2018 Integrated Report - Amazon S3

 
2018 Integrated Report - Amazon S3
TOKYU FUDOSAN HOLDINGS
                                                                                                                                          2018 Integrated Report
                                                                                                                                                                   2018 I nteg rated Rep o rt

Tokyu Fudosan Holdings Corporation
Group Finance Department, Investor Relations
Group Planning Policy Department, CSR Promotion Group   This product is made of FSC®-certified and   This report uses ink derived from
                                                        other controlled material.                   non-edible plants.
https://www.tokyu-fudosan-hd.co.jp/english/
2018 Integrated Report - Amazon S3
We go beyond
the bounds of physical
 structures to propose
  and create lifestyles.
 The Tokyu Fudosan Holdings Group has always
eagerly taken on new challenges, starting with the
    development of the community of Den-en
   Chofu. It’s in our DNA. We will continue to
leverage that “Challenging DNA” to deliver new
  value to communities and society through the
   proposal of new home, work and play styles.
2018 Integrated Report - Amazon S3
Tokyu Group Slogan                                                                                              Tokyu Fudosan Holdings Group Ideal

               Toward a Beautiful Age – The Tokyu Group                                                                             A corporate group that continues to create value
                                                                                                                                                     We go beyond the bounds of physical structures to
                  Tokyu Group Philosophy                                                                                                                    propose and create new lifestyles

               We hold this philosophy in common as we work together to create and
               support the Tokyu Group.

                                                                                                                                     Founding Spirit
                Mission Statement      We will create a beautiful living environment, where each person can
                                       pursue individual happiness in a harmonious society.
                                                                                                                                Challenging DNA
               Management Policy       Work independently and in collaboration to raise Group synergy and
                                       establish a trusted and beloved brand.
                                                                                                                                The Tokyu Fudosan Holdings Group originated 100 years ago in
                                         • Meet current market expectations and develop new ones.                               1918 with the development of Den-en Chofu based on the garden
                                         • Manage in harmony with the natural environment.                                      city concept, with the aim of developing the ideal community at a
                                                                                                                                time when there was a housing shortage. With this DNA of taking
                                         • Pursue innovative management from a global perspective.
                                                                                                                                on challenges, or “Challenging DNA,” that we have inherited, we                                               Eiichi Shibusawa, who
                                         • Value individuality and make the most of each person.                                are sincerely working toward solutions to social problems with an                                             established the Den-en
                                                                                                                                enterprising spirit, and will go beyond the bounds of physical                                                Toshi Company, the origin
                                       Through these means, we will fulfill our corporate social responsibilities.                                                                                                                            of the Group, in 1918.
                                                                                                                                structures to propose and create new lifestyles.
               Guidelines for Action   Fulfill your responsibilities. Collaborate to enhance each other’s abilities.
                                       Reinvent yourself with a global awareness.

    Contents

    Value Creation of the Tokyu Fudosan Holdings Group:              Wellness Segment                               34
                                                                                                                            Editorial Policy
      The History of Our Business and Social Issues        4         Tokyu Hands Segment                            35
                                                                                                                            The Tokyu Fudosan Holdings Group seeks to contribute to a sustainable society by solving social issues through its businesses. The Group
      Value Creation Process                               6         Innovation Business Segment                    36      issues integrated reports to provide stakeholders with a better overall understanding of how it creates value in all of its business activities. This
      Our Three Core Strengths                             8         Synergy among Our Businesses                   37      report discloses the Group’s medium- and long-term management policies and business strategies as well as financial and non-financial data
    Financial and Non-Financial Highlights                10       ESG Management:                                          prepared in accordance with the international integrated reporting framework of the International Integrated Reporting Council (IIRC) and the
    Materiality Identification Process                    13         Work Style Reforms                             38      Guidance for Integrated Corporate Disclosure and Company-Investor Dialogue for Collaborative Value Creation formulated by the Ministry of
                                                                                                                            Economy, Trade and Industry (METI).
    Medium-Term Management Plan Based                                Social Needs                                   41
     on Materialities                                     14                                                                  For more detailed financial and CSR information, please refer to the Company’s website.
                                                                     Environment                                    42
    Message from the President                            16         Corporate Governance                           44
    Feature: Initiatives to Address Social Issues                                                                              Investor Relations Information    https://www.tokyu-fudosan-hd.co.jp/english/ir/
                                                                 Directors, Audit & Supervisory Board Members
     and New Value Creation                                       and Managing Officers                             49               CSR Information             https://tokyu-fudosan-hd-csr.disclosure.site/en
      1. Greater Shibuya Area Concept                     22     Messages from Outside Directors                    52
      2. Senior Housing Business                          26     Financial Section:
      3. Renewable Energy Business                        27       Financial Analysis                               54
    Value Creation Strategy                               28       Consolidated Financial Statements                56   Note on Forward-Looking Statements
      Business Strategies:                                         Notes to the Consolidated Financial Statements   65   The forecasts and other forward-looking statements in this report are based on currently available information and certain
        Urban Development Segment                         30       Independent Auditor’s Report                     91   assumptions determined as rational. Consequently, the statements herein do not constitute assurance regarding actual results by the
                                                                                                                         Company. Actual performance may significantly differ from these forecasts due to various factors in the future.
        Residential Segment                               31     Major Business Areas                               92
        Property Management Segment                       32     Corporate Data/Stock Information                   94
        Real Estate Agents Segment                        33

2                                                                                                                                                                                                                              TOKYU FUDOSAN HOLDINGS              Integrated Report 2018   3
2018 Integrated Report - Amazon S3
Value Creation of the Tokyu Fudosan Holdings Group

    The History of Our Business
    and Social Issues

                                                                                                                                   Historical Backdrop and Social Issues
                                                                                                                                                                                 1950s-1960s                                               1970s-1980s                                1990s-2000s                                        2010s
    The origin of the Tokyu Fudosan Holdings Group was
    the development of the town of Den-en Chofu, which                                                                                                                      From reconstruction                                    Drastic change in the world                  Post-bubble period                         Toward a sustainable
    became the model for modern suburban community                                                                                                                              to growth                                          economy and advancement                     and diversification of                            society                               Our Three Core
    development in Japan. We later created new
                                                                                                                                                                           Japan rebuilt its economy,
                                                                                                                                                                                                                                       of living standards                           lifestyles
                                                                                                                                                                                                                                                                                                                          Under globalization, a paradigm                Strengths
    businesses and have grown by addressing social                                                                                                                         boosted by special demand from                          The period of rapid economic               Due to prolonged economic                   shift has taken place with both the
    issues and needs. One constant through the years has                                                                                                                   the Korean War, and completing                          growth in Japan came to an end             stagnation, coupled with the                public and private sectors looking
                                                                                                                                                                           the postwar reconstruction,                             with the oil crisis. In Japan, which       declining birthrate, aging                  to achieve sustainable growth.
    been our dedication to solving social issues through                                                                                                                   ushered in a period of rapid                            had become an economic                     population and a drop in land               Further advances in information
    the creation of new value. The history of our business is                                                                                                              economic growth. However, the                           superpower, people gained                  prices, people began to return to           technology are predicted to bring               Diverse assets
                                                                                                                                                                           housing shortage in urban areas                         material well-being and began to           inner cities. Lifestyles and values         major innovations to people’s lives,            and customers
    proof that we have done just that.                                                                                                                                     became a serious problem due to                         seek spiritual enrichment. As a            became more diverse as a result             society and the industrial structure.
                                                                                                                                                                           population concentration in the                         result, values in various realms,          of the advancement and diffusion
                                                                                                                                                                           three major metropolitan areas                          including society, culture and             of information technology and the
                                                                                                                                                                           and increasing urban sprawl.                            lifestyle diversified.                      tide of globalization.

                 Our Founding Spirit
                                                                                                                                                                                                                                                                                                                                                                           Expertise and
                                                                                                                                                                                                                                                                                                                                                                        group structure that
                Challenging                                                                                                                                                                                                                                                                                                                                                produce unique
                                                                                                                                                                                                                                                                                                                                                                            businesses

                   DNA                                                                                           1950s-1960s                                                               1970s                                     1980s                                      1990s-2000s                                 2010s-

                                                                                                               Early focus on urban                                                      Pursuing business                         Enriching living through                   Creating a new urban                        Leveraging the Group’s
                                                                                                               development in Shibuya,                                                   diversification from an early              large-scale new town                       development business in                     combined strengths to
                                                                                                               Daikanyama and                                                            stage to become a corporate               development and resort                     the post-bubble era                         propose new lifestyles
                                                                                                               neighboring areas                                                         group that creates new                    business                                                                                                                                A culture that
                                                                                                                                                                                                                                                                              We strengthened our revenue base by         Shifting to a holding company structure
                                                                                                                                                                                         lifestyles                                                                           shifting our business focus from            enabled us to propose new lifestyles by          leverages and
                                                                                                               Tokyu Land Corporation was formed in                                                                                In a time when people sought spiritual
                                                                                                                                                                                                                                                                              built-for-sale homes to leasing, which is   leveraging the Group’s combined                  passes on our
                                                             Addressing Social Issues through Our Businesses

                                                                                                               1953 by splitting off the real estate division                            In response to changing times and         enrichment, we developed large-scale
                                                                                                               of Tokyu Corporation. It supplied housing                                 social needs, we quickly expanded into    new towns in harmony with the natural      less affected by economic cycles.           strengths. Our aim was to provide new          “Challenging DNA”
                                                                                                               to alleviate the shortage, and commercial                                 real estate-related businesses with the   surroundings and began full-scale            1993                                      value through Group synergy.
                                                                                                               facilities to support people’s daily lives,                               aim of conducting urban development       development of environment-conscious         Opening of the first Tokyu Stay hotel:       2013
                                                                                                               mainly in the Shibuya area, its base.                                     to meet needs for comfortable homes       resort towns.                                Urban-style hotels that can be used         Establishment of Tokyu Fudosan
                                                                                                                  1955                                                                   and enriched lifestyles, and to create      1982                                       for long-term stays                         Holdings Corporation: Merger of Tokyu
                                                                                                                  Completion of Daikanyama Tokyu                                         new lifestyles.                             Launch of the Asumigaoka New Town          1993                                        Land Corporation, Tokyu Community
                                                                                                                  Apartment: Japan’s first luxury                                                                                     business: New urban development in         Opening of Setagaya Business                Corporation and Tokyu Livable, Inc.
                                                                                                                                                                                           1970
                                                                                                                  apartment complex development                                            Establishment of Tokyu Community          harmony with natural surroundings          Square: Tokyu Group’s first
                                                                                                                  for foreign nationals                                                    Corporation: Expansion into the                                                      super-high-rise office building
                                                                                                                                                                                                                                     1984
                                                                                                                  1958                                                                     property management business to           Opening of Palau Pacific Resort:                                                        Future
                                                                                                                                                                                                                                                                                1999
                                                                                                                  Completion of Tokyu Skyline: The                                         create comfortable lives and living       An environment-conscious, authentic        Start of the real estate securitization   Achieve further growth
                                                                                                                  first condominiums in the Japanese                                        spaces                                    resort hotel                               business: First foray into the
                                                                                                                  real estate industry                                                                                                                                          securitization business
                                                                                                                                                                                                                                                                                                                          through full-scale urban
                                                                                                                                                                                           1972                                      1986                                                                                 development that proposes
         1918                                                                                                     1961                                                                     Establishment of Area Service Co.,        Opening of first Tokyu Sports Oasis:        2004
                                                                                                                  Start of Tokyu-Mitsubishi Home                                           Ltd. (currently Tokyu Livable, Inc.):     A members-only sports club offering        Opening of first senior housing
                                                                                                                                                                                                                                                                                                                          new lifestyles
       The Tokyu Group’s urban development                                                                        Loan Program: The prototype for the                                      Expansion into the real estate agents     programs to promote healthy lifestyles     facility: One of the first in the          We are pursuing new urban
       begins with the creation of a “garden city”                                                                home loan system                                                         business as a pioneer in real estate
                                                                                                                                                                                                                                     1988                                       industry to enter the senior housing      developments geared to the new era that
                                                                                                                                                                                           transactions                                                                         business                                  is unfolding, such as the Greater Shibuya
       Based on the garden city concept that originated in                                                        1965                                                                                                               Opening of first Tokyu Harvest Club:
       England, Den-en Chofu was created as an innovative,                                                        Opening of Shibuya Tokyu Building:                                       1976                                      A membership resort hotel offering                                                   Area Concept and the Life Story Town
       modern community where urban functions co-existed                                                          A multipurpose commercial facility                                       Establishment of Tokyu Hands Inc.:        new ways to enjoy leisure time                                                       model. With these approaches, we intend to
       with abundant greenery. This was the origin of the                                                         in front of Shibuya Station                                              Creative life stores for creating new                                                                                          achieve further growth as a comprehensive
       Tokyu Group’s urban development.                                                                           (reconstruction currently underway                                       lifestyles and culture                                                                                                         real estate development group.
                                                                                                                  at the site)

                                                                                                               Newspaper advertisement                                                   First Tokyu Hands store                   Asumigaoka New Town                        Grancreer Azamino                           Artist’s rendering of the Shibuya
        Den-en Chofu (Tokyo) at the time of
                                                                                                               announcing the establishment of                                           (Fujisawa Store)                                                                                                                 Station area after completion
        its development
                                                                                                               Tokyu Land Corporation

4                                                                                                                                                                                                                                                                                                                                               TOKYU FUDOSAN HOLDINGS    Integrated Report 2018   5
2018 Integrated Report - Amazon S3
Value Creation of the Tokyu Fudosan Holdings Group

        Value Creation Process
        The Tokyu Fudosan Holdings Group is carrying out stage 2 of its medium- and long-term
        management plan based on the three core strengths it has cultivated and materialities.
          Capitalizing on our broad business scope and many points of contact with customers,                                                                                                            Value Provided to Society
        we will become a corporate group that continues to create new value by going beyond
        the bounds of physical structures to propose and create new lifestyles.

                                                                                                                                                                 Value Provided to Customers

                                                                                     Our Business Model                                                                                                             Richness of people’s
                                                                                                                                                                                                                           lives
      Our Three                     Medium- and Long-Term

                                                                                                                                                                                    new work styles
                                      Management Plan                                 Life stage    Schooling                                    Employment   Retirement

                                                                                                                                                                                     Proposals for
    Core Strengths
                                   Value Frontier 2020                                                                                                                                                               Safety and security
                                  To become a corporate group that                                                  Office
                                                                                                                    buildings
                                      continues to create value

                                    Group Fundamental Policies                         Work
      Diverse assets                                                                               Part-time job    Consignment welfare
                                   Expansion of                                        Styles        referral
      and customers                                      Creation of new                                                                                                                                           Community formation
                                    associated
                                                            demand
                                      assets
                                                                                                                    Office building
                                                                                                                    management

                                                                                                                                                                                                                     Contribution to the
                                                                                                                    Condominium management                                                                            local economy

                                                                                                                                                                                    new home styles
                                                                                                                                                                                     Proposals for
       Expertise and                                                                                                Rental housing
    group structure that                                                               Home        Rental housing
      produce unique                                                                   Styles       for students                                                                                                    Enhancement of real
                                                                                                                    New condominiums
        businesses                                                                                                                                                                                                     estate value
                                                                                                                    Previously owned housing,
                                                                                                                    renovation, and remodeling
                                                                                                                                                              Senior housing
                                                                                                                                                                                                                        Environmental
                                  Materialities (Key Social Issues)                                  Shopping                                                                                                             protection
      A culture that
      leverages and                 Economic, political and regulatory changes                                      Fitness
      passes on our                 Diversification and globalization of lifestyles      Play
                                                                                       Styles                                                                                                                       The SDGs we focus on

                                                                                                                                                                                    new play styles
    “Challenging DNA”

                                                                                                                                                                                     Proposals for
                                    Safety and security in local communities                                        Hotels
                                    and urban areas
                                    Progression of a low birthrate and
                                    aging society                                                                   Resorts
                                    IoT and innovation
                                    More stringent social demands
                                    Changes in the natural environment

6                                                                                                                                                                                                     TOKYU FUDOSAN HOLDINGS   Integrated Report 2018   7
2018 Integrated Report - Amazon S3
Value Creation of the Tokyu Fudosan Holdings Group

    Our Three Core Strengths                                                                                                                                                                            Number of customers               Assets under management (AUM)

    By leveraging the three core strengths it has built up over many years, the
    Tokyu Fudosan Holdings Group is promoting business activities that
                                                                                                                                                                                                       Approx.   10     million           ¥988.6
                                                                                                                                                                                                                                              (As of March 31, 2018)
                                                                                                                                                                                                                                                                    billion

    address social issues.
      The Group will continue to create new value through dialogue with                                                                                                                                 Cumulative number of               Number of facilities operated
                                                                                                                                                 Business
    society and customers about their needs, which will continue to change                                                                                                                               condominium units                  by the Wellness segment
                                                                                                                                                Foundations
    with the times.

                                                                                                                                      Diverse Assets
                                                                                                                                                                                                    Approx.   91,000
                                                                                                                                                                                                        (As of March 31, 2018)
                                                                                                                                                                                                                                                     168
                                                                                                                                                                                                                                              (As of March 31, 2018)

                                                                                                                                      and Customers                                                  Number of condominium units               Number of real estate
                                                                                                                                                                                                        under management                        agent transactions
                                                                                                                                 We are involved in diverse assets through a wide
                                                                                                                                 range of businesses in the varied life settings of
                                                                                                                                 home, work and play, and create opportunities                        822,231                                 23,268
                                                                                                                                 for contact with a variety of customers.                               (As of March 31, 2018)                      (Fiscal 2017)

                                                                                                                                                                                                                        Knowledge Café and Knowledge Forum
                                                                                                                                                                                                                          Cumulative number of times held
                                                                                             Organization

                                                                                                                                                                                                                                      43         times
                                                                                                                                                                                                                               (Total of 5,298 participants)

             Morinomiya Q’s MALL BASE
                                                                                   Expertise and
                                                                                  Group Structure
                                                                                   That Produce
                                                                                 Unique Businesses                                                               Corporate Culture

                                                                               We were a pioneer in expanding into the
                                                                                                                                                                                                                        Knowledge Café is a place for Group
             Tokyu Plaza Omotesando Harajuku
                                                                               Property Management and Real Estate Agents
                                                                               segments, and have a track record of creating
                                                                                                                                                A Culture That                                                          employees to gain mutual understanding of
                                                                                                                                                                                                                        Group businesses other than their own.
                                                                               unique businesses such as Tokyu Hands Inc.
                                                                               With our wide-ranging business domains, we
                                                                                                                                         Leverages and Passes on Our
                                                                               will continue to produce unique new businesses.                “Challenging DNA”
                                                                                                                                                          The DNA of embracing challenges, or
                                                              Number of                                                                                   “Challenging DNA,” that has been passed
                                                       consolidated subsidiaries                                                                          on since our business began and
             Tokyu Harvest Club Atami Izusan & VIALA                                                                                                      management that emphasizes the

                                                             131
                                                                                                                                                                                                                        Positive Networking College provides
                                                                                                                                                          meaningfuless of work help to foster a                        support for the active participation of
                                                                                                                                                          corporate culture that encourages                             women in the workplace.
                                                        (As of March 31, 2018)                                                                            employees to take on challenges.
                                                                                       First-class registered                                                                                                                      Advanced services
                                                       Number of employees with        architects: 278
                                                       professional qualifications
                                                                                       Second-class registered
                                                                                       architects: 329

             Business-Airport Roppongi
                                                          6,741                        Real estate brokers: 5,549
                                                                                       Condominium managers: 585
                                                        (As of March 31, 2018)

8                                                                                                                                                                                                                   TOKYU FUDOSAN HOLDINGS          Integrated Report 2018    9
2018 Integrated Report - Amazon S3
Financial and Non-Financial Highlights

     Financial Indicators                                                                                                                                                                         Business Indicators

                                                                                                                                                                                                                                                                                      Total Floorspace/Vacancy Rate
     Operating Revenue                                                                                 Operating Profit                                                                           Average Office Building Rent                                                        (Office Buildings and Commercial Facilities)
     (Billions of yen)                                                                                  (Billions of yen)                                                                         (Yen per tsubo* per month)                                                          (Thousand m2)                                                                   (%)
        900
                                                                          866.1                               100                                                                                 25,000
                                                                                                                                                                                                                                          23,770        24,210    24,410               1,600
                                                                                                                                                                                                                                                                                                                 1,548         1,580                                     10
                                                                                                                                                                             93.0                                              23,270                                                                1,512                                   1,458
                                               815.5        808.5                                                                                                                                               22,190                                                                                                                                     1,438
                                773.1
                    714.1                                                                                      80
                                                                                                                                                                77.5                              20,000                                                                                                                                                                  8
                                                                                                                                                      73.2                                                                                                                             1,200
        600                                                                                                                                  68.8
                                                                                                               60       61.4        63.3                                                          15,000                                                                                                                                                                  6
                                                                                                                                                                                                                                                                                          800
                                                                                                               40                                                                                 10,000                                                                                                                                                                  4
        300                                                                                                                                                                                                                                                                                                        2.8
                                                                                                                                                                                                                                                                                          400                                                    2.0
                                                                                                               20                                                                                  5,000                                                                                                  1.8                                                             2
                                                                                                                                                                                                                                                                                                                                 0.9
                                                                                                                                                                                                                                                                                                                                                            0.5
           0                                                                                                    0                                                                                       0                                                                                    0                                                                            0
                     2013        2014          2015         2016           2017         (FY)                            2013        2014     2015     2016      2017          2020         (FY)                   2013         2014        2015          2016      2017       (FY)                     2013       2014          2015             2016      2017        (FY)
                                                                                                                                                                              Target
                                                                                                                                                                                                  *1 tsubo ≈ 3.3 m2                                                                   Total floorspace:         Office buildings (left scale)
                                                                                                                                                                                                                                                                                                               Commercial facilities (left scale)
                                                                                                                                                                                                                                                                                           Vacancy rate (right scale)

     Profit Attributable to Owners of Parent2                                                          ROA3/ROE4                                                                                  Assets under Management (AUM)                                                       Revenue from Condominium Sales/No. of Units Sold
     (Billions of yen)                                                                                  (%)                                                                                       (Billions of yen)                                                                   (Billions of yen)                                                              (Units)
          50                                                                                                   10                                                                                  1,000                                                           988.6                  250                                                                        3,000

                                                                           42.0                                                                                                                                                                                                                      2,528
          40                                                                                                    8                                                                                    800                                                 787.3                            200                                                                        2,400
                                                             35.2                                                                                                                                                                                                                                                 2,027
                                                  31.5                                                                                                                                                                                    644.1                                                                                1,892
          30                            28.7                                                                    6           7.5                                 7.3           7.7                    600                                                                                  150                                                              1,627     1,800
                                                                                                                                                    7.1                                                          529.6         556.8                                                                                                         1,560
                               25.2                                                                                                    6.6                                                                                                                                                           133.3
                     23.7
          20                                                                                                    4                                                                                    400                                                                                  100                                                    96.7      95.5      1,200
                                                                                                                                                                                                                                                                                                                  89.7          87.6
          10                                                                                                    2           3.5        3.4          3.5         3.6           3.7                     200                                                                                  50                                                                          600

           0                                                                                                    0                                                                                       0                                                                                    0                                                                            0

                     2013      2014     2015      2016       2017          2020         (FY)                            2013          2014          2015       2016          2017          (FY)                   2013         2014        2015          2016      2017       (FY)                     2013       2014          2015             2016      2017        (FY)
                                                                           Target
                                                                                                               ROA            ROE                                                                      API7           CRR8        Private REITs, etc.                                      Revenue from condominium sales (left scale)
                                                                                                                                                                                                                                                                                           No. of units sold (right scale)

                                                                                                                                                                                                  No. of Condominium Units under Management/                                          No. of Retail Real Estate Transactions/
     Debt/Equity Ratio5                                                                                Debt/EBITDA Ratio6                                                                         No. of Office Buildings under Management                                            No. of Real Estate Agency Outlets
     (Times)                                                                                            (Times)                                                                                   (Units)                                                                   (Units)   (Transactions)                                                               (Outlets)
           4                                                                                                   15                                                                                 1,000,000                               1,453          1,483     1,500    1,500     25,000                                                                           250
                                                                                                                                                                                                                 1,305         1,360                                                                                                                      23,268
                                                                                                                                    12.8                                                                                                                                                                                                    22,264
                                                                                                                        11.7                 11.7                                                   800,000                                                       822,231   1,200     20,000
                                                                                                                                                                                                                                                                                                                              20,851                                   200
                                                                                                               12                                     11.2      11.4                                                                                                                                             18,573
           3                   2.8                                                                                                                                                                                                       715,660        741,624                                     18,433                                                  171
                         2.7             2.6       2.6        2.6                                                                                                                                                            678,479                                                                                                             166
                                                                                                                                                                                                                641,591                                                                                                         152
                                                                                                                9                                                                                   600,000                                                                   900     15,000                                                                           150
           2                                                                                                                                                           Approximately
                                                                  Approximately 2.3                                                                                        10.0                                                                                                                           134     149
                                                                                                                6                                                                                   400,000                                                                   600     10,000                                                                           100

           1
                                                                                                                3                                                                                   200,000                                                                   300      5,000                                                                             50

           0                                                                                                    0                                                                                           0                                                                    0           0                                                                            0

                     2013      2014     2015      2016       2017          2020         (FY)                            2013        2014     2015     2016      2017          2020         (FY)                   2013         2014        2015          2016      2017       (FY)                     2013       2014          2015             2016      2017        (FY)
                                                                           Target                                                                                             Target
     1. (FY) = Fiscal year ended/ending March 31 of the following calendar year                                                                                                                        No. of condominium units under comprehensive management (left scale)                No. of retail real estate transactions (left scale)
     2. Net profit has been reclassified as profit attributable to owners of parent from fiscal 2015.                                                                                                      No. of condominium units under facility management (left scale)                     No. of real estate agency outlets (right scale)
     3. ROA (Return on Assets) is an indicator that measures the profitability of investments in total assets: (Operating profit + Interest income + Dividend income) ÷ Total assets (average for        No. of office buildings under management (right scale)
        the period)
     4. ROE (Return on Equity) is an indicator that measures the profitability of investments in equity: Profit attributable to owners of parent ÷ Equity (average for the period)                  7. Activia Properties Inc.
     5. Debt/Equity ratio is an indicator of financial soundness: Interest-bearing debt ÷ Equity                                                                                                   8. Comforia Residential REIT, Inc.
     6. Debt/EBITDA ratio is an indicator of whether the level of interest-bearing debt compared to cash flows generated from business activities is appropriate: Interest-bearing debt ÷ EBITDA

10                                                                                                                                                                                                                                                                                                              TOKYU FUDOSAN HOLDINGS                  Integrated Report 2018   11
2018 Integrated Report - Amazon S3
Financial and Non-Financial Highlights

                                                                                                                                                                             Materiality Identification Process
                                                                                                                                                                             When it formulated the medium-term management plan, the Tokyu Fudosan Holdings Group identified key social issues that
                                                                                                                                                                             will be important to the Group over the long term, and then determined materialities based partly on the input of experts
                                                                                                                                                                             who are highly knowledgeable about the low birthrate and aging society, living and lifestyles, the environment, work styles and
     Human Resource, Social and Environmental Indicators                                                                                                                     ESG investment. We strive to create solutions for social issues through our businesses in order to realize a sustainable society
                                                                                                                                                                             and enhance the Group’s value.

                                                                                                    Percentage of Employees Undergoing                                       Identification Process
     Number of Employees                                                                            Medical Examinations
     (Persons)                                                                                      (%)                                                                         Step 1                   Determination and Organization of Social Issues
     25,000                                                                                            100      98.9   99.2    99.3   98.2    97.9        100
                                                                                                                                                                                                         When identifying key issues, the Group ascertained social issues while making reference to the Group’s management
                                                            20,421       21,091                                                                                                                          plans, the GRI Guidelines, ISO 26000, the Sustainable Development Goals, issues recognized by the Japanese
     20,000                                   19,230                                                       80
                                18,243                                                                                                                                                                   government and economic organizations, and other information, and generated a long list comprising 470 items.
                   17,594
     15,000                                                                                                60                                                                   Step 2                   Integration and Consolidation of Issues
                                                                                                                                                                                                         We integrated and consolidated the 470 social issues by organizing similar items and taking into account relevancy to
     10,000                                                                                                40
                                                                                                                                                                                                         the Group. Based on the results, we tentatively evaluated importance based on relevancy to the Group’s value creation
                                                                                                                                                                                                         process and stakeholder expectations and demands and selected 31 materialities.
      5,000                                                                                                20
                                                                                                                                                                                Step 3                   Interviews of Management Staff and Experts
             0                                                                                              0                                                                                            We conducted interviews of management staff and experts with high levels of knowledge in specialized fields. We also
                     2013        2014             2015       2016          2017             (FY)                2013   2014   2015    2016    2017        2020        (FY)                               gathered opinions regarding the importance of social issues from within the Group and society.
                                                                                                                                                          Target

                                                                                                                                                                             Management                                                       Comment

                                                                                                                                                                                                                                               • Sound and sustainable management requires an emphasis on the opinions of independent outside directors, arrangement
                                                                                                                                                                               President and Representative Director                             of issues, and investigation of the details of measures.
     Ratio of Female Managers                                                                       Ratio of Females among Total New Graduate Hires                            Yuji Okuma                                                      • In order to enhance our competitiveness even further, we need to emphasize items that will make use of the Group’s
     (%)                                                                                            (%)                                                                                                                                          diversity and differentiate the Group from other companies.
            10                                                                                             50
                                                                                                                                                                                                                                               • In a society with an aging population and advances in the Internet of things (IoT), business will be born from services that
                                                                               8.6                                                                                             Director, Operating Officer
                                                                                                                                      41.6    40.1                                                                                               combine various issues and can be provided in an integrated manner.
             8                                                                                             40                                                                  Hironori Nishikawa                                              • When engaging in the resort business, it is necessary to take measures to mitigate environmental impact from business
                                                                                                                              35.4                                             Responsible for general administration divisions
                                                                                                                31.5   33.0                                                                                                                      activities with regard to the issue of climate change.
             6                       5.7          5.9         5.7                                          30
                      4.8                                                                                                                                                    Specialized Field Experts                                        Comment
                                                                                                                                                      At least 30.0
             4                                                                                             20
                                                                                                                                                                               Low Birthrate and Aging Society                                 • It is important to create business from means of preventing the elderly from needing nursing care (such as sports, diet, and
                                                                                                                                                                               Tomoo Matsuda                                                     lifelong learning)—in other words, the perspective of preventing rather than addressing issues.
             2                                                                                             10
                                                                                                                                                                               Research Director and Chief Producer                            • In an aging society, there is potential for the Internet of things (IoT) including the use of big data relating to health to play
                                                                                                                                                                               Platinum Society Center, Mitsubishi Research Institute, Inc.      extremely important roles and become a new growth business.
             0                                                                                              0
                     2013        2014             2015       2016          2017             (FY)                2013   2014   2015    2016    2017        2020        (FY)     Living and Lifestyles                                           • It is important to consider what type of space people will come to in order to spend their time.
                                                                                                                                                          Target
                                                                                                                                                                               Research institution                                            • Businesses need to realize that minority groups are becoming the majority (e.g., unmarried persons, double-income
                                                                                                                                                                               (anonymous)                                                       no-kids households, at-home workers)
                                                                                                                                                                               Environment                                                     • Platform-like spaces and services that can change flexibly according to the diversity of individual consumers will be
                                                                                                                                                                               Shiro Wakui                                                       expected in the future.
                                                                                                                                                                               Professor, Department of Environmental and
     CO2 Emissions                                                                                  Midori wo Tsunagu Project (Area of Forest Protected)                                                                                       • The key is how to create value with environmental measures.
                                                                                                                                                                               Information Studies, Tokyo City University
                                                                               Emission intensity
     (1,000 t-CO2)                                                                  (kg-CO2/m2)     (ha)                                                                                                                                       • With regard to changes in work styles, emphasis will be placed on flexible working styles not limited to a single site, such
                                                                                                                                                                               Work Styles
           300                                                                               150     2,000                                               2,000                                                                                   as work from anywhere (a work style whereby employees can work not just at a single office, but also at home, satellite
                                                                                                                                                                               Keiko Tsuchiya
                                                                                                                                                                               General Manager, Personnel Division and Director,                 offices, and other locations).
                     228       235                  233       227                                    1,600                                                                     Adecco Ltd.                                                     • As society becomes increasingly diverse, there will be calls for this to be reflected in buildings and the environment.
           200
                                           210                             100               100                                              1,303
                                                                                                     1,200                            1,223                                    ESG Investment                                                  • What is currently being emphasized with regard to ESG investment is governance. Whether boards of directors are
                              101.9                 106.6                                                                     1,081
                     98.6                  98.4              101.0                                                     983                                                     Masaru Arai                                                       functioning properly is being called into question.
                                                                                                       800
                                                                                                                843                                                            Chairman, Japan Sustainable Investment Forum (JSIF)             • Policies, plans, and structures must be formulated, PDCA implemented, and the information disclosed.
           100                                                                                50
                                                                                                                                                                             Note: Titles are as of June 2016 when the interviews were conducted.
                                                                                                       400
                                                                                                                                                                               Step 4                    Identification of Materialities                                                                                    High

                                                                                                                                                                                                                                                                                                                            Importance to society
             0                                                                                 0            0                                                                                            Based on the interview results, we verified the appropriateness of the                                                                                        Materialities
                     2013     2014         2015     2016      2017             2020                             2013   2014   2015    2016    2017        2020                                                                                                                                                                                                      (key social issues)
                                                                                             (FY)                                                                     (FY)                               importance of each issue that should be prioritized by the Group. The
                                                                               Target                                                                     Target
            Emissions (left scale)          Emission intensity (right scale)
                                                                                                                                                                                                         evaluation results were plotted and organized as a materiality map and
                                                                                                                                                                                                         categorized into seven groups. The materialities were reported to the
                                                                                                                                                                                                         Board of Directors by the CSR Promotion Committee and identification
                                                                                                                                                                                                         was finalized.
                                                                                                                                                                                                                                                                                                                                                    Importance to the Group
                                                                                                                                                                                                                                                                                                                                                                                   High

12                                                                                                                                                                                                                                                                                                                   TOKYU FUDOSAN HOLDINGS                         Integrated Report 2018   13
2018 Integrated Report - Amazon S3
Medium-Term Management Plan Based
     on Materialities                                                                                                                                       Medium- and Long-term Management Plan
     In fiscal 2017, the Tokyu Fudosan Holdings Group launched the 2017-2020 Medium-Term Management Plan as stage 2 of its                                            Value Frontier 2020
     Value Frontier 2020 medium- and long-term management plan. When formulating this plan, we developed strategies based on                       – To Become a Corporate Group That Continues to Create Value –                                                              Entering a
     the materialities that were verified and identified as the issues on which the Group should place priority.
                                                                                                                                                                                    Two Fundamental Policies                                                                   New Stage
                                                                                                                                                     Expansion of associated assets                                Creation of new demand
     Materialities of the Tokyu Fudosan Holdings Group
                         Materialities                                Opportunities                         Risks                Related SDGs
                                                                                                                                                STAGE 1        2014-2016                                   STAGE 2          2017-2020                                                2021-
       Economic, political, and regulatory
       changes
       Issues of social security by the Japanese government,   ●   Capturing new business       ●   Risk of long-term interest
       privatization, uncertainty in the global economy, and       opportunities                    rate increases
       other factors will have major impacts on business                                                                                                         STAGE 2: 2017– 2020 Medium-Term Management Plan
       opportunities and capital procurement.
                                                                                                                                                                                                               Three Growth Strategies
       Diversification and globalization of
       lifestyles                                                                                                                                          Urban development that                              Expansion of the scope of cyclical
                                                               ● Inbound demand                 ●   Decline in total domestic                                                                                                                                            Reinforcing stock utilization
       As an urban development enterprise, diversification                                                                                                  proposes new lifestyles                                  reinvestment business
       in life and work styles, increasing importance of       ● Expanded opportunities             demand (diversification of
       multifaceted responses to consumer needs,                 for overseas business              demand)
                                                                                                                                                 Under the Greater Shibuya Area Concept, the               We are expanding cyclical reinvestment                In response to the environmental shift from a
       invigoration of local communities, and other changes                                                                                      Group is making use of local characteristics that         targets from office buildings, commercial              flow-based society to a stock-based society,
       will have major impacts on business opportunities.                                                                                        integrate numerous functions relating to work,            facilities, and rental housing to new types of        we are reinforcing stock utilization business
                                                                                                                                                 residences, and spending time and the strengths           assets including infrastructure, hotels, and          with a focus on the Property Management
       Safety and security in local                                                                                                              resulting from concentration on major projects            student residences, reinforcing earnings              business and the Real Estate Agents business,
                                                               ●   Expansion of markets                                                          to undertake development and participation                capacity. We will increase assets under               based on customer contact points. We will
       communities and urban areas                                 related to existing stock    ●   Issue of vacant homes
                                                                                                                                                 ranging from individual sites to entire communities.      management (AUM) as associated assets in              raise profits by maximizing utilization of
       As a real estate developer, the increase and aging      ●   Accelerated privatization    ● Deterioration   of existing                    We are also conducting urban development                  the Group’s asset investment business from            management stock, real estate information
       of existing stock and rising need to respond to             of public asset processing       stock
       disasters will have a major impact on business                                                                                            that promotes interaction among generations.              ¥0.8 trillion in fiscal 2016 to ¥1.3 trillion in       in the Real Estate Agents business, and
                                                                   and operation                                                                 Through collaboration within the Group, we                fiscal 2020.                                           other assets, taking advantage of business
       opportunities.
                                                                                                                                                 provide services that integrate tangible and                                                                    opportunities, and conducting business that
                                                                                                                                                 intangible elements and are directly operated                                                                   does not involve investment.
       Progression of a low birthrate and                                                                                                        by the Group to respond to diverse customer
       aging society                                                                            ●   Falling demand in                            needs in a super-aged society.
       As a Group that develops business in residences         ●   Increasing demand related        conjunction with the
       and senior housing, the low birth rate, aging               to senior citizens               decline of the working age
       population, and declining population in Japan will                                           population                                                 Reinforcing the Management Foundations That Support the Growth Strategies
       have a major impact on business opportunities.
                                                                                                                                                                                    • Strengthening measures to generate synergy effects among businesses
       IoT & Innovation                                                                         ●   Lowering of barriers to                                                               • Optimizing Group management assets and ESG management
       As a company that provides both products and                                                 entry into existing
                                                                                                    business fields, delayed                      We will maximize use of the Group’s business foundations (stock,                         In addition, to achieve sustainable growth and increase corporate
       services, advances in IoT technology will have a
                                                               ●   Business innovation              market entry, and                            customer information, and human resources), acquire derivative                        value over the long term, we are optimizing Group management assets
       major impact on innovation and changes in
       business models.                                                                             increasingly rigorous                        business opportunities, and create added value.                                       and undertaking ESG management.
                                                                                                    information security and
                                                                                                    control                                                                                                         Targets (Fiscal 2020)

       More stringent social demands
                                                                                                    Increasingly stringent
       Diverse demands from consumers, corporate
       governance, and various other factors will have a
                                                               ●   Increase in non-financial
                                                                   value
                                                                                                ●
                                                                                                    responses to various types                      Operating profit                          ¥93         billion       CO2 emissions                                 25     % reduction compared to fiscal 2005
                                                                                                    of risk
                                                                                                                                                    Profit attributable to
       major impact on management systems.
                                                                                                                                                    owners of parent                         ¥42         billion       Percentage of female hires                                                     30
                                                                                                                                                                                                                                                                                                At least       %

       Changes in the natural environment
       As a company that performs urban development,
                                                                                                                                                    Debt/Equity ratio (times)                  2.3
                                                                                                                                                                                       Approximately                   Buildings* certified under the Barrier Free Act                                100       %

       changes in infrastructure development and investor
       interests in conjunction with intensifying climate
       change will have a major impact on business
                                                               ●   Expansion of
                                                                   environmental markets
                                                                                                ●   Expansion of climate
                                                                                                    change risks                                    Debt/EBITDA ratio (times)                   10
                                                                                                                                                                                         Approximately                 Number of outside directors                        At least   1/3    (approximately 33%)

       opportunities and continuity.
                                                                                                                                                                                                                                          *Tokyu Land Corporation new large office buildings and commercial facilities

14                                                                                                                                                                                                                                                            TOKYU FUDOSAN HOLDINGS                Integrated Report 2018   15
2018 Integrated Report - Amazon S3
Message from the President

     We will continue sustainable value creation, going
     beyond the bounds of physical structures to propose
     and create new lifestyles and address social issues.

        The Value Provided by Tokyu Fudosan Holdings

     Applying Our “Challenging DNA” to the Creation of Solutions for
     Social Issues
     The Tokyu Fudosan Holdings Group originated as the Den-en                  The third stage was the period following the collapse of the
     Toshi Company established by the industrialist Eiichi Shibusawa         bubble economy, when the value of real estate was called into
     and others in 1918. In response to the deteriorating housing            question. We broadened our earnings model by dividing real
     situation in central Tokyo due to population concentration, the         estate into properties for ownership and properties for use. A
     company brought in Western ideas for high-quality urban                 representative example is Tokyu Harvest Club, a chain of
     development, and developed the community of Den-en Chofu                membership resort hotels that was launched in 1988 and is
     based on the garden city concept, which combined the merits of          celebrating its 30th anniversary this year. This was also the
     nature and cities. Ever since, the Group has conducted its              period when we began securitization of real estate, and the real
     businesses based on a strong commitment to creating solutions           estate business became more dynamic. By utilizing securitization
     for social issues, driven by its corporate DNA of taking on new         plans, we achieved significant growth in the leasing business,
     challenges, which we call “Challenging DNA.”                            and shifted the center of our earnings platform to the Urban
        I often explain the evolution of the Group’s business to investors   Development segment.
     by dividing it into four stages. The first stage was during Japan’s         The fourth stage is the present, when competition among
     rapid economic growth period, which was accompanied by a                cities around the world is intensifying and the urban functions
     worsening housing shortage. Through the development of large-           of Tokyo are once again being questioned. The roles that the
     scale new towns, we supplied housing in quantity while                  real estate industry is expected to play are also changing
     simultaneously pursuing quality in urban development.                   significantly as lifestyles and values diversify and the needs of
        The second stage came after the period of rapid growth               city dwellers become more fragmented. It is with that perspective
     ended and people began to seek spiritual enrichment. We were            that we are conducting diverse urban development using our
     quick to grasp the changes in society, and developed a resort           unique approach, based on our recognition that we need to
     business to provide ways to enjoy leisure time, and the Tokyu           propose new home, work and play styles. The redevelopment
     Hands segment, which offers a wide variety of DIY products              of Shibuya that we have been conducting as part of the Tokyu
     and information. In addition to urban development, we expanded          Group compiles all the elements of the ideal community
     our business scope to real estate-related fields, such as property       development concept that we have pursued for the last 100
     management and real estate agents businesses, thus building             years. (See Feature 1 on page 22.)
     the foundations for our current business operations.

     Value Creation Generated by Dialogue with Customers
     Our businesses have flexibly evolved to adapt to changing times,         Holdings Group, and the passing on of that flexibility is supported
     but the strengths we have cultivated over the years can be              by management that emphasizes the meaningfulness of work.
     distilled down to three: our corporate culture, organization and        Tokyu Hands, which was created as a new business segment             Yuji Okuma
     business foundations.                                                   in 1976, is symbolic of that spirit of challenge.                    President and Representative Director
        Our corporate culture is “a culture that passes on and                  The strength of our organization is our “expertise and Group      Tokyu Fudosan Holdings Corporation
     leverages our Challenging DNA.” The flexibility to accept                structure that produce unique businesses.” We shifted to a holding
     unprecedented challenges permeates the Tokyu Fudosan                    company structure in 2013, creating a flat, flexible organization.

16                                                                                                                                                                                    17
Message from the President

     The more than 100 Group companies that conduct unique                     These three strengths are the driving force of our business
                                                                                                                                                     Reinforcing Businesses That Utilize Real Estate Stock
     businesses, and the approximately 20,000 Group employees,              operations, and the source of the value the Group provides in            In growth strategy 3, “reinforcing stock utilization,” we have
     combine their capabilities through collaborative business under a      addressing social issues. Five years have passed since we shifted        made growth in the Property Management segment and Real
     unified Group strategy.                                                 to a holding company structure, but I still believe that the diversity   Estate Agents segment a fundamental strategy, based on the
       The strength of our business foundations is our “diverse             and uniqueness of our Group are outcomes of our dialogue with            shift in the external environment from a flow economy to a stock
     assets and customers.” Under the reliable and trusted Tokyu            customers. From our abundant points of contact with customers,           economy. Tokyu Community Corporation established a renovation
     brand, we own an exceptionally wide range of assets, including         we are able to gain insight into their needs first-hand, and will fully   subsidiary, Tokyu Re・design Corporation, in 2017. All of the
     office buildings, commercial facilities, housing, hotels, resorts       leverage that advantage to continue providing value that goes            renovation business of the Tokyu Fudosan Holdings Group will
     and fitness clubs, and provide services for people at every             beyond the bounds of physical structures.                                be concentrated at this subsidiary, which will strengthen the
     stage of life, from children to senior citizens.                                                                                                business by conducting redesign to generate high added value.
                                                                                                                                                        Tokyu Livable, Inc. has launched GRANTACT, a real estate
                                                                                                                                                     sales agent brand for high-grade condominiums in Minato-ku
                                                                                                                                                     and Shibuya-ku. In addition, Tokyu Housing Lease Corporation
        Medium- and Long-Term Management Plan “Value Frontier 2020: To Become a Corporate Group That                                                 is focusing on meeting the needs of wealthy residents of central
        Continues to Create Value”                                                                                                                   Tokyo, including establishing a sales center specifically for
     Stage 2 of the Medium- and Long-Term Management Plan Makes a                                                                                    high-end inner-city rental housing.

     Solid Start                                                                                                                                     Growth of the Wellness Segment                                        Synergy with National Students Information Center
                                                                                                                                                     In the Wellness segment, we are strengthening the hotel               We are taking steps to realize synergy at National Students
     In fiscal 2014, we announced “Value Frontier 2020: To Become a          cyclical reinvestment business; and 3) Reinforcing stock utilization.    business to meet inbound demand (demand from visitors to              Information Center, Co., Ltd., which the Group acquired in 2016.
     Corporate Group That Continues to Create Value,” our first              (See “Medium-Term Management Plan Based on Materialities”                Japan), where strong growth is expected. For example, we are          For example, we are developing student residences in the
     medium- and long-term management plan since adopting the               on page 14.)                                                             expanding the number of Tokyu Stay urban-style hotels, which          Residential segment, and Nasic I Support Co., Ltd., a subsidiary
     holding company structure. The second half of the plan period             Our financial targets for fiscal 2020, the final year of the plan,       we are also steadily opening in cities other than Tokyo.              of the National Students Information Center, opened the
     (stage 2) began in fiscal 2017.                                         are operating profit of ¥93 billion, profit attributable to owners of         In addition, we are carrying out business expansion, such as       “Scoutship” website for intern placement. The site uses artificial
        For stage 2, we developed a strategy based on the materialities     parent of ¥42 billion, a debt/equity ratio of approximately 2.3          the 2018 opening of resort hotels in Karuizawa and Okinawa in         intelligence co-developed with Tokyu Land Corporation
     we identified and determined as priority issues for the Group,          times and a debt/EBITDA ratio of approximately 10 times. In              partnership with a foreign hotel brand. We intend to grow the         subsidiary Ewel, Inc.
     and formulated the four-year 2017-2020 Medium-Term                     fiscal 2017, the first year, revenue and profit both surpassed the          Wellness segment into a new core business by 2020.                       We plan to create further synergy with the Group’s various
     Management Plan. The plan is centered on three growth                  levels of the previous fiscal year and of the plan. Operating profit                                                                             businesses for schools and students, who are new customers.
     strategies that will connect the Group’s combined strengths to         reached ¥77.5 billion, exceeding the plan by ¥4 billion. We thus                                                                               (See “Synergy among Our Businesses” on page 37.)
     the creation of solutions for social issues: 1) Urban development      got off to a solid start toward achieving the targets for fiscal 2020.
     that proposes new lifestyles; 2) Expansion of the scope of

                                                                                                                                                     Steadily Executing Large-Scale Developments and Strengthening Our
     Continuing to Strategically Evolve Our Various Businesses                                                                                       Financial Position
     Next, I will explain our initiatives since the beginning of fiscal      a sustainable urban community where everyone can continue to             Gross investment over the four years of the medium-term                  The debt/equity ratio, a measure of financial soundness, was
     2017, and their results.                                               live in comfort throughout their lives. (See Feature 2 on page 26.)      management plan will be ¥1.23 trillion. In the development of         2.6 times at the end of fiscal 2017, essentially the same as a
                                                                               “Life Story Town” is the name we have given to our business           Shibuya, the Nampeidai Project (tentative name) and the               year earlier, as the increase in interest-bearing debt for new
     Advancement of the Greater Shibuya Area Concept                                                                                                 Dogenzaka 1-chome Shibuya Station Front Redevelopment                 investments was offset by an increase in shareholders’ equity. I
                                                                            of urban development that proposes new lifestyles shaped by
     In growth strategy 1, “urban development that proposes new             housing. We have decided on the first four phases of such                 Project are scheduled to be completed in 2019. In addition,           recognize that strengthening our financial position is a priority
     lifestyles,” leasing of office buildings in the redevelopment of        development, including the complex developments mentioned                the Takeshiba District Development Project (tentative name) will      issue for management in order to ensure the Group’s stable
     Shibuya proceeded faster than planned. Redevelopment projects          above. Based on the concept, “A new story for each lifestyle,”           open in 2020. As these large-scale projects move forward on           growth. We will steadily improve the debt/equity ratio to
     to solve the shortage of quality office buildings in Shibuya are        we will address social issues such as diversification of lifestyles       schedule, we will carry out investment and recovery through           approximately 2.3 times, our target for the final year of the plan.
     progressing steadily.                                                  and the desire for healthier living.                                     cyclical reinvestment in wide-ranging domains including office
         An acquisition of commercial facilities via a joint investment                                                                              buildings and commercial facilities, rental housing, infrastructure
     with Norges Bank, which operates one of the world’s largest
                                                                            Investment in Renewable Energy Business                                  and industry, and hotels and resorts.
     government pension funds, contributed to the expansion of our          In growth strategy 2, “expansion of the scope of cyclical
     associated assets in the greater Shibuya area. (See Feature 1 on       reinvestment business,” investment in the renewable energy
     page 22.)                                                              business is outpacing our expectations. The Group now owns               Deepening Dialogue with Shareholders and Investors
                                                                            and operates 32 solar power and wind power generation
     Development of “Life Story Towns”
                                                                            facilities nationwide, including facilities under development. We        In our dividend policy, we seek to maintain stable dividends,            The Company has introduced a stock-based compensation
     To promote interaction among generations and lifestyle continuity      are also cooperating with solar energy operators in solar sharing,       and have set a dividend payout ratio target of 25% or higher.         program for officers. The objective is to raise awareness
     from one generation to the next, which is a pillar of growth           which shares solar energy between agriculture and power                     We are returning the growth in profit mentioned in the              regarding enhancement of corporate value over the medium to
     strategy 1, construction of the Setagaya Nakamachi Project has         generation. The renewable energy business is expected to grow            medium-term management plan to shareholders, and in fiscal             long term by having officers share the benefits and risks of
     been completed. This project is aimed at creating solutions for        significantly as demand for clean energy rises, and we plan to            2017 we increased the dividend for the fifth consecutive fiscal         changes in the Company’s stock price with shareholders. We
     social issues related to daily life, such as childcare and the aging   develop it into the third pillar of our asset management business        year. Given the favorable market conditions, we anticipate            plan to further deepen dialogue with shareholders and investors
     of the population through the development of a complex                 alongside office buildings/commercial facilities and rental housing.      revenue and profit growth again in fiscal 2018, and are planning        through company briefings and other events to build long-term
     containing senior housing and condominiums for sale. In the            (See Feature 3 on page 27.)                                              a sixth consecutive dividend increase.                                ties and mutual trust.
     Tokaichiba Project, the second phase, we are aiming to develop

18                                                                                                                                                                                                                                            TOKYU FUDOSAN HOLDINGS        Integrated Report 2018   19
Message from the President

                                                                                                                                                                 The Value Creation Story of Tokyu Fudosan Holdings
     Achieving Sustainable Growth with ESG Management
                                                                                                                                                              Pursuing Group Synergy for Sustainable Value Creation
     From the beginning, we have conducted our business with the         governance – and are working toward achieving targets for
     creation of solutions for social issues in mind. One might say      each theme by fiscal 2020. (See “Reinforcing the Management                           In the five years since we shifted to a holding company structure,        Enterprises that have a broad business scope like our Group
     that we are a group that recognized ESG (environmental, social      Foundations That Support Growth Strategies” on page 29.)                             we have achieved notable results, including the reorganization        has are sometimes at risk of being subject to a “conglomerate
     and governance) initiatives as a business strategy even before         In corporate governance, we are working to enhance the                            of overlapping businesses. On the other hand, we recognize            discount,” but I think having a business portfolio that can
     ESG investing became a focus of interest. Tokyu Land                governance system based on our belief that it is important to                        that there are Group management issues that still need to             respond flexibly to changes in social issues and the external
     Corporation established a Basic Policy regarding the                increase management efficiency and build a sound, transparent                         be addressed. For example, I think we still have room for             environment is, instead, effective for the Group’s long-term
     environment in 1998, and we undertook environmental                 management structure. The number of independent outside                              improvement in personnel exchanges and creation of synergy            sustainable growth. To gain the understanding of investors and
     initiatives early on. Today, we are promoting ESG management        directors was increased to four in June 2018, comprising                             within the Group. We need an environment for quickly creating         shareholders regarding this point, I carefully explain it as the
     across the Group, guided by our Group CSR Vision: “We will          approximately 30% of the Board of Directors.                                         value not just from the growth of individual companies, but from      spokesperson, and I intend to demonstrate it by achieving
     work on creating solutions for social issues through our               We consider environmental and social issues, such as                              collaboration and co-creation in the Group as a whole. Going          further management successes.
     business activities and in the process enhance the satisfaction     conservation of energy through reduction of CO2 emissions and                        forward, we plan to accelerate efforts to create both tangible and
     of stakeholders.”                                                   the active involvement of women in the workplace, to be as                           intangible mechanisms to maximize synergy among businesses.
        In the medium-term management plan, ESG management               important as financial matters, and strengthened management of
     is positioned as an initiative to reinforce the management          such issues in the past year. Going forward, we will firmly maintain
     foundations that support our growth strategies. We have             our stance of addressing social issues as a Group and achieve
     formulated four themes from the perspective of ESG –                sustainable growth by thoroughly implementing ESG management.                        Leveraging Diversity to Create Value beyond the Bounds of
     environment, work-style reform, social needs, and corporate                                                                                              Physical Structures
                                                                                                                                                              Looking at the Japanese real estate market, it is evident that the    diversity in connection with work style reform, but the diversity
     Promoting the Health and Vitality of Each and Every Employee                                                                                             balance of supply and demand will inevitably shift to oversupply      I am talking about refers not just to employees but to all
                                                                                                                                                              due to demographic changes resulting from the low birthrate and       stakeholders, including customers. In a society where values
     As I often say, the source of the Tokyu Fudosan Holding Group’s        Our Group companies continue to carry out progressive                             aging of the population. The risk that the value of real estate may   are diversifying, needs are also becoming fragmented, and in
     value creation is unquestionably its human resources. The fact      initiatives. Tokyu Community Corporation and Tokyu Livable, Inc.                     decline in the medium to long term is more or less understood by      some situations we may no longer be able to meet them with
     that our people generate value leads to the creation of new         received the highest level of Eruboshi certification, which is                        stakeholders.                                                         existing business techniques. Previously, we largely practiced
     concepts and lifestyles beyond the bounds of physical structures,   granted by the Ministry of Health, Labour and Welfare to                                If that is the case, providing value that goes beyond the          an “in-Group” approach because we could draw on the Group’s
     and is the reason we are able to create solutions for social        recognize companies with excellent performance in promoting the                      bounds of physical structures will become even more important.        broad business scope, but we are now actively pursuing new
     issues through our businesses.                                      active involvement of female employees. Tokyu Livable, Inc.                          Our “Challenging DNA,” which originated with the development          collaborative initiatives with partners from outside the Group
        Recently, ESG has taken on greater importance in capital         placed 24th in the Best Workplaces 2018 ranking* compiled by                         of Den-en Chofu, has expanded our revenue model from                  that have diverse knowledge and expertise. In Shibuya, for
     markets, and attention is also being focused on the value of        Great Place to Work® Institute Japan. In health management,                          development and sale to include property management, real             example, we have joined forces with a global venture capital
     human capital. These are ideas that we have long embraced.          eight Tokyu Fudosan Holding Group companies were recognized                          estate agents businesses, leasing, operation, and real estate         firm to develop a startup support program, as well as other
     For example, Tokyu Land Corporation had a corporate culture         as “White 500” companies in 2018 for their outstanding health                        asset management. Having gone through these transitions in            measures to create new industries. The greater Shibuya
     of providing the same opportunities to both men and women           and productivity management. We will continue to foster                              our business development, we now have diverse assets and              area incorporates various urban functions and attracts many
     even before Japan’s Act on Securing, Etc. of Equal Opportunity      workplaces that promote employee health and vitality to ensure                       customers, which enable us to propose value that goes beyond          different kinds of people. It is an area where the word “diversity”
     and Treatment between Men and Women in Employment went              that the Group remains a supportive and meaningful place to                          the bounds of physical structures.                                    is truly apt. By combining new home, work and play styles, we
     into effect, and we have actively taken measures to improve         work. (See “Work Style Reforms” on page 38.)                                            I believe the key to finding future business opportunities will     hope to realize urban development that takes full advantage
     workplace environments and enhance our human resource               * The world’s largest employee attitudes survey, conducted by Great Place to Work®   be diversity. Recently, we have been carrying out measures for        of Shibuya’s diversity.
     development programs.                                                 Institute Japan and covering more than 5 million employees at 7,000 companies in
                                                                           50 countries

                                                                                                                                                              Opening Up a New Era with Future-Oriented Management That Does
                                                                                                                                                              Not Fear Change
                                                                                                                                                              One thing I have always valued is future-oriented management             Discussions are currently under way on the Tokyu Fudosan
                                                                                                                                                              that does not fear change. Twenty years ago, the start of             Holding Group’s approach to the Sustainable Development
                                                                                                                                                              securitization dramatically changed the real estate business          Goals (SDGs) adopted at the U.N. Summit in 2015. If we can
                                                                                                                                                              model. Ten years ago, the operating environment of the real           coordinate our new value creation with these development
                                                                                                                                                              estate business underwent another major change due to the             goals, we will be able to achieve further evolution.
                                                                                                                                                              global financial crisis. Having experienced such sweeping                 Using the Group’s strengths as the driving force, we will steadily
                                                                                                                                                              change in the industry structure over 10-year spans, what can         carry out the medium-term management plan to make our vision
                                                                                                                                                              we expect in the years ahead? We always look at changes in            a reality through the creation of value for customers and society.
                                                                                                                                                              the environment with a long-term perspective, and will strive to      My job is to advance our value creation story and pave the way
                                                                                                                                                              continue creating value that society and customers need.              for the next era. Through sustainable value creation, we will meet
                                                                                                                                                                                                                                    the expectations of our shareholders and investors.

20                                                                                                                                                                                                                                                     TOKYU FUDOSAN HOLDINGS          Integrated Report 2018   21
Feature              Initiatives to Address Social Issues and New Value Creation

      1                  Greater Shibuya Area Concept

     The Tokyu Fudosan Holdings Group is conducting long-term, continuous urban development, of which the                                                                       Addressing Social Issues through Redevelopment of the Shibuya Station Area
     Greater Shibuya Area Concept is the leading example, while building deeper relations with local communities.
                                                                                                                                                                                Modern cities in Japan are not well equipped to deal with the changes taking place in the
     Our goal is to create solutions for social issues with urban development that utilizes the strengths of the Group.                                                         environment, namely the rapid decline and aging of populations, diversification of values and                                        Greater Shibuya Area Concept
                                                                                                                                                                                lifestyles, and the growing risk of large-scale natural disasters. Amid major shifts in people’s
                                                                                                                                                                                awareness and views on society, urban development needs to be carried out with a strong                                         A town where diversity gives rise to new value
                                                                                                                                                                                awareness of these social issues to make cities sustainable.
                                                                                                                                                                                    By redeveloping the Shibuya Station area, we are creating a community where people can                                          Various urban functions, including places
                                                                                                                                                                                                                                                                                                                     for working, living, playing, relaxing and
                                                                                                                                                                                continue to live with a sense of security, and establishing infrastructure for supporting business
          Promotion of the Greater Shibuya Area Concept                                                                                                                                                                                                                                                                   engaging in creative activities
                                                                                                                                                                                innovation. Through these and other outcomes of our urban development initiatives, we aim to
                                                                                                                                                                                create solutions for social issues and achieve the SDGs.
        The Shibuya Station area and the collection of neighborhoods                               activity, culture and lifestyles blend with the streetscape. By                                                                                                                                                                    Proposals for
        with unique character surrounding it, such as Omotesando,                                  shifting the focus of urban development from individual sites                                                                                                                                                                      home styles
        Harajuku, Ebisu and Daikanyama, are what we consider the                                   to the wider area and building a community that will grow                                                                     SDGs in the Redevelopment of
        greater Shibuya area. It is where most of the key properties of our                        sustainably over the long term, we will enhance the value of                                                                    the Shibuya Station Area
        Group and the Tokyu Group are concentrated. It also has many                               the greater Shibuya area, and of our associated assets.
                                                                                                                                                                                                                                                                                                                         Proposals for              Proposals for
        outstanding advantages – diverse urban functions including                                    Within this concept, we are carrying out three redevelopment
                                                                                                                                                                                                                                                                                                                          work styles                play styles
        places for working, living, playing relaxing and engaging in                               projects. The Nampeidai Project (tentative name) and the
        creative activities, as well as a good living environment and                              Dogenzaka 1-chome Shibuya Station Front Redevelopment
        convenient access. By connecting Shibuya and its surrounding                               Project are scheduled for completion in 2019. These will be
                                                                                                                                                                                                                                                                                                                      Cooperation with communities and
        neighborhoods, we will increase the potential of the greater                               followed by completion of the Shibuya Sakuragaoka Block                                                                                                                                                       the government and generation of innovation
        Shibuya area as a whole and create a place where bustling                                  Redevelopment Project in 2023.

                                 Harajuku                                                                                       ❶ Dogenzaka 1-chome Shibuya Station
                                                                                                                                ●
                                  Station                                                                                         Front Redevelopment Project                   Nampeidai Project                                                                                Creation of a rare large-scale office building in Shibuya
                                                                                                                                  Completion: Fall 2019 (Planned)                                                                                                                Reconstruction on the site of four buildings, including the Shin-Nampeidai Tokyu Building,
                                                                                                                                                                                (Tentative name)                                                                                 will create a large-scale office building that solves the shortage of office buildings in the
                                                                      6                                                         ❷ Shibuya Sakuragaoka Block
                                                             4                                         13                                                                                                                                                                        Shibuya area.
                                                                      Meiji-jingumae
                                                                                                                                  Redevelopment Project                         Total floorspace: Approx. 46,954 m2
                                                        5                Station                  12                              Completion: FY2023 (Planned)                  Building scale: 21 floors above ground and
                                                                                             11                                 ❸ Nampeidai Project (Tentative name)            1 basement level
                                                                                                                                                                                Use: Offices, etc.                                                                                An office building with abundant greenery that workers will enjoy
                                                                                                                                  Completion: March 2019 (Planned)                                                                                                               The rooftop Sky Garden, green terraces on each floor, and other greenery will provide
                                                                                                                                                                                Completion: March 2019 (Planned)
                                                                                                                                ❹ Jingumae 6-chome Block
                                                                                                                                ●                                                                                                                                                open and comfortable spaces for workers.
                                                                          Omotesando–
                                                                                                                                  Open: FY2022 (Planned)
                                                                            Station
                                                       17                                    9                                  ❺ Q Plaza Harajuku                                                                                                                               Enhancement of creative content industries
                                                                                                                                                                                                                                                                                 Introduction of an incubation office will nurture new companies based in Shibuya.
                                 8                                                                                              ❻ Tokyu Plaza Omotesando Harajuku
                                                                                                                                ●
                                                        Shibuya Station                                                         ❼ TENOHA DAIKANYAMA                                                                                                       (Artist’s rendering)

                                                                                                                                ❽ Shibuya BEAM
                                              16                                                                                                                                Dogenzaka 1-chome                                                                                A pedestrian network that connects the station to the
                                                                                                                                ❾ GLASSAREA AOYAMA
                                                                                                                                ●                                                                                                                                                surrounding urban area
                                         1
                                                       18                                                                                                                       Shibuya Station Front
                                  15                                                                                            ❿ Shibuya Minami Tokyu Building                                                                                                                  Establishment of three-dimensional barrier-free pedestrian flow lines will facilitate vertical
                             3                     2             10                                                                                                             Redevelopment Project                                                                            and horizontal movement around the area.
                                                                                                                                ⓫ Shin-Aoyama Tokyu Building
                                                                                                                                                                                Total floorspace: Approx. 58,970 m2
                                                                                                                                ⓬ Minamiaoyama Tokyu Building
                                                                  19
                                                                                                                                                                                Building scale: 18 floors above ground*                                                           Establishment of Airport Limousine Bus arrival/departure points
                                                                                                                                ⓭ Spline Aoyama Tokyu Building                  and 4 basement levels                                                                            Establishment of a bus terminal that includes arrival and departure points for the Airport
                                                                                                                                   Business-Airport Aoyama                      Use: Retail stores, offices, etc.                                                                 Limousine Bus will provide comfortable, direct access to international airports.
                                                                                                                                   (Membership satellite offices)                Completion: Fall 2019 (Planned)
                                                                                                                                ⓮ Ebisu Business Tower
                                                                                                                                ●                                                                                                                                                Stronger disaster prevention functions and environmental initiatives
                                                            Daikanyama                                                          ⓯ Dogenzaka Tokyu Building                      * 19 floors according to the Building Standards                                                   The project includes the introduction of support functions for people who may have
                                                              Station                                                                                                             Act of Japan                                                                                   difficulty returning to their homes after a disaster and an efficient, highly independent
                                                                                                                                   Plug and Play Shibuya powered by                                                                                                              power supply system, as well as environmental measures such as rooftop greenery.
                                                   7                                                                               TLC(Incubation facilities)                                                                                             (Artist’s rendering)
         ● In planning                                                                  14                                      ⓰ SHIBUYA SCRAMBLE SQUARE
         ● Commercial facility
                                                                                                                                  Opening: FY2019/FY2027 (Planned)              Shibuya Sakuragaoka                                                                              Connection of pedestrian flow lines of the southwest part of
         ● Office building                                                                                                                                                       Block Redevelopment                                                                              Shibuya Station
         ● Properties under asset management                                        Ebisu Station                               ⓱ SHIBUYA CAST
                                                                                                                                ●                                                                                                                                                An urban core will enhance convenience, comfort and safety, and will eliminate the
         ● Properties owned by Activia Properties Inc.                                                                                                                          Project                                                                                          fragmentation of the area caused by differences in elevation and by railways and main roads.
                                                                                                                                ⓲ SHIBUYA STREAM
                                                                                                                                ●
         ● Properties being developed by Tokyu Corporation
                                                                                                                                ⓳ SHIBUYA BRIDGE                                Total floorspace: Approx. 252,870m2
                                                                                                                                                                                Building scale:                                                                                  Establishment of lifestyle support facilities for a global world
          Advantages of the Greater Shibuya Area                                                                                                                                Block A: 37 floors above ground and 4                                                             A multilingual international medical facility, serviced apartments, childcare support
                                                                                                                                                                                basement levels                                                                                  facilities and other services will provide an enriched residential environment.
             Concentration of IT firms                        Rich residential area                Major hub of commercial and                      Good access                  Block B: 32 floors above ground and 2
                    Growth of creative                      Residents include embassies                 cultural activity                Served by nine train lines including   basement levels                                                                                  Maintenance of community safety and security in the event of
                    content industries                            and foreigners                   A district that attracts new trends          JR and private lines            Block C: 4 floors above ground
                                                                                                                                                                                                                                                                                 a disaster
                                                                                                                                                                                Use: Offices, retail stores, residences, etc.
                                                                                                                                                                                                                                                                                 The development will be equipped with temporary lodging facilities for people who may have
                                                                                                                                                                                Completion: Fiscal 2023 (Planned)                                                                difficulty returning to their homes, temporary living spaces, and a disaster stockpile warehouse.
                                                                                                                                                                                                                                                          (Artist’s rendering)

22                                                                                                                                                                                                                                                                                                    TOKYU FUDOSAN HOLDINGS                          Integrated Report 2018        23
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