Q u a l i t y B r a n d s Drive
Su s t a ined Va l u e C r e a t i o n
Annual Report 2009
Year ended March 31, 2009

The Mitsui Fudosan Group
Philosophy
Mitsui Fudosan Co., Ltd. and its subsidiaries are the largest
comprehensive real estate group in Japan. The Mitsui FudosanGroup deploys strong cash flow generated by a diversified
portfolio of properties and businesses to create value by
providing real estate solutions to end users, originators andinvestors. The Group constantly develops new business models
to remain at the forefront of its changing markets, and iscurrently executing New Challenge Plan 2016, a long-term
management plan that is designed to generate additional
expansion, sustainable earnings growth and strong shareholder
returns. Proud to contribute to society, the Mitsui Fudosan Group
has a strong record of reducing environmental loading andcontributing to a higher quality of life.

Evolution andValue Creation

A Profitable and Growing
Mitsui Fudosan Group2.65 million

2.5%

18,000 units

square meters of leased officebuilding floor space(March 31, 2009)vacancy rate of Tokyo
metropolitan area officebuildings, nonconsolidated(March 31, 2009)equivalent inventory ofland for housing(March 31, 2009)

Note: Graphs and charts in this Annual Report are all years ended, ending or as of March 31.

Contents

Seeking to link diverse values and coexist inharmony with society, as symbolized by the
Mitsui Fudosan logo
, we will work tofoster social and economic development andbenefit the environment.

By bringing knowledge and experience
together in diverse ways, we seek to advancethe real estate business and create newvalue, both at home and abroad, appropriate
to global changes in social environments andmarket structures.

We seek to create a profitable and growing
Mitsui Fudosan Group, acting honestly andfairly to realize the capabilities of the entire
organization.

Consolidated Financial Highlights

2

An Interview with President and CEO
Hiromichi Iwasa

3

Quality Brands Drive
Sustained Value Creation

9

Corporate

10

Office Buildings

11

Retail Facilities

12

Residential

13

Urban Renaissance

14

Asset Management

15

Review of Operations

16

Mitsui Fudosan at a Glance

16

Holding Business18

Trading Business

22

Management Business26

Corporate Governance

28

Management Team

31

Corporate Social Responsibility

32

Financial Section

35

Corporate Information75¥2.8 trillion

40%

in assets under management(March 31, 2009)

compound annual growth innet income per share over the
past five years

1Consolidated Financial Highlights
Mitsui Fudosan Co., Ltd. and its Subsidiaries
Years ended March 31, 2009, 2008 and 2007

Percent change

Thousands of
U.S. dollars(Note 1)

2009

2008

2007

2009/20082009

For the Year
Revenue from operations
Operating income
Net income
Cash dividends¥1,418,946
171,547
83,572
19,324¥1,360,023
179,282
87,37815,812¥1,229,194
161,843
75,214
8,794

4.3%
(4.3)
(4.4)
22.2

$14,445,139
1,746,381
850,779
196,772

At Year-End
Total assets
Total net assets
Interest-bearing debt

¥3,758,387
999,860
1,733,559¥3,634,489
992,0031,550,421¥3,294,190
963,214
1,258,427

3.4%
0.8
11.8

$38,261,091
10,178,764
17,647,959

Percent change

U.S. dollars (Note 1)

Millions of yen
except per share amounts

Yen

Per Share Data
Net income (Basic)
Cash dividends

¥

95.1
22.0

Key Indicators
Net income/revenue from operations (%)
Total net assets/total assets (%)
Debt/equity ratio (times) (Note 2)
ROA (%) (Note 3)
ROE (%) (Note 4)

¥

99.4
20.0

5.9
26.6
1.77
5.06
8.57

¥

6.4
27.3
1.60
5.53
9.12

85.5
14.0

(4.3)%
10.0

$

0.968
0.224

6.1
29.2
1.33
5.50
8.35

Notes: 1. U.S. dollar amounts are translated from yen at the rate of ¥98.23 = U.S.$1.00, the approximate exchange rate at March 31, 2009.
2. Debt/equity ratio = Interest-bearing debt / (Net assets – Subscription rights to shares – Minority interests)
3. ROA = (Operating income + Non-operating income) / Average total assets over the period
4. ROE = Net income / (Net assets – Subscription rights to shares – Minority interests, Average over the period)

Revenue from Operations

Operating Income andOperating Margin

Net Income and
Net Income per Share

(Billions of yen)(Billions of yen; %)(Billions of yen; %)1,500
1,360.0
1,200

1,111.4

1,159.3

1,418.9

200

20
179.3

1,229.2

161.8

160

87.4

171.5
16

137.5
900

120

80

83.6

75.2

75

12.1

115.8

13.2

13.2

56.5

12

11.9
600

100

50

10.4

99.4
85.5

8

95.1

100

67.5
28.7

300

50

25

40

4
34.7

0

2005

2006

2007

2008 2009(Years ended March 31)

0

2005

2006

2007

2008 2009(Years ended March 31)

0

0

2005

2006

2007

2008 2009(Years ended March 31)

Forward-Looking Statements
This report contains forward-looking statements that are based on management’s estimates, assumptions and projections at the time of publication. Some factors, which include, but are notlimited to, the risks and uncertainty associated with the worldwide economy, competitive activity and fluctuations in currency exchange and interest rates, could cause actual results to differ
materially from expectations.

20An Interview with President and CEO Hiromichi Iwasa

Economic conditions arelikely to remain challenging
over the next few years.
However, since 2003 Mitsui
Fudosan has been employing
a highly effective strategy offlexibly combining its threecore businesses of holding,
trading and management to
respond to changes in themarket. We are responding
quickly to the changes in ouroperating environment as we
a i m f o r g ro w t h o v e r t h emedium-to-long term during
the second half of New
Challenge Plan 2016.
Hiromichi Iwasa
President and Chief Executive Officer

Moving to the Second Half of New Challenge Plan 2016

Combine the flexibility of our three core businesses to
respond to market changes
Create opportunities to advance the Challenge Planover the next few years
Embrace the external environment positively,
target medium-term growth3

Revenue increased but earnings decreased during the year ended March 2009. What factors
influenced performance?
Revenues and earnings increased in the holding business, which generates comparatively stable revenues.
However, we comprehensively recognized loss on devaluation of real property for sale in the tradingbusiness to provide for future losses. This was a primary factor that caused earnings to decrease somewhat
year on year.
inventory in the sales of housing segment. As a result,operating income in the trading business decreased 15.9
percent, or ¥9.2 billion, year on year. In the
management business, the temporary dysfunction of thereal estate investment market resulted in a substantial
decrease in revenues from corporate brokerage. This andother factors caused operating income in the
management business to decrease 15.3 percent, or ¥8.0
billion, year on year.
The primary causes of the year-on-year decrease inearnings were the trading business, which was affectedby the changing market environment, and corporate
brokerage operations in the management business,
which was impacted by the turmoil caused by thefinancial crisis. However, the stable earnings of theholding business, along with fee income from assets
under management in the management business andsolid earnings among Group companies in the property
management business, form a stable earnings base that
supports the Mitsui Fudosan Group as a whole.
Our strategy of responding to our changing markets
by integrating the core holding, trading andmanagement businesses is a Mitsui Fudosan Group
strength because it creates an earnings structure that is
stable and highly profitable despite the impact of theconstantly changing external operating environment.

During fiscal 2008, the year ended March 31, 2009,
financial and capital markets became dysfunctional
following the bankruptcy of Lehman Brothers in
September 2008. This affected the real economy andtouched off a global recession. The effect on the realestate market in Japan was significant. In thisenvironment, revenue from operations increased 4.3
percent, or ¥58.9 billion, year on year to ¥1,418.9
billion. Operating income decreased 4.3 percent, or ¥7.7
billion, year on year to ¥171.5 billion. Net income
decreased 4.4 percent, or ¥3.8 billion, year on year to¥83.6 billion. While our overall performance was below
the level of the previous fiscal year, our results wereadequate for a leading company given the challenging
environment.
In the holding business, office building GranTokyo
North Tower (Chiyoda-ku, Tokyo) made a significant
contribution to performance in its first full year ofoperation following its completion in fiscal 2007. In
addition, we increased rents at existing office buildings.
As a result, operating income in the holding businessincreased 11.5 percent, or ¥9.4 billion, year on year. In
the trading business, we comprehensively andconservatively estimated losses on properties due to theapplication of the lower-of-cost-or-market method,which resulted in a loss on devaluation of real property
for sale totaling ¥15.8 billion, mainly on housing

New Challenge Plan 2016: A Clear Focus on Sustained Value Creation
New Challenge Plan 2016

(Years to March 31, Billions of yen)

Operating Income

115.8

91.2

63.3

Management Business

33.1

2005
4.30
1.86
4.26

52.3

47.5

40.9

2006
4.92
1.40
7.31

48.5

48.8

2007
5.50
1.33
8.35

* ROA = (Operating income + Non-operating income) / Average total assets over the period** ROE = Net income / (Net assets – Subscription rights to shares – Minority interests, Average over the period)

4

171.5

81.8

57.7
34.3

ROE** (%)

179.3

75.5

44.3

Trading Business

Debt/equity ratio (times)

161.8

60.0

Holding Business

ROA* (%)

137.5

2008
5.53
1.60
9.12

44.3

2009
5.06
1.77
8.57

An Interview with President and CEO Hiromichi Iwasa

Mitsui Fudosan is taking a conservative approach in the currently challenging real estatemarket. How long will challenging conditions continue, and where do you think the market
is heading? In particular, what is your outlook for the real estate investment market, which
was hit hard by the financial crisis?
Japan’s real economy will bottom out and begin a moderate recovery during the second half of fiscal 2009
and fiscal 2010. This will lead the real estate market to recovery, although over a different time frame. In
particular, the rejuvenation of the Japanese real estate investment trust (J-REIT) market will be the catalyst
for the recovery of the real estate investment market.
I believe that Japan’s economy will bottom out andbegin a moderate recovery during the second half offiscal 2009 and fiscal 2010. Moreover, the impact of thereal economy on the real estate market will differ bybusiness segment.
The office building leasing market has become morechallenging as corporate performance has deteriorated.
This market is comparatively stable and exhibits lessvolatility than the real economy. Going forward, we willneed to keep a close watch on this market.
The financial crisis affected the real estate investment
market the most. Dysfunction in financial and capital
markets has caused a sharp drop in the J-REIT, private
fund and other sectors of the real estate investment
market. For J-REITs, the credit crunch since the start of
the financial crisis has caused the debt financing market
to deteriorate, and the equity financing environment has
become challenging as investment unit prices havedecreased. Therefore, the rejuvenation of J-REITs is aprerequisite and a priority because they excel inproviding liquidity and deepening the pool of investors,
which are among the keys to overcoming dysfunctional
financial markets and revitalizing the real estate market
as a whole.
Actions taken for J-REIT financing have included
support for fund procurement from the Development
Bank of Japan and discussions between the government
and private sector on establishing a fund to support the
REIT market. In addition, legal and tax measures havebeen introduced to smooth mergers and consolidation.
These policies have served to reduce refinancing risk.
Going forward, they are expected to energize the realestate market by helping with the restructuring of the
REIT market. In the current cycle, this restructuring will,in turn, re-establish interest in J-REITs by driving market
development. Rejuvenated J-REITs will then re-energize
private funds, thus stimulating direct investment bycorporations and institutional investors. This is directly
related to the overall recovery of the real estate
investment market.
The future recovery of the real estate investment
market will be one key to expansion in internal demand.
The current environment is conducive to urban
renaissance and regional redevelopment projects, andthe Mitsui Fudosan Group will promote the projects it isexecuting and link them to stimulating sales toinstitutional investors.
On the other hand, prices have rapidly adjusted in
the housing sales market. Immediate customer needdrives housing requirements, whether it is the desire fora home among younger people or couples raisingchildren, or the desire among Japan’s Baby Boomer
generation for an urban residence. In addition, newneeds are emerging in the senior demographic. The
desire to purchase among customers has been impacted
by issues such as higher costs and the problems
unethical companies caused by falsifying earthquakeresistance data. However, demand has stabilized andpronounced needs exist. Moreover, the Japanese
government has enacted economic policies that include
support for homebuyers, such as broad tax reductions
on mortgages, measures that smooth the mortgage
process, and reduced gift taxes for the acquisition of ahome. Since January 2009, visitors to model homes andthe number of homebuyers concluding purchase
contracts has increased, and inventories appear to be
decreasing. Thus the market is expected to move towarda recovery in the second half of fiscal 2009.

5

What are Mitsui Fudosan’s management strategies for each of its business segments fromfiscal 2009 as the company moves into the second half of New Challenge Plan 2016?
We will continue integrating our three core businesses to respond flexibly to changing markets. The
challenging operating environment is presenting opportunities for Mitsui Fudosan to strengthen
competitiveness, and I want them to be catalysts for major progress in the latter stages of New Challenge
Plan 2016.
Holding Business: Strengthen the earnings foundation.
Investment

Development

Earnings

The holding business generates steady revenues andis the core business of the Mitsui Fudosan Group, but
this market is becoming increasingly challenging. We
continue working to maintain strong relationships withtenants and strengthen proposals, and we are also reengineering operations management to enhance cost
controls and ensure clear marketing policies.
In addition, our pipeline will not be affected by shortterm market gyrations. We seek stable, long-term
revenues as we carefully select projects, and intend tocontinue making sustained, focused investments.
In the office building business, we have beenpromoting improvement in asset quality and strong
relationships with tenants. This has minimized
fluctuation in revenue and contributed to solid portfolio
returns. As a result, our vacancy rate is consistently
lower than the market average, which we expect tocontinue in the future.
Our pipeline is replete with projects underdevelopment, centered on our program of redeveloping
existing assets in outstanding urban locations. We will
carefully determine market trends to focus on projects in

Own

DisposalAssets underManagement

Holding

Trading

Management

Rent Revenues

Capital Gains

Fee Income

which we can fully benefit from our competitive
advantages as we continue to execute our program ofsustained investment.
The retail facilities business has been affected by
reduced consumer spending due to the recession. The
external environment is challenging and conditions are
unpredictable, but projects are increasingly separatingstronger from weaker players.
A core strength of the Mitsui Fudosan Group is its
customer-centered approach to creating and
Office Vacancy Rate Trends
managing retail facilities. LaLaport regionalmalls and Mitsui Outlet Parks, which are key(%)
components of our retail facility portfolio,
10.0
8.57%
(6/03)
demonstrate this strength as they perform
8.0
strongly in a challenging operating
6.05%
5.8%
environment. Incorporating retail facilities in(3/09)(9/03)
6.0
our rental property portfolio is particularly
2.89%(3/08)
beneficial in a difficult environment because
4.0
2.65%
2.5%
(12/07)they provide portfolio diversity. We will
(3/09)
1.3%
2.0
continue to invest selectively in new projects
0.9%(3/08)(6/06)and steadily begin operating new facilities, and0.0will also remain aggressive in taking advantage
3/02 9/02 3/03 9/03 3/04 9/04 3/05 9/05 3/06 9/06 3/07 9/07 3/08 9/08 3/09
of good opportunities that emerge.
Market (Large-scale buildings in five wards of central Tokyo)
Mitsui Fudosan (Tokyo metropolitan area/parent company)
Data: Miki Shoji Co., Ltd.

6An Interview with President and CEO Hiromichi Iwasa

Trading Business: In sales of housing to individuals,
develop competitive products in metropolitan Tokyo. In
sales of properties to investors, we predict a rapid
recovery of the real estate investment market throughthe rejuvenation of J-REITs.

The impact of the financial crisis was most evident insales of properties to investors. The dysfunction offinancial and capital markets significantly reduced
liquidity in the real estate investment market. We are
generating appropriate returns on the projects we havedeveloped, and by no means are engaging in panic
selling in an unsettled market. This has caused ourbalance sheet to expand temporarily. However, theseassets are products that will provide appropriate returns
to the investors that purchase them, and holding themfor the time being presents no problems at all.
Our performance forecast for fiscal 2009 isconservative and only includes projects that we believed
to be highly probable at the start of the fiscal year.
Going forward, we will carefully monitor the recovery
and rejuvenation of the real estate investment market
with the aim of improving the profitability of current
projects and generating sales. At the same time, we will
evaluate the location, profitability and competitivenessof new projects in selectively making investments.
In sales of housing to individuals, Group company
Mitsui Fudosan Residential Co., Ltd. is integrated fromconstruction to sales. It offers a portfolio of brands thatare tailored to a diverse array of customer needs andlifestyles.

In fiscal 2009, we will continue to emphasize highvalue-added products, and forecast that earnings will
increase year on year absent the comprehensive
recognition of loss on devaluation of real property forsale in fiscal 2008.
Going forward, the Mitsui Fudosan Group will focus
stable, sustained investment on high-value-added
products that make the best use of its strengths.
Management Business: Continue to generate growthin the fee businesses of asset and property management
while re-engineering the brokerage business.

CapitalThe management business is contributing toconsolidated performance as component businesses
such as asset and property management generate solid
fee income from their growing portfolios of assets undermanagement. Highlights of fiscal 2008 included thelaunch of several private funds by Mitsui Fudosan
Investment Advisors, Inc. that attracted strong
participation by institutional investors despite taking
place in the period of greatest turbulence following theLehman Brothers bankruptcy. The ability to succeed atlaunching funds in the current environment
demonstrates the Mitsui Fudosan Group’s extensive
market trust and performance.
On the other hand, the recession has created serious
problems for the brokerage business. In the brokeragebusiness of Mitsui Real Estate Sales Co., Ltd., we areusing the challenging environment as an opportunity to
implement structural reforms by carrying out reengineering that goes beyond simply
Trading Business (Sales to Investors)
reducing costs. Similar to needs for
new housing, needs for existing
Win back investor trust and stimulate recovery of the real estate investment market throughhomes are rooted in actual demand,
rejuvenation of the J-REIT market.
Real estate investment
and price adjustments and the broadly
Real estate market
Financial markets
marketbased measures that support home
Debt
Rejuvenation of J-REIT
sales are also relevant to purchases ofOperatingpg ppropertiespmarketLoan
existing homes. We will make these
Brokering
Positive growth cycle
trends work for us with the aim ofInvestment corporation bonds
getting the brokerage business backLow-operatingpg ppropertiesp
Private fund activation
onto a growth vector.
EquityValue up

Positive growth cycle

REIT investment unitpg ppropertiesp
Non-operating
Develop

Real estate investment
market recovery

Fund investment
Real estate direct investment

7

An Interview with President and CEO Hiromichi Iwasa

How will Mitsui Fudosan maintain and enhance its financial position and access toexternal funding?
We will continue to maintain our sound finances.
As of March 31, 2009, interest-bearing debt totaled¥1,733.5 billion, and the debt/equity ratio (DER) was
1.77 times. While we have not achieved the New
Challenge Plan 2016 target DER of 1.4 times, thecurrent DER is at a sound, comparatively conservative
level.
Over the past year, turmoil in financial markets madefunding difficult even for some large companies. Given
this environment, the Mitsui Fudosan Group’s ability toaccess funding without problems demonstrates theeffectiveness of our financial strategy. Our strategy

under New Challenge Plan 2016 is to maintain our
sound finances. The financial crisis has shaken the realestate investment market, mainly causing our turnover
to decrease in sales of properties to investors. Ourleverage has increased slightly as a result, but going
forward we will maintain stable leverage.
In addition, we will remain selective in making
investments. At the same time, we will fully consider
returns in staunchly maintaining the soundness of our
finances.

Mitsui Fudosan increased cash dividends for three consecutive years through fiscal 2008.
Can shareholders look forward to stable returns in the future?
We aim to further increase corporate value, and are working to enhance internal capital resources sothat we can fund investment in highly profitable businesses. Concurrently, we will consider the businessenvironment, our performance and our financial condition in moving to maintain or increase dividends.
Shareholder returns are a management priority, andwe will continue working to meet the expectations of
our shareholders. We aim to further increase corporate
value, and are working to enhance internal capital
resources so that we can fund investment in highly
profitable businesses. Concurrently, we will consider thebusiness environment, our performance and ourfinancial condition in moving to maintain or increase
dividends.
Under New Challenge Plan 2016, our policy is to link
dividends to consolidated performance, with a target
payout ratio of approximately 20 percent ofconsolidated net income for the time being.
In determining dividends for fiscal 2008, we
comprehensively considered the challenging
environment, our performance for the fiscal year, ouroutlook and the policy mentioned above. Annual cash
dividends per share for fiscal 2008 totaled ¥22.0, andthe consolidated payout ratio was 23.1 percent.
We forecast that cash dividends per share for fiscal
2009 will also be ¥22.0.

8Mitsui Fudosan intends to respond rapidly to change
to prepare for its next phase of rapid growth. We will
work to meet the expectations of all stakeholders, andcertainly our shareholders. We’re counting on yourcontinued support.

Cash Dividends per Share
(Yen)
25

22.0
20.0

20

14.0

15
10.0

10
7.0
5

0

2005

2006

2007

2008

(Years ended March 31)

2009Quality Brands Drive
Sustained Value Creation
OfficeBuildings

Residential

MITSUI
FudosanGroup

Corporate
Retail Facilities
Nippon Building Fund Management Ltd.

MITSUI F UDOSAN INVESTMENT ADVISORS, INC.

Urban Renaissance

Asset Management

Turmoil in global credit markets has created challenging conditions in Japan’s realestate market. Under New Challenge Plan 2016, the Mitsui Fudosan Group is deploying
its strong, high-quality brands to generate continued growth as a real estate solutions
partner.
This section discusses our quality brands, people and finances in each of ourbusinesses, and how they will drive our efforts to succeed in a difficult environment.
9Corporate

The Mitsui Fudosan corporate brand is built on strengths in ourbusinesses, a history of achievement spanning seven decades,
and intangibles such as outstanding people.

A Leading Real Estate Brand
Established in 1941, Mitsui
Fudosan has grown by
consistently creating new
MITSUI
segments in Japan’s real estate
Fudosanmarket. In 1957, we beganGroupdiversifying into the businesses ofreclaiming oceanfront land in
Chiba Prefecture and developing residential areas. In 1968,
we were the first in Japan to develop a skyscraper, and also
entered the business of developing single-family homes andmid-rise residential condominiums. In 1981, we entered theretail facility business by initiating development of top-class
shopping centers in Japan. More recently, in 2001 Mitsui
Fudosan was the first in Japan to list a real estate investment
trust (REIT) on the Tokyo Stock Exchange, while in 2007 we
opened Tokyo Midtown, a large-scale, mixed-use property
developed using an innovative urban redevelopment model.
The Mitsui Fudosan brand therefore stands for growththrough innovation and commitment to excellence.
Mitsui Fudosan has become a leading Japanese realestate brand using abusiness model ofbalanced growth in
three corebusinesses: holding, trading and management. With
employees who are among the best in the business and apowerful financial structure, Mitsui Fudosan is well able tofully exercise the strengths of its brands to respond to
customer needs as a real estate solutions provider.
Moreover, Mitsui Fudosan has also built strong
relationships with the three core real estate customer
groups. These are the end users who are tenants of ouroffice buildings and retail facilities and the buyers of thehomes we develop; the investors who commit capital to realestate markets; and the originators who own property andrely on us for consulting and management services.

10

Above: On-site inspectionof LaLaport Iwata
Right: Retail facility development presentation

Great People Create Value
Mitsui Fudosan has creative employees withdiverse values and a pioneering spirit. They work
as individuals to enhance their professional
knowledge and capabilities, and as members ofteams to create added value. As a result, they
have acquired a solid reputation for being able tounderstand what customers truly want and thendelivering it. Our employees also contribute to
the Mitsui Fudosan corporate brand because
their behavior demonstrates a commitment to
the highest levels of corporate ethics and legal
compliance.

A Reliable Financial Brand
Global capital markets also trust the Mitsui
Fudosan brand. The global financial crisis of 2008
created serious problems for many participants inJapan’s real estate markets, but Mitsui Fudosan
maintained its excellent access to funding
because of its powerful financial structure,high-value-added business model and solid
creditworthiness. We are therefore in an
excellent position to take advantage ofopportunities for future growth.

Quality Brands Drive Sustained Value Creation

Innovation, quality and a commitment to tenant satisfaction
give Mitsui Fudosan brand leadership in the office building
market. This leadership creates value.

OfficeBuildings

The Superior Mitsui Fudosan Brand Supports
Steady Office Building Occupancy
The Workers First Brand Keeps
Tenant Satisfaction HighThe Workers First concept is a powerfulbranding tool that Mitsui Fudosan employs at its
office buildings. It guides us in raising the qualityof our products and services under the themes ofcreating a diverse network of comfortable,
sophisticated office buildings, placing workers
first, and reliable building management. It also
drives Mitsui Fudosan to create properties thatfeature outstanding information technology andsecurity and reduced environmental loading,complemented by amenities such as comfortablepublic spaces and harmonious landscape design.
The Workers First brand offers new value totenant companies and creates strong
relationships with the surrounding
neighborhood.

The Kasumigaseki Building:Consistently a Leader
Constructed in 1968, the Kasumigaseki
Building was Japan’s first skyscraper and became
a symbol of rapid economic growth. Mitsui
Fudosan demonstrated its leadership byincorporating open surroundings into an
innovative earthquake-resistant design to create
an urban oasis. We were first to achieve abuilding over 100 meters tall in Japan, more thantriple the height that was formerly possible. Thus
the age of the skyscraper began in Japan. As
many as ten thousand people visited theobservation deck of the completed building eachday, often spending time at the building’s
restaurants and shops as well. Today, we
continue to build on our strategy of creating
innovative, mixed-use properties that are bothenjoyable and profitable.

As symbolized by the Kasumigaseki Building, which was
Japan’s first skyscraper, Mitsui Fudosan has built a strong
presence by providing innovative office space generation
after generation. Strong relationships with landowners,
originators and local governments help us to acquire land inprime urban locations, which we have used to build ahigh-quality portfolio in Tokyo’s central business districts.
We further enhance portfolio profitability by redeveloping
buildings and replacing assets.
While the recession has made conditions in the officebuilding leasing market more challenging, the quality of ourportfolio and brand equity have kept occupancy at individual
properties high, in turn keeping our overall vacancy ratecomparatively low.
Moreover, the Mitsui Fudosan Group strengthens its
brand by providing services such as asset, project andproperty management that are recognized for excellence.
The Mitsui Fudosan Group’s comprehensive capabilities
range from managing revenue and improving asset value forowners to operating buildings and providing tenant andleasing services.
We are committed to putting tenants first. The tenantsatisfaction surveys we regularly conduct – and vacancy rates
that are lower than the market average – consistently indicatethat our office building brand offers exceptional value.
Constant renewal keeps
the Kasumigaseki Building,shown in 1968 (left)
and today (right), on the
cutting edge.

11Retail
Facilities

Our retail facility brands are powerful because they create
spaces where customers can make new discoveries and havenew experiences, which helps tenants succeed.

Diverse and Profitable
Retail Facility Brands
In 1981, the Mitsui Fudosan Group opened LaLaport
Funabashi (now LaLaport Tokyo-Bay), which is still one ofJapan’s largest retail facilities. Since then, we have remainedin step with changing regional and customer needs inproposing retail facilities that do not simply sell things, butinstead are places that grow in tandem with customer
lifestyles and their local communities and provide theopportunity for visitors to spend quality time.
Mitsui Fudosan delivers retail facility brands that are instep with various
customer segments.
LaLaport is a regionalmall brand offering
expansive shopping areas. Mitsui Outlet Park is a factoryoutlet brand that offers shopping as well as fun and exciting
surroundings. COREDO Nihonbashi is representative of oururban retail facility brands that create luxurious city
shopping experiences, while LaLagarden exemplifies ourneighborhood retail facility brands. This broadly based brandportfolio offers widely ranging appeal, which we continue toenhance in working to maintain and raise the strength andcompetitiveness of our retail facility brands.
Moreover, the Mitsui Fudosan Group operates its retailfacilities based on a philosophy of protecting theenvironment to ensure a bright future. In addition toactivities that contribute to society, our retail facilities also
conduct the Eco Hello program and other activities incooperation with customers that help protect theenvironment.

The Eco Hello program in action at
Arcakit Kinshicho, which received
a prestigious Local Community
Contribution SC Award.

12

Mitsui Shopping Park:
A Powerful New Brand

In January 2009, Mitsui Fudosan grouped 13
LaLaport, LaLagarden and other facilities, including
retail facilities scheduled to open in fiscal 2009,
within the new Mitsui Shopping Park brand. The
objective of this brand is to popularize and clarify
the brand identity of Mitsui Fudosan Group retailfacilities. We will work energetically to improve thetangible and intangible aspects of these retailfacilities, which will include a branded Mitsui
Shopping Park credit card.

Branded Tenant Support Services
Support Satisfaction - and Growth

Growing Together is the concept that defines
the Mitsui Fudosan Group’s retail facility
business. It involves growing along withcustomers, tenants and host neighborhoods tobecome an integral part of the community.
Growing Together expresses our desire tocontribute to the wealth and affluence of thecommunities we serve. It guides our ongoingcooperative initiatives with customers andtenants to make the people who visit our retailfacilities feel at home.

Quality Brands Drive Sustained Value Creation

Residential

We will continue to earn customer appreciation for thehigh-value-added properties we provide.

A Park Series Brand forEvery Customer Segment
Leading-edge proposals foroutstanding condominiums that arelike no other because of their superior
location and uncompromising quality.
High-grade urban condominiums withbeautiful exteriors and attention todetail supporting brand quality.
Ultra-high-rise condominiums thatoffer open lifestyles and arelandmarks of their neighborhoods.
Large-scale condominiums that create
their own environment.
High-quality condominiums withsuperior housing functions anddesign.
Family-oriented condominiums withintelligent space perfectly suited tourban living.
Vacation home condominiums atresorts in Japan.
Single-family urban homes designed
to be the best in the neighborhood.

Comprehensive Capabilities
Meet Diverse Needs
The Mitsui Fudosan Group has deployed its
comprehensive strengths to offer a full lineup of

Quality and Class Differentiate
Our Residential Brands
Mitsui Fudosan Residential Co., Ltd. is at the center ofour housing brands. This Group company is a one-stopsource of housing that is integrated from development andsales to after-sales service. Today’s rigorously selective
consumers appreciate the excellent location and quality ofthe properties the Mitsui Fudosan Group provides. The
strength of our brands has supported annual sales of over
5,000 units of housing, and we steadily exercise ouradvantages in the housing market.
Quality matters. We collect feedback on the performanceof every new condominium unit we sell, and have
implemented quality management procedures for our midand high-rise residential buildings to ensure high quality. We
also have our own security design standards for thecondominium security systems we install because we believethat safety and peace of mind raise customer satisfaction.
Mitsui Fudosan Residential uses its extensive development
expertise and experience and reflects the opinions ofcustomers in developing properties. A key goal is to createneighborhoods replete with greenery that get better withage as it builds on its strength in areas such as urban
properties and large-scale, mixed-use buildings that create
entire neighborhoods.

Housing Sales
Mitsui Fudosan Residential Co., Ltd.
Mitsui Fudosan Housing Service Co., Ltd.

housing-related products and services. We deploy

Accommodations(Rental Housing & Hotels)
Mitsui Fudosan Co., Ltd.
(Accommodations Department)
Mitsui Fudosan Housing Lease Co., Ltd.
Mitsui Fudosan Hotel Management Co., Ltd.

Group expertise to provide the optimum
solutions, whether clients are moving, ordering a
new home or remodeling. Our brands have

Changing Homes
Mitsui Fudosan Real Estate Sales Co., Ltd.

received enthusiastic support because they
encompass high-quality housing and services that

Optimal partnerin serving customer
housing andlifestyle needs

Resorts
Mitsui Fudosan Co., Ltd.
(Resort Business Promotion Department)
Mitsui Fudosan Resort Co., Ltd.

respond to a diverse array of customer needs.
Home Construction
Mitsui Home Co., Ltd.

Remodeling
Mitsui Home Remodeling Co., Ltd.

13

UrbanRenaissance

Mitsui Fudosan is an expert at transforming sleepy
urban neighborhoods into centers of business,
commerce and culture. Our urban renaissance brand is asource of long-term value.

A Leading Brand in
the Renaissance of Tokyo

An Unparalleled Recordof Achievement
Mitsui Fudosan’s record of achievement inurban redevelopment began with theKasumigaseki Building in 1968. In 1980, we
completed construction of the Sun City
redevelopment project under the concept ofcreating a neighborhood that got better withtime, while in 1993, we pioneered waterfront
redevelopment in Tokyo with the massive
Okawabata River City 21 project. Recently, we
have focused on preservation, rehabilitation andcreation in redeveloping existing properties,

Mitsui Fudosan is an industry-leading brand in the urban
renaissance business, as exemplified by Tokyo Midtown. We
took care to both create value and preserve the history of theproperty and the large number of trees on it in redeveloping
this parcel of government-owned land. Moreover, Tokyo
Midtown was developed under a hybrid business model thatcombined Mitsui Fudosan’s core holding, trading andmanagement businesses. It incorporates sophisticated urban
functions in creating a unique neighborhood under thethemes of symbiosis with the surrounding area, superior
design and art. In addition, we added outstanding value in aunique large-scale, mixed-use property that only Mitsui
Fudosan could achieve, with features including outstanding
environmental compatibility because of our commitment topreserving the trees on the property. Going forward, Mitsui
Fudosan will continue working to capture redevelopment
business opportunities in
Nihonbashi, Marunouchi,
Hibiya, Gotanda, Iidabashi andother prime Tokyoneighborhoods to develop
office buildings, retail facilities
and housing in large-scaleurban renaissance projects.

exemplified by Nihonbashi Mitsui Tower andTokyo Midtown completed in the 2000s. Eachproject we complete becomes the springboard to
our next opportunity in a cycle of transforming
our record of achievement into future growth.

Mitsui Fudosan =Nihonbashi Redevelopment
The Nihonbashi Area Development Project
exemplifies highly capital-efficient redevelopment
and reconstruction of existing assets. We
completed the Nihonbashi Mitsui Tower in 2005
and are now moving forward with the
Muromachi East District Development Project andother plans in which we are transforming existing
assets into highly competitive, state-of-the-art
buildings.
The Muromachi East District Development
Project involves integrating five separateneighborhoods into a single large-scale
development encompassing office space, retailfacilities, rental housing and a multipurpose
auditorium. We are focusing on preservation,
rehabilitation and creation in revitalizing
Nihonbashi as a center for business, commerce,
culture and exchange.

Muromachi East District Development Project(Completion scheduled in stages, FY2010-FY2013)14

Quality Brands Drive Sustained Value Creation

Mitsui Fudosan is the number-one brand in Japan’s realestate investment market because of our skill in creating
value from real estate. Investors trust our broadly based
ability to meet diverse requirements.

Our J-REIT Brands Offer
Consistently Strong Returns

Generating stable earnings from assets undermanagement is central to achieving the targets
for the management business under New
Challenge Plan 2016. In September 2001, Mitsui
Fudosan became the first company in Japan tolist a J-REIT on the Tokyo Stock Exchange, Nippon
Building Fund Inc. Today, Mitsui Fudosan is
involved in three J-REITs – Nippon Building Fund,
Nippon Accommodations Fund Inc., and Frontier

AssetManagement

Proven Effectiveness as
an Asset Management Brand
The real estate paradigm has changed as the separationof ownership and management has accelerated. Mitsui
Fudosan has positioned itself as a provider of services thatcreate value from real estate. We are now generating
opportunities for growth by offering asset and property
management services for operating properties, development
management services to move properties into the operatingstage, and other services such as consulting. The asset
management business employs the Mitsui Fudosan Group’s
deep and specialized knowledge, expertise and network toprovide investors with excellent opportunities and deliver
superior asset management services. We have built a systemfor providing seamless, end-to-end solutions to diverse
investor needs, including three J-REITs, private funds, andjoint investment schemes. In addition, expansion in fee
income through growth in assets under management isenhancing earnings as we fortify our number-one position in
Japan’s real estate investment market.

Real Estate Investment Corporation – throughtheir asset management companies, with assets
under management of ¥1,070 billion.

A Respected, Broadly Capable
Advisory and Support Brand

Planning session at Mitsui Fudosan Accommodations Fund Management Co., Ltd.

In 1997, Mitsui Fudosan led the industry inforeseeing that the real estate businessenvironment was changing and that the realestate investment market would grow inimportance, and therefore moved proactively toestablish Mitsui Fudosan Investment Advisors,
Inc. With more than ¥1,060 billion in assets
under management, Mitsui Fudosan Investment
Advisors is a potent asset management brandthat generates stable management fees that
contribute to overall Group earnings.
15

Mitsui Fudosan at a Glance

Mitsui Fudosan Creates Value
Holding Business

Share of New Office Buildings in
Portfolio (by floor area)*

The holding business consists of leasing office buildings
and retail facilities. Mitsui Fudosan continues to enhance
the quality of assets in its portfolio to improve competitiveness and profitability. Our strategy centers on
rapidly bringing highly competitive and profitableproperties on stream.

24%

17%

2%
2,260

2,650
(Thousand m2)

2003

2009

(Years ended March 31)● Newly constructed**● To be rebuilt/reconstructed* Total floor area of buildings owned and masterleased** “Newly constructed” includes buildings constructedwithin the past 5 years

Trading BusinessTrading Business Operating Income(Billions of yen; %)60

The trading business consists of sales of housing toindividual end users and the development and sale ofrental condominiums, office buildings and commercial
properties to investors. Our goals include strengthening
profitability. A highly competitive product mix is astrength in sales of housing to individual end users.
Relationships with a broad range of investors and highquality assets are strengths in sales of properties toinvestors.

27.0

40
26.9

28.2

25.8
13.6

16.5

19.3

18.6

20
30.8
18.8

22.3

20.4

0

2004 2005 2006 2007 2008 2009
(Years ended March 31)■ Operating income from sales of housing to end users■ Operating income from sales of properties to investors

Management Business

Expansion in Assets under Management& Fee Income (Billions of yen)
24.3

4,000

The management business encompasses property andasset management for J-REITs and private funds. Our
strategy centers on expanding assets under management and increasing fee income. This business contributes to increased ROE. Subsidiaries play a key role ingenerating fee income from providing solutions.

18.3

3,000

19.0

1,000

2,150
10.2

2,350

1,800

15

10

1,440
5

0

0

2004 2005 2006 2007 2008 2009
(Years ended March 31)■ Assets under management (left scale)● Fee income (right scale)1620

2,700 2,800

15.6
2,000

20.0

25

Under New Challenge Plan 2016, Mitsui Fudosan is adapting to changing markets and emerging
customer needs. Over the coming decade, we will strengthen our core businesses while embracing
new opportunities to create value for stakeholders as we evolve in tandem with accelerating external changes. Building outward from a strong base in Japan, Mitsui Fudosan intends to participate
fully in the globalization of real estate markets.
Operating Income(Billions of yen)

¥75.5 billion

2007¥81.8 billion

2008¥91.2 billion

2009

Operating Income(Billions of yen)

¥57.7 billion¥48.8 billion

2007¥48.5 billion

2008

2009

Operating Income(Billions of yen)

¥47.5 billion

2007¥52.3 billion¥44.3 billion

2008

2009

(Years to March 31)

17

Review of Operations

Holding BusinessLeasing of office buildings andretail facilities

Operating Income(Billions of yen)
100

91.2
81.8

80

Portfolio Growth Strategy:
Further improvement in asset quality
with strong management skills

60

75.5
60.1

60.0

63.3

40

20

0

2004 2005 2006 2007 2008 2009
(Years ended March 31)

Share of New Office Buildings in Portfolio(by floor area)*24%(Newly constructed)**Moreover, results during fiscal 2008, the year ended
March 2009, benefited from the full-year contribution of
GranTokyo North Tower (Chiyoda-ku, Tokyo), which is partof a redevelopment project adjacent to Tokyo Station.
Moreover, Mitsui Fudosan is making clear progress in
its New Challenge Plan 2016 strategy of improving its

2,650

portfolio by both selling and exchanging assets. As of

thousand m2

2%

March 31, 2003, our office building portfolio encom-(To be rebuilt/
reconstructed)

passed 2.26 million square meters, with 17 percent in new(As of March 31, 2009)* Total floor area of buildings owned and masterleased /** “Newly constructed” includes buildings constructedwithin the past 5 years.

properties. As of March 31, 2009, we held 2.65 million
square meters in our portfolio, with 24 percent in newproperties built within the past five years, 14 percent built
within the past six to ten years, and 2 percent undergoingreconstruction.
Office building operations are predicated on stable

A Portfolio of High-Quality Assets

head offices of Japan’s leading corporations are located in

facilities. Over the past several years, we have consistently

Mitsui Fudosan properties, and approximately 85 percent

improved competitiveness and profitability by raising theof holding business revenues comes from properties in thequality of assets in our portfolio. Projects to redevelop

five wards of central Tokyo. Holding business assets areexisting assets generate strong ROI and have been a core

therefore a source of stable revenue and earnings for theemphasis. These include the Muromachi East District

Mitsui Fudosan Group.

Development Project (Chuo-ku, Tokyo), the first phase of

Going forward, Mitsui Fudosan will closely monitor

which is scheduled for completion in fiscal 2010. Urbanchanges in tenant demand due to factors including corpo-

renaissance projects are another means we use to enhance

rate integration and mergers.

asset quality. These include flagship projects such as the
Marunouchi 1-chome Reconstruction Project (Chiyoda-ku,
Tokyo), also scheduled for completion in fiscal 2010.

18

long-term relationships. A significant percentage of the

The holding business leases office building and retail

ta

Lin

e

Kanda
StationMitsui Seimei Otemachi Bldg
Marunouchi 1-chome
Reconstruction Project(scheduled for FY2010) (A)Otemachi(Shinnihonbashi

Muromachi East District
Development Project
Phase I: FY 2010
Phase II: scheduled for FY2013(B)

Nihonbashi 1-chome Bldg

MitsukoshimaeeOtemachii

Nihonbashi
Tokyo

en

Tok

yo

Tokyo
Station

ns
hin

To
k

Yurakucho
Hibiya Station

ou

chi

Kasumigaseki

JR

run

aid

Yurakucho

Ma

KyobashioS

HibiyaSakuradamon

Kayabacho

Nihonbashi 2-chome Project(provisional name)

ka

Tokyo

e

cho Lin

u
Yurak

Lin

Exp
res

sw

ay

Toe

ak
As

on
om
nz ineHa L

usa

Imperial Palace

Nijyubashimae)

Ningyocho

OtemachiSanshin Bldg &Hibiya Mitsui Bldg
Reconstruction Project

JR ukaskoo
Y LineNihonbashi
Mitsui Tower &Mitsui Main Building

Lin
e

Mi
Takebashi

Kanda

ya

e

Hib
i

Lin

JR Y
Keih amanotin-T
oho e Line
ku L
ine
JR T
oho
ku J
oets
u Sh

ai

Chiyoda Line

Toz

inka
nsen

Main Office Buildings in Mitsui Fudosan’s Portfolio(Area around Tokyo Station)

Ginza
1-chomeTakaracho

GranTokyo North Tower
Hacchobori

JR Ke
HacchoboriLin

iyo Lin

e

e
Ginza

ne

Ginza

nz
Gi

Uchisaiwai
ToranomonaLi

Shintomicho
Higashi Ginza
Tsukiji■ Newly constructed■ To be rebuilt/
reconstructed■ Existing■ Planned

Marunouchi 1-chome Reconstruction Project(Map A) (Office building / Completion scheduled for FY2010)

Muromachi East District Development Project(Map B) (Completion scheduled in stages, FY2010-FY2013)

19

Review of Operations

Stable Rent at Quality Properties
The holding business centers on top-grade properties
in superior locations. These properties are generally nearfull occupancy, and generate stable rents. Mitsui Fudosan
maintains stable, long-term relationships with its tenants,
which in conjunction with programs to raise asset quality
has limited volatility in rent revenues. Future initiatives toenhance the profitability of our asset portfolio will include
strengthening sales capabilities and tenant satisfaction
while re-engineering to reduce costs.

Profitable Growth from Retail Facilities
Mitsui Fudosan has been developing retail facilities formore than 25 years since opening LaLaport Funabashi (nowLaLaport Tokyo-Bay) in 1981. We use the management
experience we have acquired and relationships with morethan 1,700 tenant companies to offer a wide range of
shopping options, from regional shopping malls and neighborhood retail facilities known as lifestyle parks to outlet
parks and urban retail facilities. Moreover, we continue toexpand shopping malls that we own and manage in areas
with good potential to generate profitable growth.
Shopping malls scheduled to begin operating during fiscal
2009 include the 50,000m2 LaLaport Iwata and the
60,000m2 LaLaport Shin-Misato, which together will represent a major addition to the retail facilities business. In thisbusiness, fixed-term leaseholds and mixed-use development
enhance investment efficiency and build synergy with residential and office building operations.
Mitsui Fudosan’s strengths in leasing retail facilities are
its broad menu of facility formats, its development capabilities, and the ability to operate retail facilities directly using
the management resources of the Mitsui Fudosan Group.
The key to operating at full occupancy is building strong
relationships with the stores that are tenants. In future projects, Mitsui Fudosan will prudently select investments that
present the best opportunities for profitable growth while
continuing to add appeal to its lineup so that its retail facilities are attractive to both tenants and the people who shopat their stores.
GranTokyo North Tower(Office building / Completed in October 2007)20

Holding Business

LaLaport Tokyo-Bay

A Prudent Approach to Growth(Retail facilities / Opened in April 1981)

Our office building pipeline remains strong, and we willsoon begin operating several large-scale properties. These
includes Higashi Gotanda Square (Shinagawa-ku, Tokyo),which we completed during fiscal 2008, and the
Marunouchi 1-chome Reconstruction Project andMuromachi East District Development Project Areas 2-2
project slated for completion in fiscal 2010.
The current leasing environment is challenging, but the
Marunouchi 1-chome Reconstruction Project is alreadyleased to Sumitomo Mitsui Banking Corporation. We expectthat our sales capabilities will support strong occupancy
rates just as they have during soft leasing markets in thepast.
We will also complete a number of properties in prime
locations in fiscal 2011 and beyond. While we are approaching future projects prudently, we intend to continue investing in the outstanding projects that support future growth.
Our retail facility portfolio contains high-quality assets
concentrated in the heavily populated Tokyo metropolitan
area. Many of our retail facilities are linked with trains andother forms of public transportation, which helps makethem environmentally sound. Projects in our pipeline as ofMarch 31, 2009 included the large-scale LaLaport Iwata,
which began operating in June 2009, and LaLaport ShinMisato, which we will open in September 2009. We will
employ our Growing Together concept in working to ensure
strong relationships with tenants that support full occupancy. As in the case of our office building portfolio, we are
prudently setting high hurdle rates for new projects. We
intend to steadily begin operating the excellent projects weare now building while looking for outstanding opportunities to enhance our portfolio.

Mitsui Outlet Park Marine Pia Kobe
(Retail facilities / Opened in October 1999)

21

Review of Operations

Trading Business
Sales of housing to end users
and sales of income-producing
properties to investors

Operating Income(Billions of yen)
80

57.7

60
48.8
44.3

Portfolio Growth Strategy:
Ample land bank and competitive lineup

40
32.2

48.5

34.3

20

0

2004 2005 2006 2007 2008 2009
(Years ended March 31)

Sales of Housing to End Users:
Stable Results from Value-Added Brands
Our competitive product lineup has supported solid
sales and operating margin in the housing business in adifficult environment. In fiscal 2008, high-end, valueadded properties and large-scale, high-rise properties
accounted for approximately 70 percent of sales. Thishighly competitive product mix is a core Mitsui Fudosan
strength, and a key factor supporting strong results relative to the market. Moreover, Group company Mitsui
Fudosan Residential Co., Ltd. integrates the entire residential value chain from land acquisition through sales, which
has helped us to understand customer needs and wants
and efficiently supply the properties that increasingly selective consumers desire.
Mitsui Fudosan Residential assimilates customer needs
by offering numerous brands that are in tune with customer lifestyles. However, Mitsui Fudosan Residential’s
greatest strength is that it is integrated from planning andconstruction through sales, which enables it to provide
highly competitive properties that meet customer needs.
Moreover, the high-quality management and operation
services it provides once customers move into their new
condominiums complement Mitsui Fudosan Group renovation and residential brokerage operations in the future.
Mitsui Fudosan’s strategy of concentrating on superior
properties in metropolitan Tokyo will lend strength to thisbusiness despite the projected decrease in Japan’s popula-

THE TOYOSU TOWER
22(Housing for sale / Completed in March 2009)

tion, because people continue to relocate to Tokyo.
Moreover, several changes in the tax code favoring theresidential real estate business are expected to support
sales of housing to end users.
Operating income from sales of housing to end users istrending downward. Going forward, however, Mitsui
Fudosan will focus resources on properties such as Park
Court Akasaka The Tower (Minato-ku, Tokyo) that contribute strongly to overall performance in order to maintain its position of leadership in this segment.
While competition to acquire land abated to someextent during fiscal 2008, land costs remain an importantfactor determining profitability. The Mitsui Fudosan Grouphas excellent relationships with many business partners,
and is also aggressively participating in redevelopment
projects that allow us to use our reliability and experienceto acquire business opportunities with comparatively lessPark City Hamadayama(Housing for sale / Completion scheduled for FY2009)

competition. We have therefore been able to use our own
channels to build up a land bank for approximately 18,000
units as of March 2009.

Park Court Azabujuban The Tower(Housing for sale / Completion scheduled for FY2010)23

Review of Operations

Sales of Properties to Investors:
Rejuvenation and Recovery of the
J-REIT Market
The financial crisis has had a profound impact on salesof properties to investors as dysfunction in financial andcapital markets has caused a sharp drop in the liquidity of
the real estate investment market. The credit crunch that
resulted from the financial crisis has greatly affected
J-REITs, causing difficulties in procuring debt financing anddeclines in J-REIT investment unit prices that inhibit equity
financing. Restoring the J-REIT market is crucial to overcoming the current adverse conditions and rejuvenating
the real estate investment market.
One of our core strengths is our relationships with abroad range of investors through channels including thethree J-REITs for which we provide asset management andthe numerous private funds, investment corporations andother vehicles managed by Mitsui Fudosan Investment
Advisors, Inc. During fiscal 2008, overall revenues in thisbusiness rose as increased sales to investors of incomeproducing properties such as office buildings throughspecial purpose companies (SPCs) more than compensatedfor lower direct sales of properties to investors. Furthermore, while operating income in this business was downin fiscal 2008, the contribution to earnings from sales toinvestors has increased over the past several years, and we
expect it to continue to remain a fundamental componentof consolidated earnings over the course of New
Challenge Plan 2016.
An integrated value chain has been a key to our strategy
as investors that purchase properties typically turn to the
Mitsui Fudosan Group for property and asset management
services within the core maintenance business. Afterselling properties to funds, we typically receive themanagement contract as well. Our integrated value
chain therefore provides opportunities to benefit oncethe development process is complete.
Aoyama OM-SQUARE(Office building / Completed in July 2008)

A Solid Pipeline and an Intelligent
Level of Inventories
We have an inventory of land for approximately
18,000 units of residential housing, and are working on
several large-scale developments. These efforts will include
an integrated approach to create entire communities in aseries of large-scale projects that will incorporate commercial
24Trading Businessand other facilities to raise competitiveness. Our land bankis a source of competitive strength because we not only
acquire land on the open market, but also by continuously
participating in high-value-added redevelopment andurban renaissance projects. Our large-scale redevelopment
projects typically take time to complete, but they create
lasting, long-term value that provides strong support toour revenues and earnings. We intend to strengthen ourefforts to acquire high-quality redevelopment and urban

Mitsui Outlet Park Iruma (Retail facilities / Opened in April 2008)

renaissance projects while strengthening the profitabilityof Mitsui Fudosan Residential.
Mitsui Fudosan maintains ample inventories of properties for sale to investors, with ¥267 billion on the balance

Breakdown of Housing Sales /Sales to Investors of Inventory Assets*(Year ended March 31, 2009)

sheet and approximately ¥300 billion in SPCs. These areprime assets that are recognized as superior relative toSales to investors(non-operating)30%

the market. Our ability to supply properties to a broad
Housing sales
to individuals

range of investors other than J-REITs remains a core40%

strength. As of March 31, 2009, 40 percent of total realestate inventories on the balance sheet and owned

At the endof FY2008(approx.)through SPCs was designated for sales of housing to end

8% Sales to investors

users, and 60 percent was designated for sales of proper-

15%

ties to investors. Approximately 30 percent of these assets

Sales to investors(operating/office buildings)

were not generating cash flow. However, Mitsui Fudosan
expects these properties to be sold or in operation within
the next three years, and the current inventory situation in(operating/rental condominiums)

Sales to investors(operating/retail facilities)

Ratio of non-operating assets for sale to investors

End of Fiscal 2008: approx. 30%

no way approximates the difficult circumstances prevalentduring the unwinding of Japan’s bubble economy.

7%

End of Fiscal 2010: approx. 10% (estimate)* Consolidated basis, real properties for sale (including advances paid for purchases)
and assets held by SPCs for trading business

Model for Coexistence and Growth with REITs/Funds

NipponBuilding Fund

NipponAccommodations FundManagement

Frontier Real Estate
Investment Corporation

Sale

Mitsui Fudosan
Group
Management

Management
Sale

Private Funds Structured by
Mitsui Fudosan Investment Advisors

Sale

Corporations

25

Review of Operations

Management Business
Property management andasset management for REITs
and private funds and brokerage

Operating Income(Billions of yen)
80

60
52.3
47.5

Portfolio Growth Strategy:
Raise ROE with fee-based businesses

40.9

40

44.3

33.1
28.7
20

0

2004 2005 2006 2007 2008 2009
(Years ended March 31)

Core Strategy: Grow Assets underManagement and Fee Income
The management business entails property and asset

In addition to J-REITs, private funds also acquire properties
that the Mitsui Fudosan Group developed, and contract with
the Mitsui Fudosan Group for management services.

management for J-REITs and private funds, and brokerage

Revenues from subleasing and development management areservices. It has expanded assets under management andanother source of fee income.

increased fee income by emphasizing its role as a trustee andcontract service provider on behalf of investors and originators. Mitsui Fudosan has listed two J-REITs, and in fiscal 2007

Fee Income Enhances ROE

acquired the asset management arm of Frontier Real Estate

The management business is based on Mitsui Fudosan’s

Investment Corporation, a retail facility-specific J-REIT. Theseskills as a solutions provider, and the fee income it generates

J-REITs typically take delivery of properties developed bycontributes to higher ROE because it does not require an

Mitsui Fudosan, and are a significant source of asset andincrease in assets. A key to Mitsui Fudosan’s success in theproperty management fees. We have also expanded the num-

management businesses is the ability of subsidiaries to handle

ber of private funds we manage with the objective of stablea broad range of responsibilities covering the entire real

returns.

estate value chain. As a result, fee income has been steadydespite the impact of the financial crisis.

The Leader of Japan’s Residential Brokerage Market for 23 Years
Nationwide Brokerage Transactions by the Mitsui Real Estate Sales Network
35,000(Transactions)

30,00025,00020,000With a total of 31,084 brokerage transactions
throughout Japan in the year ended March
2009, the Mitsui Real Estate Sales network has
been number one for 23 consecutive years.
Transactions have remained above 30,000
per year for each of the six years since the year
ended March 2004.

15,00010,0005,000
026

Source: Ministry of Justice

87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09(Years ended March 31)

Akasaka Biz Tower (Office and retail facilities / Completed in March 2008)

Core Competencies Drive Fee Businesses
The brokerage services that Group company Mitsui Real
Estate Sales Co., Ltd. provides in the secondary market forresidential properties are central to the management business. Transaction volume in the Japanese secondary market
relative to the primary market is low compared to the corresponding balance in the U.S. and Europe, which indicatessolid future growth potential. The Mitsui Fudosan Group’s
Mitsui Rehouse brand has been number one in Japan’s brokerage market in terms of transaction volume for 23 consecutive years since 1986, although the turmoil in financial andreal estate markets has negatively affected this business. We
see the current difficult environment as an opportunity for reengineering to cut costs, raise responsiveness and reorient
sales and the earnings structure toward urban markets, andhave initiated a restructuring program.
Moreover, we are energetically enhancing our masterleasing and development management operations. A representative example is Mitsui Fudosan’s emergence as one of thelargest operators of retail facilities in Tokyo’s Ginza area. In
addition, we will strengthen asset redevelopment operations
in city centers and regional areas, and build on the synergythat exists with the holding and trading businesses in suchprojects.
The financial crisis has had a pronounced effect on thecorporate brokerage business, which is part of the management business. The recovery of this business is closely linked
to the rejuvenation of the real estate investment market,
which has contracted due to the financial crisis. Mitsui
Fudosan is therefore moving to prepare corporate brokerage
to meet needs as its markets recover.

Consistent Growth throughGroupwide Cooperation
Assets under management totaled ¥2.8 trillion as ofMarch 31, 2009. Fee income for the Mitsui Fudosan Groupfor fiscal 2008 totaled ¥24.3 billion. Group companies are an
important part of the value chain in the management business. While making overall Group management more efficient, we work to generate growth among Group companies
by expanding assets under management and providing services such as property management.

27

Corporate Governance
The Mitsui Fudosan Group aims for sound, transparent and efficient management in building
optimum corporate governance to earn the trust of all stakeholders. Measures to strengthen
its internal system are one part of achieving that goal.
Sound and Efficient Management
Mitsui Fudosan has adopted a corporate officer sys-

supervises internal control and risk management.
In addition, the Strategy Planning Special

tem to build a business execution framework appropriate

Committee, the Risk Management Special Committee

to its operating environment and business activities,

and the Environmental Special Committee function asenhancing the soundness and efficiency of managementadvisory and strategy coordination bodies to theby separating and strengthening management and execu-

Executive Management Committee. The Strategy

tive functions. In addition, the Group Corporate Officer

Planning Special Committee formulates and deliberates

System, in which corporate officers of both MitsuiGroup strategy and management plans and engages inFudosan and its Group companies share an equal status

risk management for Mitsui Fudosan and the Mitsui

and mission, was established to further strengthen Group

Fudosan Group in collaboration with the Risk

management.

Management Special Committee. The Environmental
Special Committee, which is responsible for reviewing
overall corporate social responsibility (CSR) efforts

Improving Transparency and Expanding the
Perspective of Management
Mitsui Fudosan invites and appoints outside directors

including environmental and social contributions, compiled the Mitsui Fudosan Group’s position on CSR and
its CSR themes.

in order to strengthen the oversight functions of thedirectors and enhance management transparency. The
outside directors provide input as necessary on the reasonableness and adequacy of Mitsui Fudosan’s decision
making.

Business Execution
The Board of Directors, comprising eleven members
including three outside directors, makes decisions on

Furthermore, Mitsui Fudosan has established thematerial issues of Mitsui Fudosan and supervises theAdvisory Committee, consisting of experts from businessstatus of the directors’ execution of business. The

and academia, to diversify the perspective of manage-

corporate auditors attend meetings of the Board ofment by providing comprehensive and forward-looking

Directors and provide opinion as necessary.

advice from an objective viewpoint. The committee met

In addition, Mitsui Fudosan has designated a special

twice in fiscal 2008, and each member offered valuable

director who may pass judgment on the urgent acquisi-

advice.

tion or sale of assets when so empowered by the Board of
Directors.
Mitsui Fudosan has adopted a corporate auditor sys-

Decision-Making

28

tem. The Board of Corporate Auditors, comprising five

The Executive Management Committee, consisting

corporate auditors, including three outside auditors,of executive managing directors and executive corporate

formulates auditing policies and determines duty

officers, meets weekly to deliberate and report on

assignments. It also receives reports and discusses material

important matters related to business execution. Full-items on audits conducted according to these policies andtime corporate auditors also attend meetings to stayassignments. The corporate auditors receive periodic

informed of important decision-making processes andreports from the Audit Department and the certified public

the status of business execution, and provide opinions as

accountant and exchange information in working toward

necessary. The Executive Management Committee alsomutual cooperation.

As an internal auditing structure, the Audit

Internal Control System Report pursuant to this evalua-

Department carries out regular audits of all businesstion. In addition, the auditors have audited the content of

departments and reports the results of its audits. It also

the report. Mitsui Fudosan will continue to evaluate

works to enhance the effectiveness of internal control by

upgrades and execution in working to strengthen its sys-

identifying and providing guidance to audited divisions on

tem of internal controls.

areas requiring improvement.
Mitsui Fudosan has concluded an auditing contract
with KPMG AZSA & Co. as its certified public accountant,which conducts appropriate audits as necessary in addition to the audit at the end of the fiscal year.
Mitsui Fudosan has no conflicts of interest with either
the certified public accountant or the employees of thecertified public accountant who audits the Company.

Risk Management
The Mitsui Fudosan Group believes that appropriately
handling various business risks and minimizing theirimpact on management are the foundation for achievingsound business activities and CSR objectives.
Under the Executive Management Committee, which
supervises overall risk management for Mitsui Fudosan
and the Mitsui Fudosan Group, the Strategy Planning

Internal Control System

Special Committee and Risk Management Special

While promoting the enhancement and operation ofCommittee manage business risk and administrative risk,a system of internal control, Mitsui Fudosan is strengthen-respectively, delineate and apprehend risk issues and pro-ing the system according to its basic policy on building an

pose response measures.

internal control system formulated in October 2006 to

In addition, the Crisis Management Subcommittee, as

ensure the appropriateness of business including the con-a subordinate body of the Risk Management Special

formance of business execution with laws and the articles

Committee, apprehends the circumstances of accidents orof incorporation.

other incidents that occur and determines response policies and other matters as necessary.

Response to Internal Control Report System
Based on the Financial Instruments andExchange Law (J-SOX)

Compliance
The Mitsui Fudosan Group promotes compliance that

The Internal Control Report System requires listed

extends beyond legal compliance and adherence to cor-companies to establish and evaluate internal control relat-

porate ethics, with a strong awareness of social norms

ed to financial reports, to prepare written reports, and toand principles, and the social responsibilities of a compa-

have auditors audit those reports. The Mitsui Fudosanny. With the establishment of the Mitsui Fudosan Group

Group set up a project team in April 2006 and has contin-

Compliance Policies as behavioral guidelines for all Groupued preparing for the system while integrating the opin-

executives and employees, the Group works to prevent

ions of outside specialists. The establishment of theviolations of laws and its articles of incorporation by

Operating Administration Department in April 2007 as a

upgrading the Compliance Rules and other internal rules

J-SOX supervisory department completed a structure toand establishing the Risk Management Special

enhance and operate internal control for the entire Group

Committee. Each Mitsui Fudosan Group company has

as well as to evaluate enhancements and operations.

also set up an Internal Consultation System on

During fiscal 2008, Mitsui Fudosan implemented

compliance for employees.

J-SOX, evaluated upgrades and execution, and madeimprovements. As a result, the Company believes its internal controls relevant to consolidated financial reporting asof March 31, 2009 are effective, and has issued its

29

Corporate GovernanceCompensation for Directors andCorporate Auditors

Other Significant Compensation
Mitsui Fudosan America, Inc., a consolidated subsidiary, paid ¥33 million in compensation to KPMG LLP, a

Compensation for directors and corporate auditors in themember of the same network as Mitsui Fudosan’s certi-

year ended March 31, 2009 was as follows:fied public accountant.

Title

NumberCompensation

Directors

8¥675 million

Content of Non-Audit Services of Submitting Companies

Corporate Auditors

7¥13 million

Including the Certified Public Accountant
Non-audit services including those of the certified

The components of compensation for independent auditors

public account to which Mitsui Fudosan paid compensa-

are as follows in the year ended March 31, 2009:tion consisted of advisory services related to the evalua-Contractual compensation for audit certification

tion of internal control of financial reports.

and related responsibilities¥402 million

Additional compensation

Policy for Determining Audit Compensation¥9 million

Mitsui Fudosan’s policy to determine audit compensa-

1. The above amounts include ¥212 million in directors’
bonuses and ¥32 million in stock options that directors

tion for the certified public accountant is decided throughreceived as part of their compensation.

rational consideration of factors including the number ofdays of auditing, the size of Mitsui Fudosan and special

2. Compensation received by the two external directors andcharacteristics of its business.

three external corporate auditors included in the above
totaled ¥48 million.

Corporate Governance Organization(As of June 26, 2009)

Shareholders’ Meeting
Board of Corporate Auditors(Auditors)
Corporate Auditors
Department

Board of Directors(Directors)

Certified Public Accountant(Audit Corporation)

Business Execution and Internal Control
Advisory
Committee

President and Chief Executive Officer
Corporate Officers

Executive Management Committee(Executive Managing Directors,
Executive Corporate Officers)
Committees

Audit Department
Departments/Divisions

30

Strategy Planning Special Committee
Risk Management Special Committee
Environmental Special Committee

Management Team(As of June 26, 2009)

Front row, from left: Mitsuhiro Matsumoto, Koichi Omuro, Hiromichi Iwasa, Tatsuo Soda, Yoshiki Kageyama
Back row, from left: Yoshiharu Hayakawa, Masanobu Komoda, Yoshiaki Iinuma, Seizo Kuramoto, Toshiharu Aoki, Mitsudo Urano

Members of the Board
President and Chief Executive Officer

Executive Vice Presidents

Senior Executive Managing Directors

Hiromichi Iwasa

Koichi Omuro
Tatsuo Soda

Mitsuhiro Matsumoto
Yoshiki Kageyama
Executive Managing Directors

Managing Directors(Outside Directors)

Toshiharu Aoki
Yoshiharu Hayakawa
Mitsudo Urano

Yoshiaki Iinuma
Seizo Kuramoto
Masanobu Komoda

Auditors
Senior Corporate Auditor

Corporate Auditor

Corporate Auditors (Outside Auditors)

Kazuichi Nagata

Masayuki Isobe

Akishige Okada
Keiu NishidaToshiaki Hasegawa

President and Chief Executive Officer

Executive Managing Officers

Executive Managing Officers

Managing Officers

Hiromichi Iwasa

Yoshiaki Iinuma

Takayoshi Saito

Yasuhiko Yamashiro

In charge of Sales Offices;
General Manager, Retail Properties Division

In charge of Kansai Head Office;General Manager, Kansai Head Office

Seizo Kuramoto

Hitoshi Saito

In charge of Accounting and Finance
Department, Operating Administration
Department, Information Systems
Department

In charge of International Department

General Manager, Office Building
Development Department (I),
Office Building Division;
General Manager, Mitsui Memorial
Hospital Redevelopment Project

Toshihide Ichikawa

Masatoshi Ozaki

In charge of Tokyo Midtown Development
Department, Resort Development
Department; General Manager,
Accommodations Business Division

General Manager, Real Estate Solution
Services DivisionCorporate Officers

Executive Vice Presidents

Koichi Omuro
In charge of Space & Environment InstituteTatsuo Soda
In charge of Audit Department

Masanobu Komoda
Senior Executive Managing Officers

Mitsuhiro Matsumoto
In charge of Housing Sales Business;
President, Mitsui Fudosan Residential Co., Ltd.

Yoshiki Kageyama
In charge of Architectural andConstruction Services Department;
In charge of Nihonbashi Urban Planningand Development Department;
General Manager, Office Building Division

In charge of Executive Secretarial Department,
Corporate Communications Department,
Planning and Research Department,
Affiliated Business Department,
Toyosu-Project Development Planning
Department, Kashiwanoha Campus City
Project Development Planning
Department, Land Development
Department, Development Planning
Department, Gotanda Project Department;
General Manager, Principal Investments
Department

Yoshikazu Kitahara
Deputy General Manager, Office Building
Division

Yasuo Onozawa
General Manager, Chiyoda Area
Development Department, Office Building
Division

Shougo Nakai
In charge of Appraisal Department;
General Manager, General Administration
Department

Kenji Iino
General Manager, Personnel Department

Group Managing Officers
Group Senior Managing Officers

Group Managing Officers

Minoru Satou

Takashi Ikeda

Tadashi Ando

Mitsui Real Estate Sales Co., Ltd.

Mitsui Fudosan Housing Service Co., Ltd.

LaLaport Management Co., Ltd.

Hidehisa Takei

Takeshi Suzuki

Kiyotaka Fujibayashi

Mitsui Real Estate Sales Co., Ltd.

Mitsui Fudosan Residential Co., Ltd.

Mitsui Fudosan Residential Co., Ltd.

Hiroshi Asai

Youichi Arita

Mitsui Fudosan Investment Advisors, inc.

Mitsui Fudosan Building Management Co., Ltd.

31

Corporate Social Responsibility
The Mitsui Fudosan Group is committed to contributing to environmentally responsible socialand economic development under a corporate philosophy of coexisting in harmony withsociety and linking diverse values. Our mission is clear: bring enrichment and greater comfort
to the urban environments we create while protecting the local and global environment. Our
corporate social responsibility initiatives therefore center on the environment, the quality ofour products and services, and the creation of value in supporting community development.

The Environment: Clear Policies andGoals for the Entire Group

The Mitsui Fudosan Groupand Its Commitment to
the Environment 2008

The Mitsui Fudosan Group takes a comprehensive approach to protecting the environment.
In October 2008, the Mitsui Fudosan Grouprevised its Group Environmental Policy toenhance its emphasis on the environment fromthe design stage, and to support efforts to minimize the burden placed on the environment bycorporate administration and the operation ofproperties. Moreover, the Environmental
Management Committee within theEnvironmental Special Committee works
together with 14 Group companies to develop
and implement environmental initiatives under
the Group Environmental Policy.

A Comprehensive Approach to
Reducing Environmental Impact
Our initiatives to reduce environmental impact
include preventing pollution, rigorously complying withenvironmental laws, and implementing our own independent standards to ensure the highest level of environmental compatibility. For example, the Mitsui FudosanGroup has established eco-specifications for all of its
buildings and services to minimize environmental impact.
These voluntary standards for environmental measurescomprise design guidelines in areas including energy efficiency, green procurement, greenery, and universal
design, and case studies for equipment and methods.
Moreover, we regularly revise the eco-specifications toensure that they continuously meet the requirements ofcustomers and society.

Certification of the Group’s
Environmental Management System
The Mitsui Fudosan Group has a consistent programfor obtaining ISO 14001 certification of the components
of its environmental management system. In addition, anumber of divisions and facilities have established environmental management systems at their respective operational sites and acquired ISO 14001 certification. As ofthe end of March 2009, a total of six divisions and seven
facilities in Mitsui Fudosan Co., Ltd. and eight Group32

companies had obtained ISO 14001 certification.
Another core initiative is designing office buildings
for long life to increase energy efficiency and reduce CO2
emissions throughout each building’s lifecycle. In addition, in fiscal 2006, Mitsui Fudosan began using theComprehensive Assessment System for Building
Environmental Efficiency (CASBEE), the assessment
system recommended by the Ministry of Land,
Infrastructure, Transport and Tourism, in order to evaluate the environmental efficiency of new buildings at thedesign stage. In addition, in principle we acquire CASBEE
certification from the Institute for Building Environment
and Energy Conservation for new buildings of a certain
scale or larger. As of September 2008, Mita M-Square(Minato-ku, Tokyo), and Akasaka Biz Tower (Minato-ku,
Tokyo) were in the process of acquiring the certification.
Moreover, Yodoyabashi Mitsui Building (Chuo-ku, Osaka
City), completed in March 2008, obtained the CASBEE
Osaka rank of S, joining three office buildings and a retailproperty that are totally or partially owned by the Mitsui
Fudosan Group that have received an S from theInstitute.

Education and Communication toProtect the Environment

Environmental training
in progress

Mitsui Fudosan conducts environmental training
every year for all new employees to provide them withbasic knowledge on environmental issues and teachthem the Group’s Environmental Policy and environmental initiatives. In addition, the employees of each operating division receive environmental training every year.
Mitsui Fudosan also uses intra-Group magazines toencourage environmental awareness through means
such as intranet communication, energy conservation
workshops, environmental study groups and annual
seminars.

The same street corner becomes forested over time.

Creating Forests to Absorb and Fix CO2
Mitsui Fudosan has been planting woods in the
detached house residential neighborhoods it has developed since 1980. This has created tiered forests on
slopes and unused land within and on the periphery ofdevelopment project areas, with the use of mixed
nursery-grown plants enabling biodiverse forests withinin a short period of time. The woods are both aesthetically and environmentally important. As of 2008, they
had absorbed and fixed a cumulative 5,935 tons of CO2.

Quality: A Groupwide Commitment
The Mitsui Fudosan Group serves many customers in
an array of fields, and believes that listening to customers
is the best way to enhance their satisfaction. Therefore,
we gather the opinions of customers through means
including surveys and group interviews. We then incorporate this data in products, services and operations toensure strong, long-term relationships with customers.

Office Buildings That Put Workers FirstIn the office building business, we are dedicated tocreating secure, comfortable and convenient office environments based on the concept of Workers First. We
conduct tenant satisfaction surveys that become the basis
for creating an office environment where workers canwork safely and securely. We also work to enhance theenvironment for visitors to our buildings.

Residential Housing That Satisfies
Mitsui Fudosan Residential Co., Ltd. is devoted toenhancing the level of satisfaction of the customers whopurchase its condominium and detached housing properties. Its Customer Support Center primarily handles
inquiries in areas such as loan and contract details, while
the After-Sales Service Centers mainly handle consultations and problems relating to the facilities and equipment after customers move into their new home. In
addition, Mitsui Fudosan Residential conducts multiple
customer surveys after the move, typically within six
months and after 18 months. We also use customer
satisfaction and usage surveys in the rental housing businessto improve user-friendliness and customer satisfaction.

Truly Attractive Retail Facilities
Growing Together is the brand concept that defines
Mitsui Fudosan’s retail facilities business. It represents ourcommitment to cooperating with customers and tenants

to create value. Retail facility operator LaLaport
Management Co., Ltd. is executing a range of initiatives
to enhance the satisfaction of customers visiting theretail facilities, while promoting closer collaboration withtenants. These include patrolling properties to provide
assistance to customers in need and regular meetings
with tenants to create a communicative, cooperative relationship. Moreover, at LaLaport Shin-Misato, scheduled
to open in September 2009, a pedestrian deck will be
installed from Shin-Misato Station and a hybrid fuel cellbus will operate a shuttle service between the facility andnearby facilities.

Community: Activities That Support
Vitality and Quality of Life
Our logo(&: ampersand)symbolizes our two key principles: tocoexist in harmony with society, andto link diverse values. The Mitsui
Fudosan Group therefore contributes to local communities andsociety at large in a variety of ways.
These include support for the arts,
conservation of traditional cultural
The Tokyo Summer Music Festival
assets, environmental conservation,
economic and industrial development, and health andwelfare improvement. Mitsui Fudosan sponsors several
annual events including the Tokyo Summer Music
Festival, which introduces music from around the world,
and the Sumida River Fireworks, one of the most famous
fireworks displays in Tokyo. Moreover, Mitsui Fudosan has
been a co-sponsor of the Special Olympics since 1995, andemployees have also begun supporting this important
sporting event as volunteers in areas such as providing
support services to athletes at the lodging facility.

Contributing to Our Home
Neighborhood of Nihonbashi
The Mitsui Group originated in the
Nihonbashi district of Tokyo. Throughout
its history, Mitsui Fudosan has
participated in and supported localorganizations, such as the Nihonbashi
Area Renaissance 100-Year Planning
Committee and the Preservation Society
for the Famed Nihonbashi Bridge.
Today, our Eco Edo Nihonbashi project
shares the intense and successful recycling culture of Edo, the former name ofTokyo. We have also presented artwork
depicting historical images of the
Nihonbashi area spanning nearly 400
years to beautify the exterior surface offences enclosing construction sites.

Nihonbashi residents help in purification
ceremonies for new properties

33

Corporate Social Responsibility

Third Japan SC Awards (2008)

AlparkLaLaport Tokyo-Bay

The Japan Council of Shopping Centers (JCSC) announced
its Third Japan SC Awards (2008) in March 2008. Four Mitsui
Fudosan retail facilities won major awards. The Japan SC
Awards were established in 2004 to honor those shopping
centers that contribute to the overall image of the industry
and contribute to society and environmental protection.

Mitsui Fudosan’s goal is to develop retail facilities that arerooted in the community and grow with the neighborhoods
in which they are located. We want our shopping centers toenergize and contribute to their communities, and the SC
Awards are positive affirmation of our success in doing so.
Arcakit Kinshicho received a Local Community
Contribution SC Award because of its success at contributing
to local revitalization of an urban area by regenerating thevacant stores of a department store. It also supports local disaster and crime prevention, local festivals, and other beneficial neighborhood activities.
Alpark received a Local Community Contribution SC
Award because it has concluded disaster prevention agreements with local citizen organizations and local government
bodies under which it holds three emergency drills annually.
The award also recognized its efforts to reduce waste
through the introduction of a metered charging system forrefuse.
LaLaport Tokyo-Bay won a Gold Award. Among Japan’slargest shopping complexes, it attracts over 20 million visitorsa year. Mitsui Fudosan has executed ten renewals over thetwenty years since its opening to ensure an exceptional shopping center that integrates multiple functions to contributeto a higher quality of life.
Lazona Kawasaki Plaza received a New Face SC Award as an
outstanding newly opened facility designed to enhance customer satisfaction and convenience. This shopping center provides a broad range of services, and its sales performance has
exceeded expectations.

Good Design Awards

Mitsui Fudosan received four 2008 Good Design awards.
This was the ninth consecutive year that Mitsui Fudosan hasreceived Good Design awards since the competition for

34

2000, when it became the first in the industry to receive anaward for a condominium property.
Our multifaceted commitment to quality and customer
satisfaction was a key factor in winning the awards. Mitsui
Garden Hotel Prana Tokyo Bay won an award in the industry/office category, while Urban Dock Park City Toyosu won
an award in the single-family houses and multiple dwelling
units category. Mitsui Fudosan’s Park Homes series also
received an award in the single-family houses and multiple
dwelling units category for its overall effort to create environmentally friendly housing, while Mitsui Fudosan Residential’s
Pinocchio Program for children received a Media award.

Financial Section

Contents
Six-Year Summary....................................................... 36
Management’s Discussion and Analysis....................... 37
Consolidated Balance Sheets....................................... 48
Consolidated Statements of Income............................ 50
Consolidated Statements of Changes in Net Assets..... 51
Consolidated Statements of Cash Flows...................... 52
Notes to Consolidated Financial Statements ................ 53
Independent Auditors’ Report ..................................... 74

35

Six-Year Summary
Mitsui Fudosan Co., Ltd. and its Subsidiaries

Thousands of U.S. dollars
except per share amounts(Note 1)Millions of yen
except per share amounts and number of employees

2009

2008

2007

2006

2005

2004

2009

¥1,418,946¥1,360,023¥1,229,194¥1,159,280¥1,111,359¥1,102,844$14,445,139

9,389

27,50923,946

16,94911,32011,652

95,582

1,349,178

1,305,778

1,180,528

1,121,676

1,096,075

1,103,241

13,734,888

5,980(1,565)83,572

7,064(1,440)87,3784,410(1,808)75,214

3,155(1,167)56,541

3,596(1,507)
28,693

3,535(335)
14,45560,878(15,932)
850,779¥3,758,387¥3,634,489¥3,294,190¥2,986,502¥2,928,199¥2,916,583$38,261,091

978,667
174,296
15,476

971,310
174,296
14,788944,196
174,296
13,299858,364
174,296
13,053

687,718
134,433
12,707659,165
134,433
12,808

9,963,015
1,774,366

Years ended March 31

FOR THE YEAR:

Revenue from operations...................
Interest, dividends andmiscellaneous ......................................
Costs and expenses(including tax) ......................................
Equity in net income ofaffiliated companies ..........................
Minority interests ..................................
Net income ..............................................

AT YEAR-END:

Total assets..............................................
Shareholders’ equity and valuation andtranslation adjustments.......................
Common stock .......................................
Number of employees .........................

PER SHARE DATA:

Net income (basic) ................................
Cash dividends applicableto the year .............................................

¥

95.1

¥

99.4

¥

85.5

¥

67.5

¥

34.7

¥

17.5

22.0

20.0

14.0

10.0

7.0

7.0

26.0
5.06

26.7
5.53

28.7
5.50

28.7
4.92

23.5
4.30

22.6
4.06

RATIOS:

Equity ratio (%) (Note 2) .........................
Return on assets (%) (Note 3)...............

Notes: 1. U.S. dollar amounts are translated from yen at the rate of ¥98.23 = U.S.$1.00, the approximate exchange rate at March 31, 2009.
2. Equity ratio = (Net assets – Subscription rights to shares – Minority interests) / Total assets
3. Return on assets (ROA) = (Operating income + Non-operating income) / Average total assets over the period

36

$

0.968
0.224

Management’s Discussion and Analysis
Mitsui Fudosan Co., Ltd. and its Subsidiaries

Income Analysis(Billions of yen, %)2009

Years ended March 31

Revenue from operations ................................................................................

¥1,418.9

2008

100.0%¥1,360.0

2007
100.0%¥1,229.2

100.0%

Cost of revenue from operations..................................................................

1,098.4

77.4

1,039.3

76.4

942.9

76.7

Selling, general and administrative expenses .........................................

149.0

10.5

141.4

10.4

124.4

10.1

Operating income ...............................................................................................

171.5

12.1

179.3

13.2

161.8

13.2

Other revenues ....................................................................................................

9.4

0.7

27.5

2.0

23.9

1.9

Interest expenses ................................................................................................

29.8

2.1

26.0

1.9

21.4

1.7

Other expenses ....................................................................................................

41.1

2.9

32.8

2.4

52.8

4.3

Equity in net income of affiliated companies ..........................................

6.0

0.4

7.1

0.5

4.4

0.4

Income before income taxes and minority interests.............................

116.0

8.2

155.1

11.4

116.0

9.5

Income taxes ........................................................................................................

30.8

2.2

66.2

4.9

39.0

3.2

Minority interests................................................................................................

(1.6)

(0.1)

(1.4)

(0.1)

(1.8)

(0.2)

83.6

5.9

87.4

6.4

75.2

6.1

Net income ............................................................................................................

¥

Revenue from Operations¥¥

Consignment Sales and Consulting segment revenue did not fully

For fiscal 2008, the year ended March 31, 2009, consolidated

compensate for a significant decline in transaction volume in therevenue from operations increased 4.3 percent year on year, or

corporate brokerage business. Revenue was steady year on year in¥58.9 billion, to ¥1,418.9 billion. Revenue increased in the Leasing

the Property Management segment.

segment because of the full-year contribution of office buildingssuch as GranTokyo North Tower (Chiyoda-ku, Tokyo) and Akasaka
Biz Tower (Minato-ku, Tokyo), and also benefited from the start of

Cost of Revenue from Operations and
SGA Expenses

operations at retail facilities completed during fiscal 2008, such as

Cost of revenue from operations increased 5.7 percent year on

Mitsui Outlet Park Iruma (Iruma, Saitama) and Mitsui Outlet Park

year, or ¥59.1 billion, to ¥1,098.4 billion. As a result, gross profit

Sendai Port (Sendai, Miyagi). Unit prices increased for properties soldfrom operations was marginally lower year on year at ¥320.5 billion,

to individuals in the Sales of Housing, Office Buildings and Landand the gross margin decreased to 22.6 percent from 23.6 percent

segment because of the greater proportion of sales in metropolitan

for the previous fiscal year.

Tokyo, which also contributed to higher revenue. However, revenue

Selling, general and administrative (SGA) expenses increased 5.4

from sales of properties to investors decreased year on year. Solid

percent year on year, or ¥7.6 billion, to ¥149.0 billion, reflecting

performance in the asset management business in the Brokerage,

increased advertising and promotion expenses as Mitsui Fudosan
moved to support revenue in an increasingly competitive market

Revenue from Operations(Billions of yen)

1,360.0

1,500

1,111.4 1,159.3

environment. Personnel and retirement expenses also increased.

Operating Income

1,418.9

Operating Income(Billions of yen)

200

179.3

1,229.2

161.8

171.5

137.5

150

revenue from operations less cost of revenue from operations and

115.8

1,000

The accompanying consolidated financial statements do notinclude operating income as a discrete line item. Calculated as
SGA expenses, operating income decreased 4.3 percent year on
year, or ¥7.7 billion, to ¥171.5 billion.

100
500
50

0

2005 2006 2007 2008 2009
(Years ended March 31)02005 2006 2007 2008 2009
(Years ended March 31)

37

Other Revenue and Expenses andInterest Expenses

Income before Income Taxes andMinority Interests and Net Income

Interest, dividends and miscellaneous revenue decreased 65.9

Equity in net income of affiliated companies decreased 15.3

percent, or ¥18.1 billion, to ¥9.4 billion. In fiscal 2007, a major

percent, or ¥1.1 billion, year on year to ¥6.0 billion. As a result ofcomponent of this item was gain on sale of property and equipment

lower operating income and increased other expenses, income

and gain on sale of investment securities. In fiscal 2008, however,before income taxes and minority interests decreased 25.2 percent

Mitsui Fudosan did not generate either of these gains.

year on year, or ¥39.1 billion, to ¥116.0 billion. Income taxes net ofInterest income decreased 21.2 percent, or ¥0.1 billion, while

deferrals decreased 53.4 percent, or ¥35.4 billion, to ¥30.8 billion.

dividend income increased 16.7 percent, or ¥0.4 billion. Interest

Consequently, net income decreased 4.4 percent year on year, or

expenses increased 14.4 percent, or ¥3.7 billion, to ¥29.8 billion¥3.8 billion, to ¥83.6 billion. Net income per share decreased tobecause Mitsui Fudosan accessed external resources to acquire¥95.1 from ¥99.4 for the previous fiscal year. Although net income

property and equipment as well as inventories and to continue

decreased, Mitsui Fudosan increased annual cash dividends per sharefunding growth opportunities. The interest coverage ratio, calculated

to ¥22.0 from ¥20.0 for the previous fiscal year.

as the sum of operating income and interest, dividends andmiscellaneous revenue divided by interest expenses, was 6.1 times
compared to 7.9 times for the previous fiscal year.
Other expenses increased 25.7 percent, or ¥8.4 billion, to ¥41.1
billion. This year-on-year change resulted primarily from impairment
loss on investment securities, reflecting in part the impact of lower
securities prices. Impairment loss on investment securities totaled¥17.6 billion, compared with ¥5.4 billion in the previous fiscal year.
Loss on disposal of property and equipment resulting fromredevelopment of office buildings totaled ¥6.1 billion.

Net Income

Net Income per Share

(Billions of yen)

87.4

90

(Yen)

83.6

99.4

100

75.2
67.5

75

56.5

60

95.1

85.5

50

34.7

28.7
30
25

0

2005 2006 2007 2008 2009
(Years ended March 31)3802005 2006 2007 2008 2009
(Years ended March 31)

Management’s Discussion and Analysis

Segment Information
Leasing
2009
Floor space(m2)

Years ended March 31

Office buildings and retail facilities: Owned............................................................

Managed .....................................................
Office buildings....................................
Retail facilities ......................................
Total .................................................................

2008
Revenue(Millions of yen)

2,093,443
2,099,718

Total .................................................................

Revenue(Millions of yen)

1,999,887
2,065,210¥303,467
107,375¥410,843

4,193,161
Units

Owned............................................................
Managed .....................................................

Residential:

Floor space(m2)

4,065,098¥265,516
92,295¥357,811

Units

314
75,04275,356¥ 78,462

296
69,28869,584¥ 71,139

Other (car parks, etc.) ........................................................................................................................

40,44940,048

Total revenue ...............................................................................................................................................

¥529,756¥469,000

Operating income ....................................................................................................................................

¥ 99,529¥ 90,666

Segment revenue increased 13.0 percent year on year, or¥60.8 billion, to ¥529.8 billion. Performance benefited from the

The residential leasing business also increased units undermanagement.

full-year operation of office buildings such as GranTokyo North

Segment operating income increased 9.8 percent year on year,

Tower (Chiyoda-ku, Tokyo) and Akasaka Biz Tower (Minato-ku,

or ¥8.9 billion, to ¥99.5 billion. Factors included the full-year

Tokyo). Despite the increase in vacancy rates in the overall

contribution of several office building and retail facility projects thatmarket, income from existing buildings increased, particularly inbegan operating during the previous fiscal year. Mitsui Fudosan’s

the central business districts of Tokyo. Performance in the retailvacancy rate for office buildings in the Tokyo metropolitan area on afacilities category benefited from the start of operations at retailnonconsolidated basis was 2.5 percent as of March 31, 2009,

facilities completed during fiscal 2008, such as Mitsui Outlet Park

compared to 1.3 percent at the previous fiscal year-end. On a

Iruma (Iruma, Saitama) and Mitsui Outlet Park Sendai Port

consolidated basis including overseas operations, the vacancy rate

(Sendai, Miyagi). Other positive factors included the full-year

for office buildings and retail facilities was 2.2 percent as of Marchcontribution of several new retail facilities including Ginza Velvia-

31, 2009, compared to 1.3 percent as of March 31, 2008 and 1.4

kan (Chuo-ku, Tokyo) and the NITTA Building (Chuo-ku, Tokyo).

percent as of March 31, 2007.

Vacancy Rate for Tokyo
Metropolitan Area Office Buildings

Revenue from Operations(%)(Billions of yen)

8

(Billions of yen)

600

529.8

4

2

343.7

364.3

398.1

300

3.0

2.5
1.0

1.6

99.5

100

90.7
81.4

469.0

500
6
400

Operating Income

75

62.5

67.9

50

200

1.3

25
100

0

2005 2006 2007 2008 2009

(Nonconsolidated)(As of March 31)02005 2006 2007 2008 2009
(Years ended March 31)02005 2006 2007 2008 2009
(Years ended March 31)

39

Sales of Housing, Office Buildings and Land
2009
Units

Years ended March 31

Condominiums:

Tokyo metropolitan area................
Other ......................................................
Total.......................................................

Detached housing:Tokyo metropolitan area................
Other ......................................................
Total.......................................................

Total housing sales:

Tokyo metropolitan area................
Other ......................................................
Total.......................................................

2008

Revenue
Average unit price(Millions of yen)
(Millions of yen)

Units

Revenue
Average unit price(Millions of yen)
(Millions of yen)

4,372
834
5,206

¥248,917
25,987¥274,904

¥57
31
¥53

4,133
1,116
5,249

¥199,318
35,658¥234,977

¥48
32
¥45

534
38
572

¥ 28,418
1,772¥ 30,191

¥53
46
¥53

630
83
713

¥ 32,379
3,009¥ 35,389

¥51
36
¥50

4,906
872
5,778

¥277,335
27,759¥305,095

¥57
32
¥53

4,763
1,199
5,962

¥231,697
38,667¥270,364

¥49
32
¥45

Other sales revenue .....................................................................

¥ 91,143¥111,899

Total revenue ..................................................................................

¥396,239¥382,267

Operating income .........................................................................

¥ 48,611¥ 57,810

Segmentrevenue
revenueincreased
increased3.7
3.7percent
percent year
year onon year,year, or ¥14.0
Segment

Revenue from Operations

Operating Income

billion, toto¥396.2
billion.
Total
unitsunitsof condominiums
detachedbillion,¥396.2billion.
Total
of detachedandhousesandhouses sold to individuals
decreasedby 184 toby5,778
units.
Revenue
condominiums
sold to individuals
decreased
184 to5,778
units.
from salesfromof condominiums
to individual tocustomers
increased
17.0
Revenuesales of condominiums
individual
customers(Billions of yen)

400

percent, or17.0¥39.9
billion,orto¥274.9billiondespite billion
slightlydespite
lower
increased
percent,¥39.9
billion,to ¥274.9
sales
an increaseof high-value-addedslightlyvolume
lower duesales tovolumedue to inansales
increasein sales of high-

382.3

396.2

334.5 336.9 341.6

49.2

48.6

300
40

35.2

200

Sales
of detachedhousesto individual
customers
decreased
to 572previous
fiscal year.
Sales
of detachedhousesto individual
unitsfrom 713
units intothe
previous
fiscal 713
year.units
Otherinsales
customers
decreased
572
units fromthe revenue,
previous

57.8

60

44.7

condominiums,
which raisedwhich
averageunitaverage
prices. unit
The numberofvalue-added condominiums,
raisedprices. The
units
soldofdecreased
to 5,206
from 5,249
in thefrom
previous
fiscalinyear.
numberunits solddecreased
to 5,206
5,249
the(Billions of yen)

20
100

comprising
revenuefromsales toinvestors revenueof income-producing
fiscal year. Othersales
revenue,comprisingfrom sales toproperties
by the Company,
decreased
18.5 percent,orinvestors developedof income-producing
properties
developedby the¥20.8
billion,decreased
to ¥91.1 billion.
As of March2009,
MitsuitoFudosan
Company,
18.5 percent,or 31,¥20.8
billion,¥91.1
Residential
Ltd.
919Mitsui
unitsFudosan
in completed
inventories,
billion. As ofCo.,March
31,had2009,
ResidentialCo., Ltd.
consistingof 826incondominium
and 93 detachedhouses,up
had 919 units
completed units
inventories,
consistingof 826from
568 unitsunits
a yearearlier,which consisted
condominium
condominium
and
93 detachedhouses, of
up453
from
568 units aunits
and 115which
detached
houses.of 453 condominium units and 115
year earlier,consisted
Segment
operating income decreased 15.9 percent year on
detached
houses.
year,Segment
or ¥9.2 billion,to ¥48.6
billion.
Sales of 15.9
properties
to investors
operatingincomedecreased
percent
year ondecreased
but billion,
remainedand distributions
from SPCs
year, or ¥9.2
to profitable,¥48.6 billion.
Sales of properties
tofollowing
the sales ofbut
officebuildings
and otherandproperties
were
investors decreased
remained
profitable,
distributions
anotherfactorthat contributed
income.and
However,from SPCs
following
the sales toof operating
office buildings
othersegment
incomedecreasedbecausetoofoperating
loss onproperties operatingwere anotherfactorthat contributed
devaluationof realsegment
propertyoperating
for sale totaling
billion,withincome. However,income ¥15.9
decreasedbecause¥13.1
allocated to of
inventories
for individuals¥2.7 ¥15.8
billionof lossbillion
on devaluation
real property
for sale andtotaling
allocatedwith
to inventories
for investors.
billion,¥13.1 billion
allocated to inventories for individuals
and ¥2.7 billion allocated to inventories for investors.

4002005 2006 2007 2008 2009
(Years ended March 31)02005 2006 2007 2008 2009
(Years ended March 31)

Management’s Discussion and Analysis

Construction(Millions of yen)

2009

Years ended March 31

2008

Orders: ...........................................
Work-on-hand at beginningof period..................................
Orders during period ..................
Total ..........................................

¥103,205
172,156¥275,362¥110,841
187,441¥298,282

Net sales .......................................

¥186,269¥194,219

Work-on-hand at end of period ..

¥ 89,093¥104,062

Total revenue ...............................

¥182,074¥188,659

Operating income........................

¥¥ 1,900

2,731

Revenue from Operations

Operating Income(Billions of yen)(Billions of yen)

400

4

300

3

200

183.6 187.5 194.0 188.7 182.1

1000Note: Consolidated results of Mitsui Home Co., Ltd.

2.7

2.7
2.4

2.4
1.9

2

1

2005 2006 2007 2008 200902005 2006 2007 2008 2009

(Years ended March 31)(Years ended March 31)

Segment revenue decreased 3.5 percent year on year, or ¥6.6

the renovation market. The order backlog at the end of the fiscalbillion, to ¥182.1 billion. Mitsui Home Co., Ltd., a consolidated

year and orders received during the fiscal year both decreased year

subsidiary, handles operations in this segment. It is one of Japan’s

on year. However, segment operating income increased 43.7

leading builders of two-by-four wood-frame homes, andpercent year on year, or ¥0.8 billion, to ¥2.7 billion as a result ofspecializes in high-quality, upscale housing and the high-end ofenhanced productivity.

Brokerage, Consignment Sales and Consulting
2009
Years ended March 31

Units

Revenue(Millions of yen)

2008
Units

Revenue from Operations

Operating Income(Billions of yen)(Billions of yen)

Revenue(Millions of yen)

Revenue:
Brokerage .................. 30,338
Consignment sales..... 3,143
Consulting .................
—¥52,799
7,000
15,394

Total revenue .............

¥75,195¥84,269

Operating income ......

¥18,151¥26,595

84.3

90

31,757
5,358—¥62,097
10,067
12,104

77.3

30

68.7

performance by Mitsui Fudosan Investment Advisors, Inc. and

22.6

25

60.2
60

20

18.6

18.2

15
30

10
5

Segment revenue decreased 10.8 percent year on year, or¥9.1 billion, to ¥75.2 billion. Steady asset management

26.0 26.6

75.2

02005 2006 2007 2008 2009
(Years ended March 31)02005 2006 2007 2008 2009
(Years ended March 31)

Nippon Building Fund Management Ltd., which provides asset
management for private funds and J-REITs such as Nippon

Moreover, transaction volume fell sharply in its corporate

Building Fund, underpinned revenue. Mitsui Fudosan also received

brokerage business due to the impact of the financial crisis on thea substantial incentive fee during the fiscal year. In the brokeragereal estate investment market.

business, Group company Mitsui Real Estate Sales Co., Ltd.

Segment operating income decreased 31.8 percent year on

provides brokerage services for individual and corporate clients.

year, or ¥8.4 billion, to ¥18.2 billion. Earnings in this segment

With its nationwide network of Mitsui Rehouse brokerage offices,

benefited from stable fee income from asset, project and

Mitsui Real Estate Sales has the leading brokerage share in

investment fund management. However, the decrease in earnings

Japan’s residential housing secondary market. Difficult market

from the brokerage business impacted segment operating income

conditions, particularly in the second half of the fiscal year,

strongly. Mitsui Fudosan is currently restructuring the brokeragecaused both unit prices and transaction volume to decrease.

business to position it for recovery.

41

Property Management(Millions of yen)

2009

2008

Tenant improvement ......

¥ 77,151
25,339¥ 73,141
29,322

Total revenue ...............................

¥102,491¥102,464

Operating income ........................

¥ 15,574¥ 15,497

Years ended March 31

Revenue: Property management ......

Revenue from Operations

Operating Income(Billions of yen)(Billions of yen)120

99.6 102.5 102.5

20

90.4
80

15.5 15.6

12.7
10.8

Segment revenue increased marginally year on year to ¥102.5
billion. The contribution of new Group-managed properties such

14.3

15

78.2

10
40

as Mitsui Outlet Park Iruma (Iruma, Saitama) supported stable5

performance in this segment despite a turbulent external
environment. However, the absence of substantial fees from a02005 2006 2007 2008 200902005 2006 2007 2008 2009

(Years ended March 31)

program to add tenants at Tokyo Midtown that supported results(Years ended March 31)

in the previous fiscal year blunted revenue growth. The Property
Management segment is strategic because it allows Mitsui

include Mitsui Fudosan Housing Services Co., Ltd., which manages

Fudosan to generate fee-based revenue and earnings tocondominiums developed by Mitsui Fudosan Residential, andcomplement revenue derived from asset growth in other

LaLaport Management Co., Ltd., which manages retail facilities.

businesses. The Mitsui Fudosan Group provides office

Segment operating income increased marginally year on year

management services primarily through Group companies Mitsui

to ¥15.6 billion. Earnings drew stable support from management

Fudosan Building Management Co., Ltd. and First Facilities Co.,of office buildings, retail facilities and other properties completed

Ltd. Other Group companies involved in property managementin the previous fiscal year.

Sales of Housing Materials and Merchandise(Millions of yen)

Revenue from Operations

Operating Income¥25,496
47,478(Billions of yen)(Billions of yen)

¥69,115¥72,975

65.2¥ 1,423¥ 1,170

2009

2008

Merchandise ..................

¥24,791
44,322

Total revenue ...............................
Operating income ........................

Years ended March 31

Revenue: Housing materials ............

80

65.1

69.4

73.0

69.1

1.4

1.5

1.2

60

0.9

1.0

Segment revenue decreased 5.3 percent year on year, or ¥3.9

40

billion, to ¥69.1 billion. Factors included lower revenues at Mitsui
Designtec Co., Ltd. and the impact on revenues from the decision

0.8

0.5
20

0.2

by LaLaport Management Co., Ltd. to discontinue sales of certain
unprofitable products. Segment operating income increased 21.6
percent year on year, or ¥0.3 billion, to ¥1.4 billion.

42

02005 2006 2007 2008 2009
(Years ended March 31)02005 2006 2007 2008 2009
(Years ended March 31)

Management’s Discussion and Analysis

Facility Operations(Millions of yen)
Years ended March 31

Revenue: Hotels ............................

Other.............................

2009

2008

¥40,029
12,288¥37,499
12,245

Total revenue ...............................

¥52,318¥49,745

Operating income ........................

¥ (792)¥269

Segment revenue increased 5.2 percent year on year, or ¥2.6

Revenue from Operations

Operating Income (Loss)(Billions of yen)(Billions of yen)

60

49.7
45

38.5

52.3

3.0

1.9

2.0

39.0 40.2

1.8

1.4

30

1.0

0.3

billion, to ¥52.3 billion. Factors increasing revenue included thefull-year contribution of two hotels completed during the previous

0

15

(0.8)

fiscal year — Mitsui Garden Hotel Shiodome Italia-gai (Minato-ku,
Tokyo) and Mitsui Garden Hotel Prana Tokyo Bay (Urayasu, Chiba)02005 2006 2007 2008 2009

-1.0

2005 2006 2007 2008 2009

(Years ended March 31)— and the full-year contribution of four resort facilities acquired(Years ended March 31)

during the previous fiscal year, including Nemunosato (Shima,
Mie). Segment operating loss totaled ¥0.8 billion compared tosegment operating income of ¥0.3 billion for the previous fiscal
year, as unfavorable economic conditions reduced occupancy rates
at the segment’s hotels and resort facilities.

Other(Millions of yen)

2009

2008

Other.............................

¥ 1,595
10,161¥ 1,362
9,281

Total revenue ...............................

¥11,758¥10,644

Operating income ........................

¥ 4,611¥ 3,904

Years ended March 31

Revenue: Finance and lease ............

Revenue from Operations

Operating Income(Billions of yen)(Billions of yen)

10.6

Segment revenue increased 10.5 percent year on year, or ¥1.1

11.8
3.0

7.4

7.3
2.0

5

0

2.5

8.9

billion, to ¥11.8 billion. Segment operating income increased 18.1
percent year on year, or ¥0.7 billion, to ¥4.6 billion.

3.9

4.0

15

10

4.6

5.0

20

2.8

1.8

1.0

2005 2006 2007 2008 2009
(Years ended March 31)02005 2006 2007 2008 2009
(Years ended March 31)

43

Liquidity, Capital Resources and Financial Position
Assets(Billions of yen, %)2009

As of March 31

Cash and cash equivalents .............................................................................

¥

2008

62.9

1.7%

¥

2007

63.5

1.8%

¥

81.8

2.5%

Inventories .............................................................................................................

773.9

20.6

662.3

18.2

541.2

16.4

Other current assets ..........................................................................................

290.7

7.7

290.4

8.0

333.9

10.1

Investments and other assets ........................................................................

596.6

15.9

669.3

18.4

628.7

19.1

Net property and equipment..........................................................................

2,034.3

54.1

1,949.0

53.6

1,708.6

51.9

Total .........................................................................................................................

¥3,758.4

100.0%¥3,634.5

100.0%¥3,294.2

100.0%

Liabilities and Net Assets(Billions of yen, %)2009

As of March 31

2008

2007

Interest-bearing debt—Short term..............................................................

¥ 226.2

6.0%¥ 263.2

7.2%¥ 242.8

7.4%

Interest-bearing debt—Long term ..............................................................

1,507.3

40.1

1,287.2

35.4

1,015.7

30.8

Total interest-bearing debt .......................................................................

1,733.5

46.1

1,550.4

42.7

1,258.5

38.2

Other current liabilities ...................................................................................

398.3

10.6

453.9

12.5

443.1

13.5

Other long-term liabilities 2 .............................................................................

626.7

16.7

638.2

17.6

629.4

19.1

1

Minority interests................................................................................................

21.0

0.6

20.6

0.6

19.0

0.5

Net assets (other than minority interests) ................................................

978.9

26.0

971.4

26.7

944.2

28.7

Total .........................................................................................................................

¥3,758.4

100.0%¥3,634.5

100.0%¥3,294.2

100.0%

Notes: 1. Consists of current liabilities other than bank loans, commercial paper and long-term debt due within one year presented on the balance sheets.
2. Consists of long-term liabilities other than long-term debt due after one year presented on the balance sheets.

Current Assets

Fudosan decreased investment in SPCs and other vehicles for

Current assets increased 11.0 percent from the previous fiscal

distributing properties to external investors. Working capital

year-end, or ¥111.3 billion, to ¥1,127.5 billion. Cash and cash

increased 68.1 percent from a year earlier to ¥503.0 billion, and theequivalents decreased 1.0 percent, or ¥0.6 billion, from a year earlier

current ratio was 1.81 times, compared with 1.42 times at the end

to ¥62.9 billion, with the addition of cash from operations andof the previous fiscal year.

financing to the balance sheet compensating for the use of cash tofund inventories and other operating activities. Inventories increased

44

Investments and Other Assets

16.9 percent from a year earlier, or ¥111.6 billion, to ¥773.9 billion.

Investments and other assets decreased 10.9 percent from a year

Factors included acquisition of land for housing by Mitsui Fudosan

earlier, or ¥72.7 billion, to ¥596.6 billion. Investment securities

Residential. New acquisitions of real property for sale exceeded costdecreased 20.9 percent, or ¥44.6 billion, to ¥168.5 billion, reflecting

recovery through property sales. Equity investments in properties fora decrease in net purchases of investment securities, recognition ofsale, which primarily represent securitized interests in properties for

impairment and a decrease in the market value of securities holdingssale, decreased 7.6 percent, or ¥7.4 billion, to ¥89.8 billion as Mitsui

during the fiscal year.

Management’s Discussion and Analysis

Property and Equipment

Net Assets and Total Capital

Net property and equipment increased 4.4 percent from a year

For fiscal 2008, net assets increased 0.8 percent from a year

earlier, or ¥85.2 billion, to ¥2,034.3 billion. Capital expenditures

earlier, or ¥7.9 billion, to ¥999.9 billion. Retained earnings increased

totaled ¥165.0 billion, which was offset by depreciation totaling

19.2 percent, or ¥53.6 billion, to ¥332.3 billion as a result of net¥48.9 billion and disposal and sale of properties by the parent

income. Moreover, reserve on land revaluation, which is recorded ascompany and subsidiaries totaling ¥30.2 billion. Capital expenditures

a component of net assets under Japanese GAAP, increased by ¥5.3

decreased 51.5 percent, or ¥175.4 billion, year on year.

billion, reflecting additions to land held in inventory. Lower financial
asset prices during the fiscal year decreased net assets through aCurrent Liabilities

reduction in net unrealized holding gains on securities to ¥1.8

Current liabilities decreased 12.9 percent from a year earlier, or

billion, which is recorded as a component of net assets under¥92.5 billion, to ¥624.5 billion. Mitsui Fudosan has establishedJapanese GAAP. Negative foreign currency translation adjustmentcommitted lines of credit totaling ¥150.0 billion with several

resulting from the yen’s value relative to the U.S. dollar and thefinancial institutions to ensure access to funds and adequate

British pound at the fiscal year-end decreased net assets by ¥35.7

liquidity. The Company had not accessed these lines of credit as ofbillion. Total capital, the sum of bank loans, commercial paper, long-the balance sheet date.

term debt due within one year, long-term debt due after one year,
and net assets, increased ¥191.0 billion to ¥2,733.4 billion from

Long-term Liabilities¥2,542.4 billion a year earlier. The use of interest-bearing debt toLong-term liabilities increased 10.8 percent from a year earlier,support growth outpaced additions to net assets. Consequently, netor ¥208.5 billion, to ¥2,134.0 billion. Long-term debt due after one

assets represented 36.6 percent of total capital, compared to 39.0

year increased 17.1 percent from a year earlier, or ¥220.1 billion, topercent at the previous fiscal year-end. The debt / equity ratio1¥1,507.3 billion, as Mitsui Fudosan accessed external funding toincreased to 1.77 times from 1.60 times as a result. Return on assets

ensure liquidity while investing in opportunities for growth. Interest-(ROA)2 was 5.06 percent, compared with 5.53 percent a year earlier.

bearing debt increased 11.8 percent, or ¥183.1 billion, to ¥1,733.5

Return on equity (ROE)3 was 8.57 percent, compared to 9.12 percent

billion. Mitsui Fudosan also raised ¥10.0 billion through the issue ofa year earlier.

1.92 percent yen notes due 2018.
Notes: 1. Notes:Debt / equity ratio = Interest-bearing debt / (Net assets - Subscription rights to shares - Minority interests)
2. Return on assets (ROA) = (Operating income + Non-operating income) / Average total assets over the period
3. Return on equity (ROE) = Net income / (Net assets - Subscription rights to shares - Minority interests, Average over the period)

Total Assets

ROA(Billions of yen)

4,000

3,634.5

3,758.4(%)(Billions of yen)(Billions of yen)

5.50

6.0

3,294.2

4.92

2,928.2 2,986.5

Net Assets (Other than Minority Interests)
and Equity Ratio

Interest-Bearing Debt

5.0

3,000

5.53

5.06

2,000

1,733.5
1,550.4

4.30

1,600

1,279.1
4.0

1,199.3 1,258.5

1,200
1,000
800

1,200
2,000

28.7 28.7

23.5

944.2

(%)

26.7 26.0 30
971.4
978.9

858.4
20

687.7

600

3.0
800

400

2.0
1,000

400

1.0
0

2005 2006 2007 2008 2009
(As of March 31)02005 2006 2007 2008 2009
(Years ended March 31)

0

10

200

2005 2006 2007 2008 200902005 2006 2007 2008 20090

(As of March 31)(As of March 31)

Net Assets(Other than Minority Interests)
Equity Ratio

45

Cash Flows(Billions of yen)

Years ended March 31

2009

2008

2007

Cash flows from operating activities ............................................................

¥ (41.0)(141.6)
182.2
(0.2)
(0.6)
63.5

¥ 97.8(392.2)276.1( 0.1)(18.3)
81.8¥ 58.0(77.0)
38.1
0.2
19.2
62.6

¥ 62.9¥ 63.5¥ 81.8Cash flows from investing activities .............................................................
Cash flows from financing activities .............................................................
Effect of exchange rate changes on cash and cash equivalents ........
Net (decrease) increase in cash and cash equivalents ...........................
Cash and cash equivalents at beginning of year .....................................
Cash and cash equivalents at end of year ..................................................

Cash FlowsNet cash used in investing activities totaled ¥141.6 billion,

Net cash used in operating activities totaled ¥41.0 billion. In thecompared to ¥392.2 billion for the previous fiscal year. Mitsui

previous fiscal year, operating activities provided net cash totaling

Fudosan is carefully controlling asset growth given the currently¥97.8 billion. A key factor in the year-on-year change was the returnturbulent environment. Purchases of property and equipmentof deposits for properties sold on consignment to Mitsui Fudosan

totaled ¥153.0 billion, compared to ¥346.8 billion for the previous

Residential, included in the line item “Other, net.” The line item

fiscal year. This included outlays associated with the Chiyoda Fujimi“Increase in real property for sale and advances paid for purchases”

2-chome Project and other new investments in redevelopment

represents the net effect of cost recovery and purchase of inventories,

projects that are highly likely to generate profitable growth in thewhich consist primarily of property held for sale. Net increase in

future. Net changes in deposits from tenants and in lease deposits

inventories used cash totaling ¥125.8 billion, up from ¥100.4 billion

provided cash totaling ¥28.5 billion, compared to ¥23.7 billion forin the previous fiscal year. Income taxes paid also increased substan-

the previous fiscal year. Net purchases of marketable andtially. Depreciation and amortization increased to ¥48.9 billion.

investment securities totaled ¥31.7 billion, down sharply from¥124.9 billion for the previous fiscal year absent the impact of theacquisition of equity in Imperial Hotel, Ltd. Net cash provided by

Debt/Equity Ratio

Cash Flows fromOperating Activities

Free Cash Flow

(Times)(Billions of yen)(Billions of yen)

4.0

150

3.0

100

200

100.1

0

23.3

(38.3) (19.0) (294.4)(182.6)

58.0

1.86
2.0

100

97.8

1.40 1.33

1.60

1.77

50

0

1.0

-100

22.5

(41.0)

-200
-300

0

2005 2006 2007 2008 2009
(As of March 31)

46

-50

2005 2006 2007 2008 2009
(Years ended March 31)-400

2005 2006 2007 2008 2009
(Years ended March 31)

Management’s Discussion and Analysis

financing activities totaled ¥182.2 billion, compared with ¥276.1

Risk Information

billion in the previous fiscal year. Decrease in bank loans and

The operations of the Mitsui Fudosan Group are subject to acommercial paper totaled ¥45.2 billion, compared with an increase

number of risks, some of which are outlined below along with issuesof ¥28.9 billion for the previous fiscal year, reflecting a shift towardthat may not necessarily constitute risk factors but that may

longer-term maturities in funding operations. Proceeds from long-influence investor decisions.

term debt totaled ¥389.5 billion, up from ¥369.4 billion for theprevious fiscal year, in part because Mitsui Fudosan moved to

Changes in Demandenhance liquidity to insulate against the financial turmoil in the

Economic conditions influence demand among tenantsecond half of the fiscal year. Repayments of long-term debt,

companies for space in the office buildings that the Mitsui Fudosan

consisting primarily of long-term bank loans, totaled ¥119.4 billion,

Group owns and manages, and influence demand among individuals

compared to ¥154.7 billion for the previous fiscal year. Proceeds

for housing. A downturn in the Japanese economy may exert afrom issuance of bond totaling ¥10.0 billion represented thematerial impact on the Mitsui Fudosan Group's performance and thedomestic issue of 1.92 percent yen notes due 2018, while payments

value of its assets.

for redemption of bond totaled ¥30.0 billion. Net proceeds fromlong-term debt and bonds therefore totaled ¥250.1 billion on a

Interest Rates

cash basis. Mitsui Fudosan maintains a conservative level ofHigher interest rates in the future could increase the Mitsui

operating leverage and has become increasingly selective inFudosan Group's funding costs, raise the returns investors expect

investing for future growth. Cash dividends paid totaled ¥19.3

from real estate investments and reduce demand among individuals

billion, compared to ¥15.8 billion for the previous fiscal year as afor housing, and may therefore exert a material impact on the Mitsui

result of increased cash dividends per share for fiscal 2008.

Fudosan Group's performance and the value of its assets.

Regulations and Taxation
Changes in the regulations and systems of taxation relevant to
the real estate business may exert a material impact on the Mitsui
Fudosan Group's performance and the value of its assets.

Natural Disasters
Natural disasters may damage or destroy the Mitsui FudosanGroup's assets, and may therefore exert a material impact on the
Mitsui Fudosan Group's performance and the value of its assets.

47

Consolidated Balance Sheets
Mitsui Fudosan Co., Ltd. and its Subsidiaries
As of March 31, 2009 and 2008

Thousands of
U.S. dollars (Note 1)

Millions of yen

2009

2008

2009

ASSETS
CURRENT ASSETS

Cash and cash equivalents ...................................................................................................
Marketable securities (Note 4) ...........................................................................................
Notes and accounts receivable — trade..........................................................................
Short-term loans receivable .................................................................................................
Allowance for doubtful accounts .......................................................................................
Inventories (Note 6) ................................................................................................................
Advances paid for purchases (Note 7) .............................................................................
Equity investments in properties for sale (Note 4) .....................................................
Deferred income taxes (Note 9) .........................................................................................
Other current assets ................................................................................................................
Total current assets ............................................................................................................

¥

62,892
126
31,451
8,949(2,331)
773,861
2,859
89,77653,160106,730¥

63,496
95
34,593
8,170(569)
662,259
16,927
97,15260,05973,946$640,252
1,283
320,177
91,103(23,730)
7,878,052
29,105913,937
541,179
1,086,531

1,127,473

1,016,128

11,477,889

Investments in unconsolidated subsidiaries and affiliated companies ...............
Investment securities (Note 4) ............................................................................................
Non-current loans and accounts receivable ..................................................................
Allowance for doubtful accounts ........................................................................................
Lease deposits (Note 8) ..........................................................................................................
Deferred income taxes (Note 9) .........................................................................................
Deferred tax assets on land revaluation ..........................................................................
Other .............................................................................................................................................

174,995
168,529
49,490(8,522)
180,870
15,5572,280
13,426

177,249
213,169
53,745(7,733)
196,789
15,023
8,308
12,763

1,781,482
1,715,657
503,818(86,756)
1,841,291
158,373
23,211
136,679

Total investments and other assets..............................................................................

596,625

669,313

6,073,755

Land (Note 11)............................................................................................................................
Buildings and structures (Note 11).....................................................................................
Machinery and equipment ...................................................................................................
Construction in progress .......................................................................................................

1,456,961
954,988
99,334
18,366

1,380,935
931,50992,553
13,83914,832,139
9,721,959
1,011,239
186,969

Accumulated depreciation ....................................................................................................

2,529,649(495,360)

2,418,836(469,788)

25,752,306(5,042,859)

INVESTMENTS and OTHER ASSETSPROPERTY and EQUIPMENT, at cost:

Net property and equipment .........................................................................................
See accompanying notes.

48

2,034,289

1,949,048

20,709,447¥3,758,387¥3,634,489$38,261,091

Thousands of
U.S. dollars (Note 1)

Millions of yen

2009

2008

2009

LIABILITIES AND NET ASSETSCURRENT LIABILITIESBanks loans (Note 11) ............................................................................................................
Commercial paper (Note 11) ...............................................................................................
Long-term debt due within one year (Note 11) ...........................................................
Notes and accounts payable — trade .............................................................................
Accrued expenses ....................................................................................................................
Income taxes payable .............................................................................................................
Advances and deposits received ........................................................................................
Deferred income taxes (Note 9) .........................................................................................
Other current liabilities ..........................................................................................................
Total current liabilities .....................................................................................................

¥

55,367
13,000157,847
125,037
21,61317,756
179,987
697
53,214¥

63,82053,000146,354
110,943
25,661
35,633232,078921
48,595$563,647
132,342
1,606,912
1,272,900
220,024
180,759
1,832,302
7,096
541,729624,518

717,005

6,357,711

Allowance for employees’ retirement benefits (Note 10) .........................................
Allowance for directors’ and corporate auditors’ retirement benefits ................
Long-term debt due after one year (Note 11) ..............................................................
Deposits from tenants (Note 12) .......................................................................................
Deferred income taxes (Note 9) .........................................................................................
Deferred tax liabilities on land revaluation.....................................................................
Other long-term liabilities ......................................................................................................

29,484
1,494
1,507,345
370,694
3,129
185,31736,54628,034
1,468
1,287,247
356,61230,310186,189
35,621300,153
15,20915,345,058
3,773,735
31,854
1,886,562
372,045

Total long-term liabilities .................................................................................................

2,134,009

1,925,481

21,724,616

174,296

174,296

1,774,366

Capital surplus ..........................................................................................................................

248,332

248,3292,528,067

LONG-TERM LIABILITIESCONTINGENT LIABILITIES (Note 21)
NET ASSETS (Notes 13 and 14)

Shareholders’ equity
Common stock............................................................................................................................
Authorized— 3,290,000,000 shares
Issued— 881,424,727 shares in 2009 and 2008
Retained earnings ....................................................................................................................

332,334

278,749

3,383,223

Treasury stock ............................................................................................................................

(5,003)(4,334)(50,931)

Total shareholders’ equity................................................................................................

749,959

697,040

7,634,725

Net unrealized holding gains on securities ....................................................................

1,793

32,576

18,253Net unrealized losses on hedging derivatives ..............................................................

(459)

(106)

(4,673)

Reserve on land revaluation .................................................................................................

263,063257,728

2,678,031

Foreign currency translation adjustments .......................................................................

(35,689)(15,928)(363,321)

Total valuation and translation adjustments ...........................................................

228,708274,2702,328,290

Subscription rights to shares (Note 15) .................................................................................
Minority interests ............................................................................................................................

220
20,97386
20,6072,240
213,509

Valuation and translation adjustments ..................................................................................

Total net assets .....................................................................................................................

999,860

992,003

10,178,764¥3,758,387¥3,634,489$38,261,091

See accompanying notes.

49Consolidated Statements of Income
Mitsui Fudosan Co., Ltd. and its Subsidiaries
For the years ended March 31, 2009, 2008 and 2007

Thousands of
U.S. dollars (Note 1)

Millions of yen

2009

2008

2007

2009

¥1,418,946
9,389¥1,360,023
27,509¥1,229,194
23,946$14,445,139
95,582

1,428,335

1,387,532

1,253,140

14,540,721

1,098,425
148,973
29,76841,1681,039,342
141,398
26,03132,758942,928
124,423
21,42152,758

11,182,175
1,516,573
303,044
419,098

1,318,334

1,239,529

1,141,530

13,420,890

EQUITY IN NET INCOME OF AFFILIATED COMPANIES ...............................

5,980

7,064

4,410

60,878

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS ...............

115,981

155,067

116,020

1,180,709

INCOME TAXES (Note 9)
Current ......................................................................................................................
Deferred ....................................................................................................................

24,785
6,059

48,63817,611

26,044
12,954

252,316
61,682

Total......................................................................................................................

30,844

66,24938,998313,998

NET INCOME BEFORE MINORITY INTERESTS ..................................................

85,13788,81877,022866,711MINORITY INTERESTS ..............................................................................................

(1,565)(1,440)(1,808)(15,932)

REVENUES
Revenue from operations (Note 20) ..............................................................
Interest, dividends and miscellaneous (Note 16) .....................................

COSTS AND EXPENSES
Cost of revenue from operations ....................................................................
Selling, general and administrative expenses ...........................................
Interest ......................................................................................................................
Other (Note 17) ......................................................................................................

NET INCOME ...............................................................................................................

¥

83,572¥87,378¥75,214Yen

PER SHARE INFORMATION
Net assets per share* ..........................................................................................
Net income per share— Basic ....................................................................................................................
— Diluted ................................................................................................................
Cash dividends .......................................................................................................
* Net assets per share information does not include minority interests.

See accompanying notes.

50

2009
¥

$

850,779

U.S. dollars (Note 1)

2008

2007

1,113.9¥ 1,105.1¥ 1,073.8

95.1
95.1
22.0

99.4
99.4
20.0

85.5
—
14.0

2009
$

11.340
0.968
0.968
0.224

Consolidated Statements of Changes in Net Assets
Mitsui Fudosan Co., Ltd. and its Subsidiaries
For the years ended March 31, 2009, 2008 and 2007

Millions of yen
Shareholders’ equity

Shares ofcommon stock(thousands)

BALANCE AT MARCH 31, 2006 ............................ 881,425
Cash dividends paid (*1) ..............................................
—
Bonuses to directors (*2)..............................................
—Net income ...............................................................
—
Reversal of reserve on land revaluation, net of tax .......
—
Revaluation of property and equipment (Note 2 (H)) ....
—
Purchase of treasury stock .........................................
—
Sales of treasury stock ...............................................
—Net unrealized holding gains on securities .....................
—Net unrealized gains (losses) on hedging derivatives....
—Foreign currency translation adjustment .....................
—
Minority interests.......................................................
—BALANCE AT MARCH 31, 2007 ............................ 881,425
Cash dividends paid ...................................................
—Net income ...............................................................
—
Reversal of reserve on land revaluation, net of tax .......
—
Revaluation of property and equipment (Note 2 (H)) ....
—
Decrease in number of affiliated companies ...............
—
Purchase of treasury stock .........................................
—
Sales of treasury stock ...............................................
—Net unrealized holding gains on securities .....................
—Net unrealized gains (losses) on hedging derivatives....
—Foreign currency translation adjustment .....................
—
Subscription rights to shares ......................................
—
Minority interests.......................................................
—BALANCE AT MARCH 31, 2008................................. 881,425

Commonstock

CapitalsurplusRetainedearnings¥174,296 ¥248,295 ¥199,706——(8,796)
—
—
(176)
—
—
75,214—— (49,719)
—
—
2,454
—
—
—
—
13
—
—
—
—
—
—
—
—
—
—
—
—
—
174,296 248,308 218,683—— (15,825)——
87,378——(9,780)——(1,778)
—
—
71
—
—
—
—
21
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
174,296 248,329 278,749

Valuation and translation adjustments

Treasury
stock

Net
Net
unrealized
unrealized
holding gains gains (losses)(losses) onon hedging
securities
derivatives¥(2,147) ¥ 63,425
—
—
—
—
—
—
—
—
—
—
(996)
—
17
—
—
8,735
—
—
—
—
—
—
(3,126)
72,160
—
—
—
—
—
—
—
—
—
—
(1,239)—31——(39,584)
—
—
—
—
—
—
—
—
(4,334)32,576

Prior-period adjustments due to adoption of
new accounting standard (Note 2 (H)).......................
Cash dividends paid ...................................................
Net income ...............................................................
Reversal of reserve on land revaluation, net of tax .......
Purchase of treasury stock .........................................
Sales of treasury stock ...............................................
Net unrealized holding gains on securities .....................
Net unrealized gains (losses) on hedging derivatives....
Foreign currency translation adjustment .....................
Subscription rights to shares ......................................
Minority interests.......................................................
Other ........................................................................

———(5,338)————— (19,335)————— 83,572—————(5,313)
—
—
—
—
—
—
(851)
—
—
—
3
—
182
—
—
—
—
—
— (30,783)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1)
—
—
BALANCE AT MARCH 31, 2009................................. 881,425 ¥174,296 ¥248,332 ¥332,334 ¥(5,003) ¥ 1,793

Foreigncurrencytranslation
adjustment

Subscription
rights tosharesMinority
interests

Total net
assets¥191,097 ¥(16,308)
—
—
—
—
—
—
56,167
—
—
—
—
—
—
—
—
—
—
—
—
2,865
—
—
247,264 (13,443)————
10,464
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(2,485)————
257,728 (15,928)

¥ —
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
86
—
86

¥18,447
—
—
—
—
—
—
—
—
—
—
571
19,018
—
—
—
—
—
—
—
—
—
—
—
1,589
20,607¥876,811(8,796)(176)
75,214
6,448
2,454
(996)
30
8,735
54
2,865
571
963,214(15,825)
87,378684(1,778)71(1,239)52(39,584)(160)(2,485)
86
1,589
992,003

—
—
—
—
—
—
—
—
—
—
5,335
—
—
—
—
—
—
—
—
—
—
(353)
—
—
—
— (19,761)
—
—
—
—
—
—
—
—
—
¥(459) ¥263,063 ¥(35,689)

—
—
—
—
—
—
—
—
—
134
—
—
¥220

—
(5,338)— (19,335)—
83,572
—
22
—
(851)
—
185
— (30,783)—(353)— (19,761)
—
134
366
366
—
(1)
¥20,973 ¥999,860

¥ —
—
—
—
—
—
—
—
—
54
—
—
54
—
—
—
—
—
—
—
—
(160)
—
—
—
(106)

Reserveon landrevaluation

Thousands of U.S. dollars (Note 1)

BALANCE AT MARCH 31, 2008................................................ $1,774,366 $2,528,036 $2,837,718
Prior-period adjustments due to adoption of
new accounting standard (Note 2 (H))..............................................
Cash dividends paid.......................................................................
Net income ...................................................................................
Reversal of reserve on land revaluation, net of tax...........................
Purchase of treasury stock .............................................................
Sales of treasury stock ...................................................................
Net unrealized holding gains on securities.......................................
Net unrealized gains (losses) on hedging derivatives........................
Foreign currency translation adjustment .........................................
Subscription rights to shares ..........................................................
Minority interests ..........................................................................
Other ............................................................................................

——(54,342)—— (196,834)——
850,779——(54,088)
—
—
—
—
31
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(10)
BALANCE AT MARCH 31, 2009................................................ $1,774,366 $2,528,067 $3,383,223$(44,121)$ 331,630$(1,079)$2,623,720$(162,150)$ 875$209,783 $10,098,778————(8,663)
1,853
—
—
—
—
—
—
$(50,931)

—
—
—
—
—
—
(313,377)—————$ 18,253

—
—
—
—
—
—
—
(3,594)————$(4,673)———
54,311
—
—
—
—
—
—
—
—
$2,678,031

—
—
—
—
—
—
—
—
(201,171)———$(363,321)

—
—
—
—
—
—
—
—
—
1,365
—
—
$2,240—(54,342)—(196,834)—
850,779—
223—(8,663)—
1,884—(313,377)—(3,594)—(201,171)
—
1,365
3,726
3,726
—
(10)
$213,509 $10,178,764(*1) Includes appropriation of retained earnings of ¥4,398 million approved at the Ordinary General Shareholders’ Meeting held on June 29, 2006.
(*2) Appropriation of retained earnings approved at the Ordinary General Shareholders’ Meeting held on June 29, 2006.

See accompanying notes.

51

Consolidated Statements of Cash Flows
Mitsui Fudosan Co., Ltd. and its Subsidiaries
For the years ended March 31, 2009, 2008 and 2007

Thousands of
U.S. dollars (Note 1)

Millions of yen

Cash flows from operating activities:
Income before income taxes ................................................................................
Adjustments to reconcile income before income taxes to net cash
provided by operating activities
Depreciation and amortization .....................................................................
Equity in net income of affiliated companies............................................
Gain on sales of property and equipment, net .........................................
Loss on disposal of property and equipment ............................................
Loss on disposal of property and equipment and related expenses ..
Loss on devaluation of real property for sale ...........................................
Interest and dividend income ........................................................................
Interest expense ................................................................................................
Gain on sales of marketable securities, net .............................................
Impairment loss on investment securities ................................................
Impairment loss on investment in affiliated company ..........................
Decrease (increase) in accounts receivable ...............................................
Increase in real property for sale andadvances paid for purchases ......................................................................
Decrease (increase) in equity investments in properties for sale ........
Increase (decrease) in accounts payable ....................................................
Bonuses paid to directors ...............................................................................
Interests and dividends received ..................................................................
Interests paid ......................................................................................................
Income taxes paid .............................................................................................
Other, net ...........................................................................................................
Net cash (used in) provided by operating activities ..........................
Cash flows from investing activities:
Purchases of property and equipment ..............................................................
Proceeds from sale of property and equipment .............................................
Increase in deposits from tenants ......................................................................
Decrease in deposits from tenants .....................................................................
Increase in lease deposits .....................................................................................
Decrease in lease deposits ...................................................................................
Purchases of marketable and investment securities .....................................
Proceeds from sale of marketable and investment securities ....................
Increase in non-current loans and accounts receivable ...............................
Decrease in non-current loans and accounts receivable .............................
Other, net .................................................................................................................
Net cash used in investing activities .....................................................
Cash flows from financing activities:
Proceeds from long-term debt ............................................................................
Repayments of long-term debt ...........................................................................
Proceeds from bank loans and commercial paper .................................
Repayments of bank loans and commercial paper ................................
Proceeds from issuance of bond .........................................................................
Payments for redemption of bond .....................................................................
Cash dividends paid ...............................................................................................
Payments of dividends to minority shareholders ...........................................
Repayments of lease obligations ...........................................................
Net increase in treasury stocks ...........................................................................
Net cash provided by financing activities ............................................
Effect of exchange rate changes on cash and cash equivalents .....................
Net (decrease) increase in cash and cash equivalents .......................................
Cash and cash equivalents at beginning of year .................................................
Cash and cash equivalents at end of year .............................................................
See accompanying notes.

52

¥

2009

2008

2007

2009

115,981¥ 155,067¥ 116,020$ 1,180,709

48,891(4,510)—3,595—
15,896(3,044)29,768—17,559—2,534

44,312(7,064)(17,327)—
3,408—(2,823)
26,031(2,869)5,417

40,122(4,410)(7,677)
4,575—
28,736(2,191)
21,421——

12,961—

3,474(11,178)497,720(45,913)—36,598—161,824(30,988)
303,044—
178,754—
25,797(125,796)
509
345
—
4,902
(28,732)(62,664)(56,231)(40,997)(100,419)
23,479(7,482)(24)
4,809(25,363)(33,059)
15,23597,763(114,376)(40,125)
6,815
(178)
3,180
(20,555)(22,148)
59,93957,970(1,280,627)
5,182
3,512
—
49,903(292,497)(637,931)(572,444)(417,357)(152,972)
2,887
55,020(43,198)(11,126)
27,760(36,987)
5,327(11,514)
13,7889,381(141,634)(346,765)
35,92278,803(47,226)(28,547)
20,702(129,478)
4,531(4,683)
6,075
18,506(392,160)(219,798)
139,000
70,282(38,545)(23,963)
22,435(27,493)
5,262(4,050)7,700(7,837)(77,007)(1,557,284)
29,390560,114(439,764)(113,265)
282,602(376,535)
54,230(117,215)
140,364
95,502(1,441,861)

389,452(119,354)
1,625,544(1,670,745)
10,000(30,000)(19,324)(958)(1,767)(632)
182,216(189)(604)
63,496¥62,892

369,351(154,718)
382,052(353,133)
50,000—(15,812)(416)—(1,188)276,136(59)(18,320)
81,816¥ 63,496

272,999(237,630)
734,227(750,226)
60,000(30,000)(8,794)(1,509)—(982)
38,085
180
19,22862,588¥ 81,816

3,964,695(1,215,046)
16,548,346(17,008,500)
101,802(305,406)(196,722)(9,753)(17,989)(6,434)
1,854,993(1,924)(6,149)646,401$ 640,252

Notes to Consolidated Financial Statements
Mitsui Fudosan Co., Ltd. and its Subsidiaries

1 BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Mitsui Fudosan Co.,
Ltd. (the “Company”) have been prepared in accordance with the provisions
set forth in the Japanese Financial Instruments and Exchange Law and its
related accounting regulations, and in conformity with accounting principles
generally accepted in Japan (“Japanese GAAP”), which are different in certain
respects as to application and disclosure requirements of International
Financial Reporting Standards.
The accounts of overseas subsidiaries are based on their accounting
records maintained in conformity with generally accepted accounting
principles prevailing in the respective countries of domicile. The
accompanying consolidated financial statements have been restructured andtranslated into English (with some expanded descriptions) from theconsolidated financial statements of the Company prepared in accordancewith Japanese GAAP and filed with the appropriate Local Finance Bureau of
the Ministry of Finance as required by the Financial Instruments andExchange Law. Some supplementary information included in the statutory
Japanese language consolidated financial statements, but not required forfair presentation, is not presented in the accompanying consolidated
financial statements.
The translations of the Japanese yen amounts into U.S. dollars areincluded solely for the convenience of readers, using the prevailing exchange
rate at March 31, 2009, which was ¥98.23 to U.S. $1.00. The conveniencetranslations should not be construed as representations that the Japanese yenamounts have been, could have been, or could in the future be, converted
into U.S. dollars at this or any other rate of exchange.

2 SIGNIFICANT ACCOUNTING POLICIES(A) CONSOLIDATIONThe consolidated financial statements include the accounts of the Company
and its subsidiaries. The difference between the cost and the underlying net
equity at fair value of investments in consolidated subsidiaries and in equity
method investees is amortized over a period of 5 years. If the amount isimmaterial, it is fully recognized currently in earnings.
The difference between the cost and the underlying net equity at fairvalue of investments in consolidated subsidiaries is recorded as goodwill.
All significant inter-company accounts and transactions have been
eliminated. In the elimination of investments in subsidiaries, the assets andliabilities of the subsidiaries, including the portion attributable to minority
shareholders, are recorded based on the fair value at the time the Company
acquired control of the respective subsidiaries.
(B) USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity withthe generally accepted accounting principles requires management to makecertain estimates and assumptions that affect the reported amounts in thefinancial statements and the accompanying notes. Actual results could differ
from those estimates.
(C) EQUITY METHOD
Investments in all significant affiliated companies are accounted for by theequity method and, accordingly, stated at cost adjusted for equity inundistributed earnings and losses from the date of acquisition.
(D) TRANSLATION OF FOREIGN CURRENCY ACCOUNTS
Foreign currency receivables and payables are translated at appropriate yearend rates and the resulting translation gains or losses are taken into income
currently.
Financial statements of consolidated overseas subsidiaries are translated
into Japanese yen at the year-end rate, except that shareholders’ equity
accounts are translated at historical rates and income statement items
resulting from transactions with the Company at the rates used by theCompany.
Differences arising from translation are presented as “Foreign currencytranslation adjustment” in valuation and translation adjustments under net
assets section.

(E) CASH AND CASH EQUIVALENTS
Deposits in banks and short-term investments which are highly liquid, readily
convertible to cash and with insignificant risk of market value fluctuation,with a maturity of three months or less at the time of purchase are treated as
cash equivalents.
(F) SECURITIES
Held-to-maturity securities are stated at amortized cost.
Other securities with market values are stated at market value. Unrealized
gains and unrealized losses on these securities are reported, net of applicable
income taxes, as a separate component of valuation and translation
adjustments under net assets section. Realized gains and losses on sale ofsuch securities are computed using moving-average cost.
Other securities without market values are stated at moving-average cost.
The Company and its consolidated subsidiaries recognize losses for thedifference between the market value and the carrying amount when themarket value significantly declines. The Company and its consolidated
subsidiaries consider the decline to be significant when the market value ofthe other securities declines more than 50% of the carrying amount. Whenthe market value of the other securities declines from 30% to less than 50%of the carrying amount, the decline is also determined to be significant if themarket value of the securities is considered not to be recoverable to thecarrying amount.
If the net realizable value of the securities without market value declines
significantly below the carrying amount, it is written down to net realizablevalue with a corresponding charge in the statements of income.
(G) INVENTORIES, REVENUE AND RELATED COSTS
Inventories are stated at cost determined mainly by the specific identification
method. Costs do not include interest and administrative expenses incurred
during or after development of real estate, which are charged to income
when incurred.
Effective April 1, 2006, the Company and its domestic subsidiaries
adopted early the new accounting standard, “Accounting Standard for
Measurement of Inventories” (Statement No. 9 issued by the AccountingStandards Board of Japan). Under the new standard, inventory is initially
recorded at acquisition cost, and when net realizable value is less than thecost (i.e., profitability of inventory has declined), the cost basis is reduced to53

net realizable value. Under the previous standard, inventory initially recorded
at cost was reduced to market value when market value declined significantly
and unless the market value was expected to recover to the cost.
As a result of adopting the new accounting standard, the Company andits consolidated subsidiaries recognized loss on devaluation of real property of¥28,736 million for the year ended March 31, 2007 which was charged tocosts and expenses - other.
For the year ended March 31, 2009, the Company and its consolidated
subsidiaries recognized loss on devaluation of real property for sale of¥15,896 million ($161,824 thousand) which was charged to cost of revenue
from operations.
Revenue from the leasing is recognized on an accrual basis over the lease
term. Revenue from sale of properties is recognized in full when delivered andaccepted by the customers. Revenue from construction work is recognized by
the completed contract method, except long-term contracts exceeding certain
amounts, which are accounted for by the percentage-of-completion method,
and related costs are recognized as incurred.
(H) PROPERTY AND EQUIPMENT, RELATED DEPRECIATION
AND REVALUATION — excluding leased assets
Property and equipment are carried mainly at cost.
When disposed of, the cost and related accumulated depreciation orrevaluation of property and equipment are removed from the respective
accounts and the net difference, less any amounts realized on disposal, isreflected in the statements of income.
Depreciation of property and equipment is mainly computed by the
declining-balance method over the estimated useful lives of the assets, except
for those listed below which are calculated using the straight-line method.
1. Office buildings of the Company
2. Buildings acquired by the domestic consolidated subsidiaries
after April 1, 1998
3. Property and equipment of the overseas consolidated subsidiaries
Estimated useful lives used in the computation of depreciation are
generally as follows: Buildings 29-50 years
Structures 15-17 years
Machinery 7-15 years
Equipment 3-15 years
For buildings on fixed term leasehold, the Company computes
depreciation using the straight-line method, over its lease term assuming noresidual value.
Effective from the year ended March 31, 2009, the Company adopted theaccounting standard, “Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements” (PITF
No. 18 issued by the Accounting Standards Board of Japan on May 17, 2006),
and as a result, land and buildings owned by consolidated subsidiary in the
United Kingdom, formerly stated at fair value with unrealized gains and losses
directly charged or credited to retained earnings, are stated at acquisition costless accumulated depreciation. Prior-year depreciations and otheradjustments of ¥5,338 million ($54,342 thousand) are charged to thebeginning balance of retained earnings of the year ended March 31, 2009.
There is no significant impact on income as a result of adopting thestandard.
In connection with the 2007 revisions to the Japanese corporate income
tax law, the Company and its domestic subsidiaries changed their method of
calculating the depreciation as follows:54

1. Depreciation expenses for certain property and equipment acquired on orafter April 1, 2007 are calculated based on the revised depreciation tables
under the Japanese corporate income tax law with residual value of ¥1.
2. Under the Japanese corporate income tax law prior to the 2007 revision,
property and equipment had been depreciable to 5% of the acquisition
costs. Revised Japanese corporate income tax law permits to further
depreciate the residual amount (5% of the acquisition costs less ¥1) of
those property and equipment acquired before April 1, 2007 understraight-line method over 5 years, commencing the fiscal year following
the year in which the property and equipment have been depreciated to
5% of the acquisition costs.
There is no significant impact on income for the year ended March 31,
2008 as a result of these changes.
(I) IMPAIRMENT LOSSES ON FIXED ASSETSThe Company and its domestic subsidiaries have followed accounting
standards for impairment of fixed assets (“Opinion on Establishment of
Accounting Standards for Impairment of Fixed Assets” issued by the BusinessAccounting Deliberation Council) and the guidance on accounting standards
for impairment of fixed assets (the “Financial Accounting Standard Guidance
No. 6” issued by the Accounting Standards Board of Japan). The accounting
standards require that fixed assets be tested for recoverability whenever
events or changes in circumstances indicate that the assets may be impaired.
When the undiscounted cash flows estimated to be generated by those assets
are less than the carrying amount of those assets, the net carrying value of
assets not recoverable is reduced to recoverable amounts. Recoverable
amounts are measured by net realizable values or values in current use. Net
realizable values are determined mainly based upon appraisal value
calculated by real-estate appraisers. Values in current use are calculated
based on the present values of future cash flows.
Accumulated impairment losses are deducted from book values of related
fixed assets.
(J) LAND REVALUATION
Pursuant to the Law Concerning Land Revaluation and the revisions thereof,
the Company and certain consolidated subsidiaries revalued land used forbusiness activities on March 31, 2002.
The land prices for revaluation were determined based on the appraisal
prices by real estate appraisers in accordance with Article 2, Paragraph 5of the Enforcement Ordinance Concerning Land Revaluation. The
difference between quoted appraisal value and the carrying amount isrecorded, net of applicable income taxes, as “Reserve on land revaluation”
as a separate component of valuation and translation adjustments under
net assets section.
(K) GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets are included in “other” under caption of“investments and other assets.”
Goodwill (including negative goodwill) is amortized over a period of 5
years under straight-line method. If the amount is immaterial, it is fullyrecognized currently in earnings.
Other intangible assets are amortized under straight-line method. Software(for internal use) is amortized over its estimated useful lives of 5 years.
(L) ALLOWANCE FOR DOUBTFUL ACCOUNTSThe Company and its consolidated domestic subsidiaries provide for doubtful
accounts principally at an amount computed based on the historical bad debt

Notes to Consolidated Financial Statements

ratio during a certain reference period plus an estimated uncollectible amountbased on the analysis of certain individual accounts, including claims inbankruptcy.
(M) ALLOWANCE FOR EMPLOYEES’ RETIREMENT BENEFITSThe Company has a retirement plan which provides for lump-sum payment
and annuity. Upon retirement age or at 60, a regular employee is entitled toreceive a lump-sum payment and an annuity, or in certain cases at the optionof the retiring employee, the full amount of the retirement benefits may be
paid in a lump-sum. The retirement benefits are based primarily upon theyears of employee’s service and monthly pay at the time of retirement.
The allowance and expenses for retirement benefits are determined basedon the amounts actuarially calculated using certain assumptions.
The Company and its consolidated subsidiaries provide allowance for
employees’ retirement benefits at fiscal year end based on the estimatedamounts of projected benefit obligation and the fair value of the plan assets
at that date.
(N) ALLOWANCE FOR DIRECTORS’ AND CORPORATE
AUDITORS’ RETIREMENT BENEFITS
Allowance for retirement benefits for directors and corporate auditors of theCompany and its 37 consolidated subsidiaries are also provided at theamounts to be paid if all eligible directors and corporate auditors would havebeen retired at year end under the internal guidelines.
(O) ACCOUNTING FOR LEASE TRANSACTIONS
Effective from the year ended March 31, 2009, the Company and its domestic
subsidiaries adopted the new accounting standards, “Accounting Standard
for Lease Transactions” (Statement No. 13 originally issued by the First
Committee of the Business Accounting Council on June 17, 1993 and revisedby the Accounting Standards Board of Japan on March 30, 2007) and theimplementation guidance on accounting standard for lease transactions (theFinancial Accounting Standard Implementation Guidance No. 16 issued
originally by the Accounting System Committee of the Japanese Institute ofCertified Public Accountants on January 18, 1994 and revised by the
Accounting Standards Board of Japan on March 30, 2007), (collectively, “thenew accounting standards”).
Those standards require finance leases to be accounted for in a manner
similar to the accounting treatment for ordinary sales transactions. Lessees
are required to record assets and liabilities regarding finance leases withrecognition of depreciation and interest expenses. Capitalized leased
assets are depreciated under straight-line method, over its lease term
assuming no residual value. Lessors are required to recognize leasereceivables or investments in leased assets along with related lease(interest) income.
Under the previous accounting standards, finance leases which do nottransfer ownership of the leased assets to lessees were accounted for as
operating leases. It should be noted that such finance leases whose
commencement day falls on or prior to March 31, 2008 are still accounted for
as operating leases under the new standards.
There is no significant impact on income as a result of adopting thosestandards.
(P) INCOME TAXESThe Company and its consolidated domestic subsidiaries are subject to a
corporate tax of 30%, an inhabitant tax of approximately 6% and adeductible enterprise tax of approximately 8%, which in the aggregate

resulted in a statutory income tax rate of approximately 41% for the years
ended March 31, 2009, 2008 and 2007.
Income taxes are provided for on the basis of income for financial
statement purposes. The tax effect of temporary differences between the
carrying amounts of assets and liabilities for financial statements and income
tax purposes is recognized as deferred income taxes.
(Q) DERIVATIVES AND HEDGE ACCOUNTING
The Company and its consolidated subsidiaries defer recognition of gains orlosses resulting from changes in fair value of derivative financial instruments
until the related losses or gains on the hedged items are recognized, if
derivative financial instruments are used as hedges and meet certain
hedging criteria.
However, in cases where forward foreign exchange contracts are used ashedges and meet certain hedging criteria, forward foreign exchange contracts
and hedged items are accounted for in the following manner:
1. If a forward foreign exchange contract is executed to hedge an existing
foreign currency receivable or payable,(a) the difference, if any, between the Japanese yen amount of thehedged foreign currency receivable or payable translated using the spot rate
at the inception date of the contract and the book value of the receivable orpayable is recognized in the income statements in the period which includes
the inception date, and(b) the discount or premium on the contract (that is, the difference
between the Japanese yen amount of the contract translated using thecontracted forward rate and that translated using the spot rate at the
inception date of the contract) is recognized over the term of the contract.
2. If a forward foreign exchange contract is executed to hedge a futuretransaction denominated in a foreign currency, the future transaction will berecorded using the contracted forward rate, and no gains or losses on theforward foreign exchange contract are recognized.
Also, if interest rate swap contracts are used as hedge and meet certain
hedging criteria, the net amount to be paid or received under the interest rate
swap contract is added to or deducted from the interest on the assets or
liabilities for which the swap contract was executed.
(R) EQUITY INVESTMENTS REGARDING REAL ESTATESECURITIZATION-RELATED BUSINESS
Equity investments in tokumei-kumiai, or silent partnerships (“TK”),
preferred securities issued by tokutei-mokuteki-kaisha, or specific purpose
companies (“TMK”) and others regarding real estate securitization-related
business (collectively, “equity investments”) are presented in the balance
sheets as follows.
Equity investments held for sale are presented as “Equity investments inproperties for sale” under “CURRENT ASSETS” and those held other than forsale are presented as “Investment securities” under “INVESTMENTS andOTHER ASSETS.”(S) REVENUE FROM JAPANESE REAL ESTATE INVESTMENT TRUST (J-REIT)
Revenue from J-REIT is included in “Revenue from operations.”(T) DIRECTORS’ BONUSESThe Company and its domestic subsidiaries have followed the accounting
standard, “Accounting Standard for Directors’ Bonus” (Statement No. 4
issued by the Accounting Standards Board of Japan). Directors’ bonuses arecharged to income as selling, general and administrative expenses.

55

(U) PRESENTATION OF NET ASSETS IN THE BALANCE SHEETS
Effective from the year ended March 31, 2007, the Company and its domestic
subsidiaries adopted the new accounting standards, “Accounting Standard
for Presentation of Net Assets in the Balance Sheet” (Statement No. 5 issued
by the Accounting Standards Board of Japan) and the implementation
guidance for the accounting standard for presentation of net assets in thebalance sheet (the Financial Accounting Standard Implementation Guidance
No. 8 issued by the Accounting Standards Board of Japan), (collectively, “thenew accounting standards”).
Under the new accounting standards, consolidated balance sheets
comprise assets, liabilities and net assets, whereas previously presented
balance sheets comprised assets, liabilities, minority interests andshareholders’ equity. Net assets section comprises shareholders’ equity,
valuation and translation adjustments, subscription rights to shares andminority interests, as applicable. It should be noted that “net unrealized gains
on hedging derivatives” under “valuation and translation adjustments” were
included in assets or liabilities, gross of applicable taxes, under the previous
presentation, and therefore, “net unrealized gains on hedging derivatives” asof the beginning of the year ended March 31, 2007 is presented as “—“ inthe consolidated statements of changes in net assets.
(V) SHARE-BASED PAYMENTS
Effective from the year ended March 31, 2008, the Company and its
domestic subsidiaries adopted the accounting standards, “AccountingStandard for Share-Based Payment” (Statement No. 8 issued by the
Accounting Standards Board of Japan) and the implementation guidance forthe accounting standard for share-based payment (the Financial AccountingStandard Implementation Guidance No. 11 issued by the AccountingStandards Board of Japan).

Those standards require that the cost of stock options be measured basedon the grant-date fair value. Outstanding options are presented as subscription
rights to shares as a component of net assets in the balance sheet.
There is no significant impact on income for the year ended March 31,
2008 as a result of adopting those standards.
(W) EARNINGS PER SHARE
Basic income per share is computed by dividing the net income available for
distribution to shareholders of common stock by the weighted average
number of shares of common stock outstanding during each year. Diluted
net income per share is computed by dividing the net income available for
distribution to shareholders by the weighted average number of shares ofcommon stock outstanding during each year assuming full conversion of
convertible bonds and full execution of warrants. Diluted net income pershare for the year ended March 31, 2007 is not presented since no dilutive
potential common shares were outstanding as of March 31, 2007.
(X) RECLASSIFICATIONS
Certain prior years’ amounts have been reclassified to conform to the current
presentation. On the consolidated statements of cash flows, “increase(decrease) in bank loans and commercial paper” as formerly presented undercaption of cash flows from financing activities is separately disclosed on agross basis of “proceeds from bank loans and commercial paper” and“repayments of bank loans and commercial paper” for the year ended March
31, 2009 because it became significant. Accordingly, “increase (decrease) inbank loans and commercial paper” for the years ended March 31, 2008 and2007 are reclassified to conform to 2009 presentation. These changes had no
impact on previously reported results of operations.

3 BUSINESS REORGANIZATIONSThe Company and its domestic subsidiaries have followed accounting
standards, “Accounting Standards for Business Combinations” (issued byBusiness Accounting Council), “Accounting Standard for Business
Divestitures” (Statement No. 7 issued by the Accounting Standards Board ofJapan) and “Guidance on Accounting Standard for Business Combinations
and Accounting Standard for Business Divestitures” (Guidance No. 10 issued
by the Accounting Standards Board of Japan) (collectively, “accounting
standards for business combinations and divestitures”).
1. Business reorganizations for the year ended March 31, 2007
(1) Reorganization of residential sales business
On October 1, 2006, the Company and Mitsui Real Estate Sales Co., Ltd.
(“MRES”) transferred their residential sales business and residential salesconsignment services business, with any associated rights andobligations, to Mitsui Fudosan Residential Co., Ltd. (“MFR”), for the
purpose of integrating residential sales business into MFR, in exchange
for 996,000 shares and 2,000 shares of common stock issued by MFR,
respectively. Those 2,000 shares of common stock issued by MFR to MRES
have been distributed to the Company as dividends.
The reorganization has been accounted for as transactions among
entities under common control in accordance with the accounting
standards for business combinations and divestitures.

56

Book values of assets and liabilities transferred are as follows:
Millions of yen

Assets and liabilities transferred from the Company:
Current assets ...............................................................................
Non-current assets .......................................................................
Total ...........................................................................................
Current liabilities ..........................................................................
Long-term liabilities.....................................................................
Total ...........................................................................................
Assets and liabilities transferred from MRES:
Current assets ...............................................................................
Non-current assets .......................................................................
Total ...........................................................................................
Current liabilities ..........................................................................
Long-term liabilities.....................................................................
Total ...........................................................................................

¥365,789
7,648¥373,437¥210,561
105,038¥315,599¥27,597
1,347¥28,944¥28,844—¥28,844(2) Reorganization of building leasing business of MRESOn October 1, 2006, MRES transferred its building leasing business with any
associated rights and obligations to the Company. The reorganization will
enable specialization by MRES in promising areas of real estate brokerageand car park leasing operations, and concentration of building leasing
business in the Company.

Notes to Consolidated Financial Statements

The reorganization has been accounted for as transactions among
entities under common control in accordance with the accounting
standards for business combinations and divestitures.
Book values of assets and liabilities transferred are as follows:
Millions of yen

Current assets ...............................................................................
Non-current assets .......................................................................
Total ...........................................................................................
Current liabilities ..........................................................................
Long-term liabilities.....................................................................
Total ...........................................................................................

¥ 4,368
27,312¥31,680¥ 8,469
5,111¥13,580

2. Business reorganizations for the year ended March 31, 2008
(1) Merger with Retail and Hotel Properties Co., Ltd.
On July 1, 2007, the Company merged Retail and Hotel Properties Co.,
Ltd. (“RHP”) to integrate hotel and commercial facilities leasing businessheld by RHP into the Company, upon which RHP dissolved. The merger isbelieved to contribute in enhancing efficiency of management of hotel
and commercial facilities leasing business.
The merger has been accounted for as transactions among entities
under common control in accordance with the accounting standards forbusiness combinations and divestitures.

(2) Reorganization of building business of Kokusai Kanko Kaikan Co., Ltd.
On July 1, 2007, Kokusai Kanko Kaikan Co., Ltd. (“KK”) transferred its
building business with any associated rights and obligations to the Company.
The business transfer was made for the purposes of enhancing customer
orientation and competitiveness of the Company and its group companies.
KK, which changed its name to Celestine Hotel Co., Ltd. on October 1, 2007,
has specialized in hotel management after the reorganization.
The reorganization has been accounted for as transactions among
entities under common control in accordance with the accounting
standards for business combinations and divestitures.
3. Business reorganizations for the year ended March 31, 2009
Reorganization of building business of Minato Estate Co., Ltd.:On October 1, 2008, Minato Estate Co., Ltd. transferred its building
business with any associated rights and obligations to the Company. The
business transfer was made for the purposes of enhancing efficiency andcompetitiveness of the business. The reorganization has been accounted
for as transactions among entities under common control in accordancewith the accounting standards for business combinations and divestitures.

4 MARKET VALUE INFORMATION OF MARKETABLE SECURITIES, INVESTMENT SECURITIES AND OTHERS(1) The following tables summarize historical cost, book value and market value of securities with market values as of March 31, 2009 and 2008:(a) Held-to-maturity securities with market values:
Millions of yen

2009

Securities whose market value exceeds book value
National and local government bonds, etc. .....................................................
Securities whose market value does not exceed book value
National and local government bonds, etc. .....................................................
Total ...................................................................................................................................

2008

Book
Value

MarketValue

Difference

Book
Value

MarketValue

Difference

¥332

¥334

¥ 2

¥359

¥362

¥ 3

50
¥382

50
¥384

—
¥ 2

191
¥550

191
¥553

—
¥ 3

Thousands of U.S. dollars

2009

Securities whose market value exceeds book value
National and local government bonds, etc. .....................................................
Securities whose market value does not exceed book value
National and local government bonds, etc. .....................................................
Total ...................................................................................................................................

Book
Value

MarketValue

Difference$3,380$3,400$20

509$3,889509$3,909—$20

57

(b) Other securities with market values:
Millions of yen

2009
Historical
Cost

Securities whose book value (market value) exceeds historical cost
Stocks ............................................................................................................................
Bonds
National and local government bonds, etc. ............................................
Other..............................................................................................................................
Subtotal ........................................................................................................................
Securities whose book value (market value) does not exceed
historical cost
Stocks ...........................................................................................................................
Other ............................................................................................................................
Subtotal .......................................................................................................................
Total ...................................................................................................................................

Book Value(Market Value)

2008
Difference¥26,587¥35,600 ¥ 9,013—
11,26437,851—
16,20551,80543,19813,76956,967¥94,818

36,487 (6,711)
9,987 (3,782)
46,474 (10,493)¥98,279 ¥ 3,461—
4,941
13,954

Historical
Cost

Book Value(Market Value)

Difference¥ 39,502 ¥ 86,429¥46,92740
21,03360,57540
34,710121,179—
13,67760,60439,36333,424
4,301
4,018
43,66437,442¥104,239 ¥158,621(5,939)(283)(6,222)¥54,382

Thousands of U.S. dollars

2009
Historical
Cost

Securities whose book value (market value) exceeds historical cost
Stocks ............................................................................................................................
Bonds
National and local government bonds, etc. ............................................
Other..............................................................................................................................
Subtotal ........................................................................................................................
Securities whose book value (market value) does not exceed
historical cost
Stocks ............................................................................................................................
Other..............................................................................................................................
Subtotal ........................................................................................................................
Total ...................................................................................................................................

Book Value(Market Value)

Difference$270,661 $ 362,415 $ 91,754—
114,669
385,330—
164,969
527,384—
50,300142,054439,764
371,445 (68,319)
140,171
101,670 (38,501)
579,935
473,115 (106,820)$965,265 $1,000,499 $ 35,234(2) The following tables summarize other securities sold in the years ended March 31, 2009, 2008 and 2007:
Millions of yen

2009

2008

Gains

LossesSales amount

Gains

LossesSales amount

Gains

Losses¥5,311¥1,328¥(684)¥4,566¥2,869¥(6)¥5,191¥577¥—

Thousands of U.S. dollars

2009

58

2007

Sales amount

Sales amount

Gains

Losses$54,067$13,519$(6,963)

Notes to Consolidated Financial Statements(3) The following tables summarize the book value of securities without market value as of March 31, 2009 and 2008:
Millions of yen

Equity investments in properties for sale* ................................................................
Held-to-maturity securities ..............................................................................................
Other securities
Unlisted stocks (excluding OTC securities)...........................................................
Other (TK investments, preferred securities and others)* .............................

Thousands of U.S. dollars

2009

2008

2009

¥89,776—¥97,152
17,970$913,937—

18,26551,532

12,817
36,102

185,941
524,606* See Note 2(R)(4) The redemption schedule on held-to-maturity securities as of March 31, 2009 and 2008 is shown as follows:
Millions of yen

2009
Due within
1 YearNational and local government bonds, etc. ............................................................
Total ........................................................................................................................................

¥126
¥126

Due after 1
Year and within
5 Years

Due after 5
Years andwithin 10 Years

Due after
10 Years

¥241
¥241

¥15
¥15

¥—
¥—

Due after 1
Year and within
5 Years

Due after 5
Years andwithin 10 Years

Due after
10 Years

¥282
—
¥282

¥25
—
¥25

¥—
—
¥—

Millions of yen

2008
Due within
1 YearNational and local government bonds, etc. ............................................................
Corporate bonds ..................................................................................................................
Total ........................................................................................................................................

¥

284
4,970
¥13,000

Thousands of U.S. dollars

2009

National and local government bonds, etc. ............................................................
Total ........................................................................................................................................

Due within
1 YearDue after 1
Year and within
5 Years

Due after 5
Years andwithin 10 Years

Due after
10 Years$1,283$1,283$2,453$2,453

$153
$153

$—
$—

59

5 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING TRANSACTIONSThe Company and its consolidated subsidiaries use forward foreignexchange contracts, foreign currency swap contracts and interest rate
swap contracts as derivative financial instruments only for the purpose of
mitigating future risks of fluctuation of foreign currency exchange rates
and interest rates.
Forward foreign currency and foreign currency swap contracts are
subject to risks of foreign exchange rate changes and interest rate swap
contracts are subject to risks of interest rate changes.
The derivative transactions are executed and managed by theCompany’s Accounting and Finance Department in accordance with theestablished policies and within the specified limits on the amounts ofderivative transactions allowed.
The Company and its consolidated subsidiaries do not use derivative
financial instruments for speculative trading purposes. The derivative
financial instruments are executed with creditworthy financial institutions,and the Company’s management believes there is little risk of default by
counterparties.
The following summarizes hedging derivative financial instruments
used by the Company and its consolidated subsidiaries and items hedged:

Hedging instruments:
Forward foreign exchange contracts
Foreign currency swap contracts
Interest rate swap contracts
Hedged items:
Expected foreign currency transactions
Foreign currency debt
Borrowings and debentures
Forward foreign exchange contracts are executed within the scope ofordinary payments and receipts in foreign currency to hedge against
market fluctuation risks. Foreign currency swap contracts and interest rate
swap contracts are executed on a provisional basis to hedge against
market fluctuation risks.
The assessment of hedge effectiveness is omitted because significant
terms of hedging instruments and those of the items hedged are the sameand the risk of changes in foreign exchange rates and interest rates would
be entirely eliminated.

6 INVENTORIESInventories at March 31, 2009 and 2008 comprise the following:
Millions of yen

Real property for saleCompleted ........................................................................................................................
In progress ........................................................................................................................
Land held for development........................................................................................
Expenditure on contracts in progress ..........................................................................
Other ........................................................................................................................................

Thousands of U.S. dollars

2009

2008

2009

¥356,580
217,081
182,970
7,196
10,034¥773,861¥241,066
228,049
174,445
8,492
10,207¥662,259$3,630,052
2,209,926
1,862,669
73,257102,148$7,878,052

7 ADVANCES PAID FOR PURCHASES
Advances paid for purchases comprise primarily advance payments for purchasing real estate for sale.

8 LEASE DEPOSITSThe Company and its consolidated subsidiaries lease certain officebuildings and commercial facilities from the owners thereof and sublease
them to subtenants. In these transactions, the Company and its

60

consolidated subsidiaries pay lease deposits to the owners and receive
deposits from subtenants (See Note 12).

Notes to Consolidated Financial Statements

9 INCOME TAXES
Significant components of the Company’s deferred tax assets and liabilities as of March 31, 2009 and 2008 are as follows:
Millions of yen

Deferred tax assets:
Allowance for loss on devaluation of real property held for sale ..................
Unrealized inter-company transactions....................................................................
Allowance for loss on valuation of securities ........................................................
Net operating loss carryforwards ...............................................................................
Excess allowance for retirement benefits ...............................................................
Excess allowance for doubtful accounts ..................................................................
Accrued employees’ bonuses .......................................................................................
Unrealized loss on valuation of other securities ...................................................
Excess depreciation expense ........................................................................................
Excess prepaid expense ..................................................................................................
Loss on impairment of fixed assets ............................................................................
Unrealized loss on valuation of lease deposits .....................................................
Other ......................................................................................................................................
Total..................................................................................................................................
Deferred tax liabilities:
Deferred gain on sale of land and buildings for tax purposes ........................
Unrealized loss on valuation of shares held in consolidated subsidiaries .....
Unrealized inter-company transactions....................................................................
Unrealized gain on valuation of securities ..............................................................
Consolidation difference in real property ................................................................
Unrealized gain on valuation of lease deposits ....................................................
Unrealized gain on contribution of securities to retirement benefit trust .......
Other ......................................................................................................................................
Total..................................................................................................................................
Net deferred tax assets .........................................................................................................

Thousands of U.S. dollars

2009

2008

2009

¥ 22,405
5,665
7,922
21,502
12,249
2,390
5,885
4,316
3,097
—
16,783
4,411
15,205¥121,830¥ 38,334
5,359
18,332
8,185
11,948
1,505
5,942
2,529
2,836
1,975
12,501—
21,072¥130,518$ 228,087
57,67180,647
218,894
124,697
24,331
59,91043,93831,528—170,854
44,905
154,790$1,240,252¥ (24,912)(3,849)(409)(5,710)(541)(4,234)(1,656)(15,628)¥ (56,939)¥ 64,891¥ (25,515)(14,620)(406)(24,634)(541)——(20,951)¥ (86,667)¥ 43,851$ (253,609)(39,184)(4,164)(58,129)(5,507)(43,103)(16,858)(159,096)$ (579,650)$ 660,602

Amounts of total deferred tax assets as of March 31, 2009 and 2008 are presented net of valuation allowances of ¥12,922 million ($131,548 thousand)and ¥12,657 million, respectively.
Significant differences between the statutory tax rate and the Company’s effective tax rate for the years ended March 31, 2009, 2008 and 2007 are as
follows:

Statutory tax rate ....................................................................................................................
(Adjustments)
Unrealized loss on securities ..............................................................................................
Allowance for doubtful accounts......................................................................................
Impairment loss on investment in affiliated company .............................................
Equity in net income of affiliated companies ..............................................................
Permanent differences:Entertainment expenses and other ...........................................................................
Dividend income and other ...........................................................................................
Liquidation of subsidiaries ..................................................................................................
Other ............................................................................................................................................
Effective tax rate .....................................................................................................................

2009

2008

2007

40.66%

40.66%

40.66%(8.17)(6.67)
0.52(2.11).—.—
3.49(1.94).—.—.—(1.55)

1.09
.—
.—
1.27
26.59%

0.94.—.—(0.43)
42.72%

1.02(0.25)(3.60)(2.67)
33.61%

61

10 EMPLOYEES’ RETIREMENT BENEFITS(1) Outline of retirement plan:
The Company has adopted a tax qualified pension plan and lump-sum
pension plans as a defined benefit pension plan. The Company has also
adopted a retirement benefit trust.

17 consolidated subsidiaries have adopted tax qualified pension plans.
63 consolidated subsidiaries have adopted lump-sum pension plans. One
consolidated subsidiary has adopted employees’ pension funds.

(2) Details of projected benefit obligation:
Millions of yen

1. Projected benefit obligation ......................................................................................
2. Fair value of plan assets .............................................................................................
3. Unaccrued projected benefit obligation (1+2) ....................................................
4. Unrecognized actuarial differences .........................................................................
5. Unrecognized prior service costs ..............................................................................
6. Prepaid pension expenses ...........................................................................................
7. Allowance for employees’ retirement benefits (3+4+5+6) ...........................

Thousands of U.S. dollars

2009

2008

2009

¥(99,630)
48,362¥(51,268)
22,143114(473)¥(29,484)¥(93,900)
52,993¥(40,907)
13,38221(530)¥(28,034)$(1,014,252)
492,334$ (521,918)
225,420
1,160(4,815)$ (300,153)

Note: Some consolidated subsidiaries adopt the simple method to calculate projected benefit obligation.

(3) Details of retirement benefit expenses:
Millions of yen

1. Service costs—benefits earned during the year ...............................................
2. Interest costs on projected benefit obligation ....................................................
3. Expected return on plan assets .................................................................................
4. Amortization of actuarial differences .....................................................................
5. Amortization of prior service costs..........................................................................
6. Supplemental benefits..................................................................................................
7. Retirement benefit expenses (1+2+3+4+5+6) .................................................

Thousands of U.S. dollars

2009

2008

2007

2009

¥ 5,066
2,265(1,228)
2,878
212
180
¥ 9,373¥ 4,738
2,165(1,292)2,110
2
10¥ 7,733¥ 4,268
2,051(1,088)
2,226
(10)
103
¥ 7,550$ 51,573
23,058(12,501)
29,2992,158
1,832$ 95,419

Notes: 1. Retirement benefit expenses of consolidated subsidiaries adopting the simple method are included in service costs.
2. Supplemental benefits for the years ended March 31, 2009 and 2007 includes ¥180 million ($1,832 thousand) of premium retirement benefits paid
specifically for early retirement of employees and ¥93 million of premium retirement benefits paid specifically for employment transfer within consolidated
subsidiaries, respectively, which are included in “Other“ as a component of “COSTS AND EXPENSES.”(4) Basis for measurement of projected benefit obligation and other items:

2009
1. Allocation method for the projected
retirement benefits
Straight-line method
2. Discount rates
2.5%
3. Expected rates of return on plan assets 1.0-2.5%
4. Years over which the prior service
costs are allocated1-10 years Straight-line method over acertain number of years
within the average remaining
service years
5. Years over which the actuarial
differences obligations are allocated 5-10 years Straight-line method over acertain number of years
within the average remaining
service years

62

2008

2007

Straight-line method
2.5%
1.0-2.5%

Straight-line method
2.5%
1.0-2.5%

1-10 years

Straight-line method over acertain number of years
within the average remaining
service years

1-10 years

Straight-line method over acertain number of years
within the average remaining
service years

5-10 years

Straight-line method over acertain number of years
within the average remaining
service years

5-10 years

Straight-line method over acertain number of years
within the average remaining
service years

Notes to Consolidated Financial Statements

11 BANK LOANS, COMMERCIAL PAPER AND LONG-TERM DEBT
(1) Bank loans and commercial paper
Bank loans consist mainly of short-term notes and short-term borrowings
under the loan agreements. The Company and its consolidated subsidiaries

have had no difficulty in renewing such notes and borrowings, when they
considered it appropriate to do so.

The amounts and the weighted average interest rates of bank loans and commercial paper at March 31, 2009 and 2008 are as follow:
Millions of yen

Bank loans, with the weighted average interest rates of
1.27% in 2009 and 1.87% in 2008 ........................................................................
Commercial paper, with the weighted average interest rates of
0.23% in 2009 and 0.87% in 2008 ........................................................................

Thousands of U.S. dollars

2009

2008

2009

¥55,367¥63,820$563,647

13,00053,000132,342(2) Long-term debt
Long-term debt at March 31, 2009 and 2008 comprise the following:
Millions of yen

Long-term loans, principally from banks and insurance companies:
Loans secured by collateral or bank guarantees ...............................................
Unsecured loans.............................................................................................................
Bonds and debentures
Domestic:
2.45% yen notes due 2008 ......................................................................................
3.00% yen notes due 2013 ......................................................................................
2.08% yen notes due 2009 ......................................................................................
2.20% yen notes due 2009 ......................................................................................
2.33% yen notes due 2009 ......................................................................................
2.17% yen notes due 2008 ......................................................................................
2.29% yen notes due 2009 ......................................................................................
2.25% yen notes due 2012 ......................................................................................
2.04% yen notes due 2010 ......................................................................................
1.04% yen notes due 2013........................................................................................
1.81% yen notes due 2014........................................................................................
1.64% yen notes due 2014........................................................................................
1.65% yen notes due 2015........................................................................................
1.81% yen notes due 2016........................................................................................
1.99% yen notes due 2016........................................................................................
1.91% yen notes due 2016........................................................................................
1.54% yen notes due 2014........................................................................................
1.84% yen notes due 2017........................................................................................
2.06% yen notes due 2017 ......................................................................................
1.65% yen notes due 2014 ......................................................................................
1.97% yen notes due 2017 ......................................................................................
1.92% yen notes due 2018 ......................................................................................
Less amount due within one year .................................................................................

Thousands of U.S. dollars

2009

2008

2009

¥ 57,049
1,363,143
1,420,192¥ 70,947
1,097,654
1,168,601$ 580,770
13,877,053
14,457,823—
10,00010,00010,00010,000—10,0005,000
10,00010,00010,00010,00010,00020,00010,00020,00020,00010,00020,00010,00020,00010,000245,000
157,847¥1,507,345

25,00010,00010,00010,00010,0005,000
10,0005,000
10,00010,00010,00010,00010,00020,00010,00020,00020,00010,00020,00010,00020,000—265,000
146,354¥1,287,247—
101,802
101,802
101,802
101,802—
101,80250,899101,802
101,802
101,802
101,802
101,802203,604
101,802203,604
203,604
101,802203,604
101,802203,604
101,8022,494,147
1,606,912$15,345,058

63

Long-term loans, principally from banks and insurance companies consist of the following:
Millions of yen

Due within one year, with the weighted average interest rates of
3.11% in 2009 and 1.40% in 2008 ........................................................................
Due after one year, with the weighted average interest rates of
1.61% in 2009 and 1.87% in 2008 ........................................................................

Thousands of U.S. dollars

2009

2008

2009

¥ 117,847¥ 116,354$ 1,199,705

1,302,345¥1,420,192

1,052,247¥1,168,601

13,258,118$14,457,823

The following assets are pledged as collateral for secured loans:
Millions of yen

Collateralized assets
Land ....................................................................................................................................
Real property for sale...................................................................................................
Buildings and structures and others ......................................................................
Total ........................................................................................................................................
As is customary in Japan, collateral must be given if requested, undercertain circumstances, by a lending bank and such bank has the right tooffset cash deposited with it against any debt or obligation that becomesdue and, in case of default and certain other specified events, against all

Thousands of U.S. dollars

2009

2008

2009

¥ 35,755
28,523
66,905¥131,183¥ 51,692—
103,683¥155,375$ 363,993
290,370
681,105$1,335,468

debt payable to the bank. The Company and its consolidated subsidiaries
have never received any such requests nor do they expect that any such
request will be made.

The annual maturities of long-term debt at March 31, 2009 are as follows:Year ending March 31

Millions of yen

Thousands of U.S. dollars

2010 .....................................................................................................................................
2011 .....................................................................................................................................
2012 .....................................................................................................................................
2013 .....................................................................................................................................
2014 .....................................................................................................................................
Thereafter...........................................................................................................................
Total .....................................................................................................................................

¥ 157,847
246,953
236,307
227,401
201,999594,685¥1,665,192$ 1,606,912
2,514,028
2,405,650
2,314,985
2,056,388
6,054,007$16,951,970

12 DEPOSITS FROM TENANTS
Deposits from tenants at March 31, 2009 and 2008 comprise the following:
Millions of yen

Non-interest-bearing ........................................................................................................
Interest-bearing ..................................................................................................................
Total ........................................................................................................................................
Average interest rate .........................................................................................................
The Company and its consolidated subsidiaries generally make leaseagreements with tenants under which they receive both interest-bearing
deposits and non-interest-bearing deposits from tenants. The noninterest-bearing deposits and some of the interest-bearing deposits are

64

Thousands of U.S. dollars

2009

2008

2009

¥359,697
10,997¥370,694
1.59%¥342,173
14,439¥356,612
1.65%$3,661,783
111,952$3,773,735

not refundable during the life of the lease. The rest of the interest-bearing
deposits are generally refundable to the tenant in equal annual ormonthly payments with interests over certain periods of time commencing
after the grace periods, depending on the terms of the contracts.

Notes to Consolidated Financial Statements

13 NET ASSETS
other cash appropriations as legal earnings reserve until the total of legal
earnings reserve and additional paid-in capital equaled 25% of common
stock.
Under the Code, legal earnings reserve and additional paid-in capital
could be used to eliminate or reduce a deficit by resolution of theshareholders’ meeting or could be capitalized by resolution of the Boardof Directors. Under the Law, both of these appropriations generally requirea resolution of the shareholders’ meeting. Additional paid-in capital andlegal earnings reserve may not be distributed as dividends. Under theCode, however, on condition that the total amount of legal earnings
reserve and additional paid-in capital remained equal to or exceeded 25%of common stock, they were available for distribution by resolution of theshareholders’ meeting. Under the Law, all additional paid-in-capital andall legal earnings reserve may be transferred to other capital surplus andretained earnings, respectively, which are potentially available fordividends.
The maximum amount that the Company can distribute as dividends is
calculated based on the non-consolidated financial statements of theCompany in accordance with Japanese laws and regulations.

As described in Note 2 (U), net assets comprises four subsections, which
are the shareholders’ equity, valuation and translation adjustments,
subscription rights to shares and minority interests, as applicable.
The Japanese Corporate Law (the “Law”) became effective on May 1,
2006, replacing the Japanese Commercial Code (the “Code”). The Law isgenerally applicable to events and transactions occurring after April 30,
2006 and for fiscal years ending after that date.
Under Japanese laws and regulations, the entire amount paid for new
shares is required to be designated as common stock. However, acompany may, by resolution of the Board of Directors, designate an
amount not exceeding one-half of the price of the new shares asadditional paid-in capital, which is included in capital surplus.
Under the Law, in cases where a dividend distribution of surplus ismade, the smaller of an amount equal to 10% of the dividend or theexcess, if any, of 25% of common stock over the total of additional paidin-capital and legal earnings reserve must be set aside as additional paidin-capital or legal earnings reserve. Legal earnings reserve is included inretained earnings in the accompanying consolidated balance sheets.
Under the Code, companies were required to set aside an amountequal to at least 10% of the aggregate amount of cash dividends and

14 SUPPLEMENTAL INFORMATION ON THE CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS(1) Changes in number of shares issued and outstanding during the years ended March 31, 2009, 2008 and 2007 are as follows:(Thousands)

Numbers of shares as of March 31, 2006 .............
Numbers of shares increased (*1) ............................
Numbers of shares decreased (*2) ...........................
Numbers of shares as of March 31, 2007 .............
Numbers of shares increased (*3) ............................
Numbers of shares decreased (*4) ...........................
Numbers of shares as of March 31, 2008 .............
Numbers of shares increased (*5) ............................
Numbers of shares decreased (*4) ...........................
Numbers of shares as of March 31, 2009 .............

IssuedCommon stock

Treasury stock
Common stock

881,425——
881,425——
881,425——
881,425

1,796
352
(11)
2,137
374
(18)
2,493
429
(102)
2,820

(*1) Treasury stock increased due to purchase of odd shares.
(*2) Treasury stock decreased due to sale of odd shares and sale of theCompany’s stock held by affiliated company.
(*3) Treasury stock increased due to purchase of 242 thousand odd
shares and purchase of 132 thousand shares upon appraisal
remedy in connection with absorption of Retail and Hotel
Properties Co., Ltd. by merger.
(*4) Treasury stock decreased due to sale of odd shares.
(*5) Treasury stock increased due to purchase of 313 thousand odd
shares, purchase of 84 thousand shares upon appraisal remedy inconnection with transfer of business from Minato Estate Co., Ltd.
and purchase of 31 thousand shares of the Company’s stock byaffiliated company.

(2) Information of subscription rights to shares is summarized as follows:

Type of subscription rights to shares..........................
Balance as of March 31, 2008 ......................................
Balance as of March 31, 2009 ......................................

Company

Millions of yen
Consolidated
subsidiaries

Total

Stock option
¥ 86
¥220

—
—
—

—
¥ 86
¥220

Company

Thousands of U.S. dollars
Consolidated
subsidiaries

Total

Stock option——$2,240—$2,240

Numbers of shares regarding stock options as of March 31, 2009, 2008 and 2007 and numbers of such shares increased and decreased during the years
ended March 31, 2009 and 2008 are not presented as they are insignificant.

65

(3) Information of dividends is summarized as follows:(a) Dividends paid
The following resolution was approved by the ordinary general shareholders’ meeting held on June 27, 2008, June 28, 2007 and June 29, 2006:
Date of shareholders’ meeting
June 27, 2008
June 28, 2007
June 29, 2006
Type of stock
Common stock
Common stock
Common stock
Total amount¥9,668 million ($98,422 thousand)¥7,914 million¥4,398 million
Per share amount¥11 ($0.112)¥9¥5Record date
March 31, 2008
March 31, 2007
March 31, 2006
Effective dateJune 30, 2008
June 29, 2007
June 30, 2006
The following resolution was approved by the board of directors meeting held on October 30, 2008, October 31, 2007 and October 31, 2006:
Date of board of directors meeting
October 30, 2008
October 31, 2007
October 31, 2006
Type of stock
Common stock
Common stock
Common stock
Total amount¥9,667 million ($98,412 thousand)¥7,911 million¥4,398 million
Per share amount¥11 ($0.112)¥9¥5Record date
September 30, 2008
September 30, 2007
September 30, 2006
Effective date
December 2, 2008
December 4, 2007
December 5, 2006(b) Dividend whose record date falls within the current fiscal year but to be effective in the following fiscal year
The following resolution was approved by the ordinary general shareholders’ meeting held on June 26, 2009, June 27, 2008 and June 28, 2007:
Date of shareholders’ meeting
June 26, 2009
June 27, 2008
June 28, 2007
Type of stock
Common stock
Common stock
Common stock
Total amount¥9,665 million ($98,392 thousand)¥9,668 million¥7,914 million
SourceRetained earnings
Retained earnings
Retained earnings
Per share amount¥11 ($0.112)¥11¥9Record date
March 31, 2009
March 31, 2008
March 31, 2007
Effective dateJune 29, 2009
June 30, 2008
June 29, 2007

15 STOCK OPTION PLANS
The following summarize the stock option plans introduced by the Company.
Stock option expenses charged to income for the year ended March 31, 2009 and 2008 are as follows:
Millions of yen

Cost of revenue from operations...................................................................................
Selling, general and administrative expenses ..........................................................
Total ........................................................................................................................................

66

Thousands of U.S. dollars

2009

2008

2009

¥ 43
91
¥134

¥27
59
¥86

$ 438
926
$1,364

Notes to Consolidated Financial Statements

The following table summarizes the contents and activity of stock options as of March 31, 2009 and for the year then ended:2008 plan2007 plan

Grantees .............................................................................................................
........................................................................................................
Type of stock and number of shares granted ........................................
Grant date.............................................................................................
Vesting conditions ................................................................................
Requisite service period ........................................................................
Exercise period (*2) .............................................................................................

Directors, corporate officers and groupmanaging officers; 26 in total (*1)
71,250 shares of common stock
August 15, 2008(*2)
Not specified
August 16, 2008 – August 15, 2038

Directors, corporate officers and groupmanaging officers; 27 in total (*1)
48,880 shares of common stock
September 18, 2007(*2)
Not specified
September 19, 2007 – September 18, 2037

Non-vested options (number of shares)
Outstanding at beginning of year .........................................................
Granted .................................................................................................
Forfeited ...............................................................................................
Vested ...................................................................................................
Outstanding at end of year ...................................................................

—
71,250——71,25048,880———48,880

Vested options (number of shares)
Outstanding at beginning of year .........................................................
Vested ...................................................................................................
Exercised ...............................................................................................
Expired ..................................................................................................
Outstanding at end of year ...................................................................

—
—
—
—
—

—
—
—
—
—

Exercise price ........................................................................................
Average stock price on exercise date ....................................................
Grant-date fair value.............................................................................

Yen

U.S. dollars

1—¥1,967$ 0.01—$20.02

¥

Yen

¥

1
—
¥2,357(*1) Grantees consist of 6 directors (excluding outside directors), 12 corporate officers (non-directors) and 8 group managing officers for 2008 plan, and 6 directors (excluding outside directors), 13 corporate officers(non-directors) and 8 group managing officers for 2007 plan.
(*2) Vesting conditions and exercise period:
Stock options granted are exercisable on the following day of grantees leaving the positions of director, corporate officer or group managing officer, and for 5 years commencing on that date.

The fair value of option was estimated using the Black-Scholes option pricing-model under the following assumptions:

Expected volatility (*1) ............................................................................
Expected life (*2) .....................................................................................
Expected dividend (*3).............................................................................
Risk-free rate (*4) ....................................................................................

2008 plan2007 plan36%
15 years¥22 ($0.22) per share
1.83%

35%
15 years¥18 per share
1.88%(*1) Expected volatility is calculated based on historical stock price for the 15-year period ending on the grant date.
(*2) Options are assumed to be exercised at the midpoint of exercise period because of the difficulty to reasonably estimate expected life due to insufficient historical data.
(*3) Expected dividend yield is the expected dividend amount for the fiscal year in which the options are granted, estimated as of the grant date.
(*4) Risk-free rate represents the interest rate of Japanese government bond whose life corresponds to the expected life of stock options.

Number of vesting options is estimated based on actual forfeitures due to difficulty in reasonably estimating future forfeitures.

16 MAJOR COMPONENTS OF INTEREST, DIVIDENDS AND MISCELLANEOUS
Thousands of
U.S. dollars

Millions of yen
Years ended March 31,,2009

Interest income.....................................................................................................................
Dividend income ..................................................................................................................
Gain on sale of property and equipment ..................................................................
Gain on sale of investment securities .........................................................................
Other ........................................................................................................................................
Total ........................................................................................................................................

¥ 520
2,524
—
—
6,345
¥9,389

2008
¥

660
2,163
18,871
2,869
2,946¥27,509

2007

2009

783
1,408
17,320—4,435¥23,946$ 5,293
25,695——64,594$95,582¥67

17 MAJOR COMPONENTS OF COSTS AND EXPENSES — OTHER
Thousands of
U.S. dollars

Millions of yen

2009

2008

2007

2009

¥ 6,095——
17,559—17,514¥41,168¥ 7,479
1,544
12,961
5,417
—
5,357
¥32,758¥ 4,575
9,643——
28,736
9,804¥52,758$ 62,048——
178,754—
178,296$419,098

Years ended March 31,

Loss on disposal of property and equipment ..........................................................
Loss on sale of property and equipment ...................................................................
Impairment loss on investment in affiliated company ........................................
Impairment loss on investment securities ................................................................
Loss on devaluation of real property for sale .........................................................
Other ........................................................................................................................................
Total ........................................................................................................................................

18 LEASES
As described in Note 2 (O), effective from the year ended March 31, 2009, the Company and its domestic subsidiaries adopted the new accounting
standards for leases.
As lessee:(A) Finance leases
Assets leased under finance leases that do not transfer ownership to the lessee as of March 31, 2009 consist mainly of Parking Facilities (Mitsui
Repark). Commencing the year ended March 31, 2009, such assets are capitalized as assets and depreciated under straight-line method, over its lease term
assuming no residual value.
Finance leases that do not transfer ownership to the lessee whose commencement day falls on or before March 31, 2008 are accounted for as operatingleases under both the previous and the new accounting standards. Information on such leases is summarized as follows:(1) Pro forma amounts of acquisition cost, accumulated depreciation and net book value at March 31, 2009 and 2008:
Millions of yen

2009

Acquisition cost ...............................................................................................................
Accumulated depreciation ..........................................................................................
Net book value ................................................................................................................

Buildings
andstructures

Machineryandequipment¥5,0891,752¥3,337¥2,391
1,246¥1,145

2008

Total

Buildings
andstructures

Machineryandequipment

Total¥7,4802,998¥4,482¥4,987
1,267¥3,720¥13,690
6,150¥ 7,540¥18,677
7,417¥11,260

Thousands of U.S. dollars

2009

Acquisition cost ...............................................................................................................
Accumulated depreciation ..........................................................................................
Net book value ................................................................................................................

68

Buildings
andstructures

Machineryandequipment

Total$51,807
17,835$33,972$24,341
12,685$11,656$76,148
30,520$45,628

Notes to Consolidated Financial Statements(2) Future lease payment inclusive of interest at March 31, 2009 and 2008:
Millions of yen

Amount due within one year ..........................................................................................
Amount due after one year .............................................................................................
Total ........................................................................................................................................

Thousands of U.S. dollars

2009

2008

2009

¥ 900
3,582
¥4,482¥ 2,677
8,583¥11,260$ 9,162
36,466$45,628(3) Lease expense and the pro forma amount of depreciation expense for the years ended March 31, 2009, 2008 and 2007:
Thousands of
U.S. dollars

Millions of yen

Lease expense .......................................................................................................................
Depreciation expense ........................................................................................................

2009

2008

2007

2009

¥973
973

¥2,6572,657¥2,172
2,172$9,9059,905(4) Calculation of pro forma amount of depreciation expense:
Pro forma depreciation amounts are computed using the straight-line method over the lease terms assuming no residual value.
(B) Operating leases
Future lease payments under non-cancellable operating leases at March 31, 2009 and 2008;
Millions of yen

Amount due within one year ..........................................................................................
Amount due after one year .............................................................................................
Total ........................................................................................................................................

Thousands of U.S. dollars

2009

2008

2009

¥ 61,974
227,708¥289,682¥ 52,082
244,623¥296,705$ 630,907
2,318,111$2,949,018

As lessor:(A) Finance leases
Commencing the year ended March 31, 2009, assets leased under finance leases that do not transfer ownership to the lessee are accounted for as
investments in leased assets, which is included in other current assets. Investments in leased assets as of March 31, 2009 consists of the following:
Millions of yen

Thousands of U.S. dollars

2009
Minimum lease payments receivable.......................................................................
Unearned lease income ................................................................................................

¥2,008(296)¥1,712$20,442(3,014)$17,428

Amounts of minimum lease payments receivable due in each of the next five years and thereafter as of March 31, 2009 are as follows:
Millions of yen

2009Year ending March 31

2010 .....................................................................................................................................
2011 .....................................................................................................................................
2012 .....................................................................................................................................
2013 .....................................................................................................................................
2014 .....................................................................................................................................
Thereafter...........................................................................................................................
Total .....................................................................................................................................

Thousands of U.S. dollars

¥ 642
494
399
289
128
56
¥2,008$ 6,536
5,029
4,062
2,942
1,303
570
$20,44269

For the year ended on and prior to March 31, 2008, finance leases that do not transfer ownership to the lessee were accounted for as operating leases.
Information on such leases is summarized as follows:(1) Amounts of acquisition cost, accumulated depreciation and net book value at March 31, 2008:
Millions of yen

2008

Acquisition cost ...................................................................................................
Accumulated depreciation ..............................................................................
Net book value ....................................................................................................

Buildings
andstructures

Machineryandequipment

Total¥2,276
1,278¥ 998¥1,984
1,247¥ 737¥4,2602,525¥1,735(2) Future lease revenue inclusive of interest at March 31, 2008:
Millions of yen

2008
Amount due within one year .........................................................................................................................................
Amount due after one year.............................................................................................................................................
Total .......................................................................................................................................................................................

¥ 541
1,207
¥1,748(3) Lease revenue and depreciation expense for the years ended March 31, 2008 and 2007:
Millions of yen

Lease revenue ......................................................................................................................................................................
Depreciation expense ........................................................................................................................................................

2008

2007

¥694
583

¥604
509

(B) Operating leases
Future lease revenue under non-cancellable operating leases at March 31, 2009 and 2008:
Millions of yen

Amount due within one year ..........................................................................................
Amount due after one year .............................................................................................
Total ........................................................................................................................................

70

Thousands of U.S. dollars

2009

2008

2009

¥ 40,283
177,177¥217,460¥ 41,943
223,117¥265,060$ 410,089
1,803,695$2,213,784

Notes to Consolidated Financial Statements

19 BUSINESS TRANSACTIONS WITH SPECIAL PURPOSE ENTITIESThe Company invests in 35, 38 and 34 special purpose entities (SPEs) for
securitizing its customers’ real estate as of March 31, 2009, 2008 and2007, respectively. SPEs utilized consist mainly of tokurei-yugen-kaisha, or
limited liability companies, and tokutei-mokuteki-kaisha, or specificpurpose companies (“TMK”) under Securitization Law. The SPEs mainly
acquire real estate and develop real estate projects, and developed
properties are sold to investors.
Other than investments by the Company, SPEs are funded byborrowings from financial institutions, such as non-recourse loans andasset backed securities issued by TMK.
The Company plans to collect appropriate amount of its investments at
the exit of those projects referred to in the above. As of March 31, 2009 and2008, those projects are making progress as initially planned. The
Company’s risk exposure is limited to the amount of “equity investments inproperties for sale” and “investment securities.”
The following tables summarize transactions with the SPEs as ofMarch 31, 2009 and 2008 and for the years ended March 31, 2009, 2008
and 2007.
Millions of yen

Balance

Investments (*1)................
..................................
Management .................
Brokerage........................

Revenues and costs

2009

2008

¥110,809¥103,892————

Revenue from operations (*2)
Cost of revenue from operations (*3)
Revenue from operations (*4)
Revenue from operations (*5)

2009

2008

2007

¥31,176
38
6,698—¥10,390
1,013
1,516
37

¥9,802
1,331
1,747
125

Thousands of U.S. dollars
Balance

Revenues and costs

2009
Investments (*1)................ $1,128,057..................................
Management .................
—
Brokerage........................
—

2009
Revenue from operations (*2)
Cost of revenue from operations (*3)
Revenue from operations (*4)
Revenue from operations (*5)$317,378
387
68,187—(*1) Consists of ¥82,964 million ($844,589 thousand) and ¥87,730 million of “equity investments in properties for sale” and ¥27,845 million ($283,468 thousand) and ¥16,162 million of “investment securities” as of March
31, 2009 and 2008, respectively, and includes investments in tokumei-kumiai (TK), or silent partnerships and preferred securities issued by TMK.
(*2) Dividends on the investments earned by the Company, and consists of ¥5,527 million ($56,266 thousand), ¥5,073 million and ¥1,759 million for leasing segment and ¥25,649 million ($261,112 thousand), ¥5,317 millionand ¥8,043 million for sales of housing, office buildings and land segment for the years ended March 31, 2009, 2008 and 2007, respectively.
(*3) Costs and losses incurred by the Company in connection with the investment such as costs incurred during development of real estate, and consists of ¥nil million ($nil thousand), ¥567 million and ¥766 million for leasing
segment and ¥38 million ($387 thousand), ¥446 million and ¥565 million for sales of housing, office buildings and land segment for the years ended March 31, 2009, 2008 and 2007, respectively.
(*4) Asset management fees earned by the Company and Mitsui Fudosan Investment Advisers, Inc., and are included in brokerage, consignment sale and consulting segment.
(*5) Brokerage fees earned by Mitsui Real Estate Sales Co., Ltd., and are included in brokerage, consignment sale and consulting segment.
The Company has no directors and/or employees dispatched to any SPE as of March 31, 2009 and 2008.

Combined assets, liabilities and net assets of SPEs as of the latest closing date of each SPE is summarized as follows:
Millions of yen

Thousands of U.S. dollars

2009

2008

2009

¥507,725
46,024¥553,749¥440,168
71,347¥511,515$5,168,737
468,533$5,637,270

AssetsReal property .........................................................................................................................
Other ........................................................................................................................................
Total ........................................................................................................................................

Millions of yen

Thousands of U.S. dollars

2009

2008

2009

¥411,413
129,150
13,186¥553,749¥356,863
139,516
15,136¥511,515$4,188,262
1,314,771
134,237$5,637,270

Liabilities and net assets

Borrowings(*6) ........................................................................................................................
Capital(*7) .................................................................................................................................
Other ........................................................................................................................................
Total ........................................................................................................................................

(*6) Consists of non-recourse loans and asset backed securities issued by TMK.
(*7) Consists of capital deposit in TK and preferred capital in TMK, and includes the investments by the Company. (Refer to (*1) for respective ending balances.)71

20 SEGMENT INFORMATION(1) Leasing
Leasing of office buildings, commercial facilities, residential properties, etc.

(5) Property Management
Property management services (including tenant improvement).

(2) Sales of Housing, Office Buildings and Land
Sales of detached housing, condominiums, buildings, and land, etc.

(6) Sales of Housing Materials and Merchandise
Manufacture and sales of housing materials, as well as wholesale andretail sale of general goods.

(3) Construction
Construction of detached housing, apartments, etc. (including planningand design).
(4) Brokerage, Consignment Sales and Consulting
Real estate agency, sales agency, and sales consignment services, as wellas project management services for development of office buildings,
commercial facilities, etc., and asset management services for investors.

(7) Facility Operations
Operation of hotels and golf courses, etc.
(8) Other
Financing operations for housing loans and leasing business, etc.

Millions of yen
Elimination
or Corporate

Year ended March 31, 2009

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

Revenue from operations:
Outside customers ............
Inter-segment ....................

¥ 529,756
8,701¥396,239
11¥182,074
4,956¥75,195
3,372¥102,491
35,703¥ 69,115
36,427¥52,318462¥11,758
10,172...............................
Costs and expenses (*1) ......

538,457
438,928

396,250
347,639

187,030
184,299

78,56760,416138,194
122,620

105,542
104,119

52,78053,572

21,93017,319(99,804)(81,514)¥

Consolidated— ¥1,418,946(99,804)—
1,418,946
1,247,398

Operating income (loss) ....

¥

99,529¥ 48,611¥ 2,731¥18,151¥ 15,574¥ 1,423¥ (792)¥ 4,611¥ (18,290) ¥ 171,548

Assets ..................................
Depreciation .......................
Capital expenditures .........

¥2,318,875
36,447
148,811¥923,258
1,205
2,335

¥ 50,818
3,072
1,832

¥57,908
976
1,138¥ 79,916
1,308
1,783

¥ 44,053
962
653¥95,550
3,155
4,698

¥23,865677
440¥164,144
1,089
3,334

¥3,758,387
48,891
165,024

Elimination
or Corporate

Consolidated

Millions of yen

72

Year ended March 31, 2008

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

Revenue from operations:
Outside customers ............
Inter-segment ....................

¥ 469,000
8,228¥382,267—¥188,659
5,678¥84,269
4,196¥102,464
28,573¥ 72,975
35,995¥49,745315¥10,644
10,263...............................
Costs and expenses (*1) ......

477,228
386,562382,267
324,457

194,337
192,437

88,46561,870131,037
115,540

108,970
107,800

50,06049,791¥—(93,248)¥1,360,023—

20,907
17,003(93,248)(74,720)

1,360,023
1,180,740

Operating income .............

¥

90,666¥ 57,810¥ 1,900¥26,595¥ 15,497¥ 1,170¥269¥ 3,904¥ (18,528)¥ 179,283

Assets ..................................
Depreciation .......................
Capital expenditures .........

¥2,288,640
31,426
319,487¥824,969
878
2,848¥ 53,846
2,366
2,917

¥68,060
986
1,710¥ 73,293
1,225
1,863

¥ 46,072
1,024
877¥88,312
3,298
6,207

¥24,000
2,246
2,501

¥167,297
855
2,053¥3,634,489
44,304340,463

Notes to Consolidated Financial Statements

Millions of yen
Elimination
or Corporate

Year ended March 31, 2007

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

Revenue from operations:
Outside customers ............
Inter-segment ....................

¥ 398,070
6,399¥341,630
8¥193,970
5,897¥77,350
4,646¥ 99,632
23,161¥ 69,395
37,128¥40,201332¥ 8,946
10,328...............................

404,469

341,638

199,867

81,996

122,793

106,523

40,533

19,274(87,899)

1,229,194

Costs and expenses (*1) ......

323,119292,398

197,149

55,946

108,485

105,666

38,77916,464(70,655)

1,067,351¥

Consolidated— ¥1,229,194(87,899)—

Operating income .............

¥

81,350¥ 49,240¥ 2,718¥26,050¥ 14,308¥857¥ 1,754¥ 2,810¥ (17,244) ¥ 161,843

Assets ..................................

¥1,970,251
29,137
203,955¥732,668
559
2,918¥ 59,032
2,168
2,528

¥51,794
772
1,282¥ 69,050
891
1,743¥ 50,694
907
1,222¥84,858
2,628
2,038

¥22,567
2,249
2,095

¥253,276
811
2,575¥3,294,190
40,122
220,356

(6)

(7)

(8)

Elimination
or Corporate

Consolidated$765,499 $1,043,378
34,328363,463$ 703,640
370,834$532,607
4,703$119,699
103,553$— $14,445,139(1,016,024)—

799,827
615,046

1,074,438
1,059,952

537,310545,373

223,252
176,311(1,016,024) 14,445,139(829,829) 12,698,748

Depreciation .......................
Capital expenditures .........

Thousands of U.S. dollars
Year ended March 31, 2009

(1)

(2)

(3)

Revenue from operations:
Outside customers .............. $ 5,393,016 $4,033,788 $1,853,548
Inter-segment ......................
88,578112
50,453
Costs and expenses (*1) ........

5,481,594
4,468,370

4,033,900
3,539,031

1,904,001
1,876,199

Operating income ............... $ 1,013,224 $ 494,869 $

(4)

(5)

1,406,841
1,248,295

27,802$184,781 $ 158,546$ 14,486$ (8,063)$ 46,941$ (186,195) $ 1,746,391

Assets .................................... $23,606,587 $9,398,941 $ 517,337
Depreciation ........................
371,037
12,26731,274
Capital expenditures .......... 1,514,924
23,771
18,650$589,514 $ 813,560
9,936
13,316
11,585
18,151$ 448,468
9,793
6,648

$972,717
32,11947,827$242,950
6,892
4,479

$ 1,671,017 $38,261,091
11,086
497,720
33,941
1,679,976(*1) Includes cost of revenue from operations and selling, general and administrative expenses.

Japan area accounted for more than 90% of the consolidated revenue of all segments and the total amount of segment assets. Consequently, disclosureof segment information by geographic area has been omitted.
Overseas sales accounted for less than 10% of the consolidated revenue. Consequently, disclosure of overseas sales information has been omitted.

21 CONTINGENT LIABILITIESContingent liabilities at March 31, 2009 and 2008 are as follows:
Millions of yen

Loans guaranteed ................................................................................................................

Thousands of U.S. dollars

2009

2008

2009

¥68,706¥81,606$699,440

22 SUBSEQUENT EVENTS
There were no applicable items under this category.

73

Independent Auditors’ Report

To the Board of Directors of
Mitsui Fudosan Co., Ltd.:We have audited the accompanying consolidated balance sheets of Mitsui Fudosan Co., Ltd. and consolidated
subsidiaries as of March 31, 2009 and 2008, and the related consolidated statements of income, changes in net
assets and cash flows for each of the three years in the period ended March 31, 2009, expressed in Japanese yen.
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to independently express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Mitsui Fudosan Co., Ltd. and subsidiaries as of March 31, 2009 and 2008, and theconsolidated results of their operations and their cash flows for each of the three years in the period ended March
31, 2009, in conformity with accounting principles generally accepted in Japan.
Without qualifying our opinion, we draw attention to the following:
As discussed in Note 2 (G) to the consolidated financial statements, effective April 1, 2006, Mitsui Fudosan Co., Ltd.
and its consolidated domestic subsidiaries adopted a new accounting standard for measurement of inventories.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended
March 31, 2009 are presented solely for convenience. Our audit also included the translation of yen amounts into
U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1 to theconsolidated financial statements.

Tokyo, Japan
June 26, 200974

Corporate Information

Contents
Overview of Development Projects............................................ 76
Domestic and Overseas Networks .............................................. 80
The History of Mitsui Fudosan.................................................... 82
Investor Information ................................................................... 8375

Overview of Development Projects
Mitsui Fudosan operates approximately 200 office buildings that are occupied bymore than 3,300 corporate tenants. Strong in Tokyo’s central business district,Mitsui Fudosan’s office portfolio also covers Japan’s other major urban areas.

Office Buildings
Mitsui Main Building

Kasumigaseki BuildingThis 36-story high-rise building
was Japan’s first skyscraper.
(Completed in 1968 / Renewal in 2001 /153,000m2)

The Mitsui Main Building was designated a Registered Important
Cultural Property in 1998.
(Completed in 1929 / 36,000m2)

Shinjuku Mitsui Building

Built more than 30 years ago, thisskyscraper remains a landmark inShinjuku, the new urban hub ofTokyo.
(Completed in 1974 / Renewal in 2000 /180,000m2)

Shiodome City Center

Gate City Ohsaki is a large-scale, mixed-use intelligent building.
(Completed in 1999 / 291,000m2)

Nihonbashi 1-chome BuildingThis complex encompasses
office space, retail shops andrestaurants.
(Completed in 2003 / 212,000m2)

76

Gate City Ohsaki

This new landmark features a
striking plaza and atrium.
(Completed in 2004 / 98,000m2)

Nihonbashi Mitsui Tower

Tokyo Midtown

A 39-story high-rise combining
office space with the Mandarin
Oriental Hotel.
(Completed in 2005 / 130,000m2)

GranTokyo North Tower

Combines office, retail andresidential facilities.
(Completed in 2007 / 569,000m2)

Akasaka Biz Tower

Japan’s tallest office building isconveniently integrated with
Tokyo Station.
(Completed in 2007 / 195,000m2)

Retail Facilities

A mixed-use skyscraper located in
one of Tokyo’s most prestigious
business districts.
(Completed in 2008 / 218,000m2)

Mitsui Fudosan operates approximately 60 retail facilities throughout Japan,
including regional malls, factory outlet malls and urban facilities.

LaLaport Tokyo-Bay

Lazona Kawasaki Plaza

The first large-scale suburban shopping center in Japan.
(Opened in 1981 / 282,000m2 / 540 stores)

A large-scale shopping center adjacent to a 667-unit residential building.
(Opened in 2006 / 172,000m2 / 300 stores)

77

LaLaport Yokohama

Mitsui Outlet Park Jazz Dream Nagashima

One of the largest shopping centers in Kanagawa Prefecture.
(Opened in 2007 / 227,000m2 / 280 stores)

The largest outlet mall in Japan’s Tokai region.
(Opened in 2002 / 45,000m2 / 190 stores)

Mitsui Outlet Park Marine Pia Kobe

Ginza Velvia-kan

A fashion outlet mall in Kobe where shoppers can gaze out on thebeautiful Akashi-Kaikyo bridge.
(Opened in 1999 / 36,000m2 / 130 stores)

Housing

78

Select shops abound in this highquality retail facility for urbanites inTokyo’s Ginza district.
(Opened in 2007 / 14,000m2 / 30 stores)

Quality and value are the hallmarks of the condominiums and detachedhouses that Mitsui Fudosan develops for sale and lease.

Park Court Toranomon Atago Tower

Park City Musashi Kosugi

A high-rise condominium tower with advanced security facilities
in the heart of Tokyo.
(Completed in 2008 / 231 units)

Two high-rise condominium towers – Mid Sky Tower and Station
Forest Tower – in a pleasant suburban location.
(Completed in 2009 / 1,437 units)Overview of Development Projects

THE TOYOSU TOWER

Fine Court LaLaCity

A high-rise condominium tower on
the Tokyo waterfront that offers
outstanding convenience and comfort.
(Completed in 2009 / 825 units)

Other

A housing development featuring energy-conserving construction
and security equipment.
(Completion scheduled for FY2009 / 268 units)

Hotels and serviced apartments are other areas of the real estate market inwhich Mitsui Fudosan has a presence.

Halekulani HotelA luxury hotel on Waikiki Beach in Honolulu, Hawaii, theHalekulani Hotel is known for comfort and fine service.
(Opened in 1984 / 453 rooms)

Mitsui Garden Hotel Ginza Premier

The Garden Hotel chain operates
approximately 3,100 hotel rooms
at 12 locations throughout Japan.
(Completed in 2005 / 361 rooms)

Oakwood Premier Tokyo Midtown

The Japan debut of the top-of-the-line Premier series of the
Oakwood line of serviced apartments.
(Completed in 2007 / 107 units)

79Domestic and Overseas Networks

Hokkaido Branch

Mitsui Fudosan(U.K.) Ltd.

Tohoku Branch

Kansai Head Office
HEAD OFFICE
Chiba Branch
Chugoku Branch
Yokohama Branch
Chubu Branch
Kyoto Branch
Kyushu Branch

Domestic Network
HEAD OFFICE

1-1, Nihonbashi-Muromachi 2-chome,
Chuo-ku, Tokyo 103-0022
BRANCH OFFICES

80

Kansai Head Office

Chiba Branch

Kyoto Branch

Midosuji Mitsui Building
1-3, Bingo-machi 4-chome, Chuo-ku,
Osaka-shi, Osaka
541-0051

Chiba Chuo Twin Building No.1
11-1, Chuo 1-chome, Chuo-ku,
Chiba-shi, Chiba
260-0013

Kyoto Mitsui Building
8 Naginataboko-cho, Shijodori-Karasuma,
Higashiiru, Shimogyo-ku,
Kyoto-shi, Kyoto 600-8008

Hokkaido Branch

Yokohama Branch

Chugoku Branch

Sapporo HS Building
10-2, Kitasanjyo Nishi 2-chome, Chuo-ku,
Sapporo-shi, Hokkaido
060-0003

Yokohama Creation Square
5-1, Sakae-cho, Kanagawa-ku,
Yokohama-shi, Kanagawa
221-0052

Nakamachi Mitsui Building
9-12, Nakamachi, Naka-ku,
Hiroshima-shi, Hiroshima
730-0037

Tohoku Branch

Chubu Branch

Kyushu Branch

Sendai Honcho Mitsui Building
4-6, Honcho 2-chome, Aoba-ku
Sendai-shi, Miyagi
980-0014

Ryoshin Building
8-12, Meieki 4-chome,
Nakamura-ku, Nagoya-shi, Aichi
450-0002

Hakata Mitsui Building
10-1, Kami Gofuku-machi, Hakata-ku,
Fukuoka-shi, Fukuoka
812-0036

Mitsui Fudosan
America, Inc.
Halekulani
Corporation
Mitsui Fudosan Co., Ltd.
Shanghai Representative Office

Mitsui Fudosan(Asia) Pte Ltd.

Overseas Network

Mitsui Fudosan America, Inc.

Mitsui Fudosan (Asia) Pte Ltd.

1251 Avenue of the Americas, Suite 800,
New York, N.Y. 10020, U.S.A.
Tel : 1-212-403-5600
Fax: 1-212-403-5657

16 Raffles Quay, #37-01 Hong Leong Building,Singapore 048581
Tel : 65-6220-8358
Fax: 65-6224-8783

Halekulani Corporation

Mitsui Fudosan Co., Ltd.
Shanghai Representative Office

700 Bishop Street, Suite 600,
Honolulu, Hawaii 96813, U.S.A.
Tel : 1-808-526-1186
Fax: 1-808-531-5651

Mitsui Fudosan (U.K.) Ltd.

Room 901, Lippo Plaza 222
Huai Hai Zhong Road, Luwan District,
Shanghai, 200020, China
Tel : 86-21-5396-6969
Fax: 86-21-5396-6899

7th Floor, Berger House, 38 Berkeley Square,
London, W1J 5AE, United Kingdom
Tel : 44-20-7318-4370
Fax: 44-20-7318-4371

81

The History of Mitsui Fudosan
Office Buildings

1673• Opening of the Echigo-ya clothing store in Nihonbashi by
Takatoshi Mitsui, founder of the House of Mitsui

1929• Completion of Mitsui Main Building(Chuo-ku, Tokyo)

1941• Establishment of Mitsui Fudosan Co., Ltd.

1960

• Completion of Hibiya Mitsui Building(Chiyoda-ku, Tokyo)

1968• Completion of Kasumigaseki Building (Minato-ku, Tokyo),the first skyscraper in Japan• Start of development and sale of condominiums

1974• Completion of Shinjuku Mitsui Building(Shinjuku-ku, Tokyo)

1981• Opening of Japan’s first large-scale regional shopping
center, LaLaport Funabashi, now called LaLaport Tokyo-Bay(Funabashi-shi, Chiba Prefecture)

1986• Acquired Exxon Building, now called 1251 Avenue of theAmericas (New York City, U.S.A.)

Retail Facilities

Housing

Nihonbashi in the Edo Period

1997• Formation of consortium with overseas financial institution
and successful bid for the site of Shiodome City Center(Minato-ku, Tokyo)

1998• Opening of a factory outlet mall, Yokohama Bayside Marina
Shops and Restaurants, now called Mitsui Outlet Park
Yokohama Bayside (Yokohama-shi, Kanagawa Prefecture),using a fixed-term leasehold

1999• Acquisition of Shin Nikko Building (Minato-ku, Tokyo),initiating joint investment business with investors using asecuritization scheme• Acquisition of Japan Landic portfolio, initiating
value-enhanced fund business2001• Listing of Japan’s first real estate investment trust(J-REIT), Nippon Building Fund, Inc.
• Formation of consortium with domestic investors andsuccessful bid for the former Defense Agency site in
Roppongi, Tokyo (now called Tokyo Midtown)

2003• Completion of Shiodome City Center (Minato-ku, Tokyo)

2005• Completion of Nihonbashi Mitsui Tower (Chuo-ku, Tokyo)• Establishment of Mitsui Fudosan Residential Co., Ltd.

2006

• Opening of Lazona Kawasaki Plaza (Kawasaki-shi, Kanagawa
Prefecture), Urban Dock LaLaport Toyosu (Koto-ku, Tokyo)
and LaLaport Kashiwanoha (Kashiwa-shi, Chiba Prefecture)

2007

2008
82

Yurigaoka

Shinjuku Mitsui Building
LaLaport Funabashi(now LaLaport Tokyo-Bay)Park City Honmoku

Yokohama Bayside Marina
Shops and Restaurants(now Mitsui Outlet Park
Yokohama Bayside)

Tokyo Park Tower

Shiodome City Center

LaLaport Koshien• Opening of LaLaport Yokohama (Yokohama-shi, Kanagawa
Prefecture) and Tokyo Midtown (Minato-ku, Tokyo)• Establishment of New Challenge Plan 2016, Mitsui FudosanGroup’s long-term business strategy• Completion of GranTokyo North Tower (Chiyoda-ku, Tokyo)• Opening of Akasaka Biz Tower (Minato-ku, Tokyo),
Mitsui Outlet Park Iruma (Iruma-shi, Saitama Prefecture) and
Mitsui Outlet Park Sendai Port (Sendai-shi, Miyagi Prefecture)

Park Axis Nihonbashi

Nihonbashi Mitsui Tower
Mitsui Outlet Park Iruma

Investor Information (Parent company; as of March 31, 2009)
Mitsui Fudosan Co., Ltd.
Head Office:Listings:

Number of Employees:

1-1, Nihonbashi-Muromachi 2-chome,
Chuo-ku, Tokyo,
103-0022, JapanTokyo, Osaka (Ticker: 8801)

1,154 (Consolidated 15,476)

Number of Shares:

URL:

Date of Establishment:

July 15, 1941

Authorized: 3,290,000,000
Issued and outstanding: 881,424,727

http://www.mitsuifudosan.co.jp/english
E-mail:Number of Shareholders:

mfir@mitsuifudosan.co.jp

37,798

Common Stock:¥174,296 million

Transfer Agent:

The Chuo Mitsui Trust and Banking
Company, Limited
Major Shareholders:Number ofshares held(Thousands)

Percentage of
total sharesin issue

The Master Trust Bank of Japan, Ltd. (Trust account)
Japan Trustee Services Bank, Ltd. (Trust account)
Japan Trustee Services Bank, Ltd. (Trust account 4G)
The Chuo Mitsui Trust & Banking Co., Ltd.
State Street Bank and Trust Company 505041
Sumitomo Mitsui Banking Corporation
State Street Bank and Trust Company
State Street Bank and Trust Company 505225
The Chase Manhattan Bank NA London SL Omnibus AccountKajima Corporation
Total

64,87559,22046,022
21,96520,94818,546
15,616
14,957
14,407
13,362289,922

7.36
6.72
5.22
2.49
2.38
2.10
1.77
1.70
1.63
1.52
32.89

Composition of Shareholders:
Securities Companies

1.10%

Other Japanese Companies 7.98%

6.23%

Individuals

Financial
Institutions

ForeignInvestors

47.52%

37.17%

Monthly Stock Data (TSE):
Monthly stock price range (¥)

Topix

4,000

2,000

3,000

1,500

1,000

2,000
Common stock price range (¥)
Tokyo Price Index Close

1,000

500

0

0

Monthly trading volume (thousand shares)
300,000

200,000

100,000

0
Apr. 05

FY2005Mar. 06 Apr. 06

FY2006

Mar. 07 Apr. 07

FY2007Mar. 08 Apr. 08

FY2008Mar. 0983

This annual report is printed on a combination of
70% recycled paper and 30% fresh pulp made withconsideration for the environment.

This report was produced in August 2009.
Printed in Japan