Sumitomo Realty & Development Co., Ltd.

Shinjuku NS Building, 4-1, Nishi-Shinjuku 2-chome
Shinjuku-ku, Tokyo 163-0820, Japan
Phone: +81-3-3346-2342 Facsimile: +81-3-3346-1652

http://www.sumitomo-rd.co.jp/english/

Annual Report 2009

Printed in Japan

Distinctive Strengths,
Sustained Growth
ANNUALR E P O R T

2 0 0 9About the Company

Investor Information(As of March 31, 2009)

Sumitomo Realty & Development Co., Ltd., a core memberof the Sumitomo Group, is one of Japan’s leading realestate companies. The Company is well established as acomprehensive developer and supplier of high-quality officebuildings and condominiums in urban areas.
With operations centered on four areas—leasing, sales,
construction and brokerage—the Company has achieved a
combination of growth potential and balanced operations
that will drive its success in the challenging markets of the
21st century. Sumitomo Realty remains committed to thecreation of comfortable work and living environments that
contribute to a higher quality of life.

Major Shareholders

Consolidated
Financial Highlights

		
		
		

Number of Common Stock
Authorized: 1,900,000,000 shares
Issued: 476,085,978 shares
Number of Shareholders
16,536
Stock Exchange Listings
Tokyo Stock Exchange
Osaka Securities Exchange
Breakdown of Shareholders

Trust Accounts
Financial Institutions
Other Companies
Foreign Companies
Individuals and Others

CONTENTS

1	
2
4
6	

Paid-in Capital¥122,805 million

24.04%
10.86%
26.25%
33.18%
5.69%

Japan Trustee Services Bank, Ltd.
(Trust account 4G)
Japan Trustee Services Bank, Ltd.
(Trust account)
The Master Trust Bank of Japan, Ltd.
(Trust account)
Sumitomo Mitsui Banking Corporation
Japan Trustee Services Bank, Ltd.
(Trust account 4)
State Street Bank andTrust Company 505041
Credit Suisse Securities (Europe) Limited
The Sumitomo Trust & Banking Co., Ltd.
Kajima Corporation
Shimizu Corporation

Number ofshares held(Thousands)

Percentageof shares held

25,911

5.44%

24,448

5.14%

18,95911,990

3.98%
2.52%

11,041

2.32%

10,417
10,167
8,136
7,912
7,500

2.19%
2.14%
1.71%
1.66%
1.58%

		 At a Glance	A Message From
the Management

(Yen)

2,400

Review OF
Operations

6
12
14
16

Stock Price and Trading Volume on Tokyo Stock Exchange

Leasing
Sales
Construction
Brokerage

6

12

14

16

17	Our History
18 Corporate Governance
19 Financial Section
44 Senior Management
44 Corporate Data
45	Investor Information

Stock Price (right scale)
TOPIX Average (left scale)

6,000

1,800

4,500

1,200

3,000

600

1,500

0

0

(Millions of shares)

250

Trading Volume

200

CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS
Statements made in this annual report with respect to plans, targets and future performancethat are not historical fact are forward-looking statements. These statements are basedon management’s assumptions and beliefs in light of the information currently available.
Sumitomo Realty & Development Co., Ltd. cautions that a number of factors could cause
actual results to differ materially from those discussed in the forward-looking statements.
Such factors include but are not limited to macroeconomic conditions, supply and demandin the real estate market and interest rate trends.

150
100
50
0

7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7
2004
2005
2006
2007
2008
2009

45

Consolidated Financial Highlights
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
Years ended March 31
Thousands of
U.S. dollars1

Millions of yen
2009

2008

2007

2009

Revenue from operations.....................................................................

¥695,240¥691,928¥676,834$7,077,675

Operating income...................................................................................

146,366

154,608

137,176

1,490,034

Ordinary profit*........................................................................................

113,582

125,176

112,406

1,156,286

Net income.................................................................................................

46,205

63,13350,300470,376

Total assets.................................................................................................

¥3,006,412¥2,894,004¥2,747,900$30,605,843

Shareholders’ equity .............................................................................

436,667

427,423

409,197

4,445,353

Interest-bearing debt.............................................................................

1,847,627

1,665,042

1,473,644

18,809,193

Net income.................................................................................................

¥ 97.39¥133.00¥105.92$0.99

Shareholders’ equity...............................................................................

920.74900.57861.93

9.37

Cash dividend applicable to the year...............................................

20.00

18.00

14.00

0.20

For the YearAt Year-End
2

Per Share Data (Yen and U.S. Dollars)

Notes: 1. U
 .S. dollar amounts in this report are translated, for convenience only, at the rate of ¥98.23=U.S. $1, the prevailing exchange rate at March 31, 2009.
2. Shareholders’ equity = Net assets – Minority interests

OPERATING INCOME

REVENUE FROMOPERATIONSORDINARY PROFIT*

NET INCOME(Billions of yen)(Billions of yen)(Billions of yen)(Billions of yen)

800

200

150

75

600

616.1

646.5

676.8 691.9

695.2

720.0
150
137.2

112.4

146.4
136.0

113.6
100.0

100

51.0

50.3

50

46.2

87.0

112.0
100 100.3

400

63.1

125.2
154.6

74.4
32.5
50

50

200

0

25

’05 ’06 ’07’08 ’09 ’10(Forecast)

0

15.5

’05 ’06 ’07’08 ’09 ’10(Forecast)

0’05 ’06 ’07’08 ’09 ’10(Forecast)

0’05 ’06 ’07’08 ’09 ’10(Forecast)* Ordinary profit, which equals operating income after adjustment for non-operating gains/losses, is a management index that is widely used in Japan. Due to differences inaccounting standards, ordinary profit is not broken out in the Company’s English-language financial statements, but it is included here because it plays an important role inthe calculation of incentive payments for directors.

1At a glance
Balanced Portfolio
Our achievement of sustained growth has been the result of our well-balanced operations. We have abalanced portfolio in four operational fields—leasing, sales, construction and brokerage—that have different
risk profiles and capital requirements.
CHARACTERISTICS OF OUR FOUR OPERATIONAL FIELDS

conditions. Nonetheless, revenue and profit are both relatively high.

Leasing and sales are our traditional main fields of business. These

Our housing construction operations and brokerage operations areare capital-intensive fields; returns and risk are both high and sub-order-based businesses with low capital requirements and no sales

stantial upfront investment is required, but the level of humanrisk but substantial human resources requirements. These opera-

resources is relatively low. In leasing, the period from the initial in-tions have been developed more recently. In housing construction,

vestment to the generation of revenue—the operational cycle—isthe operational cycle is short, about six months to a year, but prod-

long, but once a building is opened for occupancy it provides a

uct development capabilities are very important. Brokerage opera-

stable, sustained source of revenue. The sales business, however, istions have the shortest operational cycle of our fields of businesscharacterized by a shorter operational cycle with volatile market

but require strong, highly competitve service networks.

Leasing

Sales

Office building, condominium and other property
leasing and management
and related activities

Mid- and high-rise condominium, detached houseand housing lot development and sales and related
activities

REVENUE FROM OPERATIONS(Billions of yen)

REVENUE FROM OPERATIONS
300

400

300

42.2%

262.6
221.2

279.6

250

298.4 300.0

224.2 224.7

200

234.3

27.1%

200

100

0

(Billions of yen)

211.0

’05

’06

’07

’08

’09

150
100

0

’10
(Forecast)(Billions of yen)

’05

’06

’07

OPERATING INCOME’10(Forecast)

42.7

93.4

90

40

83.5

55.9

32.4 33.1

63.3

19.3%

30



’09

(Billions of yen)105.3 102.0

0

’08

50

120

60

210.0

50

OPERATING INCOME

66.2%

193.6 191.2

36.5
30.7

30

21.0

20
10

’05

’06

’07

’08

’09

’10
(Forecast)

0

’05

’06

’07

’08

’09

’10
(Forecast)TAKING STEPS TO MAINTAIN WELL-BALANCED OPERATIONSSUMITOMO REALTY’S BALANCED PORTFOLIO

Sumitomo Realty’s four operational fields have complementary

Capitaloperational cycles and market characteristics, and in the past theadverse effects of changing market conditions on a particular

LeasingHigh level of capital,
low level of human resources

field have generally been offset by favorable performances inothers. As a result, the Company has been able to continue toRelatively high level of capital,
relatively low level of human resources

Sales

record increases in revenue and profit over the medium to longterm. In the future, our basic strategy will entail taking steps tomaintain well-balanced growth in our operational portfolio. More-

Relatively low level of capital,
relatively high level of human resources

over, to further reinforce our growth prospects, we will endeavor

Construction

Low level of capital,
high level of human resources

to develop a strong market presence in a fifth core field of operations, and are currently searching for the field that would best

Human Resources

complement our existing operations.

Construction

Brokerage

Custom home construction
and remodeling andrelated activities

Brokerage and sales on
consignment of real estate
and related activities by
Sumitomo Real Estate
Sales Co., Ltd.

REVENUE FROM OPERATIONS(Billions of yen)

REVENUE FROM OPERATIONS

200

127.4

135.2

142.6

156.6 160.1 162.0

60

56.5

6.1%

50

40

43.1 45.0

43.4

20

’05

’06

’07

OPERATING INCOME

’08

’09

13.0

0

’10
(Forecast)(Billions of yen)
15

’05

’06

8.4

8.7

’08

’09

’10
(Forecast)(Billions of yen)
25

14.0

20.9

20.0

17.0

10.2

10

’07

OPERATING INCOME

20

8.2%

58.5

49.2

100

0

(Billions of yen)
80

150

22.7%

Brokerage

8.8

5.5%

5

15

13.5

10

8.8

10.0

5
0

’05

’06

’07

’08

’09

’10
(Forecast)

0

’05

’06

’07

’08

’09

’10
(Forecast)A Message from the Management

Junji Takashima

Kenichi Onodera

ChairmanPresident

We will further increase our efforts to achieve our medium-term targets and beyond
that, to maintain sustainable growth.
Progress made in the medium-term management plan

Results in the March 2009 Fiscal YearAs our mainstay businesses, leasing and sales generate approxi-

In the March 2009 fiscal year, the second year of the Fourth Man-

mately 80% of our operating income. It takes a minimum of twoagement Plan, the leasing business was supported by our prog-

to three years from the time we acquire land—the “raw material”

ress in increasing rents for existing tenants and by full-year

for these businesses—until we finish the product, and many large-

contributions from buildings that were opened for occupancy

scale development projects require five years or more.

during the previous fiscal year. These factors, together with theWe aim to optimize the value of the land we acquire, and tocontribution made by the construction business, were the main

maximize revenues, we create three-year medium-term manage-

growth drivers in the year under review. However, they were un-ment plans instead of single fiscal-year plans. The steady imple-

able to fully counteract the impact of the severe operating envi-

mentation of these plans is our highest management priority.

ronment, and we recorded declines in revenue and profit in both

We have implemented three medium-term management plans
since 1997, and each was successfully completed. The current fiscal

As a result, overall revenue from operations increased 0.5%, toyear is the second year of the Fourth Plan (the Third Growth Plan). The¥695.2 billion; operating income decreased 5.3%, to ¥146.4 billion;

plan’s basic objectives are to continue to record growth in revenue

ordinary profit was down 9.3%, to ¥113.6 billion; and net income

and profit and to maintain the pace of growth. The progress we havefell 26.8%, to ¥46.2 billion. In this way, we achieved the twelfth

made toward realizing these objectives is shown in the table on theconsecutive fiscal year of higher revenue from operations, but wenext page. Since October 2008, the deterioration in the economic en-

were unable to realize an increase in profits, as we had done invironment has significantly exceeded expectations. As a result, it will

each of the preceding eleven fiscal years. Nonetheless, we main-

be difficult to achieve the initial performance targets, as they were

tained profits at a high level. Our operating income and ordinary

based on the conditions three years ago when we formulated the plan.

profit in the year under review were the second highest levels in

However, if we add our forecast performance for the plan’s third

our history, surpassed only by the record-setting performance inyear to the results we have achieved in its first two years, then we
can see that we will achieve increases in revenue and profit as wesales and brokerage.

the March 2008 fiscal year.
While ordinary profit was down year on year, under the current

have done in each of the previous plans. Moreover, the amounts

three-year plan we forecast an increase in comparison with theof the increases that we are forecasting are comparable to thoseprevious plan. Accordingly, with an emphasis on continuing stableachieved under the previous plans.

dividends, dividends for the year under review were increased by

Growth Under Medium-Term Management Plans(Billions of yen)

Revenue from operations

Operating income (right scale)

Ordinary profit (right scale)

2,500

500
2,107

2,000
1,606

1,500
202

1,000

500

0

400
339
300

274

265

1,270

(Years ended March 31)

1,939
350

437

200

170

100

87

1st Management
1st Plan*2 Plan
1999–2001

Revenue from operations

2nd Management
Plan
2nd Plan
2002–2004

1,606

3rd Management
Plan
3rd Plan
2005–2007

4th Management
4th Plan*3 Plan
2008–2010

1,939

2,107
+168
437

1,270

+336

+334

Operating income

202

+63

+85

Ordinary profit

87

+83

+104

265
170

350
274

0

+87

339

+65

*1. Cumulative total for the period covered by each plan.
*2. The figures shown for the 1st Plan are the cumulative total for the final three years of the plan.
*3. Figures are the sum of the March 2008 fiscal year results, the March 2009 fiscal year results and the March 2010 fiscal year forecasts.

¥2 per share, to ¥20 per share. Moreover, we plan to maintain divi-2010 fiscal year we will open eight new buildings with a total floor

dends of ¥20 per share in the March 2010 fiscal year as well.

space of 120,000 tsubo*, and in the following three years we plan
to open a further eleven buildings with a total floor space of

Outlook for the next fiscal year

170,000 tsubo. Under the next medium-term management plan,

Our forecasts for the March 2010 fiscal year, the final year of thewhich we will formulate shortly, in consideration of the strength-

current medium-term management plan, target revenue fromened revenue base in the leasing segment, we will reverse theoperations of ¥720.0 billion, for the thirteenth consecutive fiscal

temporary downturn in our performance and return to theyear of increase, as well as higher revenues in each of the four seg-

growth track that we have followed in each of the previous plans.

ments in our business portfolio. However, the uncertainty about

Going forward, we will further increase our efforts to achieve

how economic conditions will develop was a factor in our setting

our medium-term targets and beyond that, to maintain sustain-

relatively conservative targets for operating income, ¥136.0 billion,

able growth. We ask for the continued support of our sharehold-and ordinary profit, ¥100.0 billion.

ers and investors as we strive to achieve these goals.

Looking at our operating environment, there are signs of improvement in certain sectors, such as a recovery in condominium* 1 tsubo = 3.3 m2June 2009

sales, but the economic situation does not yet support an optimistic outlook. We will continue striving to enhance our sales andmarketing systems and to steadily achieve our performance targets for the March 2010 fiscal year, aiming to connect these efforts
to the next medium-term management plan, which starts from
the March 2011 fiscal year.

Junji Takashima, Chairman

Toward sustainable growth
The leasing segment, which provides approximately 70% of ouroperating income, surpassed ¥100.0 billion for the first time in the
March 2009 fiscal year. In the coming years, we plan to further ex-

Kenichi Onodera, President

pand our revenue base in leasing, our core segment. In the MarchSumitomo Fudosan Iidabashi Ekimae Building(Completed May 2008)

Sumitomo Fudosan Nishi Shinjuku Building No. 5(Completed May 2008)

Sumitomo Fudosan Ochanomizu First Building(Completed July 2008)

Review of Operations

Leasing

In leasing operations, Sumitomo Realty has worked to create new opportunities by implementing innovative initiatives. In this way, the Company has established a position of leadership in the leasing industry. Our leasing business ischaracterized by an outstanding portfolio that includes many new, upscale buildings in central Tokyo and by a direct
involvement in operations.
Sumitomo Realty’s Strengths
The Company made its full-scale entry
into the leasing business in the latter halfof the 1970s. In 1995, following the collapse of Japan’s economic bubble, wewere the first company in the industry torestart construction work on office buildings. We paid particular attention tolarge-scale projects in urban areas, especially those areas legally designated forredevelopment.
We currently operate about 200 buildings
for lease. The advanced interior features ofour buildings are complemented with distinctive exterior designs, including hotel-likeentranceways and all-glass exteriors. Sumitomo Realty creates innovative buildings
with strong market presences.
Overview of the Fiscal YearIn the Tokyo office building market, which
accounts for more than 90% of our portfolio, the favorable market conditions continued in the first half of the year and

vacancy rates and new contract rents
were relatively stable. However, demand
slumped from the second half of the year
and vacancy rates increased. The main
factors were that the deteriorating business sentiment and corporate performance within Japan caused tenantcompanies to become increasingly awareof the need to cut costs and cautious
about increasing floor space, and that certain companies even began withdrawing
from businesses.
In this environment, the Company’s
vacancy rate for existing buildings worsened from 3.8% at the end of the previous fiscal year, to 5.1% at the end of theyear under review. However, through thefirst half of the fiscal year, we were able toraise rents for existing tenants when leases were renewed. In addition, buildings
opened for occupancy during the previous year were open for the full year in
the fiscal year under review, such as theSumitomo Fudosan Harajuku Building

and Sumitomo Fudosan Yotsuya Building.
These two factors contributed to our performance. Further, the Sumitomo Fudosan Iidabashi Ekimae Building and theSumitomo Fudosan Nishi Shinjuku Building No. 5 that opened during the year,
were able to attract more tenants than
was initially forecast and achieved almost
full occupancy.
As a result, we were able to record substantial increases in both revenue andprofit. Revenue from operations increased
6.7%, to ¥298.4 billion, and operating
income was up 12.8%, to ¥105.3 billion.
OutlookIn the March 2010 fiscal year, we expect
earnings from existing buildings todecrease due to the effects of the economic recession. However, we forecast
that the full-year results of such properties as the Sumitomo Fudosan Iidabashi
Ekimae Building and the Sumitomo Fudosan Nishi Shinjuku Building No. 5, and theSumitomo Fudosan Akihabara Building(Completed June 2009)

Sumitomo Fudosan Shiodome Hamarikyu Building(Completed August 2009)

Sumitomo Fudosan Aobadai Tower(Completed August 2009)

REVENUE FROM OPERATIONSOPERATING INCOME
AND OPERATING MARGIN
Operating Income
Operating Margin (right scale)(Billions of yen)
298.4 300.0

300(Billions of yen)

(%)

120

40
55.9 63.3 83.5 93.4 105.3 102.0
35.3
34.0
33.4
31.8

279.6
262.6
221.2

new buildings scheduled to be opened
during the year, such as the Sumitomo
Fudosan Akihabara Building and theSumitomo Fudosan Shiodome Hamarikyu
Building will contribute to performance.
As a result, we expect to not only secureanother year of increased revenues, but
for revenue from operations to reach¥300.0 billion for the first time, an increaseof 0.6% year on year. However, we forecast
operating income to decrease 3.2%, to¥102.0 billion.
We plan to complete eight buildings
with total floor space of 115,300 tsubo in
the March 2010 fiscal year.

234.3

90

200

30
25.3

27.0

60

20

30

10

100

0

’05 ’06 ’07 ’08 ’09 ’10(Forecast)

0’05 ’06 ’07 ’08 ’09 ’100(Forecast)

Principal Office Building Development Projects in the March2010 fiscal year
Name

Sumitomo Fudosan Nishi Shinjuku Building

Location (Tokyo CBD)

Completion

Gross floorarea (Tsubo*)

Shinjuku Ward

Apr. 09

11,900Sumitomo Fudosan Kanda Building No.2 (SPC) Chiyoda Ward

June 09

6,300

Sumitomo Fudosan Akihabara Building (SPC)

Chiyoda Ward

June 099,700

Sumitomo Fudosan Shiodome Hamarikyu
Building (SPC)

Chuo Ward

Aug. 0914,500Sumitomo Fudosan Aobadai Tower (SPC)

Meguro Ward

Aug. 0917,300Ebisu SS Building

Shibuya Ward

Sept. 092,700

Sumitomo Fudosan Shinagawa Sea-side
Building

Shinagawa Ward

Nov. 09

6,600

Nishi Shinjuku 6-Chome West Project

Shinjuku Ward

Feb. 1046,300Total* 1 tsubo=3.3 m2

115,300Review of Operations—LEASING
LOCATION OF PRIME PROPERTIES­—Portfolio Centered on Central Tokyo

BunkyoShinjuku
ChiyodaShibuya

ChuoTokyo CBD (Central Business District):
7 wards, comprising Chiyoda, Minato, Chuo,
Shinjuku, Shibuya, Shinagawa and Bunkyo
BunkyoMinatoShinjuku
ChiyodaShibuyaChuo
MinatoShinagawaTokyo’s 23 wards
Shinagawa

Major flagship buildings (Please see the table on
the right.)
Buildings scheduled for completion during theThird Growth Plan (2008–2010)
Other buildings

OFFICE BUILDING FEATURES
Earthquake protection
Ceiling height*
Floor load
Air conditioning
Power capacity

Before 1981
Previous quake-resistant structure
2.5 m
300 kg/m2
Central air conditioning system
45 VA/m2

1982–1996
New quake-resistant structure
2.7 m
300–500 kg/m2
Climate control zones
60–70 VA/m2

1997 and afterAnti-sway structure
2.9–3.3 m
500–1,000 kg/m2
Separate climate control systems
85 VA/m2 and over

* Includes raised floors



SUMITOMO REALTY’S PORTFOLIO
Our portfolio includes many competitive prime properties locatedin central Tokyo. As of the end of March 2009, our leasing portfolio had a gross floor area of 3.5 million square meters and an average age of 14 years, the lowest among Japan’s major real estatecompanies. About 43% of the buildings in our portfolio werecompleted in the past 10 years. Also, 94% of the buildings in our
portfolio were located in the 23 wards of Tokyo, with 86% in
Tokyo’s central business district. Furthermore, 81% of the portfolio
was made up of large-scale buildings of more than 10,000 square
meters of gross floor area. More than 98% of the buildings meetor exceed earthquake-resistance standards that took effect in1981 and are a key yardstick for earthquake safety. Moreover,nearly half of our buildings have been completed since 1997,
when we took the lead in the application of new building designconcepts. These high-quality buildings offer leading-edge
earthquake-resistant structures, separate climate control systems
for each suite, reinforced floors for heavy loads, high-capacity
electrical systems, high ceilings and other attractive features, andthey are the focus of strong demand from many tenants.
COMPETITIVE GROWTH FOUNDATION
Including the buildings that we expect to open during the FourthPlan (the Third Growth Plan), prime properties will account foran even higher percentage of our portfolio. To respond to thechange in market demand toward prime properties and awayfrom buildings that are older, smaller or in less attractive locations,
we have been investing aggressively in new building construction, thereby further increasing the concentration of prime properties in our portfolio.

MAJOR FLAGSHIP BUILDINGS
No. of floors(aboveground /underground)

Name

Completion

Location (Tokyo CBD)

Gross floor  area (m2)

Izumi Garden Tower

43 / 4Oct. 02 Minato Ward

205,574

Shinjuku Sumitomo Building

52 / 4Mar. 74 Shinjuku Ward

177,467

Shinjuku Oak City

38 / 2

Jan. 03 Shinjuku Ward

117,446

Shiodome Sumitomo Building
Sumitomo Fudosan Mita Twin
Building WestTokyo Shiodome Building

25 / 3

July 04 Minato Ward

99,91343 / 2

Sept. 06 Minato Ward

98,33837 / 4Jan. 05 Minato Ward

95,128

Shinjuku NS Building

30 / 3

Sept. 82 Shinjuku Ward

75,046

Shibakoen First Building

35 / 2June 00 Minato Ward

63,822

Chiyoda First Building West
Sumitomo Fudosan Iidabashi
Building No. 3
Sumitomo Fudosan Iidabashi
First Building
Chiyoda First Building East
Sumitomo Fudosan Shibakoen
Tower
Sumitomo Fudosan Mita Twin
Building East
Shibuya Infoss Tower

32 / 2

Jan. 04 Chiyoda Ward

61,50124 / 2

Oct. 02 Shinjuku Ward

53,04714 / 2Mar. 00 Bunkyo Ward

52,74717 / 2

Oct. 98 Chiyoda Ward

37,47330 / 2

Oct. 01 Minato Ward

35,54917 / 1

Aug. 06 Minato Ward

35,04721 / 4Mar. 98 Shibuya Ward

34,460

Roppongi First Building

20 / 4Oct. 93 Minato Ward

31,516

Izumi Garden Tower(Completed October 2002)

Note: Figures for gross floor area indicate the area managed by Sumitomo Realty.

LEASING PORTFOLIO
Total Gross Floor Area as of March 31, 2009: 3.46 million m2
Close

New

Large

Tokyo CBD*1 86%
23 wards 94%
Less than 10 years old 43%
New quake-resistance*2 98%

Over 10,000 m2 81%*1. Tokyo CBD (Central
Business District): 7
wards, comprising
Chiyoda, Minato,Chuo, Shinjuku,
Shibuya, Shinagawa
and Bunkyo*2. N ew standards thattook effect in 1981.

Growing Demand for Prime Properties
In the central Tokyo office building market, there is strong demandfor buildings that meet the criteria for prime properties; they areclose to stations and business areas, are new and feature modern
amenities and offer large areas on each floor. These prime properties
generate high levels of revenues, while it remains difficult to findtenants for buildings that are far from stations, old or small.
CLOSE—LOCATIONS IN THE CENTRAL BUSINESS DISTRICTTo be a prime property, a building must be in the central business
district and near a major station. In the Tokyo central business
district, where many of Japan’s leading companies have theiroffices, this is an even more important factor. Large, recently
constructed buildings in good locations are in short supply,
which has been a key element in our land acquisition efforts.

NEW—BRAND-NEW AND RECENTLY CONSTRUCTED BUILDINGSThe strong demand for recently constructedbuildings is a result of tenant needs for thefollowing features:
1. Reinforced floors, high-capacity electrical systems and uninterruptible power supplies toaccommodate large computer servers
2. Separate climate control systems for eachsuite and high ceilings
3. Advanced earthquake countermeasures,such as vibration damping and earthquakeresistant construction
4. Advanced security systems

LARGE—LARGE-SCALE BUILDINGS
Buildings that can accommodate multiple units on a single floor
enable tenant companies to increase the efficiency of theiroperations, and in recent years there has been a trend for companies to consolidate their offices. As a result, demand for largescale buildings continues to increase.
In the Tokyo central business district, where buildings that meet
the three conditions for prime properties—close, new and large—
are in strong demand, our competitive portfolio will provide astrong foundation for us to utilize our strengths—development ofhigh-value-added office buildings, tenant leasing and property
management. We will utilize that foundation to maximize the earnings potential of our office building operations and build a strong
base for the achievement of sustainable growth in the years ahead.

Review of Operations—LEASING

Principal Projects from Next Medium-Term Management Plan (from 2011)
Targeting the achievement of the current medium-term management plan and subsequent growth, the Company isadvancing principal projects in Central Tokyo. In addition, the next medium-term management plan calls for opening
11 buildings with floor space of 170,000 tsubo. In this way, we will further expand our earnings foundation, our corebusiness, in the years ahead.

Principal Projects
Projects

Location

Projects in the 5th Management Plan (from 2011 to 2013)
Koraku 2-Chome West Project
Shibuya Higashi 1-Chome Project
Shibuya Uguisudani Project
Kojimachi 1-Chome Project
Iidabashi Fujimi Project
Nishi Shinjuku 8-Chome Project
Shibaura Project
Nibancho Project
Shibuya Nanpeidai Project
Others
Total
Projects after the 6th Management Plan (from 2014)
Nihonbashi 2-Chome Project
Roppongi 3-Chome Project

Bunkyo Ward
Shibuya Ward
Shibuya Ward
Chiyoda Ward
Chiyoda Ward
Shinjuku Ward
Minato Ward
Chiyoda Ward
Shibuya Ward

Completion*1

Gross floor area (Tsubo*2)

2011
2011
2011
2011
2011
2012
2012
2012
2012

23,50016,00015,0005,000
6,900
54,0007,000
6,000
18,00018,600170,000

Apr. 10–Mar. 13
Chuo Ward
Minato Ward

28,00046,000*1. Fiscal year ending March 31*2. 1 tsubo=3.3 m2

Positioning of future development projects (Tokyo Central Business District)BunkyoIidabashi area
Nishi Shinjuku area
Shinjuku
ChiyodaNihonbashi area

Kojimachi area

ShibuyaRoppongi area
Chuo

MinatoShibuya area
Shibaura area

Shinagawa10

Total Gross Floor Area for Leasing (Years ended March 31)(Thousand tsubo)
1,500

Next Plan
1,360

4th Plan
1,190

1,200

3rd Plan
900+170 thousand tsubo(11 buildings)

New Operation+14%+170 thousand tsubo(23 buildings)

1,020

2nd Plan

New Operation

+17%

870

1st Plan
680

600

300

0

’01

’04

’07

Koraku 2-Chome West Project’10(Forecast)’13(Forecast)

Shibuya Nanpeidai Project

Gross floor area . . . . 23,500 tsubo*

Gross floor area . . . . 18,000 tsubo*

Floors. . . . . . . . . .  34 above ground,
3 below ground

Floors. . . . . . . . . .  21 above ground,��������������������������������� 2 below ground

Completion. . . . . . April 2010 (plan)

Completion. . . January 2012 (plan)

Nishi Shinjuku 8-Chome Project

Shibuya Higashi 1-Chome Project

Gross floor area . . . . 54,000 tsubo*

Gross floor area . . . . 16,000 tsubo*

Floors. . . . . . . . . .  40 above ground,
3 below ground

Floors. . . . . . . . . .  25 above ground,��������������������������������� 3 below ground

Completion. . . August 2011 (plan)

Completion. . . August 2010 (plan)* 1 tsubo = 3.3m2

11

City Towers Toyosu The Twin

Review of Operations

Sales

Sumitomo Realty is a pioneer in the Japanese market in condominium development for sales. The Company established its condominium sales business earlier than almost all of its competitors. The Company is building attractive
condominiums in good locations and working to raise its brand value.
Sumitomo Realty’s Strengths
Sumitomo Realty’s condominium operations are centered in Japan’s six largest
urban areas—the Tokyo metropolitanarea, Osaka/Kobe, Sapporo, Sendai, Nagoya
and Fukuoka. Moreover, in recent years
we have enhanced our presence in othermajor cities, such as Niigata and Hiroshima.
The Company develops and sells about
5,000 units a year.
Over the past decade, we have been
one of the leading suppliers of condominium units nationwide. This strong positionis the result of our central urban strategy,
which we implemented ahead of competitors, and our aggressive approach tolarge-scale and high-rise condominiums.
Our landmark exterior designs, the richarray of common facilities that is madepossible by the scale of the buildings andelegant entrances make our condominiums sought after by a wide range of consumers with diverse lifestyles. As a result,
our high operating margin is at the top of
the industry.
12

The risk of market fluctuations is a critical factor in the condominium business.
Consequently, the Company’s policy is tooffer a stable supply of condominiums
and to enhance the Sumitomo Realty
brand through the ongoing sale of highquality units. In the years ahead, theCompany will continue striving to maintain its strong position and further expand
its business.
Overview of the Fiscal Year
Conditions in the condominium market,
which accounts for more than 90% of oursales in this segment, continued to besluggish, and the number of new units
supplied in the Tokyo metropolitan areafell to less than 50,000 during the year. In
particular, the percentage of units sold
substantially declined in the third quarter.
However, from the fourth quarter signs ofmarket recovery could be seen, as consumer purchasing motivation improved
due to the decline in mortgage interest
rates and an effective tax reduction

brought about by revisions to the tax system. Consequently, the number of units
sold began to increase, principally properties in favorable locations.
In this environment, the number ofcondominium units, detached houses
and land lots delivered increased by 265
from the previous year, to 4,008. In addition, the number of condominium units
sold was up by 638, to 3,269.
As a result, revenue from operations
was down 1.2%, to ¥191.2 billion, andoperating income fell 28.1%, to ¥30.7 billion.
While the total number of condominium
units, detached houses and land lots delivered increased, as a consequence ofthe recording of a large number of highly
profitable large-scale condominiums in
the previous fiscal year, the average priceper unit and the operating margin bothdecreased, and we recorded declines inboth revenue and profit.

City Tower Azabu Juban

Osaki West City Towers

REVENUE FROM OPERATIONSOPERATING INCOME
AND OPERATING MARGIN

Revenue from Operations
Units Delivered (right scale)Operating Income
Operating Margin (right scale)(Billions of yen)

(Units)

300

6,000

(Billions of yen)

250

4,994 4,992

5,000
4,527
3,743 4,008

200

25
32.4

224.2 224.7 211.0 193.6 191.2 210.0

OutlookIn the March 2010 fiscal year, we plan todeliver a total of 4,300 condominium
units, detached houses and land lots, anincrease of 292 year on year. Also, of the
4,200 condominium units and detachedhouses that we expect to deliver in the
March 2010 fiscal year, approximately
15% had already been sold at the end of
March 2009 (30% in the previous fiscal
year). Accordingly, we plan to continue
working to bolster our sales system andto promote sales.
As a result, in the March 2010 fiscal year
we are forecasting revenue from operationsof ¥210.0 billion, up 9.8%, and operating
income of ¥21.0 billion, down 31.7%. Thisdecline in operating income is attributable
to the establishment of conservative profit
margins due to the lack of transparency inthe future operating environment.

(%)

50
33.1 36.5 42.7

30.7

22.1
40

20

4,300
4,000

17.3
30

150

3,000

100

2,000

50

1,000

14.4

16.1

’05 ’06 ’07 ’08 ’09 ’10

0

15

14.7
10.0

20

0

21.0

10

10

0

(Forecast)5

0’05 ’06 ’07 ’08 ’09 ’10(Forecast)

Principal CONDOMINIUM DEVELOPMENT PROJECTS (2010–2011)
Name

Location

No. of  units
for sale

No. of  floorsScheduleddelivery*1

City Tower Azabu Juban

Minato Ward, Tokyo

381

38

2010

Osaki West City Towers
City Towers Toyosu
The Twin-Tower N
AqurasShinagawa Ward, Tokyo

848*2

39

2010

Koto Ward, Tokyo

461*2

48

2010

Edogawa Ward, Tokyo

567*2

14

2010

City Terrace Akishima

Akishima shi, Tokyo

392

14

2010

City Tower Ikebukuro West Tower

Toshima Ward, Tokyo

147

34

2010

City Tower Ariake

Koto Ward, Tokyo

483*2

33

2011

Toyosu II
City Tower Osaka TemmaThe River & Parks
Southern Sky Tower Residence

Koto Ward, Tokyo

850

44

2011

Osaka shi, Osaka

650

45

2011

Hachioji shi, Tokyo

371

41

2011

City Tower Warabi

Warabi shi, Saitama

268

30

2011

*1. Fiscal year ending March 31*2. Number of units includes the units of business partners.

13

AFTERREMODELINGREMODELING (Shinchiku Sokkurisan)

CUSTOM HOMES J-URBAN TRAD

Review of Operations

Construction

In the construction business, Sumitomo Realty’s business consists of the construction of custom homes and house
remodeling. Our construction operations are order based and do not require substantial amounts of capital.

Sumitomo Realty’s Strengths
Remodeling
In 1996, Sumitomo Realty launched theShinchiku Sokkurisan Full Remodeling
Package. This product addresses the concern that remodeling can sometimes bemore expensive than rebuilding in Japandue to the risk of cost overruns. With
Shinchiku Sokkurisan, a house can be fully
remodeled at half the cost and in half thetime required to rebuild it. And because
Shinchiku Sokkurisan uses less materials, it
is also environmentally friendly. We were
the first major real estate company tooffer this type of product, and Shinchiku
Sokkurisan has been well received in themarketplace. Cumulative sales have surpassed 50,000 units, and we anticipate
continued growth in Shinchiku Sokkurisan
sales in the years ahead.

14

Shinchiku Sokkurisann Sales engineer system: Most of oursales personnel have engineering qualifications.
n Carpenters: We use carpenters who
work exclusively for Sumitomo Realty.
n Fixed price: We provide the customer
with a fixed price per unit of floor area,
so there are no concerns about additional construction charges.
No need for temporary moves: We remodel homes while the customers
continue to live in them, which is amajor advantage.
n Earthquake resistance: We incorporate
earthquake-resistance strengthening
measures based on a computerized
analysis of the home as well as measures to prevent damage from termites
and moisture.
n

Custom homes
In 1995, Sumitomo Realty launched theAmerican Comfort line of high-quality,
low-cost Western-style homes in Japan
using the know-how that the Company
acquired in building and selling homes
constructed with the two-by-four method
in California.
In April 2003, we launched the J-Urban
home design, which combines the excellent security features of condominiums
with the superior ventilation and lightingof detached houses. J-Urban has beenhighly evaluated in the marketplace andhas received a Good Design Award fromthe Japan Industrial Design Promotion
Organization. In March 2009, we commenced sales of J-URBAN TRAD, which is
the latest product in the J-Urban series andoffers environmentally friendly functions,such as solar electric power systems, andthe aesthetic sense and functionality of
traditional Japanese houses.

J-Urban III

Custom Homesn A
 dvanced performance: Our original
Power Column Method makes thesehomes 1.3 times more earthquake
resistant than conventional two-by-four
homes.
Fixed price: We have an easily understood pricing system, and the use oforiginal materials and large-volume
procurement enables us to achieve
price reductions.
n Complete after-sales support: Our
homes are backed by a 20-year guarantee and our specialists conductperiodic inspections.
nOverview of the Fiscal YearIn Shinchiku Sokkurisan remodeling
operations, accompanying the rapid deterioration in business sentiment, orders fellby 273, to 7,051, but deliveries increased
by 134, to 7,090.
In custom home operations, in a challenging operating environment, orders
increased by 7 year on year, to 1,687
units, while deliveries increased by 117,
to 1,747 units.
Due to an increase in unit prices forboth custom homes and Shinchiku Sokkurisan, total sales of these two businessesrose 6.5%, to ¥137.8 billion.
On a consolidated basis, including theresults of such companies as Sumitomo
Fudosan Syscon Co., Ltd. and Sumitomo
Fudosan Reform Co., Ltd., revenue fromoperations rose 2.3%, to ¥160.1 billion,
and operating income was up 27.7%, to¥13.0 billion, meaning we recorded higher
revenue and profit for the eighth consecutive year. Breaking down revenue fromoperations, Shinchiku Sokkurisan contributed ¥88.0 billion, custom homes ¥49.8
billion and other businesses ¥22.3 billion.
All shares held in Universal Home, Inc. weresold and from the third quarter it is nolonger within the scope of consolidation.
OutlookIn the March 2010 fiscal year, we are targeting 8,800 orders—7,100 for Shinchiku
Sokkurisan and 1,700 for custom homes.
We will continue to expand our operations, focusing on Shinchiku Sokkurisan,while simultaneously working to enhance
operating measures.
Consequently, we are targeting revenue
from operations of ¥162.0 billion, up 1.2%,
and operating income of ¥14.0 billion, up
7.9%, for the ninth consecutive period of
increased revenue and profit.

REVENUE FROM OPERATIONS(Billions of yen)200

156.6 160.1

150
127.4

135.2

162.0

142.6

100

50

0

’05 ’06 ’07 ’08 ’09 ’10(Forecast)

OPERATING INCOME
AND OPERATING MARGIN
Operating Income
Operating Margin (right scale)(Billions of yen)

(%)

15

12
8.4

8.7

8.8

10.2 13.0 14.0

8.6

10

8

8.1

6.6
6

6.5

6.2

6.5

5

4

0

0

’05 ’06 ’07 ’08 ’09 ’10(Forecast)

SHINCHIKU SOKKURISAN AND
CUSTOM HOME UNITS CONTRACTED
Shinchiku Sokkurisan
Custom Homes (right scale)(Units)(Units)

8,000

4,000
7,324
6,892

6,000

6,116

3,000

5,550
2,271

4,000

7,051 7,100

2,122

2,000
1,672 1,680 1,687 1,700

2,000

1,000

0

0

’05 ’06 ’07 ’08 ’09 ’10(Forecast)

15

REVENUE FROM OPERATIONS(Billions of yen)
60
56.5

58.5

49.2
43.4

45.0

43.1

40

20

Review of Operations

Brokerage

The Company’s real estate brokerage business is handled by Sumitomo Real
Estate Sales Co., Ltd., which was established in 1975 to conduct sales of condominiums developed by Sumitomo Realty. After entering the real estate brokerage sector in 1979, Sumitomo Real Estate Sales achieved significant success in that field, and it was listed on the Tokyo Stock Exchange in 1998.

0’05 ’06 ’07 ’08 ’09 ’10(Forecast)

OPERATING INCOME
AND OPERATING MARGIN
Operating Income
Operating Margin (right scale)(Billions of yen)

Sumitomo Realty’s Strengths
Under the STEP brand name, Sumitomo
Real Estate Sales operates a network of
brokerage offices with close ties to local
communities. The network has beensteadily expanded and upgraded, andthe number of offices reached 243 by theend of March 2009. Because all of thebrokerage offices are directly operated,
the network boasts high profit margins.
Sumitomo Real Estate Sales holds thenumber one position in the industry interms of brokerage revenue from direct
operations and in terms of profitability.
In the future, the company will continue
working to expand its marketing baseand increase its market share.
Overview of the Fiscal YearThe existing home market was severely
impacted by the deteriorating financial
environment and the number of transactions substantially decreased, including
corporate transactions and large-amounttransactions. In addition, while the number of existing condominium transactions
was firm in the first half of the year, it
declined from the third quarter due mainly
to weak demand.
In this market environment, the numberof transactions in our mainstay brokerage
16

operations fell 6.5% year on year, to 27,822;
transaction prices were down 20.7%, to¥29.5 million; and total transaction value
decreased 25.9%, to ¥821.2 billion.
Consequently, revenue from operations
was down 26.4%, to ¥43.1 billion, andoperating income declined 56.3%, to ¥8.8
billion. We opened up four new directly
managed brokerage offices in the Tokyo
metropolitan area, in such locations as
Honancho and Todoroki, and one officein another area, for a total of five offices.
At the end of the year under review, ournationwide total was 243 offices.
OutlookIn the March 2010 fiscal year, we will strive
to increase sales efficiency through a reinforced IT strategy and to improve the returnon expenditures, such as on advertising.
Moreover, we will aim for an increase in
the number of brokerage transactions anda return to growth in profits.
As a result, in the March 2010 fiscal
year we are forecasting revenue fromoperations of ¥45.0 billion, up 4.4%, andoperating income of ¥10.0 billion, an
increase of 14.3%.

(%)

24

60
13.5 17.0 20.9 20.0

8.8

10.0

16

40
37.0
34.2

34.5

31.0

22.2

8

20

20.3

0

0

’05 ’06 ’07 ’08 ’09 ’10(Forecast)

NUMBER OF TRANSACTIONS AND
TRANSACTION VALUE
Transaction Value
Number of Transactions (right scale)(Billions of yen)
1,200

60,000899.7

928.8 1,052.0 1,107.9 821.2

45,000900

600

29,19927,23629,75330,00027,822

27,943300

015,000

’05

’06

’07

’08

’09

0

OUR HISTORY

Date

T opics

1949

Izumi Real Estate Co., Ltd. established as the successor to the holding company of the Sumitomo zaibatsu
following the breakup of the conglomerate.

1957

	 Izumi Real Estate Co., Ltd. changed its name to Sumitomo Realty & Development Co., Ltd.

1963

	 Merged with the holding company of the former Sumitomo zaibatsu during its liquidation.

1964

	 Entered condominium sales business with Hama-Ashiya Mansion in Kobe, Hyogo Prefecture.

1970	 Listed on the Tokyo and Osaka stock exchanges.

1973	 Established Sumitomo Fudosan Tatemono Service Co., Ltd., a consolidated subsidiary.

1974

	Completed construction of 52-story Shinjuku Sumitomo Building in Shinjuku, Tokyo; moved Company
headquarters there from Tokyo Sumitomo Building in Marunouchi, Tokyo.

1975	 Established Sumitomo Real Estate Sales Co., Ltd., a consolidated subsidiary.

1980	 Established Sumitomo Fudosan Syscon Co., Ltd., a consolidated subsidiary.

1982

Completed construction of 30-story Shinjuku NS Building in Shinjuku, Tokyo; moved Company headquarters there from Shinjuku Sumitomo Building.

1995

	 Commenced American Comfort custom home construction business.

1996

	 Commenced Shinchiku Sokkurisan remodeling business.

1997	Entered high-quality business hotel market. Opened Villa Fontaine Nihonbashi and hotels at twoother locations.

1998	 Sumitomo Real Estate Sales Co., Ltd., a consolidated subsidiary, listed on the Tokyo Stock Exchange.

1999

Commenced real estate joint investment trust fund. Launched sales of Sumitomo Realty & Development Fund (SURF) series.

Shinjuku Sumitomo Building

Shinjuku NS BuildingImplemented the Sumquest bond issue, which was the first public issue of real estate securities in Japan.

2000

Commenced luxury condominium leasing business. Completed construction of La Tour Shibakoen.

2001

The number of managed STEP brokerage offices exceeded 200.

2002

Completed construction of Izumi Garden Tower (Roppongi 1-Chome Redevelopment Project).

2003

Commenced sales of J-URBAN fixed-price urban-style housing series.

2004

Commenced sales of World City Towers in Minato Ward, Tokyo.

2006	 Established Sumitomo Fudosan Reform Co., Ltd., a consolidated subsidiary.

2007

Commenced Nishi Shinjuku 6-Chome West No. 6 District redevelopment construction(Shinjuku Ward, Tokyo).

Izumi Garden Tower

Commenced Koraku 2-Chome West District redevelopment construction (Bunkyo Ward, Tokyo).
2008

Established Sumitomo Fudosan Bellesalle Co., Ltd., a consolidated subsidiary.
Commenced sales at City Towers Toyosu The Twin (Koto Ward, Tokyo).
Commenced redevelopment work in the Nishi Shinjuku 8-Chome District (Shinjuku Ward, Tokyo).
Cumulative total number of orders for Shinchiku Sokkurisan remodeling business surpassed 50,000.
Commenced sales of J-URBAN TRAD, the fifth product in the J-URBAN series.

World City Towers

17

CORPORATE GOVERNANCE

Fundamental Approach to Corporate GovernanceTo achieve sound management, Sumitomo Realty believes that it isimportant to share information on a Companywide basis, ensure thateveryone is aware of problems, enhance internal management supervision and achieve highly transparent management through appropriate information disclosure. We have implemented a number ofcorporate governance initiatives to realize these practices efficiently.
Corporate Governance Bodies
In addition to the Board of Directors, the Company has establishedthe Executive Officers Committee, which is led by the Chairman of
the Board. These corporate governance bodies discuss important
issues and make decisions rapidly and appropriately. The Board of
Directors, the Executive Officers Committee and other committees
use a variety of means to ensure that information is shared throughout the Company and that everyone is aware of problems.
In April 2004, we instituted an executive officer system withthe objectives of selecting capable young employees and substantially bolstering our administrative systems.
The Board of Statutory Auditors has five members, including threeoutside statutory auditors. To strengthen management oversight, we
continue working to enhance outside auditing. The statutory auditors
attend meetings of the Board of Directors and the Executive Officers
Committee, track internal issues that are important for robust auditing and provide opinions as needed.
The Compliance Department, which has five staff members, monitors the operational execution of divisions throughout the Group andthe operation of internal control systems. The department also works
to prevent misconduct and mistakes. Moreover, the department
reports the results of its audits to the statutory auditors and exchanges
opinions with the statutory auditors in an appropriate manner. In
these ways, we are working to strengthen and increase the efficiency
of both the Board of Statutory Auditors and the Compliance Department. Moreover, from the viewpoint of timely disclosure, we provide
important information through our website and other means on atimely basis, and have increased management transparency forshareholders, other investors and suppliers.
Independent Auditors
In accordance with the Corporate Law and the Financial Instruments
and Exchange Law, the Company has concluded an auditing contract
with KPMG AZSA & Co. for the auditing of the Company’s accounts.
There are no conflicts of interest between Sumitomo Realty and the
independent auditing company or its employees.
Internal Control and Risk Management Systems
To efficiently institute sound management practices, the Company
has established a range of internal control systems and is working toenhance those systems.
To further enhance our compliance with laws and regulations andto ensure ethical business practices, we established the Compliance
Promotion Committee. In addition, through the Compliance Department, we have established internal auditing and internal reporting
systems. In these ways, we are working to prevent inappropriate and18

illegal actions. In regard to information management, to ensure
proper storage and control of documents, we have established internal standards for document control. Furthermore, in terms of risk
management systems, each department tracks and manages therisks associated with its operations on a daily basis, while important
issues are discussed and decided upon by the Board of Directors andthe Executive Officers Committee. In the future, we will consider further enhancement of regulations and systems as needed.
Compensation of Directors and Statutory Auditors
At the ordinary general meeting of shareholders held in June 2004,
we introduced a new performance-based compensation system fordirectors. Under this system, the annual compensation for directors isbased on the Company’s performance. The new system combines
the three elements that made up the previous system—monthly
compensation, annual bonuses and retirement allowances.
Under the new system, total annual (July to June) compensation
for directors is set at 1% of consolidated ordinary profit.
In the year under review, compensation for directors was ¥1,219
million and compensation for statutory auditors was ¥68 million.
Introduction of Takeover Defense Measures
The Company introduced a policy for responding to large-scale purchases of its shares, and at the ordinary general meeting of shareholders held on June 28, 2007 the policy was approved by more than
70% of shareholders, which is the level of support required for theapproval of special resolutions.

Overview of Takeover Defense Measures
Large-scale purchases that are subject to the policy are those purchases of shares of the Company where a specific shareholder groupintends to hold a ratio of voting rights of 20% or more or where a
specific shareholder group will, as a result, hold a ratio of voting
rights of 20% or more.
The large-scale purchase rules stipulate that the large-scale purchase shall begin after necessary and sufficient information is provided
to the Board of Directors by the large-scale purchaser and a certain
period for evaluation by the Board of Directors has elapsed.
To ensure the objectivity, fairness and rationality of decisions of theBoard of Directors, a special committee will be established that consists of members selected from among external academic experts,
lawyers, certified public accountants, etc.
If the large-scale purchase will significantly damage the corporate
value and common interests of shareholders, after considering theopinions of external experts, including lawyers and financial advisors,
and taking into the fullest account the recommendations of the special committee, the Board of Directors may take countermeasures todeter the purchase, such as the issuance of stock options.
The effective period of the takeover defense policy is matched withthe period of the Fourth Plan, which was commenced in April 2007.
The effective period will expire at the close of the 77th ordinary general meeting of shareholders held by the end of June 2010.

Financial Section

Six-Year Financial Summary
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
Years ended March 31
Millions of yen
2009

2008

2007

2006

2005

2004

For the Year
Revenue from operations............................
Leasing.................................................................
Sales.......................................................................
Construction....................................................
Brokerage...........................................................

¥695,240
298,359
191,224
160,134
43,105¥691,928
279,568
193,575
156,606
58,542¥676,834
262,620
211,035
142,564
56,532¥646,525
234,280
224,735
135,158
49,217¥616,115
221,234
224,191
127,388
43,445¥573,862
202,776
213,303
125,086
39,809

Cost of revenue from operations............

496,547

488,202490,491

487,805

470,636

435,078

SG&A expenses...................................................
% of revenue from operations..............

52,327
7.5%

49,118
7.1%

49,167
7.3%

46,6977.2%

45,1887.3%

42,807
7.5%

Operating income.............................................
% of revenue from operations..............

146,366
21.1%

154,608
22.3%

137,176
20.3%

112,02317.3%

100,291
16.3%

95,977
16.7%

Depreciation and amortization................

17,886

17,15015,677

16,33014,01912,211At Year-End
Current assets......................................................
Sales inventory*1.................................................
Total assets.............................................................
Shareholders’ equity*2. ....................................
Net interest-bearing debt............................

¥ 759,816
568,970
3,006,412
436,667
1,722,733¥ 784,195
550,8632,894,004
427,423
1,548,509¥ 756,488
531,377
2,747,900
409,197
1,343,824¥ 619,219
388,6272,460,080
375,656
1,150,880¥ 481,341
260,6132,136,329
320,098
935,155¥ 503,911
234,019
2,090,970
303,875
916,156

Per Share Amounts (Yen)
Net income............................................................
Shareholders’ equity.........................................
Cash dividend applicable to the year.........

¥ 97.39920.7420.00¥133.00
900.5718.00¥105.92
861.9314.00¥ 68.33
790.7410.00¥ 32.64673.409.00¥ 15.34
639.01
9.00

Key Ratios
Equity ratio (%)....................................................
ND/E ratio*3 (Times)..........................................

14.5
3.9

14.8
3.6

14.9
3.3

15.3
3.1

15.0
2.9

14.5
3.0

*1. Sales inventory = Inventories + Investments in SPCs holding properties for sale
*2. Shareholders’ equity = Net assets – Minority interests*3. ND/E ratio = Net interest-bearing debt (Interest-bearing debt – Cash, time and notice deposits) / Shareholders’ equity

Contents

20
24
26
27
28
29
43

Management’s Discussion and Analysis
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors’ Report19Management’s Discussion and Analysis

Overview

Other Income and Expenses

In the March 2009 fiscal year, the second year of the Fourth Management Plan (the Third Growth Plan), we achieved our twelfth
consecutive year of gains in revenue from operations, but operating
income and ordinary profit both declined for the first time in 12 years.
Specifically, leasing operations recorded substantial increases in bothrevenue and profit, and construction operations also made a contribution with revenue and profit gains. However, brokerage operations
and sales operations were significantly impacted by the severe economic conditions and posted declines in both revenue and profit.
From April 2007, we started the Fourth Plan. The basic objective of
this plan is to maintain the pace of growth achieved under the three previous plans. The numerical targets for the three years of the plan are
revenue from operations of ¥2.4 trillion, operating income of ¥470.0 billion, and ordinary profit of ¥380.0 billion. However, following thecompletion of the plan’s second year it was apparent that we will havedifficulty achieving these targets due to the deterioration in economic
conditions, which greatly exceeded expectations. However, compared tothe previous plan, we anticipate that we will still achieve solid increases inrevenue from operations, operating income, and ordinary profit.
For further information, please see page 4.

Net other expenses worsened to ¥67.1 billion, from ¥40.6 billion in theprevious fiscal year. This was primarily attributable to interest expense,
net, of ¥29.7 billion, an increase of ¥5.1 billion from the previous year;
loss on devaluation of inventories of ¥13.8 billion; and loss on devaluation of investments in securities of ¥14.2 billion.

Results of Operations
Revenue from Operations and Operating Income
In the March 2009 fiscal year, we recorded substantial gains in revenue and profit in the leasing segment. Factors contributing to thisperformance included progress made in raising rents at existingbuildings and the full-year contribution of buildings that opened in
the previous fiscal year. Construction operations also contributed tobusiness results through higher revenue and profit. In contrast, bothbrokerage operations and sales operations were seriously affected by
the deterioration in economic conditions and recorded declines inrevenue and profit. As a result, in the fiscal year under review revenue
from operations was up 0.5%, to ¥695.2 billion, but operating income
fell 5.3%, to ¥146.4 billion.
For further information about each segment, please see the
Review of Operations section on page 6.

REVENUE FROM OPERATIONSNet Income
Income before income taxes and minority interests totaled ¥79.3 billion, a fall of 30.5%. Income taxes decreased 32.7%, to ¥32.0 billion. As
a result, net income declined 26.8%, to ¥46.2 billion, and the net margin was down to 6.6%, from 9.1% in the previous fiscal year.

CASH FLOWSCash and cash equivalents at end of year totaled ¥124.9 billion, an
increase of ¥8.4 billion from the end of the previous year. Cash flows
were as follows.

Cash Flows from Operating Activities
Net cash used in operating activities was ¥52.7 billion, due principallyto accumulation of properties for sale. In comparison with the previous year, net cash used in operating activities increased ¥33.2 billion.
This is due to the decline in income before income taxes and minority
interests and the increase in investment in properties for sale(condominiums).

Cash Flows from Investing Activities
Net cash used in investing activities was ¥110.1 billion. As new development investment in the leasing segment, we made payments forpurchases of property and equipment amounting to ¥84.6 billion. We
also recorded a refund of about ¥64.9 billion in deposits from partnership investors, such as Sumitomo Realty & Development Fund (SURF)
investment partnerships, for leased buildings managed by theCompany.

Cash Flows from Financing Activities
Net cash provided by financing activities was ¥173.4 billion. For
the accumulation of properties for sale and investment in leasing

OPERATING INCOME AND
OPERATING MARGIN

ORDINARY PROFIT* AND
NET INCOME

Operating Income
Operating Margin (right scale)(Billions of yen)

(%)
24

200

800

600

Ordinary Profit(Billions of yen)

616.1

646.5

676.8

691.9 695.2

22.3

720.0

20.3
150

16.3

17.3

154.6
137.2

150

21.1
18.9
146.4

18

125.2

120

113.6

112.4

136.0

100.0
90

112.0
100

400

Net Income(Billions of yen)

100.3

12

87.0
74.4
63.1

60
50.3
6

50

200

46.2

51.0

32.5

30
15.5

’05

20

0

0

0

’06

’07

’08

’09

’10

(Forecast)

’05

’06

’07

’08

’09

’10

(Forecast)

0

’05

’06

’07

’08

’09

’10

(Forecast)* Please see the note to the graphs on page 1.

facilities, we raised ¥35.9 billion through long-term debt. In addition,
increase in short-term debt (including commercial paper) was ¥161.7
billion. Consequently, the balance of interest-bearing debt increasedto ¥1,847.6 billion.

For further information, please see “Overview of Perpetual Subordinated Loan and New Stock Subscription Rights” on page 23.

CAPITAL RESOURCES AND LIQUIDITY

Short-term debt:
Principally from banks.................... ¥ 270,970
Commercial paper............................
174,900
Subtotal.............................................
445,870
Long-term debt:
Bonds and notes................................
370,000
Loans principally from banks.....
911,757
Perpetual subordinated loan.....
120,000
Subtotal............................................. 1,401,757
Long-term debt due within
one year................................................
160,410Long-term debt due after
one year................................................ 1,241,347
Interest-bearing debt...................... 1,847,627

		Millions of yen
				
		
2009
2008

AssetsAt the end of the year under review, total assets were ¥3,006.4 billion,
an increase of 3.9%. This gain was principally due to an increase inproperty and equipment stemming from investment in leasing facilities. Total current assets decreased 3.1%, to ¥759.8 billion. From thefiscal year under review, inventories are classified as follows: real estate
for sale, real estate for sale in progress, construction in progress, andother inventories. Net property and equipment increased 11.0%, to¥1,801.4 billion.

Liabilities
Total liabilities at the end of the year under review were up 4.3% fromthe previous fiscal year-end, to ¥2,552.0 billion. Total current liabilities
increased 15.9%, to ¥899.2 billion. In addition to a rise in loans, principally from banks, of 38.5%, to ¥271.0 billion, the primary factors werean increase in commercial paper of 97.6%, to ¥174.9 billion, and a risein bonds scheduled for redemption within one year of 166.7%, to¥40.0 billion. Total long-term liabilities were down 1.1%, to ¥1,652.8
billion, mainly due to a decrease in bonds of 10.8%, to ¥330.0 billion.
As a result, at the end of the fiscal year, interest-bearing debt wasup ¥182.6 billion, to ¥1,847.6 billion. Interest-bearing debt includes aperpetual subordinated loan of ¥120.0 billion that the Company tookout on February 22, 2008. Based on the uncertain economic conditions in the previous fiscal year, this subordinated loan, which
received a high level of equity credit—75%—from the Japan Credit
Rating Agency, was intended to increase effective shareholders’equity as a provision for future financial risk while avoiding equity
dilution.

TOTAL ASSETS

2,747.9

2,894.0

2,460.1
2,000

25
409.2

400

300

427.4

385,000
875,872
120,000
1,380,872–15,000
35,885—20,885

–3.9%
4.1%
—
1.5%

114,990

45,42039.5%

1,265,882
1,665,042–24,535
182,585

–1.9%
11.0%

(%)
16

15.1

436.7
20

375.7
320.1
15.0

38.5%
97.6%
56.9%

ROE AND ROA

(%)

500

2,136.3¥ 75,300
86,400161,700

ROE (Net Income / Shareholders’ Equity)
ROA (Operating Income + Interest and Dividend Income /Total Assets)(Billions of yen)
3,006.4¥ 195,670
88,500284,170

Net income was ¥46.2 billion, and retained earnings increased, while
net unrealized holding gains (losses) on securities decreased by ¥18.6
billion. Consequently, shareholders’ equity was up 2.2% year on year,to ¥436.7 billion, and the equity ratio was 14.5%, compared to 14.8% a
year earlier. Allowing for the capital nature of the perpetual subordinated loan, the effective equity ratio was 17.5%.
ROE fell to 10.7%, from 15.1% a year earlier, while ROA was 5.1%,
compared to 5.6% the previous year.

Shareholders’ Equity
Equity Ratio (right scale)
3,000%
changeShareholders’ Equity

SHAREHOLDERS’ EQUITY AND
EQUITY RATIO(Billions of yen)Amountchange

12.8

12

15

15.3

14.9

14.8

14.5

200

10

1,000

5.6

5.0
100

0

’05

’06

’07

’08

’09

0

10.7

9.3
8

5

’05

’06

’07

’08

’09

0

4

0

4.8

5.0

’05

’06

5.4

’07

5.1

’08

’09

21

FINANCIAL STRATEGY

Investing in Line with Changes in the Market Environment andStrengthening Financial Position

Characteristics of Operations and Diversification of Fund-Raising

In the current environment, competition in site acquisition has
intensified, and it is not easy to acquire large, prime sites. This situation was unchanged even in the second half of the fiscal year, whenbusiness conditions in Japan and overseas slumped due to the global
financial crisis. For the past few years Sumitomo Realty has implemented a policy centered on urban redevelopment for future siteacquisition. Due to the need to coordinate rights among landowners,
redevelopment requires time and effort, but on the other hand comparatively high levels of profits can be expected.
In addition to moving ahead with these types of investments, we are
steadily strengthening our financial position. For site acquisition, in redevelopment projects it is difficult to raise funds through SPCs that utilize
non-recourse methods, which means that we need to use on-balancesheet fund-raising methods. Accordingly, to maintain a stable financial
position even in a worsening financial environment, we raised ¥120.0 billion in February 2008 through a perpetual subordinated loan. This
subordinated loan, which received a high level of equity credit—75%—
from a rating agency, was intended to increase effective shareholders’equity while avoiding equity dilution. Aiming for further growth, theCompany will continue to invest in development, as this is a useful
method of fund-raising from the viewpoint of increasing financial stability.
On the other hand, we are making progress in the accumulationof equity through growth in profits. We expect to reduce the ND/E
ratio, a key management indicator, from 3.3 times at the end of theThird Plan (end of March 2007) to less than 3 times at the end of thecurrent plan (end of March 2010), after including the equity nature of
the perpetual subordinated loan.
In addition, the cash flow generated by our core leasing businessis more than ¥100.0 billion, reaching ¥121.5 billion in the year underreview, nearly double the level of five years ago. This represents increased
operational stability. Accordingly, while net interest-bearing debt (ND) has
increased over the past five years, the ND/Leasing Cash Flow Ratio has
remained stable. Ratings agencies have evaluated this stability highly, andwe have maintained our ratings even in a difficult financial environment. For
more details, please see the LEASING CASH FLOWS graph on the next page.

In leasing and sales, which are our mainstay business segments, several years are required from the acquisition of a site to the completionof a building and the generation of revenues. In addition, significant
advance investment is required. In consideration of these factors,
under the three mid-term management plans from April 1997, to reinforce our financial position and achieve operational growth, we
worked to diversify our fund-raising methods so as to control interestbearing debt while making investments needed for growth.
Specifically, we have aggressively introduced development securitization methods using SPCs. With SPCs where off-balance-sheet funds
are raised through non-recourse loans, we have worked to conduct
development on a large-scale with a small amount of equity money
without placing a burden on our balance sheet. At the end of March
2009, the balance of the Company’s equity investments in SPCs was¥119 billion, and the balance of the non-recourse loan and other offbalance-sheet debt was approximately ¥600 billion, for a total of
approximately ¥720 billion. In addition, to diversify our fund-raising
methods in order to control interest-bearing debt, we have formed
SURF (Sumitomo Realty & Development Fund) investment partnerships
backed by leased buildings, making effective use of our assets in ourfund-raising activities. At the end of March 2009, the balance of investment received in SURF investment partnerships was ¥134 billion which
was recorded on the balance sheet as deposits received. For further
information regarding SPCs, please see note 24 on page 41.
By actively utilizing these types of fund-raising methods that do
not rely on interest-bearing debt, we have raised large amounts offunds without having to sell assets at low prices, and have aggressively acquired sites when site acquisition costs are low and there areinvestment opportunities. Consequently, we have completed theacquisition of the sites needed for the achievement of the current
plan, and have made favorable progress in the acquisition of sites forthe next plan and future plans.

NET INTEREST-BEARING DEBT (ND)
AND ND/E RATIOLONG-TERM DEBT RATIO ANDFIXED-INTEREST RATE DEBT RATIO
Short-Term Loans and Commercial Paper
Long-Term Loans and Bonds
Fixed-Interest Rate Debt Ratio

Net Interest-Bearing Debt (ND)
ND/E Ratio (right scale)(Billions of yen)(Times)2,000

8

INTEREST COVERAGE RATIO
Operating Income + Interest and Dividend Income
Interest Expense
Interest Coverage Ratio (right scale)(%)(Billions of yen)(Times)

160

100

12

158.1
150.1

1,722.7
1,548.5

1,500

6

80

60

1,150.9

500

935.2
2.9

3.6

3.3

3.1

3.9

83

85

79

83

77

139.5
77

1,343.8
1,000

87

83

80

120

76

40
2

6.5

80

4

22

’05

’06

’07

’08

’09

0

6.8

6.2

6
4.9

5.2
40

20

19.6
0

9

114.0
101.7

0

’05

’06

’07

’08

’09

0

’05

17.6

’06

20.6

’07

25.6

’08

30.4

’09

3

0

We are also working to raise funds at fixed, long-term rates as aprecaution against future increases in interest rates. As a result, at theend of the year under review, long-term debt accounted for 76% ofinterest-bearing debt, and fixed-interest rate debt accounted for 77%
of interest-bearing debt.
Site acquisition is essential to the achievement of ongoinggrowth. Moving forward, we will continue to strengthen our financial
position and work to achieve increased fund-raising stability as we
continue to invest in growth, centered on the core leasing business.

*1. However, voluntary repayment is possible in the event that five years havepassed from the date of the loan (i.e., February 22, 2013 and thereafter), andcertain other conditions are met.
*2. As of the effective date of the perpetual subordinated loan.
*3. P rior to February 22, 2014, the rights cannot be exercised unless perpetual
subordinated loan interest payments have been stopped. Voluntary repayment is possible on or after February 22, 2013. In the event of repayment,
the new stock subscription rights will become unexerciseable, and theCompany will acquire the new stock subscription rights at no cost.

Overview of Perpetual Subordinated Loan and
New Stock Subscription Rights

Our fundamental policy for the distribution of profit is to maintain astable base level of dividends and, while retaining a sufficient level of
earnings for stable, long-term operational growth, to increase dividends in line with growth in profit.
We have implemented three plans since April 1997. We steadilystrengthened our profit foundation under two management plans—
the First Plan and the Second Plan. In addition, we worked to respondto various changes in accounting standards and to reduce unrealized
losses. Over this period, due to comparatively large special losses, net
income fluctuated, but we maintained annual dividends at ¥6.00 per
share. At the conclusion of the Second Plan, we raised dividends tothe bubble-period level: ¥9.00 per share.
Under the Third Plan, which began in April 2004, we completed
the implementation of measures to deal with unrealized losses, andwere able to lay the foundation for full-scale growth in EPS. Due tothe success of the Third Plan, for the March 2007 fiscal year, the final
year of the Third Plan, dividends were raised to ¥14.00 per share.
In the year under review, the second year of the Fourth Plan, ordinary profit was down year on year, but over the course of the FourthPlan, we are forecasting an increase in profits in comparison with theThird Plan. Accordingly, with a priority on the continuation of stabledividends, we increased per-share dividends by ¥2.00, to ¥20.00. In
addition, we also plan per-share cash dividends of ¥20.00 for the
March 2010 fiscal year.

DIVIDEND POLICY

The perpetual subordinated loan entails the allotment of new stock
subscription rights with the objective of the creditor to secure amethod of recovering its investment. In regard to the new stock subscription rights, consideration has been given to limiting thepossibility of dilution upon execution.
Overview of Perpetual Subordinated Loan
Amount:Borrower:¥120.0 bilion
Sumitomo Realty & Development Co., Ltd.
Sumitomo Mitsui Banking Corporation(Trust Account)
February 22, 2008
No fixed date (*1)

Lendor:Effective date:
Maturity date:(1) F rom February 22, 2008 to February 21, 2013:
3 Month Yen TIBOR + 1.10%(2) F rom February 22, 2013:
3 Month Yen TIBOR + 2.10%

Applicable interest rate (*2):

Overview of New Stock Subscription Rights
Allotted to:

Sumitomo Mitsui Banking Corporation(Trust Account)

Number of shares fromsubscription rights(*2):

49,180,327 shares

New share subscription
right exercise period:

February 22, 2008, to February 22, 2058 (*3)

Exercise price:

95% of market price (average of the closing
price over the previous 20 business days), minimum exercise price: ¥1,087

LEASING CASH FLOWSLEASING ASSETS AND RETURN ON
LEASING ASSETS

Leasing Cash Flows
ND/Leasing Cash Flows Ratio (right scale)(Times)
121.5

40

(%)

2,000

1,949.8

98.1
30
78.5
60

20

’05

800

14.2

13.6

30

0

1,600

10

’06

1,538.5

’07

’08

10

(Yen)
20.0

150

6.3

’09

0

5.0

6.4

’05

8

120

6

90

5.5

’06

18.0

’08

’09

4

60

9.0

2

30

30.7

0

0

100.0
90.0

14.0
92.1

87.0
74.4

’07

20

16

114.0 113.6

112.4

6.8

400

0

20.0

125.2

1,620.0

1,200

68.9

14.2

1993.6

Income before Income Taxes(Billions of yen)

1,787.4

90

13.7

Ordinary Profit(Billions of yen)

109.3

14.7

Cash Dividends per Share (right scale)Leasing Assets
Return on Leasing Assets (right scale)(Billions of yen)
120

CASH DIVIDENDS PER SHARE,
ORDINARY PROFIT AND
INCOME BEFORE INCOME TAXES

12

79.3
10.0
61.5

8

4

0

’05

’06

’07

’08

’09

’10

(Forecast)23

Consolidated Balance Sheets
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
As of March 31, 2009 and 2008
				
Millions of yen

AssetsCurrent assets:Cash, time and notice deposits (Note 3)..........................................................................................................
Marketable securities (Note 7)................................................................................................................................
Investments in SPCs holding properties for sale (Note 7).....................................................................
Notes and accounts receivable–trade...............................................................................................................
Loans receivable..............................................................................................................................................................
Allowance for doubtful accounts.........................................................................................................................
Inventories (Note 4).......................................................................................................................................................
Deferred income taxes (Note 18)..........................................................................................................................
Other current assets......................................................................................................................................................
			 Total current assets.................................................................................................................................................

2009

2008

2009

¥ 124,894
3
50,085
11,55921,188(734)
518,885
10,56923,367759,816¥ 116,533
3
38,995
14,30843,018(425)
511,868
12,39447,501
784,195$ 1,271,445
31
509,875
117,673
215,698(7,472)
5,282,348
107,594
237,879
7,735,071

Investments and advances:
Investments in and advances to unconsolidated
	  subsidiaries and affiliates (Note 5).....................................................................................................................
Investments in securities and other (Note 7)................................................................................................
Allowance for doubtful accounts.........................................................................................................................
			 Total investments and advances...................................................................................................................

5,845
211,052(14,583)
202,314

5,854
255,403(16,428)
244,82959,503
2,148,549(148,457)
2,059,595

Property and equipment (Notes 4 and 6):
Land........................................................................................................................................................................................
Buildings and structures.............................................................................................................................................
Machinery and equipment.......................................................................................................................................
Leased assets.....................................................................................................................................................................
Construction in progress...........................................................................................................................................
				Accumulated depreciation.......................................................................................................................................
			 Net property and equipment..........................................................................................................................

1,438,071
464,693
15,844869
61,824
1,981,301(179,893)
1,801,408

1,261,992
460,983
18,904—53,665
1,795,544(172,706)
1,622,838

14,639,835
4,730,662
161,295
8,847
629,380
20,170,019(1,831,345)
18,338,674

Other assets:
Guarantee and lease deposits paid to lessors..............................................................................................
Leasehold rights and other intangible assets...............................................................................................
Deferred income taxes (Note 18)..........................................................................................................................
Other.......................................................................................................................................................................................
			 Total other assets.....................................................................................................................................................
			  Total assets.............................................................................................................................................................

170,090
51,664
17,857
3,263
242,874¥3,006,412

180,03151,625
6,113
4,373
242,142¥2,894,004

1,731,548
525,949
181,788
33,2182,472,503$30,605,843

See accompanying notes.

24

Thousands of
U.S. dollars(Note 1)				Millions of yen

Thousands of
U.S. dollars(Note 1)

Liabilities and Net Assets
Current liabilities:
Short-term debt (Notes 6 and 8)...........................................................................................................................
Long-term debt due within one year (Notes 6 and 8)............................................................................
Notes and accounts payable–trade....................................................................................................................
Accrued income taxes (Note 18)...........................................................................................................................
Accrued bonuses............................................................................................................................................................
Deposits received (Note 19).....................................................................................................................................
Other current liabilities................................................................................................................................................
			 Total current liabilities..........................................................................................................................................

2009

2008

2009

¥ 445,870
160,410
39,691
17,317
2,790
173,179
59,946899,203¥ 284,170
114,990
39,30424,358
3,335
241,659
67,933775,749$ 4,539,041
1,633,004
404,062
176,290
28,403
1,762,995
610,261
9,154,056

Long-term liabilities:
Long-term debt due after one year (Notes 6 and 8)................................................................................
Guarantee and deposits received (Note 19)..................................................................................................
Allowance for employees’ severance and retirement benefits (Note 9)......................................
Other long-term liabilities.........................................................................................................................................
			 Total long-term liabilities....................................................................................................................................

1,241,347
400,480
4,987
5,970
1,652,784

1,265,882
394,5124,639
5,887
1,670,920

12,637,148
4,076,962
50,76960,775
16,825,654

Net assets (Note 20):
Common stock:
			 Authorized – 1,900,000 thousand shares
			 Issued     – 476,086 thousand shares ...................................................................................................
Capital surplus..................................................................................................................................................................
Retained earnings...........................................................................................................................................................
Treasury stock...................................................................................................................................................................
					

122,805
132,750
208,458(3,493)
460,520

122,805
132,759
176,229(2,747)429,046

1,250,178
1,351,420
2,122,142(35,559)
4,688,181

Net unrealized holding gains (losses) on securities..................................................................................
Net deferred losses on hedges..............................................................................................................................
Foreign currency translation adjustments......................................................................................................
				(15,773)(2,318)(5,762)(23,853)

2,870(2,252)(2,241)(1,623)(160,572)(23,598)(58,658)(242,828)

Minority interests............................................................................................................................................................
			 Total net assets..........................................................................................................................................................
			  Total liabilities and net assets.....................................................................................................................

17,758454,425¥3,006,412

19,912447,335¥2,894,004

180,780
4,626,133$30,605,843

Contingent liabilities (Note 25)25

Consolidated Statements of Income
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2009, 2008 and 2007
				
				
		
Millions of yen		
2009

2008

2007

2009

Revenue from operations.................................................................................................................
Costs and expenses:
Cost of revenue from operations..................................................................................................
Selling, general and administrative expenses.......................................................................
				
Operating income..................................................................................................................................
Other income (expenses):
Interest expense, net............................................................................................................................
Dividend income....................................................................................................................................
Gain on sale of property and equipment................................................................................
Loss on sale of property and equipment.................................................................................
Loss on impairment of fixed assets (Note 10).......................................................................
Loss on devaluation of property and equipment (Note 11)........................................
Loss on disposal of property and equipment.......................................................................
Gain on sale of investments in securities.................................................................................
Loss on sale of investments in securities.................................................................................
Loss on devaluation of investments in securities...............................................................
Dividend to partnership investors................................................................................................
Gain on prior periods adjustment (Note 15).........................................................................
Gain on adjustment of accrued rent payable (Note 14).................................................
Gain on adjustment of sub-lease rent paid (Note 13).....................................................
Gain on liquidation of limited partnership (Note 12).......................................................
Loss on devaluation of inventories (Note 16).......................................................................
Loss on devaluation of real estate for sale..............................................................................
Loss on devaluation of common stocks of affiliates.........................................................
Repair expenses for prior periods construction (Note 17)............................................
Provision for allowance for doubtful accounts....................................................................
Other, net.....................................................................................................................................................
				
Income before income taxes and minority interests..................................................
Income taxes (Note 18):
Current...........................................................................................................................................................
Deferred........................................................................................................................................................
		 Total.............................................................................................................................................................

¥695,240¥691,928¥676,834$7,077,675

496,547
52,327548,874
146,366

488,20249,118537,320
154,608

490,491
49,167
539,658
137,176

5,054,942
532,699
5,587,641
1,490,034(29,718)
3,053
10
(657)
(165)
—
(1,035)28(235)(14,188)(3,135)
1,023———(13,770)—(3,545)(1,641)—(3,137)(67,112)
79,254(24,619)
2,494
174
(61)
(4,292)
—
(482)
3
(1)
(5,111)(3,487)
—
2,385
—
—
—
(2,098)———(5,543)(40,638)
113,970(20,049)
1,800
65
(13)
(793)
(62,644)
(215)
227
—
(1,548)(3,916)——
1,440
46,192————(2,828)(2,787)(45,069)
92,107(302,535)
31,080102(6,688)(1,680)—(10,536)285(2,392)(144,437)(31,915)
10,414———(140,181)—(36,089)(16,706)—(31,935)(683,213)
806,82129,362
2,686
32,04843,521
4,094
47,61539,591(1,055)38,536298,91127,344326,255

Minority interests....................................................................................................................................

1,001

3,222

3,271

10,190Net income...................................................................................................................................................

¥ 46,205¥ 63,133¥ 50,300$ 470,376

				
		
Yen		

Amounts per share of common stock:
Net income:– Basic............................................................................................................................................................
– Diluted.......................................................................................................................................................
Cash dividend applicable to the year........................................................................................
See accompanying notes.

26

Thousands of
U.S. dollars(Note 1)

2009

2008

2007

¥97.3986.30
20.00¥133.00
131.8618.00¥105.92—
14.00

U.S. dollars(Note 1)
2009

$0.99
0.88
0.20

Consolidated Statements of Changes in Net Assets
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2009, 2008 and 2007
Thousands

Millions of yen
Shareholders’ equity							NetNumber of					
unrealized
shares of 					TotalholdingcommonCommonCapitalRetained
Treasuryshareholders’ gains (losses)
stock
stock
surplusearnings
stock
equityon securities

Balance at March 31, 2006
476,086
Net income—
Foreign currency
	  translation adjustments—
Net unrealized holding	  losses on securities—
Acquisition of treasury stock—
Gains on sale
	  of treasury stock—
Cash dividends paid:		  Final for prior year (¥5 per share)—	  Interim for current year		  (¥6 per share)—
Bonuses to directors—
Minority interests—
Net deferred losses on hedges—
Balance at March 31, 2007
476,086
Net income—
Foreign currency
	  translation adjustments—
Net unrealized holding	  losses on securities—
Acquisition of treasury stock—
Gains on sale
	  of treasury stock—
Cash dividends paid:	  Final for prior year (¥8 per share)—		  Interim for current year	  	  (¥8 per share)—
Minority interests—
Net deferred losses on hedges—
Balance at March 31, 2008
476,086—
Net income
Foreign currency—
	  translation adjustments
Net unrealized holding—	  losses on securities
Acquisition of treasury stock—
Gains on sale—
	  of treasury stock
Change of scope of consolidation—
Cash dividends paid:	  Final for prior year (¥10 per share) —		  Interim for current year—	  	  (¥10 per share)
Minority interests—
Net deferred losses on hedges—
Balance at March 31, 2009
476,086

Valuation and transaction adjustments
Netdeferred
losses onhedgesForeigncurrencytranslation
adjustments

Totalvaluation and		translation
Minority
adjustmentsinterests

Total
net
assets¥122,805—¥132,748—¥ 75,652
50,300¥(1,235)—¥329,970
50,300¥ 46,900—¥    ——¥(1,214)—¥ 45,686—¥15,233—¥390,889
50,300

—

—

—

—

—

—

—

(304)

(304)

—

(304)

—
—

—
—

—
—

—
(1,022)—(1,022)(10,108)
—

—
—

—
—

(10,108)———(10,108)(1,022)

—

6

—

3

9

—

—

—

—

—

9

—

—

(2,375)—(2,375)

—

—

—

—

—

(2,375)————
122,805—————
132,754—(2,849)(37)——
120,691
63,133————(2,254)—(2,849)(37)——373,996
63,133————36,792
—

—
—
—
(73)
(73)
—

—
—
—
—
(1,518)
—

—
—
—
(73)
35,201
—

—
—
2,617
—
17,850—(2,849)
(37)
2,617
(73)
427,047
63,133

—

—

—

—

—

—

—

(723)

(723)

—

(723)

—
—

—
—

—
—

—
(502)

—
(502)

(33,922)
—

—
—

—
—

(33,922)———(33,922)
(502)

—

5

—

9

14

—

—

—

—

—

14

—

—

(3,798)—(3,798)

—

—

—

—

—

(3,798)———122,805————
132,759—(3,797)——
176,229
46,205———(2,747)—(3,797)—————429,046	  2,870
46,205———(2,179)(2,252)
—

—
—
—
—
—
(2,179)(2,241)	  (1,623)
—
—

—
2,062
—
19,912—(3,797)
2,062(2,179)447,335
46,205

—

—

—

—

—

—

—

(3,521)(3,521)—(3,521)

—
—

—
—

—
—

—
(842)

—
(842)

(18,643)
—

—
—

—
—

(18,643)———(18,643)
(842)

—
—

(9)
—

—
(4,487)96—

87(4,487)

—
—

—
—

—
—

—
—

—
—

87
(4,487)——(4,746)—(4,746)

—

—

—

—

—

(4,746)———¥122,805———¥132,750(4,743)——¥208,458———¥(3,493)(4,743)——¥460,520———¥(15,773)——(66)¥(2,318)———¥(5,762)——(66)¥(23,853) 	—(2,154)—¥17,758(4,743)(2,154)(66)¥454,425		Thousands of U.S. dollars (Note 1)
Shareholders’ equity
Valuation and transaction adjustments							
Net
		
					
unrealizedNet
Foreign
Total
					
Total
holdingdeferredcurrency
valuation and				CommonCapitalRetained
Treasuryshareholders’ gains (losses)
losses ontranslationtranslation
Minority		
stock
surplusearnings
stock
equityon securities
hedgesadjustments
adjustmentsinterests

Balance at March 31, 2008
Net income		
Foreign currency
	  translation adjustments		
Net unrealized holding	  losses on securities		
Acquisition of treasury stock		
Gains on sale of treasury stock		Change of scope of consolidation		
Cash dividends paid:	  Final for prior year ($0.10 per share)		
		  Interim for current year	  	  ($0.10 per share)		
Minority interests
Net deferred losses on hedges
Balance at March 31, 2009

See accompanying notes.

Total
net
assets$1,250,178—$1,351,512—$1,794,045
470,376$(27,965)—$4,367,770
470,376$ 29,217—$(22,926)—$(22,814)—$ (16,523)—$202,708—$4,553,955
470,376

—

—

—

—

—

—

—

(35,844)(35,844)—(35,844)

—
—
—
—

—
—
(92)
—

—
—
—
(45,679)—(8,571)977——(8,571)885(45,679)(189,789)
—
—
—

—
—
—
—

—
—
—
—

(189,789)
—
—
—

—
—
—
—

(189,789)(8,571)885(45,679)——(48,315)—(48,315)

—

—

—

—

—

(48,315)———$1,250,178———$1,351,420(48,285)——$2,122,142———$(35,559)(48,285)——$4,688,181———$(160,572)

—
—
(672)
$(23,598)———$(58,658)—(21,928)—$180,780(48,285)(21,928)(672)$4,626,133

—
—
(672)
$(242,828) 	

27Consolidated Statements of Cash Flows
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2009, 2008 and 2007
				
				
		
Millions of yen		

28

Thousands of
U.S. dollars(Note 1)

2009

2008

2007

2009

Cash flows from operating activities:
		 Income before income taxes and minority interests....................................................
		 Depreciation and amortization..................................................................................................
		 Loss on impairment of fixed assets (Note 10)...................................................................
		 Provision for (Reversal of) allowance for doubtful accounts....................................
		 Increase (Decrease) in employees’ severance and retirement benefits ..........
		 Loss on devaluation of inventories (Note 16)...........................................................................
		 Loss on devaluation of real estate for sale...........................................................................
		 Loss (Gain) on sale of property and equipment, net....................................................
		 Loss on devaluation of property and equipment (Note 11)....................................
		 Loss on disposal of property and equipment...................................................................
		 Loss (Gain) on sale of investments in securities, net.....................................................
		 Loss on devaluation of investments in securities...........................................................
		 Loss on devaluation of common stocks of affiliates.....................................................
		 Interest and dividend income.....................................................................................................
		 Interest expense...................................................................................................................................
		 Increase in investments in SPCs holding properties for sale...................................
		 Decrease in notes and accounts receivable–trade........................................................
		 Increase in inventories.....................................................................................................................
		 Decrease (Increase) in loans receivable................................................................................
		 Increase (Decrease) in notes and accounts payable–trade......................................
		 Increase (Decrease) in advances received...........................................................................
		 Other, net.................................................................................................................................................
			 Total.........................................................................................................................................................

¥ 79,254
17,886165(1,086)342
13,770
—
647
—
1,035
207
14,1883,545(3,735)30,400(11,090)2,519(106,778)(3,108)612(2,510)(25,450)
10,813¥ 113,970
17,1504,292(35,886)
(122)
—
2,098
(114)
—
482
(3)
5,111
—
(3,484)25,609(1,644)
7,325(71,116)
16,564(18,087)(7,250)(10,730)
44,165¥ 92,107
15,677
793
6,265
(173)
—
—
(52)
62,644
215
(227)
1,548
—
(2,307)
20,556(137)
4,600(190,790)
2,298
2,094
1,383
1,868
18,362$ 806,821
182,083
1,680(11,056)
3,482
140,181—
6,587—
10,536
2,107
144,437
36,089(38,023)
309,478(112,898)
25,644(1,087,020)(31,640)
6,230(25,552)(259,087)
110,079

		 Proceeds from interest and dividend income..................................................................
		 Payments for interest........................................................................................................................
		 Payments for income tax and other taxes...........................................................................
Net cash used in operating activities.........................................................................................

3,735(30,638)(36,583)(52,673)

3,485(25,181)(41,917)(19,448)

2,305(20,364)(49,184)(48,881)

38,023(311,901)(372,422)(536,221)

Cash flows from investing activities:
		 Payments for purchases of property and equipment..................................................
		 Proceeds from sale of property and equipment.............................................................
		 Payments for purchases of investments in securities..................................................
		 Proceeds from sale of investments in securities..............................................................
		 Payments for guarantee and lease deposits paid to lessors....................................
		 Proceeds from guarantee and lease deposits paid to lessors.................................
		 Payments for guarantee and lease deposits received.................................................
		 Proceeds from guarantee and lease deposits received..............................................
		 Receipts of deposits from partnership investors.............................................................
		 Restitution of deposits from partnership investors.......................................................
		 Other, net.................................................................................................................................................
Net cash used in investing activities...........................................................................................

(84,620)
20,245(16,586)
17,657(3,231)
12,709(15,060)
22,21247,455(112,336)
1,408(110,147)(144,016)
926(40,449)
7,336(4,298)
16,615(21,260)
30,840110,874(95,902)559(138,775)(152,601)529(27,457)
25,538(19,168)
5,111(16,283)
31,092
79,520(94,517)(19,652)(187,888)(861,448)
206,098(168,849)
179,752(32,892)
129,380(153,314)
226,122483,101(1,143,602)
14,334(1,121,318)

Cash flows from financing activities:
		 Increase (Decrease) in short-term debt.................................................................................
		 Proceeds from issuance of bonds and notes....................................................................
		 Redemption of bonds and notes..............................................................................................
		 Increase in long-term debt...........................................................................................................
		 Increase (Decrease) in assignment of receivables..........................................................
		 Net increase in treasury stocks...................................................................................................
		 Cash dividends paid..........................................................................................................................
		 Other, net.................................................................................................................................................
Net cash provided by financing activities...............................................................................

161,650—(15,000)
35,944
1,138(756)(10,508)964
173,432(21,800)
100,000(66,567)
179,765(34,715)(488)(8,466)(2,999)144,730

56,700100,000(80,874)
130,786
32,073(1,013)(5,882)
18,263250,053

1,645,628—(152,703)
365,917
11,585(7,696)(106,973)
9,813
1,765,571

Effect of exchange rate changes on cash and cash equivalents..............................

(1,150)206

383(11,707)

Net increase (decrease) in cash and cash equivalents..............................................
Cash and cash equivalents at beginning of year...........................................................
Increase in cash and cash equivalents of newly consolidated subsidiaries.....
Decrease in cash and cash equivalents resulting from exclusion ofsubsidiaries from consolidation...............................................................................................
Cash and cash equivalents at end of year (Note 3).......................................................

9,462
116,536479(13,287)
129,823—

13,667116,156—

96,325
1,186,359
4,876(1,580)¥124,897—¥ 116,536—¥129,823(16,084)$ 1,271,476

See accompanying notes.

Notes to Consolidated Financial Statements
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
As of and for the years ended March 31, 2009, 2008 and 2007

1 Basis of Presenting Consolidated financial statements
The accompanying consolidated financial statements of Sumitomo
Realty & Development Co., Ltd. (“the Company”) and its consolidated
subsidiaries have been prepared in accordance with the provisions
set forth in the Financial Instruments and Exchange Law and its
related accounting regulations, and in conformity with accounting
principles generally accepted in Japan (“Japanese GAAP”), which are
different in certain respects as to application and disclosure requirements from International Financial Reporting Standards.
The accounts of the Company’s overseas subsidiaries are basedon their accounting records maintained in conformity with generally
accepted accounting principles prevailing in the respective countriesof domicile. The accompanying consolidated financial statements
have been restructured and translated into English (with certain
expanded disclosure) from the consolidated financial statements of

the Company prepared in accordance with Japanese GAAP and filedwith the appropriate Local Finance Bureau of the Ministry of Financeas required by the Financial Instruments and Exchange Law. Certain
supplementary information included in the statutory Japaneselanguage consolidated financial statements, but not required for fairpresentation, is not presented in the accompanying consolidated
financial statements.
The translation of the Japanese yen amounts into U.S. dollars is
included solely for the convenience of readers outside Japan, using
the prevailing exchange rate at March 31, 2009, which was ¥98.23 to
U.S.$1. The translation should not be construed as representations
that the Japanese yen amounts have been, could have been or couldin the future be converted into U.S. dollars at this or any other rateof exchange.

2 Accounting policies(1) Significant accounting policy
The accompanying consolidated financial statements include theaccounts of the Company and significant companies over which theCompany has power of control through majority voting rights or existence of certain conditions evidencing control by the Company.
In the elimination of investments in subsidiaries, the assets and­liabilities of the subsidiaries, including the portion attributable tominority shareholders, are recorded based on the fair value at thetime the Company acquired control of the respective subsidiaries.
All significant intercompany balances, transactions and profits
have been eliminated in consolidation.
Effective from the year ended March 31, 2008, the Company andits consolidated subsidiaries adopted the new accounting standard,“Implementation Guidance on Disclosures about Certain Special
Purpose Entities” (Accounting Standards Board of Japan GuidanceNo. 15, issued on March 29, 2007).
In accordance with the new accounting standard, the Company
has provided an overview of Special Purpose Entities (“SPEs”) funded
by investments from the Company, including Special Purpose
Companies (“SPCs”), Tokutei Mokuteki Kaisha (“TMKs”) and limited partnerships (“Tokumei Kumiai”). The Company has also provided an overview of SPEs’ transactions, such as the amount of transactions, with
SPEs in Note 24 (Relationships with special purpose entities subject todisclosure).
(2) Accounting Standard for Statement of Changes in Net Assets
Effective from the year ended March 31, 2007, the Company and its
consolidated subsidiaries adopted the new accounting standards,“Accounting Standard for Statement of Changes in Net Assets”(Statement No. 6 issued by the Accounting Standards Board of Japanon December 27, 2005), and “Implementation Guidance for the
Accounting Standard for Statement of Changes in Net Assets”(Financial Accounting Standard Implementation Guidance No. 9
issued by the Accounting Standards Board of Japan on December 27,2005), collectively, “the Additional New Accounting Standards.”
Accordingly, the Company prepared the consolidated statementof changes in net assets for the years ended March 31, 2009, 2008 and2007 in accordance with the Additional New Accounting Standards.
(3) Foreign currency translation
Receivables and payables denominated in foreign currencies aretranslated into Japanese yen at the year-end rates.

Financial statements of consolidated overseas subsidiaries aretranslated into Japanese yen at the year-end rate, except for shareholders’ equity accounts, which are translated at historical rates andincome statement items resulting from the transactions with theCompany, which are translated at the rates used by the Company.
Differences arising from translation are presented as “Foreign currency translation adjustments” in net assets.
(4) Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash on hand,readily-available deposits and short-term, highly liquid investmentswith maturities not exceeding three months at the time of purchaseare considered to be cash and cash equivalents.
(5) Recognition of revenue
Revenues from sales of land and residential houses are recognizedwhen units are delivered and accepted by customers. Revenues fromleasing of office space, shops and apartments are recognized as rent
accrues over the lease term.
(6) Inventories
Effective April 1, 2008, the Company and its consolidated subsidiaries
adopted the new accounting standard, “Accounting Standard for
Measurement of Inventories” (Statement No. 9 issued by the
Accounting Standards Board of Japan on July 5, 2006) and changed
the measurement standard for inventories. The new measurement
standard writes down the book value due to a decline in profitabilityof real property.
As a result of adopting the new accounting standard and recognizing loss on devaluation of real property, gross profit, operating income
and ordinary profit decreased by ¥1,777 million ($18,090 thousand),and income before income taxes and minority interests decreased by¥15,547 million ($158,271 thousand) compared to what would havebeen reported under the previous accounting standard.
(7) Securities
Held-to-maturity securities are stated at amortized cost. Investments
in subsidiaries and affiliates that are not consolidated or accounted forusing the equity method are stated at moving-average cost. Availablefor-sale securities with available fair market values are stated at fairmarket value. Unrealized gains and losses on these securities arereported, net of applicable income taxes, as a separate componentof net assets. Realized gains and losses on the sale of such securities
are computed using moving-average cost.

29

Investments in SPCs holding properties for sale and senior securities are stated at cost determined by the specific identification method and securities with no available fair market value are stated atmoving-average cost.
Investments in partnerships similar to investment limited partnerships, which are regarded as securities under the Financial
Instruments and Exchange Law, are accounted for in a manner similar
to the equity method based on recent financial statements.
If the market value of held-to-maturity securities, investments in
subsidiaries and affiliates, available-for-sale securities and investments
in SPCs holding properties for sale declines significantly, such securities
are stated at fair market value and the difference between fair market
value and the carrying amount is recognized as a loss in the period of
the decline. If the fair market value of investments in unconsolidated
subsidiaries and affiliated companies not accounted for using the equity
method is not readily available, such securities should be written down
to net asset value with a corresponding charge in the income statement in the event net asset value declines significantly. In these cases,
such fair market value or the net asset value will be the carrying
amount of the securities at the beginning of the next year.
(8) Property and equipment
The Company and consolidated domestic subsidiaries depreciatebuildings using the straight-line method, and other property andequipment using the declining-balance method over their estimateduseful lives. Consolidated overseas subsidiaries depreciate property
and equipment using primarily the straight-line method in accordance with the accounting principles in the respective countries.
Leased assets related to finance lease transactions without title
transfer are depreciated using the straight-line method, with theleased periods as their useful lives and no residual value.
Estimated useful lives used in the computation of depreciation
are generally as follows:
Buildings and structures.....................................................
6 to 60 years
Machinery and equipment .............................................
2 to 20 years
Leased assets ........................................................................... Leased periods
In the prior period, the Company changed the depreciation method of property and equipment due to the revision of Corporate Tax
Law. Residual value is no longer used for property and equipment
acquired on or after April 1, 2007. Instead, the whole acquisition costof such property and equipment will be depreciated at the end of theuseful life with 1 yen remaining as a remainder. This accountingchange had no material impact on the consolidated statements ofincome or segment information.
As for property and equipment acquired before April 1, 2007, theirresidual values are depreciated over five years using the straight-line
method after the year in which the depreciable limit is reached.
(9) Software costs
Software costs are amortized using the straight-line method over theestimated useful lives (five years).
(10) Allowance for doubtful accounts
The Company and its consolidated subsidiaries provide for doubtful
accounts at an estimated uncollectable amount based on the evaluation of certain identified doubtful and bankrupt receivables plus anamount calculated using the percentage of actual collection losses incertain reference periods with respect to remaining receivables.
(11) Lease transactions
Effective April 1, 2008, the Company and its consolidated subsidiaries
30

adopted the new accounting standard, “Accounting Standard forLease Transactions” (Statement No. 13 originally issued on June 17,
1993, and revised on March 30, 2007 by the Accounting Standards
Board of Japan) and “Implementation Guidance on AccountingStandard for Lease Transactions” (Financial Accounting Standard
Implementation Guidance No. 16 originally issued on January 18,
1994, and revised on March 30, 2007 by the Accounting Standards
Board of Japan). Accordingly, with regard to finance lease transactions
without title transfer, we changed the accounting method in thesame manner as operating leases to the accounting method in thesame manner as sales transaction, and posted them as leased assets.
Leased assets related to finance lease transactions without title
transfer are depreciated using the straight-line method, with theleased periods as their useful lives and no residual value.
The Company will continue to use accounting procedures that
conform to methods related to normal lease transactions with respect
to finance lease transactions without title transfer with a lease transaction start date prior to the initial year of application of the new law.
The impact of this accounting change is immaterial on assets andnone on profits and losses. In addition, this accounting change has no
impact on segment information.
(12) Income taxes
Income taxes are provided for on the basis of income for financial
statement purposes. The tax effects of temporary differences between
the carrying amounts of assets and liabilities for financial statements
and income tax purposes are recognized as deferred income taxes.
(13) Employees’ severance and retirement benefits
The Company and certain of its consolidated subsidiaries provide two
types of post-employment benefit plans, lump-sum payment plans
and approved retirement pension plans, under which all eligible
employees are entitled to benefits based on their current rate of pay,
length of service and the conditions under which termination occurs.
The liabilities and expenses for severance and retirement benefits
are determined based on the amounts actuarially calculated using
certain assumptions.
The Company and certain of its consolidated subsidiaries provided
an allowance for employees’ severance and retirement benefits at
March 31, 2009, 2008 and 2007 based on the estimated projected
benefit obligation at those dates.
Actuarial gains and losses are recognized in expenses in the succeeding period.
(14) Derivative transactions and hedge accounting
The Company and its consolidated subsidiaries state derivative financial instruments at fair value and recognize changes in the fair value
as gains or losses unless derivative financial instruments are used forhedging purposes and qualify for hedge accounting.
If derivative financial instruments are used as hedges and meetcertain hedging criteria, the Company and its consolidated subsidiaries defer recognition of gains or losses resulting from changes in fairvalue of derivative financial instruments until the related losses orgains on the hedged items are recognized.
However, in cases where forward foreign exchange contracts areused as hedges and meet certain hedging criteria (regarding foreignexchange contracts), the forward foreign exchange contracts andhedged items are accounted for in the following manner:
1. If a forward foreign exchange contract is executed to hedge anexisting foreign currency receivable or payable,(a) the difference, if any, between the Japanese yen amount of thehedged foreign currency receivable or payable translated usingthe spot rate at the inception date of the contract and the bookvalue of the receivable or payable is recognized in the income
statement in the period which includes the inception date; and(b) t he discount or premium on the contract (that is, the difference
between the Japanese yen amount of the contract translatedusing the contracted forward rate and that translated using the
spot rate at the inception date of the contract) is recognizedover the term of the contract.
2. If a forward foreign exchange contract is executed to hedge afuture transaction denominated in a foreign currency, the futuretransaction will be recorded using the contracted forward rate,
and no gains or losses on the forward foreign exchange contract
are recognized.
Also, if interest rate swap contracts are used as a hedge and meetcertain hedging criteria (regarding interest rate swap contracts), thenet amount to be paid or received under the interest rate swap
contracts is added to or deducted from the interest on the assets or
liabilities relative to which the swap contract was executed as a hedge.

(15) Amounts per share of common stock
The computation of net income per share is based on the weightedaverage number of shares of common stock outstanding during
each year.
Diluted net income per share is computed based on the amountof net income available to the shareholders and the weighted-average number of shares of common stock outstanding during each year
after giving effect to the dilutive potential of shares of common stock
to be issued upon the exercise of stock options.
Cash dividends per share represent actual amounts applicable to
the respective year.
(16) Reclassifications and restatement
Certain prior year amounts have been reclassified to conform to the2009 presentation.
These reclassifications had no impact on previously reported
results of operations or retained earnings.

3 Cash and cash equivalents
Cash and cash equivalents at March 31, 2009 and 2008 consisted of the following:		Millions of yen
2009
2008

Cash, time and notice deposits................................................................................................................................................................
Marketable securities......................................................................................................................................................................................
Cash and cash equivalents ........................................................................................................................................................................

¥124,894
3¥124,897¥116,533
3¥116,536

Thousands of
U.S. dollars
2009$1,271,445
31$1,271,476

4	Inventories
Inventories at March 31, 2009 and 2008 were as follows:		Millions of yen
2009
2008

Real estate for sale............................................................................................................................................................................................
Real estate for sale in progress..................................................................................................................................................................
Construction in progress..............................................................................................................................................................................
Other.........................................................................................................................................................................................................................
Total.....................................................................................................................................................................................................................

¥262,872
249,6634,555
1,795¥518,885¥155,978348,757
5,498
1,635¥511,868

Thousands of
U.S. dollars
2009$2,676,087
2,541,617
46,371
18,273$5,282,348

The Company transferred amounts between inventories and property and equipment. Such transfers at March 31, 2009 and 2008 were as follows:		Millions of yen
2009
2008

Thousands of
U.S. dollars
2009

Inventories:
Transfer to property and equipment..............................................................................................................................................
Transferred from property and equipment................................................................................................................................
		 Net decrease............................................................................................................................................................................................

$(1,297,221)
278,215$(1,019,006)¥(127,426)
27,329¥(100,097)¥(55,281)
16,370¥(38,911)

5	Investments in and advances to unconsolidated subsidiaries and affiliates
Investments in and advances to unconsolidated subsidiaries and affiliates at March 31, 2009 and 2008 consisted of the following:		Millions of yen
2009
2008

Investments in common stock, at cost................................................................................................................................................
Advances................................................................................................................................................................................................................
Total.....................................................................................................................................................................................................................

¥2,8852,960¥5,845¥5,853
1¥5,854

Thousands of
U.S. dollars
2009$29,370
30,133$59,50331

6 Pledged assets
Assets pledged as collateral at March 31, 2009 and 2008 were as follows:		Millions of yen
2009
2008

¥14,096
27,727140¥41,963

Buildings and structures...............................................................................................................................................................................
Land...........................................................................................................................................................................................................................
Other.........................................................................................................................................................................................................................
Total ....................................................................................................................................................................................................................

¥14,839
27,727
180¥42,746

Thousands of
U.S. dollars
2009$143,500
282,266
1,425$427,191

Secured liabilities at March 31, 2009 and 2008 were as follows:		Millions of yen
2009
2008

¥31,500—¥31,500

Short-term debt.................................................................................................................................................................................................
Long-term debt..................................................................................................................................................................................................
Total ....................................................................................................................................................................................................................

¥ 1,750
31,500¥33,250

Thousands of
U.S. dollars
2009$320,676—$320,676

7 Securities
For 2009
A. The following tables summarize the acquisition costs, book values and fair market values of securities with available fair market values as ofMarch 31, 2009:(a) Held-to-maturity securities:
		Book value

Securities whose fair market value exceeds book value:
National and local government bonds.........................................................
Securities whose fair market value does not exceed book value:
National and local government bonds.........................................................
Total...........................................................................................................................................

(b) Available-for-sale securities:

Securities whose book value exceeds acquisition cost:
Equity securities............................................................................................................
Others..................................................................................................................................
Subtotal..............................................................................................................................
Securities whose book value does not exceed acquisition cost:
Equity securities............................................................................................................
Others..................................................................................................................................
Subtotal..............................................................................................................................
Total...........................................................................................................................................

Millions of yen
Thousands of U.S. dollars
Fair market			
Fair market
value
DifferenceBook value
value
Difference

¥ 982

¥ 987

¥ 5

$ 9,997$10,048$51

301¥1,283301¥1,288

—
¥ 5

3,064
$13,061

3,064$13,112—$51

Millions of yen
Acquisition			
cost
Book value
Difference

Thousands of U.S. dollars
Acquisition		
costBook value
Difference¥ 14,023
113
14,136¥ 19,597
114
19,711¥   5,574
1
5,575$ 142,757
1,150
143,907$ 199,501 $   56,744
1,161
11
200,662
56,755

119,997
1,216
121,213¥135,349

87,922
1,116
89,038¥108,749(32,075)(100)(32,175)¥ (26,600)

1,221,592
12,3791,233,971$1,377,878

895,062 (326,530)
11,361(1,018)906,423 (327,548)$1,107,085 $(270,793)

B. T he following table summarizes the book values of securities with no available fair market values as of March 31, 2009:
Available-for-sale securities:
		Millions of yen

Unlisted equity securities.......................................................................................................................................................................................................
Senior securities...........................................................................................................................................................................................................................
Investments in partnerships similar to investment limited partnerships.................................................................................................
Total......................................................................................................................................................................................................................................................

Book value
Thousands of
U.S. dollars¥    6,061
87,391
33,410¥126,862$   61,702
889,657
340,120$1,291,479

Senior securities included investments in SPCs holding properties for sale amounting to ¥49,785 million ($506,821 thousand).
C. Available-for-sale securities with maturities and held-to-maturity securities at March 31, 2009 mature as follows:
1 year or less

Bonds..........................................................................................................................................................................................
Other...........................................................................................................................................................................................
Total..............................................................................................................................................................................................
32

¥277
—
¥277

Millions of yen
1 to 5 years
5 to 10 years¥1,006—¥1,006

¥ 700
—
¥700

Over 10 years

¥—
—
¥—

1 year or less

Bonds..........................................................................................................................................................................................
Other...........................................................................................................................................................................................
Total..............................................................................................................................................................................................

D. T otal sales of available-for-sale securities sold in the year ended
March 31, 2009 amounted to ¥87 million ($886 thousand) and therelated gains and losses amounted to ¥28 million ($285 thousand)and ¥1 million ($10 thousand), respectively.
E. Investments in SPCs holding properties for sale are equity investments such as preferred subscription certificates and limited partnerships (“Tokumei Kumiai”) investments in Special Purpose
Companies (SPCs) and Tokumei Kumiai which own and develop realestate. The Company or its ­subsidiaries will sell real estate in SPCs

$2,820—$2,820Thousands of U.S. dollars
1 to 5 years
5 to 10 years$10,241—$10,241$ 7,126—$7,126

Over 10 years

$—
—
$—

and Tokumei Kumiai after the completion of construction. Tokumei
Kumiai are a vehicle for investment allowed under the JapaneseCorporate Law.
 As of March 31, 2009, investments in SPCs holding properties forsale consisted of preferred subscription certificates issued by SPCs.
F. The Company lent the equity securities temporarily to a financial
institute under a securities lending agreement. Lent securities,
included in investments in securities and other, were ¥98,911 million ($1,006,933 thousand) as of March 31, 2009.

For 2008
A. T he following tables summarize the acquisition costs, book values and fair market values of securities with available fair market values as ofMarch 31, 2008:(a) Held-to-maturity securities:
Securities whose fair market value exceeds book value:
National and local government bonds.......................................................................................................................................
Securities whose fair market value does not exceed book value:
National and local government bonds.......................................................................................................................................
Total..........................................................................................................................................................................................................................

Book value

Millions of yen
Fair market value

Difference

¥ 785

¥ 789

¥4

459
¥1,244458¥1,247(1)¥3

Millions of yen
Book value

Difference¥ 50,076
607
50,683¥ 74,428
610
75,038¥ 24,352
3
24,35590,260862
91,122¥141,805

70,751
797
71,548¥146,586(19,509)(65)(19,574)¥ 4,781(b) Available-for-sale securities:
Acquisition cost

Securities whose book value exceeds acquisition cost:
Equity securities...................................................................................................................................................................................................
Others.........................................................................................................................................................................................................................
Subtotal.....................................................................................................................................................................................................................
Securities whose book value does not exceed acquisition cost:
Equity securities...................................................................................................................................................................................................
Others.........................................................................................................................................................................................................................
Subtotal.....................................................................................................................................................................................................................
Total...................................................................................................................................................................................................................................

B. The following table summarizes the book values of securities with no available fair market values as of March 31, 2008:
Available-for-sale securities:
Unlisted equity securities..........................................................................................................................................................................................................................................................
Senior securities..............................................................................................................................................................................................................................................................................
Investments in partnerships similar to investment limited partnerships....................................................................................................................................................
Total.........................................................................................................................................................................................................................................................................................................

Book value
Millions of yen¥   5,904
85,561
28,823¥120,288

Senior securities included investments in SPCs holding properties for sale amounting to ¥38,795 million.
C. Available-for-sale securities with maturities and held-to-maturity securities at March 31, 2008 mature as follows:
1 year or less

Bonds..........................................................................................................................................................................................
Other...........................................................................................................................................................................................
Total..............................................................................................................................................................................................

¥307
—
¥307

Millions of yen
1 to 5 years
5 to 10 years

¥937
—
¥937

¥—
—
¥—

Over 10 years

¥—
—
¥—

33

D. Total sales of available-for-sale securities sold in the year ended
March 31, 2008 amounted to ¥6 million and the related gains andlosses amounted to ¥3 million and ¥1 million, respectively.
E. Investments in SPCs holding properties for sale are equity investments such as preferred subscription certificates and limited­partnerships (“Tokumei Kumiai”) investments in Special Purpose
Companies (SPCs) and Tokumei Kumiai which own and develop realestate. The Company or its subsidiaries will sell real estate in SPCs
and Tokumei Kumiai after the completion of construction. Tokumei
Kumiai are a vehicle for investment allowed under the JapaneseCorporate Law.

   As of March 31, 2008, investments in SPCs holding properties forsale consisted of preferred subscription certificates issued by SPCs.
F. The Company lent the equity securities temporarily to a financial
institute under a securities lending agreement. Lent securities,
included in investments in securities and other, were ¥123,495 million as of March 31, 2008.
G. The Company transferred investments in SPCs holding properties
for sale amounting to ¥4,933 million to investments in securities
and other in the year ended March 31, 2008.

8 Short-term debt and long-term debt
Short-term debt at March 31, 2009 and 2008 consisted of the following:		Millions of yen
		
Average interest		
2009
rate (%)
2008

Loans, principally from banks.........................................................................
Commercial paper.................................................................................................
Total..........................................................................................................................

¥270,970
1.15
174,900
1.95¥445,870		

Thousands of
U.S. dollars
Average interest
rate (%)¥195,670
1.21
88,5000.81¥284,170		

2009$2,758,526
1,780,515$4,539,041

The interest rates represent weighted-average rates in effect at March 31, 2009 and 2008, regardless of borrowing currencies, though therange of the interest rate varies by borrowing currency.
Long-term debt at March 31, 2009 and 2008 consisted of the following:		Millions of yen
2009
2008

1.68% domestic straight bonds, due 2008.................................................................................................................................
1.92% domestic straight bonds, due 2008.................................................................................................................................
1.31% domestic straight bonds, due 2009.................................................................................................................................
1.52% domestic straight bonds, due 2010.................................................................................................................................
1.30% domestic straight bonds, due 2009.................................................................................................................................
1.29% domestic straight bonds, due 2012.................................................................................................................................
1.28% domestic straight bonds, due 2012.................................................................................................................................
0.75% domestic straight bonds, due 2010.................................................................................................................................
1.18% domestic straight bonds, due 2010.................................................................................................................................
1.85% domestic straight bonds, due 2011.................................................................................................................................
1.86% domestic straight bonds, due 2011.................................................................................................................................
1.84% domestic straight bonds, due 2011.................................................................................................................................
1.87% domestic straight bonds, due 2012.................................................................................................................................
1.58% domestic straight bonds, due 2011.................................................................................................................................
1.89% domestic straight bonds, due 2013.................................................................................................................................
1.70% domestic straight bonds, due 2013.................................................................................................................................
1.80% domestic straight bonds, due 2012.................................................................................................................................
1.76% domestic straight bonds, due 2012.................................................................................................................................
1.68% domestic straight bonds, due 2013.................................................................................................................................
1.63% domestic straight bonds, due 2013.................................................................................................................................
Loans, principally from banks and insurance companies,
interest principally at rates of 0.69% to 2.66% in 2009, and 0.80% to 2.40% in 2008:
Secured........................................................................................................................................................................................................
Unsecured*...............................................................................................................................................................................................
Subtotal............................................................................................................................................................................................................
Amount due within one year.............................................................................................................................................................
Total.....................................................................................................................................................................................................................

Thousands of
U.S. dollars
2009¥       —
—20,00020,00020,00020,00030,00030,00030,00020,00020,00020,00020,00010,00010,00020,00020,00020,00020,00020,000¥   10,000
5,000
20,00020,00020,00020,00030,00030,00030,00020,00020,00020,00020,00010,00010,00020,00020,00020,00020,00020,000$        ——203,604
203,604
203,604
203,604
305,405
305,405
305,405
203,604
203,604
203,604
203,604
101,802
101,802203,604
203,604
203,604
203,604
203,604

31,5001,000,257
1,401,757(160,410)¥1,241,347

33,250962,622
1,380,872(114,990)¥1,265,882

320,676
10,182,805
14,270,152(1,633,004)$12,637,148* Unsecured long-term debt as of March 31, 2009 includes a perpetual subordinated loan of ¥120,000 million ($1,221,623 thousand).

The aggregate annual maturities of long-term debt at March 31, 2009 are as follows:34		Year ending March 31
Millions of yen

Thousands of
U.S. dollars

2010.....................................................................................................................................................................................................................................................
2011.....................................................................................................................................................................................................................................................
2012.....................................................................................................................................................................................................................................................
2013.....................................................................................................................................................................................................................................................
2014.....................................................................................................................................................................................................................................................
2015 and thereafter...................................................................................................................................................................................................................
Total......................................................................................................................................................................................................................................................

$ 1,633,004
2,679,416
3,691,846
2,550,127
1,799,684
1,916,075$14,270,152¥ 160,410
263,199362,650
250,499
176,783
188,216¥1,401,757

It is customary in Japan that security must be given if requested bylending banks under certain circumstances, and generally banks havethe right to offset cash deposited with them against any debt or

obligations payable to the bank that becomes due in the case ofdefault and certain other specified events. The Company has neverreceived such a request.

9 Employees’ severance and retirement benefits
As explained in Note 2 (13), the liabilities and expenses for severance
and retirement benefits are determined based on the amounts
obtained by actuarial calculations.

The allowance for severance and retirement benefits included in
the liabilities section of the consolidated balance sheets as of March
31, 2009 and 2008 consisted of the following:		Millions of yen
2009
2008

Projected benefit obligation......................................................................................................................................................................
Fair value of plan assets.................................................................................................................................................................................
Unrecognized actuarial differences.......................................................................................................................................................
Allowance for severance and retirement benefits........................................................................................................................

¥ 7,724(2,563)(174)¥ 4,987¥ 7,894(2,956)(299)­­¥ 4,639

Thousands of
U.S. dollars
2009$ 78,632(26,092)(1,771)$ 50,769

Included in the consolidated statements of income for the years ended March 31, 2009 and 2008 are severance and retirement ­benefit
expenses comprised of the following:		Millions of yen
2009
2008

Service costs – benefits earned during the year............................................................................................................................
Interest cost on projected benefit obligation.................................................................................................................................
Expected return on plan assets................................................................................................................................................................
Amortization of actuarial differences....................................................................................................................................................
Other.........................................................................................................................................................................................................................
Severance and retirement benefit expenses...................................................................................................................................

Other of ¥181 million ($1,842 thousand) for the year ended March 31,
2009 is the amount paid for the defined contribution plan that one of
the Company’s consolidated subsidiaries adopted in September 2008.
The discount rate and the rate of expected return on plan assets
for the years ended March 31, 2009 and 2008 used by the Company is
2.0% (the discount rate used by one consolidated subsidiary is 1.5%

¥ 537
135
(57)
299
181
¥1,095

¥533
137
(62)
(29)
—
¥579

Thousands of
U.S. dollars
2009$ 5,467
1,374
(580)
3,044
1,842
$11,147

for the year ended March 31, 2008). The estimated amount of all
retirement benefits to be paid at future retirement dates is allocatedequally to each service year using the estimated number of total service years. Actuarial gains and losses are recognized in the income
statement in the next year.

10 Loss on impairment of fixed assets
The Company and its consolidated domestic subsidiaries recognizedimpairment losses on the following assets for the years ended March
31, 2009, 2008 and 2007, respectively.
			
Use
Location

For 2009
Idle assets
Land, buildings and   structures for leased   condominiums

Fujisawa-shi, Kanagawa

1

Setagaya-ku, Tokyo, etc.

5

			
Use
Location

For 2008
Land for leased buildings Taito-ku, Tokyo
Land, buildings and   structures for leased   condominiums
Minato-ku, Tokyo, etc.
			Use
Location

For 2007
Land for development

Number ofproperties

Yokohama-shi, Kanagawa

The Company and its consolidated domestic subsidiaries recognized losses on the impairment of certain properties, which are generally assessed individually for impairment. Company houses are treatedas common assets.
As a result of declines in property values and flagging rental rates,
the carrying values of the land holdings summarized above have been
reduced by ¥165 million ($1,680 thousand), ¥4,292 million and ¥793
million for the years ended March 31, 2009, 2008 and 2007, respectively, to their recoverable amounts. These write-downs were recognized
as impairment losses in other expenses.

Number ofproperties

1
5
Number ofproperties

1

35

Details of loss on impairment of fixed assets were as follows:						Millions of yen		
2009
2008
2007

Land....................................................................................................................................................................................
Buildings, structures and others ......................................................................................................................
Total..............................................................................................................................................................................

¥122
43
¥165

¥3,990302¥4,292

¥793
—
¥793

Thousands of
U.S. dollars
2009$1,242438$1,680

The recoverable values of these assets were calculated using the net disposal value method. The net disposal value method for land forleased buildings is based on the capitalization value, and that for the others is based mainly on the assessment value for property tax purposes.

11 Loss on devaluation of property and equipment
The Company recognized loss on devaluation of property and equipment of ¥62,644 million for the year ended March 31, 2007. The property
and equipment were sold to its consolidated subsidiaries, and such losses incurred in these transactions were not eliminated in consolidation
but were recorded as loss on devaluation of property and equipment.
Details of property and equipment were as follows:						Millions of yen		
2009
2008
2007

Land ..................................................................................................................................................................................
Buildings, structures and others ......................................................................................................................
Total..............................................................................................................................................................................

¥—
—
¥—

¥—
—
¥—

¥62,644—¥62,644

Thousands of
U.S. dollars
2009

$—
—
$—

12 Gain on liquidation of Limited partnership
Gain on liquidation of limited partnership for the year ended March
31, 2007 is from the sale of the ownership as a beneficiary right in
the Sumitomo Mitsui Banking Corporation Otemachi Headquarters
Building in December 2006 along with the liquidation of the limited
partnership (“Tokumei Kumiai”).

The Tokumei Kumiai that had been involved in the ownership of
this property was liquidated as a result of the sale, and gain on liqui­
dation of limited partnership of ¥46,192 million was incurred.

13 Gain on adjustment of sub-lease rent paid
Gain on adjustment of sub-lease rent paid of ¥1,440 million for theyear ended March 31, 2007 is from the reversal of the difference
between the Company’s accrued amount payable and the amountof payment as a result of the settlement of a lawsuit against the lessorof an office building that the Company is renting in a lump.

14 Gain on adjustment of accrued rent payable
Gain on adjustment of accrued rent payable of ¥2,385 million for theyear ended March 31, 2008 is comprised of two ­factors: (1) ¥397 million of gain on adjustment of accrued rent payable of leased land forthe holding property of a ­consolidated subsidiary in the United States

because the subsidiary purchased the land from the lessor, and as aresult, rent payment became unnecessary for the subsidiary, and (2)¥1,988 million of gain on adjustment of deducted contract rent for abuilding that the Company is renting due to agreement with the lessor.

15 Gain on prior periods adjustment
Most of gain on prior periods adjustment of ¥1,023 million ($10,414 thousand) for the year ended March 31, 2009 is the amount transferred fromthe expenses in the last fiscal year to fixed assets based on the result of the investigation for tax.

16 Loss on devaluation of inventories
Loss on devaluation of inventories of ¥13,770 million ($140,181 thousand) for the year ended March 31, 2009 is due to a decline in profitability atthe beginning of the March 2009 fiscal year.
Loss on devaluation of inventories for the year ended March 31, 2008 is due to a significant decline in their market value.

17 Repair expenses for prior periods construction
Repair expenses for prior periods construction is the repair expenses incurred for custom homes which had been delivered in past fiscal years.
36

18 Income taxes
The normal effective statutory income tax rate in Japan arising out of
the aggregation of corporate, enterprise and inhabitant taxes was approximately 40.69% for the years ended March 31, 2009, 2008 and 2007.

The differences between the statutory tax rate and the Company’s
effective tax rate for the years ended March 31, 2009, 2008 and 2007
were insignificant and not presented.

Details of deferred tax assets and liabilities at March 31, 2009 and 2008 were as follows:		Millions of yen
2009
2008

Thousands of
U.S. dollars
2009

Deferred tax assets:
Net unrealized holding losses on securities...............................................................................................................................
Net operating loss carryforwards......................................................................................................................................................
Loss on impairment of fixed assets..................................................................................................................................................
Allowance for employees' severance and retirement benefits......................................................................................
Loss on devaluation of real estate for sale...................................................................................................................................
Net deferred losses on hedges...........................................................................................................................................................
Accrued enterprise tax and business office tax........................................................................................................................
Loss on devaluation of common stocks of subsidiaries and affiliates........................................................................
Unrealized intercompany profits .....................................................................................................................................................
Other...................................................................................................................................................................................................................
Subtotal of deferred tax assets............................................................................................................................................................
Valuation allowance..................................................................................................................................................................................
Total deferred tax assets..........................................................................................................................................................................

¥10,909
6,106
5,486
2,021
1,711
1,595
1,593
1,445
1,347
10,78042,993(8,951)
34,042¥    —
8,948
7,517
1,882
2,394
1,649
2,172
1,445
1,169
9,653
36,829(11,288)
25,541$111,056
62,16055,84920,574
17,41816,237
16,217
14,71013,713
109,743437,677(91,123)
346,554

Deferred tax liabilities:
Retained earnings appropriated for tax allowable reserves.............................................................................................
Net unrealized holding gains on securities.................................................................................................................................
Net deferred gains on hedges............................................................................................................................................................
Other...................................................................................................................................................................................................................
Total deferred tax liabilities....................................................................................................................................................................
Net deferred tax assets.............................................................................................................................................................................

(4,959)——(657)(5,616)¥28,426(4,959)(1,957)(118)—(7,034)¥ 18,507(50,484)——(6,688)(57,172)$289,382

19 Guarantee and other deposits received
Guarantee and other deposits received at March 31, 2009 and 2008 were as follows:		Millions of yen
		
Average interest 		2009
rate (%)
2008

Short-term deposits and long-term deposits
due within one year:
Non-interest-bearing		
Interest-bearing					
Guarantee and lease deposits from tenants:
Non-interest-bearing		
Interest-bearing		
Long-term deposits:
Non-interest-bearing		
Interest-bearing					
Total		

Thousands of
U.S. dollars
Average interest
rate (%)

2009¥154,179—
19,0000.78
173,179		

¥203,659—
38,0000.95
241,659		

$1,569,571
193,424
1,762,995

179,228—

172,077———

1,824,575—

156,435—
66,0001.08
394,512		
¥636,171

1,580,495
671,892
4,076,962$5,839,957——

155,252—
66,0000.86
400,480		
¥573,659		

37

The aggregate annual maturities of interest-bearing guarantee and other deposits received at March 31, 2009 are as follows:		Year ending March 31
Millions of yen

2010....................................................................................................................................................................................................................................................
2011....................................................................................................................................................................................................................................................
2012....................................................................................................................................................................................................................................................
2013....................................................................................................................................................................................................................................................
2014....................................................................................................................................................................................................................................................
2015 and thereafter..................................................................................................................................................................................................................
Total..............................................................................................................................................................................................................................................

¥19,000—
66,000———¥85,000

Thousands of
U.S. dollars$193,424—
671,892———$865,316

20 Net Assets
The Japanese Corporate Law (“the Law”) became effective on May 1,
2006, replacing the Japanese Commercial Code (“the Code”). The Law
is generally applicable to events and transactions occurring after April
30, 2006 and for years ending after that date.
Under the Law and its regulations, the entire amount paid for new
shares is required to be designated as common stock. However, acompany may, by a resolution of the Board of Directors, designate
an amount not exceeding one-half of the price of the new shares asadditional paid-in capital, which is included in capital surplus.
Under the Law, in cases where a dividend distribution of surplus ismade, the smaller of an amount equal to 10% of the dividend or theexcess, if any, of 25% of common stock over the total of additional
paid-in capital and legal earnings reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve
is included in retained earnings in the accompanying consolidatedbalance sheets.
Under the Code, companies were required to set aside an amountequal to at least 10% of the aggregate amount of cash dividends andother cash appropriations as legal earnings reserve until the total of

legal earnings reserve and additional paid-in capital equaled 25% ofcommon stock.
Under the Code, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit by a resolution of theshareholders’ meeting or could be capitalized by a resolution of theBoard of Directors. Under the Law, both of these appropriations generally require a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be
distributed as dividends. Under the Code, however, on condition thatthe total amount of legal earnings reserve and additional paid-in capital remained equal to or exceeded 25% of common stock, they wereavailable for distribution by resolution of the shareholders’ meeting.
Under the Law, all additional paid-in capital and all legal earnings
reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as­dividends is calculated based on the non-consolidated financial­statements of the Company in accordance with the Law and its­regulations.

21 Information for certain lease transactions
Finance leases that do not transfer ownership to lessees are not capitalized and accounted for in the same manner as operating leases. Certain
information for such non-capitalized finance leases is as follows.
As Lessee
A summary of the pro-forma amounts (inclusive of interest) of acquisition cost, accumulated depreciation and net book value at March 31, 2009
and 2008 was as follows:		Millions of yen
2009
2008

Thousands of
U.S. dollars
2009

Acquisition cost:
Buildings and structures.........................................................................................................................................................................
Other...................................................................................................................................................................................................................
Accumulated depreciation..........................................................................................................................................................................
Net book value....................................................................................................................................................................................................

$ 53,629
19,709(50,534)$ 22,804

Pro-forma depreciation equivalents of ¥1,250 million ($12,725
thousand) and ¥1,235 million for the years ended March 31, 2009 and2008, respectively, were computed using the straight-line method
over the lease terms assuming no residual value or residual indemnity.

38¥ 5,268
1,936(4,964)¥ 2,240¥ 6,036
1,060(4,137)¥ 2,959

Lease expenses under finance leases, inclusive of interest, for theyears ended March 31, 2009 and 2008 amounted to ¥1,250 million($12,725 thousand) and ¥1,235 million, respectively.

Future lease payments and receipts under such finance leases and non-cancelable operating leases at March 31, 2009 and 2008 were as follows:		Millions of yen
2009
2008

Thousands of
U.S. dollars
2009

Finance leases
Future lease payments:
		 Due within one year............................................................................................................................................................................
		 Due after one year................................................................................................................................................................................
			 Total.........................................................................................................................................................................................................

¥ 1,043
1,197¥ 2,240¥ 1,150
1,809¥ 2,959$ 10,618
12,186$ 22,804

Future sub-lease payments:
		 Due within one year............................................................................................................................................................................
		 Due after one year................................................................................................................................................................................
			 Total.........................................................................................................................................................................................................

¥    ——¥    —¥     2857¥     85$      ——
$      —

Future sub-lease receipts:
		 Due within one year............................................................................................................................................................................
		 Due after one year................................................................................................................................................................................
			 Total.........................................................................................................................................................................................................

¥    ——¥    —¥     2857¥     85$      ——
$      —

Operating leases
Future lease payments:
		 Due within one year............................................................................................................................................................................
		 Due after one year................................................................................................................................................................................
			 Total.........................................................................................................................................................................................................

¥ 6,245
14,360¥20,605¥13,093
41,998¥55,091$ 63,575
146,188$209,763

Future lease receipts:
		 Due within one year............................................................................................................................................................................
		 Due after one year................................................................................................................................................................................
			 Total.........................................................................................................................................................................................................

¥    43124¥ 167¥     54172¥    226$     438
1,262$   1,700

22 Derivative transactions
The Company and its subsidiaries utilize derivative financial instruments only for the purpose of hedging the currency risk associatedwith foreign currency denominated transactions or hedging the interest rate risk associated with the Companies’ loans payable.
Foreign exchange forward contracts and cross currency swap contracts are subject to risks of foreign exchange rate changes. Interest
rate swap contracts are subject to risks of interest rate changes. The
derivative financial instruments are executed with creditworthy financial institutions, and the Company’s management believes there is little risk of default by counterparties.
The derivative transactions are executed by the Company’s
Finance Department in accordance with the decisions of a ­committee
whose chairman is the director of the Finance Department. The
Finance Department prepares reports on derivative transactions thatare provided to the director of the Finance Department periodically.
The following summarizes hedging derivative financial instruments used by the Companies and items hedged:

The Companies evaluate hedge effectiveness by comparing the
cumulative changes in cash flows from or the changes in fair value ofhedged items and the corresponding changes in the hedging derivative instruments.
The evaluation of hedge effectiveness of interest rate swap contracts for the years ended March 31, 2009 and 2008 was not required
as special hedge accounting has been applied to derivative transactions of interest rate swap contracts. Also, the evaluation of hedge
effectiveness of foreign exchange forward contracts for the years ended
March 31, 2009 and 2008 was not required because the significant
terms of the hedging instruments and those of the hedged items
were the same, and the risk of changes in foreign exchange rates
was effectively hedged.
The contract amounts and unrealized gains or losses of outstanding derivative transactions at March 31, 2009 and 2008 were not disclosed because all derivative transactions were used as hedges andhedge accounting was applied.

Hedging instruments:
Hedged items:
Foreign exchange forward
Foreign currency monetarycontracts and cross currency 	  liabilities and foreignswap contracts	  transactions
Interest rate swap contracts

Bank loans, bonds and deposits

39

23 Segment information
The Company and its consolidated subsidiaries mainly operate their business in five segments: leasing of buildings, apartments and other properties; sale of condominiums; construction of housing and buildings; brokerage business; and other business.
Information by industry segment for the years ended March 31, 2009, 2008 and 2007 is summarized as follows:
Millions of yen							Leasing
Sales
Construction Brokerage
Other		For 2009
businessbusinessbusinessbusinessbusiness
Total

Elimination
and/orcorporate

Consolidated

I Net sales and operating income:Net sales
		 Customers.........................................
		 Intersegment..................................
			 Total.................................................
Costs and expenses.........................
		 Operating income.......................

¥ 296,299
2,060
298,359
193,015¥ 105,344¥191,224—
191,224
160,485¥ 30,739¥156,954
3,180
160,134
147,164¥ 12,970¥42,755350
43,10534,355¥ 8,750¥ 8,008
6,073
14,081
12,801¥ 1,280¥ 695,240
11,663706,903547,820¥ 159,083¥      —
(11,663)(11,663)
1,054¥ (12,717)¥ 695,240—
695,240
548,874¥ 146,366

II Identifiable assets, depreciation
expense, loss on impairment of fixed
assets and capital expenditures:
Identifiable assets..............................
¥1,993,609
Depreciation expense....................
16,180Loss on impairment
	  of fixed assets....................................
165
Capital expenditures.......................
76,786¥686,090
540¥ 11,883302¥14,675279¥52,687107¥2,758,944
17,408¥247,468
478¥3,006,412
17,886

—
6,687

—
928

—
195

—
29

165
84,625—212

165
84,837

Millions of yen							Leasing
Sales
Construction Brokerage
Other		For 2008
businessbusinessbusinessbusinessbusiness
Total

Elimination
and/orcorporate

Consolidated

I Net sales and operating income:Net sales
		 Customers.........................................
		 Intersegment..................................
			 Total.................................................
Costs and expenses.........................
		 Operating income.......................

¥ 277,530
2,038
279,568
186,154¥    93,414¥193,575—
193,575
150,848¥ 42,727¥154,996
1,610
156,606
146,446¥ 10,160¥57,806
736
58,542
38,539¥20,003¥ 8,021
3,899
11,92010,991¥    929¥ 691,928
8,283
700,211532,978¥ 167,233¥      —
(8,283)(8,283)4,342¥ (12,625)¥ 691,928—
691,928
537,320¥ 154,608¥1,949,817
15,861¥568,668
110¥ 18,787
171¥14,944269¥50,81096¥2,603,026
16,507¥290,978643¥2,894,004
17,150

4,292
144,244

—
199

—
307

—
327

—
160

4,292
145,237

—
260

4,292
145,497

Millions of yen							Leasing
Sales
Construction Brokerage
Other		For 2007
businessbusinessbusinessbusinessbusiness
Total

Elimination
and/orcorporate

Consolidated

I Net sales and operating income:Net sales
		 Customers.........................................
		 Intersegment..................................
			 Total.................................................
Costs and expenses.........................
		 Operating income (loss)..........

II Identifiable assets, depreciation
expense, loss on impairment of fixed
assets and capital expenditures:
Identifiable assets..............................
Depreciation expense....................
Loss on impairment
	  of fixed assets....................................
Capital expenditures.......................

II Identifiable assets, depreciation
expense, loss on impairment of fixed
assets and capital expenditures:
Identifiable assets..............................
Depreciation expense....................
Loss on impairment
	  of fixed assets....................................
Capital expenditures.......................

40¥ 260,727
1,893
262,620
179,125¥   83,495¥211,035—
211,035
174,499¥ 36,536¥141,244
1,320
142,564
133,748¥   8,816¥56,119413
56,53235,594¥20,938¥ 7,709
2,662
10,371
12,855¥ (2,484)¥ 676,834
6,288
683,122535,821¥ 147,301¥     —
(6,288)(6,288)3,837¥ (10,125)¥ 676,834—
676,834
539,658¥ 137,176¥1,787,363
14,570¥554,520
103¥ 19,939
143¥17,825305¥47,39764¥2,427,044
15,185¥320,856
492¥2,747,900
15,677793
151,557

—
129

—
254

—
347

—
275

793
152,562—244

793
152,806

Thousands of U.S. dollars							Leasing
Sales
Construction
Brokerage
Other		For 2009
businessbusinessbusinessbusinessbusiness
Total

Elimination
and/orcorporate

I Net sales and operating income:Net sales
		 Customers.........................................
		 Intersegment..................................
			 Total.................................................
Costs and expenses.........................
Operating income............................

Consolidated$ 3,016,380
20,971
3,037,351
1,964,929$ 1,072,422$1,946,697—
1,946,697
1,633,768$ 312,929$1,597,821
32,373
1,630,194
1,498,157$ 132,037$435,254
3,563
438,817
349,740$ 89,077$ 81,523
61,825
143,348130,317$ 13,031$ 7,077,675
118,732
7,196,407
5,576,911$ 1,619,496$       — $ 7,077,675(118,732)—(118,732)
7,077,675
10,7305,587,641$ (129,462) $ 1,490,034

II Identifiable assets, depreciation
expense, loss on impairment of fixed
assets and capital expenditures:
Identifiable assets.............................. $20,295,317
Depreciation expense....................
164,715
Loss on impairment
	  of fixed assets....................................
1,680
Capital expenditures.......................
781,696$6,984,526
5,497$ 120,971
3,074$149,394
2,840$536,364
1,091$28,086,572
177,217$2,519,271
4,866$30,605,843
182,083—
68,075

—
9,447

—
1,985

—
296

1,680
861,499

—
2,158

1,680
863,657

Distributions from SPCs and partnerships that operate real estate leasing business are included in net sales of the “Leasing business.”
The Company classified expenses and assets of the general administrative division in certain consolidated subsidiaries to unallocatable operating expenses and corporate assets in the seg­ment information for the years ended March 31, 2009, 2008 and 2007.
Under a new management policy, the Company compares the contribution levels of the business operations between each segment more
promptly, clearly and efficiently.

24 Relationships with special purpose entities subject to disclosure(1) Overview of Special Purpose Entities (“SPEs”) subject todisclosure and overview of SPEs’ transactions
As part of its real estate operations, the Company invests in SPEs­(principally Tokutei Mokuteki Kaisha (“TMKs”) under the Asset
Securitization Law).
The SPEs, which conduct real estate development and leasing projects, are funded by investments from the Company and by borrowings
from financial institutions (non-recourse loans and debentures). At theconclusion of these projects, the Company plans to appropriately
recover its investments, and as of March 31, 2009, the Company
judged that there is no risk of future losses. Moreover, in the event thatlosses do arise in the future, the Company’s exposure will be limited tothe amount of its investment.
The Company does not have any investments with voting rights inany of the SPEs, and the Company has not dispatched any directors or
employees to any of the SPEs.

At March 31, 2009, the Company had outstanding investments in 32 SPEs. The assets, liabilities, and net assets (simple sum) at the most recent
settlement date are shown below.
		Millions of yen
Assets2009
2008

Real property ......................................................................................................................................................................................................
Other.........................................................................................................................................................................................................................
Total ..........................................................................................................................................................................................................................

¥691,467
116,445¥807,912¥728,366
42,991¥771,357		Millions of yen
Liabilities and net assets
2009
2008

Borrowings *1.......................................................................................................................................................................................................
Preferred capital, etc. *2..................................................................................................................................................................................
Other.........................................................................................................................................................................................................................
Total ..........................................................................................................................................................................................................................

¥667,635
101,137
39,140¥807,912¥640,437
96,717
34,203¥771,357

Thousands of
U.S. dollars
2009$7,039,265
1,185,432$8,224,697
Thousands of
U.S. dollars
2009$6,796,651
1,029,594
398,452$8,224,697*1 Includes specified debentures of TMKs invested by the Company.
*2 Consists of preferred capital in TMKs and equity in limited partnerships (“Tokumei Kumiai”), invested by the Company.

In regard to the balance at March 31, 2009 and 2008, see *3.

41

(2) Transactions with the SPEs
		
Millions of yen
2009
2008

Thousands of
U.S. dollars
2009

Investments, etc: *3
Investments:
		 Investment securities..........................................................................................................................................................................
		 Equity investments in properties for sale...............................................................................................................................
		 Total...............................................................................................................................................................................................................
Operating revenues...................................................................................................................................................................................
Non-operating revenues........................................................................................................................................................................

¥ 69,442
49,785
119,227
14,45897¥ 74,991
38,795
113,786
11,761177$ 706,932
506,821
1,213,753
147,185987

Real estate leasing: *4
Cost of operating revenues..................................................................................................................................................................

37,04834,476377,156

Management services: *5
Operating revenues...................................................................................................................................................................................

312

297

3,176

Real estate transactions: *6
Transaction payments..............................................................................................................................................................................

¥ 47,995¥ 65,653$ 488,598*3 Includes investments in preferred stocks and specified debentures issued by TMKs and equity in Tokumei Kumiai, invested by the Company. In addition, dividends on investments are recorded as operating revenues, and interest on specified debentures is recorded as non-operating revenues.
*4 The Company leases real estate from SPEs.
*5 The Company provides management services to SPEs.
*6 The Company has purchased real property (land, buildings, etc.) from SPEs.

25 Contingent liabilities
At March 31, 2009, the Company and its consolidated subsidiaries were contingently liable as guarantors of borrowings by customers and others
in an amount aggregating to ¥60 million ($611 thousand).

26 Subsequent events
On June 26, 2009, the shareholders of the Company approved payments of a year-end cash dividend of ¥10 ($0.10) per share or a total of ¥4,743
million ($48,285 thousand) to shareholders of record at March 31, 2009. Such appropriations are recognized in the period in which they areapproved by the shareholders.

42Independent Auditors’ Report

To the Shareholders and Board of Directors of
Sumitomo Realty & Development Co., Ltd.:We have audited the accompanying consolidated balance sheets of Sumitomo Realty & Development Co., Ltd. and consolidated subsidiaries as of March 31, 2009 and 2008, and the related consolidated statements of income, changes in net assets andcash flows for each of the three years in the period ended March 31, 2009, expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to independently express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that weplan 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Sumitomo Realty & Development Co., Ltd. and subsidiaries as of March 31, 2009 and 2008, and the consolidated results of their operations and their cash flows for each of the three years in the period ended March 31, 2009, in conformity with accounting principles generally accepted in Japan.
Without qualifying our opinion, we draw attention to the following.
As discussed in Note 2 (6) to the consolidated financial statements, effective April 1, 2008, Sumitomo Realty & Development Co.,
Ltd. and its consolidated subsidiaries adopted the new accounting standard for measurement of inventories.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2009are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our
opinion, such translation has been made on the basis described in Note 1 to the consolidated financial statements.

Tokyo, Japan
June 26, 2009

KPMG AZSA & Co., an audit corporation incorporated under the Japanese Certified
Public Accountants Law and a member firm of the KPMG network of independent
member firms affiliated with KPMG International, a Swiss cooperative.

43

Senior Management(As of June 26, 2009)

BOARD OF DIRECTORS AND AUDITORS
Chairman of the Board
Junji Takashima*
Vice Chairman
Tetsuro Tsuruta
President
Kenichi Onodera*
Directors
Yoshifumi Nakamura*
Kojun Nishima
Masato Kobayashi
Satoru Ozawa
Nobuaki Takemura
Masayoshi Ohashi

Executive Officers
Senior Managing Executive Officers
Takashi Saito
Masaki Ogawa
Toshikazu Tanaka
Senior Managing Executive Officer (Engineer)
Takahiro Daisaka
Managing Executive Officers
Takao Shiojima
Masayuki Takahashi
Isamu Jobo
Yoshinobu Sakamoto
Koji Ito
Masayuki Iwamoto

Statutory Auditors
Naoto Enda
Ryoichi Nomura
Tadashi Kitamura
Kunio Kobayashi
Hiroshi Tomoyasu* Representative Director

Corporate Data
(As of March 31, 2009)

Head Office
Shinjuku NS Building
4-1, Nishi-Shinjuku 2-chome
Shinjuku-ku, Tokyo 163-0820, Japan
Phone: +81-3-3346-2342
Facsimile: +81-3-3346-1652
Corporate Website
http://www.sumitomo-rd.co.jp/english/
Date of Establishment
December 1, 1949

44

Number of Employees
9,298 (Consolidated)
Major Consolidated Subsidiaries
Sumitomo Real Estate Sales Co., Ltd.
Sumitomo Fudosan Syscon Co., Ltd.
Sumitomo Fudosan Tatemono Service Co., Ltd.
Sumitomo Fudosan Esforta Co., Ltd.
Sumitomo Fudosan Finance Co., Ltd.
Sumitomo Fudosan Reform Co., Ltd.
Sumitomo Fudosan Villa Fontaine Co., Ltd.
Sumitomo Fudosan Bellesalle Co., Ltd.

About the Company

Investor Information(As of March 31, 2009)

Sumitomo Realty & Development Co., Ltd., a core memberof the Sumitomo Group, is one of Japan’s leading realestate companies. The Company is well established as acomprehensive developer and supplier of high-quality officebuildings and condominiums in urban areas.
With operations centered on four areas—leasing, sales,
construction and brokerage—the Company has achieved a
combination of growth potential and balanced operations
that will drive its success in the challenging markets of the
21st century. Sumitomo Realty remains committed to thecreation of comfortable work and living environments that
contribute to a higher quality of life.

Major Shareholders

Consolidated
Financial Highlights

		
		
		

Number of Common Stock
Authorized: 1,900,000,000 shares
Issued: 476,085,978 shares
Number of Shareholders
16,536
Stock Exchange Listings
Tokyo Stock Exchange
Osaka Securities Exchange
Breakdown of Shareholders

Trust Accounts
Financial Institutions
Other Companies
Foreign Companies
Individuals and Others

CONTENTS

1	
2
4
6	

Paid-in Capital¥122,805 million

24.04%
10.86%
26.25%
33.18%
5.69%

Japan Trustee Services Bank, Ltd.
(Trust account 4G)
Japan Trustee Services Bank, Ltd.
(Trust account)
The Master Trust Bank of Japan, Ltd.
(Trust account)
Sumitomo Mitsui Banking Corporation
Japan Trustee Services Bank, Ltd.
(Trust account 4)
State Street Bank andTrust Company 505041
Credit Suisse Securities (Europe) Limited
The Sumitomo Trust & Banking Co., Ltd.
Kajima Corporation
Shimizu Corporation

Number ofshares held(Thousands)

Percentageof shares held

25,911

5.44%

24,448

5.14%

18,95911,990

3.98%
2.52%

11,041

2.32%

10,417
10,167
8,136
7,912
7,500

2.19%
2.14%
1.71%
1.66%
1.58%

		 At a Glance	A Message From
the Management

17
18
19
44
44
45

(Yen)

2,400

Review OF
Operations

6
12
14
16

Stock Price and Trading Volume on Tokyo Stock Exchange

Leasing
Sales
Construction
Brokerage

6

12

14

16

Our History
Corporate Governance
Financial Section
Senior Management
Corporate Data
Investor Information

Stock Price (right scale)
TOPIX Average (left scale)

6,000

1,800

4,500

1,200

3,000

600

1,500

0

0

(Millions of shares)

250

Trading Volume

200

CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS
Statements made in this annual report with respect to plans, targets and future performancethat are not historical fact are forward-looking statements. These statements are basedon management’s assumptions and beliefs in light of the information currently available.
Sumitomo Realty & Development Co., Ltd. cautions that a number of factors could cause
actual results to differ materially from those discussed in the forward-looking statements.
Such factors include but are not limited to macroeconomic conditions, supply and demandin the real estate market and interest rate trends.

150
100
50
0

7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7
2004
2005
2006
2007
2008
2009

45

Sumitomo Realty & Development Co., Ltd.

Shinjuku NS Building, 4-1, Nishi-Shinjuku 2-chome
Shinjuku-ku, Tokyo 163-0820, Japan
Phone: +81-3-3346-2342 Facsimile: +81-3-3346-1652

http://www.sumitomo-rd.co.jp/english/

Annual Report 2009

Printed in Japan

Distinctive Strengths,
Sustained Growth
ANNUALR E P O R T

2 0 0 9