INTEGRATED REPORT

Heiwa Real Estate Co., Ltd.

1-10, Nihonbashi Kabutocho, Chuo-ku,
Tokyo 103-8222, Japan
https://www.heiwa-net.co.jp/en/

2022

CONTENTS

Organization and Values

Management Policy and Statement
Organization and Values

02 Management Policy and Statement
03 Group Overview
05 The Source of Corporate Value
07 Group History

Management Policy

Provision of Safe and Comfortable Offices and Living
Spaces, thereby Contributing to People and the City

Vision09 Message from the President

Strategies for Realizing Our Management Policy

Value Creation Story

Strategy and Resource Allocation

25 Medium-term Management Plan
27 Redevelopment Business
29 Building Business
31 Asset Management Business
32 Finance and Capital Strategies
Performance

35 Financial and Non-financial Highlights
Sustainable Organizational Management

41 President and External Director Dialogue
45 Environment
50 Society
54 Compliance
55 Risk Management
56 Corporate Governance
Company Data

63 Stock Information
64 Company Information
Main External Assessments

THE INCLUSION OF HEIWA REAL ESTATE CO.,LTD. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS,
TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP,
ENDORSEMENT OR PROMOTION OF HEIWA REAL ESTATE CO.,LTD. BY MSCI OR ANY OF ITS AFFILIATES.
THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOSARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

01 Heiwa Real Estate Integrated Report 2022

Medium-term Management Plan 2022–2023
EDITORIAL POLICY

15 Materiality, Risks and Opportunities
17 Value Creation Process
19 Value Creation Story

Editorial Policy

This Integrated report has been compiled to aid
understanding of Heiwa Real Estate Group efforts toenhance corporate value from a medium- to longterm perspective by including more nonfinancial
information focusing on the environment, society
and governance (ESG).
The aim of this report is to serve as a tool forshareholders, investors and all stakeholders, thatfacilitates understanding of the Heiwa Real EstateGroup and deepens dialogues between us.
Cover Design Concept

The cover design features buildings in random
forms arranged in a radiant and dynamic image,representing urban development and the resulting
growth and bustle of the city.
The motif of the building in the center of thecover image is KABUTO ONE, opened in Tokyo’s
Nihonbashi Kabutocho district in 2021. As a
Company that contributes to revitalizing districts,
the Group is promoting the Nihonbashi Kabutocho
and Kayabacho Revitalization Project with KABUTO
ONE chosen as its representative design.
Period Covered by the Report
The report mainly covers performance in FY2021(from April 2021 to March 2022). It also includes some
information on activities before or after said period, as
well as forecasts.
Organizations Covered
Heiwa Real Estate Co., Ltd., and its Group companies
Date of Publication
October 2022
Referenced Guidelines
This report has been compiled
with reference to the International
Integrated Reporting Framework by
the International Integrated Reporting
Council (IIRC) and the Ministry of
Economy, Trade and Industry’s Value
Co-creation Guidelines
In compiling this report, we creatively incorporated
visual elements aimed at ensuring the content is simple
and easy to understand. Highly important information issummarized and presented in a way that facilitates reader
understanding of the Heiwa Real Estate Group. For further
information, please refer to our corporate website.

Challenge & Progress
Taking on challenges and reaching for new heights as a
Company that contributes to revitalizing districts

Statement

Creating _Communities, Building for the Future
What makes a neighborhood bring people joy?
At Heiwa Real Estate, we build communities that invite residents and visitors
alike to create new value while maximizing local history and tradition.
Just as Japan flourished at the dawn of capitalism, we develop lively, forwardlooking environments that embrace a mature culture.
In today’s rapidly changing society, urban development plays an ever moresignificant role.
Heiwa Real Estate has supported Japan’s financial and societal growth overgenerations through revitalizing districts.
Utilizing unique perspectives nurtured through our legacy, we help solve
societal issues by expanding the possibilities of community renovation— with bold ambition and out-of-the-box thinking.

What the _in the Tagline Represents
There are many ways in which we contribute to community development.
And the possibilities continue to expand with each and every one of us
asking ourselves, “how can I make a difference?” and acting on it.
The _symbolizes the diversity of ideas Heiwa Real Estate has towards
revitalizing districts.

Cautionary Note on Forecasts
Information in the report other than statements of historical fact
are forecasts and forward-looking statements that are based on
judgments by the management of Heiwa Real Estate in light of
information available at time of publication. Actual results may
differ materially from these forecasts due to various factors.
Heiwa Real Estate assumes no responsibility for the use of
information contained in the report.

Heiwa Real Estate Integrated Report 202202

Organization and Values

Group Overview
Overview by Business Segment

Heiwa Real Estate aims to further expand its earnings base through the promotion of business strategies
based on leveraging our superior portfolio in major cities across Japan.

Business Strategy

Redevelopment Business

P. 27

1 Nihonbashi Kabutocho and Kayabacho Revitalization

Building Businesseve issu s with
sol lopment
e
1
R eve
2
d
e
r

2 Progress in Commercializing the Sapporo

Redevelopment Project

P. 29

Building BusinessResolve local
issues

3 Pursuing External and Internal Growth

Environmental Specifications and Disaster Preparedness

5 Generating Earnings from Inventory Sales

219.2

1,552

5,443.3

1,239.9

2,677.0

Leasing revenue

2,611.1

03 Heiwa Real Estate Integrated Report 2022

251.1

1,261.5
197.7

Building Business
Operating Revenue
Revenue fromsale of properties

5

5

Gain on sale of properties

5,443.3

Operating
Revenue
Building Business

Building Business
Operating Income

1,239.9

Age
-re

3

Internalgro
wt

Asset Management
revenue

Other revenue

(in
es
P
clu roperty sal atio
ding
liz
proﬁt rea

h

338.4

Improve overall
Group proﬁtability

Su

Improvecustomersatisfaction

erioration
det
ed
lat

Asset Management
Business Operating
Revenuenagemen
t re
t ma
e
s
ve
As

6

119.1

Enhance revenue
base with solid realestate portfolio

clu Prop
din erty sales ion)tg proﬁt realiza(inBrokerage(Millions of yen)

Asset Management
BusinessenuOperating Revenue and Operating Income Composition

5,781.8
338.4

Lo

ernal growthExt
3

Improve quality
and volume
through property
replacement(FY2021)

va
lue
2

n)

6 Growing Asset Management Earnings

1

Exp
an
d

P. 31

Asset Management Business

Real estate market

HEIWA REAL ESTATE REIT, Inc.‘sAsset Management and Real
Estate BrokerageaHeiwa Real Estate REITt

Asset Management
Business•Create prosperity•Improve environmental
performance•Improve disasterprevention
performance

e
ar n
rty
p r o p e e me
nc
en ha

4 Sustainable Building Operations to Improve

su es

Development, leasing,management, and buying/sellingof stock exchange buildings, officebuildings, commercial facilities,
and residential buildingsl isRedevelopment BusinesscaBusiness Segment

Business Model• Improve comfort• Improve environmental
performance• Improve disasterprevention
performanceng
inable buildi
operations 4

sta

Building Business

Operating
IncomeAsset Management BusinessHeiwa Real Estate Integrated Report 202204Organization and Values

The Source of Corporate Value

Track Record as a Trusted Owner of Securities Exchange Buildings

Heiwa Real Estate was founded as a company that owns and leases stock exchange buildings, and currently
owns the Tokyo Stock Exchange Building, the Osaka Securities Exchange Building, the Nagoya Stock Exchange
Building and the Fukuoka Shoken Building. By holding a superior portfolio of properties in the central districtsof major cities across Japan and supporting Japan's financial infrastructure facilities, etc., we have built
relationships of trust with various stakeholders.
Our experience and track record in revitalizing the Nihonbashi Kabutocho and Kayabacho districts has
enabled us to position ourselves to make significant contributions in the Sapporo Redevelopment Project andto further fulfill our role as “a Company that contributes to revitalizing districts.”
Tokyo Stock Exchange Building Osaka Securities Exchange(Chuo-ku, Tokyo)
Building (Osaka)

Superior Portfolio in Central Districts of Major Cities across JapanTokyo area

Nagoya Stock Exchange
Building (Nagoya)Market Value of Lease Properties, etc.

Sapporo area

• Tokyo Stock Exchange Building• Nisshokan Building• KABUTO ONE• Kabutocho Heiwa Building• Kabutocho Heiwa Building No. 1• Kabutocho Heiwa Building No. 2• Kabutocho Heiwa Building No. 4• Kabutocho Heiwa Building No. 5• Kabutocho Heiwa Building No. 6• Kabutocho Heiwa Building No. 7• Kayabacho 1-Chome Heiwa Building• Kayabacho Broad Square• Dogin Building• Shin-Odori Building• Park East Sapporo• Heiwa Real Estate Nihonbashi Building• Quatro Muromachi Building• Mita Heiwa Building• Uchisaiwaicho Heiwa Building• Shimbashi Square Building

Fukuoka Shoken Building(Fukuoka)• Sapporo Ekimae Godo Building• AFT Building• Hotel Emisia Sapporo(Billions of yen)
400.0

300.0

316.3
85.6

339.5

363.5

376.8

388.9
112.2

112.4

103.3

119.4

236.2

244.0

264.4

2018

2019

2020

200.0

Sapporo100.0

Dogin Building

KABUTO ONE

0

Hotel Emisia Sapporo

Sendai2017

Book value

Sendai area

Kabutocho Heiwa Building
No. 6

230.6

• Ichibancho Heiwa Building• Solala Plaza

276.7

2021

Portfolio Data (Building Leasing Earnings) (As of March 31, 2022)
Sendai and Sapporo

Nagoya6%

Nagoya11%

Uchisaiwaicho Heiwa
Building

Ichibancho Heiwa Building

Osaka• Nagoya Stock Exchange Building• CentRise Sakae• Maruzen Nagoya Honten Building

Osaka area

• Isemachi Heiwa Building• Sakae Sun City Building

Tenjin Heiwa Building

05 Heiwa Real Estate Integrated Report 2022

19%

Other

Ofﬁce

16%

• Osaka Securities Exchange Building• Osaka Heiwa Building• Hotel Brighton City Osaka Kitahama• Osaka Midosuji Building• Kyoto Shoken Building• Daimaru Kyoto Store (West) Kyodo Building• Daimaru Kyoto Store (North) Kyodo Building• Fukuoka Shoken Building• Fukuoka Heiwa Building• Tenjin Heiwa Building

Leasing revenue by region

Solala Plaza

Nagoya area

Fukuoka area

50%

Fukuoka

Fukuoka

Mita Heiwa Building

Tokyo

14%

Tokyo
Osaka

(FY)

Unrealized gains

Commercial

11%

60%

Leasing revenue by usage

Stock exchange
Hotel Brighton City Osaka
Kitahama

Osaka Midosuji Building

13%
CentRise Sakae

Maruzen Nagoya Honten Building
Nagoya Heiwa Building

Heiwa Real Estate Integrated Report 2022

06

Organization and Values

Group History
Consolidated operating income

Heiwa Real Estate was founded in 1947 as the owner of stock exchangebuildings in Tokyo, Osaka, Nagoya and elsewhere, which play a central role inJapan’s financial markets.
In revitalizing the spirit of Nihonbashi Kabutocho and Kayabacho, rather
than reenergizing the district, the Group envisions transforming it into acolorful destination where people work, live and visit.
We will take on challenges and reach for new heights as a Company that
contributes to revitalizing districts, creating new functions and culture inthis cutting-edge securities trading hub and financial and investment center
making it livelier and more inviting.

(Yen)

14,0005,000

12,61512,00010,903
10,000

8,000

7,074

7,355

1947–

0

1986
1947 Heiwa Real Estate established 11949	Listed on the Tokyo Stock Exchange,
Osaka Securities Exchange, Nagoya Stock 1987
Exchange and Fukuoka Stock Exchange
1950 Listed on the Sapporo Securities Exchange
1988
1958 Completed construction of Fukuoka
Shoken Building
1962 Completed construction of Kyoto Shoken
1993
Building
1980 Entered the condominium sales business
1994
1984 Completed construction of the stock trading
floor building (currently Arrows) within theTokyo Stock Exchange Building complex 2

Completed construction of Yokohama
Heiwa Building
Completed construction of Osaka Heiwa
Building
Completed construction of the mainbuilding of the Tokyo Stock Exchange
Building complex 2
Completed construction of Daimaru Kyoto
Store (West) Kyodo Building
Completed construction of Daimaru Kyoto
Store (North) Kyodo Building

2000–

1,648

2012

2013

Leasing Business Asset Expansion
Phase: Enhancing the Revenue Base2000 Acquired Mita Heiwa Building
2001 Acquired Uchisaiwaicho Heiwa Building
2002 Acquired Dogin Building
2004 Completed construction of Nagoya
Heiwa Building
Completed construction of the Osaka
Securities Exchange Building 3
2007 Completed construction of the Nagoya
Stock Exchange Building

2,050

1,688

1,400

1,125*

2011(FY2020–FY2023)

Taking on challenges andreaching for new heights as a
Company that contributes torevitalizing districts

12,000

11,2284,000

EPS target

3,455

At least ¥

3,000

2,799

1,838

2,000

Establishment Phase: Supporting
the Securities Industry

8,055

8,548 8,267

Medium-term Management Plan
“Challenge & Progress”

3,955 10,000

9,673 9,432
9,335

6,000

4,000

Heiwa Real Estate Group Timeline

Closing share price(Millions of yen)2009 Initiated full-scale participation in the REIT
business (Made the current Heiwa Real
Estate Asset Management Co., Ltd., aconsolidated subsidiary)2010 Completed construction of CentRise
Sakae 42012 Completed construction of Ichibancho
Heiwa Building 5

2014

2015

Consolidated operating income¥10billion

2,000

2,131

Building

2 Tokyo Stock Exchange Building

1,000

2016

2014–

2017

2018

2019

2020

2021

The Next-Generation Heiwa Real
Estate:Taking On the Challengeof Becoming “a Company That
Contributes to Revitalizing Districts”

2014 Announced the Revitalization
Vision for Nihonbashi Kabutocho

2022

2023

(Forecast) (Target)

2018 Opened FinGATE KABUTO 72015 Completed construction of
Maruzen Nagoya Honten Building

Opened FinGATE BASE
2019 Acquired Sakae Sun City Building

Note: A five-to-one share consolidation was executed on
October 1, 2012; the share price in FY2011 is presented byconverting it into the post-consolidation share price.

0
FY

2020–

Moving to a New Stage of Growth as“a Company That Contributes to
Revitalizing Districts”

2020 Opened K5 8Opened FinGATE TERRACE
2021 Opened KABUTO ONE 92022 Opened FinGATE BLOOM

2017 Acquired Osaka Midosuji Building

Completed construction of KITOKI

Opened FinGATE KAYABA 62008 Completed construction of Hotel
Brighton City Osaka Kitahama(Chuo-ku, Tokyo)

3 Osaka Securities Exchange

Building (Osaka)

4 CentRise Sakae(Nagoya)¥12 billion

1,574

KABUTO ONE Opened©K5
1 Former Tokyo Stock Exchange

200

5 Ichibancho Heiwa Building(Sendai)

6 FinGATE KAYABA(Chuo-ku, Tokyo)

7 FinGATE KABUTO(Chuo-ku, Tokyo)

8 K5 hotel interior(Chuo-ku, Tokyo)

9 KABUTO ONEThis building’s middle floors
comprise KABUTO ONE HALL
& CONFERENCE and thebook lounge Kable, while thefirst-floor atrium has a new
information dissemination
function named The HEART.
KABUTO ONE serves as a
hub for interactions between
companies and investors, sure
to become a new landmark inthis district.

(Chuo-ku, Tokyo)

History of Nihonbashi Kabutocho and Kayabacho
Meiji Era (1870s)

Taisho Era to 1940s

Recently

From a Banking to a Securities andFinancial District

Reconstruction after the Great Kanto
Earthquake and World War II

Changes in Nihonbashi Kabutocho

Recreating the Classic Look and Feel of Nihonbashi Kabutocho

The trading floor of the Tokyo Stock Exchange,
which had been active for many years,
closed in 1999 due to factors including
the introduction of electronic trading andthe increase in internet transactions. The
Kabutocho district changed significantly as
securities companies moved elsewhere.

We are implementing the Nihonbashi Kabutocho and Kayabacho
Revitalization Project while preserving the district’s history as thebirthplace of Japan’s financial markets. Aligned with the Tokyo
metropolitan government’s “Global Financial City: Tokyo” vision, weare creating a new Kabutocho as a district where people connect, andwhere investment and growth are born.

Japan’s first modern bank, First National Bank
(now Mizuho Bank) opened in Kabutocho in
1873. The Kabutocho district subsequently
developed as a center of the Japanese economy
with the establishment of a stock exchange,
which then became the Tokyo Stock Exchange,
and numerous companies.

07 Heiwa Real Estate Integrated Report 2022

Japan’s securities markets resumed with theapproval of the GHQ in 1949. As a securities
district, Kabutocho became synonymous with thecountry’s financial markets and economy due tothe development of the Japanese economy andthe boom in its securities markets.

Currently
Announcement of a Revitalization Tagline: a Starting Point
and a Highlight

We will speed up the Nihonbashi Kabutocho and Kayabacho
Revitalization Project in the future, and the district will become aneven greater starting point for the passion of those looking to the
future and a place where all attempts and challenges shine as it offers
value and charm as an entrepreneurial starting point.

Heiwa Real Estate Integrated Report 2022

08

VisionMessage from the President
Launch of the Kabutocho 3.0 Era
Heiwa Real Estate, founded in 1947 as the owner of stock exchange buildings in Tokyo, Osaka,
Nagoya and elsewhere, with its head office located in Nihonbashi Kabutocho and Kayabacho,
known widely as a securities trading hub and a financial and investment center, has contributed
to the development of the district while bearing the heavy responsibility of supporting Japan’s
financial market infrastructure. Nihonbashi Kabutocho and Kayabacho is where Eiichi Shibusawa
devoted himself to the modernization of Japan from the Meiji Era onward, establishing The First
National Bank, Japan’s first modern bank. As the birthplace of the Japanese economy, this was atruly cutting-edge district where a stock exchange (now the Tokyo Stock Exchange) and numerous
companies were established.
If we refer to this district during the Meiji Era as Kabutocho 1.0, then the postwar period, when
it flourished as a financial district centered on the stock exchange and was known as “Japan‘sWall Street,” can be referred to as Kabutocho 2.0. This is the era in which Heiwa Real Estate
was born. Later, when the stock exchange was fully computerized to improve the efficiency of
securities transactions, the district was no longer as bustling as it had been in the past. Today, as acompany rooted in this district, we are engaged in a revitalization project leveraging the historicalcharacteristics of this district and Heiwa Real Estate strengths aimed at launching the Kabutocho
3.0 era.
This district, where Eiichi Shibusawa based the launch of new endeavors, was known as a placeof beginnings, what today we might call a hotbed for startup companies. While making use ofhistorical and geographical characteristics such as finance and startups, rather than simply restoring
the traditional bustle of this district, we want to transform it into a colorful destination that attracts adiverse range of people who work, live, stay, eat, shop and enjoy a variety of activities here.

Unique Strengths of Heiwa Real Estate

Enhancing Social andShareholder Value throughDistrict Revitalization Leveraging
Geographical History
Kiyoyuki Tsuchimoto

Representative Executive Officer,
President and CEO

09 Heiwa Real Estate Integrated Report 2022

In addition to Nihonbashi Kabutocho and Kayabacho, we also own superior portfolios in othermajor cities throughout Japan, including Osaka, Nagoya, Fukuoka, Sapporo, and Sendai. Althoughthese are not large areas, clarifying target areas is a major strength in terms of promoting district
revitalization throughout Japan. Regarding our home ground of Nihonbashi Kabutocho andKayabacho, by specializing in an area comprising approximately 100,000 square meters, we haveestablished face-to-face relationships with local residents, and based on this positive relationship,
we contribute to enhancing the value of the district itself through redevelopment incorporating
local characteristics.
In summer 2022, in the first-floor lobby of KABUTO ONE, the new Kabutocho landmarkthat opened in August 2021, a full array of portable shrines was on display. The fact that thisproject was implemented in a way that was loved by the local community is an important pointin considering the social significance of the real estate business. Our strength in building good
relationships through dialogues is also a soft power in terms of attracting and maintaining
relations with tenants.
In line with the Global Financial City: Tokyo concept promoted by the Tokyo Metropolitan
Government, since 2017, we have deployed the FinGATE series to attract independent asset
management companies and Fintech startups, and despite the impact of the pandemic over the
past two years, we have made steady progress, already attracting approximately 60 companies.
In April 2022, we opened our fifth facility in response to high occupancy rates, which has been
performing well, with more than half of all contracts signed before the grand opening. In addition
to the innate characteristics of the district itself and its objective appeal as a center for finance andstartups, we have built a solid reputation with tenants based on soft power, including support for
pre-startup preparations and post-launch networking within the district. Adding value to physicalspaces with soft power and enhancing the overall appeal of the district has translated to highoccupancy rates in assets held by the Company.

Heiwa Real Estate Integrated Report 2022

10

VisionMessage from the President

Status of the “Challenge & Progress” Medium-term Management Plan
In 2014, we formulated the medium- to long-term management plan “Over the NEXT DECADE”
with the aim of becoming a Company that contributes to revitalizing districts. This plan was
praised by investors and capital markets for taking on the challenge of redevelopment projects
integrating multiple city blocks. To maintain and further develop this successful business strategy,
we position the four-year “Challenge & Progress” medium-term management plan (FY2020–
FY2023) as period in which we will take on challenges and make great strides as a Company that
contributes to revitalizing districts. Despite launching the plan at the beginning of the pandemic,
we have made steady progress and achieved tangible results, including the opening of KABUTO
ONE last year after the plan’s turnaround point at the end of FY2021.
While Group's assets include commercial facilities, hotels and residences, the core of ourportfolio comprises office buildings throughout Japan, where have been able to maintain stable
operations even during the pandemic. As a result, in FY2021, the second year of the medium-term
management plan, the Group posted operating income of ¥12.6 billion and ordinary income of¥11.5 billion, both record highs for the third consecutive year, while net income attributable toowners of parent amounted to ¥8.7 billion, reaching a record high for the fifth consecutive year.
While we are aware that some survey reports express concerns about deterioration of the officeleasing market due to the pandemic, when looking at building leases in Nihonbashi Kabutocho
and Kayabacho, lease levels after the opening of KABUTO ONE have risen to approximately
double that of leases before redevelopment. In our view, there is a positive gap where upsides
in leasing can be expected as redevelopments improve the value of the district overall.
Redevelopments that improve the overall value of a district enhance Heiwa Real Estate economic
and shareholder value, while realizing a win—win relationship with tenants and local communities
by making the district more attractive and enjoyable for everyone. We will continue to deliversolid results over the remaining two years of the medium-term management expect to achieve all
targets.
At the same time, looking to the post-pandemic horizon, hotels that had been severely
impacted by COVID-19 are also on a recovery track. As Japan will continue to promote theexpansion of the inbound traveler market as a tourism-oriented country, we will position hotels as
an important asset for long-term growth and focus on them to a greater degree than in the past.
We are also reaffirming the stability of rental residences, with plans to expand our investment inrental residences centered on the new "ORSUS" brand in the rental residence business.

KABUTO ONE Opening
KABUTO ONE opened in August 2021, the first mixed-use building in our ongoing Nihonbashi
Kabutocho and Kayabacho Revitalization Project. The building name reflects the notion that
Kabutocho was, and will continue to be, the enduring starting point for the Japanese economy. It
has been nearly 10 years since we first formulated the Kabutocho and Kayabacho Revitalization
Project, and during the past two years, the district has transformed into an immensely colorfulplace attracting distinctive tenants that include a fashionable bistro, a confectionary shop
operated by a popular pastry chef, and a shop opened by the foremost chocolatier in Asia.
Amid all this, when I see KABUTO ONE, now complete as a tangible representation of our workand actually being used, I realize that the Kabutocho 3.0 era has finally arrived. It has been atremendous challenge for Heiwa Real Estate to transform this district, which had been driven
mainly by the stock exchange, into a district where people gather. It has become a destinationthat is more crowded on weekends than weekdays with young people and families withsmall children. The worldwide edition of the global city guide Time Out selected Nihonbashi

11 Heiwa Real Estate Integrated Report 2022

Kabutocho for inclusion among the 40 coolest neighborhoods in the world today, and HOTEL
K5, which opened in February 2020, was included in the MICHELIN Guide Tokyo 2021. I am
also pleased to see that this district has become more colorful and vibrant, with more places forworking people, especially those in the financial industry who work hard during the week, to takea breather and enjoy time off work.
In the first-floor atrium of KABUTO ONE, we installed “The HEART,” a visual digital signage
system symbolizing the new Kabutocho financial hub. Based on a beating heart and blood
circulation motif, The HEART visually conveys the pulse of the economy and market conditions,features unique to Kabutocho. On the third and fourth floors, there is a library lounge thatserves as a space facilitating dialogues and exchanges, as well as a hall able to accommodate
General Shareholders’ Meetings and IR briefings based on the concept of connecting investors
and companies.

Future Development Projects
We will continue to engage in development projects in FY2022 and beyond.
In April of this year, we completed construction of KITOKI, the first office building with retailstores for which Heiwa Real Estate adopted a hybrid structure comprising wood and SRC. In
creating a district in harmony with nature, we incorporated a biophilic design that satisfies theinstinctive human desire to be close to nature, featuring exteriors reflecting vibrant greenery andinterior designs conveying a sense of trees, water and wind on each floor.
We are developing the Kabutocho 12 Project aimed at the FY2025 opening of Caption by
Hyatt Kabutocho Tokyo, the first Hyatt select service lifestyle hotel brand in Tokyo, Japan. With adistinctive style offering few banquet facilities and a design that does not enclose guests within
the hotel, Caption by Hyatt Kabutocho Tokyo will introduce guests to restaurants and otherattractions that can be enjoyed in the district, which we believe will facilitate a win-win relationshipcomplementing our district revitalization concept. We are developing this project to capture postpandemic inbound tourism demand and meet the needs of investors and other visitors to Japan,
enhancing the overall appeal and function of the district. This project has been selected for the
Leading Projects Program for Sustainable Buildings for 2022 (led by wooden structure) promotedby the Ministry of Land, Infrastructure, Transport and Tourism, with the aim of spreading awarenessand advancing technologies related to wooden buildings as a leading project promoting the useof wood in mid- and high-rise hotels. After the aforementioned KITOKI, this is the second Heiwa
Real Estate project selected for this program. These projects are part of our efforts to realize
sustainable district revitalization, which is one goal of the Nihonbashi Kabutocho and Kayabacho
Revitalization Project.
Considering the risk of major earthquakes and other natural disasters, reducing theoverconcentration of people in Tokyo is a major issue in terms of the resilience of Japanesesociety as a whole. We will also incorporate lessons learned from the Nihonbashi Kabutocho andKayabacho Revitalization Project to promote Redevelopment Business in Sapporo, which hosted
the full marathon event in last year’s Olympics originally planned in Tokyo. I believe that the city of
Sapporo itself is quite significant for its diverse array of functions. We own assets in the heart areaof Sapporo, and will focus on the Sapporo Redevelopment Project from the larger perspective ofaddressing social issues.
With regard to the Sapporo Station South Exit North 4 West 3 Type 1 District redevelopment
project, in which Heiwa Real Estate participates as a land owner and leaseholder, as well as the
Odori West 4 South District Type 1 Urban Redevelopment Project, for which the City of Sapporo
issued a notice of urban planning decision and recently announced, we are targeting completionin 2028 and promoting commercialization in anticipation of the Hokkaido Shinkansen line
extension to Sapporo and the city’s bid to host the 2030 Winter Olympics.

Heiwa Real Estate Integrated Report 2022

12

VisionMessage from the President

Contributing to Society through Business

Enhancing Human Capital

Improving social value is one of the basic policies under our medium-term management plan.
Through projects such as the Nihonbashi Kabutocho and Kayabacho Redevelopment Project
and the Sapporo Redevelopment Project, we hope to contribute to the creation of safe andsecure communities, including disaster prevention, and the realization of a sustainable society.
Sustainability management is a major theme for Heiwa Real Estate, hence the Sustainability
Committee, established in December 2020, plays a key role in identifying the social values andmateriality we target, positioning climate change countermeasures, industrial and regional
promotion, meeting social needs, natural disaster risk responses and corporate governanceenhancements as particularly important issues. Further, we attempt to increase sustainability
management efficacy with the establishment of a framework in which the Board of Directors
monitors the content of annual sustainability plans in each department, as well as the progress
and achievement of those plans.
From an environmental perspective, in October 2021, we set a new target for greenhousegas (GHG) emission reductions of 50% (compared to FY2018) by fiscal 2030, and obtained
Science Based Targets* (SBT) certification. To achieve this target, we are switching over electricity
used in our properties to electricity derived from renewable energy sources, and will continue
to add properties utilizing renewable energy in line with global trends toward decarbonization.
Additionally, we established specific numerical targets and roadmaps for water consumption,
waste and other issues, as we move forward with a variety of additional initiatives.
To further strengthen our commitment to sustainability management, in December 2021, we
announced our endorsement of the Task Force on Climate-related Financial Disclosures (TCFD)
and made qualitative disclosures. We are currently preparing quantitative disclosures in line with
TCFD recommendations. In 2022, we also commenced sustainability-linked loan agreementswith several financial institutions upon receipt of financing. Having recognized our ambitious
GHG reduction targets, ratings agencies set sustainability performance target (SPT), with interest
rates and other conditions linked to the achievement of SPTs. In the real estate industry, thesustainability benchmark GRESB is used to measure and evaluate the ESG initiatives of eachcompany. In the Standing Investment Benchmark (for the management of existing property), in
2021 we received three out of a possible five stars in 2021, up from two in 2020. We feel that allof our ESG efforts are beginning to show in external evaluations. We will continue to promotesustainable initiatives to further improve our reputation.
With regard to safe and secure district revitalization, in addition to tangibles such as
seismic resistance in buildings, we aim to position ourselves to seek the safety and security ofcommunities and tenants in the event of an emergency, demonstrating our soft power. In thisrespect, we are proud that all our executives and employees have taken basic lifesaving courses
and obtained lifesaving skill certifications from the Fire and Disaster Management Agency andother organizations. Underpinning my idea of achieving a 100% acquisition rate among officers
and employees is the desire for all employees to be aware of their solemn duties and take pridein the fact that we are moving beyond the reconstruction of buildings, where we have establishedsolid a track record, to the revitalization of entire districts. In the Building Department, which serves
as the point of contact for tenants, I see encouraging changes, including the voluntary acquisitionof fire safety specialist certification.

As employees are an important management resource for the Company, rather than a cultivatorof human resources, I see my role as enriching the soil in which they can grow on their own. To
this end, young employees under the age of 30 who are preparing to become professionals areencouraged to acquire two or more qualifications designated by Heiwa Real Estate. I consider
expenditures associated with the acquisition of qualifications as an investment in human resources
rather than a cost, with some qualifications accompanied by an allowance after acquisition. We
encourage employees to take full advantage of this environment, and over the past year, young
employees have been proactively acquiring qualifications, tripling the amount of our investment.
At the same time, with regard to managers, we make an effort to draw out the potential ofeach individual through challenging job assignments. We intend to expand human resource
employment to include mid-career hires in addition to new graduates. I believe that the mutual
stimulation and chemical reaction between mid-career hires and existing employees will lead to
self-awareness that, in turn, will raise the level of the Company as a whole from a variety of angles.
Regarding human resource diversity, in recognition of the importance of gender diversity inparticular, we set a numerical target for the female manager ratio of 10% by 2025. In 2022, wecreated two new female manager positions and are hiring women in mid-career as candidates
for management positions. We also promote health management based on our belief thatthe maintenance of employee health is important for people to be able to engage in workwith satisfaction and demonstrate their capabilities. Heiwa Real Estate has been recognized by
the Ministry of Economy, Trade and Industry as a Certified Health & Productivity Management
Outstanding Organization for two consecutive years since 2020, with our next target being
inclusion among the top 500 corporations in Japan as a White 500 company, a goal the entire
Company is working together to realize.

Note: Science Based Targets are greenhouse gas emission reduction targets set for companies over the next 5–15 years consistent with levels
required by the Paris Agreement (which aims to limit global temperature increases to well below 2°C above pre-industrial levels and
1.5°C below pre-industrial levels).

13 Heiwa Real Estate Integrated Report 2022

To Our Stakeholders
In July 2022, we celebrated the 75th anniversary of our founding. Heiwa Real Estate has always
proactively sought to earn the trust of our many stakeholders, including local communities,
shareholders and business partners, while flexibly responding to changes in the businessenvironment. We will remain a Company trusted by its stakeholders as we will continue to makefurther changes going forward.
Having received approval at the General Shareholders’ Meeting held in June 2022, werevamped our institutional design, transitioning from a Company with an Audit & Supervisory
Board, to a Company with a Nomination Committee, etc. In separating supervisory and executivefunctions and enhancing the Board of Directors supervisory function, we will create a sophisticatedgovernance structure, and in delegating authority to the execution side, we will promote flexible
management and advance district revitalization with unprecedented decision-making speed.
Eiichi Shibusawa, who pioneered the Nihonbashi Kabutocho and Kayabacho districts, held theAnalects of Confucius in one hand an abacus in the other, embodying his basic philosophy on theunion of morality and economy. As the president of a Company with its head office located in thesame district where Shibusawa once had his office and residence, I will strive to create value forsociety by taking the management high road based on the precept of “never taking the easy way
out” from the Analects of Confucius and reflect the results of these efforts in shareholder returns.
Our top priority, the Nihonbashi Kabutocho and Kayabacho revitalization project, is changing
the image of the district itself, and my sense is that success is with our grasp. As we continue
to learn from this experience and utilize it in our next development project with the aim ofcontributing to the realization of a sustainable society, I ask for the continued understanding andsupport of all of our stakeholders.

Heiwa Real Estate Integrated Report 2022

14

Value Creation Story

Materiality, Risks and Opportunities

Sustainability Vision

Heiwa Real Estate has determined the social value we aim to provide and identified the materiality necessary
for realizing them.
In addition to responding to stakeholder expectations, we identify medium- to long-term risks andopportunities that are incorporated into sustainability management practices.
Targeted Social Value and Materiality
Targeted Social Value

Create disaster-resistant,resilient areas

We will contribute to the creation ofa district comprising buildings andfacilities with a high level of disaster
preparedness to ensure the district
continues to function safely amid thedaily community activities of people
who live and work in there.

Create environmentfriendly low-carbon areas

We will enthusiastically support
moves to embrace energy-efficienttechnologies and renewable energy
to help reduce CO2 emissions in the
district.

Create lively areas
through corporate
governance

We will continue to strengthen
corporate governance and aim to bea Company in which all officers andemployees proactively addressenvironmental and social issues.

Industrial andregional development

Materiality
Identification Process

STEP

1

Screening social
issuesUpon determining
materiality, we referred
to business plans, GRI
Standards, ISO 26000, theSDGs and other materials
to help screen social issues.

15 Heiwa Real Estate Integrated Report 2022

STEP

2

Strengthening
corporate governanceIntegration andconsolidation of issues
After screening andsorting, social issues
were integrated andconsolidated byreorganizing similar items
and factoring in theirrelevance to the Group

Based on the Group‘sapproach to stakeholder
engagement, interviews
were conducted withstakeholders, andopinions were gatheredregarding the materialityof social issues in the
Company and society.

Declining brand value and potential customer appeal due
to insufficient industrial and regional revitalization efforts

Enhance the district’s brand value and attract potential
customers through involvement in industrial revitalization,
including contributions to the Global Financial City: Tokyo vision

Risk of turnover rate increases and lower lease prices due todelayed responses to new needs

Climate change
countermeasures

Interview withstakeholders

Opportunities

Risk of personnel shortages, biased viewpoints andactivities

Natural disaster risk
mitigation measures

3

Risks

Risk of district decline due to fewer local residents, visitors,
etc.

Responding
to social needs

Identifying Materiality and Stakeholder Engagement

STEP

SDGs

STEP

Enhance brand value by invigorating the district through avariety of activities

Enhance human capital through recruitment and promotionof diverse human resources
Improve value provided by the Company with officeenvironments suitable for new work styles

Risk of asset loss due to natural disasters and suspended
activities in the district due to damage in surrounding areas

Increase the value of the district and Company assets
through reliability and safety enable ongoing activities inthe district

Increased impact of energy price fluctuations due todependence on the use of low-efficiency resources, carbon
taxes and the tightening of other regulations

Lower repair and operating costs by reducing resource
usage and improving efficiency

Lost opportunities to acquire tenants and loss of leasepremiums due to delays in implementing environmental
measuresOpportunity to acquire tenants and higher lease prices using
enhanced environmental friendliness as the point ofdifferentiation from other properties

Increased compliance risks due to deterioration of internal risk
management systems and declining awareness of compliance

Reduce compliance risks by strengthening risk management
and raising compliance awareness throughout the company

Risk of reduced effectiveness of sustainability measures due tolack of understanding and cooperation within the Company

Improve effectiveness of sustainability measures by raisingsustainability awareness throughout the Company

Stakeholder Engagement

4

The Group strengthens relationships with stakeholders through two-way communications and the provision ofenvironmental, social and economic value, contributing to the realization of a sustainable society.

Identification of materiality

Based on interviews, social issues wereconsidered in terms of importance to theCompany as well as stakeholders, with theidentification of materiality reported to theBoard of Directors.
Degree of importance among stakeholders

Create lively areas
through diversity andincubation

Risks and Opportunities

Materiality

We will play an active role in thecreation of ideal areas, where adiverse range of people gather andwork together, stimulate investment,
securities and finance, and foster
culture and the arts.

Help realize a sustainable society by increasing satisfaction through developmentof resolutions to environmental and social issues, and interactive communication
with shareholders, in our role as a Company that contributes to revitalizing districts

Building tenants and users

Low

Shareholders and investors

In addition to disclosing information in atimely and appropriate manner, the Group
proactively conducts financial results briefingsand participates in IR events for individual
investors with the aim of engaging in a wide
range of mutual communication opportunities.

Materiality

Global environment
High
Degree of importance for Heiwa Real EstateBusiness partners

The Group works to ensure sound businessactivities and improve its services from thestandpoint of its building tenants and users,
while responding to their concerns fairly
and sincerely.

With a full awareness of our responsibility
toward conserving the natural environment,
the Group proactively implements
environmental initiatives while complying withenvironment-related laws and regulations,

Building tenants
and users
Shareholders
andinvestors

Business
partners

The Group makes a good faith effort toconduct business in accordance withsocietal norms and laws related to free
and fair competition and transactions in aneffort to mutually enhance corporate value
alongside business partners.

Employees
The Group strives to respect the characterof each employee, eliminate any and all
discrimination and harassment, and ensure
safe and comfortable work environments inan effort to realize comfort and abundance.

Globalenvironment

Employees

Local
communities

Local communities

The Group places importance on
coexistence with local communities andbroadly works to contribute to society as agood corporate citizen.

Heiwa Real Estate Integrated Report 2022

16

Value Creation Story

Value Creation Process
CapitalThe Value We Offer

Intellectual Capital

Proﬁt targets

Redevelopment Business

Reputation and reliability
as an owner of stock
exchange buildings
Owned and leased stock exchangebuildings across Japan since
the Group was founded

Owns assets in the central districtsof major cities across Japan
Owns properties with potential
for medium- to long-term
redevelopment

Social capital
Good relationships with clientsand local communities

Increasing
quality andvolume throughproperty
replacement

Expanding earnings
base with a superior
real estate portfolio

Approx. 600 companies

Employees engaged
in urban development
Group employees

Improvingoverall Group
proﬁtability

Building Business240people

FemaleEmployees(non-consolidated) employee ratio

35.2%

Water usage

0.62m /m2

Corporate• Promoting capital policy focused on capital costs and efﬁciency• Strengthening corporate governance • Practicing sustainability management
Climate ChangeCountermeasures

Stakeholder expectations and needs

Solid ﬁnancial base

Building tenants
and users

Business
partners

Employees¥ 1,192billion

Interest-bearing debt
¥ 2,062billion

17 Heiwa Real Estate Integrated Report 2022

GlobalLocal
Shareholders
communities environment
andinvestors

Materiality

Financial Capital¥ 3,762 billion

Approx. 70%(FY2020–FY2023)

Consolidated
dividend payout
ratio ofapprox. 50%
by FY2023

GHG emissions

Water usage

Waste

reduction by
FY2030reduction by
FY2030reduction by
FY2030(vs. FY2018)(vs. FY2018)(vs. FY2018)

50%

20%

20%

Create Lively Areas through Diversity & Incubation
Rate of new hires thatare female

Paid holiday usage rate

Uptake of cancer screenings(every 2 years)

Annual health checks
uptakeAt least 30%

100%

of employees aged 35
or above

Buildings compliant with newearthquake resistance standards

Natural resources and energy

Net assets(FY2020–FY2023)

At least 70%

100% annually

Create Disaster-Resistant, Resilient Areas

Natural Capital

Total assets

Consolidated total return ratio

Create Environment-Friendly Low-Carbon Areas

Enhancingproperty value
throughsustainablebuilding
management

Human Capital

3

ROE

S: Society

Cooperative relationshipwith local communities

109,960Mwh

Shareholder returns

Improving shareholder value
as a listed real-estate company
The Company will improve shareholder
value through returns and greater capital
efﬁciency by maximizing the use of theGroup’s corporate value and by creating
and achieving added value in real estate.

E: Environment

Number of tenants

Energy usage(FY2023)

At least ¥120billion

At least 6%

Playing a part in the“Global Financial City: Tokyo” vision

91 people(FY2023)

Capital efﬁciency

Asset Management
Business

Superior portfolio

Consolidated operating income

At least ¥200

Enhancing areavalue throughredevelopment

Manufactured Capital

EPS

Improvingshareholder value

Responding toSocial Needs
Industrial andRegional Development
Natural Disaster
Risk Mitigation Measures
Strengthening ofCorporate Governance100%(excluding buildings earmarked
for redevelopment)

People with ﬁrst aid
training course
qualiﬁcations

All of our ofﬁcers
and employees

G: Governance
Create Lively Areas throughCorporate Governance
Composition ofBoard of Directors

Number of
female directors

Composition of Nomination
and Compensation Committee

Compliance training

At least one-third
external directors

Majority external
directors

Vision for
the Heiwa Real EstateGroup
As “a company that contributes torevitalizing districts,” the Group strives tohelp our society become more sustainable
while also improving corporate value, byincreasing satisfaction through interactive
communication with stakeholders andproviding solutions to environmental andsocial issues.

Improving social value
Making society sustainable
as “a company that contributes
to revitalizing districts”

The Group will help our society become moresustainable and promote the revitalization ofsafe and secure districts, taking into accountenvironmental concerns and disaster
preparedness, through initiatives such as therevitalization of Nihonbashi Kabutocho andKayabacho, the Sapporo Redevelopment
Project and asset management.

At least one

At least ﬁve times
each year

Heiwa Real Estate Integrated Report 2022

18

Value Creation Story

Value Creation Story
Responding to Local Issues and Social Needs
On the Nihonbashi Kabutocho and Kayabacho Revitalization Project, in developing andoperating properties, we formulate measures incorporating the resolution of local issues andsocial needs, leading to overall area rejuvenation.
In addition to creating bustle in the area and preparing for natural disasters, we areengaged in a wide range of activities unique to the storied financial district that include
making use of historic buildings and contributing to the Global Financial City: Tokyo vision.

Redevelopment

Main Issues and Social Needs• Creating bustle in the area

• Making use of historic buildings

Attractive andsustainable Nihonbashi
Kabutocho andKayabacho Revitalization
Project• Mitigating natural disaster risks• Decarbonization• Contributing to the Global Financial
City: Tokyo vision

Contributing to the
Global Financial
City: Tokyo vision

To

Ni
ng
yo
ch
o

Making use ofhistoric buildings

Nisshoken Building
Tokyo Stock Exchange Building

To
ei

K5

FinGATE BASE
FinGATE KABUTOKITOKIFinGATE TERRACE

KABUTO ONE
Eit
aido
ri

Sh
in O
ha
shi
-do
ri

Nihonbashi Kabutocho and Kayabacho
Revitalization Project

To
Nih
onb
ash
i

Shu
to
E
Cir xprescul swar R ayou Inneter

Mobilizing Heiwa Real Estate
Strengths to Create Attractive
and Sustainable Districts

Mizuho BankFinGATE BLOOM

Chuo Police Station

Kayabacho Station

Creating Districts Connecting People, Giving Rise toInvestments and Growth

19 Heiwa Real Estate Integrated Report 2022

He
iwa
-do
ri

Since the Meiji Era, Kabutocho has been known as an entrepreneurial district
for investment and securities, a stage for modern innovations, the gathering ofinvestors and the exchange of various information.
In light of this historical background, we announced the concept of creatinga district where people connect, and where investment and growth are bornwith the aim of revitalizing the essence of Kabutocho by integrating Kabutocho’s
potential with neighboring district functions.

FinGATE KAYABA

To
Mo
nz
en
To nakaza
i L cho
i

ne

Hib
iya
Lin
e

Urban Development Concept

To
Nin
gy
och
o

er
hi Riv
nbas
Niho

As
To
aku
Nih
sa
on
Lin
ba
shi
e

Sh
ow
a-d
ori

Nihonbashi Post Ofﬁce

Assets held by the Heiwa Real Estate Group(including some shared assets)
Area targeted for urban development

Heiwa Real Estate Integrated Report 2022

20

Value Creation Story

Redevelopment

Since its founding as the owner of stock exchange buildings playing
a central role in Japan’s financial markets, Heiwa Real Estate has been
deeply involved in businesses rooted in districts comprising the core offinancial markets across Japan.
Competition among cities is heating up globally as people,
economies and information become increasingly borderless.
In promoting the revitalization of Nihonbashi Kabutocho andKayabacho, the Company’s home ground and location of Japan's
largest stock market, we will play a role in establishing Tokyo as a
global financial center in Asia.

Redevelopment

Leveraged Capital and Strengths• Good relationships with business partners and local communities

Tokyo Stock
Exchange

Opened November
2021

Nihon

bashi

River

KABUTO ONE

4

5

Shin Ohashi-dori

3

8

7 8 8
1

Kayabacho Station

Sakamotocho Park

3

6

We introduced a damage assessment system able toassess building damage immediately after an earthquake,even in the absence of professional engineers. This system
can be used as objective data to determine whether or not
a building can remain in operation after an earthquake.

Eitai-dori

NekiOpened December 2021

KABEAT
Opened June 2022

©omnipollo

21 Heiwa Real Estate Integrated Report 2022

KNAG
teal

Opened October 2021

(4) Preventing power outages due to flooding
To prevent flooding, the critical KABUTO ONE Disaster
Prevention Center is located above ground on thesecond floor, with electrical substations and emergency
generators located above ground on the fifth floor(approximately 22 meters high) as well as on the rooftop.

(6) Stockpiling emergency supplies
Heiwa Real Estate contributes to enhanced district-wide
disaster prevention through the provision of temporary
waiting areas and emergency supply stockpiles to assist
people unable to return home when a disaster occurs.

(1) Block reorganization and integration
We reorganized and integrated four city blocks to create
throughways, sidewalks and other open spaces contributing
to improved pedestrian access and a bustling atmosphere.
(2) Underground passageway
A planned underground passageway will connect
directly to Kayabacho Station and the Tokyo Metro Tozai
Line and Hibiya Line, facilitating a comfortable, smoothpedestrian network providing barrier-free access between
Kayabacho Station and the ground level, which is currently
unavailable in the area north of Nihonbashi Kabutocho
where this project is located.

Efforts to reduce environmental burdens

KABUTO ONE

7

Prior to redevelopment, the district was densely packed
with multiple properties, making it difficult to separate
vehicle and pedestrian traffic or provide barrier-freeaccess and open spaces. With KABUTO ONE, we aimed tocreate pedestrian pathways and achieve harmony with thesurrounding environment through the following initiatives.

Opened July 2020

ease

8

Creating spaces for pedestrians

Heisei-doriNihonbashi
StationShuto Expressway Inner Circular RouteShowa-dori

2(3) Installation of emergency generators
KABUTO ONE is equipped with emergency generatorsthat can supply 15 VA/m2 to offices for up to 72 hours
after power supplies have been interrupted due tonatural disasters and other emergencies. These dualfuel emergency generators (dual backup system using
propane and fuel oil) can also generate power using
medium-pressure gas, which is highly reliable even in theevent of a disaster. Space has also been provided so thattenants can install their own emergency generators as a
backup measure.

(5) Highly reliable supply of electricity
KABUTO ONE utilizes three-circuit spot network substations.

6

Opened February 2020

Opened October
2020(assumption)

Vibration
control
structure

Nisshoken Building©K5

5

Building
deformation(2) Introduction of damage assessment system

Before the full-scale launch of the Nihonbashi Kabutocho
and Kayabacho Revitalization Project, the district mostly
comprised office spaces, hence the need to expand the
district’s function beyond work to foster a more bustling
atmosphere.
Against this backdrop, following the opening of K5 in
February 2020, we modernized the atmosphere of the
district with the opening of five independent restaurants
attracted by the future potential of this district. Three newrestaurants were opened on the first floor of KABUTO
ONE to provide color and activity, making a total of 18
commercial facilities strategically attracted to the district
through Heiwa Real Estate urban development efforts.

Opened August 2020

KABUTO ONE intermediate layer
seismic isolation structure

Seismic
isolation
structure

Expanding into Restaurants and Other Businesses

4(1) Use of intermediate layer seismic isolation structure
The use of an intermediate layer seismic isolation
structure reduces shaking from earthquakes and otherdisasters, providing safe and secure office spaces.

(assumption)• Track record and trust as owner of stock exchange buildings

2

In response to the growing need to enhance disasterprevention and BCP countermeasures with regard to
owned assets, Heiwa Real Estate has taken the following
measures at KABUTO ONE.

Building
deformation• Promising tenant relationships

Opened March 2016

Enhancing Disaster Prevention, Supporting Business Continuity Plan (BCP) Countermeasures

Standard earthquake-resistantbuilding• Superior portfolio (favorably located development sites)

1

KABUTO ONE Initiatives

HOPPERS(1) Introduction of environmentally friendly equipment
In addition to Low-E glass on exteriors to reduce heat loss, we use LED lighting
equipped with auto-dimming sensors and other high-efficiency equipment.
(2) Creating green spaces
We create lush pedestrian spaces with greenery on walls and an abundance ofgreen spaces throughout district streets.

(3) Installation of solar panels
Solar panels have been installed on
the building roof to provide a portionof electricity used in common areas,
thereby promoting the reduction of
GHG emissions through the use ofrenewable energy.

Heiwa Real Estate Integrated Report 2022

22

Value Creation Story

Utilizing Historic
Buildings

Utilizing Historic Buildings

Value Creation Story

In addition to the development of new buildings through scrap-and-build,Heiwa Real Estate renovates high-quality buildings for continued use.
Based on the idea that quality buildings should be utilized and provide
value for 50–100 years, we revitalize districts using a mix of development
and renovation.

As part of the Global Financial City: Tokyo vision formulated by the Tokyo
Metropolitan Government, we are promoting three specific measures:Support for the development of financial venture and other companies
with a focus on asset management, the establishment of spaces promoting
dialogues and exchanges between investors and companies, and acceptanceof high-level financial personnel, mainly targeting foreign nationals.
Against this backdrop, we launched the FinGATE series as an incubation
activity supporting the launch and growth of independent asset managementcompanies and financial startups that will drive the future of finance.

Contributing to the
Global Financial City:
Tokyo Vision

Leveraged Capital and Strengths

Leveraged Capital and Strengths• Cooperative relationships with local communities• Track record and trust as an owner of securities exchange buildings

Community-wide initiatives in partnership with tenants• Cooperative relationships with local communities• Human resources in charge of urban development

Service optimization through the creation of relationships
with financial ventures

Integration of modern, diverse ideas into projects

K5 and Store Renovation
As one interpretation of Kabutocho’s unique character,the core mission of the Nihonbashi Kabutocho andKayabacho Revitalization Project is to create new functions
and culture in the district utilizing the first floors ofbuildings that housed securities companies lining thestreet to develop street-level stores that will bring newenergy and attract more visitors.
K5 was born as a project representing the first step
toward bring new energy to the district.
The building reborn as K5 was completed in 1923 byContributing to the Global Financial City: Tokyo Vision

FinGATE (Financial Venture Integrator)

owner Dai-ichi Bank, constructed as an annex of the thirdbuilding in The First National Bank complex, Japan’s firstbank founded by Eiichi Shibusawa in 1873. Although thebuilding was covered with steel panels when Heiwa Real
Estate acquired it, renovations were conducted basedon our belief that returning the building to its original
condition when completed and utilizing it in an attractive
manner would enhance the building’s real estate value
and that of the local community.

Starting with the opening of FinGATE KAYABA in
September 2017, we have developed a total of five
facilities in the Nihonbashi Kabutocho and Kayabachoarea, housing around 60 financial startups.
FinGATE provides infrastructure and equipment suchas offices and event spaces necessary for the startup andmanagement of financial services, while also creating acommunity facilitating opportunities for entrepreneurs
to interact with each other while providing support forgovernment collaborations and middle back services.

Infrastructure (Ofﬁces, Event Spaces, Information Sources)

Ofﬁce• Provision of small ofﬁces and other spaces with individual security facilitating the acquisition ofﬁnancial licenses.
• Event space for dozens to hundreds of people, conference hall for 500 people Provision of sites
for the dissemination of information, such as (KABUTO ONE), large signage (The HEART), etc.

Middle Back Support

MiddleBack• With regard to services that can resolve issues related to middle back services required by startups,
such as registering with authorities as a ﬁnancial instruments business, middle back ofﬁce operation
cost burdens, and retaining professional human resources, we offer special pricing and mentoring
opportunities for implementation support through business alliances with servicers.

Community and Government Alliances

Beforerenovations

Comm
Govt

After
renovations

Life• In addition to more than 60 domestic and international ﬁnancial startups comprising FinGATE
tenants, we facilitate the creation of a community and provide matching opportunities to VC
accelerators, asset owners, major corporations and other companies.
• The Fintech Association of Japan, The Consortium for Japan International Asset Management Center
Promotion (JIAM), FinCity.Tokyo, and other industry groups and promotional organizations, as wellas the Financial Services Agency Fintech Support Desk and the Financial Services Agency Financial
Market Entry Ofﬁce, are all concentrated in Kabutocho and Kayabacho.

Creating Wellbeing for People Working and Living in the District• Promoting the development and attraction of hotels, restaurants and entertainment facilities
through redevelopment projects. Establishing lifestyle functions required for workplaces.
• Near Marunouchi (Tokyo Station), where major ﬁnancial institutions are concentrated, withconvenient access to Narita and Haneda airports.

Beforerenovations

Afterrenovations©K5

23 Heiwa Real Estate Integrated Report 2022

FinGATE KAYABAFinGATE KABUTOFinGATE BASE

FinGATE TERRACEFinGATE BLOOM

Heiwa Real Estate Integrated Report 2022

24

Strategy and Resource Allocation

Medium-term Management Plan

Improvingsocial value

Previous Medium-term Management Plan

Medium-term Management Plan Challenge & Progress(FY2014–FY2019)(FY2020–FY2023)

over the “NEXT DECADE”

Challenge & Progress

Tackling the challenge of, and making progress in, the aim
to be a Company that contributes to revitalizing districts

Aim to be a Company that contributes to revitalizing districts(Taking on the challenge of becoming a developer)

Strategy
Overview

Review

A Company that
contributes torevitalizing
districts(Tackling the challenge of, and making progress, as a developer)

Becoming a Company that contributes to revitalizing districts startingwith the redevelopment of Nihonbashi Kabutocho and Kayabacho

Strategy
Overview

Consolidated operating income target :From ¥8.0 billion to ¥10.0 billion level over 10 years

General Overview

Contributing to the realizationof a sustainable society as a
Company that contributes torevitalizing districts

Tackling the challenge of, and making progress in,
the aim to be a Company that contributes torevitalizing districts

Improvingshareholder value

Improving shareholder value
as a listed real-estate
Company

Consolidated operating income :From ¥10 billion to ¥12 billion over 4 years• Achieved FY2023 consolidated operating income target of ¥10 billion ahead of schedule in theprevious medium- to long-term management plan
• Operating income, ordinary income and net income attributable to owners of parent reachedrecord highs• Maintained financial discipline while improving ROE and provided proactive shareholder returns

1. Nihonbashi Kabutocho
and Kayabacho
Revitalization Project• Launched construction of first project KABUTO ONE• Launched FinGATE series for Fintech, asset management and other companies• Opened K5 facility to liven up district

2. Enhance building
leasing business• External growth leveraging sourcing capabilities (acquisitions: Approx. ¥70.0 billion)• Internal growth through proactive lease price increases)

3. Expand and diversify
Real Estate Solutions
Business• Expand asset management fees as the sponsor of Heiwa Real Estate REIT, Inc.
• Commercialize eighth HF Residence series project

4. Strengthen businessstrategy execution
structure, provide stableshareholder returns• Substantially increase ROE (FY2013: 3.4% FY2019: 6.5%)• Substantially increase total shareholder return through proactive shareholder returns (FY2013:¥870 million FY2019: ¥4.07 billion)• Shorten director term of office, expand scope of limited liability agreements, revise basic policy
on director and officer compensation, and introduce stock compensation plan

• Quantitative and qualitative expansion of the Redevelopment Business• Practicing sustainable management• Refocusing the business model on added-value creation• Growth in EPS, awareness of ROE, substantial shareholder returns
Business Strategies
1. Redevelopment Business

2. Building Business• Nihonbashi Kabutocho and Kayabachorevitalization• Progress in commercializing the Sapporo
Redevelopment Project• Pursuing external and internal growth• Promoting Sustainable Building Operations Aimed at Enhanced
Environmental Performance and Disaster Preparedness• Generating earnings from inventory sales

3. Asset Management Business4. Corporate Activities• Growing asset management earnings• Promotion of capital policy that takes into account capital costs andcapital efficiency• Strengthening corporate governance• Practicing sustainable management

Key Management Indicators
FY2014–FY2019 Results
FY2016FY2017FY2019¥62.53¥113.17¥132.57¥184.82¥189.76¥236.74¥244.67¥8.54 billion¥9.67 billion¥9.43 billion¥10.90 billion¥11.22 billion¥12.61 billion¥10.0 billion

2.8%

4.7%

5.2%

6.5%

6.3%

7.3%

At least 7%

Consolidated total return ratio

35.2%

23.0%

27.9%

57.8%

68.5%

68.8%

69.3%

Consolidated dividend payout ratio

35.2%

23.0%

27.9%

30.3%

40.6%

40.1%

40.9%

FY2014
Profit targets

EPS
Consolidated operating income

Capital efficiency ROE
Shareholder
returns

FY2020 Results

FY2021 Results

FY2022 Forecasts

FY2023 KPIs

At least ¥200 (FY2023)

At least ¥12.0 billion (FY2023)

At least 6% (FY2020–FY2023)

About 70% (FY2020–FY2023)
About 50% (by FY2023)

Investment Plan
FY2014–FY2019 Results
Redevelopment Business
Redevelopment
investments

Approximately ¥15.0 billion

Building Business
Asset Management Business

25 Heiwa Real Estate Integrated Report 2022

FY2020–FY2023 Plan

Results up to FY2021

Approximately ¥32.0 billion(Breakdown)
Nihonbashi Kabutocho and Kayabacho: Approx. ¥22.0 billion
Sapporo:Approx. ¥10.0 billion

Approx. ¥15.5 billion

Acquisitions: Approx. ¥60.0 billion

Approx. ¥29.2 billion

Recovered through replacement: Approx. ¥20.0 billion
Recovered through sale of existing inventory assets:
Approx. ¥34.0 billion

Approx. ¥29.7 billion

Heiwa Real Estate Integrated Report 2022

26

Strategy and Resource Allocation

Developing Sustainable andDiverse Districts

Redevelopment
Business

Relevant SDGs

Redevelopment BusinessBusiness Environment• Heightened momentum to revitalize districts in Nihonbashi Kabutocho and Kayabacho• Contributing to the Global Financial City: Tokyo vision• Hokkaido Shinkansen Sapporo extension• Focused on Sapporo bid for the 2030 Winter Olympics

Competitive Advantages• Developing businesses based in Nihonbashi Kabutocho, where the Company was founded• Relationship with communities• Established relationships of trust in securities and financial industries• Owner of centrally located buildings in the heart of Sapporo

Business Strategies

Completion of KITOKI (April 2022)

Commercialization of the Kabutocho 12 Project• The first office building with retail stores for which Heiwa
Real Estate adopted a hybrid structure (wood and SRC)

• The project aims to attract Hyatt’s newest lifestyle hotel
brand, “Caption by Hyatt,” a first for Tokyo• Incorporates a biophilic* design facilitating even more
comfortable working environments

Hotel nameLocation• Selected for the Leading Projects Program for
Sustainable Buildings for 2020 (led by wooden
structure) by the Ministry of Land, Infrastructure,
Transport and Tourism

Note: A spatial design method based on biophilia, the theory that humans have astrong attraction for or emotional attachment to the living world.
Location

8-5 Nihonbashi Kabutocho, Chuo-ku, Tokyo (property location)

Access

One minute walk from Kayabacho Station on the Tokyo Metro Tozai Line

Main uses

Shops and offices

Floors andconstruction

10 floors above ground, timber hybrid construction

Exclusive-use
floor space

791.95m2(scheduled to open in 2025)• Selected for the Leading Projects Program for
Sustainable Buildings for 2020 (led by wooden
structure) by the Ministry of Land, Infrastructure,
Transport and Tourism

AccessCaption by Hyatt Kabutocho Tokyo
12 Nihonbashi Kabutocho, Chuo-ku, Tokyo
One-minute walk from Kayabacho Station on the Tokyo Metro Tozai
Line and Hibiya Line
Two-minute walk from Nihonbashi Station on the Tokyo Metro GinzaLine and Toei Asakusa Line

Exclusive-use
Approximately 10,000 m2
floor space
Floors and
12 floors above ground, one floor below, one-story penthouse;
construction wooden hybrid structure
Guest rooms 200 rooms (plan)
Opening2025 (plan)
Note: The above information is based on current plans and is subject to change
upon further study.

1. Revitalization of Nihonbashi Kabutocho and Kayabacho
We will promote the development of sustainable and diverse districts by engaging in such initiatives aslivening up the entire area within the scope of district revitalization and contributing to the "Global Financial
City: Tokyo" vision, as well as materializing district redevelopment through the launch of new projects, inaddition to KABUTO ONE.
2. Progress in Commercializing the Sapporo Redevelopment Project
We will promote the Sapporo Redevelopment Project on a full scale by participating in Sapporo
Station South Exit North 4 West 3, district redevelopment (i.e., block in which the Sapporo Ekimae Godo
Building is located), along with the commercialization of the Dogin Building redevelopment project.

Note: Image for illustrative purposes only.

Progress in Commercializing the Sapporo Redevelopment Project

Revitalization of Nihonbashi Kabutocho and Kayabacho
Sapporo Station

District revitalization

Opening of KABUTO ONE (August 2021)

Kabutocho Heiwa Building No. 4 Mizuho
Bank
Kabutocho Heiwa Building No. 2

Kabutocho Heiwa Building No. 5

Kabutocho Heiwa
Building DIA Building

Kabutocho Heiwa Building No. 6
Kabutocho Heiwa Building No. 7

KITOKIKABUTO ONE

He
ise
iD
ori

Shu
to E
xpre
ssw
ay In
ner
Cir
cula
r Ro
ute

Chuo Police Station

Eita
i Do
ri

Shin
-Oh
ash
iD
ori

Tokyo Shoken Kaikan Building

Kabutocho 12 PJ

Kayabacho Station

Tokyo Shoken Kaikan Building No. 2

Kayabacho 1-chome Heiwa Building

Group-owned assets (includes some shared assets)

Location

7-1 Nihonbashi Kabutocho, Chuo-ku, Tokyo (property location)

AccessScheduled to connect directly to Kayabacho Station on the Tokyo
Metro Tozai Line and Hibiya Line

Main uses

Offices, shops, assembly hall, rental conference rooms, car parking

Floors andconstruction

15 floors above ground, two floors below, two-story penthouse,steel construction above ground, SRC structure below, (partial
steel construction), intermediate layer seismic isolation structure

Exclusive-use
floor space

Approximately 39,208 m2 (about 11,860 tsubo)

Operators

HEIWA REAL ESTATE Co., Ltd., Yamatane Corporation, Chibagin
Securities Co., Ltd.

o ChuoSappor ation
Police St

Bank ofJapan

rk
Odori Pa

Sapporo Station South Exit
North 4 West 3, district
redevelopment (to becompleted in FY2028)
i Liney Toza• Opened KABEAT, a restaurant supporting producers,
KNAG, a community café, and HOPPERS, a modern Sri
Lanka-style restaurantoHokkaid t
enGovernm
ce
fﬁ
O

Subwa

er
hi Rivnbas
Niho

Kabutocho Heiwa Building No. 5

Sapporo Station

Sapporo Stationneboku Liy Nam
Subwae Dori
a
m
ki
ro-E
Sappo

Tokyo Stock Exchange Building

To
Nin
gyo
cho

To
Nih
on

Nisshoken Building

Nihonbashi Post Ofﬁce• Building includes KABUTO ONE HALL & CONFERENCE,
a venue for interactions between investors andcorporations, and Book Lounge Kable, a library lounge

AFT Building

Sapporo Ekimae Godo Building

通
創成川

bas
Sho
hi
wa
Do
ri

To To
N
ei
As ing
ak yo
us ch
aL o
ine

• “The HEART,” one of the largest cube-shaped LED
displays in the world, is installed in the first-floor atrium

Kabutocho Heiwa Building

To
Nih
onb
ash
i

Hakodate Main Lineo
Sappor erw
Clock To

Odori-nishi 4 South所
District
Type
1 Urban
札幌市役
RedevelopmentレProjectne
塔Tozai Liテ ビ
(to be completed
in 2028) Subway ori
Odori Station

Odori Station

Nishi 4-chome Station

Shin-Odori Building

Od

Park East Sapporo

Dogin Building

Group-owned assets (includes some shared assets)

Sapporo Station South Exit North 4 West 3,
district redevelopment• Participating in district redevelopment as a land ownerand leaseholder
District area

Approx. 1.7 ha

Site area

Approx. 1.1 ha

Exclusive-use floor space Approx. 210,200 m2
Height and floors

Approx. 200 m, with 35 floors above ground, six below

Sapporo Station South Exit North 4 West3, District Redevelopment Project

Odori-nishi 4 South District Type 1
Urban Redevelopment Project

Odori-nishi 4 South District Type 1 Urban
Redevelopment Project
Operator

Odori-nishi 4-chome South ,district redevelopment
Project Preparation Partnership

Location

4-1 Odori-nishi, Chuo-ku, Sapporo, Hokkaido

Main uses

Offices, hotel, commercial

Site area

5,030 m2

Exclusive-use floor space

Approx. 99,400 m2

Floor-area ratio

Approx. 1,650 %Floors34 floors above ground, three floors below, one-story
penthouse

Maximum height

Approx. 185 m

Note: Subject to change due to future administrative consultations, urban planning
procedures or other factors.

District revitalization

27 Heiwa Real Estate Integrated Report 2022

Heiwa Real Estate Integrated Report 2022

28

Strategy and Resource Allocation

Building Business

Relevant SDGs

Building Business

Leveraging Our Superior Portfolio
in Major Cities across Japan

Progress in Internal Growth• Raising lease prices based on trends in the office leasing market (plan to raise lease prices approximately ¥700 million
between FY2020–FY2023).

Business Environment• Diversification of workstyles and office needs• Environmentally friendly and BCP-conscious operation

Competitive Advantages• Superior portfolio of properties in central districts of major cities across Japan• Track record and trust as an owner of securities exchange buildings• Tenant relationships and tenant leasing capabilities• Increased tenant satisfaction by maintaining and improving building value

Axion Otemon
Premium

ORSUS
UmejimaTaito-ku Ryusen
Plan (ORSUS)

Shinagawa-ku
Ebara Plan
(ORSUS)

Sumida-ku,
TokyoFukuoka-shi,
Fukuoka

Adachi-ku,
Tokyo

Taito-ku, Tokyo
Condominium
units

Shinagawa-ku,
TokyoCondominium
units

1,261.75m2

1,285.94m2

2,355.36m2

3,859.93m2

2,888.84m2

3,571.82m2

February 2021

July 2003

June 2021

January 2018

January 2022

September
2021

December
2023 (plan)

February 2021

September
2021

November
2023 (plan)

October 2021

January 2022––

Location

Chuo-ku, Tokyo

Major Uses
Exclusive-use
floor space

Banks and
offices

Minato-ku,
Tokyo

Offices andstores

Offices andstoresCondominium
units and stores

Stores andoffices

6,578.54m2

5,422.10m2

3,032.09m2

1,457.28m2

Completed

October 1979

March 2008

AcquiredJune 2020

September
2020

December
1989

Kabutocho Heiwa
Bldg. No. 7

Chuo-ku, Tokyo Taito-ku, Tokyo Chuo-ku, Tokyo

December
2020

Shimbashi Square
Building

29 Heiwa Real Estate Integrated Report 2022

Note: Floor space owned by the Group as of March 31, 2022.
ORSUS
HonjoAzumabashi

Kabutocho
Heiwa DIA
Building

Heiwa Real Estate
Nihonbashi Building

Condominium Condominium Condominium
units and stores units and stores
units

Kabutocho Heiwa DIA
Building

131
105

400

65

2019

2020

2021

0

(FY)

227

229

200

41

2018

524

214

15
2017

2018

2019

2020

2021

(FY)

Consolidated
vacancy rate

Non-consolidated
vacancy rate

FY2018–1.9%

FY2019–1.2%

FY20201.8%

1.8%

FY2021

4.5%

3.0%

Note: Vacancy rates were calculated by excluding
sections where rent control is in effect related toredevelopments.
Note: Vacancy rates from FY2020 onward were
calculated by including properties for sale.

Note: Amount after subtracting incremental “decrease”
from incremental “increase.” The amount in FY2019
includes ¥300 million (annual) from raising theTokyo Stock Exchange Building lease amount.

P. 22

Acquire Earnings from Inventory and Other Sales• We aim to generate earnings from the sale of profitable assets after maximizing their value, and through further
development of the HF Residence series.

• A total of four buildings—Nagoya Sakae Office, Osaka Kitahama Offices 1 & 2, and the Yokohama Office—were transferredfrom fixed assets (assets for leasing) to real estate for sale at the end of FY2021.

• Expanding investments in the rental residence business, mainly targeting office buildings in central Tokyo and othermajor cities.

ORSUS
Asakusa

600

Changes in Vacancy Rates
for Buildings

Promoting Sustainable Building Operations Aimed at Enhanced Environmental
Performance and Disaster Preparedness• Acquired properties, including the Kabutocho Heiwa Bldg. No. 7 and the Shimbashi Square Building, totaling
approximately ¥29.0 billion from the start of the current medium-term management plan to March 2022 (taking into
account properties to be completed and acquired during the Medium-term Management Plan, approximately ¥38 billion
has already been invested to date).

Heiwa Real
EstateNihonbashi
Building

138

2017

• As an external growth strategy, we plan to invest approx. ¥60 billion (net investment: ¥40 billion) over four years under the
medium-term management plan.

Shimbashi
Square Building(Millions of yen)

Note: Net number of properties after subtracting total
number of properties for which lease prices
decreased from total number of properties forwhich they increased.

Progress in External Growth

Kabutocho
Heiwa Bldg.
No. 7(Properties)

0

3. Generating Earnings from Inventory Sales
We aim to maximize value through development, lease up and remodeling projects, with the goal ofgenerating earnings from the sale of profitable assets and further development of the HF Residence series.

Acquired
assets(Increased revenue on a fiscal year basis) *50

2. Promoting Sustainable Building Operations Aimed at Enhanced Environmental Performance andDisaster Preparedness
Guided by our long-term vision, we are working to reduce CO2 emissions through investment
in sustainable building facilities and operations to help address social issues such as disaster
preparedness and environmental concerns.

(April 2020–
March 2022)(No. of properties) *100

1. Pursuing External and Internal Growth
We will generate earnings from the sale of properties during the portfolio renewal process, while
expanding the portfolio through the acquisition of new lease assets. We will also improve portfolio
profitability by raising lease prices based on trends in the office leasing market.

Net Amount of Lease Price Increases

Progress of Lease Price Increases
150

Business Strategies• Developing a new brand, ORSUS, in the rental residence business.

• We will raise lease prices while increasing tenant satisfaction by maintaining and improving building value and raisingbuilding operation and management service standards.

ORSUS Asakusa

ORSUS HonjoAzumabashi

Held Assets

Note: Area is proportionate to the Group's interest in the relevant property as of March 31, 2022

Kayabacho
OfficeNagoyaSakae
Office 1

NagoyaSakae
Office 2

Osaka
Kitahama
Office 1

Osaka
Kitahama
Office 2

Yokohama
OfficeChiba
Residence

Ogu
Residence

HF
Iwamotocho HF KawaguchiHigashiogu
ekimaeOfficeResidence
Residence(2 buildings)

Nihonbashi
Kayabacho,
Chuo-kuNaka-ku,
NagoyaNaka-ku,
NagoyaChuo-ku,Osaka

Chuo-ku,
Osaka

Naka-ku,
Yokohama

Chuo-ku,
Chiba

Nishiogu,
Arakawa-ku

Iwamotocho,
Chiyoda-ku

Sakaecho,
Kawaguchi

Higashiogu,
Arakawa-ku

3,375.83m2

7,337.43m2

9,459.56m2

5,562.57m2

2,313.23m2

10,836.30m2

1,703.23m2

1,253.16m2

3,973.84m2

2,724.83m2(49)Completed

September
1991

March
1995

March
2004

February
2015

October2011

February
1986

December
2018

February
2017

October
2021

February2022

Acquired

December
2013

February
2015

Same asabove

Same asabove

Same asabove

Same asabove

September
1986,
August 1992

3,086.11m2(90)

July 2019

April 2021

July 2021

Same asabove

Same asabove

Location
Exclusive-use
floor space

Stock balanceApprox. ¥19.8 billion

Note: Nagoya Sakae Office 1, Iwamotocho Office (2 buildings), HF Kawaguchi-ekimae Residence, and HF Higashiogu Residence were sold to HEIWA REAL ESTATE REIT, Inc. in June 2022.

TOPICS
New Residential Business Brand

We will provide residences meeting
new needs centered on the people
who live there.
Our rental residences willremain close to those who aspire to
new housing, lifestyles and flexible
work styles as we aim to create newvalue in people's lives.

ORSUS Umejima

ORSUS Nakano

Location

Asakusa 6-chome,
Taito-ku

ORSUS HonjoAzumabashi
Higashikomagata
4-chome, Sumida-ku

Umejima 2-chome,
Adachi-ku

Arai 1-chome, Nakano-ku

Units

27 units + stores

24 units + stores

89 units

33 units

Reinforced concrete
construction, six floors
above ground

Reinforced concrete
construction, 12 floors
above ground

1K, 1LDK, 2LDK

1R, 1K, 1LDK

Property name

ORSUS Asakusa

Reinforced concrete
Reinforced concrete
Structural scale construction, eight floors construction, seven floors
above groundabove ground
Layout1R, 1LDK

1K, 1LDK, 2LDK

Heiwa Real Estate Integrated Report 2022

30

Strategy and Resource Allocation

Asset
Management
Business

Strategy and Resource Allocation

Asset Management Business

Financial and Capital Strategies

Meeting Ever-Growing Real Estate
Investment DemandBusiness Environment• Growing real estate investment needs

Message from the Officer in Charge of Financial Affairs• Real estate prices remain at high levels

Competitive Advantages

Targeting Sustainable Growthwith an Awareness of Capital
Costs and Capital Efficiency• We are the sponsor of Heiwa Real Estate REIT, Inc.
• We collaborate with Group companies including Heiwa Real Estate Asset Management Co, Ltd.,
which manages assets of Heiwa Real Estate REIT, Inc.

Business Strategies

1. Growing Asset Management Earnings
We aim to grow Heiwa Real Estate Group earnings, including asset management fees, by supporting
growth of Heiwa Real Estate REIT, Inc.

Takahisa Aoyama

Director and Managing Officer

Growing Asset Management Earnings• With the growth of Heiwa Real Estate REIT, Inc., Group revenue is increasing steadily.
• HFR acquired properties through public offerings for two consecutive years.

HFR total assets

Asset management fee income from HFR(Unit: Million yen)

(Unit: ¥100 million)
2,100
1,800

1,663 1,654

1,747 1,787 1,780
1,681 1,731

1,841

1,952 2,006

1,400
1,200

1,500

1,000

1,200

800

900

600

600

400

300

200

0

Nov.
2017

May
2018

Nov.
2018

May
2019

Nov.
2019

May
2020

Nov.
2020

May
2021

Nov.
2021

Dividends per unit of HFR holding

2,300

2,300

2,350

2,550

1,196

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021 (FY)(Unit: Million yen)

3,050

2,500

1,121 1,096 1,132

1,377

Total dividend income from HFR

3,100

2,425

831

917

979

1,343

0

Feb.
2022

(Unit: Yen)

2,700

1,310

2,680

2,800

900

815

2,890
647

600

380

2,054

458

469

481

2013

2014

2015

513

685

727

566

300

1,900

1,500

Nov.
2017

May
2018

Nov.
2018

May
2019

Nov.
2019

31 Heiwa Real Estate Integrated Report 2022

May
2020

Nov.
2020

May
2021

Nov.
2021

May
2022

FY2021 Performance

Shareholder Returns

Third Consecutive Year of Record-high Earnings

Raising the Dividend per Sharefor the Fifth Consecutive YearIn FY2021, the second year of the medium-term
management plan, “Challenge & Progress,” operating
revenue increased 22.7 billion yen year on year to 57.8
billion yen, mainly due to an increase in the sale ofinventories in the Building Business. Operating income
and ordinary income expanded on an increase in gains
from the sale of properties, the contribution to revenue
from properties acquired in the previous year, and therecording of tenant cancellation penalties in the Building
Business. Operating income amounted to 12.6 billion
yen and ordinary income was 11.5 billion yen, reachingrecord highs for the third consecutive year. Sales of crossshareholdings lifted bottom-line profit to 8.7 billion yen, arecord-high for the fifth consecutive year.
In the Building Business during the pandemic, somecommercial and hotel buildings were affected, butthere was no major impact on mainstay office leasing.
In the Asset Management Business, inventory sales
went according to plan and Heiwa Real Estate REIT, Inc.,
property sales were solid, enabling us to minimize theimpact of the pandemic. There were also no impacts on
the Redevelopment Business, which has performed well,demonstrating the resilience of our business portfolio.

As part of our shareholder returns policy, we set a KPI for
the consolidated total return ratio of approximately 70%
for the four years from FY2020–FY2023, corresponding
to the timeline of the current medium-term management
plan. Further, we are targeting a consolidated payout ratioof approximately 50% by FY2023, the highest level ofshareholder returns in the developer industry. Regarding
dividends per share in FY2021, the annual dividend wasraised for the fifth consecutive year to 95 yen per share,a payout ratio of 40.1%. In light of the repurchase ofCompany shares amounting to approximately 2.5 billion
yen, the total return ratio was 68.8%.
Regarding dividends per share in FY2022, we plan toincrease the annual dividend for the sixth consecutive
year to 100 yen per share, a payout ratio of 40.9%. Having
passed a resolution to repurchase up to 2.5 billion yen
in Company shares, the total return ratio is expected to
be 69.3%. We will make every effort to maintain this highlevel of shareholder returns.

0

2012

2016

2017

2018

2019

2020

2021 (FY)Heiwa Real Estate Integrated Report 2022

32

Strategy and Resource Allocation

Medium-term Management Plan Direction

Toward Management Focused on Sustainable
Profit Growth and Capital Costs
Under the slogan “Tackling the challenge of, and making
progress in, the aim to be a company that contributes torevitalizing districts,” our policy is to engage in initiatives
aimed at “quantitative and qualitative expansion of
the Redevelopment Business,” “practicing sustainable
management,” and “refocusing the business modelon added-value creation,” in pursuit of sustained profit
growth and management taking capital costs into
account. Specifically, we will seek to create added value
through the Redevelopment Business and boost leasing
earnings by expanding and renewing our portfolio. We
believe the driver for earnings going forward will beearnings obtained from property sales utilizing unrealized
gains. In other words, growth is expected to be driven by
the increase in earnings from leasing and property sales in
the Building Business. In the Asset Management Business,
we will continue to support the growth of Heiwa Real
Estate REIT, Inc., in pursuit of the stable expansion of asset
management earnings. Through these efforts, we aretargeting consolidated operating income of at least 12.0
billion yen in the final fiscal year.

Future Investment Plans and Progress

Acquiring Earnings from Property Sales
through Portfolio Renewal
Over the next four years, we plan to invest approximately
32.0 billion yen in the Redevelopment Business andabout 60.0 billion yen into external growth (property
acquisitions) with the aim of expanding assets (portfolio)
through property acquisitions and development. At thesame time, we plan to recover approximately 20 billion
yen by renewing our conventional portfolio of long-termholdings, and approximately 34 billion yen throughinventory sales. From the third year of the medium-term
management plan, we will fully utilize unrealized gains

Financial Capital Strategy

on leasing business assets to capture gains on property
sales through portfolio renewal. During the two-year
period starting with the launch of the medium-term
management plan up to FY2021, we acquired Kabutocho
Heiwa Building No. 7, Shimbashi Square Building andother properties amounting to approximately 29.0
billion yen. When taking into account the properties tobe constructed and acquired during the medium-term
management plan, we have invested approximately
38 billion yen (as of May 2022), and are making steadyprogress toward the halfway point.
Going forward, with office buildings in central Tokyoand other major cities as our main targets, we havereaffirmed the stability of rental residences and will
expand investments in the rental business with plansto accumulate new lease assets. In the Redevelopment
Business, we opened KABUTO ONE in August 2021 andcompleted construction of KITOKI, a wooden hybrid
building, in April 2022, with the aim of revitalizing the
Nihonbashi Kabutocho and Kayabacho district. We
have also launched the Kabutocho 12 Project, whichplans to attract Caption by Hyatt Kabutocho Tokyoand is scheduled to open in 2025. In the Sapporo
Redevelopment Project, we are promoting two large scale
projects that will begin in earnest in the next mediumterm management plan: the Odori –nishi 4-chome South,
district redevelopment and the Sapporo Station South Exit
North 4 West 3, district.

Important Management Indicators and Risk Factors

Promoting Capital Policies Focused on Capital
Costs and Efficiency, Responding to Changes
in the Business Environment
Under the current medium-term management plan,in addition to profit growth, we are placing greater
importance capital costs and capital efficiency. We set
EPS as a KPI (targeting EPS of 200 yen or more in the
final year), and with an awareness of capital costs in the
5% range, we are targeting ROE (6% or more) and aconsolidated total return ratio (about 70%) that exceed

Investment Plan

EPS, Annual Dividends per Share, Consolidated Payout
Ratio and Consolidated Total Return Ratio(yen)

FY2014–2019
performance

Results up to
FY2022

FY2020–2023 plan

Approx. ¥32.0 billion
Redevelopment
Business
Redevelopment
investment

capital costs *1. Regarding shareholder returns, we set
targets at levels that will generate returns after funds
necessary for businesses have been set aside as internal
reserves, promoting a capital policy focused on capitalcosts and efficiency through share buybacks combinedwith the distribution of dividends.
In terms of financial discipline, Heiwa Real Estate's
net debt-to-equity (D/E) ratio has been kept to 1.5 times
or less, leading to improved financial soundness andthe accumulation of unrealized gains. Accordingly, ourpolicy is to control the net D/E ratio at 1.8 times or lessduring the current medium-term management plan. With
respect to risk factors, we are cognizant of the need tocarefully monitor how the office market (vacancy rates
and lease prices) is impacted by trends in corporate
business performance, the widespread adoption of
remote work and other factors, including a protracted
pandemic. Further, vacancy rates*2 were 4.5%, on an
upward trend as of end-March 2022. However, as we
now include buildings owned by Group companies andreal estate for sale in our calculation of consolidated
vacancy rates, this mainly reflects the impact of large
tenants relocating to KABUTO ONE from buildings
owned by Group companies. In addition to the creationof attractive districts and enhancements to the value ofindividual properties, we will continue agilely responding

Sapporo:Approx.

¥15.0 billion

33 Heiwa Real Estate Integrated Report 2022

(breakdown)
Nihonbashi Kabutocho and Kayabacho:

Building
Business

Acquisitions:

Asset
Management
Business

Returns from reshuffling:

Approx. 22.0 billion¥15.5 billion

Approx. 10.0 billion
Approx. 60.0 billion
Approx. 20.0 billion

Returns from existing inventory sales: Approx.

¥34.0 billion¥29.2 billion¥29.7 billion

(%)

250

72.1

200
150
100
50
0

68.5
184.8257.8

158.73

30.2

30.3

27.9
37*

2017
EPS (Left scale)

56

48

2018

189.762019

Annual dividends per share (Left scale)

75
60
45

40.6

132.5727.9

236.74
68.8

40.1
95

77

30
15

2020

2021

0
(FY)

Annual dividends per share (Left scale)

Consolidated payout ratio (Right scale)Note: Includes a 70th anniversary commemorative dividend of 4.0 yen per share.

to environmental changes by carefully selecting property
acquisition targets, flexibly renewing our portfolio, andexpanding the rental residence business.
1. Of which, we are targeting a consolidated payout ratio around 50% by FY2023.
2. National average (excluding sections subject to lease suspension related toredevelopment, etc.)

FY2022 Business Performance Forecast

Progressing Steadily Toward the Achievementof Medium-term Management Plan Targets
In FY2022, we expect net sales of 41.8 billion yen due
to lower inventory sales in the Building Business andother factors. We also expect lower operating income
and ordinary income due to a reactionary decline after
the FY2021 recording of tenant cancellation penalties
in the Building Business, and lower earnings following
the departure of large tenants, among other factors.
Accordingly, we forecast operating income of 10.0 billion
yen and ordinary income of 8.8 billion yen. At the sametime, we expect net income attributable to the parent of
8.8 billion yen, about the same level as FY2021, thanks tosignificant progress in reducing cross-shareholdings andthe recording of gains on sales of investment securities.
In FY2022, we project operating income of 10.0
billion yen, and are targeting 12.0 billion yen in FY2023,
the final year of our medium-term management plan. In
addition to monetizing vacant sections, we will acquireleasing business assets, and earnings from property
sales transferred to real estate for sale in FY2021, whilesteadily promoting other efforts toward the achievementof our targets.

To Our Stakeholder
Rather than merely pursuing the expansion of scale,Heiwa Real Estate's policy is to be more focused on
capital costs and capital efficiency while observing
fiscal discipline. We intend to promote businesses thatcan realize the provision of value to our stakeholders
in various ways, including proactively generating
shareholder returns and translating them into sustainablegrowth. We look forward to your continued support froma long-term perspective.

Heiwa Real Estate Integrated Report 2022

34

Performance

Financial and Non-financial Highlights
Financial Highlights (Consolidated)
Operating Revenue

Non-financial Highlights

Operating income

Energy Usage and Energy Usage
per Cubic Meter*1

Ordinary income

GHG Emissions and GHG
Emissions per Square Meter*1

Water Usage and Water Usage
per Square Meter*1*2(Millions of yen)

(Millions of yen)

(Millions of yen)

(MWh)(kWh/m2)(t-CO2)(kg-CO2/m2)

60,00015,00012,00012,000300

32,00090

57,81839,48040,0009,000

35,04832,698

12,61512,00046,639

8,000

9,335

8,395

20,000

9,000

8,430

2019

2020

2021

(FY)

6,000

240

94,392

174.5

194.9
163.4

171.1

0

2018

2019

2020

0

(FY)

2021

2017

2018

2019

2020

2021

(FY)

16,000

2019

2020

2021

(Millions of yen)236.7410,000

8,000

6,000

4,000

184.82158.73132.57

189.76

7,046

(Yen)

(Millions of yen)240

400,000

381,353 376,210

8,705

300,000 300,243

7,118

34.9

6,174

(%)

(Yen)

60

100

335,572 339,545
180

120

5,288

Annual Dividends per Share,
Consolidated Payout Ratio andConsolidated Total Return Ratio

0

(FY)

200,000

45

32.5

31.6

57.8

30
40

60

2,000

0

0

(FY)
2017 2018 2019 2020 2021
Net income attributable to owners of parent(Left scale)EPS (Right scale)

100,000 104,900

109,075 107,302

118,639

119,278

15

0

2017

2018

2019

Equity ratio (Right scale)

2020

2021

27.9

48
30.2

56

95

75

68.8
60

77

40.6

45

40.1

30.3

30

37※
20

0

Total assets (Left scale)

68.5

80

60

31.7

31.1

72.1

15

0

0

2017

(FY)

Net assets (Left scale)

2018

2019

2020

2021

(FY)

Annual dividends per share (Left scale)
Consolidated payout ratio (Right scale)
Consolidated total return ratio (Right scale)

EBITDA and Ratio of EBITDA to
Net Interest-Bearing Liabilities(Millions of yen)(Times)

20,000

2

1.5

1.57
1.36

1.47

1.57

1.49

8

15

6

18,57815,000 14,476 14,596

16,2039.76

10,000 9.84

16,763

11.10

9.58

10

3.2

5,000

5

2

0

0

0

0

2018

2019

2020

2021

(FY)

2017

2018

2019

2020

2021

(FY)

EBITDA (Left scale)
Ratio of EBITDA to net interest-bearing liabilities(Right scale)

35 Heiwa Real Estate Integrated Report 2022

2.9

3.2

3.1

ROE

2018
ROA

2019

2020

0.62

30

2,999

3,183

3,023

2018

2019

2020

3,011

2021

0

0.6
0.4

0

2021

(FY)

Paid Holiday Usage Rate*4
(%)
100

26.8

2020

Water usage (Left scale)

40

31.3

2019

Water usage per square meter (Right scale)

(%)

28.3

0

2018

(FY)

5

30

0.8

0.2

(kg/m2)

31.4

Target: At least 70%

80

79.7

79.6

2020

2021

70.5
60

2

61.7

40

1.60
1.76

300

10

1

0

0

2019

2020

2021

Majority of external directors

20

0

2018

(FY)

2019

2020

2021

0

(FY)

2018

2019

(FY)

Nomination
Committee

Compensation
Committee

Audit Committee

Chaired by an external
director, with external
directors comprising amajority of the committee

Chaired by an external
director, with external
directors comprising amajority of the committee

Chaired by an external
director, with external
directors comprising amajority of the committee

Committee
Chair

Committee
Chair

Committee
Chair

3.3
Five independent
external directors(Including one female director)

2017

320,000

0.70

20

2.27

6.3

4

0.5

2017

6.5

45

3

Board of Directors

5.8

375,102

Rate of Female Employees*4

4

2.30

439,68760

Scope 2 (Left scale)
GHG emissions per square meter (Right scale)

1,017 1,009

600

1.0

160,000

1,300

900

1.02

475,140

Waste per square meter (Right scale)

7.3

5.2

11.77
1

(%)

20

1,311
1,200

20,564

1.2

604,937

Waste emissions (Left scale)

ROE and ROA(Times)

1,500

2018

Note: Includes 4.0 yen 70th anniversarycommemorative dividend.

Net D/E Ratio

(t)

47.6

27,230 27,255

480,000

Scope 1 (Left scale)

Waste Emissions and Waste per
Square Meter*1*2*3

(%)

75

23,576

60.0

1.07

15

Energy usage (Left scale)

Total Assets, Net Assets andEquity Ratio

66.5

28,33025,306

Energy usage per cubic meter (Right scale)

Net Income Attributable to
Owners of Parent and EPS

68.3(m3/m2)640,000

8,000

0

2018

30,230 30,439

180

60

2,000

2017

24,000

120

3,000

0

2018

109,960

4,000

3,000

0

115,629104,299

10,244

6,000
6,000

2017

10,006

10,00010,903 11,228
9,432

11,572

(m3)

2021

(FY)

Four internal
directors

Threeexternal
directors

One
internal
director

Two
external
directors

One
internal
director

Two
external
directors

One
internal
director

1. The portfolio of real estate owned by the Group (excluding buildings designated to be sold and jointly owned buildings of which the Company has an ownership share of lessthan 25%) is within the scope of calculation.
2. Actual per-square-meter figures are calculated by dividing annual emissions/usage by the total floor area of the relevant property, regardless of the period of ownership.
3. Recycled waste is excluded from the actual figures for waste and waste emissions per square meter.
4. Heiwa Real Estate on a non-consolidated basis is within the scope of calculation.
are guaranteed by a third party.
5. Data marked with

Heiwa Real Estate Integrated Report 2022

36

Performance

Consolidated Financial Data
Unit

FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021For the fiscal year:
Operating revenue

Millions of yen

35,20532,99243,28434,34737,01041,74732,69839,48046,63935,04857,818Operating income

Millions of yen

7,074

7,355

8,055

8,548

8,267

9,673

9,432

9,335

10,903

11,228

12,615

Ordinary income

Millions of yen

3,910

4,634

5,644

6,568

6,708

8,431

8,395

8,430

10,006

10,244

11,572

Net income attributable to owners ofparentMillions of yen

2,055

2,455

2,901

2,495

4,408

4,514

5,288

6,174

7,046

7,118

8,705

Depreciation

Millions of yen

5,194

5,243

5,326

4,989

5,028

4,878

4,661

4,766

4,814

5,077

5,418

Capital expenditures

Millions of yen

17,016

12,587

9,001

15,326

15,461

15,838

16,642

21,824

12,63330,872

21,646

Cash flows from operating activities

Millions of yen

11,945

13,271

13,824

12,557

9,954

20,98013,482(12,780)

28,6808,292

34,189Cash flows from investing activities

Millions of yen(17,286)(11,199)(6,388)(15,160)(2,600)(13,017)(17,265)(12,946)(11,427)(30,200)(20,705)

Cash flows from financing activities

Millions of yen

9,834(11,083)(18,026)(8,923)(3,218)(4,222)(2,499)24,652(1,829)24,327(15,490)

Balance of cash and cash equivalents at
end of period

Millions of yen

42,50433,49322,903

11,242

15,377

19,117

12,784

11,71027,166

29,585

28,111

At fiscal year-end:
Millions of yen

75,49784,002

85,99092,29894,827

97,524

104,900

109,075

107,302118,639

119,278

1

Millions of yen

308,964

313,096

296,834

297,736

294,021

293,025300,243

335,572

339,545

381,353376,210

Interest-bearing liabilities

Millions of yen

197,083

186,902170,335

162,490

160,232

157,051

155,786

184,672

186,977

215,727

206,236

%

24.3

26.7

29.0

31.0

32.3

33.3

34.9

32.5

31.6

31.1

31.7

Yen

4

22

22

22

26

26

37

48

56

77

95

Yen

10.30

61.51

72.72

62.53

110.50113.17132.57158.73184.82189.76236.74

Book value per share (BPS)* *Yen

375.82

2,096.60

2,154.94

2,313.34

2,377.02

2,444.84

2,630.07

2,819.82

2,837.29

3,190.09

3,269.74

Price-earnings ratio (PER)

Times

21.84

29.88

22.66

27.00

12.67

13.91

15.46

13.43

15.14

18.21

16.71

Price-book ratio (PBR)

Times

0.59

0.88

0.76

0.73

0.59

0.64

0.78

0.76

0.99

1.08

1.21

Consolidated Payout ratio

%

38.8

35.8

30.3

35.2

23.5

23.0

27.9

30.2

30.3

40.6

40.1

Consolidated total return ratio

%

38.8

35.8

30.3

35.2

23.5

23.0

27.9

72.1

57.8

68.5

68.8

Millions of yen

12,432

12,905

13,64813,883

13,641

14,92014,476

14,596

16,203

16,763

18,578

Times

2.61

2.22

1.98

1.76

1.69

1.61

1.49

1.69

1.74

1.82

1.73

Times

2.04

1.82

1.71

1.64

1.53

1.41

1.36

1.57

1.47

1.57

1.49

Times

12.42

11.84

10.79

10.89

10.61

9.24

9.84

11.77

9.76

11.10

9.58

Return on assets (ROA)*1 *5

%

2.3

2.4

2.6

2.9

2.8

3.3

3.2

2.9

3.2

3.1

3.3

Return on equity (ROE)*

%

2.8

3.1

3.4

2.8

4.7

4.7

5.2

5.8

6.5

6.3

7.3

Net assets
Total assets*
Equity ratio*

1

Performance indicators:
Dividends per share*2 *3
Earnings per share (EPS)* *2

4
2

EBITDA*

4

5

D/E ratio*

5

Net D/E ratio*

5

Ratio of EBITDA to net interest-bearing
liabilities
5

Number of shares outstanding

Shares200,299,980

40,059,996

40,059,996

40,059,996

40,059,996

40,059,996

40,059,996

40,059,996

38,859,996

38,859,996

38,859,996

Number of employees*6

Persons

271

293

285

281

281

224

233

236

237

240

240

1. Total assets and equity ratio for FY2017 have been retroactively restated to reflect the application of the partial amendments to Accounting Standard for Tax Effect Accounting, etc.
2. A five-to-one share consolidation was executed on October 1, 2012; accordingly, the data varies significantly between the pre-consolidation period (until FY2011) and the postconsolidation period (FY2012 and thereafter). Further, dividends per share in FY2012 consisted of an interim dividend of 2 yen (before consolidation) and a year-end dividend of
12 yen (after consolidation); the interim dividend was converted into the post-consolidation amount of 10 yen, bringing the total amount to 22 yen.
3. Annual dividends per share for FY2017 included a 4.0-yen commemorative dividend celebrating the 70th anniversary of the Company’s founding.
4. The Company established a trust for its stock compensation plan for directors and managing officers in FY2019 and introduced an employee stock benefit trust in FY2021. The
Company’s shares held in the trust account for this trust were included in treasury stock for calculations of earnings per share and book-value per share.

37 Heiwa Real Estate Integrated Report 2022

5. Financial indicators are calculated as follows:
EBITDA: Operating income + Financial income + Depreciation
D/E ratio: Interest-bearing liabilities ÷ Net assets
Net D/E ratio: (Interest-bearing liabilities – Cash and deposits – Marketable securities) ÷ Net assets
ROA: Operating income ÷ Total assets (average of total assets at beginning and end of period) x 100
ROE: Net income attributable to owners of parent ÷ Equity (average of equity at beginning and end of period) x 100
6. The decrease in the number of employees in FY2016 is mainly due to the exclusion of Heiwa Health Care Co., Ltd., from the scope of consolidation as the Heiwa Real Estate Group
sold its entire stake in this company.

Heiwa Real Estate Integrated Report 2022

38

Performance

Consolidated Non-Financial Data
Materiality

Initiatives

Items

E

Climate Change
Environment
Countermeasures

S

Development
Responding toSocial Needs

Society

Natural Disaster
Risk Mitigation
Measures

G
Governance

Strengthening
Corporate
Governance• Director and officer compensation
system facilitating co-ownership ofshareholder value• Reducing cross-shareholdings• Improving compliance• Governance promoting
sustainable initiatives

SDGs

23,576 t-CO2

GHG emissions (Scope 1)*1

2,999 t-CO2

3,183 t-CO2

3,023 t-CO2

3,011 t-CO2

1

GHG emissions (Scope 2)*27,230 t-CO2

27,255 t-CO2

25,306 t-CO2

20,564 t-CO2

GHG emissions (Scope 3)*

211,354 t-CO2

159,740 t-CO2

75,652 t-CO2

106,761 t-CO2

GHG (CO2) emissions (per unit)* Scope 1 + 2:
1% or greater reduction each fiscal year
(target per unit compared to previous fiscal year)

68.3kg-CO2/m2

66.5kg-CO2/m2

60.0kg-CO2/m2

47.6kg-CO2/m2

Water consumption (production volume intensity):
20% reduction by FY2030*1*2(target water usage per square meter compared to FY2018)

1.07 m3/m2

1.02 m3/m2

0.62 m3/m2

0.70 m3/m2

Water usage*1

475,140 m3

604,937 m3

375,102 m3

439,687 m3

Waste emissions (production volume intensity):
20% reduction by FY2030*1*2*3(target waste per square meter compared to FY2018)2.30 kg/m2

2.27 kg/m2

1.76 kg/m2

1.60 kg/m2

Total waste emissions*1

3,089 t2,956 t2,428 t2,183 tWaste emissions (excluding recycled waste)*1

1,311 t1,300 t1,017 t1,010 tRecycled waste emissions*1

1,778 t1,655 t1,410 t1,173 tRecycling rate* : 70% by FY2030

58%

56%

58%

53.7%

Female new hires: At least 30%*

33.3%

50%

100%

33.3%

Paid holiday usage rate: At least 70%

61.7%

70.5%

79.7%

79.6%

Cancer screenings (every two years):
100% of employees aged 35 or older*4

–

–

100%

100%

Annual health checks: 100% every year*4

100%

100%

100%

100%

Status of work engagement* * : 90% by FY2023

–

–

82.5%

79.3%

Number of work-related deaths: Zero by FY2023*4*6

–

–

0

0

Female managers: At least 10% by FY2025

–

4.7%

5.0%

5.3%

Total hours of training (hours/year)

–

–

1,186

1,124

Hours of training per employee (hours/year)

–

–

11.6

12.4

Total training expenses (yen/year)––

3,274,342

8,473,780

Training expenses per employee (yen/year)––

32,101

93,118

100%

100%

100%

100%

-

-

100%

100%

4/9 peoples

4/9 people

4/9 people

4/9 people

0 people0 people1 people1 people

Nomination: 3/4 Nomination: 3/4 Nomination: 3/4
peoplepeoplepeoplesCompensation: Compensation: Compensation:
2/3 people
2/3 people
2/3 people

Nomination: 3/4
peopleCompensation:
2/3 people

4 5

Buildings compliant with new earthquake resistancestandards: 100%*1(excluding buildings earmarked for redevelopment)
People with first aid training course qualifications:
All of our officers and employees*4
Composition of Board of Directors:
At least one-third external directors(actual figures in the table are as of June 30 of each fiscal year)
Number of female directors: At least one
Composition of Nomination and Compensation Committees:
Majority external directors
Compliance training: At least five times annually

1. The portfolio of real estate owned by the Group (excluding buildings designated to be sold and jointly owned buildings of which the Company has an ownership share of lessthan 25%) is within the scope of calculation.
2. Actual per-square-meter figures are calculated by dividing annual emissions/usage by the total floor area of the relevant property, regardless of the period of ownership.
3. Recycled waste is excluded from the actual figures for waste per square meter.
4. Heiwa Real Estate on a non-consolidated basis is within the scope of calculation.

39 Heiwa Real Estate Integrated Report 2022

2021

28,330 t-CO2

Skillsdevelopmenttraining for
employees*4• Enhancement of disasterprevention measures and action
programs for when a natural
disaster strikes, from a district
BCP viewpoint• Creation of regional communities

2020

30,439 t-CO2

4

Industrial
Development/
Regional

2019

30,230 t-CO2

1• Contributing to industrial andregional developments• Increasingly diverse humanresources• Promoting occupational healthmanagement• Work-life balance• Improving office environments• More efficient operations

Performance (FY)2018

GHG emissions* Scope 1+2: 50% reduction by 2030*1(Total volume target compared to FY2018 level)

1• Reduction of GHG emissions,water use and industrial waste
generation• Environmentally friendly building
development and managementof buildings• Use of renewable energy

KPI*8

Two times

Two times

Five times

Social Value

Create Environment-Friendly Low-Carbon Areas
We will enthusiastically support moves to embraceenergy-efficient technologies and renewable energy
to help reduce CO2 emissions.

Create Lively Areas through Diversity
and Incubation

We will play an active role in the creation of ideal
areas, where a diverse range of people gather andwork together, stimulate investment, securities andfinance, and foster culture and the arts.

Create Disaster-Resistant, Resilient Areas

We are dedicated to creating buildings and facilities
with a high level of disaster preparedness ensuringthat the city continues to function safety through thedaily community activities of the people who live andwork there.

Create Lively Areas throughCorporate Governance

We will continue to strengthen corporate governanceon an ongoing basis and aim to be a company inwhich all officers and employees proactively tackle
environmental and social issues.

Five times

5. Percentage of employees who responded “yes” or “somewhat” to “My work is rewarding” in a stress check.
6. Numerical targets for each fiscal year.
are guaranteed by a third party.
7. Data marked with
: Other KPIs.
8. : Medium-term management plan KPIs

Heiwa Real Estate Integrated Report 2022

40

Sustainable Organizational Management

President and External Director Dialogue
Pursuing Sustainable Growth with a New Institutional Designroad. This approach has become my core way of thinking.
The business environment in the real estate industry has
been relatively favorable over the last 10 years, with various
ups and downs. Mr. Moriguchi, an organizational leader
with experience as the head of a publicly listed company
in the United States, frequently asks many questions, suchas “Will this still be viable 10 or 20 years from now?” These
comments have led to many realizations, making me
sometimes feel as if he is my mentor.
Moriguchi: At meetings and in other situations, I try to
be as honest as possible and say what I feel and think
without worrying about what others might think. With
its birthplace in Nihonbashi Kabutocho and Kayabacho,
I feel Heiwa Real Estate has magnificent DNA, but fromthe perspective of the real estate industry and Japan
overall, it is a small company. As in the Japanese proverb“sansho peppers are spicy even though they are small,”
we have developed into a small but distinctive company,
and as we look ahead, we must leverage our individuality
and characteristics to pursue sustainable growth, rather
than simply a strategy of expansion. The Redevelopment
Business interacts with local communities, making it
important that we fulfil our social responsibility andcontribute to local communities while attempting torealize distinctive growth in our areas of expertise.

Kiyoyuki Tsuchimoto
Representative Executive
Officer, President and CEO

The Role of External Directors
Moriguchi: In the two years since I became a Heiwa Real
Estate external director, the role external directors playin corporate governance has been changing. While I feelthere is no one right way to approach this work, there
are three roles that I believe are particularly importantfor external directors. First, it is important to monitor
execution from an objective standpoint, but it is more
important that even external directors are passionate
and feel responsible for the long-term growth of theCompany, share problems from the executive side andwork together to find solutions. It would be difficult torealize this if we didn’t have an open organization, but I
think Heiwa Real Estate is very open and always moving
in a better direction. Second, as it is very important thatmanagement be forward-looking, proactive and think

41 Heiwa Real Estate Integrated Report 2022

Takahiro Moriguchi
External Director

positively, it is critical that external directors and the Boardof Directors foster the forward-looking attitude inherent inmanagement without undermining it and attempt to shareissues while making improvements. Third, as the president
gatherers all information pertaining to the Company, it isimportant to pay close attention to whether the president
is adequately fulfilling their leadership function. I have noconcerns about President Tsuchimoto’s leadership thus
far, and will continue solidly supporting him so that he canfully demonstrate his leadership capabilities.
Tsuchimoto: Thank you very much. Whenever possible,
I receive advice from Mr. Moriguchi on the importanceof taking the high road in management. For companies
to achieve sustainable growth as a going concern, rather
than focusing on the next six to 12 months, it is vital thatdecisions are always made from a long-term perspective byconfirming that each measure is on the management high

Tsuchimoto: In the banking world where Mr. Moriguchi
was a manager, the entire industry has undergone amajor transformation, as the 13 city banks that existed
at that time have now been consolidated around threemegabanks. Having experienced these changes,
shortly after his appointment as external director, Mr.
Moriguchi commented “While I understand you aretargeting organic growth by taking advantage of local
characteristics, you should also go one step further
and consider whether organic growth alone is reallythe best way forward.” Although we are now focusedon developing Heiwa Real Estate’s strengths to achieve
growth, I learned that, rather than starting out focusedon a single direction, we must look one step ahead amidchanging times and environments, as it is the president's
job to consider various options from broad perspectives.
Moriguchi: While it is important to have a medium-term
management plan spanning three to five years closely
related to revenue and profit planning, it is also importantto have a vision for the next 10 to 20 years in the midstof major changes in the business environment. The
difficult part is creating this vision. I expect that, under the
new institutional design as a company with nominationcommittee, etc., we will be able to engage in deeper
discussions than ever before with regard to vision andpurpose, as well as value from stakeholder perspectives.

Transitioning to a Company with
Nomination Committee, etc.
Tsuchimoto: Up to now, of course, we have been able
to discuss long-term vision and management direction
under the existing Company with Board of Statutory
Auditors. However, I have a strong desire to create astructure facilitating deeper discussions at Board of
Director meetings in which Mr. Moriguchi and otheroutstanding external directors participate. To this end,
for the past year, I have been furthering discussions onchanging our institutional design to a company withnomination committee, etc. This was a year in which Mr.
Moriguchi made full use of his career up to now, evenduring these discussions, sharing the merits and risks
associated with US-style corporate governance, which heexperienced firsthand in the United States.
Moriguchi: As times continue to change, I believe pastexperience and knowledge are basically of little use,
but I am happy if I can be of some help by utilizing thesensitivities I have cultivated over the years. Although
the institutional design of a company with nominationcommittee, etc., is said to be the most advanced formof governance to date, the most important aspect ofcorporate governance is substance. For Heiwa Real
Estate, the most critical question is how to embody thisadvanced form of governance in a way that leverages
the Company’s distinctive characteristics. As I mentioned
earlier in likening the Company to sansho pepper, thestrength of a Company with a market cap in excess
of 150.0 billion yen, despite having only about 200
employees, is that the president knows every employee
face and understands the work they do, establishing agovernance system under the leadership of the president.
Having external directors play advisory roles in addition totheir monitoring function will lead to the strengthening ofgovernance and management itself.
Tsuchimoto: I think this is a very important point. We
want internal and external directors to be deeply involved
as one team on the Board of Directors to carefully discuss
long-term vision and other major policies while engaged
in supervision. Even during discussions regarding
changes to our institutional design, the Board of Directors
engaged in extremely lively discussions, including
repeated revisions to a draft proposal for the scopeof authorities delegated to Executive Officers, until aconclusion was finally reached. Going forward, we want tomaintain this atmosphere, enhancing both the form andsubstance of corporate governance.
Moriguchi: I agree. Under the new institutional design,
external directors will make up a majority of the Board,but this US-style governance also entails the risk of
unnecessarily increasing tensions between the executiveside and external directors. As external directors

Heiwa Real Estate Integrated Report 2022

42

Sustainable Organizational Management

ultimately comprise a majority, they must be more awareof the need to listen carefully to opinions and ideas fromthe executive side before making decisions on the pros
and cons of a proposal, or else the gap between the twosides may widen. I will be mindful to leverage the meritsof this external director majority without it producing anyof the adverse effects.
Tsuchimoto: Of all Mr. Moriguchi’s comments, the onethat made the deepest impression during discussions
over the past year was “simply having a majority of
external directors does not mean governance will function
properly. There is a risk of gaps opening up between theexecutive side and the Board of Directors, so we need tothink carefully and creatively.”Moriguchi: As mentioned earlier, the CEO is the personwith the best overall understanding of the Company.
In the United States, the appointment of a CEO is themost critical issue facing companies, as well as the mostimportant job of external directors. This is different fromJapan, where CEOs are often selected from within theorganization. Hence, the critical point is whether we canpromote management while maintaining our balance asa Japanese company under a US-style institutional design
where external directors comprise a majority of the Boardof Directors.

President and External Director Dialogue

Board of Director Effectiveness
Moriguchi: In considering the effectiveness of theBoard of Directors, the pursuit of efficient governancemanagement is also important, as there is no need for
Heiwa Real Estate, with only 200 Group employees, to do
the same as large corporations. As President Tsuchimoto
mentioned earlier, regardless of whether they are internalor external, the Board of Directors is very proactive in
voicing opinions. In addition, as discussions are neverleft unresolved, and progress reports and follow-ups arealways provided, I feel management is making steadyprogress through constructive and lively discussions,and in my estimation, the effectiveness of the Board of
Directors is sufficiently ensured.
Tsuchimoto: With the participation of two new external
directors this year, I look forward to lively discussions froman even more diverse range of perspectives. Regarding
Board of Director diversity, while attention has recently
focused on the director skills matrix, I believe the basic
qualities directors must possess are big-picture thinking
and boldness.
Moriguchi: I agree with you on this point. More thanskills and experience, I believe in the importance of eachdirectors’ individuality and attitude toward life, as well as
their ability to adapt themselves to the given environment.
Integrity underscored by ethics and a sense of justice arealso critical.
Tsuchimoto: I am delighted to hear Mr. Moriguchi use
the word “integrity,” as I was just thinking the same thing.
Moriguchi: (laughing) Is that so? Currently at Board
meetings, each of us draws on individual expertise andMore than skills andexperience, directors
must possess big
picture thinking,boldness and integrity.

43 Heiwa Real Estate Integrated Report 2022

varying approaches to ask pertinent questions and engage
in detailed discussions. If I had to make a suggestion forimprovement, I would say that there still seems to be acertain amount of reserve between the executive side
and external directors. To avoid meetings where energy isspent only obtaining approval from the Board of Directors
without saying what one wants to say, external directors
must be more conscious than ever of the need to listen
carefully to opinions and ideas from the executive side.
Tsuchimoto: Under the new Board system, we want torealize operational innovations such as enabling executive
officers who are not directors to continue attending
meetings as in the past so that they understand thecontent of discussions and have opportunities to voice
opinions from the executive side.

Targeting Sustainable Growth
Tsuchimoto: This year, we want to deepen Board of
Director discussions on the Company’s ideal positioning
10–20 years hence. Regardless of the type of meeting,including, for example, opportunities for free discussions
when inspecting the Sapporo Redevelopment Project, I
want to hear various opinions from everyone.
Moriguchi: Listening to President Tsuchimoto, I get
a sense that the Company has the DNA necessary forrealizing these corporate governance enhancements.
Perhaps this has been cultivated through long-term
relationships with stock exchanges and accumulated
throughout the Company’s history. In considering
sustainable growth, we will draw on this DNA as thestrength of our corporate foundation. In developing realestate business, we will become further entrenched in andmaintain close ties with core areas, including Nihonbashi

Kabutocho and Kayabacho, Osaka, Nagoya, Fukuoka andSapporo, in light of the importance of enhancing social
contributions and ESG initiatives.
Tsuchimoto: I believe it is very important that we becomea real estate company with individuality. Fortunately, theNihonbashi Kabutocho and Kayabacho district, which is
our home ground, has itself become a brand over its long
history. Leveraging these characteristics to develop the
district and enhance its overall value will, in turn, lead to theenhancement of Heiwa Real Estate corporate value. We
want to utilize our successful experiences in Nihonbashi
Kabutocho and Kayabacho on subsequent projects in
Sapporo, Fukuoka and other areas.
Moriguchi: Now that we have become a monitoringboard, it is important for external directors to exercise
their advisory function with full respect for what theexecutive side is promoting to ensure efforts proceedeven more smoothly. At the same time, looking
abroad, the global business environment has changed
dramatically in a short period of time. Globalization,
which had been moving toward economic integration,
has stalled, and we are now seeing a qualitative change
in the way events occurring throughout the world
affect the global economy. As a Japanese real estatecompany, approximately 30% of our shares are held byoverseas institutional investors, and in order to meettheir expectations, we need to adopt a more global
perspective and create scenarios for sustainable growth
leveraging the Company's distinctive characteristics.
Tsuchimoto: I agree. Heiwa Real Estate will continue toincorporate the perspectives of Mr. Moriguchi and otherexternal directors into Company management, flexibly
responding to changes in the business environment whilepursuing sustainable growth.

External directors
must be more
conscious than everof the need to listen
carefully to opinions
and ideas from theexecutive side.

Heiwa Real Estate Integrated Report 2022

44

Sustainable Organizational Management

Environment
Basic Approach
The Heiwa Real Estate Group considers its initiatives in environmental concerns as fundamental
managerial issues and will promote the initiatives throughout its overall corporate activities. Giving fullconsideration to its responsibility to conserve the natural environment, the Group actively implements
environmental initiatives while complying with environment-related laws and regulations.

Promotion System

The Company established a Sustainability Committee,
chaired by the president and CEO, comprising
executive officers, corporate officers and department
heads to facilitate the smooth implementation ofsustainability initiatives.
By monitoring the PDCA cycle for each sustainability
initiative, including those for climate change and otherenvironmental issues, and by reporting important details
to the Board of Directors, the Sustainability Committee
acts as a main driver in increasing the effectiveness ofsustainable management.

Supervision

ReportBoard of Directors

Sustainability Committee
Chief ofﬁcer (president and CEO)
Committee secretariat (Sustainability Promotion Ofﬁce,
Corporate Planning and General Affairs Department)
Operating ofﬁcer(Ofﬁcer in charge of Sustainability Promotion Ofﬁce,
Corporate Planning and General Affairs Department)

Various departments
PM

PM

BM

BM

Environmental Supply Chain
As the development and operation of real estate in
the core Building and Redevelopment Businesses
is a long-term process involving many stakeholders(design companies, construction companies, customers
and others), we recognize the importance of tacklingenvironmental issues throughout the supply chain inorder to properly address them.

Sustainable Procurement
To promote ESG-friendly initiatives throughout the value
chain for the Group's real estate portfolio, we haveestablished procurement policies for major products,
services and business partners (e.g., property managementcompanies and building management companies).
The Group strives to build cooperative relationships by
sharing information on environmental concepts and targets
to the greatest extent possible.
Policy on Environmental Issues within Tenant Businesses
The Heiwa Real Estate Group views initiatives addressing
environmental concerns as fundamental managerial
issues and promotes them throughout all corporate
activities. In full recognition of its responsibility toconserve the natural environment, the Group proactively
implements environmental initiatives while complying
with environment-related laws and regulations.
Environmental guidelines for tenants include policies
on environmental issues such as climate change, water
resources and waste.

Climate Change Initiatives
The Heiwa Real Estate Group recognizes that climate change will seriously affect the natural environment and social
structures, and regards it as a material issue that will have a major impact on its businesses as a whole.
As climate change intensifies, abnormal weather and rising sea levels will have serious consequences for countries
around the world. This could also have a significant impact on the Group’s business activities, as the value of properties it
owns could decrease due to natural disasters, and stricter environmental regulations could affect its operations.
Based on this recognition, we are making an effort to reduce greenhouse gas emissions and energy consumption while
promoting the use of renewable energy and other measures.

45 Heiwa Real Estate Integrated Report 2022

Support for TCFD Recommendations

Many corporate stakeholders, particularly investors, areaware that climate change poses systemic risks to thefinancial performance of companies today, and, therefore,
they expect companies to disclose information concerning
climate related risks and opportunities. In response to thistrend, Heiwa Real Estate announced its support for therecommendations of the Task Force on Climate-related
Financial Disclosures* (TCFD) in December 2021.

Based on the TCFD recommendations, which were
finalized in 2017, the Company will identify, assess, andmanage climate-related risks and opportunities that could
impact the Group’s business and enhance its information
disclosure accordingly, recognizing that improving theresilience of its operations is essential for continuously andstably generating earnings over the long term.

Initiative Targets and Results
The Group set the long-term target of a 50% reduction in GHG emissions by FY2030 (total
volume target compared to FY2018 level), and the short-term target of annual reductions of atleast 1% (basic unit target compared to previous fiscal year) *1*2. The long-term target acquired
SBT certification as consistent with the Paris Agreement under the SBT Initiative.
We are also aiming for a 100% environmental certification acquisition rate at newly developed
properties.
Item
Long-term target
GHG emissions reductions*1*2
Short-term target

TargetResults (FY2021)

50% reduction in GHG emissions by FY2030

23,576 t-CO2(basic unit target compared to previous fiscal year)

Annual reduction of at least 1%

47.6 kg-CO2/m

100% acquisition100%(total volume target compared to FY2018 levl)

Newly developed property environmental
certification acquisition rate*32

1. The portfolio of real estate owned by the Group (excluding buildings designated to be sold and jointly owned buildings of which the Company has an ownership share of lessthan 25%) is within the scope of calculation.
2. Greenhouse gas (GHG) emissions = Scope 1 + 2
Scope 1: Direct greenhouse gas emissions directly from sources owned or controlled by business operators.
Scope 2: Indirect greenhouse gas emissions from the use of electricity, steam and heat.
Heiwa Real Estate obtained SBT certification (1.5°C level) from the Science Based Target (SBT) Initiative, which encourages the setting of science-based reduction targets toachieve the Paris Agreement, an international framework for reducing greenhouse gas emissions.
3. Environmental certifications include DBJ Green Building Certification and CASBEE construction; applicable properties include offices and commercial buildings (excluding
small properties).

Major Initiatives

Utilizing Renewable Energy
From May 2021, electricity used at 25 Group-owned
properties, including the Nisshokan Building, whichhouses the Company’s head office (Chuo-ku, Tokyo), were
gradually switched to electricity derived from renewableenergy sources. This is expected to result in the use of
approximately 15 GWh of renewable energy per year anda reduction in CO2 emissions equivalent to approximately
7,000 tons per year.
Reducing Environmental Impacts
In recent years, there have been increasing demands forenvironmental performance in buildings due to the hugeamount of energy required for their operation. Heiwa
Real Estate also considers environmental impacts whenconstructing and renovating buildings.

Examples of Various Building Initiatives
Tokyo Stock Exchange Building• Used electricity and air conditioning controls(introduction of building management system) toconserve energy• Reduced heat loads by operational controls using totalheat exchangers and the control of outside air cooling• Reduced motor energy consumption with variable air
volume controls using inverters• Controlled waste heat recovery with heat-recovery
turbo freezers

Osaka Securities Exchange Building• Saved energy through electricity and air conditioning
controls (introduction of building management system)

CentRise Sakae• Used exterior blind system and auto-adjusting blinds• Used double-pane low-emissivity glass

KABUTO ONE• Used renewable energy (installation of solar panels)• Used energy-efficient systems (LED lighting andcontrols, use of high-efficiency devices)• Mitigated heat island effect (greenery covering 40%)

Heiwa Real Estate Integrated Report 2022

46

Sustainable Organizational Management

Green Lease

Heiwa Real Estate's practices involve initiatives that
benefit both the building owner and tenants based oncollaboration with tenants and voluntary arrangements inthe form of contracts, memorandums of understanding,etc., on the reduction of environmental impact andimprovements in the workplace environment throughenergy conservation, etc. at the properties it owns.

Sustainable Finance

The Group procured funds through assessment loans andsustainability-linked loans (SLLs) to further strengthen ourcommitment to sustainable management. We received
the highest rating of “S” as an industry-leading ESG
management company in the MUFG ESG Evaluation,and concluded an assessment loan agreement with the
Execution
February 2022

Improvementof workplaceenvironment

Improvementof health ofand comfort forofﬁce workers

Improvement ofcorporate image
Reduction of CO2
emissions (compliancewith environmental laws
and regulations)

Enhancement ofreal estate value

Pollution Initiatives
We recognize the need to reduce and control the emission of environmental pollutants across the Group’s real estate
portfolio and make an effort to reduce the use and emissions of harmful chemical and ozone-depleting substances in aneffort to prevent pollution.

Specific Initiatives• Asbestos countermeasures

Bank of Tokyo-Mitsubishi UFJ, Ltd. Regarding compliancewith sustainability-linked loan principles, SSLs from
Shinsei Bank were confirmed by the Sustainability Impact
Assessment Office, while third-party opinions wereobtained from Japan Credit Rating Agency, Ltd., withregard to SLLs from other banks.
Total loan amount

Sumitomo Mitsui Trust Bank, Limited.

50% reduction in GHG emissions
by FY2030(total volume target compared to FY2018 level)
Note: Greenhouse gas (GHG) emissions = Scope 1 + 2.

Nippon Life Insurance Company¥13.6 billion(as of September
2022)

The Group has set the following targets and will promote
reduced waste emissions. The Sustainability Committee
determines performance, comparing actual waste figures
each fiscal year versus consumption and consumption
intensity, either on a year-on-year or multi-year basis.

Waste Emissions* Reduction

Sumitomo Mitsui Banking Corporation and others

The Group maintains an appropriate understanding and manages the status of water usage within real estate management
operations. We also make various efforts to improve water usage efficiency beyond legal compliance levels.

Initiative Targets and Results

The Group set targets and will promote reduced
water consumption as shown below. The Sustainability
Committee determines water consumption reduction
targets and manages consumption volume, in principle,
at least once every 12 months, (includes determinationof target achievement levels for actual performance, andyear-on-year comparisons and analysis).

Water usage

We are also working to reduce the amount of waterused at existing properties by gradually promoting
renovation work facilitating the conversion to watersaving equipment.

Examples of Various Building Initiatives
Tokyo Stock Exchange Building• ntroduction of systems for the utilization of rainwater,
etc.

20% reduction by FY2030

KABUTO ONE

0.70m /m

CentRise SAKAE(target water usage per square meter compared to FY2018)3

2 (Annualized, FY2021)

Specific Initiatives

Building Operation Initiatives
The Group conducts various initiatives aimed at theeffective use of water resources, including the installationof rainwater storage tanks in newly developed buildings
for everyday usage and the effective use of well water.

47 Heiwa Real Estate Integrated Report 2022

• Installation of equipment including rainwater storage
tanks to use rainwater for daily facility use

Results

20% reduction by FY2030(target waste per square meter compared to FY2018)

1.60kg/m

2 (FY2021)

Note: Recycled waste is excluded from the actual figures for waste and waste
emissions per square meter.

Specific Initiatives

Nihonbashi Kabutocho and Kayabacho Revitalization
Project Initiatives

As part of the Nihonbashi Kabutocho and Kayabacho
Revitalization Project, Heiwa Real Estate commercializeda project for a retail and office building adopting a hybrid(wooden construction and SRC) structure in Nihonbashi
Kabutocho, Chuo-ku, Tokyo. The project has been adopted
by the “leading projects” program for sustainable buildings(wood-based structures) in FY2020 implemented by the
Ministry of Land, Infrastructure, Transport and Tourism(MLIT), which aims to drive technological advancement andboost public awareness related to wooden structures. The
10-floor retail and office building utilizes a hybrid structure• Effective use of rainwater and well water, among
other efforts

Business Partner Initiatives
We established the Tenant Guidelines for Environmental
Concerns and call on everyone in the Group and all ourbusiness partners to help conserve water.

• Appropriate Handling ofChlorofluorocarbons

We also conduct periodic surveys on
the amount of chlorofluorocarbon (CFC)
emissions at each property in an effort to
reduce pollutants within business activities.

The Group strives to reduce the amount of waste generated while reusing and recycling waste in all of our corporate
activities. We also work to reduce building life cycle costs and conserve resources to realize a recycling-oriented society.

The Chiba Bank, Ltd.

Water Resource Initiatives

Results

We conduct periodic surveys on thepresence or absence of equipment
containing PCBs and make regular reports
on disposal costs and related issues.

Waste and Resource Usage Initiatives

Targets

Targets• Appropriate Handling of PCBs

We conduct property surveys to determine
whether building materials containing asbestos
have been used, based upon which we makeregular reports regarding removal efforts andresponse policies.

Initiative Targets and Results

Hokkaido Bank

September 2022

Reduction ofheating andlighting costs

Aozora Bank, Ltd.

The Norinchukin BankMay 2022

Development
and deepening ofrelationship between
building owner andtenants

Reduction ofmaintenance andmanagement costs

Sustainability performance target (SPT)Resona Bank, Limited

Shinsei Bank, Limited

March 2023

June 2022

LenderEnvironmentthat includes three-floor mega-structures made using SRC
frames, with each floor within the mega-structures madeof wood. This is the first project on which the Company
adopted this type of hybrid structure. The combination of
SRC mega-structures with fire-resistant wooden structures
has been praised for opening up new possibilities interms of methods and benefits of utilizing wood in highrise buildings, and for prolonging the life of the buildings
in practical usage terms. For the outer premises, theCompany plans to install benches made of wood froma Tokyo Stock Exchange (TSE) Listing Forest located innortheastern Japan based on a social contribution program
being run by Japan Exchange Group, Inc. (JPX). The woodis called “Kablocks,” which can be used in a multitude ofapplications, and will be processed into benches. There
are high hopes that the hybrid
structure will provide a sense of
warmth unique to wood for workers,
visitors and people living nearby,
while adding a touch of tranquility to
the area. We have already acquireda certificate for carbon dioxide
fixation promoting the use of wood
produced in Akita Prefecture.

Cooperation with Business Partner
We established the Tenant Guidelines for Environmental
Concerns as part of our waste management efforts, callingon the Group and all its business partners to cooperate on
this initiative.

Environmental Compliance
The Group maintains compliancewith environment-related laws andregulations. There were no violations ofenvironment-related laws and regulations
or environmental accidents in FY2021.

Item

Unit

FY2019FY2020

FY2021

Violations of environmental laws and regulations Cases

0

0

0

Environmental accidents

Cases

0

0

0

Environment-related fines

Cases

0

0

0

Heiwa Real Estate Integrated Report 2022

48

Sustainable Organizational Management

Sustainable Organization Management

Environment

Society
Human Resource Management

Ratings from Outside Bodies
Acquisition of Environmental Certification

When constructing new buildings and conducting major renovation projects, the Group gives top priority to the environment.
In recognition of these efforts, we have received high ratings from the DBJ Green Building Certification program and CASBEE.

Recognizing the importance of diverse perspectives and values in achieving new growth, Heiwa Real Estate strives to ensure
diversity in human resources, provides equal opportunities for skills development, career advancement and meaningful
work to develop autonomous human resources with a desire to grow.
We will proactively engage in the creation of working environments and systems that make work easier for a diverse
range of human resources.

Human Resource Development Structure

CentRise Sakae

Heiwa Real Estate Ichibancho Heiwa
Nisshokan Building
Kitahama Building
Building

CASBEE-Nagoya
Rank SCASBEE-Osaka
Rank ACASBEE Rank A* self-assessment

Tenjin Heiwa
Building

Kabutocho Heiwa
Building No. 6

Kayabacho Broad
SquareDBJ Green
Building
Certification

OJT

CASBEE

Kitahama 1-Chome
Heiwa Building

KITOKI

Kabutocho Heiwa
Building No. 1

DBJ Green
Building
Certification
CASBEECASBEE-Osaka
Rank ACASBEE-Real
Estate Rank S

CASBEE-Real
Estate Rank S

CASBEE-Real
Estate Rank A

CASBEE-Real
Estate Rank S

DBJ Green Building Certification: Certification system established by the Development Bank of Japan (DBJ) to support green building real estate with consideration for theenvironment and society. This program identifies and certifies “green buildings” in response to modern real estate market needs. The evaluation is comprehensive, taking into
account both the property’s environmental performance and the degree to which the societal needs of various stakeholders surrounding the property are considered.
CASBEE: A method for evaluating and rating the environmental performance of buildings. This program comprehensively assesses building quality, including eco-friendliness (suchas energy efficiency and use of materials and fixtures with a small environmental footprint), interior comfort, and respect for the surrounding landscape.

GRESB Real Estate Assessment

Heiwa Real Estate Co., Ltd., announced today that it hasreceived ratings from the Global Real Estate Sustainability
Benchmark (GRESB). Based on scores for GRESB’s Standing
Investments Benchmark (related to currently operating
properties) and Development Benchmark (related to new
development and major renovation projects), Heiwa Real
Estate received a 4 Star and 3 Star rating, respectively,
following 3 Star ratings for both benchmarks last year.
These benchmarks are generated by the GRESB Real Estate
Assessment, which offers data on environmental, social, andgovernance (ESG) initiatives in the real estate sector. For
the second consecutive year, Heiwa Real Estate received
a Green Star designation, which is awarded to companies
that have scored highly in both the Management andPerformance components of the assessment.
Established in 2009 by a group of large pension
funds in Europe that initiated principles for responsible

49 Heiwa Real Estate Integrated Report 2022

investment, GRESB is an organization that measures the
ESG performance of property companies and funds
to generate its GRESB benchmarks each year. GRESB
currently has 170 investor members, which use its
data when selecting companies to invest in and whenholding dialogues with invested companies. Many ofthese members, including Japan’s Government Pension
Investment Fund, make use of GRESB assessment results.
In 2022, 1,820 property companies,
REITs, funds and developers fromaround the world participated in
the GRESB Real Estate Assessment.
Going forward, we will continue
to engage in proactive activities
to achieve a higher GRESB
rating by enhancing sustainable
management practices.

Major Initiatives

Training Programs
We have established programs tailored to employee careerplans, from training for new hires to management training,
while also providing a system enabling employees to takecourses at university city campuses aimed at cultivatingnext-generation human resources with skills in areas suchas planning, proposals, negotiations and leadership.
System Supporting the Acquisition of Qualifications
We recommend that employees acquire multiple realestate-related qualifications as real estate transaction
agents, first-class architects or real estate appraisers before
being promoted to managerial positions. Heiwa Real
Estate bears costs associated with the acquisition of thesequalifications. Through these efforts, we aim to cultivate apool of official qualification holders necessary for business
operations with advanced specialized capabilities.
Support for Self-Development
Employees are able to participate in e-learning programsand business seminars pertaining to qualifications exams,
language learning and business skills.
By incentivizing the acquisition of qualifications, we
encourage employees to earn qualifications as a means ofself-development and support their personal growth anddevelopment of specializations.

Short-term overseas
training program andEnglish language training

Tokyo Stock
Osaka Securities
Exchange Building Exchange Building

Job rotation

KABUTO ONE

that employees acquire multiple real estate-related
qualifications before being promoted to managerial
Heiwa Real Estate has a job rotation system enabling
positions. The Company bears costs associated with
employees to gain experience in a number of departments
acquiring these qualifications. Additionally, by encouraging
during their first 10 years at the Company, while also using
the acquisition of other self-development qualifications, weon-the-job training (OJT) and other methods to instill real
support employee personal growth and the development
estate knowledge, motivate employees to contribute to theof specializations.
organization and assess their own aptitude.
We have established programs
Qualiﬁcation
Self-development
Rank-speciﬁc training
Rank
tailored to employee career
acquisition support
supportplans, from training for new
Real estateManagement training
transaction agent
hires to management training,
University city campus
Managers
First-class architectcourse system
Incentive system
while also providing a system
Manager training
Urban renewal
to acquire
plannerenabling employees to takequaliﬁcations
ARES-certiﬁed
masteras part ofPre-manager training
courses at university city
Mid-career
Certiﬁed building a self -development
employees
dministrator
campuses aimed at cultivating
Support for
Leader training
Real estate appraiser self-development
next-generation human(conversational
Real estate
Early-career Mid-career employee Fundamental real
English)resources with skills in areas
consulting master
employees
training
estate training
e-Learning
Other
Computer skills
such as planning, proposals,
Early-career employee
External seminars
Note: Employees aretraining
IT literacy
generally expected to acquirenegotiations and leadership.
two or more qualiﬁcations
FinancialNew
New employee
before promotion toaccounting
training
Further, we recommend
employees
managerial positions.

Short-Term Overseas Training Program and English
Training Program

We offer a short-term overseas training program where
employees are dispatched for around three months, as wellas an English training program where employees attend
an English conversation school for three months. These
programs are intended to develop global human resources
through the improvement of language skills and acquisition ofcommunication skills, while providing experience in overseas
cross-cultural environments and the creation of personal
networks at the companies where employees are dispatched.

Basic Lifesaving Training
Since FY2020, Heiwa Real Estate has provided all employeeswith basic lifesaving training, including the use of AEDs.

Basic Lifesaving
Training

Numerical
targets

Targetyear

100%

Annually until
FY2030FY2019 FY2020 FY2021
–

100%

100%

Employee Skills Development Training
Time spent and expenses incurred with regard to employee
skills development training in FY2021 were as follows.
Item
Total hours of training (hours/year)

FY2021
1,124

Total training expenses (yen/year)

8,473,780

Hours of training per employee (hours/year)
Training expenses per employee (yen/year)

12.4

93,118

Heiwa Real Estate Integrated Report 2022

50

Sustainable Organizational Management

Society

Health and Safety

Achieving Diverse Workstyles

Heiwa Real Estate believes employee mental and physical health are essential for enhancing corporate value and realizing
continuous business growth. To this end, we make efforts to improve employee health, create safe work environments andprevent overwork and occupational accidents. We also call on subcontractors and stakeholders critical to our businesses toimplement health and safety initiatives for their employees.

We strive to realize comfort and affluence by respecting the personalities of each and every employee, rejecting all formsof discrimination and harassment, and securing a working environment that is safe and easy to work in. We are also making
efforts to improve work-life balance by promoting work efficiency and reducing overtime hours.

Structure

The representative executive officer, president and CEO
serves as the chief officer responsible for promoting
health management, working with the Health Committee,
industrial physicians, and health insurance associations
primarily through the Corporate Planning and General
Affairs Department.
The Health Committee meets, in principle, once amonth, so that attendees can discuss the importanceof maintaining and improving health, as well as share
information within the Company.
Committee members include managers in charge oflabor affairs, division health committee members, andindustrial physicians.
representative executive ofﬁcer, president and CEO
Corporate Planning and General Affairs Department
Industrial
physicians

HealthCommittee

Health insurance
associations

Targets and Results Associated with Efforts to Improve
Health Issues
FY2021

Numerical targets(FY2023)

100%

100%*1

Medium-term
management
plan KPIs

Cancer screenings

100%

100%*1

Paid holiday usage

79.6%

At least 70%*1

Stress checks

100%

100%*1

Cigarette smokers

14.2%

10% or less

Regular exercise

45.1%

At least 50%

Employees getting
sufficient sleep and abalanced diet

76.1%

At least 80%

Healthmanagement
KPIs

Appropriate body weight

65.0%

At least 70%

Employees leaving work
due to injury or illness

0 people0 people

Employees missing work
0 peopledue to injury or illness

0 people

Highly stressed
employees

2.5%

5% or lessWork Engagement
Statu*2

82.5%

90%

Work-related deaths

0 people0 people*1

Annual health checks

1. Numerical targets for each fiscal year
2. Percentage of employees who responded “yes” or “somewhat” to “my work is
rewarding” in stress checks.
indicates data that has been verified by a third party

51 Heiwa Real Estate Integrated Report 2022

Efforts to promote health• Participation in RIZAP health seminars• Support for extracurricular activities• Smoking countermeasures and cessation support• Online seminars on women‘s health issues• Online seminars for improved eating habits
Prevention and early detection of health problems• Stress check implementation• e-learning, and other education related to diet, sleep,
lifestyle habits and mental health• Sleep and mindfulness yoga seminars• Cancer seminars, cancer screening cost burdens
Investment in Health Management Measures

Health Management Initiatives

Item

Critical Issues Related to Employee Health• Prevention and early detection of lifestyle-relateddiseases• Prevention and early detection of mental healthproblems• Work environment improvements

Item
Medical and health-related expenses(per employee)

Rating from Outside Bodies

FY2021¥87,989

Heiwa Real Estate has been recognized as a CertifiedHealth & Productivity Management Outstanding
Organization for 2022 (large enterprise category) by the
Ministry of Economy, Trade and Industry and the Nippon
Kenko Kaigi (Japan Health Conference).
We were also certified as a Sports Yell Company in2022 by the Japan Sports Agency and as a Tokyo Sports
Promotion Company in 2021 by the Tokyo metropolitan
government for our efforts to support and promote our
employees’ sports activities

Major Initiatives

Prohibition of Discrimination
Heiwa Real Estate does not discriminate on the basis ofnationality, race, gender, age, sexual orientation, disability,
beliefs, ideas or religion. In addition, we neither conduct
nor permit behaviors that may adversely impact the work
environment, including unilateral coercion or solicitation
regarding beliefs, ideas or religions
Prohibition of Harassment
For Heiwa Real Estate, employees and officers are
regarded as important partners in the execution ofwork duties. Accordingly, the Group prohibits sexual
harassment, power harassment or any other forms ofharassment in recognition of its obligation to maintainorderly and cooperative relations in the workplace.
We have also established official rules prohibiting
sexual and power harassment in an effort to prevent
workplace harassment.
Promotion of Diversity
Our basic policy is to be inclusive of diversity in terms ofgender, age, nationality, values and other characteristics,

to create environments in which all individuals canmaximize their capabilities, and to promote the active
participation of diverse human resources.
We are working to promote diversity, including
the success of women, conduct rigorous evaluations
regardless of gender and have set quantitative targets forthe ratio of new female hires. (Medium-term management
plan KPI: At least 30% new female hires)

Initiatives Supporting Work-Life Balance• Development of employee childcare support programs(childcare leave program/childcare shortened working
hours program/childcare overtime exemption program/childbirth gift money and paid time off)
• Development of employee nursing care support
programs (nursing care leave program/nursing careshortened working hours program/nursing care overtime
exemption program)• Enhancement of employee healthcare initiatives (flextime
system/telecommuting system/cafeteria plan/summer
vacation/extra day-off program/annual paid vacation
accumulation system/long-service leave program/hourbased leave system)

KPIs and Track Record Related to Human Resources*
Item

Numeric target

FY2018FY2019FY2020

FY2021

Female new hires

At least 30%

33.3%

50.0%

100%

33.3%

Female employees

–

26.8%

28.3%

31.3%

35.2%

Female managers

At least 10% (by FY2025)

5.1%

4.7%

5.0%

5.3%

Note: Within the scope of calculation on a non-consolidated basis.

Human Rights and Labor Standards
The Heiwa Real Estate Group regards respect for human rights as one of the foundations of business continuity andcomplies with laws and regulations related to worker rights in each country where we operate. We also support andrespect international norms related to human rights, such as the International Bill of Human Rights comprising the Universal
Declaration of Human Rights, the International Labor Organization (ILO) Declaration on Fundamental Principles and Rights
at Work, the 10 Principles of the UN Global Compact, and the UN Guiding Principles on Business and Human Rights.
We also promote human rights initiatives, including the Heiwa Real Estate Group Human Rights Policy, formulated in
December 2021.

Major Initiatives• Promulgating corporate policy on labor standards• Promoting employment of people with disadvantages
such as a lack of formal education or qualifications
and a vulnerable social status, initiatives aimed ataddressing youth unemployment and the provision of
apprenticeship and internship opportunities• Conducting labor issue risk assessments• Increasing labor force diversity without regard to race,
religion, gender, age, sexual preference, disabilities or

nationality, expanding equal opportunities, conducting
seminars aimed at eliminating discrimination andfacilitating points of contact for inquiries• Reducing amount of overtime work
• Preventing child labor and forced labor• Managing wages• Ensuring diversity• Building positive labor relations

Heiwa Real Estate Integrated Report 2022

52

Sustainable Organizational Management

Sustainable Organizational Management

SocietyCompliance
Strengthening Relationships with Customers and Communities
To realize a sustainable society based on our corporate philosophy, as members of society, everyone at Heiwa Real Estate willcontribute to resolving social issues through activities in line with sustainability materiality. We are also making efforts to share
information on environmental approaches and targets to the extent possible while building collaborative relationships.

Major Initiatives

Contributing to the Global Financial City: Tokyo Vision• Developing FinGATE, office spaces for independent
asset management companies and financial venture
firms• Established The Consortium for Japan International
Asset Management Center Promotion (JIAM)• Opened KABUTO ONE (August 2021)

The HEART inside KABUTO ONEFinGATE brandInitiatives for Developing Diverse Districts• Kabutocho Heiwa Building No. 5 (K5) won the Good
Design Award 2020
• HOTEL K5 was included in MICHELIN Guide Tokyo
2021• Creating a bustling district with the strategic attractionof commercial stores• Sponsoring “Heiwa Real Estate presents CURIOCITY”
on TOKYO FM• Sponsoring the Nazotoki Guidebook series(Nihonbashi Kabutocho and Kayabacho Edition) of
riddle-based guidebooks published by Quizknock

KABEAT

Promoting the Green/Wood project

Promoting the Edible KAYABAEN project53 Heiwa Real Estate Integrated Report 2022

For the Heiwa Real Estate Group to earn the trust of society and achieve sustainable
development, we will maintain a constant awareness of compliance and conduct businessin keeping with the Heiwa Real Estate Group Code of Conduct and Standards for Behavior.

Initiatives to Strengthen Relationships in Communities
where Heiwa Real Estate Operates• Participation in the Sanno Festival• Cleanup events in Nihonbashi Kabutocho• Trees donated to Chuo Ward for lining streets in
Nihonbashi Kayabacho• Wildflowers donated to Sakamotocho Park in
Nihonbashi Kabutocho• Provided building to be demolished in firefighting
training by the Tokyo Fire Department• Exhibition of the Red Stone from Sado in connection
with Old Eiichi Shibusawa• Operation of CAFE SALVADOR BUSINESS SALON, an
information source for local communities• Operation of the Nihonbashi Kabutocho andKayabacho community website "Kabuto Live!"• Special sponsorship of the Hokkaido Marathon 2022

Participating in the Sanno Festival

Installation and exhibition of the Red Stone(KABUTO ONE first floor atrium)

Maintaining and Improving the Quality of Office
Building Operations• Disaster preparation and BCP measures• First aid certificate obtained by all officers andemployees (set as a KPI)
• Conducting customer satisfaction (CS) questionnaire
surveys• Holding gatherings for tenants• Ensuring earthquake resistance of buildings in operation

Teal

Initiatives to Develop Sustainable District• Initiatives to Develop Sustainable District• Completed construction of KITOKI, a wood and SRC
hybrid building• Promoting the Edible KAYABAEN project• Utilizing renewable energy• Promoting the Green/Wood project

Basic Approach

Disaster preparation drills

PICK UPSpecial sponsorship of the Hokkaido Marathon 2022
In supporting athletes andmaking the tournament more
exciting, Heiwa Real Estate,
which is promoting the Sapporo
Redevelopment Project, willcontribute to district revitalization
utilizing the power of sport.

Announcement on Stamping Out Misconduct and Strengthening Compliance

Enacted December 2019

1. No growth that compromises trust

The Company's officers and employees shall constantly be aware that stakeholder trust is the platform for, anddriver of, growth. These agents of the Company shall work to improve mindsets in order to regain that trust.

2. Stamping out misconduct

The Company's officers and employees shall carry out their duties in accordance with the highest ethicalprinciples and good sense, and stamp out misconduct by pledging to not engage or become involved in any
wrongdoings, with a clear distinction between personal interests and company interests.

3. Strengthening compliance further

The Company's officers and employees shall rigorously adhere to the Code of Conduct and the Standards
for Behavior for Heiwa Real Estate Group, and shall place the utmost priority on compliance.

Compliance System

The Group has established the Risk Management
Committee, a body for sharing, discussing, andcontrolling compliance and business risks in the Group.
Serious compliance violations and emerging
material risks are reported to the Board of Directors andappropriately addressed. The Corporate Planning andGeneral Affairs Department, which serves as committee
secretariat, is responsible for coordinating with Group
companies and promoting improved compliance and risk
management functions across the entire Group.

Note: Please refer to Risk Management System on page 55.

Prevention of Corruption and Bribery

The Group enacted the Code of Conduct and Standards
for Behavior, drafting a summary of compliance issues
to ensure business activities are conducted in fairness
and honesty without violating social norms. We maintainan awareness of the gravity of our social responsibility,
thoroughly comply with all laws, regulations and rules,
and seek to be a Company with a strong sense of ethics
that can maintain social trust.
Our Standards for Behavior prohibit any actions that
may appear to be collusion from society's standpoint inour relationships with government and administrative
bodies. These Standards prohibit entertainment, gifts
and other benefits deviating from social conventions,and concretely define measures to prevent bribery andcorrupt behavior in general. Details are published on our
intranet and made available to employees at all times.

FY2021 Results• Political contributions: None
• Corrupt activities and number of employees
disciplined or dismissed due to questionable behavior:
None

Compliance Hotline

Based on Internal Reporting Regulations, the Groupestablished an internal compliance hotline to rapidly
identify organizational or individual misconduct, as well as
violations of laws and regulations, and respond with thenecessary measures. This system also promotes ethics andcompliance with laws and regulations at Group companies.
Reports can be made internally or to an externalorganization. We protect those who provide us with
reports, ensuring they are not penalized for using thecompliance hotline.
To promote fair transactions with corporations and otherbusiness partners, we also created a reporting function
outside the Company that receives reports on suspected
and actual compliance violations by Group officers andemployees.

Compliance Training

The Group regularly conducts compliance training toenhance compliance awareness among officers andemployees. We also promulgate compliance awarenessthrough Company-wide simultaneous complianceinspections, information security and other efforts, anddisseminate the results of these inspections throughout
the Group.

Combating Anti-Social Forces

The Company has established a number of policies
that clearly demonstrate its firm resolve to combat antisocial forces. These policies can be found in the Codeof Conduct, the Standards for Behavior for Heiwa Real
Estate Group, the Basic Policy for Building Internal Control
Systems and the Regulations for Exclusion of Anti-Social
Forces, which are thoroughly inculcated among directors,
executive officers and employees.

Heiwa Real Estate Integrated Report 2022

54

Sustainable Organizational Management

Sustainable Organizational Management

Risk Management

Corporate Governance

Basic Approach

Basic Approach

The Company has a risk management system in place to properly manage and control risks, limit
or prevent them from materializing, and minimize damage to management resources and ensuresmooth business operations by taking appropriate measures in the event that risks do materialize.

Heiwa Real Estate considers the enhancement of corporate governance an important businessissue. We strengthen Group corporate governance to earn the trust of shareholders and otherstakeholders and to manage our businesses fairly and efficiently.

Risk Management System

The Risk Management Committee, chaired by the
Representative Director and President, and comprisedof executive officers and heads of departments, meetsquarterly to identify overall Group risks and respond
appropriately when they materialize. The committee
identifies risks that have materialized within the Group anddeliberates measures aimed at preventing recurrence,
reporting important matters to the Board of Directors andother relevant bodies as appropriate. The Heiwa Real EstateGroup risk management system is based the ISO 31000
representative risk management framework.

Schematic Diagram of the Risk Management System

We also manage the following risks, with critical mattersreported to the Board of Directors for the deliberationof responses.
• Real estate investment risks
Before discussion by the Board of Directors, theInvestment Risk Working Group analyzes risks associatedwith property purchases or sales and reports findings to
the Managing Officers’ Meeting.

Initiatives to Strengthen Corporate Governance
System2011

Established Compensation Committee

2015

Established Nomination Committee

2020

Established Sustainability Committee

2021

Established Meeting for Independent
External Directors

2022

Transitioned to a Company
with a Nomination Committee, etc.

• Business Continuity Plan (BCP)

Regulations/Systems

2015

Established Corporate Governance Guideline
Established Standards for Assessing the Independenceof Independent Officers

2016

Introduced Board of Director effectiveness evaluations

2018

Amended rules to make an external director the chair of
the Nomination Committee and Compensation Committee
and the majority of each committee’s members

2019

Reduced term of office for directors, from two years to one year
Introduced performance-linked stock compensation(medium- to long-term incentive)

In an effort to mitigate the risk of a Company crisis inemergency situations, we created a manual and conduct
regular inspections based on our BCP.

2021

Established an employee stock ownership plan

Board of Directors

Risk identiﬁcation
Risk analysis
Risk assessment
Risk response

Major Risks
In recognition of the critical function risk management
plays in Group management, Heiwa Real Estate manages
risks by classifying them into the following categories.
Of these, risks that pose an especially large risk to Groupmanagement and require intensive management are set
apart as “monitored risks” and managed accordingly.
• Real estate-related risks• Legal risks• Financial risks• Information security risks• Labor risks (health and safety)• Overall management-related risks• ESG-related risks (climate change, anti-corruption)

55 Heiwa Real Estate Integrated Report 2022

Positioning the appropriate management of information
risks as one of the Company's most important
information strategies, we established an information
security management system and strive to protect andappropriately manage all information assets in ourpossession. We maintain internal rules, provide ongoingtraining and engage in other efforts required to ensure
information security in an attempt to improve information
literacy among all officers and employees.
We make an effort to implement appropriate
countermeasures to secure and safeguard information
assets and protect against unauthorized access,destruction, data leaks, spoofing, loss, theft and otherthreats. In the unlikely event an information assetrelated security problem should occur, we will strive tominimize damage, quickly investigate the cause andprevent recurrence.

General Shareholders’ Meeting
Election/Dismissal

Election/Dismissal

Board of Directors(5 external directors

Audit Committee(2 external directors, 1 internal director)

Cooperation

Audit

Cooperation

External director

Internal Audit
Department

Audit Committee
Ofﬁce

Report, 4 internal directors
Delegation/supervision ofbusiness execution authority

Information Security

Determination of policies
Monitoring and Reviews

Dialogues and consultations

Risk Management Process

As of June 24, 2022

Transition to a Company with a Nomination Committee, etc.
• External directors comprise a majority of the Board of Directors to ensure appropriate monitoring. Business execution
is extensively delegated to executive officers, establishing a system facilitating flexible business advances.
• The Nomination, Audit and Compensation committees are chaired by external directors to ensure the independence
and objectivity of each committee.
• Full-time Audit Committee members are selected for the Audit Committee from the perspective of strengthening theauditing function.

Audit

Departments, Branches, Group Companies

As of March 31, 2022, there were no significant legal
reserves related to fines and settlements likely to be
incurred in the future arising FY2021.

Audit

Manages and supervises

Corporate Governance System

Cooperation

Reports

Legal Reserves for Litigation Including Legal
Violations and ESG Problems

Election/Dismissal

Manages and supervises

Risk Management Committee

Independent auditors(Auditing ﬁrm)

Reports

Nominating Committee(3 external directors, 1 internal director)

Compensation Committee(2 external directors,1 internal director)

Election/Dismissal

Representative executive ofﬁcer,
president and CEO

Management Conference
Sustainability Committee

Meeting of Executive Ofﬁcers

Risk Management Committee(6 executive ofﬁcers)

Internal audit)

Various departments

Administration

Group companies

Internal director

Heiwa Real Estate Integrated Report 2022

56

Sustainable Organizational Management

Board of Directors

The Board is composed of nine members (including one
woman), chaired by the director, representative executive
officer, president and CEO.
The Board determines basic management policies
and supervises the execution of duties by directors andexecutive officers.
The Board makes decisions on matters specified bylaws and regulations and the Regulations of the Board of
Directors’ Meetings, with the execution of other businessdelegated to directors.
As stipulated in the Articles of Incorporation, the Board
shall have no more than 11 members, with independent
external directors comprising a majority of members.
In addition to consideration for gender and otherdiversity issues and corporate scale when appointing
directors, the Company identifies requisite skills in termsof the knowledge, experience and capabilities required
to execute management strategy, selecting directors withthe appropriate combination of attributes in response to
the management environment, business characteristics
and other factors. External directors include those withmanagement experience at other companies.

Nomination Committee

The Nomination Committee is composed of three or moremembers selected by the Board of Directors and chairedby an external director from the perspective of ensuring
independence and objectivity.
The Committee is responsible for determining
the content of proposals submitted to the General
Shareholders’ Meeting regarding the appointment anddismissal of directors, as well as formulating the criteria for
director appointment and dismissal.
The Committee, in consultation with the Board of
Directors and the executive officer, president and CEO,reports its opinions on the appointment and dismissal of
executive officers and matters related to Representative
Director and President succession planning.
The Company discloses reasons for appointing or
dismissing individual directors and statutory officers, andfor nominating individual candidates for director positions.

Audit Committee

The Audit Committee is composed of three or moremembers selected by the Board of Directors and chairedby an external director from the perspective of ensuring
independence and objectivity. Committee members
are also selected from perspective of strengthening theaudit function.
The committee audits the execution of duties bydirectors and executive officers, prepares audit reports,
and determines the content of proposals concerning
the appointment, dismissal and non-reappointment of
independent auditors.

57 Heiwa Real Estate Integrated Report 2022

Corporate GovernanceCompensation Committee

The Compensation Committee is composed of three ormore members selected by the Board of Directors andchaired by an external director from the perspective ofensuring independence and objectivity.
The Compensation Committee determines policies
relating to decisions on the amount of individualcompensation for directors and executive officers, andalso determines the amount of individual compensation
for directors and executive officers.

Meeting of Executive Officers

The Meeting of Executive Officers is composed of six
executive officers, with the executive officer, president
and CEO managing proceedings. In addition to executing
critical operations, the Committee deliberates in advancematters to be submitted to the Board of Directors.

Management Conference

The Management Conference is composed of theexecutive officer, president and CEO and titled executive
officers, with the executive officer, president and CEO
presiding. The conference discusses the direction ofCompany management strategies and other matters.

Director Composition and Skills Matrix

To realize the medium-term management plan Challenge & Progress, we define a skill set comprising corporate
management, financial affairs and accounting, legal affairs, international business experience, finance and securities,
planning and sales, and DX and IT as the specialized knowledge and experience necessary for the Board of Directors tomake appropriate use of its decision-making and management supervision functions.

• Meeting for Independent External Director
The Meeting for Independent External Directors wasestablished for the purpose of enabling independent
external directors to exchange information and share
viewpoints with each other. Through these activities,
they create the appropriate Heiwa Real Estate Groupmanagement structure.
The Meeting for Independent External Directors
consists entirely of independent external directors, witha lead independent external auditor selected to contact
and coordinate with management and collaborate withstatutory auditors, the Board of Statutory Auditors andother bodies.

Financialaffairs andaccounting

Legalaffairs

International
Finance and Planning
DX and IT
businesssecurities and sales
Nomination
experience

Committee
Audit

Compensation

Board of Director
Attendance(FY2021)

5 years

14/ 14 (100%)

Kazuo Yamada

11 years

14/ 14 (100%)

Takahisa Aoyama——

Daisuke Kobayashi——

Kiichiro Masui

External, independent

5 years

14/ 14 (100%)

Takahiro Moriguchi

External, independent

2 years

14/ 14 (100%)

Junko Utsunomiya

External, independent

2 years

14/ 14 (100%)

Eiji Yamada

External, independent——

Mitsunobu Yamaguchi

External, independent——

Committee chair

Note: This table does not display all skills possessed by directors.

Reasons for Appointment of External Directors
Name

Independent
officer

Reasons for appointment

Kiichiro
Masui

Mr. Masui has abundant experience and deep insight in the world of finance and securities, and plays an appropriate role in advising
management and supervising business execution. Additionally, as chairman of the Nomination Committee, he provides opinions on
Company officer personnel affairs at Nomination Committee meetings from an objective and neutral standpoint. Mr. Masui was appointed
as an external director based on the expectation that he will increase the efficacy of Board of Director and committee meetings andcontinue contributing to the medium- to long-term enhancement of corporate value as an external director going forward.

TakahiroMoriguchi

Mr. Moriguchi has broad knowledge of finance and securities, international business, abundant experience and deep insight as acorporate manager, and plays an appropriate role in advising management and supervising business execution.
In addition, as a member of the Nomination Committee and chairman of the Compensation Committee, he provides opinions from an
objective and neutral standpoint, including those related to officer personnel affairs and compensation. Mr. Moriguchi was appointed as
an external director based on the expectation that he will increase the efficacy of Board of Director and committee meetings and continue
contributing to the medium- to long-term enhancement of corporate value as an external director going forward.

Junko
Utsunomiya

Ms. Utsunomiya has acquired a high degree of expertise as an attorney, and has abundant experience and deep insight in the field ofcorporate legal affairs, playing an appropriate role in providing advice to management and supervising the execution of business. As amember of the Nomination Committee, she provides opinions from an objective and neutral standpoint, including those related to officer
personnel affairs. Ms. Utsunomiya was appointed as an external director based on the expectation that she will increase the efficacy ofBoard of Director and committee meetings and continue contributing to the medium- to long-term enhancement of corporate value as
an external director going forward.

Eiji Yamada

Mr. Yamada has abundant experience and deep insight in the fields of data communications and systems development, and plays anappropriate role in advising management and supervising business execution. He was appointed as an external director based on the
expectation that he will increase the efficacy of Board of Director and committee meetings and continue contributing to the medium- tolong-term enhancement of corporate value as an external director going forward. (Appointed June 2022)

Mitsunobu
Yamaguchi

Mr. Yamaguchi possesses a high degree of expertise as a certified public accountant and extensive experience in the fields of financial
accounting and auditing. In addition to international business experience, he plays an appropriate role in advising management andsupervising business execution. He was appointed as an external director based on the expectation that he will increase the efficacy ofBoard of Director and committee meetings and continue contributing to the medium- to long-term enhancement of corporate value as
an external director going forward. (Appointed June 2022)

Risk Management Committee

The Risk Management Committee, with the executive
officer, president and CEO as the chief risk management
officer, comprises directors, managing officers andheads of departments and was established to ascertain
overall Group risks and manage risks appropriately when
they manifest.

Corporate
management

Kiyoyuki Tsuchimoto

Sustainability Committee

The Company established the Sustainability Committee,
chaired by the executive officer, president and CEO,and composed of directors, managing officers,
and department managers, to efficiently promotesustainability measures supporting the implementation ofsustainability management.
The committee monitors the PDCA cycle with regard
to sustainability measures to improve the effectiveness ofsustainability management.

Term ofofficeDirector

Note: The Company established Standards for Assessing the Independence of Independent Officers to ensure external director independence and neutrality.

Director and Officer Compensation
Basic Policy(1) Provide motivation to improve business performanceand enhance corporate value in the medium andlong term;(2) Seek shared value with shareholders;(3) Establish standards and systems contributing to theretention of talented human resources; and(4) Maintain a decision-making process with sufficienttransparency and impartiality.
• Officer compensation shall be composed of fixed-amountcompensation as basic compensation, bonuses as short-term
incentives, and the performance-linked stock compensation
plan as a medium- to long-term incentive.

• Directors concurrently serving as executive officers shall only
receive as executive officer compensation.

• Compensation for directors (excluding directors concurrently
serving as executive officers) and executive officers speciallyappointed to manage the Audit Committee secretariat shall,in light of their role, consist only of basic compensation.

Basic Compensation• Basic compensation shall be determined based oncomprehensive consideration for the significance of roles andthe scope of responsibility for each position.
• Basic compensation shall be fixed-amount compensation
provided monthly.

Heiwa Real Estate Integrated Report 2022

58

Corporate Governance• Bonuses for managing officers shall be determined inaccordance with bonuses for directors.

Performance-linked Stock Compensation• Medium- and long-term incentives are provided throughperformance-linked stock compensation, comprising afixed-amount portion and a performance-linked portion.
• The fixed-amount portion is determined according toposition, and the performance-linked portion is determinedaccording to the achievement of performance targets, stock
price and other indicators.
• The fixed-amount portion aims to strengthen the sharingof value with shareholders, and the performance-linked
portion aims to provide motivation to improve businessperformance and enhance corporate value in the medium
and long term, in addition to strengthening the link between
business performance and compensation.
• Share benefits shall be provided using a trust comprised of

The Company conducts Board of Director self-evaluations each year, and based on these results, the Board discusses
improvements and makes efforts to enhance Board efficacy.

Standards for Calculating Performance-linked
Stock Compensation• The evaluation indices for the performance-linked portion
shall be consolidated operating income, which is a concise
indication of the earning power of the core business,and total shareholder return (TSR), which indicates thereturn provided to shareholders as a result of increased
corporate value, from the viewpoint of improving businessperformance over the medium to long term.

• Stock compensation for the performance-linked portion
shall be a variable determined within the range of 0% to
150%, corresponding to the achievement of performancetargets for consolidated operating income and acomparative assessment of the stock price index for TSR.
Details shall be prescribed in stock compensation rules
established by Board of Directors resolution.

Director and Officer Compensation Ratio• The proportion of each type of director remuneration (including
executive officers concurrently serving as directors) shallbe decided by the Board of Directors in accordance with
Compensation Committee reports, taking into account suchfactors as the remuneration standards of other companies in thesame industry, with the following ratios used as an approximate
reference when performance targets are achieved.
Fixed-amountcompensation

Item
Position

Performance-linked
stock compensation

Bonus

Basic compensation Short-term incentive

Ratio of totalcompensation(approximate)

55%–65%

Medium- tolong-term incentive

20%–30%10%–20%• With regard to director compensation (excluding executive
officers concurrently serving as directors), the Company
has no policy regarding the determination of monetarycompensation, performance-linked compensation, or
non-monetary compensation amounts as a percentage ofindividual compensation.

Total Amount of Compensation by Officer Category, Type of Compensation and Number of Eligible
Directors and Managing Officers (FY2021)
Category
Directors (including external directors)

Total compensation(Millions of yen)
312 (32)

Total compensation by type (Millions of yen)
Basic compensation
183 (32)

Performance-linked Performance-linked
compensation, etc. stock compensation
98

31

Persons
eligible
9 (4)Statutory auditors(including external statutory auditors)

58 (37)58 (37)

–

–

5 (4)

Total (including external directors and external statutory auditors)

370 (69)

241 (69)9831

14 (8)

Notes: 1. The above includes one (external) statutory auditor who retired at the close of the 101st Ordinary General Shareholders' Meeting held on June 24, 2021.
2. The amount of compensation for directors (excluding external directors) has been set to be within ¥250 million per year (the amount of compensation for directors does not include
the employee salaries of directors who serve concurrently as employees) by a resolution of the 88th Ordinary General Shareholders’ Meeting held on June 26, 2008, and the amount ofcompensation for external directors has been set to be within ¥40 million per year by a resolution of the 98th Ordinary General Shareholders’ Meeting held on June 26, 2018
3. Apart from the amount of compensation for directors mentioned in (Notes) 2 above, the Company adopted a new performance-linked stock compensation plan for directors (excluding
external directors and non-residents of Japan; hereinafter, the same applies in this paragraph) and managing officers (excluding non-residents of Japan; hereinafter, the same applies in thisparagraph) of the Company at the 99th Ordinary General Shareholders’ Meeting held on June 26, 2019. At this meeting, it a resolution was passed stipulating that funds contributed by theCompany to the trust for the acquisition of the Company’s shares to be awarded to directors and managing officers as stock compensation shall be set within ¥150 million for the period of
three fiscal years. Further, the above compensation amount for directors includes ¥31 million booked as performance-linked stock compensation expenses in the fiscal year under review.
4. The amount of compensation for statutory auditors has been set to be within ¥70 million per year by a resolution of the 98th Ordinary General Shareholders’ Meeting held on June 26, 2018.

Director Training
The Company provides explanations regarding
management strategies and business details and conditions
to external directors upon their appointment and by request
thereafter for the purpose of increasing their understandingof Company business operations.

59 Heiwa Real Estate Integrated Report 2022

The Company maintains a support system, including financial
assistance, enabling directors to undergo external training as
appropriate to obtain the skills and knowledge required ofcorporate managers to facilitate a better understanding of theroles and duties expected of each director.

FY2021 Board of Director Efficacy Evaluation Results Summary
The Company conducted a self-evaluation of the effectivenessof the Board of Directors in FY2021 targeting directors andstatutory auditors. The evaluation results were compiled by thesecretariat of the Board of Directors, after which the Board of
Directors analyzed and evaluated the effectiveness of the Boardof Directors as a whole.
As a result, the Board of Directors was deemed to havemaintained adequate effectiveness overall in FY2021, having

established the Meeting for Independent External Directors,
providing a forum for information sharing among external
directors to further improve deliberations, despite new challenges,
including the need to hold more discussions on medium- to longterm management and engage in effective Board management
after transitioning to a Company with three committees.
In light of the above evaluation, we will continue toenhance Board of Director efficacy going forward.

Cross-shareholdings
The Company maintains cross-shareholdings to deepen
business relationships, as well as to facilitate financial
activities and strengthen business alliances consideredbeneficial for medium- to long-term business development.
Every year, the Board of Directors verifies theappropriateness of individual cross-shareholdings in overall
consideration of their usefulness for medium- to long-termbusiness development and whether in line with the purposes
for which they are held, as well as the overall benefits andcapital costs associated with cross-shareholdings. As a resultof this verification, holdings determined to be inappropriate
are reduced through disposal by sale after considering
share prices and market trends.

The Company deliberates each proposal regarding
the exercising of voting rights from the perspective of
the issuing company’s prospects for sustained growth,
corporate value enhancement over the medium- to longterm and increased shareholder value, while confirmingthat the issuing company has not engaged in any anti-social
acts, been involved in major scandals and that there are noserious concerns regarding corporate governance.
In addition, the Company thoroughly examines reasons,objectives, and other factors associated with proposals thathave the potential to affect corporate value and shareholder
value, then determines whether or not to grant approval.

Shareholder and Investor Initiatives
Approach to Information Disclosure

In accordance with its Disclosure Policy, Heiwa Real
Estate discloses accurate information in an impartial andtimely manner to facilitate investment decisions amongshareholders and investors. In compliance with relevantlaws and regulations, the Group proactively provides details
on management strategies and financial results, which
promotes a better understanding of business activities. The
Group also promptly posts information on its website that
falls outside the scope of timely disclosure regulations andrelated laws when said information is deemed useful forinvestment decisions by shareholders and investors.

Briefing Sessions for Institutional andIndividual Investors

We hold briefing sessions primarily for analysts andinstitutional investors twice a year (end of the second
quarter and end of the fiscal year). In addition, we
participate in IR fairs and seminars for individual investors
to create opportunities for more people to learn about the
Heiwa Real Estate Group.

External Ratings of IR Activities

The Company publicly discloses various initiatives on its
corporate website. In FY2021, the Company received
an overall ranking of Grade AA in the Nikko Investor
Relations Co., Ltd., All Japanese Listed Companies'
Website Ranking 2021, as well as the Overall IR Website
Ranking Silver Prize in the Gómez IR Website Ranking.

株主優待事務局

Shareholder Bonus Program
商品の配送やカタログギフトに関するお問合せ

0120-332-240
設置期間 : 2023年1月31日まで【受付時間】平日9時〜17時（お盆・年末年始期間を除く）※お問合せの際にはカード裏面に記載のIDとパスワードが必要です。
カタログギフト到着直後はお問い合わせが大変混み合います。
電話が繋がらない場合は、時間を空けてから改めてお掛け直し
くださいますよう、
お願い申し上げます。

Shareholders who hold at least 100 of the Company’s
shares (one trading unit) as of March 31 of each year are
given a gift card worth ¥3,000 for our online catalog. Longterm shareholders are given a gift card worth ¥5,000.
お申し込み期限：2022年10月31日まで

その可能性が広がっていきます。

• In the event directors or managing officers are dismissed, or
cause damage to the Company through willful misconduct orgross negligence, the Compensation Committee will decide
whether to partially reduce or rescind bonuses.

Evaluating Board of Director Efficacy＿街づくりに貢 献する会社• Bonuses shall be calculated by multiplying the standard
amount corresponding to position by a coefficientcorresponding to the results for net income attributable toowners of parent, and then adding an amount obtained bymultiplying the monthly fixed-amount compensation forthat position by a coefficient corresponding to individual
evaluations (including ESG evaluations). The coefficient for net
income attributable to owners of parent shall be a variable
determined within the range of 0% to 150%, and the coefficientfor individual evaluations (including ESG evaluations) shallbe a variable determined within the range of 0% to 100%.
However, representative executive officer, president andCEO compensation is not based on personal evaluations andassociated monthly fixed-amount compensation.

common stock, in principle, upon the retirement of the eligible
directors and managing officers.

街づくりに貢献する方法は、ひとつではありません。

Bonuses• Short-term incentives shall be provided through bonuses
paid as cash remuneration in June every year to raiseawareness with the aim of improving business performanceeach fiscal year.

私たちひとりひとりが、“自分は何ができるか”を考え、実行することでSustainable Organizational Management

株主ご優待品在中3,000 円 相 当カタログギフト

Record date of allotment

March 31

Granting date

Late June*

Note: Sent together with the notice of year-end dividends after theconclusion of the General Shareholders’ Meeting.

Heiwa Real Estate Integrated Report 2022

60

Sustainable Organizational Management

Corporate GovernanceManagement Team(As of June 24, 2022)

Directors

Kiyoyuki Tsuchimoto

Kazuo Yamada

Director, Representative
Executive Officer, President
and CEO

Director, Representative andSenior Managing Executive
Officer
Assistant to the President

Nominating Committee Chair
Compensation Committee Chair
Apr. 1982 Joined Tokyo Stock Exchange, Inc. (TSE)
Jun. 2013 Managing Director of TSE
Jun. 2014 Director and Senior Executive Officer of TSE
Apr. 2016 Director and Executive Vice President of TSE
Jun. 2017 Director of Heiwa Real Estate Co., Ltd. (the Company) (current position)
		 Managing Senior Executive Officer of the Company
		 In charge of Real Estate Marketing Department of the Company
Jun. 2018 In charge of Office Building Development Department of the Company
May 2019 Representative Director of the Company
		 Acting President of the Company
Dec. 2019 Representative Director and President of the Company
		 Chief Executive Officer of the Company
Jun. 2022 Representative Executive Officer, President and CEO of the Company
		 (current position)

Takahisa Aoyama

Apr. 1980 Joined Heiwa Real Estate Co., Ltd. (the Company)
Dec. 2004 General Manager of Building Department of the Company
Jul. 2006 General Manager of Office Building Development Department and		 Manager of Sapporo Branch of the Company
Apr. 2007 General Manager of Finance Department of the Company
Jun. 2009 Managing Officer of the Company
Jun. 2010 Deputy General Manager of General Affairs Headquarters, and Group		 Leader of Planning Finance of the Company
Jun. 2011 Director of the Company (current position)
		 Managing Executive Officer of the Company
		 General Manager of General Affairs and Planning Headquarters
		 of the Company
Jun. 2014 In charge of Real Estate Solutions Department of the Company
Jun. 2016 In charge of Development Planning Department (Development)
		 of the Company
Jun. 2018 In charge of Development Promotion Department (Development)
		 of the Company
Jun. 2020 Managing Senior Executive Officer of the Company (current position)
		 In charge of Development Promotion Department and Real Estate		 Investment Department of the Company (current position)
Jun. 2022 Representative and Senior Managing Executive Officer, Assistant		 to the President of the Company (current position)

Daisuke Kobayashi

Executive Officers
Representative Executive Officer, President and CEO

Director

Full-time Audit Committee Member
Apr. 1993 Joined Heiwa Real Estate Co., Ltd. (the Company)
Aug.2006 General Affairs Department and IR Office of the Company
Jun. 2013 Manager of Nagoya Branch, Leasing Headquarters of the Company
Jun. 2020 Seconded to HEIWA REAL ESTATE Asset Management CO., LTD.,
		 Director, Business Planning Division General Manager
Jun. 2022 Director of the Company (current position)

Kiyoyuki Tsuchimoto

Representative and Senior Managing Executive Officer

Kazuo Yamada

Assistant to the President, In charge of Development Promotion Department
and Real Estate Investment Department

Managing Executive Officer

Tomoharu Nakao

In charge of Office Building Development Department

Executive Officer

Hiroki Mizuta

In charge of Community Co-Creation Department

Executive Officer

Nobuhiro Seo

In charge of Real Estate Investment Department, General Manager of Real Estate
Investment Department

Executive Officer

Takahisa Aoyama

In charge of Corporate Planning and General Affairs Department, Finance Department
and Legal Office, General Manager of Real Estate Investment Department

Naoyuki Matsumoto

In charge of Finance Department, General Manager of Finance Department

		

		
		

Managing Officers
Managing Officer
Managing Officer on Special Appointment

61 Heiwa Real Estate Integrated Report 2022

Takahiro Moriguchi

Nomination Committee Chair

Nomination Committee Member
Compensation Committee Chair

External Director

Apr. 1973 Entered the Ministry of FinanceJun. 2000 Director-General of Kinki Local Finance Bureau
Jul. 2003 Director-General of the Planning and Coordination Bureau of the		 Financial Services Agency
Sep. 2005 Senior Managing Director of Japan Securities Dealers Association (JSDA)
May 2006 Vice-Chairman and Senior Managing Director of JSDA
Jul. 2008 Vice-Chairman of JSDA
Jun. 2012 Director of the Tokyo Shoken Building Incorporated
Jul. 2013 Chairman of the Japan Investor Protection Fund
Jun. 2014 Chairman of the Board of the Japan Securities Research Institute		 (current position)
Jun. 2016 Outside Director of Japan Credit Rating Agency, Ltd. (current position)
Jun. 2017 External Director of Heiwa Real Estate Co., Ltd. (the Company)
		 (current position)
Jun. 2022 Outside Director of AIZAWA SECURITIES GROUP CO., LTD. (current position)

Junko Utsunomiya
External Director

Director
Executive Officer

Apr. 1993 Joined Heiwa Real Estate Co., Ltd. (the Company)
Jun. 2014 General Manager of Finance Department of the Company
Jun. 2017 General Manager of Real Estate Marketing Department of the Company
Jun. 2018 General Manager of Office Building Department of the Company
Jun. 2020 Managing Officer of the Company
		 In charge of Real Estate Investment Department of the Company
		 General Manager of Real Estate Investment Department of the Company
Jun. 2022 Director of the Company (current position)
		 In charge of Corporate Planning and General Affairs Department,
		 Finance Department and Legal Office of the Company (current position)
		 General Manager of Corporate Planning and General Affairs
		 Department, and Legal Office of the Company (current position)

Kiichiro Masui

Shosaku Shimomura In charge of Audit Committee Office

External Director

Apr. 1967 Joined the Bank of Tokyo, Ltd. (currently MUFG Bank, Ltd.)
Jun. 1995 Member of the Board of Directors of the Bank of Tokyo, Ltd.
		 Director and Vice-President of Union Bank
Apr. 1996 Member of the Board of Directors of the Bank of Tokyo-Mitsubishi, Ltd.
(currently MUFG Bank, Ltd.)May 1997 President of UnionBanCal Corporation
		 President of Union Bank of California
Jun. 2000 Managing Director of the Bank of Tokyo-Mitsubishi, Ltd. (BTM)		 (currently MUFG Bank, Ltd.)
Jul. 2001 Managing Director, General Manager of Treasury Division and		 E-Commerce Promotion Division of BTM
May 2003 Representative Director, Deputy President, and General Manager of		 Global Banking Operations Division of BTM
May 2004 Representative Director, Deputy President, and general operations
		 manager of BTM
Jun. 2005 Advisor of BTM
Jan. 2006 Advisor of the Bank of TokyoMitsubishi UFJ, Ltd. (currently MUFG Bank, Ltd.)
Feb. 2006 Chairman of J.P. Morgan Securities Asia Pte. Limited Tokyo Branch		 (currently JPMorgan Securities Japan Co., Ltd.)
Apr. 2006 Chairman of JPMorgan Securities Japan Co., Ltd. (JPMSJ)
Jun. 2006 Representative Director, Chairman, CEO and President of JPMSJ
Sep. 2007 Representative Director and Chairman of JPMSJ
Jul. 2016 Senior Advisor of JPMSJ
Jun. 2020 External Director of Heiwa Real Estate Co., Ltd. (the Company) (current position)

Nomination Committee Member
Audit Committee Member
Apr. 2000 Registered as a lawyer and joined the law firm Nagashima, Ohno & Tsunematsu
Oct. 2007 Seconded to the Tokyo Stock Exchange, Inc. (TSE)
Nov. 2011 Founded Utsunomiya Law OfficeJun. 2012 External Statutory Auditor of Start Today Co., Ltd. (currently ZOZO, Inc.)		 (current position)
Apr. 2013 Outside Corporate Auditor of Solasto Corporation
Sep. 2013 Outside Director of Adventure Inc.
Feb. 2018 Founding partner of Utsunomiya & Shimizu and Haruki Management Legal
		 Office (current position)
Oct. 2018 Outside Audit & Supervisory Board Member of RAKSUL INC.
Oct. 2019 Outside Director, Audit and Supervisory Committee Member of RAKSUL INC.
		 (current position)
Jun. 2020 External Director of Heiwa Real Estate Co., Ltd. (the Company)
		 (current position)
Mar. 2021 Outside Director (Audit & Supervisory Committee Member) of PeptiDream Inc.
		 (current position)

Mitsunobu Yamaguchi
External Director

Eiji Yamada

External Director

Compensation Committee Member
Apr. 1978 Joined Nippon Telegraph and Telephone Public Corporation
		 (currently Nippon Telegraph and Telephone Corporation)
Jun. 2005 Senior Vice President of NTT DATA Corporation
Jun. 2011 Director and Executive Vice President of NTT DATA Corporation
Jun. 2012 Representative Director and Senior Executive Vice President of		 NTT DATA Corporation
Jun. 2015 Advisor of NTT DATA Corporation (retired in June 2017) President and		 Representative Director of Japan Information Processing Service Co., Ltd.
		 (retired in June 2021)
Jun. 2017 Outside Director of The Chiba Kogyo Bank, Ltd. (current position)
Jun. 2021 Advisor of Japan Information Processing Service Co., Ltd.
		 (current position)
		 External Director of Kyokuyo Co., Ltd. (current position)
		 External Director of Heiwa Real Estate Co., Ltd.
Jun. 2022 External Director of Heiwa Real Estate Co., Ltd. (the Company)
		 (current position)

Audit Committee Chair
Sep. 1983 Joined Tetsuzo Ota & Co. (currently Ernst & Young ShinNihon LLC)
Aug.1987 Registered as a Certified Public Accountant
Jul. 1996 Assigned to Detroit offices of Ernst & Young in the United States
May 2001 Employee of Century Ota Showa & Co. (currently Ernst & Young ShinNihon LLC)
May 2007 Representative of ShinNihon LLC (currently Ernst & Young ShinNihon LLC)
		 (retired due to retirement age in June 2020)
Jul. 2020 Established Mitsunobu Yamaguchi CPA Office, Head (current position)
Jun. 2021 Outside Audit & Supervisory Board Member of MEITEC CORPORATION
		 (current position)
Jun. 2022 External Director of Heiwa Real Estate Co., Ltd. (the Company) (current position)

Heiwa Real Estate Integrated Report 2022

62

Company Data

Company Data

Stock Information

Corporate Information(As of March 31, 2022)

Status of Shares

Major Shareholders (Top 10)

Total authorized shares:

Distribution of Shares by Shareholder Category
Securities companies

777,000

Individuals
and others(2.00％)

7,167,000

Other corporations(18.44%)

7,486,000

Total outstanding shares

38,859,000

Financial
institutions

Foreign corporations

10,254,000

13,174,000(26.39%)(33.90％)Trends in Share PriceBranch Locations

Commercial name

HEIWA REAL ESTATE CO., LTD.

Established

July 1947

Representative

Kiyoyuki Tsuchimoto
Representative Executive Officer, President andCEO

Nagoya Branch 8-21, Sakae 3-chome, Naka-ku, Nagoya 4600008, Japan

Head office

1-10, Nihonbashi Kabutocho, Chuo-ku, Tokyo
103-8222, Japan

Fukuoka
Branch14-2, Tenjin 2-chome, Chuo-ku, Fukuoka
810-0001, Japan

9.07

Branches

1,082

2.96

Osaka Branch, Nagoya Branch, Fukuoka Branch,
Sapporo Branch

Capital¥21,492 million

SapporoBranch1, Odori-nishi 4-chome, Chuo-ku, Sapporo
060-0042, Japan

Taisei Corporation

532

1.45

URL

https://www.heiwa-net.co.jp/en/

STATE STREET BANK WEST CLIENT TREATY 505234

479

1.31

Listed exchanges

SSBTC CLIENT OMNIBUS ACCOUNT

467

1.28

Tokyo Stock Exchange (Prime Market), Nagoya
Stock Exchange (Premier Market), Fukuoka Stock
Exchange, and Sapporo Securities Exchange

Securities code

8803

Resona Bank, Limited

445

1.22

Businesses

JP MORGAN CHASE BANK 385781

421

1.15

1. Building Business
Development, leasing, management, buying andselling of stock exchange buildings, office buildings,
commercial facilities and residential buildings.
2. Asset Management Business
Asset management, real estate brokerage andother business activities conducted by HEIWAREAL ESTATE REIT, Inc.

Percentage of
total equity(%)

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

4,865

13.29

Mitsubishi Estate Co., Ltd.

4,274

11.67

CGML PB CLIENT ACCOUNT/COLLATERAL

3,900

10.65

Custody Bank of Japan, Ltd. (Trust Account)

3,319

THE BANK OF NEW YORK 133969

Name

Number of shareholders: 17,324

Corporate Profile
Number ofshares(Thousands)

110,000,000 shares

Total outstanding shares: 38,859,996 shares(19.27％)(As of June 24, 2022)

1. Percentage of total equity calculated after deducting the number of shares held by
the Company as treasury stock from total outstanding shares.
2. The list of Major Shareholders above excludes 2,250,000 shares held by theCompany in the form of treasury stock.
3. 130,000 shares held by Custody Bank of Japan, Ltd. (Trust Account) as assets
in trust for executive officers and managing officers and employee stockcompensation plans are not included in treasury stock.

Employees

Osaka Branch

5-5, Kitahama 1-chome, Chuo-ku, Osaka
541-0041, Japan

Group Companies
Heiwa Real Estate Property Management Co., Ltd.
Housing Service Co., Ltd.
Heiwa Real Estate Asset Management Co., Ltd.
The Tokyo Shoken Building Incorporated

91 (non-consolidated)/240 (consolidated) (as ofMarch 31, 2022)

Organization(From April 2010 to March 2022/monthly)

General Shareholders’ Meeting

(Yen)
4,500
4,000

Nomination Committee

3,500
3,000
2,500

Board of Directors

2,000

Audit Committee

1,500

Compensation Committee

1,000
500
0

Audit Committee OfficeInternal Audit Department

President and Representative Executive Officer
April 2010

April 2011

April 2012

April 2013

April 2014

April 2015

April 2016

April 2017

April 2018

April 2019

April 2020

April 2021

April 2022

Management Conference

Notes: Prices at month-end.
Amounts shown take into account the effect of a five-to-one share consolidation executed on October 1, 2012.

Sustainability Committee

Meeting of Executive Officers

Risk Management Committee

Corporate Website
Home Page

IR Information

Sustainability

https://www.heiwa-net.co.jp/en/

https://www.heiwa-net.co.jp/en/ir/

https://www.heiwa-net.co.jp/en/
sustainability/

Corporate Planning and General Affairs Department
Legal OfficeFinance Department
Development Promotion Department
Real Estate Investment Department
Building Business Department
Community Co-Creation Department

63 Heiwa Real Estate Integrated Report 2022

Sustainability Promotion OfficeOsaka Branch
Nagoya Branch
Fukuoka Branch
Sapporo Branch

Heiwa Real Estate Integrated Report 202264