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

This annual report is printed on FSC-certified paper with vegetable based ink.

Annual Report 2010

Printed in Japan

Year ended March 31,2010

Contents
01 Snapshot of Nomura Real Estate Holdings
02 Consolidated Financial Highlights

Snapshot of
Nomura Real Estate Holdings

03 Segment Information

04 Interview with the President
09 Special Feature:
Working for the Future of a Beautiful
Planet—Nomura Real Estate Group
Environmental Initiatives
12 Segments at a Glance
14 Major Activities in Fiscal 200916 Outline of Nomura Real Estate Group
18 Group Company Profile:
Nomura Real Estate Urban Net Co., Ltd.
20 Corporate Governance
23 Board of Directors and Statutory Auditors

Point Enhancing the “PROUD” Brand

1(

For details, please refer to “Major Activities” on page 14.)

From urban detached housing tolarge-scale condominiums,
Nomura Real Estate supplies adiverse lineup of property under
the PROUD brand. By leveraging
our integration in development andsales and harnessing our strengths
in product planning and sales, infiscal 2009 our housing sales
totaled 4,111 units, exceeding 4,000
for the first time in four years.

Housing Sales (Unit)
4,104

2005

3,751

3,810

2006

2007

4,111
3,390

2008

2009 (FY)24 Corporate Social Responsibility
25 Management’ s Discussion and Analysis
30 Consolidated Balance Sheets
32 Consolidated Statements of Income
33 Consolidated Statements of Changes in Net Assets
34 Consolidated Statements of Cash Flows
35 Notes to Consolidated Financial Statements
57 Report of Independent Auditors
58 Investor Information

Aggressively Developing Business
Point in Growth Fields

2(
For further details, please refer to the “Interview with the
President” on page 4.)

The outlook for the overall realestate industry remains uncertain,
but a number of fields promise
future growth. Consequently, by
taking advantage of our client baseand the operational expertise wehave amassed to date we are
beginning new businesses in suchareas of redevelopment,
reconstruction and theestablishment of private REITs.

Deploying our wealth of advanced expertise inredevelopment and rebuilding (PROUD Shinjuku
Gyoen Empire)

Initiatives to Achieve Environmental
Point Harmony

3(
For further details, please refer to the “Special Feature” onpage 9.)“Environment” is an increasingly
important keyword in the field ofreal estate development. We are
striving to make the most ofnature’s power and magnificence,as we strive for harmony in each of
our businesses.

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 of risks
and uncertainties, which include economic trends, intensification of competition in
the real estate industry, the legal and taxation systems, and other regulations. As
such, actual results may differ from those projected.

A property planned and designed in accordancewith Proud Eco-Vision, which we developed in thefiscal year under review (PROUD City
Ikebukuro-honcho)Snapshot of
Nomura Real Estate Holdings
Point Enhancing the “PROUD” Brand

1(
For details, please refer to “Major Activities in Fiscal 2009”
on page 14.)

From urban detached housing tolarge-scale condominiums,
Nomura Real Estate supplies adiverse lineup of property under
the PROUD brand. By leveraging
our integration in development andsales and harnessing our strengths
in product planning and sales, infiscal 2009 our housing sales
totaled 4,111 units, exceeding 4,000
for the first time in four years.

Housing Sales (Unit)
4,104

2005

3,751

3,810

2006

2007

4,111
3,390

2008

2009 (FY)

Aggressively Developing Business
Point in Growth Fields

2(
For further details, please refer to the “Interview with the
President” on page 4.)

The outlook for the overall realestate industry remains uncertain,
but a number of fields promise
future growth. Consequently, by
taking advantage of our clientbase and the operational expertise
we have amassed to date, we are
beginning new businesses in suchareas of redevelopment,
reconstruction and theestablishment of private REITs.

Deploying our wealth of advanced expertise inredevelopment and reconstruction (PROUD
Shinjuku Gyoen Empire)

Initiatives to Achieve Environmental
Point Harmony

3(
For further details, please refer to the “Special Feature” onpage 9.)“Environment” is an increasingly
important keyword in the field ofreal estate development. We are
striving to make the most ofnature’s power andmagnificence through each of
our businesses, as we aim to be inharmony with the environment.

A property planned and designed in accordance with the
PROUD ECO VISION, which we developed in the fiscal
year under review (PROUD CITY Ikebukuro-honcho)

Nomura Real Estate Holdings, Inc. Annual Report 20101

Consolidated Financial Highlights
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years ended March 31				(Millions of yen)

For the Year:
Operating Results:
Operating revenue
Gross profit
Operating income
Net income
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Per Share Data (yen/dollars):
Net income
Cash dividends
Balance Sheet Data (as of March 31):
Total assets
Total net assets
Interest-bearing debt
Ratios:Return on assets (Note 2)
Return on equity
Operating margin
Dividend payout ratio
Equity ratio(Thousands of
U.S. dollars)(Note 1)

2008

2009

2010

2010

¥ 411,493
130,391
69,82235,255¥ 448,656
100,764
34,013
13,770¥ 434,226
105,576
39,275
4,660$ 4,667,091
1,134,741
422,128
50,087

7,639(13,348)
8,791(108,031)(141,789)
295,508

19,266(24,571)
13,098207,075(264,093)
140,780¥236.0930.00¥ 891,700
235,551
408,016

¥

92.21
40.00

¥1,385,532
281,376
778,074

7.9%
15.8%
17.0%
12.7%
26.1%

¥

25.69
25.00

$

¥1,405,424
349,437
759,637

2.5%
5.9%
7.6%
43.4%
17.0%

0.28
0.27

$15,105,592
3,755,773
8,164,624

2.8%
1.7%
9.0%
97.3%
21.4%

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 theTokyo Foreign Exchange Market on March 31, 2010, which was ¥93.04 = U.S.$1.00.
2. Return on assets = (Operating income + Non-operating income) / Total assets at end of fiscal year

Operating Income and ROA

Operating Revenue andOperating Margin(Millions of yen)
500,000(%)
25
448,656

400,000

411,493(Millions of yen)
80,000

(%)
12.0

20

300,000

15

200,000

105

9.0

30,000

6.0

20,000

15.8

15.0

7.9
39,27540,000

7.6

(%)
20.0
35,25560,00017.0

100,000(Millions of yen)
40,00069,822434,226

9.0

Net Income and ROE

34,01320,00010.0
13,7702.8 3.0

2.5

5.9

10,000

5.0
4,660
1.7

0

2008

2009

Operating Revenue
Operating Margin

2

Nomura Real Estate Holdings, Inc.

2010

0

0

2008

2009

Operating Income
ROA

2010

0

0

2008
Net Income
ROE

2009

2010

0

Segment Information
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years ended March 31				(Millions of yen)

Operating Revenue:
Residential Development Business
Building Business
Investment Management & Development Business
Property Brokerage & Consignment Sales Business
Other BusinessEliminations or corporate
Operating Income:Residential Development Business
Building Business
Investment Management & Development Business
Property Brokerage & Consignment Sales Business
Other BusinessEliminations or corporate
Return on Assets of Each Segment (Note 2)
Residential Development Business
Building Business
Investment Management & Development Business (Note 2)
Property Brokerage & Consignment Sales Business (Note 2)
Other Business
Inventories
Residential Development Business
Building Business
Investment Management & Development Business (Note 2)
Property Brokerage & Consignment Sales Business (Note 2)
Other BusinessEliminations or corporate(Thousands of
U.S. dollars)(Note 1)

2008

2009

2010

2010

¥238,802
56,88980,55530,183
16,837(11,773)¥231,629
90,40078,07839,764
19,836(11,051)¥259,070
95,23836,18933,964
19,657(9,892)$2,784,500
1,023,623
388,965
365,044
211,274(106,315)¥ 26,067
9,414
34,7786,392
1,514(8,343)¥ 11,787
15,769
10,1171,554
1,101(6,315)¥ 10,735
21,587
8,498
2,690
432
(4,667)$ 115,379
232,019
91,33828,915
4,641(50,164)

10.0%
4.6%
10.8%
8.8%
5.6%

3.7%
2.9%
2.8%
2.7%
3.9%

¥222,761
11,342
171,819
42,5086,318(128)¥287,410
3,215
138,364
46,371
6,132
(3)

3.5%
4.0%
2.1%
6.0%
1.6%
¥276,400
5,921
138,341
32,676
6,059(475)$2,970,762
63,645
1,486,894
351,207
65,123(5,109)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 theTokyo Foreign Exchange Market on March 31, 2010, which was ¥93.04 = U.S.$1.00.
2. ROA of each segment = Segment operating income / Segment assets at end of fiscal year

Operating Revenue*

Operating Income*(Millions of yen)
80,000(Millions of yen)
500,000
400,000

Inventories*(Millions of yen)
500,000
400,000

60,000300,000

300,000
40,000200,000

200,000
20,000100,000
0

2008

2009

2010

0

100,000

2008

2009

2010

0

2008

2009

2010

Residential Development BusinessResidential Development BusinessResidential Development Business

Building Business

Building Business

Building Business

Investment Management & Development Business

Investment Management & Development Business

Investment Management & Development Business

Property Brokerage & Consignment Sales Business

Property Brokerage & Consignment Sales Business

Property Brokerage & Consignment Sales Business

Other Business

Other Business

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

Annual Report 20103

Interview with the President

The Nomura Real Estate Holdings Group is pursuing businessdevelopments according to the strategies outlined in its Mediumterm Business Plan, as it strives to return to profit growth in adifficult operating environment. During the fiscal year under review,in each business segment we strove to leverage the Company’s
strengths, reallocating management resources into our fields ofcore competence as we worked to establish the foundations for
medium- to long-term growth.

Hirohisa Suzuki
President

4

Nomura Real Estate Holdings, Inc.

Question

1 Answer

How would you summarize thereal estate industry in fiscal
2009?

While there were signs of recovery in the Tokyo metropolitan
area condominium market as we entered 2010, including increases in the number of new condominium units supplied andimproved contract rates, the real estate investment and officemarkets continued to experience difficulties, indicating that theindustry as a whole had not yet attained a full-scale recovery.
In the housing sales market, although the number of condominium units supplied continued to be on a declining trend compared to the previous year,
price adjustments, mortgage loan tax reductions and gift tax exemptions increases invigorated customer activity. From the beginning of 2010, for us, thisresurgence played out with all units selling out their first day on the market at
PROUD CITY Ikebukuro-honcho, OACITY Kinshicho and other properties.
There was some aggressive movement in the real estate investment market, with a number of REITs, including Nomura Real Estate Residential Fund,
Inc., raising funds through public offerings, as well as the merging and reorganization of listed REITs. However, REIT investment unit prices remained
lackluster, proving insufficient to play a leading role in the real estate market.
In the office market, growing tenant concerns about the economic outlook
led them to cost cuts. Shrinking demand caused the vacancy rate to climb
to 8% in the five wards of central Tokyo, the highest level to date. It is unclear
when companies will be willing to pay more money for office space, andtherefore we expect these severe conditions will continue for some time.

Question

2 Answer

How did the Company perform during the period underreview?

Because of the sluggish market, operating revenue was slightly
lower compared to the previous fiscal year. Although we saw anincrease in operating income as a result of cost-cutting measures, there was a significant drop in net income compared tothe previous fiscal year.
In the Residential Development Business, the number of housing sales
unit (delivered) increased 21.3% year on year, to 4,111 units, owing to thecompletion of several large scale condominiums, such as PROUD TOWER
Chiyoda Fujimi. However, consolidated operating revenue in the period underreview declined 3.2%, to ¥434,226 million, reflecting lower sales of property
in property development operations caused by the sluggish real estate investment market.
Annual Report 20105

After reviewing the profitability of inventories, we posted a ¥5,623 million
write-down on inventories under operating costs. Nevertheless, operating
income increased 15.5%, to ¥39,275 million, buoyed by successful efforts to
reduce operating expenses. However, net income dropped 66.2% year on
year, to ¥4,660 million due to a ¥10,486 million loss on the valuation of equity
investments in commercial mortgage-backed securities, which we recorded
as an extraordinary loss.
We understand that this substantial loss cannot be attributed entirely tomarket upheaval. Accordingly, we recognize the urgent need to rebuild our investment management business, including revising our investment strategies,
operating structure and risk controls.

Question3

To survive in this difficult management environment, what specificoperating measures are you focused on to move forward to thenext stage of growth?

（Unit）
6,000

Land Bank in
Residential Development
Business

5,000
4,000
3,000
2,000
1,000
0

6

2011.3 12.3 13.3 14.3 15.3 16.3 17.3 〜(period in which land back will be posted)■Redevelopment and rebuilding■Tokyo metropolitan area
■Osaka metropolitan area ■Other■Carry-overNomura Real Estate Holdings, Inc.

Answer
The Group considers the recovery of profitability to be the highest priority. Returning to the basics to focus on the strengths ofeach business, we formulated five business strategies, reallocated management resources and positioned ourselves for growth
in anticipation of a full-scale market recovery.
The five business strategies are to strengthen the Residential Development
Business growth model, achieve stable growth in the investment management business, strengthen the expanded leasing business, further evolve ourdevelopment function and proactively expand the CRE Business.
In particular, we are investing aggressively in our core business, the Residential Development Business which is deploying our PROUD brand, positioning this business as the driver to achieve a profit recovery. Whereas othercompanies are scaling back their land acquisitions, we are leveraging thefunds that we received through our June 2009 capital increase by acquiringproperty. During the fiscal year, we acquired the land equivalent of approximately 7,000 residential units, and as of March 31, 2010, we had accumulated land bank corresponding to 16,500 units for use from fiscal 2010 onward.
This extremely high stock of property is our largest ever and the foundation
upon which we intend to build future profits.

Our property development operations is concentrating on developing thePremium Midsize Office (PMO) business. PMO represents a new category of
office buildings that, although smaller in scale, offer the same high quality features (design, functionality, security) found in large office buildings. Including
projects currently underway, our PMO business experience totals 10 projects.
Going forward, we will endeavor to build up our development track recordand develop our brand strategy of PMO through selecting sites solely in threewards of central Tokyo.
In the leasing business, amid ongoing corporate efforts to cut operating
costs, in addition to proposing solutions that carefully and precisely address
tenant needs, we established a separate leasing department in April 2010 tofurther strengthen our leasing activities.

PMO Akihabara

Question

4 Answer

What other initiatives are you
engaged in for future growth?

We are focusing on redevelopment and reconstruction as well as
the structuring of private REIT as businesses that make use ofGroup strengths, our accumulated expertise and high creditworthiness.
Redevelopment and reconstruction are businesses to which we can bring thewealth of experience we have cultivated over many years. These businesses
provide superior capital efficiency as they require no acquisition of land, only asmall investment. Furthermore, demand is expected to grow as the population
ages, making this an important area of focus.

Redevelopment/reconstruction projects inprogress in Tokyo metropolitan
area
首都圏で進捗中の再開発
・建替プロジェクト

Saitama
Chiba
Tokyo

Kanagawa

Tokyo bay

PROUD Shinjuku Gyoen Empire
再開発事業

Redevelopment
建替事業
Reconstruction(Reconstruction)
Located: Shinjuku-ku, Tokyo
Number of units: 93(Our allotment units 35)

PROUD TOWER Chiyoda Fujimi(Redevelopment)
Located: Chiyoda-ku, Tokyo
Number of units: 414(Our allotment units 306)

Annual Report 20107

Meanwhile, private REIT (unlisted/open-ended fund) represents a new
business in Japan. This fund is structured to provide the stability and safety
required for pension funds and other institutional investor needs. Private REIT
is unlisted, which makes them less liquid than listed REITs. However, their value
is based on appraised values of properties and is unaffected by fluctuations instock and financial markets, making them an extremely sound investment instrument with low volatility. We are already preparing to launch this type of fund.
From a medium- to long-term perspective, recognizing the limitations ofongoing business development in Japan, where the population continues todecline, we are also gathering information and researching the potential for new
business overseas, with a particular emphasis on Asia.

Question

5 Answer

What is your policy on profit
distribution? What other message do you have for shareholders and investors?

The Group is concentrating its efforts on strengthening our advantage in each business area and quickly regaining profitability.
Also, in preparation for a full-scale recovery in the real estatemarket, we are maintaining flexible strategies while carefully
watching for changes in the business environment.
Considering the need to keep soundness of our financial base, we have regrettably decided to reduce year-end dividends to ¥5 per share, ¥15 lower thanin the preceding year. The annual dividend, including the ¥20 interim dividend,
therefore amounts to ¥25 per share.
Over the medium-to long-term, our dividend policy is to target a payout ratioof 30%, depending on such factors as the operating environment, earnings
performance, capital investments and internal reserves.
Nomura Real Estate Holdings is making a groupwide effort to promote businesses that will take it to the next stage of growth. In these endeavors, we lookforward to your continued support and encouragement.

8

Nomura Real Estate Holdings, Inc.

Special Feature: Working for the Future of a Beautiful Planet—Nomura Real Estate Group Environmental Initiatives

Nomura Real Estate Group Environmental Philosophy
To ensure the beauty of the Earth is passed on to the future,
we believe that the mission of the Group
is to create and cultivate towns and spaces
in harmony with the environment
by utilizing the forces and gifts of nature.
With high aspirations,
we shall heighten our sensitivity to the environment
in pursuit of ideal environmental qualities.

In June 2010, we announced the Nomura Real Estate Group
Environmental Philosophy. This philosophy incorporates ourstance on environmental consideration and creation of newvalues in harmony with the environment through our business operations to ensure that the beauty of the earth isinherited by the citizens of the future. Based on the conceptof making harmonious coexistence with the environment,
the Nomura Real Estate Group will continue to improve thequality of its products and services, provides benefits to society and aims to enhance the value of the Group.

Annual Report 20109

Nomura Real Estate Group Environmental Initiatives
Condominiums and Detached Housing
Promoting the PROUD ECO Vision in pursuit of comfortable residences in harmony withthe environment and adopting energy-saving, low-CO2 housing as a standard

Bolstering thermal insulation
as a means to realize energy
consumption cuts and adopting
an array of energy-saving
equipment as a standard

The PROUD ECO Vision Environmental
Concept
The Residential Development Business supplies a diverse
product lineup under the PROUD brand from large-scalecondominiums to urban detached houses. We launched
the PROUD ECO Vision in November 2009, amid growing
environmental concerns in recent years, aiming for
comfortable residences in harmony with the environment.
Based on the PROUD ECO Vision of “harmony withnature, in pursuit of the comfort of residents, leading to
the ecological betterment of society as a whole,” we willcontinue to provide housing in tune with the environment
through ongoing innovative idea.
To enable the ideals of the PROUD ECO Vision tomaterialize, the planning of our housing embraces threeperspectives: reduce, create and utilize. This aids us inour drive to contribute to the global environment throughactive deployment of low-CO2 residences as a standard.

Promoting Three Major Projects that Realize the PROUD ECO Vision
The Company is striving to incorporate various ecofriendly means and ideas in major projects currently inprogress based on the ECO Vision that conceptualizes
objectives into three directives: reduce, create and utilize.

ReduceUtilizeCreateRealizing ecological improvements
through efforts to incorporate
passive design as a means forconsiderate, creative energysaving design

Introducing equipment to harness
natural energy sources (such as
solar panels and wind power
generators)

Traditional
downlighting

Multi-lamp
downlighting*1: Multi-lamp downlighting:Multi-lamp downlighting,jointly developed with the
manufacturer, is compatible
with low-energy-consumption,
long-life LED lighting● PROUD CITY Ikebukuro-honcho(start living from late March 2011 (planned))

・ The largest project in the overall PROUD condominium series, with
785 units
・ Incorporates considerate, creative ecological design from a newperspective in addition to standard ecological features, and is thefirst condominium complex to apply the PROUD ECO Vision
・ Employs multi-lamp downlighting*1, compatible with low-energyconsumption, long-life LED lighting (reduce); introduces solar power
to partially common space and facilities (create); and adopts a
passive design approach that effectively ensures shade from sunlightand passage for wind (utilize).
■ An architect's conception of entrance gate

10

Nomura Real Estate Holdings, Inc.

Office Buildings
Realizing functionality through cutting-edge
facilities, environmental consideration andenergy conservation● PROUD Shin-urayasu Palm Court(start living from late March 2011 (planned))・ A large-scale project in the systematically developed,
beautiful Shin-urayasu Bay Area of Chiba Prefecture
・ Introduces various initiatives for energy conservation
incorporating the “reduce, create and utilize” approach, led
by the introduction of wind-power generator*2
・ Utilizes three wind-power generators to supply electricity tocommon space and facilities

Providing Office Buildings with Superlative Environmental Performance
The Nomura Real Estate Group also incorporates
various energy-saving technologies and designs
in its office buildings, striving to contribute to the
comfort and environmental coexistence of theworkers in these facilities.

● Midosuji Noumura Building(construction completed in February 2009)

・ Features a rooftop garden and Japan’s
first built-in dry mist apparatus,
which imparts a cooling sensation topedestrians.
・ Earned acclaim as a model
environmentally considerate urban
office building, receiving the Third
Osaka Sustainable Building Award from Osaka Prefecture in■ An architect's conception of outward*2：Wind-power
generator● PROUD SEASON Hanakoganei(start living from late July 2010)

・ The largest project in the PROUD SEASON (urban detachedhousing) series that pursues the objective of an energysaving community, in line with the PROUD ECO Vision
・ Creates a sense of well-being through abundant greenery:a park*3 created by transplanting mature zelkova trees andplanting new trees, largely evergreens, for each residentialblock・ Meets energy conservation criteria stipulated under the EcoPoint System for housing*, introduced in December 2009
*Government aims to promote global warming countermeasures and stimulate the economy
through the system. Occupants of newly constructed ecological housing and residents
conducting ecological renovations get Eco-Points that they can exchange for various
products or use to offset further construction costs.

March 2010.

● NRE Shin-Yokohama Building(construction completed in October 2009)

・ Provides features that exhibit
consideration to the landscape,including energy-saving measures
such as the adoption of double-glazed
glass, and the installation of green belts
in the area surrounding the building
・ Received a grade A assessment
under the Comprehensive Assessment System for Built
Environment Efficiency in Yokohama (CASBEE Yokohama).

● Promoting Energy-Conservation at
Yokohama Business Park・ As part of a drive to promote
high-efficiency and energy-saving
design for heating and coolingsupply facilities within the park,*3：Club house and zelkova park

the Company’s operations toconserve energy through the introduction of high-efficiency
cooling equipment were selected as the Fiscal 2009 Energy
Use Rationalization Business Support Program*.
・ An energy-saving rate of 7.0% and total energy-savingsof 330kl (crude oil equivalent) are forecast for Yokohama
Business Park in 2012.

■ An architect's conception of town view

*Implemented by the New Energy and Industrial Technology Development Organization(NEDO), an independent administrative organization for the comprehensive developmentof new energies and industrial technologies, under this system businesses using energy intheir operations are partially subsidized for costs arising from the introduction of facilities
and technologies to promote further energy savings.

Annual Report 201011

Compulsory Automobile
Liability Insurance

12.1%

6.1%
6.8%

12.7%

■Residential Development Business

9.3%

2010

12.7%
65.1%

1.0%
6.1%

4.4%
7.6%

6.1%
6.8%

9.3%

Composition of Operating
Income（％）

Composition of Operating
Revenues*（％）

Segments at a Glance

8.1%■Building Business2010

FY2009■Investment Management & Development Business■ Property Brokerage & Consignment Sales Business

65.1%

21.4%

24.4%

19.3%

FY200958.3%■Other Business

49.1%* Operatng revenues in each segment have been calculated including intersegment sales and transfers.

Main BusinessResidential Development
Business

Building Business

Property Brokerage &Consignment Sales Business

Other Business

The Residential Development Business supplies approximately 4,000 condominium anddetached housing units a year, primarily in theTokyo metropolitan area under the PROUD
brand. By leveraging its integration in development and sales, the Group seeks to further improve its site selection, product planning andsales capabilities, as well as its management
quality. Through these strategic measures, theGroup seeks to enhance the PROUD brand.

●

Office leasing (owned)
Office leasing (subleasing)● Commercial facility leasing● Property management andfacility management

The Group owns and leases trophy officebuildings such as Shinjuku Nomura Building and Yokohama Business Park, as well as
commercial facilities such as Lazona Kawasaki
Plaza. In December 2008, NREG TOSHIBABUILDING Co., Ltd., joined the Group, boosting rental revenue. The Group is also working
to expand its fee-based businesses, including
property management and building management.

●

Property development
Investment management

The property development operations, whichseek to generate capital gains by supplying
products to the real estate investment market,
are aggressively deploying the Premium Midsize Office (PMO) brand. In investment management operations, the Group strives to provide investment opportunities to meet diverse
investor needs through the operation of REITs
and private funds.

●

Property brokerage
Consignment sales● Real property sales

The segment conducts real estate brokeragetargeting individuals and corporations, andsells condominiums and detached housing under consignment from developers outside theGroup. In its individual brokerage operations,
we are focusing on expanding sales office networks primarily in the Tokyo metropolitan area
and on promoting an Internet strategy. Our
corporate real estate brokerage operations
employ direct networking channels to morethan 3,000 companies that we have cultivatedover a long period of time.

●

Fitness club operation
Architectural planning andmanagement● Planning of commercial
facilities

In the fitness club operations MEGALOS manages 23 facilities mainly in the Tokyo metropolitan area. We expect to realize synergies
with the Group for the maintenance and management of facilities as well as the acquisitionof land information when opening facilities,
achieving growth through the expansion of the
facility network. Geo-Akamatsu also provides
a wide range of services related to commercial
facilities, including their planning, operationand management.

●

●

●
●

●
●

●
●

12

Nomura Real Estate Holdings, Inc.

Major subsidiaries

Sales of housing
Management ofcondominiums
25.0%

●

●

Investment Management &Development Business

Strengths

Nomura Real Estate Development Co., Ltd.
Nomura Living Support Co., Ltd.
● PRIME X Co., Ltd.
●

Nomura Real Estate Development Co., Ltd.
Nomura Building Management Co., Ltd.
● NREG TOSHIBA BUILDING Co., Ltd.
● YBP Heating and Cooling Supply Co., Ltd.
● NREG TOSHIBA FUDOSAN
FACILITIES Co., Ltd.
● Nomura Amenity Service Co., Ltd.
●

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

Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Urban Net Co., Ltd.

Nomura Real Estate Development Co., Ltd.
MEGALOS CO., LTD.
● Geo-Akamatsu Co., Ltd.
●●Fiscal 2009 topics
In the Residential Development Business, the Groupis aggressively developing its operations to leverage
the strength of the PROUD brand. Compared with theprevious fiscal year, the number of units sold increased
approximately 20%, to 4,111, including such projects as
PROUD TOWER Chiyoda Fujimi and PROUD CITY Kanamachi Garden. In the area of housing management
operations, efforts to expand the number of units under management led to this total to more than 120,000
units, causing a steady increase in revenues.

Operating revenue (Millions of yen)

（百万円）

300,000（百万円）

30,000Operating-related indices20,0004,000

100,000

10,000

2,000

0

2007

2008

2009（FY）

2007

2008

2009（FY）■ Other（百万円）

100,000

0

Housing sales（Units）

6,000

200,000■ Sales of housing■ Management of condominiums

In the Building Business, we strove to expand marketing
activities closely tailored to tenant needs, as well as toraise fee income from property management and facility
management operations. Revenue and income both expanded, helped by a full year’s contributions by NREGTOSHIBA BUILDING to Group operating performance.
During the year, we also added to our list of properties
the Iidabashi Plano Stage Building and the NRE NishiShinjuku Building.

Operating income (Millions of yen)

0

2007

2008

2009（FY）■ Housing for household ■ Rental condominiums

6

（百万円）

30,000Vacancy rate at fiscal year-end（%）

4.8
75,00020,0004

10,0002

50,0002.2

25,000
0

2007

2008

2009 （FY）

0

2007

2008

2009（FY）

0

2007

2.6

2008

2009（FY）■ Office leasing (owned) ■ Office leasing (subleasing)■ Commercial facility leasing ■ Property management and facility
management ■ Other

In our property development operations, we moved
forward with the development of previously acquiredsites and the sale of completed developments. During
the year under review, the Group completed construction on five properties in the PMO series, including PMO
Akihabara and PMO Hatchobori. As part of our efforts tomeet diverse investor demand through our investment
management operations, we established Nomura Real
Estate Private REIT, Inc., as a comprehensive-type, unlisted open-ended REIT.

（百万円）

100,000
75,00030,00050,00020,00025,00010,000

0

2007

2008

（百万円）

40,0002009（FY）

0

1,500

500

2007

2008

2009（FY）

In the fitness club operations MEGALOS ran various
campaigns and events, for an increase in memberships
and higher member retention. We also endeavored tomake facilities more attractive to members by renovating two properties—MEGALOS Tabata and MEGALOS
Chofu.

0

30,0006,000

15,00020,0004,000

10,000

2,000

5,000

2007

2008

2009 （FY）

0（件／百万円）

2007

2008

2009 （FY）■ Property brokerage ■ Consignment sales■ Real property sales ■ Other（百万円）

30,0002009（FY）

20,0000（Transactions/Millions of yen）

4,047

4,184

2007

2008

5,219

2009（FY）

Number of transaction ■ Total transaction value

（百万円）

2,000

150,000

1,500

20,0002008■ Private Funds, etc

Number of transactions andtotal transaction value of brokerage

8,000

0

2007

■ Listed REITs

40,00010,000(Billions of yen)

1,000

■ Property development ■ Investment management

In property brokerage operations, we enhanced thecontents on our nomu.com website to reinforce brokerage targeting individuals and expanded our network ofsales offices, resulting in an increase in the number oftransactions and the transaction value during the year.
In consignment sales operations, we endeavored toform sales tie-ups with major developers and worked
to promote supply, contracts, delivery and settlement. In the area of real estate property sales operations, we concentrated on quickly selling properties ininventory.

Assets under management
at fiscal year-end

Number of MEGALOS Members
at fiscal year-end

100,000

1,000
10,000050,000

500

2007

2008

■ Fitness Club

2009（FY）

0

2007

2008

2009（FY）

0

2007

2008

2009（FY）■ Other

Annual Report 201013

Major Activities in Fiscal 2009

Condominiums and Detached Housing Projects Completed in Fiscal 2009
■Musashino Towers■PROUD TOWER Chiyoda Fujimi

Location: Chiyoda-ku, Tokyo
Units: 414 (Our Company’s
allotments 306)

■PROUD Shin-Urayasu Marina Terrace■PROUD CITY Kanamachi Garden

Location: Urayasu-city, Chiba
Units: 179

Location: Katsushika-ku, Tokyo
Units: 421■PROUD TOWER Higashi Gotanda

Location: Shinagawa-ku, Tokyo
Units: 289 (Our Company’s
allotments 137)

Location: Musashino-city, Tokyo
Units: 570 (Our Company’s
allotments 171)

■PROUD Asagaya

Location: Suginami-ku, Tokyo
Units: 58 (Our Company’s
allotments 55)■PROUD SEASON Higashi Funabashi■PROUD Otsu-Nionohama

Location: Funabashi-city, Chiba
Lots: 69

Location: Otsu-city, Shiga
Units: 312

Offices and Logistics Facilities Completed or Acquired in Fiscal 2009
■NRE
Shin-Yokohama Building■NRE
Musashi Kosugi Building■NRE
Nishi Shinjuku Building■Iidabashi Plano Stage
Building■Landport Kawagoe

Location: Kohoku-ku, Yokohama
Floor space: 24,588 m2
Completed: October 200914

Nomura Real Estate Holdings, Inc.

Location: Nakahara-ku, Kawasaki
Location: Shinjuku-ku, Tokyo
Floor space: 24,535 m2 (North Tower), Floor space: 6,336 m2
Completed: March 2010
9,114 m2 (South Tower)
Completed: March 2010

Location: Chiyoda-ku, Tokyo
Owned portion: 3,958 m2
Acquired: April 2009

Location: Kawagoe-city, Saitama
Floor space: 79,212 m2
Completed: April 2009

PMO Series Developments
The Group is developing PMO (the Premium Midsize Office) brand, the newcategory of office buildings. PMO series are mid-sized office buildings which
offer the same level of design, functionality and security found in large officebuildings.
Good Design Award Winners in Fiscal 2009

■PMO Hatchobori■PMO Nihonbashi Honcho(already sold)

Renovation of the Shinjuku Nomura Building
We expanded direct access from the fronting roadway to the building’s lower floors, as well as internal accessibility, and introduced tenants attracting
many customers. These improvements also succeeded in attracting more customers to the basement-level shopping area.

■PMO Iwamotocho■PMO Higashi Nihonbashi■PMO Akihabara■PMO Nihonbashi Odenma-cho

Opening of New Branches Providing Real
Estate Brokerage Services for Individuals
Nomura Real Estate Urban Net is principally
engaged in real estate brokerage business.
To provide services more carefully tailoredto the needs of home buyers and home sellers in the area, we opened three branches
in 2009: the Kawaguchi Center, the Mizonokuchi Center and the Shinjuku Center.

■Kawaguchi Center■Mizonokuchi Center■Shinjuku Center

Annual Report 201015

Outline of Nomura Real Estate Group

Residential
Development
Business
Development and sales of condominiums,detached housing,residential lots and other properties, as well as housing management and maintenanceunder contract from management associations after the saleof condominiums

Building Business

Investment
Management &Development
Business

Development, construction,leasing, operation and management of office buildings,
houses, commercial facilities
and other properties, as wellas consulting on CRE utilization

Development and sales of
profit-generating property forthe real estate investment
market, and management of
J-REITs and private funds,
consulting services for securities investment, etc.

Property Brokerage& Consignment Sales
Business
Brokerage of real estate,mainly sales of condominiums
and detached housing for individual households consigned
from outside the Group, andother services

Other Business
Operation of fitness clubs;
construction design and supervision; and planning, design
and management of commercial facilities

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 Investment
Management

PRIME X

NREG TOSHIBABUILDING

Nomura Real Estate
Asset Management

YBP Heating andCooling Supply*

Nomura Real Estate
Capital Management* YBP = Yokohama Business Park

NREG TOSHIBAFUDOSAN FACILITIES

Nomura Amenity
Service

16

Nomura Real Estate Holdings, Inc.

Nomura Real Estate
Urban NetMEGALOS

Geo-Akamatsu

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

Nomura Real Estate Development Co., Ltd.
http://www.nomura-re.co.jp/english/
Nomura Real Estate Development operates in three fieldsof business: residential development, which includes
condominium and detached housing development
and sales under the PROUD brand; corporate realestate, which involves real property development andbrokerage services for corporate clients; and investment
management, which targets high-profit investment.

■

Nomura Real Estate Urban Net Co., Ltd.
http://www.nomura-un.co.jp/ (Only in Japanese)
This company’s services include residential real estate
brokerage, which assist residential relocation, andcommercial real estate brokerage. The company also
provides consignment sales business. Nomura Real
Estate Urban Net aims to become the Number One
brand in real estate services and consulting.

■Nomura Building Management Co., Ltd.
http://www.nomura-bm.co.jp/ (Only in Japanese)
Nomura Building Management handles facility
management and efficient property management,
as well as the renewal of building interiors. The
company provides expertise regarding all aspects ofmanagement of buildings.

■

Nomura Living Support Co., Ltd.
http://www.nomura-ls.co.jp/ (Only in Japanese)
Nomura Living Support responds to a broad rangeof customer needs, from managing condominiums
to renovation, interior coordination and consultation.
This company is also responsible for the management
and maintenance aspects of the Nomura Real
Estate Group’s residential development, sales andmanagement operations.

■

Nomura Real Estate Investment Management
Co., Ltd.
http://www.nreim.co.jp/english/
Nomura Real Estate Investment Management
structures and manages private funds with a wide
range of risk–return preferences. These funds precisely
meet the varying needs of investors regarding realestate investment, including investments in offices,
commercial and logistics facilities.

■

Nomura Real Estate Asset Management Co., Ltd.
http://www.nre-am.co.jp/english/
In line with its basic policy of stable medium- tolong-term asset management, Nomura Real Estate
Asset Management manages two listed REITs:
Nomura Real Estate Office Fund, which invests inoffice buildings; and Nomura Real Estate Residential
Fund, which targets residential facilities.

■

Nomura Real Estate Capital Management Co., Ltd.
http://www.nrecm.com/english
Nomura Real Estate Capital Management specializes
in managing securitized real estate funds varying fromfunds-of-funds to commercial mortgage-backed
securities (CMBSs). It also handles investmentson behalf of pension funds and other institutional
investors.

■

NREG TOSHIBA BUILDING Co., Ltd.
http://www.toshiba-building.co.jp/ (Only in Japanese)
NREG TOSHIBA BUILDING offers services spanningthe development, leasing and management ofoffice buildings, commercial facilities, warehouses,
condominiums and other properties, as well as
property brokerage and consulting on corporate realestate (CRE) utilization.

■

MEGALOS CO., LTD.
http://www.megalos.jp/ (Only in Japanese)
Under the philosophy of “transforming customer
satisfaction into happiness,” MEGALOS plans,
develops and manages fitness facilities offering topof-the-line service and equipment that are housed in
the best facilities in each area.

■

Yokohama Business Park Heating and Cooling
Supply Co., Ltd.
This company is responsible for the supply ofheating and cooling services to Yokohama Business
Park, a large-scale business facility through its
district heating and cooling system. Using a “bestmix” system that combines gas and electricity, thecompany uses energy efficiently to curtail costs andminimize environmental impact.

■

Geo-Akamatsu Co., Ltd.
http://www.geo-akamatsu.co.jp/foreign/
Geo-Akamatsu provides a full range of property
consulting and other services that maximize its 40
years of accumulated expertise. These services include
surveys of commercial facilities, project planning,leasing, commercial space design and property
management.

■

PRIME X Co., Ltd.
http://www.prime-x.co.jp/ (Only in Japanese)
Based on its accumulated real estate expertise, Prime X
develops Internet advertising businesses that specialize
in business in the real estate and housing industries.
Prime X delivers proposals that maximize customer
benefits, ranging from the creation of corporate websites
and project homepages to creating and managing
membership organizations, and handling project sales
promotions.

Annual Report 201017

Group Company Profile

Nomura Real Estate Urban Net Co., Ltd.

Corporate Profile
Head Office:Shinjuku Nomura Building,
1-26-2 Nishi-Shinjuku, Shinjuku-ku,
Tokyo 163-0576, Japan

Representative:

Nagayoshi Kanehata, President

Business Activities: Residential real estate brokerage, commercial
real estate brokerage, consignment sales,
sales of renovated condominiums, real
property development, and insurance agency

Nagayoshi Kanehata

President

Aiming to be the Number One Brand in Real
Estate Consulting and Other Services
Based on Nomura Real Estate Urban Net’s corporate
philosophy, which is “to ensure the ongoing trust of its
customers and contribute to their long-term happinessthrough real estate consulting and other services,” thecompany engages primarily in real estate brokerage, in
addition to consignment sales and insurance agency
operations. We provide top-quality consulting and otherservices to meet various needs of our customers through37 branches (as of June 30, 2010), centered on the Tokyo
metropolitan area.
	In addition, our industry-leading real estate information
website, nomu.com, is widely acclaimed for its provision ofdetailed data and is at the forefront of the real estate field interms of user access.
	In the future, the market for real estate brokerage isanticipated to grow as a result of an expanding stock ofhigh quality residential properties, evolving relocation needs
arising from shifts in society and lifestyles, and other factors.
	Nomura Real Estate Urban Net aims to bolster its ability
to adapt to its markets and to promote strategies sensitized
to the changing times with a view to expanding the roles andresponsibilities it fulfils in society. Our mission for the future
is to provide our customers with a sense of security andsatisfaction by reinforcing our information network and further
enhancing the quality of our consulting and other services.
We will pursue our mission and continue to contribute to thebetterment of society.

18

Nomura Real Estate Holdings, Inc.

Capital:¥1 billion yen

Sales:¥17,794 million (Fiscal year ended March 31,
2010)

Number of employees: 1,012 (As of March 31, 2010)
Established:

November 6, 2000

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

Corporate Philosophy
Nomura Real Estate Urban Net aims to ensure theongoing trust of its customers and contribute to theirlong-term happiness through real estate consulting andother services.

Network
ofBranches
Branches
Network of
(as
(asof
ofJuneJune20,20,2010)2010)

Saitama
Saitama
Tokyo

Tokyo

Chiba

Chiba

Kanagawa

Kanagawa■ Kansai region:
Osaka Branch■ Kansai region:
Osaka Branch

37 other branches, centered on the Tokyo metropolitan area

Business Activities

Residential real estate
brokerage

Commercial real estate
brokerage

Consignment salesof newly constructed
properties

Insurance agency

Sales of renovatedcondominiums

Real property
development

Supplying optimal solutions
including effective utilizationof real estate in line withcorporate and financial
strategies, as well as sales
support for investment
properties attuned to fundmarkets

Supporting the security andsafety of potential sellers andbuyers of residential properties
in their transactions

Preparing insurance
proposals in tune withcustomer needs throughmore than 20 life and nonlife
insurance agencies

Offering total consulting
services, from market surveys
to product planning, sales
and deliveries, to supportclient companies’ business of
housing sales

Maximizing the value ofreal estate and providing
properties for stable
investment

Providing renovated condominiums with heightened
appeal and value"nomu.com" (real estate information website, the leader in user access)Website for Homebuyers and Sellers (Japanese only)
nomu.com
http://www.nomu.com/

The nomu.com website facilitates relocation via the Internet. Accessed by a vast user base,nomu.com is at the forefront of the real estate field in terms of user access. It features anabundance of property-related information such as housing loans, insurance, renovation,
relocation, and various other aspects involved in moving home in addition to property
information..

Investment Real Estate Website(Japanese only)
nomu.com/pro

Commercial Real Estate Website(Japanese only)
nomu.com/BIZ

Relocation Website Dedicatedto Female Users (Japanese only)
nomu.com/woman

http://www.nomu.com/pro/

http://www.nomu.com/biz/

http://www.nomu.com/woman/

Annual Report 201019

Corporate Governance■ Profile of Nomura Real Estate Group
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 morethan 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 the shared
mission, sense of identity and goals for which the Nomura Real Estate Group everlastingly works.

Basic Viewpoints Regarding Corporate Governance
The Company believes that the company must be governed in a
way that continuously maximizes corporate value over the longterm, while consideration is given to the interest of shareholders and all other stakeholders related to the Nomura Real EstateGroup. Furthermore, we aim to enhance the earning power of theentire Group, and while acting as a holding company in managing and supervising the business activities of our subsidiaries, wewill strive to build a highly transparent management organization.

Corporate Governance System<Outline of Corporate Governance System>
The Company’s Board of Directors comprises seven directors. It
decides important corporate matters and supervises the execution of business operations by directors. Statutory auditors attend
meetings of the Board of Directors and provide their opinions as
the need arises.
The Board of Statutory Auditors comprises five statutory auditors, three of whom are external auditors. The Board formulates
such matters as audit policies and operational roles, and receives

20

Nomura Real Estate Holdings, Inc.

reports and conducts discussions regarding important matters relating to audits carried out on the basis of those policies and roles.
The Company has adopted a statutory auditor system. The
Company believes that management supervision should be conducted primarily by statutory auditors. The Company enhances
the effectiveness of its audit activities by assigning specialized
staff to assist statutory auditors. Furthermore, the majority ofstatutory auditors are external statutory auditors, which preserves
their independence from management and creates a structurethat enables them to perform operational audits appropriately.
The Company also has established risk management, compliance and internal audit systems, each of which report regularly to
the Board of Directors. Such reports enable the board to effectively supervise directors’ execution of duties.
As it is a holding company, the Company convenes GroupManagement Meetings, members of which include the Company’s directors and the presidents of major subsidiaries. The purpose of these meetings is to unify intentions to promote Groupmanagement and verify the progress of the budgets of each
operating company and the execution status of other business
operations.

<Risk Management and Compliance Framework>
Risk Management System
The Company has established a Risk Management Committee
whose members include officers in charge of administrative operations at the Company and Group companies, for the purposeof promoting risk management activities within the Group. The
Committee deliberates matters relating to risk management,compliance, and information security for the entire Group, andalso cooperates and provides guidance with regard to countermeasures when risks occur.

Internal Audit System and Statutory Auditor Audit
System<Internal Audit System>
The Nomura Real Estate Group has established an internal audit
department at each Group company, with the exception of somesmall companies. Each department is supervised under the
direct jurisdiction of the Group company president or an officer
who does not hold an additional office in a business operations
division, which allows the department to maintain organizational
independence. In addition, we have established the Internal Audit
Department in the Company that supervises the internal audit
functions of the entire Group and performs monitoring, evaluation
and auditing in each division within the Company.

<Compliance Systems>
The Nomura Real Estate Group regards compliance, including
the observance of laws and regulations and corporate ethics,
as one of the most important management issues. As a set of
relevant guidelines, it has formulated the Nomura Real EstateGroup Code of Action. To promote continuous educational andawareness activities for executives and employees, we have established a Compliance Department in the Company. It provides
advice, guidance, and support to Group companies. Furthermore, based on our priority of collecting information regarding
risks, we have set up the Nomura Real Estate Group Risk Hotline
as a point of contact for internal reporting by Group employees.

<Statutory Auditor Audit System>
The Company has appointed full-time staff in the Corporate
Planning Department to support statutory auditor audits. Eachstatutory auditor attends meetings of the Board of Directors andother important meetings and audits the execution of the duties
of directors while cooperating with the Internal Audit Department
and the auditing firm as needed.

Corporate Governance System
General Meeting of Shareholders
Appointment/dismissal

Nomura Real Estate Holdings, Inc.
Audit

Board of Directors (7 directors)

Appointment/dismissal

Appointment

Board of Statutory Auditors(5 statutory auditors)

Appointment/dismissal
Representative Director
Audit
Group Management Meeting

Certified Public
Accountant(Auditing Firm)

Risk Management Committee

Corporate Planning
Department

ComplianceDepartment

Management guidanceTraining & guidanceInternal Audit
Department

Monitoring

Operating Companies

Annual Report 201021

<Accounting Audits>
The Company has concluded an auditing contract with Ernst &Young ShinNihon LLC. In addition to performing regular audits,
Ernst & Young ShinNihon LLC discusses and verifies accounting
issues as needed and conducts appropriate accounting practices.
All of the certified public accountants that carry out work
have no more than seven years of continued experience in auditing the Company, and the auditing firm has adopted autonomous
measures to ensure that its employees who carry out work do
not participate for longer than a designated period in the Company’s account auditing.
Assistants associated with audit operations comprise threecertified public accountants and fifteen assistant certified public
accountants and staff.

Compensation of Directors and Statutory Auditors
At the second annual general meeting of shareholders on June
26, 2006, it was resolved that the maximum annual compensation
limit for directors and statutory auditors would be ¥650 million and¥120 million, respectively. The Company paid the following compensation for fiscal 2009 to directors and statutory auditors.
The Company’s compensation of directors and statutory auditors consists of fixed monthly compensation and variable compensation, comprising bonuses and stock-related compensation.
Bonuses are determined according to the Company’s businessperformance during the relevant fiscal year, as well as to individual contribution to that performance. Stock-related compensation,in the form of stock options, is designed to align executives’ interests with those of the Company’s shareholders, and to further
enhance corporate value. Stock options are either market-value
stock options, on which the exercise price (the amount payable
when the right is exercised) is determined on the basis of market
prices, or share compensation stock options, which have exercise prices of ¥1 per share. Stock-related compensation is notprovided for statutory auditors.
Eight directors
Two statutory auditors(excluding external auditors)
Three external directors
Total: Thirteen persons

22

Nomura Real Estate Holdings, Inc.

¥258 million¥47 million¥13 million¥319 million

Auditor Compensation
Compensation paid to the Company’s certified public accountants (auditing firm) for fiscal 2009 was as follows.
		Compensation paid for		
audit certification activities
The Company¥69 million
Consolidated subsidiaries¥125 million
Total		
¥194 million

Compensation paid for
non-audit activities–¥37 million¥37 million

Matters Concerning Parent Company
The Company’s parent company is Nomura Land and Building
Co., Ltd. (NLB).
1) Capital relationship with Nomura Land and Building Co., Ltd.
As of March 31, 2010, the Company’s parent company, Nomura
Land and Building Co., Ltd., held 50.9% of its shares. This holding percentage could decrease in the event of a sale of the Company’s shares or an increase in capitalization.
2) Business transaction relationships
In fiscal 2009, business transactions between NLB and companies in the Nomura Real Estate Group amounted to ¥6 million in
the Building Business segment and other areas.
3) Personal relationships
To strengthen audit operations, the Company has accepted one
non-full-time statutory auditor from NLB. He is Mitsuru Nakajima,a director of NLB. Hirohisa Suzuki, the Company’s President, isthe former President of NLB, but apart from the statutory auditor
mentioned above, no executives or employees of the Company
are concurrently serving at NLB or on secondment from thatcompany.
The relationship between the Nomura Real Estate Group and
NLB is as described above, but it does not exert any influenceon the Nomura Real Estate Group’s free marketing activities ormanagement decisions. The current main business activities of
NLB are shareholdings of investment securities, including thoseof the Nomura Real Estate Holdings, and the leasing of three
office buildings, but they do not compete with the Group’s business operations. In addition, NLB has subsidiaries outside theNomura Real Estate Group that are engaged in an overseas hotelmanagement business and other areas, but they also do notcompete with the Group’s business operations.
The Company performs business management independently from the parent company based on the Company’s own
responsibility.

Board of Directors and Statutory Auditors (As of June 29, 2010)

President

Director

Director

Hirohisa Suzuki

Mototsugu Takai

Tsukasa Takahashi

Director

Director

Director

Director

Seiji Matsumoto

Toshiaki Takahashi

Takao Orihara

Yukoh Yoshida

Statutory Auditor

Statutory Auditor

Statutory Auditor*

Statutory Auditor*

Shigeaki Yoshioka

Mitsuharu Sato

Yasuaki Fukui

Shigeru Matsushima Mitsuru Nakajima

Statutory Auditor*

Note: Yasuaki Fukui, Shigeru Matsushima and Mitsuru Nakajima are external statutory auditors as provided for in Article 2, Item 16 of the Company Law.

Annual Report 201023

Corporate Social Responsibility

The Nomura Real Estate Group strives, as a corporate citizen, to achieve the sustainable development ofsociety, based on its Group message of “Bringing Tomorrow Today.” In addition to providing high-quality
products and services, we are also committed to continually staying aware of the impact our businesses
have on the environment and society.
Environmental Endeavors

ReduceFormulation of an Environmental Philosophy and Residential Planning throughthe PROUD ECO Vision
In June 2010, we announced the Nomura Real Estate Group Environmental Philosophy,
expressing our ideas and policies on business activities with regard to the environment.
Based on this statement, we are fostering awareness among Group employees and taking
a proactive stance on environmental problems.
Specifically, the Group has defined the PROUD ECO Vision in its core Residential Development Business. This involves engaging various means to enhance both comfort andeconomic wellbeing, utilizing the forces and gifts of nature under a conceptualization of its
objectives into three distinct directives: reduce, create and utilize.
For information on specific environmental initiatives, please refer to the special feature on pages 9–11

UtilizeCreateThe PROUD ECO Vision—
the environmental concept of the Residential
Development Business

Considering Environmental Problems while Observing and Appreciating Fireflies
Nomura Real Estate has been holding Firefly Habitat Exhibitions since fiscal 2008. These
events present an opportunity for participants to consider environmental problems and theimportance of nature by observing and appreciating fireflies.
In fiscal 2009, we set up a Firefly Watch Special Booth in Yokohama Business Park
to see fireflies in flight. We also established a biotope tour of insects and plants and conducted rice planting activities as part of an integrated study program for local elementary
schools and organized events dedicated to releasing fish (killifish and loach) back to theirnatural habitats. Through these endeavors, Nomura Real Estate worked with local residents, university students and a host of other organizations, providing opportunities tomake contact with and to reconsider the importance of nature and living creatures.

Providing opportunities for contact withnature through Firefly Habitat Exhibitions

Providing Reliable Services
Priority on Safety
We ensure the quality, including earthquake protection, of condominiums and detachedhousing provided by the Nomura Real Estate Group through stringent checks by individual
project managers and quality control specialists at the design, construction and all otherstages. In addition, the Group issues booklets for its customers compiling detailed information on structural design and construction management, various inspections and methodsof quality control. These initiatives are geared to ensure the peace of mind for customer ofresidential business.

Pursuing thorough quality control for allprocesses, from design through construction

Improving Convenience for Occupants of PROUD Condominiums
We introduced the Living Q Call service for all PROUD condominiums managed by Nomura Living Support (sales dating from April 2010), which ensures a response to any problem
arising in the course of residency through a single telephone call. The Group is striving to
improve convenience and satisfaction for residents by providing the Living Q Call service;an Emergency Response Service to respond to issues such as those involving plumbing,electricity or keys; a Life Support Service that offers free consultation and referrals for services regarding personal computer difficulties, household matters and other lifestyle-related
agenda; and a Residential Service for interior repairs and remodeling.

24

Nomura Real Estate Holdings, Inc.

The Living Q Call service guarantees
response to residential problems through asingle telephone call.

Management’s Discussion and Analysis

Trends in the Real Estate Industry
From the beginning of 2010, in the market for
condominiums, there were signs of recovery in the Tokyo
metropolitan area condominium market. From January to
March 2010, the number of condominium units supplied
was up 20% from the corresponding period of theprevious year, with contract rates hitting a three-year highof 82.8% in March 2010. In addition, housing starts for
March 2010 rose year on year for condominiums on anationwide basis for the first time in 16 months. Overall,
demand was on an upward trend, aided by continued
ongoing adjustments of sales prices, with underlying
support from gift tax exemption increases and othermeasures by the Japanese government.
In the real estate investment market, steady
improvements in the fund procurement environment

Average prices and contract rates
for condominiums
in the Tokyo metropolitan area

Vacancy rates in the five wardsof central Tokyo

For the calendar years

(%)
100

(%)
10

40

90

8

80

6

82.5
78.3

20

69.7

0

69.7 70

4

60

2

0

0

62.7

10

J-REIT market
capitalization

As of December 31(Millions of yen)
50

30

continued, boosted by various mergers and restructuringinitiatives involving J-REITs, public offerings and support
by the Real Estate Market Stabilization Fund. Under these
conditions, transaction among real estate funds and realestate firms also showed signs that the worst was over,although weakening of J-REIT investment unit prices andother factors indicate that a full-blown recovery may stilltake some time.
It is not yet certain whether the office market hasbottomed out. Concerns about the direction of theeconomy have raised the cost-reduction awareness oftenants and prolonged the contraction in office demand.
Accordingly, the vacancy rate in offices in the five wardsof central Tokyo reached a record level at more than 8%.
The downtrend in rent levels also continued during theyear.

2005 2006 2007 2008 2009

As of March 31(Trillions of yen)
8
8.1

6.3
6

4.7

4.2
2.9 2.7

2005 2006 2007 2008 2009

4

4.1
3.4
2.5

3.0

2

0

2006 2007 2008 2009 2010

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

Source: Miki Shoji Co., Ltd.

Analysis of Operating Results
In this environment, the Nomura Real Estate Group
completed construction of a number of large-scalecondominiums, notably PROUD TOWER Chiyoda Fujimi,
boosting the number of housing sales unit (deliveries) to4,111, up 721, or 21.3%, from the previous fiscal year.
However, the impact of the stagnant real estate­investment market led to a reduction in property sales for
the Company’s Investment Management & Development
Business. This resulted in a decline of ¥14,430 million, or
3.2%, in operating revenue, to ¥434,226 million.

Source: The Association forReal Estate Securitization

In terms of profits, we posted a ¥5,623 million writedown on inventories under operating costs as a result ofa decrease in profitability. This was offset by the contribution of revenues from the consolidated NREG TOSHIBABUILDING Co., Ltd., to full-year results and effective
measures to reduce operating expenses. Consequently,
operating income grew ¥5,262 million, or 15.5%, to¥39,275 million. However a ¥10,486 million write-down
posted as an extraordinary loss related to the revaluationof equity investments (i.e., CMBS) led to a drop of¥9,110 million, or 66.2%, in net income for the year,to ¥4,660 million.

Annual Report 201025

Operating Results by Segment
Residential Development Business—Overview of
Fiscal 2009
The Residential Development Business segment focusedon its strategy to raise recognition of the PROUD brandand to boost brand value and strove to further strengthensite selection, product planning and sales capabilities byleveraging integration of development and sales.
At the end of the fiscal year, completed inventory units
stood at 535, up 270 from one year earlier. Completed
inventory units in the Tokyo Metropolitan Area, which
accounts for more than 80% of Residential Development
Business segment sales, were down year on year, butdelays in market recovery led to substantial increases in
the Kansai Area and other regions.
We are boosting profits from housing management
operations by actively carrying out management on consignment orders from outside the Group as well as forresidences within the Group. In addition, in September
2009 Nomura Living Support Co., Ltd., absorbed theoperations of ZEPHYR Community, which it alreadyowned through a mergers and acquisitions initiative, in abid to bolster management efficiency.
As a result of these endeavors, operating revenue in the
Residential Development Business segment increased¥27,441 million, or 11.8%, to ¥259,070 million, while
operating income slipped ¥1,052 million, or 8.9%, to¥10,735 million.
Building Business—Overview of Fiscal 2009
In the Building Business segment, we reinforced marketing activities attuned to tenants’ needs, cultivated commission income from property management and building
management operations, and continued to gain orders
from tenants for interior renovations. However, thevacancy rate rose from the previous year as a result of
diminishing office requirements, against the backgroundof heightened cost-reduction awareness by tenants.
Revenues from NREG TOSHIBA BUILDING, consolidated
in December 2008, contributed to full-year results, helping to push up performance from the previous fiscal year.
Consequently, operating revenue in the Building
Business segment rose ¥4,838 million, or 5.4%, to¥95,238 million, and operating income jumped ¥5,818
million, or 36.9%, to ¥21,587 million.
Investment Management & Development Business—
Overview of Fiscal 2009
In its property development operations, Nomura Real
Estate promoted development projects and undertook
sales promotion activities for its products. Further, weaggressively developed the Premium Mid-Sized Office(PMO) brand, which embraces small and medium-sizedproperties that are endowed with the high quality of large
office buildings. During the fiscal year, we completed five26

Nomura Real Estate Holdings, Inc.

buildings under this brand, contributing to robust­development track record.
Its investment management operations focus on stable
management of various types of funds handled by the
Nomura Real Estate Group. To respond to the diverse
aspirations of investors, Nomura Real Estate AssetManagement Co., Ltd. established Nomura Real Estate
Private REIT, Inc. as a comprehensive-type, unlisted,
open-ended REIT.
During the fiscal year, operating revenue in theInvestment Management & Development Business segment fell ¥41,889 million, or 53.6%, to ¥36,189 million,
and operating income decreased ¥1,619 million, or
16.0%, to ¥8,498 million.
Property Brokerage & Consignment Sales Business—
Overview of Fiscal 2009
The Company promoted strategic use of Internet media
in its property brokerage operations and actively promoted customer-driven marketing. Nomura Real Estate
Urban Net Co., Ltd. established three new branches tofortify retail operations: the Kawaguchi Center in
Kawaguchi-city, Saitama; the Mizonokuchi Center in
Kawasaki-city, Kanagawa; and the Shinjuku Center inShinjuku-ku, Tokyo.
In the area of real property sales, we promoted productsales of small and medium-sized development projects,
leveraging our wide-ranging brokerage information.
As a result, operating revenue in the Property
Brokerage & Consignment Sales Business segment
declined ¥5,800 million, or 14.6%, to ¥33,964 million,
although operating income leapt ¥1,136 million, or
73.1%, to ¥2,690 million.
Breakdown of operating income by segment(Millions of yen / %)¥432
(1.0%)¥2,690(6.1%)¥8,498(19.3%)¥10,735(24.4%)

Consolidated
Operating Income¥39,275¥21,587(49.1%)
Residential Development Business
Building Business
Investment Management & Development Business
Property Brokerage & Consignment Sales Business
Other BusinessNote: Since operating income for each business does not include “eliminations
or corporate” in segment information, the sum of operating income of thebusinesses presented in the pie chart differs from the total amount shown inthe center of such pie chart. The shares of consolidated operating income bybusiness have been calculated based on operating income for each segment.

Other Business—Overview of Fiscal 2009
As part of the Company’s fitness club business,
MEGALOS Co., Ltd. launched various campaigns andevents to recruit new members and drive up the­membership retention ratio.

The Other Business segment’s operating revenue
eased ¥179 million, or 0.9%, during the year, to ¥19,657
million, while operating income fell ¥669 million, or 60.8%,
to ¥432 million.

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 units held in inventories (units)
Rental condominium sales for investors (units)
Condominiums under management (units)
Building Business:
Vacancy rate at year-end (Offices, commercial facilities) (%)*
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

2006

2007

2008

2009

2010

3,656
448
20.5
64
36
92,758

3,245
507
22.2
6
248
97,847

3,463
347
22.7
275
747
103,102

3,135
255
21.8
265
621
110,365

3,696
415
16.1
535
248
121,212

3.5

1.9

2.2

2.6

4.8

460,320

771,211 1,031,528 1,235,611 1,204,546

3,923
347,990

3,949
388,479

4,047
406,635

4,184
293,047

5,219
386,446

113,973

115,457

120,543

129,944

128,365

Notes: 1. Figures shown for fiscal 2007 and earlier were calculated by including the leased floor area of residential projects.
2. Methods for the calculation of REIT’s AUM (Assets Under Management) have been changed since FY2006.

Analysis of Financial Position
As of March 31, 2010, total assets stood at ¥1,405,424
million, up ¥19,892 million, or 1.4%, from a year earlier.
Current assets declined ¥30,648 million, or 4.1%,
to ¥709,619 million, primarily as a result of decreasesof ¥22,567 million in inventories, led by real estate
for sale, and ¥15,620 million in notes and accounts
receivable–trade.
Property and equipment grew ¥50,507 million due toacquisition of new properties and partial consolidation ofprivate funds. Intangible assets contracted ¥1,153 million,
while investments and other assets grew ¥1,186 million.
As a result, fixed assets advanced ¥50,540 million, or
7.8%, from the previous fiscal year-end, to ¥695,805
million.
Current liabilities fell ¥119,396 million, or 32.6%,
to ¥247,333 million. As of March 31, 2010, althoughdeposits received from external business proprietors of
joint development business in common developmentsfrom other business owners were up ¥22,983 million,
short-term loans payable were down ¥86,761 million asa result of repayment though funds from public stock
offerings and other factors. Furthermore, notes andaccounts payable–trade were ¥31,831 million lower than
one year earlier.
Noncurrent liabilities increased ¥71,227 million, or
9.7%, to ¥808,654 million, mainly on the back of growth
in long-term loans payable. The Company prepares for

short-term interest rate rises primarily through long-term
fixed borrowing. Accordingly, we increased long-termloans payable ¥68,444 million from the end of theprevious fiscal year. Further, total interest-bearing debt
declined ¥18,437 million, to ¥759,637 million, contributing to a ¥48,169 million, or 4.4%, reduction in total
liabilities, to ¥1,055,987 million.
Net assets edged up ¥68,061 million, or 24.2%, to¥349,437 million. This was largely attributable to growthin capital stock and capital surplus arising from publicstock offerings. The debt-to-equity ratio was 2.5 times
and the equity ratio stood at 21.4%.
Basic Policy Concerning Profit Distribution
The Company’s basic policy regarding the distributionof profits to shareholders has required that decisions
take into account a balance with retained earnings, after
comprehensively considering such factors as businessperformance in the applicable fiscal year, the operating
environment going forward, and capital investment plans.
The fiscal year under review saw a significant dropin net income in conjunction with an extraordinary loss
incurred from an equity investment write-down. In orderto restore financial soundness of the Company, theCompany declared a year-end cash dividend of ¥5.00 per
share. Combined with the ¥20.00 interim dividend alreadypaid, this brought annual dividends for the year to ¥25.00
per share.

Annual Report 201027

In the future, in light of the operating environmentand capital investment plans and with consideration
for retained earnings, the Company plans to establish
a payout ratio of around 30%, subject to recovery inperformance, as its basic policy on profit distribution.
For fiscal 2010, the Company intends to pay interim andyear-end dividends of ¥12.50 each, for a total of ¥25.00
per share, which is the same as FY2009.
Cash Flows
Cash flows from operating activities
Net cash provided by operating activities amounted to¥19,266 million, compared with net cash used in operating activities of ¥108,031 million during the previous fiscal
year. This was primarily due to a decline in notes andaccounts payable–trade offsetting an increase in deposits
received and decreases in inventories and notes andaccounts receivable–trade.
Cash flows from investing activities
Net cash used in investing activities amounted to ¥24,571
million, compared with net cash used in investing
activities of ¥141,789 million in the previous fiscal year.
Major factors included extraordinary expenditure during
the previous year for the purchase of NREG TOSHIBABUILDING shares and purchases of property, plant andequipment and intangible assets.
Cash flows from financing activities
Net cash provided by financing activities totaled ¥13,098
million, compared with net cash provided by financing
activities of ¥295,508 million in the previous fiscal year.
Key inflows included fund procurement through long-termloans and funds received through a public stock offering,
while outflows were led by repayment of short-term loans.
As a result, cash and cash equivalents at fiscal year
end stood at ¥89,335 million, up ¥10,862 million from theprevious fiscal year.
Risk Affecting the Business of Nomura Real EstateGroup
We believe that the following major risks have thepotential to significantly impact the operating results andfinancial condition of the Group, as well as the decisionsof investors. It should be noted that matters concerning
the future in this document have been determined basedon information available to the Group at the end of fiscal
2009.
1) Trends in the real estate market
During the fiscal year under review, the Nomura Real
Estate Group’s operating income increased from theprevious fiscal year. However, net income dropped
significantly as a result of extraordinary loss incurred from

28

Nomura Real Estate Holdings, Inc.

an equity investment write-down. Although there aresome visible signs of economic recovery, the outlook forthe real economy remains bleak and it will still take timefor economic recovery to manifest.
In the future, certain events could still cause a decline
in purchasing sentiment among customers of the
Residential Development Business and the Property
Brokerage & Consignment Sales Business, our corebusinesses. These events include the current economic
slowdown, an associated deterioration in corporate earnings, a decline in consumer spending, a rise in interest
rates, or an excess supply in the real estate market. There
may also be falls in selling prices or increases in inventories due to the decline in purchasing sentiment, or losses
on valuation of inventories. For the Building Business andthe Investment Management & Development Business,moreover, such events could also spark declines in officerents, increases in vacancy rates, falls in asset values,
or drops in profit ratios. In addition, softness in the REIT
market and dwindling demand in investment funds may
be prolonged. Such events could have an adverse impact
on the Group’s business performance.
2) Changes to real estate-related legislation or the
tax system
A number of laws and regulations apply to the various
businesses of the Nomura Real Estate Group, which
will be subject to new regulations as it expands its
operational scope in the future. Going forward, the Groupmay face new obligations and expense burdens if the
Building Standards Law, the Building Lots and Buildings
Transaction Business Law, the Financial Instruments
and Exchange Law, or other real estate-related laws arerevised, or if new legislation is implemented. Such events
could adversely affect the Group’s business performance.
Furthermore, if the tax system related to real estate isrevised, this could lead to an increase in expenses forholding, acquisition, and sales of assets, or a decline
in the purchasing sentiment of customers. It could also
prompt a change in the facility strategies of companies
and revisions of their investment plans. Such events
could have an adverse impact on the Group’s businessperformance.
3) Licenses and permits for major businesses
The Group obtains the licenses and permits, such asreal estate brokerage and construction licenses, whencarrying out business activities.
Currently, there are no reasons for any of these licenses
or permits to be cancelled or subject to penalties.
However, in the future, if such licenses or permits arecancelled or subject to penalties for whatever reason, this
could adversely affect the Group’s business performance.

4) Impact of interest-bearing debt
The Group aims to increase earnings by aggressively
advancing its various businesses. To address thesefunding requirements, the Group carried out a public
offering and a third-party allocation of shares and took
out loans from financial institutions. As a result, thebalance of interest-bearing debt at fiscal year-end stoodat ¥759,637 million, down ¥18,437 million from a year
earlier (equivalent to 54.1% of total assets, 2.1 percentage points less than at the end of the previous fiscal
year). Moreover, the equity ratio was 21.4%, up 4.4
percentage points. When raising funds by borrowing, theGroup attempts to deal with the risk of a short-term risein interest rates mainly by taking out long-term, fixed-rateloans. However, an increase in borrowing costs due to arise in market interest rates could have a negative impact
on the Group’s business performance and financial
condition.
5) M&AThe Company has positioned M&A as an important
strategy for long-term growth, as it helps to make themost of the advantages offered by the holding company
system.
However, in the event of changes in the operating
environment, the expected growth of the acquiredcompany, or the synergy expected from the acquisition,
may not be realized. This could have an adverse impact
on the Group’s business performance.
6) Natural disasters
Natural disasters, such as earthquakes and wind andflood damage, as well as 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 andfinancial condition.
7) Personal information
In the course of carrying out its operations, the various
businesses of the Group handle large quantities of
personal information. The Group endeavors to comply
with various laws and regulations pertaining to personal
information, such as the Law Concerning Protectionof Personal Information, and also handle information in
the proper manner. Moreover, Group companies haveproduced various documents, such as “Information
Security Provisions,” “Rules for Handling Personal
Information” and “Guidelines for Entrusting the Handlingof Personal Information.” In these ways, the Group strives
to train and educate employees and protect the interestsof customers.

In the event of external leakage of personal information
due to unforeseen circumstances, however, confidence
in the Group could be lost, leading to a decrease in sales
and the incurrence of expenses to pay compensation
for damages. This could have an adverse impact on theGroup’s business performance.
8) Soil pollution
Under the Soil Contamination Countermeasures Law,owners of land are obliged to evaluate and report on thesoil pollution status of their properties with respect to thepresence of specific harmful substances, and also to takemeasures to remove such polluting substances.
When considering purchases of land for business use,
the Group conducts historical and pollution assessments
in advance. If the presence of pollution is confirmed, theGroup either cancels the acquisition or engages specialists to remove such pollution. However, it is possible thatthe aforementioned assessments fail to confirm the full
extent of soil pollution, or that the seller is unable to fulfill
his or her guarantee against defects even if soil pollution
is detected. Detection of soil pollution on land purchasedby the Group, therefore, could lead to changes in theGroup’s original business schedules or to the incurrenceof the additional expenses, which could have a negative
impact on its business performance or financial condition.
9) Asbestos
Some of the buildings owned by the Group have beensprayed with materials that include asbestos. The Grouphas engaged third-party organizations to assess suchbuildings. According to the results of those assessments,
the said materials are showing no signs of age-relateddegradation and are in stable condition. In the future,
however, it is possible that asbestos may be scatteredif age-related degradation occurs. Such an event could
require removal or containment of the asbestos in question, resulting in the incurrence of additional costs that
could have an adverse effect on the Group’s businessperformance or financial condition.
10) Concentration of revenues in fourth quarterIn the Residential Development Business, which accounts
for more than 50% of the Group’s revenues, housing
sales are registered as sales when properties are handed
over to the customers. In many cases, however, thecompletion and handover occur in February or Marchof each year, in accordance with the requirements ofcustomers taking up residence. For this reason, a large
proportion of the Group’s revenues is concentrated in the
fourth quarter of each fiscal year.

Annual Report 201029

Consolidated Balance Sheets
Nomura Real Estate Holdings, Inc. and its subsidiaries
March 31, 2009 and 2010

				(Millions of yen)

ASSETS
Current Assets:
Cash and deposits (Note 2 (3))
Notes and accounts receivable–trade
Short-term investment securities (Notes 3 and 4)
Real estate for sale (Notes 6 and 8)
Real estate for sale in process (Notes 6 and 8)
Land held for development (Notes 6 and 8)
Equity investments (Notes 3 and 4)
Deferred tax assets (Note 11)
Other
Allowance for doubtful accounts¥

39,47531,38539,000227,505
150,443
102,924
109,076
21,34819,269
(158)

2010

¥

39,337
15,76450,010247,927
139,01271,796
94,89022,82928,198
(144)

2010

$

422,793
169,435
537,5122,664,740
1,494,108771,673
1,019,879
245,368
303,075(1,551)

		 Total current assets

740,267

709,619

7,627,032

Investments and Other Assets:
Investment securities (Notes 3 and 4)
Lease and guarantee deposits
Deferred tax assets (Note 11)
Other
Allowance for doubtful accounts

15,316
26,797
14,3373,645(18)

17,044
26,036
14,3203,881(18)183,188279,838
153,915
41,713(192)

		 Total investments and other assets

60,077

61,263

658,462

Property and Equipment:
Land (Note 6)
Buildings and structures (Note 6)
Construction in progress (Note 6)
Machinery and equipment (Note 6)
Other

380,592
251,632
4,286
7,557
335

412,477
274,354
10,3137,733
430

4,433,332
2,948,774
110,836
83,1184,621

			
Accumulated depreciation

644,402(68,641)705,307(79,039)7,580,681(849,511)

		 Net property and equipment

575,761

626,268

6,731,170

9,427

8,274

88,928¥1,385,532¥1,405,424$15,105,592

Intangible Assets
Total Assets
See notes to consolidated financial statements.

30

2009

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

Nomura Real Estate Holdings, Inc.

				(Millions of yen)

LIABILITIES AND NET ASSETS
Current Liabilities:
Notes and accounts payable–trade
Short-term loans payable (Notes 5 and 6)
Current portion of bonds
Income taxes payable (Note 11)
Deposits received
Deferred tax liabilities (Note 11)
Provision for bonuses
Provision for directors’ bonuses
Provision for loss on business liquidation
Accrued interest
Accrued consumption taxes
Accounts payable–other
Advances received
Other

2009

¥

69,523
195,347300
14,791
31,858
707
4,465
238
215
1,914
685
7,421
28,048
11,217(Thousands of
U.S. dollars)(Note 1)

2010¥

37,692
108,586—
7,597
54,841
—
4,321
97
159
2,362
890
7,316
11,358
12,114

2010$

405,120
1,167,089—
81,655
589,436—
46,4391,047
1,703
25,382
9,562
78,638122,072
130,207

		 Total current liabilities

366,729

247,333

2,658,350

Noncurrent Liabilities:
Bonds payable
Long-term loans payable (Notes 5 and 6)
Lease and guarantees deposits received
Deferred tax liabilities (Note 11)
Deferred tax liabilities for land revaluation
Provision for retirement benefits (Note 7)
Provision for loss on subleasing business
Other

20,000562,427
47,42584,8694,996
14,283
1,812
1,615

20,180630,871
49,983
83,112
4,996
15,4451,937
2,130

216,896
6,780,638
537,217893,289
53,703
166,002
20,82522,899

		 Total noncurrent liabilities
Total Liabilities
Net Assets:
Shareholders’ equity (Note 12):
		 Capital stock		 Capital surplus
		 Retained earnings
		 Treasury stock
Valuation and translation adjustments:
		 Valuation difference on available-for-sale securities
		 Deferred gains or losses on hedges
		 Revaluation reserve for land		 Foreign currency translation adjustments
Subscription rights to shares
Minority interests
Total Net Assets
Total Liabilities and Net Assets

737,427

808,654

8,691,469

1,104,156

1,055,987

11,349,819

82,71360,04391,491(1)

115,528
92,85889,357(2)

1,241,702
998,039
960,415(21)(3,923)
256
5,999
(638)
368
45,068(2,181)
280
5,999
(425)
520
47,503(23,445)
3,007
64,480(4,568)5,589
510,575

281,376

349,437

3,755,773¥1,385,532¥1,405,424$15,105,592

See notes to consolidated financial statements.

Annual Report 201031

Consolidated Statements of Income
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years Ended March 31, 2009 and 2010

				(Millions of yen)
			

2009

2010

2010

Operating Revenue:
Operating revenue¥448,656¥434,226$4,667,091

Operating Expenses:
Operating cost
Selling, general and administrative expenses

414,643
347,892
66,751

394,951
328,650
66,301

4,244,963
3,532,351
712,612

		 Operating Income

34,01339,275422,128

Other Income and Expenses:
Interest income
Dividends income
Equity in earnings of affiliates
Refunds of fixed asset tax for prior periods
Gain on sales of property and equipment
Litigation adjustment
Reversal of provision for loss on subleasing business
Interest expenses
Equity in losses of affiliates
Provision of allowance for doubtful accounts
Loss on valuation of equity investments
Impairment loss
Loss on valuation of investment securities
Other, net(10,483)
153
47
—
67
—
—
545
(9,602)
(7)
(14)
—
—
(717)
(955)

(25,805)
152
28
7
—
364
120
—
(13,530)——(10,486)(495)—(1,965)(277,355)
1,643
300
74
—
3,914
1,289
—
(145,421)——(112,704)(5,325)—(21,125)

		 Income before Income Taxes and Minority Interests

23,53013,470144,773

Income Taxes (Note 11):
Income taxes–current
Income taxes–deferred

20,013(11,025)

11,624(5,278)

124,940(56,731)

		 Total income taxes

8,988

6,346

68,209Minority interests in income
		 Net Income
See notes to consolidated financial statements.

32(Thousands of
U.S. dollars)(Note 1)

Nomura Real Estate Holdings, Inc.

772
¥ 13,770

2,464
¥

4,660

26,477$50,087

Consolidated Statements of Changes in Net Assets
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years Ended March 31, 2009 and 2010

(Millions of yen)						
Number of					sharesCapitalCapitalRetained
Treasury
issuedstock
surplusearnings
stock

Balance at March 31, 2008
Issuance of new shares
Dividends from surplus
Net income
Reversal of revaluation reserve for land
Purchases of treasury stock
Net changes of items otherthan shareholders’ equity
Balance at March 31, 2009
Issuance of new shares
Dividends from surplus
Net income
Purchases of treasury stock
Net changes of items otherthan shareholders’ equity
Balance at March 31, 2010

Valuationdifference on
available-forsale securities

149,325,000
46,100————¥ 82,646
67
—
—
—
—

¥59,97667————¥89,273—(5,226)
13,770(6,326)
—

¥(1)
—
—
—
—
(0)

¥1,215——————
149,371,100
40,959,900————¥ 82,713
32,815————¥60,043
32,815————¥91,491—(6,794)
4,660
—

—
¥(1)
—
—
—
(0)

(5,138)¥(3,922)—————
190,331,000—¥115,528—¥92,858—¥89,357

—
¥(2)

1,741
¥(2,181)(Millions of yen)			
Deferred Revaluation
gains/losses
reserve foron hedges
land

Balance at March 31, 2008
Issuance of new shares
Dividends from surplus
Net income
Reversal of revaluation reserve for land
Purchases of treasury stock
Net changes of items otherthan shareholders’ equity
Balance at March 31, 2009
Issuance of new shares
Dividends from surplus
Net income
Purchases of treasury stock
Net changes of items otherthan shareholders’ equity
Balance at March 31, 2010¥

Foreign			currency Subscription		translationrights to
Minority
adjustments
sharesinterests

Total net
assets

0
—
—
—
—
—

¥ (327)
—
—
—
—
—

¥

9
—
—
—
—
—

¥217
—
—
—
—
—

¥ 2,543—————¥235,551
134(5,226)
13,770(6,326)
(0)

256
¥256
—
—
—
—

6,326
¥5,999
—
—
—
—

(647)
¥(638)
—
—
—
—

151
¥368
—
—
—
—

42,525¥45,068————

43,473¥281,376
65,630(6,794)
4,660
0

24
¥280

—
¥5,999213¥(425)

152
¥520

2,435
¥47,503

4,565¥349,437(Thousands of U.S. dollars) (Note 1)						
						
		
CapitalCapitalRetained
Treasury		
stock
surplusearnings
stock

Balance at March 31, 2009		 $ 889,009
Issuance of new shares		352,693
Dividends from surplus		
—
Net income		
—Purchases of treasury stock		—
Other changes		—Balance at March 31, 2010		 $1,241,702$645,346
352,693————$998,039$983,347—(73,019)50,087——$960,415

$(17)
—
—
—
(4)
—
$(21)

			
Deferred Revaluation
gains/losses
reserve foron hedges
landForeign			currency Subscription		translationrights to
Minority
adjustments
sharesinterests

Valuationdifference on
available-forsale securities$(42,161)————
18,716$(23,445)

Thousands of U.S. dollars (Note 1)

Balance at March 31, 2009
Issuance of new shares
Dividends from surplus
Net income
Purchases of treasury stock
Other changes
Balance at March 31, 2010

$2,747————260$3,007$64,480—————$64,480$(6,857)
—
—
—
—
2,289
$(4,568)

Total net
assets$3,956 $484,394 $3,024,244——
705,386——(73,019)——50,087
—
—
(4)
1,633
26,18149,079$5,589 $510,575 $3,755,773

See notes to consolidated financial statements.
Note: The number of issued shares outstanding increased by 46,100 shares in the year ended March 31, 2009 due to the exercise of stock options, and increased by 40,959,900
shares in the year ended March 31, 2010 due to a general offering and third party allotment.

Annual Report 201033

Consolidated Statements of Cash Flows
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years Ended March 31, 2009 and 2010

				(Millions of yen)			

Cash Flows from Operating Activities:
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Gain on sales of property and equipment
Equity in (earnings) losses of affiliates
Decrease in allowance for doubtful accounts
Increase in provision for retirement benefits
Decrease in provision for loss on business liquidation
Increase (decrease) in provision for loss on subleasing business
Interest and dividends income
Interest expenses
Decrease (increase) in notes and accounts receivable–trade
Decrease (increase) in inventories
Decrease in equity investments
Increase (decrease) in notes and accounts payable–trade
Increase (decrease) in deposits received
Other, net
		 Subtotal
Interest and dividends income received
Interest expenses paid
Income taxes paid
		 Net cash provided by (used in) operating activities

2009

2010

2010

¥ 23,530
7,149
—
—
7
(22)
1,381
(65)
(1,079)(200)
9,602(21,333)(36,661)(16,203)
4,739(38,794)(9,844)(77,793)
173(8,762)(21,649)(108,031)¥ 13,470
10,758
495
(364)
(7)
(14)
1,162
(56)
127
(181)
13,53015,664
19,780(1,205)(31,886)
22,983(12,757)
51,499162(13,155)(19,240)
19,266$ 144,773
115,629
5,325(3,914)(74)(150)
12,483(601)
1,355(1,943)
145,421
168,355
212,601(12,951)(342,712)
247,024(137,108)553,513
1,752(141,394)(206,796)
207,075

Cash Flows from Investing Activities:
Purchase of investment securities
Proceeds from sales and liquidation of investment securities
Purchases of investments in subsidiaries resulting in change
in scope of consolidation
Purchases of property and equipment and intangible assets
Proceeds from sales of property and equipment and intangible assets
Payments of loans receivableCollection of loans receivable
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Repayments of lease and guarantee deposits received
Proceeds from lease and guarantees deposits received
Other, net
		 Net cash used in investing activities(1,484)—(1,771)
394(19,041)
4,236(81,588)(56,663)20(20)
29(1,004)
1,987(2,726)
3,944(4,284)(141,789)—(26,796)
1,011
(3)
45
(652)
1,726
(3,101)
4,527
49(24,571)—(288,010)
10,863(35)
487(7,009)18,553(33,327)
48,659531(264,093)

Cash Flows from Financing Activities:
Net increase (decrease) in short-term loans payable
Repayments of finance lease obligations
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Proceeds from issuance of common stock
Proceeds from issuance of common stock to minority shareholders
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
		 Net cash provided by financing activities

103,700(21)
296,503(97,042)
—
—
0
0
(1)
(5,226)(2,405)295,508(109,200)(86)
147,300(83,197)174(300)
65,2510
0(6,794)(50)
13,098(1,173,689)(926)
1,583,190(894,202)
1,877(3,224)
701,3190(4)(73,019)(542)
140,780

45,68831,511

7,793
78,474

83,762
843,438

1,274¥ 78,473

3,068¥ 89,335

32,975$ 960,175

Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of the Fiscal Year
Increase in Cash and Cash Equivalents Resulting from
Change of Scope of Consolidation
Cash and Cash Equivalents at End of the Fiscal Year (Note 2 (3))
See notes to consolidated financial statements.

34(Thousands of
U.S. dollars)(Note 1)

Nomura Real Estate Holdings, Inc.

Notes to Consolidated Financial Statements
Nomura Real Estate Holdings, Inc. and its subsidiaries
March 31, 2009 and 2010

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 (collectively, the “Group”) have been prepared in accordance with the provisions set forth in the
Financial Instruments and Exchange Act of Japan and its related accounting regulations, and accounting principles
generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to the application and­disclosure 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 benefit of readers outside
Japan. 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
the prevailing exchange rate at March 31, 2010 of ¥93.04=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
their operating and financial policies have been included in the accompanying 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 has 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
as gain or loss. The asset and liability accounts of the overseas subsidiaries and affiliates are translated into Japanese yenat the exchange rates prevailing at the respective balance sheet dates of the subsidiaries and affiliates and the revenue
and expense accounts are translated into yen at the average rates of exchange for the year. 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, 2010, the balance of “Cash and cash equivalents” differed from the total balance of “Cash and­deposits” and “Short-term investment securities” because it did not include time deposits with deposit terms exceeding
three months of ¥2 million ($21 thousand).
As of March 31, 2009, the balance of “Cash and cash equivalents” differed from the total balance of “Cash and­deposits” and “Short-term investment securities” because it did not include time deposits with deposit terms exceeding
three months of ¥2 million.

Annual Report 201035

(4) Recognition of Revenues
Revenues from sales of housing and other real estate are recognized upon delivery and acceptance by customers.
(Change of Accounting Policies)
In the past, the Company and its consolidated subsidiaries recorded income and expenses related to construction­contracts based on the completed-contract method. However, in accordance with the “Accounting Standard for­Construction Contracts” (ASBJ Statement No. 15 issued on December 27, 2007) and the “Guidance on AccountingStandard for Construction Contracts” (ASBJ Guidance No. 18 issued on December 27, 2007), which took effect in thefiscal year under review, the Company and its consolidated subsidiaries, starting with the contracts undertaken during
the fiscal year under review, has now adopted the percentage-of-completion method for the portion of construction inprogress that is deemed certain to be completed by the fiscal year end (where progress of the work is estimated on the
cost-to-cost basis) and the completed contract method for other construction work. This change did not affect the profit
and loss for the fiscal year under review.
(5) Inventories
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 based on the write-down method reflecting decreased
profitability).
A write-down on inventories as result of a decrease in profitability for the year ended March 31, 2009 and 2010 were¥26,994 million and ¥5,623 million ($60,436 thousand), respectively.
(6) Short-term Investment 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 Net­Assets. Cost of securities sold is determined by the moving-average method. Available-for-sale securities without market
value are stated at cost by the moving-average method.
(7) Property and Equipment (except for leased assets)
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 (except for leased assets)
Costs of software for internal use are amortized using the straight-line method over an estimated useful life of five years.
(9) Leased Assets
Leased assets are depreciated using the straight-line method, assuming the lease period to be the useful life and theresidual value to be zero.
Finance leases, other than those that transfer ownership, that started on or before March 31, 2008, are accounted for
as operating leases.
(10) Amortization of Goodwill
Goodwill is amortized using the straight-line method over a period of 14 to 20 years.

36

Nomura Real Estate Holdings, Inc.

(11) Allowance for Doubtful Accounts
In order to prepare for possible bad debt losses on notes and accounts receivable and loans, allowance for doubtful
accounts is provided at an amount calculated on the basis of a historical bad debt ratio for a certain reference period fornormal claims, plus an estimated uncollectible amount determined on the basis of individual assessments for specificclaims with potential losses.
(12) Income Taxes
Current income taxes are stated at the estimated amount payable during each fiscal year for corporation, enterprise andinhabitants’ 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.
(13) Provision for Retirement Benefits
In order to provide for employees’ retirement benefits, the Company and its subsidiaries account for the liability for­retirement 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.
(Change in Accounting Policies)
Effective from the fiscal year under review, the Company adopted the “Partial Amendments to Accounting Standard for
Retirement Benefits (Part 3)” (ASBJ Statement No. 19) issued on July 31, 2008). This change did not affect the profit andloss for the year under review.
(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 is computed by dividing the net income available for distribution to the shareholders by the weightedaverage number of shares of common stock outstanding during each fiscal year assuming full conversion of convertible
bonds and full execution of warrants.
Net assets per share for the year ended March 31, 2009 and 2010 were ¥1,579.56 and ¥1,583.63 ($17.02), respectively.
Net income per share for the year ended March 31, 2009 and 2010 were ¥92.21 and ¥25.69 ($0.28), respectively.
Diluted net income per share for the year ended March 31, 2009 and 2010 were ¥92.10 and ¥25.63 ($0.28), respectively.
(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 isaccounted for as “Deferred tax liabilities for land revaluation” in Noncurrent Liabilities and the difference net of such tax
amount is recorded as “Revaluation reserve for land” 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 ¥3,805 million at March 31, 2009.
At March 31, 2010, market value was not less than book value after revaluation.

Annual Report 201037

(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 losses orgains on the underlying hedged items are recognized.
As to interest rate swaps that meet certain hedging criteria, the Company applies exceptional treatment where theCompany does not record these instruments at fair value but charges or credits the net cash flows from these ­instruments
to the interest arising from the hedged borrowings and corporate bonds. For currency swaps and foreign exchange
forwards that meet certain hedging criteria, the Company records cash flows from securities and loans d­ enominatedin foreign currencies at an amount determined by the swaps and forwards, and no gain or loss is r­ecognized.
3. Financial Instruments(1) Policies on Financial Instruments
It is the policy of the Company and its consolidated subsidiaries to limit its fund management to safe and highly liquid
deposits while raising funds primarily through loans from financial institutions and the issuance of corporate bonds.­­Derivatives are utilized for hedging against the risks described below not for speculative purposes.
(2) Details of Financial Instruments and Risks
Short-term investment securities comprise safe and highly liquid negotiable deposits held for the purpose of managing
temporary surplus funds.
Equity investments and investment securities primarily consist of stocks, investment units, units in an investment trust,
preferred investments and investments in silent partnerships held for the purpose of business promotion, all of which areexposed to market price fluctuation and issuer credit risk. Currency swaps and forward exchange contracts are used tohedge risks from exchange rate fluctuations on securities in foreign currencies. Interest rate swaps are used to hedge
risks arising from fluctuations in interest rates on long-term borrowings.
Derivative transactions used by the Company are as follows.
Hedging instruments

Hedged items

Interest rate swap contracts
Currency swaps and foreign exchange forward contracts

Borrowings
Securities denominated in foreign currencies

The Company and its consolidated subsidiaries evaluate hedge effectiveness by comparing the cumulative changes
in market fluctuations or in cash flows of the hedged items to the corresponding changes in the hedging derivative­instruments.
(3) Policies and Systems for Risk Management
The Company regularly checks the market value of equity investments and investment securities, as well as the financial
conditions of their issuers.
The Finance Department conducts execution of derivative transactions and risk management based on the risk management policies and operational plan determined by the Director in charge of Finance. The Finance Department also
reports the status of transactions and risk information to the Director on a regular basis. The consolidated subsidiaries
conduct execution of derivative transactions and risk management in accordance with internal policies. The Company
considers there is no substantial credit risk associated with these transactions because of the transactions being­conducted only with highly creditworthy financial institutions.
Based on the reports from each division of the Company and the consolidated subsidiaries, the Finance Department of
the Company creates and updates cash flow plans in a timely manner, managing liquidity risk through such methods as
ensuring that a specific amount of on-hand liquidity is always available.

38

Nomura Real Estate Holdings, Inc.

(4) Supplemental Information on Fair Values
The fair values of financial instruments are based on their market prices. The fair values of financial instruments with noavailable market prices are determined by using prices calculated in a reasonable manner. However, as various factors areincorporated into these calculations, the resulting values may differ if different assumptions are provided.
Fair value of financial instruments
The book values, fair values and differences of financial instrument as of March 31, 2010 are as follows. Items for which
fair value is extremely difficult to determine have not been included.
		(Millions of yen)(Thousands of 		
U.S. dollars)(Millions of yen)Book value(Thousands of		U.S. dollars)(Millions of yen)

Fair value(Thousands of
U.S. dollars)

Difference

			

2010

(1) Cash and deposits(2) Short-term investment securities(3) Equity investments(4) Investment securities 1¥ 39,337
50,01012,044
15,862$ 422,793
537,511
129,451
170,484¥ 39,337 $ 422,793
50,010537,511
12,044
129,451
15,861
170,471

Total assets

117,253

1,260,239

117,252

1,260,226

(1)

(12)

(1) Short-term loans payable 2(2) Bonds payable(3) Long-term loans payable 2

26,00020,180713,457

279,450
216,896
7,668,278

26,00019,395722,831

279,450
208,459
7,769,031

—
(785)
9,374

—
(8,437)100,753768,226

8,256,940

Total liabilities
Derivative transactions 3

759,637¥422

8,164,624
$

4,537

¥

422 $

4,537

¥

—
0
—
(1)

$

8,589
¥

—

—
0
—
(12)

92,316$—

Notes: 1. Includes government bonds etc. presented as lease and guarantee deposits on the consolidated balance sheet.
2. Current portion of long-term loans payable are included in (3) Long-term loans payable.
3. For derivative transactions, stated values are the net amounts of receivables and payables arising from the transactions. Figures in parentheses are liability amounts.

Notes:
1. Method of measuring the fair value of financial instruments
Assets(1) Cash and deposits
As these instruments are settled within a short term and their fair values and book values are nearly identical, their bookvalues are assumed as their fair values.
(2) Short-term investment securities
As these instruments, primarily comprising negotiable deposits and CRF, are settled within a short term and their fairvalues and book values are nearly identical, their book values are assumed as their fair values.
(3) Equity investments
Since these instruments are units in an investment trust, their book values are assumed to be their net asset value per unit.
(4) Investment securities
Primarily consisting of stocks and investment units, the fair values of investment securities are determined by their prices
on stock exchanges.
Please see Note 4. Securities for information on those securities from (2) through (4).

Annual Report 201039

Liabilities(1) Short-term loans payable
As these instruments are settled within a short term and their fair values and book values are nearly identical, their bookvalues are assumed as their fair values.
(2) Bonds payable
Market prices of the bonds issued by the Company.
(3) Long-term loans payable
For long-term loans payable, fair value is determined by discounting the total amount of principal and interest at theassumed interest rate on new loans of the same type. Long-term loans with floating interest rates are subject to interest
rate swap exceptional procedures, and, therefore, the fair value is determined by discounting the total amount of interest
and principal together with the interest rate swap at the interest rate assumed in a reasonable manner for new loans of
the same type.
Derivatives
Please see Note 13. Derivative Financial Instruments for information on derivative transactions.
2. Financial instruments for which fair value is extremely difficult to determine											(Millions of yen)(Thousands of
U.S. dollars)			Book value

			

2010

Investment in silent partnership 					¥84,590$909,178

Financial instruments for which there is no fair value and for which the fair value is extremely difficult to determine are
not included in (3) Equity investments and (4) Investment securities.
3. Redemption schedule for financial assets with maturities
		(Thousands of 		(Thousands of		 (Thousands of		 (Thousands of(Millions of yen) U.S. dollars) (Millions of yen) U.S. dollars) (Millions of yen) U.S. dollars) (Millions of yen) U.S. dollars)Within 1 year

1–5 years

5–10 years

Over 10 years

			

40

Cash and deposits
Short-term investment
securities andinvestment securities
Held-to-maturity
debt securities
		 Government and		 municipal bonds,
		 etc.
		 Corporate bonds
Available-for-salesecurities withmaturities
		 Debt securities
		 Others¥39,200 $421,320

Total

Nomura Real Estate Holdings, Inc.

2010

¥—

$—

¥ —

$

—

¥—

$—

267

2,870

8

86

295

3,171

—

—

—

—

—

—

—

—

—

—

—
45,000—483,663

—
—

—
—

—
—

—
—

—
—

—
—

¥84,467 $907,853

¥ 8

$86

¥295

$3,171¥—$—

4. Repayment schedule for bonds payable and long-term loans payable at March 31, 2010		(Millions of yen)(Thousands of		U.S. dollars)(Millions of yen)(Thousands of		U.S. dollars)(Millions of yen)

Within 1 year

(Thousands of
U.S. dollars)

1–2 years

2–3 years

Bonds payable
Long-term loans payable¥—
82,586$—887,640¥

180
105,793$

1,935
1,137,070

¥

Total

¥82,586$887,640¥105,973$1,139,005¥124,610 $1,339,312— $—124,610 1,339,312

		(Millions of yen)(Thousands of		U.S. dollars)(Millions of yen)(Thousands of		U.S. dollars)(Millions of yen)
4–5 years

Over 5 years

Bonds payable
Long-term loans payable¥—
146,056$—
1,569,819¥ 10,000
102,512$ 107,481
1,101,805¥ 10,000 $ 107,481
151,900 1,632,631

Total¥146,056$1,569,819¥112,512$1,209,286¥161,900 $1,740,112

3–4 years(Thousands of
U.S. dollars)(Supplementary information)
Effective from the fiscal year under review, the Company adopted the “Accounting Standard for Financial Instruments”(ASBJ Statement No.10 revised on March 10, 2008) and the “Guidance on Disclosures about Fair Value of Financial
Instruments” (ASBJ Guidance No.19 issued on March 10, 2008).
4. Securities
The following tables summarize the acquisition cost, book value and fair value of securities held by the Company as ofMarch 31, 2009 and 2010.
(1) Held-to-maturity Debt Securities with Fair Value						(Millions of yen)
Book
value

Fair
value

Difference
2009

Securities whose fair value exceeds book value:
Government and municipal bonds, etc.
Subtotal
Securities whose fair value does not exceed book value:
Government and municipal bonds, etc.
Subtotal
Total

¥295

¥296

¥1

295

296

1

20

20

(0)

20

20

(0)

¥315

¥316

¥1

Book
value

Fair 		value Difference(Millions of yen)					(Thousands of U.S. dollars)
Book
value

Fair
value Difference
2010

Securities whose fair value exceeds book value:
Government and municipal bonds, etc.
Subtotal
Securities whose fair value does not exceed book value:
Government and municipal bonds, etc.

¥293

¥294

¥1

$3,154 $3,161

$ 7

293

294

1

3,154

3,161

7

279

277

(2)

2,999

2,980

(19)

2,999

Subtotal

279

277

(2)

2,980

(19)

Total

¥572

¥571

¥(1) $6,153 $6,141$(12)Annual Report 201041

(2) Available-for-sale Securities with Fair Value(Millions of yen)

			
			

Acquisition
cost

Book 		value Difference
2009

Securities whose book value exceeds acquisition cost:
Stocks
Other

¥

126 ¥
296

423 ¥
297

297
1

422

720

298

579
561
39,979 33,519(18)(6,460)Subtotal

40,558 34,080(6,478)

Total¥40,980 ¥34,800 ¥(6,180)

Subtotal
Securities whose book value
does not exceed acquisition cost:
StocksOther(Millions of yen)					Acquisition
cost

Book 		value Difference(Thousands of U.S. dollars)
Acquisition
cost

Book
value

Difference
2010

Securities whose book value exceeds acquisition cost:
StocksOther

624 ¥ 1,199 ¥ 575 $0006,704 $ 12,887 $ 6,183
0
0
0

624

1,199

575

6,704

12,887

6,183

70
79,81760
76,085(10)(3,732)749
857,880638
817,767(111)(40,113)

Subtotal

79,887

76,145(3,742)858,629

818,405(40,224)

Total¥80,511 ¥77,344 ¥(3,167) $865,333 $831,292 $(34,041)

Subtotal
Securities whose book value
does not exceed acquisition cost:
StocksOther¥(3) Sales of Available-for-sale Securities
The table below describes sales of available-for-sale securities for the years ended March 31, 2009 and 2010:(Millions of yen)SalesamountAggregate
gains

			

¥2,258¥2Aggregate
lossesSalesamountAggregate
losses2009			

2010			

2010

¥154

¥53

$573

¥—

Aggregate
losses(Thousands of U.S. dollars)
Aggregate
gains

¥88

Aggregate
gains

Sales
amount$942$—(4) Impairment Losses on Equity Investments
During the fiscal year ended March 31, 2010, the Company incurred impairment losses of ¥10,486 million ($112,704
thousand) on equity investments.

42

Nomura Real Estate Holdings, Inc.

(5) Securities without Fair Value
The following table summarizes the book value of securities without fair value as of March 31, 2009:(Millions of yen)
					

2009

Available-for-sale securities:
CRF			
Negotiable certificates of deposit			
Unlisted stocks			Preferred investments			
Investments in silent partnerships			
Investment in limited liability partnership			

¥ 5,000
34,000565
7,522
77,73294

Please see Note 3. Financial Instruments for information as of March 31, 2010.
(6) Redemption Schedule for Available-for-sale Securities with Maturities and 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, 2009:(Millions of yen)		
Due within 1 year

Due after 1 year
and within 5 years

Due after 5 year
and within 10 years

Due after 10 years
2009

Bonds:
Government and municipal bonds, etc.
Other

¥

37
34,000

¥268
—

¥10
—

¥—
—

Total

¥34,037

¥268

¥10

¥—

Please see Note 3. Financial Instruments for information as of March 31, 2010.

Annual Report 201043

5. Short-term Loans Payable and Long-term Loans Payable
Short-term loans payable as of March 31, 2009 and 2010 mainly consisted of borrowings from banks with a weightedaverage interest rate of 1.0% in 2009 and 0.5% in 2010.
Long-term loans payable and bonds payable as of March 31, 2009 and 2010 are summarized as follows:		(Millions of yen)			(Thousands of
U.S. dollars)

2009

2010

2010

Unsecured bonds (1.7%), due 2014

¥ 10,000¥ 10,000$ 107,481

Unsecured bonds (2.1%), due 2017

10,00010,000107,481

Secured bonds (3.0%), due 2009

300

0

0

Secured bonds (0.7%), due 2012

0

180

1,934

40,115582,458

52,512660,945564,397
7,103,881

330

346

3,721

SubtotalLess amounts due within one year

643,203(60,519)

733,983(82,680)

7,888,895(888,651)

			¥582,684¥651,303$7,000,244

Loans payable*
SecuredUnsecured
Lease obligations*** Long-term loans payable as of March 31, 2009 and 2010 mainly consisted of borrowings from domestic Japanese banks and life insurance companies with a weighted-averageinterest rate of 1.4% in 2009 and 1.3% in 2010.
** The weighted-average interest rate for lease obligations is not shown because for some consolidated subsidiaries the lease obligations recorded in the consolidated balance sheets
are the amounts before deducting the interest equivalents included in the total lease commitments.

The following shows the maturities of lease obligations as of March 31, 2010 for each year.

		Year ending March 31(Millions of yen)

44

(Thousands of
U.S. dollars)

2012		
2013 		2014 		2015 		2016 and thereafter		

¥ 94
94
57
7
0

$1,009
1,016
613
72
0

				

¥252

$2,710Nomura Real Estate Holdings, Inc.

6. Pledged Assets and Secured Liabilities
Pledged assets and secured liabilities at March 31, 2009 and 2010 are summarized as follows:(1) Pledged Assets and Secured Liabilities		(Millions of yen)			

Pledged assets:
Buildings and structures
Land
Other property and equipment
			Secured liabilities:
Short-term loans payable(Including the current portion of long-term loans payable)
Long-term loans payable (Repayment periods of more than one year)
Lease and guarantee deposits received
Total

2009

2010

2010

¥ 9,305
7,455
67¥ 8,927
7,455
56$ 95,951
80,125600¥16,827¥16,438$176,676

¥

¥

$

732
2,281
96

¥ 3,109

731
1,550
89

¥ 2,370(2) Pledged Assets and Secured Liabilities for Non-recourse Loans		(Millions of yen)			

Pledged assets:
Real estate for sale
Real estate for sale in process
Buildings and structures
Land
Construction in progress
Total
Secured liabilities:
Short-term loans payable
Long-term loans payable
Total(Thousands of
U.S. dollars)

7,863
16,658957$ 25,478(Thousands of
U.S. dollars)

2009

2010

2010

¥

—
2,355
4,900
46,927
1,828¥ 4,742—
13,76968,0881,914$ 50,966—
147,995
731,816
20,567¥56,010¥88,513$951,344

1,602
35,5005,100
45,13054,815
485,060¥37,102¥50,230$539,875

Pursuant to Article 128 of the Law Concerning Liquidation of Assets (Law No. 105, 1998), Shinjuku Development andKagurazaka Development, an SPCs (special purpose companies), have pledged assets as security for ¥300 million and¥180 million for the years ended March 31, 2009 and 2010, respectively in special corporate bonds, with a payment
obligation limited to that amount.

Annual Report 201045

7. Retirement Benefits(1) Outline of Retirement Benefit Plans
The Company does not have a retirement benefit plan. Among its consolidated subsidiaries, one subsidiary has a lumpsum payment and a tax-qualified pension plan, which are defined benefit pension plans with a retirement benefit trust. Six
subsidiaries have adopted only lump-sum payment plans, and one subsidiary has only a tax-qualified pension plan. Also,
one consolidated subsidiary has a lump-sum payment plan (defined benefit type) and a pension plan (defined contributiontype). In certain cases, additional retirement benefit payments have been made.
(2) Details of Retirement Benefit Obligation		(Millions of yen)			(Thousands of
U.S. dollars)

2009

2010

2010

(1) Projected benefit obligation(2) Plan assets at fair value¥(23,987)
5,992¥(25,009)
7,290$(268,798)
78,355(3) Unfunded retirement benefit obligation (1)+(2)(4) Unrecognized actuarial gain or loss

(17,995)
3,712(17,719)2,274(190,443)
24,441(5) Provision for retirement benefits (3)+(4)¥(14,283)¥(15,445)$(166,002)

		(Millions of yen)(Thousands of
U.S. dollars)Note: Certain consolidated subsidiaries applied a simplified method to calculate their projected benefit obligation.

(3) Details of Retirement Benefit Expenses
			

2009

2010

2010

(1) Service cost(2) Interest cost(3) Less: Expected return on plan assets(4) Amortization of actuarial gain or loss
(5) Additional retirement benefit payments(6) Other¥1,448
428
(146)
533
27
142

¥1,533
446
(120)
661
10
149

$16,475
4,788(1,288)
7,109
108
1,604

Retirement benefit expenses¥2,432¥2,679$28,796

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 consolidated subsidiaries use a simplified method to calculate their projected benefit
obligation.

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

				

2009

2010

Discount rate		
Expected rate of return on plan assets 		

2.00%
2.00%

2.00%
2.00%

8. Reclassification of Assets
As a result of a review of assets held to maturity, ¥4,027 million ($43,284 thousand) of real estate for sale was reclassified
as property and equipment, and ¥1,240 million ($13,331 thousand) of property and equipment was reclassified as realestate for sale in process.
9. Gain on Sales of Property and Equipment
Gain on sales of property and equipment totaled ¥364 million (US$3,914 thousand) for land.
10. Impairment Loss
The loss is due to the write off of goodwill related to Geo-Akamatsu Co., Ltd., resulting from lower profitability than­expected at the time of share acquisition.

46

Nomura Real Estate Holdings, Inc.

11. Income Taxes
The statutory tax rate in Japan was 40.7% for the years ended March 31, 2009 and 2010.
The table below presents an itemized breakdown of factors generating differences between the statutory tax rate andthe effective tax rates of the Company and its consolidated subsidiaries for the years ended March 31, 2009 and 2010:
Significant differences between the statutory tax rate and the effective tax rate

				

2009

2010

Statutory tax rate		
Adjustments:
		 Permanent differences including entertainment expenses 				 Retained earnings of affiliates 				 Valuation allowance 				 Other 		

40.7%

40.7%

2.0
3.6
(8.6)
0.5

2.4
2.9
—
1.1

		 Effective tax rates 		

38.2%

47.1%

The table below presents an itemized breakdown of deferred tax assets and liabilities as of March 31, 2009 and 2010:
Significant components of the Company’s deferred tax assets and liabilities		(Millions of yen)			(Thousands of
U.S. dollars)

2009

2010

2010

¥ 14,165
15,160
5,817
962
1,768
—
1,209
1,124
2,979
2,689
5,095

¥ 14,273
13,169
6,296
1,013
1,760
4,536
648
1,786
2,527
1,503
5,566

$ 153,411
141,540
67,672
10,892
18,91448,758
6,961
19,19927,157
16,14959,822Gross deferred tax assets
Valuation allowance

50,968(6,721)53,077(6,438)570,475(69,198)

Total deferred tax assets

44,247

46,639501,277

Deferred tax liabilities:
Revaluation of assets on consolidation
Reserve for deferred income taxes
Other(69,956)(22,869)(1,314)(69,419)(22,552)(630)(746,125)(242,388)(6,770)

Deferred tax assets:
Unrealized profits
Inventory write-downs
Provision for retirement benefits
Provision for loss on subleasing business
Provision for bonuses
Loss on valuation of equity investments
Accrued enterprise taxes
Excess of depreciation
Revaluation of assets on consolidation
Valuation difference on available-for-sale securities
Other

Total deferred tax liabilities(94,139)(92,601)(995,283)

Net deferred tax assets¥(49,892)¥(45,962)$(494,006)

Annual Report 201047

12. Shareholders’ Equity
Companies in Japan were previously subject to the Commercial Code of Japan (the “Code”); however, the Code wassuperseded by 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 common stock must be treated as common stock and, byresolution of the board of directors, an amount equivalent to less than half of those funds may be appropriated to thecapital reserve (a component of capital surplus).
The Act provides that an amount equal to 10% of the amount to be distributed as distributions of capital surplus (otherthan the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and thelegal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the capital stock­account.
As of March 31, 2010, the Company’s capital reserve amounted to ¥92,858 million ($998,039 thousand), and no legal
reserve was recorded.
13. Derivative Financial Instruments
1. Derivatives to which hedge accounting is not applied
There are no derivative transactions to which hedge accounting is not applied.
2. Derivatives to which hedge accounting is applied(1) Currency related derivatives

		Contract amount
Hedge accounting
methodType ofderivatives

Deferral hedge
Currency swaps
accounting						Contract amountdue after one year

Fair value(Millions (Thousands ofof yen)U.S. dollars)

Major
hedged items(Millions (Thousands ofof yen) U.S. dollars)(Millions (Thousands ofof yen) U.S. dollars)

Securities
denominatedin foreign
currencies¥2,558$27,490¥2,558$27,490¥422$4,537¥2,558$27,490¥2,558$27,490¥422$4,537

Total			Note: The fair value is determined based on the quoted price obtained from the financial institutions with which the derivatives are transacted.

(2) Interest rate related derivatives

		Contract amount
Hedge accounting
methodType ofderivatives

SpecifiedInterest rate swaps
treatment for
Receive floating rate
Interest rate swap Pay fixed rate

Contract amountdue after one year

Fair value(Millions (Thousands ofof yen) U.S. dollars)

Major
hedged items(Millions (Thousands ofof yen) U.S. dollars)(Millions (Thousands ofof yen) U.S. dollars)Long-term
debt¥553,530 $5,949,377¥487,530 $5,240,004¥553,530 $5,949,377¥487,530 $5,240,004

Total			

(Note)(Note)

Note: The interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but the paid or received under the swap
agreements is recognized and included in interest expenses of income of the long-term debt as hedged items. Accordingly, the fair value of the interest rate swaps is considered
to be included in the fair value of the long-term debt.

48

Nomura Real Estate Holdings, Inc.

14. Leases
Details of significant lease transactions are as follows.
The table below presents the future lease payments and receipts of operating leases subsequent to March 31, 2009 and2010.
		(Millions of yen)
Operating leases

Future lease payments:
Due within 1 year
Due after 1 year
Total
Future lease receipts:
Due within 1 year
Due after 1 year
Total

(Thousands of
U.S. dollars)

2009

2010

2010

¥ 8,158
44,961¥ 7,240
25,979$ 77,819
279,220¥53,119¥33,219$357,039¥ 7,253
39,631¥ 9,957
49,453$107,018
531,523¥46,884¥59,410$638,541

Note: The note for finance leases has been omitted due to lack of materiality.

15. Real Estate for Rent
Some of the Company’s subsidiaries own rental office buildings and rental facilities (including land) in Tokyo and otherregions.
The book values in the consolidated balance sheets, changes during the fiscal year under review, and fair values of realestate, of which some portions are used as rental property, are determined as follows.
(1) Fair value of rental and other properties in the fiscal year ended March 31, 2010
Book value

Fair value

		 (Thousands of 		 (Thousands of		 (Thousands of		 (Thousands of(Millions of yen)
U.S. dollars) (Millions of yen)
U.S. dollars) (Millions of yen)
U.S. dollars) (Millions of yen)
U.S. dollars)
March 31, 2009

Rental properties
Other properties
used as rental
properties¥532,951 $5,728,190
25,887278,239

Increase/Decrease¥49,073$527,436(621)(6,669)March 31, 2010

March 31, 2010

¥582,023 $6,255,626¥582,471 $6,260,437

25,267

271,569

57,364

616,547

Notes: 1. Book values in the consolidated balance sheets are the amounts determined by deducting accumulated depreciation and accumulated impairment losses from the­acquisition cost.
2. Fair values as of March 31, 2010, are determined by the Company (including adjustments based on certain indexes) based primarily on their values according to real estateappraisal standards. However, if there have been no fluctuations in appraisal values or indexes considered to appropriately reflect market values since the recent appraisal or
acquisition from third parties, the Company uses the appraisal values or amounts derived from the indexes as the fair values at March 31, 2010.
3. In the above table, Other properties used as rental properties includes portions used by the Company and certain consolidated subsidiaries.

(2) Profit and loss on rental properties in the fiscal year ended March 31, 2010
		 (Thousands of 		 (Thousands of(Millions of yen) U.S. dollars) (Millions of yen) U.S. dollars)		
Operating income

Others (gains (losses)
on sale of property, etc.)
2010

Rental properties
Other properties used as rental properties¥20,640 $221,841
1,337
14,374¥364—$3,914—

Note: As real estate of which some portions are used as rental property includes portions used by the Company and certain consolidated subsidiaries for providing services as well as
management and administration, operating income for this type of real estate are not recorded.

Annual Report 201049

(Supplementary information)
Effective from the year under review, the Company adopted the “Accounting Standard for Disclosures about Fair Valueof Investment and Rental Property” (ASBJ Statement No. 20 issued on November 28, 2008) and the “Guidance on
Accounting Standard for Disclosures about Fair Value of Investment and Rental Property” (ASBJ Guidance No. 23 issued
on November 28, 2008).
16. 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, and (5) Other.
Results by segment for the years ended March 31, 2009 and 2010 were as follows:
Results by segment for the fiscal year ended March 31, 2009

(Millions of yen)						Property				
Investment Brokerage &			 Eliminations
			
Residential		 Management & Consignment			or		
Development
Building
Development
Sales
Other
Subtotal
corporate

Total

Operating revenue andoperating income
Operating revenue:
		 External customers
		 Inter-segment¥231,286
343¥ 84,603
5,797¥ 77,442
636¥36,728
3,036¥18,597
1,239¥ 448,656
11,051¥—(11,051)¥ 448,656—

		 Subtotal
Operating expenses

231,629(219,842)

90,400(74,631)

78,078(67,961)

39,764(38,210)

19,836(18,735)

459,707(419,379)(11,051)
4,736

448,656(414,643)

Operating income¥ 11,787¥ 15,769¥ 10,117¥ 1,554¥ 1,101¥

40,328¥ (6,315)¥¥318,845
234
500¥543,880
5,562
48,046¥366,788
71
6,988¥57,923148
305¥28,234
904
1,726¥1,315,670
6,919
57,565¥69,862230
379¥1,385,532
7,149
57,94434,013

Total assets, depreciation,and capital expenditure
Total assets
Depreciation
Capital expenditure

Results by segment for the fiscal year ended March 31, 2010

(Millions of yen)						Property				
Investment Brokerage &			 Eliminations
			
Residential		 Management & Consignment			or		
Development
Building
Development
Sales
Other
Subtotal
corporate

Total

Operating revenue andoperating income
Operating revenue:
		 External customers
		 Inter-segment¥258,659
411¥ 88,401
6,837¥ 35,650
539¥ 32,511
1,453¥ 19,005
652¥ 434,226
9,892

		 Subtotal
Operating expenses

259,070(248,335)

95,238(73,651)

36,189(27,691)

33,964(31,274)

19,657(19,225)

444,118(400,176)(9,892)5,225

434,226(394,951)

Operating income¥ 10,735¥ 21,587¥

8,498¥ 2,690¥

43,942¥ (4,667) ¥39,275¥307,154287
0
580¥542,619
8,578
0
17,530¥403,393
538
0
8,686

¥ 45,003
175
0101¥ 27,531
950
495
696

432

¥

¥

— ¥ 434,226(9,892)—

Total assets, depreciation,and capital expenditure
Total assets
Depreciation
Impairment loss
Capital expenditure50

Nomura Real Estate Holdings, Inc.

¥1,325,700
10,528495
27,593¥79,724 ¥1,405,424
230
10,7580495(65)27,528(Thousands of U.S. dollars)						
Property				
Investment Brokerage &			 Eliminations
			
Residential		 Management & Consignment			or		
Development
Building
Development
Sales
Other
Subtotal
corporate

Total

Operating revenue andoperating income
Operating revenue:
		 External customers
		 Inter-segment$ 2,780,088 $ 950,135
4,412
73,488

		 Subtotal
Operating expenses

2,784,500(2,669,121)

Operating income$$ 383,172
5,793

1,023,623(791,604)

115,379 $ 232,019

388,965(297,627)$

91,338$ 349,429 $ 204,267 $ 4,667,091 $— $ 4,667,091
15,615
7,007
106,315 (106,315)—
365,044
211,274(336,129) (206,633)$ 28,915 $

4,773,406(4,301,114)

4,641 $

(106,315)
56,151

4,667,091(4,244,963)

472,292 $ (50,164)$ 422,128

Total assets, depreciation,and capital expenditure
Total assets
Depreciation
Impairment loss
Capital expenditure$ 3,301,308 $5,832,101
3,086
92,1940
0
6,229
188,416$4,335,696
5,787
0
93,358$ 483,692 $ 295,907 $14,248,704 $ 856,888 $15,105,592
1,882
10,207113,156
2,473
115,629
0
5,325
5,325
0
5,325
1,083
7,484
296,570(700)
295,870

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
3. Operating expenses for the fiscal years ended March 31, 2009 and 2010 consisted of ¥6,392 million and ¥5,321 million ($57,187 thousand), 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, 2009 and 2010 consisted of ¥96,732 million and ¥111,441 million ($1,197,773 thousand), respectively, of assets not allocatedto a segment which were included in “Eliminations or corporate.” The principal items were surplus funds (cash and deposits), long-term investment funds(investment securities), deferred tax assets, and assets related to general administration of the Company and its consolidated subsidiary, Nomura Real
Estate Development Co., Ltd.

17. Contingent Liabilities
Contingent liabilities as of March 31, 2009 and 2010 were as follows:		(Millions of yen)			(Thousands of
U.S. dollars)

2009

2010

2010

Guarantees for home loans of house purchasers from banks and other
Guarantees for loans to business partners in the business ofcommercial buildings for rent
Guarantees for borrowings by affiliates¥48,214¥67,305$723,396

1,078
970

1,014
—

10,896—

			

¥50,262¥68,319$734,292

18. Subsequent Events
Payment of Dividends
At the 6th Annual General Meeting of Shareholders held on June 29, 2010, a resolution for the payment of dividends of¥5.00 ($0.05) per share, ¥952 million ($10,228 thousand) in total, to shareholders of record as of March 31, 2010 was
approved.

Annual Report 201051

19. Stock Options
In accordance with the Companies Act of Japan, on November 30, 2007, the Company granted certain stock options tocertain directors, executive officers and employees of the Company and its consolidated subsidiaries.
Information regarding the Company’s stock option plans is summarized as follows:
1. Description
Nomura Real Estate Holdings, Inc.
FY2007		
2nd issue of stock options
Recipients		
Directors of the Company’s		subsidiaries (43 persons)
			
			
			
			
Type/number of shares 		Common stock:reserved (see Note)		
52,300 shares
Grant date		November 30, 2007
Vesting conditions		
No conditions attachedService period		No period specified
Exercisable period		November 30, 2008 –		November 29, 2013
Nomura Real Estate Holdings, Inc.
FY2008
1st issue of stock options
2nd issue of stock options
Recipients
Directors of the Company
Directors and executive(5 persons)officers of the Company’s		subsidiaries (51 persons)
			
			
			
			
			
Type/number of shares
Common stock:
Common stock:reserved (see Note)
14,800 shares
61,300 shares
Grant dateAugust 11, 2008
August 11, 2008
Vesting conditions
No conditions attached
No conditions attachedService period
No period specified
No period specified
Exercisable period
August 11, 2009 –August 11, 2009 –August 10, 2014
August 10, 201452

Nomura Real Estate Holdings, Inc.

3rd issue of stock options
Directors of the Company(5 persons)
Directors of the Company’s
subsidiaries (45 persons)
Employees of the Company’s
subsidiaries (116 persons)Common stock:180,400 shares
November 30, 2007
No conditions attached
No period specified
November 30, 2009 –November 29, 2014

3rd issue of stock options
Directors of the Company(5 persons)
Directors and executive
officers of the Company’s
subsidiaries (52 persons)
Employees of the Company’s
subsidiaries (122 persons)Common stock:
191,200 shares
August 11, 2008
No conditions attached
No period specified
August 11, 2010 –August 10, 2015

Nomura Real Estate Holdings, Inc.
FY2009
1st issue of stock options
2nd issue of stock options
Recipients
Directors of the Company
Directors and executive(8 persons)officers of the Company’s
subsidiaries (51 persons)
		
			
			
			
			
Type/number of shares
Common stock:
Common stock:reserved (see Note)
21,200 shares
59,500 shares
Grant dateAugust 11, 2009
August 11, 2009
Vesting conditions
No conditions attached
No conditions attachedService period
No period specified
No period specified
Exercisable period
August 11, 2010 –August 11, 2010 –August 10, 2015
August 10, 2015
MEGALOS CO., LTD.
FY2008
Recipients

1st issue of stock options
Directors of the Company(3 persons)				Type/number of shares
Common stock:reserved (see Note)
16,400 shares
Grant date
December 1, 2008
Vesting conditions
No conditions attachedService period
No period specified
Exercisable period
December 1, 2009 –November 30, 2014
MEGALOS CO., LTD.
FY2009Recipients

1st issue of stock options
Directors of the Company(3 persons)				Type/number of shares
Common stock:reserved (see Note)
7,900 shares
Grant dateAugust 3, 2009
Vesting conditions
No conditions attachedService period
No period specified
Exercisable period
August 3, 2011 –August 2, 2016

3rd issue of stock options
Directors of the Company(8 persons)
Directors and executive
officers of the Company’s
subsidiaries (51 persons)
Employees of the Company’s
subsidiaries (129 persons)Common stock:
202,700 shares
August 11, 2009
No conditions attached
No period specified
August 11, 2011 –August 10, 2016

2nd issue of stock options
Directors of the Company(3 persons)
Employees of the Company(14 persons)Common stock:
32,000 shares
December 1, 2008
No conditions attached
No period specified
December 1, 2009 –November 30, 2015

2nd issue of stock options
Directors of the Company(3 persons)
Employees of the Company(12 persons)Common stock:27,000 shares
August 3, 2009
No conditions attached
No period specified
August 3, 2011 –August 2, 2016

Annual Report 201053

2. Scale of offer and status of changes(1) Number of stock options
Nomura Real Estate Holdings, Inc.
FY2007		

2nd issue of stock options

3rd issue of stock options

—
—
—
—
—

176,700——
176,700—

21,000—7,600—
13,4003,700
176,700——
180,400

1st issue of stock options

2nd issue of stock options

3rd issue of stock options

—
—
—
—
—

—
—
—
—
—

191,200——
7,100
184,100

14,800—14,800——61,300—37,500—23,800

—
7,100
—
—
7,100

1st issue of stock options

2nd issue of stock options

3rd issue of stock options—
21,200—21,200——59,500—59,500——202,700—
3,500
199,200—
21,200——21,200—59,500——59,500

—
3,500
—
—
3,500

Non-vested: (shares)
Previous fiscal year end		
Granted		
Forfeited		
Vested:		End of the year		
Vested: (shares)
Previous fiscal year end 		
Vested:		
Exercised		
Forfeited		End of the year		
Nomura Real Estate Holdings, Inc.
FY2008Non-vested: (shares)
Previous fiscal year end
GrantedForfeited
Vested:End of the year
Vested: (shares)
Previous fiscal year end
Vested:Exercised
Forfeited
End of the year
Nomura Real Estate Holdings, Inc.
FY2009Non-vested: (shares)
Previous fiscal year end
GrantedForfeited
Vested:End of the year
Vested: (shares)
Previous fiscal year end
Vested:Exercised
Forfeited
End of the year

54

Nomura Real Estate Holdings, Inc.

MEGALOS CO., LTD.
FY2008Non-vested: (shares)
Previous fiscal year end
GrantedForfeited
Vested:End of the year
Vested: (shares)
Previous fiscal year end
Vested:Exercised
Forfeited
End of the year

1st issue of stock options

2nd issue of stock options

—
—
—
—
—

32,000—4,000—
28,00016,400—16,400
—
—

—
—
—
—
—

1st issue of stock options

2nd issue of stock options

—
7,900
—
7,900
—

—
27,000——27,000

—
7,900
—
—
7,900

—
—
—
—
—

MEGALOS CO., LTD.
FY2009Non-vested: (shares)
Previous fiscal year end
GrantedForfeited
Vested:End of the year
Vested: (shares)
Previous fiscal year end
Vested:Exercised
Forfeited
End of the year

Annual Report 201055

(2) Unit price data
Nomura Real Estate Holdings, Inc.
FY2007		

2nd issue of stock options

3rd issue of stock options

1

3,380

1,406
2,903

—
714

1st issue of stock options

2nd issue of stock options

3rd issue of stock options

1

1

2,255

1,685
2,131

1,577
2,131

—
770

1st issue of stock options

2nd issue of stock options

3rd issue of stock options

1

1

1,663

—
1,533

—
1,533

—
641

1st issue of stock options

2nd issue of stock options

1

740

985
606

—
184

1st issue of stock options

2nd issue of stock options

1

1,010

—
883

—
259

Exercise price (¥)		
Average price upon
exercise (¥)		
Fair value on grant date (¥)		
Nomura Real Estate Holdings, Inc.
FY2008Exercise price (¥)
Average price upon
exercise (¥)
Fair value on grant date (¥)
Nomura Real Estate Holdings, Inc.
FY2009Exercise price (¥)
Average price upon
exercise (¥)
Fair value on grant date (¥)
MEGALOS CO., LTD.
FY2008Exercise price (¥)
Average price upon
exercise (¥)
Fair value on grant date (¥)
MEGALOS CO., LTD.
FY2009Exercise price (¥)
Average price upon
exercise (¥)
Fair value on grant date (¥)

Note: With respect to stock options outstanding at March 31, 2010, the number of stock options is calculated based on the number of shares of common
stock which would be required to be issued if all such stock options were to be exercised.

56

Nomura Real Estate Holdings, Inc.

Report of Independent Auditors

Annual Report 201057

Investor Information(As of March, 31, 2010)

Corporate Data
Corporate Name:
Representative:
Head Office:			Date of Establishment:
Number of Employees:
Fiscal Year:
General Meeting of
Shareholders:

Website of Nomura Real Estate Holdings
Nomura Real Estate Holdings, Inc.
Hirohisa Suzuki
Shinjuku Nomura Building, 1-26-2 Nishi-Shinjuku,
Shinjuku-ku, Tokyo 163-0566, Japan
June 1, 2004
5,195 (on a consolidated basis)
From April 1 to March 31
June

Stock Information
Common Stock:¥115,527,936,200
Number of Authorized Shares: 450,000,000
Number of Shares Issued: 190,331,000
Market Listing:First Section of Tokyo Stock Exchange
Minimum Trading Unit: 100 shares
Number of Shareholders: 57,500

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

TenLargest大株主（上位Shareholders:
10 名
Name of Shareholder

No. of shares

Shareholding (%)

Nomura Land and Building Co., Ltd.

96,817,500

50.86Japan Trustee Services Bank, Ltd. (Trust account)

12,225,400

6.42

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

8,679,200

4.56

Nomura Real Estate Holdings Employee Shareholding Association

2,698,782

1.41

Japan Trustee Services Bank, Ltd. (Trust account 9)2,173,200

1.14Japan Trustee Services Bank, Ltd. (Trust account 4)

1,941,400

1.02

Trust & Custody Services Bank, Ltd. (Securities Investment Trust account)

1,812,900

0.95

NIPPONVEST

1,600,000

0.84

Morgan Stanley & Co. Inc

1,545,600

0.81

The Bank of NY Treaty JASDEC Account

1,271,300

0.66

Composition
by Number of Shareholdings (%):
所有者別株式分布状況
Financial Institutions

Individuals and Others

19.1%

16.3%

Financial Instruments Firms

0.5%

Other Foreign Investors

12.0%

Other Japanese Firms

52.1%

Yen

Stock Price and Trading Volume on the Tokyo Stock Exchange

4,000

3,000

2,000

1,000
Millions of Shares
60

40

20

0

58

10 11
2007

12

1
2
2008

3

Nomura Real Estate Holdings, Inc.

4

5

6

7

8

9

10

11

12

1
2
2009

3

4

5

6

7

8

9

10

11

12

1
2
2010

3

4

5

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

This annual report is printed on FSC-certified paper with vegetable based ink.

Annual Report 2010

Printed in Japan

Year ended March 31,2010