Financial Section

Consolidated Balance Sheets
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
As of March 31, 2019 and 2018
Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

AssetsCurrent assets:Cash, time and notice deposits (Notes 3, 5 and 6)
Notes and accounts receivable—trade (Note 6)
Allowance for doubtful accounts
Inventories (Note 4)
Other current assets
Total current assets

Investments:
Investments in unconsolidated subsidiaries and affiliates (Note 6)
Investments in securities and other (Notes 6 and 7)
Allowance for doubtful accounts
Total investments

Property and equipment:
Land (Notes 4, 5 and 19)
Buildings and structures (Notes 4, 5 and 19)
Machinery and equipment (Notes 4, 5 and 19)
Leased assets
Construction in progress (Notes 4, 5 and 19)

Accumulated depreciation and accumulated impairment losses
Net property and equipment

Other assets:
Guarantee and lease deposits paid to lessors (Note 6)
Leasehold rights and other intangible assets
Deferred income taxes (Note 12)
Other
Total other assets
Total assets

2018

Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

2019

2018

2019

Liabilities and Net Assets
Current liabilities:
Short-term debt (Notes 6 and 8)
Long-term debt due within one year (Notes 6 and 8)
Long-term non-recourse debt due within one year (Notes 5, 6 and 8)
Notes and accounts payable—trade (Note 6)
Accrued income taxes
Accrued bonuses
Deposits received (Note 13)
Other current liabilities (Note 13)
Total current liabilities¥   25,643
169,619
102,298
54,93929,2605,573
61,582
128,458
577,372¥   61,416
275,752
49,41028,751
34,1985,283
60,382
153,388668,580$   231,018
1,528,099
921,604
494,946
263,604
50,207554,793
1,157,279
5,201,550

2,744,327
300,900
278,766
6,019
11,964
3,341,976

2,725,646
361,289
267,215
5,965
23,5293,383,644

24,723,667
2,710,811
2,511,405
54,225
107,784
30,107,892

122,805
104,154882,816(4,470)1,105,305

122,805
104,154765,326(4,443)
987,842

1,106,351
938,324
7,953,297(40,270)
9,957,702

109,210(3,972)(2,352)(74)
102,8121,208,117¥5,127,465

131,115(2,049)(2,093)
160
127,133
1,114,975¥5,167,199

983,874(35,784)(21,189)(667)
926,234
10,883,936$46,193,378¥  172,192
21,567(73)
679,90359,422933,011¥  263,210
23,773(66)
783,308
55,893
1,126,118$ 1,551,279
194,297(658)
6,125,252
535,334
8,405,504

61,544433,301(9,154)
485,691

68,083435,615(9,469)494,229554,450
3,903,613(82,468)
4,375,595

Long-term liabilities:
Long-term debt due after one year (Notes 6 and 8)
Long-term non-recourse debt due after one year (Notes 5, 6 and 8)
Guarantee and deposits received (Notes 6 and 13)
Net defined benefit liability (Note 9)
Other long-term liabilities (Notes 12 and 13)
Total long-term liabilities

2,523,937
1,378,337
35,5182,150
139,451
4,079,393

2,464,161
1,287,335
33,576
1,778
94,3973,881,247

22,738,171
12,417,450
319,982
19,3691,256,316
36,751,288

Contingent liabilities (Note 20)(548,382)
3,531,011(510,894)
3,370,353(4,940,378)
31,810,910

70,29956,75214,80935,892
177,752¥5,127,465

71,06454,753
14,29536,387
176,499¥5,167,199

633,324
511,279
133,414323,352
1,601,369$46,193,378

Net assets (Note 14):
Shareholders’ equity
Common stock:
Authorized —1,900,000 thousand shares
Issued    —476,086 thousand shares
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income (loss)
Net unrealized holding gains on securities
Net deferred losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

See accompanying notes.

Sumitomo Realty & Development Co., Ltd.

Financial Section

Consolidated Statements of Income

Consolidated Statements of Changes in Net Assets

Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2019, 2018 and 2017

Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2019, 2018 and 2017
Millions of yen

Thousands of
U.S. dollars (Note 1)

Thousands

Number ofshares ofcommon
stock

2019

2018

2017

2019

Revenue from operations
Costs and expenses:
Cost of revenue from operations
Selling, general and administrative expenses¥1,013,230¥948,402¥925,151$9,128,198

711,052
81,759792,811664,01578,750742,765

664,184
72,796736,980

6,405,874
736,567
7,142,441

Operating income
Other income (expenses):
Interest expense, net
Dividend income
Gain on sale of property and equipment
Loss on sale of property and equipment
Loss on impairment of fixed assets (Note 10)
Loss on disposal of property and equipment
Gain on sale of investments in securities
Loss on sale of investments in securities
Loss on devaluation of investments in securities
Other, net

220,419

205,637

188,171

1,985,757(19,589)
9,472
75(3,724)(8,576)(1,280)12—(1,105)(6,115)(30,830)(20,096)
8,229
38
(217)
(10,635)
(601)
1,010
(47)
—
(6,874)(29,193)(21,469)
6,588
15
(3)
(15,538)(1,522)
43——(5,662)(37,548)(176,477)
85,333676(33,550)(77,261)(11,532)
108—(9,955)(55,090)(277,748)

Income before income taxes
Income taxes (Note 12):Current
DeferredTotal

189,589

176,444

150,623

1,708,009

62,823(4,051)
58,77262,098(6,180)55,91853,161(9,533)
43,628565,973(36,496)
529,477

Profit130,817

120,526

106,995

1,178,532

—

795

3,506

—

¥  130,817¥119,731¥103,489$1,178,532

Profit attributable to non-controlling interests
Profit attributable to owners of parent

Yen

Amounts per share of common stock:
Profit attributable to owners of parent:—Basic—Diluted
Cash dividend applicable to the year

U.S. dollars (Note 1)

2019

2018

2017

2019

¥276.02—
30.00¥252.62—27.00¥218.34
—
24.00

$2.49
—
0.27

Shareholders’ equity

Balance at April 1, 2016
476,086
Profit attributable to owners of parent—
Foreign currency translation adjustments—
Net unrealized holding gains (losses) on securities—
Acquisition of treasury stock—
Disposal of treasury stock—
Cash dividends paid:
Final for prior year (¥11 per share)—
Interim for current year (¥11 per share)—
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders—
Profit attributable to non-controlling interests—
Net deferred gains (losses) on hedges—
Remeasurements of defined benefit plans—
Balance at April 1, 2017
476,086
Profit attributable to owners of parent—
Foreign currency translation adjustments—
Net unrealized holding gains (losses) on securities—
Acquisition of treasury stock—
Disposal of treasury stock—
Change in scope of consolidation—
Cash dividends paid:
Final for prior year (¥13 per share)—
Interim for current year (¥13 per share)—
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders—
Profit attributable to non-controlling interests—
Net deferred gains (losses) on hedges—
Remeasurements of defined benefit plans—
Balance at April 1, 2018
476,086
Profit attributable to owners of parent—
Foreign currency translation adjustments—
Net unrealized holding gains (losses) on securities—
Acquisition of treasury stock—
Disposal of treasury stock—
Change in scope of consolidation—
Cash dividends paid:
Final for prior year (¥14 per share)—
Interim for current year (¥14 per share)—
Profit attributable to non-controlling interests—
Net deferred gains (losses) on hedges—
Remeasurements of defined benefit plans—
Balance at March 31, 2019
476,086

Commonstock

CapitalsurplusRetainedearnings

Treasurystock¥122,805—————¥132,748————
2¥569,740
103,489————¥(4,335) ¥  820,958—
103,489
—
—
—
—
(47)
(47)
3
5

—
—

—
—

(5,214)(5,213)————¥122,805
—
—
—
—
—
—

(2)
—
—
—
¥132,748
—
—
—
—
—
—

—
—
—
—
¥662,802
119,731————(4,885)————(6,161)(6,161)————¥122,805
—
—
—
—
—
—

(28,594)———¥104,154
—
—
—
—
0
—

—
—
—
—
—
¥122,805—————¥104,154

Consolidated Statements of Comprehensive Income

Commonstock

Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

2018

2017

2019

ProfitOther comprehensive income (loss) (Note 18)
Net unrealized holding gains (losses) on securities
Net deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total other comprehensive income (loss)
Comprehensive income¥130,817¥120,526¥106,995$1,178,532(21,905)(1,923)(259)(234)(24,321)¥106,496

33,935538(1,098)
188
33,563¥154,089

24,930
1,705
(927)
442
26,150¥133,145(197,342)(17,325)(2,333)(2,108)(219,108)$  959,424

Comprehensive income attributable to:
Owners of the parent
Non-controlling interests¥106,496—¥153,493
596¥129,719
3,426$  959,424—

Balance at April 1, 2018
Profit attributable to owners of parent
Foreign currency translation adjustments
Net unrealized holding gains (losses) on securities
Acquisition of treasury stock
Disposal of treasury stock
Change in scope of consolidation
Cash dividends paid:
Final for prior year ($0.13 per share)
Interim for current year ($0.13 per share)
Profit attributable to non-controlling interests
Net deferred gains (losses) on hedges
Remeasurements of defined benefit plans
Balance at March 31, 2019

CapitalsurplusTotal
accumulated
othercomprehensive
income (loss)

Noncontrollinginterests

Total net
assets¥ 72,262——
24,930——¥(4,247)—————¥  (510)
—
(755)
—
—
—

¥(364)—————¥ 67,141—(755)
24,930——¥ 29,178—————¥917,277
103,489(755)
24,930(47)
5(5,214)(5,213)

—
—

—
—

—
—

—
—

—
—

—
—

(5,214)(5,213)

—
(2)
—
—
—
—
—
—
¥(4,379) ¥  913,976—
119,731
—
—
—
—
(64)
(64)
—
—
—
(4,885)————¥ 97,192——
33,923
—
—
—

—
—
1,718
—
¥(2,529)
—
—
—
—
—
—

—
—
—
—
¥(1,265)
—
(828)
—
—
—
—

—
—
—
337
¥ (27)
—
—
—
—
—
—

—
—
1,718
337
¥ 93,371—(828)
33,923
—
—
—

—
2,578
—
—
¥ 31,756
—
—
—
—
—
—

(2)
2,578
1,718
337
¥1,039,103
119,731(828)
33,923(64)—(4,885)(6,161)(6,161)

—
—

—
—

—
—

—
—

—
—

—
—

(6,161)(6,161)————¥765,326
130,817
—
—
—
—
(57)

—
(28,594)
—
—
—
—
—
—
¥(4,443) ¥  987,842—
130,817
—
—
—
—
(27)
(27)
0
0
—
(57)

—
—
—
—
¥131,115——(21,905)
—
—
—

—
—
480
—
¥(2,049)
—
—
—
—
—
—

—
—
—
—
¥(2,093)
—
(259)
—
—
—
—

—
—
—
187
¥ 160
—
—
—
—
—
—

—
—
480
187
¥127,133—(259)(21,905)————(31,756)——¥    ———————(28,594)(31,756)
480
187¥1,114,975
130,817(259)(21,905)
(27)
0
(57)

(6,635)(6,635)———¥882,816—(6,635)—(6,635)——————¥(4,470) ¥1,105,305

—
—
—
—
—
¥109,210———(1,923)—¥(3,972)—————¥(2,352)

—
—
—
—
(234)
¥  (74)———(1,923)(234)¥102,812—————¥    —(6,635)(6,635)—(1,923)(234)¥1,208,117

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income (loss)
RemeasureNet unrealized
Foreignments ofholding gains
Net deferredcurrency
defined(losses) on
gains (losses)
translation
benefitsecurities
on hedges
adjustments
plans

Total
accumulated
othercomprehensive
income (loss)

Noncontrollinginterests

Total net
assets————Shareholders’ equity

See accompanying notes.

Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2019, 2018 and 2017

Total
shareholders’equityMillions of yen
Accumulated other comprehensive income (loss)
RemeasureNet unrealized
Foreignments ofholding gains
Net deferredcurrency
defined(losses) on
gains (losses)
translation
benefitsecurities
on hedges
adjustments
plans

Retainedearnings

Treasury
stock

Total
shareholders’equity$1,106,351
—
—
—
—
—
—

$938,324 $6,894,829 $(40,027) $8,899,477 $1,181,216— 1,178,532— 1,178,532
—
—
—
—
—
—
—
—
—
—
(197,342)
—
—
(243)
(243)
—
0
—
0
0
—
—
(514)
—
(514)
—

$(18,459)
—
—
—
—
—
—

$(18,856)—(2,333)————$1,441 $1,145,342———(2,333)— (197,342)
—
—
—
—
—
—

$— $10,044,819—
1,178,532—(2,333)—(197,342)
—
(243)
—
0
—
(514)

—
—
—
—
—
$1,106,351—(59,775)—(59,775)——(59,775)—(59,775)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$938,324 $7,953,297 $(40,270) $9,957,702 $  983,874———(17,325)—$(35,784)

—
—
—
—
—
$(21,189)

—
—
—
—
—
—
—
(17,325)(2,108)(2,108)$  (667) $  926,234—(59,775)—(59,775)———(17,325)—(2,108)$— $10,883,936

See accompanying notes.

See accompanying notes.

Sumitomo Realty & Development Co., Ltd.

Financial Section

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2019, 2018 and 2017

Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
As of and for the years ended March 31, 2019, 2018 and 2017
Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

2018

2017

2019

¥ 189,589
46,313
8,576
(309)
(242)
3,649
1,280
(12)
1,105
(10,067)
20,1842,233
65,981
26,190(13,104)(1,800)339,566¥ 176,444
41,628
10,635
(525)
91
179
601
(963)
—
(8,484)
20,352(5,669)25,915(12,536)
17,076(6,648)258,096¥ 150,623
39,446
15,538
411
702
(12)
1,522
(43)
—
(6,707)
21,588
1,090
5,574(12,936)
7,816
5,029
229,641$ 1,708,009
417,234
77,261(2,784)(2,180)32,874
11,532(108)
9,955(90,694)
181,838
20,117594,423
235,946(118,054)(16,216)
3,059,153

Proceeds from interest and dividend income
Payments for interest
Payments for income tax and other taxes
Net cash provided by operating activities

10,066(20,147)(69,427)
260,058

8,484(20,395)(56,252)
189,933

6,707(22,295)(55,545)
158,508

90,685(181,505)(625,468)
2,342,865

Cash flows from investing activities:
Payments for purchases of property and equipment
Proceeds from sale of property and equipment
Payments for purchases of investments in securities
Proceeds from sale and redemption of investments in securities
Payments for guarantee and lease deposits paid to lessors
Proceeds from guarantee and lease deposits paid to lessors
Payments for guarantee and lease deposits received
Proceeds from guarantee and lease deposits received
Receipts of deposits from partnership investors
Restitution of deposits from partnership investors
Other, net
Net cash used in investing activities(188,573)
6,617(31,281)
334
(738)
4,475
(14,324)
35,664
1,004(10,442)(11,949)(209,213)(220,017)
357(28,835)
2,197(1,317)28,462(11,276)
25,271
2,420(11,544)(6,252)(220,534)(254,931)
125(21,249)
1,858(1,720)8,361(11,260)
22,974
2,757(13,626)(7,451)(274,162)(1,698,856)
59,613(281,811)
3,009(6,649)40,315(129,045)
321,297
9,045(94,072)(107,648)(1,884,802)(35,773)—(60,000)
4,900(4,900)198,300(225,752)
37,110(44,611)(27)(13,269)(2,892)30,000(80,000)
1,700(1,700)376,000(209,622)
12,610(21,258)(64)(12,337)(12,610)
20,000(20,000)
14,500(16,460)
520,200(296,737)
109,500(106,820)(43)(11,276)(322,279)—(540,541)
44,144(44,144)
1,786,486(2,033,802)
334,324(401,901)(243)(119,541)—(2,036)(146,058)(60,910)(5,066)
26,461—(2,257)
197,997—(18,341)(1,315,838)

Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Loss on impairment of fixed assets (Note 10)
Provision for (Reversal of) allowance for doubtful accounts
Increase (Decrease) in net defined benefit liability
Loss (Gain) on sale of property and equipment, net
Loss on disposal of property and equipment
Loss (Gain) on sale of investments in securities, net
Loss (Gain) on devaluation of investments in securities
Interest and dividend income
Interest expense
Decrease (Increase) in notes and accounts receivable—trade
Decrease (Increase) in inventories
Increase (Decrease) in notes and accounts payable—trade
Increase (Decrease) in advances received
Other, net
Total

Cash flows from financing activities:
Increase (Decrease) in short-term debt, net
Proceeds from issuance of bonds
Redemption of bonds
Proceeds from non-recourse bonds
Redemption of non-recourse bonds
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from long-term non-recourse loans
Repayment of long-term non-recourse loans
Decrease (Increase) in treasury stocks, net
Cash dividends paid
Payments for purchases of investments in subsidiaries not resulting
in change in scope of consolidation
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents

243

(124)

(388)

2,189

Net increase (decrease) in cash and cash equivalents(94,970)(4,264)

81,955(855,586)

Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents of a newly consolidated
subsidiary
Decrease in cash and cash equivalents resulting from exclusionof subsidiaries from consolidation
Cash and cash equivalents at end of year (Note 3)

262,046

267,944

185,989

2,360,775

3,631

—

—

32,712—¥ 170,707(1,634)¥ 262,046—¥ 267,944—$ 1,537,901

See accompanying notes.

1 Basis of presenting consolidated

financial statements

The accompanying consolidated financial statements of Sumitomo Realty& Development Co., Ltd. (“the Company”) and its consolidated
subsidiaries have been prepared in accordance with the provisions set
forth in the Financial Instruments and Exchange Act and its related
accounting regulations, and in conformity with accounting principles
generally accepted in Japan (“Japanese GAAP”), which are different incertain respects as to application and disclosure requirements fromInternational Financial Reporting Standards (“IFRS”).
The accounts of the Company’s 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 and translated into English (with certain expandeddisclosure) from the consolidated financial statements of the Company
prepared in accordance with Japanese GAAP and filed with theappropriate Local Finance Bureau of the Ministry of Finance as requiredby the Financial Instruments and Exchange Act. Certain supplementary
information included in the statutory Japanese-language consolidated
financial statements, but not required for fair presentation, is notpresented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollars is
included solely for the convenience of readers outside Japan, using theprevailing exchange rate at March 31, 2019, which was ¥111.00 to U.S.
$1. The translation should not be construed as representations that theJapanese yen amounts 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 Accounting policies(1) Consolidation
The accompanying consolidated financial statements include theaccounts of the Company and significant companies over which theCompany has power of control through majority voting rights orexistence of certain conditions evidencing control by the Company.
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 theCompany acquired control of the respective subsidiaries.
All significant intercompany balances, transactions and profits havebeen eliminated in consolidation.
(2) Foreign currency translation
Receivables and payables denominated in foreign currencies aretranslated into Japanese yen at the year-end rate.
Financial statements of consolidated overseas subsidiaries aretranslated into Japanese yen at the year-end rate, except forshareholders’ equity accounts, which are translated at historical rates,
and income statement items resulting from transactions with theCompany, which are translated at the rates used by the Company.
Differences arising from translation are presented as “Foreign
currency translation adjustments” in net assets.
(3) Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash on hand,readily available deposits and short-term, highly liquid investments withmaturities not exceeding three months at the time of purchase areconsidered to be cash and cash equivalents.

(4) Recognition of revenue
Revenues from sales operations of condominiums, detached houses andland lots are recognized when the units are delivered and customers
accepted the delivery. Revenues from leasing operations of officebuildings, residences and other properties are recognized as rent accrues
over the lease term.
(5) Inventories
Inventories are stated at cost, determined by the specific identification
method principally. The carrying amount of inventories is written downwhen the profitability declines.
(6) Securities
Held-to-maturity securities are stated at amortized cost. Investments in
subsidiaries and affiliates that are not consolidated or accounted for using
the equity method are stated at moving-average cost. Available-for-salesecurities with available fair values are stated at fair value. Unrealized
gains and losses on these securities are reported, net of applicable income
taxes, as a separate component of net assets. Realized gains and losseson the sale of such securities are computed using moving-average cost.
Preferred equity securities are stated at cost determined by the
specific identification method, and securities with no available fair value
are stated at moving-average cost.
Investments in limited partnerships, which are regarded as securities
under the Financial Instruments and Exchange Act, are accounted for in amanner similar to the equity method based on the recent financial
statements.
If the market value of held-to-maturity securities, investments in subsidiaries and affiliates and available-for-sale securities declines significantly, suchsecurities are stated at fair value and the difference between fair value andthe carrying amount is recognized as a loss in the period of the decline. If thefair value of investments in unconsolidated subsidiaries and affiliated companies not accounted for using the equity method is not readily available, suchsecurities should be written down to the net asset value with a corresponding charge in the income statement in the event net asset value declines
significantly. In these cases, such fair value or the net asset value will be thecarrying amount of the securities at the beginning of the next fiscal year.
(7) Property and equipment
The Company and its consolidated domestic subsidiaries depreciatebuildings using the straight-line method, and other property and equipment (excluding facilities attached to buildings and structures acquiredon or after April 1, 2016) using the declining-balance method over theirestimated useful lives. The consolidated overseas subsidiaries depreciateproperty and equipment using primarily the straight-line method in
accordance with the accounting principles in the respective countries.
In addition, the Company and its consolidated domestic subsidiaries
depreciate facilities attached to buildings and structures acquired on orafter April 1, 2016 using the straight-line method.
Leased assets related to finance lease transactions without title transfer are depreciated using the straight-line method over the lease periods
as their useful lives with no residual value.
Estimated useful lives used in the computation of depreciation are
generally as follows:
Buildings and structures...................... 6 to 60 years
Machinery and equipment.................. 2 to 20 years
Leased assets...................................... Lease periods
Sumitomo Realty & Development Co., Ltd.

Financial Section(8) Software costs
Software costs are amortized using the straight-line method over theestimated useful lives (five years).
(9) Allowance for doubtful accounts
The Company and its consolidated subsidiaries provide for doubtful
accounts at an estimated uncollectable amount based on the evaluationof certain identified doubtful and bankrupt receivables plus an amountcalculated using the percentage of actual collection losses in certain
reference periods with respect to remaining receivables.
(10) Lease transactions
Leased assets related to finance lease transactions without title transfer
are depreciated using the straight-line method over the lease periods as
their useful lives with no residual value.
(11) Income taxes
Income taxes are provided for on the basis of income for financial statement purposes. The tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial statements andincome tax purposes are recognized as deferred income taxes.
(12) Employees’ severance and retirement benefits
The Company and its certain consolidated subsidiaries provide two typesof post-employment benefit plans, lump-sum payment plans and defined
benefit corporate pension plans, under which all eligible employees areentitled to benefits based on their current rate of pay, length of service
and the conditions under which termination occurs.
For the calculation of retirement benefit obligations, the estimatedamount of retirement benefits is allocated to the respective fiscal years by
the straight-line method.
Some of the Company’s consolidated subsidiaries calculate net defined
benefit liability and retirement benefit expenses by using a simplified method
in which retirement benefit obligations are equal to the amount that would
be paid if all employees resigned voluntarily at the end of the fiscal year.
Prior service costs are recognized as expenses in the period in which
they are incurred, and actuarial gains and losses are recognized as
expenses in the following period.
(13) Construction contracts
The construction projects for which the outcome of the portion completed by the end of the fiscal year under review can be reliably estimated are accounted for by the percentage-of-completion method (thedegree of completion of each construction project is estimated using thecost-comparison method), while other construction projects areaccounted for by the completed-contract method.
(14) Derivative transactions and hedge accounting
The Company and its consolidated subsidiaries state derivative financial
instruments at fair value and recognize changes in the fair value as gains
or losses unless derivative financial instruments are used for hedging
purposes and qualify for hedge accounting.
If derivative financial instruments are used as hedges and meet certain
hedging criteria, the Company and its consolidated subsidiaries defer
recognition of gains or losses resulting from changes in fair value of thederivative financial instruments until the related gains or losses on thehedged items are recognized.

However, in cases where foreign exchange forward contracts are usedas hedges and meet certain hedging criteria (regarding foreign exchange
contracts), the foreign exchange forward contracts and hedged items areaccounted for in the following manner:
1. ‌If a foreign exchange forward 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 carrying
amount of the receivable or payable is recognized in the income
statement 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
the contracted 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 foreign exchange forward contract is executed to hedge a futuretransaction denominated in a foreign currency, the future transaction
will be recorded using the contracted forward rate, and no gains orlosses on the foreign exchange forward contract are recognized.
Also, if interest rate swap contracts are used as a hedge and meetcertain hedging criteria (regarding interest rate swap contracts), the net
amount to be paid or received under the interest rate swap contracts isadded to or deducted from the interest on the assets or liabilities relative
to which the swap contract was executed as a hedge.
(15) Amounts per share of common stock
The computation of earnings per share is based on the weighted-average
number of shares of common stock outstanding during each year.
Diluted earnings per share is computed based on the amount of profit
attributable to owners of parent on common stock and the weighted-average number of shares of common stock outstanding during each year
after giving effect to the dilutive potential of shares of common stock to
be issued upon the exercise of stock options.
Diluted earnings per share is not presented as there are no potential
shares.
Cash dividends per share represent actual amounts applicable to therespective year.
(16) New accounting pronouncements (Accounting standards andguidance issued but not yet effective)“Accounting Standard for Revenue Recognition” (ASBJ Statement No.
29, March 30, 2018)“Implementation Guidance on Accounting Standard for Revenue
Recognition” (ASBJ Guidance No. 30, March 30, 2018)(1) Overview
The standard and guidance provide comprehensive principles forrevenue recognition. Under the standard and guidance, revenue isrecognized by applying the following 5 steps:
Step 1: Identify contract(s) with customers
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: ‌Allocate the transaction price to the performance obligation in
the contract
Step 5: ‌Recognize revenue when (or as) the entity satisfies a performance obligation(2) Effective date
Effective from the beginning of the fiscal year ending March 31, 2022
(3) Effects of the application of the standards
The Company and its consolidated domestic subsidiaries are currently
in the process of determining the effects of these new standards onthe consolidated financial statements.
(17) Changes in presentation methods(Changes due to adoption of “Partial Amendments to AccountingStandard for Tax Effect Accounting”)
Effective from the beginning of the year ended March 31, 2019, theCompany and its consolidated subsidiaries adopted “Partial Amendments
to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No.
28, February 16, 2018) and changed the presentation and related notesof deferred tax assets and deferred tax liabilities, such that deferred tax
assets and deferred tax liabilities are classified as part of “Other assets”
and “Long-term liabilities”, respectively.
As a result, “Deferred income taxes” in “Current assets” decreased by¥21,793 million and “Deferred income taxes” in “Other assets”
increased by ¥2,090 million in the consolidated balance sheet as ofMarch 31, 2018. In addition, “Other current liabilities” and “Other longterm liabilities” decreased by ¥59 million and ¥19,644 million as ofMarch 31, 2018, respectively.
Total assets decreased by ¥19,703 million as of March 31, 2018 as aresult of offsetting deferred tax assets and deferred tax liabilities relating
to the same taxable entity.

(Consolidated statements of income)“Dividend to partnership investors” previously separately presented in“Other income (expenses)” was included in “Other, net” from the year
ended March 31, 2019, because the significance of the amountdecreased. Reflecting this change in presentation, the consolidated statements of income for the years ended March 31, 2018 and 2017 werereclassified, respectively.
As a result, “Dividend to partnership investors” of ¥795 million wasreclassified to “Other, net” for the year ended March 31, 2018, and“Dividend to partnership investors” of ¥1,143 million was reclassified to“Other, net” for the year ended March 31, 2017.
(Consolidated statements of cash flows)“Increase (Decrease) in assignment of receivables” previously separately
presented in “Cash flows from financing activities” was included in“Other, net” from the year ended March 31, 2019, because the significance of the amount decreased. Reflecting this change in presentation,
the consolidated statements of cash flows for the years ended March 31,2018 and 2017 were reclassified, respectively.
As a result, “Increase (Decrease) in assignment of receivables” of¥3,000 million was reclassified to “Other, net” for the year ended March
31, 2018, and “Increase (Decrease) in assignment of receivables” of¥300 million was reclassified to “Other, net” for the year ended March
31, 2017.

3 Cash and cash equivalents
Cash and cash equivalents at March 31, 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Cash, time and notice deposits
Time deposits
Cash and cash equivalents

2019

2018

2019

¥172,192(1,485)¥170,707¥263,210(1,164)¥262,046$1,551,279(13,378)$1,537,901

4 Inventories
Inventories at March 31, 2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

Real estate for sale
Real estate for sale in process
Costs on uncompleted construction contracts
Other
Total

2019

2018

2019

¥390,026
282,595
5,827
1,455¥679,903¥380,736
395,730
5,015
1,827¥783,308$3,513,748
2,545,901
52,495
13,108$6,125,252

The Company transferred amounts between inventories and property and equipment. Such transfers at March 31, 2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

Inventories:
Transferred to property and equipment
Transferred from property and equipment
Net decrease

2019

2018

2019

¥(23,162)
4,822¥(18,340)¥(38,047)
2,490¥(35,557)$(208,666)
43,441$(165,225)

Sumitomo Realty & Development Co., Ltd.

Financial Section

5 Pledged assets
Assets pledged as collateral at March 31, 2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

¥  2,068¥  2,081$   18,631

Buildings and structures

103,708

108,319934,306Land

393,316

393,316

3,543,387

Cash, time and notice deposits

Construction in progress

85

99

766

Machinery and equipment

210

268

1,892

¥499,387¥504,083$4,498,982

Total
Secured liabilities at March 31, 2019 and 2018 are as follows:

Thousands of
U.S. dollars

Millions of yen

Long-term non-recourse debt due within one year
Long-term non-recourse debt due after one year
Total

2019

2018

2019

¥102,298
300,900¥403,198¥ 49,410
361,289¥410,699$  921,604
2,710,811$3,632,415

Specified assets for non-recourse debts at March 31, 2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

Cash, time and notice deposits
Buildings and structures
Land
Construction in progress
Machinery and equipment
Total

2019

2018

2019

¥ 11,345
103,708
393,31685
210¥508,664¥ 10,652
108,319
393,31699
268¥512,654$  102,207
934,306
3,543,387
766
1,893$4,582,559(Note) “Specified assets for non-recourse debts” includes a portion of the amount of “Assets pledged as collateral” for the years ended March 31, 2019 and 2018.

3. Supplemental information on fair values of financial instruments
The fair values of financial instruments are based on their market prices,
and if the market price is not available, other rational valuation techniques are used instead. The rational valuation techniques incorporate
variable factors, and as a result the values may change due to using
different assumptions.
The amounts of derivative transactions shown in Note 16 “Derivativetransactions” are not representing the market risks related to derivativetransactions.
The carrying amounts of financial instruments on the consolidatedbalance sheets, their fair values and the differences between them as ofMarch 31, 2019 and 2018 are as follows. (Financial instruments whose
fair value is extremely difficult to estimate are not included; please see(Note 2).)

For 2019
Millions of yen

Assets:(1) Cash, time and notice deposits(2) Notes and accounts receivable—trade(3) Investments in securities
Available-for-sale securities(4) Guarantee and lease deposits
Held-to-maturity securities
Available-for-sale securities
Total assets
Liabilities:(1) Notes and accounts payable—trade(2) Short-term debt
(3) Long-term debt (including due within one year)(4) Long-term non-recourse debt (including due within one year)
Total liabilities
Derivative transactions*:
Hedge accounting
Total derivative transactions

Carrying amount

Fair value¥  172,192
21,567¥  172,192
21,567414,743

Carrying amount

Fair value¥     ——

$ 1,551,279
194,297$ 1,551,279
194,297$      ——

414,743—3,736,423

3,736,423

—

3,169
1,170
¥  612,841

3,167
1,170
¥  612,839(2)—¥    (2)28,550
10,541$ 5,521,090

28,532
10,541$ 5,521,072(18)—$    (18)¥   54,939
25,643
2,913,946
403,198¥3,397,726¥   54,939
25,643
2,964,782
410,218¥3,455,582¥     ——
50,836
7,020¥57,856$   494,946
231,018
26,251,766
3,632,414$30,610,144$   494,946
231,018
26,709,747
3,695,658$31,131,369$      —
—457,981
63,244$521,225¥   (5,733)¥   (5,733)¥   (5,733)¥   (5,733)¥     —
¥     —$   (51,649)$   (51,649)$   (51,649)$   (51,649)$      —
$      —

2. Details of financial instruments, risks, and policies andsystems of risk management
Operating receivables such as notes and accounts receivable—trade areexposed to customers’ credit risk, but this risk is generally avoided
through the receipt of deposits.
Investments in securities are business-related equities and are exposed
to market price fluctuation risk. The Group regularly checks the market
value of the securities and the financial condition of the issuers, andcontinuously reviews whether it continues to hold securities with consideration for its relationships with the issuers.
Guarantee and lease deposits are mostly deposits related to leasing
properties, and are exposed to the counterparty credit risk.

Difference

For 2018
Millions of yen

6 Financial instruments
1. Policy for financial instruments
The Company and its consolidated subsidiaries (“the Group”) have thepolicy to limit its fund management to short-term deposits with funds
through loans from banks and the issuance of corporate bonds andcommercial paper.
The Group utilizes derivative financial instruments only for the purpose of hedging the foreign exchange risk associated with foreign currency-denominated transactions or hedging the interest rate risk
associated with the Group’s loans payable, and does not utilize derivative
financial instruments for any speculative purposes.

Thousands of U.S. dollars
Difference

In addition, the Group accommodates counterparties with loans andconsequently is exposed to the borrowers’ credit risk. However, theGroup constantly checks the financial condition of principal borrowers
and their performance using the funds lent to those borrowers even after
accommodation.
The majority of due dates of operating debt, such as notes andaccounts payable, are within one year.
Interest rate swap contracts are used to hedge risks arising fromfluctuations in interest rates on certain loans and corporate bonds.
In regard to derivative transactions, the Group utilizes interest rate
swaps for bank loans and deposits, and utilizes foreign exchange forward
contracts and cross currency swap contracts for foreign currency-denominated transactions. Interest rate swap contracts are exposed to the risks
of interest rate changes, and foreign exchange forward contracts andcross currency swap contracts are exposed to the risks of foreignexchange rate changes. The derivative financial instruments are executedwith creditworthy financial institutions, and the Group’s management
believes there is insignificant risk of default by counterparties. Derivativetransactions are executed by the Group’s Finance Department in accordance with the decisions of a committee whose chairman is the directorof the Finance Department. The Finance Department prepares reports onderivative transactions that are provided to the director of the Finance
Department periodically.

Assets:(1) Cash, time and notice deposits(2) Notes and accounts receivable—trade(3) Investments in securities
Available-for-sale securities(4) Guarantee and lease deposits
Held-to-maturity securities
Available-for-sale securities
Total assets
Liabilities:(1) Notes and accounts payable—trade(2) Short-term debt
(3) Long-term debt (including due within one year)(4) Long-term non-recourse debt (including due within one year)
Total liabilities
Derivative transactions*:
Hedge accounting
Total derivative transactions

Carrying amount

Fair value

Difference¥  263,210
23,773¥  263,210
23,773¥    ——

417,841

417,841

—

789
1,180
¥  706,793

791
1,180
¥  706,795

2—¥     2¥   28,751
61,4163,001,398
410,699¥3,502,264¥   28,751
61,416
3,032,800
415,716¥3,538,683¥    ——
31,402
5,017¥36,419¥   (2,983)¥   (2,983)¥   (2,983)¥   (2,983)¥    —¥    —* Derivative transactions are stated at net of assets and liabilities. Figures in parentheses indicate net liabilities.

Sumitomo Realty & Development Co., Ltd.

Financial Section(Note 1) The calculation methods of fair value for financial instruments
Assets:(1) Cash, time and notice deposits
The fair value of cash, time and notice deposits approximates their carrying amounts because of their short-term maturities.
(2) Notes and accounts receivable—trade
The fair value of notes and accounts receivable—trade approximates theircarrying amounts unless the credit standing of debtors has changed
significantly since the loan origination.
The allowance for doubtful receivables is estimated based on
expected recoverable amounts, considering the possibility of individualcollections. Therefore the fair value of doubtful receivables approximatesthe carrying amount deducted by the estimated allowance for doubtful
accounts on the consolidated balance sheets as of the end of the fiscal
year.
(3) Investments in securities
The fair value of listed shares is based on the exchange prices at market.
For floating rate notes, the carrying amount is presented as the fair value,as the fair value approximates the carrying amount because the market
interest rate is reflected in such notes within a short time period. The fairvalue of the fixed-coupon debt is determined based on the present value
discounted at the interest rate which reflects the period remaining tomaturity and the credit risk.
For notes on securities classified by purpose of holding, please see
Note 7 “Securities.”(4) Guarantee and lease deposits
The fair value of guarantee and lease deposits are based on the value
offered by correspondent financial institutions.
For notes on securities classified by purpose of holding, please see
Note 7 “Securities.”

Liabilities:(1) Notes and accounts payable—trade and (2) Short-term debt
The fair value of these items approximates their carrying amounts
because of their short-term maturities.
(3) Long-term debt (including due within one year)
For floating rate notes, the carrying amount is used as the fair value
because the market interest rate is reflected in such notes within a shorttime period and because the credit standing of the Company is the sameafter borrowing. The fixed-coupon debt is calculated by discounting the
combined total of principal and interest at an interest rate assumed forsimilar new borrowings.
The specific matching criteria of interest rate swaps and cross currencyinterest rate swaps are applicable to some long-term debts with floatinginterest rates (please see Note 16 “Derivative transactions”). The fairvalue of these items is calculated by discounting the combined total ofinterest and principal, with which the interest rate swap and cross currency interest rate swap have been accounted for, at an interest rate
rationally estimated for similar borrowings.
The fair value of corporate bonds issued by the Company (included in(3) Long-term debt (including due within one year)) is based on themarket price.
(4) Long-term non-recourse debt (including due within one year)
For floating rate notes, the carrying amount is used as the fair value
because the market interest rate is reflected in such notes within a shorttime period and the value of its non-exempt properties has not beenchanged.
The fixed-coupon debt is calculated by discounting the combined
total of principal and interest at an interest rate assumed for similar new
borrowings or bonds.
The specific matching criteria of interest rate swaps are applicable tosome long-term non-recourse debts with floating interest rates (please
see Note 16 “Derivative transactions”). The fair value of these items is
calculated by discounting the combined total of interest and principal,
with which the interest rate swap has been accounted for, at an interest
rate rationally estimated for similar borrowings or bonds.

(Note 3) Redemption schedule of pecuniary claims and securities with maturities
For 2019
Millions of yen
1 year or lessCash, time and notice deposits
Notes and accounts receivable—trade
Guarantee and lease deposits:
Held-to-maturity securities (National government bonds)
Available-for-sale securities with maturities (National government bonds)
Total

5 to 10 years

Over 10 years¥172,192
21,567

¥ —
—

¥ —
—

¥—
—

2,969
407
¥197,135

200
561
¥761

—
171
¥171

—
—
¥—

For 2018
Millions of yen
1 year or lessCash, time and notice deposits
Notes and accounts receivable—trade
Guarantee and lease deposits:
Held-to-maturity securities (National government bonds)
Available-for-sale securities with maturities (National government bonds)
Total

1 to 5 years

5 to 10 years

Over 10 years¥263,210
23,773

¥

—
—

¥ —
—

¥—
—

328
—
¥287,311

462
842¥1,304

—
298
¥298

—
—
¥—

For 2019
Thousands of U.S. dollars
1 year or lessCash, time and notice deposits
Notes and accounts receivable—trade
Guarantee and lease deposits:
Held-to-maturity securities (National government bonds)
Available-for-sale securities with maturities (National government bonds)
Total

1 to 5 years

5 to 10 years

Over 10 years$1,551,279
194,297$    ——$    ——$——

26,748
3,667$1,775,991

1,802
5,054
$6,856—
1,541$1,541——$—(Note 4) Repayment schedule of corporate bonds, long-term debt, long-term non-recourse debt and other interest-bearing debt
For 2019
Millions of yen
Year ending March 31

Short-term debt
Long-term debt (including due within one year)
Long-term non-recourse debt (including due within one year)
Total

Derivative transactions:
Please see Note 16 “Derivative transactions.”

1 to 5 years

2020

2021

2022

2023

2024

2025 and thereafter¥ 25,643
169,619
102,298¥297,560¥     —
131,281
69,913¥201,194¥     —
211,256
14,944¥226,200¥     —
237,1963,386¥240,582¥     —
289,2823,240¥292,522¥      —1,875,312
209,417¥2,084,729

2019

2020

2021

2022

2023

2024 and thereafter¥ 61,416
275,752
49,410¥386,578¥     —
169,619
101,514¥271,133¥     —
131,281
69,129¥200,410¥     —
221,256
14,160¥235,416¥     —
237,196
2,716¥239,912¥       —1,966,294
173,770¥2,140,064

2020

2021

2022

2023

2024

2025 and thereafter$  231,018
1,528,099
921,604$2,680,721$      —1,182,712
629,847$1,812,559$      —1,903,207
134,631$2,037,838$      —2,136,901
30,504$2,167,405$      —2,606,144
29,189$2,635,333$       —16,894,703
1,886,639$18,781,342(Note 2) Financial instruments whose fair value is extremely difficult to estimate
Carrying amountThousands of
U.S. dollars

Millions of yen

Investments in subsidiaries and affiliates*1

2019

2018

2019

¥ 35,856¥ 42,745$  323,027

Unlisted equity securities*1

2,327

1,297

20,964Preferred equity securities, etc.*1

25,68825,338231,423

352

352

3,171

65,96069,095594,234

Investments in limited partnerships, etc.*1
Guarantee and lease deposits(excluding held-to-maturity securities and available-for-sale securities)*2
Guarantee and deposits received*3

For 2018
Millions of yen
Year ending March 31

Short-term debt
Long-term debt (including due within one year)
Long-term non-recourse debt (including due within one year)
Total
For 2019

228,959

207,824

2,062,694*1. The fair value of these items are not disclosed since their market price is unavailable and the assessment of their fair value is deemed extremely difficult.
*2. Guarantee and lease deposits (excluding held-to-maturity securities and available-for-sale securities) are not included in “Assets (4) Guarantee and lease deposits” because their remaining terms cannot
be determined and the assessment of their fair value is deemed extremely difficult.
*3. The fair value of guarantee and deposits received (mainly consisting of lease deposits) are not disclosed because their remaining terms cannot be determined and the assessment of their fair value isdeemed extremely difficult.

Thousands of U.S. dollars
Year ending March 31

Short-term debt
Long-term debt (including due within one year)
Long-term non-recourse debt (including due within one year)
Total

Sumitomo Realty & Development Co., Ltd.

Financial Section

7 Securities

8 Short-term debt and long-term debt

For 2019
A. The following tables summarize the acquisition costs, carrying amounts and fair values of securities with available fair values as of March 31, 2019:(a) Held-to-maturity securities:

Short-term debt at March 31, 2019 and 2018 consisted of the following:

Millions of yen

Carrying amount

Securities whose fair value exceeds carrying amount:
National and local government bonds, etc.
Securities whose fair value does not exceed carrying amount:
National and local government bonds, etc.
Total

Thousands of U.S. dollars

Difference

Carrying amount

Fair value¥  462¥1$ 4,153$ 4,162

$  9

2,708
¥3,1692,705¥3,167(3)¥(2)

24,397$28,550

24,370$28,532

(27)
$(18)

Carrying amount

Acquisition cost

Millions of yen
Carrying amount

Acquisition cost

¥25,643—¥25,643

0.27
—

2018

Average interest
rate (%)¥61,416—¥61,4160.25—¥348,562
1,171—
349,733¥180,791
1,140—
181,931¥167,771
31—
167,802$3,140,198
10,550—3,150,748$1,628,748
10,270—1,639,018$1,511,450
280—
1,511,730

65,517—664
66,181¥415,914

75,824—664
76,448¥258,419(10,307)——(10,307)¥157,495

590,243—
5,982
596,225$3,746,973

683,099—
5,982
689,081$2,328,099(92,856)——(92,856)$1,418,874

For 2018
A. The following tables summarize the acquisition costs, carrying amounts and fair values of securities with available fair values as of March 31, 2018:(a) Held-to-maturity securities:
Millions of yen

Carrying amount

Fair value

Difference

¥789

¥791

¥  2

—
¥789

—
¥791

—
¥  2

Carrying amount

Acquisition cost

¥394,231
1,180—
395,411¥202,083
1,140—
203,223¥192,14840—
192,188

23,281—
329
23,610¥419,021

26,368—329
26,697¥229,920(3,087)——(3,087)¥189,101(b) Available-for-sale securities:

Millions of yen
Difference

2019$231,018—$231,018

The interest rates represent weighted-average rates in effect at March 31, 2019 and 2018, regardless of borrowing currencies, though the range ofthe interest rate varies by borrowing currency.
Long-term debt at March 31, 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Difference

B. ‌Total sales of available-for-sale securities sold in the year ended March 31, 2019 amounted to ¥264 million ($2,378 thousand) and the related gains
amounted to ¥12 million ($108 thousand).

Securities whose carrying amount exceeds acquisition cost:
Equity securities
Debt securities*
Other
Subtotal
Securities whose carrying amount does not exceed acquisition cost:
Equity securities
Debt securities
Other
Subtotal
Total

Loans, principally from banks
Commercial paper
Total

Average interest
rate (%)

Thousands of U.S. dollars
Difference* Debt securities in securities whose carrying amount exceeds acquisition cost are included in “Guarantee and lease deposits paid to lessors” on the consolidated balance sheets.
(Note) The Company recognized impairment loss on investments in securities of ¥1,105 million ($9,955 thousand) related to equity securities in available-for-sale securities.

Securities whose fair value exceeds carrying amount:
National and local government bonds, etc.
Securities whose fair value does not exceed carrying amount:
National and local government bonds, etc.
Total

2019

Difference¥  461(b) Available-for-sale securities:
Securities whose carrying amount exceeds acquisition cost:
Equity securities
Debt securities*
Other
Subtotal
Securities whose carrying amount does not exceed acquisition cost:
Equity securities
Debt securities
Other
Subtotal
Total

Fair value

Thousands of
U.S. dollars

Millions of yen

2.50% domestic straight bonds, due 2019
0.329% domestic straight bonds, due 2018
0.563% domestic straight bonds, due 2020
0.877% domestic straight bonds, due 2020
0.462% domestic straight bonds, due 2018
1.098% domestic straight bonds, due 2023
0.426% domestic straight bonds, due 2018
0.355% domestic straight bonds, due 2018
0.950% domestic straight bonds, due 2023
0.344% domestic straight bonds, due 2018
0.968% domestic straight bonds, due 2023
0.987% domestic straight bonds, due 2024
0.914% domestic straight bonds, due 2024
0.904% domestic straight bonds, due 2024
0.884% domestic straight bonds, due 2024
0.836% domestic straight bonds, due 2024
0.809% domestic straight bonds, due 2024
0.429% domestic straight bonds, due 2021
0.392% domestic straight bonds, due 2022
0.670% domestic straight bonds, due 2025
0.826% domestic straight bonds, due 2025
0.992% domestic straight bonds, due 2025
0.400% domestic straight bonds, due 2026
0.230% domestic straight bonds, due 2026
0.400% domestic straight bonds, due 2027
Loans, principally from banks and insurance companies, with interest at weighted-average rates of 0.31%
in 2019 and 0.32% in 2018:
SecuredUnsecured
Subtotal
Amount due within one year
Total

2019

2018

2019

¥   10,000—
10,00020,000—10,000——10,000—10,00020,00020,00020,00020,00020,00020,00010,00010,00010,00020,00020,00010,00010,00030,000¥   10,000
10,00010,00020,00010,00010,00020,00010,00010,00010,00010,00020,00020,00020,00020,00020,00020,00010,00010,00010,00020,00020,00010,00010,00030,000$    90,090—
90,090180,180—
90,090——90,090—90,090180,180
180,180
180,180
180,180
180,180
180,180
90,09090,09090,090180,180
180,180
90,09090,090270,271—
2,603,946
2,913,946(169,619)¥2,744,327—
2,631,398
3,001,398(275,752)¥2,725,646—
23,458,975
26,251,766(1,528,099)$24,723,667* Debt securities in securities whose carrying amount exceeds acquisition cost are included in “Guarantee and lease deposits paid to lessors” on the consolidated balance sheets.

B. ‌Total sales of available-for-sale securities sold in the year ended March 31, 2018 amounted to ¥1,663 million and the related gains and losses
amounted to ¥1,010 million and ¥47 million, respectively.
Sumitomo Realty & Development Co., Ltd.

Financial Section

Non-recourse debt at March 31, 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

Non-recourse bonds, with interest at weighted-average rates of 0.07% in 2019 and 0.11% in 2018:
Due within one year
Due after one year
Subtotal
Non-recourse loans, with interest at weighted-average rates of 0.11% in 2019 and 0.15% in 2018:
Due within one year
Due after one year
Subtotal
Total¥  2,000
37,10039,100¥  4,900
34,20039,100$   18,018
334,234
352,252

100,298
263,800
364,098¥403,198

44,510327,089
371,599¥410,699

903,586
2,376,576
3,280,162$3,632,414

SecuredUnsecured
Total¥403,198—¥403,198¥410,699—¥410,699$3,632,414—$3,632,414

9 Employees’ severance and retirement benefits
As explained in Note 2 (12), the liabilities and expenses for severance and retirement benefits are determined based on the amounts obtained by actuarial
calculations except for the cases using the simplified method.
For 2019 and 2018
1. Defined benefit plan
(1) Adjustment table of retirement benefit obligations between the beginning and the end of the fiscal year

Retirement benefit obligations at beginning of year
Service costs
Interest costs
Actuarial differences
Retirement benefits paid
Retirement benefit obligations at end of year

2018

2019

¥11,316
717
47
(53)
(412)
¥11,615$104,640
6,432
432
(9)
(4,504)$106,991

Thousands of
U.S. dollars

Millions of yen

Year ending March 31

Millions of yen

Thousands of
U.S. dollars

2020
2021
2022
2023
2024
2025 and thereafter
Total¥  169,619
131,281211,256
237,196289,282
1,875,312¥2,913,946$ 1,528,099
1,182,712
1,903,207
2,136,901
2,606,144
16,894,703$26,251,766

Plan assets at beginning of year
Expected return on plan assets
Actuarial differences
Employer contributions
Retirement benefits paid
Plan assets at end of year

2019

2018

2019

¥5,650
113
(67)
388
(227)
¥5,857¥5,172
103
176
398
(199)
¥5,650$50,901
1,018
(604)
3,496
(2,045)$52,766(3) Adjustment‌table of retirement benefit obligations and plan assets at the end of the fiscal year and net defined benefit liability on the consolidatedbalance sheets

Thousands of
U.S. dollars

Millions of yen

The aggregate annual maturities of non-recourse debt at March 31, 2019 are as follows:
2020
2021
2022
2023
2024
2025 and thereafter
Total

2019

¥11,615
714
48
(1)
(500)
¥11,876(2) Adjustment table of plan assets between the beginning and the end of the fiscal year

The aggregate annual maturities of long-term debt at March 31, 2019 are as follows:Year ending March 31

Thousands of
U.S. dollars

Millions of yen

Millions of yen

Thousands of
U.S. dollars¥102,298
69,913
14,9443,386
3,240
209,417¥403,198$  921,604
629,847
134,63130,50429,1891,886,639$3,632,414

It is customary in Japan that security must be given if requested by lending banks under certain circumstances, and generally banks have the right tooffset cash deposited with them against any debt or obligations payable to the bank that becomes due in the case of default and certain other specified
events. The Company and its consolidated subsidiaries have never received such a request.

2019

2018

2019

Obligations under retirement benefit plans (unfunded)
Net amount of liabilities on the consolidated balance sheets¥ 6,295(5,857)438
5,581¥ 6,019¥ 6,241(5,650)591
5,374¥ 5,965$ 56,712(52,766)
3,946
50,279$ 54,225

Net defined benefit liability
Net amount of liabilities on the consolidated balance sheets¥ 6,019¥ 6,019¥ 5,965¥ 5,965$ 54,225$ 54,225

Obligations under retirement benefit plans (funded)
Fair value of plan assets(4) Components of retirement benefit expenses

Thousands of
U.S. dollars

Millions of yen

Service costs
Interest costs
Expected return on plan assets
Actuarial differences
Retirement benefit expenses

2019

2018

2019

¥ 714
48
(113)
(229)
¥ 420

¥ 717
47
(103)
41
¥ 702

$ 6,432432(1,018)(2,063)$ 3,783(5) Remeasurements of defined benefit plans (before deducting tax effect)

Thousands of
U.S. dollars

Millions of yen

Actuarial differences
Total

2019

2018

2019

¥295
¥295

¥(270)¥(270)$2,658$2,658

Sumitomo Realty & Development Co., Ltd.

Financial Section(6) Components of remeasurements of defined benefit plans (before deducting tax effect)

Thousands of
U.S. dollars

Millions of yen

Unrecognized actuarial differences
Total(7) Major breakdown of plan assets
Debt securities
Equity securities
General life insurance accounts
Other
Total
(8) Actuarial assumptions
Discount rate
Rate of expected return on plan assets

2019

2018

2019

¥66
¥66

¥(229)¥(229)

$595
$595

2019

2018

25.6%
34.9
37.8
1.7
100.0%

26.8%
34.4
37.7
1.1
100.0%

2019

2018

0.4%
2.0

0.4%
2.0

2. Defined contribution plan
The required contribution amount for a defined contribution plan that one of the Company’s consolidated subsidiaries adopted is ¥389 million ($3,505
thousand) and ¥380 million for the years ended March 31, 2019 and 2018, respectively.
10 Loss on impairment of fixed assets
The Company and its consolidated domestic subsidiaries recognized impairment losses on the following assets for the years ended March 31, 2019, 2018and 2017, respectively.
For 2019
Use

Location

Number of properties

Asset leased to others

Tokyo

1

Use

Location

Number of properties

Asset leased to others

Tokyo

1

Use

Location

Number of properties

Land for development

Tokyo, etc.

For 2018

For 2017

The Company and its consolidated domestic subsidiaries recognized
losses on the impairment of certain properties, which are generally
assessed individually for impairment. The Company’s houses are treatedas common assets.
Loss on sales of property and equipment of ¥8,576 million ($77,261
thousand) was recognized by a consolidated subsidiary by restructuringof assets within the Group for the year ended March 31, 2019. The
selling price of the asset, based on evaluation by a real estate appraiser,
was determined as its recoverable amount, and loss on sales of property
and equipment of the asset was recognized as impairment losses in otherexpenses for the year ended March 31, 2019.
The carrying value of the asset has been reduced to its recoverable
amount by ¥10,635 million since the total amount of its future cash flow

5

is estimated to be less than the carrying value for the year ended March
31, 2018. The recoverable amount is calculated by discounting the future
cash flow at 4.0%.
The carrying values of the land holdings summarized above havebeen reduced to their recoverable amounts by ¥15,538 million as aresult of mainly the determination of reviewing their business plans forthe year ended March 31, 2017. The recoverable amounts of the assets
for the years ended March 31, 2017 were determined as the net disposal value. The net disposal value for land for leased buildings and landfor development are based on the amount equivalent to the publicly
notified land price.
These write-downs were recognized as impairment losses in otherexpenses for the years ended March 31, 2018 and 2017, respectively.

11 Asset retirement obligations
Even though removing asbestos is required for some buildings theCompany and its consolidated subsidiaries (“the Group”) operate at
the time of demolishing, it is difficult to estimate the fair value ofobligations associated with such assets reasonably since the timing
and/or method of settlement for the retirement obligations are notclear enough. Therefore, for the years ended March 31, 2019 and2018, asset retirement obligations related to such a case are notrecorded (except for the asset retirement obligations recorded on thefinancial statements).

In addition, under the partial lease contracts, the Group has obligations
for restoring office spaces when they move out. For the asset retirement
obligations associated with such a case, the duration of use of the assets
is not clear enough and these assets do not have any relocation plans.
Therefore, the Group is unable to estimate the asset retirement obligations
since it is difficult to estimate the timing of fulfillment of the obligations.
Consequently, for the years ended March 31, 2019 and 2018, asset retirement obligations related to such a case are not recorded (except for theasset retirement obligations recorded on the financial statements).

12 Income taxes
The normal effective statutory income tax rate in Japan arising out of the aggregation of corporate, enterprise and inhabitants’ taxes was approximately
30.62% for the years ended March 31, 2019, and 30.86% for the years ended March 31, 2018 and 2017.
Details of deferred tax assets and liabilities at March 31, 2019 and 2018 are as follows:

Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

Deferred tax assets:
Loss on impairment of fixed assets
Loss on devaluation of real estate for sale
Depreciation and amortization of consolidated adjustment
Loss on adjustment of profit and loss on transfer
Allowance for doubtful accounts
Accrued bonuses
Accrued enterprise tax and business office tax
Net defined benefit liability
Net deferred losses on hedges
Net operating loss carryforwards
Loss on devaluation of investments in SPEs’ holding properties for sale
Elimination of unrealized profit
Loss on devaluation of investments in securities
Other
Subtotal of deferred tax assets
Valuation allowance
Total deferred tax assets¥ 17,077
14,415
7,258
4,254
3,439
1,875
1,834
1,759
1,752
1,593
1,413
926
797
13,11371,505(9,247)¥ 62,258¥ 17,146
10,885
7,977
—
3,521
1,739
2,165
1,873
951
1,939
1,413
943
844
12,85164,247(6,824)¥ 57,423$ 153,847
129,865
65,38738,32430,982
16,892
16,523
15,847
15,784
14,351
12,7308,342
7,180
118,135
644,189(83,306)$ 560,883

Deferred tax liabilities:
Net unrealized holding gains on securities
Retained earnings appropriated for tax allowable reserves
Other
Total deferred tax liabilities
Net deferred tax assets¥(48,241)(3,731)(637)¥(52,609)¥  9,649¥(57,916)(3,731)(738)¥(62,385)¥ (4,962)$(434,604)(33,613)(5,738)$(473,955)$  86,928(Note) Valuation allowance increased by ¥2,423 million ($21,829 thousand) as a result of mainly the recognition of loss on adjustment of profit and loss on transfer.

Sumitomo Realty & Development Co., Ltd.

Financial Section

15 Information for certain lease transactions

The difference between the statutory tax rate and the effective tax rate for the years ended March 31, 2019 and 2018 was insignificant and notpresented.
The difference between the statutory tax rate and the effective tax rate for the year ended March 31, 2017 is as follows:

Future lease payments and receipts under such non-cancelable operating leases at March 31, 2019, 2018 and 2017 are as follows:

Statutory tax rate
Adjustment:
Tax credit
Dividends and other income not taxable permanently
Elimination of dividend income
Inhabitant tax on per capita basis
Other
Effective tax rate

30.86%(1.89)(0.70)
0.41
0.21
0.07
28.96%

13 Deposits received and accounts payable with interest rate

Thousands of
U.S. dollars

Millions of yen

2017

2019

2018

2017

2019

Operating leases:
Future lease payments:
Due within one year
Due after one year
Total¥  1,526
42,211¥ 43,737¥  1,401
38,241¥ 39,642¥  1,387
39,053¥ 40,440$   13,748
380,279$  394,027

Future lease receipts:
Due within one year
Due after one year
Total

¥ 95,607
142,321¥237,928¥ 83,254
153,777¥237,031¥ 86,294
138,086¥224,380$  861,324
1,282,171$2,143,495

Contract amounts

Contract amounts
due after one year

¥15,105¥—

Contract amounts

Contract amounts
due after one year¥  248,600¥  208,600¥(5,733)

1,507,198

1,415,693— (*)

Guarantee and deposits received at March 31, 2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

2019

Short-term deposits and long-term deposits due within one year:
Non-interest-bearing
Interest-bearing
Guarantee and lease deposits from tenants:
Non-interest-bearing
Interest-bearing
Long-term deposits:
Non-interest-bearing
Interest-bearing
Total¥ 61,582—
61,582228,959—
49,807—
278,766¥340,348

Average interest
rate (%)

—

—

—

2018

¥ 60,382—
60,382
207,824—
59,391—
267,215¥327,597

Average interest
rate (%)

—

—

—

2019

$  554,793—
554,7932,062,693—
448,712—2,511,405$3,066,198

Accounts payable with interest rate at March 31, 2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

2019

Due within one year
Due after one year
Total

¥—
—
¥—

Average interest
rate (%)

—
—

2018

¥1,543—¥1,543

Average interest
rate (%)

0.98—

16 Derivative transactions
Hedge accounting was applied to all derivative transactions for the years ended March 31, 2019 and 2018.
The summary of these transactions is as follows:(1) Foreign currency-related derivatives
For 2018

Millions of yen

Hedging accounting

Types of derivative transactions

Hedged items

Deferred hedge
accounting

Foreign exchange forward contracts
Receipts in U.S. dollars / Payments in yen

Foreign currency-denominated transactions(Note) Accounts payable due within one year are included in “Other current liabilities” and accounts payable due after one year are included in “Other long-term liabilities” on the consolidated balance
sheets.

¥133(Note) Fair value is determined based on the quoted price obtained from relevant financial institutions.

(2) Interest-related derivatives
For 2019
Hedging accounting

Types of derivative transactions

Deferred hedge
accounting
Exceptional accounting forinterest rate swaps

Interest rate swap contracts
Fixed rate payments / Floating rate receipts
Interest rate swap contracts
Fixed rate payments / Floating rate receipts

Millions of yen
Hedged items

Bank loans
Bank loans and bonds

2019

$—
—
$—

Fair value

Fair value

Thousands of U.S. dollars
Hedging accounting

Types of derivative transactions

Deferred hedge
accounting
Exceptional accounting forinterest rate swaps

Interest rate swap contracts
Fixed rate payments / Floating rate receipts
Interest rate swap contracts
Fixed rate payments / Floating rate receipts

Hedged items

Bank loans
Bank loans and bonds

Contract amounts

Contract amounts
due after one year

Fair value$ 2,239,640$ 1,879,279$(51,649)

13,578,360

12,753,991— (*)

Contract amounts

Contract amounts
due after one year¥  243,800¥  233,800¥(3,116)

1,577,137

1,454,966

— (*)

3,000

—

— (*)

14 Net assets
Under the Japanese Corporate Law (“the Law”) and its regulations, theentire amount paid for new shares is required to be designated as common
stock. However, a company may, by a resolution of the Board of Directors,
designate an amount not exceeding one-half of the price of the newshares as additional 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
paid-in capital and legal earnings reserve must be set aside as additional
paid-in capital or legal earnings reserve. Legal earnings reserve is included
in retained earnings on the accompanying consolidated balance sheets.

Under the Law, legal earnings reserve and additional paid-in capital
could be used to eliminate or reduce a deficit and capitalized by a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be
distributed as dividends. Under the Law, all additional paid-in capitaland all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available
for dividends.
The maximum amount that the Company can distribute as dividends
is calculated based on the non-consolidated financial statements of theCompany in accordance with the Law and its regulations.

For 2018

Millions of yen

Hedging accounting

Types of derivative transactions

Deferred hedge
accounting
Exceptional accounting
for interest rate swaps
Exceptional accounting
for interest rate andcurrency swaps

Interest rate swap contracts
Fixed rate payments / Floating rate receipts
Interest rate swap contracts
Fixed rate payments / Floating rate receipts
Interest rate swap contracts
Fixed rate payments / Floating rate receipts
Receipts in U.S. dollars / Payments in yen

Hedged items

Bank loans
Bank loans and bonds
Foreign currency-denominated loans

Fair value(Note) Fair value is determined based on the quoted price obtained from relevant financial institutions.
(*) Interest rate swap contracts and cross currency interest rate swap contracts which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but thedifferential paid or received under the swap agreements is recognized and included in interest expenses or income of the long-term debt or the long-term non-recourse debt as hedged items. Thus, thefair value of such interest rate swap contracts is included in the fair value of the long-term debt.

Sumitomo Realty & Development Co., Ltd.

Financial Section

17 Segment information

Thousands of U.S. dollars

The Company and its consolidated subsidiaries mainly operate theirbusiness in five segments: (1) Leasing business consists of leasing of
office buildings, residences and other properties, and management ofthese properties; (2) Sales business consists of sale of condominiums,

detached houses and land lots; (3) Construction business consists ofconstruction of housing, condominiums and buildings; (4) Brokeragebusiness; and (5) Other businesses including fitness business and restaurant business.

Information by business segment for the years ended March 31, 2019, 2018 and 2017 is summarized as follows:
Millions of yen

For 2019
Revenue from operations:Customers
Intersegment
Total
Segment profit
Segment assets
Other:
Depreciation and amortization
Loss on impairment of fixed assets
Increase in property and equipment,
and intangible assets

Reportable segments
Leasingbusiness

Salesbusiness

Construction
business

Brokeragebusiness

Total

Adjustments

Consolidated financial
statements amounts¥  378,091
3,673
381,764¥  149,933¥3,737,136¥331,516
236
331,752¥ 47,115¥713,300¥219,776
1,917
221,693¥ 20,407¥ 30,057¥72,522377
72,899¥22,008¥14,074¥11,325
1,419
12,744¥ 1,528¥32,545¥1,013,230
7,622
1,020,852¥  240,991¥4,527,112¥     —
(7,622)(7,622)¥ (20,572)¥600,353¥1,013,230—
1,013,230¥  220,419¥5,127,465¥   43,201
8,576¥    145—¥  1,182—¥   458—¥   227—¥   45,213
8,576¥  1,100—¥   46,313
8,576

179,872

590

2,015

920

1,001

184,398397

184,795

Other businesses

Millions of yen

For 2018
Revenue from operations:Customers
Intersegment
Total
Segment profit
Segment assets
Other:
Depreciation and amortization
Loss on impairment of fixed assets
Increase in property and equipment,
and intangible assets

Reportable segments
Leasingbusiness

Salesbusiness

Construction
business

Brokeragebusiness¥  350,211
3,670
353,881¥  139,368¥3,565,088¥310,914
279
311,193¥ 46,839¥826,574¥206,839
2,517
209,356¥ 16,109¥ 27,946¥68,858311
69,169¥21,457¥12,200¥11,580
1,297
12,877¥ 1,628¥25,203¥  948,402
8,074
956,476¥  225,401¥4,457,011¥     —
(8,074)(8,074)¥ (19,764)¥710,187¥  948,402—
948,402¥  205,637¥5,167,199¥   38,981
10,635¥    174—¥  1,022—¥   471—¥   217—¥   40,865
10,635¥    763—¥   41,628
10,635

220,785

672

1,027

859

428

223,771

4,523

228,294

Other businesses

Total

Adjustments

Consolidated financial
statements amounts

Millions of yen

For 2017
Revenue from operations:Customers
Intersegment
Total
Segment profit
Segment assets
Other:
Depreciation and amortization
Loss on impairment of fixed assets
Increase in property and equipment,
and intangible assets

Reportable segments
Leasingbusiness

Salesbusiness

Construction
business

Brokeragebusiness¥  333,605
3,861
337,466¥  126,214¥3,359,262¥313,992
307
314,299¥ 46,190¥890,869¥200,565
3,058
203,623¥ 13,933¥ 27,424¥65,616
1,098
66,714¥19,148¥18,506¥11,373843
12,216¥ 1,491¥17,271¥  925,151
9,167
934,318¥  206,976¥4,313,332¥     —
(9,167)(9,167)¥ (18,805)¥666,708¥  925,151—
925,151¥  188,171¥4,980,040¥   36,949
14,035¥    207
1,502¥    970—¥   516—¥   177—¥   38,819
15,537¥    6271¥   39,446
15,538219,606

3,244

1,765

1,096

294

226,005811

226,816

Other businesses

Total

Adjustments

Consolidated financial
statements amounts

For 2019
Revenue from operations:Customers
Intersegment
Total
Segment profit
Segment assets
Other:
Depreciation and amortization
Loss on impairment of fixed assets
Increase in property and equipment,
and intangible assets

Reportable segments
Leasingbusiness

Salesbusiness

Construction
business

Brokeragebusiness$ 3,406,225
33,0903,439,315$ 1,350,748$33,667,892$2,986,631
2,126
2,988,757$  424,459$6,426,126$1,979,964
17,2701,997,234$  183,847$  270,784$653,351
3,397
656,748$198,270$126,793$   389,198
77,261$    1,306—$   10,649—$  4,126—

1,620,468

5,315

18,153

8,288

Adjustments

Consolidated financial
statements amounts$102,027 $ 9,128,198
12,784
68,667
114,811
9,196,865$ 13,766 $ 2,171,090$293,198 $40,784,793$      —
(68,667)(68,667)$ (185,333)$5,408,585$ 9,128,198—
9,128,198$ 1,985,757$46,193,378$  2,045 $   407,324—
77,261$    9,910—$   417,234
77,261

3,577

1,664,820

Other businesses

9,019

Total

1,661,243(Note) ‌Information for the year ended March 31, 2018 has been adjusted retroactively reflecting the adoption of “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No.
28, February 16, 2018) effective from the beginning of the year ended March 31, 2019.

Intercompany eliminations between the Company and its consolidated
subsidiaries and undistributed corporate expenses to each segment areincluded in adjustments of segment profit, and the Company classified
expenses of the general administrative division in the Company and its
certain consolidated subsidiaries to corporate expenses for the years ended
March 31, 2019, 2018 and 2017.

Intercompany eliminations between the Company and its consolidated
subsidiaries and undistributed corporate assets to each segment are includedin adjustments of segment assets, and the Company classified cash, timeand notice deposits, investments in securities and assets of the generaladministrative division in the Company and its certain consolidated subsidiaries to corporate assets for the years ended March 31, 2019, 2018 and 2017.

18 Comprehensive income
Amounts reclassified to profit in the current period that were recognized in other comprehensive income in the current or previous periods and tax effects
for each component of other comprehensive income (loss) for the years ended March 31, 2019, 2018 and 2017 are as follows:
Thousands of
U.S. dollars

Millions of yen

Unrealized holding gains (losses) on securities:
Increase (Decrease) during the fiscal year
Reclassification adjustments
Amounts before tax effects
Tax effects
Total
Deferred gains (losses) on hedges:
Increase (Decrease) during the fiscal year
Reclassification adjustments
Amounts before tax effects
Tax effects
Total
Foreign currency translation adjustments:
Increase (Decrease) during the fiscal year
Remeasurements of defined benefit plans:
Increase (Decrease) during the fiscal year
Reclassification adjustments
Amounts before tax effects
Tax effects
Total
Total other comprehensive income (loss)

2019

2018

2017

2019

¥(32,668)
1,088(31,580)
9,675¥(21,905)¥ 50,290(1,373)
48,917(14,982)¥ 33,935¥ 36,067(128)
35,939(11,009)¥ 24,930$(294,306)
9,802(284,504)
87,162$(197,342)¥ (3,628)
876(2,752)829¥ (1,923)¥   (453)
1,208
755
(217)
¥   538¥   482
1,978
2,460
(755)
¥  1,705$ (32,685)
7,892(24,793)
7,468$ (17,325)¥   (259)¥ (1,098)¥   (927)$  (2,333)¥    (66)
(229)
(295)
61
¥   (234)¥(24,321)¥   22941
270(82)¥   188¥ 33,563¥    (41)
681
640
(198)
¥   442¥ 26,150$    (595)(2,063)(2,658)550$  (2,108)$(219,108)

Sumitomo Realty & Development Co., Ltd.

Independent Auditor’s Report

Financial Section

19 Investment and rental properties
The Company and its certain consolidated subsidiaries own some rental properties such as office buildings and residences in Tokyo and other areas.
Certain domestic office buildings are not recognized as rental properties but as a portion used as investment and rental properties since the Company or
its certain consolidated subsidiaries use some of the floor space of these properties.
The carrying amounts of these properties on the consolidated balance sheets, their changes during the fiscal year and their fair values at March 31,
2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

Investment and rental properties

A portion used as investment and rental properties

Balance at beginning of fiscal year
Changes during the fiscal year
Balance at end of fiscal year
Fair value at end of fiscal year
Balance at beginning of fiscal year
Changes during the fiscal year
Balance at end of fiscal year
Fair value at end of fiscal year

2019

2018

2019

¥3,208,325
165,124
3,373,449
5,838,717¥  141,950(61)
141,889
379,883¥3,001,274
207,051
3,208,325
5,316,335¥  143,906(1,956)
141,950
362,081$28,903,829
1,487,603
30,391,432
52,601,054$ 1,278,829(550)
1,278,279
3,422,369(Notes)* Carrying amounts on the consolidated balance sheets are the amounts determined by deducting accumulated depreciation and accumulated impairment losses from the acquisition costs.
* Fair values as of March 31, 2019 and 2018 are calculated by the Company primarily based on their fair values according to Real Estate Appraisal Standards.

Significant changes during the years ended March 31, 2019 and 2018 are as follows:

Thousands of
U.S. dollars

Millions of yen

Increase:
Acquired real estateTransferred from real estate for sale in process, etc.
Decrease:
Depreciation and amortization
Transferred to real estate for saleTransferred to real estate for sale in process
Loss on impairment of fixed assets

2019

2018

2019

¥173,144
23,162¥214,777
38,047$1,559,856
208,666¥ (42,374)(4,822)—(8,576)¥ (37,177)—(2,490)(10,635)$ (381,748)(43,441)—(77,261)

Income and expenses for investment and rental properties for the years ended March 31, 2019 and 2018 are as follows:

Thousands of
U.S. dollars

Millions of yen

Investment and rental properties

A portion used as investment and rental properties

IncomeExpenses
Balance
Other income (expenses)
IncomeExpenses
Balance
Other income (expenses)

2019

2018

2019

¥269,493
137,784
131,709(9,193)¥ 18,413
9,176
9,237
(4)

¥236,446
121,736
114,710(10,938)¥ 21,475
11,9269,549(3)$2,427,865
1,241,297
1,186,568(82,820)$  165,883
82,667
83,216(36)

To the Board of Directors of Sumitomo Realty & Development Co., Ltd.:We have audited the accompanying consolidated financial statements of Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries,
which comprise the consolidated balance sheets as at March 31, 2019 and 2018, and the consolidated statements of income, statements ofcomprehensive income, statements of changes in net assets and statements of cash flows for each of the years in the three-year period ended March 31,
2019, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles
generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance withauditing standards generally accepted in Japan. Those standards require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The
procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of
the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, while the objective of the financial
statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Sumitomo Realty & Development Co., Ltd.
and its consolidated subsidiaries as at March 31, 2019 and 2018, and their financial performance and cash flows for each of the years in the three-year
period ended March 31, 2019, in accordance with accounting principles generally accepted in Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2019 are presented solely forconvenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on thebasis described in Note 1 to the consolidated financial statements.

(Notes)* ‌As a portion used as investment and rental properties includes a portion used by the Company or its certain consolidated subsidiaries for providing services as well as management and administration,
income for these are not recorded above. The expenses primarily consist of rent, depreciation, taxes and dues, and others.
* ‌Other income (expenses) for investment and rental properties is mostly the loss on impairment of fixed assets, and Other income (expenses) for a portion used as investment and rental properties is mostly
the loss from prior period adjustment.

20 Contingent liabilities
The Company and its consolidated subsidiaries were contingently liable as guarantors of borrowings by customers and others in an amount aggregating
to ¥7,316 million ($65,910 thousand) and ¥6,298 million at March 31, 2019 and 2018, respectively.

July 31, 2019
Tokyo, Japan

21 Subsequent events
On June 28, 2019, the shareholders of the Company approved payments of a year-end cash dividend of ¥16 ($0.14) per share or a total of ¥7,583 million($68,315 thousand) to shareholders of record at March 31, 2019. Such appropriations are recognized in the period in which they are approved by theshareholders.
Sumitomo Realty & Development Co., Ltd.