Our Commitment
Nomura Real Estate Holdings, Inc.
Annual Report 2007
Year ended March 31, 2007

Profile of Nomura Real Estate Group

Our Commitment to

Our Philosophy

At all companies in the Nomura Real Estate Group, every employee
is committed to realizing the Group’s philosophy.

Group Philosophy
The Group Philosophy is a commitment to both ourselves and to our customers and society. By showing this commitment
and continuously delivering a level of customer satisfaction at least commensurate with it, we are determined to be a Group
that people can count on even more than in the past.

Group Message

The Group Message crystallizes the philosophy of the Nomura Real Estate Group.

Group Mission
We hold each and every meeting in high esteem and are grateful for the fruit it has born. Our enthusiasm
due to the dynamism of group effort and highly creative individuals enables us to produce the best quality
service and product. Giving back to the customers and society is also a high priority for us.
The Group Mission is positioned at the core of the philosophy of the Nomura Real Estate Group. It expresses theshared mission, sense of identity and goals for which the Nomura Real Estate Group everlastingly works.

Group Symbol, United N
United N is symbolic of our fervent desire to create a better tomorrow by valuing every interaction andforming relationships with many people. This symbol also expresses the important relationships wehave with many groups such as customers, shareholders and trading partners, as well as ourcommitment to being a pacesetter in the creation of a new real estate business paradigm—regardlessof convention. At the same time, the symbol represents the new value we will create bycombining the passion and skills of every person and company in the Nomura Real Estate Groupand their diverse values.

Contents
P1
P2
P3
P4
P6
P8

Business Activities and Group Companies
Consolidated Financial Highlights
Segment Information
To Our Shareholders
Nomura Real Estate Holdings’ 50-Year Legacy
50 Years of Achievement: PROUD: A Brand Residents Are
Proud to Call Their HomeP10 50 Years of Achievement: New Value Offered by the
Nomura Real Estate GroupP12 50 Years of Achievement: Superiority of Nomura Real
Estate Group in Asset Management
P13 Our Next 50 Years:
Overview of Medium-term
Business Plan

P16 Business Portfolio
P18 Review of Operations
P18 Residential Development Business
P20 Building Business
P22 Investment Management & Development Business
P24 Property Brokerage & Consignment Sales Business
P25 Other Business
P26 Corporate Governance
P29 Corporate Social Responsibility (CSR)
P30 Board of Directors and Corporate Auditors
P31 Financial Section
P61 Corporate Data

Business Activities and Group Companies
Nomura Real Estate Holdings, Inc.

Residential
Development Business
Development and sales ofcondominiums, detachedhousing and residential lots,etc., and housing management and maintenance undercontract with management
associations after sale ofcondominiums

Building Business
Development, construction
and leasing of officebuildings, commercial
facilities, etc.
Property management of
the Group’s own andothers’ properties, such as
office buildings, university
facilities, etc

Investment
Management &Development Business

Property Brokerage &Consignment Sales
Business

Management of listed REITs,
private funds, etc., as well as
development and sales of
profit-generating property forthe real estate investment
marketIn addition to brokerage ofreal estate, sales of condominiums and detachedhousing for individual
households consigned frominside and outside the Group

Other Business
Operation of fitness clubs inaddition to management
service of architecturalplanning and construction

Nomura Real Estate Development
Residential
Development
Company

Corporate Real Estate Service Company

Investment Management& Advisory Company

Nomura Living Support

Nomura Building
Management

Nomura Real Estate AssetManagement

Prime X

Nomura Amenity Service

Nomura Real Estate
Investment Management

YBP Heating and Cooling
Supply*Nomura Real Estate
Capital Management

Nomura Real Estate
Urban Net

Megalos* YBP = Yokohama Business Park
In July 2007, Geo Akamatsu Co., Ltd. joined the Nomura Real Estate Group.

Nomura Real Estate Holdings, Inc. Annual Report 200701

Consolidated Financial Highlights
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years ended March 31(Millions of yen)(Thousands of
U.S. dollars)(Note 1)

2006

2007

2007

¥ 350,319¥367,237$3,110,858

Gross profit

97,551

108,668

920,527

Operating income

44,26854,374

460,605

Net income

12,717

26,297

222,764

Cash flows from operating activities(99,830)(89,850)(761,116)

Operating Results:
Revenues from operations

Cash flows from investing activities(17,995)(26,787)(226,913)

Cash flows from financing activities

113,818

100,863854,409¥56,109.84¥ 200.47

2,000.00

20.00

0.17

¥ 689,287¥836,303$7,084,313

Shareholders’ equity

60,732

214,207

1,806,073

Interest-bearing debt

413,039

394,885

3,345,070

Per Share Data (yen / dollars) (Note 2):
Net income
Cash dividends

$

1.70

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

Ratios:Return on assets (Note 3)

6.5%

6.6%

Return on equity

23.7%

19.2%

Operating margin

12.6%

14.8%

Dividend payout ratio

3.6%

10.0%

Shareholders’ equity ratio

8.8%

25.5%

Notes:
1. 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 30, 2007, which was ¥118.05 = US$1.00.
2. The Company carried out a 500-for-1 stock split on April 1, 2006.
3. Return on assets = (Operating income + Non-operating income) / Total assets at end of fiscal year.

Revenues from Operations andOperating Margin

Operating Income and ROA

Net Income and ROE(Millions of yen / %)(Millions of yen / %)(Millions of yen / %)400,000

14.8

60,00040,000
23.7

12.6
6.5

6.6

300,000

45,00030,000200,000

30,00020,000100,000

15,00010,00002006■ Revenues from Operations
Operating Margin

02 Nomura Real Estate Holdings, Inc. Annual Report 2007

2007

0

2006

■ Operating Income
ROA

2007

0

■ Net Income
ROE

19.2

2006

2007

Segment Information
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years ended March 31(Millions of yen)(Thousands of
U.S. dollars)(Note 1)

2006

2007

2007

¥222,518¥205,950$1,744,604

Building Business

48,28851,342434,920

Investment Management & Development Business

37,272

65,867557,954

Property Brokerage & Consignment Sales Business

22,87436,488309,089

Other Business

27,05815,162

128,437

Eliminations or corporate(7,691)(7,572)(64,146)$ 200,146

Revenues from Operations
Residential Development Business

Operating Income (loss)
Residential Development Business¥ 21,952¥ 23,627

Building Business

7,158

8,372

70,924

Investment Management & Development Business

14,224

18,613

157,665

Property Brokerage & Consignment Sales Business

5,592

8,389

71,063324

1,212

10,269(4,982)(5,839)(49,462)

Residential Development Business

11.1%

9.2%

Building Business

4.2%

4.6%

Other BusinessEliminations or corporate
Return on Assets of Each Segment (Note 2)

Investment Management & Development Business

6.5%

6.8%

Property Brokerage & Consignment Sales Business

14.9%

11.6%

Other Business

1.4%

5.0%

¥163,917¥229,863

Inventories
Residential Development Business
Building Business$1,947,167

9,078

10,165

86,106

Investment Management & Development Business

137,389

132,642

1,123,612

Property Brokerage & Consignment Sales Business

23,704

48,898414,215

Other Business

6,604

6,336

53,668Eliminations or corporate

(137)

(130)

(1,099)Notes:
1. 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 30, 2007, of ¥118.05 = US$1.00.
2. ROA of each segment = Segment operating income / Segment assets at end of fiscal year

Revenues from Operations*Operating Income*Inventories*(Millions of yen)

(Millions of yen)

(Millions of yen)

400,000

80,000600,000

300,000

60,000450,000

200,000

40,000300,000

100,000

20,000150,000

0

2006

2007

■ Residential Development Business■ Building Business■ Investment Management & Development Business■ Property Brokerage & Consignment Sales Business■ Other Business

0

2006

2007

0

2006

2007

* “Eliminations or corporate” amounts are not reflected in graphs.

Nomura Real Estate Holdings, Inc. Annual Report 200703

To Our Shareholders

Our Commitment to

Our Shareholders

Our dedication will produce results that live up to the expectations of shareholders and other investors.

Our Promisebillion, an increase of ¥16.9 billion, or 4.8%, compared toThank you for reading the 2007 Annual Report of Nomura

the previous fiscal year. Consolidated operating income rose

Real Estate Holdings, Inc. (the Company). The fiscal year

¥10.1 billion, or 22.8%, to ¥54.4 billion. Consolidated net

ended March 31, 2007 (fiscal 2006) was a year when theincome grew ¥13.6 billion, or 106.8%, to ¥26.3 billion.

Nomura Real Estate Group (the Group) accomplishedsubstantial changes in building the foundations for growth

Medium-term Business Plan (Fiscal 2007–Fiscal 2009)

in the next stage. On October 3, 2006, the shares of the

The Group has formulated a three-year medium-term

Company were listed on the First Section of the Tokyo

business plan that commences in fiscal 2007. We regard

Stock Exchange. I promise that we will achieve our growth

the next three years as a new stage, and while continuingtargets by continuing to act with an even stronger sense of

to grow, we will endeavor to build a solid earnings basedetermination and responsibility than before in relation tothat is invulnerable to the market environment.

all stakeholders.

The two fundamental policies in our medium-termbusiness plan are (1) to establish a solid earnings base andBusiness Overview of Fiscal 2006

maintain profit growth and (2) to pursue high investment

In fiscal 2006, the business environment in the real estate

efficiency and enhance the soundness of our financial

industry remained favorable in tandem with the steady

position. By fiscal 2009, the final year of the plan, therecovery of the Japanese economy, which saw anentire Group aims to raise operating income to ¥72 billion,

improvement in employment conditions and growth inreturn on assets (ROA*) to 7% and the shareholders’ equity

consumer spending. In the condominium market, supply

ratio to 30%.

remained at a high level, but sales continued to show

To achieve these targets, the Group will strongly pursue

underlying strength reflecting demand based on anticipation

three business strategies. First, we will make full use of ourregarding a rise in interest rates and the level of land prices. In

functions as a real estate developer. Second, we will

the office building leasing market, vacancy rates tended to fallstrengthen our property sourcing capabilities and strategi-

as demand continued to increase in response to ancally expand business opportunities. Third, we will expand

improvement in corporate earnings, and rents entered a phaseinvestment management operations.

of growth mainly in metropolitan areas. Moreover, the realestate investment market, as typified by real estate investment* Total ROA = (Operating income + Non-operating income) / Total assets at endof fiscal year

trusts (REITs), continued to expand steadily and firmly
increased its presence as a new form of real estate business.
In this operating environment, in fiscal 2006, theCompany reported record figures for consolidated revenues
from operations, operating income and net income.
Consolidated revenues from operations totaled ¥367.2

04 Nomura Real Estate Holdings, Inc. Annual Report 2007

Group Philosophy and Direction
In a real estate industry that is changing dramatically, thedriving force behind our steady growth is our Group
Philosophy, which we share as an entire group as the starting
point for our actions. In the Nomura Real Estate Group, weexpress this philosophy through the Group Message “Bringing
Tomorrow Today.” The message “Bringing Tomorrow Today”
incorporates the point of view of being “customer-oriented”
and it is a point of view that the Group has inherited andthoroughly held since the foundation of Nomura Real Estate
Development. This point of view that permeated theconsciousness of every single group employee led to thereinforcement of every business and supported our growth as
the Group’s comprehensive strength. We will therefore carry
this Group Philosophy forward into the future and continue to
strive to be trusted by society.

To Our Shareholders
Fiscal 2007 marks the 50th anniversary of Nomura Real
Estate Development Group. As we enter the milestone yearof our 50th anniversary, I would like to profoundly thank all
the stakeholders that are involved with the Group, beginningwith our shareholders. From here on as well, we will build astrong corporate structure in preparation for changes such as
fluctuations in real estate values and interest rate levels byforming a well-balanced business portfolio. As a unified
Group, we will also implement business strategies to achieve
the targets set out in the medium-term business plan. I lookforward to your unwavering support and encouragement inthese endeavors.
August 2007
Hirohisa Suzuki
President

Nomura Real Estate Holdings, Inc. Annual Report 200705

Nomura Real Estate Holdings’ 50-Year Legacy

Our Commitment toLegacyWe have built up a trustworthy track record and a reservoir of expertise and trust overhalf a century in business. By staying true to this legacy, we aim to deliver consistentearnings growth and raise our corporate value to meet the expectations of stakeholders.

1957

1960s

1970s

Birth of Nomura Real Estate
Development Co., Ltd.

Period of rapid growth of theJapanese economy

Japanese economic reconstruction
boom and steep rise in land prices

April 1957

May 1978Started business operation by building the
new headquarters of Nomura Securities
Co., Ltd.

Headquarters moved to Shinjuku Nomura Building

Residential Development
Business

May 1961

July 1978

Started purchasing residential land in Kajiwarayama,
Kamakura, and enteredhousing development
business as a developer

Started subdivision of land developed forvillas in Karuizawa and entered resort
business

October 1963
Launched condominium development
business with the construction of Co-op
Take-no-Maru in Yokohama.

Building Business

October 1978
Started business involving housing
management with condominiums
developed by the Company

May 1959

April 1977

Completion of new headquarters of
Nomura Securities Co., Ltd.; ownedbuilding and leased it to Nomura Securities; started
leasing business

Building Management
Division independently
established as Nomura
Building Sogo Kanri(currently Nomura Building
Management Co., Ltd.)May 1978
Completed construction of Shinjuku Nomura
Building and started leasing to tenants

Investment Management &Development Business

Property Brokerage &Consignment Sales
Business

Other Business

Revenues from operations

June 1959
Obtained real estate brokerage licence andstarted real estate brokerage business

May 1969

April 1972

Established Nomura Home as the brandname for wooden detached houses andstarted custom-made detached housingbusiness on a full scale

Started selling subdivisions of developedarea for villas in Fiji, South Pacific, marking
entry into overseas markets

1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979
Fiscal 1972: 10-month accounting period

06 Nomura Real Estate Holdings, Inc. Annual Report 2007

1980s

1990s

2000s

2007

Period of drastic changes in
economyEnd of bubble economy

New form of realestate market

Focusing on the next 50 years

October 2006

50th anniversaryof foundation of
the Group

Nomura Real Estate Holdings, Inc. listed on
First Section of Tokyo Stock Exchange

April 2007

(Millions of yen)

400,000

April 1985

March 1994

October 2002

Started selling subdivisions of Tsurukawa
Midoriyama residential area in Machidacity, Tokyo

Started selling A-City Hills and Towers at
Seifu-Shinto residential and commercial area,
in Hiroshima Seibu Kyuryo City, Hiroshima

Started selling subdivisions of Sento noMori residential area, Machida City, Tokyo

December 2002
Unified brand named PROUD establishedfor residential products and service

August 1983

January 1990

November 2001

Established overseas subsidiary, Nomura
Real Estate International Inc. in Los Angeles
and entered overseas real estate leasing
business

Completed construction of part of
Yokohama Business Park and started
leasing to tenants

Completed all 11 buildings planned for
Yokohama Business Park

July 1999

December 2001

Started project to joint investment in officebuildings with overseas investors (forerunner of Investment Management & Development business)

Opened Fab Minami-Osawa,
an urban cinema complex, in
Hachioji City, Tokyo.

December 2003
Nomura Real Estate Office
Fund, Inc. listed on the Tokyo
Stock Exchange

300,000

February2007

200,000

Nomura Real
Estate Residential
Fund, Inc. listedon the Tokyo
Stock Exchange

April 2000
Launched property
information website
nomu.com®

April 2001
Nomura Real Estate Urban Net started
business operations

100,000

November 1989

March 1995

March 2006

Launched the fitness club business with the
opening of the Tsurukawa Midoriyama Club

Opened first Megalos brand fitness facility
in Soka-city, Saitama

Withdrew from custom-made detachedhousing business1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Fiscal 1988: 6-month accounting period

For fiscal 2003 and before: Non-consolidated business result figures
for Nomura Real Estate Development are shown0

For fiscal 2004 and after: Consolidated
business results are shown

Nomura Real Estate Holdings, Inc. Annual Report 200707

50 Years of Achievement

PROUD: A

Brand Residents Are Proud to Call Their Home

We create the best living places to spend time in
In 2002, Nomura Real Estate Development established the unified brand name PROUD for residential products and service.
PROUD signifies that these are residences of which the occupants, the people who created them and the local community
can all be proud. We have continued to carry out sales of housing for more than 40 years. While continuing this business,
we have put the greatest value on “uncompromised quality.” With the support of our numerous in-house engineers and by
performing checks based on rigorous standards that we have independently determined, we have maintained high quality.
Furthermore, our integrated development, sales and management operations will help us to make effective use ofcustomers’ needs in creating subsequent residences. We will make good use of the expertise regarding residential
development that we have built up so far and also actively undertake urban redevelopment and renovation projects.

PROUD GEM Shibuya Jinnan (Shibuya-ku, Tokyo)

Number of Condominium Units Supplied(Units)
5,000

4,000

3,000

2,000

1,000

0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: Real Estate Economic Institute Co., LTD.

08 Nomura Real Estate Holdings, Inc. Annual Report 2007

PROUD Minami Aoyama (Minato-ku, Tokyo)

PROUD SEASON Minami Oizumi(Nerima-ku, Tokyo)

THE HOUSE Minami Azabu(Minato-ku, Tokyo)

THE STAGIO (Adachi-ku, Tokyo)

PROUD TOWER Futakotamagawa(Setagaya-ku, Tokyo)

Nomura Real Estate Holdings, Inc. Annual Report 200709

Offering New

Value

New Value Offered by the Nomura Real Estate GroupBy leveraging the customer networks, business expertise, and technological capabilities that it has built up so far, theNomura Real Estate Group is developing and providing diverse products and services related to real estate. We areoperating a broad range of services related to real estate that include the development and sale of profit-generating
property such as large commercial facilities and custom-made office buildings, as well as the leasing and comprehensive
management of office buildings. In addition, we contribute to the profitability and maximize the value of real estate that
customers own, and also operate businesses that support clients’ real estate strategies and a fitness club business thatentails the operation of 18 facilities mainly in the Tokyo Metropolitan area.

Shinjuku Nomura Building (Shinjuku-ku, Tokyo)

Yokohama Business Park (Hodogaya-ku, Yokohama)

Office Building Vacancy Rates in Tokyo’s 23 Wards
As of end of months (%)
8.0

6.0

4.0

2.0

0

Kitakyushu Kurosaki Shopping Center(Yahatanishi-ku, Kitakyushu)

04/3 04/6 04/9 04/12 05/3 05/6 05/9 05/12 06/3 06/6 06/9 06/12 07/3

— Average— Nomura Real Estate Holdings

Source: K.K. Ikoma Data Service System

10 Nomura Real Estate Holdings, Inc. Annual Report 2007

<Perspective image>Fukagawa Gatharia Tower-N (Koto-ku, Tokyo)

Midosuji Nomura Building (Tentative Name)(Chuo-ku, Osaka)<Perspective image>Shinjuku Nomura Building (Shinjuku-ku, Tokyo)

Megalos Plusia Kinshicho(Sumida-ku, Tokyo)

Nomura Real Estate Holdings, Inc. Annual Report 200711

Value in Asset Management
Superiority of Nomura Real Estate Group in Asset Management
In the Nomura Real Estate Group, based primarily on an “Investor Oriented” management philosophy, three asset
management companies are respectively engaged in the management of Japan real estate investment trusts (J-REITs),
private real estate funds, and securitized real estate products. When managing these investments, personnel with a broad
range of expertise and specialization spanning both real estate and finance draw up and execute real estate investment
strategies. In addition, through the creation of a framework that rigorously conducts risk management associated with realestate investment and disclosure of information, they ensure management with a high degree of reliability.

SECOM Medical Building (Chiyoda-ku, Tokyo)

Ichibancho Stear (Aoba-ku, Sendai)

Assets under the Group’s Management
As of March 31, (Billions of Yen)
1,000

800

600

400

NOF Shibuya Koen-dori
PROUD FLAT Kagurazaka
Building (Shibuya-ku, Tokyo) (Shinjuku-ku, Tokyo)

200

02000 2001 2002 2003 2004 2005 2006 2007

Note: Since March 31, 2007, the method of■ Listed J-REITs
calculating outstanding assets under■ Private Funds
management of REITs has been changed.
■ Joint Investments, etc.

12 Nomura Real Estate Holdings, Inc. Annual Report 2007

Our Next 50 Years

Our

Future -- Overview of Medium-term Business Plan

Overview of Medium-term Business Plan

Basic Policies of Medium-term Business Plan

The Nomura Real Estate Group has formulated a three-year

The basic policies of this medium-term business plan are to

medium-term business plan beginning in fiscal 2007.

establish a strong earnings base and maintain profit

Based on the medium-term business plan, we aim tofocus on growth in a medium- to long-term time frame,
including the period of this plan, and to expand earnings bybolstering the operating base of our existing businesses.
Moreover, we intend to enhance efficiency through thegrowth, and to pursue high investment efficiency andimprove the soundness of the financial base.
Establishing a strong earnings base and maintaining
profit growth means that we should aim to ensure profit
growth for the entire Group while establishing a well-effective allocation of management resources, according tobalanced business portfolio. The operating income target ofthe profitability and growth potential of each business.

¥72 billion that we have set represents a profit increase of

Based on the flexible concept of the market as theabout 32% compared to actual operating income of ¥54.4

reference point, we intend to build a foundation forbillion in fiscal 2006, and growth of about 10% on an

medium- to long-term growth by promoting the creation ofannual average basis. The Group believes it will be able tofields that cut across businesses and by making greater

comfortably achieve this target by further reinforcing theefforts to take advantage of new business opportunities.

current operating base.

Nomura Real Estate Group’s Performance Targets

improve the soundness of the financial base, the Group will

To realize the pursuit of high investment efficiency and

FY2006

FY2009Changefocus on business speed and funding efficiency in thedevelopment business and expanding fee businesses such

Operating Income(Millions of yen)

54,37472,00032.4%

as asset management and brokerage. By undertaking these

ROA*

6.6%

7.0%

0.4 pts

measures, the Group aims to pursue high investment

Shareholders’ Equity Ratio 25.5%

30.0%

4.5 pts

efficiency. We also intend to build up profits produced bythese measures and enhance the soundness of our financial* ROA = (Operating income + Non-operating income) / Total assets at end of
fiscal year

position. Based on the medium-term business plan we will
increase operating income by more than 30% without
substantially increasing the level of interest-bearing debt
compared to the end of fiscal 2006.

Nomura Real Estate Holdings, Inc. Annual Report 2007

13

Nomura Real Estate Group’s growth strategies

Business Strategies

Specific Measures

Make full use of developer functions• Promote businesses by utilizing advanced expertise in operations such as largescale redevelopment and renovation• Realize mutual growth through supply of in-house developed office buildings
and rental housing to REITs managed by the Group• Establish profit-generating property development business model that emphasizes fund cycles and investment returns• Step up endeavors aimed at multi-use property development, including
retail facilities

Strengthen property sourcing• Reinforce brand power by acquiring high acclaim from the market

capabilities and strategically expand• Bolster property sourcing capabilities by expanding volume of fundbusiness opportunities

formation business• Enhance information acquisition capabilities by promoting Internet strategies• Acquire diverse business opportunities by providing optimal solutions• Expand business domains by unearthing and fostering new businesses

Expand investment management• Continuous increase of assets under management of two REITs

operations• Aggressive expansion into new areas for private funds (such as logistics facilities, commercial facilities, and securitized real estate)

Residential Development Business Strategies

Moreover, we are working to expand the number ofIn the Residential Development Business, we aim to book

PROUD FLAT rental units supplied. In this business, Nomura

total sales of 6,000 units, comprising 5,000 units for end

Real Estate Group continuously supplies properties tousers and 1,000 for the investment market, and to establish

residential REITs in order to achieve mutual growth witha business foundation that will enable us to sustain the

REITs. While crystallizing our development, operating andsupply of these levels of figures of units. In the Residential

management expertise in each area, we are displaying our

Development Business segment, which is the Group’s corecomprehensive strength and building a business model thatbusiness, our most important management issue is to gener-

is unique to the Group.

ate a certain amount of business volume and profit without
being influenced by the market environment. To do this, we

Investment Management & Development Businesswill undertake the following measures.

Activities in the Investment Management & Development

First, we will further enhance the value of the PROUD

Business segment are broadly divided between the asset

brand. By using our integrated development, sales andmanagement and the profit-generating property develop-

management operations to grasp customers’ needs, andment operations.

through supplying meticulously well-built, high quality andhigh-performance housing, we can both raise the satisfac-

Business model of PROUD FLAT*

tion of customers who have purchased them and also focus
on public relations activities that successfully disseminate thebrand image, thereby continuing to maintain PROUD’s

Development

position as the top housing brand.
Furthermore, we are strengthening endeavors in theredevelopment, renovation and land readjustment project
operations. In these operations, it is necessary to havesophisticated expertise, an extensive track record andManagement andMaintenanceOperation

corporate creditworthiness, and there are not many
developers that can do all of these. These are highly difficult
operations in which it takes time to reach the stage ofcommercialization, but we intend to strengthen suchinitiatives as expanding our specialized departments andensuring certain levels of business volumes in these areas.

14 Nomura Real Estate Holdings, Inc. Annual Report 2007

* The PROUD FLAT property is developed by Nomura
Real Estate Development, and operated by Nomura
Real Estate Residential Fund with building
management provided by Nomura Living Support.

In asset management operations, from the second half ofthe 1990s the Nomura Real Estate Group understood the

Our Asset Management Platformchanges in the structure of real estate ownership in Japan andReal estate market

Real estate finance market

investors have been placing in the Group based on its management expertise accumulated to date and past investment
achievements has become one of the Group’s great strengths.
In the medium-term business plan, we have set a newtarget of increasing assets under management to ¥1.5 trillion
at the end of fiscal 2009, which will be approximately double

Name of firm

ment that were pioneering in the industry. The trust that

Nomura Real
Estate AssetManagement

Nomura Real
Estate Investment
Management

Nomura Real
Estate CapitalManagement

Under
management

has been carrying out initiatives in the field of asset manage-

REITs

Private funds

Securitized
real estate
products

the assets at the end of fiscal 2006. Asset management
operations intend to use this growth in assets under man-Investors

agement to establish a secure and stable income base. To dothis, we will work to further strengthen our operating
capabilities and further expand our business domains.
Nomura Real Estate Asset Management will work to
improve the earnings potential of its real estate undermanagement, to maintain and secure its fund procure-improvement of property sourcing and business promotion
capabilities, and the lessening of income volatility throughthe diversification of risk.
After having developed these projects and increased theirment capabilities and to invest in carefully selected prime

value, we then successively sell them. We both realize

properties, through Nomura Real Estate Office Fund, Inc.

development profit and also allocate the funds collected from(NOF), which undertakes consigned management, andsales to new investment projects. In the development of retail

Nomura Real Estate Residential Fund, Inc. (NRF). At thefacilities in particular, Geo Akamatsu Co., Ltd., which has ansame time, Nomura Real Estate Asset Management will

extensive track record in planning and consulting operations infurther strengthen strategic cooperation with Nomura

this area, was added to the Nomura Real Estate Group in

Real Estate Development.

fiscal 2007. Consequently, we plan to expand the develop-

Nomura Real Estate Investment Management, which
manages private funds, will accelerate the consigned

ment of commercial facilities by making maximum use of thiscompany’s expertise.

management of funds specializing in logistics and retailfacilities as new management sectors. At the same time,

Strategies for other businessthe company intends to form funds with a new investment

In the Building Business, based on the viewpoint ofstrategy to supply the market with investment products

maintaining our business portfolio, we intend to strategicallypossessing a variety of risk/return characteristics in orderincrease the number of buildings we own. During the period

to expand the consigned business domain.

of the current medium-term business plan, the Group will

Nomura Real Estate Capital Management undertakes

develop the Nihonbashi Nomura Building (tentative name) andconsigned management of funds that invests in real estate-

the Midosuji Nomura Building (tentative name) in line with ourrelated securities such as funds of funds targeting private

policy to add to the lineup of buildings we own.

real estate funds and commercial mortgage-backed securi-

In the Property Brokerage & Consignment Sales Business,ties (CMBS) as investment vehicles. In addition to growth of

our policy is to maintain a high potential for growth in thethese funds, the company aims to capitalize on thecore business of property brokerage. We aim to increase

expanding needs of investors to expand its business domain

total transaction value, which reached ¥380 billion in fiscal

with an eye to making inroads in global markets.

2006, to a level of more than ¥500 billion in fiscal 2009.

The three asset management companies of the Nomura

Finally, in the fitness club business, which we conduct under

Real Estate Group, on the basis of their “Investor Oriented”

the Megalos brand, we will continue to achieve growth bymanagement philosophy, respond to the wide-ranging

developing an urban compact type of facility and byasset management needs of investors and aim to be theaccelerating the opening of facilities in areas along railway

leading companies in this industry.

lines where there were previously no Megalos fitness clubs

The profit-generating property development operations

and in areas outside the Tokyo metropolitan area.

are currently carrying out approximately 150 projects. The
involvement in these many projects enables both the

Nomura Real Estate Holdings, Inc. Annual Report 200715

Business Portfolio

Our Commitment to

Our Markets

We will raise the presence of each business to achieve consistent growth and enhance corporate value.

Main businessResidential Development
Business

Composition of revenues■ Sales of housing■ Management of condominiums
55.9%

Building Business■ Leasing (owned)■ Leasing (subleasing)■ Property management andfacility management

Investment Management &Development Business

12.8%■ Property development■ Investment management
17.9%

Property Brokerage &Consignment Sales Business■ Property brokerage■ Consignment sales■ Real property sales
9.4%

Other Business■ Fitness clubs■ Architectural planand management
4.0%

16 Nomura Real Estate Holdings, Inc. Annual Report 2007

Composition of operating income

Major subsidiaries■ Nomura Real Estate
Development Co., Ltd.
■ Nomura Living Support Co., Ltd.
39.2%

■ PRIME X Co., Ltd.

■ Nomura Real Estate
Development Co., Ltd.

13.9%

■ Nomura Building Management
Co., Ltd.
■ Nomura Amenity Service
Co., Ltd.
■ YBP Heating and Cooling Supply
Co., Ltd.
■ Nomura Real Estate
Development Co., Ltd.

30.9%

■ Nomura Real Estate AssetManagement Co., Ltd.
■ Nomura Real Estate Investment
Management Co., Ltd.
■ Nomura Real Estate CapitalManagement Co., Ltd.
■ Nomura Real Estate
Development Co., Ltd.

13.9%

■ Nomura Real Estate Urban Net
Co., Ltd.

■ Nomura Real Estate
Development Co., Ltd.
■ Megalos Co., Ltd.
2.0%

Fiscal 2006 topics

The Residential Development Business offers a diverse product lineup that
includes large-scale condominiums, high-rise condominiums, large detachedhousing, and urban detached housing under the PROUD brand. Two properties
that we developed—PROUD CITY Oizumi Gakuen and STATES GRAN Ibaraki won
the Good Design Award 2006 (Architecture and Environment Design Category),sponsored by the Japan Industrial Design Promotion Organization. Nomura Real
Estate properties have won the Good Design Award for five consecutive years.

The Building Business has carried out renewal work on the Shinjuku Nomura
Building, our key office building, and the Nihonbashi Nomura Building(tentative name), a redevelopment project that includes renovation of the
Shinmuromachi Building. In January 2007, we also completed the Fukagawa
Gatharia Tower-N, an office building that we developed, and it started operation in February. Building utilization at the end of fiscal 2006 stood at 98.1%,
a year-on-year increase of 1.6 percentage points.

In the Investment Management & Development Business, the profit-generating
property development division sold the Secom Medical Building and the Omron
Kyoto Center Building to Nomura Real Estate Office Fund, Inc. In the asset
management part, Nomura Real Estate Asset Management listed Nomura Real
Estate Residential Fund, Inc. on the Tokyo Stock Exchange. In addition, we
responded to diverse investor needs by forming a Fund of Funds that invests
overseas and a fund that invests in securitized real estate products.

In the Property Brokerage & Consignment Sales Business, we worked tofurther develop our Internet strategy and reinforce proposal-based marketingtargeting business financial corporations. The number of registered membersof the Internet site nomu.com at the end of fiscal 2006 stood at 144,000, a
year-on-year increase of 58,000. In August 2006, we also opened the Seijo
Center as a new base in the Jonan and Josai area. Consignment sales
operations endeavored to form sales tie-ups with excellent developers andalso focused on the cultivation of new developers.
In the fitness club business, operations at four facilities that we opened in theprevious fiscal year got on track, and existing facilities also recorded a strong
earnings performance. In March 2007, we opened Megalos Plusia Kinshicho. At
the end of March 2007, the number of Megalos members based at all facilities
exceeded 115,000.

Nomura Real Estate Holdings, Inc. Annual Report 200717

Review of Operations

Residential Development Business
The Residential Development Business supplies approximately 4,000 residential properties a year, primarily in
the Tokyo metropolitan area. The Group offers a diverse product lineup under the PROUD brand that
includes: PROUD CITY (large-scale condominiums), PROUD TOWER (skyscraper condominiums), PROUD TOWN
(large-scale detached housing), and PROUD SEASON (detached housing in urban areas). The PROUD brandembodies our desire to supply the best properties in the area and greatly satisfy our customers. Our conceptof PROUD being equivalent to Nomura Real Estate Development’s high-quality condominiums has become
steadily entrenched in the market.

In housing management operations, we endeavored to

Overview of Fiscal 2006
In fiscal 2006, the housing market generally remained

thoroughly promote economic considerations while advocat-

robust, with demand from the condominium market

ing earnings growth as the most important management

showing underlying strength. However, owing to a decline

issue. To improve earnings, we also adopted a variety ofin the number of housing units sold in the housing sales

measures. For example, we reinforced collaboration with thepart, revenues from operations in the Residential Develop-

housing sales business and strove to build an integrated

ment Business segment declined ¥16.6 billion, or 7.4%,

development, sales and management business model,

year-on-year to ¥206.0 billion. However, operating income

aggressively undertook management consignment orders

increased ¥1.7 billion, or 7.6%, to ¥23.6 billion, due to anfrom companies outside the Group, and attempted to in-

improvement in the gross margin of housing sales operations.

crease the number of managed units and expand orders forlong-term repair work.

In the housing sales operations, we focused our efforts
on site selection and product planning in order to supply
properties that will be evaluated as the best in their

Basic Policy in Medium-term Business Plan and Future

respective areas. Sales were favorable as shown by the fact

Expansionthat completed inventories held only six units. In addition,

The basic policy that the Group has advocated for the

we attempted to establish a new earnings base by develop-

Residential Development Business in the medium-term

ing rental housing and expanding batch sales to investors

business plan is to become the leading company in thesuch as REITs.

Revenues from Operations

Operating Income*Number of Housing Sales(Billions of yen)

(Millions of yen)

(Units)300

30,0006,000

200

20,000

4,000

100

10,000

2,000

0

2005

■ Sales of Housing■ Management of Housing■ Other

18 Nomura Real Estate Holdings, Inc. Annual Report 2007

2006

2007

0

2005

2006

2007

* Operating income figures are total amounts ofResidential Development Business.

0

2005

■ Housing for Household■ Rental Housing

2006

2007

PROUD Minami Ogikubo(Suginami-ku, Tokyo)

PROUD TOWN Inage (Inage-ku, Chiba)

PROUD FLAT Gakugei Daigaku(Meguro-ku, Tokyo)

housing industry. In fiscal 2009, the final fiscal year of thebusiness. We also plan to supply properties to Nomura Realmedium-term business plan, we aim to post annual housing

Estate Residential Fund, Inc., which is managed within thesales of 5,000 units and rental housing sales of 1,000 units.

Group, and thereby expand assets under management in

Thereafter, we will establish an organization to ensure thethe Investment Management & Development Business.

stable supply of properties on that scale. In addition, we

In the housing management business, which is a stock-

will work to improve quality, which will become the foun-type fee business, we will expand the number of properties

dation of our brand power, in order to further enhance thethat we are commissioned to manage. At the same time, we

image of the PROUD brand.

will realize sustained growth by incorporating new business

Furthermore, to steadily promote sales of about 5,000

opportunities that are closely related to customers’ lives.

housing units a year, we will also aggressively engage in
redevelopment projects, renovation projects, and land
readjustment projects.
In addition to housing sales, we will also focus our effortson the development of rental housing for investors. With
regard to PROUD FLAT brand products, in particular, we
aim to create high-quality rental condominiums by making
use of the expertise we have cultivated in the housing sales

Business Results(Millions of yen)

Years ended March 31

Revenues from Operations

2005

2006

2007

¥205,950¥251,926¥222,518

Operating Income

23,904

21,952

23,627

Assets174,413

197,316

257,184

ROA* (%)

13.7%

11.1%

9.2%

Inventories¥153,104¥163,917¥229,863* ROA by segment = Segment operating income / Segment assets at end of fiscal year

Nomura Real Estate Holdings, Inc. Annual Report 2007

19

Building Business
The Group owns trophy office buildings such as Shinjuku Nomura Building, Yokohama Business Park, andOtemachi Nomura Building in major areas of the office market. Besides leasing the buildings we own, we arealso operating subleasing and property management businesses, which enables us to gain better
understanding of the needs of tenants that are specific to the area concerned as well as market trends in atimely manner. At the same time, we respond in a comprehensive manner to customers’ needs such as
trading and liquidity and leasing and asset use, and we have developed an organization that is able todevelop businesses with a very broad base.

Overview of Fiscal 2006

reviews, and such measures were implemented as the

In the Building Business, we strove to expand marketingcancellation of unprofitable subleasing contracts. In

activities closely suited to tenant needs as well as maintainproperty and facility management operations, weand enhance utilization rates. We also worked to expand

thoroughly improved services, which resulted in an increase

commission income relating to property management andin the number of consigned properties.

building management operations. In fiscal 2006, we carriedout renewal work on Shinjuku Nomura Building, a key

Basic Policy in Medium-term Business Plan and Future

office building, and Nihonbashi Nomura Building (tentative

Expansionname), a redevelopment project that includes renovation of

One measure to expand the Building Business going forward

Shinmuromachi Building. In January 2007, we completed

is Nihonbashi Nomura Building (tentative name), which is

the Fukagawa Gatharia Tower-N. As a result, revenues fromscheduled for completion in fiscal 2009. This is a project that

operations in the Building Business segment rose ¥3.1

entails the integrated renovation of surrounding buildings,

billion, or 6.3%, to ¥51.3 billion. Operating income grew

including Shinmuromachi Building, which Nomura Real Estate¥1.2 billion, or 17.0%, to ¥8.4 billion.

Development owns. By making use of various methods such

Profits derived from leasing operations improved because

as taking advantage of redevelopment opportunities in desig-

there was an increase in the number of cases where thenated areas in urban centers and the transfer bonus of floor

rents of existing tenants were raised as a result of rent

space, we plan to substantially increase building capacity rate.

Revenues from Operations

Operating Income*Vacancy Rate at Year-end(Billions of yen)

(Millions of yen)

(%)

60

10,000

6

7,500
40

4

5,000

20

2
2,500

0

2005

2006

2007

■ Building Leasing (Company-owned)■ Building Leasing (Subleased)■ Property Management and Facility Management■ Other

20 Nomura Real Estate Holdings, Inc. Annual Report 2007

0

2005

2006

2007

* Operating income figures are total amounts of
Building Business.

0

2005

2006

2007

Shinjuku Nomura Building(Shinjuku-ku, Tokyo)

Fukagawa Gatharia Tower-N(Koto-ku, Tokyo)

Nihonbashi Nomura
Building (TentativeName) (Chuo-ku, Tokyo)<Perspective image>

After completion, we intend this to become the Group’s

technological capabilities in regular negotiations with

key office building in the Nihonbashi district. In addition, inowners and tenants, it has responded to customer needs

the Building Business, we have adopted the policy of select-and enhanced their degree of satisfaction. In addition to

ing and owning properties that will become key office

this, as we are good at leasing and directly market

buildings in major areas of the office market. One example

properties ourselves, we have realized high operating rates.

is Midosuji Nomura Building (tentative name) in Chuo-ku,

Besides further expanding the Building Business, we

Osaka: we started construction during fiscal year 2007 andintend to reinforce our organizational network, which is able

it is scheduled for completion at the end of fiscal 2008.

to understand the needs of tenants that are specific to the

While continuing to strategically increase the floor spacearea concerned as well as market trends in a timely manner.

we own, we will also expand fee businesses, namely, property management and facility management.
In our leased buildings, we have maintained lower
vacancy rates than the market average. We believe thisstems from our comprehensive service organization
covering property management and building management,
which is the Group’s strength. As the Group makes
integrated use of its management capability andBusiness Results(Millions of yen)

Years ended March 31

Revenues from Operations

2005

2006

2007

¥ 45,826¥ 48,288¥ 51,342

6,459

7,158

8,372

168,820

170,011

180,587

3.8%

4.2%

4.6%

9,078

¥ 10,165

Operating Income
AssetsReturn on Assets* (%)
Inventories

¥

1,622

¥

* ROA by segment = Segment operating income / Segment assets at end of fiscal year

Nomura Real Estate Holdings, Inc. Annual Report 200721

Investment Management & Development Business
Investment Management & Development Business is the Group’s second core business and is steadily
achieving growth. This segment comprises two types of activities. In the case of the profit-generating
property development, we carry out investment and development by using our own funds, and thengenerate income by selling these developed properties. In the case of the asset management operations, wemanage investors’ funds. Our great strengths in this business have been established by the accumulation of a
product lineup and expertise that are able to fulfill all kinds of investors’ needs, as well as customer
confidence produced by our impressive past achievements.

Overview of Fiscal 2006

revenues from these operations soared ¥36.8 billion, orIn the Investment Management & Development Business in

187.6%, to 56.3 billion.
In asset management operations, Nomura Real Estate Assetfiscal 2006, the commercialization and securitization of
acquired projects and the acquisition of new projects showedManagement (NREAM) established and launched Nomura

favorable progress in profit-generating property development

Real Estate Residential Fund, Inc. for the purpose of investing

operations. In the asset management part, assets underin residential property. In February 2007, it listed the fund on

management in private funds and REITs expanded steadily. As

the Tokyo Stock Exchange as the second REIT operated by thea result, revenues from operations in the Investment

Group. In addition, Nomura Real Estate Investment Manage-

Management & Development Business segment surged ¥28.6

ment (NREIM) expanded assets under management.

billion, or 76.7%, to ¥65.9 billion. Operating income grew

Especially, it endeavored to expand the scale of private funds¥4.4 billion, or 30.9%, to ¥18.6 billion.

targeting commercial complexes and logistics facilities.
Meanwhile, Nomura Real Estate Capital Management

During fiscal 2006, in profit-generating property
development, we sold the Secom Medical Building, an(NRECM) expanded business in areas targeting management

advanced medical facility, and the Omron Kyoto Centersecuritised real estate funds varying from fund of funds to

Building to Nomura Real Estate Office Fund, Inc. In

commercial mortgage-backed securities (CMBS) and also

addition, we sold Conze Ebisu, an urban dining complex

acquired a license for services relating to discretionary

building, to a REIT outside the Group. As a result, operating

investment agreement based on the laws regulating the

Revenues from Operations

Operating Income*(Billions of yen)

(Millions of yen)

Assets under Management(Billions of yen)80

20,000800

60

15,000600

40

10,000

400

20

5,000

200

0

2005

2006

2007

■ Profit-generating Property Development■ Asset Management

22 Nomura Real Estate Holdings, Inc. Annual Report 2007

0

2005

2006

2007

* Operating income figures are total amounts ofInvestment Management & Development
Business.

02005■ Listed REITs■ Private Funds, etc.

2006

2007

SECOM Medical Building Conze Ebisu(Chiyoda-ku, Tokyo)(Shibuya-ku, Tokyo)

Land Port Atsugi (Atsugi-city, Kanagawa)securities investment advisory business. Operating revenues in

Asset management operations aim to expand assets underasset management operations declined ¥8.2 billion, ormanagement to ¥1.5 trillion in fiscal 2009, the final year of

46.2%, to ¥9.5 billion, due to the absence of special factors

the plan, which will be approximately double the assets atthat occurred in fiscal 2005. However, assets under businessthe end of fiscal 2006, and to build a stable base in terms ofgrew ¥310.9 billion, or 67.5%, to ¥771.2 billion.

fee business. To that end, we will undertake the following
challenges: strengthening operational expertise, expanding

Basic Policy in Medium-term Business Plan and Futuresectors targeted for investment; expanding real estate

Expansion

securitization products and other activities in the financial

Profit-generating property development operations areassets domain; diversifying methods of fund procurement;

currently engaged in more than 100 development andmeeting the requirements of the Financial Products Exchange

value-adding projects. However, going forward, we will

Law; and developing human resources.

successively sell them to realize development profits andallocate the funds collected to investment in new projects,
aiming to establish a business model for profit-generating
property development operations that focuses on fundcycles and investment returns.

Business Results(Millions of yen)

Years ended March 31

Revenues from Operations
Operating Income
AssetsReturn on Assets* (%)
Inventories

2005

2006

2007

7,720

¥ 37,272¥ 65,867

4,606

14,224

18,613

122,770

217,544

275,202

3.8%

6.5%

6.8%

¥ 84,636¥137,389¥132,642¥* ROA by segment = Segment operating income / Segment assets at end of fiscal year

Nomura Real Estate Holdings, Inc. Annual Report 200723

Property Brokerage & Consignment Sales Business
The Group’s Property Brokerage & Consignment Sales Business in its individual brokerage
operations performs highly efficient management by promoting office networks primarily
in the Tokyo metropolitan area and Internet strategies with a comprehensive property
information website, “nomu. com”. The main feature of our corporate real estate
brokerage operations is the fact that we make effective use of direct networking channels
to more than 3,000 companies that we have cultivated over a long period of time. This
leads to exploring the seeds of projects and the conclusion of contracts.

Nomura Real Estate Urban Net
Seijo Center (Setagaya-ku, Tokyo)

Overview of Fiscal 2006

value. Such endeavors to add value and sell properties

During fiscal 2006, the property brokerage part endeavored

expanded rapidly.
As a result, revenues from operations in the Property

to improve the content of nomu.com for MEN, a sitetargeting single men, and nomu.com/BIZ, a corporate real

Brokerage & Consignment Sales Business segment grew

estate information website. As we pursued a marketing¥13.6 billion, or 59.5%, to ¥36.5 billion, and operating

strategy utilizing the Internet and worked to strengthenincome climbed ¥2.8 billion, or 50.0%, to ¥8.4 billion.

customer-focused marketing targeting businesscorporations, the division performed favorably. For

Basic Policy in Medium-term Business Plan and Future

example, transaction value of brokerage increased sharply

Expansionin both individual households and corporates and rates ofIn the Group, the basic policy for the Property Brokerage &commission also rose.

Consignment Sales Business in the medium-term businessIn consignment sales, we focused on forming sales tie-ups

plan is to establish the number one brand that is trusted bywith high-quality developers and fostering new developers.

customers. Specifically, we will step up promotion of theWe also made efforts to promote product supply, contract

Internet strategy by enhancing the contents of nomu.com,

formation, delivery, and settlement.

a website managed by Nomura Real Estate Urban Net. In

In product real estate sales, we started out withaddition, we will promote the development of human

information obtained from brokerage clients, and thenresources and larger branch offices.

acquired properties, developed them and increased their

Revenues from Operations

Operating Income*Property Brokerage(Billions of yen)

(Millions of yen)(Billions of yen/number of transactions)40

20

10,000

3,923

3,949

2006

2007

3,698
30

7,500

15

20

5,000

10

10

2,500

5

0

2005

■ Property Brokerage■ Consignment Sales■ Real Property Sales■ Other

24 Nomura Real Estate Holdings, Inc. Annual Report 2007

2006

2007

0

2005

2006

2007

* Operating income figures are total amounts ofProperty Brokerage & Consignment Sales
Business.

02005■ Total Commission Fee— Number of Transactions

Other Business
The fitness club business entails the management of 18 facilities mainly in the Tokyo
metropolitan area. We expect to realize synergies with the Nomura Real Estate Groupthrough the acquisition of land information when opening facilities and themaintenance and management of facilities. We regard this as a sector where we willcontinue to achieve steady growth through the expansion of the facility network.
Megalos Plusia
Kinshicho (Sumida-ku,
Tokyo)

Overview of Fiscal 2006

Basic Policy in Medium-term Business Plan and Future

In the fitness club business activities, operations at fourExpansionfacilities that we opened in fiscal 2005 got on track, andIn the fitness industry, there has been an increase in theexisting facilities also registered a good performance. In

number of fitness club users, mainly in the middle-aged andMarch 2007, we opened Megalos Plusia Kinshicho, thesenior age groups, because of rising interest in lifestylesecond fitness club under our new concept targeting women

diseases such as metabolic syndrome (a combination ofand middle-aged people. As a result, we had a network of

medical disorders that increase one’s risk for cardiovascular

18 facilities in total, and the total number of Megalos

disease and diabetes) and measures to prevent such diseases.

members exceeded 115,000. Based on our policy of with-

We will continue to not only expand the number ofdrawing from custom-made housing business, the Company

facilities, but also endeavor to improve facilities anddissolved Nomura Home Co., Ltd. in March 2006, and that

introduce the latest equipment. We will also establish acompany was completely wound up in January 2007.

facility environment, customer service methods and scientific

As a result, revenues from operations in the Other

training theories, and we will provide the latest programs

Business segment declined ¥11.9 billion, or 44.0%, tobased on these. By utilizing this original approach and exper-¥15.2 billion. However, operating income increased ¥0.8

tise, we will contribute to the physical and mental health ofbillion, or 274.2%, to ¥1.2 billion.

as many regional residents as possible.

Revenues from Operations

Operating Income (Loss)*(Billions of yen)

(Millions of yen)30

Number of Members of Megalos

1,500

120,000

1,000

90,000500

60,000030,000

20

10

0

2005

■ Fitness Clubs Business■ Other

2006

2007

–500

2005

2006

2007

0

2005

2006

2007

* Operating income figures are total amounts of
Other Business.

Nomura Real Estate Holdings, Inc. Annual Report 200725

Corporate Governance

Our Commitment to

Our Stakeholders

We believe that a sound management structure is the backbone for earnings growthand higher corporate value.

Basic Viewpoints Regarding Corporate GovernanceRisk Management and Compliance Framework

The Company believes that the company must be governed

Risk Management System

in a way that continuously maximizes corporate value over

The Company has established a Risk Management

the long term, while consideration is given to the interest

Committee whose members include officers in charge ofof shareholders and all other stakeholders related to theadministrative operations at the Company and Group

Nomura Real Estate Group. Furthermore, we aim tocompanies, for the purpose of promoting risk management

enhance the earning power of the entire Group, and while

activities within the Group. The Committee deliberates

acting as a holding company in managing and supervising

matters relating to risk management, compliance, andthe business activities of our subsidiaries, we will strive to

information security for the entire Group, and alsobuild a highly transparent management organization.

cooperates and provides guidance with regard tocountermeasures when risks occur.

Company Organizations and Establishment of Internal
Control Systems

Compliance Systems

The Company’s Board of Directors comprises five directors.

The Nomura Real Estate Group regards compliance,

It decides important corporate matters and supervises theincluding the observance of laws and regulations andexecution of business operations by directors. Corporate

corporate ethics, as one of the most important management

auditors attend meetings of the Board of Directors andissues. As a set of relevant guidelines, it has formulated theprovide their opinions as the need arises.

Nomura Real Estate Group Code of Action.

The Company has adopted a corporate auditor system.

To promote continuous educational and awareness

The Board of Corporate Auditors comprises four corporate

activities for executives and employees, we have establishedauditors, two of whom are external auditors. It formulates

the Compliance Department in the Company. It provides

such matters as audit policies and operational roles, andadvice, guidance, and support to Group companies.

receives reports and conducts discussions regarding

Furthermore, based on the viewpoint of collecting

important matters relating to audits carried out on the basis

information regarding risks, we have set up the Nomuraof those policies and roles.

Real Estate Group Risk Hotline as a point of contact for

Moreover, the Company has established the holding ofinternal reporting by Group employees.

Group Management Meetings whose members include theCompany’s directors and the presidents of major

Internal Audit System

subsidiaries. The purposes of these meetings are to unify

The Nomura Real Estate Group has established an internal

intentions to promote Group management and to verify theaudit department at each Group company, with theprogress of the budgets of each operating company andexception of some small companies. Each department is

execution status of other business operations.

supervised under the direct jurisdiction of the Group
company president or an officer who does not hold anadditional office in a business operations division, whichallows the department to maintain organizational independence. In addition, we have established the Internal Audit
Department at Nomura Real Estate Holdings that supervises
the internal audit functions of the entire Group and performs monitoring, evaluation, and auditing in each division
within the Company.

26 Nomura Real Estate Holdings, Inc. Annual Report 2007

Corporate Governance System
General Meeting of Shareholders
Nomura Real Estate Holdings, Inc.
Appointment /dismissal

Appointment /dismissal
Appointment
Audit

Board of Directors(5 directors)

Board of Corporate Auditors(4 corporate auditors)

Appointment /dismissal

President
AuditGroup Management Meeting

Certified Public
Accountant(Auditing Firm)

Risk Management Committee
Corporate Planning
Department

ComplianceDepartment

Management guidanceInternal Audit
Department

Training & guidance

Monitoring

Operating Companies

Corporate Auditor Audit System

All of the certified public accountants that carry out work

The Company has appointed full-time staff as audit officers

have not more than seven years of continued experience inin the Corporate Planning Department to support corporate

auditing the Company, and the auditing firm has adopted

auditor audits. Each corporate auditor attends meetings ofautonomous measures to ensure that its employees thatthe Board of Directors and other important meetings andcarry out work do not participate for longer than aaudits the execution of the duties of directors while

designated period in the Company’s account auditing.

cooperating with the Internal Audit Department and theaccounting auditors as needed.

Assistants associated with audit operations comprise fivecertified public accountants, and eight assistant certified
public accountants and staff.

Accounting Audits
The Company has concluded an auditing contract with

Compensation of Directors and Officers

Ernst & Young ShinNihon. In addition to performing regular

At the second annual general meeting of shareholders on

audits, Ernst & Young ShinNihon discusses and verifies

June 26, 2006, it was resolved that the maximum annual

accounting issues as needed and conducts appropriatecompensation limit for directors and corporate auditors

accounting practices.

would be ¥650 million and ¥120 million, respectively.

Nomura Real Estate Holdings, Inc. Annual Report 2007

27

The Company paid the following compensation for fiscal
2006 to directors and corporate auditors.

Estate Holdings, and NLB, the Company’s parent company,
was established on April 15, 1957. Subsequently, inJanuary 1970, it was divided into NLB, which is engaged

Six Directors¥321 million

mainly in the management of real estate associated with

Four Corporate Auditors¥66 million

Nomura Securities Co., Ltd., and Nomura Real Estate(Among Whom, Two External Auditors)(¥7 million)

Development which conducts other real estate operations.

Total: 10 Persons¥387 million

In October 2004, it was decided that the Company would
become the holding company of the Nomura Real Estate

Compensation provided to Ernst & Young ShinNihon, theCompany’s accounting auditor, is as follows.

Group. Accordingly, NLB assigned all the outstanding
shares of Nomura Real Estate Development to theCompany as an in-kind contribution, and became theCompensation Based on Operations

Company’s parent company. Owing to the issuance of new

Provided in Article 2-1 of Certified Public

shares associated with the listing of the Company inAccountants Law¥17 million

October 2006 and sale of shares by NLB held a 64.8%

Other than Above¥96 million

shareholding in Nomura Real Estate Holdings at the end of
March 2007.

Stock Option Compensation for Directors
The Company has been engaged in revising the2) Business transaction relationships

compensation system for directors and corporate auditors

In the fiscal year ended March 31, 2007, business transactions

so that it contributes to the further enhancement of the

between NLB and companies in the Nomura Real Estatebusiness performance and corporate value of the Nomura

Group amounted to ¥19 million in the Building Business

Real Estate Group. During this period, we abolished thesegment and so on.

system of retirement benefits for directors and corporate
auditors, which tended to be inflexible and based on

3) Personal relationships

seniority, on March 31, 2006.

To strengthen audit operations, the Company has

At the general meeting of shareholders on June 28,

accepted two non-full-time corporate auditors from NLB.

2007, approval was provided to grant stock options based

They are Toshio Miura, an executive managing director ofon the exercise of stock acquisition rights to Company

NLB, and Masakazu Katada, a managing director of NLB.

directors in each fiscal year. These stock options, with

Hirohisa Suzuki, the Company’s President, is the former

transfer restrictions attached, are to be within the range of

President of NLB, but apart from the corporate auditors

the amount of ¥650 million per annum, as approved at thementioned above, no executives or employees of theannual general meeting of shareholders on June 26, 2006.

Company are concurrently serving at NLB or on

The purposes of providing these stock options are tosecondment from that company.

endeavor to share interests with all shareholders and tofurther increase corporate value.

The relationship between the Nomura Real Estate Groupand NLB is as described above, but it does not exert any
influence on the Nomura Real Estate Group’s free market-

Matters Concerning Parent Company

ing activities or management decisions. In addition, NLB

The Company’s parent company is Nomura Land and Build-has subsidiaries outside the Nomura Real Estate Grouping Co., Ltd. (NLB).

that are engaged in an overseas hotel management business and so on, but they do not compete with the1) Capital relationship with Nomura Land and Building
Co., Ltd.

Group’s business operations.
The Company performs business management

The former Nomura Real Estate Development Co., Ltd.,

independently from the parent company based on thethe predecessor of both Nomura Real Estate Development

Company’s own responsibility.

Co., Ltd., which is currently a subsidiary of Nomura Real28 Nomura Real Estate Holdings, Inc. Annual Report 2007

Corporate Social Responsibility (CSR)

The Group Philosophy of the Nomura Real Estate Group isexpressed in the words “Bringing Tomorrow Today.” Theword “Tomorrow” does not signify satisfaction andcontentment with the current situation; rather, it isimbued with the spirit of challenge focused on the future.
The word “Bringing” describes the relationship amongcustomers, society, and Group companies and high goals,
and it expresses the will to accomplish things. Moreover, it
is imbued with the sense that the products and services of
the Nomura Real Estate Group realize and provide (= bring)the dreams and future that people conjure up, while
linking together the good relationships and connections
among customers, society, and the Nomura Real EstateGroup. As such, “Bringing Tomorrow Today” is thefundamental concept in all the Group’s various corporate
activities, and it includes endeavors to achieve sociallysustainable development.
Nomura Real Estate Group’s Environmental
Conservation and Social Contribution Activities
Environmental Conservation Activities
In its business activities, the Nomura Real Estate Group
always takes account of the impact on the environment. It
strives to keep the burden that products and services orbusiness activities impose on the environment to a minimumas far as possible. An enormous amount of energy isconsumed in the construction and usage period of buildings.
Consequently, when developing and operating housing andother buildings, the Group pays sufficient consideration to
the impact on the environment, including the appropriate
use of resources and the alleviation of environmental load,from the design stage to the operating stage.

The Group conducts various
environmentally-friendly initiatives basedon ISO 14001 and has acquired thisenvironmental certification.

Social Contribution Activities
The Nomura Real Estate Group not only provides highquality products and services to customers, but also
contributes to regional culture and communities. This leads
to deeper communication between society and the Groupand an improvement in service, as well as the creation ofcommunity activities and a rich culture. We believe we cancreate truly comfortable living spaces for everyone,
including our customers.

Supporting disaster prevention training
through a community event

Nomura Real Estate Holdings, Inc. Annual Report 200729

Board of Directors and Corporate Auditors

President
Hirohisa Suzuki

Director
Mototsugu Takai

Director
Seiji Matsumoto

Director
Yoji Kurihara

Director
Takao Orihara

Corporate Auditor
Toshio Miura

Corporate Auditor
Tatsuo Shimamura

Corporate Auditor
Mitsuharu Sato

Corporate Auditor
Masakazu Katada(As of June 28, 2007)

30 Nomura Real Estate Holdings, Inc. Annual Report 2007

Financial Section

Our Commitment to

Our Results

We will promote growth strategies based on a sound management structure.
This promise to our stakeholders will lead to excellent results.

Contents
P32 Three-Year Financial Summary
P33 Management’s Discussion and Analysis
P38 Consolidated Balance Sheets
P40 Consolidated Statements of Income
P41 Consolidated Statements of Changes in Net Assets
P42 Consolidated Statements of Cash Flows
P43 Notes to Consolidated Financial Statements
P60 Report of Independent Auditors

Forward-looking Statements
This annual 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 ofrisks and uncertainties, which include economic trends, intensification ofcompetition in the real estate industry, the legal system and taxation system,and other regulations. As such, actual results may differ from those projected.

Nomura Real Estate Holdings, Inc. Annual Report 200731

Three-Year Financial Summary
Nomura Real Estate Holdings, Inc.
The fiscal years ended March 31, 2005, 2006 and 2007

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

2005

2006

2007

2007

Fiscal Year
Revenues from operations
Gross profit
Gross margin ratio
Selling, general and administrative expenses
SG&A ratio to revenues
Operating income
Operating margin
Income before income taxes and minority interests
Net income
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Cash and cash equivalents at fiscal year end¥345,894
87,531
25.3%
51,78915.0%
35,742
10.3%
16,3596,474(24,630)(20,462)
63,444
48,223¥350,319
97,551
27.8%
53,28315.2%
44,26812.6%
19,721
12,717(99,830)(17,995)
113,818
44,216¥367,237
108,668
29.6%
54,29414.8%
54,37414.8%
47,86826,297(89,850)(26,787)
100,863
28,437$3,110,858
920,527

Fiscal Year End
Total assets
Interest-bearing debt
Shareholders’ equity
Shareholders’ equity ratio
Debt-to-equity ratio (times)

580,130
300,247
46,6458.0%
6.4

689,287
413,039
60,7328.8%
6.8

836,303394,885
213,20725.5%
1.9

7,084,313
3,345,070
1,806,073(Yen)(U.S. dollars)

2005

2006

2007

2007

¥203,859.93
44,367.78–¥267,956.93
56,109.84
2,000.00¥1,427.80
200.4720.00$12.091.70
0.17

Per Share Data (Note)
Shareholders’ equity
Net income
Cash dividends
Note: The Company carried out a 500-for-1 stock split on April 1, 2006.

32 Nomura Real Estate Holdings, Inc. Annual Report 2007

459,922460,605
405,487
222,764(761,116)(226,913)
854,409240,891

Management’s Discussion and Analysis

Trends in the Real Estate Industry
In fiscal 2006, the year ended March 31, 2007, the housing sales market continued with a high level of supply andmaintained a strong performance centered on high-rise and large-scale condominiums, with robust demand evident among
first-time home buyers, primarily the so-called second-generation baby boomers, and the elderly. This performance was
supported by anticipation of a rise in the level of land prices and interest rates. In the office building leasing market, vacancy
rates declined as office demand expanded due to an improvement in corporate earnings and companies returned to thecenter of cities, while rents entered a phase of growth primarily in the case of centrally located urban buildings withexcellent locations and facilities. Furthermore, the real estate investment market, where REITs are the representative
products, also continued to expand steadily, and gradually increased their presence as a new form of real estate business.
Average prices and contract rates forcondominiums in the Tokyo metropolitan area
For the calendar years(Millions of yen / %)50
75.4

78.1 79.0

Vacancy rates in Tokyo’s 23 wards

J-REIT market’s total valuation

As of December 31(%)

As of March 31(Trillions of yen)

8.0

82.5

8.0

78.3

6.9
6.1

40
6.0

6.3

6.0

6.0

30
4.0

4.0

4.0
3.4

20

2.6
2.0

1.9

2.0

10

1.3
0.5

0

2002 2003 2004 2005 2006

■ Average priceContract rate
Source: Real Estate Economic Institute Co., Ltd.

02002 2003 2004 2005 2006

Source: K.K. Ikoma Data Service System02003 2004 2005 2006 2007

Source: Tokyo Stock Exchange, Inc.

Analysis of Operating Results
The Group reported a strong earnings performance. In fiscal 2006, revenues from operations, operating income and net
profit all reached new record highs, as was the case in fiscal 2005.
Revenues from operations year-on-year increased ¥16.9 billion, or 4.8%, to ¥367.2 billion. By segment, revenues declined in
the Residential Development Business due to a decrease in the number of sales of housing units, and revenues declined in the
Other Business due to the Group’s withdrawal from the custom-made detached housing business. However, revenues grew
substantially in the Investment Management & Development Business and the Property Brokerage & Consignment Sales
Business. In the Investment Management & Development Business, in particular, the sales of internally developed profitgenerating property to REITs inside and outside the Group made a strong contribution.
Operating income rose ¥10.1 billion, or 22.8%, to ¥54.4 billion. All segments recorded growth in profit, and the Investment Management & Development Business and the Property Brokerage & Consignment Sales Business reported particularly
striking increases. In both segments, capital gains from sales of internally developed profit-generating property made asubstantial contribution.
Net income was up ¥13.6 billion, or 106.8%, to ¥26.3 billion. As the Group had almost completed its financial restructuring
by the previous fiscal year, extraordinary losses amounted to only ¥869 million because of the early application of the lower ofcost or market valuation method to inventories. As a result, net income showed a large increase.

Nomura Real Estate Holdings, Inc. Annual Report 200733

Earnings by business segment are outlined below. It should be noted that revenues from operations in each segment
includes inter-segment sales and transfers.

Segment earnings(Millions of yen)
Years ended March 31

Residential Development Business:
Revenues from operations
Operating income
Building Business:
Revenues from operations
Operating income
Investment Management & Development Business:
Revenues from operations
Operating income
Property Brokerage & Consignment Sales Business:
Revenues from operations
Operating income
Other Business:
Revenues from operations
Operating income (loss)

2005

2006

2007

¥251,926
23,904¥222,518
21,952¥205,950
23,62745,826
6,459

48,288
7,158

51,342
8,372

7,720
4,606

37,272
14,22465,867
18,613

19,641
5,011

22,874
5,592

36,488
8,389

27,716(203)

27,058324

15,162
1,212

The pie chart below shows the percentage of operating income generated by each segment. The Group has achieved awell-balanced business portfolio.

Breakdown of operating income in fiscal 2006
(Millions of yen / %)1,212
(2.0%)

8,389(13.9%)

Total
18,613(30.9%)¥54,374
million23,627(39.2%)

8,372(13.9%)

34 Nomura Real Estate Holdings, Inc. Annual Report 2007

■ Residential Development Business ■ Building Business■ Investment Management & Development Business■ Property Brokerage & Consignment Sales Business■ Other BusinessNote: Since operating income for each business does notinclude “eliminations or corporate” in segment
information, they differ from the total value shown in thecenter of the pie chart. The shares of consolidated
operating income by business have been calculated basedon operating income for each segment.

Major operating-related indices for each business are shown in the table below:
Years ended March 31

Residential Development Business:
Condominium sales (units)
Detached housing sales (units)
Gross margin ratio of housing sales (%)
Completed housing inventories (units)
Rental condominium sales for investors (units)
Condominiums under management (units)
Building Business:
Vacancy rate (%)
Investment Management & Development Business:
Assets under management (millions of yen)
Property Brokerage & Consignment Sales Business:
Brokerage Number of transactions
Brokerage Total transaction value (millions of yen)
Other Business:
Members of MEGALOS

2005

2006

2007

4,629
374
19.2
68
0
86,385

3,656
448
20.5
64
36
92,758

3,245
507
22.2
6
248
97,847

3.5

3.5

1.9

319,713460,320

771,211

3,698
323,389

3,923
347,990

3,949
388,479

94,966113,973

115,457

Analysis of Financial Position
In fiscal 2006, current assets rose ¥111.3 billion, or 23.7%, to ¥580.5 billion. This increase resulted mainly from a yearon-year rise of ¥87.2 billion in inventories due to a purchase of land by the Residential Development Business and a ¥36.4
billion year-on-year increase in equity investments associated with growth in assets under management in the Investment
Management & Development Business. Since the Group invests in equity from the viewpoint of being in the same boat as
investors when undertaking the management of funds, the balance of equity investments increases when assets undermanagement increase.
Net property and equipment grew ¥21.8 billion, or 14.2%, to ¥175.0 billion due to the completion of the Fukagawa
Gatharia Tower-N and a purchase of land for Midosuji Nomura Building (tentative name). Investments and other assets rose
¥13.6 billion, or 21.1%, to ¥78.2 billion. This is attributable to an investment associated with the formation of Nomura Real
Estate Residential Fund, Inc. and a rise in book value associated with an increase in share prices of office and residential
REITs. As a result, total assets grew ¥147.0 billion, or 21.3%, to ¥836.3 billion.
Current liabilities decreased ¥40.8 billion, or 15.0%, to ¥230.7 billion due to a decrease in short-term debt.
Long-term liabilities increased ¥35.0 billion, or 9.8%, to ¥391.1 billion. However, the balance of interest-bearing debt
declined ¥18.2 billion to ¥394.9 billion. As a result, total liabilities decreased ¥5.7 billion, or 0.9%, to ¥621.8 billion.
In response to the enforcement of the Companies Act, minority interests and deferred gains or losses on hedges havebeen newly included in shareholders’ equity in net assets. Net assets, which include minority interests, increased ¥153.7
billion year-on-year to ¥214.5 billion. This increase was mainly due to the posting of ¥26.3 billion in net income and acapital increase (¥120.0 billion) implemented in tandem with the listing of the Company’s shares on the Tokyo Stock
Exchange. As a result, the debt-to-equity ratio was 1.9 and the shareholders’ equity ratio was 25.5%, marking a substantial
improvement from the end of the previous fiscal year.
Because of the issuance of new shares at the time of listing, we have become able to purchase properties for the sake ofprofit growth going forward without increasing debts. We would like to thank all our new shareholders, who have provided
us with funds for growth, and we will fulfill the responsibilities with which we have been charged.

Nomura Real Estate Holdings, Inc. Annual Report 200735

Cash Flows
Cash flows from operating activities
Although they decreased by ¥10.0 billion year-on-year, net cash used in operating activities was ¥89.8 billion mainly
because of: an increase in inventories, mainly caused by a purchase of land by the Residential Development Business; a risein equity investment value in the Investment Management & Development Business due to growth in assets undermanagement; and a partial offset of income before income taxes and minority interests of ¥47.9 billion.

Cash flows from investing activities
Net cash used in investing activities increased by ¥8.8 billion, resulting in ¥26.8 billion. This is mainly attributable to an
investment in Nomura Real Estate Residential Fund, Inc. as well as purchases of property and equipment, including the
Fukagawa Gatharia Tower-N building and land for an office building in Chuo-ku, Osaka.

Cash flows from financing activities
Net cash provided by financing activities declined by ¥13.0 billion, resulting in net cash provided of ¥100.9 billion. This was
mainly due to ¥119.4 billion in funds raised through a capital increase carried out in tandem with the listing of theCompany’s shares on the Tokyo Stock Exchange.

As a result, cash and cash equivalents at the end of fiscal 2006 stood at ¥28.4 billion, representing a year-on-year
decrease of ¥15.8 billion.

Basic Policy Concerning Profit Distribution
The Company’s basic policy regarding the distribution of profits to shareholders requires that such distribution isdetermined by considering a balance with retained earnings, after comprehensively taking into account such factors as
business performance during the applicable fiscal year, the management environment going forward and capital
investment plans. We intend to utilize the retained earnings for proactive business investments, including the purchase of
inventories, with the aim of obtaining profits in the future.
In accordance with the basic policy on profit distribution, the Company paid an annual dividend per share of ¥20 for
fiscal 2006. For fiscal 2007, the Company intends to pay an annual dividend per share of ¥30, including an interim
dividend of ¥15.

Risks Affecting the Business of Nomura Real Estate GroupWe believe that the following major risks have the potential to significantly impact the operating results and financial
condition of the Group as well as the decisions of investors. As the Group is sufficiently aware of the potential for these risks,in addition to carrying out thorough risk management, it is currently establishing and strengthening its internal control
systems to ensure that the best measures are taken. It should be noted that matters concerning the future in this document
have been determined on the basis of information that the Group was able to obtain as of the end of fiscal 2006.

36 Nomura Real Estate Holdings, Inc. Annual Report 2007

1) Trends in real estate market
Going forward, if incidents such as a rise in interest rates, stagnant economic conditions, a deterioration in corporate
earnings and consumer spending, or excess supply in the real estate market should occur, this would likely cause a decline
in the purchasing inclinations of customers of the Residential Development Business and the Property Brokerage &Consignment Sales Business. Moreover, in the Building Business and the Investment Management & Development
Business, this could lead to a decline in the level of office rents and a rise in vacancy rates as well as a fall in asset value,
which could have an adverse impact on the Group’s business performance.

2) Changes to real estate-related legislation or the tax system
Going forward, if the Building Standards Law, the Building Lots and Buildings Transaction Business Law or other realestate-related laws are revised, or if new legislation is implemented, this could cause the occurrence of new obligations
and expense burdens. Such events could adversely affect the Group’s business performance.
Furthermore, if the tax system related to real estate is revised, this could lead to an increase in expenses forholding, acquisition or sale of assets, a decline in the purchasing inclinations of customers, a change in the facility
strategies of companies, and a revision of their investment plans. Such events could have an adverse impact on theGroup’s business performance.

3) Licenses and permits for major businesses
Each company in the Group obtains licenses and permits such as real estate brokerage licenses and construction licenses
when carrying out business activities. In the future, if such licenses or permits should be cancelled or subject to penalties
for whatever reason, this could adversely affect the Group’s business performance.

4) Impact on balance of interest-bearing debt
When raising funds by borrowing, the Group attempts to deal with the risk of a short-term rise in interest rates mainly bytaking out long-term, fixed-rate loans. However, an increase in borrowing costs due to a rise in market interest rates could
have a negative impact on the Group’s business performance and financial condition.

5) Natural disasters
Natural disasters such as earthquakes and wind and flood damage, or the occurrence of sudden accidents, could lead todamage or destruction of real estate owned or managed by the Group. Such incidents could have a negative impact on
the Group’s business performance and financial condition.

6) Personal information
In the event of external leakage of personal information due to unforeseen circumstances, confidence in the Group could
be lost, leading to a decrease in sales and the occurrence of expenses to pay compensation for damages. This could havean adverse impact on the Group’s business performance.

Nomura Real Estate Holdings, Inc. Annual Report 200737

Consolidated Balance Sheets
Nomura Real Estate Holdings, Inc.
March 31, 2006 and 2007ASSETS
Current Assets:
Cash and bank deposits (Note 2 (3))
Notes and accounts receivable
Inventories (Notes 5 and 8)
Equity investments (Note 3)
Deferred income taxes (Note 9)
Other current assets
Allowance for doubtful accounts
Total current assets

Investments and Other Assets:
Investment securities (Note 3)
Lease deposits
Deferred income taxes (Note 9)
Other
Allowance for doubtful accounts
Total investments and other assets

Property and Equipment, at cost:
Land (Notes 5 and 7)
Buildings and structures (Note 7)
Construction in progress (Note 5)
Machinery and equipment (Note 5)
Accumulated depreciation
Net property and equipment
Intangible fixed assets
Total Assets

38 Nomura Real Estate Holdings, Inc. Annual Report 2007

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

2006

2007

2007

¥ 44,216
7,258
340,555
41,571
11,42524,248(77)¥ 28,439
9,305
427,774
77,945
11,52825,595(70)$ 240,907
78,822
3,623,669
660,272
97,652
216,816(598)

469,196580,516

4,917,540

17,20929,487
11,5926,331(54)

36,75828,185
11,832
1,461(71)

311,379
238,755
100,226
12,377(601)

64,56578,165662,136

71,392
132,783
4,424
5,542

89,141141,057701
5,587

755,116
1,194,894
5,935
47,327214,141(60,971)

236,486(61,494)

2,003,272(520,915)

153,170

174,992

1,482,357

2,356

2,630

22,280¥689,287¥836,303$7,084,313

LIABILITIES AND NET ASSETS
Current Liabilities:
Trade accounts payable
Short-term debt and current portion of long-term debt (Notes 4 and 5)
Corporate bonds due within one year
Accrued income taxes (Note 9)
Deposits received
Deferred income taxes (Note 9)
Accrued bonuses to employees
Accrued bonuses to directors and corporate auditors
Provision for loss on liquidation of subsidiaries
Accrued interest
Accrued consumption taxes
Other accounts payable
Rents received in advance
Other current liabilities (Note 8)
Total current liabilities
Long-term Liabilities:
Corporate bonds
Long-term debt less current portion (Notes 4 and 5)
Guarantees and deposits from tenants
Deferred income taxes (Note 9)
Deferred tax liabilities on land revaluation (Note 9)
Allowance for employees’ retirement benefits (Note 6)
Allowance for directors’ and corporate auditors’ retirement benefits
Provision for loss on subleasing business
Other liabilities
Total long-term liabilities
Total Liabilities
Net Assets:
Shareholders’ equity (Note 10):
Common stock
Additional paid-in capital
Retained earnings
Treasury stock
Valuation, translation adjustments and other:
Net unrealized holding gains on securities
Deferred gains/losses on hedges
Land revaluation reserve
Foreign currency translation adjustments
Minority interests
Total Net Assets
Total Liabilities and Net Assets(Millions of yen)(Thousands of
U.S. dollars)

2006

2007

2007

¥ 40,472
109,250
100
9,182
68,728
285
3,305
497
746
667
727
5,379
17,96914,173¥ 39,058
67,766–15,16560,281
185
3,665
571
628
793
1,588
5,308
17,507
18,202$ 330,861
574,041–
128,460
510,637
1,569
31,049
4,836
5,320
6,717
13,45444,968148,302
154,188271,480

230,717

1,954,402

5,500
298,189
22,626
6,257
3,930
9,133
1,241
5,880
3,331

–
327,120
31,032
11,087
3,905
10,699
–
3,812
3,465

–
2,771,028
262,877
93,91533,076
90,630–32,29529,353356,087

391,120

3,313,174

627,567

621,837

5,267,576

22,670–33,288–82,64659,97659,245(0)

700,097
508,056
501,860
(2)

4,772
–
(213)
215
988

11,429
(15)
(327)
253
1,259

96,818(131)(2,769)2,145
10,66361,720214,466

1,816,737¥689,287¥836,303$7,084,313

See notes to consolidated financial statements.

Nomura Real Estate Holdings, Inc. Annual Report 200739

Consolidated Statements of Income
Nomura Real Estate Holdings, Inc.
Years Ended March 31, 2006 and 2007

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

2006

2007

2007

Operating Revenues:
Revenues from operations¥350,319¥367,237$3,110,858

Operating Expenses:
Cost of revenues from operations
Selling, general and administrative expenses

306,051
252,768
53,283

312,863258,569
54,2942,650,253
2,190,331
459,922

44,26854,374

460,605

Other Income and Expenses:
Interest income
Dividend income
Gain on changes in equity of affiliates
Gain on compensation for damages
Gain on reversal of provision for loss on subleasing business
Interest expense
Equity in loss of unconsolidated subsidiaries and affiliates
Distributions from silent partnership
Inventory write-downs
Loss on liquidation of subsidiaries
Loss on impairment of fixed assets
Loss on subleasing business
Other, net(24,547)
100
30
455
311
–
(4,845)
(49)
(900)
–
(1,178)(4,438)(9,784)(4,249)(6,506)
373
71
–
–
1,291
(6,514)
(65)
(174)
(869)
–
–
–
(619)

(55,118)
3,156
603
–
–
10,930(55,181)(549)(1,471)(7,365)–––(5,241)

Income before Income Taxes and Minority Interests

19,72147,868405,487

11,525(4,546)
6,979

21,648(222)
21,426

183,383(1,886)
181,497

Minority interests

25

145

1,226

Net Income¥ 12,717¥ 26,297$ 222,764

Operating Income

Income Taxes (Note 9):
Current
DeferredTotal

See notes to consolidated financial statements.

40 Nomura Real Estate Holdings, Inc. Annual Report 2007

Consolidated Statements of Changes in Net Assets
Nomura Real Estate Holdings, Inc.
Years Ended March 31, 2006 and 2007

(Millions of yen)
Retainedearnings

Treasurystock

Net unrealized
holding gains
on securities–¥20,571¥ –¥ 2,263––

12,717
(0)

–
–

–
2,509

–

¥33,288¥ –¥ 4,772

59,976––––59,976
–
–
–
–

–
(453)
26,297
–
113

–
–
–
(0)
–

–
–
–
–
6,657

¥82,646¥59,976¥59,245¥(0)¥11,429

Deferred
gains/
losses onhedgesLand
revaluation
reserve

Foreigncurrencytranslation
adjustments

Minority
interests

Total
net assets

Balance at March 31, 2005
Net income
Other changes

¥ –
–
–

¥ 2,154–(2,367)¥(1,013)
–
1,228

¥ 209
–
779

¥ 46,854
12,717
2,149

Balance at March 31, 2006

¥ –¥ (213)

¥

215

¥ 988

¥ 61,720

–
–
–
–
(15)

–
–
–
–
(114)

–
–
–
–
38

–
–
–
–
271

119,952(453)
26,297
(0)
6,950

¥(15)

¥ (327)253¥1,259¥214,466

Commonstock

Additonal
paid-in
capitalRetainedearnings

Treasurystock

Net unrealized
holding gains
on securities

Balance at March 31, 2005
Net income
Other changes
Balance at March 31, 2006
Issuance of common stock
Cash dividends paid
Net income
Purchases of treasury stock
Other changes
Balance at March 31, 2007

Number ofsharesissuedCommonstock

Additonal
paid-in
capital226,650¥22,670

¥

–
–

–
–

226,650¥22,670¥

149,098,350––––
149,325,000(Millions of yen)Issuance of common stock
Cash dividends paid
Net income
Purchases of treasury stock
Other changes
Balance at March 31, 2007¥

(Thousands of U.S. dollars)

Balance at March 31, 2006
Issuance of common stock
Cash dividends paid
Net income
Purchases of treasury stock
Other changes$192,041
508,056
–
–
–
–

$

–
508,056––––$281,984–(3,840)222,764
–
952

$–
–
–
–
(2)
–

$40,421––––56,397

Balance at March 31, 2007

$700,097$508,056$501,860$(2)$96,818Land
revaluation
reserve

Foreigncurrencytranslation
adjustments

Minority
interests

Total
net assets(Thousands of U.S. dollars)
Deferred
gains/
losses onhedgesBalance at March 31, 2006
Issuance of common stock
Cash dividends paid
Net income
Purchases of treasury stock
Other changes

$

–
–
–
–
–
(131)

$(1,802)
–
–
–
–
(967)

$1,820––––325$ 8,372
–
–
–
–
2,291

$ 522,836
1,016,112(3,840)222,764(2)
58,867

Balance at March 31, 2007$(131)$(2,769)$2,145$10,663$1,816,737

Notes:(1) Effective the fiscal year ended March 31, 2007, minority interests have been included in net assets.
(2) The increase of 149,098,350 shares in the total amount of issued common stock comprises an increase of 113,098,350 shares due to a stock split and an increaseof 36,000,000 shares due to a capital increase by public offering.

Nomura Real Estate Holdings, Inc. Annual Report 200741

Consolidated Statements of Cash Flows
Nomura Real Estate Holdings, Inc.
Years Ended March 31, 2006 and 2007

Cash Flows from Operating Activities:
Income before income taxes and minority interests
Depreciation
Loss on impairment of fixed assets
Equity in loss of unconsolidated subsidiaries and affiliates
Decrease (increase) in allowance for doubtful accounts
Increase in allowance for employees’ retirement benefits
Decrease in provision for loss on liquidation of subsidiaries
Increase (decrease) in provision for loss on subleasing business
Interest and dividend income
Interest expense
Decrease (increase) in accounts receivable
Increase in inventories
Increase in equity investments
Decrease in trade accounts payable
Decrease in deposits received
Payment of bonuses to directors and corporate auditors
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash used in operating activities
Cash Flows from Investing Activities:
Payments for purchases of investment securities
Proceeds from sales of investment securities
Payments for purchases of property and equipment, and intangible fixed assets
Proceeds from sales of property and equipment, and intangible fixed assets
Increase in loans
Decrease in loans
Increase in lease deposits
Decrease in lease deposits
Decrease in guarantees from tenants
Increase in guarantees from tenants
Other, net
Net cash used in investing activities
Cash Flows from Financing Activities:
Increase (decrease) in short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of corporate bonds
Payments for redemption of corporate bonds
Proceeds from issuance of shares
Proceeds from issuance of shares to minority shareholders
Cash dividends paid
Payments for dividends to minority shareholders
Net increase in treasury stock
Net cash provided by financing activities
Net decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of the Fiscal Year
Increase (decrease) in Cash and Cash Equivalents Resulting from
Change in Scope of Consolidation
Cash and Cash Equivalents at End of the Fiscal year (Note 2 (3))
See notes to consolidated financial statements.

42 Nomura Real Estate Holdings, Inc. Annual Report 2007

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

2006

2007

2007

¥ 19,721
5,407
4,438
49
(211)
943
(61)
5,880
(130)
4,845
2,487
(82,544)(25,666)(10,407)(8,309)(441)(88)¥ 47,868
4,546
–
65
10
1,566
(118)
(2,068)(444)
6,514(2,047)(87,219)(36,374)(1,413)(7,551)–
7,646$ 405,487
38,509–549
86
13,264(999)(17,515)(3,759)55,181(17,341)(738,830)(308,125)(11,972)(63,965)–
64,774(84,087)
1,280(4,585)(12,438)(69,019)
1,151(6,303)(15,679)(584,656)
9,749(53,393)(132,816)(99,830)(89,850)(761,116)

(910)
1,579
(11,818)
2,720(5,038)490(2,508)5,502(5,543)
1,613(4,082)(9,196)
154(26,917)
141
(82)
112
(524)
1,796
(3,295)
10,800224(77,900)
1,306(228,014)
1,195
(697)
954
(4,441)
15,211(27,910)
91,487
1,896(17,995)(26,787)(226,913)

2,300
166,721(61,429)
5,571
(400)
–
1,062
–
(7)
–

(36,200)
76,768(53,122)–(5,600)
119,428
49
(453)
(7)
(0)

(306,650)
650,301(449,992)–(47,437)
1,011,672
414(3,840)(57)(2)

113,818

100,863854,409(4,007)48,223(15,774)
44,216(133,620)
374,549

–

(5)

(38)

¥ 44,216¥ 28,437$ 240,891

Notes to Consolidated Financial Statements
Nomura Real Estate Holdings, Inc.
March 31, 2006 and 2007

1. Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated financial statements of Nomura Real Estate Holdings, Inc. (the “Company”) and its consolidated subsidiaries have been prepared in accordance with the provisions set forth in the Securities and Exchange Law of Japanand its related accounting regulations, and accounting principles generally accepted in Japan (“Japanese GAAP”), which are
different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements have been compiled from the consolidated financial statements of
the Company prepared in accordance with Japanese GAAP, and translated into English for the understanding of readers. In
addition, the notes to the consolidated financial statements include information which may not be required under Japanese
GAAP but is presented herein as additional information.
The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers using theprevailing exchange rate at March 31, 2007, of ¥118.05 = U.S.$1.00. These translations should not be construed as
representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S.
dollars at this or any other rate of exchange.

2. Significant Accounting Policies(1) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries that theCompany controls directly or indirectly. Companies over which the Company exercises significant influence in terms of theiroperating and financial policies have been included in the consolidated financial statements on an equity basis.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit
included in the assets resulting from transactions among the consolidated companies have been eliminated.

(2) Foreign Currency Translation
All current and non-current accounts denominated in foreign currencies are translated into Japanese yen at the spot
exchange rates in effect at the consolidated balance sheet date. Differences arising from such translation are recognized asgain or loss. The asset and liability accounts of the overseas subsidiaries and affiliates are translated into Japanese yen at theexchange rates prevailing at the respective balance sheet dates of the subsidiaries and affiliates and the revenues andexpense accounts are translated into yen at the average rates of exchange for the period. Differences arising from suchtranslation are presented as “Foreign currency translation adjustments” in Net Assets.

(3) Cash and Cash Equivalents
In preparing the Consolidated Statements of Cash Flows, cash on hand, readily-available deposits and short-term, highlyliquid investments with maturities not exceeding three months at the time of purchase and with an insignificant risk ofmarket value fluctuation are considered to be cash and cash equivalents.
As of March 31, 2007, the balance of “Cash and cash equivalents” differed from the balance of “Cash and bank deposits” because it did not include time deposits with deposit terms exceeding three months of ¥2 million ($16 thousand).

(4) Recognition of Revenues
Revenues from sales of housing and other real estate are recognized when delivered and accepted by customers.

Nomura Real Estate Holdings, Inc. Annual Report 200743

(5) Inventories
Since the fiscal year ended March 31, 2007, inventories are mainly stated at cost, determined by the specific identification
cost method (the amounts of inventories in the accompanying Consolidated Balance Sheets are computed according to thewrite-down method reflecting decreased profitability).
Prior to March 31, 2006, inventories are mainly stated at cost, determined by the specific identification cost method.
The Company has adopted “Accounting Standard for Measurement of Inventories” (Statement No.9 issued by the
Accounting Standards Board of Japan on July 5, 2006) effective the year ended March 31, 2007. As a result, income before
income taxes and minority interests decreased by ¥869 million compared with the amount which would have been recorded
under the previous method. The information that had effects on segment information was described in Note 13.

(6) Marketable and Investment Securities
Held-to-maturity debt securities are stated at amortized cost by the straight-line method.
Available-for-sale securities with market value are stated at fair market value based on market quotations at the balance
sheet date. Unrealized gains and losses are reported, net of the applicable taxes, as a separate component of Net Assets.
Cost of securities sold is determined by the moving-average method. Available-for-sale securities without market value arestated at cost by the moving-average method.

(7) Property and Equipment
Depreciation of property and equipment is computed mainly by the straight-line method.
Estimated useful lives used in the computation of depreciation are generally as follows:
Buildings and structures

2 to 65 years(8) Software
Costs of software for internal use are amortized using the straight-line method over an estimated useful life of five years.

(9) Allowance for Doubtful Accounts
In order to prepare for possible bad debt losses on notes and accounts receivable and loans, allowance for doubtful accounts isprovided at an amount calculated on the basis of a historical bad debt ratio for a certain reference period for normal claims, plus
an estimated uncollectible amount determined on the basis of individual assessments for specific claims with potential losses.

(10) Leases
Except for finance lease agreements under which ownership of the leased assets is deemed to be transferred to the lessee,
lease fees are charged in the same manner as operating leases.

(11) Income Taxes
Current income taxes are stated at the estimated amount payable during each fiscal year for corporation, enterprise andinhabitants’ per capita taxes in the Consolidated Statements of Income.
The tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting andincome tax purposes is recognized as deferred income taxes.

44 Nomura Real Estate Holdings, Inc. Annual Report 2007

(12) Allowance for Employees’ Retirement Benefits
In order to provide for employees’ retirement benefits, the Company and its subsidiaries account for the liability for retirement
benefits based on the estimated amounts of projected benefit obligation and plan assets at the end of the fiscal year.
Actuarial gain or loss is included in the Consolidated Statements of Income from the year following the fiscal year inwhich the gain or loss is recognized on a straight-line basis over a 10-year period, which is shorter than the averageremaining service period of the eligible employees.

(13) Allowance for Directors’ and Corporate Auditors’ Retirement Benefits
The Company and certain of its subsidiaries approved a resolution for the final payment of retirement benefits for directors
and corporate auditors following the termination of the retirement benefit plan for directors and corporate auditors resolved
at the ordinary general meeting of shareholders held in June 2006.
As a result, Allowance for directors’ and corporate auditors’ retirement benefits has been included in Other current liabilities
effective the year ended March 31, 2007.

(14) Per Share Information
Basic net income per share is computed by dividing the net income available for distribution to shareholders of common
stock by the weighted average number of shares of common stock outstanding during each fiscal year.
Diluted net income per share for the year ended March 31, 2007 has not been presented since no potentially dilutive
shares of common stock were outstanding as of March 31, 2007.

(15) Land Revaluation
Under “The Law Concerning Revaluation Reserve for Land” promulgated on March 31, 1998, the Company revalued its land
held for business use. The tax amount for the difference between the appraisal value and the carrying amount is accounted
for as “Deferred tax liabilities on land revaluation” in Liabilities and the net of such tax amount is recorded as “Land revaluation reserve” in Net Assets.

Method of revaluation:
Value of land is determined based on a reasonable adjustment to the assessed value of the fixed assets as stipulated in Item
3, Article 2 of the “Enforcement Ordinance Concerning Land Revaluation” (Ordinance No.119 enacted on March 31, 1998).
Date of revaluation: March 31, 2002
Market value was less than book value after revaluation by ¥3,179 million at March 31, 2006 and ¥4,099 million ($34,720
thousand) at March 31, 2007, respectively.

(16) Derivative Financial Instruments
In principle, net assets and liabilities arising from derivative financial instruments are measured at fair value, with any changes
in unrealized gain or loss credited or charged to income. Hedging transactions are accounted for using deferral hedge
accounting, which requires the unrealized gains or losses to be deferred as assets or liabilities until the gains or losses on theunderlying hedged items are recognized.

Nomura Real Estate Holdings, Inc. Annual Report 200745

As to interest rate swaps and interest rate caps that meet certain hedging criteria, the Company applies exceptional treatment where the Company does not record these instruments at fair value but charges or credits the net cash flows fromthese instruments to the interest arising from the hedged borrowings and corporate bonds. For currency swaps and foreignexchange forwards that meet certain hedging criteria, the Company records cash flows from securities and loans
denominated in foreign currencies at an amount determined by the swaps and forwards, and no gain or loss is recognized.

(17) Accounting standard for presentation of net assets in the balance sheet
Effective the year ended March 31, 2007, the Company has adopted a new accounting standard for the presentation of net
assets in the balance sheet and the related implementation guidance. In addition, effective the year ended March 31, 2007,
the Company is required to prepare consolidated statements of changes in net assets instead of consolidated statements ofshareholders’ equity. In this connection, the previously reported consolidated balance sheet as of March 31, 2006 andconsolidated statement of shareholders’ equity for the year then ended have been restated to conform to the presentationand disclosure of the consolidated financial statements for the year ended March 31, 2007.

3. Securities
The following tables summarize the acquisition cost, book value and market value of securities which the Company held asof March 31, 2006 and 2007:(1) Held-to-maturity Debt Securities with Market Value(Millions of yen)
2006

Book
value

Marketvalue

Difference

Securities whose market value exceeds book value:
Government and municipal bonds, etc.

¥

–

¥–

–

–

–

Government and municipal bonds, etc.

290

283

(7)

Subtotal

290

283

(7)

Total

¥290

¥283

¥(7)

Book
value

Marketvalue

Subtotal–¥

Securities whose market value does notexceed book value:(Millions of yen)
2007

(Thousands of U.S. dollars)
Book
value

DifferenceMarketvalue

Difference

Securities whose market value exceeds book value:
Government and municipal bonds, etc.

5

¥0

5

5

0

Government and municipal bonds, etc.

291

287

Subtotal

291

Total

¥296

Subtotal

¥

5

¥

$

42

$

43

$ 1

42

43

1

(4)

2,461

2,428

(33)

287

(4)

2,461

2,428

(33)

¥292

¥(4)

$2,503$2,471$(32)

Securities whose market value does notexceed book value:

46 Nomura Real Estate Holdings, Inc. Annual Report 2007

(2) Available-for-sale Securities with Market Value(Millions of yen)
Acquisition
cost

Book
value

Difference

Stocks¥ 1,357¥ 3,944¥2,587

Bonds

–

–

–

Other

6,012

11,4895,477

Subtotal

7,369

15,433

8,064

12

10

(2)

2006

Securities whose book value exceeds acquisition cost:

Securities whose book value does notexceed acquisition cost:
Stocks
Bonds

–

–

–

Other

7,012

6,997

(15)

Subtotal

7,024

7,007

(17)

¥14,393¥22,440¥8,047

Acquisition
cost

Book
value

¥ 1,357¥ 3,537

Total(Millions of yen)
2007

(Thousands of U.S. dollars)

Difference

Acquisition
cost

Book
value

Difference¥2,180$ 11,499$ 29,965$ 18,466

Securities whose book value exceeds acquisition cost:
Stocks
Bonds

–

–

–

–

–

–

Other

35,43552,53317,098300,168

445,005

144,837

Subtotal

36,79256,07019,278311,667

474,970

163,303

Stocks

12

8

(4)

102

67

(35)

Bonds

–

–

–

–

–

–

Other

–

–

–

–

–

–

Subtotal

12

8

(4)

102

67

(35)

¥36,804¥56,078¥19,274$311,769$475,037$163,268

Securities whose book value does notexceed acquisition cost:

Total(3) Sales of Available-for-sale Securities for the Years Ended March 31, 2006 and 2007
The table below describes sales of available-for-sale securities for the years ended March 31, 2006 and 2007:(Thousands of
U.S. dollars)(Millions of yen)
2006

2007

2007

Sales
amountAggregate
gains

Aggregate
lossesSalesamountAggregate
gains

Aggregate
lossesSalesamountAggregate
gains

Aggregate
losses

¥91

¥80

¥–

¥9,009¥156¥–$76,315$1,324$–

Nomura Real Estate Holdings, Inc. Annual Report 200747

(4) Securities Without Market Value
The following table summarizes the book value of securities without market value as of March 31, 2006 and 2007:(Millions of yen)(Thousands of
U.S. dollars)

2006

2007

2007

Book value

Book value

Book value

Available-for-sale securities:
Unlisted stocks

¥

568

¥

555

¥

4,698

Preferred investments

4,554

4,554

38,575Investments in silent partnerships

30,02053,031

449,222(5) Available-for-sale Securities with Maturities and the Redemption Schedule for Held-to-maturity Securities
The following tables summarize the redemption schedule for securities classified as available-for-sale securities withmaturities and held-to-maturity securities as of March 31, 2006 and 2007:(Millions of yen)

2006

Due within
1 yearDue after
1 yearand within
5 years

Due after
5 years
and within
10 years

Due after
10 years¥–

Bonds:
Government and municipal
¥–

¥285

¥5

Other

bonds, etc.

–

–

–

–

Total

¥–

¥285

¥5

¥–

Due within
1 yearDue after
1 yearand within
5 years

Due after
5 years
and within
10 years

Due after
10 years(Millions of yen)

2007

(Thousands of U.S. dollars)

Due within
1 yearDue after
1 yearand within
5 years

Due after
5 years
and within
10 years

Due after
10 years

Bonds:
Government and municipal
¥–

¥290

¥5

¥–

$–

$2,457

$42

$–

Other

bonds, etc.

–

–

–

–

–

–

–

–

Total

¥–

¥290

¥5

¥–

$–

$2,457$42$–

4. Short-term and Long-term Debt
Short-term debt as of March 31, 2006 and 2007 mainly consisted of borrowings from bank; and the weighted-averageinterest rates were 0.6% and 1.0%, respectively.
Long-term debt as of March 31, 2006 and 2007 is classified as follows:(Millions of yen)(Thousands of
U.S. dollars)

2006

2007

2007

Secured¥ 27,673¥ 41,070$ 347,903

Unsecured

318,566

328,815

2,785,392

Subtotal

346,239

369,885

3,133,295

Less amounts due within one year

(48,050)(42,765)(362,267)¥298,189¥327,120$2,771,028

48 Nomura Real Estate Holdings, Inc. Annual Report 2007

Long-term debt consisted mainly of loans from domestic banks and life insurance companies. The weighted-averageinterest rates were 0.9% and 1.3% at March 31, 2006 and 2007, respectively.
The details of maturities of long-term less current portion debt subsequent to March 31, 2008 were as follows:(Millions of yen)(Thousands of
U.S. dollars)

2009¥ 66,442$ 562,827

2010

70,933600,8732011

72,229611,854

2012

59,680505,545

2013 and thereafter

57,836

489,929¥327,120$2,771,028(Millions of yen)(Thousands of
U.S. dollars)

2006

2007

2007

¥31

¥31

$264

Short-term debt and current portion of long-term debt

5

3

24

Long-term debt less current portion

3

–

–

¥ 8

¥ 3

$ 24

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

2006

2007

2007

Maturities of long-term debt for the years ending March 31

5. Pledged Assets and Secured Liabilities
Pledged assets and secured liabilities at March 31, 2006 and 2007 are summarized as follows:(1) Pledged assets and secured liabilities

Pledged assets:
Machinery and equipment
Secured liabilities:

Total(2) Pledged assets and secured liabilities for non-recourse loans

Pledged assets:
Inventories (land for sale)¥55,792¥51,847$439,196

Land–

15,560131,808

Construction in progress

–

575

4,870

55,792

67,982575,874

Total
Secured liabilities:
Short-term debt and current portion of long-term debt

3,071

1,015

8,598

Long-term debt less current portion

27,29440,052339,282¥30,365¥41,067$347,880

Total

Nomura Real Estate Holdings, Inc. Annual Report 200749

6. Employees’ Retirement Benefits(1) Outline of Retirement Benefit Plans
The Company does not have a retirement benefit plan. Among the consolidated subsidiaries, one subsidiary has lump-sum
payment and tax-qualified pension plans which are defined benefit plans with a retirement benefit trust. Four subsidiaries
have only adopted lump-sum payment plans which are defined benefit plans. Also, one consolidated subsidiary has adefined contribution pension plan in addition to lump-sum payment plans which are defined benefit plans. In certain cases,
additional retirement benefit payments have been made.

(2) Details of Retirement Benefit Obligation(Millions of yen)

(1) Projected benefit obligation(2) Plan assets at fair value(3) Unfunded retirement benefit obligation (1)+(2)(Thousands of
U.S. dollars)

2006

2007

2007

¥(20,342)¥(21,229)$(179,827)

9,623

8,783

74,399(10,719)(12,446)(105,428)(4) Unrecognized actuarial gain or loss

1,586

1,747

14,798(5) Allowance for employees’ retirement benefits (3)+(4)(9,133)(10,699)(90,630)(Millions of yen)(Thousands of
U.S. dollars)

2006

2007

2007

¥2,959¥2,001$16,954(1) Service cost

1,367

1,270

10,760(2) Interest cost

379

392

3,323

(3) Less: Expected return on plan assets

(150)

(192)

(1,630)(4) Amortization of actuarial gain or loss

545

378

3,204

(5) Additional retirement benefit payments

774

54

455

(6) Other

44

99

842

Note: Certain of the consolidated subsidiaries applied a simplified method to calculate their projected benefit obligation.

(3) Details of Retirement Benefit Expenses

Retirement benefit expenses

Notes:
1. Retirement benefit expenses of consolidated subsidiaries applying a simplified method are included in “(1) Service cost.”
2. “(6) Other” shows the contributions paid to defined contribution pension plans. Certain of the consolidated subsidiaries use a simplified method to calculate
projected benefit obligation.

Assumptions used in accounting for the retirement benefit plans are summarized as follows:
2006

2007

Discount rate

2.00%

2.00%

Expected rate of return on plan assets

2.00%

2.00%

50 Nomura Real Estate Holdings, Inc. Annual Report 2007

7. Loss on Impairment of Fixed Assets
The Group accounted for impairment losses on the following groups of assets for the fiscal year ended March 31, 2006.
Primary use

Type of assets

Location

Leasing assets, etc.
15 items

Buildings, land and other property and equipment

Hiroshima City, Hiroshima Prefecture, etc.

The Company and its subsidiaries grouped their fixed assets based on minimum units which generate cash flows largely
independent of those of other assets or groups of assets. The corporate headquarters facilities are treated as common assets.
In light of a considerable decrease in the fair value of assets against their corresponding book value due to a decline inland prices, significant deterioration in profitability due to a decline in current rent levels, adverse market conditions andcertain other factors, the Company and its subsidiaries reduced the book value of 15 groups of assets to their respective
recoverable value, and recorded the difference in loss on impairment of fixed assets totaling ¥4,438 million for the year
ended March 31, 2006. The impairment loss comprised ¥2,821 million for land and land leaseholds, and ¥1,617 million forbuildings and structures.
The recoverable value of the asset groups was measured based on their respective net realizable value, principally
determined based on appraisal valuation performed by certified real estate appraisers.

8. Unrealized Transaction
The following unrealized transaction was performed during the year ended March 31, 2006.
Nomura Real Estate Development Co., Ltd., a domestic consolidated subsidiary of the Company, entrusted a block ofrental condominiums developed for sale to a trust bank and assigned its beneficiary rights to Home Property Investors, Ltd.,an SPC (special purpose company), on December 20, 2005.
However, as Nomura Real Estate Development Co., Ltd. has retained equity holdings in silent partnerships (Tokumei
Kumiai), in amounts exceeding 5% of the transfer value to Home Property Investors, Ltd., the risks and economic benefits of
the assets were consequently not deemed to have been assigned in their entirety to other parties through the SPC.
Therefore, the transaction has been accounted for as a financing transaction in accordance with “Practical Principles
Concerning Accounting Treatment of Assignor in Liquidation of Real Estate Property Using Special Purpose Companies” (July31, 2000) for the year ended March 31, 2006.
As a result, the related assets have not been treated as sales but were included in the accompanying Consolidated Balance
Sheets at March 31, 2006, while liabilities of ¥1,094 million were recorded in “Other current liabilities” in the accompanying
Consolidated Balance Sheets at March 31, 2006.
The book value of these assets (Inventories) as of March 31, 2006 was ¥770 million.

Nomura Real Estate Holdings, Inc. Annual Report 2007

51

9. Income Taxes
The statutory tax rate in Japan was 40.7% for the years ended March 31, 2006 and 2007.
The table below presents an itemized breakdown of factors generating differences between the statutory tax rate and theeffective tax rates of the Company and its domestic subsidiaries for the years ended March 31, 2006 and 2007:

Significant differences between the statutory tax rate and the effective tax rates
2006

Statutory tax rate

40.7%

Adjustments:

2007

Statutory tax rate

40.7%

Adjustments:

Permanent differences including

Permanent differences including

entertainment expenses

1.2%

entertainment expenses

0.5%

Retained earnings of affiliates

5.5%

Valuation allowance

3.0%

Other

0.6%

Effective tax rate

44.8%

Valuation allowance(12.8)%

Other

0.8%

Effective tax rate

35.4%

The table below presents an itemized breakdown of deferred tax assets and liabilities as of March 31, 2006 and 2007:

Significant components of the Company’s deferred tax assets and liabilities(Millions of yen)(Thousands of
U.S. dollars)

2006

2007

2007

Deferred tax assets:
Unrealized profits¥ 11,257¥ 11,592$ 98,184

Inventory write-downs

6,372

6,787

57,489Allowance for employees’ retirement benefits

4,041

4,336

36,732

Loss on subleasing business

3,652

2,810

23,806

Accrued bonuses

1,590

1,488

12,610Tax loss carryforward

1,567

–

–

Trust assets for retirement benefits

1,177

703

5,954

Loss on impairment of fixed assets

840

702

5,947

Accrued enterprise tax

801

1,287

10,899

3,209

3,469

29,386Gross deferred tax assets

34,50633,174

281,017

Valuation allowance(3,780)(3,540)(29,986)

Total deferred tax assets

30,726

29,634251,031

Reserve for deferred income taxes(9,420)(8,641)(73,200)

Net unrealized gain on securities(66,450)

Other

Deferred tax liabilities:(3,281)(7,844)Gain on contribution of securities to retirement benefit trust

(868)

(662)

(5,609)

Other

(681)

(399)

(3,378)

Total deferred tax liabilities(14,250)(17,546)(148,637)

Net deferred tax assets¥ 16,476¥ 12,088$ 102,394

52 Nomura Real Estate Holdings, Inc. Annual Report 2007

10. Shareholders’ Equity
Companies in Japan had been subject to the Commercial Code of Japan (the “Code”); however, the Code was supersededby the Companies Act of Japan (the “Act”) which went into effect on May 1, 2006.
Under the Act, all funds obtained through the issuance of stock must be treated as common stock and, by resolution of
the Board of Directors, an amount equivalent to less than half of those funds may be appropriated to the capital reserve(a component of additional paid-in capital).
Also, under the Act, an amount equivalent to at least 10% of cash outlays as cash dividends or certain appropriations ofretained earnings must be transferred to the retained earnings reserve (a component of retained earnings), until the amountequals 25% of common stock, including the balance of the capital reserve.
As of March 31, 2007, the Company’s capital reserve amounted to ¥59,976 million, and no retained earnings reserve
was recorded.

11. Derivative Financial Instruments
It is a policy of the Company and consolidated subsidiaries to utilize derivative financial instruments only for the purposes ofhedging interest rate risk and currency risk, and not for speculative purposes.
The purpose of interest rate swap and interest rate cap contracts is to hedge the risk of increases in financing costs in the
future by fixing interest payments for loans, while the purpose of foreign exchange forward contracts and cross currency
swap contracts is to hedge the risk of currency fluctuation in securities denominated in foreign currencies.
Interest rate swap and interest rate cap transactions are subject to the risk of changes in interest rate. Foreign exchange
forward and currency swap transactions are subject to the risk of changes in foreign exchange rates. The derivative financial
instruments are executed with creditworthy financial institutions, and the Company’s management believes there is little riskof default by the counterparties to its derivatives positions.
The derivative transactions are executed and managed by the Company’s Finance Department in accordance with theestablished policies and plans of risk management set forth and approved by the officer in charge of the Finance
Department based on the applicable internal regulations. The Finance Department also reports the transaction status to theofficer in charge on a regular basis. In the Company’s consolidated subsidiaries, the derivative transactions are executed andmanaged in accordance with the designated procedures based on their respective internal regulations.
Details of derivative financial instruments used by the Company are summarized as follows.

Hedging instruments

Hedged items

Interest rate swap and interest rate cap contracts

Loans

Currency swap and foreign exchange forward contracts

Securities denominated in foreign currencies

Fluctuation in cash flows or total market fluctuation of hedged items is compared with that of the hedging instruments toassess the effectiveness of the hedges based on the ratio of the fluctuation.

Nomura Real Estate Holdings, Inc. Annual Report 200753

12. Leases
Finance lease transactions, other than those which are deemed to transfer ownership of the leased property to the lessee,
are accounted for as operating lease transactions.
Details of significant lease transactions are as follows:
A summary of the pro forma amounts of acquisition cost, accumulated depreciation, and year-end balance of leased
properties as of March 31, 2006 and 2007 is as follows:(Millions of yen)(Thousands of
U.S. dollars )

2007

2007

2006

Acquisition cost:
Buildings and structures
Machinery and equipment

¥

53

¥

30

$

250

2,440

2,196

18,603

414

293

2,485

Accumulated depreciation(1,561)(1,320)(11,182)

Year-end balance¥ 1,346¥ 1,199$ 10,156

Other

Notes:
1. The above acquisition cost includes the imputed interest expense portion, since the year-end balances of the future rental expense accounts were only a small
percentage of the year-end balances of property and equipment.
2. Pro forma depreciation equivalents were computed using the straight-line method over the respective lease periods assuming a nil residual value or a residual indemnity.

The table below presents the future lease payments under such finance leases subsequent to March 31, 2006 and 2007:

Finance leases(Millions of yen)(Thousands of
U.S. dollars )

2006

2007

2007

¥ 518

¥ 396

$ 3,358

828

803

6,798

¥1,346¥1,199$10,156

Future lease payments:
Due within 1 year
Due over 1 year
Total

The table below presents the future lease payments and receipts of operating leases subsequent to March 31, 2006 and 2007:(Millions of yen)(Thousands of
U.S. dollars )

2006

2007

2007

Due within 1 year

¥ 8,218¥ 7,882$ 66,769

Due over 1 year

57,65046,288392,103

Total¥65,868¥54,170$458,872

Due within 1 year

¥ 7,603¥ 5,911$ 50,067

Due over 1 year

44,86130,881

261,594

Total¥52,464¥36,792$311,661

Operating leases

Future lease payments:

Future lease receipts:

Note: The above future lease payments include the imputed expense portion, since the year-end balances of the future rental expense accounts were only a small
percentage of the year-end balance of property and equipment.

54 Nomura Real Estate Holdings, Inc. Annual Report 2007

13. Segment Information
The Company and its consolidated subsidiaries mainly operate in five business segments: (1) Residential Development; (2)Building; (3) Investment Management & Development; (4) Property Brokerage & Consignment Sales; (5) Other.
Results by segment for the years ended March 31, 2006 and 2007 were as follows:

Results by segment for the fiscal year ended March 31, 2006
(Millions of yen)
Property
Investment Brokerage &Management & Consignment
Development
Sales

Residential
Development

Building

Revenues from operations:
External customers
Inter-segment¥222,341
177¥ 44,932
3,356¥ 37,140
132

Subtotal
Operating expenses

222,518
200,566

48,28841,130Operating income¥ 21,952¥¥197,316
221
3
324

Other

Subtotal¥21,416
1,458¥24,490
2,568¥350,319
7,691

37,272
23,04822,874
17,282

27,05826,734

7,158¥ 14,224¥ 5,592¥¥170,011
4,113
799
3,538

¥217,544
64
–
7,088

¥37,46673–
283

Eliminations
or
corporate

Total

Revenues from operations
and operating income¥–(7,691)¥350,319–

358,010
308,760(7,691)(2,709)350,319
306,051324¥ 49,250¥ (4,982)¥ 44,268¥23,567
723
3,636
969

¥645,904
5,194
4,438
12,202¥43,383
213
–
(321)

¥689,287
5,407
4,438
11,881

Total assets, depreciation,
impairment loss andcapital expenditure
Total assets
Depreciation
Impairment loss
Capital expenditure

Results by segment for the year ended March 31, 2007
(Millions of yen)
Property
Investment Brokerage &Management & Consignment
Development
Sales

Residential
Development

Building

Revenues from operations:
External customers
Inter-segment¥205,365585¥ 46,912
4,430¥ 65,653
214

Subtotal
Operating expenses

205,950
182,323

51,342
42,970Operating income¥ 23,627¥¥257,184
213
336

Other

Subtotal¥34,486
2,002¥14,821341¥367,237
7,572

65,86747,25436,48828,09915,162
13,9508,372¥ 18,613¥ 8,389¥180,587
3,232
11,988¥275,202
115
24,549¥72,531
98
218

Eliminations
or
corporate

Total

Revenues from operations
and operating income¥–(7,572)¥367,237–

374,809314,596(7,572)(1,733)367,237
312,863¥ 1,212¥ 60,213¥ (5,839)¥ 54,374¥24,004
674
1,039¥809,508
4,332
38,130¥26,795
214(10,019)¥836,303
4,546
28,111

Total assets, depreciationand capital expenditure
Total assets
Depreciation
Capital expenditure

Nomura Real Estate Holdings, Inc. Annual Report 2007

55

(Thousands of U.S. dollars )Residential
Development

Building

Property
Investment Brokerage &Management & Consignment
Development
Sales

Other

Subtotal$292,128 $125,547
16,961
2,890$3,110,858
64,146

309,089
238,026

128,437
118,168

Eliminations
or
corporate

Total

Revenues from operations
and operating income
Revenues from operations
External customers
Inter-segment$1,739,646 $ 397,392
4,958
37,528Subtotal
Operating expenses

1,744,604
1,544,458

434,920
363,996557,954400,289

Operating income$ 200,146 $

70,924$ 157,665$2,178,602 $1,529,755
1,801
27,382
2,846
101,551$2,331,231
978
207,950$ 556,145
1,809

$

–
(64,146)$3,110,858–

3,175,004
2,664,937(64,146)(14,684)

3,110,858
2,650,253$ 71,063 $ 10,269$ 510,067$ (49,462)$ 460,605$614,407
826
1,849$6,857,334
36,700322,996$226,979
1,809(84,868)$7,084,313
38,509238,128

Total assets, depreciationand capital expenditure
Total assets
Depreciation
Capital expenditure$203,339
5,713
8,800

Notes:
1. Business segments are determined according to the business activities of each company in the consolidated group.
2. Principal products and services within each segment
Residential Development Business
Sale of condominiums, detached housing and residential lots, overall management of condominiums
Building BusinessLeasing and overall management of office buildings, district heating and cooling services
Investment Management & Development Business
Development and sale of profit-generating property management of and investment in real estate funds
Property Brokerage & Consignment Sales Business
Real estate brokerage and consulting services, sales representation of condominiums and detached housing, insurance brokerage
Other Business
Fitness club management and construction of custom-made housing
3. Operating expenses for the fiscal years ended March 31, 2006 and 2007 consisted of ¥5,558 million and ¥5,607 million, respectively, of unallocatable operating
expenses which were included in “eliminations or corporate.” The principal items were expenses related to general administration of the Company and its
consolidated subsidiary, Nomura Real Estate Development Co., Ltd.
4. Total assets at March 31, 2006 and 2007 consisted of ¥59,644 million and ¥55,188 million, respectively, of assets not allocated to a segment which were included in“eliminations or corporate”. The principal items were surplus funds (cash and bank deposits), long-term investment funds (investment securities), deferred tax assets, andassets related to general administration of the Company and its consolidated subsidiary, Nomura Real Estate Development Co., Ltd.
5. Change in accounting policy (for the fiscal year ended March 31, 2007)
Accounting standard for measurement of inventories
As described in Note 2 (5) Significant Accounting Policy, the Company has adopted “Accounting Standard for Measurement of Inventories” (Statement No.9
issued by the Accounting Standards Board of Japan on July 5, 2006) effective the year ended March 31, 2007. As a result, total assets in the “Other” businesssegment decreased by ¥869 million compared with the amount which would have been recorded under the previous method.

56 Nomura Real Estate Holdings, Inc. Annual Report 2007

14. Contingent Liabilities:
Contingent Liabilities as of March 31, 2006 and 2007 were as follows:(Millions of yen)(Thousands of
U.S. dollars)

2006

2007

2007

¥41,424¥44,411$376,206

1,245

1,188

10,062¥42,669¥45,599$386,268

Guarantees for home loans made by house purchasers
from banks and other
Guarantees for loans to business partners in the business ofcommercial buildings for rent

15. Subsequent Events
Payment of Dividends
At the 3rd ordinary general meeting of shareholders held on June 28, 2007, a resolution for the payment of a dividend of¥20.00 (U.S.$0.17) per share, ¥2,986 million (U.S.$25,299 thousand) in total, to shareholders was approved for the year
ended March 31, 2007.

Introduction of Stock Option Plans
At the 3rd ordinary general meeting of shareholders held on June 28, 2007, a resolution for the introduction of two stock
option plans was approved. The contents of these plans are summarized as follows:
1. Persons to whom stock options shall be allocated5 directors of the Company
2. Stock acquisition rights to be issued as stock options for stock-linked compensation
1) Total number of stock options to be issued and number of shares subject to the stock acquisition rightsa) Maximum number of stock options shall be 250 units.
b) Up to 25,000 shares of common stock of the Company shall be subject to the stock acquisition rights. The numberof shares subject to one stock option shall be 100 shares. However, subsequent to the close of this ordinary general
meeting of shareholders, whenever adjustments to the aforementioned number of shares is deemed necessary (e.g.,stock splits, stock consolidations, or allotments of shares without contribution), the Company shall make the necessary adjustments.
2) Amount of assets to be paid upon exercise of the stock acquisition rights
Payments to be made upon exercise of the stock acquisition rights shall be by cash. The price per share shall be ¥1 andthe total amount to be paid upon exercise of one stock acquisition right shall be the amount calculated by multiplying¥1 by the number of shares subject to one stock acquisition right.

Nomura Real Estate Holdings, Inc. Annual Report 2007573) Exercisable period for the stock options
The exercisable period for the stock options shall be within 5 years commencing from the day that falls 1 year after thedate when the stock acquisition rights are allotted (herein after the “Allotment Date”).
Diluted net income per share has not been presented since no potentially dilutive shares of common stock were outstanding.
4) Restrictions on the transfer of stock acquisition rights
Transfer of stock acquisition rights shall require the approval of the Board of Directors of the Company.
5) Other matters related to stock acquisition rights
The details of items (1) to (4) above and other matters shall be resolved at a Board of Directors’ meeting.

3. Stock acquisition rights to be issued as market value stock options
1) Total number of stock acquisition rights to be issued and number of shares subject to stock acquisition rightsa) Total number of stock acquisition rights
Maximum number of stock acquisition rights shall be 300 units.
b) Up to 30,000 shares of common stock of the Company shall be subject to the stock acquisition rights. The numberof shares subject to one stock acquisition right shall be 100 shares. However, subsequent to the close of this ordinary general meeting of shareholders, whenever adjustments to the aforementioned number of shares are deemednecessary (e.g., stock splits, stock consolidations, or allotments of shares without contribution), the Company shallmake the necessary adjustments.
2) Amount of assets to be paid upon exercise of stock options
Payments to be made upon the exercise of the stock acquisition rights shall be by cash, and the amount shall be theexercise price of the shares as calculated below, multiplied by the number of shares to be issued for the allotted stock
options. The exercise price per share shall be either the amount calculated by multiplying 1.05 by the average of theclosing market price of the Company’s shares for all trading days for the month immediately preceding the month inwhich the Allotment Date of the stock acquisition rights falls (excluding days when there are no transactions of theCompany’s shares of common stock) on the Tokyo Stock Exchange (fractions of less than ¥1 shall be rounded up to thenearest whole yen), or the closing market price on the Allotment Date (if there is no closing market price on that date,the closing market price on the day immediately preceding the transaction date shall be applied), whichever is higher.
Adjustments to the exercise price shall be made in cases where the Company implements a stock split, aconsolidation of the Company’s stocks, allots shares without contribution, or any other cases where the Company
acknowledges the necessity of an adjustment.

58 Nomura Real Estate Holdings, Inc. Annual Report 2007

3) Exercisable period for the stock acquisition rights
The exercisable period for the stock acquisition rights shall be within 5 years commencing from the day that falls 2
years after the Allotment Date.
4) Restrictions on the transfer of stock acquisition rights
Transfer of stock acquisition rights shall require the approval of a resolution of the Board of Directors of the Company.
5) Other matters related to stock options
The details of, and other matters related to, items (1) to (4) above shall be resolved at a Board of Directors’ meeting.

4. Outline of stock option plans(1) Stock options for stock-linked compensation
1) Eligible recipients of stock options: Certain directors of the Company and its consolidated subsidiaries (some ofthem are not included)2) Number of stock options granted: Varies according to the position of the recipients
3) Issue price of stock options: ¥0 per option
4) Exercise price of stock options: ¥1 per share5) Exercisable period for stock options: 5 years commencing from the day that falls 1 year after the Allotment Date
(2) Market value stock options
1) Eligible recipients of stock options: Certain officers of the Company and its consolidated subsidiaries, in addition torights holders of ‘stock options for stock-linked compensation.’
2) Number of stock options granted: Varies according to the position of the recipients
3) Issue price of stock options: ¥0 per option
4) Exercise price of stock options: 105% of the average closing market price of the month immediately preceding themonth in which the Allotment Date of the stock acquisition rights falls or the closing market price on the Allotment
Date, whichever is higher.
5) Exercisable period for stock options: 5 years commencing from the day that falls 2 years after the Allotment Date

Nomura Real Estate Holdings, Inc. Annual Report 2007

59

Report of Independent Auditors

60 Nomura Real Estate Holdings, Inc. Annual Report 2007

Corporate Data (As of March 31, 2007)

Corporate Name

Nomura Real Estate Holdings, Inc.

Head Office

Shinjuku Nomura Building, 1-26-2
Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-0566, Japan

Date of Establishment

June 1, 2004

Common Stock¥82,646 million

Number of Employees

3,835 (on a consolidated basis)

Number of Authorized Shares

450,000,000

Number of Shares Issued

149,325,000

Market ListingFirst Section of Tokyo Stock Exchange

Minimum Trading Unit

100 shares

Ten Largest Shareholders
Name of Shareholder

No. of shares

Shareholding (%)

Nomura Land and Building Co., Ltd.

96,817,500

64.83

The Master Trust Bank of Japan, Ltd. (Trust account)

3,197,300

2.14Japan Trustee Services Bank, Ltd. (Trust account)

3,149,500

2.10

Nomura Real Estate Holdings Employee Shareholding Association

2,364,382

1.58

Morgan Stanley & Co. International Ltd.

1,050,800

0.70

CBLUX PIONEER ASSET MANAGEMENT SA (SL)976,826

0.65

Trust & Custody Services Bank, Ltd. (B trust account)923,000

0.61

Assad

694,400

0.46

Mitsui Asset Trust and Banking Company, Limited (Nominee account no. 1)

652,500

0.43

The Chase Manhattan Bank, NA London, SL Omnibus Account642,000

0.42

Nomura Real Estate Holdings, Inc. Annual Report 2007

61

Nomura Real Estate Holdings, Inc. Annual Report 2007

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/

Printed in Japan
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