COO Message

22

Nomura Real Estate Holdings, Inc.

Introduction

Our Vision(To be)Our Current Strengths and Core(Strengths)

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

With a focus on the front lines,
I will implement strategies and lay
a foundation aimed at achieving
the Mid- to Long-term Business Plan.
Daisaku Matsuo
Executive Vice President and Representative Director
Group COO
President and Representative Director of Nomura Real Estate Development

Review of the Fiscal Year Ended March 2023 and My Mission as COO
The fiscal year ended March 2023 was the first year of
the Mid- to Long-term Business Plan (the “Plan”), whichruns until the fiscal year ending March 2031. We got off
to a solid start this year, with business profit* surpassing
our forecast and hitting a record high ¥105.1 billion.
The business environment has been changing rapidly
in recent years. It is important to separate emotions fromshort-term performance trends and maintain a focus on
the front lines of each of the Group’s real estate development projects and services. Based on this belief, over thelast year I have compiled important raw data behind ourfinancial results, such as employee opinions and changes
in customer trends, at various front lines.
From this experience, I was able to confirm the solidityof the market environment underpinning our current financial
results. In particular, I confirmed the strength of demandin the housing sales market in Japan, the robustness of
the investment appetite for profitable real estate (mainly
from institutional investors), and the vitality of transactions
for existing condominiums.
At the same time, I can see that the front lines of manybusinesses are really feeling the impact of factors that
range from changes in workstyles and lifestyles attributable
to the pandemic and the advancement of DX to pricehikes of raw material and fuel prices due to the prolonged
conflict in Ukraine since February 2022 while facing
continually increasing human resource expenses. For
instance, the leasing business, including that for offices, isconfronting rising utility costs and the hotel business isfinding difficulty in ensuring sufficient staffing to meet therecovery in inbound travel.
As the COO, I consider it my mission to promote strategies with a frontline perspective and build a foundation
to support these strategies. I intend to continue working
hard to fulfill my mission with the aim of first achieving¥115.0 billion in business profit by the end of Phase I of
the Plan (the fiscal year ending March 2025) and thenseizing business opportunities to achieve the profit plansfor Phases II and III.
* Business profit = Operating profit + Equity in earnings of affiliates +Amortization of intangible fixed assets arising from corporate acquisitions

Integrated Report 2023

23

COO Message

Business Environment Forecast and the Company’s Strategies
Domestic Real Estate Development Sector(Residential Development and Commercial Real Estate)
Regarding the Residential Development Business Unit,
although the Japanese market cannot escape the impact ofa declining birthrate and aging population over the longterm, we expect continued stable robust demand over the
medium term due to such factors as an increase in dualincome households, a rise in household income attributable
to higher wages, and low home loan interest rates.
On the other hand, the Bank of Japan loosened its
yield curve control in July 2023. Based on the concernthat this will affect mortgage interest rates and the factthat construction costs are on an upward trend, I consider it necessary to provide a more diverse product lineupand create products supported by customers more thanever before to continue ensuring sufficient profitability
going forward.
Currently, with an eye on our target to record 4,000 to
5,000 housing units a year, we have almost acquired landfor development planned to be completed during Phase I
and are working to acquire land for Phases II and III. Ourpolicy is to seize business opportunities in part by
expanding our existing product lineup, provide superhigh-end properties for high net worth individuals, undertake proposal-based mixed-use development projects,
and effectively utilize public real estate and land held byeducational institutions.
Similarly, in the Commercial Real Estate Business Unit,
we are focusing on securing opportunities to maximize
profitability as we head into Phases II and III amid rising
construction costs. The following is a quick look at theenvironments of and our strategies for each sector.
The office market has continued to normalize since thepandemic has settled down, and the trend of expanding
and moving offices among companies has gradually
become more active. Amid this environment, the Company
will continue offering a combined office portfolio strategy
featuring the PMO, H1O, and H1T brands. Regarding thelogistics facilities market, we expect the market to growgoing forward and the need for highly functional logistics
facilities to expand as e-commerce further advances
despite having the characteristic that it is easily affected byrising construction costs due to its higher ratio of building
costs to total project costs compared with other sectors.
Our policy is to step up acquisitions of land, not justthrough open bids but also by applying our expertise andcomprehensive strengths as a developer in such areas asland readjustment on farmland. Due to a recovery in
inbound demand, the operations of hotels and retail facilities

24

Nomura Real Estate Holdings, Inc.

are improving, and we intend to gradually restore thespeed of new development.
The Group’s strength is developing highly marketableassets in every sector with a focus on the needs of those
who actually use our properties. Every employee strives
to promote business with an awareness of this strength.
In addition, in the Shibaura Project, which is theGroup’s largest ever, we will utilize our accumulated
expertise and know-how. We will continue aiming toundertake completely new urban development with anapproach that considers various perspectives, such as
realizing sustainability and addressing recent changes inworkstyles and lifestyles.

New Challenges to Seizing Business
Opportunities
To seize business opportunities amid a tough competitiveenvironment, the Company employs a strategy that takes
advantage of its expertise and comprehensive strength as
a developer. The representative examples are redevelopment, rebuilding condominiums, utilization of public facilities
and land, and collaboration with educational institutions.
As for redevelopment and rebuilding condominiums,
developers support redevelopment and work to reachagreements with the landowners of existing property
while also securing profit by acquiring and selling newly
created units. The Group established the Development
Planning Division specialized in legal redevelopment in2014 and currently boasts an industry leading number of
initiatives in this business area. From Phase II onward, we
will continue to further expand the ratio of these businesses that account for the profit recorded by the housing sales business.
In addition, in 2022, we established a division to searchfor development opportunities in such new fields as MICE
facilities and hotel residences in addition to seizing development opportunities through the effective use of aging
public facilities and unused public land as well as buildings
and land held by educational institutions as the birthrate
declines and population ages.
(

P.60–61 Special Feature: Solving Social Issues through Urban
Redevelopment and the Effective Use of Public Real Estate)

In initiatives involving the redevelopment and development of public land, it is essential to possess capabilities tosolve social issues through development, for example, byenhancing the convenience of and increasing the disaster
resilience of urban areas. Exercising its strength in area
management, the Group helps to increase the value ofIntroduction

Our Vision(To be)Our Current Strengths and Core(Strengths)

urban areas by stimulating local communities while creating
highly convenient urban areas that incorporate residential,
retail, and senior residence properties. In particular, wehave received praise for our strength in area management
led by local residents, a track record we built up throughsuch projects as the KAMEIDO PROJECT (constructed in2022), PROUD CITY Hiyoshi (constructed in 2020), andFunabashi Morino City (constructed in 2014).
Regional governments that are under pressure to revitalize regional economies are showing significant interestin these initiatives. Our track record with these efforts will
be an instrumental advantage when expanding businessmoving ahead.

Overseas Business Unit
Since restarting the overseas business with our entry into
the housing sales business in Southeast Asia in 2014, wehave worked hard to search for and build relationships oftrust with local partners with whom we can mutually prosper.
As a result, in the fiscal year ended March 2023, strong
profit contributions began (business profit: ¥7.2 billion).
To build trust with partner companies, the Group provides
added value in the form of know-how cultivated in Japan,
going beyond being just a simple provider of funding.
These efforts have resulted in relationships with partners
we can trust in each country in which we operate. In
Thailand, since 2017, we have worked on over 20 joint
development projects with ORIGIN PROPERTY PUBLIC. In

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

Vietnam, we have continually worked on joint development
projects with Vinhomes, which is the country’s largest
developer, and two other companies. In the Philippines, wefounded Federal Land NRE Global, Inc. jointly with Federal
Land, a real estate company and a member of GT Capital
Holdings, a large local financial group, and we plan to invest
a total of more than ¥700.0 billion over the next 30 years.
In addition, we are expanding our property sales businessin developed countries. In London, the United Kingdom, weare promoting an office renovation project, and in Portland,
the United States, we began developing rental housing.
Through the combination of the property sales businessand housing sales, we plan to increase the business profit
share of the overseas business within the Company as awhole to 15% or more by the fiscal year ending March 2031.

Service & Management Sector(Investment Management Business Unit / Property
Brokerage & CRE Business Unit / Property & Facility
Management Business Unit)
The growth in the three business units of the aforementioned Development Sector (Residential Development
Business Unit, Commercial Real Estate Business Unit, andOverseas Business Unit) will significantly contribute to
growing profit and seizing business opportunities for thethree business units of the Service & Management Sector.
Achieving growth through the synergy of these two
sectors is an important strategy in the Plan.

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25

COO Message

In the Investment Management Business Unit, we manage the funds of various different investor types, such as
listed REIT, private REIT, and private funds, and have built
a system to enable us to continue to stably acquire properties externally even as market conditions change. In
addition, in August 2022, we founded Nomura Real Asset
Investment Co., Ltd. jointly with Nomura Holdings, Inc.
We aim to achieve further profit growth by leveraging theGroup’s real estate management know-how and Nomura
Holdings’ customer base.
In the Property Brokerage & CRE Business Unit, themarkets are currently very active for the retail, middle, andwholesale businesses. We plan for significant growth in
the middle business, which handles real estate sales
brokerage for small and midsize companies, businessowners, some individual investors, and high net worth
individuals, as the size of its market is expected to continue
to grow going forward.

In the Property & Facility Management Business Unit,
management stock is expected to steadily increase due toits having been commissioned to handle the property andfacility management of each asset developed by the
Residential Development and Commercial Real EstateBusiness Units. In addition, we provide highly competitive
construction proposals, such as “re:Premium,” a schemethat extends the cycle of large-scale repair work for
condominiums. In this way, we have extended the life ofbuildings, which has become a social issue.
These three Business Units constitute a labor-intensive
business model with few owned assets. We will continue
realizing profit growth by utilizing DX to enhance productivity, for example, the online provision data by theProperty Brokerage & CRE Business Unit and the provision of management services via smartphones by theProperty & Facility Management Business.

Building a Foundation to Realize Our Strategies
Human Capital Management
Strengthening human capital management is indispensable to realizing high profit growth as laid out in the Plan.

26

Nomura Real Estate Holdings, Inc.

To achieve this goal, we have put together a Group-widetask force and are working to build a new human resources strategy with the plan of disclosing it from the next

Introduction

Our Vision(To be)Our Current Strengths and Core(Strengths)

fiscal year. In advance of that, I will explain what I value inhuman capital management.
In recent years, with the increasingly quickly expanding
market for recruiting and dispatching personnel, I think
the Company should aim to be a workplace where
employees want to work and want to collaborate withexcellent external personnel, rather than a place where
employees just feel trapped in a job. To this end, it isimportant that the Company remain attractive for every
employee by providing a workplace that enables each
person to thrive in line with their own characteristics aswell as in terms of salary and other compensation.
The Group encourages employees to grow and gain awide range of expertise through experiences in various
real estate businesses. We are working to stimulate theorganization to enable all grades of employees, including
middle and senior managers, not just new hires, to thriveand feel highly motivated to work.
(

P.38–39 Human Resources Strategy)

Promoting Our Sustainability Strategy
We established five priority issues (materiality) and KPIs in
April 2022 in line with the idea that the Group’s sustainable growth and contributing to a sustainable society are
inextricably linked.
With the aim of realizing decarbonization, one of the

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

priority issues, we set a new target of realizing carbon
neutrality for Group-wide Scope 1, 2, and 3 emissions by
2050. We are therefore taking such measures as enhancing the energy efficiency of condominiums and officebuildings and installing solar power equipment at logistics
facilities and in detached housing. Regarding the otherpriority issues as well, we set specific KPIs and are
conducting various activities to achieve them.
(

P.40–47 Sustainability Strategy)

Promoting Our DX Strategy
DX initiatives will be key to achieving the evolution andtransformation of value creation approaches and methods
as laid out in the Plan. We are therefore emphasizing
the recruitment and development of DX personnel.
Through the recent recruitment of employees from otherindustries, we have acquired expertise and know-howthat had previously not existed within the Group. In addition, regarding our current human resources, we areconducting Company-wide DX training and haveincreased our baseline knowledge. Through these efforts,
we are establishing a foundation for promoting our DX
strategy, and specific initiatives are proceeding apace on
the front lines of each business.
(

P.36–37 DX Strategy)

To Our Stakeholders
Every employee will need to flexibly adapt to changes andtake swift action to realize our goal of “Be a ‘Life & Time
Developer,’ as never seen before” and achieve the profit
goals of the Plan. I believe it is crucial to improve theenvironment and to develop and place human resourcesin order to foster a challenging corporate culture acrossthe Group.
The representative initiative for this is the moving of theGroup’s head office functions to the Shibaura Project in2025. By consolidating the Group’s head office functions in
Shibaura, which enables the realization of new workstyles,
we will encourage the creation of innovation and accelerate
the maximization of synergy and the desire to find andundertake new businesses. We will also work to establish
a multipronged human resources system that enables
diverse personnel to cultivate their unique strengths, grow,and thrive. On the occasion of the move to Shibaura, wewill continue further accelerating growth to realize “Be aLife & Time Developer, as never seen before.”
Going forward, the Group will evolve and transform
value creation approaches and methods amid a ceaselessly
changing environment. Over the long term, we will continue providing new value as never seen before by us or bycustomers. In closing, I would like to express our sincere
appreciation to our stakeholders for their ongoing support.

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27

CFO Interview

We aim to optimize both sides of thebalance sheet in order to achieve“high profit growth, and high asset andcapital efficiency.”

Toshihide Tsukasaki
Executive Officer, Group CFO

Q. You became Group CFO in April 2023.
Could you introduce yourself?
Certainly. In April 2023, I became Group CFO. I joined
Nomura Real Estate in 1991 and have gained experienceon both the business side and the corporate side.
On the business side, I have participated in development, leasing, management, and other fields, mainly for
office buildings, and also engaged in development for
properties for sales, including logistics facilities and rental
housing, as well as in the hotel business. On the corporate side, I served as the general manager of the
Corporate Planning Department. As an executive officer
in charge of the Finance & Accounting Department andthe Finance Department, I was dedicated to formulating
the Mid- to Long-term Business Plan (the “Plan”), which

28

Nomura Real Estate Holdings, Inc.

was released in April 2022.
It is crucial for the Group to work hard to optimize bothsides of the balance sheet as we aim to achieve growththrough various real estate development projects and theprovision of related services. As Group CFO, I will leverage the experience I have cultivated in both business andcorporate matters in our ongoing efforts to realize “highprofit growth, and high asset and capital efficiency,”
which is a key theme of the Plan.

Introduction

Our Vision(To be)Our Current Strengths and Core(Strengths)

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

Q. Could you give us a review of the fiscal year ended March 2023,
the first year of the Plan?
Under the Plan, we made “high profit growth, and highasset and capital efficiency” a key theme and stated that
we will strive for high shareholder returns. We set the following specific quantitative targets (Phase I: from thefiscal year ended March 2023 to the fiscal year ending
March 2025): an annual average growth rate of 8%, an
ROA of a 4.5% level, an ROE of a 9% level, and a total
return ratio of between 40% and 50%.
In the fiscal year ended March 2023, we achieved
operating revenue of ¥654.7 billion, business profit of¥105.1 billion, and profit attributable to owners of parentof ¥64.5 billion. Thus, we significantly exceeded the initialbusiness forecasts made at the start of the fiscal year andachieved record high profits. It is a pleasure that we got
off to a great start in the first year of the Plan. Comparedwith the fiscal year ended March 2022, business profit
grew 13.4% and profit attributable to owners of parent
increased 16.6%, enabling us to keep a close eye on
firmly achieving the profit targets in Phase I of the Plan.
In addition, reflecting ongoing expansion in investment,
total assets grew to around ¥2.1 trillion as of the fiscal
year-end, and we achieved an ROA of 5.1% and an ROEof 10.1%, exceeding all Phase I targets. These results areindicative of our success in steadily promoting businessthat has high asset and capital efficiency.

Integrated Report 2023

29

CFO Interview

Business Profit, ROE and ROA
Business profit (left axis)

ROE (right axis)

ROA (right axis)(%)(Billions of yen)

10.1

120.0
100.0

8.9

80.0
60.0
40.0

79.6

82.8

76.4

92.7

105.1

4.6

4.7

2019/32020/34.1
2021/3

Annual dividends were raised ¥10.0 from the forecast
at the beginning of the fiscal year to ¥120.0, increasing
for an 11th consecutive year. Including the effect of theacquisition of treasury shares equivalent to ¥9.5 billion,

11

9

7

7.4

20.0
0

9.2

9.1

115.0

4.7

2022/35.1
52023/32025/3(Phase I of the Plan)

3

(FY)

our total return ratio amounted to 47.6% and our dividend
payout ratio amounted to 32.9%. I believe this demonstrates high shareholder returns in line with profit growth.

Shareholder Returns
Dividends per share (left axis)

Total return ratio (right axis)

Dividend payout ratio (right axis)

(Yen)

(%)

140.0

100

120.0

120.0

60.0

75.0
41.4

80.0

82.5
45.0

44.3

30.5

29.9

2019/32020/3

60

47.6
34.7

46.3

40.0
20.0

80

97.5

100.0
80.0

130.0

35.5

31.7

32.9

2022/32023/3

40
20

0

0

2021/32024/3(forecast)(FY)

Q. The Tokyo Stock Exchange announced it would encourage the companies listed on the Prime Market to take action aimed at implementing
management that is conscious of the cost of capital and stock price.
From the perspective of stock price, how would you assess the evaluation of the Company by the stock market? Could you tell us whatkind of initiatives you are thinking about as CFO?
The Company has realized management that ensuresboth profit growth and shareholder returns achieving highasset and capital efficiency with the awareness of thecost of capital and stock price, since long before theTokyo Stock Exchange’s announcement. However, theCompany’s stock price has been stuck below a price-to-30

Nomura Real Estate Holdings, Inc.

book ratio (PBR) of 1 times (as of July 2023). As CFO, I
intend to continue promoting initiatives with an awarenessof the cost of capital and stock price while emphasizing
communication with shareholders and market players.
Again, although you can break down PBR into ROE x
PER, real estate developers who own a certain level ofIntroduction

Our Vision(To be)Our Current Strengths and Core(Strengths)

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

Initiatives aimed at enhancing corporate value and market valuation

Main components

PBR

ROE

PER

The Company’s Main Initiatives

ROA

Building an optimal business portfolio
Promoting the Group’s value chain based on its development capabilities

Financial leverage

Maintaining ﬁnancial discipline (shareholders’ equity ratio: 30% level)

Capital cost

Combination of businesses and business ﬁelds with different risk-return characteristics
Ensuring ﬁnancial soundness
Communication with investors (IR activities, etc.)

Growth rate

Appropriate capital allocation• Promoting investment aimed at profit growth (circulate funds recovered from property sales
into investments)• Promoting profit returns
Sustainability and DX initiatives
Utilizing non-ﬁnancial capital (human capital), etc.

P/NAV

assets need to consider net asset value (NAV) adjusted for
unrealized gains.
Now, let us talk about how to promote initiatives aimed
at lifting these indicators. For ROE, which is ROA x financial
leverage, realizing a high ROA by building an optimalbusiness portfolio and promoting the Group’s value chain
is key. It means we are not simply stepping up the leverage.
Compared with REITs, which have low cost of capital
because their main business is leasing, real estate developers whose main business is development have a relatively
high cost of capital. We recognize the Company’s cost ofcapital is around 7% to 8%. Aiming to create value
exceeding the cost of capital, the Company not only
records value created through development as unrealized
gains but also promotes initiatives to realize unrealized
gains. Basically, the aim of these efforts is to acceleratebusiness turnover by selling off developed properties.
Moreover, regarding leasing assets owned by the Company
as non-current assets, the Company will maintain initiatives
to continue returning unrealized gains to shareholders as
realized gains while replacing some assets from theperspective of controlling overall asset volume andstrengthening our leasing asset portfolio. We believe thiswill be effective in raising up the NAV valuation.
Moreover, aiming to enhance ROA, we will strive to further expand the Service & Management Business, mainly
by acquiring fee income without using assets.
We will highlight the value created through development

Realizing unrealized proﬁt through asset replacement
Strengthening our leasing asset portfolio

by selling off developed properties. We will keep working
hard to further promote the Group’s value chain, wherein
we expand fee-based income through the provision ofrelated services while maintaining contact between
assets and customers after development, as theCompany’s characteristic business model.
p.35 Overview of the Mid- to Long-term Business Plan
(FY2023/3–2031/3) (Business portfolio strategy)

Next, aiming to enhance PER, we need to lower the costof capital and raise
the expected growth1
rate to enable toPER
r-g
generally draw themout from the followr: Cost of Capitalg: Growth Rateing formulas.
Regarding lowering the cost of capital, we aim to further
reduce the cost in part by ensuring financial stability andfostering communication with investors while balancing
businesses with different risk-return characteristics andthereby enhancing the stability of profit.

Integrated Report 2023

31

CFO Interview

Regarding the growth rate, implementing the strategiesof the Plan will be important, but growth investments
through appropriate capital allocation will be indispensable
to raising the expected growth rate. Going forward, itgoes without saying that realizing ongoing profit growth
while maintaining an ROE above the cost of capital is at
the root of our policy.

Q. What is your policy on capital allocation?
The Company aims to achieve both growth investments
and shareholder returns, and the source of funds mainlycomprises cash flow gained through business activities
and cash flow procured through financing. By circulating
funding with an axis in the property sales business, it ispossible to allocate recovered funding to investments andreturns. In addition, against the backdrop of a stablefinancial foundation, there is ample room to procure
funding through financing.
Based on funding acquired through business activities,
our shareholder returns policy is, during Phase I of thePlan, to achieve a total return ratio of between 40% and
50% and, with an eye on Phase II and beyond, to incrementally increase the dividend payout ratio to a 40%
level. Our intention is to continue providing shareholder
returns in line with this policy.
In addition, with the aim of realizing high profit growth,
we will continue expanding investment. As seen in theinvestment plan in the Plan shown at right, we will continue expanding investment in the Commercial Real EstateBusiness Unit and Overseas Business Unit and proactively
carrying out strategic investment, including M&A aimed atrealizing inorganic growth.

Investment Plan in the Mid- to Long-term Business Plan
Residential Development
Overseas

Commercial Real Estate(Billions of yen)
2,500.0

2,100.0
2,000.0200.0

1,850.0
1,700.0

200.0

150.0
1,500.0

1,000.0
700.0

800.0

1,000.0

500.0

0

850.0

900.0

850.0

Phase I

Phase II

Phase III(FY23/3–25/3)(FY26/3–28/3)(FY29/3–31/3)

Q. Since the formulation of the Mid- to Long-term Business
Plan, interest rates in Japan and overseas have beenchanging. Could you tell us about your financing policy?

Based on the characteristics of the real estate development
business over the medium to long term, with financing
centered on long-term funding as a foundation, theCompany prepared for the risk of rising interest rates by
increasing our ratio of fixed interest rates and working to
spread out the amount repaid (amount amortized) by fiscal
year. Through these efforts, the impact of rising interest
payments due to current interest rate volatility is limited.
Regarding the expansion of the overseas business,

32

Nomura Real Estate Holdings, Inc.

because our basic stance is to use funding procured inJapan for overseas investments, the recent rapid increase
in interest rates overseas has not had much of a direct
impact. We use some investment capital as a hedge toaddress the risk of exchange rate volatility. These costs
are continuing to rise, and we need to pay attention to
how we optimize the balance between exchange rate
volatility risks and costs.
We expect the uncertain financial environment to persist

Introduction

Our Vision(To be)Our Current Strengths and Core(Strengths)

moving forward, so to achieve profit growth in line with thePlan, we will need to steadily procure the necessaryamount of funding while holding down costs as we work to
expand investment, mainly in the development business.
Going forward, while there will be no change in our policy of fixing interest rates, especially for long-term funding,we will continue striving to control procurement costs byworking to diversify procurement routes and methods.
Regarding procurement routes, we increased the numberof partner financial institutions from 55, during the latest
four-year period when I was in charge of the Finance
Department, up to 74 (as of March 31, 2023). We willcontinue further expanding this number, including

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

corporate bond procurement. As for procurement methods,
we will more proactively procure funding from multiple
types of sustainable financing. Because nearly 90% of theamount procured in the fiscal year ended March 2023
was obtained through these methods, the balance ofsustainable finance expanded to over ¥200.0 billion. In
addition, I intend to procure an additional ¥500.0 billion
for the following five-year period.
Moreover, the Company’s bond issuance rating wasraised by two domestic credit rating agencies in August2023. We believe this improvement in the evaluation of ourcredit rating will help reduce credit costs for procurement
and further strengthen our funding procurement capability.

Q. Finally, could you tell us about your commitment as Group CFO?
I believe my role as CFO is to achieve “high profit growth,and high asset and capital efficiency,” to implement highshareholder returns, to clearly communicate the Company’s
initiatives to all shareholders and investors through daily IR
activities, and to foster communication with everyone.
To realize the Nomura Real Estate Group Vision for 2030

to “Be a ‘Life & Time Developer,’ as never seen before,” Iwill continue aiming to realize performance surpassing the
expectations of shareholders and investors. I will continue
giving my all to foster communication with all our stakeholders and enhance the Company’s corporate value.

Integrated Report 2023

33

Overview of the Mid- to Long-term Business Plan
(FY2023/3 - FY2031/3)
In line with the Mid- to Long-term Business Plan formulated in April 2022, the Nomura Real Estate Group aims to achieve
high profit growth and high asset and capital efficiency. To this end, we are promoting a diverse range of strategic initiatives,
including key business strategies for growth focused on the “Further expansion of domestic real estate development business,”“High profit growth in the Service & Management Sector,” and “Steady growth of overseas business.”
In addition, the Group formulates and executes long-term business plans by taking into account the characteristics of its
real estate business, which has a long business period. At the same time, in principle the Group flexibly reviews the plans
every three years to reflect changes in the external environment.

Overview of Each Strategy Aimed at Achieving the Goals of the Plan
Business strategy

Financial Strategy

DX Strategy

Sustainability Strategy

Strategies by Business Unit

• Further expansion ofdomestic real estatedevelopment businessBusiness portfolio strategy

pp. 36-37

Climate Change and Natural
Environment• High proﬁt growth in
the Service &Management Sector

Investment and Recovery
Strategy

Residential Development
Commercial Real Estate
Overseas
Investment Management
Property Brokerage & CRE
Property & Facility Management

Leasing asset portfolio
strategyp. 35• Steady growth ofoverseas businessSociety and Employees
pp. 40-47

Human Resources
Strategy

Further accelerate ourcorporate growththrough strategic
investments centeredon the Service &Management Sector aswell as fields related todigital technologies andoverseas real estate

pp. 48-59

pp. 38-39

Strategic
investments

Profit Targets (Business Profit*1)
Phase III（FY31/3）

Realize an average annual business profit growth rate around the 8%
level. Business profit is expected to grow to more than ¥180.0 billion
during the period of the Plan.

180.0Phase （FY28/3）
II140.0Phase（FY25/3）
I(Billions of yen)

105.1
Overseas Business Unit

4.0

Composition
ratio*2(100%)
3%

55.0

45%

115.0

FY23/3 Results

Composition
ratio*2(100%)
10%

7.2

40%

Commercial Real Estate Business Unit

39.5

Residential Development Business Unit

33.3

32.5

26%

Investment Management Business Unit
Property Brokerage & CRE Business Unit

8.0
13.8
9.8

9.0
12.0
10.5

25%

-6.7

-8.0

Property Sales

55%

approx. 60%

approx. 55%

approx. 55%

Leasing18%

approx. 15%

approx. 15%

approx. 15%

Service & Management

27%

approx. 25%

approx. 30%

approx. 30%

20%

Property & Facility Management Business Unit

30%

Other and Adjustment

Compositionof businessproﬁt bybusiness type*1 Business profit = operating profit + share of profit (loss) of entities accounted for using equity method + amortization of intangible assets associated with corporate acquisitions*2 Calculate the profit ratio of each division after excluding other and adjustment amounts from the business profit forecast.

Financial Targets

Shareholder Returns Policy• Pursue higher asset and capital efficiency• Ensure high shareholder returns

ROA *3
ROE *4Phase I

Phase II

Phase III

4.5% level

5% level

5% or more

9% level

10% level

10% or more

*3 ROA = business profit / (average) total assets during the period*4 ROE = profit attributable to owners of parent / (average) shareholders’ equity during the period

34

Nomura Real Estate Holdings, Inc.

Phase I

Shareholder
returns
policyPhase II

Phase III

Total return ratio:

Dividend payout ratio:

40-50%

40% level

Introduction

Our Vision(To be)(Strengths)

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

Financial Strategy
Business portfolio strategy
Plan

Results (FY2023/3)• Leverage the characteristics of each business to achieve a business portfolio that combines profit growth as well as
high asset and capital efficiency• Achieve a business profit growth rate around the 8% level through business expansion and profitability improvement
powered by intragroup business collaboration and the value chain, starting with leveraging our development capabilities• Aim for an ROA of 5% or more by taking advantage of a combination of businesses with differing profit structures and risks• Business profit totaled ¥105.1 billion (up 13.4% year on year)• Achieved an ROA of 5.1%, which surpasses our Phase I target, by
taking advantage of a combination of businesses with differingcharacteristics
ROA of each business unit

Business profit(Billions of yen)

Business type

Property Sales BusinessBusinesscharacteristics

Overseas property sales

Investment risks

Domestic
property sales

Medium to highEarnings fluctuation
risks

Service & Management Business

Property brokerage& CRE

MediumHigh

Low

MediumLow

Medium to low

ROA (medium)
ROA target

Investment management / Property &facility management

Low

ROA (high)By improving profitability, thisbusiness will achieve a high levelof ROA even when expanding
investment.

FY23/3Results

Overseas Business
Unit

4.5%

105.1

Commercial Real
Estate Business Unit

3.2%

Residential
Development
Business Unit

5.5%

Investment
Management
Business Unit

18.4%

33.3

Property Brokerage &CRE Business Unit

47.5%

19.2%

8.0

Property & Facility
Management
Business Unit

11.7

13.8

Other

11.2%

9.2

9.8

Total

5.1%

-7.4

-6.7

FY22/3Results

Leasing BusinessLeasing
Overseas
Business Unit

Medium

92.7

7.2

0.2
39.5

Commercial
Real EstateBusiness Unit

38.5

Residential
Development
Business Unit

32.5

Low

ROA (low)

Aim for stable revenue (low risk of revenue fluctuation) with ROA of 5%
or more through profit growth in the service & management businessand the improvement of the leasing asset portfolio’s profit rate.

Investment
Management
Business Unit
Property Brokerage& CRE Business Unit
Property & Facility
Management
Business Unit
Other and Adjustment

7.8

Leasing asset portfolio strategy
Plan

Results (FY2023/3)• Realize unrealized profit by selling properties that are relatively inferior properties in terms of medium- to long-termcompetitiveness• Improve leasing asset portfolio quality by increasing the proportion of highly competitive properties via redevelopment
and reconstruction• Optimally time the sale of selected redeveloped or reconstructed properties• Recorded gross profit of ¥29.3 billion through property sales(Commercial Real Estate Business Unit)• Posted an extraordinary gain of ¥6.8 billion through the sale ofnon-current assets• Transferred a portion of non-current assets to inventories, with an eye
to divesting them over the medium to long term (the balance-sheet
amount of transferred assets is approximately ¥15.0 billion as ofMarch 31, 2023)• Promoted Shibaura Project and Nihonbashi 1-chome Central District
Redevelopment

Sale
Sale

Property for saleLeasing property
held

Investment and recovery

Realization of
unrealized gain
throughproperty sales

Appropriately timed
property replacement
Redevelopment and rebuilding
Maintaining and improving
asset value

Realization of unrealized
gain throughproperty sales

Appropriately timed
property replacement

Highly competitive
properties(after redevelopment andreconstruction)

Investment and recovery strategy
Plan

Results (FY2023/3)• Expanded net investment even as we maintained ROA and ROE to secure high profit growth• Invested ¥143.0 billion in the first year, making steady progress under
our net investment plan, which sets aside a total of ¥400.0 billion forPhase I
(Billions of yen)Phase I

Phase II

Phase III(FY23/3 – FY25/3)(FY26/3 – FY28/3)(FY29/3 – FY31/3)(Billions of yen)

Total

Results (FY2023/3)

Residential Development

Residential Development

Investment

850.0

850.0

900.0

2,600.0

Investment

270.0

Recovery

800.0

850.0

900.0

2,550.0

Recovery

213.0

Commercial Real Estate

Commercial Real Estate

Investment

700.0

800.0

1,000.02,500.0

Investment

139.0

Recovery

450.0

700.0

850.0

2,000.0

Recovery

91.0

Overseas

Overseas
Investment

150.0

200.0

200.0

550.0

Investment

51.0

Recovery

50.0

150.0

200.0

400.0

Recovery

13.0

Total

Total
Investment

1,700.0

1,850.0

2,100.05,650.0

Investment

460.0

Recovery

1,300.0

1,700.0

1,950.0

4,950.0

Recovery317.0

Net investment

400.0

150.0

150.0

700.0

Net investment

143.0* Figures in the table are rounded to the nearest ¥50.0 billion

Integrated Report 2023

35

DX Strategy
DX initiatives are key to the expansion and improvement of value creation and to the realization of “Be a ‘Life & Time Developer,’as never seen before.” We will link strategic investments and initiatives unique to the Group with new value creation while
focusing on business sectors in which we can leverage our strengths.

Overview of our DX strategy
Value proposition targeted in our DX strategy (Realization of the Digital Dream)
At the core of our DX strategy is “our approach to connect closely with individuals,” which places an emphasis on each individual person. We aim
to harness this approach to develop and provide products and services that contribute to the improvement of customers’ quality of life (QOL). The
Company uses the phrase “Realization of the Digital Dream” to express DX-driven value creation.

Improvement of Quality of Life (QOL)
To improve QOL, we place emphasis on the following two aspects: Life (human’s respective lives) and Time (every moment of their time). We aim toprovide new products and services by stepping up our development efforts with a further focus on people through DX.
Quality of life

Focus on people
More enriched and innovative

Development of “Life”
Housing / Ofﬁce

Improve the quality ofpeople’s lives and lifestyles

Development and provision ofgood products and services

DX

Housing / Ofﬁce
Community / City
Local community / Global environment

Improve the total QOL ofpeople to whom theGroup’s value propositionis extended through DX

Community / City

Establishment of cities
and communities

DX

Local community / Global environment

Development of “Time” Improve the quality of daily life and each moment spent

Establishment of a DX strategy platform
We will aim to establish a platform that utilizes digital
data by building on one of the Group’s strengths, itscustomer base. From a user’s perspective, the platform
will also contribute to the improvement of people’s QOL,
as various products and services will be available from
one touch point.

Consideration ofsociety and the earth

DX
Time

A platform service built on the Group’s customer baseStronger product strength using digital data
Customer base

Increase in
the number ofmembers

Enhancement ofbrand loyalty
Creation of opportunities
to learn about services

Increase of sales of products
and services
Increase of surplus for investment
Provision of efﬁcientand convenient newservices

Improvement of service quality through feedback
Strengthen initiatives to improve QOL,
including service expansion

Investment in productivity improvements to realize cost reductions

Promotion system
As a subordinate organization of the Management Committee, we have established a DX Strategy Committee, which discusses investment plans,such as establishing policies and plans regarding the promotion of DX, improving the ICT environment, and preparing the ICT base. In promoting our
DX strategy, specific issues are addressed at meetings of the Group DX Council and Subcommittee and regular meetings of various working groups.

Investment plan
The Group is focusing on improving the QOL of customers using DX and improving productivity by revising various work processes and introducing
systems. In addition, digital security is becoming increasingly important, and, recognizing this, the Group plans to invest a total of ¥130.0 billion in
DX and ICT over the nine-year period of the Mid- to Long-term Business Plan. (Cumulative total over nine years: ¥60.0 billion in DX, ¥70.0 billion inICT.) As for progress up to the second year, we plan to invest around ¥20.0 billion in DX and ICT and are simultaneously strengthening our efforts
to hire and develop DX human resources.

36

Nomura Real Estate Holdings, Inc.

Introduction

Our Vision(To be)Our Current Strengthss and Core(Strengths
hs)

Our ChaOu
Chalallengaleng
eennnggeses andd Stra
trat
raaattegegiess
egie
(Act
(Ac
Act
Actions
ctio
io )
ions

The
Th
hhee FouFoun
ounda
dation of Our Activities
es
( e)
(Bas

Data,, etData
Dat
etcc..

DX investment themes and progress
Regarding DX investment, our policy is to concentrate funding and human capital in areas where we can best leverage the Group’s advantages.
Aiming to meet the diversifying needs of customers and assign our limited human resources to higher value-added operations, we select targets
for investment aligned with our DX strategy, looking to establish foundations that will help enhance the productivity of our operations and to promote
initiatives related to developing and providing products and services that help customers enhance their QOL. In addition, we are currently carryingout pilot testing to assess the progress of these and other initiatives that have already begun providing services. We are already seeing the effectsof the construction of a common cloud platform for the Group and the in-house development of prototype systems. In addition, regarding the progressof DX, we confirm the status of investment and the progress of processes under each theme through the DX Strategy Committee every month.

Main investment themes and specific examples

Development andprovision of
products andservices

Services that we have begun providing• WillTAP (an app for condominium residents)• NOMURA no KURASUMA (a general services website related to living and housing)• NOMURA WORK-LIFE PLUS (a service for employees of office building tenant companies), etc.
Pilot testing under way• Robot delivery (automated delivery of products purchased at stores within the area around PROUD CITY Hiyoshi)• Techrum inter-company co-creation program (verification of the effects of distribution automationand operations)• Digital platform for shared offices, etc.

Website of NOMURA no KURASUMA

Already in use• Construction of a common cloud platform for the Group

Enhancing the
productivity ofoperations

Pilot testing under way• Switching to smart services for the management ofcondominium and office building• Utilizing cleaning robots inside office buildings• Brokerage and CRE proposals utilizing AI• Utilizing digital technologies at the Group’s new head office(Shibaura Project)

Use of automated meter reading using image
analysis in office building management

Test of workstyles using DX in the new head office

DX Initiatives: WORK-LIFE PLUS
NOMURA WORK-LIFE PLUS is a platform hosting various services that address a wide range of issues facing companies and workers. We provide services
mainly aimed at employees of tenant companies and people who work at office buildings developed by the Group. Through value propositions that affect tangible
aspects, namely office building development, and intangible aspects, we aim to be a strong partner for companies and workers.

Value propositions affecting the tangible (workplace) and intangible (services for workers)
WORK with +Realizing diverse workstyles

LIFE with +Encouraging skill enhancement

Flexible work

3

■Satellite-type shared office■Office concierge■Space and supplies reservation management■Virtual offices, etc.

■Business seminars■Business videos■Human resource training■Social events, etc.

1

Solving business issues

2

Business solutions■Building-related functions■Work concierge■Corporate real estate concierge■Operation support, etc.

Skilling

Support for physical and mental health4

Wellness■Life concierge■Fitness gym■Fitness videos■Family events, etc.

Highlights of utilizing digital technology
1Service close at hand for every person:

The service can be accessed at any time anywhere from a computer for
smartphone2

Flexible service expansion:

High-priority services can be steadily added to and quickly expanded

3

Service improvement using data analysis:

Based on the movement of users, existing functions can be improved andnew functions can be developed

Integrated Report 2023

37

Human Resources Strategy
The Group promotes Wellness Management to ensure that all of its executives and employees
are in good physical and mental health and can work energetically, which is key to sustainablecorporate growth.
It also seeks to become a company where employees are happy and continue to take onchallenges through a cycle of nurturing a diverse and active workforce and securing humanresources in growth areas.
Moreover, we have established the Group Human Capital Strategy Task Force. This body iscurrently engaged in ongoing, cross-sectional discussions involving all Group companies.
Going forward, we plan to disclose the task force’s conclusions, which will, in turn, inform
both short- and long-term human resource strategies to be undertaken by the Group.

Realize employeethat can continue

Success of diverse human resources
Realize wellness, with each
employee working with vigor

Promote diversity and inclusion to enablea diverse workforce• Grow into a corporate group that contributes to growth and isrewarding for employees• Establish a working environment that maximizes the potentialof diverse personnel with a variety of backgrounds and values
such as women, seniors, LGBTQ individuals, people withdisabilities, and foreign nationals through the promotion ofdiversity management training• Cultivate management personnel and leadership personnel
that draw out the diverse capabilities of each employee

Examples of initiatives• Introduce re-skilling, in which each employee voluntarily
develops his or her own potential

38• Support work/life balance that encompasses childbirth, childcare, nursing care, injury and illness and raise awareness ofthe need to shorten working hours

Promoting health and productivity management
on a Group-wide basis

Practicing innovative workstyles on a trial basis in
anticipation of the relocation of the Group head office

We employ monitoring to assess the status of wellness measures
promoted across the Group. This provides us with insights into
presenteeism, absenteeism, and lifestyle habit trends, helping us
identify various issues. Also, as part of specific measures aimed ataddressing issues associated with exercise and dietary habits, in
FY2023/3 we introduced app-assisted walking events.

Through our head office relocation project, we
aim to realize employee happiness and become
a company that can continue to take onchallenges. We will establish and deploy systems
and operational rules in stages so as to realize
flexible ways of working.

Preparing a handbook featuring insights on
women’s health issues

Monitoring improvements in the work environment

On a regular basis, we provide training to all officers
and employees to help
them gain literacy regarding
women’s health issues. We
have also prepared a handbook summarizing basic
knowledge on this subject
and distributed it to Group
officers and employees. This handbook helps them accurately
address such issues while enabling them to reflect on the content
of training.

Introducing the “F Leave” system
The “F Leave” system grants special leave on a monthly basis forfemale employees who feel ill due to specifically female healthissues. This system has been introduced by some Group companies,
including Nomura Real Estate Development. In addition, we have
expanded the criteria upon which “F leave” is granted to include
unwellness due to infertility treatment or menopausal symptoms in
addition to menstrual discomfort.

Nomura Real Estate Holdings, Inc.

We will deliberate and determine the establishment of action plans, setting oftargets, identification of issues, and formulation of improvement measures on
working hours and annual paid leave rates at each Group company, and wewill monitor the progress and management of said plans and targets. The
results will be reported to the Board of Directors and reflected in management
plans and business activities.

Implementing training aimed at promoting D&I
We strive to create a working environment that empowers diverse humanresources to succeed. To this end, we hold seminars aimed at facilitating
understanding of nursing care while providing training to instill robust literacy
regarding members of the LGBTQ community.

Improving employee engagement
We conduct the “Nomura Real Estate Group Sustainability, Wellness, and D&I
Awareness Survey” under the banner of “Your Voice Creates New Value, Real
Value.” This survey is aimed at ensuring that top management has a sharedrecognition of good points of, and issues pertaining to, the Company andeach workplace, based on input from Group employees regarding their daily
perception of these matters. Survey results are thus utilized to create an evenbetter workplace. Looking ahead, we will conduct similar initiatives to visualize
the status of employee satisfaction among members of our Group workforce
and their drive to make spontaneous contributions. By doing so, we will planmeasures to address universal issues confronting Group members and otherwise
push ahead further with the creation of synergies.

Introduction

Our Vision(To be)Our Current Strengths and Core(Strengths)

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

happiness and become a company
to take on challenges

Human resources retention in growth areas
The starting point for growth is retaining and fostering
human resources in the Development Sector

Strengthening focus areas of the Service &Management Sector through personnel allocation• Strengthen recruitment to obtain personnel with a high level ofexpertise in multi-use properties, redevelopment, and architecture• Improve productivity through the acquisition and cultivation of
the Group’s DX personnel• Distribute resources to growth areas through personnel
exchanges within the Group• Allocate retained personnel to focus areas• Cultivate global personnel• Recruit and train foreign nationals in countries where theGroup operates

Focus areas

Investment
management

Property Brokerage& CRE

Private funds business

Middle business*

Property & Facility
Management
Construction orderedbusiness* Real estate brokerage for small and medium-sized companies, business owners, some individual investors, and high net
worth individuals

Introduction of a multi-track personnel system

Provision of training programs

A multi-track personnel system has been introduced by some Group companies tasked withcore functions supporting each business unit,
including Nomura Real Estate Development,
Nomura Real Estate Solutions, and Nomura
Real Estate Partners. This move is intended toenable individuals and the organization tocontinue to take on challenges by empowering
diverse workers to develop their respective
strengths, achieve growth, and play active roles in the workplace. To this end,
the system takes into account the duties undertaken by each individual andprovides evaluations to officers and employees based on their job functions.

In addition to providing training programs designed by each Group company, we
implement Group-wide, level-specific training programs designed in accordancewith in-house job qualifications held by recipients. By doing so, we aim toenable each Group employee to maintain a robust sense of professionalism andleverage their strengths in their areas of specialty in the course of their duties.
Also, Nomura Real Estate Development provides its employees with
“Career Training” to enable each individual to autonomously develop theircareers. This training involves a once every decade career history review, providing
employees with opportunities to reshape their future career plans.

Globalizing our human resources
We have positioned the overseas business as a
growth driver supporting the execution of theMid- to Long-term Business Plan. Accordingly,
we are striving to secure a robust pool of global
human resources as well as locally hiring andtraining foreign nationals. As of June 2023,
approximately 150 Group employees operate inoverseas bases. We expect the number of such employees to grow going forward.
In FY2023/3, we launched the “Overseas Knowledge Exchange Program,”
under which locally hired employees and foreign students serving as interns
participate in such events as tours of our frontline business sites in Japan andabroad. By doing so, we strive to facilitate interactions between Japaneseemployees and their colleagues of different nationalities and backgrounds sothat they help one another gain fresh insights, raise their technical capabilities,
and understand each other’s local customs.

The hiring and development of DX human resources
As we aim to realize an innovative mode of value creation driven by digitaltransformation (DX), we promote the hiring of mid-career human resources
equipped with extensive expertise in DX-related fields. At the same time, we
proactively train existing employees to help them acquire a robust mindset
regarding the promotion of DX by, for example, streaming video content under
the title “Digital Dream Learning.”

Introduction of the Human Resources Development Meeting
In conjunction with the recent revision of its personnel system, Nomura Real
Estate Development has introduced the Human Resources Development
Meeting. This provides a framework for facilitating discussions involving theentire frontline organization to determine short-term missions to be assigned
and medium- to long-term training policies to be enforced in light of each
employee’s personal strengths and career orientation. In these ways, Nomura
Real Estate Development holds company-wide deliberations on the successionof key positions.

Human resource development at the Property Brokerage& CRE Business Unit
Human resources serve as the most profound factor that sets our services
apart from others in the real estate brokerage business. Therefore, humanresources are of utmost importance as a component of our management capital.
For us to secure sustainable growth, the enhancement of human capital isparticularly important. In the retail business, we deliver proposals on property
brokerage transactions to individual customers. Accordingly, we appointseasoned employees who play key roles in the front line of this business to
responsibly educate and give guidance to new graduates as part of our training
programs. By doing so, we ensure that the former group of employees canfully pass down their experience and know-how to the latter. Although thismay seem to place a substantial burden on frontline employees, it has been
revealed that these training programs enable new graduates to swiftly growinto active workforce members while improving their retention. Moreover,individuals responsible for providing education often experience personal
growth themselves. As such, training programs in place at the Property
Brokerage & CRE Business Unit greatly help enhance our human capital.
Integrated Report 2023

39

Sustainability Strategy(Climate Change and Natural Environment)
The Group recognizes climate change, natural resource depletion, and ecosystem destruction as important social issues. We
are therefore contributing to the realization of a sustainable society through environmentally friendly buildings and urban
development, including initiatives for an energy-efficient and low-carbon society. We also continue to comply with environmental
laws and regulations and promote appropriate environmental management, while stepping up our initiatives in collaboration
with our stakeholders, including tenant companies and suppliers.

Climate Change andContribution to the urgent global issue of reducing CO2 emissions,
Priority issues(materiality)/targets

Decarbonization
Initiatives in “energy saving,” “low-carbon business,” and “shift to renewable energy”
SBT: 35% reduction in Scopes 1 & 2, and 3 by FY31/3 compared to FY20/3

Key performanceindicators (KPIs) for
achieving the targets• CO2 emissions:
reduce by 35%*1• Energy conservation performance indicators in newbuildings: Maintain ZEH/ZEB-oriented standards• Develop timber-based buildings:
Carbon storage amount: 10,000 t-CO2/year*2*1 Results are provided on page 45.

Achieved net-zero CO2 emissions for the entire district
covered by the Shibaura
Project, a large-scale, mixeduse development• By achieving various energy-saving
initiatives, the South Tower officespace is slated to receive ZEB-oriented
certification (as of September 2023)• We plan to introduce solar powerand carbon-neutral city gas throughthe Group’s energy business andother sources.

Renewable energy

Joined the RE100 initiative in January 2022
• We plan to introduce renewable energy in all leasing properties in Japan, including tenantportions, up to the fiscal year ending March 2024.

Nomura Real Estate Development leads Japan’s ﬁrst Virtual Mega Solar
power system for detached housing in the Tokyo Metropolitan Area
• In the Tokyo Metropolitan Area, which does not have much unused area, we are promoting a
Virtual Mega Solar power system, which will introduce solar power on par with a mega solar
power plant (total output of 1,000 kW) to detached housing (around 300 units annually).

Low-carbon

Utilization oftimber

Timber-based
buildings

EnergysavingRenewableenergyZEB
Oriented

Solar power
for logistics
facilities
Energysaving

Initiatives of the Group

Energysaving

ZEH-(M)
Oriented

Low-carbon

Energy saving

Promote development of ZEH/
ZEB-oriented standard buildings• We formulated a long-term road map aimed
at achieve ZEH- and ZEB-oriented standards
by 2030, ZEH for the Residential Development
Business Unit and ZEB for the Commercial
Real Estate Business Unit. In addition, we link
officer remuneration to levels of achievement
for each fiscal year.
• We also promote ZEH for detached housing.
We aim to increase ZEH detached housing,which accounted for 25% of the total in thefiscal year ended March 2023, to over 50%
by the fiscal year ending March 2026.

40

Nomura Real Estate Holdings, Inc.

Virtual Mega
Solar

Switch to timber-based properties• Proactively using timber, which is a low-carbon
material, in the construction of residences
and offices• Making it a policy to use wood for the standalone common buildings of condominiums• Promoting the R&D of wooden building materials
that contribute to carbon storage in buildings• Using timber cut under the Integrated
Forest Management Project in Tokyo in
the Company’s business and storingcarbon (Estimated cumulative savings of
11,000 t-CO2/30 year)• Striving to use domestic timber totaling
10,000 m3 over five years
PROUD CITY Kichijoji

Introduction

Our Vision(To be)s and Core(Strengths
hs)

Our Challeneng
ngess an
ng
nges
and
nd Stttrat
rrategie
rat
egie
giees
(Acttions)The
hee Fou
Foou
Foun
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tivivviities
iv
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Natural Environment
biodiversity preservation and realization of a circular society that contributes to CO2 reduction

Biodiversity

Circular design

By restoring the forest cycle in Japan, contribute to CO2 absorption and to the natural environment through urban afforestationand forest preservation, thus enabling rich biodiversity• Obtain biodiversity certiﬁcation

Contribute to a decarbonized society and a circular economy
through urban development and service provision that focus on
assuring longer property lives, recycling, and resource sharing• Initiatives to promote building longevity:
Implementation rate of the Company’s own standards: 100%*2• Promote waste reduction and increase recycling rate:
Rate of reducing industrial waste: 20%*2*2 We plan to disclose results for this item in the next fiscal year after calculating the amount for the fiscal year ending March 2024.

Building a new economic cycle that connects cities and nature• We have implemented a cycle of planting trees, nurturing them, and harvesting them. Harvested
trees are turned into materials and the timber is used in urban areas. In this way, we create a
new economic cycle in the space between urban and mountainous areas.
• For the Integrated Forest Management Project in Tokyo, the Company collaborates with multiple
co-creation partners, including the Tokyo Forestry Union, local material processors, and building
materials manufacturers. Together we utilize Tokyo’s forest resources and promote growing
sustainable forests for local production and local consumption.

OKUTAMA TOWN

Plant

Grow
Tsunagu Mori

Demand/create jobs

Contributing tobiodiversity
Tama River

Aim to use timber

HarvestForests ownedby the Group

Decarbonization(carbon storage)

The Group’s
main business
areas

Circulation of water/nutrients (forest photosynthesis)

Mori wo Tsunagu TOKYO project (Integrated Forest Management
Project in Tokyo) in Okutama Town, Tokyo• Concluded a land rights establishment agreement forowning around 130 ha of forests over 30 years• Regarding sustainable forest management, we acquired
SGEC forest management (FM) certification and PEFC
certification, a mutual international certification system

Evaporate/precipitate

Decarbonization(CO2 absorption)

Promote building longevity• Our Attractive 30 service adopts highly durable materials and construction methods for new
construction• Our re:Premium and re:Premium Duo services significantly extend the cycle of large-scale
repair work performed on our condominiums• These initiatives have enabled the cycle of large-scale repair work to be extended from thetypical 12 years to 16 to 18 years.

• Formulate ecosystem surveys and conservation plansand promote the conservation of natural woods andendangered organisms• Certified as an advanced 100 area on Japan’s Ministryof the Environment’s Natural Harmony Website

Concluded an agreement with Japan’s Ministry of Agriculture,
Forestry and Fisheries and timber trading companies to encourage the use of timber for buildings

Reforestation support• Building a supply chain that can stably supply domestic timber

Upstream(forestry operators)

Midstream(manufacture of housing construction
materials and trading company)

Downstream(real estate developer)

Fell and supply timber that has reachedusable age

Sharing• Under the H1T brand, the Company operates satellite-type shared offices that provide a
comfortable space for workers to use as needed. By reducing travel times and improving
productivity, the offices contribute to the reduction of CO2 emissions and the realization of acircular society.

Develop stable supply system fordomestic timber
Use 10,000 m3 of domestic timber overthe next five years in detached housing,etc., built by the Group

Integrated Report 2023

41

Sustainability Strategy (Climate Change and Natural Environment)

Roadmap to Decarbonization
Initiatives for decarbonization are a major pillar of the Group’s sustainability strategy (climate change and natural environment).
While adhering to the principles of the TCFD, SBT, and RE100, we collaborate with outside companies and focus on uniqueinitiatives as a real estate developer.

Response to the TCFD
Nomura Real Estate Holdings and Nomura Real Estate
Asset Management are fully aware that the substantial
impact of climate change on their business continuity is amajor management issue, and they therefore agreed torecommendations made by the Task Force on
Climate-related Financial Disclosures (TCFD) in order tofurther promote their initiatives. They also joined the TCFD
Consortium, an organization for supportive companies inJapan. Disclosures based on the TCFD recommendations
are presented on pages 42 (Sustainability governance) to
45 (Indicators and targets).

1 Sustainability governanceSupervision by the Board of Directors
The Sustainability Committee deliberates Group-wide policies andtargets related to the promotion of sustainability, including climatechange. The committee meets at least three times a year to study
climate change-related risks and opportunities and to consider andmonitor the Group’s GHG reduction targets. In addition, the content
of its deliberations is reported to the Board of Directors and theManagement Committee at least once semiannually as a general rule.
In the event that there are important matters for Group management,
they are reported to the Board of Directors and the Management
Committee as appropriate.

Sustainability governance structure
Board of Directors
ReportManagement Committee
ReportSustainability Committee
Chairman: Group CEO
Members: Directors and executive officers

Determination ofvarious policies

Management officeSustainability Management Dept.

Support for
implementation

Group Companies
Based on policies,
practice at thebusiness level• Creation of policies and strategies• Formulation flow for Group companies

Role of top management
The Representative Director, President, and Group CEO of Nomura
Real Estate Holdings serves as Chairman of the Sustainability
Committee and promotes action on sustainability and climate change
across the entire Group. The Group CEO is the chief officer on theexecutive side of the Board of Directors and the Management
Committee, makes optimal decisions to realize long-term growth for
the Company, including action on sustainability and climate change

42

Nomura Real Estate Holdings, Inc.

issues, and is responsible for important related executive operations.
Furthermore, to respond to climate change while also raisingawareness among directors and other management team membersof Group companies, the Group has incorporated BEI (building energy
efficiency index) figures as a non-financial performance indicator into
the performance indicators used to calculate officer remuneration,
starting from the fiscal year ending March 2023.

Intr
nt oduc
uction
uc
titio

Our
O
uurr VVisi
ision(Too bee)
(T

Our
Our
ur Curr
Currentt StreS renngths
ngt
ggths and Coree
(Str
(S
Str
trrengths
engg hs)eng
hss)

Our Chalhalle
lengngges aandnd St
Strategie
tr egggies
(Act
(Ac
(A
A ions))

Thee Founndat
The
dati
dda
atitionaat
ioonn of O
OuOurur AAcctivi
cttitiv
tivi
ivvvities
t
(Bas
(Ba
((B
B
Bas
aasse)e)Data, etc.
Data,

2 Strategy
Upon considering climate change response strategies, the Group
conducted a qualitative scenario analysis based on the IPCC Sixth
Assessment Report and the details of the Paris Agreement. In theanalysis, we examine the risks and opportunities that may be presented
to the Group as a result of climate change and consider and implement
strategies and policies that capture such risks and opportunities.

Scope of the analysis
The analysis covers all businesses of the Group, including theResidential Development Business Unit (development and sale ofcondominiums and detached housing), the Commercial Real EstateBusiness Unit (development, leasing, and sale of office buildings, retailfacilities, logistics facilities, and hotels), the Overseas Business Unit
(development of real estate overseas), the Investment Management

Business Unit (management of REITs and private funds), the Property
Brokerage & CRE Business Unit (real estate brokerage), and theProperty & Facility Management Business Unit (real estate management)
and Other.
The scope of calculation of GHG emissions includes all of Scope 1,
2, and 3 emissions generated by the Group.

Setting out scenarios: Expanding disclosure to the “1.5°C scenario”
In the scenario analysis, the Group has begun disclosing data in linewith the “2°C scenario,” in 2022 assuming the achievement of theParis Agreement goals and the realization of a decarbonized society.
We now also disclose data in line with the “1.5°C scenario” to further
expand our disclosure of quantitative data. The “4°C scenario,” a modelin which climate change countermeasures do not make sufficient
progress and the severity of natural disasters increases as a result, isalso considered. The documents listed on the right were the mainmaterials referred to in configuring each scenario. Moreover, in thisreport, we disclose effects in line with the “1.5°C scenario” and“4°C scenario.”• United Nations IPCC Fifth Assessment Report (2014), “Representative Concentration
Pathways (RCP) 2.6” and “Representative Concentration Pathways (RCP) 8.5”
• United Nations IPCC Sixth Assessment Report (2021)• IEA World Energy Outlook 2020, “Sustainable Development Scenarios (SDS)” and “Stated
Policies Scenario (STEPS)”

Disclosure items

Content disclosed as of September 30, 2022

Content disclosed as of September 30, 2023

Scenario setting

Scenario 2°C/4°C

Scenario 1.5°C/2°C/4°C

Qualitative analysis

Analysis of both risks and opportunities

Analysis of risks and opportunities separately

Quantitative analysis

Implementation of quantitative analysis ofsome scenarios

Implementation of quantitative analysis ofall scenarios

Financial impact degree setting

Disclosure of the financial impact of
only some items

Disclosure of the financial impact of each item
(Expressing the degree of impact as small,medium, or large)

Timeline setting

Assumptions up to 2030

Assumptions up to 2050
(Expressing the duration of impact as short,medium, or long)Note: Details of the content disclosed as of September 30, 2023 are presented on page 44.

Integrated Report 2023

43

Sustainability Strategy (Climate Change and Natural Environment)

Results of scenario analysis
Qualitative analysis

Quantitative analysis

Category
Our recognition

Large category

1.5°C
Items

Degree ofimpactIncrease in construction costs tomeet ZEH/ZEB standards

4°C

Duration

Degree ofimpactDuration

Small

Medium to
long

None

None

Increase in the carbon tax
imposed on the Company’s own
emissions (Scopes 1 & 2)

Small

Medium to
long

Small

Short

Rise in the burden of carbon tax indevelopment costs(Scope 3 Category 1)

MediumMedium to
long

Small

Short

Investments in energy-efficientequipment

Small

Medium to
long

None

None

Reputational

Loss on annual leases of non-ZEB
properties

MediumMediumNone

None

Technical

Change in reliability of businesses
and products

—

—

—

—

Acute

Increase in losses due tointensifying wind and water
damage (floods)

Small

Long

Small

Long

Damage from rising sea levels(floods)

Small

Long

MediumLong

Damage from rising temperatures(extremely hot days, on which thetemperature rises above 35°C)

Small

Long

Small

Long

Policy andregulatory

Enhancement of subsidy systems,
including for energy-saving
technologies, ZEBs, and ZEHs

—

—

—

—

MarketSolar power earnings

Small

—

Small

—

Increase in ZEB property sales
earnings

MediumMediumNone

None

Increase in ZEH property sales

Large

Medium

None

None

—

—

—

—

Decrease in funding procurement
costs due to a reduction in CO2

Small

Short

Small

Short

Decrease in heating costs due tohigher energy-efficient performance

Small

MediumSmall

MediumSmall category

Policies andregulations

MarketTransition
risks

Risks

Physicalrisks
Chronic

Opportunities

Transition
opportunities

Reputational

Changes in the reliability ofbusiness and productsTechnical

Note: A bar (—) is used for some items that are currently difficult to quantify.

Financial impact
Degree of impact
standard setting

Timeline setting

44

Nomura Real Estate Holdings, Inc.

Degree of impact setting

Degree of impact on consolidated
business profit

FY2023/3 Results (amount/year)

Large

10%–

¥10.5 billion–

Medium

5%–10%¥5.2–¥10.5 billion

Small

–5%

–¥5.2 billion

Duration of impact setting

Forecast period

Short term

–2025

Medium term

–2030

Long term–2050

Intro
Int
ntr
trodu
odduc
ucttion
uc
tioon
on

Ouur
O
ur Visi
Viisi
Vi
Vis
siion
((TTo
(To
To be)
be)

Ouur
Our
O
ur Curr
CuurrentCu
ent SStr
Stre
reeng
nggt
gth
ths aannd Coore
th
(SStr
(Str
trren
engt
eng
g hhs)
gt
s)

Our C
Our
Chal
hal
allengalle
leneng
ngges aandnndd Str
trat
trat
a eg
egie
ggies
(Act
(Ac
(A
Actionsions))TThehehe FFoun
oun
unnddadati
datatittiioonn of Ou
aat
Our Act
AAccttivi
tiiv
tiv
ivviities
ivi
t
(Bas
(Ba
((B
Bas
B
Baaasse)
e)

Data
D
at
ata, etc.

3. Risk management: Processes for the identification, evaluation,and management of climate-related risks on an organizational basis
The Board of Directors and the Management Committee manages
and supervises sustainability-related risks, including climate change,
and the Sustainability Committee, which is under the Management
Committee, deliberates said risks as appropriate.
In addition, each Business Unit manages individual matters related
to their businesses, such as business planning and product planning.
Specifically, they survey and assess each individual risk related to themarket (affecting customer companies and consumers) as well aslaws and regulations (such as for construction and real estate), andreflect them as appropriate in plans for businesses and products. Of
the matters considered by each Business Unit, ones that significantly
impact the entire Group are reported as appropriate to the Board of
Directors, Management Committee, Sustainability Committee, or Risk
Management Committee depending on the content.

4. Indicators and targets
The Group acquired SBT certification in 2020 and also joined RE100 in January 2022. “Indicators and targets” have been set according to thesecertifications and the GHG protocol.
Indicators concerning total greenhouse gas (GHG) emissions

Scope 3*1

Scope 1& 2

Long-term target

Total GHG (CO2) emissions by FY2051/3

Achieve carbon neutrality

Medium- to long-term target

Total GHG (CO2) emissions by FY2031/3
compared to FY2020/3

Reduce by 35%

Reduce by 35%

Short-term target

Total GHG (CO2) emissions by FY2026/3
compared to FY2020/3

Reduce by 15%

Reduce by 15%

Scope 1& 2

Scope 3*1

*1 Applicable to categories 1 and 11

Indicators concerning renewable energy
Medium- to long-term target

Electricity consumed by the entire Group by 2050

100% derived fromrenewable energy—

Short-term target

Electricity consumed by all rental properties*2
Nomura Real Estate Development owns in Japan
by FY2024/3

100% derived fromrenewable energy—*2 Excludes rental assets (including portions used by tenants) for which Nomura Real Estate Development has a direct electricity contract with a powercompany, assets sectionalized or shared between Nomura Real Estate Development and another party, assets subject to sale or demolition, and thecommon areas of some rental housing.

Leasing Business

Service & Management Business

Scope 1

Scope 2(Thousand t-CO2)200
Scope 1& 2

approx.

100 thousand t(5%)

Reduce by

132

150

160

129

120

97

126

112

107

75

23

20

21

24

15

FY20/3

FY21/3

FY22/3

FY23/3

FY31/380
Other:
approx.

35%

98

82

40

210
thousand t

0(Base year)(Target year)(10%)
Category 1

FY23/3
Actual emissions
Total

approx.

2,170

approx.

700• Adopt energy-efficient products for various equipment(LED, air-conditioning equipment, etc.)• Utilization of renewable energy

thousand t(32%)

thousand t
Category 11

approx.

Reductionmeasures1,170 thousand t(54%)

Of Scope 3, the sum of categories 1 and 11
3,500
3,000
2,500
2,000
1,500
1,000
500
0

Reduce by

35%

1,916

1,868

FY22/3

FY23/3

2,062

1,287

FY20/3(Base year)

Scope 3(Thousand t-CO2)

3,172

FY21/3

FY31/3(Target year)

Property Sales
ess B
Businessussinness

approx.

1,870 thousand t

Reductionmeasures• Improve energy efficiency in new building• Promote use of low-carbon materials (timber, etc.) in construction(The sum of categories 1 and 11, which are subject to SBT certification)
Moreover, all Scope 3 emissions (the sum of categories 1 to 15)
are approx. 2,070 thousand t.
Integrated Report 2023

45

Sustainability Strategy (Society and Employees)
As a corporate organization that links people and communities to the future, the Group aims to realize lifestyles suited topeople with diverse backgrounds and values. In all of its business activities, the Group respects the dignity and basic humanrights of all people and promotes sustainability for co-creation that transcends organizations and business categories by
setting diversity & inclusion and human rights as priority issues.

Society andStrengthening the foundation for promoting sustainability for “co-creation”
Priority issues(materiality)/targets

Diversity & inclusion
Create an organization that enables diverse workers, including women and foreign nationals, withvarious backgrounds and values to make meaningful contributions

Key performanceindicators (KPIs) for
achieving the targets• Female manager and juniormanager ratio: 20%• Childcare leave utilization rateby men and women: 100%

• Providing products and services
with inclusive design*1• Percentage of implementation of
one-on-one meetings: 100%

*1 A method of creating value as never seen before by gaining new realizations through the participation of people with diverse backgrounds and values
in the process of creating products and services

Roadmap for promoting diversity & inclusion (D&I)
Step I (FY23/3 and FY24/3)

Raise diversity and inclusion awareness
Foster a corporate culture in which employees respect
one another’s differences and feel accepted themselves

Step II (FY25/3 and FY26/3)

Step III (FY27/3 to FY31/3)

Routinely incorporate diversity andinclusion into business activities

Develop a culture of innovation
Create new value

Diverse organizations and people work together andcontinue challenges themselves

Foundation: Flexible ways of working, wellness of mind and body, psychological sense of safety
Speciﬁc measures (excerpt)

Key goals for Step I• Diversity and inclusion training for all Group employees• Awareness survey targeting Group employees(1) Achieve annual paid leave acquisition targets• Measures to encourage men to take childcare leave• A framework for inclusive design initiatives(2) Achieve 100% childcare leave utilization rateby men and womenInitiatives of the Group
Progress of key performance indicators (KPIs) (FY2023/3)
Initiatives for female managers and junior managers

Initiatives related to childcare leave for men and womenManager and junior manager ratio*3 13.9%

Utilization rate 64%• Held networking events in FY2023/3 for the Group’s female officers,
managers, and junior managers• Will continue working to continually hire and promote people at all
Group companies in FY2024/3• Held seminars for all managers and positions at or above executive
officer in the Group (13 Group companies joined the Iku-Boss
Corporate Alliance)• Eight Group companies made childcare leave for birth (post-birthfather childcare leave) paid

*3. Female manager and junior manager ratio = (Number of female managers + Number of female
candidates for managerial positions) ÷ (Number of all managers + Number of all candidates for
managerial positions)46

Nomura Real Estate Holdings, Inc.

Initiatives related to products and designs
with inclusive designs

One-on-one meetings

We launched a hands-on workshop for inclusive design. To incorporate
them into businesses, we will continue promoting these activities at all
Group companies in FY2024/3.

We consider dialogue highly important to foster an inclusive workplace.
We also conducted training to enhance dialogue skills for officers.

Percentage of implementation 83%

Introduction

Our Vision(To be)Our Challengess aandndd SStrat
trat
traa egieeg s(AcActtio
ioon
ons
nnss)

(Strengths)

The FounFoundatdation of Our Activities(Base)

Data, etc.

employeesthat transcends organizations and business categories

Human rights
Solidify a corporate foundation of mutual respect for the dignity and basic human rights of every employee andbusiness partner• Creation of human rights
due diligence system• Percentage of participation inhuman rights training: 100%*2• Procurement guideline survey
implementation rate: 80%*2 We plan to disclose results in the following fiscal year after calculating the results for this item for the fiscal year ending March 2024

Human rights due diligence roadmap
Phase 1

Status as of October 2023

Phase 2

STEP 1Clarifying human rights
risks and issues in thevalue chain
Human rights risks are identified
on two axes, with “all concerned
stakeholders” and “theCompany’s value chain.”

STEP 2

STEP 3

STEP 4

STEP 5

Identifying signiﬁcant
human rights issues

Formulation of the
Human Rights Policy

Establishment of a system to implement human rights due diligence

Implementation of human rights due
diligence and the PDCA cycle

To identify particularly serious human rights risks, risks
are mapped on the two axesof “severity of impact” and“probability of occurrence.”

Following deliberation by
the Sustainability
Committee, the Human
Rights Policy was approvedby the Board of Directors.

Following an investigation involving related
departments and an analysis of the current
situation, four priority issues were identified,and 16 to-do lists were created. (The priority
issues being: (1) Wellness and human rightsof employees; (2) Overseas business,
non-Japanese workers; (3) Human rights inthe supply chain; and (4) Remedial measures)

The four priority issues and 16 to-do lists
are being addressed (e.g., survey on form of
employment of overseas non-Japaneseemployees, fact-finding survey given to
non-Japanese technical interns hiredby suppliers)

Phase 3
STEP 6
Establishment ofa grievancemechanism

Progress of key performance indicators (KPIs) (FY2023/3)
Built a human due diligence system (promoted the following initiatives for the four priority issues)
Wellness and human rights of employees• Implemented various measures, especially throughthe Wellness and D&I Management Committee• Implemented various measures aimed at achieving
targets for the utilization of paid leave days

Overseas business andnon-Japanese workers• Incorporated human rights elements into project
evaluation criteria in the overseas business• Created human rights check lists

Human rights in the supply chain

Remedial measures• Created and distributed a hearing sheet for
suppliers to use in determining the employment
status of non-Japanese technical interns• Reformed the internal reporting system for workers at overseas bases and announced the reforms• Conducted a GAP analysis of matters required
as a general rule under guidance

Engagement with the Group’s Procurement Guidelines
FY2019/3-

Efforts to raiseawareness of theGroup’s
Procurement
Guidelines
Since the disclosure of
the guidelines in 2018,
the Group has conductedawareness-raising
activities targetingaround 4,600
companies.

FY2021/3

FY2022/3

FY2023/3

Main revision items• Clarified the scope of application (including indirect suppliers)• Formally wrote down our assurance for freedom of associationand collective bargaining rights• Formally wrote down our response to maximum working hours• Formally wrote down that we will prevent payroll deductions
beyond what is legally required• Posting the helpline specifically for suppliers (reporting help desk)

Engagement activities
with 10 business
partners

Expand the targets ofengagement companies

1. Total transaction value*4

Approx. ¥237.0 billion

Approx. ¥280.0 billion

2. Companies that weresent surveys
3. Companies that
returned surveys
4. Implementation rate
(3. ∕ 1.)
5. Number of direct interviews held

Approx. 200

Approx. 300

89 (approx. ¥90.0 billion)

154 (approx. ¥143.0 billion)

37%

51%

implementation rate: 51%

10

10

Of companies that responded to the survey, we conductedengagement with multiple companies under the guidance of
external consulting companies.

Review of the Group’s
Procurement Guidelines
Further expand the targets ofengagement companies*4 The total transaction value is the annual transaction value with the Group’s major companies.

Increase awareness of the guidelines, mainly among new business partners

Progress of key performance indicators (KPIs) (FY23/3)
Procurement guideline survey

Integrated Report 2023

47

Strategies by Business Unit
Residential Development Business Unit
Major Group companies
Nomura Real Estate Development/Nomura Real Estate Wellness/PRIME X/
First Living AssistanceOperating Revenue and Business Profit

Operating Revenue Composition

Operating revenue (Billions of yen)
Business profit (Billions of yen)

■ Housing sales¥273.6 billion (90.5%)

375.3
333.9
272.5

309.2

302.4
33.3

32.5
25.0

Haruhiko Nakamura
Executive Officer,
Business Unit Manager ofResidential Development Business Unit

19/3

25.3

20/3

FY2023/3
Operating revenue¥302.422.4

21/3

billion

23/3

22/3

■ Rental housing (sales)¥6.3 billion (2.1%)■ Rental housing(leasing revenue)¥2.3 billion (0.8%)■ Senior¥1.4 billion (0.5%)■ Other¥18.8 billion (6.2%)(FY)

Business assets (As of March 31, 2023)

Competitive advantages• Land bank in the domestic housing sales business:
approx. ¥1,770.0 billion (equivalent to 22,380 units)• Product planning capability generated by integrated
development, sales, and management system• Number of Nomura Real Estate Group Customer
Club members:
approx. 152,000• Solid customer base, highly value-added services
and development capability tailored to diverse customer needs• Level of participation in residential redevelopment
projects:
Industry-leading*• Expertise in urban-type compact town, redevelopment, and rebuilding projects* Source: Based on in-house researchBusiness strategy

Financial targets (Business Profit)

1. Deepen and evolve PROUD in the housing
sale business (stable supply of 4,000 to 5,000
units per year)(Billions of yen)
40.0

2. Strengthen efforts in redevelopment andreconstruction projects

33.3

3. Response to diversifying needs

35.0

32.5

30.0

4. Monetization of non-asset business
20.0

Trend in the number of housing units sold
(Units)
4,739

4,329
3,669

4,142

4,500

10.0

0
20/3

48

21/3

Nomura Real Estate Holdings, Inc.

22/3

23/3

24/3 (planned)

(FY)

23/3
24/3
25/3
(Results) (Forecast) (Phase I)

28/3(Phase II)

31/3(Phase III)(FY)

Introduction

Our Vision(To be)Our Current Strengths and Core(Strengths)

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

Main Businesses
Domestic housing sales• Development and sale of condominiums and detached housing

PROUD Motoyoyogicho

PROUD SEASON Seijo Court

OHANA Nakaurawa

Rental housing

Senior and other• Development, leasing and sale of rental
housing• Development and management ofsenior housing• Internet advertising• Services aimed at providing assistance to customers concerning theirhomes arrangements

PROUD FLAT Ryogoku SouthOUKAS Setagaya Sengawa

Specific initiatives and policies based on business strategies
1. Deepen and evolve PROUD in the housing sale business(stable supply of 4,000 to 5,000 units per year)
We are implementing a variety of initiatives
to strengthen our business foundations
and further improve our housing sales
business, including the PROUD brand, withthe aim of ensuring a stable housing supply.
• Initiatives to enhance productivity via
PROUD Gallery Shinjuku
the establishment of PROUD Galleries
and PROUD Lounges, both of which serve as comprehensive
condominium presentation facilities, in the Tokyo metropolitan
area and elsewhere (a total of eight such facilities were openedin the Tokyo metropolitan area and Nagoya)• Practice innovative sales methods powered by digital technologies and online contact points with customers

2. Strengthen efforts in redevelopment and reconstruction projects
While the conditions for land acquisition
continue to be difficult, the land bank forthe period up to FY2026/3 is alreadysecured. Looking ahead, we will continue
implementing land acquisition that leverages our track record and know-how.
PROUD TOWER Kameido Cross(photo on the right)• Taking an active approach to redevelopment and rebuilding projects often ingood locations despite the long period required for each project• Delivering proposals related to the effective utilization of land
owned by administrative agencies, public benefit corporations,educational institutions, etc.
• Product planning focused on high-end properties in urban areas
We will stably supply 4,000 to 5,000 housing units per year, seizing
business opportunities by combining the aforementioned initiatives.

3. Response to diversifying needs
In the aftermath of the COVID-19 pandemic, people’s value systems
and housing needs changed significantly on the back of evolving
lifestyle trends, including a growing number of single-person households and dual-income households.
• Condominium and rental housing product planning alignedwith the changing times, for example, delivering a diverse
range of compact floor plans and installing charging facilities
at a growing number of properties in anticipation of the popu-

larization of EVs• Initiatives to provide a variety of services to help lengthen healthy life
expectancy in senior housing• Expansion of the renovation business(purchase and resale of condominium
EV charging facilities(the photo is a sample image)unit ownership) and the supply of
detached housing in urban areas
We will promote the initiatives described above to accommodate
the evolving business environment and diversifying customer needs.

4. Monetization of non-asset businessIn addition to operating the housing sale business, a major pillar of
this business unit, we strive to deliver various services leveraging
the extensive customer base we have built up over the years.
• Providing various services employing “NOMURA no
KURASUMA,” a platform offered by the Nomura Real EstateGroup to support businesses and services related to living
and dwelling• Commissioned services, including those associated with maintenance and repair in response to requests from residents ofcondominiums provided by the Company
We are proactively delivering these services.

Main Initiatives to Achieve Materialities<Decarbonization>• Maintain ZEH-oriented standards in new housings• Introduce solar panels at detached housing for sale
• Achieve reductions in CO2 emissions from condominiums via the introduction of “Yukai-full”<Biodiversity>• Utilize domestically produced wood materials<Circular design>• Initiatives to create new condominiums with longer
lives and higher durability

Integrated Report 2023

49

Strategies by Business Unit

Commercial Real Estate Business Unit
Major Group companies
Nomura Real Estate Development/Nomura Real Estate Life & Sports/
Nomura Real Estate Retail Properties/Nomura Real Estate Hotels

Operating Revenue and Business Profit

Operating Revenue Composition

Operating revenue (Billions of yen)
Business profit (Billions of yen)

212.1
179.2

171.6
39.2

38.0

35.4

202.4

199.3

FY2023/3
Operating revenue

39.5

38.5

¥199.3Hiroshi Kurokawa

billionDirector and Executive Officer,
Business Unit Manager of Commercial
Real Estate Business Unit

19/3

20/3

Business assets (As of March 31, 2023)• Net lettable area (office and retail facilities):
approx. 697,000 m2• Number of tenants:
More than 2,000 companies*• Number of H1T offices and their members:
248 offices/approx. 3,600 companies,
approx. 400,000 members• Number of MEGALOS fitness clubs andtheir members:
37 clubs/approx. 114,000 members

21/3

22/3

23/3

(FY)

■ Leasing (offices)¥41.1 billion (20.7%)■ Leasing (retail facilities)¥16.1 billion (8.1%)■ Leasing (other)¥3.3 billion (1.7%)■ Property for sales (sale)¥97.4 billion (48.9%)■ Property for leasing (leasing)¥16.7 billion (8.4%)■ Fitness¥15.0 billion (7.5%)■ Other¥9.3 billion (4.7%)

Competitive advantages• Track record for developing diverse asset types• Asset brands (PMO, GEMS, Landport, etc.) basedon the market-in approach• Leasing value chain supported by collaboration
with the Investment Management Business Unit
p.17

* Total number of tenants occupying properties that the Group owns and conducts
property management for

Business strategy• Promotion of major large-scale development
projects in central Tokyo, including Shibaura
Project and Nihonbashi 1-chome Central District
Redevelopment

Financial targets (Business Profit)

1. Evolution of value creation linking environmental changes to business opportunities
2. Realization of unrealized profit and thestrengthening of the leasing property portfolio
through strategic asset replacement
3. Contribution to a sustainable society andcreation of new products/services utilizing
digital technology(Billions of yen)
80.0

60.0

55.0
45.0
40.0

39.5

Trend in amount of property sold and gross profit on property for sales
Amount of property sold (Billions of yen)

Gross profit on property for sales (Billions of yen)
106.4

106.8
87.8

20.0

97.4

65.3

11.7
19/3

50

17.6
20/3

Nomura Real Estate Holdings, Inc.

21.1
21/3

28.1

29.3

22/3

23/3

0
(FY)

23/3
24/3
25/3
(Results) (Forecast) (Phase I)

28/3(Phase II)

31/3(Phase III)(FY)

Introduction

Our Vision(To be)Our Current Strengths and Core(Strengths)

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

Main Businesses
Leasing

Property for sales

Fitness, hotels, etc.

• Development and leasing of office buildings, retail facilities, etc.

• Development, leasing, and sale of officebuildings, retail facilities, logistics facilities,etc.

• Fitness club operations• Development, leasing, and managementof hotels• Planning and management of construction
work

PMO Tamachi III

MEGALOS MachidaTOKYO TORANOMON GLOBALSQUAREKAMEIDO CLOCK
Landport TamaNOHGA HOTEL KIYOMIZU KYOTO

Specific initiatives and policies based on business strategies
1. Evolution of value creation linking environmental changes to business opportunities
We plan and develop highly competitive products by accurately
assessing changes in the environment.
• Offices:
PMO, which has successfully developed themarket for sought-after medium-sized highgrade buildings; H1O, which meets needs forsmall offices reflecting a growing number ofstartups, etc.; and H1T, which accommodates
the diversification of working styles• Logistics facilities: Landport, which meets needs for highly
functional facilities on the back of the growing
popularization of e-commerce• Hotels:
NOHGA HOTEL, which offers lifestyle-oriented
hotels to accommodate growing inboundtourism demand• Retail facilities:
GEMS, MEFULL and SOCOLA, all of which
comprise facilities aimed at meeting
diverse needs

2. Realization of unrealized profit and the strengtheningof the leasing property portfolio through strategic
asset replacement
To develop a good quality leasing asset portfolio, we strategicallyreplace our leasing assets. Funds recovered through these endeavors, along with development profit and unrealized profit acquired,are reinvested in real estate development projects. We thus aim torealize both high asset efficiency and sustainable growth.

3. Contribution to a sustainable society and creation of
new products/services utilizing
digital technology
We promote initiatives to address social
issues (e.g., decarbonization and issues
surrounding the logistics industry) and tomeet diversifying needs.
• Offices: Reduction of CO2 emissions via
the development of office buildings thatcomprise wooden hybrid structures fora portion of the main structural columns
and beams; the provision of NOMURA
WORK-LIFE PLUS, a service platformthat can be used by tenants via the

web to address various issues they confront, including labor
shortages and growing needs for diverse workstyle options,etc.
• Logistics facilities: Installation of solar panels on facility rooftops; the promotion of Techrum, a program for facilitatingco-creation among corporations, with the aim of optimizing
logistics operations through the effective use of automationequipment, etc.
TOPIC
Shibaura Project
The Shibaura Project proposes TOKYO
WORKation, a new way of working while
experiencing the sky, sea, and greenery in
the urban center using the unique location of
the Shibaura area facing Tokyo Bay.
p. 88

Main Initiatives to Achieve Materialities<Decarbonization>• Maintain ZEB-oriented standards in new buildings• Utilize renewable energy in leasing assets• Reduce CO2 emissions in the course of construction
via the use of wooden materials<Biodiversity>• Contribute to the preservation of forest cycles via theuse of wooden materials<Circular design>• Reduce waste by, for example, abolishing the individual packaging of amenities offered at hotels operated
by the GroupH1O Aoyama

Integrated Report 2023

51

Strategies by Business Unit

Overseas Business Unit
Major Group companies
Nomura Real Estate Development/ZEN PLAZA/Beijing shokai Nomura Real Estate Management/
NOMURA REAL ESTATE ASIA/NOMURA REAL ESTATE (THAILAND)/NOMURA REAL ESTATE VIETNAM/NOMURA REAL ESTATE CONSULTING (SHANGHAI)
Operating Revenue and Business Profit

Operating Revenue Composition

Operating revenue (Billions of yen)
Business profit (Billions of yen)

6.7 7.2
FY2023/3
Operating revenue

¥6.7

2.6

Masato Yamauchi

billion

0.2
19/3

Executive Officer,
Business Unit Manager of Overseas
Business Unit, in charge of Overseas
Business

20/3

21/3

22/3

23/3

■ Housing sales¥5.8 billion (86.8%)■ Leasing¥0.6 billion (9.7%)■ Other¥0.2 billion (3.5%)(FY)

From FY23/3, the Overseas Business Unit was newly established, and the Overseas
Business Division of Nomura Real Estate Development and overseas subsidiaries, etc.,
which had been classified under the “Other,” have been reclassified under this business
unit. Due to this change, figures listed for FY22/3 have been retroactively adjusted.

Business assets (As of March 31, 2023)

Competitive advantages• Number of housing sale projects the Group participated in/total project cost (our share):31/approx. ¥560.0 billion• Development track record and know-how
accumulated over the course of more than 60
years in Japan• Number of leasing projects the Group participatedin/total project cost (our share):
12/approx. ¥70.0 billion• Commitment to ensuring manufacturing quality as
well as robust product planning and improvement
capabilities■ Vietnam■ Thailand■ The Philippines

Housing sales:¥560.0approx.
billion■ China■ U.K.

Leasing, etc.:¥70.0

approx.
billion■ U.S.

* Land bank(total project cost(our share))Design review (Design KAIZEN)

Business strategy

Onsite patrols (Workplace KAIZEN)

Financial targets (Business profit)

1. Secure stable growth for the housing sales
business in Asian countries, which boast
remarkable growth
2. Strengthen initiatives related to the property
sales business centered on the U.K. and the
U.S.
3. Enable Federal Land NRE Global, Inc. (FNG),
a joint venture founded in the Philippines, toachieve constant business expansion(Billions of yen)
40.0

30.0

20.0

Four projects in which FNG decided to invest

52

Residence

Gross ﬂoor area

Commencement ofconstruction

ManilaApprox. 4,700 units

Approx. 67,000 m²

From 2024 onward

Metro Park

ManilaApprox. 1,600 units

Approx. 37,000 m²

From 2024 onward

CaviteSuburbsof Manila

Approx. 42,000 units

Approx. 763,000 m² From 2025 onward

Cebu

Cebu

Approx. 940 units

Approx. 18,000 m²

Project nameLocation

Mandaluyong

Nomura Real Estate Holdings, Inc.

From 2025 onward

10.0

7.2
5.0

4.0

0
23/3
24/3
25/3
(Results) (Forecast) (Phase I)

28/3(Phase II)

31/3(Phase III)(FY)

Introduction

Our Vision(To be)Our Current Strengths and Core(Strengths)

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

Main Businesses
Housing sales

Leasing, etc.

• Vietnam: Grand Park 2nd and 3rd period project (Ho Chi Minh City),
Ecopark (Hanoi), etc.
• Thailand: Park Thonglor and Park Origin Ratchathewi (both in
Bangkok), etc.
• China: Changzhou I and II (Changzhou City), etc.
• The Philippines: Manila BGC Sunshine Fort Residential Building,
Mandaluyong and Metro Park (all in Manila), etc.

• Offices: Sun Wah Tower and Zen Plaza (Vietnam), Beijing Fortune
Building (China), 127 Charing Cross Road (U.K.)• Retail facilities: Manila BGC Sunshine Fort Retail Building (thePhilippines)• Service apartments: Staybridge Thonglor and Staybridge Sukhumvit
24 (Thailand)• Mixed-use facilities: Mandaluyong and Metro Park, etc., (thePhilippines), Press Block Project (U.S.)

Park Thonglor (Thailand)

Ecopark (Vietnam)

Manila BGC Sunshine Fort Residential
Building, (the Philippines)

Manila BGC Sunshine Fort
Retail Building (the Philippines)

127 Charing Cross Road (U.K.)

Sukhumvit 24(Thailand)Specific initiatives and policies based on business strategies
1. Secure stable growth for the housing sales businessin Asian countries, which boast remarkable growth
In the Asian region, where growth is bourgeoning, demand forhigh-quality housing has become even stronger due to economic
development and the resulting increase in income. These market
conditions will enable us to fully leverage our development knowhow accumulated over the course of more than 60 years in Japan.
• Vietnam: With a collaboration involving multiple local partners
under way, we became a participant in the Grand Park
2nd period, which envisions the construction of morethan 10,000 housing units, and other major projects.
• Thailand: With Origin Property, our local partner, we operate a
joint venture business that boasts a cumulative total
number of housing units sold surpassing 10,000 in
October 2022.
• China: Staying alert to changes in the business environment,
we promote existing businesses in Changzhou andthe acquisition of new projects.
While selecting excellent local partners in each country, we will strive tocultivate favorable relations, develop a solid governance structure, andacquire stable business opportunities, thereby achieving further growth.

opment project encompassing rental
housing, offices, and retail facilities inPortland. Looking ahead, we will takean even more proactive approach toinvestment in the property sales business.
Press Block Project (U.S.)

3. Enable FNG, a joint venture founded in the Philippines,
to achieve constant business expansion
We have established the joint
venture FNG in tandem with
Federal Land, a real estatecompany under the umbrella of
GT Capital Group, a major conglomerate in the Philippines.
This move is aimed at securing
Mandaluyong Project (The Philippines)
our ongoing involvement inlocal projects. FNG has already decided to handle four projects witha combined project cost of approximately ¥770.0 billion (of this, ourshare amounts to approximately ¥260.0 billion). We anticipate thatFNG will grow into a profit contributor from Phase III (which will
begin in FY2029/3) of the Mid- to Long-term Business Plan onward.
We have thus positioned this joint venture as a key entity enabling
us to achieve major growth in the overseas business.

Main Initiatives to Achieve Materialities

Grand Park 2nd period (Vietnam)

2. Strengthen initiatives related to the property sales
business centered on the U.K. and the U.S.

<Human rights>• Advocate for human rights in collaboration with suppliers while asking them to comply with our procurement guidelines<Diversity & inclusion>• Empower global human resources to take key positions while hiring locals at overseas subsidiaries

Applying a medium- to long-term perspective, we will strengthen initiatives related to the property sales business in developed countries.
Specifically, in the U.K., we are playing a part in the expansion andrenovation of existing office building located in London’s central district. Meanwhile, in the U.S., we are engaged in a mixed-use develIntegrated Report 2023

53

Strategies by Business Unit

Investment Management Business Unit
Major Group companies
Nomura Real Estate Asset Management/Lothbury
Investment Management/Nomura Real Asset Investment

Operating Revenue and Business Profit

Composition of assets under management

Operating revenue (Billions of yen)
Business profit (Billions of yen)

12.0

12.4

■ Listed REIT
¥1,117.3 billion (57.1%)

13.6

12.8

As of FY2023/3

9.6
5.9

Koki Miura
Executive Officer,
Business Unit Manager of Investment
Management Business Unit

19/3

7.1

7.5

¥1,957.6

8.0

7.8

billion

20/3

21/3

22/3

23/3

■ Private REIT
¥348.6 billion (17.8%)■ Private funds, etc.
¥252.9 billion (12.9%)■ Overseas asset
manager¥238.7 billion (12.2%)(FY)

Business assets (As of March 31, 2023)

Competitive advantages• Assets under management (AUM):
approx. ¥1,957.6 billion• Business growth model based on the
Leasing Value Chain p.17
• Relationships built with institutional investors over many
years of accumulating asset management experience• Product development capabilities that meet theneeds of investors• Number of institutional investors through domestic
asset management (excluding listed REIT):
296 institutions• Asset management know-how: Accumulated overthe course of more than 20 years

Structure of the Leasing Value Chain
Property acquisition andsupply pipeline
Nomura Real Estate GroupManagement pipelines

Managed funds

Sales premisedon redevelopment

Business strategy

Financial targets (Business profit)

1. Secure stable growth for the REIT business bytaking advantage of the Leasing Value Chain
2. Strengthen the private fund business with aneye to accommodating burgeoning needs foralternative investment vehicles
3. Seize business opportunities in new fields(e.g., winning new investors and expanding
into new sectors) through collaboration with
the Nomura Group(Billions of yen)
20.0

Nomura Real Asset Investment
is a joint venture established by
Nomura Holdings and Nomura
Real Estate Holdings, having
launched its fund managementbusiness in April 2023.

54

Nomura Real Estate Holdings, Inc.

15.0

10.0

8.0

8.5

9.0

5.0

0

23/3
24/3
25/3
(Results) (Forecast) (Phase I)

28/3(Phase II)

31/3(Phase III)(FY)

Introduction

Our Vision(To be)Our Current Strengths and Core(Strengths)

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

Main Businesses
REIT

Private funds

Nomura Real Estate Master
Fund, Inc.

Nomura Real Estate Private
REIT, Inc.

• A comprehensive listed REIT,
the largest of its kind in Japan• Managing a portfolio consisting
mainly of office buildings, retailfacilities, logistics facilities, andrental housing, the total valueof which exceeds ¥1 trillion• Japan’s first comprehensive
private REIT
• Managing a portfolio consisting
mainly of office buildings, retailfacilities, logistics facilities, andrental housing, with the total
value of which exceeds ¥300.0
billion• Taking full advantage
of our experience invarious fund schemes
and sectors to formulate and manage private real estate funds
tailored to accommodate needs among
institutional investors

Overseas
Lothbury Property Trust• Formed a capital alliance with
Lothbury, a U.K.-based asset
manager, in 2018 to meet investor
needs for overseas real estate
investment

Specific initiatives and policies based on business strategies
1. Secure stable growth for the REIT business by taking
advantage of the Leasing Value Chain
Listed and private REITs constitute mainstay operations of this business unit. We are taking full advantage of the Leasing Value Chain,a strength of the Nomura Real Estate Group, to pursue external
growth in these operations. For example, Nomura Real Estate
Master Fund (NMF) acquired properties worth approximately ¥12.6
billion, including logistics facilities and office buildings developed by
Nomura Real Estate Development, in FY2023/3. During the fiscal
year, there were limited opportunities to acquire properties throughpublic offerings due to low unit price trends in the REIT market.
Nevertheless, NMF succeeded in these acquisitions through thesale of properties whose competitiveness had declined and the useof cash at hand. Meanwhile, in the same fiscal year, Nomura Real
Estate Private REIT (NPR) acquired properties worth approximately¥39.8 billion from Nomura Real Estate Development through offerings, etc. These accomplishments helped us achieve stable growthin both listed and private REITs.
Looking ahead, we will acquire excellent and competitive properties via the use of our sponsor pipeline while constantly acquiringproperties from external sources. Leveraging the unique features ofcomprehensive REITs, we will promote the replacement of our portfolio to secure an optimal combination of differing asset types while
selecting the best options for acquisition and fundraising methods
in light of the business environment.
Cumulative number of Leasing Value Chain transactions(as of March 31, 2023)
Sales of properties from Nomura Real Estate Development to listed and private REITs as well as private funds

86 properties/ ¥478.7 billion

institutional investors. Building on these relationships, we areendeavoring to formulate private funds consisting of land of logistics
facility to meet diversifying investment needs while still handlingtraditional asset types, such as office buildings and rental housing.
Furthermore, our plan for FY2024/3 calls for formulating a new private
fund aimed at strengthening the Leasing Value Chain. We will continue
to strengthen the private fund business via, for example, the formulationof new products and the enhancement of product lineups.

3. Seize business opportunities in new fields (e.g., winning
new investors and expanding into new sectors) throughcollaboration with the Nomura Group
Nomura Real Asset Investment, a joint venture we have establishedin tandem with Nomura Holdings, launched a fund managementbusiness in April 2023 after completing necessary procedures, suchas license registration. Currently, this joint venture is tasked withmanaging private real estate funds and its AUM totals more than
¥90.0 billion (as of June 30, 2023). It aims to secure an AUM
between ¥700.0 billion and ¥1 trillion in the future by promoting thedevelopment of its investor base, which includes wealthy individuals
and overseas investors, and the enhancement of its investment
products through the commercialization of novel asset classes.
In addition, the business unit is engaged in overseas operations,such as a collaboration involving U.K.-based Lothbury, while striving
to develop an even more extensive global network.

Main Initiatives to Achieve Materialities<Decarbonization>• Reduce the volume of energy consumption and CO2
emissions attributable to properties managed by funds

2. Strengthen the private fund business with an eye toaccommodating burgeoning needs for alternative
investment vehicles
To accommodate investors’ burgeoning need for alternative investment vehicles, we are strengthening our private fund business. The
assets under management (AUM) as of March 31, 2023 totaled¥252.9 billion, an increase of ¥56.5 billion from March 31, 2022. To
date, this business unit has nurtured solid relationships of trust with
Integrated Report 2023

55

Strategies by Business Unit

Property Brokerage & CRE Business Unit
Major Group companies
Nomura Real Estate Solutions/NOMURA REAL ESTATE HONG KONG/Tokio Property Services

Operating Revenue and Business Profit

Operating Revenue Composition

Operating revenue (Billions of yen)
Business profit (Billions of yen)

37.2

39.4

39.1

FY2023/3
Operating revenue

8.1

Executive Officer,
Business Unit Manager of Property Brokerage& CRE Business Unit

19/3

9.0

20/3

¥47.7

13.8

11.7

Kenichi Maeda■ Brokerage fee (retail)¥24.0 billion (50.5%)

47.7

43.7

8.9

21/3

billion

22/3

23/3

■ Brokerage fee (middle)¥9.6 billion (20.2%)■ Brokerage fee (wholesale)¥11.5 billion (24.3%)■ Other¥2.4 billion (5.1%)(FY)

Business assets (As of March 31, 2023)

Strengths• Number of retail branches: 88• Possessing advanced digital technology• Number of middle offices: 11• High customer satisfaction rating in the retail business• Number of wholesale offices: 9• Partnerships with Nomura Securities and regional
financial institutions

Note: In cases where an entity is operating multiple businesses, the number of branches
and offices is calculated on the basis of each business.

• Number of nomu.com members:
approx. 263,000 (as of January 31, 2023)• Number of partner financial institutions, including
Nomura Securities and regional financial
institutions: 112
The nomu.com website

Business strategies

Financial targets (business profit)

1. Expansion of stable revenue base capturingstrong demand in the retail business
2. Meeting various needs through collaboration
with the Nomura Group, financial institutions,and others in the middle business3. Promotion of CRE proposals and capturing
the investment needs of funds based on ourcustomer base in the wholesale business(Billions of yen)
20.0

15.0

13.8
12.0

12.0

10.0

Fees
MiddleRetail(Billions of yen)

Wholesale

33.1

35.1

34.7

21.6
11.5

24.0

23.3

39.8

11.1

11.3

8.3 9.6

9.6 11.5

19/3

20/3

21/3

22/3

23/3

21.8

5.0

45.2
24.0

(FY)

From FY23/3, we changed from the two business segments of retail and wholesale to the three segments of retail, middle,
and wholesale. In line with this change, we retroactively revised the breakdown of fees for FY22/3 for presentation purposes.

56

Nomura Real Estate Holdings, Inc.

0
23/3
24/3
25/3
(Results) (Forecast) (Phase I)

28/3(Phase II)

31/3(Phase III)(FY)

Introduction

Our Vision(To be)Our Current Strengths and Core(Strengths)

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

Main Businesses
RetailMiddleWholesale• We operate 88 stores under the “Nomura
no chukai + (PLUS)” and REALIA brands
in the Tokyo metropolitan area, Kansai,
and Chubu regions.
• We provide the best solutions, mainly toindividual customers, through high-quality
services closely attuned to local conditions.

• We precisely identify the real estate sales
needs of small and midsize companies,business owners, individual investors, andothers and provide solutions that exceed
expectations.

• We serve as a comprehensive help desk
for Nomura Real Estate and Group companies and create new value for customers’ real estate.
• We will fully leverage our total capabilities
based on our multifaceted businesses toprovide a wide range of solutions.

Specific initiatives and policies based on business strategies
1. Expansion of stable revenue base capturing strong
demand in the retail business
Since the pandemic, the need for housing is greater than everbefore, and the pre-owned real estate market is continually expanding. Currently, we are steadily expanding transaction value in theretail business by accurately assessing sales trends among customers in city centers. We will continue to promote systems to centralize
data on high-value city center properties centered on the service
brand REALIA, which meets needs for buying and selling high-value
real estate in city center areas. Moreover, we will strengthen organizational retail sales systems to meet diverse customer needs andcontinue working to expand the stable earnings base of the retailbusiness through the enhancement of customer satisfaction in partby enhancing convenience of the real estate data site nomu.com.

licensors, financial institutions, and the Nomura Group, including
Nomura Securities.

3. Promotion of CRE proposals and capturing theinvestment needs of funds based on our customer
base in the wholesale businessSeizing the increase in the off-balance sheet needs of businesscompanies, we will work to expand the wholesale business basedon the customer base we have cultivated to date. Specifically, we
will work to acquire projects and expand opportunities for CRE proposals in part by offering proposals that utilize our know-how inconstruction and construction management and by building relationships with customer companies partnered with the Nomura Real
Estate Group and Nomura Securities.
In addition, Japan has currently reopened to people from overseas, leading to a ramping up of overseas investors investing in realestate in Japan. In addition, alternative investment needs frominstitutional investors are seeing ongoing expansion in Japan.
We will continue working to seize new business opportunities by
providing customers with high-quality services that we havecultivated in each of the retail, middle, and wholesale businesses ina one-stop manner.

Main Initiatives to Achieve Materialities

2. Meeting various needs through collaboration with the
Nomura Group, financial institutions, and others in the
middle business<Circular design>• Encourage the utilization of idle properties throughbrokerage transactions• Effective use of real estate stock

We have positioned the middle business as a new growth sector in
the Business Unit. In light of the increase in real estate transactionneeds related to inheritance and business succession, we arestrengthening the real estate brokerage business for small and midsize companies, individual investors, and high net worth individuals.
We are strengthening proposals to meet various real estate-related
needs while collaborating with 112 financial institutions and othercompanies (as of March 31, 2023). These efforts are connected toour accomplishments, and there has been an increase in fees forforming agreements for sales brokerage projects thanks to introductions from partner financial institutions. Going forward, we will work
to seize business opportunities and strengthen collaboration with
Integrated Report 2023

57

Strategies by Business Unit

Property & Facility Management Business Unit
Major Group companies
Nomura Real Estate Partners/Nomura Real Estate Heating and Cooling Supply/Nomura Real
Estate Amenity Service

Operating Revenue and Business Profit

Operating Revenue Composition

Operating revenue (Billions of yen)
Business profit (Billions of yen)

91.3

98.2
8.5

7.4

98.3
9.2

105.4

99.2

FY2023/3
Operating revenue

9.8

9.2

¥105.4

Kazuhiro Toida

billionExecutive Officer,
Business Unit Manager of Property &Facility Management Business Unit

19/3

20/3

21/3

22/3

23/3

■ Property & facility
management¥59.5 billion (56.4%)■ Construction ordered¥39.8 (37.8%)■ Other¥6.0 (5.8%)(FY)

Business assets (As of March 31, 2023)

Competitive advantages• Number of housing units under management:
approx. 189,000 units• Stable supply of properties from other Business
Units through Group collaboration• Number of buildings under management:
782 units• High level of external evaluation for
management quality• Licensed Representatives of Condominium
Management Company:
616• Competitive construction proposal capacity,
including scheme for extending large-scale repair
works cycle• Building environment and healthmanagement engineers:
571

Schemes for extending large-scale repair works cycle

Business strategies

Financial targets (business profit)

1. Ensure high quality and save labor inproperty and facility management
2. Combine our technical capabilities, proposal
capabilities, and data storage and analysis inconstruction ordered
3. Develop and roll out competitive products andservices to meet customer needs
Kanri-roid

Will TAP

Building management app

An app for residentsof condominiums(Billions of yen)
20.0

15.0

10.0

9.8

10.0

10.5

5.0

0
23/3
24/3
25/3
(Results) (Forecast) (Phase I)

58

Nomura Real Estate Holdings, Inc.

28/3
(Phase II)

31/3(Phase III)(FY)

Introduction

Our Vision(To be)Our Current Strengths and Core(Strengths)

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

Main Businesses
Property & facility management

Construction ordered• Condominium management business handling around
189,000 residences• Building management business handling 782 office buildings
and other properties• Property management proposing and implementing optimal operation strategies for properties on behalf of the owners• Public-private partnership (PPP) business mainly managing andoperating public facilities• In our renewal construction business, we propose optimal
construction and repair plans suited to each building byleveraging data collected from many different sources and ouraccumulated know-how.
• In our remodeling business, we remodel condominiums, remodel
detached houses, and renovate properties.

Specific initiatives and policies based on business strategies
1. Ensure high quality and save labor in property andfacility management
In the property & facility management business, we need personnel
overflowing with hospitality to swiftly provide high-quality services
finely attuned to customers. For example, we set up a training centerwith condominium facilities for practice to develop management andengineering professionals and work hard to construct a foundation
for providing high-quality services.
In addition, as it is becoming more difficult to secure personnel, it
is important to improve operational processes using digital technologies. In the Mid- to Long-term Business Plan, we plan for DX
investment totaling several billion yen. To this end, we launchedsuch specific initiatives as beginning to develop systems to manage
the conclusion and dissolution of parking lot contracts and support
the operations of managers on the front lines of condominium management. We will create more time for improving operations andcontinue working to increase quality and save labor more thanever before.
Our high-quality services lead to customer praise→ Ranked

1st for 14 consecutive years

in the SumaiSurfin Management Company Satisfaction
Survey 2022

2. Combine our technical capabilities, proposal capabilities,
and data storage and analysis in construction ordered
We have accumulated a track record in large-scale repair construction,
mainly for condominiums and office buildings. We are working tomaintain and enhance property values by leveraging our accumulated
technical capabilities and know-how.
In the fiscal year ended March 2022, we conducted renovation
construction for the shared sewer pipes of Coop Nomura Higashi
Rokugo (Ohta-ku, Tokyo, built by Nomura Real Estate in 1982),
which is managed by Nomura Real Estate Partners. This effort
aimed to completely replace the sewer pipes of common areas,
which were of varying types, with plastic pipes, thereby reducing
the lifecycle cost. These initiatives are lauded for extending the lifeof existing condominiums, leading to receiving the PresidentAward at the 39th Housing Renovation Contest, hosted by theCenter for Housing Renovation and
Dispute Settlement Support.

3. Develop and roll out competitive products andservices to meet customer needs
Nomura Real Estate Partners developed re:Premium and re:Premium Duo, which are products that extend the cycle for large-scale
repair work. The company also developed a system that extend theperiod for construction using a new, unique defect insurance aimed
at management unions that lack repair funds during the construction period. This delays the start time of large-scale repair work due
in part to preliminary surveys and, during that time, increases thesoundness of repair funds. This system was certified as a condominium stock life extension model project, which is supported by
Japan’s Ministry of Land, Infrastructure, Transport and Tourism.
Going forward, we will continually work to consider and develop
products and services aimed at repair and renewal construction thathelps increase the value of buildings.

Main Initiatives to Achieve Materialities<Decarbonization>• Saving energy by installing high-performance equipment in renewal and renovation construction<Circular design>• Extend the life of and enhancing the resilienceof buildings by introducing re:Premium andre:Premium DUO<Society and employees>• The Mi-Ra-I Project is a reform of the organizational
culture to realize rewarding work environments andrespect independent thought and opinions

Integrated Report 2023

59

Special Feature
Solving Social Issues through Urban Redevelopment
and the Effective Use of Public Real Estate
In the real estate industry in Japan, the competition for land acquisition remains tough due to the decrease in land suitable forreal estate development. On the other hand, real estate-related social issues, such as the aging of existing buildings andobsolescence of public facilities, are expected to increase.
The Company made the further expansion of the domestic real estate development business one of its key strategies
aimed at achieving the Mid- to Long-term Business Plan (the “Plan”). To this end, we intend to solve social issues throughurban redevelopment, the rebuilding of condominiums, and the effective use of public real estate, thereby providing further
added value to stakeholders.

Social Issue: Aging and obsolescence of buildings and public facilities

Social issues
expected toincrease going
forward• Reconstruction accompanying the aging of existingbuildings and redevelopment aimed at solving problems associated with neighborhoods of densely
packed wooden houses• Replacing deteriorating public facilities• Increase in corporate need for asset disposition
and utilizing the facilities of universities andother institutions

As the business environment surrounding the real estate industry
changes, social demand for urban redevelopment and reconstruction
is expanding against a backdrop of aging buildings and increasing
obsolescence of urban facilities.
In addition, there has been an increase in instances where private
funding and know-how have been used in the construction andmanagement of public facilities. Offering local governments proposals
for making more effective use of public real estate is an effective way
to seize business opportunities going forward. In addition, in line witha falling birth rate, aging population, and changing industrial landscape, we expect an increase in corporate need for asset disposition
as well as the utilization of land and facilities held by universities andother institutions.
We will continue providing further added value related to buildings
and cities to a wide range of stakeholders.

Real estatebusiness
environment• Decrease in land suitable for real estate development,
especially in the Tokyo metropolitan area
• Intensifying competition among real estate companies

Number of projects utilizing private funding to develop or
manage public facilities
Number of projects announced (cumulative)
1,000
900

874
816

800

738

700

666
603

600
500
400
300
200
100
0

932

13

39

86

131

177

220

264

308

349

383 400

424 446

475

516

549

‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 ‘21(FY)Created by the Company based on Japan’s Cabinet Office’s presentation material entitled “Number of PFI Projects”
Note: Private Finance Initiatives (PFI): A method of using private funding, business capabilities, and technical capabilities for constructing,
maintaining, managing, and running public facilities

The Company’s solutions to issues:

Forming specialized organizations and fully utilizing
accumulated know-how

Development Planning Division and Business Creation Division
Methods to solve issues

Accumulated know-how• Urban redevelopment• Rebuilding of condominiums• Development following the effective use and replacement of public real estate• Utilization of land of national universities and industry-academia collaboration• Diverse development menu
• Capabilities to coordinate the desires of multiple afﬁliated parties, such as
landowners and local governments• Ability to promote business over the long term

In April 2022, we established the new Business Creation Division in Nomura Real Estate as an organization that specially uncovers new demandrising in recent years, such as development related to aging public facilities, mixed-use public area, school and medical company facilities and land,and PFIs. We will build medium- to long-term relationships with companies, local governments, and universities, promote business, and work todevelop new halls, arenas, and other properties. In addition, we promote the cultivation of businesses in new fields, such as next-generation mobilities,
the environment, and energy.
Alongside the Development Planning Division, which has undertaken many urban redevelopment projects, mainly in Tokyo, we propose developments that address social issues and link them to the creation of new business opportunities.

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Nomura Real Estate Holdings, Inc.

Introduction

Our Vision(To be)Our Current Strengths and Core(Strengths)

Our Challenges and Strategies(Actions)

The Foundation of Our Activities(Base)

Data, etc.

Nakano Station New North Exit Station-Front Area Redevelopment

Case 1
Redevelopment of aging public
facilities

Urban development incorporating the area’s unique, diverse culture and passing down
the DNA of Nakano Sun Plaza

This is a large-scale mixed-use redevelopment project on a premises covering over 2 ha located at the Nakano Station North Exit.
As the representative of the seven companies involved in the project,
Nomura Real Estate is promoting discussions with local govern-ments and landowners. We will ensure that the functions ofNakano Sun Plaza, which has a symbolic presence in Nakano-ku,
are passed down and promote urban development that stimulates
lifestyles, industries, and social events driven by culture.

Note: Illustration of expected completed building (future changes are possible)

Location: Nakano-ku, Tokyo
Access: One-minute walk from Nakano Station
Land area: Around 2.3 ha
Main use: Halls, offices, residences, retail facilities, hotels, and area management
facilities
Construction completion: Fiscal year ending March 2030 (plan)

Case 2
Utilizing the land and facilities ofuniversities and other institutions

Tokyo Medical and Dental University Etchujima District Land Use ProjectWorking to maintain and boost health, urban development that helps enhance QOL

The Tokyo Medical and Dental University solicited bids for this projectin August 2022. Nomura Real Estate was selected as a businesscollaborator, and a basic agreement was concluded between thetwo parties.
The project aims to effectively utilize land owned by the university in Etchujima 1-chome, Koto-ku, Tokyo. We will conduct a study
focused on urban development that enables multiple generations
to communicate and create plans for condominiums, senior residences, retail facilities, and medical and daycare facilities as well

as facilities for local collaboration and socializing.
We promote studies aimed at realizing initiatives for the industryacademia alliance while collaborating with both parties.

Business concept

Total Healthcare for All Generations
Efforts to prevent disease and promote health for all generations,and urban development to help enhance QOL

General business plan
Develop condominiums and senior residences on land
owned by Tokyo Medical and Dental University

Nomura Real Estate

National University
Tokyo Medical and
Dental University

Through this industry-academia alliance, we will continue
to implement initiatives that help enhance people’s QOL.

Provide external customers with condominiums, senior residences, andmore in prime locations

Establish related facilities whilestill owning the land

Realizing attractive urban development through an industry-academia allianceIntegrated Report 2023

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