Sekisui House Reit : Notice Concerning Borrowing of Funds (Positive Impact Finance) and Partial Early Repayment of Existing Borrowings

May 26, 2022

Real Estate Investment Trust Securities Issuer

Sekisui House Reit, Inc.

Representative:	Atsuhiro Kida, Executive Director
	(Securities Code: 3309)
Asset Management Company
Sekisui House Asset Management, Ltd.
Representative:	Toru Abe,
	President & Representative Director
Inquiries:	Koichi Saito, Chief Manager,
	Investor Relations Department
	TEL: [phone] (main)

Notice Concerning Borrowing of Funds (Positive Impact Finance)

and Partial Early Repayment of Existing Borrowings

Sekisui House Reit, Inc. ("SHR") hereby announces that it has decided today to undertake new borrowings (the "Borrowing") in addition to making a partial early repayment of existing borrowings (the "Early Repayment") as described below.

1. Borrowing of Funds

1. Description of Positive Impact Finance
   The Borrowing will be executed by entering into a loan syndication with Sumitomo Mitsui Trust Bank, Ltd. ("Sumitomo Mitsui Trust Bank") as the arranger for Positive Impact Finance ("PIF") in accordance with the Principles for Positive Impact Finance (Note 1) and the model framework of the Principles (Model Framework for financial products for corporates with unspecified used of funds and the Real Estate Investment Framework) issued by the United Nations Environment Programme Finance Initiative ("UNEP FI") (Note 2).
   PIF is a loan intended to continuously support corporations' activities of which they comprehensively analyze and evaluate the impacts (both positive and negative) related to the environment, society and economy. The most notable feature of PIF is that the degree of contribution from corporate activities, products, and services in achieving Sustainable Development Goals ("SDGs") is used as an evaluation indicator and is monitored based on publicly disclosed information while supporting such corporate activities through engagement.
   SHR and Sekisui House Asset Management, Ltd. ("SHAM"), to which SHR entrusts the management of its assets, share a philosophy with Sekisui House, Ltd., the sponsor of SHR, and position ESG as one of the top management priorities in aiming for sustainable growth. SHR has established a "Sustainability Policy" and strives to contribute to the realization of a sustainable society by complying with and implementing these policies to increase corporate value.
   In order to focus on the sustainable growth of SHR and the realization of a sustainable society, SHR has identified materiality (important issues) in 2020 based on the recognition that establishing guidelines to solve these issues and conducting related initiatives through business activities are indispensable.
   In addition, for the Borrowing, in light of changes in the environment, society and economy, SHAM reviewed some phrasing of the identified materiality along with the reassessment of targets (KPIs) linked to the materiality (Note 3). Furthermore, the following themes were selected among the materiality as activities that particularly have impact on achieving SDGs, and received qualitative and quantitative evaluations from Sumitomo Mitsui Trust Bank. The Borrowing has also obtained a third-party opinion (Note 4) from Japan Credit Rating Agency, Ltd. regarding compliance of the procedures related to this evaluation to the Principles as well as the rationality of the evaluation indicators.

Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shall prevail.

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Theme	Content	Goals and Indicators (KPI)	SDGs
		(a) Reduction of CO₂ Emissions
	・Reduce CO₂ emissions by	(Goal)
	・Reduce 50% CO₂ emission intensity of portfolio by FY
	promoting efficient use of
	2030 compared to FY 2018
	energy through capital
	(Indicator (KPI))
	investment and energy
	・CO₂ emission intensity (t-CO₂/㎡)
	conservation measures at
	(b) Reduction of Energy Consumption
	owned properties
	(Goal)
	・Promote investment in real	・Reduce 5% energy consumption intensity of portfolio
	by FY 2023 compared to FY 2018
	estate with excellent
	・Set reduction targets every 5 years after FY 2023, and
	environmental performance
	promote continuous reduction of energy consumption
Promoting Response	and actively acquire green
intensity
to Climate Change	certification with the aim of
(Indicator (KPI))
	understanding the objectivity
	・Energy consumption intensity (kWh/㎡)
	and areas for improvement in
	(c) Increase Acquisition Ratio of Green Certification
	the environmental
	(Goal)
	performance of owned
	・Achieve 70% or more of the portfolio with green
	properties
	certification by FY 2022
	[Relevant Assets]	・Continue to maintain 70% or more after FY 2022
	*Total floor base
	・Office building
	・Residence	(Indicator (KPI))
	・Green Certification Acquisition Ratio
	・Hotel
	*Certification for CASBEE for Real Estate, DBJ Green Building
		Certification
	・Reduce waste emissions by	(a) Reduction of Waste Emissions
	(Goal)
	promoting the 3Rs - "Reduce,
	・To not increase waste emission intensity of portfolio
	Reuse, Recycle"
	compared to FY 2018
Promoting Efforts
・Reduce water consumption	(Indicator (KPI))
Toward
・Waste emission intensity (kg/㎡)
by conserving water and
Environmental	(b) Reduction of Water Use
reusing rain water
	(Goal)
Resources
	・To not increase the water use intensity of portfolio
	[Relevant Assets]
	compared to FY 2018
	・Office building
	(Indicator (KPI))
	・Residence
	・Water use intensity (㎥/㎡)
	・Improve user satisfaction and	(Goal)
Providing	・Enhance the security, safety, and comfort of residents
value of owned properties by
Residents and	and tenants
providing safe, secure and
Tenants with a	(Indicator (KPI))
comfortable spaces to
1. Satisfaction of residents and tenants, and the status of
Secure and	residents and tenants
implementation of initiatives that contribute to the
Comfortable Space
[Relevant Assets]	satisfaction of residents and tenants
that Offers Peace of	2. Periodic assessment of earthquake risk and flood
Mind	・Office building	damage risk and the status of implementation of
・Residence
	measures to reduce such risks

(Note 1) The Principles for Positive Impact Finance was developed by UNEP FI in January 2017 as a financial framework for achieving SDGs. Companies disclose the level of contributions to achieving SDGs through KPIs, and banks then provide funding by evaluating the positive impact observed from these KPIs that is intended to guide the borrowers to increase positive impact and reduce negative impact. As a responsible financial institution, banks that provide such loans ensure that the impact continues by monitoring KPIs.

(Note 2) UNEP FI is an extensive and close partnership between the United Nations Environment Programme (UNEP) and more than 200 global financial institutions. Since its establishment in 1992, UNEP FI has been working in concert with financial institutions, policy/regulatory authorities to transform itself into a financial system that integrates economic development and ESG considerations. Additionally, UNEP is a subsidiary body to the United Nations system established in 1972 as an executing agency for the "Human Environment Declaration" and the "International Environment Action Programme".

Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shall prevail.

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(Note 3) For materiality and reassessed targets, please check the following website: https://sekisuihouse-reit.co.jp/en/esg/material.html

(Note 4) For the independent opinion from Japan Credit Rating Agency, Ltd., please check the following website: https://www.jcr.co.jp/en/greenfinance/

1. Terms of the Borrowing Fixed Interest Rate Borrowing

	Lenders	Borrowing	Interest rate	Drawdown	Borrowing	Repayment	Repayment
Category	amount	date	method	Security
(Note 1)	(Note 2) (Note 3)	date	method
	(mm yen)	(Note 4)	(Note 5)
	Sumitomo Mitsui	1,100
	Trust Bank, Ltd.
	Mizuho Bank, Ltd.	400
	Mizuho Trust &	300
	Banking Co., Ltd.
	Resona Bank,	300
	Limited.
	The Norinchukin	400
	Bank			Borrowing
					based on
	THE BANK OF
	300			individual loan
	FUKUOKA, LTD.
				agreement,
	Shinkin Central Bank	300			dated May 26,		Lump-sum	Unsecured
Long-			2022.
		To be determined	May 31, 2022	May 31, 2029	repayment	and
term			The lenders
The 77 Bank, Ltd.	300				at maturity	Unguaranteed
			under the loan
					agreement are
	The Yamaguchi
	400			as indicated to
	Bank, Ltd.
			the left of this
	The Shizuoka Bank,	300			table.
	Ltd.
	The Hiroshima Bank,	300
	Ltd.
	Aozora Bank, Ltd.	300
	Nippon Life	1,000
	Insurance Company
	The Joyo Bank, Ltd.	300
	Total	6,000	－	－	－	－	－	－

(Note 1) Sumitomo Mitsui Trust Bank, Ltd. is the arranger of the above borrowings.

(Note 2) The interest rates will be announced once determined.

(Note 3) The first interest payment date will be the last day of November 2022. Subsequent interest payment dates will be the last day of every six months and the principal repayment date. Where the relevant date is not a business day, such date will be the immediately following business day or (if the immediately following business day falls into the next calendar month) the immediately preceding business day.

(Note 4) Where the repayment date is not a business day, such date will be the immediately following business day or (if the immediately following business day falls in the next calendar month) the immediately preceding business day.

(Note 5) SHR may, by giving prior written notice and if certain other terms and conditions are met, make early repayment of the borrowings (in whole or in part), in the period between the drawdown date and the repayment date.

1. Purpose of the Borrowing
   The Borrowing (6,000 million yen) is for use as early repayment funds which will be repaid on May 31, 2022. For details, please refer to "2. Early Repayment Funds" below.

Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shall prevail.

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1. Amount, Use and Scheduled Outlay of Funds to be Procured from the Borrowing a. Amount of funds to be procured
   6,000 million yen
   b. Specific use of funds to be procured Funds for early repayment
   c. Scheduled outlay May 31, 2022

2. Early Repayment

1. Terms of the Early Repayment

		Balance before	Repayment	Balance after	Drawdown	Repayment	Scheduled
Category	Lenders	repayment	amount	repayment	repayment
date	date
		(mm yen)	(mm yen)	(mm yen)	date
	MUFG Bank, Ltd.	5,310	2,330	2,980
Short					February 1,	January 31,	May 31,
Mizuho Bank, Ltd.	4,360	1,910	2,450
term					2022	2023	2022
Sumitomo Mitsui
	Banking	4,030	1,760	2,270
	Corporation
	Total	13,700	6,000	7,700	－	－	－

(Note) For details of the above borrowings, please refer to "Notice Concerning Borrowing of Funds" announced on January 24, 2022.

1. Funds for Repayment
   The total borrowings of 6,000 million yen to be procured, as described in "1. Borrowing of Funds", will be used for the Early Repayment.

3. Status of Borrowings, etc. after the Borrowing and the Early Repayment

				(Unit: million yen)
		Before the Borrowing	After the Borrowing	Increase (Decrease)
Short-term borrowings (Note)	13,700	7,700	(6,000)
Long-term borrowings (Note)	215,442	221,442	6,000
	(repayment due within one year)	33,200	33,200	－
Total borrowings	229,142	229,142	－
Investment corporation bonds	34,500	34,500	－
	(redemption due within one year)	3,000	3,000	－
Total interest-bearing liabilities	263,642	263,642	－

(Note) Short-term borrowings refer to borrowings due for repayment within a period of one year or less from the relevant drawdown date, and long-term borrowings refer to borrowings due for repayment within a period of more than one year from the relevant drawdown date.

4. Other Matters Necessary for Investors' Appropriate Understanding/Judgment of Relevant Information With regard to risks associated with the Borrowing, there is no change from the contents of "Part 1. Fund Information; Section 1. Status of Fund; 3. Investment Risks" of the securities report submitted on January 25, 2022.

• Sekisui House Reit, Inc. website:https://sekisuihouse-reit.co.jp/en/

Disclaimer: This translation is for informational purposes only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shall prevail.

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