Creating World-Class
Neighborhoods
Heiwa Real Estate Co., Ltd.
Corporate Report

2019

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

Contents

Creating
World-Class Nei ghborhoods

03

History of Heiwa Real Estate05

The Source of Corporate Value07

Consolidated Financial Highlights

09

Medium- to Long-term Management Plan11

To Our Stakeholders

13	‌Focus: ‌Kabutocho Is Set for Motion
The Nihonbashi Kabutocho andKayabacho Revitalization Project

15

Review of Operations by Business19

Corporate Governance

21

Management Team23

Corporate Social Responsibility (CSR)

26

Corporate Profile and Shareholder Information

Heiwa Real Estate Co., Ltd. was founded as the owner of buildings for stock exchanges, which play a central role inJapan’s financial market, and has subsequently been deeply involved in businesses rooted in districts that are thecenter of financial markets throughout Japan.
Competition among cities has intensified as people, economies and information have become borderless.
Heiwa Real Estate will contribute to establishing Tokyo’s position as a global financial city in Asia by promoting theredevelopment of Nihonbashi Kabutocho and Kayabacho, which is where the Company was founded and home to
Japan’s largest stock exchange.

01

Disclaimer
Information in this report other than statements ofhistorical fact are forecasts and forward-looking
statements that are based on judgments by the
management of Heiwa Real Estate in light ofavailable information. 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 this report.

Heiwa Real Estate Co., Ltd. Corporate Report 201902

History of Heiwa Real Estate
Heiwa Real Estate was founded in 1947 as the owner of buildings for stock exchanges in Tokyo, Osaka, Nagoya and elsewhere, which​play a central role in Japan’s financial markets.

Nihonbashi Kabutocho and Kayabacho, where the Company was founded, have developed as the home of the securities industry. As the social ​change, including the closure of the trading floor and relocations of securities firms.

environment changed with the development of information and communications, these districts have likewise witnessed significant

Meanwhile, there are strong calls to improve the functions of Tokyo as a global financial city, and community expectations for the revitalization​of the districts are rising.

In this business environment, the Company aims to enhance its presence in the community and create the foundation for further growth and​starting with the redevelopment of Nihonbashi Kabutocho and Kayabacho.

an increase in corporate value by moving on to the next stage, “Aim to be a company that contributes to revitalizing districts,”

1947

1980

2000

2010

Establishment Phase:
Supporting the Securities Industry

Business Diversification Phase:House Sales Business and Other
Businesses

Leasing Business Asset
Expansion Phase: Enhancing
the Revenue BaseA New Phase of Growth

We expanded into new businesses in step with changes inthe social environment. We entered the suburban housingdevelopment business and the condominium sales business.

In the leasing business we increased assets such as
office buildings and commercial facilities to enhance
our revenue base.

Established as the owner of stock exchange buildings, we built
the foundation of our business by leasing stock exchangebuildings and by developing the building leasing businessmainly in the neighborhoods where stock exchanges are located.

Established as a company that owns stock
exchange buildings

Expanded business by developing buildings forlease other than stock exchanges

Further increased assets by acquiring large
office buildings

1947 Heiwa Real Estate established1980 Entered the condominium sales business2000 Acquired Mita Heiwa Building 31949	
Began leasing to the respective stock1984	
Completed construction of the stock trading

2001 Acquired Uchisaiwaicho Heiwa Building 4

exchanges

floor building (currently Arrows) within theTokyo Stock Exchange Building complex 2

11986 Completed construction of Yokohama Heiwa Building

1958	
Completed construction of Fukuoka Shoken Building

1988	
Completed construction of the main

1987	Completed construction of Osaka Heiwa Building
Entered the real estate brokerage business

1965 Entered the residential land sales business1977 Entered the detached house sales business

1962 Completed construction of Kyoto Shoken Building

2010 Completed construction of CentRise Sakae 72012	Completed construction of Ichibancho Heiwa
Building 8

Aim to be a company that contributes
to revitalizing districts through theredevelopment of Kabutocho

2002 Acquired Dogin Building

Redeveloped stock exchange buildings into officebuildings, backed by expanding demand for officespace accompanying rapid economic growth.

building of the Tokyo Stock Exchange
Building complex 2

We are now working on redevelopment projects in Nihonbashi
Kabutocho and Kayabacho, where the Tokyo Stock Exchange
Building is located, beginning our next stage “Aim to be acompany that contributes to revitalizing districts.”

Aggressively redeveloped properties in Osakaand Nagoya

2013	Made The Tokyo Shoken Building Incorporated aconsolidated subsidiary2004 Completed construction of Nagoya Heiwa Building
2004	Completed construction of the Osaka

2014	Announced the Revitalization Vision for

Nihonbashi Kabutocho

1992	Completed construction of Kayabacho Heiwa Building

Securities Exchange Building 52007 Completed construction of the Nagoya
Stock Exchange Building 6

1993	Completed construction of Daimaru Kyoto Store(West) Kyodo Building

2015	Completed construction of Kitahama 1-Chome
Heiwa Building
Completed construction of Maruzen Nagoya
Honten Building

2008	Completed construction of Hotel Brighton City
Osaka Kitahama

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

2017	Acquired Kabutocho Heiwa Building No. 6
Acquired Osaka Midosuji Building

2009	Initiated full-scale participation in the REIT business2019	Acquired Sakae Sun City Building
Began construction of KABUTO ONE

1995	Started sales of the FLARGE series of condominiums(made the current Heiwa Real Estate Asset Management Co., Ltd.
a consolidated subsidiary)1

Former Tokyo Stock Exchange
Building

2

Tokyo Stock Exchange Building(Chuo-ku, Tokyo)

03

3

Mita Heiwa Building(Minato-ku, Tokyo)

4

Uchisaiwaicho Heiwa Building(Chiyoda-ku, Tokyo)

5

Osaka Securities Exchange Building(Osaka City)

6

Nagoya Stock Exchange Building(Nagoya City)

7

CentRise Sakae(Nagoya City)

8

Ichibancho Heiwa Building(Sendai City)

Heiwa Real Estate Co., Ltd. Corporate Report 201904

The Source of Corporate Value

We will contribute to the creation of a global financial city by revitalizing districts.
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.

Supporting Japan’s financial infrastructure, we redeveloped the Osaka Securities Exchange Building and the Nagoya Stock Exchange
project of the Nihonbashi Kabutocho and Kayabacho Revitalization Project.

Building ​b y establishing relationships of trust with various stakeholders to obtain their cooperation. We have also launched the first

We are leveraging the features of Nihonbashi Kabutocho, which is home to a securities market, to revitalize this district over the medium ​contributing to the future of Nihonbashi Kabutocho and Kayabacho.

and long term. In doing so, we will contribute to the “Global Financial City: Tokyo” vision as we fulfill our social responsibility of

Ownership of Stock Exchange Buildings throughout Japan

Overview BusinessSupport the
expansion of
securities markets

Tokyo Stock Exchange Building(Tokyo)Osaka Securities Exchange Building(Osaka City)

Nagoya Stock Exchange Building(Nagoya City)• Sapporo Ekimae Godo Building• AFT Building• Park East Sapporo• Hotel Emisia Sapporo

Tenjin Heiwa Building
Sendai

Dogin Building• Fukuoka Heiwa Building

Leasing Business

Real Estate
Solutions Business

Develop, lease, manage and operate
office buildings and other properties

Develop, sell, operate and manage
income-generating properties

Ichibancho Heiwa
Building• Ichibancho Heiwa Building• Fukuoka Shoken Building

Support the growthof tenant companies

Nihonbashi Kabutocho and Kayabacho Revitalization Project

Sapporo• Shin-Odori Building

Vitalize districts andprovide information

Fukuoka Shoken Building(Fukuoka City)A Building Leasing Business in Japan’s Major Cities• Dogin Building

Aim to be a company
that contributes torevitalizing districts

Contribute to thecreation of a global
financial city

• Tenjin Heiwa Building

Tokyo

Fukuoka• Tokyo Stock Exchange Building• Kayabacho 1-Chome Heiwa Building• Nisshokan Building• Kayabacho Broad Square• Kabutocho Heiwa Building• Kayabacho Heiwa Building No. 2• Kabutocho Heiwa Building No. 1• Quatro Muromachi Building• Kabutocho Heiwa Building No. 2• Mita Heiwa Building• Kabutocho Heiwa Building No. 4• Uchisaiwaicho Heiwa Building• Kabutocho Heiwa Building No. 5• Yokohama Heiwa Building• Kabutocho Heiwa Building No. 6• Osaka Heiwa Building

Kitahama 1-Chome
Heiwa Building

05

Other Businesses

Operating revenue¥

39,480 million

Operating Revenue by Segment¥+20.7% YoY

1,674 million(4.2%)

Operating revenue

Operating income

Osaka• Osaka Securities Exchange Building

Summary of Results for FY 2018¥

Nagoya• Hotel Brighton City Osaka Kitahama• Nagoya Stock Exchange Building• Heiwa Real Estate Kitahama Building• CentRise Sakae• Kitahama 1-Chome Heiwa Building• Nagoya Heiwa Building• Osaka Midosuji Building• Maruzen Nagoya Honten Building• Kyoto Shoken Building• Isemachi Heiwa Building• Daimaru Kyoto Store (West) Kyodo Building• Sakae Center Building• Daimaru Kyoto Store (North) Kyodo Building• Sakae Sun City Building

9,335 million¥–1.0% YoY

Net income attributable to owners of parent

Maruzen Nagoya
Honten Building

Kabutocho Heiwa
Building No. 6¥

6,174 million+16.8% YoY

39,480
million

Real Estate
Solutions Business¥

17,493 million(44.3%)

Leasing Business¥

20,311 million(51.5%)

Heiwa Real Estate Co., Ltd. Corporate Report 201906

Consolidated Financial Highlights(Millions of yen)
Negative numbers in parentheses

FY 2014

FY 2015

FY 2016

FY 2017(Billions of yen)
50

Operating revenue

34,34737,01041,74732,69839,480Operating income

8,548

8,267

9,673

9,432

9,335

Ordinary income

6,568

6,708

8,431

8,395

8,430

1

34.3

0

4,766

10

Cash flows from operating activities

12,557

9,954

20,98013,482(12,780)0(2,499)24,652

Balance of cash and cash equivalents
at end of period

11,242

15,377

19,117

12,784

11,710Net assets

92,29894,827

97,524

104,900

109,075

Total assets2

297,736

294,021

293,025300,243

335,572

Interest-bearing liabilities

162,490

160,232

157,051

155,786

184,672

31.0

32.3

33.3

34.9

32.5

As of March 31:

Performance indicators:

0

2014

2015

2016

22.00

26.00

26.00

37.00

48.00

Earnings per share (EPS) (Yen)

62.53

110.50113.17132.57158.732,313.34

2,377.02

2,444.84

2,630.07

2,819.82

Price-earnings ratio (PER) (Times)

27.00

12.67

13.91

15.46

13.43

Price-book ratio (PBR) (Times)

0.73

0.59

0.64

0.78

0.76

Payout ratio (%)

35.2

23.5

23.0

27.9

30.2

13,883

13,641

14,92014,476

14,596

4

D/E ratio (Times)

1.76

1.69

1.61

1.49

1.69

Net D/E ratio4 (Times)

1.64

1.53

1.41

1.36

1.57

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

10.89

10.61

9.24

9.84

11.77

Return on assets (ROA)4 (%)

2.9

2.8

3.3

3.2

2.9

Return on equity (ROE)4 (%)

2.8

4.7

4.7

5.2

5.8

Number of employees5

281

281

224

233

236

1. ‌Due to the revision of the Accounting Standard for Business Combinations and other revisions, the line item name used in the consolidated financial statements has been
amended. The amended name was applied from FY 2015.
2. ‌Total assets and equity ratio for FY 2017 have been retroactively restated to reflect the application of the partial amendments to Accounting Standard for Tax EffectAccounting, etc.
3. Annual dividends per share for FY 2017 included a 4.0 yen commemorative dividend celebrating the 70th anniversary of the Company’s founding.
4. Financial indicators are calculated as follows:
EBITDA:
Operating income + Financial income + Depreciation
D/E ratio:
Interest-bearing liabilities ÷ Net assets
Net D/E ratio: (Interest-bearing liabilities – Cash and deposits – Marketable securities) ÷ Net assets
ROA:
Operating income ÷ Total assets (average of total assets at beginning and end of period) x 100
ROE:
Net income ÷ Equity (average of equity at beginning and end of period) x 100

2014

2017 2018 (FY)Net Income Attributable to
Owners of Parent and EPS(Billions of yen)
6.0

2015

2016

2017 2018 (FY)

6.5

6.1 (Yen)
200(Billions of yen)
400

4.4

160

4.5

2.7
2.2

(%)
60

297.7 294.0 293.0 300.2

45

34.9

30

158.73132.572.4

2.4

110.50120113.17

31.0

80

62.53

40

100

0

0

2014 2015 2016

92.2

94.8

97.5 104.9 109.0 15

1.53

1.41

1.57

0

1.36

48.0

40

0

22.0

1

10

0.5

5

13.8

13.6

9.24

23.0

30.2 3020
10002014 2015 20162017 2018 (FY)

ROE
(%)
6

5.8
5.2

14.5 12

9.84

4.7

4.7

2015

2016

4

11.77

10.89 10.61

23.5

27.9

10

5

14.4

26.0

Annual dividends per share (Left scale)
Consolidated payout ratio (Right scale)* Includes 4.0 yen 70th anniversarycommemorative dividend(Times)
16

14.9

26.0

(%)
50
40

37.0*

35.2

Total assets (Left scale)
Net assets (Left scale)
Equity ratio (Right scale)15

22016 2017 2018 (FY)

(Yen)
50

2014 2015 2016 2017 2018 (FY)(Billions of yen)
20

(Times)2

31

2014 201520

EBITDA and Ratio of EBITDA to
Net Interest-bearing Liabilities

Net D/E Ratio

1.64

33.3

0

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

1.5

32.3

32.5

2.8

2.3

30
200

4

6.7

Annual Dividends per Share andConsolidated Payout Ratio

335.5
300

8.4

8.3

Ordinary income (Left scale)
Ratio of ordinary income tototal assets (Right scale)

Total Assets, Net Assets andEquity Ratio

5.2
4.8

1.2

Book value per share (BPS) (Yen)

(%)
5

8.4

Operating income (Left scale)
Ratio of operating income tooperating revenue (Right scale)

3.6

Dividends per share3 (Yen)

6

0

4,661

(4,222)

18

2

4,878

(3,218)

23.6

23.2

6

5,028

(8,923)

8

2

4,989

Cash flows from financing activities

24

4

Depreciation(12,946)22.3

6(Billions of yen)
10

12

6,174

(17,265)

24.9

32.6

9.3

28.8

(%)
30

4

5,288

(13,017)

8

8.2

9.4

20

4,514

(2,600)

8.5

9.6

2.9

4,408

(15,160)

39.4

37.0

30

2,495

Cash flows from investing activities(Billions of yen)
10

41.7

40

Net income attributable to owners of parent

EBITDA4

Ordinary Income and Ratio ofOrdinary Income to Total Assets

FY 2018

Fiscal year (April 1 to March 31):

Equity ratio2 (%)

Operating Income and Ratio of
Operating Income to Operating Revenue

Operating Revenue

8

3
2

2.8

4
1

0

0

2014

2015

2016

2017 2018 (FY)02014 2015 2016 2017 2018 (FY)

0

2014

2017 2018 (FY)EBITDA (Left scale)
Ratio of EBITDA to net interestbearing liabilities (Right scale)

5. ‌The decrease in the number of employees in FY 2016 is mainly due to the exclusion of Heiwa Health Care Co., Ltd. from the scope of consolidation because the Heiwa Real
Estate Group sold its entire stake in this company.

07

Heiwa Real Estate Co., Ltd. Corporate Report 201908

Medium- to Long-term Management Plan

Aim to be a company that “contributes to revitalizing districts,” beginning with the redevelopment of the Nihonbashi Kabutocho and Kayabacho areas.
Achieve consolidated operating income of over ¥10 billion toward the end of the NEXT DECADE (FY 2023).

Phase II Positioning
In the three years of Phase II, we are aiming to continuously increase corporate value by building a base for businessgrowth, mainly by steadily implementing the Nihonbashi Kabutocho and Kayabacho Revitalization Project.

[Vision for the medium- to long-term management plan]

Over the NEXT DECADE

Phase II

Phase I

Aim to be a company that contributes to revitalizing districts

10 billion

Phase IIIFY 2014-2016

FY 2017-2019

FY 2020-2023

Preparation to build a growth
foundation

Build a base for business growth

Speed up the pace of growthTarget consolidated operating income: Over ¥Key Strategies
Key Strategy 1

The Nihonbashi Kabutocho and Kayabacho Revitalization ProjectStart and steadily implement the first stage of the project, the Nihonbashi Kabutocho 7 Development
Plan (tentative name) and the Nihonbashi Kayabacho 1-6 Development Plan (tentative name).

Implementation of the Nihonbashi Kabutocho
and Kayabacho Revitalization Project

Key Strategy 2Strengthening of the Building Leasing Business
Enhance the revenue base to form a base for the redevelopment project by renewing and increasing
assets for the Leasing Business and by implementing measures to improve profitability.

Key Strategy 3

Strengthen the businesses that form thebase for our redevelopment businessLeasing business(Business with stableearnings)

Ordinary
incomeNet debtto-equity(D/E) ratio¥9.0 billion¥10.0 billion*(Breakdown) Leasing Business: ¥7.4 billion¥7.7 billion/Real Estate Solutions
Business: ¥3.0 billion ¥3.6 billion¥8.0 billion¥9.0 billion

1.5 times or lower* ‌Operating income excludes corporate expenses that belong to theadministration division and are not allocated to any of thereportable segments.

09

Maintain financial
discipline

Key Strategy 4

Strengthening the Structure for Implementing Strategies and Providing
Shareholders with Stable Returns
Formulate an organizational framework suitable for executing the key strategies, as well as strive to enhancefinancial strength, while keeping management efficiency in mind. Aim to raise ROE and maintain the D/E
ratio at an appropriate level. Also, provide shareholders with stable returns, mainly through dividends.

Investment Plan and Progress
Targets for FY 2019

OperatingincomeStrengthenorganizational
controls(Business with highcapital efficiency)

Targets

Support Heiwa Real Estate REIT Inc. as its sponsor to increase its assets and improve their quality, andsteadily expand revenue from the fee businesses. Aim to diversify revenue-generating opportunities
in the Real Estate Solutions Business, including selling properties after maximizing their value by
developing income-generating properties, leasing-up, conducting renewal construction, etc.

Strengthen the base to implement
our business strategies

Real estatesolutions business

Expansion and diversification of the Real Estate Solutions Business

Plan for FY 2017-2019
The Nihonbashi
Kabutocho andKayabacho
Revitalization Project
Leasing BusinessApprox. ¥15.0 billion
Approx. ¥24.0 billion

Shareholder Returns
Progress up to theend of FY 2018
Approx. ¥5.0 billion
Approx. ¥33.0 billion(Approx. ¥7.0 billion recovered (Approx. ¥13.9 billion recoveredby renewing the portfolio)
by renewing the portfolio)

Real Estate Solutions
Approx. ¥42.0 billion
Approx. ¥42.6 billion
Business(Approx. ¥54.0 billion recovered) (Approx. ¥22.8 billion recovered)

Execution of Acquisition and Cancellation of Treasury Stock

Dividend Policy• ‌The acquisition of treasury stock is reviewed with consideration given to
future investment plans, financial discipline and PBR level.
• ‌The acquisition of treasury stock is executed if there are sufficient funds, withpriority given to investment in development projects and dividend payouts.
• ‌Total return ratio in FY 2018: 72.1%; Estimate for FY 2019: Approx. 50–60%

We will provide stable shareholder returns mainly through dividends. Our
medium- to long-term target for the consolidated payout ratio is 30%, with
due regard for the internal reserves required to increase corporate value.

Execution of Acquisition of Treasury Stock
FY 2018
FY 2019

1.2 million shares / ¥2.59 billion
Maximum of 800,000 shares
Maximum of ¥2.0 billion

Resolution Concerning Cancellation of Treasury StockMay 31,2019

1.2 million shares

Annual Dividends per Share and Consolidated Payout Ratio
(%)
50

(Yen)
50
40

40

35.2

30

23.5

23.0

27.9

30.2

20

20
10

30

22

26

26

37*

48

2014

2015

2016

2017

2018 (FY)1000Annual dividends per share (Left scale)
Consolidated payout ratio (Right scale)* Includes 4.0 yen 70th anniversary commemorative dividend

Heiwa Real Estate Co., Ltd. Corporate Report 201910

To Our Stakeholders

Medium- to Long-term Management
Plan Roadmap
We are advancing to our next phase: “Aim to be a company

Heiwa Real Estate was founded in 1947 as the owner of

11

The development will provide functions that support the“Global Financial City: Tokyo” vision, including theincrease our presence in society and build the foundation fordissemination of financial information, human resource

further growth and increased corporate value. We also plan todevelopment, and the promotion of dialogue and exchanges

employ the expertise we acquire through the redevelopment of

among investors and companies. Creating infrastructure for

Nihonbashi Kabutocho and Kayabacho in revitalizing otherstudying and teaching investment will support the growth ofurban districts.

individuals, companies and society. Work on the first project
began on May 2019. It was a significant first step for theto FY 2016) of our medium- to long-term management plan.

Kabutocho district. Now under construction with opening

We made preparations for building the foundation for growthscheduled for July 2021, the building is named KABUTO ONE

in ways such as strengthening of the Building Leasing Business,to reflect the idea that Kabutocho was, is and will continue toexpanding the fee businesses and enhancing our financial

be the starting point for the Japanese economy.

soundness. We made steady progress toward the plan target of
consolidated operating income of approximately ¥10 billion.
Phase II from FY 2017 to FY 2019 involves building thefoundation for business growth, and the full-scale start of the

Objective: Sustained Growth in
Corporate Value
Given intensifying competition among the world’s cities, weThrough steady progress of the Nihonbashi Kabutocho andneed to create value unique to Heiwa Real Estate and enhance

Kayabacho Revitalization Project, strengthening of ourour social presence as a facilitator of Japan’s financial districts.

Building Leasing Business and other initiatives, we aim to

While maintaining steady growth, we will continue to evolve

achieve sustained growth in corporate value. The revitalization

by enhancing our development, proposal and planning

project is a challenging initiative, and the entire Company iscapabilities in order to take on various new challenges. In

pushing forward together in the spirit of creating the next-

addition, I would like Heiwa Real Estate to position itself togeneration Heiwa Real Estate. We are fortunate that the efforts

contribute significantly to revitalization as part of the “Globalof our predecessors have given Heiwa Real Estate a stable

Financial City: Tokyo” vision and in other urban districts,

Nihonbashi Kabutocho and Kayabacho areas, we must alsofinancial base, but we need to consider our future operating

and to be a company that contributes more than ever tofocus on enhancing Tokyo’s international competitiveness.

environment and the new initiatives it will require.

revitalizing districts.

We announced our Revitalization Vision for Nihonbashi

I hope you will share our enthusiasm as we take on the

Key Strategies: The Nihonbashi Kabutocho
and Kayabacho Revitalization Projectbuildings for stock exchanges in Tokyo, Osaka, Nagoya andKabutocho in 2014, and began creating a district where people

elsewhere, which play a central role in Japan’s financial markets.

connect, and where investment and growth are born. The

The Company celebrated its 70th anniversary in July 2017. In

Company has been located in Nihonbashi Kabutocho andmy current and former jobs, I have spent a total of more than

Kayabacho since its establishment, enabling us to inherit andWe plan to appropriately redevelop this district in two

40 years in Nihonbashi Kabutocho and Kayabacho, which isdevelop the unique qualities of this district. Our goal is “themedium-scale stages rather than in a single redevelopment

the district where Heiwa Real Estate was established, and haveclassic look and feel” of Kabutocho, which is taking shapeproject. As the owner of the Tokyo Stock Exchange Building,watched this neighborhood evolve. The basic mission of a realthroughout the district in tandem with the Tokyo Metropolitan

our strength is in the relationships of trust we have establishedestate company is to provide an environment of convenience,

Government’s ongoing “Global Financial City: Tokyo” vision.

with the community, including local companies andcomfort and safety that allows tenant companies and people toRedevelopment of Nihonbashi Kabutocho and Kayabacho isgovernments, through 70 years in the business of leasing

connect and demonstrate their capabilities, and have an

one component of this vision, and helps us fulfill our role ofbuildings in securities and financial districts.

affluent life. In other words, developing infrastructure iscontributing to improving the infrastructure of Tokyo’s

thought to be the livelihood of real estate companies.

financial district.

Therefore, I have come to believe that since we operate in the

project with a sense of ownership.

redevelopment of Nihonbashi Kabutocho and Kayabacho.

Hiroyuki Iwakuma Representative Director and President

Heiwa Real Estate’s Roles

responsible for the Company’s next generation to lead thisthat contributes to revitalizing districts.” Our objective is to

We achieved all of our numerical targets for Phase I (FY 2014

The Next-Generation Heiwa Real Estate:
Taking on the Challenge of Becoming a Company
That Contributes to Revitalizing Districts

this district for 10 to 20 years, so I want the employees who arechallenge of creating the next-generation Heiwa Real Estate.
We are counting on your continued support.

Hiroyuki Iwakuma
Representative Director and President

I believe the relationships of trust that all of our employees
have established with our customers have provided a solid basefor our new initiatives. Heiwa Real Estate will be redeveloping

Heiwa Real Estate Co., Ltd. Corporate Report 201912

The History of Nihonbashi Kabutocho and Kayabacho

Kabutocho Is Set for Motion

Foc usThe Nihonbashi Kabutocho and Kayabacho Revitalization Project

The Nihonbashi Kabutocho and Kayabacho Revitalization Concept

Meiji Era (1870s)

Taisho Era to about 1945

Recently

Currently

From a Banking to a
Securities and Financial
District

Reconstruction after theGreat Kanto Earthquake
and World War II

Changes in Kabutocho

Recreating the Classic
Look and Feel of
Kabutocho

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 theJapanese economy with theestablishment of a stock exchange,
which then became the Tokyo
Stock Exchange, and numerous
companies.

Japan’s securities markets
resumed with the approval of
the GHQ in 1949. As a securities
district, Kabutocho became
synonymous with the country’s
financial markets and economy
due to the development of
the Japanese economy and theboom in its securities markets.

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 and the increase in Internet
transactions. The Kabutocho districtchanged significantly as securities
companies moved elsewhere.

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

Construction Starts for KABUTO ONE

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

Kabutocho Is Set for Motion
Kabutocho, a place of departure.

The Role of Nihonbashi Kabutocho and Kayabacho in the “Global Financial City: Tokyo” Vision

sak

wa

iA

Now, a town and space are coming into being in thisNihonbashi
Post Office

Sho

Toe

Str
eet

usa

Lin

e

the future yet to be written.

Kabutocho Heiwa Bldg.

financial district that will bring people together, generating

Tokyo Stock Exchange Bldg.

investment and growth that boost the Japanese economy.
KABUTO ONE will stir new life into the financial district.

hi River

MIZUHO
BANK, LTD.

Kabutocho Heiwa Bldg. No. 6
FinGATE KABUTO
Kabutocho Heiwa Bldg. No. 1

Tokyo Shoken Kaikan Bldg.
tre
et

KABUTO ONE

Coordination andcollaboration

has

hi S

Coordination andcollaboration
Nihonbashi

tre
or
iS
hib

Kabutocho

t

tree
t
ei S

tre
e

Heis

uS

Sho
w

t
Str
ee
uo

Yae
s

aS
tre
et

nter

Yaesu and Kyobashi

Ch

bo
r

iS
tre
et

JR Tokyo Station

So
toTokyo Stock Exchangel Ce

KABUTOONE

Kayabacho 1-Chome
Heiwa Bldg.
FinGATE KAYABA

Eit
ai
Str
To
ee
za
t
iL
ine

Financial Function Development Concepts
Support for development ofentrepreneurial financial start-ups
focusing on asset management

13

The center for dialogue andexchange between investors
and companies

Approximately 39,170 m2 (Approximately 11,849 tsubo)

AccessOperators

Heiwa Real Estate Co., Ltd., Yamatane Corporation,
Chibagin Securities Co., Ltd.

Main use

Office, shops, assembly hall, rental conference rooms
and car parking

Floors15 above ground, 2 below, 2-story penthouse

Design supervision
Obayashi Corporation(structure)

Construction

Steel construction above ground, SRC structure below,(partial steel construction), mid-story isolation structure

Constructor

Obayashi Corporation

Scheduled
opening

July 2021

Site size

Approx. 3,345 m2 (1,012 tsubo)

Design supervision
Mitsubishi Jisho Sekkei Incorporated(design & facility)

Kayabacho Station

Daini-Shoken
Kaikan Bldg.

Shin-Ohashi
Streetncia

Total floor space

Directly connected to Kayabacho Station on Tozai Lineand Hibiya Line of Tokyo Metro

Note: The above data are subject to change.

n-O

Chuo Police
StationUc

Large securities
companies

Fina

Marunouchi

7, Nihonbashi Kabutocho, Chuo-ku, Tokyo

Shi

et

The Bank of Japan

Coordination andcollaboration

Location

FinGATE BASE

Kabutocho Heiwa
Bldg. No. 4

Headquarters of major
financial institutions

Nisshokan Bldg.

nbas

Kabutocho Heiwa
Bldg. No. 5

Kabutocho Heiwa
Bldg. No. 2

Otemachiin the history already carved out, and one it will retain in

District revitalization

Niho

The Nihonbashi Kabutocho and Kayabachoredevelopment proposal we presented to the relevant
authorities is based on the three finance- and securitiesrelated concepts outlined below. Our staged development
plan will promote coordination and collaboration among
Otemachi, which is headquarters to many major financial
institutions, and Nihonbashi, the home of The Bank ofJapan, as it works to add finance-related functions.
The plan looks to the future as a means to support thefulfillment of the “Global Financial City: Tokyo” visionin the district.

The heart of the Japanese economy is here – a status it held

Attracting highly skilled financial
professionals mainly from abroad

Kabutocho Is Set for Motion
On May 21, 2019, we held the groundbreaking ceremony for KABUTO ONE, thefirst project of the Nihonbashi Kabutocho and Kayabacho Revitalization Project.
Now under construction with occupancy scheduled for July 2021, the building isnamed KABUTO ONE to reflect the idea that Kabutocho was, is and will continue
to be the starting point for the Japanese economy.

Kazuo Yamada
Director andManaging
Executive Officer

Heiwa Real Estate Co., Ltd. Corporate Report 201914

Review of Operations by BusinessLeasing Business
The Leasing Business focuses on stock exchange buildings and office buildings in Tokyo, Osaka, Nagoya, Fukuoka, Sapporo,
Sendai and other major cities in Japan.

FY 2018 Results

Operatingrevenue

Stock Exchange Buildings

Operatingincome20,311 million¥(4.7% YoY increase of ¥913 million)

7,158 million¥(5.4% YoY decrease of ¥408 million)

Main Points• ‌Increase in revenue due to proceeds from the sale of buildings forlease and increase in rent levels of existing properties• ‌Record income from leasing business• ‌Decrease in operating revenue partly due to sale of Higashi Osaka
Hanazono Shopping Center

Operating Revenue from Building Leasing (¥19.2 billion) by Region and Usage (FY 2018)
Other
2%
Commercial
facilities
15%

Sendai and Sapporo
15%
Fukuoka
6%

Tokyo Stock Exchange Building(Chuo-ku, Tokyo)

Osaka Securities Exchange Building(Osaka City)

Nagoya Stock Exchange Building(Nagoya City)

Fukuoka Shoken Building(Fukuoka City)

Nagoya10%

By Region

Officebuildings
67%

Operating Revenue from Building
Leasing (excluding building sales)(Billions of yen)

20

15

10

Tokyo
46%

17.6
2.6
1.1
1.9

17.9

18.7

19.2

2.7
1.0
1.8

2.7
1.0
1.8

2.8
1.1
1.9

3.7

3.8

4.1

4.3

8.2

8.4

8.9

8.9

2015

2016

2017

2018 (FY)Tokyo
Fukuoka

NagoyaOsaka
Sendai and Sapporo

By Usage
5

0

Osaka
23%

Office Buildings and Commercial Facilities

Stock exchange buildings 16%

Assets Acquired (FY 2018)

Internal Growth (FY 2018)

Hotel Emisia Sapporo

Sakae Sun City Building

Progress of Rent Increases (No. of properties)1and Amount of Rent Increases (Fiscal year basis)2(Properties)(Millions of yen)

200

200

150

138

153 150

100

100

65
50

Uchisaiwaicho Heiwa Building(Chiyoda-ku, Tokyo)

Mita Heiwa Building(Minato-ku, Tokyo)

Kabutocho Heiwa Building No. 6(Chuo-ku, Tokyo)

Dogin Building (Sapporo City)

Location

Atsubetsu-ku, Sapporo City

Naka-ku, Nagoya City

2

41

9

0

2016

2

Total floor space

45,746.04 m

21,861.69 m

Completed

April 1996

November 1991

AcquiredJanuary 2019

March 2019

50

41

2017

0

2018

(FY)

Progress of Rent Increases (Left scale)
Amount of Rent Increases (Right scale)
1. Net number of properties after subtracting total numberof properties for which rent decreased from total numberof properties for which rent increased
2. Net amount of rent increases after subtracting total amountof rent decreases from total amount of rent increases

Note: Total floor space represents the portion belonging to Heiwa Real Estate.

Strategies for the Future
Strengthening the Building Leasing BusinessWe will upgrade our portfolio mainly in the three central wards (ku) of Tokyo andnear Company branches in other areas. We will also work for internal growththrough rent increases and other measures. This will increase profitability andstrengthen the earnings base that will support our redevelopment projects.
1. Renew the portfolio to improve asset quality.
Ichibancho Heiwa Building(Sendai City)

CentRise Sakae (Nagoya City)

Osaka Midosuji Building(Osaka City)

Hotel Brighton City Osaka
Kitahama (Osaka City)

2. Expand earnings by acquiring assets in the Leasing Business.
3. Structure an earnings base that will support redevelopment projects.

15

Kiyoyuki Tsuchimoto
Representative Director
and Managing Senior
Executive Officer
Heiwa Real Estate Co., Ltd. Corporate Report 201916

Review of Operations by Business

Real Estate Solutions Business
The Real Estate Solutions Business generates earnings by developing office buildings, housing and other properties, and by acquiring,
investing in, managing, and improving the value of real estate. It enhances the overall earnings power of the Heiwa Real Estate Groupby collaborating with other Group companies such as Heiwa Real Estate Asset Management Co., Ltd., which manages the assets of
Heiwa Real Estate REIT, Inc., and in other ways that include providing Heiwa Real Estate REIT with warehousing functions.

FY 2018 Results

Operatingrevenue

Structuring a Value Chain with Heiwa Real Estate REIT

OperatingincomeAs the sponsor of Heiwa Real Estate REIT, the Company supports its growth, generating earnings in the process to strengthen theearning power of the entire Group. We will generate earnings in a value chain that links the various types of value available fromreal estate.

Main Points

17,493 million• ‌Increase in operating revenue and income mainly due to anincrease in the sale of inventory (part of Shinjuku Front Tower, Itopia
Nihonbashi SA Building, and Shinjuku Fuji Building 2)¥(49.4% YoY increase of ¥5,782 million)

3,398 million•S‌ ale of Itopia Nihonbashi SA Building to Heiwa Real Estate REIT, Inc.

¥

• ‌Asset management fees of Heiwa Real Estate Asset Management
remained stable(12.4% YoY increase of ¥376 million)

Revenue Expansion from Supporting the Growth of Heiwa Real Estate REIT
Heiwa Real Estate Co., Ltd.

Leasing income

Property
management fees

Capital gains

Dividend
incomeBrokeragecommissions

Asset Management Fee Income from Heiwa Real Estate REIT

Dividend Income from Heiwa Real Estate REIT(Millions of yen)
1,300(Millions of yen)
600

1,310

1,200

500

1,121

1,100

Development

Warehousing

Property disposal

Property acquisition

1,000

Heiwa Real Estate REIT, Inc.

Asset
management fees

Add value using
expertiseHeiwa Real Estate AssetManagement Co., Ltd.
(Asset management company for Heiwa Real
Estate REIT)

Increase
assetsIncrease
portfolio
quality

1,096

1,132

469

481

2014

2015

513

400
300

979

900

200

2014

Stable asset
management

647
566

2015

2016

2018

2017

(FY)

2016

2017

2018

(FY)

Inventories Sold
Shinjuku Front Tower

Itopia Nihonbashi SA Building

Shinjuku Fuji Building 2

Kita-Shinjuku, Shinjuku-ku

Nihonbashi Horidomecho, Chuo-ku

Nishi-Shinjuku, Shinjuku-ku

Total floor space

6,286.62 m

1,944.41 m

1,702.74 m2

CompletedMay 2011

July 1995

August 1964

Acquired

September 2011

September 2017

July 2018

April 2018

August 2018

July 2018

Building
management fees

Heiwa Service
Co., Ltd.
(Building maintenance andrenovation service provider)

Housing Development
We focus on developing carefully selected condominiums for lease for supply to REITs.

Location

Sold

2

2

Note: Total floor space represents the portion belonging to Heiwa Real Estate.

Strategies for the Future
Expansion and Diversification of the Real Estate Solutions Business
As the sponsor of Heiwa Real Estate REIT, we will steadily expand the fee businessin ways such as increasing the scale and quality of assets under management.
Another objective is to diversify revenue-generating opportunities through Real
Estate Solutions Business operations such as selling income-generating properties
after maximizing their value through development and renovation, and lease up.
HF Shoukouji Akabane
Residence (Kita-ku, Tokyo)

HF Shoukouji Akabane
Residence II (tentative name)(Kita-ku, Tokyo)

Sumida-ku Yahiro PJ(Sumida-ku, Tokyo)

Kawaguchi Sakaecho PJ(Kawaguchi City, Saitama)

Shinichi Hayashi
Director andManaging Officer

17

1. As
‌ the sponsor of Heiwa Real Estate REIT, we will expand the fee
businesses to steadily increase earnings.
2. A
 goal of the Real Estate Solutions Business is to diversify earnings opportunities.
Heiwa Real Estate Co., Ltd. Corporate Report 201918

Corporate Governance

Basic Approach

Initiatives to Strengthen Corporate GovernanceHeiwa Real Estate considers the enhancement of corporate governance an important business issue. We strengthen Group corporate
governance to earn the trust of shareholders and other stakeholders and to manage our businesses fairly and efficiently.

EstablishedCompensation
Committee.

4

General Shareholders’ Meeting
Dismissal Election
Cooperation
Audit

Board of Statutory Auditors

Board of Directors(1 internal statutory auditor, 3 external statutory auditors)(Auditing firm)

FY 2011

4

3

Increased number ofinternal directors by one.

4

3

4

FY 2012FY2013

3

FY2014

Medium-term management plan
Foundations for the Future

Audit

Compensation Committee

4

3

4

5

Increased number ofexternal directors by one.

5

3

3

FY2016FY2017454FY2015over the “NEXT DECADE” Phase I

FY2018FY2019over the “NEXT DECADE” Phase II

Reasons for Selection of External Directors and Meeting Attendance
Cooperation

Management ConferenceManaging Officers’ Meeting

Corporate Planning and General Affairs Department
Development Promotion Department
Administration
Legal Office
Office Building Development Department
Finance Department
Real Estate Solutions Department

Compensation Committee• ‌Heiwa Real Estate has a discretionary Compensation Committee underthe Board of Directors. It is chaired by an external director and consistsof a majority of external directors to ensure the objectivity and transparencyof director compensation.
• ‌Director compensation consists of fixed base salary, bonuses andperformance-linked stock compensation under a system that motivates
directors to improve business performance, enhance corporate value
over the medium to long term and share it with shareholders, and helps
Heiwa Real Estate secure outstanding people.
• ‌The committee determines the basic policy for director compensation,
total amount of compensation, and compensation for individual
directors. It also addresses inquiries from and presents opinions to theBoard of Directors regarding matters pertaining to director compensationthat the Board of Directors submits to the General Shareholders’ Meeting.

3

Initiated performance-linked
stock compensation. Reduced
term of office for directors
from two years to one year.

Independent auditor

Representative Director
and President

Board of Directors• ‌The main roles of the Board of Directors are to establish the Company’s
management philosophy and set strategic directions. In deciding
management plans and strategies, the Board of Directors conducts
sound discussions, and based on the direction of those discussions, it
decides and supervises the execution of important matters.
• ‌The board makes decisions on matters specified by laws and regulations
and the Regulations of the Board of Directors’ Meetings (developmentof medium- to long-term management plans, disposal of important
assets, etc.). The execution of other business is delegated to directors
serving as executive officers, or to executive officers.
• ‌The board consists of nine directors, including four external directors,
all of whom are independent external directors.

19

Report(7 managing officers)

Internal
audit

Increased number of independent committee
members by one. Amended rules to makeexternal directors the chair of the Nomination
Committee and Compensation Committee.

Dismissal Election

Nomination Committee

Appointment
Supervision

Election

ReportCooperation

Internal Audit
Department(5 internal directors, 4 external directors)

Audit

Corporate
Auditors Office

Implemented evaluation of theeffectiveness of the Board of
Directors. Initiated compensation
for purchasing Company stock.

Internal directors
External directors

Corporate Governance System (As of June 26, 2019)

Dismissal Election

Established Corporate Governance
Guidelines. Established Standards forAssessing the Independence of Independent
Officers. Established Nomination Committee.

Subsidiaries

Nomination Committee• Heiwa‌Real Estate has a discretionary Nomination Committee under the
Board of Directors. It is chaired by an external director and consists of amajority of external directors to ensure the objectivity and transparencyof personnel affairs associated with directors and statutory auditors.
• ‌The committee selects director and statutory auditor candidates ofgood character with sufficient ability and discernment to properly
perform the duties required of the respective positions. In addition, theNomination Committee makes decisions regarding the dismissal ofsenior management in the event of material infringement of laws andregulations in the execution of duties. Based on the opinions of theNomination Committee, the Board of Directors determines the
specifics of the agenda for election or dismissal of the relevant
individuals to be submitted to the General Shareholders’ Meeting,subject to the consent of the Board of Statutory Auditors in the case ofstatutory auditor candidates.
Board of Statutory Auditors• ‌The Board of Statutory Auditors makes appropriate decisions from an
independent and objective standpoint conscious of its fiduciary duties
to shareholders in performing its roles and responsibilities, which
include auditing the execution of duties by directors, selection anddismissal of the independent auditor and exercising its authority inmatters pertaining to statutory auditor compensation.
• ‌The board has formulated evaluation standards for and has
appropriately selected its independent auditor by testing andconfirming its level of independence and expertise.
• ‌The board consists of four statutory auditors, two of whom are
full-time statutory auditors and three of whom are external statutory
auditors.

Reasons for selection

Attendance atBoard of Directors’Meetings (FY 2018)

MotoyaAizawaMr. Aizawa has served as the president and CEO of a securities company and has experience as a corporate
manager. Based on his deep knowledge of securities and finance, and his experience in corporate
management, the Company determined that he could play an appropriate role in strengthening thesupervisory function of the Board of Directors from an independent and objective standpoint and contributeto management as a director.

12 of 12 meetings(100%)

Kunitaro
Saida

Following a career as a superintendent public prosecutor in the respective High Public Prosecutors Offices of
Takamatsu, Hiroshima, and Osaka, Mr. Saida engaged in corporate legal affairs as an attorney. Based on his
expert knowledge and experience in the legal profession, the Company determined that he could play anappropriate role in strengthening the supervisory function of the Board of Directors from an independent andobjective standpoint and contribute to management as a director.

12 of 12 meetings(100%)

Kiichiro
Masui

Based on his position as Chairman of the Board of The Japan Securities Research Institute and his specialized
knowledge and experience in the financial and securities markets, the Company determined that he could play
an appropriate role in strengthening the supervisory function of the Board of Directors from an independentand objective standpoint, and also expects him to help improve the corporate value of the Company.

12 of 12 meetings(100%)Junji
Ota

Mr. Ota has served as a director of Nippon Steel Corporation, and has a track record as a corporate manager.
Based on his deep knowledge of and experience in corporate management, the Company determined thathe could play an appropriate role in strengthening the supervisory function of the Board of Directors from an
independent and objective standpoint and contribute to management as a director.

9 of 9 meetings*(100%)

Name

Independent
officer* Mr. Ota’s record of attendance at Board of Directors meetings commenced with his appointment as director in June 2018.

Introduction of Performance-linked Stock Compensation Plan for Directors and Executive Officers
As per a resolution of the 99th Ordinary General Shareholders’ Meeting held on June 26, 2019, the Company decided to introduce a
performance-linked stock compensation plan for directors (excluding external directors and non-residents of Japan) and executive officers(excluding non-residents of Japan) and established a trust to provide up to 75,000 shares and ¥150 million over three fiscal years. The aimof this plan is to clearly link the compensation of directors and executive officers with the Company’s performance and share price, and to
motivate them to work toward improving the Company’s performance over the medium to long term and increase corporate value, while
placing them in the same position as other shareholders with respect to the benefits of share price increases and the risk of share price decreases.

• Composition of Director and Executive Officer Compensation
Fixed compensation

Base salary

Short-term incentive

Bonuses

Medium- to long-term
incentive

Performance-linked stockcompensation• Method for Calculating Performance-linked Stock Compensation
Points are awarded each fiscal year according to factors including management rank
and performance, based on the Company’s Stock Compensation Rules. The Company
will provide shares equivalent to the number of points and monetary compensation
corresponding to the Company’s market capitalization.
(Point conversion formula)
Points awarded = Fixed portion management rank points1+ Performance-linked portion management rank points 11 × Performance-linked coefficient 12+ Performance-linked portion management rank points 21 × Performance-linked coefficient 22
1. ‌Fixed portion management rank points and performance-linked portion management rank points
are calculated by dividing the standard amount of stock compensation per management rank by
the average cost of acquiring the Company’s shares by the trust.
2. ‌The performance-linked coefficient ranges from 0% to 150% depending on the rate of achievement oftargets for consolidated operating income and growth in total shareholder return in each fiscal year.

Heiwa Real Estate Co., Ltd. Corporate Report 201920

Management Team (As of June 26, 2019)5

Shinichi Hayashi

6

Director and Managing Officer
In charge of Real Estate Solutions Department

5
4

3

2

11
10

8

6

12

7

9

13

Apr. 1984 Joined Heiwa Real Estate Co., Ltd. (the Company)
Apr. 2007 Manager of Nagoya Branch of the Company
Jun. 2010 General Manager, Group Leader of Building Sales Group, Leasing Headquarters of the Company
Jun. 2011 General Manager, Group Leader of Building Sales Group, Leasing Headquarters of the Company
Jun. 2012	Managing Officer (current position) in charge of the Redevelopment of the Nihonbashi Kabutocho
District, and Group Leader of Building Sales Group, Leasing Headquarters of the Company
Jun. 2013 In charge of the Headquarters of Redevelopment of the Nihonbashi Kabutocho District
May 2015	General Manager of Real Estate Marketing Department and in charge of Real Estate
Marketing Department of the Company
Jun. 2015 In charge of Property Management Department of the Company
Jul. 2016 Manager of Sapporo Branch of the Company
Jun. 2017	Director of the Company (current position)
In charge of Real Estate Solutions Department of the Company (current position)

Motoya Aizawa
External Director

Apr. 1965 Joined Nippon Kangyo Securities Co., Ltd. (currently Mizuho Securities Co., Ltd.)
Nov. 1973	Managing Director of Aizawa Securities Co., Ltd.
Dec. 1979 President and CEO of Aizawa Securities Co., Ltd.
Jun. 1998 Chairman of Aizawa Securities Co., Ltd.
Jun. 2008 Chairman and President of Aizawa Securities Co., Ltd.
Jun. 2010 External Director of Heiwa Real Estate Co., Ltd. (current position)
Jun. 2011 President and CEO of Aizawa Securities Co., Ltd.
Jul. 2018 Chairman of Aizawa Securities Co., Ltd.
Oct. 2018 Chairman and CEO of Aizawa Securities Co., Ltd.
Jun. 2019 Senior Advisor of Aizawa Securities Co., Ltd. (current position)

1

7

Kunitaro Saida

8

External Director
Apr. 1969
Nov. 2001
Feb. 2003
Jun. 2004
Aug. 2005
May 2006
Jun. 2007
Jun. 2008
Jun. 2010
Mar. 2014

9

Appointed public prosecutor
Chief public prosecutor of Tokyo District Public Prosecutors Office
Superintendent public prosecutor of Takamatsu High Public Prosecutors Office
Superintendent public prosecutor of Hiroshima High Public Prosecutors Office
Superintendent public prosecutor of Osaka High Public Prosecutors Office
Retired from office, then registered and commenced practice as attorney (current position)
Outside Auditor of Nichirei Corporation
Outside Director of Sumitomo Osaka Cement Co., Ltd. (current position)
External Director of Heiwa Real Estate Co., Ltd. (current position)
Outside Director of Canon Inc. (current position)

Kiichiro Masui
External Director

Apr. 1973
Jun. 2000
Jul. 2003
Sep. 2005
May 2006
Jun. 2012
Jul. 2013
Jun. 2014
Jun. 2016
Jun. 2017

Entered the Ministry of FinanceDirector-General of Kinki Local Finance Bureau
Director-General of the Planning and Coordination Bureau of the Financial Services Agency
Senior Managing Director of Japan Securities Dealers Association (JSDA)
Vice-Chairman of JSDA
Director of the Tokyo Shoken Building Incorporated
Chairman of the Japan Investor Protection Fund
Chairman of the Board of the Japan Securities Research Institute (current position)
Outside Director of Japan Credit Rating Agency, Ltd. (current position)
External Director of Heiwa Real Estate Co., Ltd. (current position)

Junji Ota
External Director

Directors
1

Hiroyuki Iwakuma

2

Representative Director and President, Chief Executive Officer
In charge of Development Promotion Department
Apr. 1976 Joined Tokyo Stock Exchange, Inc. (TSE)
Nov. 2001 General Manager of Finance Department of TSE
Jun. 2003 General Manager of Information Services Department of TSE
Jun. 2004 Executive Officer of TSE
Jun. 2007 Senior Executive Officer of TSE
Aug. 2007 Senior Executive Officer of Tokyo Stock Exchange Group, Inc. (TSE Group)
Jun. 2009 	Executive Vice President & COO of TSE Group
Senior Managing Director & COO of TSE
Jan. 2013 President & CEO of TSE
Jun. 2013 	Representative Director and President of Heiwa Real Estate Co., Ltd. (the Company)(current position)
Chief Executive Officer of the Company (current position)
General Manager of Leasing Headquarters of the Company
Jun. 2014 In charge of Business Planning Department of the Company
May 2015 In charge of Development Planning Department of the Company
Jun. 2018 In charge of Development Promotion Department of the Company (current position)

3

Kazuo Yamada
Director and Managing Executive Officer
In charge of Development Promotion Department (Development)

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

21

Kiyoyuki Tsuchimoto
Representative Director and Managing Senior Executive Officer
In charge of Office Building Development Department

Apr. 1982 Joined Tokyo Stock Exchange, Inc. (TSE)
Jun. 2004 Director of Listing Department of TSE
Jun. 2007 Executive Officer of TSE
Oct. 2007	Standing Governor of Tokyo Stock Exchange Regulation(currently Japan Exchange Regulation)
Apr. 2011 Senior Executive Officer of 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)
Managing Senior Executive Officer of the Company (current position)
In charge of Real Estate Marketing Department of the Company
Jun. 2018	In charge of Office Building Development Department of the Company(current position)
May 2019	Representative Director of the Company (current position)
Acting President of the Company (current position)

4

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

Auditors
10

Naoto Kato

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

Norio Iwasaki
Director and Managing Executive Officer
In charge of Corporate Planning and General Affairs Department (General
Affairs), Finance Department and Legal Office

Apr. 1981 Joined Tokyo Stock Exchange, Inc. (TSE)
Jun. 2004 Director of General Administration Department of TSE
Jun. 2007 Director of Finance Department of TSE
Aug. 2007 General Manager of Finance Department of Tokyo Stock Exchange Group, Inc. (TSE Group)
Jun. 2009 Executive Officer of TSE Group
Jan. 2013 Executive Officer of Japan Exchange Group, Inc.
Jun. 2013 Executive Officer of TSE
Jun. 2014	Managing Executive Officer of Heiwa Real Estate Co., Ltd. (the Company) (current position)
In charge of Finance Department of the Company (current position)
Nov. 2014	In charge of Corporate Planning and General Affairs Department (General Affairs) of theCompany (current position)
Jan. 2015 In charge of Legal Office of the Company (current position)
Jun. 2015 Director of the Company (current position)

11

Statutory Auditor (Full-time)

12

Chikami Tsubaki
External Statutory Auditor

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

Masayuki Hirose
External Statutory Auditor (Full-time)

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

13

Jun Sekine
External Statutory Auditor

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

Heiwa Real Estate Co., Ltd. Corporate Report 201922

Corporate Social Responsibility (CSR)

Initiatives for Tenants

CSR Vision
As a company that contributes to revitalizing areas, the Heiwa Real Estate Group continuously offers value to people throughout society by helping
communities resolve issues and by enhancing the satisfaction of its stakeholders through its business activities.

Improving Quality and Service

Heiwa Real Estate has assessed theearthquake resistance of all its buildings
and has seismically reinforcedbuildings as needed. To mitigate
impact in the event of a disaster, we
also hold disaster preparation andcrime prevention drills for tenantcompanies, and engage in business
continuity planning.

Heiwa Real Estate conducts a
customer satisfaction survey of all
tenants of its office buildings andworks to maintain, improve andstandardize quality in every aspect ofthe management and operation of its
office buildings. We also organize
tenant gatherings to help themdevelop their businesses.

Stakeholder Engagement
The Group promotes engagement with all stakeholders in order to mutually strengthen bonds with everyone who has a stake in its business. At the sametime, the Group endeavors to improve urban environments, bring value to communities and help people benefit economically with a view to help makesociety more sustainable.

Initiatives for Employees

Building tenants and users
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.

Work-Life Balance

Shareholders and investors

Business partners

The Group creates a wide
range of opportunities toengage with shareholders andinvestors by proactively
making such efforts as holding
financial results briefings andattending events for individual
investors as well as disclosing
information in a timely andproper manner.

The Group conducts businessin good faith in accordancewith societal norms and laws
related to free and fair competition
and transactions in an effort
to mutually raise corporate
value together with its
business partners.

Building tenants
and users

Shareholders andinvestors

Maintaining Building Safety and Security

Business partners

Employee Training
Heiwa Real Estate maintains aworkplace environment in which eachmember’s job is fulfilling andrewarding. The Group also hasplanned leave-related programs andstrives to reduce overtime work. In
addition, we promote employee
health and encourage vibrantcommunication among employees bymaintaining lounges that employees
can use according to their work styleand by supporting after-work activities.

We have a short-term overseas
training program to improve foreign
language ability and acquire skill incommunicating with non-Japanese.
We have also set up a system forallowing employees to attend classes
at Keio University’s campus in the
Marunouchi district of Tokyo todevelop our next generation ofhuman resources, and have aprogram to help employees acquire
official qualifications.

Heiwa Real Estate

Initiatives for Shareholders and Investors
Global environment
Giving full consideration to its
responsibility to conserve thenatural environment, theGroup actively implements
environmental initiatives while
complying with environmentrelated laws and regulations.

Globalenvironment

Employees

Local
communities

Local communities
The Group places importance on
coexistence with local communities andworks to broadly contribute to society asa good corporate citizen.

23

Employees
The Group endeavors to
respect each employee’s
character, eliminate any and all
discrimination and harassment,
and ensure a safe andcomfortable work environment.
Through these efforts, theGroup strives to realize a senseof latitude and abundance.

Briefing Sessions for Institutional and Individual Investors
We hold briefing sessions primarily forinstitutional investors twice a year (endof the second quarter and end of the
fiscal year). In addition, we participate
in IR fairs and seminars for individual
investors to create opportunities formore people to learn about the Heiwa
Real Estate Group.

Dividend Policy and Shareholder Bonus Program
We distribute dividends to ourshareholders twice a year, an interim
dividend and a year-end dividend, toprovide appropriate shareholder
returns. In addition, we have ashareholder special benefits program
to thank our shareholders for their
day-to-day support. Under thisprogram, every year we give an
original QUO card worth ¥1,000 toshareholders with 100 or more shares.
We have also introduced a reward
program for long-term shareholders.

Heiwa Real Estate Co., Ltd. Corporate Report 2019

24

CSR

Environmental Initiatives

Corporate Profile and Shareholder Information (As of March 31, 2019)

Corporate Profile
Heiwa Real Estate Co., Ltd.

Company name:

Reducing Environmental Impact and Resource Policies

Initiatives to Reduce Environmental Impact at KABUTO ONE

The Group considers the environment
and the creation of attractive
cityscapes when constructing andrenovating buildings. We also help toreduce the life-cycle cost of buildings
through long-term use while revitalizing
communities by preserving historicalvalue and adding appeal toneighborhoods.

• ‌We aim to create a workplace withlow environmental impact while
reducing CO2 emissions throughthe use of low-e glass that excels at
reducing heat loading for building
exteriors, and the installation of
LED light fixtures with automatic
light control sensors and highly
efficient equipment.
• ‌We aim to make pedestrian areas
more pleasant by adding greeneryto walls and streets.

DBJ Green Building Certification*

Branch Locations* ‌Certification system established by Development Bank of Japan (DBJ) to support green
building real estate with consideration for the environment and society. A program for
identifying and certifying “green buildings” in response to the needs of today’s real estatemarket. The evaluation is comprehensive, taking into account not only the property’s
environmental performance but also the degree to which the societal needs of various
stakeholders surrounding the property are considered.

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

Branches:

Osaka Branch, Nagoya Branch,
Fukuoka Branch, Sapporo Branch

Representative:

Hiroyuki Iwakuma,
Representative Director and President

Capital:¥21,492 million

Participation in the
Sanno Festival

Total authorized shares:

110,000,000

Total outstanding shares:

38,859,996 (As of June 26, 2019)

Number of shareholders:     19,207(18.70%)Donation of trees to
Chuo-ku for lining streetsin Nihonbashi Kayabacho

Fukuoka Branch

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

Sapporo Branch

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

Total outstanding
shares:Exhibition of the Red Stone
from Sado in connection with
Old Eiichi Shibusawa

40,059,000
Foreigncorporations
14,757,000(36.84%)

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

Major Shareholders (Top 10)
Name

Individuals and others
8,266,000 (20.63%)

Other
corporations
7,490,000

Neighborhoodcleanup events

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

Group Companies

Securities companies
892,000 (2.23%)

Contributing to Communities

Nagoya Branch

Number of employees 236(consolidated):Distribution of Shares by Shareholder Category

Community Initiatives

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

Date of establishment: July 1947

Status of Shares

The Tokyo Stock Exchange Building, Osaka Securities Exchange Building
and Nisshokan Building received Gold DBJ Green Building Certification in
FY 2018.

Osaka Branch

Financial
institutions
8,654,000(21.60%)

Number of Percentage ofsharestotal equity(Thousands)(%)*

Mitsubishi Estate Co., Ltd.

4,274

11.05

JP MORGAN CHASE BANK 385632

2,066

5.34

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

1,799

4.65

Japan Trustee Services Bank, Ltd. (Trust Account)

1,672

4.32

BNYM AS AGT/CLTS 10 PERCENT

1,210

3.13

DFA International Small Cap Value Portfolio

950

2.46

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

730

1.89

Government of Norway

660

1.71

Japan Trustee Services Bank, Ltd. (Trust Account 9)

583

1.51

JP MORGAN CHASE BANK 385151

562

1.45

* ‌Percentage of total equity was calculated after deducting the number of shares
held by the Company as treasury stock (1,378,119) from total outstanding shares.

Corporate Website
Community Networking

25

Café Salvador Business Salon

Kabuto Live!

Created as a venue for sharing
news about the development of
the Nihonbashi Kabutocho andKayabashi areas, Café Salvador
also brings energy and prosperity
to the community.

Kabuto Live! (URL: https://kabutolive.com/) is the community website
we operate for Nihonbashi Kabutocho
and Kayabacho. Through it, we help
vitalize the community by providing
information on the culture of the
Nihonbashi Kabutocho and Kayabachofinancial district, neighborhood eventsand other topics.

Home Page

IR Information Section

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

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

Heiwa Real Estate Co., Ltd. Corporate Report 201926