Hankyu Hanshin REIT, Inc.

Sustainability

Environmental Initiatives

Environmental Targets

In a Sustainability Promotion Committee meeting conducted in March 2019, the following environmental targets were established.

  1. Energy consumption: 5% reduction over five years (Intensity)
  2. Greenhouse gas emissions: 5% reduction over five years (Intensity)
  3. Water consumption: 5% reduction over five years (Intensity)
  • The base year is fiscal 2018.

Energy Consumption and Intensity

Fiscal 2018 Fiscal 2019 Intensity YoY
Consumption Intensity Consumption Intensity
Energy consumption 89,298,458kWh 285kWh/㎡・year 92,669,778kWh 278kWh/㎡・year 97.5%
Water consumption 448,782㎥ 1.412㎥/㎡・year 468,297㎥ 1.410㎥/㎡・year 99.8%
Greenhouse gas emissions 29,984t 0.095t/㎡・year 31,232t 0.094t/㎡・year 98.3%
  • Data retention rate: 99.2% (excludes site properties of owned properties; figures for properties under quasi co-ownership are arrived by multiplying the ownership interest)

Energy Management

Established the Energy Conservation Policy

Based on the "Energy Conservation Policy" established in March 2019, HHR and HHRAM will continually seek to understand the energy consumption levels of the portfolio and measure the rate of achievement against the targeted values. Considerations for operational improvements and equipment investments will be made for energy inefficient properties, and we will continually aim to reduce energy consumption across the entire portfolio.

[Examples]

  • Initiatives through equipment renovation

    For measures that require equipment investments such as installing LED lighting and switching to high efficiency air conditioning, measures that are the most cost-effective will be prioritized based on consideration of the lifecycle costs, etc.

  • Initiatives through operational improvement

    HHR promotes initiatives in collaboration with property management companies and tenants, such as inspection to ensure that electricity and gas are turned off after store hours, appropriate temperatures are set for air-conditioners in common areas, appropriate temperatures are set for hot water for hand-washing as well as toilet seat heaters in the summer season, and appropriately reducing the number of lights that are on in common use areas (backyard).

Selected as a body eligible for receiving subsidy of the fiscal 2017 ASSET Project by the Ministry of Environment

The ASSET Project (Note) is a project that aims to significantly and efficiently reduce CO2 emissions by introducing advanced facilities that are promoted by the Ministry of Environment and by accelerating operational improvement. As part of the project, HHR participated in CO2 reduction project by upgrading a freezer at Kitano Hankyu Building, and was selected as a body eligible to receive subsidies.

  • Advanced technologies promotion Subsidy Scheme with Emission reduction Targets
Kitano Hankyu Building

Selected as body by the Ministry of Environment eligible to receive subsidy of CO2 Reduction Promotion Project through Facilities Optimization Repair

During the parts replacement of air conditioners conducted in fiscal 2018 at HANKYU NISHINOMIYA GARDENS, highly efficient machines were installed. As this contributed to the reduction of CO2 emissions, HHR was selected as a body eligible to receive subsidies for the Ministry of Environment’s CO2 Reduction Promotion Project through Facilities Optimization Repair.

HANKYU NISHINOMIYA GARDENS

Leading project to reduce carbon footprint in housing / buildings

A leading project to reduce carbon footprint in housing / buildings is a project that is selected after the government solicits entries of housing / building projects to become leading projects for carbon footprint reduction, and offers support for them from its budget by subsidizing part of the projects’ cost, such as maintenance costs. GRAND FRONT OSAKA was chosen as a leading project in 2009 and has been supported for its environment-friendly design. Its "organizing an integrated water and green network over multiple city blocks", "adoption of highly effective carbon footprint reduction technology" and "building a sustainable management system" initiatives were adopted to realize its environment-friendly design such as extensive greenery on the rooftops and in the surrounding city blocks, natural ventilation system and adoption of a solar power system.

GRAND FRONT OSAKA
(Umekita Plaza and South Building)
GRAND FRONT OSAKA
(North Building)

Countermeasures against urban heat islands

As a countermeasure against urban heat islands that occur in the summer, we have installed a fountain and mist spraying system in the roof-top garden of HANKYU NISHINOMIYA GARDENS, water sprinklers on the roofs of cinema complexes, a mist spraying system at the main entrance of HEP Five, and water facilities such as cascades and a mist projection system at the Umekita Plaza of GRAND FRONT OSAKA. These have contributed to cutting CO2 emissions by reducing the load placed on air conditioners.

<Mist spraying system>
<Fountain>

Coating roofs with heat barriers

At Kita-Aoyama San cho-me Building, the roof has been coated with a heat barrier, which prevents the room temperature from rising in the 3rd floor. This has contributed to cutting CO2 emissions by reducing the load placed on air conditioners.

Kita-Aoyama San cho-me Building

Promoting the installation of LED lighting

HHR promotes the installation of LED lighting at each of the properties in the portfolio. At HEP Five and HANKYU NISHINOMIYA GARDENS, all of the common area lights have been upgraded to LED lighting, excluding the lights in the backyard. Installation of LED lighting in areas leased by tenants was implemented at Shiodome East Side Building in fiscal 2019, and installation of LED lighting in areas leased by tenants will also be promoted at Ueroku F Building.

Using the cooling and heating sources of a district heating and cooling system

Sphere Tower Tennozu uses the steam and cold water supplied by a district heating and cooling system owned by TENNOZ AREA SERVICE INC. District heating and cooling systems are plants that centrally produce cold water and steam for the cooling and heating and hot-water supply of the entire area, which is distributed through a network of supply pipes. Through the centralization of boiler and chiller facilities, these systems conserve energy by improving operating efficiency, and also contribute to the prevention of air pollution and global warming, thereby contributing to environmental protection.

Sphere Tower Tennozu

Utilization of renewable energies

Implementation of solar power generator facilities

Solar panels were installed above the south parking lot of HANKYU NISHINOMIYA GARDENS (along Yamate Kansen), and the power generated is used to illuminate the lights. Solar panels were also installed on the roof of HEP Five, and the clean natural energy is used to light up the Ferris wheel. A monitor indicating the quantity of energy generated by the sunlight has been set up in the atrium on the first floor. Furthermore, amount of energy generated and consumed are as follows.

Property name Fiscal 2018 Fiscal 2019
HEP Five 18,054kWh 18,197kWh
<Solar panels>

Installation of wind turbine generator system

At HANKYU NISHINOMIYA GARDENS, a hybrid-type generator that combines a Savonius wind turbine with solar panels is installed, and the power generated by it is used to illuminate the rooftop lights.

<Windmills and solar panels>

Promoting green walls and planting vegetation

At GRAND FRONT OSAKA, there is the 500-meter-long "Icho Namiki" (row of ginkgo trees) that encircles the building, and the "Keyaki Namiki" (row of zelkova trees) that runs east-west between the South Building and the North Building. The 4,000 m2 garden on the north side of the North Building is a space where people can experience the changes in the four seasons, and people enjoy walks in the garden throughout the year. Moreover, on the roof of the 9th floor of the South Building and the North Building, there is a rooftop garden totaling more than 10,000 m2. This space lightens the mood of those who visit, and is also a place where office workers can exchange ideas.
In addition, the Sky Garden on the rooftop of HANKYU NISHINOMIYA GARDENS is a space of relaxation for those who visit. This is because vegetation indigenous to the Rokko mountain range is planted in the garden such as trees, cherry trees, and fruit trees, based on the facility concept of "harmony with the natural environment."

<Row of ginkgo trees>
<Rooftop garden>

Collaboration with tenants

Promotion of green lease agreements

Green lease agreements are agreements in the form of a contract or memorandum, etc. voluntarily entered into by building owners and tenants and concern reduction of environmental load through energy conservation at real estate and improvement of working environment, as well as implementation of their content. HHR will strive to increase the number of agreements that have green leases in their clauses.

Case of concluded green lease agreement

At Dew Hankyu Yamada, an agreement with a green lease clause was concluded with a tenant having a strong interest in sustainability. The points of the agreement are as follows:

  • Suppression of amount of energy and water used in area leased by the tenant, suppression of waste generated and promotion of waste-sorting on a daily basis, and establishment of system for voluntary management of such
  • Suppression of amount of energy and water used in construction work in area leased by the tenant and when procuring goods, suppression of waste generated and introduction of environmentally friendly materials
  • Cooperation toward sustainability promotion measures (obtain certifications, exchange information on amount of energy and water usage amount and waste generated, and maintenance and improvement of comfort in building)

Water Resource Initiatives

Established the Water Conservation Policy

Based on the "Water Conservation Policy" established in March 2019, HHR and HHRAM will continually seek to understand the water consumption levels of the portfolio and measure the rate of achievement against the targeted values. Considerations for operational improvements and equipment investments will be made for water resource inefficient properties, and we will continually aim to reduce water consumption across the entire portfolio.

[Examples]

  • Initiatives through equipment renovation
    For measures that require equipment investments such as switching to water conservation equipment and installing water-saving devices, measures that are the most cost-effective will be prioritized based upon consideration of the lifecycle costs, etc.
  • Initiatives through operational improvement
    Water conservation is strived for in collaboration with property management companies and tenants through measures such as saving water during cleaning as part of property management and checking for water leaks in washrooms and toilets during patrol

Reusing rainwater

At HANKYU NISHINOMIYA GARDENS, GRAND FRONT OSAKA, and METS OZONE, rainwater is stored and reused as sprinkling water for plants and for flushing toilets.

Using water reclamation equipment

Sphere Tower Tennozu has water reclamation equipment, which cleans water resources discharged from office buildings and reuses the water to flush toilets, etc.

Installation of kitchen wastewater pretreatment equipment

By preparing kitchen wastewater pretreatment equipment at HANKYU NISHINOMIYA GARDENS, the pollutants found in kitchen wastewater produced by cafés and restaurants are reduced by processing it with mixed-microbial communities, before draining it into public sewage systems. As a result, HANKYU NISHINOMIYA GARDENS is able to maintain water quality that falls well within the wastewater standards for sewage systems of Nishinomiya City.

Waste Management

The management of waste

HHR and HHRAM regularly seek to understand the figures submitted by the waste disposal operators of the portfolio.

Charging by waste amount

At HANKYU NISHINOMIYA GARDENS and GRAND FRONT OSAKA, the waste disposed by each tenant is measured on an exclusive measurement device, and a fee is assessed based on the quantity of waste produced. This system has contributed to the suppression of waste generated by tenants.

Thorough waste sorting and recycling

At Dew Hankyu Yamada and HEP Five, cardboards, papers, cans, glass bottles, and plastic bottles are sorted and recycling is conducted thoroughly.

External Certifications

Acquisition of “3 Star” and "Green Star" Rating in GRESB Real Estate Assessment

GRESB is an annual benchmarking assessment to measure ESG (Environmental, Social and Governance) integration of real estate companies and funds.

In the 2020 GRESB Real Estate Assessment, HHR received a “3 Star” in GRESB Rating, which is based on GRESB Overall Score and its quintile position relative to global participants. It also won a “Green Star” designation for the 2nd consecutive year by achieving high performance both in “Management Component” that evaluates policies and organizational structure for ESG promotion, and “Performance Component” that assesses environmental performance and tenant engagement of properties owned. HHR also received the highest “A Level” for the GRESB Public Disclosure, which assess the width of ESG disclosure.

Acquisition of DBJ Green Building Certification

DBJ Green Building Certification is a program which Development Bank of Japan grants certifications after assessing properties in five ranks, from the perspective of environmental and social considerations.
In the future, HHR will continue to work to expand the number of certified properties.

Properties with the best class environmental & social awareness

HANKYU NISHINOMIYA GARDENS
HANKYU NISHINOMIYA GARDENS

Properties with exceptionally high environmental & social awareness

HEP Five
HEP Five

Acquisition of Certification for CASBEE for Real Estate

Certification for CASBEE for Real Estate is an evaluation system that evaluates and ranks buildings and structures in terms of their environmental performance by using CASBEE (Comprehensive Assessment System for Built Environment Efficiency). In addition to each building’s ability to reduce its environmental impact across a variety of areas including energy and resource conservation as well as recycling, this system comprehensively evaluates the environmental performance of each building and structure including its aesthetic appeal.

HHR has received the rank "S (Excellent)”, the highest ranking of CASBEE certification, for SHIBAURA RENASITE TOWER and Sphere Tower Tennozu.

Received an award for fiscal 2015 Minato City Local Green City Development

The award for Minato City Local Green City Development was established by Minato City, Tokyo in fiscal 2004 with the aim to further promote greening in the city.
It is a program to commend private buildings for their environmental considerations and outstanding greening planning.

Kita-Aoyama San cho-me Building
Kita-Aoyama San cho-me Building

Green Finance

HHR has established Green Finance Framework (hereafter the “Green Finance Framework”) that complies with the Green Bond Principles 2018, the Green Bond Guidelines 2020, the Green Loan Principles, and the Green Loan and Sustainability Linked Loan Guidelines 2020 for the implementation of green finance.

Green Finance Framework

Use of Proceeds

The proceeds of green finance are allocated to the acquisition of Eligible Green Assets (Note) or implementation of renovation work or the refinancing or reimbursement of borrowings (including green loans) or investment corporation bonds (including green bonds) which have been allocated to such.

  • Assets that meet the following eligibility criteria

Eligibility Criteria

  1. Eligible Green Assets

The criteria apply to assets for which any of the following green building certifications was obtained or renewed within 36 months prior to the payment date of green bonds or the execution date of green loans or the reporting date based on the Green Finance Framework, or will be obtained or renewed in the future.

  • DBJ Green Building Certification: 3 Star, 4 Star or 5 Star
  • Certification for CASBEE for Real Estate: B+, A or S Rank
  • BELS Certification: 3 Star, 4 Star or 5 Star
  • LEED Certification: Silver, Gold or Platinum
  1. Renovation Work

The criteria apply to renovation work aiming to meet any of the following standards which were completed within 36 months prior to the payment date of green bonds or the execution date of green loans, or will be completed in the future.

  • Improvement of 1 step or higher in the number of Star or the Rank of any of the above-mentioned green building certifications.
  • Reduction of 10% or more in any of carbon dioxide emissions, energy consumption or water consumption.
  • Any other renovation work pursuing effective improvement in terms of the environment (in which a reduction of 10% or more in the volume of consumption or emissions is expected compared with conventional methods).
  • Introduction or acquisition of renewable energy-related facilities.

Management of Procured Funds

The maximum amount of green finance is set at an amount arrived at by multiplying the sum of total acquisition price of Eligible Green Assets owned by HHR and amount of expenditure for renovation work that meet the eligibility criteria by the ratio of interest-bearing debt to total assets (hereafter the “Eligible Green Debt Amount”). HHR will conduct manage so that the balance of the proceeds of green finance will not exceed the Eligible Green Debt Amount.

Total acquisition price of Eligible Green Assets
(millions of yen)
81,543
Ratio of interest-bearing debt to total assets (%) 44.1
Eligible Green Debt Amount
(millions of yen)
35,960

※The figures are as of May 31, 2020.

Assessment by External Institution

HHR has acquired Green1 (F), the highest ranking in the JCR Green Finance Framework Evaluation by Japan Credit Rating Agency, Ltd. (JCR) concerning the eligibility of the Green Finance Framework.

For the content and other details of the JCR Green Finance Framework Evaluation, please refer to the following website.
JCR Green Finance Framework Evaluation: https://www.jcr.co.jp/en/greenfinance/

Status of Finance

Balance of green bonds issued

The balance of green bond issued is 2,000 million yen (as of November 2020).

Issue amount
(millions of yen)
Interest rate Issue date Redemption date Use of proceeds
Hankyu Hanshin REIT Fourth Series of Unsecured Investment Corporation Bonds 1,000 0.300%
Per annum
October 28, 2020 October 28, 2025 Repayment of the loans (including the loans from subsequent refinancing) that were required for acquisition of Shiodome East Side Building, an Eligible Green Asset under the Green Finance Framework.
Hankyu Hanshin REIT Fifth Series of Unsecured Investment Corporation Bonds 1,000 0.540%
Per annum
October 28, 2020 October 28, 2030 Repayment of the loans (including the loans from subsequent refinancing) that were required for acquisition of Shiodome East Side Building, an Eligible Green Asset under the Green Finance Framework.

Impact Reporting

HHR will continue to disclose the following indicators once a year as long as it has a sustainability bond finance balance.

Property names of Eligible Green Assets and Status of acquisition of environmental certifications (as of November 2020).

Property name Aquisition Price (millions of yen)
DBJ Green Building CASBEE BELS LEED
HANKYU NISHINOMIYA GARDENS 18,300 ★★★★★
HEP Five 6,468 ★★★★
Kitano Hankyu Building 7,740 ★★★
Dew Hankyu Yamada 6,930 ★★★
Shiodome East Side Building 19,025 ★★★
Hankyu Corporation Head Office Building 10,200 ★★★
SHIBAURA RENASITE TOWER 3,475 S
Sphere Tower Tennozu 9,405 S
Total Amount 81,543

Quantitative indicators of Eligible Green Assets

Fiscal 2019
Energy consumption 55,130,481kWh
Water consumption 267,168m³
Greenhouse gas emissions 18,046t

※The figures are disclosed to the extent possible on the practical. As for the quantitative indicators for fiscal 2019, the figure for SHIBAURA RENASITE TOWER (aquired on May 28, 2020) is excluded.