Management's Commitment

A prime example of our community development approach is the Yaesu Project, a large-scale redevelopment project underway in the Tokyo Ekimae Yaesu area, which includes the site of our former head office building. The Yaesu, Nihonbashi, and Kyobashi area, home to the head office of Tokyo Tatemono since our establishment in 1896, is right beside Tokyo Station. It has a long history as a castle town, where traditional customs and culture have been cherished. The Company too has, as a local resident itself, valued interaction with local people. We have passed on and preserved traditional culture such as festivals, and worked to enhance the town's beauty. As we see it, a redevelopment project involves far more than merely renovating buildings and facilities. For it is after the building is completed that the real work of community building begins. With the help of the local people in the area, the neighborhood for the Company, we hope to achieve things that we could not do alone.

One of our material issues is that of strengthening Tokyo's competitiveness as an international city. Further strengthening Tokyo's competitiveness is vital to Japan's development. We are advancing several large-scale redevelopment projects in various areas of Tokyo. In our redevelopment projects, we aim to carry on the traditional culture of each region, while meeting the demands of the new era. Changes in work styles in recent years have led to growing interest in well-being. Targeting this trend, this year we newly launched Well-being Lab. Well-being is said to affect motivation and productivity. Through experiments and surveys, we will identify factors that can improve people's well-being. Drawing from these results, we will provide various services in future redevelopment projects, as we work to create offices that will improve the well-being of workers. We hope that you will continue to take an interest in our future activities in community development.

The condominiums that supported Japan's rapid growth have serious problems such as inadequate earthquake resistance due to aging, security concerns, and a lack of elevators. To tackle these issues, we have set revitalizing and utilizing real estate stock as one of our material issues, and have taken on a number of reconstruction projects. Brillia City Shakujii Koen Atlas is slated to be completed in June 2023. We have several other projects in the pipeline for completion up to 2025. In the course of such reconstruction projects and largescale redevelopment projects, there are naturally many stakeholders. Reaching an agreement is not always easy. Each person in charge must understand the values that our stakeholders hold dear. We must carry out our work with sincerity and tenacity. Earning the confidence and trust of our customers and stakeholders, and encouraging them to want to work with us, depends on how we engage directly with them, and on casual back-and-forth from day to day. I believe that such steady effort over time is an important factor that leads to success in business, helping also to win other projects.

It is no exaggeration to say that the lifeline of a company depends on how well it can continue to win projects. The basis of this is the ability to acquire information. When I was young, a senior colleague taught me that "information is the reward of compassion." Even when it seems like your efforts are not bearing fruit, if you carry on without giving up, at some point others will pick up on that. They will want to reward you for your efforts so far. What you can then get is information. I strongly believe that the power of information comes from the personal strength of each individual. Gathering employees with personal strength will help the company and lead to results. I also believe that personal strength is our company's greatest advantage.

The phrase that I always tell our employees to keep in mind so that they can enhance their personal strength is "Thoroughness in everything". The ability to build and maintain relationships of trust hinges on surprisingly minor details. I myself keep in mind that once trust is broken, no amount of time can bring it back. We must be thorough in doing things that would otherwise be taken for granted. I believe that will lead to the realization of our corporate philosophy of "trust beyond the era." This mindset has been handed down in our Tokyo Tatemono DNA and corporate culture for many years. But we must strengthen it as we carry it on for the future. Recent years have brought a rise in the hiring of career talent with a variety of personalities, values, and backgrounds. To work with mutual trust while respecting diversity, a common core understanding is vital. Stimulating communication amplifies personal happiness and organizational cohesion. In the employee engagement survey we carried out last year, we found that interpersonal relationships had weakened as employees were not communicating enough with each other. So we brought in a system of setting out small snacks in the company's break space. This has helped to spark conversations throughout the working day. After business hours, we also provide free alcoholic beverages so that employees communicate with each other in a relaxed way. I often join in with this socializing so that I can deepen my communication.

In June 2021, we set medium- and long-term targets for realizing a decarbonized society. Since setting these targets, we have strengthened and steadily advanced our efforts in each business division. In February this year we adjusted our targets by raising them or moving forward the timing. In particular, for electricity used by the real estate held in the Commercial Properties Business, we are moving forward the target by 20 years, aiming for 100% renewable energy by 2030. One of our major contributions to achieving this goal ahead of schedule is the efforts at T-LOGI, a logistics facility. We developed the T-LOGI series to support our aim of acquiring ZEB certification* at, in principle, all our logistics facilities. Solar panels are installed on the roof of each facility to generate electricity, and the power generated is consumed by the facility itself. In addition, surplus power is used at our other facilities, thereby making use of renewable energy power and avoiding wasted energy. This system of self-commissioning is a pioneer initiative, and we have steadily built up a track record of success.

When we first started talking over the medium- and long- term goals for decarbonization, I myself was troubled by the idea of setting goals that would be so hard for the Company to reach. But now I feel strongly that it makes sense to set ambitious, high goals that we all must work hard to achieve.
Among employees also, seeing more clearly what has to be done has sparked a change in mindset. I am very pleased that since we set these goals, individual employees have taken them on as goals that are personally relevant to them. We have strengthened some of the goals this time and moved forward the target timing for achieving them. Along with the new targets, we have also drawn up a roadmap for reducing GHG emissions. We will work together as a Group toward these goals, using our wisdom to the full as we take on challenges in various fields.

*A building that generates energy while conserving energy consumption by 100% or more reduction. This is the highest level of energy conservation and energy generation among the four stages of the ZEB (Net Zero Energy Building) model, which aims to reduce the annual primary energy balance consumed in the building to zero while realizing a comfortable indoor environment.

By taking part in initiatives such as the United Nations Global Compact and various study groups, we gather information and obtain support for our human rights due diligence. In April of last year, we identified seven priority issues. We are considering initiatives and continuing talks with a view to further expanding our assessments to cover participation in new businesses overseas. Respect for human rights is a critical part of the foundation for our business activities. We will continue to address it with the utmost of care. In our supply chain also, we are distributing questionnaires to our business partners to make sure that they are aware of and comply with the Sustainable Procurement Standards we set forth in 2021. This helps us understand the status of their efforts.

In terms of governance, we have worked to enhance the effectiveness of the Board of Directors. Due to the nature of the real estate business, a single investment project involves a large amount of money. The Board of Directors has thus tended to spend considerable time discussing individual projects. To address this, we have further transferred authority for investment projects to executive side. This has allowed the Board of Directors to broaden its medium- to long-term discussions on areas such as our long-term vision, medium-term plans, business portfolios, management policies, and strategies. Tokyo Tatemono has always been a company where everyone can express their opinions without fear of discrimination. But we ask outside directors in particular to be forthright in advising us on what we need to continue to grow over the medium to long term. Drawing from their varied backgrounds, the outside directors have shared fresh perspectives on matters that had in a sense been normalized within the Company. Some of their insights made the scales fall from our eyes. One opinion was that we should increase the number of people with corporate management experience and that we should include personnel with digital transformation expertise. I want to take this onboard and consider it carefully. Managing a business in today's society involves dealing with a rapidly changing business environment and high levels of uncertainty. Seeing a need to further strengthen our risk management and internal controls, in December last year we renewed our risk management system. We will identify priority risks and implement appropriate risk management.

In recognition of our efforts, we were selected for several ESG indexes last year. We will further mature our efforts, which will also enable us to meet requests from our stakeholders and to act upon them.

In our long-term vision, "Becoming a Next-Generation Developer," we set forth our aim to be a good company for all stakeholders. We will pursue balance at a higher level throughout our business, developing solutions to social issues while driving growth as a company. This means that from a mediumto long-term perspective, we will strive to consider all aspects in a balanced way. Unfortunately, it would be hard to take any given moment and say that at that time everything was in the best condition for all stakeholders. But I believe that if we constantly improve our corporate value, we will be able to earn appreciation in the future. We will then be able to say that we are a good company for all our stakeholders. In that sense, we need to continue to grow in the medium and long term, and to be a company that has that strength and is appreciated.

As a Group, we are determined to continue contributing to the realization of a sustainable society through our business activities. Thank you all for your continued confidence in and support of our Group.

June 2023