May 16, 2022

Q&A from IR Presentation (IR Meeting for FY2022)< Long-Term Management Plan >Q.

How do you assess progress of overall Long-Term Management Plan and each business segment
as of now? Both domestic and international asset businesses look good, but how about non-asset
business?

A.

Despite series of negative factors, such as COVID-19 right after an announcement of the LongTerm Management Plan followed by many environmental changes including the situation inUkraine, we are able to achieve a record high in profits. The details of each business segment are:
Offices : Not simply as places for work but the importance of offices as places for interaction
and mental satisfaction is increasing. By enhancing shared spaces, consolidation of offices fromother areas to Marunouchi is growing. Tokiwabashi Tower has been doing well with the flow
and its leasing is almost full.

Residential Business: Sales continue to go well but the number of units of condominiums soldis decreasing due to limited suitable lands for condominiums. While prices are rising closer tothe limit of affordable level, cost improvements cannot be expected due to increasing price onland and materials. Therefore, we need to discuss these issues more including product planning.
International Business: We don’t expect any changes on the direction taking advantage of thegrowth in Asia. However, at the moment, we are slightly sifting a direction to make major
investments in Europe and the U.S where investment returns are easy to predict and local
resources of our group companies can be used.
Non-asset Business: While some business segments confront difficulties to grow, in Investment
Management Business, AUM steadily grows and PL is growing accordingly. We are also trying
to earn project management fees through joint projects in Japan. We aim to pursue the same inoverseas.
Q.

Business profit forecast of 290 billion yen for FY 2023 seems higher than expected for the profit
level in the first half of the Long-Term Management Plan. On the other hand, ROE is expected
lower than FY2022. How do you plan to achieve ROE target?

A.

As you say, profit forecast for the first half of the Long-Term Management Plan is higher thanexpected. We are aware the need of discussion on it since ROE improvement can’t be achieved
without decreasing net worth equity capital. We are aiming for increasing shareholders return byincreasing profitability. We’d like to make business judgements focusing on an uncertain worldsituation.
In regard to ROE, we have resulted in 8.1% against initial forecast of 7.6% in FY2022. We think
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that there can be a room for improvement during FY2023, so we’d like to continue making efforts
to improve ROE.
We had a request for disclosing mid-term target before. This time we enhanced thedisclosure by including details of investment return results and development
pipelines in order to show more concrete profit growth forecast.
<Office Market >Q.

The vacancy rate of Marunouchi seems to be at relatively higher by historical level. How muchdo you expect for office rents?

A.

Office rent may change depending on multiple factors, such as economic growth conditions,
supply conditions of office buildings in Tokyo area, and impact of on-going weak yen on
business profit. It’s for sure that the rent will not be simply increasing. Even for Marunouchi
where highly competitive, we are aware of the need for producing offices of choice throughenhancing shared spaces and being environmentally friendly and more. Moreover by enhancing
business support functions and intangible measures, we’d like to further establish Marunouchi
as a hub between Tokyo and local cities.

< Capital Gains >Q.

It seems that profit increase is expected mainly from overseas capital gains. What are yourprospects on capital gains as well as profit growth for FY2023?

A.

In FY2023, a significant increase in overseas capital gains is expected as a result of sales ofCentral Saint Giles in London. However, it’s not our intension to increase sales of overseas
properties by forcing ourselves to record high profit. We have two large-scale properties underdevelopment in London and thus assets are being accumulated. We have decided to sell theproperty because we have now a prospect for selling it more than an expected price in addition
to the implications of portfolio management.
Large-scale development projects in Japan, including Marunouchi area, and residential
redevelopment projects are expected to make profit contributions in late 2020’s and it’s in linewith growth scenario described in the Long-Term Management Plan. Until then, we’d like tomake sure to combine various businesses, including investment management, outlet malls, rental
apartments, and international businesses, in order to make profits.

Q.

What are your thoughts on stabilized level of capital gains?

A.

It’s difficult to determine, but I think achieving sustainable growth including capital gains willlead to increase shareholders value. Continuing to hold assets is not important for us, so we’d like2

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to carefully monitor the timing of sales in each area both in Japan and overseas and also contributeto a stable profit growth.
< Investment and Development Pipelines >Q.

In regard to property pipelines shown in your IR presentation p.17 and 19, expected investment
and NOI are disclosed. To what extent how much of construction and land costs have alreadybeen decided? What about returns of each property?

A.

Disclosed figures are based on the total of expected amount for each property. These are also
based on the plan at the time of land acquisitions; therefore, the land cost had been decided
already and construction cost was estimated at that time. As for returns, we decide thesedepending on area and asset type with some adjustments base on expected return for eachbusiness disclosed in our IR presentation p.88.

Q.

As property acquisitions become challenging, how do you plan to ensure returns and expand
pipelines?

A.

By utilizing various resources through previous businesses, we aim to increase opportunities forproperty acquisitions without bidding. We are also trying to increase development returns bygaining fee income from joint projects with land owners.

< Shareholders Return >Q.

With the current profit growth, do you think there is a room to consider payout ratio increase?

A.

We’d like to work hard to enhance shareholders returns including share buybacks, however, wekeep in mind that profit growth comes first and then we need to increase the amount of dividends
while maintaining payout ratio. Currently the world situation and economic condition are difficult
to foresee, therefore, it’s important to maintain financial stability. We will also continue to discusscash allocation from the aspects of increasing both social and shareholder values.

< COVID-19 Recovery >Q.

How are retail properties and hotels recovering?

A.

As for retail properties, outlet malls have been on a recovery trend, but full recovery is not yet
expected for FY2023 considering 10~15% of inbound ratio before COVID-19. Mixed-use
facilities are still on the way for recovering. As for hotels, inbound ratio was 50% before
COVID-19. More impact may remain for FY2023, but domestic demands are expected to bealmost fully back for FY2023

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< ESG Related >Q. You have been working on environment related goals, such as net zero in CO2 emissions andrenewable energy. Do you expect cost increase due to an introduction of renewable energy?
A.

In Marunouchi and Yokohama Landmark Tower where renewable energy has been alreadyintroduced, there was almost no cost increase helped by our buying power. On the other hand, animpact on electricity cost becomes a concern due to price increase of raw materials affected by
the situation in Ukraine, so we need to pay attention to future procurement. Environmental
measures are essential for the office and residence to be chosen. We’d like to promote theintroduction of renewable energy by controlling the cost.

Q.

In regard to Strategic-Holding Stock explained in your IR presentation p.30, gain on disposals ofstocks are not planed to be recorded as an extraordinary income for FY2023. Is there any change
in the policy of continuing to sell Strategic-Holding Stock?

A.

We have been proceeding with disposals of stocks by considering market conditions with strategic
objectives in mind. It doesn’t mean to continue to increase sales amount, but we plan to continue
selling Strategic-Holding Stocks.

< Others >Q.

Your company’s stable portfolio has been appealing but I get a different impression of yourportfolio in stock market with recent significant increase of profit growth in overseas. On theother hand, I find it difficult to foresee when to expect shareholders return. What are your selling
points? What kind of investors would you like to attract?

A.

I would say one of our selling points is that the system is in place to make profit growth possible
in various businesses. We’d like to work together to promote the business with investors who arewilling to discuss social value in addition to profits and shareholder returns and also comfortablewith our strategy to increase social value. We are constantly discussing shareholders returns
including share buybacks and will make decisions at the right time given the world situation andeconomic condition.
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