Staying Ahead of
the Times to Provide
New Value

Integrated Report 2020

Contents

P 2“A Love for People

A Love for the City ”

P 5
6

P 8
P 10

Track Record of Mitsubishi Estateand Its Business Expansion
Mitsubishi Estate’s Strengths
Marunouchi Today

Mitsubishi Estate’s Value Creation Model
Message from the President

P 14 Overview of Long-Term Management Plan 2030
Forever Taking On New Challenges—The Mitsubishi Estate Group16

The Group’s Strengths and Growth Strategies

18

Road Map for 2030

20	
SPECIAL FEATURE			The Spirit of Mitsubishi: Three Principles“Shoki Hoko”“Shoji Komei”“Ritsugyo Boeki”

			Corporate Responsibility to Society
Strive to enrich society, both materiallyand spiritually, while contributing
toward the preservation of
the global environment.

Integrity and Fairness
Maintain principles of transparency
and openness,
conducting business withintegrity and fairness.

Global Understanding through Business
Expand business,based on an all-encompassing
global perspective.

			1

Domestic Asset Business

2

International Asset BusinessCondominium Business in Bangkok, Thailand

24	
SPECIAL FEATURE

3

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

The Mitsubishi Estate Group Code of Corporate Conduct

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

1

2

3

We will act with integrity.

We will strive to earn
the trust of our clients.

We will strive to createa vibrant workplace.

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

While aiming at personal growth, wewill respect the human rights anddiversity of opinions of others andincrease our creativity and professionalism,
while displaying ourcollective strengths as a team.

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

For details on the Mitsubishi Estate Group Guidelines for Conduct:
https://www.mec.co.jp/e/company/charter/index.html

52

Materiality

54

Environment (E)

55

TCFD

56

Human Resources and Diversity (S)57

Resilience (S)

58

SASB

59

Corporate Governance (G)		59

Message from the Chairman of the Board

		60

Directors

		 61	Corporate Executive Officers, Executive Officers,
and Group Executive Officers

		 64	Evaluation of the Effectiveness of the Board of
Directors / Remuneration
		65

Shares Held for Strategic Purposes

		66

Message from an Outside Director

68

Risk Management

Non-Asset BusinessParticipation in the Elevator Media Business26	Message from the Corporate Officer in Charge ofFinance & Accounting and Corporate Communications

P 30 Business Review
The Mission of the Mitsubishi Estate GroupESG Section

		 62	Characteristics of Corporate Governance System

CO • MO • RE YOTSUYA

22	
SPECIAL FEATURE

P 50

P 71
71

Financial Section
Japan’s Real Estate Market

72	
Eleven-Year Summary of Selected Financial Data
(Consolidated)74	
Financial Review

31Structural Reforms to Drive Growth Strategies

76	Consolidated Balance Sheets

32

Business Segments

34

Commercial Property Business78	Consolidated Statements of Income /Consolidated Statements of Comprehensive Income

		34

Office Building Business79	Consolidated Statements of Changes in Net Assets

		36

Retail Facility Business / Outlet Mall Business81	Consolidated Statements of Cash Flows

		37

Logistics Facility Business82	Notes to Consolidated Financial Statements

		38

Hotel Business105	Independent Auditor’s Report

		39

Airport Operation Business40

Residential Business

P 114

42

International Business

114

Principal Mitsubishi Estate Group Companies

44

Investment Management BusinessCorporate Data

116

Corporate History45	Architectural Design & Engineering Business andReal Estate Services Business

117

Organization

118

Corporate Information

46

119

About Our Website

49
		Innovation and Business Transformation Group
Business Development, Client Relations &Solutions GroupA Word about Integrated Report 2020
We adopted this integrated report format starting from FY2019, having published annual reports through to FY2018. With this integrated report, we have expanded coverage of
non-financial information centering on environmental, social, and governance (ESG) compared with prior annual reports. In doing so, we aim to increase readers’ awareness of
our efforts to raise the corporate value of the Mitsubishi Estate Group from a medium-to-long-term perspective. We hope that this report promotes a deeper understanding of
the Group among all our stakeholders, including shareholders and investors.
Definition of Term
“FY2020” refers to the Group’s fiscal year ended March 31, 2020, and other fiscal years are referred to in a corresponding manner.

(Formulated December 1, 1997; revised on August 1, 2002, January 1, 2006, and April 1, 2018)

Caution Concerning Forward-Looking Statements
This integrated report contains forward-looking statements concerning Mitsubishi Estate Co., Ltd., and its future strategies and earnings outlook, including forecasts, plans, anddecisions based on information available at the time of publication. As with any forecast, plan, or decision, forward-looking statements are inherently susceptible to potential risks,
uncertainties, and assumptions. The Company’s actual results may therefore vary materially from those expressed or implied in its forward-looking statements.

MITSUBISHI ESTATE CO., LTD. Integrated Report 20201

Track Record of Mitsubishi Estate and Its Business Expansion
The Mitsubishi Estate Group has overseen the development of the Marunouchi area over the last 120 years, evolving it into
Japan’s preeminent business center. In the process, we have accumulated unique knowledge and expertise in urban development.
Looking ahead, we are expanding our business to a variety of domains by leveraging this knowledge and expertise.

Residences

Akasaka Park House

1969	Akasaka Park House sold in lots,
Started condominium business2011	Mitsubishi Estate Residence Co., Ltd.,
founded through the integration of
the residential businesses ofMitsubishi Estate Co., Ltd.,
Mitsubishi Real Estate Services Co., Ltd.,and Towa Real Estate Co., Ltd.

2000 Opened GOTEMBA PREMIUM OUTLETS®
2009	Converted Chelsea Japan Co., Ltd., into
consolidated subsidiary (renamed
Mitsubishi Estate·Simon Co., Ltd.,GOTEMBA PREMIUM OUTLETS®
in February 2013)

Hotels1989 Opened the Royal Park Hotel

Start-Up Support
2007	Established EGG JAPAN, a new
business creation support hub, in the
Shin-Marunouchi Building
2016	Established FINOLAB, a co-working
office specializing in fintech start-ups

Royal Park HotelInternational
Business

Provision of residential properties andservices combining the comfort, safety,
and other qualities cultivated throughour operation and management ofoffice buildings

Outlet Malls

Acquisition of hotel sites and operation of
hotels by leveraging tenant relationships andoperation and management expertise we havebuilt up in Marunouchi

1972	Established Mitsubishi
Estate New York Inc.
1986 Established MEC UK Limited
1990	Initiated capital investmentin the Rockefeller GroupInternational, Inc.
2008	Established Mitsubishi Estate
Asia Pte. Ltd.

Establishment of a
new Marunouchi brandas a hub for technology start-ups

Development of outlet malls boasting the top customerdrawing power in Japan by leveraging tenant relationships
and information networks established through theoperation of Marunouchi retail facilities

A History of Business Expansion with Marunouchi as a Base
Investment Management
Business

Establishment of a robust network
through the expertise refined andaccumulated in the development of
Marunouchi as well as ample
financial resources

Leveraging the expertise andknowledge gainedin Marunouchi
Utilization of plot ratio transfer
and other methods in theredevelopment of Marunouchi

2001	Japan Real Estate Investment Corporation
became the first JREIT in Japan to be listed on
the Tokyo Stock Exchange
2015	Acquired the American investment managementcompany TA Realty LLC
2017	Mitsubishi Estate Logistics REIT Investment
Corporation was listed on the Tokyo Stock Exchange

Accumulation of expertisethrough a track recordof operating abundant
real estate assets

Returning the expertise andknowledge gained throughother business to Marunouchi

Marunouchi Redevelopment
1890

1890s–1950s

1960s–1980s

1995–20192020–

Starting from Scratch

First Phase of Development

Second Phase of Development

Third Phase of Development

Marunouchi NEXT Stage

Purchase of Marunouchi land andvision of a major business center

Dawning of a full-scale businesscenter development

An abundance of large-capacity office buildings in a period of rapid economic growth

Creating the world’s most interaction-inspiring neighborhood

Transforming Marunouchi into an area that continuously creates
new value

The history of Mitsubishi Estate began when
Yanosuke Iwasaki, the first president of
Mitsubishi Company, purchased the Marunouchi
area, which was an expanse of fields, at therequest of the Meiji government based on his
belief that the creation of a business center torival those of the world’s leading cities would
help realize the modernization of Japan.

The construction of the area’s first modern officebuilding, Mitsubishi Ichigokan, was completed in
1894. Soon after, three-story redbrick officebuildings began springing up, resulting in thearea becoming known as the “London Block.”

As Japan entered an era of high economic growth,
there was a sharp increase in demandfor office space. Through the Marunouchi remodeling plan that began in 1959, the area was rebuiltwith large-scale office buildings providing
a considerable supply of highly integrated
office space.

Following the announcement of the reconstruction of the former Marunouchi
Building in 1995, the Company transformed the Marunouchi area—which had
up until then been purely a business district—into a space with a vibrant andbustling atmosphere, based on the concept of creating the world’s mostinteraction-inspiring neighborhood. Aiming to make redevelopment of the area
broader and more comprehensive, we expanded that concept to Otemachi and
Yurakucho from 2008. By establishing a financial business center and a greater
amenity infrastructure, we promoted the strengthening of the international
competitiveness of the area. In these ways, we worked to give the area a fresh
appeal based on a new sense of values.

Marunouchi Bldg.

2

Marunouchi Park Bldg. &Mitsubishi Ichigokan

Marunouchi Nijubashi Bldg.

Positioning urban development from 2020 onward as part of the “Marunouchi
NEXT Stage,” we will promote urban development that generates improvementsin people’s quality of life and spurs discovery of and solutions to social issues
through the emergence of innovation and strengthening of our digital foundations.
Based on the theme of “Marunouchi Re-Design,” we will aim to establish the“Co-Creation Platform for Innovation through Companies, Employees,
and Visitors.”

Tokiwabashi Project Tower A

Uchikanda 1-Chome Project

Tokiwabashi Project Tower B

3

Mitsubishi Estate’s Strengths
Our Long-Term View on Urban Development and Forward-Looking DNA
Mitsubishi Estate possesses urban development expertise based on a long-term view—one that evolved Marunouchi
into a major business center over a period of 120 years—and a DNA for providing value that is constantly ahead of thetimes, as exemplified by its development of Japan’s first outlet shopping mall and its early entry into the real estate
investment trust (REIT) market.

Evolution of Marunouchi into a
Major Business Center

Establishment of Outlet Malls
as Part of Japanese Culture

Early Entrance into the
REIT market

Beginning of developmentin 1890

Opening of GOTEMBA PREMIUM
OUTLETS® in 2000

Established Japan Real Estate AssetManagement Co., Ltd., in 2000

2020

2020

2020

 umber of Companies ListedNon the First Section of theTokyo Stock Exchange 

115 companies

 umber of Outlet MallsN
operated  uilt a global platform throughB
execution of M&A and other activities

9urban environments that enrich people’s lives through the provision of new value that only we can provide.

Stren

gth

280,000

Please see pages 6 to 7 for details.

184 buildings
Rental Apartments (Operational) 28 buildings
 umber of Condominiums SoldNa Year  umber of Condominiums underN
Management  umber of Rooms in Hotels underN
Operation 

352,365 units
Retail Facilities 

24 facilities

3,604 rooms umber of Airports Operated byN
Airport Business 

10 airports(including 9 outlets)

 ogistics Facilities (Total NumberLof Developed Facilities) 

3,214 units

13 facilities

Relationships

Customer Contact Points

Approx.

280,000 umber of Patrons of Group-AffiliatedN
Retail Facilities, Hotels, and Airports 

Approx.

4

200 million per year

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Productivity per Employee—A Compact, Elite Group Honed by a Challenging
Corporate Culture

3(Reference) Productivity per Employee
FY2020(Millions of yen)

Approx.

600,000
households

FY2020(People)FY2020(Millions of yen)

ProfitNumber of
Revenue fromOperating income attributable toemployees
operations
owners of parent (Consolidated)

1,302,196

240,768

148,451

9,619

Revenue fromoperations per
employee

Operatingincome per
employee

Profitattributable toowners of parent
per employee

135.3

25.0

15.4

Establishment of a Leading-Edge Corporate
Governance System
Please see pages 59 to 67 for details.

Please see pages 34 to 49 for details.

 umber of Members Eligible toN
Join the Residence Club 

The power of our human resources—our most important management resource—
underpins our ongoing creation of value. The Group possesses an array of outstanding human resources, all of whom are able to create “something” from“nothing” and have adopted its founding DNA. In addition, we are cultivating andstrengthening our diverse human resources through the establishment of anenvironment conducive to stimulating creativity and the taking on of challenges.

Note: All figures are correct as of FY2020 or as ofMarch 31, 2020.

Among the key strengths of the Company are its abundant customer contact points and relationships of trust that it has
accumulated through a host of real estate developments and operations, in addition to its partnerships with subcontractors
and business partners. The Mitsubishi Estate Group intends to make new history through the cultivation of various
relationships that uncover latent needs and lead to the development of solutions thereto.

 umber of Office Workers
N
in Marunouchi 

Human Resources Who Have
Adopted Our DNA
Please see pages 56 to 57 for details.

2

Please see pages 34 to 49 for details.

Mitsubishi Estate owns about 30 office buildings in the Marunouchi area alone. In addition, we have taken part in thedevelopment of a wide spectrum of real estate assets, from office buildings to residential properties, retail facilities,
hotels and logistics facilities. Based on the experience we have acquired through these activities, we will uncover latentsocial issues and create solutions to address them.
 umber of Office Buildings underN
Management 

4Strengths

1

Please see page 36 for details.

Abundant Real Estate Asset Touchpoints

through urban development over many years. Leveraging these strengths, we will continue to create attractive

Please see page 44 for details.

 umber of Office Workers
N
in Marunouchi 

Approx.

The Mitsubishi Estate Group possesses unique strengths, which together form a distinctive driving force obtained umber of Tenants (Nationwide,N
All Purposes) Approx.

3,300 companies

th

g
Stren

5

We are working to establish a leading-edge corporate governance system that
contributes to improving our overall effectiveness and enhancing corporate value
over the long term. We are also responding to social needs through measures that
include transitioning to a “Company with Nominating Committee, etc.,” and ensuringoutside directors account for approximately one-half of the Board of Directors.
Inside directors
who are concurrently
serving as corporate
executive officersA total of 15 Directors, of Whom
7 Are Outside Directors
Transition to a “Company
with Nominating
Committee, etc.”

Board
CompositionNon-executive,
independent,
outside directors

A n Executive Compensation
Plan Aiming to Align Shareholders’and Executives’ Interests

7

5

Inside directors
who are not corporate
executive officers

3
MITSUBISHI ESTATE CO., LTD. Integrated Report 20205

Yurakucho

Marunouchi

OtemachiN

Kokyo (Imperial Palace) Gaien National Garden
Palace HotelTokyo

Otemon Tower •ENEOS Bldg.

PalaceBldg.

NIKKEI Bldg.

MITSUI & CO. Building

OtemachiPark Bldg.

uc

Yurakucho
Center Building(Yurakucho Marion)

Yurakucho Ekimae Bldg.
(ITOCiA)(Owned by a
Mitsubishi Estate
consolidated subsidiary)

Yusen Bldg.

(Annex)Marunouchi Naka-dori Ave.

Shin-Tokyo Bldg.
Shin-Nisseki
Bldg.

Mitsubishi Bldg.

St
at

Otemachi
Bldg.

Otemachi Naka-dori Ave.

Marunouchi
Eiraku Bldg.

Otemachi Tower

HOSHINOYA Tokyo
Otemachi Nak

a-dori Ave.

OTEMACHI FINANCIAL CITY
North Tower
South Tower

Tokyo
SankeiBldg.

ad e

Uchikanda
1-Chome Project(Planned completion in 2025), Marunouchi Line

Tokyo Station, Marunouchi Line

Daimyo-koji Ave.

Otemachi Station

NTT Communications
Otemachi Bldg.

Yomiuri Kaikan
BIC Cameraho

Yomiuri
Shimbun
Office Bldg.

Otemachi First Square

The Industry Clubof Japan and
Mitsubishi UFJ
Trust andBanking Bldg.

Shin-Marunouchi
Bldg.

Marunouchi Bldg.

OTEMACHIFINANCIAL CITY
GRAND CUBE

KDDI
Otemachi Bldg.

SMBC East Tower

Marunouchi Naka-dori Ave.

Marunouchi
2-chome Bldg.

Marunouchi Park Bldg.
& Mitsubishi Ichigokan

Marunouchi
1-3 Project(Planned Completionin September 2020)

on Line

Tokyo
Kaijo
NichidoBldg.

Marunouchi 1st St.

MarunouchiNakadori Bldg.

Mitsubishi
Corp.
Head Office

Chiyoda Linetion, Hanzom

Shin-Kokusai
Bldg.

Meiji Yasuda Seimei Bldg.

Marunouchi
Mitsui Bldg.

Gyoko-dori Ave.

Marunouchi 3rd St.

Babasaki-dori Ave.

Marunouchi
Nijubashi Bldg.

KishimotoBldg.

Keidanren
KaikanO te mac hi Rive rsid e Pro me n

Otemachi Station,

Otemachi Station, Tozai Lineak

ShinYurakucho
Bldg.

Meiji Seimei Kan
Bldg.

Otemachi One Tower

Ote Center Bldg.

Otemachi Station, Toei Mita Line

Hibiya-dori Ave.

Marunouchi Center Bldg.
MUFG Bank
Head Office

Tokyo International Forumion

Nihon Seimei
Marunouchi Bldg.
JP TOWER

Tokyo Station, JR Keiyo LineYur

Yurakucho
Bldg.

Marunouchi 6th St.

Marunouchi 7th St.

Hib

Yurakucho
Denki Bldg.

Imperial
Theater

Kokusai Bldg.

SanshiKaikan Bldg.

SMBC
Head OfficeBldg.

Nippon Life
Marunouchi
Garden Tower

Nijubashimae Station, Chiyoda Line

Marunouchi 4th St.

DN
Tower 21

Togyo KaikanNippon Broadcasting
System Bldg.

Yurakucho Station, Yurakucho Line

e
Lin
iya
The
Peninsula
Tokyo

iya

Sta
t

ion
, Hib

Toho
Twin Tower
Bldg.

Marunouchi
Police Sta.
HibiyaSankei Bldg.

Marunouchi 5th St.

Hibiya Station, Toei Mita Line

HibiyaMarine Bldg.

Marunouchi 2nd St.

Hi
C h bi y a S
i yo t ada tio
Lin n,
eTokyo Midtown
HibiyaWadakura-bori
Moat

Babasaki-bori Moat

Otemachi Sta

Hibiya-bori Moat

JA Bldg.

Tokyo Kotsu
Kaikan Bldg.
(Owned by a
Mitsubishi Estate
consolidated
subsidiary)
InfosYurakucho

Marunouchi
South Exit

Marunouchi
North Exit

Marunouchi
Central Exit

Tokyo Bldg.

Shin-Marunouchi
Center Bldg.

Marunouchi Oazo

Marunouchi Marunouchi
Hotel
Kitaguchi Bldg.

Otemachi Nomura Bldg.

Chiyoda Ward
Sports Center
Otemachi PLACE
WEST TOWER
NTT Communications
Otemachi Bldg. (Annex)
Urbannet
Otemachi Bldg.

Shin-Otemachi
Bldg.
NTT
Marunouchi
Bldg.

NTT Data
Otemachi Bldg.

Otemachi PLACE
EAST TOWER

Sumitomo Fudosan
Marunouchi Bldg.

Tokyo Station
Tokyo Tokiwabashi Project

Pacific Century Place
Marunouchi Bldg.

Marunouchi
Central Bldg.

GranTokyo
South Tower

Marunouchi Today

Marunouchi
Trust Tower Main

GranTokyo
North Tower

Eitai-dori Ave.

Sapia Tower

Asahi Life
Insurance
OtemachiBldg.

JFE Shoji
Bldg.

(Owned by aspecial-purpose
company undermanagement of
Mitsubishi Estate)

Nippon Bldg.

■ Completion before 2002

Marunouchi
Trust Tower North■ Completion after 2002
■ Completion after 2009

Building A■ Completion after 2020

(Planned completion
in FY2022)

Tekko Bldg.

900 m

The foundation for all value creation, accumulated over our history.

1,900 mMarunouchi by the Numbers
 umber of Companies Listed on the FirstN
Section of the Tokyo Stock Exchange*1 Fortune Global Top 500 Companies 

115 companies*2 onsolidated Net Sales of the 115 Companies inCthe Marunouchi Area Equivalent to around 8.85% of GDP
in Japan

122 trillion

Approx. ¥*2

Number of Office Workers 

Approx.

Marunouchi

18

13

London280,000

Domestic

Overseas

Others 14.2%

Shibuya

86 ha

Nihonbashi

Hong Kong Central

76 ha

42.5%

4.4%
Information

6.3%

292 ha1

Manufacturing

Professional Firms

71

4

Manufacturing
OthersCity of London

March 2000

Trading

10.4%

Nihonbashi

181 ha12

101 / Approx. 4,300 offices

 uilding Floor Space (Including Floor Space ofB
Buildings under Construction) Toranomon

1

*2

17

Toranomon

178 ha5

Shinagawa3

Shinagawa

6.4%

Shinagawa

49 ha

March 2020

Finance

22.4%

22.2%

Professional Firms

19.5%

As of the end of March 2020, the contracted area in the Marunouchi area (Mitsubishi
Estate only) has increased about 1.8 times compared with the end of March 2000.
In terms of tenant composition, the ratio of professional firms has been rising.
Concentration of Professional Firms

2

 op 50 company headquarters in terms of market capitalization
T
Overseas financial company offices
Top 100 law firm headquarters and offices

123 haSingapore Downtown Core

*2

(Stations with the same name on different lines are counted in number of lines)

Information

Tokyo Marunouchi

Source: Fortune Global Top 500, 2018, and Mitsubishi Estate Co., Ltd.

Railway Lines Servicing the Area 

58 ha

New York Midtown

1*2Toranomon

20.1%

20.9%

Trading
Finance3
1

Nihonbashi

28 lines,13 stations

ShibuyaContracted Area and Tenant Composition in the Marunouchi Area 

10.7%
Shibuya*2

810 hectares

32

16

New York

PICK UP(Mitsubishi Estate Only)

Companies

14

Marunouchi	Comparison of Area Sizes Source: Mitsubishi Estate Co., Ltd. *2

 umber of Buildings (Including BuildingsN
under Construction) Approx.

 umber of Major Corporate
N
Headquarters and Offices in Comparison
with Other Main Tokyo City Areas Companies

As of March 2020, Source: Mitsubishi Estate Co., Ltd.

As of May 2020, all of the four major law firms in Japan and three of the four leading audit
companies have their offices in Marunouchi.
Law firms:	Anderson Mori & Tomotsune, Nagashima Ohno & Tsunematsu, Nishimura & Asahi,
and Mori Hamada & Matsumoto
Audit companies:	KPMG AZSA LLC, Deloitte Tohmatsu LLC and Pricewaterhouse Coopers Aarata LLC

75 ha*1 Number of listed companies on the First and Second sections of the Tokyo Stock Exchange with head offices in the Otemachi, Marunouchi, and Yurakucho areas*2 Otemachi-Marunouchi-Yurakucho (OMY) District Redevelopment Project Council, “The Council for Area Development and Management of Otemachi, Marunouchi, and Yurakucho 2020”

67

Mitsubishi Estate’s Value Creation Model
Having grown as a comprehensive developer, Mitsubishi Estate will realize ongoing sustainable value improvement
through its steadfast commitment to creating attractive urban developments that anticipate changes in the times andto enriching people’s lifestyles, while leveraging and enhancing its various strengths.

Vision for the
Mitsubishi Estate Group

The Mitsubishi Estate Group’s Strengths and Value Creation Cycle

in the Future

Major Business Environment Trends /Material Issues Based on Social Issues
The EnvironmentGlobality

Community

Diversity

Birthrate / AgingLeveraging Existing
Properties

Digital Innovation

1
2

Abundant contact
points withcustomers, uniqueto the Group

Fundamental Approach

g

isin
rpr
e
t
En DNAalt Reetna
nd ss
Abutate Aoints
s
E chp
Tou

Uncovering
latent needs

4

Scaling as abusiness

sh

tion

a
Rel

ips

an
HumurcesoeReso Havd
Wh opteAd DNA
Our

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

ent
hm gs
i
l
ab dinEst a Leaporate
of Cor nceae
Edgoverntem
G ys
S

Increasing Social
Value

Increasing
Shareholder Value

Four key themes to realize asustainable society

Transformational improvements to the Group’s businessportfolio's efficiency andmarket resilience

Cities that conduct
management ofclimate change,
waste, andenergy issues

Safe and peaceful
cities of a sustainable
and resilient nature

Cities that provide
interactive added
value throughknowledge
accumulationand networks

 Borderless cities
respecting thediverse backgroundsof all peoples

Cities conducive
to realizing an
inclusive society

Pleasant andabundant cities
responding todemographic andlifestyle changes

Efficient andecological cities
where stock isutilized effectively

 Innovative cities
acting as wellspringsfor open innovation

2030 Targets

5%
10 %
ROE
EPS¥200
ROA

Collaboration(open innovation) withexternal players
possessing expertiseand ideas

58Long-Term Management Plan

2030

Searching forsolutions3

Creating a Truly Meaningful Society
through Attractive Urban Development

Driving force
unique to the
Mitsubishi
Estate GroupAim for improvement in both social value and sustainable
shareholder value that is highly resistant to market fluctuations
through business that addresses social issues
and the needs of the times

ial
anc /
n
i
F
s
ong tion
Str undale andFo dib ble
Creeputarand
R pB
u
Gro

MITSUBISHI ESTATE CO., LTD. Integrated Report 20209

Message from the President

Aiming for Growth Worthy of
the Mitsubishi Estate GroupWe will aim to increase our corporate value
by promoting a management plan with a long-term
perspective befitting the Mitsubishi Estate Group’sbusiness model and by mutually increasingsocial value and shareholder value.

In Integrated Report 2019, published in 2019, I stated that the initiatives aimed at achieving theongoing growth of the Group will not conclude with the three-year period of the discontinued
Medium-Term Management Plan and communicated my intention to engage in attractive urban
development, looking ahead five or 10 years, or even further into the future. As the value
demanded of the Group will change going forward amid the growing manifestation in recent
years of global social issues, such as increasingly serious environmental problems, the rise innatural disasters, and trends including falling birth rates, aging societies, and declining populations—issues that Japan also faces—we carried out repeated discussions on what is required inorder to transform the changes brought about by these issues into opportunities and continue toachieve growth worthy of the Group, with the support of our stakeholders. As a response, weannounced the Mitsubishi Estate Group’s Long-Term Management Plan 2030 (hereinafter, the“Long-Term Management Plan”), which spans the decade leading up to 2030.
In order to realize the urban development to which it aspires, the Group will establish goals
from a long-term perspective, unswayed by the state of the market environment. We must
continuously consider what is required of us to achieve these goals and reflect that in our management plan. Our conclusion that the previous three-year medium-term management plans
were too short for us to realize the value we sought to provide prompted the formulation of adecade-long management plan. By promoting this Long-Term Management Plan, I am certain that
the Group can create the value expected of it and boldly take on the challenge of achieving growthin new business domains, which will involve initiatives to be carried out over the long term.

Increasing Social Value Leads to Heightened
Shareholder Value

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

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Under the Long-Term Management Plan, we are focusing on realizing our mission with a dualemphasis on a strategy for social value improvement and a strategy targeting shareholder valueenhancement. Above all else, we should cherish continuing to fulfill our mission and enabling all
stakeholders to feel the value thereof. The Mitsubishi Estate Group has thus far provided value by
repeatedly identifying and addressing social issues in accordance with the times. In the 2020s,
addressing social issues and responding to the needs of the age—as well as conducting business
operations with an eye to offering value beyond that—will help the Group improve social value
while sustainably enhancing shareholder value in a manner that is resilient to market fluctuations.
Accordingly, these two strategies are inseparable from each other and exert a reciprocal influence.
Meanwhile, in our strategy targeting shareholder value enhancement, we have established
KPIs from a more shareholder-oriented perspective. Although I have hitherto discussed ourpolicy of increasing ROE through improvements in ROA, we have adopted ROE and EPS as KPIs in
addition to ROA, with the goal of clearly indicating our greater emphasis on increasing shareholder value and enhancing efficiency from the perspective of shareholders. Since I am sure that
other developments requiring our close attention will emerge, in addition to adopting the above
indicators, I will advance management while communicating with our shareholders about what issuitable for the Group.

MITSUBISHI ESTATE CO., LTD. Integrated Report 202011

Message from the President

Advancing Value Provision froma Long-Term Perspective

ESG—The Most Important Theme of Our Strategies forSocial Value Improvement

In our domestic asset business, we will focus on realizing the Marunouchi NEXT Stage andmoving ahead with a variety of measures. I want to develop Marunouchi into an area that
constantly stimulates and inspires people by evolving it into a co-creation platform for innovation
through companies, employees, and visitors and by communicating our cutting-edge initiatives tothe world.
In our international asset business, our growth in Asia will be one of the keys to our progress.
Industries, populations, and residences continue to increase in the region, and there are many
countries and regions where real estate prices are rising. Moreover, there are also countries inwhich overseas companies can carry out a large number of developments, such as Vietnam andIndonesia. As demonstrated, numerous domains exist in which we can leverage our urban
development know-how. I believe that if we can take the initiative in carrying out developments
in real estate and peripheral domains, we may dramatically increase our profits.
In addition, transforming our portfolio into one that is resilient to changes in market conditions is an important theme in the Long-Term Management Plan and growth in our non-asset
businesses is indispensable to achieving said transformation. In its expansion into new businessdomains, the Group will make full use of the various strengths it possesses. Among these, wewill leverage our strength that is the Marunouchi area and initiate a trend that encourages
business partners to want to join forces with Mitsubishi Estate, above all other companies. By
doing so, if we develop functions to constantly create new ideas and value, I am convinced our
non-asset business can grow into a major pillar of profit creation.

In FY2019, the Mitsubishi Estate Group identified seven categories of materiality as important
issues for sustainable management. By tackling these seven categories through our businessactivities, we will aim to achieve the Mitsubishi Estate Group Sustainable Development Goals 2030
that we defined as targets in the Long-Term Management Plan.
In regard to the environment, while we have to date advanced initiatives and other efforts
aimed at preventing global warming, we will continue to promote sustainable urban developmentthat proactively tackles climate change and environmental issues. The impact of the spread of
the COVID-19 pandemic is prompting calls for proposals for and the provision of office environments where social distancing can be ensured and for the introduction of non-contact security.
As the scale of disasters increases every year, I recognize that we must establish countermeasures in cooperation with surrounding areas and a variety of institutions.
Human resource development is an important theme in promoting sustainable management.
To create value over the next 10 years, I believe it will be vital to possess a sensitivity that picks up
on small changes and connects them to new value creation, without being trapped by past experience
or conventional ways of thinking. To this end, I would like to create an environment where employees can take on challenges in their own fields of interest. Thankfully, Marunouchi possesses uniqueappeal in abundance. As there is still so much new value that only the Group can realize, and in order
to increase such value, I am keen for employees to take on the challenge of creating new businesses
by utilizing technologies and collaborating with people not previously found at Mitsubishi Estate.

Tokyo Tokiwabashi Project

Offering the Group’s Unique Value inthe “New Normal Society”
It is expected that workstyles and the roles of offices will change in the society of the future.
Put in terms of concepts such as implicit knowledge and explicit knowledge, I believe that explicit
knowledge can be advanced to a certain extent under workstyles including telecommuting.
However, direct communication is necessary for implicit knowledge. I am of the opinion that
future workstyles will combine actual and digital aspects, rather than just one or the other.
I know for sure that we are one of Japan’s leading corporate groups in the urban development domain. Moreover, we have the ability to advance urban development on a global scale
suitable for countries and regions by leveraging the experience and know-how we have cultivated in Japan. Going forward, I would like to provide unique value from a global perspective that
only we can, by offering our stakeholders a range of value, including that pertaining to space andservice, with a mindset and stance centered on open innovation. We kindly ask for the continuing
support of all our shareholders and investors in our endeavors and we hope you will join us inlooking forward to the growth of the Mitsubishi Estate Group in the 2020s.
October 2020

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

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MITSUBISHI ESTATE CO., LTD. Integrated Report 202013

Overview ofLong-Term Management Plan 2030
In light of the rapidly changing market environment, the Mitsubishi Estate Group has formulated a 10-year
Long-Term Management Plan 2030, as it aims to continuously provide value sustainably to its stakeholders
over the longer term.

Overview ofLong-Term Management Plan 2030
Goals of the Plan

Background to Strategy Formulation
Under previous three-year medium-term management plans, we became shackled
by short-term target setting, which is incompatible with the urban development
approach that we ought to be pursuing. Therefore, by setting targets for periods moresuited to our original business model, which aims to improve the value of facilities
and areas over the long term, we formulated Long-Term Management Plan 2030 inorder to reflect our ambition for boldly taking action to achieve growth in new domains.

To realize the Mitsubishi Estate Group’s basic mission and ongoing growth, we will carry out management with a dual focus on strategies for increasing both social value and shareholder value.
Under our strategies for increasing social value, we will provide higher value to all stakeholders,
including visitors and employees, by implementing initiatives designed to realize a sustainable society.
Under our strategies for increasing shareholder value, we will adopt ROA, ROE, and EPS as KPIs
and aim to convert to a highly efficient business portfolio resilient to changes in market conditions.

Mitsubishi Estate Group’s Mission
Macro Environment
Global trendsDecrease in birth rate and aging
society / declining populationT echnologicaldevelopment

Creation of a Truly Meaningful Society throughUrban Development
2030 Targets

Changes in the External Environment Affecting
the Mitsubishi Estate Group

Four key themes* to realize asustainable society* Environment, Diversity & Inclusion, Innovation,
ResilienceBorderless and multiple-use real estateEmphasis on “experiential value” through services and content
Aspirations toward increasing workers’ productivity andinnovation creation
Demand for leveraging robotics and AI due to labor shortages
Entry of players from other industries into the real estate industry
Increase in inbound tourism and the economic development ofemerging nationsE xpansion in needs for environmental impact reduction andresilience (disaster prevention and reduction)

2030 Targets

A pair of Turning Gears

Increasing
Shareholder
Value

Increasing
Social Value

ROA

5%

ROE

10 %

EPS¥200

Fundamental Approach

Fundamental Approach

Create value for every
stakeholder, including visitorsand employees

Transformational improvements to the Group’s businessportfolio's efficiency andmarket resilience

SynergyRise of digital platforms
Close scrutiny to a company’s capital efficiency

Cannot thrive by continuing withour conventional business structure

Realize Our Mission and Sustainable Growth by
Increasing Both Social Value and Shareholder Value

Formulation of Long-Term
Management Plan 2030

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MITSUBISHI ESTATE CO., LTD. Integrated Report 202015

Overview of Long-Term Management Plan 2030

The Group’s Strengths and Growth Strategies
Leveraging our long-term perspective on urban development and forward-looking DNA, in addition to our extensive
user reach and abundant real estate asset touchpoints, strengths of the Group, we will seek to realize growth in thethree domains of our domestic asset business, international asset business, and non-asset business.
Moreover, we will raise the level of ROA and ROE by combining revenue expansion resilient to real estate market
fluctuations in our non-asset and other businesses and flexible capital policies.

International Asset Business Growth Strategy

2Grow International BusinessProfit Growth1

2

Domestic Asset Business

3

International Asset BusinessAdvance Marunouchi NEXT StageprojectA sia: Enhance development
business

Increase NOI* with long-term
development projects

Europe: Advance development

Optimize capital-recycling businessin line with market conditions

U.S.: Enhance and diversify capital-

Non-Asset Business

Investment<2030 Goal>

Approx. +¥50 bn

G row fee businessU tilization of new technologies,
e.g., AI and robotics

business and enhance revenue base

Investment and Return Plan (FY2021–FY2023)(vs. FY2020)

FY2020 results: ¥46.0 billionN ew B2C and B2B2C businesses

100

100

Europe/U.S.

200

200

0

Strategic allocation*

300–4500300–450

Total

600–750300

300–450

recycling business

Growth Road Map

Build a More Efficient and Market-Resilient Business Portfolio
Improve ROA and ROE by expanding revenue via mainly market-resilient, non-asset businesses
in combination with a flexible capital policy

International
Asset Business
Sustainability

Quality of Life

Solutions to social issues

Innovative services and experiences

Domestic Asset Business Growth Strategy

1

3

Leverage Existing Strengths
Profit Growth

Investment and Return Plan (FY2021–FY2023)
Investment<2030 Goal>

Approx. +¥50 bn(vs. FY2020)

FY2020 results: ¥201.0 billion

Return(Billions of yen)

Net Investment

EuropeEnact approach to investments and returns: 1. Stabilize revenue 2. Enhance capital efficiency
Advance large-scale development projects (8 Bishopsgate, 60–72 Upper Ground)

U.S.

Strengthen capital-recycling business with local resources
Carry out joint project development with local partners

Domestic
Asset Business

CapitalRecycling

Residential

Adapt to a Changing Future
Profit Growth0150<2030 Goal>

Outlet malls, etc.

100

0

100

Condominiums

500

500

0

Approx. +¥50 bn

Others

450

300

150

Total

1,200

800

400

(vs. FY2020)

FY2020 results: ¥16.0 billion

Aim for profit growth without affecting the balance sheetH owever, investments in M&A and capital alliances will be considered for
driving rapid growth and acquiring external know-how

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Growth Road Map

Mid Stage

Late Stage

Early Stage

Achieve sizable profit contribution from large project
including Tokiwabashi B Building

Optimize the balance of new investments and capital returns in response to market conditions

Secure and commercialize redevelopment project

Optimize investments and capital returns

Non-Asset Business Growth Strategy

150

Advance and commercialize redevelopment
project, including in Marunouchi

Late Stage

Secure development opportunities and accumulate assets
Realize profits (from residential and ongoing projects)

Marunouchi

Early StageMid Stage

Asia

Growth Road Map

Rental0* Aiming to invest ¥100–¥150 billion in addition to planned investments over the coming three years to expand the international business

Early Stage

Value Propositions(Billions of yen)

Net Investment

Asia* Net operating income = Rental income — rental costs(excluding depreciation)

Goal

ReturnIncrease the number of units sold and realize profits
from redevelopment project

Existing

Mid Stage

Late Stage

Investment management business: AuM growth (aim for ¥5 tn by the mid-2020s)
Hotel management business: Expand number of hotel rooms (open 3–4 hotels per year)

Non-Asset BusinessNew

Select new domains
Identify business partners
Implement field trials

Business trials
Achieve early profits

Scale up businesses
Achieve sizable profit contribution

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

17

The Mitsubishi Estate Group’s Mission

Overview of Long-Term Management Plan 2030

Creation of a Truly Meaningful Society
through Urban Development

2030 Targets

Road Map for 2030
ROA 

To achieve the targets set forth in the Mitsubishi Estate Group’s basic mission and Long-Term Management Plan 2030,
the Group will grow business profit and improve corporate value from the two major perspectives of realizing a sustainable
society and proposing times and experience that are ahead of the times.

ROE 
EPS 

5%
10 %
¥200

Achievement of the Mitsubishi Estate’s SDGs by 2030 
1. Environment

3. Innovation

2. Diversity & Inclusion

4. Resilience

Profit Growth
Early to Mid StageMid to Late Stage

Domestic Asset Business Domestic Asset Business Advance Redevelopment Projects

Profit contributions from Redevelopment
Projects

Complete Tokiwabashi A Building
Open and expand outlet malls ong-term development projects, e.g., Tokiwabashi
L
B Building ell assets and reconstruct existing buildingsS(will lower rental profits)

GO
AL

Residential development projects

Temporary decline in condominium units soldInternational Asset Business International Asset Business 

Stabilize Profitability via Capital Recycling

Profits Scale with Asset Accumulation

Shift from asset expansion to recycling enovate 1271 Ave. of the Americas, Complete 8
RBishopsgate

Stabilize capital-recycling business in Asia

Non-Asset Business Stabilize condominium business in Asia

Boost Profitability in New Domains

Expand assets capital-recycling business in Asia

La

Realize stable growth in existing businesses

Non-Asset Business teBoost profitability in new domains

Promote Commercialization in New Domains

Sta

ge

Realize stable growth in existing businesses
Promote commercialization in new domains

Flexible Capital Policy
Flexible Capital Policy in Response toMarket Conditions(Value Creation through balance sheet management) ptimize mix of investments, asset sales,O
shareholders returns, and financing in response
to market growth projections

Mid

Sta
Fle
xib

rt o

le c
api

fL

tal

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Ea

ong

×

rly

-Te

rm

Ma

Sta

ge

pol
Pro
nag
icy
vis
in r
ion
em
e
o
s
dev
ent
f
pon
elo value
se
Pla
the
pm
t
t
o
o
ma
n2
res ent
soc
r
olu
t
i
ket
030
tion hat co ety thcondof s ntri rougition
oci bute h b
s
al i
usi
ssu s to
nes
es
s

Sta

ge

Aspects for Value Provision in Light of Changes in
the Social Environment
Sustainability 

Quality of Life  evelop sustainable communities to addressDclimate change and environmental problems

 ealize urban development that provides
R
inspiration and happiness to customers,
allowing them to experience convenience,
fun, well-being, and community involvement

 nable people of all backgrounds to thrive byE
building communities adaptive to varying
lifestyle needs
Create innovative cities that birth innovative ideas
 uild strong and resilient communities that prioriB
tize security, peace, and disaster protection

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

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Overview of Long-Term Management Plan 2030
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Domestic Asset BusinessCO • MO • RE YOTSUYA
A 2.4 ha Large-Scale Redevelopment andMultifunctional Development That Will Becomea New Landmark in Yotsuya
Yotsuya is located in the center of Tokyo, with the
Chuo Line, the Sobu Line, the Marunouchi Line, and the
Namboku Line extending into the area and some ofTokyo’s leading hubs, such as Marunouchi, Shinjuku,
and Roppongi, are all situated within a radius of aroundthree kilometers. In Yotsuya, which is brimming withappeal, CO • MO • RE YOTSUYA, a large-scale mixed—
use redevelopment that will become a new landmark,was completed in January 2020.
Making full use of our resources, this project—thebusiness promotion of which we conducted in cooperation
with many landowners and the Urban RenaissanceAgency, the entity that headed the construction—lays
out multifunctional facilities, including those for offices,
retail, residences, education, and public facilities.
In addition, CO • MO • RE YOTSUYA boasts a lush green
space in the city center offering relaxation and bustle,
with coexistence with the community as its guiding
principle. In these ways, this redevelopment contributes
to the enriched lifestyles of the diverse individuals
who assemble there.

Maximization of Our Expertise in Large-Scale Mixed-Use Developments
Accumulated in Marunouchi and Elsewhere
Leveraging and combining the development and operational management expertise, experience, know-how, andnetwork accumulated by the Mitsubishi Estate Group in urban development in Marunouchi and elsewhere, theCompany was able to give rise to CO • MO • RE YOTSUYA. Moreover, as this project is a redevelopment business,
Mitsubishi Estate will continuously pursue optimal solutions for local residents, the Company, and its business
partners, including landowners, to establish facilities tailored to the area that facilitate coexistence with the community.
CO • MO • RE YOTSUYA also fulfills a role as a base for disaster-preparedness activities, as exemplified by its
functioning as a temporary refuge for stranded commuters in the event of a disaster and the installation of “manhole toilets.”
As a new landmark in Yotsuya, this redevelopment will continuously help enhance the appeal of the area.

CO • MO • RE YOTSUYA Facilities
Yotsuya Tower
The tower is an office building equipped with high-function
specifications. It has scenic views of lush green and boasts
wonderful, commanding panoramic views. The area per
floor is approximately 2,000 m2 while the ceiling height is
2.8 m. It is therefore a highly comfortable and spacious
environment suited to next-generation workstyles.

The Residence Yotsuya Avenue /The Residence Yotsuya Garden
We have created highly
convenient urban residential
spaces with building layoutsthat are in harmony with thesurrounding environment.

C O M M E NT 

CO • MO • RE Mall
The mall is a bustling
retail zone, within which
we have assembled awide range of stores,
including convenience
stores, a supermarket,
clinics, and a dry cleaner,
thereby helping bring convenience to the lifestyles of people
in the community. We also provide a rich lineup of restaurants that address dining needs, ranging from the conductof business to daily use.
Yotsuya Global Study SquareThis new development features educational facilities forvisitors and local residents that offer lifelong learningclasses and enable industrial-academic collaboration
initiatives among members of the local community andcompanies therein.
Yotsuya Sports Square / Yotsuya Cruce
We have established a multipurpose hall, music room, andmeeting room with sports, cultural activities, mutual interactions, and meeting functions open to the local community.

Message from the Employee in Charge of This Project

Realization of Our Goal to Develop a Facility Loved by Those Involved with It
The CO • MO • RE YOTSUYA project started when the local redevelopment council initiated moves in 2006 and the Company
purchased an eight tsubo plot of land on the premises and joined the council in September 2007. Establishing relationships oftrust with landowners is crucial in redevelopment projects. For landowners who hold the original land rights, anything otherthan a redevelopment of value is meaningless. For this reason, we repeatedly held workshops with landowners and carefully
established relationships of trust therewith, rather than advancing the project in a high-handed manner.
Unlike projects in which we have been engaged to date, this large-scale
mixed-use development was not located in a prime area, such as
Koji Uomi
Marunouchi or Minato Mirai. However, I believe that it will serve as a model
Senior Manager, Urban
case for our domestic asset business, which we will grow going forward.
Redevelopment Department
Mitsubishi Estate Co., Ltd.
While the value we offer changes in step with the times, fundamental values stay the same. What is important is to offer space andservices that allow the people who live, work, and visit an area toexperience genuine happiness. That is the vision of the urban development we pursue. Although this entails a great social responsibility, we
will continue to take on the challenge of this rewarding work.

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Overview of Long-Term Management Plan 2030
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Property Profile

International Asset BusinessLife One Wireless(10th project in Bangkok, completed in 2019)

Life One Wireless is in a highly
convenient location, situated two
stations from both Asoke,
Bangkok’s commercial district, andthe Siam district on the BTS, with
Rooftop poolits nearest BTS Skytrain station
being Phloen Chit. In addition, the Swiss Embassy, hotels, and otherbuildings grace the streets of its sophisticated environs. Surrounded bylush green, we have adopted European-style interiors for thiscondominium while employing a design tailored to modern lifestyles,
such as through co-working spaces and other innovations.

Condominium Business in Bangkok, Thailand
Addressing of Residential Needs in Thailand,
Which Is Experiencing Dramatic Growth,through the Mitsubishi Estate Group’s Know-How

The Address Siam-Ratchathewi(16th project in Bangkok, scheduled for completion in 2023)

This condominium is part of the“The Address” series, AP’s high-end
brand of properties. It is located in
an area just one station from theSiam district, Bangkok’s renowned
Average floor area per unit of 35 m
(typical size in Bangkok)
central commercial district. As it isreplete with facilities that include the Sky Lounge and Infinity Poolon the 50th floor overlooking the Bangkok cityscape, a high-quality
lifestyle can be enjoyed in the center of Bangkok.
2

Offering of New Value by Addressing Thailand’s Social Issues
In Thailand, which is seeing dramatic economic growth, buying a residence is not only seen as an once-in-a-lifetime
purchase, but also as an investment product. Depending on the purchaser, there is often little motivation to maintainbuilding quality over the long term. However, as the economy matures, we expect to see an increase in demand forresidences as lifelong homes. As such, there will be demand for product development and building management that preserve
housing quality over the long term. To meet this demand, we believe it will be vital to leverage the expertise we havecultivated in Japan and reflect that expertise in our product plans and designs and in the creation of building standards.
The problem of air pollution caused by PM2.5 has become increasingly serious in Thailand in recent years. With
that in mind, we have installed ventilation systems made by a Japanese manufacturer and are advancing proposals
of condominiums that take into account air quality inside a building as environment-friendly properties. Further,social issues such as the low birth rate and aging society being experienced in Japan are expected to become
increasingly apparent in Thailand going forward and consideration must be given to new needs and lifestyle patterns
in our countermeasures to the current COVID-19 pandemic. We would like to offer enriched lifestyles to customers by
quickly responding with AP to these social issues and changes in the environment.

Among Asian countries, where economic development is progressing, Thailand plays a central
role, including geographically. As such, the Mitsubishi Estate Group has been promoting a
condominium business in Thailand since 2014 and has already developed 18 condominiums(as of June 2020) through a partnership with AP (Thailand) Public Company Limited (AP),a major local developer.
Looking ahead, we will engage in real estate development that responds to the enriched
lifestyles of customers by offering know-how on resolving issues that Japan is alreadyexperiencing, such as addressing its low birth rate and aging society—which are becoming more
pertinent in Thailand—and environmental problems, as well as improving design and building
standards for building condominiums that can be lived in continuously over a long period.
Property name

Properties in Which Mitsubishi Estate Is
Involved in Central Bangkok

BTS (Skytrain)
MRT (Blue Line)MRT (Purple Line)ARL (Airport Rail Link)

1
9 14

2
3
4
5

Central commercial district
Area around Siam Station

Grand Palace area

6
7
8

7

16

Commercial district
Area around Asok Station

11 2
12 5

6
10

AP

18

9
10
11
12

17

15
4

Central business district
Area around Sathorn

1

3

Chao Phraya
River

Sukhumvit area,
where many expatriate
personnel live

8
13

13
14
15
16
17
18

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

aspire Ratchada-wongsawang
RHYTHM Asoke II
RHYTHM Sukhumvit 36-38
aspire Sathorn-Thapra
Life Asoke
RHYTHM Rangnam
Life Pinklao
RHYTHM EkkamaiLife Ladprao
Life One WirelessLife Asoke-Rama9Life Asoke Hype
Life Sukhumvit 62
Life Ladprao Valley
Life Sathorn Sierra
The Address Siam-Ratchathewi
RHYTHM Ekkamai Estate
RHYTHM Charoenkrung Pavillion

Total number of units

1,232
346
496
1,218
1,642
385
803
326
1,615
1,344
2,248
1,253
438
1,140
1,971
880
303
421

C O M M E NT 
Year of completion

2016
2016
2016
2016
2018
2017
2017
2018
2020
2019
2020
2021
2019
2021
2022
2023
2021
2022

Message from the Employee in Charge of This Project

Relationships with Local Partners Are the Key to Business Success in Thailand
In Thailand, as the real estate development business falls into the category of what is referred to as a restricted industry,overseas companies are not allowed to conduct real estate business independently, while collaboration with local partners is
mandatory. Selecting a partner was a crucial element in promoting our business in Thailand. Our partnership with AP, which
has a corporate culture highly compatible to that of our own and boasts abundant experience and expertise in condominium
development in Thailand, serves as a competitive advantage in ourbusiness there. I would like to propose a new standard of housing to theMasamichi Noyori
market in Thailand by carefully assessing market changes and leveraging
General Manager
Mitsubishi Estate Asia Pte. Ltd.
the expertise of Mitsubishi Estate and AP.
Going forward, the Company will share the experience it has gained
regarding business promotion with local companies in this business, aswell as the expertise we have accumulated in a market that is different
from Japan’s, with other asset businesses and businesses operated by
the Company in other countries. I am confident that sharing our experience inthis manner will contribute to the further expansion of our international asset
business, one of the goals laid out in Long-Term Management Plan 2030.
MITSUBISHI ESTATE CO., LTD. Integrated Report 202023

Overview of Long-Term Management Plan 2030
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Value Offered by the Elevator Media Business
The elevator media business (business name: elecinema) offers a service delivering optimized content insideelevators, enclosed spaces where people spend a short time. A projector is installed at the rear of an elevator car
and unique entertainment content, such as building information, news, weather, and advertisements, are projected
onto the door at the front. Although information is currently typically communicated using notices or tablets insideelevators, there are issues associated with these methods in terms of visibility, the burden of updating the information,and other difficulties. By using this service, customers can offer a cinema-like, compelling viewing experience byprojecting images onto an elevator door. In addition, as a slot is prepared in the delivered content that building
owners and management companies can customize according to their own wishes, they are able to provide
information to those working at their buildings in a timely manner while spacemotion conducts batched editing
and operation of generic content, such as news and weather.
In the elecinema business, we offer our services to real estate owners without their incurring any charge for
initial or running costs and monetize the business principally through advertising revenue. We are initially advancing
installations at office buildings and have been receiving copy centered on advertisers who want to communicate
their messages primarily to office workers. This service has enjoyed a positive reception. Of late, we have beenenriching short content that allows users to enjoy their brief time in elevators and carrying out large-scale revisionsof the product. By doing so, we are pursuing the provision of superior customer experiences.

Non-Asset BusinessParticipation in the Elevator Media BusinessTransforming Elevators into Theaters—
Creating a New Market Using Unique Technology

Acceleration of Commercialization through Collaboration with a Start-Up Company
We established spacemotion, which will promote our elevator media business, jointly with Tokyo, Inc., a technology
start-up. While the elevator media domain is still a young market in Japan, a huge market has developed for it inChina, which is an advanced digital country, to the extent that the market capitalization of the largest company in thisdomain reached ¥5 trillion at one point. Similar to China, in terms of advertising trends in Japan, revenue from mass
advertising, such as TV commercials, was lower than it had been in the previous year for the first time in 2019.
Amid expectations of a further decline in mass advertising going forward, out-of-home advertising (outdoor andtransit advertising), including taxi advertising, is growing rapidly.
Although delivering advertising in elevators had for somespacemotion, Inc.
time been the subject of attention as an idea, the technology fordelivering content remotely in an environment with a weak recepDate of establishment:
November 5, 2019tion proved to be an obstacle, meaning such advertising was neverBusiness location:	Otemachi 1-1-1,
Chiyoda-ku, Tokyo
realized on a full-scale in Japan. To remove this obstacle, we use
Shareholder composition:	Mitsubishi Estate Co., Ltd., andthe technology that Tokyo, Inc., our joint business partner, hasTokyo, Inc.
refined since its founding as our technological competitive advanKenichiro Ishii and Youhong Luo
Representatives:
Business activities:
tage. Mitsubishi Estate and Tokyo, Inc., will combine their respective
Operation of a content delivery service leveraging
strengths and promote this business at an overwhelming speed toprojectors in elevators
create a new market.

C O M M E NT 

Message from the Employee in Charge of This Project

We Will Create a Business Good for All Four Parties—Real Estate Owners, Elevator Users,
Advertisers, and Ourselves.
Many people use elevators several times a day, but, for almost
everyone, they are spaces where time is spent idly.
To convert this idle time into time of value, spacemotion, Inc.,a company established by Mitsubishi Estate, takes part in theelevator media business, delivering building announcements,
weather information, news, and unique entertainment content.
By projecting images inside an elevator car using a projector
to facilitate the viewing of exciting content on a large screen,
we will transform elevators into mini theaters.

24

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Projection onto the Inside Doorof an Elevator Car
Projector

Door

In an era in which digital technologies permeate every aspect of people’s lives, the Mitsubishi Estate Group, which primarily
operates in offline markets, has felt the need to redefine its business model. Accordingly, we established the DX Promotion
Office in 2018 (changed to the DX Promotion Department in 2019) within the Corporate Planning Department as a specialist
organization to drive digital transformation (DX).
As we tackle a variety of projects from multiple angles, we have positioned the elevator media business as a DX businessgenerating new revenue by combining our expertise in real estate and digital technology (utilizing idle space to relieve customer
pain points during idle time).
Given that this business deploys a solutions business model that
did not previously exist, I feel the difficulties attendant with that
Kenichiro Ishii
aspect on a daily basis. I am of the opinion that it is important thisDX Promotion Department
business model strikes a balance benefiting its four interested parties,
Mitsubishi Estate Co., Ltd.
and President &by uncovering value for real estate owners, elevator users, advertisers,
Representative Director,
and ourselves, the primary entity in this business.
spacemotion, Inc.
One of the themes of the Company’s Long-Term Management Plan
2030 is the creation of new value and functions for real estate throughtechnology. As such, we have positioned the elecinema business as avery important business acting as a litmus test for that theme.
Although this business is still in its infancy, I hope that our initiatives
will help add variety to real estate and cities.
MITSUBISHI ESTATE CO., LTD. Integrated Report 202025

Overview of Long-Term Management Plan 2030

Message from the Corporate Officer in Charge of Finance & Accounting
and Corporate Communications
mark through our initiatives to date, we will aim for a level in the double digits to further increase shareholder
value. Partly for that reason, as the chart on the previous page indicates, we will follow a policy of ROE
improvement through raising ROA by controlling our leverage ratio within a range that allows us to maintainour credit rating levels. As for improving ROA, in addition to profit growth through aiming to expand each ofour domestic asset, international asset, and non-asset businesses by around ¥50.0 billion, we will carry out
various measures that include selling underperforming assets and stocks held for strategic purposes andexpanding our non-asset business.
Please see pages 16 and 17 for the key points of each asset business initiative.

We will transform our portfolio
into one that is highly efficient andresilient to market fluctuations.

In terms of improving ROE, we will manage shareholders’ equity in addition to growing profits. The chart
below shows our plan for realizing our ROA, ROE, and EPS targets. In spite of the fact that growth in businessprofit, the numerator in the formula, does not double under this calculation, we are targeting a doubling in
EPS. As such, it is a plan that hinges on reducing the denominator, that is to say, it incorporates substantial
share buybacks.
2030 Targets: Realization Plan (ROA, ROE, and EPS)
Current (FY2020)

2030 Target

Hiroshi Katayama

Increase of ¥120–¥170 billion

Senior Executive Officer¥350–¥400 billion

Business
Profit¥230.5 billion

Establishment of Targets for Strategies to Increase Shareholder Value in Our Long-Term Management
Plan 2030 
As its Long-Term Management Plan 2030 highlights, in order for the Mitsubishi Estate Group to achieve ongoing growth, it has established KPIs with a greater focus on efficiency to transform its portfolio into one possessing the high level of efficiency and resilience to market changes that is expected of a listed company bymaking full use of the strengths it has developed to date. Although our previous policy was to use ROA
improvement as an efficiency indicator, we decided that it would be more appropriate to adopt ROE and EPS as
KPIs, in addition to ROA, to clearly indicate that we will emphasize further enhancing shareholder value andincreasing efficiency from the viewpoint of shareholders. In regard to ROE, while we have raised it to the 8%

ROE<Assumption of total asset changes >¥5.9 trillion

Optimize investments, asset sales, shareholder
returns, and financing according tomarket conditions

Flexible capital policy

Total
AssetsApprox. ¥7–¥8 trillion

Expected net increase: ¥1–¥2 trillion
Business Profit
Total Assets=

ROA: 3.9%

Leverage

ROA enhancement

Optimization of leverage
while maintaining current
level of credit ratings

Key Initiatives
Superior ROE throughStronger ROA

Grow net operating income with
development push

Adapt capital-recycling businessto market conditions

Optimize residential business'
profit structure

Grow capital gains internationally

Expand non-asset business

Dispose underperforming assets
and strategic-holding stocks

Interest-bearing debt
Respond to market conditions

EquityManage it via sharebuybacks, etc.

ROA: 5%
With current
leverage

ROE: 7.8%

ROA(EPS: ¥200)(EPS: ¥100.2)

Approach to Improve ROE

Improve ROE: Focus on ROA While Maintaining Current Level of Credit Ratings

Approx. ¥50 billion growth for each ofour domestic asset, international asset, andnon-asset business

Increase

Net investment: Approx. ¥2–¥3 trillion

Decrease

Depreciation: Approx. ¥1 trillion

ROE: 10%

Execution of a Flexible Capital Policy Taking into Account Real Estate Market Conditions 
As a business company, while we aim to capture growth investment opportunities associated with an improvement in efficiency, we believe it is crucial to strike a balance that flexibly takes into account real estate market
conditions. Our core business is super long-term redevelopments such as those in the Marunouchi area.
Accordingly, the procurement of long-term funds at low cost is important for our financial strategy and wefollow a policy of controlling our leverage ratio within a range that allows us to maintain our credit ratings.
Ordinarily, a deterioration in real estate market conditions exerts downward pressure on credit ratings.
However, as we are seeing a buyer’s market in which properties can be purchased cheaply, we are able tosecure a buffer to a certain extent. We will therefore carry out investments in a proactive manner. To that end,
we will follow a policy of increasing corporate value by optimally combining investments, asset sales, shareholder returns, and financing in accordance with real estate market conditions.
In regard to the share buybacks, we will act flexibly while monitoring factors including potential investment
demand, the status of cash, and share prices.

Improved ROA

26

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

MITSUBISHI ESTATE CO., LTD. Integrated Report 202027

Overview of Long-Term Management Plan 2030

A Flexible Capital Policy in Response to Real Estate Market Conditions (Increasing Corporate Value by Controlling theBalance Sheet)

Optimize Mix of Investments, Asset Sales, Shareholders Returns, andFinancing in Response to the Market
Market conditions
favorable for selling
Asset sales:   Profits:   

Shareholder
returns:   Market conditions
favorable for buying
Active acquisitions /Investments:   

Aiming to maximize medium- to long-term corporate value by
combining stable cash flows produced from long-term development
projects and retaining projects, with a capital-recycling businessthat takes advantage of real estate market conditions

Capital gains:   Shareholder
returns:   

Our Approach to Growth Investments and Asset Efficiency Aimed at Achieving Our Targets We have set expected returns (pre-tax internal rate of return) from investments at 6–8% for our domestic
capital-recycling business, at 8–10% for our international business (developed countries), and at 10% or more
for our international business (emerging countries). I believe that, if we can make investments that surpass
expected returns in each business on a Companywide basis, then overall returns will exceed capital costs.
In addition, in regard to risks related to investment projects, we ascertain business viability by carrying out
verification at the Strategic Investment Office, which has jurisdiction over Companywide research functions
and investment decision rules. In addition, prior to deliberations by the Executive Committee, the Strategic
Investment Committee carries out discussions and evaluations to check profitability and the nature of risks.
As discussed earlier, we will improve ROA by implementing a variety of measures, including selling underperforming assets and stocks held for strategic purposes as well as expanding our non-asset business that is
not dependent on assets. However, in our development business, we will engage investors and landowners topromote projects as joint businesses, rather than insisting on solo investments. By undertaking coordination,architectural design and engineering, leasing, and property management of development projects as a whole,
the Company will increase the ratio of its fee business and realize an increase in investment efficiency.

Our Approach to ESG Investment in Our Strategies to Increase Social Value Amid the emergence of diverse social issues in Japan, such as population decline, the low birth rate and theaging of society, and environmental problems, the Mitsubishi Estate Group, which has opportunities to engage
with these issues in a variety of ways in its urban development efforts, would like to offer higher social value.
It is important to adopt a standpoint of striking a balance between the realization of a sustainable society andthe development of the Group by helping resolve social issues and offering new value. In recent years inparticular, there has been a growing trend to screen investment destinations by taking into account not only
financial information but also non-financial elements such as environmental, social, and governance (ESG)
factors. Beyond helping resolve social issues, I believe that working to improve ESG-related matters earns
recognition from long-term investors and results in the improvement of share performance. Recently, in
accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), theCompany formulated two main scenarios regarding the risks posed by climate change and analyzed the future
impact of climate change on its business. In one scenario, in which climate change countermeasures makeprogress due to the strengthening of government regulations and policies, the rise in temperature is kept to
1.5ºC–2ºC higher than its pre-industrial revolution level. However, in the other scenario, in which countermeasures fail to make progress and the temperature rises by 4ºC, natural disasters are expected to intensify andincrease. In terms of financial risks, an increase in costs required to reduce CO2 emissions, a rise in vacancy
rates accompanying an outflow of tenants from properties where the environmental response is delayed, anda decrease in rents are all expected. Among these, we would expect the negative impact of a decline in earnings power due to an outflow of tenants to be particularly significant. We therefore intend to transform risks
into opportunities and maintain and increase our market competitiveness by examining diverse renewableenergy procurement methods centered on switching to renewable energy-derived electricity contracts, increasing energy efficiency over the short to medium term, and proactively further reducing
CO2 emissions by leveraging new technologies over the long term.
In addition, as a financial initiative, ahead of other companies and to meet rising ESG investment needs, weissued a ¥20 billion green bond in June 2018 for the purpose of allocating funds to the construction of Building
A of the Tokiwabashi Project, while in May 2020 we implemented fund procurement of ¥11.5 billion through asustainability-linked loan.
As a means to monitor and manage risks related to climate change in order to achieve the targets set out
in the Mitsubishi Estate Group Sustainable Development Goals 2030, we have incorporated those targets into
annual plans for each organization and function and will monitor their progress status from FY2020 at meetings of the Sustainability Committee and the Board of Directors twice yearly.
Please see page 55 for details of the Company’s response to the TCFD’s recommendations.

Promotion of Capital-Recycling Business

Promotion of Appropriate Information Disclosure and Engagement and Timely Measures,as the Corporate Officer in Charge of Finance & Accounting and Investor Relations 

Joint Project Concept Outline

Improve Investment Efficiency by Earning Project-Related Fees
(Development, Architectural Design, and Property Management)
Investment by Mitsubishi Estate

Independent Project

Investment by third party

Investment¥

Joint Project

Investment¥¥

Return¥¥Return¥Investment

ReturnThe stock market assesses on a daily basis the content of and stance toward information disclosure bycompanies, and this is reflected in share prices. Rather than viewing it as sufficient to simply abide by information
disclosure rules, it is important for a company to disclose specific plans in an easy-to-understand and timely
manner while detailing the conditions in its business environment and what steps it will take to draw on its
strengths to achieve growth. Based on this awareness, we will continuously engage with investors and thestock market and also endeavor to reduce capital costs.
Although FY2021, the first year of Long-Term Management Plan 2030, has begun with a profit decline forecast
due to the impact of COVID-19, our management plan is for the long term of 10 years, and we therefore do notbelieve it is necessary at this stage to revise our achievement targets for a decade from now. To achieve ourintended goals, we will correctly assess the external environment, including the market, and execute the requisite
measures in a timely manner. Accordingly, we ask for your continued support in our endeavors.

¥

Mitsubishi Estate
Group

28

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Mitsubishi EstateGroup

Development and design fees
Property management fees

Third-Party
Investor

MITSUBISHI ESTATE CO., LTD. Integrated Report 202029

Structural Reforms to Drive Growth Strategies
The Mitsubishi Estate Group operates the office building business andvarious other businesses in Japan and overseas.
Under our Long-Term Management Plan 2030, we will enhance our earnings power ineach segment through business strategies that leverage our competitive advantages,
as well as actively working to establish new businesses that pursue synergies
with our established businesses.

To date, we have increased our competitiveness and produced results through business groups divided byasset type. However, looking toward the next 10 years, we will further harness our comprehensive strengths,transcending asset-type boundaries, and restructure our organization and frameworks, in order to ensurethat we not only make use of these strengths in securing and promoting opportunities to develop new
businesses across segments, but also leverage them in our provision of non-asset businesses and service
content, while valuing the characteristics of each asset type.
In our domestic business operations, aiming to strengthen our capability to promote the expansionof cross-segment projects, we have integrated the Office Building, Lifestyle Property, and Hotel & Airport
business segments. In addition, we will consolidate our international business expertise by transferring theInternational Residential Business from the Residential Business segment to the International Businesssegment to achieve business expansion going forward. Further, we have integrated the Architectural Design &Engineering Business and Real Estate Services Business segments to streamline information disclosure.

POINT Establishment of the Commercial Property
Business Group

BUSINESS REVIEW

We have integrated the Office Building, Lifestyle Property,and Hotel & Airport business segments with the goalof promoting sourcing development and operations thatharness our comprehensive strengths by transcending
asset-type boundaries. We will also centrally promote
the sharing of land information among these segments,
cooperation with Mitsubishi Estate Residence Co., Ltd.,in mixed-use redevelopment business, and applicationof know-how in the International Business.

Previous Segments

Office Building Business
Lifestyle Property
Business

P31	Structural Reforms to
Drive Growth Strategies
P32

Business Segments

P34

Commercial Property Business

		

P34

Office Building Business

		

P36

Retail Facility Business /			Outlet Mall Business

		

P37

Logistics Facility Business

		

P38

Hotel Business

		

P39

Airport Operation Business

P40

Residential Business

P42International BusinessResidential Business

Investment Management Business

International BusinessP45	Architectural Design & Engineering Businessand Real Estate Services Business

Investment Management
Business

P46	Innovation and BusinessTransformation Group

Hotel & Airport Business

P44

P49	Business Development,
Client Relations & Solutions GroupOther

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

From FY2021
Integration of threebusiness segments

Transference of theInternational Residential
Business to the International
Business segment

Commercial Property
Business
Residential Business

Investment Management
Business
Integration of disclosure
segments

Commercial Property
Business Group
Office Building
Business

Logistics Facility
Business

Retail Facility
Business

Hotel Business

Outlet Mall BusinessAirport Operation
Business

International BusinessArchitectural Design &Engineering Businessand Real Estate
Services Business

International Business GroupInternational Commercial
Property Business
International Residential
Business

Other

Architectural Design &Engineering Business
Real Estate Services
Business

30

From Individual Assets to Mixed-Use Facility Developments

POINT
Unified Promotion of the International Business Segment
To expand the International Business segment, we will formulate and implement
optimal portfolio strategies for each region by centralizing the decisionmaking channels for residential and commercial properties (non-residential).

MITSUBISHI ESTATE CO., LTD. Integrated Report 202031

Business Review

Business Segments
Please see pages 34 to 39 for details.

Commercial Property Business Group

Office Building Business

Retail Facility Business

Outlet Mall BusinessThis is Mitsubishi Estate’s core business, which
engages in the development, leasing, andproperty management of office buildings, mainlyin Tokyo and other major Japanese cities. We
promote urban development that contributes tothe increased appeal of cities while maintaining
a balance between properties for lease andproperties for sale in our asset portfolio.

Promoting the development of various types ofretail facilities tailored to the characteristics oflocations across Japan, the Mitsubishi EstateGroup operates this business using a comprehensive system whereby it remains continuously
involved from facility planning, development, andtenant leasing through to operation after opening.

We conduct the nationwide development andoperation of our PREMIUM OUTLETS®, whichboast the top customer-drawing power in Japan.

Revenue from Operations

1,302,196 million¥

US$11,965 million*
Operating Income

240,768 million¥

US$2,212 million*
Total Assets

5,858,236 million¥

US$53,829 million*
Logistics Facility Business

Hotel BusinessAirport Operation Business

Under the Logicross brand, Mitsubishi Estate ispursuing logistics facility business opportunities
nationwide. To take advantage of the rapid growthin the domestic logistics market on the back of the
expansion of e-commerce and other factors, weare focusing on development projects at locations
suited to logistics nearby major terminals, such as
metropolitan areas, main roads, ports, and airports.

Working together with hotel operators in Japanand overseas, we conduct a hotel development
business across a wide range of categories
matching location characteristics as well aspracticing nationwide hotel operation businessunder the Royal Park Hotels brand and the
Marunouchi Hotel.

We are working to raise the value of airports
where we have already begun private management or where future privatization is planned
while advancing initiatives aimed at securing
new business opportunities.

* The above amounts were translated into U.S. dollars at ¥108.83 = US$1.00, the approximate prevailing exchange rate on March 31, 2020.

Please see page 40 for details.

Please see page 44 for details.

Residential Business

Investment Management BusinessWe offer services to meet a variety of needs forcondominiums, rental apartments, custom-built
housing, purchase and sales, leasing, brokerage
areas, renovations, and management. As thecirculation of existing homes expands andpeople’s lifestyles grow increasingly diverse, we arestrengthening our reform and renovation businessto seize upon such changes.

For investors seeking real estate asset management,
we provide a wide range of services based on
our specialized expertise, utilizing collaboration
among our operating bases in Japan, the UnitedStates, Europe, and Asia excluding Japan. These
services include real estate investment trusts(REITs) to meet management needs for longterm stability as well as private placement funds
to meet the specific management needs ofinstitutional investors.

Please see page 42 for details.

International Business
International Commercial Property
Business / International Residential
Business
The Mitsubishi Estate Group has pursued
business overseas since the 1970s, undertaking realestate leasing and development businesses in the
United States and the United Kingdom. In recent
years, we have also been actively developing ouroffice building, residential, commercial facility,
and other real estate businesses in rapidly
expanding Asian markets and advancing into
continental Europe.

32

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Millions of yen

Please see page 45 for details.

Architectural Design & Engineering Businessand Real Estate Services BusinessThis full-service architectural design andengineering business meets social needs
through construction, civil engineering, andurban and regional development planning andconsulting. Meanwhile, the Real Estate Services
Business provides one-stop, real estate
problem-solving solutions, including real estate
brokerage and condominium and office building
leasing management support.

Fiscal year ended March 31, 2020 (consolidated)

Revenue fromOperations

Commercial Property Business

723,712

187,855

4,135,091

Residential Business

385,538

24,320570,282

International Business

134,175

46,156887,179

Investment Management Business

21,316

4,467

71,829Architectural Design & Engineering Businessand Real Estate Services Business

57,1282,407

55,737

Other

8,743

(2,018)13,270(28,418)(22,420)

124,847

1,302,196

240,768

5,858,236

Eliminations or Corporate
Total

Operating
IncomeTotal Assets

MITSUBISHI ESTATE CO., LTD. Integrated Report 202033

Business Review

Commercial Property Business

Asset Type

Commercial Property Business Group Breakdown
Breakdown by
Business Model

Office Building
Retail Property /Others15%

Outlet Mall

Property Revenue fromsales
Operations
13%

Logistics Facility
Hotel
AirportBreakdown by Asset Type(Real Estate Leasing)Long-Term Management Plan 2030 Priority Strategy—
The Marunouchi NEXT Stage
1

OthersOutlet 8%
Malls
9%

Approx.:¥723.7 billion

Revenue fromOperations
Approx.:¥524.4 billion

Real estate leasing
72%

Office83%

Overview

Long-Term Management Plan 2030 positions urban development in the Otemachi, Marunouchi, and Yurakucho areas from 2020
onward as part of the Marunouchi NEXT Stage. To that end, the Office Building Business, our primary business, will carry out
improvements with a focus on the Yurakucho and Tokiwabashi areas while promoting urban development that not only helps
improve people’s quality of life but also spurs the discovery of and solutions to social issues through the emergence of innovation,in addition to strengthening our digital foundations, based on the theme of Marunouchi Re-design.
Marunouchi NEXT Stage

Marunouchi Re-design

Theme

Co-creation Platform for Innovation through Companies, Employees, and Visitors

Marunouchi Re-design

Strategy 1

Main Redevelopment Areas

Office Building BusinessTokiwabashi and Yurakucho

Set key themes

Promote co-creation opportunities

Redevelopment Projects*1

Support innovation through Marunouchi business resources

Engage in City-wide experimentation

Marunouchi 1-3, Tokyo Tokiwabashi,
Uchikanda 1-chome, Yurakucho Redev.

Strategy 2

Floor Area of Total Redevelopment Projects*

2

Overview

The Office Building Business, Mitsubishi Estate’s core business, engages in the development, leasing, and property
management of office buildings with state-of-the-art functions, mainly in major Japanese cities centering on the
Marunouchi area. Our businesses involve three types of earnings models: our property development and leasing
business, in which we ourselves develop office buildings and receive rental revenue from them; our capital-recycling
business, in which we generate capital gains on the sale of properties we have developed; and our non-asset businesses, which center on office building operations and management. Through building development and operations, weare promoting urban development to increase the attractiveness of the entire surrounding area.
Office Buildings

Business Concept

Competitive
Advantages

Major business areas inJapan (mainly thecapital-recycling business)

Property management

Master leases

	Ownership of about 30 office buildings in the Marunouchi area, a leading business area in Japan with one of theworld's greatest concentrations of companies.
	Redevelopment in Marunouchi not requiring new land acquisition is largely unaffected by fluctuations in the realestate investment market, thus enabling stable and continuous redevelopment.
	Development know-how and a track record cultivated through continuous urban development in the Marunouchi area
for more than 100 years.
	Tenant relationships and information networks built through the Group’s wide-ranging businesses, including
development in the Marunouchi area.
	Relationships with the central and local governments built through public and private sector cooperation in urban
development.
	Urban development and area management with advanced disaster-management functions centering on the
Marunouchi area.
Marunouchi Area	Generally, redevelopment enables rental revenue to be increased by expanding building floor space and raising rents
per square meter. In the Marunouchi area, we aim to promote continuous redevelopment that raises value throughindividual redevelopment projects as well as by realizing synergies across the whole area.
	Positioning urban development from 2020 onward as part of the Marunouchi NEXT Stage, we will establish a co-creation
platform for innovation through companies, employees, and visitors.

Non-Asset Businesses and Others	We intend to expand and strengthen non-asset businesses, including property management and master leases,
and businesses that utilize existing stock, such as through the renovation of aged buildings.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Company’s Total Investment by 2030

Strengthen Business Ecosystem

Updating digital infrastructure

2 Network

3 Comfort

4 Environment• Underground passage• Wharf• New mobility services• Data analysis leading
to new services• Robotization• Zero CO2 emission(Future goal)• Advanced area
energy management

5 Security

Uchikanda 1-chome
project

Security robot

Fuel cell installed in
Marunouchi Bldg.

• BCP enhancement• Human traffic data
• Collaboration withlocal governments¥600–¥700 bn*1 Some project names are provisional*2	Total floor area on construction confirmation
application

Rooftop of building in
OtemachiCable tunnel network

Main Non-Asset Type Businesses

Main Office Areas in Japan	We aim to strengthen our development pipeline by using the know-how we have accumulated through redevelopmentin the Marunouchi and other areas.

34

1 Place for Interaction• Public square• Use of space forgarden• Shared space

1,100–1,300 sq. m

2

Key Areas and Pipelines

In the Marunouchi area, the Tokyo Tokiwabashi Project, a large-scale mixed-use redevelopment boasting the largest site area in thevicinity of Tokyo Station, is well underway. In addition to the recently begun construction of the 210 meter-tall Tokiwabashi Building A,
we are moving ahead diligently with construction of Tokiwabashi Building B, which stands at 390 meters and is set to become a new
Tokyo landmark. Meanwhile, besides the Marunouchi 1-3 Project, the Tokyo Tokiwabashi Project, and the Uchikanda 1-chome Project,
we are promoting the reconstruction and renovation of several aged buildings owned in the Yurakucho area.
<Marunouchi Area Map>

<Pipeline>

Kanda

Marunouchi 1-3

Tokiwabashi Bldg. A

Tokiwabashi Bldg. B

Total Floor Area: 181,000 m2
Completion:
Sep. 2020

Total Floor Area: 146,000 m2
Completion:
Jun. 2021

Total Floor Area: 490,000 m2
Completion:
FY2028FY2021

FY20222030

Otemachi Bldg. Renovation

Uchikanda 1-chome

Yurakucho Redevelopment

Nihonbashi

Tokiwabashi

Naka-doriBusiness
Strategies

Marunouchi area (mainly
the property development
and leasing business)

Innovation of the Marunouchi Ecosystem

Tokyo Station
Yaesu

COMING SOON

Yurakucho<Legend>

Ginza
HibiyaMarunouchi area
 ey redevelopment
Karea, project sites

Total Floor Area: 111,300 m2
Completion:
Mar. 2021

Total Floor Area: 84,500 m2
Completion:
2025

Completion:

TBD

Interaction facilities

MITSUBISHI ESTATE CO., LTD. Integrated Report 202035

Business Review

Commercial Property Business
Retail Facility Business / Outlet Mall Business

Overview

Logistics Facility Business

The Retail Facility and Outlet Mall businesses promote the development of various types of retail facilities tailored tothe characteristics of locations across Japan. The Mitsubishi Estate Group operates these businesses using a comprehensive system whereby it remains continuously involved from facility planning, development, and tenant leasing
through to operation after opening. These businesses are operated through three business formats: urban mixed-use
facilities, stand-alone shopping centers, and PREMIUM OUTLETS®.

Competitive
Advantages

Business
Strategies

	The top customer-drawing power in Japan of PREMIUM OUTLETS®.
	Information networks and tenant relationships built through wide-ranging Group businesses, including developmentsin the Marunouchi area.
	Extensive development and management know-how gained through a portfolio consisting of three different businessformats, business coverage in Japan stretching beyond Tokyo, all the way from Hokkaido to Kyushu, and an extensive
tenant network.
	With urban mixed-use buildings, we are aiming to deliver wide-ranging eating and drinking options and shops as wellas various service providers to offer better amenities and convenience for office workers while also drawing inpeople for shopping and tourism.

Overview

The functions required of logistics facilities are changing as the domestic logistics market grows rapidly on the back of
the expansion of e-commerce and other factors. In recent years, we have been planning development projects centeredon locations that are easily accessible by public transportation and advantageous for recruitment, in addition to being
ideally situated for logistics, and on locations in proximity to metropolitan areas and nearby major terminals, such as
expressways, main roads, ports, and airports.
The Mitsubishi Estate Group will continue to conduct proactive investment, development, operational management,
and asset management centered on the Tokyo metropolitan, Kansai, and Chukyo areas.

Competitive
Advantages

	A business platform with a broad range of functions related to logistics facilities, from land acquisition and development to building operations, ownership, and asset management.
	Tenant relationships and information networks through wide-ranging Group businesses, including developments in
the Marunouchi area.
	Management know-how and experience gained through Tokyo Ryutsu Center Inc. (TRC) and its competitivenessunderpinned by being based in Heiwajima, a location providing excellent access to central Tokyo and Haneda Airport.

Changes in Aggregate Floor Area

Trends in Gain on Sale

Total Assets

m2

Billions of yen(As of March 2020)

2,000,000

8.0	Regarding stand-alone shopping centers, we are developing distinctive facilities tailored to diverse demand based on
detailed analyses of the location, local demand characteristics, tourism potential, and discussions with tenants.
	With outlet malls, we will continue to expand and refurbish existing facilities and develop new ones to offer visitors
unique spaces and meet their needs for a fun, one-of-a-kind experience.

1,500,000

6.0

1,000,000

4.0¥27.0 billion
4.0

Outlet Mall Business
Area Map of Main Retail Facilities(Millions of yen)

Assets underdevelopment
64% (8 buildings)

2.0

500,000

Changes in Revenue from Operations, Operating Income,and Store Area

2.0
m260,000Assets inoperation
36% (2 buildings)

8.0

320,000

00

0

FY2012 FY2014 FY2016 FY2018 FY2020 FY2022 FY2024(Plan) (Plan)

FY2017FY2018FY2019FY2020* Ratio by value* Excluding Tokyo Ryutsu Center* Including joint ventures* Excluding Tokyo Ryutsu Center

maruyama class
40,000AQUA CITY ODAIBA

310,000

IZUMI PARK TOWN Tapio
SANO PREMIUM OUTLETS®

GOTEMBA PREMIUM OUTLETS®
TOSU PREMIUM
OUTLETS®

SHISUI PREMIUM OUTLETS®

20,000300,000

Business
Strategies

MARK IS minatomirai
RINKU PREMIUM OUTLETS®
00
FY2015FY2016FY2017

Revenue from operations (left scale)

FY2018FY2019FY2020Operating income (left scale)Store area (right scale)

Logistics Facility Pipeline
FY2020T O P I C

Logistic Facilities

Completion of GOTEMBA PREMIUM OUTLETS® Phase 4 Expansion
GOTEMBA PREMIUM OUTLETS®, which opened in July 2000 as the first PREMIUM
OUTLETS® in Japan, marked its 20th anniversary in 2020 with the completion ofphase 4 of its expansion, the first expansion for 12 years. Through the opening of a
newly established area and renovation of existing areas, GOTEMBA PREMIUM
OUTLETS® has evolved into Japan’s largest shopping resort,* with approximately
290 shops, a hotel, and a hot spring day spa.
We will continue to pursue the development of shopping resorts that earncustomers’ support as outdoor shopping venues with an open feel recreating
America’s streetscapes and as destinations for savoring a short getaway.
* In terms of store floor area (Mitsubishi Estate data)
GOTEMBA PREMIUM OUTLETS®

36

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020	We intend to make acquisitions of land and undertake leasing operations by making use of our multiple information
networks and tenant relationships.
	We aim to generate stable capital gains by leveraging our logistics facility business platform to sell developed
properties to Mitsubishi Estate Logistic REIT Investment Corporation, which is managed by Mitsubishi Jisho
Investment Advisors, Inc., and other parties.
	We intend to generate synergies Groupwide by sharing the information networks and management know-how acquiredby the Tokyo Ryutsu Center, which has been involved in logistics facility business operations for over 50 years.

FY2021

FY2022

FY2023

FY2024

LOGIPORT Kawasaki Bay

Logicross Hasuda

Logista•Logicross Ibaraki Saito

Total Floor Area: 296,800 m2
Completion:
May 2019

Total Floor Area: 79,100 m2
Completion:
Mar. 2021

Total Floor Area: 157,000 m2 (2 blocks)
Block B Completion: Apr. 2021
Block A Completion: May 2021

Logicross Yokohama Kohoku

Logicross Atsugi II

Total Floor Area: 16,400 m
Completion:
Jun. 2019

Total Floor Area: 35,100 m
Completion:
Jul. 20192

Logicross Ebina
2

Logicross Zama

Total Floor Area: 183,900 m2
Completion:
Jun. 2023

Logicross Kasukabe

Total Floor Area: 62,200 m
Completion:
Nov. 2020

2

Logicross Funabashi

Total Floor Area: 38,000 m
Completion:
May 20212

Total Floor Area: 23,600 m2
Completion:
Nov. 2021

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

37

Business Review

Commercial Property Business
Hotel Business

Overview

Airport Operation Business

The Hotel Management Business operates 13 hotels nationwide under the Royal Park Hotels brand and the Marunouchi
Hotel in the Marunouchi area, aiming to improve brand value through the implementation of management focused on
customer satisfaction. We will address diversifying customer needs by continuing to increase new hotel openings.
In addition, to meet the robust and diverse accommodation needs of late, the Hotel Development Business engages
in hotel development across a wide range of categories matching location characteristics, by working together withhotel operators in Japan and overseas, including Royal Park Hotels and Resorts of the Mitsubishi Estate Group.

The Mitsubishi Estate Group is involved in the operation of Takamatsu Airport, Miyako Shimojishima Airport Terminal,
Mt. Fuji Shizuoka Airport, and seven airports in Hokkaido. Each airport will contribute to regional development by acting
in unison with their local communities to increase the non-resident population and improve regional value whileleveraging the distinctive characteristics of their respective regions.

Overview

Operation of Airports (and Planned Operation)
	We are leveraging our development expertise and the tenant relationships we have built by handling diverse realestate assets as a comprehensive developer in order to acquire sites for hotels and promote hotel development.
Competitive
Advantages

Business
Strategies

4 Seven Airports in Hokkaido
Launch of airport building facilities business for the seven Hokkaido airports
in Jan. 2020
Commencement of business operations at New Chitose Airport in Jun. 2020
Beginning of business operations at Asahikawa Airport in Oct. 2020
Launch of business operations at Wakkanai, Kushiro, Hakodate, Obihiro, andMemanbetsu airports	Applying more than 30 years of hotel management experience with the Royal Park Hotels brand, we have been
expanding our networks of full-service hotels and accommodation-oriented, limited-service hotels.

	We focus on the development of hotels under the Royal Park Hotels brand on sites we have acquired ourselves while
actively looking to lease properties to other operators and generate capital gains through the sale of properties after
holding them for a certain period of time.
	With the Royal Park Hotels brand, we aim to steadily increase operating income by improving the operating income ratio
at existing hotels while opening three to four new hotels on a yearly basis through the leasing of properties developedby other companies and the utilization of various schemes, including management contracts and franchise contracts.

2 Miyako Shimojishima Airport Terminal
Opening of passenger terminal facilities andcommencement of terminal operations at theend of Mar. 2019

3 Mt. Fuji Shizuoka Airport
Operating since Apr. 2019

1 Takamatsu Airport
Operating since Apr. 2018

Royal Park Hotel Locations

Sendai Royal Park Hotel
The Royal Park Canvas Nagoya

Competitive
Advantages

SendaiRoyal Park Hotel
The Royal Park Hotel Iconic Osaka Midosuji
The Royal Park Canvas–Osaka Kitahama
The Royal Park Hotel Fukuoka

The Royal Park Hotel Iconic Tokyo Shiodome
The Royal Park Canvas–Ginza 8

Tokyo
Kyoto Yokohama
Hiroshima	Mitsubishi Estate operates airports leveraging its track record of operating several airports, the expertise gained inbusinesses related to inbound tourism through outlet malls and hotels, and its cooperation with other businesses in
the Mitsubishi Estate Group.

The Royal Park Hotel Tokyo Haneda

NagoyaOsaka

	We ensure stable operation at each airport while aiming to achieve operational efficiency and sophistication throughinter-airport cooperation.

Yokohama Royal Park Hotel

FukuokaBusiness
Strategies

The Royal Park Hotel Kyoto Sanjo
The Royal Park Hotel Kyoto Shijo

	We will work to invigorate regions by leveraging our urban development expertise and to increase revenues forpassenger terminal buildings by harnessing our expertise in the development and operation of retail facilities.

The Royal Park Hotel Hiroshima Riverside

T O P I C

Opening of The Royal Park Hotel Iconic Osaka Midosuji
In March 2020, we opened The Royal Park Hotel Iconic Osaka Midosuji as the first brand fromour flagship brand of hotels, The Royal Park Hotel Iconic, in our range of premium
accommodation-oriented, limited-service hotels, THE Series.
As indicated by the name “Iconic,” which expresses our desire to be Osaka’s symbolic baseof hospitality, we welcome customers on the upper floors of the Obic Midosuji Building with
352 guest rooms comprising executive floors and all-day dining, lounges, and a bar that can beused for a variety of purposes.

T O P I C

Operation of Seven Airports in Hokkaido
In 2019, we established Hokkaido Airports Co., Ltd.,* in response to the consortium ofwhich we are a part being selected as the preferred bidder for the right to operate
seven airports in Hokkaido. The new company will create a multi-tourism gateway byassigning clear roles to the seven airports and steadily increase tourism activities
throughout Hokkaido by means of the promotion of digital marketing. By communicating
the appeal of Hokkaido, we will contribute to the invigoration of the seven airports
and their localities while advancing stable airport operation over the long term, withreliability and safety as the top priority.
* Established through investment by 17 entities: Hokkaido Airport Terminal Co., Ltd., Mitsubishi Estate Co., Ltd.,
Tokyu Corporation, Development Bank of Japan Inc., North Pacific Bank, Ltd., The Hokkaido Bank, Ltd.,
Hokkaido Electric Power Co., Inc., The Sankei Building Co., Ltd., Japan Airlines Co., Ltd., ANA HOLDINGS INC.,
Mitsui Fudosan Co., Ltd., Mitsubishi Corporation, Iwata Chizaki Inc., Doshin Service Center, Dentsu Inc.,
Taisei Concession Co., Ltd., and Sompo Japan Nipponkoa Insurance Inc.

38

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

CG rendering of how some of the airports will look(vision for 30 years into the future)

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

39

Business Review

Residential Business
The Mitsubishi Estate Group has approximately 50 years of experience in the condominium business. We have established a value chain to meet housing-related needs spanning from new development and rebuilding and redevelopment projects to purchasing and sales, brokerage, and management. We are also developing a wide range ofbusinesses to meet diversifying lifestyle needs. Such businesses include rental housing, renovation, our international
business, and investment-purposed real estate.

Overview

Main Non-Asset Type Businesses

Business Concept

Competitive
Advantages

Condominiums

Rental Apartments

Management

Brokerage

Custom-built
housingRenovation

Business
Strategies

Domestic Condominiums
	We aim to expand our customer base by strengthening our brand power through the enhancement of product appeal,reliability, and services and by leveraging said brand power to acquire loyal “fans.”	We intend to optimize material costs and construction costs by utilizing our leading business scale in residential
condominium development in Japan.
	We are promoting redevelopment projects that make full use of our abundant know-how related to real estatedevelopment and of the comprehensive capabilities of the Mitsubishi Estate Group.
Rental Apartments
	We are aiming to stabilize segment profits through capital gains from rental apartments and other investmentpurposed properties in the residential business.

 he power of The Parkhouse and The Parkhabio brands backed by outstanding technologies, uncompromisingT
product quality control, and a long and extensive track record.

Non-Asset Type Businesses	We aim to strengthen non-asset type businesses involving existing properties in such areas as residence management, brokerage, custom-built housing, and renovation.

 uality control of The Parkhouse brand at all stages of the development process—from design and construction toQcompletion—with “Check Eyes,” our quality management and performance indication system, which reflects ourdedication to all aspects of the properties we offer.

Residential Business Value Chain
	We are providing one-stop services as a group making full use of all of the phases of the value chain, from land acquisition, development, sales, and management through to brokerage.

Product-planning capabilities that ensure our buildings keep people safe through resilience in natural disasters andoffer both comfort and cost performance and which respect the environment and the local region by paying carefulattention to preserving biodiversity and helping realize a low-carbon society.
The ability to provide services to meet all housing-related needs.

T O P I C S

Condominium BusinessLand Bank Breakdown in Reporting Term

Ranking by Condominium Seller and Owner Based on Numberof Units Supplied(as of March 31, 2020)(2019)FY2021–FY2022
6,500 units

FY2026 onward
6,200 units

Total:
16,900 units

1 Sumitomo Realty & Development

5,690

2 Pressance Corporation

5,305

3 Nomura Real Estate

3,941

4 Mitsubishi Estate Residence

3,365

5 Mitsui Fudosan Residential

2,365

6 Eslead Corporation

2,121

7 Tokyu Land Corporation

1,812

8 Takara Leben

1,765

9 Daiwa House Industry

1,702

10 Anabuki Kosan

1,599

Note 1: Source: “National condominium market trends,” Real Estate Economic Institute Co., Ltd.
Note 2: Only family-type condominiums are included in the scope of the survey for the Tokyo
metropolitan area while those condominiums for investment purposes are not included.
Condominiums for investment purposes are included for the Kinki area and other areas.
Note 3: Fixed-term leasehold condominiums are not included in the scope of the survey.

FY2023–FY2025
4,200 units

Rental Apartment Business

Non-Asset BusinessTotal Assets

Ranking of Condominium Management Companies Based on Numberof Units under Management(March 31, 2020)(2020)

Assets underdevelopment
33% (25 buildings)

Approx.
¥88.0 billion

1 Nihon Housing

459,551

2 Daikyo Astage

429,576

3 Haseko Community

366,793

4 Tokyu Community

341,041

5 Mitsubishi Estate Community

335,980

6 Daiwa LifeNext

273,011

7 Gojinsha Keikaku Kenkyujo

217,075

Adoption of Net-Zero-Energy House (ZEH-M Ready) Standards—
A First for The Parkhouse
Mitsubishi Estate Residence Co., Ltd., will adopt ZEH-M Ready standards forthe first time at The Parkhouse Shin-Urayasu Marine Villa, which isscheduled to go on the market in November 2020. Net-zero-energy houses(ZEH) refer to houses that significantly increase the thermal insulation
performance of exterior walls while maintaining a high-quality indoor
environment by adopting high-efficiency equipment, that significantly
increase energy savings, and that aim to eliminate yearly primary energy
consumption by using renewable energy.
We will continue to realize urban development that delights people andcommunities by reducing environmental impact through residential development.
The Parkhouse Shin-Urayasu Marine Villa

Residence x Working from Home: Creation of Residences for Living
and Working
In response to the promotion of flexible and diverse workstyles in recent
years, Mitsubishi Estate Residence is advancing proposals to realize spaces
conducive to concentrating when working from home, in order to create
residences for living and working. Among these proposals is an optional
plan to install in the living room or service room of homes a “box room” thatcan easily change the layout of a room—partitioning it or enclosing it—
depending on how it is positioned. Also among these proposals is a “work-in
closet” menu plan enabling the creation of storage space within a roomlayout to be converted free of charge into a space for working from home.
Example of the positioning of a “box room”

8 Mitsui Fudosan Residential Service 209,421
9 Sumitomo Fudosan Tatemono Service 173,147

Assets in operation
67% (28 buildings)
Note: Ratio by value

40

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

10 Nomura Real Estate Partners

164,126

Note: Source: “Ranking of condominium management companies based on number of units undermanagement (2020),” Mansion Kanri Shimbun

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

41

Business Review

International Business

Overview

The Mitsubishi Estate Group’s international business began with the establishment of a company in the United Statesin the early 1970s. Its geographical coverage has since expanded to include the United Kingdom, mainland Europe, andAsia and Oceania. We have been strengthening our portfolio with both management properties predicated on returns
from rental fees and properties for sale premised on raising their value under a capital-recycling business model. We
are promoting business expansion with respect to the real estate trading rules and business customs of each country.
Furthermore, we seek to apply optimal business models for each market based on macroeconomic data and analysis
of capital and real estate markets to identify the right time to enter.

	Compared with current levels, we will increase business profit by around ¥50.0 billion and double our total assets in 2030.
To that end, we will aim to secure opportunities to invest between ¥200.0 billion and ¥250.0 billion on an annual basis.
Business
Strategies

Basic Strategies for Each Area
The United States	Reinforcement of capital-recycling businessleveraging RGII’s know-how

Total Assets and Ratio of Business Profit by Region(Target for 2030)

	Promotion of joint ventures with local partners
	Expected return from investment IRR: 8%–10%
United States

EuropeMitsubishi Estate London Limited
Europa Capital Group* ockefeller Group International, Inc.
R
Mitsubishi Estate New York Inc.
TA Realty LLC*

Europe	Implementation of investments and returns
with a focus on balancing profit stability
and capital efficiency

Asia
45%

Total Assets
Approx.
¥1.5 trillion

	Promotion of business development centeredon large-scale projects* that have alreadybeen decided

Asia and Oceania
Mitsubishi Estate Asia Pte. Ltd.
Mitsubishi Estate (Shanghai) Ltd.
Mitsubishi Estate Taiwan Ltd.
Pan Asia Realty Advisors(Singapore) Pte. Ltd.*
Mitsubishi Estate Vietnam Company Limited
PT. Mitsubishi Estate Indonesia

UnitedStates
35%

Asia
45%

Europe20%

Business
ProfitApprox.
¥90 billion

UnitedStates40%

Europe15%* 8 Bishopsgate, London and 60–72 Upper Ground, London

	Expected return from investment IRR: 8%–10%
Asia and Oceania
	Increase in investment balance and establishment of a capital recycling portfolio	Business promotion based on the two approaches of business development in which we have a major shareand of joint business with local partners* Group companies under the Investment
Management Business segment

	Expected return from investment: IRR (developed countries): 8%–10%; IRR (emerging countries): Over 10%

Competitive
Advantages

United States	The sourcing power of Rockefeller Group International, Inc. (RGII), and its development know-how and track record, as
well as the name recognition it brings.
	TA Realty LLC’s networks and track record in raising the value of properties.
Europe	Sourcing power based on business achievements over a long period.
	The establishment of development teams and operational effectiveness.
	Europa Capital LLP’s networks and track record in raising the value of properties.

T O P I C S

Asia and Oceania
	Development know-how gained in the business in Japan.
	Acclaim the Group has won for its track record in Japan among businesses in leading cities in Asia excluding those in Japan.
	Relationships with leading local partners.
	The networks Pan Asia Realty Advisors Singapore Pte. Ltd. (PA Realty) has established together with CLSA Real Estate
Partners (CLSARE), which handles the real estate fund management business in Asia and Oceania.

EuropeIn March 2019, the 8 Bishopsgate project broke ground in London, the U.K. The new
51-story high-rise office building will replace the two existing office towers, 6–8
Bishopsgate and 150 Leadenhall Street, and offer approximately 2.8 times moreleasable floor space than the two existing towers combined.

Total Assets and Ratio of Business Profit by Region(FY2020)

Asia
7%

Asia
30%

Total Assets United¥887.1 billion States
48%

Europe22%Europe44%

Business
Profit¥46.1 billion

The United States
The large-scale renovation of 1271 Avenue of the Americas, a major office building in
Manhattan’s Midtown area owned by RGII, was completed in December 2019. As
part of the renovation, we increased the window areas of the office space byapproximately 60% to enhance its open feel and upgraded the building’s facilities,
including air-conditioning equipment and elevators. As of July 2020, the tentative
contract rate for the building stood at over 95% and the gradual moving in of
tenants was underway.

UnitedStates49%

8 Bishopsgate

Asia and Oceania
In July 2020, we joined a residential development project in the center of Sydney,
One Sydney Harbour Residences One, in cooperation with Lendlease, an Australianreal estate and construction company. Located in the most popular development
area in Sydney, this project is a large-scale development that comprises 72 stories
and 317 units and which will further enhance our presence in Australia.

One Sydney Harbour Residences One

42

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

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43

Business Review

Investment Management Business

Competitive
Advantages

Architectural Design & Engineering Businessand Real Estate Services Business	Through the execution of M&A deals and other activities overseas, we have established a strategic global investment
management platform. This enables us to provide global asset management services to clients by leveraging our
expertise and achievements fostered in Japan, the United States, Europe, and Asia excluding Japan.
	In Japan, the investment management business offers specialist services. Mitsubishi Jisho Investment Advisors, Inc.,
provides asset management services across a wide range of investment products, including the country’s largest
private real estate investment trust (REIT) and a listed logistics REIT, while Japan Real Estate Asset Management Co.,
Ltd., manages Japan’s first publicly listed office REIT.

EuropeGlobally, we havecombined assets
under managementof approximately¥3.6 trillion.

Competitive
Advantages

	We undertake design and management with an in-depth understanding of operation, maintenance, and managementfrom the perspectives of business operators and clients based on experience cultivated as a comprehensive developer’s in-house design office.
	We have access to a wealth of information on China and Southeast Asian countries through a network centered on
local subsidiaries established in Shanghai and Singapore.

United States

Europa Capital LLP

Architectural Design & Engineering Business	As a full-service architectural design and engineering firm, we have extensive experience in urban planning coveringsuch areas as the design and management of buildings for various applications and proposal-based consulting,including large-scale complex developments in the Marunouchi area, and designing underground spaces that take
into account traffic conditions.

Real Estate Services Business	The real estate services business boasts one-stop real estate solution provision capabilities leveraging a wideranging service menu (including support utilizing CRE* information and real estate brokerage) and the Mitsubishi
Estate Group’s comprehensive strengths.

TA Realty LLC

Asia Pacific
Pan Asia Realty Advisors
Singapore Pte. Ltd.

	We provide solutions throughout Japan using our nationwide branch network backed by specialist expertise and knowledge.

CLSA Real Estate* Corporate real estate (CRE): Real estate held or used by a business enterprise or organization for its own operational purposes. In recent years, there has been growinginterest in using CRE strategically to contribute to increasing corporate value.

Carry out marketing and research and establish funds worldwide
Provide global opportunities to worldwide investors

Business
Strategies

Japan
Japan Real Estate AssetManagement Co., Ltd.

Groupwide
Synergy(JRE)

Mitsubishi Jisho(MJIA)
Investment Advisors, Inc.

Architectural Design & Engineering Business	In addition to handling design project orders from within the Group and from long-established clients, thearchitectural design & engineering business is working closely with the Business Development, Client Relations &Solutions Group to win new orders.
	Besides construction management work involving the comprehensive management of projects such as construction
schedules, budgets, and quality control, we are focusing on winning orders in renovation and other growth fields inorder to expand our earnings base.
	We provide technological support to Group companies and seek to generate synergies therewith.

Mitsubishi Estate Group’s network for investment & development and management & services

AuM Area Breakdown
Billions of yen(as of end of March 2020)

Asia Pacific120

Europe450

Overseas
1,770

Business
Strategies

Real Estate Services Business	We are aiming to be the leading company in CRE strategy support, real estate consulting, and recreational land andrecreational facility management by providing services to enterprises and high-net-worth individuals as our corecustomers.

UnitedStates
1,200

Domestic
1,890

	We are strengthening our value chain, which combines a variety of service menus of the Business Development,
Client Relations & Solutions Group and of each of the Group’s businesses, while expanding the range of services weprovide to existing customers.

JRE
1,050

Total
approximately¥3.6 trillion

Goal: Reach ¥5 trillion by the mid-2020s

MJIA
840

T O P I C S	By utilizing our hybrid investment model strategy, through which we co-invest our principal investment capitalalongside our clients’ in funds that our Group companies manage, we seek to capture demand for cross-borderproperty investments. Through this approach, we are simultaneously pursuing the expansion of our overseas portfolio
while benefiting from enhanced investment diversification as well as expanding and strengthening our investment
management businesses.
	In Japan, we meet the needs of domestic and overseas investors by providing a diverse lineup of products, including
listed REITs, private REITs, and private funds, as well as dependable asset management services.

T O P I C

As of April 2020, the TA Realty Core Property Fund—a core, open-end fund managed by TA Realty LLC—has been added to the
NFI-ODCE,*1 a real estate investment index calculated by the National Council of Real Estate Investment Fiduciaries (NCREIF*2).
As NFI-ODCE open-end funds do not have a defined management period and consist of multiple investors that can contribute newequity or receive returns through redemption requests on a periodic basis, they provide a degree of liquidity. Meanwhile, the term
“diversified core equity” reflects low-risk investment strategies in the equity of stable U.S. operating properties diversified acrossregions and property types, based on low leverage.
*1 NCREIF Fund Index—Open-End Diversified Core Equity*2 Nation Council of Real Estate Investment Fiduciaries

44

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Architectural Design & Engineering Business
Mitsubishi Jisho Sekkei Inc. handled the architectural design and engineering workfor the Ikebukuro Nishiguchi Park GLOBAL RING, on which construction was completed in 2019. Centered on a Global Ring 35 meters in diameter and using a round
pond that once existed there as a motif, this project created a new icon and flow ofpeople in the city. Overseas, we received an order for the China–Japan (Qingdao)
Regional Development Cooperation Zone Project in a joint venture with Nomura
Research Institute, Ltd., and the Qingdao City Planning and Design Institute in
Qingdao in Shandong Province, China. We will take advantage of receiving this order
to expand overseas the leading-edge smart city initiatives we are implementing in
the Marunouchi area.

Ikebukuro Nishiguchi Park GLOBAL RING
Photo by Nacása & Partners Inc.

Real Estate Services Business
Integration of Mitsubishi Real Estate Services’ Parking Lot-Related Business into a Subsidiary
Effective April 1, 2020, Mitsubishi Real Estate Services Co., Ltd., executed a company split of its parking lot-related business andintegrated it into its subsidiary Parking Management Organization, Ltd. (PMO). Concurrent with the integration, we changed PMO’sname to Mitsubishi Estate Parks Co., Ltd., merged the coin-parking business that had previously been operated by Mitsubishi Real
Estate Services with PMO’s facility parking-lot business, and began sales. Going forward, we will target net sales of ¥16.0 billion andparking lots under management numbering 80,000 in 2025, five years after integration, as we aim to achieve further growth in theparking-lot business by expanding areas of operation centered on the bases of various Mitsubishi Estate Group companies and on
the provision of efficient facility operation and management leveraging cutting-edge technologies.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

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Business Review

Innovation and Business Transformation Group	We newly established the Innovation and Business Transformation Group as an organizational structure responsible
for creating new businesses across the entire Group to drive the creation of new value with regard to business model
innovation domains.
Overview

	The Business Creation Department will (1) create new businesses unique to the Company while (2) leading efforts tocreate frameworks and promote open innovation initiatives aimed at creating new businesses for the Mitsubishi
Estate Group.
	The DX Promotion Department will (1) secure new sources of earnings and (2) increase earnings and enhance productivity
by refining existing business models and work processes through the leveraging of digital technologies while (3) leading
the establishment of a Groupwide IT platform and promotion of Group IT governance.

Business Creation
Department

1

DX Promotion
Department

1

2

Innovation and BusinessTransformation Group

Creation of new businesses
Creation of frameworks and promotion ofopen innovation initiatives aimed at thecreation of new businesses

T O P I C SBusiness Creation Department
In February 2019, our investments in start-ups and venture companies in Japan and overseas, conducted mainly by our Business
Creation Department, reached ¥10.0 billion (including commitments). As part of our efforts to create new businesses, we haveestablished seven focus areas, including real estate tech, AI, and renewable energy, to generate new sources of earnings.
Further, in our Corporate Accelerator Program, in which we solicit proposals from venture companies and work closely withthem, we received 72 entries in the third round of applications held in November 2019. For the five proposals deemed to be mostpromising, the Company has begun taking full-fledged measures to create new businesses with the provision of funding andcommencement of services at its facilities.
Seven Focus Areas and Main Investment Targets for Creating New Businesses

Securement of new sources of earnings
Increasing of earnings by refining existing
business models and work processes
3 E stablishment of a Groupwide IT platform
2

Real estate tech

Infrastructure
and
PPP / PFI

AI androbotics

	Our wide-ranging business portfolio in the real estate domain
as a comprehensive developer.
Competitive
Advantages

Platform
Health,food, and
agricultural
diversity	Our B2C contact points with workers and visitors in area
development districts such as Otemachi, Marunouchi, andYurakucho, with visitors to retail facilities and airports, and withresidents and other parties based on our position among theleading companies in Japan in terms of number of condominiums
supplied and assets under management.
	Relationships established with diverse tenants and corporate
business partners, from leading major companies from various
industries to start-up companies that have become tenants
at our innovation hubs, including Inspired. Lab., FINOLAB, and
EGG JAPAN.

Renewable energy

A world where people and places are connected better online

	In response to latent social needs, we will seek new earnings opportunities by accumulating and analyzing
available data online and offline, with a focus on B2B and B2B2C contact points.
GrowthStrategies

	Leveraging our knowledge cultivated in the real estate business, we will expand our business domains byproactively cooperating with external partners. As a field for verifying the business structures born of suchcooperation, the Group will utilize diverse real estate stock that it owns and manages (including agricultural
facilities and meditation studios).
	We will drive automation and laborsaving processes by using IT and digital tools, such as robotic process
automation (RPA) and business chat tools, as means of increasing productivity with the power to propagate effects
cross-organizationally and across the entire Group.
	We will promote the increased efficiency and sophistication of real estate-related processes by leveraging
technologies while creating new value and functions for real estate.
	We will proactively conduct investments and accelerators to promote open innovation while leveraging our New
Business Proposal system to uncover new business seeds from with the Company, thereby driving new businesscreation both internally and externally.

46

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Inboundtourism

Meditation Studio (Medicha)
In April 2019, we established a new company, Medicha Co., Ltd. We operate thisimmersive experience studio combining meditation, art, and tea culture based on
the concept of “a luxurious time to create a blank space for yourself.” Focusing on
meditation, a self-care method that is attracting attention and the introduction ofwhich is progressing centered on the wealthy demographic and sportspeople
overseas, Medicha will create spaces to savor an immersive feeling and its own
meditation programs in conjunction with professionals active on the front lines ofvarious fields, including meditation, sound, lighting, and tea culture.
We will offer a luxurious time to busy workers suffering from too much stress intheir daily lives so that they can reflect on themselves.

Inside a Medicha studio

GYYM
GYYM is an online service facilitating a new way to use fitness facilities. This service
is an IT platform linking gym and studio facility operators with users. By matchinggyms that want to attract customers and increase their profitability with the needsof users who want to find a gym that suits them and use it without wasting monthly
membership fees (that is, people who want to pay as they use), we are able to offer
environments for adults with busy daily lives to take exercise readily and freely.
Moreover, this service is of value to both parties as gym operators can keep down
their advertising costs and reduce variations in demand depending on time slots.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

47

Business Review

Business Development,
Client Relations & Solutions Group

Innovation and Business Transformation GroupT O P I C S

Key Points ofOrganizational
Changes

DX Promotion Department
Security for Next-Generation Facilities
In August 2019, Mitsubishi Estate introduced SQ-2 autonomous mobile security robots, developed by
SEQSENSE Inc., at the Otemachi Park Building to primarily stand guard. These robots were thenintroduced in December of the same year at the Otemachi Building to mainly conduct patrols.
At the Otemachi Building, we achieved efficiency in terms of cost and processes by establishinga system whereby elevators and robots are linked and robots are able to get in and out ofelevators automatically and by introducing two of these robots in place of two security guards.
Going forward, we plan to steadily install robots at locations where it is possible to transfer
duties from people to robots in accordance with property characteristics, while aiming tofurther increase the efficiency and sophistication of processes by increasing coordination.

	The Business Development, Client Relations & Solutions Groupwill deliver the most effective proposals to customers by centrally
managing customer contact point information and aim to maximize the acquisition of business opportunities for the Group.
	Acting as a Companywide, general contact point for the Group,
Business Development, Consulting & Solutions Departments 1
and 2 will propose solutions maximizing the Company’s resourcesin response to all manner of customer real estate utilization needs.
	The Office Leasing and Tenant Relations Department will carryout extensive office leasing activities by leveraging the Group’s
diverse building assets and customer relationships.
	In addition to properties owned by the Group, the Retail Property
Leasing Department will conduct leasing activities for retailfacilities boasting diverse characteristics, from urban to suburban
facilities, including properties owned by other companies.

Security robot SQ-2

Utilization of Cleaning Robots
After verification, Mitsubishi Estate began transitioning to the full introduction of Whiz, avacuum-cleaning robot made by Softbank Robotics, in May 2019 at several properties, including
its offices, retail facilities, airports, hotels, condominiums, and logistics facilities.
In addition, we introduced Neo, a floor-scrubbing robot developed by Avidbots, at Yokohama
Landmark Tower in April 2019, where floor scrubbing that takes seven hours and two people todo when done by hand can now be completed in two hours by one robot. In this way, the robot is
helping make costs and processes more efficient. Going forward, we plan to examine the gradualintroduction of cleaning robots that are able to operate without coming into contact with people, notonly at offices but also at properties with large floor areas, such as airports and retail facilities.

Competitive
Advantages©SoftBank Robotics

Vacuum-cleaning robot Whiz

Previous Structure

New Structure

Business Development,
Consulting & Solutions Group

Business Development, Client
Relations & Solutions Group

Business Development, Consulting &Solutions Planning Department
Business Development, Consulting &Solutions Department 1
Business Development, Consulting &Solutions Department 2
Business Development, Consulting &Solutions Department 3
Office Building Group
Office Leasing and
Tenant Relations Department
Lifestyle Property Business Group
Retail Property Leasing
Department

Client Strategy Planning
Department
Business Development,
Consulting & Solutions
Department 1
Business Development,
Consulting & Solutions
Department 2
Office Leasing and Tenant
Relations Department
Retail Property Leasing
Department

POINT
We will maximize business opportunities by fully leveraging ina cross-organizational manner the sales information that waspreviously concentrated by asset and organization.

	A cross-segment, strategic sales organization.
	Firm understanding of various apparent and latent needs of customers.
	Provision of abundant solutions drawing on Companywide resources.
	Leveraging of medium- to long-term relationships with office tenants and other customers and brokerage companies.
	Leveraging of relationships with retail tenants through an abundant leasing track record stretching from urban tosuburban facilities.
Integration of Sales and Customer Information and Leveraging of Information across the Group
Various apparent and latent needs of customers

Group Comprehensive IT Governance
The IT Management Unit of the DX Promotion Department works to develop the IT environmentthat underpins the competitiveness of the Mitsubishi Estate Group as a whole through theestablishment, maintenance, and operation of applications and IT infrastructure used internally.
In this process in particular, we aim to achieve overall, optimal Group IT operations whileworking closely with MEC Business System Solutions Co., Ltd., from the principal upstream
processes of system development and conception planning to downstream processes such as
actual implementation and operational management. Moreover, in a project for introducing
RPA, we are producing results with regard to innovating the processes of back-office work byfocusing on the business process re-engineering (BPR) of work flows and approval structures.
On the other hand, in response to threats that change on a daily basis, such as unauthorizedaccess by external parties, we are also focusing our efforts on cybersecurity measures.

Existing customers / new customers / collaboration partners

Floor-scrubbing robot Neo

Information acquisition throughmulti-tiered channels

Firm understanding and analysis
of customer trends and markets

Proposal of optimal solutions from a
Companywide perspective

Business Development, Consulting &Solutions Departments 1 and 2

Office Leasing and
Tenant Relations Department

Retail Property Leasing
Department

Integration and target selection of sales
and customer contact point functions

Improvement of product planning andproposal capabilities by strengthening
marketing functions

Establishment of systems andframeworks for harnessing
integrated sales functions

Customer Contact Point
Functions

Information Hub Function

Client Strategy Planning Department

Creation of broader and deeper proposal
and matching opportunities

Development of products and services
from the customer’s perspective

Consolidation of business menu andresource information

The Mitsubishi Estate Group’s variety of business opportunities
Departments / Group companies / New services and business models

Message from the Executive Officer in Charge of the Business Creation and
DX Promotion Departments 

T O P I C S
C O M M E N T

In a bid to play a major role in increasing earnings and profits in the non-asset business domain and service contents
provision domain under Long-Term Management Plan 2030, the Innovation and Business Transformation Group willoffer seamless services by expanding “touch points” with customers online, in addition to customer contact points at
physical locations through the development, sale, and operation of real estate, at which the Company specializes. At thesame time, by analyzing the information we acquire and accumulate from diverse customer contact points in a crosssectional manner, we will accurately identify customer needs and use the findings for the early discovery and resolutionof issues in our existing business domains and for the uncovering of new business opportunities.
In addition, we are accelerating new business development and the transformation of existing businesses by proactively
promoting open innovation with real estate technology companies and a variety of external stakeholders, including
companies from other industries.
Among these efforts, we will increase IT utilization speed and literacy for the Group as a whole by focusing in awell-balanced manner on the development of a Groupwide IT platform and on the strengthening of Group IT governance, withthe goal of smoothly promoting the utilization of digital technologies and IT that will be indispensable to our growth strategies.
Executive Officer

Ikuo Ono48

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Undertaking for a New Function Matching Customer Needs as a Section Boasting Direct Contact Points with Customers
Workation
https://workxation.mec.co.jp/ (Japanese only)This business operates new facilities supporting innovation creation by offering out-of-the-ordinary
spaces to companies and, in doing so, realizes regional revitalization. Coined in the West,“Workation” is a portmanteau of the words “work” and “vacation.” In Japan, however, which has adifferent working culture, we define it more broadly, for example, as a place for realizing diverse
workstyles, examples of which include changing location, fostering communication, and creating
innovation. In July 2020, we opened WORK x ation site Karuizawa, our second Workation facility,
and launched a Workation portal website, which features comprehensive information on facility
WORK x ation site Karuizawa
reservations and local authorities that are concentrating their energy on Workations.
Telecube
We are marketing the Telecube, a product that meets the needs of workers by allowing them to work
anytime and anywhere. In doing so, we are offering a private space necessary for managing informationand preventing the spread of infection. This business was launched through open innovation between
V-Cube, Inc., Okamura Corporation, and Mitsubishi Estate, three companies with differing strengths. By
using the Marunouchi area—a strength of which is its dense concentration of companies—as a hub toexpand this business, we will contribute to maximizing the Group’s competitive advantages.

Telecube

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

49

Overview of ESG Initiatives
The basic mission of the Mitsubishi Estate Group is “to contribute to society through urban
development.” Adopting a long-term view, the Group believes that it is of great importance topursue business activities in harmony with society.
In light of the growing momentum in Japan and overseas behind ESG investment,
as well as initiatives for the SDGs, we will aim to realize a sustainable society and enhance
corporate value over the long term by conducting governance more rigorously than ever before

For the Mitsubishi Estate Group, which declares its mission as “contributing to society through urban development,” advancing business activities in coexistence with society from a long-term perspective is of the utmost
importance. As such, the promotion of ESG initiatives is crucial.
Among the strategies for increasing social value in Long-Term Management Plan 2030, the Group has
established its Sustainable Development Goals 2030 as its vision to be achieved in that year. Through an ability
to provide value capable of contributing to sustainability and quality of life that distinguishes us from our competitors, we will increase asset value and gain opportunities to offer services to end users. Doing so will heighten
our competitiveness as a business and allow us to grow sustainably as a company.

while pursuing initiatives that pay close attention to society and the environment.

The Group’s
Basic Mission

Creation of a Truly Meaningful Society
through Urban Development
Long-Term Management Plan 2030

A Pair of Turning Gears

Mitsubishi Estate Group Sustainable Development Goals 2030

ESG SECTION

Key Themes

1. Environment
2. Diversity & Inclusion
3. Innovation
4. Resilience

Increasing
Social Value

Synergy

Increasing
Shareholder
ValueP lease see
page 26 for details.

Please see pages 53 for details.

Establish Key Themes and KPIs for the 2030s

P52

Materiality

P54

Environment (E)

P55

TCFD

P56

Human Resources and Diversity (S)P57

Resilience (S)

P58

SASB

P59

Corporate Governance (G)P68

Risk Management

The Group’s
Seven
Materiality
Categories

CommunityBirthrate / Aging

Globality

DiversityL everaging
Existing Properties

Digital Innovation

Identification of Material Issues in light of Social Issues and Trends

Environmental
Protecting the Environment

SocialHuman Resources andMarket Resilience

GovernanceCorporate Governance System

ESG Value Creation Initiatives through Business

Value
Propositions

50

T he Environment

Sustainability

Quality of Life

Solutions to Social Issues

Innovative Services and Experiences

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

51

Materiality
At meetings of the Groupwide working group in FY2019, 24 social issues and trends related to the Mitsubishi
Estate Group’s business activities were determined and materiality and related opportunities and risks wereidentified, by grouping those issues and trends into seven categories.
In addition, establishing targets for 2030 taking into account the aforementioned materiality, we will workto achieve the priority themes in Long-Term Management Plan 2030.
Please refer to our website for detailed information on identifying materiality.
Sustainability: https://www.mec.co.jp/e/sustainability/materiality/process/2030 Targets Taking into Account Materiality
As part of our Long-Term Management Plan 2030, we formulated four sustainability themes for the Mitsubishi
Estate Group to prioritize with an eye to 2030 as its Sustainable Development Goals 2030.
Beyond reaching the targets and action plans set out under these themes, we aim to surpass them byrepeatedly refining our efforts, taking into consideration changes in the external environment, status ofprogress every fiscal year, and other factors.

Materiality
The Environment	Community

Mitsubishi Estate Group Sustainability Vision 2050
Birthrate / Aging	

Be the Ecosystem Engineers

Digital Innovation

We aspire to be a corporate group (engineers) that provides spaces and infrastructure (ecosystems)
Globality

Diversity

Leveraging

Existing
Properties

where all actors (individuals, corporations, and more) are able to coexist sustainably andthrive together—economically, environmentally, and socially.
Backcasting

Main Opportunities

	Increasing need for acquisition and leasing of realestate with low environmental impact
	Expanding demand for facilities and services that
address the needs of international visitors
	Heightening need for acquisition and leasing of realestate highly resilient to disasters such as
earthquakes

Main Risks

Rising countermeasure expenses due to strength	ening of environmental regulations and stricter
renovation standards
Increased country, compliance, and supply
	
chain risks
Falling asset value and rising expenses for mainte	nance and countermeasures due to disasters suchas earthquakes

	Rising demand for facilities and services tailored todiverse living and working styles

Declining demand for facilities and services where	
the promotion of diversity is insufficient	Increasing demand for facilities and services
tailored to new needs due to demographic changes

Contracting demand for facilities and services due	
to demographic changes (including decrease inworking population)

	Reduction in waste as a result of lengthening thetime span of demolition and rebuilding work bymaking effective use of existing stock	Improvements in the efficiency and convenience offacility operations by leveraging IT and robots

Decreasing need for expensive, newly built real	estate in comparison with pre-owned and older
properties
Declining demand for facilities and services due to	late response to IT and digital innovation

Mitsubishi Estate Group Sustainable Development Goals 2030
1

Environment 

Develop Sustainable Communities to Address Climate Change andEnvironmental ProblemsR educe CO₂ emissions 35% by 2030 (compared with 2017)
Renewable energy ratio: 25%
Promote waste recycling and reduction of emissions focusing on food andplastic items
Waste recycling rate: 90%
Waste disposal: 20% reduction (compared with 2019, per m2)
Promote sustainable timber use
Establish traceability of timber to be used in business activities
2

Diversity & Inclusion 

Enable People of All Backgrounds to Thrive by Building Communities
Adaptive to Varying Lifestyle NeedsS trengthen hospitality and realize stress-free cities
Respect different lifestyles, local customs, religions, and sexual orientation
3

Innovation 

Create Innovative Cities That Continuously Spur Innovation
Please see our website for details on other opportunities and risks.
https://www.mec.co.jp/e/sustainability/materiality/opportunity-risk/

Main Methods for Providing Value	Safe and peaceful cities of a sustainable
and resilient nature	Cities conducive to realizing an inclusive
society	Cities that conduct management ofclimate change, waste, and energy issues	Pleasant and abundant cities responding
to demographic and lifestyle changes

	Borderless cities respecting the diverse
backgrounds of all peoples

	Efficient and ecological cities where stockis utilized effectively

	Cities that provide interactive added
value through knowledge accumulationand networks

	Innovative cities acting as wellsprings foropen innovation

Innovate business models and maximize performanceS upport the creation of new ideas and businesses from the perspectiveof urban development and contribute to the growth of cities and industries
4

Resilience 

Build Strong and Resilient Communities That Prioritize Security, Peace,and Disaster Protection
Enhance disaster preparedness to minimize functional stagnation during disastersE nhance BCP function through hardware measures and strengthen neighborhood
communication

Goals Formulated Based on the Seven Material Issues

Materiality (Important Issues for Sustainable Management)
	The Environment
Globality

52

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Community
Diversity	Birthrate / Aging

Digital InnovationL everaging
Existing Properties

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

53

Environment (E)TCFD

Our Approach Regarding the TCFD’s Recommendations 

We will conduct various measures designed to realize a carbon-free society, based on our Groupwide
medium- to long-term greenhouse gas reduction targets (certified by the Science Based Targets* (SBT)
initiative in April 2019) and on our becoming a signatory to RE100 (January 2020), an initiative for companies
to use 100% renewable electricity in their business activities by 2050. In addition, we will endeavor to promote
initiatives in recognizing that the reduction of waste, effective use of water and other resources, andconsideration for biodiversity are important themes.

In accordance with the TCFD’s recommendations, we formulated two future scenarios, including the below–2ºC scenario, and analyzed the future impact of climate change on our primary businesses (offices, retailfacilities, and housing). As follows, we have disclosed an overview of the four themes of corporate governance,
strategy, risk management, and metrics and targets set out under said recommendations, taking into consideration the analysis results. See below for details.
Please refer to our website for detailed information on the TCFD.
Information disclosure based on the TCFD’s recommendations:
https://www.mec.co.jp/e/sustainability/management/external-initiative/pdf/TCFD_Recommendations.pdf* Greenhouse gas emission reduction targets set by companies for five to 15 years into the future that are consistent with the standards demanded in the Paris Agreement

KPIs 

CO2 emissions (t-CO2)

Corporate Governance 
Important matters pertaining to sustainability, including climate change, are deliberated and reported on atmeetings of the Sustainability Committee, chaired by the president & chief executive officer of the Company,
with the chief sustainability officer (the executive officer in charge of the Sustainability Management andPromotion Department at the Company) as the deputy chair. The deliberations and reports of the committee
are also reported to and supervised by the Board of Directors.

Targets

FY2019 results

FY2020 results

Scope

35% reduction by 2030 and 87% reduction
by 2050, compared with 2017

3,588,345

4,038,584

Mitsubishi Estate Group*

1.3%

1.1%

Mitsubishi Estate Group*

45.5%

55.2%

Mitsubishi Estate Group*

Strategy 

11.1

7.1

Mitsubishi Estate Group*

In regard to climate change-related strategy, we have formulated two scenarios in accordance with the extent of thefollowing global response to climate change. We have established a strategy in light of analysis of the impact on ourbusinesses and identification of major risks and opportunities in each scenario.

* 2017 Performance: 3,336.472t-CO2

Renewable energy rate (%)

25% by 2030, 100% by 2050

Waste recycling rate (%)

90% by 2030

Waste disposal (kg/m2)

20% reduction compared with FY2020* Group companies have been chosen to be included in the calculation based on control criteria. Properties for which the Group’s ownership or share of beneficial interests in trust is
less than 50% have been excluded from the scope of calculations.

Please refer to our website for detailed information on other KPI and ESG data.
https://www.mec.co.jp/e/sustainability/activities/esg-data/

Overview of Scenario Analysis Result / Major Impact / Approach and Strategy Going Forward 1.5ºC–2ºC Scenario (scenario in which the response to climate change makes progress due to thestrengthening of government regulations and other policies)
Scenario overview • Climate change measures make progress as government environmental regulations arestrengthened.
• Likelihood of a rise in the cost of construction materials, which are carbon intensive,
Major impact
associated with the introduction of a carbon tax.
• Likelihood of a decline in rents as vacancy rates rise for buildings without advanced
environmental performance and leasing periods are extended. On the other hand, it isassumed that there would be an opportunity to maintain and increase competitivenessin the market by proactively carrying out additional investments.
1

Signatory to RE100 
On January 31, 2020, we signed up to RE100, a collaborative initiative committing
signatory companies to using 100% renewable energy-derived electricity in theirbusiness activities by 2050. Based on this affiliation, the Group will promotesustainable urban development leveraging the use of renewable forms of energy.

Support for the TCFD’s Recommendations 
On February 3, 2020, Mitsubishi Estate announced its support for the recommendations of the Task Force on
Climate-related Financial Disclosures* (TCFD), which recommends that companies disclose climate-relatedrisks and opportunities.
Please see page 55 for an overview of the Company’s disclosure information.
* Established by the Financial Stability Board (FSB) in response to a request from the G20 to disclose climate change-related
information and to consider measures financial institutions can take

Recent Initiatives Designed to Achieve the SBT and RE100 Promoting the Use of Renewable
Energy-Derived Electricity
On April 1, 2020, Mitsubishi Estate switched to renewableenergy (wood biomass)-derived electricity in parts of the
Marunouchi Building and Otemon Tower • ENEOS Building,which the Company operates and manages. Throughthis initiative, we expect to achieve a CO2 emissions
reduction of approximately 10,000 tons per year in total forthe two buildings.
1

Risk Management 
Marunouchi Building

Commencing the Use of Carbon-Neutral City Gas
In March 2020, Mitsubishi Estate commenced use of Japan’s first carbonneutral city gas at two of its office buildings in Chiyoda Ward, Tokyo. The gas
in question is carbon-neutral liquefied natural gas (LNG) purchased by TOKYOGAS Co., Ltd., from the Shell Group, and CO2 emissions generated in theprocesses from natural gas extraction through to combustion are offset bycarbon credits held by the Shell Group.

Otemon Tower • ENEOS Building

2

54

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

4ºC Scenario (scenario in which the response to climate change makes insufficient progress, global
warming worsens, and natural disasters intensify and increase)
Scenario overview • Natural disasters intensify and increase as the response to climate change makes
insufficient progress.
• Although there is a likelihood that costs due to temporary flood damage and other
Major impact
disasters would increase, the damage is not expected to be serious given the implementation of industry-leading measures at Company properties.
Approach and strategy going forward
In addition to switching existing electricity contracts, we are examining a variety of methods for procuring all
kinds of renewable energy, including corporate power purchase agreements (PPAs) and green power certificates(including overseas certificates). Moreover, we are looking to leverage new technologies as we aim for further
reductions in CO2 emissions.
2

To achieve the targets set out in the Mitsubishi EstateGroup’s Sustainable Development Goals 2030, in
managing climate change risks, we incorporate
action plans into annual plans for each organizationand function and have commenced monitoring andmanagement of the status of their progress since
FY2021 at meetings of the Sustainability Committee
and the Board of Directors biannually.

Metrics and Targets 
CO2 Emissions
Targets	35% reduction by 2030 and 87% reduction
by 2050, compared with 2017
FY2020 result 4,038,584 t-CO2

Renewable Energy Rate

Targets	2030: 25%
2050: 100%** Targets based on RE100 (signatory as of January 31, 2020)

FY2020 result 1.1%

Solid oxide fuel cell used in Marunouchi Building

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

55

Human Resources and Diversity (S)Our Approach 

Human Rights Initiatives Based on a recognition that employees are an important management resource for companies, the Mitsubishi
Estate Group conducts a variety of measures aimed at human resource development and health maintenanceand promotion. In promoting health and productivity management, we have issued a Health Management
Declaration and aim to establish vibrant workplaces reflecting the Group’s Code of Corporate Conduct.
Moreover, we have established a specific approach to respecting human rights in the Mitsubishi EstateGroup Human Rights Policy and support and respect international norms on human rights, such as theInternational Labour Organization’s Declaration on Fundamental Principles and Rights at Work.

Beginning in September 2018, we have been repeatedly examining human rights initiatives by holding theConstruction and Real Estate Human Rights Study Group jointly with other real estate companies and construction companies. In light of the plundering of the land of native peoples and environmental destruction in
the manufacturing process for the tropical wood that is used in Japan becoming a matters of concern, and after repeated examinations at the study group,
we formulated a policy regarding wood procurement in FY2021, establishing a
policy to use wood equivalent to that in the Sustainable Sourcing Code* (Certified
Wood and Domestically Produced Wood) for formwork concrete panels used in
the construction of offices and housing. The Group as a whole aims toincrease its use ratio of such wood to 100% by FY2031.
Formwork concrete panels

KPIs 
FY2019 results

FY2020 results

Paid leave utilization

5% increase by FY2021(FY2018 performance comparison: 66.0%)

Targets

Scope

72.9%

68.0%

Mitsubishi Estate

Rate of use of female employees taking childcare leave ofabsence

100% every year until 2030

100%

98.7%

Five Mitsubishi EstateGroup companies*

Rate of use of male
employees taking childcare
leave of absence

100% by 2030

12.6%

17.1%

Five Mitsubishi EstateGroup companies*

Rate of reinstatement to work
after childcare/maternity leave

100% by 2030

96.7%

93.8%

Five Mitsubishi EstateGroup companies** Mitsubishi Estate Co., Ltd., Mitsubishi Jisho Property Management Co., Ltd., Mitsubishi Estate Residence Co., Ltd., Mitsubishi Jisho Sekkei Inc., and Mitsubishi Real Estate Services Co., Ltd.

Please refer to our website for detailed information on other KPI and ESG data.
https://www.mec.co.jp/e/sustainability/activities/esg-data/

Initiatives Aimed at Realizing a Work–Life Balance and Flexible Workstyles 
Mitsubishi Estate has introduced a variety of systems, such as flex-time for all employees, childcare andnursing care leave, and telecommuting, so that employees can choose a workstyle best suited to their individual situations. The Company also implements the “positive off movement” that encourages employees totake paid leave by having them set targets for the number of days they wish to take.
Moreover, based on the Act on Advancement of Measures to Support Raising Next-Generation Children, we arepromoting a balance between employees’ work and child-rearing responsibilities through the formulation of aGeneral Employer Action Plan and the introduction of measures including childcare leave and a flex-time system.

Initiatives Aimed at Development of Human Resource and the Skills Thereof 
We conduct a variety of training programs with the goal of promoting role awareness in accordance withstages of career growth and employee skills development. In addition, to develop global human resources,
we have introduced a system to subsidize the cost of foreign language skills improvement measures for all
employees and established a training program for employees to gain practical experience at overseas Group
companies. We are also sending employees to study abroad and to business school.
Further, we launched a permission-based, second-job program* in January 2020. Additionally, in certain
businesses, particularly new businesses, we decided to accept applications from human resources working
second or concurrent jobs.
* Excluding at businesses where there is a conflict of interest with the Company, such as competitors. Maximum of 50 working hours per month

Initiatives Aimed at Health Management and Occupational Health and Safety In order to maintain and promote employee health, the Company offers annual
health checkups for all employees. We are aiming to increase the ratio of
employees undergoing these checkups through measures that include sending
individual notices with checkup information to those who have not taken theopportunity to undergo a checkup. We are also working on a variety of measuresdesigned to manage the health of employees, such as having an occupational
physician conduct interviews with any employee, including managers, who works
more than 80 hours of overtime per month. In addition, we also provide a freebreakfast to prevent employees from missing their morning meal.

Free breakfast* Defines standards and operational procedures for ensuring procurement with consideration for sustainability with respect tointernational agreements and codes of conduct in fields relevant to sustainability

Resilience (S)Our Approach Positioning “safety and security” as part of its corporate culture, the Mitsubishi Estate Group establishes atnormal times preventive measures, division of responsibilities, drill plans, emergency measure plans for whendisasters occur, and recovery measures.
In addition, we worked on the preparation of a business continuity plan andformulated the Mitsubishi Estate Business Continuity Plan Guidelines in October
2006. In December 2012, we formulated the Mitsubishi Estate Business Continuity
Plan Documents and the Mitsubishi Estate Guide to Preparing a BusinessContinuity Plan Document following the Great East Japan Earthquake. In theseways, we are promoting resilient organizations and urban development.
Sheltering stranded commuters at the time of
the Great East Japan Earthquake

KPIs 
Targets

Ratio of employees with first aid
provider qualifications
Ratio of buildings that are to
shelter stranded commuters

FY2019 results

FY2020 results

Boundary

100% by 2030

64.0%

61.0%

Three Mitsubishi EstateGroup companies*1

—

92.3%

92.3%

New properties*2 and large-scale
properties*3 in Japan*1 Mitsubishi Estate Co., Ltd., Mitsubishi Jisho Property Management Co., Ltd., and Mitsubishi Jisho Retail Management Co., Ltd.
*2 Completed from 2008 onward*3 Floor area of 100,000m2 and above

Please refer to our website for detailed information on other KPI and ESG data.
https://www.mec.co.jp/e/sustainability/activities/esg-data/

Various Initiatives Aimed at Ensuring Safety 
Since the Great Kanto Earthquake in 1923, the Company has been holding comprehensive emergency drills
every year with the participation of all of its executives and employees, Group companies, local fire departments, medical institutions, and other entities. The drill in FY2020, the 93rd such drill, took place on August 30,
2019, with the participation of approximately 1,250 Group employees in addition to affiliated parties, and saw
cutting-edge drills leveraging robots as well as drills for helping non-Japanese people at spaces for sheltering
stranded commuters.
In terms of our system for managing safety, we have established the Safety Management Office within our
Facility Management Planning Department to centrally manage activities and information at various sites. We
have also created the Building Safety Design
Guidelines, which independently set standards
that are stricter than the Building Standards
Act and other laws and regulations. We apply
the guidelines from a building’s design stage
to preemptively avoid accidents and revise
these as needed.
Drill simulating the utilization of security robots
Drill for sheltering stranded commutersin an emergency

56

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

57

SASB

Corporate Governance (G)Message from the
Chairman of the Board

Information Disclosure Based on SASB Standards 
Preconditions

We are classified as being in the Real Estate industry under the Infrastructure sector according to the
Sustainable Industry Classification System (SICS®) of SASB. Therefore, we have disclosed the following
information based on disclosure standards for this industry.
T he property subsectors are aligned with the 2018 GRESB Real Estate Assessment Reference Guide, as
stipulated in the SASB standards.
The scope of the following information covers only Mitsubishi Estate Co., Ltd. (not its Group companies), which
is different from the coverage of the scope used for reporting under Science Based Targets and RE100.
The following information has not been verified by a third party.
Sustainability Disclosure Topics and Accounting Metrics (FY2019)<Energy Management>
Unit ofMeasureCodeEnergy consumption data coverage as a percentage of total
floor area, by property subsector

Percentage (%)
by floor area

IF-RE-130a.1

100

100

100

100

100

100

Total energy consumed by portfolio area with data coverage

GJ

IF-RE-130a.2

15,308104,454

1,183,481

2,810

2,295

614

Percentage grid electricity

GJ

IF-RE-130a.2

0

0

0

0

0

0

Percentage renewable%

IF-RE-130a.2

0

0

0.75

0

0

0

Like-for-like percentage change in energy consumption forthe portfolio area with data coverage%

IF-RE-130a.3(4.91)(0.70)

1.71(14.12)—

2.84

IF-RE-130a.4

0

0

0

0

0

0

IF-RE-130a.4

0

0

0.28

0

0

0

Percentage of eligible portfolio that has an energy rating
Percentage of eligible portfolio that is certified to ENERGY STAR

Percentage (%)
by floor area
Percentage (%)
by floor area
Unit ofMeasureDescription of how building energy management considerations are reflected in property investment analysis andoperational strategy

Retail,High Street

Retail, Shopping
Centers

OfficeHealthcare

Parking (Indoors)

Other

Code

Contents

n/a

IF-RE-130a.5

On January 31, 2020, we joined RE100 and committed to switching to 100% renewable energy for theelectricity we use by 2050. Based on this goal, we are going to consider how we can use renewable energy
in many aspects of our business from diverse points of view. Also, we have a policy of working hard to
obtain green building certifications, such as DBJ Green Building and CASBEE certifications.

Unit ofMeasureCode

Hirotaka Sugiyama
Chairman of the Board
Mitsubishi Estate Co., Ltd.

<Water Management>
Water withdrawal data coverage as a percentage of total
floor area
Water withdrawal data coverage as a percentage of floor area
in regions with high or extremely high baseline water stress
Total water withdrawn by portfolio area with data coverage
Percentage in regions with high or extremely high baselinewater stressLike-for-like percentage change in water withdrawn for
portfolio area with data coverage

Description of water management risks and discussion ofstrategies and practices to mitigate those risks

Percentage (%)
by floor area
Percentage (%)
by floor area
Thousand m3

IF-RE-140a.1

Retail,High Street

Retail, Shopping
Centers100

IF-RE-140a.1
IF-RE-140a.2

Office100

Healthcare

100

Parking (Indoors)

Other

100

100

100

16

7

4

(0.69)(7.06)(7.89)

Not disclosed
57

533

2,552

%

IF-RE-140a.2

Not disclosed%

IF-RE-140a.3

Unit ofMeasureCodeContents

n/a

IF-RE-140a.4

We purify rainwater and wastewater in a recycling system, after which the treated recycled water* is used
to flush toilets inside the building. In order to drive the use of recycled water, we have set a KPI for taking
the recycled water use rate to 100%, and this goal will continue until 2030.
* Water reclaimed from used tap water and treated for recycling. It is used for flushing toilets, wateringgreenery, air-conditioning systems and other such facility water needs, as well as for cleaning, before
being discharged into the sewage system.

Unit ofMeasure

Code

5.25

(0.20)(5.47)<Management of Tenant Sustainability Impacts>
Percentage of new leases that contain a cost recovery
clause for resource efficiency-related capital improvements
Associated leased floor area, by property subsector
Percentage of tenants that are separately metered orsubmetered for grid electricity consumption
Percentage of tenants that are separately metered orsubmetered for water withdrawals

Percentage (%)
by floor aream2
Percentage (%)
by floor area
Percentage (%)
by floor area
Unit ofMeasureDiscussion of approach to measuring, incentivizing, andimproving sustainability impacts of tenants

Retail,High Street

Retail, Shopping
Centers

IF-RE-410a.1

OfficeHealthcare

Parking (Indoors)

Other

Not disclosed

IF-RE-410a.1

Not disclosed

IF-RE-410a.2

0

0

IF-RE-410a.2

0

0

0

0

Not disclosed

CodeContents

n/a

IF-RE-410a.3

To drive energy-saving actions with our tenants, we created a guidebook that introduces examples ofenergy-saving methods to them, and we introduced green leases in the template of our contracts. Also, wehold yearly Global Warming Prevention Council meetings in collaboration with the tenants in each of ourISO 14001-certified buildings in the Tokyo Metropolitan area to explain GHG emission reductions, energysaving actions, and to provide updates on the progress regarding these efforts, and so on.

Unit ofMeasureCode

m2

IF-RE-450a.1

Unit ofMeasureCodeContents

n/a

IF-RE-450a.2

Please refer to “(2) Strategy” in our “Information Disclosure Based on TCFD Recommendations” on our website.
(URL: https://www.mec.co.jp/e/sustainability/management/external-initiative/pdf/TCFD_Recommendations.pdf)

Unit ofMeasureCode<Climate Change Adaptation>
Area of properties located in 100-year flood zones, byproperty subsector
Description of climate change risk exposure analysis,
degree of systematic portfolio exposure, and strategies for
mitigating risks

Retail,High Street

Retail, Shopping
Centers

OfficeHealthcare

Parking (Indoors)

Other

Not disclosed

<Activity Metrics>
Number of assets, by property subsector
Leasable floor area, by property subsector
Percentage of indirectly managed assets, by property subsector
Average occupancy rate, by property subsector

58

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

After the transition to the “Company with Nominating Committee, etc.,” structure described in the Companies Act
of Japan, Mitsubishi Estate has continued to strengthen its corporate governance system. Initiatives to this end
have included introducing remuneration systems for directors—namely, the Restricted Stock Compensation
System and a performance-based incentive plan (the “Phantom Stock Plan”)—evaluating the effectiveness of theBoard of Directors, and establishing the “Mitsubishi Estate Co., Ltd., Corporate Governance Guidelines.” Since
June 2019, following the example of the Remuneration Committee, the Nominating Committee now comprises
entirely independent outside directors, while an independent outside director has been appointed as the chairperson of
the Audit Committee. In these ways, we are pursuing initiatives designed to bolster the supervisory functions of
the Board of Directors and various committees as well as promoting greater objectivity and transparency.
In May 2019, the Board of Directors decided not to renew the Company’s countermeasure program regarding possible
hostile takeover attempts. This decision was and remains an expression of our determination to have an effectivelyfunctioning governance system that continues to lead the industry as well as to realize and provide higher value
through ongoing dialogue with capital markets. Furthermore, we have been conducting lively discussions on capital
policy at Board of Directors’ meetings. In FY2020, we executed share buybacks totaling approximately ¥100.0 billion.
Long-Term Management Plan 2030, which was enacted in FY2021, is a plan forged through a process ofongoing discussions by the Board of Directors spanning more than a year. Going forward, Mitsubishi Estate
will practice management based on its strategies for increasing social value and shareholder value in order tosustainably provide value to all of its stakeholders over the long term.
Guided by the Company’s basic mission of contributing to the creation of a truly meaningful society by building attractive, environmentally friendly communities where people can live, work, and relax with contentment,
the Board of Directors is committed to meeting the expectations of shareholders and investors by doing all it can
to guide the Company in a way that takes into account future changes in society and the business environment.

Numberm2
Percentage (%)
by floor area%

IF-RE-000.A
IF-RE-000.B

Retail,High Street

Retail, Shopping
Centers

3
52,378

8607,603

OfficeHealthcare

49
4,717,870

211,657

Parking (Indoors)1
21,430

October 2020

Other

1
3,387

IF-RE-000.C

0

0

0

100

0

0

IF-RE-000.D

98.14

98.14

98.34

100

—

100

MITSUBISHI ESTATE CO., LTD. Integrated Report 202059

Corporate GovernanceDirectors(As of June 26, 2020)

Please refer to “Notice of Convocation of the 121st Ordinary General Meetingof Shareholders” for information on the career histories of directors.

Corporate Executive Officers, Executive Officers, and Group Executive Officers

https://www.mec.co.jp/e/investor/stock/shareholder/pdf/shareholder121_e.pdf(As of June 26, 2020)(Back row, from left)

1

1 Shin Nagase 2 Junichi Tanisawa 3 Jo Kato 4 Shin Ebihara 5 Tetsuji Arimori

3

2

4

5

6

Junichi Yoshida

Junichi Tanisawa

Atsuo Kyono

Tetsuji Arimori

Hidemi Waki

Representative Corporate
Executive Officer
President & Chief Executive
Officer

Representative Corporate
Executive Officer
Deputy President

Representative Corporate
Executive Officer
Executive Vice President

Representative Corporate
Executive Officer
Executive Vice President

Representative Corporate
Executive Officer
Executive Vice President

Futoshi Chiba

Noboru Nishigai

Hiroshi Katayama

Kenji Hosokane

Keiji Takano

Representative Corporate
Executive Officer
Executive Vice President

Representative Corporate
Executive Officer
Executive Vice President

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Atsushi Nakajima

Yuji Fujioka

Bunroku Naganuma

Toru Kimura

Yutaro Yotsuzuka

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

7

6 Iwao Taka 7 Toru Okusa(Front row, from left)

88 Bunroku Naganuma 9 Hiroshi Katayama 10 Masaaki Shirakawa 11 Tsuyoshi Okamoto

9

10

11

12

13

14

15

12 Junichi Yoshida 13 Hirotaka Sugiyama 14 Setsuko Egami 15 Tetsuo Narukawa

Name
Position
Appointment year
Number of shares held
(As reported in FY2020 Financial Report,
available only in Japanese)

Hirotaka Sugiyama

Hiroshi Katayama

Tsuyoshi Okamoto

Shin Nagase

Executive Officers

Group Executive Officers

Chairman of the Board

Director

Outside Director

Outside Director

Ikuo Ono

Tetsuo Yuasa

2007
50 thousand shares2016
29 thousand shares2019– shares2016– sharesTakashi Kobari

Hisashi Komada

Toshiyuki Inoue

Masaki Yamagishi

Seijin Chino

Masaharu Miyajima

Junichi Yoshida

Bunroku Naganuma

Shin Ebihara

Setsuko Egami

Tetsuo Yuasa

Hisashi Komada

DirectorDirector

Outside Director

Outside Director

Group Executive Officer

Group Executive Officer

2016
56 thousand shares2019
18 thousand shares2015– shares2015– shares

Akinori Nakajo
Akihiko Watanabe
Tetsuya Okusa

Junichi Tanisawa

Jo KatoTetsuo Narukawa

Iwao Taka

DirectorDirector

Outside Director

Outside Director

2014
40 thousand shares

2011
66 thousand shares2018– shares2016– sharesNobuhiro Okumoto
Naoki Umeda
Ryozo Kawabata
Shinya Mizumura

60

Tetsuji Arimori

Toru Okusa

Masaaki Shirakawa

DirectorDirector

Outside Director

Masaki Yamagishi

Masaharu Miyajima

2018
31 thousand shares

2013
30 thousand shares

2016– sharesGroup Executive Officer

Group Executive Officer

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Haruhiko Araki
Masato Aikawa

MITSUBISHI ESTATE CO., LTD. Integrated Report 202061

Corporate Governance

Characteristics of Corporate Governance System

Nominating Committee, Audit Committee, and Remuneration Committee Nominating Committee

Audit Committee

Remuneration Committee

Committee Duties

	Decision of the details of the proposals to
the general meeting of shareholders
related to the appointment and dismissalof directors

	Auditing and compilation of audit reports
pertaining to the performance of duties bycorporate executive officers and directors
	Decision of the details of the proposals
to the general meeting of shareholders
related to the appointment, dismissal,
and non-reappointment of the accounting
auditor	Formulation of remuneration policies forcorporate executive officers and directors
	Decision of remuneration amounts forindividual corporate executive officers anddirectors

Committee Activities

	Five meetings in FY2020
	Fifteen meetings in FY2020
	Determination of the details of director	Performance of audits through coordinanomination proposals based on standards
tion with the accounting auditor andestablished for nominating director
internal audit divisions based on audit
candidates formulated by the Nominating
standards and plans
Committee
	Attendance at important meetings, review
of important documents, and visits to	Reports and deliberations with regard tointernal divisions, branches, andthe nomination of corporate executive
officers prior to the resolution by the Board subsidiaries by full-time members of the
Audit Committeeof Directors	Six meetings in FY2020
	Decision of individual remuneration
amounts based on remuneration systems

Basic Policy 
The Company aims to realize the enhancement of corporate value through a harmonious balance between
corporate growth and the interests of its various stakeholders by following its brand slogan, “A Love for
People. A Love for the City,” based on its basic mission of “contributing to society through urban development.”
The Company shall position the development and promotion of its corporate governance system as one of themost important management issues in realizing this goal.
In developing and promoting our corporate governance system, to bring about greater clarity with regard
to roles and the strengthening of functions in both the supervision of management and the execution of business while also fulfilling accountability to our shareholders and other stakeholders, the basic policy shall work
to ensure the transparency and objectivity of management.
Evolution of Corporate Governance System
2015

2016

2017

	Transition to “Company
Organizational
	Change in outside directors with Nominating
Committee, etc.,” structure
structure, outside (improvement ofinde­pendence and gender 	Increase in ratio of outside
directors
diversity)
directors(7 of 15)
	Introduction of Restricted
Stock Compensation
SystemOfficerremuneration

2018

2019

	Making of all committee
members into nonexecutive directors
	Membership ofRemuneration Committee
comprising exclusively
outside directors

	Change of chairpersonof Audit Committee tooutside director
	Membership ofNominating Committee
composed completely ofoutside directors

	Introduction of performancebased incentive system(the “Phantom Stock Plan”)

Other aspectsof corporate
governance

4 (4 outside)

5 (2 inside, 3 outside)

4 (4 outside)

Chairperson

Tsuyoshi Okamoto (Outside Director)

Tetsuo Narukawa (Outside Director)

Shin Ebihara (Outside Director)* All three committees are composed solely of non-executive directors.

Attendance Rates of Outside Directors in FY2020 and Contributions Made 
Name	Introduction of the flexible
capital policy based onmarket conditions

	Commencement ofevaluations of theeffectiveness of the Boardof Directors
	Establishment of the“Mitsubishi Estate Co., Ltd.,
Corporate Governance
Guidelines”

Membership*

Tsuyoshi Okamoto(execution of share buybacks
totaling approximately¥100.0 billion)	Decision not to renew
the countermeasureprogram regarding possible
hostile takeover attempts

As a “Company with Nominating Committee, etc.,” Mitsubishi Estate has established the Nominating
Committee, the Audit Committee, and the Remuneration Committee, which are positioned under the Boardof Directors and are membered by a majority of outside directors. These committees help promote highstandards and ensure transparency of the decision-making process.

Masaaki Shirakawa

Shin Nagase

General Meeting of Shareholders
Board of Directors
Audit Committee

Nominating Committee

Accounting Auditor

Cooperate

Audit Committee Office

Audit
Cooperate

Remuneration Committee

Iwao Taka

Internal Audit Office
Cooperate

Risk Management & Compliance Committee

Sustainability Committee

Functional Groups, Business Groups & Corporate Staff Departments

Board of Directors 
The Board of Directors decides the basic policy of the Company’s
management, and it also carries out supervision of the executionof duties by directors and corporate executive officers. As of June
26, 2020, the Board of Directors consists of 15 directors, of whom
seven are outside directors. The role of chairman of the Board of
Directors is held by the chairman of the Board of the Company,
who does not concurrently serve as a corporate executive officer.
The membership of the Board of Directors is appropriatelybalanced with members from a diverse range of backgrounds.
MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Nominating Committee

5/5

Remuneration Committee

4/4
10/10

Nominating Committee

5/5

Remuneration Committee

6/6

Board of Directors

10/10

Audit Committee

12/12

Remuneration Committee

2/2

Board of Directors

9/10

Nominating Committee

5/5

Remuneration Committee

6/6

Board of Directors

10/10

Audit Committee

15/15

Board of Directors

10/10

Nominating Committee

5/5

Remuneration Committee

6/6

Board of Directors

10/10

Audit Committee

14/15

Contributions Made

Tsuyoshi Okamoto poses pertinent questions and offers valuable advice from an
objective viewpoint independent of management executives in charge of businessaffairs, by leveraging his management experience at a comprehensive energy company.
Shin Ebihara poses pertinent questions and offers valuable advice from an objective
viewpoint independent of management executives in charge of business affairs, byleveraging his wealth of international experience and knowledge gained through his
extensive years as a diplomat.
Tetsuo Narukawa poses pertinent questions and offers valuable advice from an
objective viewpoint independent of management executives in charge of businessaffairs, by leveraging his international experience as well as management experience atfinancial institutions and real estate companies.
Masaaki Shirakawa poses pertinent questions and offers valuable advice from an
objective viewpoint independent of management executives in charge of businessaffairs, by leveraging his knowledge in finance and economics, among other fields,
gained through his experience working at a central bank.
Shin Nagase poses pertinent questions and offers valuable advice from an objective
viewpoint independent of management executives in charge of business affairs, byleveraging his management experience at an airline company.
Setsuko Egami poses pertinent questions and offers valuable advice from an objective
viewpoint independent of management executives in charge of business affairs, byleveraging her abundant knowledge of corporate strategy, marketing strategy, andhuman resource development.
Iwao Taka poses pertinent questions and offers valuable advice from an objective
viewpoint independent of management executives in charge of business affairs, byleveraging his extensive knowledge regarding business ethics and compliance, among
other fields.

Independence Standards for Independent Outside Directors

Corporate Executive Officers

Audit

8/8

Executive Committee

Internal audit

62

Setsuko Egami

Delegate authority to executebusiness and supervise

President & Chief Executive Officer

Board of Directors

Board of Directors

Shin Ebihara

Tetsuo Narukawa

System Structure 

Attendance at Meetings of theBoard of Directors andCommittees

Composition of the Board of Directors
InsideCandidates for the outside director position shall fulfill a duty of care as a prudent manager toward the Company; understand the Group’s basic
mission of contributing to the creation of a truly meaningful society by building attractive, environmentally sound communities where people
can live, work, and relax with contentment; apply their qualities and capabilities to contribute to enhancing medium-to long-term sustainablecorporate value, as well as their experience and knowledge in specialized fields such as global business, finance, and risk management, in viewof the Group’s business characteristics, such as supporting urban development in the Marunouchi area; and have personality and knowledge
enabling objective and fair judgments, based on the perspective that they shall contribute to the common interests of shareholders without bias
toward the interest of any particular party of interest. However, as a general principle, candidates are not elected if the Tokyo Stock Exchange’s
standards for independence and the following independence standards for outside directors apply to them.
(1) A shareholder or executive member of an entity holding voting rights exceeding 10% of total voting rights of the Company.

Serve concurrently as
corporate executive officers

Do not serve
concurrently as
corporate executive
officers

Outside(2) A transaction party or executive member of an entity whose transactional amounts in the most recent fiscal year have exceeded 2% ofconsolidated revenue from operations of the Company.
(3) A representative employee, employee, or member of staff of the Company’s accounting auditor.
(4) An attorney, certified public accountant, tax accountant, consultant, or other party who has received compensation from the Company
exceeding ¥10 million in the most recent fiscal year.

Non-executive, independent

MITSUBISHI ESTATE CO., LTD. Integrated Report 202063Corporate GovernanceEvaluation of the Effectiveness of the Board of Directors
The Company regularly conducts self-evaluations of each director with regard to the operation of the Board of
Directors and the contents of deliberations. The results of these evaluations shall be reported to the Board of
Directors, and the Board of Directors analyzes and evaluates its effectiveness based on these self-evaluations
and other information.
The process and results of the evaluation of the effectiveness of the Board of Directors conducted in
FY2020 are as follows.

1. Process of Evaluation (1) Method of Evaluation
All directors conducted self-evaluations in the form of a response to a questionnaire relating to the composition,
operation, effectiveness, etc., of the Board of Directors and each of the Nominating, Audit, and Remunerationcommittees, and taking these results into consideration, they discussed the issues with each other andexamined proposed corrective measures at Board of Directors’ meetings.
(2) Items of Evaluation
Composition of theBoard of Directors

Proportion of outside directors, number of members, and diversity

Operation of theBoard of Directors

Frequency, required time, reports on execution of business by corporate executive officers, information provided
outside of Board of Directors’ meetings, questions and answers, training, etc.

Effectiveness of theBoard of Directors

Management plan, monitoring of execution of business and risk management systems, dialogue withshareholders and investors, appointment and dismissal of key management personnel, successor training
plan, remuneration paid to officers, operation of the Nominating, Audit, and Remuneration committees, etc.

Others

Method of the evaluation of the effectiveness of the Board of Directors, etc.

2. Results of Evaluation and Future Initiatives (1) Main Items Improved Since the Previous Evaluation
Through a process of examination and discussion at Board of Directors’ meetings, two point were identified.
• The outside directors received information on the current circumstances of the Company and sufficient time to holddiscussions and exchange opinions in order to contribute to management plans reflecting the long-term vision and goalsof the Company under Long-Term Management Plan 2030 that started in FY2021.
• Measures to further enhance discussions at Board of Directors’ meetings were carried out. Steps were taken to continuously enable discussions at presentation meetings of the Company’s business for outside directors and meetingscomposed mostly of outside directors, at which opinions can be exchanged.

(2) Main Issues and Future Initiatives Aimed at Further Improvements in EffectivenessThrough a process of examination and discussion at Board of Directors’ meetings, the following points were identified.
• Initiatives aimed at further improving diversity of the Board of Directors are to be continuously implemented, with efforts
mainly by the Nominating Committee.
• Appropriate monitoring is to be performed at Board of Directors’ meetings concerning the progress status of Long-Term
Management Plan 2030.

Remuneration
Total Remuneration Paid to Directors, Corporate Executive Officers, and Statutory Auditors in FY2020
Category

Total remuneration(Millions of yen)Fixed remuneration(Millions of yen)

Performance-based remuneration(Millions of yen)

Recipients

260

260

—

3

Inside directors
Corporate executive
officers
Outside directors

1,081

551

529

13

108

108

—

8

(iii) Remuneration Systems for Officers
The remuneration systems for directors and corporate executive officers shall be separately established in consideration of respectivefunctions and roles to be fulfilled for the purpose of achieving sustained corporate value improvement. In addition, directors who concurrently
serve as corporate executive officers shall be paid remuneration as corporate executive officers.
• Directors (excluding directors who concurrently serve as corporate executive officers)
In consideration of their function and role of supervising the performance of duties by corporate executive officers and directors, they shallreceive, in principle, only basic remuneration in the form of cash, and the standards shall be decided upon individually taking into accountfactors such as their position and responsibilities as directors and whether they are full-time or part-time.
• Corporate executive officers
In consideration of their function and role of taking charge of business execution of the Company, their remuneration shall, in principle,
comprise basic remuneration and variable remuneration. Variable remuneration comprises monetary compensation that is paid based on
short-term performance, etc., and stock compensation, etc., (including monetary compensation paid based on indicators such as stock price)that is paid with a view to realizing the medium- to long-term sharing of value with shareholders. The standards and ratio of basic remuneration and variable remuneration, valuation indicators for variable remuneration, and other matters shall be decided upon taking into
account medium- to long-term performance targets, etc., aimed at in management strategies and the current management plan and factors
such as position and responsibilities as corporate executive officers.

Composition of the Remuneration of Corporate Executive Officers
Basic remuneration

50%

64

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Medium- to long-term incentive remuneration

Single-year, performance-based
remuneration

Restricted stockcompensation

25%

Fixed remuneration

Phantom stock

12.5%

12.5%

Performance-based remuneration

Overview of Performance-Based Remuneration
Single-year, performance-based remuneration• Form of remuneration: Cash
• Method of evaluating performance: Quantitative evaluation looking at the previous fiscal year’s figures for consolidated operating income,
EBITDA, ROA, ROE, and operating income from respective divisions; assessment of contributions to medium- to long-term performance; andqualitative evaluation examining ESG initiatives, etc.
Medium- to long-term performance-based remuneration (Restricted stock compensation)• Form of remuneration: Shares• Restricted stock period: Approximately three years
Medium- to long-term performance-based remuneration (Phantom stock)• Form of remuneration: Cash
• Performance evaluation period: Approximately three years• Method of evaluating performance: Evaluation based on the relative ranking of the Company’s total shareholder return and the rate ofchange in common stock price among five peer companies (Nomura Real Estate Holdings, Inc., Tokyu Fudosan Holdings Corporation,
Mitsui Fudosan Co., Ltd., Tokyo Tatemono Co., Ltd., and Sumitomo Realty & Development Co., Ltd.)

Shares Held for Strategic Purposes
The Company acquires and holds shares for other than purely investment purposes if it deems such shareholdings
to be useful in facilitating the Group’s business activities smoothly in cases such as when seeking to maintain or
reinforce medium- to long-term transactional relationships or in procuring funds on a stable basis.
In regard to the holding of listed shares as investment shares for other than purely investment purposes, we
examine the rationality of such holdings from the perspective of whether they are useful or not in facilitating theGroup’s business activities smoothly, focusing on such aspects as the background of the acquisition, record of transactions, status of cooperative and collaborative relationships, and level of dividend payouts. The findings of these
examinations, as well as the number of reductions of such shares and the policy on reductions going forward, arereported to the Board of Directors at least once a year, and we are proceeding with sales in an appropriate manner.
In addition, the Company has been conducting ongoing investments in venture businesses since FY2016 in its sevendefined focus areas, which include real estate tech, AI and robotics, and renewable energy. Centered on the Innovation andBusiness Transformation Group, these efforts are aimed at heightening the value of existing businesses and expanding
the Company’s business domains through the utilization of technologies and coordination with external partners.
Please refer to page 46 for details regarding the Innovation and Business Transformation Group.

Holdings of Shares Held for Strategic Purposes(Total for Listed and Non-Listed Companies)

Change in Disposal of Shares Held for Strategic Purposes

180

20

Board Policies and Procedures in Determining the Remuneration of Senior Management and Directors(i) Procedures for Deciding Remuneration Paid to Officers
The policy concerning decisions on the details of remuneration paid to directors and corporate executive officers of the Company and the details of
remuneration for each person shall be decided upon by a resolution at the Remuneration Committee, which comprises solely outside directors.
(ii) The Basic Policy for Deciding Remuneration for Officers
The basic policy for deciding remuneration for directors and corporate executive officers of the Company is as follows.
• The remuneration system shall be linked with our medium- to long-term performance targets, etc., aimed at in management strategies andMedium-term management plans and realize sustained corporate value improvement and the sharing of value with our shareholders.
• The remuneration system shall allow for the giving of incentives to management executives to encourage them to take on challenges andconduct appropriate risk-taking in line with the above strategies’ targets and expectations of shareholders and other stakeholders.
• The remuneration system shall make it possible to fulfill high accountability for the benefit of our shareholders and other stakeholders
through objective deliberations and judgments by the Remuneration Committee.

Short-term incentive remuneration

4

0

166

8
16

164
152

FY2015FY2016

17.9

15

2

160

140

Billions of yen

FY2017

Non-new business-related holdings

148

FY2018

22

12.2

10
4.2

5
138
FY20191.4

134
FY2020

New business-related holdings

0

FY2016FY20174.0

0FY2018FY2019FY2020

FY2021(Plan)

Please refer to our Corporate Governance Report for more information on
our corporate governance system.
https://www.mec.co.jp/e/investor/governance/materials/pdf/corp200713e.pdf
MITSUBISHI ESTATE CO., LTD. Integrated Report 202065

Corporate Governance

Message from an Outside Director

Development ofCorporate Governance System
Compatible with Global Standards
in Conjunction with Expansion
of Business Domains(the “Long-Term Management Plan”). The Long-Term Management Plan was formulated based on the recognition that the three-year period of prior medium-term management plans was too short for effectively implementing the Group’s strategies. Accordingly, the Long-Term Management Plan covers 10 years. The period of adecade was chosen as it was deemed to be more ideal to the Mitsubishi Estate Group’s business model. Thisbusiness model entails raising the value of facilities and areas from a long-term perspective not overly preoccupied with short-term targets. Such an approach has been taken to ensure that the Group can continue toachieve growth in a manner best suited to it by transforming the volatile changes in the social climate into
opportunities and maintaining the support of customers, employees, and all other stakeholders. Moreover, theLong-Term Management Plan represents a declaration of the Group’s commitment to boldly seeking out
growth in new fields, even as it advances numerous initiatives that require substantial amounts of time toreach successful conclusions.

Necessity of Enhancing ESG Initiatives to Improve Corporate Value 

Shin Ebihara
Outside Director(Member of the Nominating
Committee, Chairman of theRemuneration Committee)

Enhancement of True Corporate Value through Two Reforms 
Guided by its basic mission of “contributing to society through urban development,” the Mitsubishi EstateGroup seeks to enhance true corporate value through a sophisticated balance of growth as a conglomerateand coexistence with its various stakeholders. The development and implementation of corporate governancesystems is a top management priority toward realizing this goal. In my capacity as a director, I hope to help
ensure that the Group continues to be a valuable entity a century from now. By “valuable,” I mean that theGroup has significant meaning to all stakeholders, including shareholders, employees, and society as a whole.
I believe that the Group will need to implement two reforms in order to accomplish this goal.
The first is corporate governance system reform. The Mitsubishi Estate Group is a comprehensive
developer, which means that the scope of its operations, its mission, and its duty to society is constantly
growing. Accordingly, the Group needs a corporate governance system with a variety of functions andcapabilities in order to support its business activities. I became an outside director at the Company in 2015.
Since then, I have seen the Company engage in various leading-edge governance reforms, including thetransition to the “Company with Nominating Committee, etc.,” structure, the increase in the ratio of outside
directors on the Board of Directors, and the appointment of outside directors as the chairs of each of its
committees. I personally chair the Remuneration Committee. In this committee, we are working to createa remuneration system that helps officers better share value with shareholders and which promotes
appropriate risk-taking. This system is based on the Company’s total shareholder return (TSR) ranking andentailed the introduction of a performance-based incentive plan. The evolution of the Group’s corporate
governance and remuneration systems is proving to be a significant strength.
Business reform is the second needing implementation. Surviving in the volatile market will require that
the Group reform its businesses and furnish flexible responses to change. Moreover, it is imperative for theGroup to develop management strategies from a medium- to long-term perspective and further hone its
strengths while diligently reforming its businesses in line with its strategies.

Growth Suited to the Group Achieved through Advancement of Long-Term Management Plan 2030 

In the world of politics and diplomacy, it is important to branch out into new fields whenever possible whileremaining rooted to one’s traditional foundations. The same could be said of the Mitsubishi Estate Group’sbusiness strategies. The Group’s traditional business foundation is based in the Marunouchi area. It is therefore
important for the Group to engage in new businesses after having evolved Marunouchi into a stronger and moreunique business area. The Tokyo Tokiwabashi Project is one example of an undertaking that is congruent withthis idea, whereas the Airport Business represents the Group’s aggressive expansion into new business fields.
Meanwhile, the Group is targeting the improvement of both shareholder and social value under its LongTerm Management Plan. This two-pronged goal is based on the recognition that growing while heightening
corporate value in the coming social landscape will require the Group to enhance its environmental, social, andgovernance (ESG) initiatives, in order to remain a company that society deems as truly necessary. In terms ofgovernance initiatives, the Group will need to facilitate the management decisions and supervisory functions
necessary to improve corporate value from a longer-term, more social value-oriented perspective.
In other words, the Mitsubishi Estate Group must continue evolving to realize governance systems conduciveto achieving growth from this long-term perspective.

Construction of Foundations for Ensuring Survival over the Next Century 
The Long-Term Management Plan identifies the expansion of overseas businesses centered on Asia as oneof its pillars of growth. This policy indicates the Group’s desire to contribute to urban development across theglobe by leveraging the expertise it has accumulated through its various office building, residential housing,and commercial facility operations in the Marunouchi area and other parts of Japan. Advancing real estatedevelopment businesses overseas, however, will require the Group to find promising partners, achieve a
deeper understanding of the countries and areas it seeks to explore, and create business models suitedthereto. The Group already has experience engaging in joint business activities with local overseas partners.
Accordingly, the Group will be looking to lead overseas projects while fully capitalizing on its accumulated
expertise going forward.
In terms of governance, I think it can be said that the Group has made progress in developing a leading-edge
system in Japan. However, as its business domains further globalize going forward, it will become increasingly
important for the Group to evolve its corporate governance system to comply with global standards.
As a diplomat, I have wrestled with international issues for some 40 years, during which I have foundmyself living in the United States, Europe, and Asia. I hope to fully capitalize on the experience and insightI have gained abroad to contribute to the sustainable growth of the Mitsubishi Estate Group, so as to ensurethat it can continue to survive over the next decade, nay, the next century.
My five years as an outside director at Mitsubishi Estate have shown me how spectacular a company it is.
If I were to change anything, however, it would be to have the Company’s employees exercise the sense of ambition
expressed in the saying “not enough is the beginning” as they aspire to grow the Company’s businesses.

The management strategies based on a medium- to long-term perspective I just mentioned refer to the MediumTerm Management Plan, which concluded in FY2020, and its successor, Long-Term Management Plan 2030

66

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

67

Risk Management

Risk Map
Risk Impact

Moderate
Risks that necessitate the improvementof existing measures or introductionof new measures

Risks that are appropriately dealt withby continuing existing measures

Status of Control

The Mitsubishi Estate Group has established the Mitsubishi Estate Group Risk Management rules and has set up
a risk management system to manage risks in all of its business activities. Mitsubishi Estate has also established
the Risk Management & Compliance Committee to oversee the Group’s risk management and formed the Risk
Management & Compliance Subcommittee as a working-level consulting body responsible for such matters as
the collection of risk management-related information. The corporate officer in charge of risk management is
appointed by resolution of the Board of Directors to take responsibility for overseeing risk management, andgeneral managers of each business group and general managers from Group departments have been designatedas risk management officers. We promote risk management activities through the Mitsubishi Estate Legal &Compliance Department, which serves as the secretariat.
We have also established and implemented action guidelines, contact and initial response systems, andbusiness continuity planning for use in times of crisis.

Large

Candidates for risks needing
countermeasures in the future

Key risks requiring countermeasuresduring fiscal year

Ongoing risks requiring countermeasures(currently having impact)

Ongoing risks requiring countermeasures(large impact)

Risk Management Related to Investment Projects 
Risk Management and Compliance System(As of April 2020)

Board of Directors

Corporate Officer in Charge of Risk Management & ComplianceAppointment

Decision of Basic Policy
Supervision

Reporting= Responsible for overseeing risk management= Responsible for overseeing compliance
Overall Management

Risk Management & Compliance Committee

Reporting

Risk Management & Compliance-Related Deliberation and Decision-Making Bodies
ChairmanVice-Chairman

Mitsubishi Estate
President & Chief Executive Officer

Mitsubishi Estate

Directions
through
Each Duty

Corporate Officer in Charge of Risk
Management & Compliance

Mitsubishi Estate
Risk Management
Promotion Officers(Line and Staff Departments,
Others)Strategic Investment Committee Compliance Promotion
Officers(General Managers)

Committee Members

Mitsubishi Estate Directors, Representatives from Main Group Companies
Mitsubishi Estate

Advisors

Chairman of the Board
Full-Time Members of the Audit Committee
General Manager of Internal Audit OfficeOutside Experts

ReportRisk Management
Promotion Personnel

Compliance Promotion
Personnel

ConsultaAdvice
tion

Group Company

Risk Management Officer

Among the various risks recognized by the Mitsubishi Estate Group, risks related to investment projects are
based on the assessment of business viability by Companywide research functions and under investment
decision rules of the Strategic Investment Office. Prior to the deliberation of important investment projects by
the Executive Committee, which is chaired by the president & CEO and is responsible for strategic planning forthe entire Group and monitors the progress of each business toward realizing this strategy, the Strategic
Investment Committee deliberates and evaluates profitability, the nature of risks and related countermeasures, and other matters. At each phase, risk assessments are also conducted from legal and financial
aspects in order to grasp an overall picture of the risks.

Compliance Officer

In its deliberations, in addition to assessing the economic viability of a given project using multiple indicators,
the Strategic Investment Committee verifies the appropriateness of various aspect of premises, such as rents,
unit selling prices, and construction costs. For risks, in particular, simulations of upside and downside scenarios
are incorporated into investment decision rules. The difference between the scenario set by the responsible
business group in charge of the project and the downside scenario is recognized as risk. The Strategic
Investment Committee holds discussions on the acceptable limits of that risk.

Risk Evaluation Process for Individual Projects
Scenarios anticipated by business units

Risk Management & Compliance Subcommittee
Risk Management & Compliance-Related Deliberation and Reporting Bodies

Corporate Officer in Charge of Risk
Management & Compliance
General Managers of Corporate
Group Departments

Assistance

General Managers of Line and Staff
Departments for Function andBusiness Groups
People Designated by Presidentsof Main Group Companies

Guidance

Risk Management Promotion Secretariat / Compliance Promotion Secretariat
Executive
Committee(Mitsubishi Estate Legal & Compliance Department)

General Manager of Internal Audit
Office General Manager of Mitsubishi
Estate Audit Committee Office

Risk Management Activities of Each Individual Business

68

2
Identification and Monitoring of Key Risks That Needand Function Group and Group Company

Particular Attention from the Group

Individual Group companies and function and business groups
identify important risks based on a risk analysis and carry out
activities throughout the year to reduce the risks identified. In
addition, the general managers of each function and business groupascertain the status of risk management activities of different
business companies under the jurisdiction of each business andfunction group and provide coordination and support.

To accurately grasp the risks facing the Group as a whole, and by
selecting and mapping key risks that require measures to be taken,
the risks that must be addressed and their level of priority arebrought to light. While monitoring risks throughout the year,
particularly key risks, support is provided as necessary.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Strategic Investment
Committee
Presentation of scenarios anticipated bybusiness units with major projects[Role]
Discussion on and verification of theappropriateness of importantinvestment projects
Verification of the responsible
business group’s anticipatedscenarios• Verification of consistency with
Companywide strategies• Verification of consistency withbusiness group strategies• Verification of economic viability• Verification of appropriateness ofassumptions (such as rents andconstruction costs)• Preparation of upside and downside
scenarios, quantifying risk

Preparation of the
responsible business group’s
anticipated scenarios with
important investment
projects and submission
thereof to the Strategic
Investment Committee

Risk Management Activities

1

Business GroupsV erification of individual
investment projects• Verification of consistency
with strategies of eachbusiness group• Economic viability verification

Strategic Investment
OfficeExecutive Committee[Role]
Investment decisions regarding
important projects
Verification of importantinvestment projects• Verification of compatibility
with Companywide strategies• Verification of compatibility
with business group strategies• Verification of economic
viability

Where necessary, the Strategic
Investment Office prepares separate
anticipated scenarios and submits
them to the Executive Committee.

• Companywide researchfunctions• Preparation and use ofinvestment decision rules
Jurisdiction

Anticipation of scenarios byStrategic Investment Office

Sharing of visualized risks and areas of concern for business viability

MITSUBISHI ESTATE CO., LTD. Integrated Report 202069

Financial Section

Risk Management

Dealing with Major Risks Below are some examples of risks that have come to light in the Mitsubishi Estate Group through risk management activities and various business activities and countermeasures that have been taken.

Japan’s Real Estate Market
Supply of New Large-Scale Office Buildings* in the 23 Wards of Tokyo
Million m2
2.0

Risks of
Information
Security

Risks of Corruption

Risks of Natural
and Man-MadeDisasters, etc.

In light of society’s growing concerns over the appropriate protection of personal information and information
management, the Mitsubishi Estate Group comprehensively revised its rules related to information
management in 2018 and updated its information management systems to ensure scrupulous management.
We are aiming to further improve information management through continuous monitoring and supervision.
Moreover, in order to raise the IT security level of the entire Group, we have positioned our DX (Digital
Transformation) Promotion Department at the center of efforts to standardize the Group’s IT systems andmake it more secure. We are also enhancing collaboration among DX Promotion Department personnel
and between the department and external security companies, thereby providing Groupwide support.

The prevention of corruption is an important issue for our businesses both in Japan and overseas. To that
end, we have established and announced the Mitsubishi Estate Group Anti-Corruption Guidelines anddeveloped a system to prevent corruption across the organization. Under these guidelines, the Group has
declared and put into practice several specific corruption prevention initiatives while thoroughly preventing
any acts of bribery or acts that may be suspected as such. These initiatives include carrying out due
diligence on counterparties deemed to meet certain conditions, incorporating corruption prohibition
clauses into contracts, and establishing approval and reporting procedures for the provision of entertainment,
gifts, and donations. In addition, we are seeking to gain a greater understanding of rules related to theprevention of corruption through training for directors and are also constantly monitoring this position.

The occurrence of such natural disasters as earthquakes, floods, or climate change or man-madedisasters including accidents or fires may impact the performance, financial position, or other aspects of
the Group’s business. The Group is redeveloping its properties to install advanced disaster-management
functions and has established disaster-response measures through area management.

Risks of
Fluctuations in
Exchange Rates

In addition to those held in Japan, the Group is developing and holding assets in the United States,
Europe, and Asia, for which the book values and income are accounted for in local currencies.
Consequently, any fluctuation in exchange rates would affect the yen conversion rate used for foreign
currency-denominated assets and liabilities and business transactions. The Group minimizes these risksof fluctuations in interest rates using such methods as borrowing funds in local currencies when
procuring assets overseas.

Risks of
Fluctuations in theReal Estate Market

The real estate market is closely correlated with movement in the economy. Deterioration in the economy
has a strong impact on declines in real estate prices and rental fees and the increase in vacancy rates.
In view of this correlation, the basic policy of the Group is to conclude relatively long-term lease contracts
with customers in its office building leasing business. The prospects of stable lease revenue mitigate toa certain degree the risk of sharp movements in the economy.

Risks of Increases
in Interest Rates

The Group acquires funding for its operations by borrowing from financial institutions or issuing corporate
bonds. The Bank of Japan (BOJ) has implemented a policy of quantitative and qualitative monetary easing
in response to the credit crunch in financial markets and the slowdown in the global economy. Shouldinterest rates rise, however, because of a change in the BOJ’s policy or a deterioration in the demand–
supply balance for Japanese government bonds (JGBs) caused by growth in the issuance of JGBs, it may
negatively affect the performance, financial position, or other aspects of the Group’s business.
The Group hedges interest rate risk on a certain portion of its variable interest rate financing throughinterest rate swaps to convert its interest rate payments into fixed payments. In the future, the Groupplans to manage its interest rate risk by procuring funds based on a consideration of its fixed andvariable interest rate borrowings and its outstanding corporate bond balances.

In 2019, the supply of new large-scale office buildings in Tokyo’s
23 wards by floor area decreased 40% year on year, to 850,000 m².
Supply contracted briefly in 2019, but demand held firm as companies looked to expand office space and gather together functions
handled by decentralized offices against a backdrop of strong
corporate earnings. Supply volume in 2020 is expected to reach thesecond highest level since the start of surveys, but to be low in 2021
and 2022. The average for the next five years (2020 to 2024) is
expected to be on a par with past performance levels.

1.5

1.0

0.5

0
2015

2016

2017

2018

2019

2020

* Buildings with a standard floor area of 10,000 m2 and above

2021
2022
2023
2024
CY
（Estimate）
Source: Mori Building Co., Ltd.

Office Building Market (Average Rents / Vacancy Rates in Five
Central Tokyo Metropolitan Wards)
Yen / tsubo-month%

25,00010

20,0008

15,000

6

10,000

4

5,000

2

Note: The impacts of the global COVID-19 pandemic were estimated with consideration for certain
assumptions based on performance forecasts, and the impact of the pandemic on estimates
was judged to be minimal.

In the office building market, growth in demand for offices led tovacancy rates in the five central Tokyo metropolitan wards(Minato-ku, Chiyoda-ku, Chuo-ku, Shinjuku-ku, and Shibuya-ku)
declining to 1.5%, the lowest level since December 1991. Averagerents have also followed a steady positive trend as demand ran
ahead of supply amid a growing sense of a shortage of vacancies.

0

0
3/11

3/12

Average rent

3/13

3/14

3/15

3/16

3/17

3/18

Vacancy rate (right scale)

3/19

3/20

Source: Miki Shoji Co., Ltd.

Supply of New Condominiums in the Tokyo Metropolitan Area /Average Condominium Prices
Units

Millions of yen

80,00080

60,00060

40,00040

20,00020

In the housing market, the supply of condominiums in the Tokyo
metropolitan area declined 16% year on year, to 31,238 units.
Meanwhile, the average price of condominiums in the Tokyo
metropolitan area rose 1.9% year on year, to ¥59.8 million,
owing to an increase in the supply of high-end condominiums.

0

0
2010

2011

2012

2013

2014

2015

Sales of new condominiums in the Tokyo area


2016

2017

2018

2019

CY

Condominium prices (right scale)
Source: Real Estate Economic Institute Co., Ltd.

Expected Cap Rate by Type of Property in the Tokyo Area%
7.0

Risks Arising from the COVID-19 Pandemic
In FY2020, performance in the Mitsubishi Estate Group’s hotel, commercial facility, and airport operations felt the
impacts of the global COVID-19 pandemic during February and March 2020. Moreover, the pandemic threatens toadversely impact the Group’s business activities and performance centered on these operations in FY2021. Basedon the trends surrounding the pandemic, performance forecasts for FY2021 were set assuming that Japan’s stateof emergency declaration would be lifted by May 31, 2020, and that the operating environment of businesses would
gradually recover by the end of September. In some businesses, the impact is expected to continue throughout the
fiscal year. However, should it become clear that the anticipated recovery trend will not occur, due to factors suchas the prolongation of the pandemic or intermittent waves of subsequent infections, and if it is judged that
performance forecasts need to be revised, prompt notification will be issued.

Economy Hotels for Lodging in Tokyo

6.0

Multiple-Tenant-Type Warehouse
Properties in Tokyo (Koto District)

5.0 Residential Properties forStandard Studios in Southern Tokyo
4.0

3.0

A-Grade Office Buildings* in the
Marunouchi and Otemachi Areas

Although the real estate market remained brisk due to suchfactors as the Bank of Japan’s ongoing policy of monetary easing,an excessive decline in investment returns has led to concerns insome quarters that the real estate market may be overheating.
The expected return (cap rate) was unchanged from the previous
year for many classes of real estate and in many areas, with the cap
rate for A-grade office buildings in the Marunouchi and Otemachi
areas standing at 3.5% as of April 2020.

0
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

As of April 1 each year

* Covers properties within five minutes’ walk from the nearest station and with floor areas of
at least 50,000 m2


70

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Source: Japan Real Estate Institute

MITSUBISHI ESTATE CO., LTD. Integrated Report 202071

Financial Section

Eleven-Year Summary of Selected Financial Data (Consolidated)
3/20103/20113/20123/20133/20143/20153/20163/20173/20183/20193/2020¥1,013,415¥  988,447¥1,013,069¥  927,157¥1,075,285¥1,110,259¥1,009,408¥1,125,405¥1,194,049¥1,263,283¥1,302,196

Operating income

148,972

158,258

146,299

118,349

161,271

156,332

166,199

192,495

213,047

229,178

240,768

Ordinary income

117,381130,830

120,665

92,381

139,638

133,113

144,851

169,851

190,506

206,587

219,572

Profit attributable to owners of parent

11,90064,21956,51245,50764,29773,33883,426102,681

120,443

134,608

148,451

4,355,065

4,245,209

4,387,015

4,711,521

4,765,368

4,901,526

5,311,840

5,484,115

5,801,450

5,774,193

5,858,236

Total equity*

1,183,156

1,202,270

1,256,791

1,239,547

1,329,057

1,495,838

1,509,680

1,592,777

1,698,348

1,770,643

1,734,462

Interest-bearing debt

1,762,111

1,639,050

1,716,890

2,085,417

1,973,042

1,929,355

2,291,038

2,396,994

2,481,675

2,319,597

2,429,883

Capital expenditures

114,085

76,332

282,171

208,135

159,677

177,331

275,316

275,372

289,570

285,089

331,857

Depreciation and amortization

73,92670,62867,46573,36474,80572,696

74,24575,97477,54580,336

84,941

Cash flows from operating activities

212,668

259,263203,243

122,286

336,489

200,078

135,821

168,527

293,338

345,954341,766

Cash flows from investing activities(112,639)(67,223)(272,009)(217,992)(133,537)(46,568)(231,003)(327,292)(286,841)(271,083)(277,440)

Cash flows from financing activities(106,852)(140,269)

57,18927,150(177,514)(189,109)309,237(4,921)

37,203(192,473)(28,886)

Cash and cash equivalents at the end of year

177,825

229,062

215,771

191,837

224,739

198,489

412,392

243,341

286,859

179,308

213,008

Earnings¥ 8.58¥46.27¥40.72¥32.79¥46.34¥52.85¥60.13¥74.00¥86.78¥96.97¥108.64

Cash dividends

12.00

12.00

12.00

12.00

12.00

14.00

16.00

20.00

26.00

30.00

33.00

¥230,730¥237,109¥222,885¥200,587¥246,332¥239,934¥252,034¥279,718¥302,424¥320,641¥336,784

3.4%

3.7%

3.4%

2.6%

3.4%

3.2%

3.3%

3.6%

3.8%

4.0%

4.1%

5.2

6.6

6.5

5.0

7.5

7.7

8.5

8.7

9.5

10.1

11.3

Financial Results (Millions of yen)
Revenue from operations

Financial Position (Millions of yen)
Total assets
1

Cash Flows (Millions of yen)

Per Share Amounts (Yen)

Principal Financial Indicators¥240,998

Business profit*2 (Millions of yen)
EBITDA* (Millions of yen)
3

ROA*

4

Interest coverage ratio*5 (Times)
ROE
Payout ratio

1.0%

5.4%

4.6%

3.6%

5.0%

5.2%

5.6%

6.6%

7.3%

7.8%

8.5%

139.9%

25.9%

29.5%

36.6%

25.9%

26.5%

26.6%

27.0%

30.0%

30.9%

30.4%

Stock Information
Stock price*6 (Yen)
Number of shares issued and outstanding (Thousands of shares)

5,000

Mitsubishi Estate’s Stock
Price Changes on theTokyo Stock Exchange¥1,530¥1,407¥1,476¥2,596¥2,446¥2,787¥2,090.5¥2,030¥1,798.5¥2,005.5¥1,595

1,390,397

1,390,397

1,390,397

1,390,397

1,390,397

1,390,397

1,390,397

1,390,685

1,390,908

1,391,038

1,391,174

Yen
4,000

3,000

2,000

1,000

0
3/20093/20103/20113/20123/20133/20143/20153/20163/20173/20183/20193/2020Notes:*1 Total equity is calculated by deducting non-controlling interests and stock acquisition rights from total net assets.
*2 Business profit is calculated as operating income + equity in earnings of unconsolidated subsidiaries and affiliates.
*3 EBITDA is calculated as the sum total of operating income, interest and dividend income, equity in earnings of unconsolidated subsidiaries and affiliates, depreciation and amortization, and goodwill.
*4 Calculated as Operating Income ÷ Total Assets (Average of the amount at the beginning and end of the fiscal period) until FY2019, and Business Profit ÷ Total Assets (Average of the amount at the
beginning and end of the fiscal period) in FY2020*5 The interest coverage ratio (ICR) is calculated by dividing the sum total of operating income, interest and dividend income, and equity in earnings of unconsolidated subsidiaries and affiliates by thesum total of interest expenses and commercial paper interest.
*6 As of the last trading day in March

72

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MITSUBISHI ESTATE CO., LTD. Integrated Report 202073

Financial Section

Financial Review
Matters Related to Rental Properties
Mitsubishi Estate and some of its consolidated subsidiaries own
office buildings and retail facilities in Tokyo and other major cities inJapan as well as overseas, with the aim of obtaining rental revenue
from these buildings and facilities. Because certain leased officebuildings among these are used by the Company or some of its
consolidated subsidiaries, the Company has classified such buildings
as rental properties containing self-use space.
The following table shows the year-end amounts, changes inthese amounts during the period under review, and the fair values ofinvestment and rental properties and other real estate that includes
portions used as investment and rental properties.


The following table shows the profit and loss from rental
properties and other real estate that includes portions used as
investment and rental properties.


Fiscal year ended
March 31, 2019

(April 1, 2019, to March
31, 2020)(April 1, 2018, to March
31, 2019)

Amounts recorded on the consolidated balance sheets
3,408,738

3,480,147 Increase (decrease) during
the period

94,021(71,408) Balance as of the end of
the period

3,502,759

3,408,738

Market value as of the end of
the period

7,356,741

6,953,534

Unrealized gain

3,853,982

3,544,796

Rental Properties Containing Self-Use Space

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2019

(April 1, 2019, to March
31, 2020)(April 1, 2018, to March
31, 2019)

Rental revenue

472,275

448,676

Rental costs

303,281

283,816

Difference

168,994

164,860

Other income (loss)(21,246)(7,917) Balance as of the beginningof the period

633,983 Increase (decrease) during
the period(88,403) Balance as of the end of theperiod545,580

Market value as of the end of
the period

914,103

987,600

Unrealized gain

368,523

353,616

233,476

664

1*

T&D Holdings, Inc.

746,900

660

7*

RENAISSANCE INCORPORATED

637,500641

6*Number ofstocksTotal amount bookedon balance sheet(¥ million)

THE SHIZUOKA BANK, LTD.

886,750

582

7*

TOKAI CARBON CO., LTD.

588,250

524

1*

9,099

Mebuki Financial Group, Inc.

Shares other than unlisted shares

92
64

175,510

Information on the number of shares for each company andamounts shown on the balance sheet for specific investment sharesand deemed holdings of equity shares are as follows.

Amountbooked onbalance sheet(¥ million)

Rental costs

32,36930,825Company

Difference

11,53410,005

Mitsubishi Corporation

13,088,457

29,992

1*

Other income (loss)

4,012

(406)

Japan Airport Terminal Co., Ltd

3,111,400

12,9901*

AGC Inc.

4,540,606

12,073

1*

11,963

5*

Mitsubishi UFJ Financial Group, Inc.

27,921,042

11,252

2*

Kirin Holdings Company, Limited

4,035,538

8,625

1*

Taisei Corporation

2,426,690

8,020

3*

Mitsubishi Logistics Corporation

3,665,554

7,998

4*

Mitsubishi Electric Corporation

5,577,294

7,445

1*

East Japan Railway Company

857,300

7,009

3*

80

Mitsubishi Heavy Industries, Ltd.

2,346,997

6,413

1*

60

Central Japan Railway Company

367,900

6,372

3*

TOYOTA MOTOR CORPORATION

598,4623,890

1*

Mitsubishi Materials Corporation

1,739,700

3,853

1*

NIKON CORPORATION

3,510,000

3,502

4*

Shin-Etsu Chemical Co., Ltd.

308,2123,307

1*

TOHO CO., LTD.

794,100

2,620

3*

SHIMIZU CORPORATION

2,738,650

2,314

3*

Obayashi Corporation

2,404,961

2,226

3*

Odakyu Electric Railway Co., Ltd.

901,000

2,137

3*

Mitsubishi UFJ Lease & Finance
Company Limited

3,760,000

2,000

1*

Earnings per Share

Trillions of yen

Times

Yen

10

120

net hghbri

8

1.5

6

1.0

4

0.5

2

0

0

Net interest-bearing debt
Net interest-bearing debt (after hybrid
debt deductions)*
Net interest-bearing debt / EBITDA(right scale)Net interest-bearing debt / EBITDA (after
hybrid debt deductions)*(right scale)* The subordinated bonds and subordinatedloans subject to equity credit from a credit
rating agency (50% equity treatment) are
shown after deductions.

Purposeof holding
shares4,274,100

Balance of Interest-Bearing Debt
net

Number ofsharesHEIWA REAL ESTATE CO., LTD.

100

20
0

2016 2017 2018 2019 2020

Notes:
1. The amounts included on the consolidated balance sheets presented in the table above are equal
to the total acquisition prices for applicable properties or real estate less the aggregate amountsof depreciation and impairment loss for these properties or real estate.
2. Fair values as of the end of each consolidated fiscal year are as follows:(1) The fair values of domestic properties and real estate have been calculated by Mitsubishi
Estate, based mainly on the Japanese Real Estate Appraisal Standards.
(2) The fair values of overseas properties and real estate have been calculated mostly by
local appraisers.
(3) The impacts of the COVID-19 pandemic were estimated with consideration for certain
assumptions based on performance forecasts, and the impact of the COVID-19 pandemic on
estimates was judged to be minimal.

SHIMADZU CORPORATION

40,83040

633,983

3*

43,903

480,436
153,547

690

Rental revenue

2.0

Amounts recorded on the consolidated balance sheets

345,000

Specific Investment Shares

Note: Real estate that includes portions used as investment and rental properties has portions that areused by Mitsubishi Estate and some of its consolidated subsidiaries for the purpose of providing
related services and conducting management of operations. Accordingly, rental revenue
associated with these portions has been excluded. Costs associated with applicable properties
and real estate, such as depreciation costs, building management costs, and taxes, have been
included in rental costs.

2.5

NOHMI BOSAI LTD.

Stocks held for purposes other than pure investment, the number ofshares, and their total value as of March 31, 2020, recorded on thebalance sheet are as follows.

Unlisted shares

Rental Properties Containing Self-Use Space

Rental Properties Balance as of the beginningof the period

Millions of yen

Rental Properties

Millions of yen

Fiscal year ended
March 31, 2020

Status of Shareholdings 2016 2017 2018 2019 2020

Unrealized Gain on Rental
Properties
Trillions of yen
5.0

598,500

1,969

4*

Mitsubishi Chemical Holdings
Corporation

2,897,000

1,862

1*

Seino Holdings Co., Ltd.

1,275,900

1,496

5*

THE HACHIJUNI BANK, LTD.

3,441,500

1,345

7*

Nippon Suisan Kaisha, Ltd.

2,789,900

1,333

1*

621,600889

7*

1,852,000

875

7*

Mitsubishi Research Institute, Inc.

4.0

3.0

2.0

1.0

Fukuoka Financial Group, Inc.

0
2016 2017 2018 2019 2020

Chiba Bank, Ltd.

2,340,000

514

7*

MITSUBISHI GAS CHEMICAL COMPANY,
INC.

431,405

507

1*

KUBOTA Corporation

359,000

495

4*

NIPPON EXPRESS CO., LTD.

89,483473

4*THE HYAKUGO BANK, LTD.

1,509,000455

7*

Concordia Financial Group, Ltd.

1,186,500

373

7*Tokyo Kaikan Co., Ltd.

131,140

370

3*

Matsuya Co., Ltd.

545,300

334

3*

The Chugoku Bank, Limited

343,000330

7*SHINAGAWA REFRACTORIES CO., LTD.

138,150306

1*

JFE Holdings, Inc.

399,800

281

1*

P.S. Mitsubishi Construction Co., Ltd.

496,000

254

1*

Kodensha Co., Ltd.

58,500239

3*

NANTO BANK, LTD.

50,440112

7*

Nippon Yusen Kabushiki Kaisha

86,121

110

1*

GS Yuasa Corporation

73,670107

1*Mitsubishi Kakoki Kaisha, Ltd.

66,586

106

4*

Kyushu Financial Group, Inc.

256,410

105

7*

The 77 Bank, Ltd.

70,68798

7*

Mitsubishi Steel Mfg. Co., Ltd.

112,472

89

4*

The Hokkoku Bank, Ltd.

26,500

89

7*

HOTEL NEW GRAND CO., LTD.

24,20052

4*

1* To contribute to raising corporate value by maintaining and strengthening good relationships withtenants, principally in the Office Building Business
2* To contribute to fund procurement and raising corporate value by maintaining and strengthening good
relationships, principally in the Office Building Business
3* To contribute to raising corporate value by maintaining and strengthening collaborative relationships,
principally in the Office Building Business
4* To contribute to raising corporate value by maintaining and strengthening good relationships inbusinesses across the entire Group
5* To contribute to raising corporate value through business partnerships and joint businesses
6* To contribute to raising corporate value by maintaining and strengthening collaborative relationships,
principally in the Residential Business
7* Principally to contribute to stable fund procurement

Deemed Holdings of Equity Securities
Number ofsharesCompany

Amountbooked onbalance sheet(¥ million)

Purposeof holding
sharesTokio Marine Holdings, Inc.

6,929,500

34,301

8*

Mitsubishi Electric Corporation

10,656,000

14,2258*

Mitsubishi UFJ Financial Group, Inc.

4,306,400

1,735

8*

MITSUBISHI MOTORS CORPORATION

700,000214

8*

8* To maintain authority to exercise voting rights
Note: With regard to the largest stocks in terms of the amounts recorded on the balance sheet,specific investment shares and deemed holdings of equity securities for investment purposes
are not included in aggregate totals.

Years ended March 31

74

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

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Financial Section

Consolidated Balance Sheets
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
March 31, 2020 and 20192020

Millions of yen

Thousands of
U.S. dollars (Note 3)

2019

2020

Assets¥   207,896¥    176,814$   1,910,288

Notes and accounts receivable–trade (Note 14)

50,34062,603

462,561

Marketable securities (Notes 14 and 15)

7,657

6,767

70,360Allowance for doubtful receivables

(294)

(218)

(2,706)Inventories (Note 4)

329,305

361,455

3,025,867

Equity investments (Notes 14 and 15)

450,520

387,385

4,139,673

Other current assets

70,20878,061

645,123

1,115,634

1,072,869

10,251,168

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

50,024

18,351

459,655

Investment securities (Notes 14 and 15)

187,596

240,826

1,723,753

Asset for retirement benefits (Note 7)

21,33623,935

196,055

Deferred income taxes (Note 8)

16,266

20,766

149,471

Other investments (Notes 5 and 14)

263,358

214,230

2,419,905

538,582

518,110

4,948,841

Property and equipment (Note 6):Land
Land in trust

2020

2019

2020

¥  373,635¥   392,221$ 3,433,198

Notes and accounts payable–trade (Note 14)

66,36857,967

609,836

Accrued income taxes (Note 8)

29,773

19,620273,574

Advances and deposits

112,727

139,293

1,035,815

Current liabilities:

Cash on hand and in banks (Notes 14 and 16)

Total investments and other assets

Thousands of
U.S. dollars (Note 3)

Liabilities and net assets

Current assets:

Total current assets

Millions of yen

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

81,497

79,840748,848

664,001

688,942

6,101,274

Long-term debt (Notes 6 and 14)

2,054,263

1,922,783

18,875,892

Lease deposits received (Note 14)459,177

440,058

4,219,216

Liability for retirement benefits (Note 7)

26,91926,573247,352

Deferred income taxes (Note 8)

479,915497,699

4,409,775

Negative goodwill

80,251

92,423

737,404

Other non-current liabilities

152,501

148,607

1,401,280

Total long-term liabilities

3,253,028

3,128,145

29,890,921

Total liabilities

3,917,030

3,817,088

35,992,195

			 Issued – 1,391,174,263 shares in 2020 and 1,391,038,170 shares in 2019

142,147

142,023

1,306,146

		Capital surplus

164,041

162,498

1,507,317

		Retained earnings

962,840

858,581

8,847,194

Accrued expenses and other current liabilities
Total current liabilities
Long-term liabilities:

Net assets:
Shareholders’ equity (Note 9):
		 Common stock, without par value:
			 Authorized – 1,980,000,000 shares;

		 Less treasury stock, at cost(105,282)(5,278)(967,407)

2,152,812

2,105,797

19,781,422

Total shareholders’ equity

1,163,746

1,157,824

10,693,251

608,331

676,572

5,589,743

Accumulated other comprehensive income:

730,750

2,763,937

2,711,109

25,396,838

		 Unrealized holding gain on securities

79,527

115,452

Machinery and equipment and other

152,076

143,884

1,397,377

		 Deferred gain (loss) on hedging instruments(1,948)(64)(17,907)

Construction in progress

126,31180,674

1,160,633

		 Land revaluation reserve

526,623526,623

4,838,954

5,803,470

5,718,038

53,326,015

		 Foreign currency translation adjustments(29,321)(30,144)(269,428)(1,696,217)(1,629,953)(15,585,937)

		 Retirement benefits liability adjustments (Note 7)(4,163)

952(38,260)

4,107,252

4,088,084

37,740,078

Total accumulated other comprehensive income

570,716

612,819

5,244,109

Buildings and structures

Less accumulated depreciation
Property and equipment, net

Intangible
Total assets

96,767¥ 5,858,236

95,128¥ 5,774,193

889,157$ 53,829,245

Stock acquisition rights

288

302

2,652

Non-controlling interests

206,454

186,159

1,897,037

Contingent liabilities (Note 12)
Total net assets

1,941,206

1,957,105

17,837,050

Total liabilities and net assets¥5,858,236¥5,774,193$53,829,245

See accompanying notes to consolidated financial statements.

76

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MITSUBISHI ESTATE CO., LTD. Integrated Report 202077

Financial Section

Consolidated Statements of Income

Consolidated Statements of Changes in Net Assets

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2020 and 2019
Millions of yen

Thousands of
U.S. dollars (Note 3)

2020

2019

2020

¥1,302,196¥1,263,283$11,965,415

Cost of revenue from operations (Note 4)(967,036)(940,976)(8,885,750)

Selling, general and administrative expenses(94,391)(93,128)(867,327)

Operating income

240,768

229,178

2,212,338

Revenue from operations

Other income (expenses):
Interest and dividend income
Interest expenses
Equity in earnings of affiliates

7,581

75,147(22,100)(23,503)(203,073)

229

263

2,109

(3,127)(2,580)(28,733)(16,819)(18,238)(154,550)

223,949

210,9392,057,787

Other, net (Note 13)
Profit before income taxes

8,178

Income taxes (Note 8):
Current(46,441)(501,944)(3,907)(12,517)(35,901)(58,533)(58,958)(537,846)

165,415

151,981

1,519,940

DeferredProfit(54,626)

Profit attributable to:(16,963)(17,372)(155,869)¥   148,451¥   134,608$ 1,364,071

Non-controlling interests
Shareholders of Mitsubishi Estate Co., Ltd.

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2020 and 2019
Millions of yen

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equityAccumulated othercomprehensive income
Unrealized
Deferred gain
holding(loss) on
gain (loss)
hedging
on securities
instruments¥141,898¥161,819¥763,277¥  (5,294)¥1,061,700¥121,787¥    369

124

124(6,334)(6,334)
115,452

(434)
(434)
(64)

(35,925)(35,925)¥ 79,527(1,883)(1,883)¥(1,948)

Shareholders’ equity

Balance at April 1, 2018
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2019
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
	Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2020

(37,477)
134,608(8)(1,818)

(18)
34

553
124
142,023678
162,498

124

124

249
(37,477)
134,608(18)
25(1,818)553

95,304
858,581

16(5,278)(44,112)
148,451(2)(78)(100,020)
16

1,418

96,123
1,157,824
249(44,112)
148,451(100,020)
13
(78)
1,418

124
¥142,147

1,543¥164,041

104,258¥962,840(100,004)¥(105,282)

Land
revaluation
reserve

Accumulated other comprehensive income
Foreign
Retirement
Total
currency benefits liability
accumulatedtranslation
adjustments
other compreadjustments(Note 7) hensive income¥526,623¥(12,227)

5,922¥1,163,746

See accompanying notes to consolidated financial statements.
Millions of yen

Consolidated Statements of Comprehensive Income
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2020 and 2019
Millions of yen

Thousands of
U.S. dollars (Note 3)

2020

2019

2020

¥165,415¥151,981$1,519,940

Unrealized holding gain (loss) on securities(35,924)(6,337)(330,147)

Deferred gain (loss) on hedging instruments(2,039)(384)(18,737)

Foreign currency translation adjustments

1,054(17,407)

9,686

Retirement benefits liability adjustments(5,103)839(46,983)

(382)

(913)

(3,513)

ProfitOther comprehensive income (Note 22):

Share of other comprehensive income of affiliates
accounted for by the equity method
Total other comprehensive income (loss)
Comprehensive income (Note 22)(42,400)(24,202)(389,606)¥123,014¥127,778$1,130,334

Total comprehensive income attributable to:Shareholders of Mitsubishi Estate Co., Ltd.

¥106,349¥110,779$   977,205

Non-controlling interests¥ 16,665¥ 16,998$   153,129

See accompanying notes to consolidated financial statements.

78

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Balance at April 1, 2018
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
	Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2019Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
	Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2020¥    95¥636,648

Stockacquisitionrights

Noncontrollinginterests

Total
net assets¥326¥180,412¥1,879,088
249(37,477)
134,608(18)
25(1,818)553——
526,623(17,916)(17,916)(30,144)

856
856
952

(23,829)(23,829)
612,819

(24)
(24)
302

5,746
5,746
186,159(18,106)
78,017
1,957,105
249(44,112)
148,451(100,020)
13
(78)
1,418

—
¥526,623

822
822¥(29,321)(5,116)(5,116)¥(4,163)(42,102)(42,102)¥570,716

(13)
(13)
¥288

20,294
20,294¥206,454(21,821)(15,898)¥1,941,206

See accompanying notes to consolidated financial statements.

MITSUBISHI ESTATE CO., LTD. Integrated Report 202079

Financial Section

Consolidated Statements of Changes in Net Assets (continued)

Consolidated Statements of Cash Flows

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2020 and 2019

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2020 and 2019
Millions of yen

Thousands of
U.S. dollars (Note 3)

2020

2019

2020

¥ 223,949
84,941
4,064(1,690)2,344
10,844(229)
12(4,334)(8,178)
22,10015,166
148,161(43,217)
11,006
19,200(82,687)
401,4538,189(22,239)(45,636)
341,766¥ 210,939
80,336
5,551(6,072)561—(263)(1,170)(3,227)(7,581)
23,503(16,174)
132,337(9,124)(7,379)25,599(12,144)415,690
7,688(23,606)(53,817)345,954$ 2,057,787
780,496
37,345(15,534)
21,54599,645(2,109)110(39,826)(75,147)
203,073
139,359
1,361,403(397,107)
101,134
176,422(759,790)
3,688,809
75,253(204,348)(419,339)
3,140,374

5,749(4,076)
105,810(331,722)
5,275(36,565)

10,258(3,236)
4,732(283,307)
13,871(8,258)52,826(37,461)
972,253(3,048,078)
48,471(335,984)—

16,738———(21,910)(277,440)(9,319)(1,580)(10,980)(271,083)——(201,326)(2,549,299)

29,19650,000249,967(230,736)
92,815(75,000)(73,021)—
139,325(163,776)
21,185(66,162)

268,272
459,432
2,296,860(2,120,151)
852,848(689,148)(350)(100,024)(44,103)(651)(28,886)(1,626)33,813
179,308—(113)¥ 213,008

(502)
(16)
(37,761)(11,743)(192,473)(1,796)(119,398)
286,859
13,903(2,055)¥ 179,308(3,216)(919,093)(405,250)(5,984)(265,430)(14,949)
310,695
1,647,602—(1,042)$ 1,957,256

Thousands of U.S.dollars (Note 3)

Shareholders’ equity

Balance at April 1, 2018
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
	Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2019
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
	Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2020

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equity$1,303,854$1,486,904$7,013,482$(48,652)$9,755,587

1,146

1,146
(344,371)
1,236,873(80)(16,706)

(165)
317

5,086
1,146
1,305,000

6,232
1,493,137

1,146

1,145

875,715
7,889,197

(20)
(718)

152
(48,500)(919,054)
147

13,034
14,180$1,507,317$1,119,058$3,399(58,204)(58,204)
1,060,853(3,995)(3,995)(595)(330,102)(330,102)$730,750(17,311)(17,311)$(17,907)

2,292(344,371)
1,236,873(165)
237(16,706)
5,086(405,335)
1,364,071

1,146$1,306,146

Accumulated othercomprehensive income
Unrealized
Deferred gain
holding(loss) on
gain (loss)
hedging
on securities
instruments

883,246
10,638,834
2,292(405,335)
1,364,071(919,054)
127(718)
13,034

957,997$8,847,194(918,907)
54,417$(967,407) $10,693,251

Thousands of U.S.dollars (Note 3)Landrevaluation
reserve

Balance at April 1, 2018
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
	Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2019Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in the scope of consolidationChanges in equity related to transactions with
non-controlling shareholders
	Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2020
See accompanying notes to consolidated financial statements.

80

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

$4,838,954

Accumulated other comprehensive income
Foreign
Retirement
Total
currency benefits liability
accumulatedtranslation
adjustments
other compreadjustments(Note 7) hensive income$(112,356)$    878$5,849,933

Stockacquisitionrights$2,997

Noncontrollinginterests

Total
net assets$1,657,749 $17,266,268
2,292(344,371)
1,236,873(165)
237(16,706)
5,086—
4,838,954(164,630)(164,630)(276,986)

7,872
7,872
8,750

(218,957)(218,957)
5,630,975

(222)
(222)
2,775

52,80452,804
1,710,554(166,375)
716,871
17,983,139
2,292(405,335)
1,364,071(919,054)
127(718)
13,034—$4,838,954

7,558
7,558
$(269,428)(47,010)(47,010)$(38,260)(386,866)(386,866)$5,244,109

(123)
(123)
$2,652

186,482(200,506)
186,482(146,089)$1,897,037 $17,837,050

Cash flows from operating activities
Profit before income taxes
Depreciation and amortization(Gain) loss on sales or disposal of property and equipment(Gain) loss on sales of securities
Valuation loss on equity investments
Impairment loss
Equity in earnings of affiliates
Increase (decrease) in allowances
Increase (decrease) in liability for retirement benefits
Interest and dividend income
Interest expense(Increase) decrease in notes and accounts receivable(Increase) decrease in inventories(Increase) decrease in equity investments
Increase (decrease) in notes and accounts payable
Increase (decrease) in lease deposits received
Other
		Subtotal
Interest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from sales of marketable securities
Purchases of marketable securities
Proceeds from sales of property and equipment
Purchases of property and equipment
Proceeds from sales of investment securities
Purchases of investment securities
	Proceeds from sales of investments in subsidiaries
resulting in change in scope of consolidation
	Purchase of investments in subsidiaries
resulting in change in scope of consolidation (Note 16)
Payments for merger
Other
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Net increase (decrease) in commercial paper
Increase in long-term borrowings
Repayment of long-term borrowings
Proceeds from issuance of corporate bonds
Repayment of corporate bonds	Purchase of investments in subsidiaries that do not
result in change in scope of consolidation
Net (increase) decrease in treasury stock
Cash dividends paid
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents arising from newly consolidated subsidiaries
Cash and cash equivalents of subsidiaries excluded from consolidation
Cash and cash equivalents at end of year (Note 16)
See accompanying notes to consolidated financial statements.

MITSUBISHI ESTATE CO., LTD. Integrated Report 202081

Financial Section

Notes to Consolidated Financial Statements
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2020 and 20119

1

Significant Accounting Policies

a. Basis of preparation
The accompanying consolidated financial statements of Mitsubishi EstateCo., Ltd. (the “Company”) and consolidated subsidiaries are prepared on
the basis of accounting principles generally accepted in Japan, which are
different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards, and are compiled
from the consolidated financial statements prepared by the Company as
required by the Financial Instruments and Exchange Act of Japan.
The notes to the consolidated financial statements include information which may not be required under accounting principles generally
accepted in Japan but is presented herein as additional information.
As permitted by the Financial Instruments and Exchange Act of Japan,
amounts of less than one million yen have been rounded off.
As a result, the totals shown in the accompanying consolidated financial
statements (both in yen and U.S. dollars) do not necessarily agree withthe sums of the individual amounts.
Certain amounts in the prior year’s financial statements have been
reclassified to conform to the current year’s presentation.
b. Principles of consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its consolidated subsidiaries that it controls directly or
indirectly. Companies over which the Company exercises significant
influence in terms of their operating and financial policies have been
included in the consolidated financial statements on an equity basis.
All significant intercompany balances and transactions have been
eliminated in consolidation.
c. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain
estimates and assumptions that affect the amounts reported in thefinancial 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 translated
into yen at the rates of exchange in effect at the balance sheet date. The
components of shareholders’ equity are translated at their historicalexchange rates.
e. Cash equivalents
The Company and its consolidated subsidiaries consider all highly liquid
investments that are readily convertible into cash and have an original
maturity of three months or less to be cash equivalents. Reconciliation
between cash in the balance sheets and cash equivalents at March 31,
2020 and 2019 is presented in Note 16.

82

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

f. Marketable securities and investment securities
Securities other than those of subsidiaries and affiliates are classified
into three categories: trading, held-to-maturity or other securities.
Trading securities are carried at fair value and held-to-maturity securities are carried at amortized cost. Marketable securities classified asother securities are carried at fair value with any changes in unrealized
holding gain or loss, net of the applicable income taxes, included directly
in shareholders’ equity. Non-marketable securities classified as othersecurities are carried at cost. Cost of securities sold is determined by themoving average method.
g. Inventories
Inventories are mainly stated at cost, determined by the identified cost
method. Net book value of inventories in the consolidated balance sheetsis written down when their net realizable values decline.
h. Property and equipment, depreciation and impairment
Property and equipment, except for land as discussed below, is stated atcost less accumulated depreciation. Depreciation of property, plant andequipment is calculated principally by the declining-balance method
based on the estimated useful lives and the residual value determined by
the Company, except for certain buildings of the Company and domestic
consolidated subsidiaries acquired on or after April 1, 1998 and facilities
attached to buildings and other non-building structures acquired on orafter April 1, 2016, which are depreciated by the straight-line method.
Property and equipment of foreign subsidiaries on which depreciation is
calculated by the straight-line method at rates determined based on theestimated useful lives of the respective assets. The Company and its
consolidated subsidiaries have capitalized the costs incurred for significant renewals and additions; however, costs for maintenance and repairs
are charged to income.
As of March 31, 2002, the Company revalued its land at fair value,
pursuant to Article 2 of the “Enforcement Ordinance for the Law
Concerning Revaluation Reserve for Land” and its amendments. The
related unrealized gain, net of applicable income taxes, has beenrecorded as “Land revaluation reserve” in net assets.
The Company and its consolidated subsidiaries review their property
and equipment (including land) for impairment whenever events orchanges in its business circumstances indicate that the carrying amountof the assets may not be fully recoverable. They perform cash flow
analyses to determine if impairment exists. If impairment is determined
to exist, any related loss on impairment is calculated based on the cash
flow analyses.
The useful lives of property and equipment are summarized as follows:	   Buildings and structures
2 to 75 years
i. Intangible
Intangible primarily consist of goodwill and land use rights. Goodwill
is stated on the basis of cost and is being amortized over a period of
5 years or an estimated economical period on a straight-line basis.
A loss is recognized if the fair value falls below the carrying amount.
Land use rights are stated on a cost basis.

j. Retirement benefits
Accrued retirement benefits and prepaid pension cost for employees
have been recorded mainly at the amount calculated based on theretirement benefit obligation and the fair value of the pension plan assets
as of balance sheet date.
The retirement benefit obligation for employees is attributed to eachperiod by the benefit formula method.
Actuarial gain or loss is amortized in the year following the year inwhich the gain or loss is recognized primarily by the straight-line method
over periods (mainly 1 year through 15 years), which are shorter than the
average remaining years of service of employees.
Certain foreign consolidated subsidiaries have adopted the corridor
approach for the amortization of actuarial gain and loss.
Prior service cost is being amortized as incurred by the straight-line
method over periods (mainly 1 year through 10 years), which are shorter
than the average remaining years of service of the employees.
k. Income taxes
Deferred tax assets and liabilities are determined based on the financial
statements and the tax bases of assets and liabilities, using the enacted
tax rates in effect for the year in which the temporary differences are
expected to reverse. Deferred tax assets are also recognized for theestimated future tax effects attributable to operating loss carry forwards.
Valuation allowances are established to reduce deferred tax assets if it ismore likely than not that some portion or all of the deferred tax assets
will not be realized.
l. Derivative financial instruments
The Company and certain of its consolidated subsidiaries utilize derivative financial instruments for the purpose of hedging their exposure toadverse fluctuations and changes in interest rates (interest rate swaps)
and foreign exchange rates (currency swaps), but do not enter into suchtransactions 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 accounting
under which unrealized gain or loss is deferred as an asset or liability.
m. Revenue recognition
The consolidated statements of income reflect revenue from operations in
the following manner:(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 and land isrecognized when the units are delivered and accepted by the customers. Revenue from consignment commissions for residential sales
earned by the real estate service business segment is recognized at
the time of contract conclusion for services provided up to theconclusion and at the time of ownership transfer for services provided
up to the transfer.
(c)	Revenue from real estate brokerage is recognized when an underlying
lease agreement goes into force or the underlying units are delivered.
(d)	Revenue of construction contracts, of which the percentage ofcompletion can be reliably estimated, is recognized by the percentage-of-completion method. The percentage-of-completion method is
calculated at the cost incurred by the end of the consolidated fiscal
year as a percentage of estimated total cost. The completed-contract
method continues to be applied for other contracts for which thepercentage of completion cannot be reliably estimated.
(e)	Revenue from finance lease transactions and related costs arerecognized upon receipt of lease payments.
(f)	Other operating revenue is recognized on an accrual basis.

n. Appropriation of retained earnings
Under the Companies Act of Japan, the appropriation of retained earnings with respect to a given financial year is made by resolution of theshareholders at a general meeting held subsequent to the close of suchfinancial year. The accounts for that year do not, therefore, reflect suchappropriations. See Note 9 for more information.
o. Accounting standards issued but not yet effective
Accounting Standard and Implementation Guidance on Revenue
Recognition• On March 31, 2020, the Accounting Standards Board of Japan (“ASBJ”)
issued “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29)• On March 31, 2020, the ASBJ issued “Implementation Guidance on
Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30)• On March 31, 2020, the ASBJ issued “Implementation Guidance on
Disclosures about Fair Value of Financial Instruments” (ASBJ guidance
No.19)(1) Overview
	This is a comprehensive accounting standard for revenue recognition.
Specifically, the accounting standard establishes the following
five-step model that will apply to revenue from customers:
1. Identify the contract(s) with a customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligationsin the contract
5. Recognize revenue when (or as) the entity satisfies a performanceobligation(2) Scheduled date of adoption
	The Company expects to adopt the accounting standard and implementation guidance from the beginning of the fiscal year ending
March 31, 2022.
(3)	Impact of the adoption of accounting standard and implementation
guidance	The Company is currently evaluating the effect of the adoption of thisaccounting standard and implementation guidance on its consolidated financial statements.

Accounting Standard and Implementation Guidance on Fair Value
Measurement• On July 4, 2019, the ASBJ issued “Accounting Standard for Fair Value
Measurement” (ASBJ Statement No. 30)• On July 4, 2019, the ASBJ issued “Accounting Standard for
Measurement of Inventories” (ASBJ Statement No. 9)• On July 4, 2019, the ASBJ issued “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10)• On July 4, 2019, the ASBJ issued “Implementation Guidance on
Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.
31)• On March 31, 2020, the ASBJ issued “Implementation Guidance on
Disclosures about Fair Value of Financial Instruments” (ASBJ GuidanceNo. 19)MITSUBISHI ESTATE CO., LTD. Integrated Report 202083

Financial Section(1) Overview
	The International Accounting Standards Board (IASB) and the
Financial Accounting Standards Board (FASB) each provides detailed
guidance on fair value measurement, “IFRS13 Fair Value
Measurement” and “Accounting Standards Codification Fair Value
Measurement (Topic 820)”, with approximately identical content.
Under the circumstances, the ASBJ has issued “Accounting Standard
and Implementation Guidance on Fair Value Measurement” so thatJapanese Accounting Standards ensure international consistency
mainly in guidance and disclosure of fair value of financial
instruments.
		 It has fundamentally incorporated every prescription of IFRS13 toenhance the international comparability of financial statements byadopting globally accepted standards of the measurement, but fordomestically agreed practice it has also set exceptions for certain
items without impairing the comparability.
(2) Scheduled date of adoption
	The Company expects to adopt the accounting standard and implementation guidance from the beginning of the fiscal year ending
March 31, 2022.
(3)	Impact of the adoption of accounting standard and implementation
guidance	Impact of the adoption of the accounting standard and implementation guidance on fair value measurement to consolidated financial
statements is to be determined.
Accounting Standard for Disclosure of Accounting Estimates
On March 31, 2020, the ASBJ issued “Accounting Standard for Disclosureof Accounting Estimates” (ASBJ Statement No. 31)(1) Overview
	With regard to the disclosure of “Sources of estimation uncertainty”
required to be disclosed under paragraph 125 of International
Accounting Standard (IAS)1“Presentation of Financial Statements”(hereinafter “IAS 1”) issued in 2003 by the IASB there were requests
to consider disclosing under Japanese standards because they arehighly useful to users of financial statements, the ASBJ developedand issued Accounting Standard for Disclosure of Accounting
Estimates.

2

Accounting Standard for Accounting Policy Disclosures, Accounting
Changes and Error Corrections
On March 31, 2020, the ASBJ issued “Accounting Standard for Accounting
Policy Disclosures, Accounting Changes and Error Corrections” (ASBJ
Statement No.24)(1) Overview
	In considering of the improvement of information given in the note of“accounting principles and procedures in cases where directly
relevant accounting standards are not available”, the ASBJ implemented necessary amendments and issued as the “AccountingStandard for Accounting Policy Disclosures, Accounting Changes andError Corrections”.
		 In the improvement of information given in the note of “accounting
principles and procedures in cases where directly relevant accounting
standards are not available”, the prescriptions of 1-2 of Annotations
on the Corporate Accounting Principles are to be maintained so thatthe previous practices where the prescriptions of relevant AccountingStandards and Implementation Guidance were specified would not beaffected.
(2) Scheduled date of adoption
	The Company expects to adopt the accounting standard from the endof the fiscal year ending March 31, 2021.

Additional Information

Changes in segments
The Board of Directors, on January 23, 2020, has determined to make thefollowing organizational changes with a view to implementing the new
Management Plan which begins effective the fiscal year ending of March
31, 2021, as the Group seeks to enhance its competitiveness in existing
business domains by integrating and improving know-how and networks
developed for each asset type (by application of use) as total capabilities,
and link this on to securing high added-value business opportunities thatcombine non-asset businesses and new business developments with afocus on BtoC / BtoBtoC services.
Effective the fiscal year ending of March 31,2021, the Company will
make the following changes to its disclosure segments.
(1) The Company will integrate the Office Building Business, Lifestyle
Property Business, and Hotel & Airport Business segments to establish the new Commercial Property Business segment.
(2) The Company will centralize the International Residential Business(currently under the control of the Residential Business segment)
under the International Business segment, as a consequence of
creating an organizational framework that will drive businesses for84		 The basic approach taken by the ASBJ in the development of theStandard was, rather than to expand individual notes, to state thegeneral principle (disclosure objective) and entities determine thespecific content of the disclosure with reference to this disclosure
objective. In the development, the ASBJ also made it its policy tomake reference to the provisions of paragraph 125 of IAS 1.
(2) Scheduled date of adoption
	The Company expects to adopt the accounting standard from the endof the fiscal year ending March 31, 2021.

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

each asset type in a unified manner by formulating optimal portfolio
strategies for each area, with a view to expanding and enhancing theearning power of international business operations.
(3) The Company will integrate the Architectural Design & Engineering
Business and Real Estate Services Business segments to establish
the new Architectural Design & Engineering and Real Estate Services
Business segment.
As a result, “Office Building Business”, “Lifestyle Property Business”,“Residential Business”, “International Business”, “Investment
Management Business”, “Hotel and Airport Business”, “Architectural
Design and Engineering Business”, “Real Estate Services Business” are to
be reorganized into new reportable segments consisting of “Commercial
Property Business”, “Residential Business”, “International Business”,“Investment Management Business”, “Architectural Design & Engineering
Business and Real Estate Services Business”.
Financial Information for the fiscal year ended March 31, 2020, which
is prepared using the new segmentation, is as follows:

Millions of yen

2020
Reportable Segments

Revenue andoperating income
by reportablesegment
Revenue from:	Externalcustomers
	Intersegment
or transfers
Total revenue
Segment income(loss)

Commercial
Property
Business

Residential
Business

International
Business

Investment
Management
Business

Architectural
Design &Engineering
Business andReal Estate
Services
Business¥715,213¥384,506¥134,495¥19,106¥47,913¥1,301,235¥   960¥1,302,196     —¥1,302,196

8,498
723,712

1,031
385,538(320)
134,175

2,210
21,316

9,214
57,12820,635
1,321,871

7,782
8,743

28,4181,330,614¥(28,418)(28,418)—
1,302,196¥187,855¥ 24,320¥ 46,156¥ 4,467¥ 2,407¥   265,207

Subtotal

Other

Total

Eliminations
or Corporate

Consolidated¥(2,018) ¥   263,188¥(22,420) ¥   240,768
Thousands of U.S. dollars

2020
Reportable Segments

Revenue andoperating income
by reportablesegment
Revenue from:	Externalcustomers
	Intersegment
or transfers
Total revenue
Segment income(loss)

Architectural
Design &Engineering
Business andReal Estate
Services
Business

Commercial
Property
Business

Residential
Business

International
Business

Investment
Management
Business$6,571,844$3,533,090$1,235,830$175,558$440,264 $11,956,588

78,092
6,649,936

9,480
3,542,571(2,940)1,232,890

20,314
195,873

84,667524,932

189,614
12,146,203$1,726,137$   223,470$   424,116$ 41,048$ 22,120$2,436,893

Accounting estimates in light of COVID-19
For the fiscal year ended March 31, 2020, the spread of COVID-19
impacted the Group’s businesses involving hotel and commercial
property, and it may continue influencing the Group’s business promotion
and performance mainly in those fields in the next fiscal year. Under thecircumstances, the Company has set accounting estimates, on theassumption that the state of emergency continues until the end of May
and thus overall business environment may show gradual recovery

3

Subtotal

Other

Total

$   8,826 $11,965,415
71,51180,338Eliminations
or Corporate

Consolidated      — $11,965,415

261,126
12,226,542$(261,126)—(261,126) 11,965,415$(18,544) $ 2,418,348$(206,010) $ 2,212,338

toward the end of September, but partially toward the end of this fiscal
year for some business.
The Company made accounting estimates for the valuation of fixed
assets, inventories, and equity investments based on the assumption.
Due to the difficulties of accurately forecast when the virus will end
and the impact of the spread of COVID-19, delay in the recovery longer
than estimated above may influence the Group’s financial position andoperating results in the fiscal year ending March 31, 2021.

U.S. Dollar Amounts

Translation of yen amounts into U.S. dollar amounts is included solely forconvenience, as a matter of arithmetic computation only, at the rate of¥108.83 = U.S.$1.00, the approximate rate of exchange prevailing on

March 31, 2020. The inclusion of such amounts is not intended to imply
that yen amounts have been or could be readily converted, realized or
settled in U.S. dollars at the above or any other rate.

MITSUBISHI ESTATE CO., LTD. Integrated Report 202085

Financial Section

4

Millions of yen

Inventories

Inventories at March 31, 2020 and 2019 are summarized as follows:

2019

2020

¥    20,000
30,00010,00010,00010,00010,00020,00020,00010,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,00010,00040,00010,00010,00020,00010,00010,00010,00010,00020,00015,00015,00010,00015,000
1,550
1,111
3,784
2,924
1,255
1,508
75,000¥    20,000
30,00010,00010,00010,00010,00020,00020,00010,00010,00010,00010,000—10,00010,00010,00010,00015,00010,00010,000—10,00010,00020,00010,00010,00010,00010,000—15,00015,00010,000
—
1,550
1,111
—
—
1,255
—
75,000$   183,772
275,659
91,88691,88691,88691,886
183,772
183,772
91,88691,88691,88691,88691,88691,88691,88691,88691,886
137,829
91,88691,886
367,545
91,88691,886
183,772
91,88691,88691,88691,886
183,772
137,829
137,829
91,886
137,829
14,242
10,212
34,77826,87011,536
13,858689,148

3ML+88bp interest deferrable and early redeemable subordinated unsecured
bonds due 2076

75,00075,000689,148

1.33% interest deferrable and early redeemable subordinated unsecured
bonds due 2076

70,00070,000643,204

1.48% interest deferrable and early redeemable subordinated unsecured
bonds due 2076

30,00030,000275,659

96,687
1,338,769
2,262,591(208,328)¥2,054,263

136,770
1,283,161
2,228,849(306,065)¥1,922,783

888,430
12,301,473
20,790,146(1,914,254)$18,875,892

1.087% unsecured bonds due 2022
Millions of yen

Thousands of U.S. dollars

2020

2019

2020

Real estate for sale

¥ 72,256¥ 84,104$   663,938

Land and housing projects in progress

247,677

268,152

2,275,818

975

996

8,966

2.075% unsecured bonds due 2023

Other

8,395

8,201

77,144

0.09% unsecured bonds due 2023

Total

¥329,305¥361,455$3,025,867

0.643% unsecured bonds due 2024

Land held for development

Write-downs of inventories as a result of a decrease in profitability for the years ended March 31, 2020 and 2019 were ¥1,765 million ($16,220 thousand)and ¥3,223 million, respectively, and recognized in cost of revenue from operations.

1.026% unsecured bonds due 2022
2.42% unsecured bonds due 2022
0.929% unsecured bonds due 2022
1.5% unsecured bonds due 2022

2.28% unsecured bonds due 2024
1.067% unsecured bonds due 2024
0.19% unsecured bonds due 2025

50.175% unsecured bonds due 2025

Other Investments

0.17% unsecured bonds due 2026

Other investments at March 31, 2020 and 2019 were as follows:

0.27% unsecured bonds due 2026
Millions of yen

Thousands of U.S. dollars

2020

2019

2020

Lease deposits¥126,092¥114,713$1,158,616

Long-term prepaid expenses

104,482

77,950960,051

Other

32,783

21,566301,237

Total¥263,358¥214,230$2,419,905

2.305% unsecured bonds due 2027
0.24% unsecured bonds due 2027
2.385% unsecured bonds due 2027
2.52% unsecured bonds due 2027
2.425% unsecured bonds due 2027
2.555% unsecured bonds due 2028
0.27% unsecured bonds due 2029

62.9% unsecured bonds due 2032

Short-Term Borrowings and Long-Term Debt

2.615% unsecured bonds due 2032
2.04% unsecured bonds due 2032

At March 31, 2020 and 2019, short-term borrowings and the current portion of long-term debt consisted of the following:

1.72% unsecured bonds due 2033

Millions of yen

Thousands of U.S. dollars

2020

2019

2020

¥115,306¥ 86,156$1,059,512

Commercial paper

50,000—459,432

0.703% unsecured bonds due 2037

Current portion of long-term debt

208,328

306,065

1,914,254

0.59% unsecured bonds due 2039

Total

¥373,635¥392,221$3,433,198

0.789% unsecured bonds due 2056

Loans, principally from banks

0.859% unsecured bonds due 2036
0.736% unsecured bonds due 2037

1.402% unsecured bonds due 2057
The weighted-average interest rates per annum on short-term borrowings outstanding at March 31, 2020 and 2019 were 0.44% and 0.63%, respectively. Short-term borrowings are principally unsecured.

0.631% unsecured bonds due 2019
1.87% unsecured bonds due 2019
1.62% unsecured bonds due 2019
0.571% unsecured bonds due 2019
1.53% unsecured bonds due 2019
1.975% unsecured bonds due 2019
1.805% unsecured bonds due 20192.5% unsecured bonds due 2020
1.165% unsecured bonds due 2020
0.577% unsecured bonds due 2020
0.54% unsecured bonds due 2021
1.262% unsecured bonds due 2021
1.103% unsecured bonds due 2021
1.095% unsecured bonds due 2021
1.178% unsecured bonds due 2022

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

1.313% unsecured bonds due 2058
1.132% unsecured bonds due 2069
0.39% unsecured bonds inherited from DAINIPPON ENTERPRISE INC. due 2020

At March 31, 2020 and 2019, long-term debt consisted of the following:
Millions of yen

Thousands of U.S. dollars

2020

2019

2020

—
—
—
—
—
—
—
¥10,000
10,00015,00015,00015,00020,00010,00020,000¥10,000
15,00010,00010,00010,00010,00010,00010,00010,00015,00015,00015,00020,00010,00020,000

—
—
—
—
—
—
—
$91,886
91,886
137,829
137,829
137,829
183,772
91,886
183,772

Thousands of U.S. dollars

2020

0.102% unsecured bonds under Euro MTN program due 2025
0.135% unsecured bonds under Euro MTN program due 2026
0.115% unsecured bonds under Euro MTN program due 2026
0.16% unsecured bonds under Euro MTN program due 2029
0.25% unsecured bonds under Euro MTN program due 2029
1.02% interest deferrable and early redeemable subordinated unsecured bonds due 2076

Loans from banks and insurance companies:
SecuredUnsecuredLess current portion

MITSUBISHI ESTATE CO., LTD. Integrated Report 202087

Financial Section

The aggregate annual maturities of long-term debt subsequent to March 31, 2020 are summarized as follows:Year ending March 31,

7
Millions of yen

Thousands of U.S. dollars

2021¥   208,328$ 1,914,254

2022

193,773

1,780,517

2023

153,5071,410,526

2024

227,283

2,088,425

2025

138,871

1,276,040

2026 and thereafter

1,340,827

12,320,382

Total¥2,262,591$20,790,146

The assets pledged as collateral for short-term borrowings of ¥100 million ($918 thousand) and long-term debt of ¥96,687 million($888,430 thousand) at March 31, 2020 were as follows:
Millions of yen

Thousands of U.S. dollars

Buildings and structures¥197,659$1,816,222

Machinery and equipment

1,601

14,714

235,297

2,162,066

2

26¥434,561$3,993,030

Land
Other property and equipment
Total

The following borrowings are non-recourse loans at March 31, 2020 and 2019, which are secured by collaterals as the sole source of recovery.

Retirement Benefit Plans

The Company and most of its domestic consolidated subsidiaries have either funded or unfunded defined benefit plans, defined contribution plans andlump-sum payment plans in the form of a defined benefit plan. The Company has adopted a retirement benefit trust for the lump-sum payment plan anddefined benefit plan. MEC Group International Inc., a foreign consolidated subsidiary of the Company, has adopted defined benefit plans.
The simplified method, which assumes the retirement benefit obligation to be equal to the benefits payable if all eligible employees voluntarily terminated their employment at the fiscal year end, has been adopted in accounting for defined benefit plans for some consolidated subsidiaries and theCompany’s executive officers.
The changes in the retirement benefit obligation during the years ended March 31, 2020 and 2019 are as follows:
Millions of yen

2019

2020

¥138,562¥139,360$1,273,201

Service cost

5,389

5,361

49,520Interest cost

883

849

8,121

Actuarial gain and loss

2,537

(802)

23,314Retirement benefits paid

(6,145)(6,570)(56,469)

—

221

—

Translation adjustments

(224)

(380)

(2,061)

Other

(117)

522

(1,080)¥140,885¥138,562$1,294,547

Millions of yen

Thousands of U.S. dollars

Retirement benefit obligation at the beginning of the year

Prior service cost

Retirement benefit obligation at the end of the year

The changes in plan assets during the years ended March 31, 2020 and 2019 are as follows:

Millions of yen

Thousands of U.S. dollars

2020

2019

2020

Current portion of long-term borrowings¥13,637—$125,305

Plan assets at the beginning of the year

Long-term borrowings

32,627¥24,529299,806

Total¥46,264¥24,529$425,112

The assets pledged as collateral for the above non-recourse loans at March 31, 2020 and 2019 were as follows:

Buildings and structures
Land
Construction in progress
Total

Millions of yen

Thousands of U.S. dollars

2020

2019

2020

¥32,344¥25,900$297,205

55,55917,561Thousands of U.S. dollars

2020

510,515

3,683—

33,850¥91,588¥43,462$841,571

2020

2019

2020

¥135,633¥132,508$1,246,292

Expected return on plan assets

3,086

3,085

28,363

Actuarial gain and loss

(4,054)(677)(37,259)

Contributions by the Company

4,428

5,953

40,687Retirement benefits paid

(3,840)(5,000)(35,293)

Translation adjustments

(153)

(260)

(1,410)

Other

(124)

25

(1,141)¥134,975¥135,633$1,240,238

Plan assets at the end of the year

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheet as of March 31, 2020 and2019 for the Company’s and the consolidated subsidiaries’ defined benefit plans:Millions of yen

Thousands of U.S. dollars

2020

2019

2020

Funded retirement benefit obligation¥ 121,079¥ 119,159$ 1,112,552

Plan assets at fair value(134,975)(135,633)(1,240,238)(13,896)(16,474)(127,686)

19,806

19,403

181,994

Unfunded retirement benefit obligation
Net liability for retirement benefits in the balance sheet

5,910

2,928

54,308

Liability for retirement benefits

26,91926,573247,352

Asset for retirement benefits(21,336)(23,935)(196,055)

327

291

3,011

¥   5,910¥   2,928$     54,308

Other current liabilities
Net liability for retirement benefits in the balance sheet(*) The accrued employees’ retirement benefits recognized by MEC Group International Inc., a consolidated subsidiary, were included in “Other current liabilities.”

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The components of retirement benefit expense for the years ended March 31, 2020 and 2019 are as follows:

8
Millions of yen

2020

2019

2020

Service cost

¥ 5,389¥ 5,361$49,520

Interest cost

883

849

8,121

Expected return on plan assets(3,086)(3,085)(28,363)

Amortization of actuarial loss

(805)

1,312

(7,397)

Amortization of prior service cost

(65)

(106)

(600)
1,875

204

Other
Retirement benefit expenses¥ 2,520149¥ 4,482$23,155(*) Retirement benefit expenses for consolidated subsidiaries adopting the simplified method, which assumes the retirement benefit obligation to be equal to the benefits payable if all eligible employees
voluntarily terminated their employment at the fiscal year end, are included in “Service cost.”

The components of retirement benefits liability adjustments included in other comprehensive income (before tax effect) for the years ended
March 31, 2020 and 2019 are as follows:
Millions of yen

Thousands of U.S. dollars

2019

2020

Prior service cost¥   (69)¥ (336)$    (636)Actuarial gain and loss

(7,318)1,554(67,250)

Total¥(7,388)¥1,218$(67,886)

2020

2019

30.62%

30.62%

Different tax rates applied(1.37)(0.35)

Expenses not deductible for income tax purposes

0.23

0.21

Revenues deductible for income tax purposes(0.22)(0.11)

Change in valuation allowance(0.33)(0.59)

Undistributed earnings of affiliates

0.14

0.28

Equity income(0.28)(0.28)—(0.31)

Statutory tax rate
Increase (decrease) in income taxes resulting from:

Gain on amortization of negative goodwill(2.04)—

Effect of enacted changes in tax laws and rates on Japanese tax

0.06(0.04)

Other(0.68)(1.48)

26.14%

27.95%

Effective tax rate

The significant components of deferred tax assets and liabilities as of March 31, 2020 and 2019 were as follows:

The components of retirement benefits liability adjustments included in accumulated other comprehensive income (before tax effect) as ofMarch 31, 2020 and 2019 are as follows:
Thousands of U.S. dollars

Millions of yen

Thousands of U.S. dollars

2020

2019

2020

¥   2,621¥   1,974$    24,088

Deferred tax assets:

2020

2019

2020

Unrecognized prior service cost¥    (88)¥ (54)$    (815)

Net operating loss carry forwards

Unrecognized actuarial gain and loss

(7,073)280(64,999)

Liability for retirement benefits

12,018

11,521

110,434$(65,814)

Valuation loss on inventories

1,259

4,075

11,572

Unrealized loss on property and equipment

60,96966,685560,230

Unrealized loss on property and equipment by consolidation

10,576

10,644

97,181

Loss on valuation of investment securities

3,050

2,626

28,032

Total¥(7,162)¥225

The fair values of plan assets, by major category, as a percentage of total plan assets as of March 31, 2020 and 2019 are as follows:
Bonds

2020

2019

15%

14%

Loss on valuation of equity investments

1,414

548

12,99823,90323,903

219,644

Stocks51%

54%

Land revaluation reserve

General accounts

10%

10%

Accrued bonuses

3,245

3,324

29,826

Other

69,507

63,993

638,680

188,568

189,299

1,732,689

Other

24%

22%

Total

100%

100%

(*) Approximately 42% and 44% of total plan assets were held in the retirement benefit trust as of March 31, 2020 and 2019, respectively.

The expected return on plan assets has been estimated based on the anticipated allocation to each asset class and the expected long-term returns
on assets held in each category.
The assumptions used in accounting for the above plans were as follows:

Total gross deferred tax assets
Valuation allowance(77,891)(79,125)(715,717)

Total deferred tax assets

110,677

110,173

1,016,972

Reserves under Special Taxation Measures Law(69,400)(60,693)(637,698)

Land revaluation reserve(266,314)(266,314)(2,447,069)

Unrealized gain on property and equipment by consolidation(111,366)(110,019)(1,023,304)(53,242)(64,134)(489,230)

Deferred tax liabilities:

2020

2019

Discount rates

0.0%–4.20%

0.0%–4.04%

Unrealized gain on property and equipment

Expected rates of return on plan assets

1.0%–6.50%

1.0%–6.50%

Unrealized gain on securities(35,208)(49,113)(323,518)

Rates of salary increase

0.4%–4.0%

0.4%–4.0%

Other(38,793)(36,831)(356,455)

Total deferred tax liabilities(574,326)(587,107)(5,277,276)

Net deferred tax liabilities¥(463,648)¥(476,933)$(4,260,304)

The required contribution to defined contribution plans by the Company and its consolidated subsidiaries for the years ended March 31, 2020 and2019 are ¥533 million ($4,906 thousand) and ¥500 million, respectively.

90

The effective tax rates reflected in the consolidated statements of income for the years ended March 31, 2020 and 2019 differ from the effective
statutory tax rates for the following reasons:Gain on negative goodwill

2020

Millions of yen

Income Taxes

Thousands of U.S. dollars

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

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Financial Section

9

Shareholders’ Equity

The Companies Act of Japan provides that an amount equal to 10% of theamount to be disbursed as distributions of capital surplus (other than thecapital reserve) and retained earnings (other than the legal reserve) betransferred to the capital reserve and the legal reserve, respectively, until
the sum of the capital reserve and the legal reserve equals 25% of thecapital stock account. The capital reserve amounted to ¥164,041 million

12 Contingent Liabilities($1,507,317 thousand), and the legal reserve amounted to ¥21,663
million ($199,060 thousand) at March 31, 2020. Such distributions can bemade at any time by resolution of the shareholders or by the Board of
Directors if certain conditions are met, but neither the capital reserve nor
the legal reserve is available for distributions.

At March 31, 2020, the Company and its consolidated subsidiaries had the following contingent liabilities:(1) Guarantee of loans

Guarantees of house purchasers’ loans from banks
Other
Total

10

Millions of yen

Thousands of U.S. dollars¥49,3138¥49,321$453,124
76$453,200

Millions of yen

Thousands of U.S. dollars¥26,302$241,687

Amounts per Share(2) Guarantee for business undertakings
Yen

U.S. dollars

2020

2019

2020

Basic

¥108.64¥96.97$0.99

Diluted108.63

96.96

0.99

33.00

30.00

0.30

Yen

U.S. dollars

2020

2019

2020

¥1,295.83¥1,275.54$11.90Year ended March 31

Business undertaking guarantees

Net income:Cash dividends applicable to the year

As of March 31,

Net assets

The Company, MEC Group International Inc., Mitsubishi Estate Asia Pte. Ltd. and Mitsubishi Estate Residence Co., Ltd. provide businessundertaking guarantees for property development projects in proportion to their share.
Mitsubishi Estate Asia Pte. Ltd. and MEA Commercial Holdings Pte. Ltd. provide business undertaking guarantees for property development projects.
The amount exceeding the proportion of their share is collateralized or guaranteed by the joint venture.

13 Other Income (Expenses)

The components of “Other, net” in “Other income (expenses)” for the years ended March 31, 2020 and 2019 were as follows:
Basic net income per share was computed based on the net income
available for distribution to shareholders of common stock and theweighted average number of shares of common stock outstanding during
the year, and diluted net income per share was computed based on the
net income available for distribution to the shareholders and theweighted average number of shares of common stock outstanding during
each year after giving effect to the dilutive potential of shares of common
stock to be issued upon the exercise of warrants and stock subscription
rights.

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

Millions of yen

Gain on sales of fixed assets
Gain on sales of investment securities
Gain on negative goodwill
Gain on amortization of negative goodwill
Gain on contribution for construction
Loss on disposal of fixed assets
Loss related to retirement of fixed assets
Loss on valuation of investment securities

11 Leases

Loss on transfer of businessImpairment loss(*1)

LessorInvestments in leases included in other current assets on the consolidated balance sheets as of March 31, 2020 and 2019 consisted of the following:

Other, net

Millions of yen

Thousands of U.S. dollars

2020

2019

2020

Gross lease receivables—¥ 8,068—

Unearned interest income—(3,476)—

Investments in leases—¥ 4,592—

Maturities of lease investment assets for finance leases that are not deemed to transfer ownership of the leased property to the lessee as of March
31, 2020 are as follows:
There was no information on lease investment assets for finance leases for the year ended March 31, 2020.
Future minimum lease payments subsequent to March 31, 2020 on noncancelable operating leases are summarized as follows:Year ending March 31

Millions of yen

Thousands of U.S. dollars

2021¥  8,254
257,179¥265,434$    75,847
2,363,130$2,438,9782022 and thereafterTotal(*1) Impairment loss
The Company recorded consolidated impairment losses for the following asset groups for the fiscal
year ended March 31, 2020:
Major Application
Leased assets, etc.
(total 17 groups)

Category

Location

Land, Buildings, etc.

Nishinomiya, Hyogo Prefecture, etc.

Asset grouping for the Company and its consolidated subsidiaries (collectively, the “Group”) was
made based on a minimum unit that generates cash flows, which is substantially independent fromcash flows of other assets or asset groups. Company condominiums are regarded as shared assets.
As a result, for the fiscal year ended March 31, 2020, the book values of 17 asset groups, consistingof those for which the market prices fell considerably compared with the book values due to thedecline of land prices and those for which profitability decreased considerably due to fallen rent
levels or deteriorated market conditions, etc., were reduced to the respective collectible amounts
and such reductions were recorded as impairment losses in the amount of ¥10,844 million ($99,645
thousand).

Thousands of U.S. dollars

2020

2019

2020

¥   5,144
1,711—
14,915
4,480(7,682)(5,445)(2,344)(3,240)(10,844)178¥   (3,127)  —¥ 6,072
2,097——(5,761)(3,818)———(1,171)¥(2,580)$47,270
15,726—
137,052
41,165(70,592)(50,032)(21,545)(29,777)(99,645)
1,644$(28,733)

The breakdown of such impairment losses was ¥3,128 million ($28,747 thousand) in land and¥7,715 million ($70,897 thousand) in buildings and structures.
The collectible amounts of asset groups are measured using net sale value or use value, and thenet sale value is principally expressed as an appraised value by a real estate appraiser. Future cash
flows mainly discounted at a rate of 5% are used to compute the use value.
The Company recorded consolidated impairment losses for the following asset groups for the
fiscal year ended March 31, 2019: Disclosure for the year ended March 31, 2019 is omitted due toimmateriality.

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, 2020 from noncancelable operating leases is summarized as follows:Year ending March 31

2021
2022 and thereafter
Total

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MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Millions of yen

Thousands of U.S. dollars¥  343,757
1,350,393¥1,694,150$ 3,158,663
12,408,282$15,566,946

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Financial Section

14 Financial Instruments

Overview(1) Policy for financial instruments
In consideration of plans for capital investment, the Group raises funds
mainly through bank borrowings and bond issues. In terms of fundmanagement, the Group makes every effort to avoid market risks byemphasizing liquidity and shortening the fund management period. The
Group uses derivatives for the purpose of hedging exposure to interest
rates, reducing interest expenses, and hedging the risk of fluctuations inforeign exchange rates and does not enter into derivatives for speculative
purposes.
(2) Types of financial instruments and related risk
Trade receivables – notes and accounts receivable – are exposed tocredit risk in relation to customers. Trade receivables denominated inforeign currencies, which arise from overseas operation, are exposed toforeign currency exchange risk.
Marketable securities and investment securities are exposed tomarket risk. Those securities are composed of mainly held-to-maturity
debt securities and the shares of common stock of other companies withwhich the Group has business relationships.
Equity investments are composed of mainly preferred equity investments in special purpose companies under the Law concerning
Liquidation of Assets, investments in real estate investment trusts andinvestments in silent partnerships for special purpose companies. They
are exposed to credit risks of issuers, risks of fluctuations in interest
rates and market prices, respectively.
Lease and guarantee deposits for leased assets are exposed to credit
risks of customers.
Substantially all trade payables – accounts and notes payable –have payment due dates within one year. Some of them denominatedin foreign currencies are exposed to foreign currency exchange risk.
Borrowings and bonds are taken out principally for the purpose of
making capital investments and the repayment dates of the long-term
debt extend up to 56 years from the balance sheet date. Certain longterm debt with variable interest rates is exposed to interest rate fluctuation risk. However, to reduce such risk for long-term debt bearing interest
at variable rates, the Group utilizes derivative transactions (interest rate
swaps) as hedging instruments.
Derivative transactions include interest rate swaps, currency swaps
and forward foreign exchange contracts. The Group also enters into
interest rate swap transactions to fix interest expense for long-term debt
bearing interest at variable rates and to reduce interest rate fluctuation
risk. Some of the consolidated subsidiaries enter into interest swap andcurrency swap transactions in accordance with the same policies andpurposes adopted by the Company.

(3) Risk management for financial instruments(a)	Monitoring of credit risk (the risk that customers or counterparties
may default)	In accordance with the internal policies for managing credit risk of theGroup arising from receivables and lease and guarantee deposits,
each related division in each business segment monitors credit
worthiness of their main customers periodically, and monitors due
dates and outstanding balances by individual customer. In addition, theGroup is making efforts to identify and mitigate risks of bad debts
from customers who are having financial difficulties.
(b)	Monitoring of market risks (the risks arising from fluctuations inforeign exchange rates, interest rates and others)	In order to mitigate the interest rate risk for loans payable and bonds
bearing interest at variable rates, the Group may also enter into
interest rate swap and currency swap transactions.
	  For marketable securities and investment securities, the Group
periodically reviews the fair values of such financial instruments andthe financial position of the issuers (business partners).
In addition, the Group continuously evaluates whether securities otherthan those classified as held-to-maturity should be maintained taking
into account their fair values and relationships with the issuers(business partners).
(c)	Monitoring of liquidity risk (the risk that the Group may not be able tomeet its obligations on scheduled due dates)	Based on the report from each division, the Group prepares andupdates its cash flow plans on a timely basis and stabilizes liquidity to
manage liquidity risk.
(4) S upplementary explanation of the estimated fair value of financial
instruments
The fair value of financial instruments is based on their quoted market
price, if available. When there is no quoted market price available, fairvalue is reasonably estimated. Since various assumptions and factors
are reflected in estimating the fair value, different assumptions andfactors could result in different fair value.

Estimated fair Value of financial instruments
Carrying value of financial instruments on the consolidated balance sheet as of March 31, 2020 and unrealized gains (losses) are shown in the following
table. The following table does not include financial instruments for which it is extremely difficult to determine the fair value. (Please refer to Note B below).
Millions of yen

Thousands of U.S. dollars

2020
Carrying
Value

Estimated
Fair Value

1) Cash on hand and in banks¥   207,896 ¥   207,896

2) Notes and accounts receivable–trade    50,340

		 Allowance for doubtful receivables (*1)      (294)    50,046

Estimated
Fair Value

Difference— $ 1,910,288 $ 1,910,288—

Difference

Carrying
Value

462,561(2,706)50,046—459,855

459,855—

3) Securities and investment securities
		 (i) Held-to-maturity debt securities     5,916

6,058¥    141

54,36755,666$  1,298

		 (ii) Other securities   177,971

177,971—

1,635,318

1,635,318—

		 (iii) Investments in subsidiaries and affiliates        60

346

285

560

3,180

2,619

4) Equity investments    15,264

15,264—140,258

140,258—

Total assets¥   457,156 ¥   457,583¥    426 $ 4,200,647 $ 4,204,566$  3,918

1) Notes and accounts payable–trade¥    66,368 ¥    66,368—$609,836$609,836—

2) Short-term borrowings   115,306

115,306—

1,059,512

1,059,512—

3) Current portion of long-term borrowings   156,778

156,778—

1,440,579

1,440,579—

4) Commercial paper    50,000

50,000—459,432

459,432—

5) Current portion of long-term bonds    51,550

51,550—473,674

473,674—

6) Long-term bonds   775,584

806,628¥31,044

7,126,567

7,411,824$285,2567) Long-term borrowings

1,278,678

1,312,176

33,497

11,749,324

12,057,124

307,800

Total liabilities¥2,494,266 ¥2,558,809¥64,542 $22,918,927 $23,511,983$593,056

Millions of yen

2019
Carrying
Value

1) Cash on hand and in banks2) Notes and accounts receivable–trade
		 Allowance for doubtful receivables(*1)

Estimated
Fair Value

Difference¥  176,814 ¥   176,814—

62,603(218)
62,38462,384—¥    173) Securities and investment securities
		 (i) Held-to-maturity debt securities
		 (ii) Other securities
		 (iii) Investments in subsidiaries and affiliates

5,700

5,718

230,844

230,844

—

60

974

913

13,80113,801—

Total assets¥  489,607 ¥   490,539¥   9311) Notes and accounts payable–trade¥   57,967 ¥   57,967

4) Equity investments—2) Short-term borrowings

86,15686,156—

3) Current portion of long-term borrowings

231,065

231,065

—

—

—

—

75,00075,000—¥38,470

4) Commercial paper5) Current portion of long-term bonds

733,916

772,3877) Long-term borrowings

1,188,866

1,217,104

28,237

Total liabilities¥2,372,972 ¥2,439,681¥66,7086) Long-term bonds(*1) The value of notes and account receivable-trade is shown at net value, after deducting allowance for doubtful accounts.

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Financial Section

Note A: M
 ethods to determine the estimated fair value of financial instruments and other mattersrelated to securities and derivative transactions
AssetsCash on hand and in banks
			Since these items are settled in a short period of time, their carrying value approximates fairvalue.
Notes and accounts receivable – trade			Since these items are settled in a short period of time, their carrying value approximates fairvalue.
Marketable securities and investment securities			The fair value of stocks is based on quoted market prices. The fair value of debt securities ismainly based on prices provided by the financial institutions making markets in thesesecurities. For information on securities classified by holding purpose, please refer to Note 15.
“Marketable Securities and Investment Securities.”
Equity investments
			 The fair value of equity investments is based on quoted market prices.
Liabilities
Notes and accounts payable – trade			Since these items are settled in a short period of time, their carrying value approximates fair value.
Short-term borrowings
			Since these items are settled in a short period of time, their carrying value approximates fair value.
Current portion of long-term borrowings
			Since these items are settled in a short period of time, their carrying value approximates fair value.
Commercial paper			Since these items are settled in a short period of time, their carrying value approximates fair value.
Current portion of bonds
			Since these items are settled in a short period of time, their carrying value approximates fair value.
Bonds
			 The fair value of bonds is based on the quoted market price.
Long-term borrowings
			Since variable interest rates of certain long-term borrowings are determined based on current
interest rates in a short period of time, their carrying value approximates fair value. The fairvalue of long-term borrowings with fixed interest rates is based on the present value of thetotal of principal and interest discounted by the interest rates to be applied if similar new
borrowings were entered into.
Derivatives transactions
			 Please refer to Note 17. “Derivatives and Hedging Activities.”

15 Marketable Securities and Investment Securities

Note B: Financial instruments for which it is extremely difficult to determine the fair value
Millions of yen

Thousands of
U.S. dollars(i) Unlisted stocks (*1)

¥ 60,677$   557,544(ii) Equity investments (*2)

435,256

3,999,414

126,092

1,158,616

459,177

4,219,216

2020(iii) Lease and guarantee deposit receivables (*3)(iv) Lease and guarantee deposit payables *( 4)(ii) Equity investments *373,583(iii) Lease and guarantee deposit receivables (*3)

114,713(iv) Lease and guarantee deposit payables (*4)

440,058

Government bonds
Other
		Subtotal(*1) Because no quoted market price is available and it is extremely difficult to determine the fairvalue, unlisted stocks are not included in the above table.
(*2) Because it is extremely difficult to determine the fair value for equity investments which are notlisted and have no quoted market price, they are not included in the above table.
(*3) Because no quoted market price for lease and guarantee deposit receivables for rental
properties is available and calculation of the actual period of duration from lease initiation toevacuation is difficult, it is extremely difficult to estimate a reasonable amount of cash flow andtherefore they are not included in the above table.
(*4) Because no quoted market price for lease and guarantee deposit payables for rental properties
is available and calculation of the actual period of duration from lease initiation to evacuation isdifficult, it is extremely difficult to estimate a reasonable amount of cash flow, and therefore
they are not included in the above table.

Equity securities
Government bonds
Corporate bonds
Other
		Subtotal
Total

Equity securities

Thousands of U.S. dollars

Due in One
Year or Less

Due after One
Year through FiveYears

Due after Five
Years through Ten
Years

Due after
Ten Years

Due in One
Year or Less

Due after One
Year through FiveYears

Due after Five
Years through Ten
Years

Due after
Ten Years¥207,896
50,340

—
—

—
—

—
—

$1,910,288
462,561

—
—

—
—

—
—

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

¥70
—
—

¥25
—
—

25
1,604
¥265,445

—
214
¥447

—
414
¥484

—
—
¥25

Due in One
Year or Less

Due after One
Year through FiveYears

Due after Five
Years through Ten
Years

Due after
Ten Years¥176,814
62,603

—
—

—
—

—
—

215
2,200
2,896

¥247
—
—

¥105
—
—

¥25
—
—

—
1,013
¥245,742

25
91
¥364

—
301
¥406

—
—
¥25

459
—
50,797229
14,745$2,439,081$2,140———
1,973$4,113$  643———
3,805$4,449

$229
—
—
—
—
$229

As of March 31,
2020
Corporate bonds
Long-term borrowings
Total¥ 51,550
156,778¥208,328¥ 65,000
128,773¥193,773¥ 90,000
63,507¥153,507

Due afterThree Years Due after Four
through Four Years throughYears
Five Years¥ 20,000
207,283¥227,283¥ 51,111
87,760¥138,871

Due after
Five Years¥   549,472
791,354¥1,340,827
Millions of yen

As of March 31,
2019
Corporate bonds
Long-term borrowings
Total

96

Due after One
Due in One
Year throughYear or Less
Two Years¥ 75,000
231,065¥306,065¥ 51,550
156,905¥208,455

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Due after Two
Years throughThree Years¥ 65,000
120,469¥185,469

Due afterThree Years Due after Four
through Four Years throughYears
Five Years¥ 90,000
63,507¥153,507¥ 20,000
197,164¥217,164¥109,826
0
7,480
117,306$398,585 $1,407,739 $1,009,154
229
230
1
71,540140,272
68,731
470,355 1,548,242 1,077,887

27,668——
1,747
29,416¥80,604

23,127——
1,613
24,740¥193,236(4,541)——(134)(4,675)¥112,631

254,238
212,511(41,727)
—
—
—
—
—
—
16,056
14,823(1,233)
270,295
227,334(42,961)$740,650 $1,775,577 $1,034,926

Cost

Fair Value

Unrealized
Gain (Loss)¥63,722—
6,976
70,698¥221,237—
13,803
235,040¥157,514—
6,827
164,342

9,417
25
—
1,154
10,597¥81,295

8,559
25
—
1,020
9,605
¥244,646

(857)
—
—
(133)
(991)
¥163,350

Securities whose cost exceeds their fair value:
Equity securities

Other
		Subtotal
Total

Due after
Five Years

Thousands of U.S. dollars

Amortized Cost

Fair Value

Unrealized
Gain (Loss)

Thousands of U.S. dollars$   597,261
1,183,255$1,780,517

Due after Two
Years throughThree Years$   826,977
583,549$1,410,526

Due afterThree Years Due after Four
through Four Years throughYears
Five Years$   183,772
1,904,652$2,088,425$   469,644
806,395$1,276,040

Government bonds
Due after
Five Years$ 5,048,910
7,271,471$12,320,382

Amortized Cost

Fair Value

Unrealized
Gain (Loss)¥  388—388¥  529
—
529

¥141
—
141

$ 3,569—
3,569$ 4,868—
4,868$1,298
—
1,298

—
—
5,528
5,528
¥5,916

—
—
5,528
5,528
¥6,058

—
—
—
—
¥141

—
—
50,79750,797$54,367——
50,79750,797$55,666————$1,298Debt securities whose fair value exceeds their cost:
Corporate bonds
		Subtotal
Debt securities whose cost exceeds their fair value:
Government bonds
Corporate bonds¥   507,366
650,820¥1,158,186

Millions of yen

2020

Due after One
Due in One
Year throughYear or Less
Two Years$   473,674
1,440,579$1,914,254

Corporate bonds

Marketable debt securities classified as held-to-maturity securities at March 31, 2020 and 2019 are summarized as follows:

Millions of yen

Due after Two
Years throughThree Years¥153,20425
15,265
168,495

Fair Value

Proceeds from sales of securities classified as other securities totaled ¥4,272 million ($39,255 thousand) and ¥12,364 million for the years ended
March 31, 2020 and 2019, respectively. Gross realized gains were ¥1,711 million ($15,726 thousand) and ¥6,072 million for the years ended March 31,
2020 and 2019, respectively.
The Company and its consolidated subsidiaries recognized ¥2,314 million ($21,269 thousand) and ¥29 million ($275 thousand) impairment losses oninvestment securities and investments in affiliates, respectively, for the year ended March 31, 2020, and ¥195 million impairment loss on investment
securities, for the year ended March 31, 2019.

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

Due after One
Due in One
Year throughYear or Less
Two Years

		Subtotal

Government bonds

Millions of yen

As of March 31, 2019

¥43,37824
7,785
51,188

Cost

Securities whose fair value exceeds their cost:

Other

¥232
—
—

Fair Value

2019

Millions of yen

50
—
5,528

Cost

Millions of yen

Note C: Redemption schedule for receivables and marketable securities with maturities

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

Unrealized
Gain (Loss)

Unrealized
Gain (Loss)

Securities whose cost exceeds their fair value:

Government bonds

As of March 31, 2020

Thousands of U.S. dollars

2020

Equity securities2019¥ 28,689( 2)

Millions of yen

Securities whose fair value exceeds their cost:

Millions of yen(i) Unlisted stocks (*1)

Marketable and investment securities classified as other securities at March 31, 2020 and 2019 are summarized as follows:

Other
		Subtotal
Total

MITSUBISHI ESTATE CO., LTD. Integrated Report 202097

Financial Section

17 Derivatives and Hedging Activities

Millions of yen

2019(1) Currency-related transactions

Amortized Cost

Fair Value

Unrealized
Gain (Loss)¥   603—603¥   621
—
621

¥18
—
18

—
2,200
2,896
5,096
¥5,700

—
2,199
2,896
5,096
¥5,718

—
(0)
—
(0)
¥17

Millions of yen

Thousands of U.S. dollars

2020

Debt securities whose fair value exceeds their cost:
Government bonds
Corporate bonds
		Subtotal

Class of transactions

Currency swap contracts byallocation method
Payment in JPY and receipt in USD
Payment in JPY and receipt in EUR
Payment in JPY and receipt in AUD
Total

Debt securities whose cost exceeds their fair value:
Government bonds
Corporate bonds
Other
		Subtotal
Total

Class of transactions

Currency swap contracts byallocation method
Payment in JPY and receipt in USD
Payment in JPY and receipt in EUR
Total

Cash and cash equivalents

Fixed assets
Current liabilities
Fixed liabilities
Non-controlling interests
Gain on negative goodwill
Acquisition cost
Acquisition cost before obtaining control
Loss on step acquisition
Cash and cash equivalents of subsidiary
Payments for acquisition

Fair Value

¥(59)
¥(59)

$219,942$219,942$178,156$178,156$(542)$(542)

Corporate bonds andLong-term borrowings

Subject to hedge accounting

Corporate bonds andLong-term borrowings

Notional
AmountDue after
One Year

Fair Value¥15,718¥15,718¥15,718¥15,718

¥(15)
¥(15)

Thousands of U.S. dollars

2020

2019

2020

¥207,896
(916)
6,028
¥213,008¥176,814(1,002)
3,496¥179,308$1,910,288(8,423)55,391$1,957,256

A breakdown of assets and liabilities at the start of consolidation of Marunouchi Hotel, CO., LTD., a new subsidiary resulting from the acquisition ofshares, along with details regarding the share acquisition cost and related payments are presented below.

Current assets¥19,388¥19,388

Due after
One YearCalculation method of fair value is based on the data obtained from financial institutions.
Millions of yen

Marketable securities with maturities of three months or less¥23,936¥23,936

Fair Value

Notional
Amount

2019

The following table represents a reconciliation of cash and cash equivalents as of March 31, 2020 and 2019:

Time deposits with maturities of more than three months

Due after
One Year

Millions of yen

16 Supplemental Cash Flow Information

Cash on hand and in banks

Subject to hedge accounting

Notional
AmountMillions of yen

Thousands of U.S. dollars

2020

2019

2020

—
—
—
—
—
—
—
—
—
—
—

¥ 1,049
8,995(551)(3,920)(1,285)(2,097)2,189(1,380)487(881)¥   414

—
—
—
—
—
—
—
—
—
—
—

(2) Interest-related transactions
Millions of yen

Thousands of U.S. dollars

2020
Class of transactions

Interest rate swap contracts
Fixed rate payment and floating rate receipt
Interest rate swap contracts by
short-cut methodFixed rate payment and floating rate receipt
Total

Subject to hedge
accounting

Long-term borrowings
Long-term borrowings

Notional
AmountDue after
One Year

Fair Value

Notional
AmountDue after
One Year

Fair Value¥ 73,430 ¥ 68,731¥(2,759) $   674,727 $   631,544 $(25,357)

171,801 149,055¥245,232 ¥217,786(*) 1,578,625 1,369,621(*)¥(2,759) $2,253,353 $2,001,166 $(25,357)
Millions of yen

2019Class of transactions

Subject to hedge
accounting

Interest rate swap contracts
Fixed rate payment and floating rate receipt

Long-term borrowings

Interest rate swap contracts by
short-cut methodFixed rate payment and floating rate receipt
Total

Long-term borrowings

Notional
AmountDue after
One Year

Fair Value¥ 70,703 ¥ 70,551¥86

249,366 171,785¥320,069 ¥242,336

(*)
¥86

Calculation method of fair value is based on the data obtained from financial institutions.
(*) The estimated fair value of interest rate swap contracts is included in the estimated fair value of long-term borrowings since amounts in such derivative contracts accounted for by the short-cut method
are handled together with long-term borrowings (including current portion of long-term borrowings) that are subject to hedge accounting.

(3) Interest- and currency-related transactions
Millions of yen

A breakdown of assets and liabilities at the start of consolidation of Urban Life Co., Ltd., a new subsidiary resulting from the acquisition of shares,
along with details regarding the share acquisition cost and related payments are presented below.

Current assets
Fixed assets
Goodwill
Current liabilities
Fixed liabilities
Non-controlling interests
Acquisition cost
Cash and cash equivalents of subsidiary
Payments for acquisition

Millions of yen

Thousands of U.S. dollars

2020

2019

2020

—
—
—
—
—
—
—
—
—

¥ 3,473
10,945
1,104(7,084)
(873)
(202)
7,363
(2,372)¥ 4,990

—
—
—
—
—
—
—
—
—

The value of assets and liabilities for other companies that were newly consolidated as result of the acquisition of shares is immaterial, and has
therefore been omitted.
Disclosure for the year ended March 31, 2020 is omitted due to immateriality.

98

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Thousands of U.S. dollars

2020
Class of transactions

Interest rate and currency swap
contracts by short-cut method andallocation methodPayment in JPY and receipt in USD
Fixed rate payment and floating rate receipt
Total

Subject to hedge
accounting

Notional
AmountDue after
One Year

Fair Value

Notional
AmountDue after
One Year

Fair Value¥49,400¥49,400¥49,400¥49,400¥(6,215) $453,922¥(6,215) $453,922$453,922$453,922$(57,108)$(57,108)

Long-term borrowings

Millions of yen

2019Class of transactions

Interest rate and currency swap
contracts by short-cut method andallocation methodPayment in JPY and receipt in USD
Fixed rate payment and floating rate receipt
Total

Subject to hedge
accounting

Notional
AmountDue after
One Year

Fair Value¥49,400¥49,400¥49,400¥49,400¥(4,893)¥(4,893)Long-term borrowings

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

MITSUBISHI ESTATE CO., LTD. Integrated Report 202099

Financial Section

18 Segment Information

The Company and its consolidated subsidiaries are primarily engaged
in the real estate business. Their business segments are classified interms of the nature of each operation or service and consist of following
segments: (1) Office Building Business; (2) Lifestyle Property Business;(3) Residential Business; (4) International Business; (5) Investment
Management Business; (6) Hotel and Airport Business; (7) Architectural
Design and Engineering Business; (8) Real Estate Services Business; and(9) Other businesses.

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

Impairment losses of the Company and its consolidated subsidiaries on fixed assets by reportable segments for the years ended March 31, 2020 and2019 are summarized as follows:
Millions of yen

2020
Reportable segments

Impairment loss

OfficeBuilding
Business

Lifestyle
Property
Business—¥9,006

Investment
Residential International Management
Business
Business
Business¥1,731——

Architectural
Hotel and Design and
Airport Engineering
Business
Business¥153—

Real Estate
ServiceBusiness

Subtotal

Other

¥9

¥10,902—

Eliminations
Total or Corporate Consolidated¥10,902¥(57)

Impairment loss—

$82,759$15,913——$1,410—$91$100,174—$100,174$(529)

Millions of yen

The following tables present the amortization and balance of goodwill as of and for the years ended March 31, 2020 and 2019 by reportable segment:
Millions of yen

2 020

2020

Reportable segmentsRevenue, operating
income and assets byreportable segment
Revenue from:
External customers
Intersegment ortransfers
Total revenue¥   556,240

Lifestyle
Property
Business

Investment
Residential International Management
Business
Business
Business¥125,108¥387,962¥131,038¥19,106

Architectural
Hotel and Design and
Airport Engineering
Business
Business¥33,985¥14,064

Reportable segments

Real Estate
Services
Business¥33,849

Subtotal

Other¥1,301,356¥    840

Eliminations
Total or Corporate Consolidated¥1,302,196—¥1,302,196

9,261

2,097

1,045

(320)

2,210

2,452

7,524

1,691

25,963

7,782

33,745¥ (33,745)—

565,501

127,205

389,008

130,718

21,31636,43821,58935,5401,327,319

8,622

1,335,941(33,745)

1,302,196

152,886

35,741

25,94644,544

4,467(2,998)

1,268

1,139

262,995

199

263,195(22,426)

240,768

Segment assets¥3,503,750¥545,348¥652,314¥813,103¥71,829¥86,565¥28,299¥27,441¥5,728,653¥13,149¥5,741,803¥116,433¥5,858,236

Other items
Depreciation andamortization

52,86815,272

3,948

6,646

1,333

2,786

329

539

83,72498

83,822

1,118

84,941¥   108,979¥ 48,955¥ 56,675¥135,127¥    673¥13,317¥    636¥    955¥   365,321¥    454¥   365,775¥  8,857¥   374,633

Segment income (loss)

Capital expenditures

Amortization of
goodwill
Balance of goodwillAmortization ofnegative goodwill
Balance of negative
goodwill

2 020
OfficeBuilding
Business

Lifestyle
Property
Business

Investment
Residential International Management
Business
Business
Business

Architectural
Hotel and Design and
Airport Engineering
Business
Business

Real Estate
Services
Business

Subtotal

Other

Eliminations
Total or Corporate Consolidated

Real Estate
Services
Business

Subtotal

Other

—
—

—
—

¥  386¥4,476¥ 66¥138¥1,929¥7,149————¥  208¥5,361¥ 2,591¥17,126——¥ 2,591¥17,126——¥ 2,591¥17,126¥14,505¥   333———¥84,960¥12,417

—

—

—

—

—

—

¥14,839—¥14,839—¥14,839———¥97,377—¥97,377—¥97,377

Eliminations
Total or Corporate Consolidated

Reportable segmentsAmortization of
goodwill
Balance of goodwillAmortization ofnegative goodwill
Balance of negative
goodwill

OfficeBuilding
Business

Lifestyle
Property
Business————

Investment
Residential International Management
Business
Business
Business$ 3,554$41,130$  608$1,276$17,730$65,695

Architectural
Hotel and Design and
Airport Engineering
Business
Business————

Real Estate
Services
Business

Subtotal

Other$ 1,918$49,264$ 23,811$157,365——

Eliminations
Total or Corporate Consolidated$ 23,811$157,365——$ 23,811$157,365$133,289$  3,068

—

—

—

—

—

—

$136,358—$136,358—$136,358$780,671$114,098

—

—

—

—

—

—

$894,770—$894,770—$894,770
Millions of yen$ 5,111,095$1,149,574$3,564,852$1,204,068$175,558$312,280$129,235

85,096

19,2709,609(2,940)20,314

22,537

69,13915,539238,566

71,511

310,077

Total revenue

5,196,192

1,168,844

3,574,462

1,201,127

195,873

334,818

198,375

326,568

12,196,262

79,231

12,275,493(310,077) 11,965,415

Segment income (loss)

1,404,817

328,417

238,412409,303

41,048(27,547)

11,651

10,4692,416,572

1,836

2,418,409(206,071)

Segment assets$32,194,711$5,011,008$5,993,887$7,471,319$660,014$795,421$260,037

Other items
Depreciation andamortization

485,794

140,333

36,27761,06912,25325,602

3,026$ 1,001,377$ 449,830$   520,773$1,241,637$  6,186$122,373$  5,845

Capital expenditures

Lifestyle
Property
Business

2020

Reportable segments

Intersegment ortransfers

Investment
Residential International Management
Business
Business
Business

Architectural
Hotel and Design and
Airport Engineering
Business
Business

OfficeBuilding
Business

Thousands of U.S. dollars

Thousands of U.S. dollars

Revenue, operating
income and assets byreportable segment
Revenue from:
External customers$99,645

Disclosure for the year ended March 31, 2019 is omitted due to immateriality.

The reportable segment information of the Company and its consolidated subsidiaries for the years ended March 31, 2020 and 2019 aresummarized as follows:

OfficeBuilding
Business¥10,844

Thousands of U.S. dollars$311,028 $11,957,696$  7,719 $11,965,415

2019— $11,965,415
Reportable segments$252,150 $52,638,550

4,956

769,312$  8,781 $ 3,356,806$120,828 $52,759,378

905

770,218$  4,171 $ 3,360,977$ (310,077)—
2,212,338$1,069,867 $53,829,245

10,278780,496$    81,391 $ 3,442,369
Millions of yen

2 019

Amortization of
goodwill
Balance of goodwillAmortization ofnegative goodwill
Balance of negative
goodwill

OfficeBuilding
Business

Lifestyle
Property
Business¥   409—¥    69—

Investment
Residential International Management
Business
Business
Business¥  303¥4,834¥ 64¥208¥1,983¥9,180Architectural
Hotel and Design and
Airport Engineering
Business
Business————

Real Estate
Services
Business

Subtotal

Other¥  451¥5,570¥  3,282¥ 19,794——

Eliminations
Total or Corporate Consolidated¥  3,282¥ 19,794——¥  3,282¥ 19,794

—

—

—

—

—

—

—

—

—

—

—

—

—

¥99,466¥12,751

—

—

—

—

—

—

¥112,217—¥112,217—¥112,217

Reportable segmentsRevenue, operating
income and assets byreportable segment
Revenue from:
External customers
Intersegment ortransfers
Total revenue
Segment income (loss)
Segment assets
Other items
Depreciation andamortization
Capital expenditures

OfficeBuilding
Business

Lifestyle
Property
Business

Investment
Residential International Management
Business
Business
Business

Architectural
Hotel and Design and
Airport Engineering
Business
Business¥   519,141¥104,209¥418,967¥ 80,874¥47,701¥41,763

10,553

1,973

1,438

969

1,886

2,408

529,695

106,182

420,405

81,844

49,58844,171

Real Estate
Services
Business

Subtotal

Other¥16,969¥32,428¥1,262,055¥ 1,228¥1,263,283

—

7,702

1,158

28,091

6,878

34,969¥ (34,969)—

24,67133,586

1,290,146

8,106

1,298,252(34,969)

1,263,283

Eliminations
Total or Corporate Consolidated

Gain on negative goodwill
There was no information for the year ended March 31, 2020.
Disclosure for the year ended March 31, 2019 is omitted due toimmateriality.

Geographical area information on property, plant, and equipment for theyear ended March 31, 2020 was omitted since property and equipment
located in Japan accounted for more than 90% of equipment on the
consolidated balance sheet.
Geographical area information for the year ended March 31, 2019 has
been omitted since revenue from external customers in Japan andproperty and equipment located in Japan accounted for more than 90% ofrevenue from operations on the consolidated income statement andproperty and equipment on the consolidated balance sheet, respectively.

¥1,263,283

147,691

32,56030,42826,927

9,231

2,371

2,021

2,603

253,835(196)

253,638(24,459)

229,178¥3,551,450¥520,707¥665,788¥692,325¥68,977¥71,175¥27,992¥28,739¥5,627,156¥13,408¥5,640,565¥133,628¥5,774,193

50,283

14,303

3,432

5,587

2,987

2,054

253

499

79,401

53

79,455880

80,336¥   117,167¥ 37,480¥ 41,568¥ 76,412¥11,346¥14,464¥   573¥ 1,051¥  300,065¥   762¥  300,827¥ 11,497¥  312,324

Products and service information
Refer to reportable segment information.
Geographic area information
Geographical area information on net sales for the year ended
March 31, 2020 was as follows:
Millions of yen

Japan
United States
EuropeAsia
Total

Thousands of U.S. dollars

2020

2020

¥1,157,340
90,492
43,672
10,690¥1,302,196$10,634,392
831,499
401,288
98,234$11,965,415

Major customer information
The Company does not have any major customers whose share ofrevenue from operations accounted for more than 10% of revenue fromoperations shown on the consolidated income statement. Accordingly,
major customer information has been omitted.

(*) Net sales is classified into countries or regions based on the location of the Group companies.

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101Financial Section

19

Rental Properties

20

The Company and some of its consolidated subsidiaries own office buildings for lease, commercial facilities for lease and others in Tokyo and otherareas including overseas countries (the United States and the United Kingdom, etc.) for the purpose of obtaining revenue from leases.
Some office buildings for lease in Japan are regarded as real estate including space used as rental properties since they are used by the Company
and some of its consolidated subsidiaries.
The carrying value on the consolidated balance sheet as of March 31, 2020 and the fair value of these rental properties and real estate including
space used as rental properties are as follows:
Millions of yen

Rental properties
Real estate including spaceused as rental properties

Fair value

As ofApril 1, 2019

As of
As of
Net Change March 31, 2020 March 31, 2020

¥3,408,738¥94,021¥3,502,759

633,983(88,403)545,580

Carrying value

Fair value

As ofApril 1, 2019

As of
As of
Net Change March 31, 2020 March 31, 2020

¥7,356,741 $31,321,684$863,925 $32,185,609 $67,598,469

914,103(1) Asset retirement obligations presented in the consolidatedbalance sheet
1. Outline of asset retirement obligations
Asset retirement obligations include obligations of restoration related toleasehold and rental contracts.

5,825,451(812,307)

5,013,144

2. Calculation method for asset retirement obligations
Asset retirement obligations are calculated based on the remaining contract
years as an expected use period with a discount rate between 0.0% and 2.3%.
3. Changes in asset retirement obligations during the years ended
March 31, 2020 and 2019 are as follows:

8,399,367
Millions of yen

Thousands of
U.S. dollars

2020

2019

2020

1. The carrying value represents the acquisition cost less accumulated depreciation and accumulated impairment loss.
2. The fair value is based on the following:(1) The fair value of real estate in Japan is calculated by the Company based mainly on the Real Estate Appraisal Standards.
(2) The fair value of real estate in overseas countries is appraised principally by local real estate appraisers.
(3) The impact of the novel coronavirus disease (COVID-19) on the estimate was calculated on certain assumptions based on earnings forecasts, but
the impact on the estimate is immaterial.

Balance at the beginningof the year

¥5,859¥3,355$53,837

Increase due to the acquisitionof property and equipment

1,854

2,814

17,036

Adjustments due to the elapseof time

74

66

689

The carrying value on the consolidated balance sheet as of March 31, 2019 and the fair value of these rental properties and real estate including
space used as rental properties are as follows:

Decrease due to the fulfillmentof asset retirement obligations

(13)

(48)

(121)

Millions of yen

2019
Carrying value

Rental properties
Real estate including spaceused as rental properties

As of
As of
Net Change March 31, 2019 March 31, 2019

¥3,480,147¥ (71,408) ¥3,408,738
153,547

633,983

Other(1,538)(328)(14,136)

Balance at the end of the year

¥6,236¥5,859$57,3042)	Obligation of restoration based on some real estate rental agreements
	For some commercial facilities, the Company has an obligationof restoration at the termination of leasehold rental agreements.
However, the timing to fulfill the obligation is uncertain since it ispractically possible to continue to use those facilities by re-signing
contracts and some contracts set forth a special provision to reduce
the possibility to fulfill the obligation. Furthermore, given its businessstrategies and the current business environment, the Company
intends to continue its operation and not to fulfill the obligation.
Although the Company made the best estimation taking into accountall the evidence available as of March 31, 2020, these obligations are
excluded from recognition of asset retirement obligations since theprobability of the obligations in terms of scope and amount could not
be reasonably estimated.

Fair value

As ofApril 1, 2018

480,4361)	Obligation to remove asbestos that is used for some properties andequipments in a particular way required by the Ordinance on
Preventing Asbestos Hazards
	For such properties, the Company has an obligation to remove
asbestos at demolition of buildings. However, no demolition has takenplace in the past other than those related to redevelopment or otherprojects involving many other business associates. It is therefore
difficult to reasonably estimate the timing to fulfill such obligation
based on the physical useful life of the assets caused by aging and it
is impossible to estimate the timing without specific business plans.
Although the Company has been voluntarily conducting asbestos
removal work when that is feasible due to such as termination oftenancy, it is impractical to make a reasonable estimation of progress ofsuch voluntary removal work based on the actual record of thetenancy termination and of the remaining amount of asbestos atdemolition. Moreover, it is difficult to distinguish costs of asbestos
removal from total costs of demolition. Although the Company madethe best estimation taking into account all the evidence available as ofMarch 31, 2020, these obligations are excluded from recognition ofasset retirement obligations since the probability of obligationsin terms of scope and amount was not reasonably estimated.

Thousands of U.S. dollars

2020
Carrying value

Asset Retirement Obligations(2) Asset retirement obligations not recognized in the consolidatedbalance sheet
As stated below, certain obligations are excluded from recognition ofasset retirement obligations.

¥6,953,534
987,600

1. The carrying value represents the acquisition cost less accumulated depreciation and accumulated impairment loss.
2. The fair value is based on the following:(1) The fair value of real estate in Japan is calculated by the Company based mainly on the Real Estate Appraisal Standards.
(2) The fair value of real estate in overseas countries is appraised principally by local real estate appraisers.
The income or loss from rental properties and real estate including space used as rental properties for the years ended March 31, 2020 and 2019 are
as follows:
Millions of yen

2020

Rental properties
Real estateincluding spaceused as rental
properties

Lease
income(*)

Lease cost

Lease
income(loss), net¥472,275¥303,281¥168,994

43,90332,36911,5342019

Other, net

Leaseincome(*)

Lease cost

Lease
income(loss), net¥(21,246) ¥448,676¥283,816¥164,860

4,012

Thousands of U.S. dollars

40,83030,825

10,005

Other, net

2020
Lease
income(*)

Lease cost

Lease
income(loss), net

21 Related Party Transactions

The Company has related party transactions with key management personnel of the Company and major individual shareholders.
The corresponding balances as of March 31, 2020 and 2019 and the amounts of these transactions for the years then ended are summarized as follows:
Millions of yen

2020¥(7,917) $4,339,574 $2,786,742 $1,552,832 $(195,228)(406)

403,414

297,429

105,985

Thousands of U.S. dollars

Other, net

Type

Name

Occupation

Director

JunichiTanisawa

Representative
Executive
Officer of theCompany

36,872(*) L ease income excludes that from real estate including space used as rental properties that was used by the Company and some of its consolidated subsidiaries for leasing service and operating management.

Ownership
ratio
of votingsharesRelationshipwiththe related
party

Nature oftransaction

Transaction
amountAccount

Balanceoutstandingat year end

Transaction
amountAccount

Balanceoutstandingat year end

Contract for
construction of
housing and Construction of
0.00%
other
housing

¥89

—

—

$824

—

—

1. Transaction amounts do not include consumption tax..
2. Transaction terms are determined in consideration with market prices, the same as general transactions.
Millions of yen

2019

Type

Name

Occupation

Director

JunichiTanisawa

Representative
Executive
Officer of theCompany

Ownership
ratio
of votingsharesRelationshipwiththe related
party

Nature oftransaction

Transaction
amountAccount

Balanceoutstandingat year end

Contract for
construction of
housing and Construction of
0.00%
other
housing—

Advances anddeposits¥23

1. Balance outstanding at year end includes consumption tax.
2. Transaction terms are determined in consideration with market prices, the same as general transactions.

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Financial Section

Independent Auditor’s Report
22 Other Comprehensive Income

The following table presents reclassification and tax effects allocated to each component of other comprehensive income for the years ended
March 31, 2020 and 2019:
Millions of yen

Thousands of U.S. dollars

2020

2019

2020

Unrealized holding gain (loss) on securities:¥(49,089)¥ (2,748)$(451,065)

Reclassification adjustments for gains and losses included in net income(1,627)(6,001)(14,958)

Amount before tax effects(50,717)(8,749)(466,023)

Tax effects

14,787

2,412

135,875

Unrealized holding gain (loss) on securities(35,929)(6,337)(330,147)(2,307)(181)(21,206)

Amount arising during the year

Deferred gain (loss) on hedging instruments:
Amount arising during the year

(548)

(398)

(5,037)(2,856)(579)(26,244)

816

195

7,506

(2,039)(384)(18,737)

Amount arising during the year

1,208

(17,484)

11,100

Amount before tax effects

1,208(17,484)

11,100Reclassification adjustments for gains and losses included in net income
Amount before tax effects
Tax effects
Deferred gain (loss) on hedging instruments
Foreign currency translation adjustments:

Tax effects

(153)

77

(1,413)Foreign currency translation adjustments

1,054(17,407)

9,686(6,517)

11(59,888)

(870)

1,206

(7,998)Amount before tax effects(7,388)

1,218(67,886)

Tax effects

2,284

(378)

20,992Retirement benefits liability adjustments(5,103)839(46,893)

(382)

(913)

(3,513)¥(42,400)¥(24,202)$(389,606)

Retirement benefits liability adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income

Share of other comprehensive income of companies accounted forby the equity method:Amount arising during the year
Total other comprehensive income (loss)

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Corporate Data

Principal Mitsubishi Estate Group Companies
Consolidated subsidiary

Affiliate accounted for by the equity method

Innovation and Business Transformation Address
MEC Agri Co., Ltd. *Medicha Co., Ltd. *MEC Business System Solutions Co., Ltd.

2270, Hirakawa-cho, Midori-ku, Chiba,
Chiba Prefecture 266-0004
BLUE CINQ POINT Bld. C-B1, 5-3-18 Minami Aoyama,
Minato-ku, Tokyo 107-0062
13F, Marunouchi Kitaguchi Building, 6-5, Marunouchi
1-chome, Chiyoda-ku, Tokyo 100-0005

Share ofvotingrights (%)

Phone

Business activities+81-43-312-6555

Production of agricultural products, sales

90.0+81-3-3287-5519

Meditation and operation of studios

100.0+81-3-3214-9300

Development and management of information systems and software

100.0

Address

Phone

Business activities

Mitsubishi Jisho Community Holdings Co., Ltd.

6-1, Sanban-cho, Chiyoda-ku, Tokyo 102-0075+81-3-3556-3888

Mitsubishi Jisho Community Co., Ltd.

6-1, Sanban-cho, Chiyoda-ku, Tokyo 102-0075+81-3-5213-6100

Izumi Park Town Service Co., Ltd.

7-2, Takamori, Izumi-ku, Sendai, Miyagi Prefecture981-3203+81-22-378-0022

Business management and operations
related to the condominium managementbusiness
Overall condominium and building
management, renovations, and related
businesses
Comprehensive management of
Izumi Park Town

1442-23, Yosawa Oyamacho, Sunto-gun, Shizuoka
Prefecture 410-1326
670 Soshiyama, Uchida, Sakura, Chiba Prefecture
285-0077+81-550-78-3211

5F Shinko Building, 6-8, Kanda-Ogawamachi 3-chome,
Chiyoda-ku, Tokyo 101-0052
Shinjuku Front Tower, 21-1, Kita-Shinjuku 2-chome,
Shinjuku-ku, Tokyo 169-0074
6-26, Motoyamaminamimachi, 8-chome, Higashinada-ku,
Kobe, Hyogo Prefecture 658-0015+81-3-3518-8461

Residence Management Business* Outside the scope of consolidation

Commercial Property Business
Building Management Business+81-3-3287-4111+81-11-242-7411+81-3-3211-7833+886-2-2723-8009

Comprehensive building operation andmanagement
Management and operation of buildings,
commercial facilities, and sporting facilities
Operation and management of the Yurakucho
Denki Building
Property management of Nanshan Plaza

100.0

Higashinihon Kaihatsu Co., Ltd.

100.0

Sakura Golf Development Co., Ltd.

62.5

OthersMEC Eco LIFE Co., Ltd.

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

54.9

Ryoei Life Service Co., Ltd.

Royal Life Okusawa, 33-13, Okusawa 3-chome,
Setagaya-ku, Tokyo 158-0083+81-3-3748-2650

Cooling and heating supply business in the
Marunouchi, Otemachi, Yurakucho, and other
districts
Cooling and heating supply business in the
Higashi-Ikebukuro district
Cooling and heating supply business in the
Osaka OAP district
Cooling and heating supply business in the
Yokohama Minato Mirai district

65.6

Rockefeller Group International, Inc.

1271 Avenue of the Americas, 24th Fl. New York, NY
10020 U.S.A.

+1-212-282-2000

Real estate operations

100.0

68.0

Mitsubishi Estate New York Inc.

+1-212-698-2200

Real estate operations in the United States

100.0

35.0

Mitsubishi Estate London Limited

1271 Avenue of the Americas, 24th Fl. New York, NY
10020 U.S.A.
5 Golden Square London, W1F 9HT, U.K.

+44-20-7292-3180

Real estate operations in Europe

100.0

Mitsubishi Estate Asia Pte. Ltd.

138 Market Street #27-03 CapitaGreen, Singapore 048946+65-6576-5790

Real estate operations in Asia

100.0

PT. Mitsubishi Estate Indonesia

Jl. Jendral Sudirman, Kav 5-6, Menara Astra 56th Floor,
Jakarta Pusat, 10220 Indonesia
Level 15, Saigon Centre Tower 2, 67 Le Loi Street, District 1,
Ho Chi Minh City, Vietnam 700000
1805 Room Raffles City, 268 Xizang Middle Road,
Shanghai 200001, P.R.C.
100-6, Songren Road, Xinyi District, Taipei, 11073, Taiwan
Otemachi Financial City Grand Cube 9-2,
Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8189+62-21-8060-0071

Real estate operations in Indonesia

100.0+84-24-3267-3885

Real estate operations in Vietnam

100.0+86-21-6340-4000

Real estate business in China

100.0+886-2-8780-3003+81-3-6281-8000

Real estate business in Taiwan
Real estate business overseas
Real estate development, sales, leasing,management, real estate ownership, andmanagement

100.0
100.0

Specialist real estate investment management services (real estate investment
advisory and other services)
Investment corporation asset management

100.0

Investment management business in the
United States
Investment management business in Europe

70.0

Investment management business in Asiaand Oceania

73.75

Construction and civil engineering design
administration
Interior design administration and construction, manufacture, and sale of furniture andhousehold items

100.0

Purchase, sales, and leasing brokerage ofcorporate real estate, leasing management,
real estate appraisal, and parking business
Operation and management of parking lots,parking-lot consulting

100.0+81-3-3504-0610

Marunouchi Kitaguchi Building, 6-5, Marunouchi 1-chome,
Chiyoda-ku, Tokyo 100-0005+81-3-3287-2288

63.2

URBAN LIFE Co., Ltd.

29.8

1-1, Heiwajima 6-chome, Ota-ku, Tokyo 143-0006+81-3-3767-2111

Leasing, operation, and management oflogistics and office buildings

60.0

Otemachi Building, 6-1, Otemachi 1-chome, Chiyoda-ku,
Tokyo 100-0004
2-1, Teraoka 6-chome, Izumi-ku, Sendai,
Miyagi Prefecture 981-3204
1-1, Kakigaracho 2-chome, Nihonbashi, Chuo-ku, Tokyo
103-8520
6-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005+81-3-3211-6180

Comprehensive supervision andmanagement of hotel business
Operation of Sendai Royal Park Hotel

100.0

Management and operation ofRoyal Park HotelManagement and operation of the
Marunouchi Hotel

55.7

Mitsubishi Jisho Retail Management Co., Ltd.

7-1, Daiba 1-chome, Minato-ku, Tokyo 135-8707+81-3-5579-6671

100.0

Mitsubishi Estate • Simon Co., Ltd.

Otemachi Financial City South Tower, 9-7, Otemachi
1-chome, Chiyoda-ku, Tokyo 100-0004
19-12, Takashima 2-chome, Nishi-ku, Yokohama,
Kanagawa Prefecture 220-0011+81-3-3275-5252

Operation and management of commercial
facilities
Management of outlet malls
Management of the Sky Building and the
Yokohama Shintoshi Building

54.4

Marunouchi Hotel Co., Ltd.

+81-22-377-1111+81-3-3667-1111+81-3-3217-1111

100.0+81-45-441-1221

60.0

Airport Operation BusinessTakamatsu Airport Co., Ltd.*
Shimojishima Airport Management Co., Ltd.*
Mt. Fuji Shizuoka Airport Co., Ltd.*1312-7, Oka, Konan-cho, Takamatsu, Kagawa Prefecture761-1401
1727, Irabusawada, Miyakojima, Okinawa Prefecture
906-0507
3336-4, Sakaguchi, Makinohara, Shizuoka Prefecture
421-0411+81-87-814-3657+81-980-78-6365+81-548-29-2000

Operation of Takamatsu Airport and related
businesses
Operation of the Miyako Shimojishima Airport
Passenger Terminal and related businesses
Leasing of the Mt. Fuji Shizuoka Airport
Terminal and commissioned management
and operation of the airport’s basic facilities
and airport parking lots maintained by
the prefecture

73.1
69.0
50.0

Shin Kokusai Building, 4-1, Marunouchi 3-chome,
Chiyoda-ku, Tokyo 100-0005+81-3-3214-4881

Dark fiber leasing and data center housingbusinesses in the Marunouchi and Otemachi
districts

51.0Real estate development, sales, leasing,management, real estate ownership, andmanagement

100.0

Design and construction of single-unit homes
and housing complexes, renovation of homes
and retail shops
Manufacture, processing, and sale ofconstruction materials

100.0

Residential BusinessOtemachi Financial City Grand Cube 9-2, Otemachi
1-chome, Chiyoda-ku, Tokyo 100-8189+81-3-6281-8000

Kokusai-Shin-Akasaka Building Higashi-kan, 14-27,
Akasaka 2-chome, Minato-ku, Tokyo 107-0052

Mitsubishi Estate Housing Components Co., Ltd. 228-4, Shinminato, Mihama-ku, Chiba, Chiba Prefecture
261-0002

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

100.0

Investment Management Business
Mitsubishi Jisho Investment Advisors, Inc.

Marunouchi North Exit Building, 6-5, Marunouchi 1-chome, +81-3-3218-0031
Chiyoda-ku, Tokyo 100-0005

Japan Real Estate Asset Management Co., Ltd.

+81-3-3211-7921

TA Realty LLC

Otemachi Park Building, 1-1, Otemachi 1-chome,
Chiyoda-ku, Tokyo 100-0004
28 State Street, Boston, MA 02109, U.S.A.

Europa Capital LLP

15 Sloane Square, London SW1W 8ER, U.K.

+44-20-7881-6800

Pan Asia Realty Advisors (Singapore) Pte. Ltd.

80 Raffles Place, No. 18-01, UOB Plaza 1, Singapore 048624 +65-6416-7888+1-617-476-2700

90.0

87.0

Architectural Design & Engineering Business
Mitsubishi Jisho Sekkei Inc.

Marunouchi 2-chome Building, 5-1, Marunouchi 2-chome,
Chiyoda-ku, Tokyo 100-0005
Inui Building Kachidoki, 13-1, Kachidoki 1-chome, Chuo-ku,
Tokyo 104-0054+81-3-3287-5555

Mitsubishi Real Estate Services Co., Ltd.

Otemachi Financial City Grand Cube, 1-9-2, Chiyoda-ku,
Tokyo 100-0004+81-3-3510-8011

Mitsubishi Estate Parks Co., Ltd.

3F, Seitoh Kaikan, 5-7, Sanbancho, Chiyoda-ku, Tokyo
102-0075+81-3-5215-1720

Otemachi Building, 6-1, Otemachi 1-chome, Chiyoda-ku,
Tokyo 100-0004
Shin-Tokyo Building, 3-1, Marunouchi 3-chome,
Chiyoda-ku, Tokyo 100-0005+81-3-3212-8674

Human resource-related services

100.0+81-3-3212-0555

Management of the Minoria Inage Kaigan
retail facility

66.7+81-3-6887-8200+81-43-242-9031

MEC Human Resources, Inc.
Keiyo Tochi Kaihatsu Co., Ltd.

Custom-Built Housing

114

100.0

+81-3-6704-0100

100.0

100.0

OthersReal Estate Sales

Mitsubishi Estate Home Co., Ltd.

100.0

Real Estate Services Business

OthersMitsubishi Estate Residence Co., Ltd

Mitsubishi Estate Taiwan Ltd.*
Mitsubishi Estate Residence Co., Ltd.

MEC Design International Corporation* Outside the scope of consolidation

Marunouchi Direct Access Limited+81-78-452-0668

100.0* Outside the scope of consolidation

76.9

Retail Properties Management BusinessYokohama Sky Building Co., Ltd.

Mitsubishi Estate Vietnam Company Limited
Mitsubishi Estate (Shanghai) Ltd.*

Hotel BusinessRoyal Park Hotel Co., Ltd.

+81-3-6908-5560

International Business

Logistics Facility Management BusinessTohoku Royal Park Hotel Co., Ltd.

100.0

49.0

+81-78-414-6211

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

Ikebukuro District Heating and Cooling Co., Ltd.* World Import Mart Building, Sunshine City, 1 Higashi-Ikebukuro +81-3-3988-6771
3-chome, Toshima-ku, Tokyo 170-8630
O.A.P. D.H.C. Supply Co., Ltd.
OAP Tower, 8-30, Tenmabashi 1-chome, Kita-ku, Osaka,+81-6-6881-5170
Osaka Prefecture 530-6004
Minato Mirai 21 D.H.C. Co., Ltd.
1-45, Sakuragicho 1-chome, Naka-ku, Yokohama,+81-45-221-0321
Kanagawa Prefecture 231-0062

Royal Park Hotels and Resorts Co., Ltd.

100.0

6-26, Motoyamaminamimachi, 8-chome, Higashinada-ku,
Kobe, Hyogo Prefecture 658-0015

Management of Sunshine City and otherbuildings
Management of Tokyo Kotsu Kaikan andother buildings

District Heating and Cooling BusinessTokyo Ryutsu Center Inc.

+81-43-498-6630

Management of the Higashi Fuji Country Club,
Fuji International Golf Club, and other properties
Management of Asakura Golf ClubURBAN LIFE JUUTAKUHANBAI Co., Ltd.

World Import Mart Building, Sunshine City, 1-1,
+81-3-3989-3321
Higashi-Ikebukuro 3-chome, Toshima-ku, Tokyo 170-8630
Tokyo Kotsu Kaikan, 10-1, Yurakucho 2-chome, Chiyoda-ku, +81-3-3212-2931
Tokyo 100-0006

Parking Business

Marunouchi Heat Supply Co., Ltd.*

100.0

50.0

Mitsubishi Jisho House Net Co., Ltd.

Building Leasing BusinessTokyo Garage Co., Ltd.

100.0

Research and proposals on the environmentand design
Purchase, sales, and leasing brokerage ofhomes for individuals, leasing management
Leasing business in the Kansai area,real estate sales (sales of renovatedcondominiums)
Purchase, sales, leasing brokerage,
and leasing management of homes forindividuals in the Kansai area
Operation of commercial nursing homes

70.0* Outside the scope of consolidation

Tokyo Kotsu Kaikan Co., Ltd.

71.5

Recreational Facilities

Mitsubishi Jisho Property Management Co., Ltd. Marunouchi Nakadori Building, 2-3, Marunouchi 2-chome,
Chiyoda-ku, Tokyo 100-0005
Hokuryo City Service Co., Ltd.
Hokkaido Building, 4-1, Kita 2-jou Nishi, Chuo-ku, Sapporo,
Hokkaido 060-0002
Yuden Building Kanri Co., Ltd.
Yurakucho Denki Building, 7-1, Yurakucho 1-chome,
Chiyoda-ku, Tokyo 100-0006
Nan Shan Plaza Property Management Co., Ltd.* 100-7, Songren Road, Xinyi District, Taipei, 11073, Taiwan

Sunshine City Corporation

Share ofvotingrights (%)

Note: Percentage of voting rights held is as of March 31, 2020.

91.7

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020115

Corporate Data

Corporate History

Organization
As of April 1, 2020

History

The Marunouchi site purchased by Mitsubishi Company fromthe Japanese government.
Mitsubishi Goshi Kaisha (limited partnership) established. Achieved further
expansion of business.

Mitsubishi Estate Company, Limited, established with paid-in capital totaling¥15 million, with the ownership of the Marunouchi Building and site, as well as
business rights for buildings and land within the Marunouchi area, transferredfrom Mitsubishi Goshi Kaisha.

Major properties

1893
1894
1923

Marunouchi Building completed in front of Tokyo Station.

1984

MEC UK Limited established.
Yokohama Office established (reorganized as Yokohama Branch in April 2000).

1986

1972

Urban Project Development Department

Hotel Business Department
Mixed Use Development Department

Marunouchi Development Office
Yurakucho Development Planning Office
Uchi-kanda Development Office
Akasaka Development OfficeTokiwabashi Development Department
Urban Redevelopment Department

Osaka Amenity Park (OAP) completed.

Ikebukuro Development OfficeCommercial Property Management Department

Internal Audit Office

Safety Management Office

Facility Management Planning Department

GOTEMBA PREMIUM OUTLETS® opened.

Sustainability Committee
Sustainability Subcommittee

Marunouchi Building opened.

2004

Marunouchi Oazo opened.

2005

Tokyo Building opened.

2007

Shin-Marunouchi Building opened.
The Peninsula Tokyo opened.

2009

Marunouchi Park Building and Mitsubishi Ichigokan completed.

2010

Mitsubishi Ichigokan Museum opened.

2014

Singapore CapitaGreen completed.

2015

Dai Nagoya Building completed.
Otemon Tower • JX Building completed.
OTEMACHI FINANCIAL CITY GRAND CUBE completed.

xTECH Leasing and Promotion Department
Museum Management Office

Residential Business Group
Residential Business Planning Department

Nominating
Committee
Audit Committee

Residential Value Chain Management Office

CLT Business, Residential Land &Recreational Facilities Management OfficeInternational Business Group

Audit Committee
OfficeInternational Business Planning Department

Remuneration
Committee

Investment Management Group
Investment Management Business Department

Corporate Group2011
Marunouchi Eiraku Building completed.
OTEMACHI FINANCIAL CITY (North Tower, South Tower) opened.
MARK IS shizuoka and MARK IS minatomirai opened.
Grand Front Osaka opened.

Renewal Management Office

Airport Business Department

2008

2016

Open Innovation Promotion Office

Toyosu Development Office

Mitsubishi Trust and Banking Building completed (renamed Mitsubishi UFJ
Trust and Banking Building in October 2005).
Paternoster Square completed in the City of London.

2013

Area Management Promotion Office

Logistics Facilities Development Department

Yokohama Landmark Tower completed. Yokohama Royal Park Hotel opened.

2003

2012

Risk Management & Compliance
Committee
Risk Management & Compliance Subcommittee

Corporate Planning Department

Corporate Planning Department Affiliated Group Office
Strategic Investment OfficeSustainability Management and Promotion Department
Finance & Accounting Department
Corporate Communications Department

Investor Relations Office

Human Resources Department

Human Resources Compliance & Diversity Promotion Office

General Affairs Department

Secretary Office

Rugby Marketing Office

Legal & Compliance Department

Hokkaido Branch

2017

Otemachi Park Building completed.

Tohoku Branch
Yokohama Branch

Head Office relocated to Otemachi Park Building.

2018

Establishment of PT. Mitsubishi Estate Indonesia and Mitsubishi Estate Vietnam
Company Limited.

2019

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Tenjin MM Building (IMS) opened in Fukuoka City.
Royal Park Hotel in Hakozaki, Tokyo, opened.
Hiroshima Park Building completed.

Group Companies Management Office

Project Planning Department

2001
2002

Area Management Planning Department

Strategic Investment Committee

1998
2000

Commercial Property Business Planning Department
Urban Planning Department

1995
1996

116

Executive Committee

The first phase of the Izumi Park Town Project launched.

President & Chief Executive Officer

1993

Transitioned to a “Company with Nominating Committee, etc.,”organizational structure.
Tokyo Ryutsu Center Inc. became a Mitsubishi Estate consolidated subsidiary.
Hirotaka Sugiyama and Junichi Yoshida appointed chairman of the Board andpresident & chief executive officer, respectively.
Taiwan Representative Office established.

Commercial Property Business Group

Chairman of the Board

1990

DX Promotion Department

Commercial Property Business Strategy Department

Board of Directors

Participation in the City of London’s Paternoster Square Project announced.
Capital investment in Rockefeller Group, Inc., initiated.

TA Realty LLC acquired.

Corporate Strategy Committee

Meeting of Shareholders

Hokkaido Building completed.

1973

1989

Mitsubishi Estate Building Management and Mitsubishi Estate
Property Management integrated.

Innovation and Business Transformation Group
Business Creation Department

Group Strategy Committee

Hiroshima Branch (renamed Chushikoku Branch in November 2017) andKyushu Branch established.

Mitsubishi Estate (Shanghai) Ltd. established.

Shin-Marunouchi Building completed.

1959

1983

Mitsubishi Estate Residence Co., Ltd., established.

Facility Management Consultancy Office

1953

Mitsubishi Estate Home Co., Ltd., established.

Sunshine City Corporation became a Mitsubishi Estate consolidated subsidiary.
Mitsubishi Estate Asia Pte. Ltd. commenced operations.
Chelsea Japan Co., Ltd., became a Mitsubishi Estate consolidated subsidiary(renamed Mitsubishi Estate·Simon Co., Ltd., in February 2013).

Relocation Management Office
Master Lease Planning and Management Office

Retail Property Leasing Department

Nagoya Dai-Ichi Hotel opened (Hotel Business launched).

Mitsubishi Jisho Investment Advisors, Inc., established.

Global Marketing and Promotion OfficeWorkplace Solutions Office

1969

Properties and equipment revaluated in accordance with the Law Concerning
Revaluation of Land and other relevant laws and regulations.

Office Leasing and Tenant Relations Department

1937

Akasaka Park House offered for sale in lots, marking the launch of
the Condominium Business.
Mitsubishi Estate New York Inc. established. Began expansion of businessoverseas.
Mitsubishi Real Estate Services Co., Ltd., established.
Branches established in Sapporo (renamed Hokkaido Branch in November 2017),
Sendai (renamed Tohoku Branch in July 1989), Nagoya (renamed
Chubu Branch in April 2018), and Osaka (renamed Kansai Branch in April 2016).
Strengthened business in major Japanese cities.

Began first stage of Marunouchi redevelopment.

Collaborative Partner Development OfficeBusiness Development, Consulting & Solutions Department 2

Completed Mitsubishi Ichigokan, offering the first Western-style office architecture in Marunouchi.

1962

Reconstruction of Marunouchi Building announced.

Client Strategy Planning Department
Business Development, Consulting & Solutions Department 1

1952
Mitsubishi Estate’s shares listed on the Tokyo Stock Exchange andthe Osaka Securities Exchange.
Marunouchi Remodeling Plan formulated. Met demand for offices in the yearsof high economic growth.

Business Development, Client Relations & Solutions Group1890

Marunouchi Nijubashi Building completed.

Minato Mirai 21 Office

Chubu Branch
Kansai Branch

GRAND FRONT OSAKA Office

Chushikoku Branch

Umekita Development Office

Kyushu Branch

IMS Development Office

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

117

Corporate Data

About Our Website

Corporate Information
As of March 31, 2020

Company Name
Mitsubishi Estate Co., Ltd.

Stock Information
Stock Details
Number of authorized shares: 1,980,000,000 shares
Number of shares issued and outstanding: 1,391,174,263
(136,093 increase in number of shares from the previous fiscal year-end)
Number of shareholders:	63,456(Increase of 1,158 shareholders comparedwith the end of the previous fiscal year)

9.76%

Paid-in Capital¥142,147 million
Business Activities
Development, leasing, and management of office buildings, retail,and other facilities

Mitsubishi Estate Group Corporate Website

Development of real estate for investment purposes andasset management

Shareholder Composition (Percentage of shares held)
Individuals and others

Date of Establishment
May 7, 1937

Government and local publicauthorities

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

Development and sale of land for housing, research, andother facility use

0.00%Management of leisure and other facilities
Financial institutions

Sale and brokerage of real estate and related consulting services

37.63%

Number of Employees (Excluding temporary staff)
Non-consolidated: 903
Consolidated: 9,619
Financial instruments
business operators

Foreign individuals
and companies

40.91%

URL
https://www.mec.co.jp/index_e.html

1.16%
Operating and othercompanies

10.54%
Head Office
Otemachi Park Building, 1-1, Otemachi 1-chome, Chiyoda-ku,
Tokyo 100-8133
Phone: +81-3-3287-5100

Major Shareholders

Number ofshares held Shareholding(Thousands of percentage
shares)(%)

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

122,882

9.18

Japan Trustee Services Bank, Ltd. (Trust account)

69,470

5.19

Meiji Yasuda Life Insurance Company

46,882

3.50

JP MORGAN CHASE BANK 380055

46,512

3.47

SSBTC CLIENT OMNIBUS ACCOUNT

29,513

2.20

Japan Trustee Services Bank, Ltd. (Trust account 5)

28,1492.10

Chubu Branch
Nagoya Hirokoji Building, 3-1, Sakae 2-chome, Naka-ku,
Nagoya, Aichi Prefecture 460-0008
Phone: +81-52-218-7755

Japan Trustee Services Bank, Ltd. (Trust account 7)

28,024

2.09

Kansai Branch

Tokio Marine & Nichido Fire Insurance Co., Ltd.

20,3001.51

JP MORGAN CHASE BANK 385151

20,064

1.49

STATE STREET BANK WEST CLIENT–TREATY505234

19,395

1.44

Note: The investment ratio is calculated after deducting the shares of treasury stock from theissued shares of the Company.

118

Hokkaido Branch
Hokkaido Building, 4-1, Kita 2-jou Nishi, Chuo-ku, Sapporo,
Hokkaido 060-0002
Phone: +81-11-221-6101

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

Tohoku Branch
Sendai Park Building, 6-1, Kokubun-cho 3-chome, Aoba-ku,
Sendai, Miyagi Prefecture 980-0803
Phone: +81-22-261-1361
Yokohama Branch
Yokohama Landmark Tower, 2-1, Minato Mirai 2-chome,
Nishi-ku, Yokohama, Kanagawa Prefecture 220-8115
Phone: +81-45-224-2211

Sustainability Information

IR Information

https://www.mec.co.jp/e/sustainability/index.html

https://www.mec.co.jp/e/investor/index.html

Our website contains sustainability reports
and other information that summarize Groupwide
sustainability-related data and initiatives based on
important sustainability issues.

In addition to financial information,
the site contains various IR explanatory materials
and an Asset Book.

OAP Tower, 8-30, Tenmabashi 1-chome, Kita-ku,
Osaka, Osaka Prefecture 530-6009
Phone: +81-6-6881-5160
Chushikoku Branch
Hiroshima Park Building, 7-5, Otemachi 3-chome, Naka-ku,
Hiroshima, Hiroshima Prefecture 730-0051
Phone: +81-82-245-1241
Kyushu Branch
Tenjin Twin Building, 6-8, Tenjin 1-chome, Chuo-ku, Fukuoka,
Fukuoka Prefecture 810-0001
Phone: +81-92-731-2211

MITSUBISHI ESTATE CO., LTD. Integrated Report 2020

119

Otemachi
1-chome,
Chiyoda-ku,
Tokyo
100-8133,
Japan
Otemachi Park
ParkBuilding,
Building,1-1,
1-1,Otemachi
Otemachi1-chome,
Chiyoda-ku,
Tokyo
100-8133,
Japan
https://www.mec.co.jp/index_e.html
http://www.mec.co.jp/index_e.html

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