MATTERS DISCLOSED ON THE INTERNETRELATED TO THE
NOTICE OF CONVOCATION OF
THE 123rd ORDINARY GENERAL MEETING OF SHAREHOLDERS

Consolidated Statement of Changes in Net Assets…………………

1

Notes to the Consolidated Financial Statements…………………

2

Non-consolidated Statement of Changes in Net Assets …………………

26

Notes to the Non-consolidated Financial Statements

28…………………

The content of this document is posted on the website of Mitsubishi Estate Co., Ltd.
(“the Company”) (https://www.mec.co.jp/e/investor/stock/shareholder/index.html),
pursuant to laws and regulations and Article 16 of the Articles of Incorporation of the Company.

[Translation for Reference and Convenience Purposes Only]

Consolidated Statement of Changes in Net Assets(From April 1, 2021, to March 31, 2022)(Millions of yen)
Shareholders’ equity
Share capital
Balance at the beginning ofcurrent period
Cumulative effects of changes inaccounting policies

Capital surplus

142,279

Retained earnings

164,367

Treasury shares

1,058,457

Total shareholders’equity(105,216)

1,259,887(1,509)

Restated balance

142,279

164,367

135

135(1,509)1,056,948(105,216)

1,258,378

Changes in the fiscal year underreviewIssuance of new shares

270

Dividend from surplus(46,774)(46,774)

Profit attributable to owners ofparent155,171

155,171

Purchase of treasury shares
Disposal of treasury shares(0)Change by share exchanges(964)

Change in equity of the parent
company on transactions with
non-controlling interests(3,788)(30,014)(30,014)

31

31

2,715

1,751
(3,788)Net changes in items other thanthose in shareholders’ equity
Total of changes in the fiscal year
under review
Balance at the end of current
period135(4,617)

108,396(27,267)

76,646

142,414

159,749

1,165,344(132,483)

1,335,024

Accumulated other comprehensive income

Balance at the beginning of current
periodCumulative effects of changes inaccounting policies
Restated balance

Valuationdifferenceonavailablefor-salesecurities

Deferred
gains orlosseson hedges

Revaluation
reservefor landForeigncurrencytranslation
adjustment

118,088(1,916)526,417(53,740)

RemeasureTotal
Share
Nonments
accumulated acquisition controllingof definedotherrightsinterests
benefitcomprehenplans
sive income
3,163

592,011231

209,316

Total net
assets2,061,447(1,509)118,088(1,916)526,417(53,740)

3,163

592,011231

209,316

2,059,937

Changes in the fiscal year underreviewIssuance of new shares

270

Dividend from surplus(46,774)

Profit attributable to owners ofparent155,171

Purchase of treasury shares(30,014)

Disposal of treasury shares

31

Change by share exchanges

1,751

Change in equity of the parent
company on transactions with
non-controlling interests(3,788)Net changes in items other thanthose in shareholders’ equity

12,7532,020

Total of changes in the fiscal year
under review

12,753

2,020

Balance at the end of current
period130,841103

55,9025,512

76,189(30)

23,68999,847—55,9025,512

76,189(30)

23,689176,494

526,417

2,162

8,675

668,200

201

233,005

2,236,432-1-

[Translation for Reference and Convenience Purposes Only]

Notes to the Consolidated Financial Statements
Notes on Important Matters for the Preparation of the Consolidated Financial Statements
1. Matters related to the Scope of Consolidation(1) Number of Consolidated Subsidiaries: 252
The names of major subsidiaries are as stated in “I. Current Situation of the Mitsubishi Estate Group, 8.
Situation of Material Subsidiaries, (1) Situation of Material Subsidiaries” of the “Business Report.”
Newly included in the list of consolidated subsidiaries of the Company are TOKYO390 SPC and forty-two(42) other companies due to a new establishment, etc.
Excluded from the list of consolidated subsidiaries are Mitsubishi Jisho Retail Property Management Co.,
Ltd. and twenty-two (22) other companies due to a dissolution, etc.
(2) Names, etc. of Major Non-consolidated Subsidiaries
A major non-consolidated subsidiary is Fuchinobe Development SPC.
Non-consolidated subsidiaries are excluded from the scope of consolidation because their respective sumsof total assets, operating revenue, profit (loss) (corresponding to the equity ratio owned by the Company)
and retained earnings (corresponding to the equity ratio owned by the Company) have no significant
impact on the consolidated financial statements.
2. Matters related to Application of the Equity Method(1) Number of Non-consolidated Subsidiaries Accounted for by the Equity Method: 0(2) Number of Affiliates Accounted for by the Equity Method: 122
A major affiliate in this category is Tokumei Kumiai Otemachi Kaihatsu.
Included in the affiliates accounted for by the equity method are Fuyiling Construction Co., Ltd. and ten(10) other companies due to a new establishment, etc.
Meanwhile, Excellent World Investments Limited and eighteen (18) other companies are excluded fromthe affiliates accounted for by the equity method due to a dissolution, etc.
(3) Names, etc. of Major Companies Not Accounted for by the Equity Method
A major non-consolidated subsidiary not accounted for by the equity method is Fuchinobe Development
SPC and a major affiliate not accounted for by the equity method is Tokiwabashi Investment Tokutei
Mokuteki Kaisya. The equity method is not applied to the Company’s investments in these corporations
because their respective sums of profit (loss) (corresponding to the equity ratio owned by the Company)
and retained earnings (corresponding to the equity ratio owned by the Company) have no significant
impact on the consolidated financial statements.
(4) Others
Concerning the companies accounted for by the equity method, the financial statements for the respective
fiscal years are used for those that have a closing date that differs from the consolidated closing date.
3. Matters related to Business Year, etc. of Consolidated Subsidiaries
The closing date of MEC Group International, Inc., which is a consolidated subsidiary, and two hundred
eleven (211) overseas subsidiaries, MEC eco LIFE Co., Ltd. and five (5) other consolidated subsidiaries is
December 31, the closing date of Keiyo Tochi Kaihatsu Co., Ltd. is January 31 and the closing date of Zama
Development SPC is February 28. In preparing the consolidated financial statements, the financial statements
as of and for the year ended respective closing dates are used for these companies with necessary adjustments
provided for consolidation purposes with regard to material transactions between their closing dates and theconsolidated closing date (March 31).

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4. Matters related to Accounting Policies(1) Valuation Basis and Method for Important Assets
Securities:
Held-to-maturity debt securities:
Carried at amortized cost (determined by the straight-line method for the Company and its
consolidated domestic subsidiaries and by the interest method for consolidated foreign subsidiaries.)
Other securities:
Securities other than shares, etc., that do not have a market price:
Stated at the market value (Unrealized gains and losses are reported, net of applicable taxes, ina separate component of net assets. The cost of securities sold is determined mainly by themoving-average method.)
Shares, etc., that do not have a market price:
Stated at cost determined mainly by the moving-average method
Equity investments:
Securities other than shares, etc., that do not have a market price:
Stated at the market value (Unrealized gains and losses are reported, net of applicable taxes, ina separate component of net assets. The cost of securities sold is determined mainly by themoving-average method.) Investments in non-consolidated subsidiary and affiliates notaccounted for by the equity method are stated at cost determined by the moving-averagemethod. For investments in limited partnership for investment and similar partnerships(deemed as securities under Article 2, Paragraph 2 of the Financial Instruments and ExchangeAct), the most recent financial statements available according to the financial reporting datestipulated in the partnership agreement are used as the basis for calculating the net amountequivalent to the Company’s equity interest.
Shares, etc., that do not have a market price:
Stated at cost determined mainly by the moving-average method
Derivatives:
Stated at market values
Inventories:
Real estate for sale: mainly stated at cost determined by the identified cost method. (The amountposted in the consolidated balance sheet was computed by writing down the book value withregard to the inventories for which profitability was clearly declining.)
Real estate for sale in process: Same as the above
Real estate for development: Same as the above
Costs on construction contracts in progress: Same as the above
Non-current assets:
The Company and its consolidated domestic subsidiaries adopt asset-impairment accounting.
Consolidated subsidiaries overseas apply International Financial Reporting Standards and U.S.
accounting standards.
(2) Depreciation Method of Important Depreciable Assets
Property, plant and equipment:
Depreciation of property, plant and equipment of the Company and its consolidated domestic
subsidiaries is calculated principally by the declining-balance method at fixed rates.
However, the straight-line method is adopted for buildings (excluding building improvements) acquiredon or after April 1, 1998 and building improvements and structures acquired on or after April 1, 2016.
Depreciation of property, plant and equipment of consolidated foreign subsidiaries is calculated by thestraight-line method.
Intangible assets:
The amortization of intangible assets is computed by the straight-line method. Capitalized software forinternal use is amortized by the straight-line method over the estimated internal useful life (mainly 5
years).

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[Translation for Reference and Convenience Purposes Only](3) Accounting Policies for Important Reserves
Allowance for doubtful accounts:
An allowance for doubtful accounts is provided, for possible losses from uncollectible loans andreceivables, at the amount calculated based on the actual rate of losses from the bad debt for ordinary
receivables, and on the estimated recoverability for specific receivables such as doubtful receivables.
Provision for retirement benefits for directors (and other officers):
In consolidated subsidiaries, a provision for retirement benefits for directors (and other officers) is
provided at 100% of the amount that would be required at the end of the fiscal year under review inaccordance with internal regulations.
Provision for environmental measures:
An estimated amount of loss that could be caused along with environmental measures including
treatment of PCB (Polychlorinated biphenyl) waste is provided.
(4) Accounting Method for Retirement Allowances
1) Method to attribute estimated retirement allowances to period of services
To calculate the Company’s liability for retirement allowances, the method of benefit formula basis ismainly adopted to attribute the estimated amounts of retirement allowance obligations to the period up
to the end of the fiscal year under review.
2) Accounting method for actuarial gains or losses and prior service cost
Prior service cost is mainly amortized on a straight-line basis over a certain period (1 year–10 years)
within an average remaining period of service of employees at the time of each occurrence.
Actuarial gains or losses are mainly amortized on a straight-line basis over a certain period (1 year–15
years) within an average remaining period of service of employees at the time of their occurrence, witheach amount recognized as an expense starting from the following fiscal year.
(5) Translation of Important Assets and Liabilities Denominated in Foreign Currencies into Yen
The assets and liabilities denominated in foreign currencies of foreign subsidiaries are translated into yen
at the spot rate of foreign exchange in effect at the consolidated balance sheet date of the respective
subsidiaries. The revenue and expense accounts of foreign subsidiaries are translated into yen using the
average rate of foreign exchange during the fiscal year under review. The resulting translation exchange
differences have been presented as “Foreign currency translation adjustment” under “Net assets.”(6) Important Hedge Accounting
1) Hedge Accounting
The Company adopts the deferral hedge accounting, in principle. For interest rate swaps, thepreferential treatment is applied to the swaps which satisfy the requirements of such preferential
treatment. For currency swaps, the appropriation treatment is applied to the swaps which satisfy therequirements of such appropriation treatment.
2) Hedging Instruments and Hedged Items
Hedging instruments:
Hedged items:
Interest rate swaps
Borrowings
Currency swaps
Borrowings and corporate bonds
Borrowings
Equity of the foreign subsidiaries
3) Hedging Policy
The risk hedging transactions are intended to hedge the exposure to fluctuation risks in interest rates
and foreign currency exchange rates, in accordance with the internal regulations such as “Market Risk
Management Rules” and “Management Guideline by Risk.”
4) Method of Assessing Hedge Effectiveness
The Company compares the cumulative amounts of fluctuations in the rates or in the cash flows of thehedged items with the cumulative amounts of fluctuations in the rates or in the cash flows of thehedging instruments, and assesses the effectiveness of hedging transactions based on the ratio between
the two amounts.
However, the assessment of hedge effectiveness is omitted for interest rate swaps to which special
treatment is applied.
(Hedge transactions to which “Treatment of Hedge Accounting for Financial Instruments Referring to
LIBOR” is applied)
Among the above hedge transactions, all hedge transactions included in the scope of application of“Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (ASBJ Revised
Practical Solution No.40, March 17, 2022) are subject to the exceptional treatment prescribed in the
Revised Practical Solution. The details of hedging transactions to which the Revised Practical Solution
is applied are as follows.

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Hedge accounting method:

Deferred hedge accounting, exceptional accounting for interest
rate swaps
Hedging instruments:
Interest rate swaps and currency swaps
Hedged items:
Borrowings and corporate bonds
Types of hedging transactions:Fixing cash flows(7) Accounting for Consumption Taxes Transactions subject to the consumption tax and local consumption
tax is recorded at amounts exclusive of consumption taxes. Non-deductible consumption tax and local
consumption tax are charged to income for the fiscal year under review.
(8) Accounting for significant revenues and expenses
The Company and its consolidated subsidiaries measure revenue from contracts with customers based on
the consideration stipulated in the contract with the customer. The main performance obligations in themain business relating to contracts with customers and the usual time at which such performanceobligations are satisfied (the usual time at which revenue is recognized) are as follows.
The promised consideration for contracts with customers in our major businesses is usually paid within
one year from the time the performance obligation is satisfied, and since the amount of the promised
consideration does not include a significant financial component, there are no contracts with customers forwhich we have adjusted the consideration for this effect.
1) Commercial Property Business Segment
Primarily engaged in the business of leasing office buildings and commercial facilities developed andowned, and in the business of selling office buildings and commercial facilities developed and owned.
 Real estate leasing business
Office buildings and commercial facilities developed and owned are leased, and revenue isrecognized for lease transactions in accordance with the “Accounting Standard for Lease
Transactions” (ASBJ Statement No.13, March 30, 2007, hereinafter referred to as “Leaseaccounting standards”) and other standards.
 Real estate sales business
Office buildings and commercial facilities developed and owned are sold, and revenue isrecognized when the real estate is delivered to the customer.
 Others
Other businesses include building operation and management, and hotel business.
In the building operation and management business, we operate office buildings and commercial
facilities and provide real estate management services. As the manager of the entire building, we
assume responsibility for overall management throughout the management operations and provide
building management services by performing various management tasks such as security, facility
management, cleaning, and planting services under contract terms. Since these services are
consumed by the customer as the service is provided in satisfaction of its performance obligation,
revenue is recognized over the contractual period with the customer and is measured by the amountbilled to the customer based on the passage of time. In addition, the Company contracts withlessees for internal construction work, etc. For construction contracts such as internal construction
with customers in the building operation and management business, the Company recognizes
revenue based on the cost incurred and the degree of completion of the construction work over thecontract period with the customer, since the customer controls the asset as the performanceobligation is satisfied. In cases where the period of time over which the performance obligation is
expected to be fully satisfied from the date of inception of the transaction in the contract is very
short, revenue is not recognized over a certain period of time based on alternative treatment ofmateriality, etc., and revenue is recognized when the performance obligation is satisfied.
In the hotel business, the Company and its consolidated subsidiaries operate hotels in buildings
they own. Revenue related to the hotel business is recognized over the period of use of the facilityby the customer, as the customer consumes the service as it is provided in satisfaction of theperformance obligation.
2) Residential Business Segment
Mainly engaged in construction, sales, and leasing of developed condominiums and residential houses,
as well as management of condominiums and houses on consignment and custom-built housingbusiness, etc.
 Condominium sales businessCondominiums for sale that have been conducted from the purchase of land to construction are
sold to customers, and revenue is recognized at the time the real estate is delivered to the customer.
 Contracted residential property management services
Property management services for condominiums, residential houses, etc., are rendered. As the-5-[Translation for Reference and Convenience Purposes Only]

3)

4)

5)

manager of the entire building, the company assumes responsibility for general management
throughout the management operations and provides building management services by performing
various management tasks such as security guard services, facility management, cleaning, andplanting under contractual terms. Since these services are consumed by the customer as the service
is provided in satisfaction of its performance obligation, revenue is recognized over the contractual
period with the customer and is measured by the amount billed to the customer based on thepassage of time.
 Design and contract construction of custom-built houses
Custom-built houses are sold on order, and the Company constructs and delivers houses on thecustomer’s land based on building construction contracts with the customer.
In this service, the customer controls the asset as the performance obligation is satisfied, andrevenue is recognized over the term of the contract with the customer based on the percentage ofcompletion of the construction at the cost incurred.
In cases where the period of time over which the performance obligation is expected to be fully
satisfied from the date of commencement of the transaction in the contract is very short, revenue
is not recognized over a certain period of time based on alternative treatment of materiality, etc.,
and revenue is recognized when the real estate is delivered to the customer.
 Others
Other activities include renovation and sales of condominiums, real estate brokerage, and leasingof rental condominiums. For sales of renovated condominiums, revenue is recognized at the time
the property is delivered to the customer. Real estate brokerage services provide services toconclude real estate sales contracts and real estate lease contracts and deliver real estate on behalfof customers based on real estate brokerage contracts with customers. For this service, revenue isrecognized upon completion of the delivery of the brokerage property. For lease transactions
related to rental condominiums, the Company recognizes revenue in accordance with Leaseaccounting standards and other standards.
International Business Segment
In overseas, it is engaged in the business of developing and leasing office buildings, residences,
commercial facilities, and other properties. In the real estate leasing business, the Company recognizes
revenues in accordance with Lease accounting standards. When office buildings developed and ownedby the Company are sold to customers, revenue is recognized at the time the properties are delivered tothe customers. When the financial statements of foreign consolidated subsidiaries are prepared inaccordance with International Financial Reporting Standards (IFRS) or U.S. GAAP, such financial
statements are used in accordance with “Unification of Accounting Policies Applied to Foreign
Subsidiaries, etc. for Consolidated Financial Statements” (ASBJ Revised Practical Solution No.18,
June 28, 2019, hereinafter referred to as “PITF No.18”).
Investment Management Business Segment
It provides comprehensive services related to real estate investment, mainly offering asset management
services to investment corporations and real estate funds. Revenue from asset management services
includes asset management fees over the contract period as well as success fees for property
acquisitions and property sales. Asset management fees include the amount of assets under management
multiplied by a contractually defined rate and variable fees based on asset performance multiplied bya contractually defined rate. Because asset management fees are consumed by customers as obligations
in contracts with customers are performed and services are rendered, revenue is recognized over theterm of the contract with the customer only to the extent that it is probable that, upon subsequent
resolution of the uncertainty based on the mode method, there will not be a significant reduction in therevenue recorded by the time the uncertainty is resolved. For success fees at the time of property
acquisition or sale, revenue is recognized when the performance obligation is satisfied. When thefinancial statements of foreign consolidated subsidiaries are prepared in accordance with International
Financial Reporting Standards (IFRS) or U.S. GAAP, such financial statements are used in accordancewith PITF No.18.
Architectural Design & Engineering Business and Real Estate Services Business
It is engaged in the design and engineering business and the real estate service business.
 Architectural Design & Engineering Business
Building design and engineering services are provided until building construction is complete. For
such services, the Company recognizes revenue based on the percentage of completion at cost
incurred over the term of the contract with the customer, since the customer controls the asset as
it satisfies its performance obligations. In cases where the period of time over which theperformance obligation is expected to be fully satisfied from the date of inception of the-6-[Translation for Reference and Convenience Purposes Only]
transaction in the contract is very short, revenue is not recognized over a certain period of time
based on alternative treatment of materiality, etc., and revenue is recognized when the performanceobligation is satisfied.
 Real Estate Services Business
Parking management services and real estate brokerage services are provided. In the parking
management service, we assume overall management responsibility for customer-owned parking
facilities as the manager of the entire facility and provide parking management and operation
services by performing various management tasks such as security, facility management, andcleaning under contractual terms. Parking management and operation services are consumed by
the customer as the services are provided in satisfaction of its performance obligations, andrevenue is recognized over the term of the contract with the customer and is measured by theamount billed to the customer over time.
Real estate brokerage services are provided based on real estate brokerage contracts withcustomers to conclude real estate sales contracts and real estate lease contracts on behalf ofcustomers and to deliver real estate. The Company recognizes revenue from this service uponcompletion of the delivery of the brokerage property.
Recognition of revenues from operating leases
Revenue is recognized based on the monthly lease payments to be received under the lease contracts
over the elapsed term of the leases.
Recognition of revenues from finance lease transactions
The Company recognizes net sales and cost of sales related to finance lease transactions at the time ofreceipt of the lease payments.
(9) Amortization Method and Amortization Period of Goodwill
Goodwill is equally amortized over five (5) years on a straight-line basis. However, if the effect-emerging
period can be reasonably estimated, the amount is equally amortized over the estimated period or if theamount is small, it is amortized for one (1) time.
Notes on Changes in Accounting Policies
1. Application of Accounting Standard for Revenue Recognition
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29,
March 31, 2020; hereinafter “Revenue Recognition Standard”) and other standards from the beginning of the
fiscal year under review. The Company recognizes revenue when control of a promised good or service istransferred to a customer in an amount that reflects the consideration to which the Company expects to beentitled in exchange for those goods and services. Previously, the percentage-of-completion method wasapplied to construction contracts for which the outcome of the construction activity could be estimatedreliably, while the completed-contract method was applied to other construction contracts, however, we havechanged to estimate the degree of progress toward satisfying performance obligations and recognize revenue
over a certain period of time based on the degree of progress. However, for construction contracts with a very
short period of time between the transaction commencement date and the time when the performanceobligation is expected to be fully satisfied, revenue is recognized when the performance obligation is fully
satisfied. For real estate brokerage and sales agency contracts, the Company previously recognized asrevenue the consideration received at the time the sale was concluded between the seller and the buyer and at
the time the property was delivered to the buyer, respectively. However, the Company has changed thisaccounting practice so that all consideration is recognized as revenue upon completion of delivery of theproperty, which satisfies the performance obligation.
The Company applies the Revenue Recognition Standard, etc., in accordance with the transitional treatment
provided for in the proviso to Paragraph 84 of the Revenue Recognition Standard. The cumulative impact ofretrospectively applying the new accounting policies to the previous fiscal years is adjusted to retained
earnings at the beginning of the fiscal year under review, with the new accounting policies applied from the
beginning balance. In addition, applying the method stipulated in proviso (1) to Paragraph 86 of the Revenue
Recognition Standard, contract modifications that occurred prior to the beginning of the fiscal year underreview were accounted for based on the terms of the contract after reflecting all contract modifications, withthe cumulative impact adjusted to retained earnings at the beginning of the fiscal year under review.
As a result, the effect of the application of the Revenue Recognition Standard on profit and loss, retained
earnings at beginning, and per share information for the fiscal year under review was immaterial.
Furthermore, “Trade notes and accounts receivable,” which was presented under “Current assets” in theConsolidated Balance Sheet of the previous fiscal year, has been included under “Trade notes and accounts
receivable, and contract assets” from the fiscal year under review.

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2. Application of Accounting Standard for Fair Value Measurement
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30,
July 4, 2019; hereinafter “Fair Value Measurement Standard”) and other standards from the beginning of the
fiscal year under review, and will prospectively apply the new accounting policies stipulated by the Fair
Value Measurement Standard, etc., in accordance with the transitional treatment provided in Paragraph 19 of
the Fair Value Measurement Standard and Paragraph 44-2 of the “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10, July 4, 2019).
Accordingly, for corporate bonds, which were previously considered to be financial instruments whose fairvalue was extremely difficult to determine, the acquisition cost was used as the consolidated balance sheet
amount, however, even if observable inputs are not available, the fair value calculated using unobservable
inputs based on the best available information is used as the consolidated balance sheet amount.
In addition, the Company will include notes on fair value information by level within the fair value hierarchyin the notes on financial instruments.

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[Translation for Reference and Convenience Purposes Only]
Notes on Accounting Estimates
1. Valuation of Property, Plant and Equipment(1) Amount Recorded in the Consolidated Financial Statements for the Fiscal Year under Review
Amount(Millions of yen)
4,345,989
Property, plant and equipment
3,866
Impairment losses(2) Other Information
1) Calculation Method for the Amount Recorded in the Consolidated Financial Statements for the Fiscal
Year under Review
The Group mainly owns real estate properties such as office buildings, commercial facilities, outlet
malls, hotels, logistics facilities as property, plant and equipment. For property, plant and equipment
owned by the Group, if the total undiscounted future cash flows from an asset or asset group, forwhich events or changes in circumstances indicate that the book value of the asset or asset group may
not be recoverable, are less than the book value, the book value is reduced to the recoverable amount,and such reduced amount is recorded as an impairment loss, in accordance with the AccountingStandard for Impairment of Fixed Assets.
When grouping assets in order to judge whether to recognize impairment losses or to perform themeasurement of impairment losses, a unit for asset grouping shall be the smallest unit that generates
cash flows that are largely independent of the cash flows of other assets or groups of assets.
The higher of net sale value and value in use is used as recoverable amount. While the net sale value isexpressed as an appraised value by a real estate appraiser or estimated trading price, the discounted
future cash flows are used to measure the value in use.
2) Major Assumptions
In principle, the Group estimates rents, capital expenditures, and discount rates for each individual
property. The estimation is made based on major assumptions by each asset class, taking into accountthe condition of individual properties.
The major assumptions used when estimates were made in the fiscal year under review are as follows.
 Offices
Average rents have recently been on a steady positive trend, which is expected to continue in the next
fiscal year. The vacancy rate is higher than before the spread of the novel coronavirus infection(COVID-19) because it is taking time to backfill vacancies, but we expect that the time required tobackfill vacancies will gradually improve to the normal level from the next fiscal year.
 Commercial facilities and outlet malls
As commercial rents include variable rents that are linked to tenant sales, there is a correlation between
rents and tenant sales at the relevant commercial facilities. As in the previous fiscal year, the effects of
COVID-19 remained in the fiscal year under review, and tenant sales decreased compared to before
the impact of COVID-19. However, they are currently on an improving trend, so we assume that thiseffect on sales will be limited in the next fiscal year and beyond.
 Hotels
Currently, occupancy rates have stayed at low levels due to the impact of COVID-19 and it is expected
to take a certain period of time for occupancy rates to recover to the level we had before being affectedby COVID-19. For our estimates, we assumed that hotel demand would recover to the pre-COVID-19
levels in around 2024, taking into account the overall outlook for global air demand and tourism
demand.
 Logistics facilities
Logistics facilities have not been affected by COVID-19, and the market has been favorable.
Therefore, we assume that performance of logistics facilities will continue to be steady in the next
fiscal year and beyond as is expected for the market trend.
 Redevelopment projects
The Group is engaged in multiple redevelopment projects. Compared with other development projects,
redevelopment projects have potential risks entailing that their profitability will be lower than initial
estimates as a result of delays or changes in plans. Such risks include the risk of not obtaining
agreement from other landowners in the area planned for redevelopment, and the risk of not obtaining
development permission from local governments.
The Group comprehensively assesses these various risks for redevelopment projects. However, theredevelopment projects currently underway are not in any situation that would decrease theirprofitability from the initial estimates. We therefore assume that these redevelopment projects will
progress while maintaining their profitability.
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3) Impact on the Consolidated Financial Statements for the Next Fiscal YearThe estimation of impairment losses is made based on the descriptions of 2) Major Assumptions.
Therefore, if major assumptions used for estimating impairment losses worsen, additional impairment
losses may be recognized in the next fiscal year.
2. Valuation of Inventories(1) Amount Recorded in the Consolidated Financial Statements for the Fiscal Year under Review
Amount(Millions of yen)
Real estate for sale
41,239299,532
Real estate for sale in process
380
Loss on devaluation of inventories recorded(2) Other information
1) Calculation Method for the Amount Recorded in the Consolidated Financial Statements for the Fiscal
Year under Review
If the net sale value of inventories falls below the book value, due to a decline in profitability, theGroup reduces the book value to the net sale value and records the reduced amount as loss ondevaluation, in accordance with the Accounting Standard for Measurement of Inventories. The net salevalue is the estimated sales value less the estimated additional construction costs and estimated sales
expenses.
2) Major Assumptions
The major assumption used in the estimation of net sale value for the fiscal year under review are as
follows.
Considering factors such as the latest quarterly distribution of sales by agreement date, contract prices
and number of model units visitors, the net sale values of projects whose performance is generally inline with or better the initial business plan are estimated based on the initial business plan. Meanwhile,the net sale values of projects whose performance has deteriorated from the initial business plan are
estimated based on a revised business plan, taking into consideration conditions unique to each projectsuch as the status of progress, market prices in the neighborhood and incurrence of additional costs. As
for the impact of COVID-19, we assume that the impact will be limited because current demand issteady and inventory is decreasing.
In addition, pre-construction land for development related to the condominium business has potential
risks entailing that its profitability may be lower than initially expected as a result of delays in the
projects or changes in the plan during the period up to the sales. Such risks include the risk of thedeclining of future selling price, the risk of excessive supply, and the risk of construction delay due toconsultation with neighbors.
The Group comprehensively assesses these various risks for pre-construction land for development.
However, the pre-construction projects currently underway are not in any situation that would decrease
their profitability from the initial estimates. We therefore assume that such development projects will
progress while maintaining their profitability.
3) Impact on the Consolidated Financial Statements for the Next Fiscal YearIn the valuation of inventories, the book value is written down based on the descriptions of 2) Major
Assumptions by the lower of cost or market (LCM) method. Therefore, changes in these major
assumptions used for the valuation of inventories may result in the recording of a gain on sales or an
additional loss on devaluation in the next fiscal year.

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[Translation for Reference and Convenience Purposes Only]
3. Valuation of Equity Investments(1) Amount Recorded in the Consolidated Financial Statements for the Fiscal Year under Review
Amount(Millions of yen)
624,521Equity investments(2) Other information
1) Calculation Method for the Amount Recorded in the Consolidated Financial Statements for the Fiscal
Year under Review
If the effective market value of equity investments without market price declines significantly, theGroup reduces the book value by a reasonable amount, and records such reduced amount as an
impairment loss on equity investments, in accordance with the Accounting Standard for Financial
Instruments.
In calculating the effective market value, the Group performs valuations of assets held by investees foreach purpose of holding.
2) Major Assumptions
For assets held by investees, major assumptions are determined according to the purpose of holding
such assets. For the details of assumptions made for the relevant assets, please refer to 1. Valuation of
Property, Plant and Equipment and 2. Valuation of Inventories.
3) Impact on the Consolidated Financial Statements for the Next Fiscal YearThe estimation for impairment loss on equity investments is made based on assumptions described in
2) Major Assumptions. Therefore, if there are changes in these major assumptions, it may result in
additional impairment losses on equity investments in the next fiscal year.

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[Translation for Reference and Convenience Purposes Only]
Note to the Consolidated Balance Sheet
1. Accumulated Depreciation for Property, Plant and Equipment: ¥1,800,930 million
The accumulated depreciation above includes the accumulated impairment loss.
2. Assets Subject to Collateral and Secured Debt
(1) Assets Subject to Collateral:
Buildings and structures¥199,896 million
Machinery, equipment and vehicles¥1,443 million
Land¥235,552 million
Investment securities (Note)¥15,716 million
Other (Note)¥850 million
Total¥453,459 million(Note) Investment securities of 15,716 million yen and other of 840 million yen are pledged as collateral
for the debts of the affiliated companies.
(2) Debt Secured by the Above:
Short-term borrowings
Current portion of long-term borrowings
Long-term borrowings
Total¥100 million¥16,887 million¥72,393 million¥89,381 million- 12 -

[Translation for Reference and Convenience Purposes Only]
3. Contingent Obligations(1) Guarantee Obligations
Warrantee
Amount of obligation
Substance of obligation
Takamatsu Airport Co., Ltd.
¥1,500 million
Borrowings from financial institutions
Home buyers¥57,718 million
Borrowings from financial institutions
Total¥59,218 million
The guarantee obligations for home buyers mainly mean the Company’s joint and several guarantees tosecure the repayment of housing loans of home buyers in favor of financial institutions, which continue
until the registration of the creation of the corresponding mortgages has been completed.
(2) Guarantee of Acceptance of Businesses
Warrantee
Amount of obligation
Substance of obligation¥16,518 million
PT. Windas Development
Borrowings from financial institutions(US$143,615 thousand)¥2,065 million
Meeyahta Development, Ltd.
Borrowings from financial institutions(US$16,875 thousand)¥1,951 million
NoMad 29th Street
Borrowings from financial institutions(US$16,967 thousand)
TRCC/Rock Outlet¥1,655 million
Borrowings from financial institutions
Center, LLC(US$14,392 thousand)¥1,036 million
1465 THIRD AVE JV LP
Borrowings from financial institutions(US$9,014 thousand)¥8,259 million
CL Office Trustee Pte. Ltd.
Borrowings from financial institutions(S$97,000 thousand)¥1,447 million
Glory SR Trustee Pte. Ltd.
Borrowings from financial institutions(S$17,000 thousand)Lendlease OSH Residential A Pty¥20,706 million
Borrowings from financial institutions
Ltd(AU$225,069 thousand)Lendlease OSH Residential B Pty¥9,690 million
Borrowings from financial institutions
Ltd(AU$105,332 thousand)¥11,511 million
Twin Peaks Joint Stock Company(US$95,000 thousand,Borrowings from financial institutions
VND115,925 million)¥4,499 million
RML548Co., Ltd.
Borrowings from financial institutions(THB1,223 million)
Total¥79,343 million
The Company guarantees acceptance of businesses in favor of creditors of Meeyahta Development, Ltd.,
Lendlease OSH Residential A Pty Ltd, Lendlease OSH Residential B Pty Ltd and RML548Co., Ltd. in theamount equivalent to the percentage of equity interest owned by the Company.
MEC Group International Inc. guarantees acceptance of businesses in favor of creditors of NoMad 29th
Street, TRCC/Rock Outlet Center, LLC and 1465 THIRD AVE JV LP in the amount equivalent to thepercentage of equity interest owned by the MEC Group International Inc.
Mitsubishi Estate Asia Pte. Limited guarantees acceptance of businesses in favor of creditors of CL Office
Trustee Pte. Ltd. and Glory SR Trustee Pte. Ltd. in the amount equivalent to the percentage of equity
interest owned by Mitsubishi Estate Asia Pte. Limited.
Mitsubishi Estate Asia Pte. Limited and MEA Commercial Holdings Pte. Ltd. guarantee acceptance ofbusinesses in favor of creditors of PT. Windas Development. Furthermore, for the amount in excess of theamount equivalent to the percentage of equity interest owned by Mitsubishi Estate Asia Pte. Limited and
MEA Commercial Holdings Pte. Ltd., the Company has received either the provision of collateral or
guarantees from its business partners.
MEA Commercial Holdings Pte. Ltd. guarantees acceptance of businesses in favor of creditors of Twin
Peaks Joint Stock Company in the amount equivalent to the percentage of equity interest owned by MEA
Commercial Holdings Pte. Ltd.

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[Translation for Reference and Convenience Purposes Only]
4. Revaluation of Land
The Company and some of its consolidated subsidiaries revalued the land used for its business in accordancewith the “Act on Revaluation of Land” (Act No. 34, March 31, 1998) and the “Act Partially Amending the Act
on Revaluation of Land” (Act No. 19, March 31, 2001). The revaluation difference has been included in “Netassets” as “Revaluation reserve for land,” net of the related tax that is included in “Liabilities” as “Deferred
tax liabilities for land revaluation.”
Revaluation method: The value of land is determined based on the assessed value of the fixed property tax
adjusted reasonably, as stipulated in Article 2, item (iii), of the Order for
Enforcement of the Act on Revaluation of Land (Cabinet Order No. 119, March 31,
1998).
Date of revaluation: March 31, 2002

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[Translation for Reference and Convenience Purposes Only]
Notes to the Consolidated Statement of Changes in Net Assets
1. Class and Total Number of Issued Shares and Class and Number of Treasury Shares
Number of Shares
as of the Beginningof Fiscal Yearunder Review

Increase during
the Fiscal Yearunder Review

Decrease during
the Fiscal Yearunder Review(Thousands of shares)
Number of Shares
as of the End of
Fiscal Year under
Review

Issued shares:
Shares of
1,391,328
150—
1,391,478
commonstock(Note 1)
Total
1,391,328
150—
1,391,478
Treasury shares:
Shares of
52,733
16,13416
68,852
commonstock(Note 2)
Total
52,733
16,13416
68,852
Notes:
1. The increase in the number of issued shares was due to the issuance of new shares through third-party
allotment (150 thousand shares).
2. The increase of 16,134 thousand shares in the number of the treasury shares of the Company was due to thepurchase of treasury shares by resolution of the Board of Directors (16,121 thousand shares), the purchaseof restricted stock (4 thousand shares) and the purchase of shares less than one (1) unit (8 thousand shares).
The decrease of 16 thousand shares was due to the exercise of stock options (16 thousand shares).
2. Matters related to Dividends from Surplus(1) Dividends Paid
Date of Resolution
Ordinary General Meetingof Shareholders held on
June 29, 2021
Meeting of Board of
Directors held on
November 10, 2021

Class of
SharesTotal
Amount ofDividends(Millions ofyen)

Dividendper Share(Yen)

Commonstock

25,43319

March 31,2021

June 30,
2021

Commonstock

21,34116

September
30, 2021

December 6,
2021

Record Date

Effective
Date(2) Of the Dividends for which the Record Date belongs to the Fiscal Year under review, those for which the
Effective Date of the Dividends will be in the following Fiscal Year
Total
AmountSource of Dividend
Class ofof
RecordEffective
Planned Date of Resolution
Funds for per Share
SharesDividends
Date
Date
Dividends(Yen)(Millionsof yen)Ordinary General Meeting
CommonRetained
March 31, June 30,
of Shareholders to be held
26,45220
stockearnings
2022
2022
on June 29, 2022

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[Translation for Reference and Convenience Purposes Only]
3. Matters related to Share Acquisition Rights

Breakdown of Share
Acquisition Rights

Class of
SharesSubject toShare
Acquisition
RightsNumber of the Shares subject to Share Acquisition Rights(Shares)
As of theBeginning of
Fiscal Year
under
Review

Increaseduring the
Fiscal Year
under
Review

Decreaseduring the
Fiscal Year
under
Review

As of theEnd of Fiscal
Year under
Review

Share acquisition rights granted
by a resolution at the meeting
Common
2,000
—
—
2,000
of the Board of Directors heldstock
on July 26, 2007
Share acquisition rights granted
by a resolution at the meeting
Common
3,000
—
—
3,000
of the Board of Directors heldstock
on July 31, 2008
Share acquisition rights granted
by a resolution at the meeting
Common
6,000
—
—
6,000
of the Board of Directors heldstock
on July 31, 2009
Share acquisition rights granted
by a resolution at the meeting
Common13,000
—
6,000
7,000
of the Board of Directors heldstock
1
on July 30, 2010
Share acquisition rights granted
Commonby a resolution at the meeting
17,000——17,000stockof the Board of Directors heldon July 29, 2011
Share acquisition rights granted
by a resolution at the meeting
Common19,000——19,000of the Board of Directors heldstock
on July 31, 2012
Share acquisition rights granted
by a resolution at the meeting
Common17,000—3,000
14,000of the Board of Directors heldstock
on July 31, 2013 2
Share acquisition rights granted
Commonby a resolution at the meeting
23,000—4,000
19,000stockof the Board of Directors heldon July 31, 2014 3
Share acquisition rights granted
by a resolution at the meeting
Common24,000—3,000
21,000of the Board of Directors heldstock
4
on July 31, 2015
Notes:
1. The decrease in the number of share acquisition rights, which were granted by a resolution at the meetingof the Board of Directors held on July 30, 2010, for the fiscal year under review resulted from the exerciseof the share acquisition rights.
2. The decrease in the number of share acquisition rights, which were granted by a resolution at the meetingof the Board of Directors held on July 31, 2013, for the fiscal year under review resulted from the exerciseof the share acquisition rights.
3. The decrease in the number of share acquisition rights, which were granted by a resolution at the meetingof the Board of Directors held on July 31, 2014, for the fiscal year under review resulted from the exerciseof the share acquisition rights.
4. The decrease in the number of share acquisition rights, which were granted by a resolution at the meetingof the Board of Directors held on July 31, 2015, for the fiscal year under review resulted from the exerciseof the share acquisition rights.

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[Translation for Reference and Convenience Purposes Only]
Notes on Financial Instruments
1. Matters relating to Financial Instruments(1) Policies to approach to financial instruments
The Group raises the necessary funds (mainly bank borrowings and bond issues) in light of the capital
investment plan. In terms of fund management, it makes every effort to avoid market risks by emphasizing
liquidity and shortening the fund management period. As for derivative transactions, the Group makes it apolicy not to engage in speculative transactions, focusing primarily on hedging exposures to fluctuation ofinterest rates, reducing interest expenses, and hedging the exposure to fluctuation risks in foreign currency
exchange rates.
(2) Contents and risks of financial instruments
Trade notes and accounts receivable, which are trade receivables, are exposed to the credit risks ofcustomers. Trade receivables in foreign currencies arising from overseas operations are exposed to risks ofcurrency fluctuations.
Securities and investment securities include mainly held-to-maturity debt securities and shares ofcompanies with which we have business relationships, and are exposed to risks of fluctuations in market
prices.
Equity investments includes mainly preferred equity investments in special-purpose companies under
the Law Concerning Liquidation of Assets, investments in investment units of real estate investment trusts,
and investments in anonymous partnerships into special-purpose companies. They are exposed to credit
risks of respective issuers, risks of changes in interest rates, and risks of fluctuations in market prices.
Leasehold and guarantee deposits for leased premises are exposed to credit risks of business partners.
Most of trade notes and accounts payable, which are trade payables, are due within one (1) year. Someof them in foreign currencies are exposed to risks of currency fluctuations.
Borrowings and bonds payable are intended to raise funds required mainly for capital expenditures, andtheir maturity dates and repayment dates are in a maximum of fifty nine (59) years after the closing date.
Although some of them have floating rates and are exposed to interest rate risks, they are hedged throughderivative transactions (interest rate swaps.)
Derivative transactions include interest rate swaps, currency swaps and forward exchange contracts.
Interest rate swaps hedge exposures to interest rates by fixing interest rates for financing at floatinginterest rates. Some of the consolidated subsidiaries trade interest rate and currency swaps based on thesame trading policies and for the same utilization purposes as the Company adopts.
(3) Risk management systems relating to financial instruments(i) Management of credit risks (risks of contractual defaults by business partners)
The Group periodically monitors trade receivables, and leasehold and guarantee deposits of major
business partners through the department in charge of each segment, manages the due date and thebalance by business partner, and discovers promptly and reduces the risks of failures to collectmoney due to their deteriorating financial positions(ii) Management of market risks (risks of fluctuations in foreign exchange rates and interest rates)
The Group capitalizes on interest rate swap and currency swap transactions to limit the risks offluctuations in interest rates on borrowings and bonds payable. The Group also uses foreign
currency borrowings to hedge the risk of foreign exchange rate fluctuations on its net investments inforeign subsidiaries. In terms of securities and investment securities, the Group assesses the market
values and financial positions of issuers (business partners) on a regular basis. As for those
excluding held-to-maturity debt securities, the Group continuously reviews positions in
consideration of the market conditions and relationships with business partners.
(iii) Management of liquidity risks of financing (risks of failure to pay on the due date)
The Group in a timely way develops and updates the financing plans through departments in charge
based on reports from each department, and manages liquidity risks by maintaining cash balances.
(4) Supplemental explanation for matters relating to market values, etc. of financial instruments
Since measurement of market values of financial instruments incorporate variable factors, the relevant
values may vary depending on the assumptions adopted.

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[Translation for Reference and Convenience Purposes Only]
2. Matters related to Market Values, etc. of Financial Instruments
Amounts stated on the consolidated balance sheet as of March 31, 2022, market values, and their differences
are shown as follows.
(Millions of Yen)
Reported Amounts on
Market Value
Difference
the Consolidated
Balance Sheet(1) Securities and Investment
securities (*2)(i) Held-to-maturity debt
180
184
4
securities(ii) Other securities
254,533
254,533—(2) Equity investments (*2)(*4)
24,15024,150—Total assets
278,864
278,8684(1) Current portion of long-term
79,92880,346418
borrowings(2) Current portion of bonds
90,00090,426426
payable(3) Bonds payable
786,335
797,302
10,967(4) Long-term borrowings
1,598,562
1,617,802
19,239(5) Leasehold and guarantee
451,749
432,359(19,389)
deposits received
Total liabilities
3,006,575
3,018,237
11,662Derivative transactions (*3)
(92)
(92)
—
(*1) Cash and items whose market value approximates their carrying amount due to their short maturities areomitted.
(*2) Equity securities without market prices are not included in “(1) Securities and Investment securities” and“(2) Equity investments.” The carrying amounts of such financial instruments in the consolidated balance
sheets are as follows.
Classification
Reported Amounts on theConsolidated Balance Sheet(Millions of Yen)
1) Unlisted stocks
48,972
2) Investments in capital
94(*3) Net receivables and payables arising from derivative transactions are shown as net amounts, and items thatare net liabilities in total are shown in “( ).”(*4) Investments in partnerships, etc., which are recorded on the consolidated balance sheet at the net amountof the Company’s equity interest, are not included in “(2) Equity investments.”
The amount of such financial instruments recorded on the consolidated balance sheet is 1,389 million yen.

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[Translation for Reference and Convenience Purposes Only]
3. Matters concerning the breakdown of the market value of financial instruments by level, etc.
The market value of financial instruments is classified into the following three levels based on theobservability and materiality of the inputs used to calculate the market value.
Level 1 market value:
Market value calculated based on quoted market prices for assets or liabilities
for which such market value is calculated that are formed in an active market
among the inputs for the calculation of observable market value.
Level 2 market value:
Market value calculated using inputs other than Level 1 inputs for the
calculation of observable market value.
Level 3 market value:
Market value calculated using inputs for calculating unobservable market value
When multiple inputs that have a significant impact on the calculation of market value are used, the market
value is classified to the level with the lowest priority in the calculation of market value among the levels towhich each of those inputs belongs.
(1) Financial instruments carried on the consolidated balance sheet at market valueMarket value (Millions of Yen)
Classification
Level 1
Level 2
Level 3
Total
Securities and Investment
securities
Other securities
Stocks244,386——
244,386
Corporate bonds
—
—
5,866
5,866
Other securities
4,280
—
—
4,280
Equity investment
19,629—4,521
24,150Total assets
268,296—
10,387
278,684
Derivative transactions (*)
Interest-related
—
(92)
—
(92)
Total liabilities
—
(92)
—
(92)
(*) Net receivables and payables arising from derivative transactions are shown as net amounts, and items
that are net liabilities in total are shown in “( ).”(2) Financial instruments other than those recorded on the consolidated balance sheets at market valueMarket value (Millions of Yen)
Classification
Level 1
Level 2
Level 3
Total
Securities and Investment
securities
Held-to-maturity debt
securities
Government bonds
184
—
—
184
Total assets
184
—
—
184
Current portion of long—
80,346—80,346term borrowings
Current portion of bonds—
90,426—90,426payableBonds payable—
797,302—797,302
Long-term Borrowings—
1,617,802—
1,617,802
Leasehold and guarantee—
432,359—432,359
deposits received
Total liabilities—
3,018,237—
3,018,237(Notes) 1. Explanation of valuation techniques used in the calculation of market value and inputs related tothe calculation of market value
Securities and Investment securities
Listed stocks and government bonds with quoted market prices held by the Company and its
consolidated subsidiaries are valued using quoted market prices and are classified as Level 1
market value. Non-marketable corporate bonds are valued using the discounted present value
method based on the total principal and interest based on the remaining period and interest ratetaking into account credit risk, and are classified as Level 3 market value because the effect ofunobservable inputs on the market value is significant.
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[Translation for Reference and Convenience Purposes Only]
Equity investment
Equity investments with market value held by the Company and its consolidated subsidiaries
are valued using quoted market prices and are classified as Level 1 market value.
Non-marketable equity investments are valued using the adjusted net worth method, whereby
real estate owned by the investee is marked to market, and are classified as Level 3 market
value due to the significant impact of unobservable inputs on the market value.
Derivative transactions
The market values of interest rate swaps are calculated based on prices quoted by counterparty
financial institutions, etc., and are classified as Level 2 market values.
Current portion of bonds payable and Bonds payable
The market value of bonds issued by the Company and its consolidated subsidiaries is based on
the market price for bonds with market quotations and is classified as Level 2 market value. The
market value of bonds issued by the Company and its consolidated subsidiaries with no quoted
market price is calculated using the discounted present value method based on the total amountof principal and interest (for bonds that qualify for special treatment as interest rate swaps, thetotal amount of principal and interest based on the interest rate swap rate) and an interest ratethat takes into account the remaining period of the bonds and credit risk, and is classified as
Level 2 market value. (Certain bonds are subject to currency swaps, etc., and their market
values are calculated as if they were yen-denominated bonds.)
Current portion of long-term borrowings and Long-term borrowings
The market value of long-term borrowings is calculated using the discounted present value
method based on the sum of the principal and interest (or the principal and interest at the rate of
the interest rate swap for loans that qualify for the special treatment of interest rate swaps), withinterest rates taking into account the remaining term of the debt and credit risk, and is classified
as Level 2 market value. (Certain borrowings are subject to currency swaps, etc., and theirmarket value are calculated as if it were a yen-denominated debt.)
Leasehold and guarantee deposits received
The market value of leasehold and guarantee deposits received is determined using thediscounted present value method based on the amount of the obligation to return the guaranteemoney and deposits, the period until the due date, and an interest rate that takes into accountcredit risk, and is classified as Level 2 market value.

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[Translation for Reference and Convenience Purposes Only]
Notes on Leased Real Estate
The Company and some of its consolidated subsidiaries own office buildings for rent, commercial facilities
for rent and others in Tokyo and other areas including overseas areas (the United States, United Kingdom,etc.) for the purpose of obtaining revenue from leases.
Some office buildings for rent in Japan are regarded as real estate including parts used as leased real estatesince they are used by the Company and some of its consolidated subsidiaries.
The reported amounts on the consolidated balance sheet and the fair values of these leased real estate andreal estate including parts used as leased real estate at the end of the fiscal year under review are as follows:
Reported Amounts on the Consolidated
Balance Sheet (Millions of yen)
Leased real estate
Real estate including spaces used asleased real estate

Fair Value(Millions of yen)

3,725,804

7,924,196

541,325

916,224

Notes:
1. The reported amounts on the consolidated balance sheet have deducted accumulated depreciation
costs and accumulated impairment losses from the acquisition cost.
2. Fair values at the end of the fiscal year under review are based on the following:(1) Fair values of real estate in Japan are calculated by the Company based mainly on the Real EstateAppraisal Standards.
(2) Fair values of real estate overseas are values appraised principally by local real estate appraisers.

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[Translation for Reference and Convenience Purposes Only]
Notes on Revenue Recognition
1. Break-down of Revenue
The Company breaks down its operating revenues based on its business segments and further breaks down its
commercial real estate and housing businesses by goods and services.
For the fiscal year
under review(Millions of yen)
Commercial property business
Real estate leasing business (Note 1)
546,186
Real estate sales business
126,878
Others87,593Sub-total
760,658
Residential businessCondominium sales business
212,335
Contracted residential property management services
56,664
Design and contract construction of custom-built
38,910housesOthers73,049Sub-total
380,959
International business (Note 1)
121,234
Investment management business
46,702
Architectural design & engineering and real estate
57,780services business
Other business
10,134
Total
1,377,469
Inter-segment transactions (Note 2)(27,979)
Amount recorded in consolidated financial statements
1,349,489
Revenue from contracts with customers
716,005
Revenue from other sources (Note 1)
633,483(Notes) 1. Operating revenues from real estate leasing in the commercial property business and from theinternational business are recognized mainly by applying “Accounting Standard for Lease
Transactions” (ASBJ Statement No.13) and other related standards. When financial statements ofoverseas consolidated subsidiaries are prepared in accordance with International Financial ReportingStandards (IFRS) or U.S. GAAP, such financial statements are used in accordance with PITF No. 18.
2. The above revenue breakdown includes intersegment revenues and transfers.
2. Basis information for understanding revenues arising from contracts with customers
As described in Note “4 Matters related to Accounting Policies (8) Accounting for significant revenues andexpenses” in the Notes on Important Matters for the Preparation of the Consolidated Financial Statements.
3. Information to understand the amount of revenue in the fiscal year under review and subsequent fiscal years(1) Receivables, contract assets, and contract liabilities arising from contracts with customers
The balances of receivables, contract assets, and contract liabilities arising from contracts with customers at
the beginning and end of the fiscal year under review are as follows. In the consolidated balance sheets,
receivables and contract assets arising from contracts with customers are included in “Trade notes andaccounts receivable, and contract assets,” and contract liabilities are included in “Other” under “Current
liabilities,” respectively.
Beginning of the fiscal year
End of the fiscal year
under review (Millions of yen)under review (Millions of yen)
Receivables arising from contracts
29,952
34,530with customers
Contract assets
4,612
7,081
Contract liabilities
29,06029,579Contract assets consist mainly of the rights to the consideration based on the progress of the construction
work at the end of the reporting period for design and engineering contracts and housing contracts, excluding
receivables, which are transferred to receivables when the work is completed and the consideration is
invoiced to the customer.

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[Translation for Reference and Convenience Purposes Only]
Contract liabilities consist primarily of deposits received from customers under contracts for the sale ofcondominium units.
Of the contract liability balances at the beginning of the fiscal year under review, 18,090 million yen was
related to condominium sales, of which 15,929 million yen was recognized as revenue in the fiscal year underreview. Almost all of the contract liabilities other than those related to sales of condominiums wererecognized as revenues during the fiscal year under review.
(2) Transaction price allocated to remaining performance obligations
The transaction value allocated to the residual performance obligation was 83,935 million yen at the end of
the fiscal year, of which 12,409 million yen was allocated to the Commercial property business and 71,526
million yen to the Residential business. As of the end of the fiscal year under review, the estimated timing of
performance of outstanding performance obligations is generally within two years for the Commercial
property business and generally within three years for the Residential business. The notes apply the practical
expedient method and do not include contracts with initial expected contract periods of one year or less andcontracts for which revenue from satisfaction of performance obligations is recognized in accordance with
Paragraph 19 of the Implementation Guidance.
Per-Share Information
Net assets per share
Earnings per share¥1,514.58¥116.45- 23 -

[Translation for Reference and Convenience Purposes Only]
Other Notes
1. Impairment Loss
The impairment loss is recorded for the following asset groups for the fiscal year under review.
Major application
Leased assets, etc.
(total 62 groups)

Category
Land and buildings, etc.

Location
Setagaya-ku, Tokyo; etc.

Asset grouping for the Group was made based on a minimum unit that generates cash flows, which issubstantially independent from cash flows of other assets or asset groups. Company condominiums are
regarded as shared assets.
As a result, the book values of sixty-two (62) asset groups, consisting of those for which the market prices
fell considerably compared with the book values due to a decline of land prices and those for which
profitability decreased considerably due to fallen rent levels or deteriorated market conditions, etc., werereduced to the respective recoverable amounts and such reduced amounts were recorded as an impairment
loss (¥3,866 million) under extraordinary losses.
The breakdown of such impairment loss was ¥212 million in land and trusted land, and ¥3,653 million inbuildings, structures and others. The recoverable amounts of asset groups are measured with net sale value
or value in use, and the net sale value is principally expressed as an appraised value by a real estateappraiser. Future cash flows discounted at a rate of five (5) % are principally used to compute the value inuse.
2. Asset Retirement Obligations(1) Asset retirement obligations posted on the Consolidated Balance Sheet
1) Outline of the asset retirement obligations
These obligations include obligations to restore the original state related to periodically renewed
land lease contracts and building lease contracts.
2) Computation method for the asset retirement obligations
Asset retirement obligations are computed regarding the remaining contract years as an expected
use period and using a discount rate between 0.0% and 2.3%.
3) Increase (decrease) of asset retirement obligations for the fiscal year under review
Balance at the beginning of the fiscal year under review:¥7,015 million
Increase due to the acquisition of property, plant and equipment:¥425 million
Adjustments due to the elapse of time:¥73 million
Decrease due to the fulfillment of asset retirement obligations:¥(9) million
Increase (decrease) due to other reasons:¥10 million
Balance at the end of the fiscal year:¥7,516 million(2) Asset retirement obligations that are not posted on the Consolidated Balance Sheet
The following asset retirement obligations are excluded from the posted amounts:
1) Obligation to remove asbestos that is used for some property, plant and equipment at the time ofremoval of the property, plant and equipment in a particular way required by the Ordinance on
Preventing Asbestos Hazards
For some of the property, plant and equipment of the Company, the demolition of a building
involves an obligation to remove asbestos. However, no demolition has taken place yet other thandemolition related to redevelopment or other projects that required arrangements with manybusiness associates. It is difficult to estimate the timing to fulfill such obligation due to causessuch as deterioration, based on the estimated physically usable period of the asset. We cannot
estimate when to demolish the property, plant and equipment without relevant specificmanagement plans.
To address the issue of asbestos, we have been voluntarily conducting asbestos removal workwhen tenants move out or when other opportunities allow us to do so. However, we cannot make areasonable estimate of how such voluntary asbestos removal work will progress in the future basedon the data such as how long past tenants stayed. Also, we cannot estimate the remaining amountof asbestos when such property, plant and equipment are demolished. Moreover, it is difficult toonly estimate the asbestos removal cost separately from regular demolition costs. For thesereasons, an asbestos removal-related probability assessment relative to the domain and amounts ofasset retirement obligation is difficult. Therefore, an obligation to remove asbestos is excluded
from the reported asset retirement obligations although we made a best estimate taking into
account the evidence available as of the closing date.
- 24 -

[Translation for Reference and Convenience Purposes Only]
2) Obligation to restore the original state based on some real estate rental agreements
Periodically renewed land lease contracts for some commercial facilities require restoration to theoriginal state when the contract term ends and the facility must be returned. In reality, however, it
is possible to continue to use such facilities by renewing such contracts and some contracts set
forth a special provision to reduce the possibility of performing such obligation to restore theoriginal state, which makes the timing to fulfill the obligation somewhat vague. In terms of ourbusiness strategies and the business environment, we do intend to continue with our operations andtherefore fulfillment of this obligation is not intended. For these reasons, a probability assessment
relative to the domain and amounts of asset retirement obligation is difficult to ascertain.
Therefore, an obligation to restore the original state is excluded from the reported asset retirement
obligations although we made a best estimate taking into account the evidence available as of theclosing date.

- 25 -

[Translation for Reference and Convenience Purposes Only]

Non-consolidated Statement of Changes in Net Assets(From April 1, 2021, to March 31, 2022)(Millions of yen)
Shareholders’ equity
Retained earnings

Capital surplus

Other retained earnings
SharecapitalBalance at the
beginning ofcurrent period
Changes in thefiscal year underreviewIssuance of
new shares
Dividend fromsurplusCapitalreserve

Total
capitalsurplusRetainedearnings

142,279

171,390

171,390

21,663

135

135

135

Reserve forReserve
Reserve for advanced
for open
specialdepreciation
innovadepreciaof nontion
tion
current
promotionassets855

151,496

208

Generalreserve

Earnedsurpluscarriedforward108,254414,787

TreasurysharesTotalshareholders’equity697,266(105,216)

905,720

270

ProfitPurchase oftreasury shares
Disposal oftreasury shares
Change byshareexchanges
Reversal ofreserve for
specialdepreciation
Provision forreserve foradvanceddepreciation of
non-current
assets
Reversal ofreserve foradvanceddepreciation of
non-current
assetsProvision forreserve for
open
innovation
promotion
Net changes in
items otherthan those inshareholders’equityTotal of changes
in the fiscal year
under review
Balance at theend of current
periodTotal
retainedearnings(426)(46,774)(46,774)(46,774)

93,612

93,612

93,612(30,014)(30,014)

(0)

(0)

31

31

(373)

(373)

2,715

2,342

426

3,482

(3,482)(3,248)

3,248

237

(237)

135

135

135

—

(426)

234

237

—

46,41846,464(27,267)

19,467

142,414

171,526

171,526

21,663429

151,731446

108,254461,205

743,730(132,483)

925,187- 26 -

[Translation for Reference and Convenience Purposes Only](Millions of yen)
Valuation, translation adjustments and others

Balance at the beginningof current period
Changes in the fiscal year
under review

Valuationdifference on
available-for-salesecurities

Deferred gains orlosses on hedges

Revaluation
reserve for land

Total valuation,translation
adjustments andothersShare
acquisitionrights118,090(1,431)

529,822646,482231

Total net
assets1,552,434

Issuance of new shares

270

Dividend from surplus(46,774)

Profit

93,612

Purchase of treasury
shares(30,014)

Disposal of treasury
sharesChange by shareexchanges

31
2,342

Reversal of reserve for
special depreciation
Provision forreserve for advanced
depreciation of noncurrent assets
Reversal of reserve foradvanced depreciation of
non-current assets
Provision for reserve foropen innovation
promotion
Net changes in items
other than those inshareholders’ equity

—

—

—
—
12,718

1,373

Total of changes in thefiscal year under review

12,718

1,373

Balance at the end ofcurrent period

130,809(58)- 27 -

14,091(30)

14,060—14,091(30)

33,527

529,822660,573201

1,585,962

[Translation for Reference and Convenience Purposes Only]

Notes to the Non-consolidated Financial Statements
Notes on Matters Related to Significant Accounting Policies
1. Valuation Basis and Method for Securities
Held-to-maturity debt securities:
Carried at amortized cost (straight-line method)
Shares of subsidiaries and affiliates:
Stated at cost determined by the moving-averagemethodOther securities:
Securities other than shares, etc., that do not have a market price:
Stated at the market value (Unrealized gains andlosses are reported, net of applicable taxes, in a
separate component of net assets. The cost of
securities sold is determined mainly by the movingaverage method.)
Shares, etc., that do not have a market price:
Stated at cost determined mainly by the movingaverage method
Equity investments:
Securities other than shares, etc., that do not have a market price:
Stated at the market value (Unrealized gains andlosses are reported, net of applicable taxes, in a
separate component of net assets. The cost of equity
investments sold is determined mainly by themoving-average method.) For investments in limited
partnership for investment and similar partnerships(deemed as securities under Article 2, Paragraph 2 of
the Financial Instruments and Exchange Act), themost recent financial statements available according
to the financial reporting date stipulated in thepartnership agreement are used as the basis forcalculating the net amount equivalent to theCompany’s equity interest.
Shares, etc., that do not have a market price:
Stated at cost determined mainly by the movingaverage method
2. Valuation Basis and Method for Derivatives
3. Valuation Basis and Method for Inventories
Real estate for sale:

Real estate for sale in process:Real estate for development:

Stated at market values
Stated at cost determined by the identified cost method (Theamount posted in the Non-consolidated Balance Sheets wascomputed by writing down the book value with regard to theinventories for which profitability was clearly declining.)
The same as above
The same as above

4. Depreciation Method of Non-current Assets
Property, plant and equipment:
Depreciation is computed by the declining-balance method at fixed
rates.
However, the straight-line method is adopted for the Yokohama
Landmark Tower and buildings (excluding building
improvements) acquired on or after April 1, 1998 and building
improvements and structures acquired on or after April 1, 2016.
Intangible assets:
The amortization of intangible assets is computed by the straight-line
method.
Capitalized software for internal use is amortized by the straightline method over the estimated internal useful life (5 years).

- 28 -

[Translation for Reference and Convenience Purposes Only]
5. Accounting Policies for Reserves
Allowance for doubtful accounts:

Reserve for retirement allowances:

Reserve for accepting the fulfillment of obligations:

Provision for environmental measures:

An allowance for doubtful accounts is provided, forpossible losses from uncollectible loans andreceivables, at the amount calculated based on theactual rate of losses from the bad debt for ordinary
receivables, and on the estimated recoverability forspecific receivables such as doubtful receivables.
A reserve for retirement allowances is provided at
the amount calculated based on the projectedamounts of retirement benefit obligations and plan
assets at the end of the fiscal year under review forordinary employees, and at 100% of the amountthat would be required at the end of the fiscal year
under review in accordance with internal
regulations for executive officers.
To calculate the Company’s liability for retirement
allowances to employees, the method of benefit
formula basis is adopted to attribute the estimatedretirement allowances to accounting periods up to
the end of the fiscal year under review.
Prior service cost is amortized, starting from thetime of its occurrence, on a straight-line basis overa certain period (10 years) within an averageremaining service period of employees at the timeof its occurrence. Actuarial gains or losses areamortized, starting from the following fiscal year,
on a straight-line basis over a certain period (10years) within an average remaining service periodof employees at the time of their occurrence.
A reserve for accepting the fulfillment of
obligations is provided at the estimated amount oflosses that may be caused by accepting thefulfillment of obligations.
An estimated amount of loss that could be caused
along with environmental measures including
treatment of PCB (Polychlorinated biphenyl) waste
is provided.

6. Accounting for Deferred Assets
The costs are fully charged to income when disbursed.
7. Accounting for significant revenues and expenses
The Company measures revenue from contracts with customers based on the consideration stipulated in thecontract with the customer. The main performance obligations in the main business relating to contracts withcustomers and the usual time at which such performance obligations are satisfied (the usual time at whichrevenue is recognized) are as follows.
The promised consideration for contracts with customers in our major businesses is usually paid within one
year from the time the performance obligation is satisfied, and since the amount of the promised
consideration does not include a significant financial component, there are no contracts with customers forwhich we have adjusted the consideration for this effect.
The Company is primarily engaged in the business of leasing office buildings and commercial facilities
developed and owned, and in the business of selling office buildings and commercial facilities developed andowned.
In the real estate leasing business, office buildings and commercial facilities developed and owned are leased,
and revenue is recognized for lease transactions in accordance with the “Accounting Standard for Lease
Transactions” (ASBJ Statement No.13, March 30, 2007, hereinafter referred to as “Lease accounting
standards”) and other standards.
In the real estate sales business, office buildings and commercial facilities developed and owned are sold, andrevenue is recognized when the real estate is delivered to the customer.
- 29 -

[Translation for Reference and Convenience Purposes Only]
Recognition of revenues from operating leases:
Revenue is recognized based on the monthly lease payments to be received under the lease contracts over theelapsed term of the leases.
Recognition of revenues from finance lease transactions:
The Company recognizes net sales and cost of sales related to finance lease transactions at the time of receiptof the lease payments.
8. Hedge Accounting(1) Hedge accounting:
The Company adopts the deferral hedge accounting, in principle. For interest rate swaps, the preferential
treatment is applied to the swaps which satisfy the requirements of such preferential treatment. For
currency swaps and forward exchange contracts, the appropriation treatment is applied to the contracts
which satisfy the requirements of such appropriation treatment.
(2) Hedging instruments and hedged items:
Hedging instruments:
Hedged items:
Interest rate swaps
Borrowings
Currency swaps
Borrowings and corporate bonds(3) Hedging policy:
The risk hedging transactions of the Company are intended to hedge its exposure to fluctuation risks ininterest rates and foreign currency exchange rates, in accordance with the Company’s internal regulations
such as “Market Risk Management Rules” and “Management Guideline by Risk.”(4) Method of Assessing Hedge Effectiveness
The Company compares the cumulative amounts of fluctuations in the rates or in the cash flows of thehedged items with the cumulative amounts of fluctuations in the rates or in the cash flows of the hedging
instruments, and assesses the effectiveness of hedging transactions based on the ratio between the two
amounts.
However, the assessment of hedge effectiveness is omitted for interest rate swaps to which special
treatment is applied.
(Hedge transactions to which “Treatment of Hedge Accounting for Financial Instruments Referring to
LIBOR” is applied)
Among the above hedge transactions, all hedge transactions included in the scope of application of“Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (ASBJ Revised
Practical Solution No.40, March 17, 2022) are subject to the exceptional treatment prescribed in the
Revised Practical Solution. The details of hedging transactions to which the Revised Practical Solution isapplied are as follows.
Hedge accounting method:
Deferred hedge accounting, exceptional accounting for interest rate swaps
Hedging instruments:
Interest rate swaps and currency swaps
Hedged items:
Borrowings and corporate bonds
Types of hedging transactions: Fixing cash flows
9. Accounting for Consumption Taxes
Transactions subject to the consumption tax and local consumption tax are recorded at amounts exclusive ofconsumption taxes. Non-deductible consumption tax and local consumption tax are charged to income for the
fiscal year under review.

- 30 -

[Translation for Reference and Convenience Purposes Only]
Notes on Changes in Accounting Policies
1. Application of Accounting Standard for Revenue Recognition
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29,
March 31, 2020; hereinafter “Revenue Recognition Standard”) and other standards from the beginning of the
fiscal year under review. The Company recognizes revenue when control of a promised good or service istransferred to a customer in an amount that reflects the consideration to which the Company expects to beentitled in exchange for those goods and services. However, the effect of the application of the Revenue
Recognition Standard on profit and loss, retained earnings at beginning, and per share information for the fiscal
year under review was immaterial.
Furthermore, “Accounts payable,” which was presented under “Current assets” in the Non-consolidated
Balance Sheet of the previous fiscal year, has been included under “Accounts receivable and contract assets”
from the fiscal year under review.
2. Application of Accounting Standard for Fair Value Measurement
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30,
July 4, 2019; hereinafter “Fair Value Measurement Standard”) and other standards from the beginning of the
fiscal year under review, and will prospectively apply the new accounting policies stipulated by the Fair Value
Measurement Standard, etc., in accordance with the transitional treatment provided in Paragraph 19 of the Fair
Value Measurement Standard and Paragraph 44-2 of the “Accounting Standard for Financial Instruments”(ASBJ Statement No. 10, July 4, 2019).
Accordingly, for corporate bonds, which were previously considered to be financial instruments whose fairvalue was extremely difficult to determine, the acquisition cost was used as the Non-consolidated balance sheet
amount, however, even if observable inputs are not available, the fair value calculated using unobservable
inputs based on the best available information is used as the Non-consolidated balance sheet amount.

- 31 -

[Translation for Reference and Convenience Purposes Only]
Notes on Accounting Estimates
1. Valuation of Property, Plant and Equipment(1) Amount Recorded in the Non-consolidated Financial Statements for the Fiscal Year under Review
Amount(Millions of yen)
2,972,020
Property, plant and equipment—
Impairment losses(2) Other Information
1) Calculation Method for the Amount Recorded in the Non-consolidated Financial Statements for the
Fiscal Year under Review
The Company mainly owns real estate properties such as office buildings, commercial facilities,
hotels, logistics facilities as property, plant and equipment. For property, plant and equipment ownedby the Company, if the total undiscounted future cash flows from an asset or asset group, for which
events or changes in circumstances indicate that the book value of the asset or asset group may not berecoverable, are less than the book value, the book value is reduced to the recoverable amount, andsuch reduced amount is recorded as an impairment loss, in accordance with the Accounting Standard
for Impairment of Fixed Assets.
When grouping assets in order to judge whether to recognize impairment losses or to perform themeasurement of impairment losses, a unit for asset grouping shall be the smallest unit that generates
cash flows that are largely independent of the cash flows of other assets or groups of assets.
The higher of net sale value and value in use is used as recoverable amount. While the net sale value isexpressed as an appraised value by a real estate appraiser or estimated trading price, the discounted
future cash flows are used to measure the value in use.
2) Major Assumptions
In principle, the Company estimates rents, capital expenditures, and discount rates for each individual
property. The estimation is made based on major assumptions by each asset class, taking into accountthe condition of individual properties.
The major assumptions used when making estimations in the fiscal year under review are as follows.
 Offices
Average rents have recently been on a steady positive trend, which is expected to continue in the next
fiscal year. The vacancy rate is higher than before the spread of the novel coronavirus infection(COVID-19) because it is taking time to backfill vacancies, but we expect that the time required tobackfill vacancies will gradually improve to the normal level from the next fiscal year.
 Commercial facilities
As commercial rents include variable rents that are linked to tenant sales, there is a correlation between
rents and tenant sales at the relevant commercial facilities. As in the previous fiscal year, the effects of
COVID-19 remained in the fiscal year under review, and tenant sales decreased compared to before
the impact of COVID-19. However, they are currently on an improving trend, so we assume that thiseffect on sales will be limited in the next fiscal year and beyond.
 Hotels
Currently, occupancy rates have stayed at low levels due to the impact of COVID-19 and it is expected
to take a certain period of time for occupancy rates to recover to the level we had before being affectedby COVID-19. For our estimates, we assumed that hotel demand would recover to the pre-COVID-19
levels in around 2024, taking into account the overall outlook for global air demand and tourism
demand.
 Logistics facilities
Logistics facilities have not been affected by COVID-19, and the market has been favorable.
Therefore, we assume that performance of logistics facilities will continue to be steady in the next
fiscal year and beyond as is expected for the market trend.
 Redevelopment projects
The Company is engaged in multiple redevelopment projects. Redevelopment projects have potential
risks entailing that their profitability will be lower than initially estimated as a result of delays orchanges in plans. Such risks include the risk of not obtaining agreement from other landowners in thearea planned for redevelopment, and the risk of not obtaining development permission from local
governments.
The Company comprehensively assesses these various risks for redevelopment projects. However, theredevelopment projects currently underway are not in any situation that would decrease theirprofitability from the initial estimates. We therefore assume that these redevelopment projects will
progress while maintaining their profitability.
- 32 -

[Translation for Reference and Convenience Purposes Only]

3)

Impact on the Non-consolidated Financial Statements for the Next Fiscal YearThe estimation of impairment losses is made based on the descriptions of 2) Major Assumptions.
Therefore, if major assumptions used for estimating impairment losses worsen, additional impairment
losses may be recognized in the next fiscal year.

2. Valuation of Equity Investments(1) Amount Recorded in the Non-consolidated Financial Statements for the Fiscal Year under Review
Amount(Millions of yen)369,205
Equity investments(2) Other information
1) Calculation Method for the Amount Recorded in the Non-consolidated Financial Statements for the
Fiscal Year under Review
If the effective market value of equity investments without market price declines significantly, theCompany reduces the book value by a reasonable amount, and records such reduced amount as an
impairment loss on equity investments, in accordance with the Accounting Standard for Financial
Instruments.
In calculating the effective market value, the Group performs valuations of assets held by investees foreach purpose of holding.
2) Major Assumptions
For assets held by investees, major assumptions are determined according to the purpose of holding
such assets. For the details of assumptions made for the relevant assets, please refer to 1. Valuation of
Property, Plant and Equipment and 2. Valuation of Inventories in the Notes on Accounting Estimatesin the Notes to the Consolidated Financial Statements.
3) Impact on the Non-consolidated Financial Statements for the Next Fiscal YearThe estimation for impairment losses on equity investments is made based on assumptions describedin 2) Major Assumptions. Therefore, if there are changes in these major assumptions, it may result in
additional impairment losses on equity investments in the next fiscal year.

- 33 -

[Translation for Reference and Convenience Purposes Only]
Notes to the Non-consolidated Balance Sheet
1. Accumulated Depreciation for Property, Plant and Equipment:¥1,202,990 million
The accumulated depreciation above includes the accumulated impairment loss.
2. Assets Subject to Collateral
Investment securities¥4,586 million
Shares of affiliated companies¥11,130 million
Other¥840 million
Total¥16,557 million
The above assets are pledged as collateral for debts of affiliated companies.
3. Contingent Obligations(1) Guarantee Obligations
Warrantee
Mitsubishi Estate London Limited
MITSUBISHI ESTATE NEWYORK Inc.
MEC Global Partners Holdings
LLC
Lendlease OSH Residential A Pty
Ltd
Lendlease OSH Residential B Pty
Ltd
RML548Co., Ltd.
Meeyahta Development, Ltd.
Takamatsu Airport Co., Ltd.
Ryoei Life Service Co., Ltd.
Total
(2) Keep-well agreement
Warrantee

Amount of Obligation¥119,418 million(GBP666,750 thousand,
SEK918,000 thousand)¥37,573 million(US$307,000 thousand)¥32,914 million(US$188,900 thousand,
GBP8,200 thousand,€62,000 thousand)¥20,706 million(AU$225,069 thousand)¥9,690 million(AU$105,332 thousand)¥4,499 million(THB1,223 million)¥2,065 million(US$16,875 thousand)

Substance of Obligation
Borrowings from financial
institutions
Borrowings from financial
institutions
Borrowings from financial
institutions

Borrowings from financial
institutions
Borrowings from financial
institutions
Borrowings from financial
institutions
Borrowings from financial
institutions
Borrowings from financial¥1,500 million
institutions
Deposits for repayment obligation to¥159 million
residents¥228,528 million

Amount of Obligation
Substance of Obligation¥10,403 million Borrowings from financial
MEC Finance USA, Inc.
(US$85,000 thousand) institutions
Total¥10,403 million
The Company signed keep-well agreement to complement the credit for funding by MEC Finance USA, Inc.
4. Monetary Receivables/Payables due from/to Affiliated Companies
Long-term receivables due
Short-term receivables due¥13,799 million
from affiliated companies
from affiliated companies
Short-term payables due toLong-term payables due to¥180,375 million
affiliated companies
affiliated companies- 34 -¥40,532 million¥15,149 million

[Translation for Reference and Convenience Purposes Only]
5. Revaluation of Land
The Company revalued the land used for its business in accordance with the “Act on Revaluation of Land”(Act No. 34, March 31, 1998) and the “Act Partially Amending the Act on Revaluation of Land” (Act No. 19,
March 31, 2001). The revaluation difference has been included in “Net assets” as “Revaluation reserve forland,” net of the related tax that is included in “Liabilities” as “Deferred tax liabilities for land revaluation.”
Revaluation method: The value of land is determined based on the assessed value of the fixed property tax
adjusted reasonably, as stipulated in Article 2, Item 3, of the Order for Enforcementof the Act on Revaluation of Land (Cabinet Order No. 119, March 31, 1998).
Date of revaluation: March 31, 2002
6. Equity Investments
Of the equity investments projects, the total amount of investments in anonymous partnership and preferred
equity investments, etc. into anonymous partnerships and special-purpose companies that fall under the
category of affiliated companies is ¥343,313 million.
Notes to the Non-consolidated Statement of Income
Transactions with Affiliated Companies
Operating revenue:
Operating costs:
Transactions other than operating transactions:¥37,254 million¥72,917 million¥35,575 million

Notes to the Non-consolidated Statement of Changes in Net Assets
Class and Number of Treasury Shares at the End of the Fiscal Year under Review
Common stock:
68,852,376 shares
Note on Tax-effect Accounting
The significant components of deferred tax assets and liabilities are summarized as follows:
Deferred tax assets:(Millions of yen)
Reserve for retirement allowances
3,595
Accrued bonus
1,173
Loss on devaluation of investment securities
3,567
Loss on devaluation of inventories
343
Loss on devaluation of golf memberships
207
Loss on devaluation of non-current assets
41,728
Revaluation reserve for land
22,727
Impairment loss on equity investments
1,303
Transfer of business due to reorganization
8,899
Other
41,557
Subtotal deferred tax assets
125,104
Valuation reserve(69,872)
Total deferred tax assets
55,231
Deferred tax liabilities:
Reserve for advanced depreciation of non-current assets
Gain on establishing a trust for retirement benefits
Revaluation reserve for land
Valuation difference on available-for-sale securities
Non-current assets valuation difference
Other
Total deferred tax liabilities
Net deferred tax liabilities- 35 -

66,964
7,393
265,595
57,14353,242
21,216
471,556
416,324

[Translation for Reference and Convenience Purposes Only]
Notes on Revenue Recognition
Since the basic information for understanding revenue from contracts with customers is identical in the Notes(“Notes on Revenue Recognition”) to the Consolidated Financial Statements, the notes are omitted.
Notes on Transactions with Related Parties
Subsidiaries and Affiliates, etc.
Category

Name ofCompany, etc.

Ownership
Percentage of
VotingRights, etc.

Subsidiary

Mitsubishi
Estate London
LimitedIndirectly
holding(100%)

Subsidiary

Mitsubishi
EstateResidence
Co., Ltd.

Directly
holding(100%)

Subsidiary

Mitsubishi
Jisho Property
Management
Co., Ltd.

Directly
holding(100%)

The
Company’s
Relationshipwith theRelated Party
Guarantee
obligation
Interlocking
directors
Provision ofloansInterlocking
directors
Building
operation andmanagement
consignment
Provision ofloansInterlocking
directors

Description of Transactions

Transaction
Amount(Millions ofyen)

Guarantee obligation 1

119,418

Provision of loans 2516,000

Collection of loans

554,000

Interest income 2

1,875

Cash management systemtransactions 3

4,489

Account
Item

Fiscal Yearend Balance(Millions ofyen)—
Short-termloans ofaffiliatedcompanies—

Depositreceived 3

Transaction conditions and decision policy thereof, etc.:
Notes:
1. The amount represents guarantee obligation to secure bank borrowings (GBP666,750 thousand,
SEK918,000 thousand) of Mitsubishi Estate London Limited.
2. Interest rates on loans are determined in consideration of market interest rates.
3. Deposits received are related to the cash management system provided by the Company to its groupcompanies and represent the balance at the end of the fiscal year under review.
Per-share Information
Net assets per share
Earnings per share¥1,198.95¥70.26- 36 -—

461,000—

52,092