Mitsubishi Estate : 統合報告書

Integrated

Report

2 0 2 3

Working Steadily to

Achieve Ongoing Growth

Otemachi Park Building, 1-1, Otemachi 1-chome,Chiyoda-ku, Tokyo 100-8133, Japan https://www.mec.co.jp/en

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Printed in Japan

CONTENTS

"A Love for People A Love for the City "

Forever Taking On New Challenges-The Mitsubishi Estate Group

The Spirit of Mitsubishi: Three Principles

"Shoki Hoko"		"Shoji Komei"		"Ritsugyo Boeki"
Corporate Responsibility to Society		Integrity and Fairness		Global Understanding through Business
Strive to enrich society, both materially		Maintain principles of transparency		Expand business,
and spiritually, while contributing		and openness,		based on an all-encompassing
toward the preservation of		conducting business with		global perspective.
the global environment.		integrity and fairness.

The Mission of the Mitsubishi Estate Group

We contribute to society through urban development.

By building attractive, environmentally sound communities where people can live,

work, and relax with contentment, we contribute to the creation of a truly meaningful society.

The Mitsubishi Estate Group Code of Corporate Conduct

In order to carry out the Group's Mission,

we pledge to observe the following Code of Conduct:

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We will act with integrity.		We will strive to earn		We will strive to create
	the trust of our clients.		a vibrant workplace.
We will base our conduct on laws		We will approach all objectives from		While aiming at personal growth, we
and ethics and always reflect with		our clients' point of view, providing		will respect the human rights and
humility upon our behavior, valuing		safe and reliable products and		diversity of opinions of others and
our communication with society and		services, and make information		increase our creativity and professionalism,
placing priority in our corporate		available as appropriate.		while displaying our
activities on earning trust through				collective strengths as a team.
fairness and transparency.

For details on the Mitsubishi Estate Group Guidelines for Conduct:

https://www.mec.co.jp/en/company/charter/

(Formulated December 1, 1997; revised on August 1, 2002, January 1, 2006, and April 1, 2018)

I N T R O D U C T I O N

1. 2 CEO Message

1. 8 Mitsubishi Estate's Value Creation Story

1. Marunouchi: Continuously Evolving with the Times

1. Promoting Marunouchi NEXT Stage

1. Mitsubishi Estate's Value Creation Model

1. Mitsubishi Estate's Strengths

1. Expanding into Various Domains

P 18 The Mitsubishi Estate Group's Strategies

18 Long-Term Management Plan 2030

20 Overview of Sustainability (ESG) Initiatives

1. Progress of Long-Term Management Plan 2030

1. CFO Message

34	Special Feature	1	Domestic Asset Business:
				Opening of FUKAYA-
				HANAZONO PREMIUM
				OUTLETS®
36	Special Feature		International Asset
2
				Business:
				Creation of Value in the
				Australian Market
38	Special Feature		Non-Asset Business:
3
				Opening of the Royal Park
				Canvas Ginza Corridor

P 40 Business Review

1. Overview of Business Segments
2. Commercial Property Business Group 42 Office Building Business
   44 Retail Facility Business / Outlet Mall Business
   45 Logistics Facility Business

1. Hotel Business
2. Airport Operation Business
   48 Residential Business
   50 International Business
   52 Investment Management Business

1. Architectural Design & Engineering Business and Real Estate Services Business
2. Innovation and Business Transformation Group
3. Business Development, Client Relations & Solutions Group

P 56 Sustainability (ESG) Section

56 Sustainability-Related Policies and KPIs / Sustainability Frameworks / Monitoring Frameworks / History of Sustainability Committee Meetings / External Evaluations of ESG Performance

1. 1 Environment

1. TCFD

62 2 Diversity & Inclusion

1. 3 Innovation
2. 4 Resilience
3. Topic: Realizing Sustainable Actions in the Otemachi, Marunouchi, and Yurakucho Areas

72 SASB

P 73 Corporate Governance

1. Message from the Chairperson of the Board
2. Corporate Governance System

80 Evaluation of the Effectiveness of the Board of Directors

82 Remuneration

1. Dialogues with Shareholders and Investors (ESG Meetings)
2. Shares Held for Strategic Purposes
3. Directors / Corporate Executive Officers, Executive Officers, and Group Executive Officers

88 Message from an Outside Director

90 Roundtable Discussion among Members of the Nominating Committee

92 Risk Management

P 95 Financial Section

1. Status of Shareholdings
2. Eleven-YearSummary of Selected Financial Data (Consolidated)

98 Targets and Results of the Key Themes and Major Initiatives Laid Out in Mitsubishi Estate Group 2030 Goals for the SDGs

P100 Corporate Data

1. Principal Mitsubishi Estate Group Companies

1. Organization
2. Corporate Information

C O N T E N T S

A Word about Integrated Report 2023

We adopted this integrated report format starting from FY2018, having published annual reports through to FY2017. With this integrated report, we have expanded coverage of non- financial information, centering on environmental, social, and governance (ESG) topics, compared with prior annual reports. In doing so, we aim to increase readers' awareness of our efforts to raise the corporate value of the Mitsubishi Estate Group from a medium- to long-term perspective. We hope that this report promotes a deeper understanding of the Group among all of our stakeholders, including shareholders and investors.

Definition of Term Covered

"FY2022" refers to the Group's fiscal year ended March 31, 2023, and other fiscal years are referred to in a corresponding manner.

Caution Concerning Forward-Looking Statements

This integrated report contains forward-looking statements concerning Mitsubishi Estate Co., Ltd., and its future strategies and earnings outlook, including forecasts, plans, and decisions based on information available at the time of publication. As with any forecast, plan, or decision, forward-looking statements are inherently susceptible to potential risks, uncertainties, and assumptions. The Company's actual results may therefore vary materially from those expressed or implied in its forward-looking statements.

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Mitsubishi Estate's Value Creation Story

I N T R O D U C T I O N

MITSUBISHI ESTATE CO., LTD. Integrated Report 2023

CEO Message

Atsushi Nakajima

President & Chief Executive Officer

Mitsubishi Estate Co., Ltd.

Create Value with a Long-Term Perspective (Tradition) and

Forward-Looking DNA (Pioneering Spirit) as a "Change Maker"

Strong Commitment toward Our 2030 Targets

I am Atsushi Nakajima, and I became president & chief executive officer of Mitsubishi Estate in April 2023. Three years have passed since we unveiled Long-Term Management Plan 2030 in January 2020. I am determined to fulfill my duties in my position leading the management of the Company going forward.

There is a saying: "the journey of a thousand miles begins with a single step." This is my motto. No matter how ambitious the goal is, taking the first step is crucial to achieving it. After resolving to achieve a goal, there is no other option but to advance steadily, one step at a time. My current hobby is marathon running, which I started at the age of 50 while stationed in New York. Although the road seems long when running a marathon, advancing step by step eventually leads to the finishing line.

I believe the same can be said about managing a company. Once I set a goal, I advance step by step with a resolute determination to achieve it. That is my creed. I have gained wide-ranging experience since joining the Company in 1986, including experience in the Corporate Planning Department, overseas studies at the University of California, Berkeley, and in development and asset management. However, I consider the two years I served from 2014 to 2016 as the president and CEO of Rockefeller Group International, Inc. (RGII), in the United States to be particularly invalu- able. In addition to facing a language barrier, I was the first Japanese person to lead RGII. Navigating various difficulties in my own way made me keenly aware of the importance of commu- nication. In an environment where people have disparate standpoints and approaches, doggedly maintaining careful communication is imperative for understanding the views of others and ensuring that others understand your views.

In my position leading the management of the Company going forward, I recognize that communication with shareholders and investors is of the utmost importance. I regard it as my duty to communicate our steady progress toward achieving the targets established in Long-Term Management Plan 2030 to shareholders and investors. The three years since the unveiling of the plan have witnessed various changes in the external environment, including the COVID-19 pandemic, the crisis in Ukraine, and upheaval in financial markets, primarily overseas. The outlook is also uncertain in real estate markets around the world. Amid such unpredictable conditions, in the event of a gap opening between our approach and that of our shareholders and investors to how best to achieve our targets, I will strive to bridge it through communication or, if necessary, examine the possibility of revising our policies. I am committed to communicating our steady progress while maintaining a resolute determination to achieve Long-Term Management Plan 2030.

Confronting Changes Fearlessly as a "Change Maker"

Mitsubishi Estate's history began in 1890 when Yanosuke Iwasaki, the first president of Mitsubishi Company, purchased Marunouchi land at the request of the Meiji government of Japan. Based on our strong commitment to modernizing Japan, we spent over 130 years developing the Marunouchi area into a world-leading business center while navigating various events, including Japan's period of rapid economic growth and the collapse of the country's bubble economy. Moreover, we were also at the forefront of globalization, entering the real estate market in the United States (1972) and the United Kingdom (1986) ahead of other real estate companies in

CEO MESSAGE

I N T R O D U C T I O N

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CEO Message

Japan. Domestically, we have continuously made efforts to create new value as the industry's leading company, including our entry into the REIT market and expansion of U.S.-style outlet malls. This history is the result of efforts to embody our universal basic mission of contributing to society through urban development.

Looking again at the footprints left by the Mitsubishi Estate Group, I feel the makeup of our DNA-urban development with a long-term perspective (tradition) and foresight to stay ahead of the times (a pioneering spirit), both of which are at the root of our activities-has indeed been passed down over our history. I believe the virtuous cycle whereby our pioneering spirit became part of our tradition, which then became the foundation underpinning a renewed pioneering spirit, is one of the Group's strengths. Constantly remaining highly sensitive to all changes in society and creating new value without fear of change (being a Change Maker) are vital to maintaining our DNA into the future. Today, the Group's operational domains have expanded into every conceivable business related to real estate. I believe the Mitsubishi Estate Group's purpose is to contribute to society by continuously identifying and offering value it can provide.

	Continuously Growing Based on the Group's Strengths,
Story	Even in an Uncertain External Environment
Creation	Long-Term Management Plan 2030 sets forth growth strategies for the domestic asset, interna-
Value	tional asset, and non-asset businesses. In the domestic asset business, we will further enhance
the value of our portfolio centered on the Marunouchi area while taking into account changes in the
Mitsubishi Estate's

I N T R O D U C T I O N

MITSUBISHI ESTATE CO., LTD. Integrated Report 2023

social environment. Enhancing the value of the area by boosting its appeal in terms of both area management and infrastructure is key. I am convinced that greatly enhancing the appeal of the Marunouchi area will help raise Tokyo's and-byextension-Japan's international competitiveness. Meanwhile, domestic capital-recycling assets* have accumulated to a level exceeding ¥1 trillion, based on their book value. Its extensive record of selective investments has enabled the domestic asset business to put in place a system to continuously post highly efficient, high-level capital gains. We will continuously make even more selective investments while carefully monitoring the latest market conditions to achieve the targets of Long-Term Management Plan 2030.

* Rental properties, excluding those in Marunouchi, outlet malls, and the assets of certain consolidated subsidiaries

The international asset business has expanded while managing risks by diversifying its portfolio across a wide range of regions and assets. However, in light of recent changes in certain regions and assets, we intend to maintain selective investments in focus regions while revising capital allocation as necessary. Despite an uncertain outlook in real estate markets, including a sharp rise in interest rates in the United Kingdom. and the United States and concerns regarding a decrease in office demand stemming from the spread of working from home and other factors, the international market remains promising in the long run. Given that the working population will decline in Japan, I believe developing earnings power overseas is indispensable to the Group's continuous growth. Meanwhile, the governance systems of local subsidiaries are extremely important for achieving growth overseas. Real estate is basically a local business. For this reason, I believe it is advisable to establish an environment that allows those with a thorough understanding of the market to spearhead management, regardless of whether they are Mitsubishi Estate employees or employees of local subsidiaries. Accumulating a record of various achievements in local markets helps build trust in those markets, which can then lead to our involvement in major projects. We are advancing a wide range of projects in North America, Europe, and Asia. I am keen for us to build further trust to achieve continuous growth by strengthening communication with various parties in local markets.

Turning to the non-asset business, the Investment Management Business is achieving steady profit growth. Having achieved the initial target for assets under management announced at the launch of Long-Term Management Plan 2030 ahead of schedule, we have set out fresh targets for the end of FY2030 of ¥10.0 trillion for assets under management and ¥30.0 billion for operating profit. The non-asset business generates revenues at a high level of capital efficiency without entailing major investments. Although the new targets may be challenging, they are an extremely important element for achieving the main targets of Long-Term Management Plan 2030. Drawing on the global platform it has developed over the years to accelerate communication between different regions, Mitsubishi Estate will seek to expand by addressing the needs of investors around the world. The hotel management business aims to maximize profits by steadily tapping into the post-COVID-19 recovery. Moreover, we acquired Regus Japan Holdings Co., Ltd., as a subsidiary in February 2023. With this acquisition, we will develop flexible workspaces and aim to make a variety of value propositions in terms of places to work, in addition to our mainstay core offices.

I believe that identifying earnings power is vital to achieving solid growth in each of these three businesses. Given Mitsubishi Estate is engaged in the real estate business, its assets earn a substantial portion of its revenues. However, it also has businesses that earn revenues without owning major assets, in the manner of the non-asset business. I believe identifying the elements that are central to earning revenues in each of our businesses will enable us to better leverage and customize know-how across businesses, which will in turn contribute to the further growth of the Company as a whole.

CEO MESSAGE

I N T R O D U C T I O N

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CEO Message

Growing with Society to Create a Sustainable Future

As set forth in Long-Term Management Plan 2030, we will not be able to realize growth as a company unless our business activities help improve social value. To do otherwise would damage shareholder value. Mindful of this, we have established Mitsubishi Estate Group Sustainability Vision 2050. To realize this vision, we are advancing specific themes and actions under the Mitsubishi Estate Group Sustainable Development Goals 2030, adopted in Long-Term Management Plan 2030.

While I am proud that we have promoted a host of initiatives ahead of other companies within

		our industry in Japan, steadily maintaining these efforts going forward will be crucial. I wonder
		that Japanese companies and Japanese society have been less sensitive to sustainability than
		other countries. Amid these circumstances, I believe that Mitsubishi Estate must establish itself as
		a leader of Japanese companies as well as the real estate industry. To this end, it is imperative that
		we steadily promote initiatives and communicate key performance indicators, which serve as tar-
		gets, and the outcomes of our initiatives to shareholders and investors in an easily understood
		manner. In real estate-related businesses, including urban development, there are many goals that
		cannot be realized and issues that cannot be solved solely through the efforts of individuals or
		individual companies. Together with our stakeholders, we aim to become a corporate group that
Value Creation Story	grows with society as the industry's leading company.
Creating Further Innovation Spurred by Our Diverse
Estate's
Human Resources
Mitsubishi	Ultimately, I believe business is about people. Human resources, our most valuable asset, play the
		leading role in offering value to society. We require human resources to be Change Makers and
		Professionals. Leveraging the Company's long-term perspective on urban development and for-
		ward-looking DNA and acting with the spirit to take on challenges without fearing change or being
		bound by convention, Change Makers are capable of building businesses while drawing in others
O N	and gaining the cooperation of external parties. As the term implies, Professionals have specialist
C T I	expertise. Through efforts such as promoting the strengthening of the International Business and
D U	expanding the non-asset business, I believe the presence of human resources with specialist
T R O
expertise in their respective domains will accelerate the development of businesses, thereby spur-
I N	ring further innovation. With these two elements-Change Makers and Professionals-interacting
		with each other, I believe we can offer new value that goes beyond conventional frameworks.
		Another important point is the diversity of human resources. Organizations devoid of diversity are
		likely to fall into decline. In addition to establishing systems and rules, fundamentally understand-
		ing the viewpoints of others is a prerequisite for enhancing the diversity of our organization and
		human resources. Long-Term Management Plan 2030 has adopted the improvement of both
2023	shareholder and social value as the two prongs of its strategy. Accordingly, we will steadily pro-
mote initiatives for enhancing social value and properly demonstrate the outcomes they yield.
MITSUBISHI ESTATE CO., LTD. Integrated Report

We will steadily advance concerted efforts to	CEO
MESSAGE
embody urban development with a long-term per-
spective (tradition) and foresight to stay ahead of
the times (a pioneering spirit) to achieve
Long-Term Management Plan 2030 and realize
ongoing corporate growth.

To Our Stakeholders

Three years have passed since the launch of Long-Term Management Plan 2030. While various
events occurred that could not have been anticipated, results to date-including in terms of the
progress of key performance indicators, profit growth, and headway made with investments-have
proceeded as expected. Since the launch of the plan, we have consistently implemented share-
holder returns at a high level. For example, the share buybacks of ¥100.0 billion that we
announced in November 2022 brought the total amount of such buybacks to ¥230.0 billion since
FY2019. We will continue
promoting shareholder returns as one of our priorities. Ensuring the continuous growth of our
businesses and profits is also a priority. To achieve this goal, we will endeavor to maintain a strong
awareness of returns from both long- and short-term perspectives.
Despite uncertainties in the current operating environment, including inflation, financial condi-
tions, and geopolitical risks such as the crisis in Ukraine, the Mitsubishi Estate Group has seen its	I N
business activities expand globally and its number of employees grow to more than 10,000 overall. If	T R
O D U
every one of them can embody urban development with a long-term perspective (tradition) and fore-
sight to stay ahead of the times (a pioneering spirit), I am convinced that we can achieve Long-Term	C T I
Management Plan 2030 and contribute to the creation of a truly meaningful society. I hope to proceed	O N
steadily into the future with all our stakeholders to respond to the diverse types of value that will be
required by society. My aim is to advance management with a strong focus on what is important to
shareholders, investors, community members, customers, employees, and business partners.
Drawing fully on our diversity, we will continue making concerted efforts to achieve Long-Term
Management Plan 2030 and realize ongoing corporate growth. Taking inspiration from the tradition
and pioneering spirit that make up our DNA, we pledge to grow together with stakeholders with an
awareness of our position as the industry's leading company. We ask for your
continued support for our endeavors.

President & Chief Executive Officer

Mitsubishi Estate Co., Ltd.

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