Integrated Report
2019

Sumitomo Realty & Development Co., Ltd.

1

Sumitomo’s Business Philosophy

Continue creating
new value with
"Integrity andInnovation"

The Sumitomo Realty Group, as the heir of Sumitomo Honsha,Ltd., has developed into a comprehensive real estate enterprise of
the Sumitomo Group with a history of 400 years. The businessphilosophy—“Placing prime importance on integrity and soundmanagement in the conduct of its business” and “Under nocircumstances, shall it pursue easy gains”—which have been
handed down as a guiding principle throughout the Sumitomo’s
history, live on in the form of our corporate slogan, “Integrity andInnovation.”

Placing top priority on Integrity,
we will go beyond simple development andrelentlessly pursue value creation
through our innovative and challenging spirit.

Source: Sumitomo Historical Archives

Fundamental Mission“Create even better social assets for the next generation.”
We have set forth our fundamental mission as “to create evenbetter social assets for the next generation” through ourbusinesses closely associated with people’s daily lives. Based on
this fundamental stance, the Sumitomo Realty Group is engaging
in business with the aim of creating cities and urban spaces thatare resilient to disasters, friendly to people and the environment,
and harmonious with history and culture.

Contents
2 Sustainable Growth as Tokyo’s No.1 Office Owner
History of Corporate Value Creation by "Land Innovation"

4 Our Strengths
8 A Message from the Management
16 At a Glance
18 Business activities to support value creation
18
22
24
26
27

LEASINGSALESCONSTRUCTIONBROKERAGEGROUP COMPANIES

28 Addressing Social Issues through Business Activities
30
32
34
36
38

Feature 1 Sustainable urban redevelopment—Osaki Garden City—
Feature 2 Remodeling—Shinchiku Sokkurisan
Disaster-resistant Community Development
Environmentally Friendly Community Development
Strengthening the basis of value creation

40 Corporate Governance
40
42
44
45

Board of Directors and Statutory Auditors
Matters Concerning Corporate GovernanceRisk Management
Other Information Concerning Governance

46 Financial Section
46
48
50
52
53
54
55
73

Eleven-year Financial Summary
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 Auditor’s Report

74 Company Information
74
75

Corporate Data/Investor Information
History

Cautionary Statement with Respect to Forward-looking Statements
Statements made in this annual report with respect to plans,
targets and future performance that are not historical fact are
forward-looking statements. These statements are based on
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 todiffer materially from those discussed in the forward-looking
statements. Such factors include but are not limited tomacroeconomic conditions, supply and demand in the real estatemarket and interest rate trends.

Editorial Policy
This report was compiled based on this focus with consideration paid to the disclosure framework of the International Integrated Reporting Council (IIRC).
Sumitomo Realty & Development Co., Ltd.

1

Sustainable Growth as Tokyo’s No.1 Office Owner

Gross Floor
Area(1,000m2)

Ordinary
Profit(Billions of yen)

5,000

250

4,000

200

3,000

150

2,000

100

1,000

50

History of Corporate Value Creation by "Land Innovation"
The real estate leasing business primarily involving office buildings in central Tokyo has been the driving force of our growth to date.
Accounting for nearly 70% of the Company’s operating income overall, the leasing business is clearly the main pillar of the Company’s
operations and the core of its corporate value.
We have been expanding our business platform by promoting development of office buildings with a specific focus on central Tokyo
over roughly half a century since the early 1970s. Despite various changes in the business environment, we have consistently persisted withrespect to unwaveringly adhering to the management policies based on a long-term perspective, such that, (i) the Company will not pursue
temporary gains by selling assets; (ii) the Company will hold ownerships of buildings constructed on sites it has developed; and (iii) the
Company will generate stable leasing income over the long term by owning and leasing such buildings.
As a result, we have grown to become Tokyo’s No. 1 office building owner with more than 220 buildings for lease in central Tokyo.
Acquisition of development sites is the most important aspect of the office building leasing business. We have been redeveloping sites, inother words innovating land, through purchasing and assembling land by coordinating rights and interests of landowners. These capabilitiesof "Land Innovation" constitute our greatest strength and are the source of corporate value creation.
Capitalizing on the capabilities of "Land Innovation" as well as the management foundation and other strengths we have cultivatedso far, we intend to further expand our earnings base and increase corporate value.

1998
Shibuya Infoss Tower

1974
Shinjuku Sumitomo
Building

2002
Izumi Garden Tower

2004
Shiodome Sumitomo
Building

2015
Tokyo Nihombashi Tower

2016
Sumitomo Fudosan
Roppongi Grand Tower

2018
Sumitomo Fudosan
Osaki Garden Tower

2011
Sumitomo Fudosan
Shinjuku Grand Tower

Ordinary Profit /Gross Floor Area
■ Ordinary Profit ●Gross Floor Area
Non-consolidated figures(Years ended / ending March 31)

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

8th Plan001997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Listed on the Tokyo Stock Exchange and Osaka Securities Exchange.

Major Building Development Projects

1998
Chiyoda First Building
East

2

Integrated Report 20192000
Sumitomo Fudosan
Iidabashi First Building

2000
Sumitomo Fudosan
Shibakoen First Building

2003
Shinjuku Oak Tower

2004
Chiyoda First
Building West

2005
Tokyo Shiodome
Building

2006
Sumitomo Fudosan
Mita Twin Building West

2009
Sumitomo Fudosan
Aobadai Tower

2010
Shinjuku Central Park City

2010
Sumitomo Fudosan
Iidabashi First Tower

2012
Sumitomo Fudosan
Shibuya Garden Tower

2016
Sumitomo Fudosan
Shinjuku Garden Tower

Sumitomo Realty & Development Co., Ltd.

3

Our Strengths
Capabilities of "Land Innovation"
Unlike competitors, we did not own real property in Tokyo when we started a business, and we had to purchase land fordeveloping buildings. Therefore, instead of reconstructing buildings we owned or purchasing sites through competitive
bidding and constructing new buildings, which tends to be expensive, we focused on redevelopment by integrating multiple
small parcels into a larger scale through persistent, long-term efforts to maximize the site value. In this way, we continued todevelop superior assets and enhanced our corporate value.
The capabilities of "Land Innovation" that we cultivated through engagement in redevelopment over many years
are our greatest strength. They are also a driving force enabling us to undertake many large development projects in central
Tokyo, an area where it is difficult to acquire excellent large sites.
We have an industry-leading track record in urban redevelopment in central Tokyo, including in Roppongi,
Nishishinjuku, and Iidabashi, pursuant to the Urban Renewal Act, which involves achieving an agreement with many
landowners and consultation with the authorities. Through redevelopment, we are improving central Tokyo’s infrastructure,including enhancement of disaster prevention, such as by eliminating densely built-up areas of wooden houses andwidening narrow streets, and are contributing significantly to vitalization of communities. As a result, our projects enjoy
benefits of deregulation, such as increased floor-area ratios, contributing to greater profitability.

Urban Redevelopment under the Urban Renewal Act of Japan

After

Equal value exchange
Through the conversion of the rights of the rights holders,sites can be acquired with equal value exchanges.

BeforeBuilding

X
E
C

B

C
A

Land

E

D

4

D

(above ground/
below ground)

Completion

Gross floorarea (m2)

43/4
43/2
24/2
52/4
40/3
37/2
44/2
38/2
35/4
25/3
43/2
37/4
30/3
34/3
35/2
32/2
24/3
33/3
14/2
24/2

Oct 2002
Oct 2016
Jan 2018
Mar 1974
Dec 2011
Mar 2016
Feb 2010
Jan 2003
Apr 2015
Jul 2004
Sep 2006
Jan 2005
Sep 1982
Apr 2010
Jun 2000
Jan 2004
Jun 2012
Aug 2009
Mar 2000
Oct 2002

204,444
202,549
201,560
177,467
168,372
143,372
130,695
117,606
105,837
99,91398,33895,12875,046
68,514
63,822
61,274
59,41755,77353,32253,047

Minato Ward
Minato Ward
Shinagawa Ward
Shinjuku Ward
Shinjuku Ward
Shinjuku Ward
Shinjuku Ward
Shinjuku Ward
Chuo Ward
Minato Ward
Minato Ward
Minato Ward
Shinjuku Ward
Bunkyo Ward
Minato Ward
Chiyoda Ward
Shibuya Ward
Meguro Ward
Bunkyo Ward
Shinjuku Ward

Example 2

Izumi Garden (two major redevelopment buildings, Izumi Garden Tower and Sumitomo Fudosan Roppongi Grand Tower)C
A B C D X

Land
After redevelopment

X: Developer

Iidabashi Redevelopment Project(two major redevelopment buildings, Sumitomo Fudosan Iidabashi First
Building and Sumitomo Fudosan Iidabashi First Tower)

Sumitomo Fudosan Iidabashi First Building

Sumitomo Fudosan Iidabashi First Tower

Completion

March 2000

April 2010

Gross floor area

63,000 m2

78,400 m2

Office, residence, retail

Office, residence, retail, multipurpose hallIntegrated Report 2019

Izumi Garden Tower
Sumitomo Fudosan Roppongi Grand Tower
Sumitomo Fudosan Osaki Garden Tower
Shinjuku Sumitomo Building
Sumitomo Fudosan Shinjuku Grand Tower
Sumitomo Fudosan Shinjuku Garden Tower
Shinjuku Central Park City
Shinjuku Oak City
Tokyo Nihombashi Tower
Shiodome Sumitomo Building
Sumitomo Fudosan Mita Twin Building WestTokyo Shiodome Building
Shinjuku NS Building
Sumitomo Fudosan Iidabashi First Tower
Sumitomo Fudosan Shibakoen First Building
Chiyoda First Building West
Sumitomo Fudosan Shibuya Garden Tower
Sumitomo Fudosan Aobadai Tower
Sumitomo Fudosan Iidabashi First Building
Sumitomo Fudosan Iidabashi Building No. 3

No. of floors

D
B

ABCD: Rights holders
E: Tenants

Purposes

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.

Location (Tokyo CBD)A

Before redevelopment

Example 1

Name

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

Buildings

B

Major Flagship Buildings Mainly Comprising Redevelopment Projects

Izumi Garden Tower

Sumitomo Fudosan Roppongi Grand
Tower

Completion

October 2002

October 2016

Gross floor area

208,400 m2

210,500 m2

Office, residence, hotel, retail, museum,multipurpose hall, conference room

Office, residence, retailPurposesSumitomo Realty & Development Co., Ltd.

5

Our Strengths

Leasing Portfolio that Meets Diverse Needs

Our Portfolio’s Strengths (As of March 31, 2019)
Sumitomo Realty's leasing portfolio is highly competitive in terms of the three distinct features of being"central, newest and large" that meet diverse tenants' needs. Going forward, we will endeavor to maintain andenhance our competitive strengths by focusing on providing high-quality office buildings with these qualities.

Tokyo’s No. 1 office building owner, managing
more than 220 buildings in central Tokyo’s major office districts

88%
23 Wards 94%

Tokyo CBD*

CentralGross Floor Area

5.04 million m

2

Diversified throughout major business areas
Our leasing portfolio emphasizes on locations in central Tokyo; 94% of our portfolio is in Tokyo’s 23 wards,and
88% is in the Tokyo CBD (Central Business District)*. Proximity to other office buildings and major train andsubway stations is a key condition for a prime property, and having been located in such areas is one of ourportfolio’s competitive strengths. In particular, the Tokyo CBD is designed as a district with a high concentrationof office buildings, and strong and stable demand is expected in this district going forward. Therefore, we will
work to enhance our competitive strengths by continuing to acquire development sites in this district.
* Tokyo CBD (Central Business District): 7 wards, comprising Chiyoda, Minato, Chuo, Shinjuku, Shibuya, Shinagawa and Bunkyo

New Quake-resistant*1 Structure

NewestSeismic Isolation and/or Damping System Construction

Emergency Power Generators

70%

80%

*2

*2

99%

*1 New standards that tookeffect in 1981
*2 Approx.

Buildings with Excellent BCP Compliance
The average age of the buildings in our portfolio is 16 years, the lowest figure among major Japanese real estate companies. New buildings are capableof generating strong demand by meeting tenants’ needs for facilities and design to name a few, making the relative age of the buildings in a portfolio
a key factor affecting the leasing business.
As shown in the table below, our buildings are equipped with the latest facilities and features, and are popular among tenants for their functionality,
comfort and safety in the event of a major disaster. 99% of our portfolio meets or exceeds earthquake-resistance standards that took effect in 1981,
which are a key yardstick for earthquake safety. Further, approximately 80% of the buildings we own are structured with a seismic isolation system and/or a damping system. In recent years, emergency generators that provide electricity in the event of a power outage have also become a feature soughtby tenants as a part of their business continuity planning (BCP). Thus, emergency generators are installed in about 70% of the buildings we own, which
include all newly completed buildings after 2001.

TOKYO CBD*
BunkyoShinjuku
ChiyodaShibuyaChuo
MinatoShinagawaState-of-the-art Facilities

1981 and earlier

1982–1996

1997 and after

Earthquake protection

Previous quake-resistant structure

New quake-resistant structure

Anti-sway structure

Ceiling height*

Tokyo CBD
Minato88 %Major flagshipbuildings

30%

Shinjuku

20%

Chiyoda

11%

Chuo

8%

Shibuya8%

Shinagawa

7%

Bunkyo4%

Percentage

Other wards
in Tokyo
6%
Others

Large-scalebuildings
Otherbuildings

6%* Tokyo CBD (Central Business District): 7 wards, comprising Chiyoda,
Minato, Chuo, Shinjuku, Shibuya, Shinagawa and Bunkyo

6

Integrated Report 2019

2.5 m

2.7 m

2.9–3.3 m

300 kg/m2

300–500 kg/m2

500–1,000 kg/m2

Air-conditioning

Central air-conditioning system

Climate control zones

Separate climate control systems

Power capacity

45 VA/m2

60–70 VA/m2

85 VA/m2 and overFloor load

* Only buildings ownedby the Company are shownon this map.

* Includes raised floors

LargeOver 10,000 m2 (gross floor area)

87%

Large-scale Buildings with large amounts of floor space per floor
Large-scale buildings with gross floor area of at least 10,000 square meters make up 87% of our portfolio. Consolidating multiple offices of a businesson one floor helps to facilitate internal communication and reduce space redundancies, making operations more efficient. These types of needs arebehind the increased demand in recent years for large-scale buildings with large amounts of floor space per floor. Being able to offer such spaces isdefinitely one of our strengths.

Sumitomo Realty & Development Co., Ltd.

7

A Message from the Management
Results of the Seventh Management Plan
The Seventh Management Plan launched in April 2016 was concluded in
the fiscal year ended March 31, 2019. The operating environment
remained favorable overall, particularly with respect to leasing of officebuildings in Tokyo. As a result, ordinary profit over the cumulative threeyear period amounted to ¥557.8 billion, a record-high result exceeding
the initial target of ¥480 billion by a wide margin. Moreover, in the fiscal
year ended March 2019, the final year of the plan, we achieved recordhigh financial results for the sixth consecutive fiscal year, with revenue
from operations exceeding ¥1 trillion and operating income and ordinary
profit exceeding ¥200 billion. The Seventh Management Plan ended on a
successful note with the Company having achieved substantial profit
growth.

Results for the Seventh Management Plan (Apr 2016 – Mar 2019)(Billions of yen)
Targets*(Cumulative Totals)

FY '16
Results

FY '17
Results

FY '18Results

Cumulative
TotalsChangefrom Targets

2,700

925

948

1,012

2,886

+ 186

Operating Income

550

188

206

219

613

+63

Ordinary Profit

480

168

187

203

558

+78

Revenue from Operations* Announced on May 12, 2016
* The Company changed its accounting policy (revenue recognition standards of Sumitomo Real
Estate Sales) from the beginning of the fiscal year ending March 31, 2020.
The figures provided for the fiscal year ended March 31, 2019 (7th Plan) are those after
retrospective application.

Outline of the Eighth Management Plan:
Office building leasing business as the driving force of growth
We launched the Eighth Management Plan in April 2019. As indicated in
Figure Three-year cumulative earnings targets, the performance targets
are to achieve consecutive record results for the three-year period
covered, with cumulative ordinary profit of ¥700 billion, by maintaining
the pace of growth attained under the Seventh Management Plan withwhich substantial profit increase was achieved. We also aim to achieve
record results for the ninth consecutive fiscal year with respect to results
for single fiscal years.
Whereas ordinary profit during the Seventh Management Plan
totaled slightly more than ¥550 billion, we target ordinary profit of ¥700
billion under the Eighth Management Plan. The pace of profit increase

from the Sixth Management Plan to the Seventh Management Plan was
30% and we intend to maintain this pace of profit increase from theSeventh Management Plan to the Eighth Management Plan. The plancalls for an increase of over ¥140 billion for ordinary profit from theSeventh Management Plan and its core driver is the building leasing
business. The current office building market in central Tokyo has been
buoyant. In view of the steady progress of tenant acquisition for newbuildings to be completed from now on, growth of the building leasing
business is foreseeable and thus we believe the targets for the EighthManagement Plan are highly feasible.

Performance targets
Achieve consecutive record results for the three-year period covered, with cumulative ordinary profit of ¥700 billion.
Achieve record results for the ninth consecutive fiscal year under the three management plans since the Sixth Management Plan by
maintaining the pace of growth attained under the Seventh Management Plan with which substantial profit increase was achieved.

Positioning redevelopment and leasing of
office buildings in central Tokyo as growth drivers,
we will continue creating new value.

Three-year cumulative earnings targets
Revenue from Operations¥ 3,100.0 billion( + ¥ 214.2 billion, + 7%)*

Operating Income¥

740.0 billion( + ¥ 126.8 billion, + 21%)*

Ordinary Profit¥

700.0 billion( + ¥ 142.2 billion, + 25%)** Compared with results for the Seventh Management Plan

(Reference) Comparison of Management Plan results (Years ended/ending March 31)

Revenue from Operations

Kojun Nishima
President

Operating Income
Ordinary Profit(Billions of yen)

5th Plan

6th Plan

7th Plan

8th Plan

2011-20132014-20162017-20192020-2022

2,170.0

2,442.0

2,885.8

3,100.0(+63.2)(+272.0)(+443.7)(+214.2)

437.2

500.6

613.2

740.0

(+2.3)(+63.3)(+112.6)(+126.8)

329.1

418.0

557.8

700.0

(10.0)(+88.8)(+139.8)(+142.2)

Note: All figures are cumulative totals within the period of the plan.
* The Company changed its accounting policy (revenue recognition standards of Sumitomo Real Estate Sales) from the beginning of the fiscal year ending March 31, 2020.
The figures provided for the fiscal year ended March 31, 2019 (7th Plan) are those after retrospective application.

8

Integrated Report 2019

Sumitomo Realty & Development Co., Ltd.

9

A Message from the Management

Performance targets by segment
Figure Performance targets and strategies by segment shows
performance targets by segment. The Leasing segment is expected to
grow significantly from the Seventh Management Plan to the EighthManagement Plan. In addition to the full-year contribution frombuildings completed by the Seventh Management Plan and increases inrents, new buildings will steadily be completed under the EighthManagement Plan. As tenant acquisition for these new buildings has
been proceeding well at a high pace, the building leasing business willbe the driving force for growth in the period covered by the EighthManagement Plan.
In the Sales segment, in order to maintain the high level of profit

Further investment in leasing office assets in central Tokyo
exceeding ¥40 billion a year achieved under the Seventh Management
Plan, we will strive to maintain and enhance product planning and sales
capabilities for condominiums. We have already secured land banking for
projects for the Eighth Management Plan and contracts have beenconcluded for projects to be completed in the next 12 months or so.
Thus, for the time being, we expect to attain the targets for the Sales
segment.
Both the Construction segment consisting of remodeling (Shinchiku
Sokkurisan) and custom home construction and the Brokerage segment
for real estate brokerage contribute to industry-leading profits and theCompany aims to maintain and expand those profits.

Performance targets and strategies by segment

We will continue investment in leasing office assets in central Tokyo inorder to strengthen the earnings base. We will steadily implement thedevelopment plan for over 800 thousand tsubo (one tsubo is roughly 3.3m²) of gross floor area (equivalent to over 50% of the gross floor areafor leasing currently available) to generate profits.
Figure below is a graph indicating operating income of the leasing
business and gross floor area over some 40 years. At its foundation 70
years ago, the Company owned three buildings with gross floor area of
6 thousand tsubo. Ever since, we have focused on redevelopment byintegrating multiple small parcels into a larger scale, constructedbuildings and owned them for leasing without selling them off. As aresult, we have now grown to be Tokyo’s No. 1 building owner andoperate more than 220 buildings with gross floor area exceeding 1.5
million tsubo. Despite difficulties associated with the bursting of Japan’s
bubble economy, financial crises, and the Lehman crisis, we haveaccumulated building assets step by step. This policy has supported theCompany’s sustainable growth and financial stability. In view of ourexperience, we intend to maintain this policy.

Consolidated Operating Income and Gross Floor Area

Office building leasing in Tokyo to be the driving force of growth.
Billions of yen
250

Strategies

Thousands of tsubo*1
2,500
234

Leasing

Construction

Profit growth of the Seventh Management Plan,
supported by the buoyant market environment, to be
surpassed.

Remodeling (Shinchiku Sokkurisan): Growth track, recovered in
the Seventh Management Plan following the sluggish period until
the Sixth Management Plan, to be maintained.
Custom Homes: Business base to be strengthened throughimprovement of construction systems and quality control.

Sales

Brokerage

High level of profit of the Seventh Management Plan to
be maintained.

Group collaboration to be strengthened, establishing
the base for growth in the Ninth Management Plan
onward.

Performance targets by segment

Billions of yen

219

200

2,000

Gross Floor Area
operated in Leasing Business(right scale)
155
150

1,500

100

1,000

5th Plan

6th Plan

7th Plan

8th Plan

Leasing

843.0

886.2

1,073.1

1,200.0

Sales

670.0

773.1

957.2

950.0

Construction

500.0

589.3

634.7

720.0

Brokerage

146.8

177.2

207.7

220.0

2,170.0

2,442.0

2,885.8

3,100.0

Leasing

272.1

313.7

415.5

530.0

Sales

110.2

127.2

140.1

140.0

Construction

48.9

47.0

50.4

70.0

1978 1980
1985(Years ended/ending March 31)

Brokerage

41.2

52.1

61.6

65.0

*1 1 tsubo ≈ 3.3 m²*2 Segment information has been disclosed since the March 1991 fiscal year

Operating income

437.2

500.6

613.2

740.0

Revenue from operations

77

50

500

Operating Income from
Leasing Business
0

1990

1995

2000

2005

2010

2015

2020 2022(Forecast)0* The Company changed its accounting policy (revenue recognition standards of Sumitomo Real Estate Sales) from the beginning of the fiscal year ending March 31, 2020.
The figures provided for the fiscal year ended March 31, 2019 are those after retrospective application.

* The Company changed its accounting policy (revenue recognition standards of Sumitomo Real Estate Sales) from the beginning of the fiscal year ending March 31, 2020.
The figures provided for the fiscal year ended March 31, 2019 (7th Plan) are those after retrospective application.

10

Integrated Report 2019

Sumitomo Realty & Development Co., Ltd.

11

A Message from the Management

Investment and financing for growth from now on
In addition to the 1.5 million tsubo we have developed so far, we intend
to develop 800 thousand tsubo in total, including 230 thousand tsubo
during the Eighth Management Plan and development under the NinthManagement Plan and beyond. The floor area to be newly developed

Major New Building Development Projects

exceeds 50% of the gross floor area of the buildings currently owned by
the Company. The 800 thousand tsubo is the sum of the concrete
development projects for which we have already acquired land andredevelopment projects for which we are taking the initiative.

Pace of Gross Floor Area Development*1 tsubo ≈ 3.3 m2

Thousands of tsubo
3,000

More than+800(Thousands of tsubo)

Gross
Floor
Area

2,500

5th Plan

6th Plan

7th Plan

8th Plan

+150

+110

+210

+230

thousands of tsubo

+230

2,000

1,524

thousandsof tsubo

thousandsof tsubo

1,500❽ Mita 3- and 4-chome Project (Fudanotsuji)
Expected Completion: Jul 2022

❾ Nishi-shinjuku 5-Chome Kita Project
Expected Completion: Oct 2022

❶ Sumitomo Fudosan Shinjuku Central Park Tower
Completion: Aug 2019

1,000

500

0

2001

2004

2007

2010

2013

2016

2019

2022

2025 –(Years ended/ending March 31)

Project Name

Location

Gross Floor Area
(Tsubo*)Expected
Completion❶ Sumitomo Fudosan Shinjuku Central Park Tower

Shinjuku Ward

18,100Aug 2019❷ Sumitomo Fudosan Akihabara Ekimae Building

Chiyoda Ward

7,800

Aug 2019❸ Sumitomo Fudosan Ikebukuro Higashi Building

Toshima Ward

4,900

Sep 2019❹ Sumitomo Fudosan Akihabara first Building

Chiyoda Ward

8,200

Oct 2019

Ota Ward

27,700Mar 2020❻ Ariake Project

Koto Ward

60,000Mar 2020❼ Sumitomo Fudosan Kojimachi Garden Tower

Chiyoda Ward

14,500

Apr 2020

Shinagawa Ward

14,300Mar 2021

Sumitomo Fudosan Tamachi Building East

Minato Ward

3,800

Mar 2021

Sumitomo Fudosan Ochanomizu Building

Bunkyo Ward

3,800

Mar 2021

Sumitomo Fudosan Kanda Izumicho Building

Chiyoda Ward

3,800

Apr 2021

Higashi-gotanda 2-chome Project

Shinagawa Ward

6,300

May 2021❺ Haneda Airport Project

Kita-shinagawa 5-chome Project

Others56,000

8th Plan Total

229,200❽ Mita 3- and 4-chome Project (Fudanotsuji)

Minato Ward

69,000Jul 2022❾ Nishi-shinjuku 5-chome Kita Project

Shinjuku Ward

40,800

Oct 2022* 1 Tsubo ≈ 3.3m2❼ Sumitomo Fudosan Kojimachi Garden Tower
Expected Completion: Apr 2020

❺ Haneda Airport Project
Expected Completion: Mar 2020

12

Integrated Report 2019

❷ Sumitomo Fudosan Akihabara Ekimae Building
Completion: Aug 2019

❹ Sumitomo Fudosan Akihabara first Building
Completion: Oct 2019

❸ Sumitomo Fudosan Ikebukuro Higashi Building
Completion: Sep 2019

❻ Ariake Project
Expected Completion: Mar 2020

Sumitomo Realty & Development Co., Ltd.

13

A Message from the Management

CSR through Business
Development on this scale will require investment of approximately¥2 trillion of which around ¥600 billion will be required for the EighthManagement Plan. With a portfolio of buildings with a gross floor areaof 1.5 million tsubo, we are now capable of covering the necessary
funds for investment in new buildings with cash flows from the leasing
business.
As shown in Figure below, whereas borrowings increased in stepwith the increase in gross floor area through to the end of the SeventhManagement Plan, under the Eighth Management Plan expansion of
cash flows from the leasing business will enable us to make newinvestment without increasing borrowings. We have advanced to a newstage in terms of financing thanks to a stable revenue stream from the
1.5 million tsubo of leased assets that we have accumulated step by
step.

Interest-bearing Debt and Gross Floor Area
5th Plan

6th Plan

8th Plan

7th PlanCapital Investment

(268)

(422)

(664)

Cash Flows from the Leasing Business

364

410

535

680

2,651

3,159

3,343

3,300

Interest-bearing Debt

(600)

* Cash flows from the leasing business: Operating income of the leasing business + Depreciation and amortization■ Interest-bearing Debt ■ Deposits from Partnership Investors ■ Net Assets ● Gross Floor Area (right scale)Billions of yen
4,000

more than 100 years old and restoring streetscapes.
In these ways, by working to resolve various social issues throughbusiness, we are striving to achieve sustainable growth of the Sumitomo
Realty Group and contribute to attainment of SDGs.

Thousands of tsubo*
2,000

3,000

1,500

2,000

1,000

1,000

500

0

Based on our fundamental mission “to create even better social assets
for the next generation” through our business we are committed tocreating cities and urban spaces that are resilient to disasters, friendly topeople and the environment, and in harmony with history and culture.
In the development of office buildings for lease, we have long
focused on redevelopment that makes significant contributions toenhancement of disaster prevention, such as through elimination ofareas with densely packed wooden houses and widening of narrow
streets, and to vitalization of communities. Together with local residents
and various other stakeholders, we are promoting development of
thriving communities that are safe and secure.
In the Shinchiku Sokkurisan remodeling business, we are extending
the lifespan of houses through full remodeling, including seismic
reinforcement. Making use of existing buildings to the extent possible
leads to far less industrial waste than in the case of rebuilding while also
contributing to energy saving and reduction of other environmental
impacts. We are also developing communities in harmony with history
and culture, such as by remodeling traditional wooden houses that are

2001
2004
(Years ended/ending March 31)

2007

2010

2013

2016

2019

2022
(Forecast)

Redevelopment business:
Izumi Garden (Roppongi, Tokyo)

Shinchiku Sokkurisan remodeling business:
Remodeling of traditional wooden houses
Before0* 1 tsubo ≈ 3.3 m²

After

Policy for shareholder returns
Reflecting the record results for the sixth consecutive year, we increased
annual dividends for the fiscal year ended March 31, 2019 by ¥1 fromthe initial plan and paid ¥30 per share (including an interim dividend of¥14), an increase of ¥3 per share. For the fiscal year ending March 31,
2020, we intend to pay annual dividends of ¥32 per share (including aninterim dividend of ¥16), an increase of ¥2 per share.
Our basic dividend policy is unchanged, namely, to achieve steadyprofit growth and sustainable dividend increase reflecting the profit

growth. As our aim is further profit growth by continuing developing
and leasing office buildings, we intend to allocate profit to investment in
office buildings on a priority basis. Looking back at past results, as shownin Figure Consolidated Operating Income and Gross Floor Area, we
maintained dividend payment at the time of the Lehman crisis without
decreasing the dividends and subsequently have increased dividends inline with the Company’s financial performance.

Consolidated Operating Income and Gross Floor Area
■ Ordinary Profit ● Cash Dividends per Share (right scale)Billions of yen
200

27

150
14

0

14

21

20

22

24

10

100
50

18

30

6

Please refer to page 30 for further information regarding
our redevelopment business.

●

Please refer to page 28 for further information regarding
our CSR activities through business.

15

92003 2004 2005 2006
(Years ended/ending March 31)

Integrated Report 2019

Yen
30

●

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019
(Forecast)

0

The Sumitomo Realty Group will redouble our efforts to reach the targets set out in the Eighth Management Plan and continue moving forward toachieve sustainable growth. We would like to express our gratitude to our shareholders, investors and all our stakeholders, and ask for their continuous,
long-term support.

Sumitomo Realty & Development Co., Ltd.

15

At a Glance
LEASING Refer to page 18.
Office building, condominium and otherproperty leasing and management andrelated activities

Sumitomo Fudosan Villa Fontaine Co., Ltd.
Sumitomo Fudosan Bellesalle Co., Ltd.

Refer to page 22.

Leased property
management
consignment

Outsourced management
consignment(after sale)

SALES

Significantly Driving Growth with the Leasing Business

Mid- and high-rise condominium, detachedhouse and housing lot development andsales and related activities

Sumitomo Fudosan Tatemono Service Co., Ltd.
Refer to page 24.

Sumitomo Realty &Development Co., Ltd.

CONSTRUCTION

7% 1%

Custom home construction and remodeling and related
activities

BROKERAGE

37%

62%

9%

Revenue fromOperations

Sumitomo Real Estate Sales Co., Ltd.

1%

8%

22%

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

Sumitomo Fudosan Esforta Co., Ltd.
Izumi Restaurant Co., Ltd.

LEASING

Sumitomo Fudosan Syscon Co., Ltd.
Refer to page 26.

OTHERS Refer to page 27.

LEASING

Business Portfolio

20%

Operating
IncomeCapitalLEASING
High level of capital,
low level ofhuman capital

33%

SALES
CONSTRUCTION

Relatively high level ofcapital, relatively highlevel of human capital

Relatively low level ofcapital, relatively highlevel of human capital

BROKERAGE■ LEASING ■ SALES ■ CONSTRUCTION ■ BROKERAGE ■ OTHERS

Low level of capital,
high level ofhuman capital

Human Capital

LEASING Unique Features and Competitive Advantages

CONSTRUCTION Unique Features and Competitive Advantages

Vigorous promotion of redevelopment projects in central Tokyo and an extensive
track record● Tokyo’s No. 1 office building owner with a portfolio of over 220 high-performancebuildings, primarily in the seven central districts of Tokyo, with cutting-edge
exteriors and the latest facilities and specifications● Strong market competitiveness due to a portfolio centering on buildings that are“located in central Tokyo, new, and large-scale”● Active promotion of BCP compliance through introduction of seismic isolation/
vibration control structures at 80% of the buildings we own as well as byimplementing uninterrupted power supply systems

Remodeling—Shinchiku Sokkurisan● No. 1 in the industry with an innovative “full remodeling package” system, analternative option to the conventional rebuilding● Possible to offer seismic reinforcement optimal for implementation at houses of allages● 50-70% of the rebuilding cost. Worry-free fixed pricing based on the floor area
● Each project managed entirely by a dedicated sales engineer and construction
overseen by a dedicated master carpenter with proven knowledge and skills● In addition to remodeling detached houses, promoting skeleton reform of
exclusively owned areas of condominiums nationwide enabling flexible layoutchanges. No. 1 in the industry for five consecutive years
Custom Homes● Model home exhibitions at 123 locations primarily in major cities throughout Japan● Offering advanced functional homes with attractive design utilizing expertise incondominium development●		Emphasizing product planning to enhance safety of homes, including developmentof proprietary earthquake-resistant technologies, such as “seismic control systems”
and “power panels” (patented)●

SALES Unique Features and Competitive Advantages
No.1 supplier of condominium units for five consecutive years both nationwide andin the Tokyo Metropolitan area
● Operating in major cities throughout Japan. Stable supply with properties in theTokyo Metropolitan area accounting for 80% of the portfolio● Strengthening product planning to maintain asset value for the future, such as
signature stylish exteriors, elegant entrances, rich array of facilities in common
areas, disaster-resistant high specifications for standardized performance, andintroduction of the latest household appliance● Operating Grand Mansion Gallery that offers wide-ranging information on
selecting condominiums and enables customers to review at a single location all
the properties available●

16

Integrated Report 2019

BROKERAGE Unique Features and Competitive Advantages
A network of 270 directly operated brokerage offices nationwide with a leading
track record in the industry● Sales system rooted in the community based on the customer-first principle● Operating Mansion Plaza, a brokerage office specialized in premium
condominiums, at five locations in central Tokyo; strengthening
initiatives to capture new needs in the expanding market for preowned condominiums margins.

Operating Income (Years ended/ending March 31)■ LEASING ■ SALES ■ CONSTRUCTION ■ BROKERAGE
Billions of yen
160

140

120

100

80

60

40

20

●

0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
(Forecast)* The Company changed its accounting policy (revenue recognition standards of Sumitomo Real Estate Sales) from the beginning of the fiscal year ending March 31, 2020.
The figures provided for the composition of business portfolios and the fiscal year ended March 31, 2019 are those after retrospective application.

Sumitomo Realty & Development Co., Ltd.

17

Business activities to support value creation
Review of Operations

Outlook

LEASINGFor the March 2020 fiscal year, we forecast a 2.2% year-on-year increase in revenue from operations
to ¥390.0 billion and an 8.7% year-on-year increase in operating income to ¥163.0 billion, owing torent increases and lower vacancy rates for existing buildings as well as full-year contribution from newbuildings, including Sumitomo Fudosan Onarimon Tower and Sumitomo Fudosan Shibuya Tower. We
aim to achieve record-high earnings for the fifth consecutive year.

Sumitomo Fudosan Shinjuku Central Park Tower
Location: Shinjuku Ward
Gross Floor Area: 18,178 tsubo

Completion: Aug 2019
No. of Floor: 33 above ground/2 below ground

Office Building
Sumitomo Realty made its full-scale entry into the office building leasing business in the latter half of the 1970s. Ever since, we havecontinued to develop excellent office buildings focusing on redevelopment projects in central Tokyo. We weathered the bursting of Japan’s
economic bubble in the 1990s and the Lehman crisis in the 2000s without selling off buildings we own and steadily increased the number ofbuildings. As a result, Sumitomo Realty has become the No. 1 owner of office buildings in Tokyo with more than 220 buildings in central
Tokyo.

The Tokyo office building market, where more than 90% of our leasing portfolio is concentrated, experienced
continued strong new demand from relocations and floor space expansions of existing tenants, against the
backdrop of companies’ vigorous recruitment plans and improvement of the working environment in response towork style reform. Vacancy rates remained low and rents for renewed leases continued on an upward trend.
Reflecting such an environment, the segment recorded revenue and profit growth for the March 2019 fiscal
year based on improved vacancy rate and higher rents from existing buildings as well as full-year contribution
from new buildings completed during the previous fiscal year, including Sumitomo Fudosan Osaki Garden Tower.
The segment’s revenue from operations and operating income both reached record-high levels for the fourthconsecutive year.
The vacancy rate for existing buildings decreased below 3% for the first time in 18 years, to 2.8% (4.9% at
the end of the previous fiscal year). Buildings completed during the fiscal year under review, including Sumitomo
Fudosan Onarimon Tower and Sumitomo Fudosan Shibuya Tower, are already fully occupied and in operation.
Buildings scheduled for completion in the next fiscal year and subsequent years, including Sumitomo Fudosan
Akihabara First Building and Sumitomo Fudosan Kojimachi Garden Tower, are approaching 100% occupancy.
Thus, tenant acquisition for new buildings is on a good track, at a pace exceeding initial expectations.

Location: Shibuya Ward
Gross Floor Area: 10,573 tsubo

Operating Income and Operating Margin

Billions of yen

Billions of yen

289.1

313.3

337.5

390.0

50

100

18

2017

Integrated Report 2019

Thousands of m2

75

4,500

50

3,000

25

1,500

100

150

100

2016

%

6,000

353.9

200

2015

Gross Floor Area

200

126.2

0

2018

2019

Location: Chiyoda Ward
Gross Floor Area: 8,216 tsubo
Completion: Oct 2019
No. of Floor: 23 above ground/1 below ground"Sankaku Hiroba" (triangular plaza) of
Shinjuku Sumitomo Building will debut inJune 2020

Completion: Feb 2019
No. of Floor: 21 above ground/2 below ground

Revenue from Operations

300

Location: Chiyoda Ward
Gross Floor Area: 7,819 tsubo
Completion: Aug 2019
No. of Floor: 21 above ground/2 below groundAll-weather event area available throughout the year

Sumitomo Fudosan Shibuya Tower

381.8

Sumitomo Fudosan
Akihabara First Building

T O P I C S

Overview of the Fiscal Year

400

Sumitomo Fudosan
Akihabara Ekimae Building

2020(Forecast)

0

104.4

36.1

2015

139.4

163.0

149.9

914

111.3

35.5

2016

37.4

2017

39.4

2018

■ Operating Income ● Operating Margin (right)

39.3

2019

3,189

820

902

3,493

3,790

817

4,026

811

4,226

41.8

2020

(Forecast)

0

0

2015

2016

2017

■ Outright Ownership ■ Sub-lease

2018

2019

Our flagship Shinjuku Sumitomo Building is located near Shinjuku
Station, which is the world’s busiest railway station, used by more than
three million people each day. A large-scale refurbishment plan isunderway for the Shinjuku Sumitomo Building and "Sankaku Hiroba"(triangular plaza), a huge event space, will open in June 2020.
With capacity sufficient for some 2,000 people, Sankaku Hiroba will
be an all-weather atrium unaffected by the weather or the temperature
outside while maintaining the look and feel of an outdoor venue.
Taking advantage of the lofty structure with a height equivalent to thatof a six-story building, Sankaku Hiroba will be suitable for diverse largescale events, such as sports and festivals. It will also contribute to urban
disaster mitigation in the event of an earthquake or other disaster,
providing shelter for people unable to return home.
In addition to Sankaku Hiroba, taking advantage of the locationnear Shinjuku Station, plans also call for development of aninternational conference center for business conferences and large-scaleinternational events. Through this project, the Shinjuku Sumitomo
Building will contribute to further vitalization of Shinjuku as a bustlingurban hub.
This project was approved by the Ministry of Land, Infrastructure,
Transport and Tourism as a private urban reconstruction project plans inAugust 2017. Certified by the Prime Minister of Japan as a project for anational strategic special zone, this project is highly regarded as one
that will contribute to enhancement of the international businessenvironment and attractiveness for tourists while also strengthening
urban disaster mitigation capabilities.

Public viewing

Sports event

Exterior rendering

Sumitomo Realty & Development Co., Ltd.

19

Business activities to support value creation
Review of Operations

Two Major Large-scale Complex Development Projects

LEASING

Condominium Leasing
We manage and operate about 5,300 condominium
units for leasing primarily in the 23 wards of Tokyo.
Of these, 3,400 units of 25 buildings are the La Tour
series of premium residences for leasing in central
Tokyo, such as in Daikanyama, Roppongi, Shibuya,
and Shinjuku. Offering good views, high-grade
specifications and facilities, hotel-style bilingual
concierge services, and advanced security systems,
the La Tour series is well received by affluent clientsworldwide. (As of July 31, 2019)

Haneda Airport ProjectWith 1,717 rooms consisting of 160 luxury rooms and1,557 high-grade rooms, and direct access to Haneda
Airport one of the largest airport hotels in Japan
A complex consisting of a hotel, retail, a bus terminal, a spa, and other facilities withdirect access to Haneda Airport International Terminal, the gateway to Japan, will
debut in spring 2020. With 1,717 rooms, this will be one of the largest* airport
hotels in Japan, meeting the diverse needs of inbound and outbound tourists andbusiness people as well as VIPs.
On the top floor of the hotel, travelers will be able to relieve their fatigue at anatural hot spring offering a view of Mt. Fuji, the first such facility at an airport hotelin Japan.
* The number of rooms, 1,717 rooms,
is the largest among hotels locatedwithin airport sites in Japan (as ofJanuary 2019, based on research by
Sumitomo Realty)

HanedaAirportProject site

Haneda Airport
Zone 1

International
Terminal

Tonomachi
KING SKYFRONTHotelsSumitomo Fudosan Villa Fontaine Co., Ltd.
The Villa Fontaine series is our high-grade businesshotels at prime locations that offer slightly larger
guest rooms than average, spacious beds andbathrooms, and stylish interiors. We operate 13 Villa
Fontaine hotels in central Tokyo and one each in
Osaka and Kobe.
We operate 2,764 guest rooms (as of March 31,2019), including Village Izukogen and Village Kyoto,
which are resort/tourist hotels.

Domestic
Terminal 2

Connecting
road to be
newly constructed

Domestic
Terminal 1

Project outline
Location
Site area
Gross floor area
No. of floors
Scheduled opening

Haneda Airport 2-chome, Ota ward, Tokyo
43,035 m2
91,680 m2
12 above ground
Spring 2020

Ariake Garden
Large complex consisting of retail, a hotel, ahall, residences, and a theater
In spring 2020 a large complex is scheduled to open in Ariake of the Tokyo Bay area.
The complex will consist of a commercial facility with some 200 retail tenants, a hall
to be used for concerts and other events with a maximum audience capacity of
about 8,000 people, a high-grade hotel with 749 rooms, a spa, a park, a theater,
and a seismically-isolated triple-tower for condominiums with total units of 1,539.

ToyosuMarketMultipurpose Halls
Sumitomo Fudosan Bellesalle Co., Ltd.
We operate 29 event halls/conference centers incentral Tokyo from which customers can select the
optimum venues and packages according to theirpreferred location and purpose. We are an industry
leader in terms of the number of facilities in Tokyo
Metropolis. All our venues are equipped with anarray of equipment and fixtures and are easily
accessible, and there is a wide choice of venues tomeet diverse needs of events ranging from large
events such as exhibitions and entertainment, andseminars such as academic conferences and lectures,to outdoor events. We also operate eight belle salle
LOUNGEs, which offer pay-by-the-hour work spaces
available even for one person.

20

Integrated Report 2019

Project site

AriakeColosseumAriake StationTokyo
Big Sight

Daiba

Project outline
Location
Site area

Ariake 2-chome, Koto Ward, Tokyo

Plan summary
Gross floor area
Locationarea
No. of floors
Site area
Floor area
Main use
Construction
Scheduled opening
Completion(planned)

Approx. 107,000 m2

Commercial district: approx. 172,500 m2
ResidentialKoto-ku,Tokyo
district:
approx. 161,000 m2
M areaS areaCommercial building: 2 5 above ground, 1 below ground 2
32,000m
42,810m
Annex:
ground 2
161,000m2 6 above ground, 1 below172,000m
Hotel:
16 above ground, 1 below ground
Housing, childcare facilities,
Commercial, hotel, service
Hall:
1 below groundparking lot 5 above ground,apartment,
hall, parking lot, etc.
ResidentialOctober
towers:201633 above ground, 1 below
groundOctober
2017
October 2017From spring 2020 onward
January 2020

Sumitomo Realty & Development Co., Ltd.

21

Business activities to support value creation

City Towers Tokyo Bay

Review of Operations

Location: Koto Ward, Tokyo
No. of units for sale: 1,539
No. of floors: (West) 32 above ground		
1 below ground(Central) 33 above ground(East) 33 above ground
Scheduled delivery: 2020

SALES
Outlook

Condominiums
Having entered the condominium sales business in the first half of the 1960s, Sumitomo Realty is a pioneer in the domestic market for
condominium development and sales. We have become a leading company for condominium sales in Japan by staying ahead of ourcompetitors, strategically focusing on city centers and proactively developing large, high-rise properties. We have been the No. 1 supplier ofcondominium units both nationwide and in the Tokyo Metropolitan area for five consecutive years.

5,300 condominium units are expected to be delivered andcontracts had already been concluded for about 80% of themas of the beginning of the March 2020 fiscal year. Although
we forecast a 3.5% year-on-year decrease in revenue fromoperations to ¥320.0 billion, we plan to maintain operating
income of ¥47.0 billion, the same level as for the March 2019fiscal year.
Our target for the number of condominium units sold is
5,000 units for the March 2020 fiscal year, including units to
be delivered thereafter.

Shinagawa East City Tower
Location: Shinagawa Ward, Tokyo
No. of units for sale: 363
No. of floors: 26 above ground/
1 below ground
Scheduled delivery: 2020

Overview of the Fiscal YearThe condominium market saw continued firm demand from consumers looking to purchase condominiums
owing to low interest rates as prices remained high, especially in central Tokyo, reflecting the limited supply of
new condominiums.
In such an environment, we delivered a total of 5,970 condominium units, detached houses and land lots
during the March 2019 fiscal year, an increase of 89 units from the previous fiscal year, owing to the start ofdelivery of units in projects such as Grand Hills Motoazabu, City Tower Kokubunji the Twin, City Terrace
Yokohama Nagatsuta, and City Tower Higashi Umeda Park Front. As a result, the segment achieved record
results in terms of the number of units delivered, revenue from operations, and operating income. The
segment, with income at a high level, achieved an increase in operating income for the ninth consecutive year.
The number of condominium units sold decreased by 2,244 units from the previous fiscal year to 5,111
units. We controlled the pace of concluding contracts, including for units whose sales are to be recorded in thenext fiscal year, because progress exceeded our initial expectations. As a result, the number of condominium
units sold during the fiscal year under review was lower than the level for the previous fiscal year when thenumber of new condominium units brought to market was particularly high. Contracts have already beenconcluded for about 80% (about 65% for the previous fiscal year) of a total of 5,300 condominium units to
be delivered in the next fiscal year. We are making good progress toward achievement of the earnings targets
for the next fiscal year.

T O P I C S
Principal Condominium Projects in the Eight Management Plan
In 2018, Sumitomo Realty became the No. 1 supplier of condominium units bothnationwide and in the Tokyo Metropolitan area for the fifth consecutive year.
In the Eighth Management Plan, numerous projects are scheduled in central Tokyoand in Osaka, Sapporo and other major cities, including City Towers Tokyo Bay, which is alarge-scale condominium building with 1,539 units; City Tower Oimachi comprisingresidences, commercial facilities, and greenery; and City Tower Osaka Honmachi, which isone of the largest projects in Osaka City.

Name

City Tower Kokubunji the Twin
Location: Kokubunji, Tokyo
No. of units for sale: 554

No. of Floor: (West) 36 above ground/3 below ground		(East) 35 above ground/2 below ground
Scheduled Delivery: 2019

Revenue from Operations

Operating Income and Operating Margin

Billions of yen

Billions of yen

60

400

314.3
300

264.2

311.2

331.8

320.0
45

274.8

40

43.8

44.2

46.2

46.8

47.1

47.0

30

200

16.6

22

Units Delivered*
%

100

15

0

0

2015

2016

2017

Integrated Report 2019

2018

2019

2020

(Forecast)

2015

16.1

2016

14.7

2017

15.1

2018

■ Operating Income ● Operating Margin (right)

14.2

2019

30

Units

2020

No. of Units for sale

6,000

20

4,000

10

2,000

0

0

5,351

5,716

5,881

483

22 above ground/
1 below ground

Shinagawa East City Tower

Shinagawa Ward,Tokyo363

26 above ground/
1 below ground

City Tower Ebisu

Shibuya Ward,Tokyo307

23 above ground/2 below ground

City Towers Tokyo Bay

Koto Ward,Tokyo

1,539

32 above ground/
1 below ground (West)33 above ground (Central / East)

City Tower Shinagawa Park Front

Shinagawa Ward,Tokyo312

23 above ground/
1 below ground

City Tower Sapporo

Sapporo165

31 above ground/
1 below ground

City Tower Oimachi

Shinagawa Ward,Tokyo493

29 above ground/
1 below ground

City Tower Tokorozawa Classy

Tokorozawa

276

29 above ground/2 below ground

City Tower Aoi

Nagoya354

20 above ground

City Tower Musashi-koyama

Shinagawa Ward,Tokyo318

41 above ground/2 below ground

City Tower Osaka Honmachi

Osaka

855

48 above ground115

18 above ground/2 below ground

5,970
5,300

4,996

2015

2016

2017

2018

2019

2020

(Forecast)*Number of units includes condominium units, detached houses and land lots.

No. of Floors

Chuo Ward,Tokyo

8,000

14.7

(Forecast)

Location

City Tower Ginza Higashi

Grand Hills Minami Aoyama

Minato Ward,Tokyo

City Tower Ginza Higashi

City Tower Ebisu

City Tower Musashi-koyama

City Tower Osaka Honmachi

Sumitomo Realty & Development Co., Ltd.

23

Business activities to support value creation

Review of Operations

Remodeling—Shinchiku Sokkurisan

CONSTRUCTION

BeforeCustom Homes

BeforeAfter

Detached house
PREMIUM.J

Remodeling—Shinchiku Sokkurisan

Custom Homes

Sumitomo Realty launched the Shinchiku Sokkurisan, an innovative, first-ofits-kind full remodeling package in the industry, in 1996. Rolled out
nationwide step-by-step, it has become the top brand in the market with acumulative total of more than 130,000 units contracted. Furthermore, westarted skeleton renovation business for condominiums in 2000, ahead ofindustry peers, and have been No. 1 in revenue from condominium
remodeling five years running.

In 1972 Sumitomo Realty established a subsidiary in the U.S. where platformwood-frame construction is widely used, subsequently introducing
technology cultivated in the U.S. to a business in Japan. We launched
American Comfort custom home construction business in 1995, followed by
the debut of J∙URBAN urban-style housing series in 2003, and their urban
exteriors were well received. Aiming for further expansion of the business,
we added the “wood panel method” to our lineup in 2014 to strengthen theappeal of our products.

Overview of the Fiscal Year

240

189.0

199.1

203.6

209.4

221.7

230.0

15
120

%

20.4

0

24

5

2015

2016

2017

Integrated Report 2019

2018

2019

2020

(Forecast)

0

6.9

2015

7.7

2016

Units
12,000

22.0
20

9,000

16.1
15

13.9

10
60

Shinchiku Sokkurisan and Custom Home Units Contracted
25

13.0

6.8

2017

Special Award received at the Housing Renovation Competition
One of our projects in Shinchiku Sokkurisan remodelingbusiness received a Special Award (Association of
Housing Warranty Insurers Chairman’s Award) at the35th Housing Renovation Competition held by theCenter for Housing Renovation and Dispute Settlement
Support. This was the 11th award that we have received
at this competition since the March 2006 fiscal year.
With this project, the customer, who had initiallyintended to build a new house, was able to achieve what
he had in mind thanks to our renovation technology.
Moreover, since remodeling has increased earthquake
resistance and improved thermal insulation while also
realizing ease of maintenance for water supply anddrainage pipes, the house is expected to endure over thelong term so that it can be handed down in goodcondition to the next generation. This renovation project
was highly regarded as a proposal for remodeling anaged house so that it would be as good as or better thana newly built house while extending the life of thehouse.

25

7.7

9.2

9.6

2018

2019

2020

(Forecast)

8,770
2,882

9,350 2,990
2,761

Units
4,000

11,000
3,077

3,100
3,000

6,000

2,000

3,000

1,000

10
5

■ Operating Income ● Operating Margin (right)

8,454
7,310 2,455

10,449

0

0

2015

2016

2017

2018

■ Shinchiku Sokkurisan ■ Custom Homes (right)

2019

2020

PREMIUM.J

Remodeling—Shinchiku Sokkurisan

The segment plans to increase the number of units contracted centeringon the Shinchiku Sokkurisan remodeling business. We forecast a 3.7%
year-on-year increase in revenue from operations to ¥230.0 billion and a
7.8% year-on-year increase in operating income to ¥22.0 billion. We aim
to achieve record highs for both revenue from operations and operating
income.

Billions of yen

15.3

J・LECONTE—For an aged house remodeled to be as good as or superior to a newly built one—

20

180

After

Outlook

Operating Income and Operating Margin

Billions of yen

T O P I C S

achieved higher revenue and higher profit owing to an increase in thenumber of units delivered and improvement in profitability. Operating
income increased more than 20%, setting a new record after a five-year
hiatus since the March 2014 fiscal year.

In the housing construction market, although owner-occupied housing
starts were higher than the level for the previous fiscal year, the levelremained below 300,000 units. On the other hand, remodeling is apromising growth market, and we expect rising demand for remodelinggiven that the need to accumulate a stock of high-quality residential
properties is an issue in Japan.
During the March 2019 fiscal year, both the Shinchiku Sokkurisan
remodeling business and the custom homes business achieved newrecords in terms of the number of units contracted, exceeding 10,000
units and 3,000 units, respectively.
Both businesses also set new records in terms of the number of units
delivered and revenue from operations. As a result, the segment

Revenue from Operations

BeforeCondominium

0

BeforeAfter(Forecast)

Sumitomo Realty & Development Co., Ltd.

25

GROUP COMPANIESBusiness activities to support value creation

Review of Operations

BROKERAGE
Sumitomo Real Estate Sales Co., Ltd. was established in 1975 to conduct sales of condominiums developed by Sumitomo Realty. Sumitomo
Real Estate Sales entered the real estate brokerage sector in 1979, gaining a listing on the Tokyo Stock Exchange in 1998 and achieving
significant success. To achieve further growth as the Sumitomo Realty Group, Sumitomo Real Estate Sales delisted in 2017 and became awholly owned subsidiary of Sumitomo Realty. We will strive to use our sales network more effectively so as to further increase market share.

Overview of the Fiscal Year

Sumitomo Fudosan Esforta Co., Ltd.
Sumitomo Fudosan Esforta Co., Ltd. directly manages six ésforta fitness
clubs, primarily in Tokyo. Based on the concept of “assigned instructor
system,” at each outlet instructors propose comprehensive fitness
menus according to the member’s needs by combining gym, pool,studio, and nutritional programs and provide support. The company also
operates a golf academy and fitness studios primarily offering yoga anddance programs. In addition, utilizing the know-how cultivated throughoperation of a wide range of facilities, the company is contracted bynine municipalities to operate and manage public sports facilities (as ofApril 1, 2019).

T O P I C S
Mansion Plaza specializing inbrokerage of premium condominiums
in central Tokyo opens

8 storesTohoku area

5 stores

In July 2019 Sumitomo Real Estate Sales Co., Ltd. opened Mansion Plaza at fivelocations in central Tokyo. Mansion Plaza specializes in sales and brokerage ofpremium condominiums in central Tokyo that have high asset value based on acomprehensive assessment in terms of location, scale, management, etc.
At Mansion Plaza, professionals who possess the Mansion Expert in-house
qualification offer brokerage services. These Mansion Experts have knowledgeof condominium structures, facilities, market conditions, transactions, etc., aswell as excellent track records and a wealth of experience in brokerage ofpremium condominiums in central Tokyo.

(As of the end of March 2019)72 stores
7 stores

Capital Area

Kyushu area

155 stores

Tokai area

6 stores17 stores

Revenue from Operations

Operating Income and Operating Margin

Billions of yen

Billions of yen

80

60

58.5

61.5

66.7

69.2

71.9

73.0

40

21.5
16.5

12
28.1

20

0

26

Number of Transactions and Transaction Value
%

24

18

17.7

28.8

22.0

21.0

2016

2017

2018

2019

2020

(Forecast)

0

2015

2016

Billions of yen

Transactions

60

1,600

45

1,200

30

800

40,00037,058 37,643 38,000
33,968 35,987 36,108

15

400

20,0000080,000

19.1

28.7

31.0

29.2

30.1

6

2015

Sumitomo Fudosan Syscon Co., Ltd. sells interiors to mainly Sumitomo
Realty's customers of their condominiums, custom homes, andremodeling. The company’s interior concierges propose interiors
according to customers’ requests from among the products of over 300
manufacturers in Japan and overseas. The company also constructs
Mansion Gallery and carries out interior design and finishing for hotels
and commercial facilities, as well as offers proposals for effective landuse, such as car park operation.

Izumi Restaurant Co., Ltd.

We will strive to increase the number of transactions and aim to secure
profit on a par with the level for the March 2019 fiscal year. We forecast
a 1.6% increase in revenue from operations to ¥73.0 billion andoperating income of ¥22.0 billion, the same level as the March 2019fiscal year.

Hokkaido area

Chugoku area

Sumitomo Fudosan Tatemono Service Co., Ltd. conducts property
management for about 190,000 units nationwide centering on
Sumitomo Realty's condominiums. In pursuit of comfortable, safe andsecure living environments for customers, offering services ranging fromdaily building management to concierge services (consultancy for minor
repair of rooms and equipment replacement, introduction of special
benefits available from the Sumitomo Group’s businesses), the company
responds to various customer needs based on abundant know-how andsolid technological capabilities. Residents of condominiums managed by
the company can use professional housecleaning services, housekeeping
services, and other useful lifestyle-related services and benefits.

Outlook—Services offered by professionals with excellent track records,
experience, and knowledge of condominium brokerage—

Kansai Area

Sumitomo Fudosan Syscon Co., Ltd.

year, the network had a total of 270 offices nationwide as of March 31,
2019.

In the existing home market, the number of sales contracts concluded
for condominium units in the Tokyo metropolitan area remained highand average contract prices continued to rise.
In this environment, the segment recorded a 1.6% increase in thenumber of transactions, to 37,643 units, led by existing-home saletransactions, achieving a record high for the fourth consecutive year. In
addition, the total transaction value rose to ¥1,326.3 billion, also arecord high, largely attributable to an increase in the unit transaction
value that was particularly marked in central Tokyo.
As a result, the segment maintained revenue growth for the tenthconsecutive year and operating income growth for the fourthconsecutive year, resulting in record-high revenue from operations andrecord-high operating income.
With the addition of four directly operated offices during the fiscal

270 directly managed stores

Sumitomo Fudosan Tatemono Service Co., Ltd.

2017

2018

■ Operating Income ● Operating Margin (right)

2019

2020

(Forecast)1,193.0

1,257.5

1,326.4 1,350.0
60,0001,065.7 1,065.7

2015

2016

2017

2018

2019

■ Transaction Value ● Number of Transactions (right)

2020(Forecast)0

Sumitomo Realty & Development CA., Inc.
Sumitomo Realty & Development
CA, Inc. owns and manages
InterContinental Los Angeles Century
City, a luxury hotel that boasts
excellent quality.

Sumitomo Fudosan Villa Fontaine Co., Ltd.
Sumitomo Fudosan Bellesalle Co., Ltd.

Refer to page 20.

Izumi Restaurant Co., Ltd. provides catering services for social gatheringsand various parties. Its services are popular among tenants of Sumitomo
Realty’s office buildings and users of Sumitomo Fudosan Bellesalle (event
halls).
The company runs Rieven House convenience stores within Sumitomo
Realty's office buildings that offer a product mix geared to the needs ofoffice workers.

Izumi Country Club
Izumi Country Club is a golf clubwith convenient access, locatedabout 50 km, or a one-hour
drive, away from central Tokyo.
Taking advantage of the flat
landscape, the refined layout
with effectively placed ponds
and greens as well as the scenery replete with seasonal plants andflowers are enjoyed by players.

* The Company changed its accounting policy (revenue recognition standards of Sumitomo Real Estate Sales) from the beginning of the fiscal year ending March 31, 2020.
The figures provided for the fiscal year ended March 31, 2019 are those after retrospective application.

Integrated Report 2019

Sumitomo Realty & Development Co., Ltd.

27

Addressing Social Issues through Business Activities
The Sumitomo Realty Group is engaged in a range of businesses, closely related to people's daily lives,
such as office buildings, condominiums, remodeling, custom homes and brokerage. Thus, to achievesustainable development of the Group, it is indispensable to create even better social assets and passthem down to the next generation through these businesses.
By accurately responding to changes in the social environment, Sumitomo Realty is committed
to development of safe and secure communities that will continue to deliver value far into the future
and contribute to the attainment of SDGs.

People-friendly
community development

Changes inthe external environment

Decline in Japan’s working
population

Development of vibrant communities where
everyone can live with peace of mind

Disasterprevention
BCP compliance
Development of safe and secure communities thatwithstand disasters, ensure business continuity, and protect
the livelihoods of people

Advent of the super-aged society

Reduction ofenvironmental impacts

Concentration of populationin cities

Introduction of technology anddesign contributing to reductionof impacts on the global
environment

Climate change
Increasing need toextend healthy life expectancy

Development of safe and securecommunities that will continue todeliver value far into the future

Harmony withhistory and culture
Creation of new value in harmony withhistory and culture by utilizing contemporary
design technology

Utilization of Sumitomo Realty’s experience, knowhow, and networks
28

Integrated Report 2019

Human resources development

Customer support
Sumitomo Realty & Development Co., Ltd.

29

1FeatureSustainable urban redevelopment-Osaki Garden City-

Relevant SDGs

City development to tackle the challenges facing the community

1 Enhancement of disaster prevention by eliminating the area
overcrowded with wooden houses and of narrow streets

This area used to be a densely built-up area with wooden houses exposed tohigh risk of fire and the streets were narrow, making it difficult for emergency
vehicles to enter the area. As a result of the redevelopment project, roads
around the site were improved and a fireproof condominium building wasconstructed, realizing a safe and secure community.

2 Promotion of universal design of the area by eliminatinga large difference in elevation

The site used to have a difference in elevation as large as eight meters andexperienced land collapse. The project created a landscape design with gentle
undulations and eliminated the large difference in elevation. It also built stairs
and installed elevators connecting the area with the surrounding downtown
area and the station to allow everyone to move easily.

3 Widening sidewalks to ensure pedestrian safety
Osaki Garden City, completed in October 2018, is a large complex
development project with a total floor area of about 220,000 m2
consisting of an office tower, a residential tower, and spacious green
open public spaces. The site used to be characterized by a densely
built-up area with wooden houses, an elevated land creating steep
slopes, and narrow streets preventing emergency vehicles fromapproaching. In addition to these challenges for disaster response, thearea had no linkage with the downtown area adjacent to Osaki Station.
The completion of Osaki Garden City improved the area’s linkage withthe downtown area adjacent to the station and helped to tackle thechallenges it had faced, contributing to development of the communityand enhancing its disaster prevention.
Block A

Block B

Principal purpose

Office, retail, etc.

Residence (423 units), office, etc.

Site area(30,080 m2)

19,927 m2

10,153 m2

Gross floor area
(219,565 m2)

178,141 m2

41,424 m2

Floor area ratio

Approx. 780%

Approx. 250%

No. of floors

24 above ground2 below ground

22 above ground2 below groundSidewalks in the area, indispensable infrastructure for daily activities ofresidents, used to be so narrow that safety of pedestrians was at risk. The
project widened sidewalks in the area and ensured that pedestrians can walkwithout fear.

Spacious public space to facilitatecommunity building and strengthen
disaster prevention

Public area rich in greenery andtree planting for local greening

Since the Osaki area had few public spaces where local people could
gather, it needed to facilitate community building and create a place that
could serve as a base in the event of a disaster. The project built an
expansive public space exceeding 8,000 square meters between theoffice tower and the residential tower. People in the area, not only
residents but also tenants of the office tower, are involved in community
building and improving disaster prevention.

The Osaki area previously had many small factories and lacked greenery.
The project developed a spacious green public space, contributing togreening of the local area. Cherry trees from Washington D.C., whichhave historical links with this area, were planted to pass down the local
history to future generations and express the desire for sustainable
development of the community.

Key points of the Osaki Garden City Redevelopment Project
Formulation of urban functions and a complex urban area to promote development of the area around the station
Development of a safe and secure community with enhanced disaster-prevention functions, including elimination of a densely
built-up area of wooden houses and widening of narrow streets● Promotion of universal design of the community, including elimination of the large difference in elevation of the site
● Spacious green open public spaces covering some 8,000 m2 to facilitate community building and serve as a disaster-prevention base
● Widen and improve a transportation route connecting Shinagawa City Hall, which will serve as the disaster control center in theevent of a major disaster, with the surrounding area (roads to be cleared in the event of an emergency)●●

30

Integrated Report 2019

Starting point of the portable shrine carriedby children for the Kifune Shrine Annual
Festival

Osaki Garden City Fire and Disaster
Prevention Fair 2019

Ceremony for planting cherry trees from
Washington D.C.

Osaki Garden City Cherry Blossom Festival

Sumitomo Realty & Development Co., Ltd.

31

2FeatureRemodeling—Shinchiku Sokkurisan

Relevant SDGs

Social issues concerning houses in Japan
Although the penetration rate of earthquake-resistant house in Japan is increasing every year, there are still many houses with low earthquake resistance.
Moreover, the lives of houses in Japan tend to be short compared with those of houses in Europe and the U.S. and the short rebuilding cycle has emerged as
an issue in contemporary Japan. Waste due to demolition of houses accounts for a large share of waste discharged by the construction industry. It is required thatlives of houses should be extended, which facilitate the shift to stock-type society where houses could be used by successive generations.
Earthquake-resistance of housing stock

International comparison of theaverage age of houses
Years

Without earthquake
resistanceApprox.
9 million units

80

With earthquake
resistanceApprox.
6 million units

Demolition
Houses: 7,750

60
40With earthquake
resistanceApprox.
37 million units

1981
or earlier

Source: “Progress of Earthquake Proofing of Houses”
Ministry of Land, Infrastructure, Transport and Tourism (data as of 2013)

20
0

Unit: thousand tons

Repair 570

100

From 1982
onwardIndustrial waste discharged (construction industry)

66.6

80.6

32.1
Japan

US

UK

Source: “International Comparison of the Average Age ofHouses Deregistered in 2018” Ministry of Land, Infrastructure,
Transport and Tourism(51% of the discharged
waste throughdemolition)

Building Work/
Renovation
Private Sector
Civil Engineering

15,12012,950Total:
72,700 40,540

Public Sector
Civil Engineering

3,520

Source: Reference Material 7 of “Residential Land Session, Panel on
Infrastructure Development (36th)” Ministry of Land, Infrastructure,
Transport and Tourism

Shinchiku Sokkurisan initiatives concerning social issues

The Shinchiku Sokkurisan remodeling business based on our concept ofsafe and secure housing has the industry’s foremost track record for full
remodeling with seismic reinforcement as part of the standard package.
Shinchiku Sokkurisan has met with a positive response among customers
with its remodeling proposals corresponding to the lifestyles of individual
households as well as fixed-price system and Sumitomo Realty's uniquebusiness model of appointment of a dedicated sales engineer from thefirst consultation to delivery. The cumulative total of units contracted forShinchiku Sokkurisan reached 130,000 units (as of December 2018).
The lives of houses in Japan are typically much shorter than those ofhouses in Europe and the U.S. From the viewpoint of efficient utilizationof limited resources, Shinchiku Sokkurisan fulfills an important role as theremodeling greatly reduces waste compared with rebuilding. ThroughShinchiku Sokkurisan, we will provide highly sustainable houses in whichpeople can live for longer period of time in comfort.

Cumulative total of units contracted for Shinchiku Sokkurisan
Thousand units

140

120

Conventional
remodeling

80

60

40

People friendly

20

1997.3 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

New system: neither conventional remodeling
nor rebuilding
Full remodeling with a price roughly 50% of rebuilding

Seismic reinforcement byremodeling not considered

Seismic reinforcement as standard specificationunclear pricing

Clear fixed-price system

Additional charges incurred due to
unexpected circumstances

No additional charges

Integrated Report 2019

Another aspect of Shinchiku Sokkurisan is people-friendly remodeling which includes
thermal insulation, waterproofing, and barrier-free design, in addition to seismic
reinforcement. Furthermore, in response to change of the family structure andpopulation aging, we offer homes suitable for contemporary lifestyles without
rebuilding, such as change of the layout, extension, downsizing, change from a twostory house to a one-story house, and change to a two-family house.

50%

60%

70%

Renovation
Full
remodeling0%Partial reform

Rebuilding100%

Types of remodeling Shinchiku Sokkurisan covers
Resolve all your problems
with your current houseYour dream comes true as if building
a custom-built house

Full remodeling

Renovation

Transform the house into an
earthquake-resistant one with peace ofmind while utilizing the existing structuralelements as much as possible

Complete renovation of both the interior
and the exterior with great flexibility interms of change of the layout

Harmony with history and culture

Before32

The cost of Shinchiku Sokkurisan remodelingis about 50-70% of that of rebuilding.
We respond to various customer
needs corresponding to lifestyles, desires,and budgets, and execute house remodelingat lower cost than rebuilding. In addition toconventional “partial reform,” we also offer“full remodeling” to transform the existinghouse into an earthquake-resistant one
while utilizing the existing structuralelements as much as possible and“renovation” to completely refurbish boththe interior and the exterior with great
flexibility in terms of change of the layout.

In Shinchiku Sokkurisan remodeling, the principal structural elements of a house are retained, and the life of
the house is extended through the reinforcement of earthquake resistance, which makes it possible tominimize discharge of industrial waste, CO2 emissions, and waste of resources.
Moreover, customers can live in the house while remodeling work is executed, resulting in eliminationof waste, such as packing for moving to temporary accommodation.

Remodeling—Shinchiku Sokkurisan

Principally remodeling certain
parts of the house

Lower cost than rebuilding

The launch of Shinchiku Sokkurisan remodeling is the practical expression of our desire to
renovate houses, endowing them with earthquake resistance without incurring the highcost associated with rebuilding. This idea was prompted by the collapse of many aged
houses in the Great Hanshin Awaji Earthquake of 1995. We introduced aclear fixed-price system with a price roughly 50% of that of normal
rebuilding and seismic reinforcement based on earthquake resistancediagnosis as a standard specification.
In the Kumamoto Earthquake of 2016, a series of powerful tremors caused houses to collapse that had
previously been considered not to need seismic reinforcement. In view of these circumstances, we have developed
a proprietary method to address the issues due to such a series of powerful tremors. With the addition of this new
method, we now offer seismic reinforcement and damping plans suitable for houses of all ages.

Environmentally friendly

100

0Seismic reinforcement

After

We launched a regional revitalization support service for local cities confronting issues
such as depopulation, in order to contribute to invigoration of local regions by utilizing
our expertise. The first project was regional revitalization support of Bandai Town inFukushima Prefecture.
Utilizing the expertise of remodeling of traditional wooden houses in the
Shinchiku Sokkurisan business, we refurbished buildings with the aim of enhancing
functions while retaining the external appearance of the historic townscape.

First traditional wooden house remodeling project:house built over 70 years ago

Sumitomo Realty & Development Co., Ltd.

33

Disaster-resistant Community Development

Relevant SDGs

We consider that creating social assets, such as office buildings and condominiums, and surely handing them over to the next
generation are central to the fulfillment of our mission. We aspire to develop safe and secure communities, not only for the
residents but also for everyone in the neighborhood, through our focus on buildings that can prevent or withstand damage in theevent of disaster, such as a fire or an earthquake, as well as regional disaster preparedness as a communal function.

ActionProviding a regional disaster-response baseDisaster prevention for condominiums

Public space, created through large-scale development, and halls within
office buildings will be used as temporary shelter for people unable toreturn home in the event of an earthquake or other disaster.
In addition to the open space on the site where people can stay, thefunctionality as an evacuation center has been further enhanced with awarehouse for disaster-response equipment, emergency toilet that canbe installed directly to manholes and well water for cleaning the toilet.

Sumitomo Realty’s condominiums feature seismic isolation/control
structures to prevent deformation of buildings and alleviate shaking
during an earthquake. In addition, various disaster countermeasures are
implemented, such as installation of emergency power generators,
elevator safety functions, storerooms for emergency supplies, andemergency wells.

Protection of office workers and business

Key disaster countermeasures (City Towers Tokyo Bay)

Sumitomo Realty’s office buildings actively employ seismic isolation/control structures whose ability to significantly reduce tremors provides protection for
office workers and office automation equipment. Moreover, we are promoting implementation of measures effective for tenants’ business continuity,
including installation of large-capacity emergency power generators in buildings to offer sectional supply power in office zones during a blackout.

Basic structure
Absorb seismic energy
Seismic isolation structure

Example case: Sumitomo Fudosan Osaki Garden Tower

Conventional structure

Seismic isolation structure designed to protect people and business

City Towers Tokyo Bay
Strongshaking

Seismic isolation devices

The seismic base-isolation layer cuts down on shaking
and reduce shaking in the upper floors.

Slowshaking

Plaza

Isolators
While supporting the building’s
weight, they move gently from side
to side to reduce intermittent
vibrations during an earthquake.

The seismic base-isolation structureabsorbs the shaking from the ground

Seismic
isolation
devices

U-shaped dampers
An earthquake’s seismic energy isabsorbed with their stable restoring
force characteristics, reducing
vibration.

Width of earthquake
vibration

Three-layer backup system avoids the risk of power outages.
Main Line
Break in powertransmission

Accident

STEP 1

Auxiliary Line
Electrical powertransmission

2-line power receiving system
Use an extra-high voltage of 66 kV and a 2-line powerreceiving system in order to cope with emergencies

Electricity generated with mediumpressure gas

Transformer substation

STEP 2Medium-pressuregas
Municipal gas facility

Electricity is generated with medium-pressure gas in
the event of power supplied by substations being cut
off due to an emergency.
(Supplies 15 VA/m2 for lighting and power sockets,and 7 VA/m2 for air conditioning for at least ten days.)

Disaster prevention activities involving local
residents and customers
Sumitomo Realty regularly conducts various disaster drills jointly withtenants of office buildings, local residents, and customers.
At Sumitomo Fudosan Shinjuku Garden Tower, in cooperation with the firestation, the police station, and the local government, large-scale drills
were conducted, including traffic hand signals exercise with traffic lights
off, exercise for rescue from high places, and water-discharge drills.
At Hotel Villa Fontaine Tokyo-Shiodome, with the cooperation of an NPO,an emergency instructions and evacuation drill for foreign guests was
conducted in four languages.

Cracking of pillars and beams
Deformation of door frames tends to occur
Glass tends to shatter and fall
Concrete tends to fracture and fall
Lighting equipment tends to fall
Sashes tend to come off

Frame tends not to fracture
Deformation of door frames tends not to occur
Furniture tends not to topple overLighting equipment shakes lessFirm ground and piles

Robust pillars to increase earthquake resistance

110 piles installed

Welded closed hoops

Disaster countermeasures
For power supply in the event of power outage

Emergency power generator

Electricity generated with fuel oil
Power generation

72-hour supply
oil tank for generator

3,000 kVA

2 units

Dual-fuel gas
turbine

STEP 3In the event of the supply from medium-pressure gas
being halted, electricity will be generated with the useof the heavy oil stored in the oil tank installed within
the premises.
(Supplies 15 VA/m2 for lighting and power sockets,and 7 VA/m2 for air conditioning for 72 hours.)
Traffic hand signals training by the Shinjuku Police Station with traffic lights turned off

34

Integrated Report 2019

Automatically stop at the closest floor in the event ofan earthquake

Elevator safety device
Water supply available even if the pump stops

Useful for extinguishing fireFire cistern

Water supply measures in theevent of a disaster

Securing water for domestic use, such as for a toilet

Available even in power outage

Emergency wells

Disaster-ready vending machines

Useful in the event of a disaster

Fuel oil

Because seismic isolation devices
absorb seismic energy,
the building shakes slowly andless deformation occurs.
(Conceptual diagram)

multipurpose hallBusiness continuity planning (BCP) support through multiple safety measures

Earthquake motion(horizontal vibration)

Violent horizontal vibration is caused.
Higher floors shake more strongly.

Emergency toilets connectable toa manholeFor emergency rescue

In the event of an emergency, such as an earthquake
Emergency supplies

Provided to each household

First-aid kit

Emergency backpack

Long-life drinking water

Helicopter hovering space

Sumitomo Realty & Development Co., Ltd.

35

Environmentally Friendly Community Development

Relevant SDGs

Actions
Power-sharing, energy-saving system

To Reduce CO2 Emissions
Although various initiatives have been implemented since theadoption of the Kyoto Protocol in 1997, it is reported that CO2
emissions from business operations are still trending upward.
Sumitomo Realty is striving to reduce CO2 emissions in various
aspects of its business through a shift to energy-saving design andby pursuing other initiatives.

Reduction of energy consumption
Sumitomo Realty has gained the S rank (excellent business operator)
evaluation under the “Business Operator Classification Evaluation
System” (SABC Evaluation System) of the Ministry of Economy, Trade,and Industry whereby business operators are ranked according to thedegree of their reduction of energy consumption.

Energy consumption
Energy consumption(kl crude oil equivalent per year)

Intensity(kl/m2 crude oil equivalent per year)

2016

2017

2018

120,403

123,516

135,3200.03851

0.037850.03742

Sumitomo Realty has introduced a power-sharing, energy-saving systemcentering on Izumi Garden Tower. In addition to electricity supply from autility, this system employs private power generation using a
co-generation system to supply electricity to Izumi Garden Annex
adjacent to Izumi Garden Tower and uses waste heat for highly efficient
district heating and cooling on a daily basis, thus contributing to
reduction of CO2 emissions (by approx. 2,600 tons, about 8% of current
CO2 emissions).

Initiatives for condominium buildings
In planning condominium buildings, as well as enhancing insulation
performance of floors, walls, and ceilings, we vigorously adopt
technologies to enhance energy-saving effects, including roof greening,double glazing, total heat exchange systems, heat pump systems for
efficient cooling and heating using heat in the air, heat-recovery-type
gas-powered hot water supply systems, bathtubs that retain hot watertemperature, and gas cookers
with inner flame burners.
Photovoltaic power generation
facilities and charging stations
for electric vehicles are also
installed to contribute toenergy saving.

Initiatives for office buildings
To Protect the Water Environment

Decentralized HVAC system
Sumitomo Realty’s office buildings adopt decentralized HVAC systems.
Unlike a centralized system for management of an entire building using asingle heat source, a decentralized system allows specific air-conditioning
setting for each zone, which enhances tenants’ convenience and saves
energy. By dividing a floor into zones, it is possible to turn on or off air
conditioning and adjust the temperature of each zone. Moreover, the useof natural vents installed at window frames minimizes unnecessary use of
air conditioning. This system capable of achieving big energy savings isoffered as a standard specification.
Tokyo Nihombashi Tower
Floor zoning for decentralized HVAC
installment

At our office buildings and condominium buildings, facilities forreclaiming and treating rainwater and non-fecal wastewater have been
vigorously introduced for use of recycled water. Recycled water is used
for flushing toilets and for watering greenery and trees.
Building nameShibuya Infoss Tower

Gross floorarea (m2)Completion

21

34,460March 1998

Sumitomo Fudosan Iidabashi First Building

14

53,322

March 2000

Sumitomo Fudosan Shibakoen First Building

35

63,822June 2000

Sumitomo Fudosan Shibakoen Tower30

36,300

October 2001

Sumitomo Fudosan Iidabashi Building No. 3

24

53,047

October 2002

43

204,444

October 2002

Low-e double glazing glass

Sumitomo Fudosan Mita Twin Building West43

98,338September 2006

As well as enhancing insulation performance of external walls
for air-conditioning efficiency, low-e double glazing glass is
adopted to reduce transmission of solar radiation heatindoors in summer and outflow of heat from indoors in
winter.

Shinjuku Central Park City44

130,695

February 2010

Sumitomo Fudosan Shinjuku Grand Tower

40

168,372

December 2011

Sumitomo Fudosan Tamachi First Building

11

21,802

April 2012

Energy-efficient LED lighting with brightness sensors is
adopted. In addition to low power consumption, it
contributes to reduction of CO2 emissions.
Integrated Report 2019

To Protect and Promote Greenery

In accordance with the Basic Law for Establishing the Recyclingbased Society promulgated in 2000, businesses are required totake action to address the continuing high volume of waste
generation, which is considered a pressing issue in Japan.
Sumitomo Realty is striving to minimize waste generation whenremodeling buildings and upgrading facilities and also working toextend the life of buildings.

—Vigorous promotion of roof greening and tree
planting in development projects

Initiatives through Shinchiku
Sokkurisan remodeling
The strength and rigidity of timber increases in the course of 100 years
or so. Short-cycle rebuilding wastes resources, imposing substantial
unnecessary costs and generating large amounts of industrial waste
because usable robust pillars and beams are discarded. In addition,
conventional remodeling involves repeated piecemeal projects, resulting
in generation of industrial waste each time.
Shinchiku Sokkurisan is a systematic approach to extend the life ofexisting housing through earthquake-reinforcement work while retaining
the main structural elements, thereby minimizing waste of resources andgeneration of industrial waste.

Tokyo Nihombashi Tower

35

105,837

April 2015

Sumitomo Fudosan Shinjuku Garden Tower

37

143,372

March 2016

Sumitomo Fudosan Roppongi Grand Tower

43

202,549

October 2016

Sumitomo Fudosan Osaki Garden Tower

24

201,560

January 2018

Sumitomo Fudosan Shibuya Tower

21

34,952February 2019

Retaining and increasing greenery in cities, that is, creating
communities in harmony with natural diversity, is integral to
Sumitomo Realty’s approach to environmental protection andurban redevelopment. The provision of public spaces rich ingreenery is an indispensable theme incorporated in development
plans. These public spaces can be used not only as venues for local
people to relax but also contribute to mitigation of global warming
and are useful in the event of a disaster.

Roof greening
Roof greening is an effective and efficientapproach to tree planting in urban areas
where space is limited. Green rooftops provide
insulation by blocking direct sunshine andcontribute to energy saving by enhancing theheating and cooling efficiency of the entire
building. Roof greening also helps suppress
temperature increases due to the heat island
phenomenon.

Refer to page 32.

Design of long-life office buildings

Green open spaces

Extending the life of buildings through architectural design that ensuresthey are usable for many years with minimal deterioration will minimize
resources wasted and industrial waste generated in reconstruction
works, thus contributing greatly to reduction of environmental impacts.
For office buildings, as well as design for superior earthquake resistanceand fire resistance, we emphasize securing of space and design capableof responding to change in workstyles, change in office layout, andevolution of IT. For example, the “ceiling grid system” whereby ceiling
equipment is incorporated in lighting panels makes relocation of theequipment easy.
Flexible response tochanging officelayout can minimize
waste generation.

In urban areas with few parks or open spaces,
the creation of green open spaces is a vital
aspect of new development projects. City
Tower Kanamachi has a spacious green areaof some 3,800m2, which is open to the public.
The planting includes tall trees as well as
various shrubs and flowers. This rare place
where one can enjoy the changing beauty of
the four seasons in an urban setting is asource of delight throughout the year for local
residents.

Partitions

No. offloorsIzumi Garden Tower

LED lighting

36

Use of recycled water

To Reduce Industrial Waste

600

600

Design of long-life detached houses
Our custom home business employs the “wood panel construction
method” for balanced distribution and adsorption of external forces
such as earthquakes. In addition, standard specifications include “power
panels,” which are strong bearing walls with high magnification.
Enhancement of durability ofhouses extends their life,
postponing the need forrefurbishment and rebuilding,thus contributing to reductionof industrial waste.

Protecting nature
Urban development projects tend to involve
the removal of mature trees that are alreadyon sites earmarked for development. In
contrast, instead of destroying nature,
Sumitomo Realty seeks to preserve them sothat they can be utilized as greenery toaccomplish attractive urban development inharmony with nature. La Tour Sapporo Ito
Garden was developed on the site formerly
occupied by Kairakuen, one of the firstmunicipal parks in Japan. The site, which
includes a tract of virgin forest conserved
since the time of Kairakuen, remains notable as a place where nature
flourishes in an urban setting.

Sumitomo Realty & Development Co., Ltd.

37

Strengthening the basis of value creation

Together with Customers

Creating a Workplace Environment Suitable for Diverse Human Resources

Providing Products and Services to Support Customers' Comfortably Affluent Daily Lives

Sumitomo Realty is working to create a superior workplace environment and implementing various initiatives with the aim of
becoming an enterprise where all employees are valued and experience a powerful sense of purpose.

Sumitomo Realty’s products, namely office and residential properties, are important venues where customers conduct business or where
their private lives are centered. In order to ensure superior quality management and enhance services, each division is adopting direct
marketing and management systems emphasizing communication with customers.

Hiring of Diverse Human Resources

Creating a Good Working Environment

Communication with Customers

Questionnaire Surveys of Customers

Sumitomo Realty hires diverse human resources, with an emphasis onindividuals with distinctive personalities, through recruitment of new
graduates and mid-career professionals with particular expertise andexperience. Bonus assessment is conducted on a uniform basis regardlessof age and position, promotion is not in accordance with the number ofyears of service so as to give young employees opportunities, and theprogressive performance-linked pay with high-percentage commissions isamong the highest in the industry. Within the framework of a flexible
personnel system focused on job descriptions and roles, we are working
to create a workplace environment where all employees can display theirfull potential.

Measures to ensure compliance and prevent harassment

Sumitomo Realty employees are directly involved in marketing andmanagement of office buildings and condominiums. Directly
communicating with customers, they feed back the voice of thecustomer to product development so that customers’ perspectives arereflected in products attuned to customer needs.

Our condominium sales, Shinchiku Sokkurisan remodeling, custom homeconstruction, and hotel operations conduct questionnaire surveys ofcustomers with a view to enhancing customer satisfaction. Sumitomo
Fudosan Tatemono Service also conducts questionnaire surveys of
directors of home-owner associations of condominium buildings in orderto enhance the quality of management.

We are taking steps to raise the awareness of our employees abouthuman rights issues, prevention of different types of harassment,compliance, prevention of long working hours and other issues fromvarious perspectives by periodically holding personnel training programs.
Furthermore, internal points of contact have been established for
consultation about sexual harassment and other issues and forwhistleblowing, respectively. When reports are received at these pointsof contact, matters are dealt with fairly and strictly, and steps are taken
to ensure confidentiality.

Flexible work styles

Initiatives for Empowerment of Women
Our action plan in accordance with the Act on Promotion of Women’sParticipation and Advancement in the Workplace is to increase the ratioof women among new hires. Our target is to increase the ratio of
women among new hires for sales and engineering, two job categories
with promising career opportunities for women, from 17.9% to 25%
and from 5.4% to 8%, respectively, in the period from April 2016 to
March 2021. The ratio improved every year, and we achieved the target
as of March 31, 2019, ahead of the plan, with 26.5% and 9.2%,
respectively. We will continue our efforts to create a workplace where
women are empowered.

Education and Training
In order to enhance the professional and managerial capabilities ofindividual employees according to the skills they require, we hold various
training sessions, conduct OJT, and support employees who areendeavoring to gain qualifications.
Moreover, we strive to achieve optimal personnel assignment and tocreate a workplace where employees can work with peace of mind. For
that purpose, we emphasize communication, including throughinterviews with employees conducted by the Human Resources
Department.

Various systems are available to enable flexible work styles, including
variable working hours for job categories with considerable variation inworkload from month to month or year to year, remote work, andstaggered working hours available for female employees with young
children. We are endeavoring to create a working environment where all
employees can work efficiently by making the best use of the various
systems available.

Employees’ Health and Safety
HealthIn addition to financial support for employees receiving a comprehensive
medical checkup and free-of-charge influenza vaccination, we conduct
an annual health checkup of all employees.
Furthermore, employees can seek advice from medical specialists
free of charge about mental and physical health. Free-of-charge
consultation is also available over the phone, considering privacy.
Employees’ working hours are strictly managed to prevent
excessively long hours of work. Employees who do more than a certain
amount of overtime receive a medical check by an industrial physician
based on an interview sheet and, if necessary, employees receive face-toface health guidance. In these ways, we are implementing carefulmanagement of employees’ health.
Also, as part of the initiatives to support employee health, Sumitomo
Realty has become a corporate member of fitness clubs operated by
Sumitomo Fudosan Esforta and has encouraged employees’ use of thosefacilities.

Elimination of occupational accidents
With the aim of eliminating occupational accidents, the Construction
Divisions hold an annual occupational health and safety conference andeach site holds a monthly safety meeting to ensure safety management.
Staff of the Construction Safety Management Section which is anorganization dedicated to safety management, patrol construction sites
throughout Japan and provide guidance.

38

Relevant SDGs

Integrated Report 2019

Feedback Meeting

Customer Center (Call Center)

For condominium development, the feedback meeting is held
periodically with staff from the after-sales service department as well as
sales, architectural design, and management departments participating.
Issues reported at the Feedback Meeting are fed back to productdevelopment to be reflected as necessary, in review of the architecturaldesign criteria and management, sales, and after-sales service systems.
For example, at condominiums with 24-hour manned management,interphones were modified to enable two-way communication between
the disaster prevention center and each residence.

Review ofmanagement,
sales, andafter-sales
service systems

Review ofarchitecturaldesign criteria

Voice of thecustomer

In 1999, ahead of industry peers, Sumitomo Realty established within
the head office a department dedicated to after-sales services, which
was previously a unit of a condominium management company. In April
2007 contacts for customers, which were previously separate according
to products (condominiums, custom homes, and Shinchiku Sokkurisan
remodeling) and regions, were integrated in the Customer Center inorder to effectively and speedily respond to the voice of the customer tofurther enhance customer satisfaction.
Calls to the Customer Center’s toll-free number are handled aroundthe clock throughout the year by operators exclusively assigned for that
purpose. Customer inquiries, etc. are transferred to appropriate
departments to ensure accurate and swift responses. The Customer
Center is striving to become a contact point that customers will callwhenever they wish to seek advice or for troubleshooting, not just in
emergencies.

Investor Relations

Feedback
meeting

In addition to swift disclosure of material information toshareholders and investors, the Company posts the latest
management information, including the financial summary andother financial data, on its website to enhance managementtransparency.
At a meeting held semiannually to present financial results
to analysts and institutional investors, the President andofficers in charge make presentations. We also actively engage
in small meetings and individual meetings, at which we
provide briefings and answer questions, and holdteleconferences in response to inquiries. In addition, we areenriching the provision of information in English.
Information for Investors
Japanese: http://www.sumitomo-rd.co.jp/ir/
English: http://www.sumitomo-rd.co.jp/english/

Sumitomo Realty & Development Co., Ltd.

39

Corporate Governance
Board of Directors and Statutory Auditors (As of September 30, 2019)
Apr 1970 Joined the Company
June 1998 Director
June 2007 Director - President
Sept 2019 Director - Chairman of the		Board (present)

Outside Director

Chairman of the Board

President

Outside Director

Kenichi Onodera

Kojun Nishima*

Yozo Izuhara

Apr 1983 Joined the Company
June 2009 Director
June 2010 Representative Director(present)
June 2013 Director - Deputy President(present)
Nov 2017 Head of Residential Business
Division (present)

Apr 1981 Joined the Company
June 2008 Director
June 2010 Representative Director(present)
June 2013 Director - Deputy President(present)
Mar 2016 Head of Management Division(present)
Deputy President(Significant concurrent positions outside

Nobuaki Takemura* the Company)

Director of Sumitomo Real Estate Sales Co., Ltd.

Apr 1962 Joined Nippon Sheet GlassCo., Ltd.
June 1996 Managing Director
June 1998 Representative Director,
President
June 2004 Representative Director,
ChairmanJune 2008 Director, Chairman of theBoard
Oct 2009 Director, Chairman of theBoard - Chairman
June 2010 Executive Advisor
June 2012 Honorary Senior Advisor(present)
June 2014 Statutory Auditor of theCompany (present)

Apr 1984 Joined the Company
June 2009 Director
June 2010 Representative Director(present)
June 2013 Director - President (present)
May 2017 Head of Building Development
Division(present)

Outside Director

Nobumasa Kemori

Sept 1980 Joined Sumitomo Metal
Mining Co., Ltd.
June 2006 Director, Managing Executive
OfficerJune 2007 President, Representative
Director
June 2013 Chairman, Representative
Director
June 2016 Chairman
June 2017 Executive Advisor (present)(Significant concurrent positions outside
the Company)
Executive Advisor of Sumitomo Metal
Mining Co., Ltd.
Outside Director of NAGASE & CO., LTD.
Outside Director of JFE Holdings, Inc.

Statutory Auditors
Yoshifumi Nakamura

Deputy President

Toshikazu Tanaka

Masato Kobayashi*

Takaaki Ono*
Yoshiyuki Norihisa**Outside Statutory Auditors

Apr 1984 Joined the Company
June 2013 Director (present)
Sept 2016 Head of Shinchiku - Sokkurisan
Remodeling Division (present)

Apr 1985 Joined the Company
Sept 2016 Head of Urban Property
Development Division(present)
June 2018 Director (present)

Relationship with the Company and Reasons for Appointment
Name

Director

Director

Hiroshi Kato

Hisatoshi Katayama

Yozo Izuhara

Apr 1984 Joined the Company
June 2013 Director (present)
Apr 2019 Representative Director President of Sumitomo Real
Estate Sales Co., Ltd. (present)

Apr 1985 Joined the Company
June 2011 Director (present)
Nov 2016 General Manager of Financeand Accounting Department,
Management Division (present)

Director

Director

Yoshiyuki Odai

Koji Ito(Significant concurrent positions outside
the Company)
Representative Director - President of
Sumitomo Real Estate Sales Co., Ltd.

Nobumasa Kemori

Takaaki Ono

Yoshiyuki Norihisa

Designation as
Independent Officer

Supplementary Explanation of the Relationship

Reasons for Appointment○

Mr. Izuhara previously worked for Nippon Sheet
Glass Co., Ltd., with which the Company has sometransactions, etc. Considering the scale and natureof such transactions, the Company judges it isunlikely the relationship would have any impact ondecisions of shareholders and investors.

Mr. Izuhara has a wealth of managerial experienceat another company. In view of his personality,
insight, experience, etc., the Company judges he issuitable and qualified to serve as an outside
director and has appointed him to that position.

○

Mr. Kemori previously worked for Sumitomo Metal
Mining Co., Ltd., with which the Company hassome transactions, etc. Considering the scale andnature of such transactions, the Company judges it
is unlikely the relationship would have any impact
on decisions of shareholders and investors.

Mr. Kemori has a wealth of managerial experienceat another company. In view of his personality,
insight, experience, etc., the Company judges he issuitable and qualified to serve as an outside
director and has appointed him to that position.

○

There is no special conflict of interest between Mr.
Ono and the Company.

Mr. Ono has a wealth of managerial experience. Inview of his personality, insight, experience, etc., theCompany judges he is suitable and qualified toserve as an outside statutory auditor and has
appointed him to that position.

○

Mr. Norihisa previously worked for Sumitomo
Mitsui Construction Co., Ltd., with which theCompany has some transactions, etc. Considering
the scale and nature of such transactions, theCompany judges it is unlikely the relationshipwould have any impact on decisions ofshareholders and investors.

Mr. Norihisa has a wealth of managerial
experience at another company. In view of his
personality, insight, experience, etc., the Company
judges he is suitable and qualified to serve as an
outside statutory auditor and has appointed him
to that position.

*Representative Director

40

Integrated Report 2019

Sumitomo Realty & Development Co., Ltd.

41

Corporate GovernanceMatters concerning Corporate GovernanceCorporate Governance Overview
Fundamental Approach to Corporate GovernanceTo achieve sound management, Sumitomo Realty believes that it is important to share information on a companywide basis, ensure that everyone isaware of problems, enhance internal management supervision and achieve highly transparent management through appropriate information disclosure.
We have implemented a number of corporate governance initiatives to realize these practices efficiently.
Institutional design

Company with Auditors

Number of directors (of whom outside directors)

10 (2)

Number of statutory auditors (of whom outside statutory auditors)

4 (2)Terms of office of directors

2 years

Analysis and evaluation of effectiveness of the Board of Directors

At the meeting of the Board of Directors held on March 29, 2019, analysis and evaluation of the structure andthe operational status of the Board of Directors were performed, and it was confirmed that effectiveness of theBoard of Directors is secured appropriately.

Opportunities for outside directors and statutory auditors for gaining
information

The Company periodically briefs outside directors and statutory auditors on the industry to which the Company
belongs, the Company’s history, business overview, financial information, strategies, organizations, etc. and offers
all directors and statutory auditors opportunities for gaining information necessary for them to fulfill their roles
and responsibilities.

Compensation system for directors and statutory auditors

Performance-based compensation system

Auditing company

KPMG AZSA LLC

Corporate Governance Structure
General Meeting of Shareholders
Board of Directors
President

Board of Statutory Auditors
Independent Auditors
Executive Officers Committee
Internal Audit Division

Departments, Divisions, etc.
Corporate Governance Bodies
The Board of Directors consists of 10 directors, including two outside
director. The Board makes decisions on important Company mattersand oversees the directors’ execution of duties. Furthermore, internal
information, awareness of issues and other matters are shared throughthe Board of Directors, internal meetings and other forums, promoting
quick and rational decision-making.
The Board of Directors as a whole has knowledge, experience, and capabilities
necessary for corporate management, and balance, diversity and scale are securedthat enable swift decision-making.
At the meeting of the Board of Directors held on March 29, 2019, analysis andevaluation of the structure and the operational status of the Board of Directors were
performed, and it was confirmed that effectiveness of the Board of Directors issecured appropriately.
The Board of Statutory Auditors has four members, including
two outside statutory auditors. To strengthen management oversight,
we continue working to enhance outside auditing. The statutory auditors attend
meetings of the Board of Directors and other important meetings and track internal
issues that are important for robust auditing.
Two outside directors were elected at the ordinary General Meeting of
Shareholders held in June 2019. These directors possess a wealth of management
experience and were nominated as a director in light of their appropriate personal
character, knowledge and judgment. The Company has appointed outside directors to

42

Integrated Report 2019

further enhance management efficiency and strengthen the corporate governancestructure by contributing points of view that are not bound by preconceived ideas of
the real estate industry and advice from a global perspective. The professional historyof the outside director is on page 41.
Both of the outside statutory auditors has abundant management
experience at other companies, and they were nominated because their character andknowledge were considered to be appropriate for the Company’s statutory auditors.
The outside statutory auditors fulfill their roles by expressing objective opinions on
governance from an independent standpoint from the Company without being
influenced by executives responsible for operational execution. They also work
together to improve auditing by, for example, exchanging opinions as needed withother statutory auditors, the Internal Audit Division and the independent auditors. At
the same time, they provide timely advice and guidance to internal departments
associated with internal control.
Sumitomo Realty does not have standards or a policy regarding
independence from the Company for selecting outside directors and outside statutory
auditors. However, the Company does refer to the Tokyo Stock Exchange’s evaluation
standards regarding the independence of directors and corporate auditors when
appointing such individuals.
The Company periodically briefs outside directors and statutory auditors on theindustry to which the Company belongs, the Company’s history, business overview,
financial information, strategies, organizations, etc. The Company also offers all
directors and statutory auditors opportunities for gaining information necessary forthem to fulfill their roles and responsibilities.
The Internal Audit Division, which has 10 staff members, monitors theoperational execution of divisions throughout the Group and the operation of internal
control systems. The division also works to prevent misconduct and mistakes, andproposes operational improvements. Moreover, the division reports the results of its
audits to the statutory auditors and the independent auditors and exchanges opinionswith them in an appropriate manner. These activities help to improve the quality andefficiency of the audit work of the Internal Audit Division, the statutory auditors andthe independent auditors. At the same time, the Internal Audit Division, the statutory
auditors and the independent auditors provide timely advice and guidance to internal
departments that are associated with internal control.
At meetings with the independent auditor and by means of communications
with the independent auditor, as necessary, the statutory auditors receive information
about audits and reports on the audit plan, audit results, etc. from the independent
auditor, and exchange opinions with them, and moreover exchange necessary
information with them in an effort to achieve smooth and effective audits. The
statutory auditors also monitor and examine whether the independent auditor ismaintaining independence, and is executing appropriate audits.
Reasons for Adopting the Current Corporate Governance Structure
In addition to directors who are well-acquainted with the Company’s business, weestablished a structure in June 2015 for appointing two outside directors for further
enhancement of management efficiency and strengthening of the corporate
governance structure. To strengthen the management oversight system, we have also
adopted a structure for the Board of Statutory Auditors that includes two outside
statutory auditors, and we therefore believe that sufficient corporate governancefunctions are in place.
Although no voluntary committees have been established, the Company has
adopted the following system for strengthening independence and objectivity of thefunctions of the Board of Directors concerning nomination, compensation, etc. ofsenior executives and directors as well as accountability.
Regarding nomination of candidates for positions as senior executives anddirectors, persons with rich experience, high-level insight and sophisticated expertise
who will contribute to the Company’s sustainable growth and medium- to long-term
enhancement of corporate value are selected as candidates, and the candidates are
determined by the Board of Directors based on thorough deliberation, reflecting
independent and objective opinions of independent outside directors and outside
statutory auditors in addition to opinions of internal directors who are familiar with
the Company’s business.
Compensation etc. of Directors and Statutory Auditors
At the ordinary General Meeting of Shareholders held in June 2004, we introduced a
new performance-based compensation system for directors. Under this system, theannual compensation for directors is based 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 just 1% of consolidated ordinary profit. In the year under review, compensation
for directors (excluding outside directors) was ¥1,782 million, compensation for
statutory auditors (excluding outside statutory auditors) was ¥30 million andcompensation for outside directors and outside statutory auditors was ¥64 million.
The number of directors at the time of the resolution concerning the system was 12.
Compensation of statutory auditors who are independent from businessexecution is in fixed amounts, and is determined to be within ¥6.5 million per monthin accordance with the resolution made at the ordinary general meeting ofshareholders held on June 29, 1999.
The above-mentioned amount of compensation of directors is not paid to eachof the directors in whole in the year under review, but around 50% of the wholeamount is paid. Payment of the rest is reserved in preparation for retirement benefit
for directors, making up for possible decreases in directors’ compensation if theCompany’s financial performance deteriorates in the future, salaries to be paid topersons who will become advisors or counsellors of the Company after retirement,
etc. Regarding the reserved amount, the timing of payment and the amount for eachdirector or statutory auditor cannot be determined, and thus, the reserved amountwill become subject to calculation of compensation etc. of each director or statutory
auditor upon payment in the future or upon confirmation of future payment. The total
amount of directors’ compensation is determined clearly based on performance, as

described above, and the allocation is determined based on thorough deliberation atmeetings of the Board of Directors also attended by independent outside directors
and outside statutory auditors.
The total amount etc. of consolidated compensation etc. of each director or
statutory auditor is not presented because no one receives compensation amounting
to ¥100 million or more.
Overview of Limited Liability Agreements
The Company has entered into a limited liability agreement with each of its alloutside directors and outside statutory auditors in accordance with laws andregulations and provisions of the articles of incorporation. Under the agreements,
their liabilities are limited to the minimum limit stipulated by laws and regulations.
Number of Directors
The number of directors of the Company shall be 12 or fewer as specified in thearticles of incorporation.
Requirements for a Resolution of Election of Directors
In the Company’s articles of incorporation, it is specified that a resolution for electionof Directors shall be adopted at a General Meeting of Shareholders by a majority voteof the shareholders in attendance who hold one-third (1/3) or more of the voting
rights of shareholders entitled to exercise voting rights, and the resolution shall not
be adopted by cumulative voting.
Purchase of Own Shares
By the resolution of the Ordinary General Meeting of Shareholders held on June 28,
2007, the Company partially amended the articles of incorporation, and in theamended articles of incorporation it is specified that the Company may purchase its
own shares through market transactions, etc. by a resolution of the Board of Directors.
The purpose is to enable flexible implementation of a capital policy in responseto change in the business environment and to diversify the means of returning profit
to shareholders.
Requirements for Special Resolutions of a General Meeting of Shareholders
In the Company’s articles of incorporation, it is specified that a resolution of a General
Meeting of Shareholders pursuant to Article 309, Paragraph 2 of the JapaneseCorporate Law shall be adopted by two-thirds (2/3) or more of the votes of theshareholders in attendance who hold one-third (1/3) or more of the voting rights ofshareholders entitled to exercise voting rights. The purpose is to ensure smooth
operation of a General Meeting of Shareholders by easing the quorum required forspecial resolutions of a General Meeting of Shareholders.
Interim Dividend
In the Company’s articles of incorporation, it is specified that the Company may pay
an interim dividend with the record date of September 30 of each year by a resolutionof the Board of Directors for flexibly returning profit to shareholders.
Exemptions of Liabilities of Directors and Statutory Auditors
In the Company’s articles of incorporation, it is specified that the Company may
exempt directors and statutory auditors from liability for damages to the Company
within the scope stipulated by laws and regulations by a resolution of the Board of
Directors so that directors and statutory auditors can fulfill the roles and functions
expected of them.
Independent Auditors
In accordance with the Japanese Corporate Law and the Financial Instruments andExchange Act, the Company has concluded an auditing contract with KPMG AZSA LLC
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.
Regarding election of the independent auditor, the Company makes acomprehensive judgment, taking into consideration the appropriateness of the quality
control system, independence of the auditing company, validity of the audit plan andaudit fees, etc.
The statutory auditors and the Board of Statutory Auditors deem that there are
no grounds for dismissal of or refusal to reappoint the independent auditor
concerning the status of independent auditor’s execution of duties, audit system,
independence, etc.
The fees paid to auditing certified public accountants, etc. during the year ended
March 31, 2019 amounted to ¥203 million.

Sumitomo Realty & Development Co., Ltd.

43

Corporate GovernanceRisk Management

Other Information Concerning Governance
The Policy on Large-Scale Purchase of Shares of the Company (Takeover Defense Measures)

Risk Management Structure
Risk Management Committee

Chairman: President

BCP Subcommittee

Internal Control Meeting

Hosted by General Affairs Department

Hosted by Internal Audit Division•Implementation of internal auditing•Establishment of Internal Reporting Division

Systems for ensuring appropriateness of business operations
The Company considers that establishment of internal control systems is one of theimportant management issues concerning the enhancement of corporate value andsustainable development of the Company and its subsidiaries (hereinafter referred toas the “Group”) as a whole. With regard to the matters listed below, the Company
shall establish systems in which roles and responsibilities of the Group’s directors andemployees are clarified, and through operation and appropriate review of such
systems, the Company shall strive to establish appropriate systems for governance of
the Group’s directors and employees.
(1) Systems for ensuring that the execution of duties of the Group’s
directors and employees complies with laws and regulations and withthe articles of incorporation
In order to enhance and strengthen internal control of the Group, the Company has
established the Risk Management Committee chaired by the Company’s President.
The Internal Control Meeting (hosted by the Company’s Internal Audit Division),
which is a subordinate organization of the Risk Management Committee, monitors
compliance promotion activities of the Group, and reports the result to the Risk
Management Committee.
		
The Company’s Internal Audit Division performs internal audits including
those of subsidiaries, and several contacts for whistleblowing are established within
and outside the Company to detect and prevent any misconduct or illegal acts.
(2) Systems for retention and management of information concerning theexecution of duties of the Company’s directors
Minutes of meetings of the Board of Directors of the Company, requests for
managerial decision, and other documents (including electromagnetic records) areprepared, and these documents are retained and managed by the respective
responsible departments in accordance with the Criteria for Document Retention
Periods and the Information Management Rules.
(3) Rules and other systems related to management of risks of losses of theGroup
Among the risks of the Group, the risks associated with the business, such as
investment risk and market risk, are monitored and addressed by the respective
departments and subsidiaries properly, and important matters are discussed anddetermined at meetings of the Company’s Board of Directors and other important
meetings such as management meetings. Moreover, in order to address risks oflarge-scale disasters, etc. affecting business continuity, the BCP Subcommittee(hosted by the Company’s General Affairs Department), a subordinate organizationof the Risk Management Committee, monitors the status of development ofbusiness continuity planning (BCP) by the Group, and reports the result to the Risk
Management Committee.
(4) Systems for ensuring that the execution of duties of the Group’s
directors is performed efficiently
The Group’s directors direct and supervise business operations of the respective
departments and subsidiaries in accordance with the Company’s management plan.
Moreover, the Group’s employees efficiently perform their duties under the direction
and supervision of the Board of Directors and heads of respective departments, etc.
(5) Systems for ensuring appropriateness of business operations of theGroup consisting of the Company and its subsidiaries and systems
related to reporting of matters concerning the execution of duties to
the Company
The Company periodically receives reports from each subsidiary on the execution of

44

Integrated Report 2019

duties, such as the status of business execution and financial conditions, andprovides advice and guidance concerning business operations properly, dependingon the nature of the matter in question.
		Moreover, the Company’s statutory auditors and the Company’s Internal
Audit Division audit each subsidiary, as necessary.
(6)

Particulars related to employees when the Company’s statutory
auditors request that employees be appointed to assist with the dutiesof the statutory auditors and particulars related to ensuring
independence of such employees from directors and effectiveness of
the instructions of the Company’s statutory auditors to the employees
If the Company’s statutory auditors make requests to personnel of the Company’s
Internal Audit Division concerning matters necessary for audit practices, such
personnel shall proactively offer cooperation. In such a case, the personnel who
provide assistance shall not be in the chain of command of directors or any otherpersonnel concerning the matters for which they are requested to provide
assistance.

(7) Systems for reporting to the Company’s statutory auditors by theGroup’s directors etc. and employees or by a person who received
reports from such persons and other systems related to reporting to theCompany’s statutory auditors
When the Group’s directors, etc. and employees or a person who received reports
from such persons report to the Company’s statutory auditors, or when they arerequested by the Company’s statutory auditors to report, necessary reports shall be
provided swiftly and persons who make reports shall not be treateddisadvantageously for reasons of making such reports. Moreover, the independent
auditor and the Company’s Internal Audit Office shall report to the Company’s
statutory auditors concerning the audit status properly.
(8) Particulars related to policies concerning the procedures for advancepayment or reimbursement of expenses that arise with regard to the
execution of duties of the Company’s statutory auditors or any otherprocessing of expenses or obligations that arise with regard to the
execution of duties
When, concerning the execution of duties, a statutory auditor of the Company
requests advance payment or reimbursement, etc. of expenses in accordance with
the Japanese Corporate Law, the Company shall process such expenses or
obligations, excluding any cases deemed unnecessary for the execution of duties ofthe said statutory auditor.
(9) Other systems for ensuring that audits by the Company’s statutory
auditors are performed effectively
Opportunities are ensured for the Company’s statutory auditors to attend meetingsof the Board of Directors and other important meetings so that they cancomprehend the Group’s important issues, etc., and state opinions, as necessary.
(10) Basic view for elimination of antisocial forces and the status ofestablishment of such systems
The Company shall take a resolute attitude toward antisocial forces that threatensocial order and safety, and have no relationships with such antisocial forces.
Designating the General Affairs Department as a division in charge ofcountermeasures against antisocial forces, the Company has appointed a person
responsible for the prevention of unjust claims. Furthermore, the Company collects
and manages information concerning antisocial forces by collaborating with thepolice and other relevant institutions, and shares such information internally alongwith cautionary notices.

The real estate leasing business primarily involving office buildings in central Tokyo
has been a driving force underpinning the Company’s growth thus far. Given that thisbusiness accounts for nearly 70% of the Company’s operating income overall, it
clearly forms the core aspect of its corporate value acting as a major pillar ofoperations.
The Eighth Management Plan cites as its secondary objective the notion ofsteadily promoting new building development plans in central Tokyo to achieve grossfloor area exceeding 800,000 tsubo (one tsubo is roughly 3.3m2), which constitutes
more than 50% of the 1,520,000 tsubo in gross floor area for leasing as of March
31, 2019. The Company aims to further expand its earnings base, increase its
corporate value and augment shareholder returns by successively completing suchdevelopments and putting them into operation.
Such large-scale development plans involve ultimately generating revenues fromthe substantial amount of cumulative upfront investment made thus far. The Company
has long managed to continuously expand its business platform by developing leasebuildings while avoiding exposure to vicissitudes of the real estate market andbusiness conditions, given that it has normally been buoyed by its leasing businesscash flows which have been a stable source of revenues. As such, the Company needs
to maintain and further expand its cash flows from the leasing business, which havegrown to around ¥200 billion, in order to confidently carry out such upfront
investment without having to continually resort to interest-bearing debt. Moreover, it
is likely to take another six or seven years before the Company achieves full
profitability given that the focus has been on large-scale redevelopment.
Meanwhile, if the Company adopts a short-term management policy to seek
temporary earnings and realizes latent gains by selling real estate holdings prior tohaving accomplished the objectives of the development plans formulated tocontribute to higher corporate value in the future, the leasing business cash flows thatact as a stable revenue source will decrease, thereby exposing the development plans
to financial risk. As such, the Company is unable to rule out a possible threat ofdamage to the foundations of the Company’s corporate value.
The Company’s management policy aims to steadily increase corporate value
based on a medium- to long-term outlook, and is consequently incompatible withsuch short-term goals. As such, if an investor seeking to orchestrate a takeover
emerges, the Company believes that it must seek a mandate from its shareholders
upon having ensured sufficient information and time for completing discussions, andthe Company deems that preliminary development of procedures through “the Policy
on Large-Scale Purchase of Shares of the Company (Takeover Defense Measures)”(hereinafter referred to as the “Policy”) aligns with the common interests ofshareholders. The Policy was adopted based on the decision of the meeting of its
Board of Directors dated May 17, 2007, was continued or renewed upon receiving
approval from shareholders at each of the shareholders’ meetings of the 74th fiscal
year dated June 28, 2007, the 77th fiscal year dated June 29, 2010, the 80th fiscal
year dated June 27, 2013, the 83rd fiscal year dated June 29, 2016, and the 86th

fiscal year dated June 27, 2019. The term of the Policy will expire upon the conclusionof the shareholders’ meeting of the 89th fiscal year scheduled to be held in June
2022.
The Company believes that if a large-scale purchase of the Company shares(“Large-Scale Purchase”) is initiated, the shareholders should decide to accept or
reject the Large-Scale Purchase. In order for the shareholders to correctly recognize
the effect on the corporate value and common interests of shareholders, however, it isnecessary that both the party making the Large-Scale Purchase (the “Large-Scale
Purchaser”) and the Board of Directors of our company provide to the shareholders
necessary and sufficient information, opinions, alternative proposals etc., andnecessary and sufficient time to consider the provided information, opinions,alternative proposals etc.
The Policy sets out rules on Large-Scale Purchases (hereinafter referred to as“Large-Scale Purchase Rules”) and requests the Large-Scale Purchaser to comply with
the Large-Scale Purchase Rules. The Large-Scale Purchase Rules state that the LargeScale Purchaser provide the Board of Directors of the Company necessary andsufficient information regarding the Large-Scale Purchase in advance, and only
commence the Large-Scale Purchase after a certain period of evaluation by the Boardof Directors of the Company has elapsed. The Board of Directors shall takecountermeasures that it deems necessary if the Large-Scale Purchaser does notcomply with the Large-Scale Purchase Rules, or even though the Large-Scale
Purchaser complies with the Large-Scale Purchase Rules, if it is clear that the LargeScale Purchase will cause unrecoverable damages to the Company or if the LargeScale Purchase significantly damages the corporate value and common interests ofshareholders.
Additionally, the Board of Directors of the Company shall consult with a Special
Committee consisting of external academic experts, lawyers, certified public
accountants, etc., and shall receive the recommendations of the Committee when
taking decisions as to whether or not the Large-Scale Purchaser complies with theLarge-Scale Purchase Rules, whether or not it is clear that the Large-Scale Purchasewill cause unrecoverable damages to the Company, whether or not the Large-Scale
Purchase will significantly damage the corporate value and common interests ofshareholders, and whether or not countermeasures should be taken. The Board of
Directors of the Company shall take the Special Committee’s recommendations into
the fullest account.
As stated above, the Policy stipulates rules to secure the necessary informationand time for shareholders to deliberate on the Large-Scale Purchase, as well as
countermeasures if the Large-Scale Purchaser does not comply with the Large-Scale
Purchase Rules or if it is clear that the Large-Scale Purchase will cause unrecoverable
damages to the Company. The purpose of the Policy is not to maintain the status of
the Company's officers but to contribute to the Company's corporate value and thecommon interests of its shareholders.

Timely and Appropriate Information Disclosure and Communication with Shareholders and Investors
The Company considers that it is important to ensure soundness and transparency ofmanagement by means of timely and appropriate information disclosure.
In accordance with this basic policy, the Company has put in place systems thatenable swift reporting to the responsible department at the head office andimplementation of appropriate information management measures, if a material factthat may have an impact on investors’ investment decisions arises at the Company’s
departments or at subsidiaries.
Upon emergence of a material fact and reporting thereof, the responsible
department, the General Affairs Department, the Finance and Accounting Department,
and other relevant departments, discuss whether there is need for timely disclosure,and if it is judged that disclosure is necessary, timely disclosure is performed without
delay following the necessary internal procedures. Subsequently, the disclosurematerials are posted on the Company’s website for thorough information disclosure.

The Company strives to provide explanation of the Company’s corporate
management and business activities through General Meetings of Shareholders,financial results briefing sessions, individual meetings, and other opportunities forcommunication with shareholders and investors.
If a shareholder requests a dialogue, the Company’s policy is that the department
responsible for IR or other departments respond to such request appropriately under
the supervision of the responsible director, etc. depending on the objective of the
dialogue, the method of communication, the number of shares held, the attributes,
etc.
Regarding dialogues with shareholders, the Company exercises due care
concerning the handling of insider information, and notifies, as necessary, important
meetings such as management meetings attended by directors and senior executives,of the details of the dialogues.

Sumitomo Realty & Development Co., Ltd.

45

Financial Section
Eleven-year Financial Summary
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
As of and for the years ended March 31
Millions of yen Thousands of U.S. dollars*1

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2019

¥1,013,230
381,764
331,752
221,693
72,899¥  948,402
353,881311,193
209,356
69,169¥  925,151
337,466
314,299
203,623
66,714¥  854,964
313,340
274,761
199,115
61,496¥  806,835
289,117264,207
188,995
58,486¥  780,273
283,730
234,093
201,190
57,211¥  736,652
278,317232,149
171,082
50,957¥  688,662
271,812
198,154
165,995
49,397¥  744,756
292,875
239,709
162,924
46,430¥  719,636
293,533
219,662
158,21444,621¥  695,240
298,359
191,224
160,134
43,105$ 9,128,198
3,439,315
2,988,757
1,997,234
656,748

Cost of revenue from operations

711,052

664,015664,184

614,191

579,964

558,987

529,913490,437

551,364

534,270

496,547

6,405,874

SG&A expenses% of revenue from operations

81,7598.1%

78,7508.3%

72,796
7.9%

66,532
7.8%

60,976
7.6%

60,815
7.8%

55,394
7.5%

50,760
7.4%

54,9297.4%

51,3877.1%

52,327
7.5%

736,567

Operating income% of revenue from operations

220,41921.8%

205,63721.7%

188,17120.3%

174,241
20.4%

165,895
20.6%

160,471
20.6%

151,345
20.5%

147,465
21.4%

138,46318.6%

133,979
18.6%

146,366
21.1%

1,985,757

Ordinary profit*2% of revenue from operations

204,257
20.2%

186,87119.7%

167,69718.1%

148,42417.4%

139,055
17.2%

130,537
16.7%

114,916
15.6%

107,91215.7%

106,29614.3%

100,464
14.0%

113,58216.3%

1,840,153

Profit attributable to owners of parent

130,817

119,731

103,489

87,79880,567

69,697

59,82553,23650,90852,662

46,205

1,178,532

Depreciation and amortization

46,313

41,62839,446

34,57433,51935,311

37,761

36,04923,70518,065

17,886417,234

At Year-end
Current assets
Inventories
Total assets
Shareholders’ equity*3
Net interest-bearing debt¥  933,011
679,903
5,127,465
1,208,117
3,170,595¥1,126,118
783,308
5,167,199
1,114,975
3,210,302¥1,197,508
845,2144,980,040
1,007,347
3,101,162¥1,122,189
855,816
4,675,915
888,100
2,971,667¥1,025,703
801,950
4,523,804
832,462
2,875,660¥  924,452
715,779
4,220,429
707,948
2,652,929¥  965,786
679,496
4,105,500
627,0122,424,932¥  801,142
586,1703,859,698
553,8442,407,639¥  805,958
558,091
3,234,203
526,227
1,901,850¥  802,693
521,871
3,168,098
488,896
1,785,854¥  759,816
518,885
3,006,412
436,667
1,722,733$ 8,405,504
6,125,252
46,193,378
10,883,936
28,563,919

Per Share Amounts (Yen)Profit attributable to owners of parent
Shareholders’ equity
Cash dividend applicable to the year¥   276.02
2,549.09
30.00¥   252.62
2,352.53
27.00¥   218.34
2,125.36
24.00¥   185.23
1,873.71
22.00¥   169.97
1,756.25
21.00¥   147.02
1,493.48
20.00¥   126.18
1,322.52
20.00¥   112.28
1,168.11
20.00¥   107.35
1,109.78
20.00¥   111.04
1,030.93
20.00¥    97.39
920.7420.00$      2.49
22.96
0.27

23.6
2.6
11.3
4.5
99
96
11.4

21.6
2.9
11.3
4.2
98
94
10.5

20.2
3.1
10.9
4.0
98
95
9.0

19.0
3.3
10.2
3.9
98
94
7.3

18.4
3.5
10.5
3.9
97
87
6.5

16.8
3.7
10.4
4.0
95
82
6.1

15.3
3.9
10.1
3.9
93
80
4.9

14.3
4.3
9.9
4.3
93
80
4.2

16.3
3.6
10.0
4.4
89
79
4.7

15.4
3.7
11.4
4.4
83
81
4.6

14.5
3.9
10.7
5.1
76
77
4.9

For the Year
Revenue from operations
Leasing
Sales
Construction
Brokerage

Key Ratios
Equity ratio (%)
ND/E ratio*4 (Times)
ROE (%)ROA (%)
Long-term debt ratio (%)
Fixed-interest rate debt ratio (%)
Interest coverage ratio*5 (Times)*1. U.S. dollar amounts in this report are translated, for convenience only, at the rate of ¥111.00 = U.S. $1, the prevailing exchange rate at March 31, 2019.
*2. 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 in accounting standards, ordinary profit is not referred to in the Company’s English-language financial statements but is included here because it plays an important role in thecalculation of incentive payments for directors.
*3. Shareholders’ equity = Net assets – Non-controlling interests*4. ND/E ratio = Net interest-bearing debt (Interest-bearing debt – Cash, time and notice deposits) / Shareholders’ equity*5. Interest coverage ratio = (Operating income + Interest and dividend income) / Interest expense

46

Integrated Report 2019

Sumitomo Realty & Development Co., Ltd.

47

Financial Section

Management’s Discussion and Analysis
Business Results for the Fiscal Year under Review
During the March 2019 fiscal year, the final year of the SeventhManagement Plan, we marked the seventh consecutive year of revenue
growth, the ninth consecutive year of increases in operating income andordinary profit, and the sixth consecutive year of record revenue fromoperations, operating income, ordinary profit, and profit attributable toowners of parent.
In addition, revenue from operations exceeded the ¥1 trillion mark,and ordinary profit the ¥200 billion mark, for the first time.
By segment, the leasing business centered on office building leasing inTokyo continued to perform well, driving growth in results, while all fourof our mainstay business segments achieved revenue and profit growthwith both revenue from operations and operating income reaching arecord high. As a result, revenue from operations stood at ¥1,013.2
billion (6.8% increase year on year), and operating income totaled¥220.4 billion (7.2% increase year on year).
Non-operating gains/losses improved by ¥2.6 billion from theprevious fiscal year due to an increase in dividend income, andcontributed to an increase in ordinary profit. As a result, ordinary profit
amounted to ¥204.2 billion (9.3% increase year on year), and profit
attributable to owners of parent amounted to ¥130.8 billion (9.3%
increase year on year).

Cash Flows
Cash flows for the consolidated fiscal year under review were as follows:
Cash flows from operating activities: ¥260,057 million (¥70,124
million increase year on year)
Cash flows from investing activities: ¥(209,212) million (¥11,322
million increase year on year)
Cash flows from financing activities: ¥(146,058) million (¥172,519
million decrease year on year)
Cash and cash equivalents decreased ¥91,338 million to ¥170,707
million.
Cash flows from operating activities
With an ordinary profit of ¥204.2 billion for the fiscal year under review,
net cash provided by operating activities amounted to ¥260.0 billion.
This was an improvement of ¥70.1 billion from the previous fiscal year,
mainly attributable to a decrease in inventories in addition to an increasein ordinary profit.
Cash flows from investing activities
Investment in property and equipment totaled ¥188.5 billion mainly forthe purpose of augmenting the leasing business, while the net amountof restitution of deposits from partnership investors was ¥9.4 billion. As
a result, net cash used in investing activities amounted to ¥209.2 billion.

Cash flows from financing activities
Long-term loans payable amounted to ¥198.3 billion to provide
flexibility through financial policy. Redemption of bonds and repaymentof long-term loans payable totaled ¥285.7 billion, and the net amountof short-term debt repaid was ¥35.7 billion. As a result, net cash used infinancing activities amounted to ¥146.0 billion.

Revenue from Operations

Operating Income and Operating Margin

Billions of yen

Billions of yen

1,200

800

Financial Resources for Capital and Liquidity of Funds

Liabilities
Total liabilities amounted to ¥3,919.3 billion (¥132.8 billion decrease
from the end of the previous fiscal year). Consolidated interest-bearing
debt decreased to ¥3,342.7 billion (¥130.7 billion decrease from the endof the previous fiscal year). ND/E ratio continued to improve from 2.9
times at the end of the previous fiscal year to 2.6 times.

806.8

855.0

As of the end of the fiscal year under review, long-term debt
accounted for 99% of consolidated interest-bearing debt, and fixed-rate
debt for 96% (98% and 94% respectively at the end of the previous
fiscal year). We will continue to strive for stable financial management.

165.9
160

0

20.6

205.6

188.2

174.2

2015

2016

2017

2018

2019

0

2020

(Forecast)

2015

2016

2018

22.9

2019

2020

20

160

10

80

0

0

(Forecast)

Operating Margin (right)

220.0

167.7
148.4

139.1

2015

2016

Ordinary Profit

2017

130.8 140.0

119.7

103.5

87.8

80.6

Total Assets

Shareholders’ Equity andEquity Ratio

Billions of yen

Billions of yen%

Billions of yen

6,000

1,500

45

3,600

2018

2019

2020

(Forecast)Profit Attributable to Owners of Parent

4,675.9

4,980.0

Net Interest-bearing Debt and
ND/E Ratio

5,167.2 5,127.5

4,000

1,000

1,007.3
832.5

21.6

20.2

19.0

18.4
2,000

1,115.0

1,208.1

888.1

Times

2,875.7
30

2,400

15

1,200

2,971.7

2015

2016

2017

2018

0

2019

2015

2016

2017

2018

3,210.3

3,170.6

12

8

4
3.5

0

3,101.2

23.6

500

2019

Shareholders’ Equity(Net Assets – Profit Attributable to Non-controlling Interests)

0

0

2015

3.3

3.1

2016

2017

Net Interest-bearing Debt

2.9

2018

2.6
0

2019

ND/E Ratio (right)

Equity Ratio (right)

ROE and ROA

Long-term Debt Ratio and
Fixed-interest Rate Debt Ratio

%

%

15

100

10.5

10.2

10.9

11.3

11.3

10

98
87

Interest Coverage Ratio

95

94

99

98

98

94

96

2015

3.9

2016

4.0

2017

4.2

2018

4.5

2019

230.5

214.1

15

194.9

179.8

11.4

10.5

10

9.0

80

20
0

Times

240

160

40
3.9

Billions of yen

171.2

60

5

0

80

97

6.5

26.2
2015

2016

2017

2018

Short-term Loans and Commercial Paper
Long-term Loans and Bonds
Fixed-interest Rate Debt Ratio

Integrated Report 2019240

* Please see note *2 on page 46.

ROE (Net Income / Shareholders‘ Equity)
ROA (Operating income + Interest and Dividend Income / Total Assets)

48

Billions of yen

204.3

21.8

21.7

2017

Operating Income

30

186.9

20.3

20.4

234.0

220.4

80

4,523.8

Net assets
Total net assets amounted to ¥1,208.1 billion (¥93.1 billion increase
from the end of the previous fiscal year). Profit attributable to owners ofparent stood at ¥130.8 billion, shareholders’ equity increased to¥1,208.1 billion (¥93.1 billion increase from the end of the previous
fiscal year), and the equity ratio improved from 21.6% at the end of theprevious fiscal year to 23.6%. As a result, ROE remains at an industryleading level of 11.3%.
Furthermore, unrealized gains on investment and rental properties
increased from ¥2.3 trillion at the end of the previous fiscal year to ¥2.7
trillion as of the end of the fiscal year under review (Refer to page 72.),
and have been highly evaluated by rating agencies as a buffer against
financial risks. JCR and R&I have issued ratings of A+ and A (positive),
respectively.

1,013.2 1,020.0

400

AssetsTotal assets as of the end of the fiscal year under review amounted to¥5,127.4 billion (¥39.7 billion decrease from the end of the previous
fiscal year). Although real estate for sale (including real estate for sale inprocess) decreased due to an increase in the number of condominium
units delivered, property and equipment increased through investment
in buildings for leasing.

%240

925.2 948.4

Ordinary Profit* andProfit Attributable to Owners of Parent

2019

0

2015

7.3
5
24.5
2016

21.6
2017

20.2

20.4
2018

2019

0

Operating Income + Interest and Dividend Income
Interest Expense
Interest Coverage Ratio (right scale)

Sumitomo Realty & Development Co., Ltd.

49

Financial Section

Consolidated Balance Sheets
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
As of March 31, 2019 and 2018
Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

AssetsCurrent assets:Cash, time and notice deposits (Notes 3, 5 and 6)
Notes and accounts receivable—trade (Note 6)
Allowance for doubtful accounts
Inventories (Note 4)
Other current assets
Total current assets

Investments:
Investments in unconsolidated subsidiaries and affiliates (Note 6)
Investments in securities and other (Notes 6 and 7)
Allowance for doubtful accounts
Total investments

Property and equipment:
Land (Notes 4, 5 and 19)
Buildings and structures (Notes 4, 5 and 19)
Machinery and equipment (Notes 4, 5 and 19)
Leased assets
Construction in progress (Notes 4, 5 and 19)

Accumulated depreciation and accumulated impairment losses
Net property and equipment

Other assets:
Guarantee and lease deposits paid to lessors (Note 6)
Leasehold rights and other intangible assets
Deferred income taxes (Note 12)
Other
Total other assets
Total assets

2018

Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

2019

2018

2019

Liabilities and Net Assets
Current liabilities:
Short-term debt (Notes 6 and 8)
Long-term debt due within one year (Notes 6 and 8)
Long-term non-recourse debt due within one year (Notes 5, 6 and 8)
Notes and accounts payable—trade (Note 6)
Accrued income taxes
Accrued bonuses
Deposits received (Note 13)
Other current liabilities (Note 13)
Total current liabilities¥   25,643
169,619
102,298
54,93929,2605,573
61,582
128,458
577,372¥   61,416
275,752
49,41028,751
34,1985,283
60,382
153,388668,580$   231,018
1,528,099
921,604
494,946
263,604
50,207554,793
1,157,279
5,201,550

2,744,327
300,900
278,766
6,019
11,964
3,341,976

2,725,646
361,289
267,215
5,965
23,5293,383,644

24,723,667
2,710,811
2,511,405
54,225
107,784
30,107,892

122,805
104,154882,816(4,470)1,105,305

122,805
104,154765,326(4,443)
987,842

1,106,351
938,324
7,953,297(40,270)
9,957,702

109,210(3,972)(2,352)(74)
102,8121,208,117¥5,127,465

131,115(2,049)(2,093)
160
127,133
1,114,975¥5,167,199

983,874(35,784)(21,189)(667)
926,234
10,883,936$46,193,378¥  172,192
21,567(73)
679,90359,422933,011¥  263,210
23,773(66)
783,308
55,893
1,126,118$ 1,551,279
194,297(658)
6,125,252
535,334
8,405,504

61,544433,301(9,154)
485,691

68,083435,615(9,469)494,229554,450
3,903,613(82,468)
4,375,595

Long-term liabilities:
Long-term debt due after one year (Notes 6 and 8)
Long-term non-recourse debt due after one year (Notes 5, 6 and 8)
Guarantee and deposits received (Notes 6 and 13)
Net defined benefit liability (Note 9)
Other long-term liabilities (Notes 12 and 13)
Total long-term liabilities

2,523,937
1,378,337
35,5182,150
139,451
4,079,393

2,464,161
1,287,335
33,576
1,778
94,3973,881,247

22,738,171
12,417,450
319,982
19,3691,256,316
36,751,288

Contingent liabilities (Note 20)(548,382)
3,531,011(510,894)
3,370,353(4,940,378)
31,810,910

70,29956,75214,80935,892
177,752¥5,127,465

71,06454,753
14,29536,387
176,499¥5,167,199

633,324
511,279
133,414323,352
1,601,369$46,193,378

Net assets (Note 14):
Shareholders’ equity
Common stock:
Authorized —1,900,000 thousand shares
Issued    —476,086 thousand shares
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income (loss)
Net unrealized holding gains on securities
Net deferred losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

See accompanying notes.

50

Integrated Report 2019

Sumitomo Realty & Development Co., Ltd.

51

Financial Section

Consolidated Statements of Income

Consolidated Statements of Changes in Net Assets

Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2019, 2018 and 2017

Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2019, 2018 and 2017
Millions of yen

Thousands of
U.S. dollars (Note 1)

Thousands

Number ofshares ofcommon
stock

2019

2018

2017

2019

Revenue from operations
Costs and expenses:
Cost of revenue from operations
Selling, general and administrative expenses¥1,013,230¥948,402¥925,151$9,128,198

711,052
81,759792,811664,01578,750742,765

664,184
72,796736,980

6,405,874
736,567
7,142,441

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 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
Other, net

220,419

205,637

188,171

1,985,757(19,589)
9,472
75(3,724)(8,576)(1,280)12—(1,105)(6,115)(30,830)(20,096)
8,229
38
(217)
(10,635)
(601)
1,010
(47)
—
(6,874)(29,193)(21,469)
6,588
15
(3)
(15,538)(1,522)
43——(5,662)(37,548)(176,477)
85,333676(33,550)(77,261)(11,532)
108—(9,955)(55,090)(277,748)

Income before income taxes
Income taxes (Note 12):Current
DeferredTotal

189,589

176,444

150,623

1,708,009

62,823(4,051)
58,77262,098(6,180)55,91853,161(9,533)
43,628565,973(36,496)
529,477

Profit130,817

120,526

106,995

1,178,532

—

795

3,506

—

¥  130,817¥119,731¥103,489$1,178,532

Profit attributable to non-controlling interests
Profit attributable to owners of parent

Yen

Amounts per share of common stock:
Profit attributable to owners of parent:—Basic—Diluted
Cash dividend applicable to the year

U.S. dollars (Note 1)

2019

2018

2017

2019

¥276.02—
30.00¥252.62—27.00¥218.34
—
24.00

$2.49
—
0.27

Shareholders’ equity

Balance at April 1, 2016
476,086
Profit attributable to owners of parent—
Foreign currency translation adjustments—
Net unrealized holding gains (losses) on securities—
Acquisition of treasury stock—
Disposal of treasury stock—
Cash dividends paid:
Final for prior year (¥11 per share)—
Interim for current year (¥11 per share)—
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders—
Profit attributable to non-controlling interests—
Net deferred gains (losses) on hedges—
Remeasurements of defined benefit plans—
Balance at April 1, 2017
476,086
Profit attributable to owners of parent—
Foreign currency translation adjustments—
Net unrealized holding gains (losses) on securities—
Acquisition of treasury stock—
Disposal of treasury stock—
Change in scope of consolidation—
Cash dividends paid:
Final for prior year (¥13 per share)—
Interim for current year (¥13 per share)—
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders—
Profit attributable to non-controlling interests—
Net deferred gains (losses) on hedges—
Remeasurements of defined benefit plans—
Balance at April 1, 2018
476,086
Profit attributable to owners of parent—
Foreign currency translation adjustments—
Net unrealized holding gains (losses) on securities—
Acquisition of treasury stock—
Disposal of treasury stock—
Change in scope of consolidation—
Cash dividends paid:
Final for prior year (¥14 per share)—
Interim for current year (¥14 per share)—
Profit attributable to non-controlling interests—
Net deferred gains (losses) on hedges—
Remeasurements of defined benefit plans—
Balance at March 31, 2019
476,086

Commonstock

CapitalsurplusRetainedearnings

Treasurystock¥122,805—————¥132,748————
2¥569,740
103,489————¥(4,335) ¥  820,958—
103,489
—
—
—
—
(47)
(47)
3
5

—
—

—
—

(5,214)(5,213)————¥122,805
—
—
—
—
—
—

(2)
—
—
—
¥132,748
—
—
—
—
—
—

—
—
—
—
¥662,802
119,731————(4,885)————(6,161)(6,161)————¥122,805
—
—
—
—
—
—

(28,594)———¥104,154
—
—
—
—
0
—

—
—
—
—
—
¥122,805—————¥104,154

Consolidated Statements of Comprehensive Income

Commonstock

Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

2018

2017

2019

ProfitOther comprehensive income (loss) (Note 18)
Net unrealized holding gains (losses) on securities
Net deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total other comprehensive income (loss)
Comprehensive income¥130,817¥120,526¥106,995$1,178,532(21,905)(1,923)(259)(234)(24,321)¥106,496

33,935538(1,098)
188
33,563¥154,089

24,930
1,705
(927)
442
26,150¥133,145(197,342)(17,325)(2,333)(2,108)(219,108)$  959,424

Comprehensive income attributable to:
Owners of the parent
Non-controlling interests¥106,496—¥153,493
596¥129,719
3,426$  959,424—

Balance at April 1, 2018
Profit attributable to owners of parent
Foreign currency translation adjustments
Net unrealized holding gains (losses) on securities
Acquisition of treasury stock
Disposal of treasury stock
Change in scope of consolidation
Cash dividends paid:
Final for prior year ($0.13 per share)
Interim for current year ($0.13 per share)
Profit attributable to non-controlling interests
Net deferred gains (losses) on hedges
Remeasurements of defined benefit plans
Balance at March 31, 2019

CapitalsurplusTotal
accumulated
othercomprehensive
income (loss)

Noncontrollinginterests

Total net
assets¥ 72,262——
24,930——¥(4,247)—————¥  (510)
—
(755)
—
—
—

¥(364)—————¥ 67,141—(755)
24,930——¥ 29,178—————¥917,277
103,489(755)
24,930(47)
5(5,214)(5,213)

—
—

—
—

—
—

—
—

—
—

—
—

(5,214)(5,213)

—
(2)
—
—
—
—
—
—
¥(4,379) ¥  913,976—
119,731
—
—
—
—
(64)
(64)
—
—
—
(4,885)————¥ 97,192——
33,923
—
—
—

—
—
1,718
—
¥(2,529)
—
—
—
—
—
—

—
—
—
—
¥(1,265)
—
(828)
—
—
—
—

—
—
—
337
¥ (27)
—
—
—
—
—
—

—
—
1,718
337
¥ 93,371—(828)
33,923
—
—
—

—
2,578
—
—
¥ 31,756
—
—
—
—
—
—

(2)
2,578
1,718
337
¥1,039,103
119,731(828)
33,923(64)—(4,885)(6,161)(6,161)

—
—

—
—

—
—

—
—

—
—

—
—

(6,161)(6,161)————¥765,326
130,817
—
—
—
—
(57)

—
(28,594)
—
—
—
—
—
—
¥(4,443) ¥  987,842—
130,817
—
—
—
—
(27)
(27)
0
0
—
(57)

—
—
—
—
¥131,115——(21,905)
—
—
—

—
—
480
—
¥(2,049)
—
—
—
—
—
—

—
—
—
—
¥(2,093)
—
(259)
—
—
—
—

—
—
—
187
¥ 160
—
—
—
—
—
—

—
—
480
187
¥127,133—(259)(21,905)————(31,756)——¥    ———————(28,594)(31,756)
480
187¥1,114,975
130,817(259)(21,905)
(27)
0
(57)

(6,635)(6,635)———¥882,816—(6,635)—(6,635)——————¥(4,470) ¥1,105,305

—
—
—
—
—
¥109,210———(1,923)—¥(3,972)—————¥(2,352)

—
—
—
—
(234)
¥  (74)———(1,923)(234)¥102,812—————¥    —(6,635)(6,635)—(1,923)(234)¥1,208,117

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income (loss)
RemeasureNet unrealized
Foreignments ofholding gains
Net deferredcurrency
defined(losses) on
gains (losses)
translation
benefitsecurities
on hedges
adjustments
plans

Total
accumulated
othercomprehensive
income (loss)

Noncontrollinginterests

Total net
assets————Shareholders’ equity

See accompanying notes.

Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2019, 2018 and 2017

Total
shareholders’equityMillions of yen
Accumulated other comprehensive income (loss)
RemeasureNet unrealized
Foreignments ofholding gains
Net deferredcurrency
defined(losses) on
gains (losses)
translation
benefitsecurities
on hedges
adjustments
plans

Retainedearnings

Treasury
stock

Total
shareholders’equity$1,106,351
—
—
—
—
—
—

$938,324 $6,894,829 $(40,027) $8,899,477 $1,181,216— 1,178,532— 1,178,532
—
—
—
—
—
—
—
—
—
—
(197,342)
—
—
(243)
(243)
—
0
—
0
0
—
—
(514)
—
(514)
—

$(18,459)
—
—
—
—
—
—

$(18,856)—(2,333)————$1,441 $1,145,342———(2,333)— (197,342)
—
—
—
—
—
—

$— $10,044,819—
1,178,532—(2,333)—(197,342)
—
(243)
—
0
—
(514)

—
—
—
—
—
$1,106,351—(59,775)—(59,775)——(59,775)—(59,775)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$938,324 $7,953,297 $(40,270) $9,957,702 $  983,874———(17,325)—$(35,784)

—
—
—
—
—
$(21,189)

—
—
—
—
—
—
—
(17,325)(2,108)(2,108)$  (667) $  926,234—(59,775)—(59,775)———(17,325)—(2,108)$— $10,883,936

See accompanying notes.

See accompanying notes.

52

Integrated Report 2019

Sumitomo Realty & Development Co., Ltd.

53

Financial Section

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2019, 2018 and 2017

Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
As of and for the years ended March 31, 2019, 2018 and 2017
Thousands of
U.S. dollars (Note 1)

Millions of yen

2019

2018

2017

2019

¥ 189,589
46,313
8,576
(309)
(242)
3,649
1,280
(12)
1,105
(10,067)
20,1842,233
65,981
26,190(13,104)(1,800)339,566¥ 176,444
41,628
10,635
(525)
91
179
601
(963)
—
(8,484)
20,352(5,669)25,915(12,536)
17,076(6,648)258,096¥ 150,623
39,446
15,538
411
702
(12)
1,522
(43)
—
(6,707)
21,588
1,090
5,574(12,936)
7,816
5,029
229,641$ 1,708,009
417,234
77,261(2,784)(2,180)32,874
11,532(108)
9,955(90,694)
181,838
20,117594,423
235,946(118,054)(16,216)
3,059,153

Proceeds from interest and dividend income
Payments for interest
Payments for income tax and other taxes
Net cash provided by operating activities

10,066(20,147)(69,427)
260,058

8,484(20,395)(56,252)
189,933

6,707(22,295)(55,545)
158,508

90,685(181,505)(625,468)
2,342,865

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 and redemption 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(188,573)
6,617(31,281)
334
(738)
4,475
(14,324)
35,664
1,004(10,442)(11,949)(209,213)(220,017)
357(28,835)
2,197(1,317)28,462(11,276)
25,271
2,420(11,544)(6,252)(220,534)(254,931)
125(21,249)
1,858(1,720)8,361(11,260)
22,974
2,757(13,626)(7,451)(274,162)(1,698,856)
59,613(281,811)
3,009(6,649)40,315(129,045)
321,297
9,045(94,072)(107,648)(1,884,802)(35,773)—(60,000)
4,900(4,900)198,300(225,752)
37,110(44,611)(27)(13,269)(2,892)30,000(80,000)
1,700(1,700)376,000(209,622)
12,610(21,258)(64)(12,337)(12,610)
20,000(20,000)
14,500(16,460)
520,200(296,737)
109,500(106,820)(43)(11,276)(322,279)—(540,541)
44,144(44,144)
1,786,486(2,033,802)
334,324(401,901)(243)(119,541)—(2,036)(146,058)(60,910)(5,066)
26,461—(2,257)
197,997—(18,341)(1,315,838)

Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Loss on impairment of fixed assets (Note 10)
Provision for (Reversal of) allowance for doubtful accounts
Increase (Decrease) in net defined benefit liability
Loss (Gain) on sale of property and equipment, net
Loss on disposal of property and equipment
Loss (Gain) on sale of investments in securities, net
Loss (Gain) on devaluation of investments in securities
Interest and dividend income
Interest expense
Decrease (Increase) in notes and accounts receivable—trade
Decrease (Increase) in inventories
Increase (Decrease) in notes and accounts payable—trade
Increase (Decrease) in advances received
Other, net
Total

Cash flows from financing activities:
Increase (Decrease) in short-term debt, net
Proceeds from issuance of bonds
Redemption of bonds
Proceeds from non-recourse bonds
Redemption of non-recourse bonds
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from long-term non-recourse loans
Repayment of long-term non-recourse loans
Decrease (Increase) in treasury stocks, net
Cash dividends paid
Payments for purchases of investments in subsidiaries not resulting
in change in scope of consolidation
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents

243

(124)

(388)

2,189

Net increase (decrease) in cash and cash equivalents(94,970)(4,264)

81,955(855,586)

Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents of a newly consolidated
subsidiary
Decrease in cash and cash equivalents resulting from exclusionof subsidiaries from consolidation
Cash and cash equivalents at end of year (Note 3)

262,046

267,944

185,989

2,360,775

3,631

—

—

32,712—¥ 170,707(1,634)¥ 262,046—¥ 267,944—$ 1,537,901

See accompanying notes.

54

Integrated Report 20191 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 Act and its related
accounting regulations, and in conformity with accounting principles
generally accepted in Japan (“Japanese GAAP”), which are different incertain respects as to application and disclosure requirements fromInternational Financial Reporting Standards (“IFRS”).
The accounts of the Company’s overseas subsidiaries are based on
their accounting records maintained in conformity with generally
accepted accounting principles prevailing in the respective countries of
domicile. The accompanying consolidated financial statements have been
restructured and translated into English (with certain expandeddisclosure) from the consolidated financial statements of the Company
prepared in accordance with Japanese GAAP and filed with theappropriate Local Finance Bureau of the Ministry of Finance as requiredby the Financial Instruments and Exchange Act. Certain supplementary
information included in the statutory Japanese-language consolidated
financial statements, but not required for fair presentation, is notpresented 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 theprevailing exchange rate at March 31, 2019, which was ¥111.00 to U.S.
$1. The translation should not be construed as representations that theJapanese yen amounts have been, could have been or could in the future
be converted into U.S. dollars at this or any other rate of exchange.
2 Accounting policies(1) Consolidation
The accompanying consolidated financial statements include theaccounts of the Company and significant companies over which theCompany has power of control through majority voting rights orexistence 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 to minority
shareholders, are recorded based on the fair value at the time theCompany acquired control of the respective subsidiaries.
All significant intercompany balances, transactions and profits havebeen eliminated in consolidation.
(2) Foreign currency translation
Receivables and payables denominated in foreign currencies aretranslated into Japanese yen at the year-end rate.
Financial statements of consolidated overseas subsidiaries aretranslated into Japanese yen at the year-end rate, except forshareholders’ equity accounts, which are translated at historical rates,
and income statement items resulting from 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.
(3) Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash on hand,readily available deposits and short-term, highly liquid investments withmaturities not exceeding three months at the time of purchase areconsidered to be cash and cash equivalents.

(4) Recognition of revenue
Revenues from sales operations of condominiums, detached houses andland lots are recognized when the units are delivered and customers
accepted the delivery. Revenues from leasing operations of officebuildings, residences and other properties are recognized as rent accrues
over the lease term.
(5) Inventories
Inventories are stated at cost, determined by the specific identification
method principally. The carrying amount of inventories is written downwhen the profitability declines.
(6) Securities
Held-to-maturity securities are stated at amortized cost. Investments in
subsidiaries and affiliates that are not consolidated or accounted for using
the equity method are stated at moving-average cost. Available-for-salesecurities with available fair values are stated at fair value. Unrealized
gains and losses on these securities are reported, net of applicable income
taxes, as a separate component of net assets. Realized gains and losseson the sale of such securities are computed using moving-average cost.
Preferred equity securities are stated at cost determined by the
specific identification method, and securities with no available fair value
are stated at moving-average cost.
Investments in limited partnerships, which are regarded as securities
under the Financial Instruments and Exchange Act, are accounted for in amanner similar to the equity method based on the recent financial
statements.
If the market value of held-to-maturity securities, investments in subsidiaries and affiliates and available-for-sale securities declines significantly, suchsecurities are stated at fair value and the difference between fair value andthe carrying amount is recognized as a loss in the period of the decline. If thefair value of investments in unconsolidated subsidiaries and affiliated companies not accounted for using the equity method is not readily available, suchsecurities should be written down to the net asset value with a corresponding charge in the income statement in the event net asset value declines
significantly. In these cases, such fair value or the net asset value will be thecarrying amount of the securities at the beginning of the next fiscal year.
(7) Property and equipment
The Company and its consolidated domestic subsidiaries depreciatebuildings using the straight-line method, and other property and equipment (excluding facilities attached to buildings and structures acquiredon or after April 1, 2016) using the declining-balance method over theirestimated useful lives. The consolidated overseas subsidiaries depreciateproperty and equipment using primarily the straight-line method in
accordance with the accounting principles in the respective countries.
In addition, the Company and its consolidated domestic subsidiaries
depreciate facilities attached to buildings and structures acquired on orafter April 1, 2016 using the straight-line method.
Leased assets related to finance lease transactions without title transfer are depreciated using the straight-line method over the lease periods
as their useful lives with 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...................................... Lease periods
Sumitomo Realty & Development Co., Ltd.

55

Financial Section(8) Software costs
Software costs are amortized using the straight-line method over theestimated useful lives (five years).
(9) Allowance for doubtful accounts
The Company and its consolidated subsidiaries provide for doubtful
accounts at an estimated uncollectable amount based on the evaluationof certain identified doubtful and bankrupt receivables plus an amountcalculated using the percentage of actual collection losses in certain
reference periods with respect to remaining receivables.
(10) Lease transactions
Leased assets related to finance lease transactions without title transfer
are depreciated using the straight-line method over the lease periods as
their useful lives with no residual value.
(11) 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 andincome tax purposes are recognized as deferred income taxes.
(12) Employees’ severance and retirement benefits
The Company and its certain consolidated subsidiaries provide two typesof post-employment benefit plans, lump-sum payment plans and defined
benefit corporate pension plans, under which all eligible employees areentitled to benefits based on their current rate of pay, length of service
and the conditions under which termination occurs.
For the calculation of retirement benefit obligations, the estimatedamount of retirement benefits is allocated to the respective fiscal years by
the straight-line method.
Some of the Company’s consolidated subsidiaries calculate net defined
benefit liability and retirement benefit expenses by using a simplified method
in which retirement benefit obligations are equal to the amount that would
be paid if all employees resigned voluntarily at the end of the fiscal year.
Prior service costs are recognized as expenses in the period in which
they are incurred, and actuarial gains and losses are recognized as
expenses in the following period.
(13) Construction contracts
The construction projects for which the outcome of the portion completed by the end of the fiscal year under review can be reliably estimated are accounted for by the percentage-of-completion method (thedegree of completion of each construction project is estimated using thecost-comparison method), while other construction projects areaccounted for by the completed-contract method.
(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 for hedging
purposes and qualify for hedge accounting.
If derivative financial instruments are used as hedges and meet certain
hedging criteria, the Company and its consolidated subsidiaries defer
recognition of gains or losses resulting from changes in fair value of thederivative financial instruments until the related gains or losses on thehedged items are recognized.

56

Integrated Report 2019

However, in cases where foreign exchange forward contracts are usedas hedges and meet certain hedging criteria (regarding foreign exchange
contracts), the foreign exchange forward contracts and hedged items areaccounted for in the following manner:
1. ‌If a foreign exchange forward contract is executed to hedge an existing 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 carrying
amount of the receivable or payable is recognized in the income
statement in the period which includes the inception date; and(b) the discount or premium on the contract (that is, the difference
between the Japanese yen amount of the contract translated using
the contracted forward rate and that translated using the spot rate
at the inception date of the contract) is recognized over the term of
the contract.
2. ‌If a foreign exchange forward contract is executed to hedge a futuretransaction denominated in a foreign currency, the future transaction
will be recorded using the contracted forward rate, and no gains orlosses on the foreign exchange forward contract are recognized.
Also, if interest rate swap contracts are used as a hedge and meetcertain hedging criteria (regarding interest rate swap contracts), the net
amount to be paid or received under the interest rate swap contracts isadded 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 earnings per share is based on the weighted-average
number of shares of common stock outstanding during each year.
Diluted earnings per share is computed based on the amount of profit
attributable to owners of parent on common stock 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.
Diluted earnings per share is not presented as there are no potential
shares.
Cash dividends per share represent actual amounts applicable to therespective year.
(16) New accounting pronouncements (Accounting standards andguidance issued but not yet effective)“Accounting Standard for Revenue Recognition” (ASBJ Statement No.
29, March 30, 2018)“Implementation Guidance on Accounting Standard for Revenue
Recognition” (ASBJ Guidance No. 30, March 30, 2018)(1) Overview
The standard and guidance provide comprehensive principles forrevenue recognition. Under the standard and guidance, revenue isrecognized by applying the following 5 steps:
Step 1: Identify contract(s) with customers
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: ‌Allocate the transaction price to the performance obligation in
the contract
Step 5: ‌Recognize revenue when (or as) the entity satisfies a performance obligation(2) Effective date
Effective from the beginning of the fiscal year ending March 31, 2022
(3) Effects of the application of the standards
The Company and its consolidated domestic subsidiaries are currently
in the process of determining the effects of these new standards onthe consolidated financial statements.
(17) Changes in presentation methods(Changes due to adoption of “Partial Amendments to AccountingStandard for Tax Effect Accounting”)
Effective from the beginning of the year ended March 31, 2019, theCompany and its consolidated subsidiaries adopted “Partial Amendments
to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No.
28, February 16, 2018) and changed the presentation and related notesof deferred tax assets and deferred tax liabilities, such that deferred tax
assets and deferred tax liabilities are classified as part of “Other assets”
and “Long-term liabilities”, respectively.
As a result, “Deferred income taxes” in “Current assets” decreased by¥21,793 million and “Deferred income taxes” in “Other assets”
increased by ¥2,090 million in the consolidated balance sheet as ofMarch 31, 2018. In addition, “Other current liabilities” and “Other longterm liabilities” decreased by ¥59 million and ¥19,644 million as ofMarch 31, 2018, respectively.
Total assets decreased by ¥19,703 million as of March 31, 2018 as aresult of offsetting deferred tax assets and deferred tax liabilities relating
to the same taxable entity.

(Consolidated statements of income)“Dividend to partnership investors” previously separately presented in“Other income (expenses)” was included in “Other, net” from the year
ended March 31, 2019, because the significance of the amountdecreased. Reflecting this change in presentation, the consolidated statements of income for the years ended March 31, 2018 and 2017 werereclassified, respectively.
As a result, “Dividend to partnership investors” of ¥795 million wasreclassified to “Other, net” for the year ended March 31, 2018, and“Dividend to partnership investors” of ¥1,143 million was reclassified to“Other, net” for the year ended March 31, 2017.
(Consolidated statements of cash flows)“Increase (Decrease) in assignment of receivables” previously separately
presented in “Cash flows from financing activities” was included in“Other, net” from the year ended March 31, 2019, because the significance of the amount decreased. Reflecting this change in presentation,
the consolidated statements of cash flows for the years ended March 31,2018 and 2017 were reclassified, respectively.
As a result, “Increase (Decrease) in assignment of receivables” of¥3,000 million was reclassified to “Other, net” for the year ended March
31, 2018, and “Increase (Decrease) in assignment of receivables” of¥300 million was reclassified to “Other, net” for the year ended March
31, 2017.

3 Cash and cash equivalents
Cash and cash equivalents at March 31, 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Cash, time and notice deposits
Time deposits
Cash and cash equivalents

2019

2018

2019

¥172,192(1,485)¥170,707¥263,210(1,164)¥262,046$1,551,279(13,378)$1,537,901

4 Inventories
Inventories at March 31, 2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

Real estate for sale
Real estate for sale in process
Costs on uncompleted construction contracts
Other
Total

2019

2018

2019

¥390,026
282,595
5,827
1,455¥679,903¥380,736
395,730
5,015
1,827¥783,308$3,513,748
2,545,901
52,495
13,108$6,125,252

The Company transferred amounts between inventories and property and equipment. Such transfers at March 31, 2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

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

2019

2018

2019

¥(23,162)
4,822¥(18,340)¥(38,047)
2,490¥(35,557)$(208,666)
43,441$(165,225)

Sumitomo Realty & Development Co., Ltd.

57

Financial Section

5 Pledged assets
Assets pledged as collateral at March 31, 2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

Cash, time and notice deposits¥  2,068¥  2,081$   18,631

Buildings and structures

103,708

108,319934,306Land

393,316

393,316

3,543,387

Construction in progress

85

99

766

Machinery and equipment

210

268

1,892

¥499,387¥504,083$4,498,982

Total
Secured liabilities at March 31, 2019 and 2018 are as follows:

Thousands of
U.S. dollars

Millions of yen

Long-term non-recourse debt due within one year
Long-term non-recourse debt due after one year
Total

2019

2018

2019

¥102,298
300,900¥403,198¥ 49,410
361,289¥410,699$  921,604
2,710,811$3,632,415

Specified assets for non-recourse debts at March 31, 2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

Cash, time and notice deposits
Buildings and structures
Land
Construction in progress
Machinery and equipment
Total

2019

2018

2019

¥ 11,345
103,708
393,31685
210¥508,664¥ 10,652
108,319
393,31699
268¥512,654$  102,207
934,306
3,543,387
766
1,893$4,582,559(Note) “Specified assets for non-recourse debts” includes a portion of the amount of “Assets pledged as collateral” for the years ended March 31, 2019 and 2018.

3. Supplemental information on fair values of financial instruments
The fair values of financial instruments are based on their market prices,
and if the market price is not available, other rational valuation techniques are used instead. The rational valuation techniques incorporate
variable factors, and as a result the values may change due to using
different assumptions.
The amounts of derivative transactions shown in Note 16 “Derivativetransactions” are not representing the market risks related to derivativetransactions.
The carrying amounts of financial instruments on the consolidatedbalance sheets, their fair values and the differences between them as ofMarch 31, 2019 and 2018 are as follows. (Financial instruments whose
fair value is extremely difficult to estimate are not included; please see(Note 2).)

For 2019
Millions of yen

Assets:(1) Cash, time and notice deposits(2) Notes and accounts receivable—trade(3) Investments in securities
Available-for-sale securities(4) Guarantee and lease deposits
Held-to-maturity securities
Available-for-sale securities
Total assets
Liabilities:(1) Notes and accounts payable—trade(2) Short-term debt
(3) Long-term debt (including due within one year)(4) Long-term non-recourse debt (including due within one year)
Total liabilities
Derivative transactions*:
Hedge accounting
Total derivative transactions

Carrying amount

Fair value¥  172,192
21,567¥  172,192
21,567414,743

Carrying amount

Fair value¥     ——

$ 1,551,279
194,297$ 1,551,279
194,297$      ——

414,743—3,736,423

3,736,423

—

3,169
1,170
¥  612,841

3,167
1,170
¥  612,839(2)—¥    (2)28,550
10,541$ 5,521,090

28,532
10,541$ 5,521,072(18)—$    (18)¥   54,939
25,643
2,913,946
403,198¥3,397,726¥   54,939
25,643
2,964,782
410,218¥3,455,582¥     ——
50,836
7,020¥57,856$   494,946
231,018
26,251,766
3,632,414$30,610,144$   494,946
231,018
26,709,747
3,695,658$31,131,369$      —
—457,981
63,244$521,225¥   (5,733)¥   (5,733)¥   (5,733)¥   (5,733)¥     —
¥     —$   (51,649)$   (51,649)$   (51,649)$   (51,649)$      —
$      —

2. Details of financial instruments, risks, and policies andsystems of risk management
Operating receivables such as notes and accounts receivable—trade areexposed to customers’ credit risk, but this risk is generally avoided
through the receipt of deposits.
Investments in securities are business-related equities and are exposed
to market price fluctuation risk. The Group regularly checks the market
value of the securities and the financial condition of the issuers, andcontinuously reviews whether it continues to hold securities with consideration for its relationships with the issuers.
Guarantee and lease deposits are mostly deposits related to leasing
properties, and are exposed to the counterparty credit risk.

58

Integrated Report 2019

Difference

For 2018
Millions of yen

6 Financial instruments
1. Policy for financial instruments
The Company and its consolidated subsidiaries (“the Group”) have thepolicy to limit its fund management to short-term deposits with funds
through loans from banks and the issuance of corporate bonds andcommercial paper.
The Group utilizes derivative financial instruments only for the purpose of hedging the foreign exchange risk associated with foreign currency-denominated transactions or hedging the interest rate risk
associated with the Group’s loans payable, and does not utilize derivative
financial instruments for any speculative purposes.

Thousands of U.S. dollars
Difference

In addition, the Group accommodates counterparties with loans andconsequently is exposed to the borrowers’ credit risk. However, theGroup constantly checks the financial condition of principal borrowers
and their performance using the funds lent to those borrowers even after
accommodation.
The majority of due dates of operating debt, such as notes andaccounts payable, are within one year.
Interest rate swap contracts are used to hedge risks arising fromfluctuations in interest rates on certain loans and corporate bonds.
In regard to derivative transactions, the Group utilizes interest rate
swaps for bank loans and deposits, and utilizes foreign exchange forward
contracts and cross currency swap contracts for foreign currency-denominated transactions. Interest rate swap contracts are exposed to the risks
of interest rate changes, and foreign exchange forward contracts andcross currency swap contracts are exposed to the risks of foreignexchange rate changes. The derivative financial instruments are executedwith creditworthy financial institutions, and the Group’s management
believes there is insignificant risk of default by counterparties. Derivativetransactions are executed by the Group’s Finance Department in accordance with the decisions of a committee whose chairman is the directorof the Finance Department. The Finance Department prepares reports onderivative transactions that are provided to the director of the Finance
Department periodically.

Assets:(1) Cash, time and notice deposits(2) Notes and accounts receivable—trade(3) Investments in securities
Available-for-sale securities(4) Guarantee and lease deposits
Held-to-maturity securities
Available-for-sale securities
Total assets
Liabilities:(1) Notes and accounts payable—trade(2) Short-term debt
(3) Long-term debt (including due within one year)(4) Long-term non-recourse debt (including due within one year)
Total liabilities
Derivative transactions*:
Hedge accounting
Total derivative transactions

Carrying amount

Fair value

Difference¥  263,210
23,773¥  263,210
23,773¥    ——

417,841

417,841

—

789
1,180
¥  706,793

791
1,180
¥  706,795

2—¥     2¥   28,751
61,4163,001,398
410,699¥3,502,264¥   28,751
61,416
3,032,800
415,716¥3,538,683¥    ——
31,402
5,017¥36,419¥   (2,983)¥   (2,983)¥   (2,983)¥   (2,983)¥    —¥    —* Derivative transactions are stated at net of assets and liabilities. Figures in parentheses indicate net liabilities.

Sumitomo Realty & Development Co., Ltd.

59

Financial Section(Note 1) The calculation methods of fair value for financial instruments
Assets:(1) Cash, time and notice deposits
The fair value of cash, time and notice deposits approximates their carrying amounts because of their short-term maturities.
(2) Notes and accounts receivable—trade
The fair value of notes and accounts receivable—trade approximates theircarrying amounts unless the credit standing of debtors has changed
significantly since the loan origination.
The allowance for doubtful receivables is estimated based on
expected recoverable amounts, considering the possibility of individualcollections. Therefore the fair value of doubtful receivables approximatesthe carrying amount deducted by the estimated allowance for doubtful
accounts on the consolidated balance sheets as of the end of the fiscal
year.
(3) Investments in securities
The fair value of listed shares is based on the exchange prices at market.
For floating rate notes, the carrying amount is presented as the fair value,as the fair value approximates the carrying amount because the market
interest rate is reflected in such notes within a short time period. The fairvalue of the fixed-coupon debt is determined based on the present value
discounted at the interest rate which reflects the period remaining tomaturity and the credit risk.
For notes on securities classified by purpose of holding, please see
Note 7 “Securities.”(4) Guarantee and lease deposits
The fair value of guarantee and lease deposits are based on the value
offered by correspondent financial institutions.
For notes on securities classified by purpose of holding, please see
Note 7 “Securities.”

Liabilities:(1) Notes and accounts payable—trade and (2) Short-term debt
The fair value of these items approximates their carrying amounts
because of their short-term maturities.
(3) Long-term debt (including due within one year)
For floating rate notes, the carrying amount is used as the fair value
because the market interest rate is reflected in such notes within a shorttime period and because the credit standing of the Company is the sameafter borrowing. The fixed-coupon debt is calculated by discounting the
combined total of principal and interest at an interest rate assumed forsimilar new borrowings.
The specific matching criteria of interest rate swaps and cross currencyinterest rate swaps are applicable to some long-term debts with floatinginterest rates (please see Note 16 “Derivative transactions”). The fairvalue of these items is calculated by discounting the combined total ofinterest and principal, with which the interest rate swap and cross currency interest rate swap have been accounted for, at an interest rate
rationally estimated for similar borrowings.
The fair value of corporate bonds issued by the Company (included in(3) Long-term debt (including due within one year)) is based on themarket price.
(4) Long-term non-recourse debt (including due within one year)
For floating rate notes, the carrying amount is used as the fair value
because the market interest rate is reflected in such notes within a shorttime period and the value of its non-exempt properties has not beenchanged.
The fixed-coupon debt is calculated by discounting the combined
total of principal and interest at an interest rate assumed for similar new
borrowings or bonds.
The specific matching criteria of interest rate swaps are applicable tosome long-term non-recourse debts with floating interest rates (please
see Note 16 “Derivative transactions”). The fair value of these items is
calculated by discounting the combined total of interest and principal,
with which the interest rate swap has been accounted for, at an interest
rate rationally estimated for similar borrowings or bonds.

(Note 3) Redemption schedule of pecuniary claims and securities with maturities
For 2019
Millions of yen
1 year or lessCash, time and notice deposits
Notes and accounts receivable—trade
Guarantee and lease deposits:
Held-to-maturity securities (National government bonds)
Available-for-sale securities with maturities (National government bonds)
Total

5 to 10 years

Over 10 years¥172,192
21,567

¥ —
—

¥ —
—

¥—
—

2,969
407
¥197,135

200
561
¥761

—
171
¥171

—
—
¥—

For 2018
Millions of yen
1 year or lessCash, time and notice deposits
Notes and accounts receivable—trade
Guarantee and lease deposits:
Held-to-maturity securities (National government bonds)
Available-for-sale securities with maturities (National government bonds)
Total

1 to 5 years

5 to 10 years

Over 10 years¥263,210
23,773

¥

—
—

¥ —
—

¥—
—

328
—
¥287,311

462
842¥1,304

—
298
¥298

—
—
¥—

For 2019
Thousands of U.S. dollars
1 year or lessCash, time and notice deposits
Notes and accounts receivable—trade
Guarantee and lease deposits:
Held-to-maturity securities (National government bonds)
Available-for-sale securities with maturities (National government bonds)
Total

1 to 5 years

5 to 10 years

Over 10 years$1,551,279
194,297$    ——$    ——$——

26,748
3,667$1,775,991

1,802
5,054
$6,856—
1,541$1,541——$—(Note 4) Repayment schedule of corporate bonds, long-term debt, long-term non-recourse debt and other interest-bearing debt
For 2019
Millions of yen
Year ending March 31

Short-term debt
Long-term debt (including due within one year)
Long-term non-recourse debt (including due within one year)
Total

Derivative transactions:
Please see Note 16 “Derivative transactions.”

1 to 5 years

2020

2021

2022

2023

2024

2025 and thereafter¥ 25,643
169,619
102,298¥297,560¥     —
131,281
69,913¥201,194¥     —
211,256
14,944¥226,200¥     —
237,1963,386¥240,582¥     —
289,2823,240¥292,522¥      —1,875,312
209,417¥2,084,729

2019

2020

2021

2022

2023

2024 and thereafter¥ 61,416
275,752
49,410¥386,578¥     —
169,619
101,514¥271,133¥     —
131,281
69,129¥200,410¥     —
221,256
14,160¥235,416¥     —
237,196
2,716¥239,912¥       —1,966,294
173,770¥2,140,064

2020

2021

2022

2023

2024

2025 and thereafter$  231,018
1,528,099
921,604$2,680,721$      —1,182,712
629,847$1,812,559$      —1,903,207
134,631$2,037,838$      —2,136,901
30,504$2,167,405$      —2,606,144
29,189$2,635,333$       —16,894,703
1,886,639$18,781,342(Note 2) Financial instruments whose fair value is extremely difficult to estimate
Carrying amountThousands of
U.S. dollars

Millions of yen

Investments in subsidiaries and affiliates*1

2019

2018

2019

¥ 35,856¥ 42,745$  323,027

Unlisted equity securities*1

2,327

1,297

20,964Preferred equity securities, etc.*1

25,68825,338231,423

352

352

3,171

65,96069,095594,234

Investments in limited partnerships, etc.*1
Guarantee and lease deposits(excluding held-to-maturity securities and available-for-sale securities)*2
Guarantee and deposits received*

3

Integrated Report 2019

Millions of yen
Year ending March 31

Short-term debt
Long-term debt (including due within one year)
Long-term non-recourse debt (including due within one year)
Total
For 2019

228,959

207,824

2,062,694*1. The fair value of these items are not disclosed since their market price is unavailable and the assessment of their fair value is deemed extremely difficult.
*2. Guarantee and lease deposits (excluding held-to-maturity securities and available-for-sale securities) are not included in “Assets (4) Guarantee and lease deposits” because their remaining terms cannot
be determined and the assessment of their fair value is deemed extremely difficult.
*3. The fair value of guarantee and deposits received (mainly consisting of lease deposits) are not disclosed because their remaining terms cannot be determined and the assessment of their fair value isdeemed extremely difficult.

60

For 2018

Thousands of U.S. dollars
Year ending March 31

Short-term debt
Long-term debt (including due within one year)
Long-term non-recourse debt (including due within one year)
Total

Sumitomo Realty & Development Co., Ltd.

61

Financial Section

7 Securities

8 Short-term debt and long-term debt

For 2019
A. The following tables summarize the acquisition costs, carrying amounts and fair values of securities with available fair values as of March 31, 2019:(a) Held-to-maturity securities:

Short-term debt at March 31, 2019 and 2018 consisted of the following:

Millions of yen

Carrying amount

Securities whose fair value exceeds carrying amount:
National and local government bonds, etc.
Securities whose fair value does not exceed carrying amount:
National and local government bonds, etc.
Total

Thousands of U.S. dollars

Difference

Carrying amount

Fair value¥  462¥1$ 4,153$ 4,162

$  9

2,708
¥3,1692,705¥3,167(3)¥(2)

24,397$28,550

24,370$28,532

(27)
$(18)

Carrying amount

Acquisition cost

Millions of yen
Carrying amount

Acquisition cost

¥25,643—¥25,643

0.27
—

2018

Average interest
rate (%)¥61,416—¥61,4160.25—¥348,562
1,171—
349,733¥180,791
1,140—
181,931¥167,771
31—
167,802$3,140,198
10,550—3,150,748$1,628,748
10,270—1,639,018$1,511,450
280—
1,511,730

65,517—664
66,181¥415,914

75,824—664
76,448¥258,419(10,307)——(10,307)¥157,495

590,243—
5,982
596,225$3,746,973

683,099—
5,982
689,081$2,328,099(92,856)——(92,856)$1,418,874

For 2018
A. The following tables summarize the acquisition costs, carrying amounts and fair values of securities with available fair values as of March 31, 2018:(a) Held-to-maturity securities:
Millions of yen

Carrying amount

Fair value

Difference

¥789

¥791

¥  2

—
¥789

—
¥791

—
¥  2

Carrying amount

Acquisition cost

¥394,231
1,180—
395,411¥202,083
1,140—
203,223¥192,14840—
192,188

23,281—
329
23,610¥419,021

26,368—329
26,697¥229,920(3,087)——(3,087)¥189,101(b) Available-for-sale securities:

Millions of yen
Difference

2019$231,018—$231,018

The interest rates represent weighted-average rates in effect at March 31, 2019 and 2018, regardless of borrowing currencies, though the range ofthe interest rate varies by borrowing currency.
Long-term debt at March 31, 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Difference

B. ‌Total sales of available-for-sale securities sold in the year ended March 31, 2019 amounted to ¥264 million ($2,378 thousand) and the related gains
amounted to ¥12 million ($108 thousand).

Securities whose carrying amount exceeds acquisition cost:
Equity securities
Debt securities*
Other
Subtotal
Securities whose carrying amount does not exceed acquisition cost:
Equity securities
Debt securities
Other
Subtotal
Total

Loans, principally from banks
Commercial paper
Total

Average interest
rate (%)

Thousands of U.S. dollars
Difference* Debt securities in securities whose carrying amount exceeds acquisition cost are included in “Guarantee and lease deposits paid to lessors” on the consolidated balance sheets.
(Note) The Company recognized impairment loss on investments in securities of ¥1,105 million ($9,955 thousand) related to equity securities in available-for-sale securities.

Securities whose fair value exceeds carrying amount:
National and local government bonds, etc.
Securities whose fair value does not exceed carrying amount:
National and local government bonds, etc.
Total

2019

Difference¥  461(b) Available-for-sale securities:
Securities whose carrying amount exceeds acquisition cost:
Equity securities
Debt securities*
Other
Subtotal
Securities whose carrying amount does not exceed acquisition cost:
Equity securities
Debt securities
Other
Subtotal
Total

Fair value

Thousands of
U.S. dollars

Millions of yen

2.50% domestic straight bonds, due 2019
0.329% domestic straight bonds, due 2018
0.563% domestic straight bonds, due 2020
0.877% domestic straight bonds, due 2020
0.462% domestic straight bonds, due 2018
1.098% domestic straight bonds, due 2023
0.426% domestic straight bonds, due 2018
0.355% domestic straight bonds, due 2018
0.950% domestic straight bonds, due 2023
0.344% domestic straight bonds, due 2018
0.968% domestic straight bonds, due 2023
0.987% domestic straight bonds, due 2024
0.914% domestic straight bonds, due 2024
0.904% domestic straight bonds, due 2024
0.884% domestic straight bonds, due 2024
0.836% domestic straight bonds, due 2024
0.809% domestic straight bonds, due 2024
0.429% domestic straight bonds, due 2021
0.392% domestic straight bonds, due 2022
0.670% domestic straight bonds, due 2025
0.826% domestic straight bonds, due 2025
0.992% domestic straight bonds, due 2025
0.400% domestic straight bonds, due 2026
0.230% domestic straight bonds, due 2026
0.400% domestic straight bonds, due 2027
Loans, principally from banks and insurance companies, with interest at weighted-average rates of 0.31%
in 2019 and 0.32% in 2018:
SecuredUnsecured
Subtotal
Amount due within one year
Total

2019

2018

2019

¥   10,000—
10,00020,000—10,000——10,000—10,00020,00020,00020,00020,00020,00020,00010,00010,00010,00020,00020,00010,00010,00030,000¥   10,000
10,00010,00020,00010,00010,00020,00010,00010,00010,00010,00020,00020,00020,00020,00020,00020,00010,00010,00010,00020,00020,00010,00010,00030,000$    90,090—
90,090180,180—
90,090——90,090—90,090180,180
180,180
180,180
180,180
180,180
180,180
90,09090,09090,090180,180
180,180
90,09090,090270,271—
2,603,946
2,913,946(169,619)¥2,744,327—
2,631,398
3,001,398(275,752)¥2,725,646—
23,458,975
26,251,766(1,528,099)$24,723,667* Debt securities in securities whose carrying amount exceeds acquisition cost are included in “Guarantee and lease deposits paid to lessors” on the consolidated balance sheets.

B. ‌Total sales of available-for-sale securities sold in the year ended March 31, 2018 amounted to ¥1,663 million and the related gains and losses
amounted to ¥1,010 million and ¥47 million, respectively.

62

Integrated Report 2019

Sumitomo Realty & Development Co., Ltd.

63

Financial Section

Non-recourse debt at March 31, 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

Non-recourse bonds, with interest at weighted-average rates of 0.07% in 2019 and 0.11% in 2018:
Due within one year
Due after one year
Subtotal
Non-recourse loans, with interest at weighted-average rates of 0.11% in 2019 and 0.15% in 2018:
Due within one year
Due after one year
Subtotal
Total¥  2,000
37,10039,100¥  4,900
34,20039,100$   18,018
334,234
352,252

100,298
263,800
364,098¥403,198

44,510327,089
371,599¥410,699

903,586
2,376,576
3,280,162$3,632,414

SecuredUnsecured
Total¥403,198—¥403,198¥410,699—¥410,699$3,632,414—$3,632,414

9 Employees’ severance and retirement benefits
As explained in Note 2 (12), the liabilities and expenses for severance and retirement benefits are determined based on the amounts obtained by actuarial
calculations except for the cases using the simplified method.
For 2019 and 2018
1. Defined benefit plan
(1) Adjustment table of retirement benefit obligations between the beginning and the end of the fiscal year

Retirement benefit obligations at beginning of year
Service costs
Interest costs
Actuarial differences
Retirement benefits paid
Retirement benefit obligations at end of year

2018

2019

¥11,316
717
47
(53)
(412)
¥11,615$104,640
6,432
432
(9)
(4,504)$106,991

Thousands of
U.S. dollars

Millions of yen

Year ending March 31

Millions of yen

Thousands of
U.S. dollars

2020
2021
2022
2023
2024
2025 and thereafter
Total¥  169,619
131,281211,256
237,196289,282
1,875,312¥2,913,946$ 1,528,099
1,182,712
1,903,207
2,136,901
2,606,144
16,894,703$26,251,766

Plan assets at beginning of year
Expected return on plan assets
Actuarial differences
Employer contributions
Retirement benefits paid
Plan assets at end of year

2019

2018

2019

¥5,650
113
(67)
388
(227)
¥5,857¥5,172
103
176
398
(199)
¥5,650$50,901
1,018
(604)
3,496
(2,045)$52,766(3) ‌Adjustment table of retirement benefit obligations and plan assets at the end of the fiscal year and net defined benefit liability on the consolidatedbalance sheets

Thousands of
U.S. dollars

Millions of yen

The aggregate annual maturities of non-recourse debt at March 31, 2019 are as follows:
2020
2021
2022
2023
2024
2025 and thereafter
Total

2019

¥11,615
714
48
(1)
(500)
¥11,876(2) Adjustment table of plan assets between the beginning and the end of the fiscal year

The aggregate annual maturities of long-term debt at March 31, 2019 are as follows:Year ending March 31

Thousands of
U.S. dollars

Millions of yen

Millions of yen

Thousands of
U.S. dollars¥102,298
69,913
14,9443,386
3,240
209,417¥403,198$  921,604
629,847
134,63130,50429,1891,886,639$3,632,414

It is customary in Japan that security must be given if requested by lending banks under certain circumstances, and generally banks have the right tooffset cash deposited with them against any debt or obligations payable to the bank that becomes due in the case of default and certain other specified
events. The Company and its consolidated subsidiaries have never received such a request.

2019

2018

2019

Obligations under retirement benefit plans (unfunded)
Net amount of liabilities on the consolidated balance sheets¥ 6,295(5,857)438
5,581¥ 6,019¥ 6,241(5,650)591
5,374¥ 5,965$ 56,712(52,766)
3,946
50,279$ 54,225

Net defined benefit liability
Net amount of liabilities on the consolidated balance sheets¥ 6,019¥ 6,019¥ 5,965¥ 5,965$ 54,225$ 54,225

Obligations under retirement benefit plans (funded)
Fair value of plan assets(4) Components of retirement benefit expenses

Thousands of
U.S. dollars

Millions of yen

Service costs
Interest costs
Expected return on plan assets
Actuarial differences
Retirement benefit expenses

2019

2018

2019

¥ 714
48
(113)
(229)
¥ 420

¥ 717
47
(103)
41
¥ 702

$ 6,432432(1,018)(2,063)$ 3,783(5) Remeasurements of defined benefit plans (before deducting tax effect)

Thousands of
U.S. dollars

Millions of yen

Actuarial differences
Total

64

Integrated Report 2019

2019

2018

2019

¥295
¥295

¥(270)¥(270)$2,658$2,658

Sumitomo Realty & Development Co., Ltd.

65

Financial Section(6) Components of remeasurements of defined benefit plans (before deducting tax effect)

Thousands of
U.S. dollars

Millions of yen

Unrecognized actuarial differences
Total(7) Major breakdown of plan assets
Debt securities
Equity securities
General life insurance accounts
Other
Total
(8) Actuarial assumptions
Discount rate
Rate of expected return on plan assets

2019

2018

2019

¥66
¥66

¥(229)¥(229)

$595
$595

2019

2018

25.6%
34.9
37.8
1.7
100.0%

26.8%
34.4
37.7
1.1
100.0%

2019

2018

0.4%
2.0

0.4%
2.0

2. Defined contribution plan
The required contribution amount for a defined contribution plan that one of the Company’s consolidated subsidiaries adopted is ¥389 million ($3,505
thousand) and ¥380 million for the years ended March 31, 2019 and 2018, respectively.
10 Loss on impairment of fixed assets
The Company and its consolidated domestic subsidiaries recognized impairment losses on the following assets for the years ended March 31, 2019, 2018and 2017, respectively.
For 2019
Use

Location

Number of properties

Asset leased to others

Tokyo

1

Use

Location

Number of properties

Asset leased to others

Tokyo

1

Use

Location

Number of properties

Land for development

Tokyo, etc.

For 2018

For 2017

The Company and its consolidated domestic subsidiaries recognized
losses on the impairment of certain properties, which are generally
assessed individually for impairment. The Company’s houses are treatedas common assets.
Loss on sales of property and equipment of ¥8,576 million ($77,261
thousand) was recognized by a consolidated subsidiary by restructuringof assets within the Group for the year ended March 31, 2019. The
selling price of the asset, based on evaluation by a real estate appraiser,
was determined as its recoverable amount, and loss on sales of property
and equipment of the asset was recognized as impairment losses in otherexpenses for the year ended March 31, 2019.
The carrying value of the asset has been reduced to its recoverable
amount by ¥10,635 million since the total amount of its future cash flow

66

Integrated Report 20195

is estimated to be less than the carrying value for the year ended March
31, 2018. The recoverable amount is calculated by discounting the future
cash flow at 4.0%.
The carrying values of the land holdings summarized above havebeen reduced to their recoverable amounts by ¥15,538 million as aresult of mainly the determination of reviewing their business plans forthe year ended March 31, 2017. The recoverable amounts of the assets
for the years ended March 31, 2017 were determined as the net disposal value. The net disposal value for land for leased buildings and landfor development are based on the amount equivalent to the publicly
notified land price.
These write-downs were recognized as impairment losses in otherexpenses for the years ended March 31, 2018 and 2017, respectively.

11 Asset retirement obligations
Even though removing asbestos is required for some buildings theCompany and its consolidated subsidiaries (“the Group”) operate at
the time of demolishing, it is difficult to estimate the fair value ofobligations associated with such assets reasonably since the timing
and/or method of settlement for the retirement obligations are notclear enough. Therefore, for the years ended March 31, 2019 and2018, asset retirement obligations related to such a case are notrecorded (except for the asset retirement obligations recorded on thefinancial statements).

In addition, under the partial lease contracts, the Group has obligations
for restoring office spaces when they move out. For the asset retirement
obligations associated with such a case, the duration of use of the assets
is not clear enough and these assets do not have any relocation plans.
Therefore, the Group is unable to estimate the asset retirement obligations
since it is difficult to estimate the timing of fulfillment of the obligations.
Consequently, for the years ended March 31, 2019 and 2018, asset retirement obligations related to such a case are not recorded (except for theasset retirement obligations recorded on the financial statements).

12 Income taxes
The normal effective statutory income tax rate in Japan arising out of the aggregation of corporate, enterprise and inhabitants’ taxes was approximately
30.62% for the years ended March 31, 2019, and 30.86% for the years ended March 31, 2018 and 2017.
Details of deferred tax assets and liabilities at March 31, 2019 and 2018 are as follows:

Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

Deferred tax assets:
Loss on impairment of fixed assets
Loss on devaluation of real estate for sale
Depreciation and amortization of consolidated adjustment
Loss on adjustment of profit and loss on transfer
Allowance for doubtful accounts
Accrued bonuses
Accrued enterprise tax and business office tax
Net defined benefit liability
Net deferred losses on hedges
Net operating loss carryforwards
Loss on devaluation of investments in SPEs’ holding properties for sale
Elimination of unrealized profit
Loss on devaluation of investments in securities
Other
Subtotal of deferred tax assets
Valuation allowance
Total deferred tax assets¥ 17,077
14,415
7,258
4,254
3,439
1,875
1,834
1,759
1,752
1,593
1,413
926
797
13,11371,505(9,247)¥ 62,258¥ 17,146
10,885
7,977
—
3,521
1,739
2,165
1,873
951
1,939
1,413
943
844
12,85164,247(6,824)¥ 57,423$ 153,847
129,865
65,38738,32430,982
16,892
16,523
15,847
15,784
14,351
12,7308,342
7,180
118,135
644,189(83,306)$ 560,883

Deferred tax liabilities:
Net unrealized holding gains on securities
Retained earnings appropriated for tax allowable reserves
Other
Total deferred tax liabilities
Net deferred tax assets¥(48,241)(3,731)(637)¥(52,609)¥  9,649¥(57,916)(3,731)(738)¥(62,385)¥ (4,962)$(434,604)(33,613)(5,738)$(473,955)$  86,928(Note) Valuation allowance increased by ¥2,423 million ($21,829 thousand) as a result of mainly the recognition of loss on adjustment of profit and loss on transfer.

Sumitomo Realty & Development Co., Ltd.

67

Financial Section

15 Information for certain lease transactions

The difference between the statutory tax rate and the effective tax rate for the years ended March 31, 2019 and 2018 was insignificant and notpresented.
The difference between the statutory tax rate and the effective tax rate for the year ended March 31, 2017 is as follows:

Future lease payments and receipts under such non-cancelable operating leases at March 31, 2019, 2018 and 2017 are as follows:

Statutory tax rate
Adjustment:
Tax credit
Dividends and other income not taxable permanently
Elimination of dividend income
Inhabitant tax on per capita basis
Other
Effective tax rate

30.86%(1.89)(0.70)
0.41
0.21
0.07
28.96%

13 Deposits received and accounts payable with interest rate

Thousands of
U.S. dollars

Millions of yen

2017

2019

2018

2017

2019

Operating leases:
Future lease payments:
Due within one year
Due after one year
Total¥  1,526
42,211¥ 43,737¥  1,401
38,241¥ 39,642¥  1,387
39,053¥ 40,440$   13,748
380,279$  394,027

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

¥ 95,607
142,321¥237,928¥ 83,254
153,777¥237,031¥ 86,294
138,086¥224,380$  861,324
1,282,171$2,143,495

Contract amounts

Contract amounts
due after one year

¥15,105¥—

Contract amounts

Contract amounts
due after one year¥  248,600¥  208,600¥(5,733)

1,507,198

1,415,693— (*)

Guarantee and deposits received at March 31, 2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

2019

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¥ 61,582—
61,582228,959—
49,807—
278,766¥340,348

Average interest
rate (%)

—

—

—

2018

¥ 60,382—
60,382
207,824—
59,391—
267,215¥327,597

Average interest
rate (%)

—

—

—

2019

$  554,793—
554,7932,062,693—
448,712—2,511,405$3,066,198

Accounts payable with interest rate at March 31, 2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

2019

Due within one year
Due after one year
Total

¥—
—
¥—

Average interest
rate (%)

—
—

2018

¥1,543—¥1,543

Average interest
rate (%)

0.98—

16 Derivative transactions
Hedge accounting was applied to all derivative transactions for the years ended March 31, 2019 and 2018.
The summary of these transactions is as follows:(1) Foreign currency-related derivatives
For 2018

Millions of yen

Hedging accounting

Types of derivative transactions

Hedged items

Deferred hedge
accounting

Foreign exchange forward contracts
Receipts in U.S. dollars / Payments in yen

Foreign currency-denominated transactions(Note) Accounts payable due within one year are included in “Other current liabilities” and accounts payable due after one year are included in “Other long-term liabilities” on the consolidated balance
sheets.

¥133(Note) Fair value is determined based on the quoted price obtained from relevant financial institutions.

(2) Interest-related derivatives
For 2019
Hedging accounting

Types of derivative transactions

Deferred hedge
accounting
Exceptional accounting forinterest rate swaps

Interest rate swap contracts
Fixed rate payments / Floating rate receipts
Interest rate swap contracts
Fixed rate payments / Floating rate receipts

Millions of yen
Hedged items

Bank loans
Bank loans and bonds

2019

$—
—
$—

Fair value

Fair value

Thousands of U.S. dollars
Hedging accounting

Types of derivative transactions

Deferred hedge
accounting
Exceptional accounting forinterest rate swaps

Interest rate swap contracts
Fixed rate payments / Floating rate receipts
Interest rate swap contracts
Fixed rate payments / Floating rate receipts

Hedged items

Bank loans
Bank loans and bonds

Contract amounts

Contract amounts
due after one year

Fair value$ 2,239,640$ 1,879,279$(51,649)

13,578,360

12,753,991— (*)

Contract amounts

Contract amounts
due after one year¥  243,800¥  233,800¥(3,116)

1,577,137

1,454,966

— (*)

3,000

—

— (*)

14 Net assets
Under the Japanese Corporate Law (“the Law”) and its regulations, theentire amount paid for new shares is required to be designated as common
stock. However, a company may, by a resolution of the Board of Directors,
designate an amount not exceeding one-half of the price of the newshares as additional 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 on the accompanying consolidated balance sheets.

68

Integrated Report 2019

Under the Law, legal earnings reserve and additional paid-in capital
could be used to eliminate or reduce a deficit and capitalized by a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be
distributed as dividends. Under the Law, all additional paid-in capitaland 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 as dividends
is calculated based on the non-consolidated financial statements of theCompany in accordance with the Law and its regulations.

For 2018

Millions of yen

Hedging accounting

Types of derivative transactions

Deferred hedge
accounting
Exceptional accounting
for interest rate swaps
Exceptional accounting
for interest rate andcurrency swaps

Interest rate swap contracts
Fixed rate payments / Floating rate receipts
Interest rate swap contracts
Fixed rate payments / Floating rate receipts
Interest rate swap contracts
Fixed rate payments / Floating rate receipts
Receipts in U.S. dollars / Payments in yen

Hedged items

Bank loans
Bank loans and bonds
Foreign currency-denominated loans

Fair value(Note) Fair value is determined based on the quoted price obtained from relevant financial institutions.
(*) Interest rate swap contracts and cross currency interest rate swap contracts which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but thedifferential paid or received under the swap agreements is recognized and included in interest expenses or income of the long-term debt or the long-term non-recourse debt as hedged items. Thus, thefair value of such interest rate swap contracts is included in the fair value of the long-term debt.

Sumitomo Realty & Development Co., Ltd.

69

Financial Section

17 Segment information

Thousands of U.S. dollars

The Company and its consolidated subsidiaries mainly operate theirbusiness in five segments: (1) Leasing business consists of leasing of
office buildings, residences and other properties, and management ofthese properties; (2) Sales business consists of sale of condominiums,

detached houses and land lots; (3) Construction business consists ofconstruction of housing, condominiums and buildings; (4) Brokeragebusiness; and (5) Other businesses including fitness business and restaurant business.

Information by business segment for the years ended March 31, 2019, 2018 and 2017 is summarized as follows:
Millions of yen

For 2019
Revenue from operations:Customers
Intersegment
Total
Segment profit
Segment assets
Other:
Depreciation and amortization
Loss on impairment of fixed assets
Increase in property and equipment,
and intangible assets

Reportable segments
Leasingbusiness

Salesbusiness

Construction
business

Brokeragebusiness

Total

Adjustments

Consolidated financial
statements amounts¥  378,091
3,673
381,764¥  149,933¥3,737,136¥331,516
236
331,752¥ 47,115¥713,300¥219,776
1,917
221,693¥ 20,407¥ 30,057¥72,522377
72,899¥22,008¥14,074¥11,325
1,419
12,744¥ 1,528¥32,545¥1,013,230
7,622
1,020,852¥  240,991¥4,527,112¥     —
(7,622)(7,622)¥ (20,572)¥600,353¥1,013,230—
1,013,230¥  220,419¥5,127,465¥   43,201
8,576¥    145—¥  1,182—¥   458—¥   227—¥   45,213
8,576¥  1,100—¥   46,313
8,576

179,872

590

2,015

920

1,001

184,398397

184,795

Other businesses

Millions of yen

For 2018
Revenue from operations:Customers
Intersegment
Total
Segment profit
Segment assets
Other:
Depreciation and amortization
Loss on impairment of fixed assets
Increase in property and equipment,
and intangible assets

Reportable segments
Leasingbusiness

Salesbusiness

Construction
business

Brokeragebusiness¥  350,211
3,670
353,881¥  139,368¥3,565,088¥310,914
279
311,193¥ 46,839¥826,574¥206,839
2,517
209,356¥ 16,109¥ 27,946¥68,858311
69,169¥21,457¥12,200¥11,580
1,297
12,877¥ 1,628¥25,203¥  948,402
8,074
956,476¥  225,401¥4,457,011¥     —
(8,074)(8,074)¥ (19,764)¥710,187¥  948,402—
948,402¥  205,637¥5,167,199¥   38,981
10,635¥    174—¥  1,022—¥   471—¥   217—¥   40,865
10,635¥    763—¥   41,628
10,635

220,785

672

1,027

859

428

223,771

4,523

228,294

Other businesses

Total

Adjustments

Consolidated financial
statements amounts

Millions of yen

For 2017
Revenue from operations:Customers
Intersegment
Total
Segment profit
Segment assets
Other:
Depreciation and amortization
Loss on impairment of fixed assets
Increase in property and equipment,
and intangible assets

70

Integrated Report 2019

Reportable segments
Leasingbusiness

Salesbusiness

Construction
business

Brokeragebusiness¥  333,605
3,861
337,466¥  126,214¥3,359,262¥313,992
307
314,299¥ 46,190¥890,869¥200,565
3,058
203,623¥ 13,933¥ 27,424¥65,616
1,098
66,714¥19,148¥18,506¥11,373843
12,216¥ 1,491¥17,271¥  925,151
9,167
934,318¥  206,976¥4,313,332¥     —
(9,167)(9,167)¥ (18,805)¥666,708¥  925,151—
925,151¥  188,171¥4,980,040¥   36,949
14,035¥    207
1,502¥    970—¥   516—¥   177—¥   38,819
15,537¥    6271¥   39,446
15,538219,606

3,244

1,765

1,096

294

226,005811

226,816

Other businesses

Total

Adjustments

Consolidated financial
statements amounts

For 2019
Revenue from operations:Customers
Intersegment
Total
Segment profit
Segment assets
Other:
Depreciation and amortization
Loss on impairment of fixed assets
Increase in property and equipment,
and intangible assets

Reportable segments
Leasingbusiness

Salesbusiness

Construction
business

Brokeragebusiness$ 3,406,225
33,0903,439,315$ 1,350,748$33,667,892$2,986,631
2,126
2,988,757$  424,459$6,426,126$1,979,964
17,2701,997,234$  183,847$  270,784$653,351
3,397
656,748$198,270$126,793$   389,198
77,261$    1,306—$   10,649—$  4,126—

1,620,468

5,315

18,153

8,288

Adjustments

Consolidated financial
statements amounts$102,027 $ 9,128,198
12,784
68,667
114,811
9,196,865$ 13,766 $ 2,171,090$293,198 $40,784,793$      —
(68,667)(68,667)$ (185,333)$5,408,585$ 9,128,198—
9,128,198$ 1,985,757$46,193,378$  2,045 $   407,324—
77,261$    9,910—$   417,234
77,261

3,577

1,664,820

Other businesses

9,019

Total

1,661,243(Note) ‌Information for the year ended March 31, 2018 has been adjusted retroactively reflecting the adoption of “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No.
28, February 16, 2018) effective from the beginning of the year ended March 31, 2019.

Intercompany eliminations between the Company and its consolidated
subsidiaries and undistributed corporate expenses to each segment areincluded in adjustments of segment profit, and the Company classified
expenses of the general administrative division in the Company and its
certain consolidated subsidiaries to corporate expenses for the years ended
March 31, 2019, 2018 and 2017.

Intercompany eliminations between the Company and its consolidated
subsidiaries and undistributed corporate assets to each segment are includedin adjustments of segment assets, and the Company classified cash, timeand notice deposits, investments in securities and assets of the generaladministrative division in the Company and its certain consolidated subsidiaries to corporate assets for the years ended March 31, 2019, 2018 and 2017.

18 Comprehensive income
Amounts reclassified to profit in the current period that were recognized in other comprehensive income in the current or previous periods and tax effects
for each component of other comprehensive income (loss) for the years ended March 31, 2019, 2018 and 2017 are as follows:
Thousands of
U.S. dollars

Millions of yen

Unrealized holding gains (losses) on securities:
Increase (Decrease) during the fiscal year
Reclassification adjustments
Amounts before tax effects
Tax effects
Total
Deferred gains (losses) on hedges:
Increase (Decrease) during the fiscal year
Reclassification adjustments
Amounts before tax effects
Tax effects
Total
Foreign currency translation adjustments:
Increase (Decrease) during the fiscal year
Remeasurements of defined benefit plans:
Increase (Decrease) during the fiscal year
Reclassification adjustments
Amounts before tax effects
Tax effects
Total
Total other comprehensive income (loss)

2019

2018

2017

2019

¥(32,668)
1,088(31,580)
9,675¥(21,905)¥ 50,290(1,373)
48,917(14,982)¥ 33,935¥ 36,067(128)
35,939(11,009)¥ 24,930$(294,306)
9,802(284,504)
87,162$(197,342)¥ (3,628)
876(2,752)829¥ (1,923)¥   (453)
1,208
755
(217)
¥   538¥   482
1,978
2,460
(755)
¥  1,705$ (32,685)
7,892(24,793)
7,468$ (17,325)¥   (259)¥ (1,098)¥   (927)$  (2,333)¥    (66)
(229)
(295)
61
¥   (234)¥(24,321)¥   22941
270(82)¥   188¥ 33,563¥    (41)
681
640
(198)
¥   442¥ 26,150$    (595)(2,063)(2,658)550$  (2,108)$(219,108)

Sumitomo Realty & Development Co., Ltd.

71

Independent Auditor’s Report

Financial Section

19 Investment and rental properties
The Company and its certain consolidated subsidiaries own some rental properties such as office buildings and residences in Tokyo and other areas.
Certain domestic office buildings are not recognized as rental properties but as a portion used as investment and rental properties since the Company or
its certain consolidated subsidiaries use some of the floor space of these properties.
The carrying amounts of these properties on the consolidated balance sheets, their changes during the fiscal year and their fair values at March 31,
2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

Investment and rental properties

A portion used as investment and rental properties

Balance at beginning of fiscal year
Changes during the fiscal year
Balance at end of fiscal year
Fair value at end of fiscal year
Balance at beginning of fiscal year
Changes during the fiscal year
Balance at end of fiscal year
Fair value at end of fiscal year

2019

2018

2019

¥3,208,325
165,124
3,373,449
5,838,717¥  141,950(61)
141,889
379,883¥3,001,274
207,051
3,208,325
5,316,335¥  143,906(1,956)
141,950
362,081$28,903,829
1,487,603
30,391,432
52,601,054$ 1,278,829(550)
1,278,279
3,422,369(Notes)* Carrying amounts on the consolidated balance sheets are the amounts determined by deducting accumulated depreciation and accumulated impairment losses from the acquisition costs.
* Fair values as of March 31, 2019 and 2018 are calculated by the Company primarily based on their fair values according to Real Estate Appraisal Standards.

Significant changes during the years ended March 31, 2019 and 2018 are as follows:

Thousands of
U.S. dollars

Millions of yen

Increase:
Acquired real estateTransferred from real estate for sale in process, etc.
Decrease:
Depreciation and amortization
Transferred to real estate for saleTransferred to real estate for sale in process
Loss on impairment of fixed assets

2019

2018

2019

¥173,144
23,162¥214,777
38,047$1,559,856
208,666¥ (42,374)(4,822)—(8,576)¥ (37,177)—(2,490)(10,635)$ (381,748)(43,441)—(77,261)

Income and expenses for investment and rental properties for the years ended March 31, 2019 and 2018 are as follows:

Thousands of
U.S. dollars

Millions of yen

Investment and rental properties

A portion used as investment and rental properties

IncomeExpenses
Balance
Other income (expenses)
IncomeExpenses
Balance
Other income (expenses)

2019

2018

2019

¥269,493
137,784
131,709(9,193)¥ 18,413
9,176
9,237
(4)

¥236,446
121,736
114,710(10,938)¥ 21,475
11,9269,549(3)$2,427,865
1,241,297
1,186,568(82,820)$  165,883
82,667
83,216(36)

To the Board of Directors of Sumitomo Realty & Development Co., Ltd.:We have audited the accompanying consolidated financial statements of Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries,
which comprise the consolidated balance sheets as at March 31, 2019 and 2018, and the consolidated statements of income, statements ofcomprehensive income, statements of changes in net assets and statements of cash flows for each of the years in the three-year period ended March 31,
2019, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles
generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance withauditing standards generally accepted in Japan. Those standards require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The
procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of
the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, while the objective of the financial
statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Sumitomo Realty & Development Co., Ltd.
and its consolidated subsidiaries as at March 31, 2019 and 2018, and their financial performance and cash flows for each of the years in the three-year
period ended March 31, 2019, in accordance with accounting principles generally accepted in Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2019 are presented solely forconvenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on thebasis described in Note 1 to the consolidated financial statements.

(Notes)* ‌As a portion used as investment and rental properties includes a portion used by the Company or its certain consolidated subsidiaries for providing services as well as management and administration,
income for these are not recorded above. The expenses primarily consist of rent, depreciation, taxes and dues, and others.
* ‌Other income (expenses) for investment and rental properties is mostly the loss on impairment of fixed assets, and Other income (expenses) for a portion used as investment and rental properties is mostly
the loss from prior period adjustment.

20 Contingent liabilities
The Company and its consolidated subsidiaries were contingently liable as guarantors of borrowings by customers and others in an amount aggregating
to ¥7,316 million ($65,910 thousand) and ¥6,298 million at March 31, 2019 and 2018, respectively.

July 31, 2019
Tokyo, Japan

21 Subsequent events
On June 28, 2019, the shareholders of the Company approved payments of a year-end cash dividend of ¥16 ($0.14) per share or a total of ¥7,583 million($68,315 thousand) to shareholders of record at March 31, 2019. Such appropriations are recognized in the period in which they are approved by theshareholders.

72

Integrated Report 2019

Sumitomo Realty & Development Co., Ltd.

73

Company Information
Corporate Data

History(As of March 31, 2019)

Investor Information

Head OfficePaid-in Capital

Shinjuku NS Building
4-1, Nishi-Shinjuku 2-chome,
Shinjuku-ku, Tokyo 163-0820, Japan¥122,805 million

Global Events• Izumi Real Estate Co., Ltd. established as the successor to the holding company of the Sumitomo zaibatsu following the1949
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.

Breakdown of
Shareholders

Number of Common Stock
Authorized: 1,900,000,000 shares
Issued: 476,085,978 shares

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

Date of Establishment

Number of Shareholders
10,365

December 1, 1949

Stock Exchange Listing

Number of Employees

Tokyo Stock Exchange

13,238 (Consolidated)

Major Consolidated Subsidiaries
Sumitomo Real Estate Sales Co., Ltd.
Sumitomo Fudosan Tatemono Service Co., Ltd.
Sumitomo Fudosan Syscon Co., Ltd.
Sumitomo Fudosan Villa Fontaine Co., Ltd.
Sumitomo Fudosan Bellesalle Co., Ltd.
Sumitomo Fudosan Esforta Co., Ltd.
Sumitomo Fudosan Finance Co., Ltd.

1972 • Established Sumitomo Realty & Development CA., Inc., a consolidated subsidiary.
1973 • Established Sumitomo Fudosan Tatemono Service Co., Ltd., a consolidated subsidiary.

Trust Accounts
Financial Institutions
Other Companies
Foreign Companies
Individuals and Others

27.91%
9.45%
34.81%
24.73%
3.10%

Major Shareholders
Name

Number of shares held(Thousands)

Percentage ofshares held

40,41425,715
11,99010,561
8,710
8,367
7,550
7,537
7,500
7,429

8.53%
5.43%
2,53%
2.23%
1.84%
1.77%
1.59%
1.59%
1.58%
1.57%

The Master Trust Bank of Japan, Ltd. (Trust account)
Japan Trustee Services Bank, Ltd. (Trust account)
Sumitomo Mitsui Banking Corporation
Japan Trustee Services Bank, Ltd. (Trust account 4)
Japan Trustee Services Bank, Ltd. (Trust account 5)
Daikin Industries, Ltd.
Taisei Corporation
JP MORGAN CHASE BANK 385151
Shimizu Corporation
SSBTC CLIENT OMNIBUS ACCOUNT• Completed construction of 52-story Shinjuku Sumitomo Building in Shinjuku, Tokyo; moved Company head office there from1974
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.

Yen
6,000

Stock Price (right)
TOPIX (left)

5,000

2,000

4,000

1,600

1,200

3,000

800

2,000

400

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

2014
Millions of shares
100

2015

2016

1978
• Second oil crisis• Completed construction of 30-story Shinjuku NS Building in Shinjuku, Tokyo; moved Company head office there from Shinjuku 1985
Sumitomo Building.
• The Plaza Accord
1984 • Established Sumitomo Fudosan Finance Co., Ltd., a consolidated subsidiary.
1987
1982

1986 • Established Sumitomo Fudosan Fitness Co., Ltd. (currently Sumitomo Fudosan Esforta Co., Ltd.), a consolidated subsidiary.

• Black Monday

1995 • Commenced American Comfort custom home construction business.

1989• Collapse of Berlin Wall
• Nikkei Stock Average
all-time high1996 • Commenced Shinchiku Sokkurisan remodeling business.
1997 • Entered high-quality business hotel market. Opened Villa Fontaine Nihombashi and hotels at two other 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.
• 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.

1999
• Introduction of euro2001
• September 11
terrorist attacks

2002 • Completed construction of Izumi Garden Tower (Minato Ward, Tokyo).
2003 • Commenced sales of J∙URBAN fixed-price urban-style housing series.
2004 • Commenced sales of World City Towers (Minato Ward, Tokyo).
2008

2011
2012

2008
• Lehman crisis• Established Sumitomo Fudosan Bellesalle Co., Ltd., a consolidated subsidiary.
• Commenced sales of City Towers Toyosu (Koto Ward, Tokyo).

2017

2018

2019

• Opened Grand Mansion Gallery.
• Completed construction of Sumitomo Fudosan Shinjuku Grand Tower (Shinjuku Ward, Tokyo).
• Launched a Custom-order Condominium service.
• Commenced sales of J∙RESIDENCE.

2014 • Number of condominium units brought to market over the full year was the highest in Japan for the first time.
2015

0

1973
• First oil crisis

2010 • Completed construction of Shinjuku Central Park City (Shinjuku Ward, Tokyo).

Stock Price and Trading Volume on Tokyo Stock Exchange
Yen
2,400

1964
• Tokyo Olympic Games1970 • Listed on the Tokyo Stock Exchange and Osaka Securities Exchange.

2016

1,000

2017

0

2018

• Completed construction of Tokyo Nihombashi Tower (Chuo Ward, Tokyo).

2011• The Great East Japan
Earthquake• European sovereign
debt crisis• Record-high yen
against the U.S. dollar
2015• China stock market
crash• Cumulative units contracted topped 100,000 in Shinchiku Sokkurisan remodeling operations.
• Completed construction of Shinjuku Garden (Shinjuku Ward, Tokyo).
• Completed construction of Sumitomo Fudosan Roppongi Grand Tower (Minato Ward, Tokyo).

2016• Brexit referendum• Commenced sales of City Towers Tokyo Bay (Koto Ward, Tokyo).
• Sumitomo Real Estate Sales Co., Ltd. delisted as it became a wholly owned subsidiary.
• Completed construction of Sumitomo Fudosan Osaki Garden Tower (Shinagawa Ward, Tokyo).
• Number of condominium units brought to market over the full year was the highest in Japan for the fifth consecutive year.

Trading Volume

75
50
25
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

2014

74

Integrated Report 2019

2015

2016

2017

2018

2019

Sumitomo Realty & Development Co., Ltd.

75

Shinjuku NS Building, 4-1, Nishi-Shinjuku 2-chome,
Shinjuku-ku, Tokyo 163-0820, Japan
http://www.sumitomo-rd.co.jp/english/

Printed in Japan