and measures.
5. Environmental Education
KFM will take steps to improve the environmental consciousness of its officers and employees through internal education.

External ratings

GRESB Real Estate Assessment

GRESB (Global Real Estate Sustainability Benchmark) is a benchmark system for assessing the sustainability performance of the real estate sector, established in 2009 primarily by a group of major European pension funds. Leading institutional investors participate in the GRESB assessment to utilize it in implementing their real estate investment and management processes.

A high degree of attention has been paid to the GRESB survey, as it is used by institutional investors when they select investment targets and on other occasions. The GRESB survey, which is conducted each year, is participated in by many real estate companies, REITs and real estate private funds from around the world.

Numerous programs exist for the certification of environmentally responsible real estate. But the GRESB Real Estate Assessment is the only one that is a benchmark for individual real estate companies and funds. Comparative evaluations of overall scores on a global scale are used to determine GRESB ratings, which go from one to five stars. Ratings for Kenedix Office Investment Corporation, Kenedix Residential Next Investment Corporation and Kenedix Retail REIT Corporation are shown below. All three were awarded a Green Star assessment backed by high marks for implementation and measurement and for management and policy. In addition, Kenedix Retail REIT Corporation achieved the highest GRESB score in “Eastern Asia/ Retail/ Listed” category.

(as of September 10, 2019)
Kenedix Office
Investment Corporation
Kenedix Residential Next
Investment Corporation
Kenedix Retail REIT
Investment Corporation
GRESB 2019 4 stars GRESB 2019 2 stars GRESB 2019 4 stars

DBJ Green Building Certification

DBJ Green Building Certification Program was launched by Development Bank of Japan Inc. (DBJ) in April 2011 for the purpose of supporting properties that are environmentally and socially responsible ("Green Buildings"). The program evaluates, certifies and supports properties that fulfill social and economic requirements. Comprehensive assessments of properties cover factors ranging from environmental performance to the needs of stakeholders, such as disaster prevention and proper care for surrounding communities.

There are five certification ranks: properties with the best class environmental and social awareness (five stars), properties with exceptionally high environmental and social awareness (four stars), properties with excellent environmental and social awareness (three stars), properties with high environmental and social awareness (two stars), and properties with satisfactory environmental and social awareness (one star). The ranks for Kenedix Office Investment Corporation, Kenedix Residential Next Investment Corporation and Kenedix Retail REIT Corporation are as follows:
In addition, KDX Harumi Building, KDX Nagoya Sakae Building and KDX Kobayashi-Doshomachi Building, managed by Kenedix Office Investment Corporation, are the first J-REIT properties to receive DBJ Green Building Certification in 2011.

(as of the end of December, 2019)
Kenedix Office
Investment Corporation
Kenedix Residential Next
Investment Corporation
Kenedix Retail REIT
Investment Corporation
DBJ Green Building 2019 DBJ Green Building 2017 DBJ Green Building 2018
Certified properties: 25 properties
five stars: 1 property
four stars: 3 properties
three stars: 6 properties
two stars: 12 properties
one star: 3 properties
Certified properties: 7 properties
four stars: 1 property
three stars: 4 properties
two stars: 2 properties
Certified properties: 14 properties
four stars: 3 properties
three stars: 8 properties
two stars: 3 properties

(Note) The logo of DBJ Green Building Certification indicates the highest evaluation rank among the certified properties.

Certification for CASBEE for Real Estate

CASBEE for Real Estate

CASBEE is an evaluation system for rating the environmental performance of buildings that was developed under the auspices of the Ministry of Land, Infrastructure, Transport and Tourism. The system rates the overall environmental performance of buildings from two perspectives: the environmental quality and performance of a building and the impact of a building on the external environment.
Certification for CASBEE for Real Estate is a system in which third-party organizations certify the contents of buildings evaluated by CASBEE for Real Estate, that has been developed for the purpose of using the results of environmental evaluations of existing buildings when performing real estate assessments.

As of the end of December, 2019, 12 properties managed by Kenedix Office Investment Corporation have received valuation, and 8 of them have received S rank of CASBEE for Real Estate, which is the highest rating.

BELS Certification

BELS

BELS (Building-Housing Energy-efficiency Labeling System) is a third-party certification system for rating houses and buildings in accordance with the duty to make efforts to indicate energy saving performance in the Act on the Improvement of Energy Consumption Performance of Buildings. Residential and non-residential buildings are evaluated by using a BEI (Building Energy Index) derived from the primary energy consumption based on the government-designated energy efficiency performance standard for buildings.
The number of stars shows an evaluation result ranging 1 to 5.

As of the end of December, 2019, KDX Musashi-Kosugi Bldg. and KDX Iidabashi Square, which are managed by Kenedix Office Investment Corporation, and Plasant Grand Ota Tamagawa, which is managed by Kenedix Residential Next Investment Corporation, received 3 stars. In addition, KDX Musashi-Kosugi Bldg. was the first J-REIT property to receive BELS certification in 2014.

Reduction of energy consumption and CO2 emissions (Climate change initiatives)

Basic views

Global warming, as the main factor for a climate change, has been the primal topic at international meetings so far and in 2015 Paris agreement has adopted a new framework in 18 years since Kyoto protocol. In this agreement, one of the goals is to keep the increase in global average temperature to well below 2℃ above pre-industrial levels. Considering the increasing number of extreme weather events underscores the need for action, Kenedix recognize climate change is one the most material issue for its business activities and properties under management.

Reduction of energy consumption and CO2 emissions is one of our material issues. We are making a contribution to environmental sustainability by using our business activities and property management operations for continuously cutting energy consumption and CO2 emissions in order to lower our environmental impact.

Reduction target for energy consumption and CO2 emissions, etc.

Each of the three listed REITs where Kenedix is the main sponsor has set medium-to long-term reduction targets for energy consumption, etc. and working to reduce energy consumption, etc. Some REITs also disclose their energy consumption results.

Initiatives for the reduction of energy consumption and CO2 emissions

Kenedix is participating in the fight against climate change by lowering energy consumption and CO2 emissions at the buildings it manages. Activities differ depending on how buildings are used, the length of investment funds that own buildings, the goals of investors and other factors. The three listed REITs, which are all long-term property holders, have a variety of environmental programs.

Initiatives at office buildings managed by Kenedix Office Investment Corporation

Updating of lighting fixture

Activities at Kenedix Office Investment Corporation (KDO) for reducing electricity consumption at all of its properties help protect the environment as well as lower operating expenses. KDO's efforts include converting lighting in common area / tenant area and emergency lights (including emergency guide lights) to LED to actively promote reduction of light bulb replacement costs and electricity expenses.

Updating of lighting fixture
Updating of heating and cooling systems

KDO is improving energy efficiency along with the comfort of tenants by installing highly efficient heating and cooling systems, replacing centralized systems (using a single heating/cooling unit and control room) with separate systems for different floors or zones of a building, and taking other actions.

Installation of motion sensors

The use of motion sensors in rest rooms, stairways and other locations means that lights are on only when needed and provides more convenience for building occupants.

Initiatives at residential properties managed by Kenedix Residential Next Investment Corporation

Installation of LED lights in common areas
Installation of LED lights in common areas

Kenedix Residential Next Investment Corporation (KDR) implements a variety of initiatives to conserve energy from the viewpoints of environmental awareness and cost reduction. One example is the use of LED lights in common areas and other locations for lowering expenses for electricity and the replacement of bulbs.

Remote surveillance of pavement heating

KDR has installed remote surveillance systems for snow melting equipment at some residential properties in Sapporo. Remote surveillance has significantly reduced the cost of fuel for keeping outdoor areas free of snow.

Outlets for recharging electric cars
Outlets for recharging electric cars

Parking areas have outlets so that residents can easily recharge electric cars.

Initiatives at retail facilities managed by Kenedix Retail REIT Corporation

Installation of LED lights

Kenedix Retail REIT Corporation (KRR) uses LED lights to reduce bulb replacement expenses and conserve energy. KRR also reduces its environmental impact by reducing greenhouse gases.
Major properties with LED lights are as follows:

  • Passaggio Nishiarai
    Passaggio Nishiarai
    (installed in 2015)
  • Blumer HAT Kobe
    Blumer HAT Kobe
    (installed in 2016)
  • Unicus Ina
    Unicus Ina
    (installed in 2016)
  • Ashico Town Ashikaga
    Ashico Town Ashikaga
    (installed in 2016)
  • Carino Esaka
    Carino Esaka
    (installed in 2017)
  • MONA Shin-Urayasu
    MONA Shin-Urayasu
    (installed in 2017)
Solar panel installation
Solar panel installation

By installing solar panels on a part of the rooftop of Unicus Ina, solar power is generated, and it is also effective in reducing the heat load and air conditioning load in the building, contributing to the reduction of CO2 emissions from properties. In addition, in the event of a power outage, it is possible to use the generated electricity for BCP plan.

Education to employees on sustainability

We provide sustainability training by external specialist to improve awareness and knowledge on sustainability for our employees. Also, it encourages our employees to acquire qualifications related to green building.

Issuance of green bond

Kenedix Office Investment Corporation has issued 2 billion yen of corporation bonds as green bonds from the thought that the issuance enables more committed efforts to improve sustainability and further contribution to development of the domestic green bond market by offering opportunities to the universe of investors who take active stance towards ESG investment.
Kenedix Office Investment Corporation Bonds are issued as green bonds according to “Green Bond Framework,” which obtained the second-party opinion from Sustainalytics, a third-party evaluator. Also, the Investment Corporation Bonds obtained “Green 1” from Japan Credit Rating Agency, Ltd. (“JCR”), the highest evaluation in its “JCR Green Bond Evaluation”. In addition, with regard to the Investment Corporation Bonds’ obtainment of third-party evaluations, Sustainalytics and JCR as issuance supporters have received a notice from Green Finance Organization Japan, General Incorporate Association, regarding that subsidies would be granted to them under the Ministry of the Environment’s framework of FY2018 Financial Support Program for Green Bond Issuance.

Switching to renewable energy sources for electricity

Kenedix has established a fund, which it also manages, that invests in solar and other renewable energy projects in Japan that generate electricity. Our asset management services for this fund are backed by our many years of experience involving private funds, the arrangement of financing and other activities. This fund has the medium to long-term goal of raising AUM to about ¥100 billion.

2016 2017 2018 2019
Number of renewable energy power plants* 9 21 22 23
Output of renewable energy facilities (MW)* 16.5 110.8 153.4 155.7

Note: The number of renewable energy power plants and output of renewable energy facilities at the Kenedix renewable energy fund are as of the end of each year and include locations that are operating or under development by the fund.

Reduction of water consumption and waste materials

Basic views

Although there is no imminent water supply crisis in Japan, climate change and population growth threaten the viability of water supplies worldwide. We recognize that ensuring water sources is critical to our business as well considering the steady increase in global water consumption.

Progress concerning the proper treatment of waste materials and the effective use of natural resources in Japan is continuing as people become increasingly aware of the importance of 3R (reduce, reuse and recycle) activities. Japan is focusing more and more on recycling resources as much as possible rather than mass consumption. Due to growing limitations on natural resources worldwide, there is a need for even more qualitative initiatives to go along with quantitative measures for lowering the volume of waste materials.

As an organization that provides asset management services for many types of properties which are used as a place to work or live, Kenedix has significant obligations to use a diverse array of activities for using real estate to cut water consumption and the generation of waste materials.

The reduction of water consumption and waste materials is one of our material issues. We are constantly seeking ways to use our business activities and properties to cut water use and the amount of waste materials produced. We are also lowering our environmental impact and contributing to environmental sustainability by properly managing hazardous substances and eliminating their use wherever possible.

Initiatives to reduce water consumption

Updating of water-efficient equipment

When scheduled maintenance and updates are performed at buildings we manage, we often install facilities that lower water consumption. Examples include water-efficient toilets, motion sensor faucets and water flow reduction plugs. Some of properties have introduced smart irrigation to facilitate watering plant and save water.

Initiatives for reduction of waste materials

Waste material reduction and sorting

By cooperating with property management companies used for portfolio properties, we contact tenants of office buildings, retail facilities, residential properties and other properties to urge them to reduce the amount of waste materials and dispose of items properly for each category of waste materials.

Proper measures for hazardous substances, contaminated soil and other materials requiring special handling

Before acquiring a property and in conjunction with other transactions, We thoroughly examine properties by receiving an engineering report that covers the building's structure and facilities, including environmental items. We also receive an earthquake probable maximum loss assessment, a soil contamination survey and other information. These activities ensure that the building complies with laws and regulations.

The engineering report includes a confirmation that a building is free of asbestos, PCBs and fluorocarbons. If any hazardous substances are discovered, appropriate actions are taken, such as by establishing counter-measures, managing or disposing of these substances, in accordance with laws and regulations.

If a property we plan to acquire has soil contamination, we make the investment only after the completion of remediation and other measures.

Collaboration with tenants for environmental initiatives

Basic views

Kenedix has many initiatives for the purpose of contributing to environmental sustainability by improving the environmental performance of managed properties and in other ways. Receiving the understanding and cooperation of the tenants of the properties we manage is also important. We have environmental education activities for tenants and a Green Lease program that allows both tenants and the building owner to benefit from the installation of energy-saving facilities. Activities like these make it possible to work with tenants to create a sustainable environment.

Collaboration with environmental initiatives is one of our material issues. We will continue to use joint activities with tenants, who are a key stakeholder category, for more contributions concerning environmental sustainability.

Initiatives for collaboration with tenant

Environmental education programs for tenants

Environmental education programs

Tenants of Kenedix Office Investment Corporation’s properties receive requests to conserve electricity and a manual that we have prepared that explains ways to use less electricity. We also place posters in the hallways of every floor to remind people to use electricity wisely.

Green Lease agreements

Kenedix Office Investment Corporation (KDO) and Kenedix Residential Next Investment Corporation (KDR) use Green Lease agreements for joint energy-conservation and environmentally friendly measures by building owners and tenants. At KDX Akihabara Building managed by KDO and Ten (fee-based homes for the elderly with nursing care) managed by KDR, KDO and KDR used a Green Lease to install LED lights at their own expense. KDO and KDR then receives from the tenant a Green Lease fee that is a certain percentage of the resulting cost saving due to the significant reduction in the tenant's electricity use and the maintenance cost of replacing fluorescent lamps.

*What is a Green Lease?
A Green Lease includes a provision for joint activities by the building owner and tenant to reduce the environmental impact. For example, the savings from the installation of energy-efficient equipment can be shared. This sharing lowers the building owner's expenses for installing this equipment, which makes renovations for better environmental performance easier to do. A Green Lease may also include an agreement concerning measures for conserving energy and water and making the building's interior more comfortable.

Introducing green lease with clause for environmental cooperation

Kenedix Office Corporation has promoted including clause to cooperate to improve environmental performance of the property, comfort and productivity of tenant into its based contract. Kenedix Office Investment Corporation has put the clause for environmental cooperation in 94.2% of its agreement signed from May 2018 as of April 30, 2019.
Also, some lease agreements between Kenedx Retail REIT Corporation and its tenants have a provision for joint activities to lower the environmental impact.

Cooperation with property management companies

Kenedix Office Investment Corporation is engaging with property management companies to share their vision, policies of sustainability and when making contract with a new tenant, property management companies explain these ideas to tenants to achieve their cooperation.

Biodiversity

Basic views

Protecting biodiversity and using real estate projects to create urban areas are normally conflicting activities that involve trade-offs. Kenedix has a commitment to managing real estate while giving substantial considerations for protecting biodiversity, which is critical to combating climate change. Biodiversity also plays a key role in the creation of pleasant environments for the tenants and residents of our buildings as well as everyone living in the surrounding areas.

Effective use of vegetation

We plant bushes, flowering plants and other vegetation at building entrances, open areas of building sites, rooftops and other locations. Rooftop vegetation at retail facilities creates a relaxing space for people and has the added benefit of preventing the reflection of sunshine, which helps hold down summer heat in large cities.

KDX Residence Togoshi
KDX Residence Togoshi (greenery adds value to the entrance)

  • Blumer Maitamon
    Blumer Maitamon (Entrance)
  • MONA Shin-Urayasu
    MONA Shin-Urayasu (Rooftop)
  • Blumer HAT Kobe
    Blumer HAT Kobe (Rooftop)

Saitama Prefecture Greenery Plan Award

Unicus Ina, a shopping center owned and operated by Kenedix Retail REIT Corporation, was selected for the 10th Saitama Prefecture Greenery Plan Award in 2018 as an outstanding example of a plan for the use of vegetation. Winners are selected from greenery plans submitted in accordance with the prefecture's Ordinance for Protecting and Increasing Greenery in Saitama Communities.

  • Award ceremony
    Award ceremony
  • Wall greening
     Wall greening

ABINC certification

ABINC certification

Hibiya Parkfront, which is where our head office is located, has received ABINC certification (urban/SC version) from the Association for Business Innovation in Harmony with Nature and Community (ABINC). This building, which we developed as a joint venture, was received this recognition due to its measures to protect biodiversity.

Installation of SATOYAMA units

A "SATOYAMA unit" is a group planting unit of conventional seeds and plants remaining dormant in deserted village forests ("SATOYAMA"). We have installed the units at the entrance of KDX Residence Okachimachi. Through the installation of the "SATOYAMA units," we contribute to activities for restoring SATOYAMA, as well as provide a comfortable living environment and help prevent bicycles from being left in no-parking areas.

  • Award ceremony
         SATOYAMA unit
  • Wall greening
    SATOYAMA units at KDX Residence Okachimachi

Relevant data

2016 2017 2018 2019
Number of renewable energy power plants* 9 21 22 23
Output of renewable energy facilities (MW)* 16.5 110.8 153.4 155.7
Violations of environmental laws and regulations and
environmental accidents
0 0 0 0

Note: The number of renewable energy power plants and output of renewable energy facilities at the Kenedix renewable energy fund are as of the end of each year and include locations that are operating or under development by the fund.