ADR’s properties will be managed with environmental consideration through the following measures.

1. Extending the lifespan of properties through large-scale repairs and value-enhancement renovations
2. Installing LED lighting
   As of January 2019, LED lighting is installed in 59 properties (22% of portfolio).
3. Installing water-saving toilets
4. Installing heat shielding paint roofing
5. Encouraging tenants to conserve energy usage through posters on common area billboards and periodical “RESIDIA News” and sending of sustainability guides
6. Setting of green-lease clauses
7. Including a criterion concerning initiatives taken on environment in selecting a property manager
8. Working together with building managers towards shared goals on environmental concerns
9. Introducing car sharing in parking lots of properties

   As of January 2019, 3 properties (1% of portfolio) have parking lots for car sharing.

ADR aims to raise unitholders’ value while contributing to the environment (e.g. reducing life cycle CO₂ emissions) by extending the economic life and maintaining the value of building structures through large-scale repairs and value enhancement renovations.

Establishing Policies

ADIM has established policies on “energy conservation,” “greenhouse gas emission reduction,” “water conservation” and “waste management” to improve energy efficiency of ADR’s properties and making effort to reduce the properties’ energy consumption and greenhouse gas emission.

Environmental Targets

1% average annual reduction is the medium to long-term target on reducing energy consumption and greenhouse gas emission for the whole property portfolio.

Note : The reduction target is the same for both Scope1 and Scope2.

Note: Calculated by multiplying the amount of garbage discharged at the property by incinerator emission factor.

Notes:

1. Review period
     The fiscal year starts on April and end on March of the following year.
2. Calculation method
     (1) “Intensity” is calculated as follows.
           Total Usage or Emission (MWh) ÷ Total Property Floor Space (m²)

     (2)  ”Same Store” only compares properties that have annual data for both 2017 and 2018 on energy consumption / GHG emissions / water usage / waste volume. Properties were excluded if they have been newly acquired, disposed, developed,  renovated, or if the properties’ data acquisition rate vary between the reporting period.

     (3) “Coverage” is calculated as follows.
           Total Floor Space of Data Collected (m²) ÷ Total Property Floor Space (m²)

44.2% of tenants are under leasing contract with clauses concerning energy and water conservation (green-lease contract) as of January 2018

Also ADR will insert green lease clause in the management consignment contract with property manager at the time of future consignments and contract renewals.

And based on the contract, ADR has received proposals concerning LED installation once a year from the building managers.

ADIM has established a Green Procurement Policy to put the sustainability policy’s specific component into practice with the cooperation from its suppliers.

Since FY2016, to strengthen the engagement with suppliers, major suppliers including all property management companies that ADIM uses as a vendor have been evaluated by conducting surveys at the start of the contract and annually in accordance to the policy, on how they are addressing sustainability issues.

Since we believe it is important to have our major suppliers’ understanding and cooperation, on FY2017 we have re-notified our Green Procurement Guideline to our major venders, property management companies and building management companies.

ADR invests in flexible/mixed use properties (as of January 2019, 76 properties, 28% of the portfolio), thereby contributing in reducing environmental impact, revitalizing the area and providing convenient facilities to tenants and local residents. In addition, those flexible /mixed use properties have stores and squares open to public which contributes to the revitalization of the cities and the communities, by providing places for people gather.

The flexible / mixed use properties that ADR invests in are;

1. Properties close to train stations which promote the use of public transportations thereby reducing CO₂ emissions

92% (on acquisition price) of properties are located within 10 minute walk from the nearest train station.

2. Properties with convenient facilities such as a supermarkets or convenient stores attached.
3. Properties with open space which are publicly accessible. (As of January 2019, 7 properties (3% of portfolio))
4. Universal design properties that are accessible to senior citizens.

ADR contributes in promoting urban revitalization and redevelopment through investments in the revitalization and redeveloped properties.

In revitalization projects, block districts are re-zoned, lands are more highly utilized and properties within the redevelopment will draw in people to the community thereby revitalizatizing the area.

(There are legal restrictions to the amount of development that J-REITs are allowed to do.)

Urban redevelopment properties acquired by ADR.

1. Pianetta Shiodome
2. RESIDIA Minami-Senjyu
3. RESIDIA TOWER Kami-Ikebukuro
4. Pacific Royal Court Minato Mirai Ocean Tower
5. RESIDIA Tsutsujigaoka

By investing in existing urban brownfield redevelopment properties ADR contributes in the usage of existing infrastructures such as existing water supply systems, electricity grid, public school facilities. It will also prevent urban sprawl which will save energy involved in commuting and prevent development of green lands.

ADR works together with ADIM’s sponsor group companies in various fields to lessen its environmental burden and contribute to local communities.

1. Acquisition of sponsor group developed properties

ADIM advises on the residential market to help sponsor group companies to succeed in developing flexible / mixed use properties that will satisfy ADR’s acquisition criteria.

2. Property management

The sponsor group property manager who manages the largest share of ADR’s properties cooperates with ADR not only in such measures as promoting energy savings but also in measures such as placing AED equipments in publicly accessible area, whereby contributing to local communities.

ADR takes other environmentally friendly measures such as placing green open spaces on its property sites to alleviate heat island effect, paving the property grounds with interlocking paving blocks to lessen inner-city flooding and land subsidence.

ADR triennially conducts satisfaction surveys for tenants residing at RESIDIA branded properties.

Tenants showed high satisfaction towards the location (for commuting ease, good local environment) and the quality (units’ atmosphere and design) of properties.

ADR offers a variety of services toward tenants residing in ADR’s properties to enhance tenant’s satisfaction to improve tenant retention rate. Examples of the services include “RESIDIA Customer Support” which is a support desk exclusively for tenants and “Moving Style,” offers discounts for tenants who are moving from one RESIDIA apartment to another.

*Please visit the RESIDIA website (http://www.residia.jp/) [Japanese only] for details.

On common area walls of properties, ADR puts up emergency maps (as of end of January 2019, in 100% of its 264 properties). indicating evacuation routes to evacuation sites which help to ensure safety during the occurrence of a disaster as well as to raise disaster prevention awareness (as of end of January 2017, 100% of 257 properties and as of end of January 2018, 260 properties, 99.6% of 261 properties were equipped with the maps.

Also, in many of its “RESIDIA” branded residence, ADR distribute emergency kits free of charge to any tenant who wishes for such kits.

In many ADR’s properties, AEDs are available for public use and vending machines that make charitable donation to a pediatric cancer treatment facility using part of the proceeds from the sales of its merchandise are installed.

Sponsored and participated in “The Third University Student Investment Presentation Contest” organized by the Student Investment Union (USIC) held in February 2019. In this contest, 13 investment clubs of universities belonging to USIC were each assigned to one of the 12 listed companies participating. The clubs were to evaluate the assigned company with an investor’s perspective through interviews with the target company’s personnels and by researching the company’s disclosure materials, and make a presentation on what they have discovered.

Coincidently, Kokugakuin University team who was assigned ADR, won the contest.

By sponsoring such events, we believe that we were able to contribute in promoting investment literacy among students.

Coverage –  Full-time employees and contract employees

*1 Number of employees at the start of the fiscal year.
*2 Turnover rate is calculated by dividing the number of employees leaving the company by the initial number of employees at the start of the fiscal year.
*2 Additionally, there were no employment terminated due to corporate merger, acquisition or restructuring or other reasons.
*3 Occupational accident frequency rate = number of casualties caused by disasters ÷ total working x 1 million hours.
     For details, please refer to here.

At ADIM, the company offers to its employees various programs to develop their talent and career.

For an example, the company provides courses or subsidies to attend classes offered at Keio Marunouchi City Campus, Globis University Graduate School of Management or English language classes to develop business and language skills.

Also, employees in a non-managerial position are asked annually to declare their desired career path and discuss with their superior.

New graduates will be rotated through departments for the first five years or so and will be able to accumulate various work experiences. Moreover, new graduates will have, in addition to a senior colleague instructor, a colleague that will act as a mentor who the new graduates may consult on various subjects.

Full-time employees are under subject of annual performance review.

Each individual employee will discuss with his/her reporting superior and agree on a performance goal at the beginning of the fiscal year. Progress will be reviewed and advises will be given at the mid-term review. At the end of the fiscal year, performances will be evaluated and evaluation fed back.

Salaries and bonuses will be decided based on the evaluation. In addition to individual performance, bonuses will partly be linked to the fiscal performance of ADR.

These Individual performance review sessions are not only used to feed back evaluations and discuss future career development plans but used to devise human resource allocation strategies.

ADIM provides courses offered at Keio Marunouchi City Campus, Globis Excecutive School or language schools to help employees develop business and language skills.

Also ADIM recommends employees to acquire certifications to improve business execution ability and acquire expertise.

ADIM provides subsides for expenses to assist to obtain the certifications.

No. of Employees with Certifications

ADIM recommends employees to acquirecertifications to improve business execution abilities and gain expertise and give assistance to the effort by subsidizing the expense of obtaining the certifications.

Examples of subsidized certifications;

Real Estate Broker License,

ARES Certified Master,

Securities Analyst,

Authorized Real Estate Consulting Master,

Certified Building Administrator, etc.

ADIM has in place a wide range of training progams and self-development support systems according to the employee’s position.

ADIM has started an employee investment unit ownership program. It was the first J-REIT asset management company to align ADIM employees’ interest to ADR’s unit-holders’ interest using the ownership program and also be financially beneficial for ADIM employees.

For details, please refer here.

ADIM believes Formal grievance reporting and escalation procedures is essential to encourage the reporting of misconduct, fraud and corruption. Therefore ADIM has established whistleblowing system with three internal and three external third-party hotlines.

ADIM respects the basic rights of our employees regarding the freedom of association and collective bargaining.
ADIM continuously holds appropriate and sound labor-related discussions with worker representatives.

■Membership to Cafeteria-style Benefit Package

The cafeteria-style benefit package offer employees preferential rates on various activities, for example hotel rates, local fitness facility fee, movie tickets, supporting employees’ leisure time activities and promoting physical and mental health.

■Congratulatory and Condolence Payments

We congratulate our employees on their joyful events and offer condolences on their sad occasions.

■Extended Employment

Although retirement age is set at sixty years old, eligible employees may be re-employed on yearly renewable contract bases.

■Company Trips

To promote collegiality among our employees, we organize annual company trips to resorts for one to two night stay.

■Other Employee Benefits

・Recreational Clubs

The company provides financial support to recreational clubs which employees have formed. The clubs are actively participated by employees.

・Company Gatherings

We organize fiscal year end party to celebrate on everybody’s hard work.

There is also a monthly in-house gathering held during work hours where snacks, meals and drinks including alcoholic beverages are served. It is intended to promote closer ties between employees in different section of the company.

ADIM has been introducing the following measures to improve employee’s work-life balance.

To enable employees to flexibly accommodate with their responsibilities to their family depending on their life stage or the way they want to relate to thier community, ADIM has introduced paid-leaves and other employment schemes.

There are childcare leave and shortened work hours for employees with small children, nursing leave for employees with dependents in need of nursing, volunteering leaves for employees who wants to individually contribute to their community and hourly based paid vacation to promote the usage of paid vacation.

Additionally, in 2013, to promote productive work routines we have designated every Wednesday as “no-overtime day” and make every employee leave work on time. As a result, the average over-time hours per month have drastically decreased.

Based on these measures, ADIM has applied to the Tokyo Metropolitan Government to be approved as “TOKYO Working Style Reform Declaration Company” in March 2018 and has become the first J-REIT asset management company to be approved.

ADIM periodically conduct employee satisfaction survey to improve the workplace environment so that each employ can feel pride and pleasure working for the company.

Itochu Corporation, the sponsor of ADIM, acknowledges that human resources are its greatest company asset to the growth of the company and addresses aggressively on talent development. Please refer to details here.

Also at Itochu Corporation, there is a four-days internship program in  the new graduate hiring procedure in which prospective new hires are expected to participate before official employment.

Itochu Corporation also carries out initiatives to ensure the health and safety of employees at workplaces, which are open for participation to the group companies such as ADIM. Please refer to details here.

ADR has seven properties which was awarded the DBJ Green Building Certificate. (16.7% of total floor space, 2.7% of total number of property as of January 2019)

ADIM which manages ADR’s assets, has established a corporate governance framework by setting up investment and compliance committees to oversee the execution of corporate governance and defined its commitments to its fiduciary duty. 

With the framework in place, ADIM endeavors to manage risks, to comply to laws and regulations and ensure fair handling of transactions with conflict of interest, 

Please refer here for details on the compliance framework.

Please refer here on measures to insure fair handling of transactions with conflict of interests.

ADIM has established a sustainability committee in order to institutionally take measures to improve sustainability. The committee will meet once every quarter to set targets, decide on measures, monitor external ratings on its ESG performance and monitor its progress on reaching the targets thereby improving its long-term asset value. The targets set by the committee will be authorized by the Representative Director and semi-annually reported to the board of directors on its progress.

In ADIM, in April 2019, we established a dedicated “Sustainability Team” to promote activities to improve sustainability.

The team has been established to run the Sustainability Promotion Committee and aims to improve the asset value of ADR over the medium and long term.

The asset management fee paid from ADR to ADIM is calculated as shown on the table below.

In accordance to the article of incorporation of ADR and asset management entrustment contract, the fee will in part be linked to NOI and net income per unit to strengthen the alignment of the ADIM’s interest to unit-holders’ interest.

In order to ensure disclosure transparency, in addition to statutory disclosures, ADR will disclose information it deems useful and valuable on timely bases in an easy-to-understand form. Specifically, ADR will actively disclose information on its website in addition to disclosing on the Tokyo Stock Exchanges disclosure system (TDnet).

Please click here to read the disclosures.

Please refer here (in Japanese) for informations on investor meetings and conferences.

2018 Investor Relations Activities

1. The executive director and the supervisory directors of ADR are not allowed to transact ADR units for itself or for a third-party in accordance to ADR’s bylaw on insider trading.
2. If the executive director and the supervisory directors of ADR commit illegal or improper acts or make improper profits, they are punishable not only by law but by accordance to ADR’s bylaw on claw back rule on compensations.
3. Rights of unit-holders are defined in the “Act on Investment Trust and Investment Corporations” and “Articles of Incorporation of Investment Corporation”. For detail please refer to ADR’s financial report (in Japanese only) submitted to the Financial Services Agency.
4. The compensation to the directors of ADR is restricted by the Articles of Incorporation of ADR, in which payment rules are laid down.

ITOCHU Corporation the main sponsor of ADIM, has defined its direction on promoting sustainability in the “Basic Policy of Promotion Sustainability” and has formulated the “Sustainability Action Plan” which identifies important issues on sustainability. And they promote sustainability by holding a review board semi-annually to put the program under the PDCA cycle system.

For details, please refer here.