Supplementary Information for the Report on Consolidated Financial Results for the Nine Months Ended December 31, 2024

Book value

Unrealized gains

Net Debt Equity Ratio

Equity Ratio

Jan 31, 2025 at 6:11 AM UTC · Issued by Heiwa Real Estate Co., Ltd.

Supplementary Information for the Report on Consolidated Financial Results for the Nine Months Ended December 31, 2024

January 31, 2025

Highlights During the Nine Months Ended December 31, 2024

During the period under review, net sales and operating profit decreased year on year mainly because, in the previous fiscal year, 99% of the annual forecast on gains on sales of properties was recorded during the first nine months. During the first nine months of the current fiscal year, the gains on sales of properties accounted for about 18% of the annual forecast, which is in line with the plan.
In October 2024, an urban planning proposal was submitted for Nihonbashi Kayabacho 1-Chome 6 District Development Plan (tentative name).
In December 2024, the Company announced Nihonbashi Kabutocho and Kayabacho District Urban Development Vision 2040.
In January 2025, the Company entered into a committed syndicate loan agreement with a maximum commitment amount of 72 billion yen, aimed at raising funds for the investment in the Odori-nishi 4 South, Type 1 District Redevelopment Project.
On January 31, 2025, the Company announced "Initiatives to Further Advance Management Conscious of the Cost of Capital and the Company's Stock Price," which included accelerating the reduction of cross- shareholdings and further strengthening shareholder returns. In line with these efforts, revisions were made to the full-year financial results forecast and upward revision of planned dividend per share for the fiscal year ending March 31, 2025.

Comparison of results and forecasts

for gains on sales of properties

Fiscal year ended	Fiscal year ending
March 31, 2024	March 31, 2025

Percentage of result to quarterly forecast

100%

108%

ー

100%

ー

Forecast

Result

Forecast

Result

© HEIWA REAL ESTATE Co., Ltd.	2

Initiatives to Further Advance Management Conscious of the Cost of Capital and the Company's Stock Price

We aim to reduce the cross-shareholding ratio to 10% or less of consolidated net assets by FY2026 as part of the current medium-term management plan. To further develop management that is conscious of the cost of capital and the company's stock price, efforts will be accelerated to reduce the balance of cross- shareholdings, which was approximately ¥17.5 billion as of December 31, 2024, by at least half.
The sale of cross-shareholdings has led to the realization of unrealized gains and the recording of a gain on sale of investment securities as extraordinary income. As a result, EPS for FY2026, the final year of the plan, is projected to be at least ¥300, with profit attributable to owners of parent expected to reach ¥10 billion or more, and ROE at least 8%.
The increase in gain on sale of investment securities, recorded as extraordinary income, will be returned to shareholders as ordinary dividends in line with the policy of maintaining a consolidated dividend payout ratio of 50%. In June 2024, we conducted a share buyback of approximately ¥9 billion, and to further enhance returns, plan to implement a special dividend of ¥30 per share over the three years from FY2024 to FY2026.

	Previous forecast and plan*1	Post-initiative forecast and plan*2


	Fiscal year ending	Fiscal year ending	Fiscal year ending	Fiscal year ending	Fiscal year ending	Fiscal year ending
	March 31, 2025	March 31, 2026	March 31, 2027	March 31, 2025	March 31, 2026	March 31, 2027
Profit attributable to owners of parent	¥8.5 billion			¥9.3 billion	At least ¥9.5 billion	At least ¥10 billion

Earnings per share (EPS)	¥251.56		At least ¥270	¥275.24	At least ¥280	At least ¥300

Return on equity (ROE)		At least 7%		At least 7%	At least 8%

				¥170	At least ¥170	At least ¥180
Annual dividends per share	¥126			(Comprised of ordinary	(Comprised of ordinary	(Comprised of ordinary
		dividends totaling ¥140 per	dividends totaling at least	dividends totaling at least
				share and special dividend	¥140 per share and special	¥150 per share and special
				of ¥30 per share)	dividend of ¥30 per share)	dividend of ¥30 per share)
*1 Announced on April 30, 2024 and June 7, 2024	*2 Announced on January 31, 2025

© HEIWA REAL ESTATE Co., Ltd.	3

Consolidated Financial Results for the Nine Months Ended December 31, 2024

Net sales, operating profit, and ordinary profit were down compared with the same period of the previous fiscal year, mainly due to decreased sales of properties in the Building Business.
Profit attributable to owners of parent also decreased compared with the same period of the previous fiscal year due to the reason described above, as well as decreased sell-offs of investment securities, which reflected lower amounts of cross-shareholdings.

			Nine months	Nine months			Full-year forecast	Progress against
					for the fiscal year
	(Millions of yen)	ended December	ended December	Year on year	Year on year (%)	full-year forecast*
	ending March 31,
			31, 2023	31, 2024			(%)
					2025*

	Net sales	35,715	26,947	(8,767)	(24.5)	41,700	64.6

		Building Business	33,198	24,441	(8,756)	(26.4)	37,600	65.0

		Asset Management Business	2,517	2,505	(11)	(0.4)	4,100	61.1

	Operating profit	10,951	7,479	(3,471)	(31.7)	12,500	59.8

		Building Business	11,026	7,677	(3,348)	(30.4)	12,400	61.9

		Asset Management Business	1,317	1,346	+29	+2.2	2,300	58.6

		Intersegment eliminations	(1,391)	(1,544)	(152)	-	(2,200)	-

	Ordinary profit	9,953	6,520	(3,432)	(34.5)	10,900	59.8

	Extraordinary income	1,197	-	(1,197)	(100.0)

	Extraordinary losses	12	11	(1)	(9.5)

	Profit attributable to owners of parent	7,614	4,939	(2,675)	(35.1)	9,300	53.1

	Earnings per share (EPS) (Yen)	212.75	145.60	(67.15)	(31.6)	275.24	52.9

* Announced on January 31, 2025

							© HEIWA REAL ESTATE Co., Ltd.	4

Consolidated Financial Results by Segment for the Nine Months Ended December 31, 2024

Year-on-year differences in segment results ■ Building Business

			Nine months	Nine months

	(Millions of yen)	ended	ended	Year on year	Year on year	Main reasons for year-on-year differences in results
	December 31,	December 31,	(%)

			2023	2024
	Net sales	33,198	24,441	(8,756)	(26.4)	● Leasing revenue
	The increase in leasing revenue mainly reflected contributions from the Mercure Tokyo
							Hibiya, which opened in the previous fiscal year, and the ORSUS Shin-Osaka and

		Leasing revenue	19,478	20,644	+1,165	+6.0	ORSUS Togoshiginza, which were built and acquired in the previous fiscal year, as well
							as to success in filling vacant building space and raising leasing amounts.
							• Operations of the Mercure Tokyo Hibiya, etc., contributed about ¥1.3 billion to leasing revenue.
		Revenue from sales of properties	12,705	2,665	(10,040)	(79.0)	• Increased periodic revenues from acquired and newly built properties, etc., contributed about ¥0.3
		billion to leasing revenue.
							• Filing of vacant space along with increases in leasing amounts, etc., contributed about ¥0.4 billion to
							leasing revenue.
		Other	1,014	1,132	+118	+11.7	Note: The vacancy rate for the Group as a whole was 3.32% as of December 31, 2024.
		reduced leasing revenue by about ¥0.7 billion.
							• Departures of tenants from buildings scheduled for demolition due to redevelopment projects, etc.,
							• Reduced periodic revenues resulting from sales of properties, etc., reduced leasing revenue by about
	Operating profit	11,026	7,677	(3,348)	(30.4)	¥0.3 billion.
	● Revenue from sales of properties
							The decrease in sales of properties reflected a decrease in sales of inventories. (Osaka
		Gains on sales of properties	4,729	828	(3,901)	(82.5)	Kitahama Office and Sapporo Office 2 were sold during the period under review.)


■ Asset Management Business

(Millions of yen)

Nine months

ended

December 31,

2023

Nine months

ended

December 31,

2024

Year on year

(%)

Main reasons for year-on-year differences in results

Net sales	2,517	2,505	(11)	(0.4)

	Asset management revenue	1,676	1,760	+83	+5.0

	Brokerage commissions	840	745	(95)	(11.3)

Operating profit	1,317	1,346	+29	+2.2

Despite a decrease in revenue due to lower brokerage commissions, the Asset Management Business saw an increase in revenue from higher asset management revenue.

© HEIWA REAL ESTATE Co., Ltd.	5

Consolidated Balance Sheet as of December 31, 2024

Due to the repurchase of 2.4 million shares, cash and deposits, securities, and shareholders' equity decreased, leading to a reduction in total assets and net assets. Total liabilities increased, reflecting a rise of interest-bearing liabilities.

		As of	Nine months

		ended	Year on
(Millions of yen)	March 31,	Main reasons for year-on-year differences in results
December 31,	year
		2024
		2024

Total assets	405,979	402,354	(3,625)
	Current assets	53,257	42,960	(10,297)	 Cash and deposits / Securities
	Cash and deposits/Securities	28,421	18,763	(9,658)	The decreases in cash and deposits, as well as securities were mainly due to the
	Company's repurchase of 2.4 million shares.
	Inventories (including operating investments in capital)	21,766	20,408	(1,357)	 Inventories
					The decrease in inventories mainly resulted from the sell-off of Osaka Kitahama Office
	Other current assets	3,069	3,788	+719
	and Sapporo Office 2.
	Non-current assets	352,341	359,053	+6,712	 Property, plant and equipment
					The increase in property, plant and equipment was mainly due to the payment of
	Property, plant and equipment	275,522	282,617	+7,094
	participation fee for the Odori-nishi 4 South, Type 1 District Redevelopment Project, and
	Intangible assets	31,320	31,298	(21)	construction costs for the Caption by Hyatt Kabutocho Tokyo, and the acquisition of the
	ORSUS Kiyosumi-Shirakawa Riverfront.
	Investments and other assets	45,498	45,137	(360)	 Investments and other assets
	The decrease in investments and other assets mainly resulted from the decline in fair
					value of investment securities.
	Deferred assets	381	339	(41)
Total liabilities and net assets	405,979	402,354	(3,625)
	Total liabilities	280,334	288,245	+7,911	 Interest-bearing liabilities
	Interest-bearing liabilities	231,323	241,949	+10,626	The net debt-to-equity ratio is 2.0 as of December 31, 2024.
	 Other liabilities
	Other liabilities	49,010	46,295	(2,714)	The decrease in other liabilities was mainly the result of lower amounts of accrued
	consumption taxes and income taxes payable.
	Net assets	125,645	114,108	(11,536)
	Shareholders' equity	92,235	82,127	(10,108)	 Shareholders' equity
	Valuation difference on available-for-sale securities	17,339	15,882	(1,456)
	The decrease in shareholders' equity was mainly due to the Company's repurchase of
					2.4 million shares.
	Deferred gains or losses on hedges	(6)	22	+28

	Revaluation reserve for land	16,076	16,076	-

(Note) Interest-bearing liabilities comprised short-term borrowings, current portion of bonds payable, current portion of long-term borrowings, certain other current liabilities, bonds payable, long-term borrowings, and long-term accounts payable-other.

© HEIWA REAL ESTATE Co., Ltd.	6

Key Performance Indicators

					Share price
(Yen)
7,000										5,497	5,774
6,000							5,030	5,287	5,405
					4,673
5,000
				4,120					4,080
		3,456	3,669			3,455	3,955	3,785
4,000		3,022
2,581		2,630	2,820	2,837
	2,377	2,445
3,000	2,313						3,511
2,155				3,190	3,270	3,334
2,000							2,799
				2,050	2,131
1,000	1,648	1,688	1,400	1,574

0

FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE
Mar./14	Mar./15	Mar./16	Mar./17	Mar./18	Mar./19	Mar./20	Mar./21	Mar./22	Mar./23	Mar./24

EPS, ROE, and ROA

(Yen)
280.0												236.7	254.3	236.1	10.0%
240.0											189.8	8.0%
									6.5%
200.0								5.8%
									7.7%
		4.7%	4.7%	5.2%			7.3%	6.9%	6.0%
160.0				158.7184.8

3.4%			132.6	6.3%
120.0	2.9%		113.2						4.0%

			110.5
80.0
72.7
	62.5 2.8%	3.3%	3.2%	2.9%	3.2%	3.1%	3.3%	2.8%	3.2%	2.0%
40.0	2.6%

0.0	2.8%													0.0%

FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE
Mar./14	Mar./15	Mar./16	Mar./17	Mar./18	Mar./19	Mar./20	Mar./21	Mar./22	Mar./23	Mar./24

Stock price

Book-value per share (BPS)

Net asset value (NAV) per share

EPS

ROE

ROA

Market value of assets for leasing and other purposes

Indicators of financial discipline

(Billions of yen)
500
							376.8	388.9	420.1	421.2

400						339.5	363.5
				316.3			111.5
	268.7	286.4	289.6		112.4	112.2	116.7

300	244.2	85.6	103.3	119.4
41.7	62.0	70.3
	26.4
200

217.8	227.0	224.4	219.2	230.6	236.2	244.0	264.4	276.7	308.6	304.4
100


0
FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE

	Mar./14	Mar./15	Mar./16	Mar./17	Mar./18	Mar./19	Mar./20	Mar./21	Mar./22	Mar./23	Mar./24

(Times)
2.5					34.9% 32.5% 31.6% 31.1%					40.0%
	29.0%	31.0% 32.3% 33.3%	31.7%	30.0%	30.9%	29.5%
2.0										30.0%
												1.9
1.5	1.7	1.6	1.5			1.6		1.6		1.7	1.6		20.0%
		1.4		1.5	1.5
			1.4


1.0	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	FYE	10.0%

	Mar./14	Mar./15	Mar./16	Mar./17	Mar./18	Mar./19	Mar./20	Mar./21	Mar./22	Mar./23	Mar./24	Sept./24

Note: Net asset value per share is calculated as (net assets + after-tax unrealized gains on assets for leasing and other purposes) ÷ number of shares issued excluding treasury stock

© HEIWA REAL ESTATE Co., Ltd.	7

Revised Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2025

Net sales, operating profit, and ordinary profit are forecast to increase compared to the previous forecast, due to factors such as the expected increase in the leasing revenue from owned properties in the Building Business and asset management revenue in the Asset Management Business.
Profit attributable to owners of parent is forecast to increase compared to the previous forecast, in addition to the factors mentioned above, due to the acceleration of efforts to reduce cross-shareholdings and the anticipated gain from the sale of investment securities in order to further develop management with a focus on capital costs and stock prices.

		Fiscal year ending	Fiscal year ending

(Millions of yen)	March 31, 2025	March 31, 2025	Year on year	Year on year (%)
		(Previous Forecast)*1	(Forecast)*2
Net sales	41,600	41,700	+100	+0.2

	Building Business	37,600	37,600	-	-

	Revenue from sales of properties	9,200	8,900	(300)	(3.3)

	Asset Management Business	4,000	4,100	+100	+2.5

Operating profit	12,300	12,500	+200	+1.6

	Building Business	12,100	12,400	+300	+2.5

	Gains on sales of properties	4,500	4,500	-	-

	Asset Management Business	2,200	2,300	+100	+4.5

	Intersegment eliminations	(2,000)	(2,200)	(200)	-

Ordinary profit	10,700	10,900	+200	+1.9

Profit attributable to owners of parent	8,500	9,300	+800	+9.4

EPS (Yen)	251.56	275.24	+23.68	+9.4

1 Announced on April 30, 2024 2 Announced on January 31, 2025

					© HEIWA REAL ESTATE Co., Ltd.	8

Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2025

Net sales are forecast to decrease year on year, mainly as a result of lower sales of inventories in the Building Business.
Operating profit and ordinary profit are forecast to decrease year on year, mainly due to lower gains on sales of properties.
Profit attributable to owners of parent is forecast to increase year on year because the amount of income taxes will be adjusted downward as a result of deferred tax assets.

(Millions of yen)	Fiscal year ended	Fiscal year ending	Year on year	Year on year (%)

March 31, 2024	March 31, 2025 (Forecast)*


Net sales	44,433	41,700	(2,733)	(6.2)

	Building Business	40,544	37,600	(2,944)	(7.3)

	Asset Management Business	3,888	4,100	+211	+5.4

Operating profit	13,022	12,500	(522)	(4.0)

	Building Business	12,639	12,400	(239)	(1.9)

	Asset Management Business	2,197	2,300	+102	+4.7

	Intersegment eliminations	(1,814)	(2,200)	(385)	-

Ordinary profit	11,463	10,900	(563)	(4.9)

Profit attributable to owners of parent	8,450	9,300	+849	+10.0

EPS (Yen)	236.13	275.24	+39.11	+16.6

* Announced on January 31, 2025

					© HEIWA REAL ESTATE Co., Ltd.	9

Forecast of Consolidated Financial Results by Segment for the Fiscal Year Ending March 31, 2025

Year-on-year differences in segment results ■ Building Business

Fiscal year

ending March

Year on

Year on year

(Millions of yen)

ended March

Main reasons for year-on-year differences in results

31, 2025

year

(%)

31, 2024

(Forecast)

Net sales

40,544

37,600

(2,944)

(7.3)

 Leasing revenue

Leasing revenue is forecast to increase mainly on the back of contributions from properties

acquired in the previous fiscal year, full fiscal year operations of the Mercure Tokyo Hibiya,

Leasing revenue

26,382

27,200

+817

+3.1

and the filling of vacant space.

• Full fiscal year operations of the Mercure Tokyo Hibiya are expected to contribute about ¥1.4 billion

to leasing revenue.

Revenue from sales of properties

12,780

8,900

(3,880)

(30.4)

• Filling of vacant space along with increases in leasing amounts are expected to contribute about

¥0.5 billion to leasing revenue.

• Contributions from properties acquired in the previous fiscal year are expected to boost leasing

Other

1,382

1,500

+117

+8.5

revenue by about ¥0.4 billion.

• Departures of tenants from buildings scheduled for demolition due to redevelopment projects are

expected to reduce leasing revenue by about ¥1.0 billion.

Operating profit

12,639

12,400

(239)

(1.9)

• Reduced periodic revenues resulting from sales of properties, etc., are expected to reduce leasing

revenue by about ¥0.2 billion.

• Other factors are expected to reduce periodic revenues by about ¥0.2 billion.

Gains on sales of properties

4,808

4,500

(308)

(6.4)

 Revenue from sales of properties

Revenue from sales of properties is forecast to decrease due to lower sales of inventories.

■ Asset Management Business

Fiscal year

ending March

Year on

Year on year

(Millions of yen)

ended March

Main reasons for year-on-year differences in results

31, 2025

year

(%)

31, 2024

(Forecast)

Net sales

3,888

4,100

+211

+5.4

Asset management revenue

2,565

2,700

+134

+5.2

 Asset management revenue and brokerage commissions are expected to remain

Brokerage commissions

1,322

1,400

+77

+5.8

stable.

Operating profit

2,197

2,300

+102

+4.7

Company analysis