1. Installing LED lighting
   As of January 2018, LED lighting is installed in 48 properties (22% of portfolio).
2. Installing water-saving toilets
3. Installing heat shielding paint roofing
4. Introducing car sharing in parking lots of properties
5. Encouraging tenants to conserve energy usage through posters on common area billboards and periodical “RESIDIA News” and sending of sustainability guides
6. Leasing contract with clauses concerning  energy and water conservation (green-lease contract) to 36.7% of tenant contracts as of February 2018
7. Extending the lifespan of properties through large-scale repairs and value-enhancement renovations
8. Including a criterion concerning initiatives taken on environment in selecting a property manager
9. Working together with building managers towards shared goals on environmental concerns

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.

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

Based on the policy, major suppliers including all property management companies that ADIM uses as a vendor have been evaluated at the time of start of the contract and annually using surveys on how they are addressing sustainability issues since FY2015.

To strengthen the engagement with the suppliers, since we believe it is important to have their understanding and cooperation, on FY2017 we have re-notified property management companies and building management companies who are our major supplier, our Green Procurement Guideline.

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.

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 :Both Scope1 and Scop2 are 1% target reduction.

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)Coverage is calculated as follows.

Total Floor Space of Data Collected (m²) ÷ Total Property Floor Space (m²)

ADR invests in flexible/mixed use properties, thereby contributing in reducing environmental impact, revitalizing the area and providing convenient facilities to tenants and local residents. Flexible / mixed use properties that ADR invest 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 store attached.
3. Properties with open space which are publicly accessible.
4. Properties that are barrier-free towards senior citizens.

By investing in existing urban area properties ADR contributes in the usage of existing infrastructures such as existing water, electricity supply system, public school facilities, etc.

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

(J-REITs are legally restricted from actual developments.)

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

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 urban environment 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 tenants 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 2018, 99.6% of properties (260 properties out of 261 properties )) which clearly indicate evacuation routes/sites to help ensure safety during the occurrence of a disaster as well as to raise disaster prevention awareness. (as of end of January 2016, 99.6% of properties .(250 properties out of 251 properties )  as of end of January 2017, 100% of properties (257 properties out of 257 properties )))

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

AEDs which are available for public use and vending machines that make charitable donations to address healthcare needs are installed in many of ADR’s properties. The vending machines will make a donation to a pediatric cancer treatment facility using part of the proceeds from the sales of its merchandise.

Highly specialized knowledge and experience is required in management and investment of commercial real estate. Therefore at ADIM, we not only constantly hire highly skilled personnel but also provide trainings to further develop their expertise.

Employee initiatives of ADIM are disclosed to the ADIM’s homepage.

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 school to develop business and language skills.

And ADR collaborated with Faculty of Science and Engineering,Waseda University in collaboration with industry and academia, and collaborated on prolonging housing life to improve sustaninability. 

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.

Examples of certifications that ADIM subsidizes the cost of obtaining:

Real Estate Broker License, Real Estate Securitization Master Certificate, Securities Analyst Certificate, Real Estate Consulting Master Certificate, Building Administration and Management Certificate, etc.

Examples of training courses:

• New Graduates: New Graduate Orientation, Basic Office Equipment Training, etc.
• All employees: Compliance Training, Management and Marketing Training, etc.
• Seminars and training held for specific department: Periodically inviting analyst to lecture on interest rate trends, real estate taxing and accounting, tax regulation, etc.

• *Hours spent between April 2017 to March 2018.
• *Excluding hour spent on below leadership development training.
• *Data for total of 35 people that are full-time employee that are not in a managing position (excluding loan employees).

ADIM believes that the quality of managers of each business units are crucial to the performance the company.

Therefore the company actively sends managers and prospective managers to third party training courses.

• *Hours spent between April 2017 to March 2018.
• *Excluding hour spent on below leadership development training.
• *Data for total of 23 people that are full-time employees that are in a managing position (excluding loan employees).

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 evaluation, bonuses are partly linked to the performance of ADR.

These Individual performance review sessions are not only used to feed back evaluations but also to discuss future career development plans.

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

■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.

■Financial support for congratulations and condolences

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

■Employment beyond retirement

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

■Company trips

To promote friendship 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 and which are actively participated.

・Company Gatherings

　We organize annual, 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 employees 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 society, 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 society 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, as shown on the table below.

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.

• *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.

Additionally, there were no employment terminated due to corporate mergers, acquisition or restructuring or other reasons.

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.

ADIM believes whistleblower protection 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.

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

Also Itochu Corporation introduces the Three-day internship for students 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 group companies such as ADIM. Please refer to details here.

In an effort to manage risks, to comply to laws and regulations and to prevent impropriety through conflict of interest, ADIM which manages ADR’s assets makes clear its commitment to fiduciary duty and has established frameworks and committees (investment and compliance committee) to oversee its executions.

Please refer here on details of the compliance framework.

Please refer here on how ADIM manages conflict of interest.

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 report to the board of directors on its progress.

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 transparency to its disclosures, in addition to statutory disclosures ADR will accurately disclose on timely bases useful and valuable information. The information will be disclose in addition to listing on the Tokyo Stock Exchanges disclosure system (TDnet), it will be press released as well as be listed on its own website.

Please refer here for the disclosures.

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

2017 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 also by ADR’s bylaw by 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 Financial Services Agency.
4. The compensation to the directors of ADR is restricted by the Articles of Incorporation of ADR, in which payment rules (monthly payment limit and the actual amount to be paid to which the board may decide according to the movements in inflation and other economic situation) are laid down.

ITOCHU Corporation, the main sponsor of ADIM, has formulated the “Sustainability Action Plan” by extracting the important issues on sustainability by defining the direction of sustainability as the “Basic CSR Promotion Policy”. And they promote sustainability by holding a reviewing meeting semi-annually to put the program under the PDCA cycle system.

For details, please refer to here.