Message from the President and CEO

A  corporate group trusted over a century for its balanced commitment to solving social issues and growing as a business. Representative Director, President and CEO Tokyo Tatemono Co., Ltd. Hitoshi Nomura

Carrying on our founding spirit and taking the balance between ethics and economics to an even higher level

Tokyo Tatemono was established in 1896 by Zenjiro Yasuda, the founder of the former Yasuda Zaibatsu. It was founded on the principles of always placing the customer first and maintaining an enterprising spirit. Its aim was to enable people to conduct real estate transactions with confidence, in an era when such transactions had not yet been adequately developed. Eiichi Shibusawa, the father of modern Japanese capitalism, was also deeply involved in the establishment of Tokyo Tatemono which has the longest history of business operations in Japan as a comprehensive real estate company. The Tokyo Tatemono Group has inherited the spirit of Yasuda, Shibusawa, and many other entrepreneurs who aspired to find a balance between ethics and economics. Our business history has been guided by the principle of always responding to the needs of the times and contributing to the realization of a safe, secure, and prosperous life for people and society. Such a spirit is needed precisely in times of turmoil such as the current one—as the global challenges and the international situation of recent years have reminded us.

In 2020, the Group set forth its long-term vision, “Becoming a Next-Generation Developer.” In it, we declared that we will further pursue a balance between ethics and economics. We will work to maintain an overarching balance between solving social issues and growing as a company. In this way, we will aim to be a good company that gives balanced consideration to all its stakeholders. The word “developer” conveys the idea that we develop not only in the hard sense, through real estate. We also enrich and enhance communities in the soft sense, through the various real estate services we provide to our customers. We are determined to mobilize the combined strengths of our Group to address both the hard and soft aspects of urban development. On the hard side, we pursue innovative ideas to create spaces where people can enjoy spending time, from places to work or live to places to relax. By supporting the creation of these spaces through the soft aspect of development, we create customer experience value and help enrich people’s lives. We see this as our greatest social value and our purpose as a company. We believe that the accumulation of these efforts will create “trust placed in us that extends over a century” which is linked to our corporate philosophy of “Trust beyond the era.”

Targeting the post-pandemic lifestyle and preparing for changing customer needs

Looking back on 2021, I feel that it was a year in which the post-pandemic society gradually came into view, perhaps partly helped by the increased COVID-19 vaccination rate. In fact, some of our office building clients have actually returned their office attendance rates to pre-pandemic levels through an emphasis on communication among employees. Meanwhile, in sales of condominiums, there is a growing need for spaces that can accommodate flexible work styles and diverse lifestyles. We believe that these kinds of customer needs that anticipate the post-pandemic world will take shape in the coming year.

The Group is also pursuing new initiatives in response to the wide-ranging needs of its customers. We expect a continuation and expansion of the work flexibility that emerged from the COVID-19 pandemic. In the Commercial Properties Business, we acquired Expert Office Corporation, a provider of shared and serviced offices, and entered the mid-size office business. We are also deepening communication aimed at ensuring safety and security. For example, we have been asking tenants about their satisfaction with the COVID-19 infection control measures implemented by their buildings. In the Residential Business, we were quick to address customer needs amid changing work styles. We installed a full-fledged co-working space in the common area that is open to the community and has management services. We also installed movable “wall door” partitions in each unit. These can be arranged to form private rooms for activities such as remote working. Through these and other efforts, we have been able to achieve our initial plan, despite significant impact to certain parts of our business. Looking to the post-pandemic era, we have installed experimental new devices and equipment for measuring intellectual productivity in the office.

Creating a cycle in which customer trust earned through personalstrengths leads to new business

We must respond to changing customer needs, constantly pursue customer satisfaction, continue providing social value, and ensure the sustainability of the company. I believe that what is fundamentally important in all of this is the personal strengths of each employee. We often hear it said that the greatest source of value creation for a company is its talent. For Tokyo Tatemono, it can indeed be said that our greatest strength is our talent—or more precisely, the personal strengths of each of our employees. Earning the trust of customers depends on our employees being naturally motivated to tackle their work and achieve challenging goals.

While enhancing such personal strengths, we must also have an earning mindset. That means maintaining an awareness of our growth as a company with the aim of continuing to provide value to society. I communicate this idea to my employees with the words, “Though you are a zebra, bear in your mind the horn of a unicorn.” In other words, as a so-called zebra company, we aim to maintain a balance, emphasizing coexistence and balancing social contribution with corporate profit. But at the same time, I want us to maintain our ambition for profitable growth—like the horn of a unicorn company.

I believe that down through the ages, Tokyo Tatemono has carried on the enterprising spirit on which it was founded. A recent noteworthy example is Hareza Tower in Ikebukuro in Tokyo’s Toshima Ward. On the face of it, this was a challenging project given its location in a non-prime office area. However, we were able to provide advanced environmental performance and by the time construction was completed had attracted full tenant occupancy. This demonstrated the strengths of our employees in taking on a difficult project and executing it properly through to completion. In addition, we will work to earn the trust of stakeholders we engage with in our business and in society, based on the spirit of always placing the customer first. We will repeatedly build opportunities for people to recognize the value of Tokyo Tatemono. We want people to remember us the next time they have some query and to contact us. We must establish a cycle for thoroughly converting such expectations and opportunities into profits. I believe that the Group’s business would not be viable without an awareness both of personal strengths and earning power. Based on this shared vision of our talent, we are working as a Group to develop and hire talent and to improve employee engagement.

Maximizing our efforts to achieve net zero CO2 emissions

In 2021, one of the areas that the Group discussed most was our medium- to long-term targets for reducing greenhouse gas emissions, which we have introduced in response to climate change. In terms of climate change, it has become clear that global warming is caused by human activities and that, under current circumstances, it will be extremely difficult to achieve the goals of the Paris Agreement. We recognize that we no longer have time to wait for measures to be taken. Japan has declared that its 2030 greenhouse gas reduction target will be a 46% reduction from the fiscal year 2013 level, and that it will continue to strive further toward a 50% reduction. At the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26), an agreement was adopted to pursue efforts to limit the average temperature increase from pre-industrial times to 1.5°C.

The Group has also moved to keep pace with the rest of the world. In June 2021, we set a medium- to long-term target to achieve, by fiscal 2030, a 40% reduction in CO2 emissions compared to fiscal 2019; and net zero CO2 emissions by fiscal 2050. There was some concern and hesitation within the Group about how much we could contribute to the enormous challenge of climate change. But if each employee and each company in the Group works toward the same goal, and if the international community also cooperates to the best of its abilities, we can without a doubt achieve a significant improvement over the current situation. Ambitious, lofty goals have been set. Achieving them will require steady, step-by-step measures. After numerous internal discussions, we have decided to adopt a more proactive approach by obtaining SBT (Science Based Targets) certification for our fiscal 2030 medium-term targets.

An evolved approach to ESG management, embodying employee-driven initiatives

We have just launched initiatives based on the material issues and KPIs that we have newly identified for 2021. These initiatives are aligned to our strategies for supporting the realization of our long-term vision, “Evolved Approach to ESG Management” and “Contributing to the Achievement of the SDGs.”

In terms of environmental efforts, we have joined RE100, an international initiative that sets process goals for achieving medium- and long-term targets for reducing greenhouse gas emissions and procuring 100% of the electricity used in operations from renewable energy sources. Development of buildings with high environmental performance, including ZEB and ZEH, is being promoted more strongly. There has also been a shift toward construction of wooden condominiums that use the CLT panel construction method for major structural parts, with a view to enabling carbon capture. Although relatively late in our adoption of wooden construction, we decided to take on the challenge of building a full-scale wooden structure. Recognizing the difficulties involved, we plan to use timber for approximately 85% (approximately 700m3) of the main structural components.

As our employees become increasingly aware of the importance of addressing climate change, they too are voluntarily taking concrete steps to address climate change in the businesses in which they are involved.

On the social front, in May 2021, we formulated the Tokyo Tatemono Group Human Rights Policy and Sustainable Procurement Standards. As developers, we cannot accomplish a large project by ourselves. The nature of our business instead requires that we cocreate through collaboration with financial institutions, landowners, general contractors, local residents, designers, and others. With this in mind, the Group believes that in the course of doing business it is our responsibility to respect human rights and the environment throughout the supply chain. To communicate this stance to a wide range of people outside the company, in July 2021, the Group endorsed and expressed its support for the Ten Principles of the UN Global Compact. Under the current international situation, there are many parts of the world where human rights that had previously been respected are suddenly being taken away. One example is Myanmar, where we have temporarily suspended our development projects. The Group’s human rights initiatives have only just begun. As a company, however, we are keenly aware of the importance of respecting the human rights of all stakeholders involved in our business. We will continue to take this seriously as the basis for all our business activities.

The Group is committed to becoming a company that earns even greater trust from its stakeholders by pursuing solutions to social issues and corporate growth at a higher level, with the ultimate aim of enriching people’s lives. I would like to ask all of you for your continued understanding and support of our Group.

June 2022