Otemachi Park Building, 1-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8133, Japan
http://www.mec.co.jp/index_e.html

MITSUBISHI ESTATE CO., LTD.

AdvancingIntegrated Report 2 019

Innovation,
UnlockingPotential
Integrated Report
Integrated Report 2019

2021

Delivering the Value
Needed in
the Coming Era
Otemachi Park Building, 1-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8133, Japan
https://www.mec.co.jp/index_e.html

Cover photograph taken in the reception area ofthe Mitsubishi Estate Head OfficeThis report is printed using paper that contains
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has using
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Printed in Japan
Printed in Japan

Contents2	The Mitsubishi Estate Group’s History
and Achievements“A Love for People
A Love for the City ”
Forever Taking On New Challenges—The Mitsubishi Estate Group

Marunouchi Today

6

Mitsubishi Estate’s Strengths

8

Mitsubishi Estate’s Value Creation Model

10

President’s Message“Shoji Komei”“Ritsugyo Boeki”

Integrity and Fairness
Maintain principles of transparency
and openness,
conducting business withintegrity and fairness.

Global Understanding through Business
Expand business,based on an all-encompassing
global perspective.

In order to carry out the Group’s Mission,
we pledge to observe the following Code of Conduct:

1

2

3

We will act with integrity.

We will strive to earn
the trust of our clients.

We will strive to createa vibrant workplace.

We will approach all objectives fromour clients’ point of view, providing
safe and reliable products andservices, and make information
available as appropriate.

While aiming at personal growth, wewill respect the human rights anddiversity of opinions of others andincrease our creativity and professionalism,
while displaying ourcollective strengths as a team.

We will base our conduct on laws
and ethics and always reflect withhumility upon our behavior, valuing
our communication with society andplacing priority in our corporate
activities on earning trust throughfairness and transparency.

Long-Term Management Plan 2030

https://www.mec.co.jp/e/company/charter/index.html

57		

Corporate Governance
57

		 58

Message from the Chairman of the Board
Directors

		59	Corporate Executive Officers, Executive
Officers, and Group Executive Officers

		

60

		

62	Evaluation of the Effectiveness of the Board of
Directors
63

Corporate Governance System

Shares Held for Strategic Purposes

Road Map for 2030

		 64

Remuneration

Overview of Sustainability (ESG) Initiatives

		

Message from an Outside Director

22	Targets and Results of the Key Themes and Major
Initiatives Laid Out in Mitsubishi Estate Group 2030 Goals
for the SDGs
SPECIAL FEATURE 1 Domestic Asset Business:
MARUNOUCHI TERRACE

68

71
71

66

Risk Management

Financial Section
Japan’s Real Estate Market

26

SPECIAL FEATURE 2 International Asset Business:
Launching the Warwick Court
Renovation Plan

72	Eleven-Year Summary of Selected Financial Data
(Consolidated)
74

Matters Related to Rental Properties

28

SPECIAL FEATURE 3 Non-Asset Business:

75

Status of Shareholdings

76

Consolidated Balance Sheets

TELECUBE and NINJA SPACE
30	Message from the Corporate Officer in Charge of Finance& Accounting and Corporate Communications

Business Review

78	Consolidated Statements of Income /Consolidated Statements of Comprehensive Income
79

Consolidated Statements of Changes in Net Assets

33

Business Segments

80	Consolidated Statements of Changes in Net Assets(Continued)

34

Commercial Property Business81

Consolidated Statements of Cash Flows

34

Office Building Business82

Notes to Consolidated Financial Statements

105

Independent Auditor’s Report

		
		

36

Retail Facility Business / Outlet Mall Business		

37

Logistics Facility Business		

38

Hotel Business		

39

Airport Operation Business

112

Corporate Data

112

Principal Mitsubishi Estate Group Companies

40

Residential Business

114

Corporate History

42

International Business

115

Organization

44

Investment Management Business

116

Corporate Information

45	Architectural Design & Engineering Business andReal Estate Services BusinessFor details on the Mitsubishi Estate Group Guidelines for Conduct:

3 Innovation / 4 Resilience

18

32

The Mitsubishi Estate Group Code of Corporate Conduct

2 Diversity & Inclusion

55

		

The Mission of the Mitsubishi Estate GroupBy building attractive, environmentally sound communities where people can live,
work, and relax with contentment, we contribute to the creation of a truly meaningful society.

TCFD

54

The Group’s Strengths and Growth Strategies

24

We contribute to society through urban development.

53

17
20

Corporate Responsibility to Society
Strive to enrich society, both materiallyand spiritually, while contributing
toward the preservation of
the global environment.

1 Environment

56	SASB

16

The Spirit of Mitsubishi: Three Principles“Shoki Hoko”

452117	External Evaluations of ESG Performance /About Our Website

46	Business Development, Client Relations & Solutions Group47

Innovation and Business Transformation GroupA Word about Integrated Report 2021
We adopted this integrated report format starting from FY2019, having published annual
reports through to FY2018. With this integrated report, we have expanded coverage of
non-financial information, centering on environmental, social, and governance (ESG) topics,
compared with prior annual reports. In doing so, we aim to increase readers’ awareness of
our efforts to raise the corporate value of the Mitsubishi Estate Group from a medium- tolong-term perspective. We hope that this report promotes a deeper understanding of theGroup among all our stakeholders, including shareholders and investors.

		

48

Business Creation Department

		49

DX Promotion Department

50

Sustainability (ESG) Section

Definition of Term
“FY2021” refers to the Group’s fiscal year ended March 31, 2021, and other fiscal years arereferred to in a corresponding manner.

Sustainability Frameworks

Caution Concerning Forward-Looking Statements
This integrated report contains forward-looking statements concerning Mitsubishi EstateCo., Ltd., and its future strategies and earnings outlook, including forecasts, plans, anddecisions based on information available at the time of publication. As with any forecast,plan, or decision, forward-looking statements are inherently susceptible to potential risks,
uncertainties, and assumptions. The Company’s actual results may therefore vary materiallyfrom those expressed or implied in its forward-looking statements.

(Formulated December 1, 1997; revised on August 1, 2002, January 1, 2006, and April 1, 2018)

50

51	Monitoring Frameworks / History of Sustainability
Committee Meetings / Methods for Dialogue with
Stakeholders

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

1

The Mitsubishi Estate Group’s

History and Achievements
Marunouchi Redevelopment

The Mitsubishi Estate Group has overseen the development of the Marunouchi area over the last 120 years,
evolving it into Japan’s preeminent business center. In the process, we have accumulated unique knowledge andexpertise in urban development. Looking ahead, we are expanding our business to a variety of domains byleveraging this knowledge and expertise.

A History of Business Expansion with Marunouchi as a Base

1890

Starting from Scratch

1969 Akasaka Park House sold in lots, Started condominium business

Purchase of Marunouchi land and vision of a major business center2011	Mitsubishi Estate Residence Co., Ltd., established through the
integration of the residential businesses of Mitsubishi Estate Co., Ltd.,
Mitsubishi Real Estate Services Co., Ltd., and Towa Real Estate Co., Ltd.

The history of Mitsubishi Estate began when Yanosuke Iwasaki, the firstpresident of Mitsubishi Company, purchased the Marunouchi area, which was
an expanse of fields, at the request of the Meiji government based on his
belief that the creation of a business center to rival those of the world’s
leading cities would help realize the modernization of Japan.

First Phase of Development

	Provision of residential properties and services combining the
comfort, safety, and other qualities cultivated through ouroperation and management of office buildings

Expertise and knowledge
gained through otherbusinesses

1890s–
1950s

1972 Established Mitsubishi Estate New York Inc.
1986 Established MEC UK Limited

The construction of the area’s first modern office building, Mitsubishi
Ichigokan, was completed in 1894. Soon after, three-story redbrick officebuildings began springing up, resulting in the area becoming known as the“London Block.”1990 Initiated capital investment in the Rockefeller Group International, Inc.
2008 Established Mitsubishi Estate Asia Pte. Ltd.
	Establishment of a robust network through the expertise refinedand accumulated in the development of Marunouchi as well as
ample financial resources	
Utilization of plot ratio transfer and other methods in theredevelopment of Marunouchi

1960s–
1980s

1989	Opened the Royal Park HotelAs Japan entered an era of high economic growth, there was a sharp increasein demand for office space. Through the Marunouchi remodeling plan thatbegan in 1959, the area was rebuilt with large-scale office buildings providing aconsiderable supply of highly integrated office space.

Third Phase of Development

Returning toMarunouchi

Leveraging inother businesses	Acquisition of hotel sites and operation of hotels by leveraging
tenant relationships and operation and management expertise
we have built up in Marunouchi

GOTEMBA PREMIUM OUTLETS®

Outlet Malls

1995–
2019

2000	Opened GOTEMBA PREMIUM OUTLETS®
2009	Converted Chelsea Japan Co., Ltd., into consolidated subsidiary(renamed Mitsubishi Estate•Simon Co., Ltd., in February 2013)

Creating the world’s most interaction-inspiring neighborhood	Development of outlet malls boasting the top customer-drawing
power in Japan by leveraging tenant relationships and information
networks established through the operation of Marunouchi
retail facilities

Following the announcement of the reconstruction of the former Marunouchi
Building in 1995, the Company transformed the Marunouchi area—which had
up until then been purely a business district—into a space with a vibrant andbustling atmosphere, based on the concept of creating the world’s mostinteraction-inspiring neighborhood. Aiming to make redevelopment of thearea broader and more comprehensive, we expanded that concept toOtemachi and Yurakucho from 2008. By establishing a financial businesscenter and a greater amenity infrastructure, we promoted the strengtheningof the international competitiveness of the area. In these ways, we worked togive the area a fresh appeal based on a new sense of values.

FINOLAB

Start-Up Support
2007	Established EGG JAPAN, a new business creation support hub, in the
Shin-Marunouchi Building
2016	Established FINOLAB, a co-working office specializing in fintech
start-ups

2020–

Marunouchi NEXT Stage	
Establishment of a new Marunouchi brand as a hub fortechnology start-ups

Transforming Marunouchi into an area that continuously creates
new value
Positioning urban development from 2020 onward as part of the Marunouchi
NEXT Stage, we will promote urban development that generates improvements in people’s quality of life and spurs discovery of and solutions to social
issues through the emergence of innovation and strengthening of our digitalfoundations. Based on the theme of “Marunouchi Re-Design,” we will aim toestablish the “Co-Creation Platform for Innovation through Companies,
Employees, and Visitors.”

Royal Park Hotel

HotelsAn abundance of large-capacity office buildings in a period of
rapid economic growth

Tokiwabashi 常盤橋A棟
Tower
（パース）

1271 Avenue of the Americas

International Business

Dawning of a full-scale business center development

Second Phase of Development

Marunouchi Bldg.

Akasaka Park House

Residences

Expertise andknowledge gainedin Marunouchi

Investment Management Business2001	Japan Real Estate Investment Corporation became the first JREIT in Japan to be listed on the Tokyo
Stock Exchange
2015 Acquired the American investment management company TA Realty LLC
2017 Mitsubishi Estate Logistics REIT Investment Corporation was listed on the Tokyo Stock Exchange	
Accumulation of expertise through a track record of operating abundant real estate assets

Photo by Kawasumi
and Kenji Kobayashi Photo Studio

2

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

3

Yurakucho

Marunouchi

OtemachiN

Kokyo (Imperial Palace) Gaien National Garden
Palace HotelTokyo

Otemon Tower •ENEOS Bldg.

PalaceBldg.

NIKKEI Bldg.

MITSUI & CO. Building

OtemachiPark Bldg.

Yurakucho
Center Building(Yurakucho Marion)

Yusen Bldg.

(Annex)Marunouchi Naka-dori Ave.

Marunouchi
2-chome Bldg.

Marunouchi Park Bldg.
& Mitsubishi Ichigokan

Shin-Tokyo Bldg.

Otemachi First Square

Mizuho Marunouchi
Marunouchi Terrace
Tower

The Industry Clubof Japan and
Mitsubishi UFJ
Trust andBanking Bldg.

Mitsubishi Bldg.

StatYurakucho Ekimae Bldg.
(ITOCiA)(Owned by a
Mitsubishi Estate
consolidated subsidiary)

Otemachi
Bldg.

Otemachi Naka-dori Ave.

Marunouchi Naka-dori Ave.

Marunouchi
Eiraku Bldg.

Otemachi Tower

HOSHINOYA Tokyo
Otemachi Na

Tokyo
SankeiBldg.

ka-dori Ave.

OTEMACHI FINANCIAL CITY
North Tower
South Tower, Marunouchi Lin

Tokyo Station, Marunouchi Line

Daimyo-koji Ave.

Otemachi Station

Uchikanda
1-Chome Project(Planned completion in 2025)e

NTT Communications
Otemachi Bldg.

Yomiuri Kaikan
BIC Cameraho

Yomiuri
Shimbun
Office Bldg.

ad eGinkokaikan

Shin-Marunouchi
Bldg.

Marunouchi Bldg.

Shin-Nisseki
Bldg.

Marunouchi 1st St.

MarunouchiNakadori Bldg.

Mitsubishi
Corp.
Head Office

OTEMACHIFINANCIAL CITY
GRAND CUBE

KDDI
Otemachi Bldg.

SMBC East Tower
Tokyo
Kaijo
NichidoBldg.

Gyoko-dori Ave.

Marunouchi
Mitsui Bldg.

Marunouchi 2nd St.

Marunouchi 3rd St.

Kishimoto
Bldg.

Chiyoda LineO te mac hi Rive rsid e Pro me n

Otemachi Station,

Otemachi Station, Tozai Lineuc

ShinYurakucho
Bldg.

Shin-Kokusai
Bldg.

Meiji Yasuda Seimei Bldg.

Marunouchi Center Bldg.
MUFG Bank
Head Office

Tokyo International Forumion

Nihon Seimei
Marunouchi Bldg.
JP TOWER

Tokyo Station, JR Keiyo Lineak

Marunouchi 6th St.

Marunouchi 7th St.

Yur

Yurakucho
Bldg.

Marunouchi
Nijubashi Bldg.
Babasaki-dori Ave.

Kokusai Bldg.

SanshiKaikan Bldg.

Hi b

Yurakucho
Denki Bldg.

Marunouchi 5th St.

DN
Tower 21

Togyo KaikanNippon Broadcasting
System Bldg.

Meiji Seimei Kan
Bldg.

Keidanren
KaikanOtemachi Station, Toei Mita Line

Hibiya-dori Ave.

Marunouchi 4th St.

The
PeninsulaTokyo

Imperial
Theater

Otemachi One Tower

Ote Center Bldg.

Nijubashimae Station, Chiyoda Line

Yurakucho Station, Yurakucho Line

bi y

aL

in e

Marunouchi
Police Sta.
HibiyaSankei Bldg.

iya

Sta
t

io n
, Hi

Toho
Twin Tower
Bldg.

SMBC
Head Office
Bldg.

n LineHibiya Station, Toei Mita Line

HibiyaMarine Bldg.

Nippon Life
Marunouchi
Garden Towertion, HanzomoHi
C h bi y a S
i yo t ad a t io
Lin n,
eTokyo Midtown
HibiyaWadakura-bori
Moat

Babasaki-bori Moat

Otemachi Sta

Hibiya-bori Moat

JA Bldg.

Tokyo Kotsu
Kaikan Bldg.
(Owned by a
Mitsubishi Estate
consolidated
subsidiary)
InfosYurakucho

Marunouchi
South Exit

Marunouchi
Central Exit

Tokyo Bldg.

Shin-Marunouchi
Center Bldg.

Marunouchi Oazo

Marunouchi
North Exit

Marunouchi Marunouchi
Hotel
Kitaguchi Bldg.

Otemachi Nomura Bldg.

Chiyoda Ward
Sports Center
Otemachi PLACE
WEST TOWER
NTT Communications
Otemachi Bldg. (Annex)
Urbannet
Otemachi Bldg.

Shin-Otemachi
Bldg.
NTT
Marunouchi
Bldg.

Otemachi PLACE
EAST TOWER

NTT Data
Otemachi Bldg.

Sumitomo Fudosan
Marunouchi Bldg.

Tokyo Station
TOKYO TORCH (Tokyo Tokiwabashi Project)

Pacific Century Place
Marunouchi Bldg.

Marunouchi
Central Bldg.

GranTokyo
South Tower

Eitai-dori Ave.

Sapia Tower

Asahi Life
Insurance
OtemachiBldg.
(Owned by aspecial-purpose
company undermanagement of
Mitsubishi Estate)

Bldg. For Sewage
Bureau (Bldg. D)(Planned completion
in End of Mar. 2022)

JFE Shoji
Bldg.

Nippon Bldg.

■ Completion before 2002
■ Completion after 2002

Marunouchi Today

GranTokyo
North Tower

Marunouchi
Trust Tower Main

Marunouchi
Trust Tower North■ Completion after 2009
■ Completion after 2020

Tekko Bldg.

900 m

Marunouchi by the Numbers■ Completion after 2020 (Planned)

Tokiwabashi Tower

1,900 mNumber of Companies Listed on the First Section of theTokyo Stock Exchange*1

117*

Fortune Global Top 500 Companies
2

122 trillion*

Approx. ¥Number of Office Workers

Approx.

280,000*2

Companies

13
Marunouchi

33

16

New York

15

LondonComparison of Area Sizes Source: Mitsubishi Estate Co., Ltd.

City of London

67292 ha13
6

Toranomon

2

28 lines,13 stations*Shinagawa2

178 ha1

Toranomon(Including Floor Space of Buildings under Construction)

Railway Lines Servicing the Area

76 ha

8
3

Nihonbashi

860 hectares*

Nihonbashi

New York Midtown

16

Shinagawa1

 op 50 company headquarters
Tin terms of market
capitalization
 verseas financial company
O
offices
 op 100 law firm headquartersTand offices

Tokyo Marunouchi

Toranomon

120 ha58 haSingapore Downtown Core
Shinagawa2(Stations with the same name on different lines are counted in number of lines)

Source: Fortune Global Top 500, 2020, and Mitsubishi Estate Co., Ltd.

As of March 2021, Source: Mitsubishi Estate Co., Ltd.

22.2%

75 ha

March 2000

Trading

10.4%

49 ha

22.9%

21.3%
Information

6.2%

March 2021

Manufacturing

20.0%

Trading

10.4%

181 haNihonbashi

2

6.3%

86 ha

2

Finance
OthersFinance

Information

Shibuya5

6Shibuya

Others 14.2%
Professional
Firms

4.4%

Hong Kong Central
Shibuya

TOPIC Contracted Area and Tenant Composition in the Marunouchi Area (Mitsubishi Estate Only)

Domestic

2

Building Floor Space

Approx.

Number of Major Corporate Headquarters and Offices in
Comparison with Other Main Tokyo City Areas

2

Number of Buildings (Including Buildings under Construction)

101* /Approx.4,300*

21

Marunouchi

Consolidated Net Sales of the 115 Companies in the
Marunouchi Area
Equivalent to around 8.85%
of GDP in Japan

Companies

Manufacturing

Professional
Firms

42.5%

19.2%

As of the end of March 2021, the contracted area in the Marunouchi area (Mitsubishi
Estate only) has increased about 1.8 times compared with the end of March 2000. In
terms of tenant composition, the ratio of professional firms has been rising.
Concentration of Professional Firms
As of May 2021, all of the four major law firms in Japan and three of the four leading audit companies havetheir offices in Marunouchi.
Law firms:	Anderson Mori & Tomotsune, Nagashima Ohno & Tsunematsu, Nishimura & Asahi, andMori Hamada & Matsumoto
Audit companies: KPMG AZSA LLC, Deloitte Tohmatsu LLC, and Pricewaterhouse Coopers Aarata LLC*1 Number of listed companies on the First and Second sections of the Tokyo Stock Exchange with head offices in the Otemachi, Marunouchi, and Yurakucho areas*2 Otemachi-Marunouchi-Yurakucho (OMY) District Redevelopment Project Council, “The Council for Area Development and Management of Otemachi, Marunouchi, and Yurakucho 2021”*3 As of March 2021, Source: Mitsubishi Estate Co., Ltd.

4

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

5

The Mitsubishi Estate Group possesses unique strengths, which together

Mitsubishi Estate’s

form a distinctive driving force obtained through urban development overStrengths

many years. Leveraging these strengths, we will continue to create
attractive urban environments that enrich people’s lives through theprovision of new value that only we can provide.

Relationships

Please see pages 34 to 49 for details.

Among the key strengths of the Company are its abundant customer contact points andrelationships of trust that it has accumulated through a host of real estate developments andoperations, in addition to its partnerships with subcontractors and business partners. The
Mitsubishi Estate Group intends to make new history through the cultivation of various
relationships that uncover latent needs and lead to the development of solutions thereto.
Customer Contact Points
Number of Office Workers in Marunouchi

Approx.

Our Long-Term View on Urban Development and
Forward-Looking DNA

Number of Members Eligible to Join the Residence Club

280,000

Approx.

Number of Patrons of Group-Affiliated Retail Facilities,
Hotels, and Airports

Approx.

600,000 households

Number of Tenants (Nationwide, All Purposes)

Approx.

200 million per year

3,300 companies

Mitsubishi Estate possesses urban development expertise based on a long-term view—one
that evolved Marunouchi into a major business center over a period of 120 years—and a DNA
for providing value that is constantly ahead of the times, as exemplified by its development ofJapan’s first outlet shopping mall and its early entry into the real estate investment trust(REIT) market.

Evolution of Marunouchi
into a Major Business Center
Beginning ofDevelopment in 1890

Establishment of Outlet Malls
as Part of Japanese Culture

Early Entrance into the
REIT market

Opening of GOTEMBA PREMIUM
OUTLETS® in 2000

2021

Establishment of Japan Real Estate
Asset Management Co., Ltd., in 2000

2021

Number of Companies Listed on theFirst Section of the Tokyo Stock
Exchange

Building of a Global Platform
through Execution of M&A and Other
Activities

9

117

Productivity per Employee—A Compact, Elite Group Honed by a Challenging Corporate Culture(Reference) Productivity per Employee umber of Office Workers inN
Marunouchi

Approx.

FY2021(Millions of yen)

280,000

Please see pages 4 and 5 for details.

Please see page 36 for details.

Revenue fromoperations

Operatingincome1,207,594

224,394

135,655

FY2021(Millions of yen)

Number of
employees(Consolidated)

Revenuefrom
operations
per employee

9,982

120.9

Establishment of a Leading-Edge
Corporate Governance System

ProfitOperating attributable toincome perowners of
employeeparent per
employee

22.4

13.5

Please see pages 57 to 67 for details.

Mitsubishi Estate owns about 30 office buildings in the Marunouchi area alone. In addition,
we have taken part in the development of a wide spectrum of real estate assets, from officebuildings to residential properties, retail facilities, hotels, and logistics facilities. Based on theexperience we have acquired through these activities, we will uncover latent social issues andcreate solutions to address them.

We are working to establish a leading-edge corporate governance system that contributes toimproving our overall effectiveness and enhancing corporate value over the long term. We arealso responding to social needs through measures that include transitioning to a “Company
with Nominating Committee, etc.,” and ensuring outside directors account for approximately
one-half of the Board of Directors.

Number of Office Buildings under Management

A Total of 15 Directors, of Whom 7 Are
Outside Directors

Retail Facilities

197
Rental Apartment Buildings(Owned or under Development)

24 (including 9 Outlet Malls)
Logistics Facilities (Total Number of Developed Facilities)

15

67
Number of Rooms in Hotels under Operation

Number of Condominiums Sold a Year

3,476
Number of Condominiums under Management

350,682
MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Please see pages 34 to 49 for details.

FY2021(People)Profitattributableto owners ofparentPlease see page 44 for details.

Abundant Real Estate Asset
Touchpoints

6

Please see page 54 for details.

The power of our human resources—our most important management resource—underpins ourongoing creation of value. The Group possesses an array of outstanding human resources, all ofwhom are able to create “something” from “nothing” and have adopted its founding DNA. In
addition, we are cultivating and strengthening our diverse human resources through the establishment of an environment conducive to stimulating creativity and the taking on of challenges.

2021

Number of Outlet Malls Operated

Human Resources Who Have
Adopted Our DNA

4,020
Number of Airports Operated by Airport Operation Business

10
Note: All figures are correct as of FY2021 or as of March 31, 2021.

Transition to a “Company with
Nominating Committee, etc.”
An Executive Compensation Plan
Aiming to Align Shareholders’ andExecutives’ Interests
Implementation of Third-Party
Evaluations in Determining theEffectiveness of the Board of Directors

Inside directors who areconcurrently serving as
corporate executive
officers

Non-executive,
independent,
outside directors

7

Board Composition

5
Inside directors who are
not corporate executive
officers

3
MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

7

Mitsubishi Estate’s

Value Creation Model

Having grown as a comprehensive developer, Mitsubishi Estate will aim to realize ongoing corporate value
improvement and achieve a sustainable society through its steadfast commitment to creating attractive urban
developments that anticipate changes in the times and to enriching people’s lifestyles, while leveraging and

The Mitsubishi Estate Group’s Strengths and Value Creation Cycle

enhancing its various strengths.

The Mission of the Mitsubishi Estate Group

Value Created through Our Businesses (Outcomes)

We contribute to society throughurban development.
By building attractive, environmentally sound communities where people can live,
work, and relax with contentment, we contribute to the creation of a truly meaningful society.

Abundant contact points
with customers, unique tothe Group

Increasing social value

Increasing shareholder value	Cities that conduct management of climate change, waste, andenergy issues
	Cities conducive to realizing diversity and inclusion	Innovative cities acting as wellsprings for open innovation	Safe and peaceful cities of a sustainable and resilient nature

Transformational improvements to the Group’sbusiness portfolio's efficiency and market resilience aimed
at achieving the KPIs set out in its
Long-Term Management Plan 2030

To create a truly meaningful society, the Mitsubishi Estate Group offers a broad range of value toall its stakeholders through attractive urban development, leveraging its comprehensive capabilities and strengths.

Uncovering latent needs

Products and Services Offeredthrough Businesses (Output)

Long-Term Management Plan
Fundamental Approach

Office Buildings

Aim for improvements in both social value and sustainable shareholder
value that are highly resistant to market fluctuations through businessthat addresses social issues and the needs of the times

Competitive Advantages(Strengths)

197 buildings under management /5,991,000 m in total operating floor space2

Retail Facilities

24 facilities under operation (9 outlet malls)

Logistics Facilities

Enterprising DNA
Abundant Real Estate Asset
Touchpoints

Increasing Social Value
Driving force
unique to the
Mitsubishi
Estate Group

Investment
Management Business

International Business

Relationships

15 facilities (total number of developed facilities)

Residential
Business

Commercial Property
Business

Strong Financial Foundations
Credible and Reputable
Group Brand

Scaling as
a businessArchitectural Design &Engineering Business and Real
Estate Services Business

Other
Searching forsolutions

Collaboration (openinnovation) with external
players possessing
expertise and ideas

Increasing Shareholder Value

4,020 hotel rooms under operation

Airports

Mitsubishi Estate Group
2030 Goals for the SDGs

10 airports under operation

Condominiums

2030 Targets (KPIs)

3,476 units sold a year

Rental Apartment Buildings

To achieve a sustainable society,
the Mitsubishi Estate Group willoffer more profound value to awider range of stakeholders on thefour key themes to realize
a sustainable society: theEnvironment, Diversity &Inclusion, Innovation, andResilience.

Transformational improvements to
the Group’s business portfolio's
efficiency and market resilience

5%
10 %
ROE
EPS¥200

ROA

67 rental apartment buildings under ownership(including those under development)

Number of Condominiums under Management

350,682 units

Brokerage Operations

932 transactions /¥260,240 million in transaction volume

Investment Management

Combined assets under management ofapproximately ¥3.7 trillion
OthersArchitectural Design & Engineering Business,
new businesses, etc.

Note: Please see page 20 for more information.

Foundation for Value Creation

Hotel Rooms

Note: All figures are correct as of FY2021 or as of March 31, 2021.

Major Business Environment Trends / Material Issues Based on Social Issues

Human Resources Who Have Adopted Our DNA
Establishment of a Leading-Edge Corporate Governance System
Compliance

8

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Risk management

IT / Digital transformation (DX)

Environment

Globality

Community

Diversity

Declining Birthrateand Aging Population

Leveraging Existing
DigitalProperties
Innovation

Note: Please see page 21 for information on the formulation process.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

9

President’s Message

FY2021 Business Performance: Maintained Solid Performance Despite the Significant
Impact of COVID-19
In January 2020, the Mitsubishi Estate Group unveiled its Long-Term Management Plan 2030 (hereinafter,
the “Long-Term Management Plan”). However, immediately afterwords the COVID-19 pandemic began tospread and FY2021, the first year of the Long-Term Management Plan, was thereby marked by turbulence,
including three state of emergency declarations.
In terms of business performance, we recorded revenue from operations of ¥1.2075 trillion (down 7% year
on year) and operating income of ¥224.3 billion (also down 7% year on year). Although revenue from operations and operating income declined, we were able to minimize the impact of COVID-19 to a greater extent than
anticipated, given that we had forecasted a decline of 23% in operating income at the beginning of FY2021.
Among the Group’s businesses, the hotel and retail facility businesses were significantly impacted.
Depending on the severity of COVID-19, we expect this impact to persist in FY2022. Accordingly, we willtake all possible infection countermeasures and carry out operations in accordance with the COVID-19
situation and with the policies of the national government and local authorities while delivering safety andpeace of mind to customers. On the other hand, among business-to-consumer-related businesses, market
activity is being spurred with regard to the buying and selling of logistics facilities due to increasing needs
for the development and leasing on the back of expansion in stay-at-home demand and of growth in the
e-commerce market. Meanwhile, the Residential Business performed solidly. Amid continuing strong
performance in urban areas, the number of locations with favorable conditions expanded as customers
turned their attention to buying residential properties with large rooms in suburban areas.
Despite concerns over the impact of the spread of COVID-19 on office leasing, the Group’s core business,the impact was ultimately slight, reaffirming the strength of our offices and business centers in prime
locations, such as Otemachi, Marunouchi, and Yurakucho. Needs for workstyles that offer more freedom interms of where and when people work, such as teleworking, are becoming even greater, and the Group
views this trend as an opportunity to create new value. For example, we believe that it is our mission to
identify new needs—including for improved air quality and sanitation, measures in response to demand for
non-contact settings, and proposals for offices that are conducive to flexible team building—and to create afoundation for achieving further development.

Progress on the Long-Term Management Plan

Junichi Yoshida
President & Chief Executive Officer
Mitsubishi Estate Co., Ltd.

Amid a drastically changing business environment, we will aim toachieve the targets in Long-Term Management Plan 2030 bycarrying out truly meaningful urban development from a broader
and longer-term perspective.

10

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Progress Made in Each Business
Domestic Asset Business 
We completed the Mizuho Marunouchi Tower, Ginkokaikan, Marunouchi Terrace, and the ARGYLE aoyama
office buildings and opened the expanded areas at GOTEMBA PREMIUM OUTLETS® and RINKU PREMIUM
OUTLETS. In our capital-recycling business, we steadily advanced investments for profit growth by acquiring a significantly greater number of investment opportunities than we had anticipated while securing
higher-than-projected capital gains set at the beginning of FY2021.
See Special Feature 1: Marunouchi Terrace on pages 24 and 25
International Asset Business
We entered the data center business in the United States as a new business opportunity. In addition toacquiring development opportunities in various European countries, we launched the large-scale renovation of Warwick Court, our office building in the United Kingdom, as a project for raising the value of ourexisting buildings. In Asia, going forward we will successively complete development projects that we havepromoted thus far in the expectation that they will contribute to future revenues.
See Special Feature 2: Launching the Warwick Court Renovation Plan on pages 26 and 27

Non-Asset Business 
In existing businesses, we expanded our assets under management in the Investment Management
Business and announced several joint-venture projects that will lead to the creation of fee businesses.
As new business domains, we established new “workation” facilities, a business that the Group has beenworking on, as well as promoting the TELECUBE, a workspace underpinning diverse workstyles, andspacemotion, our elevator media business. In addition, we carried out field trials for automated driving andnext-generation mobility with the development districts of Otemachi, Marunouchi, and Yurakucho as
venues for such social trials, and introduced NINJA SPACE, a work-space-matching support service.
See Special Feature 3: TELECUBE and NINJA SPACE on pages 28 and 29

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

11

President’s Message

Capital Policies and Key Performance Indicators
Taking a shareholder-oriented perspective and focusing on investment and asset efficiency, the Mitsubishi
Estate Group has identified return on assets, return on equity, and earnings per share as key performanceindicators (KPIs) in its Long-Term Management Plan.
Our results for these KPIs in FY2021 were lower than in the previous fiscal year owing to the impact of
COVID-19. Nevertheless, we announced share buybacks of ¥30.0 billion in April 2021 as part of the capital
policies set out in the plan while paying attention to the need to secure funding for growth investments.
Although there is a tendency to focus on finding solutions to matters of immediate concern due to
COVID-19, I believe it is vital that we work to build a robust foundation now in order to achieve the KPIs in
the Long-Term Management Plan. As a case in point, in fields where returning to growth will be difficult
until inbound demand is restored, we are implementing thorough cost reductions and establishing frameworks realizing greater efficiency, in order to build a foundation that creates profits into the future.
The Group has shared its strong commitment to promote its businesses using a long-term perspective
under the Long-Term Management Plan. As a result, I feel that a culture of thinking deeply about ourultimate goals and aiming for bold transformation with an eye on the future is becoming ingrained
throughout the entire Mitsubishi Estate Group. Long time spans have always been a feature of the realestate business. Moreover, amid growing demand from society regarding environmental, social, andgovernance (ESG)-related issues, creating sustainable businesses that anticipate conditions several
decades into the future is essential. With that in mind, it is my belief that making decisions from a longerterm perspective going forward will contribute to maximizing social and shareholder value.

FY2022 Initiatives: Acceleration of Growth Investments and Profit Expansion to Achieve
the Long-Term Management Plan
OverviewWhile we focused on responding to COVID-19 in FY2021, the first year of the Long-Term Management Plan,from FY2022 we will aim to restore the rate of our growth in order to achieve the plan.

Domestic Asset Business 
OfficesThanks to our efforts to date in steadily advancing the project, we completed the construction of
Tokiwabashi Tower and expect to record even higher capital gains in our capital-recycling business.
As the first step in the Tokiwabashi Project, we completed the Tokiwabashi Tower in June 2021. This
property facilitates new workstyles, such as through the installation of contactless security, and offers ICT
services for those working in the building, including for seat reservations, orders, and payments in thecafeteria and reservations of conference rooms. TOKYO TORCH, the name for the entire block, expresses
our intention to brightly illuminate Japan as we aim to promote development that is not only appropriate
for the times but also contributes to a bright future.
Retail Facilities, Outlet Malls, Hotels, and Logistics Facilities
While we expect retail facilities, including outlet malls, and hotels to continue to be affected by COVID-19 in
FY2022, daily use-oriented retail facilities have been performing strongly, with certain outlet malls evenhaving achieved sales on a par with pre-COVID-19 levels, depending on the severity of the situation surrounding the pandemic. With the aim of restoring sales, we will continue to take all possible infection
countermeasures while improving facilities and implementing soft measures geared toward the coming
new normal era. Looking at hotels, inbound consumption has plummeted and we anticipate that it will taketime to recover. Nevertheless, we are carrying out sales promotions directed at customers in Japan andwill begin to focus on reducing costs and streamlining and making management more efficient. As forlogistics facilities, despite intensifying competition for acquiring land, we will focus on obtaining outstanding investment opportunities while leveraging the broad range of information possessed by the Group.
Residences
Condominiums and rental apartments have continued to perform strongly, even amid COVID-19. In FY2022,
we will continue to focus on obtaining land acquisition and business opportunities.
International Asset Business
While I cannot make sweeping statements, given the regional disparities in the levels of progress being made invaccination rollouts and the differing responses of governments around the world, I feel that conditions are
improving, with vaccinations progressing well in New York. The Mitsubishi Estate Group will endeavor to
expand its business domains by continuing to make investments in a broad spectrum of asset types.
Although market conditions in Europe appear to be gradually recovering, more time is likely to berequired for them to settle down, due in part to the presence of COVID-19 variants. Regarding our businessactivities in Europe, renovation work and new construction projects have not been impacted significantly,
and I am confident that we will be able to proceed as initially planned.
In Asia, the Group has increased the number of development projects in which it is the major stakeholder, even on projects in countries where it had hitherto operated on a minor scale. I feel that thisincrease demonstrates the gradual recognition of the Group’s track record to date in Asia, while theacclaim for its area development in Otemachi, Marunouchi, and Yurakucho is also another major factor.
In order to meet the trust and expectations we have long built up, we will steadily achieve results in our
existing projects, centered on offices, retail facilities, and condominiums, and acquire further growthinvestment opportunities.
Non-Asset Business In addition to sustainably growing our assets under management in the Investment Management Businessand expanding fee income through the Architectural Design & and Engineering Business and joint ventures,
we have designated seven new business domains as our focus areas: 1) agriculture, 2) renewable energy,3) infrastructure, public and private partnerships (PPPs), and private finance initiatives (PFIs), 4) realestate-related services, 5) content, entertainment, and sports, 6) tourism, inbound-related businesses, andregional revitalization, and 7) healthcare and food. In respect to renewable energy, we entered the biomass
power business. We also plan to offer a variety of new value in other areas, including expanding ourbusinesses into new domains by leveraging new technologies and delivering experience-based services
integrating real and digital formats (online and offline).

12

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

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13

President’s Message

Urban Development Going Forward: Mission to Offer New Added Value froma Long-Term Perspective Remains Unchanged
The Mitsubishi Estate Group’s ongoing mission is to offer new added value to society by carrying out urban
development from a long-term perspective. Changes required in the post-COVID-19 era include, for example,
leveraging the Internet of Things (IoT) to improve work efficiency and reform workstyles, initiatives thatsociety has long called for. I feel that COVID-19 has forced us to suddenly accelerate such initiatives.
Therefore, I believe it is important to squarely engage in the provision of ideal offices for the future andspaces that facilitate flexible workstyles, rather than simply responding to COVID-19. We aim to engage inurban development not only through the provision of real estate, such as settings facilitating active communication among people that can only be realized in an office, but also from the perspective of creating
mechanisms and services, including developing mechanisms that give rise to ideas, and proposing newlifestyles without boundaries between working and living environments.
In particular, we would like to use complex developments in the Otemachi, Marunouchi, and Yurakucho
areas—our core business—as a platform to promote our capabilities globally by integrating the real andvirtual worlds, creating new value, and sequentially establishing unprecedented businesses. COVID-19 has
prompted grave conditions in the worlds of entertainment, culture, and the arts. Thus, we also aim to playa role in protecting traditional arts, including their history. As Japan’s leading business centers, we aredetermined to globally communicate the appeal of Otemachi, Marunouchi, and Yurakucho by transforming
them into must-visit areas when overseas businesspeople and tourists travel to Japan.

We will promote urban developmentthat earns the understanding ofpeople throughout the world by
delivering the new value that will beneeded in the coming era.

ESG-Based Management: Launch of Initiatives Tackling Global Issues Head On
Please see the Sustainability (ESG) Section on pages 50 to 70.

From the perspectives of creating a sustainable society and improving its corporate value over the medium
to long term, the Mitsubishi Estate Group views ESG issues as the most important theme of its strategies
for enhancing social value. In respect to the United Nations Sustainable Development Goals (SDGs), theGroup has established and seeks to achieve Mitsubishi Estate Group 2030 Goals for the SDGs.
With regard to the environment, in terms of power generation we switched to renewable energy sources
at 19 buildings, centered on Otemachi, Marunouchi, and Yurakucho. By doing so, in communal as well as exclusive
areas, we are also contributing to the decarbonization efforts of tenant companies, as all power in saidbuildings will be generated by renewable energy sources. Since this initiative will help raise the percentage
of power we source from renewable energy sources to 30%, we expect to bring forward significantly theachievement of our medium-term target of 25% by 2030.
Turning next to society, we are making efforts to minimize any adverse impacts on human rights that
may occur through our business activities and are proactively advancing initiatives embracing diversity.
Meanwhile, in 2020 we launched the OMY SDGs ACT5, a project that carries out a range of actions in the
Otemachi, Marunouchi, and Yurakucho areas, with a focus on cooperation among companies regarding fivethemes related to the SDGs—sustainable food, climate change and resource recycling, well-being, diversity
and inclusion, and communication.
The Group operates its businesses worldwide and recognizes that environmental problems and humanrights violations are global issues. The earth serves as the foundation of our lifestyles and economies. As theearth is now faced with challenges on many fronts, I strongly feel that we must increase our “love for theplanet” in addition to paying greater heed to “A Love for the People. A Love for the City,” our brand slogan.
Lastly, in respect to governance, we have continuously strengthened our corporate governance systemsince transitioning to a “Company with Nominating Committee, etc.,” in FY2016. Two examples of ourstrengthened corporate governance system include the increased representation of outside directors on
certain committees—three committees are now chaired by outside directors and the Remuneration and
Nominating committees are membered entirely by such directors—as well as the implementation of
third-party evaluations when determining the effectiveness of the Board of Directors. We will continue
striving to realize management transparency and objectivity and fulfill our obligation for accountability toall our stakeholders, including our shareholders.

A Message to Our Stakeholders
For more than a century, the Mitsubishi Estate Group has worked to create business centers necessary forJapan to compete on the global stage. In doing so, we have not only focused on business expansion andprofit growth but also grown in a sustainable manner in society and won acclaim for our efforts. I believe
we have also worked earnestly to create environments and frameworks that allow our stakeholders,
including tenant companies and visitors, to grow with us. Maintaining that conviction, we will promoteurban development centered on Otemachi, Marunouchi, and Yurakucho that gains the understanding ofpeople throughout the world. The creation of urban environments does not end with their initial development. It is my belief that inheriting and growing aspects of such environments, including their history,
culture, distinctive features, and customs, serve to further enhance their value. Needless to say, it is vitalthat we create in cooperation with local communities and local companies globally, rather than trying to do
everything by ourselves. As social interest in ESG-related issues grows, we will continue to maintain ourbelief that we are a company that tackles such issues with integrity over the long term while keeping ourfeet firmly planted on the ground as a responsible global citizen.
Real estate possesses unique qualities. It will not flourish or be embraced by people if it does not havemeaningful value. We will offer such truly meaningful value by practicing the sentiment in “A Love for the
People. A Love for the City,” our brand slogan, simply and honestly. While we may not always enjoy smoothsailing due to various challenges and headwinds, we will push forward with a belief in the course we areon. We hope that all our stakeholders, including investors, will join us in looking forward to the steady
growth that the Mitsubishi Estate Group is committed to achieving through urban development.

President & Chief Executive Officer
Mitsubishi Estate Co., Ltd.

14

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15

Long -Term
Management Plan
In light of the rapidly changing market environment, the Mitsubishi Estate Group has formulated a 10-year plan,Long-Term Management Plan 2030, as it aims to continuously provide value sustainably to its stakeholders
over the longer term.
To promote urban development, which forms the core of its business, the Company will raise the value of facilities
and areas and boldly take on the challenge of achieving growth in new domains, which will involve initiatives to be
carried out over the long term, by formulating management plans with more suitable periods.

Changes in the External Environment Affecting the
Mitsubishi Estate Group•	Emphasis on “experiential value” through services
and content•	Aspirations toward increasing workers’ productivity
and innovation creation•	Demand for leveraging robotics and AI due tolabor shortages

Leveraging our long-term perspective on urban development and forward-looking DNA, in addition to our
extensive user reach and abundant real estate asset touchpoints, strengths of the Group, we will seek torealize growth in the three domains of our domestic asset business, international asset business, andnon-asset business.
Moreover, we will raise the level of ROA and ROE by combining revenue expansion resilient to real estatemarket fluctuations in our non-asset and other businesses and flexible capital policies.

Domestic Asset Business•	Increase in inbound tourism and the economic development of emerging nations•	Borderless and multiple-use real estate

The Group’s Strengths and Growth Strategies•	Expansion in needs for environmental impact reduction and resilience (disaster prevention and reduction)•	Rise of digital platforms•	Close scrutiny to a company’s capital efficiency

	Advance Marunouchi NEXT
Stage project	Asia: Enhance development
business	Increase NOI* with long-term
development projects	Europe: Advance development
business and enhance revenue
base	Optimize capital-recycling
business in line with market
conditions

Non-Asset Business

International Asset Business	Grow fee business	Utilization of new technologies,
e.g., AI and robotics
	New B2C and B2B2C businesses

	U.S.: Enhance and diversify
capital-recycling business* Net operating income = rental income — rental costs(excluding depreciation)•	Entry of players from other industries into the realestate industry

Goal

Overview of Long-Term Management Plan 2030—Goals of the Plan o realize the Mitsubishi Estate Group’s basic mission and ongoing growth, we will carry out management with aTdual focus on strategies for increasing both social value and shareholder value.
 nder our strategies for increasing social value, we will provide higher value to all stakeholders, including visitorsUand employees, by implementing initiatives designed to realize a sustainable society.
 nder our strategies for increasing shareholder value, we will adopt ROA, ROE, and EPS as KPIs and aim toUconvert to a highly efficient business portfolio resilient to changes in market conditions.

Build a More Efficient and Market-Resilient Business Portfolio	Improve ROA and ROE by expanding revenue via mainly market-resilient, non-asset and otherbusinesses in combination with flexible capital policies

Flexible Capital Policies
Flexible Capital Policies in Response to Market Conditions (Value Creation throughBalance Sheet Management)
	Optimize mix of investments, asset sales, shareholders returns, and financing in response to market
growth projections

The Mitsubishi Estate Group’s Mission

Creation of a Truly Meaningful Society through Urban Development
Aspects for Value Provision in Light of Changes in the Social Environment
A Pair of Turning Gears

2030 Targets

Four key themes* to realize asustainable society* Environment, Diversity & Inclusion,
Innovation, and Resilience

Increasing
Social Value

Synergy

Increasing
Shareholder
Value

2030 Targets

ROA

5%

ROE

10 %

EPS¥200
Fundamental Approach

Create value for every
stakeholder, including
visitors and employees

Transformational
improvements to the Group’sbusiness portfolio's efficiency
and market resilience

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Provision of solutions to current and emerging social issues
	Sustainable urban development that proactively addresses climate change and environmental issues
	Urban development that responds to lifestyle and human resources trends and facilitates active
participation for all	Innovative urban development that continuously renews society

Fundamental Approach

Realize Our Mission and Sustainable Growth by
Increasing Both Social Value and Shareholder Value

16

Sustainability	Dynamic, flexible urban development that builds disaster-resilient communities and prioritizes
safety and security

Quality of Life

Provision of innovative services and experiences	Realize urban development that provides inspiration and happiness to customers, allowing them toexperience convenience, fun, well-being, and community involvement

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

17

Long -Term Management Plan
To achieve the targets set forth in the Mitsubishi Estate Group’s basic mission and Long-Term Management Plan
2030, the Group will grow business profit and improve corporate value from the two major perspectives

Road Map for 2030of realizing a sustainable society and proposing times and experiences that are ahead of the times.

Early to Mid StageMid to Late Stage<2030 Goal>

Leverage Existing Strengths

Approx. +¥50 billion (vs. FY2020)

Advance Redevelopment Projects
Domestic AssetBusiness Growth
Strategy

Rental dvance and commercialize redevelopment projects, including inAMarunouchi

CapitalRecycling ptimize the balance of new investments and capital returns inOresponse to market conditions

Residential

Secure and commercialize redevelopment projects

Profit Contributions from Redevelopment Projects
 chieve sizable profit contributions from large-scale projects,
A
including TOKYO TORCH

Increase the number of units sold and realize profits fromredevelopment projects

Early to Mid StageMid to Late StageFY2020 results: ¥201.0 billion

Investment and Return Plan (FY2021–FY2023)
Investment

1,500

0

1,500

Outlet malls, etc.

1,000

0

1,000

Condominiums

5,000

5,000

0

Others

4,500

3,000

1,500

Total

12,000

8,000

4,000

<2030 Goal>

Approx. +¥50 billion (vs. FY2020)

Profits Scale with Asset Accumulation
Asia

EuropeU.S.

Net Investment

Marunouchi

Grow International Business

International AssetBusiness Growth
Strategy(Billions of yen)

ReturnSecure development opportunities and accumulate assets

Stabilize Profitability via Capital Recycling
Optimize investments and capital returns

Realize profits (from residential and ongoing projects)

FY2020 results: ¥46.0 billion

Investment and Return Plan (FY2021–FY2023)
Investment

Enact approach to investments and returns: 1. Stabilize revenue 2. Enhance capital efficiency
Advance large-scale development projects (8 Bishopsgate, 60–72 Upper Ground, etc.)
Strengthen capital-recycling business with local resources
Carry out joint project development with local partners(Billions of yen)

ReturnNet Investment

Asia

1,000

1,000

0

Europe/U.S.

2,000

2,000

0

Strategic allocation*

3,000–4,500

03,000–4,500

Total

6,000–7,500

3,000

3,000–4,500* Aiming to invest ¥100–¥150 billion in addition to planned investments over the coming three
years to expand the international business

Early to Mid StageMid to Late Stage

Adapt to a Changing Future

Approx. +¥50 billion (vs. FY2020)

Promote Commercialization in New Domains
Non-Asset Business
Growth Strategy

Existing

FY2020 results: ¥16.0 billion

Investment Policy

Hotel management business: Expand number of hotel rooms (open 3–4 hotels per year)

NewIdentify business partners
Implement field trials

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Boost Profitability in New Domains

Investment Management Business: AuM growth(aim for ¥5 trillion by the mid-2020s)

Select new domains

18<2030 Goal>	Aim for profit growth without affecting the balance sheet
Business trials

Scale up businesses

Achieve early profits

Achieve sizable profit contributions

	However, consider investments in M&A and capital alliances
for driving rapid growth and acquiring external know-how

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

19

Long -Term Management Plan

To realize a sustainable society, the Group has established Mitsubishi Estate Group Sustainability Vision 2050 as its vision to beachieved in that year. Based on this vision and materiality, the Group has also formulated Mitsubishi Estate Group 2030 Goals for
the SDGs, in which it has established four key themes and KPIs for 2030. In addition, with the aim of resolving social issues andOverview of Sustainability (ESG) Initiatives

providing leading-edge services and experiences through its businesses, the Group has established “Sustainability” along with
“Quality of Life” as its value propositions in its Long-Term Management Plan 2030.

Achievement of a Sustainable Society

Mitsubishi Estate Group Sustainability Vision 2050
Be the Ecosystem Engineers

Long-Term Management Plan 2030

A Pair of Turning Gears

Increasing
Social Value

We aspire to be a corporate group (engineers) that provides spaces and infrastructure (ecosystems)
where all actors (individuals, corporations, and other players) are able to coexist sustainably
and thrive together—economically, environmentally, and socially.

Synergy

Increasing
Shareholder
Value

Backcasting

Mitsubishi Estate Group 2030 Goals for the SDGs
1

Viewing “Sustainability” and “Quality of Life” as our value propositions, we will endeavor
to achieve a sustainable society through our business activities.

Environment 

Sustainable urban development that proactively addresses climate change and environmental issues

Value Propositions

 educe GHG emissions (Scope 1 + Scope 2 + Scope 3) by 35% by 2030 (compared with FY2018) (87% reduction by 2050)
R(certified by the SBT initiative in April 2019)
Renewable energy ratio: 25% (100% by 2050) (joined RE100 in January 2020) romote waste recycling and reduction of emissions focusing on food andPplastic items
Waste recycling rate: 90%
Promote sustainable timber use

STEP

1

Diversity & Inclusion 

STEP

2

Strengthen hospitality and realize stress-free cities
Respect different lifestyles, local customs, religions, and sexual orientation

Identified 55 changes in the business environment related to our business activities
	Identified social issues and trends, such as the SDGs
	In addition to relationships with business processes, examined social and environmental trends from the perspectives ofthe Medium-Term Management Plan (FY2018 to FY2020) and the working group executive officeInnovation 

Innovative urban development that continuously renews society

STEP

3

Innovate business models and maximize performance upport the creation of new ideas and businesses from the perspective
Sof urban development and contribute to the growth of cities and industries

Identified 24 key social issues and trends we should focus on from the three perspectives of business unit
operations, the Medium-Term Management Plan (FY2018 to FY2020), and external evaluations
	Identified business opportunities and risks for each social issue and trend	Grouped material issues based on opportunities and risks

Resilience 	Careful review conducted by the working group executive office

Dynamic, flexible urban development that builds disaster-resilient
communities and prioritizes safety and security

24 Social Issues and Trends 	Worsening of climate change	Exhaustion of existing natural resources and resultant
changes in energy configuration in society as a whole	Increase in frequency of natural disasters (including
earthquakes)
	Further penetration of the Internet of Things (IoT) (including
virtualization and acceleration of the proliferation of information)
	Increase in e-commerce and omni-channel commerce, anddiversification of payment methods
	Economic growth of emerging nations, principally in Asia
	Rise in interest in physical and mental health, medical care,and wellness	Acceleration of the aging population and changing positionof the elderly in society in JapanEnhance disaster preparedness to minimize functional stagnation during disasters
 nhance BCP function through hardware measures and strengthen neighborhood
Ecommunication
Note: Please see pages 22 and 23 for the risks and opportunities of each theme
as well as KPIs and their progress status.

Formulation of key themes and KPIs based on our materiality

Material Issues (Key Areas to Pursue in Sustainable Management)
STEP

4

Environment

	Review processes for each business	Set out relationships between business processes and social issues and trends, such as the SDGs

Establish traceability of timber to be used in business activities

4

Set out strengths and characteristics of each business unit	Clarify our strengths and characteristics (source of our value creation)

Urban development that responds to lifestyle and human resource
trends and facilitates active participation for all

3

Quality of Life
Provision of innovative services and experiences

Process for Identifying Material Issues (Implemented in FY2019)Waste disposal: 20% reduction (compared with FY2020, per m2)

2

Sustainability
Provision of solutions to contemporary social issues

Globality

Community

Diversity

Declining Birthrateand Aging Population

Leveraging Existing
DigitalProperties
Innovation

	Progress of the social advancement of women and thediversification of society	Growth in need for social integration and universal design	Aging of public infrastructure and housing and increase in
housing stock (including vacant housing)	Changes in lifestyles and workstyles
	Deterioration of the natural environment and depletion ofnatural resources	Increase in social unease due to terrorism and crime(including risks from the outbreak of infectious diseases)
	Risk of rise in associated expenses	Improvements in artificial intelligence (AI) (including the
spread of automated driving technology)

	Progress of globalization (including increases in inboundand outbound tourism and rise in immigration)
	Global population growth and shortage of food supplies	Decline in the total population and working-age populationof Japan	Emergence of risks in the supply chain (including worseningof human rights issues)	Increase in number of foreign workers in Japan	Restructuring and revitalization of regional communities (including
regional depopulation and population increases in major cities)
	Promotion of private sector vitality, as a result of theprivatization of public facilities	Diversification of consumption patterns, such as thesharing economy

Conducted dialogue with stakeholders to share awareness of material issues internally and externally	Prepared drafts of material issues and conducted interviews with stakeholders
	Reported on progress to management	Conducted interviews with three external experts to receive third-party opinions on the drafts of material issues

20

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

21

Long -Term Management Plan

Targets and Results of the Key Themes and Major Initiatives Laid Out
in Mitsubishi Estate Group 2030 Goals for the SDGs

Opportunities

Environment• Increasing need for acquiringand leasing real estate withlow environmental impact• Reducing waste accompanying longer demolition/
rebuilding time spans due toeffective use of existing
properties

Risks
 ise in vacancy rates and•Rdecline in sales closing rates
and sales prices in the event ofa late response amid anincrease in the need to acquireand lease real estate with low
environmental impact• Increasing costs for new realestate development due tostronger environmental
regulations and forcountermeasures due totightening of standards forrepair work

ThemesClimateChangeBenchmarks
Greenhouse gas emissions, such as CO2
Percentage of power from renewableenergy sources

Waste

Numerical Targets
GHG emissions (Scope 1 + Scope 2 + Scope 3) for the entire Group
compared with FY2018• 35% reduction by 2030
• 87% reduction by 2050
(Certified by the Science Based Targets* (SBT) initiative in April 2019)• 25% by 2030
• 100% by 2050
(Joined RE100 in January 2020)

FY2020 Results
4,038,584 t-CO2

1.1%

Waste disposal amount per m2

20% reduction by 2030, compared with FY2020

7.1kg/m2

Waste recycling rate

90% by 2030

55.2%

Percentage of female managers

Higher than 10% by FY2031

5.8%

Percentage of female employees among
new graduate hires

30% every fiscal year through FY2031

37.8%

Rate of use of male employees taking
childcare leave of absence

Diversity

Diversity &Inclusion• Increasing demand forfacilities and services to meetneeds of global customers• Alleviation of labor shortages
through acceptance of foreign
workers into Japan• Rise in demand for facilities
and services that respond todiverse lifestyles, workstyles,
and consumption styles, suchas the acceleration of
teleworking and freelanceworking• Growth in demand forfacilities and services tailoredto new needs due todemographic changes• Increasing demand forfacilities and services tailoredto the concept of universal
design, such as barrier-freelayouts• Increasing country-specificrisks and compliance risks,
including supply chain
management• Declining demand for facilities
and services with inadequate
provision for diversified needs• Decreasing demand forfacilities and services
accompanying demographic
changes (decline in working
population, etc.)• Decreasing user numbers andrise in vacancy rates in theevent of a late response amid
an increase in demand forfacilities and services tailoredto the concept of universal
design, such as barrier-freelayouts

Human
Rights* Percentage of employees commencing
childcare leave in the same year as therelevant fiscal year whose spouses havegiven birth (irrespective of the fiscal year of
the birth)

100% every year through FY2031

98.7%

Rate of reinstatement to work afterchildcare/maternity leave

100% every year through FY2031

93.8%

Rate of use of wood equivalent to that in
the Sustainable Sourcing Code*1(Certified Wood and Domestically
Produced Wood)

100% by FY2031

Percentage of employees in the high-risk
group for metabolic syndrome* (those
aged 40 or older)

Resilience• Increasing need to acquireand lease real estate highly
resilient to disasters(including urban floods)
accompanying climate change• Growing need to acquire andlease real estate highly
resilient to disasters such as
earthquakes

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

• Plan to introduce electricity from renewable energy sources at 19 buildings centeredon the Otemachi, Marunouchi, and Yurakucho areas in FY2022• Plan to introduce electricity from renewable energy sources at all buildings held in
the Otemachi, Marunouchi, and Yurakucho areas in FY2023• Actively examine the possibility of introducing power from renewable energy
sources at facilities other than those in Otemachi, Marunouchi, and Yurakucho• Expand the number of buildings where the volume of garbage of each tenant isweighed• Continuously improve garbage separation at the Mitsubishi Estate Head Office andstrengthen calls for tenants to also improve garbage separation• Participate in verification tests aimed at establishing a resource-recycling modelthrough the recovery and development into products of plastic

Mitsubishi EstateGroup*2
Mitsubishi EstateGroup*2
Mitsubishi EstateGroup*2

Continue to pursue the initiatives described on the left

Five Mitsubishi EstateGroup companies*3

Beyond continuing to pursue the initiatives described above, continue to improve thedisclosure of information on the active roles of and working environments for women

Mitsubishi Estate Co.,Ltd.

• Once a quarter, provide information on taking childcare leave to male employees with newborns• On an individual basis, the Human Resources Department to contact male employees
who have not taken childcare leave more than a year after the birth of their child• Hold roundtable discussions by male employees with experience of taking childcare
leave to share accounts of those experiences within the Company• Recommend personnel interviews for employees within six months of theirreinstatement to work
• Create and promote awareness of a handbook on pre- and post-childbirth leave andchildcare leave summarizing childcare and other types of leave of absence andprocedures for leave takers to follow

Five Mitsubishi EstateGroup companies*3

Continue to pursue the initiatives described on the left

Five Mitsubishi EstateGroup companies*3

Continue to pursue the initiatives described on the left

Five Mitsubishi EstateGroup companies*3

Please see page 54 for details.

• Examine the possibility of confirming with construction companies the implementation
status of the standards and operational procedures described on the left
• In addition to the Programme for the Endorsement of Forest Certification (PEFC)approved wood, Mitsubishi Estate Residence to advance traceability, including obtaining
Forest Stewardship Council (FSC) certification and introducing Japan-grown timber

Mitsubishi Estate
Group

42.4%
• Created and promoted awareness of a handbook on pre- andpost-childbirth leave and childcare leave that summarizes childcare
and other types of leave of absence and procedures for leave takers
to follow
100.0%• Provided a handbook offering support regarding pregnancy,
childbirth, and reinstatement to work
• Carried out consultation sessions• Held platforms (such as roundtable discussions and lectures)
offering information helpful to achieving a work-life balance anddeveloping a career• Carried out interviews for employees with their department and with
the Human Resources Department when they are reinstated to work
following childcare leave
94.8%• Held platforms (such as roundtable discussions and lectures)
offering information helpful to achieving a work-life balance anddeveloping a career• Carried out interviews for employees with their department and with
the Human Resources Department when they are reinstated to work
following childcare/maternity leave• Recommend that those in the high-risk group participate in a program to help
prevent aggravation (guidance on lifestyle habits) offered by the Health Insurance
Association• Create and promote awareness of a handbook summarizing health promotion
programs

Mitsubishi Estate Co.,
Ltd.*420.85% by FY2026
32.8% by FY2031(Approximately 370% improvement compared with the percentage inFY2020, equivalent to the national average)

8.9%

10.1%
• Held an event to facilitate exercise habits (body improvement
contest)• Recommended participation in a specific health guidance program
implemented by the Health Insurance Association• Recommend participation in a specific health guidance program (diet program)
implemented by the Health Insurance Association• Create and promote awareness of a handbook summarizing health promotion
programs

Mitsubishi Estate Co.,
Ltd.*4

Cancer screening rate

90% every year from FY2022 through FY2031

—

80.7%
• Formulated Health Management 2030 and determined to add
screening for the five major cancer types to the standard healthcheckup menu, in order to raise the percentage of employees
undergoing such screening• Add screening recommended by the Ministry of Health, Labour and Welfare for thefive major cancer types to the standard health checkup menu
• Offer company subsidies to cover a portion of the cost of such testing as PET and
MRI scans for employees aged 50 or older to tackle illnesses other than the five
major cancer types• Create and promote awareness of a handbook summarizing health promotion programs

Mitsubishi Estate Co.,
Ltd.*4

Employees with high levels of stress

Maintain at 10% or lower from FY2022 through FY2031(Equivalent national average: 10%)

5.5%

4.7%
• Carried out stress checks and recommended the implementation ofinterviews with specialists such as clinical psychologists for thosewith high levels of stress• Established a system for online counseling by a clinical psychologist
as a measure to prevent the spread of COVID-19• Implement regular educational activities for all managers through e-learning
programs and other methods in addition to training for newly appointed managers• Carry out stress checks and recommend the implementation of interviews withspecialists such as clinical psychologists for those with continuously high levels of stress• Create and promote awareness of a handbook summarizing health promotion programs

Mitsubishi Estate Co.,
Ltd.*5—

Maximize performance by innovating
business models——

Please see pages 47 to 49 for details.

——

Support the creation of new ideas andbusinesses from the perspective of
urban development and contribute to thegrowth of cities and industries——

Please see pages 47 to 49 for details.

—

Percentage of employees with first aid
provider qualifications

100% every year through FY2031

61.0%

Implementation of emergency drills——

Percentage of buildings designated as
shelters for stranded commuters

—

92.3%

63.0%

Taking into account COVID-19 conditions, endeavor to raise the percentage of first aid
provider qualification holders by encouraging employees to undergo training to theextent possible• Implemented emergency drills, taking into account COVID-19 infection risks• Carried out verification tests of Disaster Dashboard 4.0, a platform
for communicating information to stranded commuters

Taking into account COVID-19 conditions, carry out emergency drills to the extent
possible

Relevant SDGs

Mitsubishi EstateGroup*2

39.5%• Held an event to facilitate exercise habits (body improvement
contest)Three Mitsubishi
Estate Group
companies*6—

DisasterPreparedness*1 Defines standards and operational procedures for ensuring procurement with consideration for sustainability with respect to international agreements and codes of conduct in fields relevant to sustainability*2 Mitsubishi Estate Group: Group companies have been selected based on control criteria. Properties for which the Group’s ownership or share of beneficial interests in trust is less than 50% have been
excluded from the scope of calculations.
*3 Five Mitsubishi Estate Group companies: Mitsubishi Estate Co., Ltd., Mitsubishi Jisho Property Management Co., Ltd., Mitsubishi Estate Residence Co., Ltd., Mitsubishi Jisho Sekkei Inc., and Mitsubishi Real
Estate Services Co., Ltd.
*4 Mitsubishi Estate: Applies to Head Office and branch office employees

22

CO2 emissions: 3,533,468 t-CO2
Percentage of power from renewable energy sources: 3.1%
• Resolved to switch all electricity consumed at 19 buildings centeredon the Otemachi, Marunouchi, and Yurakucho areas to electricity
from renewable energy sources in FY2022(Please see page 52 for details)
Waste emissions: 5.0kg/m2
Waste recycling rate: 60.5%• Began weighing the volume of garbage of each retail tenant by
garbage type and strengthened calls for tenants to reduce andseparate their garbage (please see page 52 for details)• Improved garbage separation at the Mitsubishi Estate Head Office(installed garbage stations with reciprocals able to hold 15 types ofgarbage in exclusive areas) and notified tenants in this regard(please see page 52 for details)
7.1%• Raised the percentage of female employees accounted for byassistant-manager-level employees who can be candidates for
management positions
37.8%
Implemented the following initiatives to raise the percentage of womenamong new graduates at the application stage:• Held roundtable discussions with women• Organized seminars for women with female speakers

Scope

36.4%

* Percentage of individuals whose results intheir regular health checkup for all of the
Health andcategories affecting the determination of
Productivity
Management lifestyle diseases were within normal levels

Innovation—

Initiatives Going Forward• 25.6% by FY2026• 14.6% by FY2031(Approximately 60% improvement compared with the percentage inFY2020, equivalent to the national average)* Percentage of individuals whose results intheir regular health checkup for any of thecategories affecting the determination oflifestyle diseases reached or exceeded thelevel at which medical attention isrecommended• Declining demand forbrick-and-mortar stores andservices accompanying theadvance of online buying andselling, such as e-commerce• Decreasing demand forfacilities and services due tolate response to IT and digital
innovation• Loss of opportunities becauseof a late response amid an
expansion in development
opportunities and demand forsmart communities, houses,
and offices• Decreasing asset value andincreasing expenses formaintenance and counter­measures due to intensifying
and increasing disasters (suchas urban floods) accompanying climate change• Fall in asset value and rise in
expenses for maintenanceand countermeasures due todisasters such as
earthquakes• Increasing renovation
expenses and disastercountermeasure costs
accompanying aging buildings

17.1%

Rate of female employees taking
childcare leave of absence

Percentage of employees in the healthygroup* (those aged 40 or older)• Decreasing cost ofenvironmental countermeasures and investment with theadvancement of technologicalinnovation• Rise in the efficiency andconvenience of operating
facilities through utilization of
IT and robots• Increasing need andopportunities for utilization insmart communities,
residences, and offices

100% by FY2031

FY2021 / Major Initiatives

92.3%

—

New*7 andlarge-scale*8 retailfacilities in Japan*5 Mitsubishi Estate: Includes employees seconded to Group companies*6 Three Mitsubishi Estate Group companies: Mitsubishi Estate Co., Ltd., Mitsubishi Jisho Retail Property Management Co., Ltd.,* and Mitsubishi Jisho Property Management Co., Ltd.
* Dissolved as of April 1, 2021, through an absorption-type merger in which Mitsubishi Jisho Property Management Co., Ltd., is the surviving company*7 New: Completed from 2002 onward*8 Large-scale: Floor area of 100,000 m2 and above

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

23

Long -Term Management PlanC O M M E NT
Message from the Employees in Charge of This Project

Domestic Asset Business

Kentaro Ouchi

Yukiko Idei

Deputy Manager
Office Leasing and Tenant
Relations Department
Mitsubishi Estate Co., Ltd.

Marunouchi Development Office
Mixed Use Development
Department
Mitsubishi Estate Co., Ltd.

(left)Developing a Platform for Diverse Lifestyles and
New Interactions and Value Creation

The logo design expresses our hope thatthe building will be a place for communication where many office workers and visitors
can converse freely (as represented by theJapanese-language quotation marks).

(right)Project Site Map
Hibiya-dori Ave.

SMBC East Tower

MizuhoMarunouchi Tower

Continuously Tackling Projects That Embody People’s Hopes
Eitai-dori Ave.

Ginkokaikan

Wadakura-Komichi

Marunouchi 1st St.

Otemachi Station, Toei Mita LineIn terms of the trajectory of its new urban development in the post-COVID-19 era, the Mitsubishi Estate Groupseeks to evolve the Marunouchi area into a platform where one million diverse office workers assemble
at optimum times to interact and create value. As a first step, we aim for Marunouchi Terrace to create a senseof excitement, stimulation, and the unexpected through a diverse lineup of facilities, most notably a rooftop
restaurant, a first for the area, and a large-scale entertainment venue. Although COVID-19 caused disruption
during the development stage, the building is suited to urban development going forward that takes into accountthe needs of the post-COVID-19 era, such as through the establishment of an outdoor terrace space. In an era
that acknowledges new workstyles and diverse value systems, we must create buildings with functions that
help enrich the lives of individuals. Amid the growing integration of work and personal lives, we have createdfacilities that embody our commitment to transforming the area itself into a platform for offering new lifestyle
proposals in order to promote well-balanced lifestyles and urban diversity.
As was the case in this project, we expect co-creation with a wide spectrum of partners, led by joint venture
partners and construction companies as well as designers and facility operators, to increase in future projects
to enable us to meet diversifying needs. We look forward to utilizing the experience and know-how we haveobtained by developing the Marunouchi Terrace as project managers in future development projects. As the first
redevelopment project in the Marunouchi NEXT Stage plan, we strongly believe that this project has broadened
the scope of the Group’s business activities from a variety of angles.
In initiatives going forward, we will improve soft measures while carefully assessing our vision of urban
development in the post-COVID-19 era. We are certain that holding events and other activities will encourage
people to visit Marunouchi Terrace time and again and help make it their favorite spot, which will in turnincrease the bustling atmosphere of the area and spread vitality.
We aim to transform Marunouchi into a place that people visit for business and a diverse range of otherpurposes, as well as an area whose workers not only go to for work but also take friends and family members
to enjoy themselves in their leisure time. Urban environments are created by people. As such, we will continuously
tackle projects that embody people’s hopes by working with a myriad of players to create unique properties.

Marutera Plaza
Marunouchi Terrace
Tozai Line Otemachi Sta.

EirakuKomichi

Marunouchi Naka-dori Ave.
The Industry Club of Japanand Mitsubishi UFJ Trust andBanking Bldg.

Marunouchi Eiraku Bldg.

M A RUNOUC H I
T ERR ACE

Retail zone
Floors 9 and 10

The first large-scale rooftop restaurantin the Marunouchi area, where patrons
can enjoy delicious meals prepared by
Japan’s leading chefs in an open andspacious setting.

The Mitsubishi Estate Group is promoting new urban development by fully leveraging its long-cultivated experience,know-how, and brand power. Through the development of Marunouchi Terrace, we will evolve Marunouchi into

Building Layout
Terracea multipurpose area offering settings for not only work but also experiences and encounters enriching people’s leisuretime that only Marunouchi can deliver.

10F

Rooftop
restaurant

9F

We advanced the development of the Mizuho Marunouchi Tower, Ginkokaikan, and Marunouchi Terrace (formerly known as the
Marunouchi 1-3 Project) as a three-building project for reconstructing the Mizuho Bank Head Office Building, Ginkokaikan, andthe Tokyo Ginko Kyoukai Building on a joint basis with Mizuho Financial Group, Inc., and the Japanese Bankers Association,completing the project in September 2020 as the first part of our Marunouchi NEXT Stage redevelopment plan.
Marunouchi Terrace, which Mitsubishi Estate maintains, will serve as a focal point of the Marunouchi and Otemachi areas.
With this in mind, we created a distinctive building that allows the bustling atmosphere of its facilities to be felt from theoutside by designing a structure that integrates Marunouchi Terrace with its external environment, in line with our determination
to extend the vibrancy of Marunouchi and Yurakucho to Otemachi. Another major feature of the building is its low-rise structure, ararity in the Marunouchi area. Making the most of this unique feature, the building as a whole offers functions that facilitate
enriching times and lifestyles, including retail and entertainment facilities and a private club.
To help realize urban development going forward that takes into account the needs of the post-COVID-19 era, Marunouchi
Terrace will aim to be a platform for new interactions and value creation, offering office workers and visitors experiences andencounters unique to the building by creating a new flow of people and generating new appeal for the Marunouchi area.
Through a broad range of projects centered on the Otemachi, Marunouchi, and Yurakucho areas, the Mitsubishi Estate Groupwill continue to raise the value of urban environments while leveraging its long-cultivated urban development know-how,credibility, and brand power.

24

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Rooftop Restaurant—
THE UPPER

Floors 3 to 7

8F
7F

Private Club—OCA TOKYOA new type of private club based on theconcept of creating a place whereindividuals with their own particular
style can enjoy borderless and creative
encounters.

6F
5F
4F

Retail zone
Floors 1 and 2

A new-style American diner with aterrace and an entertainment area that
includes state-of-the-art karaoke anddarts.

3F
Large-scale entertainment facilities
Street-level eateriesStores for office workers

Terrace

Large-Scale Entertainment
Facility—MARUNOUCHI BASE

2F

Plaza

B1F

Retail zone
Basement

Handy Stores for OfficeWorkers
The basement contains service-based
stores that meet the sophisticatedneeds of office workers, such as Chiba
Special (shoe shine emporium) and
HIROGINZA BARBERSHOP (barbers).

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

25

Long -Term Management PlanC O M M E NT
Message from the Employee
in Charge of This ProjectInternational Asset BusinessYutaro Hagiwara

Mitsubishi Estate’s First Large-Scale Renovation Projectin the United Kingdom

Manager
Mitsubishi Estate London Limited

Pursuing Unique Value That Only Renovation
Can Deliver

Warwick Court

Paternoster Square, the mixed-use development property that includes Warwick
Court, was an extremely challenging project that took a period of 13 years tocomplete from our participation in the development plan in 1990. However, ourrecord in overcoming numerous challenges in the project enabled us to win thetrust of the local market, which served as a major advantage when advancing
subsequent development plans. In light of the deep attachment to Warwick Courtof those who have been engaged in this project thus far, in addition to its status as
the cornerstone of our International Business and potential to increase revenues,
we decided to retain the building through renovation. By adding new value needed
for the coming times, we will breathe new life into this building, which has
become an established feature of the London landscape, and continue to establish
it as the flagship of our business in the United Kingdom.
Since establishing a local subsidiary there in 1986, one of the roles of theUnited Kingdom has been to earn steady income gains as an operating base witha long history. In order to achieve further business expansion going forward, theMitsubishi Estate Group will accelerate its capital-recycling business and work to
expand asset-type areas (including mainland Europe) by leveraging the experience
it has obtained to date and its comprehensive capabilities, a strength of the Group.
Speaking personally, I have gained a sense of the enjoyment of renovation
work through the Warwick Court renovation plan. I believe that creating new value
and features tailored to the needs of the times while utilizing the features of theoriginal building is a highly rewarding business that will pave the way for our
expansion into new business fields in the form of acquiring business opportunities
through renovating our existing portfolio. We will continue working to create
unique added value that only renovation can deliver and contribute to businessexpansion while cooperating with local partners and communities to enhance thepresence of the United Kingdom in our International Business.

Launching theRenovation Plan

Warwick Court, an office building that means a great deal to Mitsubishi Estate, represents the cornerstone of theCompany’s business in the United Kingdom. Through its renovation, we will give Warwick Court a new lease on life as an
office building for the new era that creates high asset value sustainably over the long term, by adding the value needed forthe coming times, such as improving well-being, catering to diversity, and reducing environmental impact.

In December 2020, we launched the renovation project (scheduled for completion in FY2023) for Warwick Court in London,
marking our first large-scale renovation project in the United Kingdom. Warwick Court is an office building forming part ofPaternoster Square (completed in 2003), a mixed-use development situated in a remarkable location next to St Paul’s Cathedral.
With the aim of improving the well-being of those working at the building, we will introduce facilities that include theconstruction of a new rooftop terrace with a view of St Paul’s Cathedral, the development of bicycle parking and showers
and lockers for bicycle commuters, as well as the establishment of LGBT-friendly, gender-neutral toilets. In addition, thecreation of open and spacious offices and the improvement of amenities will allow us to make proposals for offices suited
to the post-COVID-19 era and transform Warwick Court into the flagship office building of our International Business.
Meanwhile, by opting to renovate the building, we are scheduled to cut our CO2 emissions significantly in comparison withconstructing a new building, thereby helping reduce our environmental impact.
Under this project, we plan to renovate Warwick Court to the same specifications as London’s grade A-listed officebuildings. By realizing such a plan and continuously exploring and embodying trailblazing initiatives for office buildings, theGroup will further enhance its credibility and brand power in the development business in the United Kingdom.

26

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Providing Open andSpacious Offices

Improving Well-Being andProviding Support for Diversity

Addressing Sustainability andEnvironmental Impact Reduction

We will meet the needs of the post-COVID-19
era through the provision of open and spacious
offices. In a world where non-location-dependentworkstyles are increasingly recognized, we willoffer office spaces facilitating face-to-facecommunication by providing a terrace with aview of nearby St Paul’s Cathedral andspecifications that enable layouts to be changed
flexibly, in keeping with the significance ofphysically going to the office.

We will meet the high expectations of office
workers, such as for environmental impact
reduction and health awareness in commuting,by establishing bicycle parking for 280 bicycles
and installing showers and lockers for bicycle
commuters. In addition, we plan to create anLGBT-friendly building by having gender-neutral
toilets. Through these measures, we aim tocreate an office building that supports thediverse workstyles of the future and improves
well-being.

Compared with constructing a new building,renovating an existing one can significantly
reduce environmental impact during construction. Moreover, leaving the existing exterior andstructure promotes reuse initiatives aimed atachieving waste reduction. Along with promoting
such initiatives for reducing our environmental
impact, we plan to obtain BREEAM Excellent*
certification, which rates a building’s sustainability, after completing Warwick Court.
* Building Research Establishment Environmental
Assessment Method (BREEAM) Excellent certification isan international benchmark measuring the sustainabilityof buildings and communities. Under this method, over
540,000 certifications for more than 24,000 projects
have been issued while in excess of 2.2 million buildings
and communities have been certified and registered.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

27

Long -Term Management PlanC O M M E NT
Messages from the Employees in Charge of This Project

Non-Asset Business

Keisuke Tamaki

Toshiyuki Nasui

Unit Leader
Client Strategy Planning
Department
Mitsubishi Estate Co., Ltd.

Senior Manager
Business Creation Department
Mitsubishi Estate Co., Ltd.

(left)Akin to Having Offices Far and Wide(right)Working to Resolve Social Issues and Maximize Shareholder Value
through Co-Creation with Various Parties

The meaning and value required of places and time continue to change amid the growing
diversification of both workstyles and lifestyles. The Mitsubishi Estate Group, which boasts

In a world in which lifestyles are becoming ever-more diverse, the functions required of workplaces are alsochanging. In addition to maintaining core offices that invigorate employee communication, choosing where towork in accordance with needs is becoming increasingly important. Nevertheless, we should not simply follow
trends. Rather, we should focus on profitable fields that contribute to raising customer satisfaction levels andimproving shareholder value. To strike a balance between these two goals, we must hone functions by thoroughly investigating in a logical manner what functions are a source of added value for customers and are truly
needed by them and whether a particular field leverages the Mitsubishi Estate Group’s competitive advantages.
A prime example of this approach is the TELECUBE, which pursues the idea of being able to work anywhere to
the utmost limit. Our aim is to create synergies (a cycle of happiness) whereby we resolve social issues throughcareful thought, thereby delighting our customers, which in turn generates profits to satisfy our shareholders
and investors, and in the process allows us to get a solid sense of our own growth. I hope to transform theGroup into a company that can create such synergies and am convinced that it has the potential to do so. I aim
to give full expression to that approach through the promotion of the TELECUBE. (Keisuke Tamaki)

numerous contact points with many assets, office workers, and tenant companies, will offer
services suited to the workstyles of the coming times that only it can realize by creating
businesses based on new ideas without fixating on conventional business models.

Creating New Value with Speed That Only the Mitsubishi EstateGroup Can Offer
COVID-19 has triggered the rapid development of remote working environments. Amid these circumstances, webegan examining the full-fledged commercialization of NINJA SPACE in the summer of 2020, with the aim of offering
working environments suited to the new era, in anticipation of hybrid workstyles combining offline (going to work andmeeting face to face) and online (web-based meetings) methods becoming more widespread. The NINJA SPACE
service is a platform-based business without facilities of its own. The key point to its viability is whether or not thebusiness can capture two types of service users, namely, users as well as providers of facilities. Given that the
Mitsubishi Estate Group is able to collect information on needs and makes approaches to various facilities thanks to
its relationships with office workers and its network of tenants operating restaurants, we were confident that we
could realize the worldview of working anywhere, in tandem with the TELECUBE. By promoting NINJA SPACE, we will
deliver support for the provision of highly convenient work spaces to business people and the monetization of vacant
spaces in locations including restaurants, meeting rooms, and hotels with the aim of enabling the entire city tofunction as a work space promoting flexible workstyles. Going forward, we also seek to play a part in revitalizing
regions and invigorating Workations by building a platform that allows NINJA SPACE to be used anywhere
throughout Japan. (Toshiyuki Nasui)

Working Anytime, Anywhere with the TELECUBE—
Smart Work Booths Improving Work Efficiency

https://telecube.jp/ (Japanese only)

The TELECUBE is a private booth that can be used at a variety of locations, such as office buildings, retail facilities, and train
stations. We will offer work spaces where people can work anytime and anywhere with peace of mind with the aimof creating a piece of social infrastructure for underpinning new workstyles in the post-COVID-19 era. The work spaces are
fully secure, highly sound insulated, and clean while also meeting various regulations required for enclosed private booths.
In addition, they also cater to a burgeoning range of non-business purposes, including for making use of spare moments on
a personal basis and for carrying out online new graduate recruitment interviews. Installing TELECUBE booths holds thepotential to deliver added value to a variety of stakeholders, not only to end-users but also owners and tenants, throughways that include monetizing dead space and helping raise the value of properties. Going forward, we will identify new ways
to leverage these work spaces while increasing the number of booths installed and raising their profile.

https://www.ninjaspace.jp/ (Japanese only)
Making the Whole City Your Office.
NINJA SPACE—A Work-Space-Matching Support Service

NINJA SPACE is a work-space-matching support service that enables users to find a space to work or have a meetingoutside of their office. The service not only features spaces designed specifically for teleworking, such as conventional
co-working offices and the TELECUBE, but also introduces work spaces at facilities including restaurants, meeting rooms,
and hotels that are seeking new sources of earnings and ways to attract customers. This service benefits both users, who
are able to use work spaces without worrying about time
constraints by making reservations via NINJA SPACE, andtenants, who can deploy it to monetize periods of idle time andraise awareness of their facilities. While the growing prevalenceof teleworking is prompting recognition of the advantages of
online meetings, it is also serving to boost afresh the importance of offline forms of working. Amid the emergence ofhybrid workstyles, we will create a future in which people canStartup
Refine parameters
Matching
Routechoose workplaces in accordance with their needs.
screenand searchand payment
display
Facilities (aiming to leverage vacant
space when possible)

28

Easy Reservation via Smartphone

Comfortable and Clean Work Space

Also Installable in Offices

Users can simply choose a service area,booth, and available time on the dedicatedreservation website. After reserving, users
then press the room entrance button to
unlock the door when entering the booth.

The TELECUBE realizes a secureenvironment through soundproofing thatblocks out voices and other sounds. It also
ensures peace of mind and safety, including
through antibacterial coating of the entire
booth and full ventilation every five minutes.

Our product lineup includes types that canbe installed in offices, thereby addressing
the issue of meeting room shortages thathas emerged due to the increase in online
meetings.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Facility registration

User placement

Matches vacant space at facility
providers with space sought byusers based on location information
Available for immediate use
Private booth or open seating
Number of users
Use time

Users (seeking an immediate space
for teleworking)
Provision of space
matching needs

Onlinemeeting
Solo work

Physicalmeeting

SearchUse fee

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

29

Long -Term Management Plan
Message from the Corporate Officer in Charge of Finance &Accounting and Corporate Communications

In order to achieve the KPIs established in ourLong-Term Management Plan 2030, we willtake steps toward steadily growing profits andimplementing our capital policies while closely
monitoring real estate market conditions,amid the challenging business environment
due to the COVID-19 pandemic.

As for our international asset business, we are carrying out initiatives designed to increase revenue in a variety ofcountries and regions. Such initiatives include participation in a data center development business in the UnitedStates, the acquisition of investment opportunities in London and continental Europe, and the promotion ofdevelopment projects being successively completed in Asia.
Looking at our non-asset business, we are focusing on expanding our assets under management (AuM) in theInvestment Management Business as a means to achieve profit growth in existing businesses. As of March 31, 2021,
the Company’s AuM stood at ¥3.7 trillion, registering a steady expansion in scale even amid the COVID-19 pandemic.
In addition, we are proceeding with the acquisition of fee businesses by operating development businesses as joint
ventures. The Company announced numerous joint venture projects in FY2021. Moreover, we aim to create newsources of revenue in new business domains that will contribute to profits in the second half of the Long-Term
Management Plan 2030. These initiatives include participating in the biomass power generation business and making
venture investments in real estate related services companies.

Capital Policies: Promotion of Flexible Capital Policies in Accordance with Market Conditions

Hiroshi Katayama
Representative Corporate Executive Officer
Executive Vice President

FY2021 Business Performance: Maintained Solid Performance despite the Significant Impact of
COVID-19
In FY2021, the first year of our Long-Term Management Plan 2030, the significant impact of the spread of COVID-19
on our retail facility and hotel businesses resulted in year-on-year decreases in revenue from operations andoperating income.
Nevertheless, while we had projected a decline of 23% in operating income at the beginning of FY2021, we ultimately recorded a decline of 7%. Retail facilities, including outlet malls, and hotels were significantly impacted by
COVID-19; however, factors behind this lower-than-expected decline included the strong performance of rental profits
from office buildings and the positive boost provided by an expansion in demand for suburban properties in thecondominium business in Japan. In addition, as the impact of COVID-19 on the market for buying and selling realestate was not as extensive as we were concerned at the beginning of FY2021, we recorded much higher capitalgains than we had projected. As a result, we were ultimately able to surpass our forecast at the beginning of FY2021.

Progress on Our Long-Term Management Plan 2030: Acquisition of Investment Opportunities
for Profit Growth
In our Long-Term Management Plan 2030, we have established key performance indicators (KPIs) with a focus onefficiency, such as return on assets (ROA), return on equity (ROE), and earnings per share (EPS), in order to transform
our business portfolio into one that is resilient to changes in market conditions. Although our results for all three
KPIs in FY2021 were lower than in the previous fiscal year due to the impact of COVID-19, we have not consideredrevising our targets and intend to take a variety of measures to achieve them.
We will focus on improving ROE by raising ROA, with the aim of achieving double-digit ROE. To raise ROA, we areworking on a range of measures, such as increasing the revenues of our domestic asset and international asset
businesses, expanding our non-asset business, and selling underperforming assets and stocks held for strategic
purposes. In addition, we will achieve our three KPI targets while reducing the denominator in the equation by meansof executing share buybacks as part of our capital policies.
As a specific measure, we will increase net operating income (NOI) by steadily promoting long-term large-scale
redevelopment projects in our domestic asset business. Also, we will raise the level of our capital gains by steadily
selling properties that will bring stable returns. As higher capital gains will serve as a growth driver over the next
several years, we will steadily work to achieve increases while paying close attention to the market for buying andselling real estate. Meanwhile, by using funds generated from returns, we will proactively engage in growthinvestments that deliver improvements in efficiency. In our capital-recycling business in Japan in FY2021,
we successfully acquired investment opportunities approximately 40% above the level in plans set at the beginningof the fiscal year. These opportunities will contribute to profit growth going forward.

30

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

When acquiring investment opportunities that deliver improvements in efficiency, we believe it is crucial to flexibly strikea balance in accordance with real estate market conditions. The Group’s core business is super long-term redevelopments such as those in the Marunouchi area. Accordingly, the procurement of long-term funds at low cost is important for our financial strategy and we follow a policy of controlling our leverage ratio within a range that allows us tomaintain our credit ratings. Our policy is to aim for a sustainable increase in corporate value by striking an optimalbalance between growth investments and shareholder returns, in combination with advantageous financing while closely
monitoring real estate market conditions. For example, a deterioration in said market conditions ordinarily exerts downward pressure on credit ratings. However, as we are seeing a buyer’s market in which properties can be purchased
cheaply, we are able to secure a buffer to a certain extent. We will therefore carry out investments in a proactive manner.
Although we have adopted a stance of flexibly executing share buybacks while monitoring factors including
potential investment demand, financial soundness, and share prices, our announcement of ¥30.0 billion in sharebuybacks in April 2021 clearly showed our intention to steadily carry out policies aimed at achieving our targets,even amid the challenging business environment.
In FY2021, we registered increases in our cash flows and investment returns that were higher than we had anticipated at the beginning of the fiscal year, reflecting an improvement in profit margins and the accumulation of capitalgains. Similarly, the number of investment opportunities we acquired in the capital-recycling business in Japan
greatly exceeded our initial expectations. However, our efforts to acquire investment opportunities overseas did not
progress as we had anticipated. Accordingly, our policy going forward will be to proactively work on acquiring suchopportunities in overseas based on carefully selecting areas and asset types while paying close attention to market
conditions. For FY2022, we have established a strategic allocation quota of between ¥100.0 billion and ¥150.0 billion.
Using this quota, we aim to acquire investment opportunities primarily centered on Southeast Asia, which is experiencing dramatic economic growth, while paying close attention to the impact of COVID-19.

My Hope as Corporate Officer in Charge of Finance & Accounting and Corporate Communications:Move Forward Step by Step toward Achievement of Our KPIs
While conditions remain unpredictable given that the COVID-19 pandemic is still raging, we are beginning to see
encouraging signs, such as the steady increase in vaccination rates in Japan. The Group operates a diverse range ofbusinesses, which have been impacted in various ways depending on the business. By having our employees respondflexibly in accordance with ever-changing conditions, we were able to minimize the impact of COVID-19 to a greater
extent than we had projected at the beginning of FY2021. As a result, the Company was able to announce sharebuybacks totaling ¥30.0 billion in April 2021. Moreover, we expect to pay a cash dividend per share of ¥33 for FY2022,
a return to the pre-COVID-19 level seen in FY2020.
Although our Long-Term Management Plan 2030 has begun with decreases in revenue from operations andoperating income, the KPIs we are targeting remain unchanged. By viewing our management strategies from thelong-term and comprehensive perspective of a decade, we will take one step at a time toward achieving our targets
by steadily advancing both growth investments in Japan and overseas for profit growth and capital policies including
shareholder returns. Accordingly, we ask for your continued support in our endeavors.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

31

Business Review
The Mitsubishi Estate Group operates the office building business and various other businesses in Japan and overseas.
Under Long-Term Management Plan 2030, we will enhance our earnings power in each segment through business strategies
that leverage our competitive advantages, as well as actively working to establish new businesses that pursue synergies with

Business Segments

our established businesses.
Please see pages 34 to 39 for details.

Architectural Design &Engineering Business andReal Estate Services Business

Commercial Property Business Group
Other

Investment Management Business

International Business

Office Building Business
Revenue from Operations¥

1,207,594 million
10,907 million*

US$
Residential Business

Retail Facility BusinessThis is Mitsubishi Estate’s core business, which engages
in the development, leasing, and property managementof office buildings, mainly in Tokyo and other major
Japanese cities. We promote urban development that
contributes to the increased appeal of cities while
maintaining a balance between properties for lease andproperties for sale in our asset portfolio.

Outlet Mall Business

Promoting the development of various types of retailfacilities tailored to the characteristics of locations
across Japan, the Mitsubishi Estate Group operates thisbusiness using a comprehensive system whereby itremains continuously involved from facility planning,development, and tenant leasing through to operation
after opening.

We conduct the nationwide development and operationof our PREMIUM OUTLETS®, which boast the top
customer-drawing power in Japan.

Operating Income

224,394 million¥

2,026 million*

US$

Total Assets¥

6,072,519 million

Logistics Facility Business

54,850 million*

US$* The above amounts were translated into U.S. dollars
at ¥110.71 = US$1.00, the approximate prevailingexchange rate on March 31, 2021.
Commercial Property Business

Hotel Business

Under the Logicross brand, Mitsubishi Estate is pursuinglogistics facility business opportunities nationwide.
To take advantage of the rapid growth in the domestic
logistics market on the back of the expansion of e-commerceand other factors, we are focusing on development projects
at locations suited to logistics nearby major terminals, suchas metropolitan areas, main roads, ports, and airports.

Airport Operation BusinessWorking together with hotel operators in Japan andoverseas, we conduct a hotel development businessacross a wide range of categories matching location
characteristics as well as practicing nationwide hotelbusiness operations under the Royal Park Hotels brandand the Marunouchi Hotel.

The airport operation business promotes the invigorationof airports and their localities through its involvementin the operation of 10 airports. The airports contribute toregional development by acting in unison with their local
communities to increase the non-resident populationand improve regional value.

Please see pages 40 and 41 for details.

Fiscal year ended March 31, 2021 (consolidated)

Operating
Income (Loss)

Total Assets

Commercial Property Business

672,441

180,775

4,167,287

Residential Business

362,755

24,068673,344

International Business

114,457

37,932929,869

Investment Management Business

22,1995,966

77,58632

56,064

Other

9,055

(1,089)25,367(29,378)(24,219)

142,995

1,207,594

224,394

6,072,519

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

International BusinessWe offer services to meet a variety of needs forcondominiums, rental apartments, custom-built
housing, purchase and sales, leasing, brokerage
areas, renovations, and management. As thecirculation of existing homes expands andpeople’s lifestyles grow increasingly diverse,
we are strengthening our reform and renovation
business to seize upon such changes.

The Mitsubishi Estate Group has pursued
business overseas since the 1970s, undertaking
real estate leasing and development businesses
in the United States and the United Kingdom. In
recent years, we have also been actively
developing our office building, residential,commercial facility, and other real estatebusinesses in rapidly expanding Asian markets
and advancing into continental Europe.

Please see page 44 for details.

Investment Management BusinessArchitectural Design & Engineering
Business and Real Estate Services
Business

Total

Residential BusinessMillions of yen

Revenue fromOperations

Eliminations or Corporate

Please see pages 42 and 43 for details.

959

56,067For investors seeking real estate asset
management, we provide a wide range of services
based on our specialized expertise, utilizing
collaboration among our operating bases inJapan, the United States, Europe, and Asia
excluding Japan. These services include realestate investment trusts (REITs) to meet
management needs for long-term stability as wellas private placement funds to meet the specificmanagement needs of institutional investors.

Please see page 45 for details.

Architectural Design & Engineering Businessand Real Estate Services BusinessThis full-service architectural design andengineering business meets social needs
through construction, civil engineering, urban
and regional development planning, andconsulting. Meanwhile, the Real Estate Services
Business provides one-stop, real estate
problem-solving solutions, including real estate
brokerage and condominium and office building
leasing management support.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

33

Business Review
Commercial Property Business

Commercial Property Business

Asset Types

Commercial Property Business Group Breakdown(Fiscal year ended March 31, 2021)

Breakdown by Business Model
Others
14%

Office Buildings

Retail Properties
and Outlet Malls

Propertysales
8%

Logistics Facilities

Breakdown by Real Estate Leasing
Asset Type
Outletmalls
8%

Others7%

Revenue fromOperations
Approx.:

Revenue fromOperations
Approx.:6,724 billion¥

Real estateleasing78%

Airports

Key Areas and Pipelines
In the Marunouchi area, TOKYO TORCH (the Tokyo Tokiwabashi Project), a large-scale, mixed-use redevelopment boasting the largest site area in the vicinity ofTokyo Station, is well underway. In addition to completing the construction of the approximately 212-meter-tall Tokiwabashi Tower in June 2021, we are moving
ahead diligently with the construction of Torch Tower, which stands at 390 meters and is set to become a new Tokyo landmark. Meanwhile, besides the Mizuho
Marunouchi Tower, Ginkokaikan, Marunouchi Terrace, TOKYO TORCH (the Tokyo Tokiwabashi Project), and the Uchikanda 1-chome Project (tentative name), we arepromoting the reconstruction and renovation of several aged buildings owned in the Yurakucho area.
Marunouchi Area Map

524.4 billion¥

HotelsLong-Term Management Plan 2030 Priority Strategy—
The Marunouchi NEXT Stage

Pipeline
Tokiwabashi Tower

Mizuho Marunouchi Tower/Ginkokaikan/Marunouchi Terrace

Kanda

Torch Tower

Nihonbashi

Offices85%

Tokiwabashi
Photo by Kawasumi and Kenji Kobayashi Photo Studio

Office Building Business
The office building business, Mitsubishi Estate’s core business, engages in the development, leasing, and property
management of office buildings with state-of-the-art functions, mainly in major Japanese cities centering on the
Marunouchi area. Our businesses involve three types of earnings models: our property development and leasing business,in which we ourselves develop office buildings and receive rental revenue from them; our capital-recycling business,in which we generate capital gains on the sale of properties we have developed; and our non-asset businesses, whichcenter on office building operations and management. Through building development and operations, we are promoting
urban development to increase the attractiveness of the entire surrounding area.

Naka-dori

Overview

Total Floor Area: 180,900 m2
Completion:
Sep. 2020

Total Floor Area: 146,000 m2
Completion:
Jun. 2021

Total Floor Area: 544,000 m2
Completion:
FY2028

Tokyo Station
FY2021

FY2022

2030

Yaesu

Otemachi Bldg. Renovation

Uchikanda 1-chome

Yurakucho Redevelopment

COMING SOON

Yurakucho
Ginza

Office Buildings
Business Concept

Marunouchi area (mainly theproperty development andleasing business)

Major business areas in Japan(mainly the capital-recycling
business)

Main Non-Asset Type Businesses
Property management

Business
Strategies

	Redevelopment in Marunouchi not requiring new land acquisition is largely unaffected by fluctuations in the real estate
investment market, thus enabling stable and continuous redevelopment.
	Development know-how and a track record cultivated through continuous urban development in the Marunouchi area
for more than 120 years.
	Tenant relationships and information networks built through the Group’s wide-ranging businesses, including
development in the Marunouchi area.
	Relationships with the central and local governments built through public and private sector cooperation in urban
development.
	Urban development and area management with advanced disaster-management functions centering on the
Marunouchi area.

Marunouchi Area	Generally, redevelopment enables rental revenue to be increased by expanding building floor space and raising rents per
square meter. In the Marunouchi area, we aim to promote continuous redevelopment that raises value through individual
redevelopment projects as well as by realizing synergies across the whole area.
	Positioning urban development from 2020 onward as part of the Marunouchi NEXT Stage, we will establish a co-creation
platform for innovation through companies, employees, and visitors.
Main Office Areas in Japan	We aim to strengthen our development pipeline by using the know-how we have accumulated through redevelopmentin the Marunouchi and other areas.
Non-Asset Businesses and Others	We intend to expand and strengthen non-asset businesses, including property management and master leases, andbusinesses that utilize existing stock, such as through the renovation of aged buildings.

34

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Total Floor Area: 111,300 m2
Completion:
Mar. 2021

Total Floor Area: 84,500 m2
Completion:
2025

Completion: TBD

Master leases

	Ownership of about 30 office buildings in the Marunouchi area, a leading business area in Japan with one of the world's
greatest concentrations of companies.
Competitive
Advantages

HibiyaLegendMarunouchi area
Key redevelopment areas, project sites
Interaction facilities

Progress on the Long-Term Management Plan 2030
Development and Promotion of CIRCLES, Our Compact Office Series
CIRCLES is a development leasing business for compact offices that we have been working to strengthen
since January 2019. In an era in which workstyles unshackled by fixed places and times have become morewidespread due to the promotion of teleworking and other practices, this series of enhanced offices helps
improve the productivity and comfort associated with the workstyle of assembling to work in an office.
Beginning with CIRCLES Shiodome, CIRCLES Ginza, and CIRCLES Nihonbashibakurocho, the first threeproperties in this series, we are targeting the development of about five buildings per year to achieve a totalof 25 to 30 buildings over a five-year period and will continue to promote development in order to meet thediversifying office needs of tenant companies.
CIRCLES Shiodome roof terrace

CIRCLES Ginza

Sustainability Initiative
Acquisition of Environment-Related Certification for TOKYO TORCH Tokiwabashi Tower
TOKYO TORCH (the Tokyo Tokiwabashi Project) Tokiwabashi Tower (Building A), which we completed at the end of June 2021,
has obtained preliminary certification under the SITES® framework, becoming the first urban mixed-use development projectin Japan to receive SITES® Gold certification. This level of certification was acquired as a result of the Group’s implementationof a suite of environmental impact reduction initiatives for Tokiwabashi Tower together with the planned development of the
Nihonbashi riverside water area and of the approximately 3,000 m2 plaza developed in advance in the center of the project site.
With the aim of constructing people- and environment-friendly buildings, the Group has also acquired several environmentrelated certifications, including the DBJ (Development Bank of Japan) Green Building Certification (the Group applied forfive stars in its self-evaluation, a ranking for buildings exhibiting the highest level of environmental and social awarenessin Japan), Social and Environmental Green Evaluation System (SEGES) certification, and Association for Business Innovationin Harmony with Nature and Community (ABINC) certification. Furthermore, in procuring funds for developing Tokiwabashi
Tower, we became the first comprehensive real estate company to issue green bonds.

Tokiwabashi Tower Plaza Path* The Sustainable SITES Initiative® (SITES®) administered by Green Business Certification Inc.™ offers a quantitative benchmark when giving concrete form
to green infrastructure and a certification system for comprehensively rating the sustainability of landscapes.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

35

Business Review
Commercial Property Business

Commercial Property Business

Overview

Retail Facility Business / Outlet Mall Business

Logistics Facility Business

The retail facility and outlet mall businesses promote the development of various types of retail facilities tailored to thecharacteristics of locations across Japan. The Mitsubishi Estate Group operates these businesses using a comprehensive system whereby it remains continuously involved from facility planning, development, and tenant leasing through tooperation after opening. These businesses are operated through three business formats: urban mixed-use facilities,
stand-alone shopping centers, and PREMIUM OUTLETS®.

The functions required of logistics facilities are changing as the domestic logistics market grows rapidly on the back of
the expansion of e-commerce and other factors. In recent years, we have been planning development projects centeredon locations that are easily accessible by public transportation and advantageous for recruitment, in addition to being
ideally situated for logistics, and on locations in proximity to metropolitan areas and nearby major terminals, such as
expressways, main roads, ports, and airports.
The Mitsubishi Estate Group will continue to conduct proactive investment, development, operational management,
and asset management centered on the Tokyo metropolitan, Kansai, and Chukyo areas.

Overview

	The top customer-drawing power in Japan of PREMIUM OUTLETS®.
Competitive
Advantages

Business
Strategies	A business platform with a broad range of functions related to logistics facilities, from land acquisition and development
to building operations, ownership, and asset management.

	Information networks and tenant relationships built through wide-ranging Group businesses, including developmentsin the Marunouchi area.
Competitive
Advantages

	Extensive development and management know-how gained through a portfolio consisting of three different businessformats, business coverage in Japan stretching beyond Tokyo, all the way from Hokkaido to Kyushu, and an extensive
tenant network.

	Management know-how and experience gained through Tokyo Ryutsu Center Inc. (TRC) and its competitivenessunderpinned by being based in Heiwajima, a location providing excellent access to central Tokyo and Haneda Airport.

	With urban mixed-use facilities, we are aiming to deliver wide-ranging eating and drinking options and shops as wellas various service providers to offer better amenities and convenience for office workers while also drawing in people
for shopping and tourism.

	We intend to make acquisitions of land and undertake leasing operations by making use of our multiple information
networks and tenant relationships.
Business
Strategies

	Regarding stand-alone shopping centers, we are developing distinctive facilities tailored to diverse demand based on
detailed analyses of the location, local demand characteristics, tourism potential, and discussions with tenants.
	With outlet malls, we will continue to expand and refurbish existing facilities and develop new ones to offer visitors
unique spaces and meet their needs for a fun, one-of-a-kind experience.

Area Map of Main Retail Facilities

Changes in Aggregate Floor Area

There is a decrease in operating income compared with FY2020.
In the period since the lifting of facility closures imposed due to Japan’s firststate of emergency declaration, net sales at facilities have recovered to between
70% and 100% of their FY2020 levels, despite being impacted by factors
including the COVID-19 situation and additional state of emergency declarations.

maruyama class

AQUA CITY ODAIBA	We aim to generate stable capital gains by leveraging our logistics facility business platform to sell developed properties
to Mitsubishi Estate Logistic REIT Investment Corporation, which is managed by Mitsubishi Jisho Investment Advisors,
Inc., and other parties.
	We intend to generate synergies Groupwide by sharing the information networks and management know-how acquiredby the Tokyo Ryutsu Center, which has been involved in logistics facility business operations for over 50 years.

Changes in Store Area, Revenue from Operations, and Operating
Income of the Outlet Mall BusinessMillions of yen	Tenant relationships and information networks through wide-ranging Group businesses, including developments in the
Marunouchi area.

Trends in Gain on Sale

Assets inoperation 32%(4 buildings)

Total Assets(As of March 31, 2021)
m2

Billions of yen

2,000,000

8

8

m

2

80,000400,000

60,000300,000

IZUMI PARK TOWN Tapio

40,000200,000

SANO PREMIUM OUTLETS®

20,000100,000001,500,000

6

1,000,000

48¥61.0 billion(As of March 31, 2021)¥27.0 billion

4500,000

Assets inoperation 36%(2 buildings)(As of March 31, 2020)

2

Assets under development
68% (11 buildings)

2

GOTEMBA PREMIUM OUTLETS®

MARK ISFukuoka
MomochiSHISUI PREMIUM OUTLETS®
MARK IS minatomirai

FY2016FY2017FY2018

Revenue from operations (left scale)Store area (right scale)

RINKU PREMIUM OUTLETS®

Facility NameTOSU PREMIUM
OUTLETS®

FY2019FY2020

FY2021OpenStore Area

Gotemba (Phase 4)

June 2020

Before expansion: approx. 44,600 m2
Currently: approx. 61,000 m2 (+37%)

Rinku (Phase 5)

August 2020

Before expansion: approx. 39,400 m2
Currently: approx. 50,100 m2 (+27%)

Fukaya Hanazono (New)

Fall 2022

Kyoto Joyo (New)

Spring 2024

Approx.: 25,000 m2

Major Expansion of Two PREMIUM OUTLETS® (Gotemba Phase 4 and Rinku Phase 5) to Make Them the Largest Outlet Malls in JapanGOTEMBA PREMIUM OUTLETS®, the first of our PREMIUM OUTLETS®, evolved into the largest shopping resort inJapan* among outlet malls through the opening of a new area in July 2020 and the renovation of existing areas.
Meanwhile, RINKU PREMIUM OUTLETS® became the largest outlet center in western Japan* following the openingof a new area in August 2020 that offers views of Osaka Bay. We will continue to pursue the creation of shopping
resorts that earn customers’ support while aiming to operate facilities that contribute to regional development.

36

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

FY2017FY2018FY2019FY2020

FY2021

Note 1: Including joint ventures
Note 2: Excluding Tokyo Ryutsu Center

Note 1: Ratio by value
Note 2: Excluding Tokyo Ryutsu Center

Operating income (left scale)

Progress on the Long-Term Management Plan 2030

* In terms of store floor area (Mitsubishi Estate data)(Plan)

Assets under development
64% (8 buildings)

00FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024

MARK IS Shizuoka

KOBE-SANDA PREMIUM
OUTLETS®

0

Progress on the Long-Term Management Plan 2030

Sustainability Initiative

Expansion of the Logistics Facility Business’s Total
AssetsInstallation of Solar Power Generation Equipment at Logicross Ebina to Supply
Power for Self-Consumption

Thanks to the steady expansion of our logistics facility pipeline,
most notably the joint venture Fuchinobe Project, total assets of
the logistics facility business soared from ¥27.0 billion at theend of FY2020 to ¥61.0 billion at the end of FY2021. In FY2022,
we are scheduled to complete the construction of five facilities—Logista•Logicross Ibaraki Saito (blocks A and B),
Logicross Kasukabe, Logicross Funabashi, and Logicross Zama
Komatsubara. We will continue
working to acquire outstanding
investment opportunities tomeet the demand for logistics
facilities brought about by the
expansion of e-commerce.

At Logicross Ebina, a logistics facility we completed in November 2020, we began using solar
power generation equipment installed on the facility’s rooftop to generate power for selfconsumption under a power purchase agreement (PPA)*1 as a new initiative in partnership with
SymEnergy Inc. Under this agreement, all the power generated by the SymEnergy-owned
equipment is consumed at Logicross Ebina. This facility has also acquired a five-star rating (thehighest level) under the Building-Housing Energy-efficiency Labelling System (BELS),*2 whichlabels the energy-saving performance of buildings, and received nearly net-zero-energy building(Nearly ZEB)*3 certification as a building with annual primaryenergy consumption close to net zero. Going forward, our policy
as a general rule will be to acquire BELS certification for the
Logicross series of logistics facilities that we are developing.

Sagamihara-shi Chuo-ku
Fuchinobe Project (tentative name)

GOTEMBA PREMIUM
OUTLETS®

RINKU PREMIUM
OUTLETS®

*1 Agreements involving third-party ownership of solar power generation systems*2 A third-party certification system for rating and labeling energy-efficiency
Logicross Ebina
performance based on guidelines on the energy-efficiency performancelabeling of buildings (Building-Housing Energy-efficiency Labelling System) stipulated by the Ministry of Land,
Infrastructure, Transport and Tourism (MLIT)*3 Buildings with annual primary energy consumption of net zero or less. Nearly net-zero-energy buildings are almost
on a par with net-zero-energy buildings and satisfy both of the following two criteria in terms of energy consumption:(1) a reduction of more than 50% compared with standard primary energy consumption (excluding renewableenergy) and (2) a reduction of more than 75% less than 100% more compared with standard primary energy
consumption (including renewable energy)

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

37

Business Review
Commercial Property Business

Commercial Property Business

Overview

Hotel BusinessAirport Operation Business

The hotel management business operates 16 hotels nationwide* under the Royal Park Hotels brand and the Marunouchi
Hotel in the Marunouchi area, aiming to improve brand value through the implementation of management focused on
customer satisfaction. We will address diversifying customer needs by continuing to increase new hotel openings.
In addition, to meet the robust and diverse accommodation needs of late, the hotel development business engages inhotel development across a wide range of categories matching location characteristics, by working together with hotel
operators in Japan and overseas, including Royal Park Hotels and Resorts Co., Ltd., of the Mitsubishi Estate Group.

The Mitsubishi Estate Group is involved in the operation of Takamatsu Airport, Miyako Shimojishima Airport Terminal,
Mt. Fuji Shizuoka Airport, and seven airports in Hokkaido. Each airport will contribute to regional development by acting
in unison with their local communities to increase the non-resident population and improve regional value while leveraging
the distinctive characteristics of their respective regions.

Operation of Airports* As of August 2021

	We are leveraging our development expertise and the tenant relationships we have built by handling diverse real estate
assets as a comprehensive developer in order to acquire sites for hotels and promote hotel development.
Competitive
Advantages

	Applying more than 30 years of hotel management experience with the Royal Park Hotels brand, we have been expanding
our networks of full-service hotels and accommodation-oriented, limited-service hotels.

Business
Strategies

	We focus on the development of hotels under the Royal Park Hotels brand on sites we have acquired ourselves while
actively looking to lease properties to other operators and generate capital gains through the sale of properties after
holding them for a certain period of time.
	With the Royal Park Hotels brand, we aim to steadily increase operating income by improving the operating income ratio
at existing hotels while opening three to four new hotels on a yearly basis through the leasing of properties developed byother companies and the utilization of various schemes, including management contracts and franchise contracts.

Royal Park Hotel
Locations

4 Seven Airports in Hokkaido
Launch of airport building facility business for the seven
Hokkaido airports in January 2020
Commencement of business operations at New Chitose
Airport in June 2020
Beginning of business operations at Asahikawa Airport
in October 2020
Launch of business operations at Wakkanai, Kushiro,
Hakodate, Obihiro, and Memanbetsu airports in March 2021

New Chitose Airport

3 Mt. Fuji Shizuoka Airport
Operating since April 20192 Miyako Shimojishima Airport Terminal
Opening of passenger terminal facilities andcommencement of terminal operations at the end of
March 2019

1 Takamatsu Airport
Operating since April 2018

Royal Park Hotels
SapporoLocation

Name

Numberof Rooms

Hokkaido
Miyagi

The Royal Park Canvas Sapporo Odori Park (scheduled for completion in October 2021)
Sendai Royal Park HotelRoyal Park Hotel
The Royal Park Canvas Ginza 8
The Royal Park Hotel Iconic Tokyo Shiodome
The Royal Park Hotel Tokyo Haneda
Yokohama Royal Park Hotel
The Royal Park Canvas Nagoya
The Royal Park Canvas Osaka Kitahama
The Royal Park Hotel Iconic Osaka Midosuji
The Royal Park Hotel Kyoto Sanjo
The Royal Park Hotel Kyoto Shijo
The Royal Park Hotel Kyoto Umekoji
The Royal Park Canvas Kyoto Nijo
The Royal Park Hotel Iconic Kyoto (scheduled for completion in Spring 2022)
The Royal Park Canvas Kobe Sannomiya
The Royal Park Hotel Hiroshima Riverside
The Royal Park Hotel Fukuoka

134
110
419
121
490
313
603
153
238
352
172
127
246
180
130
170
127
174

Tokyo
Sendai
Kanagawa
Aichi
Tokyo
Kyoto
Yokohama
Kobe
NagoyaHiroshima
Osaka
Fukuoka

Osaka

Kyoto

Hyogo
Hiroshima
FukuokaCompetitive
Advantages

Business
Strategies	Mitsubishi Estate operates airports leveraging its track record of operating several airports, the expertise gained inbusinesses related to inbound tourism through outlet malls and hotels, and its cooperation with other businesses in
the Mitsubishi Estate Group.

	We ensure stable operation at each airport while aiming to achieve operational efficiency and sophistication throughinter-airport cooperation.
	We will work to invigorate regions by leveraging our urban development expertise and to increase revenues forpassenger terminal buildings by harnessing our expertise in the development and operation of retail facilities.

Progress on the Long-Term Management Plan 2030

Sustainability Initiative

Progress on the Long-Term Management Plan 2030

Sustainability Initiative

Promotion of a New Hotel Development Business inMiyakojima, Okinawa

Use of Local Timber at The Royal Park Canvas Sapporo Odori Park

Launch of Business Operations of Seven Airports
in Hokkaido

CLT and ZEB Initiatives at Miyako Shimojishima Airport Terminal andEnvironmental Preservation Activities in Miyakojima City

In 2019, we established Hokkaido Airports Co., Ltd.,* in which we havean investment stake, and launched an airport operation business at
all seven of our airports in Hokkaido (New Chitose, Wakkanai, Kushiro,
Hakodate, Asahikawa, Obihiro, and Memanbetsu) by March 2021. The
company will create a multi-tourism gateway by assigning clear roles
to the seven airports and steadily increase tourism activities throughout
Hokkaido by means of the promotion of digital marketing. By communicating the appeal of Hokkaido, we will contribute to the invigoration of
the seven airports and their localities while advancing stable airport
operations over the long term, with safety and reliability the top priority.

Miyako Shimojishima Airport Terminal, which Mitsubishi Estate developed andsubsequently opened in 2019, is the first airport terminal in Japan using crosslaminated timber (CLT) in the structural materials for its roof and implementing
net-zero-energy building (ZEB) initiatives (acquisition of ZEB Ready certification andreceipt of a five-star rating under BELS). CLT is produced using timber from the region
stipulated by Okinawa Prefecture (timber from Okinawa Prefecture or Kyushu that is
distributed in Okinawa Prefecture), thereby contributing to the vitalization of theregion’s forests and forest industry. Meanwhile, working closely with local government
and non-governmental organizations, theMitsubishi Estate Group began efforts in 2019that included beach cleanups and otheractivities to protect the gray-faced buzzard, amigratory bird of the hawk variety, which isdesignated as an endangered species. Throughsuch measures, we are contributing to thedevelopment of the region’s economy while
Check-in area at Miyako
helping preserve its rich natural environment.

On a joint basis with KAJIMA CORPORATION, we are advancing the development of the Hilton Okinawa Miyakojima Resort with the aim of a summer
2023 opening, marking Hilton’s first foray into an outlying island in Okinawa.
We have also concluded a contract with Rosewood Hotels and Resorts,
L.L.C., an operator of ultra-luxurious hotels and resorts, under which we will
outsource the management of the Rosewood Miyakojima Hotel. Targeting an
opening date in 2024, this hotel will be developed by Mitsubishi Estate andmanaged by Rosewood Hotels and Resorts.
In addition, we are proceeding withthe tentatively named Naha-shi Nishi
1-chome Project, our first hotel
development project in the city ofNaha, which we aim to open in spring
2022. In this project, the hotel will beleased to and managed by Nest Hotel
Japan Corporation, whose flagship
Rendering of the Hilton Okinawa
brand is the Nest hotel.
Miyakojima Resort

38

Overview

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Scheduled to open in October 2021, the Royal Park Canvas Sapporo Odori Park,
which actively utilizes Hokkaido-produced timber, is the first high-rise, hybridwooden hotel in Japan. This hybrid-wooden construction consolidates the
Mitsubishi Estate Group’s accomplishments to date in promoting the use oftimber in buildings: the upper floors are made completely of wood; the low andmiddle floors have reinforced concrete ceilings using wood; and one of the
middle floors has a hybrid of reinforced concrete and wood. Approximately 80%of the timber used in the hotel’s structural materials was produced in Hokkaido(approximately 1,050 m3), thereby contributing to the development of local
industry and the recycling of forest
resources. In addition, the building wasselected for inclusion in the Ministry ofLand, Infrastructure, Transport andTourism’s (MLIT’s) pilot projects forsustainable buildings (wooden structure)in the second round of invitations forcandidate projects in FY2020.
Lounge using Hokkaido-produced timberin its interior* Established through investment by 17 entities: Hokkaido Airport Terminal Co., Ltd.,
Mitsubishi Estate Co., Ltd., Tokyu Corporation, Development Bank of Japan Inc., North
Pacific Bank, Ltd., The Hokkaido Bank, Ltd., Hokkaido Electric Power Co., Inc., The
Sankei Building Co., Ltd., Japan Airlines Co., Ltd., ANA HOLDINGS INC., Mitsui FudosanCo., Ltd., Mitsubishi Corporation, Iwata Chizaki Inc., Doshin Service Center, Dentsu Group
Inc., Taisei Concession Co., Ltd., and Sompo Japan Insurance Inc.

Shimojishima Airport Terminal

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

39

Business Review
Residential BusinessResidential Business

Overview

The Mitsubishi Estate Group has approximately 50 years of experience in the condominium business. We have establisheda value chain to meet housing-related needs spanning from new development in Japan and overseas and rebuilding andredevelopment projects to purchasing and sales, brokerage, and management. We are also developing a wide range ofbusinesses to meet diversifying lifestyle needs. Such businesses include rental housing, renovation, and investmentpurposed real estate.

	The power of The Parkhouse and The Parkhabio brands backed by outstanding technologies, uncompromising productquality control, and a long and extensive track record.
Competitive
Advantages

	Product-planning capabilities that ensure our buildings keep people safe through resilience in natural disasters andoffer both comfort and cost performance and which respect the environment and the local region by paying carefulattention to preserving biodiversity and helping realize a low-carbon society.

Main Non-Asset Type Businesses
Business Concept

Condominiums

Rental Apartments

Management

Brokerage

Custom-built
housingLand Bank Breakdown
in Reporting Term

Ranking by Condominium Seller and Owner Based on Number ofUnits Supplied (Tokyo Metropolitan Area)(as of March 31, 2021)(2020)FY2028 onward
5,600 units

Total:
16,100 units

FY2022–FY2024
6,900 units

FY2025–FY2027
3,600 units

1 Nomura Real Estate

2,698

2 Sumitomo Realty & Development

2,530

3 Mitsui Fudosan Residential

1,995

4 Mitsubishi Estate Residence

1,354

5 SHINNIHON CORPORATION

1,232

6 Nippon Steel Kowa Real Estate

1,120

7 Tokyu Land Corporation

1,023

8 Daiwa House Industry973

9 MORIMOTO

708

10 Tyuou Jyutaku

616	The ability to provide services to meet all housing-related needs.

Renovation

Condominium Business	Quality control of The Parkhouse brand at all stages of the development process—from design and construction tocompletion—with “Check Eyes,” our quality management and performance indication system, which reflects ourdedication to all aspects of the properties we offer.

Business
Strategies

Domestic Condominiums
	We aim to expand our customer base by strengthening our brand power through the enhancement of product appeal,reliability, and services and by leveraging said brand power to acquire loyal “fans.”	We intend to optimize material costs and construction costs by utilizing our leading business scale in residential
condominium development in Japan.
	We are promoting redevelopment projects that make full use of our abundant know-how related to real estate development and of the comprehensive capabilities of the Mitsubishi Estate Group.
Rental Apartments
	We are aiming to stabilize segment profits through capital gains from rental apartments and other investment purposed properties in the Residential Business.
Non-Asset Type Businesses	We aim to strengthen non-asset type businesses involving existing properties in such areas as residence management,
brokerage, custom-built housing, and renovation.

Note 1: Source: “National condominium market trends,” Real Estate Economic Institute Co., Ltd.
Note 2: Family-type condominiums in the Tokyo metropolitan area are included in the scope of thesurvey. Condominiums for investment purposes are not included.
Note 3: Fixed-term leasehold condominiums are not included in the scope of the survey.

Residential Business Value Chain
	We are providing one-stop services as a group making full use of all of the phases of the value chain, from land acquisition, development, sales, and management through to brokerage.

Redevelopment Projects and Large-Scale Development Projects
Redevelopment Project / Large-Scale Development Project
Scheduled Delivery
FY2021
FY2021
FY2023
FY2023After FY2025

Location
Atsugi, Kanagawa
Chiba, Chiba
Yokohama, Kanagawa
Kita, Tokyo
Shinagawa, Tokyo
Yokosuka, Kanagawa
Minato, Tokyo
Chuo, Tokyo
Chiyoda, Tokyo

Project Name
The Parkhouse Hon-Atsugi Tower
Makuhari Bay Park Sky Grand Tower
Land Readjustment Project (H block) in West District around Kawawa-cho Station
Maintenance project of Kami-Jujo 1-chome 4-banchi Disaster prevention zone
Togoshi 5-chome, 19 District Redevelopment ProjectIn Front of Oihama Station Type 1 Urban Zone Redevelopment Project
MitaKoyama-cho Nishi area Type 1 Urban Zone Redevelopment Project
Toyomi area Type 1 Urban Zone Redevelopment Project
Kanda Ogawa-cho 3-chome West-side South area Type 1 Urban Zone
Redevelopment Project

Total Units
163
826
183
43
Approx. 240
Approx. 300
Approx. 1,200
Approx. 1,700
Approx. 110

Note: Only major projects are listed.

Rental Apartment Business

Non-Asset BusinessTotal Assets

Ranking of Condominium Management Companies Based on
Number of Units under Management(March 31, 2021)(2021)

Assets under development
46% (39 buildings)

Approx.
¥117.0 billion
Assets in operation
54% (28 buildings)

1 Nihon Housing

469,898

2 Daikyo Astage

431,656

3 Haseko Community

373,760

4 Tokyu Community

341,642

5 Mitsubishi Estate Community

334,074

6 Daiwa LifeNext

275,140

7 Gojinsha Keikaku Kenkyujo

223,043

8 Mitsui Fudosan Residential Service

202,606

9 Sumitomo Fudosan Tatemono Service 173,194
10 Nomura Real Estate Partners

Note: Ratio by value

40

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

166,976

Note: Source: “Ranking of condominium management companies based on number of units undermanagement (2021),” Mansion Kanri Shimbun

Progress on the Long-Term Management Plan 2030
Steady Promotion of the Condominium and Rental Apartment Businesses, Even amid COVID-19
In FY2021, despite being temporarily affected by closures of model rooms and other measures due to the spread of
COVID-19, our condominium business saw an increase in the number of units sold compared with the previous fiscal year
following a rise in interest in urban as well as suburban properties, resulting in low inventory levels at the end of the fiscal
year. Although we are projecting a decline in the number of units sold in FY2022, we expect to maintain net sales on a parwith FY2021 thanks to the completion of urban, high-end properties such as The Parkhouse Mita Garden Residence andTower, The Parkhouse Takanawa Tower, and The Parkhouse Yokohama Shinkoyasu Front.
In our rental apartment business, we steadily secured investment opportunities, increasing the business’s total assets
to approximately ¥117.0 billion as of March 31, 2021, up approximately ¥29.0 billion compared with the previous fiscal
year-end.

The Parkhouse Mita Garden Residence
and Tower

Sustainability Initiative
Condominium Development Meeting Net-Zero-Energy House (ZEH-M Ready) Standards —A First for The Parkhouse Series
In cooperation with Kintetsu Real Estate Co., Ltd., Mitsubishi Estate Residence Co., Ltd., is advancing the development of
The Parkhouse Shin-Urayasu Marine Villa,*1 which meets the net-zero-energy house (ZEH-M Ready),*2 standards forcondominiums, a first for Mitsubishi Estate Residence’s The Parkhouse condominium series. This property has been
awarded a five-star rating (the highest evaluation) under BELS for raising the energy-efficiency performance of thebuilding and creating its own energy using solar power generation and other systems as well as for realizing a 50%
reduction in its primary energy*3 consumption.

The Parkhouse Shin-Urayasu Marine Villa*1 Sections 1 and 2 are scheduled for completion in early October 2021 and early August 2022, respectively.
*2 Net-zero-energy house standards for condominiums refer to a type of residence that aims to offset its annual primary energy consumption, for which
graded standards have been set for reducing primary energy consumption.
*3 Primary energy refers to petroleum, natural gas, sunlight, and other naturally derived energy sources. Primary energy consumption is calculated basedon heating and cooling, ventilation, lighting, hot water supply, and five other categories.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

41

Business Review
International Business

International Business

Overview

Total Assets and Ratio of Business Profit by Region

The Mitsubishi Estate Group’s International Business began with the establishment of a company in the United Statesin the early 1970s. Its geographical coverage has since expanded to include the United Kingdom, mainland Europe, andAsia and Oceania. We have been strengthening our portfolio with both management properties predicated on returns
from rental fees and properties for sale premised on raising their value under a capital-recycling business model. We
are promoting business expansion with respect to the real estate trading rules and business customs of each country.
Furthermore, we seek to apply optimal business models for each market based on macroeconomic data and analysis ofcapital and real estate markets to identify the right time to enter.

(FY2021)Asia
29%

 itsubishi Estate London Limited
MEuropa Capital Group*

United States
50%

Europe21%

 ockefeller Group International, Inc.
R
Mitsubishi Estate New York Inc.
TA Realty LLC*
Europe13%

Mitsubishi Estate Asia Pte. Ltd.
Yangon BranchAustralia BranchMitsubishi Estate Vietnam Company Limited
Hanoi Branch
PT. Mitsubishi Estate Indonesia
Mitsubishi Estate (Thailand) Co., Ltd.
Mitsubishi Estate (Shanghai) Ltd.
Mitsubishi Estate Taiwan Ltd.
Pan Asia Realty Advisors (Singapore) Pte. Ltd.*

Total Assets
Approx.
¥1.5 trillion

United States
35%

Europe
20%

Asia
16%

Asia and Oceania* Group companies under the Investment Management Business segment

Asia
45%

Total Assets¥929.8 billion

United States

Europe(Target for 2030)

United States
71%

Asia
45%

Business Profit¥37.9 billion

Business Profit
Approx.
¥90 billion

United States
40%

Europe15%

Progress on the Long-Term Management Plan 2030
Participation in a Data Center Business in the United States

Competitive
Advantages

United States	The sourcing power of Rockefeller Group International,
Inc. (RGII), and its development know-how and trackrecord, as well as the name recognition it brings.
	TA Realty LLC’s networks and track record in raising
the value of properties.
Europe	Sourcing power based on business achievements overa long period.
	The establishment of development teams andoperational effectiveness.

Asia and Oceania
	Development know-how gained in the business in Japan.
	Acclaim the Group has won for its track record inJapan among businesses in leading cities in Asia
excluding those in Japan.
	Relationships with leading local partners.
	The networks Pan Asia Realty Advisors (Singapore) Pte.
Ltd. (PA Realty) has established together with CLSA Real
Estate Partners (CLSARE), which handles the real estate
fund management business in Asia and Oceania.

Acquisition of New Business Development Opportunities and Upcoming Completion of New Properties(Europe and Asia and Oceania)

Rendering of the completed data centers
Note: Actual buildings may differ from theabove rendering as we are planninga build-to-suit development.

In Europe, we are leveraging the know-how of Europa Capital LLP, a Group company, to promote a rental housing businessin London and to acquire development opportunities in various locations in Europe, such as Barcelona and Stockholm.
We are also acquiring new development opportunities in Asia and Oceania, most notably a condominium business in Australia. Meanwhile, development
projects that we have promoted in various locations are scheduled for completion one after another from FY2021 onward.
(Europe)	Europa Capital LLP’s networks and track record inraising the value of properties.

(Asia and Oceania)
Projects in which we are participating

	Compared with current levels, we will increase business profit by around ¥50.0 billion and double our total assets in 2030.
To that end, we will aim to secure opportunities to invest between ¥200.0 billion and ¥250.0 billion on an annual basis.
Business
Strategies

On May 7, 2021, we announced our first participation in a data center business in the United States. TA Realty LLC, a Group
company, is promoting the development of this project at a total cost of ¥200.0 billion to construct a campus of seven data
centers (two of which the Company plans to invest in on a joint basis) in northern Virginia, where data centers areconcentrated. We anticipate that global demand for data centers will increase continuously and will proactively enter thiskind of outstanding investment opportunity as we move forward.

Morello(London, rental
housing)

Fyrkanten 11 (tentative name)(Stockholm, office renovation)

Cristóbal de Moura 121-125(tentative name)(Barcelona, office)Savya Financial CenterNorth Tower(Manila)One Sydney Harbour Residences Weifengchuxiao (China)
One / Residences Two(Australia)

Basic Strategies for Each Area
The United States	Reinforcement of capital-recycling businessleveraging RGII’s know-how

Asia and Oceania
	Increase in investment balance and establishment of acapital recycling portfolio

	Promotion of joint ventures with local partners

	Business promotion based on the two approaches ofbusiness development in which we have a major shareand of joint business with local partners

	Expected return from investment IRR: 8%–10%Europe	Implementation of investments and returns with afocus on balancing profit stability and capital efficiency
	Promotion of business development centered onlarge-scale projects* that have already been decided

	Expected return from investment:
IRR (developed countries): 8%–10%;
IRR (emerging countries): Over 10%

Sustainability Initiative
Support for the Local Community through a Residential Development for People with
Developmental Disabilities
At The Green at Florham Park, a large-scale, mixed-use project combining offices, residential housing, and a hotel that
it is working on in cooperation with its joint venture partners in the city of Florham Park, New Jersey, Rockefeller GroupInternational, Inc. (RGII), has developed 62 units (completed in October 2020) for people with developmental disabilities.
As places where those with developmental disabilities can enjoy vibrant lives were lacking in this area, RGII developed
these units to provide support for the creation of employment opportunities and the promotion of leisure activities. There isconsiderable social significance to providing living space and community-building opportunities for people with developmental
disabilities in this kind of large-scale development project, which serves as a case study of a private developer shoulderinga public role through urban development. As a result of these efforts, those in the supportive housing units are able to leadvibrant lives while enjoying their new living environment as members of the community.

View of The Green at Florham Park

* 8 Bishopsgate, London, and 60–72 Upper Ground, London

	Expected return from investment IRR: 8%–10%

42

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

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Business Review
Architectural Design &Engineering Business and Real
Estate Services Business

Investment Management
Business

Architectural Design & Engineering
Business and Real Estate Services Business

Investment Management Business	Through the execution of M&A deals and other activities overseas, we have established a strategic global investment
management platform. This enables us to provide global asset management services to clients by leveraging our
expertise and achievements fostered in Japan, the United States, Europe, and Asia excluding Japan.

Overview

	In Japan, the Investment Management Business offers specialist services. Mitsubishi Jisho Investment Advisors, Inc.,
provides asset management services across a wide range of investment products, including the country’s largest
private real estate investment trust (REIT) and a listed logistics REIT, while Japan Real Estate Asset Management Co.,
Ltd., manages Japan’s first publicly listed office REIT.

Overview

	We undertake design and management with an in-depth understanding of operation, maintenance, and managementfrom the perspectives of business operators and clients based on experience cultivated as a comprehensive developer’s in-house design office.

AuM (Assets under Management) Area Breakdown	We have access to a wealth of information on China and Southeast Asian countries through a network centered on
local subsidiaries established in Shanghai and Singapore.

(Billions of yen)

EuropeUnited States

Europa Capital

TA Realty

Asia and
Oceania120

Europe
450

JRE
1,050

Total
United approximately
States¥3.6 trillion(As of March 31, 2020)

Domestic
1,890

Real Estate Services Business	The Real Estate Services Business boasts one-stop real estate solution provision capabilities leveraging a wide-ranging
service menu (including support utilizing CRE* information and real estate brokerage) and the Mitsubishi Estate Group’s
comprehensive strengths.
	We provide solutions throughout Japan using our nationwide branch network backed by specialist expertise and knowledge.

1,200

Asia-Pacific
Globally, we havecombined assets
under managementof approximately¥3.7 trillion.

Pan Asia Realty Advisors

MJIA
840

Overseas
1,770

Carry out marketing and research and establish funds worldwide
Provide global opportunities to worldwide investors

Japan
Groupwide
Synergy

Japan Real Estate AssetManagement Co., Ltd. (JRE)
Mitsubishi Jisho Investment
Advisors, Inc. (MJIA)

Asia and
Oceania130(As of March 31, 2021)

Europe490

UnitedStates
1,100Overseas
1,720

JRE
1,070

Domestic
1,990

Total
approximately¥3.7 trillion
MJIA
920

Mitsubishi Estate Group’s network for investment & development and management & services

Business
Strategies

Architectural Design & Engineering Business	In addition to handling design project orders from within the Group and from long-established clients, the Architectural
Design & Engineering Business is working closely with the Business Development, Client Relations & Solutions Groupto win new orders.
	Besides construction management work involving the comprehensive management of projects such as construction
schedules, budgets, and quality control, we are focusing on winning orders in renovation and other growth fields inorder to expand our earnings base.
	We provide technological support to Group companies and seek to generate synergies therewith.
Real Estate Services Business

Goal: Reach ¥5 trillion by the mid-2020s

Business
Strategies* Corporate real estate (CRE): Real estate held or used by a business enterprise or organization for its own operational purposes. In recent years, there has been growinginterest in using CRE strategically to contribute to increasing corporate value.

Expansion of
AuM despite COVID-19

CLSA Real EstateArchitectural Design & Engineering Business	As a full-service architectural design and engineering firm, we have extensive experience in urban planning coveringsuch areas as the design and management of buildings for various applications and proposal-based consulting,including large-scale complex developments in the Marunouchi area, and the design of underground spaces that take
into account traffic conditions.

	By utilizing our hybrid investment model strategy, through which we co-invest our principal investment capital alongside
our clients’ in funds that our Group companies manage, we seek to capture demand for cross-border property investments.
Through this approach, we are simultaneously pursuing the expansion of our overseas portfolio while benefiting fromenhanced investment diversification as well as expanding and strengthening our investment management businesses.

	We are aiming to be the leading company in CRE strategy support, real estate consulting, and recreational land and recreational
facility management by providing services to enterprises and high-net-worth individuals as our core customers.
	We are strengthening our value chain, which combines a variety of service menus of the Business Development, Client
Relations & Solutions Group and of each of the Group’s businesses, while expanding the range of services we provide
to existing customers.

	In Japan, we meet the needs of domestic and overseas investors by providing a diverse lineup of products, including
listed REITs, private REITs, and private funds, as well as dependable asset management services.

Progress on the Long-Term Management Plan 2030

Progress on the Long-Term Management Plan 2030

Commencement of the Management of a Core Open-Ended Fund in Europe

Integration of Mitsubishi Real Estate Services’ Parking-Lot-Related Business into a Subsidiary

In October 2020, Europa Capital put together and commenced the management of the Europa Diversified Income Fund (EDIF), an open-ended fund for investing inreal estate in continental Europe. The launch of this fund marks the first time* that a real estate fund management company affiliated with a Japanese company
has begun the management of such a fund.
With initial assets of €350.0 million (approximately ¥42.7 billion), EDIF will focus on investments in stable assets in operation, including logistics, housing, andoffices in various European countries, such as Germany, France, and the Netherlands. While EDIF is an open-ended fund in Europe, it will further accelerate thegrowth of our Investment Management Business by offering yet more extensive products and services to institutional investors throughout the world, following
such funds in Japan and the United States.

Effective April 1, 2020, Mitsubishi Real Estate Services Co., Ltd., executed a company split of its parking-lot-related business and integrated it into its subsidiary
Parking Management Organization, Ltd. (PMO). Concurrent with the integration, we changed PMO’s name to Mitsubishi Estate Parks Co., Ltd., merged the coinparking business that had previously been operated by Mitsubishi Real Estate Services with PMO’s facility parking-lot-related business, and began sales. Goingforward, we will target net sales of ¥16.0 billion and management of parking lots with a capacity for 80,000 automobiles in 2025, five years after integration, as we
aim to achieve further growth in the parking-lot-related business by expanding areas of operation centered on the bases of various Mitsubishi Estate Group
companies and on the provision of efficient facility operation and management leveraging cutting-edge technologies.

* Based on the findings of Mitsubishi Estate

Sustainability Initiative

Sustainability Initiative
Receipt of High Ratings in the GRESB Real Estate Assessment
Japan Real Estate Investment Corporation (JRE) and Mitsubishi Estate Logistics REIT Investment Corporation (MEL) received
the following high ratings in the GRESB* Real Estate Assessment carried out in 2020.
JRE:	Awarded five stars (the highest rating), selected as a sector leader (Asia) in the listed office sector, and ranked
number one for the second consecutive year in the office sector for listed companies in Japan.
MEL: Awarded five stars and selected as a sector leader (global and Asia) in the listed real estate sector.
* GRESB is the name of the annual benchmark assessments measuring the environmental, social, and governance-related (ESG-related) performance of realestate companies and funds and of the organization that operates these assessments.

Support for Acquisitions of ZEB and BELS Certifications by Examining the Possibility of Reducing CO2
Emissions for an Entire Portfolio and Making Proposals
Mitsubishi Jisho Sekkei Inc. was commissioned by the Japan Real Estate Investment Corporation (JRE) to examine thepossibility of reducing CO2 emissions for its entire portfolio and to identify properties that could be converted to net-zeroenergy buildings (ZEB)*1 while carrying out concrete examinations aimed at converting such properties to net-zero-energy
buildings. Specifically, Mitsubishi Jisho Sekkei proposed methods for reducing CO2 emissions by analyzing building age,building envelope performance, building scale, and air-conditioning and lighting systems. Based on the analysis results, JRE
set a target of converting between five and 10 of its properties to net-zero-energy buildings by 2030. As a first step towardachieving this target, JRE acquired ZEB Ready*2 certification at the design stage and a five-star rating under the BuildingHousing Energy-efficiency Labelling System (BELS) for its Higashi-Gotanda 1-Chome Building.
*1 Buildings with annual primary energy consumption of net zero or less
*2 As advanced buildings in anticipation of ZEB certification, buildings awarded ZEB Ready certification are those with primary energy consumption that has been
reduced more than 50% compared with standard primary energy consumption, excluding renewable energy.

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

View of Higashi-Gotanda 1-Chome
Building

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

45

Business Review
Business Development, Client
Relations & Solutions Group

Overview

Innovation and BusinessTransformation Group

Business Development, Client Relations & Solutions Group

Innovation and Business Transformation Group	The Business Development, Client Relations & Solutions Group will deliver the most effective proposals to customers
by centrally managing customer contact point information and aim to maximize the acquisition of business opportunities
for the Group.

	The Business Creation Department will (1) create new businesses unique to the Company while (2) leading efforts tocreate frameworks and promote open innovation initiatives aimed at creating new businesses for the Mitsubishi EstateGroup.

	Acting as a Companywide, general contact point for the Group, Business Development, Consulting & Solutions
Departments 1 and 2 will propose solutions maximizing the Company’s resources in response to all manner of customer
real estate utilization needs.

Overview

	The DX Promotion Department will (1) secure new sources of earnings and (2) increase earnings and enhance productivity
by refining existing business models and work processes through the leveraging of digital technologies while (3) leading
the establishment of a Groupwide IT platform and promotion of Group IT governance.

	The Office Leasing and Tenant Relations Department will carry out extensive office leasing activities by leveraging theGroup’s diverse building assets and customer relationships.

Business Creation
Department

	In addition to properties owned by the Group, the Retail Property Leasing Department will conduct leasing activities
for retail facilities boasting diverse characteristics, from urban to suburban facilities, including properties owned byother companies.

Competitive
Advantages

DX Promotion
Department

Competitive
Advantages

Various apparent and latent needs of customers

Customer Contact Point
FunctionsFirm understanding and analysis ofcustomer trends and markets

Proposal of optimal solutions from a
Companywide perspective

Business Development, Consulting &Solutions Departments 1 and 2

Office Leasing and
Tenant Relations Department

Retail Property Leasing
Department

Integration and target selection of sales
and customer contact point functions

Improvement of product planning andproposal capabilities by strengthening
marketing functions

Establishment of systems andframeworks for harnessing integrated
sales functions

Information Hub Function

2

A world where people and places are connected better online

	In response to latent social needs, we will seek new earnings opportunities by accumulating and analyzing available
data online and offline, with a focus on B2B and B2B2C contact points.
Business
Strategies

Development of products and services
from the customer’s perspective

Securement of new sources of earnings
Heightening of earnings by refining existing
business models and work processes
3 Establishment of a Groupwide IT platform
1

	Our B2C contact points with workers and visitors in area development districts such as Otemachi, Marunouchi, and Yurakucho, withvisitors to retail facilities and airports, and with residents andother parties based on our position among the leading companies
in Japan in terms of number of condominiums supplied andassets under management.
	Relationships established with diverse tenants and corporate
business partners, from leading major companies from various
industries to start-up companies that have become tenants at ourinnovation hubs, including Inspired. Lab., FINOLAB, and EGG JAPAN.

Client Strategy Planning Department

Creation of broader and deeper
proposal and matching opportunities

Creation of new businesses
Creation of frameworks and promotion of open
innovation initiatives aimed at the creation of
new businesses	Our wide-ranging business portfolio in the real estate domain as acomprehensive developer.

Existing customers / new customers / collaboration partners
Information acquisition throughmulti-tiered channels

2Innovation and BusinessTransformation Group	A cross-segment, strategic sales organization.
	Firm understanding of various apparent and latent needs of customers.
	Provision of abundant solutions drawing on Companywide resources.
	Leveraging of medium- to long-term relationships with office tenants and other customers and brokerage companies.
	Leveraging of relationships with retail tenants through an abundant leasing track record stretching from urban tosuburban facilities.
Integration of Sales and Customer Information and Leveraging of Information across the Group1

Consolidation of business menu andresource information

	Leveraging our knowledge cultivated in the real estate business, we will expand our business domains* byproactively cooperating with external partners. As a field for verifying the business structures born of suchcooperation, the Group will utilize diverse real estate stock that it owns and manages.
* including agricultural facilities, meditation studios, and a biomass power generation business.

The Mitsubishi Estate Group’s variety of business opportunities

	We will drive automation and laborsaving processes by using IT and digital tools, such as robotic process automation(RPA) and business chat tools, as means of increasing productivity with the power to propagate effects crossorganizationally and across the entire Group.

Departments / Group companies / New services and business models

	We will promote the increased efficiency and sophistication of real estate-related processes by leveraging
technologies while creating new value and functions for real estate.
	We will proactively conduct investments and accelerators to promote open innovation while leveraging our New
Business Proposal System to uncover new business seeds from within the Company, thereby driving new businesscreation both internally and externally.

Progress on the Long-Term Management Plan 2030
Undertaking for a New Function Matching Customer Needs as a Section Featuring Direct Contact Points with Customers
Workationhttps://workxation.mec.co.jp/ (Japanese only)This business operates new facilities supporting innovation creation by offering out-of-the-ordinary spaces to companies
and, in doing so, it realizes regional revitalization. Coined in the West, “Workation” is a portmanteau of the words “work”
and “vacation.” In Japan, however, which has a different working culture, we define it more broadly, for example, as a place
for realizing diverse workstyles, examples of which include changing location, fostering communication, and creating
innovation. Following the opening of Workation x ation in Nanki Shirahama and Karuizawa, we opened WORK x ation Site
Atami and WORK x ation Site Ito Shimoda in May and July 2021, respectively. We will continue developing new products
tailored to a broad spectrum of workstyles by leveraging expertise and know-how that only the Mitsubishi Estate Groupcan offer while building new relationships between regional and urban areas that contribute to regional revitalization.

Message from the Executive Officer in Charge of the Business Creation and DX Promotion Departments 

Workspace at WORK x ation Site Atami

https://www.magus-corp.jp/ (Japanese only)
Art Media Consulting Business
The Mitsubishi Estate Group, which has long spurred innovation through urban development, has incorporated art in urban
settings as well as its offices and other properties over a period of many years. We established MAGUS Co. as a joint
venture with companies including Warehouse TERRADA, TSI HOLDINGS CO., LTD., and Tokyu Corporation. MAGUS will
carry out a business offering consulting services to corporations and various services to individual entities (such as
schools and for event planning and advisory services) through the operation of art-related informational media (such as
art news and web magazines) connecting artists, ordinary citizens, corporations, and the world. Going forward, we willcontinue to build an enriched society by incorporating art into our creation of urban environments and development efforts
as well as into our relationships with customers.

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Senior Executive Officer

Ikuo Ono

In a bid to play a major role in increasing earnings and profits in the non-asset business domain and service content provision domain
under Long-Term Management Plan 2030, the Innovation and Business Transformation Group aims to offer seamless services by
expanding “touchpoints” with customers online, in addition to customer contact points at physical locations through the development,
sale, and operation of real estate, which the Company specializes in.
By analyzing the information that we acquire and accumulate from diverse customer contact points in a cross-sectional manner, we
will accurately identify customer needs and use the findings for the early discovery and resolution of issues in our existing businessdomains, for the uncovering of new business opportunities, and, in particular, for the provision of B2C and B2B2C service content, as set
forth in Long Term Management Plan 2030.
Based on our extensive user reach and abundant real estate asset touchpoints, we will further extend our business domains byleveraging technologies and working closely with external stakeholders while expanding our revenue base through the provision of newservices and service content.
Among these efforts, we will increase IT utilization speed and literacy for the Group as a whole by focusing in a well-balanced manneron the development of a Groupwide IT platform and on the strengthening of Group IT governance, with the goal of smoothly promoting theutilization of the digital technologies and IT that will be indispensable to our growth strategies.

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47

Business Review
Innovation and BusinessTransformation Group

Innovation and Business Transformation Group
Business Creation Department
1

DX Promotion Department

Creation of New Businesses 

1 Securement of New Sources of Earnings and 2 Expansion of Earnings by Refining Existing Businesses

As of July 2021, our investments in start-ups and venture companies in Japan and overseas, conducted mainly by our Business Creation
Department, stood at ¥20.0 billion (including commitments). As part of our efforts to create new businesses, we have established sevenfocus areas: 1) agriculture; 2) renewable energy; 3) infrastructure, public and private partnerships (PPPs), and private finance initiatives(PFIs); 4) real estate-related services; 5) content, entertainment, and sports; 6) tourism, inbound-related businesses, and regional
revitalization; and 7) healthcare and food, with the aim of creating new sources of earnings.
Focus Areas

Investment Targets

Mitsubishi Estate’s New Businesses

Agriculture
Renewable energy
Infrastructure, public
and private partnerships(PPPs), and private
finance initiatives (PFIs)
Real estate-related
services
Content, entertainment,
and sports
Tourism, inboundrelated businesses, andregional revitalization

New Urban Development through the Integration of Real and Digital Aspects
Digital Vision
In June 2021, we formulated the Mitsubishi Estate Digital Vision, which aims to create more livable urban environments for ordinary
citizens through digital transformation. Under this vision, the Group will develop environments that allow users to have enjoyable
experiences in urban settings while moving back and forth freely between the online and offline worlds, by extending the physical contact
points with customers that it has built up in its real assets and diverse business portfolio. In addition, we will pass on the data
accumulated through these experiences to users in the form of various optimized services and new service offerings. Mitsubishi Estate
will evolve urban environments into platforms for new discoveries and inspirations by promoting the creation of settings where people
and companies can assemble, meet, and interact both online and offline with other people and other companies.
As part of our efforts to realize this vision, we have built Machi Pass, a common authentication ID. Via this single common
authentication ID and a password, users can take advantage of a variety of services offered in an urban setting as well as receive
optimized information and services
based on such data as their user
history and location information, if
Work, leisure, living, and vacations connecting Passing on to
New urban settings and residences
they so wish. This initiative will
diverse individuals
with digital functions
customers
help evolve the urban setting into athoroughly
Provision of experiences in urban settings
Analysis and optimization focusedin a variety
place that provides enriched user
integrating the online and offline worlds
on individuals
of forms
experiences by accumulating andDigital touchpoints rooted
optimizing the experiences ofLocal data platformin urban settings
individual customers as data andpassing it on to them to facilitate
User
experience
yet better experiences.
loop
in an urban
setting

Healthcare and food

2 Creation of Frameworks Aimed at the Creation of New Businesses and Open Innovation Initiatives 

New Business Proposal System—Mitsubishi Estate Group Innovation Challenge (MEIC)
Through the New Business Proposal System, launched in 2009, we have extensively sought business proposals and ideas from
employees. In FY2022, in light of a rapidly changing business environment due to factors including the emergence of new lifestyles andvalues triggered by the COVID-19 pandemic and the digital shift in all kinds of industries, we have expanded the scope of this system toencompass Group companies and launched a new program, the Mitsubishi Estate Group Innovation Challenge (MEIC), in order to further
promote this system. The secretariat for the proposal system will provide support for everything from refining to commercializing ideas
as well as offering encouragement to employees in their endeavors. By doing so, the Group aims to create new businesses that help
diversify its sources of earnings and strengthen its core business as well as spur Groupwide innovation using more flexible ideas,
unshackled by conventional limitations. Thus far in FY2022, we have received a record 89 applications, which we are examining with aview to commercialization.

Accelerator Program
Since 2017, we have been implementing our Accelerator Program, which aims to create new businesses through open innovation withstart-up companies in order to innovate business models and spur innovation.
In 2020, taking into account the conditions required by drastic social transformations and changes in behavioral patterns, we invited
applications from start-up companies to be our partners in jointly addressing issues and offering new value to society on the theme ofrealizing a business model based on continuous business development. We selected eight start-up companies from the 110 businessplans we received and are promoting efforts toward commercialization.

Progress on the Long-Term Management Plan 2030 / Sustainability Initiative

Provision ofdata willingly
from customers

Utilization of Robotics Technology
Next-Generation Urban Development Utilizing Robots and Digital Twins
We are working on next-generation urban development utilizing advanced technologies in cooperation
with the national and Tokyo metropolitan governments and other agencies. In facility management, weare already achieving tangible results, including work efficiency improvements and cost reductions, atoffices as well as at retail facilities, hotels, airports, and logistics facilities, by coordinating autonomous
robots, elevators, IoT sensors, 3D data, and other technologies to automate work processes that are
seeing increasing labor shortages, such as security, cleaning, and transportation. We are also utilizing
the 3D City Model promoted by the Ministry of Land, Infrastructure, Transport and Tourism to examine
Security robot SQ-2
a wide range of new ways to use technology in the urban development field, including autonomous
driving, disaster preparedness simulations, and the utilization of sensors, by linking unified data from inside and outside facilities.

Participation in the Elevator Media BusinessParticipation in the elecinema Business
In November 2019, we established spacemotion, Inc., jointly with Tokyo, Inc. The newly established company ispromoting an elevator media business (business name: elecinema) that delivers video content inside elevators.
Combining the Group’s real estate expertise with digital technology, elecinema is a digital transformation businessthat aims to create new value and functions for real estate and realize previously unavailable monetization by
utilizing idle space to fill idle time.
Meanwhile, spacemotion is advancing the introduction of its video content centered on offices andcondominiums in the Tokyo metropolitan area while making efforts to enhance customer experiences by
upgrading content and improving product quality with a view to achieving further business expansion.

Entry into the Biomass Power Generation Business
In May 2021, Mitsubishi Estate, SHIZUOKA GAS AND POWER K.K., and PROSPEC AZ Inc. established Higashi Matsuyama Biomass Power Generation, LLC, a joint
venture company, marking the Company’s first foray into the biomass power generation business. The joint venture company will develop a biomass power generation
plant with a power generation capacity of 1,990 kW in Higashi Matsuyama, Saitama Prefecture, at which it plans to commence operations in FY2023. This businessis a local closed-loop renewable energy power generation business that reuses wood materials from pruning urban waste matter, including roadside trees andtrees in parks, as fuel. We expect the plant to generate approximately 15.0 GWh annually (equivalent to power for 4,800 households) and achieve CO2 emission
reductions of approximately 6,900 tons per year.
In light of the calls for achieving a decarbonized society and the rapidly rising interest in renewable energy in Japan and overseas, we plan to continue developing biomass power generation businesses throughout Japan at a rate of two or three per year. Through these efforts, we aim to realize a sustainable society bycontributing to the popularization of renewable energy.

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

3

Establishment of a Groupwide IT Platform 

Digital Transformation of Work Processes
At the Mitsubishi Estate Group, the IT Management Unit of the DX Promotion Department and MEC Business System Solutions Co., Ltd.,a Group company, work closely to establish an IT environment underpinning the improvement of the Group’s competitiveness as a wholethrough the construction, maintenance, and operation of applications and IT infrastructure used internally. In this process in particular,
we aim to achieve overall, optimal Group IT operations, from principal upstream processes with a focus on conception planning of systemdevelopment to downstream processes such as actual implementation and operational management, while working to introduce newtechnologies with the objective of increasing automation and improving productivity.

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The basic mission of the Mitsubishi Estate Group is “to contribute to society through urban development.” Adopting along-term view, the Group believes that it is of great importance to pursue business activities in harmony with society.
In light of the growing momentum in Japan and overseas behind ESG investment, as well as initiatives for SDGs,
we will aim to realize the ongoing improvement of corporate value and achieve a sustainable society by conducting corporate governance more rigorously than ever before while pursuing initiatives that pay close attention tosociety and the environment.

Sustainability-Related Policies and KPIs
Please refer to pages 20 and 21 for an overview of the Mitsubishi Estate Group’s sustainability initiatives and to pages 22
and 23 for information on sustainability-related KPIs and progress toward the accomplishment of the associated targets.

Sustainability Frameworks
Mitsubishi Estate takes a Groupwide approach to sustainability. Chaired by the president & chief executive officer of
Mitsubishi Estate and with the director responsible for sustainability (the executive officer in charge of the
Sustainability Management and Promotion Department at Mitsubishi Estate) as the deputy chair, the Group’s
Sustainability Committee comprises executives in charge of respective functional and business groups and theexecutive in charge of the Corporate Group, as well as presidents of major Group companies, and it ensures effective
Groupwide promotion of sustainability. The Sustainability Subcommittee serves as a forum for detailed discussions
to prepare for Sustainability Committee meetings.
The Sustainability Committee typically meets twice a year to deliberate on important matters and report on topics
related to sustainability. Prior to the meetings of the Sustainability Committee, the Sustainability Subcommittee
conducts preliminary discussions and topic reporting while compiling information on efforts to promote sustainability made by business groups.
Reports on important matters discussed or reported at meetings of the Sustainability Committee are reported at
the following meeting of the Board of Directors by the individual responsible for overseeing sustainability initiatives.
This arrangement allows for oversight by the Board of Directors.
In implementing sustainability-related measures, the director responsible for sustainability oversees the process,while the sustainability managers and staff of each department at Mitsubishi Estate and each Mitsubishi EstateGroup company and of the Sustainability Promotion Executive Office (Sustainability Management and Promotion
Department at Mitsubishi Estate) together head the execution of specific activities and studies.

Monitoring Frameworks
In FY2021, the Mitsubishi Estate Group implemented a framework for monitoring progress toward theaccomplishment of its targets for the key themes and key performance indicators (KPIs) described in
Mitsubishi Estate Group 2030 Goals for the SDGs (see pages 22 and 23). Under this framework, single-yeartargets and initiatives will be defined in the annual plans for each business group and functional group, andthese targets and initiatives will be monitored. Information on the status of target accomplishment anddetails of initiatives are compiled by the Mitsubishi Estate Sustainability Management and Promotion
Department, which functions as the secretariat for sustainability initiatives. This information is then reported
to the Sustainability Committee and the Sustainability Subcommittee. After meetings of the Sustainability
Committee, the executive officer in charge of the Mitsubishi Estate Sustainability Management and Promotion
Department, who is responsible for overseeing sustainability initiatives, reports on the deliberations of themeeting in question at the following meeting of the Board of Directors.
Moreover, the accomplishment of annual plan targets is used as one of the qualitative evaluation items fordetermining the remuneration paid to officers.

History of Sustainability Committee Meetings (Over past three fiscal years)
Date

Sustainability Committee
Committee chair:
President & chief executive officer of Mitsubishi Estate
Deputy committee
chair:	Director in charge of Mitsubishi Estate Sustainability
Management and Promotion Department
Committee members:	Executives in charge of respective functional andbusiness groups, the executive in charge of the Corporate
Group, presidents of core operating companies
Observers:	Chairman, standing statutory auditors, and others as
observers

Sustainability Subcommittee
Committee chair:	General manager of Sustainability Management andPromotion Department
Committee members:	Director in charge of Mitsubishi Estate Sustainability
Management and Promotion Department, generalmanagers of line and staff departments for functionaland business groups, general manager in charge of the
Corporate Group, sustainability managers and staff atcore operating companies

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Deliberate/
ReportSustainability managers
and staff

Mitsubishi Estate
Sustainability Management
Promotion and Department

Each Mitsubishi Estate
department and Mitsubishi
Estate Group company

February 10, 2020

• Discussions on an implementation plan and checking system aimed at advancing action plans in the
Mitsubishi Estate Group 2030 Goals for the SDGs and a specific action plan for human rights• Report on joining RE100 and endorsement of recommendations of Task Force on Climate-related Financial
Disclosures, etc.

December 11, 2019• Establishment of the long-term vision and the medium-term goals in relation to sustainability management• Status of response to ESG investment and various benchmarks (selection, issues, etc.), etc.

March 12, 2019• SDGs working group implementation report• Establishment of medium- to long-term CO2 emissions reduction targets (SBTs), etc.

July 31, 2018

• Report on proposal of medium- to long-term CO2 emissions reduction targets (SBTs)• Internal SDGs working group (including examination of materiality)• Human rights due diligence procedures• Green bond issuance, etc.

Methods for Dialogue with Stakeholders
Definition

Opportunities for dialogue

Primary themes

Customers

Users of tenant buildings,
parties to housing andcondominium contracts,
various subcontractors,etc.

• Customer satisfaction surveys, questionnaires, etc.
• Communication through marketing activities

Urban development to create safety andsecurity
Quality and safety management for products
and services
Urban development to support declining birthrates and aging populations

Community andSociety

Local communities andlocal residents involved in
the Mitsubishi EstateGroup's business• Meetings with influential stakeholders• Dialogue through cooperation with administrations,
local government, and NPOs
• Social contribution initiatives

Economic contributions to the community
Promotion of smart communities
Sustainable use of forest resources

Employees

Mitsubishi Estate Group
employees• Communication via personnel evaluations• Dialogue via compliance survey and other internal
platforms

Development of employees’ capabilities,
utilization of diverse human resources, andprovision of equal opportunities
Maintenance of safety as well as physical andmental healthBusiness
Partners

Construction subcontractors,
cooperating companies,
suppliers, etc.

• Communication during operations• Subcontractor evaluation systems, training
sessions for registered construction firms, quality
and safety promotion conferences, etc.
• Communication during procurement activities• Notification of CSR procurement guidelines

Supply chain management
Green procurement
Urban development to create safety andsecurity

Individual and institutional
investors• Financial results briefings (twice a year)• Small group meetings and property tours foranalysts• Meetings with Japanese and foreign institutional
investors• Communication using IR tools

Economic performance
Healthy corporate management

Director in charge of Mitsubishi Estate Sustainability
Management and Promotion Department

Sustainability Promotion
Executive Office• Road map for accomplishing Mitsubishi Estate Group 2030 Goals for the SDGs and issue analysis• Conclusion of sustainability-linked loans, etc.

FY2019Chief Sustainability Officer

Instruction

July 30, 2020

FY2020

Stakeholders

Supervision

February 8, 2021
FY2021

Board of Directors
ReportMajor topics• Introduction of renewable energy in Daimaruyu area
• Initiatives for achieving traceability for concrete form panels at Mitsubishi Estate Residence Co., Ltd.
• Report on OMY SDGs ACT5 project• Internal communication measures related to sustainability, etc.

Shareholders
and Investors

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51

1

Environment

TCFD

Target and Initiative Policies Regarding the TCFD’s Recommendations 

Sustainability is included as part of the Mitsubishi Estate Group Guidelines for Conduct based on the recognition that the
global environment is an important concern needing to be considered in business activities alongside customers, shareholders,and other stakeholders. As a specific provision, these guidelines state that we actively work to address climate change andother global environmental issues. The Group develops, holds, and operates a diverse portfolio of assets, and we realize thateliminating carbon emissions from real estate assets and managing waste production from facilities are important tasks to
be addressed. Based on these policies and issues as well as on the opportunities and risks described on pages 22 and 23,
we have established the following KPIs and are acting based thereon.

In accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), we formulated
two future scenarios, including the below 2ºC scenario, and analyzed the future impact of climate change on the Mitsubishi
Estate Group’s primary businesses (offices, retail facilities, and housing). As follows, we have disclosed an overview of thefour themes of corporate governance, strategy, risk management, and metrics and targets set out under said recommendations,taking into consideration the analysis results. See below for details.
Please refer to the Mitsubishi Estate Group website for information on the TCFD.
Information Disclosure Based on TCFD Recommendations:
https://www.mec.co.jp/e/sustainability/activities/environment/tcfd/pdf/TCFD_Recommendations.pdf

KPIs
Targets
CO2 emissions(Scope 1, Scope 2, and Scope 3)

35% reduction by 2030 and 87% reduction by 2050, compared with FY2018 (certification from Science Based
Targets acquired in April 2019)

Renewable energy (%)

25% by 2030, 100% by 2050 (RE100 joined in January 2020)

Waste recycling rate (%)

90% by 2030

Waste disposal (kg/m2)

20% reduction per m2 by 2030, compared with FY2019

Please refer to pages 22 and 23 for information on the accomplishment of KPI targets and an overview of related initiatives.
Please refer to the Mitsubishi Estate Group’s sustainability website for information on other KPIs and data.
https://www.mec.co.jp/e/sustainability/activities/esg-data/

Corporate Governance 
Important matters pertaining to sustainability, including climate change, are deliberated and reported on at meetings of the
Sustainability Committee, chaired by the president & chief executive officer of Mitsubishi Estate, with the chief sustainability
officer (the executive officer in charge of the Sustainability Management and Promotion Department at Mitsubishi Estate) as
the deputy chair. Important matters discussed or reported at Sustainability Committee meetings are also reported to andsupervised by the Board of Directors.

Strategy In regard to climate change-related strategy, we have formulated two scenarios in accordance with the extent of the following
global response to climate change. We have established a strategy in light of analysis of the impact on our businesses andidentification of major risks and opportunities in each scenario.

Acceleration of Renewable Energy Adoption 

Overview of Scenario Analysis Result / Major Impact / Approach and Strategy Going Forward 

Mitsubishi Estate has defined its target of sourcing 100% of the electricity used at 18 buildings in the Marunouchi area and at
Yokohama Landmark Tower from renewable energy compliant with RE100 standards beginning in FY2022. This initiative ismeant to further us toward the accomplishment of our CO2 emissions reduction and renewable energy rate targets. The
aforementioned shift at the 18 Marunouchi area buildings is projected to result in a reduction in CO2 emissions of approximately
160,000 t-CO2 (approximately 80% of CO2 emissions from all Mitsubishi Estate buildings in the Marunouchi area), whilebringing the renewable energy rate to around 30% on a Groupwide basis, thereby enabling us to accomplish our medium-termtarget of raising this rate to 25% by 2030 ahead of schedule.
Moreover, as renewable energy will be used for all of the electricity consumed in the applicable buildings, tenants of thesebusinesses will be free to state that they are using renewable energy without the need for memorandums or other special
agreements.
Furthermore, we will look to adopt renewable energy at all Mitsubishi Estate buildings in the Marunouchi area during
FY2023, and we also intend to actively introduce renewable energy in other areas going forward.

 .5ºC–2ºC Scenario (scenario in which the response to climate change makes progress due to the strengthening of1
government regulations and other policies)[Scenario overview] • Climate change measures make progress as government environmental regulations are strengthened.
• Likelihood of a rise in the cost of construction materials, which are carbon intensive, associated with
[Major impact]
the introduction of a carbon tax.
• Likelihood of a decline in rents as vacancy rates rise for buildings without advanced environmental
performance and leasing periods are extended.
On the other hand, it is assumed that there would be an opportunity to maintain and increase
competitiveness in the market by introducing electricity sourced from renewable energy andimplementing other environmental initiatives.

Promotion of Recycling at Head Office and in Tenant Exclusive Areas 
In February 2021, Mitsubishi Estate launched a campaign to promote full-fledged recycling, entailing sorting trash based on 15
categories, on all work floors of its Head Office. In addition, we are requesting that tenants also practice such recycling. These
requests are backed by proposals of garbage stations in which garbage reciprocals allowing trash to be sorted into 15 categories
can be stored in a compact manner. The reciprocals were developed through collaboration with an office fixture manufacturer.
These reciprocals can be integrated into cabinets, with lidless slots to ensure that thereciprocals remain sanitary. By setting up these stations in tenant exclusive areas, we arecontributing to improved recycling rates by encouraging the appropriate sorting of recyclable
materials that had been previously thrown away as combustible waste.

1

 ºC Scenario (scenario in which the response to climate change makes insufficient progress, global warming worsens,
4and natural disasters intensify and increase)[Scenario overview] Natural disasters intensify and increase as the response to climate change makes insufficient progress.
Although there is a likelihood that costs due to temporary flood damage and other disasters would[Major impact]increase, the damage is not expected to be serious given the prior implementation of industry-leading
measures at Company properties.
[Approach and strategy going forward]
In addition to switching existing electricity contracts, we are examining a variety of methods for procuring all kinds ofrenewable energy, including corporate power purchase agreements (PPAs) and green power certificates (including overseas
power certificates). Moreover, we are looking to leverage new technologies as we aim for further reductions in CO2 emissions.
2

Risk Management 
Garbage station at Mitsubishi Estate Head Office

Waste Reduction and Recycling Promotion Together with Retail Tenants 
In FY2021, we began measuring waste by tenant and by type for retail tenants at the
Marunouchi Building. The goal of this initiative is to encourage tenants to curb waste
volumes and practice appropriate recycling. In addition, we prepared easy-to-understandgarbage-sorting manuals and videos to be used in awareness-raising activities targeting
tenants. Through these efforts, we achieved a year-on-year reduction in the volume of foodscraps and paper waste submitted for disposal via combustion along with a 4.5% increasein the rate of recycled food scraps over the three-month period from October to December
2020. Similar initiatives are underway at the Shin-Marunouchi Building and the Marunouchi
Park Building, and we are examining the possibility of expanding the scope of these efforts.

To achieve the targets set out in Mitsubishi Estate Group
2030 Goals for the SDGs, in managing climate change risks,
we incorporate action plans into annual plans for eachbusiness group and functional group and have commenced
monitoring and management of the status of their progresssince FY2021 at meetings of the Sustainability Committee
and at subsequent meetings of the Board of Directors on
a biannual basis.

Metrics and Targets 
CO2 Emissions(Mitsubishi Estate Group, Scope 1, Scope 2, and Scope 3)[Targets] 	35% reduction by 2030 and 87% reduction by
2050, compared with FY2018 (certificationfrom Science Based Targets acquiredin April 2019)
FY2021 result: 3,533,468 t-CO2
Renewable Energy Rate (Mitsubishi Estate Group)[Targets] 	2030: 25%
2050: 100%
(RE100 joined in January 2020)
FY2021 result: 3.1%

Garbage-sorting manual for tenants (excerpt)

52

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

53

2

Diversity & Inclusion

3

Innovation

Target and Initiative Policies 

Target and Initiative Policies 

The Mitsubishi Estate Group recognizes that respect for human rights and accommodation of diverse human resources andworkstyles are crucial to management and business activities. Accordingly, the Mitsubishi Estate Group Guidelines for
Conduct include provisions related to respect for human rights and diversity and empowerment of individuals, and the
Mitsubishi Estate Group Human Rights Policy has been established to direct steadfast efforts based on these guidelines.
Based on this human rights policy, and for the purpose of empowering female employees, the Company has formulated an
action plan in accordance with Japan’s Act on the Promotion of Female Participation and Career Advancement in the
Workplace and with other plans for specific human rights themes. We have established the following KPIs and are acting
based thereon in line with these plans and the opportunities and risks described on pages 22 and 23.

Under Long-Term Management Plan 2030, the Mitsubishi Estate Group positions new businesses, such as those utilizing
artificial intelligence, robotics, and other new technologies, as new fields for non-asset businesses. Going forward, we will
work to create new business models and opportunities in these fields while coordinating with outside partners. Such coordination
with outside partners boasting new and advanced technologies will be imperative to the realization of a sustainable society.
For this reason, we plan to pursue initiatives that go beyond the boundaries of companies.

OMY SDGs ACT5 Project for Contributions to the SDGs Going Beyond the Boundaries of Companies 
OMY SDGs ACT5 is a project based in the Otemachi, Marunouchi, and Yurakucho areas (Daimaruyu area) through which
various activities for contributing to the accomplishment of the United Nations Sustainable Development Goals (SDGs) are
advanced via coordination among project committee member companies and partner companies and organizations. These
activities are based on the five SDG themes (Acts) of food sustainability, climate change and resource recycling, well-being,
diversity and inclusion, and communication.
In FY2021, the first year of the project, the aggregate number of participants surpassed 8,000, fostering connections and asense of community that extend beyond the boundaries of companies.
A new dimension was added to this project in May 2021 with the launch of an app
that allows users to accrue ACT5 member points by taking action to contribute to theaccomplishment of the SDGs at the individual level. Through this project, Mitsubishi
Estate looks to consistently encourage changes in the behavior of individuals in orderto create a framework that stimulates SDG-based action throughout the Daimaruyu
ACT5 member point app promotional image
area and which leads to future action.
Please refer to pages 48 and 49 for information on other digital transformation and
Download
new business activities.

Action plan based on Japan’s Act on the Promotion of Female Participation and Career Advancement in the Workplace
https://www.mec.co.jp/e/sustainability/activities/social/work-life-balance/
Mitsubishi Estate Group Human Rights Policy
https://www.mec.co.jp/e/sustainability/activities/social/human-right/pdf/human_rights_policy_20180401.pdf

KPIs
Targets
Ratio of female managers

Above 10% by FY2031

Ratio of female employees in assistant manager positions and thereby candidates Approx. 30% by FY2026
for management positions
Ratio of male employees taking childcare leave of absence

100% by FY2031

Ratio of female employees taking childcare leave of absence

100% each year until FY2031

Use rate of lumber that complies with the Sustainable Sourcing Code*1 or an equivalent
100% by FY2031
in office buildings and housing constructed using concrete form panels*2*1 Defines standards and operational procedures for ensuring procurement with consideration for sustainability with respect to international agreements and codes of conduct in fields relevant to sustainability*2 Framework composite boards made by putting ready-mixed concrete into frameworks and used in construction of concrete buildings

Please refer to pages 22 and 23 for information on the accomplishment of KPI targets and an overview of related initiatives.
Please refer to the following website for information on other KPIs and data.
https://www.mec.co.jp/e/sustainability/activities/esg-data/

ACT5 member
point app

Initiatives for Promoting Respect for Human Rights 
The Mitsubishi Estate Group has set a target of achieving a 100% use rate of lumber that complies with the Sustainable Sourcing
Code (Certified Wood and Domestically Produced Wood) or an equivalent for concrete form panels by FY2031. With this goal, we look
to combat human rights violations (child labor, seizing of land of indigenous people, etc.) that could occur during the process ofmanufacturing the timber used to produce the concrete form panels utilized for constructing office buildings and housing.
As part of our efforts to accomplish this target, requirements for suppliers to use timber that meets the aforementioned criteria
have been included in requests for quotes distributed to construction companies when contracting new construction projects sinceApril 2020. In addition, timber meeting these criteria is used for concrete form panels in Mitsubishi Estate Residence’s The
Parkhouse series of condominiums, and steps are taken to ensure traceability*1 with regard to this timber. For example, we began
receiving third-party verification for the traceability of the timber certified under the Programme for the Endorsement of Forest
Certification*2 used in The Parkhouse Komazawa Residence, while The Parkhouse Takanawamatsugaoka became the first condominium building in the world to receive certification under the Forest Stewardship Council®.*3
In addition, Mitsubishi Estate is working to address the labor environment and other issues faced by overseas technical interns
taking part in the Technical Intern Training Program in Japan. Requests for quotes contain provisions
about providing information and instruction to partners related to the compensation and lifestyles ofsaid technical interns, and investigations are conducted to confirm conditions with this regard.
Furthermore, in Asia, a region where human rights violations are common, we have prepared checklists (containing items related to land seizure, etc.) for use when performing human rights due diligence at the stage of examining possible business ventures, and the decision of whether to engage in
Formwork concrete panel use
a given business is made based on due diligence investigations.
*1 Ability to track the distribution process of products and raw materials back to the point of production*2 A mutual certification program that assesses the timber certification systems established in individual countries*3 Source: Mitsubishi Estate Co., Ltd.

Recognition under 2021 Certified Health & Productivity Management Outstanding Organizations
Recognition Program (Large Enterprise Category, White 500) 
Mitsubishi Estate was recognized as an outstanding organization in health management under the large enterprise category
and listed among the top-ranking White 500 companies in the 2021 Certified Health & Productivity Management Organizations
Recognition Program* run by the Ministry of Economy, Trade and Industry and Nippon Kenko Kaigi.
Factors leading to this recognition are thought to include the Company’s positioning of lifestyle diseases, cancer, and mental
health issues as priority health issues and its working to address and prevent these issues in accordance with the Mitsubishi
Estate Health Management Declaration established in October 2016. Other potential factors were the inclusion of KPIs related
to priority health issues in Health Management 2030, a set of targets formulated in October 2020, and the success of ourenhancing our employee health promotion initiatives based on these KPIs. Going forward, we will continue to advance initiatives aimed at accomplishing the KPI targets of Health Management 2030. Such initiatives include encouraging certain
employees to participate in a specific health guidance program in order to prevent lifestyle diseases, having employees of acertain age undergo mandatory cancer screening, and offering counseling by clinical psychologists and other specialists.
* Please refer to the following website for information on the Certified Health & Productivity Management Organizations Recognition Program.
https://www.meti.go.jp/english/press/2021/0304_003.html
Please refer to the following website for more information on the Mitsubishi Estate Health Management Declaration and Health Management 2030.
https://www.mec.co.jp/e/sustainability/activities/social/health-safety/

54

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

App Store

4

Google Play

Resilience
Target and Initiative Policies 
Improving the natural disaster resilience of real estate properties is crucial to ensuring the safety of visitors and workers aswell as for guaranteeing the safety of the surrounding areas and the business continuity of tenants. In addition to earthquakes,
we must prepare for potential increases in the frequency and intensity of urban flooding as a result of climate change. The
resilience of buildings will thus become even more important going forward. Accordingly, Mitsubishi Estate is implementing
earthquake and water damage countermeasures and developing systems for stable power supply on an individual-building
basis. We are also instituting non-infrastructure measures for providing environments that facilitate business continuity evenduring times of disaster and for establishing schemes for temporarily housing people who cannot return home because of adisaster. Furthermore, the Company is enhancing systems for the comprehensive operation of multiple buildings and for
intra-area coordination. In this manner, we aim to contribute to safer and more secure cities.

Disaster Response Drills and Verification Tests 
The Mitsubishi Estate Group conducts disaster response drills and takes various steps to ensure preparedness for disasters andother emergency circumstances. For example, comprehensive emergency drills are conducted through public and private sector
cooperation every September with the participation of all Mitsubishi Estate executives and employees, Group companies, and relevant
external entities. Through these drills, we aim to ensure swift responses to disasters and to minimize the damage caused thereby.
In addition, a verification test of our Disaster Dashboard 4.0 platform was performed together with Chiyoda Ward, Tokyo,
railroad operators, bus companies, and building operators over the period from January to February 2021. The Disaster Dashboard
4.0 platform allows for the sharing of information between disaster response institutions and the provision of information toindividuals unable to return home because of a disaster. The verification test
specifically examined features for using information communication technologies to
respond more effectively to disasters. Examples of these features included contactfree QR code processing designed to improve the efficiency of accepting individuals
unable to return home and to help prevent the spread of COVID-19, real-timetracking of the number of individuals unable to return home accepted by given
facilities via Disaster Dashboard 4.0 digital signage and the internet, and monitoringof congestion surrounding facilities accepting such individuals.
Disaster Dashboard 4.0 digital signage
MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

55

SASB

Corporate Governance

Information Disclosure Based on SASB Standards 
Notes
We are classified in the Real Estate industry under the infrastructure sector according to SICS®, so we disclose the following
information based on the standards for this industry.
The property subsectors are aligned with the 2018 GRESB Real Estate Assessment Reference Guide as stipulated in the
SASB standards.
The scope of the following information covers properties for which Mitsubishi Estate owns an equity stake of 20% or more, which
is different from the coverage of the scope used for reporting under Science Based Targets and RE100.
Third-party verification* is acquired for environmental performance figures related to properties included in the scope used forreporting under Science Based Targets and RE100, but verification has not been acquired for the following figures.

Message from the
Chairman of the Board* Please refer to the following website for information on third-party verification.
https://www.mec.co.jp/e/sustainability/table-of-contents/independent-assurance/

Sustainability Disclosure Topics & Accounting Metrics (FY2020)<Energy Management>
Unit of Measure

Energy consumption data coverage as a percentage of total Percentage (%)
floor area, by property subsector
by floor area
Total energy consumed by portfolio area with data coverage
Mwh
Percentage grid electricity
Mwh
Percentage renewable%
Like-for-like percentage change in energy consumption for%the portfolio area with data coverage
Percentage (%)
Percentage of eligible portfolio that has an energy ratingby floor area
Percentage of qualified portfolio with real estate
Percentage (%)
environmental certification
by floor area
Unit of Measure

Description of how building energy management
considerations are integrated into property investment
analysis and operational strategy

n/a

Code

Retail, Shopping Lodging, LeisureCenters& Recreation

Offices

Healthcare

Parking

Other

IF-RE-130a.1

100

100

100

100

100

100

IF-RE-130a.2
IF-RE-130a.2
IF-RE-130a.2

1,067,519
0
1.09

158,152
0
0

2,473
0
0

21,477
0
0

2,134
0
0

634
0
0

IF-RE-130a.3(9.80)

51.41—

664.29(7.03)

3.32

IF-RE-130a.4

1.85

0

0

0

0

0

IF-RE-130a.4

18.51

5.88

0

0

0

0

Contents

Code

IF-RE-130a.5

In April 2019, Mitsubishi Estate acquired certification from Science Based Targets with regard to its
Groupwide CO2 emissions reduction targets (35% reduction by 2030 and 87% reduction by 2050,
compared with FY2018). In addition, the Company joined RE100 in January 2020 and declared its
goal of sourcing 100% of the electricity it uses from renewable energy by 2050.
To accomplish these goals, the Company will proactively introduce renewable energy at the facilities
it owns and operates and install renewable energy generation systems on facility premises. We will
also proactively acquire environmental real estate certifications. Scenario analyses* based on the
TCFD-recommended framework have identified the risk of rises in vacancy rates or declines in rent
levels for buildings that have low environmental performance or that have not introduced renewableenergy. Accordingly, the swift implementation of the aforementioned initiatives will be imperative formaintaining and improving market competitiveness.

Hirotaka Sugiyama
Chairman of the Board
Mitsubishi Estate Co., Ltd.

(* https://www.mec.co.jp/e/sustainability/activities/environment/tcfd/pdf/TCFD_Recommendations.pdf)<Water Management>
Unit of Measure

Water withdrawal data coverage as a percentage of total floor
area
Water withdrawal data coverage as a percentage of floor area
in regions with High or Extremely High Baseline Water Stress
Total water withdrawn by portfolio area with data coverage
Percentage in regions with High or Extremely High Baseline
Water StressLike-for-like percentage change in water withdrawn for the
portfolio area with data coverage

Description of water management risks and discussion ofstrategies and practices to mitigate those risks

Code

Retail, Shopping Lodging, LeisureCenters& Recreation

Offices

Healthcare

Parking

Other

Percentage (%)
by floor area
Percentage (%)
by floor area
Thousand m2

IF-RE-140a.1

100

100

100

100

100

100

IF-RE-140a.1

0

0

0

0

0

0

IF-RE-140a.2

2,918

611

15

16

8

3

%

IF-RE-140a.2

0

0

0

0

0

0

%

IF-RE-140a.3

14.34

14.63

—

(2.49)

2.25(8.57)

Unit of Measure

Code

Contents

IF-RE-140a.4

We purify wastewater in a recycling system, after which the treated recycled water* is used to flush
toilets inside the building. The use of recycled water is being promoted to help mitigate future water
risks. Accordingly, we have set a target for raising the recycled water use rate to 100% by 2030, andactions for reaching this target are being advanced steadily.

n/a* Water reclaimed from used tap water and treated for recycling. It is used for flushing toilets, watering greenery,
air-conditioning systems, and other such facility water needs, as well as for cleaning, before being discharged into
the sewage system.

<Management of Tenant Sustainability Impacts>
Unit of Measure

Percentage of new leases that contain a cost recovery
clause for resource efficiency-related capital improvements
Associated leased floor area, by property subsector
Percentage of tenants that are separately metered orsubmetered for grid electricity consumption
Percentage of tenants that are separately metered orsubmetered for water withdrawals

Percentage (%)
by floor aream2
Percentage (%)
by floor area
Percentage (%)
by floor area

Retail, Shopping Lodging, LeisureCenters& Recreation

Offices

Healthcare

Parking

Other

43.16*

IF-RE-410a.1

1,373,812*

IF-RE-410a.2

0

0

IF-RE-410a.2

0

0

0

0

Not disclosed

CodeContents

n/a

IF-RE-410a.3

To drive energy-saving actions with our tenants, we created a guidebook that introduces examples ofenergy-saving methods to them, and we introduced green leases into the template of our contracts.
Also, we hold yearly Global Warming Prevention Council meetings collaborating with the tenants ofeach of our ISO 14001-certified buildings in the Tokyo metropolitan area to explain GHG emission
reduction, energy-saving actions, and to provide updates on the progress in these efforts, and so on.

Unit of Measure

Code

m

IF-RE-450a.1

Unit of Measure

Code

Contents

n/a

IF-RE-450a.2

Please refer to “(2) Strategy” in our “Information Disclosure Based on TCFD Recommendations” on
our website.
(https: //www.mec.co.jp/e/sustainability/activities/environment/tcfd/pdf/TCFD_Recommendations.pdf)

Unit of Measure

Code

Number

IF-RE-000.A

54

17

4

2

1

2

IF-RE-000.B

4,717,870

678,995

471,559

11,657

21,430

4,973

Unit of Measure

Discussion of approach to measuring, incentivizing, andimproving sustainability impacts of tenants

Code

IF-RE-410a.1* Ratio to the nationwide leasable area

<Climate Change Adaptation>
Area of properties located in 100-year flood zones, byproperty subsector
Description of climate change risk exposure analysis,
degree of systematic portfolio exposure, and strategies for
mitigating risks

2

Retail, Shopping Lodging, LeisureCenters& Recreation

Offices

Healthcare

Parking

Other

Not disclosed

Mitsubishi Estate has positioned the development and promotion of its corporate governance system as one of the most importantmanagement issues for realizing its basic mission of contributing to the creation of a truly meaningful society by building attractive, environmentally sound communities where people can live, work, and relax with contentment.
Mitsubishi Estate has adopted the “Company with Nominating Committee, etc.,” structure, and the role of the Board of Directors
under such a structure is to decide the Company’s basic management policies and supervise overall management. To that end, theCompany is working to ensure the transparency and objectivity of management so that it can fulfill its accountability to its shareholders and other stakeholders. To date, Mitsubishi Estate has implemented a broad range of initiatives on an ongoing basis, suchas introducing performance-based director remuneration, increasing the ratios of outside directors on the Board of Directors andother important committees, ensuring that independent outside directors serve as the chairpersons of all committees, and deciding
not to renew its countermeasure program regarding possible hostile takeover attempts. In FY2021, the Company implemented forthe first time a third-party evaluation of the effectiveness of the Board of Directors. Furthermore, continuing on from the sharebuybacks executed in FY2020 totaling approximately ¥100.0 billion, the Company decided to carry out additional share buybacks ofroughly ¥30.0 billion in April 2021. Going forward, Mitsubishi Estate will strive to enhance capital efficiency and shareholder returns
in an effort to achieve the capital policies adopted under Long-Term Management Plan 2030.
Our Long-Term Management Plan 2030, which began in April 2020, was formulated over a year of thorough discussions by the
Board of Directors. In addition to a strategy that targets increasing shareholder value, the plan focuses on a strategy for social
value improvement that involves making efforts toward realizing a sustainable society. By generating synergies between these
two strategies, the plan aims to realize the Company’s basic mission and achieve sustainable growth. Our Long-Term Management
Plan 2030 got off to a rough start in its initial year due to the impact of the COVID-19 pandemic. In these times of dramatic changes
in the external environment, it is more important than ever for the Board of Directors to secure members who offer a diverse
range of knowledge and experience and engage in active discussions. I am a non-executive chairman of the Board, experienced inbusiness execution. My role in such a position is to encourage more active exchanges of opinions, including greater involvement of
the outside directors, and lead lively discussions at Board meetings while also understanding the perspectives of the officers incharge of business execution. By fulfilling this role, I will help the Board establish a management supervision structure from along-term perspective with a view to achieving the goals of the Long-Term Management Plan 2030 over the next 10 years.
Guided by the Company’s basic mission, the Board of Directors will remain committed to meeting the expectations of shareholders and investors by doing all it can to guide the Company in a way that takes into account future changes in society and thebusiness environment.
August 2021

Activity Metrics
Number of assets, by property subsector
Leasable floor area, by property subsectorm2(%)
Percentage of indirectly managed assets, by property subsector Percentage
by floor area
Average occupancy rate, by property subsector%

56

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Retail, Shopping Lodging, LeisureCenters& Recreation

Offices

Healthcare

Parking

Other

IF-RE-000.C

0.0

35.3

100.0

100.0

100.0

50.0

IF-RE-000.D

96.5

100.0

100.0

100.0

—

100.0

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

57

Corporate GovernanceDirectors(As of June 29, 2021)

Corporate Executive Officers, Executive Officers, and Group Executive Officers
(As of June 29, 2021)

Hirotaka Sugiyama

Junichi Yoshida

Junichi Tanisawa

Tetsuji Arimori

Junichi Yoshida

Junichi Tanisawa

Tetsuji Arimori

Hidemi Waki

Futoshi Chiba

Chairman of the Board

Director 

DirectorDirector

2007
56,591 shares

2016
64,166 shares2014
44,481 shares2018
33,938 shares

Representative
Corporate
Executive Officer
President & Chief
Executive Officer

Representative
Corporate
Executive Officer
Deputy President

Representative
Corporate
Executive Officer
Executive Vice President

Representative
Corporate
Executive Officer
Executive Vice President

Representative
Corporate
Executive Officer
Executive Vice President

Hiroshi Katayama

Hitoshi Kubo

Jo KatoNoboru Nishigai

Hiroshi Katayama

Kenji Hosokane

Keiji Takano

Atsushi Nakajima

Yuji Fujioka

Representative
Corporate
Executive Officer
Executive Vice President

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Director

Director

DirectorDirector

2016
31,879 shares

2021
3,200 shares2011
58,139 shares

2021
28,254 shares

Representative
Corporate
Executive Officer
Executive Vice President

Tsuyoshi Okamoto

Shin Ebihara

Tetsuo Narukawa

Masaaki Shirakawa

Bunroku Naganuma

Toru Kimura

Yutaro Yotsuzuka

Ikuo Ono

Outside Director

Outside Director

Outside Director

Outside Director

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

2019
400 shares2015– shares2018
400 shares

2016– sharesShin Nagase

Setsuko Egami

Iwao Taka

Hisashi Komada

Masaki Yamagishi

Masaharu Miyajima

Outside Director

Outside Director

Group Executive Officer

Group Executive Officer

Group Executive Officer

Group Executive Officer

2016
100 shares2015
1,200 shares2016
400 shares

Name
Position
Appointment year
Number of shares held
(As reported in FY2021 Financial
Report , available only in Japanese)

Tetsuo Yuasa

Outside Director

Executive Officers

Group Executive Officers

Takashi Kobari

Tetsuo Yuasa

Nobuhiro Okumoto

Masato Aikawa

Toshiyuki Inoue

Hisashi Komada

Naoki Umeda

Hirofumi Kato

Seijin Chino

Masaki Yamagishi

Ryozo Kawabata

Masanori Iwase

Shuichi Shimizu

Masaharu Miyajima

Shinya Mizumura

Tetsuya Okusa

Haruhiko Araki

Corporate Executive
Officer

Hitoshi Kubo

58

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

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59

Corporate GovernanceCorporate Governance System

Nominating Committee, Audit Committee, and Remuneration Committee Nominating Committee

Audit Committee

Remuneration Committee

Committee Duties

	Decision-making on the details of the
proposals to the general meeting ofshareholders related to the appointment and dismissal of directors

	Auditing and compilation of audit
reports pertaining to the performanceof duties by corporate executive
officers and directors
	Decision-making on the details of the
proposals to the general meeting ofshareholders related to the appointment, dismissal, and non-reappointment of the accounting auditor	Formulation of remuneration policies
for corporate executive officers anddirectors
	Decision-making on remuneration
amounts for individual corporate
executive officers and directors

Committee Activities

	Five meetings in FY2021
	Determination of the details of
director nomination proposals basedon standards for nominating director
candidates formulated by the
Nominating Committee	Reports and deliberations with regard
to the nomination of corporate
executive officers prior to theresolution by the Board of Directors

	Fifteen meetings in FY2021
	Performance of audits throughcoordination with the accounting
auditor and internal audit divisions
based on audit standards and plans	Attendance at important meetings,
review of important documents, andvisits to internal divisions, branches,and subsidiaries by full-time membersof the Audit Committee	Six meetings in FY2021
	Decision-making on individual
remuneration amounts based on
remuneration systems

Membership*

4 (4 outside)

5 (2 inside, 3 outside)

4 (4 outside)

Chairperson

Tsuyoshi Okamoto(Outside Director)

Tetsuo Narukawa(Outside Director)

Shin Ebihara(Outside Director)

Basic Policy 
The Company aims to realize the enhancement of corporate value through a harmonious balance between corporate
growth and the interests of its various stakeholders by following its brand slogan, “A Love for People. A Love for theCity,” based on its basic mission of “contributing to society through urban development.” The Company shall position
the development and promotion of its corporate governance system as one of the most important management
issues in realizing this goal.
In developing and promoting our corporate governance system, to bring about greater clarity with regard to roles
and the strengthening of functions in both the supervision of management and the execution of business while also
fulfilling accountability to our shareholders and other stakeholders, the basic policy shall work to ensure thetransparency and objectivity of management.
Evolution of Corporate Governance System
Organizational structure, outside directors

Officer remuneration2015

	Change in outside directors (improvement of
independence and gender diversity)

2016	Transition to “Company with Nominating Committee,etc.,” structure	Increase in ratio of outside directors (7 of 15)

	Introduction of Restricted Stock
Compensation System
	Commencement of evaluations of the effectivenessof the Board of Directors
	Establishment of the “Mitsubishi Estate Co., Ltd.,
Corporate Governance Guidelines”

2017

2018

2019

Other aspects of corporate governance	Making of all committee members into non-executive
directors
	Membership of Remuneration Committee comprisingexclusively outside directors* All three committees are composed solely of non-executive directors.

Attendance Rates of Outside Directors in FY2021 and Contributions Made 	Introduction of performance-based
incentive system
Name

	Introduction of flexible capital policies based onmarket conditions (execution of share buybacks
totaling approximately ¥100.0 billion)	Decision not to renew the countermeasure program
regarding possible hostile takeover attempts

	Change of chairperson of Audit Committee to outside
director	Membership of Nominating Committee composedcompletely of outside directors

	Implementation of third-party evaluations indetermining the effectiveness of the Board of Directors

2020

Attendance at Meetings of the Boardof Directors and Committees

Tsuyoshi Okamoto

9/9
5/5
6/6

Tsuyoshi Okamoto poses pertinent questions and offers valuable advice from an objective
viewpoint independent of management executives in charge of business affairs, byleveraging his management experience at a comprehensive energy company. In this way,
he fulfills supervisory and monitoring functions of the Company’s management.

Shin Ebihara

Board of Directors
Nominating Committee
Remuneration Committee

9/9
5/5
6/6

Shin Ebihara poses pertinent questions and offers valuable advice from an objective
viewpoint independent of management executives in charge of business affairs, byleveraging his wealth of international experience and knowledge gained through his
extensive years as a diplomat. In this way, he fulfills supervisory and monitoring functionsof the Company’s management.

Tetsuo Narukawa

Board of Directors
Audit Committee

9/9
15/15

Tetsuo Narukawa poses pertinent questions and offers valuable advice from an objective
viewpoint independent of management executives in charge of business affairs, byleveraging his international experience as well as management experience at financial
institutions and real estate companies. In this way, he fulfills supervisory and monitoring
functions of the Company’s management.

Masaaki Shirakawa

Board of Directors
Nominating Committee
Remuneration Committee

Shin Nagase

Board of Directors
Audit Committee

Setsuko Egami

Board of Directors
Nominating Committee
Remuneration Committee

Iwao Taka

Board of Directors
Audit Committee

System Structure 
As a “Company with Nominating Committee, etc.,” Mitsubishi Estate has established the Nominating Committee, theAudit Committee, and the Remuneration Committee, which are positioned under the Board of Directors and are
membered by a majority of outside directors. These committees help promote high standards and ensure transparency
in the decision-making process.
General Meeting of Shareholders

9/9
5/5
6/6

Board of Directors
Audit Committee

Accounting Auditor

Cooperate

Audit Committee
OfficeCooperate

Audit

Internal Audit OfficeDelegate authority to
execute business andsupervise

Nominating Committee

Remuneration Committee

President & Chief Executive Officer

Cooperate
Risk Management & Compliance Committee

Sustainability Committee

Risk Management & Compliance Subcommittee

Sustainability Subcommittee

Corporate Strategy Committee

Audit
Internal audit

Strategic Investment Committee

Corporate Executive Officers

Board of Directors 

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Masaaki Shirakawa poses pertinent questions and offers valuable advice from an objective
viewpoint independent of management executives in charge of business affairs, byleveraging his knowledge in finance and economics, among other fields, gained throughhis experience working at a central bank. In this way, he fulfills supervisory and monitoring
functions of the Company’s management.
Shin Nagase poses pertinent questions and offers valuable advice from an objective
viewpoint independent of management executives in charge of business affairs, byleveraging his management experience at an airline company. In this way, he fulfills
supervisory and monitoring functions of the Company’s management.

9/9
5/5
6/6

Setsuko Egami poses pertinent questions and offers valuable advice from an objective
viewpoint independent of management executives in charge of business affairs, byleveraging her abundant knowledge of corporate strategy, marketing strategy, and humanresource development. In this way, she fulfills supervisory and monitoring functions of theCompany’s management.

9/9
15/15

Iwao Taka poses pertinent questions and offers valuable advice from an objective viewpoint
independent of management executives in charge of business affairs, by leveraging his
extensive knowledge regarding business ethics and compliance, among other fields. In thisway, he fulfills supervisory and monitoring functions of the Company’s management.

Independence Standards for Independent Outside Directors

Functional Groups, Business Groups, and Corporate Staff Departments

The Board of Directors decides the basic policy of theCompany’s management, and it also carries out supervision of
the execution of duties by directors and corporate executive
officers. As of June 29, 2021, the Board of Directors consists of
15 directors, of whom seven are outside directors. The role ofchairman of the Board of Directors is held by the chairman of
the Board of the Company, who does not concurrently serve asa corporate executive officer.
The membership of the Board of Directors is appropriatelybalanced with members from a diverse range of backgrounds.

9/9
15/15

Executive Committee
Group Strategy Committee

Overview of Contributions Made and Work Performed to Fulfill Expectations of Role

Board of Directors
Nominating Committee
Remuneration Committee

Composition of the Board of Directors
InsideServe concurrently as corporate
executive officers

Do not serve concurrently
as corporate executive
officers

OutsideCandidates for the outside director position shall fulfill a duty of care as a prudent manager toward the Company; understand the Group’s
basic mission of contributing to the creation of a truly meaningful society by building attractive, environmentally sound communities where
people can live, work, and relax with contentment; apply their qualities and capabilities to contribute to enhancing medium- to long-termsustainable corporate value, as well as their experience and knowledge in specialized fields such as global business, finance, and risk
management, in view of the Group’s business characteristics, such as supporting urban development in the Marunouchi area; and havepersonality and knowledge enabling objective and fair judgments, based on the perspective that they shall contribute to the common interestsof shareholders without bias toward the interest of any particular party of interest. However, as a general principle, candidates are not elected
if the Tokyo Stock Exchange’s standards for independence and the following independence standards for outside directors apply to them.
(1) A shareholder or executive member of an entity holding voting rights exceeding 10% of total voting rights of the Company.
(2) A transaction party or executive member of an entity whose transactional amounts in the most recent fiscal year have exceeded 2% ofconsolidated revenue from operations of the Company.
(3) A representative employee, employee, or member of staff of the Company’s accounting auditor.

Non-executive, independent(4) An attorney, certified public accountant, tax accountant, consultant, or other party who has received compensation from the Company
exceeding ¥10 million in the most recent fiscal year.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

61

Corporate GovernanceEvaluation of the Effectiveness of the Board of Directors
With the aim of confirming that the Board of Directors is functioning effectively through its oversight function to
improve corporate value on a medium- to long-term basis and to enhance corporate governance, each director isrequired to conduct a self-evaluation on a regular basis and report the results of this evaluation to the Board of
Directors. Based on these evaluations, the Board of Directors then conducts an analysis and evaluation of theeffectiveness of the Board of Directors as a whole.
Based on the Long-Term Management Plan 2030, in addition to the existing evaluation items, the Company added
items in FY2021 regarding initiatives to be improved going forward from the perspective of appropriately monitoring
management to increase shareholder value and social value over the long term. Furthermore, the Company implemented a third-party evaluation for each phase of this evaluation process, including the creation of questionnaires,the analysis of responses, and the sharing of issues. An overview of the evaluation process and results of thethird-party evaluation carried out on the effectiveness of the Board of Directors in FY2021 are as follows.

1. Process of Evaluation (2) Main Issues and Future Initiatives Aimed at Further Improvements in EffectivenessThrough a process of examination and discussion at Board of Directors’ meetings, the following points were identified.
• The management environment has changed significantly due to the spread of COVID-19 and other factors.
Accordingly, to deepen discussions on progress evaluations of and strategy revisions to the Long-Term Management
Plan 2030, the Board of Directors must expand and enhance its monitoring to ensure supervision with an awarenessof Companywide issues, including changes in the management environment, capital policies, and business portfolio
strategy, as well as sustainability.
• Examinations of the composition and diversity of the Board of Directors must be implemented on an ongoing basis
to further improve the Board’s effectiveness.
Appointment Standards for Director Candidates
1. Purpose 
These standards shall establish standards for the nomination of directors by the Nominating Committee.

2. Director Candidates (1) Method of Evaluation
All directors conducted self-evaluations in the form of a response to a questionnaire relating to the composition,
operation, effectiveness, etc., of the Board of Directors and each of the Nominating, Audit, and Remuneration committees,
and taking these results into consideration, they discussed the issues with each other and examined proposedcorrective measures at Board of Directors’ meetings.

Director candidates shall fulfill a duty of care of a prudent manager toward the Company, understand the Group’s basic mission of contributing to the(2) Items of Evaluation
In terms of evaluation items based on the Long-Term Management Plan 2030, the Company added “the required skills anddiversity for the Board of Directors three to five years in the future” as part of the evaluation of the Board’s composition and“topics to be fleshed out in future discussions for monitoring and the nature of reports on the status of business execution
from corporate executive officers” as part of the evaluation of the Board’s effectiveness and operation.

integrity, leadership, and foresight, candidates to be nominated shall be corporate officers in charge of one of Company’s business groups or corporate

Composition of theBoard of Directors

Proportion of outside directors, size in numbers, skills, and diversity

Effectiveness of theBoard of Directors

Management plan, monitoring of execution of business and risk management systems, dialogue withshareholders and investors, operation of the Nominating, Audit, and Remuneration committees, etc.

Operation of theBoard of Directors

Frequency, required time, report on status of business execution of corporate executive officers, provision of
information outside of Board of Directors’ meetings, questions and answers, training, etc.

Others

Method of the evaluation of the effectiveness of the Board of Directors, etc.

2. Results of Evaluation and Future Initiatives (Results of Evaluation) The Board of Directors deemed that it was functioning effectively.
(Analysis of Results) In the questionnaire on the evaluation of effectiveness completed by each director, a significant
number of items received a high ratio of “appropriate” as the response. Furthermore, a constructive exchange of
opinions took place for each evaluation item, including issues pointed out by directors and their suggestions for the
future. In particular, with respect to appropriate monitoring of the Long-Term Management Plan 2030, a high level ofawareness was observed regarding such matters as the contents of reporting by the corporate executive officers on
business execution and the balance between the time used for briefings and the time used for discussions.
(1) Main Items Improved Since the Previous Evaluation
In the previous fiscal year’s evaluation of effectiveness, “appropriate monitoring of the progress status of the LongTerm Management Plan 2030” and “continued implementation of initiatives aimed at further improving the diversityof the Board of Directors, with efforts mainly by the Nominating Committee” were identified as main issues andfuture initiatives for further improvements in effectiveness of the Board of Directors. As for the status of improvement for these issues during the fiscal year under review, the following points were identified based on examinations
and discussions conducted by the Board of Directors.
• In regard to the Long-Term Management Plan 2030 that began in FY2021, having continuously implemented
briefings on the Company’s businesses for outside directors and exchanged opinions with them, the Board of
Directors dedicated sufficient time to monitoring the state of business execution.
• At meetings of the Nominating Committee, discussions were held and opinions were exchanged regarding the levelof diversity that the Board of Directors should maintain to achieve the Long-Term Management Plan 2030.

creation of a truly meaningful society by building attractive, environmentally sound communities where people can live, work, and relax with
contentment, and have the qualities and capabilities to contribute to enhancing medium- to long-term corporate value in a sustainable manner inconsideration of the characteristics of the Company’s business, such as supporting urban development in the Marunouchi area.
(1) Inside Director Candidates
For directors from within the Company, in addition to displaying the abovementioned qualities and capabilities of being especially outstanding in
officers in charge of corporate staff who have extensive knowledge and experience related to the Group’s business, who can perform oversight roles
with a Companywide perspective, and who are highly trained, or, alternatively, personnel with such experience or personnel with translatable experience.
(2) Outside Director Candidates
For outside directors, in addition to the abovementioned qualities and capabilities, candidates shall be nominated for their operational and management experience, for their application of their experience and knowledge in specialized fields such as global business, finance, and risk management,
for having the personality and knowledge enabling objective and fair judgments based on the perspective that they would contribute to the common
interests of shareholders without bias toward the interest of any particular party of interest, and for satisfying the “Independence Standards for
Independent Outside Directors.”

3. The revision or abolishment of these standards shall require a resolution of the Nominating Committee. 

Shares Held for Strategic Purposes
The Company acquires and holds shares for other than purely investment purposes if it deems such shareholdings to be
useful in facilitating the Group’s business activities smoothly in cases such as when seeking to maintain or reinforce
medium- to long-term transactional relationships or in procuring funds on a stable basis.
In regard to the holding of listed shares as investment shares for other than purely investment purposes, we examine
the rationality of such holdings from the perspective of whether they are useful or not in facilitating the Group’s businessactivities smoothly, focusing on such aspects as the background of the acquisition, record of transactions, status ofcooperative and collaborative relationships, and level of dividend payouts. The findings of these examinations, as well as
the number of reductions of such shares and the policy on reductions going forward, are reported to the Board of Directors
at least once a year, and we are proceeding with sales in an appropriate manner.
In addition, the Company has been conducting ongoing investments in venture businesses since FY2016. Centered on the
Innovation and Business Transformation Group, these efforts are aimed at heightening the value of existing businesses andexpanding the Company’s business domains through the utilization of technologies and coordination with external partners.
Holdings of Shares Held for Strategic Purposes(Total for Listed and Non-Listed Companies)

Change in Disposal of Shares Held for Strategic Purposes

170

20

2

160

4

150

8

16

140
130

Billions of yen

166

22

30

17.9

15

12.2
10.0

10

164
152

120

148
138

134

133

4.2

5

110
100

1.4

FY2015FY2016FY2017

Non-new business-related holdings

FY2018FY2019FY2020

FY2021

New business-related holdings

0

FY2016FY20174.0

0FY2018FY2019FY2020

FY2021

FY2022(Plan)

Please refer to our Corporate Governance Report for more information on our corporate governance system.
https://www.mec.co.jp/e/investor/governance/materials/pdf/corp210709e.pdf

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

63

Corporate Governance

Remuneration

Indicators and Process for Calculating the Evaluation Index

The decision policy concerning details of remuneration for each director and corporate executive officer of theCompany is deliberated at meetings of the Remuneration Committee. The Remuneration Committee also confirmsthat the method for deciding the details of remuneration paid to each director and corporate executive officer foreach fiscal year as well as the details of each decided amount of remuneration are consistent with said decision policy.
For the fiscal year under review, the Remuneration Committee deemed that the remuneration paid to each director
and corporate executive officer was in line with the decision policy.

Companywide
performance: 50*1

Total Remuneration Paid to Directors, Corporate Executive Officers, and Statutory Auditors in FY2021
Total remuneration(Millions of yen)

Category

Inside directors
Corporate executive officers
Outside directors

Fixed remuneration(Millions of yen)

257
1,166
108

Performance-based remuneration(Millions of yen)

257
620
108

Recipients

—
545
—

3
15
7

Performance of
responsible division:
50*1

Achievement ratio compared withperformance over the last fivefiscal years: 30	Use the four indicators of consolidated operating income, EBITDA, ROA, and ROE (1:1:1:1)
	Use standard deviation to calculate the level of difficulty for achieving the performance ofthe relevant fiscal year compared with performance over the last five fiscal years	Fluctuation range of 200%–0%Achievement ratio compared withannual business plan targets: 20

	Use the four indicators of consolidated operating income, EBITDA, ROA, and ROE (1:1:1:1)
	Level of payment determined through comparisons with figures for the four above
indicators under annual business plans (payment level of 100% if in line with the plan’stargets, but can fluctuate between 200% and 0% depending on the level of achievement)

Corporate executive officers and executive officers
	1 Level of achievement toward the business group budget: Use consolidated operating income as a general rule
2 Medium-term initiatives: Approximately five years ahead, includes ESG initiatives
3 Initiatives to establish new business models: New business creation, non-asset businesses, service and content provision, etc.
	4 Initiatives to realize earnings for the entire Mitsubishi Estate Group: Use the four indexes at a ratio of 10:10:10:20 for initiatives
that go beyond the business group, etc. (initiatives that go beyond the individual role in the case of Group executive officers)
Employees are interviewed by the president & CEO, who assesses each item using three levels (200%, 100%, and 0%*2).
Group executive officers
	Use the four indicators of “level of achievement toward the individual company’s budget,” “medium-term initiatives,” “initiatives toestablish new business models,” and “initiatives to realize earnings for the entire Mitsubishi Estate Group” at a ratio of 20:10:10:10.
	Evaluation method is the same as that for corporate executive officers and executive officers.

Note: Remuneration for the Company’s directors who concurrently serve as corporate executive officers is included in the remuneration for corporate executive officers.

*1 Accounts for 12.5% of total remuneration*2 Targets for each item listed in annual business plans, and evaluations conducted using the details of these targets as the base score of 100%

Board Policies and Procedures in Determining the Remuneration of Senior Management and Directors(i) Procedures for Deciding Remuneration Paid to Officers
The policy concerning decisions on the details of remuneration paid to directors and corporate executive officers of the Company andthe details of remuneration for each person shall be decided upon by a resolution of the Remuneration Committee, which comprises
solely outside directors.
(ii) The Basic Policy for Deciding Remuneration for Officers
The basic policy for deciding remuneration for directors and corporate executive officers of the Company is as follows.
•	The remuneration system shall be linked with our medium- to long-term performance targets, etc., aimed at in management
strategies and medium-term management plans and realize sustained corporate value improvement and the sharing of value
with our shareholders.
•	The remuneration system shall allow for the giving of incentives to management executives to encourage them to take onchallenges and conduct appropriate risk-taking in line with the above strategies’ targets and expectations of shareholders andother stakeholders.
•	The remuneration system shall make it possible to fulfill high accountability for the benefit of our shareholders and otherstakeholders through objective deliberations and judgments by the Remuneration Committee.
(iii) Remuneration Systems for Officers
The remuneration systems for directors and corporate executive officers shall be separately established in consideration of respectivefunctions and roles to be fulfilled for the purpose of achieving sustained corporate value improvement. In addition, directors who
concurrently serve as corporate executive officers shall be paid remuneration as corporate executive officers.
•	Directors (excluding directors who concurrently serve as corporate executive officers)
In consideration of their function and role of supervising the performance of duties by corporate executive officers and directors,
they shall receive, in principle, only basic remuneration in the form of cash, and the standards shall be decided upon individually
taking into account factors such as their position and responsibilities as directors and whether they are full-time or part-time.
•	Corporate executive officers
In consideration of their function and role of taking charge of business execution of the Company, their remuneration shall, in
principle, comprise basic remuneration and variable remuneration. Variable remuneration comprises monetary compensation thatis paid based on short-term performance, etc., and stock compensation, etc., (including monetary compensation paid based on
indicators such as stock price) that is paid with a view to realizing the medium- to long-term sharing of value with shareholders.
The standards and ratio of basic remuneration and variable remuneration, valuation indicators for variable remuneration, and othermatters shall be decided upon taking into account medium- to long-term performance targets, etc., aimed at in management
strategies and the current management plan and factors such as position and responsibilities as corporate executive officers.

(ii) Medium- to Long-Term Performance-Based Remuneration (Remuneration by Shares with Restriction on Transfer)
1 Form of remuneration: Shares
2 Restricted stock period: Approximately three years
3 Performance evaluation and method for determining remuneration
With the objectives of creating an incentive to work for sustainable growth and of promoting the further sharing of value withshareholders, the Company adopted stock-based remuneration with a restricted transfer period of approximately three years.
The amount of monetary compensation that can be claimed when allocating stock is determined by the Remuneration Committee.
(iii) Medium- to Long-Term Performance-Based Remuneration (Phantom Stock)
1 Form of remuneration: Cash
2 Performance evaluation period: Approximately three years
3 Performance evaluation and method for determining remuneration
With the objectives of creating an incentive to work for sustainable growth and of promoting the further sharing of value withshareholders, the amount of phantom stock remuneration varies depending on the share price and on an indicator based on the
Company’s total shareholder return (TSR) ranking relative to five peer companies.*1 The base amount by position as well as the final
remuneration amount is determined by the Remuneration Committee.
*1 Five peer companies: Nomura Real Estate Holdings, Inc., Tokyu Fudosan Holdings Corporation, Mitsui Fudosan Co., Ltd., Tokyo Tatemono Co., Ltd., and Sumitomo
Realty & Development Co., Ltd.
4 Calculation method for individual amount paid

Remuneration amount

Short-term incentive remuneration

Medium- to long-term incentive remuneration

Single-year, performance-based
remuneration

Restricted stockcompensation

25%

12.5%

Remuneration baseamount*2

Share price in final month of
performance evaluation period

××

Vesting ratio*3

Issue price*2 Remuneration base amountThe remuneration base amount corresponds to the rank of the officer eligible for payment, as listed below.
President and chief
executive officer¥19,647,000

Deputy president

Executive vice president

Senior executive officer

Corporate executive officer¥12,675,000¥10,413,000¥8,352,000¥6,288,000*3 Vesting ratio
A rank is given to the TSR of the Company and its peers. The percentages in the table below correspond to the Company’s TSR rank, with 100% being the upper limit.
TSR rank
Vesting ratio

Composition of the Remuneration of Corporate Executive Officers

=

1st
100%

2nd
80%

3rd
60%

4th
40%

5th
20%

6th
0%

TSR is calculated using the formula below.
Basic remuneration
50%

Phantom stock=

TSR

Fixed remuneration

Performance-based remuneration

Overview of Performance-Based Remuneration(i) Single-Year, Performance-Based Remuneration
1 Form of remuneration: Cash
2 Performance evaluation and method for determining remuneration
With the aim of achieving further corporate growth and greater efficiency while guaranteeing financial soundness, the amount of
remuneration varies depending on consolidated operating income, EBITDA, ROA, ROE, and the target level of operating income in thedivisions for which the individual officers are responsible.
When determining remuneration, the amount is calculated using the actual indicators, etc., for the previous fiscal year, to which isadded an evaluation of qualitative aspects, established during interviews with the president,* including the degree of contribution to
performance over the medium to long term and the status of ESG-related initiatives, with the final remuneration amount being decided
by the Remuneration Committee.
Companywide performance and the performance of the officer’s division impact remuneration amounts at a ratio of 50:50. The
fluctuation range for remuneration is 0% to 200% of the base amount. The results for performance in the previous fiscal year were
112.6% for Companywide performance and, on average, 80.0% for divisional performance.
* The president is only evaluated based on Companywide performance.

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

(Share price for the final month of the performance evaluation period – Share price for the
first month of the performance evaluation period) +Total dividends per share for dividend distributions with a record date within the performance evaluation
period (excluding the final month of the performance evaluation period)

12.5%

Share price for the first month of the performance evaluation period(IV) Remuneration Payment Period
Payment periods for remuneration other than basic remuneration, which is fixed, will begin from the upcoming fiscal year.
The payment schedule is as follows.
X fiscal year

1Q
Basic remuneration
Single-year,
performance-based
remuneration
Remuneration byshares with restriction
on transfer
Phantom stock

2Q

3Q

4Q

X fiscal year + 1 fiscal year

X fiscal year + 2 fiscal years X fiscal year + 3 fiscal years

1Q

1Q

2Q

3Q

4Q

2Q

3Q

4Q

1Q

2Q

3Q

Notes

4Q
As remuneration amounts are determined by rank, in the event an officerchanges rank during a fiscal year, the amount will change starting fromthe month in which the officer assumes the new rank.
The performance evaluation of the previous fiscal year is reflected
in renumeration from July of the following year.
While stock is allocated in the relevant fiscal year, the restriction ontransfer is not lifted until three years after allocation.
This remuneration is paid after three years and upon completing anevaluation of performance during said three-year period.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

65

Corporate Governance

Message from an Outside Director

By strengthening our corporate
governance structure, we contribute to transforming businessmodels and building trust-based
relationships with society.

Iwao Taka
Outside Director(Member of the
Audit Committee)

Management Emphasizing GovernanceOver the years, the corporate governance system of the Mitsubishi Estate Group has continued to evolve at a pacethat has always been a step ahead of social demands. The Company operated under the “Company with Board ofCompany Auditors” structure described in Japan’s Companies Act when I became a statutory auditor in 2015, but it
transitioned to the “Company with Nominating Committee, etc.,” structure described in the act in the following year.
Mitsubishi Estate then went on to introduce new officer remuneration systems and frameworks for evaluating theeffectiveness of the Board of Directors, to transition to an all-outside director membership for the Nominating
Committee and the Remuneration Committee, and to appoint outside directors to chair these two committees as wellas the Audit Committee. As an outside director, I have immense praise for the type of swift action the Company hastaken over the past five years to reinforce its corporate governance system. Furthermore, these reforms were
proposed by the executive team. The fact that these proposals came from inside the Company is indicative of the highdegree of emphasis that Mitsubishi Estate places on governance in its management. The Audit Committee, of which
I am a member, also places such degree of emphasis on governance. Chaired by Outside Director Tetsuo Narukawa,
this committee is operated in a flexible, unbiased manner.
As a member of the Audit Committee, I try to be constantly mindful of both financial risk and operational risk as
I oversee the Company’s management. In regard to financial risk, I take a cautious approach, always considering
whether the explanations of the Company’s accounting auditor make sense and if the accounting treatments applied
when extraordinary items arise are convincing. As for operational risk, I focus particularly on the risks at Group
companies and in overseas businesses. I believe that Mitsubishi Estate is facilitating effective monitoring without
sacrificing audit quality, even amid the COVID-19 pandemic, by providing swifter and more detailed explanations
through full-time members of the Audit Committee and members of internal control departments.

Transformation of Hardships into Business Opportunities by Taking a Long-Term
Management Perspective
Since announcing Long-Term Management Plan 2030, the Board of Directors has been engaging in discussions basedon long-term perspectives. I believe that setting a long-term period of 10 years for the plan was the logical time framein terms of promoting business from the perspective of overall optimization and in consideration of the Group’sbusiness model. When you look back on Mitsubishi Estate’s history, you can see how the Company has continued torealize robust growth by overcoming various hardships. Such an achievement gives me great confidence that theCompany is equipped to turn the hardships presented by the COVID-19 pandemic into significant business opportunities,

66

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

and thereby secure an even more powerful growth driver, by evaluating it from a long-term management perspective.
For this reason, it is important for the Group to act with resolve, plotting a clear course for the future and committing
to this course as it proposes new ways of living and working in the post-COVID-19 era, rather than placing itself at
the mercy of the tides of the times. I believe that the Group has such a resolve and I therefore look forward to seeing
this resolve guide improvements to the business models of each of its businesses.

Sustainability as the Driving Force for Growth
The Mitsubishi Estate Group established its Sustainable Development Goals 2030 to function as a central pillar of its
strategies for increasing social value in Long-Term Management Plan 2030. Initiatives for accomplishing these goals
are being advanced based on the four key themes of “Environment,” “Diversity & Inclusion,” “Innovation,” and“Resilience.” Regarding the key theme of “Environment,” I commend the Group on its quick adoption of therecommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) in its disclosure activities andconsequently in its high level of information disclosure. More recently, the Group has been engaging in a biomass
power generation project that uses branches pruned from roadside trees, among other initiatives, raising myanticipation for its future endeavors.
A key theme I pay particular attention to is “Diversity & Inclusion.” Diversity creates substantial opportunities fortransformation. By recruiting and training individuals who offer ways of thinking and core values that are completely
new, the Group has the potential to breed “Innovation,” another key theme, for refining existing business models andcultivating new businesses.
Moreover, the Group develops its businesses in collaboration with a wide range of suppliers, and therefore
respecting human rights is of utmost importance. For this reason, the Group established the Mitsubishi Estate Group
Human Rights Policy, and substantial effort is dedicated to implementing frameworks to ensure compliance with thispolicy. For example, the Group takes precautions to ensure that it only uses wood designated as acceptable under
the Sustainable Sourcing Code (Certified Wood and Domestically Produced Wood) in formwork concrete panels(plywood panels used to make the concrete formwork employed in the construction of buildings). This approach istaken to address human rights risks, such as those associated with land seizure and child labor in areas producing
tropical forest wood, and to help preserve forests. In the past, I have served as the chairman of a subcommittee of
the Tokyo Organizing Committee of the Olympic and Paralympic Games tasked with establishing a procurement
code. I am proud to say that the Group’s initiatives inherit the spirit of the code I helped establish on thissubcommittee and are taking it a step further.

Importance of Promoting Businesses That Offer Value for Consumers
I have experience heading up the Consumer Commission of Japan’s Cabinet Office, and I therefore understand how important consumer perspectives are when it comes to business. I believe that Long-Term Management Plan 2030 represents astrategy that places a strong emphasis on business-to-consumer and consumer perspectives, and this strategy thus has
the potential to take the Group to a new stage in its evolution. A clear awareness of who the Group is ultimately providing
value to will drive the creation of new businesses and subsequently the sustainable evolution of the Group.
The Group’s brand is highly trusted among consumers and customers. However, this trust also presents the risk of
the Group becoming complacent and losing its edge. It is therefore crucial for the Group to develop frameworks that
surpass those of the average company and to ensure their functioning, in order to secure even greater levels of trust.
The reinforcement of corporate governance should be at the center of these efforts. Furthermore, it is important for theGroup to make sure that its employees—who are responsible for developing the Group’s brand—are assigned work inappropriate quantities, are positioned in an optimal manner, and are provided with the training and tools to ensure thatthey can handle the work they are given in the time provided. Such initiatives are another imperative part of maintaining
and strengthening the trust that the Group enjoys from its stakeholders.
I have accumulated a great deal of experience through my time with various government committees and otherorganizations outside the Company. If there is anything to be found in this experience that can benefit the Group, I hope
to share it through discussions with the junior employees who will shape the future of the Group. Meanwhile, the Groupis pressed to address a wide range of issues and new business domains, including those related to AI utilization anddigital transformation. Going forward, I will strive to build upon my own capabilities so that I can effectively provide
advice regarding such issues and domains in order to contribute to the continued growth of the Mitsubishi Estate Group.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

67

Risk Management

Risk Management and Compliance System
Board of Directors

Corporate Officer in Charge of Risk Management and ComplianceAppointment

Reporting

ChairmanVice-Chairman

Mitsubishi Estate President & Chief
Executive Officer

Mitsubishi Estate
Corporate Officer in Charge of Risk
Management and Compliance= Responsible for overseeing risk management= Responsible for overseeing compliance
Overall Management

Risk Management & Compliance Committee
Risk Management and Compliance-Related Deliberation and Decision-Making Bodies
Directions
through
Each Duty

Reporting

Mitsubishi Estate
Risk Management
Promotion Officers(Line and Staff Departments,
Others)Compliance Promotion
Officers

Mitsubishi Estate Directors, Representatives from Main Group Companies

Mitsubishi Estate

Advisors

Chairman of the Board
Full-Time Members of the Audit Committee
General Manager of Internal Audit OfficeOutside Experts

ReportRisk Management
Promotion Personnel

Compliance Promotion
Personnel

Consultation Advice

Group Company

Risk Management
OfficerCompliance Officer

Risk Management & Compliance Subcommittee
Risk Management and Compliance-Related Deliberation and Reporting Bodies
Assistance
General Managers of Line andStaff Departments for Functional andBusiness Groups

General Managers of and OtherManagement Personnel in Corporate
Group Departments

People Designated by Presidentsof Main Group Companies

General Manager of Internal Audit Office
General Manager of Mitsubishi Estate
Audit Committee Office

Note: Other individuals nominated by the
corporate officer in charge ofcompliance may also participate.

Executive
Committee

Guidance

Risk Management Promotion Secretariat /Compliance Promotion Secretariat(Mitsubishi Estate Legal & Compliance Department)

Risks that are appropriately
dealt with by continuing
existing measures

Candidates for risks needing
countermeasures in the future

Key risks requiring countermeasuresduring fiscal year

Ongoing risks requiring countermeasures(currently having impact)

Ongoing risks requiring countermeasures(large impact)

Among the various risks recognized by the Mitsubishi Estate Group, risks related to investment projects are based on
the assessment of business viability by Companywide research functions and under investment decision rules of theStrategic Investment Office. Prior to the deliberation of important investment projects by the Executive Committee,
which is chaired by the president & CEO and is responsible for strategic planning for the entire Group and monitors
the progress of each business toward realizing this strategy, the Strategic Investment Committee deliberates andevaluates profitability, the nature of risks and related countermeasures, and other matters. At each phase, risk
assessments are also conducted from legal and financial aspects in order to grasp an overall picture of the risks.

In its deliberations, in addition to assessing the economic viability of a given project using multiple indicators, theStrategic Investment Committee verifies the appropriateness of various aspect of premises, such as rents, unit
selling prices, and construction costs. For risks, in particular, simulations of upside and downside scenarios areincorporated into investment decision rules. The difference between the scenario set by the responsible businessgroup in charge of the project and the downside scenario is recognized as risk. The Strategic Investment Committee
holds discussions on the acceptable limits of that risk.

Risk Evaluation Process for Individual Projects

Scenarios anticipated by business units

Business Groups

Strategic Investment Committee

Executive Committee

 erification of individualV
investment projects[Role]
Discussion on and verification of theappropriateness of importantinvestment projects[Role]
Investment decisions regarding
important projects• Verification of consistency
with strategies of eachbusiness group• Economic viability verification

Presentation of scenarios anticipated bybusiness units with major investment
projects

 erification of the responsible
Vbusiness group’s anticipatedscenarios

 reparation of the responsible
Pbusiness group’s anticipatedscenarios with importantinvestment projects andsubmission thereof to theStrategic Investment
Committee• Verification of consistency with
Companywide strategies• Verification of consistency with businessgroup strategies• Verification of economic viability• Verification of appropriateness ofassumptions (such as rents andconstruction costs)• Preparation of upside and downside
scenarios, quantification of risk

Strategic Investment Office

Risk Management Activities

68

Risks that necessitate theimprovement of existing measuresor introduction of new measures

1

2

Risk Management Activities of Each Individual Business andFunctional Group and Group Company

Identification and Monitoring of Key Risks That Need ParticularAttention from the Group

Individual Group companies and functional and business groups
identify important risks based on a risk analysis and carry out
activities throughout the year to reduce the risks identified. In
addition, the general managers of each functional and businessgroup ascertain the status of risk management activities of different
business companies under the jurisdiction of each business andfunctional group and provide coordination and support.

To accurately grasp the risks facing the Group as a whole, and by
selecting and mapping key risks that require measures to be taken,
the risks that must be addressed and their level of priority arebrought to light. While monitoring risks throughout the year,
particularly key risks, support is provided as necessary.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Large

Strategic Investment Committee (General Managers)

Committee Members

Corporate Officer in Charge of Risk
Management and Compliance

Risk Impact

Moderate

Risk Management Related to Investment Projects (As of April 2021)

Decision of Basic Policy
Supervision

Risk Map

Status of Control

The Mitsubishi Estate Group has established the Mitsubishi Estate Group Risk Management rules and has set up arisk management system to manage risks in all of its business activities. Mitsubishi Estate has also established the
Risk Management & Compliance Committee to oversee the Group’s risk management and formed the Risk
Management & Compliance Subcommittee as a working-level consulting body responsible for such matters as thecollection of risk management-related information. The corporate officer in charge of risk management is appointed
by resolution of the Board of Directors to take responsibility for overseeing risk management, and general managers
of business groups and general managers from Group departments have been designated as risk management
officers. We promote risk management activities through the Mitsubishi Estate Legal & Compliance Department,
which serves as the secretariat.
We have also established and implemented action guidelines, contact and initial response systems, and business
continuity planning for use in times of crisis.

• Companywide researchfunctions• Preparation and use ofinvestment decision rules

 erification of importantV
investment projects• Verification of compatibility
with Companywide strategies• Verification of compatibility
with business group strategies• Verification of economic viability here necessary, the Strategic
W
Investment Office prepares separate
anticipated scenarios and submits
them to the Executive Committee.
Jurisdiction

Anticipation of scenarios byStrategic Investment Office

Sharing of visualized risks and areas of concern for business viability

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

69

Financial Section

Risk Management

Dealing with Major Risks Below are some examples of risks that have come to light in the Mitsubishi Estate Group through risk management
activities and various business activities and countermeasures that have been taken.

Japan’s Real Estate Market
Supply of New Large-Scale Office Buildings* in the 23 Wards of Tokyo
Million m2
2.0

Risks Related to the
COVID-19 Pandemic

In FY2021, the COVID-19 pandemic had a particularly adverse impact on the Group’s
hotel, retail facility, and airport operation businesses. In FY2022, the pandemic has thepotential to continue to adversely impact the Group’s business promotion andperformance, primarily in the aforementioned businesses.

In 2020, the supply of new large-scale office buildings in Tokyo’s 23
wards by floor area more than doubled year on year, to 1,790,000
m², the third largest supply volume recorded since surveys began.
However, supply volume is expected to decrease in 2021 and 2022
and the average such volume for the next five years (2021 to 2025) is
forecast to fall below past performance levels.

1.5

1.0

0.5

Risks of Natural and
Man-Made Disasters,
etc.

Risks of Fluctuationsin the Real Estate
MarketRisks of Fluctuations
in Exchange Rates

Risks of Increases inInterest Rates

The occurrence of such natural disasters as earthquakes, floods, or climate change or
man-made disasters including accidents, fires, or the spread of infectious diseases may
impact the performance, financial position, or other aspects of the Group’s business. The
Group is redeveloping its properties to install advanced disaster-management functions
and has established disaster-response measures through area management.

The real estate market is closely correlated with movement in the economy.
Deterioration in the economy has a strong impact on declines in real estate prices andrental fees and the increase in vacancy rates. In view of this correlation, the basic policyof the Group is to conclude relatively long-term lease contracts with customers in its
office building leasing business. The prospects of stable lease revenue mitigate to acertain degree the risk of sharp movements in the economy.

In addition to those held in Japan, the Group is developing and holding assets in the UnitedStates, Europe, and Asia, for which the book values and income are accounted for in local
currencies. Consequently, any fluctuation in exchange rates would affect the yen
conversion rate used for foreign currency-denominated assets and liabilities and business
transactions. The Group minimizes these risks of fluctuations in interest rates using suchmethods as borrowing funds in local currencies when procuring assets overseas.

The Group acquires funding for its operations by borrowing from financial institutions or
issuing corporate bonds. The Bank of Japan (BOJ) has implemented a policy of quantitativeand qualitative monetary easing in response to the credit crunch in financial markets andthe slowdown in the global economy. Should interest rates rise, however, because of achange in the BOJ’s policy or a deterioration in the demand–supply balance for Japanese
government bonds (JGBs) caused by growth in the issuance of JGBs, it may negatively
affect the performance, financial position, or other aspects of the Group’s business.
The Group hedges interest rate risk on a certain portion of its variable interest ratefinancing through interest rate swaps to convert its interest rate payments into fixed
payments. In the future, the Group plans to manage its interest rate risk by procuring funds
based on a consideration of its fixed and variable interest rate borrowings and its
outstanding corporate bond balances.

0
2016

2017

2018

2019

2020

2021

2022

* Buildings with a standard floor area of 10,000 m2 and above

2023
2024
2025
CY
(Estimate)Source: Mori Building Co., Ltd.

Office Building Market (Average Rents / Vacancy Rates in Five
Central Tokyo Metropolitan Wards)
Yen / tsubo-month%

25,00010

20,0008

15,000

6

10,000

4

5,000

2

In the office building market, vacancy rates as of March 2021 in thefive central Tokyo metropolitan wards (Minato-ku, Chiyoda-ku,
Chuo-ku, Shinjuku-ku, and Shibuya-ku) stood at 5.42%, exceeding
5.0% for the first time since March 2015, partly reflecting the impact
of office consolidations and contract cancellations due to the spreadof COVID-19. Average rents came to ¥21,541 per tsubo, down ¥1,053
year on year.

0

0
12/3

13/3

Average rents

14/3

15/3

16/3

17/3

18/3

19/3

Vacancy rates (right scale) 

20/3

21/3

Source: Miki Shoji Co., Ltd.

Supply of New Condominiums in the Tokyo Metropolitan Area /Average Condominium Prices
Units

Millions of yen

80,00080

60,00060

40,00040

20,00020

0

In the housing market, the supply of condominiums in the Tokyo
metropolitan area declined 12% year on year, to 27,228 units.
Meanwhile, the average price of condominiums in the Tokyo
metropolitan area rose 1.7% year on year, to ¥60.83 million, owing
to an increase in the supply of high-end condominiums.

0
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

CY

Sales of new condominiums in the Tokyo metropolitan area
Condominium prices (right scale)
Source: Real Estate Economic Institute Co., Ltd.

Expected Cap Rate by Type of Property in the Tokyo Area%

Risks of Information
Security

In light of society’s growing concerns over the appropriate protection of personal
information and information management, the Mitsubishi Estate Group will establish
rules related to information management and thoroughly reinforce its information
management structure. At the same time, the Group will take steps to ensure
appropriate responses in accordance with laws and regulations, such as the Act on theProtection of Personal Information.
Moreover, in order to raise the IT security level of the entire Group, we havepositioned our DX Promotion Department at the center of efforts to standardize theGroup’s IT systems and make them more secure. We are also enhancing collaboration
among DX Promotion Department personnel and between the department and external
security companies, thereby providing Groupwide support.

7.0

Economy hotels for lodging in Tokyo

6.0

5.0

Multiple-tenant-type warehouseproperties in Tokyo (Koto District)
Residential properties forstandard studios in southern Tokyo

4.0

3.0

A-Grade office buildings* in the
Marunouchi and Otemachi areas

Although the real estate market remained brisk due to such factors
as the Bank of Japan’s ongoing policy of monetary easing, an
excessive decline in investment returns has led to concerns insome quarters that the real estate market may be overheating.
The expected return (cap rate) was unchanged from the previous
year for many classes of real estate and in many areas, with the cap
rate for A-grade office buildings in the Marunouchi and Otemachi
areas standing at 3.5% as of April 2021.

0
2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

As of April 1 each year

* Covers properties within five minutes’ walk from the nearest station and with floor areasof at least 50,000 m2


70

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Source: Japan Real Estate Institute

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

71

Financial Section

Eleven-Year Summary of Selected Financial Data (Consolidated)
Financial Results (Millions of yen)
Revenue from operations

2011/3

2012/3

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/3   988,447

1,013,069   927,157

1,075,285

1,110,259

1,009,408

1,125,405

1,194,049

1,263,283

1,302,196

1,207,594

Operating income

158,258

146,299

118,349

161,271

156,332

166,199

192,495

213,047

229,178

240,768

224,394

Ordinary income

130,830

120,665

92,381

139,638

133,113

144,851

169,851

190,506

206,587

219,572

210,965

Profit attributable to owners of parent

64,21956,51245,50764,29773,33883,426102,681

120,443

134,608

148,451

135,655

Financial Position (Millions of yen)
Total assets

4,245,209

4,387,015

4,711,521

4,765,368

4,901,526

5,311,840

5,484,115

5,801,450

5,774,193

5,858,236

6,072,519

Total equity*1

1,202,270

1,256,791

1,239,547

1,329,057

1,495,838

1,509,680

1,592,777

1,698,348

1,770,643

1,734,462

1,851,899

Interest-bearing debt

1,639,050

1,716,890

2,085,417

1,973,042

1,929,355

2,291,038

2,396,994

2,481,675

2,319,597

2,429,883

2,526,142

Capital expenditures

76,332

282,171

208,135

159,677

177,331

275,316

275,372

289,570

285,089

331,857

319,841

Depreciation and amortization

70,62867,46573,36474,80572,696

74,24575,97477,54580,336

84,941

89,107

Cash Flows (Millions of yen)
Cash flows from operating activities   259,263

203,243   122,286   336,489   200,078   135,821   168,527   293,338   345,954   341,766   207,414

Cash flows from investing activities(67,223)(272,009)(217,992)(133,537)(46,568)(231,003)(327,292)(286,841)(271,083)(277,440)(297,303)

Cash flows from financing activities(140,269)

57,18927,150(177,514)(189,109)309,237(4,921)

37,203(192,473)(28,886)

50,425

Cash and cash equivalents at the end of year

229,062

215,771

191,837

224,739

198,489

412,392

243,341

286,859

179,308

213,008

172,307

Per-Share Amounts (Yen)
Earnings¥46.27¥40.72¥32.79¥46.34¥52.85¥60.13¥74.00¥86.78¥96.97¥108.64¥101.34

Cash dividends¥   12¥   12¥   12¥   12¥   14¥   16¥   20¥   26¥   30¥    33¥    31240,998

224,701

Principal Financial Indicators
Business profit*2 (Millions of yen)
EBITDA* (Millions of yen)
3

237,109

222,885

200,587

246,332

239,934

252,034

279,718

302,424

320,641

336,784

331,821

3.7%

3.4%

2.6%

3.4%

3.2%

3.3%

3.6%

3.8%

4.0%

4.1%

3.8%

6.6

6.5

5.0

7.5

7.7

8.5

8.7

9.5

10.1

11.3

11.2

ROE

5.4%

4.6%

3.6%

5.0%

5.2%

5.6%

6.6%

7.3%

7.8%

8.5%

7.6%

Payout ratio

25.9%

29.5%

36.6%

25.9%

26.5%

26.6%

27.0%

30.0%

30.9%

30.4%

30.6%

ROA*4
Interest coverage ratio*5 (Times)

Stock Information
Stock price*6 (Yen)
Number of shares issued and outstanding (Thousands of shares)

5,000

Mitsubishi Estate’s Stock
Price Changes on theTokyo Stock Exchange¥1,407¥1,476¥2,596¥2,446¥2,787¥2,090.5¥2,030¥1,798.5¥2,005.5¥1,595¥1,932.5

1,390,397

1,390,397

1,390,397

1,390,397

1,390,397

1,390,397

1,390,685

1,390,908

1,391,038

1,391,174

1,391,328

Yen
4,000

3,000

2,000

1,000

0
2010/3

2011/3

2012/3

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/3*1	Total equity is calculated by deducting non-controlling interests and stock acquisition rights from total net assets.
*2	Business profit is calculated as operating income + equity in earnings of unconsolidated subsidiaries and affiliates.
*3	EBITDA is calculated as the sum total of operating income, interest and dividend income, equity in earnings of unconsolidated subsidiaries and affiliates, depreciation and amortization, and goodwill.
*4	ROA was calculated as operating income ÷ total assets (average of the amount at the beginning and end of the fiscal period) until FY2019. However, from FY2020 ROA is
calculated as business profit ÷ total assets (average of the amount at the beginning and end of the fiscal period).
*5	The interest coverage ratio (ICR) is calculated by dividing the sum total of operating income, interest and dividend income, and equity in earnings of unconsolidated subsidiaries and affiliates by thesum total of interest expenses and commercial paper interest.
*6	As of the last trading day in March

72

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

73

Financial Section

Matters Related to Rental Properties
Mitsubishi Estate and some of its consolidated subsidiaries own
office buildings and retail facilities in Tokyo and other major cities
in Japan as well as overseas, with the aim of obtaining rental
revenue from these buildings and facilities. Because certain leased
office buildings among these in Japan are used by the Company orsome of its consolidated subsidiaries, the Company has classified
such buildings as rental properties containing self-use space.
The following table shows the year-end amounts, changes inthese amounts during the period under review, and the market
value and unrealized gains of investment and rental properties andother real estate that includes rental properties and rental properties
containing self-use space.

Status of Shareholdings
The following table shows the profit and loss from rental
properties and other real estate that includes portions used as
investment and rental properties.


Fiscal Year Ended
March 31, 2020

(April 1, 2020, to
March 31, 2021)(April 1, 2019, to
March 31, 2020)

Rental revenue

475,309472,275

Rental costs

304,405

303,281

Difference

170,903

168,994

5,622(21,246)

Rental Properties

Millions of yen

Fiscal Year Ended
March 31, 2021

Fiscal Year Ended
March 31, 2020

(April 1, 2020, to
March 31, 2021)(April 1, 2019, to
March 31, 2020)

Rental Properties
Amounts recorded on the consolidated balance sheets
Balance as of the beginningof the period

3,502,759

3,408,738

Increase (decrease) during
the period

62,83094,021

Balance as of the end of theperiod3,565,590

3,502,759

Market value as of the endof the period

7,441,369

7,356,741

Unrealized gain

3,875,779

3,853,982

Rental Properties Containing Self-Use Space
43,639Rental costs

34,28932,369Difference

9,349

11,534

Other income (loss)(2,026)

4,012

Trillions of yennet

net hghbri

Earnings per Share

Times

Yen

10

120

Rental Properties Containing Self-Use Space
2.0

Amounts recorded on the consolidated balance sheets

8545,580

633,983

Increase (decrease) during
the period(176)(88,403)545,404

545,580

Market value as of the endof the period

919,848914,103

Unrealized gain

374,444368,523

Notes: 1.	The amounts included on the consolidated balance sheets presented in the table above
are equal to the total acquisition prices for applicable properties or real estate less theaggregate amounts of depreciation and impairment loss for these properties orreal estate.
2. Fair values as of the end of each consolidated fiscal year are as follows:		 (1) The fair values of domestic properties and real estate have been calculated by
Mitsubishi Estate, based mainly on the Japanese Real Estate Appraisal Standards.
		 (2) The fair values of overseas properties and real estate have been calculated mostly by
local appraisers.

1.5

6
60

1.0

2

0

0

Shares Other Than Unlisted Shares

65

228,570

Information on the number of shares for each company andamounts shown on the balance sheet for specific investment
shares and deemed holdings of equity shares are as follows.

Company

Number ofsharesAmountbookedon balance
sheet(¥ million)

Purpose ofholding
shares

1,170

1*

T&D Holdings, Inc.

746,900

1,065

7*

TOKAI CARBON CO., LTD.

588,250

1,051

1*SHIMADZU CORPORATION

233,476935

1*

KUBOTA Corporation

359,000

904

4*

THE SHIZUOKA BANK, LTD.

886,750771

7*

RENAISSANCE INCORPORATED

637,500

747

6*

NOHMI BOSAI LTD.

345,000

741

1*

NIPPON EXPRESS CO., LTD.

89,483737

4*Mebuki Financial Group, Inc.

2,340,000

610

7*JFE Holdings, Inc.

399,800

544

1*

THE HYAKUGO BANK, LTD.

1,509,000

504

7*

Matsuya Co., Ltd.

545,300

500

3*Mitsubishi Corporation

13,088,457

40,966

1*

SHINAGAWA REFRACTORIES CO., LTD.

138,150398

1*

AGC Inc.

4,414,706

20,440

1*

Tokyo Kaikan Co., Ltd.

131,140

397

3*Japan Airport Terminal Co., Ltd.

3,111,400

16,926

1*

P.S. Mitsubishi Construction Co., Ltd.

496,000

333

1*

Mitsubishi UFJ Financial Group, Inc.

27,821,042

16,461

2*

Nippon Yusen Kabushiki Kaisha

86,121325

1*HEIWA REAL ESTATE CO., LTD.

4,274,100

14,767

5*

Kodensha Co., Ltd.

58,500298

1*Mitsubishi Logistics Corporation

3,665,554

12,407

4*

GS Yuasa Corporation

73,670221

1*Taisei Corporation

2,426,690

10,361

3*

Mitsubishi Kakoki Kaisha, Ltd.

66,586188

4*

Mitsubishi Electric Corporation

5,577,294

9,406

1*

Concordia Financial Group, Ltd.

320,000

143

7*

Mitsubishi Heavy Industries, Ltd.

2,346,997

8,094

1*

Kyushu Financial Group, Inc.

256,410121

7*East Japan Railway Company

857,300

6,720

3*

The 77 Bank, Ltd.

70,687110

7*Central Japan Railway Company

367,900

6,088

3*

NANTO BANK, LTD.

50,44099

7*

Shin-Etsu Chemical Co., Ltd.

308,2125,735

1*

Mitsubishi Steel Mfg. Co., Ltd.

112,472

98

4*

20

Kirin Holdings Company, Limited

2,690,438

5,705

1*

HOTEL NEWGRAND CO., LTD.

24,20089

4*

TOYOTA MOTOR CORPORATION

598,4625,156

1*

Gooddays Holdings Inc.

57,00065

5*Mitsubishi Materials Corporation

1,739,700

4,495

1*

NIKON CORPORATION

3,510,000

3,632

4*

TOHO CO., LTD.

794,100

3,565

3*

Odakyu Electric Railway Co., Ltd.

901,000

2,725

3*

Mitsubishi UFJ Lease & Finance
Company Limited*

3,760,000

2,511

1*

1* To contribute to raising corporate value by maintaining and strengthening good relationships
with tenants, principally in the Commercial Property Business
2* To contribute to raising corporate value by maintaining and strengthening good relationships,
principally for financing and in the Commercial Property Business
3* To contribute to raising corporate value by maintaining and strengthening collaborative
relationships, principally in the Commercial Property Business
4* To contribute to raising corporate value by maintaining and strengthening good relationships inbusinesses across the entire Group
5* To contribute to raising corporate value through business partnerships and joint businesses
6* To contribute to raising corporate value by maintaining and strengthening collaborative
relationships, principally in the Residential Business
7* Principally to contribute to stable financing

Mitsubishi Research Institute, Inc.

598,500

2,465

4*

SHIMIZU CORPORATION

2,738,650

2,453

3*

Obayashi Corporation

2,404,961

2,441

3*

Mitsubishi Chemical Holdings Corporation

2,823,000

2,342

1*

Tokio Marine Holdings, Inc.

6,929,500

36,483

8*

Seino Holdings Co., Ltd.

1,275,900

1,967

5*

Mitsubishi Electric Corporation

10,656,000

17,971

8*

Uzabase, Inc.

657,400

1,820

5*

Mitsubishi UFJ Financial Group, Inc.

4,306,400

2,548

8*

Nippon Suisan Kaisha, Ltd.

2,789,900

1,484

1*

MITSUBISHI MOTORS CORPORATION

700,000

220

8*

THE HACHIJUNI BANK, LTD.

3,441,500

1,386

7*

Chiba Bank, Ltd.

1,852,000

1,342

7*

621,600

1,304

7*

8* To maintain authority to exercise voting rights
Note: With regard to the largest stocks in terms of the amounts recorded on the balance sheet,specific investment shares and deemed holdings of equity securities for investment
purposes are not included in aggregate totals.
* Renamed Mitsubishi HC Capital Inc. on April 1, 2021

02017 2018 2019 2020 2021

Net interest-bearing debt
Net interest-bearing debt
(after hybrid debt deductions)*
Net interest-bearing debt / EBITDA(right scale)Net interest-bearing debt / EBITDA(after hybrid debt deductions)*(right scale)* The subordinated bonds and subordinatedloans subject to equity credit from a credit
rating agency (50% equity treatment) are
shown after deductions.

8,737

431,405

40

4

0.5

98

Mitsubishi Gas Chemical Company, Inc.

100
80

Balance as of the beginningof the period

Total amount booked onbalance sheet(¥ million)

Unlisted Shares

43,903

Note: Real estate that includes portions used as investment and rental properties has portions
that are used by Mitsubishi Estate and some of its consolidated subsidiaries for the purposeof providing related services and conducting operation management. Accordingly, rental
revenue associated with these portions has been excluded. Costs associated with applicableproperties and real estate, such as depreciation costs, building management costs, andtaxes, have been included in rental costs.

Net Interest-Bearing Debt /EBITDA

Number ofstocksSpecific Investment Shares

Rental revenue

2.5

Balance as of the end of theperiodMillions of yen

Fiscal Year Ended
March 31, 2021

Other income (loss)

Stocks held for purposes other than pure investment, the numberof shares, and their total value as of March 31, 2021, recorded on
the balance sheet are as follows.

2017 2018 2019 2020 2021

Unrealized Gain on Rental
Properties
Trillions of yen
5.0

4.0

3.0

2.0

1.0

0

Deemed Holdings of Equity Securities
Company

Number ofsharesAmount booked Purpose of
on balance sheet holding(¥ million)
shares2017 2018 2019 2020 2021

Years ended March 31

Fukuoka Financial Group, Inc.

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Financial Section

Consolidated Balance Sheets
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
March 31, 2021 and 2020

2021

Millions of yen

Thousands of
U.S. dollars (Note 2)

2020

2021

Assets¥    170,040¥   207,896$  1,535,905

Notes and accounts receivable–trade (Note 13)

52,031

50,340469,981Marketable securities (Notes 13 and 14)

4,626

7,657

41,791

Allowance for doubtful receivables

(553)

(294)

(5,001)Inventories (Note 3)

364,834

329,305

3,295,406

Equity investments (Notes 13 and 14)

496,182

450,520

4,481,822

Other current assets

76,87570,208694,386

1,164,037

1,115,634

10,514,293

Investments and other assets:
Investments in and advances to unconsolidated subsidiaries
and affiliates (Note 13)

41,83650,024

377,894

Investment securities (Notes 13 and 14)

240,810

187,596

2,175,150

Asset for retirement benefits (Note 6)

34,37021,336

310,453

Deferred income taxes (Note 7)

16,536

16,266

149,369

Other investments (Notes 4 and 13)

293,938

263,358

2,655,035

627,493538,582

5,667,903

Land in trust

2020

2021

¥   384,428¥  373,635$ 3,472,395

Notes and accounts payable–trade (Note 13)

60,50766,368546,540

Accrued income taxes (Note 7)

24,457

29,773220,918

Advances and deposits

121,996

112,727

1,101,944

Short-term borrowings and current portion of long-term debt
(Notes 5 and 13)

71,046

81,497641,739

662,437

664,001

5,983,537

Long-term debt (Notes 5 and 13)

2,139,618

2,054,263

19,326,332

Lease deposits received (Note 13)

466,891

459,177

4,217,248

Liability for retirement benefits (Note 6)

27,123

26,919244,999

Deferred income taxes (Note 7)

507,901

479,915

4,587,674

Negative goodwill

83,60480,251

755,166

Other non-current liabilities

123,494

152,501

1,115,479

Total long-term liabilities

3,348,634

3,253,028

30,246,900

Total liabilities

4,011,071

3,917,030

36,230,438

			 Issued—1,391,328,316 shares in 2021 and 1,391,174,263 shares in 2020

142,279

142,147

1,285,150

		Capital surplus

164,367

164,041

1,484,666

		Retained earnings

1,058,457

962,840

9,560,630

Accrued expenses and other current liabilities
Total current liabilities
Long-term liabilities:

Net assets:
Shareholders’ equity (Note 8):
		 Common stock, without par value:			Authorized—1,980,000,000 shares;

		 Less treasury stock, at cost(105,216)(105,282)(950,374)

2,237,934

2,152,812

20,214,382

Total shareholders’ equity

1,259,887

1,163,746

11,380,073

578,446

608,3315,224,881

Accumulated other comprehensive income:

118,088

79,527

1,066,646(1,916)(1,948)(17,314)

Property and equipment (Note 5):
Land

2021

Current liabilities:

Cash on hand and in banks (Notes 13 and 15)

Total investments and other assets

Thousands of
U.S. dollars (Note 2)

Liabilities and net assets

Current assets:

Total current assets

Millions of yen

2,815,474

2,763,937

25,431,077

		 Unrealized holding gain on securities

Machinery and equipment and other160,608

152,076

1,450,714

		 Deferred gain (loss) on hedging instruments

Construction in progress

136,273

126,3111,230,904

		 Land revaluation reserve

526,417526,623

4,754,919

5,928,737

5,803,470

53,551,960

		 Foreign currency translation adjustments(53,740)(29,321)(485,418)(1,748,844)(1,696,217)(15,796,626)

		 Retirement benefits liability adjustments (Note 6)

3,163(4,163)28,572

4,179,893

4,107,252

37,755,334

Total accumulated other comprehensive income

592,011570,716

5,347,405

Buildings and structures

Less accumulated depreciation
Property and equipment, net

Intangible
Total assets

101,095¥ 6,072,519

96,767¥ 5,858,236

913,151$ 54,850,682

Stock acquisition rights

231

288

2,093

Non-controlling interests

209,316

206,454

1,890,671

Contingent liabilities (Note 11)
Total net assets

2,061,447

1,941,206

18,620,244

Total liabilities and net assets¥6,072,519¥5,858,236$54,850,682

See accompanying notes to consolidated financial statements.

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Financial Section

Consolidated Statements of Income

Consolidated Statements of Changes in Net Assets

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020
Millions of yen

Thousands of
U.S. dollars (Note 2)

2021

2020

2021

¥1,207,594¥1,302,196$10,907,731

Cost of revenue from operations (Note 3)(889,830)(967,036)(8,037,488)

Selling, general and administrative expenses(93,370)(94,391)(843,377)

Operating income

224,394

240,768

2,026,866

Revenue from operations

Other income (expenses):
Interest and dividend income

16,966

8,178

153,254

Interest expenses(21,623)(22,100)(195,317)

307

229

2,773

Other, net (Note 12)(18,779)(3,127)(169,624)(23,128)(16,819)(208,914)

Profit before income taxes

201,265

223,949

1,817,952

Equity in earnings of affiliates

Income taxes (Note 7):
Current(44,647)(54,626)(403,282)

Deferred(9,548)(3,907)(86,248)(54,195)(58,533)(489,530)

147,069

165,415

1,328,422

ProfitProfit attributable to:(11,414)(16,963)(103,100)¥   135,655¥   148,451$ 1,225,322

Non-controlling interests
Shareholders of Mitsubishi Estate Co., Ltd.

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020
Millions of yen

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equityAccumulated othercomprehensive income
Unrealized
Deferred gain
holding(loss) on
gain (loss)
hedging
on securities
instruments¥142,023¥162,498¥   858,581¥  (5,278)¥1,157,824¥115,452¥   (64)

124

124(100,020)
16

249(44,112)
148,451(100,020)
13(35,925)(35,925)
79,527(1,883)(1,883)(1,948)38,56038,560¥118,08831
31¥(1,916)

Shareholders’ equity

Balance at April 1, 2019
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2020
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
	Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2021

(44,112)
148,451
(2)
(78)

(78)

1,418
124
142,147

1,543
164,041

131

130

1,418
104,258
962,840(100,004)(105,282)(40,155)
135,655
(25)
142

(17)
83

195

5,922
1,163,746
262(40,155)
135,655
(17)
58
142
195

131
¥142,279

326¥164,367

95,617¥1,058,457

66¥(105,216)

Land
revaluation
reserve

Accumulated other comprehensive income
Foreign
Retirement
Total
currency benefits liability
accumulatedtranslation
adjustments
other compreadjustments(Note 6) hensive income¥526,623¥(30,144)

96,141¥1,259,887

See accompanying notes to consolidated financial statements.
Millions of yen

Consolidated Statements of Comprehensive Income
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020
Millions of yen

Thousands of
U.S. dollars (Note 2)

2021

2020

2021

¥147,069¥165,415$1,328,422

Unrealized holding gain (loss) on securities

38,566(35,924)

348,352

Deferred gain (loss) on hedging instruments

352(2,039)3,181

Land revaluation reserve

(44)

—

(400)

ProfitOther comprehensive income (Note 21):

Foreign currency translation adjustments(26,143)

1,054(236,145)

Retirement benefits liability adjustments

7,309(5,103)66,023

Share of other comprehensive income of affiliates
accounted for by the equity method

57

(382)

520

20,097(42,400)

181,531¥167,166¥123,014$1,509,953

Shareholders of Mitsubishi Estate Co., Ltd.

¥157,093¥106,349$1,418,961

Non-controlling interests¥ 10,073¥ 16,665$    90,992

Total other comprehensive income (loss)
Comprehensive income (Note 21)
Total comprehensive income attributable to:

See accompanying notes to consolidated financial statements.

Balance at April 1, 2019
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
	Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2020
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
	Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2021¥    952¥612,819

Stockacquisitionrights

Noncontrollinginterests

Total
net assets¥302¥186,159¥1,957,105
249(44,112)
148,451(100,020)
13
(78)
1,418

—
526,623822
822(29,321)(5,116)(5,116)(4,163)(42,102)(42,102)570,716

(13)
(13)
288

20,294
20,294
206,454(21,821)(15,898)
1,941,206
262(40,155)
135,655
(17)
58
142
—
195

(206)
(206)
¥526,417(24,418)(24,418)¥(53,740)

7,327
7,327
¥3,163

21,294
21,294¥592,011

(56)
(56)
¥231

2,861
2,861
¥209,316

24,099120,241¥2,061,447

See accompanying notes to consolidated financial statements.

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Financial Section

Consolidated Statements of Changes in Net Assets (Continued)

Consolidated Statements of Cash Flows

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020
Millions of yen

Thousands of
U.S. dollars (Note 2)

2021

2020

2021

¥ 201,265
89,107(7,263)(3,021)
—
4,679
(307)
(322)
(1,553)(16,966)
21,602(3,157)56,443(21,048)(3,821)
7,837(53,726)
269,747
16,673(21,605)(57,400)
207,414¥ 223,949
84,941
4,064(1,690)2,344
10,844(229)
12(4,334)(8,178)
22,10015,166
148,161(43,217)
11,006
19,200(82,687)
401,4538,189(22,239)(45,636)
341,766$ 1,817,952
804,870(65,610)(27,290)—
42,269(2,773)(2,915)(14,031)(153,254)
195,128(28,523)
509,829(190,118)(34,517)70,790(485,286)
2,436,520
150,607(195,156)(518,479)
1,873,491

2,688(3,294)30,403(315,784)
14,186(16,712)(8,789)(297,303)

5,749(4,076)
105,810(331,722)
5,275(36,565)(21,910)(277,440)

24,284(29,754)274,620(2,852,360)
128,140(150,961)(79,392)(2,685,424)

27,400—252,874(163,891)
184,281(201,550)

29,19650,000249,967(230,736)
92,815(75,000)

247,499—2,284,115(1,480,364)
1,664,538(1,820,522)

(113)
(23)
(40,117)(8,434)50,425(1,237)(40,701)
213,008—¥ 172,307(350)(100,024)(44,103)(651)(28,886)(1,626)33,813
179,308(113)¥ 213,008(1,029)(211)(362,367)(76,184)
455,473(11,177)(367,637)
1,924,019—$ 1,556,382

Thousands of U.S.dollars (Note 2)

Shareholders’ equity

Balance at April 1, 2019
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
	Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2020
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
	Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2021

Commonstock

CapitalsurplusRetainedearnings$1,282,839$1,467,781$7,755,228

1,127

1,126

Treasurystock$ (47,676) $10,458,172(398,452)
1,340,908(19)(903,447)
144

(706)

13,9391,481,721

1,184

1,182

$1,042,838$    (585)(903,302)(950,979)(362,711)
1,225,322
(228)
1,291

(153)
758

53,493
10,511,666

Profit before income taxes
Depreciation and amortization(Gain) loss on sales of securities
Valuation loss on equity investments
Impairment loss
Equity in earnings of affiliates
Increase (decrease) in allowances
Increase (decrease) in liability for retirement benefits

12,813
941,729
8,696,957

Cash flows from operating activities(Gain) loss on sales or disposal of property and equipment

2,253(398,452)
1,340,908(903,447)
124
(706)

12,813
1,127
1,283,966

Total
shareholders’equityAccumulated othercomprehensive income
Unrealized
Deferred gain
holding(loss) on
gain (loss)
hedging
on securities
instruments

Interest and dividend income(324,497)(324,497)
718,341(17,017)(17,017)(17,602)

Interest expense(Increase) decrease in notes and accounts receivable(Increase) decrease in inventories(Increase) decrease in equity investments

2,366(362,711)
1,225,322
(153)
529
1,291

Increase (decrease) in notes and accounts payable
Increase (decrease) in lease deposits received
Other
		Subtotal
Interest and dividends received

1,762
1,184
$1,285,150

2,945$1,484,666

Interest paid

1,762
863,673$9,560,630

604
868,407$(950,374) $11,380,073

348,305
348,305$1,066,646

288
288$(17,314)

Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from sales of marketable securities

Thousands of U.S.dollars (Note 2)Landrevaluation
reserve

Balance at April 1, 2019
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
	Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2020
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
	Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2021

$4,756,783

Accumulated other comprehensive income
Foreign
Retirement
Total
currency benefits liability
accumulatedtranslation
adjustments
other compreadjustments(Note 6) hensive income$(272,283)$   8,601$5,535,354

Proceeds from sales of property and equipment
Stockacquisitionrights$2,728

Noncontrollinginterests

Total
net assets$1,681,506 $17,677,762
2,253(398,452)
1,340,908(903,447)
124(706)
12,813—
4,756,783

7,430
7,430
(264,853)(46,212)(46,212)(37,610)(380,296)(380,296)
5,155,057

(121)
(121)
2,607

183,315
183,315
1,864,822(197,101)(143,608)
17,534,154
2,366(362,711)
1,225,322
(153)
529
1,291
—
1,762

(1,863)(1,863)$4,754,919(220,565)(220,565)$(485,418)

66,182
66,182$ 28,572

192,347
192,347$5,347,405

Purchases of marketable securities

(513)
(513)
$2,09325,848217,682
25,8481,086,090$1,890,671 $18,620,244

Purchases of property and equipment
Proceeds from sales of investment securities
Purchases of investment securities
Other
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Net increase (decrease) in commercial paper
Increase in long-term borrowings
Repayment of long-term borrowings
Proceeds from issuance of corporate bonds
Repayment of corporate bonds	Purchase of investments in subsidiaries that do not
result in change in scope of consolidation
Net (increase) decrease in treasury stock
Cash dividends paid
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents of subsidiaries excluded from consolidation
Cash and cash equivalents at end of year (Note 15)
See accompanying notes to consolidated financial statements.

See accompanying notes to consolidated financial statements.

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Financial Section

Notes to Consolidated Financial Statements
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020

1

Significant Accounting Policies

a. Basis of preparation
The accompanying consolidated financial statements of Mitsubishi EstateCo., Ltd. (the “Company”) and its consolidated subsidiaries (collectively,
the “Group”) are prepared on the basis of accounting principles generally
accepted in Japan, which are different in certain respects as to theapplication and disclosure requirements of International Financial
Reporting Standards, and are compiled from the consolidated financial
statements prepared by the Company as required by the Financial
Instruments and Exchange Act of Japan.
The notes to the consolidated financial statements include information which may not be required under accounting principles generally
accepted in Japan but is presented herein as additional information.
As permitted by the Financial Instruments and Exchange Act ofJapan, amounts of less than one million yen have been rounded off. As aresult, the totals shown in the accompanying consolidated financial
statements (both in yen and U.S. dollars) do not necessarily agree withthe sums of the individual amounts.
Certain amounts in the prior year’s financial statements have been
reclassified to conform to the current year’s presentation.
b. Principles of consolidation
The accompanying consolidated financial statements include theaccounts of the Group that it controls directly or indirectly. Companies
over which the Company exercises significant influence in terms of theiroperating and financial policies have been included in the consolidated
financial statements on an equity basis.
The Company applies the “Partial Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries for Consolidated
Financial Statements” (Accounting Standards Board of Japan (ASBJ)
Practical Issues Task Force (PITF) No. 18). In accordance with this PITF,
the accompanying consolidated financial statements have been preparedby using the accounts of foreign consolidated subsidiaries prepared inaccordance with either IFRS or accounting principles generally acceptedin the United States as adjusted for certain items.
All significant intercompany balances and transactions have been
eliminated in consolidation.
c. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain
estimates and assumptions that affect the amounts reported in thefinancial statements and accompanying notes. The actual results could
differ from those estimates.
d. Foreign currency translation
Current and non-current monetary accounts denominated in foreign
currencies are translated into yen at the current rates.
The revenue and expense accounts of the foreign consolidated
subsidiaries are translated using the average rate during the year. Except
for shareholders’ equity, the balance sheet accounts are also translated
into yen at the rates of exchange in effect at the balance sheet date. The
components of shareholders’ equity are translated at their historicalexchange rates.
e. Cash equivalents
The Group considers all highly liquid investments that are readily
convertible into cash and have an original maturity of three months orless to be cash equivalents. Reconciliation between cash in the consolidated balance sheet and cash equivalents at March 31, 2021 and 2020 ispresented in Note 15.

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

f. Marketable securities and investment securities
Securities other than those of subsidiaries and affiliates are classified
into three categories: trading, held-to-maturity or other securities.
Trading securities are carried at fair value and held-to-maturity securities are carried at amortized cost. Marketable securities classified asother securities are carried at fair value with any changes in unrealized
holding gain or loss, net of the applicable income taxes, included directly
in shareholders’ equity. Non-marketable securities classified as othersecurities are carried at cost. Cost of securities sold is determined by themoving average method.
g. Inventories
Inventories are mainly stated at cost, determined by the identified cost
method. Net book value of inventories in the consolidated balance sheet
is written down when their net realizable values decline.
h. Property and equipment, depreciation and impairment
Property and equipment, except for land as discussed below, is stated atcost less accumulated depreciation. Depreciation of property, plant andequipment is calculated principally by the declining-balance method
based on the estimated useful lives and the residual value determined by
the Company, except for certain buildings of the Company and domestic
consolidated subsidiaries acquired on or after April 1, 1998 and facilities
attached to buildings and other non-building structures acquired on orafter April 1, 2016, which are depreciated by the straight-line method.
Property and equipment of foreign subsidiaries on which depreciation is
calculated by the straight-line method at rates determined based on theestimated useful lives of the respective assets. The Group has capitalized
the costs incurred for significant renewals and additions; however, costs
for maintenance and repairs are charged to income.
As of March 31, 2002, the Company revalued its land at fair value,
pursuant to Article 2 of the “Enforcement Ordinance for the Law Concerning
Revaluation Reserve for Land” and its amendments. The related unrealized
gain, net of applicable income taxes, has been recorded as “Landrevaluation reserve” in net assets.
The Group reviews their property and equipment (including land) for
impairment whenever events or changes in its business circumstancesindicate that the carrying amount of the assets may not be fully recoverable.
They perform cash flow analyses to determine if impairment exists.
If impairment is determined to exist, any related loss on impairment iscalculated based on the cash flow analyses.
The useful lives of property and equipment are summarized as follows:		
Buildings and structures
2 to 75 years
i. Intangible
Intangible primarily consist of goodwill and land use rights. Goodwill isstated on the basis of cost and is being amortized over a period of 5
years or an estimated economical period on a straight-line basis. A loss
is recognized if the fair value falls below the carrying amount. Land use
rights are stated on a cost basis.

j. Retirement benefits
Accrued retirement benefits and prepaid pension cost for employees
have been recorded mainly at the amount calculated based on theretirement benefit obligation and the fair value of the pension plan assets
as of balance sheet date.
The retirement benefit obligation for employees is attributed to eachperiod by the benefit formula method.
Actuarial gain or loss is amortized in the year following the year inwhich the gain or loss is recognized primarily by the straight-line method
over periods (mainly 1 year through 15 years), which are shorter than the
average remaining years of service of employees.
Certain foreign consolidated subsidiaries have adopted the corridor
approach for the amortization of actuarial gain and loss.
Prior service cost is being amortized as incurred by the straight-line
method over periods (mainly 1 year through 10 years), which are shorter
than the average remaining years of service of the employees.
k. Income taxes
Deferred tax assets and liabilities are determined based on the financial
statements and the tax bases of assets and liabilities, using the enacted
tax rates in effect for the year in which the temporary differences are
expected to reverse. Deferred tax assets are also recognized for theestimated future tax effects attributable to operating loss carry forwards.
Valuation allowances are established to reduce deferred tax assets if it ismore likely than not that some portion or all of the deferred tax assets
will not be realized.
l. Derivative financial instruments
The Company and certain of its consolidated subsidiaries utilize derivative financial instruments for the purpose of hedging their exposure toadverse fluctuations and changes in interest rates (interest rate swaps)
and foreign exchange rates (currency swaps), but do not enter into suchtransactions for speculative or trading purposes.
Derivative financial instruments are carried at fair value with any
changes in unrealized gain or loss charged or credited to operations,
except for those which meet the criteria for deferral hedge accounting
under which unrealized gain or loss is deferred as an asset or liability.
m. Revenue recognition
The consolidated statement of income reflect revenue from operations in
the following manner:(a) Revenue from the leasing of office space is recognized as rent
accrued over the leasing period.
(b) Revenue from sales of condominiums, residential houses and land isrecognized when the units are delivered and accepted by the customers.
Revenue from consignment commissions for residential sales earned
by the real estate service business segment is recognized at the timeof contract conclusion for services provided up to the conclusion andat the time of ownership transfer for services provided up to the transfer.
(c) Revenue from real estate brokerage is recognized when an underlying
lease agreement goes into force or the underlying units are delivered.
(d) Revenue of construction contracts, of which the percentage ofcompletion can be reliably estimated, is recognized by the percentageof-completion method. The percentage-of-completion method is
calculated at the cost incurred by the end of the consolidated fiscal
year as a percentage of estimated total cost. The completed-contract
method continues to be applied for other contracts for which thepercentage of completion cannot be reliably estimated.
(e) Revenue from finance lease transactions and related costs arerecognized upon receipt of lease payments.
(f) Other operating revenue is recognized on an accrual basis.

n. Appropriation of retained earnings
Under the Companies Act of Japan, the appropriation of retained earnings
with respect to a given fiscal year is made by resolution of the shareholders
at a general meeting held subsequent to the close of such fiscal year.
The accounts for that year do not, therefore, reflect such appropriations.
See Note 8 for more information.
o. Significant accounting estimates
1. Valuation of property and equipment(1)	Amount recorded in the consolidated financial statements for thecurrent fiscal year

Property and equipment, net
Impairment loss

Millions of yen

Thousands of
U.S. dollars¥4,179,893
4,679$37,755,334
42,269(2) Other information1)	Calculation method for the amount recorded in the consolidated
financial statements for the current fiscal year		The Group mainly owns real estate properties such as officebuildings, commercial facilities, outlet malls, hotels and logistics
facilities as property and equipment. For assets or asset groups
with indication that they may be impaired (impairment indicators),
when the sum of undiscounted future cash flows attributable tothem is lower than the carrying value, the Group values thoseassets and asset groups to the recoverable amount, and such
reduction is recognized as an impairment loss in accordance with
the Accounting Standard for Impairment of Fixed Assets.
			 Asset grouping in order to determine whether to recognize
impairment or to measure impairment losses is a minimum unitthat generates cash flows, which is substantially independent fromcash flows of other assets or asset groups. The recoverable
amount is the higher of net realizable value or value in use. Whilethe net realizable value is calculated based on the real estateappraised value or estimated sales price, the value in use iscalculated by discounting future cash flows.”
2) Major assumptions		In principle, the Group makes estimates for each individual
property. The estimation is made based on major assumptions byeach asset class, taking into account the condition of individual
properties.
			 The major assumptions used in estimation in the current fiscal
year are as follows.
		 • Offices
		“Average rents have recently been on a steady positive trend, whichis expected to continue in the next fiscal year. On the other hand,
the Group assumes that it will take longer than usual for vacancy
improvement as many companies are currently cautious about
floor expansion or relocation for expansion due to the impact of
COVID-19.”		 • Commercial facilities and outlet malls		Rents for commercial facilities and outlet malls are related totenant sales at commercial facilities and outlet malls, as they
include variable rents linked to tenant sales. In the current fiscal
year, tenant sales have decreased from the previous fiscal year due
to the impact of COVID-19. However, as it has been on an improving
trend recently, the Group expects the impact to be limited from thefollowing fiscal year onwards.
		 • Hotels
		Occupancy rates have been at low level due to the impact of
COVID-19 and it is expected to take a certain period of time foroccupancy rates to recover to the level the Group had before being
affected by COVID-19. The Group assumed that hotel demand
would recover to the pre-COVID-19 levels in around 2024, the sametiming as for the recovery in global air passenger demand.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

83

Financial Section		 • Logistics facilities		Logistics facilities have not been affected by COVID-19, and themarket has been favorable.
			 Therefore, the Group assumes that performance of logistics
facilities will continue to be steady in the next fiscal year andbeyond as is expected for the market trend.
		 • Redevelopment projects
		The Group is engaged in multiple redevelopment projects.
Compared with other development projects, redevelopment
projects are associated with potential risk of having lower profitability than originally expected because of delay in development or
subsequent modification of a development plan. Potential risk
includes risks such as being unable to obtain agreement fromother landowners in the area planned for redevelopment, and being
unable to obtain necessary governmental permission.
			 The Group comprehensively assesses these various risks forredevelopment projects. However, the redevelopment projects
currently underway are not in any situation that would decrease
their profitability from the initial estimates. The Group therefore
assumes that these redevelopment projects will progress while
maintaining their profitability.
3) Impact on the consolidated financial statements for the next fiscal year		Impairment losses are estimated based on the descriptions of 2)
Major assumptions.
			 Therefore, if major assumptions used for estimating impairment
losses worsen, additional impairment losses may be recognized in
the next fiscal year.

			 In addition, the land held for future development of residential
condominiums is associated with potential risk of having lower
profitability than originally expected because of delay in development or subsequent modification of a development plan which may
happen in a period before sales commence. Potential risk includes
risks such as a decline in sales price in the future, excessive supplyof residential condominiums due to increases in supply caused bycompetitors in neighboring areas, being unable to obtain necessary
governmental permission, delay in construction due to continuing
negotiation with existing residents in neighboring areas.
			 The Group comprehensively assesses these various risks forthe land held for future development.
			 However, the development projects currently underway are notin any situation that would decrease their profitability from theinitial estimates. The Group therefore assumes that such development projects will progress while maintaining their profitability.
3) Impact on the consolidated financial statements for the next fiscal year		The valuation of inventories is estimated based on the descriptionsof 2) Major Assumptions by the lower of cost or market (LCM)
method. Therefore, if there are changes in these major assumptions, it may result in additional write-down of inventories in thenext fiscal year.

2. Valuation of inventories(1) Amount recorded in the consolidated financial statements for thecurrent fiscal year

Equity investments

Real estate for saleLand and housing projects in progress
Write-down of inventories

Millions of yen

Thousands of
U.S. dollars¥ 88,116
267,563561$ 795,918
2,416,797
5,070(2) Other information1)	Calculation method for the amount recorded in the consolidated
financial statements for the current fiscal year		The Group values inventories at net realizable value when it islower than cost due to decline in profitability, and recognizes such
reduction as write-down of inventories in accordance with the
Accounting Standard for Measurement of Inventories. The net
realizable value is calculated by deducting the estimated additional
construction costs and estimated sales expenses from the estimated sales amount.
2) Major assumptions
		The major assumptions used in the estimation of net realizablevalue for the fiscal year are as follows.
			 Considering factors such as the latest distribution of sales byagreement date, contract prices and number of model units visitors,
the net realizable values of projects that are generally progressing inline with or better the initial business plan are estimated based on
the initial business plan. Meanwhile, the net realizable values ofprojects that have deteriorated from the initial business plan are
estimated based on a revised business plan, taking into consideration the conditions unique to each project such as the status ofprogress, market prices in the neighboring areas and incurrence ofadditional costs. With regard to the impact of COVID-19, the Groupassumes that the impact will be limited because current market
demand is steady, and inventory is decreasing.

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

3. Valuation of equity investments(1)	Amount recorded in the consolidated financial statements for thecurrent fiscal year
Millions of yen

Thousands of
U.S. dollars¥496,182$4,481,822(2)	Other information1)	Calculation method for the amount recorded in the consolidated
financial statements for the current fiscal year		The Group reduces the book value of equity investments withoutmarket price by a reasonable amount when the effective market
value of those equity investments declines significantly, andrecognizes such reduction as an impairment loss on equity
investments in accordance with the Accounting Standard for
Financial Instruments.
			 When calculating the effective market value, the Group values
assets held by investees for each purpose of holding.
2) Major assumptions
		The major assumptions are determined for assets held by investees according to the purpose of holding. For the details of assumptions made for the relevant assets, please refer to 1. Valuation ofproperty and equipment and 2. Valuation of inventories.
3) Impact on the consolidated financial statements for the next fiscal year		The estimation for impairment loss on equity investments is madebased on assumptions described in 2) Major assumptions.
Therefore, if there are changes in these major assumptions, it may
result in additional impairment losses on equity investments in thenext fiscal year.

p. Accounting standards issued but not yet effective
Accounting Standard and Implementation Guidance on Revenue
Recognition• On March 31, 2020, the ASBJ issued “Accounting Standard for Revenue
Recognition” (ASBJ Statement No. 29)• On March 26, 2021, the ASBJ issued “Implementation Guidance on
Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30)• On March 31, 2020, the ASBJ issued “Implementation Guidance on
Disclosures about Fair Value of Financial Instruments”(ASBJ guidance No.19)(1) Overview
	This is a comprehensive accounting standard for revenue recognition.
Specifically, the accounting standard establishes the following
five-step model that will apply to revenue from customers:
1. Identify the contract(s) with a customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in thecontract
5. Recognize revenue when (or as) the entity satisfies a performanceobligation(2) Scheduled date of adoption
	The Company expects to adopt the accounting standard andimplementation guidance from the beginning of the fiscal year ending
March 31, 2022.
(3)	Impact of the adoption of accounting standard and implementation
guidance	The information is not provided due to its immaterial impact on the
consolidated financial statements.

Accounting Standard and Implementation Guidance on Fair Value
Measurement• On July 4, 2019, the ASBJ issued “Accounting Standard for Fair Value
Measurement” (ASBJ Statement No. 30)• On July 4, 2019, the ASBJ issued “Accounting Standard for
Measurement of Inventories” (ASBJ Statement No. 9)• On July 4, 2019, the ASBJ issued “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10)• On July 4, 2019, the ASBJ issued “Implementation Guidance on
Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31)• On March 31, 2020, the ASBJ issued “Implementation Guidance on
Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No. 19)

2(1) Overview
	The International Accounting Standards Board (IASB) and the
Financial Accounting Standards Board (FASB) each provides detailed
guidance on fair value measurement, “IFRS13 Fair Value
Measurement” and “Accounting Standards Codification Fair Value
Measurement (Topic 820)”, with approximately identical content. Under
the circumstances, the ASBJ has issued “Accounting Standard and
Implementation Guidance on Fair Value Measurement” so thatJapanese Accounting Standards ensure international consistency
mainly in guidance and disclosure of fair value of financial
instruments.
		 It has fundamentally incorporated every prescription of IFRS13 toenhance the international comparability of financial statements byadopting globally accepted standards of the measurement, but fordomestically agreed practice it has also set exceptions for certain
items without impairing the comparability.
(2) Scheduled date of adoption
	The Company expects to adopt the accounting standard and implementation guidance from the beginning of the fiscal year ending
March 31, 2022.
(3)	Impact of the adoption of accounting standard andimplementation guidance	Impact of the adoption of the accounting standard and implementation
guidance on fair value measurement to consolidated financial
statements is to be determined.
q. Change in presentation
Changes due to the Application of the “Accounting Standard forDisclosure of Accounting Estimates”
The “Accounting Standard for Disclosure of Accounting Estimates” (ASBJ
Statement No. 31, March 31, 2020) has been applied from the fiscal year
under review, and “o. Significant Accounting Estimates” are provided inthese Notes to the Consolidated Financial Statements.
However, comparative information for the previous fiscal year is not presented
in accordance with the transitional treatment stipulated in the proviso ofparagraph 11 of the accounting standard.

U.S. Dollar Amounts

Translation of yen amounts into U.S. dollar amounts is included solely forconvenience, as a matter of arithmetic computation only, at the rate of¥110.71 = US$1.00, the approximate rate of exchange prevailing on

March 31, 2021. The inclusion of such amounts is not intended to imply
that yen amounts have been or could be readily converted, realized or
settled in U.S. dollars at the above or any other rate.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

85

Financial Section

3

Millions of yen

Inventories

Inventories at March 31, 2021 and 2020 are summarized as follows:

2020

2021

20,00010,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,00010,00040,00030,00010,00010,00020,00010,00010,00010,00010,00020,00020,00015,00015,00010,00015,000
—
5,175
1,111
3,784
2,924
1,255
1,508
15,00020,00010,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,00010,00040,000—10,00010,00020,00010,00010,00010,00010,00020,000—15,00015,00010,00015,000
1,550
—
1,111
3,784
2,924
1,255
1,508
—

180,652
90,32690,32690,32690,32690,32690,32690,32690,32690,326
135,489
90,32690,326361,304
270,978
90,32690,326
180,652
90,32690,32690,32690,326
180,652
180,652
135,489
135,489
90,326
135,489—
46,743
10,03834,187
26,414
11,34013,622
135,489

1.02% interest deferrable and early redeemable subordinated unsecured
bonds due 2076—

75,000—3ML+88bp interest deferrable and early redeemable subordinated unsecured
bonds due 2076—

75,000—

1.48% interest deferrable and early redeemable subordinated unsecured bonds due 2076

70,00030,00070,00030,000632,282
270,978

0.66% interest deferrable and early redeemable subordinated unsecured
bonds due 2081

80,000—722,608

0.97% interest deferrable and early redeemable subordinated unsecured
bonds due 2081

35,000—316,141

89,991
1,431,510
2,332,261(192,643)¥2,139,618

96,687
1,338,769
2,262,591(208,328)¥2,054,263

812,854
12,930,276
21,066,402(1,740,070)$19,326,332

0.643% unsecured bonds due 2024
Millions of yen

Thousands of U.S. dollars

2021

2020

2021

Real estate for sale

¥ 88,116¥ 72,256$   795,918

Land and housing projects in progress

267,563247,677

2,416,797

975

975

8,811

0.17% unsecured bonds due 2026

Other

8,179

8,395

73,878

0.27% unsecured bonds due 2026

Total

¥364,834¥329,305$3,295,406

2.305% unsecured bonds due 2027

Land held for development

Write-downs of inventories as a result of a decrease in profitability for the years ended March 31, 2021 and 2020 were ¥561 million ($5,070 thousand) and¥1,765 million, respectively, and recognized in cost of revenue from operations.

2.28% unsecured bonds due 2024
1.067% unsecured bonds due 2024
0.19% unsecured bonds due 2025
0.175% unsecured bonds due 2025

0.24% unsecured bonds due 2027
2.385% unsecured bonds due 2027
2.52% unsecured bonds due 2027

42.425% unsecured bonds due 2027

Other Investments

2.555% unsecured bonds due 2028

Other investments at March 31, 2021 and 2020 were as follows:

0.27% unsecured bonds due 2029
Millions of yen

Thousands of U.S. dollars

2021

2020

2021

Lease deposits¥136,478¥126,092$1,232,759

Long-term prepaid expenses

122,798

104,482

1,109,192

Other

34,66132,783313,083

Total¥293,938¥263,358$2,655,035

0.43% unsecured bonds due 2030
2.9% unsecured bonds due 2032
2.615% unsecured bonds due 2032
2.04% unsecured bonds due 2032
1.72% unsecured bonds due 2033
0.859% unsecured bonds due 2036
0.736% unsecured bonds due 2037

50.703% unsecured bonds due 2037

Short-Term Borrowings and Long-Term Debt

0.59% unsecured bonds due 2039
0.73% unsecured bonds due 2040

At March 31, 2021 and 2020, short-term borrowings and the current portion of long-term debt consisted of the following:
Millions of yen

Thousands of U.S. dollars

0.789% unsecured bonds due 2056

2021

2020

2021

¥141,785¥115,306$1,280,694

1.402% unsecured bonds due 2057

Commercial paper

50,00050,000451,630

Current portion of long-term debt

192,643

208,328

1,740,070

0.39% unsecured bonds inherited from DAINIPPON ENTERPRISE INC. due 2020

Total

¥384,428¥373,635$3,472,395

0.874% unsecured bonds under Euro MTN program due 2023

Loans, principally from banks

1.313% unsecured bonds due 2058
1.132% unsecured bonds due 2069

0.102% unsecured bonds under Euro MTN program due 2025
The weighted-average interest rates per annum on short-term borrowings outstanding at March 31, 2021 and 2020 were 0.51% and 0.44%, respectively.
Short-term borrowings are principally unsecured.

2.5% unsecured bonds due 2020
1.165% unsecured bonds due 2020
0.577% unsecured bonds due 2020
0.54% unsecured bonds due 2021
1.262% unsecured bonds due 2021
1.103% unsecured bonds due 2021
1.095% unsecured bonds due 2021
1.178% unsecured bonds due 2022
1.087% unsecured bonds due 2022
1.026% unsecured bonds due 2022
2.42% unsecured bonds due 2022
0.929% unsecured bonds due 2022
1.5% unsecured bonds due 2022
2.075% unsecured bonds due 2023
0.09% unsecured bonds due 2023

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

0.135% unsecured bonds under Euro MTN program due 2026
0.115% unsecured bonds under Euro MTN program due 2026
0.16% unsecured bonds under Euro MTN program due 2029

At March 31, 2021 and 2020, long-term debt consisted of the following:
Millions of yen

Thousands of U.S. dollars

2021

2020

2021

—
—
—
—
¥15,000
20,00010,00020,00020,00030,00010,00010,00010,00010,00020,000¥10,000
10,00015,00015,00015,00020,00010,00020,00020,00030,00010,00010,00010,00010,00020,000————$135,489
180,652
90,326
180,652
180,652
270,978
90,32690,32690,32690,326
180,652

Thousands of U.S. dollars

2021

0.25% unsecured bonds under Euro MTN program due 2029
1.04% unsecured bonds under Euro MTN program due 2050

1.33% interest deferrable and early redeemable subordinated unsecured
bonds due 2076

Loans from banks and insurance companies:
SecuredUnsecuredLess current portion

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

87

Financial Section

The aggregate annual maturities of long-term debt subsequent to March 31, 2021 are summarized as follows:Year ending March 31,

6Millions of yen

Thousands of U.S. dollars

2022¥   192,643$ 1,740,070

2023

154,732

1,397,634

2024

248,261

2,242,444

2025

137,934

1,245,909

2026

114,450

1,033,787

2027 and thereafter

1,484,239

13,406,556

Total¥2,332,261$21,066,402

The assets pledged as collateral for short-term borrowings of ¥100 million ($903 thousand) and long-term debt of ¥89,991 million($812,854 thousand) at March 31, 2021 were as follows:

Retirement Benefit Plans

The Company and most of its domestic consolidated subsidiaries have either funded or unfunded defined benefit plans, defined contribution plans andlump-sum payment plans in the form of a defined benefit plan. The Company has adopted a retirement benefit trust for the lump-sum payment plan anddefined benefit plan. Some U.S. consolidated subsidiaries have adopted defined benefit plans.
The simplified method, which assumes the retirement benefit obligation to be equal to the benefits payable if all eligible employees voluntarily terminated their employment at the fiscal year end, has been adopted in accounting for defined benefit plans for some consolidated subsidiaries and theCompany’s executive officers.
The changes in the retirement benefit obligation during the years ended March 31, 2021 and 2020 are as follows:
Millions of yen

Thousands of U.S. dollars

2021

2020

2021

¥140,885¥138,562$1,272,564

Service cost

5,605

5,389

50,631

Interest cost

750

883

6,777

Actuarial gain and loss

3,510

2,537

31,708Retirement benefit obligation at the beginning of the year

Millions of yen

Thousands of U.S. dollars

Buildings and structures¥194,614$1,757,879

Retirement benefits paid

(6,140)(6,145)(55,463)

Machinery and equipment

1,353

12,229Translation adjustments(1,186)(224)(10,714)

231,751

2,093,3202

22¥427,722$3,863,451

Land
Other property and equipment
Total

Other
Retirement benefit obligation at the end of the year

28

(117)

260

¥143,454¥140,885$1,295,764

Millions of yen

Thousands of U.S. dollars

The changes in plan assets during the years ended March 31, 2021 and 2020 are as follows:
The following borrowings are non-recourse loans at March 31, 2021 and 2020, which are secured by collaterals as the sole source of recovery.
2021

2020

2021

¥134,975¥135,633$1,219,177

Millions of yen

Thousands of U.S. dollars

2021

2020

2021

Current portion of long-term borrowings¥10,934¥13,637$ 98,764

Expected return on plan assets

3,188

3,086

28,801Long-term borrowings

35,13032,627317,317

Actuarial gain and loss

13,353(4,054)

120,619

Total¥46,064¥46,264$416,082

Contributions by the Company

3,492

4,428

31,542Retirement benefits paid

(3,705)(3,840)(33,471)

Translation adjustments

(869)

(153)

(7,857)

The assets pledged as collateral for the above non-recourse loans at March 31, 2021 and 2020 were as follows:
Millions of yen

Thousands of U.S. dollars

2021

2020

2021

Buildings and structures¥32,562¥32,344$294,121

Land

51,35955,559463,907

Construction in progress

3,288

3,683

29,702¥87,209¥91,588$787,731

Total

Plan assets at the beginning of the year

Other
Plan assets at the end of the year

17

(124)

161

¥150,452¥134,975$1,358,974

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheet as of March 31, 2021 and2020 for the Company’s and the consolidated subsidiaries’ defined benefit plans:Millions of yen

Thousands of U.S. dollars

2021

2020

2021

Funded retirement benefit obligation¥ 123,175¥ 121,079$ 1,112,594

Plan assets at fair value(150,452)(134,975)(1,358,974)(27,276)(13,896)(246,380)

Unfunded retirement benefit obligation

20,27819,806

183,170

Net liability for retirement benefits in the consolidated balance sheet(6,997)

5,910(63,210)

Liability for retirement benefits

27,123

26,919244,999

Asset for retirement benefits(34,370)(21,336)(310,453)

Other current liabilities
Net liability for retirement benefits in the consolidated balance sheet

248

327

2,243

¥  (6,997)¥   5,910$    (63,210)(*) The accrued employees’ retirement benefits recognized by MEC Group International Inc., a consolidated subsidiary, were included in “Other current liabilities.”

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The components of retirement benefit expense for the years ended March 31, 2021 and 2020 are as follows:

7
Millions of yen

2021

2020

2021

Service cost

¥ 5,605¥ 5,389$ 50,631

Interest cost

750

883

6,777

Expected return on plan assets(3,188)(3,086)(28,801)

Amortization of actuarial loss

430

(805)

3,887

Amortization of prior service cost

16

(65)

149

188

Other
Retirement benefit expenses¥ 3,802

Income Taxes

Thousands of U.S. dollars

204

1,702

¥ 2,520$ 34,346(*) Retirement benefit expenses for consolidated subsidiaries adopting the simplified method, which assumes the retirement benefit obligation to be equal to the benefits payable if all eligible employees
voluntarily terminated their employment at the fiscal year-end, are included in “Service cost.”

The components of retirement benefits liability adjustments included in other comprehensive income (before tax effect) for the years ended March 31,
2021 and 2020 are as follows:
Millions of yen

Thousands of U.S. dollars

2021

2020

2021

Prior service cost¥     3¥   (69)$    32

Actuarial gain and loss

10,627(7,318)95,992

Total¥10,630¥(7,388)$96,025

The components of retirement benefits liability adjustments included in accumulated other comprehensive income (before tax effect) as of March 31,
2021 and 2020 are as follows:

The effective tax rates reflected in the consolidated statement of income for the years ended March 31, 2021 and 2020 differ from the effective statutory
tax rates for the following reasons:
2021

2020

30.62%

30.62%

Different tax rates applied(1.03)(1.37)

Expenses not deductible for income tax purposes

0.11

0.23

Revenues deductible for income tax purposes(1.61)(0.22)

Change in valuation allowance(0.28)(0.33)

Undistributed earnings of affiliates

0.21

0.14

Equity income

0.19(0.28)—(2.04)

Statutory tax rate
Increase (decrease) in income taxes resulting from:

Gain on amortization of negative goodwill
Effect of enacted changes in tax laws and rates on Japanese tax

0.10

0.06

Other

(1.37)(0.68)

26.93%

26.14%

Effective tax rate

The significant components of deferred tax assets and liabilities as of March 31, 2021 and 2020 were as follows:
Millions of yen

Thousands of U.S. dollars

2021

2020

2021

¥   3,322¥   2,621$    30,010

8,737

12,01878,925

Deferred tax assets:

Millions of yen

Thousands of U.S. dollars

2021

2020

2021

Unrecognized prior service cost¥  (82)¥    (88)$  (741)

Liability for retirement benefits

Unrecognized actuarial gain and loss

3,550

(7,073)32,069Valuation loss on inventories

887

1,259

8,013

$31,327

Unrealized loss on property and equipment

60,47460,969546,238

Unrealized loss on property and equipment by consolidation

10,402

10,576

93,961

Loss on valuation of investment securities

3,597

3,050

32,497

Loss on valuation of equity investments

4,300

1,414

38,841

Total¥3,468¥(7,162)

The fair values of plan assets, by major category, as a percentage of total plan assets as of March 31, 2021 and 2020 are as follows:
Bonds
StocksGeneral accounts

Net operating loss carry forwards

2021

2020

14%

15%

Land revaluation reserve

23,90323,903215,91451%

Accrued bonuses

3,412

3,245

30,822

10%

Other

54%
9%

Other

23%

24%

Total

100%

100%

(*) Approximately 43% and 42% of total plan assets were held in the retirement benefit trust as of March 31, 2021 and 2020, respectively.

Total gross deferred tax assets

67,03569,507605,504

186,073

188,568

1,680,731

Valuation allowance(80,949)(77,891)(731,184)

Total deferred tax assets

105,124

110,677

949,546

Deferred tax liabilities:
The expected return on plan assets has been estimated based on the anticipated allocation to each asset class and the expected long-term returns
on assets held in each category.
The assumptions used in accounting for the above plans were as follows:
2021

2020

Discount rates

0.0%–3.24%

0.0%–4.20%

Expected rates of return on plan assets

0.92%–6.50%

1.0%–6.50%

0.4%–4.0%

0.4%–4.0%

Rates of salary increase

Reserves under Special Taxation Measures Law(68,226)(69,400)(616,260)

Land revaluation reserve(266,333)(266,314)(2,405,688)

Unrealized gain on property and equipment by consolidation(110,595)(111,366)(998,962)

Unrealized gain on property and equipment(53,242)(53,242)(480,919)

Unrealized gain on securities(50,812)(35,208)(458,969)(47,278)(38,793)(427,051)

Total deferred tax liabilities(596,489)(574,326)(5,387,852)

Net deferred tax liabilities¥(491,364)¥(463,648)$(4,438,305)

Other

The required contribution to defined contribution plans by the Company and its consolidated subsidiaries for the years ended March 31, 2021 and2020 are ¥567 million ($5,126 thousand) and ¥533 million, respectively.

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8

Shareholders’ Equity

The Companies Act of Japan provides that an amount equal to 10% of theamount to be disbursed as distributions of capital surplus (other than thecapital reserve) and retained earnings (other than the legal reserve) betransferred to the capital reserve and the legal reserve, respectively, until
the sum of the capital reserve and the legal reserve equals 25% of thecapital stock account. The capital reserve amounted to ¥164,367 million

11 Contingent Liabilities($1,484,666 thousand), and the legal reserve amounted to ¥21,663
million ($195,680 thousand) at March 31, 2021. Such distributions can bemade at any time by resolution of the shareholders or by the Board of
Directors if certain conditions are met, but neither the capital reserve nor
the legal reserve is available for distributions.

At March 31, 2021, the Company and its consolidated subsidiaries had the following contingent liabilities:(1) Guarantee of loans

Guarantees of house purchasers’ loans from banks

Millions of yen

Thousands of U.S. dollars¥31,667$286,037

Millions of yen

Thousands of U.S. dollars¥63,387$572,550(2) Guarantee for business undertakings
9

Amounts per ShareBusiness undertaking guarantees
Yen

U.S. dollars

2021

2020

2021

Basic

¥101.34¥108.64$0.91

Diluted101.33108.63

0.91

31.00

33.00

0.28

Yen

U.S. dollars

2021

2020

2021

¥1,383.47¥1,295.83$12.49Year ended March 31

Net income:Cash dividends applicable to the year

As of March 31,

Net assets
Basic net income per share was computed based on the net income
available for distribution to shareholders of common stock and theweighted average number of shares of common stock outstanding during
the year, and diluted net income per share was computed based on the
net income available for distribution to the shareholders and the weighted
average number of shares of common stock outstanding during eachyear after giving effect to the dilutive potential of shares of common stock
to be issued upon the exercise of warrants and stock subscription rights.

Amounts per share of net assets are computed based on net assets
available for distribution to the shareholders and the number of shares ofcommon stock outstanding at the year end.
Cash dividends per share represent the cash dividends proposed by
the Board of Directors as applicable to the respective years together with
the interim cash dividends paid.

The Company, MEC Group International Inc., Mitsubishi Estate Asia Pte. Ltd. and MEA Commercial Holdings Pte. Ltd. provide business undertaking
guarantees for property development projects in proportion to their share.
Mitsubishi Estate Asia Pte. Ltd. and MEA Commercial Holdings Pte. Ltd. provide business undertaking guarantees for property development projects.
The amount exceeding the proportion of their share is collateralized or guaranteed by the joint venture.

12 Other Income (Expenses)

The components of “Other, net” in “Other income (expenses)” for the years ended March 31, 2021 and 2020 were as follows:
Millions of yen

Gain on sales of fixed assets
Gain on sales of investment securities
Gain on amortization of negative goodwill
Gain on contribution for construction
Loss on disposal of fixed assets
Loss related to retirement of fixed assets
Loss on valuation of investment securities
Loss on transfer of businessImpairment loss(*1)

10 Leases

Loss on liquidation of subsidiaries
Loss on infectious disease(*2)

Future minimum lease payments subsequent to March 31, 2021 on noncancelable operating leases are summarized as follows:

Other, net

Year ending March 31

Millions of yen

Thousands of U.S. dollars

2022¥  7,931
256,257¥264,189$   71,640
2,314,675$2,386,316

2023 and thereafter
Total

The Company and its consolidated subsidiaries lease office buildings and commercial properties and earn income on these leases. Future minimum
lease income subsequent to March 31, 2021 from noncancelable operating leases is summarized as follows:Year ending March 31

2022
2023 and thereafter
Total

Millions of yen

Thousands of U.S. dollars¥   360,178
1,266,339¥1,626,518$ 3,253,352
11,438,350$14,691,702(*1) Impairment loss
The Company recorded consolidated impairment losses for the following asset groups for the fiscal
year ended March 31, 2021:
Major Application
Leased assets, etc.
(total 25 groups)

Category

Location

Land, Buildings, etc.

Nishinomiya, Hyogo Prefecture, etc.

Asset grouping for the Group was made based on a minimum unit that generates cash flows, which
is substantially independent from cash flows of other assets or asset groups. Company condominiums are regarded as shared assets. As a result, for the fiscal year ended March 31, 2021, the bookvalues of 25 asset groups, consisting of those for which the market prices fell considerablycompared with the book values due to the decline of land prices and those for which profitability
decreased considerably due to fallen rent levels or deteriorated market conditions, etc., werereduced to the respective recoverable amounts and such reductions were recorded as impairment
losses in the amount of ¥4,679 million ($42,269 thousand).
The breakdown of such impairment losses was ¥3,105 million ($28,048 thousand) in land andtrusted land, and ¥1,574 million ($14,221 thousand) in buildings and structures.
The recoverable amounts of asset groups are measured using net sale value or value in use, andthe net sale value is principally expressed as an appraised value by a real estate appraiser. Future
cash flows mainly discounted at a rate of 5% are used to compute the value in use.

Thousands of U.S. dollars

2021

2020

2021

¥ 13,582
3,021——(6,448)(2,099)——(4,679)(13,826)(5,698)(2,630)¥(18,779)¥   5,144
1,711
14,915
4,480(7,682)(5,445)(2,344)(3,240)(10,844)——178¥   (3,127)$ 122,683
27,290——(58,247)(18,965)——(42,269)(124,885)(51,472)(23,757)$(169,624)

The Company recorded consolidated impairment losses for the following asset groups for the fiscal
year ended March 31, 2020:
Major Application
Leased assets, etc.
(total 17 groups)

Category

Location

Land, Buildings, etc.

Nishinomiya, Hyogo Prefecture, etc.

Asset grouping for the Group was made based on a minimum unit that generates cash flows, which
is substantially independent from cash flows of other assets or asset groups. Company condominiums are regarded as shared assets. As a result, for the fiscal year ended March 31, 2020, the bookvalues of 17 asset groups, consisting of those for which the market prices fell considerablycompared with the book values due to the decline of land prices and those for which profitability
decreased considerably due to fallen rent levels or deteriorated market conditions, etc., werereduced to the respective recoverable amounts and such reductions were recorded as impairment
losses in the amount of ¥10,844 million.
The breakdown of such impairment losses was ¥3,128 million in land and ¥7,715 million inbuildings and structures.
The recoverable amounts of asset groups are measured using net sale value or value in use, andthe net sale value is principally expressed as an appraised value by a real estate appraiser. Future
cash flows mainly discounted at a rate of 5% are used to compute the value in use.
(*2) Loss on infectious disease
In response to the request to refrain from business and declaration of a state of emergency issued
by the national and local governments, the Group has taken measures such as closing commercial
facilities and hotels to prevent the spread of COVID-19.
As a result, some expenses (depreciation, rents, etc.) incurred by commercial facilities and hotels
during the closed period are recorded as loss on infectious disease.

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13 Financial Instruments

Overview(1) Policy for financial instruments
In consideration of plans for capital investment, the Group raises funds
mainly through bank borrowings and bond issues. In terms of fund manage­
ment, the Group makes every effort to avoid market risks by emphasizing
liquidity and shortening the fund management period. The Group uses
derivatives for the purpose of hedging exposure to interest rates, reducing
interest expenses, and hedging the risk of fluctuations in foreign exchange
rates and does not enter into derivatives for speculative purposes.
(2) Types of financial instruments and related risk
Trade receivables – notes and accounts receivable – are exposed tocredit risk in relation to customers. Trade receivables denominated inforeign currencies, which arise from overseas operation, are exposed toforeign currency exchange risk.
Marketable securities and investment securities are exposed tomarket risk. Those securities are composed of mainly held-to-maturity
debt securities and the shares of common stock of other companies withwhich the Group has business relationships.
Equity investments are composed of mainly preferred equity
investments in special purpose companies under the Law concerning
Liquidation of Assets, investments in real estate investment trusts andinvestments in silent partnerships for special purpose companies. They
are exposed to credit risks of issuers, risks of fluctuations in interest
rates and market prices, respectively.
Lease and guarantee deposits for leased assets are exposed to credit
risks of customers.
Substantially all trade payables–accounts and notes payable–havepayment due dates within one year. Some of them denominated inforeign currencies are exposed to foreign currency exchange risk.
Borrowings and bonds are taken out principally for the purpose of
making capital investments and the repayment dates of the long-term
debt extend up to 60 years from the balance sheet date. Certain longterm debt with variable interest rates is exposed to interest rate fluctuation risk. However, to reduce such risk for long-term debt bearing
interest at variable rates, the Group utilizes derivative transactions(interest rate swaps) as hedging instruments.
Derivative transactions include interest rate swaps, currency swaps
and forward foreign exchange contracts. The Group also enters into
interest rate swap transactions to fix interest expense for long-term debt
bearing interest at variable rates and to reduce interest rate fluctuation
risk. Some of the consolidated subsidiaries enter into interest swap andcurrency swap transactions in accordance with the same policies andpurposes adopted by the Company.

(3) Risk management for financial instruments(a)	Monitoring of credit risk (the risk that customers or counterparties
may default)	In accordance with the internal policies for managing credit risk of theGroup arising from receivables and lease and guarantee deposits,
each related division in each business segment monitors credit
worthiness of their main customers periodically, and monitors due
dates and outstanding balances by individual customer. In addition,
the Group is making efforts to identify and mitigate risks of bad debts
from customers who are having financial difficulties.
(b)	Monitoring of market risks (the risks arising from fluctuations inforeign exchange rates, interest rates and others)	In order to mitigate the interest rate risk for loans payable and bonds
bearing interest at variable rates, the Group may also enter into
interest rate swap and currency swap transactions.
		 For marketable securities and investment securities, the Group
periodically reviews the fair values of such financial instruments andthe financial position of the issuers (business partners). In addition,
the Group continuously evaluates whether securities other than thoseclassified as held-to-maturity should be maintained taking into accounttheir fair values and relationships with the issuers (business partners).
(c)	Monitoring of liquidity risk (the risk that the Group may not be able tomeet its obligations on scheduled due dates)	Based on the report from each division, the Group prepares andupdates its cash flow plans on a timely basis and stabilizes liquidity to
manage liquidity risk.
(4) Supplementary explanation of the estimated fair value of financial
instruments
The fair value of financial instruments is based on their quoted market
price, if available. When there is no quoted market price available, fairvalue is reasonably estimated. Since various assumptions and factors
are reflected in estimating the fair value, different assumptions andfactors could result in different fair value.

Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance sheet as of March 31, 2021 and unrealized gains (losses) are shown in the following
table. The following table does not include financial instruments for which it is extremely difficult to determine the fair value. (Please refer to Note B below).
Millions of yen

Thousands of U.S. dollars

2021
Carrying
Value

1) Cash on hand and in banks2) Notes and accounts receivable–trade
		 Allowance for doubtful receivables (*1)

Estimated
Fair Value¥   170,040 ¥   170,040

Estimated
Fair Value

Difference— $ 1,535,905 $ 1,535,905—

Difference

52,031

469,981(553)
51,477

Carrying
Value(5,001)51,477

—

2,865

2,873

¥     8

231,524

231,524

—

60

594

533

18,11818,118—464,980

464,980—

25,88525,958$     73

2,091,273

2,091,273

—

550

5,368

4,817

163,661

163,661—3) Securities and investment securities
		 (i) Held-to-maturity debt securities
		 (ii) Other securities
		 (iii) Investments in subsidiaries and affiliates
4) Equity investments
Total assets¥   474,088 ¥   474,630¥    541 $ 4,282,256 $ 4,287,146$  4,890

1) Notes and accounts payable–trade¥    60,507 ¥    60,507— $   546,540 $   546,540—

2) Short-term borrowings

141,785

141,785—

1,280,694

1,280,694—

3) Current portion of long-term borrowings

127,643

127,643—

1,152,951

1,152,951—

4) Commercial paper

50,00050,000—451,630

451,630—

5) Current portion of long-term bonds

65,00065,000—587,119587,119—745,759

770,126¥24,367

6,736,151

6,956,252$220,1007) Long-term borrowings

1,393,858

1,414,828

20,96912,590,180

12,779,590

189,409

Total liabilities¥2,584,554 ¥2,629,891¥45,336 $23,345,267 $23,754,778$409,510

6) Long-term bonds

Millions of yen

2020
Carrying
Value

Estimated
Fair Value

1) Cash on hand and in banks¥   207,896 ¥   207,896

2) Notes and accounts receivable–trade    50,340

		 Allowance for doubtful receivables(*1)      (294)    50,046

Difference—

50,046—¥    141

3) Securities and investment securities
		 (i) Held-to-maturity debt securities     5,916

6,058

		 (ii) Other securities   177,971

177,971—		 (iii) Investments in subsidiaries and affiliates        60

346

285

4) Equity investments    15,264

15,264—

Total assets¥   457,156 ¥   457,583¥    426

1) Notes and accounts payable–trade¥    66,368 ¥    66,368—

2) Short-term borrowings   115,306

115,306—

3) Current portion of long-term borrowings   156,778

156,778—

4) Commercial paper    50,000

50,000—5) Current portion of long-term bonds    51,550

51,550—6) Long-term bonds¥31,044   775,584

806,628

7) Long-term borrowings

1,278,678

1,312,176

33,497

Total liabilities¥2,494,266 ¥2,558,809¥64,542(*1) The value of notes and account receivable-trade is shown at net value, after deducting allowance for doubtful accounts.

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Note A: Methods to determine the estimated fair value of financial instruments and other mattersrelated to securities and derivative transactions
AssetsCash on hand and in banks
			Since these items are settled in a short period of time, their carrying value approximates fairvalue.
Notes and accounts receivable–trade			Since these items are settled in a short period of time, their carrying value approximates fairvalue.
Marketable securities and investment securities			The fair value of stocks is based on quoted market prices. The fair value of debt securities ismainly based on prices provided by the financial institutions making markets in thesesecurities. For information on securities classified by holding purpose, please refer to Note 14.
“Marketable Securities and Investment Securities.”
Equity investments
			 The fair value of equity investments is based on quoted market prices.
Liabilities
Notes and accounts payable–trade			Since these items are settled in a short period of time, their carrying value approximates fair value.
Short-term borrowings
			Since these items are settled in a short period of time, their carrying value approximates fair value.
Current portion of long-term borrowings
			Since these items are settled in a short period of time, their carrying value approximates fair value.
Commercial paper			Since these items are settled in a short period of time, their carrying value approximates fair value.
Current portion of bonds
			Since these items are settled in a short period of time, their carrying value approximates fair value.
Bonds
			 The fair value of bonds is based on the quoted market price.
Long-term borrowings
			Since variable interest rates of certain long-term borrowings are determined based on current
interest rates in a short period of time, their carrying value approximates fair value. The fairvalue of long-term borrowings with fixed interest rates is based on the present value of thetotal of principal and interest discounted by the interest rates to be applied if similar new
borrowings were entered into.
Derivatives transactions
			 Please refer to Note 16. “Derivatives and Hedging Activities.”

Note B: Financial instruments for which it is extremely difficult to determine the fair value
Millions of yen

Thousands of
U.S. dollars(i) Unlisted stocks (*1)

¥ 52,171$  471,248(ii) Equity investments (*2)

478,0634,318,161

136,478

1,232,759

466,891

4,217,248

2021(iii) Lease and guarantee deposit receivables (*3)(iv) Lease and guarantee deposit payables *

( 4)

2020

¥ 60,677(ii) Equity investments (*2)

435,256(iii) Lease and guarantee deposit receivables (*3)

126,092(iv) Lease and guarantee deposit payables (*4)

459,177

Government bonds
Other
		Subtotal(*1) Because no quoted market price is available and it is extremely difficult to determine the fairvalue, unlisted stocks are not included in the above table.
(*2) Because it is extremely difficult to determine the fair value for equity investments which are notlisted and have no quoted market price, they are not included in the above table.
(*3) Because no quoted market price for lease and guarantee deposit receivables for rental
properties is available and calculation of the actual period of duration from lease initiation toevacuation is difficult, it is extremely difficult to estimate a reasonable amount of cash flow andtherefore they are not included in the above table.
(*4) Because no quoted market price for lease and guarantee deposit payables for rental properties
is available and calculation of the actual period of duration from lease initiation to evacuation isdifficult, it is extremely difficult to estimate a reasonable amount of cash flow, and therefore
they are not included in the above table.

Cash on hand and in banks
Notes and accounts receivable–tradeMarketable securities and investment securities:
Held-to-maturity debt securities
National and local government bonds
Corporate bonds
Other
Other marketable securities with maturities:
National and local government bonds
Other
Total

Unrealized
Gain (Loss)

Cost

Fair Value

Unrealized
Gain (Loss)¥57,519—9,233
66,752¥218,474—
18,120236,595¥160,955—
8,887
169,842$519,553 $1,973,397 $1,453,844———
83,399163,672
80,273602,952 2,137,070 1,534,117

13,135——
2,242
15,377¥82,130

10,940——2,108
13,048¥249,643(2,195)——(133)(2,328)¥167,513

118,645
98,818(19,826)
—
—
—
—
—
—
20,252
19,045(1,206)
138,897
117,864(21,033)$741,849 $2,254,934 $1,513,084

Cost

Fair Value

Securities whose cost exceeds their fair value:
Equity securities
Government bonds
Corporate bonds
Other
		Subtotal
Total

2020
Cost

Fair Value

Unrealized
Gain (Loss)¥43,37824
7,785
51,188¥153,20425
15,265
168,495¥109,826
0
7,480
117,306

27,668——
1,747
29,416¥80,604

23,127——
1,613
24,740¥193,236(4,541)——(134)(4,675)¥112,631

Securities whose fair value exceeds their cost:
Equity securities
Thousands of U.S. dollars

Due in One
Year or Less

Due after One
Year through FiveYears

Due after Five
Years through Ten
Years

Due after
Ten Years

Due in One
Year or Less

Due after One
Year through FiveYears

Due after Five
Years through Ten
Years

Due after
Ten Years¥170,040
52,031

—
—

—
—

—
—

$1,535,905
469,981

—
—

—
—

—
—

24
—
2,527

¥253
—
—

¥ 35
—
—

¥25
—
—

216
—
22,829$2,293
—
—

$316
—
—

$225
—
—

—
2,100
¥226,723

—
628
¥882

—
74
¥109

—
—
¥25

—
18,974$2,047,908—
5,679$7,972

—
672
$988

—
—
$225

Due in One
Year or Less

Due after One
Year through FiveYears

Due after Five
Years through Ten
Years

Due after
Ten Years¥207,896
50,340

—
—

—
—

—
—

50
—
5,528

¥232
—
—

¥ 70
—
—

¥25
—
—

25
1,604
¥265,445

—
214
¥447

—
414
¥484

—
—
¥25

Government bonds
Other
		Subtotal
Securities whose cost exceeds their fair value:
Equity securities
Government bonds
Corporate bonds
Other
		Subtotal
Total

Millions of yen

As of March 31, 2020

Thousands of U.S. dollars

Millions of yen

Millions of yen

Cash on hand and in banks
Notes and accounts receivable–tradeMarketable securities and investment securities:
Held-to-maturity debt securities
National and local government bonds
Corporate bonds
Other
Other marketable securities with maturities:
National and local government bonds
Other
Total

Millions of yen

2021

Equity securities

Note C: Redemption schedule for receivables and marketable securities with maturities

As of March 31, 2021

Marketable and investment securities classified as other securities at March 31, 2021 and 2020 are summarized as follows:

Securities whose fair value exceeds their cost:

Millions of yen(i) Unlisted stocks (*1)

14 Marketable Securities and Investment Securities

Proceeds from sales of securities classified as other securities totaled ¥4,233 million ($38,235 thousand) and ¥4,272 million for the years ended
March 31, 2021 and 2020, respectively. Gross realized gains were ¥3,021 million ($27,290 thousand) and ¥1,711 million for the years ended March 31,
2021 and 2020, respectively.
The Company and its consolidated subsidiaries recognized ¥2,314 million and ¥29 million impairment losses on investment securities and investments in affiliates, respectively, for the year ended March 31, 2020. Disclosure for impaired marketable and investment securities as of March 31, 2021
is not provided due to its low materiality.
Marketable debt securities classified as held-to-maturity securities at March 31, 2021 and 2020 are summarized as follows:
Millions of yen

Thousands of U.S. dollars

Amortized Cost

Fair Value

Unrealized
Gain (Loss)

2021
Note D: The redemption schedule for bonds and long-term borrowings
Millions of yen

As of March 31,2021
Corporate bonds
Long-term borrowings
Total

Due after One
Due in One
Year throughYear or Less
Two Years¥ 65,000
127,643¥192,643¥ 90,000
64,732¥154,732

Due after Two
Years throughThree Years¥ 25,175
223,086¥248,261

Due afterThree Years Due after Four
through Four Years throughYears
Five Years¥ 51,111
86,823¥137,934¥ 10,000
104,450¥114,450

Due after
Five Years¥  569,472
914,766¥1,484,239
Millions of yen

As of March 31,
2020
Corporate bonds
Long-term borrowings
Total

Due after One
Due in One
Year throughYear or Less
Two Years¥ 51,550
156,778¥208,328¥ 65,000
128,773¥193,773

Due after Two
Years throughThree Years¥ 90,000
63,507¥153,507

Due afterThree Years Due after Four
through Four Years throughYears
Five Years¥ 20,000
207,283¥227,283¥ 51,111
87,760¥138,871

Due after
Five Years¥   549,472
791,354¥1,340,827

Thousands of U.S. dollars

Due after One
Due in One
Year throughYear or Less
Two Years$  587,119
1,152,951$1,740,070$  812,934
584,699$1,397,634

Due after Two
Years throughThree Years$  227,395
2,015,048$2,242,444

Due afterThree Years Due after Four
through Four Years throughYears
Five Years$  461,669
784,240$1,245,909$   90,326
943,461$1,033,787

Due after
Five Years$ 5,143,825
8,262,730$13,406,556

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Fair Value¥   338—338¥   346
—
346

¥8
—
8

$ 3,056—
3,056$ 3,129
—
3,129

$73
—
73

—
—
2,527
2,527
¥2,865

—
—
2,527
2,527
¥2,873

—
—
—
—
¥8

—
—
22,82922,829$25,885——
22,82922,829$25,958

—
—
—
—
$73

Debt securities whose fair value exceeds their cost:
Government bonds
Corporate bonds
		Subtotal
Debt securities whose cost exceeds their fair value:
Government bonds
Corporate bonds
Other
		Subtotal
Total

96

Amortized Cost

Unrealized
Gain (Loss)

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

97

Financial Section

Calculation method of fair value is based on the data obtained from financial institutions.

Millions of yen

2020
Amortized Cost

Fair Value

Unrealized
Gain (Loss)¥  388—388¥  529
—
529

¥141
—
141

—
—
5,528
5,528
¥5,916

—
—
5,528
5,528
¥6,058

—
—
—
—
¥141

Debt securities whose fair value exceeds their cost:
Government bonds
Corporate bonds
		Subtotal
Debt securities whose cost exceeds their fair value:
Government bonds
Corporate bonds
Other
		Subtotal
Total(*) The estimated fair value of interest rate swap contracts is included in the estimated fair value of long-term borrowings since amounts in such derivative contracts accounted for by the short-cut method
are handled together with long-term borrowings (including current portion of long-term borrowings) that are subject to hedge accounting.

(3) Interest- and currency-related transactions
Millions of yen

Thousands of U.S. dollars

2021
Subject to hedge
accounting

Class of transactions

Interest rate and currency swap
contracts by short-cut method andallocation methodPayment in JPY and receipt in USD
Fixed rate payment and floating rate receipt
Total

Notional
AmountDue after
One Year

Fair Value

Notional
AmountDue after
One Year

Fair Value¥49,400¥49,400¥43,400¥43,400¥(4,211) $446,214¥(4,211) $446,214$392,018$392,018$(38,043)$(38,043)

Long-term borrowings

Millions of yen

2020

15 Supplemental Cash Flow Information

Class of transactions

The following table represents a reconciliation of cash and cash equivalents as of March 31, 2021 and 2020:
Millions of yen

Cash on hand and in banks
Time deposits with maturities of more than three months
Marketable securities with maturities of three months or less
Cash and cash equivalents

Thousands of U.S. dollars

2021

2020

2021

¥170,040
(260)
2,527
¥172,307¥207,896
(916)
6,028
¥213,008$1,535,905(2,352)
22,829$1,556,382(1) Currency-related transactions
Millions of yen

Thousands of U.S. dollars

2021

Currency swap contracts byallocation method
Payment in JPY and receipt in USD
Payment in JPY and receipt in EUR
Payment in JPY and receipt in AUD
Total

Subject to hedge accounting

Notional
AmountDue after
One Year¥19,388¥19,388¥15,924¥15,924

Fair Value

Notional
AmountDue after
One Year

Fair Value

¥816
¥816

$175,131$175,131$143,838$143,838$7,371$7,371

Corporate bonds andLong-term borrowings

Millions of yen

2020
Class of transactions

Currency swap contracts byallocation method
Payment in JPY and receipt in USD
Payment in JPY and receipt in EUR
Payment in JPY and receipt in AUD
Total

Subject to hedge accounting

Interest rate and currency swap
contracts by short-cut method andallocation methodPayment in JPY and receipt in USD
Fixed rate payment and floating rate receipt
Total

Notional
AmountDue after
One Year

Fair Value¥23,936¥23,936¥19,388¥19,388

¥(59)
¥(59)

Corporate bonds andLong-term borrowings¥(6,215)¥(6,215)

The reportable segments of the Group are components for which discrete
financial information is available and whose operating results are
regularly reviewed by the board of directors and other committees tomake decisions about resource allocation and to assess performance.
Business performances are aggregated according to business areas thatconsist of multiple business groups and defined as organizational units
having common business objectives and management responsibilities
within the Group, and such aggregated business areas are disclosed asreportable segments.
The Company and its consolidated subsidiaries are primarily engaged
in the real estate business. Their business segments are classified interms of the nature of each operation or service and consist of following
segments: (1) Commercial Property Business; (2) Residential Business;(3) International Business; (4) Investment Management Business;(5) Architectural Design & Engineering Business and Real Estate Services
Business; (6) Other businesses.

Due to the partial changes in the organization of the Company, theCompany changed the segment classification from the fiscal year underreview. The building business, the lifestyle property business, and thehotel & airport business, which had been hitherto independent reporting
segments, were integrated into a new segment, the commercial property
business. Furthermore, to expand and strengthen the profitability of theinternational business, we will formulate optimal portfolio strategies for eachregion and deploy a structure for the integrated promotion of businesses
for each asset type. In connection with these changes, the international
residential business, which had been included in the residential businesssegment, was transferred into the international business segment. In
addition, the architectural design & engineering business and the realestate services business, which had been hitherto independent reporting
segments, were integrated into a new segment, the architectural design& engineering business and real estate services business.
Segment information for the year ended March 31, 2020 has been
restated to reflect these changes.

2021
Reportable segments

Subject to hedge
accounting

Notional
AmountDue after
One Year

Short-term borrowingsand Long-term borrowings ¥ 67,661 ¥ 64,045
Long-term borrowings

Fair Value

Thousands of U.S. dollars

Subject to hedge
accounting

Interest rate swap contracts
Fixed rate payment and floating rate receipt

Long-term borrowings
Long-term borrowings

Due after
One Year

Fair ValueRevenue, operating income andassets by reportable segment
Revenue from:
External customers
Intersegment or transfers
Total revenue

149,080 128,354¥216,742 ¥192,400(*) 1,346,586 1,159,378(*)¥(2,251) $1,957,749 $1,737,875 $(20,334)
2020

Class of transactions

Notional
Amount¥(2,251) $  611,162 $  578,496 $(20,334)

Millions of yen

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

¥49,400¥49,400

Calculation method of fair value is based on the data obtained from financial institutions.

2021

98

¥49,400¥49,400

Millions of yen

Millions of yen

Interest rate swap contracts by
short-cut methodFixed rate payment and floating rate receipt
Total

Fair Value

Long-term borrowings(2) Interest-related transactions

Interest rate swap contracts
Fixed rate payment and floating rate receipt
Interest rate swap contracts by
short-cut methodFixed rate payment and floating rate receipt
Total

Due after
One Year

The reportable segment information of the Company and its consolidated subsidiaries for the years ended March 31, 2021 and 2020 are
summarized as follows:

Calculation method of fair value is based on the data obtained from financial institutions.

Class of transactions

Notional
Amount17 Segment Information

16 Derivatives and Hedging Activities

Class of transactions

Subject to hedge
accounting

Notional
AmountDue after
One Year

Fair Value¥ 73,430 ¥ 68,731¥(2,759)

171,801 149,055¥245,232 ¥217,786(*)¥(2,759)

Segment income (loss)
Segment assets
Other items
Depreciation and amortization
Capital expenditures

Commercial
Property
Business

Residential
Business

International
Business

Investment
Management
Business

Architectural Design &Engineering Businessand Real Estate
Services Business

Subtotal

Other

Total

¥   665,257¥361,335¥114,399¥20,505¥44,746¥1,206,243¥ 1,351

7,184

1,419

57

1,694

11,31821,674

7,704

672,441

362,755

114,457

22,19956,064

1,227,917

9,055

Eliminations
or Corporate

Consolidated¥1,207,594—¥1,207,594

29,378¥  (29,378)—

1,236,973(29,378)

1,207,594

180,775

24,06837,932

5,966

959

249,703(1,089)248,613(24,219)

224,394¥4,167,287¥673,344¥929,869¥77,586¥56,067¥5,904,155¥25,367¥5,929,523¥142,995¥6,072,519

71,713

4,120

8,599

1,359

909

86,701130

86,832

2,274

89,107¥   196,728¥ 73,169¥ 71,341¥   114¥   989¥  342,342¥   349¥  342,692¥ 10,939¥  353,631

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

99

Financial Section

Thousands of U.S. dollars

Millions of yen

2 021

2020

Reportable segments

Commercial
Property
BusinessRevenue, operating income andassets by reportable segment
Revenue from:
External customers
Intersegment or transfers
Total revenue
Segment income (loss)
Segment assets
Other items
Depreciation and amortization
Capital expenditures$ 6,009,010

Residential
Business$3,263,800

International
Business$1,033,324

Reportable segments

Investment
Management
Business

Architectural Design &Engineering Businessand Real Estate
Services Business$185,213$404,175

Subtotal$10,895,524

Other$ 12,207

Total

Eliminations
or Corporate$10,907,731—

Commercial
Property
Business

Residential
Business

International
Business

Investment
Management
Business

Architectural Design &Engineering Businessand Real Estate
Services Business

Subtotal

Other

Total

Eliminations
or Corporate

Consolidated

Amortization of goodwill—¥   386¥ 66¥1,929¥  208¥ 2,591—¥ 2,591—¥ 2,591

Balance of goodwill—¥4,476¥138¥7,149¥5,361¥17,126—¥17,126—¥17,126

Amortization of negative goodwill¥14,839

—

—

—

—

¥14,839—¥14,839—¥14,839

Balance of negative goodwill¥97,377

—

—

—

—

¥97,377—¥97,377—¥97,377

Consolidated$10,907,731

64,892

12,824521

15,301

102,232

195,773

69,591

265,365$ (265,365)—

6,073,903

3,276,624

1,033,846

200,515

506,408

11,091,297

81,799

11,173,096(265,365)

10,907,731

1,632,877

217,404

342,627

53,8978,664

2,255,471(9,844)2,245,627(218,760)

2,026,866$37,641,472$6,082,057$8,399,150$700,809$506,433$53,329,924$229,135$53,559,060$1,291,622$54,850,682

647,762

37,214

77,675

12,277

8,212

783,1421,180

784,322

20,548804,870$ 1,776,969$   660,914$  644,401$  1,030$  8,933$ 3,092,249$  3,154$ 3,095,404$    98,810$ 3,194,215
Millions of yen

2 020

Product and service information
Refer to reportable segment information.
Geographical area information
Geographical area information on net sales for the year ended March 31,
2021 and 2020 are as follows:

Reportable segments

Millions of yen

Commercial
Property
Business

Residential
Business

International
Business

Investment
Management
Business

Architectural Design &Engineering Businessand Real Estate
Services Business

Subtotal

Other

Total

Eliminations
or Corporate

Consolidated¥  715,213¥384,506¥134,495¥19,106¥47,913¥1,301,235¥   960¥1,302,196—¥1,302,196

8,498

1,031

(320)

2,210

9,214

20,635

7,782

28,418¥  (28,418)—

Total revenue

723,712385,538

134,175

21,316

57,1281,321,871

8,743

1,330,614(28,418)

1,302,196

Segment income (loss)

187,855

24,32046,156

4,467

2,407

265,207(2,018)263,188(22,420)

240,768¥4,135,091¥570,282¥887,179¥71,829¥55,737¥5,720,119¥13,270¥5,733,389¥124,847¥5,858,236

Revenue, operating income andassets by reportable segment
Revenue from:
External customers
Intersegment or transfers

Segment assets
Other items
Depreciation and amortization
Capital expenditures

2021

United States

70,927

3,946

6,646

1,333

868

83,72498

83,822

1,119

84,941¥  171,254¥ 56,665¥135,137¥   673¥ 1,591¥  365,322¥   454¥  365,776¥  8,856¥  374,633

Impairment losses of the Company and its consolidated subsidiaries on fixed assets by reportable segments for the years ended March 31, 2021 and2020 are summarized as follows:
Millions of yen

2 021
Reportable segments

Impairment loss

Japan

Commercial
Property
Business

Residential
Business

International
Business

Investment
Management
Business

Architectural Design &Engineering Businessand Real Estate
Services Business

Subtotal

Other

Total

Eliminations
or Corporate

Consolidated¥2,513¥849¥1,035—¥9¥4,408¥271¥4,679—¥4,679EuropeAsia
Total

Thousands of U.S.
dollars

2020¥1,081,090
87,86722,78515,852¥1,207,594¥1,157,340
90,492
43,672
10,690¥1,302,196

2021$ 9,765,064
793,669
205,809
143,188$10,907,731$22,707$7,671$9,352—$89$39,821$2,448$42,269—

18

Rental Properties

The Company and some of its consolidated subsidiaries own office buildings for lease, commercial facilities for lease and others in Tokyo and otherareas including overseas countries (the United States and the United Kingdom, etc.) for the purpose of obtaining revenue from leases.
Some office buildings for lease in Japan are regarded as real estate including space used as rental properties since they are used by the Company
and some of its consolidated subsidiaries.
The carrying value on the consolidated balance sheet as of March 31, 2021 and the fair value of these rental properties and real estate including
space used as rental properties are as follows:
Millions of yen

2 020

Impairment loss

Rental properties
Real estate including spaceused as rental properties

Reportable segments

Commercial
Property
Business

Residential
Business

International
Business

Investment
Management
Business

Architectural Design &Engineering Businessand Real Estate
Services Business

Subtotal

Other¥9,160¥1,731——¥9¥10,902—

Total

Eliminations
or Corporate

Consolidated¥10,902¥(57)¥10,844

The following tables present the amortization and balance of goodwill as of and for the years ended March 31, 2021 and 2020 by reportable segment:
Millions of yen

Thousands of U.S. dollars

2021
Carrying value$42,269
Millions of yen

Major customer information
The Company does not have any major customers whose share ofrevenue from operations accounted for more than 10% of revenue fromoperations shown on the consolidated income statement. Accordingly,
major customer information has been omitted.

(*) Net sales is classified into countries or regions based on the location of the Group companies.

Thousands of U.S. dollars

Impairment loss

Geographical area information on property, plant, and equipment for theyear ended March 31, 2021 and 2020 are omitted since property andequipment located in Japan accounted for more than 90% of equipment on
the consolidated balance sheet.

Fair value

As ofApril 1, 2020

As of
As of
Net Change March 31, 2021 March 31, 2021

¥3,502,759¥62,830¥3,565,590

545,580(176)

545,404

Carrying value

Fair value

As ofApril 1, 2020

As of
As of
Net Change March 31, 2021 March 31, 2021

¥7,441,369 $31,639,056$567,525 $32,206,581 $67,214,968

919,848

4,928,014(1,591)

4,926,423

8,308,629

1. The carrying value represents the acquisition cost less accumulated depreciation and accumulated impairment loss.
2. The fair value is based on the following:(1) The fair value of real estate in Japan is calculated by the Company based mainly on the Real Estate Appraisal Standards.
(2) The fair value of real estate in overseas countries is appraised principally by local real estate appraisers.

2 021
Reportable segments

Amortization of goodwill
Balance of goodwill
Amortization of negative goodwill
Balance of negative goodwill

The carrying value on the consolidated balance sheet as of March 31, 2020 and the fair value of these rental properties and real estate including
space used as rental properties are as follows:

International
Business

Investment
Management
Business

Architectural Design &Engineering Businessand Real Estate
Services Business

Subtotal

Other

Total

Eliminations
or Corporate

Consolidated¥64¥2,146¥  377¥ 3,022—¥ 3,022—¥ 3,022¥4,117¥69¥4,678¥4,984¥13,848—¥13,848—¥13,848

—

—

—

—

—

—

—

—

—

—

¥97,453

—

—

—

—

¥97,453—¥97,453—¥97,453

Commercial
Property
Business

Residential
Business¥    75¥  358—

Thousands of U.S. dollars

2 021
Reportable segments

Amortization of goodwill
Balance of goodwill
Amortization of negative goodwill
Balance of negative goodwill

100

Commercial
Property
Business

Residential
Business

International
Business

Investment
Management
Business

Architectural Design &Engineering Businessand Real Estate
Services Business

Subtotal

Other$    682$ 3,239$582$19,384$ 3,408$ 27,297——$37,192$624$42,255$45,018$125,091

—

—

—

—

—

—

—

$880,257

—

—

—

—

$880,257

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Total

Eliminations
or Corporate

Consolidated$ 27,297—$ 27,297$125,091—$125,091

—

—

—

—

—

$880,257—$880,257

Millions of yen

2020
Carrying value

Rental properties
Real estate including spaceused as rental properties

Fair value

As ofApril 1, 2019

As of
As of
Net Change March 31, 2020 March 31, 2020

¥3,408,738¥ 94,021¥3,502,759¥7,356,741

633,983(88,403)545,580

914,103

1. The carrying value represents the acquisition cost less accumulated depreciation and accumulated impairment loss.
2. The fair value is based on the following:(1) The fair value of real estate in Japan is calculated by the Company based mainly on the Real Estate Appraisal Standards.
(2) The fair value of real estate in overseas countries is appraised principally by local real estate appraisers.
(3) The impact of the novel coronavirus disease (COVID-19) on the estimate was calculated on certain assumptions based on earnings forecasts, but
the impact on the estimate is immaterial.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

101

Financial Section

The income or loss from rental properties and real estate including space used as rental properties for the years ended March 31, 2021 and 2020 are
as follows:
2021

Rental properties
Real estateincluding spaceused as rental
properties

Millions of yen

Thousands of U.S. dollars

2020

2021

Lease
income(*)

Lease cost

Lease
income(loss), net

Other, net

Leaseincome(*)

Lease cost

Lease
income(loss), net

Other, net

Leaseincome(loss), net

Other, net¥475,309¥304,405¥170,903¥ 5,622¥472,275¥303,281¥168,994¥(21,246) $4,293,285 $2,749,578 $1,543,706$ 50,787

43,63934,2899,349(2,026)43,90332,36911,534

4,012

Lease
income(*)

394,180

Lease cost

309,725

84,45420 Related Party Transactions

The Company has related party transactions with key management personnel of the Company and major individual shareholders.
The corresponding balances as of March 31, 2021 and 2020 and the amounts of these transactions for the years then ended are summarized as follows:
Millions of yen(18,308)(*) Lease income excludes that from real estate including space used as rental properties that was used by the Company and some of its consolidated subsidiaries for leasing service and operating management.

Thousands of U.S. dollars

2021

Type

Name

Officer’s close
relatives

NoboruNishigai’s
close relatives

Occupation

Ownership
ratio
of votingshares—Relationshipwiththe related
party

Nature oftransaction

Transaction
amountAccount

Balanceoutstandingat year end

Transaction
amountAccount

Balanceoutstandingat year end

Contract for
construction of
housing and Construction of—otherhousing

¥20

—

—

$189

—

—

1. Transaction amounts do not include consumption tax..
2. Transaction terms are determined in consideration with market prices, the same as general transactions.

19

Asset Retirement Obligations

Millions of yen(1) Asset retirement obligations presented in the consolidatedbalance sheet
1. Outline of asset retirement obligations
Asset retirement obligations include obligations of restoration related toleasehold and rental contracts.
2. Calculation method for asset retirement obligations
Asset retirement obligations are calculated based on the remaining contract
years as an expected use period with a discount rate between 0.0% and 2.3%.
3. Changes in asset retirement obligations during the years ended
March 31, 2021 and 2020 are as follows:

2021

Balance at the beginningof the year

Thousands of
U.S. dollars

2020

2021

¥6,236¥5,859$56,331

656

1,854

5,932

Increase due to the acquisitionof property and equipment
Adjustments due to the elapseof time70

Decrease due to the fulfillmentof asset retirement obligations

(20)

74
(13)

635
(188)

73

(1,538)660¥7,015¥6,236$63,370

Other
Balance at the end of the year

Millions of yen1)	Obligation to remove asbestos that is used for some properties andequipments in a particular way required by the Ordinance on
Preventing Asbestos Hazards
	For such properties, the Company has an obligation to remove
asbestos at demolition of buildings. However, no demolition has takenplace in the past other than those related to redevelopment or otherprojects involving many other business associates. It is therefore
difficult to reasonably estimate the timing to fulfill such obligation
based on the physical useful life of the assets caused by aging and it
is impossible to estimate the timing without specific business plans.
Although the Company has been voluntarily conducting asbestos
removal work when that is feasible due to such as termination oftenancy, it is impractical to make a reasonable estimation of progressof such voluntary removal work based on the actual record of thetenancy termination and of the remaining amount of asbestos atdemolition. Moreover, it is difficult to distinguish costs of asbestos
removal from total costs of demolition. Although the Company madethe best estimation taking into account all the evidence available asof March 31, 2021, these obligations are excluded from recognition ofasset retirement obligations since the probability of obligations interms of scope and amount was not reasonably estimated.

(2) Asset retirement obligations not recognized in the consolidatedbalance sheet
As stated below, certain obligations are excluded from recognition ofasset retirement obligations.

2)	Obligation of restoration based on some real estate rental
agreements
	For some commercial facilities, the Company has an obligation ofrestoration at the termination of leasehold rental agreements.
However, the timing to fulfill the obligation is uncertain since it ispractically possible to continue to use those facilities by re-signing
contracts and some contracts set forth a special provision to reduce
the possibility to fulfill the obligation. Furthermore, given its businessstrategies and the current business environment, the Company
intends to continue its operation and not to fulfill the obligation.
Although the Company made the best estimation taking into accountall the evidence available as of March 31, 2021, these obligations are
excluded from recognition of asset retirement obligations since theprobability of the obligations in terms of scope and amount could not
be reasonably estimated.

2020

Type

Director

Name

Occupation

Ownership
ratio
of votingsharesRepresentative
Corporate
Executive
Junichi
Officer of theTanisawa
Company

Relationshipwiththe related
party

Nature oftransaction

Transaction
amountAccount

Balanceoutstandingat year end

Contract for
construction of
housing and Construction of
0.00%
other
housing¥89——

1. Transaction amounts do not include consumption tax.
2. Transaction terms are determined in consideration with market prices, the same as general transactions.

21 Other Comprehensive Income

The following table presents reclassification and tax effects allocated to each component of other comprehensive income for the years ended
March 31, 2021 and 2020:
Millions of yen

Thousands of U.S. dollars

2021

2020

2021

$ 521,915

Unrealized holding gain (loss) on securities:¥ 57,781¥(49,089)

Reclassification adjustments for gains and losses included in net income(3,003)(1,627)(27,125)

Amount before tax effects

54,778(50,717)494,789

Tax effects(16,212)

14,787(146,437)

Unrealized holding gain (loss) on securities

38,566(35,929)

348,352

Amount arising during the year(60)

(2,307)(542)

Reclassification adjustments for gains and losses included in net income

565

(548)

5,110

Amount before tax effects

505(2,856)

4,568

Tax effects

(153)

816

(1,386)

Deferred gain (loss) on hedging instruments

352(2,039)

3,181

(44)

—

(400)

Amount arising during the year

(26,143)

1,208(236,142)

Amount before tax effects(26,143)

1,208(236,142)

(0)

(153)

(2)

(26,143)

1,054(236,145)

10,184(6,517)

91,988

446

(870)

4,036

Amount before tax effects

10,630(7,388)96,025

Tax effects(3,321)

2,284(30,001)

Retirement benefits liability adjustments

7,309(5,103)66,023

Amount arising during the year

Deferred gain (loss) on hedging instruments:

Land revaluation reserve:
Tax effects
Foreign currency translation adjustments:

Tax effects
Foreign currency translation adjustments
Retirement benefits liability adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income

Share of other comprehensive income of companies accounted forby the equity method:Amount arising during the year
Total other comprehensive income (loss)

102

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

57

(382)

520

¥ 20,097¥(42,400)$ 181,531

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

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Financial Section

Independent Auditor’s Report
22 Business Combination

Business Divestiture(1) Outline of business divestiture
i. Name of successor company
		 Angel Forest Resort Ture Inc.
ii. Divested business
		 Resort Park Izu Atagawa and its related businesses.
iii. Objective of business divestiture		The Company began selling villa lots in the Izu Atagawa area in the
middle of 1960s, and has continued villa sales and related businesses
for about 50 years. On the other hand, Himawari Inc. has subsidiarycompanies specializing in resort hotels and sales and management ofvilla, and is promoting a management strategy to expand its businesses
scale and improve the quality of its services, and is actively developing
its businesses in the Izu area through M&A.
			 Since Himawari Inc. has a deep understanding of villa sales andrelated businesses and is expected to improve services to customers,
the Company judged that Himawari Inc. is suitable as an externaltransfer destination of its businesses. In order to select and toconcentrate the Company’s business domain, the Company split thesebusinesses to Angel Forest Resort Ture Inc. Angel Forest Resort Ture
Inc is a wholly owned subsidiary of Himawari Inc. established tosucceed these businesses.
			 Himawari Inc. established Angel Group, Co., Ltd. through a stocktransfer on September 1, 2020 which has a stock holdings function,and Himawari Inc. changed its trade name to Angel Real Estate Inc.
iv. Date of business divestiture		 August 1, 2020v.	Other matters with regard to the transaction including legal form
Absorption-type company split with the Company as the split company
and Angel Forest Resort Ture Inc. as the successor company.

(2) Outline of accounting treatmenti. Amount of loss on transfer recorded
		 Amount: ¥3,251 million ($29,365 thousand)ii. Fair book value of assets and liabilities transferred
Current assets
Fixed assets
Total assets

Current liabilities
Fixed liabilities
Total liabilities

Millions of yen

Thousands of
U.S. dollars¥2,770140¥2,910$25,020
1,268$26,289

Millions of yen

Thousands of
U.S. dollars

¥12
5
¥17

$116
45
$162

iii. Accounting treatment
		The amount equivalent to shareholders’ equity related to the transferred business, together with other expenses related to the businessdivestiture, in the amount of ¥3,240 million was recorded as “Loss ontransfer of business” in “Other, net” in the previous fiscal year and theamount of ¥10 million ($93 thousand) was recorded as “Other, net” in“Other, net” in the current fiscal year.
(3) Reportable segment in which the divested business was included	The divested business is classified in “Other,” not included in reportable segment.
(4)	Estimated operating performance of divested business included in the
consolidated statement of income for the fiscal year ended March 31,
2021
		 Revenue from operations: ¥59 million ($538 thousand)		 Operating profit:¥5 million ($52 thousand)23 Subsequent Events

Purchase of treasury stock
The Company resolved at the meeting of its Board of Directors held on
April 8, 2021 on matters regarding the purchase of treasury stock, basedon the provisions of Article 156 of the Companies Act, as applied byreplacing the relevant terms pursuant to the provisions of Article 165,
paragraph 3 of the same Act, as follows:(1)	Reason for purchase of treasury stock
To improve capital efficiency and shareholder value as part of thecapital policy in the long-term management plan
(2) Details of purchasei. Type of shares subject to purchase
		 Common stockii. Total number of shares to be purchased		22,000,000 shares (maximum) (1.64% of total issued shares excluding
treasury stock)iii. Total amount for purchase of shares		 ¥30,000 million (maximum)
iv. Purchase period
		 From April 9, 2021 to March 31, 2022
v. Method of purchase		 Open-market purchase on the Tokyo Stock Exchange

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Corporate Data
Principal Mitsubishi Estate Group Companies
Consolidated subsidiary

Affiliate accounted for by the equity method

Innovation andBusiness Transformation GroupMEC Agri Co., Ltd *Medicha Co., Ltd.*MEC Business System Solutions Co., Ltd.

Share ofvotingrights (%)

Address

Phone number

Business activities

2270, Hirakawa-cho, Midori-ku, Chiba,
Chiba Prefecture 266-0004
BLUE CINQ POINT Bldg. C-B1, 5-3-18 Minami Aoyama,
Minato-ku, Tokyo 107-0062
13F, Marunouchi Kitaguchi Building, 6-5, Marunouchi
1-chome, Chiyoda-ku, Tokyo 100-0005+81-43-312-6555

Production of agricultural products, sales

90.0

Residence Management Business

Address

Phone number

Business activities+81-3-3287-5519

Meditation and operation of studios

100.0

Mitsubishi Jisho Community Holdings Co., Ltd.

6-1, Sanban-cho, Chiyoda-ku, Tokyo 102-0075+81-3-3556-3888

Mitsubishi Jisho Community Co., Ltd.

6-1, Sanban-cho, Chiyoda-ku, Tokyo 102-0075+81-3-5213-6100

Izumi Park Town Service Co., Ltd.

7-2, Takamori, Izumi-ku, Sendai, Miyagi Prefecture981-3203+81-22-378-0022

Business management and operations
related to the condominium managementbusiness
Overall condominium and building
management, renovations, and related
businesses
Comprehensive management of Izumi ParkTown

+81-3-3214-9300

Development and management of
information systems and software

100.0

Higashinihon Kaihatsu Co., Ltd.

1442-23, Yosawa Oyamacho, Sunto-gun, Shizuoka
Prefecture 410-1326+81-550-78-3211

Sakura Golf Development Co., Ltd.

670 Soshiyama, Uchida, Sakura, Chiba Prefecture 285-0077 +81-43-498-6630* Outside the scope of consolidation

Commercial Property Business
Office Building Management Business
Mitsubishi Jisho Property Management Co., Ltd.

Marunouchi Nakadori Building, 2-3, Marunouchi 2-chome,
Chiyoda-ku, Tokyo 100-0005
Hokuryo City Service Co., Ltd.
Hokkaido Building, 4-1, Kita 2-jou Nishi, Chuo-ku, Sapporo,
Hokkaido 060-0002
Yuden Building Kanri Co., Ltd.
Yurakucho Denki Building, 7-1, Yurakucho 1-chome,
Chiyoda-ku, Tokyo 100-0006
Nan Shan Plaza Property Management Co., Ltd.* 100-7, Songren Road, Xinyi District, Taipei, 11073, Taiwan+81-3-3287-4111+81-11-242-7411+81-3-3211-7833+886-2-2723-8009

Comprehensive building operation andmanagement
Management and operation of buildings,
commercial facilities, and sporting facilities
Operation and management of the
Yurakucho Denki Building
Property management of Nanshan Plaza

100.0

70.0

* Outside the scope of consolidation

Sunshine City Corporation
Tokyo Kotsu Kaikan Co., Ltd.

World Import Mart Building, Sunshine City, 1-1,
Higashi-Ikebukuro 3-chome, Toshima-ku, Tokyo 170-8630
Tokyo Kotsu Kaikan, 10-1, Yurakucho 2-chome, Chiyoda-ku,
Tokyo 100-0006+81-3-3989-3321

Sanno Grand Building, 14-2, Nagatacho 2-chome,
Chiyoda-ku, Tokyo 100-0014+81-3-3504-0610

Operation and management of building
garages and sale of various gasoline products

54.9

Cooling and heating supply business in the
Marunouchi, Otemachi, Yurakucho, andother districts
Cooling and heating supply business in the
Higashi-Ikebukuro district
Cooling and heating supply business in the
Osaka OAP district
Cooling and heating supply business in the
Yokohama Minato Mirai district

65.6+81-3-3212-2931

Management of Sunshine City and otherbuildings
Management of Tokyo Kotsu Kaikan andother buildings

Tokyo Garage Co., Ltd.

Marunouchi Heat Supply Co., Ltd.

Marunouchi Kitaguchi Building, 6-5, Marunouchi 1-chome,
Chiyoda-ku, Tokyo 100-0005+81-3-3287-2288

Ikebukuro District Heating and Cooling Co., Ltd.

World Import Mart Building, Sunshine City, 1 HigashiIkebukuro 3-chome, Toshima-ku, Tokyo 170-8630
OAP Tower, 8-30, Tenmabashi 1-chome, Kita-ku, Osaka,
Osaka Prefecture 530-6004
1-45, Sakuragicho 1-chome, Naka-ku, Yokohama,
Kanagawa Prefecture 231-0062+81-3-3988-6771

Minato Mirai 21 D.H.C. Co., Ltd.

+81-6-6881-5170+81-45-221-0321

Tokyo Ryutsu Center Inc.

Rockefeller Group International, Inc.

1271 Avenue of the Americas, 24th Fl. New York, NY 10020
U.S.A.

+1-212-282-2000

Real estate operations

100.0

Mitsubishi Estate New York Inc.

+1-212-698-2200

Real estate operations in the United States

100.0

Mitsubishi Estate London Limited

1271 Avenue of the Americas, 24th Fl. New York, NY 10020
U.S.A.
5 Golden Square London, W1F 9HT, U.K.

+44-20-7292-3180

Real estate operations in Europe

100.0

Mitsubishi Estate Asia Pte. Ltd.

138 Market Street #27-03 CapitaGreen, Singapore 048946+65-6576-5790

Real estate operations in Asia

100.0

PT. Mitsubishi Estate Indonesia

Jl. Jendral Sudirman, Kav 5-6, Menara Astra 56th Floor,
Jakarta Pusat, 10220 Indonesia
Level 15, Saigon Centre Tower 2, 67 Le Loi Street, District 1,
Ho Chi Minh City, Vietnam 700000
1805 Room Raffes City, 268 Xizang Middle Road,
Shanghai 200001, P.R.C.
100-6, Songren Road, Xinyi District, Taipei, 11073, Taiwan
Otemachi Financial City Grand Cube 9-2,
Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8189+62-21-8060-0071

Real estate operations in Indonesia

100.0+84-24-3267-3885

Real estate operations in Vietnam

100.0+86-21-6340-4000

Real estate business in China

100.0+886-2-8780-3003+81-3-6281-8000

Real estate business in Taiwan
Real estate business overseas
Real estate development, sales, leasing,management, real estate ownership,and management

100.0
100.0

Mitsubishi Jisho Investment Advisors, Inc.

Marunouchi North Exit Building, 6-5, Marunouchi 1-chome,
Chiyoda-ku, Tokyo 100-0005+81-3-3218-0031

100.0

Japan Real Estate Asset Management Co., Ltd.

+81-3-3211-7921

TA Realty LLC

Otemachi Park Building, 1-1, Otemachi 1-chome,
Chiyoda-ku, Tokyo 100-0004
28 State Street, Boston, MA 02109, U.S.A.

Specialist real estate investment management services (real estate investment
advisory and other services)
Investment corporation asset management

70.0

Europa Capital LLP

15 Sloane Square, London SW1W 8ER, U.K.

+44-20-7881-6800

Pan Asia Realty Advisors (Singapore) Pte. Ltd.

80 Raffes Place, No. 18-01, UOB Plaza 1, Singapore 048624+65-6416-7888

Investment management business in the
United States
Investment management business in
EuropeInvestment management business in Asiaand Oceania

Construction and civil engineering design
administration
Interior design administration andconstruction, manufacture, and sale offurniture and household items

100.0

Purchase, sales, and leasing brokerage ofcorporate real estate, leasing management,
real estate appraisal, and parking business
Operation and management of parking lots,parking-lot consulting

100.0

Mitsubishi Estate Vietnam Company Limited
Mitsubishi Estate (Shanghai) Ltd.*

Leasing, operation, and management oflogistics and office buildings

60.0

Otemachi Building, 6-1, Otemachi 1-chome, Chiyoda-ku,
Tokyo 100-0004
1-1, Kakigaracho 2-chome, Nihonbashi, Chuo-ku, Tokyo
103-8520
6-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005+81-3-3211-6180

Comprehensive supervision andmanagement of hotel business
Management and operation of Royal Park
Hotel
Management and operation of the
Marunouchi Hotel

100.0

Mitsubishi Estate Taiwan Ltd.*
Mitsubishi Estate Residence Co., Ltd.

Hotel BusinessRoyal Park Hotels and Resorts Co., Ltd.
Royal Park Hotel Co., Ltd.
Marunouchi Hotel Co., Ltd.

+81-3-3667-1111+81-3-3217-1111

57.4
76.9

Retail Property Management Business
Mitsubishi Estate•Simon Co., Ltd.
Yokohama Sky Building Co., Ltd.

Otemachi Financial City South Tower, 9-7, Otemachi
1-chome, Chiyoda-ku, Tokyo 100-0004
19-12, Takashima 2-chome, Nishi-ku, Yokohama,
Kanagawa Prefecture 220-0011+81-3-3275-5252

Management of outlet malls

60.0+81-45-441-1221

Management of the Sky Building and the
Yokohama Shintoshi Building

54.4

1312-7, Oka, Konan-cho, Takamatsu, Kagawa Prefecture761-1401
1727, Irabusawada, Miyakojima, Okinawa Prefecture
906-0507+81-87-814-3355

73.1

3336-4, Sakaguchi, Makinohara, Shizuoka Prefecture
421-0411+81-548-29-2000

Operation of Takamatsu Airport and related
businesses
Operation of the Miyako Shimojishima
Airport Passenger Terminal and related
businesses
Leasing of the Mt. Fuji Shizuoka Airport Terminaland commissioned management and operationof the airport’s basic facilities and airport parking
lots maintained by the prefecture

Shin Kokusai Building, 4-1, Marunouchi 3-chome,
Chiyoda-ku, Tokyo 100-0005+81-3-3214-4881

Airport Operation BusinessTakamatsu Airport Co., Ltd.*
Shimojishima Airport Management Co., Ltd.*

Mt. Fuji Shizuoka Airport Co., Ltd.*+81-980-78-6365

69.0

Otemachi Financial City Grand Cube 9-2, Otemachi
1-chome, Chiyoda-ku, Tokyo 100-8189+81-3-6281-8000

Mitsubishi Estate Home Co., Ltd.

Kokusai-Shin-Akasaka Building Higashi-kan,
14-27, Akasaka 2-chome, Minato-ku, Tokyo 107-0052+81-3-6887-8200

Mitsubishi Estate Housing Components Co., Ltd.

228-4, Shinminato, Mihama-ku, Chiba, Chiba Prefecture
261-0002+81-43-242-9031

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

+1-617-476-2700

90.0

87.0
67.0

Marunouchi 2-chome Building, 5-1, Marunouchi 2-chome,
Chiyoda-ku, Tokyo 100-0005
Inui Building Kachidoki, 13-1, Kachidoki 1-chome, Chuo-ku,
Tokyo 104-0054+81-3-3287-5555

Mitsubishi Real Estate Services Co., Ltd.

Otemachi Financial City Grand Cube, 1-9-2, Chiyoda-ku,
Tokyo 100-0004+81-3-3510-8011

Mitsubishi Estate Parks Co., Ltd.

3F, Seitoh Kaikan, 5-7, Sanbancho, Chiyoda-ku, Tokyo
102-0075+81-3-5215-1720

Otemachi Building, 6-1, Otemachi 1-chome, Chiyoda-ku,
Tokyo 100-0004
Shin-Tokyo Building, 3-1, Marunouchi 3-chome,
Chiyoda-ku, Tokyo 100-0005+81-3-3212-8674

Human resource-related services

100.0+81-3-3212-0555

Management of the Minoria Inage Kaigan
retail facility

66.7+81-3-6704-0100

100.0

Real Estate Services Business
Dark fiber leasing and data center housingbusinesses in the Marunouchi andOtemachi districts

51.0

Real estate development, sales, leasing,management, real estate ownership, andmanagement

100.0

Design and construction of single-unit
homes and housing complexes, renovationof homes and retail shops, etc.
Manufacture, processing, and sale ofconstruction materials

100.0

100.0

OthersMEC Human Resources, Inc.
Keiyo Tochi Kaihatsu Co., Ltd.

Custom-Built Housing

112

100.0

Architectural Design & Engineering Business
MEC Design International Corporation

Residential Business
Real Estate Sales
Mitsubishi Estate Residence Co., Ltd.

100.0

Investment Management Business

Mitsubishi Jisho Sekkei Inc.

OthersMarunouchi Direct Access Limited+81-78-452-0668

100.0* Outside the scope of consolidation

50.0* Outside the scope of consolidation+81-3-6908-5560

International Business

29.8+81-3-3767-2111

100.0

49.0

+81-3-3748-2650

35.0

1-1, Heiwajima 6-chome, Ota-ku, Tokyo 143-0006

100.0

Research and proposals on the environmentand design
Purchase, sales, and leasing brokerage ofhomes for individuals, leasing management
Leasing business in the Kansai area, real estate
sales (sales of renovated condominiums)
Operation of commercial nursing homes

Ryoei Life Service Co., Ltd.

Logistics Facility Management Business

Management of the Higashi Fuji Country
Club, Fuji International Golf Club, and otherproperties
Management of Asakura Golf Club+81-70-4283-5747

URBAN LIFE Co., Ltd.

68.0

100.0

5F Shinko Building, 6-8, Kanda-Ogawamachi 3-chome,
Chiyoda-ku, Tokyo 101-0052
Shinjuku Front Tower, 21-1, Kita-Shinjuku 2-chome,
Shinjuku-ku, Tokyo 169-0074
6-26, Motoyamaminamimachi, 8-chome, Higashinada-ku,
Kobe, Hyogo Prefecture 658-0015
Royal Life Okusawa, 33-13, Okusawa 3-chome,
Setagaya-ku, Tokyo 158-0083

63.2

District Heating and Cooling Business

O.A.P. D.H.C. Supply Co., Ltd.

MEC Eco LIFE Co., Ltd.

50.0

Parking Business

100.0

OthersMitsubishi Jisho House Net Co., Ltd.

Office Building Leasing Business

71.5

Recreational Facilities

100.0
62.5

Share ofvotingrights (%)

Note: Percentage of voting rights held is as of March 31, 2021.

91.7

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

113

Corporate Data

Corporate History

Organization
As of June 11, 2021

History

1893
1894
1923

Marunouchi Building completed in front of Tokyo Station.

Relocation Management Office
Master Lease Planning and Management Office

Facility Management Consultancy Office
Retail Property Leasing Department

Shin-Marunouchi Building completed.

Innovation and Business Transformation Group

1953

Business Creation Department

1959

1969

Nagoya Dai-Ichi Hotel opened (Hotel Business launched).

1983

Mitsubishi Estate Home Co., Ltd., established.

1984

MEC UK Limited established.
Yokohama Office established (reorganized as Yokohama Branch in April 2000).

1986

1972

Corporate Strategy Committee

Meeting of Shareholders

Hokkaido Building completed.

Commercial Property Business Group

Executive Committee

The first phase of the Izumi Park Town Project launched.

Participation in the City of London’s Paternoster Square Project announced.
Capital investment in Rockefeller Group, Inc., initiated.

1990

Tenjin MM Building (IMS) opened in Fukuoka City.
Royal Park Hotel in Hakozaki, Tokyo, opened.
Hiroshima Park Building completed.

President & Chief Executive Officer

Strategic Investment Committee

1973

1989

Urban Planning Department
Area Management Planning Department

Project Planning Department

Logistics Facilities Development Department

Mixed Use Development Department

Uchi-kanda Development Office
Akasaka Development Office
Toyosu Development Office

Yokohama Landmark Tower completed. Yokohama Royal Park Hotel opened.
Osaka Amenity Park (OAP) completed.

Internal Audit
OfficeIkebukuro Development OfficeCommercial Property Management Department

Retail Property Strategy & Marketing Planning Office
OCA TOKYO Business Promotion OfficeSustainability Committee

GOTEMBA PREMIUM OUTLETS® opened.

Urban Redevelopment Department

Facility Management Planning Department

2002

Marunouchi Building opened.

Museum Management Office

Mitsubishi Trust and Banking Building completed (renamed Mitsubishi UFJ
Trust and Banking Building in October 2005).
Paternoster Square completed in the City of London.

Airport Business Department

2003
2004

Marunouchi Oazo opened.

2005

Tokyo Building opened.

2007

Shin-Marunouchi Building opened.
The Peninsula Tokyo opened.

Mitsubishi Estate Building Management and Mitsubishi Estate
Property Management integrated.
TA Realty LLC acquired.
Transitioned to a “Company with Nominating Committee, etc.,”organizational structure.
Tokyo Ryutsu Center Inc. became a Mitsubishi Estate consolidated subsidiary.
Hirotaka Sugiyama and Junichi Yoshida appointed chairman of the Board andpresident & chief executive officer, respectively.
Taiwan Representative Office established.

Residential Business Group
Nominating
Committee

Residential Business Planning Department

Residential Value Chain Management Office

CLT Business, Residential Land & Recreational Facilities Management Office

Audit Committee

Audit Committee
OfficeInternational Business Group

Remuneration
Committee

Marunouchi Park Building and Mitsubishi Ichigokan completed.

2010

Mitsubishi Ichigokan Museum opened.

2011
Marunouchi Eiraku Building completed.
OTEMACHI FINANCIAL CITY (North Tower, South Tower) opened.
MARK IS shizuoka and MARK IS minatomirai opened.
Grand Front Osaka opened.

2014

Singapore CapitaGreen completed.

2015

Dai Nagoya Building completed.
Otemon Tower • JX Building completed.

2016

xTECH Leasing and Promotion Department

International Business Planning Department

2009

OTEMACHI FINANCIAL CITY GRAND CUBE completed.

Investment Management Group
Investment Management Business Department

Corporate Group
Risk Management & Compliance
Committee
Risk Management & Compliance
Subcommittee

Corporate Planning Department

Corporate Planning Department Affiliated Group Office
Strategic Investment OfficeSustainability Management and Promotion Department
Finance & Accounting Department
Corporate Communications Department

Investor Relations Office

Human Resources Department

Human Resources Compliance & Diversity Promotion Office

General Affairs Department

Secretary Office

Rugby Marketing Office

Legal & Compliance Department

Hokkaido Branch

2017

Otemachi Park Building completed.

Tohoku Branch
Yokohama Branch

Head Office relocated to Otemachi Park Building.

2018

Establishment of PT. Mitsubishi Estate Indonesia and Mitsubishi Estate Vietnam
Company Limited.

2019
2020

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Sustainability Subcommittee

2008

2013

Safety Management Office
Renewal Management Office

2001

Mitsubishi Estate (Shanghai) Ltd. established.

Marunouchi Development Office
Yurakucho Development Planning Office

Mitsubishi Jisho Investment Advisors, Inc., established.

2012

Logistics Facilities Tenant Relation OfficeHotel Business Department

Properties and equipment revaluated in accordance with the Law Concerning
Revaluation of Land and other relevant laws and regulations.

Mitsubishi Estate Residence Co., Ltd., established.

Open Innovation Promotion OfficeUrban Energy Strategy Planning Department

TOKYO TORCH Department

1998
2000

Group Companies Management OfficeCommercial Property Business Strategy Department

Urban Project Development Department

1995
1996

5G Infrastructure Sharing Business Office

DX Promotion Department

Commercial Property Business Planning Department

Group Strategy Committee

Hiroshima Branch (renamed Chushikoku Branch in November 2017) andKyushu Branch established.

Sunshine City Corporation became a Mitsubishi Estate consolidated subsidiary.
Mitsubishi Estate Asia Pte. Ltd. commenced operations.
Chelsea Japan Co., Ltd., became a Mitsubishi Estate consolidated subsidiary(renamed Mitsubishi Estate • Simon Co., Ltd., in February 2013).

Global Marketing and Promotion OfficeWorkplace Solutions Office

1993

114

Office Leasing and Tenant Relations Department

1937

1962

Began first stage of Marunouchi redevelopment.

Collaborative Partner Development OfficeBusiness Development, Consulting & Solutions Department 2

Completed Mitsubishi Ichigokan, offering the first Western-style office architecture in Marunouchi.

Akasaka Park House offered for sale in lots, marking the launch of
the condominium business.
Mitsubishi Estate New York Inc. established. Began expansion of businessoverseas.
Mitsubishi Real Estate Services Co., Ltd., established.
Branches established in Sapporo (renamed Hokkaido Branch in November 2017),
Sendai (renamed Tohoku Branch in July 1989), Nagoya (renamed
Chubu Branch in April 2018), and Osaka (renamed Kansai Branch in April 2016).
Strengthened business in major Japanese cities.

Reconstruction of Marunouchi Building announced.

Client Strategy Planning Department
Business Development, Consulting & Solutions Department 1

1952
Mitsubishi Estate’s shares listed on the Tokyo Stock Exchange andthe Osaka Securities Exchange.
Marunouchi Remodeling Plan formulated. Met demand for offices in the yearsof high economic growth.

Business Development, Client Relations & Solutions Group

Chairman of the Board

Mitsubishi Estate Company, Limited, established with paid-in capital totaling¥15 million, with the ownership of the Marunouchi Building and site, as well as
business rights for buildings and land within the Marunouchi area, transferredfrom Mitsubishi Goshi Kaisha.

Major properties

1890

Board of Directors

The Marunouchi site purchased by Mitsubishi Company fromthe Japanese government.
Mitsubishi Goshi Kaisha (limited partnership) established. Achieved further
expansion of business.

Marunouchi Nijubashi Building completed.

Mizuho Marunouchi Tower, Ginkokaikan, and Marunouchi Terrace completed.

Minato Mirai 21 Office

Chubu Branch
Kansai Branch

GRAND FRONT OSAKA Office

Chushikoku Branch

Umekita Development Office

Kyushu Branch

IMS Development Office

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

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Corporate Data

External Evaluations of ESG Performance

Corporate Information
As of March 31, 2021

Company Name
Mitsubishi Estate Co., Ltd.

Stock Information
Stock Details
Number of authorized shares: 1,980,000,000 shares

Date of Establishment
May 7, 1937

Number of shares issued and outstanding: 1,391,328,316(154,053 increase in number of shares from the previous
fiscal year-end)
Number of shareholders: 66,422(Increase of 2,966 shareholders compared with the end of the previous
fiscal year)

Shareholder Composition (Percentage of shares held)
Individuals and others

9.60%

Government and local publicauthorities

0.00%
Financial institutions

Paid-in Capital¥142,279 million
Business Activities
Development, leasing, and management of office buildings, retail,and other facilities
Development of real estate for investment purposes and asset
management
Development and sale of land for housing, research, and otherfacility use
Management of leisure and other facilities
Sale and brokerage of real estate and related consulting services

Dow Jones Sustainability Asia PacificIndex

S&P Global Sustainability Yearbook
Member 2021

FTSE4Good Global Index,
20th consecutive year

FTSE Blossom Japan Index,
5th consecutive year

MSCI Japan ESG Select Leaders
Index, 4th consecutive year

MSCI Japan Empowering Women
Select Index, 4th consecutive year

S&P/JPX Carbon Efficient Index,
4th consecutive year

SOMPO Sustainability Index,
10th consecutive year

GRESB Public Disclosure,
4th consecutive year

2020 GRESB Real Estate
Assessment –5-Star Rating in
GRESB Standing Investments
BenchmarkCDP A List, the highest rating
according to CDP Climate Change
2020 Questionnaire

CDP Supplier Engagement
Assessment Leaderboard, thehighest rating according to 2020 CDP
Supplier Engagement Rating

Certified in 2021 as Outstanding
Health and Productivity Management
Organization (White 500)

Number of Employees (Excluding temporary staff)
Non-consolidated: 880
Consolidated: 9,982

35.07%

URL
https://www.mec.co.jp/index_e.html

Financial instruments
business operators

Foreign individuals andcompanies

Mitsubishi Estate has been selected for inclusion in the following environmental, social, and governance (ESG) indices forsocially responsible investment.

2.24%

42.76%

Operating and other companies

Head Office
Otemachi Park Building, 1-1, Otemachi 1-chome, Chiyoda-ku,
Tokyo 100-8133
Phone: +81-3-3287-5100

10.33%

Major Shareholders

Number ofshares held Shareholding(Thousands of percentage
shares)(%)

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

131,804

9.84

Custody Bank of Japan, Ltd. (Trust account)

64,786

4.83

Meiji Yasuda Life Insurance Company

45,476

3.39

GOVERNMENT OF NORWAY

43,8603.27

JP MORGAN CHASE BANK 380055

33,623

2.51

SSBTC CLIENT OMNIBUS ACCOUNT

25,829

1.92

Custody Bank of Japan, Ltd. (Trust account 7)

24,394

1.82

STATE STREET BANK WEST CLIENT–TREATY 505234

20,261

1.51

Custody Bank of Japan, Ltd. (Trust account 5)

19,868

1.48

Takenaka Corporation

18,1501.35

Note: The investment ratio is calculated after deducting the shares of treasury stock from theissued shares of the Company.

116

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

Hokkaido Branch
Hokkaido Building, 4-1, Kita 2-jou Nishi, Chuo-ku, Sapporo,
Hokkaido 060-0002
Phone: +81-11-221-6101
Tohoku Branch
Sendai Park Building, 6-1, Kokubun-cho 3-chome, Aoba-ku,
Sendai, Miyagi Prefecture 980-0803
Phone: +81-22-261-1361

About Our Website
Mitsubishi Estate Group Corporate Website
https://www.mec.co.jp/index_e.html

Yokohama Branch
Yokohama Landmark Tower, 2-1, Minato Mirai 2-chome,
Nishi-ku, Yokohama, Kanagawa Prefecture 220-8115
Phone: +81-45-224-2211
Chubu Branch
Nagoya Hirokoji Building, 3-1, Sakae 2-chome, Naka-ku,
Nagoya, Aichi Prefecture 460-0008
Phone: +81-52-218-7755
Kansai Branch
OAP Tower, 8-30, Tenmabashi 1-chome, Kita-ku,
Osaka, Osaka Prefecture 530-6009
Phone: +81-6-6881-5160
Chushikoku Branch
Hiroshima Park Building, 7-5, Otemachi 3-chome, Naka-ku,
Hiroshima, Hiroshima Prefecture 730-0051
Phone: +81-82-245-1241
Kyushu Branch
Tenjin Twin Building, 6-8, Tenjin 1-chome, Chuo-ku, Fukuoka,
Fukuoka Prefecture 810-0001
Phone: +81-92-731-2211

Sustainability Information

IR Information

https://www.mec.co.jp/e/sustainability/index.html

https://www.mec.co.jp/e/investor/index.html

Our website contains sustainability reports and other informationthat summarize Groupwide sustainability-related data and initiatives
based on important sustainability issues.

In addition to financial information, the site contains various IR
explanatory materials and an Asset Book.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2021

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