Integrated Report

2023

Integrity and Innovation

Inheriting Sumitomo’s Business Philosophy
with a History of 430 Years

Corporate Philosophy

The Sumitomo Realty Group is a comprehensive real estate enterprise of theSumitomo Group with a history of over 430 years. Inheriting Sumitomo’s business- Placing prime importance on integrity and soundmanagement in the conduct of its business- Under no circumstances, shall it pursue easy gains
or act imprudently- Benefit self and benefit others, private and public
interests are one and the samephilosophy, with its origins in the Monjuin Shiigaki (Founder’s Precepts), a document
written by the founder of the House of Sumitomo, Masatomo (Monjuin), and given toits family members to offer guidance on how a merchant should conduct business,
we have developed our business by placing top priority on integrity and pursuing
creation of new value with innovative and challenging spirit.
Reflecting this business philosophy, we have set forth our fundamental mission as
to “Create even better social assets for the next generation” with our corporate

Inheriting Sumitomo’s Business Philosophy with a history of 430 years

slogan, “Integrity and Innovation.”

The business philosophy inherited by the Sumitomo Group strongly demands that we,• As people, act in good faith toward all things,• Not chase easy gains, refine our humanity and develop a well-rounded character, and• Seek “harmony with the common good” that generates not only our own benefits but
also those for society in an integrated manner.

SloganIntegrity andInnovation
Placing top priority on “integrity,” we go
beyond simple development with innovative andchallenging spirit, relentlessly pursuing value
creation without pursuing easy gains. This corporate
stance as a developer is expressed in our slogan,“Integrity and Innovation.”

Fundamental Mission
Create even bettersocial assets forthe next generation
Through our businesses closely associated withpeople’s daily lives, such as office building leasing,condominium sales, custom home construction andremodeling, it is our mission to create assets thatlive on to the next generation and we strive forsustainable urban development that is “Disaster
Resistant,” “Environmentally Friendly,” “Together
with the Community” and “People Friendly.”

Code of Conduct

Monjuin Shiigaki (Founder’s Precepts) owned by Sumitomo Historical Archives

In order to fulfill our fundamental mission under the slogan “Integrity and Innovation,”
we established the Code of Conduct as guidelines to govern all our officers and employees.

Integrity and Innovation
1

Integrated Report 2023

1.
2.
3.
4.

Open Culture ................ Opportunity
Higher Goals ................. Innovation
New Approaches .......... Pioneering
ComplianceBusiness activities in compliance with laws andregulations, corporate rules, social norms, andethics

5. Rejection of Antisocial Forces
6. Trust with Our Stakeholders
7. Environmental Protection
Protecting the global environment throughefforts such as resource saving, energy saving,
resource recycling, and CO2 reduction

Sumitomo Realty & Development Co., Ltd.

2

Contents

Pick Up

05 Business Structure
07 A Message from the Management
Sumitomo Realty Group’s
11 TheBusiness Strategy

45 Business Review
Pick Up

Financial Results for Fiscal 2022 and Progress of
the Ninth Management Plan

45

Overview of Each Segment

46

Leasing

49

Sales

55

Construction

57

19

Brokerage

61

Decarbonization Targets and Initiatives

23

Group Companies

62

Unique Human Resource Investment Strategy(Utilization of Human Capital) Pick Up

25

Basic Management Strategy andMedium- to Long-term Outlook for“Sustainable Growth” Pick Up

11

The Ninth Management Plan

Sumitomo Realty Group’s
27 TheValue Creation
History of Value Creation and Our Strengths

29

Solving Social Issues through Redevelopment

31
33

Examples: Osaki Area, Roppongi Area

Enhancement of Corporate Value through Four
Mainstay Businesses
Example: Shinchiku Sokkurisan Remodeling

35
37

Value Creation Process

39

Taking on the Challenges of Creating
New Value Pick Up

41Shinjuku Sumitomo Building and “Sankaku Hiroba”

41

Ariake Garden

42

Haneda Airport Garden

42

Business
Segments

Sumitomo Realty Group’s
63 TheESG Management
Promotion of ESG and Contributions to SDGs

63

Environment

65

Society69

Governance73

Our corporate value creation through thesustainability management that inherits
Sumitomo’s business philosophy, and our
expansion strategy looking ahead to the
future of leasing business, the foundation of
our sustainable growth

P.07

Unique Human Resource Investment
Strategy (Utilization of Human Capital)
Our unique human resource investment
strategy, which supports the rich diversity of
our human resources, motivates individuals toachieve further growth and assists with careerformation, thereby underpinning thesustainable growth of the Group

P.25

Financial and Non85 Consolidated
financial Data / Company Information
Key Non-financial Data

85

Eleven-year Key Financial Summary

87

Corporate Data / Investor Information

89

History90

Basic Management Strategy and Medium- to
Long-term Outlook for “Sustainable Growth”

Taking on the Challenges of Creating
New Value

Our basic management strategy andaccompanying medium- to long-term outlook,including business outlook based on the recentchanges in social and economic conditions withnormalization of economic activity, our profit
distribution policy, investment for growth,
governance, and capital efficiency

Continuing to take on the challenges ofcreating new value through urban
development based on the sources of ourGroup’s value creation

P.11

Actively Investing in “Mumbai, India,” a Growing Market 43

P.41

Editorial Policy
This report is designed to deepen the understanding among our stakeholders on the sustainability management and business activitiesof the Sumitomo Realty Group, which inherits the Sumitomo’s business philosophy with a history of 430 years and aims to create
economic and social value for sustainable growth together with the city. It summarizes financial and non-financial information. For
details of each content item, please also refer to the following related materials.
This report was compiled based on the disclosure framework of the International Integrated Reporting Council (IIRC).

Caution Concerning Forward-looking Statements
Forward-looking statements including business forecasts contained in this integrated report represent management’s assumptions andbeliefs based on the information currently available to the Company and contain risks and uncertainties. Furthermore, they do not
represent the Company’s guarantee of future performance. Therefore, stakeholders are warned not to solely rely on these statements inmaking investment decisions. Actual results may differ from these business forecasts due to a variety of important factors.
Important factors that could affect actual results include, but are not limited to, the environment surrounding the Group’s businessareas, such as macroeconomic conditions, the real estate market, and interest rate trends.

Related Materials
For details of the contents of this report, please refer to the following related materials and pages on our website.

Period Covered: April 1, 2022 to March 31, 2023
(Some descriptions on activities and outlook in this report refer to those prior to or after this period.)
Definition of Term: “FY2022,”“FY ’22,”“fiscal 2022” or “fiscal year under review” refer to the fiscal year ended March 31, 2023.
Other fiscal years are referred to in a corresponding manner unless otherwise indicated.
Scope of Report: Sumitomo Realty & Development Co., Ltd. and its Group companies
Published: November 2023 (Japanese edition)
Cover Photo: Sumitomo Fudosan Tokyo Mita Garden Tower (Completion in February 2023)

Investor Relations https://www.sumitomo-rd.co.jp/english/ir/

Annual Securities
Report (in Japanese)

3

A Message from the Management

Medium- to Longterm Management
Strategies

Integrated Report 2023

Sustainability/ESG https://www.sumitomo-rd.co.jp/english/sustainability/

IR News
ESG Reports

Corporate
Governance
ReportSustainability News

Sumitomo Realty & Development Co., Ltd.

4

Business Structure

Sumitomo Realty Group

Property
management

Condominium
management

Four Highly-profitable Mainstay Segments
The Sumitomo Realty Group comprises the four mainstay segments: Leasing, the core earnings driver that generates nearly 70% of theoperating income overall, owning more than 230 office buildings in central Tokyo; Sales, generating stable profits every year as one of
the industry’s top suppliers of condominium units; Construction, providing Shinchiku Sokkurisan, the industry’s No.1 full-remodelingbusiness, and custom home construction; and Brokerage, having one of the highest number of transactions in the industry, primarily forexisting homes.
Each business has been steadily increasing their performance with a high level of profitability, and contributing to improving thecorporate value of the Group.

Results for the fiscal 2022
(Billion yen)

Revenue fromoperations

939.9

Operating income

241.2

Ordinary profit

236.6• Condominium Sales

1%1%

0%0%

8%8%
2323
%%

8%8%

%%
939.9
939.9 4545
BillionBillionyenyen161.9

ProfitBreakdown ofoperating income

8%8%

241.2
241.2
2121
%%
BillionBillionyenyenLeasing

6363
%%

Sales
Construction

The Sumitomo Realty Group’s
Value Creation

Sales

Breakdown of revenue
from operations

The Sumitomo Realty Group’s
Business Strategy

Sumitomo Fudosan
Tatemono Service Co., Ltd.

A Message from the Management

Four Mainstay Businesses Centered on Office Building Leasing

Brokerage

2323
%%

OthersNote: Percentage is calculated from figures before elimination and/or corporate for the fiscal year ended March 31, 2023.

Revenue from operations

Sumitomo Realty &Development Co., Ltd.

(Billion yen)YoY

FY2023 (F)YoY

Leasing

425.3

+ 0.2

445.0

+ 19.6

Sales

222.0

(11.7)

225.0

Construction

213.5

+ 9.2

Brokerage

75.1

+ 1.6

(Billion yen)

FY2022YoY

FY2023 (F)YoY

Leasing

165.6

+ 3.0

172.0

+ 6.3

+ 2.9

Sales

53.9

+ 3.4

54.0

+ 0.0

220.0

+ 6.4

Construction

21.4

+ 2.8

23.0

+ 1.5

77.0

+ 1.8

Brokerage

20.0

+ 2.0

22.0

+ 1.9

Business Review

FY2022

Operating income

Construction• Shinchiku Sokkurisan Remodeling• Custom Homes

Leasing• Office Buildings • Rental Apartments • Hotels• Multipurpose Halls • Retail Facilities
Sumitomo Fudosan Villa Fontaine Co., Ltd.
Sumitomo Fudosan Bellesalle Co., Ltd.
Sumitomo Fudosan Retail Management Co., Ltd.

Leasing

Sales

Construction

Brokerage
The Sumitomo Realty Group’s
ESG management

Sumitomo Fudosan Syscon Co., Ltd.

Operating income by segment(Billion yen)

180

Brokerage

160• Real Estate Brokerage

140S umitomo Real Estate
Sales Co., Ltd.

120
100

• Fitness Sumitomo Fudosan Esforta Co., Ltd.

Consolidated Financial and Nonfinancial Data / Company Information

80

Others60• Restaurant/Catering Izumi Restaurant Co., Ltd.

• General Insurance and Life Insurance Agency Izumi Insurance Service Co., Ltd.
etc.

40
20
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
(Years ended/ending March 31)(Forecast)(Forecast)5

Integrated Report 2023

Sumitomo Realty & Development Co., Ltd.

6

A Message from the Management
A Message from the Management

Our Material Issues (Materiality)

Striving for “Sustainable
Growth and Development”

Environment
Environmentally
FriendlyEven bettersocial assets

People Friendly

PeopleTogether with
the Community

The Sumitomo Realty Group’s
Business Strategy

Together with the City

Disasterprevention

Disaster ResistantCommunity

Creating “New Value” That
Will Be Needed for Future

We have established a sustainable and stable earnings base by steadily developing the real estate leasing businessprimarily involving office buildings in central Tokyo. We have developed numerous office buildings throughredevelopment under the Urban Renewal Act, etc. over roughly half a century since the early 1970s. By keeping theownership of these buildings, rather than selling them off, we have accumulated stable revenues. With gross floorarea of over 1.81 million tsubo (one tsubo is roughly 3.3 m2) as of March 31, 2023, the leasing business has been a

The Sumitomo
Realty Group’s
Value Creation
P.27

The Sumitomo Realty Group’s
Value Creation

Generations

Creating new value and achieving sustainable growth together with the citysolid business platform that accounts for nearly 70% of our overall operating income of over ¥240 billion.

Kojun Nishima
President

Corporate
Philosophy
P.01

7

Integrated Report 2023

Basic Management Strategy and Medium- to Long-term Outlook for “Sustainable Growth”
In May 2022, we formulated and announced the Ninth Management Plan when uncertainty was still strong oversuch issues as the COVID-19 pandemic and the situation in Ukraine. In May 2023, although the financial environmentand other conditions remain unpredictable, as COVID-19 pandemic has finally wound down and economic activity is
expected to normalize, we restated and released our “Basic Management Strategy and Medium- to Long-term
Outlook for Sustainable Growth” with the aim of further increasing corporate values, taking into consideration recentchanges in social and economic conditions. It includes earnings targets of aiming to surpass ¥300 billion in ordinary
profit in the next medium-term management plan earlier than we initially expected, as well as our profit distribution
policy, investments for growth.
Under these basic policies and strategies, we will steadily advance initiatives aimed at sustainable enhancement ofcorporate value.

Basic
Management
Strategy andMedium- to Longterm Outlook
for “Sustainable
Growth”
P.11

Sumitomo Realty & Development Co., Ltd.

Consolidated Financial and Nonfinancial Data / Company Information

Our corporate slogan “Integrity and Innovation” expresses such corporate stance. With this corporate slogan, we
have set our code of conduct to create new values by placing top priority on relationships of trust with stakeholders,always setting higher goals, and pioneering with new approaches. Under this slogan, we have set forth ourfundamental mission as to “Create even better social assets for the next generation,” and our basic management
policy aims to address various social issues including environmental ones through each business while maximizing
corporate value.
The real estate business has great social significance with a mission of enriching people’s daily lives by formingbases where people work, live and interact, as well as providing related services. As such, we have identified “Disaster
Resistant,” “Environmentally Friendly,” “Together with the Community” and “People Friendly” as our four material
issues and have been practicing “Sustainability Management” offering sustainable social assets for future
generations.

The Sumitomo Realty Group’s
ESG management

The Company is a comprehensive real estate enterprise of the Sumitomo Group, which succeeded the Sumitomo
Honsha Ltd. and inherits “Sumitomo’s Business Philosophy” which has a history of 430 years. The Sumitomo Groupis one of the longest-lasting corporate groups in the world, and its business philosophy — “Placing prime importanceon integrity,” “Under no circumstances, shall it pursue easy gains,” “Benefit self and benefit others, private andpublic interests are one and the same,” etc. — has been handed down as a guiding principle throughout its history.
In light of the wisdom of its predecessors, the Sumitomo Realty Group has developed its business based on aphilosophy of placing top priority on integrity, not pursuing easy gains, and creating not only economic value throughthe pursuit of self-interest, but also lasting social value that will be needed for future generations.

Business Review

Corporate philosophy that inherits “Sumitomo’s Business Philosophy” with a history of 430 years

In order to secure a stable supply of land in central Tokyo, where large parcels of land are rare, we, as a “LandMaker,” have been engaged in urban development including redevelopment together with numerous landowners.
Through our redevelopment business to date, in addition to creating an earnings base, we have contributed tosolving various issues of the community. By redeveloping the remaining densely built-up areas with low-rise wooden
houses in various areas of central Tokyo, which pose high disaster risks, we have realized effective use of land,
improvement of disaster preparedness and revitalization of the community. By upgrading urban function throughredevelopment, the Company contributes to enhancing the value of not only the redevelopment area but alsointernational metropolis Tokyo overall.
Our strength is the capability of “Land Innovation,” or the capability of development, which we have cultivatedover the years as one of Japan’s leading comprehensive developers. By taking advantage of this strength, we willcontinue to promote sustainable urban development that generates both economic and social value, as well as toachieve sustainable growth and maximize corporate value.

8

A Message from the Management

Earning Targets
We aim to surpass ¥300.0 billion in ordinary profit in the next medium-term management
plan, earlier than the medium- to long-term outlook forecast

Investment for Growth
Steady progress in investment in leasing office assets with gross floor area of over 700,000
tsubo in central Tokyo, mainly comprising redevelopment

At the time of the announcement of the Ninth Management Plan in May 2022, when the business environment
outlook was uncertain due to the COVID-19 pandemic and the situation in the Ukraine, the Company has set its
long-term vision to achieve ¥300.0 billion in ordinary profit by fiscal 2030 at the latest through the contribution of
earnings from operations of new buildings to be completed. However, the outlook for each business segment
including the hotel and multipurpose hall businesses, which were affected by the COVID-19 pandemic, has improved
compared to a year ago, and surpassing ¥300.0 billion in ordinary profit is now expected to be achievable during thenext medium-term management plan (2026-2028), earlier than initially expected.
Surpassing
Our office building leasing¥300 billion
business in Tokyo has proven toin next plan
(Billion yen)
be resilient even in the face of the300
COVID-19 pandemic, and we will250
continue to position it as our solid
COVID-19
foundation. In addition to office200
building leasing business, we will
Globalalso expand other businesses such
150
Financialas Shinchiku Sokkurisan
Crisisremodeling, through initiatives ofOrdinary
100
high social significance including
Profitcontribution to decarbonization,
50
Profit increase for 23 years out of 26 years
aiming to “surpass ¥300.0 billion
0in ordinary profit” with the
’97
’00
’03
‘06
’09
’12
’15
’18
’21
’24
’27
‘30
comprehensive strengths of the(Years ended/ending March 31)(F)
Group as a whole.
1st Plan
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th

The Company has adopted a policy of continuing toinvest in leasing office assets in central Tokyo, which has
underpinned sustainable growth to date, and has beenpromoting development plans with gross floor area ofover 700,000 tsubo (approx. 2,300,000 m2) expected tocomplete in and after the “Ninth Management Plan.”
The Company aims to achieve profitability from theseprojects focusing on large-scale redevelopment over the
next three medium-term management plans, andadditional investments will be approximately ¥2 trillion(of which ¥700.0 billion is for the three years of theNinth Management Plan). We will continue to steadily
promote redevelopment projects underway in Yaesu,
Roppongi, Tsukiji, and other locations in central Tokyo,
and we will strive to further expand our earnings baseand increase corporate value by completing and puttingthese projects into operation.

0

’03

’06

’09

(Years ended/ending March 31)

9Integrated Report 2023

15

Dividend increased for
10 consecutive terms

6
’12

’15

’18

’21

’24

’27

’30

‘33

0

¥

180

Gross floorarea forleasing (owned)

160
140

(March 2024 forecast)

80

1,600
1,200
1,000

33.0 billion¥(March 1997)

60
40
20
0

2,000
1,800
1,400

(right scale)

120
100

2,200

800

Operatingincome fromleasingbusiness

600
400
200

‘97 ‘00 ‘03 ‘06 ‘09 ‘12 ‘15 ‘18 ‘21 ’24(Years ended/ending March 31)

0(F)

Actively Investing in Mumbai, India’s Largest Economic City - Aiming to Establish a Major
Base Second to Tokyo
In addition to expanding the earnings base centered on the leasing business in central Tokyo, we started our overseas
expansion in Mumbai, the largest economic city in India, with our “Tokyo office building leasing business” model ofacquiring the development site independently, developing, leasing, managing and owning buildings by ourselves forthe long term. After acquiring one of the largest office building sites in BKC, a new city center of Mumbai, in July
2019, we acquired an additional site of the same scale in November 2022, and are advancing the office building
development plans with a total gross floor area of approximately 260,000 m2 and an investment scale of nearly¥200.0 billion for the two properties combined. In addition, in October 2023, we independently acquired a development
site of approximately 80,000 m2 (about 24,000 tsubo *1 tsubo ≈ 3.3 m2) in Worli, a new city center in the heart of
Mumbai, and we will advance a “super high-rise mixed-use urban development project,” which will be the largest
urban redevelopment by a Japanese company in India with a total project cost of over ¥500.0 billion and gross floorarea of over one million m2, aiming for the full opening of the facilities in the 2030s.
Starting with this mixed development project, we are looking ahead to expanding into other businesses such as
hotels, retail facilities and residential development in addition to our long-term office leasing business. We willcontinue to further expand our business base in India, bringing together the expertise in redevelopment and various
businesses that we have cultivated so far as a comprehensive real estate company, to build a major base second to
Tokyo.

Actively
Investing in“Mumbai, India,”a Growing
Market
P.43

BKC

Worli

Consolidated Financial and Nonfinancial Data / Company Information50

172.0 billion

200(Thousands of tsubo)

The Sumitomo Realty Group’s
ESG management

The Company’s basic policy of profit distribution is to ensure prioritization of investment in leasing office assets inorder to enhance the long-term earnings base and to strive for “sustainable dividend increase” in line with profit
growth. Based on this idea, we initially set forth the continuation of the “annual dividend increase of ¥5 per share”
in the Ninth Management Plan. However, in November 2022, we increased the pace of “sustainable dividend
increase in line with profit growth” from ¥5 to ¥7 per share per year, based on the recognition that, in addition
to steady progress in business
Sustainable dividend increase in line with profit growth
performance, the future outlook
Withinfor business performance has
MarchProfit7 years Dividends
2023
been brighter with the
Double(Billion yen)¥100 (Yen)¥52
dividend
normalization in the economic
350
100
activities, considering the90
300
coexistence with COVID-19.
75
250
Going forward, we willcontinue the “annual dividend
59
60
200
52
increase of ¥7 per share” andContinue to45
increase
45
150
Dividends
raise it to “¥100 per share per
dividend by
Profit30
year” within seven years,30¥7 per year100
20
doubling the current ¥52.

tsubo
and more

220

Business Review

Double the dividend within 7 years to ¥100 per share, and continue sustainable dividend
increase in line with profit growth

700,000(Billion yen)

The Sumitomo Realty Group’s
Value Creation

We believe that employees are the source of increasing corporate value, and the policy is to first return the fruits ofsustainable growth to the Group’s highly diverse workforce centered on career hires.
In fiscal 2022, in addition to a salary increase based on our unique compensation system that evaluates solely oneach employees’ ability (job responsibilities) and performance, a special allowance of ¥100,000 for daily living support
was paid uniformly to all Group employees at the end of the year in consideration of the rapid rise in prices especiallyfor utilities, and together with an expansion of the fiscal year-end lump-sum payment in conjunction with renewing
record profit, a total of 7% increase in wages was implemented.

Operating income from office building leasing
business and gross floorarea for leasing
Additional

The Sumitomo Realty Group’s
Business Strategy

Profit Distribution
Policy to return the fruits of sustainable growth to employees first, implementing a total
of 7% wage increase in fiscal 2022

A Message from the Management

Basic
Management
Strategy andMedium- to
Long-term
Outlook for“Sustainable
Growth”
P.11

We will aim to surpass ¥300.0 billion in ordinary profit in the next medium-term management plan and sustainablegrowth beyond that, with domestic businesses centered on office building leasing in Tokyo, which has maintained
stable growth even in the midst of the COVID-19 pandemic. At the same time, we will expand our business base in
India, which is experiencing remarkable development, by demonstrating our distinctive strengths unique to ourcompany, and aim to enhance our long-term and sustainable growth. We will strive for business expansion in India,
which will solidify our growth potential and realize further enhancement of corporate value with the collective effortsof the Sumitomo Realty Group. * For details on our business expansion in Mumbai, India, please refer to pages 43-44.

Sumitomo Realty & Development Co., Ltd.

10

The Sumitomo Realty Group’s Business Strategy

The “Basic Management Strategy and Medium- to Long-term Outlook for Sustainable Growth” (full text) is asfollows.

Earnings Targets
Aiming to surpass ¥300.0 billion in ordinary profit in the next medium-term management plan

(Billion yen)in next plan

300
Achieve record ordinary profit for the third consecutive year in March 2024
’22

’23

’24 (F)

Revenue from Operations

939.4
233.8
225.1

939.9
241.2
236.6

970.0
255.0
250.0

Operating Income
200

Ordinary Profit

150

COVID-19

Brokerage

50

Profit increase for 23 years out of 26 years’97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 ‘21 ‘22 ‘23 ‘24 ‘25 ‘26 ‘27 ‘28 ‘29 ‘30 ‘31
2nd

(F)

3rd

4th

5th

6th

7th

8th

9th

10th

11th

Sumitomo Fudosan Real Estate Sales Co., Ltd. is one of the industry-leading company mainly with transactions of existing housings,
focusing on spreading its “STEP” brand, while operating Mansion Plaza brokerage offices which exclusively handle high-classcondominiums, and launching STEP Auctions, an industry-new service that offers fairer and more transparent transactions under the
principle of “Customer First.” This new service has been well-accepted by many sellers.
Following the discontinuation of distributing insert flyers, in January 2023, we completely terminated our operations of sending direct
mail (DM), which had been sent to customers using registered information, from the perspective of protecting personal information. We,
instead, have shifted our focus to an advertising strategy utilizing the Internet, promoting efficient advertisement by paperless operations
and digital transformation (DX).
While the supply of new housing is on the decline, the existing housing market, which is being revitalized by an increase in highquality stock, is expected to grow, and we will strive to expand our market share by strengthening Group collaboration with our otherbusinesses such as custom homes and remodeling, and condominiums that we have sold in the past, as well as further pursuingcustomer-oriented services.

Sumitomo Realty & Development Co., Ltd.

Consolidated Financial and Nonfinancial Data / Company Information(Years ended/ending March 31)

Integrated Report 2023

The Sumitomo Realty Group’s
ESG management

Ordinary
Profit11

For condominium sales with firm demand under the low interest rate environment, more than 90% of the 3,000 units planned to bedelivered in the next fiscal year (fiscal 2023) were already sold, and sales activities including those for fiscal 2024 and beyond are making
steady progress as planned.
Although rising construction costs continuously needs to be addressed, we have already secured the necessary amount of land for
condominiums to be delivered by the next medium-term management plan amid continuing intensified competition for land acquisition.
We will maintain our policy of focusing on profit with controlling the pace of sales, rather than chasing volume of units or sales, and will
also maintain the high level of profit scale that we have achieved in previous medium-term management plans.
We are promoting development that contributes to decarbonization with the adoption of the “ZEH-M Oriented” high environmental
performance as the standard specifications for all condominiums we design from the Ninth Management Plan.

In Japan, 90% of the over 50.0 million existing houses do not meet the latest energy-saving standards, posing a major social challenge
for decarbonization. Our “Shinchiku Sokkurisan” remodeling business has been well-received for its “high-insulation remodeling” that
achieves high energy-saving performance, and the percentage of orders for “high-insulation remodeling” for full remodeling has reached
30% at present (target of 20% for the Ninth Management Plan).
In custom homes, we have launched the sale of “SUMICA” with the latest ZEH (Zero Energy House) specifications as standard; it
combines the solar power generation service “SUMIFU × ENEKARI,” which offers the benefits of solar power generation services forpeace of mind at zero initial cost simply with a fixed monthly service fee, and high thermal insulation specifications, and the ZEH ratio is
now increasing to 80% (target of 60% for the Ninth Management Plan).
In both businesses, we aim to achieve record-high profit by increasing orders through appealing to customers for high disasterprevention and environmental performance, while focusing on cost control, minimizing the impact of material price fluctuations.

GlobalFinancial
Crisis

1st Plan

Sales

Construction

100

0

For office buildings, the trend toward increasing floor space is becoming apparent against the backdrop of tenants’ staff returning to
office and increased hiring as economic activity normalizes. By steadily capturing these tenant companies’ needs, we will maintain andimprove the profitability of existing buildings and continue on the trajectory of long-term profit growth through operation of newbuildings to be completed with gross floor area of over 700,000 tsubo.
The “La Tour” luxury rental apartment series has grown to a scale of 4,000 units and has been well-accepted for its hospitality andservice. We will continue to improve our brand value and further extend our strong performance.
In the hotel and event hall business, we are striving to restore the profitability to the pre-COVID-19 levels during fiscal 2023, andaiming for further growth in the next medium-term management plan and beyond with the contribution to earnings from the full-scale
operation of Haneda Airport Garden including flagship hotels with a total of 1,700 guestrooms, directly connected to Haneda Airport,
which fully opened in January, 2023.

Business Review

250(Billion yen)

Leasing

The Sumitomo Realty Group’s
Value Creation

Surpassing¥300 billion

Growth strategy by segment
Our office building leasing business in Tokyo has proven to be resilient even in the face of the COVID-19 pandemic, and we will continue
to position it as our solid foundation. In addition to office building leasing business, we will also expand other businesses such as
Shinchiku Sokkurisan remodeling, through initiatives of high social significance including contribution to decarbonization, aiming to“surpass ¥300.0 billion in ordinary profit” with the comprehensive strengths of the Group as a whole.

The Sumitomo Realty Group’s
Business Strategy

In our mainstay real estate leasing and sales businesses, the process takes a minimum of two to three years from acquisition of land tocompletion of buildings and making a profit, and many large-scale development projects such as redevelopment projects require five
years or more. We create three-year medium-term management plans in addition to single fiscal-year plans as it may undermine themost important perspective of the real estate business, which is to maximize revenues by optimizing the value of the land we acquire.
With top priority placed on achieving objectives of the medium-term management plans we have formulated every three years, we haveincreased our corporate value as a result of the steady implementation of the plans. We have executed eight management plans, andhave achieved increases in ordinary profit in 23 fiscal years, excluding the three fiscal years under the global financial crisis and the
COVID-19 pandemic.
In the fiscal year ended March 31, 2023, the first year of the Ninth Management Plan, we achieved record ordinary profit for thesecond consecutive year and record profit for the tenth consecutive year, making a good start toward achieving the goals for the
cumulative three-year period of the medium-term management plan.
For the fiscal year ending March 31, 2024, we aim to renew record-high profits with expecting higher profits in all business segmentsof the mainstay office building leasing (Leasing segment), condominium sales (Sales segment), housing (Construction segment) and
Brokerage segment.
At the time of the announcement of the Ninth Management Plan in May 2022, when the business environment outlook was uncertain
due to the COVID-19 pandemic and the situation in the Ukraine, the Company has set its long-term vision to achieve ¥300.0 billion in
ordinary profit by fiscal 2030 at the latest through the contribution of earnings from operations of new buildings to be completed.
However, the outlook for each business segment including the hotel and multipurpose hall businesses, which were affected by the
COVID-19 pandemic, has improved compared to a year ago, and surpassing ¥300 billion in ordinary profit is now expected to beachievable during the next medium-term management plan (2026-2028), earlier than initially expected.

A Message from the Management

Basic Management Strategy and Medium- to Long-term Outlook
for “Sustainable Growth” (Announced on May 11, 2023)

12

The Sumitomo Realty Group’s Business Strategy

Basic Management Strategy and Medium- to Long-term Outlook for “Sustainable Growth”

Fixed interest rate ratio
of interest-bearing debt

Over 80%

At the end of fiscal 2022
Long-term debt ratio : 95%
Fixed interest rate ratio : 86%

Shareholders’equity ratio

Debt ratings
by JCR and R&I

28%

AA-

Trend of debt ratings

Profit Distribution Policy
 olicy to return the fruits of sustainable growth to employees first, implementing a total of 7% wage
P
increase in fiscal 2022
The Company puts into practice the corporate slogan “Integrity and Innovation” and is aiming for employee-first management to returnthe fruits of sustainable growth to employees first, based on the ideas that employees are the source of enhancing the corporate value
through sustainable growth.
We have a highly diverse workforce, with career hires accounting for 90% of our workforce, and we have implemented a salary
increase that is commensurate with the growth of individual employees, a unique personnel system in Japan that evaluates solely on
ability (job responsibilities) and performance in each of the various job categories.
In fiscal 2022, in addition to the salary increase above, a special allowance of ¥100,000 was paid uniformly to all 10,000 Group
employees as a daily living support, taking into consideration the rapid rise in prices, especially for utilities. Furthermore, the lump-sum
payment of ¥100,000 at the end of the fiscal year in conjunction with the renewal of record profit was given to all Group employees,
instead of only to those at Sumitomo Realty & Development as in the past, to share the joy of the good performance with the entire
Group. As a result, including two lump-sum payments for a total of ¥2.3 billion, the wage increase rate for the fiscal year was 7%. We
will continue to make generous human capital investments in our employees along with returns to shareholders in line with sustainablegrowth.

AA

Salary increase based on ability andperformance

A+
A
ABBB+

JCR

Lump-sum payment 1:
Special allowance

A special allowance as a daily living support(uniformly ¥100,000)

R&I

Lump-sum payment 2:
Renewing record profit

Lump-sum payment at the end of the fiscal
year in conjunction with the renewal ofrecord profit (uniformly ¥100,000)

BBB

Fiscal 2022

The Sumitomo Realty Group’s
Value Creation

Salary increaseAA-

The Sumitomo Realty Group’s
Business Strategy

Ensuring financial soundness and stability

Conservative finance focusing on long-term debt

A Message from the Management

Impact of rising interest rates on earnings is expected to be negligible
Preparing for the recent global inflation and the accompanying rise in interest rates is an important management issue for the Company
as a real estate company with large up-front investments.
Our financing policy is to manage our finances conservatively, focusing on long-term debt with 10-year maturities, maintaining a fixedinterest rate ratio of over 80%, and diversifying refinance dates (interest-bearing debt as of the end of fiscal 2022 was approximately¥3.9 trillion, with the long-term ratio at 95% and the fixed interest rate ratio at 86%).
In addition, the shareholders’ equity ratio, which indicates financial soundness, has improved every year, almost doubling to 28% from
15% 10 years ago, and the debt rating, which indicates creditworthiness of bonds and other financial assets, has improved to the AAzone rated by both Japan Credit Rating Agency, Ltd. (JCR) and Rating and Investment Information, Inc. (R&I), and we have earned a highevaluation for our financial stability as well as our profitability.

Wage
increase
rate
7%* Including two lumpsum payments for a
total of ¥2.3 billion

BBB- ouble the dividend within 7 years to ¥100 per share, and continue sustainable dividend increase inDline with profit growth

BB+
‘99

‘01

‘03

‘05

‘07

‘09

‘11

‘13

‘15

‘17

‘19

‘21

‘23

Rising interest rates simulation (next 5 years)(Billion yen)

(Years ending March 31)

2024

2025

2026

2027

2028

Repayment amount (refinancing)

294.1

383.8

345.9

440.6

302.4

18.0

18.0

—

—

18.5
+0.5

19.5
+1.0

If interest rates remain at current levels...
Interest amount

18.0

YoY change

Sustainable dividend increase in line with profit growthProfit(Billion yen)

March
2023

350

¥

YoY change

19.0
+1.0

21.0
+2.0

23.0
+2.0

26.0
+3.0

* Long-term debt and bonds* Interest-bearing debt as ¥3.9 trillion as of March 31, 2023

The Company will continue its conservative financing policy with a higher ratio of fixed interest rates, for long-term debt, and will strive
to minimize the impact of rising interest rates in the future.
The target of “ordinary profit exceeding ¥300.0 billion in the next medium-term management plan” incorporates the assumption of a
0.5% rise in market interest rates.

13

Integrated Report 2023

100¥
dividend

(Yen)

300

90

250

75

59

200

52
45

150

Dividends
Profit100

30

60
Continue toincrease
dividend by¥7 per year

Consolidated Financial and Nonfinancial Data / Company Information

18.0

Within 7 years Dividends
100

If interest rates increase by 0.5%...
Interest amount52

DoubleThe Sumitomo Realty Group’s
ESG management

Only a 0.5% impact on current leasing revenue of ¥400.0 billion = Well within the range of absorption

Business Review

The table below shows the estimated earnings impact of higher interest rates in case the entire amount scheduled for repayment(redemption) over the next five years was refinanced. The annual refinancing amount is about 10% of total interest-bearing debt, and if
the market interest rates were to rise by 0.5%, the increase in interest payments would be about ¥2.0 billion each year. This is only a
0.5% impact on current leasing revenue of ¥400.0 billion, and it is well within the range that can be absorbed by future improvements
in revenues from existing buildings and new buildings to be completed in the future. In addition, when interest rates rise, in general, theeconomy is likely to be in a moderate inflationary trend, in which case the probability of an upturn in the economy and an improvementin the Company’s earnings environment is also high.

The Company’s basic policy of profit distribution is to ensure prioritization of investment in leasing office assets in order to enhance thelong-term earnings base and to strive for “sustainable dividend increase” in line with profit growth.
Based on this idea, we initially set forth the continuation of the “annual dividend increase of ¥5 per share” in the Ninth Management
Plan. However, in November 2022, we increased the pace of “sustainable dividend increase in line with profit growth” from ¥5 to ¥7 pershare per year, based on the recognition that, in addition to steady progress in business performance, the future outlook for businessperformance has been brighter with the normalization in the economic activities, considering the coexistence with COVID-19.
In fiscal 2023, we plan to “increase the dividend for the 10th consecutive year” to ¥59 per share, and thereafter we will continue the“annual dividend increase of ¥7 per share” and raise it to “¥100 per share per year” within seven years, doubling the current ¥52. The
Company will reward shareholders for their long-term support as we aim to increase our corporate value through sustainable growth.

45
30

20
50
0

6

15
Dividend increased for 10 consecutive terms’03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 ‘21 ‘22 ‘23 ‘24 ‘25 ‘26 ‘27 ‘28 ‘29 ‘30 ‘31 ‘32 ‘33

0(Years ended/ending March 31)

Sumitomo Realty & Development Co., Ltd.

14

The Sumitomo Realty Group’s Business Strategy

Basic Management Strategy and Medium- to Long-term Outlook for “Sustainable Growth”

Governance teady progress in investment in leasing office assets with gross floor area of over 700,000 tsubo inScentral Tokyo, mainly comprising redevelopment
The Company has adopted a policy of continuing to invest in Operating income from office building leasing businessleasing office assets in central Tokyo, which has underpinned and gross floor area for leasing

 nsuring diversity of the Board of Directors - Outside Directors accounting for one-third of the Board,Eand appointing one female Director

Additional(Billion yen)

700,000(Thousands of tsubo)tsubo
and more

220
200

2,200
2,000

172.0 billion

¥

180

1,800

(March 2024 forecast)Gross floorarea forleasing (owned)

160
140

1,600
1,400

(right scale)

120

1,200

100

1,000

80 ¥33.0 billion

800

60

(March 1997)

Operatingincome fromleasingbusiness

Former (As of March 31, 2023)

600

New (As of June 29, 2023)

Inside7

Inside6Outside2

Outside3(of which, female)(0)(of which, female)

(1)

400

20
0

Number of Directors

The Sumitomo Realty Group’s
Value Creation

40

The Company has decided to make changes to its Directors and Corporate Auditors as shown in the table below due to the expiration of
the terms of office of all Directors, and it was approved at the Ordinary General Meeting of Shareholders held in June 2023.
As a result, the number of Outside Directors was increased from two to three, meeting the one-third ratio of Outside Directors
recommended in Japan’s Corporate Governance Code. In addition, a total of two members, one Director and one Corporate Auditor, arefemale.
Even under the former structure, the Board of Directors held vigorous discussions, and we believe that the Company’s governance wassufficiently functioning. However, we will continue to further strengthen and enhance our corporate governance and aim to increase ourcorporate value.

The Sumitomo Realty Group’s
Business Strategy

sustainable growth to date, and has been promoting
development plans with gross floor area of over 700,000
tsubo (approx. 2,300,000 m2) expected to complete in andafter the “Ninth Management Plan.” The Company aims toachieve profitability from these projects focusing on largescale redevelopment over the next three medium-term
management plans, and additional investments will beapproximately ¥2 trillion (of which ¥700.0 billion is for thethree years of the Ninth Management Plan).
In fiscal 2022, two large-scale redevelopment projects,
Sumitomo Fudosan Tokyo Mita Garden Tower and Sumitomo
Fudosan Shinjuku First Tower were completed. We willcontinue to steadily promote redevelopment projects
underway in Ikebukuro, Yaesu, Tsukiji, Roppongi, and otherlocations in central Tokyo, and we will strive to further
expand our earnings base and increase corporate value bycompleting and putting these projects into operation. In
terms of new properties, we maintain our policy of taking
advantage of opportunities that arise and actively acquire
desirable properties available (securing ¥300.0 billion forinvestments in new projects for the three years of NinthManagement Plan).

A Message from the Management

Investments for Growth

200
‘97

‘00

‘03

‘06

(Years ended/ending March 31)

‘09

‘12

‘15

‘18

‘21

0

‘24
(F)

Investment of ¥500.0 billion in India, aiming to increase profits by ¥30.0 billion, or 10% of domestic
ordinary profit
Delhi

India
Mumbai

Project 1
Maharashtra
State

Number of Corporate Auditors
Former (As of March 31, 2023)
Inside2

Inside2

Outside2

Outside2(of which, female)(1)(of which, female)

(1)

a.
St
ro ed)
etM lann(P

Project 2

New (As of June 29, 2023)

Sri Lanka

List of new Directors and Corporate Auditors
Corporate Auditors

Directors

BKC
Location
Site acquisition
Acquisition value(Yen equivalent)Type of ownership
Site area
Building scale

Project 1
Project 2
Bandra East, Mumbai, Maharashtra State
July 2019
November 2022
22.38 billion INR
20.67 billion INR(38.0 billion JPY)
(35.1 billion JPY)
Leasehold for 80 years
Leasehold for 80 years
12.486 m2
11.885 m2(approx. 3,780 tsubo)(approx. 3,595 tsubo)
Gross floor area of approx.
Gross floor area of approx.
130,000 m2
130,000 m2(approx. 40,000 tsubo)(approx. 40,000 tsubo)
Office building for lease
Office building for lease*1. 1 INR = 1.7 JPY*2. 1 tsubo ≈ 3.3 m2

Kenichi Onodera

Director - Chairman of the
Board

Male

Yoshifumi Nakamura Full-time Corporate Auditor

Male

Kojun Nishima

Representative Director –PresidentMaleToshikazu Tanaka

Full-time Corporate Auditor

Male

Masato Kobayashi

Representative Director –Deputy President

Male

Takashi Sakai

Outside Corporate Auditor

Outside Independent

Yoshiyuki Odai

Representative Director –Deputy President

Male

Naoko Hasegawa

Outside Corporate Auditor

Outside Independent Female

Hiroshi Kato

Director – Senior Managing
Executive Officer

MaleHisatoshi Katayama

Director – Senior Managing
Executive Officer

Male

Yozo Izuhara

Outside Director

Outside Independent

Male

Nobumasa Kemori

Outside Director

Outside Independent

Male

Chiyono Terada

Outside Director

Outside Independent Female

Male

Consolidated Financial and Nonfinancial Data / Company Information

Integrated Report 2023

a.
St
ro ed)
etM lann
(P

a.
St )
ro ed
et nn
M Pla
(

Building use

15

Nepal

d
ee
Sp d)
e
gh
Hi lannl(P
na
tio ta.
Na ail S
R

The Sumitomo Realty Group’s
ESG management* For details on our business expansion in Mumbai, India, please refer topages 43-44.

Pakistan

BKC

Business Review

In addition to expanding the earnings base centered on theleasing business in central Tokyo, the Company is making
full-fledged overseas expansion in India, with our “Tokyo
office building leasing business” model of acquiring thedevelopment site independently, developing, leasing,managing and owning buildings by ourselves for the longterm.
In July 2019, we acquired the largest office building’s site inBandra Kurla Complex (BKC), which is a new city center of
Mumbai, the largest economic city of India, and in November
2022, we acquired an additional site of a similar size. Together
with the first acquired site, we are promoting the officebuilding development with gross floor area of approximately
80,000 tsubo and an investment scale of nearly ¥200.0 billion.
We have already started underground construction for the first
property, and we are aiming to complete construction of bothproperties during the next medium-term management plan.
The BKC is being developed as a financial center, andgovernment-affiliated companies, major Indian conglomerates,
and foreign IT companies are moving into the area. New
stations for high-speed rail and a new metro line are scheduled
to be built in the future, and further development as abusiness district is expected.
Starting with these developments, we first invest
approximately ¥500.0 billion in India, or 10% of over ¥5trillion of leased assets after the completion of thedevelopment plans with gross floor area of 700,000 tsubo inJapan, while taking into consideration of various property
types and business models in addition to the long-termownership of office buildings, aiming for higher investment
efficiency than in Tokyo, considering overseas risk premiums
such as interest rates and exchange rates.
In the next medium-term management plan, we aim tosurpass ¥300.0 billion in domestic ordinary profit, and as oursource of further growth beyond that, we aim to generate
10% of that amount, or ¥30.0 billion, from overseas business.

Sumitomo Realty & Development Co., Ltd.

16

The Sumitomo Realty Group’s Business Strategy

Basic Management Strategy and Medium- to Long-term Outlook for “Sustainable Growth”
A Message from the Management

Considering abolishing advance warning takeover defense measures against malicious takeover action

Progress in reducing strategic shareholdings
From the perspective of building and strengthening stable and long-standing relationships with business partners such as tenantcompanies and financial institutions, the Company may acquire and hold shares of such business partners when it deems that suchacquisition and holding will contribute to stabilizing and enhancing corporate value.
With regard to the reduction of strategic shareholdings, in the Ninth Management Plan, the Company has set a numerical target of
reducing the ratio of the book value (purchase price) of listed shareholdings each year to 10% or less of shareholders’ equity by fiscal
2030 at the latest, and it imposes a certain level of discipline on the balance of shareholdings. In fiscal 2022, we sold six issues, withbook value of approximately ¥7.0 billion in total, whose significance of our holdings had declined. As a result, the book value of listed
shares decreased to ¥269.0 billion (down ¥3.0 billion from the preceding fiscal year), and the ratio to shareholders’ equity declined two
percentage points to 16.6% (18.4% at the end of the preceding fiscal year).
The Company will continue to examine the significance of the strategic holding of shares individually, and it will proceed to sell sharesthat are deemed to have lost their significance to continue holding as subject to reduction.

The Sumitomo Realty Group’s
Business Strategy

Since its introduction in 2007, the Company’s advance warning takeover defense measures have been renewed every three years
through a resolution of the General Meeting of Shareholders and have been continued.
The current policy was approved at the General Meeting of Shareholders in June 2022. Subsequently, the Ministry of Economy, Tradeand Industry established the “Fair Acquisition Study Group” to discuss a review of the guidelines for takeovers, and the Financial Services
Agency also started discussions on reviewing the tender offer system in March 2023, and discussions on ensuring the fairness andtransparency of acquisition procedures are progressing rapidly.
These discussions are greatly welcomed because they are expected to possibly resolve the “problems in the legal system” thatnecessitate our takeover defense measures, such as being taken all of a sudden by a malicious acquirer who rapidly purchases shares in
the market, and the takeover being consummated without sufficient time for consideration or an appropriate decision-making process at
the General Meeting of Shareholders, posing a risk of damage to corporate value and the interests of other shareholders.
In light of future trends in these system revisions, we will consider abolishing the advance warning takeover defense measures that wehave introduced, at the Board of Directors and other meetings.

Book value of listed shares and shareholders’ equity“Problems in the legal system” that necessitate our takeover defense measures

7th

8th

(March 31, 2019)(March 31, 2022)

March 31,2023 ResultsBook value of shares(Billion yen)

190.3

255.5

271.9

269.0

Shareholders’ equity(Billion yen)

821.0

1,099.3

1,479.2

1,618.9

(%)

23.2

23.2

18.4

16.6

Ratio

Fiscal 2030
TargetThe Sumitomo Realty Group’s
Value Creation

e.g. Being taken all of a sudden by a malicious acquirer who rapidly purchases shares in themarket, and the takeover being consummated without sufficient time for considerationor an appropriate decision-making process at the General Meeting of Shareholders,posing a risk of damage to corporate value and the interests of other shareholders

6th(March 31, 2016)

10% or less

Capital Efficiency
Progress in "review of corporate takeover rules," expected to possibly resolve
the problems

Changes in ROE(Years ended March 31)

abolish the “advance warning takeover defense measures”

2019

2020

2021

2022

2023

ROE

(%)

11.2

11.3

10.1

9.6

9.4

Profit(Billion yen)

130.1

141.0

141.4

150.5

161.9

Shareholders’ equity(Billion yen)

1,202.1

1,295.0

1,503.0

1,634.0

1,799.4

23.4

24.4

26.5

28.1

28.3

A

A+

A+

A+

AA-

Shareholders’ equity ratio
R&I rating(%)}

Profitability}

Stability

The Sumitomo Realty Group’s
ESG management

If the problems are solved in light of trends in these system revisions,

Business Review

Discussions on ensuring the fairness and transparency of acquisition procedures
METI: Reviewing the guidelines for takeovers at the “Fair Acquisition Study Group”
FSA : Reviewing the tender offer system and considering to tighten the large shareholding
reporting rule

Achieved ROE of 9.4%, well above the cost of capitalIn fiscal 2022, ROE (Return on Equity) was 9.4%, achieving high capital efficiency on par with the preceding year. Meanwhile, theshareholders’ equity ratio has improved every year with increasing financial stability, and R&I upgraded our credit rating to AA- in
February.
The Company will continue to maintain ROE that exceeds the cost of capital, while balancing financial stability with enhanced
profitability.

Consolidated Financial and Nonfinancial Data / Company Information

17

Integrated Report 2023

Sumitomo Realty & Development Co., Ltd.

18

The Sumitomo Realty Group’s Business Strategy

The Ninth Management Plan (Announced on May 12, 2022)
A Message from the Management

The Ninth Management Plan (from fiscal 2022 to fiscal 2024) is as follows.

Performance Targets and Strategies by Segment

Capital Investment Plans (Non-current asset investment excluding sales assets, such as condominiums for sale)

Consecutive record profit for the period covered

Further investment in leasing office assets in central Tokyo, strengthening our earnings baseAchieve cumulative ordinary profit of 750 billion yen and profit of 500 billion yen over
the three-year period

Expect to invest 1 trillion yen over the three years of the Ninth Management Plan

Maintain the position of office building leasing in Tokyo as a solid foundation, and aim
to utilize the comprehensive strengths of the Group as a whole to achieve our targets(2) We will ensure that we take advantage of opportunities
that arise by securing 300 billion yen for investments
in new projects

Performance targets by segment(Fiscal years ended/ending March 31)

Leasing

Revenue fromoperations

Construction
Brokerage

Leasing
Sales

OperatingincomeConstruction
Brokerage

Profit7th Plan

8th Plan

9th Plan

2014-20162017-20192020-2022

2023-2025

886.2
773.1
589.3
177.2

1,073.1
957.2
634.7
207.7

1,218.9
822.1
612.0
210.5

1,300.0
750.0
700.0
250.0

2,442.1

2,885.8

2,870.4

3,000.0

313.7
127.2
47.0
40.6

415.5
140.1
50.4
47.4

487.3
150.9
54.7
44.1

520.0
150.0
75.0
68.0

500.6
418.0
238.1

613.2
557.8
353.3

687.5
655.6
432.8

770.0
750.0
500.0

Vs. 8th Plan

Pace of development
Gross
floor area

thousand
tsubo

2,000

+190

1,700

thousand
tsubo

2022
8th

2025
9th

thousand
tsubo

1,500

210

180

190

10th Plan

1,000

onward

520

500

0

+129.6

+700

2,500

(Thousand tsubo)

6th Plan 7th Plan 8th Plan 9th Plan
110

More than

2001
2004
2007
1st Plan 2nd
3rd(Years ended/ending March 31)

+5%

2010
4th

2013
5th

2016
6th

2019
7th

202810th-

Principal new building development projects during the Ninth Plan

+82.5
+94.4
+67.2

+12%
+14%
+16%

Business Review

Ordinary profit

6th Plan

Gross floor area
(Thousand tsubo) * 1 tsubo ≈ 3.3 m2

The Sumitomo Realty Group’s
Value Creation

Sales(Billion yen)

Development pace of gross floor area for leasing
The Sumitomo Realty Group’s
Business Strategy(1) We will invest 700 billion yen in concrete development
projects for over 700 thousand tsubo (one tsubo isroughly 3.3 m2) of gross floor area, mainly comprisingredevelopment projects

Aim to achieve record profits for the fourth consecutive plan since the Sixth Management Plan by
maintaining the pace of growth that we attained until the Eighth Management Plan

Note: All figures are cumulative totals within the period of the plan.

Strategies

Sales

High level of profit of the Eighth Management Plan
to be maintained

 e will maintain our policy of controlling the pace of sales, pursuing profit rather than volume
WRising construction costs will need to be addressed, but the impact will be limited as construction has
been started on all projects to be delivered during the Ninth Management PlanWe will maintain our policy of securing prime sites steadily amid continuing intensified competition forland acquisition

Construction

In both remodeling (Shinchiku Sokkurisan) andcustom home construction, we will focus oncontrolling costs while enhancing quality, and aim
to achieve consecutive record profits by expandingorders

Leasing

Brokerage

19

We will further strengthen profitability as we aim
to achieve record profit in a management plan witha significant increase

Integrated Report 2023

 e will expand orders by proposing products that accurately respond to customer needs, such as a highWlevel of environmental performance and disaster preparedness
We will appropriately address spikes in prices of wood and materials, and minimize the impact

 e will strengthen Group collaboration and further pursue customer-oriented services to expand ourWmarket share

Sumitomo Fudosan Tokyo Mita Garden Tower

Sumitomo Fudosan Shinjuku First Tower

Sumitomo Fudosan Nakano Ekimae Building (Nakano 2-chome Project)(As of November 2023)

Project nameLocation(Tokyo)Gross floor area
(Tsubo *1 tsubo ≈ 3.3 m2)

Completion(Expected)

Sumitomo Fudosan Tokyo Mita Garden Tower

Minato Ward

59,400Feb 2023

Sumitomo Fudosan Shinjuku First Tower

Shinjuku Ward

27,000Mar 2023

Sumitomo Fudosan Nakano Ekimae Building (Nakano 2-chome Project)

Nakano Ward

30,000Feb 2024

Sumitomo Fudosan Akihabara East Building

Taito Ward

3,000

Mar 2024

Sumitomo Fudosan Shinjuku Minamiguchi Building (Shinjuku Minamiguchi Project)

Shibuya Ward

7,200

Mar 2024

Roppongi Ekimae Project

Minato Ward

9,700

Jan 2025

Sumitomo Fudosan Osaki Twin Building West

Shinagawa Ward

8,800

Mar 2025

Others34,100

9th Plan Total

179,200

Sumitomo Realty & Development Co., Ltd.

Consolidated Financial and Nonfinancial Data / Company Information

In office building leasing, we will strive to maintain the profitability of existing buildings, while also
securing earnings with the full-year contribution of buildings completed in the Eighth Management Plan
(180 thousand tsubo of gross floor area) and by starting operation of new buildings to be completed in
the Ninth Management Plan (190 thousand tsubo of gross floor area)
In the operation of commercial facilities, such as hotels, event halls, and retail facilities, we will recover
the profitability to pre-COVID-19 levels and anticipate a return to growth from the Tenth Management
Plan onward

The Sumitomo Realty Group’s
ESG management

Aim to maintain the earnings foundation that webuilt until the Eighth Management Plan, andachieve profit growth for the fourth consecutive
plan period

20

The Sumitomo Realty Group’s Business Strategy

The Ninth Management Plan (Announced on May 12, 2022)

Policy for Shareholder Returns *Revised on November 11, 2022

 e expect to be able to cover the additional investment of 700 billion yen in properties that are in process withW
increases in cash flows from the leasing business

Increase the pace of dividend increase from ¥5 to ¥7 per share per year due to the brightening outlook of the business performance

Capital investment and cash flows fromthe leasing business*(Billion yen)

6th Plan

7th Plan

8th Plan

9th Plan(422.3)(663.5)(805.3) (1,000.0)

Cash flows
from theleasingbusiness*

409.8

534.6

644.5

Interestbearing debt

3,342.8

3,560.0* 1 tsubo ≈ 3.3 m

Gross floorarea forleasing

Interestbearing
debt

3,800.0

7th Plan

2,000

4,000

700.0

Dividends and earnings per share

1,500

1,000

Cash dividend per share and profit

(Yen)

2

5,000

3,000

3,158.9

Gloss floor area
(Thousand tsubo)

Profit(Billion yen)

8th Plan

2017

2018

2019

2020

2021

2022

Dividends

24

27

30

35

40

45

Earnings pershare

218 253 275 298 298 317

Profit reachingrecord highs

200

150

52

(Fiscal years ended March 31)

2001
2004
2007
1st Plan
2nd
3rd(Years ended/ending March 31)

Introduction of green financing

2010
4th

2013
5th

2016
6th

2019
7th

2022
8th

2025 (F)9thTarget in the Ninth Management PlanAt the end of fiscal 2022

Procure ¥1 trillion in long-term funds from green financing

Procured ¥477.2 billion

★★★★★
★★★★★
★★★★★
★★★★★
★★★★★
★★★★
★★★★
★★★★
★★★★
★★★★
★★★★
★★★★

20

20

0

Introduction of Numerical Targets regarding Strategic Shareholdings

Gross floor area
(Thousand tsubo)* 1 tsubo≈3.3m2

54
54
43
41
14
64
49
46
30
24
19
18
458

* As of September 2023, the total number of certified buildings owned by the Company is 76, with a grossfloor area of 1.15 million tsubo including office buildings, condominiums and commercial facilities.

Properties that have acquired

9

18

40

‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 ‘21 ‘22 ‘23 ‘24(F)(Years ended/ending March 31)*Upgraded to five stars in July 2022.

DBJ Green Building Certification

6

10

14

27

35

5

Reduce the ratio of the book value of shares held to 10% or less of shareholders’ equity by fiscal 2030
The Company maintains that it can acquire and hold shares of business partners, etc., if it is deemed to contribute to the Company’s sustainable growth andmedium- to long-term enhancement of corporate value primarily from the standpoint of establishing and strengthening stable and long-standing business
relationships with them.
In this new management plan, the Company has decided to establish a numerical target for the amount of strategic shareholdings held, and certain rules. Asof the end of fiscal 2021, the book value of listed shares held of 271.9 billion yen was approximately 18% of shareholders’ equity of 1,479.2 billion yen (after
subtracting net unrealized holding gains on securities, etc., from net assets). Going forward, we will reduce this ratio each year to 10% or less by fiscal 2030.

Book value of listed shares and shareholders’ equity
Book value of shares
Shareholders’ equity(Billion yen)

1,600
1,400

(Billion yen)Book valueof shares
Shareholders’equity

Ratio

1,200

6th Plan

7th Plan

8th Plan

2016

2019

2022

190.3 255.5 271.9
821.0 1,099.3 1,479.2
23%
23%
18%

Fiscal 2030
target

Ratio
(%)

40
35

10% or less

23%

1,000

30

23%

25

18%

800

20
15

400

10%
or less200
021Integrated Report 2023

‘14

‘15
6th Plan

Sumitomo Fudosan Tokyo
Mita Garden Tower

Sumitomo Fudosan
Roppongi Grand Tower

Sumitomo Fudosan
Shinjuku Grand Tower

Sumitomo Fudosan Osaki
Garden Tower

Tokyo Nihombashi Tower

Consolidated Financial and Nonfinancial Data / Company Information

600

DBJ Green Building Certification is a certification systemestablished by the Development Bank of Japan toevaluate real estate for its performance and initiatives
regarding “environmental and social awareness” beyond
its “profitability.”

The Sumitomo Realty Group’s
ESG management

Obtain assessment of conformity with green finance from
JCR and R&I

Sumitomo Fudosan Shinjuku Grand Tower
Sumitomo Fudosan Osaki Garden Tower
Sumitomo Fudosan Shinjuku Garden Tower
Tokyo Nihombashi Tower
Sumitomo Fudosan Azabujuban Building
Sumitomo Fudosan Roppongi Grand Tower*
Sumitomo Fudosan Shinjuku Oak Tower
Sumitomo Fudosan Shinjuku Central Park Building
Shiodome Sumitomo Building
Sumitomo Fudosan Iidabashi First Tower
Sumitomo Fudosan Shibakoen First Building
Sumitomo Fudosan Shinjuku Central Park Tower
12 properties TOTAL

50

24
21 22

30

Business Review

Principles for target properties during financing period• Disclose environmental performance information, including CO2
emissions and energy consumption• Maintain at least three stars in the DBJ Green Building
Certification• Prohibit the sale of the target properties since this financing
contributes to addressing social issues such as environmental
improvement (retain to maintain performance)

Rank

Profit400Target properties (As of March 31, 2022)
Property nameCash dividend
per share

1000Target properties 12 buildings out of buildings owned by the Company that have already acquired a rating of three stars or above in DBJ Green Building Certification

Procure ¥1 trillion in funds from green financing for 12
buildings, out of buildings owned by the Company that havealready acquired a rating of three stars or above in DBJ
Green Building Certification

60

The Sumitomo Realty Group’s
Value Creation

0

59

45

500

1,000

80

Dividend increasing
for the 9th+ 7 yenconsecutive year

2,000

* Cash flows from the leasing business:
Operating income of the leasing business + Depreciation

Cash dividend per share(Yen)

The Sumitomo Realty Group’s
Business Strategy

Capitalinvestment

Maintaining policy of prioritizing investment in leasing office assets, and “sustainable dividend increase” policy in line with profit growthInterest-bearing debt and gross floor area for leasing
Interest-bearing debt
(Billion yen)

A Message from the Management

Financing Plans

‘16

‘17

‘18
7th Plan

‘19

‘20

‘21
8th Plan

‘22

‘31
(F)

10
5
0

(As of March 31)

Sumitomo Realty & Development Co., Ltd.

22

The Sumitomo Realty Group’s Business Strategy

Decarbonization Targets and Initiatives

50% reduction in CO2 emissions (Scope 1, 2 and 3) by fiscal 2030 * Compared with fiscal 2014, immediately prior to the Paris Agreement
Expressed support for 2050 carbon neutrality
Aim to achieve the target by linking decarbonization initiatives with business expansionF urther pursue the introduction of highly efficient facilities for new constructions and renovations, and reduce the Company’s CO2
emissions from energy consumption, etc., by 50% per unit of floor area
Continue awareness-raising activities for energy saving towards tenants

Promote measures to reduce emissions in both upstream and downstream parts of main businesses

Support tenant companies to introduce green power for their office spaces in a building
Support to curb energy consumption during construction
Enhance high-performance designs (adopting ZEH*-M Oriented as the standard specification for condominiums) * ZEH = Net Zero Energy House
Promote provision of the new solar power generation service, “SUMIFU × ENEKARI,” which will contribute to decarbonization for
detached houses
Promote provision of Shinchiku Sokkurisan high thermal remodeling products
Support to promote spread of automobile charging stations
 eductions in the condominium business, which accounts for approximately 60% of total emissions, will contribute from the TenthR
Management Plan onward, when the construction of properties with new design standards will be completed
Aim to reduce emissions by 25% except for condominiums

CO2 emissions reduction targets
for the Ninth Management Plan

Fiscal 2014
emissions(Thousand tons of CO2)

Proportion

3,605

Condominiums
Custom homes and Shinchiku Sokkurisan remodeling
Office buildings
Non-condominium
Total

27%
12%
1%
39%
100%

(Reference)
Fiscal 2019 emissions(Thousand tons of CO2)

Shinchiku Sokkurisan remodeling
Renovation with advanced energy-saving for the poor thermal insulation of existing houses

Custom homes
60% of orders to be ZEH homes (already standardized)* Including ZEH equivalent

Thermal insulation and energy-saving performance that exceeds the latest ZEH standards + New solar power
generation service “SUMIFU × ENEKARI”

Obtain environmental value generated by solar power through “SUMIFU × ENEKARI”* Need to achieve the equivalent of approx. 4,000 units of custom homes and Shinchiku Sokkurisan remodeling with “SUMIFU × ENEKARI”

23

Integrated Report 2023

“ZEH-M Oriented” as thestandard specification for new
condominiums* Z EH-M Oriented is an energy-saving standard that requires to reduce annual energy
consumption of the entire residential building by 20% or more in total in comparison to thecurrent standards.

Shinchiku Sokkurisan Remodeling

Custom Homes“SUMICA” adopted ZEH as standard

(25)%
(10)%

1,565
1,366
66
2,997
6,537

Realizing both environmental performance that exceeds the latest
ZEH standards and high product quality

Fiscal 2022 results

15%* Including ones under application

14%
Rose to 31% for the single month of March 2023

In December 2021, we began offering
our high thermal insulation remodelingplan nationwide. The plan is available tothe entire house or even to individualrooms, enabling an increase in thethermal insulation performance only
where it is necessary.
Reducing the environmental load
While 90% of existing housing stockby high thermal insulation
does not meet the current energy-saving
remodelingstandards, we promote thermal insulation
improvements that suit customers’
lifestyles and deliver energy-saving and highly insulated housing where residents
can live in health and comfort.

ZEH as a standard specification
Premium design
High-grade equipment
High resilience

SUMIFU × ENEKARI, solar power generation service
Providing environmentally friendly housing that also offers peace of mind at times of disaster,with solar power generation equipment and storage batteries at net zero cost for customers

SUMIFU × ENEKARI
Solar power generation equipment and storage battery
installation service for detached houses
Simply with a fixed monthly service fee…
Incur no initial costs for installing solar power
generation equipment and storage batteries

Rose to 92% for the single month of March 2023

Receive support for equipment repairs andupgrades for the entire period of residency

Approx. 70%

In April 2022, we launched “SUMICA,”
which has high environmental performance
as a standard specification, exceeding
the ZEH level of “thermal insulation
performance grade 5” and “primaryenergy consumption grade 6,” newly
established by the Ministry of Land,
Infrastructure, Transport and Tourism.
By supplying environmentally friendly
housing with high disaster prevention
capabilities, we continue to deliver
sustainable houses that meet the new
demands of the times.

Shinchiku Sokkurisan Remodeling and Custom Homes

57%

OthersAll of electric power used in the Group’s own offices to be green

Plan 1. Non-fossil fuel energy certificate
Issues non-fossil fuel energy certificate to treat as green power usage /Achieve decarbonization with no hassle
Plan 2. Raw green power from newly-built power plant
Uses raw green power from newly-built power plant according to thecontract / Contribute directly to decarbonization in Japan
Plan 3. Green power from tenant-owned power plant
Issues non-fossil fuel energy certificate, which certifies the use of green
power generated at tenant-owned power plants / Use self-generated power

Decarbonization designfor newly-built
condominiums

In October 2021, as the first in theindustry, we announced to adopt “ZEH-M
Oriented” energy saving performance as
the standard specification for all
condominiums we design and develop
from that date forward, without reducing
the quality and living comfort.
With the improvement of thermal
insulation performance and theinstallation of energy-efficient equipment,
we realize both comfortable living forresidents and contributions todecarbonization.
We also actively request cooperationfrom our partner construction companies
to use green power at the construction
sites, and promote decarbonization
across the entire value chain, that
extends from upstream to downstream,in our new condominium sales business.

An industry-first service of offering thebenefits of solar power generation services
with peace of mind

In cooperation with TEPCO Energy Partner, Inc., we provide the“SUMIFU × ENEKARI” service that installs solar power
generation equipment and storage batteries at net zero cost forcustomers in custom home construction and Shinchiku
Sokkurisan remodeling businesses. Solar panels and storage
batteries are installed at zero initial cost, with support including
equipment repairs and upgrades, provided for the entire periodof residency through a call center that operates 24 hours a day,365 days a year without any charge. Through this service, we
provide and promote environmentally friendly houses that enable
the use of electricity even at times of disaster.
At the same time, by aggregating and utilizing part of theenvironmental value of the electricity generated by customers, thisservice contributes to the realization of a decarbonized society.

Consolidated Financial and Nonfinancial Data / Company Information

20% of orders to be high thermal insulation remodeling products (already introduced)

Given the situation in which eachcompany has different approaches tothe use of green power, first in Japan,
we have developed “Sumitomo Realty’s
Green Power Plan” for each individual
tenant, offering green power plans fortheir exclusively-owned areas to suit
their needs. This plan has been wellaccepted for accommodating a wide
range of needs, and it is making major
contributions to tenants’ decarbonization
efforts.

The Sumitomo Realty Group’s
ESG management

Standardization of high-level energy-saving plan; The contribution by the subject properties will be in the 10th Plan
onward when they will be completedFirst in industry to adopt ZEH-M Oriented as standard
while maintaining a high level of living comfort

Achieving thermal insulation performance equivalent to the energy
conservation standards for newly-built houses to suit customers’ lifestyles

Approx. 4,600 units

100% of condominiums to be ZEH-M Oriented designs

A system for offering three optimal green power plans to meet theneeds of each individual tenant company

High Thermal Insulation Remodeling Plan

Green Power Plan options that can be chosen by each tenant company

Condominiums

ZEH-M Oriented Design

3,540

Office buildings
30% of energy consumption in tenant office spaces to be green

Sumitomo Realty’s Green Power Plan—

The Ninth Management Plan numerical targets and progress in each segment
Targets in the Ninth Management Plan

Condominiums

Business Review

Other (head office and Group companies)

1,591
689
55
2,336
5,940

61%

9th Planreduction target

Office Buildings

The Sumitomo Realty Group’s
Value Creation

Aim to reduce total emissions by 10% in the Ninth Management Plan

Our Initiatives for the Decarbonation Targets

The Sumitomo Realty Group’s
Business Strategy

Promote energy-saving in leasing business centered on office buildings and facility management businesses

A Message from the Management

Decarbonization Targets - Establishment of CO2 Emissions Reduction Targets (Scope 1, 2 and 3)* For details of individual initiatives, please refer to the sustainability news releases and ESG reports on the Company website. https://www.sumitomo-rd.co.jp/english/sustainability/

Sumitomo Realty & Development Co., Ltd.

24

The Sumitomo Realty Group’s Business Strategy

Unique Human Resource Investment Strategy (Utilization of Human Capital)
Current Organization - Realizing a Highly Diverse Organization

Reforming Our Personnel System to Transform Our Business Structure during the Business Reconstruction Period

Developed new business segments whererevenue is generated by people(Shinchiku Sokkurisan)

Personnel system focused on ability andachievements
Expansion of the personnel system to theentire Company, including otherbusinesses that create synergies bycombining physical and human capital(condominiums, rental apartments,
hotels, multipurpose halls, etc.), andcorporate operations positions

Evaluation of personnel based on abilities(job responsibilities) and achievements,
regardless of age, gender, or level ofseniority, to create a highly diverse andresilient organization

Enhancing our corporate value
through sustainable growth25

Integrated Report 2023

Present(Persons)

Approx.
90%

300

7,000

6,000
COVID-19

250

150

50

0

Approx.
30%

Ratio ofcareer hires

200

100

5,000

1997

Apr 2001
New growth plan
(The Second Medium-termManagement Plan) began
Apr 1997
Reconstruction plan
(The First Medium-termManagement Plan) began

Number of
employees

4,000
Global Financial
Crisis3,000

Realizing a Highly Diverse Organization
For more than 20 years, we have been actively hiring people with diverse careers at other companies as individuals who can be immediately effective in the
Company. Today, mid-career hires with work experience at other companies account for 90% of our employees at Sumitomo Realty & Development, and are thesource of the Company’s growth, realizing a flexible and resilient organization rich in diversity with various perspectives and values reflecting a variety ofexperiences, skills, and attributes.
In addition, for increasing employees’ motivation, we believe that equal opportunity in promotion to managerial positions is the most important factor, so we
promote employees based solely on their enthusiasm, ability and achievements, regardless of gender or whether they were hired as new graduates or as midcareer workers. As a result, mid-career hires account for more than 60% of managerial personnel, thus ensuring diversity in the managerial positions.
We are also actively working on the promotion of female participation and career advancement. Firstly, we have announced a numerical target for the ratio of
female employees newly hired in sales and engineering positions that support our front line operations (25% in sales and 13% in engineering positions) in order
to increase the number of female employees to be promoted in the future by increasing the ratio of women in our workforce. Secondly, we are also working tosupport women’s career development. For example, in 2022, we implemented reforms to apply personnel systems centered on job evaluation-based pay to all
employees, and created a system that enables employees with medium- to long-term gaps in their career owing to life events such as childbirth and raisingchildren to immediately assume positions of responsibility with no disadvantage after returning to work. As of the end of fiscal 2022, the ratio of female
employees in managerial position was 9.4%. We are also actively working to engage female officers. As of November 2023, we have two female officers.
We believe that diversity in managerial positions should be ensured naturally as a result of fair employment policies, systems and appointments, such as thosedescribed above. We believe that setting a numerical target for diversity in managerial positions may distort equal opportunity in the appointment of managers
and lower the morale of employees as a whole, and therefore we will not set such a numerical target.

Ratio of career hires
among all employees

Ratio of career hires inmanagerial positions

Approx.

60%

90%

or higher

Ratio of women in
managerial positions

9.4%

Operating income from Sales, Construction, Brokerage
2,000

Burst ofJapan’s
bubbleeconomyOperating income from Leasing‘83 ‘85 ‘87 ‘89 ‘91 ‘93 ‘95 ‘97 ‘99 ‘01 ‘03 ‘05 ‘07 ‘09 ‘11 ‘13 ‘15 ‘17 ‘19 ‘21 ‘23 ‘25(Years ended/ending March 31)
1995 American Comfort custom home construction
1996 Shinchiku Sokkurisan remodeling1997 Hotels
Commencement of1998 Shinchiku Sokkurisan condominium remodelingnew businesses
2000 “La Tour” series of luxury rental apartments
2002 Multipurpose halls

1,000

0

Ongoing Usage, Further Expansion, and Development of Our Personnel System
Consolidated Financial and Nonfinancial Data / Company Information

Created “job-specific career path system”
with roughly 30 different wage structures

350

In fiscal 2022, in addition to the salary increase that is commensurate with the growth of individual employees, a special allowance of ¥100,000 was paid
uniformly to all 10,000 Group employees as a daily living support, taking into consideration the rapid rise in prices, especially for utilities. Furthermore, thelump-sum payment of ¥100,000 at the end of the fiscal year in conjunction with the renewal of record profit was given to all Group employees, instead of only
to those at Sumitomo Realty & Development as in the past, to share the joy of the good performance with the entire Group. As a result, including two lump-sum
payments for a total of ¥2.3 billion, the wage increase rate for fiscal 2022 was 7%. We will continue to make generous human capital investments in our
employees along with returns to shareholders in line with sustainable growth.

The Sumitomo Realty Group’s
ESG management

Required a large number of skilled experts
from outside(Billion yen) Operating income and number of employees

Implemented a total of 7% wage increase in fiscal 2022

Business Review

Personnel System Reforms and Diversity Promotion

Given the effectiveness of this personnel strategy, we have expanded our career hires of experts from sales and engineering positions to include internal
corporate operations positions. For our major job categories alone, we have created a personnel system, in which we currently have roughly 30 types of jobspecific wage structures. The percentages of compensation, which consist of fixed and variable wages, wage raise tables, and the like, are set based on thecharacteristics of the businesses and duties that are involved in each job. For all jobs, our fair salary system performs evaluations based solely on the abilities (job
responsibilities) and achievements of individual employees, regardless of their age, gender, or level of seniority. This system promotes the sustainable growth of
our employees.

The Sumitomo Realty Group’s
Value Creation

We launched our First Medium-term Management Plan (1997 to 2001) as a reconstruction plan following the bursting of Japan’s bubble economy. At that time,
we faced a major decline in profitability along with bad debts and excessive interest-bearing debt.
In that reconstruction plan, we sought to diversify our financing, such as real estate securitization, and worked to develop land that was not in active use,which represents raw material for the real estate industry, into products. At the same time, we discovered business channels such as our new built-to-order
Shinchiku Sokkurisan remodeling business, where revenue was generated by people without requiring up-front investment. Through these efforts, we aimed torestore our profitability.
During this transformation of our business structure, it was necessary for us to hire a large number of skilled experts from outside. We abolished the former
seniority-based personnel system and reformed our personnel system so that it is focused on ability and achievements, such as by instituting a commission-based
payment system with high commissions. These initiatives contributed significantly to the growth of revenue in our Shinchiku Sokkurisan remodeling and custom
home businesses.
We later expanded the application of this personnel system to other businesses, such as condominiums, rental apartments, hotels, and multipurpose halls,
which create synergies by combining physical and human capital. We created a personnel system referred to as a “job-specific career path system,” in which
each business has multiple specialist career path systems, based on its specific requirements. The skilled experts we obtained through mid-career hires helped usprovide even greater added value in each business segment.
This personnel system has supported our business expansion. We have established a stable long-term growth foundation underpinned by revenue from theoffice building leasing business which primarily involves redevelopment in the central Tokyo area, while at the same time, establishing unique business styles inleasing-related businesses such as rental apartments, hotels, and multipurpose halls as well as mainstay businesses such as condominium sales, Shichiku Sokkurisan
remodeling, custom home construction, and brokerage. To date, we have been enhancing our corporate value through sustainable growth in this manner.

Our unique “job-specific career path system”

The Sumitomo Realty Group’s
Business Strategy

The Company puts into practice the corporate slogan “Integrity and Innovation” and is aiming for employee-first management to return the fruits of sustainablegrowth to employees first, based on the ideas that employees are the source of enhancing the corporate value through sustainable growth.
For some time, we have been actively promoting diversity based on the recognition that the presence of diverse perspectives and values reflecting a variety ofexperiences, skills and attributes within the Company is an advantage that ensures the sustainable growth of the Company. Through efforts such as securingpersonnel through career hires, implementing evaluation systems based solely on ability and achievements rather than seniority, and creating a salary systemwith multiple job-specific wage structures, we have created a unique personnel system in Japan for realizing a highly diverse and resilient organization.

Seniority system (focused on hiring new graduates)

A Message from the Management

Our unique human resource investment strategy underpinning the sustainable growth

As part of our management strategy for achieving sustainable growth, our current personnel system is effective not only for contributing to the growth of ourexisting businesses, but also for securing and fostering personnel who have the skills that will be necessary for new businesses and the future transformation of
our business structure.
In order to continue expanding and developing this personnel system, we are reviewing and revising our flexible salary standards in line with personnel
markets for each specialist job. We are also enhancing our specialized skill development education for each job so that we can develop a larger pool of essential
personnel. In addition, we are promoting the further development of our personnel system through various initiatives, such as by providing career development
support via the Sumitomo Realty Group Challenge System, which offers talented personnel opportunities to transfer jobs within the Company.
For related information on human capital, please refer to the Company website. https://www.sumitomo-rd.co.jp/english/sustainability/society

Sumitomo Realty & Development Co., Ltd.

26

The Sumitomo Realty Group’s Value Creation

About The Sumitomo Realty Group’s Value Creationnext generation,” based on Sumitomo’s business philosophy with a history of 430 years.

A Message from the Management

The Sumitomo Realty Group has promoted business activities with its fundamental mission of “Create even better social assets for the

Four Material Issues (Materiality)

From the early 1970s, Sumitomo Realty has built up its portfolio of assets in the office building business, which is the foundation for its
growth. Along the way, in central Tokyo, where it is difficult to acquire large parcels of land, we have cultivated the capability of “LandInnovation,” which has enabled us to continue our business, primarily through redevelopment. At the same time, we have also built up
expertise in urban development that contributes to solving regional issues through our business. With these strengths as the source, we
As a comprehensive developer that provides such social assets, we have identified “Disaster Resistant,” “Environmentally Friendly,”“Together with the Community,” and “People Friendly” as our materiality in value creation and ESG management. In addition to office

The Sumitomo Realty Group’s
Business Strategy

Disasterprevention

aim to maximize our corporate value that creates both economic and social value.

building leasing, in each of our businesses including condominium sales, remodeling, custom home construction and brokerage, we have
employed our own ingenuity, built competitive business portfolios, and expanded our businesses.

Environment

Going forward, we will continue to take on challenges of creating new value considering materiality mentioned above, and aim toEven bettersocial assets

Peoplerealize sustainable growth and development together with the city, providing “New Value” to people’s daily lives.

Source of Value Creation

Business Expansion
Materiality

Competitive
Business
Portfolio

P.29

P.35

Solving Social
Issues throughRedevelopment

Example:Shinchiku Sokkurisan
Remodeling

P.31

P.37

Taking on
the Challenges ofCreating New Value

P.39

P.41

	Shinjuku Sumitomo
Building and“Sankaku Hiroba”
Ariake Garden
	Haneda
Airport Garden	Actively Investing in“Mumbai, India,”a Growing Market

Disasterprevention
DisasterResistant
Environment
Environmentally
Friendly
Community
Together with
the Community

People Friendly

Integrated Report 2023

E liminating densely built-up area with wooden housesWidening narrow streets and separating pedestrians and vehicles
Adoption of seismic isolation and damping systems
Installation of emergency power generators
Providing a disaster-prevention base (e.g. shelter for stranded
commuters in the event of disaster)Create buildings and cities
that are comfortable andhave lower environmental
impact doption of highly-efficient energy-saving and water-savingAequipment
Promoting and preserving greenery in cities to ensurebiodiversity
Reducing waste emission
Requesting for supplier cooperation

Create and operatebuildings and cities aiming
for sustainable
development together withthe community

 rban development that coexists with the communityUAttracting a new population (community revitalization)
Creating liveliness through town management
Support for the formation of communities including mutual
assistance

Create buildings and cities
that are comfortable foreveryone
Develop human resources
to increase corporate value

 rban development based on universal designUPromoting barrier-free housingProtection of human rights
Promoting open and vigorous workplaceFostering diverse human resources

Sumitomo Realty & Development Co., Ltd.

Consolidated Financial and Nonfinancial Data / Company Information

PeopleCreate bases for a safe andsecure living environment
by developing disaster
resistant buildings andcitiesThe Sumitomo Realty Group’s
ESG management

History of Value
Creation and
Our Strengths

Enhancement ofCorporate Value
through Four
Mainstay Businesses

Value
Creation
Process

Examples of Initiatives

Business Review

Capabilityof “LandInnovation”

27

The Sumitomo Realty Group’s
Value Creation

Community28

The Sumitomo Realty Group’s Value Creation

History of Value Creation and Our Strengths

1974
Shinjuku Sumitomo
Building

1998
Shibuya Infoss Tower

1998
Chiyoda First Building
East

2000
Sumitomo Fudosan
Iidabashi First Building

2000
Sumitomo Fudosan
Shibakoen First Building

2002
Izumi Garden Tower

2003
Sumitomo Fudosan
Shinjuku Oak Tower(1,000 m2)(Billion yen)

5,000

300

The Tokyo office building market: the world’s largest
market backed by a pool of diverse tenants
A comparison of the office stock of the world’s business centers indicates thatTokyo, with approximately 17 million tsubo (1 tsubo ≈ 3.3m2) in gross floorarea, boasts the largest office market, compared to London with approximately
8 million tsubo and New York with approximately 12 million tsubo. Additionally,
Tokyo’s market is unique among the world’s market in that the major domestic
companies of all industries are headquartered in Tokyo and that it is backed bya pool of diverse tenants. We have consistently expanded our office building
leasing business for the past 50 years, achieving sustainable growth, andestablishing a competitive advantage with a wide-ranging portfolio of over 230
buildings in the major business areas of central Tokyo.

The Sumitomo Realty Group’s
Business Strategy

Major Building Development Projects

Ordinary
ProfitA Message from the Management

The real estate leasing business primarily involving office buildings in central Tokyo has been the driving force of our growth to date. Accounting for nearly
70% of the Company’s operating income overall, the leasing business is clearly the main pillar of the Company’s operation and the core of its corporate value.
We have been expanding our business platform by promoting the development of office buildings with a specific focus on central Tokyo over roughly
half a century since the early 1970s. Despite various changes in the business environment, we have consistently persisted with respect to unwaveringly
adhering to the management policies based on a long-term perspective, namely that the Company does not pursue temporary gains by selling assets; theCompany holds ownerships of the buildings constructed on sites it has developed; and that the Company generates stable leasing over the long term byowning and leasing such buildings. As a result, we have established a solid earnings base that is resistant to the fluctuation of economic trends.

Gross
Floor Area

250
4,000

2004
Chiyoda First Building
West

200

The Sumitomo Realty Group’s
Value Creation

3,000

2004
Shiodome Sumitomo
Building

2005
Tokyo Shiodome
Building

2006
Sumitomo Fudosan
Mita Twin Building
West

2009
Sumitomo
FudosanAobadai Tower

2010
Shinjuku Central Park
City

2010
Sumitomo Fudosan
Iidabashi First Tower

2011
Sumitomo Fudosan
Shinjuku Grand Tower

150

2012
Sumitomo Fudosan
Shibuya Garden Tower

2,000

Business Review

100

2015
Tokyo Nihombashi
Tower

2016
Sumitomo Fudosan
Roppongi Grand
Tower

2016
Sumitomo Fudosan
Shinjuku Garden Tower

2018
Sumitomo
FudosanOsaki Garden
Tower

2019
Sumitomo Fudosan
Shinjuku Central
Park Tower

2019
Sumitomo
Fudosan
Akihabara First
Building

2020
Sumitomo
Fudosan
Kojimachi Garden
Tower

2023
Sumitomo FudosanTokyo Mita Garden
Tower

2023
Sumitomo Fudosan
Shinjuku First Tower

1,000
The Sumitomo Realty Group’s
ESG management

50

Ordinary Profit / Gross Floor Area
Ordinary Profit

Gross Floor Area

(Years ended/ending March 31)*Non-consolidated figures until 1977

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
1970/3(Forecast)

0

0

2030
2028

The source of our corporate value creation

The basis for our value creation model

Capability of “Land Innovation”“Redevelopment” for the Community

Acquisition of development sites is the most important aspect of the development of buildings. We have been redeveloping sites by purchasing and assembling small
parcels of subdivided land in central Tokyo where large parcels of land are rare, and coordinating the rights and interests of landowners. Today, the capability of “LandInnovation” have become our greatest strength and the source of corporate value creation. Capitalizing on the capability of “Land Innovation” as well as the
management foundation and other strengths we have cultivated so far, we intend to further expand our profitability and increase corporate value.

Through redevelopment, we have been addressing issues facing the community by improving the disaster preparedness of areas that are at risk such as densely
built-up areas with wooden houses still seen in Tokyo’s urban areas and providing safe transportation infrastructure. Our track record of development has
resulted in deepened relationship of trust with landowners and local government officials, ensuring our constant participation in redevelopment projects. Thus,
redevelopment is the basis of our value creation model that expands profits and increases our corporate value.

Integrated Report 2023

Sumitomo Realty & Development Co., Ltd.

Consolidated Financial and Nonfinancial Data / Company Information

29

9th Plan
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

30

The Sumitomo Realty Group’s Value Creation

Solving Social Issues through Redevelopment
Redevelopment under the Urban Renewal Act - Major projects completed and planned
Project area

Shukugawa Green Town

Nishinomiya, Hyogo

33,400 Residence·Retail·Office

Nov 1977

Nishi-kanda 3-chome North-east

Chiyoda First Building East

Chiyoda Ward, Tokyo

38,800 Office·Residence·RetailOct 1998

Nakanosakaue Chuo 1-chome West

Sumitomo Nakanosakaue Building

Nakano Ward, Tokyo

36,600 Office·Residence·Retail

Apr 1999

Koraku 2-chome East

Sumitomo Fudosan Iidabashi First Building

Bunkyo Ward, Tokyo

62,900 Office·Residence·RetailMar 2000

Roppongi 1-chome West

Izumi Garden Tower

Minato Ward, Tokyo

208,400 Office·Residence·RetailOct 2002

Nishi-shinjuku 6-chome South

Sumitomo Fudosan Shinjuku Oak Tower

Shinjuku Ward, Tokyo

163,100 Office·Residence·RetailJan 2003

Nishi-kanda 3-chome North-west

Chiyoda First Building West

Chiyoda Ward, Tokyo

63,400 Office·Residence·RetailJan 2004

Mita Koyamacho East

City Tower Azabujuban

Minato Ward, Tokyo

64,600 Residence

May 2009

Osaki Station West Gate Central

Osaki West City Towers

Shinagawa Ward, Tokyo

129,100 Residence·Office·RetailAug 2009

Central Park Tower La Tour Shinjuku

Shinjuku Ward, Tokyo

153,500 Residence·Office·Retail·Multipurpose hall

Feb 2010

City Tower Sendai Kakyoin

Sendai, Miyagi

25,400 Residence·Retail·Office

Mar 2010

Koraku 2-chome West

Sumitomo Fudosan Iidabashi First Tower

Bunkyo Ward, Tokyo

78,400 Office·Residence·Retail·Multipurpose hallApr 2010

Hachioji Station South Gate

Southern Sky Tower Hachioji

Hachioji, Tokyo

99,800 Residence·Office·RetailNov 2010

Nishi-shinjuku 8-chome Naruko

Sumitomo Fudosan Shinjuku Grand Tower

Shinjuku Ward, Tokyo

179,800 Office·Residence·Retail·Multipurpose hall

Dec 2011

Ageo Nakasendo East

City Tower Ageo Ekimae

Ageo, Saitama

39,900 Residence·Office·RetailDec 2012

Asahi-dori 4-chome

City Tower Kobe Sannomiya

Kobe, Hyogo

92,900 Residence·Hotel·RetailMar 2013

Hiroshima Station South Gate B Block

City Tower Hiroshima

Hiroshima, Hiroshima

125,500 Residence·Retail·Office

Aug 2016

Roppongi 3-chome East

Sumitomo Fudosan Roppongi Grand Tower

Minato Ward, Tokyo

210,500 Office·Residence·Retail·Multipurpose hall

Oct 2016

Kokubunji Station North Gate

City Tower Kokubunji The Twin

Kokubunji, Tokyo

93,200 Residence·Retail·Office

Mar 2018

Nishi-shinagawa 1-chome

Sumitomo Fudosan Osaki Garden Tower

Shinagawa Ward, Tokyo

222,000 Office·Residence·RetailAug 2018

Oi 1-chome South No.1

City Tower Oimachi

Shinagawa Ward, Tokyo

60,600 Residence·RetailJul 2019

Kanda-neribeicho

Sumitomo Fudosan Akihabara Ekimae Building

Chiyoda Ward, Tokyo

30,800 Office·Residence·RetailAug 2019

Tokorozawa Station West Gate North

City Tower Tokorozawa Classy

Tokorozawa, Saitama

38,500 Residence·RetailMay 2021

Musashi-koyama Ekimae-doriCity Tower Musashi-koyama

Shinagawa Ward, Tokyo

53,500 Residence·RetailJun 2021

Mita 3- and 4-chome

Sumitomo Fudosan Tokyo Mita Garden Tower

Minato Ward, Tokyo

229,000 Office·Residence·RetailFeb 2023

Nishi-shinjuku 5-chome North

Sumitomo Fudosan Shinjuku First Tower

Shinjuku Ward, Tokyo

135,000 Office·Residence·RetailMar 2023

Nakano 2-chome

Sumitomo Fudosan Nakano Ekimae Building

Nakano Ward, Tokyo

99,000 Office·Residence·RetailFeb 2024(expected)

In areas such as those densely built-up with wooden houses and underutilized despite their urban location, we promote urban redevelopment that aims
for high utilization of land, improvement of disaster preparedness by making buildings
fireproof and earthquake resistant, and community revitalization.
Below are typical cases of our urban redevelopment. In this project, we promoted
successive redevelopment in two neighboring blocks where wooden houses were densely
built-up in central Tokyo.

The Sumitomo Realty Group’s
ESG management

Koraku 2-chome West

Completion

March 2000

April 2010

Gross floor area
(approx.)

62,900 m2

78,400 m2

Purposes

Office, residence, retail

Office, residence, retail, multipurpose hall

Building

X

Building

A
D
B

C
C

B
Land

A

D
B

D

Consolidated Financial and Nonfinancial Data / Company Information

Integrated Report 2023

Business Review

Nishi-shinjuku 6-chome West No.6
Kakyoin 1-chome No.1

(Sumitomo Fudosan Iidabashi First Building) (Sumitomo Fudosan Iidabashi First Tower)

Redevelopment under the Urban Renewal Act

31

Completion

Shukugawa Station Front No.1

Koraku 2-chome East

The Urban Renewal Act of Japan was enacted
in 1969 to ensure the effective utilization ofland through the improvement of the densely
populated urban areas in an integrated andcomprehensive manner. Through the communal
use of small parcels of land and thedevelopment of public facilities such as parks
and roads, it enables buildings to be rebuilt
into high-rise structures, significantly increasing
the floor area. The landowners acquire floor
space in the redeveloped building
commensurate with the value of the land or
building prior to redevelopment and thedeveloper (the Company) covers the projectfunds including the construction costs andacquires the remaining floor space.

Main purposes

The Sumitomo Realty Group’s
Value Creation

Unlike other major developers in Japan, we started with a mere three buildings in 1949 following the breakup of the conglomerates and it was only fromthe 1970s that we made our full entry into the business of developing office buildings in central Tokyo. Therefore, instead of reconstructing buildings we
owned or purchasing sites through competitive bidding, we focused on a redevelopment method by integrating multiple small parcels of land into alarger scale through persistent efforts, to maximize the site value. In this way, we continued developing superior assets, expanding our business platform
and increasing our corporate value.
We have been working on redevelopment pursuant to the Urban Renewal Act that requires the formation of a consensus among multiple landowners
and consultations with the authorities, in the areas of central Tokyo that had high potential but had issues such as low utilization and high disaster risks.
In the redevelopment, we have improved the city infrastructure including disaster-prevention functions through joint projects aiming at intensive land use
encompassing the area, as well as eliminating densely built-up areas with wooden houses and widening narrow streets. In addition, we have promoted
the creation of new value by sustainable urban development, contributing to the revitalization of the community.

Location(As of March 31, 2023)

The Sumitomo Realty Group’s
Business Strategy

Osaki Garden City

Main building

Gross floorarea m2(approx.)

A Message from the Management

Sustainable urban development to improve disaster preparedness andrevitalize the community

Land

C
A

B

C

D

Before redevelopment

After redevelopment

ABCD: Rights holders

X: Developer

X

Koraku 2-chome East (Before)

Koraku 2-chome West (Before)

Two sites after development

Sumitomo Realty & Development Co., Ltd.

32

The Sumitomo Realty Group’s Value Creation

Solving Social Issues through Redevelopment

Most redevelopment sites have their own particular set of challenges. We work to build a consensus with landowners, residents in thevicinity, and the local authorities to solve those challenges with the local characteristics in mind and to develop functions of theredevelopment sites in line with the area growth.

In addition to solving local challenges by developing robust buildings and improving the surrounding roads, we believe that continuously
revitalizing the community and maintaining the connections with surrounding communities are also important in urban development.
With this in mind, we also focus on area management such as holding events at its public open spaces for the community to interact.

Example | Osaki Area

Example | Roppongi Area

In the case of the Osaki area, we built an office building and a condominium as well as created spacious green open public spaces
covering some 8,000 m2, in order to formulate a complex of urban area and develop urban functions around the station.
The redevelopment project improved the disaster preparedness of the community by eliminating a densely built-up area with wooden
houses, integrating those houses into a large fire-resistant building, and developing the surrounding area such as widening narrowroads. In addition, it has also contributed to promoting universal design of the area by eliminating a large difference in elevation, andproviding open spaces for community building and as a disaster-prevention base.

In the Roppongi area, at the IZUMI GARDEN large urban block covering an area of approximately 6 hectares lying across bothsides of the Roppongi-itchome Station, we promote area management that contributes to the sustainable value creation of
the cities, including seasonal entertainment that creates liveliness, as well as events aimed at raising awareness of disaster
preparation and fostering a sense of mutual aid in collaboration with the local communities, tenant companies, fire departments,and others.

The Sumitomo Realty Group’s
Business Strategy

2. Striving for continuous community revitalization

A Message from the Management

1. Solving various challenges of the community, such as densely built-up wooden houses

IZUMI GARDEN(Site area: approx. 43,300 m2, Gross floor area: approx. 418,900 m2)

Osaki Garden City
(Site area: approx. 30,100 m2, Gross floor area: approx. 222,000 m2)

Izumi Garden Tower

Completion

October 2002

Sumitomo Fudosan
Osaki Garden Tower

Gross floor area

Approx. 208,400 m2

January 2018

Purposes

Office, residence, hotel, retail, museum,multipurpose hall

Gross floor area

Approx. 178,100 m2

Purposes

Office, retail, etc.

Before development of Izumi
Garden Tower

Osaki Garden Residence
Completion

August 2018

Gross floor area

Approx. 41,400 m2

Purposes

Residence (423 units), office, etc.

The Sumitomo Realty Group’s
Value Creation

Completion

Main building

Before development ofOsaki Garden City

After development
Left : Sumitomo Fudosan Osaki
Garden Tower
Right: Osaki Garden Residence

Main building

Sumitomo Fudosan
Roppongi Grand Tower

Completion

October 2016

Gross floor area

Approx. 210,500 m2

Purposes

Office, residence, retail, multipurpose hall

Two sites after development

1

Examples of area management to promote revitalization of local community formation

1 Enhancement of disaster preparedness by eliminating the densely

Events held in the pastbuilt-up area with wooden houses and narrow streets
The site used to be a densely built-up area with wooden houses exposed to highrisk of fire and the streets were narrow, making it difficult for emergency vehicles
to enter the area. The redevelopment realized a safe and secure community
through improvement of roads around the site to ensure safety for the pedestrians
and to allow the smooth flow of vehicles as well as fireproofing the buildings.

The Sumitomo Realty Group’s
ESG management

2

City development to tackle the challenges
facing the community

Business Review

Before development of Sumitomo
Fudosan Roppongi Grand Tower

2 Promotion of universal design of the area by eliminating a large

3

Cherry Blossom Festival – An art object featuring cherry blossoms

Cherry Blossom Festival - Cherry trees illuminatedChristmas Illumination

Disaster-Prevention Fair

Summer Festival

Marche’ Event

Consolidated Financial and Nonfinancial Data / Company Informationdifference in elevation
The site used to have a difference in elevation as large as eight meters andexperienced land collapse. The project created a landscape design with gentle
undulations and eliminated the large difference in elevation. It also built stairs
and installed elevators connecting the area with the surrounding downtown area
and the station to allow everyone to move easily.
3 Creating open space for interaction among the community and as adisaster-prevention base
The site used to be an industrial area with little greenery and lacked places forpeople to gather due to a densely built-up area with housing. Through thisredevelopment, spacious green open public spaces covering some 8,000 m2 werecreated, encouraging interaction among the people and bringing liveliness in thecommunity, as well as serving as a disaster-prevention base in the event of an
emergency.

33

Integrated Report 2023

Sumitomo Realty & Development Co., Ltd.

34

The Sumitomo Realty Group’s Value Creation

Leasing

Office building and affiliated businesses (rental apartments, hotels, multipurpose halls, etc.)

1997
2000
2002
2020
2023

Opened Hotel Villa Fontaine – Developed with the concept of “high-grade
economy,” challenging the norms of business hotels of the time
Launched “La Tour” series of luxury rental apartment
Opened Izumi Garden Gallery – Began full-scale operation of multipurpose
halls business
Fully opened Ariake Garden, a large-scale complex
Fully opened Haneda Airport Garden directly connected to the airport

Hotel “Villa Fontaine”

Multipurpose hall “Bellesalle”

2014 - 2019
2020
2023

35

P.55

Commenced Shinchiku Sokkurisan remodeling business

1995

Commenced American Comfort custom home construction business

Commenced Shinchiku Sokkurisan condominium remodeling business

2003

Launched J·URBAN urban-style housing series

2000

Expanded its business to 46 prefectures throughout Japan (excluding Okinawa)2021

Launched “SUMIFU x ENEKARI,” new solar power generation service

2021

Began offering high thermal insulation remodeling plan2022

Launched “SUMICA,” adopting ZEH as the standard specification

2022

Cumulative total of units contracted exceeded 160,000

Sumitomo Real Estate Sales Co., Ltd.

P.61

We entered the existing housing brokerage business in 1979 as Sumitomo
Real Estate Sales, a consolidated subsidiary. Committed to store developmentof the directly operated brokerage offices, we have built up a finely tuned
and community-based
sales structure under the
principle of “CustomerFirst.” Our brokeragebusiness has continued
to grow while responding

to the needs of the times, including opening brokerage offices dedicated to
condominiums, and the introduction of a highly transparent and fair brokeragesystem that incorporates digital technologies.
1975

Established Sumitomo Real Estate Sales Co., Ltd.

1979

Entered the existing housing brokerage business

2001

The number of STEP brokerage offices exceeded 200

2019

Opened “Mansion Plaza” brokerage offices

2021

Launched real estate DX service “STEP Auctions”

Historical operating income(Billion yen)250

The COVID-19
Pandemic

Sales
Construction
Brokerage
Others200
The Global
Financial Crisis

150

100

City Towers Tokyo Bay

50

Number of condominium units brought to market over the full year was
the highest in Japan for the sixth consecutive year
Introduced “Remote Condominium Sales”

0Integrated Report 2023

After

1998

Completed Yono House, the first high-rise condominium that adopted
integrated design in Japan
Completed the World City Towers, large-scale condominiums for inner-city
living (over 2,000 units, the largest in Japan at the time)
Opened “Grand Mansion Gallery”

Launched new membership-based web service“fureai+S of Sumitomo Realty & Development”

After housing development in the United States in the 1970s, we started
full-scale operation in Japan in 1982. We have increased our market shareespecially in metropolitan areas with the competitiveness of the productline-up which stands out for the urban modern exterior design and highgrade facilities. In May 2022, we have launched a new product with thelatest ZEH standard as its standard specification, and are focusing ourefforts on the promotion of decarbonization, which is a social challenge.

Consolidated Financial and Nonfinancial Data / Company Information

2011

P.59

The Sumitomo Realty Group’s
ESG management

2007

Custom homes

Business Review

Since its Launch in the 1960s, we have established a reputation as apioneer in condominium sales and leveraged our expertise developed in theoffice building leasing business by integrating multiple small parcels of land
into a larger scale. Since the 2000s, we have increased our share of supply
in the industry and expanded our business.
We have increased our competitiveness in this market with a sales policythat is not insistent on selling out all the units on the sale-date, our unique“Dynamic Panorama Windows” that enable residents to enjoy the view,which is an appeal of high-rise condominiums, Grand Mansion Gallery, acomprehensive information center that introduces all of our available
properties in one place, e-contract, Remote Condominium Sales service thatoffers online property showings, and other customer-first unique plans andservices.
1976

Izumi Garden Tower

Condominium sales

Construction

1996

Brokerage

Haneda Airport Garden with about 80 shops

Sales

The Shinchiku Sokkurisan remodeling business was launched a year after
the Great Hanshin-Awaji Earthquake, the devastating earthquake whichhappened in 1995. It has been well-received by customers with agroundbreaking business model such as seismic reinforcement as astandard specification and clear fixed-price system, providing safe andsecure housing at 50-70% of the price for rebuilding. Having expanded thebusiness nationwide, a cumulative total of units contracted has exceeded
160,000.

BeforeLuxury rental apartment “La Tour”

P.57

P.49

• Rental apartments Owning and operating a total of about 6,000 units• Hotels
Operating a total of 21 hotels / 5,385 rooms• Multipurpose halls Operating over 30 facilities• Retail facilities	Sumitomo Fudosan Shopping City Ariake Garden with about
200 shops(As of March 2023)

Shinchiku Sokkurisan remodeling

The Sumitomo Realty Group’s
Value Creation

In our leasing business, since the early 1970s, we have built up our portfolio
centered on office buildings in Tokyo, and have pursued urban development
by positioning office buildings at its core. In the urban development, wehave developed rental apartments, hotels, multipurpose halls, retail facilities,
and other facilities in addition to office buildings, for multi-purpose use withthe aim of revitalization of local communities through improved
convenience and creation of liveliness, reflecting the characteristics of theareas. By directly managing and operating these businesses, it hascontributed to enhancing the value of the area and to the expansion of theCompany’s earnings base.

Construction

The Sumitomo Realty Group’s
Business Strategy

With our capability of “Land Innovation” as the driving force, in addition to establishing the foundations for sustained growth centered on the revenue
from our office building leasing business, we operate leasing-related businesses such as rental apartments and hotels, and the real estate-related
businesses such as condominium sales, remodeling, custom home construction and brokerage, which contribute to solving local and social issues as acomprehensive developer.
Not only in office building business but also in these other businesses, we have expanded our business by creating new and highly competitive
products and services based on unique innovations we developed with new ideas, not bound by industry customs and common sense.
For example, Shinchiku Sokkurisan, a full remodeling system instead of rebuilding launched as a new business in 1996 after the bursting of the bubble
economy, introduced a cutting-edge business model never seen in the industry before. Shinchiku Sokkurisan has been supported by many customers for
not only the improvement of disaster preparedness but also its clear fixed-price system and environmental performance, and has grown into a leading
brand in the industry.
In addition, each of our businesses continues to create value that will be needed in the future, while responding to the demands of the times.

A Message from the Management

Enhancement of Corporate Value throughFour Mainstay Businesses

Leasing

World City Towers

City Towers Tokyo Bay
Entrance hall

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
(Forecast)(Years ended/ending March 31)
1st Plan

2nd Plan

3rd Plan

4th Plan

5th Plan

6th Plan

7th Plan

8th Plan

9th Plan

Sumitomo Realty & Development Co., Ltd.

36

The Sumitomo Realty Group’s Value Creation

Enhancement of Corporate Value through Four Mainstay Businesses

Extending useful life and reducing environmental burden by enhancing
functionality through renovation

Social issues concerning houses in JapanInsufficient earthquake resistance and low
thermal insulationL ow thermal insulation causing increased
energy consumption
E nvironmental impact from waste generated
when rebuilding

Through the
Shinchiku Sokkurisan
remodeling

1 Realizing extended useful life

Earthquake-proofing and seismic retrofitting
Revised floor plans to suit lifestyles
2 	Reducing energy consumption by installation of solar

power generator and improvement of thermal insulation
performance
3 Reducing environmental impact

Great Hanshin-Awaji Earthquake of 1995 with the desire to renovate
existing houses to make them earthquake resistant without the high cost
the industry’s foremost track record for large-scale remodeling, featuring
seismic reinforcement work and a clear fixed-price system. Since its
launch in 1996, the cumulative total of units contracted exceeded
160,000 units (as of September 30, 2022). Today, Shinchiku Sokkurisan
has become so popular across the nation that it is a brand synonymouswith full remodeling. By leaving main structural components intact andimproving housing functionality without rebuilding, the Shinchiku
of existing houses, but also to addressing the social issues concerning
houses in Japan by being environmentally friendly, i.e. minimizing
industrial waste, CO2 emissions, and waste of resources.

the Great Hanshin-Awaji Earthquake of 1995. Subsequent research
revealed that many old houses were left without rebuilding, despite

precious lives. As such, it offers a full lineup mainly from “fullremodeling” which transforms a house into a safe/secure andearthquake-resistant one while utilizing the existing structuralelements, to “partial reform,” according to the customers’ various
needs and budget.

With earthquake
resistance
40.5 million units*

2 Energy-saving standards (thermal insulation performance)of housing stock (about 50 million units)

Total:

50 million

Current
standards
only 11%22%

1992
standards*1

units(no thermal
insulation, etc.)

37%1980 standards*2*1: Standard established in 1992, pursuant to the Act on
Rationalizing Energy Use*2: Standard established in 1980, pursuant to the Act on
Rationalizing Energy Use

570

15,120Integrated Report 2023

USUK

12,95072,700 40,540

3,520

Shinchiku Sokkurisan offers proposals mainly for seismic reinforcement work that meets thegovernment’s safety standards, based on earthquake resistance diagnosis. Moreover, in
preparation for increasingly severe earthquakes, we have developed a new proprietary
method and provide optimal seismic reinforcement and damping plans for houses of all ages.
In addition to functional enhancement, we offer solutions reflecting customers’ lifestyles
such as changes in family structure and aging by layout changes, extensions, downsizing
and transforming the house into a two-family house. In this way, we are promoting
extended useful lives of houses without rebuilding.

2 Enhancing thermal insulation of existing houses and promoting
Shinchiku Sokkurisan’s high thermal insulation remodeling plan enables existing houses
with low thermal insulation performance to achieve a thermal insulation performanceequivalent to the energy conservation standards for newly-built houses. This plan is available
to the entire house or even to just individual rooms, enabling an increase in the thermal
insulation performance only where it is necessary. In addition, “SUMIFU × ENEKARI”
enables customers to install solar power generation equipment at net zero cost, together
with seismic reinforcement. Through these new services, we will further contribute to therealization of a carbon neutral society by reducing CO2 emissions from housing.

3 Reduction of environmental load through waste reduction
Shinchiku Sokkurisan remodeling contributes to the reduction of the environmental burden
through seismic reinforcement while the principal structural elements of the house areretained, thus minimizing industrial waste discharge, CO2 emission, and waste of resources,
compared to demolition involved in building a new house.
RepairOther demolition

Public sector
civil engineering

Released the results of joint research on the decarbonization
effect of building renovation

Verifying the adoption of ZEH andPart II achievement of life cycle carbon minus
through renovations

Consolidated Financial and Nonfinancial Data / Company Information

Building work/
Renovation
Private sector civilengineering

37

Japan

Source: H ousing Economics Data: International
Comparison of Average Age of Houses
Deregistered (2021) , Ministry of Land,
Infrastructure, Transport and Tourism.

installation of solar power generation systems

11
%
11%

30%

Not meetingthe 1980
standards

7,370
House
demolition
7,750
(51%
Total:of the demolition)

Before0

and revision of floor plans

From 1982 onward

1981 or earlier

Demolition

A house destroyed in the Great Hanshin-Awaji Earthquake,photographed by Professor Kenji Miyazawa

20

1 Extending the useful lives of houses through seismic reinforcement*Approx.

3 Breakdown of construction waste (Thousand tons)

After

38.2

1 Earthquake-resistance of housing stock

The Shinchiku Sokkurisan remodeling was born from the desire toreasonable price without rebuilding in order to save

55.9

60
40

Shinchiku Sokkurisan initiatives

having structural problems, due to various reasons including costs.
find a way to make such houses earthquake-resistant at a

78.8

80

The Sumitomo Realty Group’s
ESG management

Sokkurisan remodeling contributes to not only extending the useful lives

Many houses were destroyed and many precious lives were lost in

100

Business Review

of rebuilding. Based on our concept of safe and secure housing, it boasts

The desire for safe and secure housing(Years)The Sumitomo Realty Group’s
Value Creation

The Shinchiku Sokkurisan remodeling business was launched after theInternational comparison of the averageage of houses

Social issues concerning houses in Japan

With earthquake
resistance
6.1 million units*

The Sumitomo Realty Group’s
Business Strategy

Reduction of materials used and waste generated

Although the ratio of earthquake resistant houses in Japan is increasing every year, there are still many
houses with low earthquake resistance. In addition, the rebuilding cycle of houses in Japan is shortcompared with that in Europe and the U.S., and waste from the demolition of houses accounts for a large
share of waste discharged by the construction industry. There are growing calls for shifting to a stock-type
society by extending the useful life of housing.
Moreover, although discussions have been carried out on various topics for newly constructed detachedhouses, such as improving their environmental performance toward the realization of carbon neutrality in
2050, little progress has been made toward promoting energy savings or decarbonization for existinghouses, which far outnumber new houses (there are currently roughly 50 million existing houses). As such,dealing with existing detached houses is essential for Japan’s decarbonization.

Without
earthquake
resistance
7.0 million units*

A Message from the Management

Example | Shinchiku Sokkurisan RemodelingWith the aim of establishing a new environmental evaluation method for building
renovation, we started joint research with The University of Tokyo and Musashino
University in December 2021. Following last year’s announcement, we confirmed thatthrough renovation, the adoption of ZEH and life cycle carbon minus could be achieved
without the need for special construction work, and that life cycle carbon minus could beachieved more rapidly than through new construction. ( Refer to page 66 for details.)

Sources: 1. Progress of Earthquake Proofing of Houses (2018) , Ministry of Land, Infrastructure, Transport and Tourism.
2. Housing Economics Data: Performance of Housing Stock (Barrier-Free and Energy-Saving) (2021) , Ministry of Land, Infrastructure, Transport and Tourism.
3. S tatus of Industrial Waste Associated with Demolition of Houses (36th Meeting of the Housing and Building Land Committee of the Panel on Infrastructure Development) ,Ministry of Land, Infrastructure, Transport and Tourism.

Sumitomo Realty & Development Co., Ltd.

38

The Sumitomo Realty Group’s Value Creation

Value Creation Process“Sumitomo’s Business Philosophy”

Four material issues (Materiality) to “Create even bettersocial assets for the next generation”

Create bases for a safe and secureliving environment by developing
disaster resistant buildings
and cities

Create and operate buildings andcities aiming for sustainable
development together withthe community

Create buildings and cities thatare comfortable for everyone
Develop human resources toincrease corporate value

Medium- to long-term

management strategy

Value creation

through our business

OUTPUT

Sustainable urban development
P roduct planning with long-lasting
appeal (long-selling products)
Supply of disaster-resistant office andhousing

Social Value

Creation of high value-added assets
Expansion of a profitable, stable,
and sustainable earnings baseCreation of “New Value”
Solving social issues
Creation of sustainable assets

Social Issues
Climate change
Natural disasters
Population decline
Declining birthrate and aging population
Diversification of stakeholder needs
etc.

Consolidated Financial and Nonfinancial Data / Company Information

Integrated Report 2023

 igh level of energy-saving performance and operation withH
external certifications
Promotion of widespread use of green power
Sustained growth and record-high profits
Sustainable dividend increase and shareholder returns
Giving back to employees

Economic Value

Achieve sustainable growth39

Custom Homes
Real Estate Brokerage
Retail Facilities,
Multipurpose Halls, Hotels

The Sumitomo Realty Group’s
ESG management

Improvement of functionality and resilience of cities
Promotion of decarbonization
Promotion of urban greening
Promotion of universal design in cities
Revitalization and development of the community
Improvement of working and living environments
Extension of the life of stocks, and resource saving/
circulation
Contribution to SDGs

Create buildings and cities thatare comfortable and have lower
environmental impact

Business Review

OUTCOME

People Friendly

Redevelopment(Urban development)
Office Buildings
Condominiums
Shinchiku Sokkurisan
Remodeling

Major Management Resources
 apability of “Land Innovation” forC
securing landOver 230 office buildings in Tokyo
Stable and high-earnings baseWell-balanced business structure
Workforce with diverse experiences andskillsExtensive customer baseetc.

Together with theCommunity

The Sumitomo Realty Group’s
Value Creation

INPUT

Environmentally
Friendly

The Sumitomo Realty Group’s
Business Strategy

Disaster Resistant

A Message from the Management

Corporate philosophy based on

together with the city
Sumitomo Realty & Development Co., Ltd.

40

The Sumitomo Realty Group’s Value Creation

Taking on the Challenges of Creating New Value
Development that improves the value of the area(materiality). Moving beyond the boundaries of our existing businesses, we are continuing to take on the challenges of creating new value in new

Ariake Garden

businesses by leveraging the expertise we have cultivated over the years, in order to “Create even better social assets for the next generation.”

The bayside Ariake area, where Ariake Garden is located, has flourished as a bustling site for events, with a growing supply

Renovating an urban high-rise building without rebuilding, and strengthening community functionsof high-rise residences and a notably high level of population growth in Tokyo. In order to further increase the value of thisShinjuku Sumitomo Building and “Sankaku Hiroba”

bayside area, we developed Ariake Garden, a large-scale complex that helps address the area’s housing shortage and theWe implemented an extensive renovation of Shinjuku Sumitomo Building, an office-use skyscraper originally completed in 1974, and in July 2020, we completed

and energy. Over its expansive, roughly 10.7 hectare area, it consists of residences, a retail facility, theater-style hall,“Sankaku Hiroba” (triangular plaza), a large space for public events. Sankaku Hiroba is an all-weather atrium of approximately 3,250 m2 created by building aperforming arts theater, hotel, spa, and plaza. In addition to providing rich lifestyle convenience and pleasant stays, it is also

gigantic glass roof over an open public space incorporated into the building’s design. The facility not just adds to the vibrancy of the Shinjuku district, where

creating further excitement by bringing in art and culture that are novel to the Ariake area.

A Message from the Management

The Sumitomo Realty Group has expanded its business by applying its unique ingenuity in each of our businesses, in consideration of material issues

Example of eventslack of convenience for visitors during their stay, and leverages the area’s features to provide it with even greater livelinessbeen renovated instead of rebuilding, it serves as a model embodying how an office building can achieve sustainability.

The Sumitomo Realty Group’s
Business Strategy

wide-ranging functions are highly concentrated, but also provides a disaster prevention function as an emergency shelter in case of large-scale disasters. Having

Ariake Halloween Carnival

As a facility positioned in the area central to bayside vitalization, we will promote continuous urban development so that
it will become the heart of community building for local residents, and contribute to the further advancement of the entire
waterfront and bayside area.
New-year event in conjunction withlocal sports team

Sumitomo Fudosan Shopping City Ariake Garden

The Sumitomo Realty Group’s
Value Creation

Tokyo Garden Theater

BeforeAriake Garden Park

Summer art and music event
Sankaku Hiroba, one of the largest all-weather event spaces in JapanSports & Entertainment Space
Hotel Villa Fontaine Grand Tokyo Ariake

(

25 m

Theater-styleHall

Shinjuku
Sumitomo Building)

22 m
effective height

Shinjuku
Sumitomo Hall

Sankaku
HirobaShops & Restaurants

City Towers Tokyo Bay

Portable shrine mikoshi festival in
conjunction with local junior highschool and high school students

Ariake Shiki Theatre

Business Review

After

Value creation at a gateway to Japan

Shinjuku’s new hub for liveliness

Haneda Airport Garden

A view of an event held at Sankaku Hiroba

A disaster prevention center for the community

Refer to “Disaster Countermeasures” on page 71.
As the Great East Japan Earthquake in 2011 highlighted the importance of disaster prevention in urban areas,
Sankaku Hiroba has been designed to serve as a temporary shelter for up to about 2,800 stranded commuters in
the event of an emergency, taking advantage of its large indoor space. At the same time as enhancing measuresfor business continuity planning (BCP) including seismic reinforcement and expansion of oil tanks and generators,
it serves as a local disaster prevention center, contributing to boost the community’s disaster preparedness.
Shinjuku Sumitomo Building has been nicknamed “Sankaku Biru” (triangular building) for its shape and adored by the
public for nearly half a century since 1974 in a period when skyscrapers started to be built in Japan. Instead of tearing
down the Sankaku Biru, we created a sophisticated interior space as fresh as a newly constructed building with highfunctionality through remodeling work, while keeping the triangular outward appearance intact. Compared torebuilding, it significantly reduced the amount of industrial waste, such as construction materials, and by introducing
energy-saving equipment on a par with that for new buildings, it reduces the environmental load. Furthermore, it
contributes to the barrier-free feature of the area with pedestrian routes designed to resolve height gaps insurrounding areas.

Drill with members of the community

Providing the hospitality and functionality expected of a global
hub airport hotel

Airport hotel with 1,717 rooms

Consolidated Financial and Nonfinancial Data / Company Information

A model embodying sustainability of office buildings

Haneda Airport Garden is a mixed-use complex designed to respond to thediverse needs for Haneda Airport as a 24-hour international hub airport. The
core facility is the largest airport hotel in Japan that offers the hospitality
and functionality expected of a global hub airport hotel. It also has various
features, such as a MICE-compatible multipurpose hall and conference
rooms, a natural hot spring with a view of Mt. Fuji and airplanes, an allweather bus terminal that connects the airport with various parts of Japan,
and a shopping area featuring Japanese culture with an extensive lineup of
approximately 80 shops and restaurants.
By fully leveraging the potential of its location, directly connected toHaneda Airport International Terminal 3, it will perform a role of further
improving Haneda Airport, a gateway to Japan, as a new hub that enhances
convenience for international travelers and creates a vibrant atmosphere forurban international-exchange tourism.
In addition, going beyond the operation of facilities adjacent to the
airport, we contribute to the creation of one of the world’s most advanced
business areas and the sustainable development of the local community incollaboration with Haneda Innovation City and KING SKYFRONT across theTama River.

The Sumitomo Realty Group’s
ESG management

Refer to “Community Revitalization” on page 72.
The Nishi-shinjuku district, where Shinjuku Sumitomo Building is located, is not only a business center whereapproximately 200,000 people work but also an area where there is a high concentration of a variety offunctions, including large hotels, commercial facilities, universities, hospitals and residences. However, it faced amajor issue of dispersed vibrancy, due to large open spaces and a two-layered structure of roads that obstructed
the continuity of the cityscape and movements of people. Sankaku Hiroba, one of the largest all-weather event
spaces in Japan with a capacity of about 2,000 people, has become a new hub that adds vibrancy to the entire
district by hosting a variety of events.

Enhancing international exchange functions

Multipurpose hall and conference rooms
Viewing Mt. Fuji and airplanes

Natural hot spring

Connecting the airport with regional cities and tourist destinations

All-weather bus terminal

An extensive lineup featuring Japanese culture

Shopping area with approx. 80 shops
and restaurants

Façade as sophisticated as a newly constructed building

41

Integrated Report 2023

Sumitomo Realty & Development Co., Ltd.

42

The Sumitomo Realty Group’s Value Creation

Taking on the Challenges of Creating New Value

Actively investing in Mumbai, India, an overseas growing market
comparable to Tokyo—Aiming to establish a major base second to Tokyo

Mumbai – Achieving further development with enhanced infrastructure

KOPAR
KHAIRANE

Current
airport Mumbai
20km(40min.)India

New stationof high-speed
railway
CHEMBUR
BKC

Bandra East, Mumbai, Maharashtra State
22.38 billion INR (38.0 billion JPY)

20.67 billion INR (35.1 billion JPY)

Worli, Mumbai
46.7 billion INR (79.5 billion JPY)

Type of ownership

Leasehold for 80 years

Leasehold for 80 years

Freehold

Site area

12,486 m2 (approx. 3,780 tsubo)

11,885 m2 (approx. 3,595 tsubo)

80,903 m2 (approx. 24,473 tsubo)

Building scale (gross floor area)
Use

Approx. 130 thousand m2 (approx. 40 thousand tsubo) Approx. 130 thousand m2 (approx. 40 thousand tsubo)
Office building for lease

Office building for lease

WorliRoad underplanning

Gharapuri

NarimanPoint

PANVEL

Wahal

PadegharJuna Sheva

Jasai

Shirdhon

COLABA

Source: Google Maps

“Indian Shinkansen” (high-speed railway)

Connecting Mumbai and Ahmedabad in about 2 hours, covering approximately 500 km distance

Mumbai Trans Harbour Link

Connecting the center of Mumbai to the new airport under construction in Navi Mumbai acrossthe eastern shore, with a total extension of about 22 km

Sea Link

A sea bridge bypass where extension work is progressing on the western coast of the peninsula
to avoid traffic congestion in the city (scheduled to open in 2024)

Metro Line 3

Connecting major business areas from the current airport area to Nariman Point via BKC andWorli (scheduled to open in 2024)

Acquired site

Area around the acquired site

High profitability significantly exceeding
the expected return on investment in Tokyo
BKC is being developed as a financial center, with government-affiliated companies, the National
Stock Exchange, major Indian conglomerates, and foreign IT companies moving in. In the future,
the Indian Shinkansen, which will introduce Japanese technology, and new stations for new
metro lines are scheduled to open, and further development as a business district is expected.
As positioned in the upper ranks in the JLL Premium Office Rent Tracker (as of the end of thethird quarter of 2022), the rent for prime office buildings in BKC of Mumbai is at the same level
as central Tokyo. The investment efficiency is expected to yield a return more than three times
that of investment properties generally traded in Tokyo. We can expect sufficiently highprofitability even when considering risk premiums such as interest rates and exchange rates.
We believe that the development site in Worli can expect even higher profitability due tofactors such as (i) we can reduce the land cost per floor area to almost half of the BKC
properties through the acquisition of additional FAR (Floor Area Ratio), and (ii) it is a freehold
land where large-scale mixed-use development without usage restrictions is possible.

BKC

Consolidated Financial and Nonfinancial Data / Company Information

Integrated Report 2023

Mumbai Trans
Harbour Link

The Sumitomo Realty Group’s
ESG management

Project 1 in BKC(underground excavation is underway)

Project in Worli

43

Planned new
airport site

Over 1 million m2 (over 300 thousand tsubo)

Project 1 and 2 in BKC

The site is located in the heart of the city center, where work, living, and leisure are in close proximity, surrounded by five-star
hotels, luxury high-rise condominiums, office buildings housing top-tier foreign companies, and high-end shopping malls. In India,
where land registration lacks credibility and it is difficult to eliminate the risk of litigation and other development risks, it has
been indisputably owned for about 150 years as the property of a textile company owned by a conglomerate or family business.
In addition, it is a “freehold” land with no restrictions on development use, and a vast site area of approximately 80,000 m2(about 24,000 tsubo), which is over six times the size of the first and second projects in BKC combined. Taking advantage ofthese characteristics of the site, we will advance this mixed-use development looking ahead to expanding into businesses such as
hotels, retail facilities and residential development in addition to office building, leveraging our expertise cultivated in Japan.

Sea bridge bypasses
connecting the new
and former city centers

KALAMBOLIKAMOTHESuper high-rise mixed-use development project*1. 1 INR = 1.7 JPY      *2. 1 tsubo ≈ 3.3 m2

We started the overseas expansion in BKC in 2019, with our “Tokyo office building leasing business” model of acquiring thedevelopment site independently, developing, leasing, managing and owning buildings by ourselves for the long term. In 2022, weacquired an additional site of the same scale, and are advancing the office building development plans with a total gross floorarea of approximately 260,000 m2 and an investment scale of nearly ¥200.0 billion for the two properties combined.
The first office building project in BKC, which is the foothold of our business in India, is currently under construction, and thesecond project is also proceeding with permit procedures for starting underground construction after the land handover in August2023. Both projects are progressing smoothly towards sequential completion after 2026.

Navi
MumbaiBusiness Review

Location
Acquisition value (yen equivalent)

Project 2 in BKC (site acquired in November 2022) Project in Worli (site acquired in October 2023)

TALOJA

DADAR
PAREL
Under
Under
construction
construction

Project 1 in BKC (site acquired in July 2019)

Ghot
VASHI

The Sumitomo Realty Group’s
Value Creation

MumbaiThe Sumitomo Realty Group’s
Business Strategy

Maharashtra state, which includes Mumbai where we have acquired the development sites, boasts the largest economic scale in all of India’s states,
along with a population of approximately 126 million, roughly the same as Japan. The city of Mumbai, the capital of the state, with a population of
about 18.4 million, has flourished as a port town since ancient times and is known as one of Asia’s leading financial centers, with the central bank,
National Stock Exchange (NSE), Securities and Exchange Board, headquarters of various banks, and chambers of commerce of various countries.
Furthermore, Mumbai has the highest GDP per capita in all of India’s states, with headquarters of many conglomerates such as Tata and Reliance, alongwith many employees of large corporations residing there.
Currently, efforts are underway in various parts of Mumbai to enhance infrastructure. With the development of the transportation network shortening
travel times, it is expected to support the commutes of an increasing number of office workers in the future, and enable easier access to various parts of
the world and within India, thus further enhancing development of the city.

ANDHERI EAST

Since July 2019, we have successively acquired two of the largest office building sites in BKC, a new city center of Mumbai, and are advancing the office building
development plans with a total gross floor area of approximately 260,000 m2 and an investment scale of nearly ¥200.0 billion. In addition, in October 2023, wehave independently acquired a development site of approximately 80,000 m2 (about 24,000 tsubo *1 tsubo ≈ 3.3 m2) in Worli, a new city center in the heart of
Mumbai, and we will advance a “super high-rise mixed-use urban development project,” which will be the largest urban redevelopment by a Japanese company
in India with a total project cost of over ¥500.0 billion and gross floor area of over one million m2, aiming for the full opening of the facilities in the 2030s.
Starting with this mixed-use development project, we are looking ahead to expanding into other businesses such as hotels, retail facilities and residential
development in addition to our long-term office leasing business. We will continue to further expand our business base in India, bringing together the expertisein redevelopment and various businesses that we have cultivated so far as a comprehensive real estate company, to build a major base second to Tokyo. We will
strive for business expansion in India, which will solidify our growth potential and realize further enhancement of corporate value with the collective efforts of
the Sumitomo Realty Group.

A Message from the Management

Bringing together the expertise in urban redevelopment in Tokyo that we have cultivated so far

WorliSumitomo Realty & Development Co., Ltd.

44

Business Review
Overview of Each Segment

Overview of Consolidated Results

Revenue from operations
FY2022YoY

FY2023 (F)YoY

Leasing

425.3

+ 0.2

445.0

+19.6

Sales

222.0

(11.7)

225.0

Construction

213.5

+ 9.2

Brokerage

75.1

+1.6

YoY

FY2022(Apr 1, 2022 Mar 31, 2023)

Revenue from operations

939.4

939.9

+ 0.4

Operating income

233.8

241.2

+ 7.3

Ordinary profit

225.1

236.6

+11.5

Profit attributable to owners of parent

150.4

161.9

+11.4

Leasing

165.6

+ 3.0

172.0

+ 6.3

+ 2.9

Sales

53.9

+ 3.4

54.0

+ 0.0

220.0

+ 6.4

Construction

21.4

+ 2.8

23.0

+1.5

77.0

+1.8

Brokerage

20.0

+ 2.0

22.0

+1.9

(千㎡)

Percentage ofrevenue from operations(Billion yen)

400 381.7

45%

63%

425.0

425.3



120

200



80

100



40

FY18

FY19

FY20

FY21

FY22

0

FY23
(F)

Revenue from operations

FY2022

FY2023 Forecast(Apr 1, 2022 Mar 31, 2023)(Apr 1, 2023 –Mar 31, 2024)

939.9

970.0

YoY
change

241.2

255.0

+13.7

Ordinary profit

236.6

250.0

+13.3

Profit attributable to owners of parent

161.9

175.0

+13.0

165.6

172.0
80
60

39.3

42.8

39.0

38.3

40

38.7

39.0

20
FY18

FY19

FY20

FY21

FY22

0

FY23
(F)

Sales
Percentage of
operating income

Revenue from operations

Operating income
Operating margin(Billion yen)(Billion yen)

23%

324.9

21%

233.7

222.0

(right scale)

53.9
47.1

263.3

/
(%)

60

300

50.4

46.4

53.9

40

225.0

60



40



20



54.0

200
20

100

+ 30.0Operating income

162.6

155.2

0

14.2
FY18

FY19

FY20

FY21

FY22

0

FY23
(F)

FY18

20.5

14.3
FY19

FY20

21.6

FY21

24.0

24.3

FY22

0

FY23
(F)

Construction
Percentage ofrevenue from operations

Operating income
Operating margin

Revenue from operations

Percentage of
operating income(Billion yen)

8%

2,093

221.6



218.9
188.7

200

204.3

213.5

161

100



（億円）

(right scale)(Billion yen)

(%)

30

30

220.0


/

20

20.4

21.4

20.5

The Sumitomo Realty Group’s
ESG management

300

23%

23.0

18.5

20

15.5
10

9.2

9.4

8.2

FY18

FY19

FY20

7.7

9.1

10.5

10.0

10

(Billion yen)Three-year
Cumulative Targets*

Operating income

Achievement
Rate(Apr 1, 2022 – Mar 31, 2025)(Apr 1, 2022 –Mar 31, 2023)

3,000.0

939.9

31%

770.0

241.2

31%

Ordinary profit

750.0

236.6

32%

Profit attributable to owners of parent

500.0

161.9

32%

0

FY18

FY19

FY20

FY21

FY22

FY23

0

(F)

FY21

FY22

0

FY23
(F)

Brokerage
Percentage ofrevenue from operations(Billion yen)

691

8%

8%

Operating income
Operating margin

Revenue from operations

Percentage of
operating income

80

71.8

71.1

73.4

75.1

77.0

（億円） (Billion yen)

24

65.7

/
(right scale)
(%)

20.9
18.0

60
16

FY18

FY19

FY20

FY21

FY22

FY23
(F)

0

24.5

29.2
20.5

FY18

FY19

60

40
11.4

20
0

20.0

22.0

14.5

40
8

Consolidated Financial and Nonfinancial Data / Company Information

Revenue from operations

FY2022Business Review(Billion yen)

(%)

100

300

39.4

(right scale)

200

169.4
1,393

(億円)

/

(Billion yen)

160 149.9

331.7* Announced on May 12, 2022

Integrated Report 2023

398.2

400

Progress of the Ninth Management Plan (Fiscal 2022 – Fiscal 2024)

45

395.5

445.0




0

Outlook for Next Fiscal Year (Announced on May 11, 2023)

In fiscal 2022, the first year of the plan, ordinary profit achieved a record
high for the second consecutive year, while profit attributable to owners ofparent achieved a record high for the tenth consecutive year, as describedin the above “1. Overview of Consolidated Results.”
As a result, we achieved approximately one-third of our three-year
cumulative targets for revenue from operations, operating income, ordinary
profit, and profit, as shown in the table to the right, making a steady start
toward consecutive achievement of record-high Management Plan
performance.

Operating income
Operating margin

Revenue from operations

Percentage of
operating income

500

YoY
changeYoY

延床面積 経常利益

Leasing

Percentage ofrevenue from operations

Forecasts for the next fiscal year (year ending March 31, 2024) are asshown to the right. With comprehensive strengths of the Group, we intend
to achieve increased revenue and profit in all four major segments, andrecord-high ordinary profit for the third consecutive year and record-highprofit attributable to owners of parent for the eleventh consecutive year.

FY2023 (F)The Sumitomo Realty Group’s
Value Creation

FY2021(Billion yen)

FY2022(Billion yen)
(Apr 1, 2021 Mar 31, 2022)

Operating income(Billion yen)

The Sumitomo Realty Group’s
Business Strategy

Record-high ordinary profit for the second consecutive year, and record-high profit for the tenth consecutive year
The financial results for fiscal 2022 are as shown in the table below. Revenue from operations, operating income, ordinary profit and profit all increased from theprevious year. Ordinary profit achieved a record high for the second consecutive year, while profit attributable to owners of parent achieved a record high for thetenth consecutive year.
With the comprehensive strength of the Group, achieving higher operating income in all four major segments
Looking at each segment, the steady progress in the mainstay office building business underpinned the achievement, and the decline due to COVID-19 incommercial facility business such as hotels and event halls shrank, resulting in increased revenue and profit in the leasing business. In addition, the construction
business including Shinchiku Sokkurisan remodeling, as well as the brokerage business with good performance in brokerage of existing homes, both contributed
to overall performance with their record high profits. In the sales business primarily for condominium sales, even though revenue decreased owing to a decline in
the number of units delivered, it achieved higher operating income by improved profit margins.
Non-operating loss recorded ¥4.6 billion (an improvement of ¥4.1
billion year-on-year) due to increase in dividend income and decrease ininterest expense. Extraordinary loss recorded ¥6.3 billion (an improvementof ¥0.1 billion year-on-year), almost the same as the previous year.
As a result, revenue from operations for fiscal 2022 was ¥939.9 billion(up 0.1% year-on-year), operating income was ¥241.2 billion (up 3.2%
year-on-year), ordinary profit was ¥236.6 billion (up 5.1% year-on-year)
and profit attributable to owners of parent was ¥161.9 billion (up 7.6%
year-on-year).

A Message from the Management

Financial Results for Fiscal 2022 and Progress of the Ninth Management Plan

28.6

26.7

20

17.4

FY20

FY21

FY22

FY23

0

(F)

Sumitomo Realty & Development Co., Ltd.

46

Business Review

Overview of Each Segment

Maintaining high level of profit, resulting in increased operating income
In fiscal 2022, a total of 2,961 condominium units, detached houses, and land lots were delivered (down 643 units year-on-year), including properties of which
we started delivery such as Grand Hills Minami Aoyama, City Tower Osaka Honmachi, Umeda Garden Residence, and City House Koganei Koen. Although thesegment’s revenue decreased due to the decline in the number of units delivered compared with the previous year, operating income increased with improved
profit margin by the delivery of a number of highly profitable condominium units, primarily in central Tokyo.
Steady progress in condominium contracting, securing 90% of units to be delivered in the next fiscal year
In fiscal 2022, the number of condominium units sold made good progress, and increased by 20% from the previous year to 3,702 units (up 655 units). As aresult, approximately 90% of the 3,000 units planned to be delivered in the next fiscal year were already sold at the beginning of the fiscal year (approximately
80% in the previous year).

Sumitomo Fudosan Tokyo Mita Garden
Tower(Completion: Feb 2023)
Minato Ward, Tokyo
No. of floors: 42 above / 4 below ground
Gross floor area: 196,214 m2

Grand Hills Minami Aoyama(Delivery start: Apr 2022)
Minato Ward, Tokyo
No. of floors: 18 above / 2 below groundNo. of units for sale: 105

The Sumitomo Realty Group’s
Value Creation

Steady progress in office building business with higher revenue and profit
In fiscal 2022, although administrative expenses including utility increased due to soaring energy prices, full-year operation of buildings completed in the previous
fiscal year, such as Sumitomo Fudosan Tamachi Building East and Sumitomo Fudosan Kanda Izumicho Building, as well as strong leasing of the “La Tour” series ofluxury rental apartment contributed to the Company’s performance.
The decline due to COVID-19 in commercial facility business such as hotels and event halls shrank, and as a result for this segment, both revenue and profit
increased.
High occupancy rates maintained, and positive demand grown for increasing floor areas, etc.
Vacancy rates in existing buildings remained stable at the same level as the end of the previous year, maintaining a high occupancy rate of over 90%. Currently, as
the normalization of economic activity has led to a recovery in the percentage of people working at office, there has been a positive demand, such as officerelocations for more comfortable working environment and increases in floor space for recruiting more human resources. Tenant-seeking activities are also making
steady progress for new large-scale redevelopment properties completed during fiscal 2022, including Sumitomo Fudosan Tokyo Mita Garden Tower and Sumitomo
Fudosan Shinjuku First Tower, and Sumitomo Fudosan Nakano Ekimae Building scheduled for completion in the next fiscal year.

The Sumitomo Realty Group’s
Business Strategy

Sales

A Message from the Management

Leasing

Sumitomo Fudosan Nakano Ekimae Building(Nakano 2-chome Project)(Expected completion: Feb 2024)
Nakano Ward, Tokyo
No. of floors: 37 above / 2 below ground
Gross floor area: 99,154 m2

Umeda Garden Residence(Delivery start: Jul 2022)
Osaka, Osaka
No. of floors: 56 above / 1 below groundNo. of units for sale: 584

Achieved record-high profit with increased revenue andNumber of units contracted
profit despite decreased orders■ Shinchiku Sokkurisan remodeling
In fiscal 2022, the number of units contracted decreased to 7,796 units in the(Units)
12,000Shinchiku Sokkurisan remodeling business (down 566 units year-on-year) and 2,071
10,449units in the custom home construction business (down 548 units year-on-year),
10,000compared with the previous year. We have raised prices against a backdrop ofincreasing timber and other material costs, followed by a reactionary decline from
8,000
7,534
7,506
the rush immediately prior to the price raise. In addition, orders from customers
3,077
2,990
6,000
newly acquiring land for custom homes have declined due to rising land prices for
2,527
detached houses, and these are the main reasons for the decline in orders.
2,160
4,000
However, both revenue and profit increased in this business segment andachieved record-high profit for the first time in three years, as a result of increased
2,000
revenues due to price increases in both businesses and rigorous cost control,
including the use of domestic timber.
0

Achieved record-high profit for the second consecutive year with
Number of transactions and brokerage revenues
66,310increased revenue and profit■ Number of transactions■ Brokerage revenues
In fiscal 2022, in the mainstay brokerage business primarily for existing(Transactions)(Million yen)
50,000100,000
condominiums, revenue increased compared to the previous fiscal year by increased2024*
transaction unit price, although the number of transactions decreased to 34,906
72,54975,00080,00038,1442023* 40,000 37,643
34,906(down 3,238 year-on-year).
37,71536,00071,27835,122
68,58367,063As a result, both revenue and profit increased in this segment, with revenue from62,3582022*
60,00030,000operation and operating income reaching record highs for the second consecutive year.
“STEP Auctions,” a fair and highly transparent brokerage service we introduced2021*
first in the industry in 2021, has been well-accepted by many sellers. In fiscal 2022,
40,00020,0002020*
the Company continued its efforts to further deepen its “Customer First” policy, suchas the discontinuation of sending direct mail in January which had been sent to 2019* 10,000
20,000
customers using registered information from the perspective of protecting personal
information, and shifting our focus to an advertising strategy utilizing the Internet.
00Integrated Report 2023

FY19

‘15/3

FY20

‘16/3

‘17/3

■ Custom Homes(Units)

6,000

5,000
8,362

7,796

8,200
4,000

3,000

2,619

2,500

2,071

2,000

1,000

FY21

FY22

FY23
(F)

0

FY18

■仲介件数

FY19

FY20

FY21

FY22

Consolidated Financial and Nonfinancial Data / Company Information

Brokerage

The Sumitomo Realty Group’s
ESG management

Construction

FY18

47

City Tower Osaka Honmachi(Delivery start: Apr 2022)
Osaka, Osaka
No. of floors: 48 above / 1 below groundNo. of units for sale: 855

Business Review

Sumitomo Fudosan Shinjuku First Tower(Completion: Mar 2023)
Shinjuku Ward, Tokyo
No. of floors: 35 above / 2 below ground
Gross floor area: 88,991 m2

FY23
(F)

Sumitomo Realty & Development Co., Ltd.

48

■取扱高

Business Review
Business Segments

Leasing
A Message from the Management

Office Buildings / Rental Apartments / Hotels / Multipurpose Halls / Retail Facilities
Portfolio of office buildings in central Tokyo

Ikebukuro

Ueno

Takadanobaba

The Sumitomo Realty Group’s
Business Strategy

NakanoIidabashi
Akihabara
Nihombashi

Kojimachi

ShinjukuTokyo

Roppongi

Challenges

	Demand for office buildings with better locations andfunctions	Increase in demand for office buildings with high level ofdisaster preparedness and environmental performance
Demand for office buildings that support new workstyles

Competitive Advantages
An extensive line-up of buildings in various locations and scales to meet diverse needs, primarily in central Tokyo
State-of-the-art facilities, offering high degree of functionality, comfort and environmental performance
Providing flexible spaces to meet the needs of the latest office trends
A system for offering optimal green power plans that can be selected according to the needs of each tenant company

20%

Chiyoda

11%

Chuo

7%

Shibuya7%

Tokyo 23 Wards 95%

Shinagawa7%

CBD 7 Wards* 84%

Bunkyo3%

Other wards
in Tokyo

10%

Others5%

Shinagawa
Osaki

Major flagshipbuildings
over 50,000 m2
Otherbuildings
less than
10,000 m2

Large-scalebuildings
10,000 m2 50,000 m2
Buildings
developmentin progress* Only office buildings owned by the Company
are shown on this map.
(As of March 31, 2023)* CBD 7 Wards: Chiyoda, Minato,Chuo, Shinjuku, Shibuya, Shinagawa
and Bunkyo

Providing flexible spaces that can effectively meet the office needs of the new age
As the COVID-19 pandemic recedes and economies return to normal, a growing number ofcompanies are seeking to increase the frequency with which employees work at the office. Insteadof traditional office spaces, there is a rising need for offices that will increase employees’ motivation
to come to the office. The standard floors of the buildings we supply feature large spaces free ofpillars or columns that are suitable for relocations, mergers, and the creation of new office spaces.
They can flexibly meet the diverse layout needs of companies, such as creating a space thatfacilitates internal communication and generates creative ideas, and building remote conferencing
booths. These office spaces have been well-received by our many tenant companies.
Office floor layout image

The Sumitomo Realty Group’s
ESG management

Seismic isolation/damping systems and high level of disaster-preparedness for enhanced BCP complianceShinjuku

Shiodome
Mita

Business Review

Response to increasingly diverse office needs	Compliance with increasingly high environmental
performance standards
	Strengthening disaster countermeasures in preparation forsevere natural disasters
Response to new workstyles in the post-COVID-19 era

Opportunities

30%

The Sumitomo Realty Group’s
Value Creation

MinatoShibuya

Working area with spacious seating

Solo working booths that accommodate diverse workstyles

Portfolio of office buildings catering to diverse needs

Interaction space that stimulates new ideas

Free area overlooking a green space

49

Integrated Report 2023

Consolidated Financial and Nonfinancial Data / Company Information

Tokyo is Japan’s economic center, where companies from all industry sectors congregate, creating a superior market with stability over the long term. In the officebuilding leasing business, which is the core of our real estate leasing business, our leasing portfolio emphasizes locations in central Tokyo; 95% of our portfolio
is in Tokyo’s 23 wards, and 84% is in the seven wards of the Tokyo CBD (Central Business District). Many of our buildings are located in proximity of major
railway and subway stations, offering excellent accessibility favored for a business base.
The functionality of our buildings gives us a major competitive advantage in the market. In preparation for a large-scale earthquake of the kind that haveoccurred to date, we have actively adopted seismic isolation/damping systems for our buildings, enhanced BCP compliance with uninterrupted power supply
specifications, including the installation of emergency power generators. In addition, we also have realized a high level of environmental performance byadopting highly efficient equipment and energy-saving specifications, enabling our building to acquire Green Building certification.
We will continue to build a stable earnings base through continuously supplying highly competitive office buildings, mainly in the Tokyo CBD, where demandis expected to remain stable into the future.

Meeting booths for online conferences

Sumitomo Realty & Development Co., Ltd.

50

Business Review
Business Segments

Leasing* The diagram below is for illustrative purposes only. Not all features are available in all Sumitomo Realty buildings.

Environmentally friendly technologies for office buildings

The Company strives to create office buildings that continue to function and secure the safety and peace of mind of our tenants even at times of disaster. Our
entire portfolio meets or exceeds the new earthquake resistance standards adopted in 1981, and approximately 80% of the buildings we own are structured
with a seismic isolation and/or damping system, while enhancing BCP compliance with measures for uninterrupted power supply including installation of
emergency power generators in about 70% of our buildings (100% of those completed in or after 2001). We directly manage the buildings 24 hours a day, 365
days a year, making it possible to respond swiftly to emergencies.

In the construction of new office buildings and when upgrading equipment in existing buildings, we actively install the state-of-the-art and highly energyefficient equipment in promoting the development of environmentally friendly, sustainable office buildings. Our buildings’ performance and initiatives regarding“environmental and social awareness” have been highly evaluated, and 70 buildings with a total gross floor area of 1.07 million tsubo (1 tsubo ≈ 3.3 m2)
acquired DBJ Green Building Certification. This is the largest number of buildings held among the owners of buildings in the Office Building Category. (As of
September 2023, researched by the Company)

BCP | Uninterrupted power supply / elevator restoration & flooding countermeasures

Uninterrupted power supply
Sumitomo
Realtybuildings

72-hour
power
supply77
94

B. At legal inspections: Two power transmission
systems inside building enable minimal power
supply during annual inspections* As of September 2023 (including
buildings under construction)

Multi-line power
reception system

General buildings

City gas

Dual fuel gas
turbine[Emergency power
generator]

CommonEV

3. Heavy oil
power
generation

Oil tank forgenerator
Within building premises

72

hours

Buildings with
uninterrupted
power supply

Inspection

PrivateRestroom sinks

Minimal power supply
Power outlets

Lighting

Lighting Air conditioning

Lighting Toilet flushing

Using eco building materials

EV/PHV charging stations

Sustainable
Planting cherry
blossom trees
and vegetationplans that createa distinctive seasonal feel

Air conditioning

Power outlets

Heavy oil power
generation Power supply possible to a certain extent

Long-life design witheasy maintenanceGreening of premises

Watersaving

Greening

Automatic faucets
Water-saving equipment
Green power

Power supply car required

10 days

LED lights with motion detector

EnergyefficientTransmission
suspendedPower transmission secured
even when one line breaks

Disaster-resistant medium-pressure gas pipes

Total heat exchange system

Floor vents

Power
receivingequipment

RenewableenergyDistrict heating
and cooling systems

Recycling

Power transmission continued

The Sumitomo Realty Group’s
Value Creation

2. City gas power
generation

Utilizing rain water,
reclaimed water,
and waste waterElectric blinds

Low-e double glazing glass

LED lights with brightness sensor

Inspection

Break in power transmission

Substation

Roofgreening

Decentralized HVAC system

No power supply

1. Multi-line power
reception

Solar power generation

The Sumitomo Realty Group’s
Business Strategy

A. In the event of an accidental
power outage: Ensure business
continuity with up to triple backup

Uninterrupted
power supply

Efficientair
conditioning

A Message from the Management

Disaster prevention for office buildings

Co-generation system

DBJ Green Building Certification

Provisional automatic restoration of elevators

Flood countermeasures for equipment

Avoid people being trapped in elevators and long period of
no elevator service in the event of an earthquake

Electrical equipment and parking allocated above
ground level

Service suspended

Service suspended

Keep suspended until technician arrives

Keep suspended until technician arrives

Earthquake

Earthquake

Stops atnearest floor

Stops atnearest floor
Buildings with automatic

Automatic
Inspection
machine Provisionalby
FullServicediagnosis
Inspectionoperationsuspended Automatic restoration technicianofservicesmachinebyProvisional
Full
Servicesuspended diagnosis restoration technician operationof services

STRUCTURE | Seismic isolation system

Parking

Other disastercountermeasures

Layered rubber isolator
Supports the building’s
weight and slowly moves
horizontally during anearthquake. A lead plug
placed inside absorbs theenergy of earthquakes.

Integrated Report 2023

Prepared for disaster

Emergency wells

Entrances, etc. opened up toprovide shelter for
stranded commuters

Prepared for watersupply disruption

Emergency supply
storeroom

Digital signage

Dissemination ofdisaster information, etc.

Shaking of seismic
isolation layers

Prepared for emergency

Seismic
isolation
Sumitomo Realty
buildings
Seismic
damping

Seismic-isolationbuilding

35

Earthquake
shaking

Seismic isolation/
damping system

75

Adoption rate ofseismic isolation in
new buildings
completed in/after 2014

New earthquake
resistance standard*As of September 2023 (including buildings under construction)

24-hour, year-round direct management by Sumitomo Realty employees enables swift responses even in times of trouble.

51

Manhole toilets

Temporary evacuation center

Shaking of seismicisolation building
Shaking of building
without seismic isolation

SERVICE | Direct management 24 hours a dayrisk

Parking

Sumitomo FudosanTokyo Mita Garden Tower

Sumitomo Fudosan
Roppongi Grand Tower

Tokyo Nihombashi
Tower

Sumitomo Fudosan
Osaki Garden Tower

Sumitomo Fudosan
Shinjuku Grand Tower

Sumitomo Fudosan
Shinjuku Garden Tower

Total of 14 office buildings

Providing development support and relationship-building assistance tonext generation companies
Since January 2023, we have been hosting the Toranomon Summits, an event that matches morethan 1,500 of the tenant companies in our buildings with start-up companies to help createnext-generation unicorn companies. Each of these summits has a theme, such as real estate,
construction, the environment, or finance, and 10 start-ups in these fields give presentations to
the audience, which comprises roughly 200 representatives from major corporations and venture
capital companies. The summits also provide opportunities for interacting with other participants
through social gatherings.
In addition, in May 2023, we opened Growth Toranomon, a furnished office that companies
can move into without the need for major up-front expenses. We offer a wide lineup of buildings
and diverse offices to match the business growth of tenants. Through these efforts, we aresupporting the growth of next generation companies, and establishing new and stronger
relationships.

TopicsConsolidated Financial and Nonfinancial Data / Company Information

Seismic isolation devices are installed at
the bottom of and on mid-level floors ofbuildings to absorb the shaking.
Structures that suppress the directtransmission of seismic energy to thebuilding mitigate the risk to human life,
as well as the risk of furniture toppling.

Parking

Flooding

Electrical equipment

Rapid provisional
restoration

Stops atnearest floor

Parking

Flooding• Sumitomo Fudosan
Azabujuban Building• Izumi Garden Annex• Sumitomo Fudosan
Akihabara Ekimae Building• Sumitomo Fudosan Onarimon Tower• Sumitomo Fudosan
Shinjuku Central Park Tower• Sumitomo Fudosan Shibuya Tower• Sumitomo Fudosan
Shibuya Garden Tower• Chiyoda First Building West

Mitigationof Mitigation
flood ofdamage floodrisk damage

Electrical equipment

Rapid provisional
restoration

Stops atnearest floor

countermeasures
Electricalequipment

The Sumitomo Realty Group’s
ESG management

Earthquake

Full
operation

Servicesuspended

restoration of elevators

Earthquake

technician

Servicesuspended

Buildings with automatic
restoration of elevators

General buildings

Electricalequipment

Inspection
by
Full
Inspection
technician
operationby

Properties with the best class environmental & social awareness

Buildings with flood
countermeasures
Buildings with flood

General buildings

Business Review

General buildings

General buildings

Properties that have acquired five stars

The first Toranomon Summit

Sumitomo Realty & Development Co., Ltd.

52

Business Review
Business Segments

Leasing“La Tour” series

The Villa Fontaine series is our high grade
business hotels at prime locations that offer
spacious guest rooms and stylish interiors.
Sumitomo Fudosan Villa Fontaine Co., Ltd.
operates a total of 21 hotels / 5,385 rooms,
including 16 Villa Fontaine hotels in central Tokyoand one in Osaka and Kobe respectively, twoVillage series hotels in Izukogen and Kyoto
targeting resort customers and tourists, and“inumo Shibakoen,” where guests can enjoy
staying with their dogs. In December 2022, it
opened Japan’s largest airport hotel at Haneda
Airport, and is currently operating an affiliatedbusiness, the Izumi Tenku no Yu spa. (As of
March 31, 2023)

Sumitomo Fudosan Retail Management Co., Ltd.

Five individual properties of “La Tour” series, our luxury rental apartments, have acquired the highest
ratings in “DBJ Green Building Certification” from the Development Bank of Japan Inc. (DBJ).
We have acquired the certification for the La Tour series properties with the aim of objectively
evaluating the high level of living comfort, high quality of service, and environmental performance, andutilizing the findings to further improve our quality and service.
“La Tour Osaka Umeda” is the first property in Japan that properties in Kansai area have acquired
the highest ratings in the residential category of the certification.

La Tour Minami Azabu
La Tour Osaka Umeda

La Tour Sapporo Ito Garden

Consolidated Financial and Nonfinancial Data / Company Information

Directly connected to Haneda Airport, the Haneda Airport Garden fully opened
in January 2023 to become a new hub that both enhances convenience forinternational travelers and creates a vibrant atmosphere for urban
international-exchange tourism. The core facility is the largest airport hotel inJapan, under two brands, Premier and Grand, offering a total of 1,717
guestrooms. The complex also has various features, such as a multipurpose
hall and conference rooms that enhance international exchange functions, anatural hot spring with a view of Mt. Fuji and airplanes, a shopping area withan extensive lineup of approximately 80 shops/restaurants including shops
selling Japanese cultural products and travel goods, Japan’s famous
restaurants, and a food court.

The five properties that have acquired the highest ratings

La Tour Chiyoda Fujimi

The Sumitomo Realty Group’s
ESG management

Grand opening of Haneda Airport Garden Topics— a mixed-use complex, directly
connected to Haneda Airport International
Terminal 3

Topics

La Tour Daikanyama

Business Review

Sumitomo Fudosan Retail Management Co., Ltd.
manages Ariake Garden, which fully opened on avast 10.7 hectare tract in August 2020, and Haneda
Airport Garden, which fully opened in January 2023
and is directly connected to Haneda Airport.
Ariake Garden is a commercial complex featuring
a wide variety of shops catering to diverse needs
both for every day and special occasions. It has
been well-received as it proposes a new lifestyle forTokyo Bay area while contributing to therevitalization of the community. Haneda Airport
Garden is a mixed-use complex featuring an airport
hotel, commercial area, multipurpose hall, andmore, developed as a new hub to strengthen theinternational competitiveness of Haneda Airport, agateway to Japan and global hub airport. It features
an airport hotel, commercial area, multipurpose
hall, and more.

“La Tour,” Sumitomo Realty’s luxury rental apartment— Five individual* La Tour properties have acquired
the highest ratings in DBJ Green Building Certification

Integrated Report 2023

Retail Facilities

The Sumitomo Realty Group’s
Value Creation

Sumitomo Fudosan Villa Fontaine Co., Ltd.

The Sumitomo Realty Group’s
Business Strategy

Hotels53

Sumitomo Fudosan Bellesalle Co., Ltd.

Sumitomo Fudosan Bellesalle Co., Ltd. operates
over 30 facilities with multipurpose halls andconference rooms mainly in central Tokyo. Easily
accessible and featuring an array of equipment
and fixtures, our venues are used for a wide
range of events, including exhibitions, large-scale
entertainment events, family sales, academic
conferences, lectures, shareholders’ meetings,
corporate events and social gatherings. It also
operates shared office spaces “Bellesalle
Lounges,” offering small meeting rooms andprivate rooms suitable for remote work and web
conferences. (As of March 31, 2023)

We own and operate approximately 6,000 unitsof rental apartments primarily in major
metropolitan areas. Of these, the “La Tour” series
at its core offer premium residences with great
views, high-grade specifications and facilities,
hotel-style bilingual concierge services andadvanced security systems. We operate 28 La
Tour buildings with approximately 3,800 units inareas such as Daikanyama, Roppongi, Shibuya
and Shinjuku in central Tokyo, as well as in
Osaka, Kyoto and Sapporo. (As of March 31,2023)* We have already acquired certification for La Tour complex office buildings.

Multipurpose Halls

A Message from the Management

Rental Apartments

La Tour Osaka Umeda

Sumitomo Realty & Development Co., Ltd.

54

Business Review
Business Segments

Sales
Examples of our unique customer-first products and services

A Message from the Management

Condominiums / Residential Lots
* Facilities and equipment may differ by property.

Dynamic Panorama Windows
In high-rise units, the residents can enjoy a dynamic view (a direct sky view) withan exceptionally wide range of vision, experiencing a sense of release that brings afeeling of being part of the sky, even while remaining seated.
(Conceptual drawing)	Responding to changes in housing demand with diversifying
lifestyles
Securing land that will enable new supply

Opportunities	Sustained housing demand in convenient locations both in the city
center and the suburbs
	Increased demand for housing with a high level of environmental
performance

Unit with Dynamic Panorama Windows

Enhanced common areas
Taking advantage of large-scale condominiums, we have increased our product appeal
by enhancing the common areas. As well as spacious entrance halls with a two-story
atrium, our condominiums provide extensive facilities for community interaction,
including kids’ rooms, party rooms, lounges, guest rooms, fitness rooms and remote
work rooms, which residents can readily use, offering an attractive residence.
From April 2022, we introduced “Smart lock with payment system”* that allows
residents to book and pay for these common facilities on their computer or smartphone,and then unlock the door to the booked room using a PIN. In addition to enabling
access to common facilities with non-face-to-face contact, we are also enhancing thecommon facilities of small and medium-sized properties to increase convenience andasset value.

The Sumitomo Realty Group’s
Value Creation

Challenges

The Sumitomo Realty Group’s
Business Strategy

Unit with a balcony* Scheduled for installation in 114 properties as of March 31, 2023 (Not in all our properties)

Exteriors, common area design, functions and equipment that retain their asset value for the future	Operating mainly in major cities throughout Japan — stable supply with 80% of the portfolio in the Tokyo
metropolitan area
Unique services and equipment designed for customers’ convenience and comfort
	“ZEH-M Oriented” with high energy-saving performance, standardized for all new condominiums Refer to page 24

Grand Mansion Gallery
With the concept of enhancing customer convenience and satisfaction, we offer a
one-stop service with sections for consultation, selection and experience, providing
necessary information depending on the customers’ respective purposes. The facilities
are located close to 12 conveniently accessible terminal stations mainly in the Tokyo
metropolitan area. (As of March 31, 2023)

We provide condominiums that will retain their asset value and appeal over time. They are characterized by enhanced product planning with stylish exteriors thatmake them landmarks, elegant entrances, extensive common areas, disaster-resilient and high-spec basic performance, latest housing equipment, etc. A numberof our condominiums have garnered the Good Design Award sponsored by the Japan Institute of Design Promotion.

One-stop support from consultation
Detailed information available for all of Display corner for hands-on
to property introduction by ourour properties on the market, enabling experience of housing equipment andknowledgeable and professional staff comparison and consideration of
specifications
multiple properties simultaneously

Meta Mansion Gallery®
We have opened Meta Mansion Gallery®, which provides
digital content that allows people to experience a visit to a
condominium gallery via the metaverse (virtual reality), using
video, VR concept rooms, and more. People can tour the gallery
at any time, and can also call on sales staff avatars duringbusiness hours. This enables
efficient house-hunting, such as
touring or engaging in
negotiations along with family
members and friends who live faraway.

The Sumitomo Realty Group’s
ESG management

Condominiums that retain their asset value for the future

Business Review

Competitive Advantages* Meta Mansion Gallery was registered as a trademark on July 20, 2022
(Trademark application No. 2022-0014558)

TopicsConsolidated Financial and Nonfinancial Data / Company Information“fureai+S of Sumitomo Realty & Development” — a new membership-based web
service for enhancement of group coordination
In February 2023, the Sumitomo Realty Group began full-fledged operation of its new membership-based
web service. This service, which is available to roughly 170,000 households* in condominiums managed by
Sumitomo Fudosan Tatemono Service Co., Ltd., offers products and services supplied by the Group, such asreal estate brokerage, remodeling, interior purchasing, and house cleaning, at members-only prices. We areworking to enhance coordination between Group companies and expand business operations throughinitiatives such as these services.
* Ultimately, we plan to expand this service, extending it to all customers of the Sumitomo Realty Group.

55

Integrated Report 2023

Sumitomo Realty & Development Co., Ltd.

56

Business Review
Business Segments

Construction | Shinchiku Sokkurisan Remodeling
Lower cost than rebuilding
Shinchiku Sokkurisan remodeling realizes housing renovation for about
50-70% of cost of rebuilding, responding to customers’ various needs,
lifestyles and budgets. In addition to conventional “partial reform,” it offers“full-remodeling,” which transforms the house into an earthquake resistant
one while utilizing the existing structural elements and “renovation,” which
completely refurbishes both the interior and exterior and enables flexible
layout changes.

50%

60%

A Message from the Management

Detached House Remodeling / Condominium Remodeling70%

Renovation
Full
remodeling
Rebuilding

Partial reform

0%

100%
The Sumitomo Realty Group’s
Business Strategy

Types of remodeling Shinchiku Sokkurisan covers
Resolve all your problems
with your current house

Condominium remodeling — No.1* in theindustry for 10 consecutive years* Researched by The Japan Journal of Remodeling, FY2013 – 2022
ranking of sales for condominium remodeling

Full remodeling

Renovation

Transform the house into an
earthquake-resistant one with peace ofmind while utilizing the existing structuralelements as much as possible

Complete renovation of both the interior
and the exterior with great flexibility interms of change of the layout

BeforeAfter

The Sumitomo Realty Group’s
Value Creation

Since 1998, we have pioneered the industry’s skeleton renovation businessfor condominium units. The entire exclusively-owned area is dismantled andremoved, leaving only the structural frame. Everything else — from theequipment, interior, base materials to the wiring to the plumbing —is completely renewed to allow flexible layout change and make theexclusively-owned area look like new.

Your dream comes true as if building
a custom-built house

Skeleton image

Opportunities

Challenges
	Rising costs due to increases in prices of construction materials, etc.
	Responding to diversifying needs for remodeling, and the need ofdisaster countermeasures	Responding to the need to make the approximately 50 million
existing residences energy-efficient	Rising demand for large-scale remodeling, utilizing the existinghouses	Rising demand for safe and secure housing in times of disaster	Rising demand for environmentally friendly houses

Competitive Advantages* 2023 rankings for number of large-scale remodeling (contracted units) and sales for condominium remodeling, researched by The Japan Journal of Remodeling

For details on social contribution of Shinchiku Sokkurisan remodeling, please refer to pages 37-38.

Cumulative total of units contracted for Shinchiku Sokkurisan

The Sumitomo Realty Group’s remodeling business provides remodelingincluding Shinchiku Sokkurisan full remodeling, skeleton renovations forcondominium units, and partial remodeling, meeting customers’ wideranging needs and conditions. Through our involvement in many different
housing renovations over 25 years, we have amassed a wealth of expertiseand experience in areas such as layout changes, seismic reinforcement, andhandling of different structures, which has enabled us to offer proposal- andconsulting-based remodeling. Revenue from the remodeling business topped¥100 billion for the first time in the remodeling industry in fiscal 2014, andwe have established our position as the top brand in the industry. The
cumulative total of units contracted exceeds 160,000 (as of September 30,2022), and we have built a track record of solid reliability.

200(Thousand units)

September 2022 Exceeded 160,000 units
150

100

September 2015 Exceeded 100,000 units

Business Review

New “full-remodeling” system with high social significance that contributes to solving the issues concerning
No. 1* in the industry for both detached houses and condominium units
houses in Japan
Seismic reinforcement applicable to houses of all ages
Worry-free fixed pricing system at 50-70% of the rebuilding cost
Established a system to propose ideal homes by remodeling existing houses purchased through brokerage
network of our group company

Number of units contracted forShinchiku Sokkurisan

50

0‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 ‘21 ‘22 ‘23(Years ended/ending March 31)

Shinchiku Sokkurisan remodeling — No.1 in the industry

Shinchiku Sokkurisan Remodeling
Conventional remodeling

Before57

Integrated Report 2023

Principally remodeling certain
parts of the house

Full remodeling with a price50-70% of rebuilding

Seismic reinforcement byremodeling not considered

Seismic reinforcement forpeace of mind

Estimates are based on a cost estimation
system and prices are unclear

Clear fixed-price system

Additional charges incurred due
to unforeseen circumstances

No additional charges afterwork commences

Decarbonization
Actions

Through Shinchiku Sokkurisan remodeling, we have improved residential functions and extended the useful
lives of houses through renovation, including seismic reinforcement to protect the safety and security ofresidents and thermal insulation work that improves energy-saving performance. In recent years, there havebeen growing calls for initiatives to promote decarbonization, which is one of our nation’s goals. In particular,
achieving decarbonization will require an approach that extends to Japan’s more than 50 million existinghomes. By providing renovation services, we promote the use of energy-creating and energy-saving equipment,
as described below, and help existing homes contribute to decarbonization.
High Thermal Insulation Remodeling Plan (Began accepting orders in December 2021)
It is a remodeling plan available to the entire house or even to individual rooms, ensuring the thermal
insulation performance equivalent to the energy conservation standards* for newly-built houses. The
percentage of single-month orders in September 2023 was roughly 60%, due to the high number of customers
seeking to save energy while enjoying comfort. * Compliant with 2016 energy-saving standards
Shinchiku Sokkurisan and SUMIFU × ENEKARI (Began accepting orders in April, 2022)
The combination of seismic reinforcement that supports the weight of solar panels, ensuring their safe installment and our new solar power generation
service “SUMIFU × ENEKARI” that installs solar panels and storage batteries at zero initial cost has been well-received by the customers, as it
contributes to reduction of utility cost, peace of mind in a disaster, and to the environment.

Sumitomo Realty & Development Co., Ltd.

Consolidated Financial and Nonfinancial Data / Company Information

After

New system: neither conventional
remodeling nor rebuilding

Promotion of decarbonization through renovation to safe, secure and energy-efficient housing“High thermal insulation remodeling plan” and “Shinchiku Sokkurisan and SUMIFU × ENEKARI”

The Sumitomo Realty Group’s
ESG management

Making use of the foundations and pillars of the old houses, the Shinchiku Sokkurisan remodeling system involves renovating the entire house, improving its
earthquake resistance, performing thermal insulation works, and renewing the kitchen and bathroom, floor plans, interiors, and exteriors depending on thecustomer’s needs. Since its launch in 1996, the number of units contracted has steadily grown to exceed a cumulative total of 160,000 (as of September 30,2022). As a pioneer in the full remodeling business, in addition to detached houses, we have also engaged ourselves in the full remodeling of condominium units
nationwide, establishing a new genre in an industry that until then had offered only complete rebuilding or partial remodeling.

58

Business Review
Business Segments

Construction | Custom Homes
A Message from the Management

Zero Energy House friendly to both the residents
and the environment

LED lighting

Solar power generation system

High efficiency
air-conditioning

Making net zero energy use in the home the future standard for living
We propose smart, high-quality living by our long-life house in consideration of energy
saving and the environment as Net Zero Energy House (ZEH), which is friendly to both
the residents and the environment, while maintaining living comfort.
Sumitomo Realty’s

4 Features

Balance of energy consumption
High
ThermalInsulation

Making the most of heating andcooling energy without waste

High Thermal Insulation
Comfortable living withless energy consumption

Energy Saving
Visualizing energy consumption

HEMS

Daily Energy
Consumption
Heating andcooling, Hot-watersupply, Ventilation,
Lighting

EnergySavingHEMS(Home energy
management
system)100

Balance of Energy
Consumption≒

EnergyCreation

Primary-energy consumption Reduction in primary-energy use

Eco Cute

0

Clean electricity generation for home use

Energy Creation

Breathable,
waterproof,
thermal-shielding
sheetHigh thermal
insulation
structure

Disaster countermeasures for safety and security

Eco Jozu
Triple Low-E double glass(with argon gas)

Hybrid water heaters
ENE-FARM

Highly weather-resistantresin window frame

The Sumitomo Realty Group’s
Value Creation

Disaster countermeasures for safety and security in addition to superior design and high-quality fixtures and specifications (Examples)

Opportunities

Challenges

	Rising demand for comfortable, safe/secure andenvironmentally friendly houses	Rising demand for houses that offer a high level of disaster
preparedness

	Rising costs due to increases in prices of construction
materials, etc.
	Need for environmental considerations and disastercountermeasures in line with the times

Competitive Advantages

Innovative exterior design and specifications that only a developer can provide
Leveraging our expertise gained in developing numerous office buildings and condominiums, we have incorporated innovative designs and specifications that

Potable water storage system
Fresh drinking water stored in the water pipes underfloor,
and easily withdrawn in the event of water outage

Rainwater tank
Approx. 100 liters of
rainwater stored for use in
the event of water outage

A number of Good Design Awards (Products awarded for Good Design Awards 2022)
Our product line-up has won a number of Good Design Awards* and been highly evaluated for product planning

A sunken living room that connects
to a garden of light
PREMIUM.J Itami
A space called “Ma,” which harmonizes beautifully with the townscape“Iekoji”(Home alley)
PREMIUIM.J Nagakute Creating an open living space in the community,
by introducing an alley-space from the public space to the private area

The Sumitomo Realty Group’s
ESG management

only a developer can provide, including the “J∙URBAN” urban-style housing series which feature distinctive, modern exteriors characterized by the extensive use

Power Panel — Strong bearing wallswith high magnification
Outstanding strength, able to withstanddeformation and distortion from earthquakes, etc.

Business Review

Custom homes that combine innovativeness and functionality with attractive design
High-grade interiors as a standard specification at reasonable prices
Thermal insulation and energy conservation performance that exceeds the latest ZEH standards,
and standardization of solar power generation service that enables net zero cost for customers
Standard provision of long-life quality housing through the use of proprietary earthquake-proofing technology,
and product planning for enhanced safety and environmental performance
A one-stop support system to build a house from searching for suitable land by brokerage network of our groupcompany

Seismic Control System
Seismic damping devices absorb seismicenergy and reduce shaking by
approximately 50%

of glass.

High-grade housing fixtures with interiors for luxury condominiums
We have adopted high-grade room interiors and facilities found in condominiums as standard for detached houses at a reasonable price.
• Kitchen

Adopted an original high-end kitchen made of a new ceramic material that offers optimal functionality for kitchens, including scratch
resistance, stain resistance and heat resistance, alongside expressive and beautiful design• Bathroom

Original high-end bath with tile finishes for floor and bathtub

59

Integrated Report 2023

Interior image

KitchenBathroom“SUMICA” — Ensuring thermal insulation and energy-saving performance that exceeds
the latest ZEH standards
Future homes with a sophisticated design that are friendly to people and the environment
In addition to the features already provided by our previous homes, “SUMICA,” which we launched in
April 2022, offers thermal insulation and energy-saving performance that exceeds the latest ZEH standards
and comes standard with our unique solar power generation services, enabling owners to enjoy thebenefits of solar power through the installation of solar panels and storage batteries with zero initialexpense. By promoting decarbonization throughthe widespread adoption of this brand, we willcontinue to provide safe and reliable homes thatare environmentally friendly and sustainable.
The launch of this brand has raised our ZEH
ratio (including ZEH equivalent homes) to over
90% for the single month of March 2023, and iscreating a growing demand for housing that offersa high level of environmental performance.

Decarbonation
Actions

Advanced Energy

Premium Design

High Grade Equipment

High Resilience

Sumitomo Realty & Development Co., Ltd.

Consolidated Financial and Nonfinancial Data / Company Information

PREMIUM.J Yokohama No.1

The Sumitomo Realty Group’s
Business Strategy

Net Zero Energy House

60

Business Review
Business Segments

Brokerage

Group Companies
Sumitomo Fudosan Syscon Co., Ltd.

Sumitomo Fudosan Tatemono Service Co., Ltd. conducts property
management for about 170,000 condominium units nationwide centeringon Sumitomo Realty’s condominiums after delivery. In pursuit of comfortable,
safe and secure living environments for customers, it offers services ranging
from daily building management to concierge services (consultancy forminor repair of rooms and equipment replacement, introduction of special
benefits available from the Sumitomo Group’s businesses, etc.) to respondto various customers’ needs based on abundant know-how and solid
technological capabilities. Its service includes provision of useful lifestylerelated services such as professional housecleaning.

Sumitomo Fudosan Syscon Co., Ltd. provides value-added services fromproposing interiors to handling delivery and installation prior to move-in,
primarily for Sumitomo Realty’s condominiums, rental apartments, detachedhouses, and remodeling customers. In addition, the company also offers
after-sale services such as repair and replacement. Furthermore, thecompany provides contractor services for the construction work of Group
company sales centers and for restoring rental apartments to their originalstates, and operates parking lots.

The Sumitomo Realty Group’s
Business Strategy

Sumitomo Fudosan Tatemono Service Co., Ltd.

A Message from the Management

Sumitomo Realty’s Brokerage Service - STEPThe Sumitomo Realty Group’s
Value Creation

Izumi Restaurant Co., Ltd.

Challenges
	Keeping up with further developing and deepening digitaltechnology in real estate brokerage	Expanding provision of services to the growing senior
population

Opportunities
	Continuing expansion of the brokerage market with further
increase in superior housing stock	Increased awareness of housing for new styles of living, anddiversified lifestyles

Competitive Advantages

As one of the leading brands in the industry, we have built a network of over 200 directly operated brokerage offices across Japan, focusing on the brokerage ofexisting condominiums, detached houses, and land lots. Under a principle of “Customer-First,” we have established a community-based sales structure,
responding to daily brokerage needs with expertise in local information.
Further, in order to meet the recent brisk demand for existing condominiums in central Tokyo, we are also operating Mansion Plaza brokerage offices,
specializing in premium condominiums that have high asset value. In addition, in 2021, we launched “STEP Auctions,” a new brokerage service that enables us
As a result, we recorded approximately 35,000 transactions in fiscal 2022, which makes us one of the top companies in the industry.

Operation of six ésforta fitness clubs and 13 other facilities• ésforta (6 locations)• Prime Gym (1 location)• My Golf Style (8 locations)• Prime Golf (1 location)• Bay Rhythm (3 locations)• Contracted operation and management of public facilities (8 organizations)(As of March 31, 2023)

Examples of our unique services

Izumi Kaihatsu Sangyo Co., Ltd. (Izumi Country Club)
Izumi Kaihatsu Sangyo Co., Ltd. operates a golf club conveniently locatedroughly one hour from central Tokyo by car. The club welcomes not only
members, but also non-member visitors who come to play on their own.
The clubhouse was renovated in March 2023, and the golf course has
been highly praised both for entertaining guests and for private use.

The Sumitomo Realty Group’s
ESG management

to make fairer and best proposals, as we strive to strengthen our competitiveness through the customer-first approach.

Sumitomo Fudosan Esforta Co., Ltd. operates “ésforta,” high-end urban
fitness clubs located primarily in Tokyo. Based on the concept of “assigned
instructor system,” instructors propose comprehensive fitness menus
according to the members’ individual needs by combining gym, pool, studioand nutritional programs, and provide support. The company also operates awide range of facilities such as a golf academy and fitness studios, primarily
offering yoga and dance programs. In addition, utilizing the know-how
cultivated through direct operation of facilities, the company is contractedwith organizations including municipalities to operate and manage theirsports facilities.

Business Review

Industry-leading network of directly operated brokerage offices in 249 locations nationwide (As of March 31, 2023)
High customer-satisfaction ratings
Prompt response to varying customer needs through coordination among Group companies
Unique services with a “Customer-First” principle

Sumitomo Fudosan Esforta Co., Ltd.

Izumi Restaurant Co., Ltd. provides catering services for social gatheringsand various parties, and also runs several restaurants such as a Japanesedining restaurant “Azabu Tansumachi Tenryoan,” as well as“DinaGyangDos” and “UENO Kitchen.”In addition, it runs Rieven House convenience stores within Sumitomo
Realty’s office buildings in Tokyo, offering a product mix geared to the needsof office workers.

STEP Auctions
STEP Auctions introduce properties not only to individual prospective buyers, but also to a wide range of our associating realestate brokers based on the desires of sellers and the characteristics of individual real estate properties. This service aims topromote sales that are more closely aligned with customer needs. Whereas previously, it was most common for each brokerage
office to only deal with several dozen companies, under this new service, property information is provided at once to over 7,500
registered real estate brokers nationwide, and all applications are received by the head office. This allows the speedier introductionof prospective buyers with more favorable conditions.

61

Integrated Report 2023

Sumitomo Realty & Development CA., Inc.
Hotel ownership and management

Izumi Insurance Service Co., Ltd.
General insurance and life insurance agency

Sumitomo Fudosan Villa Fontaine Co., Ltd.

P.53

Sumitomo Fudosan Bellesalle Co., Ltd.

P.54

Sumitomo Fudosan Retail Management Co., Ltd.

P.54

Sumitomo Realty & Development Co., Ltd.

Consolidated Financial and Nonfinancial Data / Company Information

Mansion Plaza
Since we first opened Mansion Plazas in June 2019 in three locations in central Tokyo, the number of Mansion Plazas grew to
20 locations in various cities in Tokyo metropolitan area, the Kansai area, the Kyushu area and the Hokkaido area (as of March
31, 2023). These offices are staffed by professionals who have excellent track record and experience in condominiumtransactions and have acquired the “Mansion Expert,” an in-house qualification for their superior knowledge of condominium
structures, equipment, market and transactions. They have been trained to acquire thorough knowledge of areas and properties
so that they can offer brokerage services based on precise assessment of asset value of properties.

62

The Sumitomo Realty Group’s ESG Management

For details about the Company’s sustainability and ESG initiatives, please refer to the Company website.
https://www.sumitomo-rd.co.jp/english/sustainability/

The Sumitomo Realty Group has been practicing Sustainability Management that inherits
Sumitomo’s Business Philosophy. We have set forth four material issues in promoting ESG
as “Disaster Resistant,” “Environmentally Friendly,” “Together with the Community” and“People Friendly.” We aim to contribute to solving community and social issues throughour business activities while maximizing our corporate value. We will also contribute to
the achievement of UN’s Sustainable Development Goals (SDGs).

Sustainability Promotion System
In order to promote sustainability across the Group, Sumitomo

A Message from the Management

Promotion of ESG andContributions to SDGs

System Diagram (As of September 2023)

Realty has established the Sustainability Committee chaired by

Sustainability Committee

the Company’s President to manage status of progress towards

Chairman: President
Administrative Office:Corporate Planning Department

the targets regarding sustainability.
In addition, its subordinate organizations, the Sustainability
Promotion Council, the BCP Council and Internal Control
BCP Council

Meeting chaired by the Head of Corporate Planning Division,
work to identify and solve issues related to corresponding
sustainability issues.
Committee, and reported to the Board of Directors asnecessary.

Major ESG Initiatives (April 2022 – August 2023)
ESG Initiatives
2022 Apr Shinchiku Sokkurisan started offering SUMIFU × ENEKARI, a new solar power generation service throughrenovating existing detached houses
Participated in the “30by30 Alliance for Biodiversity” and strengthened biodiversity conservation activities

May Established and announced CO2 emissions reduction targets by fiscal 2030

Chairman: Head ofCorporate Planning Division
Administrative Office:Internal Audit Department

Departments, Divisions, etc.

Recognition from externalorganizations and endorsementof international initiatives, etc.
The Sumitomo Realty Group hasreceived high recognition from externalorganizations for its initiatives to date,

Integrated Risk Management Committee into Sustainability Committee

and has also endorsed international

Disclosed skill matrix of each director

initiatives, etc. We continue toIntroduced numerical target for strategic shareholdings

contribute to the realization of a

Signed a comprehensive collaboration agreement on forest cultivation with Susono City

sustainable society.

Jun Shinjuku Sumitomo Building and its Sankaku Hiroba won the achievement award of Japan Association for Real

Estate Sciences, “Award of Minister of Land, Infrastructure, Transport and Tourism”
Released the result of joint research with The University of Tokyo and Musashino University on Shinchiku
Sokkurisan building renovation - Cutting CO2 emissions by 47% compared to rebuilding
Signed a comprehensive collaboration agreement with Daikin for decarbonization of air conditioning systems(Phase 1: Regeneration and reuse of recovered refrigerants)

The Sumitomo Realty Group’s
Value Creation

Launched “SUMICA,” ensuring thermal insulation and energy-saving performance exceeding the latest ZEH
standards

Chairman: Head ofCorporate Planning Division
Administrative Office:Corporate Planning Department

Internal Control
Meeting

The Sumitomo Realty Group’s
Business Strategy

Important issues are conferred with the Sustainability

Chairman: Head ofCorporate Planning Division
Administrative Office:Administration Department

Sustainability
Promotion Council

ESG indexes

Selected as a constituent of “MSCI Japan ESG Select Leaders Index”
Aug Held the 111th STEP Concert, a classic concert for families to enjoy (registration required, free invitation)

Jan Held a “PET Bottle Horizontal Recycling Event” encouraging waste separation at Shinjuku Sumitomo Building

Recognition from external organizations

The Sumitomo Realty Group’s
ESG management

2023

Business Review

Held wood education event at Ariake Garden using timber cut from the “Sumitomo Realty Forest” forest
regeneration project
Sep Conducted a visiting lecture on SDGs, “Development of Environmentally Friendly Housing” at Shishibonehigashi Elementary School in Edogawa Ward, Tokyo
Oct Replaced vending machines in office buildings with “LOVE the EARTH Vendor” powered by virtually zero CO2emissions electricity
One of our largest office buildings, Sumitomo Fudosan Tokyo Mita Garden Tower, certified as “ZEB Ready”(Zero Energy Building with energy saving of 50% or more)
Nov Sumitomo Fudosan Onarimon Ekimae Building won the award of the “Minato Model Carbon Dioxide Fixation
Certification System Awards” from Minato Ward
Signed an agreement with the major Canadian lumber manufacturer and lumber importer for promotion of
two-by-four housing supply to promote decarbonization
Feb Disclosed our Multi-Stakeholder Policy

Disclosed our Declaration of Partnership Building
Higashi-Ginza Area Management Project - Held “HIGASHIGINZA Art Gallery 2”
Started “Urban Oasis 2023,” a series of mini-concerts at public spaces of our office buildings
Held a disaster drill for operation of temporary evacuation facility as a member of an association for disasterprevention in Shinjuku Station area

Disasterprevention
Even bettersocial assets

Community

63

Integrated Report 2023

Introduced hygiene products to the emergency supplies at our temporary evacuation facilities for stranded
commuters
Recognized as a 2023 Certified Health & Productivity Management Outstanding Organization under the large
enterprise category
Apr Five properties of “La Tour,” the luxury rental apartments, acquired the highest ratings in DBJ Green Building
Certification
Jun Joint research on decarbonization through renovation by The University of Tokyo, Musashino University, andSumitomo Realty - Verifying the adoption of ZEH and achievement of life cycle carbon minus throughrenovations
Installed furniture made from timber produced in Shizuoka Prefecture in a lounge of Sumitomo Fudosan Tokyo
Mita Garden Tower

Mar

PeopleInternational initiatives, etc.
Consolidated Financial and Nonfinancial Data / Company Information

Environment

FASHION and REAL ESTATE - Collaboration with TSI Holdings for initiatives of resource circulation at officeAppointed a female outside director
Installed an original recycling box in Ariake Garden - Launched a verification project to examine the potential
for consumer behavioral changes
Aug Held the 114th Summer STEP Concert at Tokyo Garden Theater - Donated to the Japan Service Dog Association
to raise service dogsJul

* Please refer to TERMS AND CONDITIONS for details on MSCI.
http://info.msci.com/l/36252/2017-06-27/kj5n9b

Sumitomo Realty & Development Co., Ltd.

64

The Sumitomo Realty Group’s ESG Management

Environment
A Message from the Management

TopicsJoint research on “Shinchiku Sokkurisan”
POINT

Aiming to establish an environmental evaluation method for the renovations of existing detached houses
towards the realization of a decarbonized, circular society, in collaboration with The University of Tokyo andMusashino University
Research finding: Verifying the adoption of ZEH and achievement of life cycle carbon minus through renovations

Addressing Environmental Issues

Background and purpose of the joint research
For decarbonization in the household sector to achieve carbon neutrality by 2050, effective approaches are needed not only for newly constructed homes but also forexisting homes, most of which have inferior energy efficiency. However, there have been few studies quantifying the contribution to decarbonization through therenovation of existing homes, and there has been a strong demand for establishing an environmental evaluation framework for the renovation of existing homes basedon scientific methods, from the perspective of policy and system formulation. Under such circumstances, the University of Tokyo Graduate School and Musashino
University requested research cooperation from Sumitomo Realty, which has a broad-ranging track record from partial to full remodeling. With our full cooperation in
performing studies at our worksites and data provision, research began in December 2021.
Since renovating existing houses promotes
resource circulation, it has the potential tocontribute to decarbonization* For details of our initiatives, please refer to “Decarbonization Targets and Initiatives” on page 23.

We will continue to promote a variety of initiatives for environmental protection as we expand our business activities.

Three-phaseverification of issues

Initiatives to Curb Climate Change

the four perspectives of governance, strategy, risks, and targets, based on the TCFD Framework, and is promoting a variety of initiatives. Important issues
among the identified risks are conferred with the Sustainability Committee, chaired by the President, and reported to the Board of Directors as necessary,
thereby establishing a supervisory system by the Board of Directors. * For details, please refer to the following information.
Disclosure based on TCFD recommendations

Phases 2 and 3 (announced in June 2023)
Verify the building lifespan extension effects of existing detached house renovations
Verify the adoption of ZEH and achievement of life cycle carbon minus throughrenovations
Life cycle carbon minus can be achieved through full renovations (with improved
energy efficiency) in roughly 35 years, which is faster than rebuilding
Comparison of life cycle CO2 emissions (cumulative, with solar power)

1.5 to 2°C Transition risk Policies and Regulations Increasing demand for ZEB*1 and ZEH*2

Medium to Large

Short term

1.5 to 2°C Transition risk Policies and Regulations Introduction of a carbon tax

Medium to Large Medium term

1.5 to 2°C

Opportunity

4°C

Physical risk

4°C

Opportunity

Event

Products and Services Lower prices of high environmental performance products due to their spread
Products and Services Increasing interest in environmental performance
Acute

Full renovation (with unchanged energy efficiency)
Full renovation (with improved energy efficiency)

MediumIncreasing occurrence of natural disasters due to extreme weather

Products and Services Increasing interest in disaster prevention features

Small

Long term
Short term

MediumMedium term

(47%)

50

30

Construction, etc.
Interiors, equipment, etc.

70

Achievement of life cycle carbon minus

60(with renovation)

50
40
30

20
10

Short term

MediumRebuilding(ton-CO2)

Consolidated Financial and Nonfinancial Data / Company Information

PeriodOpportunity

Verify the adoption of ZEH and achievement of life cycle carbon minus through existing
detached house renovations

Phase 1 (announced in June 2022)

40

Impact

1.5 to 2°C

Subcategory

Phase 3:60

(Reference) Assumed risks and opportunities by the Company
Category

Phase 2: Verify the building lifespan extension effects of existing detached house renovations(ton-CO2)

Please refer to the Sustainability page (Environment page) on the Company website. https://www.sumitomo-rd.co.jp/english/sustainability/environment

Scenario

Phase 1: Verify the CO2 emissions reduction effects of existing detached house renovations

Comparison of CO2 emissions from rebuilding and renovation, related to theamount of construction resources and waste disposal from existing detachedhousesCO2 emissions from renovation were 47% lower than emissions
from rebuilding
CO2 emissions

In order to address the physical risks associated with climate change, various schemes to curb it, and transition risks such as changes in the businessenvironment, the Sumitomo Realty Group has organized and analyzed the financial impacts brought by climate change and responses to those impacts from

It is urgent to establish quantitative methods
for evaluating resource circulation anddecarbonization effects

The Sumitomo Realty Group’s
ESG management

Risks and opportunities associated with climate change

However, little research has been conducted toevaluate the decarbonization effects ofrenovations, and there are no frameworks forquantifying contributions in this area

Business Review

In recent years, countries around the world have been working together against various environmental issues, including climatechange. In Japan, momentum toward reducing greenhouse gas emissions has been rising, and carbon neutrality by 2050 has been
declared. In addition, public-private initiatives taken for the conservation of water resources, preservation of biodiversity, reduction ofwaste, and others, are also moving into even higher gear. As well as supporting the targets set forth by the national and the local
governments and administrative organizations, the Sumitomo Realty Group is putting its efforts into various initiatives in cooperation
with respective stakeholders through its business operations.
In our Ninth Management Plan announced in May 2022, we established our own target of a 50% reduction in CO2 emissions by fiscal
2030 compared with fiscal 2014, immediately prior to the Paris Agreement.

The Sumitomo Realty Group’s
Value Creation

View of virgin forest from the entrance lobby of La Tour Sapporo Ito Garden

The Sumitomo Realty Group’s
Business Strategy

From December 2021 to March 2022, The University of Tokyo, Musashino University, and Sumitomo Realty carried out the first phase of joint research as
below to establish an environmental evaluation method for the renovations of existing detached houses. For detached houses in which full renovation
was performed and significantly improved building performance, the amount of new materials used etc. was dramatically reduced compared to rebuilding
the entire building, and cut CO2 emissions during renovation by 47%.
Following last fiscal year’s announcement, we have carried out Phases 2 and 3 of our research, verifying the effects of renovation for extending theuseful lives of existing detached houses (Phase 2), and using methods for assessing building life cycles to verify the adoption of ZEH and achievement oflife cycle carbon minus through renovations (Phase 3). As a result, we confirmed that through renovation, the adoption of ZEH and life cycle carbon minus
were achievable without the need for special construction work, and that life cycle carbon minus could be achieved more rapidly than through new
construction (roughly 35 years). In addition, we traced the houses that were renovated by Shichiku Sokkurisan, which has conducted renovation on morethan 160,000 units over the 27 years since 1996, confirming that the renovated houses had longer useful lives. Based on the results of our research, we
completed a prototype quantitative evaluation tool for measuring the resource circulation and decarbonization effects of renovation work performed on
existing houses.
This research, under an academia-industry collaboration, aims to derive methods for evaluating the environmental contributions of renovations and tocreate an evaluation framework, serving as a foundation for systems to address the social issue of promoting the decarbonization of existing detachedhouses. We will continue with our research activities, further contributing to the realization of a decarbonized, stock-type society.

0Foundation,
structural materials,
external walls, etc.

20
10

0

Demolition andwaste disposal
Rebuilding

Full renovation

-10

0

10

20

30

40

(years)*Measurements performed on houses constructed or renovated by Sumitomo Realty*1. ZEB = Net Zero Energy Building *2. ZEH = Net Zero Energy House

65

Integrated Report 2023

Sumitomo Realty & Development Co., Ltd.

66

The Sumitomo Realty Group’s ESG Management

Environment

Initiatives for Resource Circulation and Water Conservation

TopicsContributing to sustainable utilization of forest resources available in Japan
POINT

Endorsement of initiatives to expand the use of Japanese timber in order to contribute to the developmentof forests and forestry
Furniture made from timber produced in Shizuoka Prefecture installed in a lounge in a large office complex

An office lounge in Sumitomo FudosanTokyo Mita Garden Tower

Providing opportunities to watch, understand, and learn about waste separation,an essential part of PET bottle horizontal recycling
Promoting horizontal recycling through initiatives such as PET bottle dinosaur fossil art,
recycling workshops for parents and children, and hands-on events

As an event in the TOKYO Kids Festa 2023 held at Sankaku Hiroba (triangular plaza) of Shinjuku
Sumitomo Building, we held a “PET Bottle Horizontal Recycling Event” to further promotehorizontal recycling by providing opportunities to watch, understand, and learn about waste
separation, which is an essential part of PET bottle horizontal recycling.
Approximately 20,000 used PET bottles collected from workers in Shinjuku Sumitomo Building
were used as the only material in an 11-meter-long PET bottle dinosaur fossil artwork, attachedwithout using glue so that it would not interfere with recycling. There were also recycling
workshops for parents and children and hands-on events. Participants were able to learn about
and experience PET bottle horizontal recycling from a variety of perspectives.
We will continue to strive to foster more thorough separation of PET bottles collected from buildings,
both among tenant companies and visitors, and to further promote horizontal recycling activities.

PET bottle dinosaur fossil art
11-meter-long dinosaur made using only PET bottles, with approx.
20,000 bottles

FASHION and REAL ESTATE - Initiatives of resource circulation at office

Sumitomo Fudosan Onarimon Ekimae Building won the award of the “Minato Model
Carbon Dioxide Fixation Certification System Awards,” presented to buildings in
Minato Ward constructed using domestic timber

POINT

Completely switched to the use of recycled material garbage bags in the TSI head office (Sumitomo Fudosan Aoyama Building East)
Contributing to a reduction in CO2 emissions equivalent to the annual amount of CO2 absorbed
by roughly 45,000 cedar trees

Sumitomo Fudosan Onarimon Ekimae Building
Top: Wood deck (made with cypress from Seiyo City)
Bottom: Foyer (made with natural cedar from
Hamamatsu City)

As part of our resource circulation initiatives, we have completely switched to the use of recycled material garbage bags that are made of waste plastics, forthe main garbage containers (45 L or larger) in the head office of TSI Holdings Co., Ltd. (Sumitomo Fudosan Aoyama Building East), which is promoting
measures to establish a recycling-based business model and eliminate fashion loss.
Starting with this initiative, Sumitomo Realty is gradually rolling out the use of recycled material garbage bags to the more than 230 office buildings andrental apartments it operates. This will not only reduce the manufacture of new garbage bags by three million per year, but also cut CO2 emissions by

Business Review

Sumitomo Fudosan Onarimon Ekimae Building won the award of the “Minato Model Carbon Dioxide Fixation
Certification System Awards” for 2022, which are presented to buildings in Minato Ward that are constructedusing domestic timber.
Over the past 10 years, Minato Ward has certified 194 buildings within the ward as having contributed toforest development and decarbonization by using domestic timber. This award recognizes those buildings among
them that serve as excellent models of wood use and decarbonization.
Sumitomo Realty will continue to contribute to the realization of an even more sustainable society, through thecreation of highly valuable social assets that are environmentally and societally conscious.

POINT

The Sumitomo Realty Group’s
Value Creation

Winning the award of the “Minato Model Carbon Dioxide Fixation Certification System Awards”
from Minato Ward

Topics“PET Bottle Horizontal Recycling Event” at Sankaku Hiroba,
Shinjuku Sumitomo Building

The Sumitomo Realty Group’s
Business Strategy

In collaboration with The Norinchukin Bank and Shizuoka Prefectural Federation of Forest Owners’ Co-operative
Association, we installed furniture made from timber produced in Shizuoka Prefecture in an office lounge at
Sumitomo Fudosan Tokyo Mita Garden Tower in Minato Ward, Tokyo, opened in June 2023.
Sumitomo Realty has been practicing sustainable management of a forest it owns in Shizuoka Prefecture,“Sumitomo Realty Forest” (Susono City), through final cutting and reforestation as well as maintenance of naturalforest, while also promoting community engagement and awareness-raising activities using forests. Federations offorest owners’ co-operative associations and forest owners’ co-operative associations around Japan and The
Norinchukin Bank are pursuing initiatives to expand the use of Japanese timber in order to contribute to thedevelopment of forests and forestry through diffusion of wooden products made from Japanese timber. We
support these initiatives and the project involving the donation of furniture is but one aspect of activities designed
to connect major cities with adjacent rural areas.

POINT

A Message from the Management

Initiatives for Preserving Biodiversity

approximately 400 tons per year, which is equivalent to the annual amount of CO2 absorbed by roughly 45,000 cedar trees*, thereby contributing greatly toresource conservation and decarbonization.
* Source: Website of the Forestry Agency, Ministry of Agriculture, Forestry and Fisheries

Other initiatives
Other initiatives

Not only protecting and making use of natural surroundings, our development business greatly contributes to creating green space which is lacking in urban

3R initiatives

areas and maintaining biodiversity in those areas.
Osaki Garden City is a redevelopment project of a former driving school site and a densely built-up district with wooden housing. This area used to be anindustrial area with little greenery and narrow streets which posed challenges with respect to disaster response. By the completion of Osaki Garden City, theoverall location’s green coverage increased from 0.01% to 35% including its roof greening.
La Tour Sapporo Ito Garden has been built on the former site of Kairakuen, one of the first municipal parks in Japan, through redevelopment that took
advantage of the valuable old trees growing wild in the premise.

The Sumitomo Realty Group’s
ESG management

Greenery in cities

At our office buildings, we carry out activities to reduce waste discharge and promote recycling across our entire portfolio, and are committed to 3R activities(Reduce, Reuse, Recycle). In each building, we display posters and promote waste separation by providing waste separation bins to tenants for free when they
move in. We also have concluded contracts with waste disposal companies to ensure the appropriate recycling.
Risk analysis on water resources and initiatives for their conservation
Sumitomo Realty has not earned any revenue from its business activities in areas where water stress is a concern, based on the Aqueduct Survey conductedby the World Resource Institute (WRI). Even though Japan, where our business activities are mainly based, has been certified as a “Low-Medium” water risk

Consolidated Financial and Nonfinancial Data / Company Informationarea, and water stress is relatively low and is considered less likely to be directly affected by water resource depletion and other related issues, we willcontinue to closely monitor risks related to water resources in our supply chain, including the depletion of water resources in the major countries of origin ofmaterials and other supplies.
For conservation of water resources, at all properties we develop, we adopt design standards that specify the use of ultra-water-saving toilets, whichsignificantly reduce the flush volume to 6 liters or less. We install these toilets in new buildings as well as existing properties through renovation.
In addition, we have been substantially reducing water consumption by setting up sewage and rainwater reclamation facilities that purify the water, andusing the greywater to flush toilets and water plants, mainly in large office buildings.
Osaki Garden City

67

Integrated Report 2023

La Tour Sapporo Ito Garden

Sumitomo Realty & Development Co., Ltd.

68

The Sumitomo Realty Group’s ESG Management

Society
A Message from the Management

Identification of Risks through Human Rights Due Diligence
Sumitomo Realty Group conducts human rights due diligence to prevent negative impacts on human rights through our business activities. By assessing thehuman rights risks that exist in the value chain of its business activities, the Group has identified the following challenges on which we need to focus oureffort. We will conduct appropriate reviews regarding these challenges as necessary, through continuous monitoring.

2. Prohibition of discriminationor harassment in workplaces

We thoroughly implement measures to prevent any kind of discrimination and harassment inworkplace.

3. Working environment
for suppliers

We protect the health and safety of our suppliers’ employees through training and other means, andrequest our suppliers to maintain an appropriate working environment.

4. Customers’ health and safety

We conduct thorough quality control of the products and services we provide, so that customers canuse them in a healthy and safe condition.

5. P
 rotection of the human rights
of foreign technical interns

For foreign technical interns working for a Group company engaged in hotel management, we haveconfirmed that the contractors who are their direct employers maintain a good working environment,
including the payment of appropriate wages and the provision of a consultation desk in the interns’
native languages.
Further, in collaboration with the contractors, we hold local gatherings with the families of theforeign technical interns, where we provide explanations of their work and video messages from theinterns, in an effort to create an environment where they can work with peace of mind.

The Sumitomo Realty Group’s
Value Creation

We maintain an environment where employees can work in a healthy and safe condition, under strict
standards that exceed legal requirements.
The Sumitomo Realty Group’s
Business Strategy

1. Working environment
for employees

Promotion of Diversity for Active Participation of Diverse Personnel

Addressing Social Issues

Respect for Human Rights and Response to Risks of Violations
Recognizing that respect for human rights is one of the most important issues in conducting its businesses, the Sumitomo Realty Group has set forth a basic

programs for a diverse workforce, as follows. * Please refer to “Unique Human Resource Investment Strategy (Utilization of Human Capital)” on page 25.

Female participation and career advancement
We have announced a numerical target for the ratio of female employees
newly hired in sales and engineering positions that support our front line
operations. By further increasing the ratio of women at the workplace andworking on their career development, we intend to expand the pool of ourhuman resources for future promotion and gradually promote them tomanagerial positions.

Procurement Guidelines,” which describes this policy.

Childcare, nursing care support

In addition to conducting human rights due diligence, etc. to identify risks within the Company, we also continuously implement measures throughout our
supply chain to identify, prevent, and mitigate risks through monitoring. These include administering questionnaires to individual companies concerning thestatus of their human rights risk investigations and identifications.

Outline of Basic Policy (Initiatives) on Human Rights
Applied to all employees of the Sumitomo Realty Group

Respect for human rights and prevention of discrimination, etc. in the whole business
Human rights due diligence to identify and address issues
Appropriate education and awareness raising through human rights training
Appropriate remedies and corrective actions for victims
Review of human rights risks and issues as appropriate through dialogue with stakeholders* For details, please refer to Society Report on the Company website. https://www.sumitomo-rd.co.jp/english/sustainability/society

Integrated Report 2023

In order to create a comfortable work environment for those with particular needs such as childcare and nursing care, we offer various support systems
including a childcare and nursing care leave system and a shorter working hour system.

Employment of people with disabilities
We conduct hiring without discriminating age, gender or region, and 2.37% of employees of Sumitomo Realty are people with disabilities, exceeding the
2.2% required under the system on employment rate of persons with disabilities. In order to make workplaces comfortable for people with disabilities, wehave installed multipurpose bathrooms and barrier-free elevators.

Expanding opportunities for elderly employees
We are expanding opportunities for elderly employees to put their rich experience to work by hiring new employees aged 60 or older and rehiring retirees.

Various training programs

Consolidated Financial and Nonfinancial Data / Company Information

Compliance with norms and decrees related to human rights

The Sumitomo Realty Group’s
ESG management

through employee training and other measures. In addition, we request our suppliers to support our human rights policy through our “Sustainable* Target ratio of female employees in new hires: Increasing to 25% in sales and 13% inengineering positions by the end of fiscal 2025. (As of fiscal 2022, 25.6% in sales and10.2% in engineering positions)policy on human rights that applies to all employees of the Group, and undertakes thorough prevention and response to risks of human rights violations

69

an advantage for the sustainable growth of a company. We have been working on the improvement of the work environment and implementation of training

Business Review

The Sumitomo Realty Group operates businesses that are closely related to people’s lives, providing social infrastructure and related
services that compose cities, including office buildings, condominiums, detached houses, remodeling, and real estate brokerages. In
those business activities, we are continuously engaged in addressing diverse social issues such as disaster prevention, respect forhuman rights, health and safety, promotion of diversity, and human resource development, which involve many of our stakeholders
including employees, customers, business partners and local communities, as well as contributing to local communities and society.

As mentioned in A Message from the Management, we have long been promoting diversity based on the recognition that diverse perspectives and values are

We work to expand the knowledge of employees by various training programs, and inform them of the code of conduct suitable for employees of the Sumitomo
Realty Group and ensure their compliance.
Human resource
Occupational safety, harassment
training
Managerial
Harassment, labor management, compliance
position training
Occupational
Technical guidance, risk assessment methods
safety training

New employee
training
Engineertraining
Certification
training

Company history, business manners, human rights,
complianceTechnical guidance, risk assessment methods,
construction methods
Encouraging to acquire certifications

Sumitomo Realty & Development Co., Ltd.

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The Sumitomo Realty Group’s ESG Management

Society

Promotion of Community Revitalization and Contribution to Local Communities

Japan is one of the countries in the world with the greatest earthquake risk, and we recognize that improvement of resilience is one of the extremely

In order to achieve the sustained revitalization of development areas, we have strived to create a lively atmosphere by holding entertainment events not only

important themes for our business activities. As a supplier of social assets that form the foundations of people’s lives such as office buildings andin the redevelopment area but also at buildings that serve as local hubs. We also emphasize contributions to the development of community and society

condominiums, the Sumitomo Realty Group promotes initiatives to increase the resilience of the properties supplied in each business and to improve disasterthrough our business activities, and are engaged in various social contribution activities through our business activities in cooperation with stakeholders.

A Message from the Management

Disaster Countermeasures

preparedness in the operation of them.

Bringing liveliness to communities through area management

In the office building leasing business, to meet the needs for BCP, for which greater emphasis has been placed after the Great East Japan Earthquake, we havebeen actively adopting seismic isolation and damping systems, and developing buildings with specifications such as uninterruptible power supply.

We are promoting various activities to revitalize the communities at our buildings as local hubs. Since its completion in 1974, Shinjuku Sumitomo Building,nicknamed “Sankaku Biru” (triangular building), has been the center of the lively atmosphere. After a large-scale renovation, it was renewed in June 2020
with “Sankaku Hiroba” (triangular plaza), a large space with a capacity of about 2,000 people. Its all-weather atrium has the feel of an outdoor venue while
protecting the plaza from the effects of the weather and temperature. This large-scale renovation is not just a building renewal, but also contributes to thefurther revitalization of Shinjuku with the event space which accommodates a range of activities, as a hub of the city.

* Please refer to “Business Segments: Leasing” on page 51.

Further, in the large-scale development sites we manage, in order to contribute to the community’s disaster preparedness as a hub, we hold joint disaster
drills with not only workers in our office buildings but also local residents, volunteer fire corps, and fire stations at times. We also confirm the system offacilities for stranded commuters, which we prepare in multiple buildings with local governments. Through these, we make efforts to improve disaster
preparedness of the community as a whole in preparation for emergencies.

TopicsDrill for accepting stranded commuters at Sankaku Hiroba (triangular plaza)in Shinjuku Sumitomo Building

Event held at Shinjuku Sumitomo Building when first completed

Drill to practice operation of a temporary site for accommodating stranded commuters

In our condominium business, we have adopted seismic isolation/damping
structures that prevent deformation of buildings and alleviate shaking
during an earthquake in order to realize safe and secure housing. In
addition, various disaster countermeasures are implemented, such as
installation of emergency power generators, elevator safety functions,storerooms for emergency supplies and emergency wells.
Key disaster countermeasures (City Towers Tokyo Bay)
Basic structure
Seismic energy absorbed
Conventional structure

Disaster prevention of
Shinchiku Sokkurisan remodeling

Integrated Report 2023

StrongshakingSlowshaking

Deformation ofdoor frames tends
not to occur

Concrete tends
to fracture andfall
Deformation ofdoor frames
tends to occur

Crackingof pillars
and beams

Violent horizontal vibration
is caused, and higher floors
shake more strongly.

Art exhibition in an office building
entrance lobby

As part of “SDGs to living life” project of the Yomiuri Shimbun, we conducteda visiting lecture on the theme of “Think of Long-life Housing” for fifth
graders at Shishibone-higashi Elementary School in Edogawa Ward, Tokyo.
In order to provide opportunities to think about environmentallyfriendly living through the theme of “house,” we focused on remodelingfrom the perspectives of
CO2 emissions reduction
and the SDGs. We
presented our Shinchiku
Sokkurisan remodelingbusiness activities, which
utilize main structural
timber instead ofcompletely demolishinghouses, and employed
fun quiz games.
Roughly 60 students attended the lecture“STEP Concert” certified as Mecenat Activity

Lighting equipment
tends to fall
Glass tends toshatter and fall

Artworks displayed on temporary enclosuresat construction sites

TopicsSashes tend
to come off

Earthquake motion(horizontal vibration)

Furnituretends not totopple overLighting
equipment
shakes less
Frame tends
not tofracture

Seismic
isolation
devices

Because seismic isolation devices absorb
seismic energy, the building shakes
slowly and less deformation occurs.

As part of our social contribution activities, for 34 years from 1987, wehave held “STEP Concerts,” full-scale classical concerts for all ages toenjoy side by side, for which all are invited for free, with the aim of creating
opportunities for people to appreciate art and culture.
Since 1996, the concerts have been designated as a child welfare
cultural asset recommended by the Social Security Council of the Ministryof Health, Labour and Welfare, and in 2021, they were certified as an
outstanding mécénat activity in the “This is MECENAT” certification
system, which is run by Association for Corporate Support of the Arts
sponsored by Agency for Cultural Affairs.
We will continue to contribute to local communities through the supportand dissemination of cultural and artistic activities.

Consolidated Financial and Nonfinancial Data / Company Information

71

City Towers Tokyo Bay

Conducting a visiting lecture on
SDGs at an elementary school

The Sumitomo Realty Group’s
ESG management

In our custom home business, we are researching and developing various
specifications with earthquake resistant countermeasures while
incorporating earthquakeresistant technologies forbuildings and condominiums. We
also offer new types of disasterprevention that meet the needsof the times, such as packaged
products, including solar power
generation equipment and water “Power Panel” — Strong bearing walls withhigh magnification
storage facilities.

The Company is participating in the Kanosei Art Project, which Toppan
Holdings, Inc. has carried out since 2018. It aims to showcase works byartists with disabilities in various products. This project is being promoted asa new attempt to combine self-support for people with disabilities andcorporate human resource development. As we endorse the approach of“Going beyond offering support for people with disabilities to create
sustainable initiatives with them as business partners,” we are participatingin this project and displaying artists’ works in our buildings for the aestheticsof the buildings.

Business Review

Disaster prevention for condominiums

Seismic reinforcement work

Event held in Sankaku Hiroba

Participating in the Kanosei Art Project

Disaster prevention for custom homes

In order to improve functionality to makeexisting houses earthquake resistant without
rebuilding, Shinchiku Sokkurisan offers
seismic reinforcement work that meets thegovernment’s safety standards, based onearthquake resistance diagnosis.
We are promoting a variety of initiatives torealize further safety, such as thedevelopment of our original earthquakeresistant construction method.

Shinjuku Sumitomo Building after renovation

The Sumitomo Realty Group’s
Value Creation

We have concluded a collaboration agreement with Shinjuku Ward touse Sankaku Hiroba in Shinjuku Sumitomo Building, as a shelter for
2,850 stranded commuters in the event of a disaster such as anearthquake. With the cooperation of Shinjuku Ward and local
enterprises such as nearby building management companies, we
conducted a drill to practice operation of a temporary site foraccommodating stranded commuters, in consideration of employing
infectious disease countermeasures in the event of a major disaster, andperformed a review of the drill. The drill encompassed everything fromsetting up temporary sites to shutting them down. We worked with themembers of the community that took part in the drill to identify issues
and made improvements to strengthen our disaster response systems.

The Sumitomo Realty Group’s
Business Strategy

Disaster prevention for office buildings

The 108th STEP Concert“This is MECENAT” is certification system founded in 2014 by Association for Corporate
Support of the Arts in order to demonstrate the social significance and presence ofdiverse activities implemented in all regions around the country by corporations for the
purpose of promoting social creativity through arts and culture. (Sponsored by Agency
for Cultural Affairs)
Reference: About “This is MECENAT” (JP) https://mecenat-mark.org/outline/

Sumitomo Realty & Development Co., Ltd.

72

The Sumitomo Realty Group’s ESG management

GovernanceYozo Izuhara

Nobumasa Kemori

Apr
Jun
Jun
Jun
Jun
Oct
Jun
Jun
Jun
Jun

Sep 1980 Joined Sumitomo Metal Mining Co.,Ltd.
Jun 2006 Director, Managing Executive Officer
Jun 2007 Representative Director - President
Jun 2013 Representative Director - Chairman
Jun 2016 Chairman
Jun 2017 Executive Advisor
Jun 2019 Director of the Company (present)
Jun 2021 Honorable Advisor of Sumitomo Metal
Mining Co., Ltd. (present)

1962 Joined Nippon Sheet Glass Co., Ltd.
1996 Managing Director
1998 Representative Director - President
2004 Representative Director - Chairman
2008 Director - Chairman of the Board
2009 Director - Chairman of the Board and Chairman
2010 Executive Advisor
2012 Honorary Senior Advisor (present)2014 Corporate Auditor of the Company
2019 Director of the Company (present)

The Sumitomo Realty Group’s
Business Strategy

Outside Director

A Message from the Management

Outside Director

Outside Director

Chiyono Terada

Directors

Kenichi Onodera

Kojun Nishima*

Apr
Jun
Jun
Jun
Sep

Apr 1984 Joined the Company
Jun 2009 Director
Sep 2009 Head of Office Leasing Business
Division
Jun 2010 Representative Director (present)
Jun 2013 Director - President (present)

1970 Joined the Company
1998 Director
2005 Representative Director
2007 Director – President
2019 Director - Chairman of the Board(present)

Masato Kobayashi*

Yoshiyuki Odai*

Apr 1983 Joined the Company
Jun 2009 Director
Jun 2010 Representative Director (present)
Aug 2010 Head of Condominium Sales Business
Division
Jun 2013 Director - Deputy President (present)

Apr 1985 Joined the Company
Jun 2011 Director
Nov 2019 Head of Corporate Planning Division(present)
Apr 2022 Representative Director - Deputy
President (present)

Director/Senior Managing Executive Officer

Director/Senior Managing Executive Officer

Hiroshi Kato

Hisatoshi Katayama

Apr 1984 Joined the Company
Jun 2013 Director (present)
Sep 2016 Head of Remodeling Business Division(present)
Apr 2020 Senior Managing Executive Officer(present)
Apr 2022 In charge of Custom Homes Business(present)

Apr 1985 Joined the Company
Sep 2016 Head of Commercial Property
Development Division (present)
Jun 2018 Director (present)
Apr 2020 Senior Managing Executive Officer(present)

Integrated Report 2023

Yoshifumi Nakamura

Toshikazu Tanaka

Apr
Jun
Jun
Jun

Apr 1983 Joined the Company
Jun 2013 Director		
Representative Director – President of
Sumitomo Real Estate Sales Co., Ltd.
Jun 2019 Corporate Auditor of the Company(present)

1973 Joined the Company
2002 Director
2007 Representative Director
2011 Corporate Auditor (present)

Outside Corporate Auditor

Outside Corporate Auditor

Takashi Sakai

Naoko Hasegawa

Apr
Jun
Jun
Jun

Apr 1987 Joined Sumitomo Fudosan Fitness Co., Ltd.
Nov 2002 Joined The Prudential Life Insurance
Company, Ltd.
Apr 2005 Sales Manager of Tokyo #3 Agency
Apr 2013 Agency Manager of Nagano Agency
Oct 2014 Assistant to Chief Marketing Officer
Apr 2016 Agency Manager of Chiyoda #6 Agency
Apr 2021 Assistant to Chief Marketing Officer
Jul 2021 Corporate Vice President (present)		
Gender Strategy Leader (present)
Jan 2023 Chief Business Ethics Officer (present)
Jun 2023 Corporate Auditor of the Company(present)

1977 Joined Osaka Gas Co., Ltd.
2005 Director
2007 Managing Director
2010 Representative Director - Executive VicePresident
Jun 2018 Representative Director - President of HonshuShikoku Bridge Expressway Company Limited
Jan 2023 Outside Director of TSUNEISHI KAMTECSCORPORATION (present)
Jun 2023 Corporate Auditor of the Company (present)

Executive Officers
Senior Managing Executive Officer

Senior Managing Executive Officer

Managing Executive Officer

Managing Executive Officer

Executive Officer

Executive Officer

Nobuaki Takemura
Makoto Nakano
Dai Miyamoto
Takuto Fujinuma

Managing Executive Officer

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Ryuzo Amemiya

Ichiro Wada

Consolidated Financial and Nonfinancial Data / Company Information

Deputy President

Corporate Auditor

The Sumitomo Realty Group’s
ESG management

Deputy President

Corporate Auditor

Business Review

President

Note: For more details of each director and corporate auditor, please refer to “Notice of convocation of the 90th ordinary general meeting of shareholders.” (Available on the Company website)

73

Corporate Auditors*Representative Director
Chairman of the Board

The Sumitomo Realty Group’s
Value Creation

Board of Directors, Corporate Auditors and Executive Officers (As of June 29, 2023)

Jun 1976 Founded Art Hikkoshi Center
Jun 1977 Established Art Hikkoshi Center Co., Ltd.,		
President and CEO
Jun 1990 Changed corporate name into Art Corporation, President and CEO
Apr 2018 President and CEO of Art Group Holdings (present)
Dec 2019 Chairperson Emeritus of Art Corporation (Changed corporate nameinto Art Moving Company Co., Ltd. in January 2022) (present)
Jun 2020 Corporate Auditor of the Company
Jun 2023 Director of the Company (present)

Hiroyuki Hashizume

Kenichi Kawai

Tokiyuki Okada
Kenji Tsumura

Takeo Kojima

Takeshi Endo

Toshiyuki Masui Takayuki Miyagawa
Sumitomo Realty & Development Co., Ltd.

74

The Sumitomo Realty Group’s ESG management

GovernanceThis fundamental mission also includes a reminder “Do not reston seniors’ laurels and make the best efforts for a better company
for the next generation.” At this point in time, we believe that the
management of the Company should continue to be carried out bypeople mainly from within the Company who have inherited thestrong will to sow the seeds of growth for the sake of the next
generation. In doing so, we believe that employees will be able tomaintain a high level of motivation to eventually participate inmanagement.
In consideration of this basic stance, we are working to further
strengthen and enhance corporate governance so as to contributeto the enhancement of the Company’s corporate value over the
medium- to long-term, by working on collaboration and dialogue
with all stakeholders including shareholders, improving theefficiency of decision-making, appropriate supervision of execution,and proper disclosure of information.

General Meeting of Shareholders
Board of Directors

Board of Corporate Auditors
AdviseExecutive Committee

Briefing for Outside Directors
Share
information

Committee of
Outside Directors
and Auditors

Initiatives to Strengthen Corporate Governance

Whistleblowing report

Independent Auditors
Steps Taken to Strengthen Corporate Governance

Cooperate

Sustainability Committee
Chairman: President

BCP Council

Business risks

Sustainability Promotion Council Internal Control Meeting
Administrative Office:Corporate Planning Department

Control

Disaster risks

Control

Administrative Office:Internal Audit Department
Control

Environment, Biodiversity
Human rights, Diversity

Host

Internal Audit Department
Audit

Audit

Legal compliance
Compliance

Executive Department

Integrated Report 2023

Role and Structure of the Board of Directors
The Board of Directors promotes the sustainable growth of theCompany and the enhancement of corporate value over the
medium- to long-term, improves profitability and businessefficiency, and prevents fraud before it occurs. In order to do so,
it is responsible for deliberating and deciding important mattersfor the Company such as basic management policy andmanagement strategy, as well as supervising the execution ofduties by each director and executive officer.
The maximum number of directors in the Board stipulated in
the Articles of Incorporation is 12. The Board of Directors iscomprised of six directors from within the Company who are in
charge of business execution as they are deeply familiar with thesignificance of always looking resolutely forward and continuing
to invest for sustainable growth, and three outside directors
with experience as a chairman, a president or other management

Efforts to Strengthen the Supervision Function
The Company has three outside directors and four corporate
auditors for a total of seven persons, which accounts for overhalf of the 13 attendees of the Board of Directors meeting,responsible for the management supervision function. In orderto ensure that outside directors and outside corporate auditors
can fully perform their roles, in fiscal 2022 the Company (i) held
eight briefings for outside directors in which they were briefed
on the agendas for the Board of Directors meetings, the content
of discussions at Executive Committee, and other issues; and (ii)convened 14 meetings of the Board of Corporate Auditors
wherein they received reports from the independent auditor andthe Internal Audit Department and conducted interviews about
the operating situation with the heads of each department.
In addition, (iii) we have established a Committee of Outside
Directors and Auditors, comprised only of outside directors andoutside corporate auditors. The Committee of Outside Directors
and Auditors directly hears from each officer about the execution
status of the duties of which he or she is in charge and the issues
they are aware of, as well as giving appropriate advice. In theevent of a whistleblowing report on officers, outside corporate
auditors receive a report directly and share the information at
the Committee of Outside Directors and Auditors.
Through these initiatives, we believe that the Company’s
corporate governance has achieved a certain level of quality.
Sumitomo Realty & Development Co., Ltd.

Consolidated Financial and Nonfinancial Data / Company Information

75

while three outside directors and four corporate auditors for a total of sevenpersons, which accounts for over half of the 13 attendees of the Board of
Directors meeting, are responsible for the management supervision function.
In order to fully demonstrate the supervisory function, we have built asystem to accurately grasp the management condition and issues and tocooperate with each other as follows.

Roles of Outside Directors and Outside Corporate Auditors
As part of its initiatives to strengthen corporate governance, theCompany appointed two outside corporate auditors in 2002 andtwo outside directors in 2015. The number of outside directors
has been increased to three including one female, in 2023.
Corporate auditor is a system that has taken root in Japan fora long time. Corporate auditors use the strong investigative
power granted by the law to audit whether the directors are
conducting their duties appropriately. Although full-time
corporate auditors from within the Company are familiar with
the Company’s internal affairs and have excellent informationgathering skills, they might become somewhat lenient, albeit
unconsciously, when it comes to auditing their colleagues.
Therefore, the Company ensures that at least half of thecorporate auditors are outside members to add an objective
perspective and thereby ensure the effectiveness of audits.
Likewise, it is undeniable that the Board of Directors may become
narrow-minded if it consists only of people from within the
Company, and it is possible that the Board may find itself left
behind by the changes in the world. Therefore, the Company has
appointed outside directors who have excellent character andinsight, who understand its management philosophy, and who
have experience as a chairman, a president or other management
executives, in order to have them advise the management team andmonitor the officers by utilizing their wide range of knowledge andinsight based on their experience in corporate management.

Jun 2015 Appointed two outside directors
		Established a Committee of Outside Directors and Auditors / Began
holding briefings for outside directors on a regular basis to strengthen the
supervision function of outside directors and outside corporate auditors
Apr 2020 Introduced an executive officer system
Jun 2020 Appointed one female officer (outside corporate auditor)
Jun 2023 Increased the number of outside directors to three / Appointed one
female director

The Sumitomo Realty Group’s
ESG management

Overview of Corporate Governance System and Reasons for its Adoption
Under the Companies Act of Japan, companies may adopt one of thefollowing three forms of organizational structure: (i) a company withcorporate auditors, in which the Board of Directors assumes executive
responsibility, while corporate auditors are in charge of the monitoring ofmanagement; (ii) a company with a nominating committee, etc., wherein
the Board of Directors is tasked with the management monitoring function
and the Board of Executive Officers assumes executive responsibility; and (iii)
a company with an audit and supervisory committee, in which the
management monitoring function of corporate auditors is incorporated into
the functions of the Board of Directors. In this way, companies may selectthe optimum governance structure that best suits their circumstances.
As stated in the Basic Views above, in order for the Company to continue
growing, we believe that people from within the Company who are deeply
familiar with the significance of continuing to invest, always looking resolutely
forward even in difficult times, should be the core members of management
and execution, and the motivation of juniors, who will acquire experience inthe real estate business and eventually join the management team, should bemaintained; hence we have a structure as a company with corporate auditors,
where the Board of Directors bears responsibility for execution, and corporate
auditors take on the management supervision function.
Six directors, mainly from within the Company, who are deeply familiar
with the business content, are in charge of management and execution,

Jun 2002	Appointed two outside corporate auditors, making half of the four
corporate auditors outside members
Apr 2004	Reformed the management system, reducing the number of directors
from 23 to 12
Jun 2004 Introduced a fully performance-based compensation system forofficers / Abolished the retirement benefit system for officers /Abolished the bonus system for officers

Business Review

ControlC ooperation among Internal Audit Department, Independent
Auditor and Corporate Auditors
We have established the Internal Audit Department to check thebusiness execution status of each Department of the Group andthe operational status of internal controls, to prevent fraud anderrors, and to make proposals for operational improvement. The
Internal Audit Department reports the results of its internal
audits to, and exchanges views as appropriate with, corporate
auditors and the independent auditor in an effort to forge closer
collaboration between the three parties and increase the quality
and efficiency of individual audits.

Shareinformation

President

Administrative Office:Administration Department

Executive Officer System
Due to the limited number of directors, we have introduced an
executive officer system comparable with directors so that we
can appoint officers necessary for business expansion, and wehave appointed 14 executive officers who do not concurrently
serve as directors. Compensation for executive officers who are
non-concurrent directors is not an employee salary, but is to beRole and Structure of the Board of Corporate Auditors
Corporate auditors are responsible to supervise whether directors
are performing their duties properly by using the powerfulauthority endorsed by law. The Board of Corporate Auditors
consists of four corporate auditors, half of whom are the twooutside corporate auditors.

The Sumitomo Realty Group’s
Value Creation

Corporate Governance SystemT he Status of Activities of the Board of Directors
During fiscal 2022, the Company
Fiscal 2022
Name
Attendance status*
convened seven meetings of
Kenichi Onodera
7/7
the Board of Directors, where
7/7
Kojun Nishima
discussions were held on
Masato Kobayashi
7/7
matters for regular deliberation,
7/7
Yoshiyuki Odaiformulation of the medium-term
Nobuaki Takemura
7/7
management plan, confirmation
7/7
Hiroshi Kato
of progress on the plan, the
7/7Hisatoshi Katayamagovernance system, and other
Koji Ito
1/1
7/7
Yozo Izuhara
matters. The attendance status
Nobumasa Kemori
7/7
for individual directors is*B ased on the number of meetings held
indicated on the right.
during each director’s term of office.

paid from the total compensation for directors, which is clearlybased on the Company’s performance set at 1% of consolidated
ordinary profit for the previous fiscal year, because they are
considered to be comparable with directors.

The Sumitomo Realty Group’s
Business Strategy

Basic Views of Corporate Governance
The Company is a comprehensive real estate enterprise of theSumitomo Group which has a history of 430 years and inherits
Sumitomo’s business philosophy of “Placing prime importance on
integrity” and “Under no circumstances, shall it pursue easy gains.”
The Company’s slogan, “Integrity and Innovation” expresses its
corporate stance to all stakeholders including its employees,
customers, business partners, creditors and shareholders. This
includes the pride as a developer which values “Integrity” above
all, and creates new corporate value with a pioneering spirit,
without pursuing easy gains under any circumstances.
Under this slogan, we have set forth our fundamental mission as
to “Create even better social assets for the next generation,” andour basic management policy aims to contribute to addressing
various social issues such as the environment, while maximizing
corporate value through each business.

executives, who have superior character and insight andunderstand the Company’s management principles.

A Message from the Management

Overview of Corporate Governance76

The Sumitomo Realty Group’s ESG management

Governance

Name

Position

Main activities

Meeting attendance

Yozo
IzuharaDirector

Mr. Izuhara expressed his opinions necessary for the deliberation of agenda, etc. as appropriate, in meetings of theBoard of Directors. He also provided advice from an independent standpoint in terms of the supervision of theGroup’s management and the medium- to long-term improvement of its corporate value through such forums as
briefings for outside directors and meetings of the Committee of Outside Directors and Auditors.

Board of Directors meetings
7/7 (100%)

Yoshiyuki
Norihisa

ChiyonoTeradaDirector

Corporate
AuditorMr. Norihisa expressed his opinions necessary for the deliberation of agenda, etc. as appropriate, in meetings of theBoard of Directors and meetings of the Board of Corporate Auditors. He also provided advice from an independent
standpoint in terms of the supervision of the Group’s management and the medium- to long-term improvement of
its corporate value through meetings of the Committee of Outside Directors and Auditors, etc.

Corporate
AuditorMs. Terada expressed her opinions necessary for the deliberation of agenda, etc. as appropriate, in meetings of theBoard of Directors and meetings of the Board of Corporate Auditors. She also provided advice from an independent
standpoint in terms of the supervision of the Group’s management and the medium- to long-term improvement of
its corporate value through meetings of the Committee of Outside Directors and Auditors, etc.

Board of Directors meetings
7/7 (100%)
Board of Corporate Auditors
meetings
14/14 (100%)
Board of Directors meetings
7/7 (100%)
Board of Corporate Auditors
meetings
14/14 (100%)

compared to the last survey with high evaluation. Based on thisresult, at the meeting of the Board of Directors held on March
14, 2023, analysis and evaluation of the structure and theoperational status of the Board of Directors were performed, andit was confirmed that the effectiveness of the Board of Directors
was secured appropriately.

Name

Yozo
IzuharaNobumasa
Kemori

ChiyonoTeradaTakashi
Sakai

Naoko
Hasegawa

Independence

Supplementary explanation of the relationship
Mr. Izuhara served as Director, Chairman of the Company’s business partner
Nippon Sheet Glass Co., Ltd. until June 2010. However, since thetransaction amount between said company and the Company in the mostrecent fiscal year was small, accounting for less than 1% of sales for bothcompanies, the Company deems there is no impact on independence.
Mr. Kemori served as Director, Chairman of the Company’s business partner
Sumitomo Metal Mining Co., Ltd. until June 2017. However, since thetransaction amount between said company and the Company in the mostrecent fiscal year was small, accounting for less than 1% of sales for bothcompanies, the Company deems there is no impact on independence.
Ms. Terada served as President and CEO of the Company’s business partner
Art Moving Company Co., Ltd. until December 2019. However, since thetransaction amount between said company and the Company in the mostrecent fiscal year was small, accounting for less than 1% of sales for bothcompanies, the Company deems there is no impact on independence.
Mr. Sakai served as Representative Director, Executive Vice-President of theCompany’s business partner Osaka Gas Co., Ltd. until March 2013. However,since the transaction amount between said company and the Company in themost recent fiscal year was small, accounting for less than 1% of sales forboth companies, the Company deems there is no impact on independence.
Ms. Hasegawa worked for the Company’s subsidiary Sumitomo Fudosan Fitness Co.,
Ltd. (currently Sumitomo Fudosan Esforta Co., Ltd.) from April 1987 to October 2002.
However, since more than 20 years have passed since she resigned from said
company and she has not been involved in execution of business of said company
after her resignation, the Company deems there is no impact on independence.

Reasons of appointment
Mr. Izuhara had served as President and Chairman of Nippon Sheet GlassCo., Ltd., and he has extensive knowledge on overseas business and M&A
as a manager. The Company deems him to be suitable as an outside
director.
Mr. Kemori had served as President and Chairman of Sumitomo Metal
Mining Co., Ltd., and he has extensive knowledge of the mining industry
from a long-term perspective and overseas business as a manager. The
Company deems him to be suitable as an outside director.
Ms. Terada founded Art Hikkoshi Center and had served as its President andChairperson, etc., and she has extensive knowledge and wide discernment
as a manager. The Company deems her to be suitable as an outside director.
Mr. Sakai has served as Executive Vice-President of Osaka Gas Co., Ltd. andPresident of Honshu-Shikoku Bridge Expressway Company Limited, and hehas extensive knowledge and wide discernment as a manager. The
Company deems him to be suitable as an outside corporate auditor.

The Sumitomo Realty Group’s
Value Creation

Evaluation of Effectiveness of the Board of Directors
Every year, the Company analyzes and evaluates the effectivenessof the Board of Directors to further improve its functions.
A survey to all of our directors and corporate auditors forevaluating the composition, operations, deliberations, and otheraspects of the Board of Directors, showed improvements

Board of Directors meetings
7/7 (100%)

Compliance with the Independence Criteria of Outside Directors and Outside Corporate Auditors and Reasons for Appointment Thereof
Regarding appointment of outside directors and outside corporate auditors, the Company has adopted the requirements for outside
directors and outside corporate auditors prescribed in the Companies Act and the independence criteria set by the Tokyo Stock Exchange.

The Sumitomo Realty Group’s
Business Strategy

Nobumasa
KemoriMr. Kemori expressed his opinions necessary for the deliberation of agenda, etc. as appropriate, in meetings of theBoard of Directors. He also provided advice from an independent standpoint in terms of the supervision of theGroup’s management and the medium- to long-term improvement of its corporate value through such forums as
briefings for outside directors and meetings of the Committee of Outside Directors and Auditors.

A Message from the Management

The Status of Main Activities of Outside Officers

Ms. Hasegawa has served as Executive Officer and Chief Business Ethics
Officer of The Prudential Life Insurance Company, Ltd. and she has extensive
experience and wide discernment in corporate management and corporate
ethics. The Company deems her to be suitable as an outside corporate
auditor.

Officers’ Compensation
Policies for Appointment of Officers

Skill Matrix (Abilities Expected of Each Director)
Name

Kojun Nishima
Masato Kobayashi
Yoshiyuki Odai
Hiroshi Kato

Yozo Izuhara
Outside (independent)

Nobumasa Kemori
Outside (independent)

Chiyono Terada
Outside (independent)

77

Integrated Report 2023

Sales

Construction

Brokerage

Redevelopment

Planning andfinanceComplianceP olicies related to the Determination of the Content of Compensation,etc. for Individual Directors, etc., and Authorization for theDetermination Thereof
The policy for the determination of the content of compensation,etc. for individual directors, etc. (hereinafter referred to as the“determination policy”) is established by resolution of the Board of
Directors. Under the determination policy, compensation for eachdirector, etc., consists only of fixed compensation, and the specificcontent (payment amount, timing of payment, payment method,etc.) of the compensation for individual directors is determined byagreement between the Chairman of the Board and Representative

Sumitomo Realty & Development Co., Ltd.

Consolidated Financial and Nonfinancial Data / Company Information

Hisatoshi Katayama

Leasing

At the Ordinary General Meeting of Shareholders held on June 29,
2004, a resolution was passed to set the total annual compensation
for directors at just 1% of consolidated ordinary profit for theprevious consolidated fiscal year. The number of directors as of theconclusion of that General Meeting of Shareholders was 12.
On April 1, 2020, the Company introduced an executive officer
system, which enables the appointment of officers comparable todirectors necessary for business expansion, with the aim of thefurther broadening the scope of business and enhancing employee
morale. Accordingly, with the agreement of all directors, thecompensation of executive officers is also to be paid from theaforementioned total amount of compensation for directors(hereinafter, directors and executive officers are collectively referred
to as “directors, etc.”).
The monetary compensation for corporate auditors is determined
to be within 6.5 million yen per month, in accordance with theresolution made at the Ordinary General Meeting of Shareholders
held on June 29, 1999. The number of corporate auditors as of theconclusion of that General Meeting of Shareholders was five.

The Sumitomo Realty Group’s
ESG management

Kenichi Onodera

Corporate
management

reflecting independent and objective opinions of independent
outside directors and outside corporate auditors. Independent
outside directors and outside corporate auditors have sufficient
opportunities to know relevant information such as the
background, insights and achievements of internal directors,
executive officers and internal corporate auditors at several
occasions including meetings of the Committee of Outside
Directors and Auditors, briefings for outside directors, andmeetings of the Board of Corporate Auditors.

Directors, based on a resolution of authorization by the Board of
Directors. When making this agreement, each director’s duties andlevel of contribution to performance are considered.
Whereas the total annual amount of directors’ compensation isset at 1% of ordinary profit for the previous consolidated fiscal
year, the full amount is not paid to the individual directors, etc., in
the current fiscal year, and part of directors’ compensation isretained without fixing the amount per director, etc., for future use
as retirement benefits for directors, etc., and supplementation of
declines in the compensation of directors, etc., due to downturns
in business performance, etc.
With regard to compensation for directors, etc., in the fiscal year
under review, based on authority resolved by the Board of Directors
at a meeting held on June 29, 2022, the specific content (payment
amount, timing of payment, payment method, etc.) of thecompensation for individual directors was determined by agreement
between Mr. Kenichi Onodera (Director - Chairman / Chairman of
the Board), Mr. Kojun Nishima (Representative Director andPresident / Head of Office Leasing Business Division), Mr. Masato
Kobayashi (Representative Director and Deputy President / Head of
Condominium Sales Business Division), and Mr. Yoshiyuki Odai
(Representative Director and Deputy President / Head of Corporate
Planning Division).
These four directors are, respectively, the Chairman of the Board,
Representative Director and President, Representative Director and
Deputy President in charge of the business division, andRepresentative Director and Deputy President in charge of the
management division, and as these persons received thisauthorization based on the judgment that they would be able tocomprehensively examine and appropriately assess the duties andcontributions to performance of each director by bringing in theirrespective viewpoints, the Board of Directors has judged that thecontent of the compensation of individual directors, etc., for the
fiscal year under review is in line with the determination policy.

Business Review

Regarding nomination of candidates for directors and corporate
auditors, and appointment of executive officers, persons with awealth of experience, high-level insight and sophisticatedexpertise who will contribute to the Company’s sustainablegrowth and medium- to long-term enhancement of corporate
value are narrowed down to candidates through multiple
meetings of the Executive Committee. The final decision is thenmade by the Board of Directors based on thorough deliberation,

 verview of Compensation System for Officers and Resolutions ofO
the General Meeting of Shareholders concerning Officers’
Compensation, etc.

78

The Sumitomo Realty Group’s ESG management

GovernanceCategory

Amount by type of compensation (Million yen)Amount paid
(Million yen)

Directors

Basic compensation

Stock options

Bonus

Retirement benefit

Number of officers
eligible (Persons)

730

730

Executive Officers

420

420

—

—

—

9

Outside Directors

48

48

—

—

—

2

1,198

1,198

—

—

—

19

(excluding Outside Directors)

Total

—

—

8

—

Total Amount of Compensation etc. for Each Category of Officers and Number of Officers Eligible
Category

Amount by type of compensation (Million yen)

Total compensation(Million yen)

Directors(excluding Outside Directors)

Corporate Auditors(excluding Outside Corporate Auditors)

Total

Stock options

Bonus

Retirement benefit

Number of officers
eligible (Persons)

2,165

2,165

—

—

—

8

32

32

—

—

—

2

74

74

—

—

—

4

2,272

2,272

—

—

—

14

Notes: 1. With the agreement of all directors, a portion of the amount of directors’ compensation has been allocated to the nine executive officers.
2. The breakdown of total amount of compensation etc. for outside directors and outside corporate auditors is 48 million yen for outside directors and 26 million yen for outside corporate auditors.

Total Amount of Compensation of Persons with Total Compensation of 100 Million Yen or MoreName

Category

Amount by type of compensation (Million yen)

Total compensation(Million yen)

Basic compensation

Stock options

Bonus

Retirement benefit

Director

150

150

—

—

—

Kojun Nishima

Director

150

150

—

—

—

Masato Kobayashi

Director

120

120

—

—

—

Risk Management

79

Integrated Report 2023

 xamples of Risks that the Company Recognizes and theE
Board of Directors Supervises• Risk related to force majeure events, including disasters• Risk related to compliance• Risk related to climate change• Risk related to suppliers• Risk related to information security• Risk related to finance• Risk related to the spread of COVID-19(3) Risk related to Climate Change
The Group aims to respond to physical risks associated withclimate change such as storm and flood damage, as well astransition risks entailed by various systems for curbing climatechange and changes in the business environment. Based on the
TCFD Framework, we organize, analyze and disclose the financial
impacts brought by climate change and responses to those
impacts from the four perspectives of governance, strategy, risks,
and targets. In addition, the Sustainability Promotion Council, asubordinate organization of the Sustainability Committee,
promotes various initiatives. As a supplier of social assets, we arepromoting decarbonation initiatives as climate change measuresthrough our business activities. We are particularly focusing on
the development of new properties and products with highenvironmental performance, raising awareness for saving energy
in the operation of our properties, and renovating existingbuildings to improve their environmental performance, etc.
However, the Group’s operating results and financial position
may be affected by a rise in construction costs and operationalcosts due to events such as restrictions that exceed ourassumptions and drastic changes in the business environment.

Consolidated Financial and Nonfinancial Data / Company Information

Management Structure
In order to address various business risks, we established theSustainability Committee chaired by the Company’s President.
For monitoring and addressing the risks associated with thebusiness, such as investment risk and market risk, the executive
officers in charge of and responsible for respective departments
and subsidiaries report them to the President and the Board of
Directors. The President and the Board of Directors then discussand respond to these risks. With the process above, we haveestablished a system that the Board of Directors monitors therisk management and reviews the operational status asappropriate.
We have also established a system whereby the BCP Council
responsible for the risks of large-scale disasters, etc. affecting
business continuity, the Sustainability Promotion Council
responsible for issues affecting corporate activities, including
environmental problems and climate change, and for issues andrisks related to human capital etc., and the Internal Audit
Department responsible for the risks related to compliance,
respectively discuss policies for the Group, monitor the status,
and report the results to the Sustainability Committee.

The Sumitomo Realty Group’s
ESG management

Issue Awareness and Action Plans
The Sumitomo Realty Group recognizes that it is importantfor corporate management to take measures to prevent,mitigate and avoid various business risks, as well as respondto emergencies that are expected to have a significant impact
on corporate activities, based on an understanding of thevarious risks involved in business.
In addition to risk management by each business department,
the Group strives to stabilize its business activities andsustainably enhance corporate value by understanding,analyzing and appropriately dealing with risks associated withmanagement and businesses through the establishment ofcross-sectional organizations.

(6) Risk related to FinanceIn the real estate leasing and sales businesses we operate,
investment is made up front, and revenue is not claimed until
we first purchase land and the building is completed. Thismeans we need to secure a stable supply of operating funds
by borrowing from banks or issuing bonds.
To achieve this, we strive to stabilize funding by extending
the period of and promoting fixed interest rates forconsolidated interest-bearing debts while working to solidify
stable relationship with diverse financial institutions.
However, a rapid and significant change in the financial
environment, a change in the operational situation of lenders,etc. may inflict a negative impact on the Group’s earnings
performance or financial position in the forms of rises inborrowing rates and deteriorated cash flows.

Business Review

Kenichi Onodera(2) Risk related to ComplianceBusinesses operated by the Group are subject to wide-ranging
laws and regulations, including the Building Lots and Buildings
Transaction Business Act, the Construction Business Act, theBuilding Standards Act and the Labor Standards Act. We closely
monitor any change in them and work to ensure timely andappropriate compliance. The Internal Control Meeting,subordinate to the Sustainability Committee, monitors theGroup’s compliance promotion activities, while the Internal
Audit Department conducts internal audit on entities including
subsidiaries and operates multiple whistleblowing desk in andoutside the Company, aiming to detect and deter misconduct
and illegal acts.
Still, there is possibility that the Group’s business performanceand financial position may be affected through impacts ofchanges to laws, etc. on business activities. Furthermore, if theGroup and its officers and employees commit complianceviolation, the Group’s business performance or financial position
may be affected as confidence in the Group is undermined anddemand for the Group’s products decreases.

(5) Risk related to Information Security
The Group’s businesses hold large amounts of important
information, including personal data. The Group has
cybersecurity measures in place to prevent information
leaks and trains employees on information security.
However, if information is leaked due to cyberattacks or
negligence on the part of our employees, the Group’s businessperformance or financial position may be affected due topayment of compensation for the damage or decreases indemand for its products as confidence in the Group isundermined.

The Sumitomo Realty Group’s
Value Creation

Outside Directors /Outside Corporate Auditors

Basic compensation(4) Risk related to Suppliers
The Group promotes its business involving many suppliers,
including the construction companies, and personnel involved inoperation of the leasing assets such as cleaning staff, service staff,
security staff, and operators responsible for facility maintenanceand inspections. To reduce the risks associated with suppliers, theCompany’s employees conduct due diligence at the beginningof a transaction with a new supplier, make all parties thoroughly
aware of our “Sustainable Procurement Guidelines,” supervise
transactions, provide safety training to suppliers, and engage inother activities under the Sustainability Promotion Council, asubordinate organization of the Sustainability Committee.
However, the Group’s operating results and financial position
may be affected by suppliers due to unforeseen circumstances.

The Sumitomo Realty Group’s
Business Strategy

Note: Whereas the total annual amount of compensation for directors including outside directors for fiscal year ended March 31, 2023 is fixed at 2,213 million yen, the full amount has not been paid to the individual
directors and executive officers in the same fiscal year, and 1,014 million yen, the difference from the above-mentioned amount paid, has been retained as provision for future use such as their retirement benefits
and supplementation of declines in their compensation due to future downturns in business performance, etc. Regarding the retained amount, the timing of payment and the amount for individual officers cannot
be determined, and thus, the retained amount will become subject to calculation of compensation etc. of individual officers upon payment in the future or upon confirmation of future payment.

(1) Risk related to Force Majeure Events, including Disasters
In order to be prepared for force majeure events, including
disasters, the Group strives to improve its business continuity byadopting base isolation and quake-absorption structures at its
properties and equipping facilities with emergency generators
to ensure uninterrupted operation. We also create manuals andcarry out disaster drills based on expected scenarios in ourbusiness activities in order to ensure operational sustainability.
Moreover, the BCP Council, a subordinate organization of the
Sustainability Committee, determines specific policies to manage
BCP measures for the Group and monitors the status of suchmanagement.
However, if a force majeure event occurs in an extent that far
exceeds our assumptions, the Group’s business performance or
financial position may be affected as it faces costs to reconstruct
its properties or slowdown in business activities.

A Message from the Management

Amount Paid to Each Director and Executive Officer

Sumitomo Realty & Development Co., Ltd.

80

The Sumitomo Realty Group’s ESG management

Governance(Million yen)
FY2019FY2020

FY2021

FY2022

Interest-bearing debts

3,342,786

3,440,908

3,561,293

3,559,993

3,938,021

Equity1,202,103

1,294,998

1,503,021

1,634,049

1,799,372

ND/E ratio*

2.6

2.5

2.2

2.1

2.1

Long-term debt ratio

99%

96%

96%

98%

95%

Fixed-interest rate debt ratio

96%

95%

94%

96%

86%

* Net interest-bearing debts / Equity(7) Risk related to the spread of COVID-19
The COVID-19 pandemic is winding down, and further
normalization of economic and social activities is expectedgoing forward. We strive to secure revenue by implementing
appropriate measures to protect our customers and employees
from infection, based on the epidemic status of infectious
diseases and the knowledge we have accumulated thus far.

However, if the spread of COVID-19 resurges in Japan andother major countries overseas, causing prolonged period of
restrictions on people’s movements and gatherings, the Group’sbusiness performance and financial position may be affected bydecline of revenue from commercial facility business such as
hotels and event halls.

* Compliance promotion activities refer to activities to prevent all types ofcorruption including bribery and money laundering, as well as activities to comply
with various laws and regulations concerning the environment and society.

Initiatives
Whistleblowing System
The Sumitomo Realty Group has established a whistleblowing
system for the employees and their families of the entire Group,
which aims to enable early detection of compliance violations
and appropriate response. In order to encourage active
consultation and reporting, we have designed the system toWhistleblowing System
The Sumitomo Realty Group

Complianceviolations, etc.

All employees of theSumitomo Realty
Group

Reporting on officers

Internal Audit Department

Responding* Strict legal protections

External attorney-at-law

Harassment, etc.
Consultation
Responding

HR Department ofeach company
Consultation hotline of each company

81

Integrated Report 2023

ReportingOutside Corporate Auditors
Sharing information

The Committee of
Outside Directors
and Auditors

Corporate Value of the Company (Policy on Large-Scale Purchase of Shares of the Company)
Basic Policy and Initiatives to Ensure It(1) Aiming to surpass 300 billion yen in ordinary profit in thenext medium-term management plan
With top priority placed on achieving objectives of the mediumterm management plans it has formulated every three years, theCompany has increased its corporate value as a result of having
steadily implemented the plans. The Company has executed
eight management plans, and has achieved increases in ordinary
profit in 23 fiscal years, excluding the three fiscal years under
the global financial crisis and the COVID-19 pandemic.
In the fiscal year ended March 31, 2023, the first year of theNinth Management Plan, we achieved record ordinary profit forthe second consecutive year and record profit for the tenthconsecutive year, making a good start toward achieving thegoals for the cumulative three-year period of the medium-term
management plan.
For the fiscal year ending March 31, 2024, we aim to renew
record-high profits with expecting higher profits in all businesssegments of the mainstay office building leasing (Leasing
segment), condominium sales (Sales segment), housing(Construction segment) and Brokerage segment.
At the time of the announcement of the Ninth Management
Plan in May last year, when the business environment outlook
was uncertain due to the COVID-19 pandemic and the situationin the Ukraine, the Company has set its long-term vision toachieve 300 billion yen in ordinary profit by FY2030 at the latest
through the contribution of earnings from operations of newbuildings to be completed. However, the outlook for eachbusiness segment including the hotel and multipurpose hallbusinesses, which were affected by the COVID-19 pandemic,
has improved compared to a year ago, and surpassing 300
billion yen in ordinary profit is now expected to be achievable

during the next medium-term management plan (2026-2028),
earlier than initially expected.
(2) Growth underpinned by central Tokyo office building leasing
business and corporate value
The real estate leasing business primarily involving officebuildings in central Tokyo has been a driving force underpinning
the Company’s growth thus far. Given that this businessaccounts for nearly 70% of the Company’s operating income
overall, it clearly forms the core aspect of its corporate value
acting as a major pillar of operations.
The Company has been expanding its business platform bypromoting development of office buildings with a specific focus
on central Tokyo over roughly half a century since the early
1970s, an era that ushered in completion of the Shinjuku
Sumitomo Building, often referred to as “Sankaku Biru”(triangular building). The Company has experienced
unprecedented economic crises such as the bursting of Japan’s
bubble economy and the 2008 global financial crisis in wake of
the Lehman Brothers collapse, and various changes in thebusiness environment such as Japan’s bubble economy andbusiness conditions under Abenomics policies. Still, the Company
has consistently persisted with respect to unwaveringly
implementing its management policies such that: (i) the
Company will not pursue temporary gains by selling assets; (ii)the Company will develop sites and construct buildings; and(iii) the Company will hold ownership of the buildings
constructed on sites it has developed to generate stable leasing
income over the long-term by owning and leasing suchbuildings. The Company has consequently grown to become abuilding owner with a diverse portfolio of more than 230
buildings located in central Tokyo, and cash flows from theSumitomo Realty & Development Co., Ltd.

Consolidated Financial and Nonfinancial Data / Company Information

Anonymous reporting

Group consultation hotlines

The Policy for Takeover Defense Measures Against Purchase Proposals That Undermine the

The Sumitomo Realty Group’s
ESG management

Management Structure
The Group has established the Sustainability Committee chairedby the President, and its subordinate organization, the Internal
Control Meeting (hosted by the Company’s Internal Audit
Department), monitors compliance promotion activities* of theGroup and reports the result to the Sustainability Committee.
The Internal Audit Department performs internal audits to checkthe business execution status of each department of the Groupand the operational status of internal controls, prevent any
illegal acts or misconduct, and provide suggestions for business
improvement. Moreover, the department and the independent
auditor report the results of their audits to the corporate
auditors and exchange opinions in an appropriate manner.
These activities help to improve the quality and efficiency of themonitoring by the corporate auditors, the independent auditor
and the Internal Audit Department. The Group has a system inwhich the Board of Directors supervises the compliancepromotion activities. Of the matters examined by respective
department and subsidiaries, important matters are reported to
the Board of Directors.

Handling Compliance Violations
When compliance violations are discovered, the Company
conducts prompt investigations and takes strict disciplinary
actions as well as measures to prevent the reoccurrence of such
violations. At the same time, all officers and employees arewarned.

Business Review

Issue Awareness and Action Plans
The Sumitomo Realty Group has set forth its fundamental
mission which is based on Sumitomo’s business philosophy, andit established the Code of Conduct as guidelines to govern all
our officers and employees in order to fulfill this fundamental
mission. The Code of Conduct upholds the concept of
implementation of compliance and promotes complianceactivities based on the understanding that compliance is an
important management issue.
The Company defines implementation of compliance as not
only complying with laws and regulations, but also sensitively
responding and adapting to social demands that underlie laws
and regulations. We promote our business activities by
responding to laws, regulations, internal rules, social common
sense, corporate ethics and social demands that underlie them.

Compliance Training
Employees are educated on implementation of compliance as
Sumitomo Realty Group employees through various training
programs including new employee training, compliance training
for all employees and managerial position training.

The Sumitomo Realty Group’s
Value Creation

Compliance

Compliance Handbook
The Compliance Handbook, which describes appropriate
behavior in terms of compliance in given situations, is distributed
to all officers and employees to be thoroughly acquainted withlegal compliance. We update the contents as needed, following
the process where we check the adherence to the code of
ethics, identify compliance violations, and verify theeffectiveness based on feedback from the worksites.

The Sumitomo Realty Group’s
Business Strategy

FY2018provide strict legal protection for those who report violations aswell as to allow them the option of anonymous reporting. In
this system, we respond to not only clear compliance violations
but also potential violations.
We have established a compliance system by preparing two
points of contact for reporting; the Internal Audit Department,
which is independent of business divisions or other internalorganizations, serves as the internal point of contact, and an
external law firm, which is independent of the management,
serves as the external point of contact.
In addition, we have established consultation hotlines in eachGroup company’s Human Resources Department to provide
consultation on harassment and other issues related to theworking environment.
The personal information of whistleblowers is kept
confidential with strict legal protections, so they do not
suffer any negative consequences by contacting theconsultation hotlines.
Should a compliance violation be identified, we takeappropriate action and then work to prevent a similar situationfrom reoccurring by alerting our employees through the intranet
and other means. In addition, remedial measures are provided
for victims.

A Message from the Management

Consolidated interest-bearing debts, etc. in recent fiscal years

82The Sumitomo Realty Group’s ESG management

Governance* For details, please refer to “Notice of convocation of the 89th ordinary general meeting ofshareholders.” https://www.sumitomo-rd.co.jp/english/ir/

Timely and Appropriate Information Disclosure and Communication with Shareholders and Investors
Policy for Constructive Dialogue with Shareholders
The Company strives to give an account of the Company’s
corporate management and business activities through general
meetings of shareholders, financial results briefing sessions,individual meetings, and other opportunities for communication
with shareholders and investors. If a shareholder requests a
dialogue, the Company’s policy is that the Investor Relations &ESG Section will respond to such request appropriately under
the supervision of the responsible director, etc. depending on
the objective of the dialogue, the method of communication,
the number of shares held, the attributes, etc.
We hold more than 100 individual meetings each year withboth domestic and foreign institutional investors to exchange
views mainly on growth strategies, shareholder returns, capitalefficiency, takeover defense measures, reduction of strategic
shareholdings, and decarbonization initiatives.
Regarding dialogues with shareholders, we exercise due care
concerning the handling of insider information, and share thecontents of the dialogues, as necessary, at important meetings
such as meetings of the Executive Committee attended bydirectors and executive officers in order to utilizes them for theformulation of management plans and medium- to long-term
outlook, etc.

The Sumitomo Realty Group’s
ESG management

System for Information Disclosure
The Company considers that it is important to ensure soundness
and transparency of management by means of timely andappropriate information disclosure.
In accordance with this basic policy, the Company has put inplace systems that enable swift reporting to the responsible
department at the head office and implementation of
appropriate information management measures, if a material
fact that may have an impact on investors’ investment decisions
arises at the Company’s departments or at subsidiaries.
Upon emergence of a material fact and reporting thereof, theresponsible department, the Administration Department, theCorporate Planning Department, and other relevant departments,
discuss whether there is need for timely disclosure, and if it isjudged that disclosure is necessary, timely disclosure is performed
without delay following the necessary internal procedures.
Subsequently, the disclosure materials are posted on the
Company website for thorough information disclosure.

Business Review

T he Policy on Measures to a Large-Scale Purchase of Shares of
the Company and the Board’s Stance
The Company believes that if a large-scale purchase of theCompany shares (“Large-Scale Purchase”) is initiated, theshareholders should decide to accept or reject the Large-Scale
Purchase. In order for the shareholders to correctly recognize
the effect on the corporate value and common interests ofshareholders, however, it is necessary that both the party
making the Large-Scale Purchase (the “Large-Scale Purchaser”)
and the Board of Directors provide to the shareholders necessary

Consolidated Financial and Nonfinancial Data / Company Information

Integrated Report 2023

lawyers, certified public accountants, etc., and take such
recommendation to the fullest account, when judging whether or
not the Large-Scale Purchaser complies with the Large-Scale
Purchase Rules, whether or not it is clear that the Large-Scale
Purchase will cause unrecoverable damages to the Company,
whether or not the Large-Scale Purchase will significantly damage
the corporate value and common interests of shareholders, andwhether or not countermeasures should be taken.
As stated above, the Policy stipulates rules to secure thenecessary information and time for shareholders to deliberateon the Large-Scale Purchase, as well as countermeasures if theLarge-Scale Purchaser does not comply with the Large-Scale
Purchase Rules or if it is clear that the Large-Scale Purchase willcause unrecoverable damages to the Company. The purpose of
the Policy is not to maintain the status of the Company’s officers
but to contribute to the Company’s corporate value and thecommon interests of its shareholders.

The Sumitomo Realty Group’s
Value Creation

83

and sufficient information, opinions, alternative proposals, etc.,
and necessary and sufficient time to consider them.
The Policy sets out rules on Large-Scale Purchases (“LargeScale Purchase Rules”) and requests the Large-Scale Purchaser
to comply with the Large-Scale Purchase Rules. The Large-Scale
Purchase Rules state that the Large-Scale Purchaser provides theBoard of Directors necessary and sufficient information
regarding the Large-Scale Purchase in advance, and commence
the Large-Scale Purchase after a certain period of evaluation by
the Board of Directors has elapsed. The Board of Directors shalltake measures that it deems necessary if the Large-Scale
Purchaser does not comply with the Large-Scale Purchase Rules,
or even though the Large-Scale Purchaser complies with theLarge-Scale Purchase Rules, if it is clear that the Large-Scale
Purchase will cause unrecoverable damages to the Company orif the Large-Scale Purchase significantly damages the corporate
value and common interests of shareholders.
Additionally, the Board of Directors shall consult with a Special
Committee consisting of outside directors, outside corporate
auditors, persons with corporate management experience,

The Sumitomo Realty Group’s
Business Strategy(3) The necessity for the takeover defense measures
In the Ninth Management Plan, the Company has set forth thecontinuation and promotion of investment in leasing officeassets in central Tokyo as its third target, and it aims to further
expand its earnings base, increase its corporate value, andaugment shareholder returns by successively completing
concrete development plans, centered on redevelopment, witha gross floor area of over 700,000 tsubo (one tsubo is roughly
3.3 m2), which constitutes more than 40% of the 1,700,000
tsubo in gross floor area for leasing as of March 31, 2022, andputting these buildings into operation. Such large-scale
development plans involve ultimately generating revenues fromthe substantial amount of cumulative upfront investment madethus far. The Company has long managed to continuously
expand its business platform by developing lease buildings while
avoiding exposure to vicissitudes of the real estate market andeconomic conditions, given that it has always been buoyed bycash flows from the leasing business which have been a stablesource of revenues. As such, the Company needs to maintainand further expand its cash flows from the leasing business,
which have grown to exceed 200 billion yen, in order toconfidently carry out such upfront investment without having tocontinually resort to interest-bearing debt. Moreover, it is likely
to take another two or three medium-term management plan
periods before the Company achieves full profitability given thatthe focus has been on large-scale redevelopment.
On the other hand, amid large-scale financial easing, appetite
for investment in top-class domestic revenue-generating realestate has increased, and it cannot be denied that there is a riskthat a large-scale acquisition will be forcefully conducted in a
one-sided manner in relation to shares of the Company, whichholds many top-class buildings in Tokyo. If the management
policies of the Company, which aim to sustainably enhance
corporate value through the steady accumulation of leasing
assets that the Company has continued to build up over the
past half a century, are rejected and a short-term management
policy is adopted to seek temporary earnings and realizes latent

gains by selling real estate holdings prior to having accomplishedthe objectives of the development plans formulated tocontribute to higher corporate value in the future, cash flows
from the leasing business that act as a stable revenue source will
decrease as a result, thereby exposing the development plans tofinancial risk. As such, the Company is unable to rule out apossible threat of damage to the foundations of the Company’s
corporate value. The Company’s management policy aims tosteadily increase corporate value based on a medium- to longterm outlook, and is consequently incompatible with such shortterm management policies. As such, until there is a general
timeline for the generation of revenues from development planscovering over 700,000 tsubo, which is equivalent to over 40%of the current gross floor area in operation, and development
plans that are not reflected in corporate value have decreased toa certain proportion, the Company needs to seek a mandate
from its shareholders upon having ensured sufficient
information and time for completing discussions in case aninvestor seeking to orchestrate a takeover emerges.
In addition, under the Financial Instruments and Exchange Act
of Japan, there is a tender offer system in place as a process for
ensuring transparency and fairness for share transactions that
affect the control of companies, and it is thus ensured thatshareholders will have information and time to make anassessment. The tender offer period is however short, at 30
business days, and thus cannot be said to provide sufficient time
for consideration. In addition, the Company believes issues
remain in relation to the legal system, such as the fact that highhanded purchases and other abusive purchases cannot
necessarily be eliminated because partial tender offers are
permitted, and the fact that the tender offer system will not beapplied in the first place if the purchaser only purchases sharesthrough market transactions.
Based on the above, the Company deems that in order tocontinue to sustainably enhance the corporate value of theCompany in the future, the provision of procedures through the“Policy for Takeover Defense Measures Against Purchase
Proposals That Undermine the Corporate Value of the Company(Policy on Large-Scale Purchase of Shares of the Company)”(hereinafter referred to as “the Policy”), continues to align withthe common interests of shareholders. The Policy was adopted
based on the decision of the meeting of its Board of Directors
dated May 17, 2007. It was continued based on the resolutionof shareholders’ meeting of the 74th fiscal year dated June
2007, and was continued or renewed upon receiving approval
from shareholders at the 77th, the 80th, the 83rd, the 86th andthe 89th ordinary general meetings of shareholders. The termof the Policy will expire upon the conclusion of the 92nd
ordinary general meeting of shareholders scheduled to be heldin June 2025.

A Message from the Management

leasing business exceeded 220 billion yen in the fiscal year
ended March 31, 2023 (operating income of the real estateleasing business + depreciation).
The office building leasing business calls for comprehensive
strengths for carrying out business encompassing everythingfrom acquisition of development sites to operations that include
planning projects, marketing tenants, providing services fortenants and managing buildings. Given that acquiring
development sites is the most important of these operations,the Company has been developing sites for buildings as if itwere a manufacturer in terms of the approach it takes toredevelopment in terms of purchasing multiple small parcels ofland to integrate them into a larger scale and coordinating rights
and interests of landowners. In addition, the Company attaches
importance to performing building management, tenant
marketing, etc. directly, thus grasping the actual conditions ofclients and sites appropriately and always eagerly working on
the improvement of project planning and making operations
more efficient. As a result, we have realized high profitability,and have increased the value of the property possessed as well
as of the corporation. As of March 31, 2023, unrealized gains
from rental and other investment properties amounted toapproximately 3.7 trillion yen having accumulated over the years.

Sumitomo Realty & Development Co., Ltd.

84

Consolidated Financial and Non-financial Data / Company Information

Key Non-financial Data

FY2020Unit

FY2021

FY2022

Environmental Indicator

FY2020

FY2021

FY2022Thousand L

1,983,409

1,841,173

2,009,446m

3,850,618

3,796,918

3,725,121

Thousand L/m

0.515

0.485

0.539

Water Withdrawal*

Total Greenhouse Gas (GHG) Emissions (Scope 1 + Scope 2 + Scope 3)
4,917,485

4,851,091

4,742,194

Scope 1 (Direct emissions)t-CO2

41,447

43,84744,270Covered area

Scope 2 (Indirect emissions from energy use)

t-CO2

122,376

119,858

121,369

Water withdrawal coefficient

Scope 3 (Other indirect emissions)t-CO2

4,753,662

4,687,387

4,576,555

1. Purchased goods and services

t-CO2

807,278

1,129,945

1,029,072

Wastewater*

2. Capital goods

t-CO2

461,984

289,359752,311

Wastewater

Thousand L

1,843,172

1,719,615

1,903,615

3. Fuel and energy-related activities (not included in Scope 1 or Scope 2)

t-CO2

28,04527,80927,916

Covered aream

3,850,618

3,796,918

3,725,121

4. Upstream transportation and distribution

t-CO2

0

0

0

Thousand L/m

0.479

0.453

0.511

5. Waste generated in operations

t-CO2

21,811

23,757

20,476

6. Business travel

t-CO2

1,776

1,695

1,684

7. Employee commuting

t-CO2

3,364

3,211

3,191

Total waste volumet

15,016

18,54916,052

8. Upstream leased assets

t-CO2

19,977

18,82618,087

Total recycled waste volumet

10,38912,458

11,104

9. Downstream transportation and distribution

t-CO2

70,518

106,767

110,894

10. Processing of sold products

t-CO2

0

0

0

11. Use of sold products

t-CO2

3,082,599

2,832,169

2,379,038

12. End-of-life treatment of sold products

t-CO2

36,23032,92328,378

13. Downstream leased assets

t-CO2

220,082

220,927

205,509

14. Franchises

t-CO2

0

0

0

Social Indicator

15. Investments

t-CO2

0

0

0

Employee

Water withdrawal

Wastewater coefficient* The calculation of water withdrawal and wastewater boundary consists of office buildings owned and managed by Sumitomo Realty (including those used by the Company) for which reporting is required underthe Act on Rationalizing Energy Use.
The calculation of waste discharge and recycled waste boundary consists of the leasing assets owned and managed by the Sumitomo Realty Group.

Unit

FY2020

FY2021

FY2022

Persons

13,53013,04012,957

Male

Persons

9,445

9,042

8,941

m

Energy consumption coefficient

GJ/m

2

2

3,201,463

3,107,846

FemalePersons

4,085

3,998

4,016

5,300,737

5,513,815

5,744,209

Percentage of employees who received health checkup

%

100

100

100

0.609

0.581

0.541

Average length of service

Years

7.8

8.4

8.4

Green Building Certification
Number of certified properties

Diversity Indicator
Properties

26

27

54

Number of employees who took maternity leave

Persons

151

161

164

m

2

2,543,308

2,630,933

3,176,691

Number of employees who took childcare leave

Persons

189

209

305

Gross floor area of leasing assets owned by the Company

m2

4,772,670

4,856,078

5,215,000

Number of employees working shorter hours

Persons

203

256

290

Percentage of certified area to total gross floor area

%

53

54

61

Employment rate of persons with disabilities

%

2.53

2.38

2.37

Certification acquisition rate for large-scale new buildings

%

100

100

100

Percentage of female managers

%

4.5

4.7

9.1

Sumitomo Realty & Development Co., Ltd.

Consolidated Financial and Nonfinancial Data / Company Information

Gross floor area of certified properties

Integrated Report 2023

The Sumitomo Realty Group’s
ESG management

Covered area

3,229,045

2

Business Review

GJ

2

The Sumitomo Realty Group’s
Value Creation

Energy consumption

2

Waste Discharge and Recycled Waste Volumes*

Total number of employees
Energy Consumption

2

The Sumitomo Realty Group’s
Business Strategy

t-CO2

Total GHG emissions

85

Unit

A Message from the Management

Environmental Indicator86Consolidated Financial and Non-financial Data / Company Information

Eleven-year Financial Summary
A Message from the Management

Million yen

FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022736,652

780,273806,835

854,964925,151

948,402

1,012,198

1,013,513

917,473

939,431939,905

Leasing278,317

283,730

289,117313,340

337,466

353,881

381,764

395,592

398,238

425,082

425,369

Sales

232,149

234,093

264,207274,761

314,299

311,193

331,752

324,928

263,395

233,788

222,077

Construction

171,082

201,190

188,995

199,115

203,623

209,356

221,693

218,931

188,708

204,362

213,584

Brokerage

50,95757,211

58,486

61,496

66,714

69,16971,867

71,19965,79373,484

75,107

Cost of revenue from operations

529,913558,987

579,964

614,191

664,184

664,015

711,050

691,832

629,565

636,988625,452

SG&A expenses

55,39460,81560,976

66,532

72,79678,75081,75987,34968,66468,56073,179% of revenue from operations

7.5%

7.8%

7.6%

7.8%

7.9%

8.3%

8.1%

8.6%

7.5%

7.3%

7.8%

Operating income

151,345

160,471

165,895

174,241

188,171

205,637

219,389

234,332

219,244

233,883

241,274% of revenue from operations

20.5%

20.6%

20.6%

20.4%

20.3%

21.7%

21.7%

23.1%

23.9%

24.9%

25.7%

Ordinary profit*1

114,916

130,537

139,055

148,424

167,697

186,871203,227

220,521

209,950

225,115

236,651

Profit attributable to owners of parent

59,82569,69780,567

87,798103,489

119,731130,103

140,997

141,389

150,452

161,926

Depreciation and amortization

37,76135,311

33,51934,57439,446

41,62846,313

48,97457,81360,64564,635

4,105,500

4,220,429

4,523,804

4,675,915

4,980,040

5,167,199

5,130,120

5,317,623

5,673,666

5,806,040

6,365,436

627,012

707,948

832,462

888,100

1,007,347

1,114,975

1,202,104

1,295,000

1,503,021

1,634,049

1,799,372

Net interest-bearing debt

2,424,932

2,652,929

2,875,660

2,971,667

3,101,162

3,210,302

3,170,595

3,245,547

3,372,953

3,408,600

3,752,902

Unrealized gains on investment and rental properties

1,001,547

1,132,644

1,290,145

1,697,562

1,996,441

2,328,140

2,703,263

3,176,151

3,432,632

3,494,974

3,736,711

For the Year
Revenue from operations

The Sumitomo Realty Group’s
Business Strategy
The Sumitomo Realty Group’s
Value Creation

At Year-end
Total assets
Equity*2

Business Review

Per Share Amounts (Yen)

126.18147.02169.97185.23218.34252.62274.51297.50298.33317.45341.66

1,322.52

1,493.48

1,756.25

1,873.71

2,125.36

2,352.53

2,536.40

2,732.41

3,171.34

3,447.81

3,796.64

20.00

20.00

21.00

22.00

24.00

27.00

30.00

35.00

40.00

45.00

52.00

Equity ratio (%)

15.3

16.8

18.4

19.0

20.2

21.6

23.4

24.4

26.5

28.1

28.3

ROE (%)

10.1

10.4

10.5

10.2

10.9

11.3

11.2

11.3

10.1

9.6

9.4

ROA (%)

3.9

4.0

3.9

3.9

4.0

4.2

4.5

4.7

4.2

4.3

4.2

Return on leasing business*3 (%)

4.8

4.7

4.7

4.8

5.3

5.5

5.6

6.0

5.5

5.5

5.4

Long-term debt ratio (%)

93

95

97

98

98

98

99

96

96

98

95

Fixed-interest rate debt ratio (%)

80

82

87

94

95

94

96

95

94

96

86

ND/E ratio*4 (Times)

3.9

3.7

3.5

3.3

3.1

2.9

2.6

2.5

2.2

2.1

2.1

4.9

6.1

6.5

7.3

9.0

10.5

11.4

12.8

12.6

13.7

14.6

Profit attributable to owners of parent
Net assets
Cash dividend applicable to the year

Consolidated Financial and Nonfinancial Data / Company Information

Interest coverage ratio* (Times)
5

The Sumitomo Realty Group’s
ESG management

Key Ratios*1. Ordinary profit, which equals operating income after adjustment for non-operating income/expenses, is a management index that is widely used in Japan.
Ordinary profit is not referred to in the English-language financial statements of the Consolidated Financial Report, but is included here because it plays an important role in the calculationof compensation for directors.
*2. Equity = Shareholders’ equity + Accumulated other comprehensive income (loss)*3. Return on leasing business = Cash flows from leasing business / Net investments of leasing business*4. ND/E ratio = Net interest-bearing debt / Equity*5. Interest coverage ratio = (Operating income + Interest and dividend income) / Interest expense
Notes: 1. The Company changed its accounting policy (revenue recognition standards of Sumitomo Real Estate Sales) from the beginning of FY2019. The figures provided for FY2018 are thoseafter retroactive application.
2. From the beginning of FY2020, the business segments for revenue and income from Sumitomo Real Estate Sales have been changed, from the allocation to “Sales,” “Brokerage” and“Adjustments (not presented in the document),” to be consolidated into “Brokerage.” Financial results for FY2019 have been adjusted retroactively.

87

Integrated Report 2023

Sumitomo Realty & Development Co., Ltd.

88

Consolidated Financial and Non-financial Data / Company Information

History

Corporate Data

1949

• Izumi Real Estate Co., Ltd. established to succeed real estate business of the Sumitomo Honsha Ltd. following the breakup of the conglomerate.

1957• Izumi Real Estate Co., Ltd. changed its name to Sumitomo Realty & Development Co., Ltd.

1963

• Merged with the holding company of the former Sumitomo zaibatsu during its liquidation.

Investor Information

Corporate Name Sumitomo Realty & Development Co., Ltd.
Head Office

Shinjuku NS Building, 4-1,
Nishi-shinjuku 2-chome
Shinjuku-ku, Tokyo 163-0820, Japan

Number of Common Stock
Authorized: 1,900,000,000 shares
Issued:476,085,978 shares
Number of Shareholders: 16,986(of which 15,526 holding share unit)

Date of Establishment December 1, 1949

Breakdown ofshareholders¥122,805 million

Number of Employees 12,957 (Consolidated)

Trust Accounts

26.26%

Corporate Website https://www.sumitomo-rd.co.jp/english/

Financial Institutions

8.47%

Other Companies

39.49%

Foreign Companies

22.06%

Individuals and Others

3.72%

Major Consolidated Subsidiaries

Major Shareholders
Number of shares held(Thousands)Name

71,324

15.05

Custody Bank of Japan, Ltd. (Trust account)

25,477

5.38

Custody Bank of Japan, Ltd. (Trust account 4)

10,952

2.31

Sumitomo Mitsui Banking Corporation

10,000

2.11

Taisei Corporation

9,550

2.02

Daikin Industries, Ltd.

8,367

1.77

Obayashi Corporation

8,090

1.71

SSBTC CLIENT OMNIBUS ACCOUNT

7,744

Shimizu Corporation

7,500

Maeda Corporation

7,244• Listed on the Tokyo Stock Exchange and Osaka Securities Exchange.

1972• Established Sumitomo Realty & Development CA., Inc., a consolidated subsidiary.

1973• Established Sumitomo Fudosan Tatemono Service Co., Ltd., a consolidated subsidiary.

1974• Completed construction of Shinjuku Sumitomo Building in Shinjuku Ward, Tokyo (in March); moved Company headquarters there from Tokyo Sumitomo Buildingin Marunouchi, Tokyo (in June).

1975• Established Sumitomo Real Estate Sales Co., Ltd., a consolidated subsidiary.

1978• Established Biwako Resort Club Co., Ltd. (currently Sumitomo Fudosan Villa Fontaine Co., Ltd.), a consolidated subsidiary.

1980• Established Sumitomo Fudosan Syscon Co., Ltd., a consolidated subsidiary.

1982• Completed construction of Shinjuku NS Building in Shinjuku Ward, Tokyo (in September); moved Company headquarters there from Shinjuku Sumitomo Building(in October).
• Started sales of Hiroo Garden Hills in Shibuya Ward, Tokyo (a joint project).

Percentage ofshares held

The Master Trust Bank of Japan, Ltd. (Trust account)

1984• Established Sumitomo Fudosan Finance Co., Ltd. (Absorbed in March, 2022).

1986• Established Sumitomo Fudosan Fitness Co., Ltd. (currently Sumitomo Fudosan Esforta Co., Ltd.), a consolidated subsidiary.

1995• Commenced American Comfort custom home construction business.

1996• Commenced Shinchiku Sokkurisan remodeling business.

1998
1999

1.63
1.58

2002

• Completed construction of Izumi Garden Tower in Minato Ward, Tokyo.

1.53

2003
2004

2010

Yen

Stock Price (right)
TOPIX (left)

6,000

5,000

2,500

4,000

2,000

3,000

1,000

2,000

2014
2015

2022

2023

Trading Volume

Million shares

2022
Million shares

100

75

75

50

50

25

25

0 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11

2018

89

Integrated Report 2023

2019

2020

2021

2022

• Number of condominium units brought to market over full year was the highest in Japan for the first time (the sixth consecutive year from 2014 to 2019).
• Completed construction of Tokyo Nihombashi Tower in Chuo Ward, Tokyo.
• Achieved cumulative total of 100,000 units contracted in Shinchiku Sokkurisan remodeling business.

2023• Completed renovation of Shinjuku Sumitomo Building / Completed “Sankaku Hiroba,” an all-weather atrium for various events in Shinjuku Ward, Tokyo.
• Fully opened Ariake Garden, a large-scale complex in Koto Ward, Tokyo.
• 25th anniversary of Shinchiku Sokkurisan remodeling business - Achieved cumulative total of 150,000 units contracted.
• Launched “STEP Auctions,” new real estate brokerage service of Sumitomo Real Estate Sales Co., Ltd.
• Due to a market restructuring of the Tokyo Stock Exchange, the Company’s market segment was transferred from the First Section to the Prime Market• Fully opened Haneda Airport Garden in Ota Ward, Tokyo, a mixed-use complex directly connecting to the Haneda Airport.

Consolidated Financial and Nonfinancial Data / Company Information

100• Completed construction of Sumitomo Fudosan Shinjuku Grand Tower in Shinjuku Ward, Tokyo.

• Sumitomo Real Estate Sales Co., Ltd. delisted as it became a wholly owned subsidiary.

2021

2021

• Opened “Grand Mansion Gallery” in Tokyo metropolitan areas (Akihabara, Shinjuku, Shibuya, Ikebukuro, Tamachi).

2017

0 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 0

2020

• Started sales of City Towers Toyosu The Twin in Koto Ward, Tokyo.
• Completed construction of Shinjuku Central Park City in Shinjuku Ward, Tokyo.

• Completed construction of Sumitomo Fudosan Roppongi Grand Tower in Minato Ward, Tokyo.

1,000

2019

• Established Sumitomo Fudosan Bellesalle Co., Ltd., a consolidated subsidiary.

2016

2020
500

• Completed construction of Shiodome Sumitomo Building in Minato Ward, Tokyo.

The Sumitomo Realty Group’s
ESG management

1,500

2011

• Launched J·URBAN urban-style housing series.
• Started sales of World City Towers in Minato Ward, Tokyo.

Business Review

Stock Price and Trading Volume on Tokyo Stock Exchange

2018• The Samquest bond issuance, which was the first public offering of commercial real estate securitization in Japan.
• The number of STEP brokerage offices managed by Sumitomo Real Estate Sales Co., Ltd. exceeded 200.

2008

3,000

• Sumitomo Real Estate Sales Co., Ltd., a consolidated subsidiary, listed on the Tokyo Stock Exchange.
• Commenced real estate joint investment trust fund. Launched Sumitomo Realty & Development Fund (SURF) series.

2001

Notes: 1. Numbers of shares have been rounded down to the nearest thousand shares.
2. Percentage of shares held has been calculated by excluding treasury stock.

Point• Entered condominium sales business with Hama-Ashiya Mansion in Kobe, Hyogo Prefecture.

1970

The Sumitomo Realty Group’s
Value Creation

Sumitomo Real Estate Sales Co., Ltd.
Sumitomo Fudosan Tatemono Service Co., Ltd.
Sumitomo Fudosan Syscon Co., Ltd.
Sumitomo Fudosan Villa Fontaine Co., Ltd.
Sumitomo Fudosan Bellesalle Co., Ltd.
Sumitomo Fudosan Retail Management Co., Ltd.
Sumitomo Fudosan Esforta Co., Ltd.

• Opened Osaka Branch.

The Sumitomo Realty Group’s
Business Strategy

Paid-in Capital

1964

A Message from the Management

Corporate Data / Investor Information (As of March 31, 2023)• Completed construction of Sumitomo Fudosan Tokyo Mita Garden Tower in Minato Ward, Tokyo.

0

2023

Sumitomo Realty & Development Co., Ltd.

90

Shinjuku NS Building, 4-1, Nishi-shinjuku 2-chome,
Shinjuku-ku, Tokyo 163-0820, Japan
https://www.sumitomo-rd.co.jp/english/

Printed in Japan