Hulic Reit, Inc. (Hulic Reit) aim to strengthen its funding base by expanding the group of investors interested in ESG investment through financing by Sustainability Finance, as well as to further promote initiatives for sustainability.

Sustainability Finance Framework

Use of Proceeds

1) Eligibility criteria for investments qualifying as sustainability finance

Hulic Reit will use the funds procured through sustainability finance programs to newly acquire (including refinancing of acquisition funds) assets that meet the various requirements for eligible green assets and eligible social assets defined below (“eligible sustainability assets”).

2) Eligibility criteria for investments qualifying as green finance

The use of funds procured through green finance will be as follows.

• A) Funds to newly acquire eligible green assets (including refinancing of acquisition funds)
• B) Funds for renovation work and other

＜Eligibility criteria＞

A）Eligible green assets

Assets for which any of the following certifications from a third-party certification body (“green building certification”) has been or will be obtained (“eligible green assets”)

• DBJ Green Building Certification (Note 1) : 3 Stars, 4 Stars or 5 Stars
• BELS Certification (Note 2) : 3 Stars, 4 Stars or 5 Stars
• Certification for CASBEE for Real Estate (Note 3) : B+, A or S Rank
• LEED Certification (Note 4) : Silver / Gold / Platinum

B）Renovation work

One of the following three requirements must be met.

1. Renovation work intended to improve the number of stars or the grade/rank by one or more of the eligible green asset certifications in A) above
2. Renovation work intended to reduce either energy consumption, greenhouse gas emissions such as CO2 emissions, or water consumption by 30% or more
3. Installation or acquisition of facilities related to renewable energy

3) Eligibility criteria for investments qualifying as social finance

Funds procured through social finance will be used to acquire (including refinancing of acquisition funds) private nursing homes (“eligible social assets”).

Management of proceeds

A）Green finance

The amount of debt calculated by multiplying total estimated book value of eligible green assets, which relates to Hulic Reit’s portfolio at the end of each fiscal period, by the ratio of interest-bearing debt to total assets (“amount of eligible green debt”), will be set as the upper limit amount for green finance and managed so that the balance of green finance does not exceed the amount of eligible green debt as of the end of each fiscal period.

＜Management of proceeds for Green finance^(Note1)＞

• Owned assets and eligible green assets are shown as assets held at the end of the 20th fiscal period (as of February 29, 2024) (excluding Hulic Higashi Nihombashi Building). In addion, certifications from a third-party certification organization are based on the acquisition status at April 18, 2024.
• The book value of each asset at the end of the 20th fiscal period (as of February 29, 2024) is shown rounded down to the nearest million yen.
• The amount is rounded down to the nearest million yen.

B）Social finance

The amount of debt calculated by multiplying total estimated book value of eligible social assets, which relates to Hulic Reit’s portfolio at the end of each fiscal period, by the ratio of interest-bearing debt to total assets (“amount of eligible social debt”), will be set as the upper limit amount for social finance and managed so that the balance of social finance does not exceed the amount of eligible social debt as of the end of each fiscal period.

C）Sustainability finance

The money used initially for green projects or social projects intended for green finance projects or social finance projects incorporated in sustainability finance will be managed within the scope of the funds procured through green finance and social finance programs, respectively.

Reporting (Excerpt)

A）Hulic Reit will announce the following items on its website or in the disclosure materials once a year.

• Status of allocation if the funds procured based on the Framework (sustainability finance, green finance, social finance) have not been fully allocated.
• As long as funds procured based on the Framework (sustainability finance, green finance, social finance) remain outstanding, the balance of loans under each scheme shall not exceed the eligible amount of each scheme.

B）As long as funds procured through green finance remain outstanding, the following information will be disclosed on the Hulic Reit’s website or disclosure materials once in a year.

• Status of certification of eligible green assets and an evaluation of the certification
• Energy consumption, greenhouse gas emissions such as CO2 emissions, and water consumption of eligible green assets as a whole (only for available assets)
• Either energy consumption, greenhouse gas emissions such as CO2 emissions, or water consumption of eligible green assets that have undergone renovation work, before and after renovation

C）As long as funds procured through social finance remain outstanding, the following information will be disclosed on the Hulic Reit’s website or disclosure materials once in a year.

• Overview of buildings and leases
• Status of tenants and overview of facilities (number of rooms, capacity, number of tenants, occupancy rate)
• Overview of operator
• Real estate appraisal value at end of fiscal period
• Trends in amount the Investment Corporation has invested in healthcare facilities
• 24-hour nursing system service and health management and other medical services
  (however, they will not be disclosed if we are unable to obtain permission from the operator)

D）As long as funds procured through sustainability finance remain outstanding, the following information will be disclosed on the Hulic Reit’s website or disclosure materials once in a year.

• Items to be described in B) for each eligible sustainability assets for which the funds procured through the sustainability finance was allocated
• Items to be described in C) for the entire eligible sustainability assets

In addition, in the event that the initial plan of funds allocation subsequently changes significantly and there are unallocated funds, this will be disclosed on Hulic Reit’s website or other materials.