ESG Finance
Overview of the Green Finance Framework
Use of Proceeds from Green Finance
The net proceeds from green finance will be used for the acquisition of assets in the Eligible Green Projects as provided for in Eligible Green Projects below, refinancing of loans required for the acquisition of assets in the Eligible Green Projects, and for the redemption of the investment corporation bonds that have already been issued (including green bonds) for the acquisition of assets in the Eligible Green Projects.
Eligible Green Projects
Eligible Green Projects mean the projects involving assets that meet either of the following requirements.
a. Being a green building
A new, existing or refurbished building for which at least one of the following certifications has been obtained:
| i) DBJ Green Building Certification (in Japan): 5, 4 or 3 Stars |
| ii) CASBEE (in Japan): S, A or B+ |
| iii) BELS (in Japan): 5, 4 or 3 |
| iv) LEED (in the United States): Platinum, Gold or Silver |
b. Being renewable energy-based power generation equipment
Sustainability-Linked Bonds
a. Overview of Sustainability Lined Bonds
Sustainability-Linked Bonds (“SLBs”) are bond instruments for which the terms change depending on whether the issuer achieves pre-determined sustainability/ESG objectives. The Sustainability-Linked Bonds issued by GLP J-REIT in September 2021 was the world’s first Reward-type ( Note) (interest rates are cut when the Sustainability Performance Targets are achieved) sustainability-linked
bonds among the global public bonds market.
(Note) Reward-Type refers to a structure which includes a step-down provision based on achievement of KPIs or SPTs.
b. Definition of Sustainability Performance Targets (SPTs)
In issuing the Sustainability-Linked Bonds, GLP J-REIT has set the target of over 80% at the coverage rate of the properties that obtained at least one High-rank in environmental certification among properties owned by GLP J-REIT, based on Floor Area.
| i) DBJ Green Building Certification (in Japan): 5, 4 or 3 Stars |
| ii) CASBEE (in Japan): S, A or B+ |
| iii) BELS (in Japan): 5, 4 or 3 |
| iv) LEED (in the United States): Platinum, Gold or Silver |
Determination of the achievement status of SPTs and the application of Reward
In the case of Sustainability-linked Bonds issued by GLP J-REIT in September 2021, the Sustainability-Linked Bond is structured as a Reward type that an interest rate of 0.234% (0.05% reward compared with the initial interest rate) will be applied from
the day immediately following after September 28 of the following year of the
Observation reference date if SPTs is achieved as of the Observation reference date.
The first Observation reference date will be the end of December, 2024 and the first
reward applicable date will be September 28, 2025.
The achievement status of SPTs is determined every year until the Redemption date.
An interest rate of 0.234%, the same as after the reward of 0.05%, will be applied if
SPTs is achieved as of the Observation reference date, and an interest rate of
0.284%, the same as initial interest rate, will be applied from the day immediately
following September 28 of the following year of the Observation reference date if
SPTs is not achieved as of the Observation reference date.
Management of Proceeds
The upper limit of green finance (limit of the "Debts of Eligible Green Projects") shall be the amount calculated by multiplying the total acquisition cost of the Eligible Green Projects by the ratio of actual interest-bearing debt to total assets as of the end of the latest fiscal period that can be calculated on the payment date or loan date of each investment corporation bond, or as of the end of every February.
- Eligible Sustainability Projects that also fall under the definition of Eligible Green Projects under GLP J-REIT’s Green Finance Framework are included both in the total value of Eligible Sustainability Projects and in that of Eligible Green Projects. Any amount of funding provided for those projects in the form of sustainability finance or green finance is included both in the outstanding balance of sustainability finance and in that of green finance. The amount included in the total value and the outstanding balance overlaps between the two forms of finance.
Green Bond Issuance
GLP J-REIT 12th Unsecured Bonds (Special pari passu conditions among specified investment corporation bonds) (Green Bonds)
| Total issue amount | 5,100 million yen |
|---|---|
| Issuance date | December 20, 2018 |
| Redemption date | December 20, 2028 |
| Interest rate | 0.680% |
| Others | Unsecured, not guaranteed |
GLP J-REIT 13th Unsecured Bonds (Special pari passu conditions among investment corporation bonds) (Green Bonds)
| Total issue amount | 8,000 million yen |
|---|---|
| Issuance date | July 8, 2019 |
| Redemption date | July 6, 2029 |
| Interest rate | 0.608% |
| Others | Unsecured, not guaranteed |
GLP J-REIT 14th Unsecured Bonds (Special pari passu conditions among specified investment corporation bonds) (Green Bonds)
| Total issue amount | 5,000 million yen |
|---|---|
| Issuance date | November 27, 2019 |
| Redemption date | November 27, 2029 |
| Interest rate | 0.550% |
| Others | Unsecured, not guaranteed |
GLP J-REIT 18th Unsecured Bonds (Green Bonds) (Sustainability Linked Bonds)
| Total issue amount | 6,000 million yen |
|---|---|
| Issuance date | September 28, 2021 |
| Redemption date | September 28, 2028 |
| Interest rate | 0.284%(Note) |
| Others | Unsecured, not guaranteed |
The total outstanding balance of green finance as of September 28, 2021 is 29,100 million yen.
- An interest rate of 0.284% per annum is applied during the period from the day immediately following September 28, 2021 through September 28, 2025. An interest rate of 0.234% per annum is applied from the day immediately following September 28, 2025 if GLP J-REIT determines that SPTs is achieved as of each Observation date after the end of December 2024.
Reporting
GLP J-REIT will continue to disclose the following indicators as of the end of every February so long as it has a green finance balance.
Total amount of allocated proceeds/ Amount of proceeds not yet allocated
GLP J-REIT 12th Unsecured Bonds (Green Bonds)
| Total amount of allocated proceeds | 5,068 million yen |
|---|---|
| Amount of proceeds not yet allocated | 0 yen |
GLP J-REIT 13th Unsecured Bonds (Green Bonds)
| Total amount of allocated proceeds | 7,941 million yen |
|---|---|
| Amount of proceeds not yet allocated | 0 yen |
GLP J-REIT 14th Unsecured Bonds (Green Bonds)
| Total amount of allocated proceeds | 4,967 million yen |
|---|---|
| Amount of proceeds not yet allocated | 0 yen |
GLP J-REIT 18th Unsecured Bonds (Green Bonds) (Sustainability-Linked Bonds)
| Total amount of allocated proceeds | 5,963 million yen |
|---|---|
| Amount of proceeds not yet allocated | 0 yen |
- Amounts are rounded to the indicated unit.
Number of properties that are Eligible Green Projects
Information as of February 28, 2023:
| Number of properties that are Eligible Green Projects | 65 |
|---|
Evaluation by an External Organization
With regard to the eligibility of the green finance framework, GLP J-REIT has obtained the evaluation of "Green 1", the highest JCR Green Bond Evaluation from Japan Credit Rating Agency, Ltd. (JCR), which is a green bond evaluation organization.