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 contract
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, LED lighting is installed in 3 properties (1% of portfolio).

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 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 set same reduction target.

 note:Calculated by multiplying the amount of garbage discharged at the property by the emission factor at the time of combustion.

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)

Leasing contract with clauses concerning energy and water conservation (green-lease contract) to 44.2% of tenant contracts as of February 2018

Also ADR will enliven the green lease provision in the management consignment contract with property manager.

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 FY2016.

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.

ADR invests in flexible/mixed use properties (As of January 2019, 76 properties (28% of portfolio)), thereby contributing in reducing environmental impact, revitalizing the area and providing convenient facilities to tenants and local residents.  In addition, ADR contribute to the revitalization of the city and the community, such as people gathering in the property with convenient facilities and open space. 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. (As of January 2019, 7 properties (3% of portfolio))
4. Properties that are barrier-free towards senior citizens.

ADR contributes in promoting urban revitalization and redevelopment through investments in the revitalization and 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

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

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 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, 100% of properties (264 properties out of 264 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 2017, 100% of properties. (257 properties out of 257 properties )  as of end of January 2018, 99.6% of properties .(260 properties out of 261 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.

Participated and sponsored “The Third University Student Counterfeit IR Presentation Contest” sponsored by the Student Investment Union (USIC) held in February 2019. In this contest, 13 investment circles of universities belonging to USIC are paired with 12 listed companies and evaluated by investor’s perspective, through interviews with the persons in charge and managers of the target company and material research, competed presentation.

Kokugakuin University (Team name: KISHU) who presented ADR won the championship. This is because the team explained (1) the special industry structure called J-REIT in an easy-to-understand manner, and (2) it was highly appreciated that the analysis was conducted with students’ own perspective.

【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.

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

※3　Occupational accident frequency rate is calculated by dividing past working hours by the number of casualties caused by disasters and multiple 1 million hours  

             For details, please refer to here.

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

Also, employee are asked annually to declare their desired career oath and discuss with their supervisor/

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 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.

For an example, ADIM provides courses or subsidies to attend classes offered at Keio Marunouchi City Campus, Globis Excective School or 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 sustainability. 

Also ADIM recommends employees to acquire certifications to improving business performances and acquiring expertise. 

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

※Status certifications

ADIM recommends acquisition of certifications aiming at improving business performance and acquiring expert knowledge. And for the support of acquiring certifications, the investment company provides assistance for expenses etc.

Examples of certifications that ADIM subsidies the cost of obtaining

Real Estate Notary, ARES Certified Master, Securities Analyst, Authorized Real Estate Consulting Master,Certified Building Administrator, etc.

ADIM has established a wide range of training systems and self-development support systems according to positions.

ADIM introduced an employee investment unit ownership program, the first for a J-REIT asset management company to align ADIM employees’ interest to ADR’s unit-holders’ interest and improve the level of company benefits of ADIM employees.

For details, please refer to here.

ADIM believes Formal grievance reporting or 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.

■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 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 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.

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 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 Four-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 Insure Fair Handling of Transactions with Conflict of Interests, 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 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 report to the board of directors on its progress.

In ADIM, in April 2019, we established a “Sustainability Team” to promote sustainability improvement activities.
The team has been established to run the Sustainability Promotion Committee and aim to improve the asset value over the medium and long term.
In addition, the team is assigned a dedicated employee.

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.

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 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 Policy of Promotion Sustainability”. 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.