To whom it may concern:

May 12, 2022
Company:
Sumitomo Realty & Development Co., Ltd.
Representative: Kojun Nishima,
Representative Director and President
Securities code: 8830 (TSE Prime Market)
Contact:
Tetsuya Mogi, General Manager ofCorporate Planning Department

Notice of the Medium-Term Management PlanThe Eighth Management Plan ended in the fiscal year ended March 31, 2022. Accordingly, the Company has
formulated a new medium-term management plan (the Ninth Management Plan) starting from the fiscal year
ending March 31, 2023.
Particulars
With top priority placed on achieving objectives of the medium-term management plans it draws up every
three years, the Company has increased its corporate value as a result of having steadily carried out suchinitiatives. Over the past 25 years, the Company has executed eight management plans, and has achieved
increases in ordinary profit in 22 fiscal years, excluding the three fiscal years of the global financial crisisand the COVID-19 pandemic.
In the first 10 fiscal years (three medium-term management plan periods), the Company focused on restoring
its asset base, which had been damaged by the bursting of Japan’s bubble economy, and reducing interestbearing debt. In the latter 15 fiscal years (five medium-term management plan periods), the Company doubled
leasing assets, strengthened management foundations by strengthening the four segments of leasing, sales,construction and brokerage, and enhanced shareholders’ equity, lifting the credit rating to the AA zone.
Over the next three medium-term management plan periods through fiscal 2030, the Company will maintainan approach that prioritizes the allocation of funds to further investment to increase leasing assets and takesteps for sustainable profit growth, while also aiming to create a resilient management foundation and achievesustainable growth, based on the high level of social contribution of the Company’s businesses themselves,and increasing investment capacity and the level of flexibility in capital strategy.
At present, there are various issues in the management environment such as the COVID-19 pandemic,
geopolitical risk and instability in resource procurement, but as the Company expects to achieve ordinary
profit of 300 billion yen for fiscal 2030, it will position the “Ninth Management Plan” as the first step toachieving that target.

1NameNinth Management Plan

Plan period

Three years, from the fiscal year ending March 31, 2023 to the fiscal year
ending March 31, 2025

Key Points of Plan
1.

Earnings Targets
Consecutive record profit for the period covered
Achieve cumulative ordinary profit of 750 billion yen and profit of 500 billion yen over the three-year
periodAim to achieve record profits for the fourth consecutive plan since the Sixth Management Plan by
maintaining the pace of growth attained through the Eighth Management Plan
< Three-year cumulative earnings targets >Revenue from operations
Operating incomeOrdinary profit
Profit¥3 trillion ( Vs. Eighth Management Plan:¥ 770.0 billion (“¥ 750.0 billion (“¥ 500.0 billion (“++++¥ 129.6 billion + 5% )¥ 82.5 billion + 12% )¥ 94.4 billion + 14% )¥ 67.2 billion + 16% )(Reference) Comparison of management plan results(Billion yen)
(Fiscal year ended/ending March 31)

Revenue from operations
Operating income
Ordinary profit
Profit6th Plan
2014-2016

7th Plan
2017-2019

8th Plan
2020-2022

9th Plan2023-2025

2,442.1

2,885.8

2,870.4

3,000.0+272.0+443.7(15.3)+129.6

500.6

613.2

687.5

770.0

+63.3

+112.6

+74.3

+82.5

418.0

557.8

655.6

750.0

+88.9

+139.8

+97.8

+94.4

238.1

353.3

432.8

500.0

+74.1

+115.3

+79.5

+67.2

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

22.

Performance Targets and Strategies by Segment
We will maintain the position of office building leasing in Tokyo as a solid foundation, and will aim toutilize the comprehensive strengths of the Group as a whole to achieve our targets< Performance targets by segment >(Billion yen)

6th Plan

7th Plan

9th Plan

8th Plan

Leasing

886.2

1,073.1

1,218.9

1,300.0

Sales

773.1

957.2

822.1

750.0

Construction

589.3

634.7

612.0

700.0

Brokerage

177.2

207.7

210.5

250.0

2,442.1

2,885.8

2,870.4

3,000.0

Leasing

313.7

415.5

487.3

520.0

Sales

127.2

140.1

150.9

150.0

Construction

47.0

50.4

54.7

75.0

Brokerage

40.6

47.4

44.1

68.0

Operating income

500.6

613.2

687.5

770.0

Revenue from operations< Strategies >(1) Leasing
Aim to maintain the earnings foundation built through the Eighth Management Plan, and achieve
profit growth for the fourth consecutive plan period• 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 EighthManagement Plan (180 thousand tsubo of gross floor area) and by starting operation of newbuildings 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 TenthManagement Plan onward(2) Sales
High level of profit of the Eighth Management Plan to be maintained• We will maintain our policy of controlling the pace of sales, pursuing profit rather than volume• 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 intensifiedcompetition for land acquisition(3) ConstructionIn both remodeling (Shinchiku Sokkurisan) and custom home construction, we will focus oncontrolling costs while enhancing quality, and aim to achieve consecutive record profits byexpanding orders• We will expand orders by proposing products that accurately respond to customer needs, such asa high level of environmental performance and disaster preparedness• We will appropriately address spikes in prices of wood and materials, and minimize the impact3

(4) Brokerage
We will further strengthen profitability as we aim to achieve record profit in a management planwith a significant increase
We will strengthen Group collaboration and further pursue customer-oriented services to expand
our market share
3.

Capital Investment Plans (Non-current asset investment excluding sales assets, such as condominiums for sale)
Further investment in leasing office assets in central Tokyo, strengthening our earnings base
Expect to invest 1 trillion yen over the three years of the Ninth Management Plan
(1) We will invest 700 billion yen in concrete development projects for over 700 thousand tsubo (onetsubo is roughly 3.3 m2) of gross floor area, mainly comprising redevelopment projects
Current forecasts for the operation of leasing office assets are as shown in the table below< Pace of development >(Thousand tsubo)

Gross floor area

6th Plan

7th Plan

8th Plan

9th Plan

10th Plan
onward

110

210

180

190520(2) We will ensure that we take advantage of opportunities that arise by securing 300 billion yen forinvestments in new projects
4.

Financing Plans(1) We expect to be able to cover the additional investment of 700 billion yen in properties that are inprocess with increases in cash flows from the leasing business*< Capital investment and cash flows from the leasing business >(Billion yen)

6th Plan

7th Plan

8th Plan

9th PlanCapital investment(422.3)(663.5)(805.3)(1,000.0)

Cash flows from theleasing business

409.8

534.6

644.5

700.0

Interest-bearing debt

3,158.9

3,342.8

3,560.03,800.0* Cash flows from the leasing business: Operating income of the leasing business + Depreciation(2) Introduction of green financing
Procure total long-term funding amount of 1 trillion yen from green financing(i)

Procure 1 trillion yen in funds from green financing for 12 buildings, out of 27 buildings
owned by the Company that have already acquired a rating of three stars or above in DBJ
Green Building Certification* (as of March 31, 2022)

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(ii) 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 selling, as this financing is to contribute to social issues, such as environmental
improvements(iii) Obtain assessment of conformity with green finance from JCR and R&I* DBJ Green Building Certification is a certification system established by the Development Bank of Japan toevaluate real estate for its performance and initiatives regarding “environmental and social awareness” beyond its“profitability”

5.

Policy for Shareholder Returns
Continue “Sustainable Dividend Increase” and “Annual Dividend Increase of 5 yen” in line with profit
growthCash flow allocation policy of prioritizing investment in leasing office assets, to be maintained
As we expect the shareholders’ equity ratio to exceed 30% during the Ninth Management Plan period,
our flexibility in capital strategy is increasing.
< Dividends and earnings per share >(Yen)

7th Plan(Fiscal year ended March 31)

6.

2017

2018

8th Plan
2019

2020

2021

2022

Dividends

24

2730

3540

45Earnings per share

218

253

275

298

298

317

Introduction of Numerical Targets regarding Strategic Shareholdings
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 and medium- to long-term enhancement ofcorporate value primarily from the standpoint of establishing and strengthening stable and longstanding business relationships with them.
In this new management plan, the Company has decided to establish a numerical target for the amountof strategic shareholdings held, and certain rules. As of the end of the previous fiscal year, the bookvalue 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 >(Billion yen)

6th Plan(2016)

7th Plan(2019)

8th Plan(2022)

Book value of shares

190.3

255.5

271.9

Shareholders’ equity

821.0

1,099.3

1,479.2

Ratio

23%

23%

18%

(As of March 31)

5Fiscal 2030
target

10% or less

7.

Establishment of CO2 Emissions Reduction Targets (Scope 1, 2, and 3)
50% reduction 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 expansion(1) Promote energy-saving in leasing business centered on office buildings and facility managementbusinesses• We will further pursue the introduction of highly efficient facilities for new constructions andrenovations, and will reduce the Company’s CO2 emissions from energy consumption, etc., by50% per unit of floor area
• Continue awareness-raising activities for energy saving towards tenants(2) 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• Curb energy consumption during construction• Enhance high-performance designs (adopting ZEH*-M Oriented as the standard specificationfor 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 spread of automobile charging stations(3) Aim to reduce total emissions by 10% in the Ninth Management Plan
• Reductions in the condominium business, which accounts for approximately 60% of total
emissions, will contribute from the Tenth Management Plan onward, when the construction ofproperties 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>(Thousand tons of CO2)

Condominiums
Custom homes andShinchiku Sokkurisan remodeling
Office buildings
Other(head office and Group companies)
Non-condominium
Total

Fiscal 2014
emissions
3,605

9th Planreduction
targetProportion
61%(Reference)
Fiscal 2019
emissions
3,540

1,591

27%

1,565

689

12%

1,366

55

1%

66

2,336
5,940

39%
100%

(25)%
(10)%

2,997
6,537

Main numerical targets in each business
(1)
(2)
(3)
(4)

30% of tenant office spaces to introduce green power
100% of condominiums to be ZEH-M Oriented designs
60% of custom home orders to be ZEH homes (already standardized)
20% of Shinchiku Sokkurisan remodeling orders to be high thermal insulation remodeling products(already introduced)(5) All of electric power used in the Group’s own offices to be green by obtaining environmental
value generated by solar power through “SUMIFU × ENEKARI”

6