Otemachi Park Building, 1-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8133, Japan http://www.mec.co.jp/index_e.html MITSUBISHI ESTATE CO., LTD. Integrated Report 2019 Report Integrated LTD. CO., MITSUBISHI ESTATE Advancing Innovation, Unlocking Potential Integrated Report 2019 This report is printed using paper that contains This report has been prepared using 100% raw materials certified by the Forest vegetable ink. Every effort is made to Stewardship Council (FSC®). FSC® certification contain the incidence of volatile organic ensures that materials have been harvested compounds (VOCs) and to preserve from properly managed forests. petroleum resources. Printed in Japan MEC_AR19E_CV_0822_2nd.indd 1-2 2019/08/23 10:16 P2 ABOUT THE MITSUBISHI ESTATE GROUP P69 FINANCIAL SECTION 2 Track Record of Mitsubishi Estate 69 Japan’s Real Estate Market 4 Marunouchi Today 70 Eleven-Year Summary of Selected Financial Data 6 The Marunouchi Area Going Forward (Consolidated) 8 Mitsubishi Estate’s Value Creation Model 72 Financial Review 10 Business Segments 78 Consolidated Balance Sheets 80 Consolidated Statements of Income / Consolidated P12 MESSAGE FROM THE PRESIDENT Statements of Comprehensive Income 81 Consolidated Statements of Changes in Net Assets P18 SPECIAL FEATURE 83 Consolidated Statements of Cash Flows Urban Development of Mitsubishi Estate for 84 Notes to Consolidated Financial Statements “A Love for People. Improving Corporate Value 107 Independent Auditor’s Report 20 SPECIAL FEATURE 1: Marunouchi Nijubashi Building P108 CORPORATE DATA 24 SPECIAL FEATURE 2: Inspired. Lab 108 Principal Mitsubishi Estate Group Companies 28 SPECIAL FEATURE 3: Miyako Shimojishima 110 Corporate History A Love for the City ” Airport Terminal 111 Organization P32 BUSINESS REVIEW 112 Corporate Information 113 About Our Website Forever Taking On New Challenges—The Mitsubishi Estate Group 34 Office Building Business 36 Lifestyle Property Business A Word about Integrated Report 2019 We adopted this integrated report format starting from fiscal 2018, having published 38 Residential Business annual reports through to fiscal 2017. With this integrated report, we have expanded coverage of non-financial information centering on environmental, social, and 40 International Business governance (ESG) compared with prior annual reports. In doing so, we aim to 42 Investment Management Business increase readers’ awareness of our efforts to raise the corporate value of the The Spirit of Mitsubishi: Three Principles Mitsubishi Estate Group from a medium-to-long-term perspective. We hope that this 43 Hotel & Airport Business report promotes a deeper understanding of the Group among all our stakeholders, including shareholders and investors. “Shoki Hoko” “Shoji Komei” “Ritsugyo Boeki” 44 Architectural Design & Engineering Business Definition of Term “Fiscal 2019” refers to the Group’s fiscal year ended March 31, 2019, and other fiscal 45 Real Estate Services Business years are referred to in a corresponding manner. 46 Business Creation Department Caution Concerning Forward-Looking Statements Corporate Responsibility to Society Integrity and Fairness Global Understanding through Business This integrated report contains forward-looking statements concerning Mitsubishi Strive to enrich society, both materially Maintain principles of transparency Expand business, 47 Business Development, Consulting & Estate Co., Ltd., and its future strategies and earnings outlook, including and spiritually, while contributing and openness, based on an all-encompassing Solutions Group forecasts, plans, and decisions based on information available at the toward the preservation of conducting business with global perspective. time of publication. As with any forecast, plan, or decision, the global environment. integrity and fairness. forward-looking statements are inherently susceptible to potential risks, uncertainties, and assumptions. The ESG SECTION P48 Company’s actual results may therefore vary 49 SUSTAINABILITY materially from those expressed or implied in its forward-looking statements. CONTENTS 52 HUMAN RESOURCE DEVELOPMENT The Mission of the Mitsubishi Estate Group 55 CORPORATE GOVERNANCE We contribute to society through urban development. 55 Message from the Chairman of the Board 56 Directors By building attractive, environmentally sound communities where people can live, work, and relax with contentment, we contribute to the creation of a truly meaningful society. 58 Overview of Corporate Governance System 59 Outside Directors 60 Overview of Activities in Fiscal 2019 The Mitsubishi Estate Group Code of Corporate Conduct 61 Evaluation of the Effectiveness of In order to carry out the Group’s Mission, the Board of Directors / Shares Held for Strategic Purposes we pledge to observe the following Code of Conduct: 62 Remuneration 63 Corporate Executive Officers, Executive 1 2 3 Officers, and Group Executive Officers We will strive to earn We will strive to create We will act with integrity. 64 An Outside Director Discusses the trust of our clients. a vibrant workplace. Mitsubishi Estate’s Governance We will base our conduct on laws We will approach all objectives from While aiming at personal growth, we 66 RISK MANAGEMENT and ethics and always reflect with our clients’ point of view, providing will respect the human rights and humility upon our behavior, valuing safe and reliable products and diversity of opinions of others and our communication with society and services, and make information increase our creativity and professionalism, placing priority in our corporate available as appropriate. while displaying our activities on earning trust through collective strengths as a team. fairness and transparency. For details on the Mitsubishi Estate Group Guidelines for Conduct: http://www.mec.co.jp/e/company/charter/index.html (Formulated December 1, 1997; revised on August 1, 2002, January 1, 2006, and April 1, 2018) MITSUBISHI ESTATE CO., LTD. Integrated Report 2019 1 Focus shifted to ABOUT THE MITSUBISHI ESTATE GROUP make the Marunouchi Redevelopment Project broader and more Track Record of Mitsubishi Estate comprehensive The history of redeveloping Marunouchi as an attractive area Second Phase of Turning Marunouchi Development into a vibrant and bustling area As Japan entered an era of high economic growth, there was a sharp increase in demand 3 for office space. Through the Marunouchi -2 remodeling plan that began in 1959, the area was First Phase of rebuilt with large-scale office buildings providing 2008—Present Day Development a considerable supply of highly integrated office space. Sixteen such buildings were constructed, The construction of the area’s first modern office increasing the total available floor space by more building, Mitsubishi Ichigokan, was completed in than five times. Starting from Scratch 1894. Soon after, three-story redbrick office buildings began springing up, resulting in the The history of Tokyo’s Marunouchi area began in area becoming known as the “London Block.” 1890 when Yanosuke Iwasaki purchased the area at the request of the Meiji government of Japan. At the time, the area was an expanse of flat, Third Phase of Development grassy fields that became known as (2008—Present Day) Mitsubishigahara, or Mitsubishi Fields. —2007 Iwasaki’s reasoning behind this acquisition was 3 From 2008, the focus shifted to make the Marunouchi Redevelopment -1 Project broader and more comprehensive. Therefore, we have been striving his belief that, for Japan to become a modern An abundance 1995 to spread the vibrant and bustling atmosphere of Marunouchi to the districts nation, the country needed a business center of large-capacity of Otemachi and Yurakucho. We have also been promoting the establish- such as that of New York or London. The office buildings purchase price was ¥1.28 million, about three ment of a financial business center and a greater amenity infrastructure in reflecting a period times Tokyo’s annual budget at the time—a order to strengthen the international competitiveness of the area. Through of rapid economic massive sum that speaks to the boldness and the addition of a museum and other art and cultural facilities as well as growth inspiration of Iwasaki’s decision. the pursuit of eco-friendly development, Mitsubishi Estate has aimed to give the area a fresh appeal based on a new sense of values. Third Phase of Development Marunouchi Park Building and Marunouchi Dawning of a (1995—2007) full-scale Mitsubishi Ichigokan Nijubashi Building Following the announcement of the reconstruction of the former Marunouchi business center Faithful re-creation of the original The broader and more development Building in 1995, the Company began to redevelop the area around Tokyo Mitsubishi Ichigokan—now an art comprehensive Marunouchi Station based on the concept of “Pursuing diverse and multifunctional urban museum serving as a center of Redevelopment Project has also development,” with the aim of creating a landscape that would give a new cultural exchange and an office spread to Yurakucho image to the area, which had up until then been purely a business district. space that sits in the midst of the —1980s Starting with the completion of the Marunouchi Building in 2002, premium office zone in the 2 Mitsubishi Estate rebuilt six buildings in line with the new concept. Marunouchi area Purchase of 1960s Moreover, we widened the sidewalks of Naka-dori Avenue from six meters Marunouchi land to seven meters, began holding seasonal events, and took other measures 2009