7-3 Nihonbashi Odenmacho, Chuo-ku, Tokyo, Japan
Phone: +81-3-5623-8102
URL: https://www.hulic.co.jp/en/

Integrated Report2024

Publication of Integrated Report 2024

CONTENTS
Corporate Philosophy, Sustainability Vision and Medium- and Long-term Management Plan

2

Progress of Medium- and Long-Term Management Plan (2020–2029)
and Medium-Term Management Plan (2023–2025)

About Hulic Group

President,
Representative Director

Chairman,
Representative Director

Message from the Executive Officer in Charge of42

4

Finance Financial Strategy and Capital Management

Profile of Hulic

6

Hulic Growth Strategies by Business Segment

8

Sustainability Initiatives

18

Contributing to Actions for Mitigating Climate
Change and Reducing our Environmental Impact

56

Providing Safe, Secure Buildings and Spaces

64

Collaborating with Business Partners and Local Communities

66
71
74

Representative Director

SaburoNishiura

38

History of Hulic Group
Message from the Chairman,

TakayaMaeda

Business Strategies

Message from the President,

Representative Director
Financial and Non-financial Highlights

24

Hulic Group’s Value Creation Story
Hulic Group’s Value Creation Process

26

Promoting Diversity and the Developmentof Professional Human Resources

Special Feature Hulic’s Story of Sustainability

28

Maintaining and Improving Governance Trusted by Stakeholders

Materiality Assessment

32

KPIs/Targets and Results for Non-finanial Information

36

46

Financial and Corporate Information, etc.
Financial Information

88

Stock Information

98

Corporate Information

99

External Evaluations

100

Third-party Assurance

101

About the Integrated Report
Financial Information

Non-financial Information
Integrated Report 2024

The Report explains our initiatives for the sustainable growth of the Hulic Group (“the Group”) withfinancial and non-financial information.

• Summary of Consolidated Financial Results, Investor• Initiatives for Sustainability• FACTBOOK• IR Information• Sustainability Book• News Release

Presentations

https://www.hulic.co.jp/en/ir/

https://www.hulic.co.jp/en/sustainability/

Editorial Policy
For more than half a century, Hulic Co., Ltd., (“theCompany”) has been in a real estate leasing businessfocused on office buildings in central Tokyo. With thecorporate philosophy of “for the realization of a society fullof safety, peace of mind and trust, and for the continuous
improvement of corporate value,” we have been pursuing
growth of our company as well as realization of asustainable society.
   This report explains the Company’s value creation
process and how the strengths we have cultivated feed into
increasing medium- to long-term corporate values as well
as social value. It also outlines Medium-Term Management

Plan (2023-2025) and topics such as initiatives in the field ofsustainability to support our growth.
   This report references a range of materials to ensure thatthe editorial process and the content meet our standards.
These reference materials include the International Integrated
Reporting Framework recommended by the International
Financial Reporting Standards (IFRS) Foundation and the
Guidance for Collaborative Value Creation 2.0 issued by
Japan’s Ministry of Economy, Trade and Industry.
   We would like to use the Report as one of ourcommunication tools with our shareholders, investors, andour stakeholders.

The aims of the Report are to facilitate a multi-facet understanding of the Group’s sustainable growth among investors and other stakeholder groups
as well as to create new opportunities for dialogues. In issuing the Report, it has been reviewed by the Board of Directors. This report also includes
messages from executive officers that convey Hulic’s management strategy. The Chairman and Representative Director provides a general overview
of management strategy, the President and Representative Director explains fiscal year materials as well as the Medium-Term Management Plan, andthe Executive Officer in Charge of Finance covers Hulic’s financial strategy. Financial and sustainability related information which we were unable topresent in the Report from space constraints are available on our website.
Reporting Boundary

Time of Issuance

Hulic Co., Ltd. and its Group companies

June 2024

Reporting Period

Reference Guidelines

Fiscal Year 2023 (from January 1, 2023 to December 31, 2023)

International Integrated Reporting Framework (IFRS Foundation)
Guidance for Collaborative Value Creation 2.0 (Ministry of Economy, Trade and Industry)
The Japanese Ministry of the Environment “The Environmental Reporting Guidelines (2018)”
GRI (Global Reporting Initiative) “The GRI Standards 2021”

Information as of December 31, 2023 in principle unless otherwise noted.
Notwithstanding the foregoing, included some activities and information afterJanuary 1, 2024.

Hulic Co., Ltd. Integrated Report 2024

1

Corporate Philosophy and Basic Stance

Sustainability VisionCorporate Philosophy

We aim to pursue realization of a sustainable society and continued growth of Hulic byputting our Corporate Philosophy into practice.

For the realization of a society full of safety,
peace of mind and trust,and for the continuous improvement of corporate value

We commit to take a faithful approach to all of stakeholders.
To this end, we pursue initiatives based on a three-point Vision.

• We create shared value with our society by actively engaging with the environmental issues through our
Basic Stance
Ideal
Company

We aim to be a company that grows each day by utilizing stable corporate
infrastructures.

Corporate
CultureWe always conduct business from a new viewpoint in an effort to increase our corporate
value.

Stance to
Customers

We are committed to providing optimal products and services to customers, placing
customer satisfaction as our top priority.

Ideal
Employees

Each of Hulic’s employees strives to provide high quality value as a professional.

corporate activities.

• We lay the foundation for the future by providing peace of mind to our customers through offering our highvalue-added products and services.

• We take compliance seriously, respect human rights and strive to perform transparent corporate activities
based on our high ethical standards.

Medium- and Long-Term Management Plan (2020-2029)

Target Profile(FY2029)“Driving innovation” and “Accelerating progress” as our motto, we continue
to steadily increase our corporate value through evolving ourselves
flexibly in response to changes in macro environment

Financial Targets

Non-financial Targets(see details on pp. 38-39, Medium- and Long-Term Management Plan)(see details on pp. 36-37, KPIs/Targets and Results for Non-financial Information)

Business

Basic
Strategies

1

Productivity (efficiency) at a high level and achieve further growth throughdynamic transformation backed by overwhelming speedy decisionmaking

2

Hulic Co., Ltd. Integrated Report 2024

2

3

Strengthen
development and valueadded businesses Create unique new
business domains
and improve Group
strengths

Management Infrastructure

Strike a balance between P/L Growth, B/S Soundness, Profitability, andBasic PolicyF urther evolve thebusiness model andrestructure the leasing
portfolio

4  Strengthen the managementfoundation and implement stringent risk
management

5  Implement management that emphasizes
sustainable co-creation and co-existencewith society

Hulic Co., Ltd. Integrated Report 20243

In 2023• Made Hulic Biz Frontier Co., Ltd., a subsidiary

137.4

In 1957, Hulic (then called Nihonbashi Kogyo) was established to manage the branch buildings and other properties of the former Fuji Bank (now Mizuho Bank).
In 2007, the Company made a new start to mark the 50th anniversary of being established by changing the corporate name to Hulic Co., Ltd. (“the Company”).
Then in 2008, we became a public company by listing our shares on the First Section of the Tokyo Stock Exchange (current Prime Section).
We have steadily strengthened the business base with a unique growth strategy centered on real estate development, reconstruction, investments, and M&As.

In 1957• Established Nihonbashi Kogyo Co., Ltd.

Started property management for
the former Fuji Bank (now MizuhoBank) branchbuildings andinsurance
agency business■ Initial forecast■ Results (difference over initial forecast)

In 2015• Spun off insurance agency business as Hulic Insurance Service Co., Ltd.

• Completed Hulic head office building• Merged with Simplex• Merged with Senshu Shoji Co., Ltd. and Fuyo General Development• Merged with Shoei Co., Ltd. (a real estateand Finance Co., Ltd. (real estate leasing companies)

company)

In 2013

the Tokyo Stock ExchangeCo., Ltd. [full-scale entry into J-REIT
business (real estate investment
business)]

In 2011• Established Hulic Hotel• Changed corporate nameto Hulic Co., Ltd.

1957

2006

2007

10.9

10.9

12.3

Financial Crisis

2008

20.0

16.8

CO., Ltd., a subsidiary

Ltd., a subsidiary109.5
Medium-Term
Management Plan
Phase II (2023-2025)

95.6
84.6

72.5
61.8

51.4
42.5

34.3

Management Co., Ltd.

In 2007• Made Nippon View Hotel*

Solutions Co., Ltd.

Investment Advisors Inc.
(a real estate company)• Established Hulic Reit Management• Listed shares on the First Section of• Established Hulic Property• Made HULIC FUFU Co.,

In 2012

In 2008

In 2019

In 2018

In 2010123.2

In 2017■ Plan/targets

25.9

Great East Japan Earthquake

2009

2010

2011

Spread of COVID-19

2012

2013

Long-Term Management Plan before the previous plan (2009-2018)

Record of Business and Sustainability Initiatives

150.0

2014

2015

2016

2017

2018

Previous Long-Term Management Plan (2014-2023)

2019

2020

2021

2022

2023

2024

2025

2029 Fiscal Year

Launch of Medium- and Long-term Management Plan (2020-2029)

Achieved the plan’s targets four years ahead of scheduleBusiness Strategies

Consolidated Ordinary profit (Unit: JPY bln)

144.0

Hulic Group’s Value Creation Story

A Real Estate Company with Over 60 Yearsof Growth and Achievements

JPY180.0 Bln

About Hulic Group

Toward further growth by“driving innovation and accelerating progress”

History of Hulic Group* Absorbed and Merged by Hulic Hotel Management Co., Ltd.

Achieved the targets of previous Long-term management plan four years ahead of schedule

Building on the leasing business as a foundation, grew through M&As in addition to taking on property development/reconstruction and new businesses

Started PPP business&New• Completion of HULIC &New SHIBUYA, the first property under our &New brand of medium-sized commercial buildings, in 2017

Senior citizen-related businesses
Tourism-related businesses
Started new businesses (children’s education and Bizflex etc.)

General• Established CSR Vision• Issued first CSR Report, and continued to publish reports until 2019• Issued first Integrated Report• Established a CSR Committee• E stablished Sustainability Vision and a Sustainability Committee• Conducted three years of joint research with the Massachusetts Institute of Technology (MIT) on natural ventilation and natural lighting systems; patented Natural Lighting System in 2016
• Established the Hulic Guidelines for Longer Life Buildings as standard specifications for 100-year offices

Environment• S tarted disclosing
information in line with
TCFD recommendations• Disclosed SBT-approved near-term GHG emissions reduction targets (by 2030)• Achieved RE100 in 2023

• R anked first in the real estate/warehouse industry in the Environmental Management Survey conducted by Nikkei Inc. (ranked top every year until the survey ended in 2019) • D
 eclared converting to 100% renewable energy sourced electricity for electricity consumption at all company-owned buildings by 2029
•C
 ompleted fireproof wooden commercial building (HULIC &New GINZA 8)
Sustainability
Initiatives• Opened the Hulic Suginami Office in the Ogikubo area of Suginami ward, Tokyo, creating a conducive working environment for• Obtained the highest “Eruboshi” rank
employees with disabilities•D eclared ensuring all company-owned buildings can withstand a seismic intensity of level 7 by 2029

Society• E stablished a Diversity Promotion Project Team (formerly the Women’s Career Promotion Project Team)• Concluded an Official Gold Partner Agreement with the Japan Para-Badminton Federation• In order to enable continuous use and prompt resumption of activities in the event of a major earthquake, adopted an
optimal structural format

Corporate
Governance•C ertified as a Health & Productivity Management Outstanding Organization (Smalland Medium-sized Enterprises Category) for six consecutive years from 2019• Organized a Risk Management Committee, a Fund ALM Committee, and a Compliance Committee• Appointed a female external director• S tarted to take preventive measures against Mt. Fuji volcanic ash
fallout• S tarted special sponsorship of the Hulic Cup Kisei Championships• E stablished the Hulic Cup Hakurei Championships and women’s rank-deciding competition• E stablished Corporate Governance Guidelines, a Remuneration Committee and a Nominating Committee• Transitioned to a system where anon-executive director serves aschairperson of the Board of Directors• Introduced the Board Benefit Trust (BBT), a stock compensation system for directors, etc.
• Made all external officers (directors and auditors) independent officers

4

Hulic Co., Ltd. Integrated Report 2024

• An external director serves as a chairperson of
the Board of Directors

Financial and Corporate Information, etc.

Business
Initiatives

Sustainability Initiatives

Advancement of development and reconstruction business•A ppointed 2 additional external directors (Ratio of female among
directors and auditors: achieved 30%)
Hulic Co., Ltd. Integrated Report 2024

5

Profile of Hulic
Leasing Business

About Hulic Group

pp. 46-47

We are providing the real estate leasing business based on many rental properties we own, primarily in Tokyo 23
wards. We have approx. 250 properties (as of December 31, 2023) including disaster-resilient and highly safe offices,
commercial facilities, hotels, senior living, and rental housing in convenient locations near stations. These form the core

Management Policyof our business model.

“Driving Innovation” and “Accelerating Progress”
Development Business

Balanced Management
Strike a balance between P/L Growth, B/S Soundness, Profitability, and Productivity (efficiency) at a high level

P/L Growth

B/S Soundness

Posted continued earnings growth since listing on TSE
Average rate of growth of Consolidated Ordinary Profit: 20.0%

External credit rating: AA- (stable)
Equity Ratio (FY2023): 37.9%*

Profitability

Productivity (Efficiency)

Maintained higher profitability than competitors
Ordinary Profit to Sales Ratio (FY2023): 30.7%

Putting emphasis on income per employee and ROE
ROE (FY2023): 13.0%

pp. 48-50

For company-owned properties whose floor area could be increased in accordance with zoning laws, we systematically
carry out reconstruction suitable for the location with optimal floor area ratio. This enables us to increase leasing
revenue while making qualitative improvements to our portfolio. In addition, we promote development andredevelopment business drawing on the expertise built in the reconstruction of owned properties. Furthermore, We
pursue opportunities in PPP business*1 and development of next generations assets which meet the needs of times
including logistics facilities, data centers and research facilities.
*1 We are participating in projects to support the efficient use and operation of public assets (national and local government-owned land) by providing the know-how cultivated through thedevelopment and reconstruction of office buildings and commercial & lodging facilities.

Hulic Group’s Value Creation Story

Hulic’s Management Policy andBusiness Strategies*50% (JPY175 Bln) of hybrid finance (JPY350 Bln) was calculated as nominal equity.

Value-added BusinessBusiness Strategies

New Businesses

Business Strategies

Current Businesses

We are engaged in the business of using various value-added methods including renewal, renovation and conversion
to increase the asset value of properties we own and those we have recently purchased or invested in for resale. We
take profits by sales of these properties once we have maximized a property’s value. We also hold assets for short-term

Development/Reconstruction Business

Value-added Business

New Acquisitions (including M&As)

Publicly offered REIT

Private REIT

Initiatives in growth fields in line with the needs of the times

estate market.

• Bizflex business• Children's education business etc.

Seniors / Tourism / Environment

pp. 52-55

We launched several new businesses in recent years on the back of our corporate culture which allows us to constantly
challenge in progressive new business fields. We will continue to create new businesses in targeted fields that haveunmet market needs and good growth prospects by employing various methods including business collaboration andalliance, as well as M&As.

• Senior citizen-related business

Next Generation Assets“&New” (urban-style commercial facilities)

New and Other Businesses

New initiatives responding
to market needs

As the aging of society proceeds, we anticipate that social demands for nursing and medical care will increase. Therefore, we are
actively promoting the development of senior living, hospitals, and burial pavilions, as well as businesses to promote wellness and

Our Strengths

1

QOL of healthy and active seniors.

Stable revenue structure centeredon leasing business2

The majority of properties is inprime locations of central Tokyo
and/or near stations

3

Selection and concentration
strategy• Tourism-related businessTo capture demand for tourism, which is expected to increase over the medium- to long-term, Hulic operates own brand hotels (THEGATE brand) and luxury ryokans (FUFU brand) and owns leasing hotels.

• Medium-scale flexible office businessCore Fields

Non-core Fields• Tokyo and/or near stations• Regional office buildings• Medium-sized office buildings• Large-scale office buildings• Reconstructions, and small to medium-sized developments• Large-scale developments• Senior living, hotels, ryokan (Japanese-style luxury inns), next generation• Condominiums for saleassets6

Hulic Co., Ltd. Integrated Report 2024

We will provide a series of medium-scale flexible offices called “Bizflex” to respond the diversified office needs.

• Children’s education businessWe promote businesses that provide education-related services for children.

• Other businesses

Our Group companies are in various businesses including operation of REITs (both publicly and private) and private fund, building
management, insurance, and contracting for construction work among other opportunities.

Hulic Co., Ltd. Integrated Report 2024

Financial and Corporate Information, etc.

Diversification of assets

warehousing purposes with the aim of helping distribution of real estate in response to the diverse needs in the real
Leasing Business

Sustainability Initiatives

Expansion of business domains

pp. 51

7

Saburo Nishiura
Chairman,
Representative
Director

We intend to respond flexibly to the changing environmentand continually improve our corporate value, guided by our
motto: “driving innovation” and “accelerating progress.”

Analysis of the Business Environment◆

Analysis of the International Environment

About the COVID-19 pandemic, which has lasted forthree or four years, I have seen a decline in mask wearing,even on trains, indicating that we might be nearing
the resolution of this crisis. However, in international
relations, there are many ongoing issues with new ones
emerging.
   The prospect of a ceasefire in Ukraine following
Russia's invasion remains uncertain. Imports fromagricultural nations, such as Russia and Ukraine, havebeen disrupted, resulting in ongoing price increases in8

Hulic Co., Ltd. Integrated Report 2024

Japan due to higher raw material costs. In response torequests from organizations such as the Japan Business
Federation and labor unions, companies are significantly
increasing base salaries, highlighting the broad global
impact of the Russia-Ukraine issue.
   In the Middle East, the conflict between Israel andHamas continues. Given that oil prices have alreadysurged, I believe that Japan's strong dependence on
imports will lead to substantial economic repercussions
if there are more price hikes. In China, several major realestate companies have gone bankrupt or are facing(1) Decline in Working-Age Population and Other
Demographic Issues
Population decline has long been a serious issue,
with Japan's population decreasing by approximately
800,000 people compared with the previous year.*And this decline is expected to accelerate in the future.
In 2023, I met with many business leaders, and it wasapparent that most industries were grappling with labor
shortages. The lack of workers, particularly in onsite
demand for construction, as well as bus and taxi drivers,
is a critical issue. Due to these developments, there
has been a significant increase in construction costs
within the real estate sector. Construction costs for Expo
2025 Osaka have doubled from the initial budget. In
particular, the construction industry’s regulation on an
upper limit for overtime hours, adopted since 2024, hasalso had an impact. In the hotel industry, where there
is a heavy reliance on workers from overseas, especiallycleaners, the weakening yen has led to a reduction in
their numbers. Also, in senior living, while the numberof residents is growing, it has become increasingly
challenging to recruit care workers. It is highly likely thatthe shortage of workers will continue to worsen going
forward. While measures to address the declining birthrate are being discussed, a rapid recovery seems unlikely
because we need to wait at least 20 years from now
that the newborns are becoming the age of working
population. It is clear that even efforts to improve
productivity through digital transformation (DX) will noteasily resolve the problem of labor shortages.
* According to Surveys of Population, Population Change and the Number of Households basedon the Basic Resident Register issued by the Ministry of Internal Affairs and Communications(as of January 2023)(3) Risk of a Mt. Fuji Eruption
Although it is not a topic that is being talked about, we
also regard the eruption of Mt. Fuji as a natural disasterrisk. In the event of an eruption, Tokyo, Kanagawa,Shizuoka, Yamanashi, and other neighboring prefectures
would suffer considerable damage. In the past,electrical equipment was usually installed undergroundof buildings. However, in recent years, to mitigate
flood-related risks, there has been a growing trend for
installing electrical equipment on rooftops. As a result,volcanic ash from an eruption could penetrate electricalsystems, potentially making lighting and heating/coolingsystems in buildings unusable, even after electricity is
restored. Also, if volcanic ash accumulates on roads orrailways, it could affect transportation and logistics.
(4) Global Warming
In 2023, many cities exceeded their record hightemperatures. Globally, reducing greenhouse gas
emissions has become critical, leading the Japanese
government to designate 2030 as a milestone year forinterim progress and to declare the commitment toachieve carbon neutrality by 2050. While switching to
renewable energy sources is certainly the main focus,
in reality, many people recognize that achieving thisgoal without nuclear power generation is going to
be challenging. However, I think it is crucial for every
company to swiftly meet its own responsibilities for theircarbon neutrality.

Hulic Co., Ltd. Integrated Report 2024

About Hulic Group
Hulic Group’s Value Creation Story

Analysis of the Domestic Environment

There are many domestic challenges and risks as well.

Business Strategies◆(2) Earthquake Risk
The Noto Peninsula Earthquake struck at the very
beginning of 2024. Further, the probability of anearthquake directly under the Tokyo metropolitan
area or in the Nankai Trough occurring within the next
30 years is said to be very high. The Great HanshinAwaji Earthquake, the Great East Japan Earthquake, theKumamoto Earthquake, and the Hokkaido Eastern Iburi
Earthquake all reached a maximum seismic intensityof level 7 on the Japanese scale. Building collapses
naturally pose a serious threat, and depending on thetime and location of an earthquake, there could be
fires or tsunami. As mentioned earlier, there is still ashortage of workers in the construction industry, whichis expected to worsen in the future. Consequently, postearthquake reconstruction is likely to face even greater
challenges, both for manpower and financially.

Sustainability Initiatives

financial difficulties, affecting the Chinese economy.
As China is Japan's largest trading partner, the impact
on Japanese companies, especially manufacturers, issignificant, raising concerns about further negative
impact going forward. Moreover, heightened tensions
in the international arena, especially between the UnitedStates and China, alongside China-Taiwan relations andNorth Korea, have prompted Japan to spend more on
defense. I feel that many international issues are directly
or indirectly affecting the Japanese economy, making
decision-making for businesses more complex.

Financial and Corporate Information, etc.

Message fromthe Chairman,
Representative Director

910

Hulic Co., Ltd. Integrated Report 2024

our listing. The dividend per share for FY2023 increasedby JPY8 compared with the previous year, for a totalof JPY50. Further, despite of a public offering of sharesin October 2021, net income per share (EPS) has also
increased from JPY101.09 in FY2021 to JPY124.36 in
FY2023. Our dividend payout ratio is one of the highest
among the major developers.
◆

On Being a Good Company

I was a banker before becoming the president of Hulic.
During my tenure at the bank, I undertook various
responsibilities, including serving as chairman of thecredit review committee. Based on that experience,
I had doubts about whether a company could beconsidered good solely based on profitability. While
profitability is certainly important, I don't believe thatit should be the only consideration. As a result, we havebeen redefining what constitutes a “good company”
based on communication with financial institutions
and corporate governance codes from the Tokyo
Stock Exchange, making incremental improvements
to our management since going public. Although wehaven’t reached an optimal level yet, we have madeconsiderable progress. I think the following criterion
are general guidelines for defining a “good company.”(1) Achieving growth
Japan has experienced persistent deflation for an
extended period, resulting in sluggish growth rates
compared with other countries. Despite this, Hulic hasachieved annual growth of 10% or higher in ordinary
profit for 15 consecutive fiscal periods since going public.
I believe that having ordinary profit of over JPY100.0
billion is one of the benchmarks for being a leading
company in Japan. We achieved this goal in FY2021 andhave continued to increase this indicator since then.

(3) Market Capitalization/Market Valuations
Around 10 years ago, there was a brief period when
our market capitalization exceeded JPY1 trillion, butsince then, it has stayed between JPY700.0 billion and
JPY900.0 billion. Through investor relations activities,
both domestic and international, and consistently
achieving profit growth and dividend increases, inAugust 2023 we again reached the market valuation
milestone of JPY1 trillion. Our stakeholders include
customers, local communities, financial institutions,employees, among others. For shareholders, we haveundertaken initiatives that include gradually increasing
the dividend payout ratio, which currently exceeds
40%; ensuring prompt financial announcements within
one month of the financial closing date; introducing
shareholder incentives as part of our strategy topromote long-term ownership among individual
shareholders; and improving disclosure on our website.
(4) Key Management Metrics and Target Achievement
We include the following indicators as part of our key(as of December 31, 2023)❶P BR 1 or higher (benchmark for
the Tokyo Stock Exchange Prime
Market)Approx.1.5
times❷ ROE 10% or higher

13.0%❸ E quity ratio (after considering

37.9%

hybrid finance): 30% or higher❹ Net D/E ratio: 3 times or less

1.3 times❺ Debt/EBITDA ratio: 12 times or less

7.6 times❻ Vacancy rate: 1% or less0.4%

management metrics. As of December 31, 2023, wehave achieved the targets for all of these items.
(5) Sustainability
Looking at our environmental initiatives, we achieved
RE100 in 2023, two years ahead of initial plan. We
achieved this by generating renewable energy throughour own solar power plants, rather than purchasing
non-fossil certificates from external sources. We were
the first to achieve RE100 through this method inJapan. Our plan is to continue investing JPY8.0 to 10.0
billion per year to alter the electricity for all companyowned buildings to 100% renewable energy sources by2029. Further, we will incorporate industry-academia
collaborations with Waseda University to explore
insights into energy storage batteries and related
technology. Going forward, we plan to install these newbatteries at some of our solar power plants. Given the
recent severe weather patterns, it is essential to tackle
the issue of global warming by reducing greenhousegas emissions.
   For governance, our Board of Directors is consistedof five executive directors and six external directors. In
the Audit & Supervisory Board, there are two full-timemembers and three external members. In the past,
the Chairperson of the Board of Directors was a nonexecutive director who was not an external director.
However, we have transitioned to having an external
director in this position since 2024. Also, we now have

Hulic Co., Ltd. Integrated Report 2024

Hulic Group’s Value Creation Story

I have served as president and chairman for 18 years,
and I believe that we are facing challenging times.
Despite the difficult circumstances, since going public
Hulic has achieved increases in profits and dividends
for 15 consecutive fiscal periods.
   The earnings growth can be attributed to therecovery of the hotel segment, which had been in
deficit for several years but turned profitable due to theresurgence of inbound tourism, along with an increasein capital gains from real estate sales. These sales are
conducted not only to generate a profit but also tofacilitate asset restructuring, with the aim of controllingthe expansion of total assets. The equity ratio (after
considering hybrid finance) improved from 37.1% in
FY2022 to 37.9% in FY2023. This has helped to maintainour high external credit rating. We have a keen interestin maintaining external credit ratings in order to have awider range of procurement options, even if borrowing
from the financial institutions become limited due to tight
Bank for International Settlements (BIS) regulations, etc.
   We do not set operating revenue as ourmanagement target. Instead, we are prioritizing
profit items. This is because profits are essential for
fulfilling our objectives. As I will discuss later, using
renewable energy, improving seismic performancethrough development, reconstruction, distributing
dividends to shareholders, and providing a high level ofcompensation for employees cannot be accomplishedwithout profits. Since the real estate industry typicallyhas high levels of borrowing, we set our profit target as
the profit after interest payments. During the MediumTerm Management Plan (2023–2025), we are also
aiming for a consolidated dividend payout ratio of 40%
or higher as well as prioritizing profit attributable toowners of parent to make increased dividends possible.
Ordinary profit has risen by over 10% annually since

Our Situation

Key Management Metrics

Business Strategies

Approach to Corporate Management(2) Enhancing Financial Position/Safety
When I first became the president of Hulic Co., Ltd.,(“the Company”), our borrowings were secured bycollateral. (Currently, all of our loans are unsecured.)
Having collateralized loans implies a perceived lack ofsoundness from the bank's viewpoint. Given our role
as a real estate management company for banks atthat time it was natural to think that way. As a result, tosecure funding in the future and attract new talented
employees, we made the decision to go public.
Following our listing, we conducted three rounds ofpublic offerings to bolster equity base. As of December
31, 2023, our equity stood at JPY765.6 billion. However,
because we listed later than some major developers,
I believe it is necessary to continue building up ourequity by accumulating profits.
   Our external credit rating was upgraded to AAin 2022, finally giving us a certain level of recognition
from the market. Despite acquiring numerous
properties again in 2023, we strategically reorganized
our portfolio, curbing asset growth. As a result, ourborrowing balance and financing costs remained
consistent with the last fiscal year, reflecting oursensible operations and being mindful of our external
credit rating.

Sustainability Initiatives

and employees, as well as to ensure our sustainablegrowth. Dealing with immediate challenges is vital, yet
it is also necessary to prepare for the future. Moreover, it
has become quite common for profitable companies toengage in corporate social responsibility activities.

Financial and Corporate Information, etc.

   In addition to the above, there are many otherissues and risks to consider. While action must be
taken to address these issues, there is also the need togenerate profits, improve our financial performance,and provide returns to stakeholders, such as customers,
local communities, financial institutions, shareholders,

About Hulic Group

Message from the Chairman, Representative Director

11◆Customers

We convey to employees the idea that salaries are
essentially funded through rents received from ourcustomers. From this perspective, we must makeevery effort to serve our customers, as we believethat providing safe, secure, and convenient buildings
is one of their most important objectives. Apart fromresidential properties and ryokan (Japanese inns), we
typically prioritize office and commercial locations
with convenient access (within three to five minutes ofa station). Among our facilities, 63% are within threeminutes of a station and 77% are within five minutes. We
believe it is a benefit for customers if our facilities are as
close to a station as possible, especially during the rainyseason and winter.
   For business continuity plans (BCPs), there is a highrisk of a major earthquake striking Tokyo within thenext 30 years. As a result, we are pushing ahead with
development, reconstruction, and seismic reinforcement
to ensure that all company-owned buildings are
upgraded to high-resilience structures capable ofwithstanding an earthquake with seismic intensity of level
7 on the Japanese scale by 2029. We also plan to finalize
our response plan for an eruption of Mt. Fuji within thenext few years. Furthermore, we make it possible to use
renewable energy at company-owned buildings, allowing
tenants to move closer to achieving their RE100 goals.
◆

Local Communities

Hulic was formerly known as Nihonbashi Kogyo. As
the name suggests, our headquarters was located in
Nihonbashi, Chuo ward in Tokyo until 2012 when we

12

Hulic Co., Ltd. Integrated Report 2024

relocated to Odenmacho, with the nearest station being
Kodemmacho Station on the Hibiya Line. Odenmacho
used to be an area with numerous companies in the
textile industry, but over time, it transformed into a
residential area with many condominiums. Though
Hulic is not engaged in condominium development,
we still prioritize maintaining strong relationships withneighboring residents. As an example, since the local
neighborhood association didn’t have mikoshi (portableshrines) and festival floats, we made donations toprovide them. We also hold an annual summer festival,
during which we participate in carrying the donatedmikoshi along with members of the neighborhood
association and nearby companies. During the summer
festival, we are delighted to welcome many children
who come to join the festivities. Further, we haveestablished a daycare center within the head officebuilding. Aside from employees' children, we also
welcome local children, when space is available. We
donated books when the local Nihonbashi Elementary
School celebrated its 100th anniversary. Although ourbusiness model isn't focused on business to consumer (Bto C) interactions, we are committed to building strong
connections with the local community.
◆

Financial Institutions

Since joining Hulic, I have become even moreaware of the importance of finance, and I prioritizecommunications with financial institutions for strong
relationships with them. While it's not common formany companies to regard financial institutions as
stakeholders, my perspective differs. I’m not solely
influenced by my banking experience, but rather by thefact that developers, regardless of their backgrounds,
must secure stable long-term funding as they repay
development funds through rents. That’s why I view
financial institutions as crucial stakeholders. Ourinterest-bearing debts came to JPY1,445.0 billion, while◆

Shareholders

Before the COVID-19 pandemic, I devoted
a significant amount of time to investor
relations, including overseas investors.
From this experience, I felt that the needs
and expectations of each shareholder
differ significantly. Since going public,
we consistently prioritized shareholder
returns and have continued to raise dividends. We havealso maintained a consolidated dividend payout ratioof 40% or higher, which is among the highest in the realestate developer sector. In addition, as a shareholder
incentive, we send a gift catalog to mainly individual
investors. In August 2023, our market capitalization
exceeded JPY1 trillion. Furthermore, our price to bookratio (PBR) have exceeded 1 time. While stock prices are
determined by the market, we intend to keep going after
increased profits and dividends with a management
strategy that is conscious of stock price valuations.
◆

Hulic Group’s Value Creation Story

We recognize the importance of addressing the needsof our various stakeholders, including customers, local
communities, financial institutions, shareholders, andemployees. We believe it is essential to provide optimal
responses to every stakeholder.

Employees

With the declining working-age population, thechallenge lies in efficiently recruiting employees. As of
December 31, 2023, Hulic operates with a small team:
222 employees. Ordinary profit per employee exceeds
JPY600.0 million, making us one of the top performers,
based on productivity, among listed companies in Japan.
For this reason, we have been recruiting professionals or
people who have the potential to become professionals.
First, looking at salaries, the average annual salary for2023 was JPY19.08 million, ranking us among the top in
the industry. At Hulic, employees reach an annual salarylevel of over JPY5.0 million in their second year with us.
   Also, we maintain fringe benefits at an exceptionallyhigh level, as shown below.

1. Breakfast, lunch, and beverages at the head officecafeteria are free.
2. Single-person dormitories are usually provided forfree.
3. Health exams allow individuals to select the level ofscreening, such as a comprehensive check-up (if desired,an MRI and other tests are provided for free).
   We also have a rehiring system for employees who
resigned due to circumstances such as their spouse's
relocation. Our approach to HR is considered top tier,even among other listed companies.
   Besides childcare leave, flexible work hours forchildcare, and leave for tending to a sick child, we haveestablished the following systems under our nextgeneration nurturing support program.
1. Onsite daycare centers (contributes to flexibility ofcommuting by car)
2. Subsidies for after-school club fees (up to JPY50,000
per month)
3. Celebratory gifts (first born: JPY100,000, second born:
JPY200,000, third or more: JPY1,000,000)
4. Support for infertility treatments, etc.
   As a result of these initiatives, the fertility rate in
2023 was 2.8, a high rate compared with a five-year
average of 1.7 and the national average of 1.3.**Source: Population Statistics of Japan 2022 issued by the Ministry of Health, Labour andWelfareHulic Co., Ltd. Integrated Report 2024

Business Strategies

For Key Stakeholders

major real estate companies typically
carry around JPY3–4 trillion. Also, it isessential for us to maintain our current
AA external credit rating and continue
aiming for higher credit ratings. External
credit ratings are a barometer of our
financial soundness and are essential for
flexible bond issue. Hulic’s external credit
rating is currently AA-, yet it’s clear that
achieving an AAA rating would make asignificant difference for investors.

Sustainability Initiatives

including experienced business executives, scholars
specializing in corporate law and child education
policy, lawyers, certified public accountants, andjournalists.

Financial and Corporate Information, etc.

five female executives, including directors and Audit &Supervisory Board members, with women making up
over 30% (as of April 1, 2024). External directors andexternal auditors come from diverse fields of expertise,

About Hulic Group

Message from the Chairman, Representative Director

13

HR Development Strategy

As the challenge of population decline has beenclear since I assumed the president post, we haveconsciously steered away from labor-intensive
ventures and opted to concentrate on business tobusiness (B to B) operations. Our tourism-related
business segment is an exception, though. For new
graduate recruiting, we aim for a balanced ratioof male and female hires, with approximately halffrom science and engineering as well as half fromthe humanities. Moving forward, we are committed
to prioritizing training programs that allow new
employees to experience tangible growth. We also
strive to provide a comfortable work environment
through competitive salaries, fringe benefits, andspacious offices.
   I have always emphasized the distinction between
work and tasks. Tasks typically involve accurately

14

Hulic Co., Ltd. Integrated Report 2024

executing predefined activities. Although new
employees sometimes have to perform tasks to gain an
overall understanding, we prefer that other employees
do not do any tasks. Therefore, we recommend leaving
these to systems or outsourcing them. I believe that
employees should engage in meaningful work, whichmeans thinking about a job that needs to be done thenadding value. The process of thinking is challenging. To
me, this involves studying, reading many books, meeting
various people and having discussions.
   As a company, we believe in reducing overtime
work and encouraging each person to create moretime for studying, reading, and meeting people, in
addition to providing English conversation classes andonline learning. However, I believe that meeting people
involves giving to others. Without giving, there can be noreceiving. Therefore, it is essential to cultivate an interestin varied subjects and to continually learn.
   Hulic sponsors the Hulic Cup Kisei
Championships for shogi (Japanese chess)
and the Hulic Cup Hakurei Championships
for female shogi players as part of ourcultural support, in this way contributing to
the shogi community. Shogi players carefully
ponder every move, along with later moves
and their opponent's response, a single
match can take an entire day.
   On days without matches, shogi
players research new moves, often using AI.
When a new move is effective, it becomes
known to all shogi players. So, they must
continually research new strategies. I
suggest promoting tsumeshogi (shogi
puzzles) within the company as a formof thinking exercise to underscore thesignificance of critical thinking. Critical◆

Real Estate Business Strategy

It is expected that the real estate market will become
increasingly challenging as the population continues
to decline, with the residential and office sectors being
particularly affected. After becoming president, I madeseveral decisions about what we wouldn’t pursue; one ofthose was residential properties.
(1) Offices
The demand for office space will decrease as theworking-age population declines. That’s why we havebeen reducing the percentage of office properties in our
portfolio, aiming to bring it down to 50%. In the current
landscape where the average vacancy rate stands atapproximately 6%, our vacancy rate has consistently
remained below 1%. Given that 99% of Japanesecompanies are small and medium-sized, we haveoutlined the following as our fundamental strategy.
① We prioritize medium-sized buildings, typically with asite area of 500 tsubo* or less, often ranging from 200 to
300 tsubo. ② Properties should be strategically locatedwithin a 3–4 minute walk from train stations. ③ Buildings
must have a high seismic resistance to effectively
withstand major earthquakes. ④ Our buildings must be
resilient to a potential Mt. Fuji eruption, with mechanism
in place to swiftly resume operations following the ash
fall. ⑤ We intend to contribute to tenants’ RE100 goals
by altering all company-owned buildings to 100%
renewable energy use by 2029.
* One tsubo is approximately 3.3 m2.

   The costs associated with BCP initiatives andenvironmental compliance are rising. While current
profits are important, I intend to manage the businesswith a balance between the present and the future.

(3) Hotels and ryokans (Japanese style luxury inns)
As inbound tourism returns, both hotels and ryokan
have seen an increase in average daily rates (ADRs),
accompanied by exceptionally high occupancy rates. Our
directly managed hotels are located in Ginza/Yurakucho,
Asakusa, Ryogoku, Kyoto, Sapporo, and Maihama,among other areas. Development is also underway in
Yokohama, the Sapporo Station area, Fukuoka's Tenjin,
and Osaka's Shinsaibashi, with openings scheduled totake place gradually. Two of our FUFU brand of luxury
ryokan opened in Karuizawa in December 2023. This hasbrought the number of FUFU ryokan to 11, with three inAtami, two in Hakone, two in Karuizawa, and one each in
Nikko, Kawaguchiko, Kyoto, and Nara. We are planning
developments in Jogashima (Kanagawa Prefecture) and
Ginza. While the weakening yen is having a clear impact,
I don’t foresee a decline in tourists coming from overseas
anytime soon, especially considering factors such as
Japan's safety, delicious cuisine, and unique seasonal
experiences. Nonetheless, securing labor is crucial in the
tourism-related sector. Employees in hotel operations
were given substantial base salary raises. Further, weare committed to boosting business efficiency withoutcompromising the level of service for any reason. We
are promoting the efficiency of DX while optimizing
workflows and focusing on improving services throughinitiatives that include room renovations and events.
(4) Senior living
As of December 31, 2023, the number of senior

Hulic Co., Ltd. Integrated Report 2024

Hulic Group’s Value Creation Story◆(2) Commercial Facilities
Commercial facilities are gradually returning tonormal operation as COVID-19 restrictions ease andinbound tourism increases. We have identified Ginza,
Shinjuku East Side, Shibuya/Aoyama, and Asakusa
as our focus area, and all of them are progressing
smoothly. Commercial properties in prime locations
are experiencing significant interest from luxury brands
and other retailers looking to establish new stores. For
development projects in the prime area of Ginza, weare receiving a high volume of inquiries, even before
completion of buildings. In Ginza, we are planningapproximately 10 development and reconstruction
projects in the future, aiming to improve both floor area
ratios and overall business profitability.

Business Strategies

Hulic’s Growth Strategy

thinking is something that all executives and employees
must engage in daily.
   A good salary certainly attracts top employees,
and it is essential to increase productivity in order toraise salaries. Our goal going forward is to maintain an
optimal workforce size within our organization. Having
raised base salaries last year, we are now targeting an
increase in starting salaries and a roughly 10% raisein salaries for 2024. What’s more, we plan to pass on
the benefits of higher productivity directly to ouremployees.

Sustainability Initiatives

COVID-19 pandemic, and Russia's invasion of Ukraine.
While it's possible that some unexpected risks could
occur, we remain committed to steadily increasing
profits and holding assets that appreciate over time.
In the following section, I would like to discuss Hulic’s
growth strategy.

Financial and Corporate Information, etc.

   Above, I have outlined Hulic’s response andapproach to risk. Since becoming president, we have
faced significant challenges that were previously
thought to occur only once every hundred years oreven once every few hundred years, including the 2008
economic crisis, the Great East Japan Earthquake, theAbout Hulic Group

Message from the Chairman, Representative Director

15(6) Key Thoughts on Owning Real Estate
A declining population and labor shortages have16

Hulic Co., Ltd. Integrated Report 2024

New Businesses

Relying solely on conventional approaches will bedifficult for sustaining continuous growth in the faceof rapid environmental changes. Since going public,
we have expanded our business model and diversified
our portfolio to include assets beyond traditional officeand commercial spaces, such as properties catering
to seniors, health, and tourism. Recently, we ventured
into developing logistics facilities and data centers.
Our diversification extends further with initiatives
that include flexible offices (Bizflex), education, andrental offices. At the same time, we have established aframework for financing new businesses, although it's
important to note that profits from these businesses
could be realized some time in the future. While taking
risk is essential for generating profit, after some thought,
our track record suggests that we have mitigated risk by
taking on relatively low-risk investments. Taking evengreater risks in the future is essential along with thecontinuing population decline. Hulic’s equity stands
at JPY765.6 billion, and when combined with theunrealized gains from real estate of JPY384.9 billion, thistotals JPY1,150.5 billion. We will allocate approximately
10% of this amount, around JPY110.0–120.0 billion, forthis type of risk-taking. Of course, it is natural for us tocarefully identify property and business risks even morethoroughly than before. We have also started to assess
overseas projects that we had not previously joined,◆

Profitability

Ordinary profit:
JPY100 billion or
more

B/S
Soundness

External credit
rating: AA level

Marketevaluation

Capitalefficiency

SDGs

・Market cap: JPY1
trillion or more・PBR: 1 time or
higherHulic(as of December 31, 2023)

JPY137.4 billion

AA- (stable)
Approx. JPY1,133.8
billion

1.5 times

ROE: 10% or higher

13.0%

Nikkei SDGs
Management
Survey:4 stars or more

4 stars

on the opinions of experts from several fields, including
financial institutions:
While we accomplished all of the items listed above in
2023, there are still many challenges ahead. To become aleading company in Japan, we are committed to “driving
innovation” and “accelerating progress” (our motto), as
well as fostering integrity, maintaining a strong sense ofownership, and working “ahead of the curve.”

Hulic Group’s Value Creation Story

Indicator

Business Strategies◆

setting clear limits on our involvement.
   Further, we have set a certain target yield as acriterion for making investment decisions. However,for properties in our strategic areas, we have allocateddedicated resources as part of our strategy to strengthen
our portfolio. For example, in the heart of Ginza, theyield can be as low as 2% or even less. Despite the low
yields at the time of acquisition, properties in Ginza
significantly contribute to the unrealized gains, affirming
their considerable role in bolstering our portfolio.
   Two years ago, we established the Business Creation
Department. They are responsible for new businessinitiatives such as mergers and acquisitions (M&As) andoverseas business.
   We also have the Sales Promotion Department who
specializes in identifying the needs of companies that
we are currently not working with and ways to address
those needs, while contributing to revenues. In 2023,
Hulic was selected as the developer for a pioneering
R&D-centric urban development project spearheadedby JFE Holdings, Inc. and Kawasaki City. We proposedbringing R&D-focused tenants into the area, along withresidential functions, supermarkets, and other amenities
for the people who will work there. Also, as part of our
Narita Airport logistics development project, we intend
to develop facilities that can accommodate not only
logistics but also customs clearance, quarantine, andother operations. I believe adding
this kind of value is part of our new
business initiatives.
   Although we acknowledge
M&As are challenging, we areconsidering M&As as one way
to grow our business. There is apossibility that some companies
could struggle to adapt to change.
As a result, we are also exploring the
adoption of new business models tobolster growth as a Group.

Sustainability Initiatives(5) Logistics facilities
The demand for new logistics facilities in the central
Tokyo area is high, catering to the requirements ofapproximately 14 million Tokyo residents. However,competition is fierce. In addition, logistics companies
must address issues such as a shortage of drivers andachieving carbon neutrality throughout the distribution
process. For these reasons, we are targeting locations as
close to Tokyo as possible, preferably within the innerareas of National Route 16, which offers good access tohighways and other transportation routes. At the sametime, large-scale logistics developments at Narita Airport
have different objectives. Narita Airport is the top
domestic hub for cargo handling. And the completionof a third runway is scheduled for 2029. However, Narita
Airport has been open for over 45 years, and the facilities
are aging. So, we intend to construct four warehouses
and a building for customs clearance and quarantine by2029. Put simply, although they are logistics facilities,
our aim is to transform them into places capable ofmanaging all operations near the airport. Our logistics
facilities will have unique features, making them highly
competitive and relatively easy to lease out.

made the real estate business increasingly tough inrecent years. In addition, we must address issues suchas seismic performance and carbon neutrality, even if
these do not immediately contribute to profits. In thesecircumstances, I believe the following items are crucial:• Carefully interpreting demographic trends (such as
owning senior living and limiting the proportion of
office in our portfolio).
•C onsidering the volume and needs of target companies
when strategizing for offices (medium-sized buildings/
flexible office space targeting growing companies, etc.).
• Differentiating our properties as much as possible byoffering distinctive features (nearness to train stations,
BCPs, and environmental friendliness).
• Carefully selecting prime locations tailored to each
asset type.
   I aim to develop our business as a company capableof thriving despite the population decline.

Financial and Corporate Information, etc.

living units (beds) reached approximately 4,800,
approaching our goal of 5,000. Despite the highdemand stemming from population aging, there is aclear shortage of caretakers. To address this shortfall,
Hulic has implemented initiatives such as a scholarshipprogram for students pursuing careers in caretaking
and the introduction of monitoring sensors to enhancecaretaking support. However, challenges remain due
to the weakening yen, resulting in a decline in workers
from overseas, compounded by the physical demandsof caretaking. Simultaneously, aging populations are a
global phenomenon, especially in developed countries.
Consequently, we already invested in a senior living in
the United States operated by a subsidiary of Mitsui& Co., Ltd. This move capitalizes on the many workers
available in the US, offering promising investment
opportunities compared with Japan. For overseas
investments, our strategy for the future focuses onmaking only financially sound and carefully selected
investments.

About Hulic Group

Message from the Chairman, Representative Director

Becoming a Leading Company
in Japan

Although Hulic currently has justover 200 employees, we aspire
to become one of the leading
companies in Japan. We havedefined a leading company based

Hulic Co., Ltd. Integrated Report 2024

17

been completed. Construction has also begun on two

In addition, Hulic Kinshicho Collabo Tree, whichplants for generating carbon-free.

more properties: Hulic Logistics Hashimoto and Hulic

houses three venture companies, was also completed● Office buildings as a percentage of our portfolio has

Logistics Noda II.

in January 2023.
● For M&As, we acquired CROSSCOOP Co., Ltd. andbeen reduced to 46%, already below our target of

create a high-quality leasing portfolio that addresses

50%. Moving forward, we expect an increase in theproperties, we use not only public REITs but also

subsequently rebranded the company as HULIC

changing circumstances and continues to improve on

proportion of hotels, ryokan (Japanese inns), andprivate REITs and funds.

Biz Frontier Co., Ltd. for entering the rental officesustainable management while maintaining a strong

next-generation assets, all growth areas.
(3) Diversify revenue sources by enhancing initiatives
in new business areas   Reflecting on 2023, the world economy went

Ginza, Shinjuku East Side, Shibuya/Aoyama, andthrough a challenging period marked by the prolonged

Asakusa has moved ahead, boosting the ratio of

In addition to business development

Russia-Ukraine war, clashes between Israel and Hamas,

properties in focus areas to 48%.

in tourism, seniors, and theand the rapid rise of inflation and interest rates in●A vacancy rate of less than 1% has been maintained inenvironment, Hulic new businesses

Western nations.

our highly competitive leasing portfolio on the back ofinclude flexible office “Bizflex flexible   Amid these challenges, we have generally madethe initiatives mentioned above (The overall property

offices” and children’s education. We

good progress during the year. Looking specifically at

vacancy rate of 0.4%, as of December 31, 2023).

have also set an investment budget of
JPY50 billion for our growth strategy

performance, we achieved our fifteenth consecutive
year of higher profits and dividends since going public.

(2) E nhance the pipelines of development,

to diversify sources of revenue

We realized over 10% annual growth and set new record

reconstruction and value-added properties.

through initiatives in next-generation

highs for each profit indicator. Operating profit grew

Diversify exits to ensure profitability

assets including logistics facilities,

by JPY20.0 billion, or 15.8% year on year, to JPY146.1

Hulic has set a target to develop or reconstruct overdata centers, R&D facilities and CRE

billion; ordinary profit was up by JPY14.2 billion, or

100 properties by 2029, aiming to make certain that all(corporate real estate) and mergers

11.5%, to JPY137.4 billion; and profit attributable tocompany-owned buildings can withstand earthquakes

and acquisitions (M&As). In this way,

owners of parent rose by JPY15.4 billion, or 19.5%, towith a seismic intensity of level 7 on the Japanese

we are strengthening our ability to

JPY94.6 billion.

scale. We take two approaches in our strategy for

respond to environmental changes.

development and reconstruction projects: planning● Hotel segment has experienced a   Below, I will explain the basic strategies of theto maintain a portion of buildings to increase therapid recovery from the COVID-19

current Medium-Term Management Plan and our

foundation of leasing portfolio and selling a portion ofpandemic, resulting in a profit

progress up to December 31, 2023.

building to capitalize on development profits.

increase of JPY6.1 billion year

● 94 development/reconstruction projects have beenon year and a return to being(1) Build a high-quality leasing portfolio and maintain/ strengthen a flexible earnings structure

confirmed or are almost confirmed.
● Construction has begun on large-scale development

Hulic Hotel Management Co., Ltd. toincluding 100% for highly earthquake-resistant

Project, the Ginza Building reconstruction, and thefurther boost profitability.

buildings; 100% of buildings using renewable energy;

redevelopment of Jiyugaoka. Construction has begun

ensuring that less than 50% of our portfolio consistson eight properties, while 14 have been completed.

● Two new Bizflex offices haveopened and are operating at full
capacity.
● In our children's education business,

located in focus areas. We are making progress with thehas begun. We established a data center management

restructuring of our portfolio to meet these targets.

company, DEH1 K.K. , in joint venture with Digital

Kodomo Departs has been

● We achieved an 86% rate for highly earthquake-

Edge Japan LLC .

confirmed for Nakano and Tama

resistant buildings (95% when excluding thosesubjects for sale or reconstruction).
● We achieved RE100 in May 2023, two years ahead

Hulic Co., Ltd. Integrated Report 2024

● The development of logistics facilities is goingsmoothly. The second and third properties, Hulic
Logistics Noda I and Hulic Logistics Kashiwa, have

President,
Representative
Director

our tourism subsidiaries underand reconstruction projects, such as the Shinsaibashi● The data center development project in Kobunacho

TakayaMaeda

profitable. We have consolidated

Hulic has set ambitious goals to achieve by 2029,

of office buildings; and having over 50% of assets● In anticipation of synergy with our children's

Sustainability Initiatives● The development and acquisition of properties inbusiness, a growing business field.

Financial and Corporate Information, etc.

external credit rating.

18● For a possible exit strategy for development

Plan (2023–2025). The basic policy of our plan is to

Hulic Group’s Value Creation Story

2023 was the start of our Medium-Term Managementof the initial plan, by developing our own solar panel

Business Strategies

Looking Back on 2023

About Hulic Group

Message from the President, Representative Director

Plaza, with plans for four more.
● We are developing labs (R&D

facilities) as next-generation assets.

Hulic Co., Ltd. Integrated Report 2024

19

appointed, for even more diversification.

business alliance with R.project Inc., a company thatspecializes in operating campsites and facilities used   As a result of these initiatives, Hulic’s stock pricefor training camps. This demonstrates our venture

exceeded market capitalization of JPY1 trillion in August

into the outdoor business sector.

2023 and has since remained above this level.

been listed on the Tokyo Stock Exchange GrowthMarket.

Plans for FY2024
On New Year's Day 2024, a massive earthquake witha seismic intensity of level 7 (Japanese scale) struck
the Noto Peninsula. Hulic has been improving themanagement to maintain a strong external credit

seismic performance of all company-owned buildings,

ratingmaking certain that they withstand a seismic intensity● Due to the steady accumulation of profits, our equityof level 7. We also recognize the risk associated withhas risen to JPY765.6 billion, with an equity ratio

a Mt. Fuji eruption, which could significantly impact

adjusted for hybrid finance of 37.9%, a Debt/EBITDA

socioeconomic activities. We reaffirm the importance ofratio of 7.6 times, a Net D/E ratio of 1.3 times, andthe actions we have taken to address these risks.

return on equity (ROE) of 13.0%, all exceptionally   Regarding the issue of population decline, thefavorable indicators. Also, our external credit rating

long-term decline in population presents a significant

remains at the AA level.

challenge to the overall Japanese economy. In

Business Strategies(4) Ensure financial soundness and thorough risk

preparation for a potential decrease in office workers,(5) Raise the level of sustainability management,

Hulic plans to lower the ratio of offices in our portfolio

including the promotion of environmental

to below 50% and build up assets in growth sectors.

continue for now, despite the decisions to eliminate thecontinue to replace assets in our portfolio with a focus

initiatives and human capital development, etc.

   The following is our core strategy for our plans foryield curve control (YCC) and to lift negative interest

on earthquake resistance.

● We achieved RE100 in May 2023, two years ahead of

FY2024. “We intend to strengthen our leasing businessrates.

   For development and reconstruction projects, wethrough more new investments, including for next-   For the investment environment, I see a growing

are planning to mitigate any negative impact including

generation assets. We will also continue portfolio

trend in investment opportunities for Hulic. Thesethe increase of construction cost by thorough review

flood damage countermeasures for owned buildings.

restructuring with a focus on balance sheet control toopportunities include the sales of corporate real estate,of business income and expenses. With this proactive

We are also gradually implementing countermeasuresbolster revenue. Moreover, leveraging the increased risk

along with sales (divestments) by some overseas

approach, we remain committed to the development

for an ashfall from a potential Mt. Fuji eruption.

our initial plan.
● We are promoting strong seismic performance andtolerance from our steadily growing equity, we intend

investors. Further, the transaction market remains

and reconstruction of over 100 properties by 2029.

● We are strengthening initiatives for respecting human

to invest in new business areas, in this way diversifying

strong.

   A significant portion of our unrealized gains

rights. This includes revising our human rights policy

our revenue sources and accelerating the achievement   Against this backdrop, in FY2024, we will continue

comes from properties in focus areas such as Ginza,and setting up a framework for human rights dueof Medium-Term Management Plan goals.”

to build up leasing revenue through investments andShibuya/Aoyama, and Shinjuku. Also, street-level stores

diligence.

   Tuning to forecasts for FY2024, we project

replace assets to restructure our portfolio.

are commanding rents that exceed our projections,operating profit of JPY153.0 billion (an increase of   Regarding investments, large-scale corporate

buoyed by the strong expansion ambitions of luxury

in six ESG investment indices selected by the

JPY6.8 billion year on year), ordinary profit of JPY144.0

real estate (CRE) projects have started to move in thebrands. This should effectively offset the increase in

Government Pension Investment Fund (GPIF).

billion (an increase of JPY6.5 billion), and profit

second half of 2023. I believe these projects stem fromconstruction costs. Therefore, in the future we plan to● Hulic has been continually included as a constituent● We added two more external directors, resulting in

attributable to owners of parent of JPY98.0 billion (ana shift in corporate behavior, driven by the need tocontinue making investments in focus areas, such as in

non-executive directors making up the majority, andincrease of JPY3.3 billion), maintaining the trend of

improve capital efficiency in response to the price-to-and around Ginza.

achieved a female ratio of 30% among directors androbust profit growth.

book ratio (PBR) falling below 1 time. In addition, we will   The Kobunacho Project, our venture into the newauditors.

   For the business environment for FY2024, we

continue to pursue investments in various ways, such

realm of data centers, is progressing well and is expected

expect that the ease money financial environment will

as equity as well as mezzanine investments. We will also

to be completed in 2025. In logistics facilities, Hulic● Two female executive officers have also been

20

Hulic Co., Ltd. Integrated Report 2024

Hulic Co., Ltd. Integrated Report 2024

Sustainability Initiatives

investment recipients in new business sectors, have

Hulic Group’s Value Creation Story● ABEJA, Inc. and EcoNaviSta, Inc., partners andFinancial and Corporate Information, etc.

education business, we entered into a capital and

About Hulic Group

Message from the President, Representative Director

21under management (AUM) more

promotion team to drive M&As as a key component ofdividend payout ratio of 40% or higher.

effectively.

our growth strategy. Our objective is to systematically  I believe that companies should not be evaluated   In the hotel and ryokan

explore opportunities for expansion and identify

solely on their financial performance. While addressing

business segment, we arepotential avenues for growth in a integrated fashion.

sustainability is crucial, we also value what sets us apartin Fukuoka, Sapporo, Yokohama,

22

A Message to Stakeholders

management, driving innovation and accelerating

We adhere to the principles of balanced and sustainable

progress, being a small group of elite professionals,

FUFU luxury ryokan (inns) inmanagement, always mindful of the cost of capital andclarity in decision-making, anticipating the next step,

Jogashima and Ginza. We initiallyour stock price.

maintaining a strong sense of ownership, and honestyplanned to temporarily halt new   We believe that achieving and maintaining anin action. Another crucial value is following through on

expansion. However, given thatROE that exceeds the cost of capital is fundamental

everything we set out to achieve.

the tourism sector is one of theto improving our corporate value. As of December 31,   We are committed to responding flexibly to

few areas where domestic growth2023, our ROE stood at 13.0%. Consequently, our PBR haschanges in the environment by “driving innovation” andis expected, we have decided tobeen maintained above 1 time, reaching 1.5 times as of“accelerating progress”, in order for us to continuously

once again increase the number ofDecember 2023. Our strategy for improving corporate

be a “good company” and an “exciting company” for all

facilities. As we move forward, wevalue begins with prioritizing profit growth, enhancing

stakeholders.

plan to explore the development

capital efficiency, and optimizing the cost of capital.
high productivity levels, while rewarding   In the children’s education

employees. In 2023, we had a 4% basebusiness, with six Kodomosalary raise, resulting in a wage increase

Depart projects now underway,

rate, including salary adjustments,

we set up Children Educationof nearly 9%. For 2024, our aim is toBusiness Unit to accelerate ourraise this figure to approximately

Logistics Hashimoto is slated for completion in 2024.

education business. This initiative includes bolstering

10%. We believe it is necessary for   Establishing a new core fund that was planned forour collaboration with the Riso Kyoiku Group as well ascompanies in Japan to foster a positive

2023 as part of the exit strategy for development andseeking new partnership opportunities.

economic cycle by implementing wage

reconstruction projects has been temporarily deferred.

   We also started to work on making renewable

increases that outpace inflation and

Investors are currently hesitant to make long-term

energy a profitable business. Although theby establishing an environment where

investments as they are assessing how Japan's financial

environmental business was one of our original threefemale employees can continue theirpolicies will evolve. Consequently, we have postponed

new business areas, we believed that pursuing profits

careers after childbirth. We take pride insetting up core funds based on long-term investments.

from this business was too early unless we achieve

our leadership in this area.

Instead, we are planning on setting up bridge financing

RE100. Therefore, our focus has been on initiatives   For governance, starting in 2024,

or similar vehicles that will purchase and own properties

such as achieving RE100 and transitioning to 100%

we have decided to appoint an external

for a certain period.

renewable energy in all company-owned buildings.

director as the chairperson of the Board   We have explored the possibility of launching

Now that significant progress has been made in theseof Directors. This step has resulted ina new private REIT for logistics facilities this fiscal

areas, we have decided to pursue the environmental

more transparency. We will continue

year. However, we believe that incorporating logistics

business to generate revenue. At the end of 2023, weto deliver shareholder returns throughfacilities into existing private REITs would be better thanchose to make an equity investment in the first round of

dividends as we aim to increase

creating a new one with a small asset size. This approacha battery storage fund.

dividends by improving profits based

will help diversify asset classes and grow the assets   For M&As, we have established a dedicatedon a policy of providing a consolidated

Sustainability Initiatives   It is crucial to maintain and improve

Financial and Corporate Information, etc.

of new form of business in theBusiness Strategies

and Shinsaibashi, as well as

hospitality industry.

Hulic Co., Ltd. Integrated Report 2024

which represent the values we cherish, include balanced

Hulic Group’s Value Creation Storyfrom others: unique Hulic-like qualities. These qualities,

currently going ahead withprojects such as The Gate Hotels

About Hulic Group

Message from the President, Representative Director

Hulic Co., Ltd. Integrated Report 2024

23

* Please see pages 88-97 for financial information.
* Non-financial information; please see pages 36-37 regarding targets, coverages and calculation methods, and pages 56-87 for other results and major initiatives.

Ordinary Profit

Operating Profit

Profit Attributable to Owners of Parent

146.1 Bln

137.4 Bln

JPY
(JPY Bln)
150.0

146.1

90.0

(JPY Bln)
150.0
123.2

120.0

100.5
88.3

90.0

94.6

280 thousand metric t–CO2e(thousand metric t-CO2e)
400

Scope 1
299
269
10

79.1

80.0

109.5
84.6

94.6 Bln(JPY Bln)
100.0

137.4

126.1

114.5

120.0

JPY

JPY

E Greenhouse Gas Emissions*1

95.6

58.8

60.0

63.6

69.5

300

15

Scope 2

25

60.0

40.0

30.0

30.0

20.0

0

0

0

2019

2020

2021

2022

2023 (FY)Dividends per Share, Dividend Payout Ratio

JPY
(yen)
50
40
30

37.8
36.0

38.5
39.0

50.0
40.3

40.2

(%)
50
40

10

2019

2020

2021

2022

60

Return on Equity (ROE)*4

88.93

12.3

11.9

13.0

2021

2022

2023 (FY)

165.4 Bln / 7.6 times(JPY Bln)
200.0(times)

EBITDA
Debt/EBITDA ratio

160.0

104.002019

120.0 105.4

2020

2021

2022

JPY

119.2
9.9

135.2
9.0

10.1

148.8

0

2023 (FY)

2019

30.0
459.0

36.8

32.7
486.4

637.7

686.7

37.9
765.6

(%)
40
30

10

400.0

20

5

200.0

10

(thousand m3)
2,000

15

1,500

7.6

10

1,000

5

500

2020

2021

2022

2019

2020

2021

2022

2023 (FY)

0

2019

2020

2021

2022

0
2023 (FY)

Hulic Co., Ltd. Integrated Report 2024

1,855

(times)
3

1,953

437

346

59
blds

55
blds

220
blds

207
blds

204
blds

2019

2020

2021

2022

2023 (FY)

S % Properties Meeting Hulic’s Earthquake-

resistance Standards*4

80

2.0
1.7
1.3

1.3

Target 70% or higher (Achieved in 2023)
78.5

75.5

81.5

86.4

2,401
2,000
1,461
879

811

30
blds

36
blds

41
blds

40
blds

48
blds

2019

2020

2021

2022

2023 (FY)

1,000
0

S Ratio of Highly Earthquake-resistant

Buildings*5

100%

86%

Target 100% (Achieved in 2023)
(%)
100

100

100

100

100

100

80

86%

60

(95% excluding thosesubjects for sale orreconstruction)

20

As of December 31, 2023

0

2019

2020

2021

Disabilities

2022

2023 (FY)

Target 2.3% or higher*6 (Achieved in 2023)
2.42

2.34

2.54

2.68

2.74

2021

2022

2023 (FY)

(%)
100

99.5%

Target 80% or higher (Achieved in 2023)
99.1

98.7

99.6

99.6

99.5

2019

2020

2021

2022

2023 (FY)

80

60

0

Directors Meetings

2
60
40

1

20
2020

G Participation Rate of Directors in Board of

2.74%

(%)
3

77.7

40

2019

3,593

3,000

0.5

S Employment Ratio of Persons with

86.4%
(%)
100

1.3

0

(t)
4,000

2023 (FY)

1,487

1.3 times

2

2022

S Usage Rate of Paid Leave*1 EBITDA = Ordinary Profit - Equity in earnings/share of loss of entities accounted for using equity method + Interest expenses + Depreciation*2 Debt/EBITDA Ratio = Interest-bearing debts/EBITDA*3 50% (JPY75 Bln) of hybrid finance (JPY150 Bln) issued in 2018 was calculated as nominal equity. Similarly, 50% (JPY175 Bln) of hybrid finance (JPY350 Bln) issued in 2020 and 2022/2023 was also calculated
as the same.
*4 Return on equity (ROE) = Profit attributable to owners of parent/Equity (average balance)*5 Equity Ratio = Equity/Total assets*6 Net D/E Ratio = Net interest-bearing debts (Interest-bearing debts - Cash and deposits)/Shareholders’ equity

24

0

0

2023 (FY)

1

0

2021

165.4

8.5

Category 7
0.3
Category 11 32

1,953thousand m3

20

Net D/E Ratio*3*6

37.1

211

2020

3,593t40765.6 Bln / 37.9%
EquityEquity Ratio

2019

E Waste Disposal*2

Category 6
0.2

261

E Water Intake (Water Consumption)*3

40.0

0

600.0

2020

thousandmetric t–CO2e

Category 12

0

JPY

80.0

(JPY Bln)
800.0

13.4

101.09Equity, Equity Ratio*3*5

(%)
20
13.6

95.23

30

13.0%
15

124.36120

2019

EBITDA*1, Debt/EBITDA Ratio*2*3

(yen)
150

20

0
2023 (FY)2023 (FY)124.36

90

10

2022

JPY

30

31.5

2021

Net Income per Share

42.0

20

0

2020

50.0 / 40.2%

Dividend per ShareDividend Payout Ratio

35.4

2019

229

100

Category 3
4Category 5
4

261

5

239

270

Category 1
34
Category 2
62

Category 13
123

17

200

60.0

G Governance

261 thousand metric t–CO2e

13

21

S Social

E Greenhouse Gas Emissions Scope 3

280

274
13

240
11

19

Scope 3E Environment

Hulic Group’s Value Creation Story

Major Non-Financial Information

Business Strategies

Major Financial Information” have been assured by an independent assurance provider.

Sustainability Initiatives

Note: Figures marked with “

20
2019

2020

2021

2022

2023 (FY)

0

2019

2020

2021

2022

2023 (FY)0*1 B eginning with Integrated Report 2022 , we are calculating greenhouse gas emissions based on the GHG Protocol. Calculations for Scopes 1 and 2 are based on the properties where the Hulic Group has control of energy
management (30 properties in FY2019, 36 properties in FY2020, 41 properties in FY2021, 40 properties in FY2022, and 48 properties in FY2023). In addition, properties held at the end of term are subject to the calculation(Properties acquired during the reporting year for the period from the acquisition date to the end of the term are included). The unit calorific values and the emission factors are based on values in the Act on the Rational
Use of Energy and the Act on Promotion of Global Warming Countermeasures. Until FY2020, greenhouse gas emissions from one hotel operated by a subsidiary were calculated based on our ownership ratio in thatproperty, but starting in FY2021, emissions are calculated based on operational control. The boundary and calculation method for Scope3 are disclosed on our website: https://www.hulic.co.jp/en/sustainability/ecology/*2 Calculations for waste disposal are based on the properties where the Hulic Group has control of energy management (30 properties in FY2019, 36 properties in FY2020, 41 properties in FY2021, 40
properties in FY2022, and 48 properties in FY2023). Beginning in FY2020, we are calculating total waste disposal at specific properties within the boundary by using weight conversion factors basedon actual measurements. The waste disposal of certain properties are estimated using the total floor area based on the emissions intensity of buildings with similar functions.
*3 Beginning in FY2021, Hulic's fixed assets are covered, excluding properties under development and land for lease (220 properties in FY2021, 207 properties in FY2022, and 204 properties in FY2023).
Note that the amount of hot spring water used at hot spring inns is not included.
*4 H ulic’s earthquake-resistance standards are where building performance can safeguard human life and enable continued use of the building with post-earthquake repair in the event of an earthquake with a seismic intensity of level 7.
*5 H
 ighly earthquake resistant buildings are those that can safeguard human life and enable continued use of the building with post-earthquake repairs when an earthquake occurs with a seismic intensity of level 7.
*6 Our target for the employment ratio of persons with disabilities is to be at the statutory employment ratio or higher: 2.2% or higher till FY2020 and 2.3% or higher from FY2021 to FY2023.

Hulic Co., Ltd. Integrated Report 2024

Financial and Corporate Information, etc.

Hulic promotes initiatives that link corporate growth with solutions to social issues. In other words, the Company is creating
shared value through ESG-conscious business operations.

About Hulic Group

Financial and Non-financial Highlights

25

Core theme“Driving Innovation” and “Accelerating Progress”

Manufactured capital

Balanced Management
Strike a balance between P/L Growth, B/S Soundness, Profitability, and Productivity (efficiency) at a high level

250 properties

Business1

Further evolve thebusiness model andrestructure the leasing
portfolio

2Strengthen
development
and value-added
businesses

3

Create unique new business domains andimprove Group strengths

Social capital
Active promotion of social
contribution activities
Public-private coordination in PPP
business
Coordination and cooperation
with building management andconstruction companies

Management Infrastructure
4

Financial capital
Total Assets

Equity

JPY 2,480.4 billion
JPY 765.6 billion

Equity Ratio*1 As of December 31, 2023
*2 Excl. residential and related
properties*3 50% (JPY 175 Bln) of hybrid
finance (JPY 350 Bln) was
calculated as nominal equity.

26

Hulic Co., Ltd. Integrated Report 2024

37.9%*3Strengthen the
management foundationand implement stringent
risk management

5

Implement management thatemphasizes sustainable co-creationand co-existence with society

Corporate governance and complianceCorporate philosophy and basic
stance, etc.

Sustainability vision

Value-added
Business

Percentage of properties
within 5 minutes ofnearest station
77%*2

Details on

pp. 32–35

Providingsafe, securebuildings and spacesC ontributing to actions
for mitigating climatechange and reducing ourenvironmental impactC ollaborating withbusiness partners and local
communitiesP romoting diversity and thedevelopment of professional
human resources aintaining and improvingMgovernance trusted bystakeholders

Creating corporate
value
Achieving high-level balance
between indicators
Ordinary profit

JPY 100.0 billion

FY2023 JPY 137.4 billion
Maintain an AA external credit rating

As of December 31, 2023
AA- (stable)

Maintain ROE

10% or higher

FY2023 13.0%
Payout ratio

40% or higher(during current Medium-Term Management Plan)

Sustainability activities
Achieved RE100 in 2023
Promoting reducing greenhouse gas emissions
Initiatives for the highly earthquake-resistantbuildings to 100% etc.

About Hulic Group

Creation of social valueA ddressing changes indemographics

New and Other
Businesses

Percentage of properties inTokyo’s 23 wards
70%*2

Population decline

Total number of properties

OutcomeMateriality
Leasing BusinessTraining expenses per
employee
JPY 145,000

EnergyOrdinary profit per
employee
JPY 600.0 million

Business activities

Development
Business

Medium- and Long-Term
Management Plan

1,357 (consolidated) /222 (non-consolidated)

pp. 46–55

pp. 28–31

Disaster preparedness

Details on

Details on

Hulic Group’s Value Creation Story

Human and intellectual
capital
Number of
Employees

OutputBusiness Model

Business Strategies

Input*1

and for the continuous improvement of corporate value

FY2023 40.2%(Dividend per share JPY 50.0)
Market cap.

Sustainability Initiatives

For the realization of a society full of safety, peace of mind and trust, and for the continuous improvement of corporate value.

For the realization of a society full of safety,
peace of mind and trust,

JPY1 trillion or more

As of December 31, 2023
JPY 1,133.8 billion

Hulic Co., Ltd. Integrated Report 2024

Financial and Corporate Information, etc.

Hulic Group’s Value Creation Process27

1 Disaster preparedness

SpecialFeatureHulic’s Story of Sustainability

About Hulic Group

Materiality

Providing safe, secure buildings and spaces◆ Related KPIs

・ 100% highly earthquake-resistant buildings* by 2029 (target to be achieved by
the end of 2025 excluding those subjects for sale or reconstruction)
1Here, we look at three themes that we recognize as important social issues for the realization ofa society full of safety, peace of mind and trust, when identifying materiality that・ Percentage of properties meeting Hulic’s earthquake resistance standards* : 100%
each year

Analysis of the Business Environment

3

Energyearthquakes, such as earthquakes directly under metropolitan Tokyo and in the Nankai Trough, within the next 30 years. The Great East
Japan Earthquake in 2011 caused a staggering 6.5 trillion yen*4 in damages. In addition to earthquakes, Japan is also at risk of other disasters,such as an eruption of Mt. Fuji and flooding. As a real estate company that provides buildings, we recognize disaster countermeasures forbuildings as one of our most significant issues and intend to ensure that our tenants can be active with peace of mind.

Hulic’s Major Initiatives and Actions
E arthquake countermeasures: ensuring all company-ownedbuildings can withstand a seismic intensity of level 7 by 2029
Hulic has established inhouse earthquake resistance standards*2
that are stricter than the Building Standards Act and then applies
these standards to all buildings that we develop or reconstruction.
In addition, earthquake-absorbing and earthquake-damping
structures are effective for ensuring high earthquake resistance,
and we actively employ them in our buildings (see pages 64
and 65). We also assess earthquake resistance when acquiringproperties. We are working to ensure that all company-ownedbuildings can withstand an earthquake with a seismic intensityof level 7 on the Japanese scale by 2029. (We plan to develop orreconstruction more than 100 properties by 2029.)   At the same time, to accurately assess the safety of buildingsin the event of a major earthquake, wewill gradually introduce systems suchas the Sokushin Navi structural healthmonitoring system for determining thedegree of damage that could occur.
●

Measures against ashfall from possible Mt. Fuji eruption
If Mt. Fuji were to erupt, there is concern that rain mixed withvolcanic ash could get into building drainage systems, block
drain pipes, and cause failures of drains and electrical equipment.
We have jointly developed a product called a drain cap thatprevents volcanic ash from entering building equipment andplan to release it widely (patent pending).
   As well, we have established a system to swiftly restore thefunctions of buildings, enabling operations to quickly resume
once no more ash is being released from the eruption and so thatthe public infrastructure can be restored.
   We have also introduced operational measures at someof the luxurious ryokan (Japanese inns) that we own near Mt.
Fuji, such as obtaining insurance tocompensate for economic losses due totemporary closures caused by ashfall.

●

An example of reinforcement work

Business Strategies

2

Population
declineSustainability Initiatives

1

Disaster
preparedness

Japan is one of the countries where earthquakes occur most frequently, and experts believe there is a 70 to 80%*3 probability of major

Hulic Group’s Value Creation Story2

we should focus on as well as related initiatives.

Drain cap

Holding Seminars on Mitigating Damage Caused by Disasters
We have been holding seminars for employees on how to mitigate the damage
caused by disasters since 2022 (with lecturers from the Japanese Red Cross Society).
The employees learn about the expected damage and methods to protect themselvesin the event of a large-scale earthquake, such as one directly under metropolitan
Tokyo. In the practical training, they learn, among other items, how to perform first aid
using readily available plastic bags, as well as CPR and how to use an AED (defibrillator).

Seminars on mitigating damage caused by disasters*1 H
 ighly earthquake resistant buildings are those that can safeguard human life and enable continued use of the building with post-earthquake repairs when an earthquake occurs with a seismic intensity of level 7.
*2 H
 ulic’s earthquake resistance standards are where building performance can safeguard human life and enable continued use of the building with post-earthquake repair in the event of an earthquake with a seismic intensity of level 7.
*3 2020 white paper by the Ministry of Land, Infrastructure, Transport and Tourism*4 According to the Natural Disaster Damages section of 70th Japan Statistical Yearbook 2021 by the Statistics Bureau of Japan

28

Hulic Co., Ltd. Integrated Report 2024

Hulic Co., Ltd. Integrated Report 2024

Financial and Corporate Information, etc.

Topics29

Hulic’s Story of Sustainability

2 Population decline
Materiality

About Hulic Group

3 Energy
Materiality

Contributing to actions for mitigating climatechange and reducing our environmental impact

Addressing changes in demographics◆ Related KPIs

◆ Related KPIs

・Senior living (number of units): 5,000 by 2025

・ Greenhouse gas emission reduction targets
・ Number of renewable energy systems installed in development andreconstruction projects: at least three every year

Analysis of the Business Environment

・ Number of times climate change risks are monitored by the
Sustainability Committee and reported to the Board of Directors

Japan’s falling population, the increased aging of society, and the low birth rate will accelerate in the future. Japan’s population ispredicted to decline from 126.15 million in 2020 to 87 million in 2070. At the same time, the percentage of the population aged 65 andover is predicted to rise steadily from 28.6% in 2020 to 38.7% in 2070. Simultaneously, the average life expectancy is expected to rise andAnalysis of the Business Environment

immigration is set to increase.*   Population decline is an issue that affects all industries, but we believe the impact on the real estate market will be especially2030 interim targets have been set for reducing greenhouse gas (GHG) emissions, a worldwide issue, and a consensus has been reachedsignificant. For this reason, we are building a real estate portfolio that addresses demographic changes, including promoting businesseson the goal of achieving carbon neutrality by 2050. These initiatives are meant to address the pressing concern of shifting to renewable

related to the elderly and inbound tourism, in light of the rising number of overseas tourists coming to Japan.

energy. There are also energy supply concerns as many of the country’s nuclear reactors remain idle. We believe that we, as a company,   In addition, while Japan’s birth rate has been trending downward over the long term, the number of dual-income households ismust do our best to address energy issues not only to secure energy for the Hulic Group but to help our customers’ businesses run

rising and the government is considering improving programs for child-rearing support. Anticipating the growing demand for tutoringsmoothly as well.

Hulic Group’s Value Creation Story

Special Featureacademies and extracurricular activities for children, we have ventured into children’s education as one of our new business initiatives.
* Source: Summary of Future Population Projections (2023) published by the Ministry of Health, Labour and Welfare●C onverting to 100% renewable energy sourced electricity for electricity consumption at all company-owned buildings by 2029

Focusing on the “additionality” of renewable energy, the Hulic Group develops and owns solar and small hydroelectric plants forrenewable energy, rather than buying it from power companies.
   Also, against the backdrop of rising energy prices, generating our own power is an advantage for securing stable energy sources.

Lobby at FUFU KawaguchikoPromoting children’s education business
Provide education-related services for children in collaboration
with partner companies in response to more and more dualincome households and the government implementation of
measures to support child-rearing.

●Promoting other new businesses
Establish a department dedicated to new business creationand continually review and plan new businesses based on
demographic changes.

Solar power generation facility in Wakaba Ward, Chiba City●

Hulic Premium Club Nihonbashi

Sustainability InitiativesP romoting senior citizen-related business
Invest in and develop senior living, operate lounges for active
seniors, and promote new nursing carebusinesses using IoT in anticipation of
the growing social demand for nursing
and medical care as people age.

●Promoting tourism-related
business
Operate branded hotels andryokan (Japanese inns) tocapture tourism demand,
expected to rise due to theincreasing number of overseas
tourists coming to Japan.

●

Kamogawa Small Hydroelectric Plant

TopicsFinancial and Corporate Information, etc.

 uilding a real estate portfolio that addresses demographic
BchangeTarget: Office share of 50% by 2029
Keep the office share down in anticipation of an expected decline
in demand due to the decrease in the working population andchanges in the way people work.
Target: 50% of properties in focus areas
Promote acquisition and development
in focus areas (Ginza, Shinjuku
eastside, Shibuya/Aoyama, Asakusa) in
anticipation of the population being
concentrated in urban areas.
HULIC SQUARE TOKYO●

Achieved RE100 in 2023: Becoming the first in Japan to generate
renewable energy using proprietary non-FiT solar power plants

TopicsSince joining RE100 in 2019, we have been promoting the development of new

Operating Hulic Scholarship Program for Training Welfare Caretakers

non-feed-in tariff (non-FiT) solar power plants to achieve our goal. As of May 2023,

We established the Hulic Scholarship Program for Training of Welfare Caretakers in 2017 in order to

we have achieved RE100 with our non-FiT solar power plants. This is the first time insupport students aiming to be welfare caretakers, and develop human resources engaging in nursing

Japan for RE100 to be achieved without using non-fossil fuel certificates under FiT

care for the elderly and thus contribute to resolving social issues related to the aging of society.

by rather through non-FiT power sources developed in-house.

This is a non-repayable (free) scholarship that aims for an improvement of the labor shortagein nursing care.

30

Hulic Co., Ltd. Integrated Report 2024

Business Strategies

Hulic’s Major Initiatives and Actions

Hulic’s Major Initiatives and Actions

Practical training

Hulic Co., Ltd. Integrated Report 2024

31

Our Major Stakeholders and Related Materiality

Hulic has been providing properties with excellent safety, environmental features, and convenience that match the needs of thetimes and society. As social issues and stakeholders’ interests diversify, we will continue to address issues in society by assessing
opportunities and risks in our businesses to achieve sustainable growth.

We are committed to realizing a sustainable society by delivering environmental, social and economic value through interactive
communication with all stakeholders. Stakeholders who are particularly important for our sustainable growth and relevantmateriality issues are indicated below.

ReportOversight

Sustainability Committee
Discuss and coordinate sustainability including the policy for sustainability activities reflecting ESG/SDGs related
developments both at home and around the world
Chairperson: President, Members: Vice President, GM of Corporate Sustainability Department, GM of Business Planningand Management Department, GM of Real Estate Planning Department and Group company executives• Building
managementcompanies• Construction
companies• Building
maintenancecontractors• Real estate agents• Financial
Institutions• Regular meetings and business interaction(when appropriate)• Disclosure of information in our Integrated
Report and on our website (whenappropriate)• Employees of the
Hulic Group• President’s message (monthly)• President’s survey (twice a year)• Seminars by the president* (about twice amonth)• Career development interviews (twice a year
or more)• Interviews by Human Resources Department• Disclosure of information through theCompany intranet (when appropriate)

Promoting diversity
and the developmentof professional
human resources• Local communities• NPOs and NGOs

• Social contribution activities and volunteer
activities (when appropriate)• Participation in neighborhood associations(when appropriate)• Engagement with communities in the vicinityof our projects (when appropriate)• Engagement with NPOs and NGOs (whenappropriate)

Collaborating withbusiness partners andlocal communities• National and local
public government• Promoting PPP business (when appropriate)• Initiatives for various awards and evaluations(when appropriate)• Payment of appropriate taxes (whenappropriate)• Individual investors• Institutional
investors• Briefings for individual investors and foranalysts and institutional investors (including
overseas) (when appropriate)• Timely disclosure of information on our
website (when appropriate)• Establishment of a contact point for inquiries(permanent)• Issuing a shareholder newsletter (twice a
year)

Customers

Corporate Sustainability Department
・Planning and promotion of sustainability-related matters ・Management of sustainability-related matters

Sustainability Supporters
Environment

Society
Information disclosure

CSR

Business
Partners

Communication

Stakeholders
Customers Business Partners Employees Local Communities Administrative Organizations Shareholders, Investors

Materiality Identification Process
Step 1 Identification of social issues
Analyze global social concerns (SDGs, etc.) to identify a wide
range of environmental, social, and economic issues

Materiality Identified

Employees

We identified and selected issues of especially highmateriality in terms of their importance to Hulic and to ourstakeholders.

Step 2 Evaluation of materiality
Quantify and evaluate social issues from the viewpoint of their impact
on stakeholders and Hulic’s management, then decide priority

Step 3 Identification of materiality
Assess and identify materiality based on the two criteria:
importance to Hulic and to our stakeholders

Step 4 Discussion and confirmation by the management
Identified materiality are to be examined and confirmed at
Sustainability Committee (Chairperson: President) and Board of
Directors (when appropriate)

Materiality for our stakeholders

Relevance (high)Identified
materiality

Relevance (high)Materiality for Hulic

Providing safe, securebuildings and spaces
Contributing to actions
for mitigating climatechange and reducing ourenvironmental impact

Step 5 Regular review• Tenants• Facility users• Customer satisfaction survey (annually)• Disclosure of information in our Integrated
Report and on our website (whenappropriate)• Establishment of a contact point for inquiries(permanent)

Board of Directors

Addressing changes indemographics

Local
Communities

Administrative
Organizations

Collaborating withbusiness partners and local
communities
Promoting diversity and thedevelopment of professional
human resources
Maintaining and improving
governance trusted bystakeholders

Shareholders,
Investors

Providing safe, securebuildings and spaces

Hulic Group’s Value Creation Story

We established the Sustainability Committee
to deliberate on and coordinate importantmanagement concerns related to improving
long-term competitiveness and our response
to risk, after considering the situation at homeand overseas related to sustainability, including
the ESG/SDGs. Since management involvement
is essential for medium- to long-term initiatives,
the Sustainability Committee is chaired by thepresident and includes vice presidents, the GM
of Corporate Sustainability Department, theGM of Business Planning and Management
Department, the GM of the Real Estate Planning
Department, and Group company executives.
In addition, the Committee, supervised by the
Board of Directors, reports to the board at least
once a year on climate change deliberations.

Materiality of high relevance

Addressing changes
in demographics

Collaborating withbusiness partners andlocal communities

Materiality
relevant to all
stakeholders

Contributing
to actions for
mitigatingclimatechange andreducing ourenvironmental
impactCollaborating withbusiness partners andlocal communities
Promoting diversity
and the developmentof professional
human resources

Maintaining
and improving
governance trusted
by stakeholders

Business Strategies

Structure to Promote Sustainability

Major engagements (frequency inparentheses)

Sustainability Initiatives

Key stakeholders

Financial and Corporate Information, etc.

Classification

About Hulic Group

Materiality Assessment* Social gathering with the president and young/mid-career employees

32

Hulic Co., Ltd. Integrated Report 2024

Hulic Co., Ltd. Integrated Report 2024

33

Materiality Assessment

Opportunities and Risks Related to Materiality and Our Actions

Providing safe, secure buildings
and spaces

higher energy efficiency and renewable energy●H eightened need for technologies for the reuse and effective useof resources●H eightened need for real estate development that is mindful ofconserving local ecosystems●G rowth of markets and demand through the increase in businessdomains, including environmental response

and regulations as well as increased costs◉S oaring prices of construction materials◉D eteriorating residential environment and reputational

decline in the event of ecosystem destruction near a property◉R isk of delayed action on environmental issues due to lack ofenvironmental management system◉H iring-related costs may rise and shortage of care workers may

materialize as the population of young generation declines●E xpansion and using needs related to IoT demand●B etter results are expected through synergies brought about by

aiming for mutual sustainable growth with our business partners
and local communities

Collaborating with business
partners and local communities●D iversification of human resources by promoting diversity● Improved employee motivation and brand value in talent

Maintaining and improving
governance trusted bystakeholders◉N eed for additional compliance with environmental measuressociety and increase in the number of healthier senior citizens
dual-income households and the government’s enhanced
childcare support

Promoting diversity and thedevelopment of professional
human resources

vacancy rates of properties due to delays in addressingchanges in the needs of property users●H eightened need for senior living and hospitals with the aging of●P otential for growth of new markets and demand due to more

Addressing changes indemographics

delayed actions on earthquake resistance techniques and
BCP preparedness•A chievement of 100% highly earthquake-resistant buildings*1 by 2029•A
 ddressing Mt. Fuji eruption risk and exhaustive confirmation of other natural disaster risks•P revention of flooding by installing tide boards◉D ecrease in the competitive advantage and increase in●A ddressing workstyle and other changes among property users●H eightened need for buildings and properties equipped with

Contributing to actions for
mitigating climate change andreducing our environmental
impact◉R ise of vacancy rate and decline of real estate value due to

About Hulic Groupnatural disasters including earthquakes and flood damage

Main initiatives

acquisition by enhancing workplace wellness features andenriching talent development program● Improved productivity through more use of digital and DX-

related technologies◉D eclining demand for office buildings and existing

businesses due to declining working population◉C hanges in existing business model due to accelerated

digitalization◉R eputational damage due to human rights and other issues

in the supply chain◉R eputational damage due to lack of communication withlocal communities•A ssessing tenant needs through customer satisfaction surveys• Converting to 100% renewable energy sourced electricity for electricity consumption at all company-owned buildings*2 by 2029
• Achieved RE100 in 2023
• Promoting Scope 3 emission reductions through collaborations in the supply chain• Improved performance building energy savings• Waste reduction through longer life building design• Installing water-saving equipment• Actively adopting environmentally conscious technologies• Promotion of greening in development projects• Reduced greenhouse gas emissions and promoting forest circulation through the development of fireproof wooden buildings• Opinion exchange with environmental experts (Environmental Advisory Council)• Acquiring building certifications and labeling disclosure•D evelopment of and investing in senior living and other facilities as well as investing in nursing care technology• E ntry into the Children’s Education Business•D evelopment of medium-sized Bizflex flexible offices• Established a department dedicated to new business creation and the management of corporate venture capital• Close communication with tenants, building management companies and construction companies• Human rights due diligence including supply chain• Various contributions to society◉L oss of human resource acquisition and business

opportunities◉P otential for increased turnover due to inadequate working

environment• Establishing a personnel system that recognizes diverse workstyles• S ecuring occupational health and safety, promoting health and productivity management and the expansion of fringe
benefits
・Initiatives to create a highly productive organization◉P roductivity loss due to delays introducing digital and DX-

related technologies● The effectiveness of operations is ensured and confidence in◉S ocial sanctions and the deterioration of public confidence

management improves when internal controls and corporate
governance work

due to noncompliance issues from inadequate compliancesystemHulic Group’s Value Creation Story●H eightened need for properties that are safe and secure from

Risks

Business Strategies

Opportunities

Sustainability Initiatives

SDGs contributed to

Financial and Corporate Information, etc.

Materiality• Strengthening the supervisory function of the Board of Directors and Audit & Supervisory Board• Establishing a Nominating Committee and a Remuneration Committee• Establishing a corporate governance structure for climate change risk
• Compliance training for employees and setting up a hotline• Formulating a BCP and conducting drills*1 Highly earthquake resistant buildings are those that can safeguard human life and enable continued use of the building with post-earthquake repairs when an earthquake occurs with a seismic intensity of level 7 .
*2 Excludes properties for which we do not have energy management authority including master lease properties, residential properties and non-managerial co-ownership properties, and real estate for sale, etc.

34

Hulic Co., Ltd. Integrated Report 2024

Hulic Co., Ltd. Integrated Report 202435

2019 results

2020 results

2021 results

2022 results

100% (4 properties inboundary)

100% (8 properties inboundary)

100% (8 properties inboundary)

100% (4 properties inboundary)

100% (10 properties inboundary)2023 results

Unit

Assessment*15%◎

pp.29,64-65

—

—

81%

82%

86%

%

〇

pp.29,64-65

13,2595,105
261,152

metric t-CO₂e〇

pp.31,56-63

Percentage of properties meeting Hulic’s earthquake-resistance standards*1: 100% each year

All completed properties each year

Progress toward a 100% highly earthquake resistant buildings*2 by 2029

Hulic-owned fixed assets

Greenhouse gas emission reduction targets*3
By 2024 Scope1+2 70%
By 2030 Scope1+2 70%, Scope3 30%
By 2050 Scope1+2, Scope3 substantially zero (base year: 2019)

Scope1+2 P roperties where the Hulic Group has control
of energy management*3
Scope3 Indirect emissions other than Scope1 and 2
related to Hulic Group’s business activities*3

RE100 progress rate*4: 10% in 2021, 30% in 2022, 65% in 2023, 100% in 2024

Electricity used in Hulic Group business activities

—

0.5%

13.5%

47.0%

100%

%

◎

pp.31,58

Number of renewable energy systems installed in development and reconstruction projects: at least 3 every year

All completed properties each year

4

3

8

3

3

property◎

pp.58-59

Waste emission reduction target: Each year less than 11 kg/m2 in terms of basic unit

Hulic Head Office Building and Hulic Annex

—

—

—

—

9.6

kg/m2

◎

pp.62

Waste disposal: No numerical target (follow-up item)

Properties where the Hulic Group has control of energy
management *5

1,461

879

811

2,401

3,593

metric tonnes

—

pp.62

Percentage of technical measures (such as longer life design, etc.)*6 applied to reduce construction waste: 100% eachyear

All completed fixed assets each year—

100% (8 properties inboundary)

100% (8 properties inboundary)

100% (4 properties inboundary)

100% (10 properties inboundary)

%

◎

pp.62

Water intake (water consumption): No numerical target (follow-up item)

Important 204 properties*7

437

346

1,487

1,855

1,953

thousand m3

—

pp.62

Scope1
Scope2
Scope3

14,931
25,067229,006

Scope1
Scope2
Scope3

10,49018,529270,066

Scope1
Scope2
Scope3

11,36917,473
210,703

Scope1
Scope2
Scope3

13,151 Scope1
20,966 Scope2
239,397 Scope3

Water intake (water consumption): Water-saving fixture installation rate of 100% each year

Fixed assets completed each year (excluding residential)

—

—

—

—

100% (9 properties inboundary)

%

◎

pp.62

Number of greening projects*8: 1 or more each year

All completed properties each year

3

5

6

3

2

property◎

pp.63

Hulic Co., Ltd.

—

1/—

1/2

1/3

1/3

time

◎

pp.56,60-61

Number of Environmental Advisory Council meetings held: 1 or more each year

Hulic Co., Ltd.

1

1

1

1

1

time

◎

pp.56

Senior living number of room unit: 5,000 by 2025

Hulic Group (including properties sold/trusted to REIT)

—

3,600

3,700

4,000

4,800

room

〇

pp.30,52

Number of customer satisfaction surveys: 1 or more each year

Hulic Group

1

1

1

1

1

time

◎

pp.66-67

Number of times climate change risks are monitored by the Sustainability Committee: 1 or more each year
Number of times reports are submitted to the Board of Directors: 1 or more each year

Addressing changes indemographics

Collaborating withbusiness partners and local
communities

Promoting diversity
and the developmentof professional humanresources

Maintaining and improving
governance trusted bystakeholders

Relevant Page

Percentage of employees who received medical checkups*9: 100% each year

Hulic Co., Ltd.

100%

100%

100%

100%

100%

%

◎

pp.72

Use rate of childcare leave*10: 100% of eligible female employees /100% of male employees by 2024

Hulic Co., Ltd.

100%/—

100%/—

100%/—

100%/—

100%/125%

%

◎

pp.72

Ratio of employees returning to work after childcare leave: 100% each year

Hulic Co., Ltd.

100%

100%

100%

100%

100%

%

◎

pp.72

Usage rate of paid leave*11: 70% or higher each year

Hulic Co., Ltd.

78.5%

75.5%

81.5%

77.7%

86.4%

%

◎

pp.72

Percentage of career development interviews conducted: 100% every year (conducted twice a year)

Hulic Co., Ltd.

—

—

100%

100%

100%

%

◎

pp.73

Ratio of female managers: 2020; 20%, 2024; 25%, 2029; 30%

Hulic Co., Ltd.

20.2%

23.9%

22.4%

21.5%

18.3%

%

〇

pp.71

Number of seminars provided by the Diversity Promotion Project Team: once each year

Hulic Co., Ltd.

1

1*12

1

1

1

time

◎

pp.71

Employment percentages of persons with disabilities: Maintaining the statutory employment ratio or higher (2.2% orhigher till FY2020 and 2.3% or higher from FY2021 to FY2023.)

Hulic Group*13

2.42%

2.34%

2.54%

2.68%

2.74%

%

◎

pp.71

Participation rate in Board of Directors meetings: 80% or higher each year

Hulic Co., Ltd.

99.1%

98.7%

99.6%

99.6%

99.5%

%

◎

pp.77

Number of effectiveness assessment of the Board of Directors: once each year

Hulic Co., Ltd.

—

1

1

1

1

time

◎

pp.78

Number of compliance training conducted: 5 times each year (4 times for employees and once for officers)

Hulic Co., Ltd.

5 (4 employees, 1 officer)

5 (4 employees, 1 officer)

5 (4 employees, 1 officer)

5 (4 employees, 1 officer)

5 (4 employees, 1 officer)

time

◎

pp.82

Number of Risk Management Committee and Fund and ALM Committee meetings: 4 times or more each year, respectively Hulic Co., Ltd.

4/13

4/22

4/16

4/17

4/16

time

◎

pp.80-81

1

1

3/4/1*14

3/4/1

2/4/4

time

◎

pp.81

Number of BCP drills, inspections of stockpiled food and suppliers: 1 or more each year

Hulic Group*1 Hulic’s earthquake-resistance standards are where building performance can safeguard human life and enable continued use of the building with post-earthquake repair in the event of an earthquake with aseismic intensity of level 7.
*2 H
 ighly earthquake resistant buildings are those that can safeguard human life and enable continued use of the building with post-earthquake repairs when an earthquake occurs with a seismic intensity of level 7.
*3 Beginning with Integrated Report 2022, we are calculating greenhouse gas emissions based on the GHG Protocol. See pages 25 for the boundary for Scope1 and Scope2. The boundary and calculation
method for Scope3 are disclosed on our website: https://www.hulic.co.jp/en/sustainability/ecology/*4 The RE100 progress rate is calculated by dividing the total amount of power generated by Hulic-owned solar photovoltaic equipment in the year by the total amount of electricity used at the Hulic head
office building and on the floors occupied by Group companies (includes some estimates).
*5 Calculations for waste disposal are based on the properties where the Hulic Group has control of energy management (30 properties in FY2019, 36 properties in FY2020, 41 properties in FY2021, 40
properties in FY2022, and 48 properties in FY2023). Beginning in FY2020, we are calculating total waste disposal at specific properties within the boundary by using weight conversion factors based on actual
measurements. The waste disposal of certain properties are estimated using the total floor area based on the emissions intensity of buildings with similar functions.
*6 The percentage of properties completed in the given year that used technologies and measures that contributed to a reduction in waste as well as raw materials and other resources based on the Hulic
Guidelines for Longer Life.

*7 Beginning in FY2021, Hulic's fixed assets are covered, excluding properties under development and land for lease (220 properties in FY2021, 207 properties in FY2022 and 204 properties in FY2023). Note thatthe amount of hot spring water used at hot spring inns is not included.
*8 The number of completed non-current assets in each year among those buildings and facilities with a greening obligation.
*9 The executive officers, employees (including seconded staff ) and full-time contract staff who were with the Company at the time of application of medical checkup and as of December 31, were counted(excluding personnel who were on leave).
*10 Females calculated by dividing the number of employees who took maternity leave in the fiscal year by the number of employees who entered the period covered by maternity leave in the fiscal year andmales calculated by dividing the number of employees who took paternity leave in the fiscal year by the number of employees whose spouses gave birth in the fiscal year.
*11 The usage rate of paid leave is calculated by dividing the number of days of paid leave used in the year by the number of days of paid leave granted in the year. The number of days carried over in the year are excluded.
*12 In FY2020, a video training session was held in lieu of an in-person seminar session to prevent the spread of COVID-19.
*13 Limited to Hulic Co., Ltd. and subsidiary companies that have been certified as special subsidiary companies under the Act on Employment Promotion etc. of Persons with Disabilities. The employment ratio
for persons with disabilities is as of June 1 of each year.
*14 Beginning in FY2021, the number of BCP drills, inspections of stockpiled food and suppliers are disclosed, respectively.

Hulic Group’s Value Creation Story

Contributing to actions
for mitigating climatechange and reducing ourenvironmental impact

Coverage

Business Strategies

Providing safe, securebuildings and spaces

KPIs / Short-Term Targets, Medium- to Long-Term Targets

Sustainability Initiatives

Hulic’s Materiality

Figures marked with “ ” have been assured by an independent assurance provider.
For FY2023 results, we received assurances from an independent assurance provider concerning the following items: greenhouse gas emissions Scope 1, greenhouse gas emissions Scope 2, greenhouse gas
emissions Scope 3 (total, Category 13); waste disposal; water intake (water consumption); percentage of employees who received medical checkups; use rate of paid leave; and employment percentage of
persons with disabilities. We will continue to disclose information on the progress of our sustainability initiatives to the stakeholders while strive to improve disclosure quality using PDCA cycle. Results for KPIs in
the years before KPIs were set are indicated with a — (dash).

Financial and Corporate Information, etc.

We aim to increase our corporate value and solve social issues simultaneously. Therefore, with respect to key performanceindicators (KPIs) / targets, we are addressing to achieve both financial and non-financial aspects with the same amount ofimportance. Non-financial information KPIs / targets and results are shown below. For financial information KPIs, please refer tothe pages elaborating Medium- and Long-Term Management Plan (2020 to 2029).

About Hulic GroupKey Performance Indicators (KPIs) /Targets and Results for Non-financial Information*15 ◎: achieved, 〇: progressed, △: not progressed, —: not subject to assessment

36

Hulic Co., Ltd. Integrated Report 2024

Hulic Co., Ltd. Integrated Report 2024

37

Strengthen equity through profits growth and simultaneously pursue the AA credit and high profitability through sound financialbase.
Ordinary Profit Target in FY2025

FY2023 Results: 40.2%

Target Profile(FY2029)

Equity (Left axis)

1,200.0
1,000.0

13.4

800.0
600.0

Strike a balance between P/L Growth, B/S Soundness, Profitability, and Productivity (efficiency) ata high level and achieve further growth through dynamic transformation backed by
overwhelming speedy decision-making

Basic Policy

400.0

ROE (Right axis)

11.9

637.7

686.7

13.0

ROE
10% or higher

765.6

486.4
Strengthen equity

200.0
0

2020

2021

2022

2023

(%)

(times)

20.0

12.0

15.0

9.0

10.0

6.0

5.0

3.0

0

0

2025 (FY)The current Medium-Term Management Plan as phase II of the Medium- and Long-term Management Plan (2020-2029) is in progress.
Create a foundation for growth beyond 2030.
2019

2020

2021

2022

2023

InitialPlan

Previous Long-term Plan/Hulic 10 years(2014-2023）

ResultAchieved 4 years ahead

2024

2025

2026

2027

2028

2029

Basic
Strategy

Phase I
2020-2022<FY2029 Goal>
Ordinary Profit

Basic Strategy of Medium- and Long-termManagement Plan (2020-2029)

JPY180.0 Bln

2020

8.5

7.6 Debt/EBITDA 12 times or less

1.3

1.3

1.3

2021

2022

2023

Net D/E Ratio 3 times or less2025 (FY)

Current Medium-termManagement plan
Phase II
2023-2025

Phase III2026-2029

Focus
Areas

Start building strong leasing portfolio, resume development and reconstruction projects

Phase II

Monetization of development and value-added businesses and strengthen the REIT and fund business
Build up a solid and expanded portfolio for leasing business

Focus areas of the current Medium-Term
Management Plan (2023-2025)
Build a high-quality leasing portfolio andmaintain/strengthen a flexible earnings
structure

Further evolve the business model andrestructure the leasing portfolio

1.

Strengthen development and value-

2. reconstruction and value-added properties.

2. added businesses

Phase I

Hulic Co., Ltd. Integrated Report 2024

1.7

9.0

continue to enhance sustainable management, while maintaining a strong external credit rating

Create unique new business domains and3. improve Group strengths

Strengthen the management

38

9.9

Net D/E Ratio*

Aim to create a high-quality leasing portfolio that addresses the changing circumstances, andMedium-and Long-Term Management Plan (2020-2029)

Phase IIIDebt/EBITDA*

The current Medium-Term Management Plan (2023-2025) Basic Strategy/Focus Areas

1.

New
Plan

Optimal leverage* 50% (JPY75 Bln) of hybrid finance issued in FY2018 (JPY150 Bln) was calculated as nominal equity. Similarly, 50% (JPY175 Bln) of hybrid finance (JPY350 Bln) issued in FY2020, FY2022 and FY2023 wascalculated as such.

Position of the Plan

2014

12.3

Strengthen equity

4. foundation and implement stringent risk
management

Implement management that

5. emphasizes sustainable co-creation andco-existence with society

Enhance the pipeline of development,

Sustainability Initiatives

With “driving innovation” and “accelerating progress” as our motto, we continue to steadily
increase our corporate value through evolving ourselves flexibly in response to changes in themacro environment(JPY Bln)

Payout Ratio

12 times or less* 3 times or less* 10 % or higher 40 % or higher

Maintain the AA credit level

Medium-and Long-Term Management Plan (2020-2029) Target Profile and Basic Policy

ROE

Hulic Group’s Value Creation Story

FY2023 Results: JPY 137.4 Bln

Net D/E Ratio

Business Strategies

150.0 BlnJPY
The Medium- and Long-Term Management Plan (2020-2029) is intended to develop and evolve our business model, which is centeredon the real estate leasing business, and to pursue the growth of our corporate value. The current Medium-Term Management Plan
(2023-2025) is in progress as Phase II of this Medium- and Long-Term Management Plan.

Debt/EBITDA

About Hulic Group

Qualitative targets of current Medium Term-Management Plan

Diversify exits to ensure profitability

Diversify revenue sources by enhancing new

3. business domains

Ensure financial soundness and thorough risk

4. management to maintain a strong external
credit rating

Raise the level of sustainable management,

5. including the promotion of environmental

initiatives and human capital development, etc.

Hulic Co., Ltd. Integrated Report 2024

Financial and Corporate Information, etc.

Progress of Medium- and Long-Term
Management Plan (2020-2029) andMedium-Term Management Plan (2023-2025)

39

・P romote the sale of properties that do not satisfy Hulic’s strict investment criteria. Seek to make the portfolio all
highly earthquake-resistant buildings* by the end of 2025, excluding those scheduled to be sold or reconstruction.
 cquire properties through diverse investments that leverage Hulic’s ability for proposals to increase revenues
・A
from rents.
 ontinue property reshuffles to construct a competitive leasing portfolio that addresses the changing
・C
circumstances such as population decline.

 ctively work on M&As and alliances to expand existing business domains, including senior, environment and・Achildren’s education, etc.
・S et aside around JPY50.0 billion for growth investments under the medium-to long-term strategy, and explore
new business opportunities that respond to social and local community issues.

Progress up to December 31, 2023
B izflex flexible offices: opened two new properties in 2023 for a total of three in operationC hildren’s Education Business: Decision made to commercialize Kodomo Depart (children’s department stores) in Nakano and Tama
Plaza, bringing the number of planned Kodomo Depart to six◆O utdoor Business: Entered the outdoor business through a capital alliance with R.Project Inc., which is engaged in the business ofoperating camp facilities, to create synergy with the children’s education business.
◆A gribusiness: Our agribusiness in Vietnam achieved a full-year profit for the first time in FY2022. Started expanding strawberry
production in Himeji, etc.
◆◆

Progress up to December 31, 2023

Focus Area

4S teady progress also being made on restructuring the leasing portfolio
・95% of highly earthquake-resistant buildings (86% when including those scheduled to be sold or reconstructed)
・Leasable area has increased despite a temporary fall in the number of properties due to portfolio restructuring.
・K eeping the office ratio down, striving for a balanced portfolio to address the population decline and other changes in theenvironment (office share at 46%).

◆* Highly earthquake-resistant buildings are those that can safeguard human life and enable continued use of the building with post-earthquake repairs when an earthquake occurs with a seismic
intensity of level 7.

Ensure financial soundness and thorough risk management tomaintain a strong external credit rating
 aintain the AA level external credit rating to promote stable debt financing by quickly and effectively
・M
responding to changes in the financial market.
・Strengthen equity capital consistently based on accumulated profits.
・B uild a structure resilient enough to cope with disasters such as big earthquakes and eruption of Mt. Fuji, andimprove the risk management system.

Hulic Group’s Value Creation Story

1

Build a high-quality leasing portfolio and maintain /strengthen the flexible earnings structure

3

Diversify revenue sources by enhancing new business domains

Business Strategies

Focus Area

Focus Area

About Hulic Group

Progress on Medium-Term Management Plan
(Results of the Main Initiatives in FY2023)

Progress up to December 31, 2023
M
 aintained favorable financial indicators (Debt/EBITDA ratio of 7.6 times, NET D/E ratio of 1.3 times, and ROE of 13.0% as of December
31, 2023) ⇒ Maintained external credit rating of AA level◆P romoted high earthquake resistance of buildings and ashfall countermeasures for a possible eruption of Mt. Fuji.

2

Enhance the pipelines of development, reconstruction andvalue-added properties. Diversify exits to ensure profitability ccelerate completion of projects that we acquired for reconstruction during the previous Medium-Term・AManagement Plan (2020–2022).
 omplete listing of 100 properties to be developed / reconstructed by 2029 at the end of 2025. Increase
・C
distinctive development / reconstruction and value-added projects for each asset class.
・S ell some of these properties to Hulic Group REITs and funds so that the group’s AUM is maintained /enhanced and balance sheet is well controlled.

Focus Area

5

・Accelerate initiatives for environmental issues.
・Take various steps to develop human capital.
 aintain/enhance the strong governance framework and upgrade to a management structure that addresses・M
sustainability.
・Ensure transparent information disclosure to stakeholders.

Progress up to December 31, 2023W
 e have confirmed or unofficially confirmed 94 properties as of December 31, 2023 as part of our plan to develop or renovate morethan 100 properties by 2029.
◆W e completed 14 properties in 2023.
◆W e steadily expanded assets under management (AUM) at our REIT (approx. JPY 540.0 billion on December 31, 2022 to approx. JPY
590.0 billion on December 31, 2023).

Raise the level of sustainable management, including the promotionof environmental initiatives and human capital development, etc.

◆

Progress up to December 31, 2023A chieved RE100 ahead of schedule (two years ahead of initial plan, which was 2025).
R evised the human rights policy, established a framework for human rights due diligence and strengthened initiatives for respecting
human rights.
◆A dded two external directors, bringing the ratio of executive to non-executive directors to 5:7. Achieved the percentage of female
directors and auditors : 30%, etc.
◆◆

40

Hulic Co., Ltd. Integrated Report 2024

Hulic Co., Ltd. Integrated Report 2024

Financial and Corporate Information, etc.

Focus Area

Sustainability Initiatives◆

41

Director, Vice President

the tourism sector, focusing on hotels and ryokans (Japanesestyle luxury inns), to provide both domestic and international

Hulic aims to be a company with high profitability per

visitors with the opportunity to experience the splendor of

employee, in other words, a company with a high level ofJapan.

productivity, so that we are cautious in pursuing profits (volume)   Looking ahead to the future business environment, we

just from expanding our business portfolio. We also usually

expect to see rapid advances in information technologies

emphasize stable revenues, so a high growth but extremely

and changes in workstyles and lifestyles. As a result, we arevolatile revenue structure is slightly at odds with our policies.

focusing on next-generation assets, such as facilities related   Currently, the core of our business portfolio is leasing,to information technology including data centers, as well as

which also includes related business fields, such as asset

logistics centers, to meet these needs.

management and property management as well as the hotel   Nonetheless, our policy is to invest in a property whenbusiness. We are also continually exploring new revenue

we can expect a significant increase in asset value fromsources, while taking risk control measures and making every

development, reconstruction, and other measures, despite

effort to incorporate them effectively.

the fact that the investment does not perfectly satisfy ourinvestment standards.

1 F inancial performance: Analysis of businessenvironment

in the global economic recovery as we transition out of the   To strengthen the leasing business, we have followed

COVID-19 pandemic.

a policy of expansion through M&As to effectively acquire   We believe that investment in long-term holdings of theseIn 2023, while socioeconomic conditions mostly normalized,   In the real estate industry, location conditions often shapecompanies with high-quality real estate portfolios. Accordingly,

properties is likely to result in a strengthened leasing portfolio
because we are expecting increases in asset values and rents

a noticeable shortage of labor contributed to a tightening in

the competitive landscape, as demonstrated by the bustling

we have incorporated into our own business portfolio

the supply-demand gap. This, coupled with the depreciation ofcommercial activity in central urban areas amid a swift reboundbusinesses that are strongly compatible with our own,

from investment in focused areas or assets. In the final year

the yen, led to rising prices, resulting in an economic situation

in inbound consumption. Despite this buoyancy, given theparticularly in the core real estate leasing business.

of our Long-Term Management Plan (in 2029), we envisage aunprecedented in recent years. Shifting our attention to therelatively low interest rates in Japan, it is expected that domestic   In contrast, we exited from businesses that were

portfolio profile where focus area assets account for 50% of thereal estate industry, despite a softening in vacancy rates forand overseas real estate investors will continue to be active,

incompatible with leasing and were considered to have few

total real estate portfolio, and from the asset type perspective,

offices attributed to an uptick in completed properties andlooking for lucrative properties within the investment market.

synergies.

the rise of remote work, the real estate investment market   Given this environment, we will continue to steadily

remained stable. This stability was primarily driven by sustained

implement our Medium- and Long-Term Management Plan in

confidence among real estate investors, buoyed by signs of

FY2024, aiming for stable growth with balanced risk-taking.

inflation easing in Europe and the United States as well as

we plan to bring the proportion of assets other than offices to
50% of the total real estate portfolio.

4 R esource allocation strategy: Growth investment
policymedium- to long-term value added to properties by post

To strengthen and expand the leasing portfolio, which is ourinvestment development and reconstruction, we consider we   We set a hurdle rate for our investments. Assuming

continued monetary easing domestically.

2 C apital efficiency: Recognition of capital costs

main source of revenue, investment including purchasing new

will be able to enhance our corporate value when the return   Given this environment, and based on the Medium- andThe real estate business is generally seen as not having aproperties, development and reconstruction, etc. are essential.

on invested capital (ROIC) sufficiently exceeds WACC. In 2024,

Long-Term Management Plan (2020-2029), which began inparticularly high ROE. We established the ROE target of 10%

In structural terms, negative cash flows from investment

we plan to continue strengthening our leasing portfolio and2020, the Group focused on steadily increasing corporate

or higher in the Medium- and Long-Term Management Plan

activities are covered by positive cash flows from operating

making additional investments.

value by flexibly evolving in response to changes in the macroand aim to maintain high capital efficiency. For this reason,and financing activities, but the level of investment must be

environment. We were guided in this by our motto: “driving

we intend to improve ROA by realizing profits from the sale

controlled to avoid excessive reliance on cash flows from

(2) Net investment in development business

innovation” and “accelerating progress.”of completed properties that will ramp up going forward in

financing activities.

Development and reconstruction improve the fundamental   As a result, all profit indicators reached record-high levels

addition to leasing revenue from our fixed assets portfolio,

in FY2023. Consolidated ordinary profit, which we consider

which is the core source of revenue. For financial leverage,(1) Net investments in long-term lease properties

important as a profit target in the Medium- and Long-Term

we aim for steady improvement or a stable transition as

Investment standards are based on the approaching decline intenants with a safer and more comfortable environment.

Management Plan, totaled JPY137.4 billion, an increase of 11.5%

indicated by changes in Net D/E Ratio. Additionally, we think

population that is about to begin in earnest. By geographical

Above all, it is the core of our medium- to long-term businessover the previous year. Profit attributable to owners of parent

large changes in ROE, an important indicator of shareholder

area, our policy is to invest in properties near train stations

strategies to differentiate ourselves by developing high-quality

amounted to JPY94.6 billion, up 19.5% year on year. This brings

value, are not desirable. Therefore, we have excluded businessin central Tokyo, mainly in our strategic focus areas of Ginza,

medium-sized buildings with strong earthquake resistancewithin sight the target level of JPY98.5 billion set in the Medium-

opportunities from condominium sales despite the solid capital

Shinjuku East Side, Shibuya/Aoyama, and Asakusa. We intend

when there are predictions of a Tokyo epicentral earthquake

Term Management Plan (2023-2025). ROE, an indicator of capitalefficiency, as this business might be highly sensitive to market

to make our real estate portfolio more competitive as weand other natural disasters. We are planning by 2029 more thanefficiency, was 13.0%, exceeding our target of 10% or higher.

conditions.

believe population declines will result in medium- to long-term

100 development and reconstruction properties, and we aim tovalue of real estate and increase earnings. Moreover,reconstruction of buildings and facilities enables us to provide

Net D/E Ratio*, an indicator of financial soundness, decreased to   The levels of capital costs and the weighted average capitalconcentrations of people in urban areas and this could intensify

further realize corporate growth with the resultant increases in

1.3 times, exceeding by far our cap of 3 times or less.

cost (WACC) are currently low, a reflection of the financial

competition between areas.

rents and development profits.

* Net D/E ratio has factored in the effect of hybrid finance as nominal equity.

environment in recent years. At the same time, capitalization   From the perspective of asset type, it is expected that   In response to climate change, we are continuing to   For the economic outlook, moderate growth is expected

rates in the real estate market have remained low for the last

there will be a solid demand for facilities for the elderly in thedevelop energy-efficient buildings. Also, we will invest

to continue in Japan owing to a possible temporary slowdown

few years, resulting in generally stable costs and returns. Givenlong run due to the aging population. With that in mind, we areapproximately JPY66 billion to develop solar power equipment

Hulic Co., Ltd. Integrated Report 2024

About Hulic Group

rapidly recovering, and we will continue to prioritize assets in

Hulic Group’s Value Creation Story

subsides, inbound tourism and the demand for tourism are

Business Strategies

Hajime Kobayashi

42

the elderly and hospitals. In addition, as the impact of COVID-19

spread while closely watching capital costs.

3 C apital allocation strategy: Business portfolio
reviews

We will continue to build astable and sound financial basefor maintaining and increasing
medium- to long-term profits.

placing importance on healthcare assets, mainly senior living for

Sustainability Initiatives

these conditions, our policy is to monitor market changes andenhance our corporate value by maintaining a positive equity

Hulic Co., Ltd. Integrated Report 2024

Financial and Corporate Information, etc.

Message from the Executive
Officer in Charge ofFinancial Strategy andCapital Management

43and are replaced with properties compatible with ourour policy is to supplement appropriately using hybrid financing

share buybacks in the market or by setting a total return ratio iscompany-owned buildings* to electricity from 100% renewableinvestment policies. This approach also contributes by offsetting

and other methods depending on the business environment

another approach. However, considering Hulic’s specific businessenergy sources by 2029, one year ahead of schedule. In

cash flows created by financing activities. Additionally, on theand level of profit accumulation each year. For debt financing,feature that we earn stable revenue primarily from our leasing

addition, we will encourage the construction of fireproof

liability side, we monitor financial soundness using various

we raise funds by a combination of direct market procurement

portfolio, unless there are unusual environmental changes, we

wooden buildings, make effective use of unused energy, andindicators to maintain overall control of the balance sheets.

using straight corporate bond issuance and indirect market

believe it is more appropriate for us to deliver stable shareholder

take part in other initiatives to develop buildings with excellent   The Net D/E and Debt/EBITDA ratios are the ones we pay

procurement through financial institutions, ensuring an

returns through paying dividends rather than share buybacks.

environmentally friendly features. In these ways, we will develop

close attention to, among other indicators. Over the medium-appropriate balance while monitoring financial market trends.

We also recognize the need to increase share value over thereal estate properties that are sought out by our clients.

to long-term, we target a Net D/E Ratio of three times or less   When executing debt financing, we attach importancemedium-to long-term, thus we aim for both higher net assets

and a Debt/EBITDA Ratio of 12 times or less. If leverage levels on

to stable funding over the long-term, bearing in mind thatper share and net income per share. Both net assets per sharethe liability side become too high, this could raise credit issues

the leasing portfolio is Hulic’s fundamental long-term income

and net income per share have increased approximately 1.6

including external credit ratings and could lead to increased

source. In other words, we seek to secure financing withtimes over the last five years, leading up to FY2023.

funding costs and to a higher WACC. At the same time, when thelonger durations based on our approach to asset and liability

leverage level falls below the balance point, the relative weight

management, favoring fixed-interest procurement in light of

5 F unding policy: Balance sheet targets

With real estate leasing as our core business and stable leasing
income the main pillar of our revenue structure, solid growthof WACC capital costs is increased, which ultimately leads to an

the interest rate environment. These measures are designed toin this portfolio is essential for sustaining growth. We believe it

increase in WACC and a decrease in ROE, even though credit costs

ensure a stable and low-risk funding structure that allows us to

To expand leasing revenue while enhancing the leasingis necessary to position this portfolio as the major part in ourare reduced. We believe that our target level for financial leverage

flexibly navigate abrupt changes in the business and financial

portfolio, it is necessary to maintain financial soundness andfixed assets in order for us to maintain the soundness of theis close to the optimum in the current environment. However,environments.

to pay attention to the level of undistributed earnings whilebalance sheets.

we are taking quick, effective action to control the balance sheet   In October 2021, we increased our capital base through acontrolling the balance sheets.

   For this reason, we believe that it is important to first raisewith a view to maintaining the AA external credit rating level.

public offering of approximately JPY100.0 billion, with the aim   Regarding the optimal level of undistributed earnings,

the profitability of fixed assets, which sit on the asset side.

   In specific terms, our control method includes aof maintaining a strong financial base and securing growth

we envision a shareholders’ equity profile from indicators such

Increases in profitability lead to increases in asset value andcombination mainly of asset-side control through portfolio

opportunities after COVID-19.

as Net D/E Ratio and Equity Ratio, aiming to maintain it at a
sufficient level. The most important element in maintaining

act as a financial buffer contributing to financial soundness.

rebalancing and other measures as well as liability-side

Based on this approach, we formulated and are adhering tocapital control through hybrid financing, among others. We

7 C
 ash allocation: Policy on shareholder returns

an investment policy on long-term holding of properties.

set investment plan standards based on the target profile ofWhile aiming to achieve growth, Hulic places importance on

from undistributed earnings, but this does not mean that simply

Strengthening development and reconstruction is also linked

balance sheets from the initial planning stage of the beginningproviding appropriate profit distributions to the stakeholders

increasing undistributed earnings is good. On the other hand,to this approach. At the same time, properties that are notof each fiscal year and adhere strictly to the level of our

who support our growth. Specifically for returns toexcessive shareholder returns could hinder corporate growthcompatible with our core portfolio are sold and replaced.

targeted financial standards.

shareholders, we have increased our dividends in every year

and reduce future cash flows. Therefore, we will determine the

6 O ur approach to funding

since our listing, with the dividend payout ratio reaching 40.2%

level of undistributed earnings by taking a balanced view on

in FY2023. We are aiming for a dividend payout ratio of 40% or

the speed of profit growth while providing shareholder returns

development and reconstruction can reinforce our portfolio if

We undertake liability-side fund procurement, bearing in mind

higher under our Medium-Term Management Plan (2023-2025).

and other distributions.

sold under the current favorable real estate market conditions

our target balance sheet profile, while for the capital account   Shareholder returns can also be made indirectly throughFor instance, properties that do not match our investment
policy and cannot be expected to increase in value throughA-

Dividends

A

A+

A+

AA−

(positive)(stable)(times)(times)16.0

Debt/EBITDA*2 (left axis)

15.0

Net D/E ratio*2 (right axis)

7.0

Since our stock market listing in 2008, we have increased dividends every fiscal year.
Going forward, shareholder returns will continue to be primarily dividend payments. We intend to ensure a consolidated
dividend payout ratio of 40% or higher, one of the goals in our Medium-Term Management Plan.
Dividends per share (left axis)

(yen)
6.0

14.0

Dividend payout ratio (right axis)

50

13.0

32.0

5.0

12.0

27.8

40

23.7

4.0

11.0

3.0

9.0

20

20.1

19.5

30

10.0

21.8

2.0

7.6 times
1.3 times

7.0

1.0

6.0
2008

2009

2010*120112012*120132014

2015*1

2016

2017

2018

2019

2020

2021

2022

2023

(FY)

*1. Calculated on a pro forma basis.
*2. In 2018 and 2019, 50% (JPY75 Bln) of hybrid finance (JPY150 Bln) was calculated as nominal equity. Similarly, 50% (JPY175 Bln) of hybrid finance (JPY350 Bln) was calculated as such in and after
FY2020.

Hulic Co., Ltd. Integrated Report 2024

35.4

33.9

37.8

29.3
36.00

38.5

39.00

(%)
40.3

42.00

40.2

40.3

50.00

52.00

25.0
20.0

21.00

2.00

2.67

3.00

3.67

4.50

2008

2009

2010

2011

2012

35.0
30.0

25.50
15.50

45.0
40.0

31.50

13.9

10
0

32.6

24.0

10.50

8.0

Dividends have been
increasing every fiscal year

60

15.0

17.00

10.0

6.50

5.0
2013

Former Hulic*

2014

2015

2016

2017

2018

2019

2020

2021

Sustainability Initiatives

External Credit rating: JCR

sufficient shareholders’ equity is retained earnings, which comes

2022

2023

0
2024 (FY)New HulicMerger with Shoei Co., Ltd.

Financial and Corporate Information, etc.

Maintaining and Improving Financial Soundness

44

8 C ash flow policy: Approach for undistributed
earnings

Business Strategies* Excludes properties for which we do not have energy management authority including master
lease properties, residential properties and non-managerial co-ownership properties, and realestate for sale, etc.

Hulic Group’s Value Creation Story

that does not rely on the FiT system, aiming to convert all

About Hulic Group

Message from the Executive Officer in Charge of Financial Strategy and Capital Management* In consideration of the 2012 merger with Shoei Co., Ltd. (share exchange ratio: former Shoei Co., Ltd.: former Hulic Co., Ltd. = 1:3), the dividends per share in 2008–2011 were calculated by dividing
dividends of the former Hulic by three. The dividend payout ratio for 2009 and 2010 were calculated based on the initial forecast of net income excluding special factors.

Hulic Co., Ltd. Integrated Report 2024

45

Hulic Growth Strategies by Business Segment

Leasing Business

The leasing business, the core of the Group’s business, has achieved steady growth and has posted higher leasable floor areas.

We operate a real estate leasing business based on ownership and management of lease properties located with a focus on Tokyo 23 wards.
The leasing business is the core of our business model and our portfolio extensively includes office buildings, commercial facilities, hotels, senior   Hulic has built a balanced portfolio of high-quality properties primarily located close to stations in central Tokyo. As a result, our vacancy rate hasremained lower and our rent levels have trended higher than the market average.

living, and rental housings in prime locations or close to train stations with high-level safety standards with a particular emphasis on adoption of

Vacancy rate performing under market average and average rents staying higher than market average

earthquake-resistant technologies.
We are working to strengthen the real estate leasing business by actively investing in the acquisition and management of real estate in prime

We own many properties in prime locations in central Tokyo. In Tokyo 23 wards, the vacancy rate of our office and related properties has remained below the market
average over the last few years at 1% or lower. Moreover, our average rents in Tokyo 5 central wards have trended above the market average, ensuring stable revenue.
Going forward, we will continue to emphasize central Tokyo location and closeness to a station as key factors to mitigate the vacancy risk in rolling out operations.

locations and in development and reconstruction projects to further boost revenue generating capacity through effective use of this asset portfolio.

Vacancy Rate

Medium- to Long-Term Focus Strategies

Average Rents(Vacancy rate: %)10

Leasing Portfolio Policy

Market average Tokyo 5 central wards
Hulic offices, etc. Tokyo 23 wards

20,0006
4

Progress
FY2023• Set new target to achieve 100% by 2025, excluding
those subjects for sale or reconstruction

100%*186%

FY2029100%• Converting to 100% renewable energy sourced
electricity for electricity consumption at allcompany-owned buildings

100%*2• In response to a decline in working population,
establish a balanced asset class composition withkeeping the ratio of office buildings around 50%.

Office share

50%*3
Assets infocus areas

2015

2016

2017

2018

2019

2020

2021

*2 Hulic vacancy rate: excludes floor area unleased pending tenant response or reconstruction, and properties within one year from completion.

FY2029Focusing investment on central Tokyo properties close to stations

100%

FY2019FY2023

FY2029Approximately 70% of our office buildings and related properties are concentrated in central Tokyo 23 wards where tenant demand is high. Additionally, 63% ofproperties are close to a station, i.e. within a 3-minute walk.
   Located close to stations in central Tokyo, our properties have excellent transport links and are in demand from a wide range of tenants as general office space,bank branches, commercial and retail outlets, etc.

63%

46%

50%

FY2019FY202343%

48%

FY202950%

Geographical Distribution of Properties (excl. senior living and residential properties) (as of December 31, 2023)
Other 6%

Tokyo 5
central wards

Keihanshin area 4%Tokyo metropolitan areaother than 23 wards 20%

Distance from nearest station
More than 5 minutes walk 23%

Within1-minute walk

49%

210
properties

Tokyo 23 wards otherthan central 5 21%

70%

Within 4-5-minute walk
14%
Within 2-3-minute walk
30%

33%

210
properties

Within3-minute walk63%

Highly earthquake-resistant/eco-friendly buildings
In addition to selected location, we provide highly earthquake-resistant and decarbonized buildings.

Continue property reshuffles to construct a competitive leasing portfolio that addresses the changing circumstances such as falling population.
Acquisitions in Five Asset Types Focused on Growth and Market Needs❶ Focus Area Assets• Shibuya/Aoyama❷ Assets Closely Located to Major Central Tokyo Stations• Properties located mainly within a 3-minute walk ofa station in central Tokyo❸ Tourism and Healthcare-related Assets• Hotels and ryokans• Other healthcare-related facilities(Japanese style luxury inns) • Senior living and hospitals❹ Next-Generation / CRE Assets❺ Potential Value Growth Assets• Logistics facilities, data centers, research institutions and other assets in response to market needs• Assets expected to achieve future value growth through reconstruction• S table CRE assets based on expected long-term relationships building• Assets expected to achieve future value growth through value-adding initiatives

Hulic Co., Ltd. Integrated Report 2024

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (FY)

*1 Source: Market average; Miki Shoji Co., Ltd., Office Data by District (based on office buildings in Tokyo business districts with standard floor area of 100 tsubo or above).

Tokyo 23 wards• Shinjuku East side • Asakusa

02022 2023 (FY)

Achieved RE100 in May 2023, twoyears ahead of initial plan
(initial plan : 2025)

Acquisition Strategy

46

2014

*4 One tsubo is approximately 3.3 m2.

*1 Property number basis, highly earthquake resistant buildings are those that can safeguard human life and enable continued use of the building with post-earthquake repairs when an earthquake
occurs with a seismic intensity of level 7.
*2 Property number basis, excludes properties for which we do not have energy management authority including master lease properties, residential properties and non-managerial co-ownershipproperties, and real estate for sale,etc.
*3 Office share: Rent revenue basis, Assets in Focus Areas: Book value basis• Ginza

2013

Number of properties• Promote acquisition and development in strictly
selected locations, specifically focus areas (Ginza,
Shinjuku East Side, Shibuya/Aoyama, Asakusa)

50%*3

2012

*3 Hulic average rents: calculated by dividing rental revenue for last month of fiscal year by leased floor area at the end of fiscal year. Excludes hotels, ryokans, and master lease properties.

95% (excluding those subjects for sale or reconstruction)
Renewable energy
buildings

0

Effects expected▶ 100% Earthquake-resistant buildings
Incorporation of original standards forearthquake resistanceSale of uncompliant
properties

New acquisition of highly earthquake resistant buildings/
Development/Reconstruction/Reinforcement

Satisfying tenants’
BCP needs indurability

Low vacancy▶ Promotion of decarbonization in company-owned buildings
Development and holding of non-FiT renewable energy equipment
Stable supply of renewable electricity in a long-term

Higher rent

Meeting tenants’environmental
needs (RE100, etc.)

Competitive
advantages

Hulic Co., Ltd. Integrated Report 2024

Financial and Corporate Information, etc.

Highly earthquake
resistant buildings

FY2025
Achieve 100% of highly
earthquake resistantbuilding excluding thosesubjects for sale orreconstruction

10,0002

Business Strategies

Plan

Sustainability Initiatives

KPI

Market average Tokyo 5 central wards

All Hulic properties

8

Rebalancing of leasing portfolios to pursue more competitive advantages*Excl. real estate for sale

(Average rents: JPY/tsubo)
Hulic offices, etc. Tokyo 5 central wards
30,000

Hulic Group’s Value Creation Story

Business Overview

About Hulic Group

Initiatives and Track Record

47

Hulic Growth Strategies by Business Segment

Business Overview
Where properties in our portfolio have unused capacity, for instance in their permitted floor area ratio, we undertake systematic reconstruction

Progress of the Medium- to Long- Term Management Plan
Develop or reconstruct more than 100 properties (of which, 94 projects are confirmed or unofficially confirmed)

to maximize capacity in a way that suits the location. This not only results in increased rent revenue but also enhances the quality of the asset
portfolio. In addition, we promote development and redevelopment business drawing on the expertise built in the reconstruction of owned

Phase II (2023-2025)

Phase III (2026-)

More than 29 properties

More than 49 properties

Phase I (2020-2022)

properties. Furthermore, we pursue opportunities in PPP business and development of urban type data centers and logistics facilities.

Medium- to Long-Term Focus Strategies

16 properties

Complete listing of 100 properties andcompletion will be accelerated in/after Phase II* as of December 31, 2023

Hulic Group’s Value Creation Story

Completed/Plan• Strengthen leasing portfolio and increase development revenue through promotion of development business backed by a successful mediumto long-term pipeline

Developing/planning (major properties)• Increase high-quality assets by accelerating development and reconstruction projects with high standards of earthquake resistance and energy-saving features

Hulic’s Major Development and Reconstruction Track Record
Focus area properties (Ginza, Shinjuku East Side, Shibuya/Aoyama, Asakusa)

Yokohama Yamashitacho Project

Ginza Building Reconstruction Project

HULIC Sapporo Reconstruction Project II

Shinsaibashi Project

Business Strategies

Sendagaya Center Building Reconstruction Project

About Hulic Group

Development/Reconstruction Business

HULIC SQUARE TOKYOHULIC &New GINZA 8

HULIC &New SHINJUKU

Hulic Kaminarimon Building

Shibuya PARCO•Hulic Building

Hulic Fukuoka Building
Reconstruction Project

Kodomo Depart Nakano
Development Project

We are also actively developing next-generation assets including urban data centers, logistics
facilities and research facilities.
Data center

Hulic Ryogoku River Center

LICOPA Tsurumi

HULIC SQUARE SAPPORO I

Research facilities

Hospitalment Aoyama

Completed in 2023 (major properties)

Kobunacho Project

Narita Logistics Development Project

JFE steel Minamiwatarida north-area Development Project*These are images of projects at the planning stage, so they are subject to change.

Develop/ Reconstruct more than

100 properties by 2029

Pursuing more competitive advantages of the leasing portfolio through development/ reconstruction
Hulic Kinshicho Collabo Tree48

Hulic Co., Ltd. Integrated Report 2024

Charm Suite Yotsuya

Hulic Logistics Kashiwa

Bizflex Hamamatsucho by
HULIC

FUFU KARUIZAWA Wind in the Sunshine(prime locations in central Tokyo/ earthquake-resistance•high-quality /environmental friendliness /well-balanced portfolio)

Hulic Co., Ltd. Integrated Report 2024

Financial and Corporate Information, etc.

Hulic JP Akasaka Building

Logistics facilities

Sustainability Initiatives

Other (major properties)

49

Development/Reconstruction Business (PPP business)

Value-added BusinessBusiness Overview

Business Overview

Drawing on the expertise built in the development and reconstruction of office buildings, commercial and lodging facilities, etc., we are working

This business sells properties we own and those we have recently purchased or invested in after increasing the value of the asset to the maximum

with the public bodies in the effective utilization and operation of public assets owned by central and local governments.

by applying initiatives including updating, renovation, or conversion.
To meet the diverse needs of the real estate market, we also carry out short-term warehousing, which promotes the distribution of real estate to
the market.

About Hulic Group

Hulic Growth Strategies by Business Segment

Medium- to Long-Term Focus Strategies
With our plentiful value-added lineups, we build standard model cases and aim to establish this business as a growth driver and stable income●What are PPPs?

source.

estate) through partnership and collaboration with the public and private sectors.
   As a leading player in the PPP, Hulic draws on an effective track record in development in central Tokyo and a stable business base to support
effective use and operation of public real estate.

❶ Land as a risk asset*❷ Increase in underused or unused land
❸ Liabilities for risk specific to real estate(earthquake resistance, asbestos, soil pollution, etc.)* L and as a risk asset refers to the potential for extreme
fluctuation in the land price and to the owner’s responsibility
for issues specific to real estate such as asbestos andearthquake safety.

Value-added refers to bringing out a property’s potential and maximizing the real estate value.
Results of strategies for value-added

Municipalities

Issues for municipalities❶ Financial issues

Effective use andoperation of public realestate• Changes in funding conditions• Administrative and financial reforms(reform of public accounting)❷ Aging of public facilities(joint public- and private-sector
projects)••+

Use change (optimum use)
• Matching with location potential•

Increasein value(i.e., profits)

Property age

0Functional renewal work
Conventional “value up” approach• Value may not be larger than when
it was completed• Maintenance costs increase withbuilding age

PPP projects

Hulic Co., Ltd.

❶ Maximization of each real estate property’s
potential❷ Buildings designed and refurbished to meetneeds
❸ Incorporation of new business schemes❹ Reconstruction for compliance with the latest
building regulations

Real estate value-

Deteriorationfrom aging• Building deterioration• Changes in location potential

Fill thegap
MaintenanceTrack RecordE ffective track record indevelopment in central Tokyo
Stable business baseInitiatives and Track Record (Major Properties)① LICOPA Kawasaki (former site of Ito-Yokado Kawasaki Store’s parking lot)

② Hulic Kasai Rinkai Building

Hulic’s second LICOPA community-based commercial facility was designed to attract morecustomers and revitalize the property. The site was renovated into a shopping center
capitalizing on the deep roots with the local community in collaboration with Ito-YokadoCo., Ltd.
A new commercial facility was built on the former site of the parking lot to attract a newcustomer base and to create synergy with existing facilities that appeal to customers.

This large value-added project increases profitability by improving
the occupancy and efficiency rate of an existing multi-tenantcommercial building as well as by expanding a logistics facility(Hulic Logistics Kasai) using the empty spaces within the site.

Sustainability Initiatives

Issues for land investment

What Is the Value-added Business?

Added value

Public-private partnership (PPP) project promotes effective use and operation of real estate owned by central or local governments (public realBusiness Strategies• Leveraging our rich expertise in the PPP business, we aim to capture more opportunities by promoting sales to central and local governments.

Hulic Group’s Value Creation Story

Medium- to Long-Term Focus Strategies

Before value has
been added

Planning(Old) Onsite parking lot building

Hulic Kasai Rinkai Building

RISSEI GARDEN HULIC KYOTO

Hulic Rygoku River Center

Hulic Kinshicho Collabo Tree

Hulic Logistics Kasai

Shibuya 1-chome Area Joint Development Miyazaki Prefecture Tokyo
Project

Building Redevelopment Project(New) Onsite parking lot building

After value is added50

Hulic Co., Ltd. Integrated Report 2024

Hulic Co., Ltd. Integrated Report 2024

Financial and Corporate Information, etc.

Hulic Kasai Rinkai Building

51

Senior Citizen-related Business

Tourism-related BusinessBusiness Overview

Business Overview

As the aging of society continues, we anticipate that demands for nursing and medical care will increase. We are promoting the development of

To capture demand for tourism, which is expected to increase over the medium- to long-term, Hulic operates own-brand hotels and ryokans (Japanese

senior living, hospitals and columbariums, as well as businesses to promote wellbeing and enrich the lives of active seniors.

style luxury inns), and we are acquiring more hotel assets.

Medium- to Long-Term Focus Strategies

Medium- to Long-Term Focus Strategies

5,000 units by 2025 (4,800 units as of December 31, 2023).

● We directly manage hotels and invest in hotel properties in areas that attract many sightseers, in this way aim for establishing a highly

competitive advantage in the tourism industry.

● Wewill also focus on creating and expanding new senior-oriented businesses in collaboration with healthcare-related companies.

Initiatives and Track Record

Initiatives and Track Record
Given the rise in the elderly population and increasing demand for care facilities, we are investing in other businesses related to the elderly in
addition to investing and developing senior living.

Investment/Development of senior living

Senior citizen-related business• New initiatives using existing asset holdings

active seniors, among others• FY2023:1 property completed, five properties acquired

1 Own Brand Hotel (THE GATE HOTEL)Our Policy

Our Policy● One of the brand concepts is “to offer authentic value to our guests”.
● Lodging-oriented boutique hotels with carefully selected locations

and proven popularity, including in Asakusa, Ginza, Ryogoku andKyoto.
● Development

Charmpremier Gotenyama Sanbankan

La vie re Grand Syukugawa

projects areunderway inFukuoka, Yokohama,
Sapporo, and Osaka.

Hulic Premium Club Nihonbashi

2 Ryokans (Japanese style luxury inns) (FUFU brand)● Hulic owns the properties and operation is entrusted mainly to Hulic

FUFU Co., Ltd. (a joint venture with the Kato Pleasure Group).
● We are developing ryokan (Japanese style luxury inns) near famoussightseeing spots within two hours of Tokyo, primarily targeted at theaffluent.
● Opened 11 and will

open additional two
by 2025

TOPICS
Initiatives for Smart Senior Housing Project (a new nursing
care business using AI and IoT)

THE GATE HOTEL TOKYO by HULIC

State-of-the-art Smart Senior
Housing using AI and IoT

The Smart Senior Housing Project aims to provide state-of-theart senior living equipped with systems that use AI and IoT for
monitoring sensors as well as recognition cameras and nursing care

Human resource
education

record integration, etc. The intention is to raise nursing efficiency and•Remote training

improve the productivity of the staff working in senior living as well•

Coaching AI

Nursing care staff

Residents

AI analysis of big data
Platforming

strengths in monitoring sensors, sleep issues, and dementia problems.
We further moved forward and formed a capital and business alliance,
investing in this company in December 2020 to establish a stronger
relationship. Going forward, we will continue to further improveon the Smart Senior Housing Project to ease the labor shortage for

Raising nursing efficiency
Automation of nursing record
Optimal placement of staff
Educational system for nursing
care staff• Services to improve QOL andcomfort•MonitorsData
coordination

Monitoring sensor for residents
Monitoring sensor for bathing
Health anomaly detection
sensor• Urine sensor
•

•

•

•

•

FUFU KYU-KARUIZAWA Restful Forest (Guest room)

4 Hotel (Asset) Acquisition and Leasing
Our Policy● We acquired Nippon View Hotel Co., Ltd. as a wholly owned«Improving QOL»

as to offer the residents a better quality of life (QOL).
   We had a business alliance with EcoNaviSta Co., Ltd., who has

3 Nippon View Hotel
Our Policy«Raising efficiency»

subsidiary in 2019, and we are promoting efficiency improvementsby consolidating the business management sections.

● Hotel investment in a prominent tourist area
● These assets are being leased to operators with strong track records.

● Opened March 2023

Asakusa View Hotel
Annex Rokku

nursing care, and we intend to create a new healthcare business.

Asakusa View Hotel Annex Rokku (guest room)

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Hulic Co., Ltd. Integrated Report 2024

Business Strategies• Creation of businesses related to healthcare and• Use of wood in building construction and materials of senior living are under consideration

Sustainability Initiatives(verification of technologies, etc.)• All are long-term leases

Financial and Corporate Information, etc.

• Acquisition and development of facilities that have good locations and are run by excellent operators

To capture needs for tourism, Hulic: 1)directly manages hotels under our own brand name (THE GATE HOTEL); 2)operates ryokan, Japanese styleluxury inns (FUFU); 3) has acquired Nippon View Hotel Co., Ltd., which owns number of hotels under View Hotel brand; and 4) is acquiring andleasing hotels. We are developing our tourism-related business while mitigating risks by adding different grades of hotels that are owned/leased andproperties that are managed by us into our tourism portfolio (owned and leased properties: from business to luxury types in limited geographicalareas; directly managed: mainly upscale hotels and luxury ryokans). Recognizing this business as a potential growth area, we are considering
additional development of our own brand hotel (The Gate Hotel) and Ryokan, Japanese style luxury inns (FUFU).

Hulic Group’s Value Creation Story● Leveraging know-how gained through pioneering initiatives in senior citizen facilities (senior living), we aim to make an industry-leading level ofCharm Suite Yotsuya

About Hulic Group

Hulic Growth Strategies by Business Segment

Grand Nikko Tokyo Bay Maihama

Hulic Co., Ltd. Integrated Report 2024

53

Hulic Growth Strategies by Business Segment

Other BusinessBusiness Overview
Our Group companies are in various businesses including the operation of REITs (both publicly offered and private), building management, insurance,and contracting for construction work, among other opportunities. The Group is also working to diversify revenue sources by strengthening initiatives
for new businesses, including in our businesses for flexible offices, rental offices, children’s education, and the outdoors.

•W ith the increase in the number of dual-income households and the gift tax exemption for educational funds, we entered the children’s education
business in 2020, viewing it as a promising market.
•P romoted the development and deployment of Kodomo Depart, a one-stop service center forchildren.
• Formed capital and business alliances with education-related companies.

About Hulic GroupChildren’s Education Business• Invested in children’s educational facilities.

Medium- to Long-Term Focus Strategies● Actively collaborate and form alliances with other companies as well as M&As for business growth.



Hulic Group’s Value Creation Story● Set an investment budget for our growth strategy of approximately JPY50.0 billion to explore a wide range of new business areas that addresssocial and regional issues.

Initiating Flexible Offices: Bizflex by HULIC

Kodomo Depart (image)• The Bizflex series was launched in 2021 based on the concept of “easy to rent and easy to leave” as a new option for office space. Bizflex
incorporates a leasing system for flexible leasing with low move-in and move-out costs as well as digital technology (DX) that helps tenants
improve their productivity.
•A s of December 31, 2023, four properties have been
completed: Azabu-Juban, Roppongi, Tokyo-Yaesu,
and Hamamatsucho.

Outdoor Business• In 2023, we formed a capital and business alliance with R.project Inc., an operatorof camping and retreat facilities, recognizing that the outdoors contributes to thedevelopment of children’s noncognitive abilities and can create synergy with thechildren's education business.

Business Strategies• Jointly considering ways to increase the value of existing facilities.

RECAMP Katsuura

Bizflex Tokyo-Yaesu by HULIC•W
 ith a Tomato cultivation business in Hokuto City, Yamanashi, and a strawberry cultivation business in Kagawa, we also produce and sell flowers in
Vietnam using a method of producing high-quality agricultural products by Japanese farmers called Made by Japan.
• We are addressing population decline and food supply issues in the agribusiness by establishing a new agricultural model using ICT.

Rental Office Business• E ntered the rental office business, where demand is expected to grow with the increase in the number of start-ups as well as diverse workstyles.

Sustainability Initiatives

Agribusiness•W e will combine this company with our know-how in the office business and other areas to expand the services of the Group.

Overseas Businesses• In markets that we expect will grow, we consider other initiatives as we reduce risk through joint ventures with partners who have knowledge andexpertise. (We launched this business against a backdrop of building up capital by continuing profit growth and increasing the tolerance for risk.)• We established the Global Investment Unit in 2024 and are looking into investing in senior living in the United States.

54

Hulic Co., Ltd. Integrated Report 2024

Hulic Co., Ltd. Integrated Report 2024

Financial and Corporate Information, etc.

•A
 cquired CROSSCOOP Co., Ltd. in September 2023 making it a wholly owned subsidiary and changing the name to HULIC Biz Frontier Co., Ltd. This
company operates rental offices in 9 locations.

55

Contributing to Actions for Mitigating Climate Change and Reducing Our Environmental Impact

Contributing to Actions for Mitigating
Climate Change and Reducing Our
Environmental Impact

Hulic executes environmentally friendly management to realize an ideal carbon-free and recycling-oriented society in 2050.

Roadmap of Initiatives for Achieving Vision
2020-2022

2023

2024

2025

-2029

2030

-2050

Adoption of environmentally friendly technologies to properties owned

GeneralEnvironmental Policy / Environmental Management System

Start disclosing information in line with TCFD recommendations
Disclosed SBT-approved GHG emissions reduction targets (near-term targets)

Hulic Group’s Value Creation Story

Achieved
in 2023

One year ahead ofongoing plan

Development and operating solar power plants (non-FIT)
Development and operating small hydroelectric plants

Hulic Environmental Policy
Hulic has formulated the Environmental Policy embodied in
our Sustainability Vision and is executing environmentallyfriendly management to work towards solving various issues
in the global environment. The following items are clearlystated in our Environmental Policy.

❶ Environmental Compliance
We strive to create a sustainable society while
adhering to environmental laws and regulations.
❷ Environmental Management System
We contribute to the conservation of global
environment by setting environmental targets andmaking continous efforts for improving them.
❸ Environmental Performance
We reduce as much of our environmental footprint as
possible by introducing eco-friendly designs from theplanning stage of development in order to increase
environmental efficiency.
❹ Recycling-oriented Society
We contribute to the creation of a recycling-oriented,
zero waste society, by executing the 3Rs, reduce, reuse,recycle, throughout the life cycle of buildings.
❺ Environmental Awareness and Education for
Employees
We provide environmental education and awarenessraising activities to employees so that everyone
can proactively work toward the improvement ofenvironmental performance.
❻ Environmental Communication
We extensively disclose information on environmental
contribution activities, and communicate withstakeholders including local communities to expand
the circle of global environmental conservation.

56

Hulic Co., Ltd. Integrated Report 2024

Establishing an Environmental
Management System (EMS)

Circulareconomy

The Group has established a unique environmental
management system (EMS)* based on the Hulic Environmental
Policy and is constantly working to improve it through the
PDCA cycle while actively implementing environmental
conservation initiatives. In 2020, we announced our support
for the TCFD recommendations and we have further
enhanced our corporate governance mechanism centered on
Board of Director oversight and the Sustainability Committee.
* There is no office that has obtained certification for an environmental management systemsuch as ISO 14001 or EMAS in the Group.

Hulic’s Environmental Management System (EMS)

Act

Plan
Corporate Sustainability
Department

Board of Directors
・Oversee initiatives
・Instruct reviews andimprovements

・Analyze and evaluate thecurrent status
・Formulate environmental
policies and measures
・Manage climate changerisks and opportunities
・Set KPIs

Greenhouse gas
emission reduction
targets*2

Technical measures to reduce waste and resource inputs (develop longer life buildings etc).
Introducing wooden technology
Reduce by 70%

Scope1+2

Reduce by 70%*3
Reduce by 30%*3

Scope3

Substantiallyzero emissions
Substantiallyzero emissions*1 Excludes properties for which we do not have energy management authority including master lease properties, residential properties and non-managerial co-ownership properties, and real estate for sale,etc.
*2 Base year: 2019
*3 SBT-approved near-term targets. Combined Scope1and Scope2 target is consistent with reductions required to keep the global warming to 1.5˚C, the most ambitious goal of the Paris Agreement.
Scope3 target meets the SBTi’s criteria for ambitious value chain goals, meaning they are in line with current best practice.

Greenhouse Gas Emission Reduction Targets under the SBT initiative
Hulic is moving towards realizing decarbornization of our operations. Hulic’s
greenhouse gas emission target ambition to reduce absolute Scope1 and 2 by 2030 has
been determined to be in line with a 1.5˚C trajectory and has been approved sciencebased target by the SBT initiative*1. We aim to achieve the target through developing
renewable energy facilities in-house and advancing initiatives in the supply chain.

Greenhouse gas emission reduction targets (Absolute contraction targets, Base year: 2019)
2024

2030

2050

Total of Scope1 and 2*2

Reduce by 70%

Reduce by 70%

Substantially zero emissions

Scope3*3-

Reduce by 30%

Substantially zero emissions

Continual Improvement• Environmental risk mitigation and adaptation• Compliance with applicable laws and regulations• Energy and resource conservation• KPI management• Environmental reporting and communications

Check
Sustainability Committee
Risk Management
Committee
Environmental
Advisory Council

・Review and evaluate
initiatives regularly
・Evaluate climate change΄simpact on business andreflect in strategies
・Evaluate progress andperformance of KPIs

Do
Real Estate BusinessGroup companies Division・Implement business plans
with consideration for the
global environment
・Adopt environmentallyfriendly and energy-saving
technologies
・Develop and use renewableenergy・Collaborate with business
partners, etc.
・Respond to environmental
emergencies (BCPs)

We have begun the following initiatives for Scope3 (Greenhouse Gas Emission of the supply chain):【Downstream activities of the supply chain】【Upstream activities of the supply chain】
Planning to reduce greenhouse gas emissions during
Through collaboration with design firms and construction
operations by promoting energy conservation incompanies (use of building materials with low greenhousebuildings(tangible aspects, including the introduction ofgas emissions during manufacturing, promotion of use
environmentally friendly technologies, renovations forof wood in building construction and materials, use ofenergy conservation, harnessing unused energy and energy
renewable energy electricity at construction sites), andefficiency improvements through reconstruction), andplanning to reduce greenhouse gas emissions during
cooperation with tenants (intangible aspects) .
building construction.
*1 The SBT initiative: An international initiative that promotes companies to develop greenhouse gas emission reduction targets in line with Paris Agreement goals (limiting the global temperature rise above preindustrial levels to well below 2˚C and limiting below 1.5˚C).
*2 Total of Scope1 and 2: Greenhouse gas emissions from directly owned or controlled sources plus indirect purchased energy for business activities.
Scope1: Direct emissions (e.g., emissions from natural gas and other fuel combustion)
Scope2: Indirect emissions (e.g., emissions from the use of purchased electricity, heat and steam)*3 Scope3: Greenhouse gas emissions from external companies affiliated with internal business activities (in the supply chain). Targets were set for Categories 11 and 13, which cover approximately 80% of Scope3.

Hulic Co., Ltd. Integrated Report 2024

Business Strategies

RE100

Decarbonization

Achieveby 2029

One year ahead ofongoing plan

Sustainability Initiatives

Hulic will implement environmentally friendly management based on the Hulic Environmental Policy andwork to resolve issues associated with conservation of the global environment.

Converting to 100% renewable energy sourced electricity for electricity
consumption at all company-owned buildings

Financial and Corporate Information, etc.

Fundamental
Approach

About Hulic Group

Long-term Vision for the Environment

57

Contributing to Actions for Mitigating Climate Change and Reducing Our Environmental Impact

Initiatives for Achieving RE100 in 2023 and Converting to 100% Renewable Energy Sourced
Electricity for Electricity Consumption at All Company-owned Buildings by 2029
In line with Hulic’s Long-Term Vision for the Environment,
we have achieved RE100*1 in 2023 and set goals to convert
to 100% renewable energy sources for electricity consumed
at all company-owned buildings*2 by 2029 as part ofour initiatives to combat climate change. The amount of
reduction planned by 2029 is estimated to be around 132,000
t-Co2e, equivalent to the annual emissions of about 78,000
households.
   What makes Hulic’s approach unique is that we aim toachieve our targets by developing and retaining our own
renewable energy facilities that do not use the FiT system*3(non-FiT).

   We have established a corporate PPA*4 mechanism where
Hulic Property Solutions Co.,Ltd., a Group company, acts asa retail electricity supplier (power producer and supplier,or PPS), purchasing electricity derived from Hulic-owned
renewable energy sources and selling it to Hulic-owned
properties. This will ensure stable securing of renewableenergy-derived electricity over the long term.
   We are also working to build a system that flexibly
supplies the renewable energy required to meet the power
demand of our buildings by installing storage batteries
alongside solar power generation facilities to store surplus
power during peak sunlight hours.

*1 An abbreviation of “Renewable Electricity 100%”, or sourcing 100% of electricity needed for business activities from renewable energy sources*2 Excludes properties for which we do not have energy management authority including master lease properties, residential properties and non-managerial co-ownership properties, and real estate forsale, etc.
*3 A system for electricity that requires utility companies to purchase electricity generated using renewable sources for a certain period of time at a price specified by the national government.
*4 An agreement in which corporations, municipalities and other legal entities purchase renewable electricity from power providers on a long-term basis.

Fully Internal Group Corporate PPA Model● Long-term stable supply of renewable energy

from Hulic-owned power sources● Secured profitability in power generation andlow-cost supply of renewable electricity

Hulic-owned buildings

Example1: HULIC &New UDAGAWA II

We used environmentallyfriendly concrete for thefoundation of the HULIC &New
UDAGAWA II commercial facility
completed in October 2023.
Compared with the concrete
we had planned to use at first,
this reduced greenhouse gas
emissions during construction of
the foundation by around 60%(approximately 43 tonnes).

HULIC &New UDAGAWA II

Example2 : Hulic Logistics Kashiwa

We used environmentally friendly asphalt as the paving
material at the Hulic Logistics Kashiwa facility completed in
December 2023. In addition
to BELS (five-star) and
CASBEE Kashiwa (B+ rank),
external certifications
included ZEB certification,
which we obtained byinstalling a large-capacity
solar power generation
facility.
Hulic Logistics Kashiwa

Initiatives to Utilize Unused Energy
Unused energy is a generic term for energy that can beutilized but has not been used, such as heat discarded frombuildings and factories, and temperature differences between
outside air and rivers, groundwater, and sewage. To help
realize a carbon-free society, we are working on the advanced
utilization of unused energy according to location conditions,asset type, and the characteristics of development projects.
   We are working hard to reduce energy consumption
at our facilities. For example, at Hulic Ryogoku River Center,
we implemented an air conditioning system that harnesses
the temperature difference of river water from the nearby

About Hulic GroupWe are combatting climate change through environmental initiatives, including achieving
RE100 in2023 and converting to 100% renewable sources for electricity consumed at all
Company-owned buildings by 2029.

* Within embodied carbon, this refers to greenhouse gas emissions produced during building
material manufacturing and procurement and the construction phase.

Hulic Group’s Value Creation Story

Fundamental
Approachmaterials in our development projects. These initiatives help
reduce Scope 3 emissions in the upstream supply chain.

Sumida River. Additionally, at Fufu Kawaguchiko, we use
waste heat from hot springs to heat water.

Business Strategies

Initiatives for Climate Change

Heat pump that use river water

Developer
Retail electricity supplier

Hulic Property Solution Co., Ltd.

Introducing Environmentally Friendly Technologies and Obtaining Patents for Environmentally
Friendly Technologies

Renewableenergy supply

Renewable energy certificates
Non-FIT solar + post-FIT small hydroelectricNon-fossil fuel market

100% renewable energy

Unique traits of Hulic’s renewable energy sources
・New development and 100% in-house ownership of renewable energy facilities ▶ New development contributes to reduced greenhouse gas emissions (additionality)
・Non-FIT solar photovoltaic equipment ▶ No market purchase of renewable energy certificates
・100% in-house ownership of power source and energy mix (combination of solar power generation and small hydroelectric power plants, etc.) ▶
Long-term and stable renewable energy power supply

Initiatives to Reduce Embodied Carbon
Embodied carbon refers to the amount of greenhouse gas
emissions generated during the construction of buildings,
covering everything from the purchasing building materials

58

Hulic Co., Ltd. Integrated Report 2024

Hulic has developed unique natural ventilation and naturallighting systems (patented as lighting louver units) incollaboration with the Massachusetts Institute of Technology,
and is installing these systems in newly developed buildings
and the Hulic head office building. Elsewhere, we havedeveloped, with other companies, and obtained patents forlightweight solar panels and a thin-layered wall greening
system. These environmentally friendly technologies
are commercialized and offered to the public from the
manufacturers.
   For the adoption of other energy-saving technologies,
we individually consider and adopt technologies that arehighly effective for their purpose and depending on thelocation of the building.

Financial and Corporate Information, etc.

100% of renewableenergy purchased

Sustainability Initiatives

Advance, Co., Ltd.

Owner of power
generation facilities

Natural ventilation (rooftop solar chimney)

to construction, renovation, and demolition (disposal).
We are working intently to reduce embodied carbon (upfront
carbon*) by adopting environmentally friendly building

Hulic Co., Ltd. Integrated Report 2024

59

Contributing to Actions for Mitigating Climate Change and Reducing Our Environmental Impact

change-related risks and opportunities in our businesses inline with these recommendations.

[Risks] • Increase in costs of responding to a wide range of policies andregulations introduced to address climate change[Opportunities]・Increase in valuation of the environmental

performance on our properties due to social changes
leading to higher sales•O pportunities to enter new markets that help mitigate
climate change will be created

TCFD Disclosure Recommendations and Hulic Initiatives (Summary)a) Board of Directors oversight of climate-related risks and opportunitiesb) Management’s role in assessing and managing climate-related risks andopportunities
Strategya) Short-, medium-, and long-term climate-related risks and opportunities
identified by the organizationb) The impact of climate-related risks and opportunities on theorganization’s businesses, strategy and financial planningc) Describe the resilience of the organization’s strategy, taking into accountdifferent climate-related scenarios, including a 2°C or lower scenario
Risk Managementa) Organizational process for identifying and assessing climate-related risksb) Organizational process for managing climate-related risksc) Describe how processes for identifying, assessing and managing
climate-related risks are integrated into the organization’s overall risk
management

Recognizing climate change response as an important management issue, we haveestablished a governance mechanism centered on Board of Director oversight and theSustainability Committee.

● Following the basic strategies of the current Medium- and Long-Term Management Plan, we are flexibly responding by deepening● Establish Board of Directors oversight and monitoring structure● Matters related to climate change are deliberated by the Sustainability Committee, which ischaired by the President and Representative Director, who is responsible for climate change

Conclusion

It has been determined that our businesses are sustainable, our strategy is resilient, and we
can capitalize on new opportunities and improve corporate value.
● Analyze and evaluate climate change mitigation and adaptation relating to climate changerisks and opportunities, based on a 1.5˚C scenario and business as usual scenario● Examine validity of current strategies based on evaluation results

Business as usual scenario physical risks and opportunities
Maintain current priority area, location policy and portfolio composition by use

Matters related to risk management are centrally deliberated on and coordinated by the
Sustainability Committee, which is chaired by the President and Representative Director,
under the oversight of the Board of Directors.

[Risks] • P hysical risks, such as natural disasters due to climate change,

will become apparent, resulting in higher costs to address thema) Disclose the metrics used by the organization to assess climate-relatedrisks and opportunities in line with our strategy and risk management
processb) Disclose Scope1, Scope2, and, if appropriate, Scope3 greenhouse gas
emissions, and the related risksc) Describe the targets used by the organization to manage climaterelated risks and opportunities and performance against targets

management, and reports to the Board of Directors
Group-wide risk management perspective and reports to the Board of Directors●P hysical risks become apparent as climate change remains unmitigated. The financial impacts of climate change has been estimated● The Board of Directors receives reports from the Sustainability and Risk Management

Materiality has been identified. The Sustainability Committee has set non-financial KPIs andmanages progress by reviewing performance and other factors.

Conclusion● Set climate change non-financial KPIs and related metrics, disclose progress toward achieving

targets on Hulic website, etc.
• Greenhouse gas emission reduction targets (Absolute contraction targets, Base Year: 2019)
By 2024 Scope1+2 70%
By 2030 Scope1+2 70%, Scope3 30%
By 2050 Scope1+2, Scope3 Substantially zero
• Achieved RE100 in 2023•N umber of times the Sustainability Committee engaged in climate change monitoring,number of reported times to the Board of Directors• Number of Environmental Advisory Council meetings held

We analyzed the impact of risks and opportunities on our
strategy using 1.5˚C scenario and business as usual scenario
and examined resilience of our current strategies, including
the need to change management plans and basic strategies.
   At Hulic, we have been taking actions including building
up earthquake resistance, and disaster prevention measuresof our properties as well as environmental initiatives anddecarbonization. As a result, we have found no potential
financial impacts that were considered “large” related to bothtransition and physical risks in the scenarios we examined,
and have found that our business is sustainable and ourstrategy is suitably resilient. Based on our motto of “driving

Hulic Co., Ltd. Integrated Report 2024

incorporated into the Medium- and Long-Term
Management Plan•N
 o additional opportunities pertaining to climatechange after 2030 and no financial impacts● The Risk Management Committee evaluates and deliberates climate change risks from a● S trategy60

 pportunities up to 2030 have already been
[Opportunities] • O● The Sustainability Committee centrally deliberates climate change matters, including risk

Committees and oversees climate change risks
Metrics and Targets

our business model and addressing risks. We confirmed that there are no climate change risks that would have a “large” impacts
on us since we are implementing initiatives for the earthquake resistance, disaster prevention, environmental response, anddecarbonization of our properties.
●A s valuations increase for environmental initiatives for owned properties, we will build a competitive advantage in the leasing anddevelopment businesses. Also, we will capitalize on opportunities to provide new environment-conscious products and services aswell as improve corporate value.
● The total financial impacts of climate change risks and opportunities has been assessed as “minimal” over the medium-term and"minimal (positive)" over the long-term.

innovation” and “accelerating progress,” we are going ahead
with a business model that is able to flexibly respond tochanges in the environment. Going forward, we will mitigate
risks by evolving our business model based on changes insociety as we move toward decarbonization. Looking atopportunities, we concluded that we will be able to continue
improving our corporate value by building a competitive
advantage in the leasing and development businesses as
valuations increase for environmentally friendly technologies
adopted in our properties and seizing opportunities inproviding environment-conscious new products and services
in the environment-related business field.

Hulic Group’s Value Creation Story

Governance

Hulic Initiatives (Summary)as “small” over both the medium-and long-term because of a detailed examination of natural disaster risks done when properties aredeveloped or acquired. Another reason for the “small” financial impacts is the mitigation of physical risks through design standards
and disaster prevention measures in Hulic properties. To further reduce the financial impacts of climate change, we will promote a
flexible response based on the basic strategies of the Medium-and Long-Term Management Plan.
● The financial impacts of climate change opportunities have been estimated to be “none” because the creation of additional
opportunities related to climate change is not expected.

Business Strategies

TCFD Disclosure Recommendations

Analyzing the financial impacts of climate change and results[Medium[Longterm] 2030 term] 2050
[Risks]––––Increasing construction costs for compliancewith ZEB regulations––––

Carbon pricing

–

None

Expanding disclosure of the performance forenergy efficiency of buildings–

Investing in storage batteries––

Decarbonizing construction materials––

Responding to embodied carbon

–

–

–

[Medium[Longterm] 2030 term] 2050
Flooding*2

Impact on real estate value––––

Impact on profit––

Impact on real estate value

None

–

Impact on profit

None

–

Typhoons (wind damage only)––

Rising temperatures

–

–

––

––

Storm surge*2

Financial impacts in the businessas usual (BAU) scenario*3

Total

+

+++

Financial impacts matrix*4

Increase of leasing income due to growing
demand for ZEB++++

Receipt of ZEB subsidies++

ImpactClassification

Ratio to Consolidated
Ordinary Profit

–

+

Large

30% or higher

JPY 40 billion or more

Medium15% or higher, less than 30%

JPY 20 billion or more, less than
JPY 40 billion

Small

5% or higher, less than 15%

JPY 7 billion or more, less than
JPY 20 billion

MinimalLess than 5%Less than JPY 7 billion[Opportunities]

Financial impacts in the 1.5˚C scenario*1

Total

Amount / Year

[Legend] Minimal: –/+, Small: – –/++, Medium: – – –/+++, Large: – – – –/++++*1 The financial impacts from changes in policies, laws, technologies and markets due to the transition to a low-carbon society aimed at mitigating climate change.
*2 The impact on all portfolio was estimated based on the results of an analysis of the building portfolio (50 properties), which account for approximately 80% of operating revenue (leasing).
*3 The financial impacts caused by physical risks, such as the occurrence of natural disasters associated with climate change. Classified into acute risk due to individual weather events and chronic risk
due to changing climate patterns*4 We have set the criteria based on the results of consolidated ordinary profit: JPY137.4 billion in FY2023 and a forecasted JPY 144.0 billion in FY2024.

Hulic Co., Ltd. Integrated Report 2024

Sustainability Initiatives* TCFD is an abbreviation for The Task Force on Climate-related Financial Disclosures, which
was established by the Financial Stability Board and has proposed a framework for disclosing
climate-related information.

Continue on the basic strategies of our current Medium- and Long-Term Management Plan
(further develop and evolve our business model based on the real estate leasing business)

Financial and Corporate Information, etc.

Recognizing the importance of climate-related financial
information disclosure, we announced our support for the
TCFD* recommendations in 2020 and started disclosing
information on how we plan to mitigate and adapt to climate

About Hulic Group

Assessing Risks and Opportunities
1.5˚C scenario transition risks and opportunities

Information Disclosure Based on TCFD Recommendations

61

Contributing to Actions for Mitigating Climate Change and Reducing Our Environmental Impact

Building a Recycling-oriented Society

Initiatives to Reduce Waste
and reconstruction completed or under construction since
formulating the Guidelines in 2011.

1

High earthquake resistanceand high durability

2

Smoother updating andrenovation

3

High serviceability

Longer Life Building

Miyazaki Prefecture Tokyo Building
Redevelopment Project

About Hulic Group
Ginza Building Reconstruction Project

Fundamental
Approach

Hulic is carrying out initiatives that increase biodiversity in order to create urban spaces thatare in harmony with nature.

Biodiversity Guidelines
LIMEX, which uses almost no forest or water resources, theamount of water used in manufacturing was reduced byapproximately 1,320,000 liters, the equivalent of roughly
2.64 million 500ml bottles of water, compared with the sameamount of ordinary paper. Note that Hulic does not operatebusiness activities in high water stress area where demand
for water is tight.

Prevention of Pollution
We believes that minimizing environmental pollution
due to business activities is indispensable to realize a
recycling-oriented society. When planning buildings, we
adopt construction methods to reduce pollutant emissions

Examples of development projects, under planning touse of wood in materials in our development projects.

to the extent possible in cooperation with design andconstruction companies. In addition, we compile data on
air pollutants(Sox, Nox, VOC)generated in the development
projects and disclose this information on our website.

We recognize the importance of biodiversity’s impact on theliving environment, and in order to contribute to biodiversity,
we have created the Declaration of Biodiversity Conservation(Hulic’s Biodiversity Guidelines) which has been wellcommunicated throughout our Group.

Use of JHEP Certification System
We are also working to ensure that we consider ways toconserve and restore local vegetation during development
and reconstruction of properties from the standpoint ofpreserving biodiversity. We are using the JHEP certification

system issued by Ecosystem Conservation Society-Japanto quantitatively evaluate and promote biodiversity
conservation initiatives. As of December 31, 2023, a total 11
properties (Hulic Group) have been certified.

Promotion of Greening of Surrounds, Rooftops and Walls
Our greening projects aim to create lush green urban spaces
as well as to harmonize with nature with much consideration
to biodiversity. When greening surrounds, we primarily selectplants that are easy to care for and are resistant to strong
winds so as to improve the scenery and appropriate forlocational conditions.
Greening of Walls

62

Hulic Co., Ltd. Integrated Report 2024

Business Strategies

straws, spoons and shopping bags and changed to paper
items.

Initiatives to Reduce Water Consumption
Almost all water consumed in the Group is from the buildings
owned or the buildings where we have offices, and the waterflow starts from tap water and is discharged into sewers. To
reduce water consumption in all buildings we own, we aresequentially renovating with new water-saving toilets andhand basins. In addition, we use LIMEX, a paper substitutemade primarily from limestone, for the production of thisintegrated report as well as our business cards. When making

HULIC &New GINZA 8

Initiatives for Biodiversity

Reduction of Plastic Waste at the Head Office Building
The in-house canteen at the Hulic head office building has
stopped use of disposable plastic beverage containers,

to consider about theuse of wood in building
construction and materials
in our development
projects.

Sustainability Initiatives

We formulated the Hulic Guidelines for Longer Life Building(the Guidelines) in 2011 which are composed of three ideas, 1)high earthquake resistance and high durability; 2) smootherupdating and renovation; and 3) high serviceability. We use
only high-grade building frames that ensure the buildings
are durable and used safely for over 100 years. At the sametime, we make it possible to modify layouts to fit withdiversifying work styles in the future. Furthermore, longer life
buildings reduce waste generation and resources used forreconstruction by 50% or more, and reduce life cycle CO2 by
6% compared with cases where buildings are conventionallyreconstructed every 40 years (standard plans).
   Based on this evaluation, we have introduced longer
life designs as standard specifications in all development

We have been developing fireproof buildings using woodthat consumes less energy (low CO2 emissions) during
manufacturing and processing. In 2021, construction wascompleted for HULIC &New GINZA 8, Japan’s first 12-story
wooden fireproof commercial building (hybrid construction
combining wood and steel). The building has been acclaimed,
receiving many awards as a sophisticated example of urban
wooden construction.
   We are also planting trees based on the idea of planting
to replace what we use. Trees absorb CO2 in the air andprovide a carbon dioxide fixing solution as they grow, so anabundance of trees in the nation’s land and forest circulation
can help cut down CO2 levels. Furthermore, trees that are
ready to be cut for timber have a reduced ability to absorb
CO2, so while we cut down trees as building materials,
we also plant new trees to replace them. In this way, weare contributing to maintaining the proportion of young
trees that absorb CO2 well at a certain level. We continue

Hulic Group’s Value Creation Story

We are working to reduce waste and water consumption in cooperation with tenants andbuilding management companies toward realization of a recycling-oriented society. Whendeveloping and reconstruction buildings, we reduce our environmental footprint through the
adoption of longer life building designs that enable us to reduce waste significantly and to use
resources more effectively.

Financial and Corporate Information, etc.

Fundamental
Approach

Initiatives for wooden building and building with wood in materials

Hulic Co., Ltd. Integrated Report 2024

63

Providing Safe, Secure Buildings and Spaces

About Hulic Group

Actively
adopted by Hulic

Earthquake Countermeasures: Ensuring All Company-owned Buildings Can Withstand a Seismic Intensity ofEarthquake-Resistance Diagnosis, Reinforcement Works and Confirming Structural
Calculations

We believe it is our responsibility to provide earthquakeresistant building safety in order for the tenants to conductsocial activities with peace of mind. We have therefore
established our own earthquake resistance standards*1
that are stricter than the Building Standards Act, and weapply these standards to all the buildings that we develop

We diagnosed the earthquake resistance of all companyowned buildings* that were built before the new earthquake
resistance standards were set out in the Building Standards

or reconstruct, and we conduct a seismic assessment at thetime of acquisition. We are working to ensure that by 2029
all of our buildings can withstand earthquakes with a seismic
intensity of level 7. (For buildings other than those being soldor reconstruction, we plan to achieve this target by the endof 2025.)

Renovation

By adopting the most appropriate
structural type (earthquake-absorbing,earthquake-damping, or
earthquake-resistant structure) for each
property, we ensure
earthquake resistancethat exceeds the level
required by the
Building Standards
Act.

Seismic screening

Seismic performance that exceeds
the level required by the BuildingStandards Act.

[Structural
calculation sheet]

Percentage
of highly earthquake
resistant buildings*2
As of December 31, 2023

ground with possible liquefaction. However, we concluded
that these buildings will not be significantly affected byliquefaction because the foundations for these buildings
were carefully planned and constructed.

86%95%, excluding thosesubjects for sale orreconstruction*1 Hulic’s earthquake-resistance standards are where building performance can safeguard human life and enable continued use of the building with post-earthquake repair in the event of an earthquakewith a seismic intensity of level 7 .
*2 H
 ighly earthquake resistant buildings are those that can safeguard human life and enable continued use of the building with post-earthquake repairs when an earthquake occurs with a seismic
intensity of level 7 .

Adopting Earthquake-Absorbing and Earthquake-Damping Structures
To protect human life and facility functions from largescale earthquakes, we have applied high seismic capacity
on newly constructed buildings. With the aim of protecting
customers’ lives and contributing to business continuity,

we have adopted an earthquake-absorbing or earthquakedamping structure which is effective at ensuring a highseismic resistance, in addition to other methods to improve
the seismic resistance.

Earthquake-Absorbing Structures
These structures absorb seismic energy and dampen
shaking by separating the building from the ground using
a mechanism called an isolator. This reduces the shaking toabout one-half to one-tenth that of conventional earthquakeresistant building structures.

Earthquake-Damping Structures
With earthquake-damping materials installed inside thebuilding, internal seismic energy is absorbed to reduce theintensity of shaking from one-half to one-third comparedwith other general earthquake-resistant structures.

Hulic Co., Ltd. Integrated Report 2024

After the Great East Japan Earthquake, extensive regions
including coastal areas in Tokyo suffered from liquefaction,
which caused damage such as buildings leaning over andsinking. According to the liquefaction map issued by thegovernment, four buildings owned by the Company were on

Business Strategies

Acquisition

Measures Against Water Damage
When electric facilities are damaged by floodwater, thesupply of power, which is essential for the use of a building,can stop for an extended period. We investigate the statusof buildings with power receiving and transforming
equipment and private power generators that are installedin floors expected to be submerged in a flood, and examine
application of flood control measures, in preparation for
localized heavy rains caused by climate change and tsunamis
caused by earthquakes.

Sustainability Initiatives

Development

We verify thatearthquake
resistanceexceeds the level
required by the
Building
Standards Act.

* Excluding buildings that will be demolished for reconstruction.

Liquefaction Countermeasures

Initiatives during building development, acquisition, and renovation[Structural drawing]

Act (revised in 1981). All buildings that did not meet thesestandards are undergoing seismic reinforcement.

Hulic Group’s Value Creation Story

Deforming laminated rubber

Level 7 by 202964

Shakes lightly

Shakes violently

We are constantly working to generate new added value byoffering properties that are superior in terms of safety, environmental
performance and functionality. In addition, assuming various emergency
and disaster scenarios, we have created structural as well as operationaland managerial countermeasures and we are finetuning them.

Earthquake-Damping Structure

Earthquake-Absorbing Structure

Measures Against Ashfall from Possible Mt. Fuji Eruption
If Mt. Fuji erupted, the transportation infrastructure could
be shut down and electricity and other utilities could be
disrupted. Consequently, we are taking tangible action
by developing equipment that prevents volcanic ash
from entering pipes in storm drains and by installing thisequipment in company-owned buildings. In a less tangible
way, we encourage tenants to return home early, organizea system, and install any necessary equipment for a quick
recovery after an ashfall.

Hulic Co., Ltd. Integrated Report 2024

Financial and Corporate Information, etc.

Fundamental
Approach

General Building

Shakes slowly and parallelly

Providing Safe,
Secure Buildings and Spaces

65Collaborating with Business Partners and Local Communities

Collaborating with Business Partners andLocal Communities

Improving Customer Satisfaction
As office buildings, shops, and residences owned by theCompany serve as the infrastructure for customer’s social
activities, we are constantly working to improve their quality
under the philosophy of providing customers safety, peace● Energy-Saving Initiatives for Existing Buildingsof mind and trust. In order to satisfy all customers usingbuildings including tenants and visitors to the buildings, we
thoroughly undertake meticulous quality control, careful
maintenance and security to protect assets.

We believe that customer engagement is important for
responding to climate change, we created and distributed
a leaflet calling on our customers (tenants) to help saveenergy. We also had individual meetings with sometenants to have a dialogue about energy-saving measures.
Going forward, we will continue to work with tenants to
help save energy.

We conduct an annual customer satisfaction survey for
tenants of Hulic’s properties. Survey items include mattersconcerning building hardware and software and things
customers have noticed while using our buildings on adaily basis. We carefully go over the customer responses,
and then take steps to identify customer needs and make
improvements accordingly. In the survey conducted in 2023,
we continued to receive high ratings with a satisfaction levelof 92.2%. We believe the results have mainly reflected ourplanned facility reinforcement and quick response to thematters requested by customers. Furthermore, the persons
in charge responded or replied to customers’ requests andopinions after the survey.
Customer Satisfaction Rate 2023

92.2%

● Initiatives for Providing Healthy and Comfortable Spaces

Hulic is undertaking the following initiatives to provide healthy and comfortable properties to our stakeholders.

● Verification of specifications of facilities introduced and interior materials, etc. for existing properties

and properties being developed (Use of interior finishing materials and fittings that do not contain toxic
substances)● Greening of building surroundings, introduction of natural ventilation and lighting systems● Introduction of an indoor air quality improvement system using composite ceramic functional materials● Acquisition of CASBEE Wellness Office certification for developed office buildings as verifications forbuildings that support the maintenance and improvement of the health and comfort of the people in thebuildings● Measurement of indoor environments and periodic measurements after completion● Active upgrading to energy-saving equipment and other advanced equipment● Conducting preventive maintenance before issues arise in buildings equipment● Many of our owned properties are near stations, providing easy access to transportation

66

Hulic Co., Ltd. Integrated Report 2024

Social Contribution Activities
Policy for Social Contribution Activities
Basic Philosophy
Hulic actively and broadly engages in various social

About Hulic Group
Business Strategies● Customer Satisfaction Survey

Policy for Activities• Actively engage in activities with particular emphasis on the three major fields of global environment

contribution activities including but not limited to ourprotection, sharing value with local communities and responding to social needs.

business fields as a good corporate citizen. Through• Strongly support social contribution activities of employees.

these activities we wish to contribute to the sustainable• Place an emphasis on securing transparency in implementing activities and facilitate communications

development of the entire society.

and cooperation with society.

Support for Culture and the Arts● E
 stablishment and Sponsorship of the Hulic Cup Hakurei Championships and Women’s Rank-deciding

Shogi Competition

In 2020, Hulic together with the Japan Shogi Association
established a new rank-deciding Shogi competition for
women, the Hulic Cup Hakurei Championships, with the aimof expanding opportunities for female professional Shogi
players. (The competition is co-sponsored by Hulic and theJapan Shogi Association.)   Beyond supporting the arts and culture, we aresupporting professional female Shogi players from theperspective of empowering women.
   In 2023, the Hulic Cup 3rd Hakurei Championship, thetitle was contested in a seven-match series was held from
September to October, and Ms. Tomoka Nishiyama won
the championship with four wins and three losses to takethe title of "Hakurei". Ms. Tomoka Nishiyama was reinstatedas "Hakurei" for the second time since the first Hakurei
Championship.

Hulic Co., Ltd. Integrated Report 2024

Sustainability Initiatives

To fulfill our corporate social responsibilities, we collaborate withbusiness partners and local communities, to solve social issues andto build long-lasting, value-enhancing relationships.

   In the event of a disaster, we have introduced an
Internet-based safety confirmation system for swift
confirmation of the state and to share information withbuilding management companies. We also concluded
contingency agreements with the construction company
concerning restoration and recovery, enabling collaborationand cooperation in the event of a disaster.
   In addition, we have formulated a CSR purchasing policy
for procurement and purchasing. We ask business partners
to cooperate with this policy as we pursue sustainablepurchasing across the entire value chain.

Hulic Group’s Value Creation Story

Hulic stays in close communication with business partners,
such as building management companies, construction
companies, building maintenance contractors, real estateagents and property management companies, and works
to build solid long-term relationships to ensure favorable
business operations.
   In terms of our relationship with building managementcompanies, we regularly hold management status reportbriefings and assess the quality of management companies
in order to maintain and improve the quality of the buildings
we own.

Financial and Corporate Information, etc.

Fundamental
Approach

Relationships with Business Partners

67Collaborating with Business Partners and Local Communities●H osting Summer Festivals and Donating of a Portable

ShrineIn October 2012, the head office of Hulic was moved to
Nihonbashi, Odenma-cho. As part of our efforts to introduce
ourselves to the community, we have held the Hulic Odenma
Summer Festival at our head office building since 2013
every year. In 2017, as part of our community contribution
activities, we donated a portable shrine to the Odenma-cho
Ninobu Neighborhood Association to which we belong. We
hope that carrying this portable shrine at the festival will leadto further revitalization and prosperity in the area.

In April 2023, Hulic, together with the University ofTokyo, initiated a course for creating an inclusive natureexperience learning system. By harnessing informationand communication technologies, this course aims toenable children to experience and learn nature with asense of independence, even remotely, regardless of theirenvironmental or personal circumstances. In August 2023, anature-based learning session “School for Everyone Learningfrom Nature” with participation of more than 100 elementaryand junior high school students was held in Myoko Kogen,Niigata Prefecture. Online participants watched the activity in
the Metaverse space and experienced the sensation of stone
by using a body-sharing device.

● Support for the Japan Service Dog Association

As part of our initiative to give more support to people withdisabilities, we have been sponsoring the Japan Service Dog
Association since 2022.
  Especially amongpeople with disabilities,
being unaware of service
dogs is a major issue. Service
dogs, like guide dogs, are
one type of assistanceanimal. We will continue
to provide support so that
more people can learn about
service dogs.
● Donated Emergency Food Stockpiles

Business Strategies

In the course of inspecting and replacing the emergency
food stockpile at our headquarters building, we donatedfood approaching its expiration date, previously disposed ofas waste, to Second Harvest Japan, an authorized nonprofit
organization. We will continue to donate our emergency foodstockpiles in the future.

Health, Medicine and Sports● Support for Japan Para-Badminton Federation

We concluded an Official Gold Partner Agreement with theJapan Para-Badminton Federation in 2016 and have provided
support for para-badminton. We have been offering our
Nishi Kasai Center Building gym (Hulic Nishikasai Gym) to
the Federation as a practice gym for players since 2017. Hulic
was a special sponsor of HULIC DAIHATSU JAPAN PARABADMINTON INTERNATIONAL 2023 held at Yoyogi National
Stadium 1st Gymnasium in November 2023.

Billboard advertising

Academic and Research Support●1
 1th Hulic Students Idea Competition: Temptation ofArchitecture
As a real estate company, we started this competition withthe aim of providing students with opportunities to present
urban development and construction ideas. We received 121
entries for the 11th Hulic Student Idea Competition under
the theme of "Temptation of Architecture" with "Shinjuku" as
the target site.
   In the second roundof judging, held at Hulic’s
Head Office, the students
enthusiastically presented
their ideas and answeredquestions from the judges.
Following discussions among
the judges, two grand prize
winners, three excellence
award winners and fivehonorable mention award
winners were selected.

Main Social Contribution Activities in 2023
● Special sponsorship of the Hulic Cup Kisei

Championships● Organizer of the Hulic Cup Hakurei

Championship and women’s rank-deciding
competition● Special sponsorship of the Ministry of

Education, Culture, Sports, Science andTechnology Cup: Elementary and Junior HighSchool Shogi Team Championships● Relocation of Tokyo Shogi Hall
● Artwork created by artists with disabilities

displayed on temporary construction site
fencing● Supported Japan Para-Badminton Federation● Donated to Keidanren Nature Conservation

Fund● Supported environmental studies at Kyoto

University● Established collaborative social courses with

the University of Tokyo

68

Hulic Co., Ltd. Integrated Report 2024

About Hulic GroupWe have been a special sponsor of the Kisei Championships(sponsors: Japan Shogi Association and Sankei Shimbun)
since 2018. The Kisei Championship, established in 1962, is an
official championship with history.
   In the 94th Hulic Cup Kisei Championship, Mr. Sota Fujii
defended his title yet again to win his fourth consecutive title.

Social Welfare

University of Tokyo● Organized students’ idea competition● Supported Nezu Foundation● Provided Hulic Scholarship Program fortraining of welfare caretakers● Donated used postal stamps● Supported single-parent households● Contributed through employee match gift

program● Supported Naruto Sumo Stable Supporters’

Association● Supported the Japan Service Dog Association● Tree planting● Donated to the General Incorporated

Association Yoyogi National Gymnasium
Steering Committee for World Heritage
Nomination● Donated to Japanese Red Cross Society● Supported Mainichi Shimbun’s campaign toassist Fukushima<Employees’ Social Contribution Activities>● Donated to Japanese Red Cross Society● Supported New National Theatre, Tokyo● Donated to the Carers Japan● Opened onsite childcare nursery facility to● Monthly local cleanup drives, among others

local community members● Hosting Summer Festivals and participatingin carrying a portable shrine● Supported employees’ social contribution

activities● Donated emergency food stockpiles

Hulic Co., Ltd. Integrated Report 2024

Sustainability Initiatives

Championships●E stablished Collaborative Social Courses with the

Hulic Group’s Value Creation Story

Connection with Local Communities

Financial and Corporate Information, etc.

●S pecial Sponsorship of the Hulic Cup Kisei

69

Collaborating with Business Partners and Local Communities

1. Adherence to International Human Rights Standards
2. S cope of application: We expect training on our policy to be provided to all officers, employees,
and business partners● Establishment of the Diversity Promotion Project Team

3. Implementation of human rights due diligence4. Correction and remedies
5. Review of Priority Themes Related to Human Rights

Hulic’s basic approach is for employees to be aligned with
their skill sets, aptitudes and personalities that enable
individuals to perform at a maximum level and as a result
the Company operates a high value-added business witha smaller workforce. To achieve this, we believe that it isessential to raise awareness on diversity and inclusion andenhance related frameworks. We established the diversity
promotion project team which continues to engage inFocus Areas
Prohibition of discrimination2

Prohibition of harassment

3
4

Prohibition of child labor
Prohibition of forced labor5

Respect for the right of freedom of association
and right of collective bargaining

6

Reduction of excessive working hours

7

Securing of health and safety of employees

8

Payment of wages higher than minimum wage

rights risks

Human rights risk assessments
for stakeholders (by internal
stakeholders) and a survey andfeedback (by the Corporate
Sustainability Department) on
human rights for suppliers (suchas construction companies).

70

Hulic Co., Ltd. Integrated Report 2024

grievance (compliance)mechanism system

We have established and operate
a contact point for employees
and business partners to reportand consult on human rights
issues.

Hulic has set target ratios for female managers with the aimof becoming a company in which women take on activeroles. We provide follow-up training to employees to raiseawareness of our approach. In support of the Keidanren's“Challenge for the ratio of female managers up to 30% by2030”, we have achieved this target.

We employ people with disabilities and has establishedthe Hulic Suginami Office, a dedicated workplace, mainly
for sending out direct mail, together with experienced
supervisors.

We adhere to human rights due diligence, as outlined below.

❷ Operation of a

● Empowering Female Employees

Ratio of female managers (as of December 31, 2023)

18.3%
Ratio of female directors and Audit & Supervisory Board
members (as of April 1, 2024)

31.2%

Employment of Persons with Disabilities

Implementation of Human Rights Due Diligence❶ Assessing of humanregular activities based on such themes as improving
work-life balance and career development. In addition,
the Diversity Promotion Project Team holds meetings with
the President, who is responsible for this team, to directly
communicate employee opinions. In 2023, we discussed on
creating a more flexible work environment and held a lecture
event.

Employment ratio of persons with disabilities(as of June 1, 2023 on a group basis / on a non-consolidated basis)2.74 % / 7.05%❸ Evaluating the

Financial and Corporate Information, etc.

1

Promoting Diversity

Hulic Group’s Value Creation Story

The Hulic Human Rights Policy (excerpt)

Fundamental
Approach

We aim to create a vibrant and productive organization by
developing appropriate human resource strategies, including humanresources development and organizational structure, so that diverse
human resources can maximize their abilities.

Business Strategies

We established the Hulic Human Rights Policy based on the United Nation’s Guiding Principles on Business and Human Rights.
Further, respect for human rights encompasses all fundamental human rights as required in the Constitution, the Labor
Standards Act and the Universal Declaration of Human Rights.

Sustainability Initiatives

Approach to Human Rights

About Hulic Group

Promoting Diversity and the Developmentof Professional Human Resources

Respect for Human Rights

effectiveness of
initiatives

We review our human rights
policy (priority themes) basedon ❶ and ❷ as necessary
and assess the effectiveness of
prevention and mitigation.

Hulic Co., Ltd. Integrated Report 2024

71

Promoting Diversity and the Development of Professional Human Resources

Talent Development Strategy

approximately � JPY

600 million

Strategy for Talent Development and Employment
Usage Rate of Paid Leave（as of December 31, 2023）*1

86.4

%

Usage Rate of Childcare Leave(female *2/male *3) (as of December 31, 2023)

100% / 125%

*1 The number of days of paid leave taken in the current fiscal year is used as the numerator andthe number of days granted in the current fiscal year as the denominator. The numerator anddenominator do not include the amount carried over from the previous year.
*2 Number of employees who took maternity leave in the subject fiscal year / Number of
employees who took maternity leave in the subject fiscal year
*3 Number of employees who took maternity leave in the subject fiscal year / Number of
employees whose spouses gave birth in the subject fiscal year

Next Generation Nurturing Program: Examples
Job-return system

An employee who retired due to marriage, childbirth, childrearing, and nursing care, etc. can return to work under the sameworking conditions as at the time of retirement.

Celebration money on auspicious
occasions (childbirth)A special payment for childbirth is given to employees: 100,000 yen for the first child, 200,000 yen for the second child and1,000,000 yen for the third child and thereafter.

Company daycare nursery inside the Hulic has established nursery facilities at its Head Office for employees. Employees using these services can drive to work
Hulic head office building
and park their cars at the Head Office Building.
Child care leave

Ordinary profit per person**Ordinary profit (non-consolidated) /number of employees (non-consolidated)

Promoting Work-Life Balance
To enable employees to maximize their abilities, we aim torealize diverse work styles, including staggered office hours
and working from home (for employees who are raisingchildren or caring for family members) . We are implementing
systems that prevent long working hours by encouraging
employees to take paid leave and to accurately manage
working hours by logging the length of time they spend on
computers.
   In addition, we are enhancing our next-generation
nurturing support programs and ensuring a balance between
work and childcare, nursing care by introducing a new hourly
childcare and nursing care leave system.

Track record of high productivity (as of December 31, 2023)

To create an organization that can flexibly respond toenvironment change, we employ a diverse workforce. We
target hiring 50% of new graduates who are female. We
provide opportunities for employees to proactively develop
their career visions through periodic meetings (at least twicea year) with their supervisors and meetings (once a year) with
the Human Resources Department.
   In terms of training, in addition to mandatory training forfirst to third year employees or according to the position of
employees, we offer elective training and e-Learning basedon everyone’s career path, as well as a system for sending
employees to graduate schools and outside companies
through a nomination system. We have been encouraging
employees to obtain qualifications, and our professional staff
includes first-class architects, real estate appraisers, lawyers,certified accountant and others.
Result of Talent Development Programs (as of December 31, 2023)
Training expense per person

145 thousand yen

This program is available from when a female employee founds out she is pregnant until the end of the child's third year ofelementary school and when is necessary for an employee (regardless of gender) to nurse a sick child or to participate innursery school or elementary school events.

Overview of Talent Development Programs
New hires(up to around 30 years
old)Mid-career(generally 30 years old orolder)

Managers or higher

System to support obtaining qualifications
The Company bears all costs related to obtaining and maintaining qualifications(such as first-class architecture, real estate appraiser, etc.) in principle.
Encouragement on
obtaining qualifications• Obtaining multiple
qualifications by 30
years of age• Well-planned goal
setting

Sending to graduate
schoolSending to non-affiliatedcompanies

Oversea study tour program

Period of educational
assignment
New hiretraining

Training for newly appointed
deputy general managers
Managerial training

Assigned toEnhancement
multipleofdepartments
fundamental through job
abilities inrotation
finance andaccounting

Trainings as-needed (as required)

Top seminar- Social gathering with the president and mid-career/young employees
English conversation classes (held twice a week, the Company pays for the lessons),
e-learning and self-development seminars

Next-Generation Support (Infertility • 50% subsidy for out-of-pocket expenses for medical treatment (after insurance coverage).
Treatment)• It is applicable for infertility treatment 10 days of special leave (paid) and can be taken in one-hour increments.
Babysitter Program

When an employee use services of a babysitting business operator which has a corporate contract, the entire enrollment
and the annual fee as well as the monthly fee up to 15,000 yen are subsidized.

Subsidy for the expense of Kids’ Club Up to 50,000 yen is paid per month for a child until the end of his/her third year of elementary school.

Health and Productivity Management
We believe that the well-being of employees goes hand inhand with productivity improvement and the growth of
the Company. Hulic has been certified of six consecutive
years, since 2019, as a Health & Productivity Management
Outstanding Organization.

72

Hulic Co., Ltd. Integrated Report 2024   Important matters related to the promotion of healthmanagement, such as the status of overtime work andmedical checkups, are reported to the Risk Management
Committee, chaired by the president, and action is taken asnecessary.

Improving Working Environment and Well-designed Fringe Benefits
Hulic has a small workforce, which enables a distinctively
close distance between each employee, as well as between
top management and employees, making it easy tocommunicate within the Company.
   Furthermore, we continuously improve the workplaceenvironment through a President Survey (twice a year) anda Top Seminar, a social gatherings of mid-career and young
employees, where all employees have the opportunity
to make suggestions directly to the president regarding
business and work styles. We also strive to give back to our

Hulic Group’s Value Creation Story

Promoting Work-Life Balancesystems and environments that enable employees withdiverse backgrounds and skills to play an active role.

Business Strategies

To achieve sustainable growth in Japan, where the working
population is declining, we believe it is important to achieve
high performance with a limited number of employees. Our
goal is for every one of us to strive to provide high quality
value as a professional. To ensure we remain a group of
productive professionals, we place emphasis on employment
and human resources development, and work to develop

employees through salaries and various fringe benefits. This
creates an environment in which employees can maintaintheir physical and mental health and improve themselves,and further growth for the Company in what we see as apositive cycle.
Average annual salary results (as of December 31, 2023)

19.08 million yen

Hulic Co., Ltd. Integrated Report 2024

Sustainability Initiatives   We expect the abundant knowledge and expertisethat the senior rehires possess to be inherited throughcommunication and interchange with younger employees.
We also introduced a special short-term contract system in
2021 that extends the period of continuous employment
until the age of 70 so that we have motivated and capable
employees between the ages of 65 and 70.

Financial and Corporate Information, etc.

We have introduced a reemployment program for seniors inaccordance with the Act on Stabilization of Employment ofElderly Persons. Under this program, we continue employing
anyone who has reached the retirement age but who wishes
to continue working until the age of 65. We offer staggered
commuting and half-day leave for these employees andcreate a work environment comparable to active employeeswith leave and absence systems.

About Hulic Group

Human Capital Initiatives

Senior Citizen Employment Program73

Maintaining and Improving Governance Trusted by Stakeholders

Maintaining and Improving Governance
Trusted by Stakeholders

in laws and the Articles of Incorporation and importantmatters related to business execution in accordance with
the Board of Directors Rules. The Board also oversees theoverall execution of duties by managing officers who wereappointed by the Board and are responsible for businessexecution. The Board of Directors comprises 11 directors (sixare external directors). More than half are external directors,
and all of these are independent external officers. In addition,
an external director serves as the chairperson of the Board of
Directors (as of April 1 , 2024).

Hulic understands its responsibilities towards all of its
stakeholders including shareholders, and makes a pointof carrying out corporate management in a transparent
and sincere manner, while striving to enhance corporate
governance through formulation of the Corporate
Governance Guidelines.
   The Board of Directors (the Board), which is comprisedof directors elected at the General Meeting of Shareholders,
holds regular meetings once a month in principle and isconvened when necessary, and resolves matters specified

Deliberates and reports on the nomination of candidates
for Board of Directors and Audit & Supervisory Board
member.
[Status of Activities and Specific Matters Considered in
FY2023]・ Number of meetings: 2 times
・ Matters considered: Candidates for director to bepresented at the General Meeting of Shareholders
next year; promotion of directors with executive titles,
etc. and chairpersonship of the Board of Directors;
appropriateness of executive directors; and succession
planDeliberates and decides on the specific amount of
directors’ compensation within the range resolved by
the General Meeting of Shareholders.
[Status of Activities and Specific Matters Considered in
FY2023]
・Number of meetings: 3 times
・Matters considered: Consideration and determinationof base pay for each director, consideration anddetermination of performance-linked variable
compensation for each executive director andconsideration of factors determining performancebased compensation

The Members of the Board of Directors, Audit & Supervisory Board and Committees
The Company’s Board of Directors, Audit & Supervisory Board,
Nominating Committee and Remuneration Committee
include the following members. As of April 1, 2024, the Board

Diagram of Hulic’s Corporate Governance (as of April 1 , 2024)

Title

General Meeting of Shareholders
Appointment

Remuneration
Committee
Nominating
Committee

Appointment

Appointment
Coordination & Collaboration

Deliberation/
Decision

Deliberation/
ReportAudit

Board of Directors
Chairperson of the Board of Directors(external director)

Audit &
Supervisory Board
Coordination &Audit & Supervisory Collaboration

Corporate Audit
Department

Accounting Auditor
Coordination &Collaboration

Board Office
Accounting audit

ReportPresident and Representative Director

Internal audit

Sustainability Committee

Real Estate
Planning and
AffiliatedBusiness Division Administration Division Companies
Internal control functions of head
office and affiliated companies

Compliance
Risk Management
Internal Controls
Disclosure Control

Compliance Committee
Risk Management Committee
Fund ALM Committee
Operations management
Business management
Internal controls over financial reporting
Disclosure Working GroupNameof Directors and Audit & Supervisory Board included 11
male and five female members, bringing the ratio of female
directors and Audit & Supervisory Board members to 31.2%.

Board of Directors

Audit &
Supervisory Board

Nominating
Committee

Remuneration
Committee

Representative Director, Chairman

Saburo Nishiura

〇

―

―

―

Representative Director, President

Takaya Maeda

〇

―

―

―

Director, Vice President

HajimeKobayashi

〇

―

―

―

Director, Vice President

TadashiNakajima

〇

―

―

―

Director, Senior Executive Managing
Officer

Hiroshi Hara

〇

―

―

―

External Director, Chairperson of theBoard of Directors

Tsukasa
Miyajima

◎

―

◎

〇

External Director

Hideo Yamada

〇

―

〇

◎

External Director

AtsukoFukushima

〇

―

〇

〇

External Director

Shinji Tsuji

〇

―

〇

〇

External Director

Kiyomi Akita

〇

―

―

―

External Director

Yuko Takahashi

〇

―

―

―

Full-Time Audit & Supervisory Board
MemberMasahiroOkamoto

―

◎

―

―

Full-Time Audit & Supervisory Board
MemberMie Tanaka

―

〇

―

―

External Auditor

Nobuyuki
Kobayashi

―

〇

―

―

External Auditor

Noriko Koike

―

〇

―

―

External Auditor

Masao Aratani

―

〇

―

―

The chairpersons are indicated with ◎.

74

Hulic Co., Ltd. Integrated Report 2024

Hulic Co., Ltd. Integrated Report 2024

Business Strategies

Corporate Governance Mechanism

Remuneration Committee

Sustainability Initiatives

Fundamental
Approach

The Group considers that it is a critically important management
matter to build a corporate governance system with fully functioning internal controls,
risk management, compliance and disclosure control.
We intend to faithfully execute business and fulfill accountability to our stakeholders.

Nominating Committee

Financial and Corporate Information, etc.

Corporate Governance

June 1, 2015. These committees consist entirely of membersthat are independent external directors.

Hulic Group’s Value Creation Story

We have established “discretionary committees” following theenactment of the Corporate Governance Code, effected on

About Hulic Group

Nominating Committee and Remuneration Committee

75●When nominating candidates for the Board of Directors or
the Audit & Supervisory Board, reports are submitted to
the Board of Directors after deliberation by the Nominating
Committee, which is comprised entirely of independent

external directors. The reasons for nominating eachcandidate are included in Reference Documents for General
Meeting of Shareholder.

To achieve our Medium- and Long-Term Management
Plan, we have defined the skills we consider necessary fordirectors as those related to (1) corporate management, (2)sustainability and ESG, (3) finance and accounting, (4) legal
affairs and compliance, (5) risk management, (6) personnel

Corporate
management

Sustainability
and ESG

Name

Title

SaburoNishiura

Representative Director,
Chairman◎〇

TakayaMaeda

Representative Director,
President◎〇

HajimeDirector, Vice President
Kobayashi〇〇

Tadashi
Director, Vice President
Nakajima〇〇

HiroshiHara

Director, Senior Executive
Managing Officer〇

Tsukasa
Miyajima

External Director,
Chairperson of the Boardof Directors

Hideo
YamadaExternal Director

Finance andaccounting

Legalaffairs andcompliance〇◎

Personnel andlabor affairs
and human
resourcesdevelopment

Realestatebusiness

〇

〇

〇

〇

〇

◎

Risk
management

Occupation/affiliation, etc.

Reason for appointment

Independent
Director

12 of 12 (100%)

Professor Emeritus of
Keio University, Lawyer,
Professor of Law and
Graduate, School of Law
of Asahi University

Mr. Miyajima has extensive experience and insight
as a person of academic standing and the Company
believes that he leverages this expertise in the
management of the Group.

○

12 of 12 (100%)

President of Yamada
Ozaki Law Office

Mr. Yamada, a lawyer for many years, has refined views
as a legal expert as well as experience leading suchorganizations as the Bar Association (as president),
and the Company believes that he will leverage thisexpertise for the management of the Group.

○

AtsukoFukushima

12 of 12 (100%)

Journalist, Councillor ofForestry Policy Council,
Ministry of Agriculture,
Forestry and Fisheries

Ms. Fukushima has been active in the media industry
for years and has extensive experience, so the Company
believes she can reflect her wide range of perspectives
in areas including socio-economics, environment,
culture and diversity in the management of the Group.

○

Shinji Tsuji

12 of 12 (100%)

Advisor, Sompo Holdings,
Inc.

Mr. Tsuji has extensive experience and broad insightas the top management of a major non-life insurancecompany, and the Company believes that he leverages
this expertise in the management of the Group.

○

8 of 9*1 (88%)

Professor Emeritus of
the University of Tokyo,
Professor of Gakushuin
University

Ms. Akita has a high level of expertise in pedagogy(teaching), having served as a university professor
and as an officer of a public interest incorporated
foundation, and the Company believes that she willleverage this expertise for the management of theGroup.

○

9 of 9*1 (100%)

Yuko Takahashi Certified
Public Accountants Office

Ms. Takahashi has expertise in corporate accounting anda wealth of experience as a member of management at
a major advertising agency, and the Company believes
she leverages this expertise in the management of theGroup.

○

Reason for appointment

Independent
Director○

Tsukasa
Miyajima

〇

〇

〇

◎

◎

〇

〇

◎

〇

◎

〇

〇

Attendance at meetings in
FY2023〇〇〇External Auditor, Audit & Supervisory Board Member
Name

〇

◎

Kiyomi Akita

Yuko Takahashi〇◎

External Director

Yuko
External Director
Takahashi

and labor affairs and human resources development, and (7)the real estate business.
   We appoint directors with the right skills for theserequirements, and their skills are shown in the table below.

〇

AtsukoExternal Director
Fukushima
Kiyomi
Akita

Attendance at Board of
Directors meetings in
FY2023

Hideo Yamada

Director Skill Matrix

Shinji Tsuji External Director

External Director
NameProcedure for Nominating Board of Director and Audit & Supervisory Board Member Candidates

Occupation/affiliation, etc.
Audit &
Supervisory
Board

Board ofDirectors

Nobuyuki
Kobayashi

12 of 12
(100%)

15 of 15
(100%)

Director of Kobayashi
Certified Public
Accountants Office

Mr. Kobayashi has specialized knowledge in accounting
and taxation as a certified public accountant and tax
accountant, so the Company expects him to be able
to audit management objectively and from a neutral
position as an External Auditor and Audit & Supervisory
Board member.

Noriko Koike

9 of 9*1(100%)

10 of 10*1
(100%)

Koike Certified Public
Accountants Office

Ms. Koike has extensive experience and specialized
knowledge in accounting, so the Company expects that
she will be able to audit management objectively andfrom a neutral position as an External Auditor and Audit &Supervisory Board member.

○

Director, Meiji Yasuda Life
Insurance Company (Fulltime Audit & Supervisory
Committee Member)

Mr. Aratani has extensive experience and broad insight
as executives of a leading life insurance company, so
the Company expects that he will be able to audit
management objectively and from a neutral position.

〇◎◎

Corporate Governance Guidelines) in accordance with the
Securities Listing Regulations of the Tokyo Stock Exchange.
The expertise and reasons for appointment of the external
directors and external auditors are as follows.

* ◎ in a director’s skill matrix means the director has particularly outstanding skills in that particular area.
* The above list is not intended to be an exhaustive list of the knowledge and experience possessed by each director.

Masao Aratani*2—*1 The number of meetings attended in FY2023 since being appointed on March 23, 2023.
*2 Appointed on March 26, 2024

76

Hulic Co., Ltd. Integrated Report 2024

Hulic Co., Ltd. Integrated Report 2024

Hulic Group’s Value Creation Story

We appointed independent external directors andindependent external auditors who have fulfilled Hulic’s
criteria for assessing the independence of independent
external directors/auditors (disclosed in the Company’s

Business Strategies

Policy on Nominating Board of Director and Audit & Supervisory Board Member Candidates
When nominating candidates for the Board of Directors or
are expected to make improvements to the corporate value
the Audit & Supervisory Board, in addition to having excellent
from an unbiased perspective. Efforts are made with regard
character and insight and appropriately fulfilling the duty
to Audit & Supervisory Board candidates in particular, toof care, candidates are selected based on their professional
appoint at least one candidate with extensive accounting
experience and expertise as well as the contribution theyknowledge.

●

Sustainability Initiatives

External Directors and External Auditors

Financial and Corporate Information, etc.

Executive Officer Nominations

About Hulic Group

Maintaining and Improving Governance Trusted by Stakeholders

77

Maintaining and Improving Governance Trusted by Stakeholders

Assessment of the Effectiveness of the Board of Directors
The Board of Directors implements an annual self-assessment
to continuously ensure its effectiveness, implementing

pertinent revisions to Board management based on theseevaluations.

Matters Pertaining to Policies for Determining the Amount and Means of Calculating
Executive Officer Compensation, etc.
Policy for Determining Executive Officer Compensation, etc.
The compensation for directors (excluding external directors)
consists of a base (fixed) compensation, determined by theirposition within the Hulic Group and their responsibilities, aswell as performance-based compensation, which is linked
to the performance of corporate earnings and their personal
contribution to those earnings.
   In accordance with a resolution at the 86th General
Meeting of Shareholders, a portion of performance-based
compensation is allocated to a share-based payment plan
designed to give incentives for performing duties, in order78

The FY2023 assessment concluded that corporate
governance was functioning effectively as the analysis
and assessment showed that external directors withdiverse expertise comprise the majority, with 30%
now being female. In addition, the Board is fostering aculture so that officers can express their opinions, andappropriate risk-taking and risk management in being
carried out.
   However, the following points were confirmed as
ongoing issues for the Board to work on.

• Continue to ensure that the meetings proceed
more efficiently by requesting materials that haveclear discussion points, and practice more extensive
deliberations and discussions on importantresolutions, including ESG and medium- and long-term
management policy.
• I ndicate a wide range of risks involved in business andfurther enhance the effective level of risk evaluation
through categorization and by sorting risks.

External directors/auditors said that the explanation andmanagement of materials and agenda were efficient andwell-balanced, that the composition of the Board has becomemuch more diverse, and that a wide range of comments
are accepted and that opinions are exchanged from various
perspectives.

Hulic Co., Ltd. Integrated Report 2024

About Hulic Group●to achieve the sustainable growth of the Company and toenhance corporate value from the shareholders’ perspective.
   However, compensation for external directors andAudit & Supervisory Board members consists solely ofbase compensation in consideration of their roles andresponsibilities.
   Moreover, a resolution pertaining to the method for
determining executive officer compensation was passed at a
Board of Directors meeting held on February 18, 2021.

● G eneral Meeting of Shareholders Resolution Details, Determination of Specific Compensation Related to Executive

Assessment Details

Hulic Group’s Value Creation Story*1 Executor of business refers to a director with executive authority over operations andan important employee.
*2 Major lender refers to a lender from which the Company has borrowed funds in an
amount exceeding 2% of its consolidated total assets.
*3 Major counterparty refers to a counterparty whose transactions with the Hulic Groupexceed 2% of annual consolidated net sales of the said counterparty for the mostrecent fiscal year.
*4 Donation exceeding a certain amount refers to a donation to an organization in an
amount exceeding the larger of 10 million yen per year or 2% of the most recent total
revenue of the said organization.

   Ernst & Young ShinNihon LLC conducts audits of thefinancial statements and internal controls as an independentaccounting auditor.
   The Corporate Audit Department works
independently from other business activities andcarries out internal audits of the Company and Group
companies. Specifically, the Corporate Audit Department
systematically conducts internal audits following theinternal audit basic plan, which is determined by the
Board. The department also provides advice, guidance andrecommendations for improvements to help resolve issues.
The results of internal audits of the Company and Group
companies conducted by the Corporate Audit Department
are reported to the Board every quarter.

Officer Compensation, etc.
At the 92nd General Meeting of Shareholders, it was resolvedthat the annual amount for Board of Director monetarycompensation is up to JPY1,000 million. (Of this amount,up to JPY120 million can be paid to external directors.)
Additionally, a resolution at the 85th General Meeting of
Shareholders stipulates an annual amount of up to JPY150
million for Audit & Supervisory Board member monetarycompensation.
   A resolution at the 94th General Meeting of Shareholders
specifies a change in Board Benefit Trust (BBT) to a maximumof 400,000 points per fiscal year with respect to share-based
payments for directors (excluding external directors).

   When determining compensation, the Remuneration
Committee, which consists entirely of independent
external directors authorized by the Board of Directors,
deliberates and decides on the amount of individual director
compensation within the scope determined by the General
Meeting of Shareholders. Further, Audit & Supervisory
Board member compensation is determined as a separate
system from director compensation within the scope ofcompensation determined by the General Meeting of
Shareholders, in consultation with the Audit & Supervisory
Board.

Hulic Co., Ltd. Integrated Report 2024

Business Strategies(5) A person who executes the business of anorganization that receives a donation*4 exceeding acertain amount from the Company
2. S pouse, relatives within the second degree ofkinship or persons living together with person
himself/herself do not fall under the following
categories at present (except for a person who is not
significant)(1) An executor of a business of the Hulic Group(2) Persons who fall under the categories listed abovein 1. (1)-(5)   Note that when a person is deemed to be
independent, although the above-mentioned
requirements are not fulfilled, the Company may
acknowledge the person to be independent by disclosing
the basis for such decision.

Hulic is a company with an Audit & Supervisory Board,which comprises five Audit & Supervisory Board members(two are full-time auditors and three are External Auditors).
In audits conducted by the Audit & Supervisory Board
members, the members investigate the status of executionof duties by directors, managing officers and each divisionin accordance with the audit basic policy and the audit basic
plan formulated by the Audit & Supervisory Board. These
audits consist of attending meetings of the Board of Directors
as well as other meetings and internal committees whenrequired, interviewing directors and managing officers on theexecution of duties, and reviewing important documents andaccounting documents, etc. The Audit & Supervisory Board
Office has been established to support the duties of Audit &Supervisory Board members.

Sustainability Initiatives

1. The person himself/herself does not, or has not,at present or in the past three years, fall under thefollowing categories:(1) Related parties of the Company
The Company regards persons that fulfill thefollowing requirements to be related parties.
(a) An executor of business of a company in which
the Company’s executor of business*1 assumes
an executive position(b) A major shareholder or executor of its businessthat has 10% or more of the voting rights of theCompany directly or indirectly(c) A partner of the Company’s financial auditor
or its employee who performs audits of theCompany(2) An executor of business of the Company’s major
lender*2(3) An executor of business of a major counterparty*3 of
the Company(4) A person who receives remuneration in an amountexceeding 10 million yen annually besides officer’s
remuneration from the Hulic Group

Auditing Mechanism and Status

Financial and Corporate Information, etc.

Criteria for Assessing the Independence of Independent External Officers

79

Maintaining and Improving Governance Trusted by Stakeholders

Diagram of Risk Management Mechanism

Performancebased
compensation (instock)

Performancebased
compensation(bonus)Of these amounts,
non-monetarycompensation

Number of
directors/auditors

Directors (excluding External
Directors)

1,098

509

294

294

294

6

Auditors (excluding External
Auditors)

72

72

－

－

－

3

External Directors/Auditors

148

148

－

－

－

9

Tangible fixed assets risk

Fund ALM Committee

Market risk

Chairman: President
Secretariat: Finance Department

Credit risk

(real estate market conditions)

Overseas investment risk
Market risk

Sustainability Committee

About Hulic Group

Verification

Legal risk
Human resources risk

(interest rates, foreign exchange, securities)(Deliberation / coordination only)

Liquidity risk

Chairman: President
Secretariat: Corporate Sustainability
Department

Credit risk
(related to financial institutions)

Matters related to climate change(assessment and management of risks and opportunities)*1 The amount of stock compensation is provision to reserves for stock benefits posted as the portion for the current fiscal year, for performance-based compensation system.
*2 The total non-monetary compensation to directors (excluding external directors) consists of JPY294 million in performance-based compensation (in stock).

Audit

Coordination & Collaboration

Audit & Supervisory Board

Internal audit

Corporate Audit Department

Risk Management
Fundamental
ApproachPursuant to the Basic Rules of Risk Management, we manage various risks related to theGroup’s businesses including operational, market, liquidity and credit risk, among others.

Risk Management Mechanism
Hulic recognizes that appropriately managing risks of theCompany and its affiliates is one of its most importantmanagement challenges, and has set up a structure with
the Board of Directors at the top while working to make
improvements. The department responsible for a particularrisk stripe formulates risk management method, thenappropriately monitor and control risk. The status of risk
management is reported to the Risk Management Committee
and Fund ALM Committee regularly and as required by
the department in charge with its recommendations. The
Risk Management Committee and Fund ALM Committee,
which convene regularly, examine the reports andrecommendations provided by the departments in charge ofrisk management, assess overall risks and discuss appropriate

80

Hulic Co., Ltd. Integrated Report 2024

responses before reporting to the Board of Directors. The
Board of Directors resolves important matters related to risk
management upon receiving reports from the Committees.
We also verify that our affiliated companies are implementing
appropriate risk management by requiring them to submit
accurate and pertinent reports. In these ways, the Board of
Directors has an oversight of risk management of our Group.
   Furthermore, the Corporate Audit Department conducts
internal audits periodically. Risk stripes will be reviewed andadded as necessary.
   In 2023, the Fund ALM Committee held four special
meetings in addition to regular monthly meetings in orderto closely monitor interest rates, securities and other market
risks, in an effort to flexibly respond to each risk scenario.

Hulic Group’s Value Creation Story

Fixedcompensation

Chairperson of theBoard of Directors(external director)

Administrative risk

Chairman: President
Secretariat: Business Planning andManagement Department

Business Strategies

Post

Board ofDirectors

Operational risk
System risk

Business Continuity Initiatives for Emergencies (BCPs)
Our Basic Plan for Business Continuity (BCP) defines theframework and method for continuing important business
functions while minimizing damage to Hulic executives,
employees and their families and damage to Company
facilities in the event of an emergency. We have also createda BCP manual outlining specific response procedures andhave thoroughly communicated the contents to executives
and employees. In addition, a disaster response training drill
is conducted at least once a year. The drill tests processes of
establishing an emergency response headquarters, veriﬁes
operation of the safety conﬁrmation system, and provides
training on communication and information gathering

among other things. This serves to reafﬁrm the importanceof business continuity for executives and employees as well
as standards of behavior related to disaster countermeasures.
Furthermore, we analyze and evaluate the issues identiﬁedin the drill, and work to build a more practical BCP system by
reﬂecting these issues in a revised BCP manual.
   Being a real estate company that develops and owns
numerous properties, Hulic needs to prepare measuresagainst a disaster strike. In addition to measures from astructural perspective such as building structure, we aretaking various steps on operational and managerial fronts aswell, which are reviewed when required.

Hulic Co., Ltd. Integrated Report 2024

Sustainability Initiatives

Total amount by type of compensation (JPY million)
Total amount ofcompensation(JPY million)

ReportRisk Management
Committee

Financial and Corporate Information, etc.

FY2023

Report/Recommendations
Oversight

Management/reporting/recommendations related to risk
management conducted bydepartments in charge

Deliberation/coordination anddecision/report on risk
management

Affiliated companies

Directors/Auditors’ Compensation

Resolution of importantmatters related to risk
management

As of April,1 2024

Managed by Finance
Department

considered to represent a medium- to long-term sustainable
increase in shareholder value.
   Moreover, the total amount of performance-based
compensation for directors will not change if the percentagechange in the preceding fiscal year’s consolidated
ordinary profit doesn't reach at a certain level. The ratio of
performance-based compensation in the form of bonuses(monetary portion) to share-based compensation (BBT) is 1:1,
and a clawback mechanism is in place that will revoke sharebased compensation granted in the past if any misconduct
occurs.

ReportDirector compensation (excluding external directors) includes
performance-based compensation, which consists of bonus
payments and stock compensation, and basic compensation.
Performance-based compensation accounts for 40 to 50%
and basic compensation accounts for 50 to 60% of total
director remuneration. Hulic uses the percentage of change
in the preceding fiscal year consolidated ordinary profit as anindicator for performance-based compensation. Our businessperformance is concisely represented by consolidated
ordinary profit as it takes into account interest expenses
and other non-operating profit, thus we decided to use thepercentage of change in consolidated ordinary profit as it is

President, Representative Director● Performance-based Compensation

81

Maintaining and Improving Governance Trusted by Stakeholders

Compliance Trainings

Information Disclosure Policy

Shareholder Returns

Hulic’s basic policy positions compliance as one of the mostimportant management matters, with absolute adherence
to all applicable laws and rules, and to faithfully and fairly
perform corporate activities that are in line with social norms.
Compliance-related matters are set forth in the Compliance
Manual, which is shared throughout the Group to ensurethat daily operations are always performed with a high levelof ethical standards. We have established a company-wide
management mechanism for compliance composed of theBoard of Directors at the top. The Compliance Committee
assesses and manages compliance-related risk by monitoring
the status of compliance including information management,
and the status of implementation of compliance program.
The Committee reports regularly to the Board of Directors,
which in turn resolves important matters related tocompliance based on these reports. There were neither
internal compliance breaches nor violations of laws, etc. /imposed fines in FY2023.

We provide trainings on themes corresponded with
Compliance Manual including prohibiting bribery and handlingof gifts and entertainments, intellectual property right, insider
trading and severing all relations with antisocial forces ona regular basis to raise awareness of compliance among all
employees including temporary employees.

In accordance with the Disclosure Policy, we are aiming at fair,timely and accurate information disclosure for shareholders
and investors in order for them to make investment decisions.
   Not only to comply with relevant laws and regulations,
we actively disclose management strategies and financial
information, etc. so that investors are able to understandmore of our business activities.

We consider appropriate returning to our shareholders as
a management matter. Our basic policy is to provide stabledividends payment based on our business performancetrend. We are targeting a dividend payout ratio 40% or higher
during current Medium-Term Management Plan (2023-2025).

Our employees are encouraged to report directly to theinternal or external compliance hotline when they consider
it unlikely that appropriate corrective actions will be
implemented after they consult with the compliance officersof their departments on matters involving complianceissues, or when they are uncomfortable consulting withcompliance officers due to the nature of the issues involved.
The target of the Compliance Hotline are the matters which
executive officers, employees of the Company, retirees andemployees of our business partners are involved, when there
is concern on harassments, etc. When a report is made, weinvestigate the facts and respond promptly while giving due
consideration to the protection of the reporter.

1. Respect human rights and prohibit discrimination andharassment

Information Security Management

2. Comply with laws and rules

For effective information security, Hulic has established amanagement system based on information management
rules, and we are implementing sound operations.
Specifically, considering the expansion of cloud use,comprehensive measures including connection control
of devices and network, and monitoring of use logs arepromoted at both inside and outside of the Company.
In addition, we are strengthening every employee’s
awareness of the importance of information management
and information security on our systems through compliancetraining and other programs. As well, on top of conducting
internal audits to monitor compliance with Company rules on
information management, we also have security specialists
conduct technical audits, as necessary, to maintain an
effective management system.

3. Conduct business in a faithful and fair manner
4. Manage information appropriately
5. Adhere to insider trading regulations
6. Avoid involvement with anti-social forces
7. Be considerate of environmental conservation
8. Maintain and encourage the best communication possible
9. Respect intellectual property rights
10. Prohibit bribery, and rules concerning gifts and entertainments
11. Ensure transparency and reasonableness of transactions

Hulic Co., Ltd. Integrated Report 2024

Briefing Sessions for Investors
Enhancement of Various IR Tools
In addition to shareholder newsletter issued semiannually(only in Japanese), we post the latest topics through theInvestor Relations site of our website in a timely manner.
E-mails are also sent toallow investors to receive
information in more
timely manner. Everytime news about theCompany is released,
we send registrants by
E-mail. (Only in Japanese)

We ensure that all shareholders and investors develop a deep
understanding of our activities. Briefing sessions on financial
results are held semiannually (at the 2nd quarter and fiscal
year ends) by the Company’s top management primarily forinstitutional investors. In addition, we also provide numerous
one-on-one meetings with mainly institutional investors
both in Japan and abroad.

External Evaluations of IR Activities
Hulic’s website discloses timely and detailed information on
our various activities. In 2023, our website was selected as the“excellent website in all markets ranking” in Nikko Investor
Relations Co., Ltd.’s All Japanese Listed Company Website
Ranking 2023. In addition, our website won the silver prize inGomez IR Site Ranking.

Shareholder Incentives
As our appreciation to shareholders for their continued
support, we annually present the gift of a gourmet catalog toshareholders with 300 shares or more from which they canchoose an item equivalent to JPY3,000. For those with morethan three years holding, we double the gift to two items
worth JPY6,000 in total from a catalog.

Financial and Corporate Information, etc.

The Compliance Manual stipulates the following inaccordance with Our Code of Conduct.

Compliance Hotline

About Hulic GroupWe strive to ensure appropriate and timely information disclosure, and actively conduct
briefing sessions on financial results. These represent our efforts to achieve diverse forms of
mutual communication.

Compliance Promotion Mechanism

Compliance Manual

82

Fundamental
Approach

Hulic Group’s Value Creation Story

We strive to fulfill Hulic’s corporate social responsibilities and prove ourselves worthy of all of
our stakeholders’ trust including but not limited to our customers. Each and every employee
fully complies with applicable laws and in-house rules as well as engages in business activities
based on a high ethical standards.

Business Strategies

Fundamental
Approach

Initiatives for Our Shareholders and Investors

Sustainability Initiatives

Compliance* We decided to change the part of shareholder incentives system from the record date,
December 31, 2025. Detailed information is on our HP (News Release, "Notice of change thepart of shareholder incentives system ", /August 29, 2023/ only in Japanese)

Hulic Co., Ltd. Integrated Report 2024

83

Maintaining and Improving Governance Trusted by Stakeholders

Directors, Auditors and Managing Officers (as of April 1, 2024)■ Board of Directors
1984 Joined Taisei Corporation

April

1979 Joined The Yasuda Fire & Marine Insurance Co., Ltd.

April

October

2007 Joined Hulic Co., Ltd., Deputy General Manager of Real
Estate Development Department 2

April

2009 Sompo Japan Insurance Inc., Managing Executive Officer

April2004 The University of Tokyo Graduate School of Education, Professor

June

2011 NKSJ Holdings, Inc. (currently Sompo Holdings, Inc.),
Director, Managing Executive Officer

April2005 The Open University of Japan, Visiting Professor

July

April

2014 NKSJ Holdings, Inc. (currently Sompo Holdings, Inc.),,Representative Director, Deputy President and Senior
Managing Executive Officer

2015 The University of Tokyo Graduate School of Education,
Founding President of The Center for Early Childhood
Development, Education, and Policy Research

April

April

2017 Sompo Holdings, Inc., Group CFO, Representative Director,
Deputy President and Senior Executive Officer

2018 The University of Tokyo, Dean of Graduate School of
Education and Faculty of Education

April

June

2019 Sompo Holdings, Inc., Group COO, Director, Deputy
President and Representative Executive Officer

2021 Gakushuin University, Professor of Department of
Education in Faculty of Letters (to date)June

2021 The University of Tokyo, Professor Emeritus (to date)2014 Hulic Co., Ltd., Director, Executive Managing Officer,
General Manager of Real Estate Planning Department

March2022 Hulic Co., Ltd., External Director (to date)March2023 Hulic Co., Ltd., External Director (to date)

April

2022 Sompo Holdings, Inc., Director

January

2015 Hulic Co., Ltd., Director, Executive Managing Officer, General
Manager of Real Estate Development Department 1

June2022 Sompo Holdings, Inc., Advisor (to date)

April

2023 Children and Families Agency, Chairperson of Child andFamilies Council (to date)April

2020 Hulic Co., Ltd., Director, Senior Executive Managing Officer

April2021 Hulic Co., Ltd., Representative Director, Vice President

March2022 Hulic Co., Ltd., Representative Director, President (to date)April

2004 Mizuho Bank, Ltd., Deputy President

March2006 Joined Hulic Co., Ltd., Representative Director, President

March2016 Hulic Co., Ltd., Representative Director, Chairman (to date)May

2022 Riso Kyoiku Co., Ltd., Director (Non-executive) (to date)

Saburo Nishiura

June
March

2009 Hulic Co., Ltd., Director, Managing Officer, General Manager
of Real Estate Development Department 2

October2010 Hulic Co., Ltd., Director, Managing Officer, General Manager
of Business Planning Department

Representative Director, April
President

Takaya Maeda

2008 Hulic Co., Ltd., General Manager of Real Estate
Development Department 2

April

2013 Hulic Co., Ltd., Director, Managing Officer, General Manager
of Real Estate Planning Department

External Director

Shinji Tsuji

External Director

Kiyomi Akita

Ministry of Education, Culture, Sports, Science andTechnology, Central Council for Education, Chairperson ofTeacher Training Committee (to date)

October 1992 Joined Century Audit Corporation (currently KPMG AZSA LLC)
April

October

1996 Registered as a certified public accountant

February 2001 Joined Dentsu Inc.

Director, Vice President

HajimeKobayashi

Director, Senior
Executive Managing
Officer

Hiroshi Hara

April

1980 Joined The Fuji Bank, Limited

April1980 Joined Nomura Real Estate Development Co., Ltd.

May

2003 Mizuho Bank Ltd., General Manager of Hamamatsu Branch

April

April

2004 Mizuho Bank Ltd., General Manager of Gotanda Station
Branch2012 Nomura Real Estate Development Co., Ltd., Director,
Managing Executive OfficerMay

2012 Nomura Real Estate Holdings, Inc., Executive Officer

August2006 Joined Hulic Co., Ltd., Managing Officer, General Manager
of Corporate Planning Department

April

April

2010 Hulic Co., Ltd., Executive Managing Officer, General
Manager of Corporate Planning Department

2013 Nomura Real Estate Development Co., Ltd., Director,
Senior Managing Executive Officer, General Manager ofCommercial Property Development & Management Division

February
March2013 Hulic Co., Ltd., Senior Executive Managing Officer, General
Manager of Corporate Planning Department
2013 Hulic Co., Ltd., Director, Senior Executive Managing Officer,
and General Manager of Corporate Planning Department

April

2022 Hulic Co., Ltd., Director, Vice President, General Manager of
Human Resources Department

January2023 Hulic Co., Ltd., Director, Vice President (to date)

April

Director, Vice President

TadashiNakajima

2016 Joined Hulic Co., Ltd., Executive Managing Officer, General
Manager of Real Estate Development Department 3

April

2017 Hulic Co., Ltd., Executive Managing Officer, General
Manager of Value-add Business Department, General
Manager of Development Solution Department

2022 17LIVE Inc., External Auditor (to date)March2022 Dentsu Group Inc., Director (Non-executive)

March2023 Hulic Co., Ltd., External Director (to date)June

2023 Microwave Chemical Co., Ltd., External Director (Audit andSupervisory Committee Member) (to date)■ Audit & Supervisory Board Members
JanuaryApril2021 Hulic Co., Ltd., Director, Senior Executive Managing Officer

October

September 2011 Joined Tamuracho Sogo Law OfficeMarch2024 Hulic Co., Ltd., Director, Vice President (to date)2013 Mizuho Financial Group, Inc., General Manager of Legal
Division, Mizuho Bank, Ltd., General Manager of Legal
Division

December 2011 Registered as a tax accountant

July

2016 Nippon View Hotel Co., Ltd., Full-time Statutory External
Auditor

October

March

2021 Hulic Co., Ltd., Senior Corporate Auditor, Full-Time Audit &Supervisory Board Member (to date)

October

2017 Hulic Co., Ltd., Assistant Manager of Corporate Planning Department

July

2018 Hulic Co., Ltd., Deputy General Manager of Corporate Planning Department

2004 General Insurance Rating Organization of Japan, Director
2007 Meiji Yasuda Life Insurance Company, Councilor

August2017 Hulic Co., Ltd., General Manager of Real Estate Planning
Department

Senior Corporate
Auditor, Full-Time Audit &Supervisory Board Member

Nippon View Hotel Co., Ltd., Auditor
TOKYO SOIR CO., LTD., External Director and Audit andSupervisory Committee member (to date)2013 Japan Railway Construction, Transport and Technology
Agency, Asset Disposal Committee Chairman

June2014 Dai Nippon Printing Co., Ltd., External Director (to date)June

2015 Mitsui Sumitomo Insurance Company, Limited, External
Director

December 1995 Established the Kobayashi Certified Public Accountants Office
March

October

2015 Den-en Chofu Gakuen, Councilor

April

April

2016 Keio University, Emeritus Professor (to date)March2009 Hulic Co., Ltd., External Auditor, Audit & Supervisory Board Member (to date)April

2010 Nagoya University of Commerce & Business (graduate
school), Professor (to date)

January

1997 Established Koike Certified Public Accountants OfficeJune2015 The Higashi-Nippon Bank, Limited, External AuditorJune2020 Matsumotokiyoshi Holdings Co., Ltd. (currently
MatsukiyoCocokara & Co.), Outside Auditor (to date)

Masahiro Okamoto

MIKUNI CORPORATION, External Auditor (to date)

March

Asahi University, Professor of School of Law / Graduate
School of Law (to date)March2023 Hulic Co., Ltd., Senior Corporate Auditor, Full-Time Audit &Supervisory Board Member (to date)

October

1989 Joined Aoyama Audit Corporation (currently
PricewaterhouseCoopers Japan LLC)

2005 Registered as a tax accountant

April

1993 Registered as a certified public accountant

2007 National Institute for Environmental Studies, Japan, Auditor

September 1994 Joined Yamada & Partners Accounting Office (currently
Yamada & Partners Tax Co.)

July

July

2017 The Japan Institute for Labour Policy and Training, Auditor

2024 Hulic Co., Ltd., Director, Senior Executive Managing Officer,
General Manager of Business Planning and Management
Department (to date)

2021 Japan Cooperative Insurance Association Incorporated,
Committee Member of Examination Committee (to date)March2024 Hulic Co., Ltd., External Director, Chairperson of the Boardof Directors (to date)1984 Registered as a lawyer

April

1985 Joined CHUBU-NIPPON BROADCASTING CO., LTD.

May

1998 TAIYO CHEMICAL INDUSTRY CO., LTD., External Auditor (to
date)

April

1988 NHK contract presenter

October

1993 TBS contract presenter

June

2004 SATO CORPORATION, External Director

April2005 TV Tokyo economics program regular presenter

March

2006 Lion Corporation, External Director

April2006 Shimane University, Management Council MemberJune2007 Ishii Food Co., Ltd., External Auditor

December 2006 Panasonic Corporation (currently Panasonic Holdings
Corporation), Management Advisor

April

2014 Daini Tokyo Bar Association, President
Japan Federation of Bar Associations, Vice President
2015 SATO HOLDINGS CORPORATION, External Director (to date)
Akiko Tachibana Memorial Foundation, Chairman of theBoard of Directors (to date)June

2016 MIKUNI CORPORATION, External Director (to date)June

2023 YOSHIMOTO KOGYO HOLDINGS CO., LTD., External Director(to date)

AtsukoFukushima

March2012 Hulic Co., Ltd., External Director (to date)June

2015 Nagoya Railroad Co., Ltd., External Director (to date)

October

2017 The Resona Foundation for Future, Director (to date)March2020 Councilor of Forestry Policy Council, Ministry of Agriculture,
Forestry and Fisheries (to date)

External Auditor, Audit &OctoberSupervisory Board Member

Nobuyuki
Kobayashi

2022 Kewpie Corporation, External Director (to date)2017 Tokyo District Court, Adviser (to date)June

2019 The Japanese Institute of Certified Public Accountants
Tokyo Chapter, Deputy Chairman (to date)July2022 The Japanese Institute of Certified Public Accountants, Director (to date)

April

2023 Shinshu University, Faculty of Economics and Law, Part-Time Lecturer

April1983 Joined Meiji Life Insurance Company (currently Meiji
Yasuda Life Insurance Company)

April

2015 Meiji Yasuda Life Insurance Company, Managing Executive Officer

April2017 Meiji Yasuda Life Insurance Company, Senior Managing Executive Officer

June

External Auditor, Audit &MarchSupervisory Board Member

2023 Hulic Co., Ltd., External Auditor, Audit & Supervisory Board
Member (to date)

Noriko Koike■ Managing Officers
Vice President

Executive Managing Officer

Yasuki Yakabi

Kazuhiro Noguchi

Yasushi Umeda

2019 The Yamaguchi Bank, Ltd., Outside Director, Audit andSupervisory Committee Member (Part-time) (to date)Mikio Morikawa

Miki Kurobe

July2019 Meiji Yasuda Life Insurance Company, Director, Deputy President,
Executive Officer, Chief Executive of Investment Division

Yoshikazu Nagatsuka

Yoshito Nishikawa

April

2021 Meiji Yasuda Life Insurance Company, Director, Deputy President,
Executive Officer, Executive Officer in charge of Investment Division

Ken Ohta

Yuuji Mutagamihigashi

Hiroyuki Iijima

Mayumi Naruse

Keiko Yoshinaga

Yasuhiro Kinoshita

Calbee, Inc., External Director (to date)February

Mie Tanaka

1991 Registered as a certified public accountant

2011 Japan Arts Council, Auditor

External Director

April2020 Hulic Co., Ltd., Deputy General Manager of Legal & Compliance Department
Senior Corporate
November 2020 Hulic Co., Ltd., Deputy General Manager of Business
Auditor, Full-Time Audit &Planning and Management Department
Supervisory Board Member

October

October

2011 Seibu Lions, Inc., External Auditor

2016 Joined Hulic Co., Ltd.

2009 Hulic Co., Ltd., External Director (to date)2018 Daifuku Co., Ltd., External Auditor (to date)2009 Hulic Co., Ltd., External Director (to date)

December 2015 Joined Tairaka Law Offices2010 Japan Association of Private Law, Director

June

March

2011 Joined Akamatsu & Yonezu Law Office

October

2024 Hulic Co., Ltd., Director, Senior Executive Managing Officer,
General Manager of Business Planning and Management
Department, General Manager of Human Resources
Department

March

December 2010 Registered as a lawyer

March

April

Hulic Co., Ltd. Integrated Report 2024

2021 Established Yuko Takahashi Certified Public Accountants Office

January

2008 Mizuho Bank, Ltd., General Manager of Iwaki Branch

June

June

2020 Dentsu Group Inc., Executive Officer

July1985 Joined The Fuji Bank, Limited

April

Tsukasa
Miyajima

January

April2015 Hulic Co., Ltd., General Manager in charge of Real Estate
Planning Department

2023 Hulic Co., Ltd., Executive Managing Officer, General
Manager of Business Planning and Management
Department, General Manager of Human Resources
Department

2017 Dentsu Inc., Managing Director of Finance & Accounting
Office Division

April

May

January

January

2020 Hulic Co., Ltd., Director, Executive Managing Officer

2003 Registered as a lawyer

External Director,
Chairperson of theBoard of Directors

2014 Dentsu Inc., General Manager of Global Finance
Department of Corporate Strategy Division

2019 Hulic Co., Ltd., Executive Managing Officer

April2021 Hulic Co., Ltd., Executive Managing Officer, General
Manager of Real Estate Planning Department

AugustJanuary

2012 Mizuho Bank, Ltd., General Manager of Ueno Branch andGeneral Manager of Ueno Branch Division 1

April

2010 Dentsu Inc., General Manager of Business Administration
Department of Global Business Management Division

March

April

MIKUNI CORPORATION, External Auditor

84

August1990 Keio University Faculty of Law, Professor and Doctor of Law

April

Hideo Yamada

2016 Nomura Real Estate Development Co., Ltd., Advisor

April

March

External Director

April1988 Joined The Fuji Bank, Limited

2019 Hulic Co., Ltd., Managing Officer, General Manager of Real
Estate Planning Department

Yuko Takahashi

2014 Nomura Real Estate Development Co., Ltd., Representative
Director, Senior Managing Executive Officer, General
Manager of Commercial Property Development &Management Division

April

April

External Director

April2023 Ministry of Education, Culture, Sports, Science andTechnology, Central Council for Education, Vice
Chairperson of Education Curriculum Committee (to date)

External Auditor, Audit &Supervisory Board Member April

Masao Aratani

2022 Meiji Yasuda Life Insurance Company, Director, Deputy
President, Representative Executive Officer, Executive
Officer in charge of Investment Division

March2024 Hulic Co., Ltd., External Auditor, Audit & Supervisory Board
Member (to date)

April

2024 Meiji Yasuda Life Insurance Company, Director, Full-time
Audit & Supervisory Committee Member (to date)

Business Strategies

2002 Mizuho Bank Ltd., Managing Executive Officer

Managing Officer

Hulic Co., Ltd. Integrated Report 2024

Sustainability Initiatives

April1980 Joined The Fuji Bank, Limited

About Hulic Group

April

2000 The Fuji Bank, Limited, Managing Executive Officer, Headof Corporate Group and General Manager of Corporate
Development Division

Hulic Group’s Value Creation Story

1971 Joined The Fuji Bank, Limited

AugustFinancial and Corporate Information, etc.

Representative Director,
Chairman

April

85

Maintaining and Improving Governance Trusted by Stakeholders

Messages from an External Director and an External Auditor
External Director

Hulic’s initiatives to improve corporate governance began with a unique   The relationship between external directors/auditors andexecutives is based on the principle of striving for harmony,
not uniformity. The goal is to contribute to the interests ofcommitment long before Japan’s Corporate Governance Code came into force instakeholders and society through the sustainable growth of theJune 2015. To be more specific, Hulic achieved direct listing on the First Section

company. I believe that the role of external directors/auditors isof the Tokyo Stock Exchange in 2008. At that stage, there was already a strong

to contribute to Hulic’s sustainable growth by bringing diverse

awareness of the significance of being a public company and Hulic appointed

Expertise in corporate accounting
and wide-ranging management
experience at a major advertising
agency.
External Director since 2023

two external directors, though it was not a legal requirement then. Further, weestablished a Management Advisory Committee consisting of four external
officers to receive explanations on certain transactions and personnel matters aswell as to provide advice and oversight. For ensuring diversity, Hulic also made it

knowledge to the table that will provide a new understanding,while making certain that the strategies and their execution by
the executives are on the right pass. At the same time, somethings are difficult to notice for people inside the company. For
people on the inside tend not to notice, but sometimes thatIn 2012, before the establishment of the Corporate Governance Code, theby the day. Companies face one unprecedented challenge after

problem is obvious when looking in from the outside. I believe

Company set up a management structure suited to the actual situation,

another. Today, when peacetime can turn into an emergency at

one of our roles is to increase our sensitivity as those “outside

including appointing one female external director. Even before the public

any moment, the value of corporate governance is increasinglyeyes” to provide effective awareness.

began to take notice of corporate governance with the Code being adopted,

being put to the test. This makes me feel that it is essential for   Real estate business is new knowledge for me, I am

the Company had been considering the significance of external directors andthe Board of Directors to exchange frank opinions on important

reminded that this is dynamic work and that this industry

diversity in management, then we took action. In this way, the Company has

management issues as well as risks from various perspectives

has tremendous significance in building a sustainable anddemonstrated making substantial headway on corporate governance, similar to

every day and to ratify the company’s plans and approach.

prosperous society. It makes me very happy to be involved in aour progress and swift business expansion.

Tsukasa Miyajima

Hulic’s Board of Directors is composed of members with diverse

company like this. At the same time, as an external director, I am   This became even clearer beginning in 2022. Since then, Hulic’s exceptional

backgrounds and expertise. I think that there are frank and open

committed to fulfilling my responsibility to contribute to Hulic’s

sense of speed has been demonstrated for corporate governance restructuring.

discussions on a wide range of management issues, including

growth.

External Director, Chairperson of the Board of Directors

Previously, the representative director and president served as chairperson of the

ESG.

Board of Directors. However, the Company switched to a structure where a nonexecutive director assumes the role. On top of that, the criteria for submitting
proposals to the Board of Directors was reviewed, substantially transferring authority
to the executives, with the aim of improving the function of the Board of Directors as

of Directors are required, the implementation is extremely rare of such a structure
in companies with a conventional Board of Company Auditors. The depth of Hulic’s

Noriko Koike

of 16 members). One of the female officers was appointed from

External Auditor, Audit &Supervisory Board Member

the Company’s managing officers, so I believe the advanced

within the Company. There are also outstanding women among
initiatives to promote diversity are bearing fruit.

corporate governance does not stop there. In 2023, two more female external   The role of an external auditor is to conduct fair anddirectors were added to the Board, bringing the percentage of external directors

objective audits, both financial and operational, from an

to 50% and further advancing the Board toward a monitoring model. In addition,
one female Audit & Supervisory Board member was appointed from inside and one
from outside the Company, bringing the percentage of female directors and Audit &Supervisory Board members to 30%, in this way improving diversity as well.

Extensive business experienceand expert insight as a certified
public accountant.
External Auditor since 2023   In 2024, to further enhance corporate governance, the Company appointed

independent standpoint. At the same time, it is important towork with the Company to improve corporate value. The word
audit comes from the Latin auditus, which, like the word audio,
is derived from the concept of listening. I hope to continue
providing constructive insights by listening carefully andme, an external director, as the chairperson of the Board of Directors. For the

Hulic has worked to strengthen corporate governance sincethen examining the situation from a different perspective andmanagement team, the transition to the Board chaired by an external director

going public. Today, the majority of both the Board of Directors

approach.

will likely make it more difficult to manage the Board than it has in the past.

and the Audit & Supervisory Board are from outside the   Hulic’s growth has been achieved by earning the trust of

However, this may have been a natural step for Hulic, given the Company’s

Company. In fact, an external director has been appointed

stakeholders through business activities that are supported

vision of pursuing better returns for all stakeholders, including shareholders andas chairperson of the Board of Directors. Including thoseby excellent employees as well as a stable and sound financial

employees, and always staying one step ahead of societal trends.

with management experience and those who are university

base. In recent years, the Company has set high goals for   It will probably be far more challenging than I imagined to fulfill myprofessors, the external directors/auditors are experts in theirenvironmental responsiveness and has been promoting

responsibilities in the conflicting positions of chairperson and external director.

respective fields. The Board of Directors exchanges opinions frominitiatives for a sustainable society, such as switching toThis is because being a chairperson requires complete impartiality whena broad range of perspectives. The Audit & Supervisory Board

renewable energy and reducing waste.

presiding over the proceedings, and being an external director requires me toimproves effectiveness by collaborating with the accounting   I hope Hulic will continue to promote these initiatives while

represent shareholders and other stakeholders. However, because I have been

auditor responsible for financial audits and the Corporate Audit

taking all necessary risks to address long-term changes in thewith Hulic as an external director since we went public, I am in a position to

Department, responsible for internal control audits.

environment and short-term changes in economic conditions,know the direction in which the Company should go. For this reason, I intend   The Company is diverse: women account for 30% of the

pursuing what only Hulic can do while continuing to growto contribute in whatever small way I can to Hulic’s further development by

Board of Directors and the Audit & Supervisory Board (five out

flexibly.

drawing on my long experience with the Company.

86

Hulic Co., Ltd. Integrated Report 2024

Hulic Co., Ltd. Integrated Report 2024

Sustainability Initiatives

a nominating committee governance structure where the functions of the Board

Business Strategies

Corporate management grows more complex and uncertain

Hulic Group’s Value Creation Story

example, if there is a problem with the organizational culture,a point to have a higher proportion of female employees than other companies.

a monitoring board. Although this structure is commonly found in companies with

About Hulic Group

Yuko Takahashi

Hulic’s unrelenting corporate governance

Financial and Corporate Information, etc.

Message from the Chairperson of the Board of Directors

87Financial Information

Ordinary profit
Ordinary profit for FY2023 amounted to ¥137,437 million,
increased ¥14,214 million from FY2022. This was due to theabove-mentioned increase in operating profit, while nonoperating profit decreased as a result of lower income related
to termination of lease contracts.
Profit attributable to owners of parent
Profit attributable to owners of parent for FY2023 was¥94,625 million, increased ¥15,474 million from FY2022.
This was due to the above-mentioned increase in ordinary
profit, an increase in extraordinary income resulting from anincrease in compensation income, a decrease in extraordinary
losses resulting from a decrease in losses related toreconstruction, as well as an increase in taxes.
The business results for each segment were as follows.
(Operating revenue for each segment includes inter-segment operating revenue and thebalance of book-entry transfers.)

Real Estate
The Group’s core business is a leasing business that utilizes
approximately 250 buildings and properties (excluding   In PPP (Public Private Partnership) business, Hulic
Kinshicho Collabo Tree (Sumida-ku, Tokyo) was completed in
January 2023. In addition, projects including “Urban Renewal
Step-Up Project (Shibuya Area) Shibuya 1-chome Area Joint
Development Project” conducted by the Tokyo Metropolitan
Government and the Shibuya City Government were
proceeded as planned.
   As for real estate for sale, properties including Hulic
Akihabara Chuo-dori Building (Chiyoda-ku, Tokyo),
Sagamihara land (partial) (Chuo-ku, Sagamihara-shi), Hulic
Shinjuku 5-chome building, etc. were sold.
   As described above, the segment business progressed asplanned because rent income from real estate was firm andstable due to completion of properties as well as acquisitionof properties in FY2022 and FY2023. In addition, sales ofreal estate progressed steadily during FY2023. As a result,operating revenue in this business segment totaled ¥408,599
million (decreased ¥84,543 million or 17.1% year on year)
and operating profit was ¥154,432 million (increased ¥14,652
million or 10.4% year on year).

   As a result, operating revenue in this business segment
was ¥3,646 million (increased ¥30 million or 0.8% year onyear) and the operating profit was ¥1,087 million (increased¥47 million or 4.5% year on year).

Insurance Agency
Hulic Insurance Service Co., Ltd., one of the Company’s
consolidated subsidiaries, serves as an insurance agency forboth Japanese and foreign insurance companies operatingin Japan and sells various insurance products to both
corporate and individual customers. Although a difficult
business environment continues to surround the insurance
business industry, Hulic Insurance Service Co., Ltd. is pursuing
expansion of this business, concentrating on corporatetransactions, with a strategy of acquiring the business rights
of existing non-life insurance agents.

OthersHulic Build Co., Ltd., one of the Company’s consolidated
subsidiaries, regularly takes orders of repair constructions,constructions of refurbishment at the end of lease contracts
and interior fit-outs at the beginning of lease contracts fromthe Company’s existing properties.
   As a result, operating revenue was ¥6,550 million(decreased ¥1,076 million or 14.1 % year on year) andoperating profit was ¥511 million (decreased ¥96 million or
15.8% year on year).

Hotels / Ryokans
In Hotels / Ryokans business, as the Company’s consolidated
subsidiaries, Hulic Hotel Management Co., Ltd. manages “THEGATE HOTEL” brand hotel series, “View Hotel” brand hotel
series, and HULIC FUFU Co., Ltd. manages “FUFU” ryokan
series.
   In FY2023, both occupancy rates and ADR (Average Daily
Rates) remained at high levels reflecting favorable tourism
demand from both domestic and overseas customers, since
COVID-19 was downgraded to the class 5 (common infectious
disease).
   As a result, operating revenue was ¥37,351 million(increased ¥9,716 million or 35.1% year on year) andoperating profit was ¥1,026 million (¥5,099 million loss same
period of FY2022).

Hulic Group’s Value Creation Story

Operating profit
Operating profit for FY2023 amounted to ¥146,178 million,
increased ¥20,031 million from FY2022. This was due to astable rent income from properties completed and acquired,as well as higher gross sales margin from real estate for sale.

real estate for sale), amounting to approximately 1,380,000
square meters of floor space, located mainly in Tokyo’s 23
wards. From the perspective of constructing a competitive
leasing portfolio that addresses the changing environment,
we work to further improve the overall value of our buildings
and properties not only by continuous portfolio reshuffling
but also by developing and reconstructing properties thatare highly earthquake resistant and environmentally friendly.
In addition, we work to acquire stable and continuous capitalgains and asset management fees through expanding
pipelines for development / reconstruction and value-added
projects as well as diversifying exit strategies of properties.
   New acquisitions (non-current assets) in FY2023 included
Shimachu Fuchu Store (Fuchu-shi, Tokyo), ROOM DECO
Makuhari Shin-Toshin (Chiba-shi, Chiba), Hulic Shibuya Mitakedori Building (Shibuya-ku, Tokyo), Uniden Hatchobori Building(Chuo-ku, Tokyo), Hulic Ginza 7-chome Building (partial) (Chuoku, Tokyo), Olinas Mall•Olinas Core (Sumida-ku, Tokyo), Grandscape IKEBUKURO (land) (Toshima-ku, Tokyo) and others.
   In development and reconstruction business (noncurrent assets), we acquired land for development of(tentative name) Minami Hashimoto Development Project(Chuo-ku, Sagamihara-shi). In addition, (tentative name)
Sendagaya Center Building Reconstruction Project (Shibuyaku, Tokyo), (tentative name) Hulic Fukuoka Building
Reconstruction Project (Chuo-ku, Fukuoka-shi), (tentativename) Misato Logistics Development Project I (Misato-shi,
Saitama), (tentative name) Ginza Building Reconstruction
Project (Chuo-ku, Tokyo), (tentative name) Sapporo
Reconstruction Project II (Chuo-ku, Sapporo-shi), (tentativename) Shinsaibashi Project (Chuo-ku, Osaka), (tentativename) Misato Logistics Development Project II (Misato-shi,
Saitama), Ginza Core (Chuo-ku, Tokyo), and (tentative name)Shinjuku 318 Development Project (Shinjuku-ku, Tokyo), etc.
were proceeded as planned.

Business Strategies

Operating revenue
Operating revenue for FY2023 amounted to ¥446,383 million,
decreased ¥77,040 million from FY2022. This was due to astable rent income from properties completed and acquired
in FY2022 and FY2023, as well as stable sales from real estate
for sale.

Sustainability Initiatives

Business Results

About Hulic Group

Financial Analysis

Operating profit(JPY Bln)

146.1

150.0
120.0
90.0

114.5

126.1

(JPY Bln)(JPY Bln)
150.0
120.0
90.0

84.6

95.6

109.5

123.2

137.4

80.0
60.0

60.0

40.0

30.0

30.0

20.0

2019

2020

2021

Hulic Co., Ltd. Integrated Report 2024

2022

2023 (FY)

0

2019

2020

2021

2022

94.6

100.0

60.0

0

88

88.3

100.5

Profit Attributable to Ownersof Parent

Ordinary profit

2023 (FY)

0

58.8

2019

63.6

2020

69.5

2021

79.1

2022

2023 (FY)AssetsTotal assets at the end of FY2023 was ¥2,480,472 million,
increased ¥160,135 million from the end of FY2022. From theperspective of constructing a competitive leasing portfoliothat addresses the changing circumstances, we work tofurther improve the overall value of our buildings andproperties not only by continuous portfolio reshuffling but
also by developing and reconstructing properties that arehighly earthquake resistant and environmentally friendly.
   In addition, the Group strives to provide support andbackup as a sponsor to maintain and improve the long-term

earnings of Hulic Reit, Inc. & Hulic Private Reit, Inc. and realize
steady growth of its assets under management.
Changes in amount of major items were as follows• Cash and deposits:
Decreased ¥55,521 million• Real estate for sale:
Increased ¥172,319 million(Transfer from non-current assets, acquisition and sale of properties, etc.)• Land:Decreased ¥58,103 million(Acquisition of properties, transfer to real estate for sale, etc.)• Investment securities:

Increased ¥43,757 million(Acquisition and sales of investment securities, and an increase in valuation difference on
available-for-sale securities, etc.)

Hulic Co., Ltd. Integrated Report 2024

Financial and Corporate Information, etc.

Financial Position

89

Financial Information

subsidiaries and therefore have been classified as real estate that includes portions used as investment and rental properties.
   The amount on the consolidated balance sheets, the increase/decrease during year, and the fair value of such investment and rental
properties and real estate that includes portions used as investment and rental properties are shown below.
(JPY million)

2,207.3

769.3

800.0
638.3

1,776.2

687.1

461.8

1,376,282

1,448,145

Increase/decrease during year

71,863(57,689)

1,448,145

1,390,455

1,753,289

1,705,239

Balance at beginning of year

131,821

134,571

Increase/decrease during year

2,749

15,012

134,571

149,583

205,259

219,746

Amount on consolidated balance sheets

Fair value at the end of year
Real estate including portions used as rental properties and investment

489.0

400.0
1,000.0

Balance at the end of year
200.0

500.0
0

Balance at beginning of year

Rental properties and investment

Amount on consolidated balance sheets

600.0

1,500.0

FY2023

Balance at the end of year

(JPY Bln)

2,480.4

FY2022

2019

2020

2021

2022

0

2023 (FY)Fair value at the end of year

2019

2020

2021

Hulic Group’s Value Creation Story

2,019.3

2,320.32022

2023 (FY)

Cash Flows

Notes: 1. The amount on the consolidated balance sheets represents the acquisition cost less the aggregate amounts of depreciation and impairment loss.
2. Of the increase/decrease during the year, the key increase/decrease during FY2022 was the increase due to real estate acquisitions (JPY275,842 million) and the decrease due to transfer to realestate for sale (JPY151,075 million). The key increase/decrease during FY2023 was the increase due to real estate acquisitions (JPY284,909 million) and the decrease due to transfer to real estate
for sale (JPY313,494 million).
3. For main properties, the fair value at the end of the fiscal year is the amount calculated by the Company based on the Real Estate Appraisal Standards. For other main properties, the fair value
at the end of the year is the amount calculated by the Company using indicators and others believed to appropriately reflect market prices, while for certain properties, the fair value at theend of the fiscal year is the amount determined by an outside real estate appraiser based on a real estate appraisal report. If there have been no critical changes to certain assessment values orindicators believed to appropriately reflect market prices since the time that a property was acquired from a third party or since the most recent assessment, the fair value at the end of the fiscal
year is the amount determined after making an adjustment using said assessment value or indicators. For properties newly acquired during the fiscal year, the fair value is the amount on the
consolidated balance sheets due to the fact that the change in the fair value is believed to be negligible.

In FY2023, cash and cash equivalents (hereinafter “cash”) amounted

Cash flows from investing activities

to ¥82,763 million at the end of FY2023 as a result of an increase of

Net cash of investing activities was negative ¥298,330 million

The profit/loss for rental properties and investment as well as real estate including portions used as rental properties and investment is shown¥270,819 million through operating activities, a decrease of ¥298,330(decreased ¥47,005 million year on year). This was mainly attributablebelow.

million through investing activities and a decrease of ¥28,024 million

to portfolio reshuffling, development and reconstruction, from thethrough financing activities.

perspective of constructing a competitive leasing portfolio that   Cash flows in each activities and the major contributing factors inaddresses the changing environment.

FY2023 were as follows.
Cash flows from financing activities(JPY million)

FY2022

FY2023

Rental revenue

67,71066,414

Rental cost

29,772

29,475

Rental properties and investment

Cash flows from operating activities

Net cash of financing activities was negative ¥28,024 million

Net cash of operating activities was ¥270,819 million (increased ¥4,710(decreased ¥39,465 million year on year). This was mainly attributable

Difference

37,93736,939million year on year). This was mainly attributable to ¥136,698 million

to financing for above-mentioned development and reconstruction

Other profit (loss)(3,285)2,150

in profit before income taxes with the main factors of rent income

projects and acquisitions of new properties, as well as cash dividend

from real estate and sales of real estate for sale as well as ¥16,307

paid.

Rental revenue

4,065

4,609

Rental cost

5,015

5,058

Difference

(950)

(448)

Other profit (loss)(1,286)(2,148)million of depreciation and a decrease of ¥145,984 million in realestate for sale.

Real estate including portions used as rental properties and investment

Notes: 1. Real estate including portions used as rental properties and investment includes the portions used by the Company and/or some consolidated subsidiaries as services provided andmanagement. Therefore, rental revenue for these portions is not posted. In addition, such real estate related costs (depreciation and amortization, repair costs, insurance premiums, taxes andpublic dues, etc.) are included in the rental cost.
2. Other profit or (loss) for FY2022 mainly included loss on reconstructions of buildings and loss on retirement of non-current assets posted under “Extraordinary losses”. For FY2023, other profit or (loss)
included compensation income posted under “Extraordinary income”, impairment losses and loss on retirement of non-current assets posted under “Extraordinary losses”.

90

Hulic Co., Ltd. Integrated Report 2024

About Hulic Group

cities in Japan with the aim of obtaining rental revenue. A portion of these leased office buildings are used by Hulic and some consolidated

Net Assets(JPY Bln)
2,500.0
2,000.0

Hulic and some of consolidated subsidiaries own office buildings, rental condominiums and retail commercial facilities in Tokyo and other major

Hulic Co., Ltd. Integrated Report 2024

Business Strategies

Total Assets

Leasing Properties and Investment

Sustainability Initiatives

Net Assets
Total net assets at the end of FY2023 was ¥769,300 million,
increased ¥82,146 million from the end of FY2022. Total
shareholders’ equity was ¥706,794 million, increased ¥60,324
million from the end of FY2022, due mainly to an increase ofretained earnings in profit attributable to owners of parent
and a decrease of retained earnings in the cash dividend
payment.
   Total accumulated other comprehensive income was¥58,862 million, increased ¥18,603 million from the end of
FY2022, due mainly to an increase in valuation difference on
available-for-sale securities as a result of an increase of¥26,742 million in unrealized gains on marketable securities.

Financial and Corporate Information, etc.

Liabilities
Total liabilities at the end of FY2023 was ¥1,711,172 million,
increased ¥77,988 million from the end of FY2022. Thiswas mainly attributable to financing carried out for capital
investment and the like.
   The balance of borrowings was ¥1,034,029 million, which
included ¥31,144 million non-recourse borrowings owed bya consolidated SPC. Financing from financial institutions wasoperated stably at low cost thanks to the credit strength on
the back of the Group’s high earnings level.

91

Financial Information

Major Financial Information for the Last 11 Years

Operating Revenue (JPY million)

2013

2014

2015

2016

2018*1

2017

2019

2020

2021

2022*2

2023

108,444

212,791

169,956

215,780

289,618

287,513357,272

339,645447,077

523,424

446,383

Real estate business (JPY million)

95,726

199,910

137,544

182,883

258,597

256,322332,564

311,695

422,340

487,627

401,428

Insurance agency business (JPY million)[Operating Revenue for each segment]*3
2,631

2,886

3,260

3,191

3,479

4,056

2,989

2,966

3,159

3,616

3,646

Hotels / Ryokans (JPY million)

―

―

―

―

―

―

16,402

17,653

16,34927,332

37,127

Staffing business (JPY million)――

19,09419,023

18,62017,955

ー

ー

ー

ー

ー

Others (JPY million)

10,087

9,994

10,057

10,681

8,921

9,178

5,315

7,330

5,229

4,847

4,182

Operating profit (JPY million)

29,11436,03242,00253,37764,24975,56488,353

100,596

114,507

126,147

146,178

31,44838,51944,18557,353

69,20881,06595,711

115,374

131,245

139,779

154,432

Insurance agency business (JPY million)

631

747

987

898

1,077

1,596

619

667

792

1,040

1,087

Hotels / Ryokans (JPY million)

―

―

―

―

―

―

(0)

(7,492)(7,995)(5,099)1,026

Staffing business (JPY million)

―

―

515

353

335

360

ー

ー

ー

ー

ー

About Hulic Group

Fiscal Year ended December 31

696

822

911

790

356

597

1,157

809

607

511

(3,929)(4,507)(6,140)(7,162)(7,814)(8,574)(9,110)(10,344)(10,180)(10,878)

Ordinary profit (JPY million)

25,98334,31442,53451,432

61,87072,53084,645

95,627

109,581

123,222

137,437

Profit attributable to owners of parent (JPY million)

15,97022,352

33,62834,89742,40249,51558,80563,61969,564

79,15094,625

Capital expenditure (JPY million)

66,802

92,396

288,720

107,140

198,260

256,037

381,623

327,144

212,917

293,644

301,615

Depreciation and amortization (JPY million)

End of the
Fiscal Year

Information
per Share

Cash Flow
Information

6,873

7,411

8,929

11,29911,736

11,942

14,172

15,866

15,93916,253

16,307

Total assets (JPY million)

720,344773,401

1,091,266

1,133,994

1,352,137

1,525,979

1,776,272

2,019,336

2,207,325

2,320,337

2,480,472

Current assets (JPY million)

372,973

123,371

86,188160,261

128,007

164,913

187,404

183,941

248,290328,931250,901

Real estate for sale (JPY million)

90,11637,12486,58763,510111,458

143,901

116,967

135,970

109,777

90,770263,089

Non-current assets (JPY million)

596,931

687,182

930,507

1,005,707

1,187,157

1,338,114

1,591,697

1,768,862

1,876,031

2,067,114

2,105,731

Interest-bearing debts (JPY million)*4

462,028473,297658,213665,375

826,697

975,145

1,146,079

1,360,188

1,394,487

1,440,986

1,445,029

Net assets (JPY million)

177,280

205,421317,045

341,087

378,855

404,135

461,856

489,043638,332

687,153

769,300

Equity (JPY million)

176,007

202,337

312,937

336,903375,405

400,738

459,093

486,487

637,799

686,728

765,656

Net income per share (EPS) (yen)

27.01

37.72

52.75

53.00

64.38

75.18

88.93

95.23

101.09104.00124.36

Net assets per share (BPS) (yen)297.24341.40474.90511.68570.02608.49687.01

728.31

836.89902.701,006.19

6.50

10.50

15.50

17.00

21.00

25.50

31.50

36.00

39.00

42.00

50.00

Cash flows from operating activities (JPY million)

11,114

84,12336,272

108,40745,724130,973

231,180

202,304

291,736

266,108

270,819

Cash flows from investing activities (JPY million)(49,548)(83,815)(284,580)(111,018)(189,088)(258,127)(358,334)(343,137)(286,943)(345,335)(298,330)

Cash flows from financing activities (JPY million)

42,841

4,192

257,934(5,715)

148,483

131,010

141,523

187,388

106,588

11,441(28,024)

Equity ratio (%) *5

24.4

26.1

28.6

29.7

27.7

31.1*630.0*632.7*636.8*637.1*637.9*6Return on equity (ROE) (%) *7

9.8

11.8

13.0

10.7

11.9

12.7

13.6

13.4

12.3

11.9

13.0

Dividends per share (yen)Return on assets (ROA) (%) *8
EBITDA (JPY million) *9
Major
Indicators

Debt/EBITDA ratio (times) *10

3.8

4.5

4.5

4.6

4.9

5.0

5.1

5.0

5.1

5.4

5.7

37,80944,87054,67866,40377,78589,462

105,454

119,250

135,270

148,858

165,457

12.2

10.5

12.0

10.0

10.6

10.1*6

9.9*6

9.0*6

8.5*6

7.6*6

Net debt to equity ratio (times) *11

2.8

2.6

2.2

2.1

2.3

1.9*6

2.0*6

1.7*6

1.3*6

1.3*6

1.3*6

Dividend payout ratio (%)

24.0

27.8

29.3

32.0

32.6

33.9

35.4

37.8

38.5

40.3

40.2

595,731,471

596,279,271

662,561,871

662,914,071

663,062,271

663,062,271

673,907,735

673,907,735

767,907,735

767,907,735

767,907,735

Employees (consolidated) (people)

461

753

784

836

862

936

1,878

1,934

1,496

1,347

1,357

Employees (non-consolidated) (people)

125

116

128

149

156

166

181

184

189

202

222

Number of issued shares (including treasury
stock) (share)(Note) Unless otherwise noted, all the data are calculated on a consolidated basis.
*1 The Company has applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, dated February 16, 2018) from FY2019. The figures for FY2018 were
adjusted retrospectively to reflect the aforementioned changes.
*2 The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, dated March 31, 2020), etc. since the beginning of FY2022. The figures for FY2022 onward havebeen calculated using this standard.
*3 Operating Revenue of each segment omitted inter-segment Operating Revenue and the balance of book-entry transfers.
*4 Excluded lease liabilities*5 Equity ratio = Equity / Total assets

92

10.0*6

Hulic Co., Ltd. Integrated Report 2024

*6 In FY2018 and FY2019, 50% (JPY75 Bln) of hybrid finance (JPY150 Bln) was calculated as nominal equity. Similarly, 50% (JPY175 Bln) of hybrid finance (JPY350 Bln) was calculated as such in and after
FY2020.
*7 Return on equity (ROE) (%) = Profit attributable to owners of parent / Equity (average balance)*8 Return on assets (ROA) (%) = Ordinary profit / Total assets (average balance)*9 EBITDA = Ordinary profit - Equity in earnings / Share of loss of entities accounted for using equity method + Interest expenses + Depreciation and amortization*10 Debt/EBITDA ratio = Interest-bearing debts / EBITDA*11 Net debt to equity ratio = Net interest-bearing debts (Interest-bearing debts - Cash and deposits)/Shareholders’ equity

Hulic Co., Ltd. Integrated Report 2024

Business Strategies

655(3,620)Elimination or corporate (JPY million)

Sustainability Initiatives

Others (JPY million)

Financial and Corporate Information, etc.

Real estate business (JPY million)

Hulic Group’s Value Creation Story[Operating profit for each segment]
Fiscal Year

93

Financial Information

Liabilities

Current assets
Cash and deposits

Current liabilities
138,400

82,878

Short-term borrowings

7,097

8,992

21

24

Real estate for sale

90,770263,089

Real estate for sale in process

4,355

2,871

21

39

Trade accounts receivable and contract
assetsMerchandise

Costs on construction contracts in progress
Supplies

371

373

Other

9,870

14,707(7)(4)

250,901

372,973

Allowance for doubtful accounts
Total current assets
Non-current assets

523,424

446,383

Operating costs

350,854249,875

Operating gross profit

172,569

196,508

Selling, general and administrative
expenses

46,42250,329Operating profit

126,147

532

1,033

—

Provision for bonuses for
directors (and other officers)

340

382

Termination of lease contracts

4,303

446

Comprehensive income

Other

10,883

19,715

Subsidies for employment
adjustment, etc.

352

12

Comprehensive income
attributable toTotal current liabilities

245,757

185,306

Other

470

815

Owners of parent

14,894(2,902)

Net defined benefit liability

1,634

1,706

Machinery, equipment and vehicles,
net

8,890

11,991Long-term guarantee deposits

88,28793,307

Ordinary profit

1,374,904

1,316,801

Other

12,37644,257Extraordinary income

Construction in progress

16,20742,755

1,387,426

1,525,865

Other

15,66916,228

1,633,183

1,711,172

Accumulated depreciation(4,696)(5,701)Other, net

10,972

10,527

1,644,449

1,617,405

Goodwill

4,795

4,164

Leasehold interests in land

81,23370,695

Other

2,199

3,079

Total intangible assets

88,22877,938

Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity

11,576

—

136

Other

1,810

1,887

Total non-operating expenses

12,225

13,599123,222

137,437

Gain on sale of investment
securities

2,380

21

Gain on investments in silent
partnership, etc.

132

58

Subsidies for employment
adjustment, etc.

14—

111,609

Capital surplus

137,741

137,731

Contribution received forconstruction

6—

Retained earnings

401,090

461,214Compensation income

10

3,351

Treasury shares
Total shareholders’ equity(3,971)(3,760)646,469

706,794

Valuation difference on
available-for-sale securities

40,26758,943

Deferred gains or losses onhedges

(261)

(436)

Guarantee deposits

37,54547,384

Deferred tax assets

856

947

Foreign currency translation
adjustment0—

Net defined benefit asset

493

752

252

355

10,86532,838Remeasurements of defined
benefit plans

(31)

(0)

Total accumulated othercomprehensive income

40,25858,862

334,436

410,387

Non-controlling interests

424

3,643

2,067,114

2,105,731

Total net assets
Total liabilities and net assets

Other

7

295

2,552

3,727

Loss on retirement of non-current
assets

3,387

1,880

Loss on reconstructions ofbuildings

4,080

803

Total extraordinary income
Extraordinary losses

Accumulated othercomprehensive income

328,463

Hulic Co., Ltd. Integrated Report 2024

10,415

111,609284,706

2,480,472

4,858

Share capital

Investment securities

2,320,337

9,301

Non-controlling interests

Non-operating expenses(2,483)

Total assets

94

377

11,373

1,768

113,2280Provision for bonuses

Share of profit of entities
accounted for using equity
methodAccumulated depreciation

2,321

80,866

6,510

3,238

Total deferred assets

113,323

6,543

2,846

1,542

80,866

Advances received

Provision for share awards

1,895

18,603

3,511

Share of loss of entities accounted
for using equity method

Bond issuance costs

1,715

3,131

73,210210

Total other comprehensive income

Dividend income

53,532404

147

18,760

Deferred tax liabilities

Share issuance costs(1,105)

11,531

235,329

15

Share of other comprehensive
income of entities accounted forusing equity method

Income taxes payable

233,474

22

120

72

Buildings and structures, net

Business commencement expenses

64

10Interest expenses

Deferred assets

Remeasurements of defined
benefit plans, net of tax

Interest income

Non-operating income

929,145

Total non-current assets

(175)

4,523

857,748

Total investments and other assets

(206)

3,843

Long-term borrowings

Allowance for doubtful accounts

Deferred gains or losses onhedges

Accrued expenses(70,638)

Other

146,178

30,000(69,776)

Investments and other assets

18,51050,000

Accumulated depreciation

Intangible assets

2,963

Current portion of bonds
payable381,000

Total property, plant and equipment

Valuation difference on availablefor-sale securities

Other comprehensive income

103,109371,000

Land

94,719161,577

Bonds payable

FY202379,150Current portion of long-termborrowings

305,967

Machinery, equipment and vehicles

Net income before non-controllinginterests

1,774

Total non-operating income(JPY million)

FY2022

Operating revenue

303,251

Buildings and structures

FY2023660

Non-current liabilities

Property, plant and equipment(JPY million)

FY2022

FY2023

687,153

769,300

2,320,337

2,480,472

Loss on sale of investment securities

12—

Impairment losses

430

1,693

386

88

Total extraordinary losses

Other

8,296

4,466

Profit before income taxes

117,478

136,698

Income taxes - current

26,66630,753

Income taxes - deferred

11,661

11,224

Total income taxes

38,32841,978

Profit79,15094,7190

94

79,15094,625

Profit attributable to noncontrolling interests
Profit attributable to owners ofparentAbout Hulic GroupFY2022Business Strategies

Assets94(JPY million)

FY2023

Consolidated Statements ofComprehensive Income

Sustainability Initiatives(JPY million)

FY2022

Consolidated Statements of Income

Financial and Corporate Information, etc.

Consolidated Balance Sheets

Hulic Group’s Value Creation Story

Consolidated Financial Statements

Hulic Co., Ltd. Integrated Report 2024

95

Financial Information

111,609

137,759

Treasury shares(2,464)

Valuation difference
on available-for-salesecurities
38,401
38,401(18)
137,741

48,484401,090

Balance at beginning of period
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Change in scope of consolidation in entities accounted
for using equity method
Purchase of treasury shares
Disposal of treasury shares
Change in treasury shares arising from change in equity
in entities accounted for using equity method
Change in ownership interest of parent due totransactions with non-controlling interests
Net changes in items other than shareholders' equity
Total changes during period
Balance at end of period

Capital surplus

111,609

137,741

Purchase of intangible assets(2,125)(7,397)(18)

Increase (decrease) in provision forbonuses for directors (and otherofficers)

(10)

41

Increase (decrease) in provision forshare awards

Purchase of investment securities(71,594)(17,025)

46,958646,469

637

603

5,943

169

Increase (decrease) in net defined
benefit asset and liability

Proceeds from sale of investment
securities

114

11

Proceeds from redemption of
investment securities

13,289602

Proceeds from purchase of shares ofsubsidiaries resulting in change inscope of consolidation

574—

Purchase of shares of subsidiaries
resulting in change in scope of
consolidation－(1,228)

Loan advances

(3)

(104)

Proceeds from collection of loans
receivable

4

4

(350)

(17,133)(345,335)(298,330)

(108)
(108)
424

Treasury shares(3,971)

1,607
48,566687,153

Total shareholders’equity646,469(34,499)
94,625
(1)

(0)
211

(0)
211

(0)

(0)

(9)

(9)
60,123
461,214

1,034

0

(1)

(9)
137,73116

0(34,499)
94,625－
111,609(257,237)

154(1,507)(3,971)

401,090(291,108)

25

1,715
1,715
40,258Retained earnings

100

Increase (decrease) in provision forbonuses

Shareholders’ equity
Share capital120(1,530)23(JPY million)

FY2023

Proceeds from withdrawal of time
deposits

(33)

(18)
56
56
252

(115)

16,307

214

0

0
0
0

(100)

16,253

Increase (decrease) in allowance for
doubtful accounts(30,666)
79,150(1,530)
23

(206)
(206)
(261)

Payments into time deposits

Depreciation(30,666)
79,150(1,530)23

Accumulated other comprehensive income
Foreign currency
Total accumulated Non-controlling Total net assets
Deferred gains orRemeasurements ofinterests
translation
other comprehensive
losses on hedges
defined benefit plansadjustment
income(54)—
195
38,542
533
638,332
254
(54)
—
195
38,542
533
638,587

1,866
1,866
40,267

136,698(2,464)(18)—
111,609

117,478

210(3,760)60,324
706,794

Cash flows from operating activities

Cash flows from investing activities

Interest and dividend income(3,141)(3,583)

Interest expenses

10,415

11,576

Share of loss (profit) of entities
accounted for using equity method(1,033)136

Loss on retirement of non-current
assets

3,387

1,880

Loss (gain) on sale of non-current
assets(2)(127)

Loss (gain) on sale of investment
securities(2,368)(21)

Loss (gain) on investments in silent
partnership, etc.

(132)

(58)

Decrease (increase) in tradereceivables

Balance at beginning of period
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Change in scope of consolidation in entities accounted
for using equity method
Purchase of treasury shares
Disposal of treasury shares
Change in treasury shares arising from change in equity
in entities accounted for using equity method
Change in ownership interest of parent due totransactions with non-controlling interests
Net changes in items other than shareholders' equity
Total changes during period
Balance at end of period

96

Hulic Co., Ltd. Integrated Report 2024

Accumulated other comprehensive income
Foreign currency
Total accumulated Non-controlling Total net assets
Deferred gains orRemeasurements ofinterests
translation
other comprehensive
losses on hedges
defined benefit plansadjustment
income(261)
0252
40,258424
687,153(34,499)
94,625
(1)
(0)
211
(0)

Purchase of property, plant andequipment
Proceeds from sale of non-current
assetsOther, net
Cash flows from investing activities
Cash flows from financing activities(1,203)(1,869)—1,114

Decrease (increase) in real estate forsale

Net increase (decrease) in short-termborrowings

166,066

145,984

7(63)

Decrease (increase) in guarantee
deposits

Net increase (decrease) in short-termbonds payable(8,651)(8,585)

Proceeds from long-term borrowings

42,000174,500

Increase (decrease) in guarantee
deposits received

5,714

4,662

Repayments of long-termborrowings(73,076)(161,570)

Decrease (increase) in other assets(804)(4,929)Proceeds from issuance of bonds

Increase (decrease) in other liabilities(4,780)2,045

298,178

300,893

4,053

5,323

Interest paid

(10,195)(11,613)

Income taxes paid

(26,020)(23,864)92

80

266,108

270,819

SubtotalInterest and dividends received

Income taxes refund
Cash flows from operating activities(Continuing to upper right)

Valuation difference
on available-for-salesecurities
40,267

FY2023

Total shareholders' equity
599,256254
599,511(30,666)
79,1500Profit before income taxes

FY202275,34639,855

Redemption of bonds—(50,000)

Proceeds from sale of treasury shares

0—

Purchase of treasury shares(1,530)(0)

Dividends paid

(30,666)(34,499)

Proceeds from share issuance to noncontrolling interests

—

3,125

Dividends paid to non-controllinginterests(4)—

Other, net

(635)

(484)

11,441(28,024)

Net increase (decrease) in cash andcash equivalents(67,785)(55,535)

Cash and cash equivalents at
beginning of period

206,086

138,300—(1)

138,300

82,763

Cash flows from financing activities

Decrease in cash and cash equivalents
resulting from exclusion of subsidiaries
from consolidation
Cash and cash equivalents at end of
period(9)
18,675
18,67558,943

(175)
(175)
(436)

(0)
(0)
—

102
102
355

18,60318,60358,862

3,218
3,218
3,643

21,822
82,146769,300

Hulic Co., Ltd. Integrated Report 2024

About Hulic Group

Capital surplus
137,759(JPY million)

FY2023

Hulic Group’s Value Creation Story

Balance at beginning of period
Cumulative effects of changes in accounting policies
Restated balance
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Change in treasury shares arising from change in equity
in entities accounted for using equity method
Change in ownership interest of parent due totransactions with non-controlling interests
Net changes in items other than shareholders' equity
Total changes during period
Balance at end of period

Share capital
111,609(JPY million)

FY2022Business Strategies

Balance at beginning of period
Cumulative effects of changes in accounting policies
Restated balance
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Change in treasury shares arising from change in equity
in entities accounted for using equity method
Change in ownership interest of parent due totransactions with non-controlling interests
Net changes in items other than shareholders' equity
Total changes during period
Balance at end of period

Consolidated Statements of Cash Flows

Sustainability Initiatives(JPY million)

Shareholders’ equity
Retained earnings
352,351254
352,606

Financial and Corporate Information, etc.

Consolidated Statements of Changes in Equity
FY202297

Stock Information

Corporate Information

Key Stock Information (as of December 31, 2023)

767,907,735

Major Shareholders (as of December 31, 2023)
Number ofsharesShareholding ratio (%) to the number ofissued shares (excluding treasury shares)

The Master Trust Bank of Japan, Ltd.
(Trustee account)

66,697,900

8.69

Meiji Yasuda Life Insurance Company

47,617,077

6.21

Sompo Japan Insurance Inc.

42,248,800

5.51

Tokyo Tatemono Co., Ltd.

40,749,033

5.31

Fuyo General Lease Co., Ltd.

40,695,306

5.30

Yasuda Real Estate Co., Ltd.

30,789,331

4.01

Oki Electric Industry Co., Ltd.

28,631,000

3.73

Yasuda Logistics Corporation

28,431,800

3.70Mizuho Capital Co., Ltd.

25,533,900

3.33

Custody Bank of Japan, Ltd. (Trust account)

23,741,000

3.09

Hulic Co., Ltd.

EstablishedMarch 1957

Business Outline

Real estate holding, leasing, sales and brokerage

Share Capital

JPY111,609 million (as of December 31, 2023)

Business Year

From January 1 to December 31

Listing

Tokyo Stock Exchange, Prime Section

Securities Code3003

Headquarters

7-3 Nihonbashi Odenmacho, Chuo-ku, Tokyo, Japan

Number of
Employees

222 (Non-consolidated) / 1,357 (Consolidated)(as of December 31, 2023)

Major Hulic Group companies (as of December 31, 2023)
Name

Individuals and Others
10.32%
Financial Institutions
32.41%

Financial Instruments
Business Operators
4.38%

Other Japanese Companies
38.17%

Chuo-ku, Tokyo

10

Property management, consulting of lease property management
operations and management and operation of lease properties

Hulic Reit
Management Co., Ltd.

Chiyoda-ku, Tokyo

200

Asset management operations through Hulic Reit, Inc.

Hulic Real Estate Investment
Advisors Co., Ltd. *1

Chuo-ku, Tokyo

100

Asset management operations through Hulic Private Reit, Inc. etc.

Hulic Property Solution Co., Ltd.

Chuo-ku, Tokyo

50

Planning, designing, assessment, order, supervision and consulting of
construction works, Electricity retail business

HULIC Biz Frontier Co., Ltd.

Chuo-ku, Tokyo

20

Offering rental offices and related

Porte Kanazawa. Co., Ltd.

Kanazawa-shi,Ishikawa

200

Property management of Porte Kanazawa

Hulic Insurance Service Co., Ltd.

Taito-ku, Tokyo

350

Insurance agency

Hulic Hotel Management Co.,Ltd.

Chuo-ku, Tokyo

6,500

Hotel management and operations

HULIC FUFU Co., Ltd.

Chuo-ku, Tokyo

1,500

Management and operation of ryokans (Japanese style luxury inn),
consulting of ryokan management

Hulic Build Co., Ltd.

Chuo-ku, Tokyo

90

Construction-related business, office business, real estate leasing business

HULIC Agri Co., Ltd.

Chuo-ku, Tokyo

100

Management and holding stock of an agricultural company in Vietnam

Hulic Advance Energy Co., Ltd.

Chuo-ku, Tokyo

100

Maintenance and management of power plants

Hulic Proserve Co., Ltd.

Chuo-ku, Tokyo

50

Business for individual customers including Hulic Dream Associationand interior products, food services, membership club management,
contracting works to provide shared services for the Group

Stock Price (Tokyo Stock Exchange)(yen)
Stock price at the end of period
Stock price range in period(closing price basis)

98

Hulic Co., Ltd. Integrated Report 2024

FY2019FY2020

FY2021

Major Business

Hulic Building Management Co.,Ltd.

Composition of Shareholders

As ofDecember 31,
2023

Share
Capital(JPY million)*1 Treasury shares excluded from the above issued shares do not include 3,316,400 shares held by Custody Bank of Japan, Ltd. (Trust E Unit) as trust
assets of the Board Benefit Trust (BBT).
*2 The shares held by Fuyo General Lease Co., Ltd. include 420,000 shares contributed as trust assets of a retirement benefit trust of Fuyo General Lease
Co., Ltd. (The name on the shareholder registry is Mizuho Trust & Banking Co., Ltd. Retirement Benefit Trust Fuyo General Lease Account Retrustee
Custody Bank of Japan, Ltd.)*3 The shares held by Oki Electric Industry Co., Ltd. include 12,631,000 shares contributed as trust assets of a retirement benefit trust of Oki ElectricIndustry Co., Ltd. (The name on the shareholder registry is Mizuho Trust & Banking Co., Ltd. Retirement Benefit Trust Oki Electric Industry AccountRetrustee Custody Bank of Japan, Ltd.

Foreign Institutions and Others
14.72%

Address

Hulic Head Office Building

FY2022

FY2023

1,316

1,133

1,092

1,040

1,476.5

844-1,339

905-1,372

1,071-1,403

986 -1,172

1,012.0-1,520.5* Name as of April 1, 2024

Hulic Co., Ltd. Integrated Report 2024

Business Strategies

Name

Corporate Name

Sustainability Initiatives

Number of Shares Issued

Hulic Group’s Value Creation Story

1,800,000,000

Financial and Corporate Information, etc.

Number of Authorized Shares

About Hulic Group

Corporate Overview

99External Evaluations
Praised for our sustainability initiatives, Hulic has been selected for inclusion in the following ESG indices or received the following external evaluations

With the aim of enhancing the credibility of our Integrated Report, a set of selected environmental and social performance indicators for FY2023 thatand awards.

are disclosed in this Report have been assured by the third-party assurance provider, KPMG AZSA Sustainability Co., Ltd. (Indicators that have beenassured are marked with “ ”.) We will continue our efforts in providing quality information on both financial and non-financial areas.

“A-” in CDP climate change 2023 survey

MSCI Japan ESG Select Leaders Index

Received four stars in the Nikkei SDGs Management survey (2023)

MSCI NIHONKABU ESG Select Leaders Index

2024 Certified Health & Productivity Management Outstanding
Organization (Small and Medium-sized Enterprises Category)

MSCI Japan Empowering Women Index (WIN)Independent Assurance Report

Certified as Platinum Kurumin

To the President, Representative Director ofHulic Co., Ltd.
We were engaged by Hulic Co., Ltd. (the “Company”) to undertake a limited assurance engagement of the environmental andsocial performance indicators marked with an(the “Indicators”) for the period from January 1, 2023 to December 31, 2023
included in its Integrated Report 2024 (the “Report”) for the fiscal year ended December 31, 2023.
The Company’s Responsibility
The Company is responsible for the preparation of the Indicators in accordance with its own reporting criteria (the “Company’s
reporting criteria”), as described in the Report and the Website.

*1
*2

*3

*3

*4

*3

*1 Disclaimer: FTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that Hulic Co., Ltd. has been independently assessed according to the FTSE4Good criteria,
and has satisfied the requirements to become a constituent of the FTSE4Good Index Series. Created by the global index provider FTSE Russell, the FTSE4Good Index Series is designed to measure theperformance of companies demonstrating strong Environmental, Social and Governance (ESG) practices. The FTSE4Good indices are used by a wide variety of market participants to create and assess
responsible investment funds and other products.
*2 Disclaimer: FTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that Hulic Co., Ltd. has been independently assessed according to the FTSE Blossom
Japan Index, and has satisfied the requirements to become a constituent of the FTSE Blossom Japan Index. Created by the global index provider FTSE Russell, the FTSE Blossom Japan Index is designed
to measure the performance of Japanese companies demonstrating strong Environmental, Social and Governance (ESG) practices. The FTSE Blossom Japan Index is used by a wide variety of market
participants to create and assess responsible investment funds and other products.
*3 Disclaimer: The inclusion of Hulic Co., Ltd. in any MSCI index, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement or promotionof Hulic Co., Ltd. by MSCI or any of its affiliates. The MSCI indexes are the exclusive property of MSCI. MSCI and the MSCI index names and logos are trademarks or service marks of MSCI or its affiliates.
*4 Disclaimer: Morningstar, Inc., and/or one of its affiliated companies (individually and collectively, “Morningstar”) has authorized Hulic Co., Ltd. to use of the Morningstar Japan ex-REIT Gender Diversity
Tilt Logo (“Logo”) to reflect the fact that, for the designated ranking year, Hulic Co., Ltd. ranks in the top quintile of companies comprising the Morningstar® Japan ex-REIT Gender Diversity Tilt IndexSM(“Index”) on the issue of gender diversity in the workplace.

Disclaimer Regarding Forward-Looking Statements
The forward-looking statements, including forecasts of performance of Hulic and its Group
companies, contained in the Report are based on information currently available to the
Hulic management and on certain assumptions deemed reasonable. Such forward-looking
statements do not represent any guarantee by the management of its future performanceand are subject to risks, uncertainties and assumptions. Actual future performances andresults may vary substantially due to various factors.

100 Hulic Co., Ltd. Integrated Report 2024

Inquiry

Hulic Co., Ltd.
Corporate Sustainability Department
Phone: +81-3-5623-8102

Our Responsibility
Our responsibility is to express a limited assurance conclusion on the Indicators based on the procedures we have performed. We
conducted our engagement in accordance with the ‘International Standard on Assurance Engagements (ISAE) 3000, Assurance
Engagements other than Audits or Reviews of Historical Financial Information’ and the ‘ISAE 3410, Assurance Engagements on
Greenhouse Gas Statements’ issued by the International Auditing and Assurance Standards Board. The limited assurance
engagement consisted of making inquiries, primarily of persons responsible for the preparation of information presented in theReport, and applying analytical and other procedures, and the procedures performed vary in nature from, and are less in extent thanfor, a reasonable assurance engagement. The level of assurance provided is thus not as high as that provided by a reasonableassurance engagement. Our assurance procedures included:⚫ Interviewing the Company’s responsible personnel to obtain an understanding of its policy for preparing the Report andreviewing the Company’s reporting criteria.
⚫ Inquiring about the design of the systems and methods used to collect and process the Indicators.
⚫ Performing analytical procedures on the Indicators.
⚫ Examining, on a test basis, evidence supporting the generation, aggregation and reporting of the Indicators in conformity with
the Company’s reporting criteria, and recalculating the Indicators.
⚫ Visiting the Company’s ASAKUSA VIEW HOTEL selected on the basis of a risk analysis.
⚫ Evaluating the overall presentation of the Indicators.
Conclusion
Based on the procedures performed, as described above, nothing has come to our attention that causes us to believe that the
Indicators in the Report are not prepared, in all material respects, in accordance with the Company’s reporting criteria as describedin the Report and the Website.
Our Independence and Quality Management
We have complied with the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for
Accountants, which includes independence and other requirements founded on fundamental principles of integrity, objectivity,
professional competence and due care, confidentiality and professional behavior. In accordance with International Standard on
Quality Management 1, we design, implement and operate a system of quality management including policies or procedures
regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
/s/ Kenichiro Sato
Kenichiro Sato, Partner
KPMG AZSA Sustainability Co., Ltd.
Tokyo, Japan
June 17, 2024
Notes to the Reader of the Independent Assurance Report:
This is a copy of the Independent Assurance Report and the original copies are kept separately by the Company and KPMG AZSA Sustainability Co., Ltd.

Hulic Group’s Value Creation Story

FTSE Blossom Japan Sector Relative Index

Business Strategies

Morningstar Japan ex-REIT Gender Diversity Tilt Index

Sustainability Initiatives

S&P/JPX Carbon Efficient Index

FTSE Blossom Japan Index

Financial and Corporate Information, etc.

FTSE4Good Index Series

About Hulic Group

Third-party Assurance

Hulic Co., Ltd. Integrated Report 2024 101