Integrated Report 2016

New Value, Real ValueOur Group Vision

New Value, Real Value
Integrating all that is precious to people and communities,
we build cities---- dynamic stages that connect today with tomorrow’s possibilities,
and embrace every moment of life’s pursuits.
We create new value, social value, and above all, real value.
We work to “build cities that connect today with tomorrow's possibilities.”
Through the provision of products resulting from real estate development wecreate communities with extensive urban functions that offer safety, security,and comfort. We work to create sustainable communities in which diverse
generations and values can coexist and that take harmonization with natureand the environment into consideration.

We work to “embrace every moment of life’s pursuits”
Through the provision of a variety of services relating to real estate, we will
nurture times of abundance with people who “live,” “work,” “gather,” and“relax” in communities. We support the development of communities, linking
people to people and people to communities.

Nomura Real Estate Holdings, Inc.

1 Integrated Report 2016

IndexProfileOur Group Vision
Growth Trajectory
Value Creation Process
Mid- to Long-term Business Plan
Highlights from the Fiscal Year Ended March 2016
Financial and Non-financial Data

Value Creation through Continuous Transformation
Message from the President
Message from the Development Sector & CSR Officer
Message from the CFO

1
3
5
7
9
11
13
17
21

Urban Development that Connects Today with a Future of Possibilities
and Embrace Every Moment Invested in Life’s Pursuits
Feature 1:
Creating Urban-type Compact Towns

23

Feature 2:
Developing Safer, More Secure and More Comfortable Real Estate

27

Business that Produces Value

The Nomura Real Estate Group at a Glance
Residential Development Unit
Leasing Unit
Investment Management Unit
Property Brokerage & CRE Unit
Property & Facility Management Unit

31
33
37
41
45
49

A Foundation that Supports Value Creation
Message from the Chair
Corporate GovernanceCorporate Officers
Workforce Management

Data Section

Ten-Year Summary
Unit Information
Consolidated Financial Statements
Financial Report (MD&A)
Group Company Profile
Investor Information
Website

53
55
63
66
69
71
73
77
83
85
86

Editorial Policy
This report is published in order to foster understanding among shareholders, investors and other stakeholders
about the Nomura Real Estate Group’s strategies and measures geared toward the creation of mid- tolong-term value. The editing and layout of this report follows the international integrated reporting frameworkof the International Integrated Reporting Council (IIRC).
Forward-looking Statements
This integrated report contains forward-looking statements about the future plans, strategies and performance of Nomura
Real Estate Holdings, Inc. (“the Company”) and its consolidated subsidiaries (“the Group”). These forward-looking
statements are not historical facts. They are estimates, forecasts and projections based on information currently available
to the Company and are subject to a number of risks and uncertainties, which include economic trends, intensification ofcompetition in the real estate industry, the legal and taxation systems, and other regulations. As such, actual results may
differ from those projected.

Nomura Real Estate Holdings, Inc.

2 Integrated Report 2016

ProﬁleGrowth Trajectory

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Looking Back on
the Nomura Real EstateGroup’s Timely Value
Creation and Efforts to Pave
the Way for the Future

1978

We’ve achieved steady growth by delivering various realestate products and services

Completes constructionof the Shinjuku Nomura
Building and moves theheadquarters from
Nihonbashi.

1957

1961

1963

1988

1994

2002

Starts construction of
Yokohama Business Park (YBP),
the largest business development
conducted solely by theprivate sector.

Starts selling units at A.
CITY Hills and Towers in
Hiroshima Seibu Kyuryo City,
Hiroshima.

Unified brand name “PROUD”
for residential products andservices established.

Operating revenue during the fiscal year
ended September 1982

Broke throughSpun off from Nomura
Securities Co., Ltd. andlaunches real estate businessfocused on leasing andmanagement of office buildings.

Launches residential landdevelopment business with
development of Kajiwarayama
residential area in Kamakura,
Kanagawa.

Operating revenue (Billions of yen)
1957

¥100 billion

Launches condominium
development business with theconstruction of Co-op
Takenomaru in Yokohama.

*Non-consolidated data for Nomura Real Estate Development only until the fiscal year ended March 2004

1960

1970

1980

1957 to 1984 – Founding

1985 to 1990 – Expansion

We were established as a company in charge of owning and managing the new headquarters building of Nomura Securities. At the same time, we were involved in the developmentof New large-scale housing development to help alleviate housing shortages during theperiod of strong economic growth buoyed by reconstruction after the Second World War.
We also sold condominiums and built lease buildings, while entering into the brokeragebusiness as well, eventually developing dramatically into an integrated developer.

As the Japanese economy pushed ahead and the need for improving and expanding
the living environment persisted, we actively expanded our businesses to include
large-scale residential developments, large-scale office building developments, andinternational businesses. Among these, Yokohama Business Park (YBP) completed in1988 became one of the largest private sector-led office building development projects
in Japan.

Nomura Real Estate Holdings, Inc.

3 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation

Net sales for the fiscal year
ended March 2016
2003

2006

2008

¥569.5 billion

2008

Data Section

Presence of the
Nomura Real EstateGroup
Residential Development Unit
2015
Condominium units
supplied annually

Nomura Real Estate Holdings,
Inc. listed on the First Sectionof the Tokyo Stock Exchange.
Completes constructionof PMO Nihonbashi Honcho,
the first development in
the PMO series.

Nomura Real Estate
Office Fund, Inc. listed on
the Tokyo Stock Exchange.

4,556 units

NREG Toshiba Building Co.,
Ltd. joins the Nomura
Real Estate Group.

2010

Brand image survey*1
8 of 10 categories

1st
2011

(PROUD)

Leasing Unit
Vacancy rate of leased properties

1.4 %Investment Management Unit
Assets under management

Approx.

Net sales for the fiscal year ended March 2004

Broke through1990¥300 billion

Launches a condominium brand “OHANA.”OHANA Yasaka-hagiyama cho
Completes constructionof the Nihonbashi Muromachi
Nomura Building.

2000

Property Brokerage & CRE Unit
Number of nomu.com members

Approx.
2010¥1.0 trillion
210,000

Property & Facility Management Unit
Condominium property
management satisfaction*2

1st for 8 years running
1991 to 2003 – Transformation

2004 onward – Further Growth

Collapsing land prices caused Japan’s asset inflated economy to cool off rapidly,
requiring us to concentrate management resources on our condominium business.
Also, we made a full-fledged foray into the CRE business and Investment Management Business, given changes in the structure of real estate ownership and robust
development of the real estate securitization market.

Nomura Real Estate Holdings, Inc. was established in 2004. The holding company
structure was launched and in 2006 we were listed on the First Section of the Tokyo
Stock Exchange. Since then, we have been working diligently on pursuing Groupsynergies and improved strategy management. Going forward, we will continue tocreate new value while meeting and exceeding the needs and expectations ofsociety in an effort to continually boost earnings with high asset efficiency.

*1 S ource: From online data for theCondominium Brand Survey 2016advertising campaign published in the
Nikkei News Paper on Monday, May
23, 2016*2 Source: Research by Sumai Surfin, a priceinformation site for condominiums(As of September 2016)

Nomura Real Estate Holdings, Inc.

4 Integrated Report 2016

ProﬁleValue Creation Process

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Creation Process of the Nomura Real Estate Group: harnessing its strengths as an
Toward Sustainable Value Creation Value
integrated real estate developer to meet the needs of society

Source of Value Creation

Group Business Structure

Main Operating Companies

Diverse workforce

Development Sector

Group employees

6,233

Inventory of property
Property management
track record

Holding company

Nomura Real
Estate Holdings

Buildings

Management andguidance provided tothe business activities ofGroup companies
through the direct ownershipof their stock

163 thousand units
705 buildings
Brand power

Customer base
Number of customer
club members

80,000Stable financial foundation

Corporate
Governancep.55

Service & Management Sector

Residences

Shareholders’ equity ratio

29.9 %

Residential
Development
Unit

p.33

Leasing Unit

p.37

• Nomura Real Estate Development Co., Ltd.
• NREG TOSHIBA BUILDING Co., Ltd.
• Geo-Akamatsu Co., Ltd.
• NREG TOSHIBA BUILDING FACILITIES Co., Ltd.

Investment
Management
Unit• Nomura Real Estate Development Co., Ltd.
• Nomura Real Estate Asset Management Co., Ltd.

Property
Brokerage &CRE Unit• Nomura Real Estate Development Co., Ltd.
• Nomura Real Estate Urban Net Co., Ltd.

p.41

p.45
Property &Facility
Management
Unit

p.49

(As of March 2016)
Nomura Real Estate Holdings, Inc.

• Nomura Real Estate Development Co., Ltd.
• Nomura Real Estate Reform Co., Ltd.
• PRIME X. Co., Ltd.

5 Integrated Report 2016

• Nomura Real Estate Partners Co., Ltd.
• Nomura Real Estate Life & Sports Co., Ltd.
• Nomura Real Estate Heating and Cooling Supply Co., Ltd.
• Nomura Real Estate Amenity Service Co., Ltd.
• Nomura Real Estate Wellness Co., Ltd.
• NF Power Service Co., Ltd.

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Value Created
Business Overview

Main Brands

Financial value

Develops and sells condominiums, detached housing and redevelopment projects. By taking advantage of our integrated development,
sales and management structure, we are actively developing the
PROUD brand as well as the OHANA brand mainly in the Tokyo
Metropolitan area.

Profit generation
p.11-12 and p.21-22
Returning profits to shareholders
p.11-12 and p.21-22

Group collaboration/cooperation

Owns and leases office buildings and commercial facilities. Thisbusiness segment is also engaged in the development of various
asset classes of profit-generating properties including PMO brandoffice buildings, commercial facilities, and logistics facilities forinvestors.

As one of the largest single real estate investment management companies in Japan with over ¥1 trillion in assets under management, we
engage in investment management under the consignment ofinvestment corporations and private funds.

The consumer property brokerage side of the business is satisfying
its customers’ needs for relocation by having enhanced its website
and network of branch offices in the Tokyo Metropolitan area. The
CRE side of the business accommodates the wide-ranging needs ofcorporations.

Non-financial value
We build cities that connect withtomorrow and we create times ofreal value• Formation of high quality, safe, andcomfortable housing stock• Sustainable societies considerate of
the environment• Community building that creates connections• Realization of a society where people can live
healthy and comfortable lives

Creation of Urban-type Compact Towns
p.23-26

Engages in property management of housing and office building
and strives to increase the asset value and profit of buildings. Also,
this business segment operates fitness club under the MEGALOS
brand and in the future it plans on operating senior housing.

Development of real estate that offers
peace of mind, security and comfort
p.27-30

Nomura Real Estate Holdings, Inc.

6 Integrated Report 2016

ProﬁleMid- to Long-term Business Plan

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Toward Mid- toLong-term Growth
We’re aspiring for greater growth byproactively investing in the future while
maintaining our stable financial base´25/03 Operating income´22/03 Operating income¥85.0 billion ¥110 billion level´19/03 Operating income¥150 billion level´17/03 Operating income

Service &Management
Sector

¥76.0 billion

Long-term revenue goal

¥74.3 billion ¥71.8 billion¥80.9 billion
Leasing Unit

¥58.3 billion

Residential
Development
Unit´13/03´14/03´15/03´16/03´17/03´19/03´22/03Phase 1
Previous Mid- to Long-term Business Plan

Phase 2

´25/03Phase 3Current Mid- to Long-term Business Plan

Operating revenue above ¥1 trillion (fiscal year ending March 2025)
ROE at the 10% level

Shareholders’ equity ratio at the 30% level

ROA 5% or above

Dividend payout ratio of approximately 30%

Nomura Real Estate Holdings, Inc.

7 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Key Strategies

Investment Plan

Our Group Vision and Our Growth Model were created as important, fundamental
points during the creation of our Mid- to Long-term Business Plan. To achieve our
future vision of the Group, we also established three key strategies that will guideus. By implementing these strategies, we will work to realize sustainable growth
and to continually create new value for society.

We will proactively increase investment in order to realize a much higher degree of
future growth. Our plan calls for an increase in assets mainly in the Leasing Unit
while maintaining an elevated recovery-to-investment ratio and ensuring higher
asset efficiency. We will also execute strategic investments, including M&A, mainlyin the Service & Management Sector.

Investment Plan

Our Group Vision(Billions of yen)Total(‘17/03-‘25/03)

New Value, Real Value
Integrating all that is precious to people and communities,
we build cities- dynamic stages that connect today with tomorrow’s possibilities,
and embrace every moment of life’s pursuits.
We create new value, social value, and above all, real value.

Residential
Development Unit
Recovery

3,000.0

Our Growth ModelNet Investment*

250.0

Implementing a growth model that emphasizes continuous expansionof revenue with ensured high asset efficiency by appropriately responding
to changes in the social environment.

Recovery-toinvestment ratio

92%

Leasing Unit

2,000

Net Investment*

950.0

Key Strategy (1)Recovery-toinvestment ratio

47%

Strategic investment

200.0

Key Strategy (2)2,500

1,800.0
850.0

Three Key Strategies
Expand business volume and business domains in the Development Sector

Leasing Unit
Other

3,000

3,250.0

RecoveryResidential Development Unit
Service & Management Sector(Billions of yen)

Investment

Investment

Total Assets

1,500

1,000

Total

Demonstrate differentiation and a competitive edge in theService & Management Sector*
Key Strategy (3)Increase and reinforce customer base via Group-wide collaboration*Service & Management Sector: Investment Management Unit, Property Brokerage & CRE Unit, andProperty & Facility Management Unit

Nomura Real Estate Holdings, Inc.

Investment

5,250.0

Recovery

3,850.0

Net Investment*

1,400.0

Recovery-toinvestment ratio

73%*Net Investment = Investment – Recovery

8 Integrated Report 2016500

0
‘16/03Phase 1
‘19/03Phase 2‘22/03Phase 3‘25/03ProﬁleHighlights from the Fiscal Year Ended March 2016

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Prime Minister Approval of
Toranomon Station-front
Jun. Redevelopment Ekimae Project as
a National Strategic Special Zone
2015

2015

Oct.

As a special project within the National Strategic Special
Zone of the Tokyo Metropolitan area, we will work toward
finalizing the plan to complete work by 2020, when theTokyo Olympics and Paralympics will be held. This project
aims to enhance the area’s international competitivenessby forming a multipurpose downtown core that is uniqueand attractive and offers a number of urban functions.

Highlight
Apr.

May

Jun.

Jul.

Real Estate Development
Project in the Phu My Hung
Sep. High-end Residential Area ofVietnam
2015

2015

Oct.

We have begun work on the first-ever real estatedevelopment project led by Japanese companies
with a major local developer in the Phu My Hungarea of Ho Chi Minh City in Vietnam. The development will be completed in two phases and offer
condominiums for sale, with plans calling foraround 2,100 units to be built.
See p.36 to learn more

Nomura Real Estate Holdings, Inc.

9 Integrated Report 2016

All 199 Units of PROUD Tower
Akashi Immediately Sell Out
All 199 units of PROUD Tower Akashi, a mixed-use
redevelopment featuring commercial facilities andpublic facilities in front of Akashi Station on the JR
Kobe Line (Akashi City, Hyogo Prefecture), sold out
on the same day they were released. The 34-floor
building stands as Akashi City’s highest and mostexpensive building, with some units commanding
over ¥130 million.

Aug.

Sep.

Listing of the new Nomura Real
Estate Master Fund, Inc.
The three listed REITs managed by the Group(Nomura Real Estate Master Fund, Inc.
[“NMF”], Nomura Real Estate Office Fund,
Inc. [“NOF”], and Nomura Real Estate Residential Fund, Inc. [“NRF”]) merged to form
Nomura Real Estate Master Fund, Inc., one ofJapan’s largest diversified listed J-REITs withmore than ¥900 billion in assets under management.

Nomura Real
Estate Master
Fund, Inc. (“NMF”)(Sector: Logistics
and retail facilities)(New)
Nomura Real
Estate Master
Fund, Inc.
[Diversified J-REIT]

Nomura Real
Estate Residential
Fund, Inc. ( “NRF”)(Sector: Residential)

Nomura Real
Estate Office
Fund, Inc. ( “NOF”)(Sector: Office)ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Opening of Urban
Commercial Facility
Mar. GEMS Daimon
2016

2016

Jan.

Oct.

High Grade Office Building
PMO Hirakawacho Completed
We completed construction of PMO Hirakawacho, our18th property in the Premium Midsize Office (PMO) series. Located just a one-minute walk from Nagatacho
Station on the Tokyo Metro Line, this building stands as
a new and uniquely original landmark.

We opened GEMS Daimon, the thirdbuilding in the GEMS Series, following similar properties in Shibuya andIchigaya. The facility houses nine
highly unique eateries, including four
first time merchants, which cater tothe dining needs of office workers,
the local community, and visitors inand around the Daimon and Hamamatsucho areas.

Development of Landport
Komaki Begins—Our First Ever
Feb. Logistics Facility in the Chubu
Region2016

We began development on Landport Komaki (tentative name), a large-scale, highly functional logistics
facility, jointly with TODA CORPORATION. The facility
is situated so that deliveries can easily be made to
the entire Chubu region. It also features cutting edge
functions and a design that offers the ultimate in optimized and streamlined logistics.

Nov.

Dec.

Jan.

Promoting an Urban-type
Compact Town in Minowacho,Nov. Kohoku-ku, Yokohama
2015

We will promote an urban-type compact town approach to community development that is multidimensional and highly convenient by developing smart infrastructure that combines people, nature and the town.
The goal is to contribute to the development of the Hiyoshi and Tsunashima areas, which are undergoing atransformation from industrial to residential land.
See p.24 to learn more

Nomura Real Estate Holdings, Inc.

10 Integrated Report 2016

Feb.

2016

Mar.

Mar.

Winner of New Diversity Management
Selection 100
The efforts of our Diversity Promotion Committee to develop workplaces
where all employees recognize one another’s diverse traits and values
and can fully contribute their skills were recognized by the Ministry of
Economy, Trade and Industry with inclusion in Diversity Management Selection 100. This marks the first time that a real estate company was recognized with this honor in thelarge corporation category(workforce of 301 employees
or larger).
See p.67 to learn more

ProﬁleFinancial and Non-financial Data

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Main Financial Indicators
Operating Income and ROA*1

Operating Revenue(Millions of yen)

(Millions of yen)

600,000

100,000

567,159 569,545

450,000

411,493448,655 434,226

ROA (%)

7.9

517,740 532,016
480,983

Operating income

86.6

450,807

80,91275,00074,307

69,821

367,236

5.8

58,30854,374300,000

49,93950,000150,000

39,27434,0122.8
2.5

25,000042,083

6

71,894

5.6

5.4

4.6

4

3.7

2.9

2

0

0

’07/03’08/03’09/03’10/03’11/03’12/03’13/03’14/03’16/03’15/03’07/03’08/03’09/03’10/03’11/03’12/03’13/03’14/03’16/03’15/03*1 ROA = (Operating income+Non-operating income) / Total assets at end of fiscal year

Profit Attributable to Owners of Parent and ROE*2(Millions of yen)

50,000Total Assets, Shareholders’ Equity and Shareholders’ Equity Ratio

Profit attributable to owners of parent

ROE (%)

19.2

47,18220(Billions of yen)

Total assets

Shareholders’ equity

Shareholders’ equity ratio (%)

1,600

1,385.5 1,405.4
15.8
37,50025,00038,441

15

35,254
26,844
17,591
13,77012,5005.7
5.9

0’07/03’08/03’09/03

4,660 5,471
1.8
1.7’10/03 ’11/03 ’12/03

11.2

10

10.3

19,357800

29.9

836.3 891.7
21.4

20.7

301.4

304.5

22.6

24.5

5.9

400

213.2
0

’15/03’16/03

27.1

235.9

336.2

30

28.8
20

355.6

394.0

444.8

0

10

0

’07/03*2 ROE = Profit attributable to owners of parent / Equity (as average over the fiscal year)

Nomura Real Estate Holdings, Inc.

232.7

317.0

40

1,369.2

17.0
5’14/03

1,313.8

26.1

7.8’13/03

1,402.6 1,369.9

1,485.4

1,200

25.5

26,297

1,474.3

11 Integrated Report 2016’08/03’09/03’10/03’11/03’12/03’13/03’14/03’15/03’16/03ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Non-financial Data
Oil Converted Energy Usage and Intensity*3

Annual Cash Dividends and Dividend Payout Ratio(Yen)

Annual cash dividends

Dividend payout ratio (%)

60

57.50
97.3

45

87.0

100

75

30.00
43.4

20.00

25.00

25.00

50

25.00

15

27.1
10.0

0

’07/03

29.5

24.9

22.4

23.3

25

’10/03’11/03’12/03’13/03’14/0336’16/03’15/03

Interest paid (Billions of yen)20

’10/03

759.6
13.5

816.9
14.9

758.5
669.2
14.3

(1,000t-CO2/year)

40

394.8
6.5

408.0

9.6

15

7.2

0.044

0.048

0.050
0.025

’11/03’12/03’13/03’14/03’16/03’15/03CO2 emissions

Emissions intensity (t-CO2/m2/year)

132

131
0.115

0.107

0.102

57

53

52

0.088

0.086

0.081

47

47

44

’12/03’13/03’14/03

0.089

0.091

0.200
0.150
0.100
0.050
0

’10/03’11/03’16/03’15/03

Percentage of Female Employees and Percentage of Female Managers*5
Percentage of female employees (%)

Percentage of female managers (%)

30

8.8

7.8

23.76

23.23

23.54

23.64

23.23

23.23

23.92

6.47

6.64

6.38

6.25

6.28

6.10

6.04

’07/03’08/03’09/03’10/03’11/03’12/03’13/03

25.08

26.27

26.86

3.58

3.61

4.34

’14/03’15/03’16/03

20
5
10

0

0

’07/0329*4 CO2 emissions are calculated using the emissions coefficient designated in the Tokyo Metropolitan Ordinance on
Environmental Preservation.

10

10.0

31

0

616.7

12.5

500

250

721.9
617.5

31

0.075

*3 Up until the fiscal year ended March 2014, calculated for the 7 buildings (buildings with a primary use as office space)
applicable to the Tokyo Metropolitan Ordinance on Environmental Preservation in which the Nomura Real Estate Groupretains an interest of more than 50,000m2.Data for the fiscal year ended March 2015 was calculated for 143 facilities anddata for the fiscal year ended March 2016 was calculated for 142 facilities, subject to reporting requirements under the
Energy Conservation Act, excluding condominium sales centers.

’09/03

778.0

0.053

0

80

1,000

750

0.057

160

Interest-bearing Debt and Interest Paid
Interest-bearing debt

0.058

35

34

’09/03120(Billions of yen)

0.067

0.100

CO2 Emissions and Intensity*40’09/03

0.069

70

65

20

12.7
’08/03

Energy use intensity (kl/m2/year)

0

35.00
30.00

0.072

40

45.00

Energy usage

80
60

40.00
30

(1,000kl/year)’08/03’09/03’10/03’11/03’12/03’13/03’14/03’15/03’16/03

Nomura Real Estate Holdings, Inc.

0
*5 Certain operating companies of the Group have made changes to their manager qualifications in the fiscal year ended March2014 and subsequent years.

12 Integrated Report 2016

ProﬁleMessage from the President

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

With Our Sights Set on
Growth at a Higher Level,
We Will Do Our Utmost to
Achieve the Phase 1 Targetsof Our Mid- to Long-term
Business Plan
Eiji Kutsukake
President
Nomura Real Estate Holdings, Inc.

Nomura Real Estate Holdings, Inc.

13 Integrated Report 2016

As Japanese society changes in a variety of ways, the environment encompassing the real estate industry also faces a timeof great transformation.
Our Group, founded in 1957 with the mission of developing new towns to address the housing shortage, considers
now to be the time to use the real estate development skills
and techniques we have honed over the past 60 years, as wellas our operational strength, to contribute to addressing current social issues and aim for growth at a higher level. We havecome this far by putting our customers first, asking what they
really want and need, and confronting challenges head-on
in our projects. Change in society means the emergence of
new demands, and we have a mission to focus the Group’s
strengths on those areas to meet society’s expectations throughour business.
It was with this in mind that we entered into a new Midto Long-term Business Plan period in April 2016.
I am convinced that realizing Our Group Vision we offered along with the plan through our business is how we as agroup uniquely create value, sustainably increasing not only
our Company value but helping achieve a sustainable society.
We will continue to adapt and endeavor to bring aboutrich living and the dreams of the future.

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Strengthening Our Business Platform by
Promoting Unit Management
My role as president of Nomura Real Estate Holdings is to improve the competitiveness of each business unit and support
them in forming and executing strategies to demonstrate theirbusiness features in full. At the same time, I work to build theentire Nomura Real Estate Group’s asset portfolio and financial
strategy while carefully selecting investment targets by weighing investment efficiency and asset risk. In other words, I endeavor to lead the Group in continuously expanding its earnings by balancing execution and supervision.
Our Mid- to Long-term Business Plan uses operating income as an indicator for its earnings targets, and we are aim-

ing for steady growth to ¥85.0 billion in Phase 1 and ¥110.0
billion in Phase 2.
Considering that our operating income was ¥80.9 billion for the fiscal year ended March 2016, our Phase 1 target
probably looks rather conservative. We have clear reasons forit, however.
One reason is that Phase 1 is a period of firming up our
foundation. The Group has achieved growth over the past several years in a business environment propelled by Abenomics.
However, in order to exceed ¥100.0 billion in operating income and achieve growth at a higher level in Phase 2, werecognize that we need to draw even greater strength out of
our five businesses: residential development, leasing, investment management, property brokerage & CRE and property &Earnings Growth Plan (Operating Income)Strengthening Unit Management(Billions of yen)

Residential Development Unit

Leasing Unit

Service & Management Sector(Billions of yen)

Residential Development Unit

Leasing Unit

Service
Management¥150& billion
level Sector

150
150

facility management.
To that end, in April 2016 we officially established these
five areas of business, thus far referred to as segments in financial
statements, as business units. Each unit’s head will be responsible
for forming growth strategies and maximizing earnings throughcollaboration between the companies belonging to that unit.
We will furthermore strengthen cross-unit collaboration.
We have developed a management structure for development
planning, quality management and architectural design, corporate supervision, finance supervision and more across all thebusiness units. Opportunities for inter-unit collaboration areon the rise, such as the increase of mixed-use development
projects and the expansion of the Nomura Real Estate Group
Customer Club. In this environment, each business unit, in ad-

Nomura Real Estate Holdings¥150 billion level

Residential
Development Unit
¥110 billion level¥110 billion level

100
100

¥80.9 billion¥80.9 billion

Development
Planning Division
Quality Management
and Architectural
Design¥85 billion¥85 billion

Nomura Real Estate
Development
Residential
Development Division
Nomura Real
Estate Reform

Corporate Supervision

Leasing Unit
Nomura Real Estate
Development
Commercial Property
Development &Management Division
NREG TOSHIBABUILDING

Investment
Management Unit

Property Brokerage& CRE Unit

Property & Facility
Management Unit

Nomura Real Estate
Asset Management

Nomura Real Estate
Development
Corporate Real Estate
Service Division

Nomura Real
Estate Partners

Nomura Real Estate
Urban NetPRIME X.
Finance Supervision

50
50

Geo-Akamatsu
NREG TOSHIBABUILDING FACILITIES

Nomura Real Estate
Life & Sports
Nomura Real Estate
Heating andCooling Supply
Nomura Real
Estate Wellness
Nomura Real Estate
Amenity Service

NF Power Service00'16/03'16/03Phase 1('19/03)
Phase 1('19/03)

Phase 2('22/03)
Phase 2('22/03)

Phase 3('25/03)
Phase 3

Optimization of unit management/maximization of unit earnings('25/03)

Nomura Real Estate Holdings, Inc.

14 Integrated Report 2016

ProﬁleMessage from the President

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

dition to stimulating internal growth, will pursue greater collaboration with other units than ever before and thereby contribute to demonstrating the Group’s abilities as a whole.

Capturing Earning Opportunities by Facing
Changes in the Business Environment Head-on
Another reason for the Phase 1 operating income target was
our anticipation of changes in the business environment. Specifically, with the economic slowdown in China and otheremerging countries and factors causing uncertainty in the
global economy keeping the yen high and stock prices low, thefuture of the domestic economy, previously on a multi-year
recovery trend, is increasingly uncertain.
However, the real estate business, due to its nature, is
one of long project periods. This is why the business plan
we have laid out is for and extended nine year period. The
Group will face changes in the business environment headon, reinforcing our businesses as we identify issues that become evident precisely because we are not enjoying a tailwind environment, and do our utmost to achieve our Phase
1 earnings target.
The current economic climate is bearish but looking to
the business environment in the mid to long term reveals business opportunities to be captured in the changing Tokyo metropolitan area demographics and client needs.
For example, while the Tokyo metropolitan area’s population is about to peak, the senior citizen population will continue its steep rise. I am particularly interested in the significant
increase in those aged 50 to 79, which include the so-called“active senior” group. The urban-type compact towns ourGroup is developing – highly convenient, multi-purpose developments including residences, offices, retail, hotels, senior
housing and more – conform to the needs of this client demographic. Furthermore, the number of people over 80 in theTokyo metropolitan area is predicted to double by 2030, so
need for housing that facilitates future care can be expected tosteadily increase.
Based on these environmental changes, the Group willramp up efforts such as these urban-type compact towns andother mixed-use developments and large-scale redevelopments/reconstructions, as well as community-building at thesesites, from Phase 1.

Controlling Investment Risk by Carefully Selecting Projects and Using the Leasing Value Chain
In line with the increase in mixed-use developments and largescale redevelopments, the Group’s plan is to expand the balance sheet to around 1 trillion yen within the Mid- to Longterm Business Plan period. We are focusing on the following
two things to implement this wave of strategic investment
while maintaining our financial base.
One is careful plan formulation, monitoring and supervision. Through thorough assessment of investment opportunities and sequencing by committees specializing in lease asset

Tokyo Metropolitan Area Demographics

Total Asset(Thousands of people)(Billions of yen)

Aged 0-29

Aged 30-39

Aged 40-49

Aged 50-59

Aged 60-69

Aged 70-79

Aged 80+

3,000

Residential Development Unit
Service & Management Sector

Leasing Unit
Other

40,0002,500

35,00030,0002,000

25,0001,500
20,00015,0001,000

10,000
500
5,000
0

0
2010

2015

2020

2025

2030

2035

2040

Source: Prepared based on the National Institute of Population and Social
Security Research’s “Future Japan Population Estimates by Region”

Nomura Real Estate Holdings, Inc.

15 Integrated Report 2016

'16/03Phase 1('19/03)

Phase 2('22/03)

Phase 3('25/03)ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

acquisition and ownership, along with maximizing investment
efficiency, we are managing asset risk appropriately to be able
to cope with a variety of environmental changes. How we develop the asset portfolio and financial strategy of the entire
Nomura Real Estate Group is of extreme importance in making
investments, and we will continue to pursue the most appropriate portfolio for the Group.
The other is adherence to our business model. We are
not merely looking to expand our portfolio by owning a lotof lease assets. Carrying on using the leasing value chain
and recovering investment by disposing a certain amount to
our REIT is important not only for improving asset efficiency
but also for procuring capital. By merging the Group’s threelisted REITs into one, Nomura Real Estate Master Fund, in
October 2015, we will now be able to more quickly sellproperties we develop.
We intend to continue executing a high asset efficiency-focused investment strategy by balancing ownership and disposition.

Aiming for Balanced Growth through Stronger
Group-wide Oversight Structures
As the Group increases its company size, takes on new challenges and strides forward, it is essential that we establish andstrengthen company-wide oversight and monitoring structures. There are two pillars to such measures.
The first is a stronger corporate governance structure.
By proactively appointing external directors and transitioning
to a company with Audit & Supervisory Committee, etc., wehave made efforts to increase business transparency from an
outside perspective. The result has been robust discussion inboard meetings based on an understanding of the true natureof business and strategic risks and other factors. This in turnhas improved the quality of discussion at Management Com-mittee, the ultimate forum by which business is enacted. We
consider this an extremely desirable shift and will continue toassertively strengthen both internal and external governanceto bolster its efficacy.
The second pillar is financial and capital policy as laid out
in the Mid- to Long-term Business Plan. Controlling investment
by aiming for a shareholders’ equity ratio at the 30% level,
which we included as an indicator of financial health, helps
prevent moral hazards. Furthermore, awareness of targets
such as ROA, ROE and total payout ratio could be called a formof governance through the eyes of key stakeholders such as
shareholders and investors.
The Group will continue to use these structures and indicators to pursue balanced growth.

Pursuing an Unparalleled Growth Model2016 marks ten years since Nomura Real Estate Holdings was
first listed on the market.
In these ten years, the Group’s Residential Development
Unit established the PROUD brand and NREG TOSHIBA BUILDING joined the Group’s Leasing Unit, both growing into thepillars of the Group they are now. An increase in property development in both units has become the foundation of ourstock business, supporting the growth of the Service & Management Sector.
The Service & Management Sector is our frontline inunderstanding the diverse needs of our private and corporate customers. The Group will continue to bring products
and services to market that demonstrate our uniquestrengths by working closely with customers, staying on topof changing needs and, as a company engaged in town
management with the vision of building cities that “embrace every moment of life’s pursuits.” Then, by combining
earnings from our capital turnover-focused development

Nomura Real Estate Holdings, Inc.

16 Integrated Report 2016business and fee-based real estate service while maintaining
earnings growth with high asset efficiency, we will occupy
an unparalleled position in the industry.
As stakeholders, I ask that you continue to expect
growth from us as a Group.

President

ProﬁleMessage from theDevelopment Sector &CSR Officer

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

We Will Contribute to Solving Social Issues as
We Aim to Build Cities that Connect withTomorrow and to Create Times of Real Value
Seiichi Miyajima
Director & Executive Officer, Chair of CSR Committee, Nomura Real Estate Holdings Inc.
President, Nomura Real Estate Development Co., Ltd.

Amid circumstances such as the vacant housing problem, realestate stock deterioration and urban development in preparation for the Tokyo Olympic and Paralympic Games, large-scale
mixed-use redevelopment plans are in motion, especially incentral Tokyo. At the same time, looking at demographics,
while Japan’s total population has already begun to decline,
the population and number of households in urban areas continues to grow. The need for comfortable and convenient urban development in core regional cities also remains strong.
Furthermore, the need for extensive medical and care services,
including prevention, is surpassing individual needs to becomea major social issue as society ages and the number of seniorcitizens increases dramatically.
In the face of customer and societal needs such as these,enhancing city functions through safe, secure and comfortableurban development and permanently increasing city value
through community-building town management that partners
with the local society are well within what we as a general realestate group can do to demonstrate our capabilities and contribute to society. They are the core of what we consider CSR
to be.
As the director in charge of development and thechair of CSR committee, my job is to lead the Group in
Nomura Real Estate Holdings, Inc.

17 Integrated Report 2016

building cities that connect with tomorrow and creatingtimes of real value.

Accelerating Investment from Phase 1 Considering the Earnings Contribution Timeframe
The Group’s Mid- to Long-term Business Plan, begun in thefiscal year ending March 2017, plans to double operating income by the fiscal year ending March 2025, and the driver ofthis growth is expansion of business volume and business domains in the Development Sector.
Central to that are mixed-use redevelopments such asurban-type compact towns and redevelopment in central Tokyo. We are also moving into senior housing and hotel development as new fields and attempting to expand to core regional cities as well as overseas.
However, the Group’s strength in the Development Sector stems from its dual businesses: our stock business, in which
we retain real estate we have developed to earn rent revenue,
and our disposition business, in which we sell real estate wehave developed to customers or the Group’s REIT to earn a
profit. The new Mid- to Long-term Business Plan does increaseProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

the stock business but, in Phase 1, accelerates development ofreal estate for a profit, the disposition business, to ensure stable earnings and improve asset efficiency.

Mixed-use Developments and Large-scale
Redevelopments that Fulfill Our Social Duty
as a Developer
Actively taking part in planning urban development that uses
local features and addresses social needs is not only an opportunity for us to demonstrate the strengths we as a Group havecultivated and to grow as a company, it is also how we fulfill
our social duty as a developer. We are currently involved in thefollowing projects.
Urban-type Compact Towns
Boosting development of convenient, multifunctional “urban-type compact towns” combining residences, offices, retailfacilities, hotels, senior housing and more is one of our key
strategies in the Development Sector.

Last fall and this spring we announced development
plans for the Tsunashima and Hiyoshi districts of Yokohama,
the Tsunashima Sustainable Smart Town and the Hiyoshi-Minowacho project. In Tsunashima, on the former site of a private company’s office, we will develop a next-generation
smart town including a Nomura Real Estate Development forsale condominium called PROUD, corporate research facilities,
a shopping center, an energy center and even a hydrogen station. In the adjacent Hiyoshi project, we plan to develop a site
for an elementary school as requested by the community as
well as condominium units, retail facilities and senior housing.
Furthermore, by collaborating with Yokohama, a “FutureCity,”
our aim in these developments is to address environmental
problems and societal aging with multi-generational recycling
smart towns in which multiple generations can enjoy dynamic,
comfortable lives.
We also intend to promote development of these urban-type compact towns in core regional cities. In the firstround, we are participating in planning a redevelopment project in the area around Shizuoka Station, and we plan to stepup our efforts in other cities as well.

Tsunashima/Hiyoshi District Redevelopments

Tokyu Toyoko Line

Hiyoshi Station

TowardShibuya

i
um

ur

Ts

Tsunashima Stationer

RivShin-Tsunashima Station(tentative name)
TowardYokohama

Shin-Tsunashima Station
Area Development

Nomura Real Estate
Development Hiyoshi
Mixed-use
Development Plan
(tentative name)

Keio University
Hiyoshi Campus

Sotetsu/Tokyu Through-Line

Nomura Real Estate Holdings, Inc.

Site extension: approx. 2 km
Site area: approx. 300 ha

18 Integrated Report 2016

Redevelopments in Urban Areas
We will also accelerate mixed-use redevelopment in central
Tokyo. We are part of a consortium redeveloping the areaaround Toranomon Station, designated a National StrategicSpecial Zone, with completion expected in 2020, the year of
the Olympics, and are also executing redevelopment plans on
the west side of Shinbashi Station, including SL Plaza, and in
Nishi-Azabu 3-Chome, adjacent to Roppongi Hills.
We are considering including a new hotel in the Nishi-Azabu 3-Chome project. In 2015, about 20 million tourists
visited Japan and the government has set a target of doublingthat number to 40 million by 2020, so we intend to capture
this inbound demand, increase Tokyo’s international competitiveness and contribute to the development of a dynamic cityin which people from around the world can live, work, relax
and pursue fulfilling lives.

Toranomon Station Area
Redevelopment

Nishi-Azabu 3-Chome
Redevelopment

ProﬁleMessage from the Development Sector & CSR Officer

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Solving Social Issues through Business toAchieve Our Group Vision
Urban development requires many months and years. This is
why we must thoroughly grasp and understand the social issues facing people and communities now and in the future
and, through this urban development, provide added valuethat contributes to solutions. The very reason that I, in chargeof the Development Sector, promote CSR as the chair of the
CSR committee is to solve social issues by incorporating a CSR
perspective into urban development, at the upstream stages ofplanning and development, and realizing a plentiful and sustainable society through our products and services.
The fiscal year ending March 2017 is a new start for
both our Mid- to Long-term Business Plan and CSR activities.

In October 2015, in addition to the Mid- to Long-term Business Plan, we also formulated Our Group Vision: to build cities
that connect with tomorrow and to create times of real value;
to create new value, social value and, above all, real value. In
our Mid- to Long-term Business Plan, the key strategy of expanding business volume and business domains in the Development Sector contributes to building cities that connect
with tomorrow and the key strategy of demonstrating
differentiation and a competitive edge in the Service &Management Sector contributes to creating times of realvalue. For us, achieving Our Group Vision is precisely what
CSR is and promoting CSR activities as one with our businessstrategies is crucial.
Furthermore, we have identified four key themes of social issue areas in which we can make a contribution. By ad-

CSR Promotion Structure

Our Group Vision

Simultaneously Creating Social Value andIncreasing Company Value

New Value, Real Value
Integrating all that is precious to people and communities, we build cities― dynamic stages thatconnect today with tomorrow’s possibilities, and embrace every moment of life’s pursuits.
We create new value, social value, and above all, real value.

Four Key Themes for CSR

Safety/Security

Environment

Community

dressing these, we will create new value in society and accomplish Our Group Vision.

Health/Comfort

CSR Promotion Foundation

Labor: Training diverse human resources
Management structure: Corporate governance, compliance and risk management

Nomura Real Estate Holdings, Inc.

19 Integrated Report 2016

Our Group’s employees are on the frontline of the struggle
against problems in society and everyday life as they carry out
their real estate-related responsibilities. I expect that each of us
internalizing these four key themes and carrying out our daily
responsibilities with the Group’s vision at the front of ourminds will add a long-term perspective to our business activities and make them more worthwhile. This will then increase
the value of the products and services we offer and help increase the sustainability of society.
I want to instill Our Group Vision and four key themes of
CSR in every one of our employees. Then, by promoting CSR
activities as one with our Mid- to Long-term Business Plan andsimultaneously creating social value and increasing company
value, we will meet the expectations of our shareholders, investors and all other stakeholders.

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Four Key Themes for CSR

Safety/Security

Social Issues

The Group’s Approach

Specific Examples

Environment

Community

Health/Comfort

Employees inspecting a building frame

PROUD City Motosumiyoshi courtyard

A Christmas party for tenants

A senior citizen exercise program

Handling natural disasters, real estate
stock deterioration, urban renewal expectations, etc.

Addressing environmental problems
and energy shortages

Due to the low birthrate and aging society, ties between people and communities are weakening and their functions
are eroding

Heightened interest in health and comfort due to the aging society, increase infree time, shifts in priorities and lifestyles, etc. and sophistication and diversification of needs

We work to improve safety in bothtangible ways (installing the latest technology, ensuring architecture quality,
improving city functions through development, etc.) and intangible ways (disaster prevention planning, BCPs, comprehensive after-service, etc.).

In our business, we work to reduce
the environmental burden by installing
the latest environmental technology
and information and communications
technology as well as energy generation and passive design that coexists
with nature. We also seek to provide
environmental education throughevents and town meetings.

We work with the people that live,
work, gather and relax in and aroundthe development site to use urban-typecompact town-style development
and the diverse values of communities such as cooperation and frameworks that encourage multi-generational interaction to create robust
communities.

We work to enable people to live healthy
and comfortable lives by improving
health through sport and developing
senior housing as well as promoting
universal design and frameworks that encourage participation in the community.

•U sing original Apartment Building
Design Standards and Manuals•C reating a PROUD Standard Disaster
Prevention Manual for residences•Installing a disaster prevention hub
for office building tenants (PMO Nihonbashi Muromachi)•Conducting disaster prevention training•Formulating original PROUD Environmental Evaluation Sheets, quantifying
each property’s environmental efforts
and reinforcing environmental consideration•Instituting a policy of attaining at least
a CASBEE A-rating for each of our
PMO buildings•Promoting smart towns• Issuing Condominium Community
Guides and supporting community-building events such as summer
festivals and Christmas parties in eachcondominium community•Holding the Firefly Evening 2016 at Yokohama Business Park to promote local
interaction•Conducting training, seminars and exchange events for office building tenants•Sponsoring various health improvement programs corresponding to local
needs through our sports clubs•Creating a Universal Design Guidebook
and strengthening promotion of universal design based on the guidebook’s
principles

Nomura Real Estate Holdings, Inc.

20 Integrated Report 2016

ProﬁleMessage from the CFO

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

We Will Implement Balanced Management for
Further Growth
Hiroyuki Kimura
Director, Executive Officer, CFO & Head of Investor Relations, Nomura Real Estate Holdings Inc.

Beginning a New Mid- to Long-term Business
Plan for Further Growth After a Record Year
Last fiscal year, we posted record sales and income of every
type due to increased property sales in the Leasing Unit, asset
acquisition fees obtained in the Investment Management Unit
from merging our three REITs and other factors.
This fiscal year, we are forecasting revenue increase andincome decrease, but the main reason for this is the non-recurrence of certain one-off earnings last fiscal year. Excludingthese, income is expected to maintain the same level.
Operating Income and Profit Attributable to
Owners of Parent(Billions of yen)

Operating income

Profit attributable to owners of parent

100
80.9

80

74.3

60

71.8

85.0
76.0

58.3
49.9

47.1

40

38.4

43.0

26.8
20

17.5

19.3

’12/03’13/030’14/03’15/03

Nomura Real Estate Holdings, Inc.

’16/03’17/03(forecast)

21 Integrated Report 2016

’19/03(target)The Mid- to Long-term Business Plan formulated lastyear begins this year. In Phase 1, the first three years, we aim
to expand our current business portfolio to achieve an operating income of ¥85 billion.

A Turn toward Expanded Investment Last Yearthrough Careful Selection
Our previous Mid- to Long-term Business Plan, formulated in2012, made improving our financial base one of our targets but
thanks to greater progress in income than planned, we wereable to achieve a shareholders’ equity ratio at the 30% level.
Correspondingly we expanded investment ahead ofschedule, increasing total assets by approximately ¥120 billion
to bring it to around ¥1.5 trillion in total last fiscal year. Development of urban-type compact towns in Hiyoshi and Tsunashima as well as stocking up of profitable real estate, designateda driver of Phase 1 growth, is making steady progress.
We plan to continue to accelerate investment, adding
around ¥400 to 500 billion in each phase for a total asset increase of approximately ¥1.4 trillion within the Business Plan
period.

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Efficiency- and Financial Health-oriented Management for Disciplined Investment Expansion
We have maintained last fiscal year’s high ROA and ROE at 5.6%
and 11.2% respectively, but as we expand investment in stockbusinesses such as the leasing business, a drop in efficiency is aconcern. In light of this, our priority in management is ensuring
a balance between investment expansion and efficiency.
Preserving financial health is also important for stablecompany management over the mid to long term.
With that in mind we laid out mid- to long-term guidelines of ROA 5% or above, ROE at 10% and shareholders’equity ratio at 30% in our Mid- to Long-term Business Plan.
Specifically we will aim to build a balanced business portfolioby achieving steady growth in the Residential Development
Unit, the Leasing Unit and the Service & Management Sector.

Stability- and Continuity-focused Shareholder
Returns for an Expected Five Consecutive Yearsof Dividend Increase
Last year’s dividend gained ¥7.5 per share on the year-beginning forecast due to improved performance to make for a¥57.5 annual dividend. This year we forecast a fifth consecutive year of increase to an annual dividend of ¥60.
We believe that in order to expand investment, we needto increase our retained earnings, but at the same time, we
consider total payout for investor to be a vital management
issue. Our Mid- to Long-term Business Plan advocates stabilityand continuity-focused dividends based on sustainable income
growth, and we aim to increase our dividend level in the mid
to long term by factoring in a certain degree of stability andshooting for a payout ratio of about 30% rather than repeat-

ROA and ROE

Shareholders’ Equity and Shareholders’ Equity Ratio(%)(Billions of yen)

ROA

ROE

14

27.1
11.2
10.3

10

6
4

300

7.8

8
5.7
3.7

5.9

5.8

400

5.4

5.6

4.6

22.6
317.0

24.5
336.2

60

57.5

45

60.0

45.0
35.0

30

30.0
25.0

15

28.8

29.9

30

0
’12/03444.8’13/03’14/03’15/03’16/03’17/03(forecast)

394.0
355.6

20

200

100

0

Financial and Capital Policies

Asset efficiency

Capital efficiency

ROA

ROE at the

5% or above

Shareholders’ equity
ratio at the0’13/03(Yen)

10% level102’12/03

Annual Cash Dividend

Shareholders' equity ratio (%)

Shareholders' equity

500

12

edly rising and falling on short-term performance fluctuation.
We as a Group intend to fulfill the expectations of ourinvestors and other stakeholders by seizing upon growth opportunities and promoting management that balances efficiency, financial health and total payout for investors.
I ask for your continued understanding and support of
the Group’s business and management policies.

’14/03’15/03’16/030’12/03’13/03’14/03

Nomura Real Estate Holdings, Inc.

’15/0322 Integrated Report 2016

’16/0330% level

Dividend payout
ratio ofapproximately

30%

Urban Development that Connects Today with a Future of Possibilities andEmbrace Every Moment Invested in Life’s Pursuits

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

1

FeatureCreating Urban-type Compact Towns
Promoting Large-scale Redevelopment and Mixed-use Development Projects
Large-scale redevelopment is being planned across Japan and convenient,multifunctional “urban-type compact towns” are gaining attention as part of development of ideal cities for people.
Also important to ideal city development is promoting community-building and town management.
The Group will use its diverse know-how to comprehensively contribute to achieving this.

Nomura Real Estate Holdings, Inc.

23 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Urbanization and Change in Household Makeup
Drawing Attention to Urban-type Compact Towns
As single-person and elderly households increase due to the lowbirthrate and aging society, the population is concentrating inurban areas that are convenient for everyday life, the work or
hospital commute and a variety of other reasons. With theneed to develop environments in core cities all over the country in which diverse peoples can live more comfortably, thecombination of the regional revitalization being advocated by
the government and increased attention on disaster prevention
awareness following the Great East Japan Earthquake is causing a wave of new urban development to sweep across Japan.
Against this backdrop, our Group is putting its effort
into urban-type compact towns. These developments containnot only safe and comfortable housing but also retail facilities,
sporting facilities, facilities for senior citizens, parks, hospitals,
schools, research centers and various other functions, all withinwalking distance. To provide safety and abundance to all generations while nurturing the local community and forming a unique“town” – this is the type of urban development we pursue.

Management Ability is Essential to Ideal City
Development
Development of urban-type compact towns requires theknow-how to develop and manage residential, office, retailand many other types of facilities as well as robust imaginationand management ability to link these based on an urban development perspective.
In addition to our top-class track record with residential
redevelopments, by expanding our business domains in recent
years, the Group has accumulated know-how pertaining to awide range of facilities. On top of that, the expertise we havecultivated by moving into new sectors such as senior citizen/
health needs and the energy business adds value to our neigh-borhoods and is a great strength.
In this way, the Group is already using its comprehensive, Group-wide abilities to create unique urban-type compact
towns such as Funabashi Morino City in Chiba Prefecture andZutto City in Hyogo Prefecture and, through our promotion ofcommunity-building and town management, has received
praise from the residents as well as the local society. We arealso currently promoting sustainable urban development by
participating in planning redevelopments in the Tsunashima

and Hiyoshi districts of Kanagawa Prefecture.
Developing high-quality real estate stock that will be
used for many years to come and enriching the lives and pursuits of the people who live, work, gather and relax in thesecommunities through this kind of high value-added urban development is both our Group’s unique social contribution andan opportunity to achieve continuous growth. We will continue to grow together with society by demonstrating the Group’s
comprehensive abilities and empowering people and society.

Urban-type Compact Town Developments Based on Group Synergy
Demonstrating our strengths through residence-centric large-scale mixed-use developments

Offices

Fitness

Seniorhousing

Housing

Retailfacilities

HotelsServicedapartments

Funabashi Morino City

Zutto City(JR Tsukaguchi Station-Front
Redevelopment Project)

Tsunashima and Hiyoshi District
Redevelopments•For-sale housing •Retail facilities•General hospital •Senior housing•For-sale housing •Station building•Retail facilities •Station-front rotary•Large park

•For-sale housing •Commercial facilities•School •Daycare facilities•Residents for senior citizens

Nomura Real Estate Holdings, Inc.

24 Integrated Report 2016

Urban Development that Connects Today with a Future of Possibilities and Embrace Every Moment Invested in Life’s Pursuits
Feature1 Creating Urban-type Compact Towns

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Case Study

Tsunashima Sustainable Smart Town (SST) Plan:
A Fusion of Nature, People and CityThe Tsunashima SST Council, composed of Nomura Real Estate Development, Panasonic and eight other partners from different industries,
is promoting sustainable urban development in cooperation with Yokohama-shi and other government bodies.
Our aim is to create a next-generation urban-type smart town based on the concepts, “This town will create the future” and “Innovating the future together.”

Name
Location
Schedule
Site area

Tsunashima Sustainable Smart Town
4-chome Tsunashima-higashi, Kohoku-ku, Yokohama-shi, Kanagawa Prefecture
Opening in 2018
Approx. 37,900 m 2

Nomura Real Estate Holdings, Inc.

KANAGAWA

25 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Development Policy and Aims

Promoting Development of Smart Towns as
Platforms of Life by Establishing Targets to
Aim for and Codes to Follow
Tsunashima SST is a large-scale redevelopment project on theformer site of a Panasonic factory in Tsunashima-higashi, Kohoku-ku, Yokohama. Nomura Real Estate Development, Panasonic and other companies and municipal governments as wellas citizens are pooling their knowledge to promote sustainable
development of urban platforms of life from the perspective of
all who are connected to it, whether by living, working, visitingor otherwise. Our goal is an urban-type smart town that connects apartment housing, retail facilities, R&D facilities, international student dormitories and various other facilities to produce cutting-edge innovation based on the potential andissues of the Tsunashima district.
To that end we are setting numeric targets as signposts
from a wide range of perspectives such as environmental preservation, safety and security. We are also formulating codes toachieve these targets: a design code for designs and elements
making up the townscape, a sustainable code that considers thenext generation and the earth’s environment and a smart codefor comfortable, convenient, safe and secure living. These threecodes are applied when constructing each facility to ensure they
conform to the concept of a “next-generation urban-type smart
town” from both tangible and intangible perspectives.
Furthermore, the Group will contribute to the realizationof sustainable lifestyles, city and society befitting Yokohama asa “FutureCity” in its mixed-use development plan for Hiyoshi
and other projects through broad-based connections with surrounding developments.

The Nomura Real Estate Group’s Key CSR Theme Initiatives

Safety/Security

Environment

The Tsunashima SST Plan seeks urban development that protects living
and spreads safety and security around the globe with comprehensive
town security protecting its diverse facilities. It aims for 100% coverageof major entrances/exits by surveillance camera and a response time of
15 minutes or less anywhere in the neighborhood.
We have also planned mutual flexibility and optimal distribution of energy and information as well as people and materials by using facilities’
unique characteristics should a disaster occur. With a three-day lifeline
as our target, we will formulate a CCP (Community Continuity Plan) to
restore regular operations in times of emergency.

In addition to laying out environmental targets of reducing CO2 emissions by 40%, reducing everyday water usage by 30% and using newenergy for 30% or more of needs, the Tsunashima SST Plan also includes obtaining Gold rating in the LEED ND* global environmental
performance evaluation. The entire neighborhood will have visualizedenergy use through cutting-edge information and communications
technology and intelligently combine power from diverse sources including new energy such as hydrogen as well as solar and natural gas
cogeneration.
*LEED ND: The Neighborhood Development category of Leadership in Energy &Environmental Design, an environmental benchmarking system for buildings andsites developed and run by the U.S. Green Building Council.

A multi-signage(digital signage)
system to provide
various types of
information

Hydrogen usage points installedaround the neighborhood andoperated by JX Nippon Oil &Energy Corporation (concept
drawing)

Community

Health/Comfort

The Tsunashima SST Plan aims for urban development that connects
people living there, working there, visiting or otherwise both locallyand globally and attracts people searching for a better future. Throughcommunity spaces and advanced communication tools that accommodate diversity, it supports the formation of a sustainable community
nurturing interaction transcending generations and nationality andboosts the independent value of the neighborhood as a whole.

The Hiyoshi Mixed-use Development Plan, which aims to develop amulti-generational recycling town centering on residences and cemmercial
facilities but including a local elementary school and daycare facilities, also
includes developing residents for senior citizens. Through the need-specific health management services and senior citizen services offered by MEGALOS CO., LTD., a sports club, we will work with residents, visitors, neighbors and others to provide healthy and comfortable life.

Elementary
schoolCemmercial
facilities

A Keio University international
student dormitory and town
management center supporting
resident life (concept drawing)

Nomura Real Estate Holdings, Inc.

26 Integrated Report 2016

For-sale
housing
Residents
for seniorcitizens

Daycarefacilities

A diagram of the Hiyoshi Mixed-use
Development Plan, a compact town
currently being planned to attract
diverse people.

Urban Development that Connects Today with a Future of Possibilities andEmbrace Every Moment Invested in Life’s Pursuits

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

2

FeatureDeveloping Safer, More Secure andMore Comfortable Real Estate
The Nomura Real Estate Group’s Efforts in Quality Management
Thorough quality management in residences, offices and other buildings and long-term efforts toward safety, security and comfort are
essential to achieving the Group’s target of “urban development that connects today with a future of possibilities.” By sharing thisunderstanding not only with the employees of each Group company but with design companies and construction companies,
we will create and offer real estate trusted by all who live in, visit or use it.

Nomura Real Estate Holdings, Inc.

27 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

The Nomura Real Estate Group’s Quality
Management According to the Quality
Management and Architectural Design Officer

Improving the Nomura Real
Estate Group’s Quality witha Customer-first Mentality
Takashi Kaku
Executive Officer, Quality Management andArchitectural Design, Nomura Real Estate Holdings Inc.
Director & Senior Man aging Executive Officer,
Nomura Real Estate Development Co, Ltd.

Aiming for a Sustainable Society through Real
Estate that is Safe, Secure and Comfortable in
the Long Term
In recent years, sustainable urban development has become
more of a focus and people want new creations that integrate
all aspects of life precious to people and communities. At thesame time, rumors of problems related to quality, safety andsecurity are emerging in numerous industries, bringing themunder closer scrutiny by consumers and society.
The Nomura Real Estate Group has obtained trust by
carefully maintaining quality through the customer-first mentality it has valued since its founding. Rather than let that trust
make us complacent, we endeavor to create structures that
achieve safety and security from an even stricter, more longterm perspective based on the changes in society’s thinking inrecent years. Instituting the position of Quality Management
Officer in March 2016 was one such effort. As the entire
Group’s Quality Management and Architectural Design Officer,
my goal is to incorporate an emphasis on quality into all stagesof our processes, whether development, design, construction,or post-completion management and renovation, and manage
and guide each unit with a view of the big picture in order toachieve safety, security and comfort that will serve as dynamic
stages that connect today with tomorrow’s possibilities, andembrace every moment of life’s pursuits.

tional know-how we have cultivated building residences withthe technologies and expertise needed in these new sectors anddevelop high-level quality management structures covering not
only development but our after-sale services in their entirety.
Construction is something that happens through thecollaboration of many people. We have extended into various
businesses, therefore it is so important that the attention toquality that makes up the DNA of the Nomura Real EstateGroup is embedded in each employee of every Group company in each business as well as partners such as design andconstruction companies.
Since the Group’s origin, Nomura Real Estate Development, was established in 1957, we have solidified a unified
structure for manufacture, sale and management and, being
among the first developers to formulate a quality management manual, have carried on this legacy by continuing to incorporate lessons learnt through our many construction projects. Instilling these rich insights and know-how and, above
all, the customer focus contained therein in each and every
one of our staff involved in creation, management and services
should serve to preserve the trust that our customers place in
the Nomura Real Estate Group in all of our businesses.
With employees that prioritize quality and apply thisthinking to each project, whether creation, management orservices, we will live up to the trust of our customers and society.

One in ten employees is a licensed first-class architect

Inheriting Responsibility for the Customer-first
Mentality that is in the Nomura Real EstateGroup’s DNA
Another reason for establishing this position was to diversify theGroup’s business. Moving into new domains such as offices, retail facilities and senior housing requires a different kind of quality management from our residential business up until now.
Therefore my mission and responsibility is to fuse the foundaNomura Real Estate Holdings, Inc.

28 Integrated Report 2016

The high percentage of licensed first-class architects among
our employees is proof of the Nomura Real Estate Group’s
dedication to quality and one of its strengths. It is because
we have architecture experts in each unit, not just the design and quality management units, that we can thoroughly
ensure quality throughout all processes.

Nomura Real Estate Development no. of
employees: 1,812
No. of licensed first-class architects:

194 (10.7%)*As of August 2016. No. of employees excludes part-time staff.

ProﬁleUrban Development that Connects Today with a Future of Possibilities and Embrace Every Moment Invested in Life’s Pursuits
FeatureValue Creation through Continuous Transformation

2 Developing Safer, More Secure and More Comfortable Real EstateBusiness that Produces ValueA Foundation that Supports Value Creation
Data Section

Case Study

Condominium that Offer Lasting Security
The PROUD brand illustrates the Nomura Real Estate Group’s
dedication to quality

Supporting comfortable condominium
life

Operation/
Management

PROUD is the Group’s flagship residential brand. Below is a step-by-step breakdown of the dedication
to quality underpinning our trustworthiness.

Basic Plan

DesignConstruction

Inspection

Formulate a plan to maximize
the appeal of the land

Generate quality from thedesign stage based onabundant experience

Extend our dedication to quality
to the construction site

Thorough inspection leads toassured quality

Provide long-term safety andsecurity through after-service
offered by the seller

We verify the reliability of thefoundation and put forward a
product plan and basic plan thatreflect the local environment andarea characteristics.

Based on our apartment design standards, the culmination of know-how
cultivated over construction of around
180,000 condominium units, we keepa close eye on design quality whilemoving from the basic plan to basic
design and then to the actual design.

Rather than leaving it up to thoseon-site, we thoroughly monitor
the construction company while
flexibly taking onboard their input,
constructing high-quality buildings
based on our combined know-how.

We prepare a quality management
checklist for each project and process based on our apartment manual. Our employees also conduct onsite inspections to guarantee quality.

Nomura Real Estate Development,
as the seller, provides regular after-service to keep the building
safe and secure for the duration ofcustomers’ tenancies, responding
to problems with precision.

Inspecting the foundation that will be key
to the reliability of the building

Quality management manuals reflecting
60 years of experience

Sharing our thinking on quality with theconstruction company

Multiple inspections throughout eachprocess

Regular, continuous support for
comfortable living

Nomura Real Estate Holdings, Inc.

29 Integrated Report 2016

Completion

After-service

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

The Nomura Real Estate Group’s Key CSR Theme Initiatives

Residences thatoffer long-term
peace of mind

Long-term
Improvement
Plans/
Renovation
Continue to address changing
residential needs
We perform improvements overthe long term to preserve the safety
and asset value of the building anduse the Group’s comprehensive
abilities to propose renovation, resale, etc. based on changes inhousehold makeup.

Nomura Real Estate Development has formulated a PROUD Smart Design
called “SMART & GROWING” as its vision for next-generation condominium.

Safety/Security
In safety design, we formulate safety and security measures and disaster prevention
programs. We also work to offer safer and more secure products by listening tocustomer feedback through our unified manufacturing-sale-management structure.

Environment
In passive design, we formulate PROUD Environmental Evaluation Sheets for harmony
with the natural environment. These quantify the environmental measures at each
property and strengthen our efforts toward environmental consideration.

Takenaka Corporation
Head of Tokyo Main Office

Takumi Tokunaga

Community
Nomura Real Estate Development works to make common areas comfortable
and support healthy community-building. Through joint industry-academic research with Japan Women’s University Graduate School, we produced “100 Design Techniques for Condominium Communities.”

Health/Comfort
Making proposals matching thecustomer’s stage in life

I’ve been involved with Nomura Real Estate Development for over ten
years now, and what has been common to everyone that I’ve worked
with is their strong spirit and end user awareness regarding building.
This can be seen in their detailed construction manuals,
which are always being updated, and any point of improvement isimmediately implemented at the next site. They demonstrate their
dedication by visiting the site for processes usually checked by blueprint only. Their seller screenings are strict and employees present
for Nomura Real Estate Development’s inspections achieve excellent
marks in our quality construction training test that checks building
reinforcement arrangement.
At the same time, contrary to being limited by rules and arrangements, they are flexible when something better is possible,
clearly illustrating their commitment to creating a quality product inpartnership with the construction company. Going forward, I hopeto maintain our cooperative relationship with this type of thinking.

In active design, we take the initiative in implementing the latest technology andtrying to anticipate the standards of the future. We have also created a Universal
Design Guidebook and promote universal design based on it.
Nomura Real Estate Holdings, Inc.

30 Integrated Report 2016

Construction project overseen by Mr. Tokunaga(PROUD Minami-Azabu)

ProﬁleThe Nomura Real Estate Group at a Glance

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Performance of Each Business Unit during the
Fiscal Year Ended March 2016

Residential Development Unit

Leasing Unit

Composition of Operating Revenue*
Property & Facility Management Unit

Other Unit

15.5%

0.2%

Property Brokerage& CRE Unit

6.1%

Total

¥569.5Residential
Development Unit

57.4%

billionInvestment
Management Unit

Leasing Unit

1.9%

19.0%

Composition of Operating Income *Property & Facility Management Unit

Other Unit

(0.2)%

6.1%
Property Brokerage& CRE Unit

11.5%

Total

¥80.9
billion

Review of Performance

Review of Performance• During the fiscal year ended March 2016, the selling price units soldincreased, but the total number of condominiums and detachedhousing sold decreased, resulting in a decline in both revenue andprofits.
• The Residential Development Unit booked multiple redevelopment
and reconstruction projects, including Tomihisa Cross Comfort Tower(Shinjuku-ku, Tokyo) and Sakurajosui Gardens (Setagaya-ku,
Tokyo), among others.

• During the fiscal year ended March 2016, the Leasing Unit madesteady progress in finding tenants for the Hamamatsucho Building(Minato-ku, Tokyo), and the number of profit-generating properties
sold increased, leading to an increase in revenue and profits.

Operating Revenue (Billions of yen)

Operating Income (Billions of yen)

Operating Revenue (Billions of yen)

Operating Income (Billions of yen)

400

40

120

40

359.3

Residential
Development Unit

307.6

36.9%

334.5

8.5%

33.8

31.9

99.8

32.0

92.8
26.8

200

Investment
Management Unit

31.1

110.6

60

20

24.4

20

Leasing Unit

37.1%

*The total shown at the center of the pie chart includes “eliminations or corporate” withinsegment information. As a result, data differs when totaling consolidated operating revenue
and income from each business unit. The percentage breakdown is calculated based on thesimple total amount of each segment. The resulting number is rounded to the first decimal
place, which in some cases may mean the total does not add up to 100.0%.

0

0

0

’14/03 ’15/03 ’16/03’14/03 ’15/03 ’16/03

0’14/03 ’15/03 ’16/03’14/03 ’15/03 ’16/03

Note:The method of allocating part of the Company-wide expenses from the adjustment amount to each segment was changed in the fiscal year ended March 2015. In conjunction with this change, the house leasing business that had been part of the Residential
Development Unit is now included in the Leasing Unit. As a result, data appearing for the fiscal year ended March 2015 and the fiscal year ended March 2014 reflect this change.
Nomura Real Estate Holdings, Inc.

31 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Investment Management Unit

Property Brokerage & CRE Unit

Property & Facility Management Unit

Review of Performance

Review of Performance

Review of Performance• During the fiscal year ended March 2016, the Investment Management
Unit saw an increase in asset acquisition fees following the merger of
Nomura Real Estate Master Fund, Inc., Nomura Real Estate Residential
Fund, Inc., and Nomura Real Estate Office Fund, Inc. in October 2015,
and dividend income from the sale of properties held by a Special
Purpose Company (SPC), leading to an increase in revenue and profits.

• During the fiscal year ended March 2016, the Property Brokerage & CRE
Unit recorded an increase in the brokerage transaction volume andvalue, and sold properties, too, resulting in an increase in revenue andprofits.
• The retail side of the business expanded its branch network to 68 as ofMarch 31, 2016, opening six new branches, including Kohoku New
Town Center.

• During the fiscal year ended March 2016, there was an increase inproperty and facility management and work orders, and an increase inretirement benefit costs, resulting in an increase in revenue, but decline
in profits.
• In the fitness club side of the business, MEGALOS CO., LTD. wastransformed into a wholly-owned subsidiary following a successful
tender offer, and the company name was changed to Nomura Real
Estate Life & Sports Co., Ltd. in April 2016.

Operating Revenue (Billions of yen)

Operating Income (Billions of yen)

Operating Revenue (Billions of yen)

Operating Income (Billions of yen)

Operating Revenue (Billions of yen)

Operating Income (Billions of yen)

20

10

40

12

100

6

35.3

18.3
7.9

10

10.9
9.1

0

5

7.3
4.8

’14/03 ’15/03 ’16/03

8.1

0’14/03 ’15/03 ’16/03

5.3

3

50

0

’14/03 ’15/03 ’16/03

5.7
5.1

72.1

8.4

6

0

0

’14/03 ’15/03 ’16/03

9.9

29.1 30.2
20

90.2
85.8

0

’14/03 ’15/03 ’16/03’14/03 ’15/03 ’16/03

Starting from the fiscal year ended March 2016, MEGALOS CO., LTD. (currently, Nomura Real Estate Life & Sports Co., Ltd.) which had been categorized as Other Unit is now included in the Property & Facility Management Unit. As a result, data for the fiscal year ended
March 2015 and the fiscal year ended March 2016 now reflect this change.
Nomura Real Estate Holdings, Inc.

32 Integrated Report 2016

ProﬁleResidential Development Unit

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation

Further Strengthening Our Integrated Development, Sales andManagement Structure to Flexibly and Promptly Respond to Changes in the Market

Market Environment• Shrinking market for homes due to Japan’s declining
population• Oligopoly by major developers• Rising home prices caused by higher land prices andconstruction costs• Diversification of needs in homes based on changes
taking place in society• Trend toward more compact towns driven by the flowof people into urban areas

Data Section

Business Strategies under the Mid- toLong-term Business Plan

Strengths• Ability to adapt to the market using an integrated
development, sales and management structure• Established brand power from the PROUD brand• A wealth of strong customer contacts through the
Nomura Real Estate Group Customer Club

Speeding up the Decision Making Process by Sharing
Customer Perspectives and Our Ability to Adapt toMarket Needs
The market oligopoly by the top real estate companies continues
to advance as the housing market shrinks due to Japan’s declining
population. The key to realizing stable growth in this environmentis to differentiate ourselves from peers and establish a solid position in the market place. Toward that end, we are taking steps toenhance the quality of our individual businesses while also further
strengthening collaboration between production and sales teams
in an effort to share information about customer perspectives andhow to adapt to market needs, which in turn will speed up thedecision making process. At the same time, we are encouraging
the development of mainly junior human resources by having allteams commit to the entire business.

• Further evolve the integrated production, sales andmanagement system• Expand market share for existing businesses andenhance earnings power• Increase business volume by showing a presence innew business areas• Expand the land bank business by promoting
customer relations

falls to only about 6% in the huge residential market of Tokyo’s 23 wards. Going forward, we will establish focus areasfor each business and aim to increase our market share to
10% by carefully monitoring the market size of each area andthe supply situation of peers. In addition to business expansion
Condominium Supply in the Tokyo Metropolitan Area and theMarket Share of the Big 4* and Nomura Real Estate Development(Units)100,000

Supply in the Tokyo Metropolitan Area
Market share of the Big 4 (%)
Market share of Nomura Real Estate Development 40.0

80,00029

60,000

Shigeyuki Yamamoto
Executive Officer
In charge of Residential Development Unit

Currently, we occupy about an 8% share of the residential realestate market in the Tokyo Metropolitan Area, but this share
Nomura Real Estate Holdings, Inc.

33 Integrated Report 2016

34

30

30.0

22
20.0

17

40,000

18
10.0

9.0

20,000

Securing Business Volume and Market Share Based on
an Area-focused Strategy

37

36

35

32

8.2
0

4.6

2.4
’06

’07

8.3

8.2

8.0

4.8

4.5
’08

9.7

’09

0
’10

’11

’12

’13

’14

’15

Source: Real Estate Economic Institute Co., Ltd.
*Big 4: Mitsui Fudosan Residential, Mitsubishi Jisho Residence, Sumitomo Realty& Development, and Nomura Real Estate Development

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Operating Income Results and Targets(Billions of yen)

Priority Measures

50• Business development based on a clear area-focused strategy• Reinforce brand strategy• Expand into core regional cities based on the advancing trend of compact towns• Obtain know-how and develop relationships with local developers in Asian markets• Expand the land bank business collectively across the Group

40
30

31.1

33.8

31.9

'14/03'15/03'16/0330.5

30.0'17/03'19/0340.0

44.0 48.0

20
100

in existing areas, we will also seek to expand into new ones aswell. In Japan, the trend toward compact towns will provide an
opportunity for us to expand into core regional cities. Last year,
we began marketing mainly in the Kanto-Koshin’etsu region,and determined the viability of our business in multiple cities.
Starting this fiscal year, we began gathering definite projects
and participated in a redevelopment project in front of Shizuoka Station as our very first project. Overseas, we are expanding
business mainly in Asia, which has growing residential real estate needs driven by the region’s economic growth. We are
Reinforcing Brand Strategy
Market Strategy Dept.
(Brand strategy and audits)

Residential Product
Planning & Marketing Dept.
(Product strategy)

Brand vision

Uniform customer surveys
Feedback on customer reviews

Residential SalesManagement Dept.
(Sales and advertising strategy)

Business lines• Residential Development Depts. • Construction Management Depts. • Residential Sales Depts.

Provision of consistent value

Customers

already working on condominium projects in Ho Chi Minh
City, Vietnam, and in Shenyang, China. As part of these projects, we have dispatched personnel from the Residential Development Unit locally to obtain know-how and build relationships with local developers.

Reinforcing Brand Strategy
I believe that a brand represents a type of guarantee to customers. The mission of any brand is to guarantee consistentvalue in every area, from fostering a positive image in TV commercials and property ads to setting up sales centers, the actions of our employees in sales and after-sales services who
work directly with customers, and the quality of our products.
The consistent value we want to deliver to customers, or inother words our brand vision, will be reflected in our productstrategy as well as our sales and advertising strategy. We arealso working to re-define our brand vision with an eye on 10
years into the future. During this process, by using the views of
our employees on the frontlines we will foster a sense of ownership in employees for creating our brand strategy together.

Nomura Real Estate Holdings, Inc.

34 Integrated Report 2016

(Forecast)

Phase 1
(Targets)'22/03Phase 2
(Targets)'25/03Phase 3
(Targets)

Expanding the Land Bank Business Using Group-wide
Tie-ups
The Nomura Real Estate Group has access to a wealth of housing stock as well as operates the Nomura Real Estate Group
Customer Club, which has more than 80,000 members. Customer relations involve the entire Group, and by working tostrengthen our contact points with customers, we will look tofurther expand the land bank business. This fiscal year we
newly entered the renovation business. we will seek to maximize customer satisfaction through the work of Nomura Real
Estate Reform, the sales of Nomura Real Estate Urban Net, andthe collective strengths of the entire Group.
In order to expand the type of services to customers, wewill also need to build alliances with other companies. Last year,
the Nomura Real Estate Group and the Isetan Mitsukoshi Group
concluded a comprehensive business partnership agreement withthe goal of mutually enhancing the brand value of both companies. This autumn, we plan on offering Nomura Real Estate Group
Customer Club Gold Cards to members of the Nomura Real Estate Group Customer Club. Moving forward, we will continue toexpand our high quality services and improve convenience.

Residential Development Unit

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Residential Large-scale Redevelopment & Reconstruction Business in Central Tokyo

Major Redevelopment & Reconstruction Projects• Taking advantage of our No.1 track record in the industry anda wealth of know-how, we have promoted many
redevelopment and reconstruction projects in Central Tokyoand in front of railway stations.

Redevelopment/
reconstruction
projects underplanning

Redevelopment /reconstruction
land bank

4,200 units

Redevelopment & Reconstruction Projects Completed in the Fiscal
Year Ended March 2016

8,400 units• Redevelopment/reconstruction land bank: 12,600 units
nationwide have been secured.
Project name

No. of units(our share)

Phase 1('17/03-'19/03)

PROUD TOWER Tachikawa

292Completion

PROUD CITY Asagaya*

313

Completion

PROUD TOWER Akashi*

102

Completion

PROUD Fuchu Station Arena

111

Completion

PROUD TOWER Musashi-Urawa Residence

165

Completion

PROUD TOWER Nagoya-Sakae*

214

GRACIA TOWER Futamatagawa*

81

Higashi-Ikebukuro 5-chome Redevelopment

110

Musashi-Koganei Station South Exit
2nd Block Redevelopment

610

Sakai-Higashi GIORNO Building Redevelopment

273

Hankyu-Tsukaguchi Station-front
Reconstruction
Higashi-Ikebukuro Station-front Block
Redevelopment
Shakujii-Koen Station South Exit West
Redevelopment

338

Hirai Station North Exit Redevelopment
Kawaguchi Sakaecho 3-chome Redevelopment

Phase 2Phase 3('20/03-'22/03)('23/03-'25/03)

Tomihisa Cross
Comfort Tower(Shinjuku-ku, Tokyo)

Completion
Completion
Commence
construction

Completion
Commence
construction

Completion

Commence
construction

Completion

Commence
construction

210

Commence
construction

185

Commence
construction

Completion
Completion
Completion

318

Completion

414

Commence
construction

Completion

Funabashi Station South Exit Redevelopment

180

Commence
construction

Completion

Akasaka 7-chome 2nd Block Redevelopment*

230

Commence
construction

Completion

420

Commence
construction

Completion

Tsukishima 3-chome South Redevelopment*

250

Commence
construction

Completion

Tateishi Station South Block Redevelopment*

245

Commence
construction

Completion

400

Commence
construction

Kachidoki Station South 8,9 block
Redevelopment*
Minami Ikebukuro 2-chome C Block
Redevelopment*

Sakura Josui Gardens (Setagaya-ku, Tokyo)

Redevelopment & Reconstruction Projects to be Completed in the
Fiscal Year Ending March 2017 or Later

Commence
construction

Nishi-Ojima Station-front Redevelopment*

CAPITAL GATE PLACE(Chuo-ku, Tokyo)

363

The land bank
Projects under planning *JV project
All projects are currently in the planning phase and subject to change.

PROUD TOWER Akashi (Akashi-shi, Hyogo)

PROUD TOWER Tachikawa (Tachikawa-shi, Tokyo)

PROUD CITY Asagaya (Suginami-ku, Tokyo)

PROUD Fuchu Station Arena (Fuchu-shi, Tokyo)

Completion
Commence
construction

Completion(As of June 2016)
Nomura Real Estate Holdings, Inc.

35 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Measures to Accelerate Growth

Overseas Business

Customer Relations• We have set up residential development businesses and leasing businesses in Asian
countries, which have seen high demand in the real estate market due to economic
growth. We will invest ¥300 billion by the Phase 3.

• Aiming at increasing opportunities tooffer services which meet customers’changing life style needs, we have set
up the “Nomura Real Estate Group
Customer Club (NCC),” a customer
communication platform.

• In the fiscal year ended March 2016 we decided to participate in the housing businessin Ho Chi Minh, Vietnam. Also, we are considering taking part in other projects.

NCC Membership

100,000
80,000(Persons)

100,000

75,00050,00025,000

Midtown Project (Ho Chi Minh, Vietnam)0'13/03'14/03'15/03'16/03

Various Services for Our Customers'17/03(Targets)

Inventory
Domestic housing business

184,000 units

Property management business

163,000 units

Brokerage (Retail)Nomura Real Estate Group Customer Club (NCC)

80,000 members(at the end of ’16/03)

100,000 members(target for the end of ‘17/03)

Location: District 7, Ho Chi Minh
Total project expense: approx. ¥27.0 billion (Phase 1)
Phase 1 units: approx. 1,100

Group services and businesses

Total units: approx. 2,100 units
Phase 1 land area: approx. 28,000m2
Construction period: 2017-2019

Interior business

Remodeling business

Maintenance program

Relocation business

Renovation business

Partnership with
Isetan Mitsukoshi HD

Partner companies: Phu My Hung Development
Corporation, Daiwa House Industry Company, Sumitomo
Forestry

Nomura Real Estate Holdings, Inc.

36 Integrated Report 2016

Issuance of the Nomura Real EstateGroup Customer Club Gold Card

ProﬁleLeasing Unit

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation

Tackling Community Development with Various Development
Approaches Based on Societal Needs and Using This as a Pillar for the Group’s GrowthMarket Environment• Increase in demand for redevelopment andreconstruction projects given a rising number of aging
buildings• Acceleration in urban development in Central Tokyo in
preparation for the Tokyo Olympics and Paralympics• Increasingly diverse and sophisticated needs from eachfacility typeStrengths

Business Strategies under the Mid- toLong-term Business Plan

• Mutual growth model through tie-ups with GroupREITs• Development know-how for various real estate classes,
including office, commercial facilities, logistics facilities,
and lease housing• High quality property development led by professional
engineers including first-class architects• Strengthen mixed-use redevelopment including newareas• Strengthen Leasing Value Chain through coordination
with Group-affiliated REITs• Accelerate development of commercial property
business as a new focus sector

Engaging in Community Development that Harnesses
the Group’s Know-how and Views Changes in Urban
Structure and People’s Needs as an Opportunity

Minoru Hatada
Executive Officer in charge of Leasing Unit

Data Section

There is growing momentum for large-scale redevelopment
mainly in the Central Tokyo area underpinned by the city’s aging real estate stock and the urban development needed forthe upcoming Tokyo Olympics and Paralympics. Additionally,
there is a need to tackle the challenge of comprehensive development that covers an entire community, instead of conventional community development that tended to focus on a single product, given regional competition and changes inpeople’s needs.
Mixed-use redevelopment is a business that requires thetrue abilities of a developer to enhance the value of an entire
community or region over a long period of time. The Nomura
Real Estate Group has already obtained a number of redevelopment projects in the Central Tokyo area thanks to its collective know-how developed through its experience with diverse
real estate development projects and its synergies between
business units, including the Residential Development Unit. To
Nomura Real Estate Holdings, Inc.

37 Integrated Report 2016

fully leverage these opportunities and differentiate our projects as true community development, we need to work in not
only conventional sectors, but also find new sectors and products to expand into. Recently, we have initiated research on
new ways of utilizing hotels, shopping centers and offices.
As for the organizational structure, we newly established the Development Department after recognizing the
Expansion of Development Domains Aimed at Mixed-use
Development

High-end
lease
housing

Shopping
centers

Servicedapartments

HotelsUrban-type
logistics
facilities

Coldfacilities

Urban-typecommercial
facilities

Overseas

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Operating Income Results and Targets
60• Strengthen development capabilities through uniform land acquisition• Reinforce ability to structure and propose solutions for each sector• Enhance sales capabilities across sectors through tie-ups between business units• Improve cost and quality management through functional enhancements of engineering
divisions• Maximize added value from mixed-use development through Group synergies and tie-ups
between business units• Boost sales capabilities and strengthen relationships with corporate customers

need to shift from our conventional approach where sites wereacquired by business divisions in charge of each sector to asingle unified team sourcing land for development. This structure facilitates land acquisition across all sectors. This will alsoenable us to strengthen our cross-sector proposals and implement large-scale mixed-use development projects utilizing oursales capabilities closely in tune with the local community—another one of our strengths.

Establishing a Pillar for Group Growth through ¥1.8
trillion in Investments
The Leasing Unit engages in both the leasing business, where weown developed properties to obtain lease income, and the property development business, where we sell these developments toGroup-affiliated REITs for a profit. The role of the Leasing Unit isto establish a stable profit base by increasing leased assets andcontribute to the growth of Group-affiliated REITs by promoting
the property development business. As a business unit that uses
the balance sheet the most, we need to achieve high asset efficiency and expand stable revenue streams.

52.0 56.0(Billions of yen)

Priority Measures

40

26.8

24.4

'14/03'15/03

20

30.5

40.0

35.0

0

We have committed to invest ¥1.8 trillion under ourMid- to Long-term Business Plan. Half of this will be allocatedto leased assets and the other half to property development,
which in turn will be sold off to Group-affiliated REITs. This will
enable us to balance an increase in asset efficiency and stablerevenue streams.
Unrealized gains or losses are magnified based on thetiming of development, so we will establish certain standards
for the investment process and only invest after a deal is carefully vetted, while promoting continual acquisitions not influenced by investment timing. As for the nature of investments,
we will strive to acquire long-term projects with a focus on
redevelopment as well as aim to acquire around ¥90 billion(total investment amount) annually in property development
projects representing the four brands of PMO, Landport,
GEMS, or PROUD FLAT.
The most important aspect of property development ismaintaining a positive sense of tension with REITs. Enhancing
the leasing value chain will result in mutual growth. This past
year we have built a solid and mutual relationship with Nomura Real Estate Master Fund, Inc. by supplying properties from
Nomura Real Estate Holdings, Inc.

32.0

38 Integrated Report 2016

'16/03'17/03(Forecast)'19/03'22/03Phase 1
(Targets)

Phase 2
(Targets)'25/03Phase 3
(Targets)

the Group and acquiring older properties from the fund forredevelopment. Each of our brands is also steadily enhancing
its presence, which includes positive reviews from customers.
Going forward, we will build a robust portfolio of highquality assets through continual investment and contribute to
the growth of Group-affiliated REITs. This will enable us togrow into a pillar for the entire Group.
Growth Model of the Leasing Unit

Around50%¥1.8 trillion in
investments overthe period

Around50%

Property development business
Sales to Group REITs

Leasing business
Properties owned
by Nomura Real Estate GroupStrengthening ofleasing value chain

Stable lease income streams

Improved asset efficiency

Pursuit of high efficiency

Leasing Unit

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Major Large-scale Redevelopment and Mixed-use Development Projects (Office and Retail)• Actively implementing office and retail redevelopment and mixed-use development projects mainly in the Central Tokyo area.
Major Large-scale Redevelopment and Mixed-use Development Projects (Office and Retail)Central Tokyo Area

Ikebukuro

Nishi-Nippori Station
Front Redevelopment
MejiroUeno

Soto-Kanda 1-Chome
Redevelopment
Iidabashi Station
Central Redevelopment

Yokohama Nomura Building

Toranomon Station-front
Redevelopment

Project

Main Use

Nishi-Azabu 3-Chome
Redevelopment
Area and Units
Scheduled for
Acquisition

Shibaura 1-Chome Reconstruction

Phase 1

Phase 2'17/03-'19/03

Yokohama Nomura Building* Construction started

Office81,656m2

Toranomon Station-front Redevelopment

OfficeApprox. 13,000m2

Soto-Kanda 1-Chome Redevelopment

OfficeApprox. 31,000m2

Iidabashi Station Central Redevelopment

OfficeResidential

Approx. 20,000m2
Approx. 170 units

Nishi-Azabu 3-Chome Redevelopment *Hotel
Residential

TBD

Commence
construction

Nishi-Shinjuku 3-Chome Redevelopment *Commercial
Residential

Approx. 21,000m2
Approx. 920 units

Commence
construction

Shibaura 1-Chome Reconstruction*

OfficeCommercial

TBD

Nishi-Nippori Station-front Redevelopment*

Commercial
Residential

Approx. 15,000m2
Approx. 480 units

Shinbashi Station West Exit District
Redevelopment*

OfficeCommercial

TBD

Nihonbashi 1-Chome Central District Redevelopment*

OfficeTBD

TBD

Nomura Fudosan Ginza Building Reconstruction

OfficeTBD

TBD(National strategic special zone authorized project)(National strategic special zone proposal project)(National strategic special zone designated project)

Nishi-Shinjuku
3-ChomeRedevelopment'23/03-'25/03

Kanda

Shinjuku-gyoen

Toranomon Station-Front
Redevelopment

Harajuku
Commence
construction

Imperial PalaceTokyo

Completion(total floor area)

Nishi-Azabu 3-Chome
Redevelopment

Completion

Commence
construction

Completion

Commence
construction

Completion

Tokyo Tower

ShibuyaCompletion

Hamamatsucho

TamachiPhase 1completion
Phase 1completion

Commence
construction
Commence
construction

Completion

Commence
construction

Minatomirai
Shin-Takashima

Yokohama
NomuraBuilding

Takashimacho* JV Project(As of June 2016)

Note: details may change due to each project (including name) currently being in the planning stage.

Nomura Real Estate Holdings, Inc.

39 Integrated Report 2016

Nihonbashi
1-ChomeCentral District
Redevelopment

Nomura Fudosan
Ginza Building
Reconstruction
Shinbashi Station
West Exit District
Redevelopment

Shibaura 1-Chome
Reconstruction

Yokohama Area

Yokohama(Ginza MTR Building)*

ShinjukuPhase 3'20/03-'22/03

Akihabara

Sakuragicho

Shinagawa

馬車道

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Expansion of Property Development Business• Step up property developments, centered on the four brands of PMO, Landport, GEMS and PROUD FLAT, while expanding business volume and also achieving mutual
growth by selling properties to Group REITs.
• Expanding AUM to ¥200 billion by the Phase 3.
Expansion Plan of Property Development (on Balance Sheet)

Business Progress of Each Brand(Billions of yen)In the fiscal year ended March 2016, we acquired 19 properties valued at approximately ¥88.5 billion and sold eight properties valued at ¥26.7
billion. Also, we completed construction on a number of development projects, which we plan on selling one after another moving forward.

OfficeRetailLogistics

Residential

250

Acquisition (The total investment
planned for projects)
7 projects(approx. ¥31.0 billion)

Office200

190.0

Sale (sale value)

Logistics Facilities

3 projects(¥13.9 billion)

Acquisition (The total investment
planned for projects)
2 projects(approx. ¥38.0 billion)

Sale (sale value)
-

155.0

150

100

200.0

110.7

50

0
'16/03
AUM

Phase 1

Phase 2Phase 3

PMO Hirakawacho(completed in January
2016)
Retail Facilities(Billions of yen)

'16/06
AUM

Phase 1

Phase 2Phase 3

Office (PMO etc.)

40.4

60.0

65.0

65.0

Retail (GEMS/NSC etc.)

15.0

35.0

35.0

35.0

Logistics (Landport etc.)

41.0

45.0

70.0

70.0

Residential(PROUD FLAT etc.)

14.0

15.0

20.0

30.0

Total

110.7

155.0

190.0

200.0

PMO Nihonbashi Edo-dori(completed in June 2016)

Acquisition (The total investment
planned for projects)
6 projects(approx. ¥14.0 billion)

GEMS Daimon(completed in February
2016)

Landport Kashiwa-Shonan I(completed in February 2016)

Sale (sale value)
2 projects*(¥7.3 billion)

GEMS Kanda(completed in June 2016)*The sale of retail facilities includes the NRE Kichijoji Building

Nomura Real Estate Holdings, Inc.

40 Integrated Report 2016

Residential

Landport Kashiwa-Shonan II(completed in May 2016)

Acquisition (The total investment
planned for projects)
4 projects(approx. ¥5.5 billion)

PROUD FLAT HigashiKanda (completed in
May 2015)

PROUD FLAT Kagurazaka III(completed in April 2015)

Sale (sale value)
3 projects(¥5.4 billion)

ProﬁleInvestment Management Unit

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation

Aiming to Expand Our Stable Earnings Base with the Focal Pointon the REIT Business

Market Environment• Growing REIT market buoyed by rising demand for asset
management and an influx of foreign capital• Diversification of real estate utilization needs owing tochanges taking place in society, such as the aging
population• Government backing of the REIT market

Data Section

Strengths

Business Strategies under the Mid- toLong-term Business Plan

• Nomura Real Estate Master Fund, Inc. is Japan’s largest
diversified REIT with assets exceeding ¥930 billion (total
assets of over ¥1 trillion)• Leasing value chain through intra-Group tie-ups• Expertise as a real estate affiliated asset managementcompany and research capabilities utilizing a wealth ofaccumulated data

• S tabilization and expansion of the REIT business as acore business• Realize growth in the private placement fund business•E xpansion and global growth of the securities
business represented by Fund of J-REIT Funds

The REIT Business is Becoming More Stable andSteadily Expanding
The J-REIT market is steadily growing amidst an inflow of investment capital from Japan and overseas, driven by the expected recovery in Japan’s economy and real estate market as well as demand created by NISA and the negative interest rate environment.
The Investment Management Unit’s REIT business is steadily growing centered on Nomura Real Estate Master Fund, Inc. (NMF), JaChanges to Assets under Management(Billions of yen)

REIT (listed / unlisted)

NMF’s Mid- to Long-term Asset Management Strategy

3 to 5 years from now

Privately-placed funds, etc.

1,500
1,153.8 1,127.4 1,132.2 1,123.1
1,000

1,074.4500

Norio Ambe
Executive Officer
In charge of Investment Management Unit0
'12/03'13/03'14/03'15/03

Nomura Real Estate Holdings, Inc.

'16/03

pan’s largest diversified REIT created in October 2015 after themerger of three listed REITs. With an initial target to reach ¥1 trillion in assets under management over the next three to five years,
NMF has worked toward enhancing the quality of its portfolio
through Strategic Property Replacement (SPR) utilizing the Group’s
leasing value chain. In September 2016, NMF acquired TOP REIT,
Inc., drastically increasing its assets under management to morethan ¥930 billion (with total assets exceeding ¥1 trillion). This robust progress means that its initial target of ¥1 trillion in assets

10 years from now

Quality

GrowthMasterEstablish robust fund brand

Grow while maintaining top quality

Become a highly recognized J-REIT•	Strategic Property
Replacement (SPR)*:
Enhance quality of portfolio•	External growth: Focus
investments toward sponsor’s
development projects•	Assets: Maintain highly stable
investment indicators,
including size of assets•	Internal growth: Increase
rents mainly in sectors withupside potential•	Internal growth: Reinforce
property brand by maximizing
the management pipeline•	Fund brand: Strong
reputation based on quality
and growth•	Initial public offering:
Improve reputation among
unitholders•	Finance: Public offerings
based on demand from equity
markets

Sustainability*Strategy to enhance quality of investment assets harnessing the advantages of its diversified and largescale nature achieved through mergers

41 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Operating Income Results and Targets

12.0 13.0(Billions of yen)

Priority Measures

15
12• Expand size of the REIT business through continual investment• Continually improve quality of the REIT business utilizing intra-Group tie-ups• Develop new funds closely in tune with investor needs• Improve ability to address global investment needs• Step up development of human resources who can structure and cultivate funds

9

7.9

6

4.8

7.3*

'15/03under management will be achieved ahead of schedule.
Nomura Real Estate Private REIT, Inc. (NPR), a private placement REIT, has successfully attracted mid- to long-term capital frommajor public and private pension funds in Japan as well as financial institutions. It has also made solid progress with acquiringproperties from inside and outside the Group, growing at a pace
where it doubled its total assets over the past two year period.
The REIT business forms the cornerstone of the Investment Management Unit’s stable growth strategy, and for thatreason we will continue to focus on it moving forward.

second project in this segment.
In the Fund of REIT Funds (FORF) business, which targets
listed REIT, our J-REIT Value Fund, a J-REIT investment trust
structured in June 2015, has steadily increased its assets undermanagement. This success has been driven by Nomura Securities involvement on the sell side and Japan’s negative interest
rate policy. To capture growing needs among Japanese investors for overseas assets, we launched an overseas open-ended
fund of funds with diversified investments in the real estate
securitization markets of major developed countries. Next, we

Spreading Seeds for the Next Source of Earnings Growth

Changes in Net Assets of J-REIT Value Fund(Billions of yen)billion¥10(as of August 26)

12

Broke through
Jan.

8
6

June
Sales launched

Announcement of
the negative interest
rate policy

4
2
0
June
2015

Aug.

6.5

0

'14/0310

4.5

3'16/03*Includes the acquisition fees associated with themerger of the three listed REITs

We are now accelerating efforts to spread seeds for businesses
that will form the second and third pillar of our operations,while steadily growing our core REIT business and building astable earnings base.
In the private placement fund business, we are making
progress with opening up new asset classes to invest in.
Among these, we are focusing particular attention on the development of healthcare funds, given Japan’s aging population. In February 2016, we structured a fund that included our

10.0

Oct.

Dec.

Nomura Real Estate Holdings, Inc.

Feb.
2016

April

June

42 Integrated Report 2016Aug.

'17/03(Forecast)'19/03Phase 1
(Targets)'22/03Phase 2
(Targets)'25/03Phase 3
(Targets)

are planning global products, such as a US-REIT that invests in
REIT listed in the United States.

Enhancing Human Resource Development andResearch Capabilities as a Group of Professionals
Our ultimate goal as an asset management company is to enhance the performance of assets under management for ourcustomers. To achieve this, human resource development andadvanced research capabilities with an eye on long-term trends
are both essential.
As a result, we continue to focus on human resource
development, including overseas OJT, developing globally-minded
human resources through improved language training, andoperational improvements led by a bottom-up approach to
speed up decision making.
As for research capabilities, it is vital that we establish decision making criteria unique to an asset management company inorder to improve performance while always being aware of thecyclical timing of the real estate market. We will further advanceour research capabilities through highly objective analysis of theoverall market, in addition to our expertise built up over the years.

Investment Management Unit

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Nomura Real Estate Master Fund’s Strategic Property Replacement (SPR)

Acquisition of property for development (from sponsor)

Relatively
new building

Acquired Landport Kashiwa Shounan II, a Nomura Real Estate
Development branded development focused on logistics assets.

Utilization of the Leasing Value Chain

Nomura Real Estate Development’s
sales strategy• Phase 1 ('17/3-'19/3)
Total Recovery Amount:¥150 billion• '17/3 Sales Price:
Approx. ¥44 billion

Acquired from party outside the Group¥10.5 billion*2

New
building

Acquired from
Nomura Real Estate
Development¥10.8 billion*

2

Acquisition amount:

Landport Kashiwa Shounan II¥10.8 billion

Develop

InvestSPR

Strategic Property Replacement

Sold for redevelopment (to sponsor)

Strategic property replacement
to improve the quality ofthe portfolio

We sell older properties in advantageous locations to our sponsor. If the sponsor sells
the redeveloped property, NMF has exclusive negotiating rights for the purchase.

Sell

Able to be
redeveloped

ManageSold to Nomura Real
Estate Development¥18.1billion*

2

Sold to party outside the Group¥15.9 billion*

2

NOF Nihonbashi-honcho Bldg.
(49%)
55 years old*1

NOF Tameike Bldg.
56 years old*1

NOF Minami-shinjuku Bldg.
30 years old*1

Sales price:¥18.1 billion

Not suitablefor
redevelopment*1 Data as of May 9, 2016
*2 Transactional totals for the period from October 2015 to September 2016

Nomura Real Estate Holdings, Inc.

43 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

NFM’s Acquisition of TOP REIT, Inc.
• Boosted total assets to more than ¥1 trillion, making it one of the largest and well known REITs in the J-REIT market.
• Now has an eye on increasing assets to ¥1.5 trillion over the next three to five years, which represents the quality phase of its mid- to long-term asset management strategy.
• Plans to record asset acquisition fees following the merger and asset management fees will grow with the increase in assets under management.
• Further accelerates mutual growth of the Nomura Real Estate Group and REIT utilizing the leasing value chain.

Growth of NMF’s Assets

Positioning within the J-REIT Market (Asset Basis)(Billions of yen)

Diversified and complex REIT

Specialized REIT

1,200
Nomura Real Estate Master
Fund, Inc.
(Pre-merger)

TOP REIT, Inc.
(Pre-merger)
1,000

Properties

Properties

252

20

AssetsAssets(Total acquisition cost)(Total acquisition cost)¥784.6 billion

2nd(¥933.1 billion)

800¥190.4 billion

4th

600

400

200

31st

0
TOP

MHR

NAF

MTR

GLP

KDO

NPR

JPR

ADR

DOI

UUR

OJR

NMF (Pre-merger)

JRF

JRE

Properties: 272 Assets: ¥933.1 billion(Total assets exceed ¥1 trillion)

NMF (Post-merger)

NBF(Post-merger)*Data prepared based on the explanatory materials for the NMF and TOP REIT, Inc. merger dated May 26, 2016. Please refer tothese materials for additional details.

Nomura Real Estate Holdings, Inc.

44 Integrated Report 2016

ProﬁleProperty Brokerage & CRE Unit

Value Creation through Continuous Transformation
Business that Produces Value

Boosting Our Ability to Deliver the Nomura Real Estate Group’s Unique
Solutions that Accurately Capture Increasing and Diversifying Real Estate Needs
Using a Customer-oriented Approach
Market Environment• Growing needs related to real estate inheritance andgifting given Japan’s aging society and amendments to
the Inheritance Tax Act• Growing demand for corporate real estate (CRE)
strategy underpinned by the increasing number ofshareholders who emphasize asset efficiency• Increasing demand of borderless real estate investment

Executive Officer
In charge of Property Brokerage & CRE Unit

Data Section

Strengths

Business Strategies under the Mid- toLong-term Business Plan

• Two brand structure in the retail business comprising
Nomura no Chukai (Real Estate Brokerage by Nomura)+ (Plus) and nomu.com• Solid base of corporate clients and more than two
decades of experience in the wholesale business• Providing multifaceted solutions through collaboration
between the retail and wholesale businesses• Strengthen retail business face-to-face sales
capabilities and utilize ICT• Expand wholesale business customer base andstrengthen proposal capabilities• Collaborate with Nomura Securities and strengthen
collaboration within the Group

Increasing Collaboration within the Unit Aimed at
Greater Differentiation of Our Proposal Capabilities

Juntaro Kimura

A Foundation that Supports Value Creation

The Property Brokerage & CRE Unit engages in the retail businesstargeting general consumers and the wholesale business targeting corporations. In the retail business, demand is growing for
inheritance and gifting of real estate following an increase inhigh quality real estate stock, while in the wholesale businessdemand is growing for commercial real estate (CRE) strategy
given rising awareness toward asset efficiency. To address this rising demand, the Property Brokerage & CRE Unit will need to build
a structure that can deliver wide ranging solutions as an organization as well as step up human resource development andfurther set itself apart from trust banks and peers.
Therefore, the Property Brokerage & CRE Unit will continue to provide multifaceted solutions for real estate utilization by returning to its management roots, stepping up collaboration between the retail and wholesale sides, complementing
our customer base, and sharing information and networks. At
the same time, we will advance organizational improvements
in order to fulfill the missions of the retail business and wholesale business. Through these efforts, we will heighten our exNomura Real Estate Holdings, Inc.

45 Integrated Report 2016

pertise in our own business fields and also step up collaboration and mutual understanding. Also, we will encourage
collaboration not only within the unit but with other business
units as well to ensure we can capture business opportunities
for the entire Group.
We will also emphasize improvements to human resources, in addition to the above structural changes. The Property Brokerage & CRE Unit recognizes the need to focus inparticular on human resource development because we need
Clarifying the Missions of the Retail and Wholesale
Businesses

Retail Business

Wholesale Business

Strive to be chosen
by the customers in
the marketplace

Acquire fee income from ourgrowing customer base andbusiness opportunities for
the Group• Solidify the Nomura no Chukai +brand• Raise operational efficiencies
with ICT• Step up collaboration with
Nomura Securities in the area ofconsulting sales for inheritanceand other needs• Improve proposal capabilities• Implement area-focused strategy• Enhance the customer coverage
ratio

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Operating Income Results and Targets(Billions of yen)

Priority Measures20• Improve synergies between the retail and wholesale businesses through collaboration• Clarify missions of both businesses and create the right organizational structure tofulfill these missions• Develop new customers and improve earnings power by implementing area-focusedstrategy• Expand business opportunities for the Group through collaboration with Nomura
Securities

to provide valuable information and services to customers andhave the ability to present proposals. Toward that end, we will
accelerate the sharing of accumulated expertise and the building of networks through human resource exchanges andgroup training involving employees from both sides of thebusiness.

From "Person to Person Relation Management" to"Area/Corporate to Corporate Relation Management"
to Sales Promote Area-focused Strategy Grounded in
Collaboration with Nomura Securities
The Property Brokerage & CRE Unit deploys a majority of its
personnel in the Tokyo Metropolitan Area, and yet the headquarters of around 40% of Japan’s listed companies are located outside of this area. Moreover, potential customers are located inevery corner of Japan, from private companies, schools and hospitals, among others. Our new strategy requires us to bury thisgap between customer base and personnel allocation to open
up business with customers we have yet to approach.
The key point behind this area-focused strategy is to
shift from "Person to Person Relation Management (RM)" to

15.0

16
12
8

8.1

8.4

'14/03'15/03

10.5

8.5

4
0

"Area/Corporate to Corporate RM" to sales. Person to Person
RM to sales is said to be the most optimal for real estate transactions because personnel ties and connections are emphasized. However, we are looking to improve organization-wide
productivity by establishing a sales structure that emphasizes
the distance with the customer and unique traits of the region.
For this reason, both the retail and wholesale business willneed to switch to Area/Corporate to Corporate RM to sales
that takes into account the unique traits of each region. On
the retail side, we will build a network of 100 retail branch
stores around Tokyo and Kansai Region, and focus on a narrowed approach to sales using this network of stores. On thewholesale side, we will expand core offices and establish a
structure that covers potential customers dotted across Japan
using a broader approach.
Additionally, collaboration with Nomura Securities will
form an essential element of our area-focused strategy. Capitalizing on Nomura Securities’ solid customer base at around160 branches across Japan, we will be able to identify real estate needs through Group collaboration, which in turn willlead to greater business opportunities for both Nomura Securities and the Nomura Real Estate Group. In actuality, the value
Nomura Real Estate Holdings, Inc.

9.9

16.0 18.0

46 Integrated Report 2016

'16/03'17/03'19/03(Forecast)

Phase 1
(Targets)'22/03Phase 2
(Targets)'25/03Phase 3
(Targets)of collaborative projects with Nomura Securities through its
customer referral system has grown to more than ¥100 billion.
Our local subsidiaries in Hong Kong and Singapore are working to increase efforts with Nomura Securities branches in Asia
to provide solutions to inbound investment needs. Going forward, we will continue to step up these efforts and acceleratecollaboration with Nomura Securities.
Image of Person to Person RM vs. Area/Corporate to
Corporate RM
Person to Person RM

Area/Corporate to Corporate RM

Sales rep develops relationships
on a personal level

Branches and offices work withcustomers in their region of coverage

Customer

Customer

Sales repBranches/
OfficesCustomer

Customer
Customer

Customer

Branches/
Offices

Sales rep
Customer

Customer

Customer

Customer

Customer
CustomerProperty Brokerage & CRE Unit

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Initiatives Aimed at Improving Sales Capabilities in the Retail Business• Establish 100 branch stores and hire 1,000 sales reps by the fiscal year ending March 2022 to expand and solidify the business foundation.
• Establish the Nomura no Chukai + (Plus) brand, utilize ICT including nomu.com, and expand services.
• Ranked number one in two real estate categories in the 2016 Oricon CS Report. Strive to enhance customer satisfaction still further moving forward.

Initiatives Aimed at Improving Sales Capabilities
Expansion of Retail Branch Stores (’12/03: 43 branches

Kansai Region Toyonaka Ibaraki Saitama Prefecture
Esaka

OkamotoCities of Tokyo

Musashi Koganei Mitaka
Fuchu

Chofu

Machida Shin-yurigaoka
AobadaiTama Plaza

Yokohama

Fujisawa Ofuna Higashi Totsuka

Kashiwa
Myogadani

Ikebukuro

Ogikubo Nakano
Eifukucho

Takadanobaba
Shinjuku

Kyodo

Seijo Gakuenmae

Kohoku New Town

Kanagawa Prefecture

Kichijoji

Chitose Karasuyama

Mizonokuchi• Stores opened since ’13/03

Kawaguchi

Urawa
Narimasu
Musashi Urawa
NerimaOsaka
Nishinomiya Kitaguchi
Kunitachi’16/06: 71 branches)

Results from Initiatives

Tokyo’s 23 Wards
Ochanomizu

Chiba Prefecture
Motoyawata
ToyochoTokyo

Hiroo Azabu

Jiyugaoka Gakugei Daigaku

Funabashi

Kinshicho

Iidabashi

Ebisu
MeguroMusashi Kosugi
GotandaTsurumi Kawasaki Kamata Oimachi
Kanazawa Bunko
HiyoshiCommission fees

No. of branch stores

20

80

Kita-Senju

Akasaka

Sakurashinmachi Sangenjaya Shibuya

Number of Retail Branch Stores & Commission Fee(Billions of yen)

Ginza
Mita

Nishi
Kasai

ToyosuKachidoki

16

12

62

56

68
60

50

43

40

8
20

4

0

Reinforce Face-to-face Services, Further Utilize ICT, and Expand Services0'12/03'13/03'14/03'15/03'16/03

Reputation among Customers

Reinforce face-to-face services

Further utilize ICT

Expand services• Earnest repair warranty• Earnest replacement warranty• Earnest inheritance support• Home staging service

2016 Oricon CS Report
Real estate brokerage(sales)Detached homes

No.1

Nomura Real Estate Holdings, Inc.

47 Integrated Report 20162016 Oricon CS Report
Real estate brokerage(purchases)
Condominiums

No.1

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Market and Strategy of the Wholesale Business

Wholesale Business Commissions

Composition of Domestic
Real Estate

Organizational Improvements and Business
Area Expansion of the Wholesale Business• Real estate in Japan is valued at ¥2,400
trillion, and of this ¥425 trillion is owned bycorporations.

• Restructured and integrated the Corporate Real Estate Service Division of
Nomura Real Estate Development and the Asset Sales Division of Nomura
Real Estate Urban Net, both of which engaged in the wholesale business.

• With the introduction of Japan’s Corporate
Governance Code, corporations have now
introduced specific KPI.
CRE strategy will become more important forachieving targets.

• Increased the head count at the Nagoya Branch Corporate Service
Department and Kansai Regional Office Corporate Service Department,
and newly established the Kansai Regional Office Corporate Service
Department Kyoto Sales Office and Fukuoka Branch Corporate Service
Department in order to pursue a regional approach to sales and respondpromptly to real estate needs in regional areas.
Restructuring of the Wholesale Business
BeforeApprox.

¥425 trillion

Real estate owned by corporations

Approx.

¥22 trillion

REIT and private
placement funds, etc.

Approx.

¥13 trillion

Nomura Real Estate
Development
Corporate Real Estate
Service Division

After• Sharing of mutually
accumulated customer
information• Able to realize prompt
matching based on
customer needs• Expanded business opportunities throughincreased customers of each
• Overlapping customers occurred in somesituations

Expanding the Area/Corporate to Corporate RM
using an Increase in Head Count and Branches
Kansai Regional Office
Corporate Service
Department
Kyoto Sales Office(new)

J-REIT*Prepared by Nomura Real Estate Holdings based on Corporate
Owned Land and Buildings Basic Survey by the Ministry of Land,
Infrastructure, Transport and Tourism, national accounts of the
Cabinet Office, and ARES data
*Data for domestic real estate value, REIT and private placement
funds, and J-REIT is as of 2014 and data for real estate owned bycorporations is as of 2013

Nomura Real Estate
Development
Corporate Real
Estate Service Division

Nomura Real Estate
Urban Net
Asset Sales Division

Kansai Regional Office
Corporate Service Department(increase of head count)• Nearly doubled commission income compared to thefiscal year ended March 2012.
Wholesale Commissions(Billions of yen)

12

8

4

0

'12/03'13/03'14/03'15/03'16/03Business Collaboration with Nomura
Securities• Through the “Customer Referral System” with Nomura
Securities, we make CRE proposals leveraging the Group’s
collective strength.
• The number of transactions in cooperation with Nomura
Securities increased both in the wholesale and retailsectors. Annual sales volume of projects with Nomura
Securities rose to ¥100 billion.
The number of transactions in cooperation with Nomura
Securities (Contract basis)(Billions of yen)

120

Sales Volume

Number of transactions

500
400

90

300
60
200
Corporate Real Estate Service Division
Nagoya Branch

Fukuoka Branch
Corporate Service Department (new)Corporate Service Department (increase of head count)

Nomura Real Estate Holdings, Inc.

48 Integrated Report 2016

30
0

100

'12/03'13/03'14/03'15/03'16/030ProﬁleProperty & Facility Management Unit

Value Creation through Continuous Transformation
Business that Produces Value

Working to Embrace Every Moment of Life's Pursuits in Our Capacity of Town
Management and Boosting Earnings Power
across the Entire Business through Business Synergies

A Foundation that Supports Value Creation
Data Section

Market Environment

Strengths

Business Strategies under the Mid- toLong-term Business Plan

• Growing management needs from increased housing stock• Increase in demand for large-scale repairs due to aging
buildings• Acceleration of public-private collaboration in the
management of public facilities• Rising health-care needs underpinned by the upcoming
Olympics• Rising awareness of energy usage• Management stock of 163,000 residents and 705
buildings• Service quality in both residential and office asset
classes• Engineering and management capabilities establishedthrough management of a wide range of properties• Wide ranging services made possible through Group
collaboration• Acquire customer satisfaction by diversifying services
and creating high added value• Expand management stock through Group
collaboration• Expand facility management domains including sports
and health-care and business for senior citizens

Expanding Our Stable Earnings Base through the
Pursuit of Customer Satisfaction
The Property & Facility Management Unit has grown steadily
by harnessing synergies from the establishment of Nomura
Real Estate Partners Co., Ltd. in 2014, combining a building
Number of Buildings and Houses Under Management(Units)Buildings under management

Houses under management (Thousand units)

800

200

750
130
700

Toshiaki Seki
Director and Executive Officer
In charge of Property & Facility Management Unit andSenior Business Management Dept.

137
723

147

150

729
705

703

696

163

155

100

50

650

0

0
'12/03'13/03'14/03

Nomura Real Estate Holdings, Inc.

'15/03'16/0349 Integrated Report 2016

management company and housing management company.
Nomura Real Estate Partners must do more than simply generate earnings from stock management; it must deliver valuable
services for this stock and establish trust and rapport withmore and more customers. Nomura Real Estate Partners has
ranked number one in customer satisfaction* for eight years
running, and we will continue to improve our services with aneye on the customer so we can maintain this solid reputation.
The key to earning people’s trust over the long term andboosting our earnings power is collaboration between daily
management and regular repair work. 13 years have alreadypassed since we completed our very first development under
the PROUD brand, which has become the Group’s mainstay
brand. Now, management divisions and work divisions will
work side by side to grow the Re-Premium brand for largescale condominium repair work, in order to capture growing
demand for such work in the future. Our goal is to proposeand deliver value added services in this segment.
Meanwhile, as the work force declines, our ability tomaintain service quality will be called into question. Therefore,
we will need to promote diversity more than ever before, in-ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Operating Income Results and Targets

12.0 13.0(Billions of yen)

Priority Measures

15
12• Expand earnings base through improved customer satisfaction• Establish Re-Premium as a brand for large-scale condo repair work
• Increase PPP and PFI projects and expand in the sports facility domain• Continue to build the business for senior citizens and enhance ability to address healthcare and nursing care needs• Pursue synergies between expansion of energy services and facility management business

10.0

9
6

5.1

5.7

5.3

'14/03'15/03'16/03*Research by Sumai Surfin

Tokyo
Kanagawa
Chiba
Saitama
Total

Private

Total

180
58
47
27
312

234
123
77
65
499

*PPP: A Public-Private Partnership (PPP) is a scheme in which the public and private
sector work together to provide a public service. A Private Finance Initiative (PFI) is a

The Property & Facility Management Unit continues to look at
expanding into new domains based on social needs in order toestablish the next pillar of earnings growth.
In particular, we are focusing on health-care needs given
the sports boom expected from the upcoming Tokyo Olympics
and Paralympics. In April 2016, we changed the name of ourwholly-owned subsidiary that manages sports clubs MEGALOS
CO., LTD. to Nomura Real Estate Life & Sports Co., Ltd. Goingforward, we will enhance our locations based on the needs ofeach community and work to strengthen the visibility of thebrand through collaboration between locations. Furthermore,

scheme by which capital, management expertise and technologies in the privatesector are utilized to construct, maintain and manage public facilities.

by creating a joint venture between Nomura Real Estate Life &Sports and Nomura Real Estate Partners, we will work towardobtaining more PPP/PFI projects for sports facilities, a segmentwith rising demand.
Given the progression in Japan’s aging population, in
April 2015 we established Nomura Real Estate Wellness Co.,
Ltd. to spearhead our business for senior citizens. Nomura Real
Estate Wellness is now working on developing serviced senior
Nomura Real Estate Holdings, Inc.

'17/03'19/030

Number of Sports Facilities in the Tokyo Metropolitan Area
Targeted for PPP/PFI Projects*

Expanding into New Domains Based on Social Needs,
including Accommodating Rising Demand for Senior
Citizens and Health-care

6.5

3

cluding setting up workplace environments where women,
senior citizens and foreign nationals can thrive professionally,
while also actively adopting cleaning robots, remote monitoring and other cutting edge technologies.

Foundation/
Association
54
65
30
38
187

6.0

50 Integrated Report 2016

(Forecast)

Phase 1
(Targets)'22/03Phase 2
(Targets)'25/03Phase 3
(Targets)

citizen residents throughout Japan, including the Funabashi
Project located close to PROUD Funabashi, as an important
aspect of the Nomura Real Estate Group’s urban-type compact
town concept. Our business for senior citizens emphasizes
building services that support health expectancy. Through atie-up with Nomura Real Estate Life & Sports, we are building
a unique business model that harnesses the collective strengthsof the Group, including providing rehabilitation, fitness andother services to senior citizen residents.
We are also steadily growing the energy business, given
people’s rising awareness of their energy usage. In addition to
the high-voltage bulk electricity supply service that reduces thepower usage of entire condominium buildings, and solar power and electricity retailing business utilizing properties of theGroup, in December 2015, we launched NF Power Service,
which makes it possible to procure optimal power based onhighly accurate demand forecasting. Moving forward, we will
work to expand the usage of these services and provide thesediverse energy solutions based on the needs of facilities undermanagement, which in turn will boost the earnings power ofour entire business unit.

Property & Facility Management Unit

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Business for Senior Citizens• Following the Funabashi project, we have decided to participate in the “Hiyoshi-Minowacho project,“ a large-scale mixed-use development. This project is prominent in our "Urbantype Compact Town" business model, which focuses on housing.
• We plan to deliver 40 condominiums (5,000 units) in the coming 10 years through the Group-wide collaboration exemplified by the fitness business and also our distinctive businessmodel.
Funabashi Project (Neighbor of PROUD Funabashi)

Hiyoshi-Minowacho Project (Mixed-use development focusing on housing)

Keio University

Hiyoshi Station

Commercial
facilities

Elementary
schoolCondominium

Residents
for seniorcitizens

Daycarefacilities

Tsunashima Station

Location: Funabashi-shi, Chiba
Access: 5 minutes walk from Shin-funabashi Station
Type: Leasing condominium designed for senior citizens
Total units: 126 units
Operation: 2017 (schedule)
Land area: 19-50m2

Location: Kohoku-ku, Yokohama-shi
Access: Toyoko Line, Hiyoshi Station
Planned mixed-use development to construct facilities including the condominium, residents for seniorcitizens, daycare facilities, commercial facilities, and an elementary school.

Nomura Real Estate Holdings, Inc.

51 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Expanding the Fitness Club BusinessToward a Health-care Services Company that Offers morethan just Sports Clubs• Changed the name of MEGALOS CO., LTD. to Nomura Real Estate Life & Sports Co.,
Ltd., in April 2016, to better highlight that the company will now provide health-carevalue throughout people’s lives given rising health-care needs.
• Retain the MEGALOS club brand, but take a new approach that is more closely in tune
with consumer needs.
• Create a new business other than sports clubs which includes services for health-caremanagement and senior citizens.

New Rollout of MEGALOS based on Consumer Needs• Opened MEGALOS_0+ Ebisu as a premium member’s only personal conditioning clubtargeting residents living in PROUD brand developments.
• Opened MEGALOS_Reflet Ebisu as a member’s only studio for women only with afocus on helping women improve areas they perceive as problems.
• Provide a first in Japan service at MEGALOS Ichigaya that combines physical training
with a stress check and heart rate monitoring system.

MEGALOS_0+ Ebisu

Large complex
facilities
Services forsenior citizens
24-hourclubs

Wide variety of
instructional courses

Workout space

Workout space

VIP gymLoungePublic facility
management

Personal conditioning club
Dedicated
women only studios

Nomura Real Estate Holdings, Inc.

52 Integrated Report 2016

ProﬁleMessage from the Chair

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

We Continue to Strengthen Corporate
Governance by Striking a Balance between
Compliance with Japan’s Corporate Governance
Code and Our Diversity Initiatives
Kamezo Nakai
Chair
Nomura Real Estate Holdings, Inc.

Further Strengthening Our Corporate
Governance System through Compliance withJapan’s Corporate Governance CodeThe Nomura Real Estate Group has worked diligently to strengthen corporate governance since 2011, when I became President of
Nomura Real Estate Holdings. This has included making decision
making processes clearer and more transparent, in an effort tospeed up the management of the Group.
With the launch of the Tokyo Stock Exchange’s Corporate
Governance Code in June 2015, we reviewed our previous self-led
efforts and established our Basic Corporate Governance Policy toensure compliance with the Code. At the same time, we transitioned from a company with Board of Corporate Auditors to acompany with Audit & Supervisory Committee and took steps tofurther reinforce governance and monitoring.
For each of its 73 items on enhancing information disclosureand ensuring the effectiveness of the Board of Directors, among other matters, the Corporate Governance Code requires that companies
either comply with these items or explain why they do not comply.
Our first corporate governance report released in November 2015
notes that we have complied with 63 of these items. Since then, ourcompliance has increased further, so we will now examine ways to
Nomura Real Estate Holdings, Inc.

53 Integrated Report 2016

complete compliance for the four remaining items as of today.
I believe that the Advisory Committee Relating to Nominations and Compensation, newly established in February 2016 as
an advisory body to the Board of Directors, represents a particularly noteworthy development from our efforts. This committee provides a venue to discuss our thoughts on executive compensation,
the next generation of management human resources needed tolead the Company in the future, and how these human resources
should be developed. This committee is staffed by three independent external directors, while I serve as chair.
In addition, we conducted a survey of all directors on the
management, role, and discussions of the board of directors inorder to evaluate the Board’s effectiveness. Based on the results,
we will now make changes and review the situation as needed. As
for the disclosure of the reason for selection of directors, until now
we have disclosed this information for external directors via theshareholder meeting convocation notice, and now we will explain
the same reasons for the selection of in-house directors.
The Advisory Committee Relating to Nominations andCompensation and other internal organizations will now discuss
the remaining four items of the Corporate Governance Code andhow we can comply with them in a timely manner.

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Achievements and Issues Found After Vigorous
Discussions under Our Current Framework
Currently, as Chair and Chairperson of the Board of Directors, inmy pursuit of reinforcing governance I am focusing in particular on
how to make discussions more active and meaningful.
Of course, serious discussions have always taken place andwe have continually exercised our voting rights responsibly, but
now Directors & Audit & Supervisory Committee Members havebeen given voting rights, so I think we have been able to broaden
the scope of discussions further. By serving as Chair and Chairperson of the Board of Directors, I have been able to clearly stipulate
the division of duties with the Management Committee, which is
responsible for deciding on certain matters relevant to businessexecution. By focusing discussions on the Board’s own topics, I feel
we have sped up the discussion process and enhanced the effectiveness of the Board.
Meanwhile, I am also aware of certain issues. For example,
independent external directors are contributing their own expertise and experience, but I think we need to include persons withexecutive management experience in the mix. Also, a future challenge for us is the fact that only four of thirteen directors are independent external directors, which is below the goal of one third.
Going forward, we will improve this situation through discussions
held by the Advisory Committee Relating to Nominations andCompensation and other in-house organizations.

Management Diversity Must be atop aFoundation of Sustainable Growth Led byDiversified Business Operations
I steadfastly believe that management diversity is essential to theprocess of strengthening corporate governance.
In Japan, we tend to think of diversity as the utilization of
women and seniors as employees and the hiring of foreign employees, but this represents merely one area of diversity. It is important to create an organization where a diverse workforce cancoexist, regardless of nationality, age, or gender, while also linking

the diversity of this workforce to the improved performance of theCompany as a whole.
In 2013, the Group established the Diversity Promotion
Committee and initiated various systematic reforms aimed at rejuvenating its people and organizations. Although we have introduced diverse perspectives by appointing external directors andreinforcing their authority, many issues still remain in terms of governance.
This is because the residential development business has
stood at the heart of the Group’s operations for many years. Our
experience with success in this business sector is a critical asset of
the Group, but we can’t expect to grow simply by relying on thisexperience. Today, we continue to diversify our business portfolio,
including tackling large-scale and mixed-use redevelopment aswell as working on ventures in new domains. Therefore, we will needto accumulate new successes while pursuing more active bottom-up
discussions and utilizing successes from existing sectors.
In order to promote this type of management diversity,
members of the executive management team in charge of business decision making must increase their understanding of diversity and incorporate diverse approaches and diverse values. With
this in mind, we will focus on holding diversity training for executive management and developing the next generation of executive
management with diverse experiences.
However, this cannot be accomplished overnight. Our efforts to educate employees and executive management about theimportance of diversity are a major success. We will continue withthese fundamental efforts to grow our diverse businesses andachieve sustainable growth across the entire Group resulting fromthese synergies.

We Promise to Pursue Further Value Creation
for Our Shareholders and Investors
by Strengthening GovernanceDialogue with shareholders and investors is one of the principles
laid out in Japan’s Corporate Governance Code. We are committed to pursuing further dialogue, including with overseas investors
Nomura Real Estate Holdings, Inc.

54 Integrated Report 2016

and individual investors, so as to foster greater understanding andacceptance of the Group’s growth strategy.
Currently, the Group is implementing its Mid– to Long–term
Business Plan: Creating Value through Change. As this name indicates, we must constantly change and tackle the challenge of newvalue creation in order to realize sustainable growth into the future. We will continue striving to achieve this plan and reinforce
corporate governance so that shareholders and other stakeholders
recognize us as a company that constantly changes and neverstops creating value.
Fully mindful of the uniqueness of the Nomura Real EstateGroup, we will continually transform ourselves and pursue value
creation so that stakeholders recognize our success and achievements as second nature. In closing, I ask for the continued supportand understanding of all stakeholders.

ProﬁleCorporate GovernanceValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Basic Viewpoint

Basic Corporate Governance Policy

Nomura Real Estate Holdings believes that acompany must be governed in a way that continuously maximizes corporate value over the longterm, while giving consideration to the interestof shareholders and all other stakeholders. It isbased on this belief and following our Basic Corporate Governance Policy that we act as a holding company in managing and supervising thebusiness activities of our subsidiaries and strive tobuild a highly transparent management organization, which in turn will enhance the earning
power of the entire Group.

Shareholder Rights and Securing
Impartiality

Basic Corporate Governance Policy
http://www.nomura-re-hd.co.jp/english/ir/pdf/cgpolicy.pdf

Nomura Real Estate Holdings effectively maintains the same level of equality for every shareholder based on their shareholdings. We also
strive to disclose information in a timely and appropriate manner so as to prevent information
disparities among shareholders.
Nomura Real Estate Holdings has a policy
concerning strategic shareholdings that acknowledges contributing to improving the Company’s corporate value from a comprehensive
perspective of strengthening transaction rela-

2013
2014

2015

2016

• Introduced executive officer system at the holding company
Achieved business execution with a Group-wide and long-term perspective• Redefined its business segments
Achieved quicker business execution within each business by establishing a management
structure for each business segment• Revised details of subscription rights to shares used as stock options
Revised details of subscription rights to shares used for stock options as compensation andshared advantages and risks with shareholders• Appointed external director (01)• Increased the number of external directors (1Nomura Real Estate Group Code of Action as aset of relevant guidelines that will enable directors, executive officers, and employees to follow
a set of highly esteemed ethics and social norms.
We will continue collaborating as appropriate
while closely considering the interests of shareholders, employees, customers, business partners, creditors, local communities and otherstakeholders.
Compliance Systems
The Group Compliance Department spearheads
Nomura Real Estate Holdings’ efforts to promote
continuous educational and awareness activities
for executives and employees, and also provides
advice, guidance and assistance to Group com-

Appropriate Cooperation with
Stakeholders
Relationship Building with Stakeholders
In recognizing it is a member of society, theNomura Real Estate Group has established the

Status of Shareholdings

The Nomura Real Estate Group’s Efforts to Reinforce Corporate Governance2012

tions with counterparties and strategic businesstie-ups, etc. We continuously examine the rationality of the holdings from the perspective ofcontributing to improving the Company’s corporate value. The Company makes appropriate decisions when exercising voting rights relating tostrategic shareholdings based on whether holdings contribute to improving the Company’s corporate value through improving the investee
companies’ corporate value.

a. Investment shares held for purposes other than pure investment and the total amount on the balance sheet: 15
stocks / ¥3,856 millionb. S tocks, number of shares, amount on the balance sheet and purpose for investment shares held for purposes otherthan pure investment

Stock

Onward Holdings Co., Ltd.

2)

• Added decision making function to the Management Committee to accelerate the transfer
of authority• Transitioned from a company with Audit & Supervisory Board to a company with Audit &Supervisory Committee• Increased the number of external directors (2 5)• Established the Basic Corporate Governance Policy• Establishedthe Advisory Committee Relating to Nominations and Compensation
Deliberates on matters related to the nomination and compensation of directors andexecutive officers as an advisory body to the Board of Directors• Began evaluating the effectiveness of the Board of Directors• Disclosed reason for appointment of directors

Amount onbalance sheet(millions of yen)

Purpose500,000384

To enhance corporate value by
strengthening business tiesc. T he total amount recorded on the balance sheet, dividends received, gains/losses on sale, and gains/losses on
valuation of investment shares held for the purpose of pure investment in the fiscal year ended March 2016

Category

Total amount on
the balance sheet(millions of yen)

Total amount ofdividends received(millions of yen)

Total amount ofgains/losses on sale(millions of yen)

Total amount ofgains/losses on
valuation (millionsof yen)Non-listed shares

—

—

—

—

1,164

34

—

539

Other shares

Nomura Real Estate Holdings, Inc.

Number ofshares55 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

panies. Specifically, training is carried out
throughout the year following the complianceprogram, while Compliance Hour is a program
streamed to all officers and employees over theInternet on a monthly basis. These efforts andmore ensure that continual improvement isachieved in awareness of compliance.
The Nomura Real Estate Group Help Linewas set up as a whistleblower hotline independent from executive management for employees
to report or receive consultations about illegal orunethical behavior they may have witnessed taking place within the Group. Employees who use
the help line are ensured their information is kept
confidential and they cannot be treated unfairly
for reporting an incident using the help line.

Appropriate Information Disclosure
and Transparency

timely disclosure is required, the Information Disclosure Screening Team made up of general managers,
executive officers and others responsible for related
departments will screen the matter and report the results to the President. Company information found torequire timely disclosure will be disclosed in a timely
manner by the department responsible for timely disclosure (Corporate Communications Department) at
the instructions of the person responsible for information handling (Executive Officer responsible for the
Corporate Communications Department).
The Group Internal Audit Department set up
internally carries out monitoring of operations under
the timely disclosure system described above. Audit &Supervisory Committee Members attend Board of
Directors’ and other important company meetings aswell as receive reports from directors and view relevant documents to investigate whether the timely
disclosure system is functioning properly.

System for Disclosing Information
Nomura Real Estate Holdings strives to disclose information about the Group’s management strategy, financial condition, risk management, and internal control system, etc., in a fair, timely andappropriate manner based on the provisions of theCompanies Act, Financial Instruments & ExchangeAct, as well as other laws and the listing rules of theTokyo Stock Exchange. Specifically, as our timely
disclosure system below indicates, the person responsible for information handling (Executive Officer in charge of the Corporate Communications
Department) collects information about the Company through the department responsible for information collection (Corporate Planning Department)from each business unit and Group company. If information must be reviewed to determine whether

2016 Compliance Forum

Compliance Promotion Framework

Nomura Real Estate Holdings

Timely Disclosure System

Board of Directors

President

Chair and PresidentGroup Compliance Officer
Group Compliance Dept.

Chairman

Risk Management
Committee

Secretariat

Information Disclosure Screening TeamThe Nomura Real Estate Group Companies
Compliance Officers(Directors in charge of administrative operations at Group
companies, etc.)(Executive Officer in charge of the
Corporate Communications Dept.)

Department responsible fortimely disclosure
Direction

ReportReportRisk Management
Committee, etc.

Incidents withsignificant
ReporturgencyCompliance Leaders

Timely disclosure

Person responsible for
information handling(Made up of general managers, executive officers
and others responsible for related departments)

Risk Management Committee Chairman

Tokyo Stock Exchange

ReportFormed asneededDepartment responsible for information collection(Corporate Planning Dept.)(General managers of general administrative operations at Group companies)

ReportCompliance Promoters, etc.

Departments(Appointed at each company)

Nomura Real Estate Holdings, Inc.

56 Integrated Report 2016

Group companies(Corporate Communications Dept.)

ProﬁleCorporate GovernanceValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Risk Management System
Nomura Real Estate Holdings has established
Risk Management Regulations as a set of basic
principles on risk management, recognizing that
ensuring sound management and responding
appropriately to various business risks facing theGroup represent an important foundation of corporate governance. Within these regulations, wehave established flow of communication to the
executive management team to promptly convey
information in case of an unforeseen incident.
The Risk Management Committee, comprising
directors and executive officers of Nomura Real
Estate Holdings and Group companies as members, has also been established. The committee

Flow of Communication

Nomura Real Estate Holdings
Chairman, Risk Management Committee

meets monthly to deliberate on matters pertaining to risk management, compliance and information security as they relate to the entire
Group. It also discusses ways to respond to risks
that do emerge and regularly reports to theBoard of Directors.
Internal Audits and Audit &Supervisory Committee System
The Nomura Real Estate Group has established aninternal audit department at each Group company,
with the exception of some small companies. Eachdepartment is supervised under the direct jurisdiction of each Group company president or an officer
who does not hold an additional office in a business operations division, which allows the department to maintain organizational independence. In
addition, we have established the Group Internal
Audit Department in the holding company that, in
collaboration with the auditing firm, supervises theinternal audit functions of the entire Group andperforms monitoring and evaluation as well as audits each division within the Company. Also, theresults of audits are reported at meetings of theBoard of Directors and the Audit & Supervisory
Committee.
The Audit & Supervisory Committee receives regular reports from internal audit departments on the implementation and results of internal audits. When necessary, it can recommend
or instruct additional audits or necessary investigations to be carried out. The Audit & Supervisory Committee also audits and supervises the execution of duties by directors and business
operations by executive officers while cooperating with the auditing firm as needed.
Audit & Supervisory Committee Members
attend Board of Directors’ and other importantcompany meetings and can request reports frombusiness execution departments as necessary tocollect information on Nomura Real Estate Holdings’ execution of business operations. Nomura
Real Estate Holdings has established Audit & Supervisory Committee Department in order to aid
the duties of Audit & Supervisory Committee
Members. This office has its own dedicated staff
that work to implement measures for increasing
the effectiveness of audit operations.

Group Compliance Dept.

The Nomura Real EstateGroup Companies

Auditing Firm and Certified Public Accountants (as of June 29, 2016)
Auditing Firm

Communication Manager•Communication at Group companies
and formulation of guidelines, etc.
•Establishment of emergency
communication networks at
Group companies
Employees of Group companies

Ernst & Young ShinNihon
LLC

Names of Certified Public Accountants
Designated and Engagement Partner

Tadayuki Matsushige

Designated and Engagement Partner

Kazunori Takenouchi

Designated and Engagement Partner

Toru Nakagiri* Length of auditing service of each of the above-mentioned Auditors is seven years or less; therefore, the number of years isomitted.
* Ernst & Young ShinNihon LLC takes measures to ensure that individual Engagement Partners do not continue their involvementin our accounting audits over an extended period of time. Assistants involved in auditing are listed below.
 Certified Public Accountants 6 / Assistant Certified Public Accountants 6 / Other 2

Nomura Real Estate Holdings, Inc.

57 Integrated Report 2016

Nomura Real Estate Holdings has concluded an auditing contract with Ernst & Young ShinNihon LLC (the auditing firm). In addition to regular accounting audits by the auditing firm, theCompany discusses and verifies accounting issues with the auditing firm as needed and strives
to follow appropriate accounting procedures.
Certified Public Accountants involved in auditing
are listed below.

Obligations of the Board of Directors
Nomura Real Estate Holdings has selected the
management format of a company with Audit &Supervisory Committee in order to strengthen
audit and oversight functions by providing Director & Audit & Supervisory Committee Member
with voting rights during Board of Directors
meetings. We have also reinforced the oversightfunction of the Board of Directors by appointing
multiple external directors and establishing theAdvisory Committee Relating to Nominations
and Compensation, which has enabled us to realize a fair and highly transparent management
system. Additionally, we have established a risk
management system, compliance system, andinternal control system, with each reporting to
the Board of Directors on a regular basis, which
ensures the effectiveness of the supervision by the
Board of Directors concerning the execution of
directors’ duties and business operations by executive officers.

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Roles of the Board of Directors
The Board of Directors bears the responsibility torealize effective corporate governance for all
shareholders and, through this, to continuallygrow the Company and maximize long-term corporate value. To fulfill this responsibility, theBoard of Directors ensures the fairness and transparency of management by supervising management and makes the best possible decisions for
the Company through the determination of important business execution matters. The Board of
Directors is made up of a diverse collection of
directors who possess various knowledge, experience, and skills in order to achieve the neces-sary balance and diversity as a holding company
that manages a number of subsidiaries engaged
in various business segments. Specifically, theBoard of Directors comprises eight directors (excluding Director & Audit & Supervisory Committee Members), of which two are external directors, and five Directors & Audit & Supervisory
Committee Members, of which three are external directors. The Board of Directors decides important corporate matters, such as basic management policies, and supervises the executionof duties by directors and business operations byexecutive officers.

Roles of Independent External Directors
The primary role of independent external directors is to use their own knowledge to provide
appropriate advice from the perspective of thesustainable growth of the Company and enhancing corporate value, to fulfill a supervisory roleover management through important decision
making by the Board of Directors, to monitor for
conflicts of interest between the Company andexecutive management or primary shareholders,

and to state the views of shareholders and otherstakeholders appropriately to the Board of Directors using a stance independent from the executive management team. Nomura Real Estate
Holdings has established its own set of criteria
for determining the impartiality of independent
external directors, in addition to the requirements of independent officers established by the
Tokyo Stock Exchange.

Criteria for Determining Impartiality of Independent External Directors(Article 14 of the Basic Corporate Governance Policy)
Article 14 In addition to Independent Director impartiality criteria set by the Tokyo Stock
Exchange, the Board of Directors establishes criteria concerning the impartiality of
Independent External Directors and nominates Independent External Directors having
confirmed that they do not correspond to any of the following items.

Corporate Governance System
General Meeting of Shareholders
Appointment/dismissal

Appointment
Appointment/dismissal

Board of Directors
8 directors (excluding Audit &Supervisory Committee Members)

Audit/supervisory

Audit & Supervisory Committee

Audit & Supervisory Committee Dept.

Appointment/
dismissal

Advisory Committee Relating toNominations and Compensation

Representative Director

Audit

Nomura Real Estate Holdings

5 directors (Audit & Supervisory Committee Members)

Accounting auditor(auditing firm)

Management Committee
CSR Committee
Risk Management Committee
Group Internal Audit Dept.

Various departments
Guidance and support(1) Individuals who execute business for any other company with which the Company or our
subsidiaries have a reciprocal employment relationship as each other’s External Directors;(2) Individuals who are employees of the Company’s or our subsidiaries’ major business
partners (*1) or who are employees at companies that consider the Company or our
subsidiaries to be their major business partner (*1) (or individuals involved in theexecution of business if such business partner is a corporation);(3) Consultants, accounting experts, or legal experts who receive money, or other property
gains in excess of ¥10 million in addition to Directors compensation from the Company
or subsidiaries during the most recent business year;(4) Individuals affiliated to companies, etc. that provide professional services such as law
firms, accounting firms, and consulting companies that receive large sums of money orother property gains (*2) from the Company or subsidiaries;(5) Individuals who are or were involved in the execution of business at one of theCompany’s major shareholders (individuals who are or were involved in the execution ofbusiness at such corporation if the major shareholder is a corporation), or lead managing
underwriter; or(6) Close relatives of individuals stated in (1) to (5).
*1 A Major business partner means a business partner whose transactions with the Group exceed 2% of the Company’sor such business partner’s annual consolidated sales in the most recent business year.
*2 Large sums of money or other property gains means gains that exceed 2% of that company’s annual consolidated
sales in the most recent business year.

Monitoring

Operating companies

Nomura Real Estate Holdings, Inc.

58 Integrated Report 2016

ProﬁleCorporate GovernanceValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

List of External Directors

NameAudit &
Supervisory Independent
Committee
OfficerMember

Supplemental Explanation ofCompliance Item

Reason for Appointing This External Director

Attendance Record

Mr. Matsushima is a professor at the Tokyo University of
Science Graduate School of
Innovation Studies.

Mr. Matsushima has a wealth of knowledge andwide ranging experience through his many years
as an expert in business administration. He wasappointed as an External Director because his experience will be instrumental toward strengthening oversight functions covering the Board of Directors and achieving fair and highly transparent
management.

Attended 14 of the 15 Board of Directors’ meetings held during the fiscal year ended March2016.

Ms. Shinohara is a professor
at the Department of Housing and Architecture, Facultyof Human Sciences and Design, Japan Women’s University.

Ms. Shinohara has worked for many years as anarchitect and has gained a wealth of knowledge
and experience in her field. She was appointed as
an External Director because her experience will
be instrumental toward strengthening oversightfunctions covering the Board of Directors andachieving fair and highly transparent management.

Attended 14 of the 15 Board of Directors’ meetings held during the fiscal year ended March
2016.

SatoshiOgishiMr. Ogishi is a Partner at
Nishimura & Asahi.

Mr. Ogishi has established a wealth of expertise
and wide ranging experience as an attorney-at-law. He was appointed as an External Director and Audit & Supervisory Committee Member to reinforce the corporate governance systemand further enhance the audit system.

During the fiscal year ended March 2016, Mr.
Ogishi attended three of the four Board of Directors’ meetings and three of the three Audit & Supervisory Board meetings held until his retirement
as Audit & Supervisory Board Member on June 26,
2015. Since being appointed Director & Audit &Supervisory Committee Member on June 26,
2015, Mr. Ogishi has attended 10 of the 11 Boardof Directors’ meetings and 10 of the 10 Audit &Supervisory Committee meetings held.

Akira
YamateMr. Yamate is an Outside Director of Mitsubishi UFJ Financial Group.

Mr. Yamate has been a Certified Public Accountant for many years and he has established awealth of expertise and wide ranging experiencein his field. He was appointed as an External Director and Audit & Supervisory Committee Member to reinforce the corporate governance systemand further enhance the audit system.

During the fiscal year ended March 2016, Mr. Yamate attended four of the four Board of Directors’
meetings and three of the three Audit & Supervisory Board meetings held until his retirement as
Audit & Supervisory Board Member on June 26,
2015. Since being appointed Director & Audit &Supervisory Committee Member on June 26,
2015, Mr. Yamate has attended 11 of the 11
Board of Directors’ meetings and 10 of the 10 Audit & Supervisory Committee meetings held.

Shigeru
Matsushima—

SatokoShinohara

—

Akira
Ono

—

Mr. Ono is a Partner at Spring
Partners.

Mr. Ono possesses a wealth of expertise and wide
ranging experience as an attorney-at-law withmany years of professional experience. He wasappointed as an External Director and Audit & Supervisory Committee Member to reinforce thecorporate governance system and further enhance the audit system.

Nomura Real Estate Holdings, Inc.

Since being appointed Director & Audit & Supervisory Committee Member on June 26, 2015, Mr.
Ono has attended 11 of the 11 Board of Directors’
meetings and 10 of the 10 Audit & Supervisory
Committee meetings held.

59 Integrated Report 2016

Audit & Supervisory Committee
The majority of Audit & Supervisory Committee
Membership is comprised of independent external directors; and at least one of the members
who also serves as a director possesses appropriate knowledge of finance and accounting. The
Audit & Supervisory Committee performs audits
utilizing the Company’s internal control system
and receives periodic reports on internal audits
and the results from the Internal Audit Department. The Audit & Supervisory Committee also
has the authority to ask directors, executive officers, and business units of the Company and theGroup to report such matters when necessary.
Advisory Committee Relating toNominations and Compensation
In February 2016, Nomura Real Estate Holdings
set up the Advisory Committee Relating to Nomination and Compensation, comprising mainly independent external directors, as an advisory body to
the Board of Directors to strengthen the objectivity
and impartiality of the functions of the Board of
Directors in relation to director nominations andcompensation. The Advisory Committee Relating
to Nomination and Compensation meets as necessary to discuss matters relating to the nominationof and compensation for directors and executive
officers and reports the outcome of discussions
to the Board of Directors.
Evaluating the Effectiveness of the Board of
Directors
Directors conduct an annual self-assessment
about the effectiveness of the Board of Directors
and their contributions as a director, while theBoard of Directors carries out an analysis andevaluation of the effectiveness of the entire
Board of Directors, referencing the self-assess-ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

ments of each director, and a summary of theresults are disclosed appropriately. Annual evaluations will enable us to regularly ascertain thestatus of improvements and to further enhancethe effectiveness of the Board of Directors.

Results of Evaluations on the Effectiveness of the Board in the Fiscal
Year Ended March 2016
• Composition: The size of the Board of
Directors and the percentage of independent external directors is appropriate.
• Status of discussions: Each director utilizes his/her knowledge and experienceto freely and actively take part in discussions that transcend boundaries insideand outside the Company.
• Administration: The administration of
the Board of Directors is appropriate, but
one issue that has been pointed out isthat documents and explanations should
provide greater details in order to enhance the effectiveness of the Board of
Directors. In response, since March 2016,
we have pushed forward the timing of
document distribution in order to foster
understanding in agenda items in advance. Also documents are now prepared with a more narrowed focus andimprovements have been made to theprocess of explaining agenda items before the Board of Directors.
• Agenda and deliberations: The agenda and deliberations of the Board of Directors are appropriate, and an appropriate level of monitoring is implemented
with regard to the execution of duties. It
was pointed out that discussions on the
direction and policies of management
over the mid- to long-term must be enhanced. In this regard, since April 2016,
we have made improvements whereby
agenda items for the Board of Directors
are narrowed down to allow sufficient
time for deliberation.

Executive Officer Compensation
A resolution was passed at the ordinary general
meeting of shareholders held on June 26, 2015 setting the annual compensation of directors (excluding those who serve on the Audit & Supervisory
Committee) at no more than ¥650 million and thatof directors who serve on the Audit & Supervisor
Committee at no more than ¥150 million.
Nomura Real Estate Holdings’ compensation of directors consists of fixed monthly compensation and variable compensation, comprising bonuses and stock-related compensation.
Bonuses are determined according to the Com-pany’s business performance during the relevant
fiscal year. Stock-related compensation, in theform of stock options, is designed to align executives’ interests with those of the Company’s
shareholders, and to further enhance corporate
value. Stock options are either market-value
stock options, on which the exercise price (theamount payable when the right is exercised) is
determined on the basis of market prices, orshare compensation stock options, which haveexercise prices of ¥1 per share.
In order to make our policy on determining director compensation more specific andTotal Compensation of Directors and Audit & Supervisory Committee Members by Type ofRemuneration (fiscal year ended March 2016)
Total
compensation(¥ million)

Total compensation by type of remuneration (¥ million)
Basic
compensation

Stock option

Bonus

HeadcountDirectors (excluding Audit &Supervisory Committee Members)(excluding external directors)

535

242

88

204

6

Directors (Audit & Supervisory
Committee Members) (excluding
external directors)

62

40

—

22

2

Audit & Supervisory Board
Members (excluding external Audit& Supervisory Board Members)

14

14

—

—

2

External directors and Audit &Supervisory Board Members

62

62

—

—

6

Total

675

360

88

226

14

(Note 1) The above includes directors and Audit & Supervisory Board Members who retired during the fiscal year ended March 2016.
Nomura Real Estate Holdings transitioned from a company with Audit & Supervisory Board to a company with Audit & Supervisory
Committee on June 26, 2015. As a result of this change, there are two officers who belong to multiple categories. (Note 2) The compensation
amount of directors after establishing an Audit & Supervisory Committee has been set as no greater than ¥650 million per year for directors(excluding those who serve on the Audit & Supervisory Committee) and no greater than ¥150 million for Directors & Audit & Supervisory
Committee Members, per the proposal approved at the general meeting of shareholders held on June 26, 2015. (Note 3) The compensation
amount of directors prior to establishing an Audit & Supervisory Committee was set as no greater than ¥650 million per year for directors,
per the proposal approved at the general meeting of shareholders held on June 26, 2006 and no greater than ¥150 million for Audit &Supervisory Board Members, per the proposal approved at the general meeting of shareholders held on June 27, 2013.

Nomura Real Estate Holdings, Inc.

60 Integrated Report 2016

based on the Mid- to Long-term Business Plan,
we will examine solutions along with proceduresfor determining compensation that are highly
objective and transparent.

Shareholder Engagement
Nomura Real Estate Holdings conducts proactive
and constructive engagement with shareholders
based on its established systems and policy on
initiatives to promote greater engagement. The
director in charge of investor relations takes thelead in engaging shareholders, while the department in charge of investor relations supports
these efforts. The department in charge of investor relations meets with internal departments
and shares information on a daily basis to gather
information and promote engagement withshareholders. The director in charge of investor
relations reports the views and concerns ofshareholders found during engagement to the
executive management team, and regularly reports to the Board of Directors, which discusses
this information. We have established Regulations Concerning the Prevention of Insider Trading in order to ensure the fairness of information
disclosures and prevent leakages of informationthat affect our stock price. We manage insider
information appropriately according to theseregulations, while a silent period has also been
established.
Status of Investor Relations Activities
We strive to actively engage individual investors
through investor relations events sponsored by
the Tokyo Stock Exchange and others, andthrough company briefings and other means. For
analysts and institutional investors, at earnings
briefings following our announcing of semi-annual and annual results, the President sits down

ProﬁleCorporate GovernanceValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

with them to explain about the Company’s performance and management strategy. Videos ofthis explanation are streamed through our corporate website. Additionally, we strive to foster
greater understanding in the Company throughteleconferences when quarterly earnings results
are announced as well as various business briefings and property tours.
For overseas investors, we offer earnings
information in English and stream English language versions of earnings briefings via our corporate website. In addition, the President or CFO
visits with overseas investors individually in the
United States, Europe and Asia where they strive
to promote understanding of the Company
through briefings on business performance andmanagement strategy.

Main IR Activities during the Fiscal Year
Ended March 2016
IR activities for institutional
investors

Number oftimes held

Earnings briefings

2 times

Teleconferences on earnings
briefing days

4 timesCompliance with Japan’s Corporate Governance CodeOur reason for not implementing four of the 73 principles of Japan’s Corporate Governance
Code as of June 2016 is explained below. We are now working to implement these principles
as soon as practical.
Principle

Meetings with investors andanalysts (This number includes
the following meetings)

444 times

Small meetings with thepresident

2 times

Overseas IR (Europe, U.S., Asia)(including overseas conferences)

6 times

Conference organized by
securities companies(Japan)

6 times

Investor relations webpage
Japanese: http://www.nomura-re-hd.co.jp/ir/

Property tours

4 timesEnglish: http://www.nomura-re-hd.co.jp/english/ir/

SR meetings

13 times

IR activities for individual
investors
Securities company branchbriefings

4 times

IR fairs

2 times[Principle 3-1]
Enhance
Information
Disclosure[Supplementary
Principle 4-1-3]
ProperSupervision of
Successor Plans
for CEO(Planning)[Principle 4-14,
Supplementary
Principle 4-14-1,
Supplementary
Principle
4-14-2]Disclosure ofTraining Policy
for Directors

IR fair

Property tour

Nomura Real Estate Holdings, Inc.

Reason for not implementing(3) Please refer to section "Executive Officer Compensation" on p.60 regarding
the current compensation structure for directors.
In order to make our policy on determining director compensation more
specific and based on the Mid- to Long-term Business Plan, we will
examine solutions along with procedures for determining compensationthat are highly objective and transparent.

61 Integrated Report 2016

(4) When nominating and appointing director candidates and executive officers, theCompany nominates and appoints individuals who have outstanding character,insight, and capabilities, irrespective of their nationality or gender. Specifically,
the President consults with the Company’s directors and executive officers and,prepares a list of candidates by, as necessary, exchanging opinions with officers
at each Group company and interviews with potential candidates, andnominates and appoints director candidates and executive offices following
discussion at a meeting of the Board of Directors.
Since no policy or procedures have been documented, the Company will in
the future investigate the policy and procedures taken to appoint
management and nominate candidates for director.
The Company provides training for executive officers and strives to train future
management, by providing opportunities for initiatives that deepen theirknowledge and experience as managers such as experiencing numerous divisions
and attending important meetings, including Management Committee
meetings.
The Company is aware that the appropriate appointment of management in linewith the Company’s corporate philosophy and management strategies, including
external candidates, is important for realizing sustainable growth. The Company willconduct investigations so that we can formulate a successor plan for management that
includes the systematic training of officers, within the fiscal year ending March 2017.
The Board of Directors properly supervises formulated plans.
The Company provides necessary managerial level financial and legal training
when appointing executive officers. The Company also establishes, using
Company expenses, opportunities to train such officers leveraging externalorganizations after appointment, and implements initiatives to deepen
understanding relating to management. We also provide explanations pertaining
to our business activities, history, and operating environment to external
directors with the aim of deepening understanding at the time we appoint themand after their appointment if needed.
The Company is aware of the need to prepare a policy concerning the systematictraining of directors and executive officers based on our corporate philosophy
and management strategies. We will investigate formulating and disclosing sucha policy during the fiscal year ending March 2017 together with a management
successor plan.

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Messages from Audit & Supervisory Committee Members

Activities of the Audit & Supervisory Committee

Takao Orihara

Director
Full-time Audit &Supervisory Committee
Member

Nomura Real Estate Holdings transitioned from a company with Audit & Supervisory Board
to a company with Audit & Supervisory Committee after obtaining approval at the general
meeting of shareholders held in June 2015. The Audit & Supervisory Committee comprises
three part-time independent external directors and two full-time directors.
Full-time Audit & Supervisory Committee Members attend important in-housemeetings where they state their opinion, and they also receive reports regularly andwhen necessary from directors, executive officers and internal control divisions andshare their opinions as needed. Nomura Real Estate Holdings is a pure holding company, so it strives to ensure the proper administration and ascertain the situation of eachcompany and each business by having Audit & Supervisory Committee Members serve
concurrently as corporate auditors of certain key subsidiaries.
As a general rule, all Audit & Supervisory Committee Members share their views
with the President of Nomura Real Estate Holdings and receive regular reports from internal audit department and the Company’s accounting auditor.
During meetings of the Audit & Supervisory Committee, full-time Audit & Supervisory Committee Members brief the committee on the situation surrounding theGroup, including deliberations from important meetings. They also share informationand state their opinions about various issues. Audit & Supervisory Committee Members
who are also external directors take part in active discussions based on their knowledge

and experience as experts in their field, or they point out issues and share their view
from an outside perspective.
During board meetings, too, external directors, including those serving as Audit& Supervisory Committee Members, point out various issues and proactively share theiropinions as part of the active discussions that take place.
In 2015, the amended Companies Act took effect and Japan’s Corporate Governance Code was established. Yet, at the same time, there were a number of corporate
scandals, which have become a major social issue. The public is once again questioning
the approaches companies in Japan take toward governance.
In October 2015, the Group established a new Mid- to Long-term Business
Plan. The goal is to achieve growth by value creation through continuous transformation. However, there are new issues that must be addressed when it comes to the
expansion of business volume and domains as well as when undertaking more aggressive investments.
Based on this, Audit & Supervisory Committee Members and the Audit & Supervisory Committee itself are building a platform for sound corporate governance at theGroup and further enhancing corporate value. Toward that end, we will continue toactively deploy activities, including the stating of opinions.

Evaluation of the Effectiveness of the Board of Directors
We are actively working to comply with Japan’s Corporate Governance Code. One of
the most important items under this code is the evaluation of the Board of Director’s
effectiveness. In this regard, we commenced efforts in 2015, the first year the code wasin force.
Specifically, we conducted a survey of all directors, including those serving as
Audit & Supervisory Committee Members, and based on the results, we evaluated andanalyzed the overall effectiveness of the Board of Directors through deliberations held
during board meetings.
The results of this analysis and evaluation indicate that the size and compositionof the board is largely appropriate, including in terms of the ratio of independent external directors and external directors. The knowledge and experience of the various directors are also well balanced. Discussions during board meetings are open and active as
Satoshi Ogishi
well as constructive and productive.
Audit & Supervisory
Meanwhile, one task that we face is shifting the board’s role further toward
Committee Member
Independent External Director Group management and transitioning to discussions and decisions on the direction of
Nomura Real Estate Holdings, Inc.

long-term management from a perspective isolated from business execution. For example, after March 2016, we hand out documents on agenda items earlier so as to ensure
directors understand issues in advance and we will narrow down the proposals handled
by the board to ensure adequate time is spent in deliberation, including creating supporting documents and explaining matters in a more focused manner.
Going forward, analysis and evaluations will be conducted annually so that weare regularly aware of improvements being made and can work toward further enhancing the board’s effectiveness.
Independent external directors, who are free of conflicts of interest, play an important role in sharing their views and exercising their voting rights from a long-term
perspective, so that the execution side is not looking inward or is overly self-righteous
when it comes to the board’s decision making process. As an independent external director, I, too, hope to contribute to the long-term growth of Nomura Real Estate Holdings while also fulfilling the role expected of me.
*Please see p.60 for detail analysis and evaluation results.

62 Integrated Report 2016

ProﬁleCorporate Officers

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section(Front row from left) Hiroyuki Kimura, Seiichi Miyajima, Kamezo Nakai, Eiji Kutsukake, Toshiaki Seki, Yukoh Yoshida(Back row from left) Akira Yamate, Shigeki Fujitani, Satoko Shinohara, Shigeru Matsushima, Takao Orihara, Satoshi Ogishi, Akira Ono
Nomura Real Estate Holdings, Inc.

63 Integrated Report 2016

ProﬁleCorporate Officers (as of June, 2016)

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Directors
Kamezo Nakai

Eiji Kutsukake

Seiichi Miyajima

Toshiaki Seki

Chair (Representative Director)

President (Representative Director) and
Chief Executive Officer

Director (Representative Director) and
Executive Officer

Director (Representative Director) and
Executive Officer

Apr. 1984: Joined Nomura Securities Co., Ltd.
Apr. 2007: Director of Nomura Securities Co., Ltd.
Oct. 2008: Senior Managing Director of Nomura Securities
Co., Ltd.
Apr. 2009: Senior Corporate Managing Director of Nomura
Securities Co., Ltd.
Apr. 2011: Executive Vice President of Nomura Securities Co.,Ltd.
Apr. 2011: Senior Corporate Managing Director of Nomura
Holdings, Inc.
Apr. 2012: Executive Managing Director of Nomura Holdings,
Inc.
Aug. 2012: Deputy President of Nomura Securities Co., Ltd.
Apr. 2013: Director and Deputy President of Nomura Securities Co., Ltd.
Apr. 2014: Advisor of Nomura Real Estate Holdings, Inc.
Jun. 2014: Director (Representative Director) and Executive
Vice President of Nomura Real Estate Holdings,
Inc.
Jun. 2015: President (Representative Director) and Chief Executive Officer of Nomura Real Estate Holdings, Inc.
(To present)

Apr. 1981: Joined Nomura Real Estate Development Co., Ltd.
Jun. 2002: General Manager of Residential Development
Dept. (1) of Residential Development Division of
Nomura Real Estate Development Co., Ltd.
Jun. 2004: Director of Nomura Real Estate Development Co.,Ltd.
Apr. 2008: Senior Executive Officer of Nomura Real Estate Development Co., Ltd.
Apr. 2009: Managing Executive Officer of Nomura Real Estate
Development Co., Ltd.
Apr. 2012: Director (Representative Director) and Senior Managing Executive Officer of Nomura Real Estate Development Co., Ltd.
May 2012: Executive Officer of Nomura Real Estate Holdings,
Inc.
Apr. 2014: Director (Representative Director) and Executive
Vice President of Nomura Real Estate Development
Co., Ltd.
Jun. 2014: Director (Representative Director) and Executive
Officer of Nomura Real Estate Holdings, Inc. (Topresent)
Apr. 2015: President (Representative Director) and Chief Executive Officer of Nomura Real Estate Development
Co., Ltd. (To present)

In charge of Property & Facility Management Unit
and Senior Business Management Dept.

Hiroyuki Kimura

Yukoh Yoshida

Shigeru Matsushima

Satoko Shinohara

Director and Executive Officer

Director and Executive Officer

Director (External)

Director (External)

CFO and Head of Investor Relations

Management Division and Management ofAffiliated Companies

Apr. 1973: Joined Ministry of International Trade and Industry(currently, Ministry of Economy, Trade and Industry)
Jun. 1998: Deputy Director-General for Agency of Industrial
Science and Technology of Ministry of International Trade and Industry
Sep. 1999:Director-General of Chubu Bureau of International
Trade and Industry of Ministry of International
Trade and Industry
Apr. 2001: Professor, Faculty of Business Administration, Hosei University
Mar. 2007: External Director of CAC Corporation (currently,
CAC Holdings Corporation) (To present)
Apr. 2008: Professor, Tokyo University of Science Graduate
School of Management of Science & Technology(currently, Graduate School of Innovation Studies)(To present)
Jun. 2008: Audit & Supervisory Board Member of Nomura
Real Estate Holdings, Inc.
Apr. 2012: Audit & Supervisory Board Member of Nomura
Real Estate Development Co., Ltd.
Jun. 2013: Director of Nomura Real Estate Holdings, Inc.
(To present)

Apr. 1983: Joined Kohyama Atelier (currently, Hisao Kohyama
Atelier)
May 1987: Director of Spatial Design Studio
Oct. 1990: Director of Kengo Kuma and Associates
Nov. 2000: Representative Director of Spatial Design Studio(To present)
Mar. 2009: Representative Director of Kengo Kuma and Associates (To present)
Feb. 2010: Representative Partner of Satoko Shinohara Living
Design Institute LLC (To present)
Apr. 2010: Professor of Japan Women’s University (To present)
Jun. 2014: Director of Nomura Real Estate Holdings, Inc.
(To present)

Apr. 1974: Joined Nomura Securities Co., Ltd.
Jun. 1995: Director of Nomura Securities Co., Ltd.
Apr. 1999: Managing Director of Nomura Securities Co., Ltd.
Apr. 2003: Director and Executive Vice President of Nomura
Asset Management Co., Ltd.
Jun. 2003: Executive Vice President and Executive Managing
Director of Nomura Asset Management Co., Ltd.
Jun. 2003: Executive Managing Director of Nomura Holdings,
Inc.
Apr. 2008: Advisor of Nomura Asset Management Co., Ltd.
Apr. 2009: Advisor of Nomura Land and Building Co., Ltd.
Jun. 2009: President (Representative Director) of Nomura
Land and Building Co., Ltd.
Jun. 2011: President (Representative Director) of Nomura Real
Estate Holdings, Inc.
Apr. 2012: President (Representative Director) and Chief Executive Officer of Nomura Real Estate Development
Co., Ltd.
May 2012: President (Representative Director) and Chief Executive Officer of Nomura Real Estate Holdings, Inc.
Apr. 2015: Chair (Representative Director) of Nomura Real Estate Development Co., Ltd. (To present)
Jun. 2015: Chair (Representative Director) of Nomura Real Estate Holdings, Inc. (To present)

Apr. 1984: Joined Nomura Real Estate Development Co., Ltd.
Feb. 2006: General Manager of Finance & Accounting Dept.
of Nomura Real Estate Holdings, Inc.
Apr. 2009: Executive Officer of Nomura Real Estate Development Co., Ltd.
Jun. 2009: Director of Nomura Real Estate Holdings, Inc.
Apr. 2010: President (Representative Director) of Nomura Real
Estate Investment Management Co., Ltd.
May 2012: Executive Officer of Nomura Real Estate Holdings,
Inc.
Jun. 2012: Director and Executive Officer of Nomura Real Estate Holdings, Inc.
Apr. 2013: Director and Managing Executive Officer of Nomura Real Estate Development Co., Ltd.
Jun. 2013: Executive Officer of Nomura Real Estate Holdings,
Inc.
Jun. 2014: Director and Executive Officer of Nomura Real Estate Holdings, Inc. (To present)

Apr. 1986: Joined Nomura Real Estate Development Co., Ltd.
Jun. 2005: General Manager of Corporate Planning Dept. of
Nomura Real Estate Development Co., Ltd.
Jun. 2005: General Manager of Corporate Planning Dept. of
Nomura Real Estate Holdings, Inc.
Apr. 2009: Director and Executive Officer of Nomura Real Estate Development Co., Ltd.
Jun. 2009: Director of Nomura Real Estate Holdings, Inc.
Apr. 2012: Director and Managing Executive Officer of Nomura Real Estate Development Co., Ltd.
May 2012: Director and Executive Officer of Nomura Real Estate Holdings, Inc. (To present)
Apr. 2015: Director and Senior Managing Executive Officer of
Nomura Real Estate Development Co., Ltd.
(To present)

Nomura Real Estate Holdings, Inc.

64 Integrated Report 2016

Apr. 1980: Joined Nomura Real Estate Development Co., Ltd.
Apr. 2001: General Manager of Human Resource Dept. of
Nomura Real Estate Development Co., Ltd.
Jun. 2003: Director of Nomura Real Estate Development Co.,
Ltd.
Mar. 2007: Managing Director of Nomura Real Estate Development Co., Ltd.
Apr. 2007: President (Representative Director) of Nomura Living Support Co., Ltd.
Apr. 2008: President (Representative Director) and Chief Executive Officer of Nomura Living Support Co., Ltd.
Dec. 2010:President (Representative Director) of Nomura Real
Estate Reform Co., Ltd.
May 2012: Director of Nomura Real Estate Holdings, Inc.
Apr. 2014: President (Representative Director) and Chief Executive Officer of Nomura Real Estate Partners Co.,
Ltd.
Jun. 2014: Director (Representative Director) and Executive
Officer of Nomura Real Estate Holdings, Inc. (Topresent)
Apr. 2015: Chair (Representative Director) of Nomura Real Estate Partners Co., Ltd. (To present)
Apr. 2015: President (Representative Director) of Nomura Real
Estate Wellness Co., Ltd. (To present)

ProﬁleCorporate Officers

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Executive Officers
Takao Orihara

Shigeki Fujitani

Satoshi Ogishi

Director (Audit & Supervisory Committee
Member)Director (Audit & Supervisory Committee
Member)Director (Audit & Supervisory Committee
Member) (External)

Apr. 1980: Joined Nomura Real Estate Development Co., Ltd.
Oct. 2004: General Manager of Corporate Planning Dept. of
Nomura Real Estate Holdings, Inc.
Jun. 2005: Director of Nomura Real Estate Holdings, Inc.
Jun. 2005: Director of Nomura Real Estate Development Co.,Ltd.
Apr. 2008: Director and Senior Executive Officer of Nomura
Real Estate Development Co., Ltd.
Apr. 2009: Director and Managing Executive Officer of Nomura Real Estate Development Co., Ltd.
May 2012: Director and Executive Officer of Nomura Real Estate Holdings, Inc.
Apr. 2014: Audit & Supervisory Board Member of Nomura
Real Estate Development Co., Ltd. (To present)
Apr. 2014: Advisor of Nomura Real Estate Holdings, Inc.
Jun. 2014: Audit & Supervisory Board Member of Nomura
Real Estate Holdings, Inc.
Jun. 2015: Director (Audit & Supervisory Committee Member)of Nomura Real Estate Holdings, Inc. (To present)

Apr. 1981: Joined Nomura Securities Co., Ltd.
Apr. 2008: Executive Managing Director of Nomura AssetManagement Co., Ltd.
Oct. 2008: Executive Officer of Nomura Holdings, Inc.
Apr. 2013: Audit & Supervisory Board Member of Nomura
Real Estate Development Co., Ltd. (To present)
Jun. 2013: Audit & Supervisory Board Member of Nomura
Real Estate Holdings, Inc.
Jun. 2015: Director (Audit & Supervisory Committee Member)of Nomura Real Estate Holdings, Inc. (To present)

Dec. 1981:Registered with Dai-ichi Tokyo Bar Association
Dec. 1981:Joined Nishimura & Sanada (currently, Nishimura &Asahi)
Jan. 1987: Partner of Nishimura & Sanada (To present)
Apr. 2005: Professor of Tokai University Law School
Apr. 2005: Executive Director of Nozomi Servicing Co., Ltd. (Topresent)
Aug. 2011: External Director of Oracle Corporation Japan (Topresent)
Jun. 2012: Audit & Supervisory Board Member of Nomura
Real Estate Development Co., Ltd.
Jun. 2012: Audit & Supervisory Board Member of Nomura
Real Estate Holdings, Inc.
Jun. 2015: Director (Audit & Supervisory Committee Member)of Nomura Real Estate Holdings, Inc. (To present)

Takashi Kaku
Executive Officer in charge of Quality Management
and Architectural Design

Norio Ambe
Executive Officer in charge of Investment
Management Unit

Juntaro Kimura
Executive Officer in charge of Property Brokerage& CRE Unit

Shigeyuki Yamamoto
Executive Officer in charge of Residential
Development Unit

Minoru Hatada
Executive Officer in charge of Leasing Unit

Akihiro Fukuda
Executive Officer in charge of Development
Planning

Akira Yamate

Akira Ono

Director (Audit & Supervisory Committee
Member) (External)

Director (Audit & Supervisory Committee
Member) (External)

Nov. 1977: Joined Price Waterhouse & Co.
Jul. 1991: Representative Partner of Aoyama Audit Corporation
Jul. 1991: Partner of Price Waterhouse & Co.
Apr. 2000: Representative Partner of Chuo Aoyama Audit
Corporation
Apr. 2000: Partner of PricewaterhouseCoopers
Sep. 2006:Representative Partner of PricewaterhouseCoopers Aarata
Jun. 2013: Audit & Supervisory Board Member of Nomura
Real Estate Development Co., Ltd.
Jun. 2013: Audit & Supervisory Board Member of Nomura
Real Estate Holdings, Inc.
Jun. 2015: Outside Director of Mitsubishi UFJ Financial Group,
Inc. (To present)
Jun. 2015: External Audit & Supervisory Board Member ofPrudential Holdings of Japan, Inc. (To present)
Jun. 2015: Director (Audit & Supervisory Committee Member)of Nomura Real Estate Holdings, Inc. (To present)

Apr. 1998: Registered with Tokyo Bar Association
Apr. 1998: Joined Tokyo Aoyama Law Office (currently, Baker& McKenzie [Gaikokuho Joint Enterprise])Mar. 1999: Joined Okinobu, Ishihara & Sei Law Office (currently, Spring Partners)
Jan. 2006: Partner of Spring Partners (To present)
Jun. 2012: Audit & Supervisory Board Member of MEGALOS
CO., LTD. (currently, Nomura Real Estate Life &Sports Co., Ltd.)
Jun. 2015: Director (Audit & Supervisory Committee Member)of Nomura Real Estate Holdings, Inc. (To present)

Makoto Haga
Executive Officer in charge of Corporate Planning
Dept., Corporate Communications Dept.

Haruhiko Nakamura
Executive Officer in charge of Group Human
Resource Dept.

Haruki Nakamura
Executive Officer in charge of Finance &Accounting Dept. and Finance Dept.

Yukio Ichihara
Executive Officer in charge of Secretariat, Group IT
Planning & Implementation Dept., and Group
Corporate Administration Dept., Internal Audit
and Compliance

Nomura Real Estate Holdings, Inc.

65 Integrated Report 2016

ProﬁleWorkforce Management

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Basic Approach
Back in 2015, the Nomura Real Estate Group released its new Mid- to Long-term Business Planrunning to March 2025. To achieve this plan, we
will need to realize sustainable growth by raising
the bar for all of our human resources. We mustalso provide highly innovative products and services that meet the diverse needs of customers.
In order to continually create valuable
products and services with fresh, new concepts,
it will be essential for each and every Group employee to take the initiative in leveraging theirdiverse values and perspectives.
It is based on this recognition that the
Nomura Real Estate Group considers its people
to be a major driving force behind its growth andis focused on developing its human resourcesand on promoting diversity-oriented managementthat fosters a corporate culture of acceptanceand sharing of myriad viewpoints and values, regardless of gender, age, job title, or disability.

Diversity
As part of its diversity initiatives, in 2013 Nomura
Real Estate Development established the Diversity
Promotion Committee, chaired by the President
Nakai (currently Chair), comprising members ofvarious departments and positions as well as
both genders, and representing all business
units. The committee carries out wide ranging
reviews with the goal of maximizing the skills of
our workforce, regardless of differences in gender,

2013

2014

2015

2016

Start of activities/
sharing ofchallenges

Raise awarenessthrough specificmeasures

Achieve results andestablish foundation
for new promotion
system•	Clarify diversity
promotion system•	Specific solutions
for the company’s
challenges•	Establish footholdfor new mindset atworkplaces

Imbue efforts
into the front
lines as the year
promotion isput into practice•	Make solutions
known to all to:•	Identify challenges
for establishing afoothold•	Initiate specificactivities•	Change workplace/
employee mindsets•	Make activities
known to all•	Permeate the needfor diversity•	Examine voluntary
promotion systemty, Nomura Real Estate Development focuses on
employee engagement through the establishment of a dedicated person in charge, exclusive
website, blog, email magazine and employee
meetings, among other efforts.
Nomura Real Estate Urban Net is also
working on raising awareness about diversity
through the same activities.

Main Personnel System Changes up to the Fiscal Year Ended March 2016
Nomura Real Estate Development has made the following changes to its personnel system basedon recommendations issued by the Diversity Promotion Committee.
• Contract workers- Contract workers can now conclude indefinite employment contracts- The system used for promotions based on skill improvement was made clearer

The Diversity Promotion Committee’s Implementation Plan

•	Organize thecompany’s
challenges

age, job title, career or values. Under a three-year
plan, the committee is now working on recommending and executing specific measures andensuring these measures gain a foothold at thecompany. Beginning with the fourth year, wehave been implementing activities using separate
promotion systems for each business division.
To foster greater understanding of diversi-•	Work on addressing
challenges facing
each businessdivision•	Promotion activities
that involve
employees• Nursing care
- Introduced a reduced working hours program- Extended the duration of nursing care leave- Introduced a program where employees can take nursing care leave in separate installments• Re-employment- Made changes to treatment at the time an employee selects re-employment- Introduced a career seminar and job matching interviews for employees in their 50s

Selection of Ongoing Challenges• Foster greater understanding of diversity• Inform all employees about changes in the nursing care system (nursing care seminars, etc.)• Headquarters management with proactive use of diversity• Improve operational efficiency• Enhance diversity management practices of managers• Make improvements to the way meetings are held

Nomura Real Estate Holdings, Inc.

66 Integrated Report 2016

ProﬁleWorkforce Management

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Initiatives for Permeating Knowledge
Throughout the Company
In order to have understanding of diversity permeate the company, Nomura Real Estate Development has established an official intranet website and we are filing it out with contents
promoting awareness of life-work management,balancing both work and personal life, messages
from management on a Management Blog, etc.
Also, we are strengthening initiatives to permeate knowledge of diversity throughout the company by such methods as serially publishing athree-way discussion on diversity between Professor Mami Taniguchi of the Graduate School ofCommerce at Waseda University, and the Chair

and the President in our regularly published inhouse magazine.

Holding of Workplace Meetings
In order to permeate knowledge of diversity, lastyear at Nomura Real Estate Development, we
had a series of 49 workplace meetings and 1,040
employees out of a total of 1,400 (74.3%) participated. In the meetings, in addition to reportingon initiatives we’ve had up to now, we also covered topics promoting diversity such as the status
of use of the system, effective working methods,
the practice of diversity management, etc.

Carrying out Training by Rank
At Nomura Real Estate Development, we calledin outside instructors and had training for thethree separate levels of directors, general managers and senior managers. Professor Mami Taniguchi of the Graduate School of Commerce at
Waseda University was the instructor for the
training for directors, who participated in discussion. For the training for general and senior managers, over 90% of the participants said that thetraining should be continued.

Diversity Challenge! From our public website

A workplace meeting

Director training

Diversity discussion in the in-house magazine

A workplace meeting

General manager training

Nomura Real Estate Holdings, Inc.

67 Integrated Report 2016

Selected by the Ministry of
Economy, Trade and Industry for
the Diversity Management
Selection 100
In order to speed up promotion of diversity management, the Ministry of
Economy, Trade and Industry started theDiversity Management Selection 100 in
2012. From 2016, companies were selected and awarded for the new Diversity Management Selection 100 which
was established as a new phase emphasizing the themes of expanding thescope of women's work and raising thelevel of their roles, reforming work styles
to rectify long hours of labor, etc.
Nomura Real Estate Development
was the first real estate company in thelarge company category (301 employees
or more) to receive this award.

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Supporting Childcare

Supporting Nursing CareAt the Nomura Real Estate Group, we consider
childcare as an opportunity to learn a variety ofviewpoints and values so, by having parental
leave, reduced working hours for childcare, andan assistance program for holiday daycare, weoffer an environment in which employees, bothmale and female, do not have to give up on work
because they have a baby or because of childcare
obligations.
In the fiscal year ended March 2016, 139
employees benefitted from the parental leave
program and the rate of return is 91.3%. This
sort of initiative is highly regarded and both
Nomura Real Estate Development and Nomura
Real Estate Urban Net have received Kurumin
certification from the Ministry of Health, Labourand Welfare as companies that support childcare.

With our approaching aging society, restrictions
will arise on how employees work due to nursing
care of relatives and, taking into considerationthat concern is rising about leaving work because of nursing care, last year Nomura Real Estate Development held seminars on balancing
both work and nursing care, aiming for recognition of support initiatives such as providing basic
knowledge, preparations for nursing care, andexplanations of in-house programs.
Also, we are considering revising the nursing care leave and reduced working hours fornursing care programs and, going forward, expanding the work from home program.
Number of Employees Taking Nursing
Care Leave’13/03’14/03’15/03’16/0342

1

1overwork self-assessment checklist to provide
feedback to their general manager. When necessary, measures are implemented to ensure thehealth of the individual employee.

Reinforcing Health Management
The Nomura Real Estate Group Code of Action
states that the Group will “strive to maintain andenhance sound and pleasant workplace conditions.” Accordingly, we endeavor to prevent
work-related accidents, facilitate appropriate management of physical and mental health, and ensure
pleasant, employee-friendly workplaces. Group
companies offer health checkups and examinations, and have set up mental and physical healthhotlines and health consultation desks as part ofproactive efforts to address mental health issues.

Skills Development Assistance
Nomura Real Estate Development and otherGroup companies recognize the importance ofdeveloping a workforce that is capable to acting
based on a broad outlook using advanced professional expertise and faculties in order to address the changing structure of society caused by
globalization and demographics as well as adapt
to a more complex and sophisticated real estatebusiness. For this reason, we have prepared the
Basic Plan for Human Resources Development.

Nomura Real Estate Development Basic Human Development Policies• Proactive medium-to-long-term human development that provides a focus on careers• Human development that responds to change over time, fosters innovation, and supports
future management

Employee Health
Number of Employees Taking Parental Leave(Employees)

160
139
120
99
80

72

109

83

40

0
’12/03’13/03’14/03’15/03’16/03The Qualities and Skills Nomura Real Estate Development Looks forPreventing Overwork
The Nomura Real Estate Group has a variety of
initiatives in place to prevent or limit overwork by
employees.
Specifically, Nomura Real Estate Development has introduced birthday leave and “refresh” leave as a means to encouraging employees to take paid leave. In addition, to shorten
hours worked, the company has designated “noovertime” days and placed restrictions on computer usage times.
Employees whose work hours exceed apreset limit in a given month must complete an
Nomura Real Estate Holdings, Inc.

• Professionalism: The ability to perform duties professionally in any field• Determination: The willingness and ability to work proactively based on personal conviction
and to continue working until results are achieved• Judgment: Strategic thinking and decision making that exhibit an awareness of conditions in
the workplace and that lead to specific plans that produce results• Emotional intelligence: The understanding of personality characteristics and feelings, andcommunication ability that maximizes potential within an organization• Adaptability: A flexible outlook with the ability to think outside the box, and the energy tocreate new value• Versatility: A range of skills such as analytical management and the ability to discern changes
in society

68 Integrated Report 2016

ProﬁleTen-Year Summary

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Consolidated Financial Highlights
Operating revenue’07/03’08/03’09/03’10/03’11/03’12/03¥ 367,236¥ 411,493¥  448,655¥  434,226¥  480,983¥  450,807

Operating gross profit  108,668  130,391    100,763   105,576   107,222   114,910

Operating income   54,374   69,821    34,012    39,274    42,083    49,939

Ordinary income   47,446   60,291    23,702    23,967    26,149    34,173

Profit attributable to owners of parent   26,297   35,254    13,770     4,660     5,471    17,591

Cash flows from operating activities  (89,849)    7,639   (108,030)    19,266    33,947    43,876

Cash flows from investing activities  (26,787)  (13,347)   (141,788)    (24,571)    (33,730)

     7,809

Cash flows from financing activities

100,862    8,790   295,507    13,098     (7,485)    (63,296)

Capital investment*1  26,917  18,174    56,662    26,796    37,570    14,098   4,545   4,892     7,148    10,758    12,835    13,534

Profit attributable to owners of parent¥ 200.47¥ 236.09¥     92.21¥    25.69¥    28.74¥    92.38

Cash dividends   20.00   30.00     40.00

     25.00

     25.00

     25.00¥ 836,303¥ 891,700¥ 1,385,531¥1,405,424¥ 1,474,331¥1,402,624

580,515

630,916   740,266   709,618   636,925   585,332

Inventories

427,774  454,621   481,489   458,921   433,386   396,857

Equity investment  77,945  92,873   109,076    94,889    60,948    41,895

Depreciation and amortization*

2

Per Share Data (Yen):

Balance Sheet Data (as of March 31):
Total assets
Current assets

255,787

260,783   645,265   695,805   837,406   817,292

Total net assets

214,465  235,551   281,375   349,437   357,365   376,486

Interest-bearing debt

394,885

408,016   778,073   759,636   816,910   758,562      6.6      7.9       2.5       2.8       2.9       3.7Non-current assets

Ratios (%):
ROA*3
ROE*

     19.2

     15.8       5.9       1.7       1.8       5.7Operating margin      14.8      17.0        7.6       9.0       8.7      11.1

Dividend payout ratio (consolidated)     10.0     12.7      43.4      97.3

      87.0      27.1

Shareholders’ equity ratio     25.5     26.1

      17.0      21.4      20.7      22.6

Number of employees (people)    3,835    4,347     4,998     5,195     5,300     5,399

4*1 Capital investment represents the amount shown for “Purchase of property, plant and equipment and intangible assets” on the consolidated statements of cash flows. *2 Depreciation and amortization represents the amount shown for “Depreciation andamortization” on the consolidated statements of cash flows. *3 ROA = (Operating income + Non-operating income) / Total assets at end of fiscal year *4 ROE = Profit attributable to owners of parent / Equity (as average over the fiscal year)

Nomura Real Estate Holdings, Inc.

69 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section(Millions of yen)(Thousands of U.S. dollars)*5(Millions of yen)

’13/03’14/03’15/30’16/03’16/03’17/03 (Forecast)

Operating revenue¥  517,740¥  532,016¥  567,159¥ 569,545$ 5,054,536¥589,000

Operating gross profit   134,571   159,335   162,051   177,973  1,579,463

     —

Operating income    58,308    74,307    71,894    80,912    718,072  76,000

Ordinary income    45,806    64,058    63,681    72,679    645,010  67,000

Profit attributable to owners of parent    19,357    26,844    38,441    47,182    418,726  43,000

Cash flows from operating activities    89,295    83,535    23,837    13,258    117,663

     —Cash flows from investing activities     (2,588)     (20,191)    (32,476)    (59,714)    (529,951)

     —Cash flows from financing activities    (94,666)    (57,858)     (8,983)    53,637    476,020     —

Capital investment*1    18,963    21,938    38,871    50,367    446,996     —    13,513    14,333    15,258    16,026    142,233     —

Profit attributable to owners of parent¥    101.61¥   140.70¥   201.28¥   246.42$      2.19

¥ 224.33

Cash dividends     30.00     35.00     45.00

     57.50

       0.51   60.00

Depreciation and amortization*

2

Per Share Data (Yen):

Balance Sheet Data (as of March 31):
¥1,369,949¥1,313,887¥1,369,226¥1,485,449$13,182,907     —

Current assets   535,103   496,978   549,300   608,779  5,402,727     —

Inventories   369,667   349,167   429,764   496,910  4,409,924     —

Equity investment    29,578     7,128     6,316      819      7,269     —

Total assets   834,845   816,909   819,926   876,670  7,780,179     —

Total net assets   398,276   418,697   461,031   456,408  4,050,482     —

Interest-bearing debt   669,268   617,583   616,700   721,900  6,406,638     —

       4.6       5.8       5.4       5.6     —

Non-current assets

Ratios (%):
ROA*3
ROE*

       5.9       7.8      10.3      11.2

     —

Operating margin      11.3

      14.0      12.7      14.2    12.9

Dividend payout ratio (consolidated)      29.5      24.9      22.4      23.3    26.7

Shareholders’ equity ratio      24.5      27.1      28.8      29.9     —

Number of employees (people)     5,581     5,747     6,029     6,233     —

4*5 The translation of Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of the reader, using the rate of exchange prevailing on the Tokyo Foreign Exchange Market on March 31, 2016, which was ¥112.68 = U.S.$1.

Nomura Real Estate Holdings, Inc.

70 Integrated Report 2016

ProﬁleUnit Information

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Operating Revenue
Residential Development
Housing sales
Other
Leasing*5
Leasing (offices)
Leasing (retail facilities)
Leasing (other)
Property development
Property development (sale)
Property development (leasing)
Other
Investment Management
Property Brokerage & CRE
Property brokerage
Other
Property & Facility Management*1,4
Property & facility management
Construction ordered
Fitness club & elderly care
Other
Adjustments (eliminations or corporate)
Total(Millions of yen)

’13/03¥308,467
281,876   26,591
106,665   47,834    8,883    5,429   27,336      —
      —    17,181   11,133   26,093   19,217    6,876   66,376   48,149   18,226      —   14,962   (15,958)
517,740’14/03*2’15/03*2’15/03*3’16/03*3’16/03*6¥307,625
295,923  11,702  99,866   48,131  10,544    5,151  25,608      —
      —  10,429  18,326  29,168  24,520   4,647  72,150  48,743  23,406      —  18,640    (13,761)
532,016¥359,397
332,999  26,397  92,878  46,563  10,323   5,552  16,026      —
      —  14,413   9,166  30,232  25,833   4,399  71,635  49,794   21,841      —  17,753   (13,905)
567,159¥359,397
332,999  26,397  92,878  46,563  10,323   5,552      —  12,318   3,167  14,953   9,166  30,232  25,833   4,399  85,837  49,511  21,583  14,742   3,008   (13,362)
567,159¥334,514
318,795  15,719
110,625  49,594  10,873   5,882       —
  33,260   3,320   7,694  10,973  35,373  28,028   7,345  90,294  50,662  24,636  14,995   1,353   (13,590)
569,545¥334,514      —
      —
110,226      —
      —
      —
      —
      —
      —
      —  10,973  35,373      —
      —  91,552      —
      —
      —   1,353   (14,449)
569,545’17/03 (Forecast)*6¥339,000     —
     —
121,000     —
     —
     —
     —
     —
     —
     —   8,000  35,000     —
     —  96,000     —
     —
     —
       0   (10,000)
589,000¥ 32,790  23,335   (2,724)   6,176   4,455     447   (6,172)  58,308¥ 31,177  26,818   7,902    8,101   5,107     508    (5,307)  74,307¥  33,811  24,447   4,813   8,477   5,477     167    (5,300)  71,894¥ 33,811  24,447   4,813   8,477   5,758      (113)    (5,300)  71,894¥ 31,909  32,099   7,376   9,900   5,314      (152)    (5,536)  80,912¥ 31,909  31,719   7,376   9,900   5,693      (152)    (5,535)  80,912¥ 30,500  30,500   4,500   8,500   6,000       0  (4,000)  76,000

Operating Income
Residential Development
Leasing
Investment Management
Property Brokerage & CRE
Property & Facility Management
Other
Adjustments (eliminations or corporate)
Total*1 The breakdown of operating revenue for the Property & Facility Management Unit has been changed from "Building management" and "Housing management" to "Property & facility management" and "Construction ordered" since the first quarter of the fiscal year
ended March 2015. According to this change, the figures for the fiscal year ended March 2013 and after are classified under the new classification. *2 From the second quarter of the fiscal year ended March 2015, a partially revised method of allocating company-wide costs
among adjustments to each unit was incorporated. In addition, the house leasing business was transferred from the Residential Development Unit to the Leasing Unit. In line with this change, the full-year results of the fiscal year ended March 2014 and the fiscal year ended
March 2015 are reflected in the published figures. *3 From the first quarter of the fiscal year ended March 2016, the classification of MEGALOS CO., LTD. (Present: Nomura Real Estate Life & Sports Co., Ltd.) has been changed to the Property & Facility Management Unit
from the Other Unit. In line with this change, results of the fiscal year ended March 2015 and the fiscal year ended March 2016 are classified under the new classification. *4 From the first quarter of the fiscal year ended March 2016, the breakdown of operating revenue has
been changed due to the fact that MEGALOS CO., LTD. (Present: Nomura Real Estate Life & Sports Co., Ltd.) which used to be classified in the Other Unit, and Nomura Real Estate Wellness Co., Ltd. which was newly established in the first quarter of the fiscal year ended
March 2016 are classified in the Property & Facility Management Unit. In line with this change, the figures for the full-year results of the fiscal year ended March 2015 are classified under the new classification. *5 The breakdown of operating revenue for the Leasing Unit has
been changed since the second quarter of the fiscal year ended March 2016. In line with this change, the figures for the fiscal year ended March 2015 and the fiscal year ended March 2016 are classified under the new classification. *6 From the fiscal year ending March
2017, the classification of Yokohama Business Park Heating & Cooling Supply Co., Ltd (Present: Nomura Real Estate Heating and cooling Supply Co., Ltd.) has been changed from the Leasing Unit to the Property & Facility Management Unit. Due to this change, the full-year
results for the fiscal year ended March 2016 and forecast results for the full-year of the fiscal year ending March 2017 are classified under the new classification.
Nomura Real Estate Holdings, Inc.

71 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

AssetsResidential Development(Millions of yen)

’13/03’14/03*’15/03*’15/03*’16/03*’16/03*¥337,120¥331,779¥382,585¥382,585¥414,812¥414,812

1

1

2

2

Unit Operating Results

3’13/03’14/03’15/03’16/03’17/03 (Forecast)

Residential Development

Leasing  790,735  776,097  849,885  849,885  922,748  918,710

Condominiums sales (unit)    5,111    5,491   6,162   5,363

5,100

Investment Management   91,853   67,346   40,555   40,555   36,692   36,692

Detached housing sales (unit)     638     718     859     643    650

Property Brokerage & CRE   26,903   21,142   22,606   22,606   32,047   32,047      22.5     21.7      21.1

      21.9    —

Property & Facility Management   30,468   32,891   32,375   49,696   51,403   55,695

Gross margin ratio of
housing sales (%)

Other   37,168   34,133   19,833     2,485    1,565    1,565

Completed housing
inventories (unit)       42       31       89     349    —

      2.2      2.9      4.5     2.2    —

1,127,495

1,132,246

1,123,188

1,074,481    —

Adjustments (eliminations or corporate)   55,699   50,496   21,383    21,411   26,180   25,926

Total

1,369,949

1,313,887

1,369,226

1,369,226

1,485,449

1,485,449

Leasing
Vacancy rate (%)
Investment Management

Inventories
Residential Development(Millions of yen)

¥296,715¥281,698¥338,530¥338,530¥377,849¥377,849

Outstanding assets undermanagement(millions of yen)

Leasing  61,274  62,918  88,446

88,446  118,277

118,277

Property Brokerage & CRE

Investment Management   4,572      —

     —

     —

      —

       —

Property Brokerage & CRE    1,291   1,162   1,184   1,184      —

       —

Brokerage: Number oftransactions    6,494    7,437    7,174   7,710    —

Brokerage: Total transaction
value (millions of yen)  540,698  672,774  710,980

713,574    —

Buildings under management      723      703      729     705    —

Condominiums undermanagement (unit)  137,745  147,516  155,706

163,036    —

Members of MEGALOS  132,196  141,564  140,395

144,263    —Property & Facility Management      47       92      49     168      271      271

Other   5,906   3,380   1,638   1,519     638      638

Adjustments (eliminations or corporate)     (140)      (84)      (84)      (84)      (126)     (126)369,667

349,167

429,764

429,764  496,910   496,910

Total

Return on Assets (ROA)
Residential Development

(%)

9.7

9.4

8.8

8.8

7.7

7.7

Leasing

3.0

3.5

2.9

2.9

3.5

3.5

Investment Management

  —

11.7

11.9

11.9

20.1

20.1

Property Brokerage & CRE

23.0

38.3

37.5

37.5

30.9

30.9

Property & Facility Management

14.6

15.5

16.9

11.6

10.3

10.2

Other

1.2

1.5

0.8

  —

  —

  —

Total

4.6

5.8

5.4

5.4

5.6

5.6

Property & Facility
Management

ROA of each Unit = Unit operating income / Unit assets at end of fiscal year Total ROA = (Operating income + Non-operating income) / Total assets at end of fiscal year
*1 From the second quarter of the fiscal year ended March 2015, a partially revised method of allocating company-wide costs among adjustments to each Unit was incorporated. In addition, the house leasing business was transferred from the Residential
Development Unit to the Leasing Unit. The full-year results for the fiscal year ended March 2014 and the fiscal year ended March 2015 are reflected in the published figures. *2 From the first quarter of the fiscal year ended March 2016, the classification of
MEGALOS CO., LTD. (Present: Nomura Real Estate Life & Sports Co., Ltd.) has been changed to the Property & Facility Management Unit from the Other Unit. In line with this change, results for the fiscal year ended March 2015 and the fiscal year ended March
2016 are classified under the new classification. *3 From the fiscal year ending March 2017, the classification of Yokohama Business Park Heating & Cooling Supply Co., Ltd (Present: Nomura Real Estate Heating and cooling Supply Co., Ltd.) has been changed
from the Leasing Unit to the Property & Facility Management Unit. Due to this change, the full-year results for the fiscal year ended March 2016 are classified under the new classification.

Nomura Real Estate Holdings, Inc.

72 Integrated Report 2016

ProﬁleConsolidated Financial Statements

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Consolidated Balance Sheets(Millions of yen)

’15/03’16/03

Cash and deposits¥  47,420¥  57,593

Notes and accounts receivable-trade   15,029   15,371

Short-term investment securities    3,000      —

Real estate for sale   61,583   78,132

Real estate for sale in process  237,500  269,546

Land held for development  130,221  148,729

Equity investments    6,316     819

Deferred tax assets    5,688    5,285

AssetsCurrent Assets

Other   42,586   33,338

Allowance for doubtful accounts         (47)       (38)

Total current assets  549,300  608,779

Property, plant and equipment  730,076  779,091

Buildings and structures  364,363  374,378

Accumulated depreciation    (127,576)   (139,309)

Buildings and structures, net

Noncurrent Assets  236,787  235,068

Land  486,436  523,696

Other   13,821   28,164

Accumulated depreciation       (6,968)    (7,838)

Other, net    6,852   20,325

Intangible assets   10,277   10,681

Investments and other assets   79,572   86,897

Investment securities   40,853   45,511

Lease and guarantee deposits   20,487   21,379

Deferred tax assets   14,979   14,840

Other    3,252    5,167

Allowance for doubtful accounts      —

        (0)  819,926  876,670

1,369,226

1,485,449

Total noncurrent assets
Total Assets

Nomura Real Estate Holdings, Inc.

(Millions of yen)

Liabilities
Current Liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of bonds
Income taxes payable
Deposits received
Deferred tax liabilities
Provision for bonuses
Provision for directors´ bonuses
Provision for loss on business liquidation
Other
Total current liabilities
Noncurrent Liabilities
Bonds payable
Long-term loans payable
Lease and guarantee deposits received
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Provision for loss on subleasing businessNet defined benefit liability
Other
Total noncurrent liabilities
Total Liabilities
Net Assets
Shareholders´ Equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders´ equity
Accumulated Other Comprehensive Income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription Rights to Shares
Non-Controlling Interests
Total Net Assets
Total Liabilities and Net Assets

73 Integrated Report 2016

’15/03’16/03¥   48,662   151,800    3,000    13,097    25,095     124    6,218     606      83    56,498   305,188¥  51,162   137,300      —   13,232   29,617      17    7,073
     738      61   49,903   289,107    30,000   431,900    60,749    60,214    4,116     465    11,078    4,483   603,007   908,195   60,000   524,600   63,766   64,070    3,900     313   18,018    5,264   739,933
1,029,041   116,188    93,518   170,069
        (2)   379,774   116,598   109,842   207,203       (3)   433,642    5,069
      78    7,644      61    1,431    14,285    1,563    65,408  461,031
1,369,226    6,664     155    7,861      43        (3,513)   11,212    1,685    9,868   456,408
1,485,449

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Consolidated Statements of Income(Millions of yen)

Consolidated Statements of Comprehensive Income(Millions of yen)

’15/03’16/03Operating Revenue¥567,159¥569,545

ProfitOperating Cost

405,107391,571

Other Comprehensive Income

Operating Gross Profit

162,051

177,973

Valuation difference on available-for-sale securities  5,764  1,595

Selling, General and Administrative Expenses  90,157  97,061

Deferred gains or losses on hedges     53     77

Operating Income  71,894  80,912      50

¥42,653¥49,157

Revaluation reserve for land   420     216      6       (10)      71

Remeasurements of defined benefit plans, net of tax   689   (4,944)

Share of the other comprehensive income of associates
accounted for using equity method    15      (7)Total other comprehensive income  6,950   (3,073)

49,60346,084Comprehensive income attributable to owners of parent

45,38644,109Comprehensive income attributable tonon-controlling interests  4,216  1,975

Dividends income   1,123   1,007

Equity in earnings of affiliates      17      16

Other     507     459

Total non-operating income   1,699   1,555

Comprehensive Income(Breakdown)

Non-Operating Expenses
Interest expenses   8,851   7,817

Other   1,060   1,970

Total non-operating expenses   9,912   9,787  63,681  72,679

Gain on sales of noncurrent assets     206     —

Dividends distribution from silent partnershipassociated with impairment loss   2,203     —

Other     137

     —

Total extraordinary income   2,547     —

Ordinary Income’16/03Foreign currency translation adjustment

Non-Operating Income
Interest income’15/03Extraordinary Income

Extraordinary Losses
Impairment loss   8,170   1,426

Loss on valuation of investment securities     —

     278

Total extraordinary losses   8,170   1,705

Income before Income Taxes and Minority Interests  58,058  70,974

Income Taxes - Current  18,069  20,992

Income Taxes - Deferred   (2,664)     824

Total Income Taxes  15,405  21,817

Profit  42,653  49,157

Profit Attributable to Non-Controlling Interests   4,211   1,975

Profit Attributable to Owners of Parent    38,441  47,182

Nomura Real Estate Holdings, Inc.

74 Integrated Report 2016

ProﬁleConsolidated Financial Statements

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Consolidated Statements of Changes in Net Assets(Millions of yen)

Shareholders´ Equity
FY2014(From April 1, 2014 to March 31, 2015)

Capital stock

Additional
paid-in capital

Balance at April 1, 2014

116,024

93,353Cumulative effects of changes inaccounting policies

Other Comprehensive Income

Retained earnings

Treasury shares

138,971(2)   1,571

Restated balance at April 1, 2014

116,024

93,353Issuance of new shares    164    164

140,543

Total
shareholders´equityValuationdifference on
available-for-salesecurities

Deferred gains/losses on hedges

Revaluation
reserve for land

348,347

(689)

25

7,224

Foreign currency Remeasurements
translationof defined benefit
adjustments
plans

  32

    742

Total accumulated
othercomprehensive
incomeSubscription
rights to shares

Non-controllinginterests      7,333

1,273  61,742    1,571(2)

349,918

Total net assets

418,697    1,571

(689)

25

7,224

  32

    742      7,333

1,273  61,742

420,268     329    329

Dividends of surplus   (7,637)   (7,637)   (7,637)

Profit attributable to owners of parent  38,441    38,441  38,441      —

      —

Purchases of treasury shares
Increase due to the increase of
consolidated subsidiaries      16      16      16

Decrease due to the increase of
consolidated subsidiaries   (1,293)   (1,293)  (1,293)

Net changes of items other thanshareholders´ equity

116,188

93,518FY2015(From April 1, 2015 to March 31, 2016)

Capital stock

Additional
paid-in capital

Balance at April 1, 2015

116,188

93,518170,069(2)

Restated balance at April 1, 2015

116,188

93,518170,069(2)

Issuance of new shares    410    410

Dividends of surplus    

Profit attributable to owners of parent

Balance at March 31, 2015

170,069(2)

379,774

5,759

53

  420

  29

     689      6,951   290    3,665  10,907

5,069

78

7,644

    61   1,431    14,285

1,563  65,408  461,031

Valuation
Total accumulated
Subscription
Foreign currency Remeasurements
difference on
Deferred gains/
Revaluationotherrights to sharestranslationof defined benefit
available-for-sale losses on hedges reserve for landcomprehensive
adjustments
plans
securities
incomeNon-controllinginterests

Total net assets

Shareholders´ Equity

Other Comprehensive Income

Retained earnings Treasury shares

Total
shareholders´equity

5,069

78

7,644

    61   1,431    14,285

1,563  65,408  461,031

379,774

5,069

78

7,644

    61   1,431    14,285

1,563  65,408  461,031     

     820

   

  

  

    

  

      

     820      (10,047)  (10,047)

   

  

  

    

  

        (10,047)

    

    

  47,182  47,182

   

  

  

    

  

        47,182

Purchases of treasury shares

    

    

     

      (0)

   

  

  

    

  

      

       (0)Increase by share exchanges        374         374

   

  

  

    

  

      

     374

Changes in parent ownership interests
regarding the transactions with
non-controlling shareholders    

15,539       15,539

   

  

  

    

  

        15,539

1,595

77

216

  (18)  (4,944)  (3,072)   121  (55,539)  (58,490)

433,642

6,664

155

7,861

  43

  (3,513)     11,212

1,685    9,868

456,408

Cumulative effects of changes inaccounting policies

379,774      Net changes of items other thanshareholders´ equity

    

    

     

Balance at March 31, 2016

116,598

109,842

207,203(0)(3)       —

Nomura Real Estate Holdings, Inc.

75 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Consolidated Statements of Cash Flows(Millions of yen)

’15/03’16/03

Income before income taxes and minority interests¥58,058¥70,974

Depreciation and amortization  15,258  16,026

Impairment loss   8,170   1,426

Loss (gain) on valuation of investment securities     —    278

Cash Flows from Operating Activities(Millions of yen)

’15/03’16/03Purchase of investment securities   (¥1,066)   (¥3,989)

Proceeds from sales and liquidation of investment securities   1,095    2,907

Purchase of shares of subsidiaries resulting in change inscope of consolidation     —    (9,692)

Net Cash Provided by (Used in) Investment Activities

Loss (gain) on sales of property, plant and equipment    (206)     —

Purchase of property, plant and equipment and intangible assets    (38,871)   (50,367)

Equity in (earnings) losses of affiliates      (17)     (16)   3,205      308

Increase (decrease) in allowance for doubtful accounts    (131)     (13)Proceeds from sales of property, plant and equipment
and intangible assets

Increase (decrease) in provision for loss on business liquidation      (29)      (21)      (757)

Increase (decrease) in provision for loss on subleasing business       (7)    (152)

Increase (decrease) in net defined benefit liability    (391)    (282)

Interest and dividends income   (1,173)   (1,079)

Interest expenses   8,851   7,817

Decrease (increase) in notes and accounts receivable-trade    (231)    (623)

Decrease (increase) in inventories  (77,796)  (67,146)

Decrease (increase) in equity investments    812   5,497

Increase (decrease) in notes and accounts payable-trade  11,033   2,497

Increase (decrease) in deposits received  15,920   4,522

Other, net   6,309   1,953

Subtotal  44,429  41,658

Interest and dividends income received   1,642   1,064

Interest expenses paid    (9,254)   (7,970)

Income taxes paid  (12,980)  (21,494)

Net Cash Provided by (Used in) Operating Activities  23,837  13,258

Nomura Real Estate Holdings, Inc.

Payments for lease and guarantee deposits   (632)

Proceeds from collection of lease and guarantee deposits   1,324    1,502

Repayments of lease and guarantee deposits received   (3,231)    (2,558)

Proceeds from lease and guarantee deposits received   5,365    4,520

Other, net     334    (1,586)(32,476)    (59,714)

Net Cash Provided by (Used in) Investment Activities
Cash Flows from Financing Activities

16,000      (3,300)

Repayments of finance lease obligations     (154)         (148)Proceeds from long-term loans payable

102,500  184,000

Repayment of long-term loans Payable(119,383)  (102,500)

Net increase (decrease) in short-term loans payable

Proceeds from issuance of bonds   9,936   29,820

Redemption of bonds  (10,000)    (3,000)

Proceeds from issuance of common stock     131      426

Proceeds from share issuance to non-controlling shareholders       3      105

Purchase of treasury shares      —

        (0)Cash dividends paid   (7,637)   (10,047)

Dividends paid to non-controlling interests       (379)    (1,465)

Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation      —   (40,253)

Net Cash Provided by (Used in) Financing Activities   (8,983)   53,637

Effect of Exchange Rate Change on Cash and Cash Equivalents      4        (8)Net Increase (Decrease) in Cash and Cash Equivalents  (17,618)    7,173

Cash and Cash Equivalents at Beginning of Period   67,982   50,418

Increase (Decrease) in Cash and Cash Equivalents Resulting
from Change of Scope of Consolidation      54       —Cash and Cash Equivalents at End of Period  50,418    57,591

76 Integrated Report 2016

ProﬁleFinancial Report (MD&A)

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Although concern was expressed that the Japanese economy
during the fiscal year under review would be influenced by economic downturn in China and other emerging countries in Asia,
company performance was in an improving trend and continued
to reveal gradual recovery supported by the government’s economic policies and the Bank of Japan’s monetary easing policies.
While personal consumption is expected to improve along withimprovement in the employment and income environment, there
is concern about downturns in overseas economies, a situationthat contributes to unpredictability in the Japanese economy.
In the housing sales market, although the number of supplied housing units decreased due to an increase in sales prices
brought on by high construction costs, demand for housing centering on the properties in and around the Tokyo metropolitan
area remained strong, showing steady growth with the help of low
interest rates and other favorable factors.
Sale of condominiums in the metropolitan area from January to December, 2015, amounted to 40,449 units, down 9.9%
from the previous year. Also, the average percentage of firstmonth contracts for 2015 was 74.5%, down 0.6 points comparedto the previous year, maintaining the 70% level that is considered
the dividing line between good and bad performance. (Researchby the Real Estate Economic Institute Co., Ltd.)In the office market, vacancy rates showed a clear downward trend supported by the expansion of demand through therecovery of business performance and the transfer of offices toimprove conditions associated with location; and the rent levels in
the Tokyo metropolitan area gradually increased. As of the end of
March 2016, the vacancy rate in the five wards of central Tokyo
was showing improvement at 4.34%, down 0.96 points compared to the same time last year. As for the level of rent, the average for these five wards as of the end of March 2016 was ¥17,973
per 3.3 m2 (up ¥778 per 3.3 m2 compared to the same time in2015). (Research by Miki Shoji Co. Ltd.)In the real estate investment market, inflow of investment
funds in J-REIT backed by the continuation of low interest rates
supported real estate transactions, as did new listings on the market and continuing high capital increase through public offerings,
and the Tokyo Stock Exchange REIT Index was at a high level. In
addition, as of April 1, 2016, the expected yield for A class buildings in the Marunouchi and Otemachi area was 3.7%, a decrease

Metropolitan Area Condominium Supply and Contract Rate
(Calendar Year)

Vacancy Rate and Level of Rent for the Five Wards ofCentral Tokyo (At March 31)

Analysis of the Business Environment

Units

Contract rate (%)

60,00050,00040,00030,00080

56,47679.5
44,49977.8

45,602(yen/3.3 m )2Level of rent

17,9739.04

44,91340,44978

17,50076.3

16,71674.5

10,000
0

74
0

2011

2012

2013

Source: Real Estate Economic Institute Co., Ltd.

2014

2015

10
8

6.70

16,50075.1

8.56

17,00076

20,000Vacancy rate (%)

18,00017,1956

5.30
16,5044.34
16,32516,000

4
2

0

0
2012

2013

2014

2015

2016

Source: Miki Shoji Co. Ltd.

Nomura Real Estate Holdings, Inc.

77 Integrated Report 2016of 0.1 point compared to the same period last year, setting a new
historical low. (Research by The Japan Economic Research Institute)Business Results for the Fiscal Year Ended
March 2016
In this market, the Nomura Real Estate Group posted the following
consolidated performance for the fiscal year under review: Operating revenue of ¥569,545 million, which represents an increase of¥2,386 million, or 0.4% year on year; operating income of¥80,912 million, an increase of ¥9,017 million, or 12.5%; ordinary
income of ¥72,679 million, an increase of ¥8,998 million, or
14.1%; and profit attributable to owners of parent of ¥47,182
million, an increase of ¥8,740 million, or 22.7%. Operating revenue, operating income, ordinary income, and profit attributable toowners of parent all set new highs.
The increase in operating revenue was secured by increased
sales of property in the property development business and otherfactors. The increases in operating income and ordinary income
was due to an improvement in the vacancy rate for the Leasing
Unit, the increase in sales by the property development business,

Tokyo Stock Exchange REIT Index (at March 31) andExpected Yield* (at April 1)(points)

2,000

Tokyo Stock Exchange REIT Index

4.5

1,500
1,000

1642.79
4.3

Expected Yield (%)

1465.54
4.0

1864.66

1896.40

3.8

3.7

5
4

989.64

3
2

500

1

0

0
2012

2013

2014

2015

2016

Source: Tokyo Stock Exchange REIT Index, Bloomberg
Expected Yield: Japan Real Estate Institute*Expected yield of A class buildings in the Marunouchi and Otemachi area.

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

an increase in asset acquisition fees accompanying the merger of
REITs in the Investment Management Unit, etc. The increase inprofit attributable to owners of parent was due to the reaction to
the extraordinary loss in the fiscal year ended March 2015 fromthe Nomura Fudosan Tennozu Building.
Because of the above, the ¥65 billion operating income target put up in phase 1 (-March 2016) of the previous Mid- to Longterm Business Plan has been surpassed for the past three fiscal
years. And, in addition, we have maintained high levels for ROA(5.6%) and ROE (11.2%) which are mid- to long-term indicators.

Status of Each Business Unit
An overview of unit achievements is given below:
Operating revenue for each unit includes internal sales andtransfer amount among units. Due to the rounding of fractions,
total figures may not match.
Nomura Real Estate Wellness Co., Ltd., which was established in April 2015, and MEGALOS CO., LTD., which had beenclassified under the “Other Unit,” were both classified into the“Property & Facility Management Unit” from the first quarter. In
addition, NF Power Service Co., Ltd., which was established in December 2015, and newly incorporated in the “Property & Facility
Management Unit” from the third quarter to promote business inconjunction with the property and facility management business.
The results of the previous fiscal year are calculated in line with the
newly adopted unit classification.
For detailed data for each business unit, please refer to p.
71-2.

Residential Development Unit

Operating Income and ROA(Millions of yen)

Operating income

ROA (%)

100,000

5.8
4.6

80,00060,00040,0003.7
2.9

74,307

5.4
71,894

5.6
80,9126
5
458,3083

49,93942,0832

20,00010

0'11/03'12/03'13/03'14/03'15/03Operating revenue in this unit totaled ¥334,514 million, which
represents a decrease of ¥24,882 million, or 6.9% year on year,
and operating income was ¥31,909 million, a decrease of ¥1,902
million, or 5.6%. In housing sales, while sales prices of recorded
housing units increased beyond those in the previous fiscal year,
the number of housing units sold decreased, resulting in decreases
in both income and profit. In regard to housing sales, we posted thesale of 6,006 units (a decrease of 1,015 units year on year), including Toshima Cross Comfort Tower (Shinjuku-ku, Tokyo), Sakurajosui
Gardens (Setagaya-ku, Tokyo), OHANA Hachioji Oak-Court (Hachioji-shi, Tokyo), PROUD CITY Seishin-chuo (Nishi-ku, Kobe, Hyougo)
for condominiums, and PROUD SEASON Musashi-koganei Garden
Avenue (Kodaira-shi, Tokyo) for detached houses.
Number of units, sales, and outstanding contract amountsold for the joint-venture projects are calculated based on theGroup’s share.

'16/03*ROA = (Operating income + Non-operating income) / Total assets at end of fiscal year

Nomura Real Estate Holdings, Inc.

78 Integrated Report 2016

Leasing Unit
Operating revenue in this unit totaled ¥110,625 million, which
represents an increase of ¥17,746 million, or 19.1% year on year,
and operating income totaled ¥32,099 million, an increase of¥7,651 million, or 31.3%.
In the leasing business, the contribution of profit from theHamamatsu-cho Building (Minato-ku, Tokyo), which was steadily
occupied, and an increase in the number of properties sold in theproperty development business resulted in increases in both income and profit over the previous fiscal year.
Because leasing in the Hamamatsu-cho Building improved,
the vacancy rate at the end of the fiscal year under review dropped
to 2.2% from the 4.5% at the end of the previous fiscal year.

Investment Management Unit
Operating revenue in this unit totaled ¥10,973 million, which represents an increase of ¥1,806 million, or 19.7% year on year, andoperating income totaled ¥7,376 million, an increase of ¥2,563
million, or 53.3%.
This was mainly due to an increase in acquisition fee associated with the merger of Nomura Real Estate Master Fund, Inc.,
Nomura Real Estate Office Fund, Inc., and Nomura Real Estate Residential Fund, Inc. in October 2015, and dividend from SPC on its
property sales.

Property Brokerage & CRE Unit
Operating revenue in this unit totaled ¥35,373 million, which represents an increase of ¥5,140 million, or 17.0% year on year, operating income totaled ¥9,900 million, an increase of ¥1,423 million,
or 16.8%.
Due to increases in the number and amount of property
brokerage transactions and property sales, the Property Brokerage& CRE Unit revealed increases in both income and profit over theprevious fiscal year. Also, both the number of properties handledand value of transactions set record highs.
In the wholesale business, we focused our efforts on proposalbased sales meeting the needs of businesses to effectively use realestate they own. In the retail business, we worked to both spreadthe store brand Nomura no Chukai (Brokerage by Nomura) + (Plus)

ProﬁleFinancial Report (MD&A)

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

and, by continuing to expand our net of stores, increase our ability
to attract customers and expand our customer base.

Property & Facility Management Unit
Operating revenue in this unit totaled ¥90,294 million, which represents an increase of ¥4,456 million, or 5.2% year on year, andoperating income totaled ¥5,314 million, a decrease of ¥443 million,
or 7.7%.
This unit showed an increase in income and decrease inprofit compared with the previous fiscal year. This was due mainly

to an increase in retirement benefit expenses while revenue fromproperty and facility management and construction orders increased.
In fitness club business, we opened four sites, including
MEGALOS Nakanobu.

Other Unit
Operating revenue in this unit totaled ¥1,353 million, which represents a decrease of ¥1,654 million, or 55.0% year on year, andoperating loss totaled ¥152 million (the previous year was operating loss of ¥113 million).

Financial Position
AssetsTotal assets were ¥1,485,449 million, which represents an increaseof ¥116,223 million from the end of the previous fiscal year. Thiswas due mainly to an increase in inventories including real estate
for sales (an increase of ¥67,146 million) and property, plant andequipment (an increase of ¥49,014 million).

Liabilities

Key Factors of Changes in Operating Income by Unit
Investment
Management
Leasing
Residential
Development

+7.6

(1.9)

71.8

Property
Brokerage &
CRE
+1.4

+2.5

(Billions of yen)

Property & Facility
Management

Other

Adjustment

(0.4)

(0.0)

(0.2)

Total liabilities totaled ¥1,029,041 million, increased by ¥120,845
million from the end of the previous fiscal year. This was due mainly
to an increase of a long-term loans payable (increased by ¥92,700
million) and bonds payable (increase by ¥30,000 million).
As a result, interest-bearing debt increased ¥105,200 million
compared to the end of the previous fiscal year, to ¥721,900 million.

• Sale of inventories• Increase in the acquisition fee associated withthe merger of the three REITs• Improvement in the vacancy rate
• Increase in the number of properties sold

80.9

Interest-bearing Debt
(Millions of yen)

1,000,000• Decrease in units sold

800,000

816,910758,562
669,268

600,000

721,900
617,583 616,700

400,000
200,0000'11/03'15/03 Results'16/03 Results

Nomura Real Estate Holdings, Inc.

79 Integrated Report 2016

'12/03'13/03'14/03'15/03'16/03ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Net Assets
While net assets totaled ¥456,408 million, a decrease of ¥4,622
million from the end of the previous fiscal year, shareholders’ equity
increased ¥50,795 million to ¥444,854 million compared to theend of the previous fiscal year.
This was due mainly to a decrease of non-controlling interests(decrease by ¥55,539 million), while retained earnings (an increaseof ¥37,134 million) and capital surplus (an increase of ¥16,324
million) increased.
As a result, shareholders’ equity ratio rose to 29.9% fromthe 28.8% at the end of the previous fiscal year.

Ratings
Corporate bonds we have issued have been rated as shown below
by Rating and Investment Information Inc. (R&I) and Japan Credit
Rating Agency (JCR).
Rating Institution

Long-term

Short-term

Rating and Investment
Information, Inc.

A-

a-1

Japan Credit Rating Agency, Ltd.

A

J-1

Cash Flows
Cash Flows from Operating Activities
Cash flows from operating activities in the fiscal year ended March
2016 resulted in a recovery of ¥13,258 million. This was mainly
due to the recording of income before income taxes and minority
interests of ¥70,974 million, despite outflows resulted by the purchase of inventories, etc.

Cash Flows from Investing Activities
Shareholders’ Equity and Shareholders’ Equity Ratio(Millions of yen)

Shareholders’ Equity

Shareholders’ Equity Ratio (%)

500,000

50
444,854400,000
300,000
200,000

40

394,059
304,53620.7

317,066

22.6

336,218 355,680

24.5

27.1

28.8

29.9

30
20

100,000

100Cash flows from investment activities resulted in outflows of¥59,714 million. This mainly reflected the purchase of tangible
and intangible assets, and the acquisition of shares of subsidiaries
accompanied by changes in the scope of consolidation.

Cash Flows from Financing Activities
Cash flows from financing activities resulted in a recovery of¥53,637 million. The reason for this was that long-term debt financing
counteracted the impact of payments from changes in ownershipinterests in subsidiaries that do not result in change in scope of
consolidation.

0'11/03'12/03'13/03'14/03'15/03'16/03

Nomura Real Estate Holdings, Inc.

80 Integrated Report 2016

ProﬁleFinancial Report (MD&A)

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Property Acquired in the Fiscal Year Ended March 2016

Facilities and Equipment

Area
(m2)

Acquisition
price(millions of yen)

Building: 13,374
Property: 1,592

12,262

Steel-framed reinforced concrete construction,
Building: 4,431
three floors below ground, 10 floors above ground Property: 548

5,747

Company

Name (location)

Unit

Use

Size of Construction or Details of Facility, etc.

Nomura Real
Estate Co., Ltd.

Nomura Fudosan Ginza
Building*1, 2(Chuo-ku, Tokyo)

Lease

OfficeSteel-framed reinforced concrete construction(partially steel-framed reinforced concrete), fivefloors below ground, 17 floors above ground

Nomura Real
Estate Co., Ltd.

Toranomon Central Building(Minato-ku, Tokyo)

Lease

OfficeNomura Real
Estate Co., Ltd.

Minami Gyotoku SC*3
(Ichikawa-shi,
Chiba Prefecture)

Lease

Toranomon Real
Estate Co., Ltd.

Three buildings in Icchome of
Toranomon *4(Minato-ku, Tokyo)

Lease

Investments in Facilities and Equipment
In the fiscal year ended March 2016, we invested a total of¥51,805 million in facilities and equipment such as the NOMURAGINZA Building (Chuo-ku Tokyo).

Plans for Newly Constructed and Removing of Facilities
Our plans for new construction and sale of major facilities in thefiscal year ending March 2017 are as shown below.

Steel-framed construction (partially reinforced
Shopping
concrete), two floors below ground, two floors
Centerabove ground
Steel-framed reinforced concrete construction(partially reinforced concrete), one floor below
ground, seven floors above ground, two otherbuildings

OfficeBuilding: 35,612
Property: 16,503

10,646

Building: 6,686
Property: 1,009

15,278*1 Refers to calculated area owned including both total floor space and land area. *2 Increased ownership of the property following the amount acquired in the fiscal year ended March 2015.
*3 Includes the trust beneficial right. *4 Area and price are the total for the three buildings.

Major Newly Constructed Facilities in the Fiscal Year Ending March 2017 (Planned)Name(location)

Company

Unit

UseSize of Construction or
Details of Facility, etc.

Expected Amount of
Investment (millions of yen)
Total

Already paid

Method of Fund
Procurement

Start of Construction andExpected Completion
Start

Completion

Nomura Real
Estate Co., Ltd.

(provisional name) Yokohama Nomura Building Project(Nishi-ku, Yokohama-shi, Kanagawa Prefecture)

Lease

OfficeSteel-framed concrete construction,
17 floors above ground32,10019,969Loans and own funds’15/03’17/03

Nomura Real
Estate Co., Ltd.

(provisional name) Landport Takatsuki Project(Takatsuki-shi, Osaka Prefecture)

Lease

Logistics
facility

Steel-framed reinforced concrete
construction, five floors above ground

21,6009,164

Loans and own funds’16/03’18/03

NREG Toshiba
Real Estate(provisional name) NREG Sapporo Building Project(Chuo-ku, Sapporo-shi, Hokkaido)

Lease

Hotel

Steel-framed concrete construction,
10 floors above ground

3,200

1,932

Loans and own funds’16/03’17/03

Nomura Real
Estate Co., Ltd.

(provisional name) Nomura Real Estate Sendai Aobadori
Building Project (Aoba-ku, Sendai-shi, Miyagi Prefecture)

Lease

OfficeSteel-framed concrete construction(partially reinforced concrete construction)

8,000

3,878

Loans and own funds’16/03’18/03

Sale of Major Facilities in the Fiscal Year Ending March 2017 (Planned)
Company

Name (location)

Unit

Use

Size of Construction or Details of Facility, etc.

Total floor area(m2)

Completion of
construction

Area of Property(m2)

Expected date ofsale

Nomura Real
Estate Co., Ltd.

Fukagawa Gyazaria Tower N* (Koto-ku, Tokyo)

Lease

OfficeSteel-framed reinforced concrete construction,
two floors below ground, 22 floors above ground

41,446

January 2007

2,948

’17/03* Area of Property includes rented property.

Nomura Real Estate Holdings, Inc.

81 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Amount of Investments by Unit

(millions of yen)

’15/03’16/03

Increase/
Decrease

Residential
Development    216   685   469

Leasing

47,03948,348

1,309

Unit

Forecasts of financial results for the fiscal year
ending March 2017 (Announced on April 28, 2016)

(yen)

80

60

    109

Property
Brokerage & CRE    548   633    84

Property & Facility
Management    986   872    (114)

Other     18     6    12Sub-total

48,91950,591

1,672

Adjustment(15,023)

1,213

16,23633,896    4551,805     (64)
20

57.5

60.0

'16/03'17/03(forecast)

25.0

25.0

'11/03'12/03

30.0

35.0

0
'13/03'14/03'15/03

Key Factors of Changes in Operating Income by Unit
Residential
Development

17,908(1.4)

Leasing

Investment
Management

(1.2)

(2.8)

Basic Policy regarding Profit Distribution and
Dividends for the Current and Next Fiscal Year
The Company’s basic policy regarding the distribution of profits toshareholders is to aim at a payout ratio of approximately 30% overthe medium to long term, in accordance with annual business performance, comprehensively considering the operating environment, capital investment plans, retained earnings, and other relevant factors.
In light of growth in business performance, the Company isplanning an increase in the year-end dividend for the fiscal year
ended March 2016 of ¥2.5 per share from the previous forecast to¥30 per share. Combined with the second quarter-end dividend,
the annual dividend per share will be ¥57.5. In regard to the dividend for the next fiscal year, the second quarter-end and year-end
dividends will be ¥30 per share, and the annual dividend will be¥60 per share.

We expect to post operating revenue of ¥589,000 million (an increaseof ¥19,454 million compared to the fiscal year ended March
2016), operating income of ¥76,000 million (a decrease of ¥4,912
million, year on year), ordinary income of ¥67,000 million (a decreaseof ¥5,679 million, year on year), and profit attributable to ownersof parent of ¥43,000 million (a decrease of ¥4,182 million, year onyear) for the fiscal year ending March 2017.

45.0

40

Investment
Management

Total

Dividends(Billions of yen)

Property
Brokerage& CRE

Property & Facility
Management

Other

(1.4)

+0.3

+0.1

Adjustment+1.5• '16/03
Rebound of sale of inventories
80.9• '16/03
Rebound from an increase in the acquisition fee
related to the merger of the REITs

76.0• Increases in personnel expenses, taxes, dues, etc.
(Including retirement benefit expenses)• Augmentation of accuracy in adjustments allocation• Increases in personnel expenses, taxes, dues, etc.
(Including retirement benefit expenses)• Augmentation of accuracy in adjustments allocation'16/03 Results

Nomura Real Estate Holdings, Inc.

'17/03 Forecast

82 Integrated Report 2016

ProﬁleGroup Company Profile

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Nomura Real Estate Development Co., Ltd.

Nomura Real Estate Asset Management Co., Ltd.

Nomura Real Estate Urban Net Co., Ltd.

http://www.nomura-re.co.jp/english/

http://www.nre-am.co.jp/english/

http://www.nomu.com/english/

Nomura Real Estate Development conducts a
range of businesses. The Residential Development Business provides quality residential properties under the PROUD and OHANA brands.
Meanwhile, the Leasing Business plans, develops
and manages office buildings such as PMO, commercial facilities such as GEMS, and logistics andother facilities. In addition, the Corporate Real
Estate (CRE) Strategic Support and Corporate
Brokerage Business helps maximize the value ofreal estate held by companies.

In October 2011, three investment management companies in the Nomura Real EstateGroup merged and became one of the largest
real estate investment management companies
in Japan. Nomura Real Estate Asset Management provides one-stop shopping for a broad
variety of financial products and investment
management services, including privately placed
real estate funds, to listed real estate investment trusts (REIT), debt investment in domestic
real estate, overseas real estate fund of funds,
and discretionary investment management
contracts with institutional investors.

Nomura Real Estate Urban Net provides solutions for satisfying customers in the real estateservices and consulting fields. These include
residential real estate brokerage for helping
customers in changing their place of residence,and commercial real estate brokerage, which
addresses the real estate needs of companies
and investors. Nomura Real Estate Urban Net
also operates a consignment sales businesswhere it sells condominium units and detachedhousing as a sales agent.

Nomura Real Estate Partners Co., Ltd.

NREG TOSHIBA BUILDING Co., Ltd.

Nomura Real Estate Life & Sports Co., Ltd.

http://www.nomura-pt.co.jp/ (Japanese only)

http://www.nreg-tbc.co.jp/ (Japanese only)

http://www.megalos.co.jp/ (Japanese only)This company represents the integration of building and condominium management operations
with the capability to perform overall management of various building types. Nomura Real
Estate Partners combines expertise in building
and condominium management with property
management to realize effective real estate
management and construction aimed at handlinglarge-scale repair, remodeling, and interior work.

NREG TOSHIBA BUILDING offers service spanning the development, leasing and management of office buildings, commercial facilities,
warehouses, condominiums and other properties, as well as property brokerage and consulting on corporate real estate (CRE) utilization.

Fitness facilities such as fitness clubs, kids’
schools, and tennis schools are planned, developed and managed under the MEGALOS brand
name. The company also offers services aimed
at corporations and local governments.

Nomura Real Estate Heating and Cooling
Supply Co., Ltd.

Geo Akamatsu Co., Ltd.

Nomura Real Estate Reform Co., Ltd.

http://www.geo-akamatsu.co.jp/ (Japanese only)

http://www.nomura-rf.co.jp/ (Japanese only)

Nomura Real Estate Heating and Cooling Supply is responsible for the supply of heating andcooling services to Yokohama Business Park, alarge-scale business facility, through its district
heating and cooling system. Using a “bestmix” system that combines gas and electricity,
the company uses energy efficiently to curtail
costs and minimize environmental impact.

Geo-Akamatsu provides a full range of property consulting and other services that maximize
its 40 years of accumulated expertise. These
services include surveys of commercial facilities,
project planning, leasing, commercial space design and property management.

Nomura Real Estate Reform offers assistance inremodeling and repairing residential properties
to provide people with comfortable places tolive. This includes reform plans that match family growth and lifestyle changes.

Nomura Real Estate Holdings, Inc.

83 Integrated Report 2016

ProﬁleValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Nomura Real Estate Wellness Co., Ltd.

Nomura Real Estate Amenity Service Co., Ltd.

http://www.nomura-re-wn.co.jp/ (Japanese only)

NREG TOSHIBA BUILDING FACILITIES Co., Ltd.
http://www.toshiba.co.jp/tfs/ (Japanese only)

Nomura Real Estate Wellness designs and operates high-quality housing for the elderly thatincorporates secure and reliable life-longmanagement services.

Nomura Amenity Service provides cleaning services of office buildings, schools, and condominiums to maintain scenic beauty of properties as a cleaning company of the Property &Facility Management Business of the Nomura
Real Estate Group.

NREG TOSHIBA BUILDING FACILITIES offers services to maintain or improve the property value
through facility management, inspection,cleaning, security and construction, while provides safe and comfortable environment to all
customers.

PRIME X. Co., Ltd.

NF Power Service Co., Ltd.

NOMURA REAL ESTATE ASIA PTE. LTD.

Based on the accumulated expertise jointly developed with Nomura Real Estate Development, PRIME X. provides Internet advertisingbusinesses that specialize in the real estate andhousing industries. Prime X. delivers proposals
that maximize customer benefits, ranging fromthe creation of corporate websites and project
homepages to creating and managing membership organizations, and handling projectsales promotions.

NF Power Service efficiently procures electric
power using unique electric power energy data
accumulated from operations that supply energy to condominiums. The company offers added-value through energy services provided by
the Group, which include a high-voltage collective receiving service.

NOMURA REAL ESTATE ASIA PTE. LTD. promotes the Group’s businesses including
pursuing business opportunities in real estate development and supporting the investor’s demand in Japanese real estate.

NOMURA REAL ESTATE HONG KONG
LIMITED

Nomura Real Estate Consulting (Beijing) Co., Ltd.

NOMURA REAL ESTATE HONG KONG offers inbound investment support specializingin the Japanese real estate market for international investors based in Hong Kong,and strengthens ties between local companies and investors, enhancing business opportunities for the Group.

Nomura Real Estate Consulting (Beijing) supports the Nomura Real Estate Group’sbusiness in China by researching real estate market, building a relationship with ourpartners, exploring the possibilities of real estate development business including office buildings and residential properties in China.

https://www.prime-x.co.jp/ (Japanese only)

Nomura Real Estate Holdings, Inc.

84 Integrated Report 2016

ProﬁleInvestor Information (as of March 31, 2016)

Value Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section

Corporate Data

Stock Information

Corporate Name: Nomura Real Estate Holdings, Inc.

Common Stock
Number of Authorized Shares
Number of Shares Issued
Market Listing

Representative: Eiji Kutsukake, President
Head Office: Shinjuku Nomura Building,
1-26-2 Nishi-Shinjuku, Shinjuku-ku,
Tokyo 163-0566, Japan
Date of Establishment: June 1, 2004

Ten Largest Shareholders

Minimum Trading Unit
Number of Shareholders¥116,598,828,900
450,000,000
191,679,601
First Section of Tokyo
Stock Exchange
100 shares
38,144

Number of Employees: 6,233 (on a consolidated basis)
Fiscal Year: From April 1 to March 31
General Meeting of Shareholders: June

Name of Shareholders

No. of Shares

Nomura Land and Building Co., Ltd.
Japan Trustee Services Bank, Ltd. (Trust account 9)
Master Trust Bank of Japan (Trust account)
Japan Trustee Services Bank, Ltd. (Trust account)
CBNY - GOVERNMENT OF NORWAY
Employees’ Stockholding
BNYML-NON TREATY ACCOUNTState Street Bank-West Pension Fund Clients - Exempt 505233
MSCO CUSTOMER SECURITIESHSBC BANK PLC A/C CLIENTS 1

64,777,500
8,245,100
6,832,700
5,858,700
2,902,600
2,877,882
2,658,000
2,647,633
2,366,379
2,212,400

Shareholding
(%)
33.79
4.30
3.56
3.05
1.51
1.50
1.38
1.38
1.23
1.15

Stock Price and Business Performance

10.50

Stock Price
(Yen)

5,000

19.19

4,000

1.00

35.05

3,000

Composition
by Number of
Shareholdings
(%)

2,000
1,000

34.25

0
(Billions of yen)

Composition by Number of Shareholdings (%)
Financial Institutions

19.19

Financial Instruments Firms

1.00

Other Japanese Firms

34.25

Other Foreign Investors

35.05

Individuals and Others

10.50

90

60

30

0
’07/03Operating Income’08/03
Ordinary Income’09/03’10/03’11/03

Profit attributable to owners of parent

Nomura Real Estate Holdings, Inc.

85 Integrated Report 2016

’12/03’13/03’14/03’15/03’16/03ProﬁleWebsiteValue Creation through Continuous Transformation
Business that Produces ValueA Foundation that Supports Value Creation
Data Section• Investor Relations
http://www.nomura-re-hd.co.jp/english/ir/
Find the latest financial results, reports, shareholder
information and future IR schedule for the Nomura
Real Estate Group.

• CSR
http://www.nomura-re-hd.co.jp/english/csr/
Nomura Real Estate Holdings Website

Learn more about the Nomura Real Estate Group’s
four key CSR themes, social contribution activities,
and CSR implementation base.

http://www.nomura-re-hd.co.jp/english/

Nomura Real Estate Holdings, Inc.

86 Integrated Report 2016

Nomura Real Estate Holdings, Inc.
Shinjuku Nomura Building, 1-26-2
Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-0566, Japan

URL: http://www.nomura-re-hd.co.jp/english

Printed in Japan