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

MITSUB ISHI ESTATE CO., LTD.

ANNUAL REPORT
2007

Printed in Japan

Contents
To Our Shareholders

2

Special Feature

6

Corporate Governance14

Corporate Social Responsibility

17

Business Information

18

Financial Section

31

Mitsubishi Estate Corporate Data

58

A Love for People
A Love for the City
—Forever Taking on New Challenges—The Mitsubishi Estate Group

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

Contents
To Our Shareholders

2

Special Feature

6

Corporate Governance14

Corporate Social Responsibility

17

Business Information

18

Financial Section

31

Mitsubishi Estate Corporate Data

58

A Love for People
A Love for the City
—Forever Taking on New Challenges—The Mitsubishi Estate Group

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

TO OUR SHAREHOLDERSFINANCIAL RESULTS

eight years, due to postponement of sales by owners in an

A Year of Record Results

environment marked by rising prices and intensifying competition forDuring the fiscal year ended March 31, 2007, Mitsubishi Estate Co.,

land acquisition. Meanwhile, despite such concerns as rising interest

Ltd. (“Mitsubishi Estate” or the “Company”) and its consolidated

rates, with a continuing population influx into large metropolitan

subsidiaries (collectively, the “Mitsubishi Estate Group” or theareas, especially Tokyo, demand remains brisk. In the wake of rising“Group”) recorded revenue from operations of ¥947,641 million, an

land acquisition and construction costs, the outlook is for sales

increase of 12.3% from the previous fiscal year. Operating income

prices to trend upward. However, whether sales of condominiums

also climbed 20.7% year on year to ¥166,165 million. Supporting

will be favorable or not based on location and product planningthese results were a full period’s contribution from new buildings inshould become clearer as we move ahead.

the Building Business; capital gains from the reshuffling of assets, as

In the real estate investment market, with a low-interest rate

well as higher condominium sales in the Residential Business; andpolicy triggering an inflow of investment funds, competition for thecapital gains from the sale of large development properties in theacquisition of property intensified with real estate prices for some

Urban Development & Investment Management business.

properties rising sharply, resulting in an accelerating increase in landCollectively, these factors were the principal cause for the increaseprices primarily in Japan’s three major metropolitan areas. Landin revenues and earnings. In the fiscal year under review, Mitsubishi

prices of prime real estate in urban centers that has become more

Estate recorded a gain on the sale of shares of affiliated company

profitable as a result of redevelopment are rising at a rapid rate.

Cushman & Wakefield, a Rockefeller Group subsidiary, exceeding

While the impact of interest rates bears watching, higher rental rates

the loss related to the retirement of fixed assets associated withare expected to boost profitability and real estate prices in urban

building demolition as part of the Marunouchi Redevelopment

centers are likely to firm up.
Consequently, the Mitsubishi Estate Group has continued to

Project. As a result of the above factors, net income for the period

respond quickly and unerringly to business environment and market

under review surged 74.9% to ¥97,662 million.

changes, as it enhances management efficiency, improves earnings

OPERATING ENVIRONMENT

power and takes steps to raise corporate value.

Continued Strong Real Estate Market
In the office building leasing market, there is an increasing shortage

BUSINESS STRATEGIESof space resulting from office relocations to prime facilities due to avacancy rates at below 3%, demand is especially tight for large

Maintaining Balance between Asset Development
Businesses that Have Holding Strategies with thosethat Have Exit Strategies

office building space in prime locations. The supply of new office

With development as its core, the Mitsubishi Estate Group will strikebuildings in Japan temporarily increased from the previous year

a good balance between its “develop and hold” business, which

through the current year, but as tenants have already leased a

involves increasing cash flow (income gains) and raising asset value

majority of the available space, the outlook is for continued tightwhile maintaining its holdings, and its “develop and exit” business,

demand and rising rental rates, especially in central Tokyo.

which involves leveraging real estate securitization and non-stronger economy and burgeoning demand. In central Tokyo, withIn the residential market, condominium supply in the Tokyo

recourse loans and increasing capital gains through property sales.

Metropolitan area dropped below 80,000 units for the first time inThis strategy will then serve as our growth engine.

Keiji Kimura, President & CEO

Financial Highlights
Years ended March 31
Revenue from operations
Net income (loss)

Mitsubishi Estate’s earnings are steadily growing in the midst of continuing brisk activity in the real estate market. FromMillions of yen

Thousands of
U.S. dollars

2002

2003

2004

2005

2006

2007

2007

¥ 631,564¥ 681,726¥ 679,918¥ 775,381¥ 844,217¥ 947,641$ 7,956,016(71,058)

36,03934,98936,24555,82597,662819,937

As a percentage of revenue from operations(11.3)%

5.3%

5.1%

4.7%

6.6%

10.3%

—

As a percentage of total equity(10.5)%

4.3%

4.0%

4.0%

5.4%

8.3%

—

this point forward, we will pursue even greater management efficiency and stronger earning capacity to increase corporate

Total assets

3,035,795

3,007,927

3,068,842

3,124,514

3,280,209

3,447,272

28,941,922

value. Furthermore, we have created a brand slogan and brand statement that express the direction of the Mitsubishi

Total equity

832,497

839,953

897,499

920,930

1,133,623

1,225,644

10,290,018

Estate Group’s vision and our promise to all of our stakeholders. Guided by this slogan and statement, we will continue

Common stock

86,53486,53486,53486,534

129,736

136,534

1,146,286

Yen

U.S. dollars¥ (54.70)¥ 27.61¥ 26.96¥ 27.93¥ 42.60¥ 70.95$ 0.59

8.00

8.00

8.00

8.00

10.00

14.00

0.11

our efforts with an eye toward further growth.

Per share amounts:
Net income (loss)
Cash dividends applicable to the year

Notes: 1. Yen amounts shown are translated into U.S. dollars, solely for convenience, at the prevailing exchange rate on March 31, 2007, of ¥119.11 to US$1.00.
2. Total equity is calculated by deducting minority interests and stock acquisition rights from total net assets.

2 ANNUAL REPORT 2007

ANNUAL REPORT 2007

3

TO OUR SHAREHOLDERSFINANCIAL RESULTS

eight years, due to postponement of sales by owners in an

A Year of Record Results

environment marked by rising prices and intensifying competition forDuring the fiscal year ended March 31, 2007, Mitsubishi Estate Co.,

land acquisition. Meanwhile, despite such concerns as rising interest

Ltd. (“Mitsubishi Estate” or the “Company”) and its consolidated

rates, with a continuing population influx into large metropolitan

subsidiaries (collectively, the “Mitsubishi Estate Group” or theareas, especially Tokyo, demand remains brisk. In the wake of rising“Group”) recorded revenue from operations of ¥947,641 million, an

land acquisition and construction costs, the outlook is for sales

increase of 12.3% from the previous fiscal year. Operating income

prices to trend upward. However, whether sales of condominiums

also climbed 20.7% year on year to ¥166,165 million. Supporting

will be favorable or not based on location and product planningthese results were a full period’s contribution from new buildings inshould become clearer as we move ahead.

the Building Business; capital gains from the reshuffling of assets, as

In the real estate investment market, with a low-interest rate

well as higher condominium sales in the Residential Business; andpolicy triggering an inflow of investment funds, competition for thecapital gains from the sale of large development properties in theacquisition of property intensified with real estate prices for some

Urban Development & Investment Management business.

properties rising sharply, resulting in an accelerating increase in landCollectively, these factors were the principal cause for the increaseprices primarily in Japan’s three major metropolitan areas. Landin revenues and earnings. In the fiscal year under review, Mitsubishi

prices of prime real estate in urban centers that has become more

Estate recorded a gain on the sale of shares of affiliated company

profitable as a result of redevelopment are rising at a rapid rate.

Cushman & Wakefield, a Rockefeller Group subsidiary, exceeding

While the impact of interest rates bears watching, higher rental rates

the loss related to the retirement of fixed assets associated withare expected to boost profitability and real estate prices in urban

building demolition as part of the Marunouchi Redevelopment

centers are likely to firm up.
Consequently, the Mitsubishi Estate Group has continued to

Project. As a result of the above factors, net income for the period

respond quickly and unerringly to business environment and market

under review surged 74.9% to ¥97,662 million.

changes, as it enhances management efficiency, improves earnings

OPERATING ENVIRONMENT

power and takes steps to raise corporate value.

Continued Strong Real Estate Market
In the office building leasing market, there is an increasing shortage

BUSINESS STRATEGIESof space resulting from office relocations to prime facilities due to avacancy rates at below 3%, demand is especially tight for large

Maintaining Balance between Asset Development
Businesses that Have Holding Strategies with thosethat Have Exit Strategies

office building space in prime locations. The supply of new office

With development as its core, the Mitsubishi Estate Group will strikebuildings in Japan temporarily increased from the previous year

a good balance between its “develop and hold” business, which

through the current year, but as tenants have already leased a

involves increasing cash flow (income gains) and raising asset value

majority of the available space, the outlook is for continued tightwhile maintaining its holdings, and its “develop and exit” business,

demand and rising rental rates, especially in central Tokyo.

which involves leveraging real estate securitization and non-stronger economy and burgeoning demand. In central Tokyo, withIn the residential market, condominium supply in the Tokyo

recourse loans and increasing capital gains through property sales.

Metropolitan area dropped below 80,000 units for the first time inThis strategy will then serve as our growth engine.

Keiji Kimura, President & CEO

Financial Highlights
Years ended March 31
Revenue from operations
Net income (loss)

Mitsubishi Estate’s earnings are steadily growing in the midst of continuing brisk activity in the real estate market. FromMillions of yen

Thousands of
U.S. dollars

2002

2003

2004

2005

2006

2007

2007

¥ 631,564¥ 681,726¥ 679,918¥ 775,381¥ 844,217¥ 947,641$ 7,956,016(71,058)

36,03934,98936,24555,82597,662819,937

As a percentage of revenue from operations(11.3)%

5.3%

5.1%

4.7%

6.6%

10.3%

—

As a percentage of total equity(10.5)%

4.3%

4.0%

4.0%

5.4%

8.3%

—

this point forward, we will pursue even greater management efficiency and stronger earning capacity to increase corporate

Total assets

3,035,795

3,007,927

3,068,842

3,124,514

3,280,209

3,447,272

28,941,922

value. Furthermore, we have created a brand slogan and brand statement that express the direction of the Mitsubishi

Total equity

832,497

839,953

897,499

920,930

1,133,623

1,225,644

10,290,018

Estate Group’s vision and our promise to all of our stakeholders. Guided by this slogan and statement, we will continue

Common stock

86,53486,53486,53486,534

129,736

136,534

1,146,286

Yen

U.S. dollars¥ (54.70)¥ 27.61¥ 26.96¥ 27.93¥ 42.60¥ 70.95$ 0.59

8.00

8.00

8.00

8.00

10.00

14.00

0.11

our efforts with an eye toward further growth.

Per share amounts:
Net income (loss)
Cash dividends applicable to the year

Notes: 1. Yen amounts shown are translated into U.S. dollars, solely for convenience, at the prevailing exchange rate on March 31, 2007, of ¥119.11 to US$1.00.
2. Total equity is calculated by deducting minority interests and stock acquisition rights from total net assets.

2 ANNUAL REPORT 2007

ANNUAL REPORT 2007

3

TO OUR SHAREHOLDERS

The Building Business will push ahead with the Marunouchi

strategies.

Redevelopment Project, the centerpiece of its portfolio, and boost

In the International Business, with real estate investment funds

the amount of cash flow that the entire area generates by creating

increasingly in search of global opportunities, the proceeds from thesynergistic effects from more floor space devoted to sales andprevious fiscal year’s sale of shares in Cushman & Wakefield will behigher rents, thereby raising the asset value of holdings. In addition,

invested in the growth of the development and real estate advisory

to raise asset efficiency, we will improve the quality of our portfolio

businesses, in an attempt to manage market and country risks as weby reshuffling non-core assets and reinvesting in highly profitabletake steps to expand business globally.

properties with high-growth potential. As future areas of growth, we

Brand Slogan

A Love for People
A Love for the City
—Forever Taking on New Challenges—The Mitsubishi Estate GroupIn addition, we will aggressively expand proposal-based

will integrate and thereby strengthen the development,

marketing throughout the entire Group, focusing primarily on theadministration and management of the shopping center business,

Real Estate Consulting & Solution Department, a strategic marketingand take steps to expand our business foundation with projects

structure within the Group, with the aim of increasing businesswith enriching and fulfilling lives,

outside the Marunouchi area as well.

opportunities. At the same time, we will fortify our property

full of stimulating opportunities to meet.

In the Residential Business, Mitsubishi Estate will continue to

Brand Statement

Our wish is to provide people who live in, work in and visit the citymanagement and leasing businesses, which are essential to afocus on the Tokyo Metropolitan area and supply annually anstronger development business, as well as our corporate brokerage

estimated 3,500 condominiums of high quality and reliability, a

and advisory service businesses, which handle real estate liquidity

hallmark of the Company, emphasizing a location-based strategy

needs. By so doing, the overall real estate solution capability of theand product planning. In March 2005, Mitsubishi Estate formed aentire Mitsubishi Estate Group will increase in a strategic way.

The Mitsubishi Estate Group
has always pursued the genuine value sought by people
in the environments and services it provides.
With an eye to the future,

strategic partnership with and took an equity stake in TOWA REALESTATE DEVELOPMENT CO., LTD. This complementary

STRENGTHENING THE CORPORATE BRAND

we carefully listen to each and every customer,

relationship has the advantage of providing customer targets andListening Carefully to Every Customer and Challenging
New Horizons in Value Creationand create the true value they seek.

supply areas that can be leveraged with the aim of increasing
earnings while sharing know-how.

Based on integrity, open mindedness and teamwork, and acting in a

We wish to share with our customers

In the Urban Development & Investment Management business,

humane spirit of honesty, humility and thoughtful consideration for

we see the asset-utilization needs of customers that own real estate

all, we of the Mitsubishi Estate Group will always maintain an open

as a business opportunity and are aggressively expanding themind and cooperative spirit and respond to the expectations of every

development business, which puts to use the real estate value

stakeholder, including customers and shareholders.
To reinforce the competitive position of the Mitsubishi Estatetake steps to diversify methods of development, such as throughGroup as a whole, we have started taking steps to strengthen thevalue-added investments that increase real estate value, we arecorporate brand. As an expression of the corporate direction that weinvesting more in the development of income-generating real estate

have set our sights on and the promise to our stakeholders, thewith a focus on exit strategies. Moreover, in response to the

Mitsubishi Estate Group has drawn up a clearly stated brand slogan

expanding real estate development market, we will aggressively

and brand statement.
September 2007

produce synergies together with income-generating real estate exit

Medium-Term Management Plan “FF2007”

To cultivate capabilities for real estate value creation with“development” at the heart of business operations, and secure a leading
position in the industry as a real estate company for the new era

Revenue Share by Segment

Hotel Business 3.5%
Custom-Built Housing 3.6%
Architectural Design & Engineering 1.8%

Strategic Policies
International
Business
23.4%

Rebuild a dynamic and flexible management platform and system

Management Strategy
Optimize business portfolio and improve asset portfolio

Core Growth Strategy
Strategically reinforce capabilities for development-based
real estate solutions (development, real estate services,and Group-wide proposal-oriented marketing capabilities)

4 ANNUAL REPORT 2007

Urban Development &Investment Management 3.9%

The Use of “Love” in our Brand Slogan

A Love for the City
The Mitsubishi Estate Group’s business domain encompasses everything associated with the city. When we think of the word “city,”
we feel a deep appreciation of history and tradition, and our hearts overflow with the sense of pride and mission that we hold asmembers of the Mitsubishi Estate Group. The city is our “stage,” and upon this stage we create new value and create urban designs
that harmonize with the environment. This is our contribution to society. The phrase “A love for the city” evinces the sentiments anddetermination behind our work.

Other 0.4%
Real Estate Services 3.0%

Infrastructure Strategy

This aspiration will always drive our growth.

A Love for People“People” in this instance refers to all the stakeholders of the Mitsubishi Estate Group, including customers and Group employees,
and people who live in, work in and visit the city. How can we delight each and every one of them? How can we make them happy?
How can we inspire their dreams and passion? We at Mitsubishi Estate approach our work every day in constant pursuit of answers tothese questions. Each and every Group member involved in urban development contributes to creating a work environment where
dreams and passion can be shared through the work they do. “A love for people” is a phrase that expresses this attitude and intent.

Basic Objective

Foundation for the Future 2007

We will constantly take on new challenges to achieve this vision,and through it, we will continuously evolve.

creation know-how of Mitsubishi Estate. At the same time, as wedevelop the real estate investment advisory business and strive tothe inspiration and passion we derive from our work.

Building
Business
36.5%

Residential
Business
23.9%

A Genuine Love
Every day, we conscientiously ask ourselves: “What is the real value that customers seek?” By continuously creating new value in thecity, we share our dreams and passion. As a result, we win the trust of our customers. “A genuine love captures the attitude of eachand every one of our employees who are diligently working to create value and taking on new challenges.
New Challenges
In order to create new value and share with customers our dreams and passion, we must aggressively take on new challenges
unconstrained by convention and precedent. The real risk lies in not changing. “New Challenges” reflects our strong commitment tocontinually reinventing ourselves and forever taking on new challenges with the goal of reinforcing the position of the Mitsubishi
Estate Group as the most trusted and preferred real estate developer by customers.
ANNUAL REPORT 2007 5

TO OUR SHAREHOLDERS

The Building Business will push ahead with the Marunouchi

strategies.

Redevelopment Project, the centerpiece of its portfolio, and boost

In the International Business, with real estate investment funds

the amount of cash flow that the entire area generates by creating

increasingly in search of global opportunities, the proceeds from thesynergistic effects from more floor space devoted to sales andprevious fiscal year’s sale of shares in Cushman & Wakefield will behigher rents, thereby raising the asset value of holdings. In addition,

invested in the growth of the development and real estate advisory

to raise asset efficiency, we will improve the quality of our portfolio

businesses, in an attempt to manage market and country risks as weby reshuffling non-core assets and reinvesting in highly profitabletake steps to expand business globally.

properties with high-growth potential. As future areas of growth, we

Brand Slogan

A Love for People
A Love for the City
—Forever Taking on New Challenges—The Mitsubishi Estate GroupIn addition, we will aggressively expand proposal-based

will integrate and thereby strengthen the development,

marketing throughout the entire Group, focusing primarily on theadministration and management of the shopping center business,

Real Estate Consulting & Solution Department, a strategic marketingand take steps to expand our business foundation with projects

structure within the Group, with the aim of increasing businesswith enriching and fulfilling lives,

outside the Marunouchi area as well.

opportunities. At the same time, we will fortify our property

full of stimulating opportunities to meet.

In the Residential Business, Mitsubishi Estate will continue to

Brand Statement

Our wish is to provide people who live in, work in and visit the citymanagement and leasing businesses, which are essential to afocus on the Tokyo Metropolitan area and supply annually anstronger development business, as well as our corporate brokerage

estimated 3,500 condominiums of high quality and reliability, a

and advisory service businesses, which handle real estate liquidity

hallmark of the Company, emphasizing a location-based strategy

needs. By so doing, the overall real estate solution capability of theand product planning. In March 2005, Mitsubishi Estate formed aentire Mitsubishi Estate Group will increase in a strategic way.

The Mitsubishi Estate Group
has always pursued the genuine value sought by people
in the environments and services it provides.
With an eye to the future,

strategic partnership with and took an equity stake in TOWA REALESTATE DEVELOPMENT CO., LTD. This complementary

STRENGTHENING THE CORPORATE BRAND

we carefully listen to each and every customer,

relationship has the advantage of providing customer targets andListening Carefully to Every Customer and Challenging
New Horizons in Value Creationand create the true value they seek.

supply areas that can be leveraged with the aim of increasing
earnings while sharing know-how.

Based on integrity, open mindedness and teamwork, and acting in a

We wish to share with our customers

In the Urban Development & Investment Management business,

humane spirit of honesty, humility and thoughtful consideration for

we see the asset-utilization needs of customers that own real estate

all, we of the Mitsubishi Estate Group will always maintain an open

as a business opportunity and are aggressively expanding themind and cooperative spirit and respond to the expectations of every

development business, which puts to use the real estate value

stakeholder, including customers and shareholders.
To reinforce the competitive position of the Mitsubishi Estatetake steps to diversify methods of development, such as throughGroup as a whole, we have started taking steps to strengthen thevalue-added investments that increase real estate value, we arecorporate brand. As an expression of the corporate direction that weinvesting more in the development of income-generating real estate

have set our sights on and the promise to our stakeholders, thewith a focus on exit strategies. Moreover, in response to the

Mitsubishi Estate Group has drawn up a clearly stated brand slogan

expanding real estate development market, we will aggressively

and brand statement.
September 2007

produce synergies together with income-generating real estate exit

Medium-Term Management Plan “FF2007”

To cultivate capabilities for real estate value creation with“development” at the heart of business operations, and secure a leading
position in the industry as a real estate company for the new era

Revenue Share by Segment

Hotel Business 3.5%
Custom-Built Housing 3.6%
Architectural Design & Engineering 1.8%

Strategic Policies
International
Business
23.4%

Rebuild a dynamic and flexible management platform and system

Management Strategy
Optimize business portfolio and improve asset portfolio

Core Growth Strategy
Strategically reinforce capabilities for development-based
real estate solutions (development, real estate services,and Group-wide proposal-oriented marketing capabilities)

4 ANNUAL REPORT 2007

Urban Development &Investment Management 3.9%

The Use of “Love” in our Brand Slogan

A Love for the City
The Mitsubishi Estate Group’s business domain encompasses everything associated with the city. When we think of the word “city,”
we feel a deep appreciation of history and tradition, and our hearts overflow with the sense of pride and mission that we hold asmembers of the Mitsubishi Estate Group. The city is our “stage,” and upon this stage we create new value and create urban designs
that harmonize with the environment. This is our contribution to society. The phrase “A love for the city” evinces the sentiments anddetermination behind our work.

Other 0.4%
Real Estate Services 3.0%

Infrastructure Strategy

This aspiration will always drive our growth.

A Love for People“People” in this instance refers to all the stakeholders of the Mitsubishi Estate Group, including customers and Group employees,
and people who live in, work in and visit the city. How can we delight each and every one of them? How can we make them happy?
How can we inspire their dreams and passion? We at Mitsubishi Estate approach our work every day in constant pursuit of answers tothese questions. Each and every Group member involved in urban development contributes to creating a work environment where
dreams and passion can be shared through the work they do. “A love for people” is a phrase that expresses this attitude and intent.

Basic Objective

Foundation for the Future 2007

We will constantly take on new challenges to achieve this vision,and through it, we will continuously evolve.

creation know-how of Mitsubishi Estate. At the same time, as wedevelop the real estate investment advisory business and strive tothe inspiration and passion we derive from our work.

Building
Business
36.5%

Residential
Business
23.9%

A Genuine Love
Every day, we conscientiously ask ourselves: “What is the real value that customers seek?” By continuously creating new value in thecity, we share our dreams and passion. As a result, we win the trust of our customers. “A genuine love captures the attitude of eachand every one of our employees who are diligently working to create value and taking on new challenges.
New Challenges
In order to create new value and share with customers our dreams and passion, we must aggressively take on new challenges
unconstrained by convention and precedent. The real risk lies in not changing. “New Challenges” reflects our strong commitment tocontinually reinventing ourselves and forever taking on new challenges with the goal of reinforcing the position of the Mitsubishi
Estate Group as the most trusted and preferred real estate developer by customers.
ANNUAL REPORT 2007 5

Special Feature
Built on opposite sides of the street, the Shin-Marunouchi
Building and the Marunouchi Building form the gateway to thecity in front of Tokyo Station.

LINKING THE PAST, PRESENT,AND TOMORROW

100 YEARS OF MARUNOUCHI DEVELOPMENT
Our Goal—An Attractive and Vibrant City Center Recognized Worldwide
as the Leading Hub of Dynamic Interaction

Babasaki Dori in the “London Block,” circa 1907

Gyoko DoriThe London Block

Marunouchi is an international center of business that lies between Tokyo Station and the Imperial
Palace. The area’s 120 hectares accommodate approximately 100 buildings, of which Mitsubishi
Estate owns and manages roughly 30%. Approximately 4,000 companies are headquartered there
and nearly 10% of the companies listed on the First Section of the Tokyo Stock Exchange haveoffices there, and some 240,000 people work in Marunouchi.
The Company’s association with Marunouchi goes back more than a century, beginning in 1890.
At the behest of the Meiji Government, Mitsubishi Company acquired the Marunouchi site, which hadcomprised the residences of feudal lords during the Edo Period. At the time of the purchase, the site
was actually a barren field called Mitsubishi-ga-hara , literally meaning “the Mitsubishi flatland.” The
Mitsubishi Ichigokan was completed in 1894 as Japan’s first modern office building. Starting from thestrong conviction that Japan’s future prosperity required a modern office district, building such abusiness center became a primary objective.
From that point forward, Mitsubishi Estate has continued to engage in leading-edge urban
development as a trail-blazing pioneer. The transformation of the Marunouchi district into one of theworld ’s leading business centers coincided with the period of Japan’s economic growth anddevelopment into the economic powerhouse that it is today. The Marunouchi district has a history of
constant redevelopment, from projects implemented to cope with high economic growth during theShin-Marunouchi Building entrance

The Marunouchi Redevelopment embraces the theme of “Our Goal—An Attractive and Vibrant
City Center Recognized Worldwide as the Leading Hub of Dynamic Interaction.” It is also creating
communities that continue to develop while maintaining a rich history and environment. After 100
years as the nerve center of the Japanese economy, Marunouchi is transforming itself from a
dedicated business center into a lively and attractive area with diversified interests and potential.
Marunouchi—Dynamic and always in step with the times

6 ANNUAL REPORT 2007

Area surrounding Tokyo Station, circa 1927

Mitsubishi Flatland

Showa Period to the current Marunouchi Redevelopment.

The Shin-Marunouchi Building opened in
April 2007.

Mitsubishi-ga-hara, circa 1889 (painting by Fukuhide Gunji)

ANNUAL REPORT 2007

7

Special Feature
Built on opposite sides of the street, the Shin-Marunouchi
Building and the Marunouchi Building form the gateway to thecity in front of Tokyo Station.

LINKING THE PAST, PRESENT,AND TOMORROW

100 YEARS OF MARUNOUCHI DEVELOPMENT
Our Goal—An Attractive and Vibrant City Center Recognized Worldwide
as the Leading Hub of Dynamic Interaction

Babasaki Dori in the “London Block,” circa 1907

Gyoko DoriThe London Block

Marunouchi is an international center of business that lies between Tokyo Station and the Imperial
Palace. The area’s 120 hectares accommodate approximately 100 buildings, of which Mitsubishi
Estate owns and manages roughly 30%. Approximately 4,000 companies are headquartered there
and nearly 10% of the companies listed on the First Section of the Tokyo Stock Exchange haveoffices there, and some 240,000 people work in Marunouchi.
The Company’s association with Marunouchi goes back more than a century, beginning in 1890.
At the behest of the Meiji Government, Mitsubishi Company acquired the Marunouchi site, which hadcomprised the residences of feudal lords during the Edo Period. At the time of the purchase, the site
was actually a barren field called Mitsubishi-ga-hara , literally meaning “the Mitsubishi flatland.” The
Mitsubishi Ichigokan was completed in 1894 as Japan’s first modern office building. Starting from thestrong conviction that Japan’s future prosperity required a modern office district, building such abusiness center became a primary objective.
From that point forward, Mitsubishi Estate has continued to engage in leading-edge urban
development as a trail-blazing pioneer. The transformation of the Marunouchi district into one of theworld ’s leading business centers coincided with the period of Japan’s economic growth anddevelopment into the economic powerhouse that it is today. The Marunouchi district has a history of
constant redevelopment, from projects implemented to cope with high economic growth during theShin-Marunouchi Building entrance

The Marunouchi Redevelopment embraces the theme of “Our Goal—An Attractive and Vibrant
City Center Recognized Worldwide as the Leading Hub of Dynamic Interaction.” It is also creating
communities that continue to develop while maintaining a rich history and environment. After 100
years as the nerve center of the Japanese economy, Marunouchi is transforming itself from a
dedicated business center into a lively and attractive area with diversified interests and potential.
Marunouchi—Dynamic and always in step with the times

6 ANNUAL REPORT 2007

Area surrounding Tokyo Station, circa 1927

Mitsubishi Flatland

Showa Period to the current Marunouchi Redevelopment.

The Shin-Marunouchi Building opened in
April 2007.

Mitsubishi-ga-hara, circa 1889 (painting by Fukuhide Gunji)

ANNUAL REPORT 2007

7

Grand Design

Innovative & Attractive Urban Development

he Peninsula Tokyo Completed in May 2007
Opened in September 2007

Tokyo Building
Completed in October 2005

Marunouchi Building
Completed in August 2002

Shin-Marunouchi Building
Completed in April 2007

COHERENT GRAND DESIGN AND CONTINUOUS DEVELOPMENT

A Rising New City

LINKING THE PAST, PRESENT,AND TOMORROWThe First Stage (Closing in 2007)

The Industry Club of Japan and Mitsubishi UFJ Trustand Banking Building Completed in March 2003

Marunouchi OAZO
Completed in August 2004

Japan’s leading business district also has thenations best transportation access. With 20 railway
lines and 13 stations in the area, a station in
Marunouchi can be reached within a three to fiveminute’s walk from any building in the area. There
are more than 4,000 offices in Marunouchi,
employing approximately 240,000 people, and over
900,000 people are said to visit the area every day.

The development of Marunouchi began in 1894 with the construction of Mitsubishi Ichigokan. The
rapid succession of red brick buildings constructed thereafter gave rise to the nickname the “London
Block.” When Tokyo Station opened in 1914, development expanded towards the station area. This
was accompanied by a shift to large modern American style buildings, which reached its highpoint in
1923 with the construction of the Marunouchi Building. As an office building with a shopping arcade on
the first floor, it became a long-time favorite spot in the city. Standing 31 meters tall, the maximum

Buildings Owned by
Mitsubishi Estateheight for buildings according to regulations at the time, the Marunuouchi Building set the standard for
the Marunouchi skyline to follow. In addition, because of its functional street layout, the area became

Hibiya Park

Existing Buildings

Imperial Palace

informally known as the “New York Block.”
Faced with rapidly increasing demand for office space in Marunouchi during the period of rapid
Harumi Dorieconomic growth during the Showa era, the construction of large buildings began. Under a secondHibdevelopment stage, the small city blocks were consolidated into larger blocks and roads were

iya

Sta

tion

widened. This general improvement plan gave Marunouchi the form that we recognize today. Buildings
eventually exceeded heights of 100 meters, yet with the abundant greenery and wide moats of the

,C

hiy

oda

Lin

e

Hibiya DoriHibiya Station, Toei Mita Line

Otemachi Station, Toei Mita Line

Nijubashimae Station, Chiyoda Line

Otemachi Station, Chiyoda Line
Eitai DoriThe current and third Marunouchi Redevelopment started in 1998. In the first ten years (the firststage), six projects centered primarily in the area in front of Tokyo Station were completed.

Gyoko DoriBabasaki Dorineighboring Imperial Palace, the business area has preserved its orderly and aesthetic appearance.

Otemachi Station, Hanzomon Line
Marunouchi Naka Dori· The Marunouchi Building is a crossroads of communications thatsymbolizes the new Marunouchi era.

Hibiya Station, Hibiya Line· The restored Industry Club of Japan also serves as the headquarters

Yurakucho Station, Yurakucho Line

for Mitsubishi UFJ Trust and Banking Corporation

rak

uc

· The multi-site development Marunouchi OAZO stands on theSton· The multifunctional Shin-Marunouchi Building and the Marunouchi

Tokyo Station, JR Keiyo Line

Ginza Station, Marunouchi Lineregulations allowing the transfer of unused air rights
Building form a gateway to the area

JR Yokosuka Line
Tokyo Station, JR Sobu Line

Tokyo Central Post OfficeatiTokyo International Forum

former headquarters of Japan National Railways· The Tokyo Building was the first in Japan to take advantage ofhoMarunouchi Central Exit
Marunouchi South Exit

Marunouchi North Exit

Tokyo Station

Ginza Station, Hibiya Line

· Hong Kong’s renowned Peninsula Hotel opens in Tokyo
These projects are transforming Marunouchi into a lively, bustling area.
Ginza Station, Ginza Line

Marunouchi Redevelopment Project

Otemachi Station, Tozai Line

Tokyo Station, Marunouchi LineYu

Otemachi Station, Marunouchi Line

1. Hibiya Kokusai Building
2. Yurakucho Denki Building
3. Yurakucho Building
4. Shin-Yurakucho Building
5. Kokusai Building
6. Shin-Kokusai Building
7. Shin-Nisseki Building
8. Fuji Building
9. Shin-Tokyo Building
10. Kishimoto Building
11. Marunouchi Naka Dori Building
12. Ministry of Education, Culture,
Sports, Science and Technology
Building
13. Mitsubishi Building
14. Tokyo Ginko Kyokai Building
15. Otemachi Building
16. Shin-Otemachi Building
17. Nippon Building
18. Nippon Steel Building
19. JFE Shoji Building
20. Mitsubishi Soken Building
21. Mizuho Corporate Bank Ltd.
Head Office Building
22. The Bank of Tokyo-Mitsubishi
UFJ Otemachi Building

First Stage (1998-2007)
1. Marunouchi Building
2. The Industry Club of Japan and
Mitsubishi UFJ Trust andBanking Building
3. Marunouchi OAZO
4. Tokyo Building
5. Shin-Marunouchi Building
6. The Peninsula Tokyo

Second Stage (2008-2017)
1. Marunouchi Park Building
Ginza 1-Chome Station, Yurakucho Line

Planned Completion Spring 2009

2. Togin Building
Planned Completion 2012
*Years indicate fiscal years ending
March 31.

8 ANNUAL REPORT 2007

ANNUAL REPORT 2007

9

ANNUAL REPORT 2007

10

Grand Design

Innovative & Attractive Urban Development

he Peninsula Tokyo Completed in May 2007
Opened in September 2007

Tokyo Building
Completed in October 2005

Marunouchi Building
Completed in August 2002

Shin-Marunouchi Building
Completed in April 2007

COHERENT GRAND DESIGN AND CONTINUOUS DEVELOPMENT

A Rising New City

LINKING THE PAST, PRESENT,AND TOMORROWThe First Stage (Closing in 2007)

The Industry Club of Japan and Mitsubishi UFJ Trustand Banking Building Completed in March 2003

Marunouchi OAZO
Completed in August 2004

Japan’s leading business district also has thenations best transportation access. With 20 railway
lines and 13 stations in the area, a station in
Marunouchi can be reached within a three to fiveminute’s walk from any building in the area. There
are more than 4,000 offices in Marunouchi,
employing approximately 240,000 people, and over
900,000 people are said to visit the area every day.

The development of Marunouchi began in 1894 with the construction of Mitsubishi Ichigokan. The
rapid succession of red brick buildings constructed thereafter gave rise to the nickname the “London
Block.” When Tokyo Station opened in 1914, development expanded towards the station area. This
was accompanied by a shift to large modern American style buildings, which reached its highpoint in
1923 with the construction of the Marunouchi Building. As an office building with a shopping arcade on
the first floor, it became a long-time favorite spot in the city. Standing 31 meters tall, the maximum

Buildings Owned by
Mitsubishi Estateheight for buildings according to regulations at the time, the Marunuouchi Building set the standard for
the Marunouchi skyline to follow. In addition, because of its functional street layout, the area became

Hibiya Park

Existing Buildings

Imperial Palace

informally known as the “New York Block.”
Faced with rapidly increasing demand for office space in Marunouchi during the period of rapid
Harumi Dorieconomic growth during the Showa era, the construction of large buildings began. Under a secondHibdevelopment stage, the small city blocks were consolidated into larger blocks and roads were

iya

Sta

tion

widened. This general improvement plan gave Marunouchi the form that we recognize today. Buildings
eventually exceeded heights of 100 meters, yet with the abundant greenery and wide moats of the

,C

hiy

oda

Lin

e

Hibiya DoriHibiya Station, Toei Mita Line

Otemachi Station, Toei Mita Line

Nijubashimae Station, Chiyoda Line

Otemachi Station, Chiyoda Line
Eitai DoriThe current and third Marunouchi Redevelopment started in 1998. In the first ten years (the firststage), six projects centered primarily in the area in front of Tokyo Station were completed.

Gyoko DoriBabasaki Dorineighboring Imperial Palace, the business area has preserved its orderly and aesthetic appearance.

Otemachi Station, Hanzomon Line
Marunouchi Naka Dori· The Marunouchi Building is a crossroads of communications thatsymbolizes the new Marunouchi era.

Hibiya Station, Hibiya Line· The restored Industry Club of Japan also serves as the headquarters

Yurakucho Station, Yurakucho Line

for Mitsubishi UFJ Trust and Banking Corporation

rak

uc

· The multi-site development Marunouchi OAZO stands on theSton· The multifunctional Shin-Marunouchi Building and the Marunouchi

Tokyo Station, JR Keiyo Line

Ginza Station, Marunouchi Lineregulations allowing the transfer of unused air rights
Building form a gateway to the area

JR Yokosuka Line
Tokyo Station, JR Sobu Line

Tokyo Central Post OfficeatiTokyo International Forum

former headquarters of Japan National Railways· The Tokyo Building was the first in Japan to take advantage ofhoMarunouchi Central Exit
Marunouchi South Exit

Marunouchi North Exit

Tokyo Station

Ginza Station, Hibiya Line

· Hong Kong’s renowned Peninsula Hotel opens in Tokyo
These projects are transforming Marunouchi into a lively, bustling area.
Ginza Station, Ginza Line

Marunouchi Redevelopment Project

Otemachi Station, Tozai Line

Tokyo Station, Marunouchi LineYu

Otemachi Station, Marunouchi Line

1. Hibiya Kokusai Building
2. Yurakucho Denki Building
3. Yurakucho Building
4. Shin-Yurakucho Building
5. Kokusai Building
6. Shin-Kokusai Building
7. Shin-Nisseki Building
8. Fuji Building
9. Shin-Tokyo Building
10. Kishimoto Building
11. Marunouchi Naka Dori Building
12. Ministry of Education, Culture,
Sports, Science and Technology
Building
13. Mitsubishi Building
14. Tokyo Ginko Kyokai Building
15. Otemachi Building
16. Shin-Otemachi Building
17. Nippon Building
18. Nippon Steel Building
19. JFE Shoji Building
20. Mitsubishi Soken Building
21. Mizuho Corporate Bank Ltd.
Head Office Building
22. The Bank of Tokyo-Mitsubishi
UFJ Otemachi Building

First Stage (1998-2007)
1. Marunouchi Building
2. The Industry Club of Japan and
Mitsubishi UFJ Trust andBanking Building
3. Marunouchi OAZO
4. Tokyo Building
5. Shin-Marunouchi Building
6. The Peninsula Tokyo

Second Stage (2008-2017)
1. Marunouchi Park Building
Ginza 1-Chome Station, Yurakucho Line

Planned Completion Spring 2009

2. Togin Building
Planned Completion 2012
*Years indicate fiscal years ending
March 31.

8 ANNUAL REPORT 2007

ANNUAL REPORT 2007

9

ANNUAL REPORT 2007

10

Grand Design

Innovative & Attractive Urban Development

he Peninsula Tokyo Completed in May 2007
Opened in September 2007

Tokyo Building
Completed in October 2005

Marunouchi Building
Completed in August 2002

Shin-Marunouchi Building
Completed in April 2007

COHERENT GRAND DESIGN AND CONTINUOUS DEVELOPMENT

A Rising New City

LINKING THE PAST, PRESENT,AND TOMORROWThe First Stage (Closing in 2007)

The Industry Club of Japan and Mitsubishi UFJ Trustand Banking Building Completed in March 2003

Marunouchi OAZO
Completed in August 2004

Japan’s leading business district also has thenations best transportation access. With 20 railway
lines and 13 stations in the area, a station in
Marunouchi can be reached within a three to fiveminute’s walk from any building in the area. There
are more than 4,000 offices in Marunouchi,
employing approximately 240,000 people, and over
900,000 people are said to visit the area every day.

The development of Marunouchi began in 1894 with the construction of Mitsubishi Ichigokan. The
rapid succession of red brick buildings constructed thereafter gave rise to the nickname the “London
Block.” When Tokyo Station opened in 1914, development expanded towards the station area. This
was accompanied by a shift to large modern American style buildings, which reached its highpoint in
1923 with the construction of the Marunouchi Building. As an office building with a shopping arcade on
the first floor, it became a long-time favorite spot in the city. Standing 31 meters tall, the maximum

Buildings Owned by
Mitsubishi Estateheight for buildings according to regulations at the time, the Marunuouchi Building set the standard for
the Marunouchi skyline to follow. In addition, because of its functional street layout, the area became

Hibiya Park

Existing Buildings

Imperial Palace

informally known as the “New York Block.”
Faced with rapidly increasing demand for office space in Marunouchi during the period of rapid
Harumi Dorieconomic growth during the Showa era, the construction of large buildings began. Under a secondHibdevelopment stage, the small city blocks were consolidated into larger blocks and roads were

iya

Sta

tion

widened. This general improvement plan gave Marunouchi the form that we recognize today. Buildings
eventually exceeded heights of 100 meters, yet with the abundant greenery and wide moats of the

,C

hiy

oda

Lin

e

Hibiya DoriHibiya Station, Toei Mita Line

Otemachi Station, Toei Mita Line

Nijubashimae Station, Chiyoda Line

Otemachi Station, Chiyoda Line
Eitai DoriThe current and third Marunouchi Redevelopment started in 1998. In the first ten years (the firststage), six projects centered primarily in the area in front of Tokyo Station were completed.

Gyoko DoriBabasaki Dorineighboring Imperial Palace, the business area has preserved its orderly and aesthetic appearance.

Otemachi Station, Hanzomon Line
Marunouchi Naka Dori· The Marunouchi Building is a crossroads of communications thatsymbolizes the new Marunouchi era.

Hibiya Station, Hibiya Line· The restored Industry Club of Japan also serves as the headquarters

Yurakucho Station, Yurakucho Line

for Mitsubishi UFJ Trust and Banking Corporation

rak

uc

· The multi-site development Marunouchi OAZO stands on theSton· The multifunctional Shin-Marunouchi Building and the Marunouchi

Tokyo Station, JR Keiyo Line

Ginza Station, Marunouchi Lineregulations allowing the transfer of unused air rights
Building form a gateway to the area

JR Yokosuka Line
Tokyo Station, JR Sobu Line

Tokyo Central Post OfficeatiTokyo International Forum

former headquarters of Japan National Railways· The Tokyo Building was the first in Japan to take advantage ofhoMarunouchi Central Exit
Marunouchi South Exit

Marunouchi North Exit

Tokyo Station

Ginza Station, Hibiya Line

· Hong Kong’s renowned Peninsula Hotel opens in Tokyo
These projects are transforming Marunouchi into a lively, bustling area.
Ginza Station, Ginza Line

Marunouchi Redevelopment Project

Otemachi Station, Tozai Line

Tokyo Station, Marunouchi LineYu

Otemachi Station, Marunouchi Line

1. Hibiya Kokusai Building
2. Yurakucho Denki Building
3. Yurakucho Building
4. Shin-Yurakucho Building
5. Kokusai Building
6. Shin-Kokusai Building
7. Shin-Nisseki Building
8. Fuji Building
9. Shin-Tokyo Building
10. Kishimoto Building
11. Marunouchi Naka Dori Building
12. Ministry of Education, Culture,
Sports, Science and Technology
Building
13. Mitsubishi Building
14. Tokyo Ginko Kyokai Building
15. Otemachi Building
16. Shin-Otemachi Building
17. Nippon Building
18. Nippon Steel Building
19. JFE Shoji Building
20. Mitsubishi Soken Building
21. Mizuho Corporate Bank Ltd.
Head Office Building
22. The Bank of Tokyo-Mitsubishi
UFJ Otemachi Building

First Stage (1998-2007)
1. Marunouchi Building
2. The Industry Club of Japan and
Mitsubishi UFJ Trust andBanking Building
3. Marunouchi OAZO
4. Tokyo Building
5. Shin-Marunouchi Building
6. The Peninsula Tokyo

Second Stage (2008-2017)
1. Marunouchi Park Building
Ginza 1-Chome Station, Yurakucho Line

Planned Completion Spring 2009

2. Togin Building
Planned Completion 2012
*Years indicate fiscal years ending
March 31.

8 ANNUAL REPORT 2007

ANNUAL REPORT 2007

9

ANNUAL REPORT 200710

Marunouchi Park Building

LINKING THE PAST, PRESENT,AND TOMORROW
T h e S e c o n d S t a g e ( To w a rd 2 0 1 7 )“Broader and Deeper”—Progress Towards Stage II
The first stage of the Marunouchi Redevelopment Project, encompassing the redevelopment of thearea in front of Tokyo Station and the upgrading of Naka Dori, has created a lively and bustling area.
A wide range of shops, restaurants and open-air events provide a rich lifestyle—only available in
Marunouchi.
Mitsubishi Estate is engaging in novel activities at the Shin-Marunouchi Building, including the“Japan Incubation Village,” a center of business creation, and Ecozzeria , a place for the pursuit ofenvironmental harmony. Progress continues on building a community for the next generation in
keeping with the area’s role as a portal into Japan.
The second stage of the Marunouchi Redevelopment Project will begin in 2008, with seven or

the joint renovation and development of the block containing the Togin Building, the Sumitomo Trusteight buildings to be rebuilt during the ten-year period. This will enliven the whole district from theand Banking Co., Ltd. Tokyo Building and the Mitsubishi UFJ Trust and Banking Corporation Tokyo

area in front of Tokyo Station extending to Otemachi, Marunouchi and Yurakucho, further developing

Building. Completion is scheduled for the fiscal year ending March 31, 2012.

the district’s business functions while broadening its diversity.

Since the street corner where Mitsubishi Ichigokan was originally built ushered in Japan’s firstmodern office district, Marunouchi’s development is focused on creating a bustling center of business

The first project of the second stage is the Marunouchi Park Building, planned for completion in thethat satisfies the people it attracts while offering first-class cultural activities. Now, in a new era, thespring of 2009. The project includes Mitsubishi Estate’s point of departure in its long journey of

Mitsubishi Estate Group is not only developing Marunouchi’s urban functions in response to thecreating communities—the restoration of Mitsubishi Ichigokan as a museum. The second project isneeds of global business, it is also promoting harmony between the city and the environment while
enhancing the district’s welcoming atmosphere. These efforts will lead to the creation of new
attractions based on the area’s history, arts and other cultural assets. Leveraging each one of these
attractions, the Group’s goal is to create a richer and more fulfilling city life by establishing a total
area management system and integrating public and private services, thereby creating value that
only Marunouchi can provide.

Ichigokan Square

Marunouchi Naka DoriThe Most Exciting and Interactive City
11 ANNUAL REPORT 200712 ANNUAL REPORT 2007

ANNUAL REPORT 2007 13

Marunouchi Park Building

LINKING THE PAST, PRESENT,AND TOMORROW
T h e S e c o n d S t a g e ( To w a rd 2 0 1 7 )“Broader and Deeper”—Progress Towards Stage II
The first stage of the Marunouchi Redevelopment Project, encompassing the redevelopment of thearea in front of Tokyo Station and the upgrading of Naka Dori, has created a lively and bustling area.
A wide range of shops, restaurants and open-air events provide a rich lifestyle—only available in
Marunouchi.
Mitsubishi Estate is engaging in novel activities at the Shin-Marunouchi Building, including the“Japan Incubation Village,” a center of business creation, and Ecozzeria , a place for the pursuit ofenvironmental harmony. Progress continues on building a community for the next generation in
keeping with the area’s role as a portal into Japan.
The second stage of the Marunouchi Redevelopment Project will begin in 2008, with seven or

the joint renovation and development of the block containing the Togin Building, the Sumitomo Trusteight buildings to be rebuilt during the ten-year period. This will enliven the whole district from theand Banking Co., Ltd. Tokyo Building and the Mitsubishi UFJ Trust and Banking Corporation Tokyo

area in front of Tokyo Station extending to Otemachi, Marunouchi and Yurakucho, further developing

Building. Completion is scheduled for the fiscal year ending March 31, 2012.

the district’s business functions while broadening its diversity.

Since the street corner where Mitsubishi Ichigokan was originally built ushered in Japan’s firstmodern office district, Marunouchi’s development is focused on creating a bustling center of business

The first project of the second stage is the Marunouchi Park Building, planned for completion in thethat satisfies the people it attracts while offering first-class cultural activities. Now, in a new era, thespring of 2009. The project includes Mitsubishi Estate’s point of departure in its long journey of

Mitsubishi Estate Group is not only developing Marunouchi’s urban functions in response to thecreating communities—the restoration of Mitsubishi Ichigokan as a museum. The second project isneeds of global business, it is also promoting harmony between the city and the environment while
enhancing the district’s welcoming atmosphere. These efforts will lead to the creation of new
attractions based on the area’s history, arts and other cultural assets. Leveraging each one of these
attractions, the Group’s goal is to create a richer and more fulfilling city life by establishing a total
area management system and integrating public and private services, thereby creating value that
only Marunouchi can provide.

Ichigokan Square

Marunouchi Naka DoriThe Most Exciting and Interactive City
11 ANNUAL REPORT 200712 ANNUAL REPORT 2007

ANNUAL REPORT 2007 13

Marunouchi Park Building

LINKING THE PAST, PRESENT,AND TOMORROW
T h e S e c o n d S t a g e ( To w a rd 2 0 1 7 )“Broader and Deeper”—Progress Towards Stage II
The first stage of the Marunouchi Redevelopment Project, encompassing the redevelopment of thearea in front of Tokyo Station and the upgrading of Naka Dori, has created a lively and bustling area.
A wide range of shops, restaurants and open-air events provide a rich lifestyle—only available in
Marunouchi.
Mitsubishi Estate is engaging in novel activities at the Shin-Marunouchi Building, including the“Japan Incubation Village,” a center of business creation, and Ecozzeria , a place for the pursuit ofenvironmental harmony. Progress continues on building a community for the next generation in
keeping with the area’s role as a portal into Japan.
The second stage of the Marunouchi Redevelopment Project will begin in 2008, with seven or

the joint renovation and development of the block containing the Togin Building, the Sumitomo Trusteight buildings to be rebuilt during the ten-year period. This will enliven the whole district from theand Banking Co., Ltd. Tokyo Building and the Mitsubishi UFJ Trust and Banking Corporation Tokyo

area in front of Tokyo Station extending to Otemachi, Marunouchi and Yurakucho, further developing

Building. Completion is scheduled for the fiscal year ending March 31, 2012.

the district’s business functions while broadening its diversity.

Since the street corner where Mitsubishi Ichigokan was originally built ushered in Japan’s firstmodern office district, Marunouchi’s development is focused on creating a bustling center of business

The first project of the second stage is the Marunouchi Park Building, planned for completion in thethat satisfies the people it attracts while offering first-class cultural activities. Now, in a new era, thespring of 2009. The project includes Mitsubishi Estate’s point of departure in its long journey of

Mitsubishi Estate Group is not only developing Marunouchi’s urban functions in response to thecreating communities—the restoration of Mitsubishi Ichigokan as a museum. The second project isneeds of global business, it is also promoting harmony between the city and the environment while
enhancing the district’s welcoming atmosphere. These efforts will lead to the creation of new
attractions based on the area’s history, arts and other cultural assets. Leveraging each one of these
attractions, the Group’s goal is to create a richer and more fulfilling city life by establishing a total
area management system and integrating public and private services, thereby creating value that
only Marunouchi can provide.

Ichigokan Square

Marunouchi Naka DoriThe Most Exciting and Interactive City
11 ANNUAL REPORT 200712 ANNUAL REPORT 2007

ANNUAL REPORT 2007 13

Corporate GovernanceInternal Controls

ensures that the Board of Directors of the Company has sufficient

The Mitsubishi Estate Group seeks to raise true corporate value andBasic Philosophy of Corporate Governancekeeping a close eye on governance, we are taking steps to speed up

With respect to compliance, Mitsubishi Estate has formulated thetime and information to submit an alternative proposal to theachieve its basic mission of contributing to the creation of athe decision-making process on urgent issues such as theGroup’s basic mission, code of conduct and action guidelines, whichshareholders. It also helps prevent acquisitions that do not contributemeaningful society through urban development. To that end, we

acquisition of real estate assets through bids by introducing a special

define standards of conduct for officers and employees to follow.

to corporate value or shareholder interests by allowing the Company

recognize the importance of achieving a harmonious balance

director system prescribed in the Japan Company Law.

The Company is working to thoroughly instill these standards

time to discuss and negotiate with the acquirer for the benefit of the

To facilitate our response to new business opportunities, while

throughout the Group and to achieve rigorous compliance throughshareholders. Moreover, the Plan establishes an independent

Executive Officers and the Establishment ofConsultative Bodies

programs carried out by the CSR Department. Mitsubishi Estate hascommittee composed of independent outside directors. In the event

established its Group Management Rules for the management ofof an allotment of equity warrants without contribution, a type ofsights on perpetuating a management that is focused on the

At Mitsubishi Estate, 30 executive officers are in charge of businessbusiness and other types of risk. Based on these rules, we haveacquisition countermeasure, the independent directors will, after

common interests of shareholders and works to ensure transparency

execution in each of their respective areas of responsibility.

positioned the CSR Committee as a body responsible for promoting

having considered specific concrete exigencies, make a point ofand objectivity as it takes steps to further improve its management

Moreover, important decisions are deliberated upon by the Executive

Group risk management, and the Risk Management Subcommittee

advising Mitsubishi Estate’s Board of Directors, who will decide on asystem to attain efficient and sound Group management. Above all,Committee. The Executive Committee meets, as a general rule,

as a working-level body that compiles information related to risk

course of action only after having given full and serious

we view corporate governance as one of the most important

once each week with the president, the executives of each business

management. The executive in charge of the CSR Department has

consideration to said advice.

challenges that we face and, therefore, we are constantly working

division and standing statutory auditors in attendance.

been given overall responsibility for risk management, and the

between corporate growth and the interests of our various
stakeholders.
Based on this mission, the Mitsubishi Estate Group has set its

toward the creation of an optimal Group governance structure.

In addition, a number of consultative bodies have been

general staff department managers of each division and corporate

established, including the Strategic Investment Committee and thestaff department managers have been given the title of “Risk

Corporate Governance System

CSR Committee. The Strategic Investment Committee assesses andManagement Officers” and overall control and responsibility for the

Mitsubishi Estate is a company with internal statutory auditors. In

considers investment proposals, acting as a subordinate body to the

management of risk within their departments.

addition to the General Meeting of Shareholders, the highest

Executive Committee, and the Strategic Planning Committee is

The Internal Audit Office was established and implements

decision-making body, it has established a Board of Directors

responsible for deliberating overall Group management strategy.

internal controls in line with annual and medium-term auditing plans,composed of the 13 directors (including four outside directors)

The CSR Committee consults on Group CSR issues and sharesand verifies whether internal controls are being appropriately

and the Company’s four statutory auditors (including three outside

relevant information on this subject with others. Through thesemaintained and managed.

statutory auditors), and a Board of Statutory Auditors composed ofbodies, we are creating a structure to facilitate and ensure thatall statutory auditors. Moreover, the Company has introduced an

appropriate decisions are made in the area of management strategy

executive officer system and is taking steps to strengthen and more

and in the execution of business affairs.

clearly define oversight and business execution functions.

Countermeasures to Acquisitions
and Other Matters
At the Board of Directors Meeting held on May 10, 2007, Mitsubishi

Auditors and the Board of Auditors

Estate resolved to introduce a basic policy regarding those who

Directors and the Board of Directors

Statutory auditors at Mitsubishi Estate attend meetings of the Board

would assume control of the Company’s financial matters and

The Board of Directors at Mitsubishi Estate holds regularly

of Directors. In line with the annual audit plan, they audit the

management policy, and, as a concrete measure in line with thescheduled monthly meetings as well as extraordinary meetings whenbusiness execution status of the Board of Directors and of staff inbasic policy, a plan for dealing with major acquisitions of thenecessary to settle important business matters and oversee theeach division.

Company’s shares (hereinafter the “Plan”) was discussed andbusiness and affairs of the Company. In June 2007, to ensureStanding statutory auditors attend important meetings including

approved at the General Meeting of Shareholders on June 28, 2007.

greater management transparency and further fortify management

the Executive Committee and collaborate with the Internal Audit

and oversight of the Board of Directors, the number of outside

Office and the CSR Department through regularly scheduledacquisition of Mitsubishi Estate shares, shareholders will be able todirectors was increased by one and the term that a board member

meetings. Furthermore, the Office of Statutory Auditors was

decide whether said major acquisition contributes to Mitsubishi

may serve was reduced from two years to one.

established to assist the work of auditors.

Estate’s corporate value and their interests. The Plan further

14 ANNUAL REPORT 2007

The purpose of the Plan is that, in the event of a major

ANNUAL REPORT 200715

Corporate GovernanceInternal Controls

ensures that the Board of Directors of the Company has sufficient

The Mitsubishi Estate Group seeks to raise true corporate value andBasic Philosophy of Corporate Governancekeeping a close eye on governance, we are taking steps to speed up

With respect to compliance, Mitsubishi Estate has formulated thetime and information to submit an alternative proposal to theachieve its basic mission of contributing to the creation of athe decision-making process on urgent issues such as theGroup’s basic mission, code of conduct and action guidelines, whichshareholders. It also helps prevent acquisitions that do not contributemeaningful society through urban development. To that end, we

acquisition of real estate assets through bids by introducing a special

define standards of conduct for officers and employees to follow.

to corporate value or shareholder interests by allowing the Company

recognize the importance of achieving a harmonious balance

director system prescribed in the Japan Company Law.

The Company is working to thoroughly instill these standards

time to discuss and negotiate with the acquirer for the benefit of the

To facilitate our response to new business opportunities, while

throughout the Group and to achieve rigorous compliance throughshareholders. Moreover, the Plan establishes an independent

Executive Officers and the Establishment ofConsultative Bodies

programs carried out by the CSR Department. Mitsubishi Estate hascommittee composed of independent outside directors. In the event

established its Group Management Rules for the management ofof an allotment of equity warrants without contribution, a type ofsights on perpetuating a management that is focused on the

At Mitsubishi Estate, 30 executive officers are in charge of businessbusiness and other types of risk. Based on these rules, we haveacquisition countermeasure, the independent directors will, after

common interests of shareholders and works to ensure transparency

execution in each of their respective areas of responsibility.

positioned the CSR Committee as a body responsible for promoting

having considered specific concrete exigencies, make a point ofand objectivity as it takes steps to further improve its management

Moreover, important decisions are deliberated upon by the Executive

Group risk management, and the Risk Management Subcommittee

advising Mitsubishi Estate’s Board of Directors, who will decide on asystem to attain efficient and sound Group management. Above all,Committee. The Executive Committee meets, as a general rule,

as a working-level body that compiles information related to risk

course of action only after having given full and serious

we view corporate governance as one of the most important

once each week with the president, the executives of each business

management. The executive in charge of the CSR Department has

consideration to said advice.

challenges that we face and, therefore, we are constantly working

division and standing statutory auditors in attendance.

been given overall responsibility for risk management, and the

between corporate growth and the interests of our various
stakeholders.
Based on this mission, the Mitsubishi Estate Group has set its

toward the creation of an optimal Group governance structure.

In addition, a number of consultative bodies have been

general staff department managers of each division and corporate

established, including the Strategic Investment Committee and thestaff department managers have been given the title of “Risk

Corporate Governance System

CSR Committee. The Strategic Investment Committee assesses andManagement Officers” and overall control and responsibility for the

Mitsubishi Estate is a company with internal statutory auditors. In

considers investment proposals, acting as a subordinate body to the

management of risk within their departments.

addition to the General Meeting of Shareholders, the highest

Executive Committee, and the Strategic Planning Committee is

The Internal Audit Office was established and implements

decision-making body, it has established a Board of Directors

responsible for deliberating overall Group management strategy.

internal controls in line with annual and medium-term auditing plans,composed of the 13 directors (including four outside directors)

The CSR Committee consults on Group CSR issues and sharesand verifies whether internal controls are being appropriately

and the Company’s four statutory auditors (including three outside

relevant information on this subject with others. Through thesemaintained and managed.

statutory auditors), and a Board of Statutory Auditors composed ofbodies, we are creating a structure to facilitate and ensure thatall statutory auditors. Moreover, the Company has introduced an

appropriate decisions are made in the area of management strategy

executive officer system and is taking steps to strengthen and more

and in the execution of business affairs.

clearly define oversight and business execution functions.

Countermeasures to Acquisitions
and Other Matters
At the Board of Directors Meeting held on May 10, 2007, Mitsubishi

Auditors and the Board of Auditors

Estate resolved to introduce a basic policy regarding those who

Directors and the Board of Directors

Statutory auditors at Mitsubishi Estate attend meetings of the Board

would assume control of the Company’s financial matters and

The Board of Directors at Mitsubishi Estate holds regularly

of Directors. In line with the annual audit plan, they audit the

management policy, and, as a concrete measure in line with thescheduled monthly meetings as well as extraordinary meetings whenbusiness execution status of the Board of Directors and of staff inbasic policy, a plan for dealing with major acquisitions of thenecessary to settle important business matters and oversee theeach division.

Company’s shares (hereinafter the “Plan”) was discussed andbusiness and affairs of the Company. In June 2007, to ensureStanding statutory auditors attend important meetings including

approved at the General Meeting of Shareholders on June 28, 2007.

greater management transparency and further fortify management

the Executive Committee and collaborate with the Internal Audit

and oversight of the Board of Directors, the number of outside

Office and the CSR Department through regularly scheduledacquisition of Mitsubishi Estate shares, shareholders will be able todirectors was increased by one and the term that a board member

meetings. Furthermore, the Office of Statutory Auditors was

decide whether said major acquisition contributes to Mitsubishi

may serve was reduced from two years to one.

established to assist the work of auditors.

Estate’s corporate value and their interests. The Plan further

14 ANNUAL REPORT 2007

The purpose of the Plan is that, in the event of a major

ANNUAL REPORT 200715

Corporate Social Responsibility
Directors, Statutory Auditors, and Executive Officers
Mitsubishi Estate believes that the fundamental mission of corporate social responsibility (CSR) is the achievement of a truly
meaningful society through the development of an environmentally friendly and appealing urban environment that fully satisfies
the people who live, work and seek leisure there. Under this concept, Mitsubishi Estate has established a CSR Committee withthe president as committee chairperson and is conducting a variety of CSR activities that leverage the special traits of the
Mitsubishi Estate Group.

Compliance

Environmental Efforts

Mitsubishi Estate considers compliance as not simply the adherence

As part of our environmental preservation activities, we haveto legal standards, but as meeting the expectations of people ininstituted an environmental management system, establishedDirectors andPresident & Representative Director

Keiji Kimura

Executive

Chief Executive Officer

Keiji Kimurasociety at large, and also extending to adherence to internal

environmental goals and are working for continuous improvement.

Statutory Auditors

Representative Director

Nobuyuki Iizuka

Officers

Deputy President

Nobuyuki Iizuka

company rules and ethical corporate standards. Furthermore,

With the prevention of global warming becoming an ever-more

Representative Director

Toshio Nagashima

Executive Vice President

Kazuo Odagawa

because we recognize how essential compliance is to the profit baseurgent issue, we have implemented energy conservation programs

Representative Director

Hiroshi Danno

Executive Vice President

Hiroharu Koinumaof the Company, we view the creation of a compliance system as ourin cooperation with building tenants and, as a means of further

Representative Director

Takaya Endo

Executive Vice President

Toshio Nagashima

most important management challenge. Moreover, each and every

promoting energy conservation in custom-built housing, we have

Representative Director

Seiichiro Suzuki

Executive Vice President

Hiroshi Danno

employee is deepening his and her awareness of compliance issues

promoted widespread use of Aerotech, a central heating, coolingand putting them into practice.

and ventilation system. Having been proven to dramatically reduce

Director & Executive Counsel

Shigeru Takagi

Executive Vice President

Takaya Endo

Director

Hiroyoshi Ito

Executive Vice President

Seiichiro Suzuki

Director

Hirotaka Sugiyama

Executive Vice President

Toyohisa Miyauchi

Director

Isao Matsuhashi

Senior Executive Officer

Mitsuo Iwai

Director

Fumikatsu Tokiwa

Senior Executive Officer

Masaaki Kono

Director

Kazuya Okamoto

Senior Executive Officer

Takao Yagihashi

Director

Shu Tomioka

Senior Executive Officer

Standing Statutory Auditor

Eiji Tan

Standing Statutory Auditor

CO2 emissions and heating and cooling costs, the further spread of

Risk Management

Aerotech is one of our environmental goals.

To maintain proper risk assessment and management of a wide
range of internal and external business risks, Mitsubishi EstateSocial Contributions

established its CSR Committee to take the lead position in

As a good corporate citizen, the Mitsubishi Estate Group engages inmaintaining proper risk assessment and management of a widea wide range of social contributions primarily centered on

Hiroyoshi Ito

range of internal and external business risks. We have further

communities, environmental preservation, social welfare and culture

Senior Executive Officer

Yutaka Yanagisawa

established the Risk Management Council as a working-level bodyand the arts. Specific programs include Marunouchi Street Galleries

Kunihiro Inoue

Senior Executive Officer

Yuzuru Shibagakitasked with gathering risk management-related information, and we

conducted in cooperation with the HAKONE OPEN-AIR MUSEUM

Statutory Auditor

Kenjiro Hata

Senior Executive Officer

Hiroshi Nakajima

are implementing risk management cross-sectionally throughout theand the Dazzling Art Competition, a picture contest held annually for

Statutory Auditor

Akio Utsumi

Senior Executive Officer

Masao Ouchi

Company.

and in support of the future potential of disabled children.

Senior Executive Officer

Hirotaka Sugiyama

Executive Officer

Toshihide Yoshimura

Executive Officer

Kazuo Takahashi

Executive Officer

Yasuo Fujiwara

Executive Officer

Ichiro Watarai

Executive Officer

Megumu Ono

Executive Officer

Toshihiko Kazama

Executive Officer

Yoshikazu Fukasawa

Executive Officer

Shiro Fujiwara

Executive Officer

Masamichi Ono

Executive Officer

Soichiro Hayashi

Executive Officer

Jo KatoExecutive Officer

Naoto Aiba

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

(As June 28, 2007)

Ecozzeria is a place for enjoying harmonious environmental interaction in the Marunouchi area
(opened in May 2007 on the 10th floor of the Shin-Marunouchi Building)

16 ANNUAL REPORT 2007

The 5th annual Dazzling Art Competition exhibits 50 outstanding pictures(in a temporary enclosure during the construction of the Marunouchi Park Building)

ANNUAL REPORT 200717

Corporate Social Responsibility
Directors, Statutory Auditors, and Executive Officers
Mitsubishi Estate believes that the fundamental mission of corporate social responsibility (CSR) is the achievement of a truly
meaningful society through the development of an environmentally friendly and appealing urban environment that fully satisfies
the people who live, work and seek leisure there. Under this concept, Mitsubishi Estate has established a CSR Committee withthe president as committee chairperson and is conducting a variety of CSR activities that leverage the special traits of the
Mitsubishi Estate Group.

Compliance

Environmental Efforts

Mitsubishi Estate considers compliance as not simply the adherence

As part of our environmental preservation activities, we haveto legal standards, but as meeting the expectations of people ininstituted an environmental management system, establishedDirectors andPresident & Representative Director

Keiji Kimura

Executive

Chief Executive Officer

Keiji Kimurasociety at large, and also extending to adherence to internal

environmental goals and are working for continuous improvement.

Statutory Auditors

Representative Director

Nobuyuki Iizuka

Officers

Deputy President

Nobuyuki Iizuka

company rules and ethical corporate standards. Furthermore,

With the prevention of global warming becoming an ever-more

Representative Director

Toshio Nagashima

Executive Vice President

Kazuo Odagawa

because we recognize how essential compliance is to the profit baseurgent issue, we have implemented energy conservation programs

Representative Director

Hiroshi Danno

Executive Vice President

Hiroharu Koinumaof the Company, we view the creation of a compliance system as ourin cooperation with building tenants and, as a means of further

Representative Director

Takaya Endo

Executive Vice President

Toshio Nagashima

most important management challenge. Moreover, each and every

promoting energy conservation in custom-built housing, we have

Representative Director

Seiichiro Suzuki

Executive Vice President

Hiroshi Danno

employee is deepening his and her awareness of compliance issues

promoted widespread use of Aerotech, a central heating, coolingand putting them into practice.

and ventilation system. Having been proven to dramatically reduce

Director & Executive Counsel

Shigeru Takagi

Executive Vice President

Takaya Endo

Director

Hiroyoshi Ito

Executive Vice President

Seiichiro Suzuki

Director

Hirotaka Sugiyama

Executive Vice President

Toyohisa Miyauchi

Director

Isao Matsuhashi

Senior Executive Officer

Mitsuo Iwai

Director

Fumikatsu Tokiwa

Senior Executive Officer

Masaaki Kono

Director

Kazuya Okamoto

Senior Executive Officer

Takao Yagihashi

Director

Shu Tomioka

Senior Executive Officer

Standing Statutory Auditor

Eiji Tan

Standing Statutory Auditor

CO2 emissions and heating and cooling costs, the further spread of

Risk Management

Aerotech is one of our environmental goals.

To maintain proper risk assessment and management of a wide
range of internal and external business risks, Mitsubishi EstateSocial Contributions

established its CSR Committee to take the lead position in

As a good corporate citizen, the Mitsubishi Estate Group engages inmaintaining proper risk assessment and management of a widea wide range of social contributions primarily centered on

Hiroyoshi Ito

range of internal and external business risks. We have further

communities, environmental preservation, social welfare and culture

Senior Executive Officer

Yutaka Yanagisawa

established the Risk Management Council as a working-level bodyand the arts. Specific programs include Marunouchi Street Galleries

Kunihiro Inoue

Senior Executive Officer

Yuzuru Shibagakitasked with gathering risk management-related information, and we

conducted in cooperation with the HAKONE OPEN-AIR MUSEUM

Statutory Auditor

Kenjiro Hata

Senior Executive Officer

Hiroshi Nakajima

are implementing risk management cross-sectionally throughout theand the Dazzling Art Competition, a picture contest held annually for

Statutory Auditor

Akio Utsumi

Senior Executive Officer

Masao Ouchi

Company.

and in support of the future potential of disabled children.

Senior Executive Officer

Hirotaka Sugiyama

Executive Officer

Toshihide Yoshimura

Executive Officer

Kazuo Takahashi

Executive Officer

Yasuo Fujiwara

Executive Officer

Ichiro Watarai

Executive Officer

Megumu Ono

Executive Officer

Toshihiko Kazama

Executive Officer

Yoshikazu Fukasawa

Executive Officer

Shiro Fujiwara

Executive Officer

Masamichi Ono

Executive Officer

Soichiro Hayashi

Executive Officer

Jo KatoExecutive Officer

Naoto Aiba

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

(As June 28, 2007)

Ecozzeria is a place for enjoying harmonious environmental interaction in the Marunouchi area
(opened in May 2007 on the 10th floor of the Shin-Marunouchi Building)

16 ANNUAL REPORT 2007

The 5th annual Dazzling Art Competition exhibits 50 outstanding pictures(in a temporary enclosure during the construction of the Marunouchi Park Building)

ANNUAL REPORT 2007

17

BUSINESS INFORMATION(Millions of yen)

Revenue from operations

Building Business Segment
Building Business segment revenues are derived mainly
from building development and leasing in Japan. This
segment is also engaged in building management,
parking facilities, district heating and cooling, and otheroperations.

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

Urban Development& Investment Management Segment
Urban Development & Investment Management
segment revenues are derived from the development ofincome-generating real estate for investment purposes,
asset management, and related activities.

International Business Segment
International Business segment revenues are derived
from the development and leasing of buildings
conducted through U.S.-based Rockefeller Group, Inc.

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

Custom-Built Housing Segment
Custom-Built Housing segment revenues are derived
from contract construction of custom-built housing andrelated activities through Mitsubishi Estate Home Co.,Ltd.

Hotel Business Segment

Other Segment

231,514
23,979204,213

2006/3

17,736

38,216

2007/3

23,52034,274

2006/3

14,169226,444

2007/322,005
193,223

2006/3

2006/3

2007/3

2006/3

2007/3

2007/323,19917,7901,181
17,103
227

34,550(169)
41,477(404)

33,493
1,616
32,3991,247

28,851
6,082
30,775

2006/3

2007/3

Other segment revenues are derived from related
operations other than the aforementioned.
2006/318 ANNUAL REPORT 2007

312,099
89,492

2007/3

2006/3

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

100,2142006/3

Hotel Business segment revenues are derived from theoperation of Royal Park Hotels.

Real Estate Services Segment

353,956

2007/3

2007/3Operating income

7,753

4,260
798
4,717
747

REAL ESTATE CONSULTING & SOLUTION DEPARTMENT
Leveraging the Resources of the Entire Group to Expand Business Opportunities in
Proposal-Based MarketingStanding at the heart of Mitsubishi Estate’s strategic marketing structure, the Real Estate Consulting & Solution Department works tofoster deeper ties with corporate clients through proposal-based marketing, which is conducted across the Group as a whole. Making
full use of its accumulated real estate development, planning and management know-how, the Real Estate Consulting & Solution
Department is active in efforts to realize maximum value for its corporate clients.

The Mitsubishi Estate Group Total Sales Structure
The structure of the Real Estate Consulting & Solution Department isPursuing Business Opportunities in the Public
Sector and Large-Scale Joint Developments

independent from Mitsubishi Estate’s eight business divisions. To

In its quest to generate new business opportunities, the Mitsubishi

provide the best consultation and solutions service to our clients, weEstate Group as a whole is engaged in gathering information on theleverage the resources of the entire Group and create proposals

real estate needs of the public sector and in considering thethrough collaboration that transcends these divisions. In addition tocommercial feasibility of large-scale building complex development

its full commitment to existing clients, the Department is also

projects. The Real Estate Consulting & Solution Department’s

vigorously prospecting for new business.

Development Planning Office serves as an information center andliaises with all of the Group’s business divisions regarding theseprojects, which maximizes the Group’s collective strengths, andtakes steps to win new business opportunities.

Maximize asset efficiency Risk management Funds procurement Real estate investment

C O N S U L T I N GDeterminecurrent
statusCUSTOMERS

Conduct
researchandanalysis

Considerinitiatives
andproposals

REAL
ESTATE-RELATEDPLANNING,PROPOSALS,AND SERVICES

Proposal determination
Implementation
Analysis and review

S O L U T I O N

Real estate
Real estatedevelopment business investment-related
business● Development method
proposals● Financing plan support● Project management● Effective application andcollaboration business(equivalent exchange,
commission business,term leasehold interest
method)● Provisional use● Reconstruction● Real estate investment
strategy formulation
support● Market research andanalysis● Due diligence● Acquisition support● Property management● Asset management

Real estate liquidity● Real estate-backed
financing support● Securitization● Specified real estate
joint business● Sales and leaseback● Real estate brokeragebusiness

Building operational
management● Operational
management plan
analysis and proposals● Long-term maintenanceplan consulting● Building, retail facility,and hotel operational
management
consignment● Sub-leasing● Tenant marketing

Comprehensive
building analysis

Construction● Office building and retailfacility construction● Earthquake resistance● Detached-housing,analysisleased residence,● Facility managementcompany dormitory● Energy conservation andand housing construction
IT-oriented construction● Temple, hospital, andand facilities
other specialized● Interior and exteriorbuilding construction
renovation● Residence and office● Barrier-free facility
building renovation
construction● Aging-prevention
construction and facilities● Conversion

Design and supervision Lifestyle services● Environmental● Complex housing,assessment and researchcompany dormitory andhousing operation● Urban development
and management
planning-related, PFI
consulting● Community residence
operation for the elderly● Environmental and civilengineering-related● Complex housing andconsulting, design andother Internet connection
supervision
services● Construction management● Various constructionbuilding design andsupervision● Interior, exterior, and otherdesign and supervision

ANNUAL REPORT 2007 19

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

The Shin-Marunouchi Building
The grand opening was held in April 2007. From the first floor below ground to the seventh floor above ground is acommercial zone of 153 shops (113 retail shops and 40 restaurants and bars), and on the 10th floor we have created
Ecozzeria, an ecology zone to promote harmonious environmental coexistence in the Marunouchi area.

20 ANNUAL REPORT 2007

Mitsubishi Ichigokan
Mitsubishi Ichigokan, a red brickbuilding that is slated for complete
restoration, is to be used as a
museum, which, as a key culturaland arts complex, will help expand
the cultural horizons of the area.

Kobe-Sanda Premium Outlets
Opened in July 2007, and modeled
after the upscale residential area of
Pasadena in the suburbs of Los
Angeles, U.S.A., under the conceptof an open-spaced premium adultshopping center, customers canenjoy shopping for products fromapproximately 90 different brands.

The Marunouchi Park Building
As the first project of the second stage of the Marunouchi Redevelopment,
it is currently under construction with completion targeted by spring 2009.

Promoting Increased Interaction in the Marunouchi
District

Shoji Building, the Furukawa Building and the Marunouchi Yaesu

With its overwhelming infrastructure and corporate scale, the district

block. The area will function as the hub adjoining the Marunouchi

Building in order to reorganize the area as one comprehensive city

offers a variety of business opportunities. Aiming to transformand Yurakucho districts. Mitsubishi Ichigokan, which was completed

Marunouchi into a world-class center of dynamic interaction,in 1894 as Marunouchi’s first office building, will be restored as far

Mitsubishi Estate promotes the upspring of various exchanges

as possible to its original state using the original blueprints, survey

through supporting venture businesses and concentrating academic

maps, and preserved elements, and then used as a museum,

centers in the district, thereby expanding the circles of diverse

positioned as a main attraction for cultural exchange and interaction

exchanges that extend beyond the business world.

in the district. Adding to the aforementioned initiatives, Mitsubishi

The Second Stage of the Marunouchi
Redevelopment

Togin Building in conjunction with adjoining sites.

In an effort to raise awareness of Tokyo as an international center

Project to date, the second stage will encompass broader and moreamong business people all over the world, to maximize its fullcomprehensive plans to rejuvenate the Otemachi, Marunouchi andpotential, and to deliver new functions that meet today’s andYurakucho districts, an area of approximately 120 hectares.

Estate announced that it has started a second project to rebuild theBased on the achievements of the Marunouchi Redevelopment

tomorrow’s business needs, Mitsubishi Estate is acting beyond thefirst stage of the Marunouchi Redevelopment, a 10-year program

Expanding the Shopping Center Business
Throughout Japan

encompassing the upgrade, reconstruction and renovation of a

The Building Business includes shopping centers in Tokyo (inportion of the Marunouchi district. A series of new buildings have

Odaiba), Yokohama, Hakata and other locations, and work is also

been completed, beginning with the Marunouchi Building in August

proceeding to ensure a greater retail presence on Marunouchi Naka

2002, followed by the the Industry Club of Japan and Mitsubishi UFJ

Dori as part of its redevelopment. In addition, Mitsubishi Estate is

Trust and Banking Building in March 2003, the Marunouchi OAZO in

expanding outlet mall operations nationwide through Chelsea Japanrole of developer to that of a producer. In 1998, we commenced theAugust 2004 and the Tokyo Building in October 2005. The Shin-Co., Ltd., a partnership vehicle capitalized by Mitsubishi Estate,

Marunouchi Building, which opened in April 2007, together with the

U.S.-based Chelsea Property Group, Inc. and Sojitz Corporation.

Marunouchi Building form a symbolic and stately urban landscapeChelsea Japan operates outlet malls in Gotemba (Shizuoka

that serves as a main point of entry point befitting Tokyo. Completion

Prefecture), Izumisano (Osaka Prefecture), Sano (Tochigiof the Peninsula Tokyo, scheduled for September 2007, will

Prefecture), Tosu (Saga Prefecture) and Toki (Gifu Prefecture).

conclude the first stage of the Marunouchi Redevelopment.

Chelsea Japan also opened Kobe-Sanda Premium Outlets in Kobe

From 2008, and over the next 10 years, we will push ahead with

(Hyogo Prefecture) in July 2007, its sixth facility in Japan, and plans

the second stage of the Redevelopment. For the Marunouchi Park

to open Sendai-Izumi Premium Outlets (tentative name) in the

Building and Mitsubishi Ichigokan, which comprise the first project ofautumn of 2008.

the second stage, we will simultaneously redevelop the Mitsubishi
ANNUAL REPORT 2007 21

RESIDENTIAL BUSINESS
Providing High-Quality Homes that Unerringly Fulfill Market Needs
The Residential Business aims to provide ideal living environments in concert with healthy and fulfilling lifestyles by developing andmarketing condominiums, single-unit homes and residential land, as well as engaging in businesses such as condominium management
and consulting services for the optimal use of real estate. At the same time, Mitsubishi Estate manages fitness clubs and otherrecreational facilities.

Hongo Park House The Premier Fort

Arisugawa Park House

Located in Hongo, Bunkyo Ward, this large 207-unit condominium is now under construction in
partnership with TOWA REAL ESTATE DEVELOPMENT CO., LTD. With the goal of creating
durable and permanent residences, Mitsubishi Estate is constructing safe, earthquake-proof
condominiums with open pillar- and beam-free spaces that employ Thick Wall and Floor
Structure (TWFS) construction methods, and providing advanced security systems.

Arisugawa Park House is a 23-unit condominium located at Azabu Juban in Minato Ward,situated on the north side of Arisugawa Memorial Park with its abundant greenery. The 23
units have an average floor space of 120m2 and 30 parking spaces are available, providing a
comfortable lifestyle.

Growth in the Condominium Business Spurred byPrime Locations and Market-Oriented Product
Planning

unit are freely designed by the owners and built to match their

Sales of condominiums particularly in the Tokyo Metropolitan area

steadily. In addition, Mitsubishi Estate is reinforcing its focus onlifestyles. Fulfilling the diversifying needs of the market, four suchcondominiums have already been built and growth is proceeding

continued to increase. This growth is attributable to Mitsubishi

quality assurance. Utilizing its proprietary disclosure system, it

Estate’s ability to supply properties that unerringly fulfill market

provides an easy-to-understand written record of property features,

needs. Boasting excellent product planning capabilities based on thefacilities and quality evaluation at each stage of design, construction

skillful exploitation of a site’s potential, Mitsubishi Estate strives forand completion. This information is supplemented by a maintenancecompetitive advantages by focusing on properties in popular urban

report after individual property owners take occupation.

areas that offer superior and convenient location, large-scale

In the single-unit home business, Mitsubishi Estate has createdproperties with comprehensive communal facilities built with thea new brand called “dreams design,” with an underlying theme ofenvironment in mind, high-rise condominiums that provide“living spaces that reflect individuality and offer daily comfort.”

spectacular views, and collaboration with leading designers andThrough the provision of detached houses under this brand,

firms from a variety of industries.

Mitsubishi Estate is promoting residential developments based on a

Mitsubishi Estate developed and is marketing its STYLE HOUSE
series of full order-made condominiums, in which the layouts of each

22 ANNUAL REPORT 2007

more distinctive customer-oriented concept.

Style House Minami-Ogikubo
Located in a quiet residential neighborhood in Suginami Ward, Tokyo, Style House Minami-Ogikubo is a 15-unit fullorder-made-type condominium. Its trademark louver-fitted outside northern wall adds a quality and elegance that isreflected in the common interior hallways.

Park House Akasaka-Hikawa
This is the first property of Mitsubishi Estate’s condominium reconstruction business that makes use of the condominium
reconstruction law. Located in a quiet location on a hill at Akasaka in Minato Ward, Tokyo, the condominium’s original 63
units were transformed into 97 units. Mitsubishi Estate participates as an associate partner in the property with 48 units.

The need to reconstruct condominiums, which are now considered

Condominium Reconstruction

Contributing to a Healthy Lifestyle through the
Fitness Businesssocial capital, is expected to increase as buildings age. To promote

Mitsubishi Estate is also engaged in a number of leisure services

more effective use of real estate, Mitsubishi Estate established thesuch as the management of golf courses, sporting facilities andCondominium Reconstruction Office in April 2007 to actively support

businesses associated with increased leisure time and the promotion

such reconstruction needs and to initiate a framework for businessof good health. Against the backdrop of a rapidly aging society, Liv

cooperation with landowners. At present, we are cooperatively

Sports Co., Ltd. in particular is actively expanding activities in the

involved in five reconstruction projects, mainly in the Tokyo

fitness business. With the opening of Fitness & Onsen Liv Yamato, a

Metropolitan area, while working to steadily increase the number of

new type of fitness center that combines fitness facilities with a hotthese projects.

spring bath, in July 2007, Liv Sports has expanded its network to
include 10 branches of its fitness clubs. In addition, Liv Sports
operates futsal clubs and massage facilities, as well as other fitness
clubs in the Tokyo Metropolitan area. Looking toward the future, Liv
Sports will actively pursue expansion with family-oriented branches
in suburban areas around Tokyo.

ANNUAL REPORT 2007 23

URBAN DEVELOPMENT & INVESTMENT MANAGEMENT
Prioritizing Development and Management in Business Opportunity Expansion
In the real estate investment market, demand is increasing for income-generating real estate. Taking this into consideration, the Urban
Development & Investment Management business has positioned the development and management of quality real estate at the heartof business activities. Going forward, we are pursuing a two-tiered business model, promoting development functions in concert withmanagement functions.

Minamimachi
Dori Center BuildingThis building is in a prime location
only six-minutes walking distancefrom JR Sendai Station. Designedwith tradition in mind, the project
consists of a building complex
housing offices and retail shopsthat resemble older, more
traditional buildings with pillars
and posts, but are furnished withthe latest equipment.
Construction was completed in
March 2007.

Harumi Center BuildingThis project utilizes development-based securitization methods, with development
financing from non-recourse loans and equity financing from the joint-development
partners. A multi-purpose building containing offices and retail shops, this redevelopment
and land demarcation project in the Harumi district is moving forward, and as a new
business zone, it is attracting a great deal of interest. Construction of the building wascompleted in November 2006.

Actively Promoting the Development Business byStrengthening Asset Solutions Capabilities

apartments, in an effort to address the diverse needs of theinvestment market. Mitsubishi Estate is involved in the Edogawa

In the context of the development function, we are fostering theWard Shinsuna 3-chome Shopping Center Project (tentative name),development business of income-generating real estate by

and other retail facility projects. In residential property development

optimizing the timing of sales of prime investment products after(tentative name), Mitsubishi Estate is pushing forward with theconstruction completion and the commencement of operations.

development of the PARK HABIO brand of condominium complexes

In March 2007, construction of the Minamimachi Dori Center
Building in Aoba Ward, Sendai City, was completed, followed in April

for leasing purposes by leveraging its performance and know-how
accumulated in the development of the Park House brandby the Akihabara Center Place Building in Kanda Aioicho in Chiyoda

condominiums. After construction completion of PARK HABIO

Ward, Tokyo. Mitsubishi Estate is also active in a number of

KYOBASHI in September 2004, the first building of the series,

development projects including the Shiodome Stage I-2 Area Project

Mitsubishi Estate supplied a further seven buildings including PARK

(tentative name), which forms part of the large-scale Shiodome

HABIO KOISHIKAWA TOMISAKA, completed in February 2007.

Shiosite redevelopment project.

Beyond that, Mitsubishi Estate has a number of developments

Mitsubishi Estate does not limit its activities solely to officeunderway, especially in central Tokyo, and plans to continuebuildings; it also engages in the development of a broad range of real

supplying high-quality condominiums in central city locations that

estate, including retail facilities, residential properties and serviced

meet a variety of needs.

24 ANNUAL REPORT 2007

PARK HABIO KOISHIKAWATOMISAKA
Located in Koishikawa, Bunkyo Ward, one ofTokyo’s leading educational areas, these
condominiums for lease are situated in a
residential area of abundant greenery withconvenient access to the city center.
Construction was completed in February 2007.

Shiodome Stage I-2 Area Project (tentative name)
This is a large-scale project that uses development-based securitization methods. Thisdevelopment will be the last large-scale project within the 31-hectare mixed commercial zoneof the Shiodome Shiosite redevelopment project.

In its development projects, Mitsubishi Estate is utilizing specialpurpose companies and other vehicles to limit business investment
risk, although direct investment may be utilized depending on theReal Estate Asset Management Co., Ltd., which engages in asset
management for Japan Real Estate Investment Corporation, a J-REIT.
Business is steadily growing at Mitsubishi Jisho Investment

scale of development. Through a thorough decision-making process,

Advisors, which is building a private equity fund that invests in real

Mitsubishi Estate endeavors to choose an optimal investment

estate including commercial facilities, residential homes and offices.

method for each development project.

Continuing to secure management opportunities, Mitsubishi Jisho

Looking forward, Mitsubishi Estate is making every effort toInvestment Advisors aims to acquire new projects, increase thesecure more business opportunities by strengthening asset solutions

number of funds it manages and expand the balance of assets undercapabilities to maximize asset value for real estate customers.

management.

Providing a Broad Range of Specialized Services
for Real Estate Investment

Estate strives to expand business opportunities through growth inMitsubishi Estate is developing a fee-based business throughsocioeconomic needs for urban redevelopment.

Focusing on both development and management, Mitsubishi
the real estate investment market and by responding to

Mitsubishi Jisho Investment Advisors, Inc., which provides
comprehensive services related to real estate investment, and Japan

ANNUAL REPORT 2007 25

INTERNATIONAL BUSINESSA Globally Growing Real Estate Leasing and Development BusinessIn the International Business, Mitsubishi Estate operates mainly through Rockefeller Group, Inc. (RGI), which owns, leases andmanages office buildings in such locations as New York and London, and is expanding its real estate development business across theUnited States and in London and Shanghai. In March 2007, Mitsubishi Estate sold RGI subsidiary Cushman & Wakefield as part of a
restructuring of its International Business portfolio. In addition to the real estate development business, our core international business,
we are taking steps to expand our real estate investment advisory business.

Central St Giles Redevelopment Project in London

Bow Bells House Redevelopment Project in London

A joint redevelopment project with Legal & General, this complex comprises 66,000m2 ofoffices, retail shops and residences. Construction is scheduled to start in autumn 2007 andfinish at the end of 2009.

Located in the heart of London’s financial district, the Bow Bells House Redevelopment
Project calls for the construction of an office building with a total 20,000m2 in office space. The
project is scheduled for completion in November 2007.

The McGraw-Hill Building in New York City

Shanghai Bund de Rockefeller ProjectWith 51 floors above ground and five floors below ground, theMcGraw-Hill Building boasts total floor space of 237,000m2. Locatedin Manhattan, New York, this office building was completed in March
1972. Mitsubishi Estate acquired an interest in the building in April 1990.

This large-scale development located in the Waitanyuan area of Shanghai,
China, encompasses the mixed-use development of 93,000m2 comprisingresidential housing, retail shops, a boutique hotel and other facilities.

Advancing the Real Estate Development Businessacross the United States, the United Kingdom and
China

London. The project comprises a building with offices and retail

In the United States, Mitsubishi Estate owns interests in the

addition, Mitsubishi Estate recently acquired the River Plate House,

McGraw-Hill Building and the Time-Life Building in New York City’s

an office building, which is situated in an unusually excellent location

Manhattan. In addition, we are aggressively expanding our real

within the City of London, as it aggressively seeks out real estate

estate development business across the United States with projects

development opportunities.

that include suburban office buildings, distribution facilities and homes.
Mitsubishi Estate participated in the joint Central St Giles

shops and another building with residences (total floor area:
66,000m2), and is scheduled for completion by the end of 2009. In

In China, RGI has undertaken a development project in the
Waitanyuan area of Shanghai in cooperation with the Shanghai New

Redevelopment Project in London with Legal & General, a major life

Huangpu Group and Sinolink International Trading Co., Ltd. The

insurance company in the United Kingdom. Following in the

project involves the development of a complex composed primarilyfootsteps of the Paternoster Square Redevelopment Project and theof residences, retail shops and hotels with a site area of

Bow Bells House Redevelopment Project, we are scheduled to begin

approximately 17,000m2 and a total floor area of roughly 93,000m2.

construction in autumn 2007 on our third redevelopment project in

26 ANNUAL REPORT 2007

ARCHITECTURAL DESIGN & ENGINEERING
Offering Reliability and Advanced Technological Know-How Based Upon an Extensive
Record of Performance
At the core of Mitsubishi Estate’s Architectural Design & Engineering business are Mitsubishi Jisho Sekkei Inc. (MJS), a businessengaged in the design and administration of construction and civil engineering projects, building renovation work, projects related tourban and regional development, as well as comprehensive consulting, and MEC Design International Corporation, which directs
interior design and construction projects.

International House of Japan Project
The project is a preservation and refurbishment of a building that represents Japan’s modernism. A comprehensive
overhaul of the building’s ageing facilities bring it into the modern era, making it more earthquake-resistant, economical,
and functional. MJS won an award from the Architectural Institute of Japan for its work on the project.

Otemon Gakuin University Central and No. 6 Building
On the University’s 120th anniversary, MJS was awarded the bid from six contenders and completed the building in
December 2006. The new building has become a symbol of the University while maintaining the continuity of theoverall view of the campus, its flow lines and the facades of the buildings.

Robust Architectural Design & Engineering Coupledwith Expansion into Peripheral Business Operations

landscaping and environment, signs and lighting. In January 2007,
MJS also won the international bid to develop the Crowne Plaza

Major projects completed during the fiscal year ended March 31,

Shanghai. Since 2003 MJS has exchanged personnel and2007 included the Central and No. 6 Building at Otemon Gakuin

information with its partners among leading architects andUniversity, the Yomiuri Hokkaido Building, Minami-Aoyama Terrace

developers in Shanghai, and conducted reciprocal visits by top-level

Tokiwamatsu Forest, and the preservation and revitalization of theexecutives. This cooperation will be maintained and strengthened as

International House of Japan. In the fiscal year ending March 31,

MJS expands its activities and China’s high pace of economic

2008, the Shin-Marunouchi Building, the Peninsula Tokyo and thegrowth continues.

Yurakucho Station Area Development Project are targeted forcompletion. Looking toward the future, MJS will continue efforts tosecure orders in new and refurbished architectural design andengineering projects while actively sharpening its competitive edge

Business Collaboration with Kisaburo ItoStrengthens our Involvement in the Provision of
Healthcare Facilities

in the business domains of construction management, private

MJS and Kisaburo Ito Architects & Engineers, a highly accomplishedfinancing initiative (PFI) projects and district heating and coolingfirm in consulting and design of healthcare facilities, formed aservices, all of which are primed for market expansion.

business partnership in March 2007. The partners enhance their

Further to winning the bid for the master plan concerning thetechnical prowess through personnel transfers and leverage theirdevelopment of the new Pudong district in Shanghai in the fiscal

particular expertise to respond jointly to design competitions, PFI

year ended March 31, 2006, MJS won two later bids for the designand other opportunities to obtain new business in facilities for theof an underground station area, and for establishing the criteria forprovision of healthcare.

ANNUAL REPORT 2007 27

CUSTOM-BUILT HOUSING
Offering Homes for Premium Lifestyles
The Custom-Built Housing business seeks to supply the kind of quality housing that is the foundation of a rewarding life. ThroughMitsubishi Estate Home Co. Ltd., our principal vehicle in these activities, Mitsubishi Estate undertakes construction contracts forcustom-built housing for individuals as well as housing development companies.

PURE — the healthy design house
The housing theme suggests a lifestyle healthy in mind and body

Flexibly Designed Housing for Individual Lifestyles

closely collaborates with customers to contribute to realizing their

Mitsubishi Estate Home mainly adopts the two-by-four construction

dreams.

method to provide its customers with safe and comfortable living

In April 2007, Mitsubishi Estate Home announced its newenvironments. Leveraging its accumulated technical know-how andlifestyle housing product, the healthy design “PURE” house, which

expertise, the company boasts stringent quality standards, offering

incorporates the theme of health in mind and body. Also based on

maximum protection from earthquakes, durability and energy

Super Two-by-Four Aerotech, “PURE” house offers superior air

efficiency. The company’s “Aerotech” brand is a mainstay of thequality and living space versatility, creating an abundant family

Custom-Built Housing business. Moreover, the company’s advanced

lifestyle, healthy in body and mind.

proprietary technology Super Two-by-Four Aerotech* construction

Mitsubishi Estate Home is also active in fostering businessmethod achieves greater flexibility and convenience for building

opportunities with companies engaged in custom-built homes. Based

construction. Respecting each customer’s lifestyle, desires andon its residential design know-how, accumulated over a number ofpreferences for their daily lives, and taking advantage of its

years, the company endeavors to create comfortable living

technological prowess and added value, Mitsubishi Estate Home

environments on an individual and neighborhood-wide basis.

* Super Two-by-Four Aerotech is a two-by-four construction method that was developed
through the combination of Aerotech with Mitsubishi Estate Home Co., Ltd.’s unique newtechnology system. Super Two-by-Four Aerotech conserves more energy and offers
greater durability than conventional construction methods, and also enables a higher
proportion of interior space.

28 ANNUAL REPORT 2007

HOTEL BUSINESS
Enhancing Brand Power and Management
In the Hotel Business, Royal Park Hotels and Resorts Co., Ltd. integrates the administration and management of each hotel to ensure
consistency throughout the hotel chain, to enhance management efficiency and to improve the level of management. With hotels inTokyo, Yokohama, Sendai and other locations, the Royal Park hotel chain comprises a network of six hotels offering 2,056 guestrooms.

Yokohama Royal Park Hotel
The hotel underwent a total renovation in fiscal 2006. The Urban
Spa Floor, a highly specialized mini-resort, was installed on the67th floor.

Royal Park Shiodome Tower

Sendai Royal Park Hotel

The Royal Park Shiodome Tower restaurant Harmony,
located in Shiodome Media City, offers a stylish setting
and flexible service.

Located in the suburbs of Sendai City, the Sendai Royal Park
Hotel is distinguished by its elegant external facade. The
hotel boasts an expansive traditional Japanese garden that
accentuates the beauty of each season and houses wedding
facilities. Another of its extensive services is an esthetic salon
operated by the hotel.

A New Style of Hotel that Supports Business
Opened in July 2003 in Shiodome, Tokyo, the Royal Park Shiodome

As part of an initiative to enhance the hotel chain, in July 2004
we launched a central reservation office, a first for a locally owned

Tower has set out to achieve a new paradigm in hotel services,

hotel chain in Japan. Using this system, it is possible to directly

including Japan’s first Mandara Spa for relaxation, and the use of amake reservations on a Web site for rooms at hotels in Japan andtimesharing service where members are able to use guestrooms onaround the world.

an hourly basis. These unique services have sustained a high rate ofoccupancy. Mitsubishi Estate plans to use the development andFurthermore, in April 2006, Royal Park Hotels and Resortscommenced business collaboration with THE OKAMI, an

management know-how gained from the Royal Park Shiodome

organization of 19 Japanese-style ryokan hotels that are members ofTower to create new business opportunities.

various hotel associations covering the Izu area. Through thiscollaboration, Royal Park Hotels and Resorts provides reservation

Increasing the Brand Value of Royal Park Hotels
through a Management Focus on Customer Delightcorrespondence services via the Internet.

Based on the “Best for the Guest” philosophy of the Royal Park
Hotels, we take one step beyond customer satisfaction by aiming todelight our guests.

ANNUAL REPORT 2007 29

REAL ESTATE SER VICES
Meticulously Responding to the Varied Real Estate Needs of Customers
The Real Estate Services business has instituted a system that enables highly customized responses to individual customer needs.
Handled primarily through Mitsubishi Real Estate Services Co., Ltd., the goal is to provide one-stop-shopping of high-quality real estateservices covering all areas including real estate brokerage, condominium sales agency and office and residential property leasing
services. Armed with an ample portfolio of real estate services, the company established the Marunouchi Salon at the Marunouchi
Building in September 2007, from where it responds to a wide range of real estate needs.

Hiroo Garden Forest

Park House Gallery Akasaka Club

Mitsubishi Estate and Mitsui Fudosan Residential Co., Ltd. are jointly constructing Hiroo Garden Forest, a largescale, 474-unit condominium complex located in Tokyo’s Shibuya Ward. Mitsubishi Real Estate Services Co., Ltd.
has been appointed as the agent for condominium sales.

This location serves as a sales base for high-grade condominiums incentral Tokyo. A luxurious model room is available for private viewing
only by advance reservation.

Real Estate Brokerage Services

procedures such as property registration and other administrative

Mitsubishi Real Estate Services engages in a wide variety of realmatters, as well as condominium buyers in application procedures

estate brokerage businesses, ranging from the purchase, sale andfor mortgage loans. Through a comprehensive range of services,

leasing of commercial properties such as buildings and factory sites,

Mitsubishi Real Estate Services provides reliable support toand individual properties such as condominiums, single-unit homes

customers in their selling activities. In the area of residential

and residential land, to consulting services that facilitate the optimal

development and sales, the company is on hand to provide total

application of customers’ real estate. In addition, we provide support

support to developers. We offer a full range of services including site

to company management through Consulting M, a consulting service

information for potential condominium development, inspections andthat leads in the field of enhancing corporate value throughappraisal, market research, product planning, and advertising andcorporate real estate (CRE) strategies. Mitsubishi Real Estate

promotions planning.

Services also boasts a nationwide network of branches and sales
offices that are connected online. Through these means, Mitsubishi

Office and Residential Leasing Services

Real Estate Services is consistently able to provide the most up-to-

Mitsubishi Real Estate Services is engaged in a full range of officedate real estate information.

and residential property leasing services. The company offers asublease system, under which it leases an entire property from theSales Agency Services for Properties such as
Condominiums

owner and sublets to tenants under a master-lease agreement. It
also provides a property management system that includes a

Qualified staff, who are well versed in the unique features andcomprehensive range of leasing services. Rounding out its total

characteristics of individual properties, as well as real estate finance,

support system, the company also serves investors and asset

law, taxation and related matters, are on hand to assist customers inmanagers by satisfying wide-ranging needs in leasing management

the sale of properties such as condominiums. Mitsubishi Real Estatethrough its lease-management support system.

Services also offers specialist staff to assist customers in peripheral

30 ANNUAL REPORT 2007

Financial Section
Contents
Financial Review

32-34

Consolidated Statements of Income

35

Consolidated Balance Sheets

36-37

Consolidated Statements of Changes
in Net Assets

38-39

Consolidated Statements of Cash Flows40

Notes to Consolidated Financial Statements 41-56
Report of Independent Auditors

57

ANNUAL REPORT 2007 31

Financial Review

SUMMARY
In the fiscal year ended March 31, 2007, Mitsubishi Estate reported
historic highs in each of its major revenue and earnings categories.
Revenue from operations increased 12.3% compared with theprevious fiscal year. On the earnings front, operating income
climbed 20.7%, while net income surged 74.9% year on year.
In the Buildings segment, strong results were fueled bycontributions for the full fiscal year mainly from new buildings inconnection with the Marunouchi Redevelopment Project and thesale of assets. Conditions were also positive in the Residential
Development segment, which benefited from an improvement incondominium gross profit margins and an increase in the ofcondominiums sold, and in the Urban Development & Investment
Management segment, which benefited from gains on sales ofdevelopment properties. Buoyed by positive results, revenue fromoperations increased for the third year in succession. Operating
income climbed for the fifth consecutive year, while net income rose
for the third year in a row.

REVENUE FROM OPERATIONSRevenue from operations for the fiscal year ended March 31, 2007
was ¥947,641 million, an increase of ¥103,424 million, or 12.3%,
compared with the previous fiscal year. Details of results andoperating conditions for each business segment are provided asfollows.
In the Building Business segment, despite the impact of adecline in revenue from the closure of existing buildings forreconstruction as part of the Marunouchi Redevelopment Project,results benefited from an increase in occupancy rates andcontributions for the full fiscal year from the Tokyo Building, which
was completed in October 2005, as well as contributions from thedisposition of a portion of equity held in the Sanno Grand Building,the Harumi Park Building, the new wing of the Harumi Park Building,

Revenue from Operations (Billions of yen)

Operating Income(Billions of yen)and the Nishiki Park Building, the latter of which was acquired in
March 2005. As a result of the above factors, revenue from segment
operations increased ¥41,857 million, or 13.4%, to ¥353,956 million.
On a year-on-year basis, revenue in the Residential Businesssegment climbed ¥27,301 million, or 13.4%, to ¥231,514 million,
thanks an increase in the number of condominiums sold by 575 to
3,445.
In the Urban Development & Investment Management segment,
revenue advanced due to the sale of Kitanomaru Square, a building
completed in January 2006, and the inclusion of a part of ananonymous partnership. As a result, revenue from operations
increased ¥3,942 million, or 11.5%, to ¥38,216 million.
Focusing mainly on the robust real estate markets in Europe
and the United States, revenue from Mitsubishi Estate’s
International Business segment rose ¥33,221 million, or 17.2%, to¥226,444 million. This was primarily attributed to increased revenue
from the real estate brokerage business of Cushman & Wakefield,
Inc., and to stable operations in real estate development andleasing businesses.
In the Architectural Design & Engineering segment, an increasein the number of completed projects, a decline in the sales cost ratio
and other factors contributed to an increase in revenue of ¥687
million, or 4.0%, to ¥17,790 million.
In the Custom-Built Housing segment, revenue decreased¥6,927 million, down 16.7% year on year, to ¥34,550 million, due togreater consolidation of sales bases in the Tokyo and Osaka
metropolitan areas compared to the previous fiscal year.
In the Hotel Business segment, despite the sale of the Atsugi
Royal Park Hotel, brisk business in the banquet-related business at
the Yokohama Royal Park and other hotels contributed to anincrease in revenue from operations of ¥1,094 million, or 3.4%, to¥33,493 million.

Net Income(Billions of yen)

Net Income Per Share (Basic)

97.7

947.6
844.2

(Yen)

70.95

166.2

775.4
681.7

137.6

679.9
118.2
96.0

36.0

2003/3 2004/3 2005/3 2006/3 2007/3

32 ANNUAL REPORT 2007

2003/3 2004/3 2005/3 2006/3 2007/3

42.60

55.8

103.7

35.0

36.2

2003/3 2004/3 2005/3 2006/3 2007/3

27.61

26.96

27.93

2003/3 2004/3 2005/3 2006/3 2007/3

In the Real Estate Services segment, higher revenue from realestate brokerage was more than offset by a decline in home sales
agency revenue caused by a change in accounting standards forrecording real estate brokerage fees from the previous fiscal year,
resulting in a decrease in revenue from operations of ¥1,924 million,
or 6.3%, to ¥28,851 million.
Revenue from the Other segment declined ¥457 million, down
9.7%, to ¥4,260 million.

million compared to the previous fiscal year. This was mainly due toincreases in interest and dividend income as well as to gain on
sales of shares of affiliated companies in “other, net.” Interest anddividend income increased ¥1,324 million to ¥4,112 million. Equity
in earnings of unconsolidated subsidiaries and affiliates climbed¥1,538 million to ¥8,094 million. Interest expenses totaled ¥18,873
million, a year-on-year improvement of ¥1,003 million. Other, net
income jumped by ¥37,639 million to ¥18,470 million.

ANALYSIS OF INCOME

NET INCOME

Compared with the previous fiscal year, operating income increased¥28,551 million, or 20.7%, to ¥166,165 million.
Operating income in the Building Business segment climbed
12.0% due to the full fiscal year contributions from buildings
completed during the fiscal year ended March 31, 2006. In addition,
operating income in the Residential Business segment rose 35.2%,
resulting from the improvement in gross profit margins, and surged
66.0% in the Urban Development & Investment Management
segment, owing to the distribution of profits from investments in ananonymous partnership in association with the sale of properties.
On a year-on-year basis, operating income in the International
Business segment fell 5.1%, reflecting a decline in fee income froma Group investment advisory company. In the Real Estate Services
segment, operating income dropped 21.6% on the back of lower
sales brokerage revenue resulting from changes in accounting
standards related to the recording of sales. Operating income in theArchitectural Design & Engineering and Hotel Business segments
improved while the operating loss in the Custom-Built Housing
segment narrowed.

Compared with the previous fiscal term, income before income
taxes and minority interests increased ¥70,056 million, or 64.9%, to¥177,969 million. Net income in the fiscal year under review rose
¥41,837 million, or 74.9%, to ¥97,662 million, and net income pershare was ¥70.95.

ANALYSIS OF FINANCIAL POSITION(1) Consolidated Cash Flow
On a consolidated basis, cash and cash equivalents (hereafter“cash”) at the end of the fiscal year under review rose ¥38,999
million to ¥206,089 million. The main sources of cash were income
before income taxes and minority interests, depreciation andamortization, proceeds from sales of property and equipment,
proceeds from issuance of corporate bonds and increase in longterm borrowings. The main uses of cash were purchases of property
and equipment, repayment of corporate bonds and repayment oflong-term borrowings.

In the fiscal year under review, other income (expenses) amounted
to net other income of ¥11,804 million, an improvement of ¥41,505

Cash Flows from Operating Activities
Net cash provided by operating activities was ¥150,710 million,
down ¥19,034 million compared with the previous fiscal year. For
the period under review, income before income taxes and minority
interests amounted to ¥177,969 million and non-cash items such as

Total Assets

Interest-Bearing Debt

OTHER INCOME (EXPENSES)(Billions of yen)

Total Equity(Billions of yen)(Billions of yen)

EBITDA(Billions of yen)

3,447.3
3,124.5
3,007.9 3,068.8

233.4

3,280.2
1,225.7

1,227.5 1,211.9

1,198.4

200.9

1,133.6
1,007.7 1,012.6
840.0

2003/3 2004/3 2005/3 2006/3 2007/3

897.5

920.9

2003/3 2004/3 2005/3 2006/3 2007/3

2003/3 2004/3 2005/3 2006/3 2007/3

178.4
157.6

167.4

2003/3 2004/3 2005/3 2006/3 2007/3

ANNUAL REPORT 2007 33

depreciation and amortization totaled ¥54,257 million. In addition,
Mitsubishi Estate recorded decreases in notes and accounts
receivable as well as equity investments, and an increase in notes
and accounts payable.
Cash Flows from Investing Activities
In the fiscal year under review, net cash used in investing activitieswas ¥85,389 million, a turnaround of ¥115,272 million. This was
mainly attributed to the acquisition of property and equipment.
Cash Flows from Financing Activities
Net cash used in financing activities totaled ¥34,093 million, down
¥98,370 million compared with the previous fiscal year. While
Mitsubishi Estate received cash from the increase in long-termborrowings and the issuance of corporate bonds, this was morethan offset by outflows attributed to the repayment of both long-termborrowings and corporate bonds.
(2) Consolidated Balance Sheets
Compared with the previous fiscal year-end, total assets increased¥167,063 million to ¥3,447,272 million as a result of the operating,investing and financing activities previously mentioned.
Total liabilities, when compared to the previous fiscal year-end,
increased ¥72,496 million to ¥2,186,364 million. Net assets
increased ¥94,568 million to ¥1,260,908 million due primarily to anincrease in retained earnings.
Note: In line with changes to accounting standards adopted in fiscal 2006, figures for“shareholders’ equity” for the fiscal year ended March 31, 2006 have been restated as “netassets.”before interest, taxes, depreciation and amortization (EBITDA) of¥200 billion, to be achieved by the final fiscal year of the Plan,
ending March 31, 2008. Against this target, EBITDA for the fiscal
year ended March 31, 2006 was ¥200.9 billion. Accordingly,
Mitsubishi Estate achieved its goal two years in advance. EBITDA
for the fiscal year under review increased year on year to ¥233.4
billion. Looking to the future, Mitsubishi Estate will continue toposition EBITDA as a core component of its management policies.
To this end, the Company has formulated the fundamental
strategies of rebuilding a dynamic and flexible management
structure, securing an optimal business portfolio, improving its asset
portfolio, and strengthening its development-based real estatesolutions capabilities.
Recognizing the long-term nature of cash flows in its mainstay
Building Business operations, Mitsubishi Estate has adopted afinancial strategy based on the procurement of long-term funds at
stable interest rates. At the present time, Mitsubishi Estate is taking
advantage of favorably low interest rates through the issue of longterm corporate bonds with maturity dates of more than 10 years.
Under its Medium-Term Management Plan, Mitsubishi Estate has
identified the goal to maintain the net balance of interest-bearing
debt as of March 31, 2008 to within five times of EBITDA, and it
promotes management awareness of the level of interest-bearing
debt based on earning capacity. As a result of the repayment ofliabilities and the conversion of convertible bonds to common stock,
the balance of interest-bearing debt as of March 31, 2007 stood at¥1,012.6 billion. Deducting cash and cash equivalents, the netbalance of interest-bearing debt as of the fiscal year-end was¥806.5 billion, clearing the aforementioned target ratio of EBITDA.

MANAGEMENT INITIATIVES AND FINANCIAL STRATEGIESIn its new three-year Medium-Term Management Plan (April 1, 2005
through March 31, 2008), the Company set a goal for earnings

ROA

(%)

ROE

(%)

Interest Coverage Ratio(Times)

9.5
5.3
8.3

4.6

7.4

3.6
4.0
3.3

5.4

4.0
4.3

3.9

4.7

4.0
3.4

2003/3 2004/3 2005/3 2006/3 2007/3

34 ANNUAL REPORT 2007

2003/3 2004/3 2005/3 2006/3 2007/3

2003/3 2004/3 2005/3 2006/3 2007/3

Financial Statements

Consolidated Statements of Income
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2007 and 2006
Millions of yen

Thousands of
U.S. dollars(Note 3)

2007

2006

2007

Revenue from operations¥ 947,641¥ 844,217$ 7,956,016

Cost of revenue from operations(719,337)(650,389)(6,039,274)

Selling, general and administrative expenses(62,137)(56,213)(521,684)

Operating income

166,165

137,614

1,395,057

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

4,112

2,788

34,531(18,873)(19,876)(158,451)

Equity in earnings of unconsolidated subsidiaries and affiliates

8,094

6,556

67,958Other, net (Note 14)

18,470(19,169)

155,067

11,804(29,701)

99,105

177,969

107,913

1,494,162

Current(54,069)(28,509)(453,942)

Deferred(20,100)(17,217)(168,759)(74,169)(45,726)(622,701)(6,137)(6,360)¥ 97,662¥ 55,825

Income before income taxes and minority interests

Income taxes (Notes 1 and 9):

Minority interests
Net income(51,523)$

819,937

See accompanying notes to consolidated financial statements.

ANNUAL REPORT 2007 35

Consolidated Balance Sheets
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
March 31, 2007 and 2006
Millions of yen

Thousands of
U.S. dollars(Note 3)

2007

2006

2007

¥ 201,107¥ 139,605$ 1,688,417

Notes and accounts receivable – trade (Note 7)

33,912

63,763284,718

Marketable securities (Note 4)

6,160

27,28951,718

Allowance for doubtful receivables(421)(3,303)(3,542)Inventories (Note 5)

300,180

305,800

2,520,198

Equity investments (Note 4)

127,099

108,978

1,067,073

Deferred income taxes (Note 9)

36,82738,786309,185

AssetsCurrent assets:
Cash (Notes 7 and 15)

Other current assets
Total current assets

33,70247,758282,953738,568

728,679

6,200,723

Investments:
Investments in and advances to unconsolidated subsidiaries and affiliates

57,571

51,558483,346

Investment securities (Note 4)

300,470

311,519

2,522,628

Other investments (Notes 6 and 7)

132,075

132,584

1,108,849

490,116495,662

4,114,824

Land

1,414,754

1,293,186

11,877,712

Buildings and structures

1,515,603

1,503,768

12,724,400

82,207

102,634

690,181

Total investments

Property and equipment (Note 7):

Machinery and equipment and otherConstruction in progress

88,17028,353740,246

3,100,735

2,927,942

26,032,540(916,496)(931,570)(7,694,539)

Property and equipment, net

2,184,239

1,996,372

18,338,001

Intangible and other assets

34,34859,495288,372¥3,447,272¥3,280,209$28,941,922

Less accumulated depreciation

Total assets
See accompanying notes to consolidated financial statements.

36 ANNUAL REPORT 2007

Millions of yen

Thousands of
U.S. dollars(Note 3)

2007

2006

2007

¥ 140,969¥ 166,746$ 1,183,519

Notes and accounts payable – trade72,30185,502607,015

Accrued income taxes (Note 9)

38,07820,889319,693

Advances and deposits

104,577

95,823877,992

Liabilities and net assets
Current liabilities:
Short-term borrowings and current portion of long-term debt (Note 7)

118,029

76,706990,931

Total current liabilities

Accrued expenses and other current liabilities (Note 9)

473,956445,668

3,979,151

Long-term debt (Note 7)

871,619

841,015

7,317,770

Lease deposits received

306,546

304,189

2,573,640

Accrued employees’ retirement benefits (Note 8)

13,433

11,787112,779

Deferred income taxes (Note 9)

481,667

459,752

4,043,888

Other non-current liabilities

39,14051,456

328,6092,186,364

2,113,868

18,355,839

Total liabilities

Net assets:
Shareholders’ equity (Note 10):
Common stock, without par value:
Authorized—1,980,000,000 shares;
Issued—1,382,518,351 shares in 2007 and136,534

129,736

1,146,286

Capital surplus

1,371,189,197 shares in 2006

165,216

158,421

1,387,089

Retained earnings

324,611

246,246

2,725,307(2,965)(2,024)(24,896)623,396532,381

5,233,786

133,843

142,040

1,123,698

Less treasury stock, at cost
Total shareholders’ equity

Valuation, translation adjustments and others:
Unrealized holding gain on securities
Deferred gains or losses on hedging instruments
Land revaluation reserve
Foreign currency translation adjustments
Total valuation, translation adjustments and others

Stock acquisition rights
Minority interests

161

–

1,353

470,397466,259

3,949,270(2,154)(7,057)(18,090)602,247

601,2425,056,231

79

–

664

35,18532,717295,399

Contingent liabilities (Note 13)
Total net assets

1,260,908

1,166,340

10,586,082

Total liabilities and net assets¥3,447,272¥3,280,209$28,941,922

ANNUAL REPORT 2007 37

Consolidated Statements of Changes in Net Assets
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2007 and 2006

Millions of yen
Shareholders’ equity

Balance at March 31, 2005
Increase arising from conversion of convertible bonds
Cash dividends paid
Net income
Treasury stock
Directors’ and statutory auditors’ bonuses
Land revaluation reserve (Note 1)
Net change in items other than those in shareholders’ equity
Balance at March 31, 2006
Changes in the year:
Increase arising from conversion of convertible bonds
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Directors’ and statutory auditors’ bonuses
Land revaluation reserve (Note 1)
Changes in consolidated subsidiaries and companies
accounted for by the equity method
Net change in items other than those in shareholders’ equity
Total of changes in the year
Balance at March 31, 2007

Commonstock

CapitalsurplusRetainedearnings

Treasurystock¥ 86,534
43,202¥115,236
43,202¥243,577¥(1,800)(11,676)
55,825
(17)

(223)
(5)
(41,474)

129,736

158,421

6,797

6,797

246,246(2,024)(15,132)
97,662
(2)

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

(8)
6,797
¥136,534

6,794¥165,216

78,364¥324,611

Total
shareholders’equity¥443,547
86,404(11,676)
55,825(240)(5)(41,474)
532,381
13,594(15,132)
97,662(1,145)187(5)(4,138)(8)(941)¥(2,965)

91,015¥623,396
Millions of yen

Valuation, translation adjustments and others

Unrealized
gain onsecurities

Balance at March 31, 2005
¥ 68,865
Increase arising from conversionof convertible bonds
Cash dividends paid
Net income
Treasury stock
Directors’ and statutory auditors’ bonuses
Land revaluation reserve (Note 1)
Net change in items other thanthose in shareholders’ equity
73,175
Balance at March 31, 2006
142,040
Changes in the year:
Increase arising from conversionof convertible bonds
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Directors’ and statutory auditors’ bonuses
Land revaluation reserve (Note 1)
Changes in consolidated subsidiaries
and companies accounted forby the equity method
Net change in items other thanthose in shareholders’ equity(8,197)
Total of changes in the year
(8,197)
Balance at March 31, 2007
¥133,843
See accompanying notes to consolidated financial statements.

38 ANNUAL REPORT 2007

Deferred
gains orlosses on
hedging
instruments

Land
revaluation
reserve

Foreigncurrencytranslation
adjustments

Totalvaluation,translation
adjustments
and others

StockacquisitionrightsMinority
interests

Total net
assets¥¥424,785¥(16,268)¥477,382¥ –¥35,303¥ 956,233–

86,404(11,676)
55,825(240)(5)(41,474)–

41,474466,259

9,210(7,057)

123,860
601,242–(2,585)32,717

121,274
1,166,340

13,594(15,132)
97,662(1,145)187(5)(4,138)

(8)
161
161
¥161

4,138
4,138
¥470,397

4,902
4,902
¥ (2,154)

1,005
1,005
¥602,247

79
79
¥79

2,467
2,467
¥35,185

3,552
94,567¥1,260,908

Consolidated Statements of Changes in Net Assets (continued)
Thousands of U.S. dollars(Note 3)
Shareholders’ equity

Balance at March 31, 2006

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equity$1,089,217$1,330,044$2,067,389$(16,993)$4,469,658

57,06957,069Changes in the year:
Increase arising fromconversion of convertible bonds

114,138

Cash dividends paid

(127,042)

Net income

819,937

Purchase of treasury stock
Disposal of treasury stock

(24)

(114)

Directors’ and statutory
auditors’ bonuses
Land revaluation reserve (Note 1)(127,042)
819,937(9,616)(9,616)

1,712

1,573

(45)

(45)

(34,742)(34,742)

(74)

(74)

Changes in consolidated subsidiaries
and companies accounted forby the equity method
Net change in items other thanthose in shareholders’ equity
Total of changes in the year

57,06957,044

657,917(7,903)764,127

Balance at March 31, 2007

$1,146,286$1,387,089$2,725,307$(24,896)$5,233,786

Thousands of U.S. dollars(Note 3)
Valuation, translation adjustments and others

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

Unrealized
gain onsecurities

Deferred
gains orlosses on
hedging
instruments$1,192,518

$

–

Land
revaluation
reserve

Foreigncurrencytranslation
adjustments

Totalvaluation,translation
adjustments
and others

StockacquisitionrightsMinority
interests

Total net
assets$3,914,527$(59,253)$5,047,792$$274,681$9,792,132–

114,138(127,042)
819,937(9,616)
1,573(45)(34,742)(74)(68,819)(68,819)$1,123,698

1,353
1,353
$1,35334,742
34,742$3,949,270

41,163
41,163$(18,090)

8,439
8,439
$5,056,231

664
664
$664

20,71820,718$295,399

29,822
793,949$10,586,082

See accompanying notes to consolidated financial statements.

ANNUAL REPORT 2007 39

Consolidated Statements of Cash Flows
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2007 and 2006

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Loss (gain) on sales or disposal of property and equipment(Gain) loss on sales of beneficial interests in trust of property
and equipment
Gains on sales of securities
Valuation loss on securities
Gains on sale of investment
Valuation loss on inventories
Impairment loss
Equity in net income of affiliates(Decrease) increase in allowancesInterest and dividend income
Interest expense(Decrease) increase in notes and accounts receivable
Decrease (increase) in inventories
Increase in equity investments
Increase in notes and accounts payable(Decrease) increase in lease deposits received
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from sales of marketable securities
Purchases of marketable securities
Proceeds from sales of property and equipment
Purchases of property and equipment
Proceeds from sales of investment securities
Purchases of investment securities
Proceeds from sales of beneficial interests in trust of property
and equipment
Other
Net cash (used in) provided by investing activities
Cash flows from financing activities
Net (decrease) increase in short-term borrowings
Net decrease in commercial paper
Increase in long-term borrowings
Repayment of long-term borrowings
Proceeds from issuance of corporate bonds
Repayment of corporate bonds
Payments of capital reduction to minority shareholders
Cash dividends paid
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents arising from mergers and acquisitions
Cash and cash equivalents at end of year (Note 15)
See accompanying notes to consolidated financial statements.

40 ANNUAL REPORT 2007

Millions of yen

Thousands of
U.S. dollars(Note 3)

2007

2006

2007

¥ 177,969
54,2579,789¥ 107,913
53,655(55,530)$ 1,494,162
455,522
82,184(1,895)(40,945)
119(2,150)–
5,503(8,094)(1,501)(4,112)
18,873(18,132)
8,394(20,388)
16,225(35)
5,793
199,668
4,818(18,637)(35,138)
150,710

3,327(1,031)
336–
27,63935,321(6,556)624(2,788)19,87616,147(18,425)
(514)
1,104
5,800
11,860198,7635,936(19,293)(15,121)
169,744(15,909)(343,760)
1,005(18,057)
046,206(67,958)(12,609)(34,531)
158,451(152,236)
70,475(171,176)
136,222(298)
48,6401,676,334
40,451(156,472)(295,009)
1,265,304

3,928
(109)
7,771
(138,169)
56,388(22,640)

2,029(3,898)113,006(60,491)
1,812(26,792)

32,984(920)
65,243(1,160,018)
473,414(190,083)

2,858
4,583
(85,389)

9,277(5,059)29,88324,00238,480(716,897)(2,835)–
119,922(123,524)
21,974(33,077)–(15,132)(1,420)(34,093)
3,344
34,571167,090
4,427¥ 206,089

1,544(58,000)
52,347(68,305)
40,196(77,361)(4,939)(11,676)(6,269)(132,463)
2,602
69,766
97,324–¥ 167,090(23,807)–
1,006,817(1,037,062)
184,486(277,701)–(127,042)(11,928)(286,238)
28,076290,244
1,402,828
37,172$ 1,730,245

Notes to Consolidated Financial Statements
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2007 and 2006

1. Significant Accounting Policies
a. Basis of preparatione. Cash equivalents

The accompanying consolidated financial statements of Mitsubishi Estate Co.,The Company considers all highly liquid investments that are readily con-Ltd. (the “Company”) and consolidated subsidiaries are prepared on the basis

vertible into cash and have an original maturity of three months or less to beof accounting principles generally accepted in Japan, which are different incash equivalents. Reconciliation between cash in the balance sheet and cash

certain respects from the application and disclosure requirements ofequivalents at March 31, 2007 and 2006 is presented in Note 15.

International Financial Reporting Standards, and are compiled from theconsolidated financial statements prepared by the Company as required byf. Marketable securities and investment securities

the Securities and Exchange Law of Japan.

Securities other than those of subsidiaries and affiliates are classified into

The financial statements of the Company’s overseas consolidated

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

subsidiaries are prepared on the basis of the accounting and relevant legal

securities are carried at fair value and held-to-maturity securities are carried atrequirements of their countries of domicile.

amortized cost. Marketable securities classified as other securities are carried

The notes to the consolidated financial statements include information

at fair value with any changes in unrealized holding gain or loss, net of thewhich may not be required under accounting principles generally accepted inapplicable income taxes, included directly in net assets. Non-marketable

Japan but is presented herein as additional information.

securities classified as other securities are carried at cost. Cost of securities

As permitted by the Securities and Exchange Law of Japan, amounts ofsold is determined by the moving average method.

less than one million yen have been rounded off. As a result, the totals shownin the accompanying consolidated financial statements (both in yen and U.S.

g. Inventories

dollars) do not necessarily agree with the sums of the individual amounts.

Inventories are mainly stated at cost, determined by the identified cost

Certain amounts in the prior year’s financial statements have been
reclassified to conform to the current year’s presentation.

method; however, when the fair value is substantially less than cost and thedecline in fair value is considered to be permanent, inventories are revalued atfair value.

b. Principles of consolidation
The accompanying consolidated financial statements include the accounts ofh. Property and equipment, depreciation and impairment

the Company and the subsidiaries that it controls directly or indirectly.

Property and equipment, except for land as discussed below, is stated at cost

Companies over which the Company exercises significant influence in terms ofless accumulated depreciation. Depreciation is calculated principally by thetheir operating and financial policies have been included in the consolidated

declining-balance method, except for buildings acquired in Japan subsequent

financial statements on an equity basis.

to March 31, 1998 and property and equipment of foreign subsidiaries, forAll significant intercompany balances and transactions have been
eliminated in consolidation.

which depreciation is calculated by the straight-line method at rates
determined based on the estimated useful lives of the respective assets. The
Company has capitalized the costs incurred for significant renewals andc. Use of estimates

additions; however, costs for maintenance and repairs are charged to income.

The preparation of financial statements in conformity with generally accepted

As of March 31, 2002, the Company revalued its land at fair value,

accounting principles requires management to make certain estimates andpursuant to Article 2 of the “Enforcement Ordinance for the Law Concerning

assumptions that affect the amounts reported in the financial statements andRevaluation Reserve for Land” and its amendments. The related unrealizedaccompanying notes. The actual results could differ from those estimates.

gain, net of applicable income taxes, has been recorded as “land revaluation
reserve” in net assets.

d. Foreign currency translation

The Company reviews its property and equipment (including land) for

Current and non-current monetary accounts denominated in foreign currencies

impairment whenever events or changes in its business circumstances

are translated into yen at the current rates.

indicate that the carrying amount of the assets may not be fully recoverable.

The revenue and expense accounts of the foreign consolidated

The Company performs cash flow analyses to determine if an impairment

subsidiaries are translated using the average rate during the year. Except forexits. If impairment is determined to exist, any related loss on impairment isshareholders’ equity, the balance sheet accounts are also translated into yen

calculated based on the cash flow analyses.

at the rates of exchange in effect at the balance sheet date. The components
of shareholders’ equity are translated at their historical exchange rates.

ANNUAL REPORT 2007 41

i.

Leasesl.

Income taxes

Noncancelable leases are primarily accounted for as operating leases

Deferred tax assets and liabilities are determined based on the financial(whether such leases are classified as operating or finance leases) except forstatements and the tax bases of assets and liabilities, using the enacted tax

leases that stipulate the transfer of ownership of the leased assets to therates in effect for the year in which the temporary differences are expected tolessee are accounted for as finance leases.

reverse. Deferred tax assets are also recognized for the estimated future tax
effects attributable to operating loss carry forwards. Valuation allowances arej.

Intangible and other assets

Intangible and other assets primarily consist of goodwill and land use rights.

established to reduce deferred tax assets if it is more likely than not that thesome portion or all of the deferred tax assets will not be realized.

Goodwill is stated on the basis of cost and is amortized over a period of five
years or an estimated economical period on a straight-line basis, except form. Derivative financial instruments

any goodwill and any indefinite lived intangible assets of subsidiaries in the

The Company and certain of its consolidated subsidiaries utilize derivative

United States acquired through a business combination completed after Junefinancial instruments for the purpose of hedging their exposure to adverse

30, 2001, which have not been amortized. A loss is recognized if the fair value

fluctuations and changes in interest rates (interest rate swaps) and weather

falls below the carrying amount. Land use rights are stated on a cost basis.

(weather derivatives), but do not enter into such transactions for speculative or
trading purposes.

k. Retirement benefits

Derivative financial instruments are carried at fair value with any changes

The Company and most consolidated subsidiaries have noncontributory

in unrealized gain or loss charged or credited to operations, except for thosefunded and unfunded defined benefit plans covering most of their employees.

which meet the criteria for deferral hedge accounting under which unrealized

Employees of the Company and its consolidated subsidiaries are entitledgain or loss is deferred as an asset or liability.

under most employment termination circumstances to annuity payments or
lump-sum payments, the amounts of which are determined principally by

n. Revenue recognitionreference to their basic rates of pay, length of service, and the conditions

The consolidated statements of income reflect revenue from operations in theunder which the termination occurs.

following manner:

Accrued employees’ retirement benefits are provided mainly at an amountcalculated based on the retirement benefit obligation and the fair value of thepension plan assets as of the balance sheet date, adjusted for unrecognized(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 isactuarial gain or loss and unrecognized prior service cost. The retirement

recognized when the units are delivered and accepted by the customers.

benefit obligation is calculated for each period by the straight-line method over

Revenue from consignment commissions for residential sales earned by

the estimated years of service of the employees.

the Real Estate Service business segment is recognized at the time ofActuarial gain and loss are amortized in the year following the year incontract conclusion for services provided up to the conclusion and at thewhich the gain or loss is recognized by the straight-line method over a period

time of ownership transfer for services provided up to the transfer.

ranging from five to 15 years, which are shorter than the average remaining(c) Revenue from real estate brokerage is recognized when an underlying

years of service of the employees.
Prior service cost is amortized as incurred by the straight-line method

lease agreement goes into force or the underlying units are delivered.
(d) Revenue from the Architectural Design & Engineering business segment isover a period of either six or 10 years, which are shorter than the average

recognized at the date of completion of each relevant project, except thatremaining years of service of the employees.

certain long-term (over one year) projects over ¥500 million in total revenue

Until the fiscal year ended March 31, 2007, the Company and certain of
its consolidated subsidiaries had retirement benefit plans for directors andare recognized by the percentage of completion method.
(e) Revenue from construction contracts is recognized at the date of com-statutory auditors who were customarily entitled to lump-sum payments

pletion of each relevant project, except that certain long-term (over one

under the Company’s and its consolidated subsidiaries’ respective internalyear) projects over ¥5,000 million in total revenue are recognized by theregulations. Accrued severance benefits for these officers were provided at
estimated amounts and were included in “other non-current liabilities.”

percentage of completion method.
(f) Other operating revenue is recognized on an accrual basis.

The Annual General Shareholders’ Meeting held on June 29, 2006
approved a resolution for the termination of the Company’s retirement benefito. Appropriation of retained earnings

plans for directors and statutory auditors and for the payment of the related

Under the Corporation Law of Japan, the appropriation of retained earnings

benefits to them based on their respective service periods commencing fromwith respect to a given financial year is made by resolution of the shareholders

the date of appointment to June 29, 2006. The Company has reversed all

at a general meeting held subsequent to the close of such financial year. The

accumulated reserved benefits for them, with the balance of unpaid retirement

accounts for that year do not, therefore, reflect such appropriations. See Notebenefits as of March 31, 2007 included in “other non-current liabilities.” Certain

10 for more information.

consolidated subsidiaries still have retirement benefit plans for directors andstatutory auditors and provide an accrual for such retirement benefits at
estimated amounts.

42 ANNUAL REPORT 2007

2. Accounting Changesa) Accounting standards for presentation of net assets in the balance sheetc) Accounting standards regarding accounting for business combinations

Effective the year ended March 31, 2007, the “Accounting Standards for

Effective the year ended March 31, 2007, the “Accounting Standards for

Presentation of Net Assets in the Balance Sheet” (ASBJ Statement No. 5

Business Combinations” (issued by the Business Accounting Deliberation

issued by the ASBJ on December 9, 2005) and the “Implementation

Council on October 31, 2003), the “Accounting Standards for Business

Guidance on Accounting Standards for Presentation of Net Assets in the

Divestitures” (ASBJ Statement No. 7 issued by the ASBJ on December

Balance Sheet” (ASBJ Implementation Guidance No. 8 issued by the ASBJ

27, 2005) and the “Implementation Guidance on Accounting Standards foron December 9, 2005) have been applied.

Business Combinations and Business Divestitures” (ASBJ Implementation

Had this change not been implemented, the previous category of“shareholders’ equity” would have been ¥1,225,482 million ($10,288,657

Guidance No. 10 issued by the ASBJ on December 27, 2005) havebeen applied.

thousand).
d) Practical solutions for application of control criteria and influence criteriab) Accounting standards for share-based payment including stock options

for investment associations

Effective the year ended March 31, 2007, the “Accounting Standards for

Effective the year ended March 31, 2007, the “Practical Solutions for

Share-Based Payment” (ASBJ Statement No. 8 issued by the ASBJ on

Application of Control Criteria and Influence Criteria for Investment

December 27, 2005) and the “Implementation Guidance on Accounting

Associations” (Practical solutions report No. 20 issued by ASBJ on

Standards for Share-Based Payment” (ASBJ Implementation Guidance

September 8, 2006) have been applied.

No. 11 issued by the ASBJ on May 31, 2006) have been applied.
As a result of this change, income before income taxes and minority

As a result of this change, consolidated total assets increased¥129,838 million ($1,090,068 thousand) compared with the previous

interests decreased by ¥79 million ($663 thousand) compared with theaccounting method. This change had no significant impact onprevious accounting method.

consolidated income.

3. U.S. Dollar Amounts
Translation of yen amounts into U.S. dollar amounts is included solely for

The inclusion of such amounts is not intended to imply that yen amounts have

convenience, as a matter of arithmetic computation only, at the rate of ¥119.11

been or could be readily converted, realized or settled in U.S. dollars at the= U.S.$1.00, the approximate rate of exchange prevailing on March 31, 2007.

above or any other rate.

ANNUAL REPORT 2007 43

4. Marketable Securities and Investment Securities
Marketable and investment securities classified as other securities at March 31, 2007 and 2006 are summarized as follows:
2007
Millions of yen

Thousands of U.S. dollars

Cost

Fair value

Unrealized
gain (loss)

Cost

Fair value

Unrealized
gain (loss)¥72,698¥287,717¥215,019$610,343$2,415,557$1,805,213

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

5,330

15,851

10,52044,748133,078

88,321

78,029303,569

225,540

655,100

2,548,644

1,893,543

Securities whose cost exceeds their fair value:
Equity securities
Total

566

509

(57)

4,751

4,273

(478)

¥78,596¥304,078¥225,482$659,860$2,552,917$1,893,056

2006
Millions of yen

Cost

Fair value

Unrealized
gain¥68,320¥302,986¥234,665

5,330

10,364

5,033¥73,651¥313,350¥239,699

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

Proceeds from sales of securities classified as other securities totaled ¥999 million ($8,387 thousand) in 2007 and ¥166 million in 2006. Gross realized gain was¥911 million ($7,648 thousand) in 2007 and ¥160 million in 2006.
Marketable debt securities classified as held-to-maturity securities at March 31, 2007 and 2006 are summarized as follows:
2007
Millions of yen

Amortized
cost

Fair value¥¥

Unrealized
gain (loss)

Thousands of U.S. dollars

Amortized
cost

Fair value

Unrealized
gain (loss)

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

35
116

35

¥0

116

0

$

293
974

$

296

$ 2

978

3

3,633

3,633

–

30,50330,503

0

3,784

3,785

0

31,772

31,778

5

Government bonds

183

182

(1)

1,540

1,529

(10)

Corporate bonds

–

–

–

–

–

–

Subtotal
Debt securities whose cost exceeds their fair value:

Other
Subtotal
Total

44 ANNUAL REPORT 2007

–

–

–

–

–

–

183

182

(1)

1,540

1,529

(10)

¥3,967¥3,967¥(0)$33,313$33,308

$ (4)

2006
Millions of yen

Amortized
cost

Fair value¥¥

Unrealized
gain (loss)

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

94
94

95

¥0

95

0

Debt securities whose cost exceeds their fair value:
Government bonds

143

140

(2)

Corporate bonds

1,999

1,999

(0)

Other

1,899

1,896

(3)

Subtotal

4,041

4,036

(5)

Total

¥4,136¥4,131¥(5)

Marketable and investment securities recorded at cost at March 31, 2007 and 2006 are summarized as follows:
Millions of yen

Thousands of
U.S. dollars

2007

2006

2007

¥ 7,908¥ 18,727$ 66,384

291

351

2,450

4,992

21,671

41,910

Other securities:
Nonmarketable equity securities(other than equity securities listed on the over-the-counter market)
Mutual funds
Commercial papers
MMF
Investments in silent partnerships

876

1,337

7,356

36,20878,849303,991

Other
Total

267

468

2,249

¥50,543¥121,403$424,343

The redemption schedule for securities classified as other securities at March 31, 2007 is summarized as follows:
Millions of yen

Thousands of U.S. dollars

Due within
one year or lessDue after one year
through five years

Due after five
years or more

Due within
one year or lessDue after one year
through five years

Due after five
years or more

Government bonds

¥10

¥ 180

¥30

$83

$ 1,511$251

Corporate bonds

–

116

–

–

–

–

Other bonds

–

3,633

–

–

–

–

Total

¥10

¥3,929¥30$83$32,987$251

Bonds:The Company recognized losses on other securities considered other-than-temporary amounting to ¥106 million ($889 thousand) and ¥336 million for the years
ended March 31, 2007 and 2006, respectively.

ANNUAL REPORT 2007 45

5. Inventories
Inventories at March 31, 2007 and 2006 are summarized as follows:
Millions of yen

Thousands of
U.S. dollars

2007

2006

2007

Real estate for sale

¥ 89,960¥136,926$ 755,274

Land and housing projects in progress

192,305

147,709

1,614,521

Land held for development

8,965

8,886

75,271

Other

8,948

12,27775,131¥300,180¥305,800$2,520,198

Millions of yen

Thousands of
U.S. dollars

Total

6. Other Investments
Other investments at March 31, 2007 and 2006 were as follows:

Lease deposits
Long-term prepaid expenses and other
Total

2007

2006

2007

¥ 77,571¥ 71,949$ 651,258

54,50360,634

457,590¥132,075¥132,584$1,108,849

Millions of yen

Thousands of
U.S. dollars

7. Short-Term Borrowings and Long-Term Debt
At March 31, 2007 and 2006, short-term borrowings and the current portion of long-term debt consisted of the following:

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

2007

2006

2007

¥ 47,043¥ 49,118$ 394,960

93,925

117,627

788,558¥140,969¥166,746$1,183,519

The weighted-average interest rates per annum on short-term borrowings outstanding at March 31, 2007 and 2006 were 1.14% and 0.72%, respectively. Short-termborrowings are principally unsecured.

46 ANNUAL REPORT 2007

At March 31, 2007 and 2006, long-term debt consisted of the following:
Millions of yen

Zero coupon convertible bonds due 2006
1.325% unsecured bonds due 2006
3.4% unsecured bonds due 2006
3% unsecured bonds due 2006
2.975% unsecured bonds due 2007
2.575% unsecured bonds due 2008
0.37% unsecured bonds due 2008
2.525% unsecured bonds due 2008
3.1% unsecured bonds due 2008
1.82% unsecured bonds due 2009
3.075% unsecured bonds due 2009
2% unsecured bonds due 2009
1.985% unsecured bonds due 2009
0.72% unsecured bonds due 2009
1.9% unsecured bonds due 2010
1.55% unsecured bonds due 2011
1.44% unsecured bonds due 2011
1.16% unsecured bonds due 2011
3.275% unsecured bonds due 2012
1.47% unsecured bonds due 2012
1.58% unsecured bonds due 2012
1.395% unsecured bonds due 2012
1.2% unsecured bonds due 2012
1% unsecured bonds due 2013
0.785% unsecured bonds due 2013
1.675% unsecured bonds due 2014
1.349% unsecured bonds due 2014
1.65% unsecured bonds due 2014
1.75% unsecured bonds due 2014
1.655% unsecured bonds due 2014
1.409% unsecured bonds due 2015
1.295% unsecured bounds due 2015
1.572% unsecured bounds due 2015
1.443% unsecured bounds due 2016
1.985% unsecured bounds due 2016
1.88% unsecured bounds due 20163.125% unsecured bonds due 20173% unsecured bonds due 2018
2.5% unsecured bonds due 2020
2.42% unsecured bonds due 2022
1.50% unsecured bonds due 2022
2.28% unsecured bonds due 2024
2.9% unsecured bonds due 2032
2.615% unsecured bonds due 2032
2.04% unsecured bonds due 2032
1.72% unsecured bonds due 2033
7.37% unsecured bonds due 2008 (payable in U.S. dollars)
Floating rate bonds due 2006 (payable in U.S. dollars)
Floating rate bonds due 2007 (payable in U.S. dollars)
Loans from banks and insurance companies:
SecuredUnsecuredLess current portion

Thousands of
U.S. dollars

2007

2006

–
–
–
–
30,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00020,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00020,00010,000––980¥ 13,595
10,00010,00010,00030,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00020,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00020,00010,000
2,530
1,207
–

$

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

75,314
390,995
958,642(117,627)¥ 841,015

931,978
3,262,161
8,106,329(788,556)$7,317,770

¥

2007
–
–
–
–
251,868
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956167,91283,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956125,934
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956
83,956167,91283,956––
8,223

ANNUAL REPORT 2007 47

Certain bonds have call options that may be exercised at the respective

current conversion prices per share of ¥1,200 ($11), subject to adjustment

expiry dates.

in certain cases, such as the Company issuing stock at a price lower than

The agreements under which the zero coupon convertible bonds weremarket value.

issued provide for conversion of the bonds into shares of common stock at theAggregate annual maturities of long-term debt subsequent to March 31, 2007 are summarized as follows:
Millions of yen

Thousands of
U.S. dollars

2008¥ 93,925$ 788,559

2009

118,005

990,7252010

175,695

1,475,066

2011

59,353498,3052012

112,391

943,590

Year ending March 31,

2013 and thereafter
Total

406,175

3,410,083¥965,544$8,106,329

Assets pledged as collateral for short-term borrowings of ¥1,000 million ($8,395 thousand) and long-term debt of ¥111,008 million ($931,980 thousand) at March 31,
2007 were as follows:
Millions of yen

Cash

¥

Notes and accounts receivable – trade
Buildings and structures

2,926

Thousands of
U.S. dollars$

24,56743361

115,683

971,230

Machinery and equipment

3,796

31,872

Land

45,576382,639

Construction in progress

2,031

17,056

Other property and equipment

22

187

Other intangible assets

3

32

Investment securities

04¥170,083$1,427,952

Total

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

other banks which become due in cases of default or certain other specified

institutions under certain circumstances, and banks, in general, have the right

events. The Company has never received any such request nor does it expect

to offset cash deposited with them against any debt or obligations payable tothat any such request will be made.

48 ANNUAL REPORT 2007

8. Pension and Severance Plans
The following table sets forth the funded status of pension and severance plans, and the amounts recognized in the consolidated balance sheets at March 31, 2007
and 2006 for the Company’s and its consolidated subsidiaries’ defined benefit pension plans:Millions of yen

Thousands of
U.S. dollars

2007

2006

2007

¥(85,510)¥(84,455)$(717,914)

Plan assets at fair value

91,73389,914

770,157

Unfunded retirement benefit obligation

6,222

5,458

52,243–388–(13,776)(13,242)(115,659)

648

494

5,447

Net amounts recognized in the consolidated balance sheet(6,904)(6,900)(57,968)

Prepaid pension expenses

6,911

4,886

58,030¥(13,816)*¥(11,787)$(115,999)*

Retirement benefit obligation

Unrecognized net benefit obligation at transition
Unrecognized actuarial loss
Unrecognized prior service costAccrued employees’ retirement benefits* Accrued employees’ retirement benefits recognized by Rockefeller Group, Inc., a consolidated subsidiary, in the amount ¥383 million ($3,216 thousand) were presented in accrued
expenses and other current liabilities.

Components of expenses related to the pension and severance plans for the years ended March 31, 2007 and 2006 were as follows:
Millions of yen

Service costThousands of
U.S. dollars

2007

2006

2007

¥ 3,806¥ 3,660$ 31,955Interest cost

2,113

2,043

17,746

Expected return on plan assets(1,573)(1,267)(13,209)

Amortization of net retirement benefit obligation at transition
Other
Total

77

51

652

(216)

2,669

(1,817)¥ 4,207¥ 7,158$ 35,327

The assumptions used in accounting for the pension and severance plans for the years ended March 31, 2007 and 2006 were as follows:
2007

2006

Discount rate

2.0 – 5.7%

2.0 – 5.7%

Expected rate of return on plan assets

0.5 – 7.5%

1.0 – 7.5%

9. Income Taxes
Income taxes in Japan applicable to the Company and its domestic consoli-of the years ended March 31, 2007 and 2006. Income taxes of the foreign

dated subsidiaries consist of corporation tax, inhabitants’ taxes and enterpriseconsolidated subsidiaries are based generally on the tax rates applicable intax which, in the aggregate, resulted in a statutory tax rate of 40.69% in each

their countries of incorporation.

ANNUAL REPORT 2007 49

The effective tax rates reflected in the consolidated statements of income for the years ended March 31, 2007 and 2006 differ from the statutory tax rate for thefollowing reasons:
2007

2006

40.69%

40.69%

Change in valuation allowance(3.48)(0.19)

Different tax rates applied

0.99

1.22

Revenues deductible for income tax purposes(0.51)(0.32)

Expenses not deductible for income tax purposes

0.23

0.34

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

Undistributed earnings of affiliates

7.44

5.15

Equity income(1.77)(2.22)

Other
Effective tax rates(1.91)(2.30)

41.68%

42.37%The significant components of deferred tax assets and liabilities as of March 31, 2007 and 2006 were as follows:
Millions of yen

Thousands of
U.S. dollars

2007

2006

2007

Deferred tax assets:
Net operating loss carry forwards¥ 14,653¥ 14,719

Accrued retirement allowances and pension costs

11,82817,02999,308Valuation loss on inventories

32,021

32,615

268,837

Unrealized loss on property and equipment

45,66957,761

383,421Land revaluation reserve

56,586

63,727475,081

Other

20,60420,606

172,984

181,363

206,460

1,522,656(16,556)(16,212)(139,001)

164,807

190,248

1,383,655

Valuation allowance
Total deferred tax assets$

123,022

Deferred tax liabilities:
Reserves under the Special Taxation Measures Law(57,262)(58,197)(480,751)

Land revaluation reserve(379,044)(383,346)(3,182,303)

Unrealized gain on property and equipment(35,717)(31,966)(299,865)

Unrealized gain on securities(91,609)(97,533)(769,114)

Other(40,897)(35,646)(343,362)

Total deferred tax liabilities(604,530)(606,689)(5,075,398)

Net deferred tax liabilities¥(439,723)¥(416,441)$(3,691,743)

10. Shareholders’ Equity
The new Corporation Law of Japan (the “Law”), which superseded most of thelegal reserve equals 25% of the capital stock account. The Company’s capitalprovisions of the Commercial Code of Japan, went into effect on May 1, 2006.

reserve amounted to ¥165,216 million ($1,387,089 thousand), and the legal

The Law provides that an amount equal to 10% of the amount to be disbursed

reserve amounted to ¥21,663 million ($181,880 thousand) at March 31, 2007.

as distributions of capital surplus (other than the capital reserve) and retained

Such distributions can be made at any time by resolution of the shareholders,earnings (other than the legal reserve) be transferred to the capital reserveor by the Board of Directors if certain conditions are met, but neither theand the legal reserve, respectively, until the sum of the capital reserve and thecapital reserve nor the legal reserve is available for distributions.

50 ANNUAL REPORT 2007

11. Amounts per ShareYen

U.S. dollars

2007

2006

2007

Basic

¥70.95¥42.60$0.59

Diluted

70.71

40.42

0.59

Cash dividends applicable to the year

14.00

10.00

0.11

Yen

U.S. Dollars

March 31,

2007

2006

2007

Net assets¥887.79¥827.79$7.45

Year ended March 31,
Net income:Basic net income per share was computed based on the net income available

Amounts per share of net assets are computed based on net assets

for distribution to shareholders of common stock and the weighted averageavailable for distribution to the shareholders and the number of shares ofnumber of shares of common stock outstanding during the year. Diluted net

common stock outstanding at the year end.

income per share was computed based on the net income available for

Cash dividends per share represent the cash dividends proposed by the

distribution to the shareholders and the weighted average number of shares ofBoard of Directors, as applicable to the respective years, together with thecommon stock outstanding during each year, after giving effect to the dilutive

interim cash dividends paid.

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

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

consolidated balance sheets if finance lease accounting had been applied todepreciation, accumulated impairment loss and net book value of leased

the finance leases currently accounted for as operating leases:

assets as of March 31, 2007 and 2006, which would have been reflected in the2007
Millions of yen

Buildings and structures
Others
Total

Thousands of U.S. dollars

Acquisition
Costs

Accumulated
depreciation

Accumulated
impairment loss

Net bookvalue

Acquisition
Costs

Accumulated
depreciation

Accumulated
impairment loss

Net book
value¥12,381¥3,892¥256¥ 8,233$103,954$32,677$2,153$ 69,122

8,783

4,868

66

3,848

73,74140,872560

32,308¥21,165¥8,760¥323¥12,081$177,695$73,550$2,714$101,431

2006
Millions of yen

Buildings and structures
Others
Total
Lease payments relating to finance leases accounted for as operatingleases in the accompanying consolidated financial statements amounted to

Acquisition
Costs

Accumulated
depreciation

Accumulated
impairment loss

Net book
value¥12,102¥2,811¥422¥ 8,868

8,580

4,661

165

3,754

¥20,683¥7,472¥587¥12,623¥3,046 million ($25,572 thousand) and ¥2,959 million for the years ended
March 31, 2007 and 2006, respectively.

ANNUAL REPORT 2007 51

Future minimum lease payments subsequent to March 31, 2007 on noncancelable operating leases and finance leases accounted for as operating leases are
summarized as follows:
Millions of yen

Thousands of U.S. dollars

FinanceleasesOperatingleasesFinanceleasesOperatingleases¥ 3,743¥ 2,328$ 31,430$ 19,545

8,661

24,74172,715

207,721¥12,404¥27,069$104,145$227,266

Years ending March 31,
20082009 and thereafter

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, 2007 from noncancelable operating leases are summarized as follows:
Millions of yen

Thousands of U.S. dollars¥239,879$2,013,929

Years ending March 31,
20082009 and thereafter
Total

430,382

3,613,315¥670,261$5,627,244

13. Contingent Liabilities
At March 31, 2007, the Company and its consolidated subsidiaries had the following contingent liabilities:

Guarantees of affiliates’ loans from banks

Millions of yen

Thousands of
U.S. dollars¥1,798$15,095

Guarantees of order-made house purchasers’ loans from banks and others

74

621

Other

249

2,090

¥2,122$17,815Total

14. Other Income (Expenses)
The components of “other, net” in “other income (expenses)” for each of the years ended March 31, 2007 and 2006 were as follows:
Millions of yen

Thousands of
U.S. dollars

2007

2006

¥ 1,115¥ 57,823

Gain on sales of shares of affiliated companies

40,060–336,333

Gain on sales of investments

2,150

–

18,057

Gain on transfer of business

1,895

–

15,912

Loss on disposal of fixed assets(6,843)(5,054)(57,458)

Loss related to retirement of fixed assets(13,423)–(112,695)(736)(27,639)(6,184)(5,503)(35,321)(46,206)

Loss on sales of beneficial interest in trust of fixed assets–(3,327)–

Loss on soil solution related countermeasures (*2)–

(4,859)

–

(244)

(790)

(2,056)¥ 18,470¥(19,169)$ 155,067

Gain on sales of fixed assets

Loss on valuation of inventories
Impairment loss (*1)

Other, net

52 ANNUAL REPORT 2007

2007
$

9,366

(*1) Impairment loss

The Company recorded consolidated impairment losses for the following

The Company recorded consolidated impairment losses for the following

asset groups for the year ended March 31, 2006.

asset groups for the year ended March 31, 2007.
Major application

Category

Location

Tennis club
(total 1 group)

Buildings, land, etc.

Sendai, Miyagi
Prefecture

Leased assets, etc.
(total 8 groups)

Buildings, land, etc.

Shinagawa-ku, Tokyo,
othersOverseas businesses(total 1 group)

Goodwill

California, USA

Major application

Category

Location

Golf courses(total 3 groups)

Buildings, land,leasehold, etc.

Sendai, Miyagi
Prefecture, others

Hotels(total 2 groups)

Buildings, land,
structures, etc.

Sendai, Miyagi
Prefecture, others

Leased assets, etc.
(total 41 groups)

Buildings, land,leasehold, etc.

Hiroshima, Hiroshima
Prefecture, others

Overseas businesses(total 2 groups)

Intangible assets

The State of California,
USA, others

Asset grouping for the Group was made based on a minimum unitthat generates cash flows, which is substantially independent from cash

The breakdown of such impairment loss was ¥24,618 million in land

flows of other assets or asset groups. As a result, for the year ended

and leasehold, ¥5,374 million in buildings and structures and ¥5,329

March 31, 2007, the total book value of the 10 asset groups listed above

million in other losses.

was reduced to the respective collectible amounts, with the reductions

The collectible amounts of asset groups are measured according torecorded as an impairment loss of ¥5,503 million ($46,201 thousand),net sale value or use value, with the net sale value principally expressed

attributed to either market prices falling considerably below the bookas an appraised value by a real estate appraiser. Future cash flows

values due to a decline in land prices, or to significantly lower profitability

discounted at a rate of 5% are used to compute the use value.

due to falling rent levels or deteriorated market conditions.
The breakdown of such impairment loss was ¥4,153 million ($34,867

As for the impairment loss on fixed assets in the overseas businesses,
the impairment loss is calculated for consolidated foreign subsidiaries

thousand) in goodwill, ¥1,329 million ($11,158 thousand) in land and ¥20

in accordance with accounting principles generally accepted in the

million ($168 thousand) in buildings and structures.

United States.

(*2) Loss on contaminated soil countermeasures
This loss represented the loss related to the contaminated soil and groundwater of the OAP Residence Tower in Osaka.

15. Supplemental Cash Flow Information
The following table represents a reconciliation of cash and cash equivalents as of March 31, 2007 and 2006:
Millions of yen

Cash

Thousands of
U.S. dollars

2007

2006

2007

¥201,107¥139,605$1,688,417

Time deposits with maturities of more than three months(1,178)(815)(9,891)Marketable securities with maturities of three months or less

6,160

23,30051,718Resell agreements with maturities of three months or less
Cash and cash equivalents

–

5,000

–

¥206,089¥167,090$1,730,245

16. Derivatives
The Company and certain of its consolidated subsidiaries utilize derivative

The Company is exposed to credit loss in the event of nonperformancefinancial instruments for the purpose of hedging their exposure to adverseby the counterparties to the derivatives, but any loss would not be material

fluctuations and changes in interest rates (interest rate swaps) and weather

because the Company enters into such transactions only with financial(weather derivatives), but do not enter into such transactions for speculative or

institutions with high credit ratings.

trading purposes.

ANNUAL REPORT 2007 53

17. Segment Information
Business segments
The Company and its consolidated subsidiaries are primarily engaged in theterms of the respective operations or services, and consist of nine segments:

real estate business. Effective the year ended March 31, 2006, the Company(1) building business; (2) residential business; (3) urban development &reorganized its corporate structure and changed its business segmentation

investment management; (4) international business; (5) architectural designfrom eight segments to nine segments in order to present and disclose Group& engineering; (6) custom-built housing; (7) hotel business; (8) real estatebusinesses more appropriately. Business segments are newly reclassified inservices; and (9) other businesses.

The business segment information of the Company and its consolidated subsidiaries for the years ended March 31, 2007 and 2006 are summarized as follows:
Millions of yen

2007

Building
business

Residential
business

Urban
development& investment
management¥ 347,540¥230,631¥ 38,181¥226,444¥11,802¥33,718¥ 2,324¥ 947,641

6,416

882

35

–

5,988

831

393

4,954

1,935

21,437(21,437)–

Total revenue

353,956

231,514

38,216

226,444

17,79034,55033,49328,851

4,260

969,078(21,437)

947,641

Operating expense

253,742

207,535

14,695

204,438

16,60934,71931,87722,7693,461

789,849(8,373)

781,475¥ 100,214¥ 23,979¥ 23,520¥ 22,005¥ 1,181¥ (169)¥ 1,616 ¥ 6,082¥

798¥ 179,229¥ (13,064)¥ 166,165¥2,017,633¥397,118¥250,542¥332,225¥19,664¥14,225¥30,127 ¥104,559¥37,977¥3,204,074¥243,198¥3,447,272

38,531

780

2,931

9,774

51

119

1,444

279

114

54,029227

54,257

–

776

486

4,153

–

–

–

–

87

5,503

–

5,503

93,906816

23,846

26,816

17

254

1,353

665

172

147,849(890)

146,958

Architectural
International
design & Custom-built
business engineering
housingHotelbusiness

Real estateservices

Other

Total

¥33,100 ¥ 23,896

Eliminations
or corporate

Consolidated¥¥ 947,641

Revenue and operating income
Revenue from:
External customers
Intersegment or transfers

Operating income (loss)–

Total assets, depreciation,and capital expenditures
AssetsDepreciation
Impairment loss
Capital expenditures

Thousands of U.S. dollars

2007

Building
business

Residential
business

Urban
development& investment
management

Architectural
International
design & Custom-built
business engineering
housingHotelbusiness

Real estateservices

Other

Eliminations
or corporate

Total

Consolidated

Revenue and operating income
Revenue from:
External customers$ 2,917,811 $1,936,293 $ 320,557 $1,901,135 $ 99,088 $283,090 $277,895 $200,629 $ 19,516 $ 7,956,016 $Intersegment or transfers
Total revenue
Operating expense
Operating income (loss)$– $ 7,956,016

53,869

7,407

294

–

50,275

6,978

3,307

41,597

16,250179,980(179,980)–

2,971,681

1,943,701

320,851

1,901,135

149,363

290,068

281,202242,227

35,7668,135,997(179,980)

7,956,016

2,130,320

1,742,381

123,379

1,716,382

139,446

291,490

267,630

191,162

29,062

6,631,257(70,298)

6,560,958

841,360 $ 201,319 $ 197,471 $ 184,752 $ 9,916 $ (1,421) $ 13,571 $ 51,064 $ 6,704 $ 1,504,739$ (109,681) $ 1,395,057$16,939,243 $3,334,051 $2,103,457 $2,789,231 $165,096 $119,431 $252,936 $877,838 $318,839 $26,900,126$2,041,795 $28,941,922

Total assets, depreciation,and capital expenditures
AssetsDepreciation
Impairment loss
Capital expenditures

54 ANNUAL REPORT 2007

323,493

6,556

24,61482,066435

1,005

12,1302,346

961

453,611

1,911

–

6,518

4,082

34,875

–

–

–

–

730

46,206–455,522
46,206788,398

6,853

200,202

225,143

150

2,136

11,363

5,588

1,444

1,241,281(7,478)1,233,803

Millions of yen

2006

Building
business

Residential
business

Urban
development& investment
management¥ 306,290¥203,286¥ 34,252¥193,223¥10,488¥37,534¥32,143¥24,210¥ 2,787 ¥844,217

5,808

927

21

–

6,614

3,942

256

6,564

1,930

26,065

Architectural
International
design & Custom-built
business engineering
housingHotelbusiness

Real estateservices

Other

Total

Eliminations
or corporate

Consolidated¥–¥ 844,217(26,065)–

Revenue and operating income
Revenue from:
External customers
Intersegment or transfers
Total revenue

312,099

204,21334,274

193,223

17,103

41,47732,39930,775

4,717

870,283(26,065)

844,217

Operating expense

222,606

186,476

20,105170,024

16,87541,881

31,151

23,022

3,969

716,114(9,511)

706,60389,492¥ 17,736¥ 14,169¥ 23,199¥

227¥ (404)¥ 1,247¥ 7,753¥747¥ 154,169¥ (16,554)¥ 137,614

Operating income (loss)¥

Total assets, depreciation,and capital expenditures
Assets¥1,987,595¥338,026¥103,796¥345,483¥18,732¥16,531¥30,986¥70,845¥37,555¥2,949,553¥330,656¥3,280,209

Depreciation

41,766

833

249

8,578

103

157

1,366

217

167

53,440214

53,655

Impairment loss

4,048

24,606

–

2,064

–

1,162

2,337

–

1,100

35,321–35,321

Capital expenditures

43,432977

12,924

7,345

12

243

1,358

320

168

66,783(2,030)64,753

Geographical segments
The Company and its consolidated subsidiaries operate primarily in Japan, the United States and certain other areas. The geographical segment information of theCompany and its consolidated subsidiaries for the years ended March 31, 2007 and 2006 is summarized as follows:
Millions of yen

2007
Japan

United States

Other

Total

¥ 721,883¥154,139¥71,618¥ 947,641

Eliminations
or corporate

Consolidated¥¥ 947,641

Revenue and operating income
Revenue from:
External customers
Intersegment or transfers
Total revenue

–

805

–

–

805

(805)

–

722,689

154,139

71,618948,447(805)

947,641

Operating expense

566,125

142,641

61,357770,124

11,351

781,475

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

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

Thousands of U.S. dollars

2007
Eliminations
or corporate

Consolidated$$ 7,956,016

Japan

United States

Other

Total

$ 6,060,642$1,294,097$601,277$ 7,956,016

6,766

–

–

6,766

(6,766)–

6,067,408

1,294,097

601,277

7,962,782(6,766)

7,956,016

Revenue and operating income
Revenue from:
External customers
Intersegment or transfers
Total revenue–

Operating expense

4,752,963

1,197,560

515,135

6,465,659

95,2996,560,958

Operating income$ 1,314,445$

96,536$ 86,141$ 1,497,123$ (102,065)$ 1,395,057

Total assets$23,700,079$2,139,906$653,208$26,493,194$2,448,727$28,941,922

ANNUAL REPORT 2007 55

Millions of yen

2006
Japan

United States

Other¥ 651,716¥144,434¥ 48,066

668

–

–

Total

Eliminations
or corporate

Consolidated¥–¥ 844,217

(668)

–

Revenue and operating income
Revenue from:
External customers
Intersegment or transfers
Total revenue¥

844,217668

652,385

144,434

48,066

844,886(668)

844,217

Operating expense

524,314

129,330

40,141

693,786

12,816706,603

Operating income¥ 128,071¥ 15,103¥

7,925¥ 151,100¥ (13,485)¥ 137,614

Total assets¥2,561,007¥231,963¥113,291¥2,906,261¥373,947¥3,280,209

Unallocatable operating expenses

March 31, 2007 and 2006 amounted to ¥454,614 million ($3,816,758

Unallocatable operating expenses included under “eliminations or corporate”

thousand) and ¥496,471 million, respectively, and consisted principally offor the years ended March 31, 2007 and 2006 amounted to ¥12,543 million

cash, marketable securities, investments in other securities, deferred tax($105,312 thousand) and ¥13,673 million, respectively, and consisted ofassets and other assets allocated to the Administration Department of theoperating expenses incurred in the Administration Department of theCompany.

Company. Corporate assets included under “eliminations or corporate” as ofOverseas revenue
The following table represents overseas revenue earned by the Company’s consolidated subsidiaries in foreign countries during the years ended March 31, 2007
and 2006:
Millions of yen

2007
United States

Other areas

Consolidated¥148,783¥71,739¥220,523

15.7%

7.6%

Overseas revenue
Overseas revenue
Consolidated revenue% of overseas revenue to consolidated revenue

947,641
23.3%

Thousands of U.S. dollars

2007
United States

Other areas

Consolidated$1,249,126$602,299$1,851,426

Overseas revenue
Overseas revenue
Consolidated revenue$7,956,016

Millions of yen

2006
United States

Other areas

Consolidated¥144,441¥48,109¥192,550

17.1%

5.7%

Overseas revenue
Overseas revenue
Consolidated revenue% of overseas revenue to consolidated revenue

56 ANNUAL REPORT 2007

844,21722.8%

Report of Independent Auditors

ANNUAL REPORT 2007 57

Mitsubishi Estate Corporate Data

Corporate Information
Head Office:Otemachi Building, 6-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8133, JapanWeb site: http://www.mec.co.jp
Phone: (03) 3287-5100

Date of Establishment:
May 7, 1937

Paid-in Capital:¥136,534 million

Number of Shares of Common Stock Issued:
1,382,518,351 shares

Number of Shareholders:
69,499 (excluding shareholders with less than 1,000 shares)

Major Shareholders:% of total

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

5.09

Meiji Yasuda Life Insurance Company

4.15

State Street Bank and Trust Company

4.11

Japan Trustee Services Bank, Ltd. (Trust Account)

3.70

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

3.13

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2.94

State Street Bank and Trust Company 505103

2.41

Taisei Corporation

2.11

Takenaka Corporation

2.04

Asahi Glass Co., Ltd.

1.64

Major Consolidated Subsidiaries:
Mitsubishi Real Estate Services Co., Ltd.
Mitsubishi Estate Home Co., Ltd.
Mitsubishi Jisho Sekkei Inc.
Yokohama Royal Park Hotel Co., Ltd.
Mitsubishi Estate Building Management Co., Ltd.
Mitsubishi Jisho Towa Community Co., Ltd.
Marunouchi Heat Supply Co., Ltd.
Yokohama Sky Building Co., Ltd.
Royal Park Hotel Co., Ltd.
Rockefeller Group, Inc.

Stock Exchange Listings:
Tokyo Stock Exchange and other major Japanese stock exchanges

Transfer Agent and Registrar:
Mitsubishi UFJ Trust and Banking Corporation 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan

Auditor:Ernst & Young ShinNihon(As of March 31, 2007)58 ANNUAL REPORT 2007

Organization

Real Estate Consulting &Solution Department

Meeting of Shareholders

Board of Directors

Chairman of the Board

Strategic Planning
Committee
CSR
Committee

President & Chief
Executive Officer

Compliance
Subcommittee
Environmental
Subcommittee
Risk Management
Subcommittee

Internal Audit Office

Executive Committee
Strategic Investment
Committee

Board of Statutory Auditors
Statutory Auditor

Development Planning Office

Building Business
Commercial Planning Department
Group Companies Management Office
Area Brand Management Department
Area Brand Promotion Office
Museum Pre-Opening Office
Building Management Advisory OfficeCommercial Leasing Department
Agency Leasing Office
Relocation Management Office
Property Management Department
Building Safety Management Office
Marunouchi-Otemachi Area Building Management Department
Yurakucho Area Building Management Department
Tokyo Metropolitan Area Building Management Department
Retail Planning Department
Retail Leasing Department
Commercial Development Department
Area Planning Office
Residential BusinessResidential Development Promotion Department
Condominium Development Department
Master-Planned Development Department
Detached Housing Office
PARTNER System Department
Condominium Reconstruction Office
Residential Planning & Marketing Department
Customer Service Office
Quality Management Office
Recreational Facility OfficeUrban Development & Investment Management Business
Commercial Property Investment Planning Department
Commercial Property Development & Investment Department
International Business
International Business Department

Office of Statutory Auditors
Toyosu Project Promotion Office
Corporate Staff
Corporate Planning Department
Personnel Planning Department
Finance & Accounting Department
Corporate Communications Department
Investor Relations Office
General Affairs Department
Legal OfficeSecretary Office
CSR Department
Sapporo Branch
Tohoku Branch
Yokohama Branch
Nagoya Branch
Osaka Branch
Chugoku Branch
Kyushu Branch(As of April 1, 2007)

ANNUAL REPORT 2007 59

Mitsubishi Estate Group

Building Business
Building Leasing Business
AQUACITY PROPERTIES, LTD.
IMS Co., Ltd.
Yokohama Sky Building Co., Ltd.
Tokyo Kotsu Kaikan Co., Ltd.
Chelsea Japan Co., Ltd.

Marunouchi Direct Access Limited
Marunouchi Hotel Co., Ltd.

Building Management Business

Parking Business

Mitsubishi Estate Building
Management Co., Ltd.
MEC Building Facilities Co., Ltd.
Mitsubishi Jisho Property
Management Co., Ltd.
Hokuriku City Management Co., Ltd.
Hokuryo City Service Co., Ltd.
Hibiya City Co., Ltd.
MJ Building Service Co., Ltd.
Aqua City Co., Ltd.
Yuden Building Kanri Co., Ltd.
O.A.P. Management Co., Ltd.

Grand Parking Center Co., Ltd.
Hibiya City Parking Co., Ltd.
Tokyo Garage Co., Ltd.

District Heating
and Cooling Business
Marunouchi Heat Supply Co., Ltd.
O.A.P. D.H.C. Supply Co., Ltd.
Minato Mirai 21 D.H.C Co., Ltd.

International Business

Urban Development &Investment Management(

Mitsubishi Jisho Investment Advisors, Inc.
Tokumei Kumiai Machidukuri Investment
Ascott International Management Japan Co., Ltd.
Japan Real Estate Asset Management Co., Ltd.

Rockefeller Group, Inc. (RGI)
118 other companies
19 other companies)

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

Architectural Design & Engineering
Mitsubishi Jisho Sekkei Inc.
MEC Design International Corporation

Mitsubishi EstateCo., Ltd.

Hotel Business

Real Estate Services
Mitsubishi Real Estate Services Co., Ltd.

OthersRoyal Park Hotels and Resorts Co., Ltd.
Royal Park Inn Nagoya Co., Ltd.
Tohoku Royal Park Hotel Co., Ltd.
Royal Park Shiodome Tower Co., Ltd.
Yokohama Royal Park Hotel Co., Ltd.
Royal Park Hotel Co., Ltd.

Shiki Resorts Co., Ltd.
Shiki Club Links Co., Ltd.
MEC Information Development Co., Ltd.
MEC Human Resources, Inc.
Keiyo Tochi Kaihatsu Co., Ltd.
(3 other companies)

Residential Business
Real Estate Sales
TOWA REAL ESTATE DEVELOPMENT CO., LTD.

Residence Management BusinessIzumi Park Town Service Co., Ltd.
Mitsubishi Jisho Towa Community Co., Ltd.
MT Community Staff Co., Ltd.

Recreational Facility
Higashinihon Kaihatsu Co., Ltd.
MEC Urban Resort Tohoku Co., Ltd.
Liv Sports Co., Ltd.
Sakura Golf Development Co., Ltd.
Ryoei Life Service Co., Ltd.
Tsunagu Network Communications, Inc.
(1 other company)
Consolidated Subsidiaries
Equity-Method Affiliates(As of April 1, 2007)

60 ANNUAL REPORT 2007

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

MITSUB ISHI ESTATE CO., LTD.

ANNUAL REPORT
2007

Printed in Japan