MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

Mitsubishi Estate Company, Limited
Otemachi Building, 6-1, Otemachi 1-chome,
Chiyoda-ku, Tokyo 100-8133, Japan
http://www.mec.co.jp/

Printed in Japan

MITSUBISHI ESTATE CO., LTD.

ANNUAL REPORT 2008

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.

CONTENTS

2

A Message from the President

4

To Our Shareholders

8

Special Feature

14

Business Information

28

Financial Review

54

Mitsubishi Estate Corporate Data

58

Corporate Social Responsibility

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,

Caution regarding forward-looking statements
Statements made in this annual report with respect to the Mitsubishi Estate Group’s current plans, estimatesand strategies are forward-looking statements about the future performance of the Mitsubishi Estate Group.
These statements are based on management’s assumptions, which are founded on currently available
information and therefore should not be unduly relied upon. The Mitsubishi Estate Group cautions that a numberof significant factors could cause future results to differ from forecasts in the forward-looking statements.

and through it, we will continuously evolve.
This aspiration will always drive our growth.

A Message from the President

The Mitsubishi Estate Group envisions its future, over the medium to long term,
as “a global real estate solutions provider—development as a core driver.”By “solutions provider,” we mean that Mitsubishi Estate is a real estate company thatprovides high added value to each and every customers including real estate end users,
owners and investors.
“Development” is ingrained in the Company’s soul, and on that basis we confronted theissue of how to deal with various transformations in the business climate, such as
globalization, securitization of real estate, the accelerated pace of IT innovations, andthe necessity of harmoniously co-existing with the natural environment. The conclusion
we reached after much deliberation was to strive to become “a global real estatesolutions provider.”Mitsubishi Estate formulated “Action 2010,” its New Medium-Term Management Plan,covering the three-year period from April 1, 2008, to March 31, 2011. As a means toconverge our established targets for further growth with the rationale underlying ourbusiness strategies, under Action 2010, the Group’s core businesses have beenorganized into four business domains: Real Estate Holding, Real Estate Development
and Investment, Real Estate Investment Management, and Real Estate Services. Before
the Plan, the Group’s business presence and management resources were focused on
operations corresponding to the first and second of these domains; however, we will now
step up activities relative to these domains in the Real Estate Investment Management
and Real Estate Services domains, as we aim for new pillars of growth.
Mitsubishi Estate will continue to strengthen its corporate brand—the very source ofeach of its businesses’ growth and the Group’s competitiveness. Underlying the Group’s
brand slogan, “A Love for People; A Love for the City,” is its genuine enthusiasm andspirit toward all stakeholders, and its strong commitment to taking on the challenge ofcreating new value for the city—the stage on which we perform. Forever on the move,
the Mitsubishi Estate Group will continue to reinvent itself while reinforcing its position
as the most trusted and preferred real estate developer.
July 2008

Keiji Kimura, President & CEO

2

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 20083

To Our Shareholders

Financial Results

September 2007, revisions to existing building rental
rates, and the sales of properties in the International
Business segment.
Ordinary income rose 6.8% compared with theprevious fiscal year to ¥162,061 million. In the fiscal year
under review, Mitsubishi Estate recorded extraordinary
gains on sales of shares of affiliated companies, sales ofbeneficial interest in trust of fixed assets and sales ofinvestment securities and incurred extraordinary losses
on valuation of investment securities and inventories aswell as impairment loss. As a result, net income
contracted 11.0% compared with the previous fiscal yearto ¥86,963 million.

In the fiscal year ended March 31, 2008, Mitsubishi
Estate Co., Ltd. recorded revenue from operations
totaling ¥787,652 million, a decrease of 16.9% comparedwith the previous fiscal year. This year-on-year decline
was mainly attributed to a drop in the number ofcondominiums sold in the Residential Business segment,
the sale of a consolidated subsidiary in the International
Business segment in the fiscal year ended March 31,
2007 and the reactionary decline in revenue following
the sale of a large-scale development property in the
Urban Development & Investment Management
segment, also in the fiscal year ended March 31, 2007.
Operating income, on the other hand, climbed 7.1% year
on year to ¥177,983 million. This was primarily attributable
to contributions from the Building Business segment,
particularly the Shin-Marunouchi Building, completed in
April 2007, The Peninsula Tokyo, which opened in

Operating Environment
The office building leasing market is increasingly
characterized by tight conditions resulting fromrelocations to larger premises due to the general

Financial Highlights Years ended March 31
2003
Revenue from operations

2004

2005

2006

Millions of yen

Thousands of
U.S. dollars

2008

2008

2007

¥ 681,726 ¥ 679,918 ¥ 775,381 ¥ 844,217 ¥ 947,641 ¥

787,652 $ 7,861,588

36,03934,98936,24555,82597,662

86,963867,989

As a percentage ofrevenue from operations

5.3%

5.1%

4.7%

6.6%

10.3%

11.0%

­­­—

As a percentage of
total equity

4.3%

4.0%

4.0%

5.4%

8.3%

7.1%

­—

Total assets

3,007,927

3,068,842

3,124,514

3,280,209

3,447,272

4,327,137 43,189,317

Total equity

839,953

897,499

920,930

1,133,623

1,225,644

1,238,889 12,365,397

Common stock

86,53486,53486,534

129,736

136,534

Net income

Per share amounts:
Net income
Cash dividends
applicable to the year¥

136,534

1,362,752

Yen

U.S. dollars

27.61 ¥

26.96 ¥

27.93 ¥

42.60 ¥

70.95 ¥

62.99 $

0.62

8.00

8.00

8.00

10.00

14.00

16.00

0.15

Notes: 1. Yen amounts shown are translated into U.S. dollars, solely for convenience, at the prevailing exchange rate on March 31, 2007, of ¥100.19 to US$1.00.
2. Total equity is calculated by deducting minority interests and stock acquisition rights from total net assets.

economic recovery and burgeoning demand for floor
space. This is particularly true for the five central wardsof Tokyo where vacancy rates remain low and rental
rates continue to hover at high levels.
Looking ahead, the supply of new office space in2008 across the five central wards of Tokyo is expected
to fall substantially compared with the previous year.
With underlying corporate sector demand for large-scalebuildings anticipated to remain firm, continued tightdemand and supply conditions are forecast.
In the residential market, the supply of condominiums
in the Tokyo Metropolitan area in 2007 fell to around60,000 units, 18% lower than 2006 and the second
consecutive year of substantial decline. One reason forthis downturn is the slump in sales of certain suburban
properties reflecting increases in land and construction
costs and ultimately higher sales prices. In addition,
revisions to the Building Standards Law in 2007 arethought to have contributed to delays in housing starts.
While sales prices of newly constructed condominiums
in large metropolitan areas continue to hover at highlevels, the market is beginning to definitely recognize therelative merits of property location, convenience andprice. Amid signs that housing starts are emerging froma period of inactivity, the market continues to adopt acautious approach reflecting concerns in connection
with the timing of supply and construction completion.
In the real estate investment market, transaction
prices remained high in certain areas as competition for
the acquisition of properties continued to intensify.
Impacted by subprime loan and other issues, however,signs began to emerge of an investment slowdown by
certain funds and institutional investors from the second
half of 2007. While investment needs for prime properties
are expected to remain high, we recognize the growing
uncertainty that surrounds the future of the real estate
investment market and the need to pay close attention to
ongoing trends.
Under these circumstances, the Mitsubishi EstateGroup will endeavor to respond appropriately to changes
in its operating and market environments as it strives toenhance management efficiency, earnings power andcorporate value.

The New Medium-Term
Management Plan “Action 2010”
The previous Medium-Term Management Plan, which
covered the period from April 1, 2005 to March 31, 2008,
had as its basic objectives the cultivation of capabilities
for real estate value creation with “development” at theheart of business operations, and securing a leading
position (building a foundation for the future) in theindustry as a real estate company for the new era.
Mitsubishi Estate has taken steps to build a foundation
for future medium- to long-term growth by reinforcing, inparticular, its development, real estate services andproposal-based marketing capabilities. Building on thisfoundation, and to position the Group for its next leap
forward, Mitsubishi Estate formulated “Action 2010,” its
New Medium-Term Management Plan, covering thethree-year period from April 1, 2008 to March 31, 2011.
In formulating the plan, Mitsubishi Estate took into
consideration the following four trends in its operating
environment.
• Globalization:

Globalization of real estate
investors (funds), users andcompetition• Securitization of Growth in asset management
real estate:needs such as pensions,

government funds, etc., anddiversification of real estate players• Acceleration of
the pace of
informatization:

Due to IT innovations,accelerating speed and greater
degree of change in markets, etc.

• Harmonious
environmental
co-existence:

Increasing global awareness ofthe need to tackle
environmental problems

Building on the aforementioned results achieved
under the previous medium-term management plan,and in light of its stance toward the Mitsubishi Estate
corporate brand, as well as changes in its businessenvironment, the Mitsubishi Estate Group is aggressively
promoting its action plan as it strides toward the following
future vision.
Mitsubishi Estate’s Future Vision
under its New Medium-Term Management Plan

To become “a global real estate solutions
provider — development as a core driver”

4

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

5

In its efforts to establish individual action themes aimed
at achieving its future vision, Mitsubishi Estate hasclassified its business activities into four core domains
taking into consideration the attributes and environmentof each business.

1st

Domain

2nd

Domain

3rd

Domain

4th

DomainReal Estate
Holding

This domain obtains
rental revenues (incomegain) from real estate

Real Estate
Development
and Investment

This domain obtains
capital gains from realestateReal Estate
Investment
Management

This domain provides
management services toinvestors and obtains a
fee income

Real Estate
Services

This domain provides
fee-based services tocustomers involved inreal estate

Through to the present day, Mitsubishi Estate hascontinued to focus its business presence andmanagement resources on the Real Estate Holding (1stDomain) and the Real Estate Development andInvestment (2nd Domain). In light of recent customer andmarket structural changes surrounding the Mitsubishi
Estate Group, it has sought to increase the emphasis
placed on the Real Estate Investment Management (3rd
Domain) and the Real Estate Services (4th Domain) andeach domain’s involvement in future Mitsubishi Estatevisions from both the medium- and long-term
perspectives.

Practical Action Items for EachBusiness Domain
1st Domain: The Real Estate Holding
Maximize Asset Value Held in Marunouchi andOther Locations
Reinforce asset management (AM) capabilities andimprove cash flow gained from assets, promote highinvestment efficiency redevelopment and maximize thevalue of assets held, especially those in Marunouchi.
As a part of the aforementioned activities,
organizationally differentiate property management (PM)and leasing functions from the AM function, further
reinforcing capabilities in each.

6

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

2nd Domain: The Real Estate Development andInvestment
Further Reinforce Development andRisk Management Capabilities
Secure and hold an advantage in the diversity ofdevelopment offerings, including type, means andduration, and invest broadly in the development
segment.
While reinforcing development capabilities, accurately assess the development investment fund portfolio
and develop risk management capabilities.
Promote collaboration with TOWA REAL ESTATEDEVELOPMENT CO., LTD. and improve development
capabilities as a group.
3 rd Domain: The Real Estate Investment
Management
Build a Global Platform
Play a leading role in promoting the flow of funds to thereal estate sector and securing a position for the realestate category within fund management activities.
In identifying opportunities for the allocation of funds
to the real estate sector, build a variety of networks thatcan be deployed in major cities overseas, and build aglobal real estate investment management platform.
4th Domain: The Real Estate Services
Aim to be a Leading Service Provider thatContributes to Advancing Development
Capabilities
Leverage a diverse range of real estate offerings,
including brokerage and advisory services, secure a
position as the “best partner” and “best player” in thefield of providing services to corporations through astronger capacity to provide diverse solutions forcorporate real estate.
As a source of competitive strength, improve theability to provide real estate services, including PM,
leasing, design and administration, in each of the realestate holding, development and investment andinvestment management segments.

Action Items for Strengthening Domain/
Cross-Sectional CompetitivenessStrengthen Each Domain, Leveraging
Development Capabilities
Affirm development capabilities as the source ofcompetitive strength for all domains and seek further
reinforcement. At the same time, have the Real Estate
Development and Investment domain, which has gained
strength as the core of development capabilities, help
other domains to grow, and promote the creation of amechanism for producing synergies in investment
management, real estate services, and so forth.
Further Develop Proposal-Based Marketing
Focus on medium- to long-term “Customer Value,” andreaffirm the significance of proposal-based marketing,which seeks commercialization by continually promoting
solutions to customers, and, as an advantage unique to
Mitsubishi Estate, further strengthen this marketing
capability.

Management Infrastructure Action Items
Reinforcing Management, People andOrganization Infrastructure
Mitsubishi Estate is taking steps to disseminate
management policy throughout the Company, foster a
corporate culture that promotes a spirit of taking onchallenges, positioning “globalization of management
and personnel” as its basic policy for infrastructuredevelopment and promoting greater management“visibility.” Moreover, in each expanding, diversifying andincreasingly advancing Group segment, Mitsubishi
Estate is working to reinforce and raise awareness of thecorporate governance system, including risk management, compliance and internal controls.
Active Measures toward Harmonious
Environmental Co-Existence
Mitsubishi Estate is formulating a “Long-Term
Environmental Vision” to proactively work towardharmonious environmental co-existence and is further
clarifying its stance of actively contributing to society
with the view of reducing its environmental impact. In
order to realize this “Long-Term Environmental Vision,”
the Group will formulate and implement an action plan.

Globalize Each Domain
While seeking to continually increase the value ofoverseas assets held, position development andinvestment, investment management and real estateservices as growth fields, and over the medium to longterm, try to gain 20% profit growth overseas while
promoting globalization in phases.

Consistent with its previous medium-term management
plan, Mitsubishi Estate will continue to enhance corporate
value by increasing cash flows, taking into consideration
the optimal balance with efforts to secure a soundfinancial position. From a quantitative perspective, theGroup has identified the following key management
indicators and targets to be achieved by the final year of“Action 2010.”

Management Indicators and Targets(Fiscal year ending March 31, 2011)

EBITDA*1(Earnings before interest,
taxes, depreciation andamortization):

EBITDA*1/
Total assets

Net interestbearing debt/
EBITDA multiple*2¥300.0 billion(Actual for the fiscal year ended
March 31, 2008: ¥245.9 billion*3 )Over 6.5%(Actual for the fiscal year ended
March 31, 2008: 6.3%)

Under 6 times(Actual for the fiscal year ended
March 31, 2008: 5.1 times*4

Underlying Numerical Assumptions(Actuals for fiscal year ended March 31, 2008)

Revenue fromoperations

Operating income

Ordinary income¥1,220.0 billion(¥787.6 billion)¥235.0 billion(¥177.9 billion)¥200.0 billion(¥162.0 billion)

Notes:
1. EBITDA = operating income + interest and dividend income +equity in earnings (losses) of unconsolidated subsidiaries andaffiliates + depreciation and amortization
2. Net interest-bearing debt = Interest-bearing debt – Cash and cash
equivalents
3. In the fiscal year ended March 31, 2008, Mitsubishi Estate
surpassed its previous medium-term management plan (April 1,2005 to March 31, 2008) EBITDA target of ¥200.0 billion
4. Details of companies newly included in Mitsubishi Estate s scope of
consolidation as a consolidated subsidiary as of March 31, 2008
have been included in the consolidated balance sheet as of the endof the fiscal year under review. From a statement of income
perspective, details of newly consolidated subsidiaries will be
included from the fiscal year ending March 31, 2009. Accordingly,
for net interest-bearing debt/EBITDA multiple calculation purposes,interest-bearing debt of newly consolidated subsidiaries has been
excluded. Furthermore, excluding the impact of anonymous
partnership consolidation not included as an underlying assumption
at the time the previous medium-term management plan wasformulated, the net interest-bearing debt/EBITDA multiple for the
fiscal year ended March 31, 2008 was approximately 4.4 times.
This figure falls within the management target of under five times
for the same fiscal year outlined in the previous medium-term
management plan.

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 20087

Special Feature

The Marunouchi Redevelopment Reflects

the New Face of Tokyo
More than 100 Years of Marunouchi Development
Our Goal—An Attractive and Vibrant City Center RecognizedWorldwide as the Leading Hub of Dynamic Interaction

1 8 9 0〜

Babasaki Dori in the “London
Block,” circa 1907

Marunouchi’s Naka Dori after
completion of remodeling in 1967

1 9 9 8〜2 0 0 7

In 1890, Mitsubishi Goshi Kaisha received a request from the government to purchase the
Marunouchi site, which had been used exclusively as a residential area for feudal lords
during the Edo Period. Marunochi’s history as an international business center began withthe unveiling of Mitsubishi Ichigokan in 1894, followed by the construction of another 13 threestory, red-brick office buildings lining both sides of Babasaki Dori for about 100 meters.
Because of its foreign appearance, the area was nicknamed the “London Block.”
Thereafter, the opening of Tokyo Station in 1914 transformed Marunochi into an importantcenter of communications and transportation, and buildings were constructed along Gyoko
Dori facing the Imperial Palace. Large modern American-style buildings appeared, reaching ahigh point in 1923 with the construction of the Marunouchi Building. Because of its functional
street layout, the area became informally known as the “New York Block.”
The Marunouchi Building in particular had a major effect in solidifying the area’s reputation
as a business center, not only because of its scale and adoption of new construction methods,
but also because it introduced a shopping area where visitors could interact freely—arevolutionary “open-style” office building concept in Japan at that time.
In line with rapid economic growth during the Showa era, the area was comprehensively
redeveloped into the modern business center that it is today. As a pioneer in urban development,
Mitsubishi Estate will continue forging ahead with forward-looking developments, aiming tocreate “An Attractive and Vibrant City Center Recognized Worldwide as the Leading Hub of
Dynamic Interaction” through the Marunouchi Redevelopment, while capturing the vision ofeach generation in the Company’s continuous evolution.

The Marunouchi Redevelopment

T
Marunouchi before the
Redevelopment Project began
Marunouchi is an international business center that lies between Tokyo Station and the Imperial Palace.
The area’s 120 hectares accommodate approximately 100 buildings, of which Mitsubishi Estate owns and manages
roughly 30%. With approximately 4,000 companies located in the area employing some 240,000 office workers,
Marunouchi is also home to nearly 10% of the companies listed on the First Section of the Tokyo Stock Exchange.

he currently underway Marunouchi Redevelopment commenced in 1998. During thefirst 10-year stage, Mitsubishi Estate worked to transform Marunouchi from a
specialized business district to a more diversified area by renovating buildings primarily
in front of Tokyo Station and reconstructing six buildings.
At the start of the Marunouchi Redevelopment, we recognized that on top of the area’s
excellent transportation access, its main strength was the concentration of people andcommerce. On this basis, and in looking to capitalize on that strength, we continue to further
enhance Marunouchi’s value.
Beyond the people and established business exchanges already in the area, we are
creating a place that attracts visitors and provides opportunities for face-to-face businessencounters, so that by encouraging new business and interactions, Marunouchi becomes anarea that generates value.

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

9

Special Feature: The Marunouchi Redevelopment Reflects the New Face of Tokyo

The First Stage
1 Marunouchi Building

T h e M a r u n o u c h i R e d eve l o p m e n t

Completed in August 2002

The Second Stage
2 The Industry Club ofJapan and Mitsubishi UFJ
Trust and Banking Building

3 Marunouchi
Kitaguchi Building

4 Tokyo Building

5 Shin-Marunouchi Building

6 The Peninsula Tokyo

1 Marunouchi Park Building

Completed in October 2005

Completed in April 2007

Completed in May 2007
Opened in September 2007

Plans are for construction to
be completed in April 2009

(Marunouchi OAZO)
Completed in August 2004

Completed in March 2003

The first stage of the Marunouchi Redevelopment Project, which
encompassed redevelopment of the area in front of Tokyo Stationand the upgrade of Naka Dori, has created a lively and bustling area.
The second stage of redevelopment aims to further broaden anddeepen the project’s scope, extending this vibrancy over an entire
district encompassing Otemachi, Marunouchi and Yurakucho.

〈 Ma r unouchi Map 〉
Buildings Owned by Mitsubishi EstateN

1

1. Hibiya Kokusai
		 Building
2. Yurakucho Denki
		 Building
3. Yurakucho Building
4. Shin-Yurakucho
		 Building
5. Kokusai Building
6. Shin-Kokusai Building
7. Shin-Nisseki Building
8. Fuji Building
9. Shin-Tokyo Building
10. Kishimoto Building
11. Marunouchi
		 Naka Dori Building
12. The Marunouchi		 Nichome Building
13. Mitsubishi Building
14. Tokyo Ginko
		 Kyokai Building

Imperial Palace

Hibiya Park

22

iya

Sta

tion

Harumi Dori

Hib

,C

hiy
oda

Lin

e

21

Marunouchi Naka Dori

11

14

20

4

3

6

9

1

13

7
Yurakucho Station, Yurakucho Line

Yu
ra

ku

ch

tat
ion

Tokyo Central
Post Office

Tokyo International Forum

42( Scheduled for completionin March 2009 )15

21. The Bank of		 Tokyo-Mitsubishi
		 UFJ Otemachi
		 Building (Owned by		 a special-purpose
		 company)

22. Resona Maruha
		 Building (Owned by		 a special-purpose
		 company)

First Stage (1998-2007)

Marunouchi
South Exit

Marunouchi
Central Exit

Marunouchi
North Exit

33

2. The Industry Club of Japan and		 Mitsubishi UFJ Trust and Banking Building
3. Marunouchi Kitaguchi Building		 (Marunouchi OAZO )Marunouchi OAZOThe
Marunouchi
HotelTokyo Station

1. Marunouchi Building

Otemachi Station,
Marunouchi Line

JR Yokosuka Line
Tokyo Station, JR Sobu Line

4. Tokyo Building

16

5. Shin-Marunouchi Building
6. The Peninsula Tokyo

Second Stage (2008-2017)

19
17

18

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

Otemachi Station,
Hanzomon Line		 purpose company)

2

Otemachi Station, Tozai Line

Tokyo Station, JR Keiyo LineYURAKUCHO ITOCiA(The Yurakucho
Ekimae Building)

5

1Tokyo Station, Marunouchi LineoS

The Tokyo
Kotsu Kaikan
Building

10

The Otemachi
1-chome Project122

Ginza Station,
Marunouchi Line

Otemachi Station,
Chiyoda Line
Eitai Dori

8

Nijubashimae Station,
Chiyoda Line
Gyoko DoriHibiya Station,
Hibiya Line5

10Babasaki Dori

6

Otemachi Station,
Toei Mita Line

Hibiya DoriHibiya Station, Toei Mita Line

15. Otemachi Building
16. Shin-Otemachi
		 Building
17. Nippon Building
18. Nippon Steel		 Building
19. JFE Shoji Building
20. Mizuho Corporate
		 Bank Ltd.Head
		 Office Building
		 (Owned by a special-

1. Marunouchi Park Building and Mitsubishi
		 Ichigokan Building		 (Plans are for construction to be completed in April 2009)
2. The Marunouchi 1-4 Project (tentative name)		 encompasses plans to reconstruct the Togin and		 other buildings.
		 (Plans are for construction to be completed in FY2011)
3. Mitsubishi Soken Building		 (Plans are for construction to be completed in 2012)

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 200811

Special Feature: The Marunouchi Redevelopment Reflects the New Face of Tokyo

1 9 9 8 〜2 0 0 7

The First Stage: Creating a New Vibrancy in MarunouchiR

During the “Golden Week” holiday period(April 27, 2008 to May 6, 2008), some
1,080,000 people participated in events held
throughout Marunouchi

econstructed in August 2002, the Marunouchi Building (four floors below ground and
37 floors above ground) is a crossroad of communication that symbolizes the new
Marunouchi era. Comprised of a 26-floor office zone and a commercial zone featuring
140 restaurants and shops selling domestic and international fashion as well as general goods,
the Marunouchi Building brought back to life the spirit of Marunouchi’s original landmark.
Completed in April 2007, the Shin-Marunouchi Building (four floors below ground and 38
floors above ground) stands together with the Marunouchi Building to form the gateway toJapan from Tokyo Station. The 27 floors of offices boast impressive quality, while the eightfloor commercial zone comprises about 150 individual businesses offering cuisine, fashionand various goods, providing a charming setting for adults seeking entertainment.
The Shin-Marunouchi Building also supports the development of forward-looking initiatives
by housing such facilities as the “Japan Incubation Village,” a business creation center wherebusiness groups and venture support offices meet, and Ecozzeria, a place for designing
strategies for the environment.
In addition to these activities, by promoting concerts, exhibitions, and events related to theenvironment and health at various spots within Marunouchi, we have transformed the area into
a 24-hour, 365-day hub of constant activity and excitement. The upgrade of the main avenue,
Marunouchi Naka Dori, has connected the area in front of Tokyo Station with adjoining
Yurakucho, Ginza, and Otemachi.

The Shin-Marunouchi Building has attracted
approximately 25 million visitors in the 12months since its opening

2 0 0 8〜

“Broader” and “Deeper”—Progressing to the Second StageC

An image of the museum café inthe Mitsubishi Ichigokan Museum of Art
scheduled to open in April 2010.

12

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

ommenced in 2008, the second stage of the Marunouchi Redevelopment aims tofurther broaden and deepen the project’s scope, extending the vibrancy of the areain front of Tokyo Station created through the first stage of development over an entire
district encompassing Otemachi, Marunouchi and Yurakucho.
The second stage calls for the reconstruction of seven or eight buildings during a ten-year
period, including the rebuilding of the Marunouchi Park Building, scheduled for completion in
April 2009. This project also includes the restoration of Mitsubishi Ichigokan, representing a
return to Mitsubishi Estate’s very beginnings in its long history of creating communities. Plans
are in place for the Mitsubishi Ichigokan Museum of Art to open in April 2010, serving as a corefacility for culture and the arts.
The second project of the second stage encompasses the reconstruction and developmentof the block containing the Togin Building and its neighboring Sumitomo Trust and Banking
Co., Ltd. Tokyo Building and Mitsubishi UFJ Trust and Banking Corporation Tokyo Building.
Known as the “Marunouchi 1–4 Plan” (tentative name), the project is scheduled for completionin the fiscal year ending March 31, 2012. In the third project, Mitsubishi Estate will execute thereconstruction phase of the Mitsubishi Soken Building. This third project forms a part of “theOtemachi Linked Urban Redevelopment Project” and will help to accelerate the developmentof the entire Marunouchi area.
In the second stage of the Marunouchi Redevelopment, Mitsubishi Estate will elevate
Marunouchi’s attractiveness in terms of urban tourism by enhancing the area’s cultural aspects,
further expanding the diversity of urban functions, and strengthening the various features thatmake it an international business center. In order to fuse Otemachi, Marunouchi and Yurakucho
into a single community, we will also promote harmony with the environment and stellar
hospitality in our focus on “Creating a Sustainable Community” that progresses toward
growth.

事
業 概 要 Information
Business
Business Structure of the Mitsubishi Estate Group
BUSINESS SEGMENT

Building Business

Real Estate Consulting & Solution Departments

Urban Development &Investment Management

Residential Business

Mitsubishi
Estate Co., Ltd.

International Business

Custom-Built Housing

Leveraging the Resources of the Entire Group to Expand Business Opportunities in
Proposal-Based Marketing

Architectural Design &Engineering

Standing at the heart of Mitsubishi Estate’s strategic marketing structure, the Real Estate Consulting & Solution Departments
work to foster deeper ties with clients through proposal-based marketing, which is conducted across the Group as a whole.
Making full use of their accumulated real estate development, planning and management know-how, both departments areactive in efforts to realize maximum value for their clients.

Hotel Business

Real Estate Services

Business Segment
Building BusinessResidential Business

Urban Development &Investment Management

The Mitsubishi Estate GroupInternational BusinessGroup Framework• Property Management andOffice Leasing Group• Commercial Asset Management
and Development Office• Retail Property Group• Residential Development Group• Commercial Property Development
and Investment Group• Investment Management Group• International Business Group

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

Residential Business segment revenues arederived from the construction and sale ofcondominiums, single-unit homes, and residential
and commercial lots. This segment is also engaged
in the management of condominiums and homes,
and leisure-related businesses.
Urban Development & Investment Management
segment revenues are derived from thedevelopment of income-generating real estate forinvestment purposes, asset management, andrelated activities.

International Business segment revenues arederived from the development and leasing ofbuildings conducted through U.S.-based
Rockefeller Group, Inc.

Consolidated
Sales Breakdown¥380.5billionbillionArchitectural Design &Engineering

Custom-Built Housing• Architectural Design &Engineering Group• Custom-Built Housing Group• Hotel Business Group

Architectural Design & Engineering segment
revenues are derived from the design and project
supervision of construction and civil engineering
projects and related activities mainly throughMitsubishi Jisho Sekkei Inc.

Custom-Built Housing segment revenues arederived from contract construction of custom-built
housing and related activities through Mitsubishi
Estate Home Co., Ltd.

• Real Estate Services Group¥29.4
billion¥71.9
billion26.3 %

Conduct
researchandanalysisAnalysis and review

8.9 %

2.3 %

¥31.2

3.8 %

¥33.1

4.1%

¥27.9

3.4 %

¥4.9

0.6 %

billionbillion

Real estate investmentrelated business

Real estate liquidity

Building operational
management

Comprehensive building
analysis

Construction• Real estate-backed 	• Detached-housing, 	• Development method • Real estate investment 	 financing support• Operational 		• Earthquake resistance 	 leased residence, 	
proposals
strategy formulation 	management plan 	analysis• Securitizationcompany dormitory 	analysis and proposals • Facility management• Business plan support
support• Specified real estate 	and housing 		• Long-term mainte• Project management• Market research and 	• Energy conservation
joint businessconstruction
nance plan consulting• Effective application
analysisand IT-oriented• Sales and leaseback• Residence and office 	and collaboration• Due diligence• Real estate brokerage 	 • Building, retail facility, 	 construction andbuilding renovationand hotel operational 	 facilities
business (equivalent• Acquisition support
businessmanagement 	exchange, commission • Property management• Interior and exterior 	
consignment
business, term• Asset management
renovation• Sub-leasingleasehold interest• Barrier-free facility 	• Tenant marketing	 method)
construction• Provisional use• Aging-prevention 	• Reconstruction
construction andfacilities• Conversion

Hotel Business segment revenues are derived fromthe operation of Royal Park Hotels.

Real Estate Services segment revenues are derived
from real estate brokerage and related services
through Mitsubishi Real Estate Services Co., Ltd.

REALESTATE-RELATEDPLANNING,PROPOSALS,AND SERVICES

Considerinitiatives
andproposals

Implementation

3.6 %

¥19.0

Other segment revenues are derived from related
operatoins other than the aforementioned
billionMITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

Determinecurrent
statusS O L U T I O N

billion

Other

Real estate
investment

Proposal determination

billion

Real Estate Services

Funds
procurement

C O N S U L T I N G

CUSTOMERS¥213.9Risk
management

46.9 %

Real estatedevelopment business

Hotel Business14

Maximize asset
efficiency

A Wide Range of Solutions Covering
Individual Real Estate Needs to
Corporate Real Estate Strategic
SupportThe structure of the Real Estate Consulting &Solution Departments are independent from
Mitsubishi Estate’s eight business segments(comprised of the Building Business,
Residential Business, Urban Development &Investment Management, International
Business, Architectural Design & Engineering,

Custom-Built Housing, Hotel Business, andReal Estate Services.)
In an effort to consistently provide optimal
consultation and solutions services that
address client’s real estate needs such as
effective methods for property utilization andacquisition, we create business proposals thatdraw on the resources of the entire Group.
The Real Estate Consulting & Solution
Departments offer consultation for individual
properties and multiple properties held and

Design and supervision

Lifestyle services• Environmental 	• Complex housing, 	assessment andcompany dormitory
researchand housing operation 	• Urban development 	and management
planning-related, PFI 	 • Community residence 	consulting
operation for the• Environmental and civil 	 elderly
engineering-related 	• Complex housing
consulting, design and 	 and other Internet
supervisionconnection services• Construction
management• Design and supervisionof various buildings
and structures• Interior, exterior, andother design andsupervisionleased by the corporate sector. We analyze
matters taking into consideration thecomprehensive features of real estate andprovide solutions that match the financial andmanagement strategies of individualcompanies. In this manner, Mitsubishi Estate
endeavors to realize the maximum value ofcorporate real estate (CRE).

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

15

BUSINESS SEGMENT

Building Business
Enhancing Urban Functions
from an Area Management
Perspective
The Building Business primarily undertakes the development, leasing andproperty management of office buildings in Japan’s major cities while also
handling management of large-scale
shopping centers, operation of parking
lots and district operation of heating
and cooling services throughout Japan,
thereby enhancing urban functions froman area management perspective.

2

3

4

5

Revenue from operations (left scale)Operating income (right scale)

100,214353,956

300,000

114,490(Millions of yen)

400,000

380,562(Millions of yen)

120,000

90,000200,000

60,000100,000

30,0000

2007/3

2008/30

1Retail Property Group
1 The Marunouchi Park Building
As part of the first project of the second stage ofthe Marunouchi Redevelopment, the Marunouchi
Park Building is currently under construction withcompletion targeted by April 2009.

2 Mitsubishi Ichigokan
A red-brick building slated to be completely
restored and opened as a museum in April
2010, Mitsubishi Ichigokan will function as a
key cultural and arts complex for expanding
the area’s cultural horizons.

16

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

Commencement of the Second Stageof the Marunouchi Redevelopment
Mitsubishi Estate is acting beyond the role ofdeveloper to that of a producer, as it maximizes the full potential of Marunouchi anddelivers new functions that meet the businessneeds of today and tomorrow. In 1998, we
commenced the first stage of the Marunouchi
Redevelopment, a 10-year program encompassing the upgrade, reconstruction andrenovation of much of the Marunouchi
district. Beginning with the Marunouchi
Building in August 2002, six new buildings
have been completed, highlighted by the
grand opening of the Shin-Marunouchi
Building in April 2007. With the completion of
The Peninsula Tokyo in September 2007, thefirst stage of the Marunouchi Redevelopment
came to a close.
From 2008, and over the next 10 years,
we will push ahead with the second stage.
Designed to reorganize the area as one
comprehensive city block, the first project of
the second stage consists of the constructionof the Marunouchi Park Building and therestoration of Mitsubishi Ichigokan, along withthe simultaneous redevelopment of the
Mitsubishi Shoji Building, the Furukawa
Building and the Marunouchi Yaesu Building.
Adding to these initiatives, Mitsubishi Estate
announced the launch of second project of
the second stage, the “Marunouchi 1– 4 Plan”(tentative name), encompassing therebuilding of the Togin Building, theSumitomo Trust and Banking Co., Ltd. Tokyo
Building, and the Mitsubishi UFJ Trust andBanking Corporation Tokyo Building.
Advancing onward from this second stage,
Mitsubishi Estate is putting in place the third
project of the second stage—rebuilding the
Mitsubishi Soken Building, which will link the
Marunouchi Redevelopment to the Otemachi
district.
Based on the achievements of the
Marunouchi Redevelopment to date, thesecond stage will encompass broader andmore comprehensive plans to further
rejuvenate the Otemachi, Marunouchi and
Yurakucho districts, an area of approximately
120 hectares.

Active Expansion of the Retail
Property Business throughout Japan
In its retail property business, Mitsubishi
Estate is pushing forward with thedevelopment of various types of retailproperties that match the unique features ofeach location and area. The Mitsubishi EstateGroup continuously engages in facility
planning, development, tenant leasing andmanagement through its comprehensive
development structure.

A Fresh Breeze and Joy-for People
and Cities
Mitsubishi Estate is evolving its retail property
business to provide exciting new places
where people of all walks of life can gather in
comfort. Since the 1989 opening of the Tenjin
MM Building (IMS) in Fukuoka Prefecture,retail property operations have become afull-blown business with numerous projects
completed, including the Landmark Tower,
Aqua City Odaiba, the Marunouchi Building,and several “Premium Outlets”.

In its efforts to create a more appealing city,
Mitsubishi Estate has continued to raise thevalue of retail facilities in the Marunouchi area
including the Shin-Marunouchi Building in 2007.
Together with an emphasis on infrastructuredevelopment, the Company is aggressively
carrying out promotional activities. From an area
management perspective, Mitsubishi Estate is
focusing on operations that realize intangible
benefits.
Outside the Marunouchi area, we are
pursuing several new retail property
developments in autumn 2008, including theMinami-sunamachi Shopping Center“SUNAMO” in Tokyo’s Koto Ward, Izumi Park
Town Tapio in Sendai City, Miyagi Prefecture,and in partnership with Chelsea Japan Co., Ltd.,
Sendai Premium Outlet, also located in Sendai
City. Mitsubishi Estate is also promoting various
projects around the country, such as the
Sapporo Maruyama Park Shopping Center
Project (tentative name) in Sapporo City,
Hokkaido, and the Ami Premium Outlet(tentative name) in the town of Ami, Ibaraki
Prefecture.

3 Izumi Park Town Tapio
Positioned at the heart of Izumi Park Town, a largescale development that commenced in 1969. Plans
are in place to open Izumi Park Town Tapio in October 2008. This lifestyle-proposal retail facility is located adjacent to the Sendai-Izumi Premium Outlet, which is scheduled to open at the same time.

4 The Shin-Marunouchi Building
From its grand opening in April 2007, the ShinMarunouchi Building has continued to provide an“enchanting time for adults.” The retail portion ofthis building comprises one below-ground andseven above-ground floors, housing 153 shopsthat exude individuality and hospitality. With the
exception of a few stores, “Marunouchi House”
on the seventh floor is open to 4:00 am. Together
with the Marunouchi Building and Marunouchi
Naka Dori, this addition has brought a new senseof glamour to the Marunouchi area.

5 Minami-sunamachi
Shopping Center “SUNAMO”
Located only five minutes on foot from Minamisuna Station on the Tokyo Metro Tozai Line, thiscenter will open in the autumn of 2008. As a lifestyle center in the heart of a residential district,the facility will stand out as the top shopping center in the area, offering high quality and comfort.

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

17

BUSINESS SEGMENT

Residential
Business
Providing High-Quality
Homes that Fulfill Market
Needs
Through the Residential Businesssegment, we aim to provide ideal living
environments in concert with healthy
and fulfilling lifestyles by developing
and marketing condominiums, singleunit homes and residential land, as
well as engaging in businesses suchas condominium management andconsulting services for the optimal useof real estate. At the same time, Mitsubishi Estate operates and manages
golf courses.
3

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

(Millions of yen)

213,903

24,32623,979150,000

231,514200,000

24,00018,000100,000

12,00050,0006,000

02007/3

2008/30

1 Park House Shinmachi Ouga
Located in Shinmachi, Setagaya Ward, Tokyo,
this 17-unit condominium faces a line of cherrytrees at Nomikawa-Shinsui Park, and is surrounded by major avenues on its three other sides. The
building features a courtyard, and all units havebeen designed to ensure sunlight and privacy,
with abundant floor space from 90 to 120m2.

2 Nogizaka Park House
This 42-unit condominium is located in Akasaka,
Minato Ward, Tokyo, next to abundant green
space surrounding the Nogi Shrine, and only twominutes’ walk from Nogizaka Station on the Tokyo Metro subway. With independently secured
single and double units on the first floor, and its
anti-seismically reinforced building structure, theNogizaka Park House offers peace of mind in theheart of the city.

18

130,000250,000

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

42

Growth in the Condominium BusinessSpurred by Prime Locations andMarket-Oriented Product Planning
In its condominium business, Mitsubishi
Estate fulfills market needs through location
selection based on solid market research.
The Company continues to provide its “ParkHouse” condominiums mainly in the Tokyo
Metropolitan area, where demand is steady.
Boasting excellent product planningcapabilities based on the skillful application ofa site’s potential, Mitsubishi Estate aims forcompetitive advantage by focusing on
properties in popular urban areas that offer
superior and convenient location, large-scale
properties with comprehensive communal
facilities built with the environment in mind,
high-rise condominiums that provide
spectacular views, and collaboration withleading designers and firms from a variety ofindustries.
Mitsubishi Estate developed and ismarketing its STYLE HOUSE series of fullorder-made condominiums, in which thelayouts of each unit are freely designed by theowners and built to match their lifestyles.
Fulfilling the diversifying needs of the market,
six such condominiums have already been
built and growth is proceeding steadily. In
addition, Mitsubishi Estate is reinforcing its
focus on quality assurance services. Utilizing
its proprietary disclosure system, it provides
an easy-to-understand written record ofproperty features, facilities and quality
evaluation at each stage of design,
construction and completion. A maintenancereport is regularly provided after individual
property owners take up residence.
In the single-unit home business,
Mitsubishi Estate has created its new“dreams design” brand, with an underlying
theme of “living spaces that reflect
individuality and offer daily comfort.” Under
this brand, Mitsubishi Estate is promoting
residential developments based on a more
distinctive customer-oriented concept.

Newly Established Apartment
Development Department
In its residential leasing business, which sells
properties to prospective institutional
investors, Mitsubishi Estate promotes thedevelopment of its PARK HABIO brandmainly in central Tokyo. Following thecompletion of the first building in the series,
the PARK HABIO KYOBASHI, in September
2004, Mitsubishi Estate has alreadycompleted a further 13 buildings while
engaging in numerous other projects.
Building on this momentum, Mitsubishi Estate
applied the synergistic effects and sharedknow-how of its condominium sales planningto establish the Apartment Development
Department within the Residential
Development Group in April 2008. Looking
ahead, we will continue to offer high-quality
apartments in central Tokyo, while meeting
diverse residential needs and securing stablerevenues.

Opening of the Asakura Golf Club
Mitsubishi Estate is also engaged in a number ofleisure services such as the management of golfcourses, sporting facilities and businesses
associated with increased leisure time and thepromotion of good health. Mitsubishi Estate is anestablished player in the golf course business.
The Company operates an existing portfolio that
includes the Izumi Park Town Golf Club (Sendai
City, Miyagi Prefecture), the Higashi Fuji Country
Club (Oyama-cho, Sunto-gun, Shizuoka Prefecture) and the Fuji International Golf Club
(Oyama-cho, Sunto-gun, Shizuoka Prefecture).
Furthermore, Mitsubishi Estate plans to open the
Asakura Golf Club (Sakura City, Chiba Prefecture) in October 2008 through Sakura Golf
Development Co., Ltd., a development vehicle
established jointly with Tokyu Land Corporation.
Located approximately 60 minutes from central
Tokyo within the Chiba Research Park, thisMitsubishi Estate development boasts convenient transportation access. An 18-hole courseof over 7,000 yards, this project is designed as a
top-level champions’ course capable of hosting
officially sanctioned tournaments.

3 PARK HABIO SUITENGUMAE
Adjacent to the Royal Park Hotel, the PARKHABIO SUITENGUMAE offers all of its 60 highgrade leased apartments the top amenities of thehotel, including a concierge service by Royal Park
staff. Suitengumae Station on the Hanzomon
Subway Line and the Tokyo City Air Terminal are
only two minutes’ walk, providing highly convenient access to both domestic and international
flights.

4 Asakura Golf Club (Clubhouse)
Seemingly afloat in stately elegance, this clubhouse is a representation of a warehouse.
Equipped with a competition room that can hold amaximum of 60 people, Asakura Golf Club extends a heartfelt welcome in a spirit of thoroughmanagement and high hospitality. Combining adriving range that is more than 250 yards longwith an approach shot practice area, Asakura
Golf Club offers a fulfilling club life and high-quality service.

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

19

BUSINESS SEGMENT

Urban Development& Investment
Management
Business
Prioritizing Development
and Management inBusiness Opportunity
Expansion2

In the real estate investment market,
demand is increasing for income-generating real estate. Taking this into
consideration, the Urban Development& Investment Management businesshas positioned the development andmanagement of quality real estate at
the heart of business activities. Goingforward, we are pursuing a two-tiered
business model, promoting development functions in concert with management functions.

3

Revenue from operations (left scale)Operating income (right scale)

29,43016,86320,00010,0000

12,0002008/30

1 Shiodome Building
Completed in December 2007, this was the final
large-scale project within the 31-hectare mixed
commercial zone of the Shiodome Shiosite redevelopment project. Only three minutes’ walk fromthe JR Hamamatsucho Station and Daimon Subway Station, the building’s popular HAMASITE
Gurume area on the first and second floors at the
Shiodome South Entrance features some 20
shops and restaurants.

2 Minamimachi-Dori Center BuildingThis building is in a prime location only six-minutes walking distance from JR Sendai Station.
Designed with tradition in mind, the project consists of a building complex housing offices (including the Sendai branch of Norinchukin) andretail shops that resemble older, more traditionalbuildings with pillars and posts, but are furnishedwith the latest equipment. Construction wascompleted in March 2007.

20

4

5

18,0006,000

2007/3

1(Millions of yen)
24,00023,52030,00038,216(Millions of yen)
40,000

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

Actively Promoting the Development
Business by Strengthening Asset
Solutions Capabilities
In the context of the development function,
we are fostering the development business of
income-generating real estate by optimizing
the timing of sales of prime investment
products after construction completion andthe commencement of operations.
In 2007, construction of the Akihabara
Center Place Building in Kanda Aioicho inTokyo’s Chiyoda Ward was completed in
April, followed by the Shiba-Daimon Front
Building in Shibakoen in Tokyo’s Minato Wardin October, and the Shiodome Building in
Kaigan, also in Minato Ward, in December.
Mitsubishi Estate is also active in a number ofdevelopment projects in Tokyo, including theBelgian Embassy Redevelopment Project(tentative name; private section), and the
Toyosu 3–1 City Block Building Project(tentative name). Ongoing projects in other
cities are the Higashi-Nibancho Square in
Sendai City, the Yodoya-Bashi Square in

Osaka City, and the Hiroshima-shi Naka-ku
Teppo-cho Building Project (tentative name).
Mitsubishi Estate does not limit its
activities solely to office buildings; it also
engages in the development of a broad rangeof real estate, including retail properties andserviced apartments, in an effort to address
the diverse needs of the investment market.
Coordinating with the Building Business,
Mitsubishi Estate is involved in a number ofretail facility projects such as the Minamisunamachi Shopping Center “SUNAMO,”(please refer to page 17 for details). In theserviced apartment business, Mitsubishi
Estate collaborates with The Ascott Group
Limited, a Singaporean firm with global
operations, on the Citadines Tokyo Shinjuku
Project (tentative name) and the Citadines
Kyoto Gojo Project (tentative name).
In its development projects, Mitsubishi
Estate is utilizing special-purpose companies
and other vehicles to limit business
investment risk, although direct investment
may be utilized depending on the scale ofdevelopment. Through a thorough decisionmaking process, Mitsubishi Estate endeavors
to choose an optimal investment method foreach development project.
Looking forward, Mitsubishi Estate ismaking every effort to secure more business
opportunities by strengthening asset
solutions capabilities to maximize asset value
for real estate customers.

Providing a Broad Rangeof Specialized Services
for Real Estate Investment
The Mitsubishi Estate Group boasts
considerable expertise in the investment
management function. In specific terms,
Group companies Mitsubishi Jisho Investment
Advisors, Inc. provides comprehensive
services relating to real estate while Japan
Real Estate Asset Management Co., Ltd. has
been entrusted to manage the investments ofJapan Real Estate Investment Corporation, areal estate investment trust in Japan (J-REIT).
Business is steadily growing at Mitsubishi

Jisho Investment Advisors, which is building a
private fund that invests in real estateincluding retail properties, residential homes
and offices. Continuing to securemanagement opportunities, Mitsubishi Jisho
Investment Advisors aims to acquire new
projects, increase the number of funds it
manages and expand the balance of assets
under management.
Placing equal emphasis on each of thedevelopment and management functions,
Mitsubishi Estate will endeavor to expand
business opportunities through growth in thereal estate investment market and by
responding to socioeconomic needs forurban redevelopment.

3 Yodoya-Bashi Square (Osaka City)
Situated in Osaka’s main business area in a prime
location directly connected to Yodoya-Bashi Station on the Keihan Train Line, the Yodoya-Bashi
Square stands out as an all-purpose office towerthat attracts both offices and shops to its 18
aboveground floors. Construction completion isplanned for August 2009.

4 Belgian Embassy Redevelopment
Project (tentative name; private
section)This project encompasses the development of amulti-leased building (offices and residences) on
the site of the former Belgian Embassy in Nibancho, Chiyoda Ward, Tokyo. Mitsubishi Estate isemploying a design system that integrates thesite and the buildings to harmonize the new embassy building into a single comprehensive site.
Construction completion is planned for July2009.

5 Citadines Tokyo Shinjuku Project(tentative name)
This is Mitsubishi Estate’s third project in its serviced apartments business, which mainly targets
foreign business travelers staying on business forseveral months. The opening of the Citadines Tokyo Shinjuku is planned for February 2009.

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

21

BUSINESS SEGMENT

International
Business
A Globally Growing Real
Estate Leasing andDevelopment BusinessIn the International Business, Mitsubishi Estate operates mainly throughRockefeller Group, Inc. (RGI), whichowns and manages office buildings insuch locations as New York andLondon. The Company is working to
expand its real estate development
business mainly across the UnitedStates and in London. Furthermore,
Mitsubishi Estate is currently looking
to grow its real estate investment management business.

1

4

5

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

(Millions of yen)
30,000150,000

27,54422,005200,000

226,444

250,000

18,00071,92050,0002007/3

3

6

7

6,000

2008/30

1 Central St Giles Redevelopment
Project in London
A joint redevelopment project with Legal & General, a major U.K. life insurance company, thiscomplex comprises 66,000m2 of offices, retailshops and residences. Construction is scheduled
to finish at the end of 2009.

2 Bow Bells House Redevelopment
Project in London
Located in London’s financial district, the Bow
Bells House Redevelopment Project features anoffice building with a total 20,000m2 of officespace. The project was completed in December
2007.

3 River Plate House in London
Acquired in May 2007, this office building comprises 19,000m2 of floor space and is situated in aprime location in the City of London.

222

12,000100,000

0

24,000

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

Advancing the Real Estate
Development Business mainly acrossthe United States and the United
Kingdom
In the United States, Mitsubishi Estates owns
large-scale office buildings—the McGraw-Hill
Building and the Time-Life Building—in New
York City’s Manhattan, and acquired the
Phelps-Dodge Tower office building locatedin Phoenix, Arizona, in March 2008. The
Company is currently undertaking 25
development projects in nine states, ranging
from office condominiums and distribution
facilities to homes and mixed-use complexes.
In addition to expanding its real estatedevelopment business, Mitsubishi Estate
aims to establish a global platform throughgrowing its real estate investment
management business.
Mitsubishi Estate is also aggressively
expanding its development business in the

United Kingdom and London. Completed in
2003, the Paternoster Square
Redevelopment Project was the Company’s
first redevelopment of a mixed-use officecomplex located in the City of London
financial district. On the site, Mitsubishi Estateowns Warwick Court and 10 Paternoster
Square.
Also in the City of London, the Company
completed its second project, the Bow Bells
House Redevelopment Project, in December
2007. A joint project with Mitsubishi
Corporation, it features an office building withapproximately 20,000m2 of office space aswell as retail shops.
In July 2007, we began participating in
the joint Central St Giles Redevelopment
Project with Legal & General, a major U.K. life
insurance company. As our third
redevelopment project in London, located in
the city’s west end, the complex willencompass 66,000m2 of offices, shops andresidences. Construction commenced in
September 2007 and is scheduled forcompletion by the end of 2009.
In addition, in May 2007, Mitsubishi Estate
acquired River Plate House, an office building
situated in a prime location within the City of
London.

4 The McGraw-Hill Buildingin New York City

6 Paternoster Square in London

With 51 floors above ground and five floors below
ground, the McGraw-Hill Building boasts total
floor space of 237,000m2. Located in Manhattan,
New York, this office building was completed in
March 1972. Mitsubishi Estate acquired an interest in the building in April 1990.

Development of this mixed-use office complex
located in the City of London was completed in
May 2003. The Company owns two buildings:
Warwick Court, with floor space of 28,400m2, and10 Paternoster Square, with floor space of
33,600m2.

5 Flushing Commons, New York

7 Phelps-Dodge Tower in Phoenix

The Flushing Commons Project located in
Queens, New York is a multi-function development encompassing residential, retail and officefacilities. The total site area is estimated at
180,000 m2. Construction is scheduled to commence in 2009.

Constructed in 2001 in Phoenix, Arizona, this office building has floor space totaling 38,000m2.
Mitsubishi Estate acquired the Phelps-Dodge
Tower in March 2008.

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

23

BUSINESS SEGMENT

BUSINESS SEGMENT

Architectural
Design &Engineering

Custom-Built
Housing
Building Quality Homes for
Future Generations

Offering Reliability andAdvanced Technological
Know-How Based upon an
Extensive Record of
Performance
At the core of Mitsubishi Estate’s
Architectural Design & Engineeringbusiness are Mitsubishi Jisho Sekkei
Inc. (MJS), a business engaged in thedesign and administration of construction and civil engineering projects,
building renovation work, projects
related to urban and regional development, as well as comprehensive
consulting, and MEC Design International Corporation, which directs
interior design and construction
projects.

1

The Custom-Built Housing businessstrives to provide housing that reduces
environmental impact and meets theneeds of Japan’s aging society, applying superior technical design capabilities to construct homes of the highest
quality. Through Mitsubishi Estate
Home Co., Ltd., our principal vehicle inthese activities, the Mitsubishi EstateGroup undertakes construction contracts for custom-built housing forindividuals as well as developers.

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

2,500

2,324

19,086

17,79016,000

1,181

1,000
500

4,000
0

2007/3

2008/30

1 YURAKUCHO ITOCiAPart of the redevelopment of the area facing Yurakucho Station, a district undergoing revival since
the postwar period, YURAKUCHO ITOCiA wascompleted in October 2007 as an office and retailcomplex.

2 M.M. TOWERS FORESIS
Located in Yokohama’s Minato Mirai 21 district,
M.M. TOWERS FORESIS is a twin-tower condominium housing 1,226 units.

24

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

Efforts toward Strong Architectural
Design & Engineering in Harmony with
the Environment

Heightening Customer Satisfaction
through Design Capabilities andQuality Control

Major projects completed by MJS during the
fiscal year ended March 31, 2008 included theShin-Marunouchi Building, The PeninsulaTokyo, YURAKUCHO ITOCiA, M.M. TOWERS
FORESIS, and Marunouchi Naka Dori Avenue(exterior embellishments). In addition, proposedplans to reconstruct the Tokyo Central Post
Office were accepted. Projects targeted forcompletion in the fiscal year ending March 31,
2009 include the Breeze Tower in Nishi-Umeda
in Osaka, the Keio University Hiyoshi Campus
Complex (tentative name), and the Park House
Tsukuba Kenkyugakuen.
While actively continuing efforts to secureorders in new and refurbished architecturaldesign and engineering projects, MJS isaggressively offering proposals that consider
the environment, taking into consideration theneeds of the day, longer life spans, harmony
with the environment, scenic landscaping,energy efficiency, resource conservation andwaste reduction.

As an interior design specialist, MEC Design
International Corporation was active
throughout the fiscal year ended March 31,
2008. The company completed projects at
the Shin-Marunouchi and other buildings,
designed the interior of common areas while
promoting sales of interior options at the M.M.
TOWERS FORESIS and other facilities andundertook other projects at hospitality
facilities and a large passenger liner. Drawing
on its advanced design capabilities andtechnological strengths, the company has
significantly expanded its business. Looking
forward, MEC Design International
Corporation will aggressively expand its
consulting business and focus efforts in its
interior design supervisory operations.
Furthermore, the company will work towardheightening the level of customer satisfaction
by improving its business processes andimplementing thorough quality control.

31,21634,550

3,000
2,000

10,000

1,000

(616)

20,0002

002007/3

2,000
1,500

12,0008,000

2(Millions of yen)

4,000

(169)

Revenue from operations (left scale)Operating income (right scale)
20,000(Millions of yen)

40,00030,000(Millions of yen)

1

3

2008/3

1 Komazawa Stage 2 Home Gallery
Adding a balcony extension that describes an arc
to the sedate form of its hip roof construction
lends a sophisticated feel to the traditional appearance of the exterior design.

2 3 Komazawa Stage 2 Home
Gallery (interior)
The spaciousness of the airy, vaulted ceilingand the high degree of freedom from utilizing
air-conditioning throughout produces a highquality family lifestyle.

Mitsubishi Estate Home provides its
customers with safe, spacious andcomfortable living environments. Boasting
stringent quality standards, the company
leverages its accumulated technical knowhow and expertise including its two-by-fourconstruction method to ensure maximum
earthquake protection, durability and energy
efficiency. Respecting each customer’s
lifestyle, desires and preferences, we
endeavor to become the partner of first
choice as we build customized “only for you”
living environments.
In light of concerns surrounding Japan’s
low birth rate and aging society, as well as
global environmental issues, Mitsubishi
Estate Home makes efforts to construct
long-lasting homes. Demonstrating thiscommitment, in May 2008, we announced
our 50-year guarantee system for newly
constructed housing, “Long Support 50,” thatoffers a 50-year guarantee on thepermanence of a building’s main structural
framework, which the company constructs
using its advanced Super Two-by-Four
Aerotech method, as well as water resistanceof the roof and outer siding. In addition, thestructural plywood used as main materials toconstruct floors, walls and roofs is madeentirely of domestic lumber, for which
Mitsubishi Estate adheres to standard
specifications for custom-built housing inorder to contribute to domestic forest
conservation.
Along with customized residences forcustomers, Mitsubishi Estate Home is also
active in fostering business opportunities withhousing development companies. Drawing
on its know-how in residential design
accumulated over a number of years, thecompany endeavors to create comfortableliving environments on an individual andneighborhood-wide basis.

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

25

BUSINESS SEGMENT

BUSINESS SEGMENT

Hotel Business

Real Estate
Services

Enhancing Brand Powerand Management

Meticulously Responding tothe Varied Real Estate
Needs of Customers

In the Hotel business, Royal Park
Hotels and Resorts Co., Ltd. integrates
the administration and management ofeach hotel to ensure consistency
throughout the hotel chain, enhance
management efficiency and improve
the level of management. With hotels
in Tokyo, Yokohama, Sendai and otherlocations, the Royal Park hotel chain
comprises a network of six hotels
offering 2,056 guestrooms.

1

The Real Estate Services business has
instituted a system that enables highly
customized responses to individual
customer needs. Handled primarily
through Mitsubishi Real Estate Services Co., Ltd., the goal is to provide
one-stop shopping of high-quality realestate services covering all areas
including real estate brokerage, condominium sales agency and office andresidential property leasing services.
Adding to its ample portfolio of realestate services, the company established the Parking Operations Office inApril 2008. Looking ahead, Mitsubishi
Real Estate Services will continue torespond to a wide range of real estateneeds.

2

Revenue from operations (left scale)Operating income (right scale)

1,200

7,000

400

0

0

2007/3

2008/3

Revenue from operations (left scale)Operating income (right scale)
3(Millions of yen)
30,0001 Royal Park Shiodome Tower
Highly praised as representing a new generationof urban hotels, the Royal Park Shiodome Tower,
located in Shiodome Media City, Tokyo, offers astylish environment and flexible services.

2 Lobby of a Royal Park HotelIn addition to prime locations and a full range offacilities, Royal Park Hotels offer luxurious comfort to guests from around the world through a
dedication to top service.

3 Yokohama Royal Park Hotel(Superior Twin of the Landmark Club)A total renovation program was implemented
from fiscal 2006. The 67th floor was refurbished
as an urban spa area with a highly specialized resort ambiance. The 60th floor was newly launched
as a new concept area.

24,000A New Style of Hotelthat Supports Business
Opened in July 2003 in Shiodome, Tokyo, theRoyal Park Shiodome Tower has set out toachieve a new paradigm in hotel services,
including Japan’s first Mandara Spa forrelaxation, and the use of a timesharing
service where members are able to use
guestrooms on an hourly basis. These uniqueservices have sustained a high rate ofoccupancy. The Mitsubishi Estate Groupplans to use the development andmanagement know-how gained from theRoyal Park Shiodome Tower to create new
business opportunities.

Increasing the Brand Value of Royal
Park Hotels through a Management
Focus on Customer Delight
Based on the “Best for the Guest” philosophyof Royal Park Hotels, we take one stepbeyond customer satisfaction by aiming todelight our guests.
As part of an initiative to enhance thehotel chain, in July 2004 we launched acentral reservation office, a first for a locallyowned hotel chain in Japan. Using thissystem, it is possible to directly makereservations on a Web site for rooms at hotels
in Japan and around the world.
Furthermore, in April 2006, Royal Park
Hotels and Resorts commenced businesscollaboration with THE OKAMI, anorganization of 19 Japanese-style ryokan
hotels that are members of various hotel
associations covering the Izu area. Throughthis collaboration, Royal Park Hotels andResorts provides reservation correspondence
services via the Internet.

18,000(Millions of yen)
8,000

27,941

800

6,400
4,800

4,108

14,000

6,082

33,1631,600

28,851

21,000

2,000

1,362

28,000(Millions of yen)

1,616

35,00033,493(Millions of yen)

12,000

1,600

6,000
0

3,200

2007/3

2008/3

1 Hiroo Garden Forest
Mitsubishi Estate and Mitsui Fudosan ResidentialCo., Ltd. are jointly constructing Hiroo Garden
Forest, a large-scale, 474-unit condominium
complex located in Tokyo’s Shibuya Ward.

2 Parking Ecology Network (PEN)
To contribute to both parking services and theecology, partial proceeds from parking charges
are donated to tree-planting programs.

0

1

Real Estate Brokerage Services
Mitsubishi Real Estate Services engages in awide variety of real estate brokeragebusinesses, ranging from the purchase, saleand leasing of commercial properties such asbuildings and factory sites, and individual
properties such as condominiums, single-unit
homes and residential land, to consulting
services that facilitate the optimal applicationof customers’ real estate. In addition, we
provide support to company management
through Consulting M, a consulting service
that leads in the field of enhancing corporate
value through corporate real estate (CRE)
strategies. Mitsubishi Real Estate Services
also boasts a nationwide network ofbranches and sales offices that areconnected online. Through these means,
Mitsubishi Real Estate Services is consistently
able to provide the most up-to-date realestate information.

Sales Agency Services for Properties
such as Condominiums
In Mitsubishi Estate Services’ sales agency
services, qualified staff, who are well versedin the unique features and characteristics ofindividual properties, as well as real estate
finance, law, taxation and related matters, areon hand to assist customers in the sale ofproperties such as condominiums. Mitsubishi
Real Estate Services also offers specialist
staff to assist customers in peripheral
procedures such as property registration andother administrative matters, as well as
condominium buyers in application
procedures for mortgage loans. Through acomprehensive range of services, Mitsubishi
Real Estate Services provides reliablesupport to customers in their selling activities.
In the area of residential development andsales, the company is on hand to provide
total support to developers. We offer a fullrange of services including site information forpotential condominium development,
inspections and appraisal, market research,
product planning, and advertising andpromotions planning.

Office and Residential Leasing
Services
Mitsubishi Real Estate Services is engaged ina full range of office and residential property
leasing services. The company offers asublease system, under which it leases anentire property from the owner and sublets totenants under a master-lease agreement. It
also provides a property management
system that includes a comprehensive rangeof leasing services. Drawing on the knowhow cultivated through its leasing services,
Mitsubishi Real Estate Services established a
new business, the Parking Operations Office,in April 2008, to support management of thecompany’s parking services. Rounding out its
total support system, the company also
serves investors and asset managers bysatisfying wide-ranging needs in leasing
management through its lease management
support system.

2

26

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 200827

Financial Review

SUMMARY
In the fiscal year ended March 31, 2008, revenue from operations
decreased 16.9% compared with the previous fiscal year. This was
mainly attributable to a drop in the number of condominiums sold in
the Residential Business segment; the sale of large-scale properties
during the fiscal year ended March 31, 2007, resulting in a decline in
the distribution of benefits from an anonymous partnership in the
Urban Development & Investment Management segment; and lower
revenue in the International Business segment following the sale ofa Group real estate brokerage company during the previous fiscal
year. From an earnings perspective, operating income increased
7.1% year on year, the sixth consecutive fiscal year of growth.
Ordinary income improved for the eighth consecutive fiscal year,
climbing 6.8% compared with the previous fiscal year. This wasprimarily attributable to substantial contributions from the sale ofproperties, income generated from newly constructed buildings in
the Marunouchi area, and the revision of rental rates applicable toexisting buildings. Despite these favorable results, net income for the
fiscal year under review declined 11.0% year on year.

revenue in the Real Estate Services segment decreased ¥910

In the Urban Development & Investment Management

million, or 3.2%, to ¥27,941 million.

segment, revenue declined ¥8,785 million, or 23.0%, to ¥29,430
million. Despite contributions from equity and other investments

Revenue from the Other segment increased ¥722 million, orinterest in trust of fixed assets amounting to ¥1,737 million, gain on

following the sale of such properties as Somerset Azabu East,

16.9%, compared with the previous fiscal year to ¥4,982 million.

sales of investment securities of ¥1,697 million, and gain on sales ofa serviced apartment complex, results were impacted by a decreasein the distribution of benefits from an anonymous partnershipfollowing the sale of large-scale properties during the fiscal year
ended March 31, 2007.
As of the end of the previous fiscal year, Mitsubishi Estate’s
consolidated subsidiary Rockefeller Group, Inc. sold its entire equity
investment in Cushman & Wakefield, Inc. As a result, revenue fromoperations in the International Business segment decreased
substantially, falling ¥154,523 million, or 68.2%, year on year to¥71,920 million.
In the Architectural Design & Engineering segment, Mitsubishi
Jisho Sekkei Inc. recorded revenue and earnings in connection with
the Shin-Marunouchi Building and other buildings. In addition, thissegment enjoyed the benefits of an increase in the number ofcompleted projects. As a result, revenue from segment operations
climbed ¥1,295 million, or 7.3%, compared with the previous fiscal

Revenue from Operations
Revenue from operations for the fiscal year under review was¥787,652 million, a decrease of ¥159,988 million, or 16.9%, compared with the previous fiscal year. Details of results and operating
conditions for each business segment are provided as follows.
In the Building Business segment, revenue from operations
increased ¥26,605 million, or 7.5%, compared with the previous
fiscal year to ¥380,562 million. In addition to contributions from theShin-Marunouchi Building, completed in April 2007, and The
Peninsula Tokyo, opened in September 2007, as well as revisions torental rates applicable to existing buildings, this favorable result was
attributable to an increase in repair contract construction revenue.
On a year-on-year basis, revenue in the Residential Businesssegment decreased ¥17,611 million, or 7.6%, to ¥213,903 million,
mainly reflecting a drop in the number of condominiums sold.

year to ¥19,086 million.

Revenue from Operations (Billions of yen)

Net Income

Operating Income(Billions of yen)844.2

On a year-on-year basis, revenue in the Custom-Built Housing
segment declined ¥3,333 million, or 9.6%, to ¥31,216 million. Thiswas mainly attributable to a drop in the number of orders forcustom-built housing and contract work placed with Mitsubishi
Estate Home Co., Ltd.

166.2

787.6

In the Hotel Business segment, results from Royal Park Hotels
and other hotels were robust. This was offset, however, by theabsence of contributions from the Atsugi Royal Park Hotel, which
was sold during the fiscal year ended March 31, 2007. Accounting
for these factors, revenue from segment operations decreased ¥330
million, or 1.0%, year on year to ¥33,163 million.
Owing to a drop in revenue at Mitsubishi Real Estate Services
Co., Ltd., reflecting a decline in the number of home agency sales,losses amounted to ¥8,088 million. Principal components were loss
on valuation of inventories totaling ¥1,458 million, loss on disposalof fixed assets of ¥1,194 million, loss on valuation of investment
securities of ¥2,769 million, and impairment loss amounting to¥1,498 million.

Net Income
Compared with the previous term, income before income taxes andminority interests decreased ¥18,306 million, or 10.3%, to ¥159,663
million. Net income in the fiscal year under review declined ¥10,698
million, or 11.0%, to ¥86,963 million, while net income per sharewas ¥62.99.
Analysis of Financial Position(1) Consolidated Cash Flow

On a consolidated basis, cash and cash equivalents (hereafter“cash”) at the end of the fiscal year under review rose ¥13,622 million
to ¥219,712 million. The main sources of cash were income before
income taxes and minority interests, depreciation and amortization,
proceeds from sales of property and equipment, proceedsfrom issuance of corporate bonds and an increase in long-termborrowings. The principal uses of cash were purchases of property

Other Income (Expenses)
In the fiscal year under review, other income amounted to ¥14,316
million, a decrease of ¥386 million compared with the previous fiscal
year. This was mainly due to a decline in equity in earnings ofunconsolidated subsidiaries and affiliates. Other expenses climbed¥1,044 million year on year to ¥30,238 million, owing to increased
interest expenses.

and equipment, repayment of corporate bonds and repayment oflong-term borrowings.
Cash Flows from Operating Activities

Net cash used in operating activities was ¥16,248 million, a decreaseof ¥166,958 million compared with net cash provided by operating
activities in the previous fiscal year. For the period under review, income
before income taxes and minority interests amounted to ¥159,663(Billions of yen)

Net Income Per Share (Basic)(Yen)

Total Assets

177.9(Billions of yen)

Total Equity(Billions of yen)Interest-Bearing Debt

(Billions of yen)

EBITDA(Billions of yen)

4,327.1
62.99

118.2

1,133.6

35.0

2004/3 2005/3 2006/3 2007/3 2008/3

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

3,068.8 3,124.5

55.8

103.7

2004/3 2005/3 2006/3 2007/3 2008/3

233.4

70.95

86.9

137.6

679.9

28

shares of affiliated companies totaling ¥2,255 million. Extraordinary

Operating Income
On a year-on-year basis, operating income climbed ¥11,818 million,
or 7.1%, to ¥177,983 million.
Operating income in the Building Business segment rose
14.2% due to contributions from newly completed buildings, revisionof rental rates applicable to existing buildings, property sales andother factors. In addition, operating income edged up 1.4% in the
Residential Business segment, resulting from improvements incondominium gross profit margins, and increased 25.2% in theInternational Business, owing to a variety of factors including theelimination of real estate comprehensive service marketing expenses
and contributions from property sales. Operating income in theArchitectural Design & Engineering segment surged 96.8% on
the back of improvements in gross profit margins primarily forlarge-scale properties. In the Urban Development & Investment
Management segment, operating income declined 28.3% year
on year owing to a drop in the distribution of benefits from ananonymous partnership following the sale of large-scale properties
during the fiscal year ended March 31, 2007. Year-on-year decreases
in operating income were also reported in the Custom-Built Housing,Hotel Business and Real Estate Services segments.

97.7

947.6
775.4

Turning to extraordinary items, extraordinary gains totaled¥5,690 million, mainly comprised of gain on sales of beneficial

36.2

2004/3 2005/3 2006/3 2007/3 2008/3

3,280.2

1,225.6 1,238.8

1,645.4

3,447.3
897.5 920.9

42.60

245.9

200.9
167.4

178.4

1,211.9 1,198.4
1,007.7 1,012.6

26.96 27.93

2004/3 2005/3 2006/3 2007/3 2008/3

2004/3 2005/3 2006/3 2007/3 2008/3

2004/3 2005/3 2006/3 2007/3 2008/3

2004/3 2005/3 2006/3 2007/3 2008/3

2004/3 2005/3 2006/3 2007/3 2008/3

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 200829

Financial Statements

million, and non-cash items such as depreciation and amortization

billion and ¥245.9 billion, respectively, surpassing the establishedtotaled ¥56,867 million. These cash inflows were adjusted to reflecttarget by a considerable margin. Under its new Medium-Term

movements in notes and accounts receivable, equity investments,

Management Plan, “Action 2010,” Mitsubishi Estate has envisioned

notes and accounts payable as well as other items.

the Company attaining the status of “a global real estate solutions

Consolidated Statements of Income
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2008 and 2007

provider—with development as the core driver.” Under this new Plan,

2008

Cash Flows from Investing Activities

the Company will increase the relative involvement of the Real Estate

Net cash used in investing activities was ¥212,207 million, anManagement and Real Estate Services businesses, complementing

Revenue from operations

increase of ¥126,817 million. This was attributable to a variety ofthe existing concentrated allocation of management resources in the

Cost of revenue from operations

factors including the acquisition of property and equipment.

Real Estate Holding and Real Estate Development and Investment
businesses. In nurturing each of these areas as a core business,

Cash Flows from Financing Activities

Mitsubishi Estate is well placed to deliver high-value-added products

Net cash provided by financing activities totaled ¥238,942 million,

and services to real estate end customers, owners and investors,

a turnaround of ¥273,036 million from net cash used in financing

and to realize customer value. In the final fiscal year of the Plan,

activities in the previous fiscal year. The principal components

ending March 31, 2011, the Company has established the following

were increases in long-term borrowings and the issuance ofnumerical targets.

corporate bonds.
(2) Consolidated Balance Sheets

Compared with the previous fiscal year-end, total assets increased¥879,865 million to ¥4,327,137 million as a result of the operating,Total liabilities, when compared to the previous fiscal year-end,
increased ¥793,477 million to ¥2,979,841 million. Net assets climbed¥86,387 million to ¥1,347,295 million, due primarily to retained

(%)

ROE

(%)

4.6

4.9

$ 	 7,861,588(551,455)(719,337)(5,504,098)

Selling, general and administrative expenses(58,213)(62,137)(581,030)

Operating income

177,983

166,165

1,776,459

6,823

4,112

68,107(22,251)(18,873)(222,095)¥ 	

Other income (expenses):

Interest expenses

EBITDA/Total assets: over 6.5%

Equity in earnings of unconsolidated subsidiaries and affiliates

3,739

8,094

37,327

Other, net (Note 14)(6,631)

18,470(66,192)(18,320)

11,804(182,852)

159,663

177,969

1,593,606

Current(52,390)(54,069)(522,906)

Deferred(9,472)(20,100)(94,546)(61,862)(74,169)(617,452)(10,836)(6,137)(108,163)

97,662$    	 867,989

Net interest-bearing debt/EBITDA multiple: under 6 times

has adopted a financial strategy based on the procurement of

Income before income taxes and minority interests

long-term funds at fixed rates of interest. At the present time, alongwith borrowings, the Company is taking advantage of favorably

promotes management awareness of how to determine the level ofinterest-bearing debt based on earning capacity. In the fiscal year

Income taxes (Notes 1 and 9):

under review, the Company issued corporate bonds and procured
funds through borrowings. As a result, the balance of interestbearing debt as of March 31, 2008 stood at ¥1,645.4 billion.
Deducting cash and cash equivalents, the net balance of interestbearing debt as of the fiscal year-end was ¥1,425.6 billion. This

Minority interests
Net income¥ 	86,963¥   	

See accompanying notes to consolidated financial statements.

included companies newly incorporated in the scope of
consolidation during the fiscal year ended March 31, 2007.

Interest Coverage Ratio(Times)

9.5

8.3

5.3

787,652

EBITDA: ¥300 billion

with maturity dates of more than 10 years. Mitsubishi Estate also

Management Initiatives and Financial Strategies
Under its Medium-Term Management Plan, covering the three-year
period from April 1, 2005 to March 31, 2008, the Company set
a goal for earnings before interest, taxes, depreciation andamortization (EBITDA) of ¥200 billion, to be achieved by the final
fiscal year of the Plan. Against this target, EBITDA for the fiscal year
ended March 31, 2006 was ¥200.9 billion. Accordingly, Mitsubishi
Estate achieved its goal two years in advance. EBITDA for the fiscal
years ended March 31, 2007 and March 31, 2008 were ¥233.4

2008

2007
947,641

Interest and dividend income

low interest rates through the issued of long-term corporate bonds

earnings growth.

ROA

¥ 	

From a financial management perspective, Mitsubishi Estate

investing and financing activities previously mentioned.

Thousands of
U.S. dollars

Millions of yen

8.5

7.1

7.4

4.0
3.6

5.4
4.0

2004/3 2005/3 2006/3 2007/3 2008/3

30

4.0

2004/3 2005/3 2006/3 2007/3 2008/3

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

4.7
3.9

2004/3 2005/3 2006/3 2007/3 2008/3

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 200831

Consolidated Balance Sheets
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
March 31, 2008 and 2007

Thousands of
U.S. dollars (Note 3)

Millions of yen

2008

2008

2007

Thousands of
U.S. dollars (Note 3)

Millions of yen

AssetsLiabilities and net assets

Current assets:

Current liabilities:

2008

2007

2008

¥   	 271,137¥   	 140,969$  	 2,706,234¥    	 186,321¥   	 201,107$   	1,859,678

Notes and accounts receivable – trade

37,06333,912369,930

Notes and accounts payable – trade114,780

72,301

1,145,629

Marketable securities (Note 4)

31,7396,160

316,789

Accrued income taxes (Note 9)

38,372

38,078383,001

(436)

(421)

(4,356)

Advances and deposits

87,500104,577

873,349

Inventories (Notes 5 and 7)

602,824

300,180

6,016,816

72,121

118,029

719,843

Equity investments (Note 4)

185,640

127,099

1,852,881

Total current liabilities

583,913473,956

5,828,059

Deferred income taxes (Note 9)

47,05336,827

469,639

Long-term debt (Note 7)

1,374,269

871,619

13,716,634

Other current assets

51,17933,702510,825

Lease deposits received

359,561

306,5463,588,798

1,141,385

738,568

11,392,205

Accrued employees’ retirement benefits (Note 8)

18,083

13,433

180,488

Deferred income taxes (Note 9)

550,194

481,667

5,491,509

Goodwill

67,172–

670,455

Other non-current liabilities

26,64639,140265,9612,979,841

2,186,364

29,741,908

			 Issued – 1,382,518,351 shares in 2008 and 2007

136,534

136,534

1,362,752

		 Capital surplus

165,216

165,216

1,649,029

		 Retained earnings

387,214324,6113,864,801

Cash (Notes 7 and 15)

Allowance for doubtful receivables

Total current assets

Investments:

Short-term borrowings and current portion of long-term debt (Note 7)

Accrued expenses and other current liabilities

Total liabilities

Investments in and advances to unconsolidated
subsidiaries and affiliates

17,01757,571

169,851

Investment securities (Notes 4 and 7)

236,331

300,470

2,358,830

Shareholders’ equity (Note 10):

Other investments (Note 6)

143,329

132,075

1,430,576

		 Common stock, without par value:396,678

490,116

3,959,258

			 Authorized – 1,980,000,000 shares;

Total investments

Property and equipment (Note 7):

Net assets:

1,564,953

1,414,754

15,619,860

		 Less treasury stock, at cost

(3,440)(2,965)(34,335)

280,547–2,800,149

Total shareholders’ equity

685,524

623,396

6,842,247

1,766,921

1,515,603

17,635,710

Valuation, translation adjustments and others:

Machinery and equipment and other106,432

82,207

1,062,307

89,621

133,843894,516

Construction in progress

83,271

88,170831,136

3,802,126

3,100,735

37,949,164

		 Land revaluation reserve(1,087,391)(916,496)(10,853,293)

		 Foreign currency translation adjustments

2,714,735

2,184,239

27,095,870

Land
Land in trust
Buildings and structures

Less accumulated depreciation
Property and equipment, net

		 Unrealized holding gain on securities
		 Deferred gains or losses on hedging instruments

Total valuation, translation adjustments and others
Stock acquisition rights
Minority interests

Intangible and other assets (Note 7)

74,33934,348

741,983¥ 	 4,327,137¥

3,447,272$ 	43,189,317

161(3,563)

470,397

4,716,819(8,478)(2,154)(84,622)553,364

602,247

5,523,149

142

79

1,422

108,264

35,1851,080,589

1,347,295

1,260,908

13,447,409

3,447,272$ 43,189,317

Contingent liabilities (Note 13)
Total net assets

Total assets(357)
472,578

Total liabilities and net assets¥

4,327,137¥

See accompanying notes to consolidated financial statements.

32

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 200833

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Changes in Net Assets (continued)

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2008 and 2007

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2008 and 2007

Millions of yen

Thousands of U.S. dollars

Shareholders’ equity

Balance at March 31, 2006
Increase arising from conversion of convertible bonds
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Directors’ and statutory auditors’ bonuses
Land revaluation reserve (Note 1)
Changes in consolidated subsidiaries and companies
accounted for by the equity method
Net change in items other than those in shareholders’ equity
Balance at March 31, 2007
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1)
Net change in items other than those in shareholders’ equity
Total of changes in the year
Balance at March 31, 2008

Commonstock

CapitalsurplusRetainedearnings¥129,736
6,797¥158,421
6,797¥246,246

Shareholders’ equity
Treasurystock¥(2,024)(15,132)
97,662
(2)

(13)
(5)
(4,138)(1,145)204

Total
shareholders’equity¥532,381
13,594(15,132)
97,662(1,145)187(5)(4,138)(8)
136,534

165,216

324,611(8)(2,965)(22,089)
86,963(90)(2,180)¥136,534¥165,216

62,603¥387,214

(870)
396

(22,089)
86,963(870)
305(2,180)(474)¥(3,440)

62,128¥685,524

Valuation, translation adjustments and others

Balance at March 31, 2006
Increase arising from conversionof convertible bonds
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Directors’ and statutory auditors’ bonuses
Land revaluation reserve (Note 1)
Changes in consolidated subsidiaries
and companies accounted for by
the equity method
Net change in items other than those inshareholders’ equity
Balance at March 31, 2007
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1)
Net change in items other thanthose in shareholders’ equity
Total of changes in the year
Balance at March 31, 2008

Unrealized
gain onsecurities¥142,040¥      –

CapitalsurplusRetainedearnings$1,362,752$1,649,029$3,239,957

Land
revaluation
reserve

Foreigncurrencytranslation
adjustments

Totalvaluation,translation
adjustments
and others

StockacquisitionrightsMinority
interests

Total net
assets¥466,259¥(7,057)¥601,242¥     –¥  32,717¥1,166,340

Treasury
stock

Total
shareholders’equity$(29,598)$6,222,140(220,477)
867,989(904)(21,763)$1,362,752

623,396

Millions of yen

Deferred
gains orlosses on
hedging
instruments

Balance at March 31, 2007
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1)
Net change in items other than those in shareholders’ equity
Total of changes in the year
Balance at March 31, 2008

Commonstock$1,649,029

624,844$3,864,801(8,693)
3,955(220,477)
867,989(8,693)
3,051(21,763)(4,737)$(34,335)

620,106$6,842,247

Thousands of U.S. dollars
Valuation, translation adjustments and others

Balance at March 31, 2007
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1)
Net change in items other thanthose in shareholders’ equity
Total of changes in the year
Balance at March 31, 2008

Unrealized
gain onsecurities

Deferred
gains orlosses on
hedging
instruments$1,335,899$ 1,609Land
revaluation
reserve

Foreigncurrencytranslation
adjustments

Totalvaluation,translation
adjustments
and others

StockacquisitionrightsMinority
interests

Total net
assets$4,695,055$(21,507)$6,011,056$   790$   351,183$12,585,171(220,477)
867,989(8,693)
3,051(21,763)(441,382) (5,172)
21,763(441,382) (5,172)
21,763$   894,516 $(3,563) $4,716,819(63,115)(487,906)
632
729,405
242,131(63,115)(487,906)
632
729,405
862,237$(84,622) $5,523,149 $1,422 $1,080,589 $13,447,409

See accompanying notes to consolidated financial statements.

13,594(15,132)
97,662(1,145)187(5)(4,138)(8)(8,197)
133,843

161
161

4,138
470,397

4,902(2,154)

1,005
602,247

79
79

2,467
35,1853,552
1,260,908(22,089)
86,963(870)
305(2,180)(44,222)(44,222)¥  89,621

(518)
(518)
¥(357)

2,180
2,180¥472,578(6,323)(6,323)¥(8,478)(48,883)(48,883)¥553,364

63
63
¥142

73,07973,079¥108,264

24,25986,387¥1,347,295

See accompanying notes to consolidated financial statements.

34

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 200835

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2008 and 2007

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2008 and 2007

Thousands of
U.S. dollars (Note 3)

Millions of yen

2008
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 beneficial interests in trust of property
and equipment

Gain on sales of securities
Valuation loss on securities
Gains on sale of investment
Valuation loss on inventories
Impairment loss
Equity in net income of affiliates
Increase (decrease) in allowancesInterest and dividend income
Interest expense
Early repayment of a portion of borrowings
Increase in notes and accounts receivable(Increase) decrease in inventories
Increase in equity investments(Decrease) increase in notes and accounts payable
Increase (decrease) in lease deposits received
Other		
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash (used in) 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
Proceeds from sales of beneficial interests in trust of property
and equipment
Other (Note 15)
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
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 (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents arising from mergers and acquisitions
Cash and cash equivalents at end of year (Note 15)
See accompanying notes to consolidated financial statements.

36

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

¥ 	

¥ 	

159,663
56,867
1,319

2007

2008

1. Significant Accounting Policiesa.

Basis of preparation

177,969
54,2579,789$ 	 1,593,606
567,592
13,174(1,737)(3,950)
2,769
–
1,458
1,498
(3,739)959(6,823)
22,251
1,168(6,452)(79,102)(85,042)(465)
25,538(35,692)
50,487
8,233(21,128)(53,840)(16,248)(1,895)(40,945)
119(2,150)–
5,503(8,094)(1,501)(4,112)
18,873–(18,132)
8,394(20,388)
16,225(35)
5,793
199,668
4,818(18,637)(35,138)
150,710(17,341)(39,427)
27,640–14,555
14,952(37,327)
9,581(68,107)
222,095
11,661(64,401)(789,525)(848,817)(4,646)
254,899(356,250)
503,916
82,180(210,884)(537,386)(162,174)

–
–
1,157
(270,798)
11,448(18,796)

3,928
(109)
7,771
(138,169)
56,388(22,640)––
11,551(2,702,853)
114,268(187,612)b.

12,09552,686(212,207)

2,858
4,583
(85,389)

120,727
525,868(2,118,050)

equity basis.

9,700
248,925(78,410)140,612(51,997)(22,089)(7,798)238,942(2,765)
7,721
206,089
5,901
219,712(2,835)
119,922(123,524)
21,974(33,077)(15,132)(1,420)(34,093)
3,344
34,571167,090
4,427¥ 	 206,089

96,8242,484,535(782,619)
1,403,454(518,989)(220,477)(77,836)
2,384,891(27,601)
77,0652,056,986
58,903$ 	 2,192,955¥ 	translated into yen at the rates of exchange in effect at the balance

The accompanying consolidated financial statements of Mitsubishi

sheet date. The components of shareholders’ equity are translated

Estate Co., Ltd. (the “Company”) and consolidated subsidiaries areat their historical exchange rates.

prepared on the basis of accounting principles generally accepted inJapan, which are different in certain respects as to the applicationand disclosure requirements of International Financial ReportingStandards, and are compiled from the consolidated financial
statements prepared by the Company as required by the Financial
Instruments and Exchange Law of Japan.
The financial statements of the overseas consolidatede.

Cash equivalents

The Company considers 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 thebalance sheet and cash equivalents at March 31, 2008 and 2007 ispresented in Note 15.

subsidiaries are prepared on the basis of the accounting andf.

relevant legal requirements of their countries of domicile.

Securities other than those of subsidiaries and affiliates are classified

The notes to the consolidated financial statements include

Marketable securities and investment securities

into three categories: trading, held-to-maturity or other securities.

information which may not be required under accounting principles

Trading securities are carried at fair value and held-to-maturity

generally accepted in Japan but is presented herein as additional

securities are carried at amortized cost. Marketable securities classi-

information.

fied as other securities are carried at fair value with any changes in

As permitted by the Securities and Exchange Law of Japan,

unrealized holding gain or loss, net of the applicable income taxes,

amounts of less than one million yen have been rounded off. As a

included directly in shareholders’ equity. Non-marketable securities

result, the totals shown in the accompanying consolidated financialclassified as other securities are carried at cost. Cost of securities

statements (both in yen and U.S. dollars) do not necessarily agree

sold is determined by the moving average method.

with the sums of the individual amounts.
Certain amounts in the prior year’s financial statements havebeen reclassified to conform to the current year’s presentation.
Principles of consolidation

The accompanying consolidated financial statements include theaccounts of the Company and the subsidiaries that it controls
directly or indirectly. Companies over which the Company exercises
significant influence in terms of their operating and financial policies
have been included in the consolidated financial statements on an
All significant intercompany balances and transactions havebeen eliminated in consolidation.
c.

Use of estimatesg.

Inventories

Inventories are mainly stated at cost, determined by the identified
cost method; however, when the fair value is substantially less thancost and the decline in fair value is considered to be permanent,
inventories are revalued at fair value.
h.

Property and equipment, depreciation and impairment

Property and equipment, except for land as discussed below, isstated at cost less accumulated depreciation. Depreciation is
calculated principally by the declining-balance method, except forbuildings acquired in Japan subsequent to March 31, 1998 andproperty 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

The preparation of financial statements in conformity with generally

assets. The Company has capitalized the costs incurred for

accepted accounting principles requires management to makesignificant renewals and additions; however, costs for maintenancecertain estimates and assumptions that affect the amounts reported

and repairs are charged to income.

in the financial statements and accompanying 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 for shareholders’ equity, the balance sheet accounts are also

As of March 31, 2002, the Company revalued its land at fairvalue, 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 reviews its property and equipment (includingland) for impairment whenever events or changes in its business

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 200837

circumstances indicate that the carrying amount of the assets may

Until the fiscal year ended March 31, 2007, the Company andnot be fully recoverable. The Company performs cash flow analyses

certain of its consolidated subsidiaries had retirement benefit plansownership transfer for services provided up to the transfer.

recognized by the percentage of completion method.

to determine if an impairment exits. If impairment is determined tofor directors and statutory auditors who were customarily entitled to(c)	Revenue from real estate brokerage is recognized when an(f)	Other operating revenue is recognized on an accrual basis.

exist, any related loss on impairment is calculated based on the cash

lump-sum payments under the Company’s and its consolidated

underlying lease agreement goes into force or the underlying

flow analyses.

subsidiaries’ respective internal regulations. Accrued severance

units are delivered.

The useful lives of property and equipment are summarized aswere included in “other non-current liabilities.”

follows:i.

(d)	Revenue from architectural design and engineering business isrecognized at the date of completion of each relevant project,

Buildings and structures		

2 to 75 years

The annual general shareholders’ meeting held on June 29,

Machinery and equipment and other2 to 35 years

2006 approved a resolution for the termination of the Company’s

million in total revenue are recognized by the percentage ofretirement benefit plans for directors and statutory auditors and forcompletion method.

Leases

Noncancelable leases are primarily accounted for as operatingleases (whether such leases are classified as operating or financeleases) except that leases that stipulate the transfer of ownership ofthe leased assets to the lessee are accounted for as finance leases.

the payment of the related benefits to them to be based on theirrespective service periods commencing from the date of appoint-

except that certain long-term (over one year) projects over ¥500o.

Appropriation of retained earnings

Under the Corporation Law of Japan, the appropriation of retained
earnings with respect to a given financial year is made by resolutionof the shareholders at a general meeting held subsequent tothe close of such financial year. The accounts for that year donot, therefore, reflect such appropriations. See Note 10 for(e)	Revenue from construction contracts is recognized at the date ofmore information.

completion of each relevant project, except that certain long-term

ment to June 29, 2006. The Company has reversed all accumulated
reserved benefits for them and the balance of unpaid retirement
benefits as of March 31, 2007 was included in “other non-current

2. Accounting Changes

liabilities.” Certain consolidated subsidiaries still have retirement

Effective April 1, 2007, the Company and its domestic subsidiaries and affiliates have changed their method of depreciation based on an

Intangible and other assets primarily consist of goodwill and land

benefit plans for directors and statutory auditors and provide anamendment to the Corporation Tax Law of Japan for tangible fixed assets acquired on or after April 1, 2007.

use rights. Goodwill is stated on the basis of cost and is being

accrual for such retirement benefits at estimated amounts.

j.

Intangible and other assets

amortized over a period of 5 years or an estimated economical
period on a straight-line basis, except for any goodwill and any
indefinite lived intangible assets of subsidiaries in the United Statesacquired in a business combination completed after June 30, 2001,
which have not been amortized. A loss is recognized if the fairvalue falls below the carrying amount. Land use rights are stated ona cost basis.
k.

Retirement benefits

The Company and most consolidated subsidiaries havenoncontributory funded and unfunded defined benefit planscovering most of their employees. Employees of the Company andits consolidated subsidiaries are entitled under 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 theconditions under which the termination occurs.
Accrued employees’ retirement benefits are provided mainly at
an amount calculated based on the retirement benefit obligation andthe fair value of the pension plan assets as of the balance sheet
date, as adjusted for unrecognized actuarial gain or loss andunrecognized prior service cost. The retirement benefit obligation is
attributed to each period by the straight-line method over theestimated years of service of the employees.
Actuarial gain and loss are amortized in the year following thel.

Income taxes

Deferred tax assets and liabilities are determined based on thefinancial 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 to reverse. Deferred tax assets are also
recognized for the estimated future tax effects attributable tooperating loss carryforwards. Valuation allowances are established
to reduce deferred tax assets if it is more likely than not that the

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.

4. Marketable Securities and Investment Securities
Marketable and investment securities classified as other securities at March 31, 2008 and 2007 are summarized as follows:
Thousands of U.S. dollars

2008

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 foreign exchange 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 those which meet the criteria for deferral hedge

Cost

Fair value

Unrealized
gain (loss)

Cost

Fair value

Unrealized
gain (loss)¥71,157¥213,864¥142,707$710,221$2,134,593$1,424,372

Securities whose fair value exceeds their cost:
Equity securities
Other
		

Subtotal

5,330

11,786

6,456

53,205

117,645

64,43976,487

225,651

149,164

763,426

2,252,238

1,488,812

Securities whose cost exceeds their fair value:
Equity securities
		

Total

10,429

9,799

(629)

104,099

97,812(6,286)¥86,917¥235,451¥148,534$867,525$2,350,051$1,482,526

accounting under which unrealized gain or loss is deferred as an
asset or liability.
n.

Millions of yen

2007

Revenue recognition

The consolidated statements of income reflect revenue from(a)	Revenue from the leasing of office space is recognized as rent
accrued over the leasing period.
(b)	Revenue from sales of condominiums, residential houses andland is recognized when the units are delivered and accepted bystraight-line method over the period of 3 years or 10 years which

the customers. Revenue from consignment commissions forare shorter than the average remaining years of service ofresidential sales earned by the real estate service businessthe employees.

segment is recognized at the time of contract conclusion for

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008of ¥100.19 = U.S.$1.00, the approximate rate of exchange prevailing on March 31, 2008. The inclusion of such amounts is not intended to

Derivative financial instruments

method over the period of the range from 1 year to 15 years

Prior service cost is being amortized as incurred by theTranslation of yen amounts into U.S. dollar amounts is included solely for convenience, as a matter of arithmetic computation only, at the rate

Millions of yenm.

operations in the following manner:the employees.

3. U.S. Dollar Amounts

some portion or all of the deferred tax assets will not be realized.

year in which the gain or loss is recognized by the straight-line
which are shorter than the average remaining years of service of38

benefits for these officers were provided at estimated amounts and(over one year) projects over ¥5,000 million in total revenue areservices provided up to the conclusion and at the time of

Cost

Fair value

Unrealized
gain (loss)¥72,698¥287,717¥215,019

5,330

15,851

10,52078,029303,569

225,540

Securities whose fair value exceeds their cost:
Equity securities
Other
		

Subtotal

Securities whose cost exceeds their fair value:
Equity securities
		

Total

566

509

(57)

¥78,596¥304,078¥225,482

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

39

The redemption schedule for securities classified as other securities at March 31, 2008 is summarized as follows:

Proceeds from sales of securities classified as other securities totaled ¥5,636 million ($56,256 thousand) in 2008 and ¥999 million in2007. Gross realized gain was ¥1,698 million ($16,947 thousand) in 2008 and ¥911 million in 2007, respectively. Gross realized loss was ¥3

Millions of yen

million ($29 thousand) in 2008.

Thousands of U.S. dollars

2008
Due within
one year or lessMarketable debt securities classified as held-to-maturity securities at March 31, 2008 and 2007 are summarized as follows:
Millions of yen

Government bonds

Fair value

Unrealized
gain (loss)

Amortized
cost

Fair value

Unrealized
gain (loss)¥     64¥     65¥  1$     640$     652$  12

Corporate bonds

2,418

2,431

13

24,13524,270

138

2,482

2,497

15

24,77624,923151

Government bonds

138

138

(0)

1,386

1,386

(0)

Corporate bonds

Debt securities whose fair value exceeds their cost:		

Subtotal

Debt securities whose cost exceeds their fair value:
2,759

2,759

–

27,54527,545–

		

Subtotal

2,898

2,898

(0)

28,93228,932

(0)

		

Total

¥5,381¥5,395¥15$53,709$53,855$150

Government bonds¥20¥   165¥20$199$  1,646

–

5,177

–

–

51,681–Other bonds

–

–

–

–

–

–

¥20

¥5,342¥20$199$53,328

$199

		

Total

securities considered other-than-temporary amounting to ¥8 million ($87 thousand) and ¥106 million for the years ended March 31, 2008 and2007 respectively.

5. Inventories
Inventories at March 31, 2008 and 2007 are summarized as follows:

2008

2007
Fair value

Unrealized
gain (loss)¥     35¥     35¥0Debt securities whose fair value exceeds their cost:

Other
		

Subtotal

116

116

0

3,633

3,633

–

3,784

3,785

0

Government bonds

183

182

(1)

Corporate bonds

–

–

–

Other
Subtotal

		

Total

–

–

–

183

182

(1)

¥3,967¥3,967¥0¥303,523¥  89,960$3,029,474

Land and housing projects in progress

279,141

192,305

2,786,120

Land held for development

8,742

8,965

87,256

Other

11,418

8,948

113,965¥602,824¥300,180$6,016,816

Total

Other investments at March 31, 2008 and 2007 were as follows:
Millions of yen

2008
Lease deposits
Total

Marketable and investment securities recorded at cost at March 31, 2008 and 2007 are summarized as follows:
Millions of yen

2008

Thousands of U.S. dollars

2008

2007

¥  6,753¥  7,908$  67,402

293

291

2,924

Commercial papers

6,741

4,992

67,291

MMF

22,558876

225,154

Investments in silent partnerships

21,28636,208212,460

Other

2,678

267

26,731¥60,310¥50,543$601,965

Total

2008

¥  86,595¥  77,571

56,73354,503566,260¥143,329¥132,075$1,430,576$   864,316

7. Short-Term Borrowings and Long-Term Debt

Nonmarketable equity securities		

Thousands of U.S. dollars

2007

At March 31, 2008 and 2007, short-term borrowings and the current portion of long-term debt consisted of the following:

Other securities:

Mutual funds

2008

2007

Real estate for saleLong-term prepaid expenses and other(other than equity securities listed on the over-the-counter market)

Thousands of U.S. dollars

6. Other Investments

Debt securities whose cost exceeds their fair value:

		

$199

The Company recognized losses on other securities considered temporary amounting to ¥2,760 million ($27,552 thousand) and other

Millions of yen

Amortized
cost

Corporate bonds

Due after one year Due after five years
through five years
or moreCorporate bonds

Millions of yen

Government bonds

Due within
one year or less

Bonds:

Thousands of U.S. dollars

2008
Amortized
cost

Due after one year Due after five years
through five years
or moreMillions of yen

2008
Loans, principally from banks¥  56,131

Thousands of U.S. dollars

2008

2007
¥  47,043$   560,251

Commercial paper

10,000–99,810Current portion of long-term debt

205,006

93,9252,046,173¥271,137¥140,969$2,706,234

Total

The weighted-average interest rates per annum on short-term borrowings outstanding at March 31, 2008 and 2007 were 1.08% and1.14%, respectively. Short-term borrowings are principally unsecured.

40

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 200841

At March 31, 2008 and 2007, long-term debt consisted of the following:

The aggregate annual maturities of long-term debt subsequent to March 31, 2008 are summarized as follows:
Millions of yen

2.975% unsecured bonds due 2007
2.575% unsecured bonds due 2008
0.37% unsecured bonds due 2008
2.525% unsecured bonds due 2008
3.1% unsecured bonds due 2008
1.82% unsecured bonds due 2009
3.075% unsecured bonds due 2009
2% unsecured bonds due 2009
1.985% unsecured bonds due 2009
0.72% unsecured bonds due 20092.12% unsecured bonds due 2009
1.9% unsecured bonds due 2010
2.29% unsecured bonds due 2010
1.55% unsecured bonds due 2011
1.44% unsecured bonds due 2011
1.16% unsecured bonds due 2011
1.47% unsecured bonds due 2012
1.58% unsecured bonds due 2012
2.77 % unsecured bonds due 2012
3.275% 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
1.655% unsecured bonds due 2014
1.409% unsecured bonds due 2015
1.572% unsecured bonds due 2015
1.295% unsecured bonds due 2015
1.443% unsecured bounds due 2016
1.985% unsecured bounds due 2016
1.88%unsecured bounds due 2016
1.79%unsecured bounds due 20172.045%unsecured bounds due 20171.825%unsecured bounds due 20173.125% unsecured bonds due 20171.77% unsecured bonds due 20173% unsecured bonds due 20181.975% unsecured bonds due 2019
1.805% unsecured bonds due 20192.5% unsecured bonds due 2020
2.42% unsecured bonds due 2022
1.50% unsecured bonds due 2022
2.075% unsecured bonds due 2023
2.28% 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
2.9% 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 2007 (payable in U.S. dollars)
Floating rate bonds due 2008 (payable in U.S. dollars)
Loans from banks and insurance companies:
SecuredUnsecuredLess current portion

42

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

Thousands of U.S. dollars

2008¥              –
––10,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00020,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,00010,00010,00010,00010,00010,00020,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,00010,00010,00020,00010,000–13,5872007¥  30,000
10,00010,00010,00010,00010,00010,00010,00010,00010,000–10,000–10,00010,00010,00010,00020,000–10,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,00010,000–––10,000–10,000––10,00010,00010,000–10,000––––10,00010,00020,00010,000980–

2008$                –
––99,81099,81099,81099,81099,81099,81099,81099,81099,81099,81099,81099,81099,81099,810199,620
99,81099,81099,81099,81099,81099,81099,81099,81099,81099,81099,81099,81099,81099,810149,715
99,81099,81099,81099,81099,81099,810199,620
99,81099,81099,81099,81099,81099,81099,81099,81099,81099,810149,715
99,81099,81099,810199,620
99,810–135,612443,265
552,423
1,579,275(205,006)¥1,374,269

111,008
388,556
965,544(93,925)¥871,619

4,424,243
5,513,753
15,762,808(2,046,173)$13,716,634

Year ending March 31,

Millions of yen

Thousands of U.S. dollars

2009¥   205,006$  2,046,173

2010

239,933

2,394,789

2011

307,571

3,069,881

2012

168,630

1,683,111

2013

141,164

1,408,972

2014 and thereafter

516,968

5,159,882¥1,579,275$15,762,808

Total

The assets pledged as collateral for short-term borrowings of ¥211 million ($2,105 thousand) and long-term debt of ¥443,265 million($4,424,246 thousand) at March 31, 2008 were as follows:
Millions of yen

Thousands of U.S. dollars

Cash¥    5,518$     55,077

Inventories

127,409

1,271,677

Buildings and structures

172,827

1,724,992

Machinery and equipment

6,375

63,633

Land

118,825

1,186,006

Land in trust

279,567

2,790,369

Other property and equipment

3

33

Other intangible assets

27

272

Investment securities

94

944

¥710,648$7,093,008

Total
As is customary in Japan, collateral must be given if requested

cases of default or certain other specified events. The Company has

by lending institutions under certain circumstances, and banks, innever received any such requests nor does it expect that any suchgeneral, have the right to offset cash deposited with them against

requests will be made.

any debt or obligations payable to a bank which become due in

8. 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,
2008 and 2007 for the Company’s and its consolidated subsidiaries’ defined benefit pension plans:Millions of yen

2008

Thousands of U.S. dollars

2008

2007

¥(93,391)¥(85,510)$(932,145)

Plan assets at fair value

83,962

91,733

838,029

Unfunded retirement benefit obligation(9,429)6,222(94,116)

619(13,776)

6,187

Retirement benefit obligation

Unrecognized actuarial loss
Unrecognized prior service cost
Net amounts recognized in the consolidated balance sheet
Prepaid pension expenses
Accrued employees’ retirement benefits

488

648

4,880

(8,319)(6,904)(83,038)

10,134

6,911

101,151¥(18,453)*¥(13,816)$(184,189)** T he accrued employees’ retirement benefits recognized by Rockefeller Group, Inc., a consolidated subsidiary, in the amount ¥370 million ($3,692 thousand) were presented in accrued
expenses and other current liabilities.

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

43

The components of expenses related to the pension and severance plans for the years ended March 31, 2008 and 2007 were as follows:
Millions of yen

2008

The significant components of deferred tax assets and liabilities as of March 31, 2008 and 2007 were as follows:

Thousands of U.S. dollars

Millions of yen

2008

2007

Thousands of U.S. dollars

2008

2007

2008

¥   13,465¥   14,653$    134,401

Service cost

¥ 3,836¥ 3,806$ 38,288

Interest cost

2,209

2,113

22,056

Net operating loss carryforwards

Expected return on plan assets(1,686)(1,573)(16,837)

Accrued retirement allowances and pension costs

14,827

11,828147,991

74

77

745

Valuation loss on inventories

37,70532,021

376,340

(520)

(216)

(5,195)

Unrealized loss on property and equipment

56,52745,669564,201¥ 3,913¥ 4,207$ 39,058

Land revaluation reserve

55,17956,586

550,744

Other

46,28920,604

462,0122,235,702

Amortization of net retirement benefit obligation at transition
Other
Total

Deferred tax assets:

223,995

181,363

Valuation allowance(27,541)(16,556)(274,888)

Total deferred tax assets

196,454

164,807

1,960,816

The assumptions used in accounting for the pension and severance plans for the years ended March 31, 2008 and 2007 were as follows:
2008

2007

Discount rate

2.0 ~ 6.0%

2.0 ~ 5.7%

Expected rate of return on plan assets

0.5 ~ 7.5%

0.5 ~ 7.5%

9. Income Taxes
Income taxes in Japan applicable to the Company and its domestic

and 2007. Income taxes of the foreign consolidated subsidiaries areconsolidated subsidiaries consist of corporation tax, inhabitants’based generally on the tax rates applicable in their countries oftaxes and enterprise tax which, in the aggregate, resulted inincorporation.

Reserves under Special Taxation Measures Law(59,373)(57,262)(592,604)

Land revaluation reserve(379,132)(379,044)(3,784,132)

Unrealized gain on property and equipment(141,394)(35,717)(1,411,259)

Unrealized gain on securities(59,069)(91,609)(589,577)

Other(52,469)(40,897)(523,703)

Total deferred tax liabilities
Net deferred tax liabilities

statutory tax rates of 40.69% for the years ended March 31, 2008
The effective tax rates reflected in the consolidated statements of income for the two years ended March 31, 2008 differ from the statutory
tax rate for the following reasons:Statutory tax rate

Deferred tax liabilities:

2008

2007

40.69%

40.69%

Increase (decrease) in income taxes resulting from:
Change in valuation allowance(1.84)(3.48)

Different tax rates applied

1.10

0.99

Revenues deductible for income tax purposes(1.56)(0.51)

Expenses not deductible for income tax purposes

0.38

0.23

Undistributed earnings of affiliates

5.25

7.44

Equity income(1.14)(1.77)

Other(4.13)(1.91)

Effective tax rates

38.75%

41.68%(691,439)(604,530)(6,901,278)¥(494,984)¥(439,723)$(4,940,462)

10. Shareholders’ Equity
The new Corporation Law of Japan (the “Law”), which superseded

the legal reserve equals 25% of the capital stock account. The

most of the provisions of the Commercial Code of Japan, went into

capital reserve amounted to ¥165,216 million ($1,649,029 million),

effect on May 1, 2006. The Law provides that an amount equal toand the legal reserve amounted to ¥21,663 million ($216,227 million)

10% of the amount to be disbursed as distributions of capitalat March 31, 2008. Such distributions can be made at any time bysurplus (other than the capital reserve) and retained earnings (other

resolution of the shareholders, or by the Board of Directors if certain

than the legal reserve) be transferred to the capital reserve and theconditions are met, but neither the capital reserve nor the legal

legal reserve, respectively, until the sum of the capital reserve andreserve is available for distributions.

11. Amounts per Share
Yen

Year ended March 31,

2008

U.S. dollars

2008

2007

Net income:Basic¥62.99¥70.95$0.62

Diluted

62.97

70.71

0.62

16.00

14.00

0.15

Cash dividends applicable to the year

Yen

March 31,

Net assets:

44

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

2008
¥897.40

U.S. dollars

2007¥887.79

2008
$8.95

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 200845

Amounts per share of net assets are computed based on net

Basic net income per share was computed based on the net
income available for distribution to shareholders of common stock

assets available for distribution to the shareholders and the number

and the weighted average number of shares of common stockof shares of common stock outstanding at the year end.

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, 2008 from noncancelable operating leases are summarized as follows:

outstanding during the year, and diluted net income per share was

Cash dividends per share represent the cash dividends

computed based on the net income available for distribution to the

proposed by the Board of Directors as applicable to the respective

2009¥150,956$1,506,697

shareholders and the weighted average number of shares ofyears together with the interim cash dividends paid.

2010 and thereafter

723,845

7,224,726¥874,801$8,731,423

common stock outstanding during each year after giving effect toYear ending March 31,

Millions of yen

Total

Thousands of U.S. dollars

the dilutive potential of shares of common stock to be issued upon
the exercise of warrants and stock subscription rights.

13. Contingent Liabilities
At March 31, 2008, the Company and its consolidated subsidiaries had the following contingent liabilities:

12. Leases
The following pro forma amounts represent the acquisition costs,

which would have been reflected in the consolidated balance sheets

accumulated depreciation, accumulated impairment loss and net

if finance lease accounting had been applied to the finance leases

book value of the leased assets as of March 31, 2008 and 2007,

currently accounted for as operating leases:

Millions of yen

Thousands of U.S. dollars

Buildings and structures
Others
Total

Accumulated
depreciation¥15,323¥4,9307,634¥22,958

Accumulated
impairment loss

Acquisition
costs

Accumulated
depreciation

Accumulated
impairment loss

Net book
value

¥141

¥10,251$152,942$49,210$1,413$102,318

3,976

24

3,633

76,20339,692242

36,267¥8,907¥165¥13,884$229,146$88,903$1,656$138,586

Buildings and structures¥12,381¥3,892Others413,725

Accumulated
impairment loss

¥256

Net bookvalue¥  8,233

8,783

4,868

66

3,848

¥21,165¥8,760¥323¥12,081

5,729¥43,897$438,142

The components of “Other, net” in “Other income (expenses)” for each of the years ended March 31, 2008 and 2007 were as follows:
Millions of yen

Thousands of U.S. dollars

2008

2007

¥        –

¥  1,115$          –2,25540,06022,511Gain on sales of investments

–

2,150

–

Gain on transfer of business

–

1,895

–

1,737

–

17,341Gain on sales of shares of affiliated companies

Gain on sales of beneficial interest in trust of fixed assets
Gain on sales of investment securities

1,697

–

16,947

Loss on disposal of fixed assets(4,616)(6,843)(46,082)

Lease payments relating to finance leases accounted for as operating leases in the accompanying consolidated financial statements

Loss related to retirement of fixed assets(1,194)(13,423)(11,920)amounted to ¥3,520 million ($35,133 thousand) and ¥3,046 million for the years ended March 31, 2008 and 2007, respectively.

Loss on valuation of inventories(1,458)(736)(14,555)

Impairment loss (*1)

(1,498)(5,503)(14,952)

Future minimum lease payments subsequent to March 31, 2008 on noncancelable operating leases and finance leases accounted for as

Early repayment of a portion of borrowings(1,168)–(11,661)

operating leases are summarized as follows:

Loss on valuation of investment securities(2,769)–(27,640)

382

(244)

3,821

¥(6,631)¥18,470$(66,192)

Total

Other, net
Millions of yen

46

573

14. Other Income (Expenses)

Gain on sales of fixed assets

2007
Accumulated
depreciation$  18,688

41,451

2008

Millions of yen

Acquisitioncosts¥  1,872

Guarantees of house purchasers’ loans from banks and others
Total

Net book
value

Thousands of U.S. dollars

Guarantees of affiliates’ loans from banks
Other

2008
Acquisition
costs

Millions of yen

Year ending March 31,

Financeleases2009¥  3,744

2010 and thereafter

10,306¥14,050

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

Thousands of U.S. dollars

OperatingleasesFinanceleasesOperatingleases¥  2,341$  37,370$  23,368

22,633102,872

225,903¥24,974$140,242$249,272(*1) Impairment loss

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

47

The Company recorded consolidated impairment losses for thefollowing asset groups for the year ended March 31, 2008:

The Company recorded consolidated impairment losses forthe following asset groups for the year ended March 31, 2007.

Category

Location

Category

Location

Leased assets, etc.
(total 6 groups)

Buildings, land,
etc.

Chiba, Chiba
Prefecture, etc.

Tennis club
(total 1 group)

Buildings, land,
etc.

Sendai, Miyagi
PrefectureInternational businesses(total 2 groups)

Goodwill,
construction inprogress, etc.

California, USA,
etc.

Leased assets, etc.
(total 8 groups)

Buildings, land,etc.

Shinagawa-ku,
Tokyo, etc.

International businesses(total 1 group)

Goodwill

California, USA

Major Application

Major application

Asset grouping for the Group was made based on aminimum unit that generates cash flows, which is substantially

Asset grouping for the Group was made based on a

independent from cash flows of other assets or asset groups.

minimum unit that generates cash flows, which is substantiallyCompany condominiums are regarded as shared assets. As a

independent from cash flows of other assets or asset groups.

result, for the fiscal year ended March 31, 2008, the book values

As a result, for the year ended March 31, 2007, the book value ofof 8 asset groups, consisting of those for which the market

a total of 10 asset groups above was reduced to the respective

prices fell considerably compared with the book values due tocollectible amounts and the reductions were recorded as an

the decline of land prices and those for which profitability

impairment loss (¥5,503 million ($46,201 thousand)), because­decreased considerably due to fallen rent levels or deteriorated

the market price considerably fell compared with the bookmarket conditions, etc., were reduced to the respective collect-

values due to the decline in land price or profitability

ible amounts and such reduced amounts were recorded as an

considerably decreased due to fallen rent levels or deteriorated

impairment loss (¥1,498 million) under extraordinary losses.

market conditions.

The breakdown of such impairment loss was ¥789 million

		The breakdown of such impairment loss was ¥4,153of the difference between the acquisition price of these assets andconsolidated subsidiary, which was acquired by the Company

liabilities and the proceeds and payments from the acquisition.

through additional purchase of its stocks, as well as a reconciliation
Millions of yen

Thousands of U.S. dollars

2008
Current assets¥ 260,126$ 2,596,331

Fixed assets

268,436

2,679,276

Goodwill

22,809227,662

Current liabilities(142,723)(1,424,532)

Non-current liabilities(243,458)(2,429,970)

Goodwill(32,170)(321,090)

Minority interests(63,134)(630,150)

Acquisition cost

69,885697,526

Investment value on an equity basis before acquisition(45,971)(458,844)

Acquisition cost of additional purchase

23,913

238,681

(33)

(334)

Cash and cash equivalents of subsidiary(77,518)(773,711)

Proceeds from acquisition

62,134620,163

Payments for acquisition¥    (8,495)$     (84,798)

Unpaid amount

16. Derivatives

in goodwill, ¥482 million in construction in progress and ¥225

million ($34,867 thousand) in goodwill, ¥1,329 million ($11,158

million in buildings and structures and others.

thousand) in land and ¥20 million ($168 thousand) in buildings

The Company and certain of its consolidated subsidiaries utilize

The Company is exposed to credit loss in the event ofand structures.

derivative financial instruments for the purpose of hedging theirnonperformance by the counterparties to the derivatives, but any

exposure to adverse fluctuations and changes in interest rates

loss would not be material because the Company enters into suchnet sale value or use value, and the net sale value is principally(interest rate swaps) and foreign exchange rates (currency swaps),

transactions only with financial institutions with high credit ratings.

Future cash flows discounted at a rate of 5% are used toexpressed as an appraised value by a real estate appraiser.

but do not enter into such transactions for speculative orcompute the use value.

Future cash flows discounted at a rate of 5% are used to

trading purposes.

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.

As for the impairment loss in the international business, theimpairment loss is calculated for consolidated foreignsubsidiaries in accordance with the U.S. accounting standards.

The collectible amounts of asset groups are measured withcompute the use value.
As for the impairment loss on fixed assets in the

17. Segment Information

International Business, the impairment loss is calculated forconsolidated foreign subsidiaries in accordance with accounting
principles generally accepted in the United States.

15. Supplemental Cash Flow Information
The following table represents a reconciliation of cash and cash equivalents as of March 31, 2008 and 2007:
Millions of yen

2008¥201,107(1,348)(1,178)(13,455)

Marketable securities with maturities of three months or less

31,7396,160

316,789

Cash and cash equivalents

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

newly reclassified in terms of the nature of each operation or service

engaged in the real estate business. Effective the year ended Marchand consist of eight segments: (1) Building Business; (2) Residential

31, 2006, the Company reorganized its corporate structure andBusiness; (3) Urban Development & Investment Management;changed its business segmentation from eight segments to newly(4) International Business; (5) Architectural Design and Engineering;

established nine segments in order to present and disclose the(6) Custom-Built Housing; (7) Hotel Business; (8) Real EstateGroup businesses more appropriately. Their business segments are

Services; and (9) Other businesses.

2008¥186,321

Resell agreements with maturities of three months or lessBusiness segments

The Company and its consolidated subsidiaries are primarily

Thousands of U.S. dollars

2007Time deposits with maturities of more than three months

Cash

48

The following are major components of assets and liabilities of a

$1,859,678

3,000

–

29,943¥219,712¥206,089$2,192,955

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

49

The business segment information of the Company and its consolidated subsidiaries for the years ended March 31, 2008 and 2007 isGeographical segmentssummarized as follows:

Building
Business

Revenue and operating income
Revenue from:
External customers
Intersegment or transfers
Total revenue
Operating expense
Operating income (loss)
Assets, depreciation, andcapital expenditures
AssetsDepreciation
Impairment loss
Capital expenditures

Residential
Business

Urban
Develop­ment andInvestment
International
Management
Business

The Company and its consolidated subsidiaries operate primarily inconsolidated revenue of all segments and the total amount ofMillions of yen

Japan, the United States and certain other areas. In the year ended

segment assets. Consequently, disclosure of segment information

For the year ended March 31, 2008

March 31, 2008, Japan area accounted for more than 90% of theby geographic area has been omitted.

Architectural
Design and Custom-Built
Engineering Housing

Hotel
Business

Real Estate
Services

Other

Total

Eliminations
or corporate

Consolidated

The geographical segment information of the Company and its consolidated subsidiaries for the year ended March 31, 2007 is summarized
as follows:
Millions of yen¥   374,041
6,521
380,562
266,071¥   114,490¥212,869
1,033
213,903
189,576¥  24,326¥  29,391
39
29,43012,567¥  16,863¥  71,920–
71,92044,376¥  27,544¥11,569
7,517
19,086
16,762¥  2,324¥29,082 ¥32,577
2,134
585
31,216 33,163
31,833 31,801¥    (616) ¥  1,362¥23,773
4,167
27,941
23,832¥  4,108¥  2,427 ¥   787,652
2,554
24,554
4,982
812,207
3,986
620,808¥     995 ¥   191,398¥           – ¥   787,652(24,554)–(24,554)787,652(11,139)
609,669¥ (13,415) ¥   177,983

2007¥731,816
795
32
1,835

¥337,375
2,316–
106,345¥351,016
5,539
1,401
44,857¥22,15540–
63¥14,992
144
56
205¥28,626
1,510
–
1,216

¥31,909388–
729¥26,406 ¥4,111,124
139
56,767–1,490
397
277,799¥216,013
99
7
3,798

¥4,327,137
56,867
1,498
281,597

United States¥   721,883¥154,139

Total

Eliminations
or corporate

Consolidated¥   947,641¥           –

¥   947,641

Other

Revenue and operating income
Revenue from:
External customers¥2,566,825
45,893–
122,149

Japan

Intersegment or transfers
		

Total revenue¥71,618

805

–

–

805

(805)

–

722,689

154,139

71,618948,447(805)

947,641

Operating expenses

566,125

142,641

61,357770,124

11,351

781,475

Operating income¥   156,563¥  11,498¥10,260¥   178,322¥ (12,156)¥   166,165

Total assets¥2,822,916¥254,884¥77,803¥3,155,604¥291,667¥3,447,272

Thousands of U.S. dollars
For the year ended March 31, 2008
Building
Business

Residential
Business

Urban
Develop­ment andInternational
Investment
Management
Business

Architectural
Design and Custom-Built
Engineering Housing

Hotel
Business

Real Estate
Services

Unallocatable operating expenses
Other

Total

Eliminations
or corporate

Consolidated

Revenue and operating income
Revenue from:
External customers$  3,733,317 $2,124,655 $   293,355 $   717,839 $115,477 $290,268 $325,161 $237,283 $  24,229 $  7,861,588 $              – $  7,861,588
Intersegment or transfers
65,08910,319394– 75,027 21,308
5,844 41,599 25,499
245,081 (245,081)–
Total revenue
3,798,406 2,134,975
293,750
717,839 190,504 311,576 331,006 278,882 49,728 8,106,670 (245,081) 7,861,588
Operating expense
2,655,673 1,892,173
125,432
442,919 167,304 317,727 317,407 237,876 39,794 6,196,310 (111,181) 6,085,128
Operating income (loss)$  1,142,733 $   242,801 $   168,317 $   274,919 $  23,200 $   (6,150) $  13,598 $  41,006 $  9,934 $  1,910,360 $  (133,900) $  1,776,459
Assets, depreciation, andcapital expenditures
Assets$25,619,582 $7,304,288 $3,367,355 $3,503,504 $221,139 $149,635 $285,718 $318,492 $263,561 $41,033,278 $2,156,038 $43,189,317
Depreciation
458,068
7,939
23,11655,285401
1,442 15,075
3,876
1,390
566,598994
567,592
Impairment loss–
322–
13,991–562–––
14,87675
14,952
Capital expenditures
1,219,175
18,317 1,061,434
447,721637
2,052 12,141
7,283
3,964 2,772,727
37,910 2,810,637

Unallocatable operating expenses included under “Eliminations oramounted to ¥454,614 million and consisted principally of cash,

corporate” for the year ended March 31, 2007 amounted to ¥12,543

marketable securities, investments in other securities, deferred tax

million, respectively, and consisted of operating expenses incurred in

assets and other assets allocated to the Administration Department

the Administration Department of the Company. Corporate assetsof the Company.

included under “Eliminations or corporate” as of March 31, 2007
Overseas revenue

For the year ended March 31, 2008, overseas sales accounted for less than 10% of the consolidated revenue. Consequently, disclosure ofoverseas sales information has been omitted.
The following table represents overseas revenue earned by the Company’s consolidated subsidiaries in foreign countries during the years
ended March 31, 2007:
Millions of yen

2007
United States

Millions of yen

Revenue and operating income
Revenue from:
External customers
Intersegment or transfers
Total revenue
Operating expense
Operating income (loss)
Assets, depreciation, andcapital expenditures
AssetsDepreciation
Impairment loss
Capital expenditures

50

Building
Business

Residential
Business¥   347,540
6,416
353,956
253,742¥   100,214¥230,631
882
231,514207,535¥  23,979¥2,017,633
38,531–
93,906¥397,118
780
776
816

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008¥  38,181
35
38,216
14,695¥  23,520¥250,542
2,931
486
23,846¥226,444–
226,444
204,438¥  22,005¥332,225
9,774
4,153
26,816

Architectural
Design and Custom-Built
Engineering Housing¥11,802
5,988
17,79016,609¥  1,181¥19,664
51–
17

Overseas revenue
Hotel
Business

Real Estate
Services¥33,718 ¥33,100 ¥  23,896
831
393
4,954
34,550 33,493 28,851
34,719 31,877 22,769¥    (169) ¥  1,616 ¥    6,082¥14,225
119–
254¥30,127 ¥104,559
1,444
279
–
–
1,353
665

Total

Overseas revenue

For the year ended March 31, 2007
Urban
Develop­ment andInternational
Investment
Management
Business

Other areas

Other

Total

Eliminations
or corporate¥  2,324
1,935
4,260
3,461
¥     798

¥947,641
21,437
969,078
789,849¥179,229¥           – ¥   947,641(21,437)–(21,437)
947,641(8,373)
781,475¥ (13,064) ¥   166,165¥37,977 ¥3,204,074
114
54,02987
5,503
172
147,849

Consolidated¥243,198 ¥3,447,272
227
54,257
–
5,503
(890)
146,958¥148,783¥71,739

15.7%

7.6%

Consolidated revenue% of overseas revenue to consolidated revenue¥220,523
947,641
23.3%

18. Business Combination
AQUACITY PROPERTIES held a portion of beneficial interests inThis business combination was treated as transactions undertrust of the Aqua City Odaiba commercial complex (the “Property”)

common control in accordance with “Accounting Standard for

as management company of Silent Partnership Aquacity Properties,

Business Combinations” (issued by the Business Accounting

consolidated subsidiary of the Company. On December 27, 2007,

Council on October 31, 2003) and “Guidelines for Accounting

the Company merged AQUACITY PROPERTIES for the purpose ofStandard for Business Combinations and Accounting Standard for

directly holding the Property. Accordingly, AQUACITY PROPERTIESBusiness Divestitures” (Financial Accounting Standard

was dissolved and Silent Partnership Aquacity Properties was

Implementation Guidelines No. 10 issued by the Accounting

terminated.

Standards Board of Japan on December 22, 2006).
MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

51

Report of Independent Auditors

19. Transactions with Special Purpose Companies
As part of its real estate business, the Company makes preferred

after construction of buildings on it. The Company sees no future

investments in 12 special purpose companies that are establishedloss on these preferred investments as of March 31, 2008 and theunder the Asset Liquidation Law of Japan. The Company intends toCompany considers that its exposure to loss that may arise in therecover such preferred investments through rental revenue andfuture is limited to the amount of its preferred investments. The

subsequent sale of real estate that has been obtained by the special

following tables represent the Company’s transactions with major

purpose companies from their customers or sale of such real estate

special purpose companies for the year ended March 31, 2008.

Amounts of preferred investment as of March 31, 2008
Millions of yen

Preferred investment securities(*1)¥82,327

Thousands of U.S. dollars$821,709

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

Preferred investment securities: revenue (*1)

Thousands of U.S. dollars¥   874$  8,723

447

4,462

Management business: revenue(*2)

Intermediate business: revenue

(*3)

104

1,038

Real estate rent: cost

(*4)

1,335

13,325

Design management business: revenue (*5)

123

1,228

(*1) Preferred investment securities are indicated as amount of investment as at March 31, 2008. The Company records dividends from such investments as revenue from operations.
(*2)	T he Company and Mitsubishi Jisho Investment Advisors, Inc. provide asset management business to special purpose companies and record such service income as revenue fromoperations.
(*3) Mitsubishi Real Estate Services Co., Ltd. provides real estate intermediate business to special purpose companies and records such service income as revenue from operations.
(*4) The Company enters into real estate rental agreements with special purpose companies and records such rent expenses as cost of revenue from operations.
(*5) Mitsubishi Jisho Sekkei, Inc. provides design management services to special purpose companies and records such service income as revenue from operations.
	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 and liabilities 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.

Major assets
Millions of yen

Real estate
Other
Total

Thousands of U.S. dollars¥292,823$2,922,677

18,901

188,652¥311,725$3,111,338

Major liabilities and net assets
Millions of yen

Debt
Preferred investments

(*6)

Other
Total

Report of Independent Auditors
The Board of Directors
Mitsubishi Estate Co., Ltd.
We have audited the accompanying consolidated balance sheets of Mitsubishi Estate Co.,
Ltd. and consolidated subsidiaries as of March 31, 2008 and 2007, and the related
consolidated statements of income, changes in net assets, and cash flows for the years thenended, all expressed in yen. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis forour opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Mitsubishi Estate Co., Ltd. and consolidated
subsidiaries at March 31, 2008 and 2007, and the consolidated results of their operations
and their cash flows for the years then ended in conformity with accounting principles
generally accepted in Japan.

Thousands of U.S. dollars¥188,239$1,878,820

122,850

1,226,170

635

6,338

¥311,725$3,111,338

The U.S. dollar amounts in the accompanying consolidated financial statements withrespect to the year ended March 31, 2008 are presented solely for convenience. Our audit
also included the translation of yen amounts into U.S. dollar amounts and, in our opinion,such translation has been made on the basis described in Note 3.

(*6) Preferred investments include contributions made by the Company as described in (*1) above.

Tokyo, Japan
June 27, 2008

52

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 200853

Mitsubishi Estate Corporate Data

Directors, Statutory Auditors, and Executive Officers

Corporate Information

Directors and Statutory Auditors
President & Representative Director

Keiji Kimura

Chief Executive Officer

Keiji Kimura

Representative Director

Nobuyuki Iizuka

Deputy President

Nobuyuki Iizuka

Mitsubishi Estate Home Co., Ltd.

Representative Director

Toshio Nagashima

Executive Vice President

Toshio Nagashima

Mitsubishi Jisho Sekkei Inc.

Representative Director

Hiroshi Danno

Executive Vice President

Hiroshi Danno

Representative Director

Takaya Endo

Executive Vice President

Takaya Endo

Head Office

Major Consolidated Subsidiaries

Otemachi Building, 6-1, Otemachi 1-chome, Chiyoda-ku,

Mitsubishi Real Estate Services Co., Ltd.

Tokyo 100-8133, JapanWeb site: http://www.mec.co.jp/
Phone: (03) 3287-5100

Royal Park Hotels and Resorts Co., Ltd.
Mitsubishi Estate Building Management Co., Ltd.

Date of Establishment

Mitsubishi Jisho Towa Community Co., Ltd.

Representative Director

Seiichiro Suzuki

Executive Vice President

Seiichiro Suzuki

May 7, 1937

Marunouchi Heat Supply Co., Ltd.

Director & Executive Counsel

Shigeru Takagi

Executive Vice President

Toyohisa Miyauchi

Paid-in Capital

Royal Park Hotel Co., Ltd.

Director

Hiroyoshi Ito

Executive Vice President

Masaaki Kono

Director

Hirotaka Sugiyama

Executive Vice President

Takao Yagihashi

Director

Isao Matsuhashi

Senior Executive Officer

Hiroyoshi Ito

Director

Fumikatsu Tokiwa

Senior Executive Officer

Yutaka Yanagisawa

Director

Kazuya Okamoto

Senior Executive Officer

Yuzuru Shibagaki

Director

Shu Tomioka

Senior Executive Officer

Hiroshi Nakajima

Standing Statutory Auditor

Eiji Tan

Senior Executive Officer

Masao Ouchi

Standing Statutory Auditor

Kazuhiko Hasegawa

Senior Executive Officer

Hirotaka Sugiyama

Auditor

Statutory Auditor

Kenjiro Hata

Executive Officer

Toshihide Yoshimura

Ernst & Young ShinNihon

Statutory Auditor

Akio Utsumi

Executive Officer

Kazuo Takahashi

Executive Officer

Yasuo Fujiwara

Executive Officer

Ichiro Watarai

Executive Officer

Megumu Ono

Executive Officer

Toshihiko Kazama

Executive Officer

Yoshikazu Fukasawa

Executive Officer

Shiro Fujisawa

Executive Officer

Masamichi Ono

Executive Officer

Soichiro Hayashi

Executive Officer

Jo KatoExecutive Officer

Naoto Aiba

Executive Officer

Takao Tojo

Executive Officer

Koji Kiyosawa

Sunshine City Corporation
Rockefeller Group, Inc.

¥136,534 million

Stock Exchange Listings

Number of Shares of Common Stock Issued

Tokyo Stock Exchange and other major Japanese stock exchanges

1,382,518,351 shares

Transfer Agent and Registrar

Number of Shareholders

Mitsubishi UFJ Trust and Banking Corporation 4-5,

67,997 (excluding shareholders with less than 1,502 shares)

Major Shareholders

54

Executive Officers

Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan% of total

State Street Bank and Trust Company

5.40

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

4.87

Meiji Yasuda Life Insurance Company

3.79

Japan Trustee Services Bank, Ltd. (Trust Account)

3.38

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

3.12

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2.93

State Street Bank and Trust Company 505103

2.29

Taisei Corporation

2.10

Takenaka Corporation

2.03

Asahi Glass Co., Ltd.

1.64

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

(As of March 31, 2008)

Notes:
1. Among directors, only Isao Matsuhashi, Fumikatsu Tokiwa,
Kazuya Okamoto, and Shu Tomioka fulfill the qualifications necessary
for outside director as stipulated in Article 2-15 of the Corporation Law
of Japan.
2. Among statutory auditors, only Kazuhiko Hasegawa, Kenjiro Hata, andAkio Utsumi fulfill the qualifications necessary for outside statutory
auditor as stipulated in Article 2-16 of the Corporation Law of Japan.

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 200855

Organization

Mitsubishi Estate Group• Real Estate Consulting & Solution Group

Real Estate Consulting & Solution Department 1

Building Business

Real Estate Consulting & Solution Department 2• Property Management and Office Leasing Group
Property Management Department

Building Leasing Business

Building Safety Management Office
Yokohama Renewal Office

Office Leasing Department

Relocation Management OfficeTenant Relations and Consulting Department

Master Lease Planning and Management OfficeSunshine City Corporation

Ascott International Management Japan Co., Ltd.

•

Yokohama Sky Building Co., Ltd.

Japan Real Estate Asset Management Co., Ltd.

•

Commercial Asset Management Department

Group Companies Management Office

Area Brand Management Department

Area Brand Promotion Office•Commercial Asset Development Department

Museum Pre-Opening Office

Office of Statutory Auditors

Yuden Building Kanri Co., Ltd.

•

Hokuryo City Service Co., Ltd.

•IMS Co., Ltd.

•Sunshine BS Corporation•

Royal Park Hotels and Resorts Co., Ltd.

O.A.P. Management Co., Ltd.

•

Yokohama Royal Park Hotel Co., Ltd.

Parking Business•Royal Park Inn Nagoya Co., Ltd.

• Commercial Property Development and Investment Group

Commercial Property Development and Investment Planning Department
Commercial Property Development and Investment Department
Development Planning Office••

Mitsubishi Jisho Sekkei Inc.

•

MEC Design International Corporation

Custom-Built Housing•

Mitsubishi Estate Home Co., Ltd.

•

Mitsubishi Estate Housing Components Co., Ltd.

Hotel Business

Building Management Advisory Office•Grand Parking Center Co., Ltd.

•

Tohoku Royal Park Hotel Co., Ltd.

Toyosu Development Project Office•

Tokyo Garage Co., Ltd.

•Royal Park Shiodome Tower Co., Ltd.

District Heating and Cooling Business•Royal Park Hotel Co., Ltd.

•

Marunouchi Heat Supply Co., Ltd.

Real Estate Services•

Ikebukuro District Heating and Cooling Co., Ltd.

•

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

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

•

Shiki Resorts Co., Ltd.

Others•

Shiki Club Links Co., Ltd.

Marunouchi Direct Access Limited•

MEC Human Resources, Inc.

Marunouchi Hotel Co., Ltd.

•

Keiyo Tochi Kaihatsu Co., Ltd.

Residential Development Group
Residential Development Planning Department
Master-Planned Residential Department

Detached Housing Office

PARTNER System Department

Condominium Redevelopment Office

Apartment Development Department
Residential Design Planning and Marketing Department

Residential Customer Service Office

Recreational Facility Office

Residential Quality Management Office• International Business Group & Investment Management GroupInternational Business Department

Investment Management Office•

Residential Business
Real Estate Sales•

Corporate Planning Department
Personnel Planning Department
Finance & Accounting Department
Corporate Communications Department

Investor Relations Office

General Affairs Department

Secretary Office

CSR Department

Legal Office• Consolidated Subsidiaries
Equity-Method Affiliates

TOWA REAL ESTATE DEVELOPMENT CO., LTD.

•

Izumi Park Town Service Co., Ltd.

•

Mitsubishi Jisho Towa Community Co., Ltd.

•MT Community Staff Co., Ltd.
Recreational Facilities

Sapporo Branch•

Higashinihon Kaihatsu Co., Ltd.

•MEC Urban Resort Tohoku Co., Ltd.

Tohoku Branch

Sakura Golf Development Co., Ltd.

Yokohama Branch

OthersNagoya Branch•

Osaka Branch
Chugoku Branch
Kyushu Branch

Mitsubishi Real Estate Services Co., Ltd.

Residence Management Business

Affiliated Group Office

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

MEC UK Limited

Architectural Design & Engineering•• Corporate Group56•

Mitsubishi Estate Building Management Co., Ltd.

Mitsubishi Jisho Property Management Co., Ltd.

Compliance
Subcommittee

Board of Statutory Auditors
Statutory Auditor

Mitsubishi Estate New York Inc.

•

CSR
Committee

Strategic Investment
Committee

Building Management Business• Retail Property Group

Retail Property Leasing Department

Executive Committee

Rockefeller Group, Inc. (RGI)•

MEC Building Facilities Co., Ltd.

Condominium Development Department

Internal Audit Office••

Retail Property Development Department

Risk Management
Subcommittee

International Business

Mitsubishi Jisho Retail Property Management Co.,Ltd.

Retail Property Planning OfficeEnvironmental
Subcommittee

Tokyo Kotsu Kaikan Co., Ltd.
Chelsea Japan Co., Ltd.

•Board of Directors

President &Chief Executive Officer

Mitsubishi Jisho Investment Advisors, Inc.

Area Planning Office

Meeting of Shareholders

Strategic Planning
Committee••• Commercial Asset Management and Development Office

Chairman of the Board

Urban Development & Investment Management

Ryoei Life Service Co., Ltd.
Tsunagu Network Communications, Inc.

(As of May 1, 2008)

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 200857

Corporate Social Responsibility

The Mitsubishi Estate Group has adopted as its fundamental

to promote CSR activities embodies its corporate brand.

CSR Case Studies

implementing initiatives for low-carbon and recycling-oriented

mission the goal to create a truly meaningful society by building

Furthermore, to carry out this mission—in addition toCompliancesociety models in partnership with our customers, we will

attractive, environmentally sound communities where people

disseminating the Mitsubishi Estate Group Code of Conduct

Mitsubishi Estate considers compliance as not simply thespearhead the creation of sustainable communities. Mitsubishi

can live, work and relax with contentment. As a Group, ourthroughout the Group—a CSR Committee chaired by theadherence to legal standards, but as “meeting the expectations

Estate is working in collaboration with local communities toconcept of corporate social responsibility (CSR) encompasses

president was formed to promote Group-wide CSR activitiesof people in society at large,” while adhering to internal company

reduce environmental impact throughout the Otemachi,

initiatives that help realize enduring growth for the company

and to implement a wide variety of CSR activities that draw onrules and ethical corporate standards. Furthermore, because

Marunouchi and Yurakucho districts of Tokyo. In addition toand society as a whole. Accordingly, Mitsubishi Estate’s efforts

the Group’s distinctive features.

we recognize how essential compliance is to the profit base of

taking so-called hard measures, such as introducing a highly

the Company, we view the maintenance of a compliance systemefficient central heating, cooling and ventilation system andas a priority task of management. Moreover, each and every

adding greenery to the roofs and walls of our buildings in these

employee is deepening his and her awareness of complianceareas, the Company’s initiatives also include soft measures, asissues and putting them into practice.

exemplified by the staging of environment-related events and

The Mission of the Mitsubishi
Estate Groupseminars.
Risk Management
To maintain proper risk assessment and management of a wide

Social Contributions

We contribute to society through urban development

range of internal and external business risks, Mitsubishi Estate

As a good corporate citizen, the Mitsubishi Estate Grouphas placed the CSR Committee in overall charge of risk

engages in a wide range of social contribution acivities primarily

By building attractive, environmentally sound communities where people canlive, work and relax with contentment, we contribute to creating a truly meaningfulsociety.

management. We have further established the Risk Management

centered on promoting its harmonious coexistence with

Council as a working-level body tasked with gathering risk

communities, environmental preservation, social welfare as wellmanagement-related information, and are implementing risk

as culture and the arts. Specific Mitsubishi Estate-developed

management cross-sectionally throughout the Company.

programs include operating the Nature Info Plaza in the Shin-

The Mitsubishi Estate Group
Code of Corporate Conduct
In order to carry out the Group Mission, we pledge toobserve the following Code of Conduct:

Yurakucho Building and the Marunouchi Bird Song Plaza—
Environmental Efforts

which

conduct

As part of Action 2010, the New Medium-Term Management

information

Plan, we make our contribution to society clearer by actively

preservation—and the annual Dazzling Art Competition, aaiming at reducing environmental impact. By energeticallydrawing contest held for disabled children throughout Japan.

Greenery seen on a wall at the Shin-Marunouchi Building.

The prize-giving ceremony for the Dazzling Art Competition was held at Tokyo
Marunouchi Building Hall in February 2008.

oneducational
natureactivities

conservation

and
and

disseminate
environmental

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

2. We will strive to earn the trust of our clients
We will approach all objectives from our clients’ point of view, providing safeand reliable products and services, and make information available asappropriate.

3. We will strive to create a vibrant workplace
While aiming at personal growth, we will respect the human rights anddiversity of opinions of others, and increase our creativity and professionalism
while displaying our collective strengths as a team.
Mitsubishi Estate Group Action Charter
For more information, please refer to:
http://csr.mec.co.jp/koudousisin.html(Formulated December 1, 1997)(Revised August 1, 2002)(Revised January 1, 2006)

58

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2008

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 200859