Sustainable Finance

Due to its involvement in real estate development and services, the Group bears a social responsibility to build communities that connect today with tomorrow’s possibilities by pursuing its vision of “New Value, Real Value.” With the goal of contributing to the sustainable development of society, we are advancing a variety of efforts, including the issuance of sustainability-linked loans and sustainability bonds.

Sustainability Linked Loans

Overview

Sustainability-linked loans are designed to enhance the sustainability performance of borrowers and encourage sustainable economic activities and growth. Borrower performance is measured through sustainability performance targets (SPTs), which are set in alignment with the interest rate and other loan terms with the borrowers and also with their ESG strategy. Borrowers are either incentivized or disincentivized depending on performance against SPTs.
With support from the Chiba Bank as the sustainability coordinator, the Nomura Real Estate Group established an SLL Framework*1, the first of its kind in Japan, raising a fund of 11 billion yen for financing and refinancing purposes from nine of the TSUBASA Alliance*2 member banks, including the Chiba Bank, on July 30, 2021.

We intend to increase our transactions with ESG-oriented financial institutions via the SLL Framework and thereby stabilize our procurement of sustainability funds. Meanwhile, we are strengthening our ESG initiatives to better respond to global warming, human rights and labor issues and further reinforce our governance systems.

A framework designed to facilitate SLL operations for both the borrower (e.g., the Nomura Real Estate Group) and the lenders (e.g., banks such as the Chiba Bank) by comprehensively defining all SLL terms that need to be specified for each contract, such as SPTs, incentives and reporting requirements.

A wide ranging alliance with the participation of the following ten regional banks: Chiba Bank, Daishi Hokuetsu Bank, Chugoku Bank, Iyo Bank, Toho Bank, North Pacific Bank, Musashino Bank, Shiga Bank, Bank of the Ryukyus, and Gunma Bank.

SLL Framework Overview

Date of establishmentJuly 28, 2021
Sustainability coordinatorChiba Bank
SPTsSBT-approved target reduction rate for total greenhouse gas emissions*3
IncentivePreferential interest rate spread according to the achievement of SPTs

A total GHG emission reduction of 35% by 2030 from the FY2019 level

Sustainability Bond

Overview

Nomura Real Estate Holdings issued a sustainability bond (corporate bond) to raise funds for projects that will contribute to the resolution of environmental and social issues. The Company also formulated the Nomura Real Estate Group Sustainability Bond Framework (See Reference 1) when it issued the bond.

NameNomura Real Estate Holdings, Inc. 15th Unsecured Bonds
(Sustainability Bond)
Total amount of the bond issue10 billion yen
Interest rate0.390% on an annual basis
Bond payment dateFebruary 26, 2021
Redemption date (duration of bond)February 26, 2031 (10 years)
Coupon payment dateFebruary 26 and August 26 every year
Bond ratingsA (Japan Credit Rating Agency, Ltd.)
A- (A minus) (Rating and Investment Information, Inc.)
Third-party (external) evaluation The evaluation reports (see Reference 2) on the Nomura Real Estate Group Sustainability Bond Framework’s conformity with the Sustainability Bond Guidelines and other relevant principles were received from third-party evaluation agencies Vigeo Eiris (V.E), Japan Credit Rating Agency (JCR), and Rating and Investment Information (R&I).
Underwriters Nomura Securities Co., Ltd. (Lead Managing Underwriter), Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (Independent Lead Manager), SMBC Nikko Securities Inc. (Syndicate Underwriter), and Mizuho Securities Co., Ltd. (Syndicate Underwriter)
Structuring agent*1Nomura Securities Co., Ltd.
(Scheduled) Use of proceedsThe bond proceeds are to be used as investments and loans for refinancing the costs of the PMO, H¹T and OUKAS businesses to Nomura Real Estate Holding’s subsidiaries.

A structuring agent supports the issuance of a sustainability bond by providing the issuer with advice on the formulation of the sustainability bond framework and the acquisition of the second opinion and third-party reviews.

Reference 1: Nomura Real Estate Group Sustainability Bond Framework (Japanese only)

Reference 2: Third-party Evaluation Reports

JCR’s Evaluation of the Sustainability Finance Framework (Japanese only)
JCR’s Evaluation of the Sustainability Bond (Japanese only)
The Second Party Opinion from Vigeo Eiris (Japanese only)
The Second Party Opinion from R&I (Japanese only)

Reporting

(1) Reporting on Fund Appropriation Status

■Overview of Eligible Businesses

Bond proceeds have been appropriated to cover the expenses and investments for the following businesses and properties.

  
Green Project
Business Outline Eligible Properties
PMO (ピーエムオー) Premium midsize office
PMO (Premium Midsize Office)
The PMO business handles medium-sized office buildings, which feature functionality and sophistication on par with large-scale buildings and offer an excellent working space for tenants.

Basically, PMO buildings accommodate one tenant per floor to provide efficiency, independence and safety. Tenants, including those who handle sensitive information, have found that security measures taken for the buildings have also been highly reliable.
PMO Nishi-Shinjuku

PMO Kanda-Iwamotocho
  
Social Project
Business Outline Eligible Properties
OUKAS(オウカス)
OUKAS
The OUKAS business develops and operates elderly housing with supportive services under the aim of providing seniors with housing that enables them to enjoy their life and look forward to tomorrow every day.
OUKAS residences are designed to provide senior residents with daily wellness programs (physical exercise, diet and good sleep) and 24-hour care services.
OUKAS Funabashi
H1T (エイチワンティー) Human First Time
H¹T
Human First Time
The H¹T operates pay-per-use shared office spaces to maximize people’s creativity and productivity. Comfortable, sophisticated and conveniently located, these spaces serve as superb satellite offices that make diverse workstyles a reality. H¹T

■Fund Appropriation Status (February 26–March 31, 2021)

Funds (Million Yen)
Funds raised (calculated by subtracting bond issuance expenses from amount of bond issued) 9,937
Funds spent during the period from February 21, 2021, the day of the bond issue, to the end of fiscal 2020, on March 31, 2021. (actual value) -9,937
Unspent funds as of March 31, 2021 0

All funds were used for refinancing.

(2) Impact Reporting

■Eligible Green Projects and Acquired Certification

PropertiesCertification SystemCertification LevelDate of Certification
PMO Nishi-ShinjukuDBJ Green Building
May 24, 2021
PMO Kanda-Iwamotocho IIDBJ Green Building
April 30, 2021

■Environmental Data* about Eligible Green Projects (February 26–March 31, 2021)

PropertiesAmount of CO₂ EmittedAmount of Energy UsedAmount of Water Used
PMO Nishi-Shinjuku
PMO Kanda-Iwamotocho II

Not disclosed because the period in fiscal 2020 was shorter than a month.

■Eligible Social Projects and Property/Business Data

OUKAS Funabashi
Total number of units125
Number of residents (as of June 30, 2021)131
H¹T
Number of offices (as of July 2021)58 offices (and 45 affiliated offices)
Membership (as of July 2021)Approx. 140,000

Sustainability