Cosmos Initia Co., Ltd.

Cosmos Initia Co., Ltd. Targeting JPY5bn operating profit in FY03/19: one-stop provider of real estate development, sales, and solutions TICKER: 8844 TSE: JASDAQ website: http://www.cigr.co.jp/english/message.html LAST UPDATE: 2017.06.29 Business Develops, sells, leases, brokers condominiums and investment properties Business model: Cosmos Initia is a comprehensive developer selling newly built condominiums and detached houses in the Tokyo and Kinki regions. The company also offers real estate subleasing, brokerage, and consulting services. One-stop provider: Cosmos Initia has a suite of offerings: development and sales of new condominiums and detached houses, renovation, retail brokerage, resale of pre-owned condos (after renovation), and residential services. (Residential business: 53% of sales in FY03/17.) In the Solutions business (31% of sales), it targets commercial real estate owners, providing investment property sales, condo and office subleasing, commercial real estate brokerage, and real estate consulting services. Member of Daiwa House group after business turnaround: Cosmos Initia joined the Daiwa House group through a capital alliance in June 2013 (Daiwa House stake: 63.19% as of end March 2017). Daiwa House Industry Co. Ltd. (with offices nationwide), Fujita Corporation (with strengths in construction and redevelopment), and Cosmos Initia will be working together on redevelopment and reconstruction projects in areas near train stations in major cities that are government-designated. Cosmos Initia will provide development and services related to condos for active seniors. Earnings Solid recovery in sales and profits from FY03/15 FY03/17: Third consecutive year of growth in sales and operating profit. Sales were JPY92.4bn (+6.1% YoY) and operating profit JPY4.1bn (+17.3%). Major factors in the recovery were higher sales and improved GPM. Recurring profit was JPY3.5bn (+17.6%) and net income attributable to parent company shareholders JPY3.0bn (-16.7%). The fall in net income was related to booking a corporate income tax adjustment in FY03/16. The full-year dividend remained at JPY7 per share. FY03/18 company forecast: Sales, JPY98.0bn (+6.1% YoY); operating profit, JPY4.4bn (+7.7%); recurring profit, JPY3.9bn (+12.0%); net income, JPY3.3bn (+8.9%); and full-year dividend of JPY9 (up YoY). The company expects an increase in sales in the Solutions business to contribute to higher operating profit. Medium-term strategy Targeting sales of JPY105bn and operating profit of JPY5bn in FY03/19 Under its 2018 medium-term plan (FY03/17 FY03/19), the company targets sales of JPY105bn (+20.7% vs. FY03/16) and operating profit of JPY5bn (+43.7% vs. FY03/16) for the final year, FY03/19. In the Residential business, while maintaining a focus on new housing subdivisions, it is keen to renovate pre-owned properties, expand residential services, and strengthen retail-brokerage services. Cosmos Initia will be working with Daiwa House Industry and Fujita. It will provide development and services for condos geared toward active seniors. In the Solutions segment it aims to provide one-stop services to commercial real estate owners, as well as focus on investment property development. It is currently developing ten residential hotels to meet demand for extended stays by tourists visiting Japan. The first is scheduled to open in February 2018, and the company aims eventually to supply and manage 1,500 rooms. Strengths and weaknesses Strengths Member of Daiwa House group: enjoys the group s support and group synergies for finances (larger credit limits) and sales (joint development, brand presence) Land acquisition does not rely on auctions: by using alumni networks to gather information, the company leverages in-house expertise, enabling it to acquire land suitable for sales of medium-scale projects About 105,000 condos sold: the company can tap into the stock of condos it has already sold when taking part in further business activities such as house trade-ins Weaknesses Low margins: in FY03/17 OPM was 4.4% (roughly one-third of industry average) due to focus on providing high-level products and services (FY03/19 OPM forecast: 4.8%) Dependence on parent: outsources property management and other operations to group companies, limiting its own growth Limited operating area: while there are benefits from focusing resources on prime markets in Tokyo and Kinki regions, company cannot tap into growth elsewhere Profit growth drivers Currently: newly built condos and detached houses Medium term: renovations, investment properties, subleased properties, and hotels Index Market capitalization JPY14.6 bn Stock price (2017/6/19) JPY430 Issued shares 33,911,219 shares Foreign stockholding ratio 3.77 % BPS (FY03/17) JPY656.02 PBR (FY03/17) 0.66 x PER (FY03/18 Est.) 4.4 x Dividend (FY03/18 Est.) JPY9.00 Dividend yield (FY03/18 Est.) 2.09 % ROE (FY03/18 Est.) 14.8 % Net debt/equity ratio (FY03/17) 180.9 % Note: Issued shares include treasury stock. 01/23

Cosmos Initia Co., Ltd. Member of Daiwa House group following turnaround ADR: one-stop provider of real estate development, sales, and solutions TICKER: 8844 TSE: JASDAQ website: http://www.cigr.co.jp/english/message.html LAST UPDATE: 2016.xx.xx Trends and results Revenue YoY Operating profit YoY Recurring profit YoY Net income YoY EPS BPS ROA ROE (JPYmn) (JPYmn) (JPYmn) (JPYmn) (JPY) (JPY) (RP-based) FY03/08 194,439-8.9% 17,956 0.8% 14,692-7.0% 18,824 31.5% 158.17 359.69 5.2% 41.4% FY03/09 191,616-1.5% -18,207 nm -22,402 nm -88,608 nm -740.01-436.02-8.2% - FY03/10 169,995-11.3% -4,797 nm -7,581 nm 25,408 nm 2,480.23-2,354.25-4.5% - FY03/11 101,414-40.3% 1,410 nm 701 nm -411 nm -49.01-2,063.58 0.8% 1.7% FY03/12 80,200-20.9% 1,852 31.3% 1,398 99.4% 720 nm 71.48-1,544.22 2.1% 9.4% FY03/13 85,824 7.0% 2,562 38.3% 2,100 50.2% -1,684 nm -134.96-1,522.45 3.9% - FY03/14 67,441-21.4% 1,739-32.1% 1,386-34.0% 1,259 nm 41.52 417.49 2.3% 9.2% FY03/15 75,620 12.1% 1,745 0.3% 1,351-2.5% 1,735 37.8% 51.18 469.79 1.8% 11.5% FY03/16 87,022 15.1% 3,480 99.4% 2,959 119.0% 3,639 109.7% 107.33 574.21 3.2% 20.6% FY03/17 92,366 6.1% 4,084 17.4% 3,482 17.7% 3,030-16.7% 79.63 656.02 3.3% 14.5% FY03/18 Est. 98,000 6.1% 4,400 7.7% 3,900 12.0% 3,300 8.9% 97.32 - - - Note: Amounts below JPY1mn rounded off. 02/23

Business Provides new condos/detached houses and investment real estate solutions in Tokyo and Kinki Company overview Cosmos Initia is a housing developer launched in 1974 to sell condominiums (has sold about 105,000 condos in total; formerly Recruit Cosmos). It also sells new detached houses, with over 4,000 sold as of end March 2017. Active mainly in the Tokyo and Kinki regions, the company supplies first-time buyers with medium-sized condo units and provides investment property solutions. Trends in sales, operating profit (JPYmn) and OPM Established in 1974 as a condo developer; has sold about 105,000 units, and over 4,000 newly built detached houses. Also provides investment property solutions. Got its start as a Recruit associate; now a subsidiary of Daiwa House. 280,000 15.0% 230,000 9.2% 10.0% 180,000 194,439 191,616 169,995 2.3% 3.0% 2.6% 2.3% 4.0% 4.4% 4.5% 4.8% 5.0% 130,000 80,000 30,000-20,000 (JPYmn) -9.5% 1.4% 101,414-2.8% 80,200 85,824 67,441 75,620 87,022 92,366 98,000 105,000 17,956 1,410-4,797 1,852 2,562 1,739 1,745 3,480 4,084 4,400 5,000-18,207 FY03/08 FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 Est. FY03/19 Est. Sales Operating profit OPM (right axis) 0.0% -5.0% -10.0% -15.0% Subsidiary of Daiwa House Cosmos Initia joined the Daiwa House group through a capital alliance in June 2013 (Daiwa House stake: 63.19% as of end March 2017). Features Cosmos Initia offers integrated real estate services including development, housing subdivision, leasing, and brokerage services in Greater Tokyo (within 30km from Tokyo) and the Kinki region, focusing on medium-sized developments for first-time buyers. Majors such as Mitsui Fudosan (TSE 8801) and Mitsubishi Estate (TSE 8802) have group companies specializing in areas such as development, housing subdivision, distribution, leasing, and management, but Cosmos Initia offers all these services under one roof. This enables it to respond swiftly to various customer needs. Suite of property development, housing subdivision sales, leasing, brokerage services. Core businesses are Residential business (54% of sales in FY03/17) and Solutions business (31%). The company sells condos for active seniors that enable asset building and provide a comfortable living situation for its residents. It provides resident services via subsidiary Cosmos Life Support. The company aims to broaden its customer base by selling renovated condos to people in their late 20s to late 30s. It is also a one-stop provider of solutions for investors and companies, covering buying, operation, and sales of investment properties. In recent years, even as it expanded its holding of pre-owned, renovated properties, the company has worked to achieve a highly productive business by creating and strengthening inter-segment synergies and streamlining operations. In addition, it is currently developing ten residential hotels to meet the demand for extended stays by tourists visiting Japan, with the first scheduled to open in February 2018. Business model by segment From FY03/17 the company reclassified its reporting segments based on the strategies outlined in its 2018 medium-term plan. There are now four reporting segments: Residential (mainly B2C), Solutions (mainly B2B), Construction, and Overseas. 03/23

Segment sales (FY03/17)* 10,953 12% 4,032 4% Residential Solutions 28,502 31% CY03/17 Sales 92,366 (JtYmn) 49,884 53% Construction works Overseas Other *In addition to the figures for each segment, intra-company eliminations amount to JPY1.0bn. Residential business This business includes development and sale of newly built condos and detached houses, sales of renovated condos, retail brokerage, resale of pre-owned condos (after renovation), and resident services (53% of sales in FY03/17). When sourcing land, the company relies on an alumni network, allowing it to avoid auctions. (Non-auction sourced land is three-fourths of its acquisitions.) This enables acquisition of land suitable for medium-sized housing developments. Newly built condos For newly built condos, it takes roughly 24 30 months from land acquisition to sale. The company has typically sold around 700 900 condo units per year. In the future, rather than seeking to scale up, it will watch the market environment and select only properties that can be expected to generate profits. Since FY03/11, selling prices of the company s new condos have been on an uptrend amid rising costs for land purchases and construction work. In FY03/17, the average selling price was roughly JPY44.7mn per unit (see Business section). The company aims for GPM of around 20% (19.3% in FY03/17). Main costs are land acquisition (nearly 40% of sales) and building construction (outsourced to general contractors, over 40%). Residential business (54% of sales in FY03/17): offers a variety of products on a one-stop basis including the development and sale of newly built houses and condos. *Main brand is Initia, targeting first time-new condo buyers in mid-30s *Also tapping into active senior demographic of 60 years old and over (Grand Cosmo) *Good Design Award winner 15 years in a row (2002 2016) Newly built detached houses Cosmos Initia had been developing and selling around 90 120 new detached houses per year, but in FY03/17 there were only 68 such projects. Selling prices of new homes have been rising since bottoming out in FY03/10 for the same reasons as condos (rising costs of land acquisition and construction). In FY03/17 the average selling price per home was around JPY71mn (+16.3% YoY). Compared to condominiums, detached houses have higher average selling prices, due to higher land cost per home. GPM is roughly 15 16% (11.8% in FY03/17 due to booking of valuation losses). For detached houses, land acquisition costs comprise a larger share of costs than for condos, while construction costs account for less. According to the company, GPMs of newly built detached houses are lower than for condos due to recent surges in land acquisition costs, and higher construction, development, and road-paving costs. Renovated condos Renovated condos refer to condos that, rather than undergoing piecemeal upgrades, undergo extensive remodeling (typically involving completely stripping the living space to create a new living space), which are then resold. See the Update (as of May 2017) and Renovated condos sections for more information. Cosmos Initia s renovated condos stand out because of the company s selling capabilities of its one-stop coverage, and because they use the services and designs seen in the company s new condos. 04/23

Solutions business Cosmos Initia also offers one-stop services to commercial property owners (customers with assets of JPY200mn 1bn) primarily in Greater Tokyo. This includes investment property sales, residential and office building subleasing, commercial real estate brokerage (corporate brokerage), and real estate consulting through a real estate health checkup service* (31% of sales). According to the company, in Japan, individuals with more than JPY1bn in assets often build long-term relationships with major real estate companies and trust banks, which they use for their property investments. Meanwhile, Cosmos Initia targets the upper-middle demographic (assets of JPY200mn 1bn), since it says few companies offer solutions to meet the needs of this segment. As of end FY03/17, the company had subleasing management contracts for 9,352 residential units, and office building subleasing contracts covering an area of 45,726sqm (as of end FY03/13, the respective figures were 7,375 units and 16,835sqm). Its real estate consulting service real estate health checkup service had 3,122 members at end FY03/17 (536 members at end FY03/13). Solutions business (31%): one-stop provision of investment property sales, subleasing, commercial property brokerage and consulting, mainly in Tokyo *Targets customers with assets of JPY200mn 1bn *Real estate health checkup service: a free membership-based consulting service that provides third-party analysis of real estate for investment and leasing management from a variety of angles. Construction work Cosmos More (100% subsidiary): operates model condos, sells interior goods, and provides office relocation and repair services * Cosmos More is among the top players in the niche market of model condos, according to Cosmos Initia (Cosmos More builds and operates model condominium rooms for Mitsubishi Estate and Mitsui Fudosan); the company also creates its own designs and provides consulting services on office-space utilization Daiwa Cosmos Construction (equity-method affiliate: joint investment between Daiwa LifeNext, Cosmos Initia, and Daiwa House): major renovations Overseas Cosmos Australia Pty. Ltd. (100% subsidiary): develops condos in Sydney in cooperation with Daiwa House group. Earnings improved in the hotel and resort business (FY03/17 sales of JPY4.0bn and operating profit of JPY305mn) operated on Fraser Island (registered as a natural World Heritage Site in 1992), and the company plans to sell the business during FY03/18. In addition, Cosmos Australia and Daiwa Living Management obtained the Waldorf Group s holdings of a serviced apartment management and operation business and created a subsidiary that will begin serviced apartment business in Australia and New Zealand. Other Cosmos Life Support Co. Ltd. (consolidated subsidiary): manages and operates condos for active seniors Daiwa Cosmos Construction Co., Ltd. (equity-method affiliate: joint capital by Daiwa LifeNext, Cosmos Initia, and Daiwa House Industry): handles large condo renovation projects 05/23

Sales by reporting segment (past 10 years) Sales by segment (10 year period) FY03/08 FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 Est. (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Sales (external customers) 194,439 191,616 169,995 101,414 80,200 85,824 67,441 75,620 87,022 92,366 98,000 YoY -8.9% -1.5% -11.3% -40.3% -20.9% 7.0% -21.4% 12.1% 15.1% 6.1% 6.1% New segment Residential 52,711 49,884 39,200 YoY na -5.4% -21.4% % of total 60.6% 54.0% 40.0% Solutions 22,036 28,502 46,900 YoY na 29.3% 64.5% % of total 25.3% 30.9% 47.9% Construction works 9,611 10,953 11,000 YoY na 14.0% 0.4% % of total 11.0% 11.9% 11.2% Overseas 3,726 4,032 1,900 YoY na 8.2% -52.9% % of total 4.3% 4.4% 1.9% (Elimination of inter-company transactions) -1,064-1,007-1,000 Real estate sales 132,311 78,771 56,163 61,130 40,435 46,094 YoY na -40.5% -28.7% 8.8% -33.9% 14.0% % of total 77.8% 77.7% 70.0% 71.2% 60.0% 61.0% Real estate leasing 13,791 13,345 13,098 13,289 13,396 14,303 YoY na -3.2% -1.9% 1.5% 0.8% 6.8% % of total 8.1% 13.2% 16.3% 15.5% 19.9% 18.9% Real estate brokerage 796 765 694 1,058 1,430 3,882 YoY na -3.9% -9.3% 52.4% 35.2% 171.5% % of total 0.5% 0.8% 0.9% 1.2% 2.1% 5.1% Other 23,094 8,533 10,244 10,346 12,178 11,340 YoY na -63.1% 20.1% 1.0% 17.7% -6.9% % of total 13.6% 8.4% 12.8% 12.1% 18.1% 15.0% Old segment Real estate sales 136,021 137,029 130,841 52,774 YoY -13.7% 0.7% -4.5% 14.5% % of total 70.0% 71.5% 77.0% 60.6% Real estate leasing 14,933 YoY 4.4% % of total 17.2% Real estate brokerage 6,910 YoY 78.0% % of total 7.9% Real estate management 18,268 18,506 9,430 YoY 1.0% 1.3% -49.0% % of total 9.4% 9.7% 5.5% Real estate leasing 13,129 14,573 13,616 YoY 7.8% 11.0% -6.6% % of total 6.8% 7.6% 8.0% Other 27,019 21,506 16,106 12,403 YoY 5.9% -20.4% -25.1% 9.4% % of total 13.9% 11.2% 9.5% 14.3% 06/23

Operating profit by reporting segment (past 10 years) Operating profit by reporting segment (past 10 years) FY03/08 FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 Est. (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Operating profit by segment (not adjusted for inter-segment and company-wide eliminations) 19,338-18,133-2,255 3,552 3,688 4,223 3,021 3,064 4,831 5,594 6,110 New segment * YoY 5.7% -193.8% -87.6% -257.5% 3.8% 14.5% -28.5% 1.4% 57.7% 15.8% 9.2% % of total 9.9% -9.5% -1.3% 3.5% 4.6% 4.9% 4.5% 4.1% 5.6% 6.1% 6.2% Residential 2,936 2,128 1,200 YoY na -27.5% -43.6% % of total 60.8% 38.0% 19.6% OPM 5.6% 4.3% 3.1% Solutions 1,384 2,799 4,500 YoY na 102.2% 60.8% % of total 28.6% 50.0% 73.6% OPM 6.3% 9.8% 9.6% Construction works 333 360 370 YoY na 8.1% 2.8% % of total 6.9% 6.4% 6.1% OPM 3.5% 3.3% 3.4% Overseas 176 305 40 YoY na 73.3% -86.9% % of total 3.6% 5.5% 0.7% OPM 4.7% 7.6% 2.1% (Elimination of inter-company transactions) -1,351-1,510-1,710 % of total -1.6% -1.6% -1.7% Real estate sales -3,774 3,085 3,519 3,838 2,138 1,870 YoY na nm 14.1% 9.1% -44.3% -12.5% % of total na 86.9% 95.4% 90.9% 70.8% 61.0% OPM -2.9% 3.9% 6.3% 6.3% 5.3% 4.1% Real estate leasing 247 244 79 255 525 617 YoY na -1.2% -67.6% 222.8% 105.9% 17.5% % of total na 6.9% 2.1% 6.0% 17.4% 20.1%. OPM 1.8% 1.8% 0.6% 1.9% 3.9% 4.3% Real estate brokerage -131 73-55 82 127 442 YoY na nm nm nm 54.9% 248.0% % of total na 2.1% -1.5% 1.9% 4.2% 14.4% OPM -16.5% 9.5% -7.9% 7.8% 8.9% 11.4% Other 1,372 149 146 47 229 133 YoY na -89.1% -2.0% -67.8% 387.2% -41.9% % of total -60.8% 4.2% 4.0% 1.1% 7.6% 4.3% OPM 5.9% 1.7% 1.4% 0.5% 1.9% 1.2% Old segment Real estate sales 17,050-20,295-5,760 2,835 YoY 9.8% nm nm 151.6% % of total 88.2% nm nm 58.7% OPM 12.5% nm nm 5.4% Real estate leasing 557 YoY -9.7% % of total 11.5% OPM 3.7% Real estate brokerage 928 YoY 110.0% % of total 19.2% OPM 13.4% Real estate management 1,392 1,545 793 YoY -5.9% 11.0% -48.7% % of total 7.2% nm nm OPM 7.6% nm nm Real estate leasing -21 429 0 YoY nm nm nm % of total -0.1% nm nm OPM -0.1% nm nm Other 917 187 19 477 YoY -19.6% -79.6% -89.8% 258.6% % of total 4.7% nm nm 9.9% OPM 4.3% nm nm 3.8% (Elimination of inter-company transactions) -1,382-74 -2,542-2,142-1,836-1,661-1,281-1,319-1,351-1,510-1,710 % of total -0.7% 0.0% -1.5% -2.1% -2.3% -1.9% -1.9% -1.7% -1.6% -1.6% -1.7% Consolidated operating profit 17,956-18,207-4,797 1,410 1,852 2,562 1,739 1,745 3,480 4,084 4,400 YoY 0.8% nm nm nm 31.3% 38.3% -32.1% 0.3% 99.4% 17.4% 7.7% OPM 9.2% -9.5% -2.8% 1.4% 2.3% 3.0% 2.6% 2.3% 4.0% 4.4% 4.5% 07/23

Residential business (real estate sales business) sales (past 10 years) Residential business (real estate sales business), sales breakdown (past 10 years) FY03/08 FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 Est. (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Sales na na na na na na na na 52,711 49,884 39,200 Rreal estate sales business, sales breakdown (past 10 years) FY03/08 FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 Est. FY03/18 Est. (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Sales 136,021 137,029 132,311 78,771 56,163 61,130 40,435 46,094 na na na Newly built condominiums 94,316 88,511 94,058 53,949 37,406 52,242 32,906 32,195 39,759 33,266 25,400 Newly built detached houses 21,116 19,069 13,509 6,936 5,765 6,659 5,157 6,185 5,480 4,817 5,200 Investment leasing condominiums 4,778 15,338 na na na na na na na na na Renovated condominiums 3,664 3,658 23,139 16,821 11,694 990 1,611 7,308 6,546 11,030 7,500 Purchase/resale of pre-owned condominiums - - - - - - - - 4,950 10,477 7,100 Others - - - - - - - - 1,596 553 400 Retail brokerage - - - - - - - - 957 769 1,100 Land/other 12,145 10,732 na na na na na na - - - Sales representative/other - - 1,605 1,064 1,295 1,238 759 404 - - - Sales volume Newly built condominiums (unit) 2,719 2,760 3,224 1,453 1,091 1,435 799 772 896 744 555 Newly built detached houses (lot) 457 408 314 147 116 116 89 120 90 68 61 Investment leasing condominiums (building) 3 7 na na na na na na na na na Renovated condominiums (unit) 16 na na na na na na na na na na Purchase/resale of pre-owned condominiums (unit) - - - - - - 10 92 159 317 195 Other - - - - - - - - na na na Land/other (unit) 42 na na na na na na na - - - Average sales price Newly built condominiums 34.7 32.1 29.2 37.1 34.3 36.4 41.2 41.7 44.4 44.7 45.8 Newly built detached houses 46.2 46.7 43.0 47.2 49.7 57.4 57.9 51.5 60.9 70.8 85.2 Investment leasing condominiums 1,592.7 2,191.1 na na na na na na na na na Renovated condominiums 229.0 na na na na na na na na na na Purchase/resale of pre-owned condominiums (unit) - - - - - - - - 31.1 33.1 36.4 Land/other 289.2 na na na na na na na na na na Note: Sales volume and the average unit price for newly built condominiums and detached houses for FY03/10 and earlier are not directly comparable with those for FY03/11 and subsequent years. Sales figures for FY03/11 and afterward for joint projects are prorated but those for FY03/10 and earlier are not. (As a result, sales volume for FY03/10 and earlier are larger than those for FY03/11 and afterward, but prices are lower.) 08/23

Solutions business (mainly property leasing and brokerage) sales (past 10 years) Solutions business (past 10 years) FY03/08 FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 Est. (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Sales na na na na na na na na 22,036 28,502 46,900 Subleasing real estate na na na na na na na na 14,980 13,849 14,700 Investment real estate na na na na na na na na 6,470 14,087 31,600 Single detached property na na na na na na na na 3,864 11,078 21,600 Other na na na na na na na na 2,606 3,009 10,000 Corporate brokerage na na na na na na na na 553 565 600 Pproperty leasing and brokerage, sales breakdown (past 10 years) FY03/08 FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 Est. FY03/18 Est. (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Old segment Subleasing real estate 13,283 14,801 13,937 13,459 13,175 13,366 13,443 14,351 14,980 na na Real estate brokerage - - 796 765 694 1,058 1,430 3,882 6,910 na na (Real estate brokerage transaction value) - - (24,880) (29,389) (24,270) (33,191) (41,891) (36,514) (42,577) na na Tokyo region - - - (13,222) (11,203) (15,564) (20,096) (16,850) (18,112) na na Kinki region - - - (3,781) (3,540) (5,159) (4,211) (5,150) (4,373) na na (Corporate brokerage (Tokyo region)) - - - (12,385) (9,526) (12,467) (17,583) (14,514) (20,090) na na Subleasing houses/number, brokerage cases Subleasing real estate (unit) 7,112 7,850 6,959 7,058 7,069 7,375 8,071 8,354 8,980 9,352 9,875 Vacancy rate 4.2% 4.2% 4.8% 4.5% 5.2% 3.8% 5.1% 3.7% 4.4% 2.9% na One house property within investment real estates (house) - - - - - - - - 6 15 22 Number of brokerages (unit) 1,134 683 643 693 587 800 840 752 805 na na Sublease unit price Subleasing real estate (unit) - - - - - - - - 1.7 1.5 1.5 Single detached property within investment real estate (house) - - - - - - - - 644.0 738.5 981.8 Brokerage transaction value per unit - - (38.7) (42.4) (41.3) (41.5) (49.9) (48.6) (52.9) na na Brokerage commission rate - - 3.2% 2.6% 2.9% 3.2% 3.4% 10.6% 16.2% na na Overview of segment changes Old segments Real Estate New condos (incl. townhouses) New detached houses (incl. building lot sales) Renovated condos Investment property sales Leasing Condos and office subleasing Real estate brokerage Retail brokerage Corporate brokerage Real estate consulting Resale of pre-owned condos (renewal) Other Construction work by subsidiaries Overseas businesses Note: The change to the new segments occurred at the start of FY03/17. Residential New condos (incl. townhouses) New detached houses (incl. building lot sales) Renovated condos Retail brokerage Resale of pre-owned condos (renewal) Solutions Investment property sales Condos and office subleasing Corporate brokerage Real estate consulting Construction work Overseas businesses New segments The structure of Cosmos Initia and group companies, as well as parent company Daiwa House and its group companies, is shown in the following figure. 09/23

Relationship between Cosmos Initia group and Daiwa House group Daiwa House Group Daiwa House Group Business partnership/synergy Investment Daiwa House Industry Joint venture/business partnership Investment Cosmos Initia Residential Solutions Daiwa LifeNext Management commission/business partnership Cosmos Life Support Grand Cosmos Musashiurawa Management and operation service Investment Daiwa Cosmos Construction Large repair Investment Daiwa House Australia Australia Real Estate Joint Project Summer Hill Project Drummoyne Project Cosmos Australia, and 7 other companies Overseas Cosmos More Constructions Cosmos Initia Group History Cosmos Initia got its start as an affiliated company of Recruit (currently Recruit Holdings: TSE 6098). It changed its name to Recruit Cosmos in 1985, and became independent in 2005 via an MBO (management buyout). Following setbacks* with investment property developments and changes in the real estate market, the company filed for a Turnaround ADR (Alternative Dispute Resolution)** under the Law on Special Measures for Industrial Revitalization and Innovation in 2009, and received debt relief and other support from financial institutions. (The reconstruction plan was completed in March 2013, with repayment of JPY100.8bn in turnaround ADR liabilities). Recruit Cosmos joined the Daiwa House (TSE 1925) group under a capital and business alliance***. Cosmos Initia is a subsidiary of Daiwa House, which held 63.19% of the issued capital as of end March 2017. *In June 2005, Cosmos Initia became independent from the Recruit group via an MBO with investments from private equity funds managed by Unison Capital. With the change of ownership, the company got involved in investment property development (residential and some office) as well as started a business of adding value to income-generating properties. It grew these businesses amid easily available finances. However, the credit crunch following the subprime mortgage crisis, plus the accompanying loss of liquidity in the property market and fall in property prices, sparked a rapid deterioration in profits. In FY03/09, inventory valuation losses of JPY11.0bn (booked as expenses) led to an operating loss. Furthermore, a JPY41.2bn cut in the book value of real estate for sale and valuation losses of JPY5.3bn on fixed assets saw restructuring losses (extraordinary losses) of JPY53.3bn for a net loss of JPY88.1bn, and at end FY03/09, the company had JPY45.2bn in excess liabilities. ** Turnaround ADR (Alternative Dispute Resolution): to facilitate an early turnaround for businesses, an independent expert acts as a go-between for creditors (such as financial institutions) and debtors. This reduces the tax burden for both parties, and smooths the provision of bridging finance to the debtor. This is based on the certified ADR under the Act on Promotion of Use of Alternative Dispute Resolution (MOJ) defined in the Law on Special Measures for Industrial Revitalization and innovation. ***In September 2009, the company raised JPY1.0bn by issuing Class 1 preferred stock to Daiwa House, simultaneously selling its subsidiary Cosmos Life (now Daiwa LifeNext Co., Ltd., a real estate management company) to Daiwa House. In June 2013, Cosmos Initia made a third-party placement to Daiwa House (total payment: roughly JPY9.5bn) and purchased preferred stock that correspondent financial institutions had held under debt-equity swap arrangements, and canceled all preferred stock. Competitors There are roughly 315,000 companies involved in real estate in Japan (12.0% of the 10/23

roughly 2.8mn companies excluding the finance and insurance industry) according to Statistics of Corporations (Ministry of Finance, 2015 edition). OPMs in the real estate industry are the highest across all sectors excluding finance and insurance, at 11.6% versus the all-industry average of 3.9%. Among these, the largest groups (Mitsui Fudosan, Mitsubishi Estate, and Sumitomo Realty (TSE 8830) boast high margins owing to profitable office leasing businesses in prime urban areas. Competitors that are mainly involved in condo development and sales include Pressance Corporation (TSE 3254), Daikyo (TSE 8840), Takara Leben (TSE 8897) and Gold Crest (TSE 8871). Cosmos Initia has relatively low OPMs compared to these competitors (see Strengths and weaknesses section). Major competitors by segment Condo developers: Pressance Corporation, Daikyo, Takara Leben, and Gold Crest Newly built detached houses (main competitors by product or area): Nomura Real Estate (TSE 3231) Mitsui Fudosan Leasing (subleasing): Mitsui Fudosan Residential Lease Brokerage: Mitsui Fudosan Realty, Sumitomo Real Estate Sales Margin comparison: real estate mega-majors and condo sellers Mitsui Fudosan (8801) Cosmos Initia(8844) FY03/17 FY03/17 Sales OP OPM Sales OP OPM Leasing 536,518 135,774 25.3% Residential 49,853 2,128 4.3% Sales 488,710 65,285 13.4% Solutions 28,446 2,799 9.8% Management 347,672 53,838 15.5% Construction work 9,937 360 3.6% Mitsui Home 247,195 4,907 2.0% Overseas 4,023 305 7.6% Others 84,320 5,994 7.1% Others 105-23 -21.9% Eliminations - -33,102 - Eliminations - -1,486 - Total 1,704,416 232,698 13.7% Total 92,366 4,084 4.4% Mitsubishi Estate(8802) Daikyo(8840) FY03/17 FY03/17 Sales OP OPM Sales OP OPM Building 476,828 133,570 28.0% Real Estate Development 159,649 10,684 6.7% Lifestyle Property 84,250 25,807 30.6% Real Estate Management 61,315 3,449 5.6% Residential 407,220 19,253 4.7% Real Estate Brokerage 104,395 8,987 8.6% International 66,573 26,313 39.5% Adjustments - -2,598 - Investment Management 20,790 4,520 21.7% Total 325,360 20,523 6.3% Design Management 12,064 445 3.7% Hotel 33,067 1,932 5.8% Real Estate Services 23,890 2,157 9.0% Takara Leben(8897) Other 720 289 40.1% FY03/17 Adjustments - -21,793 - Sales OP OPM Total 1,125,405 192,495 17.1% Real Estate Sales 79,638 5,665 7.1% Real Estate Leasing 5056 987 19.5% Sumitomo Realty(8830) Real Estate Management 3,665 158 4.3% FY03/17 Others 11,108 2971 26.7% Sales OP OPM Adjustments 4,130 708 - Real Estate Leasing 333,604 126,213 37.8% Total 103,599 10,491 10.1% Real Estate Sales 313,992 46,189 14.7% Completed Work 200,565 13,933 6.9% Real Estate Brokerage 65,615 19,147 29.2% Pressance Corporation(3254) Others 11,372 1,490 13.1% FY03/17 Adjustments - -18,804 - Sales OP OPM Total 925,151 188,171 20.3% Real Estate Sales 75,746 13,531 17.9% Adjustments 3,245 1,212 - Tokyu Fudosan Holdings(3289) Total 78,991 14,173 17.9% FY03/17 Sales OP OPM Urban 246,822 44,854 18.2% Gold Crest(8871) Housing 108,494 9,663 8.9% FY03/17 Management 139,658 8,079 5.8% Sales OP OPM Brokerage 80,192 11,292 14.1% Real Estate Sales 27,449 6,235 22.7% W ealth 93,841 7,577 8.1% Leasing 2,947 1,594 54.1% Hands 96,575 253 0.3% Others 5,428 1,188 21.9% Next generation/related business 42,919-1,909-4.4% Adjustments - 0 - Adjustments - -6,584 - Total 35,824 9,019 25.2% Total 808,503 73,227 9.1% Source: Shared Research based on each company s data 11/23

Earnings Sales and profits increased from FY03/15; dividend increase planned for FY03/18 FY03/17 earnings: Sales were JPY92.4bn (+6.1% YoY) and operating profit was JPY4.1bn (+17.3%). Major factors were higher sales (up YoY in each segment) and 0.3pp improvement in GPM. Recurring profit: JPY3.5bn (+17.6%); net income attributable to parent company shareholders: JPY3.0bn (-16.7%). Results exceeded the initial FY03/17 company forecasts by 2.6% for sales and 10.4% for operating profit. The fall in net income was because in FY03/16 the company booked a corporate income tax adjustment of JPY1.2bn related to deferred tax assets, but no such adjustment was made in FY03/17. The FY03/17dividend remained at JPY7.0 per share. Residential: Sales, JPY49.9bn (-5.4% YoY); segment operating profit, JPY2.1bn (-27.5%). In order to make up for a drop in sales of new condos and detached houses, the company expanded its renovated condo business (buying and selling pre-owned condos) but still failed to keep sales and profits from declining. The number of new condos sold was 744 units (-152 YoY); the number of newly built detached houses delivered was 68 (-22 YoY). Average unit prices for newly built condos were JPY44.7mn (+0.7%) and for newly built detached houses, JPY70.8mn (+16.3%). GPM: Newly built condos, 19.3% (-1.1pp YoY); newly built detached houses, 11.8% (-3.6pp). However, the 68 new detached houses delivered in FY03/17 included some projects for which the company declared an impairment loss in FY03/16. If these projects are excluded, the GPM for new detached houses was 14.3% (-0.9pp). At end FY03/17, inventory of uncontracted completed properties was 100 new condos (-142 YoY) and 19 new detached houses (-6). Solutions: Sales, JPY28.5bn (+29.3% YoY); segment operating profit, JPY2.8bn (+102.2%). This business operates subleasing primarily in the Greater Tokyo region. Number of condo units under contract was 9,352 (+372). The company obtained pre-owned rental condos and an office building and increased the number of investment properties to be sold after renovation by nine YoY, for a total of 15. GPM: 13.3% (-0.5pp YoY). However, this GPM is only for building sales and does not include lease revenue received while the company was making improvements to the buildings. If this revenue were included, the FY03/17 GPM would have improved about 2% YoY. Construction: Sales to external clients, JPY11.0bn (+14.0%); segment operating profit, JPY360mn (+8.1%). Subsidiary Cosmos More, which does repair work on offices and constructs rental residences, saw both orders and sales increase YoY. Overseas: Sales to external clients, JPY4.0bn (+8.2%); segment operating profit, JPY477mn (+73.3%). At Cosmos Australia, earnings for the hotel and resort operation business improved and almost reached record highs. However, the hotel and resort business in Australia is in the process of being sold, and the company intends to withdraw from the business as announced in its medium-term plan. Sales of newly built condos, number of units delivered, and average price per unit 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 99,354 94,316 94,058 88,511 44.4 44.7 45.8 41.2 41.7 34.7 37.1 34.3 36.4 32.1 29.9 29.2 53,949 52,242 37,406 39,759 32,906 32,195 33,266 25,400 3,325 2,719 2,760 3,224 1,453 1,091 1,435 799 772 896 744 555 FY03/07 FY03/08 FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 Est. Sales of newly built condominiums (JPYmn) Number of units delivered Average price per unit (right axis; JPYmn) 50 45 40 35 30 25 20 15 10 5 0 12/23

Note: The number of houses delivered and the average unit price for FY03/10 and earlier are not directly comparable with those for FY03/11 and subsequent years. The numbers of joint projects for FY03/11 onward are prorated, but numbers for FY03/10 and earlier are not. (As a result, sales volume for FY03/10 and earlier are larger than those for FY03/11 and afterward, but prices are lower.) Sales of newly built detached houses, number of houses delivered, and average price per home 25,000 20,000 21,116 19,069 85.2 90 80 70.8 15,000 13,509 70 10,000 5,000 0 (JPYmn) 57.4 57.9 60.9 6,936 5,765 6,659 6,185 49.7 5,157 46.2 46.7 47.2 51.5 5,480 4,817 5,200 43.0 457 408 314 147 116 116 89 120 90 68 61 FY03/08 FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 Est. Sales of newly built detached houses (JPYmn) Number of houses delivered Averag price per home (right axis; JPYmn) 60 50 40 Note: The number of houses delivered and the average unit price for FY03/10 and earlier are not directly comparable with those for FY03/11 and subsequent years. The numbers of houses for joint projects for FY03/11 onward are prorated, but numbers for FY03/10 and earlier are not. (As a result, sales volume for FY03/10 and earlier are larger than those for FY03/11 and afterward, but prices are lower.) GPM on newly built condos and detached houses 25% 20% 15% 10% 12.8% 14.3% 7.0% 20.2% 20.0% 21.1% 16.6% 16.5% 11.4% 18.8% 9.9% 15.2% 12.8% 20.4% 15.4% 19.3% 11.8% 14.5% 16.3% 5% 0% 2.6% FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 Est. Newly built condominiums Newly built detached houses Condominium market (Tokyo and Kinki regions): condo prices (JPYmn) 70 65 60 55 50 45 40 35 Newly built condominiums sales (Tokyo region) Trend line for Newly built condominiums sales (Tokyo region) Trend line for Newly built condominiums sales (Kinki region) Newly built condominiums sales (Kinki region) 30 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2013 2014 2015 2016 2017 Source: Shared Research based on Real Estate Economic Institute data Condominium market (Tokyo region): inventory of condos carried over for sale next month 8,000 83.5% 81.6% 81.6% 83.7% 83.7% 7,000 85.0% 79.6% 80.6% 81.5% 79.6% 78.9% 79.6% 6,000 78.4% 78.2% 78.1% 78.6% 76.6% 78.7% 82.1% 80.0% 75.5% 76.1% 74.7% 74.9% 76.6% 5,000 71.6% 71.1% 74.3% 75.0% 74.5% 70.9% 68.8% 72.9% 72.0% 4,000 68.4% 69.6% 67.6% 69.6% 70.0% 66.2% 69.9% 64.8% 66.6% 3,000 63.3% 66.0% 66.4% 63.3% 66.3% 65.0% 62.5% 61.6% 2,000 58.6% 61.6% 60.0% 1,000 0 Inventory of condos carried over for sale next month Contract rate (right axis: %) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2013 2014 2015 2016 2017 Source: Shared Research based on Real Estate Economic Institute data 90.0% 55.0% 50.0% 13/23

Quarterly performance Cumulative FY03/16 FY03/17 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales 11,547 36,024 50,941 87,022 17,979 33,142 52,293 92,366 YoY -21.5% 15.1% 22.7% 15.1% 55.7% -8.0% 2.7% 6.1% Sales by segment Residential 4,817 21,686 28,563 52,711 10,375 17,461 25,907 49,884 YoY na na na na 115.4% -19.5% -9.3% -5.4% % of total 41.7% 60.2% 56.1% 60.6% 57.7% 52.7% 49.5% 54.0% New condominiums 3,160 17,224 20,817 39,759 8,300 13,172 18,969 33,266 YoY -53.2% 23.8% 42.4% 23.5% 162.7% -23.5% -8.9% -16.3% % of total 27.4% 47.8% 40.9% 45.7% 46.2% 39.7% 36.3% 36.0% New detached houses 541 2,060 3,859 5,480 484 851 1,837 4,817 YoY -49.7% 7.5% 10.1% -11.4% -10.5% -58.7% -52.4% -12.1% % of total 4.7% 5.7% 7.6% 6.3% 2.7% 2.6% 3.5% 5.2% Renovated condominiums 881 1,962 3,251 6,546 1,407 3,093 5,619 11,030 YoY na na na na 59.7% 57.6% 72.8% 68.5% % of total 7.6% 5.4% 6.4% 7.5% 7.8% 9.3% 10.7% 11.9% Retail brokerage 233 438 634 925 182 342 480 769 YoY na na na na -21.9% -21.9% -24.3% -16.9% % of total 2.0% 1.2% 1.2% 1.1% 1.0% 1.0% 0.9% 0.8% Solutions 3,836 8,440 14,481 22,036 3,888 9,547 16,726 28,502 YoY na na na na 1.4% 13.1% 15.5% 29.3% % of total 33.2% 23.4% 28.4% 25.3% 21.6% 28.8% 32.0% 30.9% Real estate subleasing 3,660 7,333 11,086 14,980 3,454 6,858 10,340 13,849 YoY na na na na -5.6% -6.5% -6.7% -7.6% % of total 31.7% 20.4% 21.8% 17.2% 19.2% 20.7% 19.8% 15.0% Investment property sales 35 818 3,025 6,470 281 2,344 5,953 14,087 YoY na na na na 702.9% 186.6% 96.8% 117.7% % of total 0.3% 2.3% 5.9% 7.4% 1.6% 7.1% 11.4% 15.3% Corporate brokerage 140 288 369 585 152 344 432 565 YoY na na na na 8.6% 19.4% 17.1% -3.4% % of total 1.2% 0.8% 0.7% 0.7% 0.8% 1.0% 0.8% 0.6% Construction works 2,187 4,626 6,088 9,611 2,859 4,933 6,656 10,953 YoY na na na na 30.7% 6.6% 9.3% 14.0% % of total 18.9% 12.8% na na 15.9% 14.9% 12.7% 11.9% Overseas 861 1,652 2,376 3,726 1,030 1,603 2,548 4,032 YoY na na na na 19.6% -3.0% 7.2% 8.2% % of total 7.5% 4.6% 4.7% 4.3% 5.7% 4.8% 4.9% 4.4% Other - - 0 0 28 54 80 113 YoY na na na na nm nm nm nm % of total 0.0% 0.0% - - 0.2% 0.2% 0.2% 0.1% Intersegment transactions, transfers -156-380 -568-1,064-202 -457-625 -1,121 YoY na na na na nm nm nm nm % of total -1.4% -1.1% na na -1.1% -1.4% -1.2% -1.2% CoGS 9,154 28,847 40,824 69,876 13,823 25,729 40,795 73,849 YoY -24.6% 13.0% 20.8% 13.9% 51.0% -10.8% -0.1% 5.7% CoGS ratio 79.3% 80.1% 80.1% 80.3% 76.9% 77.6% 78.0% 80.0% Gross profit 2,393 7,177 10,116 17,145 4,156 7,412 11,498 18,516 YoY -6.7% 24.4% 31.0% 20.3% 73.7% 3.3% 13.7% 8.0% GPM 20.7% 19.9% 19.9% 19.7% 23.1% 22.4% 22.0% 20.0% SG&A 3,238 6,628 9,672 13,665 3,403 6,581 9,933 14,432 YoY 10.7% 10.6% 8.9% 9.3% 5.1% -0.7% 2.7% 5.6% SG&A-to-sales ratio 28.0% 18.4% 19.0% 15.7% 18.9% 19.9% 19.0% 15.6% Operating profit -845 549 444 3,480 752 831 1,565 4,084 YoY nm nm nm 99.4% nm 51.3% 252.5% 17.4% OPM -7.3% 1.5% 0.9% 4.0% 4.2% 2.5% 3.0% 4.4% Sales by segment Residential -707 774 616 2,936 566 452 822 2,128 YoY na na na na nm -41.5% 33.4% -27.5% % of total nm 141.0% 138.7% 84.4% 75.3% 54.4% 52.5% 52.1% OPM -14.7% 3.6% 2.2% 5.6% 5.5% 2.6% 3.2% 4.3% Solutions 114 364 730 1,384 276 951 1,645 2,799 YoY na na na na 142.1% 160.9% 125.3% 102.2% % of total nm 66.3% 164.4% 39.8% 36.7% 114.4% 105.1% 68.5% OPM 3.0% 4.3% 5.0% 6.3% 7.1% 10.0% 9.8% 9.8% Construction works 82 171 98 333 166 105 28 360 YoY na na na na 102.4% -38.5% -71.4% 8.1% % of total nm 31.1% 22.1% 9.6% 22.1% 12.6% 1.8% 8.8% OPM 3.7% 3.7% 1.6% 3.5% 5.8% 2.1% 0.4% 3.3% Overseas 22-90 -17 176 94 15 137 305 YoY na na na na 327.3% nm nm nm % of total nm -16.4% -3.8% 5.1% 12.5% 1.8% 8.8% 7.5% OPM 2.6% -5.4% -0.7% 4.7% 9.1% 0.9% 5.4% 7.6% Other -4-7 -11-32 -6-13 -21-23 YoY na na na na nm nm nm nm % of total nm -1.3% -2.5% -0.9% -0.8% -1.6% -1.3% -0.6% OPM nm -0.9% -1.8% -1.1% -21.4% -24.1% -26.3% -20.4% Intersegment transactions, transfers -352-663 -972-1,319-344 -680-1,046-1,486 YoY na na na na nm nm nm nm % of total nm -120.8% -218.9% -37.9% -45.7% -81.8% -66.8% -36.4% Recurring profit -966 315 41 2,959 609 494 1,057 3,482 YoY na na na 119.0% nm 56.9% 2478.0% 17.7% RPM nm 0.9% 0.1% 3.4% 3.4% 1.5% 2.0% 3.8% Net income -983 305 39 3,639 513 384 819 3,030 YoY na na na 110% nm 26% 2000% -17% Net margin nm 0.8% 0.1% 4.2% 2.9% 1.2% 1.6% 3.3% <Residential: Sales volume> New condominiums (units) 73 370 464 896 183 283 411 744 New detached houses (lots) 11 38 66 90 9 16 32 68 Retail brokerage (transactions) 6,360 11,503 16,474 22,172 4,787 8,888 13,167 18,300 <Residential: GPM, inventory of uncontracted completed properties> New condominiums: GPM 12.5% 20.3% 20.2% 20.4% 18.9% 17.9% 18.7% 19.3% New condominiums: inventory (uncontracted, completed units) 53 49 93 242 185 111 99 100 New detached houses: GPM 13.1% 13.4% 15.0% 15.4% 5.9% 4.2% 7.3% 11.8% New detached houses: inventory (uncontracted, completed lots) 31 34 23 25 34 27 29 19 <Residential: Progress in contracts> New condos: planned delivery (units) 971 937 937 755 755 755 New condos: contracted (units) 447 622 814 327 515 682 New condos: progress ratio 46.0% 66.4% 86.9% 43.3% 68.2% 90.3% New detached houses: planned delivery (lots) 102 91 91 80 80 80 New detached houses: contracted (lots) 29 53 82 15 27 51 New detached houses: progress ratio 28.4% 58.2% 90.1% 18.8% 33.8% 63.8% Pre-owned condos: planned delivery (units) na na na 275 275 275 Pre-owned condos: contracted (units) na na na 62 114 261 Pre-owned condos: progress ratio na 41.5% na 22.5% 41.5% 94.9% <Solutions: subleasing, sales volume, and vacancy> Subleased condominiums (units) 8,445 8,660 8,777 8,980 8,972 6,858 9,331 9,352 Vacancy rate 4.6% 5.2% 4.7% 4.4% na 3.8% na 2.9% Corporate brokerage 5,209 10,825 13,722 20,404 4,543 14,282 17,464 20,384 FY03/18 company forecast: Expects higher sales and profits. Sales are expected to be JPY98.0bn (+6.1% YoY), operating profit JPY4.4bn (+7.7%), recurring profit JPY3.9bn (+12.0%), and net income JPY3.3bn (+8.9%). The company targets a dividend payout ratio 14/23

of 10%, but also attempts to balance payouts with retained earnings. It plans a JPY2 YoY increase for FY03/18, for a full-year dividend of JPY9. The company expects sales and profits in the Residential and Overseas businesses to fall YoY. This is because it expects to sell fewer new condos and detached houses and withdraw from the hotel and resort business in Australia. However, the company also forecasts that the fall in the Residential and Overseas businesses earnings will be offset by expansion of the Solutions business. The company expects gross profit to decline 5.5% YoY (JPY1.0bn) but that SG&A expenses will also decline 9.2% YoY (JPY1.3bn) for the same reasons (a fall in new condo and detached house sales, and withdrawal from the hotel and resort business in Australia). As a result, it forecasts a 7.7% (JPY316mn) increase in overall operating profit. Residential: Sales, JPY39.2bn (-21.4% YoY); segment operating profit, JPY1.2bn (-43.6%). The company forecasts the number of new condos sold to fall by 189 units YoY to 555 and the number of detached houses sold to fall by 7 units to 61. The company does not plan to continue strengthening sales promotions including inventory turnover as it did in FY03/17, so it forecasts a drop in sales of renovated condos as well. The company forecasts a GPM of 14.5% (-4.8pp) for new condos due to a higher ratio of units in the Kansai region, where selling expenses are higher than in the Kanto region. Solutions: Sales, JPY46.9bn (+64.5%); segment operating profit, JPY4.5bn (+60.8%). The company forecasts a YoY increase of 523 units for properties under subleasing management, for a total of 9,875. It also expects the number of investment properties sold to rise by seven for a total of 22. This figure includes hotels. The company forecasts that the GPM for these investment properties will fall by 2.0pp to 11.3%, but says this estimate is conservative. Construction: Sales, JPY11.0bn (+0.4%); segment operating profit, JPY370mn (+2.8%) Overseas: Sales, JPY1.9bn (-52.9%); segment operating profit, JPY40mn (-86.9%) Medium-term strategy Growth drivers: Residential and Solutions businesses 2018 medium-term plan In May 2016, the company released its 2018 medium-term plan covering FY03/17 through FY03/19. In FY03/19 it targets sales of JPY105bn (+120.7% vs. FY03/16) and operating profit of JPY5bn (+143.7%). It expects operating profit margin for FY03/19 to rise to 4.8% thanks to improving profitability at its Solutions and Construction segments. Cosmo Initia also forecasts a net debt/equity ratio of 1.5x (net liabilities: JPY43bn, net assets: JPY29bn) for the same period. The company has proposed a CSV (creating shared value) vision and aims to resolve social issues through its products and services. Medium-term plan: Sales of JPY105bn in FY03/19 Operating profit of JPY5bn Net debt/equity ratio of 1.5x First year earnings came in above plan Earnings in FY03/17, the first year of the company s 2018 medium-term plan, came in above plan (see Earnings section). The company determined in its latest assessment, conducted at end FY03/17, that no major changes were needed to its core policy laid out a year earlier. It believes it is making progress toward its FY03/19 targets. Details as of the May 2016 earnings release Portfolio Aiming for sustainable growth, the new medium-term plan has two growth drivers: the Residential and Solutions businesses. In FY03/16 the Residential business accounted for around 60% of sales, and Solutions, 25%. In FY03/19, Cosmos Initia aims to have a more 15/23

balanced portfolio, with sales of roughly 50% and 41% respectively. Earnings volatility is relatively high in the Residential business, while the Solutions business is relatively stable. Cosmos Initia is cautious about the direction of the real estate market, as concerns mount that the prices of newly built condominiums may be approaching a peak. For this reason, the company is becoming more selective about the location of its properties and focusing on adding value. The company s operating environment is changing (see the chart below), such as an increase in the number of properties that it sells and the aging of these properties, as well as the nation s declining birthrate and more women joining the workforce. Cosmos Initia sees these developments as an opportunity to expand sales and profits. 2018 medium-term plan: segment sales and operating profit (JPYmn) FY03/16 % of total FY03/17 YoY % of total FY03/18 Est. YoY % of total FY03/19 Est. % of total Sales 87,022 100.0% 92,366 6.1% 100.0% 98,000 6.1% 100.0% 105,000 100.0% Residential 52,711 60.6% 49,884-5.4% 54.0% 39,200-21.4% 40.0% 52,500 50.0% Solutions 22,036 25.3% 28,502 29.3% 30.9% 46,900 64.5% 47.9% 43,400 41.3% Construction works 9,611 11.0% 10,953 14.0% 11.9% 11,000 0.4% 11.2% 10,000 9.5% Overseas 3,726 4.3% 4,032 8.2% 4.4% 1,900-52.9% 1.9% 0 0.0% Consolidation adjustment -1,064-1.2% -1,007 - -1.1% -1,000-0.7% -1.0% -900-0.9% Operating profit 3,480-4,084 17.4% - 4,400 7.7% - 5,000 - Residential 2,936-2,128-27.5% - 1,200-43.6% - 3,000 - Solutions 1,384-2,799 102.2% - 4,500 60.8% - 3,300 - Construction works 333-360 8.1% - 370 2.8% - 400 - Overseas businesses 176-305 73.3% - 40-86.9% - 0 - Consolidation adjustment -1,351 - -1,510 - - -1,710 - - -1,700 - OPM Operating profit 4.0% 4.4% 4.5% 4.8% Residential 5.6% 4.3% 3.1% 5.7% Solutions 6.3% 9.8% 9.6% 7.6% Construction works 3.5% 3.3% 3.4% 4.0% Overseas businesses 4.7% 7.6% 2.1% - 2018 medium-term plan: assumptions FY03/16 FY03/17 FY03/18 Est. FY03/19 Est. Residential Newly built condominiums sales (unit) 896 744 555 550~600 Newly built detached houses (lot) 90 68 61 Approx. 90 Retail brokerage, renovation works (JPYmn) 957 769 925 Approx. 1,200 Existing condo purchase and resale (renewal) (unit) 159 317 195 400~450 Solutions Investment property sales (JPYmn) 6,470 14,087 31,600 Approx. 2,600 Subleasing condominiums (unit) 8,980 9,352 9,875 Approx. 12,000 Subleasing building area (sqm) 34,337 na na Approx. 68,000 Commercial real estate brokerage (corp. brokerage) (JPYmn) 553 565 600 Approx. 1,000 Real estate consulting (unit) 3,087 na na 5,000 Business environment according to the company On-going changes in demographics and household size Increasing needs for solution regarding vacant houses, reconstruction, and major repairs Renovation of pre-owned houses and buildings Renovation and retail market continuing to expand Increasing needs for asset management and inheritance tax saving measures Increasing needs for sustainability and disaster management Promoting energy conservation and anti-earthquake reinforcement Increasing awareness of safety and security (Earthquakes/construction anxiety) 2020 Tokyo Olympics Increase in inbound overseas travelers and tourism Residential business New condos: Cosmos Initia plans to concentrate on properties in convenient areas that are close to the city center, while slightly smaller than before. It aims to continue new interior designs and to distinguish itself by offering home decoration and do-it-yourself decoration services that allow customers to realize their interior design ideas. Sales: company forecast of JPY52.5bn in FY03/19 (JPY52.7bn in FY03/16) Unit sales target: 550 600 (896) Company assumption for GPM: mid-16% range (20.4%) *boom in prices to peak: Cosmos Initia assumes that prices are near a peak as purchasers loan repayment rates (income/loan ratio) are over 20% New detached houses: Cosmos Initia plans to concentrate on urban single-family homes. It plans to distinguish itself via floor plans and products. For example, considering changes to family composition and an increase in households with both partners working, the company plans to increase focus on convenience and have 16/23