Integrated Report 2018

New Value, Real Value

Nomura Real Estate Holdings, Inc.
Shinjuku Nomura Building, 1-26-2 Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-0566, Japan
URL: http://www.nomura-re-hd.co.jp/english

Printed in JapanTo Our Stakeholders

Our Group Vision “New Value, Real Value”

New Value, Real Value
Integrating all that is precious to people and communities,

New Value, Real Value
Integrating all that is precious to people
and communities, we build cities—dynamic stages that connect today with

we build cities—dynamic stages that connect today with tomorrow’s

tomorrow’s possibilities—

possibilities—and embrace every moment of life’s pursuits.

and embrace every moment of life’s

We create new value, social value, and, above all, real value.

pursuits. We create new value, social value,
and, above all, real value.

The Nomura Real Estate Group has adopted“New Value, Real Value” as its Group Vision
toward meeting the expectations of its cus-

Action Guideline “What We Value”

tomers and all other stakeholders. It represents
the Group’s determination to resolve the issuesof society head on in providing a wide range ofservices related to building cities, developing
real estate, and the real estate market.

Client-first approach
We maintain our “client-first” approach as well as our attitude to ensure trust andfulfill expectations, which we have valued since the foundation of the company.

Moreover, we aim to enhance our sustainable corporate value through the constantawareness of the Group’s Action Guideline“What We Value” among all employees andthe realization of our Group Vision “New Value,

Creating new value based on original ideas

Real Value.”
This integrated report contains both finan-

We pursue creating new value with free and out-of-the-box thinking,cial and non-financial information regarding

placing importance on anticipating future and global perspectives.

our ideas and specific measures for enhancing sustainable corporate value based on the

Always being a challenger
We always bear in mind that we are a challenger andexternal factors surrounding the Group.
September 2018

take on new challenges with humility and ambition.

Acknowledging our growth with societyEver mindful of our responsibility and pride in creating the future for people and cities,
we contribute to society and continue to be a company on which it relies.

Eiji Kutsukake

Working with vigor and achieving wellness

President and Representative Director,
Group CEO
Nomura Real Estate Holdings, Inc.

Recognizing that working with vigor brings growth to both the company andourselves, we take the utmost care of our mental and physical health.

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 20181

Regarding information disclosure
Additional information can be found on our website.

other stakeholders of the Nomura Real Estate Group’s strategies and measures geared toward

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

the creation of mid- to long-term value. The editing and layout of this report follow theInternational Integrated Reporting Framework of the International Integrated Reporting Council(IIRC).

Period covered by the report
This report mainly covers the period from April 1, 2017 to March
31, 2018. Parts may discuss information from times prior to thisperiod or activities or outlooks for times following this period.

Integrated report
Financial and non-financial information, value creation models, business unit overviews, etc.
www.nomura-re-hd.co.jp/english/ir/ir_library/annualreport.html

Guidelines concerning the disclosure of
non-financial information• Global Reporting Initiative Standards• ISO 26000 Guidance on Social Responsibility

Guidelines concerning integrated reporting

Scope of this report

Ministry of Economy, Trade and Industry’s“Guidance for Integrated Corporate Disclosure
and Company–Investor Dialogue for Collaborative
Value Creation”

Nomura Real Estate Holdings, Inc. and Nomura Real Estate Group
companies (19)Company information
Company profile and history, list of corporate officers and organizational chart,
corporate governance, list of Group companies, etc.
www.nomura-re-hd.co.jp/english/company/

Investor information
Management policies, IR library, information for individual investors, FAQs, etc.
www.nomura-re-hd.co.jp/english/ir/

Toward the Next Stage of Growth

Editorial
PolicyThis report is published in order to foster understanding among shareholders, investors, andForward-looking statements
This integrated report contains forward-looking
statements about the future plans, strategies, andperformance of Nomura Real Estate Holdings, Inc.
(the “Company”) and its consolidated subsidiaries(the “Group”). These forward-looking statements
are not historical facts. Rather, 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 andtaxation systems, and other regulations. As such,actual results may differ from those projected.

CSR report
Progress of Mid- to Long-term Business Plan and Business Units

Social and environmental initiatives, activities that contribute to society, etc.
www.nomura-re-hd.co.jp/english/csr/

Contents

Section 1

Section 2

Section 3

Section 4

This section illustrates how the Nomura RealThis section details the progress of our mid- toThis section outlines our proactive efforts toThis section includes the consolidated financial

Estate Group’s competitive edge, the driving

long-term business plan Creating Value throughenhance corporate governance, including thestatements and other information for use inforce behind its growth, will contribute to its

Change, which was launched in FY17/3 and runs

implementation of a performance-based stock

quantitative analysis of the Group’s financial

ongoing advancement in line with the Group’s

through to FY25/3, in line with analysis of our

incentive plan, as well as our measures tocondition and profitability and cash flow creation.

management policy.

performance and financial strategies.

improve management transparency.







Progress of Mid- to Long-term
Business Plan and Business Units

Toward the Next Stage of Growth

8

The Path of Creation and Ambition

46

Message from the CFO

52

Our Growth Drivers

54

Residential Development Business Unit

58

Leasing Business Unit

Profit Structure

Investment Management Business Unit

14

62

Financial and Non-financial Data

Property Brokerage & CRE Business Unit

16

66

Message from the CEO70 roperty & Facility Management
P
Business Unit

10

12	High-Efficiency Management and24	Special Feature:
How will the growth strategy of the
Nomura Real Estate Group take shape?

3278	Dialogue:
The Evolving Governance of
Nomura Real Estate Holdings

At a Glance74	Main Topics from the Fiscal Year Ended
March 31, 201882

Corporate Officers

85

Corporate Governance94

10-Year Summary

96

Consolidated Balance Sheets98	Consolidated Statements of Income /Consolidated Statements ofComprehensive Income

100 Consolidated Statements of Cash Flows
101 Business Unit Information

Corporate and Financial Information

Realizing Our Group VisionCorporate and Financial
Information

Nomura Real Estate Group’s Management Base

6

Nomura Real Estate Group’s
Management Base103	Facilities Situation
108 Group Company Profiles
110 Corporate Information

Message from the COO & CSR Officer

36	Creating Social and Environmental Value
through Business Activities

40

2

Human Resource Management

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 20183

Section 1
Toward the Next Stage of Growth

Toward the Next Stage of GrowthThis section illustrates how the Nomura Real
Estate Group’s competitive edge, the driving
force behind its growth, will contribute to its
ongoing advancement in line with the Group’s
management policy.

6

The Path of Creation and Ambition

8	Realizing Our Group Vision
10

Our Growth Drivers

12	High-Efficiency Management andProfit Structure

14

Financial and Non-financial Data

16

Message from the CEO

24	Special Feature:
How will the growth strategy of the
Nomura Real Estate Group take shape?

32

Message from the COO & CSR Officer

36	Creating Social and Environmental Value
through Business Activities

40

Human Resource Management

Shibaura 1-chome Rebuilding Plan (tentative name)4

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 2018

5

1959

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

Opens Osaka Regional OfficeOpens Nagoya Branch(currently Kansai Regional Office)1971

Property Brokerage & CRE
Business Unit

1973

2004

2015

Opens Sendai Branch

Establishes Nomura Real Estate
Holdings, Inc., and is listed on
First Section of Tokyo Stock
Exchange in 2006

Establishes NOMURA REALESTATE ASIA PTE. LTD.

1977

1987

1995

2014

2017

Establishes Nomura Building
General Management Co., Ltd.
for building and condominium
management

Establishes Yokohama Business Park Heating
and Cooling Supply Co., Ltd. (currently
Nomura Real Estate Heating and Cooling
Supply Co., Ltd.)

Opens first MEGALOS-branded
fitness facility in Soka-shi,
Saitama (currently MEGALOS_X
SOKA 24)

Establishes Nomura Real Estate
Partners Co., Ltd.

Opens OUKAS Funabashi,
our first elderly assisted
living home

1959

1987

1999

2000

2013

Enters real estate
brokerage business

Establishes Brokerage Business
Unit, which mainly focuses on
residential brokerage businessand also handles corporate realestate and insurance services

Launches real estate
information website nomu.com

Establishes Nomura Real Estate
Urban Net Co., Ltd.

Launches new service brand
Nomura no chukai +¥623.7billionFiscal year ended March 31, 20182016
Nomura Real Estate Development
Co., Ltd. and Nomura Real Estate
Urban Net Co., Ltd. merge
wholesale businesses

2003

Investment Management
Business Unit

Service & Management Sector

Property & Facility
Management Business Unit

1957

Toward the Next Stage of Growth

Companywide

The Path of Creation and Ambition

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

2011

2018

Nomura Real Estate AssetManagement Co., Ltd. iscreated from merger ofthree existing investment
management companies

Nomura Real Estate Holdings,
Inc. agrees to develop apartnership with Lothbury
Investment Management Group2015
Nomura Real Estate Master
Fund, Inc. is created frommerger of three existing REITs

Completes construction of
Shinjuku Nomura Building.
Head Office moved from Nihonbashi
to Shinjuku Nomura Building

Leasing Business Unit
Residential Development
Business Unit

Development Sector

1978

Geo Akamatsu Co., Ltd.
is made subsidiary of Nomura
Real Estate Holdings, Inc.

2018

1988
Starts construction of Yokohama
Business Park (YBP), largest businessdevelopment conducted solely by
private sector

1961

1963

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

Launches condominium
development business withconstruction of Co-op
Takenomaru in Yokohama-shi,
Kanagawa

1957–1984
Creation

62007

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Operating revenue (billions of yen)
* Non-consolidated data for Nomura Real Estate
Development until the fiscal year ended
March 31, 2004

1985–1990
Expansion

2008

2005

2007

NREG TOSHIBA BUILDING
Co., Ltd. joins Nomura
Real Estate Group

Completes
Completes
construction of PROUD construction of
FLAT Yoyogi Uehara
Landport Atsugi

2008

2012

2017

Completes
construction of PMO
Nihonbashi Honcho

Completes
construction of
GEMS Shibuya

Establishes Nomura
Real Estate Hotels
Co., Ltd.

Participates in office leasing
business in Ho Chi Minh,
Vietnam

1991

2002

2006

2011

2017

2017

Establishes NOMURA HOME
CO., LTD, which provides
custom-built housing(liquidated)

Establishes unified brand name
“PROUD” for residences andservices

Establishes Prime X. Co., Ltd.

Launches condominium brand“OHANA” with completion of
OHANA Yasaka-hagiyama-cho

Establishes First Living
Assistance Co., Ltd.

Participates in residential
housing development in
Bangkok, Thailand

1991–2003
Reform2004–
Further Growth after Being Listed

Nomura Real Estate Holdings, Inc. Integrated Report 20187

Realizing Our Group Vision
Action Guideline—What We Value

Opportunities for
Growth Initiatives• Demands for contribution to the
local community• Japan’s declining birth rate andaging population• Urban renewal and local revitalization• Rising cost of building energy
conservation• Aging of existing properties• Shifting from savings to investment• Further acceleration in globalization• Growing needs for health and comfort

New Value, Real Value

Our Advantages
in Value Creation

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

• Increased cost for improving work
environments• Social and environmental concerns
in the supply chain

We will continue to provide new value to customers
and society. By focusing on social changes anddiversifying needs, we will make use of ourstrengths to offer innovative business.

Driver3

Maintaining a Thorough Commitment to Quality
Driver1“PROUD” brand rating:

Creating Value by Finding Ways
to Satisfy Market Needs

Toward the Next Stage of Growth• Taking a client-first approach• Creating new value based on original ideas• Always being a challenger• Acknowledging our growth with society• Working with vigor and achieving wellness

Group Philosophy—Our Group Vision

Controlling
Business Risks

P.11

No. 1*

1

Number of first-class licensed architects:

P.10

296*

2

Cumulative number of custom-built condominiums supplied:

5,000 units (approx.)

Quality control that is constantly improving
Quality control originating from technology and product development

No. 1

Rankedfor high quality brokerage service for thethird consecutive year*3
DBJ Green Building certification

Our Advantages
in Value Creation

Residential Development
Business Unit

LEED certification

No. 1

for management satisfaction among condominium
Rankedresidents for the ninth consecutive year*4
Recipient of the Good Design Award for the

P.24–31

A Variety of Relations with Customers and Society
Development Sector

BELS certification

Service & Management Sector
Investment Management
Business Unit

Leasing Business Unit

Property Brokerage & CRE
Business Unit

Property & Facility
Management Business Unit

Driver2

Operating as a Cooperative Organization• Condominiums• Detached housings• Urban-type compact
towns

8

• Property development• Investors• Stores• Offices• Asset owners• Corporate brokerage•R etail facilities• nomu.com members•E lderly housings

Assets undermanagement

Number of brokeragetransactions

Number of housings
under management(for the fiscal year ended March 31, 2018)(as of March 31, 2018)(as of March 31, 2018)(for the fiscal year ended March 31, 2018)(as of March 31, 2018)

5,865 units

1,020,000 m

1.3 trillion

170,000 units

Number of
PROUD units soldNumber of property
developments(approx.)Number of properties undermanagement

8,561 transactions(as of March 31, 2018)(as of March 31, 2018)

58,000 units

180 buildings

Nomura Real Estate Holdings, Inc. Integrated Report 2018¥

Number of nomu.com
members(approx.)Number of office buildings
under management(as of March 31, 2018)(as of March 31, 2018)(as of March 31, 2018)349 buildings

200,000 members

723 buildings(approx.)Cooperating beyond Business Boundaries•F itness clubs

Leasable
floor area2

P.10

• Buildings and housings
under management

Number of housing
units sold(approx.)16th consecutive year

Cooperating beyond Organizational Boundaries

Integrated Development, Sales, and Management System

Land
Acquisition

Planning
and Design

Construction
and Inspection

Sales

Operation
Management

Residential
Development
Service

Leasing

Investment
Management

Property
Brokerage & CRE

Property &Facility
Management

Holdings Structure*1	In the 2018 Condominium Brand Survey, published by Nikkei Inc., PROUD
was ranked No. 1 in seven out of 10 items.
*2	Number of employees qualified as first-class architects within Nomura Real Estate
Development Co., Ltd. and Nomura Real Estate Partners Co., Ltd.
(as of March 31, 2018)*3	Received No. 1 ranking in the 2016, 2017, and 2018 Oricon Customer Satisfaction
Report for real estate brokerages in both the condominium (purchases) anddetached housings (sales) categories*4 Management satisfaction survey conducted by Sumai Surfin

Nomura Real Estate Holdings, Inc. Integrated Report 20189

Our Growth Drivers

Driver1

Creating Value by Finding Ways to Satisfy Market Needs
to a fault, has become the base of our corporate culture.
Moreover, this approach has cultivated a corporate culture thatvalues improving our products by reflecting customer and market
feedback. By combining our knowledge and enthusiasm with
our high level of technical skills, we have offered the best products and services, including “PROUD,” which has achieved ahigh level of brand power in the condominium industry.

Our Major Brands

3

Maintaining a Thorough Commitment to Quality

Our commitment to quality, which has been cultivated since
the time of our inception, has been an important part of the
Nomura Real Estate Group. Through this commitment, wehave earned the absolute trust of both customers and society.
Our quality management manuals consolidate the know-how
we have cultivated through our management of roughly
180,000 housings. These manuals are also useful for quality(As of March 31, 2018)

checks and our after-sales services, which are provided regularly following property completion and transfer. But no matter
how much expertise we accumulate, we will continue ourcommitment to quality. This attitude toward taking on new
challenges leads to new technologies and initiatives, humanresources development, and the creation of new added value.

Toward the Next Stage of Growth

It has been necessary for the Nomura Real Estate Group, which
did not always have the same ability to procure funds as it does
now, to create its own growth capital through timely acquisitionof development profit. In order to facilitate the continuous
acquisition of development profit, we have to put our customers
first and create products that exceed their expectations. Thissensitivity to customer needs, which we have embraced almost

DriverRecipient of theGood DesignAward for 16
Consecutive Years
1 1000 no IGOKOCHI*

Quality management manuals consolidating
60 years of expertise

1

3

2

4

2 PROUD CITY Asagaya
3 OHANA Series
4 PROUD Utsukushigaoka

Number of units sold

58,000(approx.)Number ofdevelopments completed

39

units

Housings

Number ofdevelopments completed

23

buildings

Offices* “1000 Ways to Be Comfortable.” Based on 100,000 responses from 40,000 participants, this concept wasapplied to new ideas for houses, resulting in a housing project that aims for a richer, more comfortable lifestyle.

Regular, continuous support for comfortable livingbuildings

Logistics facilities

Elderly housings with supportive
services

HotelsNew Challenges for the Nomura Real Estate Group

Driver2

Operating as a Cooperative Organization

At the Nomura Real Estate Group, every employee takes ona variety of roles and works as a team. If there is a business
opportunity, even in unknown domains, we always try to takeit on by crossing sectors and divisions. We employ this tactic
because our mission has always been maximizing limited
resources to meet the needs of customers and society. As aresult, the Group has become a cooperative organization thatcreates new value through original ideas. It has also led to thecurrent integrated development, sales, and management
system. We have extended this cooperative spirit beyond theGroup to include our business partners, which has spurredsignificant growth.

Creating Value by Finding
Ways to Satisfy Market Needs

Offices

Fitness
clubs

Operating as a Cooperative
Organization

Elderly
housings

Residences

Retailfacilities

Maintaining a ThoroughCommitment to Quality

HotelsServicedapartments

Residential Development
Realizing large-scale, mixed-use developments characteristic of the Nomura Real Estate Group by
combining the expertise cultivated in each field

Leasing
Property & Facility
Management

Large-scale Projects under Development

Property Brokerage & CRE
Investment Management
2020−

10

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Urban-type compact town:
Hiyoshi-Minowacho Project2025−

Large-scale, mixed-use development
project: Shibaura 1-chome Rebuilding
plan (tentative name)2025−

Large-scale, mixed-use
redevelopment project:
Nihonbashi 1-chome Central District
Redevelopment Project

Nomura Real Estate Holdings, Inc. Integrated Report 201811

High-Efficiency Management and Profit Structure

Operating
Revenue ¥Service &Management
SectorOur High Asset Efficiency

The Group

Land acquisition


ROA

ROE

4.6%

9.4%

*1 Management satisfaction survey conducted by Sumai Surfin*2 According to Real Estate Economic Institute Co., Ltd.
*3 Based on in-house research*4	In the 2018 Condominium Brand Survey, published by Nikkei Inc.,PROUD was ranked No.1 in seven out of 10 items.
*5	Including properties in the planning stage

Outer circle: Operating profit by segment
Inner circle: Operating profit by business model

149.6 billion

Operating
Profit21.4 billion¥

Operating
Revenue ¥355.4 billion

Operating
Profit¥Industry average*

3.8%

8.2%

* Market capitalization average for the industry’s top six companies excluding
the Group

Business
Unit

Assets under management

Number of housing
units sold(as of March 31, 2018)

1.3 trillion (approx.)(for the fiscal year ended
March 31, 2018)

5,865 units

Number of brokerage transactions(for the fiscal year ended March 31, 2018)

8,561 transactions

Share of condominium market
in Tokyo metropolitan area*2

Number of nomu.com members(2017)

10.8%(as of March 31, 2018)

Achievement of top-level asset
and capital efficiency

Development

200,000 members (approx.)(ranked No. 2)

Residential redevelopment*3

Number of condominiums
under management

No. 1(as of March 31, 2018)

170,000 units (approx.)
Sales 1

Property sales
business

Sales
revenue

723 buildings

Commission
revenue

Sales 1 / Lease 2

3

2

Fee businessLeasingbusiness

Leasingrevenue

Distribution of business risk

Buildings

PROUD brand rating*4

Property Sales
Business

No. 1

Operating Profit(as of March 31, 2018)

Condominiums
Fee business 3(Investment Management /Property Brokerage & CRE /Property & Facility
Management)

Fee Business

Number of buildings
under management

1

Residential
24.5 billion Development(Investment Management /Property Brokerage & CRE /Property & Facility Management)¥

Investing of acquired / procured funds

Toward the Next Stage of Growth

The Nomura Real Estate Group combines its three businesses of property sales business, leasing business,and fee business in a balanced manner in response to the risks associated with each business.
Through this effort, we work to control risks such as market fluctuations to the utmost of our ability andgenerate stable earnings while at the same time achieving high levels of asset and capital efficiency.

¥76.6 billion

Property management
satisfaction of condominium
residents*1

For details on the
Residential
Development Business
Unit, please refer topages 54 to 57.

(For the fiscal year ended March 31, 2018)

No. 1

for
ninth consecutive year

Leasing
Business

For details on theService & Management
Sector, please refer topages 62 to 73.

ReturnBasic Approach to Revenue Growth
Companywide

Business Characteristics

Property sales
business

Leasingbusiness

Operating
Revenue ¥• High asset efficiency• Volatility of earnings

Operating
ProfitLeasable floor area

Vacancy rate

• Asset-heavy business model(as of March 31, 2018)(as of March 31, 2018)

Offices• Stable earnings

Fee business35.2 billion¥• Stable earnings• Asset-light business model• Gradual growth

For details on the
Leasing Business Unit,
please refer topages 58 to 61.

Sales revenue from property
development

134.9 billion

Leasing
Business
Unit

850,000 m

2

Retail facilities

0.7%

Number of property
developments*5

Sales revenue from property
development(as of March 31, 2018)(for the fiscal year ended
March 31, 2018)180 buildings

43.3 billion¥

170,000 m

2

Time

12

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 201813

Financial and Non-financial Data

Financial and Non-financial Data

Toward the Next Stage of GrowthMain Financial Indicators

Annual Cash Dividends / Dividend Payout Ratio
Yen%
97.3
80

Operating Revenue

87.0

65.00

70.00

100

57.50

Millions of yen

60

750,000
600,000

448,655434,226

480,983

517,740

532,016

567,159

569,545569,680

623,76240.00
40450,80743.4

450,000

75

45.00
25.00

25.00

20

25.00

30.00

27.1

29.5

12

13

35.00

50

24.9

22.4

23.3

26.5

14

15

16

17

29.1

25

300,000

09

10

11



150,000

Annual cash dividends

09

10

11

12

13

14

15

16

17



18
(Years ended March 31)

Dividend payout ratio (right scale)

18(Years ended March 31)

Interest-bearing Debt / Interest Paid
Billions of yen

Operating Profit / ROA*1

778.0

Millions of yen%

100,000

8

74,30775,00058,30850,00034,0122.5

25,000Billions of yen

1,000

39,27442,0832.8

2.9

49,9395.8

80,912
71,894
5.4

5.6

4.6

77,271

750

76,660

4.6

3.7

14.9

500

10

11

12

13

14

15

16

17



12.5

47,18250,00047,00546,02910

1117,591

09

1.7
10

1.8
11

19,357

5.7

5.9

12

13

10.3

11.2

10.1

%

1,000 kl / year
80

15

60

9.4

10

40

5

20

14

15

16

17

1,474.3

21.4

20.7

1,402.6

1,369.9

22.6

24.5

0.069

0.067

1,313.8
27.1

1,369.2
28.8

29.9

301.4

304.5

317.0

336.2

355.6

394.0

444.8

09

10

11

12

13

14

15

16

1,593.0
30.2

1,673.0

Shareholders’ equity ratio (right scale)

Nomura Real Estate Holdings, Inc. Integrated Report 2018

17

18

0.058
31

0.057
31

69

74

77

kl / m2 / year
0.100

0.075

0.053
0.044

0.047

0.045

0.049
0.050

29

0.025

10

11

12

13

14

15

16

17

18
(Years ended March 31)

30.0

%

Energy use intensity (right scale)

1,000 t-CO2 / year

40

160

30

120

481.3

80

501.4
10

17

t-CO2 / m2 / year

131
0.115
57

130

133

140

0.200

0.150

0.107

0.102

53

52

0.088

0.086

0.081

47

47

44

0.089

0.089

0.081

0.088

40

18
(Years ended March 31)*1 ROA = (Operating profit + Non-operating profit) / Total assets at end of the fiscal year
*2 ROE = Profit attributable to owners of parent / Equity (as average over the fiscal year)14

1,485.4

235.9

Shareholders’ equity

35

34

09

20


Total assets

16

CO2 Emissions / Intensity*4

17.0
450

36

Energy use

1,350

900

15



ROE (right scale)Billions of yen

1,405.4

14

65

18

Total Assets / Shareholders’ Equity / Shareholders’ Equity Ratio

1,385.5

13

Main Non-financial Data

20

(Years ended March 31)

1,800

12

7.8


Profit attributable to owners of parent

7.3

Interest paid (right scale)

26,844

5,471

7.5

5

0.072

37,500

4,660

10

7.8

(Years ended March 31)

38,441

5.9

8.8

Oil Converted Energy Use / Intensity*3

Millions of yen

12,500

15

616.7

18

Profit Attributable to Owners of Parent / ROE*2

13,770

20

721.9
617.5
10.0

09

ROA (right scale)

25,000669.2

(Years ended March 31)
Operating profit

14.3

9.6

Interest-bearing debt

09

810.1

758.5

250

4

2

816.9

13.5

6

4.9

759.6

877.8

0.100

0.050

09

10

11



12

13

14

15

16

17

18
(Years ended March 31)

CO2 emissions

Emissions intensity (right scale)*3	Up until the fiscal year ended March 31, 2014, data was calculated for the 7 buildings (buildings with office space as primary use) in which the Nomura Real Estate Group retains
an interest of more than 50,000 m2 and are subject to the Tokyo Metropolitan Ordinance on Environmental Preservation. Under these same conditions, data for the fiscal year ended
March 31, 2015 was calculated for 143 facilities, data for the fiscal year ended March 31, 2016 was calculated for 142 facilities, data for the fiscal year ended March 31, 2017 wascalculated for 181 facilities, and data for the fiscal year ended March 31, 2018 was calculated for 184 facilities.
*4	CO2 emissions are calculated using the emissions coefficient designated in the Tokyo Metropolitan Ordinance on Environmental Preservation.
Nomura Real Estate Holdings, Inc. Integrated Report 201815

Message from the CEO

Eiji Kutsukake

President and Representative Director,
Group CEO
Nomura Real Estate Holdings, Inc.

The Nomura Real Estate Group Mission—Creating “New Value, Real Value”
to provide richness in everyday life, work, and relationships
Our Group Vision

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

16

Toward the Next Stage of Growth

We provide richness in everyday life,
work, and relationships to help solve social
issues in countries and cities. That is theduty of the real estate industry.

Nomura Real Estate Holdings, Inc. Integrated Report 2018

We have adopted these words as our Group philosophy andlaid them out as our Group Vision for customers and stakeholders. Carrying on our daily business, we always keep ourGroup Vision in mind. With my background in securities andfinance, I inevitably focus on the profitability that comes fromreal estate. It is obvious that profitability is an essential part ofincreasing corporate value, but I believe that the most important part is the history and ideas that have been connected toa piece of land or a building. I think that the real estate industry’s mission is to contribute to the future by creating new value
in line with the times and making use of what we have generated so far. In the end, this idea is based on nothing more thanproviding richness in everyday life, work, and relationships.
Producing new value—by creating a space that enriches
a person’s time spent—is what generates revenue.

Resolving social issues from country to country
Furthermore, the real estate industry is one that affects and isaffected by many factors, either directly or indirectly. These
factors include a country’s or city’s economy, demographics,
business performance, society, and environment. With continuing globalization, these influences are growing in a situation
where information spreads quickly. That is why I firmly believethat the real estate industry should be at the forefront when it
comes to tackling social issues for countries and cities as well

as for people’s everyday life, work, and relationships. I feel thatinternational society requires actions to promote stronger
responsibility for corporate business activities such as theSustainable Development Goals (SDGs), which were established by the United Nations in 2015. In turn, providing richness
in everyday life, work, and relationships will help solve social
issues in countries and cities. I believe that to be the duty of
the real estate industry.

Strong collaboration within the Group to create added value
Since its founding in 1957, the Nomura Real Estate Group has
spent more than 60 years confronting social issues through theprovision and expansion of the real estate development business and various real estate related services. Since 2015,
under the Nomura Real Estate Holdings system, we havebeen strongly promoting departmental management in our
five business units: the Residential Development Business Unit,
the Leasing Business Unit, the Investment Management
Business Unit, the Property Brokerage & CRE Business Unit,
and the Property & Facility Management Business Unit. Our

primary Group companies include Nomura Real Estate AssetManagement Co., Ltd., an investment management company
that handles REITs and other investment management services;
NREG TOSHIBA BUILDING Co., Ltd., which joined the Nomura
Real Estate Group in 2008 and is making great contributions
to the expansion of the leasing business; Nomura Real Estate
Urban Net Co., Ltd., which continues to make advanced
efforts in the real estate brokerage business; and Nomura Real
Estate Partners Co., Ltd., which has acquired several highratings for property and facility management for condominiums

Nomura Real Estate Holdings, Inc. Integrated Report 201817

Message from the CEOchanges in society while continuing to provide high added
value, strong collaboration throughout the Group is becoming
increasingly important, and we will facilitate the means fordoing so.

It is crucial to grow through the expansion of business opportunities inboth the mature domestic market and the growing overseas markets.
Three years have passed since I was appointed Group CEO.
In line with our Mid- to Long-term Business Plan, we havesteadily expanded our Development and Service &Management sectors; however, to realize further growth,
I believe that the entire Group must surpass previous goals.
To make that possible, it is crucial we grow in both matureand growing markets.
The domestic market, which is the main market of theGroup, is already a mature market, and there are increasing
concerns that market scale will shrink over the long term amid
the declining birth rate and aging population. At the same time,
specifically because Japan is a mature market, the requirements are of a high level and the social issues are even more
complex. In this sort of market, it is important to focus on
corporate growth by working at the forefront of tackling social

issues, expanding business opportunities, and continuing torefine our strengths and expertise.
In Japan, I am focused on changes in lifestyle. The population of Japan has declined for the seventh consecutive year
since 2010, while the proportion of people aged 65 and overaccounts for 27.7%*1 of the total population, marking a record
high and showing a rapid shift to a super-aged society.
Combined with such factors as an expected decline in theworking age population, this demographic shift is receiving
global attention as an issue for developed countries. In the
future, cutting-edge technologies, such as robots and AI, as
well as employment structure changes will be necessary
to maintain economic activity. Both factors will bear a strong
influence on lifestyle.

Redevelopment, rebuilding, andurban-type compact towns will act asa solution for the challenges
facing society.

Against that backdrop, we should look at the ratio of working couples in Japan. The ratio of dual-income households
was 32.8% of the population in 2000, increasing to 40.6% in
2017.*2 Further, looking at trends in female participation in theworkforce, the M curve has been improved considerably, butthere is still much room for improvement if we look at othercountries around the world. In Japan, a country where thelabor force is shrinking, the success of women in the workplace is directly connected to national strength. I believe thatboth the country and industry are entering an era where working couples will make up the greater part of the workforce by
creating a women-friendly working environment.
Another factor to look at is the number of senior workers.
While the mega trend of population decline is receiving all theattention, in terms of the next 10 to 20 years we should be
more focused on the rapid increase in the number of seniorcitizens. Thanks to developments in medicine, life expectancy
is rising. That, coupled with higher pension eligibility ages, hasresulted in a greater motivation among senior citizens to work.
Japanese companies are generally responding by extending or
abolishing retirement ages in order to secure this labor force.
Furthermore, as the number of dual-income households
increases, so does the importance of shorter commuting andgreater convenience because of the need to balance work andlife in a limited timeframe. To accommodate the growing elderly
population, the demand for urban-type compact towns isincreasing because shopping, hospitalization, entertainment,
and other services can be reached within walking distance.
Changes in lifestyle have led to transformation in the way
people live and work, not only in metropolitan areas but also
in regional core cities. I fully believe that our abundance of
upcoming redevelopment and rebuilding projects and oururban-type compact towns, the result of efforts made overmany years, are a key solution to these social issues.

Toward the Next Stage of Growthand other buildings. As we strengthen the links among theseGroup companies in order to carry out the specific initiatives of
their respective business units, we are also steadily expanding
our business. To better respond to customer needs as well as

Message from the CEO

Changing Demographics (Domestic)
Millions of people
160

120

80

40

1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
80 years and older
70 to 79 years
60 to 69 years
50 to 59 years
40 to 49 years
30 to 39 years
0 to 29 years
Source: M inistry of Internal Affairs and Communications,
Current Population Estimates as of October 1, 2017*P
 opulation as of October 1 for each year (including foreigners residing in Japan); 2015
values derived from 2015 Population Census, Population by Age and Nationality(reference table) by the Statistics Bureau of the Ministry of Internal Affairs andCommunications

Ratio of Dual-Income Households in Japan’s Population
%
45
41%
40
35%
35

30
25%
25

*1	Ministry of Internal Affairs and Communications, Current Population Estimatesas of October 1, 2017*2	Statistics Bureau of the Ministry of Internal Affairs and Communications, Labour Force
Survey2000
2005
Households with full-time homemakers
Other (self-employed, etc.)

20102015 2017
Dual-income households

Source: S tatistics Bureau of the Ministry of Internal Affairs and Communications, Labour
Force Survey

Ratio of Women’s Participation in Workforcesof Selected Countries (M curve)
%
85
80
75
70
65
60
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
(Age)
Japan (2016)
Japan (2007)
United States
United Kingdom
Germany
Source: T he Japan Institute for Labour Policy and Training,
Databook of International Labour Statistics 201818

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 201819

Message from the CEO

Message from the CEO

We are not just tackling social issues related to lifestylechanges—issues related to offices and logistics are also apriority. An example of these social issues is earthquake resistant buildings under old standards. Much of the urban infrastructure in the Tokyo metropolitan area was developed tomeet the needs that arose from the Tokyo Olympic construction boom in 1964. Even now, more than 50 years later, the23 wards of Tokyo have small and medium-sized earthquake
resistant buildings spreading over a total area of about 5.12
million m2 (1.55 million tsubo). As a result of the 2011 Great
East Japan Earthquake, the awareness of issues related tosafety and security has increased, but the progress of redevelopment and rebuilding remains slow. On the other hand, looking at business opportunities, we can assume with confidence
that the demolition of old buildings will accelerate as small andmedium-sized building owners grow older, subsequently leading to business succession and the inheritance of these buildings. Small and medium-sized companies, which employ
70%*3 of Japanese people, are performing steadily and thedemand for human resources is strong. As a result, demand is
growing for our PMO buildings, which provide safety and security. Amid these conditions, there is a great business opportunity and an opportunity to solve these social issues. (Pleaserefer to pages 26 and 27 for details.)

and what we can provide for them. I feel that we are ready toaccelerate further growth of our overseas business.
I believe there are three important factors in our overseas
business potential: city power, local developers, and our value.
In terms of city power, we will focus on per capita GDP, especially in the Asian region. Since economic growth potential has
a direct tie to business opportunities, city power becomesa major prerequisite in doing overseas real estate business.
As for local developers, we will make sure to confirm inadvance whether we respect each other and how we spread
responsibilities to benefit both of us in order to build win-win
relationships. Because the real estate business is primarily alocal business, we will consider not only the volume of future
real estate pipelines but also the corporate culture of potential
partners. Finally, regarding our value, we can develop

Distribution of Office Buildings in Tokyo’s 23 Wards
by Number of Years Since Completion
65

Small and medium-sized buildings
constructed to old earthquake
standards cover about 5.12 million m2(1.55 million tsubo).

60
55
50
45
40
35
30

properties as well as provide our after-sales service expertise.
Our ability to perform this role will be a great advantage, particularly in countries and regions where there is no practice ofplanning regular and long-term repairs on buildings in advance.
Turning toward Europe and other countries where real estatemarkets are mature, I believe that to enter the investment management business primarily through M&A gives more advantages than directly taking on real estate development in orderto gather information for future business and acquire knowhow. This approach can add to the potential for businessdevelopment that comes afterward. We will continue to examine the characteristics of various countries and cities, assess
the risks, and set our initiatives accordingly. (Please refer topages 30 and 31 for details.)

Toward the Next Stage of Growth

The rebuilding of buildings constructed under old earthquake resistancestandards is a key growth market that helps resolve social issues.

25
20
15

Progress under our Mid- to Long-term Business Plan

10
5
0

40

30

20

10

0

10

20

30

40

Vertical axis: Number of years since completion
Horizontal axis: Area leased (33,057.85 m2 / 10,000 tsubo)
 mall to medium scale (Total floor area of 991.74 m2 to 16,528.93 m2 /S
300 to 5,000 tsubo): 19.6 million m2 (5.94 million tsubo)Large scale (Total floor area of over 16,528.93 m2 / 5,000 tsubo):
22.1 million m2 (6.68 million tsubo)
Source: Created by the Company based on XYMAX Corporation’s Xymax Real Estate
Institute Research Report, TOKYO 23 WARDS | Supply of New Office Space2018 & Office Stock Pyramid 2018*3	Ministry of Economy, Trade and Industry, 2018 White Paper on Small and Medium
Enterprises in Japan

In growing overseas markets, we must identify our strengths.
When we expand our perspective to the world, the UnitedStates, Europe, and other areas have mature real estate markets
like in Japan. In addition, there are also areas like Southeast Asia

that are experiencing growth in their real estate markets rightnow. With regard to the Group’s overseas expansion, we areworking carefully to determine what people in these areas want

Per Capita Comparison of Japan’s GDP with GDP of Selected Asian Countries and Cities

The fiscal year ending March 31, 2019 marks the final year of
Phase 1 of our Mid- to Long-term Business Plan. When weformulated this plan, we set the target for operating profit at¥85.0 billion for the fiscal year ending March 31, 2019, but thefigure estimated in the earnings forecast at the beginning of the
fiscal year was ¥81.0 billion. This shortfall was mainly because
the number of housing units sold and the gross margin ratio ofsales were expected to be lower than planned due to sluggishness in market conditions that were beyond the scope ofassumptions. As mentioned later, I believe we need to revise
our business strategy for the Residential Development
Business Unit. Meanwhile, other business units are proceeding
steadily with planting several business seeds for growth.
In addition, the Mid- to Long-term Business Plan sets out
four indicators for its financial and capital policies: ROA at
above 5%; ROE at the 10% level; the shareholders’ equity ratioat the 30% level; and the dividend payout ratio at approximately 30%. ROA and ROE were almost as expected in thefiscal year ended March 31, 2018, with respective ratios of
4.6% and 9.4%. In the real estate industry, sophisticated balance sheet management is required for companies. We promote ROE management through a well-balanced businessportfolio across the property sales business, the leasing business, and the fee business, which leads to a high ROE. This is
the distinctive strength of the Group, and we are enforcing it to
manage ROE. With regard to total shareholder returns, wehave managed to achieve our sixth consecutive increase individends. We also acquired treasury stock for the first time in
the fiscal year ended March 31, 2018. (Please refer to pages
48 and 49 for details.) This measure is aimed at providing
steady increases in shareholder returns and improving capitalefficiency with comprehensive consideration of the stock price,financial soundness, and business investment opportunity. We
have also decided to acquire treasury stock in the fiscal year
ending March 31, 2019.

Phase 1 marks the preparation period for further growthin each business unit.

SingaporeUS$
50,000Phase for quantity

Phase for quality

Phase for quality differentiation
Hong Kong

40,00030,000South Korea

Kuala Lumpur

Taiwan20,000

Bangkok

Philippines
VietnamHo Chi Minh

Indonesia

JakartaChina

10,000
Myanmar

India

Malaysia
Thailand

ManilaPer capita nominal GDP for Japan
Per capita nominal GDP for countries in Asian region (most recent)Per capita nominal GDP for metropolitan areas in Asian region(most recent)

Mumbai

1960
1970
1980
1990
Source: Created by the Company based on data from the World Bank, International Monetary Fund, and other institutions

20

Nomura Real Estate Holdings, Inc. Integrated Report 2018

2000

2010

Phase 1 of the Mid- to Long-term Business Plan is a period ofbusiness preparation for future growth. Despite the likelihoodof Phase 1 to fall short of its targets, my conclusion is that wehave planted sufficient business seeds as planned. Below are
the strategies for each business unit.
In the Residential Development Business Unit, we deliverroughly 6,000 units a year, but recovering our profit margin isa major issue. In the current residential market, the increasing
number of dual-income households marks a need for housingthat offers better access to the workplace and a child-friendly
environment. This trend is an example of the lifestyle changes
I mentioned earlier, and I believe these changes will affect ourbusiness more in the future. Land acquisitions and property
developments that satisfy such needs and changes in themarket are essential to recovering profit margins, and we are
now working to fine-tune our business strategy. However, wehave already undertaken some redevelopment and rebuilding
business in the areas where customer needs must be fulfilled.

2016

Nomura Real Estate Holdings, Inc. Integrated Report 201821

Message from the CEO

investment management companies, we can expect to attaintheir property management know-how and networks as well as
their investment management expertise. Besides adding theirinvestment management fees, we are also expecting to explore
future development opportunities. The Property Brokerage &CRE Business Unit is expected to continue to grow steadily
within the Japanese market in the future. In addition to ourcollaboration with Nomura Securities Co., Ltd., we are strengthening our business arrangements with local banks and otherfinancial institutions and working to meet customers’ various
needs. Regarding the Property & Facility Management
Business Unit, the number of residential housing units andbuildings under management and profitability have shownsteady growth. This business unit will continue to enjoy a favorable business environment. We expect that the number ofproperties under management that are in need of large-scale
repair will increase. In addition, OUKAS, our elderly housing
brand, has started operations smoothly and is receiving residents. We have acquired several new lots for OUKAS, and weare expecting revenue contribution in the future.
*4 Based on in-house research*5	From the fiscal year that commences April 1, 2019 (including stock from projects stillin the planning stage)

Sustainable growth through resolving social issues
Our Group companies collaborate with each other, sincerely
caring about people’s everyday life, work, and relationships andalso providing various real estate-related services in our drive toachieve our Group Vision. I believe the Group enjoys a good
reputation in society.
All our employees follow our highly regarded five-point
Action Guideline “What We Value”—taking a client-first
approach; creating new value based on original ideas; always
being a challenger; acknowledging our growth with society;and our recently added, promoting health and well-being atwork. I am convinced that these five values are important elements in realizing the sustainable growth of corporate value
for the Group going forward. In addition to tackling the social
issues of Japan, we are also listening to the voices of people
who live, work, and stay in other countries and cities. I intend
to ensure the Group’s business will contribute to resolving theirsocial issues and achieve sustainable growth. To all our shareholders and other stakeholders, we appreciate your continued
understanding and support.

Toward the Next Stage of Growth

I am proud to say that we are at the top of the industry for thenumber of residential redevelopment projects in Japan.*4
We are carrying out our assignments with our 100 professionals and aiming to increase the number of current inventory
stock of 14,000 units.*5
In the Leasing Business Unit, PMO, GEMS, and othermedium-scale property developments, which we have beenworking on for more than 10 years, are on track and havebecome major contributors to revenue, amounting to ¥10.0
billion in operating profit, representing about 30% of the business unit’s operating profit. We have successfully combined
profitable short-term real estate for sale with a duration of three
to four years with large-scale redevelopment for long-term
leasing that lasts over 10 years. At the same time, we aim toacquire stable and long-term revenue from both property sales
and leasing as a prerequisite to greater capital efficiency. Also
within this business unit, we have launched NOHGA HOTEL,
our new hotel brand. Through this action, we will develop aunique hotel business.
The Service & Management Sector is recording steady
growth as well. The Investment Management Business Unit
has shown stable growth with cash generating properties.
I consider M&A to be an effective means to build a platformin the European and U.S. markets. By acquiring highly reputed

Message from the CEO

September 2018

Eiji Kutsukake
President and Representative Director,
Group CEO
Nomura Real Estate Holdings, Inc.

We will accelerate our ESG initiatives, an indispensable key
to Company growth.
We always have to consider Environmental, Social andGovernance (ESG) implications when we make investments,
as represented by Japan’s Government Pension Investment
Fund (GPIF), signing on to the United Nations’ Principles for
Responsible Investment (PRI) in 2015. I believe ESG initiatives
are an indispensable key to our sustainable growth with ourwide range of stakeholders. With regard to governance, ourBoard of Directors received various third-party opinions andsuggestions in the process of evaluating the effectiveness of
our Board in the fiscal year ended March 31, 2018. In addition,
many institutional investors have appreciated our adoption of amonitoring-type board. In order to newly address the SDGs in
terms of the environment and society, we have formulated
policies and goals in line with our four existing key CSR
themes: Safety/Security, Environment, Community, and Healthand Well-being. This formulation is based on the recognition
that global sustainability will have a major influence on ourbusiness. By adopting these international initiatives we will

22

Nomura Real Estate Holdings, Inc. Integrated Report 2018

further contribute to the resolution of social issues and theenhancement of future economic value through proper business activities. (Please refer to pages 34 and 35 for details.)
In regard to the social aspect of human resource management, we had previously made efforts to reform work styles
and promote diversity. However, in December 2017, we
received corrective recommendations and guidance from theLabor Standards Inspection Office regarding the Discretionary
Work System for Management-related Work for Nomura Real
Estate Development. Furthermore, we consider the death ofan employee, recognized as a work-related accident byauthorities, to be a serious matter. I strongly declare that
employees are the Group’s most important resource and thatsuch a tragic event should never occur again. We aim for“health and wellness management” so that all personnel work
creatively with a healthy body and mind, which will lead tosustainable corporate growth. (Please refer to pages 40 to 43
for details.)

We will accelerate our ESG initiatives, anindispensable key to Company growth.
We believe that the health andwell-being of our employees leads tocorporate sustainability.
Through this belief, we will realize“Wellness management.”

Nomura Real Estate Holdings, Inc. Integrated Report 201823

Special Feature: How will the growth strategy of the Nomura Real Estate Group take shape?

Special Feature: How will the growth strategy of the Nomura Real Estate Group take shape?

Toward the Next Stage of Growth

Applying Our Business Model to Achieve Growth
1. Diversifying Our Business Lineup

2. Expanding Business Areas
Apartments

EuropeInvestment Management Business

P.26–27
Offices

Property development
Mixed-usedevelopment
Residential
redevelopment

Logistics facilities

Japan

P.28–29

Real Estate Development BusinessCondominiums
Detached housings
Building lots

P.30–31

Retail facilities

Southeast Asia
Differentiation factor

Marketing through local researchSpecial Feature
How will the growth strategyof the Nomura Real EstateGroup take shape?

Acquisition of growth

opportunities begins with dedicated marketing
The Group begins its business activities with thorough, on-the-ground analysis through the perspective of
how people in certain areas live and spend their time. These efforts are generating concrete results not only
in residential development but also in property development and overseas business that extend beyond business domains, countries, and regions.
Since its founding in 1957, the Group has steadily grown fromresidential development in 1961 to encompass office andcondominium development, carving out its spot in history as areal estate company. Within the residential development business—our founding business—we offer a comprehensive
lineup of services that covers development, sales, and management. Under this structure, we communicate with customers,
listen to their needs, and then use that feedback to generate
new products and services while ensuring thorough quality
control. In 2003, PROUD was established as the signature
condominium brand for the Group. Following the birth of the
PROUD brand, the Group saw dramatic growth in residential
development. Using that same acquired knowledge and expertise, we responded to customer needs by establishing a property development business under a groundbreaking and highly

24

Nomura Real Estate Holdings, Inc. Integrated Report 2018

original business model. This business has been spearheadedby Premium Midsize Office (PMO), which features high-quality
design and functionality. These efforts are extended to ouroverseas business, with the Group applying its distinctive highquality to challenges in property and urban development andreceiving high praise in these local communities.
Currently, the Group is broadening its scope of urban development by expanding into the senior and hotel businesses.
As society and lifestyles undergo dramatic changes, highly
convenient and multifunctional urban development will become
increasingly important in the future. The Group places sustainable urban development, both domestically and globally, as acore strategy in its next growth stage and strives to realize its
Group Vision through its steadfast commitment to development.

Nomura Real Estate Holdings, Inc. Integrated Report 201825

Special Feature: How will the growth strategy of the Nomura Real Estate Group take shape?

PMO—A Product Created through Customer Dialogues
Large-scale office building development has been an active
industry in the Tokyo metropolitan area since 2000. Though
there was demand from small and medium-sized companies
to mimic large companies and rent out an entire floor just forthem, high-grade, high-spec buildings were simply too large.
While medium-sized buildings were more affordable, standards
and security were insufficient. There were only a few officebuildings on the market however that did meet this need, andseveral businesses had to make do with buildings that did not
fulfill their requirements. In 2006, our project team was formed
to find a solution to this problem plaguing small and mediumsized companies with high growth potential. Analyzing market
trends in office building development and opinions from ourexisting tenants, we developed the Premium Midsize Office(PMO) series of office buildings, medium-sized buildings thatcombine superior earthquake resistance with high functionality
and standards comparable to a large-scale office building.
The fundamental design of a PMO accommodates one
tenant per floor, with dedicated plumbing on each floor toincrease functionality. We employ a tried and tested model asa template, but we are constantly adapting interior designs andequipment, adjusting them to the characteristics of the locationand the target tenants. This, combined with increased energy

conservation and greening, is part of our continuous pursuit ofpremium standards. We develop PMO in high demand areas.
To determine whether significant demand exists, we carry out
market research and analysis of the surrounding vicinity, startingfrom the land acquisition phase. We always work to improve thevalue of the PMO brand through further discussions with thepersonnel related to each property, while maintaining the overall
concept. We are focused on the continued development of
PMO properties to enhance the PMO brand.
For instance, we provide a space that can be used for company briefings and to conduct interviews free of charge. We
also offer online training courses applicable to a wide rangeof staff, from new recruits to managers. Furthermore, we also
hold events in order to build a sense of community within eachcompany in PMO, which include nature-based activities suchas rice planting. Moreover, we have set up a center for countermeasures in times of disaster at PMO Nihonbashi
Muromachi. Approximately 20 PMOs are in operation in thevicinity of Nihonbashi and the center acts as a central point forcollecting and transmitting information for the early restorationof each building. A warehouse that stores water and emergency rations for occupants has also been establishedfor emergencies.

In the domestic office market, the demand for high-grade offices
is expected to continue until roughly 2020. Tenant demand isconsistent with steady business results, with vacancy rates andrent continuing to improve. Since 2012, the amount of leased
office space has increased by approximately 330,578.5 m2(100,000 tsubo) annually, which confirms the strong demand
for more office space. In addition, looking in terms of the age of
office buildings in the 23 wards of Tokyo, the total area of officebuildings built before 1981, and therefore built according to
obsolete earthquake resistance standards, amounts to approximately 5.12 million m2 (1.55 million tsubo). This reflects the needfor timely replacement of these buildings in the face of disasterrisks. The majority of these buildings are small to medium insize. The owners of these buildings often operate small or
medium-sized businesses but due to the lack of successors,
it is difficult to continue their own business, which requires
them to sell their properties. In the future, PMOs will play asignificant role in an environment where the need for rebuilding
is constant and the number of businesses closing down isincreasing. Moving forward, the Group will continue to expand
steadily while tackling the issues facing society.

Developments*

Before39 buildings

After

Distribution of Office Buildings in Tokyo’s 23 Wards by Numberof Years Since Completion
65

Small and medium-sized buildings
constructed to old earthquake
resistance standards cover an areaof roughly 5.12 million m2(1.55 million tsubo).

60
55
50
45
40
35
30
25
20
15
10
5
0

40

30

20

10

0

10

20

30

40

Vertical axis: Number of years since completion
Horizontal axis: Area leased (33,057.85 m2 / 10,000 tsubo)
 mall to medium scale (Total floor area of 991.74 m2 to 16,528.93 m2 /S
300 to 5,000 tsubo): 19.6 million m2 (5.94 million tsubo)Large scale (Total floor area of over 16,528.93 m2 / 5,000 tsubo):
22.1 million m2 (6.68 million tsubo)
Source: C reated by the Company based on XYMAX Corporation’s Xymax Real Estate
Institute Report, TOKYO 23 WARDS | Supply of New Office Space 2018 & Office
Stock Pyramid 2018

Acquisitions and Sales (Three-year average from year ended March 31, 2016 toyear ended March 31, 2018)

Developments* Cumulative floor area

PMO Compared with Generic Office Buildings

Toward the Next Stage of Growth

Midsize Offices—Expectations for Long-term Demand

Nomura Real Estate Group x Offices

158,677.7 m(48,000 tsubo)
2

CASBEE A rankor higher

DBJ Green Building
certification

Acquisitions(total planned investment)

Avg. ¥21.6 billion (¥65.0 billion total)

20 buildings

12 buildings

Sales (operating revenue)

Avg. ¥8.8 billion (¥26.6 billion)* As of March 31, 2018. Includes developments at the planning stage

PMO Shibuya

Grade
High

Contributions to Enhancing Tenant BusinessHighly Productive Development Stock
Stock(total planned investment)¥86.7 billion, 18 properties

Balance on balance sheets¥62.6 billion

Large-scale offices
Bunkyo ward

Small-scale offices

Shinjuku ward

BeforeOrdinary profit margin
Chiyoda ward

Area
Large

Main PMO Features
Highly functional PMO

Elegant, high-quality
entrances equippedwith security gates“Hard” advantages•	Selection of areas with strong demand for office buildings when
acquiring land

Chuo ward

Shibuya ward•	Security gates at entrance

Meguro ward

•	Stylish exterior design

26

Nomura Real Estate Holdings, Inc. Integrated Report 2018

2% UP
Approx.

Shareholders’ equity ratio

6% UP

Number of business
partners (sales agents)

Approx.

Number of full-time
employees“Soft” advantages
Independent “one floor,
one tenant” setup

Approx.

Minato ward•	Comfort and energy efficiency through fine-tuned, separately controlled
air conditioning setups on each floor•	Community events and joint training geared toward tenants

5% UP

Taito ward

After

Small

Approx.

ROA

Medium-scale offices

Low

Average Results Three Years after Tenant Moves in

Shinagawa ward
Sale completed

15% UP
Approx.

25% UP

Holding

Nomura Real Estate Holdings, Inc. Integrated Report 201827

Special Feature: How will the growth strategy of the Nomura Real Estate Group take shape?

Landport—A Large-scale, Highly Functional Logistics Facility That Promotes Businessahead of Its Time
Within the Leasing Business Unit, we are promoting our property development business, which is linked to the growth ofGroup REITs. At the same time, we are also securing highcapital efficiency and stable earnings growth through the salesof property development to our Group REITs. In 2004, logistics
facilities were not widely regarded as commercial properties inJapan. The Group made early efforts within the industry, andin 2007 completed its first Landport development property.
While demand was expected to increase in accordance withthe proliferation of e-commerce, we were looking to quickly
meet the needs of markets that were lacking highly functional
logistics facilities. To achieve this, we aimed to apply ourstrengths as a real estate group—a track record of plentiful
land transactions and a development scheme—and offer facilities that would contribute to changes in the logistics industry
in the future. The Investment Management Business Unit facilitated our early entry into this field. We launched a logistics
facility development fund ahead of other companies by accurately grasping institutional investor needs in the logistics sector.
To respond to tenant needs, we introduced a structure where
Group employees work directly with logistics companies,
thereby deepening relationships. This structure facilitates two
characteristics of our logistics facilities business; the first is
the ability to fully grasp the needs of our customers in detail;the second is, after a facility is established, our employees
will work in a distribution center and strive to improve thefacilities. As of March 31, 2018, 23 properties have been completed, including projects under planning.
Although the logistics business was originally focused on
the Tokyo metropolitan area, in 2017 the Group expanded thisarea to Chubu and Kansai areas as well. In general, access toa highway interchange is an important factor in determining thelocation of logistics facilities. Likewise, Landport facilities arealso planned to be built in industrial areas within about 8 kmof an interchange. In development, we operate mainly using
a multi-tenant model, and select areas that can be utilized as
logistics bases for a variety of tenants. In that light, we provide
facilities with optimal size and specifications. Another characteristic of our facilities is that we are able to secure functions
that help improve usability in such ways as enabling flexible
load storage by effectively utilizing available floor height andpillar spans. Meanwhile, we are also developing facilities thatincorporate logistics specifications for particular industries,
and we are accelerating the development of facilities in anticipation of future laborsaving operations.
In addition to being environmentally friendly, as shown by
our CASBEE rankings (A or higher) and LEED and DBJ Green
Building certifications, we maintain a comprehensive safetysystem that includes emergency power supply, stockpilingwarehouses, and seismic isolation structures so that operations will not cease even in the event of a disaster.

Continuing Demand for Fundamentally Strong Logistics Facilities
In accordance with the sharp increase in e-commerce, thelogistics industry is handling more deliveries, but the overall
size of packages is getting smaller. As a result, the need todevelop a logistics network that can facilitate same-day delivery of oversized packages is becoming an urgent issue.
Furthermore, as e-commerce gains popularity, there is growing
fear that it will become difficult to maintain a viable logistics
system in the face of an aging population and a labor shortage.
With delivery time constraints becoming stricter, the scope ofservices, including time slot selection, payment collection, andancillary tasks upon receipt, is also increasing. These factors
combined with rising e-commerce use and more frequenttransport make appropriate coordination vastly difficult during
peak times.
In order to respond to these changes appropriately, it is
crucial to implement a strong form of logistics with more sustainable, stable functions and improved productivity. This however, will pose a major challenge for the future. It is necessary
to accelerate the introduction of robotics and cooperation
among business operators. In addition, the proportion of facilities that have been in operation for over 50 years is expected
to increase sharply in the next 20 years. Amid greater consciousness of business continuity plans (BCP) in the wake of
the Great East Japan Earthquake, there is also high demand
for rebuilding. As a result, Landport will have a major role toplay in the future.

Developments*

Number of express home deliveries handled
Millions of parcels

3,977

4,000

3,500

3,000

2,500

08
09
10
11
12
13
Source: Ministry of Land, Infrastructure and Transport* Excluding air deliveries

14

15

16

Trillions of yen

%

20

10

16.5

16

8

5.8
12

6

8

4

4

2

10
11
12
13
14
15
Scale of e-commerce market
E-commerce ratio
Source: Ministry of Economy, Trade and Industry

16

17

Acquisitions and Sales (Three-year average from fiscal year ended March 31, 2016
to fiscal year ended March 31, 2018)

Main Characteristics of Landport

CASBEE A rankor higher

DBJ Green Building
certification

Acquisitions(total planned investment)

Avg. ¥38.8 billion (¥116.5 billion total)

By combining the following features, we provide facilities with optimal size and specifications for our customers.

23 buildings

1,279,338.8 m2(387,000 tsubo)

5 buildings

13 buildings

Sales (operating revenue)

Avg. ¥11.7 billion (¥35.2 billion)

Efficient facility design

We supply large-scale highly functional logistics centers concentrated
in the metropolitan areas of Tokyoand the Kansai region to realize theoptimization required by shippers andlogistics companies.

We are able to meet a variety oftenant needs due to a design thatfeatures wide pillar spans and beams
set at an effective height to maximize
efficient use of storage space.

High carrying capacity

BCP initiatives

We install transport machines witha high load capacity, which enables
efficient transfer of loads between
floors.

We promote the installation ofseismic isolation devices, emergency
power supply, stockpiling warehouses,
and other equipment to ensure thecontinuity of logistics operations.

17

Scale of e-commerce market

Developments* Cumulative floor area

Locations appropriate for logistics

Toward the Next Stage of Growth

Nomura Real Estate Group x Logistics* As of March 31, 2018. Includes developments at the planning stage

Ample Pipeline

Contributions to Securing a Suitable Workforce

Stock(total planned investment)¥121.9 billion, 11 properties

Balance on balance sheets¥42.6 billion

To cope with the miniaturization and increased frequency oftransportation, securing a suitable workforce is a priority issue
for today’s logistics facilities. Landport helps secure personnel
for tenant companies by providing a comfortable work environment for those working at the facility.

Kawagoe

Tokorozawa

NaritaTokyo

Hachioji

28

Consideration for the environment

Security measures

Our facilities utilize building-wide LED
lighting in order to reduce runningcosts and out of consideration for
the environment. We also promote
the installation of solar panels on
facility rooftops.

Security cameras are installed on thepremises and guards are present toensure security within the facility.

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Chiba
Kawasaki
Yokohama
Chigasaki

Sale completed

Cafeteria
Our facilities feature a spacious and clean
cafeteria that can be used for breaks,
meals, or as a space to conduct businessdiscussions in order to create a favorable
working environment.

Drivers’ Rest Area
We provide ample amenities for drivers,
including dedicated toilets and outdoor
vending machines.

Holding

Nomura Real Estate Holdings, Inc. Integrated Report 201829

Special Feature: How will the growth strategy of the Nomura Real Estate Group take shape?

Applying Domestic Marketing Methods in Southeast Asia
The Group is currently accelerating expansion of the residential
development business and leasing business with a focus oncountries showing outstanding growth, such as Thailand,
Vietnam, the Philippines, and China. We are planning to invest¥300.0 billion in our overseas business by 2025, and havecommitted to investing a total of ¥35.0 billion in nine projects
by July 2018. We aim to capture the brisk demand in Asia byproviding new value through products and services to local
communities, as part of our efforts to sustain our business ineach country on a medium- to long-term basis.
In order to achieve success in the development businessoverseas, we believe that it is vital to collaborate with local
developers who possess notable advantages in each country’s
market. The first step in this process is to identify local developers with a corporate culture that is highly compatible with
the ideas and strategies of the Group. From that point on, theGroup and local developers can cooperate to complement
each other’s strengths and weaknesses and, at the same time,
accurately grasp the needs of the country or region that
undergo changes during their growth process. By doing so,

the Group can put forth high-quality products and differentiatedservices that will provide new value to the local population.
In the same manner as our domestic business, we primarily
market to local populations overseas. We repeat a cycle ofsending employees to locations, closely examining local needs
alongside our partners, incorporating the knowledge andexpertise gained into our products, and communicating withcustomers, which leads to differentiation. This PDCA cycle,
which started as an original activity of the Company, utilizes ourdevelopment policy cultivated over many years through ourdomestic business. For instance, collaborative industrial–academic research as well as fact-finding investigations via home
visits in each target country leading to planning and development proposals have been integral parts of this cycle. Throughthese initiatives, we are gradually drawing out local needs.
By continuing to implement these initiatives alongside our
local partners, the Group aims to strengthen relationships
therewith, improve product capabilities, and enhance the value
provided to customers in local markets.

Development Methods Overseas
Practicing
dedicated marketingoverseas

Domestic
Developments

Thorough survey oflifestyle and culture
Detailed analysis ofsurrounding areas
Confirming of
local convenience

Project management with Japanese quality

Overseas
Developments

There are two main overseas business risks: individual business risk and country risk. To reduce individual business risk, in
addition to thoroughly investigating target markets from a local
perspective, we are cooperating with local partners, utilizing
our expertise gained from our domestic business, and training
human resources. To reduce country risk, we classify target
countries for investment and, based on that classification,
we place a total investment limit on each target country. Risk
verification is carried out on a continuous basis and our policy
is to periodically check countries targeted for investment aswell as determine the validity of business scale in terms of risk
and return and in relation to the progress of business overseas.
Through these methods, we intend to make step-by-step
progress with our plans while maintaining proper attention torisk. As we cooperate with local partners, and as we accumulate experience, we plan to expand our business scale in target
regions, and we will gradually expand our list of target countries when the opportunity arises.
In addition to growing markets such as Southeast Asia, weare considering Europe, a mature market, as a target for overseas business. However, as opposed to our approach inSoutheast Asia, where we entered through the development
business, we will gain a foothold through the investment management business by gathering real estate-related informationfrom customers and investors. As part of this effort, the Group

Utilize our 60 years of development experience in Japan to create
a quality control / technical manual for construction sites suited toparticular regions.

Developments*

58,000Measure 3: Local condominiums
Mild seasons year-round23

buildings

16

buildings

90

buildings

Dining-out culture

Small closets

Shower-only bathrooms

Common areas
Large public bath areas
Introduction of Japanesesanitation facilities

Mature Markets

Asian Region

Europe(Thailand, Vietnam, the Philippines,
China)(The UK, etc.)



Start
Phase I1

Shenyang, China

Residence

Approx. 4,100 units

Mitsubishi Corporation

11.25%

2

Ho Chi Minh, Vietnam

Residence

Approx. 2,300 units

Phu My Hung Development
Daiwa House
Sumitomo Forestry

12.25%

3

Manila, the Philippines

Residence
RetailApprox. 1,400 units
Approx. 30,000 m2

Federal Land
Isetan Mitsukoshi Holdings

20.00%

4

Ratchayothin,
Bangkok, Thailand

Residence

A building: 334 units
B building: 489 units

Origin Property

49.00%

5

On Nut, Bangkok,
ThailandResidence

601 units

Origin Property

49.00%

6

Ramkhamhaeng,
Bangkok, Thailand

Residence

685 units

Origin Property

49.00%

7

Thonglor, Bangkok,
ThailandService
Apartment

303 units

Origin Property

49.00%

8

Ho Chi Minh, Vietnam
Sun Wah Tower (existing)

OfficeApprox. 26,500 m2

SUN WAH GROUP

24.00%

9

Beijing, China
Beijing Fortune Building(existing)

OfficeApprox. 55,000 m2

Beijing Capital Development Co., Ltd.

Participation in
management

Minimal kitchens

Private areas

Growth Markets

Our Share

Measure 4: Service apartments (for Japanese expats and business travelers)
After conducting surveys
with Japanese expats
and those traveling forbusiness, we havedesigned facilities thatrecreate a Japaneseliving environment basedon their feedback.

Investment Management
Business

Joint Partner

Organize facilities so that even small rooms encourage comfortable living.
Solutions tosatisfy needs, even insmall rooms

MarketDevelopment+
Property and Facility
Management

Total Business

Provide added value that caters to market needs accurately

39

Starting
Business

Main Useunits

buildings

Overseas Strategy Framework

Project

Measure 2: Create a comfortable office environment
Implement maintenanceand cost management
based on a long-term
renovation plan tooperate offices
effectively.

agreed to acquire a 75% stake in Lothbury Investment
Management Limited in July 2018, a UK-based real estate
management company boasting relationships with over 110
institutional investors and an operational scale of ¥30.0 billion.
In the future, we will build a global platform and respond to
global investment needs. We will also make use of Lothbury’s
expertise to accelerate global development of the Group’s
investment management business. We are reviewing the ideaof then using the information and knowledge gained from these
efforts to eventually introduce a real estate development business in Europe.

Planned Investments

Measure 1: Create a quality control / technical manual

Toward the Next Stage of Growth

The Group’s Overseas Strategy Regarding Market Characteristics and Risks

Nomura Real Estate Group x Overseas(FY17/3–19/3)

Phase II

(FY20/3–22/3)

Complete
Phase III(FY23/3–25/3)

Large closets

Bathtubs installedin bathrooms* As of March 31, 201830

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 201831

Message from the COO & CSR Officer

Message from the COO & CSR Officer

On December 25, 2017, Nomura Real Estate Development
Co., Ltd., a Group company of Nomura Real Estate Holdings,
received corrective recommendations and guidance regarding
the Discretionary Working System for Management-Related
Work from the Labor Standards Inspection Office, which presides over the Company’s headquarters and its four regional
business offices. This matter is being taken as a serious issue,
and we will make full efforts to carefully undertake labor management and improve working conditions so that no such
incident occurs again, and to regain the trust of our shareholders and other stakeholders.
To this end, in April 2017 the Group established theWorkstyle Reform Promotion Committee, and as its chairman,
I have focused on improving productivity, reducing working
hours, and enhancing work-life balance. We have identified andanalyzed impeding factors against the reforms in each business and have set in place the personnel systems and policies
to balance work and private life, which are functional regardlessof time and place.

Seiichi Miyajima
Executive Vice President
and Representative Director
Group COO

Moreover, we understand the importance of top management and senior officers to thoroughly discuss issues with
employees and to steadily implement the necessary measures
to improve working conditions. For this reason, top management and senior officers have held around 40 meetings with
employees to hear their opinions directly and discuss topics
such as working environments and labor conditions. Based onthese discussions, we are now progressing with activities thatwill lead to concrete measures.
To underscore this point, our employees are our greatest
resource, and their health and well-being are indispensable to
the Group’s sustainable growth. We are promoting wellness
management so that all employees are able to stay mentallyand physically healthy and work proactively. (For more details
on our initiatives related to wellness management, please referto pages 40 to 43.)

The Changing Business Environment Surrounding the Groupand the Related Risks and Business Opportunities
At present, corporate earnings are recovering in Japan underpinned by sustained low interest rates and low inflation amid
an ideal economy. In the real estate market, market cap rates
are falling and real estate prices are rising. In addition, construction costs are increasing. The volume of transactions havebeen sustained however, and the market continues to be
steady. On the other hand, looking at the future of Japanesesociety shows us a variety of social problems, including its
shrinking economy due to population decline and low birthrate

To solve environmental and social issues in this business means
to meet the needs of customers and society. Promotion of CSR
leads to the development of products and services and thecreation of new business.

Toward the Next Stage of Growth

Promotion of Wellness Management for the Physicaland Mental Well-being of Our Employees—Our Most Important Resource

and aging population, as well as an insufficient number ofworkers. The natural environment is another issue to consider,with global warming leading to the growing threat of climatechange and natural disasters.
With the adoption of global frameworks such as theSustainable Development Goals (SDGs) and the Paris
Agreement, businesses are expected to strengthen theircommitment to addressing environmental and social issues
surrounding society. While taking on such serious issues

CSR Promotion Structure
Our Group Vision

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

Four Key Themes for CSR
Safety/Security

Environment

Community

Health and Well-being

CSR Promotion Foundation
Human Capital: Creating wellness and developing diverse human resources
Management Structure: Corporate governance, compliance, and risk management

32

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 201833

Message from the COO & CSR Officer

will allow us to differentiate our goods and services from othercompanies and raise our level of competitiveness. As for thedecrease in available labor, major innovations are alreadyunderway, through work style reforms that improve productivity,and labor force substitution with IoT and AI.
As we pursue global initiatives such as the SDGs and theParis Agreement, we are making efforts to bolster our environmental awareness, disaster prevention functions, and business
continuity plans. Environmental awareness tends to lead toprogressively higher costs. These efforts, however, also leadto the development of low-carbon, environmentally conscious
goods and services. These developments can provide newvalue by being environmentally and people friendly, and throughthe economic benefits delivered to customers and society.
Local revitalization and compact city development are being
promoted in order to breathe life into local communities. But
regardless of whether the target is a city center or a rural area,
we are focused on developing a multifunctional and highly
convenient urban-type compact town, where people can live,
work, communicate, and interact. This type of compact town
contributes to the rejuvenation of local communities. Thesevarious projects are our starting point and as laid out in ourGroup Vision “we build cities—dynamic stages that connect
today with tomorrow’s possibilities,” we hope the residents will“embrace every moment of life’s pursuits” by creating communities and managing these projects. Through our businessactivities, we will fulfill our corporate social responsibility.

A Year of Strengthening CSR and ESG Initiatives
The Nomura Real Estate Group analyzed and identified social
issues and decided upon four key themes for CSR as focal
points for our initiatives. These key themes are Safety/Security,
Environment, Community, and Health and Well-being.
Additionally, we have established two CSR Promotion
Foundations: Human Capital, and Management Structure,

which encompasses corporate governance, compliance, andother management issues.
To achieve a sustainable business, nothing is more important than the health of its employees, and it is absolutely
essential that they perform their duties with vitality. In addition,
implementing work style reforms helps to increase productivity,

Details of CSR Initiatives Main Initiatives for the Fiscal Year Ended March, 31, 2018
As part of a Companywide effort to strengthen CSR initiatives, we held
CSR Committee (four times a year), CSR Promotion Committee (threetimes a year), and various other meetings within each department during
the fiscal year ended March 31, 2018. During these meetings, we conducted a context analysis of major CSR/ESG evaluations conducted byexternal parties in order to gain an objective understanding of the Group’s
CSR activities. Based on these activities, we have formulated a GroupCSR and ESG policy and Group CSR Procurement Guidelines.
Policies for Activities for the Fiscal Year Ending March 31, 2019
• Employ a PDCA cycle for Group CSR and ESG policy goals• Begin implementation of Group CSR Procurement Guidelines• Reinforce employees’ understanding of CSR promotion activities• Strengthen response to climate change

34

Nomura Real Estate Holdings, Inc. Integrated Report 2018

maintain work-life balance, and provide employees with moretime for their private life. This in turn creates self-satisfaction in
their work and life and motivation for self-learning. In this way,
I am confident that the Company will expand through the selfdevelopment of its employees, and that this sort of positive cycle
will increase corporate value and lead to sustainable growth.
In the fiscal year ended March 31, 2018, in order to enhance
our CSR and ESG activities on a Groupwide level, we shared
our Group policy with all employees to ensure that everyone has
this policy in mind when conducting their daily business activities. As part of this, each business unit has established its own
concrete goals rooted in our key themes and the Sustainable
Development Goals (SDGs). To set these goals, we need toquantify their related elements because in some fields, we areunsure about our current stance toward the targets we will set.
Thus, we will measure our position and establish our objectives.
Moreover, to further our CSR and ESG efforts, we require
cooperation not just within the Company but from our business
partners and suppliers. With this in mind, we formulated ourGroup CSR Procurement Guidelines in the fiscal year ended
March 31, 2018, and will begin its implementation in the fiscal
year ending March 31, 2019. The Group’s businesses, ranging

from development and construction to operation and management, demand a variety of technologies and services, and thisrequires cooperation with architecture companies, construction
companies, service providers, and other business partners andsuppliers. It is important to bear in mind environmental andsocial issues throughout the entire supply chain while staying
rooted in the Group CSR Procurement Guidelines. We hope forthe understanding and cooperation of our business partners
and suppliers in this regard.
In the fiscal year ending March 31, 2019, we will ramp up
our response to environmental issues even further. We havealready set up an environmental subcommittee led by theofficers responsible for quality management and architecturaldesign. This subcommittee is reviewing other measures suchas environmental management systems and medium- to longterm reduction plans for energy consumption and CO2 emissions. As we carry out these efforts, we will employ a PDCA
(Plan-Do-Check-Act) cycle, requiring us to first assess ourposition as a company, set our goals, review results and factors, and then set new goals. This will serve our efforts as wework to bring our CSR and ESG initiatives to a new level.

Toward the Next Stage of Growthcomes with risks, I believe that resolving these issues as a partof our business activities serves to meet the needs of customers
and society, leads to the development of goods and services,and creates new business opportunities. Falling demand in theJapanese economy due to the population decline is becoming
a serious issue, but at the same time we are also seeing values
and lifestyles become more diversified. Meeting these needs

Message from the COO & CSR Officer

Increased Value for Stakeholders and Ensuring Group Growth
Connecting with stakeholders is very important for companies
to achieve sustainable growth. Since we are a real estate business, we are responsible for urban planning and service management, and our stakeholders cover an extremely wide rangeof supporting industries. For that reason, we are constantly
making efforts to continue creating new value alongside a wide
range of stakeholders. In capital markets, investments emphasizing ESG are getting popular, meaning that it is important topromote our investment activities through ESG initiatives andproper disclosure. I would like to both contribute to society
through active efforts in our business practices toward CSR
and ESG and respond to the needs of investors, shareholders,and other stakeholders.
Going forward, we will continue to take on new challenges
and changes in order to gain the trust and meet the expectations of our stakeholders going forward as a highly unique andattractive corporate group.

Our Promises to Stakeholders Group CSR Procurement Guidelines
I.	Establish an effective
compliance program
II. Respect human rights
III.	Practice fair business activities
IV. Consider the environment
V. Ensure and improve quality
VI. Ensure information security
VII.	Maintain a reporting system forillegal activities
VIII.	Build a business continuity plan (BCP)

Customers andLocal Communities

Shareholders
and Investors

To provide safe, comfortable, and high-quality
goods and services tolocal communities andthe customers who live,
work, and gather in thecities we create.

To increase corporate
value and realize sustainable growth for theshareholders and investors who supply us withcapital.

Business Partners

Employees

Society

To gain the cooperationand expertise of a varietyof business partners as
we create a cities andpromote operations.

To build an organizationthat promotes health,creates purpose, andbuilds motivation for ourhuman resources—thefoundation of our business—and provide themeans for each and every
employee to perform to
the best of their ability
and take on challenges
that create new value.

To utilize business activities to resolve social
issues and fulfill our
responsibilities to society.

Nomura Real Estate Holdings, Inc. Integrated Report 201835

Creating Social and Environmental Value through Business Activities

The Nomura Real Estate Group’s Policy on CSR
CSR
Theme

Environment

formulated a Group policy and established a set of material
issues for these themes andfoundations. In addition, we set specific goals connected to the
Sustainable Development Goals (SDGs) and actual businessactivities. These material issues and goals were incorporated
into our newly formulated The Nomura Real Estate Group’s
Policy on CSR, which was developed from an ESG perspective. We will promote CSR activities by utilizing the PDCA cyclein accordance with this policy.

E

Four
key themes

Environment

STEP 1

Review social issues extensively

STEP 2

Identify key themes for the Group

Identify key themes via CSR Committee meetings, such as impact on the Company’sbusiness, relevance, and degree of risk

S
Community

Importance for our business

Health andWell-being

STEP 3

STEP 4

STEP 5

Identify key themes forstakeholders

Finalize four key themes

Identify activities and business
related to each key theme

STEP 6

Evaluate and discuss issues

STEP 7

Determine and approve policies
and materiality

Identify key themes via questionnaires and feedback from stakeholders pertaining
to expectations for the Company and social issues that we must address.

Identify four key themes by allocation based on importance from theperspectives of stakeholders and the Company

The Nomura Real Estate Group aims to provide
wellness management so that all its executives
and employees can carry out their work energetically and in good physical and mental health,which leads to sustainable corporate growth.
In this way, it contributes to the realization of asustainable society, the continuation of businessactivities, and increased corporate value. The
Group also promotes the occupational safety
and health maintenance of its employees andsuppliers, recognizing that those matters areimportant management issues. Also, recognizingthat the innovations brought about by diversity areimportant for the continued creation of new value,
the Group works to promote diversity and create
fair and rewarding workplaces so that humancapital with a variety of perspectives and ways ofthinking, regardless of their attributes, can fully
demonstrate their personalities and capabilities.

Conduct evaluations and hold discussions based on policy trends and internationalframeworks, such as the SDGs and the SASB
Determine policies and material issues after the CSR Committee and the CSR
Promotion Council conclude discussions, and submit to the Board of Directors
for approval

The 17 SDGs were adopted at the United Nations Sustainable Development
Summit in September 2015. Worldwide cooperation is required to achievethese goals and the Group understands the importance of contributing totheir attainment. Through efforts guided by the four key themes and theirmateriality, we will contribute to achieving the SDGs.
G

Nomura Real Estate Holdings, Inc. Integrated Report 2018

The Nomura Real Estate Group recognizes thatthe declining birth rate and aging population,
globalization, and the diversification of individual
values and lifestyles are important social issues.
It communicates with stakeholders and provides
products and services for a healthy and comfortable life to all sorts of people, regardless of their
attributes. In that way, it respects diversity andcontributes to the realization of a healthy andvigorous society.

Determine policies and priorities for each key theme to promote CSR activities
Identify activities and business for each key theme via the CSR Promotion Council

Achieving the Sustainable Development Goals (SDGs)

36

The Nomura Real Estate Group recognizes that
community dysfunction and reduced vitality, andthe related weakening of communities due tofactors such as the declining birth rate and aging
population and the increase in the number ofvacant dwellings are important social issues.
The Group fosters connections with customers
and local communities and supports the nurturingof communities by means of building design
initiatives and operational services. Throughthese measures, it is promoting smooth mutual
assistance in emergencies and community
revitalization, and contributing to the realizationof a cooperative society.

Management Structure

Safety/Security

Identify and select social issues highly relevant to business by identifyingsocial issues referring to international frameworks, such as the GRI Guidelines
and ISO 26000

Two Promotion Foundations

Importance for our stakeholders

five through seven and formulated the Nomura Real Estate Group’s Policy on CSR and a set of material issues.

The Nomura Real Estate Group recognizes thatbuilding and infrastructure deterioration andobsolescence, reduced urban functions, andincreased natural disasters are important social
issues. It contributes to the realization of the safety
and security of customers and local communities
through the provision of products and services
based on appropriate quality management andsustainable urban development. It also promotes
the creation of work and living environments inwhich business and daily living can continue evenin times of emergency.

Community

Four key themes for CSR were selected in the fiscal year ended March 31, 2016. In the fiscal year ended March 31, 2018, we added steps

The Nomura Real Estate Group recognizes thatclimate change, the depletion of natural resources,
and the collapsing of ecosystems are importantsocial issues. It contributes to the realization ofa sustainable society through environmentallyfriendly urban development, including energysaving and low-carbon initiatives as well as theuse of renewal energy and appropriate utilizationof resources. It also complies with environmental
laws, ordinances, and regulations, and promotes
appropriate environmental management.

Health and Well-being

Process for Formulating Our Four Key Themes, Policies, and Material Issues

Group Policy

Human Capital

Four Key Themes for CSR

management plans and business activities. Further, we havealso established the CSR Promotion Council, which is responsible for implementing the policies decided by the CSR
Committee. The CSR Promotion Council comprises membersof each business unit appointed by the Chairman of the CSR
Committee who are responsible for business promotion in theirunit and implement activities, provide management, and raiseawareness of CSR among employees.

Safety/Security

CSR Management System
To further strengthen and promote its CSR activities, theCompany established the CSR Committee (Chairman:
Executive Vice President and Representative Director, GroupCOO of Nomura Real Estate Holdings, Inc.). The committee
comprises Directors, Executive Officers, and External Directors
selected by the Board of Directors and is in charge of deliberating on and establishing policies and action plans concerning
CSR and ESG. The reviews conducted by the committee arereported to the Board of Directors and reflected in

Toward the Next Stage of Growth

Our Group Vision is at the forefront of our Group philosophy.
We aim to create new value for society by realizing our Group
Vision through business, and we believe the way to do that isthrough the promotion of CSR activities. Up to this point, wehave promoted our CSR activities using a system based onfour key themes for CSR—Safety/Security, Community,
Environment, and Health and Well-being, as well as our two
promotion foundations—Human Capital and Management
Structure. In the fiscal year ended March 31, 2018, weCreating Social and Environmental Value through Business Activities

The Nomura Real Estate Group promotes thestrengthening of compliance as well as risk
management and corporate governance,
recognizing that they are important management
issues for the realization of a sustainable society,the continuation of business activities, andincreased corporate value. It also conducts its
business activities with respect for the humanrights of all people, including customers, local
communities, employees, and suppliers.

Material Issues

Group Targets / Indicators

Upgrades to environmental management

Acquiring of advanced environmental
management certification(DBJ Green Building, LEED, CASBEE, etc.)

Responding to climate change

Promoting solar power generation

Related SDGs

Reducing CO2 emissions

Reducing energy use
Effective utilization of water resources

Reducing water usage

Consideration for biodiversity

Acquiring biodiversity certification(ABINC / JHEP / SEGES)

Appropriate utilization of resources andpollution control

Reducing waste discharge
Promoting use of domestic and
FSC certified timber

Improved safety/security in design andconstruction

Complying with design and construction
standards and quality manuals

Improved quality of safety/security in operationand management

Improved management quality and expanding
after-sales service

Initiatives for longer life and increased durability

Providing of long life and high durability products
and services

Safety and security in disasters

Expanding of disaster preparedness

Expanding of planning and design forrevitalization of communities

Care for communities and support forrevitalization
Supporting revitalization of communities inoperations and management

Response to aging population anddiversity and support for health

Improved customer satisfaction and comfort

Promoting universal design
Supporting health and increasing healthy life
expectancy
Promoting communication to improve customer
satisfaction
Improving comfort
Preventing work-related accidents

Health and safety of employees

Promoting thorough physical andmental health management
Promoting taking of paid leave
Preventing overwork
Promoting active participation by women

Promotion of diversity

Supporting childcare and nursing care
Promoting hiring of seniors andpeople with disabilities

Creation of fair and rewarding workplaces
Improvements to human capital
Supplier safety

Implementing fair assessment and compensation
Improving employee satisfaction
Enhancing cultivation of human capitalComplying with CSR procurement guidelines
Ensuring supplier safety

Corporate governance

Ensuring diversity in Board of Directors

ComplianceObserving compliance requirements

Risk management

Implementing thorough risk management

Human rights

Implementing thorough human rights training

Improved supplier management

Compliance with CSR procurement guidelines

Nomura Real Estate Holdings, Inc. Integrated Report 201837

Creating New Social and Environmental Value through Business

Creating New Social and Environmental Value through Business

Investment Management Business Unit

Safety/Security

Environment

Community

Toward the Next Stage of Growth

CSR Activities by Business Unit

Health andWell-being

Accelerating Efforts Related to Sustainability

Residential Development Business Unit

Safety/Security

Environment

Community

Health andWell-being

Nomura Real Estate Asset Management Co., Ltd. is engaged in ESG-friendly
operations to improve the value of portfolio assets over the medium to long term.
In 2017, and for the second consecutive year, Nomura Real Estate Master Fund,
Inc. and Nomura Real Estate Private REIT, Inc. both earned a Green Star from the
Global Real Estate Sustainability Benchmark (GRESB), the highest out of four
ratings granted by GRESB. In addition, both companies received 5-Star ratings
due to the ranking of their overall score.
Further, Nomura Real Estate Asset Management signed the Principles for
Responsible Investment (PRI) and the United Nations Environment Programme
Finance Initiative (UNEP FI) in December 2017. The signing of the PRI represents
the first in Japan for an asset management company that is affiliated with a realestate company.

Undertaking Smart Town Development for a Sustainable Society

PROUD Tsunashima SST

Leasing Business Unit

PROUD Tsunashima Sustainable Smart Town (SST) was developed withthe concept of “a town that is shaping the future” and is accordingly an“urban smart city” where people can build relationships to pursue abetter future. Tsunashima SST serves as the only condominium in thesmart town and offers various products that represent many new thingsin the PROUD Series. In doing so, Tsunashima SST facilitates “nextgeneration living,” to address customer needs and accommodate achanging society. As an example, we have introduced the Private Viera
Home Device Controller, utilizing the IoT to consolidate into one device
control over television viewing and sound, intercom response, and homeelectronics, and combined it with energy information tracking. This technology increases opportunities for users to engage with energy information, raising residents’ awareness and, in turn, serving to reduce theduration and amount of energy use. Accordingly, it also serves the purpose of creating a residence that offers high quality of life (QOL), focusing
on more enjoyable time spent with the family. On the environmental side,
Tsunashima SST has been the recipient of a variety of certifications. In
particular, Tsunashima SST is the first condominium in Japan to receive
LEED® pre-certification. This pre-certification, part of a global environmental certification program, was granted after a review of the planningstage of Tsunashima SST.

Safety/Security

Environment

Community

Health andWell-being

Property Brokerage & CRE Business Unit

Shibaura 1-chome Rebuilding Plan (tentative name)Agreement signing ceremony (far left, Director of
Nomura Real Estate Urban Net)

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Community

Nomura Real Estate Urban Net Co., Ltd. and the Tokyo Metropolitan Government
concluded “The Urban Development Agreement to Support the Elderly throughCollaboration between the City and Business Operators.” As the company, which
deals primarily with real estate brokerage for individuals and real estate related
consulting, has many opportunities to visit customers’ homes, they monitor thehealth of the elderly in their day-to-day business activities. Moreover, in June 2018
the first floor of our property brokerage branches in Tokyo were designated as“Kodomo 110 Ban no Ie” (children’s refuge center) locations where children can go
if they feel in danger. Also, in April 2017 we joined the Shinagawa CSR Promotion
Committee, and through the activities of its members and those of other groups, we
are working to deal with such social issues as the declining birthrate and aging
population.

Property & Facility Management Business Unit

Safety/Security

Community

Health andWell-being

Maintaining and Improving the Health of the Elderly

Residents exercising at OUKAS Funabashi

38

Environment

Contributing to the Community with Administrative Bodies

Building a Base for International Tourism and Business througha Bustling Waterfront and Revitalized Water Transport
The tentatively named Shibaura 1-chome Rebuilding Plan, centeredaround the Hamamatsucho Building (also known as the Toshiba Building),
is a project to redevelop offices, hotels, residences, and retail facilities
over a period of roughly 10 years. We will develop the project from theperspective of all our key themes by making use of the existing waterfront, greenery, scenery, and other features of the area. In terms of safety
and security, we aim to improve our disaster prevention measures bystrengthening our fundamental disaster response system. This effort will
involve setting up both a space for people stranded after a disaster anda stockpile warehouse as well as introducing a powerful, self-sustaining
distributed energy system for emergency situations. We will also contribute in terms of the environment by utilizing next-generation energy technology and establishing an energy network. These efforts will promote
efficient energy use with lower heat load. Furthermore, we will contributeto revitalizing water transport in the area by constructing harbor andterminal facilities for small-sized passenger boats.

Safety/Security

Nomura Real Estate Wellness Co., Ltd. has developed OUKAS, a new brand ofelderly housing, based on the creation of towns where seniors can live with vitality
and maintain their health. OUKAS was developed to extend healthy living and support independent lifestyles. In October 2017, the first elderly housing, OUKAS
Funabashi, opened next to Funabashi Morino City, which houses the PROUD
Funabashi condominium of roughly 1,500 units. And thanks to its location, OUKAS
Funabashi also functions as a place of generational exchange. Furthermore, OUKAS
Funabashi takes advantage of Group company collaboration by offering residents a
health program jointly developed with Nomura Real Estate Life & Sports Co., Ltd. By
allowing residents to lead healthy lives, and to both live and stay active longer, we
are working effectively to reduce the number of people who require care, lower
social security costs, and resolve a variety of social issues connected to aging.

Nomura Real Estate Holdings, Inc. Integrated Report 201839

Human Resource Management

Human Resource Management

In 2015, the Nomura Real Estate Group announced its Mid- toLong-term Business Plan for the period from April 2016 to
March 2025. In fulfilling this plan, it is important to achievesustainable growth by offering innovative products and services
to meet various customer needs. To this end, we will raise thelevel of our human resources. Each and every Group employee
bringing diverse values and viewpoints to initiatives is a vital
part of generating new ideas to continue creating valuable
products and services. As such, the Group considers humanresources an essential component of its promotion infrastructure
and is putting its energy into reforming work styles, cultivating
human resources, and promoting diversity in order to create awork climate where employees can express a range of thoughts
and values, regardless of gender, age, job title, or disability.

Overview of Wellness Management

Employee Happiness and Corporate Growth
We realize employee happiness and corporate growththrough work-style reforms and diversity management.

Work-style Reforms

1. Compliance with laws and regulations•	We will ensure compliance with all applicable employment
laws and regulations, including but not limited to the labor
management agreement regarding overtime hours.
Top management will convey this message on a continual
basis to raise awareness among all employees to ensure
full compliance.
2.	Direct communication among directors, officers,
and employees to build relationships and improve
working conditions•	Hold “top management meetings,” where directors andofficers meet with 10 employees at all job levels. We will
improve working conditions based on the opinions ofthese employees.

Diversity• Enhancing work–life balance by improving
productivity leads to increased employee
happiness and motivation• Become a corporate group that contributes to
employee growth and satisfaction• Build an environment where each person can
maximize their abilities• Cultivate a work climate that accepts andexpresses diverse values

Wellness

Wellness Management
Despite our continuous efforts to promote work-style reforms
and diversity, in December 2017 the Group company Nomura
Real Estate Development Co., Ltd. received corrective recommendations and guidance regarding the Discretionary Working
System for Management-Related Work from the Labor
Standards Inspection Office. The Group regards the treatmentof labor to be a very serious issue. We will continue to aim for“health and wellness management” so that all employees canwork creatively with a healthy body and mind, which will lead tosustainable corporate growth.

Toward the Next Stage of Growth

Basic Policy

Employees can work creatively with a healthy body and mind = our fundamental policy

3.	Ensuring mental and physical well-being(1)	Raising awareness of mental and physical well-being
among all employees				 •	Implement “wellness hour”—a web-based training
program for all employees to educate them on labor
management and basic health knowledge(2)	Monitoring of employees’ mental and physical status bydirectors, officers, and supervisors				 •	Conduct “wellness meetings” where supervisors anddepartment heads meet regularly with the humanresources department(3)	Enhancing of health consulting function and medical
check function				 •	Increase the number of nurses and industrial
physicians at our health counseling facilities andstation nurses at our main headquarters
To put the points set out above into practice, in July 2018 weestablished the “Wellness Promotion Section” under the Group
Human Resources Department of Nomura Real Estate
Holdings, Inc. and the Human Resources Departmentof the Company.

Specific Initiatives to Promote Work-style Reforms (Implemented by each company)
Initiatives to enable flexible work styles in terms of hours and location
1. Promotion of effective use of working hours• Promotion of flexible working hours system

2. Increase in choices of working location• Introduction of telecommuting and work-from-home program• Utilization of satellite offices

Initiatives to enable appropriate work–life balance
1. Encouraging of annual leave use•	Introduction of regular holidays at sales offices to allow forscheduled leave•	Introduction of various systems to encourage employees totake leave (e.g., refresh holidays, weekend holidays, public
holidays, anniversary holidays, birthday holidays)

2. Improvement of awareness of working hours•	Creation of visual representations of working hours,
introduction of “no overtime” days•	Introduction of system comprising registered leaving times
and the compulsory shutdown of personal computers

Implementation of Plan-Do-Check-Act (PDCA) cycle to improve productivity•	Promotion of “inventory clearance” and prioritization ofwork in progress•	Delegation of authority, allocation of responsibilities

Other actions•	Introduction of rules to assist employees with child-related andcaregiving duties (staggered working hours, requests to change
roles and duties, subsidized babysitting, paternity leave formale employees (holidays for child’s birthday, leave for childsupport reasons, etc.))

40

Nomura Real Estate Holdings, Inc. Integrated Report 2018•	Establishment of internal communication space within our officelocated at Shinjuku Nomura Building (see page 42)

Nomura Real Estate Holdings, Inc. Integrated Report 201841

Human Resource Management

Human Resource Management

Reforming the Work Styles of Group Employees
Hard Aspects—Establishing ARUMON, a Second Space for Employees
In October 2016, the Nomura Real Estate Group established ARUMON, a 300-m2 “second space” for employees,on the 41st floor of Shinjuku Nomura Building, the headquarters for Group companies such as Nomura Real Estate
Development, Nomura Real Estate Urban Net, and Nomura
Urban Space Partners. “ARUMON” gets its name fromthe reverse of NOMURA, and represents a space where
employees can experiment with a reversal of more or lessconventional ideas and practice a work style more suited
to themselves. ARUMON offers multiple meeting spaces,“focus booths” with individual desks, and a library workshop with a multi-functional area that can be used for
creative purposes. In addition, Group employees can use
this space as a satellite office.
Outside of work-related applications, ARUMON also
acts as a place to promote health, through morning exercises and breakfast meetings; a place to study, including
TOEIC study groups; and a place for communication,
hosting BAR ARUMON and other functions.

Encouraging the Active Participation of Women

Hiring Seniors and People with Disabilities

The Nomura Real Estate Group is working to support theactive participation of women based on the view that incorporating diverse perspectives into business is a vital part of creating new corporate value. As of April 1, 2018, our efforts
in this regard have led to a female manager ratio of 5.45% anda female junior manager ratio of 15.08%.* In addition, we have
one female director on the Board of Directors of the Group.

The Group makes an active effort to recruit seniors and people
with disabilities. As of June 1, 2018, people with disabilities
represented 1.90% of the total workforce. Moreover, the Groupcurrently employs 404 people aged 60 or over (excluding parttime positions).

* Junior manager: A candidate for manager for the following year

%
40
27.10

25.08

27.74

29.75

28.60

Healthy Business Declaration of Nomura Real Estate
Development Co., Ltd.
Nomura Real Estate Development regards employee healthmanagement from a business administration perspective, andformulated the “Healthy Business Declaration of Nomura Real
Estate Development Co., Ltd.” in October 2017. Also, theCompany president was selected as the chief person responsible for healthy business promotion.

Percentage of Female Employees and Percentage ofFemale Managers

30

Toward the Next Stage of Growth

Column“Healthy Business Declaration of
Nomura Real Estate Development Co., Ltd.”

20

10

5.56

4.37

4.81

5.38

5.45

14

15

16

17

18



(As of April 1)
Percentage of female employees

Percentage of female managers* Certain Group companies have made changes to their manager qualifications
since 2015.
* Data is for the entire Nomura Real Estate Group.

At Nomura Real Estate Development, we believe thathuman resources are our greatest asset, and that thephysical and mental health of our employees is the wellspring for new value creation for future business. Guided
by our corporate philosophy, which gives personnel acentral role, we will promote health management toactively contribute to maintaining and improving the healthof our employees.

Views of ARUMON (from left): meeting space, library workshop, night bar

Support for Childbirth, Childcare, and Caregiving

Soft Aspects—Work-style Reform through the Intranet
The Nomura Real Estate Group launched and manages
the Nomura Real Estate Group Work-style Reforms siteon the Company intranet, which all employees can view.
Within the site, employees can access pages on FAQ,

proposing reforms and improving efficiency quickly, cases
from other companies, and a recommended reading list.
Through these varied functions, we are working to raiseawareness on employee work-style reforms.

The Group has set up a personnel system that enables
employees to continue working after major life events, suchas childbirth, as well as with duties, such as childcare andcaregiving. Furthermore, this system is disclosed on the
Company intranet to spread awareness. Moreover, we foster awork environment where all employees feel comfortable utilizing this system without prejudice.
Number of Employees Taking Parental Leave
People160

Management through the Diversity Promotion
Committee (Diversity Challenge)
In 2013, Nomura Real Estate Development established theDiversity Promotion Committee (also known as “Nomura
Diversity Challenge”), chaired by then-President Kamezo Nakai(currently, executive advisor to Nomura Real Estate
Development). Through this committee, proposals were madefrom a Companywide perspective regarding work-style reformrelated issues and working environment improvements. We
have made the following revisions based on these proposals.

139

120

119

109

99

Major Revisions Regarding Human Resource Matters
Implemented up to the Fiscal Year Ended March 31, 2016
through Nomura Diversity Challenge (Abridged)

86
80

40
The Nomura Real Estate Group Work-style Reforms site
14
15
16

* Data is for the entire Nomura Real Estate Group.

17

18(Years ended March 31)

Number of Employees Taking Nursing Care Leave(Years ended March 31) (People)
2014

2015

2016

2017

2018

2

1

1

2

4

• Revisions related to contract employees• Revisions related to nursing care
• Revisions related to reemployment• Revisions related to childcare support

Nomura Diversity
Challenge logo

* Data is for the entire Nomura Real Estate Group.

42

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 201843

Section 2

Progress of Mid- to Long-term
Business Plan and Business Units

46

Message from the CFO

52

At a Glance

54

Residential Development Business Unit

58

Leasing Business Unit

62

Investment Management Business Unit

66

Property Brokerage & CRE Business Unit70

 roperty & Facility Management
P
Business Unit

Progress of Mid- to Long-term Business Plan and Business Units

This section details the progress of our mid- tolong-term business plan Creating Value through
Change, which was launched in FY17/3 and runs
through to FY25/3, in line with analysis of ourperformance and financial strategies.

74	Main Topics from the Fiscal Year Ended
March 31, 2018



44

Nomura Real Estate Holdings, Inc. Integrated Report 2018

PROUD TOWER Nagoya Sakae

Nomura Real Estate Holdings, Inc. Integrated Report 201845

Message from the CFO

Message from the CFO

Aiming for Continuous Development
While Balancing Growth Investment
and Shareholder Returns

for reviewing the strategies and policies for Phase 2. Taking
into account the current situation of each business unit, I would
like to begin preparations for growth in our next phase.

buildings,*1 building up a good reputation in the market. Totalland bank for sale has reached a value of ¥300.0 billion,*2
which exceeds our Mid- to Long-term Business Plan forecast.
Due to the increased value of our own properties, rent andleasing levels are also showing positive trends.
The fiscal year ending March 31, 2019, the final year of
Phase 1 of our Mid- to Long-term Business Plan, is a period*1 As of March 31, 2018; includes projects in planning stage*2 As of March 31, 2018; based on total project costs

A business portfolio that balances risk diversificationand investment efficiency
Hiroyuki Kimura

Progress of the Mid- to Long-term Business Plan
The fiscal year ended March 31, 2018 marked the second
year of our Mid- to Long-term Business Plan. Earnings in the
Residential Development Business Unit were lower than our
projections at the beginning of the fiscal year amid market
fluctuations, but this shortfall was offset by solid performancesin the Leasing Business Unit and the Service & Management
Sector. As a result, we achieved operating profit of ¥76.6 billion
and profit attributable to owners of parent of ¥46.0 billion,
which were roughly at or on the same level as our overall earnings forecasts. This outcome was made possible by our wellbalanced business portfolio. As far as our future investment isconcerned, our “Initiatives for Future Growth” (Please referto pages 24 to 31 for details.) are being carried out steadily.
The ¥300 billion investment plan for overseas businesses, tobe completed by the fiscal year ending 2025, is moving forward as planned. All of our target cities in Southeast Asia haveachieved remarkable growth in per capita GDP and improved
standards of living, reaching their development phases in which
both the quality and the quantity of properties are required.
These areas should prove to be showcases for the businessexpertise of the Group. Our key to success is the formationof joint ventures with good local developers, combined withproper risk management. With regard to our domestic business,
property development for sale amounted to 180 completed

ROA / ROE

Operating Profit by Segment and Business Model%

Billions of yen

9.4
9

4.6

Residential
Development
Business Unit
¥24.5 billion

Business Characteristics• High asset efficiency

Property sales
business(Year ended March 31,
2018)• Volatility of earnings

Leasing businessLeasing
Business Unit
¥35.2 billion

3

14

15

16

17



46

Companywide

Service &Management
Sector
¥21.4 billion¥76.6 billion

6

ROA

Basic Approach to Revenue Growth
Return12

In the fiscal year ended March 31, 2018, we prioritized therecovery of the pace of condominium contract signings, which
once was tapered down due to rising sales prices. As I statedearlier, condominium sales are part of a business prone toshort-term market fluctuations. By recovering speed, we wereable to begin a new business cycle based on the market
conditions at the time. As a result, the number of contracts
increased 21.9% year on year, for a total of 5,917 units,
despite lower earnings than expected in the Residential
Development Business Unit. Moving forward, we will continue
to maintain contract speed while working to recover profit.
Furthermore, maintaining a good balance among thesethree businesses greatly contributes to efficiency. The realestate industry tends to have low asset efficiency. However,management focused on asset efficiency is a distinctive
strength of the Group, as indicated by our Mid- to Long-term
Business Plan, which targets an ROA at above 5% and an
ROE at the 10% level. In the fiscal year ended March 31, 2018,
our ROA was 4.6% and ROE was 9.4%. We will work to maintain these levels.

Progress of Mid- to Long-term Business Plan and Business Units

Director,
Group CFO, Head of Investor Relations

The real estate business involves a large number of mid- andlong-term projects. For that reason, it is important to be prepared for the risks associated with market fluctuations. The
Group aims for distribution of business risks on a Groupwide level by maintaining a balance among its three businessactivities: leasing, property sales, and fees (Please refer topages 12 and 13.). The leasing business secures a stable cash
flow, but the business could be exposed to long-term market
risks, possibly suffering from unrealized losses, depending on
the timing of acquisition and development. If, for instance,sluggish market conditions should continue over a long periodof time, leasing value could deteriorate causing us difficulties infund procurement. On the other hand, the property sales business is prone to short-term market risk, typically over the threeyear period from land acquisition to development and sale.
While short-term PL volatility does exist, the business canmaintain a proper cycle from land acquisition to sale, taking
advantage of the market situation at the time. In addition to thetwo businesses mentioned above, the low-risk fee business isimportant for a well-balanced and diversified business portfolio.

ROE

Nomura Real Estate Holdings, Inc. Integrated Report 201818
(Years ended March 31)• Stable earnings• Asset-heavy business model• Stable earnings

Fee business• Asset-light business model• Gradual growthOuter circle: Operating profit by unit
Inner circle: Operating profit by business model
Property sales
Leasing
Fee

Time

Nomura Real Estate Holdings, Inc. Integrated Report 201847

Message from the CFO

Message from the CFO

Financial strategy and capital policy
thanks to an accumulation of profits, the shareholders’ equity
ratio was 30%, roughly the same level as the previous fiscal
year. In terms of returns to shareholders for the fiscal year
ended March 31, 2018, we increased annual dividends to ¥70
per share, which marks the sixth consecutive year of increased
dividends. In anticipation of stable earnings for the fiscal year
ending March 31, 2019, and in accordance with the policy
stated in our Mid- to Long-term Business Plan, we intend tokeep our payout ratio of 30% and increase annual dividends to¥75 per share. Although the profitability of each business unit issteadily improving, I would like to continue careful managementof balance sheets and create a good balance between investments for growth and returns for shareholders.
* Not including shareholders’ equity on accounting treatment

Acquisition of treasury stock

Meanwhile, in the capital market the Group remained underclose scrutiny as a domestic real estate company because ofdeep concerns over long-term growth in light of the low birthrate and aging population. Under these circumstances, we
examined our stock price levels, financial soundness, andbusiness investment conditions and made the decision toacquire treasury stock.

For our investors
Since taking office as CFO, I have been engaged in IR activities
involving dialogues with many investors. I have found valuable
opinions in these meetings and I think sharing these opinions
within the Company leads to further corporate growth. Goingforward, we will strive to meet the expectations of our investors, optimize capital costs, and realize sustainable corporate
growth. Our goal is to conduct even more meetings with ourinvestors in the future. I ask for your continued understanding
and support moving forward.

Number of Meetings with Investors
Times%
478
500
100

400

80

300

60

38.0

200

We also acquired treasury stock totaling ¥10.0 billion to
improve shareholder returns and capital efficiency. For the fiscal
year ending March 31, 2019, we decided to acquire treasury

stock of up to ¥5.0 billion. Our board members investigatedthe possibility of treasury stock acquisition for over two years
by analyzing feedback from shareholders. As part of the100

Fiscal year ending March 201917

Domestic

Type of shares acquired

Common shares

Total amount¥10.0 billion (completed acquisition)

Type of shares acquired

Common shares

Maximum number of shares that can be acquired

2.5 million shares (upper limit) (percentage of outstanding shares,
excluding treasury shares: 1.33%)

Total shares acquired¥5.0 billion (upper limit)

Acquisition period

April 27, 2018 to March 31, 2019

Acquisition method

Market purchase at Tokyo Stock ExchangeInterest-bearing Debt / Interest Paid

Shareholders’ Equity / Shareholders’ Equity Ratio

Billions of yenBillions of yen

1,000

877.8

Billions of yen

%

600

40

16

501.4
12

450

Overseas

18(Years ended March 31)
With CFO or CEO in attendance (right scale)

Annual Cash Dividends / Dividend Payout Ratio

Stock Price / PBR / PNAV

Yen%
75
80
40
70

YenMultiple

30.0
750

29.1
30

60

3,000

3.0
2,512

30.0
30
2,000

7.3

500

8

300

40

20

16
Fiscal year ended March 201820

Progress of Mid- to Long-term Business Plan and Business Units

Since the fiscal year ended March 31, 2011, we have strengthened our financial base by taking steps to reduce interestbearing debt while increasing fixed-interest debt and prolonging
borrowing periods. Since the fiscal year ended March 31, 2016,
interest-bearing debt has been increasing due to increased
investments, but interest paid has been declining, in the lowinterest environment. By taking advantage of a good market
environment, we raised funds through publicly offered hybrid
corporate bonds and loans during the period between Marchand April 2018, diversifying our procurement method. Fifty
percent of these bonds and loans are labeled as certified capital for rating purposes. Thanks to good timing, I believe wewere able to procure the necessary funds for future strategic
investments, which might require significant funds. Due to the
expansion of assets and liabilities in our balance sheet, interest-bearing debt increased ¥67.7 billion year on year. However,Mid- to Long-term Business Plan, the Group plans to invest¥1.0 trillion, which anticipates coming demand for significant
funds. In order to facilitate the stable procurement of necessary
funds, it is important that we secure good credit from financial
institutions, which requires the financial discipline to maintaina shareholders’ equity ratio of 30%. We also have to consider
the decrease of shareholders’ equity due to the acquisitionof treasury stock.

40

2.0

20
0.97
1,000

250

4

14

15

16

17


Interest-bearing debt

48

Interest paid (right scale)

Nomura Real Estate Holdings, Inc. Integrated Report 201818
(As of March 31)

150

10

14

15

16

17


Shareholders’ equity

Shareholders’ equity ratio (right scale)18(As of March 31)

20

1.0

10

15

Annual cash dividends

19 (forecast)
18(Years ended / ending March 31)
Dividend payout ratio (right scale)

16

0.75

12

17

13

14



15

16

17

18
(As of March 31)

Stock price at end of fiscal year
PBR (right scale)
PNAV (right scale)

Nomura Real Estate Holdings, Inc. Integrated Report 201849

Message from the CFO

References

Message from the CFO

Investment Plan

(Formulated November 2015)

Mid- to Long-term Business Plan (–2025/3)—Creating Value through Change

Total Assets
Billions of yenPhase 33,000

Start of Mid- to Long-term
Business Plan

Phase 2Phase 1

Our Group Vision

Key Strategy (1)Integrating all that is precious to people and communities, we build cities—dynamic stages that connect todaywith tomorrow’s possibilities—and embrace every
moment of life’s pursuits. We create new value, social
value, and, above all, real value.

Expand business volume and business domains
in the Development Sector

1,500

Key Strategy (2)16/3

Our Growth Model
Key Strategy (3)Implementing a growth model that emphasizes continuous expansion of revenue with ensured high asset
efficiency by appropriately responding to changes inthe social environment.

Residential Development Business Unit

18/3
19/3
(forecast)Service & Management Sector

22/3(plan)

25/3(plan)

Increase and reinforce customer base via
Groupwide collaboration
Investment PlanResidential
Development
Business Unit

Mid- to Long-term Profit Goals
Operating Profit

Leasing
Business Unit

Billions of yenPhase 3

180.0

17/3
Leasing Business Unit

Progress of Mid- to Long-term Business Plan and Business Units

Demonstrate differentiation and a competitive edgein the Service & Management Sector

Start of Mid- to Long-term
Business Plan

Phase 2Phase 1120.0

¥150.0 billion level

Billions of yen

Phase 1

Phase 2Phase 3

Total

Investment

950.0

1,100.0

1,200.0

3,250.0

Recovery

900.0

1,000.0

1,100.0

3,000.0

Net investment

50.0

100.0

100.0

250.0

Recovery-to-investment ratio

95%

91%

92%

92%

Investment

400.0

600.0

800.0

1,800.0

Recovery

150.0

300.0

400.0

850.0

Net investment

250.0

300.0

400.0

950.0

Recovery-to-investment ratio

38%

50%

50%

47%

50.0-100.0

50.0-100.0

50.0-100.0

200.0

Investment

1,425.0

1,775.0

2,050.0

5,250.0

Recovery

1,050.0

1,300.0

1,500.03,850.0

Net investment

375.0

475.0

550.0

1,400.0

Recovery-to-investment ratio

74%

73%

73%

73%

Strategic Investment¥110.0 billion level
Total¥85.0 billion
60.0

Financial and Capital Policies
16/3
Residential Development Business Unit

17/3

18/3

Leasing Business Unit

19/3
(plan)

22/3(plan)

25/3(plan)

Service & Management Sector

Asset Efficiency

Profit Plan by Business Unit (Operating Profit)

Billions of yen

17/3

18/3

Phase 1

Phase 2Phase 3

Residential Development Business Unit

27.7

24.5

30.0

40.0

44.0-48.0

Leasing Business Unit

32.5

35.2

35.0

40.0

52.0-56.0

Service & Management Sector

22.0

21.4

23.5

35.0

40.0-44.0

Other

(0.0)

(0.0)

0.0

–

–

Adjustment

(5.1)

(4.5)

(3.5)

–

–

Companywide

77.2

76.6

85.0

110.0 level

150.0 level•	Top-class asset efficiency
among major competitors
in the industry

Nomura Real Estate Holdings, Inc. Integrated Report 2018

ROA

5

10

%
level

Financial Soundness•	Financial foundation thatenables flexible growthinvestment

ROE•	Capital efficiency in line withshareholder expectations

%

Over

•	A level that enables sustainablebusiness investment amid
sudden environmental changes

50

Capital Efficiency

Shareholder Returns

Shareholders’ equity ratio

30

%
level

•	Shareholder returns are madein consideration of stability
and sustainability in terms ofcontinuous profit growth

Dividend payout ratio

Approx.

30%

Nomura Real Estate Holdings, Inc. Integrated Report 201851

At a Glance

At a Glance

Operating Revenue(Billions of yen)

Composition of Operating Revenue*• Nomura Real Estate Development Co., Ltd.

16.8%

• PRIME X. Co., Ltd.

Property
Brokerage & CRE
Business Unit

¥35.7 billion

334.5

Total

¥623.7 billion

27.7

housings sold decreased 75, to 607.

57.0%

16/ 3

¥355.4 billion

17/ 3• NREG TOSHIBA BUILDING Co., Ltd.

Leasing
Business Unit

16/ 3

17/ 3

18/ 3

134.9
110.2

31.7

115.0

32.5

35.2

¥2.6 billion, or 8.2%, to ¥35.2 billion, due largely to an increase inleasing revenue in the leasing business from the contributions of• Geo-Akamatsu Co., Ltd.

21.6%

new properties, including the Yokohama Nomura Building (located• Nomura Real Estate Hotels Co., Ltd.

¥134.9 billion

in the Nishi ward of Yokohama, Kanagawa Prefecture), and• NREG TOSHIBA BUILDING FACILITIESCo., Ltd.

increased sales of property development and land for business.

16/ 3

Composition of Operating Profit*

17/ 3

18/ 3

16/ 3

17/ 3

18/ 3

• In the fiscal year ended March 31, 2018, operating revenue fell

Investment Management Business Unit

Property & Facility Management
Business Unit

• Nomura Real Estate Development Co., Ltd.

9.2%

• Nomura Real Estate Asset Management
Co., Ltd.

¥7.0 billion

10.9
9.6

¥200.0 million, or 2.9%, to ¥9.3 billion, and operating profit fell

7.3
9.3

¥100.0 million, or 1.7%, to ¥5.9 billion, due largely to negative
6.0

5.9

¥76.6 billion

fiscal year ended March 31, 2017.
Residential
Development
Business Unit

32.0%

¥24.5 billion

7.7%¥5.9 billion

Property Brokerage & CRE Business Unit

16/ 3

17/ 3

18/ 3

35.3

34.8

35.7

Leasing
Business Unit

16/ 3

17/ 3

18/ 3

• In the fiscal year ended March 31, 2018, operating revenue• Nomura Real Estate Development Co., Ltd.

9.9

increased ¥800.0 million, or 2.5%, to ¥35.7 billion, and operating
9.1• Nomura Real Estate Urban Net Co., Ltd.

8.4

46.0%

17/ 3

Nomura Real Estate Holdings, Inc. Integrated Report 2018

• Nomura Real Estate Development Co., Ltd.

18/ 3

16/ 3

17/ 3

18/ 3

6.9

7.0

• In the fiscal year ended March 31, 2018, operating revenue rose

Property & Facility Management Business Unit

Note: Nomura Real Estate Reform Co., Ltd., which had been classified under
the Residential Development Business Unit, was transferred to theProperty & Facility Management Business Unit in the fiscal year ending
March 31, 2019. In line with this change, the financial results from thefiscal year ended March 31, 2018 have been calculated under the
new classification.

negative repercussions of increased expenses incurred from openand value in the Property Brokerage & CRE Business Unit.

16/ 3* The total shown at the center of the pie chart includes “eliminations or
corporate” amount within segment information. As a result, data differs whentotaling consolidated operating revenue and income from each business unit.
The percentage breakdown is calculated based on the simple total amount ofeach segment. The resulting figure is rounded to the first decimal place,which in some cases may mean the total does not add up to 100.0%.

profit fell ¥600.0 million, or 7.4%, to ¥8.4 billion, due largely to
ing new stores, despite an increase in brokerage transaction volume¥35.2 billion

52repercussions of asset acquisition fees related to the merger of
Nomura Real Estate Master Fund, Inc. and TOP REIT Inc. in the

FY18/3

Investment
Management
Business Unit

¥19.9 billion, or 17.3%, to ¥134.9 billion, and operating profit rose

Progress of Mid- to Long-term Business Plan and Business Units• Nomura Real Estate Development Co., Ltd.

18/ 3

• In the fiscal year ended March 31, 2018, operating revenue rose

Leasing Business Unit

Total

in the gross profit ratio, despite an increase in the number of units
sold in the housing sales business. Condominium units soldResidential
Development
Business Unit

¥9.3 billion¥8.4 billion

profit fell ¥3.2 billion, or 11.8%, to ¥24.5 billion, due to a decrease
24.5

increased 373 year on year, to 5,258, while the number of detached

1.5%

11.0%

Performance Overview

increased ¥25.6 billion, or 7.8%, to ¥355.4 billion, and operating
31.9

FY18/3

Investment
Management
Business Unit

Property
Brokerage & CRE
Business Unit

329.7

355.4

• First Living Assistance Co., Ltd.

¥104.5 billion

5.7%(Billions of yen)

• In the fiscal year ended March 31, 2018, operating revenue

Residential Development Business Unit

Property & Facility Management
Business Unit

Operating Profit

91.5

95.7

104.5

¥100.0 million, or 2.0%, to ¥7.0 billion, due largely to higher income

5.6• Nomura Real Estate Partners Co., Ltd.

¥8.8 billion, or 9.2%, to ¥104.5 billion, and operating profit rosefrom property and facility management related to an increase in the• Nomura Real Estate Life & Sports Co., Ltd.

number of consignments and an increase in construction ordered,• Nomura Real Estate Heating and Cooling
Supply Co., Ltd.

such as large-scale repairs of condominiums.

• Nomura Real Estate Wellness Co., Ltd.
• Nomura Real Estate Amenity Service Co., Ltd.
• NF Power Service Co., Ltd.
16/ 3

17/ 3

18/ 3

16/ 3

17/ 3

18/ 3

Nomura Real Estate Holdings, Inc. Integrated Report 201853

Residential Development
Business Unit
To achieve future growth, we are pursuing multifunctionaland highly convenient urban development, starting withurban-type compact towns. Also, we are accelerating
expansion into new areas, including local core cities andlocations overseas.

Growth Opportunities•	Changes in residential demand with transition of social
environment and daily lifestyles•S hift toward compact towns with population influx tourban centers

Business Risks•	Shrinking residential market due to population decline•	Rising housing prices due to increased land prices andconstruction costs

Daisaku Matsuo
Executive Officer, in Charge of Residential Development Business Unit

Relationship with Stakeholders and Group Synergy

Progress of Mid- to Long-term Business Plan and Business Units

Business Unit Introduction

PROUD CITY OTA-ROKUGOThe Residential Development Business Unit conducts development and sales of residences including condominiums and detachedhousings, operates an Internet advertising agency, and manages the home/living assistance business.
Transfer of landand property

Transfer of landand property

Landowner
General contractor

Major Business

Payment for land andconstruction costs

Housing Sales
PROUD

PROUD SEASONThe condominium brand synonymous with
Nomura Real Estate

Large-scale, urban-type
detached housings

Residential Development
Business Unit

Land acquisition
information

Site information

Leasing
Business Unit

Purchaser of property
Payment from property

Property sales

Property Brokerage& CRE Business Unit

Property
Community building
management

Property & Facility
Management
Business Unit

TopicsBreakdown of Operating Revenue(Fiscal year ended March 31, 2018)
Billions of yen
PROUD Roppongi

PROUD Fuchu Station Arena

PROUD SEASON Seijo Gakuenmae Teien no machi

Housing Sales
We have developed approximately 180,000 housing units mainly in theTokyo metropolitan and Kansai areas featuring our integrated development,
sales, and management system.

18.6(5.2%)

Redevelopment Projects

PROUD TOWERPROUD CITY

OHANA

High-rise tower condominiums

Large-scale condominiums

Suburban-type condominium brand

Involved in approximately 30 redevelopment projects in the Tokyo metropolitan area,
we hold the leading shares in the industry.

336.8(94.8%)

Local Core Cities and Overseas
Utilizing our expertise acquired through our conventional business domains,
we are promoting the development of local core cities with the strong needfor compact towns and prospering Asian countries.

Housing sales
Internet advertising, consignment sales, etc.

Group Companies
PROUD TOWER Nagoya Sakae

54

PROUD CITY Tsukaguchi

Nomura Real Estate Holdings, Inc. Integrated Report 2018OHANA Machida Oak Court• Nomura Real Estate Development Co., Ltd.
• PRIME X. Co., Ltd.

For more information on these Group companies, please see pages 108 and 109.

• First Living Assistance Co., Ltd.

Nomura Real Estate Holdings, Inc. Integrated Report 201855

Residential Development Business Unit

Residential Development Business Unit

Developments in New Regions

Business Policy and Progress of Mid- to Long-term Business Plan
Status
Items

Existing areas(Expand market
share and strengthen
profitability)

New areas(Regional core cities)(Overseas)

Residential
stock business

Achievements

IssuesStrategies• Recovered contracting speed in the
Housing Sales Business• Increased market share forTokyo metropolitan area
• Expanded redevelopment and reconstruction
business (industry leader in number ofhousing-related initiatives)• Continuous securing ofbusiness volume• Strengthening of productdevelopment capabilities• Secured business in local core cities and infour cities• Expanded business in Southeast Asia andachieve strong sales• Establishment of a businesspromotion structure
by utilizing alliances• Strengthening of collaborative
ties with local partners• Expansion and enhancementof information network• Enhance local redevelopment efforts• Shift from investment-focused collaboration tobusiness-focused collaboration• Build a localized business structure• Building profitability in stockbusiness• Strengthen customer relations• Establish a new cooperation system for the
remodeling business• Launched renovation business• Entered into a home/living assistance business• Further improve profitability and speed of sales• Shift from large-volume customers to high-yield sales• Acquire land according to easy access to workand school• Strengthen collaborative ties with local governments
and landowners

Expanding Redevelopment
We continue to secure project volume through various business techniques such as mixed-use development, redevelopment, and housing complex renovation. We are taking steps
to achieve our goal of commercializing 5,300 units by Phase 3,
plus another 4,800 units, which are in the planning stage.
Development of Urban-type Compact Towns
We are working to promote our strategy of establishing multifunctional, highly convenient urban-type compact towns as a
response to the changing social structure arising from several
factors including the declining birthrate and aging population.
We are not only focused on consolidating a variety of functions,such as residences, office buildings, retail and public facilities,
hospitals, and facilities geared toward the elderly, but also onbuilding a community.

Total Units in the Residential Redevelopment Business
Units
8,000
4,700
100

4,000

0

400

2,600

Phase 1
(17–19)Phase 2
(20–22)2,300
Phase 3
(23–25)(Years ended/ending March 31)

Housing land bank*1
Project under planning*2*1 Project schedules determined*2 Project schedules not yet determined

Location Strategy Based On Proximity to Work andChild-friendly Environment
The increasing number of dual-income households has led toa greater ratio of purchasers from the dual-income demographic. The growing ratio of these purchasers has had aconsiderable impact, rising from less than 40% share of themarket to over 50% in the past 10 years. Of dual-income
households, the number of dual-income families with children
has been increasing significantly, and therefore we will work
to provide residential developments that meet the changing
housing needs accompanying the diversifying customer base.

Total Number of Housing Units

91

PROUD Niigata Yoneyama

Niigata-shi, Niigata

70

Mishima Station South Exit Eastern Block
Redevelopment

Mishima-shi, Shizuoka

Approx. 300 (projected)

Okayama Station-front Redevelopment

Okayama-shi, Okayama

Approx. 300 (projected)

Kouyamachi and Miyukicho District
Redevelopment

Shizuoka-shi, Shizuoka

Approx. 200 (projected)

Fukushima Station East Exit Redevelopment
Project

Fukushima-shi, Fukushima

Approx. 200 (projected)

Utsunomiya Station East Exit District
Maintenance Project

Utsunomiya-shi, Tochigi

Approx. 150 (projected)

Okayama Station-front
Redevelopment

PROUD Toyama Jinzu Honmachi

PROUD Niigata Yoneyama

Planned Investments

Ratio of Dual-income Households Purchasing
New Condominiums in Tokyo Metropolitan Area

Project

Main Use

Total Business

Joint Partner

Company
Equity1

Shenyang, China

Residence

Approx. 4,100 units

Mitsubishi Corporation

11.25%

2

Ho Chi Minh, Vietnam

Residence

Approx. 2,300 units

Phu My Hung Development
Daiwa House
Sumitomo Forestry

12.25%

3

Manila, the Philippines

Residence
RetailApprox. 1,400 units
Approx. 30,000 m2

Isetan Mitsukoshi Holdings

20.00%

4

Ratchayothin,
Bangkok, Thailand

Residence

A building: 334 units
B building: 489 units

Origin Property

49.00%

5

On Nut, Bangkok, Thailand

Residence

601 units

Origin Property

49.00%

6

Ramkhamhaeng, Bangkok,
ThailandResidence

685 units

Origin Property

49.00%

Start
Phase I

(FY17/3–19/3)

Phase II

(FY20/3–22/3)

Complete
Phase III(FY23/3–25/3)%• Convenient commuting (good access to central Tokyo and30

railway stations)

25%

28%
26%

• Convenience of daily living (in the vicinity of daily shopping centers)

54%

25

• Childcare environment (sufficient childcare facilities)

38%
20

15

0

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Promotion of Overseas BusinessIn our overseas business, we plan toinvest ¥300.0 billion in both the Residential
Development Business Unit and the Leasing
Business Unit by Phase 3 (March 31, 2025),
as stated in the Mid- to Long-term Business
Plan. In Asian countries with continued economic growth, the priority in the real estatemarket has shifted from a “quantity phase”
to a “quality phase.” With this shift, we can
expect to showcase the expertise we havecultivated in the domestic market. In the fiscal
year ended March 31, 2018, we joined the
housing sales business in Bangkok, Thailand
in cooperation with local developers.

Location

Toyama-shi, Toyama

PROUD Tsunashima Sustainable Smart Town (SST)

Housing features desired by dual-income households

56

Project

PROUD Toyama Jinzu Honmachi

Progress of Mid- to Long-term Business Plan and Business Units

Increase Competitiveness in Existing Domestic Areas

Regarding Our Business in
Local Core Cities
We commenced sales of PROUD Toyama
Jinzu Honmachi and PROUD Niigata
Yoneyama, and both contracts are making
solid progress. We also plan to expand
business in cooperation with theDevelopment Planning Division, including
participation in the Okayama Station-front
Redevelopment Project, managed by the
Kansai Regional Office.

Manila, the Philippines

Bangkok, Thailand(Condominiums / Retail)(Condominiums)

Number of housing units:
approx. 1,400

Units under development:
3 buildings with 2,000 units
in total

Retail floor area:
approx. 30,000 m2

13%Company equity: 49.00%

Company equity: 20.00%

08
09
10
11
12
13
14
15
16
17
(Year)
DINKS
Dual-income households
Source: R esearch by SUUMO of the survey on Tokyo Metropolitan Area’s new condos
contractors trend in 2017”

Nomura Real Estate Holdings, Inc. Integrated Report 201857

Leasing Business Unit

Growth Opportunities•	Increasing demand for redevelopment and reconstructionof aging buildings•	Diversifying office needs, accelerating urban development
in Central Tokyo•D
 iversifying needs for guest lodging due to increase offoreign visitors to JapanWe are promoting property development for sales andconducting large-scale, mixed-use redevelopment,
particularly in urban areas where reconstruction andredevelopment demand is strong.

Business Risks•	Fall in demand for large-scale office buildings, etc.,
due to oversupply•C utbacks in offices due to worsening corporate
performance• Intensifying competition to acquire land for development•R eductions in sales opportunities due to worsening
REIT markets

Minoru Hatada
Executive Officer, in Charge of Leasing Business Unit

Yokohama Nomura Building

Relationship with Stakeholders and Group Synergy

The Leasing Business Unit conducts development, construction, leasing, and management of office buildings and retail facilities,
property development and sales, consignment of planning and operation of retail facilities, and planning and operation of hotels.

Leasing of property

Tenants

Transfer of property

Payment fromleasing fees
Sales of property
development

Landowner
General contractor

Major Businesses

Payment for landand construction costs

Leasing Business Unit

Group REITs
Payment from property
development

Leasing
Major office buildings

Land acquisition
information

Property acquisition
information

Residential
Development
Business Unit

Shinjuku Nomura Building

Yokohama Nomura Building

Nihonbashi Muromachi
Nomura Building

Yokohama Business Park

Hamamatsucho Building

Umeda Sky Building

850,000 m

approx.

Leasable floor area (retail)approx.

2

170,000 m

Breakdown of Operating Revenue(Fiscal year ended March 31, 2018)13.7

Lazona Kawasaki Plaza

1,020,000 m(35.6%)

Property Development and Sales

73.1(54.2%)

Asset brands
Retail facilities

Apartments

Logistics facilities

Offices (PMO, etc.)

41 buildings

Retail facilities (GEMS, etc.)

28 buildings

Condominiums (PROUD FLAT, etc.)

90 buildings

Logistics facilities (Landport, etc.)

21 buildings

180 buildings

58

GEMS Kayabacho

Nomura Real Estate Holdings, Inc. Integrated Report 2018

PROUD FLAT Shin-Osaka

Landport Iwatsuki

Participation in Mixed-use Redevelopment Plan
We have committed to an investment plan with a business scale of ¥650.0 billion
focused on Central Tokyo to be carried out by the fiscal year ending March 31, 2025.
This plan includes the Group’s largest development project, the provisionally titled
Shibaura 1-chome Rebuilding Plan, with a floor space of 550,000 m2.

Leasing
Property development
Property management, etc.

Group Companies
Cumulative total of developments

PMO Shibakoen

Leasing Properties

We have developed 180 buildings through our unique brands. These developments
secure sales revenue every fiscal year and contribute to the growth of Group REITs.

48.0

Offices

Investment
Management
Business Unit

Property Development and Sales(10.2%)

2

Morisia Tsudanuma

Property &Facility
Management
Business Unit

Fund
management

We hold approximately 1 million m2 of leasable property, generating stable income
from leasing revenues.

Billions of yen2

Total leasable floor area
Bono Sagamiono

Property
Brokerage &CREBusiness Unit

Property management andtenant services

TopicsMajor retail facilities
Leasable floor area (office)

Progress of Mid- to Long-term Business Plan and Business Units

Business Unit Introduction• Nomura Real Estate Development Co., Ltd.
• NREG TOSHIBA BUILDING Co., Ltd.

For more information on these Group companies, please see pages 108 and 109.

• Geo-Akamatsu Co., Ltd.
• Nomura Real Estate Hotels Co., Ltd.

• NREG TOSHIBA BUILDING FACILITIESCo., Ltd.

* Above figures include projects in the planning stage.

Nomura Real Estate Holdings, Inc. Integrated Report 201859

Leasing Business Unit

Leasing Business Unit

Promotion of Mixed-use Development BusinessBusiness Policy and Progress of Mid- to Long-term Business Plan

We are actively promoting mixed-use development projects with a focus on Central Tokyo. We are planning to invest ¥900.0 billion into properties for

StatusItems

long-term ownership by the fiscal year ending March 31, 2025, and have committed to investing ¥650.0 billion as of March 31, 2018.

Achievements

IssuesStrategies• Moved forward with large-scale, mixed-use
development projects at such certified National
Strategic Special Zones as Shibaura 1-chome andNihonbashi 1-chome. These projects are expected
to contribute to future earnings• Utilized Group capabilities to acquire quality
properties such as Morisia Tsudanuma• Entered the hotel business under the
NOHGA HOTEL brand and steadily accumulated
business opportunities•M onitoring of schedule forlarge-scale, mixed-use development
projects• Increases in scale of operational
assets, etc.
• Improvement of ROA•A ccumulation of expertise in hotelbusiness operations• Steadily promote and lease large-scale,
mixed-use developments• Further expand retail facilities business• Steady implementation of first Group-operated
hotel and expansion of the hotel business• International growth through strengthening
relationship with tenants

Growth ofsales revenues• Utilized Group synergy to steadily expand stock toapprox. ¥300.0 billion• Expanded development lineup according to locationand market (urban-type retail facilities, etc.)•S teady acquisition of stock• Continuously achieve sales revenue
by expanding business volume

New areas(overseas)• Expanded business in growth markets within
Southeast Asia

• Increases in business opportunities• Steadily promote invested projects• Expand information network to capturebusiness opportunities

Growth ofleasing revenues

Our property development business, which centers around four brands, has been steadily growing with total stock reaching ¥300.0
billion (based on total investment amount). As we continue to utilize the capabilities of the Group, we expect further expansion ofthis business with the aim of achieving development profits.
Property Development Stock

Property Sales

Billions of yen

Billions of yen

Start of Mid- to Long-term Business Plan

400

300.0
300

190.0
200
137.3

40

Stock
increase of¥110.0 billion

250.0

Start of Mid- to Long-term Business Plan

50

Stock

Phase I
(FY17/3–19/3)

Phase II
(FY20/3–22/3)

OfficeRetailApprox. 12,000 m2

Start

Complete

Musashi-Koganei Station 2nd District
Redevelopment

RetailResidential

Approx. 10,000 m2

Start

Complete

Minamikoiwa 6-chome Redevelopment*

RetailResidential

Approx. 4,500 m2

Nishi-Azabu 3-chome Redevelopment*

Hotel
Residential

Approx. 9,900 m2

Start

Shibaura 1-chome Rebuilding Plan
(tentative name)*(Certified as National Strategic Special Zone)

Complex

Approx. 550,000 m2(total floor space)

Start

Kameido 6-chome Plan

RetailResidential

TBD

Nihonbashi 1-chome Central District
Redevelopment*(Certified as National Strategic Special Zone)

OfficeRetailHotelApprox. 374,254 m2(total floor space)

Nishi-Shinjuku 3-chome West Redevelopment*

RetailResidential

Approx. 21,000 m2

Nishi-Nippori Station-front Redevelopment*

RetailResidential

Approx. 18,000 m2

Soto-Kanda 1-chome Redevelopment

OfficeHotel
RetailApprox. 44,000 m2

Iidabashi Station Central Redevelopment

OfficeResidential

Approx. 22,000 m2

Shinbashi Station West Exit Redevelopment*

OfficeRetail

TBD

Nomura Fudosan Ginza Building Rebuilding(Ginza MTR Building)*

OfficeTBD

Toranomon Station-front Redevelopment(Certified as National Strategic Special Zone)

35.3

33.2

30

20

92.4

18/3

BS balance

16/3
Amount sold

9.4

8.7

10

17/3

Area to Be
Acquired

43.3

158.9

100

16/3

Main Use

Project

17/3

10.0

18/3

Start

Phase III(FY23/3–25/3)

Complete

Complete

Complete

Progress of Mid- to Long-term Business Plan and Business Units

Property Development Business

Major Large-scale Redevelopment & Mixed-use Development Projects

Start

Start

(TBD)

*JV projects
All projects are in the planning stage and are subject to change.

Gross profit

Development of Hotel BusinessIn October 2017, the Nomura Real Estate Group established Nomura Real Estate Hotels Co., Ltd. to
conduct planning and operation of hotels. The hotel industry is a growth market that is expected to continue
expanding in the future amid a growing number of visitors from overseas. We have established NOHGA

Toranomon Stationfront Redevelopment

Musashi-Koganei Station 2nd District
Redevelopment

Shibaura 1-chome Rebuilding Plan
(tentative name)Nihonbashi 1-chome Central District
Redevelopment Project

HOTEL, a Group-operated hotel brand driven by the concept of “offering guests an unforgettable experiencecreated through deep ties withthe local community.” Under
this brand, we have set up our
first project, NOHGA HOTEL
UENO, which is scheduled toopen in November 2018.

60

NOHGA HOTEL UENO

Promotion of Overseas Business

Location: 3-minute walk from Ueno Station
Number of rooms: 130

Planned Investments

Opening: November 2018 (plan)
Main Use

Total Business

Joint Partner

Our Share

Phase I
(FY17/3–19/3)

Manila, the Philippines

RetailResidential

Approx. 1,400 units
Approx. 30,000 m2

Federal Land
Isetan Mitsukoshi
Holdings

20.00%

Start

Complete

Bangkok, Thailand
Thonglor

Serviceapartments

303 rooms

Origin Property

49.00%

Start

Complete

Ho Chi Minh, Vietnam
Sun Wah Tower (existing property)

OfficeApprox. 26,500 m2

SUN WAH GROUP

24.00%

Beijing, China
Beijing Fortune Building (existing property)

OfficeApprox. 55,000 m2

Beijing Capital
Development—(Participatingin operation)

Project

Operating company:
Nomura Real Estate Hotels Co., Ltd.

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Phase II
(FY20/3–22/3)

Phase III(FY23/3–25/3)

Nomura Real Estate Holdings, Inc. Integrated Report 2018

61

Investment Management
Business Unit
REIT markets are expected to grow moving forward.
We will pursue stable fee income, with further growth
hinging on Nomura Real Estate Master Fund, Inc. (NMF),
Japan’s largest diversified REIT in terms of assets undermanagement, and Nomura Real Estate Private REIT, Inc.
(NPR), Japan’s first private placement REIT.

Growth Opportunities•	Expanding asset management business in Japan andoverseas due to growing demand for asset management
and rise in global capital flow•	Increasing demand for real estate investment due to lowinterest rate environment

Business Risks•	Worsening fund procurement environment resulting fromvolatility in Japanese and global economies•	Reviewing of low interest rate policy

Norio Ambe
Executive Officer, in Charge of Investment Management Business Unit
PMO Hirakawacho

Relationship with Stakeholders and Group Synergy

The Investment Management Business Unit provides asset management services for real estate securitization products including
REITs and private funds.

Fund structuring /Asset management

Major Businesses

Investment Management
Business Unit

Progress of Mid- to Long-term Business Plan and Business Units

Business Unit Introduction

Investors
Investment

Management fee

Real estate fund

Listed REIT
Property
management

Leasingmanagement

Property & Facility
Management
Business Unit

One of the largest diversified REITs in Japan, managing
approximately ¥1.1 trillion in offices, residences, retail facilities,
logistics facilities, and hotels.

Private REIT

Leasing value
chain (see below)

Leasing
Business Unit

Property information

Property Brokerage& CRE Business Unit

Private Funds and Securities Funds• Office funds• Healthcare funds• Fund of J-REITs• Overseas Open-end FoFs

Japan’s first private REIT, in operation since 2010. In March
2018, we achieved a balance of ¥200.0 billion in assets undermanagement and are aiming for further growth through selective investment.

New property

Responding to the needs of investors, we provide diversified
management including private funds and securities funds.

Opportunities forDevelopment

Opportunities forExternal Growth

The Group considers and implements future
redevelopment and rebuilding projects.

Realize external growth and improve portfolio
quality by replacing assets through acquisition ofhighly competitive, high-grade properties.

Landport Higashi-Narashino(formerly Ito Yokado
Higashi-Narashino store)(pictured left)

Leasing
Value Chain

PROUD FLAT Tomigaya(formerly Mitsubishi Motors Shibuya)(pictured right)

Assets under Management

Sales to the Nomura Real Estate GroupAcquisition of Group Development Projects

Billions of yen

NOF Nihonbashi Honcho Building(After May 2015)

1,600

No. ofbuildings

1,200

800

Amountacquired

NOF Tameike Building

Redevelopment

NOF Nihonbashi
Honcho Building

NOF Minami Shinjuku Building

Office (PMO, etc.)

10¥39.8 billion

Morisia Tsudanuma

Retail facilities (GEMS, etc.)

6¥21.5 billion

Ito Yokado Higashi-Narashino store

Condominiums (PROUD FLAT, etc.)

14¥16.3 billion

Mitsubishi Motors Shibuya (land interest)

Logistics facilities (Landport, etc.)

4¥36.0 billion

Mitsubishi Motors Suginami (land interest)

Total

34

¥113.7 billion

Total

¥51.1 billion*

Ito Yokado
Higashi-Narashino store

Morisia Tsudanuma

400

04

05

06

07

08



10

11

12

13

14

15

16

17

Group Companies

18(As of March 31)

Listed REIT

62

09

Private REIT

Private funds/securities funds

Nomura Real Estate Holdings, Inc. Integrated Report 2018

• Nomura Real Estate Development Co., Ltd.

For more information on these Group companies, please see pages 108 and 109.

• Nomura Real Estate Asset Management Co., Ltd.

Nomura Real Estate Holdings, Inc. Integrated Report 2018

63

Investment Management Business Unit

Investment Management Business Unit

Private REIT

Business Policy and Progress of Mid- to Long-term Business Plan
Status
Items

Achievements

IssuesListed REITs (NMF)• Conducted initial public offering after merging withthree listed REITs and merger with Top REIT
• Grew to one of the largest domestic REITs,
with approximately ¥1 trillion in assets undermanagement

Private REIT

• Achieved steady external growth due to lively
demand from investors• Reached ¥200.0 billion in assets under management
ahead of schedule

Strategies•S ustainable external growth inoverheating real estate market• Internal growth leading to stabledividend growth• Realize external growth centered on theleasing value chain• Continue internal growth through rent revisions

Nomura Real Estate Private REIT, Inc. (NPR) is the first company in Japan to manage private REITs. In the midst of a lowinterest rate environment, there is high investor demand for
private placement REITs—which provide stable income returns.
Accordingly, we are steadily expanding assets under management. As a result of being entrusted with funds from a diverse

range of investors, including pension funds and central andregional financial
institutions, we were able to reach a major milestone in March
2018, with total assets under management reaching ¥200.0
billion. Moving forward, we will continue to strive for further
growth through selective investment.

Private Funds and Securities Funds

Private funds• Resumed structuring and management of new
private funds•S earching properties suitable forprivate placement funds
 cquiring diversified investor needs•A• Pursue opportunities to commercialize fundsof new property sectors• Attract new investors and meet the needsof existing investors

Securities funds• Set up fund of J-REITs and Overseas Open-end
FoFs• Managed pilot fund of US-REITs•D eclining investor demand formonthly dividend distribution type
investment trusts• Identifying demand among
overseas investors• Build a track record of steady management
for improving performance• Attract new investors and meet the needs ofexisting investors

In order to respond to the diverse investor needs that cannot
be met through our existing REITs, we are employing various
approaches to create private funds. In the fiscal year ended
March 31, 2018, we invested in forward commitment-type
projects as well as a core office in the Tokyo metropolitan area,

representing new funds. In securities funds, we are working
to increase assets by continuing to enhance management
performance in regard to the J-REIT Value Fund and Overseas
Open-end FoFs.

CAP rates remain at record lows and the price levels in the
trading market for properties are on an upward trend. In the
midst of this environment, Nomura Real Estate Master Fund(NMF) is steadily implementing strategic property replacement(SPR). In October 2017, we moved from the “property replacement” phase to the “growth” phase, a shift that occurred earlier than planned. In line with our entry into this new phase,
we revamped our logo and developed a new brand strategy.

Since February 2018 we have continued to grow steadily,
which includes raising about ¥18.0 billion after conducting
an initial public offering post-merger. In the fiscal year ended
March 31, 2018, NMF utilized the leasing value chain toacquire 13 properties, valued at ¥41.2 billion, from Nomura
Real Estate Development, including properties that had alreadyconcluded sales contracts as of March 31, 2018.

As a first step toward global development of the investment management business, the Group agreed to acquire a 75% stake in
Lothbury Investment Management Group Limited, a real estate investment manager based in the UK. Moving forward, we aim to
expand our total assets under management by offering cross-border services, such as providing real estate investment opportunities
to investors, our mutual customers.

• Strategic Property Replacement(SPR): Enhanced quality of portfolio

1 Continue external growth centering on the sponsor pipeline through utilizing the• Internal growth: Increased rents mainly
in sectors with upside potential

2 Internal growth leading to stable dividend growth• Initial public offering: Improved
reputation among unit holders

Increase AUM by offeringcross-border investment
opportunities to Japaneseand UK investors• Relationships with over 160
institutional investors
after three years

leasing value chain

Scale of real estate
investment market in
the UK and Japan*

Business synergy

To a New Stage
Established after two years

Progress of Mid- to Long-term Business Plan and Business Units

Strategic Relationship with UK-based Lothbury Investment Management Group Limited
Listed REIT

Nomura Real Estate
Holdings will acquire
a 75% stake in
Lothbury Investment
Management Group
Limited3 Introduce new ESG investors and acquire continued support of major investors in• Managing of ¥1.3 trillion in J-REIT
and private REIT, etc.

Japan and overseas• Relationships with over 110
institutional investors

Grow to become the No. 1 domestically listed REIT in the medium to long term

• Managing of approx. ¥300.0 billion,
specialized in the UK

Strategic
Partnership

UK
Approx.
¥180 trillion

Future businesspossibilities

Japan
Approx.
¥230 trillion

Expand overseas
business with LIM’s
investment capabilities* PGIM Real Estate “A Bird’s Eye View of Real Estate Markets: 2017 Update” (values converted to yen)

Revamp logo to coincide with entry into new stage
Overview of Lothbury Investment Management

Company nameLothbury Investment Management
Group Limited

Businessoverview

Management of UK-specialized
open-end funds, etc.

Properties
managed63 properties primarily for commercial,
office, and logistics use in London andsoutheastern United Kingdom

To kick off our new brand strategy, we have adopted a new logo for

http://www.lothburyim.com/

the Nomura Real Estate Master Fund that incorporates a reindeer into its distinctive design.
  The meaning of our logo
• Its strong, regenerating antlers symbolize our resolve for constant advancement.
• Its sight of looking far ahead represents our strategies, with long-term perceptions
and perspectives.
• Its strong front legs represent our clear intention to build solid performance.

55 St. James’s Street

64

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Covent Garden

Nomura Real Estate Holdings, Inc. Integrated Report 201865

Property Brokerage &CRE Business Unit

Growth Opportunities

We are boosting our ability to deliver the Nomura Real
Estate Group’s unique solutions that accurately addressincreasing and diversifying real estate needs using
a customer-oriented approach.

•	Increasing stock of exceptional housing and need torelocate due to social and lifestyle changes•	Growing needs related to business succession and realestate inheritance• Growing demand for CRE strategy•	Arising inbound investment needs from overseas investors

Business Risks•	Decrease in consumer demand due to increasing interest
rates and economic downturn•	Decline in property development amid drop in consumer
spending due to increased property prices•	Intensified competition for human resources

Juntaro Kimura
Executive Officer, in Charge of Property Brokerage & CRE Business Unit

Relationship with Stakeholders and Group Synergy

Progress of Mid- to Long-term Business Plan and Business Units

Business Unit Introduction

Nomura no chukai + Iidabashi Center

The Property Brokerage & CRE Business Unit provides real estate brokerage and consulting services and conducts consignment ofsales of condominiums and detached housings.

Major Businesses

Real estate purchaser / seller

Property Brokerage &CRE Business Unit

Retail Brokerage business for individuals

Individuals

Corporate
customers

Assetmanagementcompanies

Real estateagentsLocalfinancial
institutions

Publiccorporations /publicservice
corporations

BusinessownersOverseas
investors

Comprehensive CRE proposals thatutilize our development functions

Consignment Sales BusinessResidential
Development
Business Unit

Leasing
Business Unit

TopicsBreakdown of Operating Revenue
Nomura no chukai +, provider of total support for real estate sales and purchases, andchanging places of residence in the Tokyo metropolitan area, Kansai, and Nagoya

Consignment of sales of newly built condominiums and detached housings;
coordination of housing business, a business with high added value that meets theneeds of our customers(Fiscal year ended March 31, 2018)

Network of Domestic Wholesale Sales Offices

We have established Nomura no chukai + in the Tokyo metropolitan area, Kansai, andmost recently, Nagoya. We are providing a new support menu with services such as“Home Staging,” which facilitates sales of properties through the use of model rooms
that have been furnished and decorated, and our “10-year follow-up” service to provide
peace of mind after purchases.

Billions of yen

4.0

Wholesale Brokerage business for corporations(11.4%)

Overseas Offices

WholesaleKansai Regional Office
Corporate Service
Department
Kyoto Sales Office

10.8

20.7

(30.4%)(58.2%)

Tokyo
Korea

China
Fukuoka Branch
Corporate Service
Department

Nagoya Branch
Corporate Service Department

RetailKansai Regional Office
Corporate Service Department

Responding to the real estate needs of our corporate customers on a nationwide scale

66

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Wholesale

Consignment sales, etc.

Philippines
Thailand
Malaysia

We have built an organization that is able to reach customers across Japan, and aredeveloping our business to meet the needs of customers according to their specificattributes. We are continuously working to meet the needs of overseas investors toinvest in Japan.
Consignment Sales BusinessHong Kong

Corporate Real Estate
Service Division

Kansai Regional Office
Corporate Service Department
Hiroshima Sales Office (in planning)

RetailSingapore

We utilize our expertise in consignment sales acquired through years of experience
with developers, such as Nomura Real Estate Development. This expertise allows us
to provide total support for the housing business, including market research, productplanning, sales, and distribution.

Indonesia

Group Companies
Providing comprehensive real estate solutions for companies, corporate owners,
institutional investors, asset owners, and individuals in Japan and other Asian countries• Nomura Real Estate Development Co., Ltd.

For more information on these Group companies, please see pages 108 and 109.

• Nomura Real Estate Urban Net Co., Ltd.

Nomura Real Estate Holdings, Inc. Integrated Report 2018

67

Property Brokerage & CRE Business Unit

Property Brokerage & CRE Business Unit

Wholesale BusinessBusiness Policy and Mid- to Long-term Business Plan Progress
Status
Items

Achievements

IssuesStrategies

Retail business• Expanded to 80 business sites and achieveda record-high number of commissions throughdevelopment of diverse services•D eepening community-based sales • Expand market area by building structure of
by focusing on area characteristics
100 bases in metropolitan areas of Tokyo,• Improving productivity by utilizing ICT
Kansai, and Nagoya• Become top brand in customer satisfaction
through face-to-face services via Nomura no
chukai + stores and online real estate information site nomu.com

Wholesale business• Established branches in new areas(Fukuoka, Kyoto, Hiroshima)• Established overseas earnings bases(established Overseas Sales Division)•E xpanding customer base• Increasing overseas earnings further• Strengthen ties with Nomura Securities andlocal financial institutions• Drive development by realizing CRE
proposal strategy• Make efforts to engage with inbound demandand expand target countries for businessWith business performance remaining positive and businesssentiment continuing to improve, capital investment by corporations is increasing. There is also strong demand for property
acquisition among real estate investors due to interest rates
remaining low. As a result, total transaction value remains at
a high level.

Amid these conditions, the wholesale business achieved
increases in income and profit for the fiscal year ended March
31, 2018. We have steadily expanded our customer base by
establishing a system that enables us to respond swiftly tocustomers across the country by restructuring our organizationand establishing stores in Kyoto and Fukuoka.

Trading in Commercial Property

Wholesale Brokerage Commissions

Trillions of yen

Billions of yen

6

12
1.4

5
9

Retail Business4

market by steadily increasing the number of sales agents andexpanding the number of stores to 80 as of June 30, 2018. We
are providing support for the purchase and sales of real estatefor investment and for measures related to inheritance andbusiness succession. In addition, we are upgrading our customer service, which includes expanding the functions of ournomu.com service. Through these initiatives, we achieved
record-high income for commissions in the fiscal year ended
March 31, 2018.

Contracts and Prices for Used Condominiums(Tokyo metropolitan area)

Retail Commissions and Property Brokerage Branches
at Fiscal Year-end

Units

Billions of yen

40,00036,43230,34730,00033,798 34,776

Millions of yen
37,189 37,329
60

25

100

31,39728,87145

20

68

20,000
25.30

25.00

25.89

27.27

28.92

30.49

31.95

10

11

12

13

14

15

16

17

(CY)
Contracts
Prices (right scale)
Source: Created by the Company with information from Real Estate Information Network
for East Japan

78
80

56

60

50
43

30

15

10,000

73

62
15

25.66

No. of branches

10

40

5

20

12

13

14

15

16

Retail commissions
Property brokerage branches at fiscal year-end (right scale)

0.9
1.0

0.8

3

1.5

0.3

2
2.5
1
08

0.4

0.3
1.2

07

6

1.0

4.5

09

0.6

1.7

1.4

1.3

10

11

12

3.0

13

3.2

14

2.6

15

2.8

3

2.1

16

17

12

14

15

16

17
18
(Years ended March 31)

Regional areas

Source: Created by the Company with information from the February 2018
Nikkei Real Estate Market Report

In overseas business, transaction value increased for the
fiscal year ended March 31, 2018 due to our response toinbound investor needs centered in Asia from our bases inHong Kong and Singapore. We will continue to increase thenumber of inbound investors by utilizing our collaboration with
Nomura Securities and develop ties with local financial institutions and accounting firms to further expand our earnings
overseas. In response to outbound needs, we offered information sessions to our domestic customers in regards to thecondominium business in Bangkok, Thailand, in which the
Residential Development Business Unit participates. As a resultof our promotion to attract customers, we were able to achieve
steady sales for a certain number of condominiums throughour sales agent.

Collaboration with Nomura Securities
We achieved record highs in both transaction volume andtransaction value in the fiscal year ended March 31, 2018
in our collaboration with Nomura Securities. These results
were possible because Nomura Securities was able toappropriately capture the real estate trading needs of its
customers. We plan to enhance our collaboration andexpand ­revenues in the future.

Collaboration with Nomura Securities
Billions of yenNo. of transactions

120

600

90

450

17
18
(Years ended March 31)

Inbound Investments
Commission
(millions of yen)

Transaction value(millions of yen)800

40,000

60

300

600

30,000

30

150

400

20,000200

1,000

Expanding Our Customer Service
Nomura no chukai + was ranked number one in the condominium purchases, condominium sales, and detached housing
sales categories for real estate brokerages in the 2018 Oricon
Customer Satisfaction Ranking. In addition, on our real estate
information site, nomu.com, we have introduced functions thatutilize cutting-edge technology such as “Mansion Data Plus,”
which provides estimates on condominium prices and VR
home staging, as a way to offer customers more convenient
ways to search for a home.

13

(CY)
Tokyo metropolitan area

Progress of Mid- to Long-term Business Plan and Business Units

The used condominium market remains steady with thenumber of contracts and contract prices moving upward. In atrend continuing from 2016, the number of contracts for usedcondominiums in the Tokyo metropolitan area exceeded thenumber of newly built condominium units in 2017. Although thenumber of contracts is starting to show signs of tapering due
to factors such as an increase in inventory in some areas, themarket is expected to remain strong moving forward. In theretail business, we have taken advantage of the growing

1.0

12Transaction value

15
Commission

16

17

13

14

15

16

17
18
(Years ended March 31)

Transaction volume (right scale)

18(Years ended March 31)

Transaction value (right scale)Mansion Data Plus

68

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 2018

69

Property & Facility
Management Business Unit
We do more than manage condominiums and officebuildings; we offer services to bring them value andearn the trust of ever more clients.

Growth Opportunities•	Increase in demand for large-scale repairs due toaging buildings•	Acceleration of public–private collaboration in the
management of public facilities•	Rising healthcare needs underpinned by the upcoming
Tokyo 2020 Olympics and Paralympics•	Rising awareness of energy use

Business Risks•	Human resource acquisition due to worker shortages

Toshiaki Seki•	Competitive pricing of management fees

Executive Vice President
in Charge of Property & Facility Management Business Unit

Relationship with Stakeholders and Group Synergy

The Property & Facility Management Business Unit conducts property and facility management, including management of condominiums, office buildings, and educational facilities. The unit also completes contracts for repair and tenant-related construction
work and for renovations to condominiums and detached housings. In addition, the unit also engages in development planning andoperations of the fitness business and elderly housing and services.

Property management
Payment of managementcompensation fees

Property & Facility
Management Business Unit

Major Businesses
Property and Facility Management

Consignment ofproperty management

Residential
Development
Business Unit

Condominiums

Office buildings

Building
management

Leasing
Business Unit

Breakdown of Operating Revenue(Fiscal year ended March 31, 2018)

6.5(6.2%)

16.0
50.3
Condominium repair and renovation

31.6(48.2%)(30.2%)

Fitness / Senior Business

Operation and management
Construction orders
Fitness / Senior
High-voltage collective receiving service, etc.

Group Companies
Fitness brand70

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Senior business brand

Building
management

Investment
Management
Business Unit

Property information
introduction

Property
Brokerage & CRE
Business Unit

Property and Facility Management

Construction Ordered(15.4%)

Large-scale condominium repairs brandPayment of repair fees

We manage approximately 170,000 residential units and 700 buildings, many of whichhave been developed by the Group. In addition, the Group has been ranked
No. 1 in surveys of management satisfaction for condominium residents for nineconsecutive years.*Billions of yen

Office building renovations

Repair work

Homeowners’ association,
condominium owners,
building owners,
administrative agencies, etc.

TopicsPublic facilities

Construction Ordered

Progress of Mid- to Long-term Business Plan and Business Units

Business Unit Introduction

OUKAS Funabashi

We employ 130 licensed, first-class building operation and management engineers
to provide services utilizing highly technical capabilities in renovation and interior
construction and large-scale condominium repair work.
Fitness / Senior BusinessWe currently operate MEGALOS fitness clubs at 43 locations. In elderly housing,we opened our first location, OUKAS Funabashi, in October 2017. Moving forward,
we are strengthening development efforts for new properties.
* Management satisfaction survey conducted by Sumai Surfin (as of September 2017)

For more information on these Group companies, please see pages 108 and 109.

• Nomura Real Estate Development Co., Ltd. • N omura Real Estate Heating and• Nomura Real Estate Partners Co., Ltd.
Cooling Supply Co., Ltd.
• Nomura Real Estate Life & Sports Co., Ltd. • Nomura Real Estate Wellness Co., Ltd.

•N omura Real Estate Amenity Service
Co., Ltd.
• NF Power Service Co., Ltd.

Nomura Real Estate Holdings, Inc. Integrated Report 201871

Property & Facility Management Business Unit

Property & Facility Management Business Unit

Senior BusinessBusiness Policy and Progress of Mid- to Long-term Business Plan
Status
Items

Achievements

IssuesStrategies

Increasing
management stock• Increased profit by increasing number of developed
properties under management• Disposed of underperforming projects• Hiring and training employees• Improve productivity by introducing robots andIT technologies• Promote renovation business by utilizing
Group stock

Expandingbusiness field
Evolving portfolioof services• Achieved growth by increasing orders of large-scalecondominium repair work
• Strengthened renovation business•D eveloping approach to exclusively
owned condominiums• Expand PPP/PFI businesses• Expand energy management business

Fitness business• Improved profitability by offering unique services,•T raining personnel
such as women-only fitness clubs, and by upgrading
senior programs• Opened locations in metropolitan areas• Manage highly unique clubs with proprietary
programs• Announced launch of elderly housing brand OUKAS
and began operation of first location• Established capital and business partnerships withnursing facility companies• Supply 40 properties and 5,000 housing units
within 10 years

Senior business

While we will see a decline in the overall domestic population in
the future, the population of those 65 and older is expected toincrease. Of that population, over 90% will be self-sufficient or
will require only mild care. As a result, the need for enrichedcare services and treatment, including preventive treatment,
as well as efforts to maintain and improve health, has becomea major social issue. In response, the Group launched the

OUKAS brand, aiming to create a home where self-sufficientseniors can lead vibrant lives. To improve the senior businessas a whole, we formed a capital tie-up with corporations thathave expertise in the caregiving industry. Going forward, we
aim to provide 40 properties and 5,000 housing units in thenext 10 years.

Planned Projects for the Senior Business•C reating a business model thatallows the senior business to play
an important role in urban-typecompact towns

Kaihin Makuhari Project (tentative name) (elderly housing)Year of opening:

2020

Total units:

141

Kichijoji Project (tentative name) (elderly housing)Year of opening:

2020

Total units:

116

Ebisu Project (tentative name) (day service)

Year of opening:

2020

Capacity:

35

Hiyoshi Project (tentative name) (elderly housing)Year of opening:

2021

Total units:

120

Nomura Real Estate Group’s Elderly Housing
Features of OUKAS

Among the condominiums managed by the Group, there isan increasing number of properties in need of repair. To meetthis need, we aim to increase orders in the large-scalecondominium repair work industry, and strengthen sales of
re:Premium, our large-scale condominium repair work brand(pictured right) offered through Nomura Real Estate Partners.
Nomura Real Estate Partners cooperates with materials
manufacturers and subcontractors as the primary contractor
responsible for construction related to Nomura Real Estate’s
PROUD brand of condominiums. Properties contracted
through re:Premium offer large-scale repair terms that are
longer than the industry standard,* which results in lower repair
costs for residents.
We will continue to strengthen our renovation sales in linewith large-scale repair terms and increase customer satisfaction through collaboration with the renovation business.

re:Premium
Our Large-scale Repair Brand
A Home for Celebrating Life
“Tomorrow HealthierThan Today”“Town planning” thatenables any generation
to walk and be active“Health maintenanceand promotion” toprovide strong physicaland mental health

Joint Fitness Program with MEGALOSAt OUKAS Funabashi, we provide a fitness training
program jointly developed with Nomura Real Estate
Life & Sports Co., Ltd., which operates MEGALOS
fitness clubs. We aim to improve the physical capabilities of residents through programs taught by resident trainers.

Progress of Mid- to Long-term Business Plan and Business Units

Large-Scale Condominium Repairs

1st Project (OUKAS Funabashi): Launched and Operating with a Smooth Influx of Residents
Location: Funabashi, Chiba
Access:	15-minute walk from
Funabashi Station (JR Sobu Line)
5-minute walk from
Shin-Funabashi Station(Tobu Urban Park Line)
Opened: October 2017
Total units: 125 units

Repeatednegotiations
to ensurecooperation

Materials
manufacturers* Industry standard: Large-scale repairs once every 12 years
re:Premium: Large-scale repairs once every 16–18 years

Construction
companies
Main dining hall

Concierge desk

Fitness studioLarge public bathSpecialized trainers

Variety of fitness programs

Fitness Business
Develop productswith improved
service life

Introduce new
construction methods

Properties under Management by Construction
Completion Period

Sales Projections for Large-scale Condominium Repairs

Units

Millions of yen

10,0006,000

Developing Facilities to Meet a Variety of Lifestyles
To accommodate the diversifying lifestyles of our customers, we are developing facilities with a variety of concepts under the
MEGALOS brand.

Comprehensive sports club equippedwith a gym, studio, and pool

24-hour mini sports gym

Women-only fitness clubFirst PROUD property completed
Period of large-scale
repair work forhousing units

7,500

Increase in repairs
for large-scale
properties

4,000

5,000
2,000
2,500
MEGALOS Hibiya Chanter
75

72

80

85

90

95

00

05

Nomura Real Estate Holdings, Inc. Integrated Report 2018

10

15

14

15

16

17

18

MEGALOS_24 Terrasse Nayabashi

MEGALOS_Reflet Minatomirai

19
20
21
(Years ended / ending March 31)

Nomura Real Estate Holdings, Inc. Integrated Report 201873

Main Topics from the Fiscal Year Ended March 31, 2018

Main Topics from the Fiscal Year Ended March 31, 2018

April
Opening of women’s studio MEGALOS
Reflet Minatomirai, in support of women
toward glamorous lifestyles
We launched the opening of MEGALOS
Reflet Minatomirai, our first MEGALOS
Reflet branch in Kanagawa Prefecture.
MEGALOS Reflet is a women-only studiothat offers cutting-edge programs basedon the concept of “beautiful lifestyles”
toward achieving relaxation and theideal physique.

We began a 3D virtual imaging service thatenables users to view interiors from various
angles. These high-quality images, which
are generated by collecting data througha 3D scanner, make you feel as if you arewalking inside. We also commenced ourE-mail Delivery Service for Recommended
Properties, which sends out emails withdetails on recommended properties
according to customer preferences basedon their viewing history.

May
Development of viewing device
featuring Microsoft HoloLens
for new condominium sales
We introduced the Holographic
Condominium Viewer featuring
Microsoft’s HoloLens holographic computer for Proud City
Etchujima, which commenced
sales in July 2017. This is thefirst time for the HoloLens to be
utilized for sales of new condominiums in Japan.

Reconstruction of Hamamatsucho
Rebuilding of development plans for“Shibaura 1-chome Rebuilding plan”(tentative name)July
Completion of constructionof Landport Takatsuki, first
Landport series projectin Kansai
In June 2017, we completed
construction of Landport
Takatsuki, our first highly functional, large-scale logistics
center in the Kansai region,
which has an expansive distribution network spanning areas
such as Osaka, Kyoto, andKobe. The facility also featureshigh performance in terms ofbusiness continuity planning(BCP) through such capabilities
as 72 hours of on-site power
generation.

Provision of “re:Premium” service for
PROUD condominiums

Nomura Real Estate Development, NREGTOSHIBA BUILDING Co., Ltd., and East
Japan Railway Company formulated andannounced development plans for theirjoint “Shibaura 1-chome Rebuilding Plan”(tentative name). Going forward, we will
advance the procedures necessary forcertification of the National StrategicSpecial Zones plans by the Prime Ministerof Japan.

7

6

5

4

Launch of 3D walk-through video service
on nomu.com

October

98

We began providing the “re:Premium”
large-scale repair work service for PROUD
condominiums to deliver long-term
guarantees exceeding industry standards
through quality-assured construction.

11

10

September

NovemberSupport of mixed-use realestate development business in
the Philippines

Acquisition of Green Star and5 Star ratings for GRESB byGroup REITs

Acceleration of businessdevelopment in local core cities

We began a joint initiative with
Isetan Mitsukoshi Holdings Ltd.
and Federal Land Inc., a major
real estate company in thePhilippines, for mixed-use
development of housing andcommercial facilities in thesuburbs of Manila in thePhilippines. This is the firstmixed-use development project
undertaken in the Philippines
involving a developer andretailer from Japan.

Nomura Real Estate Master
Fund, Inc. and Nomura Real
Estate Private REIT, Inc. were
evaluated for their exceptional
efforts concerning sustainability
and received a Green Star, thehighest rating out of four levels,
for the second year in a row.
They also earned 5 Star, thehighest rating from the Global
Real Estate Sustainability
Benchmark (GRESB).

We commenced developmentof PROUD Toyama Jinzu
Honmachi and PROUD Niigata
Yoneyama condominiums in
Toyama City, Toyama Prefecture
and Niigata City, Niigata
Prefecture, respectively.

Launch of OUKAS elderly housing brandWe commenced operations of OUKAS
Funabashi, our first project under the
new OUKAS brand of elderly housing,to extend healthy life spans through urban
development and health maintenance andpromotion, as well as to provide support
for lifelong housing and independent living.

12

DecemberParticipation in service/apartment businessin Thailand
Nomura Real Estate
Development announced its
participation in a joint service/apartment business in
Bangkok, Thailand with local
developer Origin Property
Public Company Limited.
Staybridge Suites Bangkok
Thonglor is a service/apartment
brand of the Intercontinental
Hotel Group and is advancing
into the Southeast Asian market
for the first time.

Establishment of
Nomura Real Estate Hotels
We established Nomura Real Estate
Hotels Co., Ltd. to conduct hotel planningand operations for promotion of theGroup’s hotel business. The first hotel
under the NOHGA HOTEL brand isscheduled to open in the Ueno area inTokyo in November 2018.

2

1

Progress of Mid- to Long-term Business Plan and Business Units

2017

August

3

2018

March
Completion of constructionof PROUD City Tsukaguchi, thelargest urban-type compact
town in Kansai
We completed constructionof PROUD City Tsukaguchi(total of 1,200 units) as part ofour ZUTTOCITY mixed-use
redevelopment project in frontof Tsukaguchi Station (JRTakarazuka Line) in Amagasaki
City, Hyogo Prefecture.

Promoting innovation throughdevelopment of Tsunashima SST
We established our nextgeneration urban-type smart
town through the completionof construction of PROUD
Tsunashima SST, the only condominium within Tsunashima
Sustainable Smart Town
(Tsunashima SST), along with
the Town Energy Center andsmart technology development
facilities, which are already inoperations.

PROUD Niigata Yoneyama

PROUD Toyama Jinzu Honmachi

74

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 201875

Section 3

Nomura Real Estate Group’s
Management BaseThis section outlines our proactive efforts toenhance corporate governance, including theimplementation of a performance-based stockincentive plan, as well as our measures toimprove management transparency.

78	Dialogue:
The Evolving Governance of
Nomura Real Estate Holdings
Corporate Officers

85

Corporate GovernanceNomura Real Estate Group’s Management Base82

Shinjuku Nomura Building (Nomura Real Estate Holdings, Inc. headquarters)

76

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 201877

Dialogue: T he Evolving Governance of Nomura Real Estate Holdings

Atsushi Yoshikawa
Chairman of the Board of Directors

Increasing Corporate Value through Our Nomination and Compensation Systems
In 2015, Nomura Real Estate Holdings transitioned from a company with an Audit & Supervisory Board to acompany with an Audit & Supervisory Committee, and in 2016, established the Advisory Committee Relating
to Nominations and Compensation in order to strengthen corporate governance. The Company also introduced a new compensation system after a resolution at the 14th Ordinary General Meeting of Shareholders
held in June 2018. Taking into consideration that the real estate business is characteristically long-term, theCompany has introduced a share-based incentive program that is based on the ability to meet earnings goals
over a three-year period. That will increase awareness of contributions toward improved corporate growthand greater earnings in the medium to long term. Atsushi Yoshikawa, chairman of the Board of Directors, and
Makoto Haga, Head of the Management Division, discussed the goals of this new compensation system, theeffect it will have on future management, and the activities and circumstances regarding the Advisory
Committee Relating to Nominations and Compensation.

Effects of Establishing the Advisory Committee Relating to Nominations
and Compensation
Yoshikawa: One year has passed since I took on the role ofchairman of the Board of Directors in June 2017. In February
2016, the Company established the Advisory Committee
Relating to Nominations and Compensation as a consulting
body that reports to the Board of Directors to enhance its

78

Nomura Real Estate Holdings, Inc. Integrated Report 2018independence, objectivity, and accountability in matters related
to the nomination and compensation of management members
and members of the Board of Directors. In its first year, thecommittee focused on sorting out various issues related tothe methods of compensation and nomination for the Board

Makoto Haga
Director and Executive Officer
Supervisor of Management Divisionof Directors, taking into account the circumstances of theCompany, and making comparisons with other companies,
with the cooperation of experts on these matters. In 2017, its
second year, the committee continued discussions regarding
the introduction of a more concrete system.
Through these discussions, I think the external directorsof the committee have been able to obtain a considerable
amount of information, including on the personalities of key
executives, reasons for appointment, and compensation structure. They have also been able to compare this information
against the cases of other companies. As a result, I believe
discussions have been beneficial for both nomination andcompensation by clarifying the roles of each position,

formulating selection criteria, and determining the number of
positions required. Deepening the awareness of stakeholders
has led to meaningful discussions.
Nomura Real Estate Group’s Management BaseThe Evolving Governance of
Nomura Real Estate Holdings

Dialogue: The Evolving Governance of Nomura Real Estate Holdings  
Haga: It certainly is quite the achievement to have shifted waysof thinking over the course of a single year. Instead of appointing
directors based on length of employment and sheer individual
performance, by backcasting, we have been able to think about
the positions, skills, and experience that are required for theGroup’s growth and development. We now employ a third party
when evaluating the board’s effectiveness to confirm the adequateness of the board members.

Updating the Compensation Process
Yoshikawa: In our 2017 Integrated Report, we expressed ourintention to review our compensation policy in response to the
Corporate Governance Code, designing a detailed compensation structure. With the cooperation of an external consulting
company, we began reviewing the system in 2016, and theAdvisory Committee Relating to Nominations and Compensation
began discussing specific reviews of the system in 2017. These
discussions were centered on the implementation of a systemthat would place greater emphasis on the importance ofincreasing corporate value in the medium to long term while
not becoming overly technical. Our compensation system
consisted of a base salary—or fixed part—as well as cash
bonuses and stock options, or variable part. This was thought
to be a mechanism to share interests with our shareholders.
We incorporated the concept of time into the system because

the real estate industry is clearly a long-term business. I believethat compensation systems should lead to the maintenance ofhigh motivation and maximization of performance.
  
Haga: As a general rule, it takes a long time for companies in
the real estate industry to generate profits compared with
manufacturers that handle consumer goods. It goes without
saying that accumulating short-term profits does lead to themid- to long-term growth of corporate value, but if one wants
to make a serious commitment to sustainable growth for the
longer term, I believe that a strong commitment to improving
profits for the next several years is the key to increasing corporate value. This is especially true for the real estate industry
because it is a long-term business. The newly designed

Nomura Real Estate Holdings, Inc. Integrated Report 201879

Dialogue: The Evolving Governance of Nomura Real Estate Holdings

compensation system consists equally of fixed and variable
parts. Furthermore, variable compensation comprises both
short-term and long-term incentive bonuses. Long-term incentive bonuses include a share-based incentive program and isbased on the degree of achievement of earnings goals at theend of the third year and the restricted stock compensation
plan. I believe that a system with the mechanism to provide
compensation in proportion to the achievement of mid- tolong-term performance is well-suited to the real estate industry.
  Yoshikawa: Senior management, including the Company’s
directors, must render a concrete business plan in their field
to increase entire the corporate value of the Group. By implementing share-based compensation linked to earnings at theend of the third year, we hope to send a message both internally and externally that we will greatly accelerate our mid- tolong-term growth strategies in line with the direction of eachbusiness unit. I believe that we have a system in place that

Dialogue: The Evolving Governance of Nomura Real Estate Holdings

will allow all of our employees and officers to concentrate on
sustainable profit growth.
  Haga: Rather than just look at performance within a single
year, we need to look at the sustainability of that performance.
Some businesses may have a short-term profit model, but if
there is no consideration given to the medium to long term,
they may end up with sluggish growth. To outperform othercompanies in the industry, we have formulated our long-term
management plan so that each business unit must cooperate
to achieve overall corporate value and maintain a mid- to longterm perspective for various tasks. When we acquire land, we
have to check its price by taking into account not only its current state but also its mid-to long-term potential. By incorporating mid- and long-term incentives into our compensation
system, I believe that awareness of not only yearly performancebut also sustainable long term profits will spread throughout
the Group.

New Compensation System (To be introduced in the fiscal year ending March 31, 2019)
Changes to the System

Goals of Adopting a Share-based Compensation System
Compensation linked to stock prices

Fixed compensation

Fixed compensation

Bonus

Bonus

Stock options

Performance-based
compensation
Non-performance-based
compensation

Performance-based compensation: changes every three years
Clearer incentive to improve mid-term performance

Non-performance-based compensation:deferred until officer retires
Incentive to improve long-term contributions and corporate growth

Nomination and Compensation as a Means of Raising Corporate Value  Yoshikawa: When determining the promotion of executive
officers, the Advisory Committee Relating to Nominations andCompensation will request to the executive side an explanation
regarding the reasons for nomination, background, and abilityof the candidates. In addition, the committee will also inquire
about his or her weakness and what forms of training the executive side will provide to the candidates to solve their issues.
In addition to general managers’ meetings, the Board
meetings, and Management Committee meetings, the committee also checks on the candidates at various other in-house
events. The committee will perform comprehensive deliberations on performance at those events and the cases made by
the executive side. If the CEO’s opinions seem to be arbitrary
and an election or promotion is unfair or impartial, the CEO’s
aptitude will be examined. This creates a positively tense atmosphere, but I think that it is very important to foster an environment that encourages the process of objective and transparent
discussions regarding our next generation of senior management. The current Advisory Committee Relating to Nominations
and Compensation consists of a non-executive internal director
which is myself, and three external directors. I consider this tobe a good balance for objective discussion.
  Haga: I think that this is a good balance too. It should be a big
challenge for part-time directors to properly judge candidates
proposed by the executive side for appointment to the board orfor promotion. I believe the most transparent process for judging

candidates is for a full-time, non-executive director such as
Chairman Yoshikawa to gather a variety of personnel information and to incorporate the frank opinions of external directors.
  
Yoshikawa: To contribute to our new succession plan, current
senior executives are required to file and submit reports to me
that describe the skills and abilities required for each positionand specific names of the candidates suitable for immediate
office and those who will be suitable five years down the line.
While this succession report serves as one of the materials fordetermining appointments and promotions, I think it also provides a good opportunity for the management team to review
various duties and roles required and to see if there are thingslacking. These reports will be accumulated in my office andkept on record for review by the Advisory Committee Relating
to Nominations and Compensation. If the CEO or COO would
like to consult with me about our human resources, I can also
give my opinions based on this accumulated information as well.
  
Haga: I actually wrote the report myself as well and foundinvaluable insights. If you write down issues and concerns
regarding candidates for succession, you are able to find out
specific career training paths. I think that this is a very effective
way to establish our succession plan and training policies as
required by the Corporate Governance Code.
  
Yoshikawa: In addition to their appointments, we must maintain transparency in the dismissal process. In cases of fraud
or violations of the law, we should consider these dismissals.
Considering that the term on the Board of Directors is one year,
not being reappointed in the following year essentially functions
as the process for dismissal, provided that we follow theappropriate process. This process will be examined further as
we move forward. The Board of Directors will continue to discuss our nomination and compensation systems in order toincrease corporate value in the medium to long term and meetthe expectations of our shareholders and other stakeholders.

Nomura Real Estate Group’s Management Base

Share-based compensation•M otivation for improving corporate value over the
medium to long term•S
 haring of interests with shareholders  
Haga: There are some salient questions that need to be kept
in mind. What skills and experience of the management arenecessary for the sustainable growth of the Group? What roles
should each of its members fulfill? What is the appropriatecompensation for them? If these questions are not asked, andif the compensation and nomination systems are not well integrated, then neither will function. I think that removing the notionof seniority as superiority and moving toward a pure meritcompensation system based on the outcomes of expectedroles are large steps in the right direction.

Yoshikawa: At the same time, with the revisions made to thecompensation system, we have reviewed the selection standard process and succession plan for the Board of Directors.
We received input from external directors in our discussions.
Our nomination and compensation systems should be viewed
as wheels on the same vehicle. Our nominations to the board,much like compensation, should incorporate a mid- to longterm point of view that is not overly slanted toward short-term
results. Another point to consider is succession. We need toevaluate whether a candidate is actively making efforts to cultivate the next generation of management personnel.

80

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 201881

Corporate Officers

Corporate Officers(As of September 2018)

Directors

Atsushi Yoshikawa

Eiji Kutsukake

Seiichi Miyajima

Toshiaki Seki

Hiroyuki Kimura

Makoto Haga

Chairman of the Board of Directors

President and Representative Director,
Group CEO

Executive Vice President andRepresentative Director, Group COO

Executive Vice President and Representative Director,
In charge of Group companies, Unit Manager of
Property & Facility Management Business Unit

Director and Executive Officer,
Group CFO and Head of Investor Relations

Director and Executive Officer,
Supervisor of Management Division,
Corporate Communications Department

Apr. 1984	Joined Nomura Securities Co., Ltd.
(currently, Nomura Holdings, Inc.)
Apr. 2007	Executive Managing Director of Nomura Securities Co., Ltd.
Oct. 2008	Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2009	Senior Corporate Managing Director of
Nomura Securities Co., Ltd.
Apr. 2011	Executive Vice President of Nomura Securities Co., Ltd.
Senior Corporate Managing Director and Chief Operating
Officer of Nomura Holdings, Inc.
Apr. 2012	Executive Managing Director of Nomura Holdings, Inc.
Aug. 2012	Deputy President of Nomura Securities Co., Ltd.
Apr. 2013	Director and Deputy President of
Nomura Securities Co., Ltd.
Apr. 2014	Advisor of Nomura Real Estate Holdings, Inc.
Jun. 2014	Representative Director and Executive Vice President of
Nomura Real Estate Holdings, Inc.
Jun. 2015	President and Representative Director,
Chief Executive Officer of
Nomura Real Estate Holdings, Inc. (present)
Apr. 2017	Chairman and Representative Director of
Nomura Real Estate Development Co., Ltd. (present)

Apr. 1981	Joined Nomura Real Estate Development Co., Ltd.
Jun. 2004	Director of Nomura Real Estate Development Co., Ltd.
Apr. 2008	Senior Executive Officer of
Nomura Real Estate Development Co., Ltd.
Apr. 2009	Managing Executive Officer of
Nomura Real Estate Development Co., Ltd.
Apr. 2012	Representative Director and Senior Managing Executive
Officer of Nomura Real Estate Development Co., Ltd.
May 2012	Executive Officer of Nomura Real Estate Holdings, Inc.
Apr. 2014	Representative Director and Executive Vice President of
Nomura Real Estate Development Co., Ltd.
Jun. 2014	Representative Director and Executive Officer of
Nomura Real Estate Holdings, Inc.
Apr. 2015	President and Representative Director,
Chief Executive Officer of
Nomura Real Estate Development Co., Ltd. (present)
Apr. 2017	Executive Vice President and Representative Director of
Nomura Real Estate Holdings, Inc. (present)

Apr. 1978	Joined Nomura Securities Co., Ltd.
(currently, Nomura Holdings, Inc.)
Jun. 2000 Director of Nomura Securities Co., Ltd.
Oct. 2001 Director of Nomura Securities Co., Ltd.
Jun. 2003	Executive Officer of Nomura Securities Co., Ltd.
Apr. 2004	Executive Managing Director of Nomura Holdings, Inc.
and Senior Corporate Managing Director of
Nomura Asset Management Co., Ltd.
Apr. 2006	Executive Vice President of
Nomura Asset Management Co., Ltd.
Apr. 2008	Director and President of
Nomura Asset Management Co., Ltd.
Oct. 2008	Executive Managing Director of
Nomura Holdings, Inc. and Director, President,
and CEO of Nomura Asset Management Co., Ltd.
Jun. 2011	Executive Vice President and Senior Managing Directorof Nomura Holdings, Inc. and CEO and President of
Nomura Holding America Inc.
Aug. 2012	Representative Executive Officer and Group COO of
Nomura Holdings, Inc.
Jun. 2013	Director, Representative Executive Officer,
and Group COO of Nomura Holdings, Inc.
Jun. 2016	Advisor of Nomura Holdings, Inc.
Apr. 2017	Director of Nomura Real Estate Development Co., Ltd.
(present)
Advisor of Nomura Real Estate Holdings, Inc.
Jun. 2017	Chairman of the Board of Directors of
Nomura Real Estate Holdings, Inc. (present)
May 2018 External Director of Ryohin Keikaku Co., Ltd. (present)

Satoko Shinohara

Director (External)

Director (External)

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

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

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Apr. 1984	Joined Nomura Real Estate Development Co., Ltd.
Apr. 2009	Executive Officer of
Nomura Real Estate Development Co., Ltd.
Jun. 2009	Director of Nomura Real Estate Holdings, Inc.
Apr. 2010	President and Representative Director of
Nomura Real Estate Investment Management Co., Ltd.
(currently, Nomura Real Estate Asset Management
Co., Ltd.)
Director of Nomura Real Estate Asset Management
Co., Ltd.
Director of Nomura Real Estate Capital Management
Co., Ltd. (currently, Nomura Real Estate AssetManagement Co., Ltd.)
Oct. 2011	Managing Director of Nomura Real Estate AssetManagement Co., Ltd.
May 2012	Executive Officer of Nomura Real Estate Holdings, Inc.
Jun. 2012	Director and Executive Officer of
Nomura Real Estate Holdings, Inc.
Apr. 2013	Director and Managing Executive Officer of
Nomura Real Estate Development Co., Ltd.
Jun. 2014	Director and Executive Officer of
Nomura Real Estate Holdings, Inc. (present)

Apr. 1989	Joined Nomura Real Estate Development Co., Ltd.
Oct. 2010	General Manager of Management Planning Department
of Nomura Real Estate Development Co., Ltd.
Oct. 2011	Director and Senior General Manager of
Investment Management Division of
Nomura Real Estate Asset Management Co., Ltd.
Apr. 2012	Executive Officer of
Nomura Real Estate Development Co., Ltd.
May 2012	Executive Officer of Nomura Real Estate Holdings, Inc.
Apr. 2015	Managing Executive Officer of
Nomura Real Estate Development Co., Ltd.
Apr. 2017	Director and Managing Executive Officer of
Nomura Real Estate Development Co., Ltd. (present)
Director of NREG TOSHIBA BUILDING Co., Ltd. (present)
Director of Nomura Real Estate Life & Sports Co., Ltd.
Director of Geo Akamatsu Co., Ltd.
Director of Nomura Real Estate Reform Co., Ltd.
(currently, Nomura Real Estate Partners Co., Ltd.)
Director of PRIME X. Co., Ltd.
Director of Nomura Real Estate Wellness Co., Ltd.
Jun. 2017	Director and Executive Officer of
Nomura Real Estate Holdings, Ltd. (present)

Nomura Real Estate Group’s Management Base

82

Shigeru Matsushima

Apr. 1980	Joined Nomura Real Estate Development Co., Ltd.
Jun. 2003	Director of Nomura Real Estate Development Co., Ltd.
Mar. 2007	Managing Director of
Nomura Real Estate Development Co., Ltd.
Apr. 2007	President and Representative Director of
Nomura Living Support Co., Ltd.
(currently, Nomura Real Estate Partners Co., Ltd.)
Apr. 2008	President and Representative Director, and Chief
Executive Officer of Nomura Living Support Co., Ltd.
Dec. 2010	President and Representative Director of
Nomura Real Estate Reform Co., Ltd.
(currently, Nomura Real Estate Partners Co., Ltd.)May 2012	Executive Officer of Nomura Real Estate Holdings, Inc.
Apr. 2013	Director of Nomura Building Management Co., Ltd.
(currently, Nomura Real Estate Partners Co., Ltd.)
Apr. 2014	President and Representative Director, and Chief
Executive Officer of Nomura Real Estate Partners Co., Ltd.
Jun. 2014	Representative Director and Executive Officer of
Nomura Real Estate Holdings, Inc.
Apr. 2015	Director of Nomura Real Estate Urban Net Co., Ltd.
Chairman and Representative Director of
Nomura Real Estate Partners Co., Ltd. (present)
President and Representative Director of
Nomura Real Estate Wellness Co., Ltd. (present)
Jun. 2015	Director of MEGALOS CO., LTD. (present)(currently, Nomura Real Estate Life & Sports Co., Ltd.)
Apr. 2018	Executive Vice President and Representative Director of
Nomura Real Estate Holdings, Inc. (present)
Director of Nomura Real Estate Reform Co., Ltd.
(currently, Nomura Real Estate Partners Co., Ltd.)
President and Representative Director of
NF Power Service Co., Ltd. (present)

Nomura Real Estate Holdings, Inc. Integrated Report 201883

Corporate GovernanceCorporate Officers

Basic Viewpoint on Corporate GovernanceNomura Real Estate Holdings believes that a company must be governed in a way that continuously maximizes corporate value over the longterm while giving consideration to the interests of shareholders and all other stakeholders. It is based on this belief and in accordance with
our Basic Corporate Governance Policy that we act as a holding company in managing and supervising the business activities of our subsidiaries and strive to build a highly transparent management organization, which in turn will enhance the earnings power of the entire Group.
Basic Corporate Governance Policy www.nomura-re-hd.co.jp/english/ir/pdf/cgpolicy.pdf

Shigeki Fujitani

Satoshi Ogishi

Director (Audit & Supervisory Committee Member)

Director (Audit & Supervisory Committee Member)

Director (Audit & Supervisory Committee Member)(External)

Apr. 1980	Joined Nomura Real Estate Development Co., Ltd.
Jun. 2005	Director of Nomura Real Estate Holdings, Inc.
Director of Nomura Real Estate Development Co., Ltd.
Apr. 2008	Director and Senior Executive Officer of
Nomura Real Estate Development Co., Ltd.
Apr. 2009	Director and Managing Executive Officer of
Nomura Real Estate Development Co., Ltd.
May 2012	Director and Executive Officer of
Nomura Real Estate Holdings, Inc.
Apr. 2014	Audit & Supervisory Board Member of
Nomura Real Estate Development Co., Ltd. (present)
Audit & Supervisory Board Member andAdvisor of Nomura Real Estate Holdings, Inc.
Audit & Supervisory Board Member of
Geo Akamatsu Co., Ltd. (present)
Jun. 2014	Audit & Supervisory Board Member of
Nomura Real Estate Holdings, Inc.
Audit & Supervisory Board Member of
Nomura Real Estate Urban Net Co., Ltd. (present)
Audit & Supervisory Board Member of
Nomura Real Estate Partners Co., Ltd. (present)
Audit & Supervisory Board Member of
MEGALOS CO., LTD. (present)(currently, Nomura Real Estate Life & Sports Co., Ltd.)
Jun. 2015	Director (Audit & Supervisory Committee Member) of
Nomura Real Estate Holdings, Inc. (present)
Audit & Supervisory Board Member of
NREG TOSHIBA BUILDING Co., Ltd.
Apr. 2018	Audit & Supervisory Board Member of
Nomura Real Estate Wellness Co., Ltd. (present)
Audit & Supervisory Board Member of
Nomura Real Estate Hotels Co., Ltd. (present)

Apr. 1981	Joined Nomura Securities Co., Ltd.
(currently, Nomura Holdings, Inc.)
Apr. 2008	Executive Managing Director of
Nomura Asset Management Co., Ltd.
Oct. 2008	Executive Officer of Nomura Holdings, Inc.
Apr. 2013	Audit & Supervisory Board Member of
Nomura Real Estate Development Co., Ltd. (present)
Jun. 2013	Audit & Supervisory Board Member of
Nomura Real Estate Holdings, Inc.
Audit & Supervisory Board Member of
Nomura Real Estate Urban Net Co., Ltd. (present)
Audit & Supervisory Board Member of
Nomura Building Management Co., Ltd.
(currently, Nomura Real Estate Partners Co., Ltd.)(present)
Apr. 2014	Audit & Supervisory Board Member of
PRIME X. Co., Ltd. (present)
Jun. 2014	Audit & Supervisory Board Member of
Nomura Real Estate Asset Management Co., Ltd.
(present)
Audit & Supervisory Board Member of
NREG TOSHIBA BUILDING Co., Ltd. (present)
Jun. 2015	Director (Audit & Supervisory Committee Member) of
Nomura Real Estate Holdings, Inc. (present)
Jun. 2016	Audit & Supervisory Board Member of
Nomura Real Estate Reform Co., Ltd.
(currently, Nomura Real Estate Partners Co., Ltd.)
Apr. 2018	Audit & Supervisory Board Member of
Nomura Real Estate Wellness Co., Ltd. (present)
Audit & Supervisory Board Member of
Nomura Real Estate Hotels Co., Ltd. (present)

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

Executive Officers
Takashi Kaku
	In charge of Quality Management andArchitectural Design

Norio Ambe	In charge of Investment Management
Business Unit

Juntaro Kimura

Basic Corporate Governance Policy
Shareholder Rights and Securing Impartialityof Action as a set of relevant guidelines that will enable directors,
executive officers, and employees to follow a set of highly
esteemed ethics and social norms. We will continue collaborating
as appropriate while closely considering the interests of shareholders, employees, customers, business partners, creditors, local
communities, and other stakeholders.

Nomura Real Estate Holdings effectively maintains the same levelof equality for every shareholder based on their shareholdings.
We also strive to disclose information in a timely and appropriatemanner so as to prevent information disparities among shareholders. Nomura Real Estate Holdings has a policy concerning strategic shareholdings that acknowledges contributions to improving
the Company’s corporate value from a comprehensive perspectiveof strengthening transaction relations with counterparties andstrategic business tie-ups, etc.
We continuously examine the rationality of the holdings from theperspective of contributing to improving the Company’s corporate
value. The Company makes appropriate decisions when exercising
voting rights related to strategic shareholdings based on whether
holdings contribute to improving the Company’s corporate value
through the enhancement of investee companies’ corporate value.

Appropriate Information Disclosure and Transparency
System for Disclosing Information
Nomura Real Estate Holdings strives to disclose information about
the Group’s management strategy, financial condition, risk management, and internal control system, etc., in a fair, timely, andappropriate manner based on the provisions of the Companies
Act, Financial Instruments & Exchange Act, as well as other laws
and the listing rules of the Tokyo Stock Exchange. Specifically, as
our timely disclosure system below indicates, the person responsible for information handling (Executive Officer in charge of the
Corporate Communications Department) collects information about
the Company through the department responsible for informationcollection (Corporate Planning Department) from each business
unit and Group company. If information must be reviewed toAppropriate Cooperation with Stakeholders
Relationship Building with Stakeholders
In recognizing that it is a member of society, the Nomura Real
Estate Group has established the Nomura Real Estate Group Code

Nomura Real Estate Group’s Management Base

Takao Orihara	In charge of Property Brokerage & CRE
Business Unit

Shigeyuki Yamamoto
In charge of Development Planning Unit

Minoru Hatada
In charge of Leasing Business Unit

Akira Yamate

Akira Ono

Director (Audit & Supervisory Committee Member)(External)

Director (Audit & Supervisory Committee Member)(External)

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

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

Daisaku Matsuo
	In charge of Residential Development
Business Unit

Masaomi Katayama
In charge of International Business Dept.

The Nomura Real Estate Group’s Efforts to Reinforce Corporate Governance• Introduced executive officer system at the holding company• Established the Advisory Committee Relating toNominations and Compensation

Achieved business execution withGroupwide, long-term perspective

Deliberates on matters related to the nomination andcompensation of directors and executive officers as
an advisory body to the Board of Directors• Redefined its business segments
Achieved quicker business execution withineach business by establishing a management
structure for each business segment• Began evaluating the effectiveness of theBoard of Directors• Revised details of subscription rights to shares used as stock options
Revised details of subscription rights toshares used for stock options ascompensation and shared advantages
and risks with shareholders

Haruki Nakamura• Disclosed reason for appointment of directors• Implemented performancebased stock incentive plan

• Increased the number of external
2)
directors (1•A ddressed revisions
to the Corporate
Governance Code	In charge of Finance & Accounting Dept.
and Finance Dept.

Yukio Ichihara	In charge of Group Internal Audit Dept.,
Group Legal & Compliance Dept., Group
General Affairs & IT Strategy Dept.,
Secretariat, Internal Audit and Compliance

Yoichiro Ishikawa
	In charge of Group Human Resources Dept.

Katsuya Tanaka
In charge of Corporate Planning Dept.

2012

2013

2014

• Appointedan external director (0

2015

1)

2016

2017

•	Added decision-making function to the Management Committee
to accelerate the transfer of authority•	Transitioned from a company with an Audit & Supervisory Board to
a company with an Audit & Supervisory Committee•	Increased the number of external directors (25)• Established the Basic Corporate Governance Policy

84

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 201885

Corporate GovernanceCorporate GovernanceStatus of Shareholdingsa. Investment shares held for purposes other than pure investment and the total amount on the balance sheet: 13 stocks / ¥1,240 million
b. Stocks, number of shares, amount on the balance sheet, and purpose for investment shares held for purposes other than pure investment
Stock

Number of shares

Amount on balance sheet(millions of yen)

500,000

381

Onward Holdings Co., Ltd.

PurposeTo enhance corporate value by strengthening business tiesc. The total amount recorded on the balance sheet, dividends received, gains/losses on sale, and gains/losses on valuation of investment shares held
for the purpose of pure investment in the fiscal year ended March 31, 2018
Category

Total amounton the balance sheet(millions of yen)

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

Total amount of gains/losses on valuation(millions of yen)

—

—

—

—

1,394

34

0

770

Non-listed shares

Other shares

Total amount ofdividends received(millions of yen)

the Group represents an important foundation of corporate governance. Within these regulations, we have established a flow ofcommunication to the executive management team to promptly
convey information in case of an unforeseen incident. The Risk
Management Committee, comprising directors and executive
officers of Nomura Real Estate Holdings and Group companies,
has also been established. The committee meets monthly to deliberate on matters pertaining to risk management, compliance, andinformation security as they relate to the entire Group. It also discusses ways to respond to risks that do emerge and regularly
reports to the Board of Directors.

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 each Group company president or an officer who
does not hold an additional office in a business operations
division, which allows the department to maintain organizational
independence. In addition, we have established the Group Internal

Risk Management System
Nomura Real Estate Holdings has established Risk Management
Regulations as a set of basic principles on risk management,
recognizing that ensuring sound management and appropriatecomprehension of and responses to various business risks facing

Timely Disclosure System

The Nomura Real Estate Group regards compliance, including theobservance of laws and regulations and corporate ethics, as oneof its most important management issues. As a set of relevant
guidelines, the Company has formulated the Nomura Real EstateGroup Code of Action. We have established the Risk Management
Committee and Group Legal & Compliance Dept. in the Company
to promote continuous education and enlightening activities forthe executives and employees of the entire Group, and to provide
advice, guidance, and support to Group companies.
Furthermore, based on our priority of collecting information
regarding risks, the Company has set up the Nomura Real EstateGroup Helpline as a point of contact for internal reporting by Group
employees. Employees who use the helpline are ensured theirinformation is kept confidential and they cannot be treated unfairly
for reporting an incident using the helpline.

Flow of Communication
Nomura Real Estate Holdings
Chairman, Risk Management Committee
Group Compliance Dept.

Nomura Real Estate Group Companies
Communication Manager• Communication at Group companies and formulation of guidelines, etc.
• Establishment of emergency communication networks at Group companies

Auditing Firm and Certified Public Accountants(As of June 26, 2018)

Internal Audits and Audit & Supervisory
Committee System

Compliance Systems

Auditing Firm

Ernst & Young
ShinNihon LLC

Employees of Group companies

Names of Certified Public Accountants

Designated and Engagement Partner

Hidetsugu Kaneko

Designated and Engagement Partner

Toru Nakagiri

Designated and Engagement Partner

Natsuo Saiki*1. The length of auditing service of each of the abovementioned auditors is seven years
or less; therefore, the number of years is omitted.
*2. Ernst & Young ShinNihon LLC takes measures to ensure that individual Engagement
Partners do not continue their involvement in our accounting audits over an extended
period of time. Assistants involved in auditing are listed below.
Certified Public Accountants: 4 / Assistant Certified Public Accountants: 6 / Other: 5Compliance Promotion Framework and Risk Management Framework
President
Tokyo Stock Exchange

ReportInformation Disclosure Screening Team

Timely disclosure

Formed as needed

Person responsible for information handling(Executive Officer in charge of the Corporate
Communications Dept.)(Made up of general managers, executive officers,
and others responsible for related departments)

Risk Management Committee Chairman

Direction

NomuraReal Estate
Holdings

ReportDepartment responsible for information collection(Corporate Planning Dept.)

About the Risk Management
Committee

Board of Directors
Chairman and President

ReportCommittee
Chairman
Risk Management
Committee

Group Compliance Officer

Department responsible for timely disclosure(Corporate Communications Dept.)

Group Compliance Dept.

ReportReportIncidents withsignificant urgency

Nomura Real Estate Group’s Management Basedetermine whether timely disclosure is required, the Information
Disclosure Screening Team made up of general managers, executive officers, and others responsible for related departments will
screen the matter and report the results to the President. Company
information found to require timely disclosure will be disclosed ina timely manner by the department responsible for timely disclosure(Corporate Communications Department) at the instruction of theperson responsible for information handling (Executive Officer incharge of the Corporate Communications Department).
The Group Internal Audit Department carries out the monitoringof operations under the aforementioned timely disclosure system.
Audit & Supervisory Committee Members attend Board of Directors’
and other important company meetings as well as receive reports
from directors and view relevant documents to investigate whether
the timely disclosure system is functioning properly.

Audit Department in the holding company that, in collaboration
with the auditing firm, supervises the internal audit functions of theentire Group and monitors and evaluates as well as audits eachdivision within the Company. Also, the results of audits are reported
at meetings of the Board of Directors and the Audit & Supervisory
Committee. The Audit & Supervisory Committee receives regular
reports from internal audit departments on the implementation andresults of internal audits. When necessary, it can recommend or
instruct additional audits or necessary investigations to be carriedout. The Audit & Supervisory Committee also audits and supervises the execution of duties by directors and business operations
by executive officers while cooperating with the auditing firm as
needed. Audit & Supervisory Committee Members attend Board of
Directors’ and other important Company meetings and can request
reports from business execution departments as necessary tocollect information on Nomura Real Estate Holdings’ execution ofbusiness operations. Nomura Real Estate Holdings has establishedan Audit & Supervisory Committee Department in order to aid theduties of Audit & Supervisory Committee Members. This officehas its own dedicated staff who work to implement measures forincreasing the effectiveness of audit operations. Nomura Real
Estate Holdings has concluded an auditing contract with Ernst &Young ShinNihon LLC (the auditing firm). In addition to regularaccounting audits by the auditing firm, the Company discusses
and verifies accounting issues with the auditing firm as needed
and strives to follow appropriate accounting procedures. Certified
Public Accountants involved in auditing are listed below.

The Nomura
Real EstateGroup
Companies

Secretariat

Compliance Officers(Directors in charge of administrative operations at Group companies, etc.)

Risk Management
Committee, etc.

<Customarily meets once a month><Extraordinary meetings held as necessary><Reports to the Board of Directors at least once
every three months><Roles>• Regular monitoring of risks• Risk evaluation and analysis• Preemptive preventive measures• Incident response• Measures to prevent repeat incidents• Improvement of compliance awarenessCompliance Leaders(General managers of general administrative operations at Group companies)

ReportDepartments

86

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Compliance Promoters, etc.
Group companies(Appointed at each company)

Nomura Real Estate Holdings, Inc. Integrated Report 201887

Corporate GovernanceObligations of the Board of Directors
Nomura Real Estate Holdings has selected the management
format of a company with an Audit & Supervisory Committee inorder to strengthen audit and oversight functions by providing
directors who serve as Audit & Supervisory Committee Memberswith voting rights during Board of Directors’ meetings. We havealso reinforced the oversight function of the Board of Directors byappointing multiple external directors and establishing the Advisory
Committee Relating to Nominations and Compensation, which hasenabled us to realize a fair and highly transparent management
system. Additionally, we have established a risk management
system, compliance system, and internal control system, witheach reporting to the Board of Directors on a regular basis, which
ensures the effectiveness of the supervision by the Board of
Directors concerning the execution of directors’ duties and business operations by executive officers.

Roles of Independent External Directors
The primary roles of independent external directors are to use theirown knowledge to provide appropriate advice from the perspectiveof the sustainable growth of the Company and enhancing corporate value, to fulfill a supervisory role over management throughimportant decision-making by the Board of Directors, to monitor for
conflicts of interest between the Company and executive management or primary shareholders, and to state the views of shareholders and other stakeholders appropriately to the Board of Directors
using a stance independent of the executive management team.
Nomura Real Estate Holdings has established its own set of criteria
for determining the impartiality of independent external directors, inaddition to the requirements of independent officers established by
the Tokyo Stock Exchange.

Audit & Supervisory Committee
The majority of Audit & Supervisory Committee Members comprises independent external directors; and at least one of themembers, who also serves as a director, possesses appropriate
knowledge of finance and accounting.
The Audit & Supervisory Committee performs audits utilizing theCompany’s internal control system and receives periodic reports on
internal audits and the results from the Internal Audit Department.
The Audit & Supervisory Committee also has the authority to ask
directors, executive officers, and business units of the Company
and the Group to report such matters when necessary.

Corporate Governance System
General Meeting of Shareholders
Appointment / dismissal

Nomura Real
Estate Holdings

Appointment / dismissal
Audit / supervision

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

Audit & Supervisory Committee Dept.

Appointment / dismissal

Advisory Committee Relating toNominations and Compensation

Representative Director

Criteria for Determining Impartiality of Independent
External Directors(Article 14 of the Basic Corporate Governance Policy)*1	A major business partner means a business partner whose transactions with
the Group exceed 2% of the Company’s or such business partner’s annual
consolidated sales in the most recent business year.
*2	Large sums of money or other property gains means gains that exceed 2% ofthat company’s annual consolidated sales in the most recent business year.

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Audit

Accounting auditor(auditing firm)

CSR Committee
Risk Management Committee

Various departments

Group Internal Audit Dept.

Guidance and support

Monitoring

Operating companies

Advisory Committee Relating to Nominations
and Compensation
In February 2016, Nomura Real Estate Holdings set up the Advisory
Committee Relating to Nominations and Compensation, comprising mainly independent external directors, as an advisory body to
the Board of Directors to strengthen the objectivity and impartiality
functions of the Board of Directors in relation to director nominations and compensation. The Advisory Committee Relating toNominations and Compensation meets as necessary to discussmatters relating to the nomination of and compensation for directors and executive officers and reports the outcome of discussions
to the Board of Directors.

Evaluating the Effectiveness of the Board of Directors
Directors conduct an annual self-assessment on the effectivenessof the Board of Directors and their contributions as a director, while
the Board of Directors carries out an analysis and evaluation of theeffectiveness of the entire Board of Directors, referencing the selfassessment of each director, and a summary of the results is disclosed appropriately. Annual evaluations will enable us to regularly
ascertain the status of improvements and to further enhance theeffectiveness of the Board of Directors.

Results of the Assessment of the Effectiveness of the Board of Directors
For the assessment of the effectiveness of the Board of Directors
in fiscal 2018, the Company conducted questionnaires andinterviews of all directors (including Audit & Supervisory
Committee Members) utilizing a third-party evaluation organization for the first time, to further improve the effectiveness of theBoard of Directors. The analysis and assessment based on
discussions at a meeting of the Board of Directors regarding
the results are outlined below.
•M embers
The scale of the Board of Directors and the ratio of independent
external directors are appropriate on the whole.
An issue to consider going forward is that to enhance thecapacity of the Board of Directors, it is advised that the Company
invite directors with experience in corporate management and anabundant knowledge of overseas business and technology.
•D iscussions
Discussions are free and lively, exceeding internal and external
limits and leveraging the knowledge and experience of eachdirector.

88

Audit & Supervisory Committee

Management Committee

Article 14 In addition to Independent Director impartiality
criteria set by the Tokyo Stock Exchange, the Board of
Directors establishes criteria concerning the impartialityof Independent External Directors and nominates
Independent External Directors having confirmed thatthey do not correspond to any of the following items.
(1)	Individuals who execute business for any other company with which the Company or its subsidiaries havea reciprocal employment relationship as each other’sExternal Directors;(2)	Individuals who are employees of the Company’s or
its subsidiaries’ major business partners*1 or who areemployees at companies that consider the Company
or its subsidiaries to be their major business partner*1(or individuals involved in the execution of business if
such business partner is a corporation);(3)	Consultants, accounting experts, or legal experts who
receive money, or other property gains in excess of ¥10
million, in addition to Directors compensation from theCompany or subsidiaries during the most recent business year;(4)	Individuals affiliated to companies, etc., that provide
professional services such as law firms, accounting
firms, and consulting companies that receive large
sums of money or other property gains*2 from theCompany or subsidiaries;(5)	Individuals who are or were involved in the execution ofbusiness at one of the Company’s major shareholders(individuals who are or were involved in the execution ofbusiness at such corporation if the major shareholder isa corporation), or lead managing underwriter; or(6) Close relatives of individuals stated in (1) to (5).

Appointment

Nomura Real Estate Group’s Management Base

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

Corporate Governance• Operation
Improvements were made in fiscal 2018 in such areas as ensuring distribution of materials prior to meetings and further clarifying
the discussion points.
An issue to consider going forward is the need for improvements to conduct a thorough review of its details by utilizing thesummary materials.
• Proposals
During fiscal 2018, the Company carried out operational improvements, such as narrowing down matters for discussion by the
Board of Directors and providing opportunities for deliberation
outside of regular Board of Directors’ meetings.
An issue to consider going forward is the ensuring of adequate
time for discussions on the Group’s strategies and the consideration of themes to be deliberated, as well as the need to follow
up on the contents of discussions.
Going forward, we hope to conduct an evaluation of effectiveness utilizing a third-party evaluation organization once every
three years.

Nomura Real Estate Holdings, Inc. Integrated Report 201889

Corporate GovernanceCorporate Governance

Shareholder Engagement

List of External Directors
Name

Shigeru Matsushima

Satoko Shinohara

Audit &
Supervisory Independent
Committee
director
Member

Supplemental
explanationof compliance item

Reason for appointment as external director

Attendance record—

Mr. Matsushima has a wealth of knowledge and wide-ranging
experience through his many years as an expert in businessadministration. He was appointed as an External Director since
his experience will be instrumental toward strengthening oversightfunctions covering the Board of Directors and achieving fair andhighly transparent management.

Attended 19 of the 19 Boardof Directors’ meetings held
during the fiscal year ended
March 2018.

——

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

Akira Yamate

Attended 18 of the 19 Boardof Directors’ meetings held
during the fiscal year ended
March 2018 and 12 of the
12 Audit & Supervisory
Committee meetings held.

Mr. Yamate is anExternal Director of
Mitsubishi UFJ
Financial Group.

Mr. Yamate has been a Certified Public Accountant for many years
and he has established a wealth of expertise and wide-ranging
experience in his field. He was appointed as an External Directorand Audit & Supervisory Committee Member to reinforce thecorporate governance system and further enhance the audit system.

Attended 18 of the 19
Board of Directors’ meetings held during the fiscal
year ended March 2018
and 11 of the 12 Audit &Supervisory Committee
meetings held.

Mr. Ono is a Partner
at Spring Partners.

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

Attended 19 of the 19
Board of Directors’ meetings held during the fiscal
year ended March 2018
and 12 of the 12 Audit &Supervisory Committee
meetings held.

Director Compensation
At the Ordinary General Meeting of Shareholders held on June 26,
2018, it was determined that an yearly amount of not more than
¥550 million for directors (excluding those who are also Audit &Supervisory Committee Members) and on June 26, 2015, it wasdetermined that an yearly amount of not more than ¥150 million
for directors who are Audit & Supervisory Committee Members, will
be paid as additional compensation for performance-based stockincentive. Moreover, as for performance-based stock incentive planat the Ordinary General Meeting of Shareholders held on June 26,
2018, it was determined that for each applicable period (three fiscal
years) the Company’s contribution to trust will not be an amount of
more than ¥730 million while the number of shares delivered, etc.,
to the Company’s directors will not be more than 423,000 shares.
A decision was also made to implement a performance-based
stock incentive plan in place of stock options for stock compensation from the fiscal year ending March 31, 2019 (please see page
80 for details).

Total Compensation, etc., Total Compensation, etc., by Type of Remuneration, and the Number of Directors Applicable(Fiscal year ended March 31, 2018)
Director category

90

Total compensation,etc. (millions of yen)

Total compensation, etc. by type of remuneration (millions of yen)
Basic
Stock option
Bonuscompensation, etc.

Number of directors
applicable

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

469

250

81

137

8

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

77

57

—

20

2

External directors and Audit & Supervisory Board Members

71

71

—

—

5

Total

618

379

81

157

15

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Status of Investor Relations Activities
We strive to actively engage individual investors through investor
relations fairs and Company information sessions conducted by the
CEO and via the Internet. For analysts and institutional investors,
at earnings briefings following our announcement of semiannual
and annual results, the CEO sits down with them to explain about
the Company’s performance and management strategy. Videosof this explanation are streamed through our corporate website.
Additionally, we strive to foster greater understanding in the
Company through conference calls when quarterly earnings results
are announced as well as through small meetings with the President
and property tours.
For overseas investors, we offer earnings information in English
and stream English-language versions of earnings briefings via our
corporate website. In addition, the CEO or CFO visits with overseas
investors individually in the United States, Europe, and Asia where
they strive to promote understanding of the Company throughbriefings on business performance and management strategy.

We have been working to improve the disclosure section of our
website in order to justly and fairly provide information to our investors. Consequently, the Company earned a silver award from
Gomez IR Site Ranking for the fiscal year ended March 31, 2018.
Our comprehensive rank was 35 (14 in the previous fiscal year),putting us fourth in the industry (first in the previous fiscal year).

Main IR Activities during the Fiscal Year Ended March 31, 2018
IR activities for institutional investors

Number oftimes held

Earnings briefings

2

Conference calls on the earnings announcement days

4

Meetings with investors and analysts(This number includes the following meetings)

478

Small meetings with the president

1

Overseas IR (Europe, U.S., Asia) (including overseas conferences)9

Conference organized by securities companies (Japan)

6

Property tours

6

SR meetings

13

IR activities for individual investors

Number oftimes held

Company information sessions by CEO1

IR fairs

1

Company information session via the Internet

1

Please Visit Our IR Site.
Japanese:
www.nomura-re-hd.co.jp/ir/
English:www.nomura-re-hd.co.jp/english/ir/

Nomura Real Estate Group’s Management Base

Akira Ono

Attended 18 of the 19 Boardof Directors’ meetings held
during the fiscal year ended
March 2018.

Mr. Ogishi has established a wealth of expertise and wide-ranging
experience as an attorney-at-law. He was appointed as an External
Director and Audit & Supervisory Committee Member to reinforce
the corporate governance system and further enhance the audit
system. The Company and its subsidiaries engage in transactions
concerning legal services with Nishimura & Asahi, of which Satoshi
Ogishi is a Partner. However, the transaction amount in the mostrecent business year represents less than 2% of the sales of saidlaw office and of the consolidated operating revenue of theCompany.

Mr. Ogishi is aPartner at Nishimura& Asahi.

Satoshi Ogishi

Ms. Shinohara has worked for many years as an architect and has
gained a wealth of knowledge and experience in her field. She wasappointed as an External Director since her experience will be
instrumental toward strengthening oversight functions covering theBoard of Directors and achieving fair and highly transparent management. Spatial Design Studio, for which Satoko Shinohara serves
as Representative Director, has the above described transactions
with Nomura Real Estate Development Co., Ltd. However, thetransaction amount in the most recent business year represents
less than 2% of the sales of said company and of the consolidated
operating revenue of the Company.

Nomura Real Estate Holdings conducts proactive and constructive
engagement with shareholders based on its established systems
and policy on initiatives to promote greater engagement. The
director in charge of investor relations takes the lead in engaging
with shareholders, while the department in charge of investor
relations supports these efforts. The department in charge of investor relations meets with internal departments and shares information
on a daily basis to gather information and promote engagementwith shareholders. The director in charge of investor relations
reports the views and concerns of shareholders found during
engagement to the executive management team, and regularly
reports to the Board of Directors, which discusses this information.
We have established Regulations Concerning the Prevention of
Insider Trading in order to ensure the fairness of information disclosures and prevent leakages of information that affect our stock
price. We manage insider information appropriately according tothese regulations, while a silent period has also been established.

Compliance with Japan’s Corporate Governance CodeOur reasons for not implementing two of the 73 principles of Japan’s Corporate Governance Code as of August 2018 are provided below. We are now working to implement theseprinciples as soon as practicable. Moreover, we are planning to implement revisions by the end of 2018 in regard to the changes in the Corporate Governance Code announced onJune 1, 2018.

Principle

Reason for not implementing[Supplementary Principle 4-1-3]
Proper Supervision of Successor Plans for
CEO (Planning)

The Company believes that the appropriate appointment of management in line with the Company’s corporate philosophy
and management strategies, including external candidates, is important for realizing sustainable growth. As for the plan forsuccessors, the Company clarified the criteria for the appointment of officers, and established a process, the scope of which
includes the Company’s training policy, the management of each officer’s evaluation, and their election. Going forward, in
addition to the Advisory Committee Relating to Nominations and Compensation providing regular monitoring and reporting to
the Board of Directors, the Company will strive for the further enhancement of the structure and content of training, to ensurethat the training of successor candidates, in relation to the aforementioned established successor plan, goes as planned.

[Principle 4-14, Supplementary
Principle 4-14-1, Supplementary
Principle 4-14-2]
Disclosure of Training Policy for Directors

The Company provides training that takes into consideration its corporate philosophy and management strategies. Specifically,in addition to being trained regarding corporate management such as financial and legal matters when an officer is appointed,
the Company establishes opportunities to train such officers after appointment mainly by leveraging external training organizations and by rotating them through different organizational units to improve management capabilities. Also, the Company
establishes opportunities for external directors to deepen understanding relating primarily to its business activities and operating environment. Going forward, the Company will continue to investigate the aforementioned topics, mainly through theAdvisory Committee Relating to Nominations and Compensation, in order to further enhance the structure and content oftraining primarily for directors.

Nomura Real Estate Holdings, Inc. Integrated Report 201891

Section 4
Corporate and Financial Information

This section includes the consolidated­financial statements and other information
for use in quantitative analysis of the Group’s
financial condition and profitability and cash
flow creation.

94

10-Year Summary

96

Consolidated Balance Sheets98	Consolidated Statements of Income /Consolidated Statements ofComprehensive Income

100 Consolidated Statements of Cash Flows
101 Business Unit Information
103	Facilities Situation
108 Group Company Profiles
110 Corporate Information

Corporate and Financial Information

92

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 201893

10-Year Summary

10-Year Summary(Millions of yen)
09/3

10/3

11/3

12/3

13/3

14/3

15/3

16/3

17/3

18/3

19/3 (forecast)

Operating revenue

448,655434,226

480,983

450,807517,740

532,016

567,159

569,545569,680

623,762700,000

Operating gross profit

100,763

105,576

107,222

114,910

134,571

159,335

162,051

177,973

177,241

182,053—

Operating profit

34,012

39,27442,08349,93958,30874,307

71,89480,912

77,271

76,66081,000Ordinary profit

23,702

23,967

26,14934,17345,80664,05863,681

72,67968,952

68,03372,000

Profit attributable to owners of parent

13,770

4,660

5,471

17,591

19,357

26,84438,44147,18247,00546,02947,000Cash flows from operating activities(108,030)

19,26633,94743,87689,29583,53523,837

13,258(31,889)

21,498—Cash flows from investing activities(141,788)(24,571)(33,730)

7,809(2,588)(20,191)(32,476)(59,714)(54,558)(51,637)—

Cash flows from financing activities

295,507

13,098(7,485)(63,296)(94,666)(57,858)(8,983)53,63776,57543,787—

Composition of Operating Revenue*5, 6

FY18/3¥623.7 billion

Millions of yen

16/3

17/3

18/3

334,514

329,787355,455

Capital investment*1

56,662

26,79637,57014,09818,963

21,93838,87150,36761,30071,665—

 esidential Development
R
Business Unit

Depreciation*2

7,148

10,758

12,835

13,534

13,513

14,333

15,25816,026

16,877

18,824—

Leasing Business Unit

110,226

115,009

134,941Investment Management
Business Unit

10,973

9,662

9,378

Per Share Data (Yen):
Profit attributable to owners of parent

92.21

25.69

28.74

92.38

101.61140.70201.28246.42245.10240.89250.22

 roperty Brokerage & CRE
PBusiness Unit

35,37334,82035,703

Annual dividends

40.00

25.00

25.00

25.00

30.00

35.00

45.00

57.50

65.00

70.00

75.00

 roperty & Facility Management
P
Business Unit

91,552

95,764

104,581Other Business Unit

1,353

106

107

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

1,385,531

1,405,424

1,474,331

1,402,624

1,369,949

1,313,887

1,369,226

1,485,449

1,593,093

1,673,099—

Current assets

740,266

709,618

636,925585,332

535,103496,978

549,300

608,779

684,306

717,635—  Inventories

481,489

458,921433,386

396,857

369,667

349,167

429,764

496,910570,888592,996—  Equity investment

109,076

94,88960,94841,89529,578

7,128

6,316

819

2,567

9,612

—

Non-current assets

645,265

695,805

837,406

817,292

834,845816,909819,926

876,670

908,786

955,464—

Total net assets

281,375

349,437

357,365

376,486

398,276

418,697

461,031456,408

493,813514,982—

Interest-bearing debt

778,073759,636

816,910758,562

669,268

617,583

616,700

721,900

810,100

877,800

—

ROA*3

2.5

2.8

2.9

3.7

4.6

5.8

5.4

5.6

4.9

4.6

—

ROE*4

5.9

1.7

1.8

5.7

5.9

7.8

10.3

11.2

10.1

9.4

—

Operating margin

7.6

9.0

8.7

11.1

11.3

14.0

12.7

14.2

13.6

12.3

11.6

Dividend payout ratio

43.4

97.3

87.0

27.1

29.5

24.9

22.4

23.3

26.5

29.1

30.0

Shareholders’ equity ratio

17.0

21.4

20.7

22.6

24.5

27.1

28.8

29.9

30.2

30.0

—

Number of employees (consolidated)

4,998

5,195

5,300

5,399

5,581

5,747

6,029

6,233

6,467

6,636

—

Operating Profit Factor Analysis
Billions of yen
77.2

+2.6

+0.1
(0.1)

+0

+0.6

76.6

(0.6)

(3.2)

Management Benchmarks (%):

Main Factors
 esidential Development
R
Business Unit

Decrease in gross margin ratio of
housing sales

Leasing Business Unit

Increase in leasing revenue
Increase in gain on sales of property
development and land forcommercial use

Investment Management
Business Unit

In response to asset acquisition feesfrom the merger of two REITs infiscal 2016

 roperty Brokerage &P
CRE Business Unit

Increase in business expenses fromnew branch openings

 roperty & Facility
PManagement Business Unit

Increase in revenue from property andfacility management, and construction
ordersOther Business Unit

94

Nomura Real Estate Holdings, Inc. Integrated Report 2018

18/3

Corporate and Financial Information*1 Capital investment represents the amount shown for “Purchase of property, plant and equipment and intangible assets” in the consolidated statements of cash flows.
*2 Depreciation represents the amount shown for “Depreciation” in the consolidated statements of cash flows.
*3 ROA = (Operating income + Non-operating income) / Total assets at end of the fiscal year
*4 ROE = Profit attributable to owners of parent / Equity (as average over the fiscal year)*5	From the fiscal year ended March 31, 2017, the classification of Yokohama Business Park Heating and Cooling Supply Co., Ltd.
(now: Nomura Real Estate Heating and Cooling Supply Co., Ltd.) has been changed from the Leasing Business Unit to the Property & Facility Management Business Unit.
Due to this change, the full-year results for the fiscal year ended March 31, 2016 are classified under the new classification.
*6	Nomura Real Estate Reform Co., Ltd., which had been classified under the Residential Development Business Unit, was transferred to the Property & Facility Management Business
Unit in the fiscal year ending March 31, 2019. In line with this change, the financial results for the fiscal year ended March 31, 2018 have been calculated under the new classification.

17/3

Adjustments

Nomura Real Estate Holdings, Inc. Integrated Report 201895

Consolidated Balance Sheets

Consolidated Balance Sheets(Millions of yen)

AssetsCurrent Assets

2017(Millions of yen)

Liabilities

2018

2017

2018

Current Liabilities

Cash and deposits

47,701

52,347   Notes and accounts payable–trade35,612

41,696

Notes and accounts receivable–trade16,53517,308   Short-term loans payable

106,300

102,300

Securities
Real estate for sale

—

9,000

   Current portion of bonds

10,000—120,385

102,884   Income taxes payable

16,052

14,99329,45918,807

Real estate for sale in process

249,663261,278  Deposits received

Land held for development

199,812228,326   Deferred tax liabilities

20

—

2,567

9,612

   Provision for bonuses

7,516

7,679

   Provision for directors’ bonuses

639

590

   Provision for loss on business liquidation

47

36  Other

50,14948,073   Total current liabilities

255,799

234,176

Equity investments
Deferred tax assets

5,555

—

Other

42,12336,917(37)(39)

684,306

717,635

Allowance for doubtful accounts
Total current assets

Non-Current Liabilities  Bonds payable

70,000140,000   Long-term loans payable

623,800

635,500   Lease and guarantee deposits received

57,59760,241   Deferred tax liabilities

63,592

59,828   Deferred tax liabilities for land revaluation

3,900

3,900

   Provision for loss on subleasing business

257

102

18,931

18,375   Net defined benefit liability  Other   Total non-current liabilities
Total Liabilities

Non-Current Assets

5,402

5,991

843,481923,940

1,099,280

1,158,116

Property, plant and equipment
394,607403,011(152,718)(163,985)

Shareholders’ Equity    Buildings and structures, net

241,888

239,026   Capital stock

116,779

117,072  Land549,671592,550   Capital surplus

110,023

110,316  Other

26,053

26,576   Retained earnings

242,704

275,299(9,778)  Treasury shares   Accumulated depreciation(8,787)   Other, net

17,265

16,797  Total shareholders’ equity  Total property, plant and equipment

808,825

848,374

Accumulated Other Comprehensive Income

10,985

12,364

Intangible assets  Investment securities   Valuation difference on available-for-sale securities   Deferred gains or losses on hedges

Investments and other assets
46,25242,362   Revaluation reserve for land

(3)

(10,004)

469,503492,683

7,947

4,516

119

262

7,860

7,860

21,73823,131   Foreign currency translation adjustment

62

(225)

14,992

20,843   Remeasurements of defined benefit plans(4,129)(3,605)  Other

5,992

8,387

   Total accumulated other comprehensive income   Total investments and other assets
Total non-current assets
Total Assets

Nomura Real Estate Holdings, Inc. Integrated Report 2018

(0)

(0)

Share Acquisition Rights

88,97594,725

Non-Controlling Interests

908,786

955,464

1,593,093

1,673,099

Total Net Assets
Total Liabilities and Net Assets

11,860

8,807

1,986

2,424

10,462

11,067493,813514,982

1,593,093

1,673,099

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Corporate and Financial Information   Lease and guarantee deposits   Deferred tax assets   Allowance for doubtful accounts

96

Net Assets   Buildings and structures   Accumulated depreciation

97

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income(Millions of yen)

(Millions of yen)



2017

2018

Operating Revenue

569,680

623,762

ProfitOperating Cost

392,438

441,708

Other Comprehensive Income

Operating Gross Profit

177,241

182,053

Valuation difference on available-for-sale securities

2017

2018

47,527

46,666

1,282(3,430)(36)

142Selling, General and Administrative Expenses

99,970105,393

Deferred gains or losses on hedges

Operating Profit

77,271

76,660

Revaluation reserve for land

(0)

(0)

Foreign currency translation adjustment

19

(33)

Remeasurements of defined benefit plans

(616)

523

Non-Operating Income
Interest income

5245

Dividend income

252

75

Share of profit of entities accounted for using equity method

83

25Interest on refund—

162

Gain on transfer of right to request purchase of shares

—

112

Other

310

351

Total non-operating income

698

773

Non-Operating Expenses
Interest expenses

7,539

7,334

Other

1,477

2,065

Total non-operating expenses

9,017

9,400

68,952

68,033

Ordinary Profit Share of other comprehensive income of entities accounted
for using the equity method   Total other comprehensive income
Comprehensive Income

(0)

(254)

648

(3,052)

48,17543,61347,65442,976521

636(Breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

Extraordinary Income
Gain on sales of non-current assets

946

3,311

Gain on sales of investment securities—

455

Total extraordinary income

946

3,766
3,614

Extraordinary Losses
Impairment loss

254

Loss on building reconstruction

337

462

Total extraordinary losses

591

4,077

Profit before Income Taxes

69,30767,722

Income Taxes–Current

22,957

23,811

Income Taxes–Deferred(1,177)(2,755)

Total Income Taxes

21,78021,055

Profit47,527

46,666

Profit Attributable to Non-Controlling Interests
Profit Attributable to Owners of Parent

521

636

47,00546,029Corporate and Financial Information

98

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 201899

Consolidated Statements of Cash Flows

Business Unit Information

Operating Revenue(Millions of yen)

Cash Flows from Operating Activities
Profit before income taxes
Depreciation
Impairment loss
Loss (gain) on sales of investment securities
Loss (gain) on sales of non-current assets
Share of (profit) loss of entities accounted for using equity method
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for loss on business liquidation
Increase (decrease) in provision for loss on subleasing business
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses
Decrease (increase) in notes and accounts receivable–trade
Decrease (increase) in inventories
Decrease (increase) in equity investments
Increase (decrease) in notes and accounts payable–trade
Increase (decrease) in deposits received
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash Flows from Investing Activities
Purchase of investment securities
Proceeds from sales and liquidation of investment securities
Purchase of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets
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 guarantee deposits received
Other, net
Net cash provided by (used in) investing activities

100

Nomura Real Estate Holdings, Inc. Integrated Report 20182018

69,307
16,877
254
—
(946)
(83)
(1)
(13)
(55)
912
(304)
7,539
(1,157)(73,977)(1,748)(15,546)(158)(2,244)(1,346)285(9,332)(21,495)(31,889)

67,722
18,824
3,614(455)(3,311)
(25)
1
(11)
(155)
(555)
(121)
7,334
(769)
(28,943)(7,044)
6,084(10,652)
4,566
56,10394(9,425)(25,274)
21,498(1,499)1,410(61,300)
12,066(1,018)964(12,448)
6,124
1,142
(54,558)(4,439)3,491(71,665)
19,589(1,148)1,240(3,153)
4,189
258(51,637)

(500)
(148)
160,000(91,300)
19,869—88
98(0)(11,504)(26)
76,575(25)(9,897)57,591(11,500)(149)
80,000(60,800)
69,360(10,000)
391—(10,048)(13,435)(31)
43,7870
13,64847,6994
47,699—61,347

Residential Development
Housing sales
Other
Leasing*1
Leasing (offices)
Leasing (retail facilities)
Leasing (other)
Property development
Property development (sales)
Property development(leasing)
Other
Investment Management
Property Brokerage & CRE
Property brokerage
Other
Property & Facility
Management*2, 3
Property & facility
management
Construction ordered
Fitness club & elderly care
Other
Other
Adjustments(Eliminations or Corporate)
Total(Millions of yen)

15/3*4

15/3*5

16/3*5

16/3*6

17/3*6

18/3*7359,397
332,999
26,39792,87846,563
10,323
5,552
16,026—359,397
332,999
26,39792,87846,563
10,323
5,552—
12,318334,514318,795
15,719110,625
49,594
10,873
5,882—
33,260334,514318,795
15,719110,226
49,594
10,873
5,882—
33,260329,787
308,960
20,827
115,009
51,981
11,6495,954—
35,350355,445336,819
18,626
134,941
53,312
12,686
7,193—
43,301

379,000——
173,000
—
—
—
—
—

—

3,167

3,320

3,320

4,054

4,724

—

14,413
9,166
30,232
25,833
4,399

14,953
9,166
30,232
25,833
4,399

7,694
10,97335,37328,028
7,345

7,295
10,97335,37328,028
7,345

6,018
9,662
34,82030,283
4,536

13,722
9,378
35,703
31,637
4,065

—
9,500
40,500——71,63585,837

90,29491,552

95,764

104,581

112,000

49,79449,511

50,662

47,952

48,301

50,386—

21,841——
17,753

21,583
14,742—
3,008

24,63614,995—
1,353

24,63614,995
3,967
1,353

26,857
15,5235,081
106

31,604
16,064
6,526
107

—
—
—
0

(13,905)(13,362)(13,590)(14,449)(15,470)(16,396)(14,000)

567,159

567,159

569,545569,545569,680

623,762700,000

33,811
24,4474,813
8,477

33,811
24,447
4,813
8,477

31,90932,0997,376
9,900

31,90931,7197,376
9,900

27,78732,567
6,016
9,124

24,52335,232
5,911
8,452

26,50035,0006,000
10,500

5,477

5,758

5,314

5,693

6,939

7,078

7,500

167

(113)

(152)

(152)

(30)

(10)

0

(5,300)(5,300)(5,536)(5,535)(5,132)(4,527)(4,500)71,894

71,89480,91280,912

77,271

76,66081,00019/3 (forecast)

Operating Profit

Residential Development
Leasing
Investment Management
Property Brokerage & CRE
Property & Facility
Management
Other
Adjustments(Eliminations or Corporate)
Total(Millions of yen)*1	The breakdown of operating revenue for the Leasing Business Unit has been changed since the second quarter of the fiscal year ended March 31, 2016. In line with this change,
the figures for the fiscal year ended March 31, 2015 and the fiscal year ended March 31, 2016 have been published under the new classification.
*2	The breakdown of operating revenue for the Property & Facility Management Business Unit has been changed from “Building management” and “Housing management” to“Property & facility management” and “Construction ordered” since the first quarter of the fiscal year ended March 31, 2015. According to this change, the figures for the
fiscal year ended March 31, 2013 and after have been published under the new classification.
*3	From the first quarter of the fiscal year ended March 31, 2016, the breakdown of operating revenue has been changed due to the fact that MEGALOS CO., LTD.
		(present: Nomura Real Estate Life & Sports Co., Ltd.), which used to be classified in the Other Business Unit, and Nomura Real Estate Wellness Co., Ltd., which was newly
established in the first quarter of the fiscal year ended March 31, 2016, are classified in the Property & Facility Management Business Unit. In line with this change, the figures
for the full-year results of the fiscal year ended March 31, 2015 have been published under the new classification.
*4	From the second quarter of the fiscal year ended March 31, 2015, a partially revised method of allocating Companywide costs among adjustments to each business unit wasincorporated. In addition, the apartment leasing business was transferred from the Residential Development Business Unit to the Leasing Business Unit. In line with this change,
the full-year results of the fiscal year ended March 31, 2015 have been published under the new classification.
*5	From the first quarter of the fiscal year ended March 31 2016, MEGALOS CO., LTD. (present: Nomura Real Estate Life & Sports Co., Ltd.), which used to be classified in theother Business Unit, was classified in the Property & Facility Management Business Unit. In line with this change, the figures for the full-year results of the fiscal year ended
March 31, 2015 and the fiscal year ended March 31, 2016 have been published under the new classification.
*6	From the fiscal year ended March 31, 2017, the classification of Yokohama Business Park Heating & Cooling Supply Co., Ltd (present: Nomura Real Estate Heating andCooling Supply Co., Ltd.) has been changed from the Leasing Business Unit to the Property & Facility Management Business Unit. In line with this change, the full-year resultsfrom the fiscal year ended March 31, 2016 to the fiscal year ended March 31, 2018 have been published under the new classification.
*7	As of the fiscal year ending March 31, 2019, the classification of Nomura Real Estate Reform Co., Ltd. has been changed from the Residential Development Business Unit to theProperty & Facility Management Business Unit. In line with this change, the full-year results of the fiscal year ended March 31, 2018 have been published under the new classification.

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Corporate and Financial Information

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 shares
Proceeds from share issuance to non-controlling shareholders
Purchase of treasury shares
Cash dividends paid
Dividends paid to non-controlling interests
Net cash provided by (used in) financing activities
Effect of Exchange Rate Change on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period
Increase (Decrease) in Cash and Cash Equivalents Resulting
from Change of Scope of Consolidation
Cash and Cash Equivalents at End of Period

2017

101

Facilities Situation

Business Unit Information

Assets

1. Facilities Situation


Residential Development
Leasing
Investment Management
Property Brokerage & CRE
Property & Facility Management
Other
Adjustments (Eliminations or Corporate)
Total

Inventories
Residential Development
Leasing
Investment Management
Property Brokerage & CRE
Property & Facility Management
Other
Adjustments (Eliminations or Corporate)
Total

Return on Assets (ROA)*5
Residential Development
Leasing
Investment Management
Property Brokerage & CRE
Property & Facility Management
Other
Total*6(Millions of yen)

15/3*1

15/3*2

16/3*2

16/3*317/3*318/3*4

382,585
849,885
40,55522,60632,375
19,833
21,383
1,369,226

382,585
849,885
40,55522,606
49,696
2,485
21,411
1,369,226

414,812922,748
36,692
32,04751,403
1,565
26,1801,485,449

414,812918,710
36,692
32,04755,695
1,565
25,926
1,485,449

450,698
993,985
35,64922,87356,529929
32,427
1,593,093

448,4121,060,815
34,84017,18162,781921
48,147
1,673,099

338,530
88,446
—
1,184
168
1,519
(84)
429,764

377,849
118,277
—
—
271
638
(126)
496,910

377,849
118,277
—
—
271
638
(126)
496,910403,232
166,997
—
—
964
13
(319)
570,888

401,030
187,299
—
—
5,091
13
(437)
592,996

(%)

8.8
2.9
11.9
37.5
16.9
0.8
5.4

8.8
2.9
11.9
37.5
11.6
—
5.4

15/3

2017

2018

427

675

LeasingChange247

56,224

69,151

12,926

Investment Management

22

26

4

Property Brokerage and CRE

649

527

(122)

1,754

2,081

326

—

2

2

59,07972,464

13,385

Property and Facility Management
Other
Subtotal
Adjustments

1,295

1,111

(184)

Total

60,37473,575

13,200

7.7
3.5
20.1
30.9
10.3
—
5.6

7.7
3.5
20.1
30.9
10.2
—
5.6

6.2
3.3
16.9
39.9
12.3
—
4.9

5.5
3.3
17.0
49.2
11.3
—
4.6

16/3

17/3

18/3

19/3 (forecast)

6,162
859
21.1
87
2

5,363
643
21.9
134
215

4,885
682
21.7
252
402

5,258
607
19.1
239
218

5,400
700
—
—
—

4.5

2.2

0.8

0.7

—

1,123,188

1,074,481

1,260,064

1,285,903—

7,174
710,980

7,710
713,5748,272
745,147

8,561
800,739——729
155,706
140,395

705
163,036
144,263

702
168,999
140,743723
173,705
139,836———*1	From the second quarter of the fiscal year ended March 31, 2015, a partially revised method of allocating Companywide costs among adjustments to each business unit wasincorporated. In addition, the apartment leasing business was transferred from the Residential Development Business Unit to the Leasing Business Unit. In line with this change,
the full-year results of the fiscal year ended March 31, 2015 have been published under the new classification.
*2	From the first quarter of the fiscal year ended March 31, 2016, the classification of MEGALOS CO., LTD. (present: Nomura Real Estate Life & Sports Co., Ltd.) has been changed
from the Other Business Unit to the Property & Facility Management Business Unit. In line with this change, the full-year results of the fiscal year ended March 31, 2015 and thefiscal year ended March 31, 2016 have been published under the new classification.
*3	From the fiscal year ended March 31, 2017, the classification of Yokohama Business Park Heating & Cooling Supply Co., Ltd. (present: Nomura Real Estate Heating and Cooling
Supply Co., Ltd.) has been changed from the Leasing Business Unit to the Property & Facility Management Business Unit. In line with this change, the full-year results of the
fiscal year ended March 31, 2016 have been published under the new classification.
*4	From the fiscal year ending March 31, 2019, the classification of Nomura Real Estate Reform Co., Ltd. has been changed from the Residential Development Business Unit to theProperty & Facility Management Business Unit. In line with this change, the full-year results of the fiscal year ended March 31, 2018 have been published under the new classification.
*5	ROA for each business unit = Business unit operating profit / Business unit assets at end of the fiscal year
*6	Total ROA = (Operating profit + Non-operating profit) / Total assets at end of the fiscal year
*7	Classification for completed housing inventories changed as of the third quarter of the fiscal year ended March 31, 2017. As a result, data from the fiscal year ended
March 31, 2015 to the fiscal year ended March 31, 2018 has been altered to reflect this change.

The following facilities were completed in the fiscal year ended March 31, 2018.
Company Name

Property Name (Location)

Business
Segment

Use

Construction, Size,
Details of Facility, etc.

Area (m2)Completion

Acquisition Price(Millions of yen)

Nomura Real Estate
Development Co., Ltd.

Nomura Fudosan Sendai Aobadori Building (Aoba-ku, Sendaishi, Miyagi)

Leasing

OfficeSteel-framed construction,
1 floor below ground,
10 floors above ground

Building: 12,026
Land: 1,595

April 2017

7,715

Nomura Real Estate
Development Co., Ltd.

Landport Takatsuki(Takatsuki-shi, Osaka)

Leasing

Logistics
facility

Reinforced concrete construction(partially steel-framed construction), 5 floors above ground,
1 other building

Building: 70,529
Land: 35,276

June 2017

20,886

We acquired the following properties in the fiscal year ended March 31, 2018.
Company Name

Property Name (Location)

Business
Segment

Use

Construction, Size,
Details of Facility, etc.

Area (m2)

Acquisition Price(Millions of yen)

Nomura Real Estate
Development Co., Ltd.

Morisia Tsudanuma*1(Narashino-shi, Chiba)

Leasing

Retailfacility

Steel-framed reinforced concrete construction(partially reinforced concrete), 3 floors below
ground, 12 floors above ground, 1 otherbuilding

Building: 97,699
Land: 19,194

18,004

Nomura Real Estate
Development Co., Ltd.

Kameido 6-chome Project(tentative name)*1, 2(Koto-ku, Tokyo)

LeasingLand slated
for building
construction—

Land: 24,822

17,497

Nomura Real Estate
Development Co., Ltd.

Wako Building(Minato-ku, Tokyo)

Leasing

OfficeNomura Real Estate
Development Co., Ltd.

Soto-Kanda 3-chome Project(tentative name)(Chiyoda-ku, Tokyo)

LeasingLand slated
for building
construction

Steel-framed reinforced concrete construction,
Building: 3,171
1 floor below ground, 8 floors above ground,
Land: 621
1 other building—

Land: 663

7,289

3,980

*1 Includes trust beneficiary right.
*2 “Land area” refers to total area during the planning stage.

The following land held for development was reclassified as a non-current asset in the fiscal year ended March 31, 2018.
Company Name
Nomura Real Estate
Development Co., Ltd.

Property Name (Location)

Business
Segment

Use

Construction, Size,
Details of Facility, etc.

Area (m2)Kanda Nishikicho 1-chome
Project (tentative name)*(Chiyoda-ku, Tokyo)

Leasing

OfficeSteel-framed reinforced concrete construction(partially reinforced concrete), 1 floor below
ground, 9 floors above ground, 1 otherbuilding

Building: 4,241
Land: 886

Acquisition Price(Millions of yen)
6,947
Corporate and Financial Information

Residential Development
Condominium sales (units)
Detached housing sales (units)
Gross margin ratio of housing sales (%)
Completed housing inventories (released for sale) (units)*7
Completed housing inventories (unreleased) (units)*7
Leasing
Vacancy rate (%)
Investment Management
Outstanding assets under management (millions of yen)
Property Brokerage & CRE
Brokerage: Number of transactions
Brokerage: Total transaction value (millions of yen)
Property & Facility Management
Buildings under management
Condominiums under management (units)
Members of MEGALOS

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Business Unit (Millions of yen)
Residential Development(Millions of yen)

338,530
88,446
—
1,184
49
1,638
(84)
429,764

Business Unit Operating Results

102

In the fiscal year ended March 31, 2018, we invested a total amount of ¥73,575 million, including the acquisition of Morisia Tsudanuma(Narashino-shi, Chiba).

* Excludes construction in progress accounts.

We sold the following properties in the fiscal year ended March 31, 2018
Company Name

Property Name (Location)

Business
Segment

Use

Construction, Size, Details of Facility, etc.

Nomura Real Estate
Development Co., Ltd.

Nomura Fudosan Musashi Kosugi
Building N*1, 2 (Nakahara-ku,
Kawasaki-shi, Kanagawa)Leasing

OfficeSteel-framed construction, 1 floor below
ground, 14 floors above ground

Building: 18,905
Land: 3,537

Nomura Real Estate
Development Co., Ltd.

Nomura Fudosan Musashi Kosugi
Building S*1, 2 (Nakahara-ku,
Kawasaki-shi, Kanagawa)

OfficeSteel-framed construction, 1 floor below
ground, 6 floors above ground

Building: 6,555
Land: 2,559

Area (m2)Book Value(Millions of yen)

16,138
Leasing*1 Includes trust beneficiary right.
*2 Both total building area and land area are multiplied by our share ratio.

Nomura Real Estate Holdings, Inc. Integrated Report 2018103

Facilities Situation

Facilities Situation

2. Major Facilities and Equipment
Major facilities and equipment by unit for the Nomura Real Estate Group are as follows.
1) Leasing Business Unit
Company NameBook Value(Millions of yen)

Construction, Size, Details
of Facility, etc.

Total Floor
Area (m2)Completion ofConstructionor (Date of
Acquisition)

Land
Area
(m2)

Facility

OfficeSteel-framed reinforced concrete
construction (partially steelframed reinforced concrete),
3 floors below ground, 39 floors
above ground

158,732

March
1984

33,921

14,637 129,809

Steel-framed construction(partially steel-framed reinforced
concrete), 2 floors below ground, 245,200
21 floors above ground, 11 otherbuildings

MainlyFebruary
1990

70,817

Use

Land

Other

Total

Property Name (Location)

Book Value(Millions of yen)

Use

Construction, Size, Details
of Facility, etc.

Total Floor
Area (m2)Completion ofConstructionor (Date of
Acquisition)

Land
Area
(m2)

Facility

98,254September
2006

72,013

13,986—468

14,455

Land

Other

Total

NREG TOSHIBABUILDINGLAZONA Kawasaki
Plaza*3, 5 (Saiwai-ku,
Kawasaki-shi, Kanagawa)Retailfacility

Steel-framed reinforced concrete
construction (partially steelframed reinforced concrete),
1 floor below ground, 6 floors
above ground

NomuraReal Estate
Development

Otemachi Nomura
Building*2, 3(Chiyoda-ku, Tokyo)

OfficeSteel-framed construction(partially steel-framed reinforced
concrete), 5 floors below ground,27 floors above ground

9,815

February
1994

749

1,260

12,5849

13,853

NREG TOSHIBABUILDING

Toshiba Hamamatsucho
Building(Minato-ku, Tokyo)

OfficeSteel-framed reinforced concrete
construction, 8 floors above
ground13,482

July
1974

2,907

361

10,9560

11,318

NomuraReal Estate
Development

Dai-ni Edobashi Building*5(Chuo-ku, Tokyo)

OfficeSteel-framed reinforced concrete
construction, 3 floors below
ground, 9 floors above ground

13,359November
1973

1,376

576

10,553

0

11,130Hamamatsucho Building /Toshiba Building(Minato-ku, Tokyo)

NomuraReal Estate
Development

Yokohama Business
Park*2 (Hodogaya-ku,
Yokohama-shi,
Kanagawa)

OfficeNREG TOSHIBABUILDINGLAZONA Kawasaki
Toshiba Building(Saiwai-ku, Kawasaki-shi,
Kanagawa)

OfficeSteel-framed construction,
15 floors above ground

98,428

March
2013

9,764

14,911

22,245490

37,647

NomuraReal Estate
Development

Retailfacility

Reinforced concrete construction(partially steel-framed
construction), 1 floor below
ground, 11 floors above ground

43,059January
2013

5,797

5,813

4,649

347

10,810Shinjuku Mirai
Development

MIRRAZA Shinjuku*2(Shinjuku-ku, Tokyo)

Retailfacility

Steel-framed construction(partially steel-framed reinforced
concrete), 3 floors below ground,
10 floors above groundbono Sagamiono
Shopping Center*3(Minami-ku, Sagamiharashi, Kanagawa)

7,628

August
2010

781

2,741

32,132

15

34,889NomuraReal Estate
Development

Minamigyotoku SC*2
(Ichikawa-shi, Chiba)

Retailfacility

35,612April
2000

16,503

5,144

4,942

13

10,070NomuraReal Estate
Development

Nihonbashi Muromachi
Nomura Building(Chuo-ku, Tokyo)

OfficeSteel-framed construction(partially steel-framed reinforced
concrete), 5 floors below ground,
21 floors above ground

Steel-framed construction(partially reinforced concrete),
2 floors below ground, 2 floors
above ground

44,989September
2010

2,737

14,336

19,227328

33,893

NREG TOSHIBABUILDING

Fuchu Toshiba Building(Fuchu-shi, Tokyo)

Office32,299

April
1993

8,290

3,722

5,247

18

8,987

NomuraReal Estate
Development

Yokohama Nomura
Building*3(Nishi-ku, Yokohama-shi,
Kanagawa)

OfficeSteel-framed construction,
17 floors above ground, 1 otherbuilding

58,755January
2017

Steel-framed reinforced concrete
construction (partially reinforced
concrete), 1 floor below ground,
8 floors above ground, 1 otherbuilding

6,721

NREG TOSHIBABUILDING

Shinyokohama
Toshiba Building(Kohoku-ku, Yokohamashi, Kanagawa)Training
facility

Reinforced concrete
construction, 1 floor below
ground, 4 floors above ground,
4 other buildings

28,822MainlyJune 1969

15,829

3,093

5,660

33

8,788

26,748

March
1982

3,184

1,810

22,67714

24,503

NomuraReal Estate
Development

Iidabashi Plano Stage
Building*3(Chiyoda-ku, Tokyo)

OfficeReinforced concrete
construction, 2 floors below
ground, 38 floors above ground

3,958

February
2009

785

1,607

6,401

1

8,010

29,430

April
1961

3,196

2,051

21,116—23,167

NomuraReal Estate
Development

Nihonkouku Tamachi
Building*2, 6(Minato-ku, Tokyo)

OfficeSteel-framed reinforced concrete
construction, 1 floor below
ground, 7 floors above ground

17,531January
1984

4,134

0

7,820

—

7,820

58,512

May
1978

NomuraReal Estate
Development

Nomura Fudosan Sendai
Aoba-dori Building(Aoba-ku, Sendai-shi,
Miyagi)

OfficeSteel-framed construction,
1 floor below ground, 10 floors
above ground

12,026

April
2017

1,595

4,189

3,306

102

7,597

NREG TOSHIBABUILDING

NREG Kawasaki Logistics
Center (Kawasaki-ku,
Kawasaki-shi, Kanagawa)Logistics
facility

Reinforced concrete construction(partially steel-framed
construction), 5 floors
above ground49,046March
2014

27,866

3,805

3,109

432

7,348

NomuraReal Estate
Development

Wako Building(Minato-ku, Tokyo)

OfficeSteel-framed reinforced concrete
construction, 1 floor below
ground, 8 floors above ground

3,171

April
1971

621

569

6,716

—

7,285

NREG TOSHIBABUILDING

Umeda Sky Building*3(Kita-ku, Osaka-shi,
Osaka)

OfficeSteel-framed construction(partially steel-framed reinforced
concrete and reinforced
concrete), 2 floors below ground,
40 floors above ground

43,093

March
1993

8,325

2,445

4,585

101

7,132

NREG TOSHIBABUILDING

Toshiba Osaka Building(Chuo-ku, Osaka-shi,
Osaka)

OfficeSteel-framed reinforced concrete
construction, 4 floors below
ground, 10 floors above ground

15,220

October
1965

1,307

1,005

5,989

5

7,000

NomuraReal Estate
Development

Kanda Nishikicho
1-chome Project(tentative name)(Chiyoda-ku, Tokyo)

OfficeSteel-framed reinforced concrete
construction (partially reinforced
concrete), 1 floor below ground,
9 floors above ground, 1 otherbuilding

4,241

MainlyFebruary
1986

886

40

6,904

—

6,944

NREG TOSHIBABUILDING

NREG Midosuji Building /Nomura Fudosan Midosuji
Building (Chuo-ku,
Osaka-shi, Osaka)

OfficeSteel-framed reinforced concrete
construction, 2 floors below
ground, 10 floors above ground

21,007

April
1974

2,366

553

5,768

35

6,357

NomuraReal Estate
Development

Nomura Fudosan
Ichigaya Building(Chiyoda-ku, Tokyo)

OfficeSteel-framed reinforced concrete
construction, 2 floors below
ground, 9 floors above ground

6,753

January
1982

1,220

2,979

3,182

3

6,165

NomuraReal Estate
Development

Nomura Fudosan
Ginza Building*3(Chuo-ku, Tokyo)

OfficeSteel-framed reinforced concrete
construction (partially steelframed reinforced concrete),
5 floors below ground, 17 floors
above ground

NomuraReal Estate
Development

NOF Nihonbashi Honcho
Building (Chuo-ku, Tokyo)

OfficeSteel-framed reinforced concrete
construction, 3 floors below
ground, 8 floors above ground

NomuraReal Estate
Development

Shinjuku Nomura
Building*2, 3(Shinjuku-ku, Tokyo)

OfficeSteel-framed reinforced concrete
construction (partially steelframed reinforced concrete),
5 floors below ground, 50 floors
above ground

Logistics
facility

Reinforced concrete construction(partially steel-framed construction), 5 floors above ground,
1 other building

OfficeSteel-framed construction(partially steel-framed reinforced
concrete), 2 floors below ground,
14 floors above ground

NomuraReal Estate
Development

Landport Takatsuki(Takatsuki-shi, Osaka)

Midosuji Mirai
Development

Midosuji Nomura
Building*2(Chuo-ku, Osaka-shi,
Osaka)

NomuraReal Estate
Development

Morisia Tsudanuma*(Narashino-shi, Chiba)
2Retailfacility

Kameido 6-chome Project Land slated
for building(tentative name)*2, 4(Koto-ku, Tokyo)
construction

NomuraReal Estate
Development

Nomura Fudosan
Tennozu Building*2, 3(Shinagawa-ku, Tokyo)

Toranomon
Real Estate

Toranomon Station-front
Redevelopment (tentativename) and others(Minato-ku, Tokyo)

NomuraReal Estate
Development

Nomura Fudosan
Shibadaimon Building(Minato-ku, Tokyo)

OfficeSteel-framed reinforced concrete
construction (partially reinforced
concrete), 3 floors below ground,
12 floors above ground, 1 otherbuilding—
Steel-framed reinforced concrete
construction (partially reinforced
concrete), 2 floors below ground,
26 floors above ground

Reinforced concrete construction
Land slated(partially steel-framed reinforced
for building
concrete), 1 floor below ground,construction
7 floors above ground

OfficeNomura Real Estate Holdings, Inc. Integrated Report 2018

Steel-framed construction(partially steel-framed reinforced
concrete), 2 floors below ground,
11 floors above ground70,52920,42097,699—39,943

3,289

15,700June
2017

February2009

MainlyOctober
1978(December
2017)

June
1996

October
1973

April
2010

4,639

35,276

1,939

19,194

24,822

5,730

1,099

2,447

29,495

19,658

5,833

10,000

3,684

1,973

—

4,397

56

3,794

14,584

8,809

16,303

10,247

15,707

16,037

17,497

11,685

15,12010,650268 144,714

967

532

196

360

24

7

—

73

1

76

45,04729,001

22,333

20,60819,41618,017

17,497

16,15615,17914,521

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Corporate and Financial Information

NREG TOSHIBABUILDING

NomuraReal Estate
Development

104

Property Name (Location)

Company Name

105

Facilities Situation

Company Name

Facilities Situation

Property Name (Location)

NREG TOSHIBABUILDING

Creare Toshiba Fuchu(Fuchu-shi, Tokyo)

NomuraReal Estate
Development

Toranomon Central
Building(Minato-ku, Tokyo)

Use

Residential

OfficeConstruction, Size, Details
of Facility, etc.

Total Floor
Area (m2)Completion ofConstructionor (Date of
Acquisition)

Land
Area
(m2)

Reinforced concrete construction(partially steel-framed reinforced
concrete), 10 floors above
ground26,352January
1992

20,5904,431

August1977

Steel-framed construction(partially steel-reinforced
concrete and steel-framed
reinforced concrete), 3 floors
below ground, 10 floors
above ground

The following major Leasing Business Unit facilities for sublet are rented by the Group and do not appear in the previous table.

Book Value(Millions of yen)
Facility

4,249

Land

1,516

Other

Total

40

5,806

548

746

4,999

0

OfficeNREG TOSHIBABUILDING

Tsurumi Toshiba Building(Tsurumi-ku, Yokohamashi, Kanagawa)

OfficeSteel-framed reinforced concrete
construction, 1 floor below
ground, 10 floors above ground

20,648

March
1991

3,501

2,456

3,073

29

5,559

NomuraReal Estate
Development

Fukuoka Tenjin Center
Building*2, 3 (Chuo-ku,
Fukuoka-shi, Fukuoka)

OfficeSteel-framed reinforced concrete
construction, 3 floors below
ground, 19 floors above ground

25,103

April
1976

2,256

911

4,413

2

5,327

NomuraReal Estate
Development

PMO Yaesu Dori(Chuo-ku, Tokyo)

OfficeSteel-framed construction(partially steel-framed reinforced
concrete), 1 floor below ground,
9 floors above ground

7,074

May
2013

931

1,356

3,840

20

5,217

NomuraReal Estate
Development

PMO Nihonbashi
Muromachi*3(Chuo-ku, Tokyo)

OfficeSteel-framed construction(partially steel-framed reinforced
concrete), 1 floor below ground,
9 floors above

5,333

January
2013

701

1,026

3,716

12

4,756

6,000

March
2010

1,078

1,533

4,115

46

5,695

17,298AKS Building (Chiyoda-ku, Tokyo)

7,516

NomuraReal Estate
Life & Sports

Property Name (Location)

Rentable Area(m2)

Fitnessclub

Completion of
Total Floor Construction or(Date of
Area (m2)
Acquisition)

Construction, Size, Details
of Facility, etc.
Reinforced concrete
construction, 3 floors, 1 otherbuilding and fitness club

June
2002

15,321

Book Value(Millions of yen)

Land
Area
(m2)

Facility

15,430

Land

8,293

—

Other

Total

1,116

9,410

Notes: 1	“Facility” represents building accounts, “land” represents land accounts, and “other” represents structures; machinery; tools, appliances, and fixtures; vehicles anddelivery equipment; and leased asset accounts. “Total” represents tangible fixed assets excluding construction in progress accounts.
			2	“Total floor area” represents the total owned area of MEGALOS Kashiwa, MEGALOS Chikusa 24, and MEGALOS Saginuma. “Land area” represents theleased land area of these three facilities. “construction, size, details of facility, etc.” and “completion of construction or (date of acquisition)” are in reference to
MEGALOS Kashiwa.

3. Establishment and Renovation of Facilities
As of the fiscal year ended March 31, 2018, the following facilities were scheduled to be established and renovated.
There is no major ­expansion or removal of facilities.
1) Establishment of major facilities

Property Name
(Location)

Company Name

OfficeSoto-Kanda 3-chome
Project (tentative name)(Chiyoda-ku, Tokyo)

Land slated
for building
construction—

NREG TOSHIBABUILDING

Toshiba Fukuoka Building(Chuo-ku, Fukuoka-shi,
Fukuoka)

OfficeSteel-framed construction(partially steel-framed reinforced
concrete), 2 floors below ground,
17 floors above ground

23,711

July
1993

4,597

1,944

1,918

21

3,884

NREG TOSHIBABUILDING

Toshiba Manseibashi
Building*5(Chiyoda-ku, Tokyo)

OfficeReinforced concrete
construction, 1 floor below
ground, 9 floors above ground

5,319

September
1961

681

240

3,551

0

3,792

NomuraReal Estate
Development

Soto-Kanda 3-chome
Project (tentative name)(Chiyoda-ku, Tokyo)

NREG TOSHIBABUILDING

Nomura Fudosan
Nishishinjuku Kyodo
Building*3(Shinjuku-ku, Tokyo)

OfficeSteel-framed construction(partially steel-framed reinforced
concrete and reinforced
concrete), 1 floor below ground,
8 floors above ground

6,716

October
1993

1,249

983

2,700

3

3,687

NREG TOSHIBABUILDING

Ginza 6-chome Project(tentative name)(Chuo-ku, Tokyo)

NREG TOSHIBABUILDING

Toshiba Sendai
Building*3, 5 (Aoba-ku,
Sendai-shi, Miyagi)

Hotel

Steel-framed construction(partially reinforced concrete),
2 floors below ground, 11 floors
above ground

16,179

April
1975

1,731

641

2,817

5

3,464

2) Renovation of major facility

Business
Segment

Use

6,478

July
1959

690

200

4,393

—

(March
2018)

663

—

3,980

—

3,980

NomuraReal Estate
Development

Toranomon Station-front
Redevelopment (tentativename) (Minato-ku, Tokyo)

Leasing

OfficeNomuraReal Estate
Development

Kanda Nishikicho 1-chome
Project (tentative name)(Chiyoda-ku, Tokyo)

Leasing    —   4,593

Company Name
Nomura Real Estate Development

Planned Aggregate
Investment(Millions of yen)

Construction, Size, Details
of Facility, etc.

Total

AmountPaid

Steel-framed concrete construction(partially steel-framed reinforced concrete
construction), 4 floors below ground,24 floors above ground

35,30014,609

OfficeSteel-framed construction, 1 floor
below ground, 10 floors above ground

11,530

Leasing

Hotel

Steel-framed construction,
10 floors above ground

Leasing

OfficeSteel-framed concrete construction(partially steel-framed reinforced
concrete construction), 3 floors below
ground, 11 floors above ground

Property Name
Existing buildings

Business
Segment
Leasing

Planned Aggregate Investment(Millions of yen)
Total
3,700

Sources ofFunding

Schedule
Start

Completion

Loans payable
and own funds

FY18/3

FY21/3

6,956

Loans payable
and own funds

FY19/3

FY21/3

6,550

3,980

Loans payable
and own funds

FY19/3

FY21/3

4,600

2,157

Loans payable
and own funds

FY18/3

FY20/3

Construction Period

NoteAmount Paid
— April 2018–March 2019

Renovation of facility

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Corporate and Financial Information

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Use

MEGALOS Soka and43 other facilities(Soka-shi, Saitama andothers)Steel-framed reinforced concrete
construction, 1 floor below
ground, 9 floors above ground*1	“Facility” represents building accounts, “land” represents land and lease accounts, and “other” represents structures; machinery; tools, appliances, and fixtures; vehicles
and delivery equipment; and leased asset accounts. “Total” represents the sum of lease accounts and tangible fixed assets excluding construction in progress accounts.
*2 Includes trust beneficiary right.
*3 Refers to calculated area owned including both total floor area and land area.
*4 “Land area” refers to total area during the planning stage.
*5 Land area includes leased land.
*6 Transferred from non-current assets to land held for development in June 2018.

106

Across Shin Osaka (Yodogawa-ku, Osaka-shi, Osaka)

Nomura Real Estate Development

Company Name

Nomura Fudosan
Nishishinjuku Building(Shinjuku-ku, Tokyo)

NomuraReal Estate
Development

Nomura Real Estate Development

5,747

NomuraReal Estate
Development

Nomura Fudosan
Tameike Building(Minato-ku, Tokyo)

Property Name
(Location)2) Property and Facility Management Business Unit

Steel-framed construction(partially steel-framed reinforced
concrete), 1 floor below ground,
9 floors above ground

NomuraReal Estate
Development

Company Name

107

Group Company Profiles

Group Company Profiles

Nomura Real Estate AssetManagement Co., Ltd.

Nomura Real Estate Urban Net
Co., Ltd.

Nomura Real Estate Hotels
Co., Ltd.

Nomura Real Estate Amenity
Service Co., Ltd.

NREG TOSHIBA BUILDINGFACILITIES Co., Ltd.

Nomura Real Estate Development conducts a range ofbusinesses. The Residential Development Business provides
quality residential properties under the PROUD and otherbrands. Meanwhile, the Leasing Business develops officebuildings such as PMO, commercial facilities, and logistics
and other facilities. In addition, the Corporate Real Estate(CRE) Support and Corporate Brokerage Business helps
maximize the value of real estate held by companies.
This company employs 1,864 personnel.

Nomura Real Estate Asset Management is one of the largest
real estate investment companies in Japan, and provides a
one-stop shop for a broad variety of financial products andinvestment management services, including privately placed
REIT and funds to listed real estate investment trusts (REITs)
and overseas real estate fund of funds. This company
employs 152 personnel.

Nomura Real Estate Urban Net provides solutions forsatisfying customers in the real estate services andconsulting fields. These include residential real estate
brokerage for helping customers in changing their placeof residence. Nomura Real Estate Urban Net also operates
a consignment sales business where it sells condominium
units and detached housing as a sales agent. This company
employs 1,236 personnel.

Nomura Real Estate Hotels develops hotels that act as
central points for attractive town planning. After development, we provide services to Group customers whileworking to build communities by bringing people andcities together.

Nomura Amenity Service provides cleaning services ofoffice buildings, schools, and condominiums to maintainthe scenic beauty of properties as a cleaning companyof the Property & Facility Management Business of the
Nomura Real Estate Group. This company employs
73 personnel.

NREG TOSHIBA BUILDING FACILITIES offers services tomaintain or improve the property value through facility
management, inspection, cleaning, security and construction, while providing safe and comfortable environment toall customers. This company employs 102 personnel.

Nomura Real Estate Partners
Co., Ltd.

NREG TOSHIBA BUILDING
Co., Ltd.

Nomura Real Estate Life & Sports
Co., Ltd.

PRIME X. Co., Ltd.

NF Power Service Co., Ltd.

First Living Assistance Co., Ltd.

This company represents the integration of building
management operations with the capability to performoverall management of various building types. Nomura
Real Estate Partners combines expertise in building andcondominium management with property management torealize effective real estate management and construction
aimed at handling large-scale repair work. This company
employs 2,255 personnel.

NREG TOSHIBA BUILDING offers services spanning thedevelopment, leasing, and management of office buildings,
commercial facilities, warehouses, condominiums, andother properties, as well as property brokerage andconsulting on CRE (corporate real estate) utilization.
This company employs 87 personnel.

Fitness facilities such as fitness clubs, kids’ schools, andtennis schools are planned, developed, and managed under
the MEGALOS brand name. The company also offers
services aimed at corporations and local governments.
This company employs 572 personnel.

Based on the accumulated expertise jointly developedwith Nomura Real Estate Development, PRIME X. provides
Internet advertising businesses that specialize in the realestate and housing industries. PRIME X. delivers proposals
that maximize customer benefits, ranging from the creationof corporate websites and project home pages to creating
and managing membership organizations, as well as handlingpromotions. This company employs 122 personnel.

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

To offer a home / living assistance service for the customers of our corporate clients, we have developed a businessthat links corporate clients and their customers in a varietyof lifestyle-related fields through a service that dispatches
housing experts on home visits.

Nomura Real Estate Heating andCooling Supply Co., Ltd.

Geo Akamatsu Co., Ltd.

Nomura Real Estate Wellness
Co., Ltd.

NOMURA REAL ESTATEASIA PTE. LTD.

NOMURA REAL ESTATE HONG
KONG LIMITED

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

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

Geo-Akamatsu provides a full range of property consulting
and other services that maximize its 50 years of accumulated expertise. These services include surveys of commercial facilities, project planning, leasing, commercial
space design, and property management. This company
employs 141 personnel.

Nomura Real Estate Wellness designs and operates
high-quality housing for the elderly that incorporates secureand reliable life-long management services.

NOMURA REAL ESTATE ASIA promotes the Group’sbusinesses, including pursuing business opportunities inreal estate development in Southeast Asia and supporting
investors’ demand for Japanese real estate.

NOMURA REAL ESTATE HONG KONG offers inboundinvestment support specializing in the Japanese real estatemarket for international investors based in Hong Kong, andstrengthens ties between local companies and investors,
enhancing business opportunities for the Group.

Nomura Real Estate Consulting (Beijing) supports theGroup’s business in China by researching the real estatemarket, building a relationship with our partners, andexploring the possibilities of real estate development
business including office buildings and residential properties in China.

Corporate and Financial Information

Nomura Real Estate
Development Co., Ltd.

* Number of employees as of March 31, 2018108

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Nomura Real Estate Holdings, Inc. Integrated Report 2018109

Corporate Information

Corporate Information(As of March 31, 2018)

Corporate Data

Stock Information

Stock Price

Corporate Name:

Nomura Real Estate Holdings, Inc.

Common Stock:¥117,072,789,750

Representative:

Eiji Kutsukake, President

Number of Authorized
Shares:450,000,000

Head Office:	Shinjuku Nomura Building,
1-26-2 Nishi-Shinjuku, Shinjuku-ku,
Tokyo 163-0566, Japan
Date of Establishment:

June 1, 2004

Number of Employees:

6,636 (consolidated)

3,000

Number of
Shares Issued:	192,155,201 shares(including 3,956,956 treasury shares)

2,000

Market Listing:	First Section of
the Tokyo Stock Exchange

Fiscal Year:	From April 1 to March 31
General Meetingof Shareholders:Yen

Minimum Trading Unit:

1,000

100 shares

Number of Shareholders: 30,866

June

14/4

Organizational Chart

15/4

16/4

Trends of Number of Shareholders

17/4

18/3

10 Largest Shareholders

PeopleAdvisory Committee
Relating to Nominations
and Compensation

Name of Shareholder

80,000

Audit & Supervisory
Committee

Board of Directors

60,000

Audit & Supervisory
Committee Dept.

40,00020,000Management
Committee

President

09

Budget Committee

Risk Management
Committee

CSR Committee

10

11

12

13

14

15

16
17
18
(Years ended March 31)

IT Planning
Committee

Nomura Holdings, Inc.
Japan Trustee Services Bank, Ltd.
(Trust account)
BNYMSANV AS AGENT / CLIENTS LUXUCITS NON TREATY 1
The Master Trust Bank of Japan, Ltd.
(Trust account)
Japan Trustee Services Bank, Ltd.
(Trust account 9)
Nomura Real Estate Holdings Employee
Shareholding Association
STATE STREET BANK WEST CLIENT TREATY 505234
Japan Trustee Services Bank, Ltd.
(Trust account 5)
STATE STREET BANK - WEST PENSIONFUND CLIENTS - EXEMPT 505233
HSBC BANK PLC A/C CLIENTS 1

No. of Shares

Shareholding(%)

64,777,500

34.41

9,965,800

5.29

6,074,100

3.22

5,480,200

2.91

3,940,600

2.09

2,918,882

1.55

2,538,234

1.34

2,505,400

1.33

2,319,333

1.23

2,318,714

1.23

Asset Strategy
Committee

Composition by Number of Shareholdings

Corporate Planning
Dept.

Finance Dept.

20.19%

34.25%

35.05%

10.50%

2017

21.38%

34.27%

33.19%

11.15%

Group Human
Resources Dept.

Corporate
Communications
Dept.

Group Legal &Compliance Dept.

Group General
Affairs & IT
Strategy Dept.

Secretariat

Overseas
Planning Dept.

2018

19.57%

36.67%

8.90%

34.83%(Years ended March 31)
Financial institutions

110

Nomura Real Estate Holdings, Inc. Integrated Report 2018

Corporate and Financial Information

Finance &Accounting Dept.

2016
Group Internal
Audit Dept.

Other Japanese firms

Other foreign investors

Individuals and others

Nomura Real Estate Holdings, Inc. Integrated Report 2018111