H e i w a R e a l E s t a t e C o., L t d.
Corporate
Report2020

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

Creating World-Class
Neighborhoods

Creating World-Class Neighborhoods

Contents

About the Heiwa Real Estate Group
02 History of Heiwa Real Estate
04 Value Creation Model
06 The Source of Corporate Value
Value Creation Strategy
08 To Our Stakeholders
12 New Medium-term Management Plan
18 Review of Operations by Business
Base Supporting Our Strategy
20 P racticing Sustainable Management
22 Environment
23 Society
24 Corporate Governance
28 Management Team

Since its founding, the Heiwa Real Estate Group has been
based in Nihonbashi Kabutocho and Kayabacho, allowing
returning the district to it to inherit the district’s uniquecharacter while creating new value.
Instead of simply returning the district to the level ofCorporate Data
30 Consolidated Financial Highlights
32 Organization
33 Corporate Profile andShareholder Information

prosperity it enjoyed in earlier days, the Group has beentransforming the district to suit the many people whowork, live and visit there now. In our redevelopment work,
we give importance to making use of and developing the
district’s uniqueness.
By leveraging and building on the characteristics of thisarea, we will reach for new heights as “a company that
contributes to revitalizing districts.”

Editorial Policy
We publish this Corporate Report to communicate ourannual results and our initiatives aimed at medium- tolong-term enhancement of corporate value. We hopethat it will serve as the starting point for further dialogue
with shareholders, investors and other stakeholders.
It has been compiled with reference to theInternational Integrated Reporting Framework, publishedby the International Integrated Reporting Council (IIRC).
Important items are graphically represented, with theaim of making the report simple and easy to understand.
Additional financial information beyond the scope of thisreport, as well as our corporate governance information,
are available on our corporate website.

Disclaimer
Information in this report other than statementsof historical fact are forecasts and forward-looking
statements that are based on judgments by the
management of Heiwa Real Estate in light of available
information. Actual results may differ materially fromthese forecasts due to various factors. Heiwa Real Estate
assumes no responsibility for the use of information
contained in this report.

Heiwa Real Estate Co., Ltd. Corporate Report 20201

Abo u t t h e He i w a R eal Es t at e G r oup

H i s to r y o f H e i w a R eal E s t at e
Heiwa Real Estate was founded in 1947 as the owner of buildings for stock exchanges in Tokyo, Osaka,
Nagoya and elsewhere, which play a central role in Japan’s financial markets.
Nihonbashi Kabutocho and Kayabacho, where the Company was founded, have developed as thehome of the securities industry. As the social environment changed with the development of
information and communications, these districts have likewise witnessed significant change, including
the closure of the trading floor and relocations of securities firms.
Instead of simply returning the district to the level of prosperity it enjoyed in earlier days, the Group

2000

1980

1947
Establishment Phase:
Supporting the Securities
Industry
Established as the owner of stock
exchange buildings, we built thefoundation of our business by leasing
stock exchange buildings and by
developing the building leasing
business mainly in the neighborhoods
where stock exchanges
are located.

Business Diversification Phase:House Sales Business andOther Businesses
Expanded into new businesses
in step with changes in the social
environment. Entered the suburban
housing development business andthe condominium sales business.

1949 Began leasing to the respective
stock exchanges 1
1958 Completed construction of
Fukuoka Shoken Building
1962 Completed construction of
Kyoto Shoken Building

2000 Acquired Mita Heiwa Building
2001 Acquired Uchisaiwaicho Heiwa
Building

1984 Completed construction of the stock
trading floor building (currently Arrows) 2002 Acquired Dogin Building
within the Tokyo Stock Exchange
2004 Completed construction of Nagoya
Building complex 2
Heiwa Building
1986 Completed construction of Yokohama
Heiwa Building

Completed construction of the Osaka
Securities Exchange Building 3

1987 Completed construction of Osaka
Heiwa Building

2007 Completed construction of the
Nagoya Stock Exchange Building

1988 Completed construction of the mainbuilding of the Tokyo Stock Exchange
Building complex 22008 Completed construction of Hotel
Brighton City Osaka Kitahama

1992 Completed construction of Kayabacho
Heiwa Building
1993 Completed construction of Daimaru
Kyoto Store (West) Kyodo Building
1

Aggressively redeveloped properties
in Osaka and Nagoya. In the leasing
business, increased assets such as
office buildings and commercial
facilities to enhance our revenue base.

2020

2014
The Next-Generation Heiwa Real
Estate: Taking on the Challengeof Becoming “a Company That
Contributes to Revitalizing Districts”
Engaged in the revitalization of Nihonbashi
Kabutocho and Kayabacho, successfullylaunching KABUTO ONE as the first project.

Moving to a New Stage of Growth
as “a Company That Contributes to
Revitalizing Districts”
Reaching for new heights as “a company that contributes
to revitalizing districts.” Working to contribute to therealization of a sustainable society while enhancing
corporate value through the resolution of environmental
and social issues, and dialogue with stakeholders.

2020 Opened K5 51980 Entered the condominium sales business
1947 Heiwa Real Estate established

Leasing Business Asset
Expansion Phase: Enhancing
the Revenue Basehas been transforming the district to suit the many people who work, live and visit there now.
While harnessing the area’s character and history as a securities trading hub and a financial andinvestment center, we seek to bring new energy and visitors back to the community, and develop
new functions and culture. In doing so, we will reach for new heights
as “a company that contributes to revitalizing districts.”

2014 Announced the Revitalization Vision for
Nihonbashi Kabutocho

Opened FinGATE TERRACE
2021 Scheduled opening of KABUTO ONE 62015 Completed construction of Kitahama
1-Chome Heiwa Building
Completed construction of Maruzen Nagoya
Honten Building
2017 Acquired Kabutocho Heiwa Building No. 6
Acquired Osaka Midosuji Building
Opened FinGATE KAYABA 42018 Opened FinGATE KABUTO
Opened FinGATE BASE
2019 Began construction of KABUTO ONE 62009	Initiated full-scale participation in the
REIT business5(made the current Heiwa Real Estate AssetManagement Co., Ltd. a consolidated subsidiary)

K5(Chuo-ku, Tokyo)

1994 Completed construction of Daimaru
Kyoto Store (North) Kyodo Building

6

KABUTO ONE(Chuo-ku, Tokyo)

Former Tokyo Stock Exchange Building
4

FinGATE KAYABA(Chuo-ku, Tokyo)
3

2

Tokyo Stock Exchange Building(Chuo-ku, Tokyo)

2

Osaka Securities Exchange Building(Osaka City)

Heiwa Real Estate Co., Ltd. Corporate Report 20203

Abo u t t h e He i w a R eal Es t at e G r oup

V a l u e C r eat i o n Mo d e l
As “a company that contributes to revitalizing districts,” we strive to help society become moresustainable while also improving corporate value, by increasing satisfaction through dialogue withstakeholders and by providing solutions to environmental and social issues.

The Source of Corporate Value

Generating Greater ValueThe Value We Offer(The Heiwa Real Estate Group’s Strengths)(New Medium-term Management Plan
“Challenge & Progress”)(Vision for the Heiwa Real Estate Group)

Superior portfolio of
properties in central
districts of major cities
across Japan

Improving social value
Environmental
concerns

Track record and trust
as an owner of securities
exchange buildings

Nihonbashi Kabutocho
and Kayabachorevitalization• Progress incommercializing
SapporoRedevelopment
Project

Sourcing capability
developed througha track record in thepurchase and sale ofreal estate

Operating expertise of
Heiwa Real Estate
REIT, Inc.

Businessstrate• Nihonbashi
Kabutocho andKayabacho
revitalization

Corporate Activities

DGs
.N. S
eU
th

Redevelopment
Businessg into ac
cou
akin
t
s
nt
e
gi

• Promotion of capital policythat takes into account capitalcosts and capital efficiency• Strengthening corporate
governance• Practicing sustainable
management

Building
Business

Better disaster
preparedness• Pursuing external
and internal growth• Sustainablebuilding operations
to improve
environmental
performanceand disaster
preparedness

Expansion ofleasing businessrevenue

Asset Management Business

Capital gains

Making society sustainable asa “company that contributes torevitalizing districts”
The Group will help our society become
more sustainable and promote therevitalization of safe and secure districts, taking
into account environmental concerns anddisaster preparedness, through initiatives suchas the revitalization of Nihonbashi Kabutocho
and Kayabacho, the Sapporo Redevelopment
Project, and asset management.

Improving shareholder value

Expansion ofasset management
fees, etc.

Growth in
EPS

Improving shareholder value as alisted real-estate company• Growing asset management earnings• Generating earnings from inventory sales

Create safe
and secure
districts

The Company will improve shareholder
value through returns and greater capitalefficiency by maximizing the use of theGroup’s corporate value and by creating
and achieving added value in real estate.

Increase in
ROE

Substantial
shareholder
returns

Heiwa Real Estate Co., Ltd. Corporate Report 2020

45

Abo u t t h e He i w a R eal Es t at e G r oup

The Source of Corporate Value
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. Furthermore, we hold asuperior portfolio of properties in central districts of major cities across Japan. Through theseproperties, we support Japan’s financial infrastructure, enabling us to establish relationships oftrust with various stakeholders and obtain their cooperation. This led to the successful launch of
the first project of the Nihonbashi Kabutocho and Kayabacho Revitalization Project.
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 and to further fulfill our role as “a company that contributes torevitalizing districts.”

Track Record and Trust as an Owner of Securities Exchange Buildings

Tokyo Stock Exchange Building(Chuo-ku, Tokyo)

Osaka Securities Exchange Building(Osaka City)

Nagoya Stock Exchange Building(Nagoya City)

Fukuoka Shoken Building(Fukuoka City)

Superior Portfolio in Central Districts of Major Cities across Japan
Hokkaido (Sapporo)

Portfolio Data

• Dogin Building• Shin-Odori Building• Park East Sapporo• Sapporo Ekimae Godo Building• AFT Building• Hotel Emisia Sapporo

Sendai and Sapporo

17%
Fukuoka

Sendai (Ichibancho)
Osaka Midosuji Building

Kitahama 1-Chome
Heiwa Building

Hotel Brighton City
Osaka Kitahama

Heiwa Real Estate
Kitahama Building

Osaka (Kitahama)• Osaka Securities Exchange Building• Osaka Heiwa Building• Hotel Brighton City Osaka Kitahama• Heiwa Real Estate Kitahama Building• Kitahama 1-Chome Heiwa Building

Dogin Building• Ichibancho Heiwa
Building• Solala Plaza

6%

12%

Fukuoka (Tenjin)

Ichibancho Heiwa Building• Kabutocho Heiwa Building No. 7• Kayabacho 1-Chome Heiwa Building• Kayabacho Broad Square• Kayabacho Heiwa Building No. 2• Quatro Muromachi Building• Mita Heiwa Building• Uchisaiwaicho Heiwa Building• Yokohama Heiwa Building

Other

2%

OfficeCommercial

66%

16%

Leasingrevenue* by
usage

Nagoya (Sakae)

6

Osaka

*Excluding residential buildings;
as of March 31, 2020

• Tokyo Stock Exchange Building• Nisshokan Building• Kabutocho Heiwa Building• Kabutocho Heiwa Building No. 1• Kabutocho Heiwa Building No. 2• Kabutocho Heiwa Building No. 4• Kabutocho Heiwa Building No. 5 (K5)
• Kabutocho Heiwa Building No. 6• Fukuoka Shoken Building• Fukuoka Heiwa Building• Tenjin Heiwa Building• Nagoya Stock Exchange Building• CentRise Sakae• Nagoya Heiwa Building• Maruzen Nagoya Honten Building• Isemachi Heiwa Building• Sakae Center Building• Sakae Sun City Building

CentRise Sakae

44%

21%

Tokyo (Nihonbashi
Kabutocho)

Maruzen Nagoya
Honten Building

Tokyo

Nagoya• Osaka Midosuji Building• Kyoto Shoken Building• Daimaru Kyoto Store (West) Kyodo Building• Daimaru Kyoto Store (North) Kyodo Building

Tenjin Heiwa Building

Leasingrevenue* byregionStockexchange

16%*Excluding residential buildings;
as of March 31, 2020

Uchisaiwaicho Heiwa Building

Mita Heiwa Building

Kabutocho Heiwa Building No. 6
Heiwa Real Estate Co., Ltd. Corporate Report 20207

Va lu e Cr eat i on St r at eg y

T o O u r St akeh o l d er s

Reaching New Heights as “a Company
That Contributes to Revitalizing Districts,”
Districts ,”Heiwa Real Estate Is Promoting Its
Uniqueness
Uniqueness as a Real Estate Developer
Kiyoyuki Tsuchimoto Representative Director and President

Heiwa Real Estate’s Role
Heiwa Real Estate Co., Ltd. was founded in 1947 as the

Increasing Our Presence as a
Real Estate Developer

four years ahead of schedule. At the same time, we achieved
record highs for every level of profit. Through our efforts overQualitative and Quantitative Expansion of the
Redevelopment Businessthe past six years, I believe we have achieved the two goals ofFirst, in the Redevelopment Business we intend to improve

owner of buildings for stock exchanges in Tokyo, Osaka,

In FY 2014, the Group formulated the 10-year Medium-increasing our presence as a real estate developer and improving

the quality and speed of development in order to further

Nagoya and elsewhere. They play a central role in Japan’s

to Long-term Management Plan “Over the NEXT DECADE”

business performance ahead of schedule.

expand qualitatively and quantitatively. The first project in thefinancial markets. Since then, we have been responsible for(hereinafter referred to as the “previous medium- to long-

Against this background, the Heiwa Real Estate Group

providing infrastructural support for the securities market whileterm management plan”) and has been working to become

is determined to take on even more challenges with the aim

areas, KABUTO ONE, will open in 2021, making our

expanding our business operations on the foundation of trust“a company that contributes to revitalizing districts” byof reaching new heights as a real estate developer, and has

redevelopment efforts clearly visible. We will continue to

we have built as Japan’s only real estate company with stock

revitalizing the Nihonbashi Kabutocho and Kayabacho areas,

formulated a new medium-term management plan, “Challenge

expedite work on projects after KABUTO ONE. Moreover,exchange buildings in its portfolio. The basic mission of a real

where the Company was founded. When formulating the& Progress,” for the four years beginning FY 2020.

we will not only conduct scrap and built—i.e., develop new

estate company is to provide an environment of convenience,previous medium- to long-term management plan, we set

comfort and safety that allows tenant companies and people toout to establish our presence as a real estate developer in 10

connect and demonstrate their capabilities, and lead affluent

years—a very challenging goal for us at that time. With thelives. In other words, our role is to raise the quality of urban

start of construction of KABUTO ONE, however, our efforts

In “Challenge & Progress,” we will contribute to resolving

that modern society calls for. Based on the idea that the

infrastructure and community services.

have become clearly visible. In addition, backed by real estatesocial issues by focusing on three businesses—thecontinued use of a good building can provide value over amarket conditions, our employees have faithfully fulfilled

Redevelopment Business, the Building Business, and thelifespan of not just 50 but even as much as 100 years, wetheir respective duties, achieving the plan’s FY 2023 target for

Asset Management Business—and reach new heights as “abelieve it is essential to conduct redevelopment with a balance

consolidated operating income of over ¥10 billion in FY 2019,

company that contributes to revitalizing districts.”

between new development and renovation of existing stock.

revitalization of the Nihonbashi Kabutocho and Kayabachobuildings after demolishing old ones—but will also renovate

A Business Strategy for Reaching New Heights

existing high-quality buildings and continue to make bestuse of them. In fact, I believe this is in line with the direction

Heiwa Real Estate Co., Ltd. Corporate Report 2020

89

To Our Stakeholders

A representative example is K5, which opened in Februarycommunication systems, that provide tenants with peace of

2020. This renovation of a 90-year-old classical building

mind and security.

The Cornerstones of Increased Corporate
Value

adjacent to the Tokyo Stock Exchange as a complex including

The Building Business involves two key aspects: stablea hotel, restaurant and bar was enthusiastically received. We

growth as an earnings base and sustainable building operation.

The Heiwa Real Estate Group aims to increase value forwill continue to promote sustainable redevelopment that

As in the past, we continue to promote external growth, whichsociety by contributing to the resolution of social issues while

incorporates both new and classical buildings.

includes building our portfolio through the acquisition of newincreasing value for shareholders by enhancing shareholder

buildings for lease, as well as internal growth, which involves

returns. Under the new medium-term management plan,

intangible benefits and services in addition to tangible assets.

improving portfolio profitability through lease price increases.

our basic policy for shareholder returns over the four years of

Therefore, together with the formulation of the new medium-

While continuing to work for these two kinds of growth under

the plan is a consolidated total return ratio of approximately

term management plan we changed our organization andthe new medium-term management plan, we will also promote

70%. In addition to an EPS target, as a new KPI we have set

established the Community Co-creation Department. This

sustainable building operations with the aim of improving

an ROE target that takes capital costs into account. We havedepartment will promote “co-creation” with local residents andenvironmental performance and disaster preparedness. We

selected this KPI because we believe that a key mission of acompanies who are working together on the revitalization of thehave set clear key performance indicators (KPIs) related to thelisted company is to increase shareholder value. We will work

Nihonbashi Kabutocho and Kayabacho areas. Our intention isenvironment and disaster prevention that also address otherto increase corporate value by working to improve value forto promote planning of intangible benefits and services such associal requirements including the Sustainable Development

society and for shareholders.

cooperative events that will make the revitalization unique. A

Goals (SDGs), and as a real estate company we are working to

key issue is taking advantage of the distinctive characteristics ofresolve social issues through the operation of buildings.

In addition, creating neighborhoods necessarily encompasses

these areas. Under a development concept of creating a district

In addition, we foresee offices after COVID-19 undergoingOver the four years of the new plan, I would like to makeHeiwa Real Estate a company that society appreciates and thathas an extensive and reputable track record. For example, with

where people connect, and where investment and growthvarious changes, including becoming places for discussion ofregard to operating safety and security, we plan to make sureare born, we want to establish a cutting edge in the areas ofinnovation, which cannot be achieved through remote work, asthat all executives and employees have life-saving qualifications

securities, finance and investment to fully bring out the appeal

well as places for fostering corporate culture and relationships ofand can perform emergency procedures such as AED ifof the district.

trust. We also believe that in selecting office space, companies

necessary. In addition, in the revitalization of the Nihonbashi

will judge whether a building is environmentally responsible, for

Kabutocho and Kayabacho areas we would like to develop

redevelopment project in Sapporo for the Redevelopment

example, whether it is powered by renewable energy. Viewingbuildings that attract the most attention in Japan. KABUTO

Business. Here, we will apply the expertise we have acquired

such changes in the business environment as opportunities, weONE, which is scheduled to open in 2021, will feature anin revitalizing the Nihonbashi Kabutocho and Kayabacho

will anticipate the social functions that people demand fromatrium and serve as the flagship of the new Kabutocho, in part

districts. While life during and after COVID-19 are major

offices and provide offices that customers prefer.

because of its information dissemination functions.

Next is our project in Sapporo. This is the first

concerns at present, in implementing our project in Sapporo
we are also considering the possibility of major issues similar
in severity to COVID-19—such as an earthquake beneathgreater Tokyo or higher average temperatures in summer
due to global warming—issues that must be dealt with in a
preventative fashion, because once they manifest, it may be toolate. These concerns led us to consider Sapporo an attractive
candidate site because it helps to resolve the issues associatedwith overconcentration in metropolitan Tokyo. We are now
preparing proposals that include future work styles and our
corporate vision.

Promotion of the Core Building Business
The Heiwa Real Estate Group’s main business is leasing in
the Building Business. Providing safety and security to our
tenants on a daily basis is of the utmost importance. During
the COVID-19 pandemic, as a company that owns andoperates buildings, to the greatest extent possible we willcontinue to focus on establishing systems, including emergency

I am also strongly committed to corporate governance,

Creation of Value through the Asset Management
Business
The Company supports the growth of Heiwa Real Estate
REIT, Inc. as its sponsor. J-REITs are a very attractive
vehicle that can provide real estate investment opportunities
to a wide range of investors, and as such we feel we cancontribute to society through this business. The Heiwa Real
Estate Group is working to strengthen its overall earning
power through earnings generated in the process of
supporting the growth of Heiwa Real Estate REIT. The
Company is also developing rental condominiums with aview to supplying them to Heiwa Real Estate REIT. In
particular, we are steadily building a development trackrecord for the HF Residence series. We will continue
working to generate earnings by selling income-generating
properties after maximizing their value, and by further
developing the HF Residence series.

because for many years in the past my work involved extensive
discussion of governance. Now that I am in a position tosee it put into practice, I intend to make sure that effective
corporate governance is implemented. In the past, we havefocused on enhancing corporate governance, and in FY 2020
we have appointed a female lawyer and an individual withextensive international experience in corporate management
as external directors to further enhance the diversity of theBoard of Directors. As we move into our phase of reaching newheights, we will engage in lively exchanges of opinions withexternal directors in order to create the tension needed for theCompany’s evolution.

Kabutocho, said that healthy desire gives rise to creativity.
This desire comes from within, not from orders from above. I
want Heiwa Real Estate to be a company filled with individual
desire. I am encouraged in this regard, because as it happened,
we were able to respond very quickly to the outbreak of
COVID-19 because our employees took it upon themselves toswiftly switch to working at home to prevent the spread of theinfection and set up a remote work environment.
The second element I value in management is virtue.
Classical Chinese literature suggests that good deeds are
rewarded well into the future. I always bear in mind the needto manage through good deeds. The misconduct of a former
Group employee in 2019 served to reinforce this mindset. I
visited our business partners to explain the situation, and theirtrust in Heiwa Real Estate, built over 70 years in business,remained unshaken. I am grateful for this trust and remind
employees that managing through good deeds is the key tobuilding even stronger relationships of trust. I will be taking a
fresh look at the ethics and integrity of every employee.
While concern remains about the impact of the COVID-19
pandemic, I believe that major changes in the environment
also present great opportunities for the Heiwa Real EstateGroup. I intend to guide the Group toward a new era as
an enterprise with a century of history by leveraging thestrengths of the entire Group to increase our presence as areal estate developer through the creation of new value. As “acompany that contributes to revitalizing districts,” we aim to
improve corporate value by contributing to the realization of asustainable society and working to increase shareholder value.
We ask for your continued understanding and support for

Key Management Values of an Enterprise
Aiming for a Century of History

the Heiwa Real Estate Group’s initiatives as we strive to reach
new heights.

There are two elements I value in Group management. The

Kiyoyuki Tsuchimoto

first is desire. Eiichi Shibusawa, who is so closely linked toRepresentative Director and President

Heiwa Real Estate Co., Ltd. Corporate Report 20201011

Va lu e Cr eat i on St r at eg y

New Medium-term Management Plan
In the previous medium- to long-term management plan, under which our vision was to become “acompany that contributes to revitalizing districts,” we set a target of achieving consolidated operating
income of ¥10 billion by FY 2023. We achieved that target in FY 2019, four years ahead of schedule.

Review of Previous Medium- to Long-term Management Plan

We have established a new medium-term management plan beginning FY 2020, and aim to respondto our constantly changing social environment and further develop our business.

Vision for the Heiwa Real Estate Group

Under the “Over the NEXT DECADE” Medium- to Long-term Management Plan formulated in 2014, the Group achieved

As “a company that contributes to revitalizing districts,” the Group strives to help society become more sustainable while

excellent outcomes in terms of both internal and external growth, as well as the successful launch of KABUTO ONE, thealso improving corporate value, by increasing satisfaction through interactive communication with stakeholders andfirst project in the Nihonbashi Kabutocho and Kayabacho Revitalization Project. In addition, the plan set a numerical target

providing solutions to environmental and social issues.

of around ¥10 billion in consolidated operating income by FY 2023. In FY 2019, the Group surpassed this target, four years

Improving social value

Improving shareholder value

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

Improving shareholder value as alisted real-estate company

ahead of schedule, and reported record earnings.

Positioning of the New Medium-term Management Plan

Overview of the New Medium-term Management Plan “Challenge & Progress”
Previous Medium-to Long-term Management Plan

New Medium-term Management Plan

“Over the NEXT DECADE”“Challenge & Progress”(FY 2014–FY 2019)(FY 2020–FY 2023)

Aim to be “a company that
contributes to revitalizing districts”

Tackling the challenge of, andmaking progress in, the aim to be“a company that contributes torevitalizing districts”(Taking on the challenge of
becoming a developer)

FY 2014–FY 2019
actual

FY 2020–FY 2023
plan

Approx. ¥15 billion

Approx. ¥32 billion“Challenge & Progress” (FY 2020–FY 2023)
Tackling the challenge of, and making progress in, the aim to be“a company that contributes to revitalizing districts”(Tackling the challenge of, and making progress, as a developer)

Consolidated operating income…From ¥10 billion to ¥12 billion over 4 years(Tackling the challenge of, and making
progress, as a developer)

Consolidated operating income
From ¥8 billion to ¥10 billion over 10 years

Redevelopment Investment Plan

New Medium-term Management Plan

Consolidated operating income
From ¥10 billion to ¥12 billion over 4 years• Quantitative and qualitative expansion of the
Redevelopment Business• Practicing sustainable management• Refocusing the business model on addedvalue creation• Growth in EPS, awareness of ROE, substantial
shareholder returns• Quantitative and qualitative expansion of
the Redevelopment Business• Practicing sustainable management

Business Strategies
1

Redevelopment Business2

1. Nihonbashi Kabutocho and Kayabacho revitalization
2. Progress in commercializing the Sapporo
Redevelopment Project

1. Pursuing external and internal growth
2. Sustainable building operations to improve
environmental performance and disaster preparedness

Asset Management Business4

governance (ESG) issues and the United Nations’ Sustainable Development Goals (SDGs). The Group also needs to pay
close attention to the impact that the COVID-19 pandemic is having on real estate market conditions and domestic andoverseas economies.
Against this backdrop, the Group formulated a new management plan for the period from FY 2020 to FY 2023. In

Note: The former Real Estate Solutions Business has been renamed the Asset Management Business.

(1) Numerical Targets
Profittargets

addition to responding to the aforementioned changes in the external environment, the new plan broadens and further
advances the business strategies of the previous medium- to long-term management plan.
During the new medium-term management plan, we will continue working to meet the challenge of, and make progressin, becoming “a company that contributes to revitalizing districts.” We will also work to help society better address theissue of sustainability, while refocusing our business model on the creation of added value through external and internal
growth, the commercialization of the Sapporo Redevelopment Project, and the revitalization of Nihonbashi Kabutocho
and Kayabacho. In doing so, we will further enhance corporate value.

Corporate Activities
1. Promotion of capital policy that takes into accountcapital costs and capital efficiency
2. Strengthening corporate governance
3. Practicing sustainable management

1. Growing asset management earnings
2. Generating earnings from inventory sales

The business climate in which the Group is operating has changed significantly. There is now greater need to manage risk
from natural disasters, further develop corporate governance and meet increased awareness of environmental, social andBuilding BusinessNote: The former Leasing Business has been renamed the Building Business.

3
Tackling New Challenges in Response to the External Environment and Social Needs• Refocusing the business model on added-value creation• Growth in EPS, awareness of ROE, substantial
shareholder returns

Capitalefficiency

EPS
Consolidated
operating income
ROE(2) Investment Plan for FY 2020 to FY 2023
At least ¥200
(FY 2023)

At least ¥12 billion1(FY 2023)

Business
Redevelopment Business

At least 6%2

Investment amount

Approx. ¥32 billion

Breakdown:
Nihonbashi Kabutocho and Kayabacho: Approx. ¥22 billion
Sapporo: Approx. ¥10 billion(FY 2020–FY 2023)

Approx. 70%
Shareholder Consolidated total(FY 2020–FY 2023)(Consolidated dividend payout ratio
returnreturn ratioof approx. 50% by FY 2023)

Building Business
Asset Management
Business

Acquisitions: Approx. ¥60 billion
Returns from portfolio renewal: Approx. ¥20 billion
Returns from existing inventory sales:
Approx. ¥34 billion(Reference) Financial soundness: Net debt-to-equity ratio of 1.8 times or less
1. Breakdown of consolidated operating income
Building Business: ¥11.8 billion; Asset Management Business: ¥1.8 billion;
Corporate/Eliminations, etc.: −¥1.6 billion
2. We target ROE of at least 5% in FY 2020 in light of the impact of the COVID-19 pandemic.

Heiwa Real Estate Co., Ltd. Corporate Report 2020

1213

New Medium-term Management Plan

“Challenge & Progress”

Business Strategies
1

Redevelopment BusinessOpening of KABUTO ONE (scheduled for 2021)

Nihonbashi Kabutocho and Ka
Kayabachoyabacho Revitalization
We will make progress in developing diverse and sustainable districts through revitalization that createscreates
prosperity across entire target districts and to support the “Global Financial City: Tokyo” vision, in addition
to actual district redevelopment projects, including KABUTO ONE and other new project starts.

KABUTO ONE

Scheduled to open with full office space occupancy
Will contribute to reduced environmental burden throughthe use of renewable energy, and improved disaster
preparedness through facilities and supplies for people
stranded after a disaster

The Nihonbashi Kabutocho and Kayabacho Revitalization Concept

Note: The project owners are Heiwa Real Estate Co., Ltd., Yamatane Real EstateCo., Ltd. and Chibagin Securities Co., Ltd.

A district where people connect, and where investment and growth are born

Vitalizing the Local Area through “Tsunagu • Bridging”

Since the Meiji era, Kabutocho has been an entrepreneurial district for investment and securities, a district where
innovation has been in step with the times, where investors have gathered and where a broad array of information
has been exchanged. This historical background and other factors were the basis for our concept of a district where
people connect, and where investment and growth are born. Our goal is revitalization that is unique to Kabutocho
through the harmonization of Kabutocho’s potential with neighboring districts.

K5 opened in February 2020

K5

• Micro-complex that includes a hotel,
restaurants, and bars

Heiwa Real Estate Seeks to Inspire New Trends in Nihonbashi Kabutocho and Kayabacho• Large-scale renovation of a historical©K5

building originally constructed as an annex
to the third building of Japan’s first bank

As part of the Nihonbashi Kabutocho and Kayabacho Revitalization Project, one of our major missions in revitalizing
the classic look and feel of Kabutocho, the streets of which were previously lined with securities firms, is torepurpose the ground floor of buildings and other features as street-level commercial establishments. This will bringenergy and visitors back to the area, and give rise to new functions and culture.

(First National Bank)
Opened a succession of stores as a bridgethat connects the area, centering on K5
ease

©K5

Neki

Human Nature + Stockholm Roast

Omnipollos TOKYO

Based on this concept, starting with the opening of K5 in February 2020, we are working to swiftly heighten thearea’s ambience, expand existing entertainmentooptions and attract new visitors by connecting a
Ni

ng

yo

ch

succession of stores rich in character. We willTopromote the development of stores under three
e

t

Lin

Str
ee

usa

ow
a

Sh

iA
Toe

shi

Neki

FinGATE’s three sites are home to around 30 corporate tenants, including start-up companies, Fintech, and

FinGATE KABUTO

Human Nature+
Stockholm Roast

asset management companies

FinGATE BASE
FinGATE TERRACE

A fourth site, FinGATE TERRACE, opened in April 2020

K5

To
N

ing

[PHAS E 1 ]ute

Omnipollos[PHAS E 3 ]District revitalization(Scheduled to open in 2021)

FinGATE TERRACE

in-

iya

Oh

ash

et

e

ree

t

FinGATE BASE

Lin

i St

tre

Sh

et
tre
i S

Chuo Police
StationFinGATE KABUTO

Hib

ai S

He

Stockholm Roast

Eit

ise

Omnipollos

FinGATE KAYABATokyo Shoken Kaikan Bldg.
KABUTO ONE

Cir
cul

Human Nature

er

Neki

Inn

ease

ar

Ro

[PHAS E 2 ]KABUTO ONEMIZUHO
BANK, LTD.

ho

nba
iho

ease

yoc

beginnings.

FinGATE: Supporting the “Global Financial City: Tokyo” VisionTokyo Stock Exchange Bldg.

To
N“origin”—each starting anew in a district of new

K5

hihaving its own voice and individuality; andsakfuture potential of the area; “originality”—each©Stirling Elmendorf

Nisshokan Bldg.
nbas
Niho iverR

keywords: “neighborhood”—each sharing in the©Stirling Elmendorf

Nihonbashi
Post Office

Kayabacho Station
FinGATE KAYABA

Assets held by the Heiwa Real Estate Group (Including some shared assets)

To
z

ai

Lin

e

Heiwa Real Estate Co., Ltd. Corporate Report 2020

14

15

New Medium-term Management Plan

“Challenge & Progress”

Business Strategies
2

Building Business

Asset Management Business

3

1. Pursuing External and Internal Growth

1. Growing Asset Management Earnings

We will generate earnings from the sale of properties during the process of renewing the portfolio, whilebuilding up the portfolio through the acquisition of new lease assets. We will also improve portfolio
profitability by raising lease
lease prices based on trends in the office leasing market.

We aim to grow Heiwa
Real Estate Groupearnings, including
asset management
fees, by supporting
growth of Heiwa Real
Estate REIT, Inc.

• Our goal is to build up new lease assets, mainly targeting
office buildings in central Tokyo and major cities.

• We will work to raise lease prices based on trends in theoffice leasing market (cumulative annual price increaseover four years: approx. ¥700 million).

• We plan to invest approx. ¥60 billion (net investment of¥40 billion) over four years, a higher level of investment
than in previous years.

• We will work to increase tenant satisfaction while raising prices,by maintaining and improving building value and providing
higher-level building operation and management services.

Investment Plan Trends

Warehousing

New Medium-term
Plan

Phase I

Phase II(FY 2014–FY 2016)(FY 2017–FY 2019)(Billions of yen)
24.0

22.5

(FY 2020–FY 2023)

22.0

Investment Approx. ¥30 billion Approx. ¥41 billion Approx. ¥60 billion
Approx. ¥16 billion Approx. ¥16 billion Approx. ¥20 billion

Net
investment Approx. ¥14 billion Approx. ¥25 billion Approx. ¥40 billion

23.0

Stable asset
management(Asset management company for
Heiwa Real Estate REIT)

Asset Management Fees

2021

2022

2023

1,310
1,200

Guided by our long-term vision,
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.

(Building maintenance andrenovation service provider)

Dividend Revenues from Heiwa Real Estate REIT

(FY)

2. Sustainable Building Operations to Improve Environmental Performanceand Disaster Preparedness

Heiwa Service Co., Ltd.

(Millions of yen)
800

(Millions of yen)
1,400

0

1,000

Increase
portfolio
quality

Building management fees

Heiwa Real Estate
Asset Management Co., Ltd.

21.0

2020

Increase
assetsAsset management fees

23.5

20.0

Brokeragecommissions

Heiwa Real Estate REIT, Inc.

Add value using
expertise

Building Leasing Earnings Targets

Previous Medium-term Plan

Returns

Development

Dividend
incomeProperty management fees

Capital gains

Property disposal

Internal Growth Strategies

Leasing income

Property acquisition

External Growth Strategies

Heiwa Real Estate Co., Ltd.

1,121

1,096

1,196

1,132

600
400

979

469

481

513

2014

2015

2016

566

647

685

200

800

0

0

2014

2015

2016

2017

2019

2018

(FY)

2017

2018

2019

(FY)

Environmental and Disaster-Preparedness KPIs
FY 2030

Environment

Reduce CO2
emissions by

20%(vs. FY 2018)

4

FY 2030

FY 2030

Reduce water

Reduce waste

usage by

20%

(vs. FY 2018)

by

20%

Society(vs. FY 2018)

Buildings compliant
with new earthquake
resistance standards

100%(Excluding buildings earmarked
for redevelopment)

People with
first-aid training
course qualifications
All of our officers
and employees

Corporate Activities

2. 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.

Understandcapital costs

Consider investment returns inlight of real estate market prices

1. Promotion of Capital Policy That Takes into Account Capital Costs and Capital Efficiency
In promot
promotinging a capital policy that takes into account capital costs and capital efficiency, we have set thefollowing targets for KPIs for the period from FY 2020 to FY 2023: ROE of at least 6% and a consolidated
total return ratio of around 70% (consolidated dividend payout ratio of approx. 50% by FY 2023).
2023).
Note: We are targeting ROE of at least 5% in FY 2020 in light of the impact of the COVID-19 pandemic.

Set an ROE target that takes into account capital costs.
Set internal reserves in light of level of investment return at current real estate market prices, with the view ofcapital efficiency.

Set internal reserve levels(shareholder returns)

Consolidated
total return ratio
Approx. 70%

ROE

EPS

At least 6%

At least ¥200

FY 2020–FY 2023

FY 2030

FY 2020–FY 2023
(Consolidated dividend
payout ratio approx.
50% by FY2023)

We are targeting ROE of at least 5% in FY 2020 in light of
the impact of the COVID-19 pandemic.

2. Strengthening Corporate Governance 3. Practicing Sustainable Management
Pages 24–27

Pages 20–21

Heiwa Real Estate Co., Ltd. Corporate Report 20201617

Va lu e Cr eat i on St r at eg y

Review of Operations by Business

Building BusinessNote: The former Leasing Business has been renamed
the Building Business.

Asset Management BusinessNote: The former Real Estate Solutions Business has
been renamed the Asset Management Business.

Business Strategies

Business Strategy

1. Pursuing External and Internal Growth
We will generate earnings from the sale of properties during the process of renewing the portfolio, whilebuilding up 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.

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

2. Sustainable Building Operations, we are working to Improve 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.

FY 2019 Results

FY 2019 Results

Operating Revenue(Millions of yen)

20,3112019 (FY)

2018

15

5

18.7
2.7

19.2
2.8

21.0
3.6

1.8 1.1 1.9 1.2 2.5

1.8 1.0
4.1
3.8

4.3

4.4

8.4

8.9

8.9

9.1

2016

2017

2018

2019 (FY)

101.02019 (FY)Net Amount of Lease Price Increases

Progress of Lease Price Increases(Increased revenue on a fiscal year basis)1(No. of properties)2(Properties)

600

25

138

524
120

400

17,493

229

200

60

14

0
2016

2017

2019 (FY)

1. Net amount of lease price increases after subtracting
total amount of lease price decreases from total
amount of lease price increases• ‌Decrease in income due partly to the absence of the one-time
gain from the sale of part of Shinjuku Front Tower equity,which was posted in the previous fiscal year

20182019 (FY)Asset Management Fees

• Decrease in management fee and brokerage fee income
Dividend Revenues from Heiwa Real Estate REIT(Millions of yen)

800

1,310

131

1,121

1,000

65
41

1,096

1,196

1,132

2017

800

2018

2019 (FY)2. Net number of properties after subtracting total numberof properties for which lease prices decreased from total
number of properties for which they increased

469

481

2014

2015

0

2014

2015

2016

2017

2019 (FY)2018• Overview of the property

Location

Aoba-ku, Sendai City,
Miyagi2

14,896.22 m

Exclusive-use
floor space(including common spacecorresponding to Heiwa Real
Estate’s equity share)

Completed

September 2009

AcquiredAugust 2019

2017

2018

2019 (FY)• Assets Held (As of March 31, 2020)
Location

Solala Plaza

2016

Genera ting Ea rnings from Inventory Sal es

Highlight

Name

566

200

Shinjuku Front Tower equity Kita-Shinjuku, Shinjuku-ku

We acquired Solala Plaza in Sendai City,
the largest city in the Tohoku region, withthe aim of increasing revenue throughthe accumulation of leasing businessassets. Located in the convenient andcompetitively attractive Sendai Stationarea, this property will be managed overthe medium to long term.

513

685

400

0
2016

647

600

979

A c q u is i t io n o f S o lala Plaza

Highlight• ‌Increase in revenue due to the sale of inventory

3,128

1,400

0
2018

Main Points

3,398
−8.0%

2019 (FY)

2018

1,200

30

70

Operating Income(Millions of yen)

+26.5%

90

300

100

22,136(Millions of yen)

150

500

0
Tokyo Osaka Nagoya
Fukuoka Sendai and Sapporo(Millions of yen)• ‌Increase in both revenue and income due to the effect of the
upward revision of lease prices of the Tokyo Stock Exchange
Building and other properties(Millions of yen)(Billions of yen)

Operating Revenue• ‌Contributions to income from properties acquired during theprevious term (Hotel Emisia Sapporo and Sakae Sun City
Building) and during the current term (Solala Plaza)+26.9%

Operating Revenue from Building
Leasing (Excluding building sales)

17.9
2.7

9,080

7,158
+10.8%

20

Main Points

Operating Income(Millions of yen)

22,5082018

2. 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.

We aim to maximize value
through development, lease up
and remodeling projects, with thegoal of generating earnings fromthe sale of profitable assets andfurther development of the HF
Residence series, including one
new project being commercialized
in addition to those listed here.

Total floor spaceCompleted

Acquired

7,683.64 m2

May 2011

September 2011

Ginza offices

Ginza, Chuo-ku

8,427.67 m2

September 1974

July 2018

Chiba hotel

Chuo-ku, Chiba City

1,645.88 m2

December 2018

July 2019

HF Residence series

Stock balanceApprox. ¥25.4
billion(See table below)• Projects in the HF Residence Series (As of March 31, 2020)
HF Shoukouji Akabane Residence II

Properties developed by the Company
Sumida-ku Yahiro PJ
Kawaguchi Sakaecho PJ

Setagaya PJ

Building
image

Location Iwabuchimachi, Kita-ku

Yahiro, Sumida-ku

Sakaecho, Kawaguchi City Setagaya, Setagaya-ku

Heiwa Real Estate Co., Ltd. Corporate Report 2020

18

19

Ba se S u pp or t i ng Our St r at eg y

Practicing Sustainable Management
We will establish a Sustainability Committee (tentative name) to work on resolving social issues
through our corporate activities that contribute to achieving the SDGs, thereby realizing asustainable society and growth. This will be even more effective when the plan-do-check-act(PDCA) cycle is monitored by the management team and executive employees. We also aim toincrease corporate value by making our organization more dynamic through promotion of
employee health and internal communication.

Sustainability VisionHelp realize a sustainable society by increasing satisfaction through development of resolutions to environmental and social
issues, and interactive communication with shareholders, in our role as “a company that contributes to revitalizing districts”
Key themes

Environment

Change in the global
environment

Initiatives• Climate change measures- CO2 reductions- Environmentally friendly building
development and management• Resource initiatives- Water- Waste emission• Create safe and secure districts- Improve disaster-preparedness

Society

GovernanceRisk from natural
disasters
Social needs

Strengthening ofcorporate governancePrevention of misconduct

SDGs

KPIs

• CO2 reductions: 20% by FY 2030
• Water usage: 20% reduction by FY 2030
• Waste: 20% reduction by FY 2030
(All vs. FY 2018)• Buildings compliant with new earthquake resistance standards:
100% (excluding buildings earmarked for redevelopment)• More diverse human resources• People with first aid training course qualifications: All of ourofficers and employees• Promote occupational healthmanagement• Paid holiday usage rate: At least 70%• Work-life balance- Improve office environments- More efficient work practices• Annual health check uptake: 100% every year

• Improvement of compliance• Director and officer compensation
system that allows interest in
shareholder value• Reduction in cross-shareholdings• Uptake of cancer screening (every 2 years): 100% of
employees aged 35 years or above• Rate of new hires that are female: At least 30%• Composition of Board of Directors: At least one-third external
directors• Number of female directors: At least one• Composition of Nomination and Compensation Committees:
Majority external directors• Compliance training: At least five times each year

Heiwa Real Estate Co., Ltd. Corporate Report 202020

21

Base Supporting Our Strategy

Environment

Society

Basic Approach

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.

• The Heiwa Real Estate Group places importance on coexistence with local communities and broadly works tocontribute to society as a good corporate citizen.

• Giving full consideration to its responsibility to conserve the natural environment, the Group actively implements
environmental initiatives while complying with environment-related laws and regulations.

• The Group proactively participates in various social contribution activities with a view to offering benefits to thecommunities it serves.

Initiatives under the Medium-term Management Plan
Guided by our long-term vision, we are working to reduce CO2 emissions through investment in sustainablebuilding facilities and operations to help address social issues like disaster preparedness and environmental
concerns.

• The Group endeavors to respect each employee’s character, eliminate any and all discrimination andharassment, and ensure a safe and comfortable work environment. Through these efforts, the Group strives torealize a sense of latitude and abundance.

Initiatives under the Medium-term Management Plan
As “a company that contributes to revitalizing districts,” the Group will help our society become more sustainable
and promote the revitalization of safe and secure districts, taking into account environmental concerns anddisaster-preparedness. Furthermore, the Group aims to promote the health of employees, strengthen internal
communication, increase the vitality of the organization and enhance corporate value.

Policies on Reducing
Environmental Impact and Resources

Environmental Initiatives
at KABUTO ONE

Promote the revitalizationof safe and secure districts

Health andProductivity Management

The Group considers the environment and the creationof attractive cityscapes when constructing andrenovating buildings. We also help to reduce thelife-cycle cost of buildings through long-term use whilerevitalizing communities by preserving historical value
and adding appeal to neighborhoods. Kabutocho
Heiwa Building No. 5 was completed in 1923. It has
been revitalized as K5 by conducting renovations
including remodeling of the building’s exterior.

• We aim to create a workplace with low environmental
impact while reducing CO2 emissions through theuse of low-e glass that excels at reducing heatloading for building exteriors, and the installation of
LED light fixtures with automatic light control sensors
and highly efficient equipment.

The Group will help our society become more sustainable
and promote the revitalization of safe and secure
districts, taking into account environmental concerns anddisaster-preparedness, through initiatives such as therevitalization of Nihonbashi Kabutocho andKayabacho, the Sapporo Redevelopment Project, andasset management.

In 2017, Heiwa Real Estate was recognized as one ofJapan’s top 500 large companies in the Health andProductivity Management Organization Recognition
Program, through which companies that makeoutstanding efforts in healthcare management are
certified by Japan’s Ministry of Economy, Trade andIndustry and the Nippon Kenko Kaigi (“Japan HealthConference”).
Meanwhile, in recognition of Heiwa Real Estate’s
efforts to facilitate and promote sports activities for its
employees, the Japan Sports Agency certified the Group
successively in FY 2018 and FY 2019, and the Tokyo
metropolitan government designated it as a corporationthat promotes sports locally in those same years.

• We aim to make pedestrian areas more pleasant byadding greenery to walls and streets.

DBJ Green Building Certification*
The Tokyo Stock Exchange Building, Osaka Securities
Exchange Building and Nisshokan Building received
Gold DBJ Green Building Certification in FY 2018.
* Certification system established by Development Bank of Japan(DBJ) to support green building real estate with consideration for theenvironment and society. A program for identifying and certifying“green buildings” in response to the needs of today’s real estatemarket. The evaluation is comprehensive, taking into account not
only the property’s environmental performance but also disaster
preparedness and the degree to which the societal needs of various
stakeholders surrounding the property are considered.

Participation in the Sanno Festival

Neighborhood cleanup events

Donation of trees to Chuo-ku
for lining streets in Nihonbashi
Kayabacho

Exhibition of the Red Stone from
Sado in connection with Old Eiichi
Shibusawa

Work-Life Balance
Heiwa Real Estate makes efforts to maintain awork environment in which each member’s job
is fulfilling and rewarding. The Group also
supports the balanced compatibility of work andprivate life (work-life balance) by realizing
various working-style options and making use ofvarious plans for leave, and other programs. The
Group strives to prepare a work environmentthat enables employees to dedicate their time

to life events such as pregnancy, childbirth,childrearing or nursing care of family members.

KPIs in Medium-term Management Plan
Paid holiday usage rate: At least 70%
Uptake of cancer screening (every 2 years):
100% of employees aged 35 years or above
Annual health check uptake: 100% every year
Rate of new hires that are female: At least 30%

Communication lounge

Heiwa Real Estate Co., Ltd. Corporate Report 202022

23

Base Supporting Our Strategy

statutory auditors, proposals are subject to the consent of
the Board of Statutory Auditors.
• The Company discloses the reasons for appointing or
dismissing individual directors and statutory officers, and fornominating individual candidates for director and statutory
auditor positions.

Corporate Governance
Basic Approach• Heiwa Real Estate considers the enhancement of corporate governance an important business issue. We
strengthen Group corporate governance to earn the trust of shareholders and other stakeholders and to
manage our businesses fairly and efficiently.

Corporate Governance System (As of June 24, 2020)
General Shareholders’ Meeting
Election

Dismissal

Election
Audit

Board of Statutory Auditors(1 internal statutory auditor, 3 external statutory auditors)

Corporate Auditors
OfficeBoard of Directors

Appointment
Supervision

Audit

ReportInternal Audit Department

Election
Cooperation
Report(5 internal directors, 4 external directors)

Election
Cooperation

Dismissal

Independent auditor

Nomination Committee
Compensation Committee

Audit

Representative Director and President

Board of Directors• The main roles of the Board of Directors are to establish theCompany’s management philosophy and set and review
strategic directions. In deciding and reviewing management
plans and strategies, the Board of Directors conducts sounddiscussions, and based on the direction of those
discussions, it decides and supervises the execution ofimportant matters.
• The board makes decisions on matters specified by laws
and regulations and the Regulations of the Board of
Directors’ Meetings (development of medium- to long-term
management plans, disposal of important assets, etc.). The
execution of other business is delegated to directors
serving as managing officers, or to managing officers.
• The Company sets reasonable limits on the number ofconcurrent positions that directors and statutory auditors
may serve as officers of other
Board of Directors
listed companies, taking into
At least one-third
account the necessary time andexternal directors
effort for appropriately fulfilling
their roles and responsibilities.
• The Company discloses the statusof concurrent positions held bydirectors and statutory auditors as: External: Internal
officers at other listed companies.
director
director

Compensation Committee• Heiwa Real Estate has a discretionary Compensation
Committee under the Board of Directors. It is chaired by an
external director and consists of a majority of external
directors to ensure the objectivity and transparency of
director compensation.
• Director compensation consists of fixed base salary, bonuses
and performance-linked stock compensation under a systemthat motivates directors to improve business performanceand enhance corporate value over the medium to longterm, that considers sharing value with shareholders, andthat helps Heiwa Real Estate secure outstanding people.

Medium- to long-term management plan
Over the NEXT DECADEFY 2011

FY 2014

FY 2012FY 2013

Cooperation
Administration

Subsidiaries• The committee determines the basic policy for director
compensation, total amount of compensation, andcompensation for individual
Compensation Committee
directors. It also addresses
Chaired by an external director,
inquiries from and presents
and external directors comprise
opinions to the Board of Directors
the majority of members
regarding matters pertaining todirector compensation that theCommittee
chair
Board of Directors submits to the: External: Internal
General Shareholders’ Meeting.
director
director

Nomination Committee• Heiwa Real Estate has a discretionary Nomination Committee
under the Board of Directors. It is chaired by an external
director and consists of a majority of external directors toensure the objectivity and transparency of personnel affairs
associated with directors and statutory auditors.
• The committee selects director and statutory auditor
candidates of good character with sufficient ability anddiscernment to properly perform the duties required of therespective positions.
• The committee can also resolve to dismiss a sitting director
or statutory auditor if he or she has, in the execution ofmanagement duties, seriously violated the law, been
involved in a major scandal, or clearly failed to meet
acceptable standards of conduct.
• For matters related to the aforementioned nomination or
dismissal of directors and statutory auditors, the committee
responds to questions from and reports its opinions to theBoard of Directors.
• Based on the opinions of theNomination Committee
committee, regarding the election
Chaired by an external
or dismissal of the relevant
director, and external directors
comprise majority of members
individuals, the Board of Directors
determines the specifics of theCommittee
proposals to be submitted to thechair
General Shareholders’ Meeting. In: External: Internal
the case of matters concerning thedirector
director

FY 2014–FY 2019

FY 2011–FY 2013
Medium-term management plan
Foundations for the Future

Established Compensation Committee.

Management Conference

Various departments

Initiatives to Strengthen Corporate Governance(Auditing firm)

Managing Officers’ Meeting
Internal audit

Dismissal

Board of Statutory Auditors• The Board of Statutory Auditors makes appropriate decisions
from an independent and objective standpoint conscious ofits fiduciary duties to shareholders in performing its roles andresponsibilities, which include auditing the execution ofduties by directors, selection and dismissal of the independent
auditor and exercising its authority in matters pertaining tostatutory auditor compensation.

• The Board of Statutory Auditors ensures cooperation withexternal directors through discussions held in Board of
Directors’ meetings. In addition, cooperation between
external directors and statutory auditors is ensured asnecessary.
• The Board of Statutory Auditors sets evaluation criteria forevaluating the independent auditor, and accordingly,
selects external auditing firms after verifying and confirming
their independence and expertise, and other factors.
• To ensure that audits conducted by the independent auditor
meet high standards, the Board of Statutory Auditors audits
the independent auditor’s audit plan to ensure that an
appropriate amount of time has been allocated for the
purpose of auditing.

FY 2015

FY 2016

FY 2017

FY 2020–FY 2023
Medium-term management
plan Challenge & Progress

FY 2018

Established Corporate Governance Guidelines.
Established Standards for Assessing theIndependence of Independent Officers.
Established Nomination Committee.

FY 2019

FY 020Initiated performance-linked stockcompensation.
Reduced term of office for directors
from two years to one year.

Implemented evaluation of theeffectiveness of the Board of Directors.

Appointed one female
director.

Increased number of internal directors from four to five.
Increased number of external directors from three to four.
Increased number of independent committee members by one.
Amended rules to make external directors the chair of theNomination Committee and Compensation Committee
and the majority of each committee’s members.

External Directors and External Statutory Auditors
The Company has four external directors and three external statutory auditors, all of whom were selected on thebasis of their extensive experience, knowledge and other qualities, and their ability to provide pertinent opinions
on the Company’s management and other matters from an objective perspective. In addition, the Company has
established Standards for Assessing the Independence of Independent Officers to ensure the independence andneutrality of external directors and external statutory auditors.
External Directors
Name

Independent
officer

Reasons for selection

Attendance (FY 2019)
Board of Directors’Meetings

Kiichiro
Masui

Yes

Based on Mr. Masui’s specialized knowledge and experience in the financial and securities markets, theCompany determined that he could play an appropriate role in strengthening the supervisory function of theBoard of Directors from an independent and objective standpoint, and also expects him to help enhance thecorporate value of the Company.

14 of 14 meetings(100%)

Junji
Ota

Yes

Mr. Ota has a track record as a corporate manager, and based on his deep knowledge of and experience incorporate management, the Company determined that he could play an appropriate role in strengthening
the supervisory function of the Board of Directors from an independent and objective standpoint, and also
expects him to help enhance the corporate value of the Company.

13 of 14 meetings(92.9%)

TakahiroMoriguchi

Yes

Mr. Moriguchi has a track record as a corporate manager, and based on his deep knowledge in finance and securities andexperience in corporate management, the Company determined that he could play an appropriate role in strengthening
the supervisory function of the Board of Directors from an independent and objective standpoint, and also expects him
to help enhance the corporate value of the Company. (Appointed in June 2020)

–

Junko
Utsunomiya

Yes

Ms. Utsunomiya has been involved in corporate legal affairs as an attorney, and based on her deep knowledgeof and experience in the legal profession, the Company determined that she could play an appropriate role instrengthening the supervisory function of the Board of Directors from an independent and objective standpoint,
and also expects her to help enhance the corporate value of the Company. (Appointed in June 2020)–

External Statutory Auditors
Attendance (FY 2019)

Name

Independent
officer

Reasons for selection

Board of Directors’Meetings

Board of Statutory
Auditors’ Meetings

Masayuki
HiroseYes

Mr. Hirose has a track record serving as a corporate auditor, and the Company determined that hecould make use of his specialized knowledge and experience for the audit system of the Company
from an independent and objective standpoint.

14 of 14
meetings(100%)

12 of 12
meetings(100%)

ChikamiTsubakiYes

The Company determined that Ms. Tsubaki could make use of her specialized knowledge andexperience as a certified public accountant for the audit system of the Company from an
independent and objective standpoint.

13 of 14
meetings(92.9%)

11 of 12
meetings(91.7%)

Jun
SekineYes

The Company determined that Mr. Sekine could make use of his deep knowledge developed at
the Bank of Japan and experience in corporate management at a securities company for the audit
system of the Company from an independent and objective standpoint.

13 of 14
meetings(92.9%)

11 of 12
meetings(91.7%)

Heiwa Real Estate Co., Ltd. Corporate Report 202024

25

Base Supporting Our Strategy

Compensation of Directors and Other Officers

Risk Management

Compensation for directors and managing officers includes fixed basic compensation, bonus and performancelinked stock. This system was designed to encourage improving the Company’s performance as well as increasing
medium- to long-term corporate value, retaining talented personnel, and sharing value with shareholders.
Compensation for statutory auditors consists of monthly compensation only, with the limit on the amount ofcompensation determined at the General Shareholders’ Meeting. Basic compensation for internal, external,
full-time and part-time statutory auditors is determined by the Board of Statutory Auditors.

As part of our Group-wide internal controls, we require our subsidiaries to observe the Risk Management
Guidelines to ensure a consistent risk management framework throughout the Group. We have a Risk
Management Committee chaired by the representative director and president, which meets each quarter. In
accordance with the Risk Management Guidelines, the committee assesses risks that have manifested, anddiscusses measures to prevent their recurrence.

Breakdown of Compensation by Officer Category (FY 2019)
Total compensation by type (Millions of yen)

Investment Risk Working Group
Before a potential property transaction is discussed by the

To minimize the risk of an emergency disrupting business,

Board of Directors, the Investment Risk Working Group

we have established a business continuity plan and aanalyzes the risks associated with buying or selling themanual based on this plan.

Total compensation(Millions of yen)

Basic compensation

Bonus

Performance-linked stock

Directors (excluding external

222

143

55

24

5

property in question and reports its findings to the

Statutory auditors (excluding
external statutory auditors)

20

20

–

–

1

Managing Officers’ Meeting.

External directors and external
statutory auditors

64

64

–

–

7

Category
directors)

Persons eligible

1. The above includes one director who resigned on December 20, 2019.
2. Total compensation for directors indicated above does not include ¥20 million in condolence money paid with regard to a former representative director and president, who
passed away in FY 2019.

Compliance
The Heiwa Real Estate Group strives always to conduct business with an awareness of compliance based on the
Code of Conduct and the Standards for Behavior for the Heiwa Real Estate Group in order to maintain society’s
trust and achieve sustained growth.
Taking to heart the lessons learned from the misconduct of Company employees in 2019, we issued a Noticeon Stamping Out Misconduct and Strengthening Compliance in December 2019. It expresses our commitment inthis regard, and we have been implementing related measures.
Announcement on Stamping Out Misconduct and Strengthening Compliance
1. No growth thatcompromises trust

The Company’s officers and employees will constantly remind themselves that stakeholder trust is theplatform for, and driver of, growth and will work to change mindsets in order to regain that trust.

2. Stamping out
misconduct

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

3. Strengthening
compliance further

The Company’s officers and employees will rigorously adhere to the Code of Conduct and the Standards
for Behavior for the Heiwa Real Estate Group, and will prioritize compliance as the number one issue.

Compliance System

Compliance Hotline

Business Continuity Plan

Initiatives for Shareholders and Investors
The Heiwa Real Estate Group strengthens corporate governance Group-wide to maintain the trust of shareholders
and other stakeholders and to manage its businesses fairly and efficiently. The Group also creates a wide range ofopportunities to engage with shareholders and investors by proactively making such efforts as holding financial
results briefings and attending events for individual investors.
Approach to Information Disclosure

development of its businesses, particularly the

In accordance with its Disclosure Policy, Heiwa Real Estate

Redevelopment Business and the Building Business, anddiscloses accurate information in an impartial and timely

secures sufficient internal reserves for the ongoingmanner in order to facilitate investment decisions among

enhancement of shareholder value. As a basic policy, theshareholders and investors. In compliance with relevant

Company is targeting a consolidated total return ratio oflaws and regulations, the Group proactively provides

70% from FY 2020 to FY 2023, taking into accountdetails of its management strategies and financial results,

standards for business investment returns as well as capitalwhich promotes better understanding of its businesscosts and capital efficiency.

activities. The Group also promptly provides information
on its website that falls outside the scope of timely
disclosure regulations and related laws when suchinformation is deemed useful for investment decisions byshareholders and investors.

Briefing Sessions for Institutional and Individual
Investors• Repurchases of Company Stock (Fiscal year ended March 31, 2020)
Class of shares to be repurchased

Common stock of the Company

Total number of shares for repurchase 800,000 shares
Aggregate amount repurchased¥1.94 billion

Period for repurchases

April 26, 2019–October 31, 2019

• Details of Resolution Regarding Repurchases ofCompany Stock (As of April 30, 2020)

The Group has established the Risk Management

Based on its Internal Reporting Regulations, the GroupWe hold briefing sessions primarily for analysts andCommittee, which oversees the Group’s compliance andhas established an internal compliance hotline to ensure

institutional investors twice a year (end of the second

business risks and provides a forum for their discussion.

that the Company is swiftly made aware of and can takequarter and end of the fiscal year). In addition, weClass of shares to be repurchased

Common stock of the Company

Serious violations or risks that manifest relating to

the necessary steps to address legal violations or misconduct

participate in IR fairs and seminars for individual investors

Total number of shares for repurchase Maximum of 400,000 sharescompliance are reported to and addressed by theby groups or individuals, in addition to promoting ethics

to create opportunities for more people to learn about theAggregate repurchased amountMaximum of ¥1 billion

and legal compliance at Group companies.

Heiwa Real Estate Group.

Period for repurchases

May 1, 2020–October 31, 2020

Company’s Board of Directors.
Furthermore, the Corporate Planning and General

Whistleblowers can choose to speak to internal or

Affairs Department, which serves as the committee

external contacts depending on the nature of their report,• Dividends per Share and Consolidated Payout Ratio

secretariat, coordinates with Group companies to promote

and are protected from disadvantageous treatment due

the improvement of compliance and risk management

to their whistleblowing.

(Yen)
100

functions throughout the Group as a whole.

Furthermore, an external reporting hotline has been

The Group organizes regular compliance training to foster
a compliance mindset in all officers and employees. To
further promote compliance awareness, we conduct

Consolidated payout ratio

60

including corporations, through which they can report

27.9

30.2

23.0
40

compliance violations or potential violations of theGroup’s officers or employees.

20

Basic Policy on Shareholder Returns

regular Company-wide compliance and information

The Company returns profits to shareholders on the basis

security checks and publicize the results internally.

of having ensured funds for the stable long-term

(%)
50

40.0

80

established to promote fair trading with business partners,

Compliance Training

Dividends per share

48

30.3
56

64

40
30
20

37

10

26

0

0

2016

2017

2018

2019

Note: Includes 70th anniversary commemorative dividend of ¥4.0

2020

(Forcast)(FY)

Heiwa Real Estate Co., Ltd. Corporate Report 2020

26

27

Ba se S u pp or t i ng Our St r at eg y

M a n ag e m en t Te am(As of June 24, 2020)
Directors

Kiyoyuki Tsuchimoto
Representative Director,
President and Chief
Executive Officer

Kazuo Yamada
Director and Senior Managing
Executive Officer
In charge of Development
Promotion Department
and Real Estate Investment
Department

Tomoharu Nakao
Director and Managing
Officer
In charge of Office Building
Development Department

Junji Ota
External Director

Joined Tokyo Stock Exchange, Inc. (TSE)
Director of Listing Department of TSE
Executive Officer of TSE
Standing Governor of Tokyo Stock Exchange Regulation(currently Japan Exchange Regulation)
Senior Executive Officer of TSE
Managing Director of TSE
Director and Senior Executive Officer of TSE
Director and Executive Vice President of TSE
Director of Heiwa Real Estate Co., Ltd. (the Company)
Managing Senior Executive Officer of the Company 		In charge of Real Estate Marketing Department of theCompany
Jun. 2018 In charge of Office Building Development Departmentof the Company
May 2019 Representative Director of the Company
		Acting President of the Company
Dec. 2019 Representative Director and President of theCompany (current position)
		 Chief Executive Officer of the Company (current position)

Apr. 1981
Jun. 2004
Jun. 2007
Aug. 2007

Apr. 1982
Jun. 2004
Jun. 2007
Oct. 2007
		
Apr. 2011
Jun. 2013
Jun. 2014
Apr. 2016
Jun. 2017		

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 (current position), Managing Executive
Officer, and General Manager of General Affairs andPlanning 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 Senior Managing Executive Officer of the Company(current position)		
In charge of Development Promotion Department andReal Estate Investment Department of the Company(current position)

Apr. 1987 Joined Tokyo Stock Exchange, Inc. (TSE)Jul. 2006 General Manager of Corporate Headquarters, Nippon
Parking Development Co., Ltd.
Jun. 2009 Outside Corporate Auditor of HoriPro Inc.
Oct. 2009 Director and General Manager of General Affairs
Department of Nippon Parking Development Co., Ltd.
Aug. 2011 General Manager of Planning & Finance Group,
General Affairs and Planning Headquarters of Heiwa
Real Estate Co., Ltd. (the Company)
Jun. 2013 Group Leader of Planning & Finance Group, General
Affairs and Planning Headquarters of the Company
Jun. 2014 Managing Officer of the Company (current position)
		General Manager of Corporate Planning and General
Affairs Department of the Company
Nov. 2014 In charge of Corporate Planning and General Affairs
Department (Corporate Planning) of the Company
		 In charge of Office of the Council on Urban Development
for Investment and Economic Growth of the Company
May 2015 In charge of Urban Development Promotion Office of the Company
Jun. 2018 In charge of Development Promotion Department(Corporate Planning) of the Company
Jun. 2020 Director of the Company (current position)		
In charge of Office Building Development Departmentof the Company (current position)

Apr. 1971 Joined Nippon Steel Corporation
Jun. 2001 Director, General Manager of Department ofAffiliated Companies, Nippon Steel Corporation
Apr. 2003 Director, General Manager of Corporate Planning
Department, Nippon Steel Corporation
Apr. 2005 Managing Director, Member of the Board of
Nippon Steel Corporation
Jun. 2008 Senior Auditor of Nippon Steel Corporation
May 2011 Chairman of Japan Audit & Supervisory Board
Member Association
Jun. 2012 Advisor (full-time) of Nippon Steel Corporation
		External Statutory Auditor of Nippon SteelEngineering Co., Ltd.
		External Auditor of Enterprise Turnaround Initiative
Corporation of Japan (currently Regional Economy
Vitalization Corporation of Japan)
Jul. 2014 Advisor of Nippon Steel Corporation
Nov. 2014 Supreme Advisor of Japan Audit & Supervisory
Board Members Association
Jul. 2016 Public Governor, Chair of Self-regulation Board &Vice-Chairman of Japan Securities Dealers Association
Jun. 2018 External Director of Heiwa Real Estate Co., Ltd. (theCompany) (current position)
		 Outside Director of Toshiba Corporation (current position)

Jun. 2009
Jan. 2013
Jun. 2013
Jun. 2014
		Norio Iwasaki
Representative Director andSenior Managing Executive
Officer
In charge of Corporate
Planning and General
Affairs Department, Finance
Department and Legal Office

Hiroki Mizuta

Nov. 2014
Jan. 2015
Jun. 2015
Dec. 2019
Jun. 2020
		Joined Tokyo Stock Exchange, Inc. (TSE)
Director of General Administration Department of TSE
Director of Finance Department of TSE
General Manager of Finance Department of Tokyo
Stock Exchange Group, Inc. (TSE Group)
Executive Officer of TSE Group
Executive Officer of Japan Exchange Group, Inc.
Executive Officer of TSE
Managing Executive Officer of Heiwa Real Estate Co.,
Ltd. (the Company) (current position)
In charge of Finance Department of the Company(current position)
In charge of Corporate Planning and General Affairs
Department (General Affairs) of the Company
In charge of Legal Office of the Company (current position)
Director of the Company
Representative Director of the Company (current position)
Senior Managing Executive Officer of the Company(current position)
In charge of Corporate Planning and General Affairs
Department of the Company (current position)

Junko Utsunomiya
External Director

Statutory Auditors

Apr. 1987 Joined Heiwa Real Estate Co., Ltd. (the Company)
Apr. 2007 Manager of Osaka Branch of the Company
Jun. 2010 Manager of Nagoya Branch of the Company
Jun. 2012 Group Leader of Building Leasing Group, Leasing
Headquarters of the Company
Jun. 2013 Managing Officer of the Company (current position)
		Group Leader of Building Sales Group, Leasing
Headquarters of the Company
Apr. 2014 Sales Manager of Osaka Branch of the Company
Jun. 2014 Manager of Osaka Branch of the Company
Jun. 2020 Director of the Company (current position)		
In charge of Community Co-Creation Departmentof the Company (current position)

Director and Managing
Officer

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(Position as of June 24, 2020; retired as of June 30,
2020)
Sep. 2013 Outside Director of Adventure Inc. (current position)
Feb. 2018 Founding partner of Utsunomiya & Shimizu andHaruki Management Legal Office (current position)
Oct. 2018 Outside Audit & Supervisory Board Member of
RAKSUL INC.
Oct. 2019 Outside Director, Audit & Supervisory Committee
Member of RAKSUL INC. (current position)
Jun. 2020 External Director of Heiwa Real Estate Co., Ltd. (theCompany) (current position)

Apr. 1979 Joined Heiwa Real Estate Co., Ltd. (the Company)
Dec. 1987 Finance Department of the Company
Apr. 1997 Osaka Branch of the Company
Jul. 2001 Fukuoka Branch of the Company
Jul. 2002 General Affairs Department of the Company
Jun. 2010 General Manager of General Affairs Headquarters,
and Group Leader of General Affairs of theCompany
Jun. 2014 General Manager of Corporate Planning andGeneral Affairs Department of the Company
Jun. 2015 Statutory Auditor of the Company (current position)

Naoto Kato

Masayuki Hirose

Statutory Auditor (Full-time)

External Statutory Auditor(Full-time)

In charge of Community
Co-Creation Department

Kiichiro Masui
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 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.
(current position)

Chikami Tsubaki
External Statutory Auditor

Apr. 1970 Joined Ebara - Infilco Co., Ltd. (currently Ebara
Corporation)
May 1975 Joined Asahi & Co. (currently KPMG AZSA LLC)
Mar. 1979 Registered and commenced practice as Certified
Public Accountant (current position)
Jul. 1999 Representative Partner of Asahi & Co.
Jul. 2004 Executive Board Member of the Japanese Instituteof Certified Public Accountants
Jun. 2013 Outside Audit & Supervisory Board Member of NKSJ
Holdings Inc. (currently Sompo Holdings, Inc.)
Jun. 2014 External Statutory Auditor of Heiwa Real EstateCo., Ltd. (the Company) (current position)
Jun. 2016 Outside Director of Seiko Epson Corporation (Audit& Supervisory Committee Member) (Position as ofJune 24, 2020; retired as of June 30, 2020)

Jun Sekine
External Statutory Auditor

Apr. 1979 Joined Tokyo Stock Exchange, Inc. (TSE)
Jun. 2003 Director of Examination Department of TSE
Jun. 2004 Director of Information System Department of TSE
Apr. 2006 Director of IT Planning Department of TSE
Jun. 2006 Director of IT Planning Department and Directorof Trading Systems, Development Operations
Department of TSE
Aug. 2007 General Manager of IT Planning Department ofTokyo Stock Exchange Group, Inc. (TSE Group)		Director of Trading Systems, IT Development
Department of TSE
Jan. 2009 Director of Tdex + System, IT Development
Department and Director of IT Management Office of TSE
Jun. 2009 Director of TSE Group		
Statutory Auditor of TSE
Jan. 2013 Director of Japan Exchange Group, Inc. (Audit
Committee member)
Nov. 2014 Chairperson of Japan Audit & Supervisory Board
Members Association
Jun. 2017 External Statutory Auditor of Heiwa Real EstateCo., Ltd. (current position)

Apr. 1978 Joined The Bank of Japan (BOJ)
May 2001 General Manager of Matsumoto Branch, BOJ
Jul. 2003 General Manager of Hiroshima Branch, BOJ
Jan. 2006 Director-General of Personnel and Corporate
Affairs Department, BOJ
Mar. 2007 Director-General of Research and Statistics
Department, BOJ
May 2008 Joined Okasan Securities Co., Ltd.
Jun. 2008 Director of Okasan Securities Co., Ltd.
Apr. 2017 Executive Officer of Okasan Securities Group Inc.
Jun. 2017 Managing Executive Officer of Okasan Securities
Co., Ltd.
Jun. 2018 External Statutory Auditor of Heiwa Real EstateCo., Ltd. (the Company) (current position)
		Outside Director of Shinhan Bank Japan

Managing Officers

Takahiro Moriguchi
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 ofTokyo-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, andGeneral Operations Manager of BTM
Jun. 2005 Advisor of BTM
Jan. 2006 Advisor of the Bank of Tokyo-Mitsubishi 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 andPresident 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. (theCompany) (current position)

President and Chief Executive Officer

Kiyoyuki Tsuchimoto

Senior Managing Executive Officers

Norio Iwasaki

In charge of Corporate Planning and General Affairs Department (General Affairs), Finance Department and Legal OfficeKazuo Yamada

In charge of Development Promotion Department and Real Estate Investment Department

Hiroki Mizuta

In charge of Community Co-Creation Department

Tomoharu Nakao

In charge of Office Building Development Department

Nobuhiro Seo

In charge of Corporate Planning and General Affairs Department, and Legal Office
General Manager of Corporate Planning and General Affairs Department, and Legal Office

Takahisa Aoyama

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

Akihito Takano

In charge of Development Promotion Department
General Manager of Development Promotion Department

Managing Officers

		
		
		

Heiwa Real Estate Co., Ltd. Corporate Report 202028

29

C or p or at e D at a

Consolidated Financial Highlights(As of March 31, 2020)(Millions of yen)

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

Fiscal year (April 1 to March 31):

Operating Revenue(Billions of yen)
50

Operating revenue

37,01041,74732,69839,48046,63940

Operating income

8,267

9,673

9,432

9,335

10,90330

Ordinary income

6,708

8,431

8,395

8,430

10,00620

Net income attributable to owners of parent

4,408

4,514

5,288

6,174

7,046

Depreciation

5,028

4,878

4,661

4,766

4,814

Cash flows from operating activities

9,954

20,98013,482(12,780)

28,680Cash flows from investing activities(2,600)(13,017)(17,265)(12,946)(11,427)

Cash flows from financing activities(3,218)(4,222)(2,499)24,652(1,829)Balance of cash and cash equivalents
at end of period

15,377

19,117

12,784

11,71027,166

Net assets

94,827

97,524

104,900

109,075

107,302

Total assets1

294,021

293,025300,243

335,572

339,545

Interest-bearing liabilities

160,232

157,051

155,786

184,672

186,977

32.3

33.3

34.9

32.5

31.6

As of March 31:

Equity ratio1 (%)
Performance indicators:
Dividends per share (Yen)
3

26.00

26.00

37.00

48.00

41.7

110.50113.17132.57158.73184.82

Book value per share (BPS)3 (Yen)2,377.02

2,444.84

2,630.07

2,819.82

2,837.29

12.67

13.91

15.46

13.43

15.14

Price-book ratio (PBR) (Times)

0.59

0.64

0.78

0.76

0.99

Payout ratio (%)

23.5

23.0

27.9

30.2

30.3

13,641

14,92014,476

14,596

16,203

D/E ratio4 (Times)

1.69

1.61

1.49

1.69

1.74

Net D/E ratio4 (Times)

1.53

1.41

1.36

1.57

1.47

Ratio of EBITDA to net interest-bearing
liabilities (Times)

10.61

9.24

9.84

11.77

9.76

2.8

3.3

3.2

2.9

3.2

Return on assets (ROA)1, 4 (%)

Number of employees5

4.7
281

4.7
224

5.2
233

5.8
236

9

1. ‌Total assets and equity ratio for FY 2017 have been retroactively restated to reflect the application of the partial amendments to Accounting Standard for Tax EffectAccounting, etc.
2. Annual dividends per share for FY 2017 included a 4.0 yen commemorative dividend celebrating the 70th anniversary of the Company’s founding.
3. The Company established a trust for its stock compensation plan for directors and managing officers in FY 2019, and the Company’s shares held in the trust account for thistrust were included in treasury stock for calculations of earnings per share and book-value per share.
4. 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
5. ‌The decrease in the number of employees in FY 2016 is mainly due to the exclusion of Heiwa Health Care Co., Ltd. from the scope of consolidation because the Heiwa Real
Estate Group sold its entire stake in this company.

9.4

8.4

8

9.3

8.2

8.3

8.4

6.7

4
3

2

0

0

2015

2016

2017

(Billions of yen)
10

0

2015

2018 2019 (FY)Net Income Attributable to
Owners of Parent and EPS

2016

2017

(Billions of yen)400

132.57110.50 113.17

7.0

300

5.2

100

0

2017

200

50

100

0

0

2018 2019 (FY)

45

34.9

30

33.3

94.8

97.5 104.9 109.0 107.3 15

15

0

0

32.5

31.6

1.57
1.36

1.47

16

13.6
12

1

0.5

0

10.61

14.4

2018 2019 (FY)

14.5

16.2 16

11.77
9.24

9.84

9.76

4

4
0

2016

2017

23.5

23.0

30

27.9

30.2

30.3
15

0

2018 2019 (FY)

(%)
8

6.5
5.8

6

4.7

4.7

5.2

4
8

2015

26.0

ROE and ROA

12

8

0

2015 2016 201745

Annual dividends per share (Left scale)
Consolidated payout ratio (Right scale)* Includes 4.0 yen 70th anniversarycommemorative dividend(Times)
20

14.9

26.0

2015 2016 2017

Total assets (Left scale)
Net assets (Left scale)
Ratio of operating income tooperating revenue (Right scale)(Billions of yen)
20

(Times)
2

30

32.3

EBITDA and Ratio of EBITDA to
Net Interest-bearing Liabilities

Net D/E Ratio

1.41

45

2015 2016 2017 2018 2019 (FY)Net income attributable to ownersof parent (Left scale)EPS (Right scale)

1.53

294.0 293.0 300.2

48.0

(%)
60

37.0*

2.5

2016

56.0

335.5 339.5
1502018 2019 (FY)

(Yen)
60

6.1

4.5

4.4

2015 2016 2017

Annual Dividends per Share andConsolidated Payout Ratio(%)
60

184.82
7.5

2018 2019 (FY)

Total Assets, Net Assets andEquity Ratio
(Yen)
200

158.73

6.5
237

9.6

10.0

6

10

1.5

Return on equity (ROE)4 (%)

39.4
32.6

2015

Price-earnings ratio (PER) (Times)(Billions of yen)
10

10.9

56.00

Earnings per share (EPS) (Yen)

EBITDA4(Billions of yen)
12

46.6

37.0

Ordinary Income

6

5.0

2

Operating Income

2018 2019 (FY)EBITDA (Left scale)
Ratio of EBITDA to net interest-bearing
liabilities (Right scale)

3.3

2.8

3.2

2.9

3.2

2

0

2015

2016 20172018 2019 (FY)

ROE
ROA

Heiwa Real Estate Co., Ltd. Corporate Report 2020

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C or p or at e D at a

Co r p o r a t e Da t aOrganization

Corporate Profile and Shareholder Information(As of June 24, 2020)(As of March 31, 2020)

Corporate Profile

General Shareholders’ Meeting

Nomination Committee

Internal Audit Department

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

Kiyoyuki Tsuchimoto,

Nagoya Branch

8-21, Sakae 3-chome, Naka-ku,
Nagoya 460-0008, Japan

Date of establishment: July 1947

Statutory Auditors
Corporate Auditors OfficeOsaka Branch

HEIWA REAL ESTATE CO., LTD.

Company name:

Board of Statutory Auditors

Branch Locations

Board of Directors

Representative Director and President

Representative:

Representative Director and President

Compensation Committee

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

Fukuoka Branch

14-2, Tenjin 2-chome, Chuo-ku,
Fukuoka 810-0001, Japan

Management Conference

Branches:

Osaka Branch, Nagoya Branch,
Fukuoka Branch, Sapporo Branch

Sapporo Branch

Capital:¥21,492 million

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

URL:

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

Listed exchanges:

Tokyo and Nagoya (First Section),
Fukuoka and Sapporo

Group Companies

Stock code:

8803

Businesses:

1. Building Business
Development, leasing, administrationand management of stock exchangebuildings, office buildings, commercial
facilities, and residential buildings
2. Asset Management Business
Development, sale, operation andmanagement of revenue-generating realestate, development and sale ofresidential buildings, and real estateagency services
3. Other Businesses
Building facility maintenance andmanagement, repair work contracting,and insurance services

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

Managing Officer’s Meeting
Corporate Planning and General
Affairs Department
Legal Office(As of June 24, 2020)

Finance Department
Development Promotion Department
Osaka Branch
Real Estate Investment Department
Nagoya Branch
Office Building Development Department
Fukuoka BranchCommunity Co-Creation Department
Sapporo Branch

Number of employees: 106 (non-consolidated)
237 (consolidated)

Corporate Website
Home Page

IR Information Section

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

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

Major Shareholders (Top 10)

Status of Shares
Total authorized shares:

110,000,000
Name

Total outstanding shares: 38,859,996
Number of shareholders: 17,664

Distribution of Shares by Shareholder Category
Securities companies
518,000 (1.34%)
Other
corporations
7,419,000

Shareholder Bonus Program(19.09%)Total outstanding
shares:Shareholders who hold at least 100 of the Company’s shares (onetrading unit) as of March 31 of each year are given an original QUO

38,859,000

prepaid card worth ¥1,000. Long-term shareholders are given an
original QUO prepaid card worth ¥3,000. Heiwa Real Estate is currently

Foreigncorporations
14,881,000

redeveloping Tokyo’s Nihonbashi Kabutocho district, which is home
to its head office. To make people more familiar with the district,(38.30%)QUO prepaid cards have been created featuring original designs andinformation about the Nihonbashi Kabutocho district’s culture, historicallandmarks and famous places.

Individuals and others
6,491,000 (16.70%)

8th series, featuring Kabutocho Heiwa Building No. 5(K5)

Financial
institutions
9,549,000(24.57%)

Number
Percentageof sharesof total(Thousands) equity (%)1

Mitsubishi Estate Co., Ltd.

4,274

11.28

Japan Trustee Services Bank, Ltd. (Trust
Account)

2,856

7.54

CGML PB CLIENT ACCOUNT /COLLATERAL

2,646

6.99

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

2,180

5.76

JP MORGAN CHASE BANK 385632a

1,859

4.91

Japan Trustee Services Bank, Ltd.
(Trust Account 5)

741

1.96

DFA INTL SMALL CAP VALUE
PORTFOLIO

687

1.82

JP MORGAN CHASE BANK 385151

639

1.69

BNP PARIBAS SECURITIES SERVICESLUXEMBOURG / JASDEC / ABERDEEN
STANDARD SICAV I CLIENT ASSETS

605

1.60

Taisei Corporation

532

1.41

1. Percentage of total equity was calculated after deducting the number of shares
held by the Company as treasury stock (981,258) from total outstanding shares.
2. Among the Company’s shares held by Japan Trustee Services Bank, Ltd., 60,000
shares were held as trust assets in a trust for the Company’s stock compensation
plan for directors and officers, and are excluded from the figure for treasury
stock in note 1, above.

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