Green Finance｜ESG｜Nippon Prologis REIT, Inc.

Nippon Prologis REIT, Inc.ESG

Green Finance

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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 attempt to reduce our environmental footprint and to strive to minimize our environmental impacts. In addition, the demand for ESG-related investment has been significantly increasing in the capital market, as ESG-related social concerns rise among major financial institutions and investors. In light of this recent trend, NPR has stipulated the “Green Finance Framework” and the “Green Equity Framework,” capitalizing on its high-quality portfolio that provides the capital market with essential opportunities of ESG investments. NPR intends to continue our strong commitment to ESG through conducting Green Finance and Green Equity Offerings, while expanding our investor universe by generating demand for ESG investments.

GREEN FINANCE

NPR may conduct green finance according to the protocols described in NPR’s “Green Finance Framework,” which incorporates the four elements listed up by the Green Bond Principles stipulated by the International Capital Market Association (ICMA) and the Green Loan Principles stipulated based on the Green Bond Principles. NPR has obtained a second-party opinion for the eligibility of the “Green Finance Framework” from Japan Credit Rating Agency, Ltd. (JCR), a third-party rating agency who provides ESG assessment.

GREEN FINANCE FRAMEWORK (Japanese)
SECOND-PARTY OPINION

Green Finance Framework Overview

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1. Applicable Finance Schemes
Green bonds and/or green loans

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2. Use of Proceeds
The proceeds will be allocated to investments in projects which meet the eligible criteria (the “Eligible Green Projects”) or refinancing of existing green finance schemes.

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3. Project Evaluation and Selection Process
The projects to which the proceeds will be allocated are analyzed and evaluated by the ESG Committee, which is organized within the Asset Manager for NPR, in terms of their qualification for the eligible criteria stipulated by the Green Finance Framework.

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4. Management of Proceeds
The proceeds will be promptly allocated to investments in the Eligible Green Projects or refinancing of existing green finance schemes. After the completion of the initial allocation, if the proceeds are temporarily not allocated to the Eligible Green Projects, we will manage and control the proceeds until the redemption or repayment by confirming that the total balance of green finance is compliant with the permitted upper limit of the amount of Green Eligible Debt (total amount of the Eligible Green Projects multiplied by total asset LTV) at each fiscal period.

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5. Reporting
NPR will make its best efforts to report the following information on its website:
  • Allocation status of the proceeds from green finance
  • Allocation plans in case there are unallocated residual proceeds from the green finance from the date one month after the completion of such green finance
  • The fact that certain eligible green projects are disqualified as the permitted use of proceeds as a result of disposition, physical damages or failure to satisfy the eligible green criteria of such eligible green projects, prior to the redemption or repayment of the green finance
  • The total balance of green finance and the permitted upper limit of the amount of Green Eligible Debt at each fiscal period
Additionally, NPR reports the following contents annually on its website to the extent practicable.
  • Types and ratings of the certificates obtained for green buildings
  • Achieved effects of energy savings as a result of repairs and maintenance work
  • Estimated amount of electricity power generation and estimated amount of CO2 emission reduction as a result of the introduction of renewable energy power generators
  • Summary of status of NPR’s investments into green buildings
  • Data with respect to ESG initiatives to be conducted by NPR and the Asset Manager

As for the “Green Bond Framework” and its endorsement from Sustainalytics, a third-party ESG assessment agency, based on which NPR issued a series of green bonds in and prior to 2023, please refer to the following:

GREEN BOND FLAMEWORK
SECOND-PARTY OPINION

Reporting of Allocation Status of the Proceeds from Green Finance

The following is a series of reports on the allocation status of proceeds from our Green Finance to the Eligible Green Projects:

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Name
or
Lender		 Amount
(JPY Million)		 Date of
Issuance or
Borrowing		 Date of
Redemption
or Repayment		 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.
15th Unsecured Investment Corporation Bonds 3,000 2024/9/18 2029/9/18 2024/11/27 The redemption of the 2nd Unsecured Investment Corporation Bonds (3,000 million yen) issued on Nov. 27, 2014, which originally refinanced previous loans borrowed for the acquisitions of properties on Sep. 1, 2014 (Prologis Park Kawajima 2, Prologis Park Ebina, Prologis Park Kawanishi, Prologis Park Amagasaki 3 and Prologis Park Kobe), all of which are the Eligible Green Projects.
The Gunma Bank, Ltd. 2,000 2025/3/12 2030/9/12 2025/3/12 A portion of the prepayment of the short-term loans (11,000 million yen) borrowed on Dec. 2, 2024, which originally borrowed for the acquisition of Prologis Park Yachiyo 1 on Dec. 2, 2024, which is the Eligible Green Project.
Total Balance of Green Finance 41,300
Permitted Upper Limit of Green Eligible Debt 340,785

  • As of November 30, 2024

Green Equity

NPR conducts green equity offerings 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

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1. Use of proceeds
The proceeds will be allocated to new or existing investment or expenditure for the Eligible Green Projects.

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2. Process for project evaluation and selection
The projects to which the proceeds will be allocated are evaluated and selected by the ESG Committee.

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3. Management of proceeds
The proceeds are allocated to the Eligible Green Projects.

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4. Reporting
NPR reports on 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.

Reporting of Allocation Status of the Proceeds from Green Equity Offerings

The following is a series of reports on the allocation status of proceeds from our Green Equity Offerings to the Eligible Green Projects:

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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 Feb. 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 Finance Framework.”

THE ELIGIBLE GREEN PROJECTS IN NPR'S PORTFOLIO
  • Green Building

    Buildings which have been or planned to be acquired/renewed at least one of the following third-party certificates from (1) to (5) below:

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    (1) LEED Platinum, Gold, Silver (For LEED BD+C, version 4 or later)
    (2) BREEAM Outstanding, Excellent, Very Good
    (3) CASBEE S, A, B+
    (In the case of not certified by a third-party but assessed based on self-reporting, applicable only within three years from the date of completion of the building.)
    (4) DBJ Green Building Certification 5, 4
    (5) BELS BELS (2016 standard): 5, 4

    BELS (2024 standard)
    Non-residential: Level 6 to Level 4
    Houses with renewable energy equipment: Level 6 to Level 3
    Housing without renewable energy equipment: Level 4 to Level 3
  • Refurbishments to Properties in order to Improve Energy Efficiency or Reduce Environmental Impact (only expected to have a reduction effect of 30% or more at the planning)
  • Equipment Generating Renewable Energy and Its Installation

NPR has stipulated the eligible criteria for the "Eligible Green Projects" more stringent in the "Green Finance Framework" established in 2024. For details on the eligible criteria defined in the "Green Bond Framework" established in 2018 and the "Green Equity Framework" established in 2021, please refer to each framework from the links below.

GREEN BOND FRAMEWORK
GREEN EQUITY FRAMEWORK