Sustainable Finance | Sustainability | Nomura Real Estate Holdings, Inc.

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 (SLLs) 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 establishment	July 28, 2021
Sustainability coordinator	Chiba Bank
SPTs	SBT-approved target reduction rate for total greenhouse gas emissions^*3
Incentive	Preferential interest rate spread according to the achievement of SPTs

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

Positive Impact Finance

Overview

Positive Impact Finance (PIF) is based on the Principles for Positive Impact Finance developed by the United Nations Environment Programme Finance Initiative (UNEP FI) and is a loan agreement intended to comprehensively analyze and evaluate the impacts, both positive and negative, of borrowers’ business activities related to the environment, society, and economy, for supporting these activities on an ongoing basis. The loan is intended to create a positive circle for the borrower in achieving the SDGs and enhancing their financial value by utilizing the degree of contribution from corporate activities, products, and services in achieving the goals as an evaluation indicator, and by monitoring and supporting activities through engagement by the lending financial institution based on publicly disclosed information.
The Group will continue to leverage both PIF and SLLs to raise stable funds for promoting business activities that push us toward achieving the SDGs and realizing a sustainable society.

Lender	Sumitomo Mitsui Trust Bank	Shikoku Bank	Hokkaido Bank
Institution conducting PI assessment	Sumitomo Mitsui Trust Bank	Sumitomo Mitsui Trust Bank^*	Dogin Regional Research Institute
Drawdown date	March 31, 2023	July 31, 2023	September 29, 2023
Amount raised	17 billion yen	2 billion yen	3 billion yen

Uses a framework that allows for flexible PI financing from multiple financial institutions and is based on the PI assessment by Sumitomo Mitsui Trust Bank.
For more details, see here.

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.

Name	Nomura Real Estate Holdings, Inc. 15th Unsecured Bonds (Sustainability Bond)
Total amount of the bond issue	10 billion yen
Interest rate	0.390% on an annual basis
Bond payment date	February 26, 2021
Redemption date (duration of bond)	February 26, 2031 (10 years)
Coupon payment date	February 26 and August 26 every year
Bond ratings	A (Japan Credit Rating Agency, Ltd.) A- (A minus) (Rating and Investment Information, Inc.)
Third-party (external) evaluation of green bond	The third-party evaluation (see Reference 2) on the Nomura Real Estate Group Sustainability Bond Framework’s conformity with the Sustainability Bond Guidelines and other relevant principles was received from third-party evaluation agencies Vigeo Eiris (now Moody’s Japan KK), Japan Credit Rating Agency (JCR), and Rating and Investment Information (R&I).
Underwriters	Nomura Securities Co., Ltd. (lead manager), Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (independent underwriting manager), SMBC Nikko Securities Inc. (underwriting syndicate), Mizuho Securities Co., Ltd. (underwriting syndicate)
Structuring agent^*1	Nomura Securities Co., Ltd.
(Scheduled) Use of proceeds	The 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 text only)

Reference 2: Third-party Evaluation

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

Social Project
	Business Outline	Eligible Properties
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 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 (as of March 31, 2024)

	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 26, 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 and no change until March, 2024	0

All funds were used for refinancing.

(2) Impact Reporting

■Eligible Green Projects and Acquired Certification

Properties	Certification System	Certification Level	Date of Certification
PMO Nishi-Shinjuku	DBJ Green Building		May 24, 2021
PMO Jinbocho	DBJ Green Building		August 29, 2022

■Environmental Data about Eligible Green Projects (April 1, 2022 to March 31, 2023)

Properties	Amount of CO₂ Emitted	Amount of Energy Used	Amount of Water Used
PMO Nishi-Shinjuku	146t-CO₂	656MWh	1,875㎥
PMO Jinbocho	24t-CO₂	138MWh	482㎥

■Eligible Social Projects and Property/Business Data

OUKAS Funabashi
Total number of units	125
Number of residents (as of March 31, 2024)	131

H¹T
Number of offices (as of March, 2024)	151 offices (and 130 affiliated offices)
Membership (as of March, 2024)	Approx. 470,000

Green Bond (Shibaura Green Bond)

Overview

Nomura Real Estate Holdings, Inc. issues green bonds as a means of raising funds for projects that contribute to resolving environmental problems. When the green bonds are issued, the Nomura Real Estate Group Sustainability Bond Framework (Reference 1) is used.

	Nomura Real Estate Holdings, Inc. 16th Unsecured Bond (green bond)	Nomura Real Estate Holdings, Inc. 17th Unsecured Bond (green bond)
Amount	14 billion yen	6 billion yen
Coupon rate	0.698% per annum	1.311% per annum
Coupon payment date	October 19, 2023
Maturity date	October 19, 2028 (5 years)	October 19, 2033 (10 years)
Coupon payment date	April 19 and October 19 of each year
Rating (at time of issuance)	A+ (Japan Credit Rating Agency) A (Rating and Investment Information)
Second-party opinion	The Nomura Real Estate Group Sustainability Bond Framework has obtained a second-party opinion, stating that it complies with the Sustainability Bond Guidelines and other relevant principles, from independent third parties Vigeo Eiris (now Moody’s Japan KK), Japan Credit Rating Agency (JCR), and Rating and Investment Information (R&I).
Underwriters	Nomura Securities Co., Ltd. (lead manager), Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (independent underwriting manager), SMBC Nikko Securities Inc. (underwriting syndicate), Mizuho Securities Co., Ltd. (underwriting syndicate)
Structuring agent	Nomura Securities Co., Ltd.
Use of proceeds	Investment and loan funds to our subsidiaries to finance the development of the BLUE FRONT SHIBAURA（Shibaura Project）

Reporting

(1) Allocation Reporting

■Summary of the Eligible Project

The proceeds are allocated to expenditures and investments in the following project.

Green Project
	Project Outline	Project
	A project in the National Strategic Special Zone to develop a large-scale complex with an area of about 4.7 ha and a total floor area of approximately 550,000 m². The entire district is designed to achieve net zero CO₂ emissions through a 45% reduction in CO₂ emissions by improving the energy-saving performance of the buildings and introducing solar power generation and carbon-neutral city gas.	BLUE FRONT SHIBAURA （Shibaura Project）

■Allocation of proceeds (as of March 31, 2024)

	Amount (million yen)
Amount of proceeds (issue amount of the green bond less issuance costs)	19,892
Expenditures from time of funding (October 19, 2023) to December 31, 2023 (result)	-19,892
Balance of unallocated proceeds as of March 31, 2024	0

(2) Impact Reporting

■Name of Eligible Green Project, Certification Obtained, and Certification Date

Project	Certification System	Certified Level	Certification Date
BLUE FRONT SHIBAURA （Shibaura Project）	LEED	Gold	ー
BLUE FRONT SHIBAURA （Shibaura Project）	CASBEE	Rank S (scheduled)	ー

■Environmental Data about Eligible Green Projects

Project	CO₂Emission	Energy Consumption	Water Consumption
BLUE FRONT SHIBAURA （Shibaura Project）	ー	ー	ー

Achievements and Future Targets of Sustainable Finance Initiatives

■Achievements (as of March 31, 2024)

Sustainability bond	10 billion yen
Green bond	20 billion yen
SLL	310.0 billion yen across 71 financial institutions
PIF	22.0 billion yen at three financial institutions
DBJ Employee Health Management Rated Loan, BCM Rated Loan	2.5 billion yen at one financial institution
DBJ BCM Rated Loan	4.0 billion yen at one financial institution
Mizuho Human Capital Management Impact Finance	6.5 billion yen at one financial institution
Sustainable finance total	375.0 billion yen

■Future Target

To raise an additional 500 billion yen in sustainable finance initiatives in the five years to fiscal 2027 (cumulative total of 700 million yen)