ANNUAL REPORT 2009

FSC09三菱地所
アニュアル英文Otemachi Building, 6-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8133, Japan
http://www.mec.co.jp/

エイ・アイ・エイ・

デザイン研究所

9073099

三田製版センター

404
表紙

1-4
280
434.5

ANNUAL REPORT 2009
Ye a r e n d e d M a r c h 3 1 , 2 0 0 9This report is printed using
environment-friendly soy ink.

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

Contents
2
4
6
20
35
66

A Message from the President
To Our Shareholders
Special Feature :Marunouchi Redevelopment Project
Business Information
Financial and Corporate Data Section
Corporate Social Responsibility

A Message from the President

Creating New Value for Urban Areas—the Mitsubishi Estate Group
Becoming a Corporate Entity Truly Trusted by Society“A global real estate solutions provider— development as a core driver”—this is how theMitsubishi Estate Group envisions its future. In accordance with this vision, Mitsubishi
Estate is working diligently to develop into a real estate company that provides high added
value to real estate end-users, owners and investors, thereby realizing exceptional benefits
for its customers.
As the aforementioned vision clearly states, the Mitsubishi Estate Group keeps reinforcing
its foothold in the area of “development.” Meanwhile, We are aggressively tackling newchallenges, such as business globalization, real estate securitization, technologicalinnovation and environmental co-existence. Through these endeavors, we are promoting
business management with an eye on the sustainable growth of the Mitsubishi Estate Group
as a whole.
In the fiscal year ended March 31, 2009, the global economy underwent drastic changes.
The Mitsubishi Estate Group’s business came under significant effects attributable to theglobal recession. Of course, it is indispensable for the Company to further optimize thebalance between growth potential and business soundness in order to flexibly adjust to
fluctuations in operating environments. Even through such an effort, however, we will
persistently keep the central focus on our pivotal management principles aimed atrealizing the Group’s future vision.
What is more, precisely because we are in the middle of a challenging time, we are morecommitted than ever before to aggressively strengthening our corporate brand, which iswithout doubt the wellspring of our competitiveness and growth. Underlying the Group’s
brand slogan, “A Love for People, A Love for the City,” indicates our genuine enthusiasm
and spirit toward all stakeholders, as well as our strong determination to create new value
for urban areas—the stage on which we perform.
For generations to come, the Mitsubishi Estate Group will continue to reinvent itself while
reinforcing its position as the most trusted and preferred real estate solutions provider.
July 2009

Keiji Kimura, President & CEO

2 |ANNUAL REPORT 2009

ANNUAL REPORT 2009 |3

To Our Shareholders

Medium-Term Management Plan “Action 2010”
Operating Environment
During the fiscal year ended March 31, 2009, conditions in the office building
leasing market in Japan, which had shown relatively steady expansion until theprevious fiscal year, changed dramatically. These conditions included a vacancy
rate that, in general, turned to and continued on an upward trend, attributable
to the rapid worsening of performance in the Japanese corporate sector. As theoperating environment in the corporate sector remains severe, corporations areaggressively promoting cost reduction initiatives. This situation is expected to leadto circumstances where these corporations may heighten their calls for reducing
office-related costs and expenses. Accordingly, the operating environment for the
Mitsubishi Estate Group will allow no optimism in its outlook for the time being.
In the condominium market, condominium sales were stagnant, due to a risein condominium prices resulting from surging construction costs and expenses aswell as to weakened consumer sentiment owing to the deterioration in economic
conditions. Consequently, the number of residential units actually supplied
remained extremely low during the fiscal year under review. Reflecting the favorable adjustments in condominium prices and the reinforcement of mortgage tax
breaks by the Japanese government, there are signs of recovery in market
demand, including a larger number of people visiting model rooms. However, fullfledged recovery in market conditions is expected to require a long time period.
The credit crunch in the financial market during the period has significantly
affected the real estate industry in Japan, causing the real estate investment market to contract substantially and leading into the bankruptcy of several real estatecompanies due to their funding difficulties. Amid the ongoing financial turmoil,
the Japanese real estate industry has yet to attract investments, and the realestate investment market is slated to continue to face harsh conditions.
Under these circumstances, the Mitsubishi Estate Group will endeavor to
respond appropriately to changes in its operating and market environments as it
strives to enhance management efficiency, earnings power and corporate value.

Financial Results

million. The increase in revenue from operations was attributable to the positive
impact of the first full-year of operation of the Shin-Marunouchi Building, which
was completed in April 2007, and upward rent revisions for existing buildings, aswell as to the contribution of earnings of new consolidated subsidiaries—namely,
Sunshine City Corporation and Tokyo Kotsu Kaikan Co., Ltd. The decrease in operating income was mainly due to Towa Real Estate Development Co., Ltd.—aMitsubishi Estate consolidated subsidiary in the Building Business—which posted
an operating loss, and to the International Business, which was negatively impacted by the significant appreciation of the yen.
Ordinary income dropped 33.0% year on year to ¥108,624 million.
Mitsubishi Estate recorded extraordinary gains on sales of shares of affiliatedcompanies, while posting extraordinary losses on valuation of investment securities and inventories, on cancellation of real estate transaction contracts and on
disposal of fixed assets, as well as impairment loss. As a result, net income
decreased 47.8% year on year to ¥45,423 million. (For more details, please see
the Financial Review section starting on page 36 of this report.)

Dividend Policy
Mitsubishi Estate adheres to the basic policy of stably returning profits to its
shareholders through such means as cash dividends. In doing so, the Company
gives due consideration to reserving funds necessary for future business developments, including the Marunouchi Redevelopment Project. In the fiscal year
ended March 31, 2009, Mitsubishi Estate paid an interim dividend of ¥8 pershare, the same as the previous fiscal year, and decided to pay a year-end dividend of ¥8 per share, for an annual per-share dividend of ¥16.
Mitsubishi Estate will determine future dividend levels by comprehensively
taking into account performance levels for each period and aiming to keep its
consolidated payout ratio at a 25% to 30% level. In line with such a stance, theCompany plans to pay an annual per-share dividend of ¥12 for the fiscal year
ending March 31, 2010, which comprises an interim and year-end per-share dividend of ¥6, respectively.

Thousands of
U.S. dollars

Millions of yen

2004

2005

2006

2007

2008

2009

2009

¥ 679,918¥ 775,381¥ 844,217¥ 947,641¥ 787,652¥ 942,626$ 9,596,116

34,98936,24555,82597,662

86,96345,423

462,415

5.1%

4.7%

6.6%

10.3%

11.0%

4.8%

—

4.0%

4.0%

5.4%

8.3%

7.1%

3.8%

—

As a percentage ofrevenue from operations
As a percentage of
total equity
Total assets

3,068,842

3,124,514

3,280,209

3,447,272

4,327,137

4,429,070

45,088,779

Total equity

897,499

920,930

1,133,623

1,225,644

1,238,889

1,148,494

11,691,896

Common stock

86,53486,534

129,736

136,534

136,534

136,534

1,389,943

Yen

U.S. dollars

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

¥

26.96

¥

8.00

27.93
8.00

¥

42.60
10.00

To become “a global real estate solutions provider — development as a core driver”
Practical Action Items for Each Business Domain
DomainBusiness Attribute Action Item

1stReal Estate Holding

2ndReal Estate Development and Investment

3rdReal Estate Investment Management

4th

Real Estate Services

Domain

Domain

DomainAction Item
Maximize the value of assets held in Marunouchi and other locations

Obtains rental revenues (income gain) from real estate

Further reinforce development and risk management capabilities

Obtains capital gains from real estate

Build a global platform

Provides management services to investors and obtains a fee income

Aim to be a leading service provider that
contributes to advancing development capabilities

Provides fee-based services to customers involved in real estate

Action Items for Strengthening Domain/Cross-Sectional CompetitivenessStrengthen Each Domain,
Leveraging Development Capabilities

Globalize Each Domain
While seeking to continually increase the value of overseas assets held, position development and investment,
investment management and real estate services as
growth fields, and over the medium to long term, workto earn approximately 20% of consolidated operating
income overseas, while promoting globalization at a pace
optimal for each operation

Affirm development capabilities as the source of competitive strength for all domains and seek further reinforcement. At the same time, have the Real Estate Development
and Investment domain, which has gained strength as thecore of the Company’s development capabilities, help
other domains to grow and promote the creation of amechanism for producing synergies in investment management, real estate services, and so forth

Further Develop Proposal-Based Marketing
Focus on medium- to long-term “Customer Value” andreaffirm the significance of proposal-based marketing,which seeks new business creation by continually promoting solutions to customers, and, as an advantage
unique to Mitsubishi Estate, further strengthen this marketing capability

Management Infrastructure Action Items

Financial Highlights Years ended March 31

Net income

Mitsubishi Estate’s Future Vision under ACTION 2010

DomainFor the fiscal year under review, revenue from operations increased 19.7% year on
year to ¥942,626 million, while operating income declined 22.1% to ¥138,567

Revenue from operations

Mitsubishi Estate’s current medium-term management plan, ACTION 2010, covers the three-year period from April 1, 2008 to March 31, 2011. Under ACTION
2010, Mitsubishi Estate has established a new corporate brand slogan, “A Love for People, A Love for the City.” Embracing this brand slogan, we havedefined a future vision for the Mitsubishi Estate Group, as described below, by reflecting the outcome of the previous medium-term management plan andongoing changes in operating environments. The entire Group is accelerating the implementation of various action items toward realizing this vision.

¥

70.95
14.00

¥

62.99
16.00

¥

32.90
16.00

$

0.33
0.16

Notes: 1. Yen amounts shown are translated into U.S. dollars, solely for convenience, at the prevailing exchange rate on March 31, 2009, of ¥98.23 to US$1.00.
2. Total equity is calculated by deducting minority interests and stock acquisition rights from total net assets.

Caution regarding forward-looking statements

Reinforcing Management, People and Organization Infrastructure

Active Measures toward Harmonious Environmental Co-Existence

Facilitate the development of globally capable human resources and other initiatives byclearly defining the dissemination of management policies throughout the Group, thefostering of a corporate culture that promotes a spirit of taking on challenges and theglobalization of management and personnel as basic infrastructure reinforcement policies.
Also, for each Group segment that continues to expand, diversify and increase sophistication, work to reinforce and raise awareness of the corporate governance system, including risk management, compliance and internal controls

Formulate a “Long-Term Environmental Vision” to proactively work toward harmonious
environmental co-existence and further clarify the Company’s stance of actively contributing to society with the view of reducing the environmental impact of Group operations.
In order to realize this “Long-Term Environmental Vision,” formulate and implement
action plans

Management Indicator Targets for the Fiscal Year Ending March 31, 2011
Consistent with its previous medium-term management plan from April 1, 2005 to March 31, 2008, Mitsubishi Estate will continue to enhance corporate value by increasing cash flows, taking into consideration the optimal balance with efforts to secure a sound financial position. From a quantitative perspective, the Group has identified thefollowing key management indicator targets to be achieved by the end of the final year of ACTION 2010.
EBITDA*1

EBITDA*1 / Total Assets

Net Interest-Bearing Debt / EBITDA Multiple*2¥300.0 billion

Over 6.5%

Under 6.0 times*1 EBITDA = Operating income + Interest and dividend income + Equity in earnings (losses) of unconsolidated subsidiaries and affiliates + Depreciation and amortization*2 Net interest-bearing debt = Interest-bearing debt – Cash and cash equivalents

Plans, estimates and strategies included in this annual report are forward-looking statements concerning the future performance of the Mitsubishi Estate Group. These statements are based on management’s assumptions,which have been made in accordance with information available to the Company as of the date of this report’s preparation. Accordingly, the content of this report should not be relied upon unduly. Mitsubishi Estate cautions that a number of factors could cause future results to differ from its forecasts.

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Special Feature : Marunouchi Redevelopment Project

The Second Stage ofMarunouchi Redevelopment
Further Expanding and Deepening the Scope of the ProjectThrough the first stage of the Marunouchi Redevelopment Project, from 1998 to 2007,
Mitsubishi Estate completed such projects as the Marunouchi Building, the Shin-Marunouchi Building and
the Tokyo Building. By successfully closing the first stage, the Company has rejuvenated the area peripheral toTokyo Station as well as the Marunouchi Naka Dori area.
Mitsubishi Estate has entered the second stage, which extends from 2008 to 2017, by starting the firstproject—namely, the Marunouchi Park Building & Mitsubishi Ichigokan. Further expanding and deepening
the scope of Marunouchi Redevelopment, the Company will spread the positive effects of the projectto the Otemachi, Marunouchi and Yurakucho areas.

1st Project

Marunouchi Park Building &Mitsubishi Ichigokan
2nd Project

Marunouchi 1-4 Plan
(tentative name)
3rd Project

Otemachi 1-chome Second Area
1st Class Urban Redevelopment Project

Marunouchi is an international business center that lies between Tokyo Station and theImperial Palace. The area’s 120 hectares
accommodate approximately 100 buildings,
of which Mitsubishi Estate owns and manages
roughly 30%. With approximately 4,000 companies located in an area employing some
240,000 office workers, Marunouchi is home
to nearly 10% of the companies listed on theFirst Section of the Tokyo Stock Exchange.

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Special Feature : Marunouchi Redevelopment Project

1st Project

Marunouchi Park Building &Mitsubishi Ichigokan
Marunouchi Park Building & Mitsubishi Ichigokan—Intricately Fusing Tradition and Innovation
1

2

3

4

F

ocusing on the properties in front of Tokyo Station, the first stage of the
Marunouchi Redevelopment Project has transformed the district from asolely business area into an urban area of exceptional diversity open to infinite
possibilities. With the completion of the Marunouchi Building, the ShinMarunouchi Building, the Tokyo Building and the Marunouchi OAZO, the firststage has transformed the district into a space with new urban functions. Now
the curtain is rising on the second stage. The scope of redevelopment is
expanding to include the Yurakucho and Otemachi areas. Mitsubishi Estate iscontributing to the expansion of culture, art, history and other urban functions, thereby further improving the appeal of these areas.
The Marunouchi Park Building & Mitsubishi Ichigokan is the first project inthe second stage. Boasting cutting-edge office space and superior specifications, the low-rise section features a bustling retail zone and the relaxing
Ichigokan Square, with rich greenery. In addition, the venerable Mitsubishi
Ichigokan—the first office building that blazed a trail for the creation of the
Marunouchi business district—has been faithfully restored and will serve as anart museum where visitors and office workers in the area can encounter highquality art and culture. Inspired by the design concept, “The beautiful fusionof a cutting-edge form and a timeless silhouette of tradition,” the innovative
design of the Marunouchi Park Building & Mitsubishi Ichigokan blends in wellwith various scenes in Marunouchi, including business, shopping and sightseeing, as well as historical, cultural and artistic events. All in all, the Marunouchi
Park Building & Mitsubishi Ichigokan is enhancing the exceptionally attractive
qualities of Marunouchi.
What is more, this first project is acting to preserve the memory of thecity and invigorating the Marunouchi area with advanced functions that will
pave the way for next-generation urban lifestyles. Building on the success of
this project, Mitsubishi Estate is intricately fusing tradition and innovation,
while tackling new challenges toward elevating the area’s status as the world’s
most interactive and vital city.

Project Profile
Address:

6-1, 6-2 Marunouchi 2-chome, Chiyoda Ward, Tokyo

Completion: April 2009
1, 2

3

4

Main uses:

Offices, retail shops, art museum, parking, district heating and cooling facility, etc.

Office entrance: Effectively separating the flow of officevisitors and tenant employees, the double-deck entrance
lobby welcomes people with a dramatically soaring atrium
and an ambience that resonates with the building’s status
as being at the cutting edge of business.

Structure:

Steel-frame, steel-reinforced-concrete/brick masonry (Mitsubishi Ichigokan)

Number offloors:4 floors below ground, 34 floors above ground with 3-story-high roof structure/
1 floor below ground, 3 floors above ground with 1-story-high roof structure(Mitsubishi Ichigokan)

Height:Approx. 157m

Offi ce zone: The outstanding office space is impressive,with its unprecedented scale, style and excellence. Standard
office floors combine the office zone, which offers superiorlayout efficiency, and the panorama zone, which comes inmany variations. Each standard fl oor provides a stage forall business scenarios, with its column-free space totalingover 3,305m 2 .

Site area:

Approx. 11,900m 2 (approx. 3,600 tsubo)

Floor area:

Approx. 205,000m 2 (approx. 62,010 tsubo)(High-rise + low-rise: approx. 199,000m 2 ; Mitsubishi Ichigokan: approx. 6,000m 2 )Parking:

282 vehicles

Lounge: The fifth floor houses a relaxing lounge dedicatedto tenant employees.

Marunouchi Park Building & Mitsubishi Ichigokan—a new Marunouchi landmark

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Special Feature : Marunouchi Redevelopment Project

Proactive Efforts toward Realizing Environmental Co-ExistenceA

iming to create a city in harmony with the environment, Mitsubishi
Estate has not only improved the energy efficiency of facilities andequipment used in the Marunouchi Park Building but has also introduced
roof-top 60kW solar power generation systems as well as ultrahigh-efficiency
lighting and air-flow window systems on standard office floors. These features collectively function to reduce the energy consumption and environmental impact of the building.
In addition, a total of 2,500m2 of greenery in the Ichigokan Square and on
the balconies of the low-rise portion and external walls, coupled with a waterretention pavement with a self-water-supply system and “dry mist” generators, contributes to the mitigation of the heat island phenomenon.

5
6

Ichigokan Square Providing Rich GreeneryF

unctioning as a courtyard for the Marunouchi Park Building & Mitsubishi
Ichigokan, the Ichigokan Square entices the eye with various plants, whichreflect the seasons, and a fountain and other waterscapes. Furthermore, 10
gas lights, the design of which is based on those actually used in the Meiji era,
are installed along the Mitsubishi Ichigokan. This and other features offer visitors relaxing and refreshing moments.

7

1

3

2

4

1, 2

Ichigokan Square
Surrounded by lanes and promenades,
the Ichigokan Square delights the eyewith trees and flowers while offering
the enjoyment of open cafes and works
of art. Truly an oasis in the heart of
Marunouchi, the space provides office
workers with a place to find moments ofrelaxation in their hectic daily routine.

10 |ANNUAL REPORT 2009

Annex exterior and Marunouchi Park
Building main entrance to the retail zone:
Inside, workers and visitors will find the stimulation and hospitality of a wide selection ofshops and restaurants encompassing thebasement (B1) to the third floor of the highrise tower and also the adjoining annex.
Outside lies the Marunouchi Brick Square—
space centered about the refreshingly green
Ichigokan Square, where people can gather,interact and relax. The fourth floor of the
Marunouchi Park Building houses a fitnessclub, which will provide office workers with aconvenient place to recharge and refreshthemselves.

3

Common area on B1

4

Gas light: Based on the design of the lamps
actually used in the Marunouchi area during
the Meiji era

5Solar power generation :Roof-top space is utilized to
install solar cell panels.

6

Dry mist: As a measure to mitigate the heat island phenomenon, “dry mist” generators havebeen installed in the Ichigokan
Square. Not wet to the touch,the microscopic droplets ofwater create a comfortablesense of cool refreshment.

7

Water retention pavementwith self-water-supply system: On clear summer days,
water is fed to the pavement via
a water pipe embedded in thelower layer of the pavement.
The evaporating water cools the
pavement surface temperature.

ANNUAL REPORT 2009 |11

Special Feature : Marunouchi Redevelopment Project

Restored Mitsubishi Ichigokan to Serve as a Museum for
Cultural ExchangeOriginally completed in 1894 and demolished in 1968, the Mitsubishi
Ichigokan—the first office building in Marunouchi—has been restored byfaithfully referring to preserved architectural drawings and survey drawings aswell as by using preserved original building materials. Using approximately 2.3
million red bricks, which have been manufactured in China through almost thesame method as that used in the Meiji era, the restoration has been carriedout through meticulous design, material selection and construction planning.
The Mitsubishi Ichigokan Museum will open in April 2010 within therestored Mitsubishi Ichigokan. Prior to the opening of the museum, an exhibition to commemorate the completion of restoration will be held from
September 3, 2009. At this exhibition, the history of the Mitsubishi Ichigokan
and the Marunouchi area will be introduced, while photos taken by famous
photographers will be exhibited.

The “London Block” cityscape on Babasaki-dori Street in 1909

12 |ANNUAL REPORT 2009

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Special Feature : Marunouchi Redevelopment Project

1

2

3

4

Exhibition Gallery

5

An Air of Romance and Vision Permeates the Faithful
Restoration of a Timeless IconT

he total resurrection of the Mitsubishi Ichigokan extends to the interior,
where some of the rooms, corridors and stairways have been faithfully
restored. Originally used as a bank operations office, the two-story atrium room
serves as a museum café that retains the original Meiji era ambience. The attractive and comfortable space transports visitors back to those good old days.

1

Using preserved materials, the column
capital restores detailed ornamentation.

2

The attic room and roof made the maximum use of original materials and construction methods.

3This room, with its brick walls, will be
used as a museum shop.

4

The central stone stairway has been
restored using preserved materials.

5

A hallway has also been faithfully restored
by referring to preserved drawings.

Former Bank Operations Office
Conceptual drawing of the museum café

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Special Feature : Marunouchi Redevelopment Project

2nd Project

Marunouchi 1-4 Project(tentative name)
Project Applying the Latest in Environmental Technologies
and Boasting Marunouchi’s Largest Floor Area
Reorganizing Various Urban FunctionsLocated at the hub that joins Marunouchi and Otemachi—areas with a highconcentration of core financial entities—this project reorganizes sophisticated, high-quality international business functions. The project will create thelargest office space in the Marunouchi area, with each floor boasting approximately 3,306m2. Also, accommodating retail shops primarily on the basement(B1) and the first floor, the project will link with the retail functions of the
Marunouchi Naka Dori area for renewed excitement.

New Pedestrian Walkway NetworkT

he new building constructed through the Marunouchi 1-4 Project will connect
to the Industry of Japan Club and Mitsubishi UFJ Trust and Banking Building
below and above ground. This project will establish a new pedestrian walkway
network that links Tokyo Station, the Shin-Marunouchi Building and Otemachi
Station, thereby adding to the district’s bustling atmosphere and accessibility.

Building Demonstrating Superior Environmental Performance

Project Profile
Address:
4-2 (including other lots) Marunouchi 1-chome, Chiyoda Ward, Tokyo
Main uses: Offices, financial institution branch office, retail shops, parking, etc.
Site area:
Approx. 8,000m 2
Floor area: Approx. 141,000m 2
Number of 4 floors below ground, 27 floors above ground with
2-story-high roof structure
floors:Height:Approx. 150m
Completion: January 2012 (scheduled)Under the Marunouchi 1-4 Project, Mitsubishi Estate will construct a building that has environmental performance superior to the specifications
defined under the Tokyo Green Building Plan initiative of the Tokyo metropolitan government. The Company will aggressively promote activities aimed at
reducing CO2 emissions relating to the building, thereby solidifying the building’s leading-edge, eco-friendly status. By introducing eco-friendly exteriors
and energy-efficient facilities, we are working to acquire an S-rank certification under the Comprehensive Assessment System for Building Environmental
Efficiency (CASBEE) of the Tokyo metropolitan government. Also, this green
project will maintain the continuity of trees planted on the Marunouchi Naka
Dori Street while increasing the use of greenery on the low-rise portion.

3rd Project

Otemachi 1-chome Second Area 1st
Class Urban Redevelopment Project* From north-west (left): Building A and Building B

Project Profile
Location:

Flowers Adding to
Seasonal Expressions
Flowers planted in the Ichigokan Square
were collected from all over the world
and delivered via airfreight for theenjoyment of visitors throughout theyear. These flowers have been nurtured
during the past two years so that they
can adjust themselves to the environment in Marunouchi.

16 |ANNUAL REPORT 2009

Project to Rejuvenate Otemachi—an International Business Hub

Mitsubishi Estate has participated in the project to redevelop the designated second area in Otemachi 1-chome, which uses a linked urban redevelopment process, as the landowner of the Mitsubishi Soken Building. This
project is the Company’s third project in the second stage of the Marunouchi
Redevelopment Project.
Mitsubishi Estate serves as the joint executing entity to redevelop Building
B through the project. Also, as a developer designated for the development of
Building A, the Company plans to acquire a portion of unallocated floor areain Building A.

Former properties of the landowners who participated in the Otemachi
1-chome 1st Class Urban Redevelopment Project (Otemachi 1-chome,
Chiyoda Ward, Tokyo)
Project area: Approx. 14,100m 2 (total)
Floor area: Approx. 242,000m 2 (total)
Structure: Steel-frame, partially steel-reinforced concrete,concrete-filled steel tubular columns
Number offloors:Height:Main uses:
Project
scheme:Executingentity:Schedule:

4 floors below ground, 31 floors above ground (Building A),
35 floors above ground (Building B)
Approx. 154m (Building A), approx. 177m (Building B)
Offices, retail
1st class urban redevelopment project in accordance with
the Urban Renewal Law of Japan (independent project)
Urban Renaissance Agency (representative entity)
Mitsubishi Estate Co., Ltd. (joint entity)
2010
2012

Building construction start
Building construction completion

ANNUAL REPORT 2009 |17

<Marunouchi Map>
Kokyo Gaien National GardenHarumi Dori

Palace Bldg.
Palace Hotel(under(under construction) construction)

Hibiya Station, Toei Mita Line

Shin-Kokusai
Bldg.

Yusen
Bldg.

Tokyo
Kaijo
Nichido
Bldg.

Tokyo
Kaijo
NichidoBldg.
(Annex)Marunouchi 1st St.

Mitsubishi
Corp.
Head Office

Gyoko DoriMarunouchi-Nakadori
Bldg.

Marunouchi 2nd St.

Marunouchi
MitsuiBldg.

Marunouchi 2-chomeBldg.

Shin-Tokyo Bldg.
Shin-Nisseki
Bldg.

Marunouchi
Bldg.

Shin-Marunouchi
Bldg.

Mitsubishi Bldg.

The Bank ofTokyo-Mitsubishi UFJ,
Ltd. Head Office

Shin-Sumitomo
Bldg.
Otemachi First Square

Yomiuri Shimbun
Bldg.

Mizuho Corporate Bank Ltd.
Head Office Bldg.

The Industry Clubof Japan and
Mitsubishi UFJ Trustand Banking Bldg.

Otemachi
Bldg.
OtemachiFinancial Center

The Marunouchi
1-4 Project

Marunouchi
South Exit

Marunouchi
Central Exit

Shin-Koko
Bldg.

Otemachi 1-chome
Second Area 1st Class
Urban Redevelopment Project

Tokyo Sankei
Bldg.

Otemachi 1-6 Project(tentative name)(tentative name)en, Marunouchi Lin

Marunouchi Center Bldg.

Shin-Marunouchi
Marunouchi OAZO Center Bldg.

Marunouchi
North Exit

Tokyo Bldg.

Marunouchi Marunouchi
Hotel Kitaguchi Bldg.

(Marunouchi OAZO)NTT Communications
Otemachi Bldg.

Otemachi Nomura
Bldg.

Mitsubishi
Soken Bldg.

TeishinBldg.
NTT Communications
Otemachi Bldg. (Annex)
Urbannet Otemachi
Bldg.

Shin-Otemachi
Bldg.
NTT
Marunouchi
Bldg.

NTT Data
Otemachi
Bldg.

ou

te

Toyota Tsusho Corp.
Tokyo Head Office

Koko Bldg.

Otemachi Statio

Nihon Seimei
Marunouchi Bldg.

JP Tower(tentative name)

Development Bankof JapanKDDI
Otemachi Bldg.

Tokyo StationrR

Circular RouteGinko
Kaikan
Bldg.

irc
ula

Infos
Yurakucho

Keidanren
KaikanMitsuiLife Insurance Bldg.

Pacific Century Place
Marunouchi Bldg.

Buildings Owned by Mitsubishi Estate

Marunouchi
CentralBldg.

GranTokyo
South Tower

Eitai Dori

Sapia
Tower

Asahi
Life Insurance
Otemachi Bldg.
(owned by aspecial-purpose
company undermanagementof Mitsubishi Estate)

JFE Shoji Bldg.
Nippon Bldg.
oky
To

The First StageThe Second Stage

Marunouchi
Trust Tower
Main

GranTokyo
North Tower

xp
res
sw
ay
Inn
er
C

Tokyo Kotsu
Kaikan Bldg.

(owned by a Mitsubishi Estate
consolidated subsidiary)

Tokyo
Ginko
KyokaiBldg.

Tokyo Station, Marunouchi Line

Daimyo Koji Ave.

Yurakucho ITOCiA

Otemachi
Pal Bldg.

JA Bldg.

yoda Line(owned through a special-purpose company
capitalized by Mitsubishi Estate)

Marunouchi Park Bldg. &Mitsubishi Ichigokan

Yomiuri Kaikan
BIC Camera

Tokyo
Metro
politanExpressway Inner

Marunouchi 3rd St.

Meiji Yasuda Life Insurance
Bldg.

KishimotoBldg.

Mitsui Bussan Bldg.
(Annex)

Otemachi Station, Chi

Marunouchi Naka Dori Ave.

Tokyo International Forum(owned by a Mitsubishi Estate
consolidated subsidiary)

Babasaki DoriMarunouchi 4th St.

Marunouchi 5th St.

Fuji Bldg.

Meiji Seimei Kan
Bldg.

NIKKEI Bldg.

Otemachi Station, Toei Mita Line

Otemachi Station, Tozai Line

Yu
rak
uc
ho
Sta
tio
n

ShinYurakucho
Bldg.

Kokusai Bldg.

Tokyo
KaikanTokyo Station, JR Keiyo Line

Yurakucho
Center Bldg.
Yurakucho
HankyuDepartment
Store
Yurakucho
Seibu
Department
Store

Yurakucho
Bldg.

Marunouchi 6th St.

Yurakucho
Denki Bldg.

Marunouchi 7th St.

The Peninsula Sanshi Kaikan
Tokyo
Bldg.

Imperial
TheaterTokyo
Chamber ofCommerce &Industry

The Bankof Tokyo
Mitsubishi UFJ
Otemachi Bldg.

(owned by aspecial-purpose
company undermanagementof Mitsubishi Estate)

Ote Center
Bldg.

Nijubashimae Station, Chiyoda Line

Yurakucho Station, Yurakucho Line

Marunouchi
Police Sta.
HibiyaSankei Bldg.
Togyo Kaikan-Nippon
DN
Broadcasting System
Tower 21
Bldg.

Wadakura-bori
Moat

Hibiya Dori

Line

Sta
Hib
i ya

Toho
Twin Tower
Bldg.

tion

, Hi

biya

Hibiya Marine
Bldg.

Marunouchi
1-chomeAIG Bldg. Redevelopment
Project(tentative name)

Mitsui Bussan Bldg.

tro
po
lita
nE

Hib
Ch iya St
iyod atioa Li n,neBabasaki-bori MoatN

(owned by aspecial-purpose
company under managementof Mitsubishi Estate)Linen, Hanzomon
Otemachi Statio

Hibiya-bori Moat

ResonaMaruha Bldg.

e
M

Marunouchi
Trust Tower
North

Nippon Steel Bldg.
Daini Tekko Bldg.

The First StageThe Second Stage

Daiichi Tekko Bldg.

Daiwa
Gofukubashi Bldg.
Bank of Japan

Mitsubishi
Jushi
Bldg.
Marunouchi Building
Completed inAugust 2002

18 |The Industry Club of Japan and
Mitsubishi UFJ Trust and Banking
Building Completed in
March 2003

ANNUAL REPORT 2009

Marunouchi Kitaguchi
Building (Marunouchi OAZO)
Completed in August 2004

Tokyo Building
Completed in
October 2005

Shin-Marunouchi Building
Completed in
April 2007

The Peninsula Tokyo
Completed in May 2007
Opened in
September 2007

Marunouchi Park Bldg.
& Mitsubishi Ichigokan
Completed in April 2009

The Marunouchi 1-4
Project (tentative name)

Otemachi 1-chome
Second Area 1st Class
Urban Redevelopment
Project(owned by aspecial-purpose
company undermanagementof Mitsubishi Estate)

ANNUAL REPORT 2009 |19

Business Information
Business Structure of the Mitsubishi Estate Group
Maximize asset
Risk
efficiency
management

Building Business

Determinecurrent
statusCustomers
International Business

Mitsubishi EstateCo., Ltd.

Custom-Built Housing

Real estate
investment

C ONSU LTI N G

Urban Development &Investment Management

Residential Business

Funds
procurement

Architectural Design &Engineering

Real estate-relatedplanning,
proposals and services

Considerinitiatives
and proposals

Conduct
research
and analysis

Proposal determination

Hotel Business

Implementation
Real Estate Services

Analysis and review

S O L U T I ON
Business Segment
Building BusinessResidential Business

Urban Development &Investment Management

The Mitsubishi Estate GroupInternational BusinessArchitectural Design &Engineering

Custom-Built Housing

Hotel BusinessGroup Framework

Business Activities

Consolidated
Sales Breakdown• Property Management and Office Leasing Group• Commercial Asset Management andDevelopment Group• Retail Property Group

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

¥406.6• Residential Development Group

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

¥309.0Urban Development & Investment Management
segment revenues are derived from thedevelopment of income-generating real estatefor investment purposes, asset management, andrelated activities.

¥91.9• Commercial Property Development andInvestment Group• Investment Management Group• International Business Group• Architectural Design & Engineering Group• Custom-Built Housing Group• Hotel Business GroupInternational Business segment revenues arederived from the development and leasing ofbuildings conducted through U.S.-based Rockefeller
Group, Inc.

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

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

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

BillionBillionBillion¥47.3
Billion¥20.0
Billion¥29.3
Billion¥30.7
Billion

Real Estate Services• Real Estate Services Group

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

¥23.3
Billion

Other

Other segment revenues are derived from related
operations other than the aforementioned.

¥3.8
Billion

20 |ANNUAL REPORT 200942.3%

Real estate development

Real estate investment

Real estate liquidity• Development method
proposals• Business plan support• Project management• Effective utilization/joint
ventures (equivalentexchanges/term leaseholdinterest method)• Provisional use• Reconstruction• Real estate investment
strategy formulation support• Market research and analysis• Due diligence• Acquisition support• Asset management• Real estate-backed
financing support• Securitization• Specified real estate
joint ventures• Sales and leaseback• Real estate brokerage

Building operation andmanagement

Comprehensive building
analysis• Operation and management plan
analysis and proposals• Long-term maintenance plan consulting• Commissioned operation andmanagement of buildings,
retail facilities and hotels• Subleasing• Tenant marketing• Operation and management ofresidential complex and corporate
housing• Property management• Earthquake resistanceanalysis• Facility management• Energy saving andIT utilization in buildings
and facilities• Interior and exteriorrenovation• Barrier-free facility
construction• Anti-aging measures forbuildings and facilities• Conversion

Construction

Design and supervision

CRE strategy support• Single-unit homes
and rental andcorporate housing• Residential andoffice renovation• Environmental assessment
and research• Consulting for urban
development and private
finance initiatives (PFIs)• Consulting, design andsupervision for environmental
and civil-engineering solutions• Construction management• Design and supervision forbuildings and structures• Design and supervision forinterior and exterior• Organization of CRE
information• CRE valuation• Support for strategy
formulation andimplementation

32.1%

9.6%

4.9%

2.1%

3.0%

3.2%

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

A Wide Range of Solutions Covering
Everything from Individual Real Estate Needs
to Corporate Real Estate Strategic Support
This department is independent from Mitsubishi
Estate’s eight business segments (comprised of the
Building Business, Residential Business, Urban
Development & Investment Management,International Business, Architectural Design &Engineering, Custom-Built Housing, HotelBusiness, and Real Estate Services).

In an effort to consistently provide optimal
consultation and solutions services that address clients’ real estate needs, such as effective methods
for property utilization and acquisition, we createbusiness proposals that draw on the resources ofthe entire Group.
The department offers consultation for individual properties and multiple properties held andleased by corporate clients. We analyze matterstaking into consideration the comprehensive fea-tures of real estate and provide solutions thatmatch the financial and management strategies ofindividual companies. In this manner, Mitsubishi
Estate endeavors to realize the maximum value ofcorporate real estate (CRE).

2.4%

0.4%

ANNUAL REPORT 2009 |21

1 Mitsubishi Ichigokan

4 Minami-sunamachi Shopping
Center “SUNAMO”

Mitsubishi Ichigokan has been
completely restored to what it was
in 1894—the first office building in
Marunouchi. This building willfunction as a key culture and arts
complex for expanding the area’s
cultural horizon.

Located only five minutes on footfrom Minami-sunamachi Stationon the Tokyo Metro Tozai Line, thiscenter opened in October 2008. As
a life-style center in the heart of aresidential district, the facility will
stand out as the top shopping center in the area, offering high quality and comfort.

2 Otemachi 1-chome Area 1st
Class Urban Redevelopment
Project

5 Izumi Park Town Tapio

On the former site of government
office buildings in Otemachi, amultipurpose complex was completed in April 2009, including
office buildings, an international
conference center and retail facilities (front to back: Keidanren
Kaikan; JA Building and NIKKEIBuilding). As a project partner,
Mitsubishi Estate has acquired asection of an office building andretail space for leasing.

3

4

1

Opened in October 2008, Izumi
Park Town Tapio—a lifestyle-proposal retail facility—is located at
the heart of Izumi Park Town, alarge-scale multipurpose development project that started up in
1969, and is adjacent to the
Sendai-Izumi Premium Outlets,
which opened at the same time.

6 Shopping Center“maruyama class”

3 Marunouchi Brick Square
Scheduled for grand opening in
September 2009 as a commercial
zone in the Marunouchi Park
Building, the Marunouchi Brick
Square will offer retail functions
suitable for the hub that joins
Marunouchi and Yurakucho.
Together with the Mitsubishi
Ichigokan Museum and its peripheral park, this new shopping facility will generate synergy to attract
people to Marunouchi.

Opened in March 2009 in thenature-rich, historic Maruyama
area of Sapporo City, this retailfacility is developing into a “residents’ clubhouse” that offers
high-quality and fulfilling values,
recreation and opportunities for
personal exchange.

2

5

6

Building Business
BUSINESS SEGMENT(Millions of yen)

(Millions of yen)
150,000

270,000

406,606
119,204

360,000

380,562
114,490

450,000

120,000

90,000180,000

60,00090,00030,0000

2008/3 2009/3

22 |The Building Business primarily undertakes the development, leasing and property management of officebuildings in Japan’s major cities, while also handlingmanagement of large-scale shopping centers, theoperation of parking lots and district operation ofheating and cooling services throughout Japan, thereby enhancing urban functions from an area management perspective.

0

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

Enhancing Urban Functions froman Area Management Perspective

Promoting the Second Stage of Marunouchi
Redevelopment
Mitsubishi Estate is going beyond the role of developer tothat of a producer, as it maximizes the full potential of
Marunouchi and delivers new functions that meet the business needs of today and tomorrow. In 1998, we commenced the first stage of Marunouchi Redevelopment, a10-year program encompassing the upgrade, reconstruction and renovation of much of the Marunouchi district.
Beginning with the Marunouchi Building in August 2002,
six new buildings have been completed, highlighted by the
grand opening of the Shin-Marunouchi Building in April
2007. With the opening of the Peninsula Tokyo in
September 2007, the first stage of Marunouchi

ANNUAL REPORT 2009

Redevelopment came to a close.
From 2008, and over the next 10 years, we will pushahead with the second stage. Designed to reorganize thearea as one comprehensive city block, the first project of
the second stage consisted of the construction of the
Marunouchi Park Building and the restoration of Mitsubishi
Ichigokan, along with the simultaneous redevelopment of
the Mitsubishi Shoji Building, the Furukawa Building andthe Marunouchi Yaesu Building. This large-scale project wascompleted in April 2009.
Adding to these initiatives, Mitsubishi Estate haslaunched the second project of the second stage, the“Marunouchi 1-4 Plan” (tentative name), encompassing therebuilding of the Togin Building, the Sumitomo Trust andBanking Co., Ltd. Tokyo Building, and the Mitsubishi UFJ
Trust and Banking Corporation Tokyo Building. Going forward, Mitsubishi Estate is tackling the third project—rebuilding the Mitsubishi Soken Building—throughparticipation in the second phase of the Otemachi
Redevelopment Project using a linked urban redevelopment
process.
Based on the achievements of Marunouchi
Redevelopment to date, the second stage will encompass
broader and more comprehensive plans to further rejuvenate the Otemachi, Marunouchi and Yurakucho districts, anarea of approximately 120 hectares.

Retail Property Group
Active Expansion of the Retail Property Businessthroughout Japan
In its retail property business, Mitsubishi Estate is pushingahead with the development of various types of retail properties that match the unique features of each location andarea. The Mitsubishi Estate Group continuously engages infacility planning, development, tenant leasing and management through its comprehensive business structure.
A Fresh Breeze and Joy—for People and City
Mitsubishi Estate is evolving its retail property business toprovide exciting new places where people of all occupations
and lifestyles can gather in comfort. Since the 1989 opening of the Tenjin MM Building (IMS) in Fukuoka Prefecture,retail property operations have become a full-blown business with numerous projects completed, including theLandmark Tower, Aqua City Odaiba and the Marunouchi
Building.
In its efforts to create a more appealing city, Mitsubishi
Estate has continued to raise the value of retail facilities in
the Marunouchi area, including the Shin-Marunouchi
Building in 2007, to be followed by the Marunouchi Brick
Square (commercial zone in the Marunouchi Park Building)in September 2009. Along with such infrastructure develop-

ment, the Company is aggressively carrying out promotional activities. From an area management perspective,
Mitsubishi Estate is focusing on operations that realize
intangible benefits.
Outside the Marunouchi area, we opened the Minamisunamachi Shopping Center “SUNAMO” in Tokyo’s Koto
Ward, as well as the Izumi Park Town Tapio and the SendaiIzumi Premium Outlets, both in Sendai City, Miyagi
Prefecture in October 2008. More recently, the Company
opened the “maruyama class” shopping center in Sapporo
City, Hokkaido in March 2009, and the Ami Premium
Outlets was opened in the town of Ami, Ibaraki Prefecturein July 2009.
In addition to urban retail properties in Marunouchi
and other major city areas and community-based retailproperties, including “SUNAMO,” the Company will undertake various projects nationwide, with CHELSEAS PREMIUM
OUTLETS shopping centers operated by Chelsea Japan Co.,
Ltd., which become a Mitsubishi Estate consolidated subsidiary in March 2009, as the third pillar of retail property
operations.

7
7 Sendai-Izumi
Premium Outlets
Operated by Chelsea Japan Co.,
Ltd.—a developer specializing inoutlet shopping centers—this is
the seventh CHELSEA PREMIUM
OUTLETS shopping center inJapan. Opened in Izumi Ward of
Sendai City in October 2008, thisshopping center accommodates
approximately 80 retail shops.

ANNUAL REPORT 2009 |23

3 Park House Ichigaya-yanagicho
Located in Ichigaya-yanagicho,
Shinjuku Ward—at the center of the
JR Yamanote line circle—this 97-unit
condominium features easy accessto three stations on four different
train or subway lines, including a
two-minute walk to Ushigomeyanagicho Station on the Toei OedoLine. Thanks to its entrance, set backfrom the road, and its indoor hallways, this condominium protects
residents’ privacy while providing
the superior convenience that Tokyo
can offer. It is scheduled for completion in December 2009.

1 Park House
Meguro-Gakugeidaigaku
Located in 2-chome, Meguro-honcho, Meguro Ward, Tokyo, thiscondominium houses 44 residential
units. Its symmetrical design creates an authentic and stately atmosphere that retains its grace evenin changing times and environments. By offering many units thathave roof-top patios as well asother features, the condominium
allows residents to enjoy nature’s
offerings. It is scheduled for completion in January 2010.

2

4 Park House Suginami-Takaido

3

2 Minami-Aoyama Park House
5

Located in 6-chome, MinamiAoyama, Minato Ward, Tokyo, thisis a 23-unit condominium with
fixed-term land leasehold interest.
Despite its convenient locationnear the Tokyo Metro Omotesando
Station, this condominium features open designs to make rooms
look more spacious than theiractual size, with all units positioned on the corners. Scheduled
for completion in January 2010, it
proposes a residential concept ofsuperior safety based on an
advanced anti-seismic structure.

1

4

A joint venture of Mitsubishi Estate
and Towa, this 101-unit condominium
is located in 2-chome, Takaido-nishi,
Suginami Ward, Tokyo, just a fiveminute walk from Takaido Station on
the Keio Inokashira line. Using Japaninspired design, this low-rise residential condominium has a hill-likecourtyard that extends from theentrance toward the back of the site.
The courtyard is surrounded by katsura trees that show fresh greenery inthe spring and red leaves in theautumn. It is scheduled for completionin April 2010.

6

Residential Business
BUSINESS SEGMENT(Millions of yen)

(Millions of yen)
50,000309,039

350,000

140,000
70,00040,00030,00020,000(15,460)

210,000

213,903
24,326

280,000

10,0000

0Providing High-Quality Homes that
Fulfill Market Needs
Through the Residential Business segment, we aim toprovide ideal living environments in concert withhealthy and fulfilling lifestyles by developing and marketing condominiums, single-unit homes and residential land, as well as engaging in businesses such as
condominium management and consulting services forthe optimal use of real estate. At the same time,
Mitsubishi Estate operates and manages golf courses.

2008/3 2009/3
Revenue from operations (left scale)Operating income (loss) (right scale)

24 |Expanding The Condominium Business throughDifferentiation Spurred by Prime Locations andMarket-Oriented Product Planning
In its condominium business, Mitsubishi Estate fulfills market needs through location selection based on solid market
research. The Company continues to provide its “ParkHouse” condominiums, mainly in the Tokyo Metropolitanarea, where demand is steady. Offering excellent productplanning based on the skillful development of a site’s
potential, Mitsubishi Estate aims for competitive advantage
by focusing on condominiums in central Tokyo that offer
superior convenience, large-scale properties with comprehensive communal facilities built with the environment in
mind, high-rise condominiums that provide spectacular

ANNUAL REPORT 2009

views, and differentiated designs achieved through collaboration with leading designers and firms from a variety ofindustries. Also, in response to ever-diversifying consumer
tastes, the Company develops and markets its STYLE
HOUSE series of fully order-made condominiums.
In step with providing high-quality condominiums,
Mitsubishi Estate is reinforcing its focus on quality assurance services. Utilizing its proprietary disclosure system, theCompany delivers an easy-to-understand written record ofproperty features, facilities and quality evaluation at eachstage of design, construction and completion. A maintenance report is regularly provided after individual property
owners take up residence.
In its residential leasing business, which sells properties
to prospective institutional investors, Mitsubishi Estate promotes the development of its PARK HABIO brand, mainly incentral Tokyo. The Company has already completed 18
properties, and it will continue to supply high-quality leased
condominiums, mainly in central Tokyo, that accommodate
diversified lifestyle-related needs, thereby achieving stableprofitability. In the single-unit home business, Mitsubishi
Estate is promoting residential developments based on amore distinctive, customer-oriented concept. Specifically,
the “dreams design” brand proposes “living spaces thatreflect individuality and offer daily comfort.”

Towa Real Estate Development Turned into a Wholly
Owned Subsidiary
Based on a capital alliance agreement in December 2004,
Mitsubishi Estate and Towa Real Estate Development Co.,
Ltd. (“Towa”) have mutually pursued synergies throughjoint ventures by drawing on their respective strengths
while gradually reinforcing their capital relationship. In April
2009, Mitsubishi Estate made Towa its wholly owned subsidiary through a share exchange, with the aim of efficiently
adjusting to changes in the business environment, enhancing strategic integrity and agility, and reestablishing a strong
business structure.
Looking ahead, the two companies will leverage theirindividual brand power and increase their focus on products
where they boast advantages. In this way, the Mitsubishi
Estate Group will work to accelerate operations in the
Residential Business segment.
Asakura Golf Club Opens in October 2008
Mitsubishi Estate is also engaged in a number of leisure services such as the management of golf courses, sporting
facilities and businesses associated with increased leisuretime and the promotion of good health. Mitsubishi Estate isan established participant in the golf course business. The
Company operates an existing portfolio that includes the
Izumi Park Town Golf Club (Sendai City, Miyagi Prefecture),

the Higashi Fuji Country Club (Oyama-cho, Sunto-gun,Shizuoka Prefecture), and the Fuji International Golf Club
(Oyama-cho, Sunto-gun, Shizuoka Prefecture). Moreover,
the Company opened the Asakura Golf Club (Sakura City,
Chiba Prefecture) in October 2008 through Sakura Golf
Development Co., Ltd., a development vehicle establishedjointly with Tokyu Land Corporation. Located an hour from
central Tokyo and within the Chiba Research Park underdevelopment by the Company, this new golf course boasts
convenient transportation access. An 18-hole course ofover 7,000 yards, this project is designed as a top-level
champions’ course capable of hosting officially sanctioned
tournaments.

5 PARK HABIO Hatchobori
Completed in July 2008, this 108unit high-quality leased condominium is located in 3-chome,
Hatchobori, Chuo Ward, Tokyo.
Based on the design concept of“modern Japanesque,” this property’s exterior and entrance skillfully blend a Hatchobori-specificatmosphere with a sharp, sophisticated urban design. Boasting easy
access to three stations on four different train or subway lines, including a three-minute-walk from
Hatchobori Station on the Tokyo
Metro Hibiya line, the PARK HABIO
Hatchobori is conveniently withinwalking distance of Tokyo Station.

6 Asakura Golf Club
Designed by taking advantage of aflat landscape and natural forest,
this golf course offers both thestrategic characteristics and difficulties that golfers of wide-ranging
skill levels can enjoy. Equippedwith a competition room that canhold a maximum of 60 people, theAsakura Golf Club extends a heartfelt welcome in a spirit of meticulous management and warm
hospitality.

ANNUAL REPORT 2009 |25

2 Toyosu 3-1 City Block Building

1

Project (tentative name)
Directly connected to Toyosu
Station on the Tokyo Metro
Yurakucho line, this project boasts
superior locational characteristics.
Housing offices and retail spaces,
this eco-friendly multipurpose
complex reduces CO2 emissions by
26% compared with ordinary
buildings thanks to the greenery
occupying 35% of the site and theeffective utilization of natural air
flow and sunlight. It is scheduled
for completion in August 2010.

3 Higashi-Nibancho Square(Sendai City)

3

1 Nibancho Center Building
Completed in July 2009, this multipurpose building (offices and residences) is situated on the formersite of the Belgian Embassy in
Nibancho, Chiyoda Ward, Tokyo.
Mitsubishi Estate is employing adesign system that integrates thesite and the buildings to harmonize
the new embassy building into asingle comprehensive city block.

2

This is a multipurpose complex
offices and retail spaces, favorably
situated on Higashi-Nibancho
Avenue, the main artery in Sendai
City. The site has a plaza suitablefor various events and a Hikari-noIzumi (light fountain) wall displaythat adds a fantastic touch to thesite with the play of lighting andsplashing water. Completed in July
2008, the Higashi-Nibancho
Square is serving as a place of recreation and relaxation for neighboring residents and office
workers.

4

Urban Development & Investment Management Business
BUSINESS SEGMENT(Millions of yen)

(Millions of yen)
65,00091,919100,000

80,00039,00033,50460,000029,43016,86340,00020,00052,00026,00013,0002008/3 2009/3

0Prioritizing Development andManagement in Business
Opportunity Expansion
In line with its fundamental policy, the Urban
Development & Investment Management businessdevelops and manages high-quality, income-generating real estate that meets diversified investor needs inthe real estate investment market. We are working to
expand based on a two-tiered business model, promoting development functions in concert with management functions.

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

26 |Actively Promoting the Development Business byStrengthening Asset Solutions Capabilities
In the context of development functions, we build incomegenerating real estate to be sold as prime investment products in a timely manner after the completion of construction
and the commencement of operations.
In July 2008, the Higashi-Nibancho Square was completed in Sendai City, as was the Amagasaki Front Buildingin October the same year in Amagasaki City, Hyogo
Prefecture. More recently, the Hiroshima Teppo-cho Building

ANNUAL REPORT 2009

was completed, in April 2009, in Hiroshima City, and the
Nibancho Center Building in Chiyoda Ward, Tokyo was finished in July 2009. Mitsubishi Estate’s current development
projects include the Toyosu 3-1 City Block Building Project(tentative name) and the Kita-Shinjuku Project (tentativename) in central Tokyo, as well as the Yodoya-Bashi Squarein Osaka City and the Kyoto Shijo Karasuma Building (tentative name) in Kyoto City.
Mitsubishi Estate does not limit its activities solely tooffice buildings: it also engages in the development of abroad range of real estate, including retail properties andserviced apartments, in an effort to address the diverse
needs of the investment market. Coordinating with the
Building Business, we opened the Minami-sunamachi
Shopping Center “SUNAMO” in Koto Ward, Tokyo in
October 2008 and the “maruyama class” shopping center in Sapporo City in March 2009. As for serviced apartments, we opened the Citadines Tokyo Shinjuku—a joint
project with The Ascott Group Limited, a Singaporebased global serviced apartment operator—in Shinjuku
Ward, Tokyo in March 2009. Mitsubishi Estate is also promoting the Citadines Kyoto Gojo Project (tentative name)jointly with the Singaporean partner, aiming for a grandopening in 2010.

Looking forward, Mitsubishi Estate is making every
effort to secure more business opportunities by strengthening asset solutions capabilities to maximize asset value forreal estate customers.
Providing a Broad Range of Specialized Services forReal Estate Investment Management
Mitsubishi Estate is active in the real estate investment management business through Mitsubishi Jisho Investment
Advisors, Inc. and Japan Real Estate Asset Management
Co., Ltd. Mitsubishi Jisho Investment Advisors provides specialized services relating to real estate investment management through such means as establishing private funds thatinvest in real estate such as retail properties, residential
properties and offices. Japan Real Estate AssetManagement manages the investments of Japan Real Estate
Investment Corporation, a Japanese real estate investment
trust (J-REIT) specializing in office buildings. These Group
companies are steadily growing their operations and working to continuously expand the balance of assets undermanagement.
Mitsubishi Estate will place equal emphasis on each of
the development and management functions to contributeto the growth of the real estate investment market in

Japan. In this way, we will strive to capture new business
opportunities, thereby accommodating socioeconomic
needs for urban development.

4 Amagasaki Front Building(Amagasaki City, Hyogo
Prefecture)
This is a favorably located multipurpose complex offices and retailspaces, directly connected by apedestrian deck to Amagasaki
Station, which offers access to
three JR lines. Creating a recreational and relaxing atmospherewith roof-top and exterior-wall
greenery, this building attracts
neighboring residents and office
workers for personal exchange. It
was completed in October 2008.

5 Citadines Tokyo Shinjuku
This is Mitsubishi Estate’s third
project in the serviced apartments
business jointly undertaken with
Singapore-based The Ascott Group
Limited. Marking the penetrationof the Citadines brand into Japan,
this serviced apartment targets
foreigners who have come to
Japan on business for a one-nightor up to a several-month stay. It
opened in March 2009.

5

ANNUAL REPORT 2009 |27

1 Central St Giles
Redevelopment Projectin London
A joint redevelopment projectwith Legal & General, a major U.K.
life insurance company, this complex comprises 66,000m2 of offices,
retail shops and residences.
Construction is scheduled for completion in the spring of 2010.

2 The McGraw-Hill Buildingin New YorkWith 51 floors above ground andfive floors below ground, theMcGraw-Hill Building boasts total
floor space of 237,000m2. Locatedin Manhattan, New York, thisoffice building was completed in
March 1972. Mitsubishi Estate firstacquired an interest in the building in April 1990.

3

3 Paternoster Square in London
Development of this multipurpose
office complex located in the Cityof London was completed in May
2003. The Company owns twobuildings: Warwick Court, withfloor space of 28,400m2; and 10
Paternoster Square, with floor
space of 33,600m2.

2

1

4

5

International Business
BUSINESS SEGMENT

30,00015,000028,00047,38245,00035,00012,52660,000(Millions of yen)

27,54475,00071,920(Millions of yen)

21,00014,0002008/3 2009/3

7,000

0

A Globally Growing Real Estate
Leasing and Development BusinessIn its International Business, Mitsubishi Estate operates
mainly through Rockefeller Group, Inc. (RGI), whichowns and manages office buildings in such locations
as New York City and London. The Company is working to expand its real estate development business,
mainly across the United States and in London, whilecurrently looking to grow its real estate investment
management business. Furthermore, we established
Mitsubishi Estate Asia Pte. Ltd. in Singapore in October
2008, aiming to expand our Asian operations.

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

28 |Advancing the Real Estate Development Business
Mainly across the United States and the United
Kingdom
In the United States, Mitsubishi Estate owns large-scale
office buildings—the McGraw-Hill Building and the TimeLife Building—in New York’s Manhattan, and it acquired
the One North Central, office building (Previously PhelpsDodge Tower) located in Phoenix, Arizona, in March 2008.
The Company is currently undertaking approximately 30
development projects in nine states, ranging from office

ANNUAL REPORT 2009

condominiums and distribution facilities to homes andmultipurpose complexes. In addition to expanding its realestate development business, Mitsubishi Estate aims toestablish a global platform by growing its real estate
investment management business.
Mitsubishi Estate is also aggressively expanding its
U.K. development business in London, England. Throughthe Paternoster Square Redevelopment Project completed
in 2003, the Company has developed a multipurpose
complex centered on an office building in the City of
London financial district. On the site, we own Warwick
Court and 10 Paternoster Square.
Also in the City of London, we completed our second
project, the Bow Bells House Redevelopment Project, in
December 2007. A joint project with Mitsubishi
Corporation, it features an office building with approximately 20,000m2 of office space as well as retail shops.
In July 2007, we began participating in the joint Central
St Giles Redevelopment Project with Legal & General, a major
U.K. life insurance company. As our third redevelopment
project in London, located in the city’s west end, the complex
will encompass 66,000m2 of offices, shops and residences.
Construction started in September 2007 and is scheduled forcompletion in the spring of 2010.

In addition, in May 2007, Mitsubishi Estate acquired
River Plate House, an office building situated in a prime
location within the City of London.
Mitsubishi Estate Asia Starts Operation in Singapore
In recent years, real estate investment funds are globalizing their operations, while real estate markets in Asia andother emerging countries have, until recently, been rapidly expanding due to the economic growth in theseregions. In response, Mitsubishi Estate has established
Mitsubishi Estate Asia Pte. Ltd. in Singapore as its Asian
flagship base. This new base began full-scale operationsin October 2008.
Mitsubishi Estate Asia will target all Asian regions
other than Japan, focusing on new development projects
as well as redevelopment projects aimed at enhancing thevalue of existing real estate.

4 River Plate House in London
Acquired in May 2007, this classically designed office building comprises 19,000m2 of floor space.

5 Bow Bells House
Redevelopment Projectin London
Located in London’s financial district, this project features an officebuilding with a total of 20,000m2
of office space. The project wascompleted in December 2007.

6 One North Central
in Phoenix
Constructed in 2001 in Phoenix,
Arizona, this office building has
floor space totaling 38,000m 2.
Mitsubishi Estate acquired thisbuilding in March 2008.

7 Distribution Facilities
Redevelopment Projectin Tucson
Located in Tucson, Arizona, this project involves the redevelopment of
distribution facilities with total floor
space of 38,000m2. Construction isscheduled for stepwise completionfor each facility from 2009 onward.

6

7

ANNUAL REPORT 2009 |

29

1

2

1 Akasaka Home Gallery“Ecofeel”

1 Breeze Tower

3

Located in the Nishi-Umeda business district in front of Osaka
Station, this is a multipurpose highrise complex comprising offices,
retail spaces, and event and conference halls. Featuring naturalventilation and other energy-saving designs, the Breeze Tower is apeople-friendly complex.

2 “Ecofeel” (Living Room)

2

4

5

2 Keio University

Sash doors can be fully opened toconnect the living room with theopen deck, creating a relaxing,
open environment.

6

2,178

2,100

10,000

1,400

5,000

700

0

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

Offering Reliability and Advanced
Technological Know-How Basedupon an Extensive Record of
Performance
At the core of Mitsubishi Estate’s Architectural Design
and Engineering Business are Mitsubishi Jisho Sekkei
Inc. (MJS) and MEC Design International Corporation.
MJS engages in the design and administration of construction and civil engineering projects, building renovation work and projects related to urban andregional development, as well as comprehensive consulting. MEC Design International directs interior
design and construction projects.

Promoting Strong Architectural Design andEngineering Business and Expanding Domestic andChinese Operations
Major projects completed by MJS during the fiscal year
ended March 31, 2009 included the Breeze Tower in Osaka
City, the Keio University Hiyoshi Campus Kyoseikan in
Yokohama City, the Park House Tsukuba Kenkyugakuen in
Tsukuba City, Ibaraki Prefecture, and the Kitahama Tower inOsaka City. During the fiscal year ending March 31, 2010,

30 |ANNUAL REPORT 2009

MJS plans to complete such projects as the Marunouchi
Park Building & Mitsubishi Ichigokan, the Otemachi 1chome Area 1st Class Urban Redevelopment Project and theAmi Premium Outlets in the town of Ami, Ibaraki
Prefecture. MJS will aggressively pursue increased architectural design and engineering orders for new construction
and renovation projects. At the same time, it will continue
to enhance its position in such promising business domains
as construction management, district heating and coolingfacilities reconstruction, and private finance initiatives (PFIs).
In 2007, MJS opened a Shanghai Office. This initiative
has broadened MJS’s network of personal contacts in
China. Based on this advantage, and leveraging its highly
acclaimed technological expertise in architectural and urban
design, environmental protection and energy saving, MJS
will work to steadily expand its Chinese business.
Realizing Eco-Friendly Design and Engineering
Considering environmental aspects has become an absolute
requirement in urban and building development. In responseto this trend, MJS will offer eco-friendly proposals moreaggressively than ever before, at affordable prices and withtangible results, under the priority policy of contributing tolonger building life, environmental harmony, scenic landscaping, energy and resource saving and waste reduction.

Building Homes that Accommodate
Residents’ Lifestyle-Related
Preferences
In the Custom-Built Housing Business segment,
Mitsubishi Estate, mainly through Mitsubishi Estate
Home Co., Ltd. (MEH), undertakes construction contracts for custom-built housing for individuals, housing
complexes, medical clinic buildings and other types of
edifices for sale, while conducting renovation ofhomes and retail shops. Also, Mitsubishi Estate
Housing Components Co., Ltd. supplies high-quality
construction materials used with a two-by-four construction method.

Realizing Customers’ Dream Homes through“Handmade” Custom Design
In the custom-built housing business, MEH works to meetcustomers’ preferences by offering custom design services.
To this end, MEH has fostered its technological capabilities
and established its own stringent quality standards.
Specifically, by combining the Super Two-by-Four construction method, which demonstrates maximum earthquake
protection, fire resistance and durability, and the Aerotech

central air-conditioning method, MEH builds homes that are
comfortable to live in and are capable of flexibly satisfying
customers’ custom-design needs.
MEH makes proposals regarding effective utilization ofland and other assets when constructing housing complexes. Meanwhile, MEH provides fully order-made medical clinic buildings and other structures without the use ofpredetermined construction and architectural methods.
In the renovation business, MEH offers an extensive
menu of renovation plans for homes, condominiums, buildings, retail shops and other structures. Based on such anadvantage, we are precisely accommodating customers’
housing desires and preferences.

(Millions of yen)

(Millions of yen)

New Lifestyle-Proposal Homes Now on SaleIn May 2009, as the first project that commemorates its
25th anniversary, MEH launched the SELECUBE lifestyle-proposal small home series with a flexible pricing system.
Meanwhile, MEH has incorporated environmental considerations into its business. Specific initiatives include the use ofdomestic lumber in custom-built housing, a move which it
started in 2008, and the introduction of standalone, passive
solar-heated homes. In step with these environmental
approaches, MEH will continue to develop and sell lifestyleproposal homes with premium value.

5 Komazawa Stage 1

40,00030,0004,000

29,3492,800

20,05820,00019,086
2,324

3,500

3,000

20,0002,000

10,000

1,000

(281)

(Millions of yen)

25,00031,216

BUSINESS SEGMENT(616)

Custom-Built Housing

2008/3 2009/3

Gallery

1

BUSINESS SEGMENT

0

4 Komazawa Stage 1 Home
This model home has a unique
cubic overall shape with naturalstone exterior walls adding astately impression.

Architectural Design & Engineering

15,000As a core space in the “Ecofeel”
home, this hospitable living room
provides a stage for various
scenes, including family relaxationand guest hosting. Optimal spacedesign enables you to enjoy carefree interaction between family
members.

3 “Ecofeel” (Open Deck)

Hiyoshi Campus Kyoseikan
This multipurpose complex of the
Keio University Hiyoshi Campus
houses lecture rooms, laboratories,
accommodation facilities, a 50meter swimming pool and an auditorium that can be used as aconcert hall. Thanks to various
design initiatives to reduce its environmental impact, this complex has
become the first structure toacquire an S-rank certification
under the Comprehensive
Assessment System for Building
Environmental Efficiency (CASBEE)of Yokohama City.

(Millions of yen)

Combining the sharp ridge roof
with the gentle curves of the exterior pergola, this Ecofeel home
has a simple yet distinctive overallsilhouette. Also being an all-electric home, this edifice optimallybalances eco-friendliness and comfortable living.

00

2008/3 2009/3
Revenue from operations (left scale)Operating loss (right scale)

Home Gallery (Kitchen/
Conservatory)
This model home features a “cockpit” style original kitchen, as well
as a conservatory suitable formeals and coffee or tea breaks,
and it effectively incorporates
greenery into daily life.

6 Komazawa Stage 1 Home
Gallery (Living Room)This is a living room, raised fromthe first floor, with a vaulted ceiling. The outstanding open designand space realizes relaxation ofhigher quality.

ANNUAL REPORT 2009 |31

1 Hiroo Garden Forest
Completed in February 2009 in
Shibuya Ward, Tokyo, Hiroo Garden
Forest was a joint project between
Mitsubishi Estate and Mitsui Fudosan
Residential Co., Ltd. For this 474-unit
large-scale condominium complex,
Mitsubishi Real Estate Services isserving as the sales agent.

1 Royal Park Shiodome Tower
Highly praised as representing a
new generation of urban hotels,
the Royal Park Shiodome Tower,
located in Shiodome Media City,
Tokyo, offers a stylish environment
and flexible services.

2 CRE Strategy Support System“CRE@M”

2 Lobby of a Royal Park Hotel

The Mitsubishi Estate Group provides one-stop support for the corporate real estate (CRE) strategies
of corporations.

2

In addition to prime locations and afull range of facilities, Royal Park
Hotel offer luxurious comfort toguests from around the world
through a dedication to top service.

3 Yokohama Royal Park Hotel(Superior Twin of“club The Landmark Floor”[high-class amenities andservices floor] )A total renovation program was
implemented from the fiscal year
ended March 31, 2007. The 67th
floor was refurbished as an urban
spa area with a highly specialized
resort ambiance. The 60th floor
was newly launched as a new concept area.

3 Parking Ecology Network“PEN”

Hotel Business

Real Estate Services

BUSINESS SEGMENT

BUSINESS SEGMENT(Millions of yen)

(Millions of yen)

40,00030,77533.1631.362

30,000

2,000

1,500

1,000

10,000

500

0

(19)

20,0002008/3 2009/3

0Enhancing Brand Power andManagement
In the Hotel Business, Royal Park Hotels and Resorts
Co., Ltd. integrates the administration and management of each hotel to ensure consistency throughout
the hotel chain, enhance management efficiency andimprove the level of management. With hotels inTokyo, Yokohama, Sendai and other locations inJapan, the Royal Park Hotel chain comprises a networkof six hotels offering 2,054 guestrooms.

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

Increasing the Brand Value of Royal Park Hotels
through a Management Focus on Customer Delight
Based on the “Best for the Guest” philosophy of Royal Park
Hotels, we go one step beyond customer satisfaction byaiming to delight our guests. This approach has been highly
recognized, enabling us to win the leading position in the2008 Japan Hotel Guest Satisfaction Index StudySM conduct-

ed by J.D. Power Asia Pacific, Inc.*, an organization specializing in research and consulting relating to customer
satisfaction. This marked the second consecutive year for
Royal Park Hotels to win the top position in the ¥15,000 to¥35,000 per night segment. We will further promote customer delight-focused hotel management and operations.
Planning to Open a New Hotel on Kyoto’s Sanjodori Street
Royal Park Hotels and Resorts is planning to develop andopen a new hotel on Kyoto’s Sanjo-dori Street, leveraging
the development and management expertise that it nurtured through the success of the Royal Park Shiodome
Tower. Scheduled for opening in the autumn of 2011, the
new hotel will provide 168 guestrooms as an accommodation-centric facility. Royal Park Hotels and Resorts will work
to expand its hotel chain and bolster its brand power
through the development of new hotels in Tokyo and major
government-designated cities.

* Japan Hotel Guest Satisfaction Index StudySM conducted by J.D. Power Asia Pacific, Inc.
Royal Park Hotels fell under the segment of ¥15,000 to ¥35,000 per night hotels with the most common guestroom space of 20m2 or larger. The study was based on
12,089 valid responses received from people who used applicable hotels within the previous year. For more details, please visit the J.D. Power and Associates Web site at:
http://www.jdpower.com/corporate/japan/.

32 |ANNUAL REPORT 2009

Meticulously Responding to the
Varied Real Estate Needs of Customers
Driven by Mitsubishi Real Estate Services Co., Ltd., theReal Estate Services Business has instituted a system thatenables highly customized responses to individual customer needs. Leveraging its collective strengths andinformation capabilities, the Mitsubishi Estate Group
provides a wide range of optimal solutions for individual and corporate real estate utilization, brokerage, newcondominium sales and real estate leasing.
Real Estate Brokerage Services
Mitsubishi Real Estate Services engages in wide-ranging
operations relating to real estate owned by individuals andcorporations. These operations include purchase, sale, brokerage for leasing services and consulting services for realestate utilization. Also, we provide “Consulting M” one-stop
services to help companies raise their corporate value andfacilitate efficient corporate management. More recently, in
November 2008, we launched the “CRE@M” corporate realestate (CRE) strategy support system. In addition, Mitsubishi
Real Estate Services is expanding outside Japan, offering support services for corporations’ international operations andforeign corporations.

Sales Agency Operations for Properties such as
Condominiums
In Mitsubishi Real Estate Services’ sales agency operations,
qualified staff—people who are well versed in the uniquefeatures and characteristics of individual properties, as well as
real estate finance, law, taxation and related matters—are on
hand to assist sellers in transactions of condominiums andother properties. In the area of residential development andsales, we are providing comprehensive support to developers.
We offer a full range of services including site, property andmarket information survey, product planning and advertisingand sales planning.

(Millions of yen)
30,00022,500(Millions of yen)
5,000

23,3741

3,750

15,000

2,500

7,500

1,250

(445)

3

27,941
4,108

1

To contribute to global environmental
efforts through parking operations,
Mitsubishi Real Estate Services donates
a portion of the proceeds from parking charges to tree-planting programs.

00

2008/3 2009/3
Revenue from operations (left scale)Operating income (loss) (right scale)Accelerating Leased Condominium/Office Building
Management Support Business and Coin-Operated
Parking Lot Operations
Mitsubishi Real Estate Services offers a variety of lease management support services relating to leased condominiums
and office buildings, and its customer base ranges from individuals and corporate clients to asset managers of securitized
real estate. We have a structure to enable comprehensive
services covering everything from business plan formulationand product planning to lease management after construction completion. In April 2008, Mitsubishi Real Estate Services
established a new Parking Operations Office. This office isworking to develop new automated, coin-operated parking
services, applying Mitsubishi Real Estate Services’ extensive
expertise in lease management services.
ANNUAL REPORT 2009 |33

Financial andCorporate Data Section
Contents
36 | Financial Review
39 | Financial Statements
39 | Consolidated Statements of Income
40 | Consolidated Balance Sheets
42 | Consolidated Statements of Changes in Net Assets
44 | Consolidated Statements of Cash Flows45 | Notes to Consolidated Financial Statements
61 | Report of Independent Auditors

62 | Mitsubishi Estate Corporate Data
62 | Mitsubishi Estate Group63 | Directors, Statutory Auditors and Executive Officers
64 | Organization
65 | Corporate History

34 |ANNUAL REPORT 2009

ANNUAL REPORT 2009 |35

Financial Review
Millions of yen (rounded down)

Revenue from Operations / Operating Income
In the fiscal year ended March 31, 2009, consolidated revenue fromoperations increased ¥154,973 million, or 19.7%, from the previous fiscal
year to ¥942,626 million. Consolidated operating income, however,decreased ¥39,416 million, or 22.1%, year on year to ¥138,567 million.
Results for each business segment are as follows.
In the Building Business segment, Mitsubishi Estate enjoyed a year-onyear increase in rental revenue due to contributions from the ShinMarunouchi Building and new consolidated subsidiaries—namely, Sunshine
City Corporation and Tokyo Kotsu Kaikan Co., Ltd.— as well as to thebenefit of upward revisions to rental rates applicable to existing buildings.
Contracted property management revenue also increased, owing to
expanded floor space under contracted management. Meanwhile, repair
contract construction revenue declined compared with the previous fiscal
year, during which the Company undertook a large number of contract
projects relating to the Shin-Marunouchi Building. As of March 31, 2009,the vacancy rate stood at 2.86% for the buildings held by Mitsubishi Estate,compared with 2.06% as of March 31, 2008. Reflecting all of theaforementioned factors, revenue from operations increased ¥26,044 million
from the previous fiscal year to ¥406,606 million, and operating income
also increased ¥4,714 million year on year to ¥119,204 million.
In the Residential Business segment, Mitsubishi Estate’s revenue in thecondominium business dropped year on year, attributable to a year-on-year
decrease in the number of condominiums sold. However, after including
revenue from condominium sales by consolidated subsidiary Towa Real
Estate Development Co., Ltd., overall condominium business revenue grew
year on year. Other revenue also grew year on year, reflecting the sale of acommercial facility within the Kohoku New Town in Tsuzuki Ward,
Yokohama City. As a result, revenue from operations in the Residential
Business segment climbed ¥95,136 million year on year to ¥309,039
million. On the earnings front, however, Mitsubishi Estate posted an
operating loss totaling ¥15,460 million. Owing to Towa Real Estate

Development’s operating loss, this represents a year-on-year decrease of

Revenue from Operations

Income before Taxes and Special Items

Operating Income(Billions of yen)

947.6
844.2
775.3

2009/3

2008/3

YoY Change¥39,786 million from the operating income recorded in the previous fiscal

Business segment continued to focus on increasing orders for “Mitsubishi

Building Business

406,606

380,562

26,044

year. As a supplementary note, in line with the application of theHome” brand homes. Orders actually received for these homes have

309,039

213,903

95,136

Accounting Standards for Measurement of Inventories, Mitsubishi Estateconsequently expanded year on year. During the fiscal year under review,

included ¥25,776 million in cost of revenue from operations in connection

however, the number of sales of custom-built housing and contract work

91,91929,43062,488with the write-down of certain inventories that have experienced

completed declined, while the unit price for these projects increased. As a

Residential Business
Urban Development &Investment Management
Businessdeterioration in profitability.

result, revenue from operations in this segment decreased ¥1,867 million year

47,382

71,920(24,537)

on year to ¥29,349 million, while operating loss contracted ¥335 million to

International BusinessArchitectural Design &Engineering

20,05819,086971¥281 million.

Custom-Built Housing

29,34931,216(1,867)

Hotel Business

30,77533,163(2,387)In the Urban Development & Investment Management Businesssegment, a Mitsubishi Estate consolidated subsidiary enjoyed capital gains
from the sale of such properties as Trade Pier Odaiba (Minato Ward,

Royal Park Hotels and Resorts Co., Ltd. serves as the core driver inTokyo) and the Shin Fujita Building (Osaka City), while Mitsubishi Estate

strengthening Mitsubishi Estate’s operations in the Hotel Business segment.

Real Estate Services

23,37427,941(4,566)

itself experienced contributions from income gains. As a result, revenue

This consolidated subsidiary operates Royal Park Hotels in Japan. All

Other

3,872

4,982

(1,109)from operations in this segment jumped ¥62,488 million year on year tobusinesses in this segment, including the accommodation business,¥91,919 million, with operating income also jumping ¥16,640 million toexperienced deterioration in revenue during the fiscal year under review. As a

¥33,504 million.

result, revenue from operations dropped ¥2,387 million year on year to¥30,775 million. The segment posted ¥19 million in operating loss,

Foreign-currency-denominated revenue declined for the real estateleasing and development business in the International Business segment

representing a worsening of ¥1,381 million from the operating income

compared with the previous fiscal year, during which Mitsubishi Estate soldrecorded in the previous fiscal year.

a performing asset in the state of Oregon, the United States. Yen-

166.2

787.6

137.6

In the Real Estate Services segment, Mitsubishi Real Estate Services Co., Ltd.

Eliminations(19,752)(24,554)

4,801

942,626

787,652

154,973

Building Business

119,204

114,490

4,714

Residential Business
Urban Development &Investment Management
Business(15,460)

24,326(39,786)

33,504

16,863

16,64012,52627,544(15,017)

2,178

2,324

(146)

Revenue from Operations

denominated revenue also declined, negatively impacted by the significant

suffered a decline in revenue in connection with a decrease in the number ofappreciation of the yen (previous fiscal year: ¥117.85 = US$1.00; fiscal year

home agency sales. Revenue from real estate brokerage services similarly fellInternational BusinessArchitectural Design &Engineering

under review: ¥103.48 = US$1.00). As a result, revenue from operations indue to a decrease in the number and unit price of cases handled. As a result,

Custom-Built Housing

(281)

(616)

335

this segment slipped ¥24,537 million year on year to ¥47,382 million, while

segment revenue from operations sank ¥4,566 million year on year to ¥23,374

Hotel Business

(19)

1,362

(1,381)

operating income fell ¥15,017 million to ¥12,526 million.

million. The segment recorded ¥445 million in operating loss, a drop of ¥4,554

Real Estate Services

(445)

4,108

(4,554)

million from the operating income posted in the previous fiscal year.

Other

669

995

(325)

(13,309)(13,415)105

138,567

177,983(39,416)

In the Architectural Design & Engineering Business segment, Mitsubishi
Jisho Sekkei Inc. recorded increased revenue from operations in connection

Revenue from operations in the Other segment fell ¥1,109 million yearwith the Breeze Tower (Osaka City) and other projects. Accordingly, revenue

on year to ¥3,872 million. Segment operating income also dropped ¥325

from operations in this segment rose ¥971 million year on year to ¥20,058

million to ¥669 million.

Eliminations or Corporate
Operating Income

See accompanying notes to consolidated financial statements.

million. However, segment operating income declined ¥146 million to¥2,178 million, due to deterioration in business profitability. On an additionalnote, with regard to long-term, large-scale projects, Mitsubishi Estate records
revenue in proportion to the percentage of construction completion basis.

(Billions of yen)

942.6

Driven by Mitsubishi Estate Home Co., Ltd., the Custom-Built Housing

Net Income(Billions of yen)

177.9

151.6
138.5

(Billions of yen)

162.0

3,124.5

108.6
93.6

3,280.2

EBITDA(Billions of yen)

1,225.6 1,238.8
1,148.4
1,133.6

4,327.1 4,429.0
86.9
3,447.2

Interest-Bearing Debt
(Billions of yen)(Billions of yen)

97.6

121.2

118.2

Total Equity

Total Assets(Billions of yen)

1,834.1

233.4

1,645.4
200.9

920.9

245.9
209.5

178.3
1,198.3

55.8

1,007.7 1,012.5
45.4

36.2

2005/3 2006/3 2007/3 2008/3 2009/3

36 |2005/3 2006/3 2007/3 2008/3 2009/3

ANNUAL REPORT 20092005/3 2006/3 2007/3 2008/3 2009/3

2005/3 2006/3 2007/3 2008/3 2009/3

2005/3 2006/3 2007/3 2008/3 2009/3

2005/3 2006/3 2007/3 2008/3 2009/3

2005/3 2006/3 2007/3 2008/3 2009/3

2005/3 2006/3 2007/3 2008/3 2009/3

ANNUAL REPORT 2009 |37

Financial Statements

Other Income (Expenses)
Other income declined ¥3,080 million year on year to ¥11,235 million, due
to a decrease in interest income and equity in earnings of unconsolidated
subsidiaries and affiliates. Other expenses increased ¥10,940 million to¥41,179 million, mainly owing to a rise in interest expenses.
Turning to extraordinary items, Mitsubishi Estate posted gain on salesof shares of affiliated companies totaling ¥6,283 million. Extraordinary
losses amounted to ¥24,902 million. Principal components were loss on
valuation of inventories totaling ¥7,375 million, loss on disposal of fixed
assets totaling ¥2,562 million, loss on valuation of investment securities
totaling ¥7,524 million, impairment loss totaling ¥2,447 million and loss on
cancellation of real estate transaction contracts totaling ¥4,991 million.

income before income taxes and minority interests amounted to ¥90,005
million, and such non-cash items as depreciation and amortization totaled¥60,364 million. These cash inflows were adjusted to reflect movements in

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2009 and 2008

notes and accounts receivable, equity investments, notes and accounts

Thousands of
U.S. dollars (Note 3)

Millions of yen

payable as well as other items.

2009

Net cash used in investing activities amounted to ¥214,500 million, a year-

Cost of revenue from operations(728,002)(551,455)(7,411,207)

Selling, general and administrative expenses(76,056)(58,213)(774,268)

Operating income

138,567

177,983

1,410,640

5,768

6,823

58,720(31,240)(22,251)(318,038)

1,558

3,739

15,864(24,647)(6,631)(250,915)(48,561)(18,320)(494,369)

90,005

159,663916,271

factors including purchases of property and equipment.

942,626¥

2009

Revenue from operations

on-year increase of ¥2,293 million. This was attributable to a variety of

¥

2008

Cash Flows from Investing Activities

787,652$

9,596,116

Cash Flows from Financing Activities

Net cash provided by financing activities was ¥141,055 million, a year-on-

Net Income
Income before income taxes and minority interests decreased ¥69,658
million, or 43.6%, year on year to ¥90,005 million. Net income edged
down ¥41,540 million, or 47.8%, to ¥45,423 million. Net income per sharestood at ¥32.90.

Consolidated Statements of Income

year decrease of ¥97,886 million. The principal components were an

Other income (expenses):

increase in long-term borrowings and proceeds from the issuance ofInterest and dividend income

corporate bonds.

Interest expenses
Equity in earnings of unconsolidated subsidiaries and affiliates(2) Consolidated Balance Sheets

Compared with the previous fiscal year-end, total assets increased ¥101,933

Analysis of Financial Position

million to ¥4,429,070 million as a result of the operating, investing and(1) Consolidated Cash Flowfinancing activities previously mentioned.
Total liabilities, when compared with the previous fiscal year-end, rose

On a consolidated basis, cash and cash equivalents at the end of the fiscal

Other, net (Note 14)

Income before income taxes and minority interests

year under review decreased ¥35,159 million year on year to ¥184,552¥174,515 million to ¥3,154,357 million. The balance of interest-bearing

million. Major cash inflows included income before income taxes anddebt as of March 31, 2009 expanded ¥188,788 million from the previous

minority interests, depreciation and amortization, proceeds from issuance offiscal year-end to ¥1,834,195 million. Deducting cash and cash equivalents,

corporate bonds and an increase in long-term borrowings. Major cash

the net balance of interest-bearing debt as of March 31, 2009 increased

Current(34,707)(52,390)(353,332)

outflows included purchases of property and equipment, repayment of¥223,947 million year on year to ¥1,649,642 million.

Deferred

6,606(9,472)

67,258(28,101)(61,862)(286,074)(16,481)(10,836)(167,781)

Income taxes (Notes 1 and 9):

Net assets shrank ¥72,582 million year on year to ¥1,274,713 million.

corporate bonds and repayment of long-term borrowings.

This was attributable to an expansion of negative foreign currency translation
Minority interests

adjustments, which more than offset an increase in retained earnings.

Cash Flows from Operating Activities

Net cash provided by operating activities stood at ¥45,824 million, an

Net income¥

45,423¥86,963$

462,415

improvement of ¥62,072 million from the net cash used in operating
See accompanying notes to consolidated financial statements.

activities during the previous fiscal year. For the fiscal year under review,

ROE

ROA

Interest Coverage Ratio
(%)

(%)

4.6

(Times)8.3

5.3

Net Income Per Share (Basic)
(Yen)

9.5

4.9

70.95
8.5

7.1

62.99

7.4

4.0
5.4

3.3
4.0

42.60
3.8

4.7

4.7

32.90
27.93

2005/3 2006/3 2007/3 2008/3 2009/3

38 |2005/3 2006/3 2007/3 2008/3 2009/3

ANNUAL REPORT 20092005/3 2006/3 2007/3 2008/3 2009/3

2005/3 2006/3 2007/3 2008/3 2009/3

ANNUAL REPORT 2009 |39

Consolidated Balance Sheets
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
March 31, 2009 and 2008

Thousands of
U.S. dollars (Note 3)

Millions of yen

2009

2008

2009

2009

AssetsLiabilities and net assets

Current assets:

Current liabilities:

Cash (Notes 7 and 15)¥

181,168¥

186,321$

Thousands of
U.S. dollars (Note 3)

Millions of yen

1,844,325

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

¥

2008

406,604¥2009

271,137$

4,139,307

Notes and accounts receivable – trade28,94937,063294,711

Notes and accounts payable – trade

101,450

114,780

1,032,786

Marketable securities (Note 4)

4,442

31,73945,222

Accrued income taxes (Note 9)

20,27338,372

206,391

Allowance for doubtful receivables

(402)

(436)

(4,095)

Advances and deposits

107,645

87,5001,095,856

Inventories (Notes 5 and 7)

600,536

602,824

6,113,571

Accrued expenses and other current liabilities

53,623

72,121545,894

Equity investments (Note 4)257,879

185,640

2,625,266

Total current liabilities

689,597583,9137,020,235

Deferred income taxes (Note 9)

43,55947,053

443,445

Long-term debt (Note 7)

1,425,129

1,374,269

14,508,083

Other current assets

59,006

51,179600,698

Lease deposits received

371,141

359,561

3,778,286

1,175,139

1,141,385

11,963,146

Accrued employees’ retirement benefits (Note 8)

14,29618,083

145,536

Deferred income taxes (Note 9)539,505

550,194

5,492,267

Goodwill

84,921

67,172

864,520

Total current assets

Investments:

Other non-current liabilities

29,766

26,646

303,028

3,154,357

2,979,841

32,111,958

136,534

136,534

1,389,943

Capital surplus

165,216

165,216

1,681,932

Retained earnings

408,775

387,2144,161,411(3,715)(3,440)(37,827)

706,810685,524

7,195,459

30,73089,621

312,839

(591)

(357)

(6,024)

Total liabilities

Investments in and advances to unconsolidated
subsidiaries and affiliates

15,10017,017

153,723

Investment securities (Notes 4 and 7)

137,354

236,331

1,398,295

Other investments (Note 6)

135,323

143,329

1,377,623

287,778396,678

2,929,641

Total investments

Net assets:
Shareholders’ equity (Note 10):
Common stock, without par value:
Authorized – 1,980,000,000 shares;
Issued – 1,382,518,351 shares in 2009 and 2008

Property and equipment (Note 7):Land1,632,779

1,564,953

16,622,000

277,425

280,547

2,824,242

Total shareholders’ equity

1,840,117

1,766,921

18,732,743

Valuation, translation adjustments and others:

Machinery and equipment and other106,956

106,432

1,088,837

Unrealized holding gain on securities

Construction in progress

136,344

83,271

1,388,013

Deferred gains or losses on hedging instruments

3,993,622

3,802,126

40,655,837

Land revaluation reserve

460,009472,578

4,682,980(1,123,904)(1,087,391)(11,441,563)

Foreign currency translation adjustments(48,462)(8,478)(493,359)

2,869,718

2,714,735

29,214,274

441,684

553,364

4,496,436

218

142

2,220

125,999

108,264

1,282,703

1,274,713

1,347,295

12,976,821

Land in trust
Buildings and structures

Less accumulated depreciation
Property and equipment, net

Less treasury stock, at cost

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

Intangible and other assets (Note 7)

96,43474,339981,716

Contingent liabilities (Note 13)
Total net assets

Total assets¥

4,429,070¥

4,327,137$

45,088,779

Total liabilities and net assets¥

4,429,070¥

4,327,137$

45,088,779

See accompanying notes to consolidated financial statements.

40 |ANNUAL REPORT 2009

ANNUAL REPORT 2009 |41

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Changes in Net Assets (continued)

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2009 and 2008

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2009 and 2008
Millions of yen

Thousands of U.S. dollars (Note 3)

Shareholders’ equity

Balance at March 31, 2007
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1)
Net change in items other than those in shareholders’ equity
Total of changes in the year
Balance at March 31, 2008
Decrease due to the change of accounting policies forconsolidated foreign subsidiaries
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1)
Changes in consolidated subsidiaries and companies accounted
for by the equity method
Net change in items other than those in shareholders’ equity
Total of changes in the year
Balance at March 31, 2009

Commonstock

CapitalsurplusRetainedearnings¥136,534¥165,216¥324,611

Shareholders’ equity
Treasurystock¥(2,965)(22,089)
86,963(90)(2,180)136,534

165,216

62,603
387,214

(870)
396

(474)
(3,440)(22,089)
86,963(870)
305(2,180)62,128685,524(3,860)(22,088)
45,423(22,088)
45,423
(649)
274
2,062

(649)
374

123
0
¥165,216¥623,396(3,860)

(99)
2,062

0
¥136,534

Total shareholders’equity25,421¥408,775(275)¥(3,715)

25,145¥706,810

Valuation, translation adjustments and others

Balance at March 31, 2007
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1)
Net change in items other thanthose in shareholders’ equity
Total of changes in the year
Balance at March 31, 2008
Decrease due to the change of accounting
policies for consolidated foreign subsidiaries
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1)
Changes in consolidated subsidiaries andcompanies accounted for by the equity method
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2009

Unrealized
gain onsecurities¥133,843

¥ 161

Land
revaluation
reserve

Foreigncurrencytranslation
adjustments

Totalvaluation,translation
adjustments
and others

StockacquisitionrightsMinority
interests

Total net
assets¥470,397¥ (2,154)¥ 602,247¥ 79¥ 35,185¥1,260,908(22,089)
86,963(870)
305(2,180)(44,222)(44,222)
89,621

(518)
(518)
(357)

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

63
63
142

73,07973,079108,264

24,25986,387
1,347,295

CapitalsurplusRetainedearnings$1,389,943$1,681,932$3,941,916

Treasurystock$(35,020)(39,298)(224,866)
462,415(224,866)
462,415(6,614)
2,799
20,993(6,614)
3,807

1,259

$1,681,932$6,978,771(39,298)(1,008)20,993$1,389,943

Total shareholders’equity258,793$4,161,411

1,259(2,806)$(37,827)

255,986$7,195,459

Minority
interests

Total net
assetsThousands of U.S. dollars (Note 3)
Valuation, translation adjustments and others

123

Millions of yen

Deferred
gains or losses
on hedging
instruments

Balance at March 31, 2008
Decrease due to the change of accounting policies forconsolidated foreign subsidiaries
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1)
Changes in consolidated subsidiaries and companies accounted
for by the equity method
Net change in items other than those in shareholders’ equity
Total of changes in the year
Balance at March 31, 2009

Commonstock

Unrealized
gain onsecurities

Deferred
gains or losses
on hedging
instruments

Balance at March 31, 2008
$912,365 $(3,634)
Decrease due to the change of accounting
policies for consolidated foreign subsidiaries
Changes in the year:
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1)
Changes in consolidated subsidiaries andcompanies accounted for by the equity method
Net change in items other than(599,525) (2,389)
those in shareholders’ equity
Total of changes in the year
(599,525) (2,389)
Balance at March 31, 2009
$ 312,839 $(6,024)Land
revaluation
reserve$4,810,934

Foreigncurrencytranslation
adjustments

Totalvaluation,translation
adjustments
and others$(86,311) $5,633,354

Stockacquisitionrights$1,450 $1,102,150$13,715,727(39,298)(224,866)
462,415(6,614)
2,799
20,993
1,259(127,954) (407,047) (1,136,917)
769
180,553(127,954) (407,047) (1,136,917)
769
180,553$4,682,980 $(493,359) $4,496,436 $2,220 $1,282,703(955,594)(699,607)$12,976,821

See accompanying notes to consolidated financial statements.

(3,860)(22,088)
45,423
(649)
274
2,062
123
(58,891)(58,891)¥ 30,730

(234)
(234)
¥(591)(12,568)(12,568)¥460,009(39,984)(39,984)¥(48,462)(111,679)(111,679)¥ 441,684

75
75
¥218

17,735
17,735¥125,999(93,868)(68,722)¥1,274,713

See accompanying notes to consolidated financial statements.

42 |ANNUAL REPORT 2009

ANNUAL REPORT 2009 |43

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2009 and 2008

Thousands of
U.S. dollars (Note 3)

Millions of yen

2009
Cash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Loss on sales or disposal of property and equipment
Gain on sales of beneficial interests in trust of property and equipment
Gain on sales of securities
Valuation loss on securities
Valuation loss on inventories
Impairment loss
Loss on cancellation of real estate sales contract
Equity in net income of affiliates
Increase in allowancesInterest and dividend income
Interest expense
Early repayment of a portion of borrowings
Increase in notes and accounts receivable
Decrease (increase) in inventories
Increase in equity investments
Decrease in notes and accounts payable
Increase in lease deposits received
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Proceeds from sales of marketable securities
Proceeds from sales of property and equipment
Purchases of property and equipment
Proceeds from sales of investment securities
Purchases of investment securities
Proceeds from sales of beneficial interests in trust of property and equipment
Purchase of investments in subsidiaries resulting in change in scope of
consolidation (Note 15)
Proceeds from purchase of investments in subsidiaries resulting in change inscope of consolidation (Note 15)
Other (Note 15)
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Increase in long-term borrowings
Repayment of long-term borrowings
Proceeds from issuance of corporate bonds
Repayment of corporate bonds
Cash dividends paid
Other
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents arising from mergers and acquisitions
Cash and cash equivalents of subsidiaries excluded from consideration
Cash and cash equivalents at end of year (Note 15)
See accompanying notes to consolidated financial statements.

44 |ANNUAL REPORT 2009¥

90,00560,364
2,779–(6,473)
7,532
7,375
2,447
4,991
(1,558)2,079(5,768)31,240–7,394
16,048(93,848)(12,655)
6,082
7,303
125,343
6,330(30,555)(55,293)
45,824

2008¥¥

159,663
56,867
1,319(1,737)(3,950)
2,769
1,458
1,498
–
(3,739)959(6,823)
22,251
1,168(6,452)(79,102)(85,042)(465)
25,538(35,692)
50,487
8,233(21,128)(53,840)(16,248)$916,271614,525
28,299–(65,903)
76,68175,087
24,91650,818(15,864)
21,168(58,720)
318,038–
75,278163,378(955,397)(128,835)
61,92374,3481,276,017
64,445(311,065)(562,896)
466,501–
1,157(270,798)
11,448(18,796)
12,0951,453
1,727(1,997,950)
90,640(108,742)–(12,150)(8,495)(123,697)

81,114
267,790(185,047)
66,649(41,601)(22,088)(25,761)
141,055(7,585)(35,206)
219,712542(495)
184,552–(47,085)(2,183,655)

62,134(951)(212,207)¥

1. Significant Accounting Policies

2009

142
169
(196,258)
8,903(10,681)––(4,625)(214,500)

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
March 31, 2009

9,700
248,925(78,410)140,612(51,997)(22,089)(7,798)238,942(2,765)
7,721
206,089
5,901–
219,712$825,764
2,726,155(1,883,814)
678,502(423,515)(224,866)(262,256)
1,435,959(77,222)(358,407)
2,236,711
5,526(5,046)
1,878,784a.

Basis of preparation

at fair value with any changes in unrealized holding gain or loss, net of the

The accompanying consolidated financial statements of Mitsubishi Estate Co.,

applicable income taxes, included directly in shareholders’ equity. Non-Ltd. (the “Company”) and consolidated subsidiaries are prepared on the basis

marketable securities classified as other securities are carried at cost. Cost ofof accounting principles generally accepted in Japan, which are different insecurities sold is determined by the moving average method.

certain respects as to the application and disclosure requirements ofg.

International Financial Reporting Standards, and are compiled from theInventories are mainly stated at cost, determined by the identified costconsolidated financial statements prepared by the Company as required bymethod. Net book value of inventories in the consolidated balance sheet isthe Financial Instruments and Exchange Law of Japan.

written down when their net realizable values decline.

The notes to the consolidated financial statements include informationh.

Inventories

Property and equipment, depreciation and impairment

which may not be required under accounting principles generally accepted in

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

Japan but is presented herein as additional information.

less accumulated depreciation. Depreciation is calculated principally by theAs permitted by the Securities and Exchange Law of Japan, amounts ofdeclining-balance method, except for buildings acquired in Japan subsequent

less than one million yen have been rounded off. As a result, the totals shownto March 31, 1998 and property and equipment of foreign subsidiaries onin the accompanying consolidated financial statements (both in yen and U.S.

which depreciation is calculated by the straight-line method at rates

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

determined based on the estimated useful lives of the respective assets. The

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

Company has capitalized the costs incurred for significant renewals andadditions; however, costs for maintenance and repairs are charged to income.
As of March 31, 2002, the Company revalued its land at fair value,

Principles of consolidation

The accompanying consolidated financial statements include the accounts of

pursuant to Article 2 of the “Enforcement Ordinance for the Law Concerning

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

Revaluation Reserve for Land” and its amendments. The related unrealizedCompanies over which the Company exercises significant influence in terms

gain, net of applicable income taxes, has been recorded as “Land revaluationof their operating and financial policies have been included in thereserve” in net assets.

consolidated financial statements on an equity basis.
All significant intercompany balances and transactions have been

The Company reviews its property and equipment (including land) for
impairment whenever events or changes in its business circumstances indicate

eliminated in consolidation.

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

c.

Company performs cash flow analyses to determine if an impairment exits. If

Use of estimates

The preparation of financial statements in conformity with generally accepted

impairment is determined to exist, any related loss on impairment is calculated

accounting principles requires management to make certain estimates andbased on the cash flow analyses.

assumptions that affect the amounts reported in the financial statements and

The useful lives of property and equipment are summarized as follows:

accompanying notes. The actual results could differ from those estimates.

Buildings and structures

2 to 75 yearsd.

Machinery and equipment and other2 to 35 years

Foreign currency translation

Current and non-current monetary accounts denominated in foreigni.

currencies are translated into yen at the current rates.

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

The revenue and expense accounts of the foreign consolidated

Intangible and other assets

Goodwill is stated on the basis of cost and is being amortized over a period ofsubsidiaries are translated using the average rate during the year. Except for

5 years or an estimated economical period on a straight-line basis. A loss isshareholders’ equity, the balance sheet accounts are also translated into yen

recognized if the fair value falls below the carrying amount. Land use rights

at the rates of exchange in effect at the balance sheet date. The components

are stated on a cost basis.

of shareholders’ equity are translated at their historical exchange rates.

j.

e.

The Company and most consolidated subsidiaries have noncontributory

Cash equivalents

Retirement benefits

The Company considers all highly liquid investments that are readily

funded and unfunded defined benefit plans covering most of their employees.

convertible into cash and have an original maturity of three months or less to

Employees of the Company and its consolidated subsidiaries are entitledbe cash equivalents. Reconciliation between cash in the balance sheet andunder most employment termination circumstances to annuity payments or

cash equivalents at March 31, 2009 and 2008 is presented in Note 15.

lump-sum payments, the amounts of which are determined principally byf.

reference to their basic rates of pay, length of service, and the conditions

Marketable securities and investment securities

Securities other than those of subsidiaries and affiliates are classified into
three categories: trading, held-to-maturity or other securities. Trading

under which the termination occurs.
Accrued employees’ retirement benefits are provided mainly at an

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

amount calculated based on the retirement benefit obligation and the fairamortized cost. Marketable securities classified as other securities are carriedvalue of the pension plan assets as of the balance sheet date, as adjusted for
ANNUAL REPORT 2009 |45

unrecognized actuarial gain or loss and unrecognized prior service cost. The

contract conclusion for services provided up to the conclusion and at the

Accounting Standards for Lease Transactionstransactions where ownership of leased assets does not transfer to the lessee

retirement benefit obligation is attributed to each period by the straight-line

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

Until March 31, 2008, noncancelable leases of the Company and its domestic

and for which transactions started before March 31, 2008, the Company and(c) Revenue from real estate brokerage is recognized when an underlying

consolidated subsidiaries are accounted for as operating leases (whether suchits domestic subsidiaries and affiliates treat such leases as operating leases.

leases are classified as operating or finance leases) except that lease

The effect of the change on the consolidated statement of income for the

method over the estimated years of service of the employees.
Actuarial gain and loss are amortized in the year following the year inlease agreement goes into force or the underlying units are delivered.

which the gain or loss is recognized by the straight-line method over the(d) Revenue from architectural design and engineering business is recognizedagreements which stipulate the transfer of ownership of the leased assets tofiscal year ended March 31, 2009 was immaterial.

period of the range from 1 year to 15 years which are shorter than theat the date of completion of each relevant project in the Architectural

the lessee are accounted for as finance leases. Effective April 1, 2008, thePresentation of Goodwill Amortization

average remaining years of service of the employees.

Design & Engineering Division, except that certain long-term (over one

Company and its domestic subsidiaries and affiliates have adopted

Amortization of goodwill and negative goodwill had previously been offsetyear) projects over ¥500 million in total revenue are recognized by the“Accounting Standards for Lease Transactions” (Financial Accounting

due to immateriality of either the amortization amount of goodwill orpercentage of completion method.

Standard No. 13 originally issued by the First Committee of the Businessnegative goodwill. Effective April 1, 2008, amortization of goodwill and(e) Revenue from construction contracts is recognized at the date of

Accounting Council on June 17, 1993 and revised by the Accounting

negative goodwill are presented separately in the consolidated statement ofincome due to increased materiality of their amortization amount. As a result

Prior service cost is being amortized as incurred by the straight-line
method over the period of 2 years or 10 years which are shorter than the
average remaining years of service of the employees.

completion of each relevant project in the Architectural Design &Standards Board of Japan on March 30, 2007) and “Implementation

Deferred tax assets and liabilities are determined based on the financial

Engineering Division, except that certain long-term (over one year) projects

Guidelines for Accounting Standards for Lease Transactions” (Financialof this change, consolidated operating income decreased by ¥1,041 million

statements and the tax bases of assets and liabilities, using the enacted tax

over ¥5,000 million in total revenue are recognized by the percentage of

Accounting Standard Implementation Guidelines No. 16 originally issued by($10,607 thousand) for the fiscal year ended March 31, 2009, compared with

rates in effect for the year in which the temporary differences are expected tocompletion method.

the Accounting System Committee of the Japanese Institute of Certified

the amount that would have been reported under the previous presentationk.

Income taxes

reverse. Deferred tax assets are also recognized for the estimated future tax(f) Revenue from construction contracts is recognized at the date of

Public Accountants on January 18, 1994 and revised by the Accounting

method. However, this change had no impact on consolidated income before

effects attributable to operating loss carry forwards. Valuation allowances arecompletion of each relevant project in divisions other than theStandards Board of Japan on March 30, 2007). With regard to lease

income taxes and minority interests for the fiscal year ended March 31, 2009.

established to reduce deferred tax assets if it is more likely than not that theArchitectural Design & Engineering Division, except that certain long-term

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

(over two years) projects over ¥5,000 million in total revenue arel.

recognized by the percentage of completion method.

Derivative financial instruments

3. U.S. Dollar Amounts

The Company and certain of its consolidated subsidiaries utilize derivative(Supplemental information)

Translation of yen amounts into U.S. dollar amounts is included solely for convenience, as a matter of arithmetic computation only, at the rate of ¥98.23 =financial instruments for the purpose of hedging their exposure to adverse

Effective April 1, 2008, construction contracts with terms of over two

U.S.$1.00, the approximate rate of exchange prevailing on March 31, 2009. The inclusion of such amounts is not intended to imply that yen amounts have been

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

years and total revenue of over ¥5,000 million have been executed inor could be readily converted, realized or settled in U.S. dollars at the above or any other rate.

exchange rates (currency swaps), but do not enter into such transactions fordivisions other than the Architectural Design & Engineering Division. In

speculative or trading purposes.

order to fairly present revenue and expenses for such long-term and large-

Derivative financial instruments are carried at fair value with any changes

scale construction contracts, revenue are recognized by the percentage ofin unrealized gain or loss charged or credited to operations, except for thosecompletion method. Consolidated revenue, expenses, operating income

which meet the criteria for deferral hedge accounting under which unrealized

and income before income taxes and minority interests accounted by thisgain or loss is deferred as an asset or liability.

method are ¥1,360 million ($13,848 thousand), ¥1,282 million ($13,053m.

thousand), ¥78 million ($794 thousand) and ¥78 million ($794 thousand),

Revenue recognition

The consolidated statements of income reflect revenue from operations in the(g) Other operating revenue is recognized on an accrual basis.

(a) Revenue from the leasing of office space is recognized as rent accruedn.

Appropriation of retained earnings

Under the Corporation Law of Japan, the appropriation of retained earnings(b) Revenue from sales of condominiums, residential houses and land isMarketable and investment securities classified as other securities at March 31, 2009 and 2008 are summarized as follows:
Millions of yen

with respect to a given financial year is made by resolution of the shareholders

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

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

Revenue from consignment commissions for residential sales earned byaccounts for that year do not, therefore, reflect such appropriations. See Notethe real estate service business segment is recognized at the time of

10 for more information.

Thousands of U.S. dollars

2009

respectively, for the fiscal year ended March 31, 2009.

following manner:over the leasing period.

4. Marketable Securities and Investment Securities

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

Cost

Fair value

Unrealized
gain (loss)

Cost

Fair value

Unrealized
gain (loss)¥51,170
5,331
56,501¥102,701
7,682
110,384¥51,5312,351
53,882$520,924
54,273575,197$1,045,520
78,2101,123,731$524,596
23,937548,534

27,905¥84,407

25,774¥136,158(2,131)¥51,751

284,087$859,284

262,388$1,386,120(21,698)$526,835

Millions of yen

2008

2. Changes in Accounting Policy
Accounting Standards for Measurement of Inventories

reported under the previous accounting method. The amount included in the

Until March 31, 2008, inventories are mainly stated at cost, determined by the

beginning balance of inventories affected by this change in accounting policy

identified cost method .Effective April 1, 2008, the Company and its domestic

was recorded as other expenses (net) in the amount of ¥7,375 million

subsidiaries and affiliates have adopted “Accounting Standards for($75,087 thousand).

Measurement of Inventories” (Financial Accounting Standard No. 9 issued by

Accounting Policies Applied to Foreign Subsidiaries for Consolidated

the Accounting Standards Board of Japan on July 5, 2006) for inventories held

Financial Statement

for sale in the ordinary course of business. Net book value of inventories in the

Effective April 1, 2008, the Company has applied “Practical Solution on

consolidated balance sheet is written down when their net realizable values

Unification of Accounting Policies Applied to Foreign Subsidiaries for

decline. As a result of this adoption, consolidated operating income decreased

Consolidated Financial Statement” (Practical Issues Task Force No. 18 issuedby ¥19,282 million ($196,300 thousand) and consolidated income before

by the Accounting Standards Board of Japan on May 17, 2006). This adoption

income taxes and minority interests decreased by ¥26,658 million ($271,388

had no impact on the consolidated statements of income for the fiscal year

thousand), compared with the respective amounts that would have been

ended March 31, 2009.

46 |ANNUAL REPORT 2009

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

Cost

Fair value

Unrealized
gain (loss)¥71,157
5,330
76,487¥213,864
11,786225,651¥142,707
6,456
149,164

10,429¥86,917

9,799¥235,451(629)¥148,534

ANNUAL REPORT 2009 |47

Proceeds from sales of securities classified as other securities totaled ¥279 million ($2,849 thousand) in 2009 and ¥5,636 million in 2008. Gross realized gain

The redemption schedule for securities classified as other securities at March 31, 2009 is summarized as follows:

was ¥197 million ($2,009 thousand) in 2009 and ¥1,698 million in 2008, respectively. Gross realized loss was “¥0” in 2009 and ¥3 million in 2008.

Millions of yen

Marketable debt securities classified as held-to-maturity securities at March 31, 2009 and 2008 are summarized as follows:
Millions of yen

Thousands of U.S. dollars

2009
Amortized
cost

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

Fair value

Unrealized
gain (loss)

Amortized
cost

Fair value

Unrealized
gain (loss)

¥ 214
–
214

¥ 215
–
215

¥1
–
1

$ 2,178–
2,178$ 2,197
–
2,197

$ 18
–
18

–
1,913
1,913
¥2,127

–
1,905
1,905
¥2,121

–
(8)
(8)
¥(6)

–
19,47919,479$21,658–
19,403
19,403$21,600

–
(86)
(86)
$(67)

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

¥160
177
–
¥337

¥ 35
218
–
¥253

Bonds:
Government bonds
Corporate bonds
Other bonds
Total

Thousands of U.S. dollars
Due after five years or
more

Due within
one year or lessDue after one year
through five years$1,6281,805–$3,434

$ 356
2,225
–
$2,582

¥ 20
1,517
–
¥1,537

5. Inventories
Inventories at March 31, 2009 and 2008 are summarized as follows:2009

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

Fair value

Unrealized
gain (loss)

¥ 64
2,418
2,482

¥

65
2,431
2,497

¥ 1
13
15

138
2,759
2,898
¥5,381

138
2,759
2,898
¥5,395

(0)
–
(0)
¥15

Marketable and investment securities recorded at cost at March 31, 2009 and 2008 are summarized as follows:
Millions of yen

2009
Other securities:
Nonmarketable equity securities(other than equity securities listed on the over-the-counter market)
Mutual funds
Commercial papers
MMF
Investments in silent partnerships
Other
Total

Thousands of U.S. dollars

2008

203
15,448–$15,651

and on other securities considered other-than-temporary amounting to ¥404 million ($4,112 thousand) in 2009 and ¥8 million in 2008, respectively.

Millions of yen

Amortized
cost$

The Company recognized losses on other securities considered temporary amounting to ¥7,120 million ($72,485 thousand) in 2009 and ¥2,760 million in 2008,

Millions of yen

2008

Due after five years or
moreReal estate for saleLand and housing projects in progress
Land held for development
Other
Total

Thousands of U.S. dollars

2008¥198,085
383,352
8,974
10,123¥600,536¥303,523
279,141
8,742
11,418¥602,8242009$2,016,543
3,902,602
91,363103,062$6,113,571

6. Other Investments
Other investments at March 31, 2009 and 2008 were as follows:
Millions of yen

2009
Lease deposits
Long-term prepaid expenses and other
Total

Thousands of U.S. dollars

2008¥ 88,983
46,340¥135,323¥ 86,595
56,733¥143,329

2009$ 905,868
471,754$1,377,623

2009

7. Short-Term Borrowings and Long-Term Debt
¥ 6,504
344
1,499
16
22,9352,758¥34,058¥ 6,753
293
6,741
22,55821,286
2,678¥60,310$ 66,212
3,503
15,264169
233,491
28,079$346,721

At March 31, 2009 and 2008, short-term borrowings and the current portion of long-term debt consisted of the following:
Millions of yen

2009
Loans, principally from banks
Commercial paper
Current portion of long-term debt
Total

¥139,300
10,000257,303¥406,604

Thousands of U.S. dollars

2008¥ 56,131
10,000205,006¥271,137

2009$1,418,105
101,801
2,619,400$4,139,307

The weighted-average interest rates per annum on short-term borrowings outstanding at March 31, 2009 and 2008 were 1.43% and 1.08%, respectively.
Short-term borrowings are principally unsecured.

48 |ANNUAL REPORT 2009

ANNUAL REPORT 2009 |49

At March 31, 2009 and 2008, long-term debt consisted of the following:

The aggregate annual maturities of long-term debt subsequent to March 31, 2009 are summarized as follows:
Thousands of U.S. dollars

Year ending March 31,

2009

–
–
–
¥10,000
10,00010,00010,00010,00010,00010,00010,00010,00010,00010,00020,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,00010,00010,00010,00010,00010,00020,00010,00010,00010,00015,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,00010,00010,00010,00020,00010,000–13,2162008¥10,000
10,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00020,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,00010,00010,00010,00010,00010,00020,000––10,000––10,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,000–10,00010,00020,00010,00013,587
–

2010
2011
2012
2013
2014
2015 and thereafter
Total

403,640
670,576
1,682,432(257,303)¥1,425,129

443,265
552,423
1,579,275(205,006)¥1,374,269

4,109,131
6,826,596
17,127,483(2,619,400)$14,508,083

Millions of yen

2009
2.525% unsecured bonds due 2008
3.1% unsecured bonds due 2008
2.12% unsecured bonds due 2009
1.82% unsecured bonds due 2009
3.075% unsecured bonds due 2009
2% unsecured bonds due 2009
1.985% unsecured bonds due 2009
0.72% unsecured bonds due 2009
1.9% unsecured bonds due 2010
2.29% unsecured bonds due 2010
1.55% unsecured bonds due 2011
1.44% unsecured bonds due 2011
1.16% unsecured bonds due 2011
1.47% unsecured bonds due 2012
1.58% unsecured bonds due 2012
3.275% unsecured bonds due 2012
2.77 % unsecured bonds due 2012
1.395% unsecured bonds due 2012
1.2% unsecured bonds due 2012
1% unsecured bonds due 2013
0.785% unsecured bonds due 2013
1.675% unsecured bonds due 2014
1.349% unsecured bonds due 2014
1.65% unsecured bonds due 2014
1.75% unsecured bonds due 2014
1.655% unsecured bonds due 2014
1.409% unsecured bonds due 2015
1.295% unsecured bonds due 2015
1.572% unsecured bonds due 2015
1.443% unsecured bounds due 2016
1.985% unsecured bounds due 2016
1.88% unsecured bounds due 2016
1.79% unsecured bounds due 20172.045% unsecured bounds due 20171.825% unsecured bounds due 20173.125% unsecured bonds due 20171.77% unsecured bonds due 20171.65% unsecured bonds due 2018
2.005% unsecured bonds due 2018
3% unsecured bonds due 2018
1.84% unsecured bonds due 2018
1.72% unsecured bonds due 20181.975% unsecured bonds due 2019
1.805% unsecured bonds due 20192.5% unsecured bonds due 2020
2.42% unsecured bonds due 2022
1.50% unsecured bonds due 2022
2.075% unsecured bonds due 2023
2.28% unsecured bonds due 2024
2.305% unsecured bonds due 2027
2.385% unsecured bonds due 2027
2.52% unsecured bonds due 2027
2.425% unsecured bonds due 2027
2.555% unsecured bonds due 2028
2.9% unsecured bonds due 2032
2.615% unsecured bonds due 2032
2.04% unsecured bonds due 2032
1.72% unsecured bonds due 2033
Floating rate bonds due 2008 (payable in U.S. dollars)
Floating rate bonds due 2009 (payable in U.S. dollars)
Loans from banks and insurance companies:
SecuredUnsecuredLess current portion

50 |ANNUAL REPORT 2009–––
$101,801
101,801
101,801
101,801
101,801
101,801
101,801
101,801
101,801
101,801
101,801
203,603
101,801
101,801
101,801
101,801
101,801
101,801
101,801
101,801
101,801
101,801
101,801
101,801
101,801
101,801
152,702
101,801
101,801
101,801
101,801
101,801
101,801
203,603
101,801
101,801
101,801
152,702
101,801
101,801
101,801
101,801
101,801
101,801
101,801
101,801
101,801
101,801
152,702
101,801
101,801
101,801
101,801
203,603
101,801–
134,542Millions of yen

Thousands of U.S. dollars¥ 257,303
339,235
230,251
177,826
110,549
567,266¥1,682,432$ 2,619,400
3,453,482
2,344,008
1,810,303
1,125,412
5,774,876$17,127,483

The assets pledged as collateral for short-term borrowings of ¥640 million ($6,515 thousand) and long-term debt of ¥403,640 million ($4,109,131 thousand) at
March 31, 2009 were as follows:
Millions of yen

Thousands of U.S. dollars

¥

$

Cash
Real estate for saleLand and housing projects in progress
Land held for development
Buildings and structures
Machinery and equipment
Land
Land in trust
Other property and equipment
Other intangible assets
Investment securities
Total
As is customary in Japan, collateral must be given if requested by lending

6,229
2,314
67,975
583
163,644
5,691
267,816
276,443127
68¥790,796

63,42023,563691,998
5,944
1,665,935
57,9402,726,426
2,814,242
13
277
692
$8,050,456

a bank which become due in cases of default or certain other specified

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

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

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

8. Pension and Severance Plans
The following table sets forth the funded status of the plans, and the amounts recognized in the consolidated balance sheets at March 31, 2009 and 2008 for
the Company’s and its consolidated subsidiaries’ defined benefit pension plans:Millions of yen

2009
Retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
The net retirement benefit obligation at transition of the accounting standards
Unrecognized actuarial loss
Unrecognized prior service cost
Net amounts recognized in the consolidated balance sheet
Prepaid pension expenses
Accrued employees’ retirement benefits

Thousands of U.S. dollars

2008¥(94,714)
62,832(31,882)
38
27,521
1,099(3,223)
11,422¥(14,645)

2009¥(93,391)
83,962(9,429)–619
488(8,319)10,134¥(18,453)$(964,216)
639,643(324,572)
391
280,176
11,189(32,814)116,280$(149,095)* The accrued employees’ retirement benefits recognized by Rockefeller Group, Inc., a consolidated subsidiary, in the amount ¥349 million ($3,559 thousand) was presented in other current liabilities.

The components of expenses related to the pension and severance plans for the years ended March 31, 2009 and 2008 were as follows:
Millions of yen

2009Service cost
Interest cost
Expected return on plan assets
Amortization of net retirement benefit obligation at transition
Other
Total

¥ 4,1822,251(1,645)10988¥ 5,787

Thousands of U.S. dollars

2008¥ 3,836
2,209(1,686)74(520)¥ 3,9132009$ 42,573
22,923(16,752)
110
10,067$ 58,922
ANNUAL REPORT 2009 |51

The assumptions used in accounting for the pension and severance plans for the years ended March 31, 2009 and 2008 were as follows:

Discount rate
Expected rate of return on plan assets

10. Shareholders’ Equity

2009

2008

The new Corporation Law of Japan (the “Law”), which superseded most ofreserve and the legal reserve equals 25% of the capital stock account. The

2.0 ~ 6.0%
0.5 ~ 7.5%

2.0 ~ 6.0%
0.5 ~ 7.5%

the provisions of the Commercial Code of Japan, went into effect on May 1,

capital reserve amounted to ¥165,216 million ($1,681,932 million), and the2006. The Law provides that an amount equal to 10% of the amount to belegal reserve amounted to ¥21,663 million ($220,541 million) at March 31,

disbursed as distributions of capital surplus (other than the capital reserve)

2009. Such distributions can be made at any time by resolution of theand retained earnings (other than the legal reserve) be transferred to theshareholders, or by the Board of Directors if certain conditions are met, but

capital reserve and the legal reserve, respectively, until the sum of the capitalneither the capital reserve nor the legal reserve is available for distributions.

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

40.69% for the years ended March 31, 2009 and 2008. Income taxes of theconsolidated subsidiaries consist of corporation tax, inhabitants’ taxes andforeign consolidated subsidiaries are based generally on the tax rates

enterprise tax which, in the aggregate, resulted in statutory tax rates ofapplicable in their countries of incorporation.

11. Amounts per Share
Yen

2009

The effective tax rates reflected in the consolidated statements of income for the two years ended March 31, 2009 differ from the statutory tax rate for theYear ended March 31,

following reasons:

Net income:
Basic
DilutedCash dividends applicable to the year

Statutory tax rate
Increase (decrease) in income taxes resulting from:
Change in valuation allowance
Different tax rates applied
Revenues deductible for income tax purposes
Expenses not deductible for income tax purposes
Undistributed earnings of affiliates
Equity income
Other
Effective tax rates

2009

2008

40.69%

40.69%

23.02
0.66(0.74)
0.71(30.66)(0.57)(1.89)
31.22%(1.84)
1.10(1.56)
0.38
5.25(1.14)(4.13)
38.75%The significant components of deferred tax assets and liabilities as of March 31, 2009 and 2008 were as follows:
Millions of yen

2009
Deferred tax assets:
Net operating loss carry forwards
Accrued retirement allowances and pension costs
Valuation loss on inventories
Unrealized loss on property and equipment
Land revaluation reserve
Other
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserves under Special Taxation Measures Law
Land revaluation reserve
Unrealized gain on property and equipment
Unrealized gain on securities
Other
Total deferred tax liabilities
Net deferred tax liabilities

52 |ANNUAL REPORT 2009

¥ 20,105
13,57147,65153,43655,10947,314
237,188(69,505)
167,683(63,802)(377,647)(180,405)(21,800)(16,053)(659,709)¥(492,026)

Thousands of U.S. dollars

2008¥ 13,465
14,82737,70556,52755,17946,289223,995(27,541)
196,454(59,373)(379,132)(141,394)(59,069)(52,469)(691,439)¥(494,984)

2009$

204,681138,159
485,096
543,992
561,023
481,6712,414,624(707,577)
1,707,046(649,519)(3,844,525)(1,836,561)(221,934)(163,427)(6,715,969)$(5,008,922)

U.S. dollars

2008¥32.90
32.90
16.00

2009
¥62.99
62.97
16.00

$0.33
0.33
0.16

Yen

2009

March 31,

Net assets:

U.S. dollars

2008¥832.012009¥897.40$8.47

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

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

for distribution to shareholders of common stock and the weighted averageavailable for distribution to the shareholders and the number of shares ofnumber of shares of common stock outstanding during the year, and diluted

common stock outstanding at the year end.

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

Cash dividends per share represent the cash dividends proposed by the

distribution to the shareholders and the weighted average number of shares

Board of Directors as applicable to the respective years together with theof common stock outstanding during each year after giving effect to theinterim cash dividends paid.

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

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

reflected in the consolidated balance sheets if finance lease accounting had

accumulated depreciation, accumulated impairment loss and net book value

been applied to the finance leases currently accounted for as operating leases:of the leased assets as of March 31, 2009 and 2008, which would have been
Millions of yen

Thousands of U.S. dollars

2009

Buildings and structures
Others
Total

Acquisition
costs

Accumulated
depreciation

Accumulated
impairment loss

¥18,373
6,290¥24,663¥ 9,315
3,807¥13,122

¥357
4
¥361

Net bookvalue

Acquisition
costs

Accumulated
depreciation

Accumulated
impairment loss

¥ 8,701
2,478¥11,179$187,047
64,035$251,082$ 94,829
38,765$133,594$3,63841$3,680Net bookvalue$ 88,579
25,228$113,807

Millions of yen

2008

Buildings and structures
Others
Total

Acquisition
costs

Accumulated
depreciation

Accumulated
impairment loss

¥15,323
7,634¥22,958¥4,9303,976¥8,907

¥141
24
¥165

Net book
value¥10,251
3,633¥13,884

ANNUAL REPORT 2009 |53

With regard to the non-ownership transfer finance lease transactions for

Lease payments relating to finance leases accounted for as operating

which transactions started before March 31, 2008, the Company continues

leases in the accompanying consolidated financial statements amounted toto apply a method that conforms to the procedures used for ordinary¥3,394 million ($34,556 thousand) and ¥3,520 million for the years ended

operating leases.

March 31, 2009 and 2008, respectively.

Future minimum lease payments subsequent to March 31, 2009 on noncancelable operating leases and finance leases accounted for as operating leases are
summarized as follows:
Millions of yen
Year ending March 31,

Financeleases

2010
2011 and thereafterTotal¥ 3,491
8,049¥11,540¥ 2,671
47,747¥50,418

FinanceleasesOperatingleases$ 35,541
81,946$117,488$ 27,195
486,076$513,271

The Company and its consolidated subsidiaries lease office buildings and commercial properties and earn income on these leases. Future minimum lease income
subsequent to March 31, 2009 from noncancelable operating leases is summarized as follows:
Millions of yen

Thousands of U.S. dollars¥147,730
552,060¥699,790$1,503,927
5,620,076$7,124,004

2010
2011 and thereafter
Total

asset groups for the fiscal year ended March 31, 2009:
Major Application

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

Category

Location

Leased assets, etc.
(total 15 groups)

Buildings, land,etc.

Minato-ku,
Tokyo, etc.

International businesses(total 1 group)

Construction inprogress, etc.

Florida, USA

Major application

Category

Location

Leased assets, etc.
(total 6 groups)

Buildings, land,
etc.

Chiba, Chiba
Prefecture, etc.

International businesses(total 2 groups)

Goodwill,
construction inprogress, etc.

California, USA,etc.

Thousands of U.S. dollars

OperatingleasesYear ending March 31,

The Company recorded consolidated impairment losses for the following

13. Contingent Liabilities

Millions of yen¥ 2,890
64,620777¥68,286

Thousands of U.S. dollars$ 29,420
657,851
7,918$695,190

Asset grouping for the Group was made based on a minimum unit

flows of other assets or asset groups. Company condominiums arethat generates cash flows, which is substantially independent from cash

regarded as shared assets. As a result, for the fiscal year ended March 31,

flows of other assets or asset groups. Company condominiums are

2009, the book values of 16 asset groups, consisting of those for which

regarded as shared assets. As a result, for the fiscal year ended March 31,

the market prices fell considerably compared with the book values due to2008, the book values of 8 asset groups, consisting of those for which

the decline of land prices and those for which profitability decreased

the market prices fell considerably compared with the book values due toconsiderably due to fallen rent levels or deteriorated market conditions,the decline of land prices and those for which profitability decreased

etc., were reduced to the respective collectible amounts and suchconsiderably due to fallen rent levels or deteriorated market conditions,

reduced amounts were recorded as an impairment loss (¥2,447 million)etc., were reduced to the respective collectible amounts and such

under extraordinary losses.

reduced amounts were recorded as an impairment loss (¥1,498 million)

The breakdown of such impairment loss was ¥976 million ($9,937

under extraordinary losses.

thousand) in land, ¥1,057 ($10,765 thousand) million in buildings

The breakdown of such impairment loss was ¥789 million inand structures and ¥413 ($4,213 thousand) million in construction

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

buildings and structures and others.

The collectible amounts of asset groups are measured with net sale

At March 31, 2009, the Company and its consolidated subsidiaries had the following contingent liabilities:

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

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

The collectible amounts of asset groups are measured with net salevalue or use value, and the net sale value is principally expressed as anvalue or use value, and the net sale value is principally expressed as an

appraised value by a real estate appraiser. Future cash flows mainly

appraised value by a real estate appraiser. Future cash flows discounted at

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

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

As for the impairment loss in the international business, theAs for the impairment loss in the International Business, theimpairment loss is calculated for consolidated foreign subsidiaries in

impairment loss is calculated for consolidated foreign subsidiaries inaccordance with the U.S. accounting standards.

accordance with accounting principles generally accepted in the
United States.

14. Other Income (Expenses)
15. Supplemental Cash Flow Information

The components of “Other, net” in “Other income (expenses)” for each of the years ended March 31, 2009 and 2008 were as follows:
Millions of yen

2009
Amortization of negative goodwill
Gain on sales of shares of affiliated companies
Gain on sales of beneficial interest in trust of fixed assets
Gain on sales of investment securities
Loss on disposal of fixed assets
Loss related to retirement of fixed assets
Loss on valuation of inventories
Impairment loss (*1)
Early repayment of a portion of borrowings
Loss on valuation of investment securities
Loss on cancellation of contracts for sales of real estate
Other, net¥ 1,041
6,283––(4,024)(2,562)(7,375)(2,447)–(7,524)(4,991)(3,045)¥(24,647)

Thousands of U.S. dollars

2008–¥ 2,255
1,737
1,697(4,616)(1,194)(1,458)(1,498)(1,168)(2,769)–382¥(6,631)

The following table represents a reconciliation of cash and cash equivalents as of March 31, 2009 and 2008:2009$ 10,607
63,968––(40,974)(26,088)(75,087)(24,916)–(76,598)(50,818)(31,005)$(250,915)

Millions of yen

2009
Cash
Time deposits with maturities of more than three months
Marketable securities with maturities of three months or lessResell agreements with maturities of three months or less
Cash and cash equivalents¥181,168
(760)
4,145
–
¥184,552

Thousands of U.S. dollars

2008¥186,321(1,348)31,7393,000¥219,712

2009$1,844,325(7,739)42,198–$1,878,784(*1) Impairment loss

54 |ANNUAL REPORT 2009

ANNUAL REPORT 2009 |55

The following are major components of assets and liabilities of a consolidated subsidiary, which was acquired by the Company through additional purchase of its

Thousands of U.S. dollars

stocks, as well as a reconciliation of the difference between the acquisition price of these assets and liabilities and the payments from the acquisition.
Millions of yen

Thousands of U.S. dollars

2009
Current assets
Fixed assets
Goodwill
Current liabilities
Fixed liabilities
Goodwill
Minority interests
Acquisition cost
Investment value on an equity basis before acquisition
Acquisition cost of additional purchase
Unpaid amount
Cash and cash equivalents of subsidiary
Proceeds from acquisition
Payments for acquisition

For the year ended March 31, 20092008

¥ 19,035
142,416351(18,329)(73,478)(12,060)(27,792)
30,142(4,925)25,216(273)(12,792)–¥ (12,150)

Building
Business

2009¥ 260,126
268,436
22,809(142,723)(243,458)(32,170)(63,134)
69,885(45,971)
23,913(33)(77,518)
62,134¥ (8,495)$ 193,788
1,449,827
3,581(186,597)(748,027)(122,781)(282,933)
306,856(50,146)
256,710(2,785)(130,227)–$ (123,697)

Revenue and operating income
Revenue from:$ 4,078,726
External customers
Intersegment or transfers
60,607
Total revenue
4,139,334
Operating expense
2,925,809
Operating income (loss)$ 1,213,524
Assets, depreciation,
impairment loss andcapital expenditures$28,798,231
AssetsDepreciation
500,937
Impairment loss
3,081
Capital expenditures$ 1,134,207

Residential
Business

Urban
Development andInternational
Investment
Business
Management

Architectural
Design and Custom-Built
Engineering
Housing

Hotel
Business

Real Estate
Services

Other

Total

Eliminations
or corporate

Consolidated$3,134,187 $ 933,977 $ 482,363 $153,869 $279,425 $307,879 $209,813 $ 15,873 $ 9,596,116 $– $ 9,596,116
11,897
1,774– 50,326 19,356
5,423 28,146 23,553
201,087 $(201,087)–
3,146,084
935,752
482,363 204,196 298,781 313,303 237,960 39,426 9,797,203 (201,087) 9,596,116
3,303,475
594,675
354,836 182,023 301,642 313,500 242,496 32,607 8,251,067(65,592) 8,185,475$ (157,391) $ 341,077 $ 127,527 $ 22,173 $ (2,861) $ (197) $ (4,535) $ 6,819 $ 1,546,136 $(135,495) $ 1,410,640$7,640,127 $3,317,233 $3,094,602 $257,858 $143,675 $273,877 $570,357 $268,776 $44,364,739 $ 724,039 $45,088,779
16,73012,83361,801459
1,461 14,507
4,596
1,165
614,49431
614,525
4,389
10,325
4,213
–
–
2,851
–
55
24,916–
24,916$ 116,826 $ 113,285 $ 721,060 $ 1,345 $ 2,176 $ 10,760 $ 7,387 $ 1,015 $ 2,108,065 $ (4,006) $ 2,104,059

Changes in accounting policy

Effective April 1, 2008, the Company and its domestic subsidiaries and affiliates have adopted “Accounting Standards for Measurement of Inventories” (Financial

16. Derivatives

Accounting Standard No. 9 issued by the Accounting Standards Board of Japan on July 5, 2006) for inventories held for sale in the ordinary course of business.

The Company and certain of its consolidated subsidiaries utilize derivative

The Company is exposed to credit loss in the event of nonperformance by

As a result of this adoption, consolidated operating income at Residential Business segment decreased by ¥19,280 million ($196,280 thousand), andfinancial instruments for the purpose of hedging their exposure to adverse

the counterparties to the derivatives, but any loss would not be material

consolidated operating income at Custom-Built Housing segment decreased by ¥1 million ($20 thousand), compared with the respective amounts that would

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

because the Company enters into such transactions only with financial

have been reported under the previous accounting method.

exchange rates (currency swaps), but do not enter into such transactions for

institutions with high credit ratings.

Supplemental information

Effective April 1, 2008, construction contracts with terms of over two years and total revenue of over ¥5,000 million have been executed in divisions other than

speculative or trading purposes.

the Architectural Design & Engineering Division. In order to fairly present revenue and expenses for such long-term and large-scale construction contracts,
revenue are recognized by the percentage of completion method. Consolidated revenue, expenses, operating income at Residential Business segment accounted

17. Segment Informationby this method are ¥1,360 million ($13,848 thousand), ¥1,282 million ($13,053 thousand) and ¥78 million ($794 thousand), respectively, for the fiscal year

Business segments

ended March 31, 2009.

The Company and its consolidated subsidiaries are primarily engaged in theManagement; (4) International Business; (5) Architectural Design andreal estate business. Their business segments are reclassified in terms of theEngineering; (6) Custom-Built Housing; (7) Hotel Business; (8) Real Estate

nature of each operation or service and consist of eight segments: (1) Building

Services; and (9) Other businesses.

Millions of yen

For the year ended March 31, 2008

Business; (2) Residential Business; (3) Urban Development & Investment
The business segment information of the Company and its consolidated subsidiaries for the years ended March 31, 2009 and 2008 are summarized as follows:
Millions of yen

For the year ended March 31, 2009

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

56 |

Urban
Development andInternational
Investment
Business
Management

Architectural
Design and Custom-Built
Engineering
Housing

Building
Business

Residential
Business¥ 400,653
5,953
406,606
287,402¥ 119,204¥307,871
1,168
309,039
324,500¥ (15,460)¥ 91,744
174
91,91958,414¥ 33,504¥ 47,382–
47,382
34,855¥ 12,526¥15,114
4,943
20,05817,880¥ 2,178¥27,447 ¥30,243 ¥20,610 ¥ 1,559 ¥ 942,626
1,901
532
2,764
2,313
19,752
29,349 30,775 23,374
3,872
962,379
29,630 30,795 23,820
3,202
810,502¥ (281) ¥ (19) ¥ (445) ¥ 669 ¥ 151,876¥– ¥ 942,626(19,752)–(19,752)
942,626(6,443)804,059¥(13,309) ¥ 138,567¥2,828,850
49,207302¥ 111,413¥750,489
1,643
431¥ 11,475¥325,851
1,260
1,014
¥ 11,128¥303,982
6,070
413¥ 70,829¥25,32945–¥ 132¥14,113
143
–
¥ 213

¥ 71,122 ¥4,429,070
3
60,364–2,447¥ (393) ¥ 206,681

ANNUAL REPORT 2009

Hotel
Business¥26,9021,425
280¥ 1,057

Real Estate
Services¥56,026
451
–
¥ 725

Other

Total

¥26,401 ¥4,357,948
114
60,3615
2,447¥ 99 ¥ 207,075

Eliminations
or corporate

Consolidated

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

Urban
Development andInternational
Investment
Business
Management

Architectural
Design and Custom-Built
Engineering
Housing

Building
Business

Residential
Business

Hotel
Business¥ 374,041
6,521
380,562
266,071¥ 114,490¥212,869
1,033
213,903
189,576¥ 24,326¥ 29,391
39
29,43012,567¥ 16,863¥ 71,920–
71,92044,376¥ 27,544¥11,569
7,517
19,086
16,762¥ 2,324¥29,082 ¥32,577 ¥ 23,773
2,134
585
4,167
31,216 33,163 27,941
31,833 31,801 23,832¥ (616) ¥ 1,362 ¥ 4,108¥ 2,427 ¥ 787,652
2,554
24,554
4,982
812,207
3,986
620,808¥ 995 ¥ 191,398¥¥2,566,825
45,893–¥ 122,149¥731,816795
32¥ 1,835¥337,375
2,316–¥106,345¥351,016
5,539
1,401
¥ 44,857¥22,15540–¥ 63¥14,992
144
56
¥ 205

¥26,406 ¥4,111,124
139
56,767–1,490¥ 397 ¥ 277,799¥216,013
99
7¥ 3,798¥28,6261,510–¥ 1,216

Real Estate
Services¥31,909
388
–
¥ 729

Other

Total

Eliminations
or corporate

Consolidated– ¥ 787,652(24,554)–(24,554)787,652(11,139)
609,669¥ (13,415) ¥ 177,983¥4,327,137
56,8671,498¥ 281,597

ANNUAL REPORT 2009 |57

Geographical segments

Major assets

The Company and its consolidated subsidiaries operate primarily in Japan, theUnited States and certain other areas. In the fiscal year ended March 31,

Millions of yenof all segments and the total amount of segment assets. Consequently,
disclosure of segment information by geographic area has been omitted.
Real estate
Other
Total

2009, Japan area accounted for more than 90% of the consolidated revenue
Overseas revenue

Thousands of U.S. dollars

March 31, 2009
¥499,187
29,067¥528,254$5,081,813
295,911$5,377,725

Millions of yen

Thousands of U.S. dollars

For the fiscal year ended March 31, 2009, overseas sales accounted for less than 10% of the consolidated revenue. Consequently, disclosure of overseas sales
information has been omitted.

Major liabilities and net assets

March 31, 200918. Business Combination
AQUACITY PROPERTIES held a portion of beneficial interests in trust of the

Accounting Standard Implementation Guidelines No. 10 issued by the

Aqua City Odaiba commercial complex (the “Property”) as management

Accounting Standards Board of Japan on December 22, 2006).

company of Silent Partnership Aquacity Properties, consolidated subsidiary of

On December 22, 2008, the Company acquired all stocks of Mitsubishi

the Company. On December 27, 2007, the Company merged AQUACITY

Jisho Towa Community from Towa Real Estate Development Co, Ltd (“Towa”).

PROPERTIES for the purpose of directly holding the Property. Accordingly,

Since these two companies are consolidated subsidiaries of the Company, thisAQUACITY PROPERTIES was dissolved and Silent Partnership Aquacity

acquisition was treated as transactions under common control in accordance

Properties was terminated.

with “Accounting Standard for Business Combinations” (issued by theThis business combination was treated as transactions under common

Debt and otherPreferred investments
Total

(*7)
(*8)

Guidelines for Accounting Standard for Business Combinations and(issued by the Business Accounting Council on October 31, 2003) and

Accounting Standard for Business Divestitures”(Financial Accounting Standard“Implementation Guidelines for Accounting Standard for Business

Implementation Guidelines No. 10 issued by Accounting Standards Board of

Combinations and Accounting Standard for Business Divestitures” (Financial

Japan on November 15, 2007).

$3,460,175
1,917,550$5,377,725(*7) Debt and other include specific bonds(*8) Preferred investments include contributions made by the Company.

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

March 31, 2008

Business Accounting Council on October 31, 2003) and “Implementation

control in accordance with “Accounting Standard for Business Combinations”¥339,893
188,361¥528,254

Preferred investment securities(*1)¥82,327

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

For the year ended March 31, 2008

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

has been obtained by the special purpose companies from their customers orin 14 special purpose companies that are established under the Assetsale of such real estate after construction of buildings on it. The following

Liquidation Law of Japan. The Company intends to recover such preferredtables represent the Company’s transactions with major special purpose

investments through rental revenue and subsequent sale of real estate thatcompanies for the fiscal year ended March 31, 2009.

Amounts of preferred investment as of March 31, 2009
Millions of yen

Thousands of U.S. dollars

March 31, 2009
Preferred investment securities(*1)¥153,392$1,561,559

Millions of yen

Thousands of U.S. dollars

Major revenue (cost) from transactions with special purpose companies

Preferred investment securities: revenue
Management business: revenue
Intermediate business: revenue
Real estate rent: cost
Design management business: revenue

(*1)
(*2)
(*3)
(*4)
(*5)

(*1) Preferred investment securities are indicated as amount of investment as at March 31, 2008. The Company records dividends from such investments as revenue from operations.
(*2) The Company and Mitsubishi Jisho Investment Advisors, Inc. provide asset management business to special purpose companies and record such service income as revenue from operations.
(*3) Mitsubishi Real Estate Services Co., Ltd. provides real estate intermediate business to special purpose companies and records such service income as revenue from operations.
(*4) The Company enters into real estate rental agreements with special purpose companies and records such rent expenses as cost of revenue from operations.
(*5) Mitsubishi Jisho Sekkei, Inc. provides design management services to special purpose companies and records such service income as revenue from operations.
The Company does not own investments with voting rights for any special purpose companies and does not send directors and employees to any special purpose companies. The following table sets forth major assets
and liabilities of the special purpose companies as of their recent financial closing dates. Excluded are special purpose companies whose financial closing dates are yet to come because their initial fiscal years have juststarted.

Major assets
Millions of yen

For the year ended March 31, 2009
Preferred investment securities: revenue
Other income
Management business: revenue
Intermediate business: revenue
Real estate rent: cost
Design management business: revenue

(*2)
(*3)
(*4)
(*5)
(*6)

¥ 598
47
1,873
–
6,531
1,019

$ 6,097–481
19,07366,494
10,374(*1) Preferred investment securities are indicated as amount of investment and specific bonds as at March 31, 2009. The Company considers that its exposure to loss that may arise in the future is limited to the amount of
its preferred investments.
(*2) The Company records dividends from such investments as revenue from operations and related expense as cost of revenue from operations.
(*3) The Company records interest incomes from such specific bonds as other income.
(*4) The Company, Mitsubishi Estate Building Management Co., Ltd. and Mitsubishi Jisho Property Management Co., Ltd. provide asset management business to special purpose companies and record such service income
as revenue from operations.
(*5) The Company enters into real estate rental agreements with special purpose companies and records such rent expenses as cost of revenue from operations.
(*6) Mitsubishi Jisho Sekkei Inc. and MEC Design International Corporation provide design management services and remodeling services to special purpose companies and record such service incomes as revenue fromoperations.
The Company does not own investments with voting rights for any special purpose companies and does not send directors and employees to any special purpose companies. The following table sets forth major
assets and liabilities of the special purpose companies as of their recent financial closing dates. Excluded are special purpose companies whose financial closing dates are yet to come because their initial fiscal years
have just started.

58 |ANNUAL REPORT 2009

¥ 874
447
104
1,335
123

March 31, 2008
Real estate
Other
Total

¥292,823
18,901¥311,725

Major liabilities and net assets
Millions of yen

For the year ended March 31, 2008
Debt
Preferred investments
Other
Total

(*6)

¥188,239
122,850635¥311,725(*6) Preferred investments include contributions made by the Company as described in (*1) above.

ANNUAL REPORT 2009 |59

Report of Independent Auditors

20. Subsequent Events
Share Exchange

The Company and Towa, by resolution of the meeting of the Board of Directors of each company held on February 5, 2009, determined to implement a shareexchange to make the Company a wholly-owning parent company and Towa a wholly-owned subsidiary (the “Share Exchange”) and concluded a shareexchange agreement (the “Share Exchange Agreement”).
Upon conclusion of the Share Exchange Agreement, shares of common stock of Towa were delisted on April 23, 2009 and Towa became a wholly-owned
subsidiary of the Company on April 30, 2009.
(1) Schedule of the Share Exchange
Meeting of Board of Directors to resolve the Share Exchange

February 5, 2009

Conclusion of the Share Exchange Agreement

February 5, 2009

Public notice of the record date of the extraordinary general meeting of shareholders (Towa)

February 6, 2009

Resolution on the convocation of the extraordinary general meeting of shareholders (Towa)

February 20, 2009

Record date of the extraordinary general meeting of shareholders (Towa)

February 21, 2009

General meeting of shareholders with class shares for the shareholders with Class A through Class E preferred stock (Towa)

March 27, 2009

General meeting of shareholders with class shares for the shareholders with common stock (Towa)

March 30, 2009

Extraordinary general meeting of shareholders (Towa)

March 30, 2009

Date of delisting (Towa)

April 23, 2009

Date of the Share Exchange (the Effective Date)

April 30, 2009

Notes: 1. In addition to the general meeting of shareholders, Towa held the general meetings of shareholders with class shares for the shareholders with common stock and the shareholders with Class A throughClass E preferred stock, respectively, and Towa obtained approvals for the Share Exchange.
2. The Company did not hold a general meeting of shareholders for the approval of the Share Exchange pursuant to the simplified procedure for a share exchange in accordance with Article 796, Paragraph 3,of the Law.

(2) Description of the allocation concerning the Share Exchange
Company nameShare exchange ratio

Mitsubishi Estate Co., Ltd. (Wholly-owning parent company)
Common stock: 1

Number of shares newly issued
upon the Share Exchange

Common stock: 7,878,746 shares

Towa (Wholly-owned subsidiary)
Common stock: 0.042
Class A preferred stock: 0.585
Class B preferred stock: 0.316
Class E preferred stock: 0.572

Notes: Share allocation ratio1) Common stock
For each share of Towa’s common stock, 0.042 share of the Company’s common stock shall be issued; provided, however, that no shares shall be allotted to 382,504,695 shares of Towa held by the Company
upon the Share Exchange.
2) Class A preferred stock
For each share of Towa’s Class A preferred stock, 0.585 share of the Company’s common stock shall be issued; provided, however, that no shares shall be allotted to 6,473,000 shares of Towa’s Class A preferredstock held by the Company upon the Share Exchange.
3) Class B preferred stock
For each share of Towa’s Class B preferred stock, 0.316 share of the Company’s common stock shall be issued; provided, however, that no shares shall be allotted to 1,280,000 shares of Towa’s Class B preferredstock held by the Company upon the Share Exchange.
4) Class C preferred stock
As the Company holds all the shares in this category, no shares shall be allotted to the Class C preferred stock upon the Share Exchange.
5) Class D preferred stock
As the Company holds all the shares in this category, no shares shall be allotted to the Class D preferred stock upon the Share Exchange.
6) Class E preferred stock
For each share of Towa’s Class E preferred stock, 0.572 share of the Company’s common stock shall be issued; provided, however, that no shares shall be allotted to 500,250 shares of Towa’s Class E preferredstock held by the Company upon the Share Exchange.

Report of Independent Auditors
The Board of Directors
Mitsubishi Estate Co., Ltd.
We have audited the accompanying consolidated balance sheets of Mitsubishi Estate Co., Ltd. andconsolidated subsidiaries as of March 31, 2009 and 2008, and the related consolidated statements ofincome, changes in net assets, and cash flows for the years then ended, all expressed in yen. These
financial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Mitsubishi Estate Co., Ltd. and consolidated subsidiaries at March
31, 2009 and 2008, and the consolidated results of their operations and their cash flows for the years
then ended in conformity with accounting principles generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to theyear ended March 31, 2009 are presented solely for convenience. Our audit also included thetranslation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made on the basis described in Note 3.

Tokyo, Japan
June 26, 2009(3) Impact on the business results
As a result of the Share Exchange, capital stock and capital surplus of the Company will increase by ¥4,839 million ($49,262 thousand) and ¥5,269 million($53,643 thousand), respectively, and goodwill will increase by ¥4,310 million ($43,884 thousand) for the fiscal year ending March 31, 2010. Goodwill shallbe amortized over an estimated period for which the effect of goodwill be realized.

60 |ANNUAL REPORT 2009

ANNUAL REPORT 2009 |61

Mitsubishi Estate Corporate Data

Mitsubishi Estate Group

Corporate Information

Building BusinessDirectors, Statutory Auditors and Executive Officers (As of June 26, 2009)
Directors and Statutory Auditors(as of March 31, 2009, except where indicated)

Head Office
Otemachi Building, 6-1, Otemachi 1-chome, Chiyoda Ward
Tokyo 100-8133, JapanWeb site: http://www.mec.co.jp/index_e.html
Phone: +81-3-3287-5100

Date of Establishment
May 7, 1937

Paid-in Capital¥141,373 million (as of April 30, 2009)

Number of Shares of Common Stock Issued
1,382,518,351 shares (see Note 1)

Number of Shareholders•

Sunshine BS Corporation

Sunshine City Corporation•

Sunshine Enterprise Corporation•

Yokohama Sky Building Co., Ltd.

•

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

•Tokyo Kotsu Kaikan Co., Ltd.

•

Chelsea Japan Co., Ltd.

•Grand Parking Center Co., Ltd.

Building Management Business•Tokyo Garage Co., Ltd.

•

Mitsubishi Estate Building
Management Co., Ltd.

•

Marunouchi Heat Supply Co., Ltd.

•

Mitsubishi Jisho Retail Property
Management Co., Ltd.

•

Ikebukuro District Heating and CoolingCo., Ltd.

•

Mitsubishi Jisho Property Management
Co., Ltd.

•

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

•

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

•

Hokuryo City Service Co., Ltd.

•IMS Co., Ltd.

•

Marunouchi Direct Access Limited•

Yuden Building Kanri Co., Ltd.

•

Marunouchi Hotel Co., Ltd.

% of total

The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account 4G)
Japan Trustee Services Bank, Ltd. (Trust Account)
Meiji Yasuda Life Insurance Company
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
State Street Bank and Trust Company
Tokio Marine & Nichido Fire Insurance Co., Ltd.
Taisei Corporation
The Chase Manhattan Bank, N.A. London S.L. Omnibus Account
Asahi Glass Co., Ltd.

Parking BusinessDistrict Heating and Cooling Business

OthersResidential Business

68,482 (excluding shareholders with less than 1,502 shares)

Major Shareholders

Building Leasing Business
•

5.65
4.94
4.16
3.79
3.12
3.12
2.93
2.10
1.75
1.64

•

Real Estate Sales•

MEC Urban Resort Tohoku Co., Ltd.

Towa Real Estate Development Co., Ltd.

•

Towa Nasu Resort Co.

Residence Management Business•

Sakura Golf Development Co., Ltd.

•

Izumi Park Town Service Co., Ltd.

•

Mitsubishi Jisho Towa Community
Co., Ltd.

•MEC Eco LIFE Co., Ltd.

•

Ryoei Life Service Co., Ltd.

•MT Community Staff Co., Ltd.

•

Towa Real Estate Brokerage Co., Ltd.

Recreational Facilities•

Tsunagu Network Communications, Inc.

•

OthersHigashinihon Kaihatsu Co., Ltd.

Executive Officers

President & Representative Director

Keiji Kimura

Chief Executive Officer

Keiji Kimura

Representative Director

Nobuyuki Iizuka

Deputy President

Nobuyuki Iizuka

Representative Director

Toshio Nagashima

Executive Vice President

Toshio Nagashima

Representative Director

Hiroshi Danno

Executive Vice President

Hiroshi Danno

Representative Director

Takaya Endo

Executive Vice President

Takaya Endo

Representative Director

Masaaki Kono

Executive Vice President

Seiichiro Suzuki

Representative Director

Hiroyoshi Ito

Executive Vice President

Toyohisa Miyauchi

Director

Yutaka Yanagisawa

Executive Vice President

Masaaki Kono

Director

Hirotaka Sugiyama

Executive Vice President

Takao Yagihashi

Director & Executive Counsel

Shigeru Takagi

Executive Vice President

Hiroyoshi Ito

Director (see Note 1)

Isao Matsuhashi

Senior Executive Officer

Yutaka Yanagisawa

Director (see Note 1)

Fumikatsu Tokiwa

Senior Executive Officer

Yuzuru Shibagaki

Director (see Note 1)

Yasumasa Gomi

Senior Executive Officer

Hiroshi Nakajima

Director (see Note 1)

Shu Tomioka

Senior Executive Officer

Masao Ouchi

Standing Statutory Auditor

Eiji Tan

Senior Executive Officer

Hirotaka Sugiyama

Standing Statutory Auditor (see Note 2)

Kazuhiko Hasegawa

Senior Executive Officer

Toshihiko Kazama

Statutory Auditor (see Note 2)

Kenjiro Hata

Executive Officer

Yasuo Fujiwara

Statutory Auditor (see Note 2)

Akio Utsumi

Executive Officer

Ichiro Watarai

Executive Officer

Megumu Ono

Executive Officer

Shiro Fujisawa

Executive Officer

Masamichi Ono

Executive Officer

Soichiro Hayashi

Executive Officer

Jo KatoExecutive Officer

Naoto Aiba

Executive Officer

Takao Tojo

Executive Officer

Koji Kiyosawa

Executive Officer

Masao Toyoizumi

Executive Officer

Kazuyuki Yabu

Executive Officer

Kenichi Iwata

Executive Officer

Atsuo Kyono

Stock Exchange Listings

Urban Development & Investment Management

Tokyo Stock Exchange and other major Japanese stock exchanges•

Mitsubishi Jisho Investment Advisors, Inc.

•

Japan Real Estate Asset Management Co., Ltd.

Notes:

Transfer Agent and Registrar•

Ascott International Management Japan Co., Ltd.

1. Among directors, Isao Matsuhashi, Fumikatsu Tokiwa, Yasumasa Gomi and Shu Tomioka are outside
directors who fulfill the qualifications set forth under Article 2-15 of the Corporation Law of Japan.

Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda Ward, Tokyo 100-8212, Japan

International Business•

Rockefeller Group, Inc. (RGI)•

Mitsubishi Estate New York Inc.

Transfer Account Management Institution for Special Account•

MEC UK Limited

Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda Ward, Tokyo 100-8212, Japan

Architectural Design & Engineering

Transfer Account Management Institution for Special Account establishedfor shareholders of the former Towa Real Estate Development Co., Ltd.
(see Note 2)
The Chuo Mitsui Trust and Banking Company, Limited
33-1, Shiba 3-chome, Minato Ward, Tokyo 105-0014, Japan

Mitsubishi Estate Asia Pte. Ltd.
•

Mitsubishi Jisho Sekkei Inc.

•

MEC Design International Corporation

Custom-Built Housing•

Mitsubishi Estate Home Co., Ltd.

•

Mitsubishi Estate Housing Components Co., Ltd.

Hotel Business

Auditor•Royal Park Hotels and Resorts Co., Ltd.

Ernst & Young ShinNihon LLC•

Royal Park Inn Nagoya Co., Ltd.

•

Tohoku Royal Park Hotel Co., Ltd.

•Royal Park Shiodome Tower Co., Ltd.

Notes:•

Yokohama Royal Park Hotel Co., Ltd.

1. In line with the Share Exchange that resulted in Towa Real Estate Development Co., Ltd. (“Towa”)
becoming a wholly owned subsidiary, a total of 7,878,746 shares were newly issued on the effective
date of April 30, 2009. This increase brings the number of outstanding shares of Mitsubishi Estate, theparent company, to 1,390,397,097 shares.

•

Royal Park Hotel Co., Ltd.

Real Estate Services

2. As part of the Share Exchange agreement with Towa effective April 30, 2009, Mitsubishi Estate ismaintaining its position associated with the special account established by Towa when the electronic
share certificate system was enacted. Consequently, The Chuo Mitsui Trust & Banking Co., Ltd. willretain its position as the transfer account management institution for the special account established
for the former Towa’s shareholders.

•

2. Among statutory auditors, Kazuhiko Hasegawa, Kenjiro Hata and Akio Utsumi are outside auditors
who fulfill the qualifications set forth under Article 2-16 of the Corporation Law of Japan.

Mitsubishi Real Estate Services Co., Ltd.

Others•MEC Information Development Co., Ltd.

•MEC Human Resources, Inc.

•

Keiyo Tochi Kaihatsu Co., Ltd.

• Consolidated subsidiary• Equity-method affiliate

62 |ANNUAL REPORT 2009

ANNUAL REPORT 2009 |63Organization (as of April 1, 2009)

Corporate History• Real Estate Consulting & Solution Group
Real Estate Consulting & Solution Dept. 1

1890

Real Estate Consulting & Solution Dept. 2

September

The Marunouchi site (over 353,000m2)—a former military training ground
known as Kanda Misaki-cho—purchased by Mitsubishi Company fromthe Japanese government
Marunouchi Architectural Office established1893

December

Mitsubishi Goshi Kaisha (limited partnership) established

1894

June

• Property Management and Office Leasing Group
Property Management Dept.

Building Safety Management Office
Yokohama Renewal OfficeCommercial Property Advisory Office
Office Leasing Dept.

Relocation Management OfficeTenant Relations and Consulting Dept.

Master Lease Planning and Management Office• Commercial Asset Management and Development Group
Meeting of Shareholders

Commercial Asset Management Dept.

Group Companies Management Office

Area Brand Management Dept.

Area Brand Promotion OfficeCommercial Asset Development Dept.

Museum Pre-Opening Office

March

1923

July
February

1937

Retail Property Development Dept.
Strategic Planning
Committee

President &Chief Executive Officer

CSR
Committee

May

1945

•

Executive Committee

Residential Development Group
Residential Development Planning Dept.
Master-Planned Residential Dept.

Detached Housing Office

PARTNER System Dept.

Condominium Redevelopment Office

Apartment Development Dept.

Strategic Investment
Committee••

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

Tenjin MM Building (IMS) opened in Fukuoka City
Royal Park Hotel in Hakozaki, Tokyo opened
Hiroshima Park Building completed
Hiroshima Branch (renamed Chugoku Branch in April 2000) andKyushu Branch established1990

February
April
September

1993

1995

NovemberReconstruction of Marunouchi Building announced

1996

January
November

Osaka Amenity Park (OAP) completed
Head Office relocated to Tokyo Building
Reconstruction of Marunouchi Building commenced

Business rights for the Marunouchi site and other land and buildings,
excluding those for Marunouchi Building and Yaesu Building, werereturned to Mitsubishihonsha Co., Ltd. . Mitsubishihonsha Co., Ltd. dissolved and its operations transferred to two newly established secondary
corporations, Yowa Fudosan Ltd. and Kaito Fudosan Ltd.

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

2001

1953

April
May

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

1959

July

Marunouchi Remodeling Plan formulated

1960

February

Marunouchi Parking Area completed
Hokkaido Building completed

November

DecemberMay

Mr. Otokazu Nakata and Mr. Takejiro Watanabe appointed president andchairman, respectively
Akasaka Park House offered for sale in lots, marking the launch of
the Condominium Business

1972

April
June

Mitsubishi Estate New York Inc. establishedThe first phase of the Izumi Park Town Project
launched

September
2002

1973

Finance & Accounting Dept.
Corporate Communications Dept.

Investor Relations Office

General Affairs Dept.

Secretary Office

CSR Dept.

Legal Office

December

Mitsubishi Real Estate Services Co., Ltd. established

November

Branches established in Sapporo, Sendai, Nagoya and Osaka

1975

May

1978

October1980

June
October

Hibiya Kokusai Building completed

April
November

Nagoya Dai-Ichi Hotel opened (renamed Royal Park Inn Nagoya in April 2001)
MEC USA, Inc. established

1984

July

1986

March
July
October

February
March
April
May
July

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

2004

September
December

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

2005

March
June
November

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

2007

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

2008

January
March
October

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

2009

March

Chelsea Japan Co., Ltd. turned into a Mitsubishi Estate
consolidated subsidiary
Towa Real Estate Development turned into a
Mitsubishi Estate wholly owned subsidiary
Marunouchi Park Building & Mitsubishi Ichigokan completed

Shin Aoyama Building completed
Mr. Tatsuji Ito and Mr. Otokazu Nakata appointed president andchairman, respectively

1983

Tohoku Branch

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

Semiannual settlement of accounts changed to annual

1981

Sapporo Branch

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

Izumi Park Town

Corporate Planning Dept.

March
September

2003

Investment Management Office

April
June

Mr. Takejiro Watanabe appointed president
Shin-Marunouchi Building completed

1969• Corporate GroupMr. Takeshi Fukuzawa and Mr. Jotaro Takagi appointed as president andchairman, respectively

April

May
NovemberInvestment Management Group

June

April

1952

International Business Group

1994

2000

1962

Human Resources Compliance Office

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

1999

Residential Quality Management Office

Affiliate Group Office

JulyParticipation in the City of London’s Paternoster Square Project announced
Capital investment in the Rockefeller Group, Inc. initiatedConstruction of Ryokuendai New Town commenced

Ownership of Yaesu Building (completed in March 1928 and renamed
Marunouchi Yaesu Building in 1962) and its site transferred from
Mitsubishisha Co., Ltd. to Mitsubishi Estate

Residential Customer Service Office

Yokohama Branch

April
June
July
July

Marunouchi Building completed

Recreational Facility Office

Human Resources Dept.

Yokohama Minato Mirai 21 Block-25 Development Plan announced

1989

September

Residential Design Planning and Marketing Dept.

International Business Dept.

Office of Statutory Auditors

January

Toyosu Development Project Office

Condominium Development Dept.

Board of Statutory Auditors
Statutory Auditor

1950

Development Planning OfficeEnvironmental
Subcommittee

Internal Audit Office

April

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

Compliance
Subcommittee

Risk Management
Subcommittee

November

Retail Property Leasing Dept.

•

Mr. Jotaro Takagi appointed president

January

Yokohama Landmark Tower

Retail Property Planning Dept.
Chairman of the Board

Real Estate Division established within Mitsubishi Goshi Kaisha

Marunouchi Building• Retail Property Group

June

1988

Mitsubishi Ichigokan
1906

Area Planning Office
Board of Directors

Mitsubishi Ichigokan,
the first office building in
Marunouchi, completed

1987

Shin-Marunouchi Building

Mitsubishi Estate Home Co., Ltd. established

April

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

April

Marunouchi Park Building & Mitsubishi Ichigokan

Nagoya Branch
Osaka Branch
Chugoku Branch
Kyushu Branch

64 |ANNUAL REPORT 2009

ANNUAL REPORT 2009 |65

Corporate Social Responsibility

CSR Case Studies
The Mitsubishi Estate Group has adopted as its fundamental mission the goal of
creating a truly meaningful society by building attractive, environmentally soundcommunities where people can live, work and relax with contentment. Putting
this mission into practice itself underpins Mitsubishi Estate’s CSR activities, all ofwhich are aimed at helping realize the sustainable growth of the Company andsociety as a whole. At the same time, Mitsubishi Estate believes that the promotion of CSR activities will directly lead to the improvement of its corporate brand.

All Group employees share the Mitsubishi Estate Group Code of Corporate
Conduct as ethical guidelines to achieve the mission. Meanwhile, with the aim ofpromoting Groupwide CSR activities, the Company has established a CSR
Committee, chaired by the president. With the CSR Committee serving as thecentral driver, we are proactively implementing a wide variety of CSR activities
that draw on the Group’s distinctive features.

Compliance

Social Contributions

Mitsubishi Estate considers compliance as not simply the adherence to legal
standards, but as meeting the expectations of people in society at large, not tomention the adherence to internal company rules and ethical corporate standards. Furthermore, because we recognize how essential compliance is to the
profit base of the Company, we view the maintenance of a compliance system
as a priority task of management. Moreover, all Group employees are deepening their awareness of compliance issues while proactively promoting compliance-focused activities.

As a good corporate citizen, the Mitsubishi Estate Group engages in a wide
range of social contribution activities centered on promoting its harmonious
coexistence with communities, its environmental preservation and social welfare
activities, and its support for culture and the arts. For example, the Company
operates the Nature Info Plaza (Marunouchi Bird Song Plaza) in the ShinYurakucho Building, which conducts educational activities and disseminates
information on nature conservation and environmental preservation. In addition, the Company hosts the annual Dazzling Art Competition—a drawing contest held for disabled children throughout Japan—while implementing“Experience Nature” projects nationwide to promote communication between
urban and rural people.

Risk Management

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

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

To maintain proper risk assessment and management of a wide range of internal and external business risks, Mitsubishi Estate has placed the CSR Committee
in overall charge of risk management. In addition, we have established a Risk
Management Subcommittee as a working-level body tasked with gathering risk
management-related information. This subcommittee is implementing crosssectional risk management throughout the Group.

Environmental Management
Under its ACTION 2010 medium-term management plan, Mitsubishi Estate further clarified its commitment to contributing to society by actively reducing its
environmental impact. By aggressively implementing initiatives toward realizing a
low-carbon, recycling-oriented society in partnership with its customers, theCompany is leading sustainable urban development. Specifically, we are implementing various initiatives to reduce the environmental impact in general in the
Otemachi, Marunouchi and Yurakucho areas through public-private collaboration.
Actual initiatives are categorized into those with direct or indirect results.
Initiatives with direct results include the introduction of high-efficiency air-conditioning systems and “dry mist” generators as well as the arrangement of roof-top
and external-wall greenery on our properties. Initiatives with indirect results
involve the staging of environment-related events and seminars in these areas.

Award ceremony of the 7th Dazzling Art Competition(February 2009, in the Marunouchi Building Hall)

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

2. We will strive to earn the trust of our clients
We will approach all objectives from our clients’ point of view, providing safe andreliable products and services, and make information available as appropriate.

3. We will strive to create a vibrant workplace
While aiming at personal growth, we will respect the human rights and diversity ofopinions of others and increase our creativity and professionalism, while displaying
our collective strengths as a team.
For details of the Mitsubishi Estate Group Guidelines for Conduct,
please visit our Web site at:
http://www.mec.co.jp/e/company/charter/index.html(Formulated December 1, 1997)(Revised August 1, 2002)(Revised January 1, 2006)“Dry mist” generators and trees lining the street near the Shin-Marunouchi Building

66 |ANNUAL REPORT 2009

“Experience Nature” project for forest thinning and farming in Yamanashi Prefecture (October 2008)

ANNUAL REPORT 2009 |67