HEIWA REAL ESTATE GROUP

March 29, 2024

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Formulation of Heiwa Real Estate Group Long-term Vision “WAY 2040”

Over the four-year period from FY2020 to FY2023, the Heiwa Real Estate Group advanced its medium-term management plan, Challenge &Progress, positioning itself to strive for new heights as a company contributing to district revitalization.
We progressed with revitalization of the Nihonbashi Kabutocho and Kayabacho district, as well as large-scale redevelopment projects in Sapporo,and transitioned to a business model centered on creating added value through both external and internal growth. Meanwhile, our commitment tosustainability initiatives led us to actively address social issues. As a result, we anticipate achieving all key performance indicators (KPIs), including
consolidated operating profit exceeding ¥12 billion, earnings per share (EPS) over ¥200, and a return on equity (ROE) over 6%. These achievements
represent a significant leap forward for the Group over the past four years.
Conversely, the urban landscape and lifestyles are undergoing major changes due to various factors, including the diversification and qualitativeshifts in workstyles, expanded demand from inbound tourism, population decline, a dwindling birthrate and an aging society, and intensifiedcompetition between cities and between regions. Additionally, heightened expectations for improved capital efficiency, the advancement ofsustainability management, progress in digital technology, and the increasing threat of natural disasters are all contributing to the rapidly evolving
operating environment.
In light of these significant external changes, we have developed a long-term vision for the Group toward 2040 to clarify our desired future state.
Reflecting on the Group’s past initiatives, we have endeavored to revitalize districts through continuous and long-term Bazukuri * initiatives, guided
by the belief that enhancing each individual aspect of an area will bring significant improvement. The future of the Group lies in expanding theseefforts both qualitatively and quantitatively to build environments that draw people in, transcending the traditional role of a developer. By
maintaining this momentum, we aim to achieve dynamic growth and enrich the future. These are my ideals encapsulated in our long-term vision.
*Bazukuri includes operations such as construction of buildings, and creation of community and opportunities.

March 2024

©HEIWA REAL ESTATE GROUP

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HEIWA REAL ESTATE GROUP

Long-term Vision “WAY 2040”

Pursue perpetual dynamic
growth to become theBazukuri Company“”

HEIWA REAL ESTATE GROUP

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Group Philosophy
Heiwa Real Estate Group Corporate Philosophy

Our Purpose

Enriching everyone’s futurewith Bazukuri that draws people inThis is the Group’s raison d'être. It articulates
the fundamental purpose and guiding
principles of our existence within society.

Long-term Vision “WAY 2040”

Pursue perpetual dynamic
growth to become the“Bazukuri Company”

This represents the Group’s vision.
It outlines the journey toward realizing Our
Purpose and declares the kind of presence
we aspire to embody.

Our Values

Trust Forward thinking Co-creation

These are the shared values of the Group,
indicating what we hold dear and how weconduct our business.

Basic Policy

Code of Conduct /Heiwa Real Estate Group Credo /Standards for Behavior

This forms the guideline for each officer andemployee of the Group to fulfill their social
responsibility with a high ethical standard.

©HEIWA REAL ESTATE GROUP

04Group Purpose
Heiwa Real Estate Group Purpose

Enriching everyone’s future with Bazukuri that draws people inOur aim is to enrich the future of all stakeholders.
This includes both material and spiritual prosperity.
We are committed to continuously creating spaces
where everyone involved can enjoy this abundance.

Through continuous Bazukuri , we have infused vibrancy
into districts. The fundamental value shared across theGroup’s work is drawing people in through diverse
Bazukuri endeavors. As a Group, we will embark on
initiatives to create captivating living environments.

©HEIWA REAL ESTATE GROUP

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Assessment of External Environment

Amid significant changes in the business environment,
establishing a long-term vision enables us to enhance corporate value.
Changes to Urban Environment and Lifestyles

Diversification and qualitative
shifts in workstyles
Population decline, and a dwindlingbirthrate and an aging society
Expanded demand frominbound tourism
Intensified competition between
cities and between regions

Changes to Society and Global Environment

Heiwa RealEstate GroupLong-term Vision“ WAY 2040”

Establishmentof long-termvision

Expectations for improved
capital efficiency
Advancement of sustainability
management
Progress in digital technology

Threat of natural disasters©HEIWA REAL ESTATE GROUP

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Growth Strategy

Through four growth strategies, we aim to enhance corporate value
and achieve our vision for 2040.
Long-term Vision “ WAY 2040”

Pursue perpetual dynamic growth tobecome the “Bazukuri Company”
Four Growth Strategies

Quantitative Targets

1. Expand redevelopment business

Deploy Bazukuri endeavorsthat draw people inthroughout Japan
3. Boost social value

Promote sustainability
initiatives

2. Cultivate profit growth while
enhancing capital efficiency

Expand leasing business, promote
reinvestment by realizing gains
from property sales, andenter new business areas
Enhance

corporate
value throughsynergies

Consolidated operating profit ofat least ¥25 billion in 2040
Sustainable ROE exceeding
cost of capital

4. Strengthen business foundations

Maximize human capitalfor accelerated growthNet-zero greenhouse gas (GHG)
emissions by 2050
*1. Achieve around double the consolidated operating profit level in FY2023.
*2. The ROE target is set for each medium-term management plan.

©HEIWA REAL ESTATE GROUP

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Growth Strategy (1) Expand Redevelopment BusinessIn addition to revitalizing the Nihonbashi
Kabutocho and Kayabacho district, we will
promote redevelopment in major cities
nationwide, thus expanding our portfolio of leaseassets, which serve as a stable revenue base.

SAPPOROTOKYO

Deploy Bazukuri endeavors thatdraw people in throughout Japan

KabutochoandKayabacho
district

Harnessing our unique presence in major cities
across the country, we will not only drive
redevelopment in the Nihonbashi Kabutochoand Kayabacho district, and Sapporo, but also
promote redevelopment in other areas, creatingOSAKA

environments that draw people in. As a Bazukuri
Company, we will address social issues such asachieving a decarbonized society while striving
to expand our revenue base.

FUKUOKA

NAGOYABazukuri
Company©HEIWA REAL ESTATE GROUP

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We aim for profit growth and improved
capital efficiency by expanding andreinvesting in redevelopment projects,
while also leveraging Group vehicles tofacilitate exit strategies.
Expand leasing business, reinvest gains fromproperty sales, and enter new business areas
As a Bazukuri Company, we aim to expand our redevelopment projects

Profit growth

Growth Strategy (2) Cultivate Profit Growth While Enhancing Capital Efficiency

Expand leasing revenue
through redevelopment
projects

Business
Portfolio
in 2040

both qualitatively and quantitatively, and accumulate lease assets,
which provide a stable revenue base. Additionally, we aim to recoverFurther growththrough new businessa portion of our invested capital by generating new added value andrealizing latent gains, then reinvesting this in subsequent
redevelopment projects to enhance capital efficiency.
To facilitate the smooth operation of this business model, we will strive
to improve capital efficiency by utilizing Group vehicles as exit

Currentstatus

Expand the AssetManagement Businessstrategies and expanding asset management revenue through anincrease in assets under management (AUM), among other measures.

Improvement in capital efficiency

Further, to achieve dynamic growth, we will expand into new businessareas that contribute to the realization of our long-term vision.

©HEIWA REAL ESTATE GROUP

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Growth Strategy (3) Boost Social Value

We aim to achieve net-zero GHG emissions, balancing profit growth withaddressing social issues at an elevated level, as we work toward resolving global challenges.
Promote sustainability initiatives
Sustainability Vision
Our activities as a Bazukuri Company contribute to realizing a sustainable society by addressing environmental and social issues, while
enhancing satisfaction through interactive communication with all stakeholders.
Social ValueProfitgrowth

Resolutionofsocial issues

Implement Bazukuri Initiatives toAttract People throughDiversity and Innovation

MaterialitySDGs

Industrial Development /Regional RevitalizationResponding to Social Needs

2050 goal of climate change initiatives

Create Disaster-Resistant, Resilient Areas

Natural Disaster Risk Mitigation
MeasuresNet-zero
GHG emissions

Create Environment-Friendly
Low-carbon Areas

Climate Change Countermeasures

Ensure Corporate GovernanceSupporting Bazukuri

Strengthening CorporateGovernance©HEIWA REAL ESTATE GROUP

10Growth Strategy (4) Strengthen Business Foundations

To achieve our long-term vision, we will enhance organizational capacity and maximize human capitalby promoting internal human resource development and acquiring human resources externally.
Maximize human capital for accelerated growth
Heiwa Real Estate Group’s Human Capital Management
Basic Policy

The Heiwa Real Estate Group shall promote human capital management through the acquisition of diverse talent and the cultivation ofindividuals who embody our core values.
Human Resource Strategy

Our Purpose

Enriching everyone’s future with

Bazukuri that draws people inLong-term Vision “WAY 2040”

Pursue perpetual dynamic growth
to become the “Bazukuri Company”
Our Values

Trust Forward thinking

Co-creation

・Build awareness of Our Purpose ・Define, acquire, and develop

Develop Human Resources
Capable of Realizing Our Purpose

Create an Organization That
Promotes and Maximizes Diversity
Foster a Comfortable
Work Environment

human resources for achieving the long-term vision
・Cultivate human resources capable of taking on challenges
・Promote sustainability initiatives
・Advance women’s empowerment
・Encourage the active engagement of diverse human resources
・Drive health and productivity management
・Energize internal communication ・Enhance work engagement©HEIWA REAL ESTATE GROUP

11Roadmap to Achieving Our Long-term Vision

We will designate the three-year period from FY2024 to FY2026 as Stage 1 of ourlong-term vision, and formulate a new medium-term management plan for thisperiod to drive forward our growth strategies.
Long-term Vision “ WAY 2040”“Challenge & Progress”

Key Achievements

・Opened KABUTO ONE and promoted the creationof vibrant districts
・Commercialized two large-scale redevelopment
projects in Sapporo
・Acquired properties totaling approximately ¥70billion
・Transitioned to a business model focused on
creating added value by renewing our portfolio
and realizing gains from property sales
・Achieved all KPIs, including consolidated
operating profit of ¥12 billion, EPS over ¥200,and ROE over 6%.

FY2020–FY2023
Previous medium-term
management plan

Challenge & Progress

Pursue perpetual dynamic growth tobecome the “Bazukuri Company”

2040

Promote growth strategies

Expand redevelopment
business

Cultivate profit growth
while enhancing
capital efficiency

Boost social value

Strengthen businessfoundations

Consolidated operating
profit of at least ¥25 billion
in 2040

Sustainable ROE exceeding
cost of capital

Net-zero GHG emissions
by 2050

FY2024–FY2026
Next medium-term
management plan

WAY 2040 Stage1©HEIWA REAL ESTATE GROUP

Enriching everyone’s future with Bazukuri that draws people in