19-D-1254 March 27, 2020 Green Loan Evaluation by Japan Credit Rating Agency, Ltd. Japan Credit Rating Agency, Ltd. (JCR) announces the following Green Loan Evaluation Results. JCR Assigned Green 1 to Daiwa Green Finance Program Trust ABL for Iwamizawa and Kushiro Solar Power Generation Facilities Daiwa Green Finance Program Trust ABL Subject : (Iwamizawa and Kushiro Solar Power Generation Facilities) Type : ABL Amount : JPY 2.2 billion Date of Loan Execution : March 27, 2020 Final Repayment Date : June 30, 2036 Redemption Method : Schedule repayment Use of Proceeds : Funds for the acquisition of solar power generation facilities <Green Loan Evaluation Results> Overall evaluation Green 1 Greenness Evaluation g1 (use of proceeds) Management, Operation and m1 Transparency Evaluation Chapter 1: Evaluation Overview Daiwa Energy & Infrastructure Co. Ltd. (the “Company”), a wholly owned subsidiary of Daiwa Securities Group Inc., was established to support the creation of future societies by promoting energy investments and loans based on SDGs and technology. The Company started operations in 2018 with the Energy Investment Division of Daiwa PI Partners Co. Ltd. as its predecessor. The Company aims to provide "new value" and contribute to SDGs by investing in renewable energy, infrastructure, and resources. As of September 2019, about 50% of the Company’s investments are renewable energy, including domestic and overseas solar power generation facilities. The Company intends to continue to actively invest in this field. To date, it has developed approximately 103MW of solar power generation facilities and 13MW of biomass power plants and all completed renewable energy projects have been operating stably. The environmental initiatives through renewable energy have been steadily implemented. The subject to be evaluated is the trust ABLs (the “ABLs”) backed by the loan for the fund for the acquisition of the solar power generation facilities. Hokkaido Renewable Energy Initiative Platform LLC (the “Project GK”), a joint venture company developed by the Company will acquire the facilities. The Company is a sponsor of the Project GK 1/13 https://www.jcr.co.jp/ and invests in silent partnerships. Project GK acquires the solar power generation facilities by borrowing loans from Hitachi Capital Trust Corporation (“Hitachi Capital”), a trustee of the ABLs, and by receiving fund by silent partnerships. Loans from Hitachi Capital are financed by funds raised through the money trust. Hitachi Capital executes loans to Project GK subject to predetermined conditions such as conclusion of the related agreements. During the loan period, principal and interest payment will be made to the ABL Lender in a manner predetermined by the loan agreement of the ABLs, funded by the revenue from the sales of the solar power generation facilities. [Scheme Chart] JCR confirmed that 100% of the funds procured by the ABLs will be used to finance the acquisition of the solar Asset Manager business consignment Daiwa Real Estate Asset Management Project GK ABL Lender ABL Trustee/Lender [Subject to Evaluation] ABL Investor lending Senior principal/interest Loans principal Settlor Beneficiary Hitachi Capital trust proceeds /interest Facilities Daiwa Securities Investor of Trust Beneficiary Interests principal/dividend fund Trust Beneficiary Trust Beneficiary Equity Sponser Interests Interests dividend Daiwa Energy & Infrastructure Stated Capital (100%) general incorporated association power generation facilities, and that the annual CO2 emissions reductions by the solar power generation facilities are expected to be 9,214 t-CO2. In addition, JCR confirmed that the Company recognizes the negative environmental impact that could be anticipated in the implementation of the project under the supervision of the relevant internal department and external third-party organizations, and takes necessary avoidance and mitigation measures. From the above, JCR considers that the ABLs are for green projects with high environmental improvement effects. JCR evaluates that the management of the fund raised through the ABLs has been established because of the funding allocation plan and the funding for the green projects, the implementation of tracking management, and the absence of any particular concerns regarding the operation of unallocated funds. In addition, as the appropriation of funds and the content of reports on the environmental improvement effects are appropriate, JCR evaluates that transparency of the ABLs to investors is high. As a result, based on the JCR Green Finance Evaluation Methodology, JCR assigns "g1" for the “Greenness Evaluation (use of proceeds)” and "m1" for the "Management, Operation and Transparency Evaluation". Consequently, JCR assigns "Green1" for overall "JCR Green Loan Evaluation." Detailed evaluation results are discussed in the next chapter. The ABLs meet the standards for the Green Bond Guidelines by the Ministry of the Environment and the standards for the Green Loan Principles12. 1 ICMA(International Capital Market Association) Green Bond Principles 2018 https://www.icmagroup.org/green-social-and-sustainability-bonds/green-bond-principles-gbp/ 2 Ministry of the Environment Green Bond Guidelines 2017 http://greenbondplatform.env.go.jp/pdf/greenbond_guideline2017.pdf 2/13 https://www.jcr.co.jp/en Chapter 2: Current Status of the project on each evaluation factor and JCR's evaluations Evaluation Phase 1: Greenness Evaluation Based on the current situation described in detail below and JCR's evaluation of the target areas, JCR evaluated 100% of the use of proceeds are allocated to green projects, and assigned "g1"for Phase 1: Greenness Evaluation, which is the highest. (1) JCR's key consideration in this factor In this section, JCR assesses whether the proceeds will be allocated to green projects that have explicit improvement effects on environment. Next, JCR assesses whether an internal department/division which is exclusively in charge of environment issues or a third party agency prove it sufficiently and have taken necessarily workaround or mitigation measures, in case of possibility on use of proceeds have negative impact on the environment. Finally, JCR confirms consistency with the Sustainable Development Goals (SDGs). (2) Current status of evaluation targets and JCR’s evaluation a. The environmental improvement effects of the project i. 100% of the funds are used to acquire solar power generation facilities, which is highly effective in improving the environment. All of the ABLs are used to fund the acquisition of the three solar power generation facilities (the “Facilities”) in Iwamizawa City, Hokkaido and Kushiro City, Hokkaido. The proceeds from the issuance of the ABLs will be fully appropriated to the loan to the Project GK through the Hitachi Capital. JCR confirmed from the agreements for this project that the loans to the Project GK will be used to fund the acquisition of the Facilities. Daiwa Real Estate Asset Management Co., Ltd. (a wholly owned subsidiary of Daiwa Securities Group Inc.) is expected to become the asset manager of the Facilities. Since all of the Facilities are in commercial operation, CO2 reductions will be realized immediately from the time of acquisition. Annual CO2 emission reductions were calculated by multiplying the annual power generation by the adjusted emission factor of the electric power company responsible for the business locations. Taking various conditions into account, the annual power generation by the Facilities is estimated to be about 13,591MWh, and the annual CO2 emission reductions are estimated to be about 9,214 t-CO2. Based on the above, JCR considers that the projects are high environmental improvement effect. (Summary of Projects) Annual CO Power Annual Power 2 Emission Project Name Location Generation Generation *1 *2 Reductions Output(kW) (MWh/ year) *3 (t-CO2/year) Iwamizawa Solar Iwamizawa City, 8,970 9,268 6,283 Power Plant Hokkaido Kushiro Solar Power Plant Kushiro City, *4 3,600 4,323 2,931 Hokkaido * 1: Based on the output scale. * 2: Based on materials provided by the Company. * 3: Methodology of calculating CO2 emissions reductions = Annual Power Generation × Adjusted emission factor for FY2018 (latest figures) * 4. Sum of Kushiro-Masuura Solar Power Plant and Kushiro-Boyo Solar Power Plant. 3/13 https://www.jcr.co.jp/en ii. The Use of Proceeds falls under the category of "renewable energy" as defined in the Green Bond Principles or the Ministry of the Environment's Green Bond Guidelines. The Fifth Strategic Energy Plan approved by the Cabinet in 2018 states that "Japan contributes to the development of the Japanese economy and society, and the sustainable development of the world by providing stable, sustainable and independent energy over the long term." Renewable energy is positioned as an important low-carbon energy source. The plan considers renewable energy to be important for energy security, regional revitalization, and reduction of environmental negative impact, focusing on the fact that renewable energy is produced domestically and does not emit CO2, while there are various issues such as stable supplies and costs at present. The plan aims to convert renewable energy sources to mainstay domestic power sources with benchmarks for 2030 and 2050, and to actively promote the introduction of renewable energy sources. Solar power generation can be used not only as distributed power system for large-scale development, in-house consumption and local consumption, but also as