INTEGRATED REPORT

2023

Heiwa Real Estate Co., Ltd.

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

CONTENTSManagement Policy and Statement

Organization and Values

02 Management Policy and Statement
03 Group History
05 Group Overview
07 The Source of Corporate Value
Vision09 Message from the President
Value Creation Story

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

25 Medium-term Management Plan
27 Redevelopment Business
30 Building Business
33 Asset Management Business
34 Financial and Capital Strategies
Performance

37 Financial and Non-financial Highlights
39 Consolidated Financial Summary
41 Consolidated Non-financial Summary
Sustainable Organizational Management

43 President and External Director Dialogue
47 Sustainability Management Transformation
49 Environment
55 Society
59 Risk Management
60 Compliance
61 Corporate Governance
Company Data

69 Stock Information
70 Company Information

Editorial Policy

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

Management
PolicyCover Design Concept

The cover design incorporates silhouettes ofpeople working and living in the city, expressing
lively activities and a bustling atmosphere.
As a Company that contributes to revitalizing
districts, we are focusing efforts on the Nihonbashi
Kabutocho and Kayabacho Revitalization Project
and the Sapporo Redevelopment Project with theaim of enhancing corporate value.

Period Covered by the Report
The report mainly covers performance in FY2021(from April 2021 to March 2022). It also includes some
information on activities before or after said period, as
well as forecasts.
Organizations Covered
Heiwa Real Estate Co., Ltd., and its Group companies
Date of Publication
October 2023
Referenced Guidelines
This report has been compiled
with reference to the International
Integrated Reporting Framework by
the International Integrated Reporting
Council (IIRC) and the Ministry of
Economy, Trade and Industry’s Value
Co-creation Guidelines
In compiling this report, we creatively incorporated
visual elements aimed at ensuring the content is simple
and easy to understand. Highly important information issummarized and presented in a way that facilitates reader
understanding of the Heiwa Real Estate Group. For further
information, please refer to our corporate website.
Cautionary Note on Forecasts
Information in the report other than statements of historical fact
are forecasts and forward-looking statements that are based on
judgments by the management of Heiwa Real Estate in light of
information available at time of publication. Actual results may
differ materially from these forecasts due to various factors.
Heiwa Real Estate assumes no responsibility for the use of
information contained in the report.

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

Medium-term Management Plan 2022–2023
Medium-termManagement Plan

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

Statement

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

Main External Assessments

What the _in the Tagline Represents
THE INCLUSION OF HEIWA REAL ESTATE CO.,LTD. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF HEIWAREAL ESTATE CO.,LTD. BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.
Morningstar, Inc., and/or one of its affiliated companies (individually and collectively, “Morningstar”) has authorized Heiwa Real Estate Co., Ltd. to use of the Morningstar Japan ex-REIT Gender Diversity Tilt Logo (“Logo”) to reflect the fact that, for the designatedranking year, Heiwa Real Estate Co., Ltd. ranks in the top quintile of companies comprising the Morningstar® Japan ex-REIT Gender Diversity Tilt IndexSM (“Index”) on the issue of gender diversity in the workplace. Morningstar is making the Logo available foruse by Heiwa Real Estate Co., Ltd. for informational purposes. Heiwa Real Estate Co., Ltd. use of the Logo should not be construed as an endorsement by Morningstar of Heiwa Real Estate Co., Ltd. or as a recommendation, offer or solicitation to purchase, sell orunderwrite any security associated with Heiwa Real Estate Co., Ltd. The Index is designed to reflect gender diversity in the workplace in Japan, but Morningstar does not guarantee the accuracy, completeness or timeliness of the Index or any data included in it.
Morningstar makes no express or implied warranties regarding the Index or the Logo, and expressly disclaim all warranties of merchantability or fitness for a particular purpose or use with respect to the Index, any data included in it or the Logo. Without limiting
any of the foregoing, in no event shall Morningstar or any of its third party content providers have any liability for any damages (whether direct or indirect), arising from any party's use or reliance on the Index or the Logo, even if Morningstar is notified of thepossibility of such damages. The Morningstar name, Index name and the Logo are the trademarks or services marks of Morningstar, Inc. Past performance is no guarantee of future results.

01 Heiwa Real Estate Integrated Report 2023

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

Heiwa Real Estate Integrated Report 2023

02

Organization and Values

Group History
Consolidated operating income

Closing share price(Millions of yen)

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

5,000

14,00012,61512,00010,903

9,673 9,432

10,000

8,000

7,074

7,355

8,055

1,838 1,648

4,000

Heiwa Real Estate Group Timeline

1947–

0

Establishment Phase: Supporting
the Securities Industry

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

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

2000–

1,125※

2011 2012 2013

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

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

11,2288,548 8,267(FY2020–FY2023)

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

12,3004,000

10,784
3,955 3,785

9,335

3,455

EPS target

3,000

At least ¥

2,799

6,000

2,000

Medium-term Management Plan
“Challenge & Progress”

(Yen)

1,688

2,050
1,400

Consolidated operating income

2,000

2,131

¥10billion

1,574¥12 billion

1,0002014 2015 2016 2017 2018 2019 2020 2021 2022 2023

2014–

200

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

2014 Announced the Revitalization
Vision for Nihonbashi Kabutocho(Target)2018 Opened FinGATE KABUTO 72015 Completed construction of
Maruzen Nagoya Honten Building

Opened FinGATE BASE
2019 Acquired Sakae Sun City Building

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

0
FY

2020–

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

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

2017 Acquired Osaka Midosuji Building

Completed construction of KITOKI

Opened FinGATE KAYABA 62008 Completed construction of Hotel
Brighton City Osaka Kitahama

KABUTO ONE Opened©K5
1 Former Tokyo Stock Exchange

Building

2 Tokyo Stock Exchange Building(Chuo-ku, Tokyo)

3 Osaka Securities Exchange

Building (Osaka)

4 CentRise Sakae(Nagoya)

5 Ichibancho Heiwa Building(Sendai)

6 FinGATE KAYABA(Chuo-ku, Tokyo)

7 FinGATE KABUTO(Chuo-ku, Tokyo)

8 HOTEL K5(Chuo-ku, Tokyo)

Meiji Era (1870s)

Taisho Era to 1940s

Recently

From a Banking to a Securities andFinancial District

Reconstruction after the Great Kanto
Earthquake and World War II

Changes in Nihonbashi Kabutocho

Recreating the Classic Look and Feel of Nihonbashi Kabutocho

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

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

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

03 Heiwa Real Estate Integrated Report 2023

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

9 KABUTO ONE(Chuo-ku, Tokyo)

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

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

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

Heiwa Real Estate Integrated Report 2023

04

Organization and Values

Group Overview
Overview by Business Segment

Business Model

Business Segment

Business Strategy

Building Business

Redevelopment BusinessHeiwa Real Estate aims to further expand its earnings base through the promotion of business strategies based on our solid
real estate portfolio of properties centrally located in major urban areas across Japan.

P.27

1 Revitalizing Nihonbashi Kabutocho and Kayabacho
2 Promoting Sapporo Redevelopment Project commercialization

Development, leasing,administration, management
and sale of stock exchangebuildings, office buildings,
commercial facilities andresidential buildings

Redevelopment Business
P.27

P.30

Building Businessolve issue
Res h redevelopme
nt
wit
1 2

3 Promoting external and internal growth4

Promoting sustainable building operations aimed at improving environmental
performance and disaster preparedness

5 Generating earnings from inventory sales
Resolve local issues

lu
nt e

4,452.2
367.4

Brokerage(Millions of yen)

Asset Management
Business Operating
Revenue

367.4

248.2

165.2

4,084.8

1,057.2

1,406.5

Leasing revenue

2,513.0

05 Heiwa Real Estate Integrated Report 2023

314.0

1,078.4
207.1

Building Business
Operating Revenue
Revenue fromsale of properties

Gain on sale of properties

4,084.8

Other revenue

Operating
Revenue
Building Business

Operating
IncomeBuilding Business
Operating Income

1,057.2

5

P roissues3

Enhance revenue
base with solid realestate portfolio

Improve overall
Group proﬁtability

clu

perty sales

n)
(in
clud
atio
ing proﬁt realiz

th

3

Pr

s

din operty sale)g proﬁt realization

5

A

Improve customer
satisfaction

erioration
d det
late
-re
ge

Asset Management
revenue

Improve quality
and volume
through property
replacementd Assetpan
Ex anagement earn
ing
6 M
s

(in

119.1

(FY2022)

Real Estate Market

Operating Revenue and Operating Income Composition

P.33

1 2

rnal growth
Exte

Asset Management
Business

Heiwa Real Estate REIT

Note: External growth refers to expanding revenue opportunities through the acquisition of new prime properties, or reshuffling the property portfolio to improve the profitability ofheld properties.
Note: Internal growth refers to enhancing the value of held properties through renovations and other efforts aimed at increasing lease revenue and occupancy rates.

c al

6 Expanding Asset Management earnings

Lo

P.33

Asset Management Business

Internal
grow

Heiwa Real Estate REIT, Inc.,
asset management and realestate brokerage

a
av e
are m
property ance
e nh

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

4 Su
op stainable building

e ra

tions

Building Business
P.30

Asset Management BusinessHeiwa Real Estate Integrated Report 2023

06

Organization and Values

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. By holding a superior portfolio of properties in the central districtsof major cities across Japan and supporting Japan's financial infrastructure facilities, and other operations, wehave built relationships of trust with various stakeholders.
Our experience and track record in revitalizing the Nihonbashi Kabutocho and Kayabacho districts has
enabled us to position ourselves to make significant contributions in the Sapporo Redevelopment Project andto further fulfill our role as a Company that contributes to revitalizing districts.

Track Record as a Trusted Owner of Securities Exchange Buildings

Tokyo Stock Exchange Building Osaka Securities Exchange(Chuo-ku, Tokyo)
Building (Osaka City)

Nagoya Stock Exchange
Building (Nagoya City)

Solid Portfolio in Central Districts of Major Cities across Japan

Market Value of Lease Properties, etc.

Tokyo area

Sapporo area

• Tokyo Stock Exchange Building• Nisshokan Building• KABUTO ONE• Kabutocho Heiwa Building• Kabutocho Heiwa Building No. 1• Kabutocho Heiwa Building No. 2• Kabutocho Heiwa Building No. 4• Kabutocho Heiwa Building No. 5• Kabutocho Heiwa Building No. 6• Kabutocho Heiwa Building No. 7• Kayabacho 1-Chome Heiwa Building• Kayabacho Broad Square• Heiwa Real Estate Nihonbashi Building• Quatro Muromachi Building

Fukuoka Shoken Building(Fukuoka City)• Dogin Building• Shin-Odori Building• Park East Sapporo• Mita Heiwa Building• Uchisaiwaicho Heiwa Building• Shimbashi Square Building• KITOKI• Higashi Yaesu City Building• Grace Building Sengakujimae(Billions of yen)
5,000

• Sapporo Ekimae Godo Building• Heiwa Real Estate Sapporo Station East Building

4,000

3,395
3,000

1,194

3,889

1,124

1,122

2,644

2,767

2020

2021

4,201
1,115

2,000

Sapporo1,000

Dogin Building0

Sendai area

2018

2,440

2019

3,086

2022

Sendai and Sapporo

Tokyo

14%
6%

NagoyaNagoyaFukuoka

Mita Heiwa Building

Ichibancho Heiwa Building

11%

Solala Plaza

Nagoya area

Uchisaiwaicho Heiwa
Building

Fukuoka area

• Nagoya Stock Exchange Building• CentRise Sakae• Maruzen Nagoya Honten Building• Isemachi Heiwa Building• Sakae Sun City Building• Heiwa Real Estate Nagoya
Fushimi Building• Addit-Sakura-dori

Osaka area

Tenjin Heiwa Building

07 Heiwa Real Estate Integrated Report 2023

Leasing revenue by region

Osaka

20%

Other

Ofﬁce

13%

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

49%

Fukuoka

Tokyo
Osaka

(FY)

Unrealized gains

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

SendaiKabutocho Heiwa Building No. 6

2,362

Book value• Ichibancho Heiwa Building• Solala PlazaKABUTO ONE

1,033

3,635

3,768

Commercial

11%

63%

Leasing revenue by usage

Stock exchange
Hotel Brighton City Osaka
Kitahama

Osaka Midosuji Building

CentRise Sakae

Maruzen Nagoya Honten Building
Nagoya Heiwa Building

13%

Heiwa Real Estate Integrated Report 2023

08

VisionMessage from the President
Reaching for New Heights as a Company that Contributes to Revitalizing Districts

Fulfilling Our
Responsibilities toFuture Stakeholders
through Urban
Development with
Magnetic Attraction

Since Heiwa Real Estate’s founding in 1947 as the owner of stock exchange buildings in Tokyo,
Osaka, Nagoya, and elsewhere, our head office has been located in Nihonbashi Kabutocho andKayabacho, known widely as a securities trading hub and a financial and investment center, where wehave contributed to the development of the district, bearing the heavy responsibility of supporting
Japan’s financial market infrastructure, while also achieving business growth. However, in line withthe subsequent digitalization of securities trading, the district was no longer as bustling as it had
been in the past, and we declared our intention to take on the challenge of becoming a developer,
formulating the 10-year medium- to long-term management plan “Over the NEXT DECADE” in 2014,
with the specific goal of revitalizing our home ground of Nihonbashi Kabutocho and Kayabacho.
Having achieved this plan ahead of schedule, we moved on to the next phase, a four-year period
during which we intend to establish our track record as a developer, and in 2020, we formulated
the four-year medium-term management plan “Challenge & Progress,” under which we have beenpromoting various measures.
In the area Heiwa Real Estate is revitalizing, if we refer to the period during the Meiji Era when Eiichi
Shibusawa established The First National Bank, Japan’s first bank, as Kabutocho 1.0, then the postwar
period, when it flourished as a financial district, can be referred to as Kabutocho 2.0. I believe we are
now creating the Kabutocho 3.0 era by leveraging the geographical and historical characteristicsof this district as well as our own strengths as a Company. Looking back over the past year, as wetransition from life with COVID-19 to a post-pandemic world, I realize that this district has beentransformed into a colorful, diverse, and bustling area, and like a powerful magnet, it emits a magnetic
energy attracting new people and companies. I am very pleased we are able to demonstrate oururban development achievements in such a tangible way.

The Magnetic Force Attracting People to Kabutocho

Kiyoyuki Tsuchimoto

Representative Executive Officer,
President and CEO

09 Heiwa Real Estate Integrated Report 2023

In revitalizing Nihonbashi Kabutocho and Kayabacho, one of the pillars of our medium-term
management plan, we have achieved tangible urban development with the opening of the K5
micro-complex facility in February 2020, the opening of the KABUTO ONE mixed-use building inAugust 2021, and the completion of KITOKI in April 2022, the first office building with retail storesfor which Heiwa Real Estate adopted a hybrid structure comprising wood and SRC. During this time,
we strategically attracted distinctive commercial facilities unique to the district, including fashionablebistros and a confectionary shop operated by a popular pastry chef. At present, a total of 20
commercial facilities have been attracted to K5, with the reinvigorated atmosphere and larger numberof stores leading to an increase in traffic, from approximately 10,000 visitors per month when K5 first
opened, to approximately 50,000 visitors per month since the pandemic subsided. By attracting new
visitors in addition to those work in the area, we are transforming it into a colorful destination that
attracts a diverse range of people. We are also receiving an increasing number of inquiries regarding
collaborations and other opportunities. I recognize this as meaning the district has become a location
worthy of collaborations, that we have facilitated that type of environment. My sense is that Kabutocho
itself is undoubtably becoming a magnetic force that draws people to the area.
In the FinGATE business, which started with the Tokyo metropolitan government’s “Global Financial
City: Tokyo” vision, considering the district’s geographical history, we are attracting companies in
the Fintech sector, mainly financial startups and independent asset management companies. At theend of March 2023, 64 companies had moved in to the district, establishing its position as one of thelargest concentrations of financial startups in Japan. We will continue to consider facility expansions
and other measures, and by broadening the scope to include non-financial startups, we aim to attract
100 companies during FY2024. The physical appeal of the district itself and the value we provide interms of soft power are held in high regard, with word-of-mouth recommendations and referrals fromexisting tenants leading to the attraction of new tenants. Going forward, we want make this district acluster of startups in diverse industries, where new chemical reactions and innovation can occur.

Heiwa Real Estate Integrated Report 2023

10

VisionMessage from the President

Urban Development Leveraging Area Characteristics
The know-how and experience value accumulated as a developer during the Nihonbashi Kabutocho
and Kayabacho Revitalization Project are major assets for the Company. That being said, I think themost important aspect of urban development is to provide buildings and functions suitable for thearea based on the significance and characteristics of each area.
Although Nihonbashi Kabutocho and Kayabacho are located in a prestigious area of Tokyo at thecenter of the nation’s economy, rather than aiming to recreate the same bustling atmosphere as theadjacent Otemachi and Nihonbashi districts, we have attempted to thoroughly differentiate ourselvesfrom our neighbors by promoting the creation of a district with individuality that compels people togo out of their way to visit.
At present, we are also engaged in two redevelopment projects in Sapporo, where we do not
expect to be able to easily apply our successful experiences in Kabutocho. Looking at Japan as awhole, and in consideration of the risk of major earthquakes and other natural disasters, we must build
a BCP system enabling several other cities to supplement functions currently concentrated in Tokyo
to address the inherent risks of overconcentration. One of the candidate cities with the potential toalleviate “Japan’s Achilles’ Heel” is Sapporo, which formulated the Green Capital Sapporo Declaration
as a zero-carbon city and has made great strides toward achieving this vision. The site planned in
the Odori-nishi 4 South district, where Heiwa Real Estate plays a central role in redevelopment, islocated in the heart of central Sapporo. Accordingly, we will develop atrium spaces and commercial
facilities that contribute to improving the attractiveness and functionality of Sapporo and Odori Park,
as well as sophisticated offices and high-grade, world-class hotels on the middle and upper floors tostrengthen central Sapporo business competitiveness in a manner appropriate for a Green Capital,
with construction scheduled for completion in 2028. We also participate in the Kita 4 Nishi 3 district
project as one of the land owners and leaseholders, where we are engaged in urban development
appropriate for the gateway to Sapporo, Hokkaido’s capital city, with construction scheduled forcompletion in FY2028.

Urban Development that Values Coexistence with Nature
Regarding the environment, we recognize that there are few green spaces, particularly in Nihonbashi
Kabutocho and Kayabacho, so during the Nihonbashi Kabutocho and Kayabacho Revitalization Project,
we took on various challenges while placing importance on increasing green spaces in the district.
In 2020, Heiwa Real Estate launched the Wood/Green Project. This urban development initiative
creates a sense of unity throughout areas targeted for urban development and promotes coexistencewith nature using wooden decks and benches made with timber from a Tokyo Stock Exchange (TSE)
Listing Forest owned by the Japan Exchange Group, Inc. (JPX), and outdoor landscaping connectedunder a common concept design. In 2021, we donated plantings for the Garden of Seven Autumn
Flowers, located inside Sakamotocho Park, which had been renovated by Chuo Ward. This park,
which features a small hill, spacious lawns, and a stream that runs past seasonal flowers, has beentransformed into a space where numerous people can gather and relax, and most importantly, it isgreatly appreciated by local residents. In 2022, we opened Edible KAYABAEN, a farm garden locatedon the rooftop of the Tokyo Shoken Building. In this vegetable garden, which makes effective use of thebuilding’s rooftop while facilitating regional food circulation and education on food and agriculture,
I and other employees are growing snap peas, and looking forward to harvest time. We also opened
planting-related stores inside the K5 hotel, which opened in 2020, and the Keshiki commercial facility,
which opened in 2022, among other efforts to create green spaces and districts that achieve coexistencewith nature, themes we have taken particular care to promote.
KITOKI, completed in April 2022, incorporates wood in office interiors and a biophilic design
satisfying the instinctual human need to connect with nature, and has been highly evaluated as an
initiative that broadens the possibilities for wood in urban areas, receiving triple recognition in 2022 with
the Good Design Award, the Wood Design Award, and the Award for Excellence at the Good Facilities
Using Wood Competition, as well the Grand Prize at the Wood City TOKYO Model Architecture Awards
in January 2023. KITOKI, where the space itself conveys a sense of vibrant life, is not large in scale, witheach floor occupying just over 1,000 square feet, but all nine floors are fully occupied, despite the higher
lease prices compared to the surrounding market price. I feel there is great significance in our having
created a model green building that has received the highest levels of recognition for a construction
method that even general construction companies can perform.

Practicing Sustainability Management
We are promoting various initiatives related to sustainability management practices, one of themain strategies under the current medium-term management plan. Our highly stable asset ORSUS
Togoshiginza rental residence has acquired ZEH-M Oriented certification, and to strengthen ourcommitment to sustainability management, we raise funds through assessment loan agreements andsustainability-linked loans.
In terms of ensuring diversity in human resources, we are promoting the appointment of corehuman resources using KPIs that include the ratio of women and mid-career hires in management
positions. These efforts have been well received, as evidenced by our selection for inclusion in all
six indices managed by the Government Pension Investment Fund (GPIF). In the Global Real Estate
Sustainability Benchmark (GRESB) evaluation, Heiwa Real Estate received its first 4 Star rating in 2022.
To realize a sustainable society, we are currently developing various concepts to resolve social issues
and contribute to the SDGs through our corporate activities.
Further, during the plan period, we have also sought to enhance the sophistication of corporate
governance, which supports management both in name and substance. The transition to a Company
with a Nominating Committee, etc., in June 2022, and the delegation of a substantial amount ofauthority to executive officers, has enabled us to realize more flexible decision-making than everbefore regarding the acquisition and sale of large-scale buildings. While incorporating our own
interpretations, we will maintain efforts to further strengthen corporate governance by leveraging theadvantages of being a Company with a Nominating Committee, etc.

11 Heiwa Real Estate Integrated Report 2023

Heiwa Real Estate Integrated Report 2023

12

VisionMessage from the President

Strengthening Human Capital
People are an important management resource for Heiwa Real Estate, and I will continue to
implement measures based on the recognition that my role is not to nurture human resources, but toprepare the soil in which they can grow on their own.
Although the acquisition of qualifications and English language skills are not mandatory, we view
expenditures associated with these efforts as an investment in human resources rather than a cost,and several years ago, we enhanced systems supporting these activities. In the past, although weassumed that employees seeking knowledge required in the departments to which they are assigned
were taking certification exams, but in the first year since introducing this system, the number ofyoung employees proactively acquiring certifications has increased, and the amount invested has
tripled. We expect our employees to open up new possibilities through taking on such challenges.
We also encourage growth through work by purposely giving managers tough assignments, withsection managers asked to work at the level of a deputy manager, and deputy managers asked towork at the level of a general manager, thereby maximizing the potential of each individual. We areproactively expanding recruitment, both new graduates and mid-career hires, and working to createchemical reactions that result when people with proven track records at other companies are brought
in and immediately get involved, leading to the mutual growth of employees.
I am now taking on another challenge: Creating work environments where a clever and playful
spirit is always present. I feel that attractive plans and rich ideas that draw people to a district,making them want to visit and come back again, can only be nurtured with a corporate culture thatis relaxed in the positive sense of the word. Since fall 2022, I have been working in the office for
one weekend a month, during which time I do not see anyone on the streets wearing suits. Wearing
casual clothing makes me think differently about the future of the Company. In 2022, we introduced
a super flextime system, and in April 2023, we made major changes to the head office layout toencourage greater interaction among employees. I think the Company will become even moreinteresting if it is filled with employees who have a colorful sensibility and playful spirit, and are free
to choose their own workstyles.

Final Year of the Medium-term Management Plan “Challenge & Progress”
During the past three years, we have been able to maintain stable operations and achieve tangible
results even amid the difficult business environment caused by the pandemic. This gives me a senseof the underlying strength of our employees, and I am seeing more calls for collaborations fromoutside the Company, now that our achievements and value as a developer, represented by KABUTO
ONE, have been made visible.
The past three years of the pandemic have been a period during which we were able to reaffirm
the necessity of offices, but the reasons we need offices have changed dramatically. Rather thansimply a place to do work, offices have become real-world spaces that cannot be replicated using
digital technologies, where people gather, meet face-to-face, and exchange opinions to create
innovation. I am keenly aware that the necessity and value of offices is changing in this way, and I
believe it is important that the value we provide meets these needs in tangible and intangible ways.
FY2023 is the final year of our medium-term management plan. In April 2023, we broke groundon the Kabutocho 12 Project “Caption by Hyatt Kabutocho Tokyo,” which will open in 2025. As withKITOKI, this wooden hybrid structure accommodation facility has been selected for the Leading
Projects Program for Sustainable Buildings (led by wooden structure) promoted by the Ministry ofLand, Infrastructure, Transport and Tourism. As the Japanese economy becomes more globalized,
we will place importance on capturing business from the increased flow of inbound visitors fromoverseas, and developing essential facilities and functions appropriate for the location in each area
under redevelopment. In the Redevelopment Business, the two Sapporo projects mentioned above
have also received urban planning decisions and are now moving forward. We have a robust pipelineof projects that will lead to medium- and long-term growth, and by steadily advancing these projects,
we will achieve our goal of enhancing social and shareholder value.

13 Heiwa Real Estate Integrated Report 2023

Numerical targets for the final year of the medium-term management plan include consolidated
operating income in the ¥12 billion range, EPS of at least ¥200, and ROE of at least 6%, all of which weare on track to achieve. As for shareholder returns, in line with the consolidated dividend payout ratio
target of approximately 50%, we plan to increase the FY2023 annual dividend by ¥12 year on yearto ¥116, marking seven straight years of dividend increases. We will achieve these targets by firmly
executing the measures described herein, leading to further growth.

Co-creating Value with Stakeholders
In addition to employees, shareholders and investors, business partners, local communities and othergroups, we recognize “the future” as a stakeholder and will continue to place importance on cocreating value for the future.
Employees in particular are the cornerstone of our business efforts and the source of the urban
development that we promote to attract people. As we believe employee health and vitality are thebasis for maximizing their individual strengths, we have proactively set KPIs linked to the promotion of
employee health, including a 70% or higher paid holiday usage rate and a 100% annual health checkcompletion rate, and by implementing measures that consider employee mental and physical health,
we have made efforts to create comfortable work environments. We are very happy to announce that
Heiwa Real Estate has received “White 500” certification from the Ministry of Economy, Trade andIndustry. This certification is granted to the top 500 companies practicing particularly excellent healthmanagement in the 2023 Certified Health & Productivity Management Outstanding Organization
large enterprise category. We are committed to maintaining these efforts going forward.
We have continued to engage in dialogue with our shareholders and investors through IR activities
and other means, but now that we have been able to demonstrate our achievements in urban
development, I feel they are even more interested in our future prospects. To this end, I believe it isimportant to present a clear vision of where we want to be in 10 to 15 years, then explain our mediumto long-term management plans and other concrete measures. Specifically, during the redevelopment
process, we will continue to engage in dialogues to share our vision of the future, which is focused onlong-term growth, rather than merely the pursuit of immediate, short-term profit. Further, in 2023, we
held the first ever tour of our facilities for individual shareholders centered on KABUTO ONE, which
opened in 2021, to demonstrate firsthand how our revitalization efforts have transformed Nihonbashi
Kabutocho and Kayabacho into a colorful district. Thanks to everyone’s support, the number of tour
applicants far exceeded the capacity, and I would like to thank our shareholders once again for theirstrong interest in Heiwa Real Estate. I will continue to resolutely manage the Company and meetshareholder and investor expectations for future growth.
Finally, in terms of “the future,” I feel we have a strong responsibility in terms of thoroughly
responding to urgent social issues that must be addressed. In particular, the global response to
climate change is one of the major responsibilities of our generation, as our efforts today will leadto stakeholder value 10 to 20 years from now. While promoting the reduction of greenhouse gas
emissions from our business, we will create a green future in which we can coexist in harmony withnature and pursue both societal sustainability and the sustainable growth of the Company.
Having marked our 75th anniversary in 2022, we are looking ahead to the next 25 years, when we
will become a 100-year-old Company. We will work toward that goal by formulating a medium- tolong-term management plan for FY2024 and beyond, asking ourselves “how can we leverage thegeography, history, and characteristics of districts and transform them into attractive destinations
that draw in visitors with the same magnetic power generated by Kabutocho?” As we move forward
focused on our long-term vision for Heiwa Real Estate, I ask for the continued understanding andsupport of all our stakeholders.

Heiwa Real Estate Integrated Report 2023

14

Value Creation Story

Materiality, Risks and Opportunities

Sustainability Vision

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

Risks and Opportunities

Targeted Social Value

Materiality
Industrial andregional development

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

Create disaster-resistant,resilient areas

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

Create environmentfriendly low-carbon areas

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

Create lively areas
through corporate
governance

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

Materiality
Identification Process

STEP

1

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

15 Heiwa Real Estate Integrated Report 2023

STEP

2

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

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

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

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

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

Climate change
countermeasures

Interview withstakeholders

Opportunities

Risk of personnel shortages, biased viewpoints andactivities

Natural disaster risk
mitigation measures

3

Risks

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

Responding
to social needs

Identifying Materiality and Stakeholder Engagement

STEP

SDGs

STEP

Enhance brand value by invigorating the district through avariety of activities

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

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

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

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

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

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

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

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

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

Improve effectiveness of sustainability measures by raisingsustainability awareness throughout the Company

Stakeholder Engagement

4

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

Identification of materiality

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

Building tenants and users

Shareholders and investors

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

Materiality

Global environment
High
Degree of importance for Heiwa Real EstateBusiness partners

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

High

Degree of importance among stakeholders

Create lively areas
through diversity andincubation

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

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

Building tenants
and users
Shareholders
andinvestors

Business
partners

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

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

Globalenvironment

Employees

Local
communities

Local communities

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

Heiwa Real Estate Integrated Report 2023

16

Value Creation Story

Value Creation Process
CapitalThe Value We Offer
Proﬁt targets

Intellectual Capital
Reputation and reliability
as an owner of stock
exchange buildings

Redevelopment Business

Owned and leased stock exchangebuildings across Japan since
the Group was founded

Asset Management
Business

Owns properties with potential
for medium- to long-term
redevelopment

Social Capital
Good relationships with clientsand local communities
Playing a part in the“Global Financial City: Tokyo” vision

Improve quality
and volume
through property
replacement

Enhance revenue
base with solid realestate portfolio

Improve overall
Group proﬁtability

Approx. 770 companies

Improve customer
satisfaction

Human Capital
Employees engaged
in urban development

253people

Building BusinessFemaleEmployees(non-consolidated) employee ratio

35.4%

Natural resources and energy
Water usage

0.77m /m
3

2

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

Stakeholder expectations and needs

Solid ﬁnancial base
Net assets

Building tenants
and users

Business
partners

Employees¥ 1,193billion
GlobalLocal
Shareholders
communities environment
andinvestors

Materiality

Financial Capital

17 Heiwa Real Estate Integrated Report 2023

(FY2020–FY2023)

Approx. 70%(FY2020–FY2023)

Consolidated
dividend payout
ratio ofapprox. 50%
by FY2023

Industrial andRegional Development
Responding toSocial Needs
Natural Disaster
Risk Mitigation Measures
Strengthening ofCorporate GovernanceImproving shareholder value
as a listed real-estate company
The Company will improve shareholder
value through returns and greater capital
efﬁciency by maximizing the use of theGroup’s corporate value and by creating
and achieving added value in real estate.

E: Environment
Create Environment-Friendly Low-Carbon Areas
GHG emissions

Water usage

Waste

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

50%

20%

20%

Rate of new hires thatare female

Paid holiday usage rate

Uptake of cancer screenings(every 2 years)

Annual health checks
uptakeAt least 30%

of employees aged 35
or above

At least 70%

100% annually

Create Disaster-Resistant, Resilient Areas
Buildings compliant with newearthquake resistance standards

Natural Capital¥ 2,268billion

Consolidated total return ratio

100%Group employees

Interest-bearing debt

ROE

Create Lively Areas through Diversity & Incubation

Cooperative relationshipwith local communities¥ 3,983 billion

Shareholder returns

S: Society

Number of tenants

Total assets(FY2023)

At least ¥120 billion

Resolve local issues

Owns assets in the central districtsof major cities across Japan

139,220MWh(FY2023)

At least ¥200

At least 6%

Superior portfolio

Energy usage

Consolidated operating income

Capital efﬁciency

Manufactured Capital

96 people

EPS

Improvingshareholder value

100%(excluding buildings earmarked
for redevelopment)

People with ﬁrst aid
training course
qualiﬁcations

All of our ofﬁcers
and employees

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

Number of
female directors

Composition of Nomination
and Compensation Committee

Compliance training

At least one-third
external directors

Majority external
directors

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

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

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

At least one

At least ﬁve times
each year

Heiwa Real Estate Integrated Report 2023

18

Value Creation Story

Value Creation Story
Incorporating Local Issues and Social Needs
On the Nihonbashi Kabutocho and Kayabacho Revitalization Project, in developing
and operating properties, we formulate measures incorporating the resolution of local
issues and social needs, leading to overall area rejuvenation.
In addition to recognizing needs and issues common to all redevelopment projects,
such as creating bustle in the area and preparing for natural disasters, we are engaged
in a wide range of activities unique to the storied financial district that include making
use of historic buildings and contributing to the Global Financial City: Tokyo vision.

Redevelopment

Main Issues and Social Needs• Creating bustle in the area

• Making use of historic buildings

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

Contributing to the
Global Financial
City: Tokyo vision

To

Ni
ng
yo
ch
o

Making use ofhistoric buildings

Nisshokan Building

FinGATE KABUTOKITOKI

19 Heiwa Real Estate Integrated Report 2023

FinGATE TERRACE

KABUTO ONE
Eit
aido
ri

Sh
in O
ha
shi
-do
ri

To
Nih
onb
ash
i

Chuo Police Station

Kayabacho Station

Creating Districts Connecting People, Giving Rise toInvestments and Growth

FinGATE KAYABA
He
ise
i-d
ori

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

FinGATE BASE

To
Nin
gy
och
o

To
ei

Mizuho BankFinGATE BLOOM

To
Mo
nz
en
To nakaza
i L cho
i

ne

Hib
iya
Lin
e

Urban Development Concept

K5

Shu
to
E
Cir xprescul swar R ayou Inneter

Nihonbashi Kabutocho and Kayabacho
Revitalization Project

Tokyo Stock Exchange Buildingerhi Rivnbas
Niho

Mobilizing Heiwa Real Estate
Strengths to Create Attractive
and Sustainable Districts

As
To
aku
Nih
sa
on
Lin
ba
shi
e

Sh
ow
a-d
ori

Nihonbashi Post Ofﬁce

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

Heiwa Real Estate Integrated Report 2023

20

Value Creation Story

Redevelopment

Since its founding as the owner of stock exchange buildings playing
a central role in Japan’s financial markets, Heiwa Real Estate has been
deeply involved in businesses rooted in districts comprising the core offinancial markets across Japan.
In promoting the revitalization of Nihonbashi Kabutocho andKayabacho, the Company’s home ground, we will transform the city
into a colorful place where diverse people gather.

Redevelopment

Leveraged Capital and Strengths• Superior portfolio (favorably located development sites)• Good relationships with business partners and local communities• Promising tenant relationships• Track record and trust as owner of stock exchange buildings

Expanding into Restaurants and Other Businesses
Before the full-scale launch of the Nihonbashi Kabutocho
and Kayabacho Revitalization Project, the district mostly
comprised office spaces, hence the need to expand the
district’s function beyond work to foster a more bustling
atmosphere. Against this backdrop, following the openingof K5 in February 2020, we modernized the atmosphereof the district with the opening of five independent
restaurants attracted by the future potential of this district.

With the opening of “BANK” and “Keshiki” in December
2022, the total number of commercial facilities strategicallyattracted to the district through Heiwa Real Estate urban
development efforts rose to 20. The number of visitors permonth to these commercial facilities has expanded fromapproximately 10,000 people (as of April 2021), to about
50,000 people at present.

KITOKI Initiatives: Exploring the Possibilities for Wood in Urban Areas
KITOKI is a 10-floor retail and office building utilizing a hybrid structure that includes threefloor mega-structures made using SRC frames, with each floor within the mega-structures
made of wood. This is the first project to adopt this type of hybrid structure. The wooden
hybrid construction with mega-structures realized in KITOKI can utilize construction methods
prevalent in low-rise wooden buildings comprising two to three stories, regardless of how
many floors are added. We hope the adoption of wooden hybrid construction will lead to anincrease in the prevalence of wooden construction, as it will enable construction companies,
craftsmen, and others who have worked on low-rise wooden construction projects to build
high-rise wooden structures.

Selected for the Leading Projects Program for
Sustainable Buildings (Led by Wooden Structure)
Promoted by the Ministry of Land, Infrastructure,
Transport and Tourism
Wooden hybrid construction utilizing a hybrid structurethat includes three-floor mega-structures made using SRC
frames, with each floor within the mega-structures madeof wood is highly durable to ensure safety and stability,
while the wooden structures maintain a certain degreeof versatility. By adopting a wooden hybrid structure,
low-rise wooden building construction methods canbe incorporate wood without the need for a large-scale
wooden structure, making it possible to construct interior
spaces that facilitate contact with wood. The adoption ofthis wooden hybrid structure demonstrates to society the
future potential for wooden construction.

OpenedDecember
2022

©K5

Neki

teal

KNAG

KABEATease

Collaboration with a TSE Listing Forest
Outside the structure are wooden benches made using“kabulock” (wood processed into blocks for various
applications) from timber grown in a Tokyo Stock Exchange(TSE) Listing Forest owned by the Japan ExchangeGroup, Inc. (JPX) as part of its social contribution activities,
located in Yashimamachi, Yurihonjo, Akita Prefecture. The
hybrid structure is expected to provide a sense of warmth
unique to wood for workers, visitors, and people living
nearby, while adding a new touch of tranquility to the area(acquired certificate for carbon dioxide fixation promoting
the use of wood produced in Akita Prefecture).
Circular Economy Initiatives
Heiwa Real Estate contributes to the circular economy
by repurposing wooden framework used when making
concrete columns. Wood used for low-rise framework
is demolded and repurposed for artwork, signs, and

21 Heiwa Real Estate Integrated Report 2023

other uses that take advantage
of its distinctive irregularities.
Wooden framework thatwould normally be disposedof as waste after use is reused
elsewhere, contributing to therealization of a circular economy
and a recycling-oriented society.

Biophilic Design Office
Biophilic design is a spatial design technique based on
the biophilia hypothesis, which states that “humans havea psychological tendency to be attracted to living thingsand life.” Studies have shown that incorporating biophilic
design into the workplace environment can improve
employee productivity, increase corporate value, andimprove the workplace atmosphere.
KITOKI incorporates biophilic design to provide a more
comfortable working environment as a fully set-up office.
Organized around threenature themes (wind,
water, and wood), setup
offices feature vegetationand the sound of runningwater, providing workers
with a sense of comfort.
Incorporating Attractive Log Columns (Application of
New Technology Promoting the Use of Wood)In the building’s entrance, columns stretching up fromthe first to third floors are made from whole chestnut
tree trunks sourced in Akita Prefecture. Normally, several
years are required to naturally dry this type of broadleaf
tree, but by artificially drying the timber using “woodbe,”
Japan’s first wood dryer, which uses modified water andfire retardant, we areable to substantiallyshorten the drying timeand reduce costs. In thisway, we are proactively
utilizing the latest woodrelated technologies toexpand the possibilities
of wood utilization.

Heiwa Real Estate Integrated Report 2023

22

Value Creation Story

Utilizing Historic Buildings

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

Utilizing Historic
Buildings

Value Creation Story

Contributing to the Global Financial City: Tokyo Vision

Contributing to the
Global Financial City:
Tokyo Vision

Leveraged Capital and Strengths

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

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

Service optimization through the creation of relationships
with financial ventures

Integration of modern, diverse ideas into projects

K5 (Opened February 2020)

BANK (Opened December 2022)

The building reborn as K5 was completed in 1923,
constructed as an annex of the third building in The
First National Bank complex, Japan’s first bank foundedby Eiichi Shibusawa in 1873. Although the building
was covered with steel panels when Heiwa Real Estate
acquired it, we have modernized and renovated it basedon our belief that returning the building to its original
condition when completed and utilizing it in an attractive
manner would enhance the building’s real estate value
and that of the local community.

BANK is a former bank branch, andthe exposed concrete and massive
vaults that remain give the space anatmosphere typical of the Kabutocho
financial district.
The exterior wall line has been set
back on one side to create a public
space, and an olive tree, estimatedto be over 1,000 years old, has beenplanted there as a symbol of peace.

FinGATE (Financial Venture Company Integrator)
FinGATE provides infrastructure and equipment such as offices and event spaces necessary for the startup andmanagement of financial services, while also creating a community facilitating opportunities for entrepreneurs to interact
with each other while providing support for government collaborations and middle back services.
Starting with the opening of FinGATE KAYABA in September 2017, we have developed a total of five facilities in the
Nihonbashi Kabutocho and Kayabacho area, housing around 64 financial startups. After expanding and upgrading FinGATEKAYABA and FinGATE BASE in FY2023, we aim to attract 100 companies by the end of FY2024.

Number of FinGATE tenants

Infrastructure
Ofﬁce(Ofﬁces, Event Spaces, Information Sources)(Total number of lease agreements, coworking agreements, andshared-use agreements)
100 (target)

100

Middle Middle Back Support
Back

80

60

60

Comm
Govt

Life

©K5

23 Heiwa Real Estate Integrated Report 2023

FinGATE KAYABA

Community andGovernment Alliances

Creating Wellbeing
for People Working
and Living in the District

FinGATE KABUTO

42

40

26

20

FinGATE BASE

64

31

8
0

2017

2018

2019

2020

2021

FinGATE TERRACE

2022

2024

(FY)

FinGATE BLOOM

Heiwa Real Estate Integrated Report 2023

24

Strategy and Resource Allocation

Medium-term Management Plan

Improvingsocial value

Previous Medium-term Management Plan

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

over the “NEXT DECADE”

Challenge & Progress

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

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

Strategy
Overview

Review

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

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

Strategy
Overview

Consolidated operating income target:

From ¥8.0 billion to ¥10.0 billion level over 10 years

General Overview

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

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

Improvingshareholder value

Improving shareholder value
as a listed real-estate
Company

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

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

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

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

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

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

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

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

Key Management Indicators
FY2014–FY2019 Results
FY2016FY2017FY2019¥62.53¥113.17¥132.57¥8.54 billion¥9.67 billion

2.8%

Consolidated total return ratio
Consolidated dividend payout ratio

FY2020 Results

FY2021 Results

FY2022 Results¥184.82¥189.76¥236.74¥254.27¥229.14¥9.43 billion¥10.90 billion¥11.22 billion¥12.61 billion¥10.78 billion¥12.3 billion

4.7%

5.2%

6.5%

6.3%

7.3%

At least 7.7%

At least 6%

35.2%

23.0%

27.9%

57.8%

68.5%

68.8%

68.3%

70.0%

35.2%

23.0%

27.9%

30.3%

40.6%

40.1%

40.9%

50.6%

FY2014
Profit targets

EPS
Consolidated operating income

Capital efficiency ROE
Shareholder
returns

FY2022 Forecasts

FY2023 KPIs

At least ¥200 (FY2023)

At least ¥12.0 billion (FY2023)

At least 6% (FY2020–FY2023)

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

Investment Plan
FY2014–FY2019 Results
Redevelopment Business
Redevelopment
investments

Approximately ¥15.0 billion

Building Business
Asset Management Business

25 Heiwa Real Estate Integrated Report 2023

FY2020–FY2023 Plan

Results up to FY2021

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

Approx. ¥17.7 billion

Acquisitions: Approx. ¥60.0 billion

Approx. ¥66.6 billion

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

Approx. ¥40.6 billion

Heiwa Real Estate Integrated Report 2023

26

Relevant SDGs

Strategy and Resource Allocation

Redevelopment
Business

Redevelopment Business

Developing Sustainable and Diverse Districts

Business Environment• Heightened momentum to revitalize districts in Nihonbashi Kabutocho and Kayabacho• Contributing to the Global Financial City: Tokyo vision• Hokkaido Shinkansen Sapporo extension

Competitive Advantages

Location

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

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

Main uses

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

Floors andconstruction

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

Exclusive-use
floor space

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

Operators

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

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

Business Strategies

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

Revitalization of Nihonbashi Kabutocho and Kayabacho

Nisshokan Building

Nihonbashi Post Ofﬁce

Tokyo Stock Exchange Buildingerhi Rivnbas
Niho

Kabutocho Heiwa Building
Kabutocho Heiwa Building No. 5

Kabutocho Heiwa Building No. 2

Kabutocho Heiwa Building No. 1

Kabutocho Heiwa
Building DIA Building
To
Nih
onb
ash
i

Kabutocho Heiwa Building No. 6
Kabutocho Heiwa Building No. 7• The first office building with retail stores for which Heiwa
Real Estate adopted a hybrid structure (wood and SRC)

• The project aims to attract Hyatt’s
newest lifestyle hotel brand,“Caption by Hyatt,” a first for Tokyo• Selected for the Leading Projects Program for
Sustainable Buildings for 2020 (led by wooden
structure) by the Ministry of Land, Infrastructure,
Transport and Tourism• Incorporates a biophilic* design facilitating even more
comfortable working environments

Opening of KABUTO ONE (August 2021)

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

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

Location

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

Access

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

Main uses

Shops and offices

Floors andconstruction
Exclusive-use
floor space• Building includes KABUTO ONE HALL & CONFERENCE,
a venue for interactions between investors andcorporations, and Book Lounge Kable, a library lounge• Opened KABEAT, a restaurant supporting producers,
KNAG, a community café, and HOPPERS, a modern Sri
Lanka-style restaurant• Office spaces continue to be fully occupied

Kabutocho Heiwa Building No. 4 MizuhoBankCommercialization of the Kabutocho 12 Project• Since opening, KABUTO ONE has hosted finance andinvestment-related events, contributing to the prosperity
and revitalization of the local community as a newlandmark in the district.

(scheduled to open in 2025)• The first wooden hybrid accommodation facility
operated by a foreign hotel brand, selected for the
Leading Projects Program for Sustainable Buildings for2020 (led by wooden structure) by the Ministry of Land,
Infrastructure, Transport and Tourism
Hotel name

Caption by Hyatt Kabutocho Tokyo

Location

12 Nihonbashi Kabutocho, Chuo-ku, Tokyo

Access

One-minute walk from Kayabacho Station on the Tokyo Metro Tozai
Line and Hibiya Line
Two-minute walk from Nihonbashi Station on the Tokyo Metro GinzaLine and Toei Asakusa Line

10 floors above ground, timber hybrid construction

Exclusive-use
floor space

9,958.56m2

791.95m2

Floors andconstruction

12 floors above ground, one floor below, one-story penthouse;
wooden hybrid structure

Guest rooms

195 rooms (plan)

Opening2025 (plan)

Note: The above information is based on current plans and is subject to change
upon further study.

To
Nin
gyo
cho

To
Nih
on

bas
Sho
hi
wa
Do
ri

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

District revitalization

Completion of KITOKI (April 2022)

KITOKIKABUTO ONE

He
ise
iD
ori

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

Chuo Police Station

Eita
i Do
ri

Shin
-Oh
ash
iD
ori

Tokyo Shoken Kaikan Building

Kabutocho 12 PJ

Kayabacho Station

Tokyo Shoken Kaikan Building No. 2

Kayabacho 1-chome Heiwa Building

Note: Image for illustrative purposes only.

Group-owned assets (includes some shared assets)
District revitalization

27 Heiwa Real Estate Integrated Report 2023

Heiwa Real Estate Integrated Report 2023

28

Relevant SDGs

Strategy and Resource Allocation

Strategy and Resource Allocation

Redevelopment Business

Sapporo Station

Hakodate Main Line

Sapporo Ekimae Godo Building
Sapporo Station

通創成川

o ChuoSappor ation
Police St

Japan
rk

Odori Pa

Tozai Li

y
Subwa

ne
boku Li
y Nam
Subwa
Dori
e
a
m
ro-EkiSappooHokkaid t
enGovernmce
fﬁOBank of

Sapporo Station South Exit
North 4 West 3, district
redevelopment (to becompleted in FY2028)
ne

Sapporo Stationo
Sappor erw
Clock To

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

Odori Station

Nishi 4-chome Station

Shin-Odori Building

Promoting the Odori-nishi 4 South, Type-1 District
Redevelopment Project

Business Environment• Notified of urban planning decision in December 2022

Competitive Advantages• World-class architect Kengo Kuma has been invited tobe the design supervisor• Superior portfolio of properties in central districts of major cities across Japan• Track record and trust as an owner of securities exchange buildings• Tenant relationships and tenant leasing capabilities• Increased tenant satisfaction by maintaining and improving building value(scheduled for completion in 2028)

Heiwa Fudosan
Sapporo Station
Higashi Building

Od

Park East Sapporo

Dogin Building

Group-owned assets (includes some shared assets)

Participation in Sapporo Station South Exit North 4
West 3, district redevelopment• Diversification of workstyles and office needs• Developing high-grade hotels meeting international
standards and highly functional offices to enhancebusiness competitivenessOperator

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

Location

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

Main uses

Offices, hotel, commercial

Site area

5,030 m2

Exclusive-use floor space

Approx. 99,400 m2

Floor-area ratio

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

Maximum height

Approx. 185 m

Business Strategies

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

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

• Notified of urban planning decision in April 2022

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

Progress in External Growth• Participating in project as landowner and leaseholder,aiming to generate new prosperity and appeal asa symbol of the gateway to Sapporo, the capitalof Hokkaido, while commercialize redevelopment
targeting completion in 2028
Approx. 1.7 ha

Site area

Approx. 1.1 ha

Exclusive-use floor space Approx. 210,200 m
Height and floors• Acquired properties totaling approximately ¥66.0 billion from the start of the current Medium-term Management Plan toMarch 2023.
• To date, approximately ¥68 billion has already been invested, when taking into account properties to be completed andacquired during the Medium-term Management Plan.
• Expanding investments in the rental residence business, mainly targeting office buildings in central Tokyo and othermajor cities.

2• Developing a new brand, ORSUS, in the rental residence business (see next page).

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

Note: Floor space owned by the Group as of March 31, 2023.
Acquired
assets(April 2020–
March 2022)

Heiwa Real Estate
Kabutocho Heiwa
Kabutocho Heiwa
Shimbashi Square
Nihonbashi
Bldg.
DIA Building
Building
Building
No. 7

Axion Otemon
Premium

Grace Building
Sengakujimae

Higashi-Yaesu
City Bldg.

Location

Chuo-ku, Tokyo

Fukuoka-shi,
FukuokaMinato-ku, Tokyo

Chuo-ku, Tokyo

Major Uses

Condominium
Offices and stores Offices and stores Offices and stores Offices and stores
Banks and offices Offices and stores Offices and stores Stores and offices
units and stores
2,441.36㎡

3,821.03㎡

17,049.41㎡

12,229.39㎡

June 1994

November 1993

April 1974

May 1986

Exclusive-use
floor spaceCompleted

Sapporo Station South Exit North 4 West 3, District
Redevelopment Project29 Heiwa Real Estate Integrated Report 2023

• Environmentally friendly and BCP-conscious operation

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

(scheduled for completion in FY2028)

District area

Leveraging Our Superior Portfolio
in Major Cities across Japan

Building
Business

Progress in Commercializing the Sapporo Redevelopment Project

Building Business

Odori-nishi 4 South District Type 1 Urban Redevelopment Project

Minato-ku, Tokyo

Chuo-ku, Tokyo

Chuo-ku, Tokyo

6,578.54m2

5,422.10m2

3,032.09m2

1,261.75m2

2,355.36m2

October 1979

March 2008

December 1989

July 2003

January 2018

AcquiredJune 2020

September 2020 December 2020 September 2021

Kabutocho Heiwa
Bldg. No. 7

Shimbashi Square
Building

Heiwa Real Estate
Nihonbashi Building

Kabutocho Heiwa
DIA Building

October 2021

Axion Otemon
Premium

Heiwa Fudosan
Nagoya Fushimi Addit Sakura-dori
Bldg.
NagoyaJune 2022/
September 2022/
November 2022
December 2022 December 2022

Grace Building
Sengakujimae

NagoyaFebruary 2023

Heiwa Fudosan
Higashi-Yaesu City
Addit Sakura-dori
Nagoya Fushimi Bldg.
Bldg.

Heiwa Real Estate Integrated Report 2023

30

Strategy and Resource Allocation

Redevelopment Business

ORSUS Series Development

Progress in Internal Growth• Developing new brand ORSUS in the rental residence business• Raising lease prices based on trends in the office leasing market (plan to raise lease prices approximately ¥700 million
between FY2020–FY2023)• Expected to total 11 properties, including two development projects currently in progress
Note: Area is proportionate to the Group's interest in the relevant property as of March 31, 2023.
Operating properties
Property name

ORSUS Asakusa

ORSUS
Honjo-Azumabashi

ORSUS Umejima

ORSUS Nakano

ORSUS Nishi-Nippori

ORSUS Shin-Ekoda

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

Progress of Lease Price Increases

Net Amount of Lease Price Increases(Properties)(Millions of yen)

600

150

(No. of properties) *Taito-ku, Tokyo

Sumida-ku, Tokyo

Adachi-ku, Tokyo

Nakano-ku, Tokyo

Arakawa-ku, Tokyo

Nerima-ku, Tokyo

Total floor space(No. of units)

1,457.28㎡(27Units)

1,285.94㎡(24Units)

3,859.93㎡(89Units)

999.51㎡(33Units)

1,176.84㎡(24Units)

2,644.57㎡(63Units)

Completion dateFebruary 2021

June 2021

January 2022

January 2022

June 2021

July 2021

Acquisition dateFebruary 2021

January 2022

January 2022

April 2022

September 2021

September 2022

Operating properties
Property name

524

400

200

Location(Increased revenue on a fiscal year basis) *ORSUS Oimachi

ORSUS Akabane East

Under Development
ORSUS Otorii

ORSUS Togoshiginza

138

131
105

100

227

229

214

2018

2019

2020

50

150

0

2021

2022

65

0

(FY)

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

77

2018

2019

2020

2021

(FY)

2022

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

Changes in Vacancy Rates
for Buildings
Consolidated
vacancy rate

Non-consolidated
vacancy rate

FY2019–1.2%

FY20201.8%

1.8%

FY2021

4.5%

3.0%

FY2022

4.5%

4.3%

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

Acquire Earnings from Inventory and Other Sales

Taito-ku Minowa Project• We aim to generate earnings from the sale of profitable assets after maximizing their value, and through further
development of the HF Residence series.

• Two buildings, Sapporo Hotel and Fukuoka Residence, were transferred from fixed assets (assets for leasing) to real estate
for sale at the end of FY2022.

Appearance

Held Assets

Note: Area is proportionate to the Group's interest in the relevant property as of March 31, 2023
Kayabacho
OfficeLocation

Shinagawa-ku, Tokyo

Kita-ku, Tokyo

Ota-ku, Tokyo

Shinagawa-ku, Tokyo

Taito-ku, Tokyo

Total floor space(No. of units)969.45㎡(36Units)

2,241.13㎡(49Units)

3,876.43㎡(99Units)

3,586.40㎡(92Units) planned

2,949.61㎡(54Units) planned

Completion date

October 2019

November 2022

February 2023

October 2023 planned

January 2024 planned

Acquisition date

October 2022

December 2022

February 2023−−

Nagoya Sakae
OfficeOsaka Kitahama Osaka Kitahama
Yokohama Office Sapporo Hotel
Office 1
Office 2

Chiba Residence Ogu Residence

FukuokaResidence

Location

Chuo-ku, Tokyo

Nagoya

Osaka

Osaka

Yokohama

Sapporo

Chiba

Arakawa-ku, Tokyo

FukuokaExclusive use
floor space

Approximately
3,500㎡

Approximately
9,500㎡

Approximately
5,500㎡

Approximately
2,500㎡

Approximately
3,000㎡

Approximately
46,000㎡

Approximately
1,500㎡

Approximately
1,000㎥

Approximately
2,500㎡

September 1991

March 2004

February 2015

October 2011

February 1986

April 1996

December 2018

February 2017

January 2018

December 2013Same as above

Same as above

Same as above

Same as above

January 2019

July 2019

April 2021

October 2021

Completiondate
Acquisition
date

Stock balanceApproximately ¥14.1 billion

Note: Osaka Kitahama Office 1 & 2, Yokohama Office, Sapporo Hotel, Chiba Residence, and Ogu Residence have been sold (as of September 2023).

Promoting Sustainable Building Operations Aimed at Enhanced Environmental Performance andDisaster Preparedness• ORSUS Togoshiginza acquired ZEH-M Oriented certification as part of initiatives aimed at reducing GHG emissions• This property received a full five-star rating from the Building-Housing Energy-efficiency Labeling System (BELS) for
reducing the annual primary energy consumption in entire buildings by 35% compared to current energy saving
standards (excluding renewable energies)

この住棟のエネルギー消費量

TOPICS
Mercure Tokyo Hibiya• We have decided to renovate part of our Uchisaiwaicho Heiwa Building
into a Mercure hotel, a mid-range brand owned by leading European
hotel group Accor, which is scheduled to open in winter 2023.
• The design concept is based on a theater set. The hotel willaccommodate 178 guest rooms, restaurants, a fitness center, meetingrooms, an executive lounge, and other facilities.

35 ％削減建築物省エネルギー性能表⽰制度
国⼟交通省告⽰に基づく第三者認証
2023年4⽉7⽇交付

Exterior

31 Heiwa Real Estate Integrated Report 2023

Entrance hall

Heiwa Real Estate Integrated Report 2023

32

Strategy and Resource Allocation

Strategy and Resource Allocation

Asset Management Business

Financial and Capital Strategies

AssetManagement
Business

Meeting Ever-Growing Real Estate
Investment Demand

FY2022 Performance

Sixth Consecutive Year of All-time High Profits

Business Environment• Growing real estate investment needs• Real estate prices remain at high levels

Competitive Advantages• We are the sponsor of Heiwa Real Estate REIT, Inc.
• We collaborate with Group companies including Heiwa Real Estate Asset Management Co, Ltd.,
which manages assets of Heiwa Real Estate REIT, Inc.

Message from the Officer in Charge of Financial Affairs

Business Strategies

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

Growing Asset Management Earnings• With the growth of Heiwa Real Estate REIT, Inc. (HFR), Group revenue is increasing steadily.

• HFR has increased its total assets to over ¥220.0 billion through two consecutive years of public offerings and portfolio renewals.

HFR total assets

Asset management fee income from HFR(Unit: Billions of yen)

(Unit: Million yen)

240.0
2.00.0160.0

168.1 173.1 174.7

178.7 178.0

184.1

194.7 196.3

213.3

221.0

1,573

1,600

1,310
1,200

917

979

1,121 1,096 1,132

1,343

1,377

Promoting Capital Policies
with an Awareness of Capital
Costs and Capital Efficiency
to Achieve Targets in the Final
Year of the Medium-termManagement Plan
Takahisa Aoyama

Director and Managing Officer

In FY2022, the third year of the medium-term
management plan “Challenge & Progress,” lower sales ofinventories in the Building Business and temporary factors
including a reactionary decline after the FY2021 recordingof tenant cancellation penalties resulted in operating
revenue of 44.5 billion yen (-13.2 billion yen year-onyear), operating income of 10.7 billion yen (-1.8 billion
yen year-on-year), and ordinary income of 9.6 billion yen(-1.9 billion yen year-on-year). Although sales and profits
declined, these temporary factors were incorporated into
initial plans, which proceeded on track. Sales of crossshareholdings lifted bottom-line profit to 9.1 billion yen, arecord-high for the sixth consecutive year.
In the Building Business, excluding temporary factors
such as the reactionary decline after the FY2021 recordingof tenant cancellation penalties, leasing revenue
increased in line with the expansion of our portfolio andinternal growth. Regarding property sales, inventory sales
to Heiwa Real Estate REIT went according to plan. in the
Asset Management Business, Group revenue, including
asset management fees, steadily increased in line with theaccumulation of assets under management by Heiwa Real
Estate REIT, Inc. In the Redevelopment Business, an urban
planning decision was announced for the Odori West 4
South District in Sapporo, and construction of Caption by
Hyatt Kabutocho Tokyo began in April 2023, with eachbusiness proceeding on track.

1,196

800

120.0
80.0

400
40.0
0

Nov.
2018

May
2019

Nov.
2019

May
2020

Nov.
2020

May
2021

Nov.
2021

May
2022

Nov.
2022

May
2023

Dividends per unit of HFR holding
3,050
2,800

2,350

2,500

2,550

2,680

2,800

3,130 3,160

2015

2016

2017

2018

2019

2020

2021

2022 (FY)

2,890

1,000

909
815

800

600

400
2,000

1,600

2014

(Unit: Million yen)

3,200

2,425

2013

Total dividend income from HFR(Unit: Million yen)

2,400

0

458

469

481

2013

2014

2015

513

566

647

685

727

200

Nov.
2018

May
2019

Nov.
2019

May
2020

Nov.
2020

33 Heiwa Real Estate Integrated Report 2023

May
2021

Nov.
2021

May
2022

Nov.
2022

May
2023

0

2016

2017

2018

2019

2020

2021

2022 (FY)Heiwa Real Estate Integrated Report 2023

34

Strategy and Resource Allocation

Financial and Capital Strategies

Shareholder Returns

Raising the Dividend per Share for the Sixth
Consecutive Year
Our shareholder return policy under the medium-term
management plan “Challenge & Progress” sets a KPI for
the consolidated total return ratio of approximately 70%
for the four years from FY2020–FY2023. Further, we aretargeting a consolidated payout ratio of approximately
50% by FY2023, the highest level of shareholder returns
in the developer industry. Regarding dividends per share
in FY2022, the annual dividend was raised for the sixth
consecutive year to 104 yen per share, a payout ratioof 40.9%. In light of the repurchase of Company sharesamounting to approximately 2.5 billion yen, the total
return ratio was 68.3%.
Regarding dividends per share in FY2023, we plan toincrease the annual dividend for the seventh consecutive
year to 116 yen per share, a payout ratio of 50.6%. In
this final year of the current medium-term management
plan, we will make every effort to maintain a high level ofshareholder returns.

Medium-term Management Plan Direction

Toward Management Focused on Sustainable
Profit Growth and Capital Costs
Under the slogan “Taking on challenges and reachingfor new heights in the aim to be a Company that
contributes to revitalizing districts,” our policy is toengage in initiatives aimed at “quantitative and qualitative
expansion of the Redevelopment Business,” “practicing
sustainable management,” and “refocusing the businessmodel on added-value creation,” in pursuit of sustained
profit growth and management taking capital costs into
account. Specifically, we will seek to create added value
through the Redevelopment Business and boost leasing
earnings by expanding and renewing our portfolio. We
believe the driver for earnings going forward will beearnings obtained from property sales utilizing unrealized
gains. In other words, growth is expected to be driven by
the increase in earnings from leasing and property sales in

the Building Business. In the Asset Management Business,
we will continue to support the growth of Heiwa Real
Estate REIT, Inc., in pursuit of the stable expansion of asset
management earnings. Through these efforts, we aretargeting consolidated operating income of at least 12.0
billion yen in the final year of the plan.

Current Progress of Investment Plans Approaching
the Final Year of the Medium-term Management Plan

Acquiring Earnings from Property Sales throughPortfolio Renewal
During these four years, we plan to invest approximately
32.0 billion yen in the Redevelopment Business andabout 60.0 billion yen into external growth (property
acquisitions) with the aim of expanding assets (portfolio)
through property acquisitions and development. During
the three-year period starting with the launch of themedium-term management plan up to FY2022, weacquired Kabutocho Heiwa Building No. 7, Shimbashi
Square Building, Heiwa Fudosan Nagoya Fushimi
Building, Addit Sakura-dori, and other properties, while
promoting the expansion of the ORSUS series of rental
residences, with property acquisitions amounting toapproximately 66.0 billion yen. When taking into accountthe properties to be constructed and acquired during
the medium-term management plan period, we haveinvested approximately 68.0 billion yen, and at this point,
we are on track to achieve our investment plans.
Going forward, with office buildings in central Tokyoand other major cities as our main targets, we will
expand investments in the rental business with plansto accumulate new lease assets. In the Redevelopment
Business, we opened KABUTO ONE in August 2021 andcompleted construction of KITOKI, a wooden hybrid
construction building, in April 2022, both aimed atrevitalizing the Nihonbashi Kabutocho and Kayabacho
district. In April, we launched construction of Caption
by Hyatt Kabutocho Tokyo, which is scheduled to open
in 2025. In the Sapporo Redevelopment Project, weare promoting two large scale projects that will begin
in earnest in the next medium-term management plan:

Investment Plan

Important Management Indicators and Risk Factors

Promoting Capital Policies Focused on Capital
Costs and Efficiency, Responding to Changes in
the Business Environment

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

Results up to
FY2022

FY2020–2023 plan

Approx. ¥32.0 billion
Redevelopment
Business¥15.0 billion

35 Heiwa Real Estate Integrated Report 2023

Building
Business

Acquisitions:

Asset
Management
Business

Returns from reshuffling:

Approx. ¥22.0 billion¥17.7 billion

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

Returns from existing inventory sales: Approx.

(%)

72.1

250

¥34.0 billion

150
100

¥66.6 billion¥40.6 billion

50
0

68.5
57.8

200

(breakdown)
Nihonbashi Kabutocho and Kayabacho:
Sapporo:Approx.

300

158.73
30.2

48

2018
EPS (Left scale)

40.6

30.3
77

56

2019

68.3
254.27236.74189.76184.8268.8

2020

Annual dividends per share (Left scale)

40.1

40.9
104

95

75
60
45
30
15

2021

2022

0
(FY)

Annual dividends per share (Left scale)

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

respect to risk factors, amid the easing of restrictions on
activities and the normalization of economic and social
activities as the pandemic subsides, we have reaffirmed
the need for offices as a space where people can meetface-to-face to exchange ideas and create innovation,
and are cognizant of the need to carefully monitor the
impact of large-scale office supplies on office market
conditions (vacancy rates, lease prices, etc.). Further,
vacancy rates*2 were 4.5% at the end of March 2023, buthave been on a downward trend since reaching a high of
6.2% in September 2022. We assume vacancy rates in theGroup's portfolio will continue to decline for some time,
as vacancies presumably continue to be filled. In addition
to the creation of attractive districts and enhancements
to the value of individual properties, we will continue
agilely responding to environmental changes by carefully
selecting property acquisition targets, flexibly renewing
our portfolio, and expanding the rental residence business.
1. Of which, we are targeting a consolidated payout ratio around 50% by FY2023.
2. National average (excluding sections subject to lease suspension related toredevelopment, etc.)

Under the current medium-term management plan,in addition to profit growth, we are placing greater
importance on capital costs and capital efficiency. We set
EPS as a KPI (targeting EPS of 200 yen or more in the finalyear), and maintaining an awareness of capital costs, weare targeting ROE (6% or more) and a consolidated total
return ratio (about 70%)*1 that exceed capital costs.
Regarding shareholder returns, we set targets at
levels that will generate returns after funds necessary
for business have been set aside as internal reserves,
promoting a capital policy focused on capital costs andefficiency through share buybacks combined with the
distribution of dividends.
In terms of financial discipline, Heiwa Real Estate's
net debt-to-equity (D/E) ratio has been kept to 1.5 times
or less, leading to improved financial soundness andthe accumulation of unrealized gains. Accordingly, ourpolicy is to control the net D/E ratio at 1.8 times or lessduring the current medium-term management plan. With(Yen)

FY2014–2019
performance

Redevelopment
investment

Odori-nishi 4 South, Type-1 district redevelopment project
and the Sapporo Station South Exit North 4 West 3, Type-1
district redevelopment project.
While making these business investments, we alsoplan to recover approximately 20 billion yen by renewing
our conventional portfolio of long-term holdings, andapproximately 34 billion yen through inventory sales.
Since the first half of the third year of the medium-term
management plan, we have fully utilized unrealized gains
on leasing business assets to capture gains on property
sales through portfolio renewal, and at the end of FY2022,
we had collected approximately 40.0 billion yen. We plan
to continue this process as part of portfolio renewal efforts
in FY2023, the final year of the plan.

FY2023 Business Performance Forecast

Progressing Steadily Toward the Achievement ofMedium-term Management Plan Targets
In FY2023, the final year of the medium-term
management plan, we expect net sales of 44.1 billion
yen due to lower inventory sales in the Building Businessand other factors. We also anticipate higher operating
income and ordinary income from gains on sales ofproperties in the Building Business. Accordingly, we
forecast consolidated operating income of 12.3 billion
yen and consolidated ordinary income of 10.7 billion yen.
We expect to achieve our consolidated operating incometarget of 12.0 billion yen in the final year of the mediumterm management plan.
At the same time, net income attributable to the parent
is expected to be slightly lower at 8.2 billion yen, due to areactionary decline in FY2023 following large extraordinary
gains recorded in FY2022 as a result of significant
progress in reducing cross-shareholdings. Regarding
dividends, to achieve the consolidated dividend payout
ratio of approximately 50% targeted in the medium-term
management plan, we forecast a dividend of 116 yen per
share, an increase of 12 yen from FY2022.

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

Heiwa Real Estate Integrated Report 2023

36

Performance

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

Non-Financial Highlights
Operating Income

Energy Usage and Energy Usage
per Cubic Meter*1

Ordinary Income(Millions of yen)

(Millions of yen)

(Millions of yen)(MWh)60,00015,00012,000150,000

57,81846,63940,00039,48012,61512,00044,522

10,903 11,228

10,006

10,00010,784

8,000

9,335

9,000

35,048

11,572
10,244

9,647

8,430
90,000

6,000
6,000

20,000

0

2019

2020

2021

2022

0

(FY)

2018

2019

2020

2021

2022

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

300

32,00090

94,392

240

109,960
104,299

171.1

2018

2019

2020

2021

2022

(FY)

120

2019

2020

2021

2022

(Millions of yen)
10,0004,000(Millions of yen)300

400,000

240

7,046
6,000

(Yen)

9,137
8,705
254.27

8,000

6,174

7,118

236.74

398,333

376,210

(Yen)

60

120

31.6

31.1

31.7

30.0 3060

002018 2019 2020 2021 2022
(FY)
Net income attributable to owners of parent(Left scale)EPS (Right scale)

109,075 107,302

118,639 119,278 119,324
15

68.3
104 60

77
40.6

60

30.2

120

2,000

57.8

80

100,000

68.5
68.8
95

45

32.5

75

72.1

40.1

40.9

56
30.3

0

2018

2019

2020

Total assets (Left scale)

Equity ratio (Right scale)

2021

2022

3,183

3,023

3,011

2018

2019

2020

2021

0

2018

Net assets (Left scale)

2.30

2.27

2019

2020

2021

2022

500

45

1,017

0.62

27.6 30

1,009

1.76

1.60

0.77

2,709

2022

0.6

0.70

0.4
0.2

0

0

(%)

5

100

4

80

2020

2021

2022

(FY)

Water usage (Left scale)

Paid Holiday Usage Rate*4
(%)
100

79.6

2019

Water usage per square meter (Right scale)Target: At least 70%

79.7

0

2018

(FY)

Rate of Female Employees*4(kg/m2)0.8

160,000

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

2.79

439,687

320,000

Scope 1 (Left scale)

1,300

530,304 1.0

375,102

80.1

Target: At least 70%

80

70.5

15

0

(FY)

1,311

1.02

480,000 475,140

15,14027,230 27,255

0 2,999

1,931

1.2

604,937

60

0

1,500

1,000

20
0

2,000

30

48

40

45

(t)

75

(FY)

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

(%)

100

300,000

200,000

158.73381,353(%)

335,572 339,545

180

184.82 189.76

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

1.07

12,431 15

Energy usage (Left scale)

Total Assets, Net Assets andEquity Ratio

60.0(m3/m2)640,000

23,57625,306 20,564

Energy usage per cubic meter (Right scale)

Net Income Attributable to
Owners of Parent and EPS

66.5

8,000

60

2018

28,330(m3)

47.6
16,000

174.5

0

(FY)

24,000 68.3

180

194.9

163.4

30,230 30,439

201.1

30,000

2,000

0

2018

60,000

4,000

3,000

115,629

Water Usage and Water Usage
per Square Meter*1*2(kWh/m2)

139,220

120,000

GHG Emissions and GHG
Emissions per Square Meter*1

79.7

79.6

80.1

2020

2021

2022

70.5

61.7

3

60

2

40

40

1

20

20

0

0

60

61.7

(FY)

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

0

2018

2019

2020

2021

2022

0

2018

(FY)

2019

2020

2021

2022

(FY)

2018

2019

(FY)

Waste emissions (Left scale)

Waste per square meter (Right scale)

EBITDA and Ratio of EBITDA to
Net Interest-Bearing Liabilities

Net D/E Ratio(Millions of yen)(Times)

20,000

2

1.5

1.57

1.47

1.57

18,5781.67
1.49

15,000 14,596

16,20311.77
9.76

10,0001

16,763

ROE and ROA(Times)

(%)

20

8

7.3

16,998
15

11.10

9.58

11.71

10

6

6.5
5.8

0.5

5,000

5

2

0

0

0

0

2019

2020

2021

2022

(FY)

2018

2019

2020

2021

2022

(FY)

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

37 Heiwa Real Estate Integrated Report 2023

3.2

Majority of external directors

7.7

6.3

4

2.9

2018

Board of Directors

3.1

3.3

2.8

Five independent
external directors(Including one female director)

2018
ROE

2019
ROA

2020

2021

2022

(FY)

Four internal
directors

Nominating
Committee

Compensation
Committee

Audit Committee

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

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

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

Committee
Chair

Committee
Chair

Committee
Chair

Three
external
directors

One
internal
director

Two
external
directors

One
internal
director

Two
external
directors

One
internal
director

1. From FY2021 onward, the portfolio of real estate owned by the Group (excluding inventories and jointly owned buildings of which the Company has an ownership share of lessthan 25%) is within the scope of calculation. For FY2022, the scope covers the Group's real estate portfolio (excluding inventories).
2. Actual per-square-meter figures are calculated by dividing annual emissions/usage by the total floor area of the relevant property, regardless of the period of ownership.
3. Recycled waste is excluded from the actual figures for waste and waste emissions per square meter.
4. Heiwa Real Estate on a non-consolidated basis is within the scope of calculation.
are guaranteed by a third party.
5. Data marked with

Heiwa Real Estate Integrated Report 2023

38

Performance

Consolidated Financial Summary
Unit

FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022For the fiscal year:
Operating revenue

Millions of yen

32,99243,28434,34737,01041,74732,69839,48046,63935,04857,81844,522

Operating income

Millions of yen

7,355

8,055

8,548

8,267

9,673

9,432

9,335

10,903

11,228

12,615

10,784

Ordinary income

Millions of yen

4,634

5,644

6,568

6,708

8,431

8,395

8,430

10,006

10,244

11,572

9,647

Net income attributable to owners of parent

Millions of yen

2,455

2,901

2,495

4,408

4,514

5,288

6,174

7,046

7,118

8,705

9,137

Depreciation

Millions of yen

5,243

5,326

4,989

5,028

4,878

4,661

4,766

4,814

5,077

5,418

5,668

Capital expenditures

Millions of yen

12,587

9,001

15,326

15,461

15,838

16,642

21,824

12,63330,872

21,646

44,112

Cash flows from operating activities

Millions of yen

13,271

13,824

12,557

9,954

20,98013,482(12,780)

28,6808,292

34,18923,952

Cash flows from investing activities

Millions of yen(11,199)(6,388)(15,160)(2,600)(13,017)(17,265)(12,946)(11,427)(30,200)(20,705)(40,250)

Cash flows from financing activities

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

13,994

Balance of cash and cash equivalents at endof period

Millions of yen

33,49322,903

11,242

15,377

19,117

12,784

11,71027,166

29,585

28,11125,807

Net assets

Millions of yen

84,002

85,99092,29894,827

97,524

104,900

109,075

107,302118,639

119,278

119,324

Total assets*1

Millions of yen

313,096

296,834

297,736

294,021

293,025300,243

335,572

339,545

381,353376,210398,333

Interest-bearing liabilities

Millions of yen

186,902170,335

162,490

160,232

157,051

155,786

184,672

186,977

215,727

206,236

226,895

%

26.7

29.0

31.0

32.3

33.3

34.9

32.5

31.6

31.1

31.7

30.0

Yen

22

22

22

26

26

37

48

56

77

95

104

Yen

61.51

72.72

62.53

110.50113.17132.57158.73184.82189.76236.74254.27

Book value per share (BPS)* *Yen

2,096.60

2,154.94

2,313.34

2,377.02

2,444.84

2,630.07

2,819.82

2,837.29

3,190.09

3,269.74

3,334.34

Price-earnings ratio (PER)

Times

29.88

22.66

27.00

12.67

13.91

15.46

13.43

15.14

18.21

16.71

14.89

Price-book ratio (PBR)

Times

0.88

0.76

0.73

0.59

0.64

0.78

0.76

0.99

1.08

1.21

1.14

Consolidated Payout ratio

%

35.8

30.3

35.2

23.5

23.0

27.9

30.2

30.3

40.6

40.1

40.9

Consolidated total return ratio

%

35.8

30.3

35.2

23.5

23.0

27.9

72.1

57.8

68.5

68.8

68.3

Millions of yen

12,905

13,64813,883

13,641

14,92014,476

14,596

16,203

16,763

18,57816,998

Times

2.22

1.98

1.76

1.69

1.61

1.49

1.69

1.74

1.82

1.73

1.90

Net D/E ratio*

Times

1.82

1.71

1.64

1.53

1.41

1.36

1.57

1.47

1.57

1.49

1.67

Ratio of EBITDA to net interest-bearing
liabilities

Times

11.84

10.79

10.89

10.61

9.24

9.84

11.77

9.76

11.10

9.58

11.71

Return on assets (ROA)*1 *5

%

2.4

2.6

2.9

2.8

3.3

3.2

2.9

3.2

3.1

3.3

2.8

Return on equity (ROE)*

%

3.1

3.4

2.8

4.7

4.7

5.2

5.8

6.5

6.3

7.3

7.7

At fiscal year-end:

Equity ratio*

1

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

4
2

4

EBITDA*5
D/E ratio*555

Number of shares outstanding

Shares40,059,996

40,059,996

40,059,996

40,059,996

40,059,996

40,059,996

40,059,996

38,859,996

38,859,996

38,859,996

38,859,996

Number of employees*6

Persons

293

285

281

281

224

233

236

237

240

240

253

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

39 Heiwa Real Estate Integrated Report 2023

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

Heiwa Real Estate Integrated Report 2023

40

Performance

Consolidated Non-financial Summary
Materiality

E

Climate Change
Environment
Countermeasures

S
SocietyG
GovernanceIndustrial
Development/
Regional
Development
Responding toSocial Needs

Initiatives• Reduction of GHG emissions,water use and industrial waste
generation• Environmentally friendly building
development and managementof buildings• Use of renewable energy• Contributing to industrial andregional developments• Increasingly diverse humanresources• Promoting occupational healthmanagement• Work-life balance• Improving office environments• More efficient operations

Items

Natural Disaster
Risk Mitigation
Measures

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

SDGs

2019

2020

2021

2022

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

30,230 t-CO2

30,439 t-CO2

28,330 t-CO2

23,576 t-CO2

15,140t-CO2

GHG emissions (Scope 1)*1

2,999 t-CO2

3,183 t-CO2

3,023 t-CO2

3,011 t-CO2

2,709t-CO2

GHG emissions (Scope 2)*1

27,230 t-CO2

27,255 t-CO2

25,306 t-CO2

20,564 t-CO2

12,431t-CO2

GHG emissions (Scope 3)*1

211,354 t-CO2 159,740 t-CO2

75,652 t-CO2

106,761 t-CO2

104,596t-CO2

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

68.3kg-CO2/m2 66.5kg-CO2/m2 60.0kg-CO2/m2

47.6kg-CO2/m2

27.6kg-CO2/m2

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

1.07 m3/m2

1.02 m3/m2

0.62 m3/m2

0.70 m3/m2

0.77m3/m2

Water usage*1

475,140 m3

604,937 m3

375,102 m3

439,687 m3

530,304m3

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

2.27 kg/m2

1.76 kg/m2

1.60 kg/m2

2.79kg/m2

Total waste emissions*1

3,089 t2,956 t2,428 t2,183 t3,010tWaste emissions (excluding recycled waste)*1

1,311 t1,300 t1,017 t1,010 t1,931tRecycled waste emissions*1

1,778 t1,655 t1,410 t1,173 t1,079tRecycling rate*1: 70% by FY2030

58%

56%

58%

53.7%

35.8%

Female new hires: At least 30%*4

33.3%

50%

100%

33.3%

50.0%

Paid holiday usage rate: At least 70%

61.7%

70.5%

79.7%

79.6%

80.1%

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

–

–

100%

100%

100%

Annual health checks: 100% every year*4

100%

100%

100%

100%

100%

Status of work engagement*4*5: 90% by FY2023

–

–

82.5%

79.3%

80.4%

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

–

–

0

0

0

Female managers: At least 10% by FY2025

–

4.7%

5.0%

5.3%

10.8%

Total hours of training (hours/year)

–

–

1,186

1,124

1,514

Hours of training per employee (hours/year)

–

–

11.6

12.4

15.8

Total training expenses (yen/year)––

3,274,342

8,473,780

6,536,880

Training expenses per employee (yen/year)––

32,101

93,11868,093

100%

100%

100%

100%

100%

-

-

100%

100%

100%

4/9 peoples

4/9 people

4/9 people

4/9 people

5/9 persons

0 people0 people1 people1 people1 people

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

1. From FY2021 onward, the portfolio of real estate owned by the Group (excluding inventories and jointly owned buildings of which the Company has an ownership share of lessthan 25%) is within the scope of calculation. For FY2022, the scope covers the Group's real estate portfolio (excluding inventories).
2. Actual per-square-meter figures are calculated by dividing annual emissions/usage by the total floor area of the relevant property, regardless of the period of ownership.

41 Heiwa Real Estate Integrated Report 2023

Performance (FY)2018

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

KPI*8

Nomination: Nomination: 3/4 Nomination: 3/4 Nomination: 3/4
Nomination:
peoplepeoplepeople3/4 people
3/4 peoples
Compensation: Compensation: Compensation: Compensation: Compensation:
2/3 people
2/3 people
2/3 people
2/3 people
2/3 people
Two times

Two times

Five times

Five times

Social Value

Create Environment-Friendly Low-Carbon Areas

We will enthusiastically support moves toembrace energy-efficient technologies andrenewable energy to help reduce CO2 emissions.

Create Lively Areas through Diversity
and Incubation

We will play an active role in the creation ofideal areas, where a diverse range of people
gather and work together, stimulate investment,
securities and finance, and foster culture and thearts.

Create Disaster-Resistant, Resilient Areas

We are dedicated to creating buildings andfacilities with a high level of disaster preparedness
ensuring that the city continues to function safety
through the daily community activities of thepeople who live and work there.

Create Lively Areas throughCorporate Governance

We will continue to strengthen corporate
governance on an ongoing basis and aim to be
a company in which all officers and employees
proactively tackle environmental and social issues.

Five times

3. Recycled waste is excluded from the actual figures for waste per square meter.
4. Heiwa Real Estate on a non-consolidated basis is within the scope of calculation.
5. Percentage of employees who responded “yes” or “somewhat” to “My work is rewarding” in a stress check.

6. Numerical targets for each fiscal year.
are guaranteed by a third party.
7. Data marked with
: Other KPIs.
8. : Medium-term management plan KPIs
Heiwa Real Estate Integrated Report 2023

42

Sustainable Organizational Management

President and External Director Dialogue

Kiyoyuki Tsuchimoto
Representative Executive
Officer, President and CEO

Kiichiro Masui
External Director

Deepening the Board of Directors and Strengthening
Corporate GovernanceTrajectory of Governance Enhancements
Tsuchimoto: After my appointment in 2019 as President,
when formulating the mid-term management plan,
we identified corporate governance enhancements as
one of the most important themes, aiming for a Boardof Directors infused with diversity in accordance with
the Corporate Governance Code. Amid the ongoinginternationalization of Japan’s capital markets, at the2020 General Shareholders’ Meeting, we resolved tostrengthen diversity in terms of gender and overseas
experience. In addition, based on issues identified
through dialogues with shareholders and investors, with

43 Heiwa Real Estate Integrated Report 2023

regard to governance, we announced our intention toconsider the most appropriate organizational form forthe next generation of Heiwa Real Estate. After repeateddiscussions by the Board of Directors, in 2022, wetransitioned to a Company with a Nominating Committee,etc., with external directors comprising the majority of
directors. This mid-term management plan truly enabled
us to tangibly demonstrate our efforts to enhance
governance. Of course, changing the institutional
design does not automatically change the content of
the organization. The degree to which we can leverage
our new capacity as a Company with a Nominating
Committee, etc., is crucial, and we want to emphasize thatinternal and external directors should work together as

one team to enhance corporate value while remaining
cognizant of separating supervision and execution.
Masui: I became an external director in 2017, andsince then, have worked with Mr. Tsuchimoto, who was
appointed Director and Executive Vice President at thatsame time. From the beginning, Board meetings werevery congenial, with lively discussions taking place in an
atmosphere that made it easy to express one’s opinion.
As Board member diversity has increased, there are moreopinions based on diverse ideas and knowledge being
expressed than ever before. At the same time, public
views and societal demands regarding governancehave changed considerably in these past six years alone.
Although we external directors do not have as detailed
an understanding of operations as the executive side, I
believe that sharing and discussing objective opinions fromdifferent perspectives can inform executive team decisionmaking and judgments. The Corporate Governance
Code has various principles, but ideal governance differs
depending on the company. Trial and error are essential
in formulating and implementing better governance thatconsiders the special characteristics of the company, and I
look back on the past year as a period of continuous efforts
to pursue even more advanced governance.
Tsuchimoto: Mr. Masui has shared information with us
in a timely manner in the past regarding governance oflisted companies, corporate governance trends in capital
markets, common concerns and current conditions
in stock markets, as well as issues in the securities
market, and has provided accurate feedback on how toapproach Company governance and capital markets.
One of the most memorable comments made by Mr.
Masui was during our discussions on transitioning to a
new institutional design, when he stated, “If too muchemphasis is placed on the supervisory function, it may
become more of a brake than an accelerator, making it
difficult to achieve Heiwa Real Estate’s ultimate goal ofsustainable growth. Rather than becoming a textbook
Company with a Nominating Committee, etc., we should
aim for an original governance structure appropriate for
Heiwa Real Estate.”
Masui: It is important to move forward as a team,after all. In addition to Board of Director meetings,
opinions are energetically exchanged at the Meetingfor Independent External Directors established in
2021, where various management topics, including
medium-term management plans, are discussed basedon common understanding. Even watching sports
such as the WBC, you can see each individual athlete
improving their skills while winning through teamwork.
In a company, while each individual hones their skills
as an expert in their chosen field, they are also part ofa team that works together vertically and horizontally,
enabling them to demonstrate great power. I want tocontinue emphasizing the importance of considering thebest outcome for Heiwa Real Estate while maintaining
common understanding as a team.

Tsuchimoto: I totally agree with you and I am gratefulfor the encouragement. I am glad that our team isdeepening its awareness and realizing a more effective
Board of Directors, while also taking advantage of the
Meeting of Independent External Directors.

Deepening the Board of Directors
Tsuchimoto: As Mr. Masui mentioned, our Board of
Directors receives proactive opinions from a wide varietyof perspectives. I feel this culture is part of our DNA ,which has been passed down through the long traditionof our Company.
Masui: I am sure it is partly due to the culture, but I
think it is also due to the personality of Mr. Tsuchimoto,who always listens to our opinions with a cheerfuldisposition. From sustainable initiatives exemplified by thecompletion of KITOKI in 2022, to the promotion of career
opportunities for women, and employee health measures,
under Mr. Tsuchimoto’s leadership, I can see thatcomments made at Board meetings and in discussions
are being incorporated and the Company is formulatingclear responses to issues raised. Not only do we trustthat even our smallest comments will be respected to
the fullest extent, we also feel that our discussions aremeaningful, as they help promote business.
Tsuchimoto: Thank you very much. The implementationof sustainability management is a key theme in our
medium-term management plan. This year, we were
especially happy to be recognized as a 2023 CertifiedHealth & Productivity Management Outstanding
Organization (White 500), the result of our efforts
to promote the creation of an environment in which
employees can work with vitality. At present, all executives
and employees have the certification logo on theirbusiness cards to promote awareness of this achievement.
If Heiwa Real Estate is recognized externally as a company
with a firmly rooted health management system, thisshould have a substantial impact on the recruiting of
human resources.
Masui: It certainly will. With regard to human capital, we
are taking care to conduct various measures, including
the introduction of new systems. To strengthen teamwork
as a Company, it is important that individual employees
develop their own skills, and it is also important that
the Company provide them with the tools to do so. I
think further discussions are needed regarding what,
specifically, we should focus on, and how. Additionally, in
2023, one year since changing our institutional design,
we should further consider governance managementthat leverages the merits of being a Company with aNominating Committee, etc.”
Tsuchimoto: Regarding human capital, we recognize
this as homework for the executive side and want todeepen discussions of programs unique to our Company
during the process of formulating a long-term vision

Heiwa Real Estate Integrated Report 2023

44

Sustainable Organizational Management

President and External Director Dialogue

and the next management plan. I recognize that myrole is to cultivate the soil in which human resources cangrow on their own, and I believe it is very important for
the Company to commit to improving the capabilities ofeach and every employee. As part of this effort, young
employees in their 20s who are in the preparatory phaseof becoming professionals are encouraged to obtain atleast two certifications useful in the real estate industry or a
related area, with the Company covering related costs. In
the year following the announcement of this policy within
the Company, young employees proactively acquired
qualifications, and the amount of investment in humanresources tripled. In terms of human resource recruiting,
we are hiring mid-career professionals on the same scale as
new graduates, mainly to take on the challenge of entering
new fields, rather than to fill personnel shortages. I hope tocontinue receiving your opinions on programs and otherefforts that will further strengthen our human capital.
Masui: Regarding the Company with a Nominating
Committee etc., it is important to develop a strong
succession plan to ensure that rational checks andprocesses are adhered to when making nominations. Thatbeing said, it is not enough to simply follow succession
plans. As the Company is one team, it is also necessary to
make efforts and devise ways to unite increasingly diverse
board members under the President. The selection of
the next successor in particular will determine the futureof Heiwa Real Estate, and as chairman of the committee,
I bear a considerable amount of responsibility. The
Nominating Committee engages in heated discussions
on how to select personnel who will be responsible formanaging the Company.
Tsuchimoto: Mr. Masui was involved in central
government administration for a long time, and my sensethat you approach work by questioning the substance,

I emphasize that internal andexternal directors should work
together as one team to enhance
corporate value.

45 Heiwa Real Estate Integrated Report 2023

rather than the form, of each and every policy. Even on the
Nominating Committee, you approach improvement fromthis perspective, which I think leads to a different process
than simply following rules and formulas.

Toward Heiwa Real Estate Medium- to
Long-Term Growth
Tsuchimoto: When we began formulating the nextmanagement plan, I proposed to the Board of Directorsthat it would be best to first establish a broad vision for
the next 10–15 years, then formulate specific measures thenext three to four years. Even then, Mr. Masui encouraged
me to look at things from a long-term perspective. I
think the discussion was further invigorated by insightfulquestions and opinions derived from thinking about
things from a long-term perspective.
Masui: While I am not in a position to provide knowledge
or insight into the real estate industry, I do maintain aconstant awareness of what I am saying and how myperspective might look different from the execution side.
That being said, I hope I am not saying anything that iscompletely misguided or unnecessary.
Tsuchimoto: In addition to formulating a long-term vision,
we are currently in the process of reimagining our Company
purpose, and I am reminded of a memorable episodefrom these discussions. Heiwa Real Estate was established
as a policy measure in 1947 as a real estate company
tasked with managing stock exchange buildings. Up tonow, our purpose has been to manage stock exchangebuildings without interruption. However, that was a time
when there were only trading floors, and now that thebusiness environment has changed dramatically withthe digitalization of securities trading, we must define a
different purpose, which is something we have discussed

at length during previous Board meetings. The details ofinternal discussions are also regularly reported to the Boardof Directors, and I was very impressed with Mr. Masui’s
assessment of the review process itself, when he stated, “Aslong as the purpose is formulated after all executives andemployees working at Heiwa Real Estate have engaged in
sufficient discussions, everything will be fine.” This comment,
which demonstrates his big-picture thinking so well, was anopportunity for me to reaffirm the role of external directors.
Masui: From my experience of the process involvedin considering proposals presented up to now, I
think executives and employees have engaged inappropriate and wide-ranging discussions, with theprocess itself providing a sense of pride and dignity only
possible through personal involvement. Ahead of theannouncement, we will revamp our purpose with the aimof uniting all executives and employees working at Heiwa
Real Estate.
Tsuchimoto: Since 2014, when we formulated theprevious medium- to long-term management plan, we
have taken on the challenge of “becoming a Company
that contributes to revitalizing districts” by transitioning
from a stock exchange building management company
to a real estate developer. The initiatives we have beenpromoting under the current medium-term management
plan aimed at “becoming a Company that contributes torevitalizing districts” have finally started to bear fruit, andwe must focus on ensuring that we accomplish this aim
going forward. Looking 10 years or more ahead to the
future, we will of course consider business expansion andother initiatives, but the core focus will still be how we cantransform the areas we own in major cities into districts
that draw people in. We also hope to receive your valuable
opinions from various angles and perspectives with regard
to the formulation of our future management plan andlong-term vision for the next 10–15 years.
Masui: When considering the future, I think it is importantto answer the question “who are we?” Growth and newchallenges are important for a company, but how they areachieved will make a big difference in terms of the pathtaken to get there. The further ahead we look, the more
important it is to reaffirm the path that Heiwa Real Estateshould take in pursuing growth, and share it throughout
the Company.
Tsuchimoto: Our concept is expressed in the urban
development we have been promoting in Nihonbashi
Kabutocho and Kayabacho. These efforts will haveno meaning if all we do is simply copy other districts.
Nihonbashi Kabutocho and Kayabacho, where our head
office is located, has a distinctive history as a financial,securities, and investment district. Rather than restoring its
former bustle, we have sought to give the area an edgeby creating a colorful district that attracts a diverse rangeof people as only Heiwa Real Estate can. As a result, werenovated a Taisho Era building to create the hotel K5 in
2020, and over the past three years, a total of 20 uniquecommercial establishments that share our vision of urban
development have gathered in the area, with the numberof visitors to these establishments increasing from 10,000
per month three years ago, to 50,000 per month atpresent, indicating how completely different this district
is compared to the past. Now that we are able to tangibly
demonstrate Heiwa Real Estate’s unique approach tourban development, we are receiving inquiries regarding
collaborations from a wide variety of areas.
These changes have given us confidence, and as wemove to the next stage, we will formulate a solid long-term
vision for promoting initiatives unique to Heiwa Real Estatethat attract people to Kabutocho and Sapporo, as well asother areas.

It is important to answer the question“who we are we?” when determining
a direction for future growth.

Heiwa Real Estate Integrated Report 2023

46

Sustainable Organizational Management

Sustainability Management Transformation
The vision of the Heiwa Real Estate Group is to enhance shareholder value as a publicly listed real estatecompany and contribute to the realization of a sustainable society as a Company that contributes to urban
development. Accordingly, we have positioned sustainability management as a priority within our medium-term
management plan and are promoting various initiatives to this end.

FY2021

FY2020Overall

December• Identified social values and materiality
targets• Established the Sustainability
Committee

E

Environment

April• Formulated targets for the reduction of
GHG emissions, water consumption, andwaste emissions
October• Participated in GRESB, received two-starratingDecember• KITOKI selected for the Leading Projects
Program for Sustainable Buildings for 2020(led by wooden structure)
March• Formulated a Group environmental policy

S

Society

April• Formulated targets associated with healthmanagement

April• Established the Sustainability Promotion Office
October• First Integrated Report published OfficeMay• Introduced sustainable energy to portfolio
properties
October• Received GRESB three-star rating
Raised GHG emissions reduction target(20 50% reduction by 2030)

October• Donated trees and plants to Sakamoto Park2018 • First Sports Yell Company certification• First Tokyo Sports Promotion Company certification

GovernanceG

2011 • Established Compensation Committee
2015 • Established Nomination Committee• Formulated Corporate Governance Guidelines• Established Standards for Assessing the Independence of Independent Officers
2016 • Introduced Board of Director effectiveness evaluations
2018 • Revised rules to make an external director the chair of the Nomination
Committee and Compensation Committee and the majority of eachcommittee’s members

47 Heiwa Real Estate Integrated Report 2023

December• Endorsed the TCFD recommendations• Disclosed quantitative data based on TCFD
recommendations

December• Formulated the Heiwa Real Estate Human
Rights Policy• Formulated target ratios for female and midcareer hires (including foreigners)
January• Provided building to be demolished in
firefighting training
March• Formulated target ratios for utilization of malechildcare leave

FY2022

FY2023June• Selected for inclusion in:
FTSE Blossom Japan Sector Relative Index
FTSE Blossom Japan Index
MSCI Japan ESG Select Leaders Index
MSCI Japan Empowering Women (WIN) Select Index
All ESG indices managed by the Government Pension
Investment Fund (GPIF)May• Acquired SBT certifications
August• Caption by Hyatt Kabutocho Tokyo selected for the
Leading Projects Program for Sustainable Buildings for2022 (led by wooden structure)
October• Received GRESB four-star rating
December• First response to CDP climate change program(received a score of B)
January• KITOKI won the Grand Prize (Governor’s Prize) in the
Wood City TOKYO Model Architecture Award• Selected as an Environmentally Sustainable Enterprise at
the 4th ESG Finance Awards Japan

April• Selected for inclusion in
Morningstar Japan ex-REIT
Gender Diversity Tilt Index
newly adopted by the GPIFMarch
• Disclosed quantitative
data based on TCFD
recommendations
April• ORSUS Togoshiginza acquired
ZEH-M Oriented certification

April• Opened Edible KAYABAEN
October• Published the Declaration on Partnership Building
March• Certified as a Health & Productivity Management
Outstanding Organization for 2023 (White 500)

May
• Established an employee stock ownership plan
June
• Abolished takeover defense measures• Established Meeting for Independent External
Directors

2019 • Reduced term of office for directors, from two years to one year
• Introduced performance-linked stock compensation (medium- to long-term
incentive)

PICK UP

January• Acquired the highest rating of “S” in the
MUFG EG evaluation program OfficeFebruary• Executed a sustainability-linked loan
• Participated in the UN Global Compact
March• Non-financial data certified by a third party• First Sustainability Report publishedImproving External Assessments

E

Since the start of the medium-term management plan, we have
implemented various measures, including the utilization of renewableenergy in the properties we own, the acquisition of environmental
certifications, the formulation of various environmental KPIs andpolicies, and the provision of enhanced information disclosure.
As a result of these efforts, after an initial ratingof 2 Stars, which rose to 3 Stars in 2021, Heiwa Real
Estate received a 4 Star rating for the Standing
Investment Benchmark related to existing property
management in the 2022 GRESB Real Estate
Evaluation, a benchmark used to evaluate ESGrelated efforts in the real estate sector.

December• ESG-related risks added to list of risks to be
managed by the Risk Management Committee

Promoting Health Management

June• Transitioned to a Company with a Nominating
Committee, etc.
• Established structure with external directors
accounting for a majority of directors

GS

As Heiwa Real Estate believes employee mental and physical healthare important for the continuous growth of business and enhancementof corporate value, we are engaged in the promotion of healthmanagement. Having set health management KPIs, including target
ratios for paid holiday usage and health exams, and engaged in healthawareness and guidance activities for executives and employees,
our ranking in the Health and Productivity
Management Organization Certification System
improved from about 2,000 overall at the
beginning of the medium-term management
plan, to the 201–250 range in two years, andin 2023, we were certified for the first time as a
Health & Productivity Management Outstanding
Organization 2023 (White 500).

GTransitioned to a Company with a Nominating
Committee, etc.

As the enhancement of corporate governance is positioned as animportant business issue, up to now, we have made various efforts
to strengthen our governance structure, including the voluntaryestablishment of a Nomination Committee and Compensation
Committee, the appointing of at least one-third external directors, a
reduction in term of office for directors, and the introduction of stockbased compensation. To further strengthen corporate governance inlight of the business environment surrounding the Group, in 2022 wetransitioned to a Company with a Nominating
Committee, etc., establishing a structure suitable
for monitoring by a majority of external directors,
and promoting the substantial delegation ofbusiness execution to executive officers, thereby
enabling the flexible promotion of management.

Heiwa Real Estate Integrated Report 2023

48

Sustainable Organizational Management

Environment

The Company established a Sustainability Committee,
chaired by the President and CEO, comprising
executive officers, corporate officers and department
heads to facilitate the smooth implementation ofsustainability initiatives.
In monitoring the PDCA cycle of each sustainability
initiative, including those related to climate change andother environmental issues, and reporting importantdetails to the Board of Directors, the Sustainability
Committee acts as the main driver in increasing theeffectiveness of sustainable management.

Supervision

ReportBoard of Directors

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

Various departments
PM

PM

BM

BM

Environmental Supply Chain

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

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

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

GovernanceThe chief officer for climate-related issues is the Executive
Officer, President and CEO, who has the final decisionmaking authority regarding sustainability promotion,and the operating officer for climate-related issues is
the Officer in charge of Sustainability Promotion Office,Corporate Planning and General Affairs Department.
At Sustainability Committee meetings, the operating
officer for climate-related issues periodically reports
to the chief officer for climate-related issues regarding
assessments of specified climate change impacts,
management of risks and opportunities, the progressof efforts to adapt to and mitigate such impacts andrisks, and efforts to combat climate change, including
performance indicators and targets. All matters are
discussed and examined by members of the Sustainability
Committee, and on that basis, final decisions are made by
the chief officer for climate-related issues.

Strategy
As the potential range of outcomes of future events related to climate change is uncertain, Heiwa Real Estate factors this into
its business strategies. Specifically, we identify risks and opportunities under two scenarios, an increase in average global
temperatures of 1.5℃ and 4℃. An overview of each scenario analysis is shown in the table below. Based on the results ofthis analysis, we will promote initiatives that include the use of renewable energy, BCP measures, sustainable finance, andthe acquisition of environmental certifications to enhance the resilience of our business.
Scenario Analysis Results
Classification

Relevance to Company

Policy andlegal

Higher taxes on GHG emissions if acarbon tax program is adopted, andstricter energy conservation standards
for buildings

Transition risks

Promotion System

Physical risks

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

In recognition of the systemic financial risks associatedwith climate change, investors and other stakeholders are
calling for the disclosure of information on climate-relatedrisks and opportunities. Heiwa Real Estate announced its
endorsement of the TCFD in December 2021.
In line with TCFD final recommendations, we will
identify, assess, and manage climate-related risks andopportunities that could impact the Group’s business andenhance information disclosure accordingly, based on therecognition that improving the resilience of operations isessential for continuously and stably generating earnings
over the long term.

Opportunities

Basic Approach

Disclosure Based on TCFD Recommendations

Advancements and widespread
Technology adoption of technologies for reusing
and saving energy

Financial impact on Company• Increasing outlays for taxes or fines associatedwith building GHG emissions

TimingDegree of financial impact
1.5℃ scenario

4℃ scenario• Taxation of carbon-intensive building materials

Mediumterm–• Increasing costs for adopting new technologies
for building facilities

Mediumterm–• Increasing outlays for related retrofitting costs

MarketHigher prices of services from relevant
suppliers amid growing need todecarbonize• Increasing costs for developing and constructing
low-carbon buildings, including net zero energy
buildings and houses

Mediumterm–

Reputation

Changing demand from building
tenants and occupants based on theirpreferences for buildings equipped tocombat climate change and avoidanceof buildings that are not• Decreasing leasing income if measures todecarbonize are slow, due to difficulty inattracting new tenants and occupants as well as
lower retention rate

Shortterm

–

Acute

Damage to properties caused by• Increasing repair costs and decreasing
violent winds from typhoons oroperational efficiency of buildings
flooding inside buildings from torrential
rains or overflowing rivers

Mediumterm

Chronic

Growing demand for air conditioning• Increasing costs for operating, maintaining, anddue to increasing numbers of extremely
upgrading air conditioning systems
hot and cold days

Mediumterm

Resource
efficiency

Reduced energy consumption due toinstallation of more efficient facilities• Reduced maintenance and operating costs
resulting from improved energy-saving
performance

Shortterm

Products
andservices

Greater ability to attract building
tenants, occupants, and users throughmore environmentally friendly anddisaster-prepared facilities and services• Increased leasing revenue and opportunities
to attract tenants with buildings that have beendifferentiated in terms of superior environmental
performance and business continuity plans

Mediumterm

Markets

Growing numbers of environmentallyaware investors and banks that
integrate climate-related factors infinancing decisions• Lower borrowing costs from loans secured
through green financing initiatives

Shortterm–

Notes: 1. Short-term refers to a period spanning up to three years, medium-term refers to a period of four to 10 years, and long-term refers to over 10 years.
2. Arrows shown in bold represent financial impacts spanning ¥500–¥1,500 million, arrows shown without bold represent financial impacts between ¥0 and ¥499 million, anda dash represents no financial impacts.
3. The degree of financial impacts assumes a medium-term period up to 2030

49 Heiwa Real Estate Integrated Report 2023

Heiwa Real Estate Integrated Report 2023

50

Sustainable Organizational Management

Environment

Risk Management
Each year, the operating officer responsible for executing
climate-related initiatives assembles a working group
comprising members in charge of relevant departments to
identify and assess climate-related risks that could impact
the Company. Climate-related risks identified in working
group analyses are based on the following framework.
The Company’s businesses could be impacted by(1) Transition risks socioeconomic trends associated with the transition
to low- and zero-carbon societies(a) Policy andlegal risks

Risks associated with stricter regulations in line withthe policy-based promotion of decarbonization(b) Technology
risks

Risks associated with the development andmainstreaming of new low-carbon anddecarbonization technologies(c) Market risks

Risks associated with market fluctuations, such asenergy price volatility and changes in demand forservices(d) Reputation
risks

Risks associated with being viewed negatively bystakeholders, including building tenants, local
residents, employees, and investors.

(2) Physical risks

The Company’s businesses could be impacted bychanges in traditional climate patterns and othermeteorological phenomena due to ongoingclimate change.

(a) Acutephysical risks

Risks associated with typhoons, floods, and otherevents(b) Chronic
Risks associated with prolonged high or low
physical risks temperatures, and long-term shifts in climate patterns.

Indicators and Targets
To mitigate climate-related risks and realize opportunities,
we established key performance indicators (KPIs) andare in the process of setting and monitoring targets. The
progress of various initiatives and KPIs are reported to
the Sustainability Committee at least once annually by theofficer responsible for executing climate-elated initiatives
and measures. Targets and performance trends related to
GHG emissions, defined as a KPI, are as shown below. In
addition, Heiwa Real Estate has obtained SBT certification(1.5°C level) for our GHG emission volume reduction
targets from the Science Based Target (SBT) Initiative,
which encourages the setting of science-based reduction
targets to achieve the Paris Agreement, an internationalframework for reducing greenhouse gas emissions.
GHG Emissions Reduction Target
Greenhouse gas emissions volume reduction target

50% reduction in emissions(vs. FY2018) by FY2030(t-CO2)32,000(t-CO2)32,00024,000(kg-CO2/m2)

30,23030,439

68.3

66.5

90

28,33075

23,57660.0

16,00027,23060

47.6

27,25525,306

20,5648,000

15,14027.6
12,431

0

2,999

3,183

3,023

3,011

2018

2019

2020

2021

-50%

16,0000FY201851 Heiwa Real Estate Integrated Report 2023

Target (FY2030)

30

15

0
(FY)

GHG emissions (Scope 1) (Left scale)

GHG emissions (Scope 2 ) (Left scale)
GHG emissions (per unit) (Right scale)Notes 1. Prior to FY2021, the scope of calculation is the real estate portfolio held by
the Group (excluding buildings designated to be sold and jointly ownedbuildings of which the Company has an ownership share of less than 25%).
In FY2022, the scope of calculation is the real estate portfolio held by theGroup (excluding inventories).
2. Figures with check marks have been verified by third-party organizations.

Specific Initiatives
Reducing Environmental Impacts
In recent years, there have been increasing demands forenvironmental performance in buildings due to the hugeamount of energy required for their operation. Heiwa
Real Estate also considers environmental impacts whenconstructing and renovating buildings.
Examples of Various Building Initiatives
Tokyo Stock Exchange Building• Used electricity and air conditioning controls(introduction of building management system) toconserve energy• Reduced heat loads by operational controls using totalheat exchangers and the control of outside air cooling• Reduced motor energy consumption with variable air
volume controls using inverters• Controlled waste heat recovery with heat-recovery
turbo freezers, etc.

Utilizing Renewable Energy
From May 2021, electricity used at owned properties,
including the Nisshokan Building, which houses
the Company’s head office (Chuo-ku, Tokyo), were
gradually switched to electricity derived from renewableenergy sources. This is expected to result in the use of
approximately 20 GWh of renewable energy per year anda reduction in CO2 emissions equivalent to approximately
9,000 tons per year.
Green Lease
Heiwa Real Estate engages in efforts that benefit building
owners and tenants alike based on tenant collaborationsand voluntary arrangements in the form of contracts,
memorandums of understanding, and other agreements
related to environmental impact reductions and workplaceenvironment improvements through energy conservationand other initiatives conducted at owned properties.

Development
and deepening ofrelationship between
building owner andtenants• Saved energy through electricity and air conditioning
controls (introduction of building management
system), etc.
• Used exterior blind system and auto-adjusting blinds• Used double-pane low-emissivity glass, etc.

KABUTO ONE

Reduction ofmaintenance andmanagement costs

Sustainable Finance
The Group procures funds through assessment loans andsustainability-linked loans (SLLs) to further strengthen
our commitment to sustainable management. The SLL
sustainability performance target and total loan amount are
shown below. Additionally, we received the highest ratingof “S” as an industry-leading ESG management company in
the MUFG ESG Evaluation, and concluded an assessment
loan agreement with the Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sustainability performance target (SPT)

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

Total loan amount¥18.6 billion(as of March 2023)

Reduction ofheating andlighting costs
Improvementof workplaceenvironment

Improvementof health ofand comfort forofﬁce workers

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

Enhancement ofreal estate value

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

Initiative Targets and Results

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

Osaka Securities Exchange Building• Used renewable energy (installation of solar panels)• Used energy-efficient systems (LED lighting andcontrols, use of high-efficiency devices)• Mitigated heat island effect (greenery covering 40%),
etc.

8,000

45

2,709

2022

CentRise Sakae

30,23024,000GHG Emissions and GHG Emissions per Square Meter

Reduction water usage

Targets
Results

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

0.77m /m
3

2 (annualized, FY2022)

Specific Initiatives
Building Operation Initiatives
The Group conducts various initiatives aimed at theeffective use of water resources, including the installationof rainwater storage tanks in newly developed buildings

for everyday usage and the effective use of well water.
We are also working to reduce the amount of water used
at existing properties by gradually promoting renovation
work facilitating the conversion to water-saving equipment.

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

KABUTO ONE• Installation of equipment including rainwater storage
tanks to use rainwater for daily facility use, etc.

CentRise SAKAE• Effective use of rainwater and well water, among otherefforts, etc.

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

Heiwa Real Estate Integrated Report 2023

52

Sustainable Organizational Management

Environment

Pollution Initiatives

Ratings from Outside Bodies

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

Specific Initiatives• Asbestos countermeasures

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

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

We also conduct periodic surveys on the amount ofchlorofluorocarbon (CFC) emissions at each property inan effort to reduce pollutants within business activities.

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

Waste Emissions* Reduction

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

2.79kg/m

2 (FY2021)

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

Specific Initiatives

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

The 10-floor retail and office building adopt a hybrid
structure that includes three-floor mega-structures
made using SRC frames, with each floor within themega-structures made of wood. This is the first project
for the Company to adopt such a hybrid structure. The
combination of SRC mega-structures with fire-resistantwooden structures has been praised for opening up
new possibilities in terms of methods and benefits ofutilizing wood in high-rise buildings, and for prolonging
the life of the buildings in practical usage terms. . For theouter premises, the Company plans to install benches
made of wood from a Tokyo Stock Exchange (TSE) Listing
Forest located in northeastern Japan based on a social
contribution program being run by Japan Exchange Group,
Inc. (JPX). The wood is called “Kablocks,” which can beused in a multitude of applications, and will be processed
into benches. There are high hopes thatthe hybrid structure will provide a senseof warmth unique to wood for workers,
visitors and people living nearby, while
adding a touch of tranquility to the area.
We have already acquired a certificate forcarbon dioxide fixation promoting the useof wood produced in Akita Prefecture.

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

Environmental Compliance
The Group maintains compliance withenvironment-related laws and regulations. There
were no violations of environment-related laws andregulations or environmental accidents in FY2022.

53 Heiwa Real Estate Integrated Report 2023

KABUTO ONETokyo Stock Exchange
Building

Osaka Securities
Exchange Building

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

Results

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

DBJ Green Building Certification• Appropriate Handling ofChlorofluorocarbons

Waste and Resource Usage Initiatives

Targets

Acquisition of Environmental Certification

Item

Unit

FY2020 FY2021 FY2022

Violations of environmental laws and regulations Cases

00

Environmental accidents

Cases

0

0

0
0

Environment-related fines

Cases

0

0

0

CentRise Sakae
CASBEE-Real
Estate Rank S

Ichibancho Heiwa Kabutocho Heiwa
Building
Building No. 1
CASBEE-Real
Estate Rank S

CASBEE-Real
Estate Rank S

Tenjin Heiwa
Building
CASBEE-Real
Estate Rank A

Nisshokan Building

KITOKI

Heiwa Real Estate
Nagoya Fushimi
Building

Kayabacho
Kabutocho Heiwa Kayabacho Broad Shimbashi Square
1-Chome Heiwa
Building No.
SquareBuilding
Building
CASBEE-Real
Estate Rank S

CASBEE-Real
Estate Rank S

CASBEE-Real
Estate Rank A

CASBEE-Real
Estate Rank A

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

GRESB Real Estate Assessment
In the GRESB Real Estate Assessment, which is thebenchmark for assessing ESG initiatives in the real estate
sector, Heiwa Real Estate acquired a 4 Star rating (3 Star in
FY2021) under the “Standing Investments Benchmark” forthe operation of existing properties, and a 3 Star rating (also
3 Star in FY2021) under the “Development Benchmark”
related to new developments and majorrenovations. We also received the GreenStar designation for the second year in a row,which is awarded to companies that excel
in terms of management systems and theimplementation and measurement of policies.

CDP

In 2022, Heiwa Real Estate participated for the first time inthe climate change program established by the Carbon
Disclosure Project (CDP), an international non-profit
organization that assesses climate change-related disclosure.
The Group received a score of “B” in the assessment.
CDP is a non-profit organization that supports
institutional investors and major purchasers around theworld that are highly concerned about the environment,
calling on corporations and governments to promote
initiatives and disclose information on climate change,
water resource protection, forest conservation andother environmental issues. In 2022, more than 680
institutional investors with more than 130 trillion dollars
in assets and 280 major purchasers with 6.4 trillion

dollars in procurement spending requested data on
environmental impacts, risks, and opportunities throughthe CDP platform, with a record
number of approximately 18,700
companies responding.

ESG Finance Award Japan
Heiwa Real Estate was selected for inclusion in theEnvironmentally Sustainable Enterprise Category at the 4th
ESG Finance Awards Japan, organized by the Ministry of
the Environment.
The ESG Finance Awards Japan are designed tofurther promote and expand ESG finance by recognizing
institutional investors, financial institutions, brokerages,
companies, and other organizations that have proactively
engaged in ESG finance or environmental and social
projects and have made an impact, aimed at sharing thesepioneering efforts with wider society.
The Environmentally Sustainable Enterprise category
was established to provide investors and corporations
with concrete examples of enterprises incorporating
significant environmental opportunities and risks into
their management strategies to enhance corporate value,leading to both positive effects on the environment andenhancement of corporate value.
Companies, including Heiwa Real
Estate, that meet certain standards
are selected as Environmentally
Sustainable Enterprises.

Heiwa Real Estate Integrated Report 2023

54

Sustainable Organizational Management

Society
Human Resource Management

Health and Safety

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

Human Resource Development Structure
Heiwa Real Estate has a job rotation system enabling employees to gain experience in a number of departments during theirfirst 10 years at the Company, while also using on-the-job training (OJT) and other methods to instill real estate knowledge,
motivate employees to contribute to the organization and assess their own aptitude.

Manager training

Mid-career
employees

Pre-manager training

Early-career
employees

Mid-career employee
training
Early-career employee
training

University city campus
course system

Leader training

New employee training

Fundamental realestate training
Computer skills
IT literacy
Financial accounting

Job rotationNew
employees

Qualiﬁcation acquisition support

OJT

Managers

Rank-speciﬁc training
Management training

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

55 Heiwa Real Estate Integrated Report 2023

Short-term overseas
training program andEnglish language
training

Rank

Real estate transaction agent
First-class architect
Urban renewal planner
ARES-certiﬁed master
Certiﬁed building administrator
Real estate appraiser
Real estate consulting master
Other

Self-development support

System for incentivizing
employees to obtain
qualiﬁcations themselves

Support for self-development(conversational English)
e-Learning

External seminars

Note: Employees are generally expected toacquire two or more qualiﬁcations before
promotion to managerial positions.

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

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

self-development and support their personal growth anddevelopment of specializations.

Short-Term Overseas Training Program and English
Training Program
We offer a short-term overseas training program where
employees are dispatched for around three months, aswell as an English training program where employees
attend an English conversation school for three months.
These programs are intended to develop global humanresources through the improvement of language skills
and acquisition of communication skills, while providing
experience in overseas cross-cultural environments andthe creation of personal networks at the companies where
employees are dispatched.
Basic Lifesaving Training
Since FY2020, Heiwa Real Estate has provided all employeeswith basic lifesaving training, including the use of AEDs.
Basic Lifesaving
Training

Numerical
targets
100%

TargetFY2020 FY2021 FY2022
year
Annually until
100% 100% 100%
FY2030Industrial
physicians

HealthCommittee

Health Management Initiatives

Targets and Results Associated with Efforts to Improve
Health Issues
FY2022

Numerical targets(FY2023)

Annual health checks

100%

100%*1

Cancer screenings

100%

100%*1

Paid holiday usage

80.1%

At least 70%*1

Stress checks

100%

100%*1

Cigarette smokers

17.5%

10% or less

Regular exercise

44.3%

At least 50%

Employees getting
sufficient sleep and abalanced diet

69.1%

At least 80%

Appropriate body weight

62.7%

At least 70%

Employees leaving work
due to injury or illness

Item
Medium-term
management
plan KPIs

Healthmanagement
KPIs

0 people0 people

Employees missing work
0 peopledue to injury or illness

0 people

Highly stressed
employees

5% or less

1.8%Work Engagement Statu*

2

Employee Skills Development Training
Time spent and expenses incurred with regard to
employee skills development training were as follows.
Item

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

Work-related deaths

FY20201,186

FY2021

1,124

FY2022
1,514

11.6

12.4

15.8

3,274,342 8,473,780 6,536,880
32,101

93,11868,093

Health insurance
associations

80.4%

90%

0 people0 people*1

Efforts to promote health• Participation in RIZAP health seminars• Support for extracurricular activities• Smoking countermeasures and cessation support• Online seminars on women‘s health issues• Online seminars for improved eating habits
Prevention and early detection of health problems• Stress check implementation• e-learning, and other education related to diet, sleep,
lifestyle habits and mental health• Sleep and mindfulness yoga seminars• Cancer seminars, cancer screening cost burdens
Creating a Comfortable Working Environment
Our head office (Nisshokan)
has a multipurpose lounge
for breaktime, lunch, internal
meetings, and regular business.
The lounge also includes healthequipment to promote the healthof all officers and employees.
Investment in Health Management Measures
Item

FY2022

Medical and health-related expenses(per employee)

60,055 yen

Rating from Outside Bodies
Heiwa Real Estate has been recognized as a CertifiedHealth & Productivity Management Outstanding
Organization for 2023 (White 500) in the large enterprise
category by the Ministry of Economy, Trade and Industry
and the Nippon Kenko Kaigi (Japan Health Conference).
We were also certified as a Sports Yell Company in2023 by the Japan Sports Agency and as a Tokyo Sports
Promotion Company in 2022 by the Tokyo metropolitan
government for our efforts to support and promote our
employees’ sports activities.

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

Critical Issues Related to Employee Health• Prevention and early detection of lifestyle-related diseases• Prevention and early detection of mental health problems• Work environment improvements

Heiwa Real Estate Integrated Report 2023

56

Sustainable Organizational Management

Society

Achieving Diverse Workstyles

Strengthening Relationships with Customers and Communities

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

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

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

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

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

Major Initiatives
Contributing to the Global Financial City: Tokyo Vision• Developing five FinGATE, office spaces for independent
asset management companies and financial venturefirms, with 64 companies in occupancy (March 2023)• Established The Consortium for Japan International
Asset Management Center Promotion (JIAM)• Opened KABUTO ONE (August 2021)
Initiatives for Developing Diverse Districts• HOTEL K5 was included in MICHELIN Guide Tokyo 2021
• Opened new commercial complexes BANK and Keshiki• Creating a bustling district with the strategic attractionof commercial stores• Third consecutive award for Nihonbashi Kabutocho
revitalization efforts• Held “LIVING GREEN FES,” and interactive event
facilitating enjoyment of the green lifestyle• Held “Kabutocho Night Market”, a walking event
enlivening the Nihonbashi Kabutocho area
• Held Tokyo Stock Exchange Jazz event “Jazz EMP@
Tokyo Financial Street 2022” at TSE Arrows• Donated trees and plants to Sakamotocho Park in
Nihonbashi Kabutocho• Provided building to be demolished in firefighting
training by the Tokyo Fire Department• Exhibition of the Red Stone from Sado in connection
with Old Eiichi Shibusawa• Operation of CAFE SALVADOR BUSINESS SALON, an
information source for local communities• Operation of the Nihonbashi Kabutocho andKayabacho community website "Kabuto Live!"• Special sponsorship of the Hokkaido Marathon 2023
• Donations to the World Aquatics Championships Fukuoka 2023
• Projection of educational videos on The HEART incooperation with local police and fire departments• Provision of classes at Sakamoto Elementary School in
conjunction with Edible KAYABAEN

KPIs and Track Record Related to Human Resources*
Item

Numeric target

FY2018FY2019FY2020

FY2021

FY202150.0%

Female new hires

At least 30%

33.3%

50.0%

100%

33.3%

Female employees

–

26.8%

28.3%

31.3%

35.2%

35.4%

Female managers

At least 10% (by FY2025)

5.1%

4.7%

5.0%

5.3%

10.8%

Male employees taking childcare leave

–

–

–

–

–

75.0%

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

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

Major Initiatives• Promulgating corporate policy on labor standards• Promoting employment of people with disadvantages
such as a lack of formal education or qualifications anda vulnerable social status, initiatives aimed at addressing
youth unemployment and the provision of apprenticeshipand internship opportunities• Conducting labor issue risk assessments• Increasing labor force diversity without regard to race,

57 Heiwa Real Estate Integrated Report 2023

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

Class provided at Sakamoto Elementary School

BANK

KeshikiInitiatives to Develop Sustainable Districts• Construction of wooden hybrid building KITOKI wascompleted and received the following awards for opening
up new possibilities for the use of wood in urban areas– Grand Prize (Governor's Prize) in the Wood City TOKYO
Model Architecture Award in 2023
– Wood Design Award 2022 Honorable Mention (Jury
Chairman Award)– Good Facilities Using Wood Competition 2022 – Award
for Excellence– Good Design Award 2022
• Edible KAYABAEN project promotion
In recognition of our urban farming initiative providing
participants with knowledge and food, we received the“Excellence Award” in the Urban Space Category at the
3rd Green Infrastructure Awards
Initiatives to Strengthen Relationships in Communities
where Heiwa Real Estate Operates• Participation in the Sanno Festival• Cleanup events in Nihonbashi Kabutocho• Trees donated to Chuo Ward for lining streets in
Nihonbashi Kayabacho

Maintaining and Improving the Quality of Office
Building Operations• Conducting customer satisfaction (CS) questionnaire
surveys• First aid certificate obtained by all officers andemployees (set as a KPI)
• Disaster preparation and BCP measures• Holding gatherings for tenants• Ensuring earthquake
resistance of buildings inoperation• Conducted drills at KABUTO
ONE to assist people unable
to return home when adisaster occurs

Training to assist people unable toreturn home

PICK UPSpecial sponsorship of the Hokkaido Marathon 2023

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

Heiwa Real Estate Integrated Report 2023

58

Sustainable Organizational Management

Sustainable Organizational Management

Risk Management

Compliance
Basic Approach

Basic Approach

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

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

Risk Management System

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

Schematic Diagram of the Risk Management System

We also manage the following risks, with critical mattersreported to the Board of Directors for the deliberationof responses.

1. No growth that compromises trust• Real estate investment risks

2. Stamping out misconduct

Before discussion by the Board of Directors, theInvestment Risk Working Group analyzes risks associatedwith property purchases or sales and reports findings to
the Managing Officers’ Meeting• Business Continuity Plan (BCP)
In an effort to mitigate the risk of a Company crisis inemergency situations, we created a manual and conduct
regular inspections based on our BCP.

Board of Directors
Reports

Manages and supervises

Risk Management Committee
Reports

Manages and supervises

Departments, Branches, Group Companies

Risk identiﬁcation
Risk analysis
Risk assessment
Risk response

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

59 Heiwa Real Estate Integrated Report 2023

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

Information Security

Determination of policies
Monitoring and Reviews

Dialogues and consultations

Risk Management Process

Legal Reserves for Litigation Including Legal
Violations and ESG Problems

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

Announcement on Stamping Out Misconduct and Strengthening Compliance

Enacted December 2019

The Company's officers and employees shall constantly be aware that stakeholder trust is the platform for, anddriver of, growth. These agents of the Company shall work to improve mindsets in order to regain that trust.
The Company's officers and employees shall carry out their duties in accordance with the highest ethicalprinciples and good sense, and stamp out misconduct by pledging to not engage or become involved in any
wrongdoings, with a clear distinction between personal interests and company interests.

3. Strengthening compliance further

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

Compliance System

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

Note: Please refer to Risk Management System on page 59.

Prevention of Corruption and Bribery

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

Compliance Hotline

In addition to establishing an internal reporting system(compliance hotline) based on Internal Reporting Regulations
that facilitates the reporting of information pertaining to illegal
or inappropriate behavior, the basic policy for establishingan internal control system includes provisions related to thecreation of an internal reporting system, which has been
approved by the Board of Directors.

The status of internal control system development, including
the internal reporting system, is reported to the Board of
Directors, which then engages in ongoing supervision.
The Company's internal reporting system designates pointsof contact that include attorneys who are independent frommanagement, the General Manager of the Internal Audit
Department, and full-time Audit Committee members.
The Internal Reporting Regulations include provisions toprohibit the disadvantageous treatment of whistleblowers,
and a system is in place to ensure that individuals providing
information remain confidential and are not subject todisadvantageous treatment.
In addition to the internal reporting system, the General
Affairs Department has established an internal consultation
service that provides consultation on a wide range of subjects.
Further, we established External Reporting Regulations
and have a system in place to receive reports from business
partners pertaining to compliance-related matters involving
Heiwa Real Estate officers and employees, with the Company's
legal counsel or the General Manager of the Internal Audit
Department as points of contact.

Compliance Training

The Group regularly conducts compliance training to enhancecompliance awareness among officers and employees. We
also promulgate compliance awareness through Companywide simultaneous compliance inspections, information
security and other efforts, and disseminate the results of these
inspections throughout the Group.

Combating Anti-Social Forces

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

Heiwa Real Estate Integrated Report 2023

60

Sustainable Organizational Management

Corporate Governance
Board of Directors

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

Established Sustainability Committee

Established Meeting for
Independent External Directors

SystemTransitioned toa Company witha Nominating
Committee, etc.

Established Compensation Committee
Established Nomination Committee
2011

2015

2016

2017

2018

2020

2021

2022

Established an employee stock
ownership plan

Introduced Board of
Director effectivenessevaluations

Regulations/
Systems

2019

Established Corporate Governance
Guidelines
Established Standards for Assessing theIndependence of Independent Officers

Reduced term of office for directors, from two years to one year
Introduced performance-linked stock compensation (mediumto long-term incentive)
Amended rules to make an external director the chair of
the Nomination Committee and Compensation Committee
and the majority of each committee’s members

Corporate Governance System
As of June 23, 2023

Transition to a Company with a Nominating Committee, etc.

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

(2 external directors, 1 internal director)

Cooperation

Audit

Cooperation

Election/Dismissal

Independent auditors(Auditing ﬁrm)

Audit Committee

External director

5/9

members

55.6%
Internal directors
Four member

NameInternal Audit
Department

Audit Committee
Ofﬁce

Report, 4 internal directors
Delegation/supervision ofbusiness execution authority

Audit(5 external directors

Cooperation

External directors
Five members

Election/Dismissal

Board of Directors

Audit

External directors Female directors
Female directors
One member

Non-executive directors
Six members

1/9

6/9

members

members

11.1%

66.7%
Directors serving as
managing ofﬁcers
Three members

Male directors

Eight members)

Attendance/
meetings held

Name

Attendance/
meetings held

Kiyoyuki Tsuchimoto 11/11 times (100%)

Kiichiro Masui

11/11 times (100%)

Kazuo Yamada

11/11 times (100%)

Takahiro Moriguchi

11/11 times (100%)

Takahisa Aoyama

9/9 times (100%)*

Junko Utsunomiya

11/11 times (100%)

Daisuke Kobayashi

9/9 times (100%)*

Eiji Yamada

8/9 times (88.9%)*

Audit Committee

Nominating Committee(3 external directors, 1 internal director)

Compensation Committee(2 external directors,1 internal director)

Note: Appointed at the Ordinary General Shareholders' Meeting held on June 24,2022; attendance since assuming office is shown.

Nominating Committee

Committee meeting attendanceElection/Dismissal

Representative executive ofﬁcer,
president and CEO

Management Conference
Sustainability Committee
Risk Management Committee(5executive ofﬁcers)

Various departments

Administration

Group companies

ChairmanExternal directors

Internal director

Name

Attendance/
meetings held

Kiichiro Masui

3/3 times (100%)

Takahiro Moriguchi

3/3 times (100%)

Junko Utsunomiya

3/3 times (100%)

Kiyoyuki Tsuchimoto 3/3 times (100%)

The Nominating Committee shall comprise three or moremembers selected by the Board of Directors and chairedby an external director from the standpoint of ensuring
independence and objectivity.
The Committee is responsible for determining
the content of proposals submitted to the General

Committee meeting attendance
Name

External directors

Attendance/
meetings held

Mitsunobu Yamaguch 9/9 times (100%)

ChairmanInternal director

Junko Utsunomiya

9/9 times (100%)

Daisuke Kobayashi

9/9 times (100%)

The Audit Committee shall consist of at least threemembers selected by the Board of Directors and chairedby an external director to ensure independence andobjectivity. Committee members are also selected fromperspective of strengthening the audit function.
The Committee audits the execution of duties bydirectors and executive officers, prepares audit reports,
and determines the content of proposals concerning
the appointment, dismissal and non-reappointment of
independent auditors.
The Audit Committee met a total of nine times during
FY2023, and based on auditing policy, examined risks
and issues in three areas, priority auditing items, regular
auditing items, and independent auditing, and conducted
auditing activities in conjunction with the Internal Control
Department and Internal Audit Department.

Compensation Committee
Committee meeting attendance

Mitsunobu Yamaguchi 9/9 times (100%)*

Meeting of Executive Ofﬁcers

Internal audit

Non-executive
directors

Board of Directors Meeting Attendance

General Shareholders’ Meeting
Election/Dismissal

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

Shareholders’ Meeting regarding the appointment anddismissal of directors, as well as formulating the criteria for
director appointment and dismissal.
The Committee, in consultation with the Board of
Directors and the executive officer, president and CEO,reports its opinions on the appointment and dismissal of
executive officers and matters related to Representative
Director and President succession planning.
The Company discloses reasons for appointing or
dismissing individual directors and statutory officers, andfor nominating individual candidates for director positions.
The Nominating Committee met a total of three times
in FY2023, determining details of proposals related todirector appointments and deliberating executive officer
appointments and President and CEO succession plans.

ChairmanExternal directors

Internal director

Name

Attendance/
meetings held

Takahiro Moriguchi

3/3 times (100%)

Eiji Yamada

3/3 times (100%)

Kiyoyuki Tsuchimoto 3/3 times (100%)

The Compensation Committee shall consist of at least
three members selected by the Board of Directors andchaired by an external director to ensure independence
and objectivity.
The Compensation Committee determines policies
relating to decisions on the amount of individualcompensation for directors and executive officers, andalso determines the amount of individual compensation
for directors and executive officers.
The Compensation Committee met a total of threetimes during FY2023 to discuss compensation andbonuses for directors and executive officers, as well as
revisions to policies on individual director and otherofficer compensation and stock compensation rules.

Internal director

61 Heiwa Real Estate Integrated Report 2023

Heiwa Real Estate Integrated Report 2023

62

Sustainable Organizational Management

Corporate Governance

Executive Committee

Management Conference
The Management Conference is chaired by the President
and CEO and composed of titled executive officers.
The conference discusses the direction of Company
management strategies and other matters.

The Executive Committee is composed of five executive
officers, with the Executive Officer, President and CEO
managing proceedings. In addition to executing criticaloperations, the Committee deliberates in advance mattersto be submitted to the Board of Directors.

Risk Management Committee

Sustainability Committee

The Risk Management Committee, is chaired by the
President and CEO as the chief risk management officer
and composed of directors, managing officers and heads ofdepartments. It was established to ascertain overall Grouprisks and manage risks appropriately when they manifest.

The Sustainability Committee is chaired by the President
and CEO and composed of executive officers, corporate
officers, and department heads to facilitate the smooth
implementation of sustainability initiatives.
The committee monitors the PDCA cycle with regard
to sustainability measures to improve the effectiveness ofsustainability management.

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

6 years

Kazuo Yamada

12 years

Takahisa Aoyama

1 yearDaisuke Kobayashi

1 yearKiichiro Masui

External, independent

6 years

Takahiro Moriguchi

External, independent

3 years

Junko Utsunomiya

External, independent

3 years

Eiji Yamada

External, independent

1 yearMitsunobu Yamaguchi External, independent

1 yearCommittee chair

Corporate
management

Financial affairs
and accounting

Legal affairs

International
Finance and Planningbusiness experience securities and sales

DX and IT

Nomination

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

• Compensation for directors (excluding directors concurrently
serving as executive officers) and executive officers speciallyappointed to manage the Audit Committee secretariat shall,in light of their role, consist only of basic compensation.
In addition, Group corporate officer compensation shallfollow the compensation system of the Group company forwhich they are responsible for business execution, with only
basic compensation provided by the parent company.

Basic Compensation• Basic compensation shall be fixed-amount compensation
provided monthly.

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

Independent
officer(1) Provide motivation to improve business performanceand enhance corporate value in the medium andlong term;(2) Seek shared value with shareholders;(3) Establish standards and systems contributing to theretention of talented human resources; and(4) Maintain a decision-making process with sufficienttransparency and impartiality.

• Basic compensation shall be determined based oncomprehensive consideration for the significance of roles andthe scope of responsibility for each position.

Reasons for Appointment of External Directors
Name

Basic Policy• Officer compensation shall be composed of fixed-amountcompensation as basic compensation, bonuses as short-term
incentives, and the performance-linked stock compensation
plan as a medium- to long-term incentive.

Director Composition and Skills Matrix

Director

Director and Officer Compensation

Reasons for appointment

Kiichiro
Masui

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

TakahiroMoriguchi

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

Junko
Utsunomiya

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

Eiji Yamada

Mr. Yamada has abundant experience and deep insight in the fields of data communications and systems development, and plays anappropriate role in advising management and supervising business execution. In addition, as a member of the Compensation Committee,
he provides objective and neutral opinions regarding director and officer compensation and related issues at committee meetings.
Mr. Yamada was appointed as an external director based on the expectation that he will increase the efficacy of Board of Director andcommittee meetings and continue contributing to the medium- to long-term enhancement of corporate value as an external director
going forward.

Mitsunobu
Yamaguchi

Mr. Yamaguchi possesses a high degree of expertise as a certified public accountant and extensive experience in the fields of financial
accounting and auditing. In addition to international business experience, he plays an appropriate role in advising management andsupervising business execution. Further, as chairman of the Audit Committee, he appropriately audits the execution of business operations
from an independent standpoint.

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

• Bonuses shall be calculated by multiplying the standard
amount corresponding to position by a coefficientcorresponding to the results for net income attributable toowners of parent, and then adding an amount obtained bymultiplying the monthly fixed-amount compensation forthat position by a coefficient corresponding to individual
and an amount calculated by multiplying monthly fixedcompensation for that position by a coefficient corresponding
to ESG evaluations. The coefficient for net income attributableto owners of parent shall be a variable determined within
the range of 0% to 150%, the coefficient for individual
evaluations shall be a variable determined within the range
of 0% to 100%, and the coefficient for ESG evaluations shallbe a variable determined within the range of -20% to 20%.
However, representative executive officer, president andCEO compensation is not based on personal evaluations andassociated monthly fixed-amount compensation.

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

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

Standards for Calculating Performance-linked
Stock Compensation• The evaluation indices for the performance-linked portion
shall be consolidated operating income, which is a concise
indication of the earning power of the core business,and total shareholder return (TSR), which indicates thereturn provided to shareholders as a result of increased
corporate value, from the viewpoint of improving businessperformance over the medium to long term.
• Stock compensation for the performance-linked portion
shall be a variable determined within the range of 0% to
150%, corresponding to the achievement of performancetargets for consolidated operating income and acomparative assessment of the stock price index for TSR.
Details shall be prescribed in stock compensation rules
established by Board of Directors resolution.

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

Fixed-amountcompensation

Bonus

Basic compensation Short-term incentive
55%–60%25%–30%

Performance-linked
stock compensation
Medium- tolong-term incentive
15%–20%• With regard to director compensation (excluding executive
officers concurrently serving as directors), the Company
has no policy regarding the determination of monetarycompensation, performance-linked compensation, or
non-monetary compensation amounts as a percentage ofindividual compensation.

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

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

63 Heiwa Real Estate Integrated Report 2023

Heiwa Real Estate Integrated Report 2023

64

Corporate GovernanceTotal Amount of Compensation by Officer Category, Type of Compensation and Number of Eligible
Directors and Managing Officers (FY2022)
Basic compensation

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

Persons
eligible

Directors (including external directors)

93 (39)93 (39)––12 (6)

Statutory auditors(including external statutory auditors)

14 (9)

14 (9)

–

–

4 (3)

Managing officers

273

128

112

32

6

Notes: 1. In accordance with a resolution at the 102nd General Shareholders’ Meeting held on June 24, 2022, Heiwa Real Estate transitioned from a Company with an Audit & Supervisory Board,
to a Company with a Nominating Committee, etc. Regarding the three persons concurrently serving as Executive Officers after the transition, pre-transition compensation is shown under“Directors,” and post-transition compensation under “Executive Officers.” The number of Directors and compensation do not include one of the three persons concurrently serving as posttransition Executive Officers who was simultaneously appointed Executive Officer and Director with the transition, and therefore received no compensation prior to the transition. The table
includes four Directors who retired at the conclusion of the 102nd General Shareholders’ Meeting held on June 24, 2022. Further, the amount of compensation for Directors prior to thetransition was determined by resolution at the 88th General Shareholders’ Meeting held on June 26, 2008, to be within ¥250 million per year (the amount of remuneration for Directors does
not include the employee salaries of Directors who serve concurrently as employees), and the amount of compensation for External Directors was set to be within ¥40 million per year byresolution at the 98th Ordinary General Shareholders’ Meeting held on June 26, 2018.
2. In accordance with the transition to a Company with a Nominating Committee, etc., four Statutory Auditors retired at the conclusion of the 102nd General Shareholders’ Meeting held on June24, 2022. Compensation for Statutory Auditors covers the period between April 1–June 24, 2022. The pre-transition compensation for Statutory Auditors was set to be within ¥70 million peryear by a resolution at the 98th General Shareholders’ Meeting held on June 26, 2018 (applicable to four Statutory Auditors when the resolution was approved).
3. Compensation for Executive Officers is applicable to the tenure (June 24, 2022–March 31, 2023) of six Executive Officers appointed after the transition to a Company with a Nominating
Committee, etc. Regarding the three persons concurrently serving as Directors after the transition, pre-transition compensation is shown under “Directors,” and post-transition compensation
under “Executive Officers.”

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

Briefing Sessions for Institutional and Individual
Investors

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

Disclosure Policy

The Company maintains a support system, including
financial assistance, enabling directors to undergoexternal training as appropriate to obtain the skills andknowledge required of corporate managers to facilitate abetter understanding of the roles and duties expected ofeach director.

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

Each year, Heiwa Real Estate conducts a Board of Directors self-evaluation, and based on the results, the Board discusses
ways to improve and strengthen its effectiveness.

The Company conducted a self-evaluation of the effectivenessof the Board of Directors in FY2022 targeting directors andstatutory auditors. The evaluation results were compiled by thesecretariat of the Board of Directors, after which the Board of
Directors analyzed and evaluated the effectiveness of the Boardof Directors as a whole.

As a result, the Board of Directors was determined to beeffective in FY2022, as it continued to utilize free discussions
and other approaches to further improve deliberations,
including the discussion of medium- to long-term management
strategies.
In light of the above evaluation, we will continue toenhance Board of Director efficacy going forward.

Cross-shareholdings
Every year, the Board of Directors verifies theappropriateness of cross-shareholdings held by theCompany to deepen business relationships, as well as
facilitate financial activities and strengthen businessalliances considered beneficial for medium- to long-termbusiness development, with overall consideration of theirusefulness in line with the purposes for which they are
held, as well as the overall benefits and associated capitalcosts. As a result of this verification, holdings determined

65 Heiwa Real Estate Integrated Report 2023

The Company publicly discloses various initiatives on its
corporate website. In FY2022, the Company received
an overall ranking of Grade AA in the Nikko Investor
Relations Co., Ltd., All Japanese Listed Companies'
Website Ranking 2022, as well as the Overall IR Website
Ranking Silver Prize in the Gómez IR Website Ranking.

Shareholder Bonus Program
株主優待事務局

商品の配送やカタログギフトに関するお問合せ

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

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

株主ご優待品在中3,000 円 相 当カタログギフト

Record date of allotment

March 31

Granting date

Late June*

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

Board of Director Effectiveness Evaluations

FY2021 Board of Director Efficacy Evaluation Results Summary

External Ratings of IR Activities

その可能性が広がっていきます。

Total compensation by type (Millions of yen)

＿街づくりに貢 献する会社

Total compensation(Millions of yen)

街づくりに貢献する方法は、ひとつではありません。

Category

Shareholder and Investor Initiatives

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

to be inappropriate will be reduced through disposal bysale after considering share prices and market trends.
The results of said reductions are as follows. As of
March 31, 2023, Heiwa Real Estate cross-shareholdings oflisted stocks totaled ¥10,779 million (market value).
FY2021: ¥829 million (disposal price)
FY2022: ¥3,939 million (disposal price)

TOPICS
Events for Individual Shareholders
We conducted tours of KABUTO ONE, which openedin 2021, as an opportunity to provide shareholders
with a deeper understanding of our initiatives.
Although we received more interest than we could
accommodate, shareholders selected in an impartial
lottery were able to experience Heiwa Real Estate’svision of urban development. We will continue to
conduct these tours going forward.

Tour Overview
Date:

Thursday, February 16, 2023

Details:

Company overview provided by President
and CEO TsuchimotoTour of KABUTO
ONE facilities (including walk throughsurrounding streets)Tour includes lunch
and souvenirs (provided for free)

Venue:KABUTO ONE and the area targeted inurban development

Participants: Approximately 40 people

Heiwa Real Estate Integrated Report 2023

66

Sustainable Organizational Management

Management Team

Corporate Governance(As of June 23, 2023)

Directors

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

Takahisa Aoyama
Director
Executive Officer

Kazuo Yamada

Director, Representative andSenior Managing Executive
Officer
Assistant to the President

Apr. 1980 Joined Heiwa Real Estate Co., Ltd. (the Company)
Dec. 2004 General Manager of Building Department of the Company
Jul. 2006 General Manager of Office Building Development Department and		 Manager of Sapporo Branch of the Company
Apr. 2007 General Manager of Finance Department of the Company
Jun. 2009 Managing Officer of the Company
Jun. 2010 Deputy General Manager of General Affairs Headquarters, and Group		 Leader of Planning Finance of the Company
Jun. 2011 Director of the Company (current position)
		 Managing Executive Officer of the Company
		 General Manager of General Affairs and Planning Headquarters
		 of the Company
Jun. 2014 In charge of Real Estate Solutions Department of the Company
Jun. 2016 In charge of Development Planning Department (Development)
		 of the Company
Jun. 2018 In charge of Development Promotion Department (Development)
		 of the Company
Jun. 2020		 Senior Managing Executive Officer of the Company In charge of		 Development Promotion Department (current position) and Real Estate		 Investment Department of the Company (current position)
Jun. 2022		 Representative and Senior Managing Executive Officer, Assistant to the		 President of the Company (current position)
Jun. 2023		 In Charge of Community Co-Creation Department (current position)

Kiichiro Masui

Takahiro Moriguchi

Nominating Committee Chair

Nominating Committee Member
Compensation Committee Chair

External Director

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

Junko Utsunomiya
External Director

External Director

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

Nominating Committee Member
Audit Committee Member
Apr. 1993 Joined Heiwa Real Estate Co., Ltd. (the Company)
Jun. 2014 General Manager of Finance Department of the Company
Jun. 2017 General Manager of Real Estate Marketing Department of the Company
Jun. 2018 General Manager of Office Building Department of the Company
Jun. 2020 Managing Officer of the Company
		 In charge of Real Estate Investment Department of the Company
		 General Manager of Real Estate Investment Department of the Company
Jun. 2022 Director of the Company (current position)
		 In charge of Corporate Planning and General Affairs Department,
		 Finance Department and Legal Office of the Company
		 General Manager of Corporate Planning and General Affairs
		 Department, and Legal Office of the Company
Apr. 2023		 In charge of Corporate Planning Department, General Affairs
		 Department and Finance Department of the Company (current position)
		 General Manager of Corporate Planning Department of the Company
		 (current position)

Executive Officers

Daisuke Kobayashi
Director

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

Representative Executive Officer, President and CEO
Representative and Senior Managing Executive Officer

Kiyoyuki Tsuchimoto
Kazuo Yamada
Assistant to the President, in charge of Development Promotion Department and		Managing Executive Officer

Tomoharu Nakao
Nobuhiro Seo
Takahisa Aoyama

Community Co-Creation Department

In charge of Office Building Development Department

Executive Officer
Executive Officer		In charge of Real Estate Investment Department
In charge of Corporate Planning Department, General Affairs Department and
Finance Department

Managing Officers
Managing Officer
Managing Officer

Naoyuki Matsumoto
Kiichi Kikuchi

Managing Officer on Special Appointment
Group Director

Shosaku Shimomura In charge of Audit Committee Office
Hiroki Mizuta

		

67 Heiwa Real Estate Integrated Report 2023

In charge of Finance Department, General Manager of Finance Department
In charge of General Affairs Department and Legal Office General Manager ofGeneral Affairs Department and Legal Office

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

Mitsunobu Yamaguchi
External Director

Eiji Yamada

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

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

Heiwa Real Estate Integrated Report 2023

68

Company Data

Company Data

Stock Information

Corporate Information(As of March 31, 2023)

Status of Shares

Major Shareholders (Top 10)

Total authorized shares:

Distribution of Shares by Shareholder Category
Securities companies
Individuals
and others(2.46％)

8,046,000

Other corporations(20.71%)

7,848,000(20.20％)Total outstanding shares

38,859,000

Financial
institutions

Foreign corporations

9,785,000

12,224,000(25.18%)(31.46％)

Trends in Share PriceBranch Locations

Commercial name

HEIWA REAL ESTATE CO., LTD.

Established

July 1947

Representative

Kiyoyuki Tsuchimoto
Representative Executive Officer, President andCEO

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

Head office

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

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

Branches

Osaka Branch, Nagoya Branch, Fukuoka Branch,
Sapporo Branch

1.92

Capital¥21,492 million

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

532

1.48

URL

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

Listed exchanges

STATE STREET BANK WEST CLIENT- TREATY 505234

503

1.40

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

Resona Bank, Limited

445

1.24

Securities code

8803

JP MORGAN CHASE BANK 385781

433

1.21

Businesses

Sumitomo Mitsui Banking Corporation

402

1.12

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

Percentage of
total equity(%)

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

4,673

13.00

Mitsubishi Estate Co., Ltd.

4,274

11.89

CGML PB CLIENT ACCOUNT /COLLATERAL

3,900

10.85

Custody Bank of Japan, Ltd. (Trust Account)

3,256

9.05

STATE STREET BANK AND TRUSTCOMPANY 505001

688

Taisei Corporation

Name

Number of shareholders: 20,434

955,000

Corporate Profile
Number ofshares(Thousands)

110,000,000 shares

Total outstanding shares: 38,859,996 shares(As of March 31, 2023)

1. Percentage of total equity calculated after deducting the number of shares heldby the Company as treasury stock (2,898,000 shares) from total outstanding shares.
2. The list of Major Shareholders above excludes 2,898,000 shares held by theCompany in the form of treasury stock. 175,000 shares held by Custody Bank ofJapan, Ltd. (Trust Account) as assets in trust for the Company's director, officer andemployee stock compensation plans are not included in treasury stock.

Employees

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

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

96 (non-consolidated)/253 (consolidated)Organization(From April 2010 to March 2023/monthly)

Osaka Branch(As of April 1, 2023)

General Shareholders’ Meeting

(Yen)
4,500
4,000
3,500

Nominating Committee

3,000
2,500

Board of Directors

2,000

Audit Committee

1,500

Compensation Committee

1,000
500

0

Audit Committee OfficeInternal Audit Department

President and Representative Executive Officer
April 2010

April 2011

April 2012

April 2013

April 2014

April 2015

April 2016

April 2017

April 2018

April 2019

April 2020

April 2021

April 2022

April 2023

Management Conference

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

Sustainability Committee

Meeting of Executive Officers

Risk Management Committee

Corporate Website
Home Page

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

IR Information

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

Sustainability

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

Corporate Planning Department

Sustainability Promotion Office

General Affairs Department

IR OfficeLegal OfficeFinance Department
Development Promotion Department
Real Estate Investment Department
Building Business Department
Community Co-Creation Department

69 Heiwa Real Estate Integrated Report 2023

Osaka Branch
Nagoya Branch
Fukuoka Branch
Sapporo Branch

Heiwa Real Estate Integrated Report 2023

70