AD Works' "U square Takadanobaba" Renovation Case Study Featured in MLIT's Collection of Case Studies for Promoting Renovation of Small and Medium-sized Buildings

"U square Takadanobaba" 1st floor A.D.Works Co., Ltd. (Headquarters: Chiyoda-ku, Tokyo, President and CEO: Toshiya Suzuki, hereinafter "ADW"), a subsidiary of A.D.Works Group Co., Ltd. (Headquarters: Chiyoda-ku, Tokyo, President and CEO: Hideo Tanaka, hereinafter "ADWG") that promotes the income-producing real estate business, carried out renovation work, and "U square Takadanobaba", currently operating as a flexible office, was adopted and featured in the collection of case studies for the "Model Investigation Project for Promoting Value-up Renovation Investment in Small and Medium-sized Buildings" (hereinafter "this Collection of Case Studies"), which was solicited by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) as an initiative to promote ESG investment in the real estate sector. We will continue to actively strive to solve social issues through our income-producing real estate business. 1. Initiatives by MLIT to promote value-up renovations of small and medium-sized buildings Recently, small and medium-sized buildings constructed during the bubble era in Japan have been aging and are reaching the time for renovation. However, due to the aging of owners and anxiety about securing funds, sufficient renovation and rebuilding have not progressed, raising concerns about an increase in vacancies and a decline in market liquidity as a social problem. If such buildings are left unattended, it may lead to external diseconomies such as an increase in vacant buildings in the future. Under these circumstances, it is difficult to improve real estate value through conventional maintenance and repairs alone, and there is a risk that properties will become difficult to trade on the market even if the owner wishes to sell them. Therefore, there is a demand to promote value-up renovations that enhance value. In particular, renovations that address social issues such as the environment are expected to have effects such as rent increases and securing stable tenants, but because cost-effectiveness and specific methods are unclear, investment decisions are difficult, and widespread adoption has not progressed. Therefore, in response to these challenges, the Ministry of Land, Infrastructure, Transport and Tourism conducted a model investigation project and collected and analyzed cases of value-up renovations of small and medium-sized buildings. This collection of case studies organizes and visualizes how renovations should balance responses to social issues and value enhancement, as well as their effects, and is expected to contribute to promoting future investment and revitalizing the market. 2. Adoption of cases recognized for enhancing value through addressing social issues In producing this collection of case studies, an external committee selected cases from among those publicly solicited that met the following conditions: (1) Renovations that address social issues and aim to enhance the value of real estate. (2) Regarding social impact, it must be possible to explain externally using a logic model based on guidance. (3) The renovation is expected to improve property value through rent increases, shorter vacancy periods, etc., and can explain the strengthening of relative competitiveness. (4) Property conditions and renovation plans (funding, design, leasing, operation, etc.) must be highly versatile content that can serve as a reference for other businesses. The case of "U square Takadanobaba" renovated by ADW was adopted in recognition of its consideration of uses based on regional characteristics, aiming to contribute not only to well-being and productivity improvement but also to regional revitalization and community formation as a flexible office, and its acquisition of Green Building Certification (LEED® O+M GOLD), demonstrating high environmental performance. Being featured in this collection of case studies indicates that the value-up of single-building income-producing real estate, which ADW has worked on as its core business, balances social impact and real estate value enhancement, and is positioned as a highly versatile model that serves as a reference for other businesses. We will continue to actively engage in solving issues toward the realization of a sustainable society through our business activities. [Reference: "Model Investigation Project for Promoting Value-up Renovation Investment in Small and Medium-sized Buildings" Collection of Case Studies] For details on the renovation cases, please see this collection of case studies. Model Investigation Project for Promoting Value-up Renovation Investment in Small and Medium-sized Buildings