Otemachi Building, 6-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8133, Japan
http://www.mec.co.jp/index_e.html

ANNUAL REPORT 2013

Approx.
296m

Approx.
Approx.

240m

Approx.

205m

180m
Approx.
Approx.

36m

20m

Yokohama Landmark Tower

Sunshine 60

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Marunouchi Building

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ANNUALREPORT2013
Fiscal Year ended
March 31, 201313/09/06 16:37

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

A Love for People
A Love for the City
Forever Taking on New Challenges –The Mitsubishi Estate GroupOur wish is to provide people who live in, work in and visit the citywith enriching and fulfilling lives,
full of stimulating opportunities to meet.
The Mitsubishi Estate Group
has always pursued the genuine value sought by people
in the environments and services it provides.
With an eye to the future,
we carefully listen to each and every customer,
and create the true value they seek.
We wish to share with our customers
the inspiration and passion we derive from our work.
We will constantly take on new challenges to achieve this vision,and through it, we will continuously evolve.
This aspiration will always drive our growth.

Cont e nt s
2 An Interview with the President
6 Business Information
21 CSR Management / Operating Results
54 Principal Mitsubishi Estate Group Companies
56 Corporate History
57 Corporate Information

1

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MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

An Interview with the President

Guided by a growth strategy that is grounded in thestrength of our human resources, we will ramp up
efforts to orchestrate comfortable cities for the future
and create ideal urban environments worldwide.
Established in 1937, Mitsubishi Estate Co., Ltd. has a long history of excellence as a comprehensive real estate company. As a group, our basic mission is to “contribute to society throughurban development.” Our activities are wide ranging and include the development, leasing, andmanagement of off ice buildings and commercial properties, typified by the cluster of buildingsin Tokyo’s Marunouchi district, the development of real estate for investment purposes, thedevelopment and sale of residential properties, design supervision, and real estate brokerage services.
Indicative of its long-term approach toward the development of its business and strategies,
the Mitsubishi Estate Group has successfully nurtured the Marunouchi district in Tokyo fromits purchase as a wilderness area in 1890 into one of the world’s leading commercial centers.
Rather than rest on its laurels, the Group put in place “BREAKTHROUGH 2020:
Orchestrating comfortable cities for the future—we create ideal urban environments worldwide,” a new medium- to long-term management plan, in the fiscal year ended March 31, 2012.
Working in unison, the Group is committed to achieving this plan and realizing what we ideallysee as the Group in ten years’ time.

President & Chief Executive Officer
Mitsubishi Estate Co., Ltd.

3

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MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Please provide us with an overview of results of fiscal 2013 (the fiscal
year ended March 31, 2013) and an outline of the issues you expect toconfront in fiscal 2014.

5

What are the growth strategies of the
Mitsubishi Estate Group?

In fiscal 2013, the Mitsubishi Estate Group con-throughout the real estate market entered athat our consistently earnest marketing efforts

I firmly believe that a company’s strength rests

Otemachi Chain Redevelopment Project, andfronted an extremely harsh operating environ-recovery phase from the second half of thewill in time bear fruit. On this basis, we antici-

on the strength of its people. With this in mind,

the tentatively named Marunouchi 3-2 Project.

ment. Our results were negatively impacted byfiscal year under review. For example, the sup-pate a substantial year-on-year surge ina workplace environment that motivates

While continuing to upgrade the quality andsuch factors as financial instability in Europe

ply of new large-scale office buildings in cen-income in fiscal 2014. This confidence is par-employees to carry out their daily duties withfunctionality of the Marunouchi district, ourand a slowdown in the rate of economic

tral Tokyo has tapered off. Demand for officeticularly strong in our Residential Businesspride is essential to consistently enhancing

tangible development endeavors will be com-

growth in China. In addition to corrections fol-space by the corporate sector is steadily rising

activities. Our determined efforts to reduce

corporate value and the satisfaction of stake-plemented by a focus on such intangible fields

lowing the sale of large-scale properties in fis-in line with the positive turnaround in eco-costs following the launch of Mitsubishi Jisho

holders. Taking this one step further, fosteringas the environment and information as a partand related activities in a never-ending pursuitcal 2012, we recorded an extraordinary loss innomic conditions in Japan. As a result, signs

Residence Co., Ltd. are finally showing signs

human resources and building a dynamicof efforts to counter competition from otherof lifelong customer value.

connection with the reconstruction of severalof improvement in the supply and demandof success and we anticipate our activities inworkplace environment are therefore of criti-

international cities, including Singapore andoffice buildings. Accounting for these andbalance are becoming increasingly evident.

this area will gather considerable momentum

cal importance. Accordingly, our first growthHong Kong.

other factors, the Mitsubishi Estate Group

Turning to the condominium market, condi-

in fiscal 2014. In the Building Business, how-strategy lies in ensuring these two key require-In the Residential Business, we integrated

activities, a key component of our medium- toreported a substantial year-on-year decline intions remain firm. This reflects the underlying

ever, improvements in the office building mar-ments are recognized throughout the Group.

the residential development and sales opera-

long-term management plan. Building on ourboth revenues and income.

strength of continued volume zone sales tar-

ket are yet to contribute fully to the Group’s

Having put in place this vital infrastructure,

tions of Mitsubishi Estate, Mitsubishi Realmany years of experience and a proven track

geting first-time buyers. At the same time, theperformance. While we project a substantial

we are making steady progress toward identi-

Estate Services Co., Ltd., and Towa Real Estate

record of business expansion in North America

weak yen and robust stock prices at theincrease in operating income on the back offying and carrying out specific growth strate-

Development Co., Ltd. in January 2011, andand the United Kingdom, we will extend into

beginning of 2013 fueled a recovery in the

an upswing in property sales in fiscal 2014,

gies. Moving beyond the first stage

launched Mitsubishi Jisho Residence Co., Ltd.

new business domains, including Asia, where

sale of higher priced properties. In the real

growth in mainstay office leasing income will

(1998-2007) of our key Marunouchi

together with The Parkhouse condominium

many countries continue to exhibit marked

estate investment market, trends were buoyedremain limited. Looking ahead, we will chan-

Redevelopment Project, we are currently pro-brand. While it took us a little time to fully

rates of economic growth. We are confident

by the inflow of funds from overseas. This has

nel our energies toward early improvements inceeding smoothly with the second stage

harness the benefits of integration, we havethat the expertise we have gained from carry-triggered a period of active buying and selling.

new building utilization rates and the increased(2008-2017). In 2012, the second project offinally solidified the necessary organizationaling out the Marunouchi Redevelopment andWhile recognizing that the Group’s results

profitability of existing buildings. In this latterthe second stage, the Marunouchi Eiraku

structure, and anticipate significant contribu-

other projects are in high demand by markets

will not immediately benefit from improve-case, we will work to revise rents and redou-Building and third project, Otemachi Financial

tions to income in fiscal 2014. Looking ahead,around the world. While meeting thisments in market conditions, we are confident

ble efforts toward reducing costs.

City, were completed in January and October,

the Group will continue to work in unison,demand, we will look to bring back the expe-

respectively. Moving forward, we are stead-focusing on the development and sale of con-rience garnered overseas to enrich our activi-

fastly pursuing several new development proj-

dominiums. Every effort will be made toties in Japan.

ects, including the tentatively named

strengthen the Group’s logistics, leasing,

Otemachi 1-1 Project, the third phase of the

management, custom-built housing, renovation,

On a more positive note, conditions

Please tell us more about “BREAKTHROUGH 2020,” your medium- tolong-term management plan.
In “BREAKTHROUGH 2020,” we first and• Management & Services Business:

foremost lay out the values and code of con-

The Business group where Mitsubishi

duct that our employees should abide by, spe-

Estate offers customers added value

cifically, five values and five actions. Then,through professional services,roughly dividing the Group’s business domains

we set forth our aim to reinforce our value

into the:chains by closely linking the two business• Investment & Development Business:

In addition, considerable weight will beplaced on our overseas business development

domains. Fully leveraging these value chains, theInvestment & Development
Business
Marunouchi
Redevelopment

Commercial Property
Development &Investment BusinessResidential
Business

International
Business

In closing, is there any message that you would
like to convey to stakeholders?
The Mitsubishi Estate Group has identified “A

I am confident in our ability to overcome diffi-

Love for People, A Love for the City—Forever

culties in our operating environment.

The Business group where Mitsubishi

aim of the Group’s medium- to long-term man-

Estate invests in development projects,

agement plan is to cement its No. 1 position in

Taking on New Challenges” as its corporate

Together, each and every member of thethe investment and development business fields.

brand slogan.

Group will do their utmost to realize ourFive “Values”

Five “Actions”“Innovative”

Continue to take on challenges as an innovative urban developer“Eco-conscious”

Aim for sustainable growth through advanced
environmental initiatives“Customer-oriented”“Global”“As One Team”

Always think about customer value from a customer perspective
Develop HR, structure and businesses suitable for global operations
Unite as one team and strive to realize BREAKTHROUGH 2020

Synergies

Management & Services
Business
PM & Leasing

Shopping
Centers

Investment
Management

Architectural
Design &Engineering

HotelsBrokerage andOther Services

This slogan encapsulates our beliefs andestablished growth strategies. As we workvalues, such as honesty and trust, our orienta-

toward achieving our goals, we would like totion toward our customers, commitment tothank all our stakeholders and kindly request

value creation, and our willingness to confront

their continued support and understanding.

challenges. In staying true to these values,

6

Business Information

Investment Management
Business

Architectural Design& Engineering

0.7%

2.0%

Investment Management Businesssegment revenues are derived fromthe management of real estate forinvestment purposes and othertypes of assets.

Architectural Design & Engineering
segment revenues are derived fromthe architectural design and engineering services provided to construction and civil engineering
projects and related activities.

Hotel Business

3.0%
Hotel Business segment revenues are derived
from the operation of Royal Park Hotels andrelated activities.

Real Estate Services

2.8%
Real Estate Services segment revenues arederived from real estate brokerage and related
services.

International Business

Other

6.4%

0.5%

International Business segment revenues are derived
from real estate development and leasing activities
as well as related operationsin the United States, theUnited Kingdom and Asia.

Consolidated Sales Breakdown in fiscal 2013

927.1billion yen

Building Business

p7

p9

Building Business

Retail Property Business

Investment
Management
Business

p16

Residential
Business

Commercial Property International
Development &Business
Investment Business

p10

p12

p14

Architectural
Design &Engineering

Hotel
Business

Real Estate
Services

Business Development,
Consulting &Solutions Group

p17

p18

p19

p20

1
Building
Business

Enhancing Urban
Functions froman Area
Management
Perspective
The Building Business primarily
undertakes the development,
leasing and property management of office buildings inJapan’s major cities. It also handles the management of largescale shopping centers, theoperation of parking lots, andthe operation of district heating
and cooling services throughout
Japan. In addition to ensuring
advanced preparedness against
disasters, the business placesconsiderable weight on environmentally friendly activities as apart of ongoing efforts toenhance urban functions froman area management perspective.

Revenue from operations (left scale)Operating income (right scale)(Millions of yen)

480,000

160,000

Building Business

33.0%

46.3%

240,000

Residential Business segment revenues are derived from theconstruction and sale of condominiums, single-unit homes,
and residential and commercial lots. This segment is also
engaged in the management of condominiums and homes,
along with leisure and other-related businesses.

Building Business segment revenues are derived
mainly from building development and leasing inJapan. This segment is also engaged in building
management, as well as parking facilities, district
heating and cooling, and other operations.

120,0000

120,000

107,667

360,000

Residential Business

442,748

Commercial Property Development& Investment Business segment
revenues are derived from thedevelopment of real estate forinvestment purposes and related
activities.

200,000

146,007

5.3%(Millions of yen)

600,000

510,850

Commercial Property
Development& Investment Business

80,00040,0002012/3

2013/30

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Otemachi Financial City
This project entailed the redevelopment of asite that housed the JA Building, Keidanren
Kaikan, and Nikkei Building prior to theirdemolition. Reconstruction has been completed on a facility that contains multiple
offices and retail stores. In addition to its
large scale, this development represents a
new landmark structure in the Otemachi
area, distinguished by its outstanding environmental and disaster prevention features.

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Promoting the Second Stage ofMarunouchi Redevelopment
Mitsubishi Estate is going beyond the role of developer to that of producer, as it maximizes the fullpotential of the Marunouchi area and delivers new
functions that meet the business needs of today andtomorrow. In 1998, we commenced the first stage,
covering a period of 10 years, of Marunouchi
Redevelopment. Beginning with the completion of
the Marunouchi Building in 2002, a total of six newbuildings have been completed, including the ShinMarunouchi Building.
In 2008, we pushed ahead with the second
stage. The first project of the second stage consistedof the Marunouchi Park Building and Mitsubishi
Ichigokan in April 2009. In January 2012, we witnessed the completion of the second project, theMarunouchi Eiraku Building, followed by the third
project, Otemachi Financial City, in October 2012.

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

The latter of these two properties falls within the
Otemachi Chain Redevelopment Project. Positioned
as the fourth project of the second stage of the
Marunouchi Redevelopment Program, the Otemachi
1-1 project (tentative name) is currently in progresswith construction being carried out under an integrated development plan on the Resona Maruha
Building and The Bank of Tokyo-Mitsubishi UFJ
Otemachi Building.
Based on the achievements of the first stage ofthe Marunouchi Redevelopment Program, the second
stage is designed to encompass broader and morecomprehensive plans to further rejuvenate theOtemachi, Marunouchi, and Yurakucho districts. As
the benefits of development ripple across the area asa whole, we anticipate the city’s functions and performance to more than rival those of major international cities worldwide.

The Otemachi 1-1 Project(Tentative Name)
The project entails the reconstructionof two office buildings according to asingle harmonized development plan.
Every effort is being placed on ensuring an optimal urban environment
while promoting distinctive business
operations and support activities aswell as eco-friendly and disaster prevention features commensurate with
Otemachi as a leading international
financial district.

Retail Property Group
Active Expansion of the Retail Property
Business throughout Japan
In its retail property business, Mitsubishi Estate is pushing ahead with thedevelopment of various types of retail properties that match the unique features of each area. The Mitsubishi Estate Group continuously engages infacility planning, development, tenant leasing and management operations
through its comprehensive business structure.

The Commercial Asset Development
Department is mainly engaged in the reconstruction of buildings held by the Company. At
any one time, the department is actively promoting several building development plans
simultaneously. It is not uncommon for a plan
to extend over 10 years from negotiations
with rights holders and related parties todeliberations with public authorities, the closure of existing buildings, demolition, and theeventual construction of new buildings.
Over the past 15 years, the face of the
Otemachi, Marunouchi, and Yurakucho districts has changed dramatically. In addition toa significant number of new office buildings,
the area has welcomed new commercial andretail facilities, hotels, art galleries, and daycare centers for children. More than just officebuildings that bring millions of workers to thearea each day, the Otemachi, Marunouchi, andYurakucho districts attract a diverse range ofvisitors both during the day and night.
Catering to the needs of shoppers, people out
for a stroll, and art lovers alike, this area isvibrant with life.
Cities inherently provide a place for people
to assemble and, through mutual exchange
and the sharing of experiences, to inspire one
another. As we work to develop the city districts of the future, we will integrate a diverse
range of ideas that incorporate environmental
and disaster prevention concerns to build better urban environments.

Yuko Koibuchi
Mitsubishi Ichigokan
Mitsubishi Ichigokan has been completely restored to its former 1894 glory as the first office building in Marunouchi. Today, thisbuilding is functioning as a key culture and arts complex for expanding the area’s cultural horizons.

9

Deputy General Manager
Commercial Asset Development Department
Mitsubishi Estate Co., Ltd.

Shisui PREMIUM OUTLETS opened in April
2013 and offers easy access from central Tokyo
and Chiba Prefecture. Travel time by car isabout 50 minutes from central Tokyo andabout 10 minutes from Narita Airport. Visitors
can also take a bus from Shisui Station on the
JR Line or Keisei Shisui Station on the KeiseiLine. Shisui PREMIUM OUTLETS covers a sitearea of approximately 420,000m2, which islarger than Gotemba PREMIUM OUTLETS, andoffers parking for as many as 5,500 cars.
The facility was designed with an art deco
theme that is reminiscent of American cities of
the 1930s, with the dining pavilion patternedon an airport. With the goal of creating anenvironment pleasing to overseas visitors, thefacility features a shuttle bus to Narita Airport,
covered bus stops extending a full 250 meters,
foreign exchange and flight information services, and full-time staff capable of providing
multilingual assistance.
From popular select shops to stores specializing in domestic and overseas fashion
brands, sporting and outdoor goods, and lifestyle items, not to mention restaurants offering exclusive menus featuring local specialties,
Shisui PREMIUM OUTLETS provides a rich lineup of shopping experiences, and visitors areinvited to find their own particular favorite.

Kazutoshi Hatasue
Assistant Manager
Development
Mitsubishi Estate·Simon Co., Ltd.

Shisui PREMIUM OUTLETS
Opened on April 19, 2013, this is the ninth facility
under the PREMIUM OUTLETS brand name. Locatedin Shisui-machi, Inba-gun, Chiba Prefecture, thiscomplex boasts total store floor space of approximately 21,700m2. Together with eight stores thatare opening for the first time in Japan, this development opened with a total of 121 stores, the largest
number of any PREMIUM OUTLETS at the time of
opening.

MARK IS Shizuoka

MARK IS Minatomirai

Opened on April 12, 2013, the largescale shipping center offers sevenfloors above ground with a total floor
and retail store space of approximately 36,000 tsubo and 11,000
tsubo, respectively. With convenient
access, MARK IS SHIZUOKA is abouta three-minute walk from the JR
Higashi Shizuoka Station, four minutes on foot from Yunoki Station on
the Shizuoka Railway Line, and fiveminutes from Naganuma Station.

Opened on June 21, 2013, this facility
will comprise six floors above groundand four floors below ground. Shopfloor space will come in at around13,000 tsubo with total floor space ofapproximately 35,100 tsubo. The closest railway station is Minatomirai on
the Yokohama Minatomirai Line, withdirect access from the fourth underground floor. The facility is also eightminutes on foot by moving walkway
to JR Sakuragicho Station.

Offering New Value by Creating Ideal
Urban Environments — for People andCitiesCreating new value through our retail property business, synchronizing people’s lifestyles with “urban
heartbeats,” the Mitsubishi Estate Group orchestrates
ideal urban environments that maximize cities’ value
and the quality of living for everybody who lives andworks in them as well as for those who visit.
Since the 1989 opening of the Tenjin MM Building(IMS) in Fukuoka Prefecture, retail property operations
have become a full-blown business with numerous
projects completed, including the Yokohama Landmark
Tower and the Marunouchi Building.
In its efforts to create a more appealing city,
Mitsubishi Estate has continued to raise the value ofretail facilities in the Marunouchi area. To this end,
we opened iiyo!! (a commercial zone in the
Marunouchi Eiraku Building), the seventh facility
operated by the Group, in March 2012. Along withsuch infrastructure development, the Company is fervently carrying out promotional activities. From anarea management perspective, Mitsubishi Estate is
focusing on operations that realize intangible benefits.
In projects outside the Marunouchi area, we
opened MARK IS Shizuoka (Shizuoka City, Shizuoka
Prefecture), the first independent retail property
under the core MARK IS brand, in April 2013. Thiswas followed by the opening of MARK IS Minatomirai (Yokohama City, Kanagawa Prefecture) in June
2013. In addition, Mitsubishi Estate launched the
SHISUI PREMIUM OUTLETS (Shisui-machi, Inba-gun,Chiba Prefecture) in April 2013.
Mitsubishi Estate will continue to focus on three
types of retail properties: those in Marunouchi, centered on the Marunouchi Building; urban- and suburban-type retail properties focusing mainly on the
MARK IS series; and outlet facilities developed by
Mitsubishi Estate·Simon Co., Ltd., which became aconsolidated subsidiary in March 2009. Maintaining
this focus, the Company will promote a variety of
projects across Japan with an eye to business development as it cultivates global markets going forward.

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MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Residential
BusinessEngaging in theDevelopment of a
Residential
Business That
Meets WideRanging
Customer Needs
Through the Residential
Business segment, we aim toprovide ideal living environments in concert with healthy
and fulfilling lifestyles by developing, marketing and leasing
condominiums, single-unit
homes, and residential land
while engaging in renovation
activities as well as condominium management and consulting services for the optimal useof real estate. At the same time,
Mitsubishi Estate operates andmanages golf courses.

16,00012,000315,351

342,823300,000

100,000

4,000

2012/3

2,317

8,000

4,792

200,0000

2013/3

With the overarching vision “Always, new joy in daily
life,” Mitsubishi Jisho Residence Co., Ltd. maintains asincere commitment to the building of homes andcontinues to employ an integrated production andsales structure as it focuses on the voices of its customers. We intend to maintain an unwavering focus
on addressing the diverse needs of our customers as
we work toward becoming a leading company interms of both quality and service.
To cater to a broad customer base, Mitsubishi
Jisho Residence created the “Five Eyes” quality control system, which won the 2012 Good DesignAward. It includes “Check Eyes,” the company’s proprietary condominium quality management and performance indication system utilized in “The Parkhouse”
condominiums throughout Japan.
With the aim of providing an extra layer of luxury
to the high-quality, high-value added “The Parkhouse”
brand, Mitsubishi Jisho Residence launched “The
Parkhouse Gran” as a flagship brand for the heart ofthe city in February 2013.

Mitsubishi Estate is engaged in residential leasing
activities focusing mainly on the PARK HABIO brandlocated within the Tokyo Metropolitan area. With 32
properties already completed, the Company will continue to provide high-quality condominiums for leasing purposes.

This 761-unit large-scale lease condominium building provides premium communal facilities and hospitality featuresthat go beyond those expected in ordinary rental condominium buildings. Signature features include a top floor swimming pool and gymnasium.
The Parkhouse Harumi Towers
A short 2.5km and 3.5km from Ginza and Marunouchi, respectively, The Parkhouse Harumi Towers is located in central Tokyo on
the water in the Harumi district of Chuo Ward. Offering a total of approximately 1,744 units, this twin tower 49-story condominium complex employs seismic isolation construction and has been accredited as an outstanding long-term tower residence.

Custom-Built Housing Business

The Parkhouse Tsudanuma
Kanade no Mori(Millions of yen)

400,000

Residential Leasing Business

PARK HABIO Shinjuku Eastside Tower

Revenue from operations (left scale)Operating income (right scale)(Millions of yen)

Residential Sales Business

0

The Parkhouse Gran
Minamiaoyama Takagicho
The Parkhouse Gran Minamiaoyama
Takagicho is the first project in “The
Parkhouse Gran” series, which offers
prime locations in the heart of thecity, the highest standard and quality in housing, and support for themost luxurious level of living. Offering
an exclusive Aoyama location, The
Parkhouse Gran Minamiaoyama
Takagicho places added emphasis
on privacy. With the exception ofsome units, specially designed elevators (for which the company has apatent pending) deliver residents totheir private hallways, adding to thesense of a high-class residence.

The Parkhouse Tsudanuma is located in a
portion of the Kanade no Mori large-scale
multipurpose development project that iscurrently in progress. Offering a total of 721
seismic isolation condominiums, theParkhouse Tsudanuma will form part of an
expansive development site covering approximately 350,000m2 in front of the south exitof Tsudanuma Station on the JR Sobu Line.

Shibuya Home Gallery
Shibuya Home Gallery aims to provide
custom-built housing that utilizes advanced
technology to achieve the highest levels ofseismic resistance and environmental friendliness within an open and relaxed design.

Mitsubishi Estate Home Co., Ltd. provides custom-built
housing featuring superior construction methods insuch areas as thermal insulation, seismic resistance,and durability as well as energy efficiency and highlevels of comfort thanks to the company’s proprietary
Aerotech barrier-free air-conditioning system. Moreover,in such areas as rental housing, hospitals, and storesas well as in residential subcontracting from new construction to remodeling, we are able meet all the various needs of our customers.

Mitsubishi Jisho Residence does not focus onbuilding and selling box-like condominiums,
but rather takes a keen interest in the qualityof life provided to the customer by their home.
Along with a focus on the quality of life, “The
Parkhouse” brand involves the creation of
products with an eye to the future.
With the aim of embodying the value ofMitsubishi Jisho Residence’s “The Parkhouse”
brand in the center of the city, “The ParkhouseGran” series was launched as a flagship brandin 2013. Built to “The Parkhouse” brand’s
impeccable specifications in the most soughtafter city-center locations, the “Gran” series
offers to its residents the highest level of luxury living in spacious comfort.
We remain focused on managing thebrand and aim to make “The Parkhouse” theleading brand in customer loyalty. Looking
ahead, we anticipate “The Parkhouse Gran”
series will continue to drive the overall brandgoing forward.

Yukiko Aoyagi
Assistant Manager
Brand/Customer Satisfaction Promotion Department
Mitsubishi Jisho Residence Co., Ltd.

11

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MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Commercial Property Development &Investment
Business
Developing
Market NeedsOriented Real
Estate forInvestment
PurposesThrough the Commercial
Property Development &Investment Business, Mitsubishi
Estate is promoting development operations. Our basic
strategy in this segment entails
the development of prime realestate for investment purposesthat effectively accommodates
the needs of both tenants in theleased real estate market andinvestors in the real estate
investment market.

Actively Promoting Development
Operations by Addressing the Needs
of Both Tenants and Investors andMaximizing Asset Value
Mitsubishi Estate’s Commercial Property Development& Investment Business employs a unique businessmodel. Under this model, the business cycle starts
with the development of office buildings and othertypes of real estate for investment. The Mitsubishi
Estate Group leverages its wide-ranging business
functions to maximize the value of the properties
developed. These properties are sold at the highest
possible prices in the real estate investment market,
and the proceeds collected through property sales areused for new development projects.
In April 2012, construction was completed on
Shinjuku Eastside Square. More recently, constructionof the Kojimachi Front Building was completed in
February 2013.
In the meantime, to respond to diversified realestate investment market needs, the Company isactive in distribution facility development projects aswell as office buildings. Having completed the
Nakano Shokai Tatsumi Center though a joint development project with Mitsui & Co., Ltd. in February
2012, the Company is currently making progress indeveloping Logiport Sagamihara, the largest distribution facility in Japan, in collaboration with LaSalle
Investment Management Inc. as well as the tentatively named Logiport Hashimoto.

Maintaining Income Gains andSecuring Capital Gains through Timely
Sales of Assets
In general, real estate for investment generates stable income gains (rental revenues) after completion.
For this reason, such real estate does not have to be
sold immediately after completion. Instead, it can besold when market conditions are favorable. In otherwords, the seller of a property can decide on theholding period for securing capital gains (profit after
deducting the difference between the selling priceand all associated costs and expenses, including landacquisition costs and building construction costs).
This is the true advantage of Mitsubishi Estate in thissegment. The Company will continue to bolster theasset solutions capabilities required to maximize thevalue of real estate.
Looking ahead, we will continue to capture new
business opportunities, thereby strategically meetingthe socioeconomic needs for urban development
while maximizing real estate asset value.

Shinjuku Eastside Square

Revenue from operations (left scale)Operating income (right scale)(Millions of yen)

(Millions of yen)

15,000

Logiport Sagamihara

Front Place Nihonbashi

Logiport Sagamihara is one of the largest distribution centers inJapan, and not only offers the advantages of location, connecting the Tokyo area to Western Japan through its accessibility to
the Metropolitan Intercity Expressway following the opening of
the Sagamihara Aikawa interchange, but also is positioned tospur development in an area that has attracted considerable
attention as a strategic base capable of covering the Tokyo
Metropolitan area. In addition to boasting the strongest levelsof seismic resistance, durability and quality, the design of the
facility factors in considerations for the environment.
Construction is expected to reach completion in August 2013.

Front Place Nihonbashi was specially designed as a highlysophisticated environmentally friendly building, and is conveniently located near the intersection of Showa-dori andEitai-dori, just a one minute walk from Nihonbashi Stationon the Tokyo Metro Tozai Line and Ginza Line, as well as theToei Asakusa Line, three minutes’ walk from Kayabacho
Station on the Tokyo Metro Tozai Line and within walking
distance of both Mitsukoshimae Station and Tokyo Station.
Construction is scheduled for completion in February 2014.

40,00030,00011,18012,50050,27850,00055,80960,000Located within the large-scale, approximately
3.7 hectare Shinjuku Eastside development
project and directly connected to HigashiShinjuku Station on the Tokyo Metro Fukutoshin
Line and Toei Oedo Line, the Shinjuku Eastside
project is an office building capable of accommodating more than 10,000 people. With astandard effective floor area of approximately
1,800 tsubo, its floor plate is the largest in
central Tokyo, and the building has an openspace green area that covers approximately
1.3 hectares. Shinjuku Eastside Square wascompleted in April 2012.

Kojimachi Front Building
7,500
5,000

10,0001,609

20,0000

2012/32,500

2013/3

Conveniently located near
Mita Station on the Toei Mita
Line and Asakusa Line, as well
as JR Tamachi Station, the Shiba
Front Building and Tamachi
Front Building are being developed as office buildings with afocus not only on functionality
and comfort, but also the environment and added safety.
Completion of both buildings
is scheduled for June 2014.

10,0000

Located one minute on foot from Kojimachi Station on
the Tokyo Metro Yurakucho Line and four minutes from
Hanzomon Station on the Hanzomon Line, the Kojimachi
Front Building is an eco-friendly, highly functional
office building (standard floor area approximately 200
tsubo) that offers superior access. Sumitomo Mitsui
Banking Corporation awarded the Company a gold
assessment for its environmental initiatives in February
2013, and the building received a gold environmental
rating from the Development Bank of Japan. Construction of the Kojimachi Front Building was completed in
February 2013.

Shiba Front Building

Tamachi Front Building

With excellent visibility along Kojimachi’s main
thoroughfare, the Kojimachi Front Building
offers superior access, being just a one minute
walk from Kojimachi Station on the Tokyo
Metro Yurakucho Line and four minutes from
Hanzomon Station on the Hanzomon Line. The
north side of the building, facing the street, iscovered entirely by glass, ensuring effective
use of light while imparting a strong sense of
the building’s prestige. Moreover, the building
is designed with a horizontal orientation, creating a sense of unity with the city and theflow of pedestrians moving up and down thestreet.
In terms of functionality, the buildingshows sufficient seismic resistance in line withthe heightened expectations for safety fromtenants following the Great East Japan
Earthquake. In addition, the building hasreceived certifications from financial institutions following aggressive efforts to ensure an
environmentally friendly building, with features that include the utilization of LED lighting and a system controlling minimal
outside-air volume. We are also committed toensuring the comfort of those working in thebuilding, including through the introduction ofnatural ventilation functions and the installation of aroma diffusers in the elevator halls.
We will continue to develop attractive
products that meet the needs of both investors
and tenants.

Daisuke Miyanouchi
Manager
Commercial Property Development andInvestment Department
Mitsubishi Estate Co., Ltd.

13

4
14

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Accelerating Leasing andDevelopment Operations in the
United States, the United Kingdom
and Asia

International
Business

In the United States, Mitsubishi Estate owns largescale office buildings, including the McGraw-Hill
Building and the Time-Life Building in Manhattan, NewYork City. In 2012, the Company acquired 50 Beale
Street, an office building located in San Francisco. In
addition, Mitsubishi Estate is currently undertaking
approximately 30 development projects in 10 states,
including office buildings, distribution facilities, andhomes.
At the same time, the Company is aggressively
expanding its U.K. development business in London,
which is centered on the Paternoster Square Redevelopment Project and the Central Saint Giles Redevelopment Project. In 2013, we acquired 1 Victoria
Street, an office building in London’s West End.

Trilateral Global
Development
System: UnitedStates, United
Kingdom, Asia

In Asia, the Company established Mitsubishi
Estate Asia Pte. Ltd. in 2008 and is participating incondominium and office building development projects in Singapore and Vietnam. After setting up a
representative office in China in 2011, Mitsubishi
Estate newly established Mitsubishi Estate(Shanghai) Ltd. in 2013. In China, we are actively
participating in condominium development projects
as well as the construction of multipurpose developments encompassing condominiums, homes, andretail facilities in the cities of Suzhou, Shanghai, andChengdu.
Leveraging its track record at home and overseas, the Company will develop its real estate business on a global basis in the years to come.

In addition to its real estateleasing and development operations in the United States andthe United Kingdom, theCompany is actively expanding
its overseas real estate businessin Asia mainly throughMitsubishi Estate Asia Pte. Ltd.
and Mitsubishi Estate (Shanghai)Ltd. In this manner, Mitsubishi
Estate is developing its global
operations through a trilateralsystem comprising the UnitedStates, the United Kingdom andAsia.

The McGraw-Hill Building in New YorkWith 51 floors above ground and five floors below ground, the McGraw-Hill Building boasts total floor space of approximately 237,100m2. Located in Manhattan, New York, this office building was completed in March 1972. Mitsubishi Estate
first acquired an interest in the building in April 1990.

Revenue from operations (left scale)Operating income (right scale)(Millions of yen)Central Saint Giles in London

Office Development (CapitaGreen) in Singapore

A joint redevelopment project with Legal & General, a major
U.K. life insurance company, this complex covers a total
floor area of approximately 66,000m2 and comprises offices,
retail shops and residences. Construction was completed in
April 2010.

A joint venture office building project with CapitaLand
Group, this project covers a site area of approximately
5,500m 2 and has a total floor area of approximately
82,400m2. Ground was broken on this project in 2012, withcompletion scheduled for 2014.

Rockefeller Group International, Inc. (RGII), a
core company in the U.S. operations of the
Mitsubishi Estate Group, focuses on the investment management and real estate development/holdings businesses, and is a key player
in fostering the globalization of the Mitsubishi
Estate Group. In the dynamic U.S. market,
keeping ahead of numerous rival companies
requires an enhanced base of personal contacts and local expertise, as well as the will tocontinually promote the localization of operations.
It will soon be 24 years since Mitsubishi
Estate began its capital participation in RGII.
There have been a number of difficulties in theintervening years, including the collapse of
Lehman Brothers, but RGII has been able tomeet and overcome every challenge it has
faced. RGII boasts a local staff of more than400, with many employees having several
decades of experience at the company. In linewith the “As One Team” spirit, RGII is a key
member of the Mitsubishi Estate Group andcontinues to promote localization and globalization of the Group as a whole.

(Millions of yen)

Kentaro Suzuki

20,00080,000Senior Investment Manager
Rockefeller Group International, Inc.
15,00060,89260,000Condominium Development in
Chengdu10,00020,000

8,020

8,371

42,10840,0005,000

02012/3

2013/30

A joint-venture project with
CapitaLand Township Pte. Ltd. ofSingapore, this new-town project
covers a site area of approximately
75,000m2, has a total floor area ofapproximately 350,000m 2, andboasts around 3,400 residences.
Construction began in 2012 and is
expected to reach completion in
2016.

15

6

Investment Management
Business
Harumi Front
Harumi Front is a large-scale
Class A building boasting thelargest standard floor area inthe district, and is located inHarumi, a well-known officebuilding area within the three
central-Tokyo districts. Japan
Real Estate Investment Corporation acquired the building
from Mitsubishi Estate inJanuary 2013. Construction of
the building was completed in
February 2012.

6,000

7,108

4,500

5,924

6,000

3,000

1,464

2,000

0

2012/3

2,129

4,000

1,500

2013/30

To meet the specific needs of institutional investors,
Mitsubishi Jisho Investment Advisors, Inc. (MJIA) has
formed fixed-term private funds that invest in officebuildings as well as commercial (shopping centers),
leased residential properties, and distribution facilities. Also, MJIA offers a broad range of investment
products, including open-ended, non-listed private
REITs (Nippon Open Ended Real Estate Investment
Corporation) to satisfy the needs of investors who
prioritize stability and long-term investments.
Meanwhile, Japan Real Estate Asset Management Co., Ltd. handles a listed REIT that accommo-

dates individual investors. This investment managementcompany manages the investments of Japan Real
Estate Investment Corporation, a Japanese REIT
(J-REIT) specializing in office buildings. Japan Real
Estate Asset Management has the longest history
among listed J-REITs, and it has maintained steady
performance over the past 12 years. Thus, the Mitsubishi Estate Group is providing industry-leading
investment management services.
Looking to the future, we aim to offer prime
investment opportunities, including new asset-type
investments to any and all investors in Japan andoverseas as well as to contribute to the further
development of the real estate investment market.

Revenue from operations (left scale)Operating income (right scale)(Millions of yen)

(Millions of yen)

2,000

20,00015,00010,000

1,500

1,234

(Millions of yen)

8,000

Offering Industry-Leading Investment
Management Services to Meet
Diversified Investor Needs

19,568(Millions of yen)

Ginza Kabukiza

At the core of Mitsubishi
Estate’s Architectural Design
and Engineering Business are
Mitsubishi Jisho Sekkei Inc.
(MJS) and MEC Design
International Corporation. MJS
engages in the design andadministration of construction
and civil engineering projects,
building renovation, and projects related to urban andregional development as well ascomprehensive consulting. MEC
Design International is involved
in interior design administrationand construction projects.

In its Investment Management
Business, Mitsubishi Estate isoffering wide-ranging services
for both individual and institutional investors. For investors
seeking the effective management of real estate assets, theCompany’s services extend fromthe management of real estate
investment trusts (REITs) tomeet the needs of investors
who desire security through realestate investment over the longterm to the management of private funds to satisfy the specificneeds of institutional investors.
Revenue from operations (left scale)Operating income (right scale)

17

The Ginza Kabukiza project is a
grand renovation of the Kabukiza
Theatre, a traditional arts hall inwhich Japan takes great pride.
The complex combines the theater, which maintains a traditional Japanese architectural style inwhich white features prominently, with a recessed 29-story modern high rise.

Addressing the
Needs of Society
through AbundantExperience as wellas Superior Design
and Engineering
Capabilities

1,190

Providing a
Variety ofSpecialized
Services for Real
EstateInvestment
Management

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Architectural Design& Engineering
Business

19,932

5
16

5,000

0

1,000

500

2012/3

2013/30

JP Tower
JP Tower is a commissioned project for the rebuildingof the Tokyo Central Post Office. Construction on thelower floors involved the adoption of a seismically isolated structure while maintaining a portion of the existing building, while the upper floors have a modern
glass façade. As a result, the building creates a newurban landscape that offers a contrast of the old andthe new.

Design Work on the Nan Shan Plaza
Project in Taipei
The Nan Shan Plaza project currently under development
involves the creation of a large-scale complex that includes abus terminal, commercial facilities, and offices in one of Taipei’s
most prestigious locations. The project centers on a skyscraper
reaching about 300m and aims through the effective use ofwater features and green areas to create an oasis within the city
as well as a center for exchange and bustling activity.

Completion of High-Profile, LargeScale Projects

Expanding Overseas Operations inSoutheast Asia

Major architectural design and engineering projects
that captured the public’s interest and were completed
in fiscal 2012 included Ginza Kabukiza and JP Tower.
In fiscal 2013, plans are in place to complete suchprojects as the rebuilding of the Nagoya Tokio Marine& Nichido Building, maintenance work on the Osaka
Prefectural Police Academy (PFI), and construction of
the Hiroo Garden Forest Tsubaki Residence.
Moving forward, every effort will be made tosecure architectural design and engineering orders for
new construction and renovation projects, to addresschanging needs, including for high-quality products
and eco-technologies, and to further strengthen all
business fields, including construction managementand district heating and cooling facilities.

Overseas operations currently include Mitsubishi
Jisho Sekkei Architectural Design & Engineering(Shanghai) Co., Ltd., which operates in Taiwan and
China, where urban development is showing dramatic progress. The company’s efforts paid off in 2012,
with the firm winning orders as a result of its participation in a design competition for a large-scale complex development project in central Taipei.
Mitsubishi Jisho Sekkei has won strong praise fromoverseas for its high-quality urban and architecturaldesign, as well as its state-of-the-art environmental andenergy saving technologies. In order to better promotethese strengths in Southeast Asia, which has seen dramatic growth in the last few years, the Company
opened a representative office in Singapore in May
2013. From this location, the Company is actively developing its business network and continues its efforts to
expand operations throughout Southeast Asia, including
Malaysia, Vietnam, Indonesia, and Myanmar.

7
18

Hotel
Business

Real Estate
Services

28,299

2,000

474

(278)

1,000

0

-10,0000

2012/3

2013/3

Royal Park Hotel25th Anniversary-1,000

Yokohama Royal Park Hotel
20th Anniversary

Royal Park Hotel The Haneda

Royal Park Hotels
Anniversary Year

Royal Park Hotel The Haneda features a direct link to theInternational Passenger Terminal of Haneda Airport.
Featuring Japan’s first transit hotel,* the Royal Park Hotel
The Haneda is set to open at the end of September 2014,
with 315 rooms. Following a “Dream Box” concept, theHotel aims to leave travelers with a memorable airport hotel
experience.
*A transit hotel allows passengers awaiting connecting
flights to stay without having to clear immigration or cus- Royal Park Shiodome Tower
toms.
10th Anniversary

Three Royal Park Hotels in theTokyo Metropolitan area will
be celebrating milestone anniversaries between July 2013
and June 2014. To commemorate this year of anniversaries,
hotels throughout the Groupwill be carrying out various
special campaigns for theircustomers.

The philosophy of the Royal Park Hotels, “Best for the
Guest”, has been adopted by the entire hotel group to
ensure customer satisfaction is always a top priority.
This approach has been well acknowledged by organizations in Japan and overseas, enabling us to win theleading rank in the 2012 Japan Hotel Guest Satisfaction
Index Study SM conducted by J.D. Power Asia Pacific,
Inc.,* an organization specializing in research andconsulting related to customer satisfaction. This marks
the sixth consecutive year for Royal Park Hotels to win
the top position in the ¥15,000 to ¥35,000 per night
category.
* Japan Hotel Guest Satisfaction Index StudySM conducted by
J.D. Power Asia Pacific, Inc. between 2007 and 2012
Royal Park Hotels ranked high in the segment of ¥15,000 to ¥35,000
per night hotels with the most common guestroom space of 20m2 orlarger. The study was based on 7,679 valid responses received frompeople who used applicable hotels within the previous year. For moredetails, please see the press release of the J.D. Power and Associates
Web site at: http://www.jdpower.co.jp/press/pdf2011/2011Japan%20
Hotel%20GSI.pdf (Japanese language only)

In the Real Estate Services
Business, Mitsubishi Real Estate
Services Co., Ltd. and Mitsubishi
Jisho House Net Co., Ltd. closelycollaborate to meticulously
respond to customers’ realestate needs. Leveraging its collective strengths and information capabilities, the Mitsubishi
Estate Group provides a widearray of optimal solutions forindividual and corporate realestate utilization, brokerage,
and leasing.

Revenue from operations (left scale)Operating income (loss) (right scale)(Millions of yen)

(Millions of yen)

1,500

30,000

Expanding “THE SERIES” Brand
THE SERIES brand strives to make the most of theunique features of its location and region. This brandoffers sophisticated design and excellent hospitality ata reasonable price. In fiscal 2012, The Fukuoka and
The Kyoto made their debut. Each hotel has alreadybeen widely acclaimed by a large number of patrons.
In November 2013, The Nagoya will open in front of
Nagoya Station while The Haneda, with a direct link to
the international terminal at Haneda Airport, is scheduled to commence operations at the end of September
2014.

The Residence Lounge by Mitsubishi Jisho
The Residence Lounge by Mitsubishi Jisho, open from April 2013, is a onestop consultation area offering to our customers a wealth of information andservices related to housing, including services tied to leasing operations, condominium management, renovation projects, and the buying and selling of
housing.

Parking Ecology Network“PEN”
CRE Strategic Support System (CRE@M)
The Company offers total support for corporate CRE (corporate real estate) strategies, from consolidated real estate management to project operations and progress management.

Real Estate Brokerage and Consulting
Services

20,000

1,058

3,000

10,000With a planned opening on November 1, 2013, this 153room hotel is located in an attractive area only a five-minute
walk from JR Nagoya Station at Meieki 3-Chome, NakamuraWard, Nagoya City. The concept of the project is to encompass serious business facilities into a hotel, to provide a hotel
where guests can conduct business.

27,209(Millions of yen)

25,65420,000Royal Park Hotel The Nagoya

Increasing the Brand Value of Royal
Park Hotels through a Management
Focus on Customer Satisfaction

Revenue from operations (left scale)Operating income (loss) (right scale)
30,000(Top) “Chef’s Terrace” is a new type of restaurant, featuring
an open kitchen that combines the charm of Western,
Japanese, and teppanyaki cooking.
(Bottom) The “Mon Cheri” function room is based on asouthern European nature-themed wedding concept.

19

Meticulously
Responding tothe Various Real
Estate Needs ofCustomers

10,000

1,000

500

(57)

In the Hotel Business, theMitsubishi Estate Group maintains a network of seven hotels
in Japan located in Sendai,
Tokyo (Nihonbashi and
Shiodome), Yokohama, Chiba,
Kyoto, and Fukuoka under theRoyal Park Hotels brand name.
With the prospective openingof two more hotels in Nagoya
and Tokyo (Haneda), this number will rise to nine. Building on
a management foundation that
focuses on customer satisfaction, the Mitsubishi EstateGroup will work
to improve its
brand value
while expanding
Group hotels.

March 2013 Opening of the Sendai Royal Park Hotel’s“Chef’s Terrace” and “Mon Cheri”

26,085

Improving Our
Brand Value andExpandingGroup Hotels(Millions of yen)

8

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 20130

-10,0000

2012/3

2013/3-1,000Mitsubishi Real Estate Services and Mitsubishi Jisho
House Net engage in wide-ranging operations related to real estate owned by individuals and corporations. These operations include purchasing, sales,
brokerage for leasing services, and consulting services for real estate utilization. Through brokerage services for individuals, the two companies provide
comprehensive support in real estate purchasing andsales as well as in finding new housing. They meetthe diversified requirements of customers through anationwide network.
In addition to providing various need-oriented
investment proposals to individual customers, theywork to satisfy the wide-ranging needs of corporate
customers in Japan and overseas through services
ranging from real estate assessment, sales, and purchase brokerage to consulting for effective utilization. In this manner, every effort is made to address
the diverse requirements of every possible customer.
Furthermore, they have established the CRE@M
cloud-type system to offer comprehensive assistanceTo contribute to global environmental efforts through parking
operations, Mitsubishi Real
Estate Services donates a portion of the proceeds from parking charges to tree-planting
programs.

from the integrated management of real estate tothe operation and progress management of projects
in promoting corporate real estate (CRE) strategies.

Advancing the Leased Condominium/
Office Building Management Support
Business and Coin-Operated Parking
Lot Operations
Mitsubishi Real Estate Services and Mitsubishi Jisho
House Net offer a variety of lease management support services related to leased condominiums andoffice buildings, and their customer base ranges fromindividuals and corporate clients to asset managers
of securitized real estate. We have a structure thatenables comprehensive services covering everythingfrom business plan formulation and product planningto lease management after construction completion.
Moreover, we provide our customers with information on leased properties according to their preferences, including those owned by Mitsubishi Estate. In
addition, we are promoting “PEN” automated, coinoperated parking services, applying our extensive
expertise in lease management services.

20

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Business Development,
Consulting & Solutions GroupCSR Management / Operating Results

Leveraging the Resources of the Entire Group to Expand
Business Opportunities in Proposal-Based MarketingStanding in the heart of Mitsubishi Estate’s strategic marketing structure, the Business Development,
Consulting & Solutions Group works to foster deeper ties with clients through proposal-based marketing, whichis conducted across the Company as a whole. Making full use of the company’s accumulated real estate development, planning, and management expertise, the two departments that comprise this group are active inefforts to realize maximum value for their clients.

22 CSR Management
22 Our Approach to CSR
23 Corporate Governance / Compliance / CSR Case
Studies
24 Directors, Statutory Auditors and Executive Officers

Maximize asset
Risk
efficiency
management

Funds
procurement

Real estate
investment

25 OrganizationC O N S U L T I N G

Customers

Determinecurrent
statusConduct
research
and analysis

26 Operating Results
Real estate-relatedplanning,
proposals and services

Considerinitiatives
and proposals

26 Financial Highlights—Five-Year Summary
27 Financial Review
30 Consolidated Balance Sheets
32 Consolidated Statements of Income

Proposal determination

Consolidated Statements of Comprehensive Income
Implementation

33 Consolidated Statements of Changes in Net Assets
Analysis and review

35 Consolidated Statements of Cash FlowsS O L U T I ON

36 Notes to Consolidated Financial Statements
Real estate development

Real estate investment

Real estate liquidity

s $EVELOPMENT METHODPROPOSALS
s "USINESS PLAN SUPPORT
s 0ROJECT MANAGEMENT
s %FFECTIVE UTILIZATIONJOINTVENTURES EQUIVALENTEXCHANGESTERM LEASEHOLDINTEREST METHOD
s 0ROVISIONAL USE
s 2ECONSTRUCTION

s 2EAL ESTATE INVESTMENTSTRATEGY FORMULATION SUPPORTs -ARKET RESEARCH AND ANALYSIS
s $UE DILIGENCE
s !CQUISITION SUPPORTs !SSET MANAGEMENTs 2EAL ESTATE BACKED
FINANCING SUPPORTs 3ECURITIZATION
s 3PECIFIED REAL ESTATEJOINT VENTURES
s 3ALES AND LEASEBACKs 2EAL ESTATE BROKERAGE

Building operation andmanagement

Comprehensive building
analysiss /PERATION AND MANAGEMENT
PLAN ANALYSIS AND PROPOSALSs ,ONG TERM MAINTENANCE
PLAN CONSULTING
s #OMMISSIONED OPERATION AND
MANAGEMENT OF BUILDINGSRETAIL FACILITIES AND HOTELS
s 3UBLEASING
s 4ENANT MARKETING
s /PERATION AND MANAGEMENT OFRESIDENTIAL COMPLEX ANDCORPORATE HOUSING
s 0ROPERTY MANAGEMENT

s %ARTHQUAKE RESISTANCEANALYSIS
s &ACILITY MANAGEMENT
s %NERGY SAVING AND)4 UTILIZATION IN BUILDINGSAND FACILITIESs )NTERIOR AND EXTERIORRENOVATIONs "ARRIER FREE FACILITYCONSTRUCTION
s !NTI AGING MEASURES FOR
BUILDINGS AND FACILITIESs #ONVERSION

A Wide Range of Solutions Covering Everything from
Individual Real Estate Needs to Corporate Real Estate
Strategic Support
The Business Development, Consulting & Solutions Group (comprising the Business
Development, Consulting & Solutions Dept. 1, and Business Development,
Consulting & Solutions Dept. 2) are independent from Mitsubishi Estate’s eight
principal business segments (comprising the Building Business, Residential Business,
Commercial Property Development & Investment Business, International Business,
Investment Management Business, Architectural Design & Engineering Business,
Hotel Business, and Real Estate Services Business).

Construction

Design and supervision

CRE strategy support

s 3INGLE UNIT HOMESAND RENTAL AND
CORPORATE HOUSING
s 2ESIDENTIAL AND
OFFICE RENOVATION

s %NVIRONMENTAL ASSESSMENT
AND RESEARCH
s #ONSULTING FOR URBAN
DEVELOPMENT AND PRIVATEFINANCE INITIATIVES 0&)Ss #ONSULTING DESIGN AND
SUPERVISION FOR ENVIRONMENTAL
AND CIVIL ENGINEERING SOLUTIONS
s #ONSTRUCTION MANAGEMENT
s $ESIGN AND SUPERVISION FOR
BUILDINGS AND STRUCTURES
s $ESIGN AND SUPERVISION FOR
INTERIOR AND EXTERIORs /RGANIZATION OF #2%
INFORMATION
s #2% VALUATION
s 3UPPORT FOR STRATEGYFORMULATION AND
IMPLEMENTATIONIn an effort to consistently provide optimal consultation and solutions services
that address clients’ real estate needs, such as effective methods for property utilization and acquisition, we create business proposals that draw on the resources ofthe entire Group.
The departments offer consultation for individual properties and multiple properties held and leased by corporate clients. We analyze the situation, taking into
consideration the comprehensive features of the real estate under review, and provide solutions that match the financial and management strategies of individual client companies. In this manner, Mitsubishi Estate endeavors to realize the maximum
value of corporate real estate (CRE).

53 Independent Auditor’s Report

54 Principal Mitsubishi Estate Group Companies
56 Corporate History
57 Corporate Information

21

22

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 201323

CSR Management

Our Approach to CSR

Corporate GovernanceCompliance

The Mitsubishi Estate Group believes that its fundamental mission is the creation of a truly meaningful society through the building of attractive, envi-

Guided by its fundamental mission, the Mitsubishi Estate Group

Mitsubishi Estate considers compliance not simply as adherence to legalronmentally sound communities where people can live, work and relax. To this end, the Group acts with integrity while striving to earn the trust of its

endeavors to promote management that is focused on the interests ofstandards, but as meeting the expectations of people in society at large,

clients and create a vibrant workplace, the three core tenets of its code of corporate conduct. Placing the utmost importance on maintaining dia-shareholders while fully supporting its Statutory Auditor system andnot to mention the adherence to internal company rules and ethical cor-logue with its stakeholders, the Mitsubishi Estate Group strives to contribute to the well-being of society.

the introduction of an executive officer system. To ensure greater trans-

porate standards. Furthermore, because we recognize how essential

parency and objectivity, as well as to improve the management andcompliance is to the profit base of the Company, we view the mainte-

oversight of the Board of Directors, external Directors are to benance of a compliance system as a priority task of management.

appointed while efforts are continuing to promote separation andMoreover, all Group employees are deepening their awareness of com-

greater control of supervision and auditing, as well as to strengthen its

pliance issues while proactively promoting compliance-focused activities.

Three Principles

business execution functions. At the same time, the Group’s management system is being restructured to focus on dynamism and flexibility

所期奉公

処事光明

立業貿易

"Shoki Hoko"
Corporate Responsibility to Society"Shoji Komei"
Integrity and Fairness"Ritsugyo Boeki"
Global Understanding through Business

Strive to enrich society, both materially and spiritually, while contributing towards the preservation of
the global environment.

Maintain principles of transparency and openness, conducting business with integrity and fairness.

Expand business, based on an allencompassing global perspective.

Group. We view corporate governance as one of our most important

Environmental Management

systems and, therefore, are constantly working toward the creation ofUnder its Environmental Slogan, “For Sustainable Cities, For a Sustainablea structure that is best suited for the Group.

Earth,” the Mitsubishi Estate Group is aggressively implementing initiatives aimed at realizing a low-carbon, recycling-oriented society
through each of its business while promoting sustainable urban devel-

Reports Concerning Corporate Governanceopment that gives due consideration to such environmental aspects as

 Basic policy regarding corporate governance, and capitalbiodiversity. As a prime example, we are incorporating the latest in

structure, corporate attributes, and other basic information
 Overview of business management organization and

The Mission of the Mitsubishi Estate Groupother corporate governance systems related to managerial decision-making, business execution, and management supervision

We contribute to society through urban development
By building attractive, environmentally sound communities where people can live, workand relax with contentment we contribute to the creation of a truly meaningful society.

CSR Case Studies

in order to ensure the more efficient and sound management of the Status of implementation of measure related to shareholders and other stakeholders
 Basic policy and status of implementation of the internal
control system
 Others

environmental facilities and technologies into the development of newlarge-scale buildings in our Building Business. At the same time, we are
adopting intelligent lighting as well as hybrid radiant cooling systems intenanted properties as a part of efforts to create next-generation offices. Moreover, we are upgrading existing buildings with the introductionof cutting-edge facilities that exhibit outstanding environmental performance. In the Residential Business, we are actively promoting thedevelopment of the eco-friendly “soleco” system, which combines asolar power generation system and a central high-voltage power transmission system. Working to reduce the environmental footprint of business activities as a whole, we are endeavoring to enhance awarenessand to act as a conduit for the dissemination of information. To thisThe Mitsubishi Estate Group Code of Corporate Conduct

end, we are conducting environmental events and seminars at suchlocations as Ecozzeria and Marunouchi Saezuri Kan.

In order to carry out the Group Mission, we pledge to observe the following Code of Conduct:Social Contribution

1. We will act with integrity

2.

We will base our conduct on laws
and ethics and always reflect withhumility upon our behavior, valuing
our communication with society
and placing priority in our corporate activities on earning trust
through fairness and transparency.

We will approach all objectives
from our clients’ point of view,providing safe and reliable products and services, and make information available as appropriate.

We will strive to earn
the trust of our clients3.

We will strive to create avibrant workplace

The Mitsubishi Estate Group engages in a wide range of social contribution activities centered on promoting its harmonious coexistence with

While aiming at personal growth,
we will respect the human rights
and diversity of opinions of others
and increase our creativity andprofessionalism, while displaying
our collective strengths as a team.

communities, its environmental preservation and social welfare activities,
and its support for culture and the arts. For example, during the fiscal
year under review, Mitsubishi Estate participated as a supporter in the La
Folle Journee au Japon “Days of Enthusiasm” Music Festival, held small
concert events, implemented “Experience Nature” projects nationwide
to promote communication between
urban and rural people, hosted theannual Dazzling Art Competition,a drawing contest for disabled chil-

For details of the Mitsubishi Estate Group Guidelines for Conduct

dren throughout Japan, and partici-

http://www.mec.co.jp/e/company/charter/index.html

Project to support reconstructionpated in the Rebirth TOHOKU Food

Details
http://www.mec.co.jp/e/investor/irlibrary/corp/index.html(Formulated December 1, 1997) (Revised August 1, 2002) (Revised January 1, 2006)

efforts in the Tohoku area.
Details
http://www.mec.co.jp/e/csr/index.html

24

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Directors, Statutory Auditors and Executive Officers

Organization

Business Development, Consulting & Solutions Group
Business Development, Consulting & Solutions Dept. 1
Business Development, Consulting & Solutions Dept. 2
Property Management and Office Leasing Group
Property Management Dept.

Building Safety Management Office
Yokohama Renewal Office

Keiji Kimura

Hirotaka Sugiyama

ChairmanYutaka Yanagisawa

Chief Executive Officer

Masaaki Kono

Deputy President

Building Management Integration Planning Office

Meeting of Shareholders

Commercial Property Advisory Dept.

Executive Vice President

Office Leasing and Tenant Relations Dept.
Board of Directors

Relocation Management Office
Master Lease Planning and Management OfficeTenant Improvements Management Office

Chairman of the Board

President &Chief Executive Officer

Hiroyoshi Ito

Masao Ouchi

Toshihiko Kazama

Masamichi Ono

Executive Vice President

Executive Vice President

Executive Vice President

Executive Vice President

Strategic Planning
Committee

Executive Committee
Strategic Investment
Committee

Commercial Asset Management and Development Group
Commercial Asset Management Dept.

Group Companies Management Office

Area Brand Management Dept.

Tokyo Client Business Development Office

Museum Management OfficeCommercial Asset Development Dept.
Area Planning Office
Retail Property Group
Retail Property Planning Dept.

Retail Property Improvements Management OfficeUrban Redevelopment Business Dept.
Logistics Facilities Development Investment Dept.
Internal Audit Office

CSR Committee
Compliance
Subcommittee

Jo KatoNaoto Aiba

Soichiro Hayashi

Koji Kiyosawa

Executive Vice President

Executive Vice President

Senior Executive Officer

Senior Executive Officer

Commercial Property Development and Investment Group
Commercial Property Development and Investment Planning Dept.
Commercial Property Development and Investment Dept.

Toyosu Development and Investment OfficeUrban Redevelopment Business Dept.
Board of Statutory Auditors
Statutory Auditors
Office of Statutory Auditors

CSR & Environmental
Sustainability
Subcommittee
Risk Management
Committee
Risk Management
Subcommittee

Logistics Facilities Development Investment Dept.
Residential Development Group
Residential Business Dept.

Recreational Facilities Office

Apartment Development Dept.

Development Solutions OfficeInternational Business GroupInternational Business Dept.

Shanghai Representative Office

Investment Management Group

Kenichi Iwata

Atsuo Kyono

Toru Okusa

Yutaka Tajima

Tetsuji Arimori

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Investment Management Business Dept.
Corporate Group
Corporate Planning Department Affiliated Group Office

Corporate Planning Dept.

Kazuyuki Yabu

Kazuhiko Arahata

Masami Amano

Executive Officer

Executive Officer

Executive Officer

Hidemi Waki

Junichi Tanisawa

Hiroshi Katayama

Executive Officer

Executive Officer

Executive Officer

Junichi Yoshida

Tetsuo Yuasa

Shinichi Takeuchi

Executive Officer

Executive Officer

Executive Officer

Akinori Nakajo

Noboru Nishigai

Futoshi Chiba

Executive Officer

Executive Officer

Executive Officer

Human Resources Dept.

Human Resources Compliance Office

Keiji Kimura

Hirotaka Sugiyama

Yutaka Yanagisawa

Masaaki Kono

Finance & Accounting Dept.

Structured Finance Office

Representative Director
Chairman of the Board

Representative Director
President & Chief
Executive Officer

Representative Director

Representative Director

Corporate Communications Dept.

Investor Relations Office

General Affairs Dept.

Secretary Office

Toshihiko Kazama

Jo KatoNaoto Aiba

Masamichi Ono

Representative Director

Representative Director

Representative Director

Director

Toru Okusa

Isao Matsuhashi

Fumikatsu Tokiwa

Yasumasa Gomi

Director

Director

Director

Director

Shu Tomioka

Hiroshi Danno

Kazuhiko Hasegawa

Kenjiro Hata

DirectorStanding Statutory
AuditorStanding Statutory
Auditor

Statutory Auditor

Akio Utsumi
Statutory Auditor(As of June 27, 2013)

Research & Strategy OfficeDirectors and Statutory Auditors

Notes:
1. Among directors, Isao Matsuhashi, Fumikatsu Tokiwa, Yasumasa Gomi, and
Shu Tomioka are external directors who fulfill the qualifications set forth
under Article 2-15 of the Corporation Law of Japan.
2. Among statutory auditors, Kazuhiko Hasegawa, Kenjiro Hata, and Akio
Utsumi are external auditors who fulfill the qualifications set forth under
Article 2-16 of the Corporation Law of Japan.

Legal & Compliance Dept.
CSR & Environmental Sustainability Dept.

Sapporo Branch
Tohoku Branch
Yokohama Branch
Nagoya Branch
Osaka Branch
Chugoku Branch
Kyushu Branch(As of April 1, 2013)

GRAND FRONT OSAKA Office

25

26

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Financial Highlights—Five-Year Summary

2009/327

Financial Review

2010/3

2011/3

2012/3

2013/3Financial Results (Millions of yen)In the Investment Management Business segment, results were

Revenue from Operations/Operating Income
In the fiscal year ended March 31, 2013, consolidated revenue frombuoyed by such factors as sales revenue from the investments distrib-

operations decreased ¥85,911 million, or 8.5%, from the previous fis-uted to funds as well as an upswing in distributions from a special-

cal year to ¥927,157 million. Consolidated operating income also

purpose company in which Mitsubishi Estate and other companies

Revenue from Operations

942,626

1,013,415

988,447

1,013,069

927,157

declined, falling ¥27,949 million, or 19.1%, year on year to ¥118,349

have invested. As a result, revenue from operations increased ¥1,183

Operating Income

138,567

148,972

158,258

146,299

118,349

million. Results for each business segment are as follows.

million compared with the previous fiscal year to ¥7,108 million.

Ordinary Income

108,624

117,381130,830

120,665

92,381Net Income

45,423

11,90064,21956,51245,507

Financial Position (Millions of yen)
Total Assets
Total Equity*

1

Interest-Bearing Debt

In the Building Business segment, the Marunouchi Eiraku Building
contributed to earnings. Revenues, on the other hand, declined year

In the Architectural Design & Engineering Business segment,

ed as a result of the sale of Akasaka Park Building during the fiscal

Mitsubishi Estate recorded revenue in connection with such projects asyear ended March 31, 2012. As of March 31, 2013, the vacancy rate

Otemachi Financial City (Chiyoda Ward, Tokyo) as well as Shinjuku

4,355,065

4,245,209

4,387,015

4,711,521

stood at 3.98%, compared with 3.58% as of the end of the previous

Eastside Square (Shinjuku Ward, Tokyo). During the fiscal year under

1,148,494

1,183,156

1,202,270

1,256,791

1,239,547

fiscal year. Reflecting these factors, revenue from operations fell

review, earnings from interior design and construction increased sub-2,085,417¥68,102 million year on year to ¥442,748 million. Operating income

stantially, but earnings from architectural design and engineering

contracted ¥38,339 million to ¥107,667 million.

decreased due to a decline in the amount of each property. Thus,

1,762,111

1,639,050

1,716,890

Per Share Amounts (Yen)Net Income

32.90

8.58

46.27

40.72

32.79

Cash Dividends

16.00

12.00

12.00

12.00

12.00

In the Residential Business segment, Mitsubishi Estate’s revenue inearnings from the Architectural Design & Engineering Business seg-the condominium business slipped year on year, due to a decline inment in total were unchanged from the previous year. As a result, rev-

the number of condominiums sold. As a result, revenue from opera-

enue from operations decreased ¥364 million to ¥19,568 million. In

tions decreased ¥27,472 million to ¥315,351 million. Operating

contrast, operating income increased ¥44 million to ¥1,234 million.

income in this segment was ¥2,317 million, a drop of ¥2,475 com-

Principal Financial Indicators
209,522230,730

237,109

222,885

200,587

3.3%

3.5%

3.8%

3.5%

2.7%

4.7 times

5.2 times

6.6 times

6.5 times

5.0 times

3.8%

1.0%

5.4%

4.6%

3.6%

ROA
Interest Coverage Ratio *3
ROE

Stock Information
Stock Price (Yen)

1,102

Number of Shares Issued andOutstanding (Thousands of shares)

1,530

1,382,518

1,407

1,390,397

1,390,397

2,596

1,476

1,390,397

1,390,397

Notes:
1. Total equity is calculated by deducting minority interests and stock acquisition rights from total net assets.
2. EBITDA is calculated as the sum total of operating income, interest and dividend income, equity in earnings of unconsolidated subsidiaries and affiliates, depreciation andamortization, and goodwill.
3. The interest coverage ratio (ICR) is calculated by dividing the sum total of operating income, interest and dividend income, and equity in earnings of unconsolidated subsidiaries andaffiliates by the sum total of interest expenses and commercial paper interest.

(Billions of yen)

942.6

Ordinary Income

Operating Income

Revenue from Operations(Billions of yen)

1,013.4 988.4 1,013.0
927.1

148.9
138.5

Net Income

146.2

117.3

(Billions of yen)

56.5

108.6
118.3

92.3

45.4

taken to reinforce the management structure at each hotel under thesegment, revenue from operations decreased compared with the pre-Royal Park Hotel brand. At the same time, particular emphasis was

vious fiscal year impacted by the deterioration in revenues in line withplaced on further promoting and developing a new hotel businessthe sale of a large-scale property. Specifically, revenue from operations

under the “THE” series brand of Royal Park Hotels. In the fiscal year

declined ¥5,530 million year on year to ¥50,278 million. Operating

ended March 31, 2013, revenue and earnings improved compared

income, on the other hand, grew ¥9,570 million to ¥11,180 million.

with the previous fiscal year, which was negatively impacted by the

In the International Business segment, properties located in major

drop in demand attributable to the Great East Japan Earthquake. In

U.S. cities and the City of London in the United Kingdom showed sta-

the fiscal year under review, revenue from operations in the Hotelble performance. In addition, revenue increased due to such factors as

Business segment climbed ¥2,644 million to ¥28,299 million.

the sale of properties held in the United States. As a result, revenue

Operating income was ¥474 million, a positive year-on-year turn-from operations in the International Business segment as a wholearound of ¥753 million.

climbed ¥18,783 million compared with the previous fiscal year to

In the Real Estate Services segment, the number of transactions¥60,892 million while operating income increased ¥350 million year

was essentially unchanged from the previous fiscal year. On a positiveon year to ¥8,371 million.

note, the amount of commission per transaction increased. As a

Total Equity(Billions of yen)

4,711.5
4,429.0
4,355.0
4,387.0
4,245.2

64.2
120.6

In the Commercial Property Development & Investment BusinessTotal Assets(Billions of yen)

130.8

158.2

With Royal Park Hotels and Resorts Co., Ltd., which oversees theGroup’s Hotel business activities, playing a central role, steps werepared with the previous fiscal year.

EBITDA (Millions of yen) *¥2,129 million.

on year, following a correction in connection with other income post-

4,429,070

1,834,195

2

Operating income also improved, rising ¥665 million year on year to

EBITDA

Interest-Bearing Debt
(Billions of yen)

1,256.7
1,239.5
1,183.11,202.2
1,148.4(Billions of yen)(Billions of yen)

2,085.4
1,834.1
1,762.1

1,716.8
1,639.0

230.7 237.1
209.5

222.8
200.5

45.5

11.9

2009/3 2010/3 2011/3 2012/3 2013/3

2009/3 2010/3 2011/3 2012/3 2013/3

2009/3 2010/3 2011/3 2012/3 2013/3

2009/3 2010/3 2011/3 2012/3 2013/3

2009/3 2010/3 2011/3 2012/3 2013/3

2009/3 2010/3 2011/3 2012/3 2013/3

2009/3 2010/3 2011/3 2012/3 2013/3

2009/3 2010/3 2011/3 2012/3 2013/3

28

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Millions of yen

result, the Group enjoyed an upswing in real estate brokerage revenue
in this segment. As a result, revenue from operations improved ¥1,123
million year on year to ¥27,209 million. In the fiscal year under review,

Revenue from operations¥191,837 million. Major cash inflows included income before income

these amounts during the period under review, and the fair values of

2013/3

2012/3YOY Change

taxes and minority interests, long-term borrowings, and proceeds frominvestment and rental properties and other real estate that includes

927,157

1,013,069(85,911)issuance of corporate bonds. Major cash outflows included purchases of

portions used as investment and rental properties.

property and equipment and the repayment of long-term borrowings.

the Mitsubishi Estate Group reported operating income of ¥1,058 mil-

Building Business

442,748

510,850(68,102)

lion in the Real Estate Services segment. This represented a positive

Residential Business

315,351

342,823(27,472)

Commercial Property
Development & Investment
Business

50,27855,809(5,530)International Business

60,892

42,10818,783¥80,956 million compared with the previous fiscal year. For the fiscal

Amounts recorded on consolidated balance sheets

7,108

5,924

1,183

year under review, income before income taxes and minority interests

Balance as of the beginning of the period

turnaround of ¥1,116 million from the previous fiscal year’s operatingloss.
Revenue from operations in the Other segment increased ¥902
million to ¥4,408 million. Despite this improvement, the Mitsubishi
Estate Group incurred an operating loss of ¥10 million in the Other

Millions of yen

Fiscal Year Ended
Fiscal Year Ended
March 31, 2013 (April 1, March 31, 2012 (April 1,2012 to March 31, 2013) 2011 to March 31, 2012)

Cash Flows from Operating Activities
Net cash provided by operating activities was ¥122,286 million, down

Investment Management
Business
Architectural Design &Engineering Business

Rental Properties

2,622,741

2,467,177

amounted to ¥56,741 million, and depreciation and amortization—a

Increase (decrease) during the period

342,654

155,563

19,56819,932(364)

non-cash item—totaled ¥73,364 million. These and other cash inflows

Balance as of the end of the period

2,965,396

2,622,741

Hotel Business

28,29925,654

2,644

were adjusted to reflect movements in inventories, income taxes paid,

Market value as of the end of the period

4,920,768

4,469,512

Other Income (Expenses)

Real Estate Services

27,20926,085

1,123

and other items.

Other income increased ¥1,013 million year on year to ¥10,136 mil-

Other

4,408

3,506

902

lion. Despite a decrease in dividend income, this increase was largely

Adjustments(28,707)(19,628)(9,079)Cash Flows from Investing Activities

Balance as of the beginning of the period

attributable to higher interest income. Other expenses climbed ¥1,348

Operating Income

118,349

146,299(27,949)

Net cash used in investing activities totaled ¥217,992 million, down

Building Business

107,667

146,007(38,339)

Increase (decrease) during the period(4,854)(1,269)million to ¥36,104 million, due to the increase in interest expenses,¥54,016 million year on year. This was largely due to purchases ofBalance as of the end of the period

227,564

232,419

Market value as of the end of the period

339,800

330,100

segment, a year-on-year deterioration of ¥192 million.

2,317

4,792

(2,475)

11,180

1,609

9,570

dinary gains of ¥7,540 million, mainly from the gain on sales of fixedCommercial Property
Development & Investment
Business

assets totaling ¥6,165 million and gain on negative goodwill amount-

International Business

8,371

8,020

350

Net cash provided by financing activities amounted to ¥27,150 million,

ing to ¥1,374 million.

2,129

1,464

665

down ¥30,038 million year on year. This reflected long-term borrow-totaling ¥43,181 million, which consisted of ¥24,338 million in loss

Investment Management
Business
Architectural Design &Engineering Business

1,234

1,190

44

related to retirement of fixed assets, ¥8,985 million in impairment loss

Hotel Businesson equity investment, ¥7,030 million in provision for loss on guaran-

Real Estate Services

tees, and ¥2,826 million in impairment loss.

Other

Turning to extraordinary items, Mitsubishi Estate recorded extraor-

At the same time, the Company posted an extraordinary loss

property and equipment.
Cash Flows from Financing Activities

ings, the issuance of corporate bonds and other financing activities.

Adjustments(2) Consolidated Balance Sheets

474

(278)

753

1,058

(57)

1,116

Compared with March 31, 2012, total assets as of March 31, 2013,

(10)

181

(192)

increased ¥324,505 million to ¥4,711,521 million mainly on the back

(16,074)(16,632)558

of the operating, investing, and financing activities previously identi-

Net Income

fied, which led to movements in assets and liabilities.

Income before income taxes and minority interests declined ¥30,772

Analysis of Financial Position

million, or 35.2%, year on year to ¥56,741 million. Net income con-

(1) Consolidated Cash Flow

The balance of interest-bearing debt as of March 31, 2013, grew

tracted ¥11,004 million, or 19.5%, to ¥45,507 million. Net income

On a consolidated basis, cash and cash equivalents at the end of the fis-¥368,527 million compared with the balance as of March 31, 2012,

per share came to ¥32.79.

cal year under review decreased ¥23,934 million year on year toto ¥2,085,417 million. Deducting cash and cash equivalents, the net¥392,462 million year on year to ¥1,893,580 million.
Net assets decreased ¥7,903 million year on year to ¥1,366,011 million. Increases in such items as unrealized holding gain on securities andInterest Coverage Ratio

ROE
(%)

(%)

foreign currency translation adjustments were more than offset by

Net Income Per Share(Yen)(Times)decreases in retained earnings, land revaluation reserve, and other items.

46.27
3.8

• Matters related to Rental Properties

40.72

Mitsubishi Estate and some of its consolidated subsidiaries own certain
3.5

3.5

6.6

3.3

32.90

32.79

6.5

the aim of obtaining rental revenue from these buildings and facilities.

4.6
5.2

Because certain leased office buildings among these are used by the

3.6
4.7
2.7
2009/3 2010/3 2011/3 2012/3 2013/3

office buildings and retail facilities in Tokyo and other major cities inJapan as well as in the United States and the United Kingdom, with

5.4
3.8

Company or some of its consolidated subsidiaries, the Company has
5.0

8.58

classified such buildings as real estate that includes portions used as
investment and rental properties.

1.0
2009/3 2010/3 2011/3 2012/3 2013/3

2009/3 2010/3 2011/3 2012/3 2013/3

232,419

233,688

Notes:
1. The amount included in the consolidated balance sheets presented in the table
above is equal to the total acquisition price for applicable properties or real estateless the aggregate amounts of depreciation and impairment loss for these propertiesor real estate.
2. Fair values as of the end of each consolidated fiscal year are as follows:(1) The fair values of domestic properties and real estate have been calculated by
Mitsubishi Estate, based mainly on the Japanese Real Estate Appraisal Standards.
(2) The fair values of overseas properties and real estate have been calculated mostly
by local appraisers.

Also, the following table shows profit and loss related to realestate, including the investment and rental properties and other realestate that includes portions used as rental properties for each fiscal
year.

Total liabilities climbed ¥332,409 million to ¥3,345,509 million.

balance of interest-bearing debt as of March 31, 2013, increased

ROA

Real Estate That Includes Portions Used as Rental Properties
Amounts recorded on consolidated balance sheets

Residential Businessamong other factors.

29

2009/3 2010/3 2011/3 2012/3 2013/3

The following table shows the year-end amounts, changes inMillions of yen

Fiscal Year Ended March
31, 2013 (April 1, 2012 toMarch 31, 2013)

Fiscal Year Ended March
31, 2012 (April 1, 2011 toMarch 31, 2012)

Rental Revenue

349,767

345,288

Rental Costs

231,696

224,155

Difference

118,070

121,133

Other Income (Loss)(17,189)(20,984)

Rental Properties

Real Estate That Includes Portions Used as Rental Properties
Rental Revenue

17,646

19,052

Rental Costs

16,431

16,393Difference

1,215

2,659

Other Income (Loss)(5,534)(444)

Notes:
1. Real estate that includes portions used as investment and rental properties has portions that are used by Mitsubishi Estate and some of its consolidated subsidiaries forthe purpose of providing related services and conducting operation management.
Accordingly, rental revenue associated with these portions has been excluded. Costs
associated with applicable properties and real estate, such as depreciation costs,
building management costs and taxes, have been included in rental costs.
2. Other income (loss) includes loss on retirement of fixed assets, impairment loss andother items.

30

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Financial Statements
Consolidated Balance Sheets
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
March 31, 2013 and 2012

Thousands of
U.S. dollars (Note 3)

Millions of yen

2013

2012

2013

2013

AssetsLiabilities and net assets

Current assets:

Current liabilities:

Cash (Notes 6, 14 and 16)¥

192,076¥

215,741$

Thousands of
U.S. dollars (Note 3)

Millions of yen

2,042,277

Short-term borrowings and current portion of long-term debt (Notes 6 and 14)

¥

2012

327,304¥

2013

302,933$

3,480,113

Notes and accounts payable – trade (Note 14)

53,044

77,860563,999

6,507

Accrued income taxes (Note 8)

8,935

15,45595,004(2,130)(2,141)

Advances and deposits

89,282

114,017949,307511,036

465,401

5,433,666

Accrued expenses and other current liabilities

60,877

48,787647,289

Equity investments (Notes 14 and 15)

208,523

288,548

2,217,159

Total current liabilities

539,444559,053

5,735,715

Deferred income taxes (Note 8)

21,064

15,148

223,968

Long-term liabilities:

Other current assets

63,73658,199677,691

Long-term debt (Notes 6 and 14)

1,747,905

1,405,635

18,584,849

1,026,773

1,083,704

10,917,315

Lease deposits received (Note 14)

378,876

373,189

4,028,454

Accrued employees’ retirement benefits (Note 7)

16,671

15,420177,260

Deferred income taxes (Note 8)

516,800

502,6295,494,952

Negative goodwill

88,14382,995937,201

Other non-current liabilities

57,66874,175613,171

Total long-term liabilities

2,806,065

2,454,046

29,835,891

3,345,509

3,013,100

35,571,607

141,373

141,373

1,503,170

Notes and accounts receivable – trade (Notes 6 and 14)

29,92541,927318,187

Marketable securities (Notes 14 and 15)

612

866

Allowance for doubtful receivables(201)

Inventories (Note 4)

Total current assets

Investments:
Investments in and advances to unconsolidated
subsidiaries and affiliates (Note 14)

15,663

14,870166,543

Investment securities (Notes 6, 14 and 15)

185,491

159,171

1,972,268

Total liabilities

Other investments (Notes 5 and 14)

148,525

142,885

1,579,219

Net assets:

349,680

316,927

3,718,032

Total investments

Shareholders’ equity (Note 9):
Common stock, without par value:
Authorized – 1,980,000,000 shares;
Issued – 1,390,397,097 shares in 2013 and 2012

Property and equipment (Note 6):Land

1,883,246

1,672,379

20,023,883

Capital surplus

170,485

170,485

1,812,712

377,854308,932

4,017,591

Retained earnings

413,392

471,087

4,395,458

2,063,217

1,969,910

21,937,454

Less treasury stock, at cost

(4,585)(4,366)(48,752)

Machinery and equipment and other135,637

123,301

1,442,189

720,666

778,580

7,662,588

Construction in progress

33,90941,037

360,551

70,60847,251

750,750

(221)

(238)

(2,356)

Land in trust
Buildings and structures

Less accumulated depreciation
Property and equipment, net

Intangible and other assets

Total shareholders’ equity
Accumulated other comprehensive income:

4,493,866

4,115,561

47,781,670

Unrealized holding gain on securities(1,270,029)(1,233,325)(13,503,774)

Deferred gain (loss) on hedging instruments

3,223,836

2,882,235

34,277,896

Land revaluation reserve498,103

500,647

5,296,157

Foreign currency translation adjustments(49,608)(69,449)(527,473)

Total accumulated other comprehensive income

518,881478,2115,517,077

500

451

5,323

125,963

116,672

1,339,325

1,366,011

1,373,915

14,524,315

111,230

104,148

1,182,678

Stock acquisition rights
Minority interests
Contingent liabilities (Note 12)
Total net assets

Total assets
See accompanying notes to consolidated financial statements.

¥

4,711,521¥

4,387,015$

50,095,923

Total liabilities and net assets¥

4,711,521¥

4,387,015$

50,095,923

31

32

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Consolidated Statements of Income

Consolidated Statements of Changes in Net Assets

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012

Thousands of
U.S. dollars (Note 3)

Millions of yen

2013
Revenue from operations

¥

2012

927,157¥$

9,858,135

Cost of revenue from operations(733,392)(790,233)(7,797,895)

Selling, general and administrative expenses(75,415)(76,536)(801,866)

Operating income

118,349

146,299

1,258,372

Other income (expenses):
Interest and dividend income
Interest expenses

4,023

4,164

42,782(24,594)(23,087)(261,507)

517

515

5,497

(41,554)(40,378)(441,834)(61,608)(58,785)(655,061)

56,74187,513603,311Equity in earnings of unconsolidated subsidiaries and affiliates
Other, net (Note 13)
Income before income taxes and minority interests
Income taxes (Note 8):
Current(16,528)(28,715)(175,741)

Deferred

14,62010,070155,454(1,907)(18,644)(20,286)

Minority interests(9,325)(12,356)(99,157)

Net income¥

45,507¥

Millions of yen
Shareholders’ equity

2013

1,013,069

56,512$483,866

33

Balance at April 1, 2011
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than those in shareholders’ equity
Total of changes in the year
Balance at April 1, 2012
Cumulative effect of changes in accounting policy (Note 2)
Restated balance at April 1, 2012
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than those in shareholders’ equity
Total of changes in the year
Balance at March 31, 2013

Commonstock

CapitalsurplusRetainedearnings

Treasurystock¥141,373¥170,485¥449,889¥(4,390)¥757,358(74)
98(16,653)
56,512(74)
78(18,608)(32)(16,653)
56,512(19)(18,608)(32)

141,373

170,485

141,373

170,485

21,198471,087(89,146)
381,940

23(4,366)(4,366)(16,652)
45,507
(29)
1,160
1,466

¥141,373¥170,485

31,451¥413,392

Total shareholders’equity21,221
778,580(89,146)
689,433(384)
166(16,652)
45,507
(384)
136
1,160
1,466

(218)
¥(4,585)

31,233¥720,666

Minority
interests

Total
net assets¥112,395¥1,315,047

Millions of yen

See accompanying notes to consolidated financial statements.

Accumulated other comprehensive income

Consolidated Statements of Comprehensive Income
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012

Thousands of
U.S. dollars (Note 3)

Millions of yen

2013
Income before minority interests¥

2012
54,833¥

2013
68,869$583,024

Other comprehensive income (Note 22):
Unrealized holding gain (loss) on securities

23,358Deferred gain (loss) on hedging instruments(770)

248,364

(65)

(246)

(692)

Land revaluation reserve(1,384)23,717(14,718)

Foreign currency translation adjustments

19,556(8,299)207,940

Share of other comprehensive income of companies
accounted for by the equity method
Total other comprehensive income
Comprehensive income (Note 22)

679

(134)

7,225

42,145

14,264448,119¥

96,979¥83,134$

1,031,143

Shareholders of Mitsubishi Estate Co., Ltd.

¥87,337¥

71,203$928,624

Minority interests

¥

9,641

¥

11,931$

102,519

Total comprehensive income attributable to:

See accompanying notes to consolidated financial statements.

Balance at April 1, 2011
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than thosein shareholders’ equity
Total of changes in the year
Balance at April 1, 2012
Cumulative effect of changes in accounting
policy (Note 2)
Restated balance at April 1, 2012
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than thosein shareholders’ equity
Total of changes in the year
Balance at March 31, 2013
See accompanying notes to consolidated financial statements.

Unrealized
holding
gain onsecurities

Deferredgain (loss) on
hedging
instruments

Land
revaluation
reserve

Foreigncurrencytranslation
adjustments¥ 48,021¥(254)¥458,297¥(61,151)

Total
accumulated
other
Stock
comprehensive acquisition
incomerights¥444,912¥381(16,653)
56,512(74)
78(18,608)
(32)
(770)
(770)
47,251

16
16
(238)

42,35042,350500,647(8,297)(8,297)(69,449)

33,29833,298478,211

70
70
451

4,276
4,276
116,672

37,64558,867
1,373,915(89,146)

47,251(238)

500,647(69,449)478,211451

116,672

1,284,768(16,652)
45,507
(384)
136
1,160
1,466

23,35623,356¥ 70,60816
16¥(221)(2,544)(2,544)¥498,103

19,84019,840¥(49,608)

40,66940,669¥518,881

49
49
¥500

9,291
9,291
¥125,963

50,00981,243¥1,366,011

34

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Consolidated Statements of Changes in Net Assets (continued)

Consolidated Statements of Cash Flows

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012

Thousands of
U.S. dollars (Note 3)

Thousands of U.S. dollars (Note 3)
Millions of yen

Shareholders’ equity

Balance at April 1, 2011
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than those in shareholders’ equity
Total of changes in the year
Balance at April 1, 2012
Cumulative effect of changes in accounting policy (Note 2)
Restated balance at April 1, 2012
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than those in shareholders’ equity
Total of changes in the year
Balance at March 31, 2013

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock$1,503,170$1,812,712$4,783,516$(46,681)$8,052,718

(796)
1,047

(177,071)
600,877(796)
837(197,856)(344)(177,071)
600,877(210)(197,856)(344)

1,503,170

1,812,712

1,503,170

1,812,712

225,392
5,008,909(947,867)
4,061,041

251(46,429)(46,429)(177,063)
483,866(310)
12,334
15,590$1,503,170$1,812,712

334,417$4,395,458

Total shareholders’equity225,6448,278,362(947,867)
7,330,494(4,089)1,766(177,063)
483,866(4,089)1,456
12,334
15,590(2,323)$(48,752)

332,093$7,662,588

Thousands of U.S. dollars (Note 3)
Accumulated other comprehensive income

Balance at April 1, 2011
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than thosein shareholders’ equity
Total of changes in the year
Balance at April 1, 2012
Cumulative effect of changes in accounting
policy (Note 2)
Restated balance at April 1, 2012
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than thosein shareholders’ equity
Total of changes in the year
Balance at March 31, 2013
See accompanying notes to consolidated financial statements.

Unrealized
holdnig
gain onsecurities

Deferredgain (loss) on
hedging
instruments$510,596$(2,705)Land
revaluation
reserve

Foreigncurrencytranslation
adjustments

Total
accumulated
other
Stock
comprehensive acquisition
incomerights$4,872,908 $(650,201) $4,730,597

Minority
interests$4,053 $1,195,063

Total
net assets$13,982,433(177,071)
600,877(796)
837(197,856)(344)(8,188)(8,188)502,408170
170(2,534)450,301450,301
5,323,209(88,227)(88,227)(738,429)

354,056
354,056
5,084,654

744
744
4,798

45,47245,472
1,240,535

400,273
625,917
14,608,351(947,867)

502,408(2,534)

5,323,209(738,429)

5,084,654

4,798

1,240,535

13,660,483(177,063)
483,866(4,089)1,456
12,334
15,590248,341
248,341$750,750

178
178$(2,356)(27,052) 210,955
432,423(27,052) 210,955
432,423$5,296,157 $(527,473) $5,517,077

524
98,789524
98,789$5,323 $1,339,325

531,738
863,832$14,524,315

2013
Cash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Loss on sales or disposal of property and equipment
Gain on sales of securities
Valuation loss on securities
Valuation loss on equity investments
Impairment loss
Equity in net income of affiliates
Increase (decrease) in allowancesInterest and dividend income
Interest expense(Increase) decrease in notes and accounts receivable(Increase) decrease in inventories(Increase) decrease in equity investments
Increase (decrease) in notes and accounts payable
Increase (decrease) in lease deposits received
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from sales of marketable securities
Purchases of marketable securities
Proceeds from sales of property and equipment
Purchases of property and equipment
Proceeds from sales of investment securities
Purchases of investment securities
Other (Note 16)
Net cash used in investing activities
Cash flows from financing activities
Net increase and decrease in short-term borrowings
Net increase and decrease in commercial paper
Increase in long-term borrowings
Repayment of long-term borrowings
Proceeds from issuance of corporate bonds
Repayment of corporate bonds
Cash dividends paid
Other
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase and decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents arising from newly consolidated subsidiaries
Cash and cash equivalents of subsidiaries excluded from consideration
Increase in cash and cash equivalents arising from merger
Cash and cash equivalents at end of year (Note 16)
See accompanying notes to consolidated financial statements.

¥¥

56,74173,364
11,560
(260)
–
8,985
2,826
(517)
4,973
(4,023)
24,594
11,672
43,173(24,319)(13,833)
5,965(26,539)
174,363
6,277(24,940)(33,413)122,286

2012¥

87,51367,465
7,886
(229)
333
3,011
18,133(515)
3,193(4,164)23,087(6,416)
109,481(82,423)(3,146)(1,743)28,134
249,601
4,379(22,931)(27,805)
203,2432013$

603,311780,057
122,914(2,769)–95,53430,051(5,497)52,882(42,782)
261,507
124,109459,050(258,580)(147,085)
63,426(282,190)
1,853,939
66,747(265,183)(355,272)
1,300,230

181
–
9,948
(206,608)
2,247(2,804)(20,957)(217,992)

1,179(1,000)10,592(282,109)
1,728
(922)
(1,477)(272,009)

1,934–
105,777(2,196,794)
23,894(29,819)(222,830)(2,317,837)(13,301)
35,000399,752(486,374)
187,650(82,881)(16,652)
3,958
27,1503,838(64,716)
215,771
42,724(1,942)–
191,837

4,794–
241,898(235,393)
105,270(35,630)(16,653)(7,097)57,189(2,262)(13,839)
229,0627(66)
607
215,771(141,433)
372,142
4,250,429(5,171,451)
1,995,218(881,245)(177,063)
42,087
288,684
40,816(688,105)
2,294,222
454,278(20,657)–
2,039,737

¥

$

35

36

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Notes to Consolidated Financial Statements
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012

1

Significant Accounting Policies

a. Basis of preparation
The accompanying consolidated financial statements of Mitsubishi Estate Co.,
Ltd. (the “Company”) and consolidated subsidiaries are prepared on the basisof accounting principles generally accepted in Japan, which are different incertain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards, and are compiled from theconsolidated financial statements prepared by the Company as required by
the Financial Instruments and Exchange Act of Japan.
The notes to the consolidated financial statements include information
which may not be required under accounting principles generally accepted inJapan but is presented herein as additional information.
As permitted by the Financial Instruments and Exchange Act of Japan,
amounts of less than one million yen have been rounded off. As a result, thetotals shown in the accompanying consolidated financial statements (both inyen and U.S. dollars) do not necessarily agree with the sums of the individual
amounts.
Certain amounts in the prior year’s financial statements have been
reclassified to conform to the current year’s presentation.
b. Principles of consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its consolidated subsidiaries that it controls directly or
indirectly. Companies over which the Company exercises significant influencein terms of their operating and financial policies have been included in the
consolidated financial statements on an equity basis.
All significant intercompany balances and transactions have been
eliminated in consolidation.
c. Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates andassumptions that affect the amounts reported in the financial statements andaccompanying notes. The actual results could differ from those estimates.
d. Foreign currency translation
Current and non-current monetary accounts denominated in foreign
currencies are translated into yen at the current rates.
The revenue and expense accounts of the foreign consolidated
subsidiaries are translated using the average rate during the year. Except forshareholders’ equity, the balance sheet accounts are also translated into yen
at the rates of exchange in effect at the balance sheet date. The components
of shareholders’ equity are translated at their historical exchange rates.
e. Cash equivalents
The Company and its consolidated subsidiaries consider all highly liquid
investments that are readily convertible into cash and have an original
maturity of three months or less to be cash equivalents. Reconciliation
between cash in the balance sheets and cash equivalents at March 31, 2013
and 2012 is presented in Note 16.
f. Marketable securities and investment securities
Securities other than those of subsidiaries and affiliates are classified into
three categories: trading, held-to-maturity or other securities. Trading
securities are carried at fair value and held-to-maturity securities are carried atamortized cost. Marketable securities classified as other securities are carriedat fair value with any changes in unrealized holding gain or loss, net of theapplicable income taxes, included directly in shareholders’ equity. Nonmarketable securities classified as other securities are carried at cost. Cost of
securities sold is determined by the moving average method.
g. Inventories
Inventories are mainly stated at cost, determined by the identified cost
method. Net book value of inventories in the consolidated balance sheets iswritten down when their net realizable values decline.
h. Property and equipment, depreciation and impairment
Property and equipment, except for land as discussed below, is stated at costless accumulated depreciation. Depreciation is calculated principally by the

declining-balance method, except for buildings acquired in Japan subsequent
to March 31, 1998 and property and equipment of foreign subsidiaries on
which depreciation is calculated by the straight-line method at rates
determined based on the estimated useful lives of the respective assets. The
Company and its consolidated subsidiaries have capitalized the costs incurred
for significant renewals and additions; however, costs for maintenance andrepairs are charged to income.
As of March 31, 2002, the Company revalued its land at fair value,
pursuant to Article 2 of the “Enforcement Ordinance for the Law Concerning
Revaluation Reserve for Land” and its amendments. The related unrealized
gain, net of applicable income taxes, has been recorded as “Land revaluation
reserve” in net assets.
The Company and its consolidated subsidiaries review their property andequipment (including land) for impairment whenever events or changes in its
business circumstances indicate that the carrying amount of the assets may
not be fully recoverable. They perform cash flow analyses to determine if
impairment exits. If impairment is determined to exist, any related loss on
impairment is calculated based on the cash flow analyses.
The useful lives of property and equipment are summarized as follows:
Buildings and structures
2 to 75 years
i. Intangible and other assets
Intangible and other assets primarily consist of goodwill and land use rights.
Goodwill is stated on the basis of cost and is being amortized over a period of
5 years or an estimated economical period on a straight-line basis. A loss isrecognized if the fair value falls below the carrying amount. Land use rights
are stated on a cost basis.
j. Retirement benefits
The Company and most consolidated subsidiaries have noncontributory
funded and unfunded defined benefit plans covering most of their employees.
Employees of the Company and its consolidated subsidiaries are entitledunder most employment termination circumstances to annuity payments or
lump-sum payments, the amounts of which are determined principally byreference to their basic rates of pay, length of service, and the conditions
under which the termination occurs.
Accrued employees’ retirement benefits are provided mainly at an
amount calculated based on the retirement benefit obligation and the fairvalue of the pension plan assets as of the balance sheet date, as adjusted for
unrecognized actuarial gain or loss and unrecognized prior service cost. The
retirement benefit obligation is attributed to each period by the straight-line
method over the estimated years of service of the employees.
Actuarial gain and loss are amortized in the year following the year inwhich the gain or loss is recognized by the straight-line method over periodsof 1 year to 15 years, which are shorter than the average remaining years ofservice of the employees.
Prior service cost is being amortized as incurred by the straight-line
method over periods of 1 year to 10 years, which are shorter than the averageremaining years of service of the employees.
k. Income taxes
Deferred tax assets and liabilities are determined based on the financial
statements and the tax bases of assets and liabilities, using the enacted tax
rates in effect for the year in which the temporary differences are expected toreverse. Deferred tax assets are also recognized for the estimated future tax
effects attributable to operating loss carry forwards. Valuation allowances are
established to reduce deferred tax assets if it is more likely than not that thesome portion or all of the deferred tax assets will not be realized.
l. Derivative financial instruments
The Company and certain of its consolidated subsidiaries utilize derivative
financial instruments for the purpose of hedging their exposure to adverse
fluctuations and changes in interest rates (interest rate swaps) and foreignexchange rates (currency swaps), but do not enter into such transactions for
speculative or trading purposes.

Derivative financial instruments are carried at fair value with any changes
in unrealized gain or loss charged or credited to operations, except for thosewhich meet the criteria for deferral hedge accounting under which unrealized
gain or loss is deferred as an asset or liability.
m. Revenue recognition
The consolidated statements of income reflect revenue from operations in thefollowing manner:(a) Revenue from the leasing of office space is recognized as rent accrued overthe leasing period.
(b) Revenue from sales of condominiums, residential houses and land isrecognized when the units are delivered and accepted by the customers.
Revenue from consignment commissions for residential sales earned by thereal estate service business segment is recognized at the time of contractconclusion for services provided up to the conclusion and at the time ofownership transfer for services provided up to the transfer.
(c) Revenue from real estate brokerage is recognized when an underlying leaseagreement goes into force or the underlying units are delivered.
(d) Revenue of construction contracts, of which the percentage of completion canbe reliably estimated, is recognized by the percentage-of-completion method.
The percentage-of-completion method is calculated at the cost incurred by theend of the consolidated fiscal year as a percentage of estimated total cost. The
completed-contract method continues to be applied for other contracts forwhich the percentage of completion cannot be reliably estimated.
(e) Other operating revenue is recognized on an accrual basis.
n. Appropriation of retained earnings
Under the Companies Act of Japan, the appropriation of retained earnings
with respect to a given financial year is made by resolution of the shareholders
at a general meeting held subsequent to the close of such financial year. The

2

Consolidated Financial Statements,” and their assets and liabilities aremeasured at fair value. As a result, retained earnings decreased by ¥89,146
million ($947,867 thousand) as at April 1, 2012.
(“Changes in depreciation method”)
In accordance with an amendment to the Corporation Tax Law of Japaneffective April 1, 2012, the Company and its domestic consolidated
subsidiaries have changed their depreciation method for property, plant andequipment acquired on or after April 1, 2012, other than certain buildings, toreflect the methods prescribed in the amended Corporation Tax Law. The
previously applied 250% declining-balance method was changed to the
200% declining-balance method. The impact of this change on consolidated
operating income and income before income taxes and minority interests forthe year ended March 31, 2013 is immaterial.

U.S. Dollar Amounts

Translation of yen amounts into U.S. dollar amounts is included solely forconvenience, as a matter of arithmetic computation only, at the rate of¥94.05 = U.S. $1.00, the approximate rate of exchange prevailing on March4accounts for that year do not, therefore, reflect such appropriations. See Note
9 for more information.
o. Standards issued but not yet effective
On May 17, 2012, the Accounting Standards Board of Japan (ASBJ) issued“Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26) and“Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance
No. 25), which replaced the Accounting Standard for Retirement Benefits that
had been issued by the Business Accounting Council in 1998 with an effective
date of April 1, 2000 and the other related practical guidance, being followedby partial amendments from time to time through 2009. The major changes
are as follows:(1) Treatment in the balance sheet–Actuarial gains and losses and prior service
cost that have yet to be recognized in profit or loss shall be recognizedwithin net assets (accumulated other comprehensive income), after
adjusting for tax effects, and the deficit or surplus shall be recognized as aliability (liability for retirement benefits) or asset (asset for retirement
benefits).
(2) Treatment in the statement of income and the statement of comprehensive
income–Actuarial gains and losses and prior service cost that arose in thecurrent period and have yet to be recognized in profit or loss shall be
included in other comprehensive income and actuarial gains and losses andprior service cost that were recognized in other comprehensive income inprior periods and then recognized in profit or loss in the current period
shall be treated as reclassification adjustments.
This standard and related guidance are effective as of the end of fiscal
years beginning on or after April 1, 2013. The Company is currently
evaluating the effect these modifications will have on its consolidated resultsof operations and financial position.

Changes in Accounting Policy(“Revised Accounting Standard for Consolidated Financial Statements”)
Effective April 1, 2012, the Company early adopted the new accounting
standard, “Revised Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22 issued on March 25, 2011), “Revised
Guidance on Disclosures about Certain Special Purpose Entities” (ASBJ
Guidance No. 15 issued on March 25, 2011) and other related standards andguidance. Accordingly, 6 special purpose companies, including Shinjuku
6-chome Tokutei Mokuteki Kaisya, Otemachi Development Tokutei Mokuteki
Kaisya, Toyosu 3-1 Tokutei Mokuteki Kaisya, Shinjuku 6-chome S-Block
Tokutei Mokuteki Kaisya, have been newly included within the scope of
consolidation.
The accounting policies of the newly consolidated 6 entities comply withthe rules under paragraph 44-4, item (4) of “Accounting Standard for3

37

31, 2013. The inclusion of such amounts is not intended to imply that yen
amounts have been or could be readily converted, realized or settled in U.S.
dollars at the above or any other rate.

Inventories

Inventories at March 31, 2013 and 2012 are summarized as follows:
Millions of yen

Real estate for saleLand and housing projects in progress
Land held for development
Other
Total

2013
¥152,354
343,6218,615
6,444¥511,036

Thousands of U.S. dollars

2012¥120,573
328,127
8,632
8,068¥465,401

2013$1,619,934
3,653,600
91,607
68,524$5,433,666

38

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

5

Millions of yen

Other Investments
2013

Other investments at March 31, 2013 and 2012 were as follows:
Millions of yen

Lease deposits
Long-term prepaid expenses and other
Total

6

2013
¥110,689
37,836¥148,525

Thousands of U.S. dollars

2012¥101,833
41,052¥142,8852013$1,176,922
402,296$1,579,219

Short-Term Borrowings and Long-Term Debt

At March 31, 2013 and 2012, short-term borrowings and the current portion of long-term debt consisted of the following:
Millions of yen

Loans, principally from banks
Commercial paper
Current portion of long-term debt
Total

2013
¥ 68,291
35,000224,013¥327,304

Thousands of U.S. dollars

2012¥ 79,002—
223,930¥302,933

2013$ 726,115
372,142
2,381,855$3,480,113

The weighted-average interest rates per annum on short-term borrowings outstanding at March 31, 2013 and 2012 were 0.59% and 0.63%, respectively. Shortterm borrowings are principally unsecured.
At March 31, 2013 and 2012, long-term debt consisted of the following:
Millions of yen

2013
1.58% unsecured bonds due 2012
3.275% unsecured bonds due 2012
2.77% unsecured bonds due 2012
1.395% unsecured bonds due 2012
1.2% unsecured bonds due 2012
1% unsecured bonds due 2013
0.785% unsecured bonds due 2013
1.675% unsecured bonds due 2014
1.349% unsecured bonds due 2014
1.65% unsecured bonds due 2014
1.75% unsecured bonds due 2014
0.519% unsecured bonds due 2014
1.655% unsecured bonds due 2014
1.409% unsecured bonds due 2015
1.295% unsecured bonds due 2015
1.572% unsecured bonds due 2015
1.443% unsecured bonds due 2016
1.985% unsecured bonds due 2016
1.88% unsecured bonds due 2016
0.553% unsecured bonds due 2016
0.459% unsecured bonds due 2016
1.79% unsecured bonds due 2017
0.428% unsecured bonds due 20172.045% unsecured bonds due 20171.825% unsecured bonds due 20173.125% unsecured bonds due 20171.77% unsecured bonds due 20170.187% unsecured bonds due 2018
1.65% unsecured bonds due 2018
2.005% unsecured bonds due 2018
0.811% unsecured bonds due 2018
3% unsecured bonds due 2018
1.84% unsecured bonds due 2018
1.72% unsecured bonds due 2018
0.631% unsecured bonds due 2019
1.87% unsecured bonds due 2019
1.62% unsecured bonds due 2019
0.571% unsecured bonds due 2019
1.53% unsecured bonds due 2019
1.975% unsecured bonds due 2019
1.805% unsecured bonds due 20192.5% unsecured bonds due 2020

¥

–
–
–
–
–
–
10,00010,00010,00010,00010,000
4,664
10,00010,00010,00010,00015,00010,00010,00015,00010,00010,00020,00010,00010,00010,00020,00015,00010,00010,00010,00010,00015,00010,00010,00015,00010,00010,00010,00010,00010,00010,000Thousands of U.S. dollars

2012¥ 20,000
10,00010,00010,00010,00010,00010,00010,00010,00010,00010,000–10,00010,00010,00010,00015,00010,00010,00015,00010,00010,000–10,00010,00010,00020,000–10,00010,00010,00010,00015,00010,000–15,00010,000–10,00010,00010,00010,000

2013

$

–
–
–
–
–
–
106,326
106,326
106,326
106,326
106,326
49,590106,326
106,326
106,326
106,326
159,489
106,326
106,326
159,489
106,326
106,326
212,652
106,326
106,326
106,326
212,652
159,489
106,326
106,326
106,326
106,326
159,489
106,326
106,326
159,489
106,326
106,326
106,326
106,326
106,326
106,326

1.165% unsecured bonds due 2020
0.577% unsecured bonds due 2020
0.54% unsecured bonds due 2021
1.262% unsecured bonds due 2021
1.103% unsecured bonds due 2021
1.095% unsecured bonds due 2021
1.178% unsecured bonds due 2022
1.087% unsecured bonds due 2022
1.026% unsecured bonds due 2022
2.42% unsecured bonds due 2022
0.929% unsecured bonds due 2022
1.5% unsecured bonds due 2022
2.075% unsecured bonds due 2023
2.28% unsecured bonds due 2024
1.067% unsecured bonds due 2024
2.305% unsecured bonds due 2027
2.385% unsecured bonds due 2027
2.52% unsecured bonds due 2027
2.425% unsecured bonds due 2027
2.555% unsecured bonds due 2028
2.9% unsecured bonds due 2032
2.615% unsecured bonds due 2032
2.04% unsecured bonds due 2032
1.72% unsecured bonds due 2033
Floating rate bonds due 2012 (payable in U.S. dollars)
Floating rate bonds due 2013 (payable in U.S. dollars)
Loans from banks and insurance companies:
SecuredUnsecuredLess current portion

39

Thousands of U.S. dollars

2012
10,00015,00015,00015,00020,00010,00020,00020,00030,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,00010,00010,00010,00020,00010,000–27,567

10,000––15,00020,00010,00020,000––10,000–10,00010,00010,000–10,00010,00015,00010,00010,00010,00010,00020,00010,000
6,235
–

2013
106,326
159,489
159,489
159,489
212,652
106,326
212,652
212,652
318,979
106,326
106,326
106,326
106,326
106,326
106,326
106,326
106,326
159,489
106,326
106,326
106,326
106,326
212,652
106,326–
293,119

236,212
988,473
1,971,918(224,013)¥1,747,905

213,687
779,643
1,629,566(223,930)¥1,405,635

2,511,561
10,510,088
20,966,705(2,381,855)$18,584,849

The aggregate annual maturities of long-term debt subsequent to March 31, 2013 are summarized as follows:Year ending March 31,

2014
2015
2016
2017
2018
2019 and thereafter
Total

Millions of yen¥ 224,245
382,540
138,913
236,077
196,148794,224¥1,972,150

Thousands of U.S. dollars$ 2,384,323
4,067,415
1,477,021
2,510,132
2,085,580
8,444,699$20,969,173

The assets pledged as collateral for short-term borrowings of ¥100 million ($1,063 thousand) and long-term debt of ¥236,212 million ($2,511,561 thousand) at
March 31, 2013 were as follows:
Millions of yen

Buildings and structures
Machinery and equipment
Land
Construction in progress
Other property and equipment
Investment securities
Total¥178,799
3,533
324,979
353
2,171
68
¥509,906

Thousands of U.S. dollars$1,901,114
37,5673,455,394
3,755
23,086731$5,421,650

The following debts included in long-term debt are non-recourse loans at March 31, 2013, which are secured by collaterals as the ultimate sources of repayment.
Bonds
Long-term borrowings
Total

Millions of yen

Thousands of U.S. dollars

¥

$

4,664
174,635¥179,299

49,596
1,856,835$1,906,432

40

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

The repayment sources at March 31, 2013 are the following assets and their accompaniments.
Millions of yen

CashNotes and accounts receivable – trade
Buildings and structures
Machinery and equipment
Land
Construction in progress
Other property and equipment
Total

7

¥ 15,693
1,103
45,692
155
137,505353
2,171¥202,675

Thousands of U.S. dollars$ 166,863
11,732
485,836
1,653
1,462,047
3,755
23,086$2,154,975

Pension and Severance Plans

The following table sets forth the funded status of the plans, and the amounts recognized in the consolidated balance sheets at March 31, 2013 and 2012 for
the Company’s and its consolidated subsidiaries’ defined benefit pension plans:Millions of yen

Retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
The net retirement benefit obligation at transition of the accounting standards
Unrecognized actuarial loss
Unrecognized prior service cost
Net amounts recognized in the consolidated balance sheets
Prepaid pension expenses
Accrued employees’ retirement benefits

2013¥(108,134)
80,940(27,194)(116)
19,408(155)(8,058)8,845¥ (16,903)

Thousands of U.S. dollars

2012¥(100,512)
74,401(26,111)
6
18,330530(7,243)8,463¥ (15,707)

2013$(1,149,756)
860,611(289,144)(1,243)
206,365(1,655)(85,678)
94,053$ (179,731)* The accrued employees’ retirement benefits recognized by Rockefeller Group, Inc., a consolidated subsidiary, in the amount of ¥232 million ($2,470 thousand) at March 31, 2013 and ¥287 million at March 31, 2012 waspresented in other current liabilities.

The components of expenses related to the pension and severance plans for the years ended March 31, 2013 and 2012 were as follows:
Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of net retirement benefit obligation at transition
Amortization of actuarial loss
Other
Total

2013
¥ 4,437
2,116(1,654)3
1,611
746¥ 7,261

Thousands of U.S. dollars

2012¥ 4,3172,185(1,563)
8
2,195
280¥ 7,4242013$ 47,180
22,500(17,591)
38
17,136
7,941$ 77,205

The assumptions used in accounting for the pension and severance plans for the years ended March 31, 2013 and 2012 were as follows:
Discount rate
Expected rate of return on plan assets

82013
1.0 ~ 4.6%
0.5 ~ 7.5%

Income Taxes

Income taxes in Japan applicable to the Company and its domestic
consolidated subsidiaries consist of corporation tax, inhabitants’ taxes andenterprise tax which, in the aggregate, resulted in statutory tax rates of

The effective tax rates reflected in the consolidated statements of income for the years ended March 31, 2013 and 2012 differ from the statutory tax rate for thefollowing reasons:Statutory tax rate
Increase (decrease) in income taxes resulting from:
Change in valuation allowance
Different tax rates applied
Revenues deductible for income tax purposes
Expenses not deductible for income tax purposes
Undistributed earnings of affiliates
Equity income
Reversal of temporary differences associated with investment in affiliates
Effect of enacted changes in tax laws and rates on Japanese tax
Other
Effective tax rates

38.01% for the year ended March 31, 2013 and 40.69% for the year ended
March 31, 2012. Income taxes of the foreign consolidated subsidiaries are
based generally on the tax rates applicable in their countries of incorporation.

2013
38.01%

2012
40.69%(17.68)(0.28)(0.74)
2.99
0.26(0.33)(19.44)
–
0.57
3.36%

(3.50)
0.55(0.54)
0.62(0.08)(0.22)–(18.35)
2.13
21.30%The significant components of deferred tax assets and liabilities as of March 31, 2013 and 2012 were as follows:
Millions of yen

Deferred tax assets:
Net operating loss carry forwards
Accrued retirement allowances and pension costs
Valuation loss on inventories
Unrealized loss on property and equipment
Unrealized loss on property and equipment by consolidation
Land revaluation reserve
Loss on valuation of equity investments
Other
Total gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserves under Special Taxation Measures Law
Land revaluation reserve
Unrealized gain on property and equipment by consolidation
Unrealized gain on property and equipment
Unrealized gain on securities
Other
Total deferred tax liabilities
Net deferred tax liabilities

92012
1.0 ~ 5.5%
0.5 ~ 7.5%

41

2012

¥

¥

9,151
13,647
18,62082,926
13,466
29,834
4,626
32,245204,519(67,509)
137,010(74,104)(322,051)(122,681)(42,644)(36,494)(18,851)(616,827)¥(479,817)

2013

6,269
13,511
16,24685,885
15,39029,791
2,952
28,958199,006(78,859)
120,146(72,820)(322,650)(162,210)–(25,486)(16,655)(599,824)¥(479,677)$

97,301
145,108
197,989
881,730
143,179
317,224
49,196
342,855
2,174,586(717,802)
1,456,783(787,924)(3,424,260)(1,304,424)(453,424)(388,034)(200,437)(6,558,507)$(5,101,723)

Shareholders’ Equity

The Companies Act of Japan provides that an amount equal to 10% of theamount to be disbursed as distributions of capital surplus (other than thecapital reserve) and retained earnings (other than the legal reserve) betransferred to the capital reserve and the legal reserve, respectively, until thesum of the capital reserve and the legal reserve equals 25% of the capitalstock account. The capital reserve amounted to ¥170,485 million ($1,812,712

10

Thousands of U.S. dollars

2013

thousand), and the legal reserve amounted to ¥21,663 million ($230,343
thousand) at March 31, 2013. Such distributions can be made at any time byresolution of the shareholders or by the Board of Directors if certain conditions
are met, but neither the capital reserve nor the legal reserve is available for
distributions.

Amounts per Share
Yen

Year ended March 31,
Net income:
Basic
DilutedCash dividends applicable to the year2013

As of March 31,
Net assets

2013¥893.27

U.S. dollars

2012¥32.79
32.78
12.00

2013
¥40.72
40.71
12.00

Yen

$0.34
0.34
0.12
U.S. dollars

2012¥905.60

2013
$9.49

42

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Basic net income per share was computed based on the net income available
for distribution to shareholders of common stock and the weighted average
number of shares of common stock outstanding during the year, and diluted
net income per share was computed based on the net income available for
distribution to the shareholders and the weighted average number of sharesof common stock outstanding during each year after giving effect to thedilutive potential of shares of common stock to be issued upon the exercise of
warrants and stock subscription rights.

11

Amounts per share of net assets are computed based on net assets
available for distribution to the shareholders and the number of shares ofcommon stock outstanding at the year end.
Cash dividends per share represent the cash dividends proposed by the
Board of Directors as applicable to the respective years together with theinterim cash dividends paid.

(*1) Impairment loss
The Company recorded consolidated impairment losses for the following asset
groups for the fiscal year ended March 31, 2013:
Major Application
Leased assets, etc.
(total 19 groups)

Future minimum lease payments subsequent to March 31, 2013 on noncancelable operating leases are summarized as follows:
Millions of yen

2014
2015 and thereafterTotal¥ 5,743
155,403¥161,146

Thousands of U.S. dollars$

61,072
1,652,344$1,713,417

The Company and its consolidated subsidiaries lease office buildings and commercial properties and earn income on these leases. Future minimum lease income
subsequent to March 31, 2013 from noncancelable operating leases is summarized as follows:Year ending March 31,

Millions of yen

2014
2015 and thereafter
Total¥199,427
672,285¥871,713

Thousands of U.S. dollars$2,120,445
7,148,174$9,268,620

14
12Contingent Liabilities

At March 31, 2013, the Company and its consolidated subsidiaries had the following contingent liabilities:(1) Guarantee of loans
Millions of yen

Guarantees of affiliates’ loans from banks
Guarantees of house purchasers’ loans from banks
Other
Total

¥ 9,039
38,616
90¥47,746

Thousands of U.S. dollars$ 96,110
410,597964$507,673(2) Guarantee for business undertakings
Millions of yen

Business undertaking guarantees¥8,953Thousands of U.S. dollars$95,201

Mitsubishi Estate Asia Pte. Ltd. provides business undertaking guarantees for residential development projects in proportion to its share.
(3) Obligation of additional investment
Millions of yen

Obligation of additional investment¥28,500

Thousands of U.S. dollars$303,030

Our additional contribution obligation for the special purpose company is 50% as our stake.

13

Other Income (Expenses)

The components of “Other, net” in “Other income (expenses)” for each of the years ended March 31, 2013 and 2012 were as follows:
Millions of yen

Amortization of negative goodwill
Gain on sales of fixed assets
Gain on sales of investment securities
Gain on negative goodwill
Loss on disposal of fixed assets
Loss related to retirement of fixed assets
Impairment loss (*1)
Loss on valuation of equity investments
Loss for soil decontamination
Loss on serviced apartment business
Loss on clinic closing
Provision for loss on guarantees
Other, net

2013
¥

835
6,165
362
1,374
(5,744)(24,338)(2,826)(8,985)–––(7,030)(1,367)¥(41,554)

Thousands of U.S. dollars

2012
¥

835
2,205
229
–
(6,586)(7,728)(18,133)(3,011)(1,569)(3,618)(1,296)–(1,706)¥(40,378)2013$ 8,881
65,5583,856
14,619(61,078)(258,787)(30,051)(95,534)–––(74,755)(14,543)$(441,834)

Land, Buildings, etc.

Location
Saitama, Saitama
Prefecture, etc.

Asset grouping for the Company and its consolidated subsidiaries (collectively,
the “Group”) was made based on a minimum unit that generates cash flows,which is substantially independent from cash flows of other assets or asset
groups. Company condominiums are regarded as shared assets. As a result, forthe fiscal year ended March 31, 2013, the book values of 19 asset groups,
consisting of those for which the market prices fell considerably compared withthe book values due to the decline of land prices and those for which profitability
decreased considerably due to fallen rent levels or deteriorated market
conditions, etc., were reduced to the respective collectible amounts and such
reduced amounts were recorded as impairment losses in the amount of ¥2,826
million ($30,051 thousand).
The breakdown of such impairment losses were ¥1,615 million ($17,182
thousand) in land, ¥1,210 million ($12,869 thousand) in buildings and structures,
respectively.
The collectible amounts of asset groups are measured with net sale value or
use value, and the net sale value is principally expressed as an appraised value by
a real estate appraiser. Future cash flows mainly discounted at a rate of 5% areused to compute the use value.

LeasesYear ending March 31,

Category

43

The Company recorded consolidated impairment losses for the following asset
groups for the fiscal year ended March 31, 2012:
Major Application
Leased assets, etc.
(total 23 groups)

Category

Location

Buildings, Long-term Yokohama, Kanagawa
prepaid expenses, etc. Prefecture, etc.

Asset grouping for the Group was made based on a minimum unit thatgenerates cash flows, which is substantially independent from cash flows ofother assets or asset groups. Company condominiums are regarded as sharedassets. As a result, for the fiscal year ended March 31, 2012, the book values of
23 asset groups, consisting of those for which the market prices fell considerablycompared with the book values due to the decline of land prices and those forwhich profitability decreased considerably due to fallen rent levels or deteriorated
market conditions, etc., were reduced to the respective collectible amounts andsuch reduced amounts were recorded as impairment losses in the amount of¥18,133 million.
The breakdown of such impairment losses were ¥3,279 million in land andland in trust, ¥7,360 million in buildings and structures, ¥7,492 million inbuildings and long-term prepaid expenses, respectively.
The collectible amounts of asset groups are measured with net sale value or
use value, and the net sale value is principally expressed as an appraised value by
a real estate appraiser. Future cash flows mainly discounted at a rate of 5% areused to compute the use value.

Financial Instruments

Overview(1) Policy for financial instruments
In consideration of plans for capital investment, the Group raises funds mainly
through bank borrowings and bond issues. In terms of fund management, theGroup makes every effort to avoid market risks by emphasizing liquidity andshortening the fund management period. The Group uses derivatives for the
purpose of hedging exposure to interest rate, reducing interest expenses, andhedging the risk of fluctuations in foreign exchange rates and do not enter
into derivatives for speculative purpose.
(2) Types of financial instruments and related risk
Trade receivables – notes and accounts receivable – are exposed to credit riskin relation to customers. Trade receivables denominated in foreign currencies,
which arise from overseas operation, are exposed to foreign currency
exchange risk.
Marketable securities and investment securities are exposed to market
risk. Those securities are composed of mainly held-to-maturity debt securities
and the shares of common stock of other companies with which the Grouphas business relationships.
Equity investments are composed of mainly preferred equity investmentsin special purpose companies under the Law concerning Liquidation of Assets,
investments in investment unit of trust held in real estates and investments insilent partnership for special purpose companies. They are exposed to credit
risks of issuers, risks of fluctuations in interest rates and market prices,
respectively.
Lease and guarantee deposit for leased assets are exposed to credit risks
of customers.
Substantially all trade payables – accounts and notes payable – havepayment due dates within one year. Some of them denominated in foreign
currencies are exposed to foreign currency exchange risk.
Borrowings and bonds are taken out principally for the purpose of
making capital investments and the repayment dates of the long-term debt
extend up to 21 years from the balance sheet date. Certain long-term debt
with variable interest rates is exposed to interest rate fluctuation risk.
However, to reduce such risk for long-term debt bearing interest at variable
rates, the Group utilizes derivative transactions (interest rate swap) as ahedging instrument.
Derivative transactions include interest rate swaps, currency swaps andforward foreign exchange contracts. The Group also enters into interest rate
swap transactions to fix interest expense for long-term debt bearing interest

at variable rates and to reduce interest rate fluctuation risk. Some of theconsolidated subsidiaries enter into interest swap and currency swap
transactions in accordance with the same policies and purposes adopted by
the Company.
(3) Risk management for financial instruments(a) Monitoring of credit risk (the risk that customers or counterparties may
default)
In accordance with the internal policies for managing credit risk of theGroup arising from receivables and lease and guarantee deposits, eachrelated division in each business segment monitors credit worthiness of
their main customers periodically, and monitors due dates and outstandingbalances by individual customer. In addition, the Group is making efforts to
identify and mitigate risks of bad debts from customers who are having
financial difficulties.

(b) Monitoring of market risks (the risks arising from fluctuations in foreignexchange rates, interest rates and others)
In order to mitigate the interest rate risk for loans payable and bonds
bearing interest at variable rates, the Group may also enter into interest
rate swap and currency swap transactions.
For marketable securities and investment securities, the Group
periodically reviews the fair values of such financial instruments and thefinancial position of the issuers (business partners). In addition, the Group
continuously evaluates whether securities other than those classified as
held-to-maturity should be maintained taking into account their fair values
and relationships with the issuers (business partners).
(c) Monitoring of liquidity risk (the risk that the Group may not be able tomeet its obligations on scheduled due dates)
Based on the report from each division, the Group prepares and updates
its cash flow plans on a timely basis and stabilizes liquidity to manage
liquidity risk.
(4) Supplementary explanation of the estimated fair value of financial
instruments
The fair value of financial instruments is based on their quoted market price, if
available. When there is no quoted market price available, fair value isreasonably estimated. Since various assumptions and factors are reflected inestimating the fair value, different assumptions and factors could result indifferent fair value.

44
Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance sheet as of March 31, 2013 and unrealized gains (losses) are shown in the following table.
The following table does not include financial instruments for which it is extremely difficult to determine the fair value. (Please refer to Note 2 below).

Note 3: Redemption schedule for receivables and marketable securities with maturities at March 31, 2013
Millions of yen
Due in One Year Due after One Yearor Less
through Five Years

As of March 31, 2013

Millions of yen

Thousands of U.S. dollars

20131) Cash on hand and in banks2) Notes and accounts receivable – trade
Allowance for doubtful receivables (*1)3) Securities and Investment securities(i) Held-to-maturity debt securities(ii) Other securities
4) Equity investments
Total assets
1) Notes and accounts payable – trade2) Short-term borrowings
3) Current portion of long-term borrowings
4) Commercial paper5) Current portion of long-term bonds6) Long-term bonds7) Long-term borrowings
Total liabilities

45

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Carrying
Value

Estimated
Fair Value¥ 192,076
29,925(201)
29,724¥ 192,076–

29,724–624
179,609
13,097¥ 415,132

645
179,746
13,097¥ 415,290

¥

¥

¥

–
–
–
–
–
¥46,972
13,550¥60,523

53,044
68,291
166,445
35,00057,567
689,664
1,058,240¥2,128,254

53,044
68,291
166,445
35,00057,567
736,636
1,071,791¥2,188,777

Carrying
Value

Difference

¥

20
137
–
157

Estimated
Fair Value

Difference$ 2,042,277 $ 2,042,277
318,187(2,141)
316,046
316,046

–

–

6,643
1,909,722
139,261$ 4,413,951

6,861
1,911,184
139,261$ 4,415,630

$

$

$

–
–
–
–
–
$499,440
144,080$643,521

563,999
726,115
1,769,757
372,142
612,098
7,332,956
11,251,892$22,628,963

563,999
726,115
1,769,757
372,142
612,098
7,832,397
11,395,973$23,272,484

$

217
1,461
–
1,679

Cash on hand and in banks
Notes and accounts receivable – tradeMarketable securities and investment securities:
Held-to-maturity debt securities
National and local government bonds
Corporate bonds
Other
Other marketable securities with maturities:
Corporate bonds
Other
Total

Thousands of U.S. dollars

Due after Five Years
through Ten Years

Due after
Ten Years

Due in One Year Due after One Yearor Less
through Five Years

Due after Five Years
through Ten Years

Due after
Ten Years¥192,076
29,925

–
–

–
–

–
–

$2,042,277
318,187

–
–

–
–

–
–

10
233
–

¥145
–
25

¥234
–
–

–
–
–

106
2,485
–

$1,541–265$2,488
–
–

–
–
–

–
350
¥222,595

–
–
¥170

–
–
¥234

–
–
–

–
3,721
$2,366,778––$1,807––$2,488–––Millions of yen
Due in One Year Due after One Yearor Less
through Five Years

As of March 31, 2012
Cash on hand and in banks
Notes and accounts receivable – tradeMarketable securities and investment securities:
Held-to-maturity debt securities
National and local government bonds
Corporate bonds
Other
Other marketable securities with maturities:
Corporate bonds
Other
Total

¥215,542
41,927

24
155
350
–
–
¥258,000

Due after Five Years
through Ten Years

Due after
Ten Years

–
–

–
–

–
–

¥

60
209
1,313

¥202
–
–

–
–
–

–
–
¥1,583

–
–
¥202

–
–
–

Note 4: The redemption schedule for bonds and long-term borrowings

Millions of yen
Millions of yen

20121) Cash on hand and in banks2) Notes and accounts receivable – trade
Allowance for doubtful receivables (*1)3) Securities and Investment securities(i) Held-to-maturity debt securities(ii) Other securities
4) Equity investments
Total assets
1) Notes and accounts payable – trade2) Short-term borrowings
3) Current portion of long-term borrowings
4) Current portion of long-term bonds5) Long-term bonds6) Long-term borrowings
Total liabilities

Carrying
Value

Estimated
Fair Value¥ 215,741
41,927(833)
41,094¥ 215,741–

41,094–

Difference

2,051
152,050
7,407¥ 418,345

2,072
152,187
7,407¥ 418,503

¥

¥

¥

–
–
–
–
¥30,073
8,613¥38,686

77,86079,002
147,695
76,235560,000
845,635¥1,786,429

77,86079,002
147,695
76,235590,073854,249¥1,825,116¥

Due inOne Yearor Less¥ 57,800
166,445¥224,245

Due after
One Yearthrough
Two Years¥ 44,664
337,875¥382,540

Due after
Two Years
throughThree Years¥ 20,000
118,913¥138,913

As of March 31, 2012

Due inOne Yearor Less

Due after
One Yearthrough
Two Years

Due after
Two Years
throughThree Years

Corporate bonds
Long-term borrowings
Total¥ 76,200
147,695¥223,895¥ 30,000
164,279¥194,279¥ 40,000
286,870¥326,870

As of March 31, 2013
Corporate bonds
Long-term borrowings
Total

Thousands of U.S. dollars
Due after
Four Years
throughFive Years¥ 85,000
111,148¥196,148

Due after
Five Years¥470,000
324,224¥794,224

Due afterThree Years
through
Four Years

Due after
Four Years
throughFive Years

Due after
Five Years¥20,000
49,794¥69,794¥ 70,000
148,953¥218,953¥400,000
195,738¥595,738

Due afterThree Years
through
Four Years¥ 70,000
166,077¥236,077

Due after
One Yearthrough
Two Years$ 474,902
3,592,512$4,067,415

Due inOne Yearor Less$ 614,566
1,769,757$2,384,323

Due after
Due after
Due afterThree Years Four Years
Two Years
throughthroughthroughFive Years
Three Years Four Years$ 212,652 $ 744,284 $ 903,774
1,264,368
1,765,847
1,181,806$1,477,021 $2,510,132 $2,085,580

Due after
Five Years$4,997,341
3,447,358$8,444,699

Millions of yen

20
137
–
157

15

Marketable Securities and Investment Securities

Marketable and investment securities classified as other securities at March 31, 2013 and 2012 are summarized as follows:
Millions of yen

Thousands of U.S. dollars

2013
Cost

Fair
value

Unrealized
gain (loss)

Cost

Fair
value

Unrealized
gain (loss)¥72,476¥172,229¥ 99,752$770,616$1,831,252$1,060,636

5,331

13,098

7,767

56,685

139,275

82,59077,807

185,328

107,520

827,3021,970,528

1,143,226

Equity securities

8,276

7,009

(1,266)87,99774,530(13,467)

10

10

–

106

106

–

492

359

(133)

5,239

3,819

(1,420)(*1) The value of notes and account receivable-trade is shown at net value, after deducting allowance for doubtful accounts.

Securities whose fair value exceeds their cost:
Note 1: Methods to determine the estimated fair value of financial instruments and other matters related tosecurities and derivative transactions
AssetsCash on hand and in banks
Since these items are settled in a short period of time, their carrying value approximates fair value.
Notes and accounts receivable – trade
Since these items are settled in a short period of time, their carrying value approximates fair value.
Marketable securities and investment securities
The fair value of stocks is based on quoted market prices. The fair value of debt securities is mainly
based on prices provided by the financial institutions making markets in these securities. For information
on securities classified by holding purpose, please refer to Note 15. “Marketable Securities andInvestment Securities.”
Equity investments
The fair value of equity investments is based on quoted market prices.
Liabilities
Notes and accounts payable – trade
Since these items are settled in a short period of time, their carrying value approximates fair value.
Short-term borrowings
Since these items are settled in a short period of time, their carrying value approximates fair value.
Current portion of long-term borrowings
Since these items are settled in a short period of time, their carrying value approximates fair value.
Commercial paper
Since these items are settled in a short period of time, their carrying value approximates fair value.
Current portion of bonds
Since these items are settled in a short period of time, their carrying value approximates fair value.
Bonds
The fair value of bonds is based on the quoted market price.

Long-term borrowings
Since variable interest rates of certain long-term borrowings are determined based on current interest
rate in a short period of time, their carrying value approximates fair value. The fair value of long-termborrowings with fixed interest rate is based on the present value of the total of principal and interest
discounted by the interest rate to be applied if similar new borrowings were entered into.
Derivatives Transactions
Please refer to Note 17. “Derivatives and Hedging Activities.”
Note 2: Financial instruments for which it is extremely difficult to determine the fair value
Millions of yen

Thousands of
U.S. dollars

2013

2012

2013

Equity securities
Other
Subtotal
Securities whose cost exceeds their fair value:(i) Unlisted stocks *1¥ 21,383¥ 20,756$ 227,359

Corporate bonds(ii) Equity investments *2

195,426

281,141

2,077,897

Other(iii) Lease and guarantee deposit receivables *3

110,689

101,833

1,176,922(iv) Lease and guarantee deposit payables *4

378,876

373,189

4,028,454*1. Because no quoted market price is available and it is extremely difficult to determine the fair value,
unlisted stocks are not included in the above table.
*2. Because it is extremely difficult to determine the fair value for equity investments which are not listed
and have no quoted market price, they are not included in the above table.
*3. Because no quoted market price for lease and guarantee deposit receivables for rental properties isavailable and calculation of the actual period of duration from lease initiation to evacuation is difficult,it is extremely difficult to estimate a reasonable amount of cash flow and therefore they are notincluded in the above table.
*4. Because no quoted market price for lease and guarantee deposit payables for rental properties isavailable and calculation of the actual period of duration from lease initiation to evacuation is difficult,it is extremely difficult to estimate a reasonable amount of cash flow, and therefore they are notincluded in the above table.

Subtotal
Total

8,778

7,378

(1,400)93,34378,456(14,887)¥86,586¥192,706¥106,120$920,645$2,048,984$1,128,338

46

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Millions of yen

17

2012
Fair
value

Cost

Unrealized
gain (loss)

Derivatives and Hedging Activities

1. Currency related transactions

Millions of yen

Thousands of U.S. dollars

2013

Securities whose fair value exceeds their cost:
Equity securities
Other
Subtotal

47¥43,528¥115,972¥72,443

5,331

7,408

2,076

48,859123,380

74,520Class of Transactions

Subject to hedged accounting

Forward foreign exchange contracts
Total

Loans to affiliated companies

Notional
AmountDue after
One Year¥4,496¥4,496

–
–

Fair
value

Notional
AmountDue after
One Year

¥(61)
¥(61)

$47,808$47,808

Fair
value

–
–

$(649)$(649)

Calculation method of fair value is based on the data obtained from financial institutions.
Securities whose cost exceeds their fair value:
Equity securities

38,15935,997(2,162)

Corporate bonds

10

10

–

Other
Subtotal
Total

142

9

(133)

38,31236,016(2,295)¥87,172¥159,396¥72,224

2. Interest related transactions

Millions of yen

Class of Transactions

Interest rate swap contracts
Fixed rate payment and floating
rate receipt
Interest rate swap contracts by short-cut
methodFixed rate payment and floating
rate receipt
Total

Proceeds from sales of securities classified as other securities totaled ¥759 million ($8,075 thousand) in 2013 and ¥472 million in 2012, respectively. Grossrealized gain was ¥362 million ($3,856 thousand) in 2013 and ¥229 million in 2012, respectively. Gross realized loss was ¥101 million ($1,079 thousand) in2013.
Marketable debt securities classified as held-to-maturity securities at March 31, 2013 and 2012 are summarized as follows:
Millions of yen

Subject to hedged accounting

Notional
AmountDue after
One Year

Fair
Value

Long-term borrowings¥ 19,567¥ 19,567¥(443)

Long-term borrowings
and Corporate bonds

147,073

136,863(*)¥166,640¥156,430¥(443)

Thousands of U.S. dollars

Fair
value

Unrealized
gain (loss)

Fair
value

Unrealized
gain (loss)

Class of Transactions

Government bonds

¥389

¥405

¥16

$4,136$4,312$175

Corporate bonds

235

239

3

2,506

2,549

42

624

645

20

6,643

6,861

217

Government bonds

–

–

–

–

–

–

Other

–

–

–

–

–

–

–

–

–

–

–

–

¥645

¥20

$6,643$6,861$217

Debt securities whose cost exceeds their fair value:

Subtotal
Total

¥624

Interest rate swap contracts
Fixed rate payment and floating
rate receipt
Interest rate swap contracts by short-cut
methodFixed rate payment and floating
rate receipt
Total

Due after
One Year

Fair
value

Short-term borrowings¥ 84,046
and Long-term borrowings¥ 78,215¥(444)

Long-term borrowings
and Corporate bonds

158,970

118,715(*)¥243,016¥196,931¥(444)

Subject to hedged accounting

Notional
AmountFair
value

Unrealized
gain (loss)

Government bonds

¥ 376

¥ 385

¥ 9

Corporate bonds

371

382

11

747

768

20

Class of Transactions

Debt securities whose fair value exceeds their cost:

SubtotalInterest rate and currency swap contracts
Payment in GBP and receipt in JPY
Floating rate payment and fixed ratereceipt
Total–

Subject to hedged accounting

Notional
AmountCorporate bonds¥27,800¥27,800

Notional
Amount–¥(2,113)$295,587–$(22,474)–¥(2,113)$295,587–$(22,474)

1,303

2012

–

Class of Transactions

Subject to hedged accounting

Corporate bonds¥6,200–¥723

Loans to affiliatedcompanies

1,802

–

110

¥8,002

–

¥834

1,303

–

¥2,072¥20

Interest rate and currency swap contracts
Payment in GBP and receipt in JPY
Floating rate payment and fixed ratereceipt

The following table represents a reconciliation of cash and cash equivalents as of March 31, 2013 and 2012:

Interest rate and currency swap contracts
Payment in GBP and receipt in USD
Floating rate payment and fixed ratereceipt
Total

Supplemental Cash Flow Information

Millions of yen

CashTime deposits with maturities of more than three months
Marketable securities with maturities of three months or less
Cash and cash equivalents$(4,717)

Fair
Value

Notional
Amount1,303

16

Due after
One Year–¥2,051

Total$1,771,827 $1,663,271

Thousands of U.S. dollars

Millions of yen

1,303

(*)

Millions of yen

Debt securities whose cost exceeds their fair value:
Other

1,455,221

2013

Amortized
cost–

1,563,777$(4,717)(*) The estimated fair value of interest rate swap contracts is included in the estimated fair value of long-term borrowings and corporate bonds since amounts in such derivative contracts accounted for short-cut method
are handled together with long-term borrowings and corporate bonds that are subject to hedged accounting.

2012

Government bonds$ 208,049 $ 208,049

Fair
value

Calculation method of fair value is based on the data obtained from financial institutions.

3. Interest and currency related transactions

Millions of yen

Subtotal

Due after
One Year2012
Amortized
cost

Debt securities whose fair value exceeds their cost:

Subtotal

Notional
AmountMillions of yen

2013
Amortized
cost

Thousands of U.S. dollars

2013

2013
¥192,076(605)
366¥191,837

Thousands of U.S. dollars

2012¥215,741(655)
685¥215,771

2013$2,042,277(6,434)
3,894$2,039,737

Calculation method of fair value is based on the data obtained from financial institutions.

Due after
One Year

Fair
value

Due after
One Year

Fair
value

48

18

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 201349

Impairment losses of the Company and its consolidated subsidiaries on fixed assets by reportable segments for the years ended March 31, 2013 and 2012 aresummarized as follows:

Segment Information
The Company and its consolidated subsidiaries are primarily engaged in
the real estate business. Their business segments are classified in terms of thenature of each operation or service and consist of eight segments: (1) Building
Business; (2) Residential Business; (3) Commercial Property Development andInvestment; (4) International Business; (5) Investment Management; (6)Architectural Design and Engineering; (7) Hotels Business; (8) Real Estate
Services; and (9) Other businesses.

The reportable segments of the Group are components for which discrete
financial information is available and whose operating results are regularly
reviewed by the board of directors and other committees to make decisions
about resource allocation and to assess performance. Business performances
are aggregated according to business areas that consist of multiple businessgroups and defined as organizational units having common businessobjectives and management responsibilities within the Group, and suchaggregated business areas are disclosed as reportable segments.

Millions of yen

2013
Reportable Segments
Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

Building
Business

Impairment loss

¥16

¥2,715–¥94–

Impairment loss

$178

$28,870–$1,002––

Real Estate
Services–

Subtotal

Other

Total

Eliminations
or Corporate Consolidated–¥2,826–¥2,826–¥2,826––$30,051–$30,051–$30,051

Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

Real Estate
ServicesThousands of U.S. dollars–

The reportable segment information of the Company and its consolidated subsidiaries for the years ended March 31, 2013 and 2012 is summarized as follows:
Millions of yen

Millions of yen

2012

2013

Reportable Segments

Reportable Segments

Building
Business

Revenue, operating income andassets by reportable segment
Revenue from:
External customers¥ 434,743
Intersegment or transfers
8,004
Total revenue
442,748
Segment income (loss)¥ 107,667
Segment assets¥3,030,858
Other items
Depreciation and amortization
Capital expenditures¥ 56,479¥ 128,016

Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

Real Estate
Services

Subtotal

Other

Total

Building
Business

Eliminations
or Corporate Consolidated

Impairment loss

¥8,657¥9,111¥54¥269¥ 2,664¥ 32,254¥ 46,113
4,165
50,278¥ 11,180¥432,556¥ 6,248¥ 45,910¥ 60,892 ¥ 7,044 ¥12,582 ¥27,841 ¥26,126 ¥ 926,176 ¥ 980 ¥ 927,157– ¥ 927,157
–
64
6,986
457
1,083
25,2803,427
28,707 ¥ (28,707)–
60,892
7,108 19,568 28,299 27,209
951,456
4,408
955,865(28,707)927,157¥ 8,371 ¥ 2,129 ¥ 1,234 ¥ 474 ¥ 1,058 ¥ 134,434 ¥ (10) ¥ 134,423 ¥ (16,074) ¥ 118,349¥383,824 ¥31,240 ¥23,108 ¥24,152 ¥25,103 ¥4,553,010 ¥27,261 ¥4,580,272 ¥131,248 ¥4,711,521¥39–¥18,133

Total–¥18,133

Eliminations
or Corporate Consolidated–¥18,133¥ 5,987 ¥¥ 5,196 ¥

38 ¥
16 ¥

72 ¥ 1,088 ¥39 ¥ 793 ¥457 ¥ 73,036 ¥469 ¥ 212,696 ¥84 ¥ 73,121 ¥ 242 ¥ 73,364
25 ¥ 212,722 ¥ 1,759 ¥ 214,481

2013

Millions of yen

2013
Reportable Segments
Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

Building
Business

Amortization of goodwill¥388¥ 3,126–

Amortization of negative goodwill¥

835

Balance of negative goodwill¥109,342

Balance of goodwill–

Real Estate
Services––

Subtotal

Other

Total

¥ 4,331¥0¥ 4,331

Eliminations
or Corporate Consolidated

–

¥ 746

¥70

¥14,597–¥6,530

¥70

–

–

–

¥ 21,198¥0¥ 21,199–¥ 21,199

–

–

–

–

–

–

–

¥

835

–

¥

835

–

¥

–

–

–

–

–

–

–

¥109,342–¥109,342–¥109,342

Reportable Segments–¥ 4,331
835

Thousands of U.S. dollars

Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

2013
Real Estate
Services

Subtotal

Other

Total

Eliminations
or corporate Consolidated

Revenue, operating income andassets by reportable segment
Revenue from:
External customers$ 4,622,469 $3,304,981 $ 490,306 $ 647,445 $ 74,902 $133,780 $296,028 $277,790 $ 9,847,705 $ 10,429 $ 9,858,135– $ 9,858,135
Intersegment or transfers
85,111
48,03844,291–
680 74,286
4,867 11,518
268,795 36,442
305,237 $ (305,237)–
Total revenue
4,707,581 3,353,019
534,598
647,445 75,583 208,067 300,896 289,308 10,116,500 46,872 10,163,373 (305,237) 9,858,135
Segment income (loss)$ 1,144,791 $ 24,639 $ 118,877 $ 89,010 $ 22,643 $ 13,127 $ 5,047 $ 11,258 $ 1,429,396 $ (114) $ 1,429,282 $ (170,909) $ 1,258,372
Segment assets$32,226,030 $6,402,622 $4,599,219 $4,081,068 $332,171 $245,701 $256,802 $266,917 $48,410,535 $289,865 $48,700,401 $1,395,521 $50,095,923
Other items
Depreciation and amortization
Capital expenditures

–

Other

The following table presents the amortization and balance of goodwill as of and for the years ended March 31, 2013 and 2012 by reportable segment:¥310,833
4,517
315,351¥ 2,317¥602,166

Thousands of U.S. dollars

Building
Business–

Subtotal

Reportable Segments
Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

Building
Business

Amortization of goodwill$

Subtotal

Other

Total

$ 33,238–$ 7,940

$748

–

–

– $

46,059$0$–$155,211–$69,441

$748

–

–

– $ 225,401$0$ 225,401– $ 225,401

8,881

–

–

–

–

–

–

– $

8,881

–

$

– $

$1,162,603

–

–

–

–

–

–

– $1,162,603–$1,162,603

Amortization of negative goodwill $46,060Eliminations
or Corporate Consolidated

4,132

Balance of goodwill
Balance of negative goodwill

Real Estate
Services

8,881

– $

46,0608,881– $1,162,603

Millions of yen

2012$ 600,522 $ 28,333 $ 66,439 $ 63,661 $$ 1,361,149 $ 342,954 $ 488,146 $ 55,253 $

412 $
178 $

772 $ 11,570 $ 4,860 $ 776,571 $425 $ 8,432 $ 4,988 $ 2,261,529 $902 $ 777,474 $ 2,583 $ 780,057
271 $ 2,261,801 $ 18,703 $ 2,280,505

Reportable Segments

Building
Business

Millions of yen

2012
Reportable Segments

Building
Business

Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

Real Estate
Services

Subtotal

Other

Total

Eliminations
or Corporate Consolidated

Revenue, operating income andassets by reportable segment
Revenue from:
External customers¥ 504,100
Intersegment or transfers
6,749
Total revenue
510,850
Segment income (loss)¥ 146,007
Segment assets¥2,915,905¥341,040
1,783
342,823¥ 4,792¥685,447¥ 55,650
159
55,809¥ 1,609¥230,467¥ 42,108 ¥ 5,756 ¥13,502 ¥25,093 ¥24,817 ¥1,012,070 ¥ 998 ¥1,013,069– ¥1,013,069
–
168
6,430
561
1,268
17,1202,507
19,628 ¥ (19,628)–
42,1085,924 19,932 25,654 26,085 1,029,191
3,506 1,032,697(19,628) 1,013,069¥ 8,020 ¥ 1,464 ¥ 1,190 ¥ (278) ¥ (57) ¥ 162,750 ¥ 181 ¥ 162,932 ¥ (16,632) ¥ 146,299¥328,935 ¥28,147 ¥21,520 ¥23,462 ¥25,171 ¥4,259,057 ¥27,468 ¥4,286,526 ¥100,489 ¥4,387,015

Other items
Depreciation and amortization
Capital expenditures¥ 1,932¥ 8,511¥ 1,766¥ 81,007¥ 5,673 ¥¥ 57,330 ¥¥ 55,948¥ 143,767

Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

Real Estate
Services

Subtotal

Other

Total

Eliminations
or Corporate Consolidated

Amortization of goodwill¥489¥ 3,126

–

¥ 753

¥ 70

–

–

–

¥ 4,440¥0¥ 4,440–

Balance of goodwill¥

113¥17,723–¥6,312

¥140

–

–

–

¥ 24,289¥0¥ 24,289–¥ 4,440¥ 24,289

Amortization of negative goodwill

¥

835

–

–

–

–

–

–

–

¥

835

–

¥

835

–

¥

Balance of negative goodwill¥107,285

–

–

–

–

–

–

–

¥107,285–¥107,285–¥107,285

835

Products and Service Information
Refer to reportable segment information.

40 ¥
54 ¥

73 ¥ 1,174 ¥26 ¥ 1,251 ¥512 ¥ 67,123 ¥734 ¥ 292,683 ¥86 ¥ 67,210 ¥119 ¥ 292,803 ¥254 ¥ 67,465(131) ¥ 292,671

Geographic Area Information
Geographic area information has been omitted since revenue from external customers in Japan and property and equipment located in Japan accounted formore than 90% of revenue from operations on the consolidated income statement and property and equipment on the consolidated balance sheet, respectively.
Major Customer Information
The Company does not have any major customers whose share of revenue from operations accounted for more than 10% of revenue from operations shown on
the consolidated income statement. Accordingly major customer information has been omitted.

50

19

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

51

The followings are the carrying value on the consolidated balance sheet as of March 31, 2012 and the fair values of these rental properties and real estateincluding space used as rental properties as of March 31, 2012;

Transactions with Special Purpose Companies

As part of its real estate business, the Company makes preferred investmentsin special purpose companies that are established under the Asset Liquidation
Law of Japan. The Company intends to recover such preferred investments
through rental revenue and subsequent sale of real estate that has beenobtained by the special purpose companies from their customers or sale ofsuch real estate after construction of buildings on it.
Effective April 1, 2012, the Company early adopted the new accounting

standard, “Revised Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22 issued on March 25, 2011) and otherrelated standards and guidance. Accordingly there is no special purpose
companies need to be disclosed.
The following tables represent the Company’s transactions with major
special purpose companies for the fiscal year ended March 31, 2012.

Millions of yen

2012
Carrying Value

Rental properties
Real estate including spaces used asrental properties

As ofApril 1, 2011

Fair ValueNet Change

As ofMarch 31, 2012

As ofMarch 31, 2012

¥2,647,177¥155,563¥2,622,741¥4,469,512

233,688(1,269)232,419

330,100

Amounts of preferred investment as of March 31, 2012
Millions of yen

Preferred investment securities

2012¥164,487(*1)

Major revenue (cost) from transactions with special purpose companies
Millions of yen

2012
¥ 274
18
1,940
3,199
938

Preferred investment securities: revenue (*2)
Other income(*3)
Management business: revenue(*4)
Real estate rent: cost(*5)
Design management business: revenue (*6)(*1) Preferred investment securities are indicated as amount of investment andspecific bonds as at March 31, 2012. The Company considers that its exposure toloss that may arise in the future is limited to the amount of its preferredinvestments.
(*2) The Company records dividends from such investments as revenue fromoperations and related expense as cost of revenue from operations.
(*3) The Company records interest incomes from such specific bonds as other income.
(*4) The Company, Mitsubishi Estate Building Management Co., Ltd. and Mitsubishi
Jisho Property Management Co., Ltd. provide asset management business to
special purpose companies and record such service income as revenue fromoperations.
(*5) The Company enters into real estate rental agreements with special purpose
companies and records such rent expenses as cost of revenue from operations.
(*6) Mitsubishi Jisho Sekkei Inc. and MEC Design International Corporation provide
design management services and remodeling services to special purpose
companies and record such service incomes as revenue from operations.

20

The Company does not own investments with voting rights for any
special purpose companies and does not send directors and employees to any
special purpose companies. The following table sets forth major assets andliabilities of the special purpose companies as of their recent financial closing
dates. Excluded are special purpose companies whose financial closing dates
are yet to come because their initial fiscal years have just started.

Millions of yen
Millions of yen

2012¥562,718
29,893¥592,611

Real estate
Other
Total
Major liabilities and net assets

Millions of yen

Debt and otherPreferred investments
Total

2012
¥354,521
238,090¥592,611

(*7)
(*8)

(*7) Debt and other include specific bonds.
(*8) Preferred investments include contributions made by the Company.

Some office buildings for lease in Japan are regarded as real estateincluding space used as rental properties since they are used by the Company
and some of its consolidated subsidiaries.

The followings are the carrying value on the consolidated balance sheet as of March 31, 2013 and the fair values of these rental properties and real estateincluding space used as rental properties as of March 31, 2013;
Millions of yen

Thousands of U.S. dollars

2013
Carrying Value

Rental properties
Real estate including spaces used asrental properties

As ofApril 1, 2012

The income or loss from rental properties and real estate including space used as rental properties for the years ended March 31, 2013 and 2012 were as
follows:

Major assets

Rental Properties

The Company and some of its consolidated subsidiaries own office buildings
for lease, commercial facilities for lease and others in Tokyo and other areas
including overseas countries (the United States and the United Kingdom) forthe purpose of obtaining revenue from leases.

1. The carrying value represents the acquisition cost less accumulated depreciation and accumulated impairment loss.
2. The fair value is based on the following:(1) The fair value of real estate in Japan is calculated by the Company based mainly on the Real Estate Appraisal Standards.
(2) The fair value of real estate in overseas countries is appraised principally by local real estate appraisers.

Fair Value

Carrying ValueNet Change

As ofMarch 31, 2013

As ofMarch 31, 2013

As ofApril 1, 2012

¥2,622,741¥342,654¥2,965,396¥4,920,768

232,419(4,854)

227,564

339,800

Fair ValueNet Change

As ofMarch 31, 2013

As ofMarch 31, 2013$27,886,675$3,643,320$31,529,995$52,320,775

2,417,228(51,614)2,419,614

3,612,971

1. The carrying value represents the acquisition cost less accumulated depreciation and accumulated impairment loss.
2. The components of net change in carrying value included increases mainly due to the consolidation of Shinjuku 6-chome Tokutei Mokuteki Kaisya in theamount of ¥166,998 million ($ 1,775,634 thousand).
3. The fair value is based on the following:(1) The fair value of real estate in Japan is calculated by the Company based mainly on the Real Estate Appraisal Standards.
(2) The fair value of real estate in overseas countries is appraised principally by local real estate appraisers.

2013
Lease
income (*1)

Thousands of U.S. dollars

2012
Other, net
(*2)

Lease
income (*1)

2013

Lease
income, net

Other, net
(*2)

Lease
income (*1)

Rental properties¥349,767 ¥231,696 ¥118,070 ¥(17,189) ¥345,288 ¥224,155 ¥121,133
Real estate including space
17,646
16,431
1,215(5,534) 19,052
16,3932,659
used as rental properties¥(20,984)$3,718,951 $2,463,548 $1,255,403 $(182,770)

Lease cost

Lease
income, net

Lease cost

(444)

187,632

Lease cost

174,708

Lease
income, net

12,924

Other, net(*2)(58,843)(*1) Lease income excludes the one from real estate including space used as rental properties that was used by the Company and some of its consolidated subsidiaries for leasing
service and operating management.
(*2) Other, net includes loss on disposal of fixed assets and impairment loss.

21

Asset Retirement Obligations(1) Asset retirement obligations presented in the consolidated balancesheet
1. Outline of asset retirement obligations
Asset retirement obligations include obligations of restoration related toleasehold and rental contracts.
2. Calculation method for asset retirement obligations
Asset retirement obligations are calculated based on the remaining
contract years as an expected use period with a discount rate between
0.3% and 2.6%.
3. Change in asset retirement obligations for the fiscal year is as follows:
Millions of yen

Thousands of
U.S. dollars

Asset Retirement Obligations

Balance at April 1, 2012
Increase due to the acquisition ofproperty and equipment
Adjustments due to the elapse of time
Increase (Decrease) due to the changeof estimate
Decrease due to the fulfillment of asset
retirement obligations
Other
Balance at March 31, 2013

¥401

$4,267

222

2,363

10

115

(52)

(561)

(10)

(107)

(81)
¥490

(864)
$5,212(2) Asset retirement obligations not recognized in the consolidatedbalance sheet
As below stated, certain obligations are excluded from recognition of asset
retirement obligations.

1) Obligation to remove asbestos that is used for some properties andequipments in a particular way required by the Ordinance on Preventing
Asbestos Hazards

For such properties, the Company has an obligation to remove asbestos atdemolition of buildings. However, no demolition has taken place in the pastother than those related to redevelopment or other projects involving manyother business associates. It is therefore difficult to reasonably estimate thetiming to fulfill such obligation based on the physical useful life of theassets caused by aging and it is impossible to estimate the timing without
specific business plans. Although the Company has been voluntarily
conducting asbestos removal work when that is feasible due to such as
termination of tenancy, it is impractical to make a reasonable estimation ofprogress of such voluntary removal work based on the actual record of thetenancy termination and of the remaining amount of asbestos atdemolition. Moreover, it is difficult to distinguish costs of asbestos removalfrom total costs of demolition. Although the Company made the best
estimation taking into account all the evidence available as of March 31,
2013, these obligations are excluded from recognition of asset retirement
obligations since the probability of obligations in terms of scope andamount was not reasonably estimated.
2) Obligation of restoration based on some real estate rental agreements
For some commercial facilities, the Company has an obligation ofrestoration at the termination of leasehold rental agreements. However, thetiming to fulfill the obligation is uncertain since it is practically possible tocontinue to use those facilities by re-signing contracts and some contracts
set forth a special provision to reduce the possibility to fulfill the obligation.
Furthermore, given its business strategies and the current businessenvironment, the Company intends to continue its operation and not tofulfill the obligation. Although the Company made the best estimation
taking into account all the evidence available as of March 31, 2013, theseobligations are excluded from recognition of asset retirement obligations
since the probability of obligations in terms of scope and amount was notreasonably estimated.

52

22

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Independent Auditor’s Report

Other Comprehensive Income

The following table presents reclassification and tax effects allocated to each component of other comprehensive income for the years ended March 31, 2013
and 2012:
Millions of yen

2013
Unrealized holding gain (loss) on securities:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effects
Tax effects
Unrealized holding gain (loss) on securities
Deferred gain (loss) on hedging instruments:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effects
Tax effects
Deferred gain (loss) on hedging instruments
Revaluation reserve for Land:
Tax effects
Foreign currency translation adjustments:
Amount arising during the year
Amount before tax effects
Tax effects
Foreign currency translation adjustments
Share of other comprehensive income of companies accounted
for by the equity method:Amount arising during the year
Total other comprehensive income

23

Thousands of U.S. dollars

2012

2013

¥ 34,488
101
34,589(11,231)
23,358¥ (8,432)
41(8,391)
7,620
(770)

$ 366,705
1,074
367,780(119,415)
248,364

(539)
468
(71)
6
(65)

(894)
665
(229)
(17)
(246)

(5,737)
4,976
(761)
68
(692)

(1,384)23,717(14,718)

19,70819,708(151)
19,556(8,315)(8,315)15(8,299)209,549
209,549(1,609)207,940679¥ 42,145(134)¥14,264

7,225$ 448,119

Business Combination

Transaction under common control(1) Outline of the merger
1. Name and business description of the transferred business(Surviving company)
Name
Mitsubishi Estate Co., Ltd.
Business description
Development and leasing of offices and commercial complexes,
etc.
(Absorbed company)
Name
MEC Asset Holding, Ltd.
Business description
Holding trust beneficiary rights in The Bank of Tokyo-Mitsubishi
UFJ Otemachi Building and leasing and management of thebuilding.
2. Date of the merger
October 30, 2012

3. Legal form of the merger
Absorption-type merger, with the Company as the surviving company.
4. Name of the company subsequent to the merger
Mitsubishi Estate Co., Ltd.
5. Additional information relating to the merger
MEC Asset Holding, Ltd. had held trust beneficiary rights in The Bank ofTokyo-Mitsubishi UFJ Otemachi Building, leased and managed thebuilding as the management company of the silent partnership MEC
ASSET HOLDING. Mitsubishi Estate Co., Ltd. resolved to initiate themerger for the purpose of directly owning and redeveloping thebuilding.
(2) Outline of accounting treatment
The merger was treated as a transaction under common control inaccordance with “Accounting Standard for Business Combinations” (ASBJ
Statement No. 21 issued on December 26, 2008) and “Implementation
Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures” (ASBJ Guidance No. 10
issued on December 26, 2008).

53

54

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

55

Principal Mitsubishi Estate Group Companies• Consolidated subsidiary

Share of Voting
Rights (%)

Building Business

Share of Voting
Rights (%)

Residential Business
Recreational Facilities

Building Leasing Business• Sunshine City Corporation

World Import Mart Building, Sunshine City, 1-1, HigashiIkebukuro 3-chome, Toshima Ward, Tokyo 170-8630

TEL +81-3-3989-3321

Management of Sunshine City and other buildings

63.2• Higashinihon Kaihatsu Co., Ltd.

1442-23, Yosawa Oyamacho, Sunto-gun,Shizuoka Prefecture 410-1326

TEL +81-550-78-3211

Management of the Higashi Fuji Country Club,
Fuji International Golf Club and other properties

100.0• Yokohama Sky Building Co., Ltd.

19-12, Takashima 2-chome, Nishi Ward, Yokohama,
Kanagawa Prefecture 220-0011

TEL +81-45-441-1221

Management of the Sky Building and the
Yokohama Shintoshi Building

54.4• MEC Urban Resort Tohoku Co., Ltd.

1-1, Akedori, Izumi Ward 1-chome, Sendai,
Miyagi Prefecture 981-3206

TEL +81-22-377-3136

Operation and management of Izumi Park Town
Golf Club and other properties

100.0• Towa Nasu Resort Co.

3376, Takakuotsu, Nasu-machi, Nasu-gun,Tochigi Prefecture 325-0398

TEL +81-287-78-2700

Sale of land for cottages, operation of Nasu
Highland Park

100.0

670, Uchida, Sakura, Chiba Prefecture 285-0077

TEL +81-43-498-6630

Management of Asakura Golf Club

49.0

• MEC Eco LIFE Co., Ltd.

6-1, Otemachi 1-chome, Chiyoda Ward, Tokyo 100-0004

TEL +81-3-5222-9671

Research and creation of environmental design
proposals

100.0• Ryoei Life Service Co., Ltd.

Royal Life Okusawa, 33-13, Okusawa 3-chome,
Setagaya Ward, Tokyo 158-0083

TEL +81-3-3748-2650

Management of commercial nursing homes

85.0

TEL +81-3-4477-2000

Internet connection services for housing complexes

20.0

8-4, Higashiazabu 1-chome, Minato Ward, Tokyo 106-0044 TEL +81-3-5575-5512

Management and operation of serviced apartments

40.0• Rockefeller Group, Inc. (RGI)

1221 Avenue of the Americas, New York, New York
10020-1095, U.S.A.

Real estate operations

100.0• Tokyo Kotsu Kaikan Co., Ltd.

Tokyo Kotsu Kaikan, 10-1, Yurakucho 2-chome,
Chiyoda Ward, Tokyo 100-0006

TEL +81-3-3212-2931

Management of Tokyo Kotsu Kaikan andother buildings

50.0• Mitsubishi Estate·Simon Co., Ltd.

Otemachi Financial City South Tower, 9-7, Otemachi
1-chome. Chiyoda Ward, Tokyo 100-0004

TEL +81-3-3275-5252

Management of outlet malls

60.0

Building Management Business

Sakura Golf Development Co., Ltd.
OthersMitsubishi Estate Building•
Management Co., Ltd.

Marunouchi 2-chome Building, 5-1, Marunouchi
2-chome, Chiyoda Ward, Tokyo 100-0005

TEL +81-3-3287-4111

Mitsubishi Jisho Retail Property•
Management Co., Ltd.

7-1, Daiba 1-chome, Minato Ward, Tokyo 135-8707

TEL +81-3-5579-6671

Mitsubishi Jisho Property•
Management Co., Ltd.

Shin-Yurakucho Building, 12-1, Yurakucho 1-chome,
Chiyoda Ward, Tokyo 100-0006

TEL +81-3-3287-6263

Comprehensive building operation and management

100.0• Hokuryo City Service Co., Ltd.

Hokkaido Building, 4-1 Kitanijonishi, Kita 2-jou Nishi,
Chuo Ward, Sapporo, Hokkaido 060-0002

TEL +81-11-242-7411

Management and operation of buildings,
residences and sporting facilities

100.0• IMS Co., Ltd.

Tenjin MM Building, 7-11, Tenjin 1-chome, Chuo Ward,
Fukuoka, Fukuoka Prefecture 810-0001

TEL +81-92-733-2006

Operation and management of the Tenjin MM
Building

92.0• Yuden Building Kanri Co., Ltd.

Yurakucho Denki Building, 7-1, Yurakucho 1-chome,
Chiyoda Ward, Tokyo 100-0006

TEL +81-3-3211-7833

Operation and management of the Yurakucho
Denki Building

62.5• Mitsubishi Estate New York Inc.

1221 Avenue of the Americas, New York, New York
10020-1095, U.S.A.

TEL +1-212-698-2200

Real estate operations in the U.S.

100.0

• Sunshine BS Corporation

World Import Mart Building, Sunshine City, 1-1, HigashiIkebukuro 3-chome, Toshima Ward, Tokyo 170-8630

TEL +81-3-3989-3378

Operation and management services of theSunshine City Building

63.2• MEC UK Limited

88 Wood Street, London EC2V 7DA, U.K.

TEL +44-20-7776-6900

Real estate operations in the U.K.

100.0

World Import Mart Building, Sunshine City, 1-1, HigashiIkebukuro 3-chome, Toshima Ward, Tokyo 170-8630

6 Battery Road, Singapore 049909

TEL +65-6576-5790

Real estate operations in the Asia

100.0

TEL +81-3-3989-3460

Operation and management services of the Sunshine
City observation deck, aquarium and other facilities• Mitsubishi Estate Asia Pte. Ltd.

• Sunshine Enterprise Corporation

63.2

Raffles City, 268 Xizang Middle Road, Shanghai P.R.C

TEL +21-6340-3000

Real estate business in China

100.0• Grand Parking Center Co., Ltd.

6-2, Otemachi 2-chome, Chiyoda Ward, Tokyo 100-0004

TEL +81-3-3270-5048

Management of the Japan Parking Center

97.0• Tokyo Garage Co., Ltd.

Sanno Grand Building, 14-2, Nagatacho 2-chome,
Chiyoda Ward, Tokyo 100-0014

TEL +81-3-3504-0610

Operation and management of building garages
and sale of various gasoline products

54.9

Comprehensive building operation and management
Operation and management of commercial facilities

100.0
100.0

District Heating and Cooling Business•Kishimoto Building, 2-1, Marunouchi 2-chome,
Chiyoda Ward, Tokyo 100-0005

TEL +81-3-3287-2288

Cooling and heating supply business in the
Marunouchi, Otemachi, Yurakucho and other districts

64.2

Ikebukuro District Heating andCooling Co., Ltd.

World Import Mart Building, Sunshine City, 1-1, HigashiIkebukuro 3-chome, Toshima Ward, Tokyo 170-8630

TEL +81-3-3988-6771

Cooling and heating supply business in the
Higashi-Ikebukuro district

50.7

O.A.P. D.H.C. Supply Co., Ltd.

OAP Tower, 8-30, Tenmabashi 1-chome, Kita Ward,
Osaka, Osaka Prefecture 530-6004

TEL +81-6-6881-5170

Minato Mirai 21 D.H.C. Co., Ltd.

1-45, Sakuragicho 1-chome, Naka Ward, Yokohama,
Kanagawa Prefecture 231-0062

TEL +81-45-221-0321

Cooling and heating supply business in the OsakaOAP district
Cooling and heating supply business in the
Yokohama Minatomirai district

Ascott International
Management Japan Co., Ltd.

International Business

Parking Business• Marunouchi Heat Supply Co., Ltd.

Tsunagu Network Communications, Inc. 2-1, Otemachi 2-chome, Chiyoda Ward, Tokyo 100-0004

Commercial Property Development & Investment Business

35.0

Mitsubishi Estate (Shanghai) Ltd.
* Outside the scope of consolidation

Investment Management Business•

Mitsubishi Jisho Investment
Advisors, Inc.

Fuji Building, 2-3, Marunouchi 3-chome, Chiyoda Ward,
Tokyo 100-0005

TEL +81-3-3218-0031

Specialist real estate investment management services(real estate investment advisory and other services)

100.0

•

Japan Real Estate AssetManagement Co., Ltd.

Shin-Tokyo Building, 3-1, Marunouchi 3-chome,
Chiyoda Ward, Tokyo 100-0005

TEL +81-3-3211-7921

Investment corporation asset management

63.0

Architectural Design & Engineering Business• Mitsubishi Jisho Sekkei Inc.

Fuji Building, 2-3, Marunouchi 3-chome,
Chiyoda Ward, Tokyo 100-0005

TEL +81-3-3287-5555

Construction and civil engineering design
administration

100.0• MEC Design International Corporation

Inui Building Kachidoki,13-1, Kachidoki 1-chome,
Chuo Ward, Tokyo 104-0054

TEL +81-3-6704-0100

Interior design administration and construction,
manufacture and sale of furniture and household
items

100.0

Royal Park Hotels and Resorts
Co., Ltd.

Otemachi Building, 6-1, Otemachi 1-chome,
Chiyoda Ward, Tokyo 100-0004

TEL +81-3-3211-6180

Comprehensive management and management
support of hotels

100.0• Tohoku Royal Park Hotel Co., Ltd.

2-1, Teraoka 1-chome, Izumi Ward, Sendai,
Miyagi Prefecture 981-3204

TEL +81-22-377-1111

Operation of Sendai Royal Park Hotel

100.0• Royal Park Shiodome Tower Co., Ltd.

6-3, Higashinihonbashi 1-chome, Minato Ward,
Tokyo 105-8333

TEL +81-3-6253-1111

Operation of Royal Park Shiodome Tower

100.0• Yokohama Royal Park Hotel Co., Ltd.

Yokohama Landmark Tower, 2-1-3, Minatomirai 2-chome,
Nishi Ward, Yokohama, Kanagawa Prefecture 220-8173

TEL +81-45-221-1111

Operation of Yokohama Royal Park Hotel

100.0• Royal Park Hotel Co., Ltd.

1-1, Kakigaracho 2-chome, Nihonbashi, Chuo Ward, Tokyo
TEL +81-3-3667-1111
103-8520

Management of Royal Park Hotel

55.7

Otemachi Building, 6-1, Otemachi 1-chome,
Chiyoda Ward, Tokyo 100-0004

TEL +81-3-5224-6200

Operation of the “THE” series of hotels

100.0

Mitsubishi Real Estate Services
Co., Ltd.

Shin-Otemachi Building, 2-1, Otemachi 2-chome,
Chiyoda Ward, Tokyo 100-8113

TEL +81-3-3510-8011

Corporate brokerage, office leasing brokerage andmanagement, real estate appraisal, and parking business

100.0• Mitsubishi Jisho House Net Co., Ltd.

Shinjuku Front Tower 21-1, Kita Shinjuku 2-chome,
Shinjuku Ward, Tokyo 220-8173

TEL +81-3-6908-5560

Purchase, sales, and leasing brokerage of homes forindividuals, leasing management

100.0

Otemachi Building, 6-1, Otemachi 1-chome,
Chiyoda Ward, Tokyo 100-0004

TEL +81-3-3214-9300

Development and management of information
systems and software

100.0• MEC Human Resources, Inc.

Otemachi Building, 6-1, Otemachi 1-chome,
Chiyoda Ward, Tokyo 100-0004

TEL +81-3-3212-8674

Human resource-related services

100.0• Keiyo Tochi Kaihatsu Co., Ltd.

Shin-Tokyo Building, 3-1, Marunouchi 3-chome,
Chiyoda Ward, Tokyo 100-0005

TEL +81-3-3212-0555

Management of the PAT Inage commercial facility

55.6

1-1, Heiwajima 6-chome, Ota Ward, Tokyo 143-0006

TEL +81-3-3767-2111

Leasing and operating management of logistics andoffice buildings

24.1

Hotel Business
29.6•

Others• Marunouchi Direct Access Limited
Marunouchi Hotel Co., Ltd.

Shin-Tokyo Building, 3-1, Marunouchi 3-chome,
Chiyoda Ward, Tokyo 100-0005

TEL +81-3-3214-4881

6-3, Marunouchi 1-chome, Chiyoda Ward, Tokyo 100-0005 TEL +81-3-3548-0181

Construction and leasing of optical fibers in the
Marunouchi district
Management of the Marunouchi Hotel

51.0
31.4

Residential Business
Real Estate Sales• Mitsubishi Jisho Residence Co., Ltd.

Otemachi Building, 6-1, Otemachi 1-chome,
Chiyoda Ward, Tokyo 100-8189

TEL +81-3-3287-8800

Sale, brokerage, leasing, contract construction,
holding and management of real estate

100.0

•

Custom-Built Housing• Mitsubishi Estate Home Co., Ltd.
Mitsubishi Estate Housing•
Components Co., Ltd.

Fuji Building, 2-3, Marunouchi 3-chome, Chiyoda Ward,
Tokyo 100-0005

TEL +81-3-3287-0010

Design and construction of single-unit homes andhousing complexes, renovation of homes and retail
shops

100.0

91.7

TEL +81-43-242-9031

Manufacture, processing and sale of construction
materials

15-12, Kiba 2-chome, Koto Ward, Tokyo 135-0042

TEL +81-3-3643-3310

Manufacture and sale of housing construction materials

18.3

7-2, Takamori, Izumi Ward, Sendai City, Miyagi Prefecture981-3203

TEL +81-22-378-0022

Comprehensive management of Izumi Park Town

100.0

Mitsubishi Jisho Community
Co., Ltd.

Mitsubishi Jisho Community Headquarters Building,
3-13, Yaesu 2-chome, Chuo Ward, Tokyo 104-0028

TEL +81-3-6895-3800

Comprehensive management of condominiums andbuildings

100.0• MT Community Staff Co., Ltd.

Kyobashi Park Building, 7-4, Hatchobori 3-chome,
Chuo Ward, Tokyo 104-0032

TEL +81-3-6222-7127

Property management operations and associatedtraining operations for condominiums and otherproperties

Residence Management Business• Izumi Park Town Service Co., Ltd.
•Royal Park Hotel Management
Co., Ltd.

Real Estate Services Business•

228-4, Shinminato, Mihama Ward, Chiba,
Chiba Prefecture, 261-0002

Prime Truss Co., Ltd.

TEL +1-212-282-2000

Others•MEC Information Development
Co., Ltd.

100.0
Tokyo Ryutsu Center Inc.

Note: Percentage of voting rights held is as of March 31, 2013

56

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2013

Corporate History
1890

March

September
1893

December

1894

June

Corporate Information (As of March 31, 2013)

The Marunouchi site (over 353,000m2)—a former military training ground
known as Kanda Misaki-cho—purchased by Mitsubishi Company from theJapanese government
Marunouchi Architectural Office established

1993

July
September

July

1923

February

Yokohama Landmark Tower

1,980,000,000 shares

April
NovemberSendai Royal Park Hotel opened
Reconstruction of Marunouchi Building announced

Number of shares issued
and outstanding:

1,390,397,097 (No change from the endof previous fiscal year)

1996

January
November

Osaka Amenity Park (OAP) completed
Head Office relocated to Tokyo Building

Number of shareholders:

1999

April

Reconstruction of Marunouchi Building commenced

67,638 (Decrease of 2,600 shareholders
compared with the end of the previous
fiscal year)

2000

April

Aqua City Odaiba commercial complex opened under the management of
Mitsubishi Estate subsidiary Aqua City Co., Ltd. (renamed Mitsubishi Jisho
Retail Property Management Co., Ltd. in July 2007)
Royal Park Hotels and Resorts Co., Ltd. established

1995

November

Marunouchi Building
1937

May

November
1945

1950

April

January

Mitsubishi Estate Company, Limited established with paid-in capital
totaling ¥15 million, with the ownership of the Marunouchi Building andits site, as well as business rights for buildings and land within the
Marunouchi area, transferred from Mitsubishi Goshi Kaisha
Construction-related businesses of Mitsubishi Goshi Kaisha transferred to
Mitsubishi Estate

1952

May
November

1953

April
May

Yowa Fudosan and Kaito Fudosan merged with Mitsubishi Estate
Mitsubishi Estate’s shares listed on the Tokyo Stock Exchange and the
Osaka Securities Exchange

1959

July

Marunouchi Remodeling Plan formulated

February

Marunouchi Parking Area completed

1962

December

Hokkaido Building completed

1969

May

April
June

April
June
September

2002

March

September

2003

February
March
April
May
July

Marunouchi OAZO opened (completed in August)
Capital investment in Towa Real Estate Development Co., Ltd. initiated

2005

March
June
November

Construction of Shin-Marunouchi Building commenced
Keiji Kimura appointed president
Tokyo Building opened (completed in October)

April
SeptemberShin-Marunouchi Building opened
The Peninsula Tokyo opened (completed in May)

2007

Shin-Marunouchi Building
2008

2009

January
March
October

Towa Real Estate Development becomes a Mitsubishi Estate consolidated subsidiary
Sunshine City Corporation becomes a Mitsubishi Estate consolidated subsidiary
Mitsubishi Estate Asia Pte. Ltd. commenced operations

March

Chelsea Japan Co., Ltd. becomes a Mitsubishi Estate consolidated subsidiary (renamed Mitsubishi Estate·Simon Co., Ltd. in February 2013)
Towa Real Estate Development turned into a
Mitsubishi Estate wholly owned subsidiary
Marunouchi Park Building & Mitsubishi Ichigokancompleted
Marunouchi BRICK SQUARE opened

December

Mitsubishi Real Estate Services Co., Ltd. established

April

1973

November

Branches established in Sapporo, Sendai, Nagoya and Osaka

April

1975

May
October

1980

June

1981

October

1983

April
November

1984

July

1986

March
July
October

1987

June

1988

January

1989

April
June
July
July

1990

February
April
September

Mitsubishi Trust and Banking Building completed (renamed Mitsubishi UFJ
Trust and Banking Building in October 2005)
Head Office relocated to Otemachi Building
Introduction of an executive officer system
Paternoster Square completed in the City of London
Royal Park Shiodome Tower opened

September
DecemberIzumi Park Town

1978

Properties and equipment revaluated in accordancewith the Law Concerning Revaluation of Land andother relevant laws and regulations
Marunouchi Building opened (completed in August)

2004

Otokazu Nakata and Takejiro Watanabe appointed president andchairman, respectively
Akasaka Park House offered for sale in lots, marking the launch of theCondominium Business
Mitsubishi Estate New York Inc. establishedThe first phase of the Izumi Park Town
Project launched

Shigeru Takagi and Takeshi Fukuzawa appointed president and chairman,
respectively
Mitsubishi Jisho Sekkei Inc. established through a spin-off of thearchitectural design and engineering business
Mitsubishi Jisho Investment Advisors, Inc. establishedMarunouchi Building

Takejiro Watanabe appointed president
Shin-Marunouchi Building completed

1960

1972

2001

Ownership of Yaesu Building (completed in March 1928 and renamed
Marunouchi Yaesu Building in 1962) and its ownership transferred from
Mitsubishihonsha Co., Ltd. to Mitsubishi EstateBusiness rights for the Marunouchi site and other land and buildings,
excluding those for Marunouchi Building and Yaesu Building, werereturned to Mitsubishihonsha Co., Ltd., Mitsubishihonsha was dissolved
and its operations transferred to two newly established secondary
corporations, Yowa Fudosan Ltd. and Kaito Fudosan Ltd.

Semiannual settlement of accounts changed to annual

September

Shin Aoyama Building completed
Tatsuji Ito and Otokazu Nakata appointed president andchairman, respectively
Hibiya Kokusai Building completed

Marunouchi Park Building & Mitsubishi Ichigokan
2010
2011

April
January

Nagoya Dai-Ichi Hotel opened (Hotel Business launched)
MEC USA, Inc. established
Mitsubishi Estate Home Co., Ltd. established

April

MEC UK Limited establishedThe first consolidated financial statements announced
Yokohama Office established (reorganized as Yokohama Branch in April 2000)

April
2012

Jotaro Takagi appointed president

January
November

Mitsubishi Ichigokan Museum opened
Mitsubishi Jisho Residence Co., Ltd. established through company spin-offs
and the subsequent integration of residential development and sales
businesses of Mitsubishi Estate, Mitsubishi Real Estate Services Co., Ltd.
and Towa Real Estate Development Co., Ltd.
Keiji Kimura and Hirotaka Sugiyama appointed chairman and president,
respectively
Shanghai Representative Office establishedMarunouchi Eiraku Building completed
Otemachi Financial City opened(completed in October)

Yokohama Minato Mirai 21 Block-25 Development Plan announced
Tenjin MM Building (IMS) opened in Fukuoka City
Royal Park Hotel in Hakozaki, Tokyo opened
Hiroshima Park Building completed
Hiroshima Branch (renamed Chugoku Branch in April 2000) andKyushu Branch established
Participation in the City of London’s Paternoster Square Project announced
Capital investment in the Rockefeller Group, Inc. initiatedConstruction of Ryokuendai New Town commenced

Mitsubishi Estate Co., Ltd.

Number of authorizedshares:June

Real Estate Division established within Mitsubishi Goshi Kaisha
Marunouchi Building completed

Company Name

Takeshi Fukuzawa and Jotaro Takagi appointed as president and chairman,
respectively

1994

Mitsubishi Ichigokan
1906

Stock Information

Stock Details

Mitsubishi Goshi Kaisha (limited partnership) established
Mitsubishi Ichigokan,
the first office building in
Marunouchi, completed

Akasaka Park Building completed
Yokohama Landmark Tower completed
Yokohama Royal Park Hotel opened

Marunouchi Eiraku Building
2013

February
April

May
June

Construction commenced on the A building of the Otemachi 1-1 Project(tentative name)
Mitsubishi Estate (Shanghai) Ltd. established
MARK IS Shizuoka opened (completed in March)
GRAND FRONT OSAKA opened (completed in March)
Construction commenced on the Dai Nagoya Building
MARK IS Minatomirai opened (completed in May)

Date of Establishment

Government and local public authorities

0.00%
Individuals and otherForeign individuals
and companies

44.32%

Financial institutions

34.51%

By type ofshareholder

Paid-in Capital¥141,373 million
Business Activities
Development, leasing and management of office buildings,
commercial and other facilities
Development of real estate for investment purposes and asset
management
Development and sale of land for housing, research and otherfacility use
Management of leisure and other facilities
Sale and brokerage of real estate and related consulting services

Shareholder Composition (Shareholding Percentage)

8.01%

May 7, 1937

Number of Employees

Financial instruments
business operators

Non-consolidated: 677 (Excluding temporary staff)
Consolidated: 8,001 (Excluding temporary staff)

1.22%

URL

Operating andother companies

http://www.mec.co.jp/index_e.html

11.94%

Head Office
Otemachi Building, 6-1, Otemachi 1-chome, Chiyoda-ku, Tokyo, 100-8133
Tel +81-3-3287-5100

Sapporo Branch

Major Shareholders

Hokkaido Building, 4-1, Kitanijonishi, Chuo-ku, Sapporo City,
Hokkaido, 060-0002
Tel +81-11-221-6101

Number of Shares
Held (Thousandsof shares)

Percentage
Shareholding

The Master Trust Bank of Japan,
Ltd. (Trust Account)87,162

6.26

Japan Trustee Service Bank, Ltd.
(Trust Account)

56,531

4.06

Meiji Yasuda Life Insurance
Company

50,142

3.60

State Street Bank and Trust Company

35,9292.58

Tokio Marine & Nichido Fire
Insurance Co., Ltd.

28,420

2.04

Nagoya Branch

SSBT OD05 OMNIBUS
ACCOUNT - TREATY CLIENTS

28,090

2.02

Nagoya Hirokoji Building, 3-1, Sakae 2-chome, Naka-ku, Nagoya City,
Aichi Prefecture, 460-0008
Tel +81-52-218-7755

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

25,963

1.86

Osaka Branch

CBLDN- STICHTING PGGMDEPOSITARY - LISTEDREAL ESTATE PF FUND

23,575

1.69

OAP Tower, 8-30, Tenmabashi 1-chome, Kita-ku, Osaka City,
Osaka Prefecture, 530-6033
Tel +81-6-6881-5160

Asahi Glass Co., Ltd.

22,714

1.63

Chugoku Branch

The Bank of New York, Treaty
JASDAQ Account22,0601.58

Hiroshima Park Building, 7-5, Otemachi 3-chome, Naka-ku, Hiroshima City,
Hiroshima Prefecture, 730-0051
Tel +81-82-245-1241

Tohoku Branch
Sendai Park Building, 6-1, Kokubun-cho 3-chome, Aoba-ku, Sendai City,
Miyagi Prefecture, 980-0803
Tel +81-22-261-1361

Yokohama Branch
Yokohama Landmark Tower, 2-1, Minato Mirai 2-chome, Nishi-ku,
Yokohama City, Kanagawa Prefecture, 220-8115
Tel +81-45-224-2211

Kyushu Branch
Tenjin Twin Building, 6-8, Tenjin 1-chome, Chuo-ku, Fukuoka City,
Fukuoka Prefecture, 810-0001
Tel +81-92-731-2211

57