Message to Shareholders

Founded in 1896 by Zenjiro Yasuda, founder of the now defunct Yasuda financial conglomerate, the Tokyo Tatemono Group has since continued on with Zenjiro Yasuda's principle of "customer first" and "progressive spirit" of acting ahead of the times as the foundation of its corporate activities. The Group has expanded its business centering on commercial properties and residential business while covering a broad range of real estate businesses including real estate solution services business, senior business and overseas business.

The Tokyo Tatemono Group has been pressing ahead with its Medium-term Business Plan (2015-2019), upholding the statement "continue to be the leading choice, providing amazing value through innovative group synergies" since 2015. In light of various changes in business environment such as the bleak investment environment due in part to an escalation in real estate acquisition competition bucked by low interest rates and a rise in construction costs, enhanced/diversified requirement standards for services, a decline in population and expansion of the senior market in Japan, the Group aims to strengthen its earnings power by building a business portfolio that is rich with growth potential through focusing on three key strategies: "strategic investments," "strengthening services" and "exerting group synergies."

In the fiscal year ended December 31, 2016, the second year of the current Medium-term Business Plan, Tokyo Tatemono Group posted a decline in revenue from operations year-on-year but secured profit growth on a consolidated basis. While the number of condominium sales posted fell in contrast with the previous fiscal year, the Group saw an increase in sales of real estate for sale in the Commercial Properties and Real Estate Solution Services business. Reflecting this performance, the Group posted revenue from operations of ¥254,498 million, a decrease of 2.1% from ¥260,012 million in the previous fiscal year, and operating income of ¥36,363 million, a growth of 5.6% from ¥34,439 million in the previous fiscal year. Meanwhile, consolidated recurring income totaled ¥30,635 million, an increase of 23.5% from ¥24,796 million. Profit attributable to owners of the parent was ¥19,742 million, an increase of 20.7% from ¥16,359 million, owing in part to an increase in equity-method gains in the overseas business and an improved financial balance.

The Tokyo Tatemono Group has been steadily progressing towards the fiscal 2019 goal of consolidated operating income of 50 billion yen.

As for shareholder returns, Tokyo Tatemono Group has set a basic policy of carrying out stable distribution by comprehensively taking into account future management environment, business development, changes in business results, etc., while building internal reserve to strengthen the management base and financial standing.
As the consolidated earnings for the fiscal year ended December 31, 2016 greatly outperformed the forecasts released at the start of the fiscal year, the year-end dividend was increased by \2 per share to \14 per share (annual dividend of \26) from the forecast dividend announced at the start of the fiscal year (interim dividend of \12 per share/year-end dividend of \12 per share, each including a ¥2 dividend to commemorate the 120th anniversary of the founding of the Company).

We are determined to meet the expectations of shareholders and investors by continuing to steadily build profits going forward.

The Tokyo Tatemono Group will continue to strive for expansion of the company and creation of a prosperous society, taking pride in the trust accumulated over generations under our corporate philosophy of "Trust beyond the era." We ask for your continued support and guidance.

September 2017
President and Chief Executive Office

Hitoshi Nomura