In order to realize a sustainable society, SHR conducts asset management with due consideration given to the environment, society and governance (collectively referred to as “ESG”), with the objective of providing “sustainable living bases” for residents of residential properties and “sustainable bases of operation” for tenant companies of commercial properties. While utilizing the know-how on operation and management of real estate possessed by the sponsor, Sekisui House, Ltd., SHR promotes such initiatives as energy saving, environmental consideration, and ensuring living safety and business continuity to enhance satisfaction of residents and tenants at owned properties.
As part of such initiatives, SHR submitted an amendment to its shelf registration statement for green bond issuance (the present shelf registration statement for green bond issuance was submitted on February 23, 2018) on December 14, 2018 with the intention to further promote asset management with due consideration given to ESG.
Green Bonds are a type of bond instrument issued by issuers to finance eligible green projects (environmentally-friendly investment projects). The issuance of Green Bonds must adhere to the Green Bond Principles of International Capital Market Association (ICMA). For more information of Green Bond Principles, please refer to the following website.
Green Bond Framework
1. Use of Proceeds
The proceeds of the green bond will be allocated toward the acquisition of the new and/or existing assets that meet the following eligibility criteria (the “Eligible Green Projects”) and/or toward refinancing the existing loans/investment corporation bonds that have already been allocated to Eligible Green Projects.
To be eligible for green bond proceeds, Eligible Green Project must meet the following eligibility criteria:
- Buildings that have a valid third-party certification described below on the date of a green bond issuance and at the time of reporting, and/or that are expected to receive the certification post issuance:
- - 3, 4, or 5 Stars under the DBJ Green Building Certification, or
- - A or S rank under the Comprehensive Assessment System for Built Environment Efficiency (CASBEE) certification for real estate
The validity periods of the third-party certifications as of December 14, 2018 are two or three years for DBJ Green Building Certifications and five years for CASBEE certifications for real estate from the date of receiving respective certifications. These validity periods, however, may change when SHR obtains certifications or recertifications in the future.
2. Project Evaluation and Selection Process
Eligible Green Projects will be evaluated and selected by Sustainability Committee, which is chaired by the president & representative director and participated by all full-time directors of SHAM, in accordance with itsand eligibility criteria.
- SHR merged with Sekisui House Residential Investment Corporation (“SHI”) effective as of May 1, 2018. Acquisition prices of assets SHR succeeded from SHI through said merger are not appraisal values as of the effective date of said merger but of the initial acquisition prices as of the acquisition by SHI (when partial disposition, etc. have taken place thereafter, such are reflected in the prices). The same applies hereinafter.
- Total floor area of properties with sectional ownership indicates the sum total of areas calculated by multiplying leasable area and co-owned area by ownership ratio for office buildings; and the total floor area of the entire building for residential properties.
3. Management of Proceeds
As long as the green bonds are outstanding, SHR will conduct management to ensure that the total amount of the outstanding green bonds does not exceed the total acquisition price of the Eligible Green Projects.
As long as the green bonds are outstanding, SHR will internally track and manage the allocated proceeds on a portfolio basis. If the total or part of the proceeds of the green bonds are not immediately allocated to Eligible Green Projects, SHR will specify the unallocated proceeds and, pending their allocation to Eligible Green Projects, maintain total or part of the unallocated proceeds in cash or cash equivalents.
Total acquisition price of Eligible Green Projects and distribution （As of March 15,2019）
SHR will disclose that the net proceeds of the green bonds are fully allocated to Eligible Green Projects in accordance with its Green Bond Framework, and that the total amount of the outstanding green bonds does not exceed the total acquisition price of Eligible Green Projects.
While the green bonds are outstanding, SHR will annually report the total acquisition price of Eligible Green Projects and the total amount of the outstanding green bonds, as of the end of March.
It may also receive assertions by SHAM's president & representative director that the net proceeds have been allocated to Eligible Green Projects.
SHR will disclose the following quantitative environmental performance indicators as of the end of March once a year on its website, as long as the green bonds are outstanding.
- The number of the buildings of Eligible Green Projects
- The levels of certifications acquired by respective Eligible Green Projects
- The total amount of the floor area of Eligible Green Projects
- The following quantitative indicators of Eligible Green Projects (where SHR has energy control authority)
- - Electricity consumption
- - Water consumption
- - CO2 emissions
Third-party Eligibility Assessment
SHR has obtained a second-party opinion from Sustainalytics, an ESG rating agency, for the eligibility of green bond framework.(Note) For details of the second-party opinion, please refer to the following website.
- Being eligible for green bond framework means complying with the four requirements set by the Green Bond Principles: use of proceeds, project evaluation and selection process, management of proceeds and reporting.
Financial Support Programme for Green Bond Issuance of the Ministry of the Environment
Under the Financial Support Programme for Green Bond Issuance, when issuance supporters registered with The Green Bond Issuance Promotion Platform of the Ministry of the Environment provide support for the issuance of green bonds to issuers including corporations and municipalities, such as by granting external review, subsidies will be provided to the issuance supporters for the expenses required.
Sustainalytics Japan is registered as an issuance supporter (external review division) by the Ministry of the Environment, and thus the obtainment of a second-party opinion by SHR is subject to subsidy under FY 2018 Financial Support Programme for Green Bond Issuance.