Human Resources Management

Initiative Policy

At NBFM, human resources are the company’s most important asset. Recognizing that they are indispensable to the sustained development of the business (Stable growth and operation of NBF) and organization, we have established a human resources vision and strive to secure and develop specialized personnel with extensive expertise in real estate and finance and leadership personnel with management capabilities that will improve the organization’s productivity.

Human resources vision

To support the continued growth of the organization which we aim to be, the employees will remain committed to results and continue striving to achieve growth, while the company will provide a venue that fosters growth and reward results appropriately.

Initiatives System

Based on the above philosophy, NBFM is mainly engaged in the following initiatives:

• Recruitment activities for timely and appropriate talent acquisition in response to changes in the business environment, business conditions, and organizational status.
• Accepting many secondees from sponsoring companies to receive know-how in real estate-related operations.
• Optimal job rotation based on understanding all employees' desires, experiences, and work capabilities through annual employee satisfaction survey, interviews, etc., to ensure the right person is in the right place.
• Introduction of support systems for obtaining professional qualifications such as "The Association for Real Estate Securitization (ARES) Certified Master" and "Certified Building Administrator" (qualification acquisition assistance system available to all employees).
• Introduction of support systems for attending seminars, lectures, and courses that lead to self-improvement, aimed at nurturing the ability to perceive things from diverse perspectives and sensibilities and overflowing creativity in proposal-making.
• Additionally, conducting training to enhance the evaluation skills of department heads. Providing access to appropriate training and educational opportunities for each career stage, focusing on the development of interdisciplinary talents and leadership personnel with broad perspectives, insights, and ideas, not limited by industry or field.

Internal Training & Education System

The number of employees with certificates is shown below (including employees seconded from sponsors, etc.).

Certificates	The number of employees
ARES Certified Master	16
Real estate notary	31
Class-1 architect	3
Chartered Member of the Securities Analysts Association of Japan	4
Lawyer	1
Tax accountant	1
Certified Building Administrator	5

* As of January 31, 2024

Training Details

Training in Specialized Fields

We aim to regularly update the fundamental knowledge necessary for asset management by inviting external instructors to conduct various training sessions periodically. These sessions deepen our expertise in not only the state of the real estate market but also trends in the economic environment, the ever-changing dynamics of ESG, changes in laws related to asset management, and the complex compliance surrounding REITs, including understanding and adhering to changes. The training by external instructors, who are experts in their respective fields, facilitates this. Additionally, with the goal of developing globally active talent, we offer one-on-one English conversation training with native speakers. Within the company, we conduct weekly information sharing meetings with all employees (including managers) to share the current state of the real estate and financial sectors surrounding the REIT market in real-time.

Leadership Training for directors and general manager-level employees

We have training and human resource management programs for not only directors but also for prospective directors, providing opportunities to learn about management and leadership in their respective positions.

Training Track Details

	FY2021	FY2022	FY2023
Sustainability training	0 times	6 times	5 times
Leadership Training for directors and general manager-level employees	2 times	2 times	1 time
Real estate market training	5 times	8 times	8 times
Compliance training	13 times	14 times	12 times
Human rights training (LGBT, harassment, etc.)	1 time	2 times	1 time
Other training (IT training, etc.)	1 time	2 times	1 time
English training	Interested employees	Interested employees	Interested employees

Training participation in 2021, 2022, and 2023 is as shown below.

Training Participation

	FY2021	FY2022	FY2023
Average hours per an employee	15 hours	13 hours	17 hours
Average days per an employee	19 days	16 days	21 days

Human Resources seconded from Sponsors

As part of our human resources strategy, NBFM receives highly specialized human resources with diverse backgrounds from our multiple sponsors, with the aim of achieving qualitative improvement in our operational expertise and implementing high-quality asset management through leveraging their expert capabilities.

Number of People (Employees) seconded from Sponsors

	The number of human resources
Mitsui Fudosan Co., Ltd. (46% equity ratio)	6
Sumitomo Life Insurance Company (35% equity ratio)	2
Sumitomo Mitsui Trust Bank, Ltd. (5% equity ratio)	1

* As of March 31, 2024

Furthermore, management-level personnel seconded from our sponsors Mitsui Fudosan Co., Ltd. and Sumitomo Life Insurance Company possess both specialized knowledge and organizational management skills due to the human resources training systems at their original companies, and by continuing to attend training programs at those companies, they make contributions in terms of both asset management and making the organization more dynamic.

Conducting Regular Career Conversations, Performance Evaluation

NBFM has adopted a compensation system that rewards all employees (excluding seconded employees) for their achievements (performance evaluation). Compensation is divided into fixed and variable pay, with the variable pay, which is awarded based on individual performance evaluations, designed to enhance motivation and the desire for growth. Furthermore, the proportion of variable pay in the annual salary is higher for those in upper grades, reflecting a reward system that expects a greater contribution to company performance from those at higher levels.
Additionally, at NBFM, regular career consultations are conducted for all employees. Opportunities are provided at least once every six months for detailed discussions on one's career development and skill enhancement, receive feedback on performance, and express requests to the company, supporting the improvement of employees’ motivation and the broadening of their skills. The process includes initial interviews (goal setting) at the beginning of the period, mid-term interviews (progress check and advice), and final interviews (feedback on evaluation results), establishing a transparent goal setting and evaluation feedback system between supervisors and subordinates. The goal setting is divided into performance goals and behavioral characteristics (competency) goals, each of which is evaluated separately. Performance evaluations objectively quantify the degree of achievement of individual performance goals directly linked to departmental objectives, and this degree of achievement is reflected in the employee's variable compensation amount. The evaluation of behavioral characteristics (competency) objectively quantifies the extent to which the required competencies for the job grade were demonstrated, leading to an increase in the employee's fixed salary.

	FY2021	FY2022	FY2023
Rate of interviews with directors	100% (22 out of 22)	100% (21 out of 21)	100% (26 out of 26)

Health and Safety

Initiatives Policy

Recognizing that human resources are the company’s most important asset, we believe that creating a comfortable work environment and organization that will help promote the mental and physical health of all employees is an essential management issue.

Based on this approach, we meet regulatory standards in all our health and safety initiatives, such as promoting work-life balance, employee health, labor management, and risk management, as well as strive to create a work environment that enables all employees to continue working with peace of mind while improving their mental and physical health, including introducing a staggered working hours system and setting recommended paid vacation days.

Developing the Office Environment

With the relocation of our office in September 2019, we created workspaces that focus on employee comfort.

• Expansion of common space
• Workspaces that focus on employee comfort

• In April 2023, we converted the break area into an office space/free space and made changes to the layout that will further promote and enhance communication and foster synergy among employees.

Benefits and Work-Life Balance

As part of our efforts to create work environments that enable employees to continue working with peace of mind, we have established the following benefit programs in addition to promoting diverse work styles.

Examples

※In principle, all employees are eligible. (If limited, indicate in parentheses.)

＜Relating to Childbirth, Childcare, and Family Care＞

• Vacation, leave, and shortened work hours program for childcare
• Vacation, leave, and shortened work hours program for family care
• Enhanced support for employees balancing work with childcare, including establishing paid maternity leave and extending childcare leave period
  *Maternity leave taken rate: 100%, Childcare leave taken rate: 40%

＜Vacation-Related＞

• Promoting taking paid vacation time
  *Paid vacation usage rate: 74.0% in FY2023
• Special summer vacation or consecutive vacation days

＜Initiatives Targeting Employee Health＞

• Medical examination cost subsidy program (all direct-hire employees)
• Confirmation of medical examination by industrial physicians and public health nurses (all direct-hire employees)
• Conducting antigen tests for those who are interested
• Participating in events aimed at maintaining/improving health
• Influenza vaccination cost subsidy program

＜Initiatives Targeting Work Style＞

• Provision of satellite offices

＜Other＞

• Collaboration with companies providing benefit services
• Volunteer activities during working hours
• Defined contribution pension plan intended to support life planning
• Implementing base-pay increase in FY2024

Employee Stock Purchase Plan

We have established an Employee Stock Purchase Plan that enables direct-hire employees to acquire NBF investment units. Due to this system, it is anticipated that employees will be more focused on improving the company’s performance, which we believe will contribute to the continued growth of NBF and improve value for investors. Furthermore, we provide financial incentives to employees who use the system, with the aim of enhancing employee benefits.

Employee Satisfaction Survey

As part of our efforts to establish excellent relations between employees and the company, we conduct an employee satisfaction survey each year to verify how fulfilling their assigned duties are, how satisfied they are with the work environment, and their preferences with regard to introducing programs at the company (response rate: 100%). Based on the survey results, we provide feedback to all employees and also we strive to develop a better work environment.

	FY2021	FY2022	FY2023
Employee Satisfaction Score (5-point scale)	4.1	4.0	3.7

Example Initiatives

• Expanding the scope of the training support program
• Enhancing support for employees balancing work with childcare, including establishing paid maternity leave and extending the childcare leave period, etc.

Respecting Human Rights and Diversity, Equity & Inclusion

Initiatives Policy, Respecting Human Rights

In addition to respecting basic human rights, Mitsui Fudosan Group complies with laws and regulations concerning workers’ rights in the various countries where it conducts its business activities. Furthermore, it supports and respects the basic labor rights stipulated in the ILO Declaration on Fundamental Principles and Rights at Work. The Group complies with the laws and regulations that apply in the different countries and regions where it conducts its business activities. In accordance with the provisions of the UN Guiding Principles on Business and Human Rights, it also promotes human rights due diligence in its supply chain.

• Policy Prohibiting Discrimination
  We will eliminate all discrimination on the grounds of race, nationality, religion, gender, age, disability, or sexual orientation.
• Policy Prohibiting Harassment
  We will not tolerate any form of harassment, including sexual harassment or abuse of power.
• Policy to Prevent Child Labor or Forced Labor
  We will not permit child labor or forced labor. The Group has never used child or forced labor. To ensure that none is used in the future, we ensure that each business location complies thoroughly with the laws and regulations of its host country and conduct regular monitoring. In the unlikely event that such a violation is suspected to have occurred, we have also established a whistle-blower contact point that employees can report to.
• Policy to support Freedom of Association and the Right to Collective Bargaining
  We respect freedom of association and the right to collective bargaining.
• Policy Supporting Rights to a Minimum Wage and Living wage
  Mitsui Fudosan Group conducts labor management while abiding by the labor laws and regulations of each country. In terms of wages, we have adopted a basic policy of not only following rules on minimum wages in each country, but also paying wages that exceed those requirements.
• Principles and Procedures for Community Investment
  Mitsui Fudosan Group carries out business activities that do not infringe on human rights, either inside or outside Japan, by ensuring respect for the human rights of all stakeholders, including local residents and children. Through neighborhood creation, we are striving to form communities and create opportunities for interaction between diverse human resources, ultimately leading to new markets and employment. In this way, we offer various forms of value to the communities where we conduct business. By participating in and funding area management organizations, we invest in local communities, and work to increase the value of real estate.

Referring to international norms relating to human rights, such as the Universal Declaration of Human Rights, NBF and NBFM seek to identify any negative impacts of their business activities on the human rights of various people, including foreign residents and indigenous peoples, in advance and take steps to prevent or improve them with the aim of thoroughly promoting our business considering human rights.
In addition to complying with the relevant laws and regulations, NBF and NBFM support and respect the basic labor rights stipulated in the ILO Declaration on Fundamental Principles and Rights at Work.

• Effective approval of freedom of association and collective bargaining rights
• Prohibition of forced labor
• Prohibition of child labor and consideration for young workers
• Prohibition of discrimination in hiring
• Prohibition of abuse and harassment
• Appropriate wages and benefits
• Appropriate working hours, holidays, and vacation time

Based on the above policy, NBF and NBFM have established a Compliance Manual, and seek to impart the human rights-related policies to all employees, including those on temporary assignment, through activities such as compliance training.

• Freedom of association and collective bargaining rights: NBF and NBFM support and respect freedom of association and collective bargaining rights.
• Prohibition of discrimination, harassment, and other inappropriate behavior in the workplace: NBF and NBFM prohibit discrimination and inappropriate behavior for any reason unrelated to one’s position in the business, including on the basis of race, nationality, birthplace, religion, belief, gender, age, disability, sexual orientation, gender identity, education, marital status, and employment type. Furthermore, we do not tolerate abuse of any kind in the workplace, including sexual harassment and power harassment.
• Prohibition of child labor and forced labor: There has never been any child labor or forced labor at NBF or NBFM. Furthermore, a contact point has been established for reporting concerns if a potential violation is discovered.

Promoting Diversity, Equity, & Inclusion

Diversity, Equity & Inclusion Initiative Policy

NBFM pursues various diversity, equity & inclusion initiatives to enable a wide range of human resources to display their individual skills.
Our passionate, capable employees have a diverse range of skills, experiences, and values; as such, we are working to ensure an environment where they can demonstrate their individual abilities to the upmost, and recognize one another as individuals, evaluated fairly regardless of their race, nationality, religion, gender, age, presence or not of disability, gender identity, sexual orientation, or other characteristics. To this end, we are promoting workstyle reforms and enhancing our human resources system so as to raise organizational productivity and our employees' work-life balances.

• Promoting female participation (female employee rate)
  

  FY2019	⇒	FY2023
  13.3%		39.5%

• Wide age range
  

  FY2019	⇒	FY2023
  20s – 30s: 42%		51%
  40s – 50s: 54%		44%
  60s: 4%		5%

• Continued employment system (promoting participation of employees above retirement age)
  We have created a system for continuing to employ interested employees above the designated retirement age until they reach the age of 65, with the aim of drawing on the extensive specialized skills and management capabilities that they have accumulated to date to train younger employees and maintain and improve the vitality of the business. The continuous employment system enables participants to use the same leave program, flex-time program, etc. as regular employees.

Dealing with Harassment

In its internal regulations such as the Compliance Manual and Regulations on the Prohibition of Harassment, NBFM prohibits all employees (including managers) from harassing others for reasons such as nationality, gender, age, pregnancy, childbirth, etc. or engaging in actions that could potentially lead to harassment. Furthermore, we conduct regular training.

Training Examples

• Training for all employees, including management, on methods of dealing with discrimination and harassment when they occur.
• Training on types of discrimination and harassment (power harassment, sexual harassment, maternity harassment), examples of language and behavior that constitute harassment, and methods for dealing with discrimination and harassment when subject to them (whistleblowing, prohibition of adverse treatment, etc.).
• Training to provide a deeper understanding of how to avoid discriminating against LGBT people and appreciate their diverseness and individuality.

System for Receiving Requests and Grievances from Employees

We have introduced a system (setting up suggestion boxes) allowing all employees, including those on temporary assignment, to submit a wide range of opinions relating to human resources, the work environment, etc. while maintaining their anonymity. Submitted opinions are shared with management as needed. Based on whistleblower protection regulations, NBFM has also set up internal and external whistleblowing contact points and established a system that enables conduct toward employees, suppliers, etc. that violates human rights (including discrimination and harassment), unfair or inappropriate conduct, and the like to be anonymously reported to a compliance officer or external law firm. When handling the details of requests or grievances, the rules prohibit adverse treatment of whistleblowers, including protecting whistleblowers’ personal information and prohibiting retaliatory treatment, and oblige NBFM to determine and implement appropriate measures based on the reported information, as well as mandating that NBFM, whistleblowing/consulting contact persons, and individuals responsible for handling whistleblowing shall not disclose or leak the fact that whistleblowing or consulting occurred, the details of the whistleblowing or consultation, personal information obtained in the investigation, etc. without a valid reason (duty of confidentiality).
Furthermore, if a whistleblower is subjected to adverse treatment due to consulting or whistleblowing, they may report this to a whistleblowing contact point. After receiving this report, the whistleblowing contact person shall promptly implement corrective measures addressing the adverse treatment to protect the whistleblower.

Labor Standards and Practices

Labor-Management Relations

No labor union has been formed at NBFM, but it recognizes basic labor rights such as freedom of association and collective bargaining rights in its Compliance Manual, etc. Furthermore, regarding labor-management relations, NBFM has not made any layoffs or the like in conjunction with mergers, acquisitions, etc. in the past.
At NBFM, all employees are informed about policies relating to labor standards such as wages and working hours.

System Enabling Employees to Engage in Dialogue with Management

At NBFM, meetings between employees and directors are held twice a year as a mechanism for dialogue between employees and company management. These provide opportunities for employees to make requests related to the company’s systems and discuss topics such as their personal career vision.

Compliance with Labor Standards

During the period from January 1, 2023, to December 31, 2023, there were no serious violations of labor standards.

Paying Higher than Minimum Wage and Complying with Equal Pay for Equal Work

NBFM not only complies with the minimum wage stipulated in labor laws but also has a basic policy of paying wages exceeding that amount. Along with paying a wage higher than the minimum wage specified, it is our policy to have a compensation system that ensures equal pay for equal work.

Reducing Excess Working Hours and Overtime

With the aim of reducing excess working hours and overtime, NBFM has established a labor-management agreement (“36 agreement”) and pursues the following initiatives:

• Monitoring working hours and interviews with employees by industrial physicians and public health nurses
• Notifying employees who may be working long hours and their supervisors
• Encouraging employees to take at least two consecutive days of paid vacation
• Taking thorough steps on a monthly basis to inform immediate supervisors of the need to appropriately manage their subordinates’ time at work and workload and all employees of the need to manage their time at work

Personnel Data

In order to secure human resources with high-level knowledge and experience over the long term, improvement of internal systems including benefit and welfare programs and other schemes has been conducted. As a result, human resources for maintaining stable fund management have been secured.

Item	FY2021		FY2022		FY2023
Total number of employees	31		33		36
（Number of regular employees）	22	Male 13 Female 9	23	Male 13 Female 10	26	Male 16 Female 10
Percentage of women	40.9%		43.4%		38.5%
Average employment period	6.1 years		5.5 years		5.3 years
Rate of used portion of paid vacation	56.4%		77.7%		74.0%
Rate of use of medical examinations	100%		100%		100%
Employment of People with Disabilities	0		0		0
(Number of seconded employees)	9		10		10
Number of newly hired employees	4	Male 1 Female 3	5	Male 2 Female 3	7	Male 6 Female 1
Number of retired employees	0		4		4
Employee turnover rate in the fiscal year	-		10.0%		13.3%
Number of parental leave takers	0	Male 0 Female 0	1	Male 0 Female 1	2	Male 1 Female 1
Return-to-work rate after parental leave	-		100%		100%
Temporary Employee	5		5		7

(*)In this report, indication of “All employees” means entire employees including regular employees and seconded employees mentioned above. In addition, although temporary employees are not in direct employment relationship with NBFM, some of the initiatives for NBFM employees shown in this report target temporary employees as well.