Message from the President and CEO

With 2024 being the final year of the current medium-term business plan, I would like to reflect back on the years covered by the plan.

The Company formulated the current plan in 2020, but major environmental changes soon followed, including the rapid spread of the COVID-19 pandemic, widespread revisions to corporate workstyles (including a shift to working from home), and a drastic drop in the flow of people due to emergency declarations.

Due to these external environmental changes, the Company's mainstay business of office leasing struggled more than initially planned. We nevertheless took various measures to further enhance the added value of physical spaces in line with the belief held by the majority of companies in Japan that people would eventually return to working at the office. And, regarding our overall business performance, we steadily achieved our targets on the back of the strong performance of the for-sale condominiums business and property sales to investors. Market conditions were also good, including low interest rates, but I think the main driving forces were our accumulation of quality real estate stock from the previous medium-term plan and the Company's strong product planning capabilities.

We are simultaneously working to optimize our business portfolio through share transfers of consolidated subsidiaries. We have also been able to both secure solid business results and optimize our business portfolio and asset composition, such as by selling non-current assets.

As a result, we achieved higher revenue and profit in 2023 and gained strong confidence in achieving our 2024 targets on the back of the business results, organization, and human resources base we have built so far.

With this year marking its 128-year anniversary of its founding, Tokyo Tatemono is Japan's oldest general real estate developer. I believe that surviving 128 years is in and of itself proof that the Company is sustainable. Going forward, we intend to overcome various environmental changes and set a track record attractive to stakeholders while addressing social issues as they arise in an effort to continue benefiting sellers, buyers, and the broader community.

Because developers' business operations can significantly impact the environment and society, we have proactively incorporated ESG measures into the current medium-term business plan to ensure sustainable medium- to long-term growth.

As for governance, to stimulate discussion of medium- to long-term issues at Board of Directors meetings, in 2023 we established the Management Discussion Board, which enables the free discussion of particular themes. The Company's Board of Directors meetings have always had an atmosphere that welcomes frank discussions, but there are times when medium- to long-term issues are not fully discussed, so we created an appropriate framework to aid in the formulation of the next medium-term plan. In the previous year, the Management Discussion Board covered such topics as management that is aware of capital costs and share price, soliciting valuable insights from outside directors and accelerating discussion.

Regarding its human resource strategy, the Company again disclosed its approach related to human capital in the fiscal 2023 securities report. In addition, the aforementioned Management Discussion Board took up our human resource strategy as a topic, sorted out the initiatives under the current medium-term business plan and in light of present-day issues, and deepened discussion on how to connect business strategies with the human resource strategy in order to ensure that the Company continues to grow moving forward.

Regarding our environmental strategy, we have been promoting initiatives in line with ambitious targets, having set stricter medium- to long-term targets for greenhouse gas (GHG) emission reduction in October 2023. The Company has also conducted eco-conscious development before the SDGs were announced, with the prime example being the Otemachi Forest on the grounds of THE OTEMACHI TOWER. Last year, praising our initiatives to date, the Ministry of the Environment certified the forest as a nature symbiosis site.

We will continue to accelerate ESG initiatives under the next medium-term business plan with the aim of remaining a vital part of society.

The Company has set out a long-term vision of becoming a next-generation developer by around 2030. Because fiscal 2024 is serving as a year in which we are reflecting on our progress, we are accelerating discussions related to the next medium-term business plan. Based on the drastic changes in the external environment and the Company's current situation, Tokyo Tatemono is earnestly preparing for the announcement of the next plan around spring 2025. Here, we hope to be able to provide a glimpse into our outlook for the future, and I also discuss my views on current issues and the outlook moving forward.

We recognize that the most pressing issue at present is soaring construction costs and expect this to have a major impact on the Company's overall business in the form of, for example, lower profitability and higher demand for funding. Regarding this situation, the Board of Directors has thoroughly studied and discussed various scenarios from the perspective of risk management and considered actions to improve profitability and meet funding demand as well as management schedules for projects for which construction is slated to begin in the near future.

Regarding the three fields constituting our profit composition as outlined under the current plan (leasing, property sales, and services), based on changes in the external environment, I believe that the specific compositions of these fields will themselves differ from those existing when the plan was initially formulated.

First, profit from office buildings in the leasing field has fallen below initial assumptions due to rising energy costs and increasing vacancy rates due to the COVID-19 pandemic. On the other hand, the Company is set to finish construction of the Yaesu Project in fiscal 2025 and plans to steadily build up leasing profit through the development of multiple largescale redevelopment projects thereafter. In addition, vacancy rates from the end of 2023 onward have been trending down, and, with the feedback loop caused by rising inflation and wages, I think that there is no way for office building rents to be the only cost not rising. I believe it is certainly necessary to hold deep in-person conversations and intend to continue working hard to expand leasing revenues from existing office buildings while carefully monitoring market trends, such as the supply of office buildings going forward.

In addition, the Company is proud that under the current plan it has constructed a well-balanced asset portfolio and accumulated a wide range of stock that includes logistics properties and hotels in addition to its existing mainstay office buildings. Over our history, we have owned mainly office buildings and earned leasing revenue. We are now striving to expand leasing profit by, for example, increasing the ownership ratio of for-rent condominiums, rents for which have been rising.

Regarding property sales to investors, we will continue to step up the sale of our currently owned stock. We will simultaneously strive for the optimal asset portfolio composition. With the aim of maximizing profit, we have established a system that enables us to sell assets to meet needs as they arise, such as selling some non-current assets as needed.

Regarding for-sale condominiums, we recognize that this is our best performing business under the current plan. As the current plan has played out, we have garnered high praise from customers for the quality and locations of our properties, such as SHIROKANE The Sky and Brillia Tower Dojima. Although the condominium business is generally considered highly volatile, the Company is backed by strong product planning capabilities based on the Brillia brand and owns an excellent land bank built through the acquisition of carefully selected parcels of land. We believe this business will underpin our results under the next medium-term business plan. While there is some cause for concern, like Bank of Japan policy shifts, we will strive to continuously build on our solid track record to grow profit.

Finally, regarding the services field, we believe it necessary to achieve further expansion under the next plan. Currently, the leasing and property sales fields generate the majority of the Company's profit, but we plan to strengthen the Brokerage, Parking, and Fund businesses in their role as the core of the services field from the perspective of capital efficiency.

Compared with when the current plan was formulated, although there are some deviations from our initial assumptions, we aim to secure stable growth under the next plan through appropriate control of our portfolio.

I believe there is value in being self-motivated. This belief dates back to my beginnings as and has been strongly influenced by my experience as real estate broker. Back then, if I did not take the initiative myself, there would simply be no work. I started by going out to search for information on who was looking to buy, sell, lease, and rent real estate. When someone would reach out with that kind of information, I felt thankful and learned to express my gratitude.

From this experience, I realized that because I was willing to take the initiative, I was able to connect with people, gain new information, and create new value. I believe that self-motivated action is necessary to the realization of our long-term vision of becoming a next-generation developer.

To create new value not yet mapped out in the growth trajectory of our business, it is important that everyone in the Company take the initiative and strive to secure their personal strengths so that we may win our customers' trust, which is a strength of the Company.

Looking toward 2030, we plan to finish construction on multiple redevelopment projects, including the Yaesu Project, and will be looking to take on challenges oriented toward expanding the services field and investing in overseas businesses. Amid this situation, I myself will strive to be a self-starter and work to achieve the long-term vision together with top management and employees.

I believe that securing medium to long-term growth for the Company and enhancing corporate value will lead to Tokyo Tatemono becoming a good company in the eyes of all stakeholders as outlined in the long-term vision. In addition, our business track record has made me constantly mindful of the fact that steadily forging ahead and achieving our targets one by one is the best way to ensure that all our stakeholders feel that ours is a company that keeps its promises into the future.

Last year, I visited Europe and North America for the first time since the COVID-19 pandemic began and was able to exchange opinions with overseas investors in a face-to-face setting. I recognize that investors, whether domestic or overseas, offer perspectives that can be very valuable to the Company. When formulating the targets and agendas of the next plan, we intend to reflect opinions that we receive, ensuring that stakeholders can feel confident that Tokyo Tatemono will enjoy stable growth well into the future. I thank you for your continued understanding and support for the Group and praise for the Company over the medium to long term.