POTENTIAL FOR
FUTURE GROWTH
Leveraging Our Strong Presence Under
Our New Medium-Term Management Plan

ANNUAL REPORT 2016

Beginnings of New Growth

SeventhManagement Plan
—Office Building Development Projects
To make our core business of office building development andleasing in Tokyo even stronger and solidify our position as No. 1
owner of office buildings in Tokyo, Sumitomo Reality is striving
to expand its business foundation by giving the highest priority toinvestment for redevelopment in central Tokyo.
Specifically, we will work to accelerate the pace of officebuilding development during and after the Seventh Management
Plan. We are moving forward with development projects thattarget total gross floor area of more than one million tsubo. Thistarget includes the gross floor area of 220,000 tsubo to bebrought to market under the Seventh Management Plan.

New Building Development Projects in the 7th Management Plan
Location (Tokyo CBD)

Gross floor area(tsubo*²)

Expected
completion

Sumitomo Fudosan Shinbashi Building

Minato Ward

2,500

Jul. 2016

Sumitomo Fudosan Roppongi Grand Tower

Minato Ward

63,100Oct. 2016*3

Azabujuban Project

Minato Ward

13,900Dec. 2016

Projects

Total: 2017*¹
Shibaura 3-chome Project
Osaki Project
Kojimachi 4-chome Project

79,500
Minato Ward

3,700

Jun. 2017

Shinagawa Ward

54,400Jan. 2018

3,800

Mar. 2018

Chiyoda Ward

Total: 2018*¹

61,900Onarimon Project

Minato Ward

9,900

May 2018

Kojimachi 1-chome Project

Chiyoda Ward

3,600

Sep. 2018

Kanda Neribeicho Project

Chiyoda Ward

9,300

Oct. 2018

Ueno 5-chome Project

Taito Ward

3,500

Oct. 2018

Shibuya Ward

11,500Feb. 2019

Shibuya Udagawacho Project
Sotokanda 1-chome Project

Chiyoda Ward

8,100

Feb. 2019

Nishi Shinjuku 6-chome Project

Shinjuku Ward

16,700Mar. 2019

Total: 2019*¹

62,600

Others

16,800Total: 7th Management Plan
* 1. Fiscal year ending March 31*2. 1 tsubo = 3.3 m2*3. Partial occupation commenced in April 2016

220,800

Osaki Project
LOCATION

Shinagawa Ward
GROSS FLOOR AREA

54,400 tsubo
EXPECTED COMPLETION

Jan. 2018
NO. OF FLOORS

24 above ground2 below ground

Shibaura 3-chome
Project
LOCATION

Minato Ward
GROSS FLOOR AREA

3,700 tsubo
EXPECTED COMPLETION

Jun. 2017
NO. OF FLOORS

12 above ground
1 below ground

Onarimon Project
LOCATION

Minato Ward
GROSS FLOOR AREA

9,900 tsubo
EXPECTED COMPLETION

May 2018
NO. OF FLOORS

22 above ground2 below ground

Azabujuban Project
LOCATION

Minato Ward
GROSS FLOOR AREA

13,900 tsubo
EXPECTED COMPLETION

Shibuya Udagawacho
Project
LOCATION

Shibuya Ward
GROSS FLOOR AREA

11,500 tsubo
EXPECTED COMPLETION

Feb. 2019
NO. OF FLOORS

18 above ground2 below groundDec. 2016
NO. OF FLOORS

10 above groundPOSSIBILITIES FOR THE FUTURE

No. 1 Owner of Office Buildings in Tokyo
We made our full-scale entry into the leasing business in the second half of the 1970s, somewhat later than other major domestic real estate companies. However, as a result of our steadypace of office building development since then, we currently manage more than 200 officebuildings, making us the No. 1 developer in Tokyo. With our lineup of various types of buildings, mostly in the Tokyo CBD*, we are able to meet a broad range of diverse tenant needs.
Please refer to page 16 for more details on our portfolio.
* Tokyo CBD (Central Business District): 7 wards, comprising Chiyoda, Minato, Chuo, Shinjuku, Shibuya, Shinagawa and Bunkyo

G
N
SI
A
LE

Cash Flows from Leasing Business(Years ended March 31)

143.4

Billions of yen

150

120

90

60

53.4

30

0

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Sumitomo Realty & Development Co., Ltd.

1OUR FUNDAMENTALOur Redevelopment Projects in Central Tokyo
Approximately 60% of the office buildings we develop are redevelopment projects. We have the No. 1*
track record in “redevelopment” among developers. Using the expertise we have cultivated to date,
we will continue to grow by building a pipeline focused on redevelopment projects.
* In terms of number of buildings (Sumitomo Realty data)

Acquisition of Land for Redevelopment
Is Our Building Development “DNA”
The acquisition of land for construction via “redevelopment” has been the driving force
behind our successful office building development.
The Company places priority on redevelopment, rather than simply rebuilding; we
focus in particular on putting together several parcels by reaching agreements withmultiple landowners to redevelop the land on a larger scale.
Buildings

E
B

C

B

Equal value exchange
Through the conversion of the rights ofrights holders, sites can be acquiredwith equal value exchanges.

D

C

D

A

Land

Before redevelopment

A

Building

Purchases of individual rights

ABCD : Rights holders(amalgamation of rights)

Building

E

D

B

C

X

X

A B C D X

X

Land

Land
After redevelopment

After redevelopment

X : Developer*

X : Developer** ‌A‌cquirer of property other than that received by rights holders
in equal value exchange (developer)

CHARACTERISTICS OF LEGAL REDEVELOPMENT PROJECTSMERITS

Substantial benefits in terms of investment
return and profitabilityI n comparison with methods where the land is first purchased,such as competitive tenders, projects are completed with small
initial investments.
Developing blocks of land enhances the convenience of the area,and makes it possible to receive government subsidies and approvals for higher utilization (ratio of total floor space to land area).

2

Annual Report 2016

DEMERITS

Substantial behind-the-scenes work is requiredI t is necessary to form a consensus among multiple property rights
holders, and there are also consultations with administrative bodies, resulting in longer development times.
( The government is currently promoting shorter development
periods through simplified approval procedures and othermeasures.)

STRENGTH
A

B

C

D

E

Shinjuku Central Park City

Sumitomo Fudosan
Shinjuku Grand Tower

Sumitomo Fudosan
Iidabashi First Tower

Chiyoda First Building West

Izumi Garden Tower
F

Tokyo CBD* Tokyo CBD (Central Business District): 7 wards, comprising Chiyoda,
Minato, Chuo, Shinjuku, Shibuya, Shinagawa and Bunkyo

C
Ueno Station

B

D

Shiodome Sumitomo
Building

A

G

Iidabashi
StationShinjuku Station

Tokyo Station

E

F

H
ShibuyaStationG

Roppongi
StationHamamatsucho
StationTamachi Station

Sumitomo Fudosan
Shibakoen Tower
H

Shinagawa
Station

Sumitomo Fudosan
Shibakoen First Building

OUR TRACK RECORD
Sumitomo Realty Constantly Pursues Challenges to
Ensure Continuous Growth
Since its establishment in 1949, Sumitomo Realty has continued to
expand the scope of its operations to become one of Japan’s leading
comprehensive real estate companies and a core company of theSumitomo Group, which has a history going back 400 years. Ouroperations are expanding beyond our core business of office building
leasing to a range of areas including condominium sales, custom
homes and remodeling, and real estate brokerage.

The First Medium-Term Management Plan was launched in
1998, and with the Sixth Management Plan having concluded, we
began operating under the Seventh Management Plan from the March2017 fiscal year. By placing top priority on the achievement of theseplans, Sumitomo Realty has been able to grow to where we are today.
Going forward, we will continue to expand existing businesses
while pursuing the challenges of new business development, toensure even higher, continuous growth.

Progress under Medium-Term Management Plans

2008 ‌Established Sumitomo Fudosan
Bellesalle Co., Ltd., a consolidated
subsidiary.

Billions of yen	‌Commenced sales of City Towers
Toyosu (Koto Ward, Tokyo).

1,000

2004 C ommenced sales of World City Towers(Minato Ward, Tokyo).
2003 ‌Commenced sales of J·URBAN
fixed-price urban-style housing series.
2002 ‌Completed constructionof Izumi Garden Tower.

750

1996 ‌Commenced Shinchiku Sokkurisan
remodeling business.

500

250

0

1949 ‌Izumi Real Estate Co., Ltd.
established as the successor
to the holding company of theSumitomo zaibatsu following the
breakup of the conglomerate.

1957 ‌Izumi Real Estate Co., Ltd.
changed its nameto Sumitomo Realty &Development Co., Ltd.

1949ended/ending
1957 March 31)(Years

1997

1998

1999

2000

2002

2003

2004

2005

2006

2007

2008

2009

1st Plan*

2nd Plan

3rd Plan

4th Plan

Revenue from operations

1,270

1,606

1,939

2,107

Operating income (right scale)

202

265

350

435

Ordinary profit (right scale)

87

170

274

339

1998–2001

4

2001

Annual Report 2016

2002–2004

2005–2007

2008–2010

2012 Commenced sales of J·RESIDENCE.

2014 Number of condominium units brought to market over thefull year was the highest in Japan for the first time.
‌2015 Completed construction of Tokyo Nihonbashi Tower (Chuo Ward, Tokyo).
2011 Opened‌Grand
Mansion Gallery.

Cumulative units contracted topped 100,000 in Shinchiku Sokkurisan remodeling operations.
2016 Completed construction of Deux Tours Canal & Spa (Chuo Ward, Tokyo).

	‌Completed constructionof Sumitomo Fudosan
Shinjuku Grand Tower(Shinjuku Ward, Tokyo).

Completed construction of Shinjuku Garden (Shinjuku Ward, Tokyo).

Billions of yen

Record results inthe threeconsecutive years

200

ROE
(%)

5.7
1999

10.2
2016

150

Ordinary Profit(Billions of yen)

100

21.7
1999

148.4

2016

Cash Flows from Leasing Business(Billions of yen)
50

53.4
1999

2010

2011

2012

2013

2014

2015

2016

2017

2016

0

(Forecast)

5th Plan

6th Plan

2014–20162017–2019 (Forecast)

2,170

2,442

2,700

437

501

550

329

418

480

2011–2013

143.4

7th PlanNote: ‌The figures represent cumulative totals for the period covered by each plan.
* ‌The 1st Plan began in 1998 and spanned four years. Figures shown represent cumulative totals
for the final three years of the plan.

Sumitomo Realty & Development Co., Ltd.

5

To Our Shareholders

We would first like to take this opportunity to express our thanks on behalf of
the Sumitomo Realty & Development Group for your ongoing support. Sumitomo
Realty’s business has expanded in scope and continued to grow since our establishment in
1949. We are currently a core company of the Sumitomo Group and a leading comprehensive developer within the Japanese real estate industry, with operations in a wide range ofareas including office building leasing, condominium sales, custom homes and remodeling(Shinchiku Sokkurisan), and real estate brokerage.
We have formulated a medium-term management plan every three years since 1997,
and have achieved sustained growth through the achievement of these plans.
In addition to achieving the targets set under the Sixth Management Plan, which
commenced in April 2013, we were able to achieve record results in the three consecutive
years covered by the plan.
In the midst of an uncertain economic environment, the Seventh Management Plan
was commenced in April 2016. We will strive to achieve the targets under theSeventh Management Plan and for continuous growth.
We greatly appreciate your continued support.

Junji Takashima
Chairman of the Board

6

Annual Report 2016

Kojun Nishima
President

CONTENTS
8 President Interview

28 Financial Section

12 At a Glance		 28 Eleven-year Financial Summary

14 Review of Operations
		14 LEASING

		 30 Management’s Discussion and Analysis
		 32 Consolidated Balance Sheets		1 8 SALES

		 34	‌Consolidated Statements of Income andConsolidated Statements of Comprehensive Income		20 CONSTRUCTION

		 35	‌Consolidated Statements of Changes in Net Assets

		22 BROKERAGE

		 36 Consolidated Statements of Cash Flows

23 Corporate Governance		 23 Board of Directors and Statutory Auditors

		 37 Notes to Consolidated Financial Statements
		 59 Independent Auditor’s Report

		 24 Corporate Governance Initiatives

60 Corporate Data / Investor Information

26 CSR

6 1 History

Cautionary Statement with Respect to Forward-looking Statements
Statements made in this annual report with respect to plans, targets and future performance that are not historical fact are forward-looking statements. These statements are based on management’s
assumptions and beliefs in light of the information currently available. Sumitomo Realty & Development Co., Ltd., cautions that a number of factors could cause actual results to differ materiallyfrom those discussed in the forward-looking statements. Such factors include but are not limited to macroeconomic conditions, supply and demand in the real estate market and interest rate trends.

Sumitomo Realty & Development Co., Ltd.

7

PRESIDENT INTERVIEW

To further establish our strong
position as Tokyo’s No. 1 officebuilding owner, we will continue
to focus on redevelopment projects in central Tokyo, and aim forsustainable growth.

Kojun Nishima
PresidentQ

1Please recap Sumitomo Realty’s results for the March 2016
fiscal year and under the Sixth Management Plan.
For the March 2016 fiscal year, we recorded ¥855.0 billion in revenue from operations, with
operating income of ¥174.2 billion, ordinary profit of ¥148.4 billion, and profit attributableto owners of parent of ¥87.8 billion. This marked our fourth consecutive year of revenue
growth, our sixth consecutive year of increases in operating income and ordinary profit, andour third consecutive year of record revenue from operations, operating income, ordinary
profit, and profit attributable to owners of parent. By business segment, the Leasing segment
achieved record profit, and along with Sales, Construction, and Brokerage, all four main segments recorded revenue and profit growth.
The March 2016 fiscal year was the final year of the Sixth Management Plan, whose initial target was to achieve a record-high single-year and a three-year cumulative revenue andprofit. During the period covered by the plan, the Company experienced a favorable operating environment as the Japanese government’s “Abenomics” policies boosted the economy
with a weaker yen and higher stock prices. The Construction and Brokerage segments were
adversely affected by an increase in the consumption tax rate, yet the main segments, Leasing
and Sales, drove performance. As a result, we achieved record results for revenue and profits
for three consecutive years and on a three-year cumulative basis.

8

Annual Report 2016

Q

Q

2

What is your basic policy regarding returns to shareholders?
Our first priority is to maintain a steady dividend payout to our shareholders. At the sametime, we endeavor to set aside a sufficient amount of retained earnings to ensure stable,
long-term growth of our business.
In light of our business results for the March 2016 fiscal year, we paid a full-year dividend of ¥22 per share (including an interim dividend of ¥11 per share), which representeda ¥1 increase from the previous year. For the March 2017 fiscal year, we intend to increase
the dividend by ¥1 per share and pay a full-year dividend of ¥23 per share (including aninterim dividend of ¥11 per share).
In terms of our equity ratio, there remains much more possibility for growth relative toother companies in the industry. Accordingly, we intend to maintain a stable dividend payout
while keeping a sufficient amount of retained earnings to strengthen our financial standing.
In addition, there are plenty of development projects to invest in for future growth. Our aim
is to meet the expectations of shareholders by undertaking investments to increase profit,
which will eventually lead to higher corporate value.

3

What are your basic policies under the Seventh Management Planand your forecasts for the March 2017 fiscal year, the first year
under the plan?
We do not expect the favorable operating environment that underpinned the Sixth
Management Plan to continue for the next three years. This was taken into account when
we formulated our projections, but for the period covered by the Seventh Management Plan,
which began from April 2016, we aim to remain on a path to revenue and profit growth, mainly
driven by growth in profit in the main Leasing segment, and to repeat record cumulative
results for the three-year period.
In the main Leasing business, we expect to bring a total of 220,000 tsubo of gross floorarea to market during the three years covered by the Seventh Management Plan. We are looking to finalize our plans for the allocation of land and commencement of construction.
We will also focus on accelerating the growth of peripheral businesses. As a part of thiseffort, we are upgrading the profile of four businesses—custom homes, rental condominiums,
hotels, and multipurpose halls—to become full-fledged departments, and working to establish a fifth business pillar along with the existing four business pillars consisting of officebuilding leasing, condominium sales, brokerage, and Shinchiku Sokkurisan remodeling.
For the March 2017 fiscal year—the first year under the Seventh Management Plan—we
see the main Leasing segment continuing to drive results, and as such have forecast revenue
and profit growth in all four main business segments. Nevertheless, uncertainty over the economic environment remains high, so we will stay focused and aim for a fourth consecutive
year of achieving record results following the March 2016 fiscal year.

Sumitomo Realty & Development Co., Ltd.

9

PRESIDENT INTERVIEW

QQ

4 What is the medium-term business policy for the Leasing segment,
which is set to drive growth?

To further establish our strong position as Tokyo’s No. 1 office building owner, operating
more than 200 office buildings, we will continue to focus on redevelopment projects in central Tokyo, including those in National Strategic Special Zones such as Yaesu, Roppongi,
and Mita. We will work to accelerate the pace of development, from the previous averageannual pace of 50,000 tsubo of gross floor area during and after the Seventh Management
Plan, thereby providing a new total gross floor area of more than one million tsubo. As far as
such investment costs are concerned, they are generally within the scope of operating cash
flows. In addition to the above projects, we will make sure to take advantage of opportunities for entirely new projects when they appear. Accordingly, we will definitely be able tostrengthen our Leasing business and expect further, continuous growth.

5What is your policy going forward in terms of investment strategy
and financial strategy?
We are very thorough in our selection of, yet very active in acquisition of, development sites.
Not only have we been relying on making successful tender offers, which can become relatively expensive due to competition, we are also emphasizing the practice of aggregatingsmall parcels of land for possible larger redevelopment projects, as we believe this multiplies
the value of those properties. We have found our strength within this practice and have certainly developed competitive advantages in our Leasing business. (Please refer to Page 2 forfurther information regarding our redevelopment projects.)
During the March 2016 fiscal year, our interest-bearing debt grew by ¥131.9 billion, as
we had many opportunities to acquire excellent development sites for office buildings andcondominiums. In line with the favorable financial environment, long-term interest rates
remain low as for now, with the rate applied to our long-term financing of more than 10-year
tenors being less than 1%. We will continue to secure long-term and fixed-rate funding inorder to maintain a robust financial position.
In the March 2016 fiscal year, we recorded profit attributable to owners of parent of¥87.8 billion, which is a 9% increase from the previous year. With the accumulated profit andcorresponding growth in shareholders’ equity, our net debt-equity (ND/E) ratio improved to
3.3 times. In addition, because the conditions for early repayment of the ¥60.0 billion subordinated loan with a repayment option that we procured in February 2013 were met, we repaid
the loan in a lump sum in February 2016. We will continue to make active investments withthe aim of accumulating profits in order to increase shareholders’ equity and to further
improve our financial balance.

10

Annual Report 2016

SEVENTH MANAGEMENT PLAN
(April 2016 to March 2019)1

Achieve consecutive record results for the three-year period covered,with cumulative ordinary profit of ¥480 billion

Although we do not expect the favorable conditions that were
present during the previous three years to continue during theperiod covered by the Seventh Management Plan, we will
firmly maintain our “revenue and profit growth trajectory”
to surpass the record results achieved under the Sixth
Management Plan.

Three-year cumulative earnings targets¥2,700 billion

Revenue from operations(+¥258.0 billion, +11%)*¥550 billion

Operating income(+¥49.4 billion, +10%)*¥480 billion

Ordinary profit(+¥62.0 billion, +15%)** Compared with Sixth Management Plan

Comparison of results for each medium-term management plan (Years ended /ending March 31)
4th Plan
2008–2010

5th Plan
2011–2013

6th Plan
2014–2016

7th Plan
2017–2019 (Forecast)

Revenue from operations¥2,107 billion¥2,170 billion¥2,442 billion¥2,700 billion

Operating income¥435 billion¥437 billion¥501 billion¥550 billion

Ordinary profit¥339 billion¥329 billion¥418 billion¥480 billion

Management Plan

Note: All figures are cumulative totals within the period of the plan.

2C ontinue to invest for growth in leased buildings, further accelerate
the annual development pace of 50,000 tsubo of gross floor area

Our basic policy of further strengthening our mainstay leasing business with a primary focus on redevelopment incentral Tokyo is unchanged. We will work to secure properties equivalent to more than one million tsubo of grossfloor area to be brought to market during and after the Seventh Management Plan.
Pace of development
Management Plan

4th Plan

5th Plan

6th Plan

7th Plan

Gross floor area (tsubo)

160,000

150,000

110,000

220,0003Promote growth of peripheral businesses to develop fifth pillar of operations

We will upgrade custom homes, rental condominiums, hotels, and multipurpose halls operations to full-fledged
departments, and work to develop these businesses to a level that will rival our four business pillars*.
Revenue from operations and portion of total revenue from operations for custom homes, rental condominiums, hotels, andmultipurpose halls
Management Plan
Revenue from operations
Percent of total

4th Plan

5th Plan

6th Plan

7th Plan¥222.0 billion(+¥24.0 bn)¥249.0 billion(+¥27.0 bn)¥336.0 billion(+¥86.0 bn)¥430.0 billion(+¥94.0 bn)

11%

11%

14%

16%

* The current four business pillars are office building leasing, condominium sales, brokerage, and Shinchiku Sokkurisan remodeling.

Sumitomo Realty & Development Co., Ltd.

11

AT A GLANCELEASING

SALES

Office building, condominium and other property leasing and man-

Mid- and high-rise condominium, detached house and housing lot

agement and related activities

development and sales and related activities

REVENUE FROM OPERATINGOPERATIONSINCOME

36.3 %

58.5%

MAJOR CONSOLIDATEDSUBSIDIARIES· ‌Sumitomo Fudosan Tatemono Service
Co., Ltd.
· Sumitomo Fudosan Villa Fontaine Co., Ltd.
· ‌Sumitomo Fudosan Bellesalle Co., Ltd.

HISTORY

REVENUE FROM OPERATINGOPERATIONSINCOME

31.9%

23.2%

HISTORY

Sumitomo Realty made its full-scale entry into the leasing business in the latter
half of the 1970s. We demonstrated our strong business development capabilities by being the first company in the industry to restart construction work
on office buildings following the collapse of Japan’s economic bubble in the
1990s. Our competitive strengths and focus on large-scale redevelopment
projects have enabled us to build our current leading position in the domestic
real estate industry.

Having entered the condominium sales business in the first half of the 1960s,
Sumitomo Realty is a pioneer in the domestic market for condominium
development and sales. We have become a leading company for condominium
sales in Japan by staying ahead of our competitors, strategically focusing oncity centers and proactively developing large, high-rise properties.

UNIQUE FEATURES AND COMPETITIVE ADVANTAGESUNIQUE FEATURES AND COMPETITIVE ADVANTAGES‌ fact that we primarily engage in all aspects ourselves, from land purchases
Theand tenant acquisition to property management, means that we can quickly
address tenant needs in our developments.
‌We have an extensive track record in redevelopment.

‌ have businesses in cities across Japan, and 80% of our portfolioWe
is in the Tokyo metropolitan area.
‌In order to maintain asset value for the future, we are bolstering distinct
characteristics such as modern appliances and stylish designs, including
landmark exteriors, a rich array of common facilities and elegant entrances.
We‌ are employing a unique sales strategy in order for the customer tounderstand the value of our condominiums.

Please refer to page 1.

‌Our“close, new and large” leasing portfolio gives us strong market
competitiveness.

Please refer to page 18.

Please refer to page 16.

Balanced Portfolio
CapitalLEASING
High level of capital,
low level of human resources

SALES
Relatively high level of capital,
relatively high level of human resources

CONSTRUCTION
Relatively low level of capital,
relatively high level of human resources

BROKERAGE
Low level of capital,
high level of human resources
Human Resources

12

Annual Report 2016

CONSTRUCTIONBROKERAGE

Custom home construction and remodeling andBrokerage and sales on consignment of real estate andrelated activities

related activities by Sumitomo Real Estate Sales Co., Ltd.

REVENUE FROM OPERATINGOPERATIONSINCOME

MAJOR CONSOLIDATEDSUBSIDIARYREVENUE FROM OPERATINGOPERATIONSINCOME· Sumitomo Fudosan Syscon Co., Ltd.

23.1%

8.0%

HISTORY

Remodeling—Shinchiku Sokkurisan
Sumitomo Realty launched the Shinchiku Sokkurisan full remodeling package
in 1996. It has become the top brand in the market with a cumulative total ofmore than 100,000 units contracted.

Custom Homes

MAJOR CONSOLIDATEDSUBSIDIARY· ‌Sumitomo Real Estate Sales Co., Ltd.

7.1%

9.3%

HISTORY
Sumitomo Real Estate Sales Co., Ltd., was established in 1975 to conduct salesof condominiums developed by Sumitomo Realty. After entering the real estate
brokerage sector in 1979, Sumitomo Real Estate Sales achieved significant success and was listed on the Tokyo Stock Exchange in 1998. We are strengthening
our sales network to further increase our market share.

We launched the American Comfort line in 1995. To keep up with the needs ofthe times, we followed this with the J∙URBAN line in 2003 and J∙RESIDENCE
in 2012. We are also enhancing our marketing strength with a nationwide networkof over 100 model house units.
UNIQUE FEATURES AND COMPETITIVE ADVANTAGESUNIQUE FEATURES AND COMPETITIVE ADVANTAGESPlease refer to page 21 for details on Shinchiku Sokkurisan and‌
Our
network of brokerage offices has close ties to local communities.
‌The network has steadily expanded to 257 offices nationwide as of the end of
March 2016.
‌Because all brokerage offices are directly operated, the network boasts efficient
operations and the industry’s high profit margins.

Custom Homes.

Remodeling—Shinchiku SokkurisanWe‌ can remodel a home in half the time and at 50% to 70% of the cost of
rebuilding.
With‌a fixed price per unit of floor area, customers do not need to worry
about additional charges.

Custom Homes
We‌ use our expertise in condominium development to offer homes with both
functionality and an attractive design.
We‌ develop original earthquake-resistant technologies, and continue toenhance our technical capabilities.

Our achievement of sustained growth has been the result of our wellbalanced operations. We have a balanced portfolio in four operational fields—leasing, sales, construction and brokerage­—that havedifferent risk profiles and capital requirements.
The leasing and sales businesses involve projection-based production that requires large upfront investment for land. Risk andreturns are high, and the operational cycle is long at roughly 3 to 10
years, but human resource levels are relatively low. The construction

and brokerage businesses are order-based businesses that do not
require upfront investment and have a short operational cycle of lessthan one year, but require substantial human resources.
Our steady growth to date is the result of complementary corebusinesses with different individual characteristics, which has led tobalanced growth. We will work to achieve sustained growth going
forward by strengthening our existing businesses and by also establishing new core businesses.

Sumitomo Realty & Development Co., Ltd.

13

REVIEW OF OPERATIONSLEASING
BASIC GROWTH STRATEGY

Continuing new investment to build a platform
for growth, by further increasing the portfolio’s
portion of prime properties that are “close, newand large”

36.3 %

58.5 %REVENUE FROM OPERATIONS¥ 313.3 billion
OPERATING INCOME¥ 111.3 billion

OVERVIEW OF THE FISCAL YEARThe Tokyo office building market, where roughly 200 of the segment’s buildings, representing more than 90% of its portfolio, areconcentrated, experienced solid tenant demand and a stable, lowvacancy rate against a backdrop of improved economic sentimentand a recovery in corporate earnings. This favorable environment led
to higher margins of rent increases for both new and renewed leases.
Reflecting such an environment, the segment recorded revenue
and profit growth for the March 2016 fiscal year, with higher rents
and improved vacancy rates at existing buildings and full-year contributions from Sumitomo Fudosan Onarimon Ekimae Building andSumitomo Fudosan Hirakawacho Building, which were completed
during the previous fiscal year. The segment’s revenue from operations and operating income both reached record levels for the firsttime in seven years, surpassing the previous records in the March2009 fiscal year.

Sumitomo Fudosan
Shinjuku Garden Tower
LOCATION

Shinjuku Ward
GROSS FLOOR AREA

43,370 tsubo*
COMPLETION

Mar. 2016
NO. OF FLOORS

37 above ground2 below ground

14

Annual Report 2016

Tokyo Nihonbashi
Tower
LOCATION

Chuo Ward
GROSS FLOOR AREA

32,016 tsubo*
COMPLETION

Apr. 2015
NO. OF FLOORS

35 above ground
4 below ground

Sumitomo Fudosan
Mita Building
LOCATION

Minato Ward
GROSS FLOOR AREA

7,544 tsubo*
COMPLETION

Nov. 2015
NO. OF FLOORS

13 above ground

The vacancy rate for existing buildings showed a slight improvement,
to 4.7% from 4.9% at the end of March 2015, and tenant acquisition
for new buildings is on a good track, including for Tokyo
Nihonbashi Tower and Sumitomo Fudosan Shinjuku Garden Tower(Takadanobaba), which were completed in the March 2016 fiscal year
and are almost fully contracted.
OUTLOOK

We are aiming for record revenue from operations and operating
income in the March 2017 fiscal year, based on an improved earnings
structure from existing buildings and full-year contributions fromthe buildings completed during the year under review, such as Tokyo
Nihonbashi Tower.
Specifically, we are projecting a 5.3% increase in revenue fromoperations, to ¥330.0 billion, with a 6.9% increase in operating
income, to ¥119.0 billion.

* 1 tsubo=3.3m2

36.1

35.5

0

12

13

14

15

16

Operating Income

0

0

902

1,500

119.0

111.3

17

(Forecast)

104.4

16

98.0

313.3

15

94.2

289.1

14

89.6

283.7

13

330.0

278.3

12

30

3,493

34.5

3,000

12

13

14

15

16

36.1

40
271.8

0

33.8

60

914

33.0
110

4,500

3,189

80

Thousands of m2

923

220

%

90

3,171

120

1,010

Billions of yen

330

3,135

Billions of yenGross Floor Area

1,051

Operating Income andOperating Margin

3,109

Revenue from Operations

17(Forecast)

Operating Margin (right scale)

Outright Ownership

Sub-lease

Sumitomo Realty & Development Co., Ltd.

15

REVIEW OF OPERATIONSOUR LEASING PORTFOLIO(As of March 31, 2016)

In the Tokyo CBD (Central BusinessDistrict)*, where buildings that meet
the three conditions for prime properties—close, new and large—are instrong demand, our competitive portfolio will provide a strong foundation
for us to utilize our strengths—development of high-value-added officeTOKYO CBD*
buildings, tenant leasing and property
Bunkyomanagement. We will utilize that
Shinjuku
foundation to maximize the earnings
ChiyodaChuo
potential of our office building opera- Shibuya
Minatotions and build a strong base for theachievement of sustainable growth in
Shinagawathe years ahead.

Major flagship buildings(see the table below)
Other buildings* ‌Only buildings ownedby the Company areshown on this map.

* Tokyo CBD (Central Business District): 7 wards,
comprising Chiyoda, Minato, Chuo, Shinjuku,
Shibuya, Shinagawa and Bunkyo

TOKYO’S NO. 1 OFFICE BUILDING OWNER, MANAGINGGROSS FLOOR AREA

MORE THAN

4.40 MILLION M

200 BUILDINGS

2

IN CENTRAL TOKYO’S MAJOR OFFICE DISTRICTS
Major Flagship Buildings
Name

1. Izumi Garden Tower
2. Shinjuku Sumitomo Building
3. Sumitomo Fudosan Shinjuku Grand Tower
4. Sumitomo Fudosan Shinjuku Garden Tower
5. Shinjuku Central Park City
6. Shinjuku Oak City
7. Tokyo Nihonbashi Tower
8. Shiodome Sumitomo Building
9. Sumitomo Fudosan Mita Twin Building West
10. Tokyo Shiodome Building
11. Shinjuku NS Building
12. Sumitomo Fudosan Shibakoen First Building
13. Sumitomo Fudosan Iidabashi First Tower
14. Chiyoda First Building West
15. Sumitomo Fudosan Shibuya Garden Tower
16. Sumitomo Fudosan Aobadai Tower
17. Sumitomo Fudosan Iidabashi First Building
18. Sumitomo Fudosan Iidabashi Building No. 3
19. Sumitomo Fudosan Shibuya First Tower
20. Sumitomo Fudosan Shiodome Hamarikyu Building
Note: Figures for gross floor area indicate the area managed by Sumitomo Realty.

16

Annual Report 2016

No. of floors

Location (Tokyo CBD)

(above ground/
below ground)

Completion

Gross floorarea (m2)Minato Ward
Shinjuku Ward
Shinjuku Ward
Shinjuku Ward
Shinjuku Ward
Shinjuku Ward
Chuo Ward
Minato Ward
Minato Ward
Minato Ward
Shinjuku Ward
Minato Ward
Bunkyo Ward
Chiyoda Ward
Shibuya Ward
Meguro Ward
Bunkyo Ward
Shinjuku Ward
Shibuya Ward
Chuo Ward

43/4
52/4
40/3
37/2
44/2
38/2
35/4
25/3
43/2
37/4
30/3
35/2
34/3
32/2
24/3
33/3
14/2
24/2
25/3
21/2

Oct. ’02
Mar. ’74
Dec. ’11
Mar. ’16
Feb. ’10
Jan. ’03
Apr. ’15
July ’04
Sept. ’06
Jan. ’05
Sept. ’82
June ’00
Apr. ’10
Jan. ’04
June ’12
Aug. ’09
Mar. ’00
Oct. ’02
Aug. ’10
Aug. ’09

204,456
177,467
168,329
143,372
130,299
117,575
105,837
99,91398,33895,12875,04670,381
68,454
61,20959,41755,77353,20553,047
52,942
47,951OUR PORTFOLIO’S STRENGTHS(As of March 31, 2016)

Sumitomo Realty’s leasing portfolio is highly competitive in terms of the three distinct features ofbeing “close, new and large.” Going forward, we will endeavor to maintain and enhance ourcompetitive strengths by focusing on providing high-quality office buildings with these qualities.

Close
Tokyo CBD*88%
23 Wards

95%
New
Completedsince 2000

60%
New quakeresistance*99%* ‌New standards thattook effect in 1981

LOCATIONS IN THE TOKYO CBD

Our leasing portfolio emphasizes locations in central Tokyo; 95% of our portfolio is in Tokyo’s 23 wards, and 88% is in
the Tokyo CBD (Central Business District)*. A location near other office buildings and major train and subway stations
is a key condition for a prime property, and our properties’ locations are one of our competitive strengths. In particular,
the Tokyo CBD is being developed as an area with a high concentration of office buildings, and stable demand can be
expected in this area going forward. We will therefore work to enhance our competitive strengths by continuing toacquire land in this area.
* ‌Tokyo CBD (Central Business District): 7 wards, comprising Chiyoda, Minato, Chuo, Shinjuku, Shibuya, Shinagawa and Bunkyo

BRAND-NEW AND RECENTLY CONSTRUCTED BUILDINGSThe average age of the buildings in our portfolio is 16 years, the lowest figure among major Japanese real estate companies, and 60% of the buildings in our portfolio have been completed since 2000. New buildings are able to generatestrong demand by meeting tenant needs in areas like facilities and design, making the relative age of the buildings ina portfolio a key factor affecting leasing businesses.
As shown in the table below, our buildings are equipped with the latest facilities and features, and are popularamong tenants for their functionality, comfort, and safety in the event of a major disaster. 99% of our portfolio meetsor exceeds earthquake-resistance standards that took effect in 1981, which are a key yardstick for earthquake safety. In
recent years, emergency generators that provide electricity in the event of a power outage have also become a featuresought by tenants as part of their business continuity planning.

State-of-the-art Facilities
Earthquake protection
Ceiling height*
Floor load
Air-conditioning
Power capacity

Before 1981

1982–1996

1997 and after

Previous quake-resistant structure

New quake-resistant structure

Anti-sway structure

2.5 m

2.7 m

2.9–3.3 m

300 kg/m2

300–500 kg/m2

500–1,000 kg/m2

Central air-conditioning system

Climate control zones

Separate climate control systems

45 VA/m2

60–70 VA/m2

85 VA/m2 and over

* Includes raised floors

LargeOver 10,000 m2(gross floor area)

86%

LARGE-SCALE BUILDINGS

Large-scale buildings with gross floor area of at least 10,000 square meters make up 86% of our portfolio. When a tenantmoves, being able to consolidate multiple business offices on one floor facilitates internal communication and reduces
space redundancies, helping to make operations more efficient. These types of needs are behind the increased demand inrecent years for large-scale buildings with large amounts of floor space per floor.

Sumitomo Realty & Development Co., Ltd.

17

REVIEW OF OPERATIONSSALESBASIC GROWTH STRATEGYOVERVIEW OF THE FISCAL YEAR

Enhancing our brand strength by providing
high-quality properties via a unique sales
strategy, to build a strong position that is lesssusceptible to changes in market conditions

The condominium market, which represents more than 90% of
the segment’s portfolio, continued to experience a favorable sales
environment as interest rates stayed low. Results were boosted bya significant rise in sales prices for properties in attractive prime
locations. Despite an uncertain outlook for the economy and thefinancial market, consumers continue to show robust purchasing
appetite and traffic at model units remained high.
In such an environment, we delivered a total number of 4,996
condominium units, detached houses, and land lots this year, including Deux Tours Canal & Spa (Harumi), City Tower Musashi Kosugi,
and The Tennoji Residence Garden & Vista (355 units less than theprevious year). Although the number of units declined, a rise in
prices per unit led to revenue and profit growth, for a second consecutive year of record revenue from operations and operating income.

31.9 %

23.2 %

Deux Tours
LOCATION

Chuo Ward, Tokyo
NO. OF UNITS FOR SALE

1,450
NO. OF FLOORS

52 above ground
1 below ground
SCHEDULED DELIVERY

2016

18

Annual Report 2016

REVENUE FROM OPERATIONS¥ 274.8 billion
OPERATING INCOME¥ 44.2 billion

City Terrace
Kichijojiminami
LOCATION

Mitaka, Tokyo
NO. OF UNITS FOR SALE

268
NO. OF FLOORS

6 above ground
1 below ground
SCHEDULED DELIVERY

2016

Principal Condominium Development Projects(2016–2017)

The number of condominium units sold increased by 320 units
from the previous year, to 5,524 units, achieving over 5,000 units ofannual sales for a fourth consecutive year. As of the beginning of the
March 2017 fiscal year, contracts had been concluded for approximately 60% of the 5,000 condominium units and detached houses
planned for delivery during the year (approximately 45% at the
beginning of the March 2016 fiscal year).

Name

Deux Tours

Chuo Ward, Tokyo

1,450*2

2016

Katsushika Ward, Tokyo

840

2016

City Terrace Kichijojiminami

Mitaka, Tokyo

268

2016

City Tower Musashi Kosugi

Kawasaki

800

2016

Osaka

413

2016

City Tower Kanamachi

The Tennoji Residence
Garden & VistaOUTLOOK

We are projecting a 104-unit increase, to 5,100, in the number ofcondominium units, detached houses, and land lots delivered, andare aiming for a third consecutive year of record units delivered,revenue from operations, and operating income.
We are therefore forecasting a 1.9% increase in revenue fromoperations, to ¥280.0 billion, with a 0.7% rise in operating income,to ¥44.5 billion.

No. of units Scheduled
for saledelivery*1

Location

City Terrace Toyocho

Koto Ward, Tokyo

522

2017

Edogawa Ward, Tokyo

357

2017

City Terrace Omori Nishi

Ota Ward, Tokyo

279

2017

City House Nakameguro
Residence

Meguro Ward, Tokyo

115

2017

Yokohama

243

2017

City Tower Umeda Higashi

Osaka

501

2017

City Tower Nagamachi Shintoshin

Sendai414

2017

Hiroshima

471

2017

City Terrace Hirai

City Terrace Yokohama
Tsunashima Gardens

City Tower Hiroshima*1. Fiscal years ended/ending March 31*2. Excluding 216 units for SOHO use

30
19.1

16.7

16.6

16.1

17

(Forecast)

0

12

13

14

15

16

Operating Income

6,000

30

4,000

15

2,000

0

0

15.9

44.5

44.2

16

43.8

15

39.2

274.8

14

38.9

264.2

13

37.9

234.1

12

280.0

232.1

0

16.8

15
198.2

100

Units

17(Forecast)

Operating Margin (right scale)

12

13

14

15

16

5,100

200

%

45

4,996

45

5,351

Billions of yen

300

4,958

Billions of yen

Units Delivered*

4,688

Operating Income andOperating Margin

4,119

Revenue from Operations

17(Forecast)* ‌Number of units includes condominium units, detachedhouses and land lots.

Sumitomo Realty & Development Co., Ltd.

19

REVIEW OF OPERATIONSCONSTRUCTION
BASIC GROWTH STRATEGYOVERVIEW OF THE FISCAL YEAR

Further raising our competitiveness by refining
our planning, technical, and sales capabilities
without being bound by conventional thinking

The number of units contracted during the year grew to record
levels, at both the Shinchiku Sokkurisan remodeling business, witha 15.6% increase, to 8,454 units, and for custom homes operations,with a 17.4% increase, to 2,882 units. With this turnaround to growthin the number of units and in revenue, segment results reboundedfrom the negative effect of the increase in the consumption tax rate
and revenue and profit rose for the first time in two years.
To maintain this revenue and profit growth, both businesses areproactively expanding their product lineups and strengthening thestructure of their marketing operations. The Shinchiku Sokkurisan
business is strengthening its condominium remodeling operations,where high future growth is expected, and custom homes operations
is adding a new wood panel construction method to its existing twoby-four method.

23.1 %

8.0 %20

Annual Report 2016

REVENUE FROM OPERATIONS¥ 199.1 billion
OPERATING INCOME¥ 15.3 billion

OUTLOOK

We are aiming for a return to a solid trajectory of revenue andprofit growth from the March 2017 fiscal year. Both the Shinchiku
Sokkurisan remodeling business and custom homes operations willcontinuously strive to expand and enhance their product lineups aswell as strengthen the structure of their marketing operations.
Our March 2017 fiscal year projections are for a 0.4% increase
in revenue from operations, to ¥200.0 billion, with a 1.3% increasein operating income, to ¥15.5 billion.

REMODELING—SHINCHIKU SOKKURISANKEY FEATURES‌
Sales
engineer system: Most of our sales personnel have engineering qualifications.
‌
Carpenters:
We employ carpenters who work exclusively for
Sumitomo Realty.

Before‌
Fixedprice: We provide the customer with a fixed price perunit of floor area, so there are no concerns about additional
construction charges.
‌ need for temporary moves: We remodel homes whileNo
the customers continue to live in them, which is a majoradvantage.

Cost Comparison
Rebuilding

100 %

‌
Earthquake
resistance: We incorporate earthquake-resistancestrengthening measures based on a computerized analysis of
the home as well as measures to prevent damage from termites and moisture.

Shinchiku
Sokkurisan

50 ~70%

0%

After

50%

100%

CUSTOM HOMESKEY FEATURES‌
Advancedperformance: We have developed proprietary
earthquake-resistant technologies, namely the New Power
Column, New Power Cube and Super Power Wall construction methods, and are actively incorporating these technologies in all our products.
‌Top-classequipment and specifications: Leveraging ourstrengths in the form of our track record in condominiums
and economies of scale as a comprehensive developer, we
employ high-grade condominium interior materials asa standard specification.
‌Completeafter-sales support: Our homes are backed by
a 30-year guarantee, and we have a dedicated contact line
for customers.

70

7

17

(Forecast)

0

15.3

16

7.7

13.0

15

6.9

18.7

199.1

14

9.3

15.8

189.0

13

9.2

16.5

201.2

12

200.0

171.1

0

166.0

9.9

12

13

14

15

16

Operating Income

7.8

9,000

3,000

10

6,000

2,000

5

3,000

1,000

17

(Forecast)00Operating Margin (right scale)

12

13

14

15

16

Shinchiku Sokkurisan

8,600
3,000

14

UnitsUnits

8,454
2,882

140

%

15

15.5

21

7,310
2,455

Billions of yen

210

7,623
2,430

Billions of yen

Shinchiku Sokkurisan andCustom Home Units Contracted

7,651
2,389

Operating Income andOperating Margin

7,228
1,968

Revenue from Operations

0

17(Forecast)

Custom Homes (right scale)

Sumitomo Realty & Development Co., Ltd.

21

REVIEW OF OPERATIONSBROKERAGE
BASIC GROWTH STRATEGYOVERVIEW OF THE FISCAL YEAR

Strengthening our business platform byfurther expanding our network and pursuingcloser ties between existing offices and their local
communities

The existing home market experienced an increase in the number ofcontracts concluded in the Tokyo metropolitan area, and the trend ofrising average contract prices, especially for condominiums, continued.
Given this environment, the segment, which is handled by
Sumitomo Real Estate Sales Co., Ltd., recorded a 5.9% increase, to35,987 units, in the number of transactions, led by retail transactions
for existing homes. This marked a turnaround to growth from theprevious year’s decrease triggered by the increase in the consumption
tax rate, and a record number of transactions. Transaction value percontract decreased on a decline in the number of corporate transactions, but strong results at the retail division held the total transaction value to last year’s level, at ¥1,065.7 billion, for a second
consecutive year above ¥1 trillion.
As a result, the segment maintained revenue growth for a seventh consecutive year, for record revenue from operations, and anincrease in operating income for the first time in two years.
With the addition of two directly operated offices during theyear, the network had a total of 257 offices nationwide as of March
31, 2016.

REVENUE FROM OPERATIONS

7.1%¥ 61.5 billion
OPERATING INCOME

9.3 %¥ 17.7 billion

OUTLOOK

Our brokerage operations will continue to open new offices andupgrade existing offices, while at the same time striving to raisemarketing efficiency, with the aim of achieving revenue and profit
growth on a record number of brokerage transactions.
We are therefore forecasting a 2.4% increase in revenue fromoperations, to ¥63.0 billion, with a 1.6% increase in operating
income, to ¥18.0 billion, for the March 2017 fiscal year.

0

14

15

16

Operating Income

22

Annual Report 2016

40

800

20

400

17

0

0

(Forecast)

Operating Margin (right scale)

48,00031,44333,18035,98735,45537,96533,96832,00016,000

12

13

14

15

16

Transaction Value

1,182.6

13

Transactions

1,200

18.0

12

28.6

Billions of yen

1,065.7

17(Forecast)

17.7

16

16.5

15

28.8

18.0

14

28.1

14.5

13

29.4 28.4

31.4

14.5

61.5

12

63.0

58.5

7
57.2

25
51.0

14

49.4

50

0

%

60

21

1,065.7

Billions of yen

75

987.8

Billions of yen

Number of Transactions andTransaction Value

858.9

Operating Income andOperating Margin

892.8

Revenue from Operations

17

0(Forecast)

Number of Transactions (right scale)

CORPORATE GOVERNANCE

BOARD OF DIRECTORS AND STATUTORY AUDITORS (As of June 29, 2016)
OUTSIDE DIRECTORS

Chairman of the Board

Junji Takashima*

Deputy Chairman of the Board

Kenichi Onodera
Hiromasa Yonekura

President

Deputy President

Kojun Nishima*

Nobuaki Takemura*

Deputy President

Director

Masato Kobayashi*

Hiroshi Kato

Director

Director

Koji Ito

Masumi Aoki

(Date of birth: March 31, 1937)
April 1960 Entered Sumitomo Chemical Co., Ltd.
June 2000 President, Sumitomo Chemical Co., Ltd.
April 2009	Chairman, Sumitomo Chemical Co., Ltd.
May 2010	Chairman, KEIDANREN (Japan Business Federation)
June 2014	Honorary Chairman, KEIDANREN (present)	Counselor, Sumitomo Chemical Co., Ltd. (present)
June 2015	Outside Director, Sumitomo Realty & Development Co., Ltd. (present)

Shoichi Abbe
(Date of birth: September 20, 1940)
April 1963	Entered The Sumitomo Warehouse Co., Ltd.
June 1994	Director, The Sumitomo Warehouse Co., Ltd.
June 1997	Executive Managing Director – Managing Director,
The Sumitomo Warehouse Co., Ltd.
June 2000	Executive Managing Director – President, The Sumitomo Warehouse
Co., Ltd.
June 2010	President – Executive Officer, The Sumitomo Warehouse Co., Ltd.
June 2013	Statutory Auditor, Sumitomo Realty & Development Co., Ltd.
June 2015	Executive Managing Director – Chairman of the Board, The Sumitomo
Warehouse Co., Ltd. (present)
June 2015	Outside Director, Sumitomo Realty & Development Co., Ltd. (present)(Note)	Mr. Yonekura and Mr. Abbe both meet the requirements for independent directors
stipulated by the Tokyo Stock Exchange, and the Company has notified the Tokyo
Stock Exchange that both individuals are designated as independent directors.
	Mr. Yonekura is a member of the special committee established in accordance with
the Company’s takeover defense measures.

STATUTORY AUDITORS
Director

Yoshiyuki Odai

Director

Toshikazu Tanaka

Yozo Izuhara*
Takaaki Ono*

* Executive Managing Director

Tadashi Kitamura
Yoshifumi Nakamura* Outside Statutory Auditor

Sumitomo Realty & Development Co., Ltd.

23

CORPORATE GOVERNANCECORPORATE GOVERNANCE INITIATIVESFUNDAMENTAL APPROACH TOCORPORATE GOVERNANCE

To achieve sound management, Sumitomo Realty believes that it
is important to share information on a Companywide basis, ensurethat everyone is aware of problems, enhance internal management
supervision, and achieve highly transparent management throughappropriate information disclosure. We have implemented
a number of corporate governance initiatives to realize thesepractices efficiently.
CORPORATE GOVERNANCE BODIESThe Board of Directors is made up of 12 directors, including two
outside directors. The Board makes decisions on importantCompany matters, and oversees the directors’ execution of duties.
Furthermore, internal information, awareness of issues and othermatters are shared through the Board of Directors, internal meetingsand other forums, promoting quick and rational decision-making.
The Board of Statutory Auditors has four members, including
two outside statutory auditors. To strengthen management oversight,
we continue working to enhance outside auditing. The statutory
auditors attend meetings of the Board of Directors and other important
meetings, and track internal issues that are important for robust auditing.
Two outside directors were elected at the ordinary General
Meeting of Shareholders held in June 2015. Both of these directors
possess a wealth of company management experience and were nominated as directors in light of their appropriate personal character,knowledge and judgment. The Company has appointed outside
directors to further enhance management efficiency and strengthen
the corporate governance structure by contributing points of viewthat are not bound by preconceived ideas of the real estate industry
and advice from a global perspective. The professional histories of
the two outside directors are on page 23.
Each of the two outside statutory auditors has abundant management experience at other companies, and they were nominatedbecause their character and knowledge were considered to be appropriate for the Company’s statutory auditors. The outside statutory
auditors fulfill their roles by expressing objective opinions on governance from an independent standpoint from the Company without
being influenced by executives responsible for operational execution.

They also work together to improve auditing by, for example,
exchanging opinions as needed with other statutory auditors, theInternal Audit Division and the independent auditors. At the sametime, they provide timely advice and guidance to internal departments associated with internal control.
Sumitomo Realty does not have standards or a policy regarding
independence from the Company for selecting outside directors
and outside statutory auditors. However, the Company does referto the Tokyo Stock Exchange’s evaluation standards regarding
the independence of directors and corporate auditors when
appointing such individuals.
The Internal Audit Division, which has nine staff members,monitors the operational execution of divisions throughout theGroup and the operation of internal control systems. The divisionalso works to prevent misconduct and mistakes, and proposes operational improvements. Moreover, the division reports the results of its
audits to the statutory auditors and the independent auditors andexchanges opinions with them in an appropriate manner. These
activities help to improve the quality and efficiency of the audit workof the Internal Audit Division, the statutory auditors and the independent auditors. At the same time, the Internal Audit Division,
the statutory auditors and the independent auditors provide timely
advice and guidance to internal departments that are associatedwith internal control.
​INDEPENDENT AUDITORSIn accordance with the Japanese Corporate Law and the Financial
Instruments and Exchange Law, the Company has concluded an
auditing contract with KPMG AZSA LLC for the auditing of
the Company’s accounts.
There are no conflicts of interest between Sumitomo Realty
and the independent auditing company or its employees.
REASON FOR ADOPTING THE CURRENT STRUCTURE

In addition to directors who are well-acquainted with the Company’sbusiness, two outside directors have been appointed from June 2015,
for the further enhancement of management efficiency and strengthening of the corporate governance structure. To strengthen the management oversight system, we have also adopted a structure forGeneral Meeting of Shareholders

Board of Directors
President

Board of Statutory Auditors
Independent Auditors
Executive Officers Committee
Internal Audit Division

Departments, Divisions, etc.

24

Annual Report 2016

the Board of Statutory Auditors that includes two outside statutory
auditors, and we therefore believe that sufficient corporate governance functions are in place.
INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS

To efficiently institute sound management practices, the Company
has established a range of internal control systems and is working toenhance those systems.
To further enhance our compliance with laws and regulations
and to ensure ethical business practices, we established the Risk
Management Committee. In addition, through the ComplianceDepartment, we have established internal auditing and internalreporting systems. In these ways, we are working to prevent
inappropriate and illegal actions.

measures to avoid disturbance by abnormal speculations to ourbusiness approach, which has brought significant achievements.
The Company therefore introduced a policy for responding to largescale purchases of its shares, and at the ordinary General Meeting of
Shareholders held on June 28, 2007 the policy was approved bymore than 70% of shareholders, which is the level of support
required for the approval of special resolutions. With the approvalof shareholders at the 77th General Meeting of Shareholders heldin 2010, again at the 80th General Meeting of Shareholders held in
2013, and again at the 83rd General Meeting of Shareholders held in2016 (with shareholders approving its continuation or renewal), thepolicy has been extended to the conclusion of the 86th General
Meeting of Shareholders, scheduled to be held in 2019.
OVERVIEW OF TAKEOVER DEFENSE MEASURES AND

COMPENSATION OF DIRECTORS AND

BOARD OF DIRECTORS’ JUDGMENT

STATUTORY AUDITORSThe Company believes that if a large-scale purchase of the Company’s
shares is initiated, the shareholders, in principle, should decide toaccept or reject the large-scale purchase. To enable the shareholders
to correctly understand the large-scale purchase’s effect on the corporate value and the common interests of shareholders, however, it isnecessary that both the party making the large-scale purchase andthe Board of Directors of the Company provide to the shareholders
necessary and sufficient information, opinions, alternative proposals,etc., and that the shareholders are given sufficient time to consider
the provided information, opinions, alternative proposals, etc.
The large-scale purchase rules stipulate that the large-scalepurchase shall begin after necessary and sufficient information isprovided to the Board of Directors by the large-scale purchaser anda certain period for evaluation by the Board of Directors has elapsed.
To ensure the objectivity, fairness and rationality of decisions of
the Board of Directors, a special committee will be established thatconsists of members selected from among external academic experts,
lawyers, certified public accountants, etc.
If the large-scale purchase will significantly damage the corporate value and common interests of shareholders, after considering
the opinions of external experts, including lawyers and financial
advisors, and taking into the fullest account the recommendations of
the special committee, the Board of Directors may take countermeasures to deter the purchase, such as the issuance of stock options.
Based on the above basic concept, we set out rules on largescale purchases and request the large-scale purchaser to comply withthe large-scale purchase rules. The Board of Directors shall take certain measures if the large-scale purchaser does not comply with thelarge-scale purchase rules. The Board shall also take measures in theevent that, even though the large-scale purchaser complies with thelarge-scale purchase rules, it is clear that the large-scale purchase willcause unrecoverable damage to the Company or in the event that thelarge-scale purchase significantly damages the corporate value andcommon interests of shareholders.

At the ordinary General Meeting of Shareholders held in June 2004,
we introduced a new performance-based compensation system fordirectors. Under this system, the annual compensation for directors
is based on the Company’s performance. The new system combines
the three elements that made up the previous system—monthly
compensation, annual bonuses and retirement allowances.
Under the new system, total annual (July to June) compensation
for directors is set at 1% of consolidated ordinary profit. In the year
under review, compensation for directors (excluding outside directors)
was ¥1,297 million, compensation for statutory auditors (excluding
outside statutory auditors) was ¥31 million and compensation foroutside directors and outside statutory auditors was ¥101 million.
TAKEOVER DEFENSE MEASURESThe Group endeavors to increase corporate value through integrated
Group management. This entails striving for well-balanced growth
whereby mainstay businesses of a different nature—leasing, sales,
construction and brokerage—complement each other.
Of our business segments, the real property leasing businessand the real property sales business are “development businesses
based on market anticipation” requiring anticipatory investments.
In other words, we need to acquire land and construct a building
within a planned period before we are allowed to record revenue. The
Company’s main business is to always make appropriate anticipatory
investments for the future. The characteristic of the two businesses
mentioned above is that investments lead to revenues and enhancement of our corporate value after an interval.
However, considering the existence of a large number of market
participants who are capable of making huge investments, we are
cautious about the risk of abnormal investment activity in the stockof the Company amid an enormous variety of decisions and speculations. Hence, as a company aiming to improve shareholder value
steadily over the medium and long term, we have determined thatit promotes the common interests of shareholders to take certain

Sumitomo Realty & Development Co., Ltd.

25

CSR

BASIC APPROACH TO CSR

SUMITOMO’S BUSINESS PHILOSOPHYThe Sumitomo Group’s business philosophy is encapsulated by the following precepts­—“Place prime importance on
integrity and sound management in the conduct of its business” and “Under no circumstances, shall it pursue
easy gains or act imprudently.”
These have been inherited as teachings since the time of the Sumitomo Group’s founder. They are still regarded
as the touchstone for the Sumitomo Realty Group’s business activities.

THE SUMITOMO REALTY GROUP’S FUNDAMENTAL MISSION
Guided by Sumitomo’s business philosophy, we have set forth our fundamental mission as being “to create even better social assets for the next
generation” through our business. Based on this fundamental stance, we
engage in business with the aim of creating cities and urban spaces thatare resilient to disasters and friendly to people and the environment.

1Create even bettersocial assets
for the next generation

DISASTERRESISTANT

23ENVIRONMENTFRIENDLY

2PEOPLE FRIENDLY

Our redevelopment business creates peoplefriendly cities. A case in point is Sumitomo
Fudosan Roppongi Grand Tower, where anunderground walkway is being built so thatpedestrians of all abilities can move moreeasily from city areas to train stations.
AEDs

In order to be better prepared for a medical emergency at an office building, hotel orother key facility we operate and manage,
we have installed automated external defibrillators (AEDs). Moreover, all personnel
undertake first-aid training.

26

Annual Report 2016

DISASTER RESISTANTPROTECTING OFFICE WORKERS AND
BUSINESSES

Sumitomo Realty’s latest office buildings actively employ
earthquake-resistant features to protect office workers.
Furthermore, we install emergency generators in buildings to supply power for a certain period of time during
a blackout, enabling tenants to continue operations.
CONTRIBUTING TO REGIONAL DISASTER
PREVENTIONPEOPLEFRIENDLY

ENHANCING REGIONALCONVENIENCE AND PROMOTINGBARRIER-FREE ACCESS

1

Sumitomo Realty has contributed to regional development through various redevelopment projects in cities.
By redeveloping areas with densely packed wooden houses,
we re-create cities so they are more resistant to disasters.
The open spaces that are a feature of our redevelopment
projects also serve as places for temporary refuge ina disaster.

3
ENVIRONMENT FRIENDLY
IMPROVING THE ENVIRONMENTAL PERFORMANCE OF
BUILDINGS

We make efforts to preserve and utilize the lands’ existing trees and plants inour development projects. We also improve buildings’ thermal insulation andlandscapes by planting trees on sites and creating green rooftops and green
public arenas. Our development projects are always concerned for global
environment and ecology.
PROMOTING ENERGY CONSERVATION

Our latest office buildings feature decentralized HVAC (heating, ventilation, and air-conditioning) systems
with independent air-conditioning units so that they can be turned on and off to adjust temperature in eachzone. The systems certainly enhance tenant convenience and contribute to energy conservation. We also saveenergy used in lighting systems with the installation of highly energy-efficient HF-type fluorescent light andLED light bulbs.

CSR THROUGH BUSINESSSHINJUKU GARDEN—Close to work, surrounded by greenery, and with superiordisaster preparedness that provides peace of mind

Completed in March 2016, Shinjuku Garden is a large-scale, multipurpose development on 2.4 hectares of land in aconvenient urban location. The property was developed to blend in with its surroundings, and was built as a location
for safety and peace of mind even in the event of a disaster, with open public spaces and roads so that it can function
as a community disaster response center.
LARGE, MULTIPURPOSE DEVELOPMENTREGIONAL DISASTER-RESPONSE BASE

AMID LUSH GREENERY

In the event of an earthquake orother disaster, many commuters in
the area around Shinjuku Garden
are expected to have difficulty
returning home*, and it is crucial
for buildings in such a location tohave a large multipurpose hall that
could be opened as a place for these people to stay. This hall isequipped with telecommunications equipment (rechargers, Wi-Fi,etc.) so that people can notify their families or companies that they
are safe, and information regarding the status of public transportation, conditions in other areas, and other disaster-related information can be displayed on large screens. In addition to the open spaceon the site where people can stay, the functionality as an evacuation
center has been further enhanced with a warehouse for disasterresponse equipment (approximately 50 square meters), 10 emergency
toilets that can be installed directly to manholes, and well water for
cleaning the toilets.

Approximately 66% of the site, or
1.5 hectares, is open space with lotsof greenery. In addition to reducing
the environmental burden andimproving the heat island phenomenon, we have created a “lawnplaza” and “shade grove” where people can relax. Roughly 40% of
the entire land site is planted with greenery.
PEOPLE-FRIENDLY NETWORK OF PLEASANTPEDESTRIAN ROUTES

Many pedestrians coming from Takadanobaba Station pass throughthe area around Shinjuku Garden, and we have sought to improve
the geographical feature that had been broken up by retaining walls.
We have removed the retaining walls in order to level out the differences of approximately four meters in elevation within the site andcreated barrier-free pathways to offer a space that can be used comfortably by all pedestrians, including both young children andelderly people.

* Approximately 350,000 people, the fourth highest number in Tokyo, according to
a 2004 report by the Shinjuku City government.

SHINCHIKU SOKKURISAN REMODELING OPERATIONSOur Shinchiku Sokkurisan remodeling operations facilitate remodeling of existing buildings. We reduce remodelingcosts, improve earthquake resistance and make other improvements in response to customer demand.
EARTHQUAKE REINFORCEMENT, EXTENDED LIFE AND
ENERGY CONSERVATION FOR HOUSING

Shinchiku Sokkurisan is contributing to efforts to promoteearthquake-proofing of existing homes through low-cost remodeling.
It also extends the life of existing housing through earthquakereinforcement work requiring no dismantlement, while leaving
the main structural elements intact. The process also does notwaste resources and generates little industrial waste; for instance,
old tatami mats are reused as material for cement.

HARMONY WITH BUILDING’S HISTORY

Shinchiku Sokkurisan can also breathe
new life into old houses. We add value
suited to modern living, while taking
care to preserve the history and characterof a house that may have been home to
many generations of a family. Sumitomo
Realty is striving to reinvigorate oldhouses more than 100 years old, helping
to ensure that tradition stays alive.

Sumitomo Realty & Development Co., Ltd.

27

FINANCIAL SECTION
ELEVEN-YEAR FINANCIAL SUMMARY
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
As of and for the years ended March 31
Millions of yen

2016

2015

2014

2013

2012

¥  854,964
313,340
274,761
199,115
61,496¥  806,835
289,117264,207
188,995
58,486¥  780,273
283,730
234,093
201,190
57,211¥  736,652
278,317232,149
171,082
50,957¥  688,662
271,812
198,154
165,995
49,397

Cost of revenue from operations

614,191

579,964

558,987

529,913490,437

SG&A expenses

66,532
7.8%

60,976
7.6%

60,815
7.8%

55,394
7.5%

50,7607.4%

174,241
20.4%

165,895
20.6%

160,471
20.6%

151,345
20.5%

147,465
21.4%% of revenue from operations

148,42417.4%

139,055
17.2%

130,537
16.7%

114,916
15.6%

107,912
15.7%

Profit attributable to owners of parent

87,79880,567

69,697

59,82553,236

Depreciation and amortization

34,57433,51935,311

37,761

36,049¥1,122,189
855,816
4,675,915
888,100
2,971,667¥1,025,703
801,950
4,523,804
832,462
2,875,660¥  924,452
715,779
4,220,429
707,948
2,652,929¥  965,786
679,496
4,105,500
627,0122,424,932¥  801,142
586,1703,859,698
553,8442,407,639¥   185.23
1,873.71
22.00¥   169.97
1,756.25
21.00¥   147.02
1,493.48
20.00¥   126.18
1,322.52
20.00¥   112.28
1,168.11
20.00

19.0
3.3
10.2
3.9
98
94
7.3

18.4
3.5
10.5
3.9
97
87
6.5

16.8
3.7
10.4
4.0
95
82
6.1

15.3
3.9
10.1
3.9
93
80
4.9

14.3
4.3
9.9
4.3
93
80
4.2

For the Year
Revenue from operations
Leasing
Sales
Construction
Brokerage% of revenue from operations
Operating income% of revenue from operations
Ordinary profit*2

At Year-end
Current assets
Inventories
Total assets
Shareholders’ equity*3
Net interest-bearing debt

Per Share Amounts (Yen)Profit attributable to owners of parent
Shareholders’ equity
Cash dividend applicable to the year

Key Ratios
Equity ratio (%)
ND/E ratio* (Times)
4

ROE (%)ROA (%)
Long-term debt ratio (%)
Fixed-interest rate debt ratio (%)
Interest coverage ratio*5 (Times)*1. U.S. dollar amounts in this report are translated, for convenience only, at the rate of ¥112.62 = U.S.$1, the prevailing exchange rate at March 31, 2016.
*2.	Ordinary profit, which equals operating income after adjustment for non-operating gains/losses, is a management index that is widely used in Japan.
	Due to differences in accounting standards, ordinary profit is not broken out in the Company’s English-language financial statements, but it is included here because it plays an important role in the calculation of
incentive payments for directors.
*3. Shareholders’ equity = Net assets – Profit attributable to non-controlling interests*4. ND/E ratio = Net interest-bearing debt (Interest-bearing debt – Cash, time and notice deposits) / Shareholders’ equity*5. Interest coverage ratio = (Operating income + Interest and dividend income) / Interest expense

28

Annual Report 2016 ｜ Financial Section

Thousands of U.S. dollars*1

2011

2010

2009

2008

2007

2006

2016

¥  744,756
292,875
239,709
162,924
46,430¥  719,636
293,533
219,662
158,21444,621¥  695,240
298,359
191,224
160,134
43,105¥  691,928
279,568
193,575
156,606
58,542¥  676,834
262,620
211,035
142,564
56,532¥  646,525
234,280
224,735
135,158
49,217$ 7,591,582
2,782,277
2,439,717
1,768,025
546,049

551,364

534,270

496,547

488,202490,491

487,805

5,453,658

54,9297.4%

51,3877.1%

52,327
7.5%

49,118
7.1%

49,167
7.3%

46,6977.2%

590,765—

138,46318.6%

133,979
18.6%

146,366
21.1%

154,608
22.3%

137,176
20.3%

112,02317.3%

1,547,159—

106,29614.3%

100,464
14.0%

113,582
16.3%

125,17618.1%

112,406
16.6%

87,03813.5%

1,317,919—

50,90852,662

46,205

63,13350,30032,506

779,595

23,70518,065

17,886

17,15015,677

16,330306,997¥  805,958
558,091
3,234,203
526,227
1,901,850¥  802,693
521,871
3,168,098
488,896
1,785,854¥  759,816
518,885
3,006,412
436,667
1,722,733¥  784,195
511,868
2,894,004
427,423
1,548,509¥  756,488
489,093
2,747,900
409,197
1,343,824¥  619,219
330,700
2,460,080
375,656
1,150,880$ 9,964,385
7,599,148
41,519,402
7,885,811
26,386,672¥   107.35
1,109.78
20.00¥   111.04
1,030.93
20.00¥    97.39
920.7420.00¥   133.00
900.5718.00¥   105.92
861.9314.00¥    68.33
790.7410.00$      1.64
16.64
0.20

16.3
3.6
10.0
4.4
89
79
4.7

15.4
3.7
11.4
4.4
83
81
4.6

14.5
3.9
10.7
5.1
76
77
4.9

14.8
3.6
15.1
5.6
83
85
6.2

14.9
3.3
12.8
5.4
79
83
6.8

15.3
3.1
9.3
5.0
80
77
6.5

—
—
—
—
—
—
—

Sumitomo Realty & Development Co., Ltd.

29

MANAGEMENT’S DISCUSSION AND ANALYSIS

Billions of yen

Billions of yen

17(Forecast)

0

20.4

12

13

14

15

16

Operating Income

20.2

Billions of yen

30

180

20

120

10

60

0

0

178.0

16

20.6

174.2

15

20.6

165.9

14

20.5

160.5

13

21.4

151.3

12

%

147.5

0

880.0

60
855.0

300
806.8

120

780.3

600

736.7

180

688.7

900

Ordinary Profit * and Profit
Attributable to Owners of Parent

17(Forecast)

Operating Margin (right scale)

155.0
97.0

Operating Income andOperating Margin

148.4
87.8

Revenue from Operations

139.1
80.6

In leasing and sales, which are our mainstay business segments, several
years are required from the acquisition of a site to the completion ofa building and the generation of revenue. In addition, significant

130.5
69.7

Financial Strategy

114.9
59.8

For the March 2016 fiscal year, we recorded a fourth consecutive
year of revenue growth, a sixth consecutive year of operating income
and ordinary profit growth, and a third consecutive year of record
levels for revenue from operations, operating income, ordinary
profit, and profit attributable to owners of parent.
Sumitomo Realty places the highest priority on the achievementof its medium-term management plans, and the March 2016 fiscal
year marked the conclusion of the Sixth Management Plan. The plan
initially set targets of “record financial results, with cumulative ordinary profit of ¥400 billion for the three-year period.” As a result of
the Japanese government’s “Abenomics” economic policies, stock
prices rose and the yen weakened, boosting the economy for a generally favorable operating environment. Although the construction andbrokerage businesses were adversely affected by a consumption tax
rate increase, the main leasing and sales businesses drove results, andthe initial targets for both operating income and ordinary profit were
surpassed. Cumulative ordinary profit for the three-year period coveredby the Sixth Management Plan totaled ¥418.0 billion, which was
also a record for a period covered by a management plan. The initial
target of record single-year results was achieved in the plan’s first year,
followed by new records in the subsequent two years as well.
From April 2016, we are operating under the Seventh Management Plan, which commences in the March 2017 fiscal year. We do
not expect the favorable operating environment that underpinned the
Sixth Management Plan to continue, but we are aiming to maintain“a path of revenue and profit growth” and to surpass the record results
achieved under the Sixth Management Plan. For more details on the
new plan, please refer to “Seventh Management Plan” on page 11.

advance investment is required. In consideration of these factors,
under the three medium-term management plans from April 1997
to reinforce our financial position and achieve operational growth,
we worked to diversify our fund-raising methods so as to control
interest-bearing debt while making investments needed for growth.
Specifically, we have aggressively introduced development
securitization methods using SPEs (SPEs have been included in thescope of consolidation since the March 2012 fiscal year). In addition,
to diversify our fund-raising methods in order to control interestbearing debt, we have formed SURF (Sumitomo Realty &Development Fund) investment partnerships backed by leased buildings, making effective use of our assets in our fund-raising activities.
By actively utilizing these types of fund-raising methods that
do not rely on interest-bearing debt, in the first half of the 2000s
we raised large amounts of funds without having to sell assets at low
prices, and have aggressively acquired sites when site acquisition
costs are low and there are investment opportunities. Consequently,
our site acquisition has proceeded according to plan, and we were able
to achieve substantial growth in revenue and profit as well as improve
our financial structure over a decade.
Since the second half of the 2000s, it has become increasingly
difficult to acquire large prime sites that meet our investment criteria, in part because of intensified competition. Given this situation,
Sumitomo Realty has implemented a policy centered on urban redevelopment for future site acquisition. As a result, we are making
steady progress with the preparations for future development projects
in the pipeline.
We plan to bring gross floor area of approximately 220,000 tsubo
for leasing to market, mainly at large-scale redevelopment projects in
Roppongi and Osaki, during the Seventh Management Plan (please referto page 11 for more information regarding specific projects in theSeventh Management Plan). We are aiming to further accelerate theannual development pace of 50,000 tsubo of gross floor area during
and after the Seventh Management Plan. We intend to cover theinvestment for these future development projects generally with
operating cash flows. In addition to this investment, we will consider

107.9
53.2

Review of the Sixth Management Plan and Start of
the Seventh Management Plan

12

13

14

15

16

17

Ordinary Profit

Profit Attributable to Owners of Parent* Please see note *2 on page 28.

30

Annual Report 2016 ｜ Financial Section(Forecast)Site acquisition is essential to the achievement of sustained
growth. We will continue to strengthen our financial position
through the generation of profit and work to achieve increased fundraising stability as we continue to invest in growth, centered on thecore leasing business.

bond issues or other debt financing if additional investment opportunities arise, recognizing that current low interest rates present afavorable environment for financing.
Sumitomo Realty’s financial position has continued to improve.
During the three years covered by the Sixth Management Plan,interest-bearing debt increased ¥508.1 billion, but with the accumulation of profit, shareholders’ equity also increased ¥261.0 billion.
As a result, the equity ratio stood at 19.0% as of March 31, 2016,
compared with 15.3% at the beginning of the period covered by thePlan, and the ND/E ratio improved to 3.3 times from 3.9 times. In
addition, the market value of real estate for leasing stood at ¥4.7 trillion as of March 31, 2016, and this included unrealized gains of ¥1.7
trillion, which we recognize as a useful buffer against financial risks.
Factoring in these unrealized gains (please refer to page 58 “Notes toconsolidated financial statements; #19. Investment and rental properties” for more information), the equity ratio as of March 31, 2016,
would be 32.4% and the ND/E ratio would be 1.4 times. Ratings
agencies have evaluated these strengths highly, and we have maintained our rating even in difficult financial environments, such as
after the Lehman crisis. As of June 2016, JCR and R&I issued ratingsof A+ and A–, respectively.
In terms of ROE, we remain at the top level of our industry
with an average level of 10.2% over the past five years (please refer topage 28 “Eleven-year financial summary”).
In addition, we are enhancing the stability of our debt portfolio by procuring funds for longer tenors and at fixed rates to hedge
against the risk of higher interest rates going forward. During theyear under review, we issued ¥40.0 billion of 10-year corporate
bonds with an interest rate of less than 1%. We will continue toclosely observe market conditions and extend the tenor of our debt
portfolio going forward. As of March 31, 2016, long-term debt
accounted for 98% of consolidated interest-bearing debt, andfixed-rate debt for 94%.

Dividend Policy

Our fundamental policy for the distribution of profit is to maintaina stable base level of dividends and, while retaining a sufficient levelof earnings for stable, long-term operational growth, to increase dividends in line with growth in profit.
We have implemented six plans since April 1997. We worked torespond to various changes in accounting standards and to reduce
unrealized losses under the First Management Plan and the Second
Management Plan. Under the Third Management Plan, which began
in April 2004, we completed the implementation of measures to deal
with unrealized losses, and laid the foundation for full-scale growthin EPS. Thereafter, we continued to increase the dividend in linewith profit growth to the extent that we raised the dividend for the
March 2009 fiscal year, the year after we recorded record-high profit,to ¥20.00 per share.
However, profit subsequently declined due to the Lehman crisis.
Nevertheless, we focused on the continuation of stable dividends
and maintained the dividend per share at ¥20.00. Reflecting the factthat the March 2016 fiscal year was our third consecutive year ofrecord earnings, as in the previous year, we increased the full-year
dividend by ¥1.0, to ¥22.00 per share. In addition, at this time we
intend to pay a full-year dividend of ¥23.00 per share for the March2017 fiscal year. Moving forward, we will make efforts to continue
profit growth and advance the expansion of equity, while further
enhancing shareholder returns.

Total Assets

Shareholders’ Equity and 
Equity Ratio

Billions of yen

Billions of yen

6,000

900

4,000

600

Net Interest-bearing Debt and
ND/E Ratio
%

14.3

15.3

16.8

18.4

19.0

Billions of yen

Times

30

3,000

12

20

2,000

8

10

1,000

0

0

14

15

16

Shareholders’ Equity (Net Assets – Profit Attributable toNon-controlling Interests)

3.3
2,971.7

13

3.5
2,875.712

3.7
2,652.90

3.92,424.9

16888.1

4,675.9

15832.5

4,523.814707.9

4,220.4

13

627.0

4,105.5

12553.8

3,859.70300

2,407.6

4.3
2,000

12

13

14

15

16

Net Interest-bearing Debt

40

ND/E Ratio (right scale)

Equity Ratio (right scale)

Sumitomo Realty & Development Co., Ltd.

31

CONSOLIDATED BALANCE SHEETS
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
As of March 31, 2016 and 2015
Thousands of U.S. dollars(Note 1)Millions of yen

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)
Deferred income taxes (Note 12)
Other current assets
		 Total current assets

2016

2015

2016

¥  187,234
19,665(48)
855,816
13,63845,884
1,122,189¥  151,367
27,597(78)
801,950
10,82534,042
1,025,703$ 1,662,529
174,614(426)
7,599,148
121,097
407,423
9,964,385

57,401
321,296(9,801)
368,896

56,233
337,427(11,914)
381,746

509,687
2,852,921(87,026)
3,275,582

2,317,729
1,039,019
28,851
3,040
36,4483,425,087

2,259,845
933,641
26,224
3,396
106,738
3,329,844

20,580,083
9,225,884
256,180
26,993
323,637
30,412,777(436,504)
2,988,583(406,489)
2,923,355(3,875,901)
26,536,876

103,981
51,718
12,684
27,864
196,247¥4,675,915

107,252
54,015
13,534
18,199193,000¥4,523,804

923,291459,226
112,627
247,415
1,742,559$41,519,402

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 5 and 19)
Leased assets
Construction in progress (Notes 4, 5 and 19)

Accumulated depreciation
		 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
See accompanying notes.

32

Annual Report 2016 ｜ Financial Section

Thousands of U.S. dollars(Note 1)Millions of yen

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 (Notes 6 and 13)
Other current liabilities (Notes 12 and 13)
		 Total current liabilities

2016

2015

2016

¥   78,718
316,737
121,964
54,31630,046
4,216
71,619154,799
832,415¥   87,000
380,863
69,191
66,963
26,5193,726
61,172102,109797,543$   698,970
2,812,440
1,082,969
482,294
266,791
37,436
635,935
1,374,525
7,391,360

2,344,819
296,663
249,800
6,081
28,8602,926,223

2,115,356
374,618
328,393
5,434
42,9212,866,722

20,820,627
2,634,195
2,218,078
53,996
256,260
25,983,156

122,805
132,748569,740(4,335)820,958

122,805
132,750494,276(4,247)745,584

1,090,437
1,178,725
5,058,959(38,492)
7,289,629

72,262(4,247)(510)(364)
67,141
29,178917,277¥4,675,915

88,799(1,615)(550)
244
86,87827,077859,539¥4,523,804

641,644(37,711)(4,529)(3,232)596,172
259,085
8,144,886$41,519,402

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

Contingent liabilities (Note 20)
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
Non-controlling interests
		 Total net assets
			 Total liabilities and net assets

Sumitomo Realty & Development Co., Ltd.

33

CONSOLIDATED STATEMENTS OF INCOME
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2016, 2015 and 2014
Thousands of U.S. dollars(Note 1)Millions of yen

2016

2015

2014

2016

Revenue from operations
Costs and expenses:
Cost of revenue from operations
Selling, general and administrative expenses¥854,964¥806,835¥780,273$7,591,582

614,191
66,532680,723

579,964
60,976
640,940

558,987
60,815619,8025,453,658
590,765
6,044,423

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
Dividend to partnership investors
Other, net

174,241

165,895

160,471

1,547,159(24,398)
5,483
115
—
(10,806)(1,146)
428
(76)
(466)
(1,387)(6,434)(38,687)(26,049)
5,063
4
(3)
(3,811)(3,105)——­(30)(1,776)(5,521)(35,228)(26,911)
4,569
19
(3)
(15,068)(1,919)
1,430
—
(96)
(2,174)(5,196)(45,349)(216,640)
48,686
1,021—(95,951)(10,176)
3,800
(675)
(4,138)(12,316)(57,129)(343,518)

Income before income taxes
Income taxes (Note 12):Current
Deferred		Total135,554

130,667

115,122

1,203,641

49,989(5,259)44,73044,7852,661
47,44645,125(2,521)42,604

443,873(46,696)
397,177

Profit90,824

83,221

72,518806,464

Profit attributable to non-controlling interests

3,026

2,654

2,821

26,869¥ 87,798¥ 80,567¥ 69,697$  779,595

Profit attributable to owners of parent

Yen

2016

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

¥185.23—
22.00

U.S. dollars (Note 1)2015¥169.97
—
21.00

2014

¥147.02
—
20.00

2016

$1.64
—
0.20

See accompanying notes.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2016, 2015 and 2014
Thousands of U.S. dollars(Note 1)Millions of yen

2016

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
Comprehensive income attributable to:
Owners of the parent
Non-controlling interests
See accompanying notes.

34

Annual Report 2016 ｜ Financial Section

2015

2014

2016

¥ 90,824¥ 83,221¥72,518$ 806,464(16,514)(2,649)59(710)(19,814)¥ 71,010

51,057
10
3,498
65
54,630¥137,851

17,796
(262)
4,220
—
21,754¥94,272(146,635)(23,522)524(6,304)(175,937)$ 630,527¥ 68,061
2,949¥134,511
3,340¥90,604
3,668$ 604,342
26,185CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2016, 2015 and 2014
Thousands

Number ofshares ofcommonstock

Balance at April 1, 2013
476,086
Profit attributable to owners of parent—	Foreign currency translation adjustments—
	Net unrealized holding gains on securities—
	Acquisition of treasury stock—	Disposal of treasury stock—	Cash dividends paid:		Final for prior year (¥10 per share)—		Interim for current year (¥10 per share)—Profit attributable to non-controlling interests—
	Net deferred losses on hedges—	Remeasurements of defined benefit plans—
Balance at April 1, 2014
476,086Cumulative effects of changes inaccounting policies—
Restated balance
476,086
Profit attributable to owners of parent—	Foreign currency translation adjustments—
	Net unrealized holding gains on securities—
	Acquisition of treasury stock—	Cash dividends paid:		Final for prior year (¥10 per share)—		Interim for current year (¥10 per share)—Profit attributable to non-controlling interests—
	Net deferred gains on hedges—	Remeasurements of defined benefit plans—
Balance at April 1, 2015
476,086Cumulative effects of changes inaccounting policies—
Restated balance
476,086
Profit attributable to owners of parent—
Foreign currency translation adjustments—Net unrealized holding losses on securities—
Acquisition of treasury stock—
Disposal of treasury stock—
Change in scope of consolidation—
Cash dividends paid:
		 Final for prior year (¥11 per share)—
		 Interim for current year (¥11 per share)—Change in treasury shares of parent
arising from transactions with
non-controlling shareholders—Profit attributable to non-controlling interests—
Net deferred losses on hedges—
Remeasurements of defined benefit plans—
Balance at March 31, 2016
476,086

Millions of yen

Shareholders’ equity

Accumulated other comprehensive income (loss)
Net
RemeasureTotal
unrealized
Foreignments of accumulated
Total
holding gains Net deferred currency
definedotherNonshareholders’ (losses) on gains (losses) translation
benefit comprehensive controlling
equitysecurities
on hedges adjustments
plansincome (loss)
interests

Commonstock

CapitalsurplusRetainedearnings

Treasurystock¥122,805—————¥132,749————
1¥363,384
69,697————¥(3,779)
—
—
—
(363)
1

¥615,159
69,697——(363)
2¥ 19,981——
17,782——¥(1,393)—————¥(6,736)
—
3,374
—
—
—

¥   —
—
—
—
—
—

¥ 11,852—
3,374
17,782——¥21,854—————¥648,865
69,697
3,374
17,782
(363)
2

—
—
—
—
—
¥122,805—————¥132,750(4,741)(4,740)———¥423,600—————¥(4,141)(4,741)(4,740)———¥675,014—————¥ 37,763

—
—
—
(248)
—
¥(1,641)—————¥(3,362)

—
—
—
—
174
¥  174

—
—
—
(248)
174
¥ 32,934

—
—
2,730
—
—
¥24,584(4,741)(4,740)
2,730
(248)
174
¥732,532—
122,805—————
132,750
—
—
—
—

(410)
423,190
80,567————(4,141)
—
—
—
(106)

(410)
674,604
80,567——(106)—
37,763——51,036——(1,641)—————(3,362)
—
2,812
—
—

—
174
—
—
—
—

—
32,934—
2,812
51,036——
24,584
—
—
—
—

(410)
732,12280,567
2,812
51,036
(106)

—
—
—
—
—
¥122,805—————¥132,750(4,741)(4,740)———¥494,276—————¥(4,247)(4,741)(4,740)———¥745,584—————¥ 88,799

—
—
—
26
—
¥(1,615)—————¥  (550)

—
—
—
—
70
¥  244———26
70¥ 86,878

—
—
2,493
—
—
¥27,077(4,741)(4,740)2,493
26
70¥859,539—
122,805
—
—
—
—
—
—

—
132,750
—
—
—
—
0
—

—
494,276
87,798————(1,906)—(4,247)
—
—
—
(89)
1
—

—
745,584
87,798——(89)
1(1,906)—
88,799——(16,537)————(1,615)
—
—
—
—
—
—

—
(550)
—
40
—
—
—
—

—
244
—
—
—
—
—
—

—
86,878—40(16,537)————
27,077
—
—
—
—
—
—

—
859,539
87,79840(16,537)(89)
1(1,906)————(5,214)(5,214)——(5,214)(5,214)

—
—

—
—

—
—

—
—

—
—

—
—

(5,214)(5,214)————¥122,805(2)———¥132,748————¥569,740————¥(4,335)(2)———¥820,958————¥ 72,262——(2,632)—¥(4,247)————¥  (510)

—
—
—
(608)
¥(364)——(2,632)(608)¥ 67,141

—
2,101
—
—
¥29,178(2)
2,101(2,632)(608)¥917,277

Total net
assetsThousands of U.S. dollars (Note 1)

Balance at April 1, 2015
Cumulative effects of changes inaccounting policies
Restated balance
Profit attributable to owners of parent
Foreign currency translation adjustmentsNet unrealized holding losses on securities
Acquisition of treasury stock
Disposal of treasury stock
Change in scope of consolidation
Cash dividends paid:
		 Final for prior year ($0.10 per share)
		 Interim for current year ($0.10 per share)Change in treasury shares of parent
arising from transactions with
non-controlling shareholdersProfit attributable to non-controlling interests
Net deferred losses on hedges
Remeasurements of defined benefit plans
Balance at March 31, 2016

Shareholders’ equity

Accumulated other comprehensive income (loss)
Net
RemeasureTotal
unrealized
Foreignments of accumulated
Total
holding gains Net deferred currency
definedotherNonshareholders’ (losses) on
losses ontranslation
benefit comprehensive controlling
equitysecurities
hedgesadjustments
plansincome (loss)
interests

Commonstock

CapitalsurplusRetainedearnings

Treasurystock$1,090,437$1,178,743$4,388,883$(37,711) $6,620,352$ 788,483$(14,340)$(4,884) $ 2,167$ 771,426 $240,428$7,632,206—
1,090,437
—
—
—
—
—
—

—
1,178,743
—
—
—
—
0
—

—
4,388,883
779,595————(16,925)—(37,711)
—
—
—
(790)
9
—

—
6,620,352
779,595——(790)
9(16,925)—
788,483——(146,839)————(14,340)
—
—
—
—
—
—

—
(4,884)
—
355
—
—
—
—

—
2,167
—
—
—
—
—
—

—
771,426—
355(146,839)————
240,428
—
—
—
—
—
—

—
7,632,206
779,595
355(146,839)(790)
9(16,925)————(46,297)(46,297)——(46,297)(46,297)

—
—

—
—

—
—

—
—

—
—

—
—

(46,297)(46,297)

—
(18)
—
—
—
—
—
—
—
—
—
—
$(38,492) $7,289,629 $ 641,644——(23,371)—$(37,711)———
18,657(23,371)—(5,399)—$ 596,172 $259,085(18)
18,657(23,371)(5,399)$8,144,886————$1,090,437

(18)
—
—
—
—
—
—
—
$1,178,725 $5,058,959

—
—
—
—
—
—
—
(5,399)$(4,529) $(3,232)

Total net
assetsSee accompanying notes.

Sumitomo Realty & Development Co., Ltd.

35

CONSOLIDATED STATEMENTS OF CASH FLOWS
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2016, 2015 and 2014
Thousands of U.S. dollars(Note 1)Millions of yen

2016
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
Decrease in net defined benefit liability
Gain on sale of property and equipment, net
Loss on disposal of property and equipment
Gain on sale of investments in securities, net
Loss on devaluation of investments in securities
Interest and dividend income
Interest expense
Increase (Decrease) in notes and accounts receivable—trade
Increase in inventories
Increase (Decrease) in notes and accounts payable—trade
Increase (Decrease) in advances received
Other, net
		Total

2015

2014

2016

¥ 135,554
34,574
10,806(2,095)
(388)
(115)
1,146
(352)
466
(5,574)24,4897,442(51,302)(12,363)
10,981
9,118
162,387¥ 130,667
33,519
3,811
(583)
(212)
(1)
3,105
—
30
(5,261)
26,247(8,741)(88,915)
21,446(3,507)(7,725)
103,880¥ 115,122
35,311
15,068(3,006)
(155)
(16)
1,919
(1,430)96(4,629)26,971(530)(24,292)
6,671
4,261
7,549
178,910$ 1,203,641
306,997
95,951(18,602)(3,445)(1,021)
10,176(3,126)
4,138(49,494)
217,448
66,081(455,532)(109,776)
97,50580,961
1,441,902

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

5,574(24,870)(46,985)
96,106

5,261(26,747)(47,327)
35,067

4,629(28,205)(38,340)
116,994

49,494(220,831)(417,199)
853,366

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(91,297)404(18,118)
1,838(1,373)
4,658(12,400)
26,047721(24,835)
8,971(105,384)(149,517)
141(22,335)
14,324(1,088)
5,691(11,635)
18,415
1,994(74,876)(2,032)(220,918)(181,471)
109(26,813)
3,857(1,296)
14,813(13,992)
15,395
2,381(105,667)(2,765)(295,449)(810,664)
3,587(160,877)
16,320(12,191)
41,360(110,105)
231,282
6,402(220,520)
79,657(935,749)

Cash flows from financing activities:
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 in assignment of receivables
Increase in treasury stocks, net
Cash dividends paid
Other, net
Net cash provided by financing activities(8,282)40,000(60,000)
5,000(8,264)566,200(380,863)
39,600(61,518)(1,700)(88)(11,277)(73,827)
44,981(57,900)
110,000(80,000)
3,000(8,348)505,800(200,085)
23,800(69,440)(2,777)(106)(10,323)(25,806)
187,815(52,500)
140,000(70,000)
8,000(8,848)354,500(213,392)
67,900(76,190)(7,829)(360)(10,327)(33,499)
97,455(73,539)
355,177(532,765)
44,397(73,380)
5,027,526(3,381,842)
351,625(546,244)(15,095)(781)(100,133)(655,541)
399,405

126

2,078

2,491

1,119

Net increase (decrease) in cash and cash equivalents

35,830

4,042(78,509)318,150

Cash and cash equivalents at beginning of yearDecrease in cash and cash equivalents resulting fromexclusion of subsidiaries from consolidation
Cash and cash equivalents at end of year (Note 3)

150,265

146,223

224,732

1,334,265(106)¥ 185,989—¥ 150,265—¥ 146,223(941)$ 1,651,474

Effect of exchange rate changes on cash and cash equivalents

See accompanying notes.

36

Annual Report 2016 ｜ Financial SectionNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
As of and for the years ended March 31, 2016, 2015 and 2014

1. Basis of presenting consolidated financial
statements

The accompanying consolidated financial statements of Sumitomo Realty & Devel-(2) Foreign currency translation
Receivables and payables denominated in foreign currencies are translated into
Japanese yen at the year-end rate.

opment Co., Ltd. (“the Company”) and its consolidated subsidiaries have been

Financial statements of consolidated overseas subsidiaries are translated into

prepared in accordance with the provisions set forth in the Financial Instruments

Japanese yen at the year-end rate, except for shareholders’ equity accounts, which are

and Exchange Law and its related accounting regulations, and in conformity withtranslated at historical rates, and income statement items resulting from transactions

accounting principles generally accepted in Japan (“Japanese GAAP”), which arewith the Company, which are translated at the rates used by the Company.

different in certain respects as to application and disclosure requirements fromInternational Financial Reporting Standards.
The accounts of the Company’s overseas subsidiaries are based on theirDifferences arising from translation are presented as “Foreign currency translation adjustments” in net assets.

accounting records maintained in conformity with generally accepted accounting(3) Cash and cash equivalents

principles prevailing in the respective countries of domicile. The accompanying

In preparing the consolidated statements of cash flows, cash on hand, readily available

consolidated financial statements have been restructured and translated into

deposits and short-term, highly liquid investments with maturities not exceeding

English (with certain expanded disclosure) from the consolidated financial state-

three months at the time of purchase are considered to be cash and cash equivalents.

ments of the Company prepared in accordance with Japanese GAAP and filed withthe appropriate Local Finance Bureau of the Ministry of Finance as required by the(4) Recognition of revenue

Financial Instruments and Exchange Law. Certain supplementary information

Revenues from sales operations of condominiums, detached houses and land lots areincluded in the statutory Japanese-language consolidated financial statements, but

recognized when the units are delivered and accepted by customers. Revenues fromnot required for fair presentation, is not presented in the accompanying consolidated

leasing operations of office buildings, residences and other properties are recognizedfinancial statements.

as rent accrues over the lease term.

The translation of the Japanese yen amounts into U.S. dollars is included solely
for the convenience of readers outside Japan, using the prevailing exchange rate at(5) Inventories

March 31, 2016, which was ¥112.62 to U.S.$1. The translation should not be

Inventories are stated at cost, determined by the specific identification method

construed as representations that the Japanese yen amounts have been, could haveprincipally. The carrying amount of inventories is written down when the profitabil-been or could in the future be converted into U.S. dollars at this or any other rate

ity declines.

of exchange.

(6) Securities
Held-to-maturity securities are stated at amortized cost. Investments in subsidiaries

2. Accounting policies

and affiliates that are not consolidated or accounted for using the equity method are(1) Consolidation

are stated at fair value. Unrealized gains and losses on these securities are reported,

stated at moving-average cost. Available-for-sale securities with available fair values

The accompanying consolidated financial statements include the accounts of the

net of applicable income taxes, as a separate component of net assets. Realized gains

Company and significant companies over which the Company has power of control

and losses on the sale of such securities are computed using moving-average cost.

through majority voting rights or existence of certain conditions evidencing control
by the Company.
In the elimination of investments in subsidiaries, the assets and liabilities ofthe subsidiaries, including the portion attributable to minority shareholders, are

Preferred equity securities are stated at cost determined by the specific­identification method, and securities with no available fair value are stated atmoving-average cost.
Investments in limited partnerships, which are regarded as securities under therecorded based on the fair value at the time the Company acquired control of the

Financial Instruments and Exchange Law, are accounted for in a manner similar to therespective subsidiaries.

equity method based on the recent financial statements.

All significant intercompany balances, transactions and profits have been eliminated in consolidation.

If the market value of held-to-maturity securities, investments in subsidiaries
and affiliates and available-for-sale securities declines significantly, such securities arestated at fair value and the difference between fair value and the carrying amount isrecognized as a loss in the period of the decline. If the fair value of investments inunconsolidated subsidiaries and affiliated companies not accounted for using theequity method is not readily available, such securities 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 the carrying amount of the securities at the beginning of the next fiscal year.

Sumitomo Realty & Development Co., Ltd.

37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(7) Property and equipment(12) Employees’ severance and retirement benefits

The Company and its consolidated domestic subsidiaries depreciate buildings using

The Company and certain of its consolidated subsidiaries provide two types ofthe straight-line method, and other property and equipment using the declining-post-employment benefit plans, lump-sum payment plans and defined benefit

balance method over their estimated useful lives. The consolidated overseas

corporate pension plans, under which all eligible employees are entitled to benefits

subsidiaries depreciate property and equipment using primarily the straight-line

based on their current rate of pay, length of service and the conditions under which

method in accordance with the accounting principles in the respective countries.

termination occurs.

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.

For the calculation of retirement benefit obligations, the estimated amount 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

Estimated useful lives used in the computation of depreciation are generally
as follows:

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

Buildings and structures

6 to 60 years

Machinery and equipment

2 to 20 years

employees resigned voluntarily at the end of the fiscal year.
Prior service costs are recognized as expenses in the period in which they are

Leased assets		

Lease periods

incurred, and actuarial gains and losses are recognized as expenses in the following period.
Effective from the year ended March 31, 2015, the Company and its consoli-(8) Software costs

dated subsidiaries (“the Group”) adopted the main clause of Article 35 ofSoftware costs are amortized using the straight-line method over the estimated useful“Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26 on May 17,

lives (five years).

2012) and the main clause of Article 67 of “Guidance on Accounting Standard for(9) Allowance for doubtful accounts

Retirement Benefits” (ASBJ Guidance No. 25 on March 26, 2015). Accordingly, theGroup reviewed the calculation methods of retirement benefit obligations and service

The Company and its consolidated subsidiaries provide for doubtful accounts at an

costs, and revised the method of determining the discount rate from the method

estimated uncollectable amount based on the evaluation of certain identified doubt-

using the discount rate based on approximate number of the average remaining

ful and bankrupt receivables plus an amount calculated using the percentage of actual

service years of employees to the method using the single weighted-average discountcollection losses in certain reference periods with respect to remaining receivables.

rate reflecting the estimated period and amount of benefit payment.

(10) Lease transactions

Accounting Standard for Retirement Benefits, the effect of the changes in the calcula-

Leased assets related to finance lease transactions without title transfer are depreciatedtion methods of retirement benefit obligations and service costs is recognized as anusing the straight-line method over the lease periods as their useful lives with noadjustment to retained earnings at the beginning of the year ended March 31, 2015.

residual value.
The Company and its consolidated subsidiaries use the accounting procedures

In accordance with the transitional treatment set forth in Article 37 of the

As a result, net defined benefit liability increased by ¥637 million and retained
earnings decreased by ¥410 million as of April 1, 2014. In addition, operatingthat conform to methods related to normal lease transactions with respect to financeincome and income before income taxes and minority interests on the consolidated

lease transactions without title transfer with a lease transaction start date prior tostatement of income for the year ended March 31, 2015 decreased by ¥11 million,

March 31, 2009.

respectively.

(11) Income taxes(13) Construction contracts

Income taxes are provided for on the basis of income for financial statement

The construction projects for which the outcome of the portion completed by the

purposes. The tax effects of temporary differences between the carrying amounts ofend of the fiscal year under review can be reliably estimated are accounted for by theassets and liabilities for financial statements and income tax purposes are recognizedpercentage-of-completion method (the degree of completion of each construction

as deferred income taxes.

project is estimated using the cost-comparison method), while other construction
projects are accounted for by the completed-contract method.

38

Annual Report 2016 ｜ Financial SectionNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(14) Derivative transactions and hedge accounting

the beginning of the fiscal year, the Group has changed to the method to reflect the

The Company and its consolidated subsidiaries state derivative financial instruments

effect of change in the allocation of acquisition cost based on finalization of provi-at fair value and recognize changes in the fair value as gains or losses unless derivative

sional accounting treatment in consolidated financial statements for a fiscal year

financial instruments are used for hedging purposes and qualify for hedge accounting.

which a date of business combinations belongs to. In addition, the Group has

If derivative financial instruments are used as hedges and meet certain hedging

changed the presentation of net income, and also changed the presentation fromcriteria, the Company and its consolidated subsidiaries defer recognition of gains or

minority interests to non-controlling interests. Certain reclassifications have been

losses resulting from changes in fair value of the derivative financial instruments until

made to consolidated financial statements for the previous fiscal year to reflect thethe related gains or losses on the hedged items are recognized.

change of the presentation.

However, in cases where foreign exchange forward contracts are used as hedges

The Group adopted the Accounting Standard for Business Combinations andand meet certain hedging criteria (regarding foreign exchange contracts), the foreignother standards in accordance with the transitional treatments stipulated in Article

exchange forward contracts and hedged items are accounted for in the following

58-2 (4) of the Accounting Standard for Business Combinations, Article 44-5 (4) ofmanner:the Accounting Standard for Consolidated Financial Statements and Article 57-4 (4)1. If a foreign exchange forward contract is executed to hedge an existing foreignof the Accounting Standard for Business Divestitures from the beginning of thecurrency receivable or payable,

fiscal year.

(a) t he difference, if any, between the Japanese yen amount of the hedged foreign

In the consolidated statements of cash flows for the fiscal year, cash flow related

currency receivable or payable translated using the spot rate at the inception

to the acquisition or sale of shares of subsidiaries not accompanied by a change in thedate of the contract and the carrying amount of the receivable or payable isscope of consolidation is classified as “cash flows from financing activities,” while

recognized in the income statement in the period which includes the inception

costs related to acquisition of shares of subsidiaries accompanied by a change in thedate; andscope of consolidation and cash flow for expenses incurred by acquisition or sale of(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 andthat 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 future transaction

shares of subsidiaries not accompanied by a change in the scope of consolidation areclassified as “cash flows from operating activities.”
The impacts on the consolidated financial statements and per share information are insignificant.

the contracted forward rate, and no gains or losses on the foreign exchange(17) New accounting pronouncements (Accounting standards
issued not but yet effective)

forward contract are recognized.

“Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ

denominated in a foreign currency, the future transaction will be recorded using

Also, if interest rate swap contracts are used as a hedge and meet certain hedg-

Guidance No. 26 on March 28, 2016)

ing criteria (regarding interest rate swap contracts), the net amount to be paid or
received under the interest rate swap contracts is added to or deducted from the(1) Outline

interest on the assets or liabilities relative to which the swap contract was executed

The implementation guideline for the recoverability of deferred tax assets, reviews

as a hedge.

and reflects the following treatments basically following the framework of Audit(15) Amounts per share of common stockCommittee Report No. 66 “Audit Treatment of Judgments with Regard to Recoverability of Deferred Tax Assets” in which companies are classified into five categories and

The computation of earnings per share is based on the weighted-average number of

the amount of deferred tax assets are estimated according to such categories.

shares of common stock outstanding during each year.

(i)	Treatment of companies which do not meet any of the requirements to be classi-

Diluted earnings per share is computed based on the amount of profit attribut-

fied as Category 1 to 5

able to owners of parent on common stock and the weighted-average number(ii)	Requirements for Category 2 or Category 3of shares of common stock outstanding during each year after giving effect to the(iii)	Treatment of future deductible temporary differences of which scheduling is

dilutive potential of shares of common stock to be issued upon the exercise ofstock options.
Diluted earnings per share is not presented as there are no potential shares.
Cash dividends per share represent actual amounts applicable to the respective year.

(16) Business combinations and related matters

impracticable for companies that fall under Category 2(iv)	Treatment of a period in which taxable income before adjusting future temporary
differences can be rationally estimated for companies that fall under Category 3(v)	Treatment of a case in which companies which meet the requirement to be classified as Category 4 fall under Category 2 or 3

Effective from the year ended March 31, 2016, the Group adopted “Accounting(2) Scheduled date of adoption

Standard for Business Combinations” (ASBJ Statement No. 21 on September 13,

The implementation guidance is scheduled to be adopted from the beginning of the2013), “Accounting Standard for Consolidated Financial Statements” (ASBJ State-year ending March 31, 2017.

ment No. 22 on September 13, 2013) and “Accounting Standard for Business
Divestitures” (ASBJ Statement No. 7 on September 13, 2013), and then records the(3) Impact of the adoption

amount of difference of the changes in equity in subsidiaries which the Company

The impact of adopting the implementation guidance is under evaluation at the time

keeps its control as capital surplus, and expenses acquisition-related cost in the fiscal

of preparation of the consolidated financial statements.

year which such cost is incurred. For business combinations conducted after

Sumitomo Realty & Development Co., Ltd.

39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Cash and cash equivalents
Cash and cash equivalents at March 31, 2016 and 2015 consisted of the following:Thousands of
U.S. dollars

Millions of yen

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

2016

2015

2016

¥187,234(1,245)¥185,989¥151,367(1,102)¥150,265$1,662,529(11,055)$1,651,474

4. Inventories
Inventories at March 31, 2016 and 2015 are as follows:

Thousands of
U.S. dollars

Millions of yen

2016
Real estate for sale
Real estate for sale in process
Costs on uncompleted construction contracts
Other
Total

¥311,306
535,399
7,277
1,834¥855,816

2015¥189,771
604,455
5,708
2,016¥801,950

2016$2,764,216
4,754,031
64,616
16,285$7,599,148

The Company transferred amounts between inventories and property and equipment. Such transfers at March 31, 2016 and 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen

2016
Inventories:
Transferred to property and equipment
Transferred from property and equipment
Net increase (decrease)2015¥(19,737)
8,873¥(10,864)

¥   —
4,524
¥4,5242016$    —
40,170$40,170

5. Pledged assets
Assets pledged as collateral at March 31, 2016 and 2015 are as follows:

Thousands of
U.S. dollars

Millions of yen

2016
Cash, time and notice deposits
Buildings and structures
Land
Construction in progress
Machinery and equipment
Total¥  2,081
114,451
390,48637
282¥507,3372015¥  1,833
149,004
446,11317654¥597,621

Secured liabilities at March 31, 2016 and 2015 are as follows:

Thousands of
U.S. dollars

Millions of yen

2016Long-term non-recourse debt due within one year
Long-term non-recourse debt due after one year
Total

¥121,964
296,663¥418,627

2015¥ 69,191
374,618¥443,809

Specified assets for non-recourse debts at March 31, 2016 and 2015 are as follows:2016¥ 12,787
114,451
390,48637
282¥518,043(Note) “Specified assets for non-recourse debts” includes a portion of the amount of “Assets pledged as collateral” for the years ended March 31, 2016 and 2015.

40

Annual Report 2016 ｜ Financial Section

2016$1,082,969
2,634,195$3,717,164

Thousands of
U.S. dollars

Millions of yen

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

2016
$   18,478
1,016,258
3,467,288
329
2,504$4,504,857

2015¥ 16,761
149,004
446,11317
654¥612,549

2016$  113,541
1,016,258
3,467,288
329
2,504$4,599,920

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Financial instruments

Interest rate swap contracts are used to hedge risks arising from fluctuations in

1. Policy for financial instrumentsinterest rates on certain loans, corporate bonds, commercial paper and deposits.

The Company and its consolidated subsidiaries (“the Group”) have the policy to limit

In regard to derivative transactions, the Group utilizes interest rate swaps for

its fund management to short-term deposits with funds through loans from banks andbank loans and deposits, and utilizes foreign exchange forward contracts and crossthe issuance of corporate bonds and commercial paper.

currency swap contracts for foreign currency-denominated transactions. Interest rate

The Group utilizes derivative financial instruments only for the purpose ofswap contracts are exposed to the risks of interest rate changes, and foreign exchange

hedging the foreign exchange risk associated with foreign currency-denominatedforward contracts and cross currency swap contracts are exposed to the risks oftransactions or hedging the interest rate risk associated with the Group’s loans

foreign exchange rate changes. The derivative financial instruments are executed withpayable, and does not utilize derivative financial instruments for any speculative

creditworthy financial institutions, and the Group’s management believes there is

purposes.

insignificant risk of default by counterparties. Derivative transactions are executed by
the Group’s Finance Department in accordance with the decisions of a committee

2. Details of financial instruments, risks, and policies andsystems of risk management

whose chairman is the director of the Finance Department. The Finance Department
prepares reports on derivative transactions that are provided to the director of the

Operating receivables such as notes and accounts receivable—trade are exposed tocustomers’ credit risk, but this risk is generally avoided through the receipt ofFinance Department periodically.

3. Supplemental information on fair values of financial
instruments

deposits.
Investments in securities are business-related equities and are exposed tomarket price fluctuation risk. The Group regularly checks the market value of the

The fair values of financial instruments are based on their market prices, and if the

securities and the financial condition of the issuers, and continuously reviews

market price is not available, other rational valuation techniques are used instead.

whether it continues to hold securities with consideration for its relationships with

The rational valuation techniques incorporate variable factors, and as a result thethe issuers.

values may change due to using different assumptions.

Guarantee and lease deposits are mostly deposits related to leasing properties,
and are exposed to the counterparty credit risk.

The amounts of derivative transactions shown in Note 16 “Derivative transactions”
are not representing the market risks related to derivative transactions.

In addition, the Group accommodates counterparties with loans and consequently

The carrying amounts of financial instruments on the consolidated balanceis exposed to the borrowers’ credit risk. However, the Group constantly checks the

sheets, their fair values and the differences between them as of March 31, 2016 andfinancial condition of principal borrowers and their performance using the funds lent2015 are as follows. (Financial instruments whose fair value is extremely difficult toto those borrowers even after accommodation.

estimate are not included; please see (Note 2).)The majority of due dates of operating debt, such as notes and accounts
payable, are within one year.

For 2016
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*2:
Hedge accounting
Total derivative transactions

Thousands of U.S. dollars

Carrying amount

Fair value

Difference

Carrying amount

Fair value

Difference¥  187,234¥ 187,234¥    —$ 1,662,529$ 1,662,529$     —

19,665

19,665—

174,614

174,614—

296,518

296,518—

2,632,907

2,632,907

—

1,311

1,322

11

11,641

11,739

98

1,210

1,210

—

10,744

10,744—¥  505,938¥  505,949¥    11$ 4,492,435$ 4,492,533$     98¥   54,316¥   54,316¥    —$   482,294$   482,294$     —

78,71878,718—698,970

698,970—

2,661,556

2,713,205

51,64923,633,067

24,091,680

458,613418,627

425,033

6,406

3,717,164

3,774,046

56,882¥3,213,217¥3,271,272¥58,055$28,531,495$29,046,990$515,495¥      (6,161)¥      (6,161)¥    —$   (54,706)$   (54,706)$     —

¥      (6,161)¥      (6,161)¥    —$   (54,706)$   (54,706)$     —

Sumitomo Realty & Development Co., Ltd.

41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For 2015
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)(5) Guarantee and deposits received*1
Total liabilities
Derivative transactions*2:
Hedge accounting
Total derivative transactions

Carrying amount

Fair value

Difference¥  151,367¥  151,367¥    —

27,597

27,597—308,122

308,122

—

1,305

1,308

3

1,065

1,065

—

¥  489,456¥  489,459¥     3¥   66,963¥   66,963¥    —

87,00087,000—2,496,219

2,505,944

9,725

443,809449,740

5,931

66,00066,000—¥3,159,991¥3,175,647¥15,656¥   (2,391)¥   (2,391)¥    —¥   (2,391)¥   (2,391)¥    —*1. The amounts only included in financial liabilities are disclosed.
*2. Derivative transactions are stated at net of assets and liabilities. Figures in parentheses indicate net liabilities.

(Note 1) The calculation methods of fair value for financial instruments

Liabilities:

Assets:(1) Notes and accounts payable—trade and (2) Short-term debt

(1) Cash, time and notice deposits

The fair value of these items approximates their carrying amounts because of their

The fair value of cash, time and notice deposits approximates their carrying amounts

short-term maturities.

because of their short-term maturities.

(3) Long-term debt (including due within one year)(2) Notes and accounts receivable—trade

For floating rate notes, the carrying amount is used as the fair value because the

The fair value of notes and accounts receivable—trade approximates their carrying

market interest rate is reflected in such notes within a short time period and becauseamounts unless the credit standing of debtors has changed significantly since thethe credit standing of the Company is the same after borrowing. The fixed-coupon

loan origination.

debt is calculated by discounting the combined total of principal and interest at an

The allowance for doubtful receivables is estimated based on expected recover-interest rate assumed for similar new borrowings.

able amounts, considering the possibility of individual collections. Therefore the fair

The specific matching criteria of interest rate swaps and cross currency interest

value of doubtful receivables approximates the carrying amount deducted by the esti-

rate swaps are applicable to some long-term debts with floating interest rates (pleasemated allowance for doubtful accounts on the consolidated balance sheets as of thesee Note 16 “Derivative transactions”). The fair value of these items is calculated by

end of the fiscal year.

discounting the combined total of interest and principal, with which the interest rate(3) Investments in securities

swap and cross currency interest rate swap have been accounted for, at an interest rate

The fair value of listed shares is based on the exchange prices at market. For floating

rationally estimated for similar borrowings.

rate notes, the carrying amount is presented as the fair value, as the fair value approxi-

The fair value of corporate bonds issued by the Company (included in (3)mates the carrying amount because the market interest rate is reflected in such notes

Long-term debt (including due within one year)) is based on the market price.

within a short time period. The fair value of the fixed-coupon debt is determined based(4) Long-term non-recourse debt (including due within one year)

on the present value discounted at the interest rate which reflects the period remaining

For floating rate notes, the carrying amount is used as the fair value because theto maturity and the credit risk.

market interest rate is reflected in such notes within a short time period and the value

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 by­correspondent financial institutions.
For notes on securities classified by purpose of holding, please see Note 7“Securities.”

42

Annual Report 2016 ｜ Financial Sectionof its non-exempt properties has not been changed.
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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The specific matching criteria of interest rate swaps are applicable to some(5) Guarantee and deposits received

long-term non-recourse debts with floating interest rates (please see Note 16

The fair value of these items approximates their carrying amounts because the market“Derivative transactions”). The fair value of these items is calculated by discounting

interest rate is reflected in deposits with floating interest rates within a short time

the combined total of interest and principal, with which the interest rate swap has

period and the credit standing of the Company is the same after borrowing.

been accounted for, at an interest rate rationally estimated for similar borrowings
or bonds.

Derivative transactions:
Please see Note 16 “Derivative transactions.”(Note 2) Financial instruments whose fair value is extremely difficult to estimate

Carrying amountThousands of
U.S. dollars

Millions of yen

2016
Investments in subsidiaries and affiliates*1
Unlisted equity securities*1 *2
Preferred equity securities, etc.*1
Investments in limited partnerships, etc.*1
Guarantee and lease deposits (excluding held-to-maturity securities and available-for-sale securities)*3
Guarantee and deposits received*4¥ 35,763

2015¥ 34,596

2016$  317,555

1,428

1,429

12,68021,63822,388

192,133

352

745

3,126

101,460

104,882

900,906

181,498

168,273

1,611,597*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. The Company recognized ¥16 million ($142 thousand) of impairment loss on investments in securities for the year ended March 31, 2016.
*3.	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 andthe assessment of their fair value is deemed extremely difficult.
*4.	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 is deemed extremely difficult.

(Note 3) Redemption schedule of pecuniary claims and securities with maturities

For 2016
Millions of yen

Cash, 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 year or less

1 to 5 years

5 to 10 years

Over 10 years¥187,234

¥   —

¥ —

¥—

19,484

181

—

—

—

1,315

—

—

—

613

526

—

¥206,718¥2,109¥526¥—

1 year or less

1 to 5 years

5 to 10 years

Over 10 years¥151,367

¥   —

¥ —

¥—

27,596

1

—

—

195

1,115

—

—

—

408

605

—

¥179,158¥1,524¥605¥—

1 year or less

1 to 5 years

5 to 10 years

Over 10 years$1,662,529$    —$     —$—

173,007

1,607

—

—

—

11,676

—

—

—

5,444

4,671

—

$1,835,536$18,727$4,671$—For 2015
Millions of yen

Cash, 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

For 2016
Thousands of U.S. dollars

Cash, 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

Sumitomo Realty & Development Co., Ltd.

43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Note 4) Repayment schedule of corporate bonds, long-term debt, long-term non-recourse debt and other interest-bearing debt

For 2016
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

2017

2018

2019

2020

2021

2022 and thereafter¥ 78,718¥     —

¥     —

¥     —

¥     —

¥      —

316,737

289,622275,752

169,619

131,281

1,478,545

121,964

20,73447,00999,05466,80963,057¥517,419¥310,356¥322,761¥268,673¥198,090¥1,541,602

2016

2017

2018

2019

2020

2021 and thereafter¥ 87,000¥     —

¥     —

¥     —

¥     —

¥      —

380,863316,737

289,622275,752

169,619

1,063,626

69,191

120,992

19,762

46,03798,082

89,745—40,000———26,000¥537,054¥477,729¥309,384¥321,789¥267,701¥1,179,371

2017

2018

2019

2020

2021

2022 and thereafter$  698,970$      —

$      —

$      —

$      —

$       —2,812,440

2,571,675

2,448,517

1,506,118

1,165,699

13,128,618

1,082,969

184,106

417,413879,542593,225559,909$4,594,379$2,755,781$2,865,930$2,385,660$1,758,924$13,688,527

For 2015
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)
Guarantee and deposits received
Total

For 2016
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

44

Annual Report 2016 ｜ Financial SectionNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Securities
For 2016
A. The following tables summarize the acquisition costs, carrying amounts and fair values of securities with available fair values as of March 31, 2016:(a) Held-to-maturity 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

Millions of yen

Fair value

Difference

Carrying amount

Fair value

Difference¥1,311¥1,322¥11$11,641$11,739

$98

—

—

—

—

—

—

¥1,311¥1,322¥11$11,641$11,739$98

Carrying amount

Acquisition cost

Difference

Carrying amount

Acquisition cost

Difference¥236,945¥122,206¥114,739$2,103,933$1,085,118$1,018,815

1,210

1,140

70

10,744

10,123

621

582

502

80

5,168

4,457

711

238,737

123,848

114,889

2,119,845

1,099,698

1,020,147

58,373

68,880(10,507)518,318

611,614(93,296)

—

—

—

—

—

—

618

755

(137)

5,488

6,704

(1,216)(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

Thousands of U.S. dollars

Carrying amountMillions of yen

Thousands of U.S. dollars

58,991

69,635(10,644)523,806

618,318(94,512)¥297,728¥193,483¥104,245$2,643,651$1,718,016$  925,635* 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 ¥466 million ($4,138 thousand) of impairment loss on investments in securities (¥449 million ($3,987 thousand) on equity securities in available-for-sale securities).

B. Total sales of available-for-sale securities sold in the year ended March 31, 2016 amounted to ¥1,371 million ($12,174 thousand) and the related gains and losses amounted
to ¥428 million ($3,800 thousand) and ¥76 million ($675 thousand), respectively.

Sumitomo Realty & Development Co., Ltd.

45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For 2015
A. The following tables summarize the acquisition costs, carrying amounts and fair values of securities with available fair values as of March 31, 2015:(a) Held-to-maturity securities:

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

¥1,305Difference¥1,308

¥3

—

—

—

¥1,305¥1,308¥3

Carrying amount

Acquisition cost

¥287,487¥154,178¥133,309

1,065

1,013

52

124

76

48

288,676

155,267

133,409

19,36021,297(1,937)

—

—

—

1,151

1,305

(154)

(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

Millions of yen

Difference

20,511

22,602(2,091)¥309,187¥177,869¥131,318* 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 ¥30 million of impairment loss on investments in securities (¥30 million on equity securities in available-for-sale securities).

B. The Company lent the equity securities temporarily to financial institutions under securities lending agreements. Lent securities, included in investments in securities andother, were ¥81,108 million as of March 31, 2015.

46

Annual Report 2016 ｜ Financial SectionNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Short-term debt and long-term debt
Short-term debt at March 31, 2016 and 2015 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2016
Loans, principally from banks
Commercial paper
Total

Average interest
rate (%)

2015

Average interest
rate (%)¥78,7180.32¥87,000

0.39

—

—

—

—

¥78,718

2016$698,970—¥87,000$698,970

The interest rates represent weighted-average rates in effect at March 31, 2016 and 2015, regardless of borrowing currencies, though the range of the interest rate varies byborrowing currency.
Long-term debt at March 31, 2016 and 2015 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2.50% domestic straight bonds, due 2019
0.96% domestic straight bonds, due 2015
0.94% domestic straight bonds, due 2015
0.80% domestic straight bonds, due 2015
0.74% domestic straight bonds, due 2016
0.68% domestic straight bonds, due 2016
0.75% domestic straight bonds, due 20170.55% domestic straight bonds, due 2017
0.50% domestic straight bonds, due 2017
0.50% domestic straight bonds, due 2017
0.486% domestic straight bonds, due 20170.444% domestic straight bonds, due 2017
0.388% domestic straight bonds, due 2018
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
Loans, principally from banks and insurance companies, with interest at weighted-average rates of 0.34%
in 2016 and 0.49% in 2015:
SecuredUnsecured*
Subtotal
Amount due within one year
Total

2016

2015

2016

¥   10,000¥   10,000$    88,794—

30,000——10,000——20,000—10,00010,00088,79410,00010,00088,79410,00010,00088,79410,00010,00088,79410,00010,00088,79410,00010,00088,79410,00010,00088,79410,00010,00088,79420,00020,000177,588

10,00010,00088,79410,00010,00088,79420,00020,000177,588

10,00010,00088,79410,00010,00088,79420,00020,000177,588

10,00010,00088,79410,00010,00088,79410,00010,00088,79410,00010,00088,79420,00020,000177,588

20,00020,000177,588

20,00020,000177,588

20,00020,000177,588

20,00020,000177,588

20,00020,000177,588

10,00010,00088,79410,00010,00088,79410,00010,00088,79420,000—177,588

20,000—177,588———

2,241,556

2,056,219

19,903,719

2,661,556

2,496,219

23,633,067(316,737)(380,863)(2,812,440)¥2,344,819¥2,115,356$20,820,627* Unsecured long-term debt as of March 31, 2015 includes a subordinated loan of ¥60,000 million.

Sumitomo Realty & Development Co., Ltd.

47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Non-recourse debt at March 31, 2016 and 2015 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2016Non-recourse bonds, with interest at weighted-average rates of 0.60% in 2016 and 0.82% in 2015:
Due within one year
Due after one year
SubtotalNon-recourse loans, with interest at weighted-average rates of 0.51% in 2016 and 0.72% in 2015:
Due within one year
Due after one year
Subtotal
Total

2015

2016

¥ 16,460¥  8,264$  146,155

24,60036,060218,434

41,06044,324

364,589

105,504

60,927

936,814272,063338,558

2,415,761

377,567

399,485

3,352,575¥418,627¥443,809$3,717,164¥418,627¥443,809$3,717,164

—

—

—

¥418,627¥443,809$3,717,164

Year ending March 31

Millions of yen

Thousands of
U.S. dollars

2017
2018
2019
2020
2021
2022 and thereafter
Total¥  316,737$ 2,812,440

289,622

2,571,675

275,752

2,448,517

169,619

1,506,118

SecuredUnsecuredTotal
The aggregate annual maturities of long-term debt at March 31, 2016 are as follows:

131,281

1,165,699

1,478,545

13,128,618¥2,661,556$23,633,067

Year ending March 31

Millions of yen

Thousands of
U.S. dollars

2017
2018
2019
2020
2021
2022 and thereafter
Total¥121,964$1,082,969

20,734

184,106

47,009417,413

99,054

879,542

66,809593,225

The aggregate annual maturities of non-recourse debt at March 31, 2016 are as follows:

63,057559,909¥418,627$3,717,164

It is customary in Japan that security must be given if requested by lending banks under certain circumstances, and generally banks have the right to offset 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.

48

Annual Report 2016 ｜ Financial SectionNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 forthe cases using the simplified method.

For 2016 and 2015
1. Defined benefit plan
(1) Adjustment table of retirement benefit obligations between the beginning and the end of the fiscal year

Thousands of
U.S. dollars

Millions of yen

2016
Retirement benefit obligations at beginning of year
Cumulative effects of changes in accounting policies
Restated balance
Service costs
Interest costs
Actuarial differences
Retirement benefits paid
Decrease from the change in the scope of consolidation
Retirement benefit obligations at end of year

¥10,0942015$89,629—637—¥10,094¥ 9,734$89,629

635

671

5,638

88

84

781

452

14

4,013

(417)

(409)

(3,702)

(1)

—

(8)

¥10,851¥10,094$96,351(2) Adjustment table of plan assets between the beginning and the end of the fiscal year

Thousands of
U.S. dollars

Millions of yen

2016
Plan assets at beginning of year
Expected return on plan assets
Actuarial differences
Employer contributions
Retirement benefits paid
Plan assets at end of year2016

¥ 9,097

2015

2016

¥4,005¥4,660$41,378

93

80

826

(228)

369

(2,025)

402

403

3,570

(157)

(197)

(1,394)¥4,770¥4,660$42,355(3) Adjustment table of retirement benefit obligations and plan assets at the end of the fiscal year and net defined benefit liability on the consolidated balance sheets
Thousands of
U.S. dollars

Millions of yen

2016
Obligations under retirement benefit plans (funded)
Fair value of plan assets
Obligations under retirement benefit plans (unfunded)
Net amount of liabilities on the consolidated balance sheets
Net defined benefit liability
Net amount of liabilities on the consolidated balance sheets2015¥ 5,840$ 52,655(4,770)(4,660)(42,355)

1,160

1,180

10,300

4,921

4,254

43,696¥ 6,081¥ 5,434$ 53,996¥ 6,081¥ 5,434$ 53,996¥ 6,081¥ 5,434$ 53,996(4) Components of retirement benefit expenses

Thousands of
U.S. dollars

Millions of yen

2016
Service costs
Interest costs
Expected return on plan assets
Actuarial differences
Retirement benefit expenses

2016¥ 5,930

¥ 635

2015
¥ 671

2016
$ 5,638

88

84

781

(93)

(80)

(826)

(355)

(271)

(3,152)

¥ 275

¥ 404

$ 2,441

Sumitomo Realty & Development Co., Ltd.

49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(5) Remeasurements of defined benefit plans (before deducting tax effect)

Thousands of
U.S. dollars

Millions of yen

2016
Actuarial differences
Total

2015
¥(84)

$9,190¥1,035¥(84)$9,190(6) Components of remeasurements of defined benefit plans (before deducting tax effect)

Thousands of
U.S. dollars

Millions of yen

2016
Unrecognized actuarial differences
Total

2015
¥(355)$6,038¥680¥(355)$6,038

2016

2015

22.4%

18.6%

35.4

41.5

40.0

37.8

2.2

2.1

100.0%

100.0%(8) Actuarial assumptions
Discount rate
Rate of expected return on plan assets

2016

¥680

(7) Major breakdown of plan assets
Debt securities
Equity securities
General life insurance accounts
Other
Total

2016

¥1,035

2016

2015

0.4%

0.9%

2.0

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 ¥352 million ($3,126 thousand) and ¥352
million for the years ended March 31, 2016 and 2015, respectively.

50

Annual Report 2016 ｜ Financial SectionNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2016, 2015 and 2014, respectively.

For 2016
Use

Location

Land for development

Tokyo, etc.

Number of properties

8

For 2015
Use

Location

Number of properties

Land for development
Assets leased to others

Ibaraki
Tokyo

1

Use

Location

Number of properties

Land for development
Assets leased to others

Tokyo, etc.
Tokyo

1

For 2014

The Company and its consolidated domestic subsidiaries recognized losses on the42

the determination of reviewing their business plans for the year ended March 31,

impairment of certain properties, which are generally assessed individually for impair-

2016, and ¥3,811 million and ¥15,068 million as a result of transferring from prop-

ment. The Company’s houses are treated as common assets.

erty and equipment to inventories for the years ended March 31, 2015 and 2014,

The carrying values of the land holdings summarized above have been reduced
to their recoverable amounts by ¥10,806 million ($95,951 thousand) as a result ofrespectively. These write-downs were recognized as impairment losses in otherexpenses.

Details of loss on impairment of fixed assets are as follows:

Thousands of
U.S. dollars

Millions of yen

2016
Land

¥10,8062015¥3,811

2014¥15,0682016$95,951

The recoverable amounts of these assets were determined as the net disposal value. The net disposal value for land for leased buildings and land for development are basedon the amount equivalent to the publicly notified land price, and that for the others is based mainly on the sales comparison approach.

11. Asset retirement obligations

In addition, under the partial lease contracts, the Group has obligations for

Even though removing asbestos is required for some buildings the Company and its

restoring office spaces when they move out. For the asset retirement obligations asso-

consolidated subsidiaries (“the Group”) operate at the time of demolishing, it is diffi-

ciated with such a case, the duration of use of the assets is not clear enough and thesecult to estimate the fair value of obligations associated with such assets reasonably

assets do not have any relocation plans. Therefore, the Group is unable to estimate

since the timing and/or method of settlement for the retirement obligations are

the asset retirement obligations since it is difficult to estimate the timing of fulfill-

not clear enough. Therefore, for the years ended March 31, 2016 and 2015, asset

ment of the obligations. Consequently, for the years ended March 31, 2016 andretirement obligations related to such a case are not recorded (except for the asset

2015, asset retirement obligations related to such a case are not recorded (except for

retirement obligations recorded on the financial statements).

the asset retirement obligations recorded on the financial statements).

Sumitomo Realty & Development Co., Ltd.

51

NOTES TO CONSOLIDATED 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 33.06% for the year
ended March 31, 2016, 35.64% for the year ended March 31, 2015 and 38.01% for the year ended March 31, 2014.
Details of deferred tax assets and liabilities at March 31, 2016 and 2015 are as follows:

Thousands of
U.S. dollars

Millions of yen

2016
Deferred tax assets:
Depreciation and amortization of consolidated adjustment
Loss on impairment of fixed assets
Loss on devaluation of real estate for sale
Allowance for doubtful accounts
Accrued enterprise tax and business office tax
Net operating loss carryforwards
Net deferred losses on hedges
Net defined benefit liability
Accrued bonuses
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
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

Following the approval of “Act for Partial Revision of the Income Tax Act” (Act

2015

2016

¥  9,306¥ 10,359$  82,632

9,174

6,225

81,460

6,015

5,087

53,410

2,503

2,222

22,225

2,466

2,375

21,897

2,170

2,264

19,268

1,895

773

16,826

1,876

2,095

16,658

1,449

1,373

12,866

1,413

1,492

12,547

980

1,013

8,702

853

862

7,574

6,846

4,666

60,78846,94640,806

416,853(4,049)(4,262)(35,953)¥ 42,897¥ 36,544$ 380,900(31,925)(42,481)(283,475)(3,731)(3,941)(33,129)

(626)

(773)

(5,559)(36,282)(47,195)(322,163)¥  6,615¥(10,651)$  58,737

and to 30.62% for temporary differences expected to be eliminated in the fiscal years

No. 15 of 2016) and “Act for Partial Revision of the Local Tax Act” (Act No. 13 of

beginning on or after April 1, 2018. As a result, net deferred tax assets decreased by

2016) by the National Diet on March 29, 2016, the corporate tax rate will be¥61 million ($542 thousand) and deferred income taxes increased by ¥1,785 million

reduced from fiscal years beginning on or after April 1, 2016. Accordingly, the effec-($15,850 thousand), respectively.

tive statutory tax rate used to measure deferred tax assets and liabilities is changed
from 32.34% to 30.86% for temporary differences expected to be eliminated in thefiscal year beginning on April 1, 2016 and the fiscal year beginning on April 1, 2017,52

Annual Report 2016 ｜ Financial Section

The differences between the statutory tax rate and the effective tax rate for theyears ended March 31, 2016 and 2015 were insignificant and not presented.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. Deposits received and accounts payable with interest rate
Guarantee and deposits received at March 31, 2016 and 2015 are as follows:

Thousands of
U.S. dollars

Millions of yen

2016
Short-term deposits and long-term deposits due within one year:
Non-interest-bearing
Interest-bearing

Average interest
rate (%)

2015¥ 71,619—¥ 61,172

—

—

—

—

—

Total

$ 635,935—
635,935

181,498—

168,274—

1,611,596

—

—

—

—

—
606,482

68,302—

94,119———66,0000.28—

249,800

328,393

2,218,078¥321,419¥389,565$2,854,013

Accounts payable with interest rate at March 31, 2016 and 2015 are as follows:

Thousands of
U.S. dollars

Millions of yen

2016
Due within one year
Due after one year
Total

2016

61,172

71,619

Guarantee and lease deposits from tenants:
Non-interest-bearing
Interest-bearing
Long-term deposits:
Non-interest-bearing
Interest-bearing

Average interest
rate (%)

Average interest
rate (%)¥1,544

0.98

3,087

0.98

¥4,631

2015

Average interest
rate (%)¥1,544

0.98

4,630

0.98

¥6,174

2016$13,710
27,411$41,121(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.

The aggregate annual maturities of accounts payable at March 31, 2016 are as follows:Year ending March 31

2017
2018
2019
2020
2021
2022 and thereafter
Total

Millions of yen

Thousands of
U.S. dollars¥1,544$13,710

1,544

13,7101,543

13,701

—

—

—

—

—

—

¥4,631$41,121

Sumitomo Realty & Development Co., Ltd.

53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. Net assets

Under the Law, legal earnings reserve and additional paid-in capital could

Under the Japanese Corporate Law (“the Law”) and its regulations, the entire

be used to eliminate or reduce a deficit and capitalized by a resolution of theamount paid for new shares is required to be designated as common stock. However,shareholders’ meeting.

a company may, by a resolution of the Board of Directors, designate an amount not

Additional paid-in capital and legal earnings reserve may not be distributed as

exceeding one-half of the price of the new shares as additional paid-in capital, which

dividends. Under the Law, all additional paid-in capital and all legal earnings reserve

is included in capital surplus.

may be transferred to other capital surplus and retained earnings, respectively, which

Under the Law, in cases where a dividend distribution of surplus is made,the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25%

are potentially available for dividends.
The maximum amount that the Company can distribute as dividends isof common stock over the total of additional paid-in capital and legal earnings

calculated based on the non-consolidated financial statements of the Company

reserve must be set aside as additional paid-in capital or legal earnings reserve. Legalin accordance with the Law and its regulations.

earnings reserve is included in retained earnings on the accompanying consolidatedbalance sheets.

15. Information for certain lease transactions
Future lease payments and receipts under such non-cancelable operating leases at March 31, 2016, 2015 and 2014 are as follows:
Thousands of
U.S. dollars

Millions of yen

2016
Operating leases:
Future lease payments:
		 Due within one year
		 Due after one year
Total
Future lease receipts:
		 Due within one year
		 Due after one year
Total

2015

2014

2016

¥  1,116¥    995¥    942

16,962

17,44917,736150,613¥ 18,078¥ 18,444¥ 18,678$  160,522¥ 73,456¥ 58,934¥ 52,024$  652,246

111,546

90,226

91,614990,464¥185,002¥149,160¥143,638$1,642,710

Contract amounts

Contract amounts due
after one year

Fair value¥15,249¥—¥(98)$    9,909

16. Derivative transactions
Hedge accounting was applied to all derivative transactions for the years ended March 31, 2016 and 2015.
The summary of these transactions is as follows:

For 2016(1) Foreign currency-related derivatives
Millions of yen

Hedging accounting

Types of derivative transactions

Hedged items

Deferred hedge
accounting

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

Foreign currency-denominated transactions

Thousands of U.S. dollars

Hedging accounting

Types of derivative transactions

Hedged items

Deferred hedge
accounting

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

Foreign currency-denominated transactions(Note) Fair value is determined based on the quoted price obtained from relevant financial institutions.

54

Annual Report 2016 ｜ Financial Section

Contract amounts

Contract amounts due
after one year

Fair value$135,402$—$(870)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(2) Interest-related derivatives
Millions of yen

Hedging accounting

Types of derivative transactionsDeferred hedge
accounting

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

Exceptional accounting
for interest rate swaps
Exceptional accounting
for interest rate andcurrency swaps

Hedged items

Bank loans
Bank loans and bonds

Contract amounts

Contract amounts due
after one year

Fair value¥  616,000¥  406,000¥(6,063)

1,507,665

1,338,501

—(*)

4,000

3,000

—(*)

Foreign currency-denominated loans

Thousands of U.S. dollars

Hedging accounting

Types of derivative transactionsDeferred hedge
accounting

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

Exceptional accounting
for interest rate swaps
Exceptional accounting
for interest rate andcurrency swaps

Hedged items

Bank loans
Bank loans and bonds

Contract amounts

Contract amounts due
after one year

Fair value$ 5,469,721$ 3,605,044$(53,836)

13,387,187

11,885,109—(*)

35,51826,638—(*)

Foreign currency-denominated loans(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 the differential 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, the fair value of such interest rate swap contracts is
included in the fair value of the long-term debt.

For 2015(1) Foreign currency-related derivatives
Millions of yen

Hedging accounting

Types of derivative transactions

Hedged items

Deferred hedge
accounting

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

Foreign currency-denominated transactions

Contract amounts

Contract amounts due
after one year

Fair value¥14,996¥—¥(12)

Contract amounts

Contract amounts due
after one year

Fair value¥  472,000¥  472,000¥(2,379)

1,280,626

1,136,956

—(*)

4,000

4,000

—(*)

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

(2) Interest-related derivatives
Millions of yen

Hedging accounting

Types of derivative transactionsDeferred hedge
accounting

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

Exceptional accounting
for interest rate swaps
Exceptional accounting
for interest rate andcurrency swaps

Hedged items

Bank loans
Bank loans and bonds
Foreign currency-denominated loans(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 the differential 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, the fair value of such interest rate swap contracts is
included in the fair value of the long-term debt.

Sumitomo Realty & Development Co., Ltd.

55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. Segment information
The Company and its consolidated subsidiaries mainly operate their business in five segments: (1) Leasing business consists of leasing of office buildings, residences and otherproperties, and management of these 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) Brokerage business; and (5) Other business including fitness business and restaurant business.
Information by business segment for the years ended March 31, 2016, 2015 and 2014 is summarized as follows:
Millions of yen

Reportable segments
Leasingbusiness

Salesbusiness

Construction
business

Brokeragebusiness

Other business

Total

Adjustments

Consolidated financial
statements amounts¥  309,847¥274,515¥197,548¥60,555¥12,499¥  854,964¥     —¥  854,964

3,493

246

1,567

941

997

7,244

(7,244)—313,340

274,761

199,115

61,496

13,496862,208(7,244)854,964

For 2016
Revenue from operations:Customers
Intersegment
Total
Segment profit
Segment assets
Other:
Depreciation and amortization
Loss on impairment of fixed assets	Increase in property andequipment, and intangible assets¥  111,327¥ 44,188¥ 15,300¥17,722¥ 1,790¥  190,327¥ (16,086)¥  174,241¥3,194,740¥888,578¥ 18,167¥19,135¥17,783¥4,138,403¥537,512¥4,675,915¥   32,098¥    233¥  1,038¥   365¥   169¥   33,903¥    671¥   34,574

6,414

4,392

—

—

—

10,806—

10,806

122,809

843

1,478

763

244

126,137305

126,442Millions of yen

Reportable segments
Leasingbusiness

Salesbusiness

Construction
business

Brokeragebusiness

Other business

Total

Adjustments

Consolidated financial
statements amounts¥  285,942¥263,963¥187,260¥57,724¥11,946¥  806,835¥     —¥  806,835

3,175

244

1,735

762

2,420

8,336

(8,336)—289,117264,207

188,995

58,486

14,366815,171(8,336)

806,835¥  104,442¥ 43,781¥ 12,963¥16,462¥ 1,882¥  179,530¥ (13,635)¥  165,895¥3,123,993¥844,623¥ 16,327¥18,404¥19,674¥4,023,021¥500,783¥4,523,804¥   31,047¥    184¥    958¥     263¥   149¥   32,601¥    918¥   33,519

1,188

2,623

—

—

—

3,811

—

3,811

140,475

3,924

1,572

640

1,781

148,392

4,632

153,024

For 2015
Revenue from operations:Customers
Intersegment
Total
Segment profit
Segment assets
Other:
Depreciation and amortization
Loss on impairment of fixed assets	Increase in property andequipment, and intangible assets

Millions of yen

Reportable segments
Leasingbusiness

Salesbusiness

Construction
business

Brokeragebusiness

Other business

Total

Adjustments

Consolidated financial
statements amounts¥  280,105¥233,869¥198,324¥56,591¥11,384¥  780,273¥     —¥  780,273

3,625

224

2,866

620

4,706

12,041(12,041)—

283,730

234,093

201,190

57,211

16,090792,314(12,041)

780,273¥   97,952¥ 39,209¥ 18,709¥17,962¥ 1,910¥  175,742¥   (15,271)¥  160,471¥3,010,807¥749,259¥ 17,924¥13,813¥17,567¥3,809,370¥411,059¥4,220,429¥   32,975¥    230¥    744¥   185¥   143¥   34,277¥  1,034¥   35,311

26

15,042———

15,068—15,068

173,648

2,474

1,891

286

294

178,593327

178,920

For 2014
Revenue from operations:Customers
Intersegment
Total
Segment profit
Segment assets
Other:
Depreciation and amortization
Loss on impairment of fixed assets	Increase in property andequipment, and intangible assets

56

Annual Report 2016 ｜ Financial SectionNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Thousands of U.S. dollars

Reportable segments
Leasingbusiness

Salesbusiness

Construction
business

Brokeragebusiness

Other business

Total

Adjustments

Consolidated financial
statements amounts$ 2,751,261$2,437,533$1,754,111$537,693$110,984$ 7,591,582$        —$ 7,591,582

31,016

2,184

13,914

8,356

8,853

64,323(64,323)—

2,782,277

2,439,717

1,768,025

546,049

119,837

7,655,905(64,323)

7,591,582$   988,519$  392,364$  135,855$157,361$ 15,894$ 1,689,993$ (142,834)$ 1,547,159$28,367,430$7,890,055$  161,312$169,908$157,903$36,746,608$4,772,794$41,519,402$   285,012$    2,069$    9,217$  3,241$  1,500$   301,039$    5,958$   306,997

56,95338,998———95,951—

95,951

1,090,472

7,485

13,124

6,775

2,167

1,120,023

2,708

1,122,731

For 2016
Revenue from operations:Customers
Intersegment
Total
Segment profit
Segment assets
Other:
Depreciation and amortization
Loss on impairment of fixed assets	Increase in property andequipment, and intangible assets

Intercompany eliminations between the Company and its consolidated subsid-

Intercompany eliminations between the Company and its consolidated subsid-

iaries and undistributed corporate expenses to each segment are included iniaries and undistributed corporate assets to each segment are included in adjustments

adjustments of segment profit, and the Company classified expenses of the generalof segment assets, and the Company classified cash, time and notice deposits, invest-administrative division in the Company and certain of its consolidated subsidiaries

ments in securities and assets of the general administrative division in the Company

to corporate expenses for the years ended March 31, 2016, 2015 and 2014.

and certain of its consolidated subsidiaries to corporate assets for the years ended
March 31, 2016, 2015 and 2014.

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 componentof other comprehensive income (loss) for the years ended March 31, 2016, 2015 and 2014 are as follows:
Thousands of
U.S. dollars

Millions of yen

2016
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:
Decrease during the fiscal year
Reclassification adjustments
		 Amounts before tax effects
		Tax effects
Total
Foreign currency translation adjustments:
Increase 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)

2015

2014

2016

¥(27,205)¥ 72,459¥28,994130

145(1,335)

1,155(27,075)

72,60427,659(240,410)$(241,565)

10,561(21,547)(9,863)

93,775(16,514)51,057

17,796(146,635)(5,098)(693)(1,283)(45,267)

1,327

832

880

11,783(3,771)

139

(403)

(33,484)

1,122

(129)

141

9,962

(2,649)10(262)(23,522)

59

3,498

4,220

524

(680)

355

—

(6,038)

(355)

(272)

—

(3,152)(1,035)83—(9,190)

325

(18)

—

2,886

(710)

65

—

(6,304)¥(19,814)¥ 54,630¥21,754$(175,937)

Sumitomo Realty & Development Co., Ltd.

57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19. Investment and rental properties
The Company and certain of its consolidated subsidiaries own some rental properties such as office buildings and residences in Tokyo and other areas. Certain domestic officebuildings are not recognized as rental properties but as a portion used as investment and rental properties since the Company or certain of its consolidated subsidiaries use someof 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, 2016 and 2015 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

2016

2015

2016

¥2,767,130¥2,504,743$24,570,503(70,934)

262,387(629,853)

2,696,196

2,767,130

23,940,650

4,147,483

3,921,410

36,827,233¥  147,140¥  289,596$ 1,306,517

130,636(142,456)

1,159,972

277,776

147,140

2,466,489  524,052  283,006

4,653,277(Notes)* Carrying amounts on the consolidated balance sheets are the amounts determined by deducting accumulated depreciation from the acquisition costs.
* Fair values as of March 31, 2016 and 2015 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, 2016 and 2015 are as follows:

Thousands of
U.S. dollars

Millions of yen

2016
Increase:
Acquired real estateTransferred from real estate for sale in process
Decrease:
Depreciation and amortization
Transferred to real estate for saleTransferred to real estate for sale in process
Loss on impairment of fixed assets

2015¥122,220¥144,858$1,085,242—

19,737—¥ (30,360)¥ (29,458)$ (269,579)(4,425)—(39,291)—(6,383)—  (9,275)  (3,811)  (82,357)

Income and expenses for investment and rental properties for the years ended March 31, 2016 and 2015 are as follows:

Thousands of
U.S. dollars

Millions of yen

2016

Investment and rental properties

A portion used as investment and rental properties

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

2016

2015

2016

¥185,566¥178,920$1,647,718

95,164

93,587845,001

90,40285,333

802,717(10,117)(5,659)(89,833)¥ 30,892¥ 17,665$  274,303

17,454

10,092

154,981

13,438

7,573

119,322

(12)

1

(107)

(Notes)* As a portion used as investment and rental properties includes a portion used by the Company or certain of its 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 the one for a portion used as investment and rental properties is mostly the loss on disposal of property
and equipment.

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 ¥3,849 million ($34,177
thousand) and ¥2,075 million at March 31, 2016 and 2015, respectively.

21. Subsequent events
On June 29, 2016, the shareholders of the Company approved payments of a year-end cash dividend of ¥11 ($0.10) per share or a total of ¥5,214 million ($46,297 thousand) toshareholders of record at March 31, 2016. Such appropriations are recognized in the period in which they are approved by the shareholders.

58

Annual Report 2016 ｜ Financial Section

INDEPENDENT AUDITOR’S REPORTTo 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 comprisethe consolidated balance sheets as at March 31, 2016 and 2015, and the consolidated statements of income, statements of comprehensive 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, 2016, and a summary of significant accounting policies andother 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 inJapan, 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 with auditing standards
generally accepted in Japan. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain 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 judgement, 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 proceduresthat 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 the appropriateness 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, 2016 and 2015, and their financial performance and cash flows for each of the years in the three-year period ended March 31, 2016, 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, 2016 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 the consolidated
financial statements.

July 28, 2016
Tokyo, Japan

Sumitomo Realty & Development Co., Ltd.

59

CORPORATE DATA / INVESTOR INFORMATION(As of March 31, 2016)

CORPORATE DATAINVESTOR INFORMATIONHead OfficePaid-in Capital

Shinjuku NS Building,¥122,805 million

4-1, Nishi-Shinjuku 2-chome

Breakdown of Shareholders

Shinjuku-ku, Tokyo 163-0820, Japan

Number of Common Stock

Corporate Website

Issued: 476,085,978 shares

http://www.sumitomo-rd.co.jp/english/

Date of Establishment

Authorized: 1,900,000,000 shares

Number of Shareholders
11,681

December 1, 1949

Trust Accounts

Stock Exchange Listing

Number of Employees

Tokyo Stock Exchange

12,116 (Consolidated)

25.20%

Financial Institutions

9.69%

Other Companies

28.75%

Foreign Companies

32.50%

Individuals and Others

3.86%

Major Shareholders

Major Consolidated Subsidiaries
Sumitomo Real Estate Sales Co., Ltd.
Sumitomo Fudosan Tatemono Service Co., Ltd.
Sumitomo Fudosan Syscon Co., Ltd.
Sumitomo Fudosan Villa Fontaine Co., Ltd.
Sumitomo Fudosan Bellesalle Co., Ltd.
Sumitomo Fudosan Esforta Co., Ltd.
Sumitomo Fudosan Finance Co., Ltd.

Name

Number of shares held(Thousands)

Percentage ofshares held

26,626
26,202
11,99010,650
7,527
7,500
7,224
6,740
6,551
6,528

5.59%
5.50%
2.52%
2.24%
1.58%
1.58%
1.52%
1.42%
1.38%
1.37%

The Master Trust Bank of Japan, Ltd. (Trust account)
Japan Trustee Services Bank, Ltd. (Trust account)
Sumitomo Mitsui Banking Corporation
Japan Trustee Services Bank, Ltd. (Trust account 4)
Obayashi Corporation
Shimizu Corporation
The Bank of New York Mellon SA/NV10
Mitsui Sumitomo Insurance Co., Ltd.
State Street Bank-West Pension Fund Clients-Exempt 505233
State Street Bank West Client-Treaty 505234

Stock Price and Trading Volume on Tokyo Stock Exchange
Yen

Yen

1,800

6,000

Stock Price (right scale)

1,500

5,000

TOPIX (left scale)

1,200

4,000

900

3,000

600

2,000

300

1,000

0

7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6

2011

2012

2013

2014

2015

2016

Millions of shares
150

Trading Volume

100

50

0

7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6

2011

60

Annual Report 2016

2012

2013

2014

2015

2016

0

HISTORY

1 949

1949

‌
Izumi
Real Estate Co., Ltd. established as the successor to the holding company of the Sumitomo zaibatsu
following the breakup of the conglomerate.

1957‌‌Izumi Real Estate Co., Ltd. changed its name to Sumitomo Realty & Development Co., Ltd.

–

Global Events

1963‌‌Merged with the holding company of the former Sumitomo zaibatsu during its liquidation.

1964‌Entered condominium sales business with Hama-Ashiya Mansion in Kobe, Hyogo Prefecture.

1970‌Listed on the Tokyo Stock Exchange and Osaka Securities Exchange.

1973‌Established Sumitomo Fudosan Tatemono Service Co., Ltd., a consolidated subsidiary.

1974‌‌Completed construction of 52-story Shinjuku Sumitomo Building in Shinjuku, Tokyo; moved Company head office
there from Tokyo Sumitomo Building in Marunouchi, Tokyo.

1975‌Established Sumitomo Real Estate Sales Co., Ltd., a consolidated subsidiary.

1980

Established Sumitomo Fudosan Syscon Co., Ltd., a consolidated subsidiary.

1982

‌
Completed
construction of 30-story Shinjuku NS Building in Shinjuku, Tokyo; moved Company head office there from
Shinjuku Sumitomo Building.

1995‌Commenced American Comfort custom home construction business.

1 980

–

1981
2000

–

2001
201 6

1964
‌Tokyo Olympic Games

1973
First oil crisis

1978‌Second oil crisis

1985
The Plaza Accord

1987

1996

‌Commenced Shinchiku Sokkurisan remodeling business.

1997‌‌Entered high-quality business hotel market. Opened Villa Fontaine Nihonbashi and hotels at two other locations.

1989

1998

‌‌Sumitomo Real Estate Sales Co., Ltd., a consolidated subsidiary, listed on the Tokyo Stock Exchange.

1999

‌
Commenced
real estate joint investment trust fund. Launched sales of Sumitomo Realty & Development Fund
(SURF) series.
‌‌Implemented the Sumquest bond issue, which was the first public issue of real estate securities in Japan.

Collapse of Berlin Wall‌Nikkei Stock Average
all-time high2000

‌Commenced luxury condominium leasing business. Completed construction of La Tour Shibakoen.

2001‌The number of managed STEP brokerage offices exceeded 200.

2002‌Completed construction of Izumi Garden Tower (Minato Ward, Tokyo).

Black Monday

1999‌Introduction of euro2003

‌Commenced sales of J∙URBAN fixed-price urban-style housing series.

2004‌‌Commenced sales of World City Towers (Minato Ward, Tokyo).

2006‌Established Sumitomo Fudosan Reform Co., Ltd., a consolidated subsidiary.

2008‌‌Established Sumitomo Fudosan Bellesalle Co., Ltd., a consolidated subsidiary.
‌Commenced sales of City Towers Toyosu (Koto Ward, Tokyo).

2010‌Completed construction of Shinjuku Central Park City (Shinjuku Ward, Tokyo).

2011

‌
OpenedGrand Mansion Gallery.
‌Completed construction of Sumitomo Fudosan Shinjuku Grand Tower (Shinjuku Ward, Tokyo).

2012

‌
Completed
construction of Sumitomo Fudosan Shibuya Garden Tower (Shibuya Ward, Tokyo).
‌Launched a Custom-order Condominium service.
‌Commenced sales of J∙RESIDENCE.

2013‌Commenced construction of Roppongi 3-chome Project (Minato Ward, Tokyo).

‌ Great East JapanThe
Earthquake‌European sovereign debt
crisis‌Record-high yen against
the U.S. dollar

2014‌Number of condominium units brought to market over the full year was the highest in Japan for the first time.

2015‌China stock market crash

2015

‌
Completed
construction of Tokyo Nihonbashi Tower (Chuo Ward, Tokyo).
‌Cumulative units contracted topped 100,000 in Shinchiku Sokkurisan remodeling operations.
‌Number of condominium units brought to market over the full year was the highest in Japan for the second
consecutive year.

2016

‌
Completed
construction of Deux Tours Canal & Spa (Chuo Ward, Tokyo).
‌Completed construction of Shinjuku Garden (Shinjuku Ward, Tokyo).

Shinjuku NS Building(Head office)World City Towers

City Towers Toyosu the Twin

2001
‌September 11
terrorist attacks

2008‌Lehman crisis

2011

Izumi Garden Tower

Sumitomo Fudosan
Shinjuku Grand Tower

Sumitomo Realty & Development Co., Ltd.

61

SUMITOMO REALTY & DEVELOPMENT CO., LTD.

ANNUAL REPORT 2016

Shinjuku NS Building, 4-1, Nishi-Shinjuku 2-chome
Shinjuku-ku, Tokyo 163-0820, Japan
http://www.sumitomo-rd.co.jp/english/

Printed in Japan