Mitsubishi Estate Group

Long-Term Management Plan
2030

Contents
Long-Term Management Plan 2030
Overview

2

Business Strategies① Domestic Asset Business

15② International Asset Business

23③ Non-asset Business30

ESG Initiatives

37

Appendices46

MITSUBISHI ESTATE CO., LTD.

1

Long-Term Management Plan 2030
Overview

MITSUBISHI ESTATE CO., LTD.

2

Overview of Management Plan

1. Management Plan: Objective
Mitsubishi Estate Group’s Mission:
Creation of a truly meaningful society through urban development
2030 Target (P40)
Address Four key themes*
to realize a sustainable
society*「Environment」「Diversity & Inclusion」「Innovation」「Resilience」

Fundamental Approach
Create value for every
stakeholder including visitorsand employees

2030 Target (P5)

A pair of driving wheels

Increasing
Socialvalue

Increasing
Shareholder
value

Synergy

ROA

ROE

5%

10%

EPS
¥

200

Fundamental Approach
Transformational
improvements to thebusiness portfolio's efficiency
and market resilience

Realize our mission and sustainable growthby increasing both social value and shareholder value
MITSUBISHI ESTATE CO., LTD.

3

Overview of Management Plan

2. Strengths and Growth Strategy
Strengths“Long-term view on Urban Development” and “Forward-looking DNA”
“Extensive user reach” and “abundant real estate asset touchpoints”
Leverageexisting strengths①Domestic Asset Business

Grow international
business

Adapt to a changing future②International Asset Business Advance “Marunouchi NEXT
Stage” project Asia: Enhance development
business

 Increase NOI with long-term
development projects

 Europe: Advance development
business and Enhance revenuebase Optimize capital recycling
business for market conditions

Goal

Value
Propositions

MITSUBISHI ESTATE CO., LTD.

③Non-asset Business Grow Fee Business Delve into new technologies,
e.g. AI/Robotics
 New B2B and B2B2C Businesses US: Enhance and diversify capital
recycling business

Build a more efficient and market-resilient business portfolio
Improve ROA and ROE by expanding revenue via mainly market-resilient non asset businessin combination with flexible capital policy

Sustainability

Social issue solutions

Quality Of Life

Innovative services & experiences4Quantitative Target

3. Quantitative Target – 2030 Target
2030 Target
ROA*1

ROE

EPS

5％

10％

¥200

*1 ROA＝Business Profit*2 / Total Asset (average of opening/closing balances)

Key Assumptions
Profit Growth

Shareholders Return

Financial Stability

Current framework *Maintain

Business Profit*2• Payout ratio:
Approx. 30%¥350–400 bn• Share buybacks+(when determined to be
optimal use of funds)

current level ofcredit ratings【Reference】
R＆I：AAS＆P：A＋
Moody‘s：A2* Will adjust to business conditions*2 Business Profit= Operating Income + Equity in earnings (loss) unconsolidated subsidiaries and affiliates

MITSUBISHI ESTATE CO., LTD.

5

Reaching Targets

4. Approach to improve ROE
Improve ROE: Focus on ROA while maintaining current level of credit ratings

ROE

≒

ROA

×

ROA enhancement

Key Initiatives
Superior ROE throughstronger ROA

Grow NOI with development
push (P13,17-20)

Adapt capital recycling businessto market conditions (P21)

Optimize residential business'
profit structure (P22)Grow capital gains
internationally (P23-29)

Expand non-asset business(P30-36)

Dispose underperforming assets
and strategic-holding stocks(P9,14,44)

Leverage
Optimize leverage
while maintaining
current level ofcredit ratings
Interest-bearing debt

Respond to market conditions

EquityManage it via share buyback, etc.

Improved ROA
MITSUBISHI ESTATE CO., LTD.

6

Reaching Targets

5. 2030 Targets: Realization Plan (ROA・ROE・EPS)
Current (FY20)

2030 Target

Business Profit

Increase of ¥120–170 bn¥350-400 bn¥230.5 bn

Approx. ¥50bn growth from each of: domestic
asset, international asset, non-asset business(EPS: ¥200)<Assumption of total asset changes >(EPS: ¥100.2)

Total Asset【 Flexible capital policy 】

Business Profit

Total Asset¥5.9 tn

Approx. ¥7-8 tn

Optimize investments, assets sales, shareholder
return and financing according to market
conditions

Expected net increase: ¥1-2tn＝

ROA : 3.9%

ROA : 5%
With current leverage

ROE : 7.8％
MITSUBISHI ESTATE CO., LTD.

Increase Net investment: Approx. ¥2–3 tn
Decrease Depreciation: Approx. ¥1 tn

ROE : 10％7

Flexible Capital Policy

6. Capital Policy – Responsive to market conditions* From IR Presentation FY2019 with some translational adjustments

Flexible capital policy – Responsive to market conditions(Value creation through BS management)
Optimize mix of investment, asset sales, shareholders returns
and financing in response to the market
Sellers' market
Asset Sales:

Profits:

Shareholder return :Buyers' market

To maximize mid-to-long value, we combine: stable CF from long-term development PJs and asset holdings capital recycling business in response to the market

MITSUBISHI ESTATE CO., LTD.

Active acquisition/investment:

Capital gain:

Shareholders return :8

Flexible Capital Policy

7. Value creation through BS management* From IR Presentation FY2019 with some translational adjustments(Additional statements are underlined)

Flexible Capital Policy – Responsive to market conditions(Value creation through BS management)
Asset

Shareholders’ Equity and Liability

Capital recycling business optimized for market
conditions

Maintaining Financial Stability

 In seller's market: expedite asset sales Financial reserves for seizing buyer's market opportunities

 Investment in promising PJs to enhance corporate value

 High credit rating enables long-term and low-cost financing

Long-term development and asset holdings(core focus: Marunouchi redevelopment) In sellers' market, use asset sale proceeds for shareholder
returns and to maintain financial stability

 Steady capital investment in core business enables stable,
cycle-proof rental cashflow
 Timely asset sales judged by expected yields and external
environment

Sale of underperforming properties andstrategic-holding stocks
 Disposal of underperforming assets, including core asset
 Ongoing disposal of strategic-holding stocks

Expansion of Non-asset Business
MITSUBISHI ESTATE CO., LTD.

Capital Efficiency Improvement
 Targets: ROA 5%, ROE 10%, EPS ¥200
 Increase numerator (net income) and decrease denominator(shareholders’ equity) Choose measures to manage shareholders’ equity according
to market conditions

9

Flexible Capital Policy

8. Capital Allocation Policy
Cash inFinancialcapacity

Cash out
Strategic
Allocation
investment/
shareholders
return/suppression ofdebt

Strategic allocation to improve medium- to longterm capital efficiency

 Allocate capitals based on market conditions
 Select projects which help to increase the shareholder value

Capital recycling business expected returns (pre-tax IRR)

Domestic: 6～8％
International (developed countries) : 8～10％
International (developing countries) : 10+％
*Expected return from total investment in each business

Cash flowfromoperatingactivities

Plannedinvestment &return* Including undetermined projects. See p.14 for the next three-year forecastBaseshareholders
returnMITSUBISHI ESTATE CO., LTD.

Planned projects – return through asset sale (book value)

Payout ratio: Approx. 30％* Shareholder returns method and scale will be adjustedwith real estate and financial market conditions, stock price and ROE/EPS

10

Reaching Targets

9. Profit Growth Strategy - 2030 Vision
Profit changes vs FY2020*① Domestic AssetBusiness

Approx. +¥50 bn(FY20E * : Approx. ¥ 201.0 bn)② International AssetBusiness

Approx. +¥50 bn(FY20E * : Approx. ¥ 36 bn)③ Non-asset BusinessApprox. +¥50 bn(FY20E * : Approx. ¥ 16 bn)④ Fluctuation Factors
Approx. ±¥20–30 bn* Composition of FY20 Business(Round number)

MITSUBISHI ESTATE CO., LTD.

Growth Strategy① Advance “Marunouchi NEXT Stage” project② Increase NOI with development projects③ Optimize capital recycling business to market conditions④ Optimize residential business profit structure① Expand development business in Asia
② Enhance development business and revenue base in Europe③ Enhance and diversify US capital recycling business① Steady profit growth in existing businesses② Utilization of technology③ Provision of service contents focusing on B2C/B2B2C

P17-19
P13
P20
P21
P22
P24-28
P24-27
P29
P24-27
P29
P31-32
P31
P33-35
P31,
P33-34,36

・Asset sales control in response to market conditions
・Capital gain and rental profit fluctuation due to investment opportunities

Profit= ① Domestic Asset + ② International Asset + ③ Non-asset Business + Eliminations or corporate(¥ 201.0 bn)(¥ 36 bn)(¥ 16 bn)(▲ ¥ 23 bn)

11Reaching Targets

10. Roadmap for Profit Growth
Early stage

Domestic
Asset
Business

International
Asset
Business

Non-asset
Business

MITSUBISHI ESTATE CO., LTD.

Middle stage

Advance
Redevelopment projects

Late stage

Redevelopment Projects' Contribution• Complete Tokiwabashi A Bldg.
• Open & expand outlet mall
• Asset sales and reconstruction of existing buildings (willlower rental profit)• Temporary decline in the condominium units sold

• Long-term developments, e.g. Tokiwabashi B Bldg.
• Residential redevelopments

Profits scale with asset accumulation

Stabilize profit via capital recycling• 1271 Ave. of the Americas renewal, 8 Bishopsgate
completion• Stabilize Asia condominium business• Expand assets in Asia capital recycling business

Promoting commercialization in new domains• Stable growth in existing businesses• Promoting commercialization in new domains• Shift from asset expansion to recycling• Stabilize capital recycling business in Asia

Accelerate profits in new domains• Stable growth in existing businesses• Accelerate profits in new domains

12Reaching Targets

Domestic

11. Pipelines
Project name*1
Marunouchi 1-3
Tokyo Tokiwabashi Bldg. A
Marunouchi Uchikanda 1-chome
Yurakucho Redevelopment (TBD)
Tokyo Tokiwabashi Bldg. B
GOTEMBA PO (Phase 4 expansion)
RINKU PO (Phase 5 expansion)
Outlet MallFUKAYA HANAZONO PO
KYOTO JOYO PO
Link Square Shinjuku*2
CO・MO・RE YOTSUYA*2
Kita Aoyama 2-chome
Other
TRC Distribution A Bldg. (reconstruction)
Umekita Phase 2 Development (Osaka)
IMS redevelopment (Fukuoka)

FY2021●

International

Asia

Europe
US

2024

～

2030

●
★

●
●

★
●
●
●
●

●

Kokusai Shin-Akasaka Bldg. Redevelopment

CapitaSpring (Singapore)
Mixed Use Development inHangzhou (China)
Daswin (Indonesia)
Phase 3 of Singapore-Hangzhou
Science & Technology Park (China)
Yoma Central (Myanmar)
180 George Street (Australia)
One City Centre (Thailand)
245 Hammersmith Road (London)*2
8 Bishopsgate (London)60-72 Upper Ground (London)(ITV The London Television Centre)
1271 Avenue of the Americas (NY)*2

FY2022 FY2023

★

●

●
●
●
●
●
●
●
●
●

…International projects approved for the previous management plan (FY18-FY20)★…Start Construction*1 For some projects, start/completion date is provisional…Construction period●…Completion*2 To be completed in FY 2020

MITSUBISHI ESTATE CO., LTD.

13

Investment Return Plan

12. Three Year Investment Return Plan (FY2021-FY2023)(Billions of Yen)

3-year Total

Composition
Planned Investments and Return
Domestic Asset

International Asset

Strategic Allocation
600(investment/shareholders return/suppression of debt)
Investment

Outlet mall,
Capital Recycling asset,
And Others

Plannedinvestments

Condominium

1,500

Marunouchi
area

150
0

ReturnMITSUBISHI ESTATE CO., LTD.

150

Vary investment allocation
for medium- to long-term
capital efficiency

600

Europe and
US
Asia

100

200
Aim for international profit
growth

500
300

Net
Investment

Disposeunderperforming assets
for capital efficiency

550

Asset sales plan assumes
market conditions of previous
three years

100～200

Strategic
Allocation

500

Return1,100Strategic Return

Strategic
Return

0

250

100

0

200

100～200

0-100～-200

～600

14

Long-Term Management Plan 2030
Business Strategy① Domestic Asset Business

MITSUBISHI ESTATE CO., LTD.

15

Domestic Asset Business1. Domestic Asset Business Growth Strategy
Profit Growth (vs FY2020)

Investment & Return Plan (FY2021-FY2023)(Billions of Yen)

Investment<2030 Goal>

Approx. +¥50 bn(FY20E : Approx. ¥201.0 bn)

ReturnNet Investment

Marunouchi

150

0

150

Outlet Mall, etc.

100

0

100

Condominium

500

500

0

Other

450

300

150

Total

1,200

800

400

Growth Roadmap
Early stage

Domestic
Asset
Business

MITSUBISHI ESTATE CO., LTD.

Middle stage

RentalAdvance and commercialize redevelopment PJ, including
Marunouchi

CapitalRecycling

Optimize the balance of new investment & capital return in response to market conditions (P21)ResidentialSecure and commercialize redevelopment PJ

Late stage

Achieve sizeable profit contribution from large PJ including
Tokiwabashi B bldg. (P20)

Increase the number of unit sold and realize profits ofredevelopment PJ(P22)16

Domestic Asset Business

2. Future of Marunouchi (Marunouchi NEXT Stage: Overview)
Marunouchi Redevelopment To-date

Marunouchi NEXT Stage

Theme

Theme

The world‘s most interaction-inspiring neighborhood

Marunouchi Re-design

Increase in Operating Floor Area*1(Unit: k sq. m.)

3,500

Existing building

1,238 k sq m.

2,915

＋

2,500

1,677
1,500
1,000

1,421

1,836

Redevelopment Projects*4
Marunouchi 1-3, Tokyo Tokiwabashi PJ
Uchikanda 1-chome, Yurakucho Redev.

4,300

Floor Area of Total Redevelopment PJs*5(Before reconstruction*3: 3,523)

1,100-1,300 k sq. m

Working Population

MEC’s Total Investment by 2030

280,000¥600–700 bn*2*2(Before Redevelopment *3：Approx.227,000)

500
0Towards2030

Number of Offices

1,079

2,000

Tokiwabashi and Yurakucho

13

New (Redevelopment)

3,000

Main Redevelopment Area

Completed Projects (‘02-’19)

FutureGoal

256
2003/3

2019/3*1 MEC only: total floor area of MEC‘s holding + leased floor

MITSUBISHI ESTATE CO., LTD.

ESG Goal*2 Marunouchi Total*3 As of 1996 before former Maru bldg. close*4

Zero CO2 Emissions
100% Waste Recycling

Some project names are provisional*5 Total floor area on construction confirmation application

17

Domestic Asset Business

3. Future of Marunouchi
Marunouchi Re-design
Co-creation Platform for Innovation through Companies, Employees, and Visitors
Strategy①

Program②

Innovation of Marunouchi- Ecosystem

Set key themes

Promote co-creation opportunities

Support innovation throughMarunouchi business resourcesCity-wide experimentation

Strengthen Business Ecosystem updating digital infrastructure①Place forInteraction②Network③Comfort④Environment

Public square

Underground passage

Zero CO₂ emission

Use of space for garden

Wharf

Data analysis leads to
new services

Shared space

New mobility services

Rooftop of building in Otemachi

MITSUBISHI ESTATE CO., LTD.

Uchikanda 1-chome PJ

Robotization

Security robot(Future goal)

Advanced area energy
management

Fuel cell installed in Marunouchi Bldg.

⑤Security
BCP enhancement
Human traffic data
Collaboration with local
government

Cable tunnel network

18

Domestic Asset Business

4. Future of Marunouchi
Value creation through Tokiwabashi and Yurakucho redevelopment＜Place for interaction＞＜Marunouchi area map＞

Kanda

Serviced officefacilities

Marunouchi 1-3

Tokiwabashi Bldg. A

Tokiwabashi Bldg. B

Floor area:181,000㎡
Completion: Sep. 2020

Floor area:146,000㎡
Completion: Jun. 2021

Floor area: 490,000㎡
Completion: FY2028

FY2021

FY20222030

Otemachi Bldg.
Renovation

Uchikanda 1-chome

Yurakucho
Redevelopment(TBD)

Floor area: 111,300㎡
Completion: Mar. 2021

Floor area: 84,500㎡
Completion: 2025

Nihonbashi

Fintechinnovation lab

Tokiwabashi

Social innovation
lab

Tokyo
StationYaesu

Co-Creation
community for asustainable
societySpace to find a variety of ideas＜Pipelines＞

Yurakucho＜Legend＞

Intrapreneur
community

MITSUBISHI ESTATE CO., LTD.

HibiyaGinza

Marunouchi area

凡例

Key redevelopment area

Interaction facilities

19

Domestic Asset Business

5. Expected NOI Contribution
New and expanding asset projects will increase by ¥60 bn on net NOI basis in Domestic AssetBusiness(Billions of Yen)

+80

＜Key projects＞

+60
+40

+70

FUKAYAHANAZONOPREMIUM
OUTLETS®
PJTokyo Tokiwabashi
Bldg. AGOTEMBAPREMIUM
OUTLETS®
Phase 4
Expansion

Uchikanda 1-chome

NOI (Net)

Tokyo Tokiwabashi
Bldg. B+¥60 bn

+20
+0
-20

FY21-FY23
FY21–FY23
NOI
from Newly
NOI from
Newly(Total)
Contributing
Projects

FY24-FY26
FY24–FY26
NOI
from Newly
NOI from
Newly(Total)
Contributing
Projects

Office building and complex facility

FY27NOIFY27–
from Newly
Contributing
Projects
NOI from
Newly (Total)

Outlet mall and Logistics-10

Contributing
Projects
Total Plan
period(Total)
NOI from Newly
Contributing Projects

Decrease from closure* NOI＝Rental Income ー Rental Cost(excluding Depreciation)* Total contribution to NOI from domestic pipelines shown on Page 13. Subject to change (future property sales)
MITSUBISHI ESTATE CO., LTD.

20

Domestic Asset Business6. Promoting Capital Recycling BusinessChange in Capital Gains (incl. Int’l)(Billions of Yen)
50.0

Domestic

40.0International

31.3

30.0

46.0

30.0

20.3

10.0
0.0

Avg. FY15-17

 Optimize the balance between new investment and return(asset sales) to market conditions

16.0

11.0

20.0

Capital Recycling — Policy

Asset sale basedon market
conditions

 Joint projects for improved efficiency (see below)
 Expected return for domestic capital recycling business*: 6～8％
* Expected return of total capital recycling business

Avg. FY18-20

Domestic Asset*
Book value at end of Mar. 2019¥1.1 tn

Joint Project Concept Outline
Improve investment efficiency by earning project related fees
(development, design, and property management)

Composition of Asset

1.2%
1.3%
Office(pre-tax IRR)

Independent
Project

5.6%

7.0%

:Investment by MEC:Investment by
3rd party

Joint Project

RetailRental apartment 10.9%
Logistics
Hotel
Other

MITSUBISHI ESTATE CO., LTD.

74.0%

*Total income-generating
assets x-Marunouchi, Outlet
malls, and assets of particularconsolidated subsidiaries

Investment

MEC Group

ReturnInvestment

MEC Group

ReturnReturnFees

Investment

3rd Party
Investor

21

Domestic Asset Business7. Optimize residential business profit structure
Residential Business Strategy
Early to mid 2020s• Sales of condos will decrease due to careful selection of investments in current market• Focus is ①development/sale of rentals and ②securing residential redevelopment projects

Mid to late 2020s• Regain condominium sales with completion of redevelopment projects• Maximize gains from rental property sales by timing to market conditions

Condominium Business

Rental Apartment BusinessBook value of rental apartment
Approx. ¥80.0 bn(March 2019)(Composition by value)

assets under development
31%(25 units)
assets in operation• Sales will trend down for the next few years• Increase profits by focusing on property in central Tokyo• Current focus on redevelopment projects will contribute to profits after mid 2020s
Land Bank* by period(September 2019)

Project name*69%(25 units)

3,300(Billionsof Yen) Capital gain from rental apartment

25
20
15
10
5
0

9

1

FY17

FY18

MITSUBISHI ESTATE CO., LTD.

11
FY19

5,300

21
(15 properties)

3-year total

Major Redevelopment Projects

10,100

FY20

FY21-25* # of unit MEC owns.

Total units Completion

Togoshi 5-chome

200

Early-2020s

Oppama District300

Mid-2020s

Higashikanamachi 1-chome

700

Late 2020s

Koyama 3-chome

800

Late 2020s

Musashikosugi District

1,400

Late 2020s

There will be approx.15 more projects (total of approx. 10,000
units) to be completed after mid-2020s.

FY26* Project names are abbreviated..

22

Long-Term Management Plan 2030
Business Strategy② International Asset Business

MITSUBISHI ESTATE CO., LTD.

23

International Asset Business1. Growth Strategy
Profit growth (vs FY2020)

Investment & Return Plan (FY2021-FY2023)(Billions of Yen)

Investment<2030 Goal>

Approx. +¥50 bn(FY20E : Approx. ¥36 bn)

Net
Investment

Return

Asia

100

100

0

Europe/US

200

200

0

Strategic Allocation*

300～4500300～450Total

600～750300

300～450* Aiming to invest ¥100-150 bn/year in addition to planned investment for

coming 3 years to expand international business

Growth Roadmap
Early stage
Asia

Middle stage

・Secure development opportunities and accumulate asset
・Realize profit (from Residential and ongoing projects)

Late stage

・Optimize investment and capital return

International
・Approach to investment and return: ① Stabilizing revenue ② Enhancing capital efficiency
EuropeAsset・Advance large-scale development projects (8 Bishopsgate, 60-72 Upper Ground)Business
US

MITSUBISHI ESTATE CO., LTD.

・Strengthen capital recycling business with local resources
・Joint project development with local partners

24International Asset Business2. Change in Asset and Profit Structure
Current

Asia

 Expand Asia development businessBusiness Profit:28%¥30.4 bn
(FY18–FY20 Average)

Total Asset:¥713.0 bn(Mar. 2019)2030 Target

US

Towards 2030 Target

5%

28%

Europe Annual investment: around ¥200–

50%
67%

22%

250 bn 1st half of 2020s : Profit increase

with asset accumulation

45%
45%

Business Profit:
Approx. ¥90 bn(2030 target)

35%
40%

Total Asset:
Approx. ¥1.5 tn(2030 forecast) 2nd half of 2020s:

Balance investment and return

15%
20%

ROA：Around 6%

ROA：Around 4%
Strategy①Asia Increase investment, build capital recycling
portfolio
 Two approaches:①Development with major stake②Joint businesses with local partners②Europe Investment and return to optimize profit
stability and capital efficiency
 Advance mainly large-scale** 8 Bishopsgate, 60-72 Upper Ground

MITSUBISHI ESTATE CO., LTD.

③US
 Strengthen capital recycling business,making the most of RGII* know-how
 Joint venture with local partners* Rockefeller Group International, Inc.

25

International Asset Business3. International Asset/Ongoing Projects
Many ongoing developments (rentals and condos) are expected to make early profit contribution
International Asset

Major Ongoing Projects(Mar. 2019)

Book Value:¥643.4 bn
20%

27%

US (Manhattan)

32%

US (Other)

Location

Use

Completion

Area / Units*1

China (Hangzhou)

Office2020

52,500㎡

8 Bishopsgate

UK (London)

Singapore
China (Hangzhou)
Indonesia (Jakarta)
DaswinMyanmar (Yangon)
Yoma Central
Savya Financial Center North Tower The Philippines (Manila)
Australia (Sydney)
180 George Street
Thailand (Bangkok)
One City Centre
Mixed Use Development in Hangzhou

Asia

21%

Property Name
Phase 3 of Singapore-Hangzhou
Science & Technology Park
CapitaSpring

EuropeAsia

EuropeUS

OfficeOfficeOfficeMulti-use
OfficeOfficeOfficeOfficeNine Elms Park

UK (London)60-72 Upper Ground (ITV The
London Television Centre)

Rentalapartment

UK (London)

TBD

1271 Avenue of the Americas
Boro Tower
Rose Hill

US (Manhattan)

OfficeOfficeUS (Virginia)
US (Manhattan)

Condominiums

2021
59,000㎡
2021
51,750㎡
2021
75,000㎡
2021 212,670㎡*22021 24,600㎡*3
2022
55,000㎡
2022
66,000㎡
2022

53,000㎡

2022

196 units

2020s 2nd
half

TBD

Dec. 2019
Jan. 2019
Spring 2021

195,000㎡
41,000㎡
123 units*1 Leasable area or # of units *2 Total floor area

*3 Area for saleLand Bank in Asia
1271 Avenue of the Americas(Condominiums)

Daswin Project

Total: 8,200 units*
2,300

8 Bishopsgate project

MITSUBISHI ESTATE CO., LTD.

Yoma Central

FY2021

3,400

FY20222,500

FY2023-* # of unit MEC owns

26

International Asset Business4. International Business Profit Forecast
Steady development of asset portfolio will lead to achievement of 2030 target
Capital Gain

Avg. FY18–FY20

Income Gain

Contribution fromongoing projects

60.0-70.0(Billions of Yen)

2030 Target

Around 90.0⑤③
Avg. FY08–FY17

17.3
6.7
10.7

④

30.4

①

16.0

②

14.4

①Capital recycling business③On-going projects in Asia

Steady profit of

Number of ongoing projects:(rental property)

Approx.

¥10 bn/year (US)②Hybrid model investment
Income gain
Approx.

MITSUBISHI ESTATE CO., LTD.

¥4 bn/year

Land Bank: (Condos)
Approx.

16 PJs8,200 units④Large-scale renovation anddevelopment projects(US and Europe)

Continue investment
opportunities for capital
recycling business in Asia⑤
Expand Asia
development
business
Continue work on
60-72 Upper
Ground (London)

27

International Asset Business

5. Business Strategy and Development Cases in Asia and Oceania
Expected Return from Investment

IRR Developed countries

Developing countries

8～10 %
10+ %*Expected return from total investment business in each area (pre-tax IRR)

Business Strategy
 Increasing in capital recycling asset portfolio
 Two wheels of business:①Development with major stake②Joint businesses with local partners

Detailed Area Strategy in the Region
Development Project Cases
Vietnam and Indonesia⇒ ①Development with major stake②Joint businesses with local partners
Thailand, Malaysia, The Philippines,

Singapore, China, Taiwan, Australia⇒ Mainly joint businesses with local partners

CapitaGreen(Singapore, Office)MITSUBISHI ESTATE CO., LTD.

Daswin(Indonesia, Office)Life one Wireless(Thailand, Condominium)

28

International Asset Business

6. Business Strategy and Development Cases in US and Europe
Expected Return from Investment

IRR

8～10 %*Expected return from total investment business in each area (pre-tax IRR)

Business Strategy【Europe】

Key Projects①8 Bishopsgate (London)②60-72 Upper Ground(London)③Capital Recycling
Business in US

 Approach to investment & return:①Stabilizing revenue ②Enhancing capital efficiency【US】
 Strengthen capital recycling business with local resources Joint venture with local partners

8 Bishopsgate Project

Selected Track record
8 Finsbury Circus
Redevelopment PJ

Tri City Industrial Complex(US, Logistics facility)

Liv Goodyear(US, Rental Apartment)(London, Office)

IRR
MITSUBISHI ESTATE CO., LTD.

Approx.

8%

IRR

over

10%

IRR

over

10%
29

Long-Term Management Plan 2030
Business Strategy③ Non-asset Business

MITSUBISHI ESTATE CO., LTD.

30

Non-asset Business1. Non-asset Business Growth Strategy
Profit Growth (vs FY2020)

Investment Policy Aim for profit growth without affecting BS<2030 Goal>

Approx. +¥50 bn(FY20E : Approx. ¥16 bn)

 However, investment for M&A and capital alliance would
be considered for rapid growth and acquiring externalknow-howGrowth Roadmap
Early stage

Late stage

Existing

Investment management business: AUM growth (aim for ¥5 tn by the mid-2020s)
Hotel management business: Expanding number of hotel rooms (open 3-4 hotels/year)

New

Select new domain
Identify business partner
Conduct POC

Non-asset
Business

MITSUBISHI ESTATE CO., LTD.

Middle stage

Launch Business Pilot
Achieve early profits

Scale up businesses
Achieve sizeable profit contribution31Non-asset Business

2. Steady Growth in Existing Business
Steady Growth in Existing Business (Approx. +¥20–25 bn)

Steady profit increase mainly through investment management and hotel management businesses

Profit Growth Scenario

2030 Target+¥20–25 bn

Stable growthPresent
condition

2019

2020

2021

2022

Investment Management Business＜Growth Strategy＞• AUM balance of ¥5 tn by the mid-2020s(currently ¥3.1 tn)• Goodwill fully amortized (+¥2 bn)

2023

2024

2025

2026

Hotel Management Business＜Growth Strategy＞• Continue to open 3–4 new hotels/year.
Rooms - Royal Park Hotel(published)

6,000
4,000

2,688 3,047

4,359 4,359 4,609
3,649 3,999

2,000
0

MITSUBISHI ESTATE CO., LTD.

2018 2019 2020 2021 2022 2023 2024

2027

2028

2029

2030

Property Management
Residential-related fee business(management, brokerage, renovation)

Architectural Design & Engineering
Real Estate Services＜Growth Strategy＞• Improved efficiency using IT• Stronger alliance within MEC Group• Staff talent on growth areas32

Non-asset Business

3. New Initiatives for the 2030s: Key Concept
New Initiatives for the 2030s and Beyond (＋¥25～30 bn)

Utilize technology for sophistication of current business and new business development
Seek new business opportunities in B2C/B2B2C that match potential social needs

Fast-changing external environment and diversified real estate needs
Value proposition based on social challenges and potential customer needs

Sustainability

Quality Of Life

Environment

Innovation

Convenience

Fun

Resilience

Diversity & Inclusion

Health (Well-Being)

Community Involvement

Extensive user reach andAbundant real estate asset touchpoints① Utilization of technology
MITSUBISHI ESTATE CO., LTD.

② Promote new service/contents on B2C/B2B2C domain
33

Non-asset Business

4. New Initiatives for the 2030s: Business Domain Expansion
Expand business domains through technology and partnerships, offering new services and contents
Extensive user reach andabundant real estate asset
touchpoints①Utilization of technology

Collaboration withexternal partner

Business sophistication
New business development

Workers
in Marunouchi
Approx.

280K

PartnerCompany

Offices areas
Group manages

2.6 mnApprox.
tsubo

Strengths of our Group

Visitors to the Group’s
Facilities/year,(commercial,hotels, airports)

200

Approx.
mn

Cumulative Condos sold(To-date)
Approx.

Residence Club
Memberships
Approx.

units

households

200K

MITSUBISHI ESTATE CO., LTD.

600K

PartnerCompany

Accelerate theexpansion ofbusiness domain&
customer reach② Promote newservice/contents
on B2C/B2B2C
domainPartnerCompany34

Non-asset Business

5. New Initiatives for the 2030s: Utilization of technology①Utilization of technology
Enhance efficiency and sophisticate real estate services by utilizing technology
Create new value and function of real estate by utilizing technology
SolutionsIssues and needs

Enhance efficiency and sophisticate
 Provide know-how toservices & operation using AI and robots Office areas managed
external parties and createby our Group
Creating earning opportunities by adding
new digital functions to properties
Approx. 2.6 mn tsubo
new business opportunities

Serious Labor shortage
Work complexity
Work style reform
Property owners’ desire
for increasing asset
value

MEC’s Bldg.
Management cost
Approx.
©SoftBank Robotics▲Autonomous
security robots▲ Detect abnormality
via AI's video analysis▲ AI cleaning robots＜ Examples of business in progress ＞■ Issues and Needs

Projector

Effective use of time
& spaceElevator media“ELE-CINEMA”

Goal

Door

Needs for effective
ad media
Lack ofcommunicationmeans in buildings■ Solutions

Provide newcustomer experienceby video distribution
in elevator
Distribute various
information withsuperior viewing
experience¥50 bn/year

Our Group manages

5,000 condos• Provide property management
utilizing technology• Create new business chances bymaking digitalized real estateavailable to external partners

 Generate synergy bycollaborating with otherservices• Provide value-added information
utilizing cross-cutting customer
data• Collaborate with our existing
business domains (e.g. media)▲Actual screen

MITSUBISHI ESTATE CO., LTD.

35

Non-asset Business

6. New Initiatives for the 2030s: Provision of service contents② Provision of service contents focusing on B2C/B2B2C
Provide services for diverse personal/social issues and needs
Take new business opportunities by analyzing data and discovering new needs
SolutionIssues and needs
Diversified life-styleEnhancement of valueof experience
Change of consumer
behavior
Stress fromdiscontinuous services

Goal

Provide flexible services addressing
each consumer’s issues and needs
Minimize efforts in services and provide
pleasant service experience▲Health-awarenessprogram for female
workers▲Information
service for
Marunouchi
workers▲Web service
enabling forconvenient use

 Discover personal/social needs
by collecting and analyzing
behavioral data and visitors’ datafrom customers of MEC & partners
 Provide new services to solve theneeds
MEC’s customers

Partners’ customers＜ Examples of business in progress ＞
Communication boothfor tele-work“TELECUBE”■ Issues and Needs

Change in work
environment and style
Needs for child andfamily care
Improvement of
productivity
Reduce travel
exhaustion

MITSUBISHI ESTATE CO., LTD.

■ Solutions
Provide workplace andsupport flexible work style
Provide secure and quiet
workplace to improve
workers’ efficiency

Collect &analyze data
Discoverpersonal/social needs

Provide newservice contents36Long-Term Management Plan 2030
ESG Initiatives

MITSUBISHI ESTATE CO., LTD.

37

ESG Initiatives

1. ESG Initiatives (Overview)
Mitsubishi
Estate Group’s
MissionCreation of a truly meaningful society through urban development
Identify 7 materialities
considering environmental shift surrounding the Group

Group’sMaterialities(P39)

Establish key themes and KPIs for the 2030s
Mitsubishi Estate Group Sustainable Development Goals 2030
Key Themes

1. Environment 2. Diversity & Inclusion 3. Innovation 4. Resilience

Environment
Protecting the environment

Social

(P41)

(P42)

Human resource and resilience

Governance(P40)(P43～44)

Corporate governance system

ESG value-creation initiatives
through business
Value Propositions

Sustainability
Social issue solutions

Quality Of Life

Innovative services & experiences"Materialities = the degree of relevance of an ESG initiative to the company's domain; also, such an initiative that is deemed highly material”
MITSUBISHI ESTATE CO., LTD.

38

ESG Initiatives

2. Materialities (Important Issues for Sustainable Management)
Identifying 7 Materialities’ Opportunities and Risks
Materialities

MITSUBISHI ESTATE CO., LTD.

Opportunities

Risks

Real estate with lower environmental impact and natural
disaster resilience

Environmental regulations' impact on development
opportunities

Response to foreign workers and foreign visitors needs

Increased country, compliance, and supply chain risks

Real estate / development that protects against terrorism
and crime

Aging and vacant buildings causing security issues

Growing demand for facilities or services which meetvarious styles of life, work and consumption

New work styles (e.g. telecommuting) reducing demand
for fixed offices

Facilities that best serve the aging population

Working age population decline changes demand for
fixed offices

Redevelopment and renovation of existing stock in major
citiesNew condominium needs changing

Smart-city/home/office technology

Reduced demand for physical facilities

39

ESG Initiatives

3. Sustainable Development Goals 2030
Mitsubishi Estate Group’s Sustainable Development Goals 2030
Four key themes chosen:

1. Environment

Develop sustainable communities to address climatechange and environmental problems

2. Diversity & Inclusion

Enable people of all backgrounds to thrive by building
communities adaptive to varying lifestyle needs

3. Innovation

Create innovative cities that birth innovative ideas

4. Resilience

Build strong and resilient communities thatprioritize security, peace, and disaster protection

MITSUBISHI ESTATE CO., LTD.

40

ESG Initiatives

4. Initiatives to Protect Environment (ESG's "E")Key KPIs and Targets■ CO₂ emissions ■ Waste disposal ■ Renewable energy rate ■ Waste recycle rate
■ Water recycle rate ■ # of renovated buildings and condos ■ Domestic lumber usage rate

CO₂ Emissions⁃ Increase electricity storage facilities⁃ Optimize thermal circulation⁃ Employ demand response system

2030 Target

35％ reduction (vs. FY2018)

2050 Target

87％ reduction (vs. FY2018)*These targets were approved byWaste Recycle Ratetenants, visitors, and guests⁃ System/measures to facilitate waste
separation

2030 Target

90％【Actual : 45.5％ (FY2019)】

Renewable Energy Rate

Waste Disposal

2030 Target
2050 Target

25％
100％

【Actual : 1.3％ (FY2019)】

MITSUBISHI ESTATE CO., LTD.



SBT Initiative in April 2019

【Actual: 3,336,000t (FY2018)】

CO2 Reduction
Case Study⁃ Raise awareness and distribute information for

Use of a fuel cell system manufactured by
Mitsubishi Hitachi Power Systems
Installed in the Marunouchi Building
Mar. 2019
CO2 emission reduced by 50% vs grid
power

2030 Target

20％ reduction(vs. FY2020)【Referential figures: 0.01t/sq m. (FY2019)】

Marunouchi Bldg.

Fuel Cell System installed

41

ESG Initiatives

5. Initiatives to Human Resources and Resilience (ESG's “S”)
＜Human Resource＞Key KPIs and Targets＜Resilience＞Key KPIs and Targets■ PTO utilization■ Rate of buildings that are to take in stranded commuters■ Paternity leave utilization■ Rate of people with first aid training course qualifications■ Retention post-parental-leave
Rate of Buildings That are
to Take in Stranded Commuters

PTO Utilization
FY2021 Goal

5％ increase

Actual (FY2019)(VS FY2018)

Rate of such facilities*3【Actual*1：66.0％ (FY2018)】

Paternity Leave Utilization
FY2030 Goal

100％

【 Actual*2：12.6％ (FY2019)

Rate of People with First Aid
Training Course Qqualifications

FY2030 Goal

100％

【Actual*4 ：64.0％ (FY2019)】

Retention Post-parental-Leave
FY2030 Goal

100％

*2 Average of 5 companies (Mitsubishi Estate, Mitsubishi Estate Residence,

Mitsubishi Jisho Property Management, Mitsubishi Jisho Sekkei, Mitsubishi Real Estate Services)

MITSUBISHI ESTATE CO., LTD.

Seismic Performance of New
Building (Marunouchi Area)

1.5×of a standard skyscraper(=withstand a level 7 earthquake)

Emergency Generator for BCP in
New Buildings (Marunouchi Area)

72 hr

*5

【Actual*2：96.7％ (FY2019)*1 Mitsubishi Estate only92％

*3 Office building: Large buildings completed in 2002 onward. Commercial facilities: Large facilities completed in 2008 onward*4 Average of 3 companies (Mitsubishi Estate, Mitsubishi Jisho Property Management, Mitsubishi Jisho Retail Property

Management)*5 There are certain exceptions

42

ESG Initiatives

6. Corporate Governance (ESG’s “G”) -1
Establish effective governance that ensures long-term enhancement of corporate value(as of Jan 2020)

Corporate Structure• Transitioned to a “Company with Nominating Committee, etc.” in June 2016

Structure of the Board of Directors

Committee Members• 15 directors: 8 company directors and 7 independent outside
directors (10 of which are non-executive directors)• Chairpersons of all committees are independent outside directors• Remuneration and Nominating Committees comprised ofindependent outside directors only
Nominating Committee
Exclusively outside directors• 6 of 7 independent outside directors are male and 1 is female.

Board Structure

Composition of male/female
1

5

7
3

Company Director(Executive)
Company Director(Non-executive)
Independent/Outside Director (Non-executive)

MITSUBISHI ESTATE CO., LTD.

Audit Committee
Chairperson is outside director

Remuneration Committee
Exclusively outside directors

14
Male

Femal
: Outside Director: Company Director(Non-executive): Chairperson

43

ESG Initiatives

7. Corporate Governance (ESG’s “G”) -2
Non-Renewal of Anti-takeover Measure• The Board of Directors did not renew the anti-takeover program which would provide countermeasures against hostile
takeover attempts. It expired in June 2019.

The Executive Compensation Plan Aims to Align Shareholders and Executives’ Interests
Composition of Compensation
Base Salary50％
Fixed Component

Short-term Incentive

Singe-year
Performance-based
Incentive

25％

Medium- to
Long-term Incentive

RS
Incentive

12.5％

PS
Incentive

12.5％

Variable Component<Single-year Performance-based Incentive>
・Form : cash
・Calculation: "KPIs" : Operating Profit, ROE etc. of previous year
<New Long-term Performance-based Incentive Plan (PS Incentive) >・Form : cash
・Performance evaluation period: 3 years
・Calculation: Based on stock price and total shareholder returns relative to peer companies*<Restricted Stock Plan (RS Incentive) >・Form : stock
・Lock-up period: 3 years* Nomura Real Estate Holdings, Inc., Tokyu Fudosan Holdings Corporation, Mitsui Fudosan Co., Ltd., Tokyo Tatemono Co., Ltd., and Sumitomo Realty & Development Co., Ltd

Strategic-holding Stock Policies• Sold 28 entities* with total value of approx. 31.5 bn yen in the past four years (FY16–19).
• Current market value of the holdings is approx. 230 bn yen; routinely review strategic objectives and dispose of stocks
as necessary.

* Including partial sale

MITSUBISHI ESTATE CO., LTD.

44

ESG Initiatives

8. External Evaluation
As of January 2020, reputations or ratings below have been given.
• FTSE4Good Global Index (18 years in a row)
• FTSE Blossom Japan Index (Adopted by GPIF)(3 years in a row)
• MSCI Japan ESG Select Leaders Index (Adopted by GPIF) (3 years in a row)
• MSCI Japan Empowering Women Select Index (Adopted by GPIF)• S&P/JPX Carbon Efficient Index (Adopted by GPIF)• SNAM Sustainability Index (8 years in a row)
• GRESB Public Disclosure (3 years in a row)
• GRESB Real Estate 2019: Three Stars/Green Star
• CDP Climate Change 2019 Questionnaire: A- rating

MITSUBISHI ESTATE CO., LTD.

45

Appendices

MITSUBISHI ESTATE CO., LTD.

46

Appendices

1. Expected Results and Review of Previous Medium-term Management Plan
<Summary> All quantitative targets are on track
Financial efficiency and corporate value improvement initiatives showing significant progress①Expected results vs targets (in brackets)
Operating income: ¥230 bn(¥220 bn) , ROA: 3.9％ (around 3.5%) , Net interest-bearing debt / EBITDA: 7.4×(around 8.5×)②Efforts to improve financial efficiency

Significant progress in improving both the numerator (profit) and the denominator (asset and equity)

Increase
numerator
Expand businesswithout asset
Control
denominator• Advance long-term redevelopment projects• Enhance rental profit on existing asset• Increase in capital gains• Secure development projects• Develop hybrid model investment business• M&A: realty business, parking management• Public listing of logistics REIT company• Expand hotel operations business• Executed ¥100 bn share buyback• Disposal of underperforming asset• Disposal of strategic-holding stocks• Replacement of assets

business③Efforts to enhance corporate value
Reinforcement of
capital policy
and governance

MITSUBISHI ESTATE CO., LTD.

• Transformation of capital policy• No renewal of anti-takeover measures• Disposal of strategic-holding stocks• Change in the composition of Committees

Independent outside directors only for Nominating
Committee
Independent outside director for the chairman of Audit
Committee

47

Appendices2. Quantitative Target (Rationale of index selection)

FormulaRationale

Business Profit ÷ Total Asset*

This is an index that demonstrates the importance of continuous
improvement of asset efficiency for our asset business which continues tobe our core activity. It is also used to monitor the progress of non-asset
business.

ROE

Profit Attributable to Owners of Parent
÷ Equity*

The index is introduced for the first time in the Management Plan to ensure
improvement of capital efficiency and enhancement of shareholder value.
The basic idea is improvement of ROE through improvement of ROA.
Leverage will be properly managed, including share buyback, while
maintaining current credit ratings

EPS

Profit Attributable to Owners of Parent÷ Average Number of Stocks during
the Year

The index is introduced for the first time in the Management Plan to ensure
improvement of business efficiency and enhancement of shareholder value.
The basic idea is improvement of EPS through the improvement of profits.
The denominator will be properly managed through share buyback, while
maintaining current debt ratings.

Business Profit

Operating Profit+ Equity in earnings (loss)
unconsolidated subsidiaries andaffiliates

Strategic alliance with third parties will become more critical than ever forthe continuing growth of our business. This index is introduced to monitor
profits including returns from these joint ventures.

ROA(See below)* Average of the amount at the beginning and end of the period

MITSUBISHI ESTATE CO., LTD.

48

Appendices3. Segmentation Change from April 1, 2020
Current Segments
Office Building Business
Lifestyle Property
Business
Residential Business
International Business
Investment Management
Business
Hotel & Airport BusinessArchitectural Design &Engineering Business①:Integration of
three businesses②:Integration of international
residential business into
International Business③:Integration of disclosure
segments

From FY2021
Commercial Property
Business
Residential Business
International Business
Investment Management
Business
Architectural Design &Engineering Business andReal Estate Services
Business
Other Businesses

Commercial Property
Business Group
Office Building Business
Outlet Mall Business
Retail Facility Business
Logistics Facility Business
Hotel Development Business
Hotel Operation BusinessAirport Operation Business

International
Business Group

Real Estate Services
Business

International Commercial Property

Other Businesses

International Residential BusinessBusiness<Purpose of Change>① The Office Building, Lifestyle Property, and Hotel & Airport business units will be merged to strengthen capabilities for increasing cross-segment
projects.
② International Residential business will move from the Residential Business segment to the International Business segment to consolidate
international project expertise.
③ Architectural Design & Engineering Business, and Real Estate Services Business are integrated as Other Businesses for simplified disclosure.

MITSUBISHI ESTATE CO., LTD.

49

Contact Information
Investor Relations Office,Corporate Communications Department
Mitsubishi Estate Co., LTD.
+81-3-3287-5200
https://www.mec.co.jp/<Disclaimer>
Regarding information on the properties of this material, it is based on judgment obtained from information available at thepresentation date of this material.
Please be aware that actual information can result in different results depending on various factors.

MITSUBISHI ESTATE CO., LTD.