Green Finance|ESG|Nippon Prologis REIT, Inc.

Nippon Prologis REIT, Inc.ESG

Green Finance

As a member of the Prologis Group, NPR has been strategically engaged in investing in and managing high-quality, energy-efficient, sustainable, modern logistics facilities in line with NPR’s strategy in reducing our environmental footprint and striving to minimize our environmental impacts. In addition, the demand for ESG-related capital investment has been significantly increasing, as ESG-related social concerns rise. In light of this recent trend, NPR has established the “Green Bond Framework” and the “Green Equity Framework”, capitalizing the high-quality portfolio of Eligible Green Projects, providing the capital market with opportunities for ESG investment. NPR intends to continue our strong commitment to ESG through such “Green Financing” activities, while expanding our investor universe by generating demand for ESG investment.

Green Bond

NPR may issue green bonds according to the protocols described in Prologis’ “Green Bond Framework” with reference to the four elements indicated by the Green Bond Principles stipulated by the International Capital Market Association (ICMA). NPR has obtained a second-party opinion for the eligibility of the “Green Bond Framework” from Sustainalytics, a third-party ESG evaluation agency.

GREEN BOND FRAMEWORK
SECOND-PARTY OPINION

Green Bond Framework Overview

1. Use of proceeds
The proceeds will be allocated to new or existing investment or expenditure for the Eligible Green Projects.
2. Process for project evaluation and selection
The projects to which the proceeds will be allocated are evaluated and selected by the Green Bond Committee, which consists of the members of our ESG Committee.
3. Management of proceeds
Green Bond Committee allocates the proceeds to the Eligible Green Project Portfolio.
4. Reporting
NPR reports in its website, within a year of the issuance of applicable green bonds, the status of allocation to "the Eligible Green Projects". Reporting will include the total allocated / unallocated amount of proceeds, the numbers and certification levels of the applicable Eligible Green Projects, to the extent practicable.

The Allocation Reporting of our Green Bond

The allocation of net proceeds to the Eligible Green Projects regarding our Green Bond is reported below.

Amount
(JPY Million)
Date of
Issuance
Date of
Redemption
Date of
Allocation
Use of Proceeds
7th Unsecured Investment Corporation Bonds 6,000 2018/8/17 2028/8/17 2018/8/20 A portion of the prepayment of the short-term loans (6,300 million yen) borrowed on Aug. 8, 2018, which was a refinancing of loans originally borrowed for the acquisitions of properties on Aug 1, 2017 (Prologis Park Narashino 5, Prologis Park Ibaraki and Prologis Park Koga 2), all of which are the Eligible Green Projects.
8th Unsecured Investment Corporation Bonds 5,000 2020/4/17 2040/4/17 2020/4/20 A portion of the prepayment of the short-term loans (10,000 million yen) borrowed on Feb. 5, 2020, which originally borrowed for the acquisitions of properties on Feb. 5, 2020 (Prologis Park Chiba 1, Prologis Park MFLP Kawagoe and Prologis Park Tsukuba 1-B), all of which are the Eligible Green Projects.
9th Unsecured Investment Corporation Bonds 5,000 2020/4/17 2050/4/15 2020/4/20 A portion of the prepayment of the short-term loans (10,000 million yen) borrowed on Feb. 5, 2020, which originally borrowed for the acquisitions of properties on Feb. 5, 2020 (Prologis Park Chiba 1, Prologis Park MFLP Kawagoe and Prologis Park Tsukuba 1-B), all of which are the Eligible Green Projects.
10th Unsecured Investment Corporation Bonds 7,000 2021/5/31 2031/5/30 2021/6/15 1) A portion of the prepayment of the short-term loans (10,000 million yen) borrowed on Feb. 8, 2021, which originally borrowed for the acquisitions of properties on Feb. 8, 2021 (Prologis Park Chiba New Town, Prologis Park Chiba 2 and Prologis Park Tsukuba 2), all of which are the Eligible Green Projects.
2) A portion of the redemption of the 3rd Unsecured Investment Corporation Bonds (2,000 million yen) issued on Jun. 15, 2017, which originally refinanced previous loans borrowed for the acquisitions of properties on Mar. 3, 2016 (including Prologis Park Kitamoto, Prologis Park Joso and Prologis Park Osaka 5), all of which are the Eligible Green Projects.
11th Unsecured Investment Corporation Bonds 5,000 2021/5/31 2036/5/30 2021/6/15 1) A portion of the prepayment of the short-term loans (10,000 million yen) borrowed on Feb. 8, 2021, which originally borrowed for the acquisitions of properties on Feb. 8, 2021 (Prologis Park Chiba New Town, Prologis Park Chiba 2 and Prologis Park Tsukuba 2), all of which are the Eligible Green Projects.
2) A portion of the redemption of the 3rd Unsecured Investment Corporation Bonds (2,000 million yen) issued on Jun. 15, 2017, which originally refinanced previous loans borrowed for the acquisitions of properties on Mar. 3, 2016 (including Prologis Park Kitamoto, Prologis Park Joso and Prologis Park Osaka 5), all of which are the Eligible Green Projects.
12th Unsecured Investment Corporation Bonds 3,000 2022/6/22 2027/6/22 2022/6/22 A portion of the prepayment of the short-term loans (7,300 million yen) borrowed on Dec. 13, 2021, which was a refinancing of loans originally borrowed for the acquisitions of properties on Dec. 1, 2021 (Prologis Park Inagawa 2, Prologis Park Kobe 5 and Prologis Park Ebina 2), all of which are the Eligible Green Projects.
13th Unsecured Investment Corporation Bonds 2,300 2022/8/17 2028/8/17 2022/8/17 A portion of the prepayment of the short-term loans (7,300 million yen) borrowed on Dec. 13, 2021, which was a refinancing of loans originally borrowed for the acquisitions of properties on Dec. 1, 2021 (Prologis Park Inagawa 2, Prologis Park Kobe 5 and Prologis Park Ebina 2), all of which are the Eligible Green Projects.
14th Unsecured Investment Corporation Bonds 3,000 2023/4/4 2028/4/4 2023/4/4 A portion of the prepayment of the short-term loans (5,000 million yen) borrowed on Dec. 15, 2022, which originally borrowed for the acquisitions of properties on Dec. 15, 2022 (Prologis Park Inagawa 1, Prologis Park Kobe 3 and Prologis Park Ogori), all of which are the Eligible Green Projects.
Total Green Bond Balance 36,300

Green Equity

NPR conducted a green equity offering in January 2021, the first in the J-REIT industry, according to the protocols described in the “Green Equity Framework” with reference to the four elements indicated by the Green Bond Principles stipulated by the International Capital Market Association (ICMA). NPR has obtained a second-party opinion for the eligibility of the “Green Equity Framework” from DNV, a third-party ESG evaluation agency.

GREEN EQUITY FRAMEWORK
SECOND-PARTY OPINION

Green Equity Framework Overview

1. Use of proceeds
The proceeds will be allocated to new or existing investment or expenditure for the Eligible Green Projects.
2. Process for project evaluation and selection
The projects to which the proceeds will be allocated are evaluated and selected by the ESG Committee.
3. Management of proceeds
ESG Committee allocates the proceeds to the Eligible Green Project Portfolio.
4. Reporting
NPR reports in its website, within a year of the issuance of new investment units through the green equity offering, the status of allocation to "the Eligible Green Projects". Reporting will include the total allocated / unallocated amount of proceeds, the numbers and certification levels of the applicable Eligible Green Projects, to the extent practicable.

The Allocation Reporting of our Green Equity Offering

The allocation of net proceeds to the Eligible Green Projects regarding our Green Equity Offering is reported below.

Amount
(JPY Million)
Date of
Launch
Date of
Settlement
Date of
Allocation
Use of Proceeds
10th Follow-on Offering 35,604 2021/1/20 2021/2/2 2021/2/8 A portion of the acquisitions of properties on February 8, 2021 (Prologis Park Chiba Newtown, Prologis Park Chiba 2 and Prologis Park Tsukuba 2), all of which are the Eligible Green Projects.
11th Follow-on Offering 29,491 2021/11/29 2021/12/10 2021/12/13 A portion of the prepayment of the short-term loans (57,100 million yen) borrowed on Dec. 1, 2021, which originally borrowed for the acquisitions of properties on Dec. 1, 2021 (Prologis Park Inagawa 2, Prologis Park Kobe 5 and Prologis Park Ebina 2), all of which are the Eligible Green Projects.
12th Follow-on Offering 23,649 2022/12/5 2022/12/14 2022/12/15 A portion of the acquisitions of properties on Dec. 15, 2022 (Prologis Park Inagawa 1, Prologis Park Kobe 3 and Prologis Park Ogori), all of which are the Eligible Green Projects.
13th Follow-on Offering 24,400 2023/5/22 2023/6/1 2023/6/2 A portion of the acquisition of Prologis Park Soka on June 2, 2023, which is the Eligible Green Project.

The Eligible Green Projects

The Eligible Green Projects are assets which meet the following eligible criteria set forth in the “Green Bond Framework” and “Green Equity Framework”.

THE ELIGIBLE GREEN PROJECTS IN NPR'S PORTFOLIO

1. Green Building

  • New, existing or refurbished buildings which have received or scheduled to be received at least one of the following classifications:
(a) LEED Platinum, Gold, Silver
(b) DGNB Platinum, Gold, Silver
(c) BREEAM Outstanding, Excellent, Very Good, Good
(d) HQE Exceptional, Excellent, Very Good (Very Performant), Good (Performant)
(e) CASBEE S, A, B+
(f) DBJ Green Building Certification 5, 4
(g) BELS 5, 4
  • Refurbishments to properties in order to significantly improve energy efficiency and/or water efficiency of, or make other environmentally beneficial improvements to a building, building subsystem or land.

2. Renewable Energy Projects

Acquisition, development, construction and/or installation of renewable energy production units. Renewable energy and storage projects can include:

  • Solar panel installations
  • Wind-related energy projects

3. Energy Efficiency

  • Energy Storage Systems