Social Finance

Under the basic philosophy of obtaining stable income and pursuing sustainable growth through a wide range of investments in “spaces where people live and stay”, KDR defines healthcare-related facilities, which become social infrastructures, as one of its main investment targets as a bridge connecting the capital market and the healthcare industry.
KDR aims to maximize unitholder value by continuously investing in these facilities and conducting stable management of them.

In Japan, a super-aging society, the shortage of healthcare facilities are urgent social issues. KDR believes that there is a growing need in society for REITs to play an important role as a purchaser and manager of healthcare facilities.
KDR is further enhancing initiatives for sustainability through the issuance of bonds and borrowing, which are limited use that make a high degree of contribution to society, and KDR also aims to contribute to the development of the domestic social financial market by providing investment opportunities to and collaborating with financial institutions who are proactively conducting ESG investment and financing.

Social Bond

KDR issued the J-REIT’s first social bonds in December 2019, and its second social bonds in May 2021. Offering an opportunity for investors who want to make ESG investments has attracted a broader range of investors and diversified fund procurement channels.

“Social bond※” refers to bonds for which the entire amount of the procured funds is allocated only to initial partial or full investment into new or existing eligible social projects or refinancing and is compliant with the four core requirements of the social bond principles (use of procured funds, evaluation and selection process of project, management of procured funds and reporting).

※ The International Capital Markets Association defined Social Bond Principles.

Social Finance Framework

■Use of funds procured through social finance
The Investment Corporation will allocate the funds procured through social finance to the acquisition of assets eligible for social finance (described in below), repayment of borrowings required for such acquisition and redemption of investment corporation bonds (including refinance).
■Assets eligible for social finance^※
 Assets eligible for social finance refer to assets fulfilling the following eligibility criteria.

Senior living facilities	private senior homes Serviced senior housing Apartments for the elderly Group homes for elderly with cognitive impairment Small multi-function facilities Daycare facilities, etc.
Medical facilities	Hospitals Clinics Medical malls Nursing and health facilities, etc.

※ Please refer to "Healthcare Facilities" in the list of portfolios for assets eligible for social finance of the Investment Corporation.

■Selection criteria and process of project 
The requirements of assets eligible for social finance are stipulated in the Management Guidelines of Residential REIT Division prepared by Kenedix Real Estate Fund Management, Inc., the asset management company of the Investment Corporation. In addition, as for the procurement of social finance, compliance with the eligibility criteria (eligibility criteria in (2) above) of social finance will be screened in the process of decision-making for the acquisition of assets and borrowing of funds.
■Management of procured funds
Debt eligible for social finance is the amount calculated by multiplying the total acquisition price of the assets eligible for social finance in the portfolio of the Investment Corporation with the ratio of interest-bearing debt to total assets, and the upper limit of social finance will be set.
The maximum amount available for social finance is ¥36.8 billion and the Investment Corporation currently issues ¥3.7 billion as social bonds and borrows \4.9 billion as social loan as of January 31, 2023.


The figures as of the end of January 2023 are as follows.

Aquisition price	¥300.9 billion (180 properties)
Assets eligible for social finance	¥73.3 billion (37 properties)
LTV	50.2％
Debt eligible for social finance	¥36.8 billion

Allocation report of social finance

As of January 31 2023, the allocation report about social bond are as follows. 

Total amount of outstanding social bond: ¥ 3,700 million 

Kenedix Residential Next Investment Corporation Sixth Series Unsecured Investment Corporation Bonds（the “social bond”）

Total amount issued	¥ 2,000 million
Total amount of funds raised (net proceeds)	¥ 1,983 million
Interest rate	0.750％per annum
Issue date	December 20, 2019
Redemption date	December 20, 2029
Total Allocated amount	¥ 1,983 million (100% allocated on December 30, 2019）
Press release at pricing date	Notice Concerning the Issuance of the Investment Corporation Bonds (Social Bond)

Kenedix Residential Next Investment Corporation Seventh Series Unsecured Investment Corporation Bonds（the “social bond”）

Total amount issued	¥ 1,700 million
Total amount of funds raised (net proceeds)	¥ 1,684 million
Interest rate	0.720％per annum
Issue date	May 31, 2021
Redemption date	May 30, 2031
Total Allocated amount	¥ 1,684 million (100% allocated on Jue 1, 2021）
Press release at pricing date	Notice Concerning the Issuance of the Investment Corporation Bonds (Social Bond)

As of January 31 2023, the allocation report about social loan are as follows. 

Total amount of outstanding social loan: ¥ 4,900 million 

Series 55-A