Annual Report 2012
Year ended March 31, 2012

Moving to

THE NEXT STAGE

Profile

As a company that recently marked seventy years since its founding, Mitsui Fudosan
has maintained a tradition of continuous

Three strategies torealize innovation

innovation that has allowed the Company
to evolve into Japan’s #1 real estate company. With innovation as its cornerstone,
Mitsui Fudosan has consistently read thetrends of the times while developing newmarkets. The Company was a major player
in coastal development businesses andthe construction of large-scale residential
zones on which post-war economic growth
was founded. We built the Kasumigaseki•P rovide solutions for customer
needs created by maturing society
and economy•Provide solutions that meet customer needs on a global basis

Building, famed as the first skyscraper inJapan, and helped create the real estate
securitization market. Recently, we havebeen promoting urban development including Tokyo Midtown and the Nihonbashi
Revitalization Project. Essentially, Mitsui
Fudosan’s DNA is about understanding new
senses of value and the real nature ofissues, needs, and desires, then matching
the creative challenge of providing solutions.

Businessmodel innovation•Integrate tangibles and intangibles•Create new value through collaboration with different industries•Create communities

Contents
2 Innovation Trajectory
4 Introducing the Group’s Premium Assets
6 Financial Highlights
7 An Interview with the President
14 Innovation 201718 Review of Operations
28 Corporate Governance
32 Management Team
34 Financial Section
77 Domestic and Overseas Networks
78 History
79 Investor Information
Note:
Graphs and charts in this Annual Report are all years ended,ending or as of March 31.

1
2
3

Customercentered
management

Full implementation of Groupmanagement•Pursue economies of scale•Offer one-stop services•Network with partners

Accelerating innovation to move to

THE NEXT STAGE

1

Innovation Trajectory

1929

Bringing to the market an officebuilding that epitomizes theessence of craftsmanship

1950s

The Mitsui Main Building, which continues to house
Mitsui Fudosan’s head office, was completed in
1929 using the very latest in construction techniques and methods. The building was designated a
Registered Important Cultural Property in 1998.

and

1960s

From post-war reconstruction tohigh growth
During this period of postwar reconstruction
growth, Mitsui Fudosan played a major roleacross a wide range of areas. The Company’scontributions were particularly strong in thedevelopment business, focusing mainly on thedredging and reclamation of land along coastal
areas in Chiba Prefecture and the construction oflarge-scale residential zones on which post-war
economic demand and growth was founded. The
Company built the landmark Kasumigaseki
Building, which at 36 stories attracted muchattention as Japan’s first skyscraper building.

Mitsui Main Building(Completed in 1929 / 36,000m2)

Innovation remains the cornerstone of

OUR ONGOING EVOLUTION
1980s

Changes in the industrial
structure
Mitsui Fudosan entered such lifestyle-related
fields as large-scale shopping centers, which
encompass entertainment functions, and proprietary hotel management. In addition toactively promoting joint private- and publicsector urban redevelopment beginning withidle factory sites, the Mitsui Fudosan Group as

LaLaport TOKYO-BAY

a whole took steps to respond to the evolving(Opened in 1981 / 307,000m2 / 540 stores)

operating environment. One such step was
reinforced efforts to enter the U.S. market.

1251 Avenue of the Americas
Okawabata River City 21(Completed in 1993)

2(Acquisition in 1986 / 214,000m2)

1970sConcentration of the population in cities
Following in the footsteps of Mitsui Real Estate Sales
Co., Ltd., which is engaged in housing brokerage activities, Mitsui Home Co., Ltd. was established in 1974 asa part of efforts to expand the housing business. Mitsui
Fudosan took a major leap forward as a comprehensive
real estate developer with the construction of Chiba

Kasumigaseki
Building

Garden Town, a new type of high-rise housing estate.

(Completed in 1968 /Renewal in 2001 /153,000m2)

common sporting facilities with

Projects such as Chiba Garden Town, which combine
abundant greenery with the aim ofrevitalizing communities, triggered
the Company’s full-fledged entry
into the detached housing business,

Reclaimed land in
the central districtof the Chiba Portand the establishment of a condominium development business.
Chiba Garden Town
(Completed in 1975)

Every facet of the Mitsui Fudosan Group’s growth and development is grounded in its ability to meet eachand every challenge while creating new value in response to society’s evolving needs. Standing at the forefront of each era, we have continued to fortify our business platform and to nurture a spirit of genuine innovation. Looking ahead, we will fulfill the expectations of society by working to consistently create new value.

1990s

and

2000s

From the collapse of Japan’s economic bubble to urban
redevelopment

Nihonbashi Mitsui Tower(Completed in 2005 / 130,000m2)

After the collapse of Japan’s economic bubble, Mitsui
Fudosan was quick to put in place a new businessmodel in response to the paradigm shift in thedomestic real estate market. The Company actively
participated in the establishment of a Japan realestate investment trust (J-REIT) market on the Tokyo
Stock Exchange. Mitsui Fudosan took an equity interest in Nippon Building Fund Inc., Japan’s first publicly
listed J-REIT. In addition, the Company contributed toenhancing the Tokyo City brand through urban redevelopment projects in Roppongi and Nihonbashi andrevitalizing Japan’s real estate market.

J-REIT Nippon Building Fund Inc.

Tokyo Midtown(Completed in 2007 /569,000m2)

3

Introducing the Group’s Premium Assets

Office Buildings
Mitsui Fudosan operates approximately
200 office buildings that are occupied bymore than 3,000 corporate tenants.
Strong in Tokyo’s central business district, Mitsui Fudosan’s office portfolio also
covers Japan’s other major urban areas.
Shinjuku Mitsui Building

Nihonbashi 1-chome Building(Completed in 1974 / Renewal in2000 / 180,000m2)(Completed in 2004 / 98,000m2)

Retail Facilities
20 Old Bailey(Acquisition in 1989 / 24,000m2)

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

URBAN DOCK LaLaport TOYOSU(Opened in 2006 / 165,000m2 / 190 stores)

Park Court
Akasaka
The Tower

Housing(Completed
in 2009 /518 units)

Quality and value are the hallmarks ofthe condominiums and detached houses that Mitsui Fudosan develops forsale and lease.
Park Tower GranSky(Completed in 2010 / 613 units)

Park Court
AzabuJuban
The Tower(Completed
in 2010 /440 units)

4

GranTokyo North Tower

Akasaka Biz Tower(Completed in 2007 / 195,000m2)(Completed in 2008 / 218,000m2)

Sumitomo Mitsui Banking
Corporation Head Office
Building

Muromachi-Higashi Mitsui
Building(Completed in 2010 / 40,000m2)(Completed in 2010 / 80,000m2)

MITSUIOUTLET PARKSHIGA RYUO(Opened in 2010 /27,000m2 /165 stores)

LaLaport YOKOHAMA(Opened in 2007 / 241,000m2 / 280 stores)

MITSUI OUTLET PARKJAZZ DREAM NAGASHIMA(Opened in 2002 / 62,000m2 / 230 stores)

LaLaport
SHIN MISATO(Opened in 2009 /142,000m2 /180 stores)

Other
Park City Yokohama
Nakayama(Completed in 2011 / 117 houses)

Hotels and serviced apartments areamong the other areas of the realestate market in which Mitsui Fudosan
has a presence.

Halekulani Hotel(Opened in 1984 / 453 rooms)

5

Financial Highlights
Years ended March 31

08

11

Operating Income(Millions of yen)
2,000,000

992,003

999,860

1,029,226

1,042,386

1,100,407

08

09

10

11

12

1,740,048

1,746,719

1,733,559

(%)
4.0

1.77

1.73

1.71

12

0

09

10

Interest-bearing Debt

11

10

11

12

11

12

10

0

12

08

09

Debt/Equity ratio

ROA

ROE

Net Income per Share

(%)
6.0

(%)
10.0

(Yen)
120
8.57

5.06
9.12

90
4.0

95.1

8.0

99.4

5.53

11

20

1.0

08

Total Net Assets

10(Millions of yen)
30

3.0

1.62

500,000

0

Total Assets

09

2.0

1.60

0

08
Net Income

Shareholders' Equity/ Total Assets

1,000,000

2,000,000

1,000,000

1,550,421

3,780,700

3,710,424

3,634,489

3,868,412(Millions of yen)
4,000,000

3,758,387

Interest-bearing Debt andDebt/Equity ratio

1,500,000

012Operating Margin

Total Assets and Total Net Assets

3,000,000

060,08410

0950,1300

12

1125,000

27.9

10

6.0

9.4

57.1

09

50,00049,909

08

8.5

12.0

27.0

0

0

8.7

75,00056.8

50,00018.0

27.2

500000500,000(Millions of yen)
100,000

26.7

12.1

126,03813.2

1,743,411

100,000

120,092

1000000

120,585

150,000

171,547

1,000,000

179,282

1,338,102

1,405,270

1,384,807

1,418,946

1500000(%)
24.0

83,572(Millions of yen)
200,000

26.0(Millions of yen)
1,500,000

Net Income

87,378Operating Income andOperating Margin

1,360,023

Revenue from Operations

6.0
3.39

6.05
4.0

60
4.92

68.4

3.41

3.55

4.78

2.0
30
2.0

0

6

0

0

08

09

10

11

12

08

09

10

11

12

08

09

10

An Interview with the President

Masanobu Komoda
President andChief Executive Officer

Q

The Mitsui Fudosan Group continued toment in the wake of the Great East Japan

witness major changes in its external

Earthquake, a slowdown in the global economy

operating environment. Can you pleaseattributable to the European sovereign debt cri-provide us with your overview of fiscal

sis, and the drop in export activity as a result of

2011?

prolonged appreciation in the value of the yen
and the floods in Thailand. On the other hand,A

One year has now passed since I assumed thethere were signs of an economic recovery reflect-

position of president and we embarked on a new

ing increased production on the back of supply

journey under a reorganized structure and sys-

chain restoration, an upswing in housing invest-

tem. Operating conditions throughout this peri-

ment mirroring reconstruction efforts after theod, fiscal 2011 (the year ended March 31, 2012),

earthquake disaster, and robust trends in devel-

were mixed. On the one hand, a variety of factors

oping countries including the Asia region.

placed considerable downward pressure on the

The real estate market experienced similar

Japanese economy. These factors included

mixed conditions. In the office leasing market,

deterioration in the domestic business environ-vacancy rates remained flat while the weak trend

7

An Interview with the President

in rents continued unabated. For large-scale
offices in the central business district, on theQ

How would you assess the Group’s per-A

Under the backdrop of the aforementioned oper-

formance in fiscal 2011?

other hand, tenant company needs for safety
and business continuity are strong. This is contributing to improved demand. In the retail facility
leasing market, conditions were impacted byating conditions, the Mitsui Fudosan Group wassuch factors as the earthquake disaster. Overall

nevertheless able to achieve its targets in fiscal

trends in the retail facility leasing market, howev-

2011. Revenue from operations was ¥1,338.1

er, were firm reflecting improvements in personalbillion, down 4.8% from the previous fiscal year,

consumption. Despite delays in the commence-

due to factors including a decrease in the num-

ment of sales of certain properties, contract rates

ber of units sold in property sales to the individu-

remained stable with conditions in the housingals’ category resulting from the adjustment insales market generally sound. This was largely

construction schedules after the Great East

attributable to the ongoing low interest rate envi-

Japan Earthquake. On the other hand, operatingronment and government policy support, which

income was ¥126.0 billion, up 5.0% from theprovided the impetus for an upswing in consum-

previous period due to factors including officeer sentiment. As a result, the stable contract ratebuildings and retail facilities coming on-stream

provided an underlying strength to the market.

and an improved profit ratio in property sales toTurning to the real estate investment market,

the individuals’ category. Net income was ¥50.1

there were clear indications of an overall pick up.

billion, up 0.4% from the previous period, result-This largely reflected the purchase of investment

ing from factors including an increase in income

units by the Bank of Japan in the J-REIT market,

taxes paid due to the reversal of deferred tax

vigorous acquisition of properties funded by cap-

assets accompanying the change in income tax

ital increases through public offerings and otherrates following tax reform. Having secured

improvements that led to steady external growth.

improvements in its overall earnings, the Mitsui
Fudosan Group achieved its performance forecasts.

8

Q

Mitsui Fudosan put in place its Innovation

through fiscal 2017. The Plan is divided into two

2017 long-term business plan that begins

stages of three years each. During the first stage

in fiscal 2012. Could you please provide

from fiscal 2012 to fiscal 2014, we will makeus with the background behind the plan

investment and prepare the foundation for future

and what you hope to achieve?

growth. During the second stage from fiscal
2015 to fiscal 2017, we will establish our positionA

The Mitsui Fudosan Group initiated the New

as a real estate solutions partner for our custom-

Challenge Plan 2016 long-term business plan iners in global markets.

fiscal 2007. Subsequently, the financial crisis triggered by the fall of Lehman Brothers in 2008 andthe resulting global downturn, the Great East

Q

You have identified several core initiatives
under Innovation 2017. Please provide

Japan Earthquake in 2011, the escalating

more details on your efforts to strengthen

European sovereign debt crisis and other issues

the competitiveness of your domestic

significantly altered our operating environment.

business.

These events highlighted various structuralissues in Japan, including the hollowing out ofindustry, fiscal insecurity and social securityA

The domestic market continues to mature. We
will channel our energies toward the three core

issues, as well as energy supply concerns. In

strategies of (1) creating neighborhoods; (2)addition, the speed at which the domestic mar-evolving the housing businesses; and (3) evolving

ket is maturing and markets are globalizing is

our model for cooperation with investors.

exceeding the assumptions made in New
Challenge Plan 2016. Going forward, we expect

1. Creating neighborhoodsa shift in the quality of demand and the emer-

Our basic approach involves a virtuous cycle ofgence of new growth segments in the domestic

integrating diverse functions and features, creat-market, while markets and customers worldwide

ing communities that mature with age to create

become increasingly borderless.

high-value-added neighborhoods. We combine

The Mitsui Fudosan Group positioned fiscal

the expertise of various partners to meet cus-

2009 to fiscal 2011 as a period to deal with thetomer needs for security, safety, sustainability, theaftermath of the financial crisis. We implemented

environment, comfort and efficiency with a focus

crisis countermeasures while preparing for futureon our Smart City concept that incorporates fea-

growth. Given the changes in our operating envi-

tures such as the use of information and com-ronment, however, we have formulated

munications technology. We strive to create

Innovation 2017, the new Group long-term busi-

attractive neighborhoods by creating high-quality

ness plan starting from fiscal 2012, to pursue thecommunities. Leading products currently in prog-

innovation needed to create value in the coming

ress that represent our efforts in this area include

era and to become a Group that can sustain

the urban-type Nihonbashi Revitalization Plan

profitable growth. The Mitsui Fudosan Group will

and the suburban Kashiwanoha Campus City

focus on achieving strong growth and profitability

Project in Chiba Prefecture.

during the six years of the Plan from fiscal 20129

An Interview with the President

2. Evolving the housing businessWe are expanding businesses related to existingQ

Please tell us about your efforts to devel-A

Our overseas business development endeavors

op global operations.

homes, such as housing brokerage and remodeling, where growth is expected, and we are developing products and services for active seniors.
With customer needs diversifying and becoming

aim at ensuring medium- to long-term growth.

more sophisticated due to the maturing of soci-

Harnessing our innovative capabilities and ability

ety and the economy, we have opened the Mitsuito create new value nurtured in an extremely

Housing Mall to offer customers a one-stopcompetitive domestic market, we will ramp up

source of solutions that may incentivize them tothe pace of our efforts while striving to address

select Mitsui Fudosan as their partner in all

customer needs that extend the regional bound-aspects of searching for a home so we can help

aries of developed and developing countries.

them live comfortable lives. We are also enhanc-

In North America and Europe, the Mitsui

ing the competitiveness of our products by

Fudosan Group aims to build up an outstanding

accelerating programs that encompass both theportfolio mainly consisting of office buildings for

so to speak hardware (properties/facilities) andlease. In Asia, we will remain active in the proper-

software (people/community). For example, wety sales business focusing mainly on condomini-

will develop new products based on customer

ums, for which demand is growing in tandem

perspectives and introduce smart technologies,

with economic expansion and urbanization, andand we will also offer a service called Mitsui

the retail facility business, which will benefit from

Housing Loop, which provides various housing

growing personal consumption.

and lifestyle-related services, to residents of

We will build the foundation for these initiatives

housing supplied by the Mitsui Fudosan Group.

through the Group’s internal organization, alliances with strong local partners, and other methods.

3.	Evolving our model for cooperation withinvestors

ous stages of development in each country andWe will stimulate and expand the Japanese real

region, we will deploy our strengths from theestate investment market in terms of real estateexpertise and experience we have built up in

by adding logistics facilities to our existing asset

Japan and the knowledge we acquire throughclasses; improving liquidity in the real estate mar-our future businesses.

ket by making corporate real estate (CRE), public

In addition, we will provide solutions for cross-real estate (PRE), private finance initiative (PFI)

border needs as a partner for our customers inand public private partnership (PPP) proposals

Japan that are doing business overseas. We willthat meet the needs of both public and private

also provide solutions for the business expansion

customers; and developing new investment

and leisure needs of overseas customers doingproducts. The Mitsui Fudosan Group aims tobusiness in Japan.

increase assets under management and profitability as a result.

10

Based on the economic conditions and the vari-

Q

Can you provide us with details of theDuring the period of the plan, we expect dis-Group’s medium-term quantitative tar-posals to comprise approximately ¥200.0 billion

gets*? In addition, can you tell us aboutof planned capital expenditures in the domestic

your investment plans and the yields thatmarket. This is consistent with our efforts to con-you expect to recoup?

tinuously improve the quality of our portfolio. In
our real property for sale, we plan to both investA

In fiscal 2014, we are targeting operating income

and recover around ¥2,400 billion. Our proposedof ¥163.0 billion. By segment, we expect ourinvestment in real property for sale will be allocat-

holdings, trading and management activities will

ed with approximately two-thirds in property

contribute ¥87.0 billion, ¥39.0 billion and ¥48.0

sales earmarked for individuals and one-third forbillion, respectively. We plan to achieve net

investors. Overseas, we intend to invest approxi-

income of ¥67.0 billion, and ROA of aroundmately ¥500.0 billion in Europe, North America

3.8%, a debt-to-equity ratio of approximately 1.8

and Asia with disposals approaching ¥100.0 bil-times on an interest-bearing debt balance oflion. Around 60% of our overseas investment will

¥2,160.0 billion as of the end of fiscal 2014.

be directed toward Europe and North America

In fiscal 2017, our goals are for continued

focusing mainly on office buildings. The remain-

improvement. We are looking to achieve operat-ing 40% will go to Asia, where we will concen-

ing income of ¥240.0 billion or higher with ourtrate on retail facility and housing activities.

holdings, trading and management activities

On a net basis, our investment will total

contributing ¥120.0 billion, ¥60.0 billion andaround ¥1.0 trillion over the period, which we¥60.0 billion, respectively. Our goal for net

plan to fund through adjusted cash flow*.

income in fiscal 2017 has been set at ¥110 billion
or higher. Accordingly, we are looking at an ROAof around 5.5%, a debt-to-equity ratio of approx-*Adjusted cash flow = Income before income taxes + Depreciation andamortization, etc. – Income taxes paid
Note:
Earnings, benchmarks and interest-bearing debt data for fiscal 2014
and fiscal 2017 are inclusive of special purpose company (SPC) figures.

imately 1.5 times and interest-bearing debt ofapproximately ¥2,100 billion at period-end.
The Mitsui Fudosan Group will naturally
engage in proactive investment throughout theperiod from fiscal 2012 to fiscal 2017 with theaim of generating future growth. Our investment
plans over this period will essentially entail newcapital expenditures in Japan of approximately¥800.0 billion. In specific terms, expenditures will
be channeled toward projects in prime locationsin the Tokyo Metropolitan area including
Nihonbashi, Hibiya and Otemachi that offer considerable future promise, as well as the new
LaLaport, outlet and the renewal of existing retailfacilities where we intend to increase floor space.

11

An Interview with the President

Q

Please provide us with details of theGroup’s near-term forecasts for the fiscal

Q

year ending March 31, 2013.

A

In fiscal 2012, the leasing segment is expected
to experience an increase in both revenues andfund procurement conditions as a result of
the European sovereign debt crisis?

A

As far as Mitsui Fudosan is concerned, there has
been no deterioration in the current conditions

earnings. This is largely due to contributions fromfor procuring funds. Debt funding from financial

retail facilities including Mitsui Outlet Kisarazu,

institutions including banks and the issuance of

which opened in April 2012. In the property sales

bonds represent two key sources of funds for thebusiness, the number of condominiums is fore-

Company. Procurement conditions for bothcast to increase together with additional positive

methods remain extremely favorable. With

factors including improvements in profit margins.

respect to debt funding, Mitsui Fudosan enjoys

Taking these factors into account, revenues andexcellent relationships with a large number of

earnings in the property sales business are alsofinancial institutions and continues to procure

anticipated to rise. As a result, revenue fromfunds at extremely favorable terms and condi-

operations is forecast to climb ¥121.9 billion totions. The Company also remains well positioned¥1,460.0 billion in the fiscal year ending March 31,

to issue corporate bonds as and when required.

2013. From a profit perspective, operating

Mitsui Fudosan issued a series of 10-year

income is projected to increase ¥9.0 billion tostraight corporate bonds totaling ¥10 billion in¥135.0 billion. After factoring in a ¥10.0 billion

Japan in May 2012 at a procurement rate of

net extraordinary loss, net income is expected to

0.997%. Notwithstanding current favorable con-reach ¥55.0 billion, up ¥4.9 billion year on year.

ditions, we recognize the need to monitor such

The Mitsui Fudosan Group is anticipating theissues as the European sovereign debt crisis on

early application of changes in the accounting

an ongoing basis.

standard for consolidation of SPCs in the fiscal
year ending March 31, 2013. As a result, consolidated performance forecasts incorporate theeffects of this early application. Please refer tothe MD&A section of this report on page 37 forbusiness segment information.

12

Are you experiencing any deterioration inQ

What are your thoughts on Mitsui Fudosan’ssocial mission and corporate social respon-

Q

What is Mitsui Fudosan’s stance regard-A

Shareholder returns are based on comprehen-ing shareholder returns?

sibility as a leading company in Japan’s realestate sector?

A

The public and private sectors in Japan are com-sive consideration of reinvesting earnings to

ing together with the aim of reconstruction fromincrease shareholder value over the mid-to-longthe damage of the Great East Japan Earthquake,term and directly distributing earnings to meet

together facing what might be called a national

shareholder expectations. We aim to maintaincrisis. The Mitsui Fudosan Group and its busi-

stable dividends in the short term and increase

ness have also been challenged anew with ques-

dividends in the future as a result of earnings

tions such as “what is true safety and security?”

growth.

and “what kind of living is compatible with sus-

Mitsui Fudosan comprehensively considered

tainable development?” We at the Group are inits performance in fiscal 2011, outlook for thethe midst of aiming to meet these challenges andfuture and dividend policy in paying cash divi-

contribute to the reconstruction of Japan.

dends per share totaling ¥22.00, consisting ofinterim and fiscal year-end cash dividends of

The social mission of the Mitsui Fudosan Group¥11.00 per share.

is to realize the Group Statement, “Bringing
Enrichment and Comfort to Urban Areas,” which it
upholds. In order to promote this goal, threeimportant CSR themes are raised; “Environmental

Q

In closing, what message do you have forA

Against the backdrop of a business environment

shareholders?

Initiatives,” “Provision of High-Quality Products
and Services” and “Challenges for Creating New
Values and Markets.”that continues to fluctuate at a dizzying pace, theMitsui Fudosan Group will continue to draw on
its tradition of continuous innovation. Moving forward, we will exercise our inherent qualities tothe fullest to steadfastly achieve the next phaseof growth outlined under our long-term businessplan and increase corporate value.
As we work toward achieving our establishedgoals, we kindly request the continued supportand understanding of shareholders.

13Innovation 2017

The Mitsui Fudosan Group’s

Long-Term Business Plan
for Fiscal 2012 to Fiscal 2017

The Mitsui Fudosan Group will focus on achieving strong growth andprofitability during the six years of the Plan from FY2012 throughFY2017. The Plan is divided into two stages of three years each.

Innovation2017

Term of the plan

Innovation 2017

Stage I (2012-2014)

Stage II (2015-2017)

Make investments and prepare the foundation
for future growthCore strategies

Establish our position as a real estate solutions partner
for our customers in global markets

Quantitative targets and benchmarks(Billions of yen)

FY2014 Targets*

Create value by executing
these three strategies
Full implementation of Group management
Pursue economies of scale
Offer one-stop services
Network with partners

Operating income

163

≥ 240

Holding87

120

Trading

39

60

Management

48

60

67

Net income

3.8%

ROA

Approx.

Debt/equity ratio

Approx. 1.8 times

2,160Interest-bearing debt

Three strategies

FY2017Goal*

≥ 110
5.5%

Approx.

Approx. 1.5 times

2,100

Approx.

*Earnings, benchmarks and interest-bearing debt for FY2014 and FY2017 include special
purpose company (SPC) figures. The potential impact of the mandatory application of
IFRS on results and benchmarks is not included.

Reference: Operating income by financial accounting segment

Business model
innovation

Customer-centered
management

Integrate tangibles andintangibles
Create new value
through collaboration
with different industries
Create communities

Provide solutions forcustomer needs createdby maturing society
and economy
Provide solutions thatmeet customer needs
on a global basis

Strengthen the competitiveness ofour domestic business& Develop global operations

14

Leasing95

128

Property Sales

39

60

Management

40

52

Investments and disposal (by area & type)(Billions of yen)

FY2012-FY2017 Total

Area and Type

Domestic

Capitalexpenditures

Real property
for saleOverseas

Europe, North
America & Asia

800

Investment

Approx.

DisposalApprox.

200

Total

Approx.

600

Investment

Approx. 2,400

DisposalApprox. 2,400

Total

Approx.

±0

Investment

Approx.

500

DisposalApprox.

100

Total

Approx.

400

1. Strengthen the competitiveness of our domestic business
Create neighborhoods
Establishing competitive advantage as a city brandsustainable management, the Group is also working

is vital in the domestic market. The Mitsui Fudosan

to promote premium neighborhoods with higher

Group is seamlessly integrating diverse functions

added value.

and features to create quality communities. ThroughCreating neighborhoods in Nihonbashi
Nihonbashi Mitsui Tower(Completed in FY2005),
Mitsui Main Building

Nihonbashi Honcho MK-SQUARE(Completed in FY2011)

Shinnihonbashi

Otemachi 1-Chome
Mitsui Building

OtemachiPreserve

Revitalize

Createthe culture of historicneighborhoods withtraditional buildings

neighborhoods withwater and greenery

appealing newneighborhoods for the
next generation

Sumitomo Mitsui
Banking Corporation
Head Office Building(Completed in FY2010)Tokyo

Mitsukoshimae

Muromachi East District
Development Project
Areas 1-5 & 2-3(Scheduled forcompletion in FY2003)
Nihonbashi Honcho
2-Chome Area Project(Scheduled forcompletion in FY2012)
Muromachi-Higashi Mitsui
Building (Completed in FY2010)

Tokyo
StationNihonbashi

GranTokyo North Tower(Completed in FY2007)

Nihonbashi 1-Chome
Building (Completed in FY2003)
Nihonbashi 2-Chome
Redevelopment

Completed properties (from FY2003)
Properties under development
Existing properties
Properties in planning

Creation of the Kashiwanoha Campus City neighborhood
Kashiwanoha Smart City
A neighborhood of the future
Environment
friendly

Public/private/
academiacollaboration

Health &longevity

Creation ofnewindustries

Advancedknowledge
accumulation
TX Entrepreneur
Partners

Institute of Gerontology
The University of Tokyo

Energy management
for the entire area

15

Innovation 2017

Evolve the housing business
The Mitsui Fudosan Group is focusing on fee-based

products based on our customers’ perspectives

businesses such as housing brokerage and remod-

and introducing smart technologies. Coupled witheling, where growth is expected, and the develop-

Mitsui Housing Loop service, which provides vari-ment of products and services for active seniors. In

ous housing and lifestyle-related services, we are

addition to opening Mitsui Housing Mall as a one-accelerating programs that encompass both tangi-

stop source of solutions, we are developing newbles and intangibles.

Expand business related to existing homes
Mitsui Real Estate Sales Co., Ltd. provides brokerage
services while operating parking facilities. The company
changed its name to Mitsui Fudosan Realty Co., Ltd. in
April 2012. Moving forward, the company will raise
operating efficiency and bolster its business platform.

Mitsui Home Remodeling Co., Ltd. changed its name to
Mitsui Fudosan Reform Co., Ltd. in April 2012. The company will position remodeling activities as a core pillar of
the housing business taking into consideration the aging
of society, the trend toward smaller household units andan increase in quality housing stock.

Evolution of our model for cooperation with investors
The Mitsui Fudosan Group will stimulate andimproved collaboration between the private andexpand Japan’s real estate investment (J-REIT)

public sectors, introducing innovative investment

market in terms of both real estate and finance byproducts and expanding J-REIT and related mar-developing new classes of assets including multi-

kets. Through these means, the Group will increase

use logistics facilities, which offer ample room forthe volume of assets under management as well as

increased growth, promoting asset liquidity throughprofitability.

Logistics facility business value chain
Example of multiuse logistics facility development
Property Overview
Location: Shiohama1-Chome, Ichikawa, Chiba
Site area: 52,921 m2
Floor space: Approx. 121,000 m2

Model for cooperation with investors
CRE sales

Originators

Management
Sales

Supplyproperties

J-REIT
Private REITs, etc.

Capitalinvestment

Investors

Logistics
facilities

End users Third-party logistics (3PL) companies Approx. 3,000 office building tenant companies
Approx. 2,000 retail facility tenant companies

162. Develop global operations
Overseas business development
Every effort will be made by the Group to promoteerable weight given to property sales, retail facilities

business strategies that are tailored to the markets

and areas in which the Group can harness theof developed and developing countries. In the U.S.

strengths of its innovative know-how. The Mitsui

and Europe, Mitsui Fudosan will focus on the

Fudosan Group will build the foundation necessary

world’s major cities and build up a portfolio thatto successfully complete these initiatives through its

consists mainly of offices for lease. Particular atten-

internal organization, alliances with strong local

tion will also be given to development-type projects

partners and other methods.

that offer strong profit potential. In Asia, the Groupwill actively target urban development with consid-

LondonDalianBeijing
Tianjin ShanghaiTokyo
NingboGuangzhou Hong Kong

New York

San Francisco

Washington D.C.
HawaiiSingapore
20 Old Bailey (London)
1251 Avenue of theAmericas (New York)
Halekulani (Hawaii)

5 Hanover Square (London)

Shanjing Outlet Plaza,
Ningbo (China)

Tianjin Eco-City (Area 12a)
(China)Homer Building(Washington D.C.)）

Moorgate (London)
Shanghai New Town
Development Project (China)

Asia

North America & Europe

Develop retail facilities, housing and office buildings more actively
Create value by proactively participating in creating neighborhoods

Build up an outstanding portfolio by turning over assets
Be more active in development projects

Provide solutions for cross-border needs
The Mitsui Fudosan Group will provide solutions intune with the efforts of Japanese companies doing

Japan to overseas companies seeking to expand

business overseas. This will primarily involve partner

their business locally. At the same time, the Groupcustomers in Japan including tenant companies.

will steadfastly acquire business opportunities in

17

Review of Operations

Achieving

GROWTHthrough value creation
Defining Features and Strengths of Mitsui Fudosan’s Five Segments

Office buildings
Retail facilities
Property sales
to individuals
Property sales
to investors

1

Core Segment 1

Leasing

12Core Segment 2

Core Segment 3

Property sales

Management

Mitsui Home
Other

18

3

Property management
Brokerage,
Asset management, etc.

Core Segment1_Leasing Segment

Core Segment2_Property Sales Segment

1

Core Segment3_Management Segment

Leasing Segment

In the Leasing segment, Mitsui Fudosan maintains a quality portfolio of office buildings

and retail facilities including shopping centers. In addition to their prime location, properties are complemented by a broad and diverse pool of blue-chip tenants. Revenues

from the Leasing segment in fiscal 2010 and 2011 were ¥423,468 million and ¥420,528
million, respectively, representing approximately 31.4% of the Company’s total revenue
from operations. Harnessing its development capabilities, Mitsui Fudosan will continue
to enhance portfolio quality as the cornerstone of its stable revenue structure.

FY2010

Revenue fromOperations

FY2011

423,468 million ¥420,528 million

BREAKDOWN OF LEASING SEGMENT REVENUE

Office buildings Office Building Revenue by Area
Retail facilities

Other¥131.5 billion
31%¥5.3 billion
1%(FY ended March 2012; non-consolidated)

Regions

7%

Revenue¥420.5billionOverseas
office buildings

Domestic
office buildings¥19.1 billion
5%¥264.4 billion
63%

Other metropolitanTokyo

5 wards ofcentral Tokyo

16%

77%

Mitsui Fudosan maintains a portfolio that is distinguished by the strengthof its well-established metropolitan brands. Properties are mainly locatedWith office buildings and retail facilities comprising approximately

in the five wards of central Tokyo. Vacancy rates for the Company’s hold-

70% and 30%, respectively, of the Company’s entire portfolio,

ings are below the market average.

every emphasis is place on property stability and integrity.

19

Review of Operations
Core Segment1_Leasing Segment

 Major Newly Operational Projects (Office buildings)
FY
Completed

2011

2012

2013

2014

Project Name(* Indicates subleased or jointly
owned property)

Location

Rentable Floor
Space

Nagoya Mitsui Building New
Building

Nagoya, Aichi≈ 11,000m2

Nihonbashi Honcho
MK-SQUARE*

Chuo-ku, Tokyo≈ 8,000m2

Shimbashi M-SQUAREMinato-ku, Tokyo≈ 5,000m2

Onarimon M-SQUAREMinato-ku, Tokyo

≈ 6,000m2

Hamarikyu Mitsui Building*Chuo-ku, Tokyo≈ 12,000m2

Yokohama Mitsui Building

Yokohama, Kanagawa≈ 49,000m2

Hiroshima Train Vert Building*

Hiroshima, Hiroshima≈ 14,000m2

DiverCity Tokyo*

Koto-ku, Tokyo≈ 44,000m2

Nihonbashi Honcho 2-Chome
Project*

Chuo-ku, Tokyo≈ 14,000m2

Nihonbashi Muromachi East
District Development Projects
Area 2-3*

Chuo-ku, Tokyo≈ 20,000m2

Nihonbashi Muromachi East
District Development Projects
Area 1-5*

Chuo-ku, Tokyo≈ 9,000m2

Sapporo Mitsui Building
Reconstruction Project *Sapporo, Hokkaido≈ 25,000m

Chiyoda Fujimi 2-Chome Project*

Chiyoda-ku, Tokyo

TBD1

Scheduled for completion
in FY2015 and afterl Kita-Shinagawa 5-Chome Area 1
Redevelopment Project*l Toyosu 2-, 3-Chome Area 2 Project(Koto-ku, Tokyo)l Hibiya Mitsui Building /Sanshin
Building Reconstruction Project(Chiyoda-ku, Tokyo)l Nihonbashi 2-Chome Project (Chuoku, Tokyo)l Otemachi 1-Chome Mitsui Building(Chiyoda-ku, Tokyo)
FY completed and rentable floor space may change
in the future. Some project names are tentative.

Moving forward, Mitsui Fudosan will continue toenhance the quality of its portfolio by pushing
forward the abundance of projects in which theCompany can fully harness its development
capabilities currently in hand. At the same time,2

Mitsui Fudosan will maintain its focus on bolstering long-standing ties with its approximate
3,000 corporate tenants.

1: Total floor space for office/retail building: approx. 123,000 m2

Retail facilities Retail Facility Revenue by Category
Other(FY ended March 2012)*

A diversity of facility types and stable revenue
structure supported by robust relationships with2,000 tenant companies

5%

Urban Facilities

10%
Lifestyle Center

5%

LaLaport KASHIWANOHA

30%*Includes master-leased properties

20

Regional mall50% Ratio of Fixed & Sales Linked Rent by Category Sales at Mitsui Fudosan Retail Facilities(FY ended March 2012)*(Billions of yen)
80

≈ 75

≈ 25

≈ 60

60

60

≈ 75

80

≈ 90 ≈ 10

≈ 40

≈ 25

(%)
100

40

40
20

20

0

0

Regional Mall
Fixed rent

Outlet Parks

Others3/2008All Facilities

Sales‐linked rent

*Includes master-leased properties

3/20093/20103/2011

LaLaport TOKYO BAYLAZONA Kawasaki

LaLaport TOYOSU

LaLaport YOKOHAMA

3/2012

Mitsui Fudosan has been developing and operating retail facilities for just over three decades since opening LaLaport Funabashi (now LaLaport TOKYO-BAY) in 1981, and currently operates in a diverse array offacility categories. Rents from the overall retail facility portfolio are structured for stable earnings, withapproximately 75% fixed and 25% linked to store performance. Stable earnings are also underpinned byrobust efforts to ensure that sales remain high at facilities where sales-linked rents apply.

 Major Newly Operational Projects (Retail facilities)
FY
Opened

2011

2012

2013

Scheduled for completion
in FY2014 and after

Project Name(* indicates master-leased or jointly
owned property)

Location

Store floor
space

MITSUI OUTLET PARK JAZZDREAM NAGASHIMA 4th Stage

Kuwana, Mie≈ 9,000m2

Shanjing Outlet Plaza Ningbo*

Ningbo, Zhejiang, China≈ 26,000m2

MITSUI OUTLET PARK KURASHIKI

Kurashiki,Okayama≈ 20,000m2

Ginza Komatsu*

Chuo-ku, Tokyo≈ 9,900m2

DiverCity Tokyo*

Koto-ku, Tokyo≈ 50,000m2

MITSUI OUTLET PARK KISARAZU

Kisarazu, Chiba≈ 28,000m2

LaLaport SHIN-MISATO ANNEX

Misato, Saitama≈ 3,000m2

Higashi Ikebukuro 1-Chome
Project

Toshima-ku, Tokyo≈ 8,700m2

Niigata bandai 1-chome ProjectNiigata, Niigata≈ 22,000m2

Nihonbashi Muromachi East District
Development Projects Area 2-3*

Chuo-ku, Tokyo≈ 14,000m2

Nihonbashi Muromachi East District
Development Projects Area 1-5*

Chuo-ku, Tokyo≈ 5,000m

2l Fujimi LaLaport Project (Fujimi,
Saitama)l Osaka Izumi Project (Izumi, Osaka)l Osaka Banpaku Site Plan
(Suita, Osaka)
FY completed and rentable floor space may change
in the future. Some project names are tentative.

Mitsui Fudosan operates in a diverse array offacility categories including regional shopping
centers, outlet parks, lifestyle centers as well asurban and other facilities. The Company engages
in the development of best-fit facilities that arecapable of attracting large numbers from within
and around major consuming regions.

21

2

Review of Operations
Core Segment1_Leasing Segment

Core Segment2_Property Sales Segment

Core Segment3_Management Segment

Property Sales Segment

In the Property Sales segment, Mitsui Fudosan engages in the sale of condominiums
and detached housing to individuals. The second and equally important facet of its

Property Sales operations is the sale of rental housing, office buildings and other properties to investors. Revenues from the Property Sales segment in fiscal 2010 and 2011were ¥405,243 million and ¥321,352 million, respectively, representing approximately

24.0% of the Company’s total revenue from operations. In this segment, Mitsui Fudosan
is underpinned by the strengths of its competitive products located in central Tokyo, its
ability to create superior assets and multiple exit strategies.

FY2010

Revenue fromOperations

FY2011¥405,243 million ¥321,352 million(Billions of yen)

28.1

In addition to the development and sale of high value-added con26.8

 Property Sales Segment: Operating Income

26.9

60 INCOME
TRENDS IN PROPERTY SALES SEGMENT OPERATING

40

dominiums and detached housing to individuals, Mitsui Fudosan is(Billions of yen)
60

30.8

erties to institutional investors. In this regard, the Company har22.3

20

30.8

FY ended

14.0 8.0

10.2 5.4

0

9.7 6.4

11.3 1.1

20.4

20

10.2 5.4

9.7 6.4

0
FY ended

11.3 1.1

20.4

nesses its development capabilities to create superior assets.

28.1

40

14.0 8.0

26.9

engaged in the development and sale of income generating prop-

3/2007 3/2008 3/2009 3/2010 3/2011 3/2012 3/2013(E)Property sales to investors
Property sales to individuals

3/2008 3/2009 3/2010 3/2011 3/2012 3/2013(E)Property sales to investors
Property sales to individuals
Property
sales to individuals Sales and Operating Margin(Millions of yen) Condominium Units Booked Contracts during
the Year and Inventories at End of FY

(%)
12.0

400

(Units)
8,000

11.4

0

0
FY ended 3/2008

3/2009 3/2010 3/2011 3/2012 3/2013(E)General bottoming out and improvement in operating margins

22

0
FY ended

4,900

4,512
5,362

5,455
5,628

5,206

2,000

380

Operatingmargin(RHS)

Units
booked

638

3.0

4,651
3,889

4.0
3.1

872

3.8

4,000

Sales
(LHS)

3,321
826

6.0
5.0

5,249
4,331

257.2

316.3

300.9

6.7

6,000

453

100

305.0

270.3

200

280.0

9.0

300

Contracts
duringthe FY
Inventories
at endof FY

3/2008 3/2009 3/2010 3/2011 3/2012 3/2013(E)The Company books approximately 5,000 condominiums each year. Actual
inventories continue to steadily decrease.

(FY ended March 2012)(Billions of yen)
150

Other
regions

Kansai&Chubu≈Metropolitan
Tokyo

10%

≈

85%

60

30

The bulk of Mitsui Fudosan’s condominiums are located in metropolitan Tokyo.

0

3/2008 Land Bank (Condominiums) (As of March 31, 2012)Land acquired equivalent to approximately

21,000

106.1

95.4

90

118.4

120

5%

107.4

≈

 Land Acquisition Cost

111.7

2

 Breakdown of Sales by Condominium Region

3/20093/20103/20113/2012Land acquisition costs have remained relatively stable over the past five
years. Mitsui Fudosan engages in the continuous acquisition of land earmarked for development and maintains a Land Bank equivalent to approximately 21,000 units.

units(includes project stage of redevelopment)

Property sales to investors Business Model based on Cooperation with Investors
As a Group, Mitsui Fudosan maintains a variety of exit strategies.

Sales

Management contracts

to a diverse array of investors

after sales

J-REITs managed by the Mitsui Fudosan Group

Private funds structured and managed by the Mitsui Fudosan Group(Structures and manages private funds)

Institutional investors,
corporations, etc.

 Inventory of Property for Sales to Investors
Operating officebuildings≈

36%

Operatingretail facilities≈

19%

Planned &under development≈

43%

Operating rental
housing properties

≈

2%

Total

≈ 447 billion (As of March 31, 2012)

On balance sheet¥235 billion

Off balance sheet¥212 billion

Mitsui Fudosan continues to promote the development of all
projects in hand.
* Consolidated basis. On-balance sheet real properties for saleincluding advances paid for purchases, and assets held by SPCs
for the property sales business

23

3

Review of Operations
Core Segment1_Leasing Segment

Core Segment2_Property Sales Segment

Core Segment3_Management Segment

Management Segment

The management business consists of: 1) the property management category, which

generates stable revenue growth from increases in properties under management; and2) the brokerage and asset management, etc. category, which uses the Group’s expertise to generate fee income in ways such as providing asset management services for
J-REITs and for private funds and brokerage services for individuals and corporations.

Revenues from the Management segment in fiscal 2010 and 2011 were ¥277,947 million and ¥286,639 million, respectively, representing approximately 21.4% of theCompany’s total revenue from operations.

FY2010¥277,947million ¥286,639 million(Billions of yen)
50
40

33.0

10.5
23.7

21.9

21.9

33.0

10.5

10.2
21.9

23.7

8.4
21.2

20.3

21.9

20

10.2

8.4

This stability also reflects the Company’s ability to cover diverse
asset classes including office buildings, retail facilities and rental

10

18.6

30

10

income stream that is derived from stable contract management.

20

25.4

40

Growth in its property management activities is based on a fee
30

21.2

(Billions of yen)
50

18.6

 Management Business Operating Income

20.3

TRENDS IN OPERATING INCOME

25.4

Revenue fromOperations

FY2011

housing. At the same time, Mitsui Fudosan’s brokerage and asset

0

management businesses are buoyed by the overall know-how of

FY ended

3/20083/2009 3/2010 3/2011 3/2012 3/2013(E)the Group.

Brokerage, Asset management, etc.
Property management

0
FY ended

3/2008 3/2009 3/2010 3/2011 3/2012 3/2013(E)* Figures for the years ended March 2008 through 2009 are for reference.

Brokerage, Asset management, etc.
Property management

Property Management

Mitsui Fudosan boasts comprehensive manage-

Office Buildings

ment capabilities that extend over diverse asset

Mitsui Fudosan Building Management Co., Ltd. (651 buildings under management)
First Facilities Co., Ltd. (335 buildings under management)

Diverse Asset Classes

24

Retail Facilities

Housing

LaLaport Management Co., Ltd.
(59 facilities)

Mitsui Fudosan Housing Lease Co., Ltd.
(47,341 subleased and consigned units)
Mitsui Fudosan Housing Service Co., Ltd.
( 221,900 units under management)
Diverse Asset Classes

classes. The Company is defined by its strengths
in office buildings, retail facilities and residences.

222

217

210

196

184

160

152

141

172

133

76

120
80

44

59

50

200
160

97

117

100

124

(Thousand units)
240

121

(Thousand units)
150

118

 Property Management (Sales condominiums):
Track Records

40

0

0

FY ended

3/2004 3/2005 3/2006 3/2007 3/2008 3/2009 3/2010 3/2011 3/2012

FY ended

3/2004 3/2005 3/2006 3/2007 3/2008 3/2009 3/2010 3/2011 3/2012 Property Management (Leasing condominiums):
Track Record
Asset Management
4746

 Assets under Management(FY ended March 2012)

38

41

40

44

(Thousand units)
50

30%
8%

20

30

27

34

30

24

10
0
FY ended

3/2004 3/2005 3/2006 3/2007 3/2008 3/2009 3/2010 3/2011 3/2012

Steady annual increase in the number of properties managed

Privatefunds, etc.

40%

Frontier Real
Estate Investment
Corporation

Originators

15%

7%

Another key strength of Mitsui Fudosan’s management business is its ability to deliver services through three REITs and private funds.

 Assets under Management: Track Record

260

2Sumitomo Real
Estate Sales

45.9

31,443246

3Tokyu Livable, Inc.

30.1

14,912

121

2.0

4

Nomura Real Estate
Holdings, Inc.

16.3

5,762

46

1.5

5

Mitsubishi UFJ Real
Estate Services

10.9

4,994

41

1.0

Source: 18/5/2012 jyuutaku-sinpo
The Mitsui Fudosan Group’s Mitsui Rehouse brand has been
number one in Japan’s brokerage market for individuals in termsof transaction volume for 26 consecutive years since 1986.
Note: According to newspaper and other media reports.

2.5

2.92

36,071

2.80

59.8

2.70

Mitsui Fudosan
Realty2.80(Trillions of yen)
3.0

1

2.70

Numberof stores

2.35

Transactions(Unit)

2.15

Fee/Revenue(Billions of yen)

1.80

Brokerage

1.44

3 Car Park Leasing: Track Records

0.5

0FY ended

3/2004 3/2005 3/2006 3/2007 3/2008 3/2009 3/2010 3/2011 3/2012

Mitsui Fudosan Realty has continued to dominate Japan’s property sales

Mitsui Fudosan continues to secure steady growth in assets undermarket. The company has secured the top position in brokerage transac-

management.

tions handled for 26 consecutive periods since fiscal 1986 and a record
high in the fiscal year ended March 31, 2012. Mitsui Fudosan Realty takes
all necessary measures to ensure continued expansion in line with efforts
to secure the top market share.

25

Review of Operations

Mitsui Home Segment
Active in the rental housing and housing development markets, Mitsui Home Co., Ltd.
primarily designs and builds custom-built homes with 2 x 4 construction at its core.
Mitsui Home revenues in fiscal 2010 and 2011 were ¥205,131 million and ¥207,568
million, respectively, representing approximately 15.5% of the Company’s total revenue
from operations. Defined by its innovative engineering and sophisticated design capabilities, the company takes the lead in adapting to and creating market trends. In addition to setting new standards in smart housing, Mitsui Home has recently put in place a
new medium- and long-term management plan as roadmap for the future.

FY2010

Revenue fromOperations¥205,131million ¥207,568 million

MEDIUM-TERM MANAGEMENT PLAN “INNOVATIONS IN
TIMBER CONSTRUCTION 2017” (Fiscal 2012 to Fiscal 2017)

Fiscal 2012
to Fiscal 2017
Medium-Term Management Plan
“Innovations in Timber
Construction 2017”

Fiscal 2014
40th anniversary

1974: Founded

FY2011QUANTITATIVE TARGETS

Revenue fromOperations(Consolidated)

Fiscal 2014
Targets

Fiscal 2017
Goal

¥255 billion¥350 billion

6,000

7,000 or more

Number of
Building Orders
Received(Non-consolidated)

OUTLINE OF THE MEDIUM-TERM PLAN
.Competitive Strategies.Growth Strategies

Pursue competitive advantage in environmental
performance through the smart 2 x 4 concept

Renovation business: take steps toapproach a 200,000-strong stock built
on blue-chip customers

From Fiscal 2011:
Positioned fiscal 2011 as the year
to initiate a second foundation;

Strengthen product and technology
development

launched a variety of reforms including a review
of sales and marketing areas, increased
selection and focus in the allocation ofmanagement resources and further group
reorganization in preparation for establishinga new medium-term management plan(put in place a mission statement)

Reinforce Group synergies (Mitsui no Sumai
Mall / Mitsui no Sumai LOOP)

Fiscal 2010:
Group company reorganization (took steps to
optimize the supply of component materials;
further enhanced services)

Bolster design capabilities and promoteincreased recognition and acceptance

Adopt an area strategy that focuses on
increasing the number of sales and marketing
staff in Japan’s three major metropolitan areas

Facility-system construction business:in addition to promoting favorable
legislative conditions in the timber property
construction market, pursue growth in thedevelopment of proprietary technologies
Overseas business: evolve steadily from acomponent material manufacturer
to a production builder

Put forward uniform proposals based on creative
partnerships (architects, interior coordinators)

Oct. 2009:
Put forward the brand message “Homes for
Exceptional Living for Generations” tomarket the company’s 35th anniversary

26.Group Strategies
Increase profitability at group companies

Strengthen human resources through grouppersonnel management

Other Segment
In the other segment, Mitsui Fudosan is active across a wide variety of fields. Principal
fields of activity comprise facility operations, merchandise and other.
Revenue from Operations (Millions of yen)

FY2010

Revenue fromOperations

Fiscal 2011

Share (%)

Facility Operations

49,07948.1

Merchandise

40,003

39.2

Other

12,931

12.6

Total

102,015100.0

FY2011¥93,481 million ¥102,015 million

Facility Operations

Merchandise

In the facility operations field, the Mitsui Fudosan Group operates the

In the merchandise field, Group company Uniliving Co., Ltd. operates the Unidy

Mitsui Garden Hotels chain, the Celestine Hotel, and resort hotels in Japan,

chain of home centers located mainly in the Tokyo Metropolitan area. Anotheras well as the Halekulani and other hotels in Hawaii. The Group also oper-

Group company, Daiichi Engei Co., Ltd. sells seasonal flowers and plants.

ates a number of golf clubs in Japan.

 The Mitsui Garden Hotel Chain in spreading
across the country.

Uniliving Co., Ltd.

Hokkaido
Mitsui Garden Hotel Sapporo

Daiichi Engei Co., Ltd.

Kyoto
Mitsui Garden Hotel Kyoto SanjoMitsui Garden Hotel Kyoto Shijo

Other

Kumamoto

In the other field, Mitsui Fudosan Reform Co., Ltd. engages in remodelingMitsui Garden Hotel Kumamoto

Hiroshima

MiyagiMitsui Garden Hotel
HiroshimaMitsui Garden
Hotel Sendai

Okayama

response to the ongoing maturity of both society and the economy. Against
projected to experience demand growth, as a key component of the

ChibaMitsui Garden Hotel
PRANA Tokyo BayMitsui Garden Hotel Chiba
Mitsui Garden Hotel Kashiwa

TokyoMitsui Garden Hotel
Osaka Yodoyabashi

Japan’s housing market continues to undergo structural change inthis backdrop, Mitsui Fudosan is positioning renovation services, which areMitsui Garden
Hotel Okayama

Osaka

operations.

Mitsui Garden Hotel Ginza PremierMitsui Garden Hotel Shiodome Italia-gai
Mitsui Garden Hotel Yotsuya
Mitsui Garden Hotel Ueno
Mitsui Garden Hotel Kamata

Group’s housing business.
Business activities will remain within Japan’s three major metropolitan
areas for the foreseeable future. In addition to promoting the renovation of
detached housing, condominiums, medical facilities and business assets,
Mitsui Fudosan will strive to secure a position as a leading high-value-added renovation brand.

27

Corporate Governance

The Mitsui Fudosan Group aims for sound, transparent and efficient management inbuilding optimum corporate governance to earn the trust of all stakeholders. Measures tostrengthen its internal system are one part of achieving that goal.

Sound and Efficient Managementtion, and provide opinions as necessary. The Executive

Mitsui Fudosan has adopted a corporate officer system toand risk management.

Management Committee also supervises internal control

build a business execution framework appropriate to its

In addition, the Strategy Planning Special Committee, theoperating environment and business activities, enhancing

Risk Management Special Committee, the Social

the soundness and efficiency of management by separating

Contribution Special Committee and the Environmental

and strengthening management and executive functions. In

Special Committee function as advisory and strategy coor-

addition, the Group Corporate Officer System, in which cor-dination bodies to the Executive Management Committee.

porate officers of both Mitsui Fudosan and its Group com-

The Strategy Planning Special Committee formulates andpanies share an equal status and mission, was establisheddeliberates Group strategy and management plans andto further strengthen Group management.

engages in risk management for Mitsui Fudosan and the
Mitsui Fudosan Group in collaboration with the Risk

Improving Transparency andExpanding the Perspective ofManagement

Management Special Committee. The Social Contribution
Special Committee and Environmental Special Committee
are responsible for reviewing overall social contribution
activities and environmental activities.

Mitsui Fudosan invites and appoints outside directors inorder to strengthen the oversight functions of the directors
and enhance management transparency. The outside direc-

Board of Directors and Board of
Corporate Auditors

tors provide input as necessary on the reasonableness andadequacy of Mitsui Fudosan’s decision-making.

The Board of Directors, comprising thirteen members

Furthermore, Mitsui Fudosan has established theincluding four outside directors, makes decisions on materi-

Advisory Committee, consisting of experts from businessal issues of Mitsui Fudosan and supervises the status of theand academia, to diversify the perspective of management

directors’ execution of business. The corporate auditors

by providing comprehensive and forward-looking advice

attend meetings of the Board of Directors and provide opin-from an objective viewpoint.

ions as necessary.

Decision-Making

tor who may pass judgment on the urgent acquisition or saleIn addition, Mitsui Fudosan has designated a special direc-

28

of assets when so empowered by the Board of Directors.

The Executive Management Committee, consisting of exec-

Mitsui Fudosan has adopted a corporate auditor system.

utive managing directors and executive corporate officers,

The Board of Corporate Auditors, comprising five corporate

meets weekly to deliberate and report on important matters

auditors, including three outside auditors, formulates auditing

related to business execution. Fulltime corporate auditors

policies and determines duty assignments. It also receives

also attend meetings to stay informed of important deci-reports and discusses material items on audits conductedsion-making processes and the status of business execu-

according to these policies and assignments. The corporateauditors receive periodic reports from the Audit Department

Outside Auditors

and the certified public accountant and exchange information

Mitsui Fudosan has appointed Akishige Okada, Keiu

in working toward mutual cooperation.

Nishida and Toshiaki Hasegawa after a comprehensive eval-

As an internal auditing structure, the Audit Department car-uation of their characters, capabilities, experience and otherries out regular audits of all business departments and reports

factors. None of the three has a conflict of interest with gen-the results of its audits. It also works to enhance the effective-eral shareholders.

ness of internal control by identifying and providing guidance toOverview of Criteria concerning the Independenceof Outside Directors and Outside Auditors as well
as Personal, Capital or Business Relationships or
Other Conflicts of Interest with the Company

audited divisions on areas requiring improvement.

Outside Directors and Outside
Auditors

Outside officers and independent officers are appointed
Mitsui Fudosan has four outside directors and three outside

after taking into consideration a comprehensive range ofauditors.

factors including personality traits, capabilities as well as
personal and career history. There are vested interests

Outside Directors

between the Company and each of its outside directors or

Mitsui Fudosan has appointed Yoshiharu Hayakawa,outside auditors or any incidence of a conflict of interest

Mitsudo Urano, Eiji Hosoya and Masayuki Matsushima afterwith general shareholders. As a result, outside directors anda comprehensive evaluation of their characters, capabilities,

outside auditors are deemed independent.

experience and other factors. None of the four has a conflictof interest with general shareholders.

Corporate Governance Organization(As of June 28, 2012)

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

Board of Directors(Directors)

Certified Public Accountant (Audit Corporation)

Business Execution and Internal Control
Advisory
Committee

President and Chief Executive Officer
Corporate Officers
Audit Department

Executive Management Committee(Executive Managing Directors,
Executive Corporate Officers)
Committees
Strategy Planning Special Committee
Risk Management Special Committee
Social Contribution Special Committee
Environmental Special Committee

Departments/Divisions

29

Corporate GovernanceWith respect to outside directors, Masayuki Matsushima
was Chairman of Credit Suisse Securities (Japan) Limited.
There are no special vested interests between Credit Suisse

Compensation for Officers andCorporate Auditors

Securities (Japan) Limited and the Company. Yoshiharu

The amount of compensation for officers and the method of

Hayakawa is Representative of Kasumi Empowerment

its calculation utilize the basic compensation in a total

Research Institute; Mitsudo Urano is Representative

amount within the scope set and approved by resolution of

Director and Chairman of Nichirei Corp.; and, Eiji Hosoya is

the Ordinary General Meeting of Shareholders, a bonus paid

Chairman and Executive Officer of Resona Holdings Inc.

as a short-term incentive that comprehensively takes intoand Chairman and Director of Resona Bank, Ltd. Turning toconsideration such things as business results achieved inoutside auditors, Toshiaki Hasegawa is Representative ofeach fiscal year and must be approved by resolution at the

Toshiaki Hasegawa Law Firm, and Akishige Okada is

Ordinary General Meeting of Shareholders, and stock

Advisor of Sumitomo Mitsui Banking Corporation and was

options paid as medium-term incentive in an amount within

formerly Chairman and Director of Sumitomo Mitsui

the scope set and approved by resolution of the Ordinary

Financial Group Inc. with respect to relationships between

General Meeting of Shareholders.

each of the aforementioned companies and Mitsui Fudosan,
and in the context of transactional details, it was determinedthat there was no potential of any impact on the decisions

Internal Audit Systemof shareholders and investors. Accordingly, details have

As an internal auditing system, the Audit Department, with abeen omitted. In addition, Mitsui Fudosan has not formulat-

staff of 16, carries out regular audits of all business depart-ed criteria concerning the independence of outside direc-

ments and reports the results of its audits. It also works totors and outside auditors.

enhance the effectiveness of internal control by identifying

Revisions to the Tokyo Stock Exchange Securities Listing
Regulations in December 2009 made it obligatory for listed

and providing guidance to audited divisions on areas requiring improvement.

companies to secure independent officers to act from the

Mitsui Fudosan has concluded an auditing contract withpoint of view of protecting general shareholders. Mitsui

KPMG AZSA LLC as its certified public accountant, which

Fudosan has appointed the aforementioned four outside

conducts appropriate audits as necessary in addition to thedirectors and three outside auditors as independent officers.

audit at the end of the fiscal year.

Compensation for Directors and Corporate Auditors
Total
Compensation(Millions of yen)

Basic Compensation

Stock Options

Bonus

Number ofApplicable Officers

Directors (Excluding outside directors)

813

500

66

246

13

Corporate Auditors (Excluding outside directors)

84

84

—

—

3

Outside Directors

76

76

—

—

8

Title

30

Amount of Compensation by Type (Millions of yen)Compensation of Directors Exceeding ¥100 Million

Total
Compensation(Millions of yen)

Basic Compensation

Stock Options

Bonus

Chairman of the Board and Chief Executive Officer
Hiromichi Iwase

169

99

13

56

President and Chief Executive Officers
Masanobu Komoda

155

87

12

56

Amount of Compensation by Type (Millions of yen)

Mitsui Fudosan has no conflicts of interest with either the

In addition, the Crisis Management Subcommittee, as acertified public accountant or the employees of the certified

subordinate body of the Risk Management Special

public accountant that audit the Company.

Committee, apprehends the circumstances of accidents or

Mitsui Fudosan’s policy to determine audit compensation
for the certified public accountant is decided through ratio-other incidents that occur and determines response policies
and other matters as necessary.

nal consideration of factors including the number of days ofauditing, the size of Mitsui Fudosan and special characteristics of its business.

ComplianceTotal audit compensation for fiscal 2011 was ¥394 mil-

The Mitsui Fudosan Group promotes compliance that

lion. Mitsui Fudosan America, Inc., a consolidated subsid-

extends beyond legal compliance and adherence to corpo-

iary, paid ¥27 million in compensation to KPMG LLP, arate ethics, with a strong awareness of social norms andmember of the same network as Mitsui Fudosan’s certified

principles, and the social responsibilities of a company. Withpublic accountant.

the establishment of the Mitsui Fudosan Group Compliance
Policies as behavioral guidelines for all Group executives

Risk Management

and employees, the Group works to prevent violations of

The Mitsui Fudosan Group believes that appropriately han-Compliance Rules and other internal rules and establishingdling various business risks and minimizing their impact on

the Risk Management Special Committee. Each Mitsui

management is the foundation for achieving sound business

Fudosan Group company has also set up an Internal

activities and CSR objectives.

Consultation System on compliance for employees.

laws and its articles of incorporation by upgrading theUnder the Executive Management Committee, which
supervises overall risk management for Mitsui Fudosan and
the Mitsui Fudosan Group, the Strategy Planning Special
Committee and the Risk Management Special Committee
manage business risk and administrative risk, respectively,
delineate and apprehend risk issues, and propose response
measures.

Risk Management Organization(As of June 28, 2012)

Board of Directors
President and CEO

Executive Management Committee
Strategy Planning Special Committee(Business risk management)
Risk Management Special Committee(Administrative risk management)

Crisis Management Subcommittee
Disaster Risk Management
Department

System Risk Management
Department

Clerical Risk Management
Department

Compliance Management
Department

Respective headquarters, departments, etc.

Group companies

31Management Team(As of June 28, 2012)

Front row, from left: Eiji Hosoya, Yoshiharu Hayakawa, Hiromichi Iwasa, Masanobu Komoda, Mitsudo Urano, Masayuki Matsushima
Back row, from left: Kenji Iino, Toshihide Ichikawa, Yoshiaki Iinuma, Mitsuhiro Matsumoto, Hitoshi Saito, Yoshikazu Kitahara, Hiroshi Asai

Members of the Board
Chairman of the Board and Chief Executive Officer

Executive Managing Directors

Hiromichi Iwasa

Hitoshi Saito
Toshihide Ichikawa
Yoshikazu Kitahara
Hiroshi Asai
Kenji Iino

President and Chief Executive Officer

Masanobu Komoda
Senior Executive Managing Directors

Mitsuhiro Matsumoto
Yoshiaki Iinuma

Managing Directors (Outside Directors)

Yoshiharu Hayakawa
Mitsudo Urano
Eiji Hosoya
Masayuki Matsushima

Auditors
Senior Corporate Auditor

Corporate Auditors (Outside Auditors)

Seizo Kuramoto

Akishige Okada
Keiu NishidaToshiaki Hasegawa

Corporate Auditor

Koichi Nishiyama

32Corporate Officers
Chairman and Chief Executive Officer

Hiromichi Iwasa

Kenji Iino
In charge of Executive Secretarial Department, Corporate Communications Department,
Personnel Department, Appraisal Department, Affiliated Business Department

President and Chief Executive Officer

Yasuhiko Yamashiro

Masanobu Komoda

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

In charge of Audit Department, Corporate Planning Department, Smart City Promotion
Department

Yasuo Onozawa
Deputy Chief Operating Officer, Office Building Division

Senior Executive Managing Officers

Mitsuhiro MatsumotoTakeshi Suzuki
In charge of China Business Department

In charge of Housing Sales Business

Eiichi Sawai

Managing Officers

In charge of Planning and Research Department, Space & Environment Institute

Hiroyuki Ishigami

Yoshiaki Iinuma

Deputy Chief Operating Officer, Retail Properties Division

In charge of Toyosu-Project Development Planning Department, Kashiwanoha Campus
City Project Development Planning Department, Development Planning Department,
Gotanda Project Department, Branch Offices;
Chief Operating Officer, Retail Properties Division

Masatoshi Satou

Executive Managing Officers

Hitoshi Saito
In charge of International Department

Toshihide Ichikawa
In charge of Tokyo Midtown Development Department;
Chief Operating Officer, Accommodations Business Division

Yoshikazu Kitahara
In charge of Architectural and Construction Services Department,
Nihonbashi Urban Planning and Development Department;
Chief Operating Officer, Office Building Division

General Manager, International Department

Takashi Yamamoto
Deputy Chief Operating Officer, Accommodations Business Division;
General Manager, Residential Leasing Business Department

Akihiko Funaoka
General Manager, Corporate Planning Department;
General Manager, Smart City Promotion Department

Shuji Tomikawa
Chief Operating Officer, Real Estate Solution Services Division

Takashi Ueda
Deputy Chief Operating Officer, Office Building Division;
General Manager, Office Building Project Planning Department

Hiroshi Asai
In charge of General Administration Department, Accounting and Finance Department,
Information Systems Department

Group Officers
Group Senior Officers

Group Officers

Hidehisa Takei

Yoichi Arita

Mitsui Fudosan Realty Co., Ltd.

Mitsui Fudosan Building Management Co., Ltd.

Shogo Nakai

Tadashi Ando

Mitsui Fudosan Investment Advisors, inc.

LaLaport Management Co., Ltd.

Masatoshi Ozaki

Tooru Inoue

Mitsui Fudosan Reform Co., Ltd.

Mitsui Fudosan Residential Co., Ltd.

Kiyotaka Fujibayashi
Mitsui Fudosan Residential Co., Ltd.

33

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

Thousands of
U.S. dollars(Note 1)
except per shareamounts

Millions of yen
except per share amounts and number of employees
Years ended March 31

2012

2011

2010

2009

2008

2007

2012

FOR THE YEAR:
Revenue from operations Interest, dividends andmiscellaneous¥1,338,102 ¥1,405,270 ¥1,384,807 ¥1,418,946 ¥1,360,023 ¥1,229,194 $16,280,594
5,854

27,044

31,152

9,389

27,50923,946

71,225

1,296,948

1,382,293

1,356,870

1,349,178

1,305,778

1,180,528

15,779,876

3,702

689

2,027

5,980

7,064

4,410

45,042

Costs and expenses  (including tax)
 Equity in net income ofaffiliated companies
Minority interests
Net income

(580)

(801)

(1,032)(1,565)(1,440)(1,808)(7,057)50,13049,90960,084

83,57287,37875,214609,928

AT YEAR-END:
Total assets Shareholders’ equity andaccumulated othercomprehensive income¥3,868,412 ¥3,780,700 ¥3,710,424 ¥3,758,387 ¥3,634,489 ¥3,294,190 $47,066,699
1,078,183

1,019,941

1,007,811

978,667

971,310944,196

13,118,178

Common stock

174,296

174,296

174,296

174,296

174,296

174,296

2,120,647

Number of employees

16,666

16,28815,922

15,476

14,78813,299¥     57.1

¥     56.8¥     68.4¥     95.1

¥     99.4

22.0

22.0

22.0

22.0

20.0

14.0

Equity ratio (%) (Note 2)

27.9

27.0

27.2

26.0

26.7

28.7

Return on assets (%) (Note 3)

3.55

3.39

3.41

5.06

5.53

5.50

PER SHARE DATA:
Net income (basic) Cash dividends applicableto the year¥     85.5 $     0.695
0.268

RATIOS:

Notes: 1. U.S. dollar amounts are translated from yen at the rate of ¥82.19=U.S.$1.00, the approximate exchange rate at March 31, 2012.
2. Equity ratio = (Net assets – Subscription rights to shares – Minority interests) / Total assets
3. Return on assets (ROA) = (Operating income + Interest, dividends and miscellaneous revenues, excluding extraordinary gains + Equity in net income of affiliated companies) / Average total assets overthe period

34

Management’s Discussion and Analysis

Income Analysis(Billions of yen, %)

2011

2012

Years ended March 31

2010

Revenue from operations¥1,338.1

100.0%¥1,405.3

100.0%¥1,384.8

100.0%

Cost of revenue from operations

1,067.0

79.7

1,138.0

81.0

1,120.1

80.9

Selling, general and administrative expenses

145.1

10.9

147.2

10.5

144.1

10.4

Operating income

126.0

9.4

120.1

8.5

120.6

8.7

Other revenues

5.8

0.4

27.0

2.0

31.1

2.2

Interest expenses

26.7

2.0

27.5

2.0

29.5

2.1

Other expenses

14.3

1.1

36.6

2.6

26.5

1.9

Equity in net income of affiliated companies

3.7

0.3

0.7

0.1

2.0

0.1

Income before income taxes and minority interests

94.5

7.0

83.7

6.0

97.7

7.0

Income taxes

43.8

3.3

33.0

2.3

36.6

2.6

(0.6)

(0.0)

(0.8)

(0.1)

(1.0)

(0.1)

¥   50.1

3.7¥   49.9

3.6¥   60.1

4.3

Minority interests
Net income

contributed to revenue. Other properties that came on-

Revenue from Operations

stream during this period such as “Nagoya Mitsui Building

For fiscal 2011, the year ended March 31, 2012, consolidat-

New Building” and “Mitsui Outlet Park Kurashiki” partially

ed revenue from operations was ¥1,338.1 billion, down 4.8

contributed to revenue. Furthermore, store sales in the retail

percent year on year, or ¥67.2 billion, due to factors includ-facilities were moving favorably. In the “Property Sales” seg-

ing a decrease in the number of units sold in the property

ment, factors including a decrease in the number of units

sales to individuals category resulting from the adjustment inbooked in the “Property Sales to Individuals” category,

construction schedule after the Great East Japancaused by the adjustment in construction schedule due toEarthquake.

the earthquake, led to a decrease in revenue from opera-

In the “Leasing” segment, there was an impact from thetions. In the “Property Sales to Investors” category, revenue

decrease in revenue in the existing buildings. However,decreased from the previous period despite property sales

properties that came on-stream during the previous period

to Nippon Building Fund and Mitsui Fudosan Private REIT.

such as the “Sumitomo Mitsui Banking Corporation HeadIn the “Management” segment, revenue increased in the

Office Building” and “Mitsui Outlet Park Shiga Ryuo” fully“Property Management” category due to an increase in thenumber of units managed in our “Repark” (Car Park

Revenue from Operations

ties handled. In addition, revenue was up in the “Brokerageand Asset Management” category due to an increase in thenumber of properties handled in our brokerage business forindividuals, Mitsui Rehouse business, and a recorded asset
management fee for fund arrangement.

171.5

150

179.3

1,338.1

1,405.3

1,384.8(Billions of yen)
200

1,418.9

1,200

1,360.0(Billions of yen)
1,500

Leasing) business and an increase in the number of proper-

Operating Income

120.1

126.0

100

120.6

900

10

11

12

600

50
300

0

0

08

09

10

11

12

08

09

(Years ended March 31)

35

Management’s Discussion and Analysis

COST OF REVENUE FROM OPERATIONS AND
SGA EXPENSES

Fudosan incurred a loss on disposal of property and equipment of ¥5.6 billion, an impairment loss on investment
securities of ¥1.3 billion and casualty losses of ¥0.4 billion

Cost of revenue from operations decreased 6.2 percent

while providing for casualty losses of ¥0.8 billion, eachyear on year, or ¥71.1 billion, to ¥1,067.0 billion. Gross prof-

amount was substantially lower than the previous fiscal year.

it from operations increased 1.5 percent, or ¥3.9 billion, toNotes 19 to 21 of the Notes to Consolidated Financial¥271.1 billion, and the gross margin increased to 20.3 per-Statements provide additional information.

cent from 19.0 percent.
Selling, general and administrative (SGA) expenses
decreased 1.4 percent year on year, or ¥2.0 billion, to¥145.1 billion.

Income before Income Taxes andMinority Interests and Net Income
Equity in net income of affiliated companies increased 437.3
percent year on year, or ¥5.4 billion, to ¥3.7 billion. Income

Operating Income

before income taxes and minority interests increased 12.9

Operating income was ¥126.0 billion, up 5.0 percent year

percent, or ¥10.8 billion, to ¥94.5 billion. Income taxes net

on year, or ¥ 5.9 billion, due to factors including office build-of deferrals increased 32.7 percent, or ¥10.8 billion, toings and retail facilities coming on-stream and an improved¥43.8 billion. Consequently, net income increased 0.4 per-profit ratio in property sales to individuals category.

cent, or ¥0.2 billion, to ¥50.1 billion. Net income per share
increased to ¥57.1 from ¥56.8 for the previous fiscal year.

INTEREST, DIVIDENDS AND MISCELLANEOUS
INCOME, AND OTHER COSTS AND EXPENSES
Interest, dividends and miscellaneous revenue decreased
78.4 percent, or ¥21.2 billion, to ¥5.9 billion. This decrease
mainly reflected the absence of the gain on sale of investment securities, which totaled ¥21.0 billion in fiscal 2010.
Other costs and expenses decreased 60.9 percent, or¥22.3 billion, to ¥14.3 billion. This largely reflected theabsence of any impairment loss on fixed assets, which
totaled ¥4.1 billion in the previous fiscal year. While Mitsui

68.4

83.6

60

40

50.1

49.9

60.1

60

20

0

0

09

10

11

12

11

12

40

20

08

57.1

80

80

56.8

(Yen)
100

99.4

(Billions of yen)
100

95.1

Net Income per Share

87.4

Net Income

08

09

10

(Years ended March 31)

36

Mitsui Fudosan maintained annual cash dividends per shareat ¥22.0.

SEGMENT INFORMATIONN LEASING(Millions of yen)

2012

2011

Office Buildings¥283,614¥291,721

Retail Facilities

131,560

125,810

Years ended March 31

Revenue
Total Leased Floor Space (1,000 m ):

4,531

4,383

Owned

1,303

1,240

Managed

1,533

1,531

Owned

1,042

971

2

Office Buildings
and Retail Facilities

Office Buildings
Retail Facilities

Managed

654

640

5,353

5,936

Total Revenue

420,528

423,468

Operating Income

95,70088,929

Other

Revenue

For the period under review, there was an impact from themoving favorably. As a result, entire segment revenue fromdecrease in revenue in the existing buildings. However,operations was down ¥2.9 billion from the previous period,

properties that came on-stream during the previous period

and operating income was up ¥6.8 billion. The vacancy rate

such as the “Sumitomo Mitsui Banking Corporation Headof the Company’s office buildings (non-consolidated) in the

Office Building” and “Mitsui Outlet Park Shiga Ryuo” fully

Tokyo Metropolitan Area remained low compared to thecontributed to revenue for the period. In addition, othermarket, amounting to 4.4 percent.

properties that have come on-stream during this period
such as “Nagoya Mitsui Building New Building” and “Mitsui
Outlet Park Kurashiki” have contributed to revenue for theperiod. Furthermore, store sales in the retail facilities were

4.4
3.9

400

80

4.0

3

300

60

200

40

100

20

95.7

4.4

(Billions of yen)
100

88.9

4

Operating Income(Billions of yen)
500

420.5

(%)
5

Revenue from Operations

423.5

Vacancy Rate for Tokyo Metropolitan Area Office Buildings(Non-consolidated)

3.0
2.5

2

1.6

1

1.3

1.0
0

0

04

05

06

07

08

09

10

11

12

(As of March 31)

0

11

12

11

12
(Years ended March 31)

37

Management’s Discussion and Analysis

M Property Sales

Property Sales to Individuals and Investors(Millions of yen)

Units

Average Unit
Price

Revenue

Units

Average Unit
Price

Tokyo Metropolitan Area ¥178,929

3,456

¥52

¥218,013

4,048

¥54

Revenue

Condominiums
Property Sales
to Individuals
Detached Housing

Property Sales to Investors
Total

2011

2012

Years ended March 31/As of March 31

Other34,9101,056

33

48,037

1,407

34

Subtotal

213,8394,512

47

266,0515,455

49Tokyo Metropolitan Area

37,187664

56

45,098

825

55

Other

6,216

140

44

5,187

100

52

Subtotal

43,403804

5450,285925

54

Revenue

257,2435,316

48

316,3366,380

50

Operating Income

10,264

9,735

Revenue

64,10888,905

Operating Income

5,470

6,458

Revenue

321,352

405,243

Operating Income

15,734

16,193Inventories (Property Sales to Individuals)(Units)
As of March 31

2012

2011

2010

2009

2008

Condominiums

380

638

872

826

453

Detached Housing

24

46

40

93

115

Total

404

684

912

919

568

In the “Property Sales to Individuals” category, although revenue decreased because of a decrease in the number ofresidential units from the previous period due to the adjustment in construction schedule after the Great East Japan
Earthquake, operating income was up led by an improved
profit ratio resulting from a decline in the proportion of properties with low gross margin rates.
In the “Property Sales to Investors” category, both revenue and earnings were down from the previous period,

Revenue from Operations(Billions of yen)
500

Operating Income(Billions of yen)
20

In the entire segment, revenue was down ¥83.9 billion
300

321.4

and operating income was down ¥0.5 billion from the previous year.
Thanks to favorable market sales conditions in the

15

15.7

400

405.2

Fudosan Private REIT.

16.2

despite property sales to Nippon Building Fund and Mitsui

10

200

“Property Sales to Individuals,” the completed housing
inventories of residential units declined to 404 from 684 at

5100

the end of the previous period.
0

0

11

12

11

12
(Years ended March 31)

38

N Management(Millions of yen)

2012

2011

¥212,878¥206,085

Operating Income

23,776

21,905

Revenue

73,76071,860Years ended March 31

Operating Income

10,587

10,215

Revenue

286,639

277,947

Operating Income

34,364

32,121For the period under review, revenue and earnings wereincreased in the “Property Management” category due to anincrease in the number of units managed in our “Repark”(Car Park Leasing) business and an increase in the number

Revenue from Operations(Billions of yen)
300

“Brokerage and Asset Management, etc.” category also
reported improved revenue and earnings, due mainly to a(Billions of yen)
40

277.9

of properties handled.

30

200

higher number of properties handled in our brokerage busi-

20

ness for individuals in Mitsui Rehouse business and arecorded asset management fee for fund arrangement.

Operating Income

34.4

Total

32.1

Brokerage, Asset Management, etc.

Revenue

286.6

Property Management

100

In the entire segment, revenue was up ¥8.6 billion from the10previous period and operating income was also up ¥2.2 billion.
0

0

11

12

11

12
(Years ended March 31)

39

Management’s Discussion and Analysis

N Mitsui Home

(Millions of yen)

2012

2011

Revenue¥160,316¥152,816

Orders144,573

142,753

Revenue

18,414

26,901

Orders

22,791

31,235

17,891

17,223Years ended March 31

New Construction
Reform/Renewal
Lease Management
Other

10,945

8,189

Total Revenue

207,568

205,131

4,187

3,764

Operating Income

Note: The above revenue figures differ from those disclosed by Mitsui Home, because sales to the Mitsui Fudosan Group are deducted from Mitsui Home’s consolidated revenue from operations.

“New Construction” at the beginning of the year than in theprevious fiscal year and unit prices rose. Entire segment revenue was up ¥2.4 billion from the previous period, andoperating income was up ¥0.4 billion.

(Billions of yen)
250

(Billions of yen)
5

200

4

150

3

100

2

50

1

0

4.2

accordingly. On the other hand, there were more orders forOperating Income

3.8

moved to the “Other” segment, decreasing the revenue

Revenue from Operations

207.6

gory, the revenue of Mitsui Home Remodeling Co., Ltd. was

205.1

For the period under review, in the “Reform/Renewal” cate-

0

11

12

12

11

(Years ended March 31)

N Other

2011

Facility Operations¥49,079¥49,923

Merchandise

40,00340,272

Other

12,931

3,284

Total Revenue

102,015

93,481

(807)

1,002

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

100

80

60

For the period under review, due to factors including theperiod, and operating income was down ¥1.8 billion for theentire segment.

0.5

0.0

40
-0.5

revenue for Mitsui Home Remodeling Co., Ltd moved to this
20

-0.8

segment, revenue was up ¥8.5 billion from the previous

Operating Income

1.0

2012

102.0

Years ended March 31

Revenue from Operations

93.5(Millions of yen)

-1.0

0

11

12

11

12
(Years ended March 31)

40

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

2011

2012

As of March 31

Cash and cash equivalents¥   61.7

1.6%

2010

¥   56.7

1.5%¥   62.7

1.7%

Inventories

651.0

16.8

651.2

17.2

684.8

18.4

Other current assets

229.0

5.9

221.3

5.9

240.0

6.5

Investments and other assets

633.8

16.4

612.8

16.2

630.6

17.0

Net property and equipment

2,292.959.3

2,238.7

59.2

2,092.3

56.4

Total

¥3,868.4

100.0%¥3,780.7

100.0%¥3,710.4

100.0%

Liabilities and Net Assets(Billions of yen, %)

2011

2012

As of March 31

Interest-bearing debt—Short term¥   296.9

Interest-bearing debt—Long term

1,446.5

37.4

1,443.3

38.2

1,433.3

38.6   Total interest-bearing debt

1,743.4

45.1

1,740.0

46.0

1,746.7

47.1

Other current liabilities *

395.4

10.2

359.1

9.5

280.0

7.5

Other long-term liabilities *2

629.2

16.3

639.2

16.9

654.5

17.6

1

Minority interests

7.7%

2010

¥   296.7

7.8%¥   313.4

8.5%

21.6

0.5

21.9

0.6

21.0

0.6

Net assets (other than minority interests)

1,078.8

27.9

1,020.5

27.0

1,008.2

27.2

Total

¥3,868.4

100.0%¥3,780.7

100.0%¥3,710.4

100.0%

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

Current Assets

Investments and Other Assets

Current assets increased 1.4 percent from the previous fis-

Investments and other assets increased 3.4 percent from acal year-end, or ¥12.6 billion, to ¥941.7 billion. Cash andyear earlier, or ¥21.0 billion, to ¥633.8 billion. Investments incash equivalents increased 8.9 percent from the previous

unconsolidated subsidiaries and affiliated companies

fiscal year-end, or ¥5.1 billion, to ¥61.7 billion. Inventories

increased 7.3 percent, or ¥8.3 billion, to ¥122.2 billion.

were effectively unchanged year on year at ¥651.0 billion.

Investment securities increased 4.5 percent, or ¥11.8 billion,

Advances paid for purchases, primarily of real estate forto ¥275.5 billion.

sale, increased ¥6.3 billion, or 182.6 percent, to ¥9.7 billion.
Equity investments in properties for sale, which primarily

Property and Equipment

represent securitized interests in properties for sale,Net property and equipment increased 2.4 percent from adecreased 12.4 percent, or ¥8.2 billion, to ¥57.6 billion.

year earlier, or ¥54.2 billion, to ¥2,292.9 billion. The increase

More than offsetting a 26.4 percent, or ¥12.4 billion, year-

stemmed from the construction investment for Yokohama

on-year decrease in deferred income taxes which fell to

Mitsui Building by Mitsui Fudosan and Mitsui Outlet Park

¥34.5 billion, other current assets rose by 29.7 percent, orKisarazu and the new investment for office buildings by¥21.0, to ¥91.8 billion. Working capital decreased 8.6 per-Mitsui Fudosan (U.K.) Ltd. Capital expenditures decreased

cent from a year earlier to ¥249.4 billion, and the current

0.5 times year on year, or ¥117.6 billion, to ¥111.8 billion,

ratio was 1.36 times, compared with 1.42 times at the end

while depreciation totaled ¥53.2 billion.

of the previous fiscal year.

41

Management’s Discussion and Analysis

Current Liabilities

earnings increased 9.5 percent, or ¥31.5 billion, to ¥363.9

Current liabilities increased 5.6 percent from a year earlier,billion. Reserve on land revaluation, which is recorded as aor ¥36.5 billion, to ¥692.3 billion. Mitsui Fudosan has estab-component of net assets under Japanese GAAP, increased

lished committed lines of credit totaling ¥230.0 billion with

8.4 percent from a year earlier, or ¥22.9 billion, to ¥294.1

several financial institutions to ensure access to funds andbillion. Net unrealized holding gains on securities, which isadequate liquidity. The Company had not accessed theserecorded as a component of net assets under Japaneselines of credit as of the balance sheet date.

GAAP, increased 19.9 percent, or ¥8.4 billion, to ¥50.4 billion. Negative foreign currency translation adjustments

Long-term Liabilities

resulting from the yen’s value relative to the U.S. dollar andLong-term liabilities decreased 0.3 percent from a year earli-

the British pound at the fiscal year-end decreased net

er, or ¥7.1 billion, to ¥2,075.7 billion. Long-term debt due

assets by ¥46.5 billion. Total capital (the sum of bank loans,

after one year increased 0.2 percent, or ¥3.2 billion, tocommercial paper, long-term debt due within one year,¥1,446.5 billion. While making the substantial capital invest-

long-term debt due after one year, and net assets)

ments discussed earlier, Mitsui Fudosan stressed soundincreased ¥61.4 billion to ¥2,843.8 billion from ¥2,782.4 bil-finances and selectivity in investing in opportunities forlion a year earlier. Both net assets and interest-bearing debt

growth, and supplemented funds for investment throughincreased. Net assets represented 38.7 percent of total

cost recovery from property sales. Interest-bearing debt

capital, compared with 37.5 percent at the previous fiscal

increased 0.2 percent, or ¥3.4 billion, to ¥1,743.4 billion.

year-end.
The debt / equity ratio*1 decreased to 1.62 times from 1.71

Net Assets and Total Capitaltimes. Return on assets (ROA)*2 was 3.55 percent, compared

For fiscal 2011, net assets increased 5.6 percent from awith 3.39 percent a year earlier. Return on equity (ROE)*3 wasyear earlier, or ¥58.0 billion, to ¥1,100.4 billion. Retained

4.78 percent, compared to 4.92 percent a year earlier.

Notes : 1. Equity ratio = (Net assets – Subscription rights to shares – Minority interests) / Total assets
		 2. ROE = Net income / (Net assets – Subscription rights to shares – Minority interests, Average over the period)(Billions of yen)
2,000

3.55

3.39

3.41

3

1,000

2
1,000

27.2 27.0 27.9

1,020.5

1,008.2800

1,078.8

26.0

25

20

600

15

400

10

200

5

500
1

0

0

08

09

10

11

12

(As of March 31)

42

(%)
30

1,000

971.4

1,743.4

1,740.01,550.4

1,500

1,746.7

5.06

5

4

2,000

(Billions of yen)
1,200
26.7

5.53

3,868.4

3,780.7

3,710.4(%)
6

3,758.4

3,000

3,634.5(Billions of yen)
4,000

Net Assets (Other than Minority
Interests) and Equity Ratio

Interest-Bearing Debt

978.9

ROA

1,733.6

Total Assets

0

08

09

10

11

12

(Years ended March 31)

0

08

09

10

11

12

(As of March 31)

0

08

09

10

11

12

(As of March 31)
Net Assets (Other than Minority Interests)
Equity RatioCash Flows(Billions of yen)
Years ended March 31

2012

2011

2010

Cash flows from operating activities¥148.2¥185.1¥84.4

Cash flows from investing activities(124.4)(170.6)(64.8)Cash flows from financing activities(18.7)(20.4)(19.8)

Effect of exchange rate changes on cash and cash equivalents

(0.1)

(0.2)

0.1

Net (decrease) increase in cash and cash equivalents

5.0

(6.0)

(0.2)

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

56.7

62.7

62.9

¥ 61.7¥ 56.7¥62.7

CASH FLOWS

of property and equipment totaled ¥105.5 billion, compared

Despite the increase in income before income taxes, netwith ¥179.0 billion for the previous fiscal year. Net changes

cash provided by operating activities totaled ¥148.2 billion,

in deposits from tenants and in lease deposits provided cash

compared with ¥185.1 billion in the previous fiscal year. The

totaling ¥7.5 billion, compared with ¥9.0 billion used for themain factor in the year-on-year change was that net

previous fiscal year. Net purchases of marketable and invest-

increase in real property for sale and advances paid for pur-ment securities totaled ¥22.1 billion, compared with net pro-chases used cash totaling ¥10.1 billion, while in the previ-

ceeds from sale of marketable and investment securities ofous fiscal year net decrease provided cash totaling ¥46.3
billion. The line item “Decrease (increase) in real property forsale and advances paid for purchases” represents the net(Millions of yen)effect of cost recovery and purchase of inventories, which

Years ended March 31

2012

2011

consist primarily of property held for sale. Depreciation andIncrease in deposits from tenants¥40,902¥52,669

amortization increased to ¥53.2 billion.

Decrease in deposits from tenants(43,110)(64,805)

Increase in lease deposits(8,157)(8,395)

Net cash used in investing activities totaled ¥124.4 billion,
compared with ¥170.6 billion for the previous fiscal year.

Decrease in lease deposits

17,862

11,557

Mitsui Fudosan continues to acquire properties with long-

Total¥ 7497¥ (8,974)

term potential when circumstances are favorable. Purchases

Cash Flows fromOperating Activities

148.2

0

10

11

23.8

150

14.5

185.1

(Billions of yen)
100

1.62

1.71

1.73

1.60

1.5

(Billions of yen)
200

1.77

(Times)2.0

Free Cash Flow

19.6

Debt/Equity Ratio

1.0

-100

84.4

97.8

100

(182.6)

50

0.5

-200

-50

08

09

10

11

12

(As of March 31)

08

09

-300

10

11

12

(Years ended March 31)(294.4)0.0(41.0)

0

08

09

12

(Years ended March 31)

43

Management’s Discussion and Analysis¥9.7 billion for the previous fiscal year.
Net cash used in financing activities totaled ¥18.7 billion,

OUTLOOK FOR FISCAL 2012 (Year Ending March 31, 2013)

primarily representing cash dividends paid of ¥19.3 billion.

In the next period we forecast ¥1,460.0 billion in revenue

In the previous fiscal year, financing activities used net cashfrom operations, up approximately ¥122.0 billion, and fore-

totaling ¥20.4 billion. Net proceeds from bank loans andcast a ¥9.0 billion increase in operating income to ¥135.0

commercial paper amounted to ¥8.2 billion compared withbillion. Net income is likely to increase by ¥4.9 billion to

net repayments of bank loans and commercial paper of¥55.0 billion.

¥1.5 billion in the previous fiscal year. Proceeds from longterm debt totaled ¥221.8 billion, compared with ¥217.6 bil-

Segment Forecasts

lion for the previous fiscal year. Repayments of long-term

Leasing: Retail facilities that have opened in the current fis-debt, consisting primarily of long-term bank loans, totaled

cal year, “Mitsui Outlet Park Kisarazu” and “DiverCity¥245.3 billion, compared with ¥254.0 billion for the previous

Tokyo,” are contributing to revenue; thus, we expect an

fiscal year. Proceeds from issuance of bond totaled ¥20.0

increase in revenue of ¥13.4 billion and an increase in oper-

billion while there were no payments for redemption of

ating income of ¥2.3 billion for the entire segment.

bond. Net repayments of long-term debt and bonds therefore totaled ¥3.4 billion on a cash basis, compared with net

Property Sales: We expect an increase in both revenue andproceeds of ¥3.6 billion in the previous fiscal year. Mitsui

earnings from factors including an increase in the number ofFudosan maintains a conservative level of operating lever-units booked and an improved profit ratio in “Property Sales toage and largely drew on internal capital resources in invest-

Individuals” category, and we also expect an increase in bothing for future growth during fiscal 2011. Cash dividends

revenue and earnings in “Property Sales to Investors.” For thepaid were essentially unchanged year on year.

entire segment, we expect a ¥83.6 billion increase in revenue
and a ¥6.2 billion increase in operating income.
(Millions of yen)

2012

2011

Proceeds from long-term debt

¥ 221,832¥ 217,597

Repayments of long-term debt

(245,256)(253,952)

Proceeds from issuance of bond

20,00050,000Years ended March 31

Payments for redemption of bond
Total

44

(10,000)—¥   3,424

¥

3,645

Management: While revenue was increased due to a higher
number of properties handled in our brokerage business for

RISK INFORMATION

individuals and an increase in the number of units entrusted

The operations of the Mitsui Fudosan Group are subject tofor property management, asset management fee for funda number of risks, some of which are outlined below along

arrangement was recorded in the current fiscal year. Thus,

with issues that may not necessarily constitute risk factors

we expect an increase in revenue by ¥7.3 billion and abut that may influence investor decisions.

decrease of operating income by ¥1.3 billion for the entire
segment.

Changes in Demand
Economic conditions influence demand among tenant com-

Other: Due to a business expansion by Mitsui Fudosan

panies for space in the office buildings that the Mitsui

Reform Co., Ltd. and a steady improvement of revenue inFudosan Group owns and manages, and influence demand

Hotel business category, we expect improvement in revenue

among individuals for housing. A downturn in the Japaneseand earnings.

economy may exert a material impact on the Mitsui
Fudosan Group’s performance and the value of its assets.

Mitsui Fudosan plans to pay total cash dividends of ¥22.00
per share, consisting of an ¥11.00 interim dividend and an

Interest Rates¥11.00 year-end dividend.

Higher interest rates in the future could increase the Mitsui
Fudosan Group’s funding costs, raise the returns investors
expect from real estate investments and reduce demand
among individuals for housing, and may therefore exert amaterial impact on the Mitsui Fudosan Group’s performanceand the value of its assets.
Changes in Real Estate Taxes
Changes in real estate taxes that increase the cost of owning, acquiring or selling real estate or reduce consumer willingness to purchase housing may exert a material impact
on the Mitsui Fudosan Group’s performance and the valueof its assets.
Changes in Real Estate and Finance Laws
Future changes in laws or regulations relevant to Mitsui
Fudosan’s businesses, including the Building Standard Law,
the City Planning Act and the Financial Instruments andExchange Law, that reduce the value of assets or limit thescope of operations by incurring new obligations, increasing
costs or limiting asset ownership rights may exert a material
impact on the Mitsui Fudosan Group’s performance.
Natural Disasters
Natural disasters may damage or destroy the Mitsui
Fudosan Group’s assets, and may therefore exert a material
impact on the Mitsui Fudosan Group’s performance and thevalue of its assets.

45

Consolidated Balance Sheets
Mitsui Fudosan Co., Ltd. and its Subsidiaries
As of March 31, 2012 and 2011

Thousands of
U.S. dollars (Note 1)

Millions of yen

2012

2011

2012

¥   61,727¥   56,676$   751,028

ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 4)

15

—

183

Notes and accounts receivable - trade (Note 4)

Marketable securities (Note 4, 5)

26,53924,042322,898

Short-term loans receivable

9,620

11,511

117,046

Allowance for doubtful accounts(879)(1,245)(10,695)

650,956

651,178

7,920,136

9,757

3,452

118,713Inventories (Note 8)
Advances paid for purchases (Note 9)
Equity investments in properties for sale (Note 4, 5, 24)

57,56965,739700,438

Deferred income taxes (Note 11)34,54446,946420,294

Other current assets

91,88270,867

1,117,922   Total current assets

941,730

929,166

11,457,963

Investments in unconsolidated subsidiaries and affiliated companies

122,156

113,832

1,486,264

Investment securities (Note 4, 5, 24)

275,492

263,688

3,351,892

Non-current loans and accounts receivable

58,91445,533

716,803

INVESTMENTS and OTHER ASSETS

Allowance for doubtful accounts(6,529)(6,917)(79,438)

160,846

171,556

1,957,002

Deferred income taxes (Note 11)

9,761

10,104

118,761

Deferred tax assets on land revaluation

1,233

1,451

15,002

Lease deposits (Note 4, 10)

Other11,906

13,564

144,859

633,779

612,811

7,711,145

Land (Note 7, 13)

1,637,381

1,605,148

19,921,900

Buildings and structures (Note 7, 13)

1,098,664

1,045,763

13,367,368

Machinery and equipment

112,615

104,936

1,370,179

Construction in progress

31,43034,611

382,4072,880,090

2,790,458

35,041,854(587,187)(551,735)(7,144,263)    Total investments and other assets

PROPERTY and EQUIPMENT, at cost:

Accumulated depreciation   Net property and equipment
See accompanying notes.

46

2,292,903

2,238,723

27,897,591¥3,868,412¥3,780,700$47,066,699

Thousands of
U.S. dollars (Note 1)

Millions of yen

2012

2011

2012

¥   32,157¥   36,322$   391,252

LIABILITIES AND NET ASSETSCURRENT LIABILITIESBank loans (Note 4, 13)Commercial paper (Note 4, 13)

37,00024,000450,176

Long-term debt due within one year (Note 4, 13)

227,765

236,390

2,771,201

Notes and accounts payable—trade (Note 4)

101,32187,1381,232,766

Accrued expenses

25,483

21,557

310,050

Income taxes payable

11,651

24,250141,757

Advances and deposits received

162,122

133,630

1,972,527

Deferred income taxes (Note 11)

396

486

4,818

Other current liabilities (Note 14)

94,41592,0481,148,741

692,310

655,821

8,423,288

33,002

31,494

401,533

957

1,186

11,644

1,446,489

1,443,336

17,599,331

353,837

354,858

4,305,110   Total current liabilities
LONG-TERM LIABILITIESAllowance for employees’ retirement benefits (Note 12)
Allowance for directors’ and corporate auditors’ retirement benefits
Long-term debt due after one year (Note 4, 13)
Deposits from tenants (Note 4, 15)Deferred income taxes (Note 11)

32,471

20,048395,072

Deferred tax liabilities on land revaluation

168,130

192,374

2,045,626

Other long-term liabilities (Note 14)

40,80939,197496,520

2,075,695

2,082,493

25,254,836

174,296

174,296

2,120,647

Capital surplus

248,297248,310

3,021,012

Retained earnings

363,877

332,336

4,427,266(5,386)(5,397)(65,530)

781,084

749,545

9,503,395

50,35541,995

612,666   Total long-term liabilities
CONTINGENT LIABILITIES (Note 26)
NET ASSETS (Notes 16 and 17)
Shareholders' equity
Common stock   Authorized— 3,290,000,000 shares   Issued— 881,424,727 shares in 2012 and 2011

Treasury stock — 3,098,596 shares in 2012 and
3,087,750 shares in 2011   Total shareholders' equity
Accumulated other comprehensive income (loss)
Net unrealized holding gains on securities
Net unrealized losses on hedging derivatives
Reserve on land revaluation
Foreign currency translation adjustments    Total accumulated other comprehensive income
Subscription rights to shares (Note 18)

(869)

(371)

(10,573)

294,110271,2423,578,416(46,497)(42,470)(565,726)

297,099

270,3963,614,783

588

521

7,154

Minority interests

21,63621,924

263,243

Total net assets

1,100,407

1,042,386

13,388,575¥3,868,412¥3,780,700$47,066,699

See accompanying notes.

47

Consolidated Statements of Income
Mitsui Fudosan Co., Ltd. and its Subsidiaries
For the years ended March 31, 2012, 2011 and 2010

Thousands of
U.S. dollars (Note 1)

Millions of yen

2012

2011

2010

2012

¥1,338,102¥1,405,270¥1,384,807$16,280,594

REVENUES
Revenue from operations (Note 25)
Interest, dividends and miscellaneous (Note 20)

5,854

27,044

31,152

71,225

1,343,956

1,432,314

1,415,959

16,351,819

1,066,968

1,138,048

1,120,091

12,981,725

Selling, general and administrative expenses

145,096

147,129

144,130

1,765,373

Interest

26,74827,45629,544

325,441

COSTS AND EXPENSES
Cost of revenue from operations

Other (Note 19, 21)

14,34536,681

26,530174,535

1,253,157

1,349,314

1,320,295

15,247,074

EQUITY IN NET INCOME OF AFFILIATED COMPANIES

3,702

689

2,027

45,042

INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS

94,501

83,68997,691

1,149,787

Current

17,611

34,04628,014214,272

Deferred

26,180(1,067)

8,561

318,530

INCOME TAXES (Note 11)  Total43,791

32,97936,575532,802

NET INCOME BEFORE MINORITY INTERESTS

50,71050,71061,116

616,985

(580)

(801)

(1,032)(7,057)¥   50,130¥   49,909¥   60,084$   609,928

MINORITY INTERESTSNET INCOME

48

Consolidated Statements of Comprehensive Income
Mitsui Fudosan Co., Ltd. and its Subsidiaries
For the year ended March 31, 2012 and 2011

Thousands of
U.S. dollars (Note 1)

Millions of yen

2012

2011

2012

¥50,710¥ 50,710$616,985

Net unrealized holding gains (losses) on securities

8,348(9,832)

101,570

Net unrealized gains (losses) on hedging derivatives

(531)

189

(6,461)

Net income before minority interests
Other comprehensive income (loss):Reserve on land revaluation

23,50343285,959

Foreign currency translation adjustments(2,775)(7,223)(33,763)

Equity in other comprehensive loss of affiliated companies(1,210)(1,315)(14,722)

Total other comprehensive income (loss)

27,335(18,138)

332,583

Total comprehensive income¥78,045¥ 32,572$949,568¥77,551¥31,693$943,558

494

879

6,010

¥78,045¥32,572$949,568

Comprehensive income attributable to:Shareholders of the Company
Minority interests   Total
See Note 22.

Yen

U.S. dollars (Note 1)

PER SHARE INFORMATION

2012

2011

2010

2012

Net assets per share*¥1,227.5¥1,161.2¥1,147.2$14.935— Basic

57.1

56.8

68.4

0.695

— Diluted

57.0

56.8

68.4

0.694

Cash dividends

22.0

22.0

22.0

0.268

Net income per share* Net assets per share information does not include subscription rights to shares and minority interests.
See accompanying notes.

49Consolidated Statements of Changes in Net Assets
Mitsui Fudosan Co., Ltd. and its Subsidiaries
For the years ended March 31, 2012, 2011 and 2010

Millions of yen
Shareholders' equity

BALANCE AT APRIL 1, 2009

Shares ofcommonstock(thousands)

Commonstock

Capitalsurplus

Accumulated other comprehensive income (loss)

Retainedearnings

Treasury
stock

Net
Net
unrealized unrealized
holding
gains
gains(losses)(losses) on on hedging
securities derivatives

Reserveon landrevaluation

Foreigncurrency Subscription
translationrights toadjustments
sharesMinority
interests¥20,973 ¥  999,860

Total
net
assets881,425¥174,296¥248,332¥332,334¥(5,003)¥ 1,793¥(459)¥263,063¥(35,689)¥220

Decrease in number of affiliated companies

—

—

—

(62,443)

—

—

—

—

—

—

—

(62,443)

Cash dividends paid

—

—

—

(19,329)

—

—

—

—

—

—

—

(19,329)

Net income

—

—

—

60,084

—

—

—

—

—

—

—

60,084 Reversal of reserve on land revaluation,
net of tax
Purchase of treasury stock

—

—

—

(8,992)

—

—

—

8,274

—

—

—

(718)

—

—

—

—

(275)

—

—

—

—

—

—

(275)

Sales of treasury stock

—

—

(12)

—

88

—

—

—

—

—

—

76

Net unrealized holding gains on securities

—

—

—

—

—

50,121

—

—

—

—

—

50,121

—

—

—

—

—

—

(129)

—

—

—

—

(129)

 Net unrealized losses on hedging
derivatives
Foreign currency translation adjustments

—

—

—

—

—

—

—

—

1,757

—

—

1,757

Subscription rights to shares

—

—

—

—

—

—

—

—

—

158

—

158

Minority interests

—

—

—

—

—

—

—

—

—

—

64

64

BALANCE AT MARCH 31, 2010

881,425

174,296248,320

301,654(5,190)51,914(588)

271,337(33,932)378

21,037

1,029,226

BALANCE AT APRIL 1, 2010

1,029,226

881,425

174,296248,320

301,654(5,190)51,914(588)

271,337(33,932)378

21,037

Decrease in number of affiliated companies

—

—

—

(20)

—

—

—

—

—

—

—

(20)

Cash dividends paid

—

—

—

(19,327)

—

—

—

—

—

—

—

(19,327)

Net income

—

—

—

49,909

—

—

—

—

—

—

—

49,909 Reversal of reserve on land revaluation,
net of tax
Purchase of treasury stock

—

—

—

120

—

—

—

(95)

—

—

—

25

—

—

—

—

(268)

—

—

—

—

—

—

(268)

Sales of treasury stock

—

—

(10)

—

61

—

—

—

—

—

—

51

Net unrealized holding losses on securities

—

—

—

—

—

(9,919)

—

—

—

—

—

(9,919) Net unrealized gains on hedging
derivatives

—

—

—

—

—

—

217

—

—

—

—

217

Foreign currency translation adjustments

—

—

—

—

—

—

—

—

(8,538)——(8,538)Subscription rights to shares

—

—

—

—

—

—

—

—

—

143

—

143

Minority interests

—

—

—

—

—

—

—

—

—

—

887

887

BALANCE AT MARCH 31, 2011

881,425¥174,296¥248,310¥332,336¥(5,397)¥41,995¥(371)¥271,242¥(42,470)¥521¥21,924 ¥1,042,386

BALANCE AT APRIL 1, 2011

881,425

174,296248,310332,336(5,397)

41,995(371)

271,242(42,470)521

21,924

Decrease in number of affiliated companies

—

—

—

17

—

—

—

—

—

—

—

17

Cash dividends paid

—

—

—

(19,324)

—

—

—

—

—

—

—

(19,324)

Net income Reversal of reserve on land revaluation,
net of tax

1,042,386———

50,130

—

—

—

—

—

—

—

50,130

—

—

—

718

—

—

—

22,868———23,586(99)

Purchase of treasury stock

—

—

—

—

(99)

—

—

—

—

—

—

Sales of treasury stock

—

—

(13)

—

110

—

—

—

—

—

—

97

Net unrealized holding gains on securities

—

—

—

—

—

8,360

—

—

—

—

—

8,360

 Net unrealized gains (losses) on
hedging derivatives
Foreign currency translation adjustment

—

—

—

—

—

—

(498)

—

—

—

—

(498)

—

—

—

—

—

—

—

—

(4,027)——(4,027)

Subscription rights to shares

—

—

—

—

—

—

—

—

—

67

—

67

Minority interests

—

—

—

—

—

—

—

—

—

—

(288)

(288)

881,425¥174,296¥248,297¥363,877¥(5,386)¥50,355¥(869)¥294,110¥(46,497)¥588

BALANCE AT MARCH 31, 2012

¥21,636 ¥1,100,407

Thousands of U.S. Dollars (Note 1)

BALANCE AT APRIL 1, 2011

$6,339 $266,748 $12,682,637

Decrease in number of affiliated companies

—

—

207

—

—

—

—

—

—

—

207

Cash dividends paid——

(235,114)

—

—

—

—

—

—

—

(235,114)——

609,928

—

—

—

—

—

—

—

609,928

—

—

8,736

—

—

—

278,233———

286,969(1,204)

Net income Reversal of reserve on land revaluation,
net of tax
Purchase of treasury stock

—

—

—

(1,204)

—

—

—

—

—

—

Sales of treasury stock

—

(158)

—

1,339

—

—

—

—

—

—

1,181

Net unrealized holding gains on securities

—

—

—

—

101,716

—

—

—

—

—

101,716 Net unrealized gains (losses) on hedging
derivatives

—

—

—

—

—

(6,059)

—

—

—

—

(6,059)Foreign currency translation adjustment

—

—

—

—

—

—

—

(48,996)——(48,996)

Subscription rights to shares

—

—

—

—

—

—

—

—

815

—

815

Minority interests

—

—

—

—

—

—

—

—

—

(3,505)(3,505)$2,120,647 $3,021,012 $4,427,266 $(65,530) $612,666 $(10,573) $3,578,416 $(565,726)$7,154BALANCE AT MARCH 31, 2012

See accompanying notes.

50$2,120,647 $3,021,170 $4,043,509 $(65,665) $510,950 $ (4,514) $3,300,183 $(516,730)$263,243 $13,388,575

Consolidated Statements of Cash Flows
Mitsui Fudosan Co., Ltd. and its Subsidiaries
For the years ended March 31, 2012, 2011 and 2010

Thousands of
U.S. dollars (Note 1)

Millions of yen

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

2012

2011

2010

2012

¥   94,501¥   83,689¥   97,691$ 1,149,787

53,231(3,702)
4,396(3,462)
26,7481,256(2,601)

52,955(689)
8,374(3,410)27,4566,212
299

50,287(2,027)—(2,755)29,544—6,840

647,658(45,042)
53,486(42,122)
325,441
15,282(31,646)(10,053)

46,320(50,241)(122,314)

7,528
3,237
(1,878)
4,751(26,771)(41,734)
42,714
148,161(4,921)(2,647)
3,571
5,334(27,775)(14,740)
5,027
185,055(2,876)(2,942)—
4,810(29,640)(21,821)
7,519
84,38991,59339,384(22,849)
57,805(325,721)(507,775)
519,698
1,802,665(105,535)
717
40,902(43,110)(8,157)
17,862(24,986)(178,966)
3,364
52,669(64,805)(8,395)
11,557(11,950)(70,658)595
50,164(53,797)(12,261)
15,339(13,896)(1,284,037)
8,724
497,652(524,516)(99,246)
217,326(304,003)

2,851

21,624

26,13434,688(16,219)
13,077(1,756)(124,354)(12,055)
12,106
4,298(170,553)(11,266)
10,908(6,096)(64,834)(197,335)
159,107(21,366)(1,513,006)

221,832(245,257)
1,358,719(1,350,542)
20,000—(19,317)(698)(2,277)(70)(1,040)(18,650)

217,597(253,952)
1,524,501(1,526,031)
50,000(10,000)(19,313)(803)(2,175)(224)—(20,400)

133,014(119,267)
1,264,417(1,275,426)
40,000(40,000)(19,317)(1,007)(1,977)(199)—(19,762)2,699,014(2,984,025)
16,531,439(16,431,950)
243,339—(235,029)(8,493)(27,704)(852)(12,652)(226,913)

(106)
5,051
56,676¥   61,727(166)(6,064)62,740¥   56,676

55
(152)
62,892¥   62,740(1,291)
61,455689,573$   751,028
51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Mitsui Fudosan Co., Ltd. and its Subsidiaries

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Mitsui
Fudosan Co., Ltd. (the “Company”) have been prepared in accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
The accounts of overseas subsidiaries are based on theiraccounting records maintained in conformity with generally accepted accounting principles prevailing in the respective countries of
domicile. In compliance with the accounting standard, “Practical
Solution on Unification of Accounting Policies Applied to Foreign
Subsidiaries for Consolidated Financial Statements” (PITF No. 18
issued by the Accounting Standards Board of Japan, hereafter,“PITF No. 18”), certain adjustments, which are not recorded in thestatutory books of overseas subsidiaries, are incorporated in the
consolidated financial statements of the Company prepared inaccordance with Japanese GAAP and filed with the appropriate
Local Finance Bureau of the Ministry of Finance as required by the
Financial Instruments and Exchange Law (“statutory Japanese language consolidated financial statements”). The accompanying consolidated financial statements have been restructured andtranslated into English (with some expanded descriptions) from thestatutory Japanese language consolidated financial statements.
Some supplementary information included in the statutory
Japanese language consolidated financial statements, but notrequired for fair presentation, is not presented in the accompanying
consolidated financial statements.
The translations of the Japanese yen amounts into U.S. dollars
are included solely for the convenience of readers, using the prevailing exchange rate at March 31, 2012, which was ¥82.19 to U.S.
$1.00. The convenience translations should not be construed as
representations that the Japanese yen amounts have been, could
have been, or could in the future be, converted into U.S. dollars at
this or any other rate of exchange.

2. SIGNIFICANT ACCOUNTING POLICIES(A) CONSOLIDATIONThe consolidated financial statements include the accounts of theCompany and its subsidiaries. The difference between the cost andthe underlying net equity at fair value of investments in consolidated
subsidiaries and in equity method investees is amortized over a
period of 5 years. If the amount is immaterial, it is fully recognizedcurrently in earnings.
The difference between the cost and the underlying net equity atfair value of investments in consolidated subsidiaries is recorded as
goodwill.
All significant inter-company accounts and transactions havebeen eliminated. In the elimination of investments in subsidiaries,
the assets and liabilities of the subsidiaries, including the portion
attributable to minority shareholders, are recorded based on the fairvalue at the time the Company acquired control of the respective
subsidiaries.
(B) USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with the generally accepted accounting principles requires
management to make certain estimates and assumptions that affectthe reported amounts in the financial statements and the accompanying notes. Actual results could differ from those estimates.
(C) EQUITY METHOD
Investments in all significant affiliated companies are accounted for by
the equity method and, accordingly, stated at cost adjusted for equity inundistributed earnings and losses from the date of acquisition.
Commencing from the year ended March 31, 2011, the Company
and its consolidated subsidiaries adopted “Accounting Standard for
Equity Method of Accounting for Investments (ASBJ Statement
No. 16; March 10, 2008) and “Practical Solution on Unification of
Accounting Policies Applied to Associates Accounted for Using theEquity Method” (PITF No. 24; March 10, 2008). Those standards
require unification of accounting policies applied to affiliated companies accounted for under the equity method. There was no impact
on the consolidated financial statements as of and for the year
ended March 31, 2011 as a result of adopting those standards.

52(D) TRANSLATION OF FOREIGN CURRENCY ACCOUNTS
Foreign currency receivables and payables are translated at appropriate year-end rates and the resulting translation gains or losses
are taken into income currently.
Financial statements of consolidated overseas subsidiaries aretranslated into Japanese yen at the year-end rate, except thatshareholders’ equity accounts are translated at historical rates andincome statement items resulting from transactions with theCompany at the rates used by the Company.
Differences arising from translation are presented as “Foreign
currency translation adjustments” in accumulated other comprehensive income under net assets section.
(E) CASH AND CASH EQUIVALENTS
Deposits in banks and short-term investments which are highly liquid, readily convertible to cash and with insignificant risk of market
value fluctuation, with a maturity of three months or less at the timeof purchase are treated as cash equivalents.
(F) SECURITIES
Held-to-maturity securities are stated at amortized cost.
Other securities with fair values are stated at fair value.
Unrealized gains and unrealized losses on these securities arereported, net of applicable income taxes, as a separate componentof accumulated other comprehensive income under net assets section. Realized gains and losses on sale of such securities are computed using moving-average cost.
Other securities without fair values are stated at moving-­average
cost.
The Company and its consolidated subsidiaries recognize losses
for the difference between the fair value and the carrying amountwhen the fair value significantly declines. The Company and its consolidated subsidiaries consider the decline to be significant when
the fair value of the other securities declines more than 50% of thecarrying amount. When the fair value of the other securities declines
from 30% to less than 50% of the carrying amount, the decline isalso determined to be significant if the fair value of the securities is
considered not to be recoverable to the carrying amount.

If the net realizable value of the securities without fair value
declines significantly below the carrying amount, it is written down
to net realizable value with a corresponding charge in the statements of income.
(G) INVENTORIES, REVENUE AND RELATED COSTS
The Company and its consolidated subsidiaries have followed
accounting standard, “Accounting Standard for Measurement of
Inventories” (Statement No. 9 issued by the Accounting Standards
Board of Japan). Under the standard, inventories are initially recorded at acquisition cost, and when net realizable value is less than thecost (i.e., profitability of inventory has declined), the cost basis is
reduced to net realizable value. Costs are determined mainly by the
specific identification method and do not include interest andadministrative expenses incurred during or after development ofreal estate, which are charged to income when incurred.
The Company and its consolidated subsidiaries recognized loss
on devaluation of real property for sale of ¥19,797 million for theyear ended March 31, 2010 which was charged to cost of revenue
from operations. Loss on devaluation of real property for sale was
not significant for the year ended March 31, 2012 and 2011.
Revenue from leasing is recognized on an accrual basis over thelease term.
Revenue from sale of properties is recognized in full when delivered and accepted by the customers.
The Company and its consolidated subsidiaries have followed
Accounting Standard for Construction Contracts (ASBJ Statement
No. 15; December 27, 2007) and the Guidance on AccountingStandard for Construction Contracts (ASBJ Guidance No. 18;
December 27, 2007). The percentage-of-completion method shallbe applied if the outcome of the construction activity is deemedcertain during the course of the activity, otherwise the completedcontract method shall be applied.
(H) PROPERTY AND EQUIPMENT, RELATED DEPRECIATION
AND REVALUATION—excluding leased assets
Property and equipment are carried mainly at cost.
When disposed of, the cost and related accumulated depreciation or revaluation of property and equipment are removed from therespective accounts and the net difference, less any amounts realized on disposal, is reflected in the statements of income.
Depreciation of property and equipment is mainly computed by
the declining-balance method over the estimated useful lives of theassets, except for those listed below which are calculated using thestraight-line method.
1. Office buildings of the Company
2. Buildings acquired by the domestic consolidated subsidiaries
after April 1, 1998
3. Property and equipment of the overseas consolidated subsidiaries
Estimated useful lives used in the computation of depreciation
are generally as follows:
Buildings
29-50 years
Structures
15-17 years
Machinery
7-15 years
Equipment
3-15 years
For buildings on fixed term leasehold, the Company computes
depreciation using the straight-line method, over its lease term
assuming no residual value.
(I) IMPAIRMENT LOSSES ON FIXED ASSETSThe Company and its consolidated subsidiaries have followed accounting standards for impairment of fixed assets (“Opinion on Establishmentof Accounting Standards for Impairment of Fixed Assets” issued by theBusiness Accounting Deliberation Council) and the guidance on
accounting standards for impairment of fixed assets (the “Financial

Accounting Standard Guidance No. 6” issued by the AccountingStandards Board of Japan). The accounting standards require that
fixed assets be tested for recoverability whenever events or changes incircumstances indicate that the assets may be impaired. When theundiscounted cash flows estimated to be generated by those assets
are less than the carrying amount of those assets, the net carrying
value of assets not recoverable is reduced to recoverable amounts.
Recoverable amounts are measured by net realizable values or values
in current use. Net realizable values are determined mainly based upon
appraisal value calculated by real-estate appraisers. Values in current
use are calculated based on the present values of future cash flows.
Accumulated impairment losses are deducted from book valuesof related fixed assets.
(J) LAND REVALUATION
Pursuant to the Law Concerning Land Revaluation and the revisions thereof, the Company and certain consolidated subsidiaries
revalued land used for business activities on March 31, 2002.
The land prices for revaluation were determined based on theappraisal prices by real estate appraisers in accordance with Article
2, Paragraph 5 of the Enforcement Ordinance Concerning Land
Revaluation. The difference between quoted appraisal value andthe carrying amount is recorded, net of applicable income taxes, as“Reserve on land revaluation” as a separate component of accumulated other comprehensive income under the net assets section.
(K) GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets are included in “Other” undercaption of “INVESTMENTS and OTHER ASSETS.”
Goodwill (including negative goodwill) is amortized over a periodof 5 years under straight-line method. If the amount is immaterial, it
is fully recognized currently in earnings.
Other intangible assets are amortized under the straight-line
method. Software (for internal use) is amortized over its estimateduseful lives of 5 years.
(L) ALLOWANCE FOR DOUBTFUL ACCOUNTSThe Company and its consolidated subsidiaries provide for doubtful
accounts principally at an amount computed based on the historical bad debt ratio during a certain reference period plus an estimated uncollectible amount based on the analysis of certain individual
accounts, including claims in bankruptcy.
(M) ALLOWANCE FOR CASUALTY LOSSESThe Company and its consolidated subsidiaries have estimatedrestoration expenses to recover tangible fixed assets and inventories damaged due to the Great East Japan Earthquake and provided allowance for casualty losses as a component of other current
liabilities on the consolidated balance sheets. The allowanceamounted to ¥1,693 million ($20,599 thousand) and ¥3,571 million
at March 31, 2012 and 2011, respectively.
(N) ALLOWANCE FOR EMPLOYEES’ RETIREMENT BENEFITSThe Company has a retirement plan which provides for lump-sum
payment and annuity. Upon retirement age or at 60, a regular
employee is entitled to receive a lump-sum payment and an annuity, or in certain cases at the option of the retiring employee, the fullamount of the retirement benefits may be paid in a lump-sum. The
retirement benefits are based primarily upon the years of employee’s service and monthly pay at the time of retirement.
The allowance and expenses for retirement benefits are determined based on the amounts actuarially calculated using certain
assumptions.
The Company and its consolidated subsidiaries provide allowance for employees’ retirement benefits at fiscal year end based on
the estimated amounts of projected benefit obligation and the fairvalue of the plan assets at that date.

53

(O) A LLOWANCE FOR DIRECTORS’ AND CORPORATE
AUDITORS’ RETIREMENT BENEFITS
Allowance for retirement benefits for directors and corporate auditors of the Company and its 34 consolidated subsidiaries are also
provided at the amounts to be paid if all eligible directors and corporate auditors would have retired at year end under the internal
guidelines.
(P) ACCOUNTING FOR LEASE TRANSACTIONSThe Company and its consolidated subsidiaries have followed“Accounting Standard for Lease Transactions” (Statement No. 13
originally issued by the First Committee of the Business Accounting
Council on June 17, 1993 and revised by the AccountingStandards Board of Japan on March 30, 2007) and the“Implementation Guidance on Accounting Standard for Lease
Transactions” (the Financial Accounting Standard Implementation
Guidance No. 16 issued originally by the Accounting System
Committee of the Japanese Institute of Certified Public
Accountants on January 18,1994 and revised by the AccountingStandards Board of Japan on March 30, 2007).
Those standards require finance leases to be accounted for in amanner similar to the accounting treatment for ordinary sales transactions. Lessees are required to record assets and liabilities regarding finance leases with recognition of depreciation and interest
expenses. Capitalized leased assets are depreciated under thestraight-line method, over the lease term assuming no residual
value. Lessors are required to recognize lease receivables or investments in leased assets along with related lease (interest) income.
It should be noted that finance leases which do not transfer ownership of the leased assets to lessees whose commencement day falls
on or prior to March 31, 2008 are accounted for as operating leases.
(Q) INCOME TAXESThe Company and its consolidated domestic subsidiaries are subject to a corporate tax of 30%, an inhabitants tax of approximately
6% and a deductible enterprise tax of approximately 8%, which in
the aggregate resulted in a statutory income tax rate of approximately 41% for the years ended March 31, 2012, 2011 and 2010
Refer to Note 11 for the change in a corporate income tax ratecommencing the year beginning on April 1, 2012.
Income taxes are provided for on the basis of income for financial
statement purposes. The tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial
statements and income tax purposes is recognized as deferredincome taxes.
(R) DERIVATIVES AND HEDGE ACCOUNTING
1. Hedge accounting
The Company and its consolidated subsidiaries defer recognition ofgains or losses resulting from changes in fair value of derivative
financial instruments until the related losses or gains on the hedged
items are recognized, if derivative financial instruments are used ashedges and meet certain hedging criteria.
However, in cases where forward foreign exchange contracts areused as hedges and meet certain hedging criteria, forward foreignexchange contracts and hedged items are accounted for in the following manner:(1) If a forward foreign exchange contract is executed to hedge
an existing foreign currency receivable or payable,   (a) the difference, if any, between the Japanese yen amount of
the hedged foreign currency receivable or payable translated using the spot rate at the inception date of the contract
and the book value of the receivable or payable is recognized in the income statements in the period which includes
the inception date, and54   (b) the discount or premium on the contract (that is, the difference between the Japanese yen amount of the contract
translated using the contracted forward rate and that translated using the spot rate at the inception date of the contract) is recognized over the term of the contract.
(2) If a forward foreign exchange contract is executed to hedge afuture transaction denominated in a foreign currency, thefuture transaction will be recorded using the contracted forward rate, and no gains or losses on the forward foreignexchange contract are recognized.
Also, if interest rate swap contracts are used as hedge and meetcertain hedging criteria, the net amount to be paid or received
under the interest rate swap contract is added to or deducted fromthe interest on the assets or liabilities for which the swap contract
was executed.
2. The following summarizes hedging derivative financial instruments used by the Company and its consolidated subsidiaries
and items hedged:
Hedging instruments:   Forward foreign exchange contracts   Foreign currency swap contracts   Interest rate swap contracts
Hedged items:   Expected foreign currency transactions   Foreign currency debt   Borrowings and debentures
3. Hedge policy
The Company and its consolidated subsidiaries use interest rate
swap contracts to mitigate risk of fair value changes of borrowingsand debentures due to fluctuating interest rates and risk of changes
in cash flows. Exchange rate risk on borrowings made and debentures issued in non-functional currencies is hedged by utilizing currency swaps. Exchange rate risk on forecasted transactions to besettled in non-functional currencies is hedged by using forward foreign exchange contracts.
4. Assessment of hedge effectivenessThe assessment of hedge effectiveness is omitted because significant terms of hedging instruments and those of the items hedged
are the same and the risk of changes in foreign exchange rates andinterest rates would be entirely eliminated.
(S) EQUITY INVESTMENTS REGARDING REAL ESTATESECURITIZATION-RELATED BUSINESS
Equity investments in tokumei-kumiai, or silent partnerships (“TK”),
preferred securities issued by tokutei-mokuteki-kaisha, or specificpurpose companies (“TMK”) and others regarding real estate securitization-related business (collectively, “equity investments”) arepresented in the balance sheets as follows.
Equity investments held for sale are presented as “Equity investments in properties for sale” under “CURRENT ASSETS” and those
held other than for sale are presented as “Investment securities”
under “INVESTMENTS and OTHER ASSETS”.
(T) REVENUE FROM JAPANESE REAL ESTATE INVESTMENT
TRUST (J-REIT)
Revenue from J-REIT is included in “Revenue from operations”.
(U) DIRECTORS’ BONUS
The Company and its consolidated subsidiaries have followed theaccounting standard, “Accounting Standard for Directors’ Bonus”(Statement No. 4 issued by the Accounting Standards Board ofJapan). Directors’ bonuses are charged to income as selling, general and administrative expenses.

(V) SHARE-BASED PAYMENTS
The Company and its consolidated subsidiaries have followed theaccounting standards, “Accounting Standard for Share-Based
Payment” (Statement No. 8 issued by the Accounting Standards
Board of Japan) and the “Implementation Guidance for the
Accounting Standard for Share-Based Payment” (the Financial
Accounting Standard Implementation Guidance No. 11 issued by
the Accounting Standards Board of Japan).
Those standards require that the cost of stock options be measured based on the grant-date fair value. Outstanding options arepresented as subscription rights to shares as a component of net
assets in the balance sheet.
(W) COMPREHENSIVE INCOME
Commencing the year ended March 31, 2011, the Company andits consolidated subsidiaries adopted “Accounting Standard for
Presentation of Comprehensive Income” (ASBJ Statement No. 25;
Jun 30, 2010). Amounts of “Accumulated other comprehensive
income (loss)” and “Total accumulated other comprehensive
income (loss)” for the prior year represent those of “Valuation andtranslation adjustments” and “Total valuation and translation adjustments”, respectively. Refer to Note 22 for the information for theyear ended March 31, 2010.
(X) ASSET RETIREMENT OBLIGATIONS
Commencing the year ended March 31, 2011, the Company andits consolidated subsidiaries adopted “Accounting Standard for
Asset Retirement Obligations” (ASBJ Statement No. 18; March 31,2008) and the “Guidance on Accounting Standard for Asset
Retirement Obligations” (Guidance No. 21; March 31, 2008).
According to the standards, obligations associated with the retirement of tangible fixed assets are recorded as liabilities when thoseobligations are incurred, with the amount of the liability initially measured by discounting the future cash flows. The associated asset
retirement costs are capitalized as part of the carrying amount of
the fixed asset and allocated as period expenses.
As a result of adopting the standards, income before income
taxes and minority interests for the year ended March 31, 2011
decreased by ¥1,944 million of which ¥1,425 million represents the
cumulative effect of initially applying the standards.
(Y) ACCOUNTING CHANGES AND ERROR CORRECTIONS
Commencing the year ended March 31, 2012, the Company andits consolidated subsidiaries adopted “Accounting Standard for
Accounting Changes and Error Corrections” (ASBJ Statement
No. 24, December 4, 2009) and the “Guidance on AccountingStandard for Accounting Changes and Error Corrections” (ASBJ
Guidance No. 24, December 4, 2009). Those standards requirethat changes in accounting policies, changes in presentations andcorrections of prior period errors be accounted for retrospectively,
and changes in accounting estimates be accounted for prospectively. Those requirements are applied to accounting changes andcorrections of prior period errors made on and after the beginningof the year ended on March 31, 2012.
(Z) EARNINGS PER SHARE
Basic income per share is computed by dividing the net income
available for distribution to shareholders of common stock by theweighted average number of shares of common stock outstanding
during each year. Diluted net income per share reflects the potential
dilution that could occur if securities or other contracts to issuecommon stock were exercised or converted into common stock.
(AA) RECLASSIFICATIONS
Certain prior years’ amounts have been reclassified to conform tothe current presentation. “Loss on impairment of fixed assets”,“Gain on sales of marketable securities, net”, “Cumulative effect of
initial application of new standards for asset retirement obligations”
and “Loss on devaluation of real property for sale” which were presented as separate reconciliation items to net cash provided byoperating expenses of the consolidated statements of cash flows
for the years ended March 31, 2011 and 2010 are reclassified to“other, net” due to their immateriality.
(AB) NEW ACCOUNTING STANDARDS NOT YET ADOPTED
The new accounting standards and other pronouncements thathave been issued which the Company and its consolidated subsidiaries have not yet adopted as of March 31, 2012, are as follows.
• A ccounting Standard for Consolidated Financial Statements(ASBJ Statement No. 22, revised March 25, 2011)• Guidance on Disclosures about Certain Special Purpose Entities(ASBJ Guidance No. 15, revised March 25, 2011)• Guidance on Determining a Subsidiary and an Affiliate (ASBJ
Guidance No. 22, revised March 25, 2011)• P ractical Solution on Application of the Control Criteria and
Influence Criteria to Investment Associations (ASBJ PITF No. 20,
revised March 25, 2011)
Before those revisions, special purpose entity that met certain conditions was excluded from scope of consolidation both by an investor and an originator. As a result of the revisions, such special
purpose entity is excluded from scope of consolidation by an originator only. The Company and its consolidated subsidiaries will adopt
those revised standards commencing the year beginning on April 1,
2012, and as a result, certain special purpose entities in which theCompany invests will be included in scope of consolidation.

3. BUSINESS REORGANIZATIONSThere were no significant business reorganizations for the year ended March 31, 2012, 2011 and 2010.

4. FINANCIAL INSTRUMENTS(1) Risk management policy regarding financial instrumentsa. Policy on financial instruments
The Company and its consolidated subsidiaries make fund procurements mainly through bank loans and issuance of bonds.
The temporary surplus funds are invested in low-risk financial
assets. Derivative instruments are used to mitigate risks referred
to below, and the Company and its consolidated subsidiaries do
not enter into speculative derivative transactions or transactions
with high volatility on fair value.

b. Risk management
Notes and accounts receivable and lease deposits are subject tocustomers’ credit risk. Each business division monitors due
dates and balances for each counterparty to mitigate the risk of
those receivables being uncollectible due to financial difficulties
and other factors.
  Investment in equity securities is exposed to market-price risk.
The securities are mainly those of companies with business relationships. The Company and its consolidated subsidiaries

55­ eriodically monitor market prices and continuously reviewpwhether the securities should be held.
  Notes and accounts payable are mostly due within one year.
  Short-term debt is mainly used for funding working capital.
Procurement from long-term debt and bonds payable, of which
the maturities are due within 19 years from the balance sheet
date, are mainly used for capital expenditures. Debt with floatinginterest rates is subject to interest-rate risk. The Company and its
consolidated subsidiaries utilize derivatives (interest rate swaps)
as hedging instruments for some long-term debt with floatinginterest rates to fix the cash flows of interest payments.
Exchange rate risk on borrowings made and bonds issued in
non-functional currencies are hedged by utilizing currency swaps.
Refer to Note 2 (R) for details on hedge accounting, hedge policy,
assessment of hedge effectiveness and other matters.

  By using derivative instruments, the Company and its consolidated subsidiaries are exposed to counterparty’s credit risk andmarket risks such as interest rate risk and exchange rate risk.
The Company and its consolidated subsidiaries manage thecredit risk by carefully evaluating the financial positions of major
financial institutions before entering into contracts. The derivativetransactions are executed and managed by procedures set forthin the policies established in each group company and arereported periodically to directors in charge.
  Payables, debt and deposits from customers are subject toliquidity risk. The risk is managed by preparing and monitoring
through monthly cash schedules.

(2) Estimated fair value of financial instruments
The carrying amount, estimated fair value and the difference of financial instruments as of March 31, 2012 and 2011 are summarized in the following table. Information on financial instruments for which the fair value is not reliably measurable is not included in the below table (refer to b).
Millions of yen

2011

2012
Carrying
amountEstimated
fair value

Difference

Carrying
amountEstimated
fair value

Difference

Assets¥   62,274¥   62,274—¥   57,223¥   57,223

Notes and accounts receivable-trade26,53926,539—24,042

24,042—Marketable and investment securities

175,733

175,77037

167,794

167,807

13

Cash and bank deposits *1

¥

¥

—

Liabilities
Notes and accounts payable-trade

101,321

101,321—87,13887,138—Bank loans and long-term debt due within one year

259,922

260,919997

272,712273,697

985

Commercial paper
Long-term debt due after one year
Derivative instruments *2

37,00037,000—24,00024,000—1,446,489

1,488,768

42,2791,443,336

1,478,892

35,556

4,366

4,366

—

4,984

4,984

—

Thousands of U.S. dollars

2012
Carrying
amountEstimated
fair value

Difference

AssetsCash and bank deposits *1$   757,683 $   757,683$—

Notes and accounts receivable-trade322,898

322,898—

Marketable and investment securities

2,138,131

2,138,581

450

Notes and accounts payable-trade

1,232,766

1,232,766—

Bank loans and long-term debt due within one year

3,162,453

3,174,583

12,130Liabilities

Commercial paper
Long-term debt due after one year
Derivative instruments *2

450,176

450,176—

17,599,331

18,113,737

514,406

53,121

53,121—*1 Carrying amount of cash and bank deposits consists of ¥61,727 million ($751,028 thousand) and ¥56,676 million of cash and cash equivalents and ¥547 million ($6,655 thousand) and ¥547 million of bankdeposits with maturities exceeding 3 months, which are included in other current assets in the accompanying consolidated balance sheets as of March 31, 2012 and 2011, respectively.
*2 Carrying amount and estimated fair value of derivative instruments represent derivative assets netted against derivative liabilities.

56

a. Estimation of fair value
The following methods and significant assumptions were used toestimate the fair value of financial instruments for which the fairvalue is reasonably measurable.
Cash and bank deposits and notes and accounts receivabletrade—The carrying amount of cash and bank deposits and notes
and accounts receivable-trade approximates fair value due to theirrelatively short maturity.
Marketable and investment securities—Fair value of those securities is based on quoted market prices. Refer to Note 5 for detailed
information.
Notes and accounts payable-trade and commercial paper—
The carrying amount of notes and accounts payable-trade andcommercial paper approximates fair value due to their relatively
short maturity.
Bank loans and long-term debt due within one year—The carrying
amount of bank loans approximates fair value due to their relatively

short maturity. Fair value of long-term debt and bonds payable due
within one year is calculated by discounting the future cash flows,
using the borrowing interest rates expected to be currently available
for the Company and its consolidated subsidiaries for debt with similar terms and remaining maturities as the discount rates.
Long-term debt due after one year—Fair value of long-term debt
due after one year is calculated by discounting the future cash
flows, using the borrowing interest rates expected to be currently
available for the Company and its consolidated subsidiaries for debt
with similar terms and remaining maturities as the discount rates.
Derivative instruments—Refer to Note 6.
Fair value of financial instruments includes amounts based onquoted market prices and amounts reasonably calculated. Fairvalue reasonably calculated, incorporating fluctuating factors, issubject to change under different assumptions. Nominal amountshown in Note 6 does not represent the market risk regarding thederivative transactions.

b. Financial instruments for which the fair value is not reliably measurable
For the following financial instruments, for which there were no quoted market prices, reasonable estimates of fair values could not be madewithout incurring excessive costs because of the difficulty in estimating future cash flows. Thus, information on those instruments is not presented in the above table.
Thousands of
U.S. dollars (Note 1)

Millions of yen

2012

2011

2012

¥ 57,569¥ 65,739$  700,438   Unlisted stocks (excluding OTC securities)

16,172

16,534

196,764   Other (TK investments, preferred securities and others)

83,47376,267

1,015,610

160,846

171,556

1,957,002

353,837

354,858

4,305,110

Assets:Equity investments in properties for sale
Other securities

Lease deposits *Liabilities:
Deposits from tenants ** While fair value accounting is applied to some lease deposits and deposits from tenants, they are not separately disclosed since they are not material.

c. Redemption schedule
The redemption schedule on cash and cash equivalents, receivables and securities with maturities as of March 31, 2012 and 2011 is as follows.
Refer to Note 13 for redemption schedule for long-term debt.
Millions of yen

2012
Due within 1 year

Due after 1 year
and within 5 years

Cash and bank deposits *¥62,274¥ —Notes and accounts receivable-trade26,539Due after 5 Years
and within 10 Years¥

Due after 10 Years

—

¥—

—

—

—

15

717

1,011

—

¥88,828¥717¥1,011¥—

Due after 5 Years
and within 10 Years

Due after 10 Years

Other securities
National and local government bonds, etc.
Total

Millions of yen

2011
Due within 1 year

Due after 1 year
and within 5 years

Cash and bank deposits *¥57,223

¥ —

¥ —

¥—

Notes and accounts receivable-trade

24,042———Other securities
National and local government bonds, etc.
Total

—

589

908

—

¥81,265

¥589

¥908

¥—

57

Thousands of U.S. dollars

2012
Due after 1 year
and within 5 years

Due within 1 year

Cash and bank deposits *Notes and accounts receivable-trade$  757,683$

322,898

Due after 5 Years
and within 10 Years

—

$

—

Due after 10 Years

—

$—

—

—

Other securities
National and local government bonds, etc.
Total

183

8,724

12,300—$1,080,764$8,724$12,300$—* Carrying amount of cash and bank deposits consists of ¥61,727 million ($751,028 thousand) and ¥56,676 million of cash and cash equivalents and ¥547 million ($6,655 thousand) and ¥547 million of bankdeposits with maturities exceeding 3 months, which are included in other current assets in the accompanying consolidated balance sheets as of March 31, 2012 and 2011, respectively.

5. FAIR VALUE INFORMATION OF MARKETABLE SECURITIES, INVESTMENT SECURITIES AND OTHERS(1) The following tables summarize historical cost, book value and fair value of securities as of March 31, 2012 and 2011:(a) Held-to-maturity securities:
Millions of yen

2011

2012
Book Value

Fair Value

DifferenceBook Value

Fair Value

Difference¥1,507¥1,545¥38¥  991¥1,007

¥16

236

235

(1)

506

503

(3)

¥1,743¥1,780¥37¥1,497¥1,510¥13

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

Thousands of U.S. dollars

2012Book Value

Fair Value

Difference$18,336$18,798$462

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

2,871

2,859

(12)

$21,207$21,657$450(b) Other securities:
Millions of yen

2011

2012
Book Value(Fair Value)

DifferenceBook Value(Fair Value)

Historical Cost

Historical Cost

Difference

Stocks¥114,426

Other

30,241¥35,955¥78,471¥107,875¥38,524¥69,351

25,842

4,399

31,74425,217

Subtotal

144,667

6,527

61,797

82,870139,619

63,74175,878

Securities whose book value (fair value) exceeds
historical cost

Securities whose book value (fair value) does not exceed
historical cost
Stocks29,32333,893(4,570)26,67831,641(4,963)

Subtotal

29,32333,893(4,570)26,67831,641(4,963)¥173,990¥95,690¥78,300¥166,297¥95,382¥70,915

Total

58

Thousands of U.S. dollars

2012Book Value(Fair Value)

Historical Cost

Difference

Stocks$1,392,213$437,462$ 954,751

Other367,940

314,418

53,522

Subtotal

1,760,153

751,880

1,008,273

Stocks356,771

412,374(55,603)

Subtotal

356,771

412,374(55,603)$2,116,924 $1,164,254$ 952,670

Securities whose book value (fair value) exceeds
historical cost

Securities whose book value (fair value) does not exceed
historical cost

Total(2) The following table summarizes other securities sold in the years ended March 31, 2012, 2011 and 2010:
Millions of yen

2011

2012

2010

Sales amount

Gains

LossesSales amount

Gains

LossesSales amount

Gains

LossesStocks

¥342

¥9

¥(69)

¥21,374¥20,965¥(1)¥26,028¥25,713

¥(88)

Total

¥342

¥9

¥(69)

¥21,374¥20,965¥(1)¥26,028¥25,713¥(88)

Thousands of U.S. dollars

2012
Sales amount

Gains

LossesStocks$4,161$110$(840)

Total$4,161$110$(840)(3) The Company and its consolidated subsidiaries recognized ¥1,256 million ($15,282 thousand) and ¥6,212 million of impairment loss on
investment securities for the year ended March 31, 2012 and 2011, respectively.

6. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING TRANSACTIONS
The following summarizes hedging derivative financial instruments accounted for under hedge accounting as of March 31, 2012 and 2011:
Millions of yen

2012
Nominal Amount
Hedged items

Interest rate swap *

1

Total

Due after 1 year

Fair Value¥659,000¥515,000*1

30,00030,000

5,079

743

­—

30

¥689,743¥545,000¥5,109Long-term debt

Pay : fixed rate
Receive : floating rate
Foreign currency swap *2

Long-term debt

Foreign exchange forward *3

Forecasted transactions denominated inforeign currencies

Total

59

Millions of yen

2011
Nominal Amount
Hedged items

Total

Due after 1 year

Fair Value¥670,500¥537,500*1

30,00030,000

4,978

1,085

­—

6

¥701,585¥567,500¥4,984Long-term debt

Interest rate swap *1
Pay : fixed rate
Receive : floating rateLong-term debt due within one year

Interest rate swap *1
Pay : floating rate
Receive : fixed rateLong-term debt

Foreign currency swap *2
Total

Thousands of U.S. dollars

2012
Nominal Amount
Hedged items

Interest rate swap *Total

Due after 1 year

Fair Value

Long-term debt

1

Pay : fixed rate
Receive : floating rate
Foreign currency swap *2

Long-term debt

Foreign exchange forward *3

Forecasted transactions denominated inforeign currencies

Total$8,018,007$6,265,969*1

365,008

365,008

61,796

9,040

­—

365

$8,392,055$6,630,977$62,161*1. The net amount to be paid or received under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract was executed. Thus, the fair valueof the interest rate swap is included in the fair value of short-term and long-term debt.
*2. Recognition of gains or losses resulting from changes in fair value of foreign currency swap contracts are deferred until the related losses or gains on the hedged items are recognized.
*3. Future transactions denominated in foreign currencies will be recorded using the contracted forward rate, and no gains and losses on the foreign exchange forward contract are recognized.
*4. Fair values are calculated mainly by discounting the future cash flows.

7. INVESTMENT AND LEASING PROPERTIESThe Company and its consolidated subsidiaries have followed“Accounting Standard for Disclosures about Fair Value ofInvestment and Rental Property” (ASBJ Statement No. 20;
November 28, 2008) and its implementation guidance “Guidanceon Accounting Standard for Disclosures about Fair Value ofInvestment and Rental Property” (ASBJ Guidance No. 23,
November 28, 2008) which require explanations on investment andleasing properties and disclosure of fair value of those properties.
Investment and leasing properties are properties held to earn rentals or for capital appreciation, and include (1) properties classified
as investment properties in the balance sheet, (2) idle propertiesand (3) leasing properties other than (1) and (2).
The Company and its certain subsidiaries own office buildings forrent, commercial facilities and other properties in Tokyo and otherareas. Net rent income and loss on disposal of property and equipment regarding those investments and leasing properties were
¥83,794 million ($1,019,516 thousand) and ¥3,969 million ($48,291
thousand) for the year ended March 31, 2012. Net rent income andloss on disposal of property and equipment regarding those investments and leasing properties were ¥76,486 million and ¥10,931
million for the year ended March 31, 2011. Net rent income andimpairment loss regarding those investments and leasing properties
were ¥79,447 million and ¥12,970 million for the year ended March
31, 2010. Gross rent revenue is included in revenue from operations and gross cost for rent is included in cost of revenue fromoperations. Impairment loss and loss on disposal of property andequipment are included in other costs and expenses (see Note 21).

The carrying amounts, net changes in the carrying amounts and the fair value of the investment and leasing properties as of and for the years
ended March 31, 2012 and 2011 are stated below:
Millions of yen

2011

2012
Carrying amount

Fair value

Carrying amountEnd of year

End of year

¥1,986,866¥2,827,636

Beginning of year

Net Increase during
the yearEnd of year

End of year

Beginning of year

Net Increase during
the year¥1,986,866¥62,801¥2,049,667¥2,860,072¥1,845,886¥140,980

Thousands of U.S. dollars

2012
Carrying amount

60

Fair value

Beginning of year

Net Increase during
the yearEnd of year

End of year

$24,174,060$764,095$24,938,155$34,798,297

Fair value

Carrying amount represents acquisition cost less accumulated depreciation and accumulated loss on impairment.
The net increase in the carrying amounts mainly consists of acquisitions of real estate which amount to ¥86,407 million ($1,051,308 thousand) and ¥201,515 million, for the years ended March 31, 2012 and 2011, respectively.
Estimated fair value was calculated internally based on Japanese Real Estate Appraisal Standards.

8. INVENTORIESInventories at March 31, 2012 and 2011 comprise the following:Thousands of
U.S. dollars

Millions of yen

2012

2011

2012

Completed¥241,139¥249,236$2,933,921

In progress

241,581

207,2212,939,299

Land held for development

150,333

174,570

1,829,091

Expenditure on contracts in progress

9,235

11,228112,362

Other

8,668

8,923

105,463

Total¥650,956¥651,178$7,920,136

Real property for sale

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

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

and its consolidated subsidiaries pay lease deposits to the owners
and receive deposits from subtenants (See Note 15).

11. INCOME TAXES
Significant components of the Company’s deferred tax assets and liabilities as of March 31, 2012 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

2012

2011

2012

Deferred tax assets:
Excess allowance for retirement benefits¥ 11,988¥ 13,372$  145,857

Loss on impairment of fixed assets

11,85730,241

144,263

Allowance for loss on devaluation of real property held for sale

11,62916,128141,489

Allowance for loss on valuation of securities

8,610

9,178

104,757

Unrealized inter-company transactions

6,306

5,796

76,725

Accrued employees’ bonuses

6,011

6,238

73,135

Unrealized loss on valuation of lease deposits

3,951

4,747

48,072

Loss on disposal of property and equipment

3,941

3,245

47,950

Excess depreciation expense

3,655

3,700

44,470Net operating loss carryforwards

3,118

2,597

37,936

Unrealized loss on valuation of other securities

1,622

2,021

19,735

Accrued enterprise tax

1,102

2,619

13,408

Other

19,53324,654

237,657  Total¥ 93,323¥124,536$1,135,454

61

Thousands of
U.S. dollars

Millions of yen

2012

2011

2012

Unrealized gain on valuation of securities¥(29,514)¥(30,847)$ (359,095)

Deferred gain on sale of land and buildings for tax purposes(21,362)(24,532)(259,910)

Unrealized gain on valuation of lease deposits(3,864)(4,625)(47,013)

Unrealized loss on valuation of shares held in consolidated subsidiaries(3,444)(3,921)(41,903)

Unrealized gain on contribution of securities to retirement benefit trust

Deferred tax liabilities:(1,451)(1,656)(17,654)

Unrealized inter-company transactions

(707)

(449)

(8,602)

Consolidation difference in real property

(371)

(424)

(4,514)Other(21,172)(21,566)(257,598)  Total¥(81,885)¥ (88,020)$ (996,289)

Net deferred tax assets¥ 11,438¥ 36,516$  139,165

Amounts of total deferred tax assets as of March 31, 2012 and 2011 are presented net of valuation allowances of ¥16,447 million($200,110 thousand) and ¥16,345 million, respectively.
Significant differences between the statutory tax rate and the Company’s effective tax rate for the years ended March 31, 2012 and 2010
are as follows:

Statutory tax rate

2012

2010

40.66%

40.66%(Adjustments)
Change in tax rate

3.64

—

Higher (lower) tax rates on foreign subsidiaries

1.37(1.78)

Amortization of goodwill
Equity in net income of affiliated companies

—

0.33

(2.07)(0.84)

Permanent differences:Entertainment expenses and other

1.28

0.89

Dividend income and other—(3.13)

Other

1.46

1.31

Effective tax rate

46.34%

37.44%

Information as of March 31, 2011 has not been disclosed as the differences are insignificant.
Commencing the year beginning on April 1, 2012, the Company
and its domestic consolidated subsidiaries are subject to new corporate income tax rates based on the “Amendment to income tax
law, etc. in response to the changing economic structure” and the“Special measures to secure the financial resources to implement
the restoration from the Great East Japan Earthquake.” promulgated on December 2, 2011.
Effective tax rates based on the new corporate income tax rates
were applied in calculating deferred tax assets and liabilities as ofMarch 31, 2012. The change in tax rates resulted in an increase of¥3,439 million ($41,482 thousand) in income tax expenses—
deferred for the year ended March 31, 2012. The change in tax

62

rates also resulted in decreases of ¥2,979 million ($36,245 thousand) in current deferred income tax assets, ¥1,069 million($13,006 thousand) in non-current deferred income tax assets, ¥53
million ($645 thousand) in current deferred income tax liabilities,¥4,506 million ($54,824 thousand) in non-current deferred income
tax liabilities, ¥174 million ($2,117 thousand) in deferred tax assetson land revaluation and ¥23,677 million ($288,076 thousand) in
deferred tax liabilities on land revaluation, and increases of ¥3,949
million ($48,047 thousand) in net unrealized holding gains on securities and ¥23,577 million ($286,860 thousand) in reserve on land
revaluation as of March 31, 2012.

12. EMPLOYEES’ RETIREMENT BENEFITS(1) Outline of retirement plan:
The Company has adopted a corporate pension plan and lumpsum pension plans, both of which are defined benefit plans. The
Company has also adopted a retirement benefit trust.
One consolidated subsidiaries have adopted tax qualified pension plans. 60 consolidated subsidiaries have adopted lump-sum

pension plans. One consolidated subsidiary has adopted employees’ pension funds. 11 consolidated subsidiaries have adopted
defined benefit corporate pension plans. One consolidated subsidiary has adopted defined contribution pension plan.

(2) Details of projected benefit obligation:
Thousands of
U.S. dollars

Millions of yen

2012

2011

2012

1. Projected benefit obligation¥(126,817)¥(110,097)$(1,542,974)

2. Fair value of plan assets

70,25063,923854,727¥ (56,567)¥ (46,174)$  (688,247)

4. Unrecognized actuarial differences

23,471

14,442285,570

5. Unrecognized prior service costs

143

333

1,740

6. Prepaid pension expenses

49

95

596

¥ (33,002)¥ (31,494)$  (401,533)

3. Unaccrued projected benefit obligation (1+2)

7. Allowance for employees’ retirement benefits (3+4+5-6)
Note: Some consolidated subsidiaries adopt the simplified method to calculate projected benefit obligation.

(3) Details of retirement benefit expenses:
Thousands of
U.S. dollars

Millions of yen

1. Service costs—benefits earned during the year

2012

2011

2010

2012

¥ 5,906¥5,053¥ 4,929$ 71,858

2. Interest costs on projected benefit obligation

2,461

2,453

2,376

29,943

3. Expected return on plan assets(1,500)(1,388)(1,119)(18,250)

4. Amortization of actuarial differences

3,465

3,334

3,890

42,158

5. Amortization of prior service costs

176

(17)

(5)

2,141

6. Supplemental benefits

36

107

3

438

¥10,544¥9,542¥10,074$128,288

7. Retirement benefit expenses (1+2+3+4+5+6)

Note: Retirement benefit expenses of consolidated subsidiaries adopting the simplified method are included in service costs.

(4) Basis for measurement of projected benefit obligation and other items:
2012

2011

2010

1. A
 llocation method forthe projected retirement
benefits

Straight-line method

Straight-line method

Straight-line method

2. Discount rates

1.2 - 2.2%

1.2 - 2.5%

1.2 - 2.5%

3. E
 xpected rates of return 1.0 - 2.5%
on plan assets

1.0 - 2.5%

1.0 - 2.5%

4. Y
 ears over which theprior service costs areallocated

1-10
years

Straight-line method
1-10 years
over a certain numberof years within the
average remaining
service years

Straight-line method
over a certain numberof years within the
average remaining
service years

1-10 years Straight-line method
over a certain numberof years within the
average remaining
service years

5. Y ears over which the
5-10
actuarial differences
years
obligations are allocated

Straight-line method5-10 years
over a certain numberof years within the
average remaining
service years

Straight-line method
over a certain numberof years within the
average remaining
service years

5-10 years Straight-line method
over a certain numberof years within the
average remaining
service years

Note: Discount rate for the Company which was 2.5% for the year ended March 31, 2011 changed to 1.8% for the year ended March 31, 2012.

63

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

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

The amounts and the weighted average interest rates of bank loans and commercial paper at March 31, 2012 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

2012

2011

2012

Bank loans, with the weighted average interest rates of 0.52% in 2012
and 0.46% in 2011

¥32,157¥36,322$391,252

Commercial paper, with the weighted average interest rates of 0.11% in 2012
and 0.15% in 2011

37,00024,000450,176(2) Long-term debt
Long-term debt at March 31, 2012 and 2011 comprise the following:Thousands of
U.S. dollars

Millions of yen

2012

2011

2012

Loans secured by collateral or bank guarantees¥    9,270¥    9,772$   112,787

Unsecured loans

1,359,984

1,384,954

16,546,831

Total long-term loans, principally from banks and insurance companies

1,369,254

1,394,726

16,659,618

3.00% yen notes due 2013

10,00010,000121,669

2.25% yen notes due 2012

5,000

5,000

60,834

1.04% yen notes due 2013

10,00010,000121,669

1.81% yen notes due 2014

10,00010,000121,669

1.64% yen notes due 2014

10,00010,000121,669

1.65% yen notes due 2015

10,00010,000121,669

1.81% yen notes due 2016

20,00020,000243,340

1.99% yen notes due 2016

10,00010,000121,669

1.91% yen notes due 2016

20,00020,000243,340

1.54% yen notes due 2014

20,00020,000243,340

1.84% yen notes due 2017

10,00010,000121,669

2.06% yen notes due 2017

20,00020,000243,340

1.65% yen notes due 2014

10,00010,000121,669

1.97% yen notes due 2017

20,00020,000243,340

1.92% yen notes due 2018

10,00010,000121,669

2.09% yen notes due 201910,00010,000121,669

1.72% yen notes due 201910,00010,000121,669

1.63% yen notes due 201910,00010,000121,669

1.49% yen notes due 201910,00010,000121,669

1.50% yen notes due 2020

10,00010,000121,669

1.19% yen notes due 2020

10,00010,000121,669

1.06% yen notes due 2020

10,00010,000121,669

1.32% yen notes due 2020

10,00010,000121,669

2.30% yen notes due 2030

10,00010,000121,669

1.27% yen notes due 2021

10,000—121,669

1.17% yen notes due 2021

10,000—121,669

Total bonds and debentures

305,000

285,000

3,710,914

Long-term loans, principally from banks and insurance companies:

Bonds and debentures
Domestic:

Less amount due within one year
Long-term debt due after one year64

227,765

236,390

2,771,201¥1,446,489¥1,443,336$17,599,331

Long-term loans, principally from banks and insurance companies consist of the following:Thousands of
U.S. dollars

Millions of yen

Due within one year, with the weighted average interest rates of 1.39% in2012 and 1.23% in 2011

2012

2011

2012

¥  222,765¥  236,390$ 2,710,366

Due after one year, with the weighted average interest rates of 1.55% in2012 and 1.61% in 2011

1,146,489

1,158,336

13,949,252

Total¥1,369,254¥1,394,726$16,659,618

The following assets are pledged as collateral for secured loans:Thousands of
U.S. dollars

Millions of yen

2012

2011

2012

Land

¥15,572¥15,927$189,463

Buildings and structures and others

22,58923,215274,839¥38,161¥39,142$464,302

Collateralized assets

Total

As is customary in Japan, collateral must be given if requested,under certain circumstances, by a lending bank and such bank has
the right to offset cash deposited with it against any debt or obligation that becomes due and, in case of default and certain otherspecified events, against all debt payable to the bank. The Company
and its consolidated subsidiaries have never received any such
requests nor do they expect that any such request will be made.

The annual maturities of long-term debt at March 31, 2012 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

Due within 1 year

2012

2011

2012

¥  227,765¥  236,390$ 2,771,201

Due after 1 to 2 years

208,775

231,433

2,540,151

Due after 2 to 3 years

198,345

211,072

2,413,250

Due after 3 to 4 years

180,346

193,349

2,194,257

Due after 4 to 5 years

165,787

181,753

2,017,119

Thereafter

693,236

625,7298,434,554¥1,674,254¥1,679,726$20,370,532

Total

14. ASSET RETIREMENT OBLIGATIONS(1) Asset retirement obligations recognized in the consolidated balance sheets as of March 31, 2012 and 2011
The Company and its consolidated subsidiaries, in connection with
operating commercial facilities and parking business (Mitsui
Repark), have entered into real estate lease contracts with terms
ranging from several months to 20 years. Asset retirement obligations have been recognized in respect of the obligation of theCompany and its consolidated subsidiaries to the landlords toremove the facilities from leased real estate at the end of thosecontracts. The liability has been calculated with expected useful
lives ranging from several months to 20 years and discount rates
ranging from 0 to 2.5%.
Asset retirement obligations are included in other current liabilities
and other long-term liabilities on the consolidated balance sheets.

65

The following table summarizes the changes in the aggregate carrying amount of asset retirement obligations for the year ended March 31,
2012 and 2011:
Thousands of
U.S. dollars

Millions of yen

2012

2011

¥2,611¥2,418

Increase due to acquisition of fixed assets

269

—

3,273

Net increase due to revisions to original estimate *2

246

1,561

2,993

Decrease due to settlement(420)(1,598)(5,110)

Other

239

230

2,908

¥2,945¥2,611$35,832

Beginning of year *1

End of year2012

$31,768*1 Balance at beginning of the year ended March 31, 2011 represents the amount under initial application of new accounting standards. Refer to Note 2(X).
*2 Increased mainly due to additions of asbestos removal costs that have become reasonably measurable.

(2) Asset retirement obligations not recognized in the consolidatedbalance sheets as of March 31, 2012 and 2011
The Company and its consolidated subsidiaries own properties
containing asbestos material and are obligated to remove thosematerials upon disposition of the properties. However, since sufficient information is not available to reasonably estimate the obligation amount due to uncertainty about the method and timing ofsettlement, asset retirement obligation is not recognized for the
obligations to remove asbestos materials.

The Company and its consolidated subsidiaries, in connection
with some commercial facilities, hotels and retail premises, haveentered into real estate lease contracts and are obligated to thelandlords to dismantle the facilities upon exit. However, sufficient
information is not available to reasonably estimate the obligation
amount due to uncertainty about the timing of settlement or lack ofplan to settle. Thus asset retirement obligation regarding reestablishing the status quo is not recognized except for those mentionedin (1) above.

15. DEPOSITS FROM TENANTS
Deposits from tenants at March 31, 2012 and 2011 comprise the following:Thousands of
U.S. dollars

Millions of yen

Non-interest-bearing
Interest-bearing
Total
Average interest rate

The Company and its consolidated subsidiaries generally makelease agreements with tenants under which they receive both interest-bearing deposits and non-interest-bearing deposits from tenants. The non-interest-bearing deposits and some of theinterest-bearing deposits are not refundable during the life of the

2012

2011

2012

¥349,694¥345,467$4,254,702

4,143

9,391

50,408¥353,837¥354,858$4,305,110

1.20%

1.30%

lease. The rest of the interest-bearing deposits are generally refundable to the tenant in equal annual or monthly payments with interest
over certain periods of time commencing after the grace periods,
depending on the terms of the contracts.

16. NET ASSETS
Net assets comprises four subsections, which are shareholders’equity, accumulated other comprehensive income, subscription
rights to shares and minority interests, as applicable.
Under the Japanese Company Law (the “Law”), the entire
amount paid for new shares is required to be designated as common stock. However, a company may, by resolution of the Board of
Directors, designate an amount not exceeding one-half of the priceof the new shares as additional paid-in capital, which is included incapital surplus.
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% of common stock over the total of additional paid-in-capital and legal earnings reserve must be set aside66

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

17. SUPPLEMENTAL INFORMATION ON THE CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS(1) Changes in number of shares issued and outstanding during the years ended March 31, 2012, 2011 and 2010 are as follows:(Thousands)

Numbers of shares as of March 31, 2009

IssuedTreasury stock

Common stock

Common stock

881,425

2,820

Numbers of shares increased *1—

176

Numbers of shares decreased *2

—

(49)

881,425

2,947

—

175

Numbers of shares as of March 31, 2010
Numbers of shares increased *1
Numbers of shares decreased *

—

(34)

881,425

3,088

3

Numbers of shares as of March 31, 2011
Numbers of shares increased *1—

74

Numbers of shares decreased *4

—

(63)

881,425

3,099

Numbers of shares as of March 31, 2012
*1 Treasury stock increased due to purchase of odd shares.
*2 Treasury stock decreased due to sale of odd shares.
*3 Treasury stock decreased due to sale of 31 thousand odd shares and exercise of 3 thousand shares of subscription rights.
*4 Treasury stock decreased due to sale of 23 thousand odd shares and exercise of 40 thousand shares of subscription rights.

(2) Information of subscription rights to shares is summarized as follows:
Thousands of
U.S. dollars

Millions of yen
Company

Type of subscription rights to shares

Consolidated
subsidiaries

Total

Company

Consolidated
subsidiaries

Total$7,154$—$7,154

Stock option

Balance as of March 31, 2010

¥378

¥—

¥378

Balance as of March 31, 2011

¥520

¥—

¥520

Balance as of March 31, 2012

¥588

¥—

¥588

Number of shares regarding stock options as of March 31, 2012, 2011 and 2010 and number of such shares increased and decreased during the years then ended are not presented as they are insignificant.

(3) Information of dividends is summarized as follows:(a) Dividends paid
The following resolution was approved by the ordinary general shareholders’ meeting held on June 29, 2011, June 29, 2010 and June 26, 2009:

Date of shareholders' meeting
Type of stock
Total amount
Per share amount
Record date
Effective dateJune 29, 2011
Common stock¥9,662 million ($117,557 thousand)¥11 ($ 0.134)
March 31, 2011
June 30, 2011

June 29, 2010
Common stock¥9,664 million¥11
March 31, 2010
June 30, 2010

June 26, 2009
Common stock¥9,665 million¥11
March 31, 2009
June 29, 2009

The following resolution was approved by the Board of Directors’ meeting held on October 31, 2011, October 29, 2010 and October 29, 2009:

Date of board of directors’ meeting
Type of stock
Total amount
Per share amount
Record date
Effective date

October 31, 2011
Common stock¥9,662 million ($117,557 thousand)¥11 ($ 0.134)
September 30, 2011
December 2, 2011

October 29, 2010
Common stock¥9,663 million¥11
September 30, 2010
December 2, 2010

October 29, 2009
Common stock¥9,664 million¥11
September 30, 2009
December 2, 2009(b) Dividend whose record date falls within the current fiscal year but to be effective in the following fiscal year
The following resolution was approved by the ordinary general shareholders’ meeting held on June 28, 2012, June 29, 2011 and June 29, 2010:

Date of shareholders' meeting
Type of stock
Total amount
SourcePer share amount
Record date
Effective dateJune 28, 2012
Common stock¥9,662 million ($117,557 thousand)

Retained earnings¥11 ($ 0.134)
March 31, 2012
June 29, 2012

June 29, 2011
Common stock¥9,662 million
Retained earnings¥11
March 31, 2011
June 30, 2011

June 29, 2010
Common stock¥9,664 million
Retained earnings¥11
March 31, 2010
June 30, 201067

18. STOCK OPTION PLANS
The following table summarizes the stock option plans introduced by the Company.
Stock option expenses charged to income for the years ended March 31, 2012, 2011 and 2010 are as follows:
Thousands of
U.S. dollars

Millions of yen

Cost of revenue from operations

2012

2011

2010

2012

¥ 28

¥ 34

¥ 34

$  341

Selling, general and administrative expenses

107

115

124

1,302

Total

¥135

¥149

¥158

$1,643

The following table summarizes the contents and activity of stock options as of March 31, 2012 and for the year then ended:2011 plan2010 plan2009 plan2008 plan2007 plan

Grantees

Directors, corporate
officers and groupmanaging officers;
25 in total *1

Directors, corporate Directors, corporate Directors, corporate Directors, corporate
officers and group officers and group officers and group officers and groupmanaging officers; managing officers; managing officers; managing officers;
25 in total *1
25 in total *1
26 in total *1
27 in total *1

Type of stock and number ofshares granted

143,040 shares ofcommon stock

140,420 shares ofcommon stock

109,650 shares ofcommon stock

71,250 shares ofcommon stock

48,880 shares ofcommon stock

Grant dateAugust 12, 2011

August 13, 2010

August 14, 2009

August 15, 2008

September 18, 2007

Vesting conditions

*2

*2

*2

*2

*2

Requisite service period

Not specified

Not specified

Not specified

Not specified

Not specified

Exercise period *2

August 13, 2011 August 12, 2041

August 14, 2010 August 13, 2040

August 15, 2009 August 14, 2039

August 16, 2008 August 15, 2038

September 19, 2007 September 18, 2037—

140,420

109,650

69,29047,550143,040

—

—

—

—

Non-vested options(number of shares):
Outstanding at beginning of year
GrantedForfeited

—

—

—

—

—

Vested—(9,030)(12,520)(11,020)(7,490)143,040

131,390

97,13058,27040,060

Outstanding at end of year
Vested options (number of shares):
Outstanding at beginning of year

—

—

—

—

—

—

9,030

12,52011,0207,490

Exercised—(9,030)(12,520)(11,020)(7,490)

Expired

—

—

—

—

—

VestedOutstanding at end of year
Exercise price
Average stock price on exercise date
Grant-date fair value

—

—

—

—

—

Yen

U.S. dollars

Yen

Yen

Yen

Yen

¥  1

$ 0.01¥    1¥    1¥    1¥    1

—

—

1,580

1,580

1,516

1,516

¥919

$11.18¥1,029¥1,493¥1,967¥2,357*1 Grantees consist of 9 directors (excluding outside directors), 8 corporate officers (non-directors) and 8 group managing officers for 2011 plan, 8 directors (excluding outside directors), 9 corporate officers (nondirectors) and 8 group managing officers for 2010 plan and 2009 plan, 6 directors (excluding outside directors), 12 corporate officers (non-directors) and 8 group managing officers for 2008 plan, and 6 directors (excluding outside directors), 13 corporate officers (non-directors) and 8 group managing officers for the 2007 plan.
*2 Vesting conditions and exercise period:
Stock options granted are exercisable on the day following grantees leaving the positions of director, corporate officer or group managing officer, and for 5 years commencing on that date.

The fair value of options was estimated using the Black-Scholes option pricing-model under the following assumptions:2011 plan

Expected volatility *1
Expected life *2
Expected dividend *3
Risk-free rate *42010 plan2009 plan

40%

40%

40%

15 years

15 years

15 years¥22 ($0.27) per share¥22 per share¥22 per share

1.58%

1.41%

1.88%

*1 Expected volatility is calculated based on the historical stock price for the 15-year period ending on the grant date.
*2 Options are assumed to be exercised at the midpoint of the exercise period because of the difficulty to reasonably estimate expected life due to insufficient historical data.
*3 Expected dividend is the expected dividend amount for the fiscal year in which the options are granted, estimated as of the grant date.
*4 Risk-free rate represents the interest rate of Japanese government bonds whose life corresponds to the expected life of stock options.
Number of vesting options is estimated based on actual forfeitures due to difficulty in reasonably estimating future forfeitures.

6819. IMPAIRMENT LOSS ON FIXED ASSETS
During the year ended March 31, 2012, there were no impairment losses recognized by the Company and its consolidated subsidiaries.
During the year ended March 31, 2011, the Company and certain consolidated subsidiaries recognized impairment losses for the following
groups of assets.
Primary use

Type of assets

Location

Leasing properties

Buildings, land, etc.

Chuo Ward, Tokyo, etc.

Operating facilities

Buildings, land, etc.

Usuki City, Oita, etc

For the purpose of identifying fixed assets that are impaired, theCompany and certain consolidated subsidiaries grouped their fixed
assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets or groups ofassets. The corporate headquarters’ facilities are treated as common assets.
In the light of a significant decrease in the projected recoverable
amount due to the Company’s decision to sell the leasing properties early, the Company recorded impairment loss on those properties. In addition, considering significant deterioration of profitability
due to a decline in current rental rates, adverse changes in market

conditions and other factors, the Company reduced the book values of operating facilities to their recoverable amounts and recognized impairment losses.
Impairment losses totaling ¥4,115 million are comprised of¥1,885 million of land, ¥1,134 million of buildings and structures,and ¥1,096 million of others.
Recoverable amounts are measured by net realizable values orvalues in current use. Net realizable values are determined mainly
based upon appraisal values calculated by real-estate appraisers.
Values in current use are calculated based on the present values of
future cash flows, using a discount rate of 5%.

During the year ended March 31, 2010, the Company and certain consolidated subsidiaries recognized impairment losses for the following
groups of assets.
Primary use

Type of assets

Location

Leasing properties

Buildings, land, etc.

Minato Ward, Tokyo, etc.

Operating facilities

Buildings, land, etc.

Yoichi County, Hokkaido, etc

For the purpose of identifying fixed assets that are impaired, theCompany and certain consolidated subsidiaries grouped their fixed
assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets or groups ofassets. The corporate headquarters’ facilities are treated as common assets.
In the light of a significant decrease in the projected recoverable
amount due to the Company’s decision to sell the leasing properties early, the Company recorded impairment loss on those properties. In addition, considering significant deterioration of profitability
due to a decline in current rental rates, adverse changes in market

conditions and other factors, the Company reduced the book values of operating facilities to their recoverable amounts and recognized impairment losses.
Impairment losses totaling ¥18,938 million are comprised of¥8,425 million of land, ¥9,783 million of buildings and structures,and ¥730 million of others.
Recoverable amounts are measured by net realizable values orvalues in current use. Net realizable values are determined mainly
based upon appraisal values calculated by real-estate appraisers.
Values in current use are calculated based on the present values of
future cash flows, using a discount rate of 5%.

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

Millions of yen
Years ended March 31,

2012

2011

2010

2012

Interest income¥  241¥   209¥   301$ 2,932

Dividend income

3,221

3,201

2,454

39,190—20,96525,713

—

Other

2,392

2,669

2,684

29,103

Total¥5,854¥27,044¥31,152$71,225

Gain on sale of investment securities6921. MAJOR COMPONENTS OF COSTS AND EXPENSES—OTHER
Thousands of
U.S. dollars

Millions of yen

2012

2011

2010

2012

¥    —¥4,115¥18,938$     —

Loss on disposal of property and equipment

5,635

12,325—68,561

Impairment loss on investment securities

1,256

6,212

—

15,282Years ended March 31,

Impairment loss on fixed assets

Casualty losses

359

4,628

—

4,368

Provision for casualty losses

759

3,571

—

9,235

Other

6,336

5,830

7,592

77,089Total¥14,345¥36,681¥26,530$174,535

22. COMPREHENSIVE INCOME
An analysis of each component of other comprehensive income (loss) and related tax effects for the year ended March 31, 2012 is presented
as follows.
Millions of yen

Thousands of
U.S. dollars

2012

2012

¥ 7,036$ 85,607

Net unrealized holding gains on securities
Unrealized holding gains arising during the year
Reclassification to income for the year  Pretax amount

352

4,283

7,387

89,877   Tax (expense) benefit

961

11,692  Net-of-tax amount

8,348

101,570

Unrealized losses arising during the year

(1,731)(21,061)

Reclassification to income for the year

716

8,712

(1,015)(12,349)

Net unrealized losses on hedging derivatives

Pretax amountTax (expense) benefit

483

5,877

Net-of-tax amount(531)(6,461)

23,503285,959(2,775)(33,763)

Reserve on land revaluation
Tax (expense) benefit
Foreign currency translation adjustments
Aggregated adjustment during the year resulting from foreign currency translation
Equity in other comprehensive loss of affiliated companies
Unrealized losses arising during the year

(1,210)(14,722)   Total other comprehensive income¥27,335$332,583

Comprehensive income and other comprehensive income for the year ended March 31, 2010 are stated below. Refer to Note 2(W).
Millions of yen

2010

Other comprehensive income (loss):
Net unrealized holding gains on securities
Net unrealized losses on hedging derivatives¥ 49,862(184)

Reserve on land revaluation(718)

Foreign currency translation adjustments

1,039

Equity in other comprehensive income of affiliated companies
Total other comprehensive income

984¥ 50,983

Comprehensive income attributable to:Shareholders of the Company
Minority interests
Total comprehensive income

70¥111,038
1,061¥112,099

23. LEASESAs lessee:(A) Finance leases
Assets leased under finance leases that do not transfer ownershipto the lessee as of March 31, 2012 and 2011 consist mainly of

Parking Facilities (Mitsui Repark). Such assets are capitalized asassets and depreciated using the straight-line method over theirlease term assuming no residual value.

As described in Note 2 (P), finance leases that do not transfer ownership to the lessee whose commencement day falls on or before March
31, 2008 are accounted for as operating lease. Information on such leases is summarized as follows:(1) Pro forma amounts of acquisition cost, accumulated depreciation and net book value at March 31, 2012 and 2011:
Thousands of U.S. dollars

Millions of yen

2011

2012
Buildings andstructures

Machinery andequipment¥4,593¥1,124

Acquisition cost

2012

Total

Buildings andstructures

Machinery andequipment¥5,717¥4,593¥1,653

Total

Buildings andstructures

Machinery andequipment

Total¥6,246$55,883$13,675$69,588

Accumulated
depreciation

2,602

1,064

3,666

2,174

1,375

3,549

31,65912,94544,604

Net book value¥1,991¥   60¥2,051¥2,419¥  278¥2,697

24,224$   730$24,954(2) Future lease payment inclusive of interest at March 31, 2012 and 2011:
Thousands of
U.S. dollars

Millions of yen

Amount due within one year

2012

2011

2012

¥  391¥  671$ 4,757

Amount due after one year

1,660

2,026

20,197

Total¥2,051¥2,697$24,954(3) Lease expense and the pro forma amount of depreciation expense for the years ended March 31, 2012, 2011 and 2010:
Thousands of
U.S. dollars

Millions of yen

2012

2011

2010

2012

Lease expense

¥597

¥749

¥800

$7,264

Depreciation expense

597

749

800

7,264

(4) Calculation of the pro forma amount of depreciation expense:
Pro forma depreciation amounts are computed using the straight-line method over the lease terms assuming no residual value.
(B) Operating leases
Future lease payments under non-cancellable operating leases at March 31, 2012 and 2011:
Thousands of
U.S. dollars

Millions of yen

Amount due within one year

2012

2011

2012

¥ 64,383¥ 59,340$  783,344

Amount due after one year

151,417170,382

1,842,280

Total¥215,800¥229,722$2,625,624

As lessor:
Operating leases
Future lease revenue under non-cancellable operating leases at March 31, 2012 and 2011:
Thousands of
U.S. dollars

Millions of yen

2012

2011

2012

Amount due within one year

¥ 42,800¥ 36,421$  520,745

Amount due after one year

209,522

183,930

2,549,239

Total¥252,322¥220,351$3,069,984

71

24. BUSINESS TRANSACTIONS WITH SPECIAL PURPOSE ENTITIESThe Company invests in 25, 30 and 32 special purpose entities(SPEs) for securitizing its customers’ real estate as of March 31,
2012, 2011 and 2010, respectively. SPEs utilized consist mainly of
tokurei-yugen-kaisha, or limited liability companies, and tokuteimokuteki-kaisha, or specific purpose companies (“TMK”) under
Securitization Law. The SPEs mainly acquire real estate and develop
real estate projects, and developed properties are sold to investors.
Other than investments by the Company, SPEs are funded byborrowings from financial institutions, such as non-recourse loans
and asset backed securities issued by TMK.
The Company plans to collect the appropriate amount of its
investments at the exit of those projects referred to above. As of
March 31, 2012 and 2011, those projects are making progress as
initially planned. The Company’s risk exposure is limited to theamount of “equity investments in properties for sale” and “investment securities”.

The following tables summarize transactions with the SPEs as of March 31, 2012 and 2011 and for the years ended March 31, 2012, 2011
and 2010.
Millions of yen
Balance

Revenues and costs

2011

2012

Investments *1¥96,385

Management—¥112,684—

Revenue from operations *2

2012

2011

2010

¥5,232¥8,254¥24,925

Cost of revenue from operations *3

662

342

143

Revenue from operations *4

868

1,401

1,252

Thousands of U.S. dollars
Balance

Revenues and costs

2012

Investments *1

2012$1,172,710

Management—

Revenue from operations *2$63,657

Cost of revenue from operations *3

8,055

Revenue from operations *4

10,561*1 Consists of ¥47,211 million ($574,413 thousand) and ¥59,921 million of “equity investments in properties for sale” and ¥49,174 million ($598,297 thousand) and ¥52,763 million of “investment securities” asof March 31, 2012 and 2011, respectively, and includes investments in tokumei-kumiai (TK), or silent partnerships and preferred securities issued by TMK.
*2 Dividends on the investments earned by the Company, and consists of ¥5,232 million ($63,657 thousand) and ¥5,044 million for leasing segment and ¥nil million ($nil thousand) and ¥3,210 million for property sales segment for the year ended March 31, 2012 and 2011, respectively.
*3 Costs and losses incurred by the Company in connection with the investment such as costs incurred during development of real estate, and consists of ¥442 million ($5,378 thousand) and ¥322 million for theleasing segment and ¥220 million ($2,677 thousand) and ¥20 million for the property sales segment for the years ended March 31, 2012 and 2011, respectively.
*4 Asset management fees earned by the Company and Mitsui Fudosan Investment Advisers, Inc., and are included in the management segment for the years ended March 31, 2012 and 2011.

The Company has no directors and/or employees dispatched to any SPE as of March 31, 2012 and 2011.
Combined assets, liabilities and net assets of SPEs as of the latest closing date of each SPE is summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2012

2011

2012

¥445,433¥464,946$ 5,419,552

32,421

39,947394,464¥477,854¥504,893$5,814,016

AssetsReal property
Other
Total

Thousands of
U.S. dollars

Millions of yen

2012

2011

2012

Borrowings *5¥351,003¥341,552$4,270,629

Capital *6

119,210

161,855

1,450,420

7,641

1,486

92,967¥477,854¥504,893$ 5,814,016

Liabilities and net assets

Other
Total

*5 Consists of non-recourse loans and asset backed securities issued by TMK.
*6 Consists of capital deposit in TK and preferred capital in TMK, and includes investments by the Company. (Refer to (*1) for respective ending balances.)7225. SEGMENT INFORMATION
Effective from the year ended March 31, 2011, the Company andits consolidated subsidiaries adopted “Accounting Standard forDisclosures about Segments of an Enterprise and RelatedInformation” (ASBJ Statement No. 17; March 27, 2009) and the“Guidance on Accounting Standard for Disclosures about
Segments of an Enterprise and Related Information” (ASBJ
Guidance No. 20; March 21, 2008).
Reportable Segment Information:
The reportable segments of the Company represent its components for which operating results are regularly reviewed, utilizing
separately available financial information, by the management indeciding how to allocate resources and assessing segment performance.
The Company’s Head Office organizes its business units basedon products and services, with each unit controlling subsidiaries
with related business, mainly consisting of leasing, property sales
and management.
The Company employs a matrix form of segment categorized bybusiness unit organized by Head Office and by services provided.

The Company’s segments have been aggregated based on thenature of products and services into the 5 reportable segments of“Leasing”, “Property Sales”, “Management”, “Mitsui Home”, a listed
subsidiary, and “Other”.
Descriptions of reportable segments are stated below.
(1) Leasing
Leasing of office buildings and commercial facilities, etc.
(2) Property Sales
Sales of condominiums and detached housing to individuals, andsales of rental housing and office buildings, etc. to investors.
(3) Management
Property management and brokerage and asset management, etc.
(4) Mitsui Home
New housing construction and renovation, etc.
(5) Other
Facility operations and merchandise sales, etc.

Financial information about reportable segments for the years ended March 31, 2012, 2011 and 2010 is summarized in the following tables.
The accounting policies of segments are almost the same as those described in Note 2. Segment operating income is based on revenue fromoperations, cost of revenue from operations and selling, general and administrative expenses. Transactions and transfers between segments
are made at amounts based on prevailing market prices.
Millions of yen
Year ended March 31, 2012

(1)

(2)

(3)

(4)

(5)

Adjustments *1

Consolidated¥  420,528
15,680¥321,352¥286,639¥207,568¥102,015¥     —

¥1,338,102—

42,462

9,271

3,383

(70,796)

Total revenue from operations—¥  436,208¥321,352¥329,101¥216,839¥105,398¥ (70,796)¥1,338,102

Segment operating income¥   95,700¥ 15,734¥ 34,364¥  4,187¥   (807)¥ (23,140)¥  126,038

Segment assets

2,474,791

753,266

240,120

113,152

110,232

176,851

3,868,412

Depreciation

37,141

1,470

6,053

3,579

3,615

1,373

53,231

Additions to property and equipment
and intangible assets

91,341

762

10,438

3,680

4,566

969

111,756

Revenue from operations:
Outside customers
Inter—segment

Millions of yen
Year ended March 31, 2011

(1)

(2)

(3)

(4)

(5)

Adjustments *2

Consolidated¥  423,468
15,849¥405,243¥277,947¥205,131¥93,481¥     —

¥1,405,270—

41,168

8,999

3,551

(69,567)

Total revenue from operations—¥  439,317¥405,243¥319,115¥214,130¥97,032¥ (69,567)¥1,405,270

Segment operating income¥   88,929¥ 16,193¥ 32,121¥  3,764¥ 1,002¥ (21,916)¥  120,093

Segment assets

2,427,493

745,625

207,064

114,366

107,543

178,6093,780,700

Depreciation

36,610

1,438

5,858

3,876

3,775

1,398

52,955

Loss on impairment of fixed assets

1,743

—

95

—

2,277

—

4,115

Additions to property and equipment
and intangible assets

210,597

1,530

8,208

3,354

4,924

781

229,394

Revenue from operations:
Outside customers
Inter—segment

73

Millions of yen
Year ended March 31, 2010

(1)

(2)

(3)

(4)

(5)

Adjustments *3

Consolidated¥  430,976
16,837¥386,256¥266,662¥202,865¥ 98,048¥     —

¥1,384,807

14

41,002

7,059

3,973

(68,885)

Total revenue from operations—¥  447,813¥386,270¥307,664¥209,924¥102,021¥ (68,885)¥1,384,807

Segment operating income¥   95,554¥ 12,493¥ 29,714¥  3,640¥    228¥ (21,043)¥  120,586

Segment assets

Revenue from operations:
Outside customers
Inter—segment

2,273,046

796,794

208,325

113,068

110,112

209,079

3,710,424

Depreciation

34,538

1,177

5,308

3,840

3,985

1,439

50,287

Loss on impairment of fixed assets

14,056

—

836

—

4,046

—

18,938Additions to property and equipment
and intangible assets

38,877

4,216

5,875

2,777

7,377

2,850

61,972

Year ended March 31, 2012

(1)

(2)

(3)

(4)

(5)

Adjustments *1

Consolidated$ 5,116,535$3,909,867$3,487,517$2,525,465$1,241,210$      —

$16,280,594

190,777—

516,632

112,800

41,160(861,369)—

Total revenue from operations$ 5,307,312$3,909,867$4,004,149$2,638,265$1,282,370$ (861,369) $16,280,594

Segment operating income$ 1,164,375$  191,434$  418,104$   50,943$   (9,819)$ (281,541) $ 1,533,496

Segment assets

30,110,610

9,164,935

2,921,523

1,376,712

1,341,185

2,151,734

47,066,699

451,892

17,88573,64643,54543,983

16,707

647,658

1,111,340

9,271

126,998

44,77455,554

11,7901,359,727

Thousands of U.S. dollars

Revenue from operations:
Outside customers
Inter—segment

Depreciation
Additions to property and equipment
and intangible assets*1 Adjustments to segment operating income of ¥(23,140) million ($(281,541) thousand) consists of ¥15 million ($184 thousand) of inter-segment elimination and ¥(23,155) million ($(281,725) thousand) of corporate expenses, which mainly represent the Company’s general and administrative expenses that are not allocable to any of the reportable segments. Adjustments to segment assets of ¥176,851 million($2,151,734 thousand) consists of ¥(730,484) million ($(8,887,748) thousand) of inter-segment elimination, ¥785,179 million ($9,553,218 thousand) of corporate assets and investments in affiliated companies of ¥122,156 million ($1,486,264 thousand).
*2 Adjustments to segment operating income of ¥(21,916) million consists of ¥230 million of inter-segment elimination and ¥(22,146) million of corporate expenses, which mainly represent the Company’s generaland administrative expenses that are not allocable to any of the reportable segments. Adjustments to segment assets of ¥178,609 million consists of ¥(721,668) million of inter-segment elimination, ¥786,445
million of corporate assets and investments in affiliated companies of ¥113,832 million.
*3 Adjustments to segment operating income of ¥(21,043) million consists of ¥908 million of inter-segment elimination and ¥(21,951) million of corporate expenses, which mainly represent the Company’s generaland administrative expenses that are not allocable to any of the reportable segments. Adjustments to segment assets of ¥209,079 million consists of ¥(718,189) million of inter-segment elimination, ¥812,332
million of corporate assets and investments in affiliated companies of ¥114,936 million.

Reportable segment information regarding carrying amount and amortization of goodwill and income recognized from negative goodwill has
been omitted due to their immateriality.
Products and Services Information:
Refer to reportable segment information.
Geographic Area Information:
Geographic area information has been omitted since revenue fromoutside customers in the Japan area and property and equipment
located in the Japan area accounted for more than 90% of revenue
from operations on the consolidated income statements and property and equipment on the consolidated balance sheets, respectively.

74

Customer Information:
Customer information has been omitted since revenue from no single customer exceeded 10% of revenue from operations on the
consolidated income statements.

26. CONTINGENT LIABILITIESContingent liabilities at March 31, 2012 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

Loans guaranteed

2012

2011

2012

¥42,014¥48,837$511,181

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

75

Independent Auditors’ Report76Domestic and Overseas Networks

DOMESTIC NETWORKOVERSEAS NETWORKHead Office

Mitsui Fudosan America, Inc.

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

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

Branch Offices

Kansai Head Office

Halekulani Corporation

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

2222 Kalakaua Avenue, Suite 900,
Honolulu, Hawaii 96815, U.S.A.
Tel : 1-808-526-1186
Fax : 1-808-531-5651

Kyoto Branch

Mitsui Fudosan (U.K.) Ltd.

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

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

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

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

Mitsui Fudosan (Asia) Pte. Ltd.
16 Raffles Quay, #37-01 Hong Leong Building,Singapore 048581
Tel : 65-6220-8358
Fax : 65-6224-8783

Mitsui Fudosan (Shanghai) Consulting Co., Ltd.

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

Unit 2101, One ICC,
Shanghai International Commerce Center,999 Middle Huaihai Road Xuhui District Shanghai,
200031, China
Tel : 86-21-5396-6969
Fax : 86-21-5396-6899

Yokohama Branch

Mitsui Fudosan Consulting (Beijing) Co., Ltd.

Yokohama Mitsui Building
1-2, Takashima 1-chome, Nishi-ku,
Yokohama-shi, Kanagawa 220-0011

17th Floor, Unit 17, China World Office ,No.1 Jianguomenwai Avenue, Beijing, 100004, China
Tel : 86-10-6505-3101
Fax : 86-10-6505-3115

Chiba Branch

Chubu Branch
Nagoya Mitsui Main Building
24-30, Meieki Minami 1-chome,
Nakamura-ku, Nagoya-shi, Aichi 450-0003

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

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

Mitsui Fudosan Consulting (Guangzhou) Co., Ltd.
Room 1405, R&F CENTRE No.10
Huaxia Road, Zhujiang New Town, Guangzhou,
510623, China
Tel : 86-20-2802-3188
Fax: 86-20-2802-3180

Mitsui Fudosan Co., Ltd. Hong Kong Branch
Level 3, Three Pacific Place,
1 Queen’s Road East, Admiralty, Hong Kong
Tel : 852-2855-6951

77

History(From Mitsui Fudosan’s Corporate Profile 2012)

1673

l

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

1914

l

Establishment of Mitsui Company and its real estatesection

1929
1941

l

Completion of Mitsui Main BuildinglSeparation of real estate division from the Mitsui
Company, establishment of Mitsui Fudosan Co., Ltd. with
3 million yen in capital, wholly owned by the Mitsui family

1949
1951
1956

l

Listing of stocklFoundation of Daiichi Engei Co., Ltd.

l

Liquidation and absorption of the Mitsui Company by
Mitsui Fudosan

1959

l

Capital participation in Fuji Sogo Development (now Cany
Corporation)

1960
1961

l

Foundation of Oriental Land Co., Ltd.

lStart of development and sales of residential and vacation
property

2002

2003

Completion of MARINE PIA KOBE PORTO BAZAR
Factory Outlets (now MITSUI OUTLET PARK MARINE PIA
KOBE ) (Hyogo)lStart of Office Building Fund operationlCompletion of La Fete Tama Minami Osawa (now MITSUIOUTLET PARK TAMA MINAMI OSAWA) (Tokyo)lCompletion of Mitsui Garden Hotel Okayama (Okayama)lCompletion of Garden Walk Makuhari (now MITSUIOUTLET PARK MAKUHARI ) (Chiba)lCompletion of Nakanoshima Mitsui Building (Osaka)lCompletion of JAZZ DREAM NAGASHIMA (now MITSUIOUTLETPARK JAZZ DREAM NAGASHIMA ) (Mie)lCompletion of Shiodome City Center (Tokyo)lEstablishment of Challenge Plan 2008, Mitsui FudosanGroup’s long-term business strategylCompletion of Roppongi T-CUBE (Tokyo)lCompletion of Aoyama Park Tower (Tokyo)lCompletion of Goodwood Gardens (Singapore)lStart of development and sales of condominiumslCompletion of Kasumigaseki Building (Tokyo), the firstskyscraper in Japan

2004

l

Opening of Nihonbashi 1-Chome Building (COREDO
Nihonbashi ) (Tokyo)lStart of construction and sales of houseslOpening of office in Shanghai, China

Establishment of Mitsui Real Estate Sales Co., Ltd.

2005

l

l

Completion of Nihonbashi Mitsui Tower (Tokyo)lCompletion of Mita Tsunamachi Park Mansion (Tokyo)lOpening of Mitsui Garden Hotel Ginza Premier (Tokyo)lCompletion of Ginza Mitsui Building (Tokyo)lEstablishment of Mitsui Fudosan Residential Co. Ltd.

lFoundation of Mitsui Fudosan America, Inc.

l

Opening of Urban Dock LaLaport TOYOSU (Tokyo)lCompletion of Shinjuku Mitsui Building (Tokyo)lOpening of LAZONA Kawasaki plaza (Kanagawa)lEstablishment of Mitsui Home Co., Ltd.

lOpening of LaLaport KASHIWANOHA (Chiba)

1975
1976
1980
1981

l

Foundation of Mashiko Country Club (Tochigi)lOpening of LaLaport YOKOHAMA (Kanagawa)lFoundation of Uniliving Co., Ltd.

lOpening of Tokyo Midtown (Tokyo)lEstablishment of “

” system of joint developmentllOpening of LaLaport (now LaLaport TOKYO-BAY),
Japan’s first large-scale regional shopping center (Chiba)

Establishment of New Challenge Plan 2016, Mitsui
Fudosan Group’s long-term business strategylCompletion of Gran Tokyo North Tower (Tokyo)

1983
1984

l

Opening of Tokyo Disneyland (Chiba)llOpening of Mitsui Garden Hotel Osaka (now Mitsui
Garden Hotel Osaka Yodoyabashi), Mitsui Fudosan’s firsthotel in Japan (Osaka)Completion of Akasaka Biz Tower (in Akasaka Sacas)(Tokyo)lCompletion of Yodoyabashi Mitsui Building (Yodoyabashi
Odona)(Osaka)lOpening of MITSUI OUTLET PARK IRUMA (Saitama)lOpening of MITSUI OUTLET PARK SENDAI PORT
(Miyagi)l

Opening of Mitsui Garden Hotel Yotsuya (Tokyo)lCompletion of Sendai Hon-cho Mitsui Building (Miyagi)lOpening of LaLaport IWATA (Shizuoka)lOpening of LaLaport SHIN-MISATO (Saitama)lOpening of MITSUI OUTLET PARK SAPPORO KITAHIROSHIMA (Hokkaido)lOpening of Mitsui Garden Hotel Sapporo (Hokkaido)lFull Completion of Tokyo Southern Garden (Tokyo)lOpening of MITSUI OUTLET PARK SHIGA RYUO (Shiga)lOpening of Mitsui Garden Hotel Ueno (Tokyo)lCompletion of Muromachi Higashi Mitsui Building(COREDO Nihonbashi) (Tokyo)lOpening of Shanjing Outlet Plaza, Ningbo (Zhejiang
Province, PRC)l

Opening of MITSUI OUTLET PARK KURASHIKI(Okayama)lCompletion of Yokohama Mitsui Building (Kanagawa)lEstablishment of Innovation 2017, Mitsui FudosanGroup’s long-term business strategylOpening of MITSUI OUTLET PARK KISARAZU (Chiba)lOpening of DiverCity Tokyo (Tokyo)

1968

1969
1971
1972
1973
1974

l

Opening of Halekulani Hotel in Hawaii

1986

l

Acquisition of Exxon Building, (now 1251 Avenue of theAmericas ) (New York)

1987
1990
1991
1993

l

Opening of Waikiki Parc Hotel (Hawaii)lOpening of Alpark (Hiroshima)lCreation of new corporate logo “lFull completion of Okawabata River City 21, West Block(Tokyo)

1994

1995
1998

1999

2006

2007

2008

2009

”

l

Full completion of Bell Park City (Osaka)lListing of Mitsui Home Co., Ltd. on Tokyo Stock
ExchangelOpening of Shonan Village (Kanagawa)lOpening of Tsurumi Hanaport Blossom (now MITSUIOUTLET PARK OSAKA TSURUMI ), the first factory outlet
mall in Japan (Osaka)lRegistration of Mitsui Main Building as Important Cultural
PropertylCompletion of Yokohama Bayside Marina Shops andRestaurants (now MITSUI OUTLET PARK YOKOHAMABAYSIDE ) (Kanagawa)lEstablishment of the Mitsui Fudosan Group Vision andMission

l

78

2000

l

2010

2011

2012

Completion of Gate City Osaki (Tokyo)

Investor Information(Parent company; as of March 31, 2012)

Mitsui Fudosan Co., Ltd.

Head Office:Number of Shareholders:

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

34,164

Date of Establishment:

Sumitomo Mitsui Trust Bank, Limited

July 15, 1941

Number of Employees:

Capital:1,256 (Consolidated 16,666)¥174,296 million

URL:

Listings:

http://www.mitsuifudosan.co.jp/english

Transfer Agent:Tokyo, Osaka (Ticker: 8801)

Number of Shares:
Authorized: 3,290,000,000
Issued and outstanding: 881,424,727

Major Shareholders

Composition of Shareholders
Number ofshares held(Thousands)

Percentage of
total sharesin issue

The Master Trust Bank of Japan, Ltd. (Trust account)
Japan Trustee Services Bank, Ltd. (Trust account)
Cbldn Stichting PGGM Depository
SSBT ODO5 OMNIBUS ACCOUNT - TREATY CLIENTSThe Chase Manhattan Bank, N.A. London S.L.Omnibus Account
Sumitomo Mitsui Banking Corporation
State Street Bank and Trust Company 505223
The Chuo Mitsui Trust & Banking Co., Ltd.
The Bank of New York Treaty JASDEC Account73,60357,27325,655
20,136
19,98818,54618,083
17,565
16,444

8.35
6.5
2.91
2.28
2.27
2.10
2.05
1.99
1.87

Mellon Bank, N.A. as Agent for
its Client Mellon Omnibus US Pension

15,197

1.72

Total

282,489

32.05

Securities
Companies

1.84%
Other JapaneseCompanies

7.77%
Individuals

6.36%

Financial
Institutions

ForeignInvestors

47.50%

36.50%

Monthly Stock Data (TSE)Monthly stock price range(¥)

Common stock price range
Tokyo Price Index Close

4,000

Topix
2,000

3,000

1,500

2,000

1,000

1,000

500

0

0

Monthly trading volume(million shares)
300
200
100
0

Apr.08FY2008Mar.09 Apr.09

FY2009Mar.10 Apr.10

FY2010Mar.11 Apr.11

FY2011

Mar.12

Notice concerning social and environment activities
Details of the Mitsui Fudosan Group’s efforts to contribute to society and the environment are posted on the following website.

http://www.mitsuifudosan.co.jp/english/corporate/csr/2011/index.html
79

MITSUI FUDOSAN CO., LTD. ANNUAL REPORT 2012

This report was produced in August 2012.
Printed in Japan