Message to Shareholders

Established in 1896 by Zenjiro Yasuda, the founder of the former Yasuda financial conglomerate, the Tokyo Tatemono Group has carried forward as the foundation of its corporate activities since its founding Zenjiro Yasuda’s principles of "The customer always comes first" and "Enterprising spirit" through which it anticipates the trends of the times. Currently, we are engaged primarily in the commercial properties business and the residence business and handle a broad range of businesses concerning real estate, including the real estate service business, the senior & child care business and the overseas business.

A five-year medium-term business plan under the theme of "Tokyo Tatemono Group aims to continue to be the leading choice, providing amazing value through innovative group synergies" had been underway at the Tokyo Tatemono Group from 2015. In the fiscal year ended December 31, 2019 (FY2019), the final fiscal year of the plan, revenue and income increased compared with the previous fiscal year. Specifically, revenue from operations was ¥323.0 billion (up 18.2% from ¥273.3 billion for the previous fiscal year) and operating income was ¥52.4 billion (up 12.1% from ¥46.7 billion for the previous fiscal year). Revenue from operations reached a new high for the third consecutive year and operating income reached a new high for the second consecutive year. This was due in part to increase in leasing revenue and property sales to investors in the commercial properties business and increase in the number of condominium sales posted in the residence business. In addition, recurring income was ¥44.6 billion (up 6.1% from ¥42.0 billion for the previous fiscal year) and profit attributable to owners of the parent was ¥29.7 billion (up 9.2% from ¥27.2 billion for the previous fiscal year). This was due in part to improvement in financial balance.

As such, we managed to achieve the operating income target of ¥50.0 billion set under the previous medium-term business plan and simultaneously implement disciplined financial management with a debt-to-equity ratio of 2.5 times and interest-bearing debt / EBITDA multiple of 12.6 times in terms of financial indicators, too. Achievements were also made in business aspects with steady growth in each business, in addition to investment in new asset types (logistics facilities, etc.), expansion in stock of quality real estate and other various initiatives for future growth.

In light of such achievements, we have formulated a long-term vision looking ahead to around the year 2030 and a new medium-term business plan for FY2020 through FY2024 for us to continue achieving sustainable growth as a group even amid rapid change in our business environment.
Setting as our long-term vision "Becoming a Next-Generation Developer," we seek to be a "good company" in that we are rated highly by all stakeholders by evolving into a next-generation developer that achieves both solving of social issues and growth as a company at a higher level. Setting consolidated business income (a profit indicator that is the sum of operating income and equity gains (losses) in affiliated companies) of ¥120.0 billion as the profit level for around the year 2030, we will aim to achieve a well-balanced profit structure being mindful of capital efficiency along with making stable leasing profit the core of profit composition.

As a step toward achieving the long-term vision, we have set the five-year period from 2020 to 2024 as the new medium-term business plan period during which we will aim to achieve consolidated business income of ¥75.0 billion as a target for FY2024.
Under the new medium-term business plan, we will promote five key strategies—(1) Promotion of large-scale redevelopment; (2) Further strengthening of the condominium business; (3) Expansion of property sales for investors; (4) Strengthening of brokerage, fund and parking lot businesses; and (5) Growth in overseas business—and also aim for inclusion in ESG indices through evolutionof ESG management.

As for shareholder returns, for FY2019, the plan is to raise the annual dividend by ¥6 per share from the previous fiscal year’s ¥35 per share (up ¥3 per share from the dividend forecast announced at the beginning of the fiscal year), resulting in an annual dividend of ¥41 per share (payout ratio of 29.0%).
In addition, under the new medium-term business plan, we have established a baseline consolidated dividend payout ratio of 30% or more and will aim to increase shareholder returns in a stable manner through sustainable income growth. We will consider whether or not to repurchase company shares based on the business environment and financial situation, among other factors.

We will continue to aim to grow the company and create a prosperous society, taking pride in the trust placed in us that extends over a century under our corporate philosophy of "Trust beyond the era." We ask for your continued support and guidance.

March 2020
President and Chief Executive Office

Hitoshi Nomura