Notice on Consolidation of Shares and Revision of the Number of Shares Constituting One Unit of Stock

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1 [Translation] May 15, 2012 To Whom It May Concern Sadao Yoshino, President, Director Heiwa Real Estate Co., Ltd. 1-10, Nihonbashi Kabuto-cho, Chuo-ku, Tokyo (Code No. 8803) First Section of Tokyo, Osaka and Nagoya; Fukuoka and Sapporo Notice on Consolidation of Shares and Revision of the Shares Constituting One Unit of Stock Heiwa Real Estate Co., Ltd. ( the Company ) hereby announces that it has resolved to submit a proposal for a consolidation of shares and a revision of the number of shares constituting one unit of stock to the 92nd Ordinary General Shareholders Meeting to be held on June 27, 2012, as outlined below. I. Consolidation of Shares 1. Purpose of the Consolidation of Shares The Japanese Stock Exchanges Conference has announced an Action Plan for Consolidation of Trading Units calling for the consolidation of the share trading unit of all listed domestic shares into one hundred (100) shares. In an effort to promote this plan, the Conference has decided to consolidate trading units into two kinds, namely, units of one hundred (100) shares and units of one thousand (1,000) shares, by April 1, The Company, which is a listed company, respects this decision and intends to promptly adopt it in the belief that the consolidation of trading units will enhance the convenience of investors and other market participants. We will consolidate shares of our common stock (consolidating five shares into one share) and revise the number of shares constituting one unit of stock from five hundred (500) to one hundred (100), in order for the investment unit to conform to the amount that the Tokyo Stock Exchange has demonstrated to be most conducive to enhance liquidity and the easy entry of investors.

2 2. Outline of the Consolidation of Shares (1) Details of the consolidation of shares 1) Class of shares to be consolidated: Shares of common stock 2) Consolidation ratio: Consolidation of five shares into one share 3) shares to be decreased shares issued before the consolidation 200,299,980 (as of March 31, 2012) shares shares to be decreased by the consolidation 160,239,984 shares shares issued after the consolidation 40,059,996 shares Note: shares to be decreased by the consolidation is the number (theoretical value) obtained by multiplying the number of shares issued before the consolidation by the consolidation percentage. 4) Effect of the consolidation of shares The consolidation of shares decreases the number of shares issued to one-fifth of the current number, but the net asset value per share increases fivefold because the net assets and other conditions remain unchanged. The number of shares constituting one unit of stock shall be revised from five hundred (500) to one hundred (100) simultaneously with the consolidation of shares, which will change the share trading unit to one hundred (100) shares, one-fifth of the current number. Therefore, there will be no change in the opportunity to trade shares or in the shareholder rights (including voting rights) after the consolidation of shares. Shareholders holding shares of less than one unit may conduct procedures for the purchase or sale of shares of less than one unit. (2) Measures to be taken for any fraction of less than one share When any fraction of less than one share is caused by the consolidation of shares, the fractional shares shall be sold or purchased based on Article 234 or Article 235 of the Companies Act and the proceeds from the sale or purchase shall be distributed to the shareholders who held the fractional shares in proportion to their ratios. Upon the effectuation of the consolidation of shares, shareholders holding less than five shares at present will lose the opportunity to hold them. Procedures for the Purchase of shares of less than one unit and the Sale of shares of less than one unit are available for these shareholders. These shareholders may contact their securities companies or the transfer agent of the Company for inquiries.

3 (3) shareholders to be decreased by the consolidation of shares Constitution of the Company s shares (As of March 31, 2012) shareholders and number of shares issued shareholders (ratio) shares issued (ratio) shareholders 28,741 (100.0%) 200,299,980 (100.0%) Shareholders holding less than five (one to four) shares 1,875 (6.5%) 4,375 (0.002%) Shareholders holding five shares or more 26,866 (93.5%) 200,295,605(99.998%) Note: Out of the 1,875 shareholders holding less than five shares, 962 shareholders (who collectively hold 2,544 shares) have not informed the Company of their whereabouts and have accordingly been unreachable by post or for dividend receipt for more than five years. (4) Conditions for consolidation of shares The consolidation of shares shall be subject to approval and resolution to be made at the Company s 92nd Ordinary General Shareholders Meeting to be held on June 27, 2012 on the agenda item regarding the consolidation of shares and the agenda item regarding partial amendment to the Articles of Incorporation and the revision of the number of shares constituting one unit of stock. II. Revision of Shares Constituting One Unit of Stock 1. Purpose of the revision of the number of shares constituting one unit of stock This revision is proposed for the purpose of avoiding any impairment of shareholder rights (including voting rights) or any obstruction of convenience in trading by shareholders as a result of the consolidation of shares in response to the Action Plan for Consolidation of Trading Units described in the above I-1 Purpose of the Consolidation of Shares. 2. Details of revision of the number of shares constituting one unit of stock The number of common stock shares constituting one unit of stock shall be revised from five hundred (500) to one hundred (100). 3. Conditions for revision of the number of shares constituting one unit of stock The revision of the number of shares constituting one unit of stock shall be subject to approval at the Company s 92nd Ordinary General Shareholders Meeting to be held on June 27, 2012 on the agenda item regarding partial amendment to the Articles of Incorporation regarding the revision of the number of shares constituting one unit of stock, etc., and the agenda item regarding the consolidation of shares.

4 III. Schedule for Consolidation of Shares and Revision of Shares Constituting One Unit of Stock May 15, 2012 (Tuesday) Resolutions to be made by the Board of Directors June 27, 2012 (Wednesday) Resolutions to be made by the Ordinary General Shareholders Meeting (tentative) October 1, 2012 (Monday) Effective date for the consolidation of shares (tentative) October 1, 2012 (Monday) Effective date for the revision of the number of shares constituting one unit of stock (tentative) (For reference) 1. The effective date for the consolidation of shares and the revision of the number of shares constituting one unit of stock is October 1, 2012 (Monday), as mentioned above. Shareholders and investors are advised, however, to take note of the following practical matters to be handled in relation with the transfer procedures after the trading of shares: September 25, 2012 (Tuesday) Final day for trading with the current number of shares constituting one unit of stock (five hundred shares) September 26, 2012 (Wednesday) The number of shares constituting one unit of stock of the Company will be revised from five hundred (500) to one hundred (100). The effect of the consolidation of shares will be reflected in the share price. October 1, 2012 (Monday) The consolidation of shares and the revision of the number of shares constituting one unit of stock will take effect. 2. Notice on Partial Amendment to the Articles of Incorporation is disclosed separately today in relation with this notice. Attached materials: (For reference) Q&A on Consolidation of Shares and Revision of the Shares Constituting One Unit of Stock.

5 (For reference) Q&A on Consolidation of Shares and Revision of the Shares Constituting One Unit of Stock Q1: What is the significance and purpose of the consolidation of shares and revision of the number of shares constituting one unit of stock? First of all, we will explain the revision of the number of shares constituting one unit of stock. The number of shares constituting one unit of stock, which is provided by the Companies Act, is the share trading unit used by exchanges and the unit of voting rights used at general shareholders meetings. At present, the number of shares constituting one unit of stock of the Company is five hundred (500). Under the revision of the number of shares constituting one unit of stock, such shall be revised to one hundred (100). The number of shares constituting one unit of stock is to be revised under a plan adopted by the Japanese Stock Exchanges Conference. Ultimately, the trading unit for all listed domestic shares is to be consolidated to hundred (100) shares under this plan. As an interim revision, however, the Conference first plans to consolidate the trading units into two kinds, namely, units of one hundred (100) shares and units of one thousand (1,000) shares, by April 1, This revision is intended to enhance convenience for investors and other market participants, and to strengthen the international competitiveness of the Japanese securities market. The Company, which is a listed company, therefore intends to make revisions in accordance with the plan. Meanwhile, the securities listing regulations of the Tokyo Stock Exchange stipulate that the price of the trading unit desirable for investors is between 50,000 yen and 500,000 yen. With a simple revision of the number of shares constituting one unit of stock to one hundred (100), the price of the trading unit of the Company s shares would become less than the recommended price. Therefore, a consolidation of shares is to be implemented concurrently with the revision of the number of shares constituting one unit of stock. A consolidation of shares is a combination of a given number of shares into a smaller number. In this consolidation of shares, five shares are to be consolidated into one share in accordance with the revision of the number of shares constituting one unit of stock from five hundred (500) to one hundred (100), one-fifth of the former. Q2: Will the consolidation of shares have any effect on the asset value? There will be no difference in the Company s asset and capital after the consolidation of shares. Therefore, apart from other factors such as the stock market trends, there will be no effect on the asset value of shares held by shareholders. The number of shares a shareholder holds will decrease to one-fifth of the current number. For example, 1,000 shares held by a shareholder will decrease to 200 shares and the net asset value per share will increase fivefold. The share price will also increase, in theory, to five times the current price.

6 Q3: What will be the number of shares held and the number of units of stock? When the consolidation of shares and the revision of the number of shares constituting one unit of stock are simultaneously put into effect, the number of shares held will decrease but the number of units of stock will remain unchanged, as follows. Before After shares held units of stock shares held units of stock fractional shares Case No. 1 3, Nil Case No Nil Case No Case No Nil 24 Nil 0.6 Case No. 5 4 Nil Nil Nil 0.8 Any fraction of one share arising as a result of the consolidation of shares (hereinafter referred to as fractional share ) shall be collectively sold or purchased by the Company and the total proceeds from the purchase and sale shall be paid to shareholders in proportion to their ratios. Any number less than five (one, two, three, or four) shares held by a shareholder before the consolidation come into effect shall become fractional shares. The payment amount (hereinafter referred to as proceeds from fractions ) will be remitted together with the interim dividend early in December. Q4: Will any decrease of shares held bring about a decrease of the dividend amount to be received? The number of shares a shareholder holds will decrease to one-fifth of the current number. However, the dividend per share is scheduled to increase fivefold, hence the total dividend amount the shareholder receives subject to the consolidation of shares will remain unchanged unless other factors such as change of operating results arise. No dividend will be paid for fractional shares caused by the consolidation of shares. Note that proceeds from the fractional shares shall be paid as described in Q3. Q5: Will the shareholder special benefit plan be discontinued? The Company sends special gifts to shareholders holding one unit of stock or more at the end of September every year. Because the number of units of stock will remain unchanged, as explained in Q3, shareholders will still be entitled to receive benefits under the shareholder special benefit system.

7 Q6: Does a shareholder need to go through any procedures? No special procedures are required. If a shareholder wishes to sell shares of less than one unit or purchase shares of less than one unit to make a full unit of stock, there are procedures for the purchase or sale of shares of less than one unit. Such a shareholder may contact your securities company or the transfer agent (*) of the Company. Q7: Is there any method to avoid the fractional share treatment? Shareholders can avoid the disposal of fractional shares by using the system for the purchase or sale of shares of less than one unit before the consolidation of shares. This will be explained using the cases of Q3, as follows. shares held Sale Purchase Case No Sell 2 shares Buy 498 shares Case No Sell 123 shares Buy 377 shares Case No. 5 4 Sell 4 shares Buy 496 shares To learn the specific procedures, you may inquire with your securities company. If you do not have an account at a securities company, you may inquire with the transfer agent (*) of the Company. The time limit for the procedures to avoid the disposal of fractional shares depends on the procedures required for the individual case. You are requested to inquire with your securities company or the transfer agent (*) of the Company. Q8: Will the system for the purchase or sale of shares of less than one unit be available for any shares of less than one unit caused by the consolidation of shares? The system for the purchase or sale of shares of less than one unit will be available even after the consolidation of shares. Shares described in Case No. 2 and Case No. 4 in Q3 above correspond to this situation. A shareholder in Case No. 2 may request the Company either to sell 40 shares or to purchase 60 shares. A shareholder in Case No. 4 may request the Company either to sell 24 shares or to purchase 76 shares. For specific procedures, you may inquire with your securities company or the transfer agent (*) of the Company. Q9: Is there any effect on the minimum investment amount or minimum sales amount of shares? Take, for example, the closing price of 184 yen at the Tokyo Stock Exchange on May 11, 2012 before the consolidation of shares. In theory, the share price per unit of stock after the consolidation of shares shall be as follows due to the consolidation of five shares into one. Consequently, there is no effect on the minimum investment amount or the minimum sales amount of shares, as follows. Before the consolidation of shares: 184 yen/share x 500 shares = 92,000 yen After the consolidation of shares: 920 yen/share x 100 shares = 92,000 yen

8 Q10: Is there any influence on margin transactions? General margin transactions negotiated between investors (shareholders) and securities companies are handled differently depending on the securities company. For details, please ask your securities company. Q11: What is the schedule? The schedule is as follows: June 27, 2012 (Wednesday) September 25, 2012 (Tuesday) September 26, 2012 (Wednesday) October 1, 2012 (Monday) October 1, 2012 (Monday) Early December, 2012 Resolutions to be made by the Ordinary General Shareholders Meeting The results will be mailed after the resolutions are made. Final day for trading with the current number of shares constituting one unit of stock (five hundred shares) The number of shares constituting one unit of stock of the Company will be revised from five hundred (500) to one hundred (100). The effect of the consolidation of shares will be reflected in the share price. Effective date for the consolidation of shares Effective date for the revision of the number of shares constituting one unit of stock The sale of shares after the consolidation of shares and the sale or purchase of shares of less than one unit of stock are available on this date and thereafter. Proceeds from fractions will be remitted to the shareholders entitled thereto, together with the interim dividend. (*) The Company s Transfer Agent: JAPAN SECURITIES AGENTS, LTD. Call Center Tel: [open from 9:00 to 17:00 on weekdays, available in Japanese only] This agent is also the account management institution for special accounts.