Nomura Real Estate Holdings Annual Report 2013 For the Year Ended March 31, 2013

Nomura Real Estate Holdings, Inc.
Shinjuku Nomura Building, 1-26-2
Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-0566, Japan

URL: http://www.nomura-re-hd.co.jp/english

Printed in Japan

Creating Value through Change
Annual Report 2013
For the Year Ended March 31, 2013

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Investor Information

The Next Growth StageThe Nomura Real Estate Group is aiming to provide
highly innovative products and services by constantly asking
how it can respond to diversifying social needs.

(As of March 31, 2013)

Corporate Data
Corporate Name:

Nomura Real Estate Holdings, Inc.

Date of Establishment:

June 1, 2004

Representative:

Kamezo Nakai, President

Number of Employees:

5,581 (on a consolidated basis)

Head Office:Shinjuku Nomura Building,
1-26-2 Nishi-Shinjuku, Shinjuku-ku,
Tokyo 163-0566, Japan

Fiscal Year:

From April 1 to March 31

General Meetingof Shareholders:

June

Stock Information
Common Stock:
Number of Authorized Shares:
Number of Shares Issued:
Market Listing:Minimum Trading Unit:
Number of Shareholders:

15.84%

21.77%¥115,728,103,400
450,000,000
190,595,500
First Section of Tokyo Stock Exchange
100 shares
59,123

2.09%
Composition by
Number of
Shareholdings(%)

Ten Largest Shareholders
Name of Shareholder

No. of shares

Shareholding (%)

Nomura Land and Building Co., Ltd.

64,777,500

33.98

The Master Trust Bank of Japan, Ltd. (Trust account)

7,775,400

4.07

Japan Trustee Services Bank, Ltd. (Trust account 9)5,880,300

3.08

35.48%

24.82%

Japan Trustee Services Bank, Ltd. (Trust account)

5,518,700

2.89

Nomura Real Estate Holdings Employee Shareholding Association

3,295,482

1.72

Composition by Number of
Shareholdings

RBC IST LONDON–CLIENTS ACCOUNT

2,180,800

1.14■ Financial Institutions

The Bank of New York Mellon as Agent BNYM. AS EA Dutch
Pension Omnibus 140016

2,152,183

1.12

SSBT OD05 Omnibus Account–Treaty Clients

2,092,700

1.09

Nomura Securities Co., Ltd.

2,058,940

1.08

The Bank of NY Treaty JASDEC Account1,935,194

1.01(15.84%)■ Financial Instruments Firms(2.09%)■ Other Japanese Firms(35.48%)■ Other Foreign Investors(24.82%)■ Individuals and Others(21.77%)

Stock Price and Trading Volume on the Tokyo Stock Exchange

Stock Price
(Yen)
2,500
2,000
1,500
1,000
500

Trading Volume(Thousandsof Shares)

0

80,00060,00040,00020,000

0
4
5
2010

6

7

8

9

10 11 12

1
2
2011

3

4

5

6

7

8

9

10 11 12

1
2
2012

3

4

5

6

7

8

9

10 11 12

1
2
2013

3

89

Overview of the Nomura Real Estate Group
Group Philosophy of the Nomura Real Estate GroupThe Group Philosophy is a commitment to both ourselves and to our customers and society.
By showing this commitment and continuously delivering a level of customer satisfaction at least commensuratewith it, we are determined to be a group that people can count on even more than in the past.

Group Message

Bringing Tomorrow Today
The Group Message crystallizes the philosophy of the Nomura Real Estate Group.

Group Mission
We hold each and every meeting in high esteem and are grateful for the fruit it hasborn. Our enthusiasm due to the dynamism of group effort and highly creative
individuals enables us to produce the best quality services and products. Giving back to
the customers and society is also a high priority for us.
The Group Mission is positioned at the core of the philosophy of the Nomura Real Estate Group.
It expresses the shared mission, sense of identity and goals for which the Nomura Real Estate Groupeverlastingly works.

Group Spirit
Aim to be a unique business group with creativity
The spirit of placing customers first
To the future with a youthful spirit and enthusiasm
Pursuit of a trustworthy brandCorporate citizenship
The Group Spirit is the Group’s attitude toward achieving its mission, and represents the value that all membersof the Nomura Real Estate Group should continually share and treasure.

02

Nomura Real Estate Holdings, Inc. Annual Report 2013

Nomura Real Estate Holdings Profile
The Nomura Real Estate Group comprises Nomura Real Estate Development and other Group companies, and operates in the Residential Development Business, Leasing Business, Investment Management Business, Property Brokerage & CRE Business, Property & Facility Management Business,
and Other Business. Nomura Real Estate Holdings strategically manages the overall Group as its holding company, and works to improve the corporate value of the overall Group by providing products and services matched to markets in each area in which Group companies operate.

Residential Development Business
The Residential Development Business Segment is engaged in development and sales of condominiums and detached housing. By taking advantage of our integrated development and sales
operation, we are developing the “PROUD” brand primarily in the Tokyo Metropolitan area, offering condominiums and detached housing. In addition, we launched a new brand named “OHANA”
in August, 2011 for operations in the suburbs of the Tokyo Metropolitan area.

■ Nomura Real Estate Reform Co., Ltd.
■ PRIME X. Co., Ltd.

■ Nomura Real Estate Urban Net Co., Ltd.

Property Brokerage & CRE BusinessIn property brokerage services for individual customers, the Property Brokerage and CRE Business
Segment is satisfying its customers’ needs for relocation by having enhanced its website and the
network of branch offices in the Tokyo Metropolitan area. For corporate property brokerage, thisbusiness segment has taken advantage of direct networks with more than 5,000 corporate clients
which have so far been developed to find and conclude deals.

Contents
04

Major Completed Properties
in Fiscal 201218 Residential Development Business

32

Corporate Social Responsibility (CSR)

06

Consolidated Financial Highlights

22 Leasing Business37

Corporate Governance08

Message from the President

26 Investment Management Business

42

Corporate Officers

14

Review of Operations

28 Property Brokerage & CRE Business

44

Management’s Discussion
and Analysis

16 Segments at a Glance

30 Property & Facility Management

50

Consolidated Balance Sheet

BusinessAnnual Report 2013 Nomura Real Estate Holdings, Inc.

Leasing Business

Investment Management Business

The Leasing Business Segment owns and leases office buildings such as
Shinjuku Nomura Building and Hamamatsucho Building (Toshiba Building),
and commercial facilities such as Lazona Kawasaki Plaza and bono
Sagamiono Shopping Center. This business segment is also engaged in
the development of profit-generating properties including office buildings, commercial facilities, and logistics facilities for investors.

The Investment Management Business Segment is engaged in investment management under the consignment by investment corporations and private funds. In October, 2011, the Nomura Real EstateGroup’s three investment management companies merged to form
one of the largest single real estate investment management company in Japan with over ¥1 trillion in assets under management.

n NREG TOSHIBA BUILDING Co., Ltd.
n Yokohama Business Park Heating and Cooling Supply Co., Ltd.
■ Nomura Real Estate Assetn Geo-Akamatsu Co., Ltd.

Management Co., Ltd.

n NREG TOSHIBA BUILDING FACILITIES Co., Ltd.

■■■■

Nomura Real Estate Development Co., Ltd.

■ MEGALOS Co., Ltd.

Nomura Real Estate Development conducts a range of businesses. The residential development businessprovides quality residential accommodation under the PROUD and OHANA brands. Meanwhile, the building
business, the commercial facility business, and the logistics facility business plan, develop, lease and manage
commercial, logistics and other facilities, including office buildings such as PMO, and GEMS urban-typecommercial facilities. In addition, the corporate real estate (CRE) strategic support and corporate brokeragebusiness helps maximize the value of real estate.

n Nomura Building Management Co., Ltd.
n Nomura Living Support Co., Ltd.
n Nomura Amenity Service Co., Ltd.

Other Business
The Other Business Segment mainly operates fitness clubs, running 27 establishments
primarily in the Tokyo Metropolitan area.

Property & Facility Management Business
The Property & Facility Management Business Segment is engaged in property management of housing and office buildings by utilizing the knowhow elaborated through long years of operation and strives to increase theasset value and profit of buildings.

52

Consolidated Statement of Income

53

Consolidated Statement ofComprehensive Income

54

Consolidated Statement of
Changes in Net Assets

55

Consolidated Statement of
Cash Flows

56

Notes to Consolidated
Financial Statements

86

Independent Auditor’s Report87Group Company Profile

89

Investor Information

Forward-looking Statements:
This annual report contains forward-looking statements about the
future plans, strategies and performance of Nomura Real Estate
Holdings, Inc. (“the Company”) and its consolidated subsidiaries(“the Group”). These forward-looking statements are not historicalfacts. They are estimates, forecasts and projections based on
information currently available to the Company and are subject toa number of risks and uncertainties, which include economic
trends, intensification of competition in the real estate industry, thelegal and taxation systems, and other regulations. As such, actual
results may differ from those projected.

03

04

Nomura Real Estate Holdings, Inc. Annual Report 2013

Major Completed Properties in Fiscal 2012

In fiscal 2012, we completed large-scale projects

PROUD Funabashi
PROUD Funabashi is one of the Tokyo metropolitan area’s
largest condominium projects, consisting of 1,497 units in total.
The project was developed jointly with Mitsubishi Corporation.
Based on the “Smart & Share Town Concept,” the project wasadvanced with emphasis on next-generation town development.

OHANA Hiratsuka-Momohama

PROUD Uehara

PROUD SEASON
Higashifunabashi
Garden Avenue

PROUD TOWER Sumiyoshi

PROUD Kitasenri

Annual Report 2013 Nomura Real Estate Holdings, Inc.

05

such as PROUD Funabashi and a Class 1 urban redevelopment project in the west block of Sagamiono Station.

PROUD Tower Sagamiono
bono Sagamiono Shopping Center(Class 1 urban redevelopment project in the west block of Sagamiono Station)
The Nomura Real Estate Group has developed a large-scale mixed-use
redevelopment project covering a total development area of approximately
3.1 hectares in front of Sagamiono Station on the Odakyu Odawara Line.
The project consists of residential properties such as PROUD Tower Sagamiono;
large-scale commercial facilities such as bono Sagamiono Shopping Center; andpublic facilities.

PMO Nihonbashi Muromachi

Lazona Kawasaki TOSHIBA Building

06

Nomura Real Estate Holdings, Inc. Annual Report 2013

Consolidated Financial Highlights
Nomura Real Estate Holdings, Inc. and its subsidiaries
Fiscal year

2007

2008

2009

2010

Operating revenue�����������������������������������������������������������������������������

¥411,493¥  448,656¥  434,226¥  480,983

Gross profit���������������������������������������������������������������������������������������

130,391

100,764

105,576

107,222

Operating income�����������������������������������������������������������������������������

69,82234,01339,27542,083

Ordinary profit�����������������������������������������������������������������������������������

60,292

23,702

23,967

26,149Net income���������������������������������������������������������������������������������������

35,255

13,770

4,660

5,472

For the Year:

Cash flows from operating activities �������������������������������������������������

7,639(108,031)

19,26633,948Cash flows from investing activities���������������������������������������������������

(13,348)(141,789)(24,571)(33,731)

Cash flows from financing activities���������������������������������������������������

8,791

295,508

13,098(7,486)

18,17456,663

26,79637,571

4,892

7,149

10,758

12,836

Net income���������������������������������������������������������������������������������������

¥ 236.09¥    92.21¥    25.69¥    28.74

Cash dividends ���������������������������������������������������������������������������������

30.00

40.00

25.00

25.00

Total assets ���������������������������������������������������������������������������������������

¥891,700¥1,385,532¥1,405,424¥1,474,331

Total net assets ���������������������������������������������������������������������������������

235,551

281,376

349,437

357,366

Interest-bearing debt�������������������������������������������������������������������������

408,016

778,074

759,637

816,910

1

Capital investment* �������������������������������������������������������������������������
2

Depreciation* �����������������������������������������������������������������������������������Per Share Data (yen):

Balance Sheet Data (as of March 31):

Ratios (%):
7.9

2.5

2.8

2.9

ROE* �����������������������������������������������������������������������������������������������

15.8

5.9

1.7

1.8

Operating margin �����������������������������������������������������������������������������

17.0

7.6

9.0

8.7

ROA*3�����������������������������������������������������������������������������������������������
4

Dividend payout ratio �����������������������������������������������������������������������

12.7

43.4

97.3

87.0

Equity ratio���������������������������������������������������������������������������������������

26.1

17.0

21.4

20.7

D/E ratio (times)���������������������������������������������������������������������������������

1.8

3.3

2.5

2.7

Number of Employees (people) ���������������������������������������������������������

4,347

4,998

5,195

5,300

Notes: 1. Capital investment represents the amount shown for “Purchase of property, plant and equipment and intangible assets” on the consolidated statements ofcash flows.
2. Depreciation and amortization represents the amount shown for “Depreciation and amortization” on the consolidated statements of cash flows.
3. ROA = (Operating income + Non-operating income) / Total assets at end of fiscal year
4. ROE = Net income / Equity (as average over the fiscal year)
5. The translation of Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of the reader, using the rate of exchange prevailingon the Tokyo Foreign Exchange Market on March 31, 2013, which was ¥94.05 = U.S.$1.

Operating Revenue andOperating Margin

Operating Income and ROA

Net Income and ROE(Millions of yen)

(%)(Millions of yen)

600,000

20

60,0006450,000

15
40,0004

300,000

10

150,000

5(%)

20,000

0

0

08

09

10

11

12

Operating revenue (left axis)
Operating margin (right axis)

FY2012: Year ended March 31, 2013

(FY)

(Millions of yen)

(%)

20,00012

15,0009

10,000

6

5,000

3

2

0

0

08

09

10

Operating income (left axis)
ROA (right axis)

11

12

(FY)

0

0

08

09

Net income (left axis)
ROE (right axis)

10

11

12

(FY)

Annual Report 2013 Nomura Real Estate Holdings, Inc.

2011

(Thousands of
U.S. dollars)(Note 5)
2012

(Millions of yen)
2012

Key Points of Operating Results
Overview of Results¥  450,807¥  517,741$ 5,504,951

The Nomura Real Estate Group achieved higher earnings on

114,910

134,5711,430,850

higher revenue mainly due to a large increase in the number

49,93958,308619,969of units sold in the mainstay Residential Development Busi-

34,17445,807

487,046

ness. Consolidated operating revenue increased 14.8%

17,591

19,357

205,821year on year to ¥517.7 billion, operating income rose

43,87789,295

949,447

16.8% to ¥58.3 billion, ordinary income rose 34.0% to

7,809(2,588)(27,520)¥45.8 billion, and net income rose 10.0% to ¥19.3 billion.

(63,296)(94,666)(1,006,556)

14,09818,963201,631

Dividends

13,535

13,514

143,687

The annual dividend per share for fiscal 2012 was ¥30,
which was ¥5 higher than for fiscal 2011. We plan to pay¥    92.38¥   101.61

1.08

25.00

30.00

0.32

¥1,402,624¥1,369,949$14,566,183

376,486

398,276

4,234,729

758,562

669,269

7,116,096

3.7

4.6

5.7

5.9

11.1

11.3

27.1

29.5

22.6

24.5

2.4

2.0

5,399

5,581

Total Assets, Net Assets andEquity Ratioa ¥30 per share annual dividend for fiscal 2013 as well.

Interest-bearing Debt

Consolidated Cash Dividends andDividend Payout Ratio(Millions of yen)

(%)(Millions of yen)

(Yen)(%)

1,500,000

30

1,000,000

50

100

800,000

40

80

1,000,000

20

600,000

30

60

500,000

10

400,000

20

40

200,000

10

20

0

0

08

09

Total assets (left axis)
Equity ratio (right axis)

10

11

12

Net assets (left axis)

(FYE)

0

0

08

09

10

11

12

(FYE)

0

08

09

10

11

12

Cash dividends per share (left axis)
Consolidated dividend payout ratio (right axis)

(FY)

07

08

Nomura Real Estate Holdings, Inc. Annual Report 2013

Message from the President

Continuing to create value
through change

President

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Fiscal 2012 Highlights

Fiscal 2013 Outlook

Our mainstay Residential Development Businessposted higher operating revenue and earnings on
the back of record-high sales of 5,749 condominium and detached housing unit. We also captured
the top spot* in Japan for the first time ever in thenumber of condominium units supplied.

Our Residential Development Business is
projecting a further year-on-year increasein condominium and detached housing sales to
6,200 units. We are also projecting higher
operating revenue and earnings due to growthin all our businesses.

Our mainstay Residential Development Business sold 5,749 condominium and detached housing units in fiscal 2012. This wasapproximately 1,700 units more than in fiscal 2011 and a record.
Another highlight of the past year was this business’ topping theunit rankings for condominiums sold in major cities in Japan in
2012. This was a great way to mark a milestone, the 10th anniversary of the PROUD condominium brand. For a company thathas set its sights on being the No. 1 residential brand, the past
year was very meaningful indeed.
For our Leasing Business, it was a year in which our efforts
over many years bore fruit. We completed the LAZONA Kawasaki
TOSHIBA Building, a trophy office building which the Toshiba
Group plans to tenant; and we opened the bono Sagamiono
Shopping Center in the multifaceted redevelopment project areain front of the Sagamiono Station in Japan’s Kanagawa Prefecture.
This was developed in cooperation with Nomura Real EstateGroup companies.
The past year was also significant in terms of our capital
structure. Our parent company, Nomura Holdings, Inc., sold someof its Nomura Real Estate shares, which resulted in our becoming
an equity-method affiliate rather than a consolidated subsidiary.
Going forward, we will maintain cooperative business relationships with the Nomura Group as we strive for mutual growth.

For fiscal 2013, we are projecting higher operating revenue andearnings on a consolidated basis than in fiscal 2012. We areprojecting operating income of ¥60.0 billion and net income of¥21.0 billion on operating revenue of ¥518.0 billion.
In the Residential Development Business, we expect the business environment to remain favorable. We are forecasting salesof 6,200 condominium and detached housing units for fiscal
2013, which would be a record for the second straight year. Of
the units we expect to sell in fiscal 2013, approximately 80%
have already been contracted as of the start of the term. This
makes it more likely than in past fiscal years that we will achieve
our forecast for fiscal 2013.
Continuing to acquire prime land will be a key point for
maintaining strong performance in the Residential Development
Business going forward. It has become more difficult to acquireland due to the number of developers that are looking to do so
as well. Even so, in fiscal 2012, we acquired land for approximately 7,500 units, which has enabled us to build up our inventory of land for fiscal 2013 and beyond to approximately 22,500
units. I believe that this is the result of our successful efforts todevelop various products, namely PROUD, OHANA, anddetached housing, while building up expertise for capturingbusiness opportunities in, among other areas, the redevelopment and rebuilding businesses.
In our Leasing Business, there are signs of recovery in thebusiness environment highlighted by a decline in the officevacancy rate. We have maintained a low vacancy rate of 2.2%
for our offices and commercial facilities combined. In our property development operations, we have placed a priority on recovering funds from properties acquired before the Lehman Shock.
Going forward, however, we will adopt a more aggressive management stance. To support this we will step up development oflogistics and commercial facilities in tandem with the development of our office brand, Premium Midsize Office (PMO).
In the Investment Management Business, meanwhile, thefund procurement environment remains favorable, and J-REIT*According to research by Real Estate Economic Institute Co., Ltd.

Net Sales/Operating Income(Millions of yen)

(Millions of yen)

60,00058,308600,000

49,939 517,741
450,807

60,000518,000

400,000

40,000200,000

20,000

0

0

11

12

13
(forecast)n Net sales (left axis)

n Operating income (right axis)

(FY)

09

10

Nomura Real Estate Holdings, Inc. Annual Report 2013

fund prices have recovered. In June 2013, we publicly listed
Nomura Real Estate Master Fund, Inc., which targets investment
in logistics and retail properties. We plan to leverage this achievement for Investment Management Business growth and work todevelop new products that match investor needs.

Mid- to Long-term Business Plan
In October 2012, we unveiled our Mid- toLong-term Business Plan through 2022/3—“Creating Value through Change.”
In fiscal 2012, under a new management structure, we launched
the Nomura Real Estate Group’s Mid- to Long-term Business Plan
through 2022/3. The theme of the plan is “Creating Value
through Change.” The key concepts in this plan are, as its nameimplies, Change and Creating Value.

Looking ahead, the Group’s operating environment is
expected to remain uncertain and unstable. Moreover, changes
in the social structure caused by a declining birthrate and aging
society, and the changing composition of households alongwith diversifying customer needs and other factors will likely
have a major impact on the Group’s business environment overthe long term.
Based on our recognition of the operating environment wemade being an enterprise group that continues to create highvalue through sustainable change the concept of our long-term
vision. In addition to staying in step with change, we plan tocreate value through change and the development of markets.
We believe that this stance is imperative for maintaining ourcustomer appeal. We will, therefore, constantly accept new challenges and continue to create high value that meets the increasingly diverse needs of the customers and society we serve.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Management Indices and Stepwise Growth Plan
We have set 3 management indices for our
medium- to long-term plan over the next 10 years:
shareholders’ equity of over 30%, ROA* of over
5.5%, and an earnings base for ¥100.0 billion interms of operating income. And we have also
devised a plan for achieving growth in steps.
This plan covers a period of 10 years. We have set 3 management
indices for our 10-year medium- to long-term plan: a shareholders’ equity ratio of over 30%, an ROA* of over 5.5%, and an
earnings base for ¥100.0 billion in terms of operating income. We
have also devised a plan for achieving stepwise growth.
We chose a 10-year period because we believe it is important for management to have a long-term perspective based on
the long-term nature of the real estate business and the need tolook squarely at changes in our business environment. This
10-year plan is split into 3 phases of roughly 3 years each. In thisway, we have devised a growth scenario in which managementtargets are to be achieved in progressive stages.
There are three management indices in this plan: a shareholders’ equity ratio of over 30%, an ROA of over 5.5%, and an
earnings base for ¥100.0 billion in terms of operating income.
In phase 1 of the plan through fiscal 2015, we aim toincrease the shareholders’ equity ratio to 30%. By achieving this,we will be able to actively and flexibly make investments for

Three Management Indicesfuture growth. We will also build a financial base that will enable
us to continue stably procuring funds and conducting businessactivities even if there is a sharp downturn in the business or
financial environment.
We will also aim to achieve operating income of ¥65.0 billion
by steadily expanding earnings in existing businesses while
taking up the challenge of creating new businesses to lay thefoundation for future growth.
The goal of phase 2, through fiscal 2018, is to strengthen
our earnings power through the efficient growth of existing
business fields. There is still room to grow and innovate in our
five existing business fields; and by pursuing this growth andenhancing our earnings power, we believe we can achieve an
ROA of over 5.5%, one of the management indices of our plan.
Simply speaking, ROA, operating income divided by total
assets, is an indicator of how efficiently capital is being used togenerate earnings. We intend to build a uniquely balanced business portfolio by pursuing growth in our Residential Development Business and property development operations as well as
in businesses that do not use our assets, businesses such as
investment management, brokerage and management. At thesame time, we will work on improving asset efficiency.
In the third and final phase, through fiscal 2021, our aim isto generate operating income of ¥100.0 billion as the final
target of the Mid- to Long-term Business Plan. This would be
double the earnings posted in fiscal 2011, when we completed
our previous medium-term business plan.

Stepwise Growth Plan
ROA*

Shareholders’ Equity Ratio:
Over 30%n Operating Income•‌To secure financial foundation for new investments andchallenges toward the company’s sustainable growth.
•‌To attain a level at which business activities can becontinued stably even amid the turbulence of an
unstable economic and business environment.

ROA: Over 5.5%•‌To construct a business portfolio that promotes
improvement of asset efficiency and is characterized byhigh profit efficiency.
•‌To increase the earning power by aggressive expansion
in service and management areas in addition to development areas.

Operating Income:Earnings base for 100.0 billion yen•‌To become a corporate group with a strong presence as
a comprehensive real estate enterprise.
•‌To realize further earnings growth by expanding existing
business domain and creating a new business model.

5.5%

100.0
4.6%

58.3
billionyen

2012
Shareholders’equity ratio
24.5%

80.0
65.0
billionyen

2015billionyen
levelbillion
yen
level

2018

2021

(FY)

Phase 1

Phase 2Phase 3

To build thefoundation for growth
Shareholders’ equity
ratio 30%

To construct a highly
profitable businessportfolio
ROA 5.5%

To build an earnings
base for operating
income of about
100.0 billion yen

3-year Plan

Mid- to Long-term Business Plan

*ROA = (Operating income + Non-operating income) / Total assets at the end of fiscal year

11

12

Nomura Real Estate Holdings, Inc. Annual Report 2013

Business Portfolio Construction
We aim to construct a unique business portfolio that facilitates continuous growth.
Let me now discuss the main points of our targeted businessportfolio and new initiatives for accelerating growth. These will
be key to achieving the management targets I just mentioned.
In the Residential Development Business, we aim to ensure
steady and stable growth as a core business of the Group by building brand equity in PROUD and our other brands. Our goal is tobuild a structure that can ensure a stable supply of 7,000 units byfiscal 2015. Furthermore, we will work to raise customer satisfaction by enhancing various services for residents of our condominiums after they move in, services that match owners’ needs at thetime, so that we build permanent relationships with them.
In the Leasing Business, we plan to increase the earnings

power of leased assets. At the same time, we intend to step up
the establishment of property development operations for property sales to investors as well as for lease to customers who intend
to own. These efforts will leverage our expertise as a developer.
Finally, we are determined to promote faster growth in businesses that we have designated as service and management
areas. These businesses, which do not use our assets, are investment management, property brokerage & CRE, and property &facility management. We view the service and management
areas as harboring major business opportunities in an increasingly borderless real estate market where the stock of social
assets is increasing.
Our goal after 10 years is to add service and management
areas as a third major business alongside the Residential Development and Leasing businesses to provide a business portfolio in
which these three businesses each account for a share of around
one-third.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Profit Distribution and Dividend Policy

Message to Shareholders and Investors

We plan to pay an annual dividend per share of¥30 for fiscal 2013 based on our performance
forecasts.

The Nomura Real Estate Group is endeavoring tocreate new value by responding to relentlesschange. We are pursuing even higher corporate
value as a real estate group that stays ahead of
the curve.

Nomura Real Estate Holdings’ basic policy on the distribution of
profits to shareholders is to aim for a payout ratio of approximately
30% over the medium- to long-term in line with business performance while comprehensively considering the operating environment, capital investment plans, internal reserve levels and otherrelevant factors. The annual dividend for fiscal 2012 was ¥30 as
forecast, which was ¥5 higher than for fiscal 2011. We plan toalso pay a ¥30 per share annual dividend for fiscal 2013.

As I’ve said, we view the ever-changing needs the customers andsociety we serve as new business opportunities. By continuing tochange, we aim to create new value and grow as a corporation.
We will implement activities as a cohesive group to raise ourcorporate value and achieve the management vision and targets
in our Mid- to Long-term Business Plan.
I would like to thank all our shareholders and investors fortheir continuing support.

Annual Dividend Per Share
(Yen)

50
40

30

30

25

25

25

09

10

11

30

20
10

0

12

13

(FY)

(forecast)President

13

Review of Operations

16

Nomura Real Estate Holdings, Inc. Annual Report 2013

Segments at a Glance
Residential Development
Business

Leasing Business

Investment Management
Business

Main Business

Main Business

Main Business■ Sales of housing■ Leasing (offices)■ Leasing (other)■ Leasing■ Property development(commercial facilities)■ Investment management

Operating revenue (Millions of yen)

Operating revenue (Millions of yen)

Operating revenue (Millions of yen)

400,000

150,000

15,000Other

300,000

Other
Property development

100,000

200,000
Sales ofhousing

100,000
0

Leasing (other)
Leasing(commercial facilities)
Leasing (offices)

50,000
0

11

12

11

(FY)

Operating income (Millions of yen)

12

30,000

5,000
0

11

(FY)

Operating income (Millions of yen)

40,00010,00012(FY)Operating income (Millions of yen)

30,0008,000

20,0004,000

10,0000

20,00010,0000–4,000

0

11

12

(FY)

Composition of operating revenue andoperating income (%)

11

12

(FY)

Composition of operating revenue andoperating income (%)

11

12

(FY)

Composition of operating revenue andoperating income (loss) (%)

2.1%

57.3%

– 4.2%

51.0%

20.0%
36.2%

n Operating revenue n Operating income

n Operating revenue n Operating income

n Operating revenue

Operating income (loss)

Fiscal 2012 topics

Fiscal 2012 topics

Fiscal 2012 topics

The mainstay Residential Development Business segment implemented strategies to boost the value ofthe PROUD brand while striving to further strengthensite selection, product planning, and sales capabilities by leveraging the strengths of its integrated
development, sales, and management system. In
fiscal 2012, the segment booked sales of PROUD
Funabashi, PROUD Komaba, PROUD SEASON
Hibarigaoka Garden Terrace and other properties.
Furthermore, the segment reported steadysales of the newly launched OHANA brand, withsales of 275 condominium units booked at 2 properties: OHANA Yasaka-Hagiyama-Cho and OHANA
Hiratsuka Momohama.
As a result, the combined number of condominiums and detached houses sold reached arecord-high 5,749 units.

The Leasing Business segment strove to improveutilization rates by expanding marketing activities
closely tailored to tenant needs. As a result, thevacancy rate was 2.2% as of March 31, 2013,
remaining at a low level.
Furthermore, the segment completed bono
Sagamiono Shopping Center, a redevelopment
project in the west block of Sagamiono Station,and LAZONA Kawasaki TOSHIBA Building, a largescale office building with floor space of over
100,000 m2.
Property development operations promoted
the development business and product sales. In
fiscal 2012, sales of two properties werebooked, namely PMO Akihabara II and PMO
Nihonbashi 2chome.

The Investment Management Business segment
focused on the stable management of the various
funds operated by the Nomura Real Estate Group.
In listed REITs, the segment strove to maintain andimprove the performance of properties held. In
private funds, the segment focused on steadily
executing exit strategies for projects arranged in
the past.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Property Brokerage &CRE Business

Property & Facility
Management Business

Main Business

Main Business■ Property brokerage■ Building management■ Housing management

Operating revenue (Millions of yen)

Operating revenue (Millions of yen)

40,00080,00030,00060,000Other

20,00010,000Property brokerage0

12

Housingmanagement

40,00020,000

Building
management

11

(FY)

Operating income (Millions of yen)

Operating revenue (Millions of yen)
15,000

0

11

12

6,000

10,000
5,000
0

11

(FY)

Operating income (Millions of yen)

8,000

Other Business

12

(FY)

Operating income (Millions of yen)

6,000

600

4,000

400

2,000

200

4,000
2,000
0

0

11

12

(FY)

Composition of operating revenue andoperating income (%)

0

11

(FY)

Composition of operating revenue andoperating income (%)

11n Operating revenue n Operating income

12

(FY)

Composition of operating revenue andoperating income (%)

2.8%
0.7%

12.9%
6.8%

4.9%
9.6%

n Operating revenue n Operating income

12

n Operating revenue n Operating income

Fiscal 2012 topics

Fiscal 2012 topics

Fiscal 2012 topics

Wholesale operations focused on building relationships with customers by providing CRE solutions that accurately respond to their needs.
Retail operations strengthened marketing
activities by utilizing Internet media while actively
developing new branches closely tied to local
communities. In fiscal 2012, six branches wereopened, including Aobadai Center and Myogadani Center.

Building management operations focused on
expanding various properties under management
centered on office buildings, while actively working to receive orders for interior renovations fromtenants and improve management quality.
Housing management operations worked tofurther improve customer satisfaction throughenhancement of service lineups for tenanted areas
and other measures.
As a result, the number of properties andbuildings under management, which represent a
steady source of earnings, steadily expanded inboth the housing management and building management operations.

The fitness club business segment implemented
various campaigns and events to recruit new
members and improve members’ satisfaction.
Furthermore, the segment worked to improve thequality of fitness clubs by revamping training
equipment and other facilities by conducting
renovation work at MEGALOS Tachikawa andother locations.

17

18

Nomura Real Estate Holdings, Inc. Annual Report 2013

Residential Development Business
The Residential Development Business achieved record-high performance in condominium and detached housing unit sales, operating revenue and operating income in
Fiscal 2012. Sales of our core brand, PROUD, were strong; however, growth in OHANA
brand condominiums for suburban areas, detached housing and our redevelopment
business also contributed to this segment’s impressive results. With our sights set firmly
on becoming the No. 1 residential brand, we will strive to further increase customer
satisfaction by taking full advantage of our integrated development, sales and management structure.
Seiichi Miyajima
Executive Officer
Responsible for Residential Development Business

Question 01

Please tell us about your initiatives in fiscal 2012.
Our Residential Development Business has had a set sales goal of
5,000 condominium and detached housing units per year. In
fiscal 2012, we surpassed this goal with a record-breaking 5,749
condominium and detached housing sales, and achieved operating revenue of ¥305.7 billion and an operating income of ¥32.9
billion, also records. I believe this stellar performance was due
partly to our having acquired a significant number of prime
properties by continuing to actively purchase land even after the
Lehman Crisis, and in doing so acquiring many prime properties,
as other companies held back. Another factor was that our core

Changes in Housing Sales and Gross Margin Ratio(Units)(%)

8,000

40

5,749

6,000

5,077
4,000

4,111

22.5

30

20

4,028

16.4

16.1

2,000

23.3

6,200

10

0

0

09

10

11

Number of housing units sold (left axis)

12

13

(FY)

(forecast)Gross margin ratio (right axis)

brand, PROUD, continued to do well, as did the OHANA brandof suburban condominium and the PROUD SEASON brand of
detached housing. Combining properties developed by our redevelopment and rebuilding businesses also increased condominium and detached housing sales. Thanks to this performance,
we climbed to the top of the 2012 unit rankings for private
condominiums sold in major cities in Japan (according to research
by Real Estate Economic Institute Co., Ltd.).

Question 02

What impact have recent changes hand on thebusiness environment of the Residential Development
Business?
I saw the scheduled consumption tax hike in Japan as a majorrisk that could catalyze a change in the sales environment. Actually, at the beginning of fall 2012, many potential buyers wereadopting a wait-and-see attitude on purchases because thegovernment hadn’t decided on what, if any, forms of relief itwould offer to offset the increase in consumption tax, and thisresulted in a temporary drop in demand. Since the beginning of
2013, however, the launch of relief measures, such as extensionof the framework for tax credits on housing loans, and growing
anticipation of higher mortgage interest rates and property
prices following the Abe administration’s announcement of its
inflation target have more and more people thinking that now isa good time to buy.
Indeed, we are seeing an increase in the number of prospective homebuyers. Since the start of this year, for example, thenumber of visitors to showrooms is up around 20% year on year.
I am confident going forward, therefore, that the sales market
will remain healthy.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

2

1
1 PROUD Komaba (Meguro-ku, Tokyo)
2 PROUD SEASON Hibarigaoka Garden Terrace (Higashikurume City, Tokyo)
3 OHANA Hiratsuka-Momohama (Hiratsuka City, Kanagawa Prefecture)3
Question 03

One of the goals of the Mid- to Long-term Business
Plan is to “achieve steady growth as our corebusiness.” Please explain your strategy here.
Quantitative growth and higher quality are the pillars of ourstrategy for achieving steady growth as a core business.
In terms of quantitative growth, our 3-year plan calls for thecreation of a structure that can achieve a stable supply of 7,000
units in our Residential Development Business. We have alreadymade a steady start toward establishing such a structure. In fiscal
2012, we acquired land for 7,500 units and signed contracts for
7,150 units. We will pursue quantitative growth by leveraging
our unrivaled development know-how in the above-mentioned
OHANA, redevelopment and rebuilding, and detached housingbusinesses and our strong sales capabilities.
Our quality enhancement strategy extends to productappeal, quality and customer service. With PROUD, we remainvery particular about location, building and quality. With a structure that integrates development, sales and management, we
can draw on customer needs identified by our frontline sales andmanagement personnel to provide products sought by customers and increase satisfaction with those products. We will also
strive to further increase brand value by satisfying existingowners. In addition, fiscal 2013 will see the launch of someadvanced initiatives. One example is NEXT PASS 10, the industry’s first maintenance service that provides maintenance forprivate spaces in condominiums for 10 years after move-in.
SMART & GROWING is another example. This is an action
plan for the acceleration of energy management and community
building, areas that have seen heightened interest in the wake of
the Great East Japan Earthquake. Along with the above, we willcontinue to pursue still other means of realizing quantitative
growth and quality enhancement to achieve steady growth as acore business.

Major Projects Upcoming

PROUD TOWER Chiyoda-Fujimi Residence

PROUD TOWER Shinonome Canal Court

PROUD CITY Motosumiyoshi(Chiyoda-ku, Tokyo: 137 units)(Koto-ku, Tokyo: 600 units)(Nakahara-ku, Kawasaki City, Kanagawa Prefecture: 296 units)

19

20

Nomura Real Estate Holdings, Inc. Annual Report 2013

Leveraging Collective Strengths to
Develop the PROUD Brand

Continuing to provide valued services to PROUD owners
It goes without saying that owners wish to preserve theconvenience and comfort of their condominiums, and weare introducing various services that we hope will satisfy
that desire.
The first is NEXT PASS 10, which will be offered to
PROUD owners. After-sales service in Japan for private spacesin the past has typically involved the provision of repair andequipment warranty services for just two years after a resident moves into a new condominium. However, NEXT PASS
10 extends this period to 10 years for private areas, andprovides equipment warranty extensions, emergency
response and repair services, and long-term maintenancesupport for a fee. In fiscal 2012, we launched our Relocation
Service, through which we rent and lease homes from individuals who are vacating due to transfer or other reasons. By
renting such homes directly, we avoid concern associatedwith renting out vacant residences.
We have also formulated SMART & GROWING, the
PROUD smart design environmental vision for next-generation

condominiums. This represents the evolutionary development of the PROUD ECO Vision announced in 2010.
Guided by the phrase Smart Design, we develop various
environmental initiatives for future implementation as wecreate a new energy management framework and standardize equipment specifications for solar power generation, compact storage batteries and other equipment toprovide a stronger environmental response. When one
adds to this Growing Design for improved common area
comfort, community building, and safe and secure living, it
can be seen that we are creating an even higher level of
PROUD brand value.
These actions are aimed at creating a Residential Value
Chain that provides value over an extended lifecycle bystrengthening relationships with customers. By providing
solutions such as repairs, remodeling, moving, upgrading
and leasing according to owner needs at the time, we build
relationships with customers that last a lifetime.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Redevelopments Create Urban Areas
PROUD TOWER Oizumi-Gakuen

PROUD TOWER Musashikosugi

Our redevelopment business fulfills our social mission by rejuvenating communities as well as in various
other ways
Our redevelopment business requires informed consent frommany different stakeholders. This demands proposal and solution capabilities as well as time, all of which test a developer’s
abilities. It’s not unheard of for the entire process from development to opening to take 10 years. But I am proud to saythat we boast one of the industry’s best track records in theredevelopment business. We have been involved in this business for more than 10 years and we are using the know-how
we have built up in residential development to good effect.
Our basic role in the redevelopment business is to promote the creation of urban areas as a developer. A large
number of our projects are near train stations, so they
become community symbols. Indeed, the redevelopment
business can upgrade the functions of a community and

Name
PROUD TOWER Otsu
THE SENDAI TOWER Ichibancho Residence
PROUD TOWER Oizumigakuen
PROUD TOWER Musashikosugi
CAPITAL GATE PLACETomihisa Cross Comfort Tower
Tachikawa Sta. North Gate Redevelopment Project
Fuchu Sta. South Gate Redevelopment Project
Keikyu Kamata Sta. West Gate Redevelopment Project

breathe new life into it. We provide wide-ranging businessexpertise related to housing, office buildings, commercial
facilities and other properties to support the types of redevelopment projects that reinvigorate communities. Given its
considerable social significance, this is a business area inwhich we fulfill our mission as a developer.
The redevelopment business is also very important for
our growth. With the increasing difficulty in acquiring thesites we need, this business has a very important role to playin securing a stable medium- to long-term stock of sites tocreate the stable supply structure I mentioned earlier. This is
why we will channel a number of resources into the redevelopment business, with the aim of achieving greater growth.

Address
Otsu-shi, Shiga
Aoba-ku, Sendai-shi
Nerima-ku, Tokyo
Nakahara-ku, Kawasaki-shi
Chuo-ku, Tokyo
Shinjuku-ku,Tokyo
Tachikawa-shi, Tokyo
Fuchu-shi, Tokyo
Ota-ku, Tokyo

Total units to be sold
161
118
165
433
495
993
292
130
160

Our share
128
59
165
303
247
407
292
130
160

Completion
FY14/3
FY14/3
FY15/3
FY15/3
FY16/3
FY16/3
FY17/3
FY17/3
FY17/321

22

Nomura Real Estate Holdings, Inc. Annual Report 2013

Leasing BusinessIn fiscal 2012, both office leasing and commercial facility leasing performed steadily,with both maintaining low vacancy rates. During this time, we worked to develop a
broad range of businesses. In the office business, we promoted the Premium Midsize
Office (PMO) business, and we also completed the LAZONA Kawasaki TOSHIBA
Building. In commercial facilities, we successfully opened the bono Sagamiono
Shopping Center and launched a GEMS urban-type commercial facility.

Tadashi Nakajima
Executive Officer
Responsible for Leasing Business

Question 01

Please tell us about your Leasing Business initiatives
in fiscal 2012.
The major highlights of the past year were completion of the
LAZONA Kawasaki TOSHIBA Building, the opening of the bono
Sagamiono Shopping Center, and the accelerated developmentof our office building PMO business.
The LAZONA Kawasaki TOSHIBA Building is a flagship project in our cooperation with the Toshiba Group. It is a large-scale
office building with a floor space exceeding 100,000 m2. For thisreason we see the LAZONA Kawasaki TOSHIBA Building as oneof our core assets. The Toshiba Group will lease the entire building as the base for its Smart Community business. However,
because approximately 59,400 m2 of floor space will become
vacant at our Hamamatsucho building as a result of this move,
Changes in Vacancy Rates (Office/Commercial Facilities)
(%)

6.0

4.0

2.2

2.0

0.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

08

09

10

11

12

(FY)

one of our major tasks in fiscal 2013 will be to fill this space assoon as possible.
The bono Sagamiono Shopping Center is a large commercial
facility that connects directly with Sagamiono Station, a terminal
station on the Odakyu Line. Opened on March 15, 2013, it has
made a strong start as a community-centered shopping center,attracting more than 300,000 shoppers in its first 3 days ofoperation. For us, it represents our first involvement with a largescale shopping center and harnesses the collective strengths of ahost of Nomura Real Estate Group companies, including Nomura
Real Estate Development, Geo-Akamatsu Co., Ltd., Nomura
Building Management Co., Ltd., Nomura Living Support Co.,
Ltd., and MEGALOS Co., Ltd. The successful completion of thisshopping center is a significant first step that will serve as aspringboard for future efforts.
In our PMO business, we acquired sites for the developmentof four buildings in fiscal 2012. Our PMO business answers theneeds of companies that want about 330 m2 of floor space on
the same floor, and this “product” has earned high praise fromtenants and building owners. Coupled with greater recognitionin the market, this has all the signs of becoming a high-growthbusiness. Capitalizing on this momentum, we will accelerate thepace of business development with the target of developing six
buildings per year going forward.

23

1
1 Lazona Kawasaki TOSHIBA Building (Saiwai-ku, Kawasaki City, Kanagawa Prefecture)2

2 bono Sagamiono Shopping Center (Minami-ku, Sagamihara City, Kanagawa Prefecture)

Question 02

What is your outlook for the market environment?
Positive signs are slowly emerging in the office building market
after a period of sluggishness. The vacancy rate is improving following the end of a cycle of many new office buildings being
supplied. Under these market conditions, we are maintaining a
low vacancy rate of 2.2%. In terms of office rents, negotiations tolower office rents with tenants that have continued since theLehman Crisis are being handled without too much impact.
Indeed, the majority of our tenants that we were in discussions
with agreed to renew their contracts without downward rent revisions in fiscal 2012, suggesting rents are bottoming out. Looking
ahead, if Abenomics produces a clear recovery in corporate earnings, demand from companies for more office floor space should
increase, which in turn could very well push rents up.

Question 03

What is your growth strategy?
In fiscal 2013, our office building, commercial facility and logistics facility businesses will acquire and develop sites focusing on
their areas of specialization.
As a long-term target, our PMO business aims to develop up
to 50 buildings, to make PMO into a core brand alongside
PROUD in the future. Since the Great East Japan Earthquake inparticular, many building owners have been considering how todeal with aging buildings out of concerns about their seismic
resistance. We will acquire these sorts of buildings and develop

them under the PMO brand. In addition, we are looking at ways
to provide our PMO expertise by offering a suite of services fromrebuilding to building management, as well as joint businesses
with building owners.
In the commercial facility business, we plan to utilize theexpertise we amassed from the bono Sagamiono Shopping
Center among large-scale redevelopment projects that are centered on our strong suit of housing to develop more large-scale
shopping centers.
We intend to develop 3 to 4 GEMS facilities per year going
forward. We launched the GEMS brand as an urban-type commercial facility focused on sites in front of train stations. Having
already acquired sites for our next developments, we have madea steady start toward expanding the scale of this business. In
addition, we are planning to develop a commercial facility which
UNIQLO will lease on a site only a 3-minute walk from the JR
Kichijoji Station. We aim to expand these urban-type commercial
facilities going forward.
In terms of logistics facilities, to date, we have developed
and managed a total of 6 facilities with approximately 330,000
m2 of space under the Land Port brand. As a result, we haveamassed more expertise in this area than peer companies. We
plan to actively develop more logistics facilities to meet fastgrowing distribution needs accompanying burgeoning Internet
shopping. We hope to develop 2 to 3 facilities per year.

Atsugi

24

Nomura Real Estate Holdings, Inc. Annual Report 2013

PMO Business Development
We aim to establish a unique presence in the market with the PMO brand.
PMO Nihonbashi Muromachi

We have been developing the PMO brand in midsize office buildings
since starting this business in 2008 with the PMO Nihonbashi
Honcho building. The brand was launched to respond to customer
demand for midsize office buildings with quality equivalent to thatof a large-scale office building. By accurately responding to market
needs, PMO has carved out a certain position in the market.
Going forward, we will redouble efforts to develop the PMO
business to grow this brand into a cornerstone of the Company.
Besides quantitative expansion, we will also work to enhance quality. Regarding the latter, we will provide new value in terms of services that support tenants’ corporate activities, going beyond
physical aspects such as building location, size and quality.
One example of this approach is the opening of N-FORT in the
PMO Nihonbashi Muromachi building for meeting corporate business continuity planning (BCP), welfare and other needs that haveincreased in the wake of the Great East Japan Earthquake. N-FORT
can be used as a common space by companies that are tenants in
PMO buildings. It has presentation rooms, meeting rooms and otherspaces, as well as a service desk for our various tenants. However, italso has a storehouse for emergency supplies and can be used as an
emergency response base. We are confident that the provision ofthis sort of new value in our PMO business, value will translate intohigher tenant satisfaction and increased brand value. In terms ofquantitative expansion, we plan to branch out from the three central city wards where the PMO business is concentrated to the
Shibuya and Shinjuku areas. We aim to develop around six buildings
a year.

1

Name
PMO Nihonbashi Honcho

Address
Nihonbashi Honcho, Chuo-ku

2

PMO Hatchobori

3Completion

Status2,450 m2

2008/6

Sold

Hatchobori, Chuo-ku

2,074 m2

2009/5Sold

PMO Iwamotocho

Iwamotocho, Chiyoda-ku

1,041 m2

2009/5

Sold

4

PMO Higashi-Nihonbashi

Higashi-Nihonbashi, Chuo-ku

1,859 m2

2009/10

Sold

5

PMO Akihabara

Iwamotocho, Chiyoda-ku

3,037 m2

2010/1Sold

6

PMO Nihonbashi Odenmacho

Nihonbashi Odenmacho, Chuo-ku

2,054 m2

2010/3

Sold

7

PMO Hatchobori II

Hatchobori, Chuo-ku

3,174 m2

2010/6

Sold

8

PMO Akihabara II

Higashi-kanda, Chiyoda-ku

2,700 m2

2011/1Sold

9

PMO Nihonbashi 2chome

Nihonbashi, Chuo-ku

1,341 m2

2011/7

Sold

10

PMO Nihonbashi Muromachi

Nihonbashi Muromachi, Chuo-ku

3,857 m2*

2013/1

In operation

11

PMO Yaesu-dori

Hatchobori, Chuo-ku

5,003 m2

2013/5In operation

12

PMO Tamachi

Shiba, Minato-ku

About 4,000 m2

2014/1 (planned)

In construction

13

PMO Kanda-Tsukasacho

Kanda-Tsukasacho, Chiyoda-ku

About 3,400 m2

2013/9 (planned)

In construction

14

PMO Ginza 8chome

Ginza, Chuo-ku

About 2,000 m2

2014/3 (planned)

In construction

15

PMO Nihonbashi Kayabacho

Nihombashi Kayabacho, Chuo-ku

About 3,400 m2

2014/8 (planned)

In construction

16

PMO Shibakoen

Shibakoen, Minato-ku

About 2,600 m2

2014/7 (planned)

In construction

17

PMO Shibadaimon

Shibadaimon, Minato-ku

About 1,700 m2

2014/12 (planned)

In planning

18

PMO Nihonbashi Edo-doriNihonbashi Kodenmacho, Chuo-ku

About 1,300 m2*

2015/10 (planned)

In planning* our share

Leased floor area

(2013/7)

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Developing Commercial and Logistics Facilities
We are redoubling our efforts to develop urban-type commercial facilities and highly functional logistics facilities.
GEMS Shibuya

We are developing GEMS urban-type commercial facilities
based on the concept of providing facilities that adults can use
regularly with ease and where they can enjoy quality food, timeand space. GEMS Shibuya, our first GEMS property, which islocated in front of the new south exit of the JR Shibuya Station,
held its grand opening in October 2012. To fully cater to theneeds of office workers in the vicinity of the facility, we handpicked tenant stores, including inviting stores new to Shibuya,rather than the normal chain stores found in many buildings.
However, our involvement doesn’t stop at simply leasing thefacility to tenants. We also work with tenants on everythingfrom operating the entire facility and attracting customers to
implementing measures to raise sales. Our aim is to enhance
the facility as a whole. We believe that enhancing the operational capabilities and increasing the satisfaction of the customers who patronize the stores in this way will lead to stableearnings for the facility.
With our logistics facilities, which we are developing under
the Land Port brand, we are distinguishing ourselves fromwarehouses. The rapid growth of Internet shopping in recent
years has created demand for highly functional facilities thatcan deliver products speedily to consumers. Land Port answers
these needs. Since 2007, we have developed six facilities todate under this brand. Our strength in this field lies in our ability
to plan facilities that accurately reflect tenant needs, drawing
on the relationships we already have with quality tenants fromdevelopment and management activities thus far. We believethat we can leverage this advantage to further differentiate ourfacilities from those of others.
In April 2013, we established a division focused on thesefacilities to expand the scale of our business further.

Land Port Kawagoe

25

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Nomura Real Estate Holdings, Inc. Annual Report 2013

Investment Management BusinessIn fiscal 2012, this segment recorded lower operating revenue and earnings amid asluggish market environment. Nevertheless, we laid the stepping stones to ournext stage of growth. Assets under management topped ¥1 trillion, making us oneof the largest real estate investment management companies in Japan. In thiscapacity, we will push ahead with a major organizational overhaul to build an efficient business structure that will enable us to demonstrate an even better level of
performance.

Yasuaki Fukui
Executive Officer
Responsible for Investment Management Business

Question 01

From the standpoint of product development, the mood in
the market was utterly transformed at the end of 2012 by the
impact of the so-called “Abenomics.” Suddenly, we were in anenvironment in which we could make some aggressive moves
for growth. These included listing Nomura Real Estate Master
Fund, Inc. in June 2013. I believe we are now well positioned tospring ahead with our next stage of growth without missing theopportunity to capitalize on this upbeat market mood.

Please summarize fiscal 2012 and give us youroutlook.
In fiscal 2012, we put a priority on maintaining and improving
the performance of owned properties rather than expanding
scale at listed REITs. In private equity funds, we focused on executing exit strategies for projects formed in the past. As a result,
we were unable to increase assets under management. Even inthis environment, however, we put in place the structures for our
next stage of growth and pushed ahead with initiatives todevelop new products. In terms of the former, we analyzed ourpast investment management results and used this as the basis
for a rigorous debate about what we should do to deliver better
performance. We subsequently initiated efforts to create anorganization that can manage investments more efficiently byreforming our business structure.

Question 02

What is your basic concept for the next stage of
growth?
Essentially, for an investment management company to achieve
better performance, it needs the ability to research investees andthe timing of investments. In addition, to fulfill its responsibilities
to investors, it is important to clarify how its investment

Trend in Assets Under Management(Billions of yen)

1,500

1,000

500
Joint investment, etc.
Private Funds
REITs

0

99

00

01

02

03

04

05

06

07

08

09

10

11

12

(FY)

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Nomura Real Estate Master Fund Basic Philosophy
Investment Philosophy

Investment Strategy
A balanced portfolio that produces stable income returns

Focused on consumer demand stability

Home delivery

Logistics
facilities
Product provision

Consumers
DeliveryInventory
management, etc.

Producers

1 Concentrate investment on greater Tokyo (target portfolio share of 80% or more inprinciple; acquisition price basis) focused on a sizeable population that can support
consumer demand
2 Balanced investment in logistics facilities and retail properties

Sales

3 Development and management capabilities for supporting external growth andstable operations

Retailproperties

Portfolio building
Logistics facilities

Wholesale

Retail properties

Nomura Real Estate Group Value Chain
Logistics facilities and retail properties are bothessential infrastructure for the economy andindustry to support consumer demand

Planning, development and operational capabilities in logistics facilities and retail properties
Management support from the Nomura Real Estate Group
Investment management track record in private funds and J-REITs
Promotion of external growth via Sponsor's pipeline

Investment in logistics facilities and retail properties will
create stable income backed by consumer demand

Aims to generate stable income over the medium- and longterms by investing in logistics facilities and retail properties
mainly in greater Tokyo

performance will be evaluated. If we fail to have a philosophy orhouse opinion on this research and evaluation method, wecannot hope to prevail as an investment management company
in an increasingly global market. That’s why we have establisheda research office to support the formulation of investment strategy. And that’s also why we have established an investment
performance office with the aim of strengthening our investment performance evaluation and other functions. In the future,by putting in place an organizational structure that can facilitate
the formation of a house opinion, we hope to make the decisionmaking process more visible.

various real estate investment management products and indoing so answer investor needs of the times.

Morisia Tsudanuma

Question 03

Please tell us more about the Nomura Real Estate
Master Fund.
The Nomura Real Estate Group actively invests in logistics andcommercial facilities as real estate businesses with growthpotential. These properties can be expected to deliver stable
returns as investment management targets. This was the reason
we pushed ahead with preparations to establish the Nomura
Real Estate Master Fund to manage logistics and commercial
facilities, ultimately achieving a public listing as our third REIT in
June 2013. This REIT had an anticipated initial portfolio of 54
properties at its initial public offering (IPO). With the aggregate
purchase price for these properties estimated at approximately¥227.0 billion, it was one of the largest IPOs in J-REIT history.
Investors were clearly impressed, with subscriptions exceeding
estimates. Looking ahead, we will continue to harness the collective strengths of the Nomura Real Estate Group to developLand Port Urayasu

27

28

Nomura Real Estate Holdings, Inc. Annual Report 2013

Property Brokerage & CRE Business
The property brokerage operations posted record highs in terms of total transaction value and the number of transactions in fiscal 2012. One of our main initiatives was to expand our area network in retail operations at Nomura Real Estate
Urban Net Co., Ltd. In wholesale operations, meanwhile, we worked hard on consulting activities and solutions proposals for companies and investors.

Seishi Miyajima
Executive Officer
Responsible for Property Brokerage & CRE Business

Question 01

What initiatives did you implement in retail andwholesale operations in fiscal 2012?
In retail operations, we redoubled our efforts to expand ourbranch network. During fiscal 2012, we opened 6 branches,bringing our branch network to 48, and we also made progressin our search for more potential sites. The feature of branchdevelopment at Nomura Real Estate Urban Net is that the company is pouring its energy into creating an area network based incentral Tokyo with the aim of expanding high-value transactions.
Furthermore, in order to increase personnel both in terms ofquantity and quality, we continued to actively employee midcareer professionals as well as university graduates, and at thesame time revamped our training system. Indeed, we worked at

Number of Transactions / Total Transaction Value(Billions of yen)

(Transactions)

800

8,000

5,774

600

5,219
400

5,762

6,494
6,000

4,184

4,000

200

2,000

0

0

08

09

Total transaction value (left axis): 1Q
Number of transactions (right axis)

10

11
2Q

3Q

12
4Q

(FY)

establishing a unique program for the upgrading of employee
skills, and as part of this opened the Nomura Dynamo College(NODYC) as a permanent training center in April 2013.
In our wholesale operations, we provide consulting services,and propose and execute solutions for increasing value by effectively utilizing corporate real estate (CRE). We are also engaged
in real estate brokering between corporate customers such as forfunds and developers. These operations boast high productivity,
as we finally see the results of our efforts to develop humanresources and bolster our organization.

Question 02

What is your business strategy going forward?
I believe that our retail operations can expand business opportunities as the stock of quality housing builds. Moreover, as companies in the industry as a whole battle to establish a dominantpresence, competition among major players is expected tointensify. With this understanding, in order to emerge as awinner in the market, I believe that enhancing our information
and area networks as well as securing and developing humanresources will be essential.
In terms of human resources, we will continue proactive
recruitment and enhance training and development programs
that lead to increased levels of customer satisfaction. In the
future, we aim to have a 1,000-strong sales force, approximately
double the current size. In terms of the information network,
Nomura Real Estate Urban Net’s nomu.com was launched aheadof other companies as a real estate information site and has
garnered strong market support. We continue to see nomu.com

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Retail Operations

仲介・CRE事業

Expand branch network to 100 stores in 10 years

NarimasuE nhance the nomu.com real estate portal
site, which boasts the industry’s highest
access numbers

NerimaUrawa

Musashikoganei

MitakaShinjuku(Head Office Sales Division)(Investment Consulting Division)(Information Development Division)

Kichijoji

Eifukucho

Ogikubo

Fuchu

Chofu

Chitosekarasuyama

MachidaShinyurigaoka

Seijogakuenmae

Myogadani
Kinshicho

Takadanobaba
Ochanomizu

Akasakamitsuke
Shibuya

Kyodo

Kashiwa

Kawaguchi

Ikebukuro

Meguro

Azabu

Ebisu

Funabashi

Motoyawata
Ginza

ToyochoTamachi
GotandaSakurashinmachi

Gakugeidaigaku

Tama-plaza
KamataMusashikosugi
AobadaiMizonokuchi

Jiyugaoka

Nishinomiya
kitaguchi

Esaka

Hiyoshi
TsurumiHigashitotsuka

Umeda(Osaka Branch)

Yokohama

Fujisawa
Kanazawabunko
Hongodai(2013/7)

as the fulcrum of our information network. We intend, therefore, to continue increasing and enhancing the available content
and investing in the system to keep ahead of rivals. With ourbranch network, our plan is to nearly double our current network to 100 branches, centered on the areas where PROUD andother Nomura Real Estate Development properties are concentrated, and the central Tokyo area where many high-value properties are located.
In our wholesale operations, meanwhile, we believe that we
can grow further based on firm demand for effective utilizationof real estate in the corporate sector and an expected increase indemand from professional real estate investors. Essential tomedium- to long-term growth in this field will be having employees that have the skills to deal with the target customers andrefining their ability to make and execute proposals as a group of
professionals. At present, we are lacking in these two areas incomparison to the number of target customers, so we will pushon with the building of this sales force. In the wholesale market,
there is no obvious major frontrunner. This means that it is possible to emerge as the number-one brand by leveraging thefunctions of the Nomura Real Estate Group and strengthening
information sharing with the Nomura Securities Group to engage
in activities that increase investor satisfaction and enhance corporate value through the CRE strategy.

Wholesale Operations
Public corporations
Corporations in
the public interest

General businesscorporations

Funds

Overseas funds

Diversification and expansion of needs related to the buying/selling andeffective application of assets
Strengthening of customer relationships from a long-term perspective and abilities to identify needs
Business recommendations (development, asset management, property management) applying thecapabilities of Group companies
Strengthening of ties to the Nomura Group

29

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Nomura Real Estate Holdings, Inc. Annual Report 2013

Property & Facility Management BusinessIn fiscal 2012, this segment posted higher operating revenue mainly on account ofhigher management revenues, reflecting the increase in managed properties. I
believe that the high marks we have earned for various initiatives will also propel
our business forward. These include Nomura Building Management Co., Ltd. obtaining ISO 20000 certification, and Nomura Living Support Co., Ltd. topping customer
satisfaction ratings for four consecutive years.

Toshiaki Seki
Executive Officer
Responsible for Property & Facility Management Business

Question 01

Please tell us some of the highlights of fiscal 2012.
This segment was newly established following an overhaul ofmanagement classifications when we formulated our Mid- toLong-Term Business Plan. Our strength lies in the managementof a wide range of properties, extending from office buildings
and condominiums to logistics centers, data centers, universities,
and public facilities. Leveraging this strength, we posted higher
operating revenue in fiscal 2012 as we increased both thenumber of buildings and condominiums under management.
Nomura Building Management is involved in the managementof many data centers as well as office buildings. In fiscal 2012, it
became the first company in the building management industry
in Japan to obtain ISO 20000 certification, the international
standard for service management.
Looking ahead by widely utilizing the high-quality management standards prescribed by ISO 20000, Nomura Building

Management is aiming to enhance its ability to provide highquality management services. Nomura Living Support, meanwhile, secured the No. 1 ranking* in customer satisfaction for
the fourth year running in a survey of tenant satisfaction.
Nomura Living Support has also won plaudits for its Living Q Callservice, a call-out service for private areas which it rolled out
three years ago. Following the Great East Japan Earthquake,
Nomura Living Support anticipated changes in the safety andsecurity awareness of residents and responded by supporting
community-building efforts as a means of lessening the impact
of disasters. I believe that this proactive initiative has helped toboost the level of satisfaction. Nomura Living Support has also
produced a guidebook to help foster an environment of self andmutual support in times of trouble, which has been proposed for
condominium associations contracted for management. In thisway, we are enhancing our ability to make and create measuresthat put customer satisfaction front and center.
*Survey by Attractors Lab Co., Ltd., a real estate marketing company

Buildings under Management

Condominiums under Management(Number of transactions)(Units)800

150,000

600
100,000
400
50,000200

00
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

08

09

10

11

12

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

08
(FY)

09

10

11

12
(FY)

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Business Base Expansion

運営管理事業• Condominiums• Office buildings• Data centers• Educational facilities• Logistics facilities• Sports commercial
facilities• Public facilities

Expansion of ancillary businesses throughleveraging the stock of properties

Large-scale repair
and maintenance

Renovation andfacility upgrades

Question 02

What is your growth strategy going forward?
We view Nomura Living Support’s Living Q Call as an important
service platform in the context of our growth strategy in theProperty & Facility Management Business in an era of declining
births and a growing population of elderly. We plan to introduce
Living Q Call at all properties that Nomura Real Estate develops.
By providing this sort of highly satisfying service, we will maintain the relationship of trust we currently have with customers
into the future, and this will be the foundation of a residential
value chain.
The continuous increase in properties under management isleading to new business opportunities as well. With condominiums, large-scale repair work is required every 12 years. Officebuildings must be repaired once every 10 or so years. We intend

Tenant move-in/
move-out work

Cleaning ofprivate spaces

to work hard to win contracts for this type of work. Furthermore,
we see the provision of total solutions proposals for office buildings as a growth engine. This includes proposals to building
owners for improvements such as remodeling to increase theoccupancy rate and facility upgrades to comply with the revised
Japanese Energy Conservation Law, as well as work associatedwith tenant layout changes and when tenants move in and outof buildings.
Creating synergies between Nomura Building Management
and Nomura Living Support is also an important theme for our
growth strategy. Standardizing systems should benefit our earnings, and sharing each company’s know-how in the fields inwhich they excel should translate into a better ability to makeproposals and back them up. In short, it should strengthen thecollective capabilities of the entire Group.

About Living Q Call
Living Q Call responds to the increasing demand from condominium residents for services forprivate areas. It has been introduced for all condominium units sold by Nomura Real Estate
Development and managed by Nomura Living Support.
With Living Q Call, we offer an emergency on-call service through which dedicatedservice staff respond quickly to requests for everything from changing burned out light bulbs
to fixing waste disposers and other equipment that has broken down. In addition, it provides
consultation regarding PC use and other matters, and housekeeping-related services as well
as a housing service, which introduces home repair and remodeling vendors, house cleaningand other services.
Going forward, we aim to increase the range of services provided by Living Q Call as wework to increase customer satisfaction and build relationships of trust.

Emergency
on-call
serviceHousecleaning andother services

Housekeepingrelated
services31

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Nomura Real Estate Holdings, Inc. Annual Report 2013

Corporate Social
Responsibility (CSR)

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Corporate Social Responsibility (CSR)
Four Key CSR Themes
Based on our Group message of “Bringing Tomorrow Today,”the Nomura Real Estate Group promotes CSR activities centeredon four key CSR themes with emphasis on the spirit of corporate
citizenship that has been handed down since our founding. We
will create new value for society by addressing social issues
through our daily business activities, with the aim of fulfilling ourobligations to all stakeholders.

Raising Quality andService Levels

Engaging inEnvironmental
Initiatives

Ensuring

Developing Human

Compliance

Resources

land and also devastated mountain forests, can work together
with urban residents for everyone’s mutual and sustainable
benefit. Nomura Real Estate Development sponsors a group
established to promote this project, mainly made up of local
residents and NPOs, and obtained the cooperation of Tsukuba
City and the University of Tsukuba in order to push forward with
relevant initiatives.
Targeting both people who live in PROUD condominiums
and employees, the company has started to offer them theopportunity to directly experience life in a rural community. In
the project’s region, people can try their hand at rice-planting,indigo dyeing, and harvesting. The Group is thus providing
people who normally live in urban areas with the means to contribute to preserving the natural environment, to interact withrural residents, and to learn local history and culture, thereby
aiding the revitalization of the region.

Stakeholder Relations
Together with Customers
Based on a customer-first approach, the Nomura Real EstateGroup is involved in a range of initiatives designed to reflect
customer feedback and society’s demands in its products andservices. We strive to achieve the highest levels of safety, security
and quality in these as we create new value for society.
Disaster Preparedness at Managed Properties
Nomura Living Support provides support
for disaster preparedness measures, helping condominium associations formulate
and implement disaster preparedness drills
and earthquake response manuals. The
company has also created the Disaster
Preparedness Guidebook, a set of guidelines for dealing with earthquakes andpower outages, and distributes it free ofcharge to all condominium associations Disaster Preparedness
contracted for management.
Guidebook
Launching of the Kayabuki-no-sato Project
The Kayabuki-sato Project was launched in the Tai District of
Tsukuba City in Ibaraki Prefecture. The thinking behind this project is to create a mechanism by which the rural residents of theregion, who face such problems as an increase in deserted arable

Kayabuki-no-sato Project

Disaster Response Drills
The Nomura Real Estate Group holds regular disaster preparedness drills with tenants to ensure their safety and security, andthat of their visitors. Nomura Building Management Co., Ltd.
provides assistance for the development of earthquake and fire
response manuals, and runs basic lifesaving certification classes
for building managers. In addition, disaster communication drills
are held every month between the head office of Nomura Building Management and local sites, and once a year a widespreaddisaster response drill is held. The drill involves identifying,assessing and communicating damagelevels, and buildinga system that uses
wireless devices andteleconferencing.

Widespread Disaster Response Drill

33

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Nomura Real Estate Holdings, Inc. Annual Report 2013

Holding the PROUD BOX Thanksgiving
The year 2013 is a milestone year marking 10 years since thestart of sales of the PROUD brand of properties. As an expressionof our gratitude to all concerned, the Nomura Real Estate Group
held the PROUD BOX Thanksgiving for the owners of PROUD
condominiums, for members of the PROUD Club who are considering purchasing a condominium, and for all others who havesupported the PROUD brand over the years. The Thanksgiving
comprised a wide variety of events, including presentations of
the life services available, talks by invited guests, lifestyle proposals, and workshops.
This was the first large-scale Thanksgiving to be held by theGroup, and the approximate 16,000 visitors over the two days
were well satisfied.

PROUD Itamiwagamachi Residence, Geo Itami The ResidenceThis project was praised as creating a new kind of attractivenessand atmosphere through creative design that blends in with atown featuring the historical beauty of sake breweries, temples
and suchlike, by means of integrated real estate development ina historical town with many townscape regulations.

Together with Employees
The Nomura Real Estate Group believes that the growth of
employees, the people directly involved in carrying out theGroup’s business, is essential to earning the trust of stakeholders
and developing in a sustained manner. We focus on pleasantworking conditions and human resource development to ensurethat the diverse values of Group employees are respected by all,and that individuals can maximize their abilities.
Launching Team Tomorrow 2013 to Promote Diversity
As an initiative to promote diversity management, in June 2013
the Nomura Real Estate Group launched Team Tomorrow 2013
aimed at promoting diversity. The objective of this initiative is tofoster diversity by creating a company in which a wide variety of
employees can demonstrate their capabilities to the full, irrespective of age, gender or other personal characteristics.

PROUD BOX Thanksgiving

Measures to Enhance Quality● Winning Good Design Awards in 2012
The “enecoQ” smart condominium energy management system,
PROUD CITY Inage-Kaigan Season Block + Residence Block,
PROUD Itamiwagamachi Residence, and Geo Itami The Residence, which were developed by Nomura Real Estate Development, all won Good Design Awards in 2012. Nomura Real Estate
Development has now taken home Good Design Awards for 11
consecutive years.
● Features of Award-winning Systems and Properties“enecoQ” Smart Condominium Energy Management System
The system was recognized as Japan’s first epoch-making mechanism for identifying how to shift peak-time electricity consumption. Based on electricity usage, the system can reduce theelectricity demand of the entire condominium, and also makevisible patterns of electricity consumption.
PROUD CITY Inage-Kaigan Season Block + Residence BlockThis project was lauded as contributing to creating a well-loved
town comprising residences, commercial facilities, assembly halls,
parks and other amenities, and as fostering awareness of thenatural environment and of community building for all residents.

Team Tomorrow 2013

Dynamo Camp
Nomura Real Estate Development’s “Dynamo Camp” is a crossdivisional, employee interaction program designed to spur anunderstanding of the company’s current status and an awareness of each individual’s importance as part of the whole. The
name “Dynamo” symbolizes human resources that can take theinitiative to spark innovation. The camp brings together employees from across various job titles, divisions and age brackets toconsider and discuss the company’s future in terms of new business and other themes.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Hiring Diverse Personnel
The Nomura Real Estate Group hires people with disabilities andseniors based on the conviction that when diverse personnel
acknowledge one another’s values it raises organizational capabilities, and this leads to increased corporate value. As of March
31, 2012, the Group employed 80 people with disabilities, representing 1.54% of the total workforce. We will continue promoting these hiring practices and working to create pleasantand convenient working conditions for people with disabilities.
In addition, Nomura Living Support employed 1,936 seniorcitizens as “Smile” supporters (building managers) and in otherpositions (as of September 30, 2012).
No. of Disabled Employees/Disabled Employee Employment Ratio(Number of people)

(%)

125

2.0

100

1.63

75

71

1.67
83

1.54
80

1.6
1.2

50

0.8

25

0.4

0

0

09
n No. of disabled employees

n

10

11

(FY)

Disabled employee employment ratio

Support for Childcare and Nursing Care
The Nomura Real Estate Group has instituted childcare leave,
shortened working hours for childcare, and nursing care leave
programs in order to promote a workplace where every employee
can choose an optimal working arrangement to demonstrate hisor her abilities. These programs are intended to help prevent
employees from having to relinquish their jobs due to childcare
and nursing care responsibilities.

Furthermore, information on using the programs is communicated on the Company intranet, while promoting efforts in theworkplace to ensure the programs are easy to actually use. In
fiscal 2011, 72 employees, including 3 male employees, tookchildcare leave.
Looking ahead, the Nomura Real Estate Group will continue
to actively familiarize employees with these programs andencourage employees to make use of them.

In Harmony with the Environment
The Nomura Real Estate Group promotes environmental initiatives in various areas of business, looking to the Nomura Real
Estate Group Environmental Philosophy for guidance. The Groupsees reducing environmental impact and helping bring about asustainable society as one of its social missions as a corporation.
The Exhibit of Urban Design for Firefly Habitats
Recognized at the Kanagawa Global Environment Awards
At Yokohama Business Park (YBP), the Nomura Real Estate Grouphas been holding “The Exhibit of Urban Design for Firefly Habitats” since 2008. This exhibit has continued to attract both tenants and local residents, and it has now been recognized at the
Kanagawa Global Environment Awards by the Kanagawa Prefectural Government and the Kanagawa Conference for Preserving the Global Environment. The exhibit provides an opportunity
for everyone to consider the importance of nature and living
things through the observation of fireflies. The event is held
together with many groups, including local residents and members of Yokohama National University.
In addition, YBP also actively supports interactions with local
children and the creation of a safe and secure town throughsuch events as biotope tours and rice-harvesting lessons.

No. of Childcare Leave Takers(Number of people)

80

72
60

40

41

47
The Exhibit of Urban Design for Firefly Habitats

20

0

09

10

11

(FY)

35

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Nomura Real Estate Holdings, Inc. Annual Report 2013

The LAZONA Kawasaki TOSHIBA Building was Awarded a
DBJ Green Building Platinum Ranking and an S Ranking
by CASBEE Kawasaki
The LAZONA Kawasaki TOSHIBA Building in Kawasaki City, in
Kanagawa Prefecture, was completed in March 2013. It has
been awarded a Platinum ranking, the highest ranking under the
DBJ Green Building certification program, and an S ranking by
CASBEE Kawasaki.
The LAZONA Kawasaki TOSHIBA Building is a next-generation
office building that employs the latest energy-saving technology
to reduce CO2 emissions by over 50% compared to a conventional

office building. It was recognized as being in the top class inJapan as regards considering the environment and society, andfor satisfying BCP criteria.
Formulation of “SMART & GROWING” PROUD smart design
Nomura Real Estate Development has also formulated “SMART& GROWING” PROUD smart design as an environmental vision
for the next-generation condominiums that are being developedin the PROUD series. The “SMART & GROWING” PROUD smart
design represents an evolutionary development of the PROUDECO Vision we announced in 2010, and is a new action plan toaccelerate initiatives for next-generation smart condominiums. It
broadly comprises the two concepts of “smart design,” basedon the theme of advanced facilities and coexistence with theenvironment, and of “growing design,” based on the theme ofa sustainability that aims to preserve condominium value throughthe provision of comfortable and secure living.

The LAZONA Kawasaki TOSHIBA Building

Conceptual diagram of the “SMART & GROWING” PROUD smart design

Active Design
Active Design

Utilization of advanced facilities
Understanding the standards ofthe future in advance

SMART

PROUD smart design

Passive Design
Passive Design

Incorporates a coexistence withthe environment that makes fulluse of greenery and otheraspects of nature

The Group is developing substantial comfort and security

Community Design

based on the concept of facilities with advanced smart
specifications together with “community & safety.”

Community Design
The comfort of common areas
Support for community building

GROWING
Safety Design
Safety Design

Safety and security initiatives
Formulation of disasterpreparedness programs

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Corporate Governance

37

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Nomura Real Estate Holdings, Inc. Annual Report 2013

Corporate Governance
Basic Viewpoints Regarding Corporate Governance
The Company believes that it must be governed in a way that continuously maximizes corporate value over the long term, while consideration is given to the interest of shareholders and all otherstakeholders related to the Nomura Real Estate Group. Furthermore,
we aim to enhance the earning power of the entire Group, andwhile acting as a holding company in managing and supervising thebusiness activities of our subsidiaries, we will strive to build a highly
transparent management organization.

Corporate Governance System
The Company’s Board of Directors comprises five directors (of which
1 is an external director). The Board of Directors with the executive
officers in attendance decides important corporate matters andsupervises the execution of business operations by directors andexecutive officers. The Company has accepted an external director inorder to strengthen the supervisory function of the Board of Directors and realize highly fair and transparent management. Audit &Supervisory Board Members attend meetings of the Board of Directors and provide their opinions as the need arises. Furthermore, theCompany has introduced a system of executive officers with an aim
to strengthen Group management, to separate and enhance thebusiness execution function from the decision-making and supervisory functions of the Board of Directors. Each executive officer
appointed by the Board of Directors is delegated management
authority based on the Company’s internal rules and other stipulations to execute business under the direction of the president & CEO
and policies approved by the Board of Directors of the Company.
Audit & Supervisory Board Members comprises five Audit &Supervisory Board Members, three of whom are external Audit &Supervisory Board Members. The Board formulates such matters asaudit policies and the division of auditing roles, and receives reports
and conducts discussions regarding important matters relating toaudits carried out on the basis of those policies and divided roles.
The Company has adopted Audit & Supervisory Board Member
system. The Company believes that management supervision should
be conducted primarily by Audit & Supervisory Board Members. The
Company enhances the effectiveness of its audit activities throughmeasures that include the establishment of an Office of Audit &Supervisory Board Members and the assignment of specialized staff
to assist the Audit & Supervisory Board Members. Furthermore, themajority of Audit & Supervisory Board Members are external Audit &Supervisory Board Members, which preserves their independence
from management and creates a structure that enables them toperform operational audits appropriately. Furthermore, in addition
to accepting an external director in order to strengthen the supervisory function of the Board of Directors and realize highly fair andtransparent management, the Company has also established risk
management, compliance and internal audit systems, each of which
report regularly to the Board of Directors. Such reports enable theBoard to effectively supervise directors’ execution of duties.
As a holding company, the Company convenes Group Management Meetings, comprised of the Company’s directors and thepresidents of major subsidiaries as members. The purpose of thesemeetings is to unify intentions to promote group management andverify the progress of the budgets of each operating company andthe execution status of other business operations.

Internal Audit System and Audit & Supervisory
Board Member System
Internal Audit System
The Nomura Real Estate Group has established an internal audit

Corporate Governance System

General Meeting of Shareholders
Appointment/dismissal

Board of Directors

Audit & Supervisory Board(5 directors)

Audit

Appointment/dismissal(5 Audit & Supervisory Board Members)

Office of Audit & Supervisory
Board Members

Representative Director

Group Management Meeting
CSR Committee
The filing company

Risk Management Committee

Various departments
Guidance and support

Appointment

Appointment/dismissal

Internal Audit Department
Monitoring

Operating Companies

Audit

Certified Public
Accountants(Auditing Firm)

Annual Report 2013 Nomura Real Estate Holdings, Inc.

department at each group company, with the exception of somesmall companies. Each department is supervised under the direct
jurisdiction of the Group company president or an officer who does
not hold an additional office in a business operations division, whichallows the department to maintain organizational independence.
In addition, we have established the Internal Audit Departmentin the Company that, in collaboration with the auditing firm,
supervises the internal audit functions of the entire Group andperforms monitoring, evaluation and auditing in each division
within the Company.

Audit & Supervisory Board Member Audit System
The Company has appointed full-time staff in the Office of Audit &Supervisory Board Members to support Audit & Supervisory Board
Member audits. Each Audit & Supervisory Board Member attends
meetings of the Board of Directors and other important meetings
and audits the execution of the duties of directors while cooperatingwith the Internal Audit Department and the auditing firm as needed.
Audit & Supervisory Board Member Shigeki Fujitani has experience in finance and audit work over many years and Audit &Supervisory Board Member Akira Yamate possesses a qualification as a Certified Public Accountant. Both individuals thus havea considerable degree of professional insight regarding financeand accounting.
Accounting Audits
The Company has concluded an auditing contract with Ernst &Young ShinNihon LLC (the auditing firm). In addition to regularaccounting audits by the auditing firm, the Company discusses andverifies accounting issues with the auditing firm as needed andstrives to follow appropriate accounting procedures.
All of the certified public accountants that carry out work of
the auditing firm have no more than seven years of continued
experience in auditing the Company, and the auditing firm has
adopted autonomous measures to ensure that its employees whocarry out work do not participate for longer than a designatedperiod in the Company’s account auditing.
Assistants associated with accounting audit operations comprise eight certified public accountants, nine assistant certified
public accountants, etc., and seven other staff.

Compensation of Directors and Audit & Supervisory
Board Members
 olicy and Decision-making Method Regarding theP
Amount and Calculation of Compensation and Other
Remuneration for Directors and Audit & Supervisory
Board Members
It was resolved that the maximum annual compensation limit for
directors and Audit & Supervisory Board Members would be ¥650
million and ¥150 million, respectively.
The Company’s compensation of directors and Audit & Supervisory Board Members consists of fixed monthly compensation andvariable compensation, comprising bonuses and stock-related compensation. Bonuses are determined according to the Company’sbusiness performance during the relevant fiscal year, as well as toindividual contribution to that performance. Stock-related compensation, in the form of stock options, is designed to align executives’interests with those of the Company’s shareholders, and to further
enhance corporate value. Stock options are either market-value
stock options, on which the exercise price (the amount payable
when the right is exercised) is determined on the basis of market
prices, or share compensation stock options, which have exercise
prices of ¥1 per share. Stock-related compensation is not provided
for Audit & Supervisory Board Members.
Total Compensation of Directors and Audit & Supervisory
Board Members by Type of Remuneration (Fiscal 2012)
Total compensation by type of
remuneration (¥ million)
Total
Basic
compensacompensation
tion(¥ million)

Directors
Audit & Supervisory
Board Members

StockoptionBonus

Retirement
benefits

Headcount

280

160

45

74

—

5

(excluding external
Audit & Supervisory
Board Members)

67

51

—

16

—

3

External directors
and Audit &Supervisory Board
Members
Total

22
370

22
234

—
45

0
90

—
—

3
11

Notes: 1.	The annual General Meeting of Shareholders on June 27, 2013 resolvedthat the maximum annual compensation limit for Audit & Supervisory Board
Members is ¥150 million.
2.	
External Audit & Supervisory Board Member Mitsuru Nakajima, who
resigned on June 27, 2013, received compensation in fiscal 2012 in theamount of ¥27 million as a corporate officer from NOMURA LAND AND
BUILDING Co., Ltd., a former parent company of the Company. NOMURALAND AND BUILDING ceased to be a parent company of the Company on
March 21, 2013.

Compensation of Accounting Auditors
Policy for Deciding the Compensation of Accounting Auditors
The Company takes factors such as the days spent performing
accounting audits, and the scale and business characteristics of theCompany comprehensively into consideration in reaching an appropriate decision regarding the compensation of its auditing firm’s
certified public accountants and other accounting audit personnel.

Compensation paid to the auditing firm’s certified public
accountants for fiscal 2012 was as follows.
Compensation of Certified Public Accountants in Detail(Fiscal 2012)
Compensation paid for audit
certification activities (¥ million)

The Company
Consolidated subsidiaries
Total

62
111
173

Compensation paid for
non-audit activities (¥ million)

—
29
29

39

40

Nomura Real Estate Holdings, Inc. Annual Report 2013

Risk Management
Risk Management System
The Company has established a Risk Management Committee
whose members include officers in charge of administrative operations at the Company and Group companies, for the purpose ofpromoting risk management activities within the Group. The Committee deliberates matters relating to risk management, compliance, and information security for the entire Group, and also
cooperates and provides guidance with regard to countermeasureswhen risks occur.
The Group’s businesses handle large quantities of personal
information in various operations due to business requirements.
They endeavor to comply with various laws and regulations pertaining to this personal information, such as the Law Concerning
Protection of Personal Information, and also handle information in
the proper manner. Moreover, the Group has established internal
rules, such as “Information Security Provisions,” and “Rules for
Handling Personal Information,” which set forth guidelines on
handling personal information and appointing information security
managers, among other matters. In these ways, the Group strives
to train and educate employees.
Formulation of Risk Management Regulations
The Nomura Real Estate Group believes that ensuring sound management by properly addressing risks is fundamental to corporations. Accordingly, the Group has established Risk Management
Regulations as its fundamental risk management guidelines. Risk

management is predicated on the crucial task of understanding risk.
The Group has thus established timely and proper reporting rules,
including prompt escalation of situational reports to management
after unforeseen incidents have occurred, in addition to regularly
monitoring risks.

Compliance
Compliance Systems
The Nomura Real Estate Group regards compliance, including theobservance of laws and regulations and corporate ethics, as one of
the most important management issues. As a set of relevant guidelines, it has formulated the Nomura Real Estate Group Code of
Action. To promote continuous educational and awareness activities
for executives and employees of the entire Group, we have established a CSR Committee and CSR Promotion Department in the
Company. It provides advice, guidance and support to Group companies. In addition, Compliance Officers and Compliance Leaders
have been appointed at Group companies in an effort to ensure thatcompliance pervades throughout the Group.

Nomura Real Estate Group Risk Hotline
The Nomura Real Estate Group Risk Hotline serves as a point of contact for whistle-blowing by Group employees. Two internal reporting
channels are available: one to internal directors and the other to outside legal counsel. In the event that a compliance issue cannot be
resolved in the workplace or in other related circumstances, employees may choose to consult with either point of contact.

Flow of Communication

Nomura Real Estate Group Compliance Promotion Framework

Nomura Real Estate Holdings

Nomura Real Estate Holdings

Chairman, Risk Management Committee

Board of Directors
Chairman and President

CSR Promotion Department

Nomura Real EstateGroup Companies

ChairmanGroup Compliance Officer(Director in charge of CSR
Promotion Department,
Nomura Real Estate
Holdings)

Risk Management
Committee
Secretariat

CSR Promotion Department

Committee
members

Communication Manager• Communication at Group Companies
Formulation of guidelines, etc.
• Establishment of emergency communication networks at Group
companies

Employees of Group Companies

Nomura Real EstateGroup Companies
Compliance Officers

Committee
members(Directors in charge of administrative
operations at Group companies)

Compliance Leaders(General managers of administrative
operations at Group companies)

Compliance Promoters, etc.
(Appointed at each company)

Risk Management
Committee, etc.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Disclosure System Concerning Timely Disclosure
Corporate Information Collection
Corporate information of the Company is aggregated by the person
responsible for information handling (the corporate officer in chargeof the Corporate Communications & Investor Relations Department)
through the department responsible for information collection (Corporate Planning Department) from responsible individuals in eachdepartment within the Company. Regarding Nomura Real EstateGroup companies, corporate information is aggregated by the
person responsible for information handling (the corporate officer incharge of the Corporate Communications & Investor Relations
Department) through the department responsible for informationcollection (Corporate Planning Department) from responsible individuals in each Group company. Information on incidents with significant urgency is aggregated by the person responsible for
information handling (the corporate officer in charge of the Corporate Communications & Investor Relations Department) through the
Chairman of the Risk Management Committee.
Decisions on Timely Disclosure of Corporate Information
The person responsible for information handling (the corporate officer in charge of the Corporate Communications & Investor Relations
Department) forms an Information Disclosure Screening Team,
which is made up, as needed, of general managers, corporate officers and others responsible for related departments, if a decision isrequired on whether or not to disclose corporate information aggregated by the aforementioned system. This team decides whether or
not to disclose information after looking at the necessity for timely
disclosure, the disclosure details and other matters, and at the sametime reports to the president.

handling (the corporate officer in charge of the Corporate Communications & Investor Relations Department). The department responsible
for timely disclosure (Corporate Communications & Investor Relations
Department) prepares the materials for disclosure and makes thempublic after receiving the approval of the person responsible for information handling (the corporate officer in charge of the Corporate
Communications & Investor Relations Department).

Investor Relations Activities
Communication with Analysts and Institutional Investors
The Company holds earnings briefings twice a year (at around thetime of announcing annual and semi-annual results) where it
explains business results and forward-looking matters such as management policies. The Company also communicates actively withinstitutional investors overseas through the overseas investor relations (IR) activities it conducts periodically.

Information Transmitted via the IR Website
The Nomura Real Estate Holdings’ IR website was upgraded in April
2012. The Company’s consolidated financial statements, earnings
briefing materials, annual reports and other IR-related information
are provided through this website. In June 2013, the Company
refreshed its webpage for individual investors (Japanese only) in thehope that this will foster a deeper understanding of the Company.

Timely Disclosure
Corporate information that must be disclosed in accordance with thetimely disclosure rules of the Tokyo Stock Exchange and corporate
information that the Company decides needs to be disclosed in atimely manner is disclosed by the department responsible for timely
disclosure (Corporate Communications & Investor Relations Department) under the direction of the person responsible for information

Nomura Real Estate Holdings IR Website:
http://www.nomura-re-hd.co.jp/english/ir/index.html

Timely Disclosure System

President
Information Disclosure
Screening Team

Formed asneeded(Made up of general managers, corporate officers
and others responsible for related departments)

Risk Management Committee
ChairmanReportTokyo Stock Exchange

ReportTimely disclosure

Person responsible for information handling(Corporate officer in charge of the Corporate
Communications & Investor Relations Department)

Direction

ReportDepartment responsible for information collection
Incidents withsignificant
urgency

Report(Corporate Planning Department)
ReportDepartments of Nomura Real Estate Holdings, Inc.

Group companies

Department responsible
for timely disclosure(Corporate Communications &Investor Relations Department)

41

42

Nomura Real Estate Holdings, Inc. Annual Report 2013

Corporate Officers(As of June 27, 2013)

President (Representative Director) &Chief Executive Officer

Kamezo Nakai

Director (Representative Director) &Executive Officer

Executive Officer

Executive Vice President

Seiichi Miyajima

Seishi Miyajima

Executive Officer

Executive Officer

Executive Officer

Takashi Kaku

Toshiaki Seki

Yasuaki Fukui

Director & Executive Officer

Executive Officer

Executive Officer

Takao Orihara

Tadashi Nakajima

Shigeyuki Yamamoto

Seiji Matsumoto*1 Shigeru Matsushima is an external director as provided for in Article 2, Item 15 of the Companies Act.
*2 Shigeki Fujitani, Satoshi Ogishi and Akira Yamate are external Audit & Supervisory Board Menbers as provided for in Article 2, Item 16 of the Companies Act.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Executive Officer

Executive Officer

Director & Executive Officer

Executive Officer

Kouzou Ise

Hiroyuki Kimura

Yukoh Yoshida

Makoto Haga

Director*1

Audit & Supervisory Board Member

Audit & Supervisory Board Member

Shigeru Matsushima(Full-time)(Full-time)

Youji Kurihara

Shigeaki Yoshioka

Audit & Supervisory Board Member*2

Audit & Supervisory Board Member*2

Audit & Supervisory Board Member*2(Full-time)

Satoshi Ogishi

Akira Yamate

Shigeki Fujitani

43

44

Nomura Real Estate Holdings, Inc. Annual Report 2013

Management’s Discussion and Analysis
Trends in the Real Estate Industry

result, consolidated operating revenue increased ¥66,933 mil-

The condominium market in the Tokyo metropolitan area duringlion, or 14.8%, to ¥517,741 million, operating income rosecalendar year 2012 saw sales increase 2.5% year on year, to¥8,368 million, or 16.8%, to ¥58,308 million, ordinary income

45,602 units. Contract rates at average first month were downrose ¥11,633 million, or 34.0%, to ¥45,807 million, and net

1.5 percentage points to 76.3%. Despite these marginalincome rose ¥1,765 million, or 10.0%, to ¥19,357 million.

declines, the market remained at a high level. This primarily

Operating Results by Segment

reflected solid real demand centered on first-time condominium

Residential Development Businesspurchases, against the backdrop of low interest rates.
In the office market, although rent levels remained soft, theCondominium sales during the fiscal year under review included

sharp increase in the supply of new office buildings has run its

PROUD CITY Urawa (Urawa-ku, Saitama City, Saitama Prefec-

course. As a result, the market has begun showing signs of a recov-ture), PROUD Komaba (Meguro-ku, Tokyo), OHANA Yasaka-

ery. The office building vacancy rate in the five wards of central

Hagiyama-Cho (Higashimurayama City, Tokyo), PROUD TOWERTokyo declined 0.48 of a percentage point from a year earlier to

Sumiyoshi (Higashinada-ku, Kobe City, Hyogo Prefecture),

8.56% as of March 31, 2013, signaling an improvement.

while sales of detached houses included PROUD SEASONIn the real estate investment market, the fund procurement

Inagekaigan (Mihama-ku, Chiba City, Chiba Prefecture), andenvironment has remained strong, with rising investment unit

PROUD SEASON Higashi-Funabashi Garden Avenue (Funabashi

prices for J-REITs supported by increased demand for J-REIT pur-City, Chiba Prefecture).

chases from investors. Consequently, new REIT listings by invest-

The inventory of completed units at the end of the fiscal year

ment corporations and capital increases through public offerings

declined 72 units from a year earlier, to 42 units, while con-have gathered pace, along with growth in property acquisitions.

cluded housing contracts not yet posted as sold rose 1,431 units,

These and other developments have led to a recovery in the busi-

to 5,400 units on the same basis.
Residential Development Business segment operating reve-ness environment.

nue increased ¥88,182 million, or 40.5%, year on year, toAnalysis of Operating Results¥305,760 million, while operating income rose ¥11,977 million,

The Nomura Real Estate Group recorded a ¥11,405 million

or 57.2%, to ¥32,917 million. This strong growth was mainly

impairment loss, reflecting the fact that some leased assets in

attributable to a large increase in the number of units soldproperty, plant and equipment saw a decline in profitability.

accompanying a change in recognition of operating revenue for

However, the Group’s mainstay Residential Development Busi-some properties from fiscal 2011 to fiscal 2012 because of theness achieved a year-on-year increase in revenue and earnings

Great East Japan Earthquake. Another contributing factor was

mainly due to a large increase in the number of units sold. As athe segment’s favorable sales performance.

Average Prices and Contract Rates for
Condominiums in the Tokyo Metropolitan
Area (For the calendar years)

Vacancy Rates in the Five Wards ofCentral Tokyo (As of March 31)

J-REIT Market Capitalization(As of March 31)(Millions of yen)

(%)

(%)

(Trillions of yen)

50

100

10

8

40

80

8

30

60

6

20

40

4

10

20

2

0

0

6
4

0

08

09

■ Average price (left axis)

10
■

11

12

(Year)

2

0

09

10

11

12

13

(Year)

09

10

11

12

13

(Year)

Contract rate (right axis)

Source: Real Estate Economic Institute Co., Ltd.

Source: Miki Shoji Co., Ltd.

Source: The Association for Real Estate Securitization

Annual Report 2013 Nomura Real Estate Holdings, Inc.

The number of units, sales, and housing contracts not yet

Investment Management Businessposted as sold for the joint-venture projects are calculated based

In the Investment Management Business segment, we focusedon the Company’s allotments.

on the stable management of the various funds operated by the
Nomura Real Estate Group.

Leasing Business

Investment Management Business segment operating reve-In the Leasing Business segment, we worked to increase utiliza-nue decreased ¥1,830 million, or 14.1%, year on year, totion rates of buildings we own by stepping up sales activities to¥11,133 million, while the operating loss was ¥2,724 million,

meet tenant needs.

compared to operating income of ¥6,552 million in the previous

bono Sagamiono Shopping Center (Minami-ku, Sagamihara

fiscal year. This decrease in sales and profits was mostly due toCity, Kanagawa Prefecture), which we developed, began opera-

the absence of dividend income from sales of properties at SPCs

tions with full occupancy from March 2013.

recorded in fiscal 2011 and the posting of loss on valuation of

As a result of these and other factors, the vacancy rate for

equity investments in fiscal 2012.

our Leasing Business has stayed at a low level. It was 2.2% as of
Property Brokerage & CRE Business

March 31, 2013.
Furthermore, LAZONA Kawasaki TOSHIBA Building (Saiwai-

In wholesale operations, we focused on building relationships

ku, Kawasaki City, Kanagawa Prefecture), a large-scale officewith customers by providing CRE solutions that accurately

building with floor space of over 100,000 m2, was completed at

respond to their needs.

the end of March 2013.

In retail operations, the Company strengthened marketing

In property development operations, the Company pro-activities by utilizing Internet media while actively developing

moted the development business and product sales. We also

new branches. We opened 6 branches during the fiscal year

actively developed the Premium Midsize Office (PMO) brand ofunder review: Aobadai Center, Myogadani Center, Tsurumi

mid size office buildings with the quality of large-scale buildings.

Center, Akasaka Center and Motoyawata Center in the Tokyo

In fiscal 2012, we booked sales of two properties, namely PMO

metropolitan area, and Nishinomiya Kitaguchi Center in the

Akihabara II (Chiyoda-ku, Tokyo) and PMO Nihonbashi 2chome

Kansai area.

(Chuo-ku, Tokyo).

Property Brokerage & CRE Business segment operating rev-

As a result, Leasing Business segment operating revenue

enue decreased ¥8,209 million, or 23.9%, year on year, todecreased ¥16,751 million, or 13.6%, year on year, to ¥106,666¥26,094 million, while operating income rose ¥4,250 million, or

million, while operating income rose ¥3,645 million, or 18.5%,

220.7%, to ¥6,176 million. The higher earnings on lower oper-to ¥23,336 million. The higher earnings on lower operating

ating revenue were mainly attributable to the transfer of somerevenue were mainly attributable to a decrease in product sales

real property to other segments in fiscal 2011 and large increases

in property development operations.

Other Business
0.7%
Property & Facility
Management Business
6.8%
Property Brokerage &CRE Business
9.6%

Investment
Management Business–  4.2%

Breakdown ofconsolidated
operating income(loss) by segment
FY2012¥58,308

Leasing Business
36.2%

Residential
Development
Business
51.0%

Breakdown of Consolidated Operating Income (Loss) by Segment(FY2012)(Millions of yen)

■ Residential Development Business

32,917■ Leasing Business

23,336(36.2%)■ Investment Management Business–  2,724(–  4.2%)■ Property Brokerage & CRE Business

6,176(9.6%)■ Property & Facility Management Business

4,378(6.8%)

448(0.7%)■ Other Business(51.0%)(millions of yen)

Note: Since operating income for each business does not include “eliminations or
corporate” in segment information, the sum of operating income of the businesses presented in the pie chart differs from the total amount shown in thecenter of the pie chart. The shares of consolidated operating income by businesshave been calculated based on operating income for each segment.

45

46

Nomura Real Estate Holdings, Inc. Annual Report 2013

in the number of transactions and the transaction value in prop-

Property & Facility Management Business segment operating

erty brokerage operations.

revenue increased ¥1,693 million, or 2.5%, year on year, to¥69,064 million, while operating income decreased ¥109 mil-Property & Facility Management Businesslion, or 2.4%, to ¥4,378 million.

In building management operations, we focused on expanding
Other Businessvarious properties under management centered on office buildings, while working actively to receive tenant orders for interior

In the fitness club business segment, the Company implemented

works and to improve management quality.

various campaigns and events to recruit new members andimprove members’ satisfaction.

In housing management operations, we worked to steadily
increase condominiums under management by receiving consign-

Other Business segment operating revenue increased ¥370

ment orders for managing condominiums from within the Group.

million, or 2.5%, year on year, to ¥14,962 million, while operat-

Also we stepped up measures to further improve customer satis-

ing income rose ¥29 million, or 7.1%, to ¥448 million.

faction by enhancing service lineups for tenanted areas.

Major operating-related indices for each business are shown in the table below.
2008

2009

2010

2011

2012

Condominium sales (units) ����������������������������������������

3,135

3,696

4,497

3,397

5,111

Detached housing sales (units)������������������������������������

255

415

580

631

638

Gross margin ratio of housing sales (%) ��������������������

21.8

16.1

16.4

23.3

22.5

Completed housing units held in inventories (units)����

265

535

113

114

42

Rental condominium sales for investors (units)������������

621

248

138

739

534

Leasing Business:
Vacancy rate at year-end(Offices, commercial facilities) (%)*��������������������������

2.6

4.8

4.0

2.3

2.2

1,235,611

1,204,546

1,126,601

1,153,898

1,127,495

Fiscal year

Residential Development Business:

Investment Management Business:
Assets under management (millions of yen)����������������
Property Brokerage & CRE Business:
Brokerage (number of transactions)����������������������������

4,184

5,219

5,774

5,762

6,494

Brokerage-total transaction value (millions of yen)������

293,047

386,446425,274

452,950

540,698

Property & Facility Management Business:
Buildings under management (number oftransactions)������������������������������������������������������������

631

655

684

696

723

Condominiums under management (units)����������������

110,365

121,212

127,567

130,987

137,745

129,944

128,365

127,707

133,033

132,196

Other Business:
Members of MEGALOS (people) ��������������������������������

* Accompanying the change in segments, some items have also been changed from fiscal 2011.

Analysis of Financial Position

short-term loans payable (up ¥19,342 million) and notes payable

As of March 31, 2013, total assets stood at ¥1,369,949 million,(up ¥12,996 million), there was a decrease in long-term loans

down ¥32,675 million from a year earlier. This was mostly

payable (down ¥108,635 million).

because equity investments (down ¥12,316 million), lease andNet assets rose ¥21,789 million year on year to ¥398,276

guarantee deposits (down ¥5,912 million) and investment secu-

million. This was mostly because retained earnings increased

rities (down ¥5,000 million) declined.

¥13,520 million.

Total liabilities decreased ¥54,464 million to ¥971,673 million. This was mostly because while there were increases in

The equity ratio was 24.5%, up 1.9 percentage points fromthe end of the previous fiscal year.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Cash Flows
Cash flows from operating activities

Risks Affecting the Business of Nomura Real EstateGroup

Net cash provided by operating activities amounted to ¥89,295

We believe that the following matters related to the Group’s

million, an increase of ¥45,418 million from the previous fiscal

business, accounting and other conditions could have a material

year. This was primarily due to income before income taxes andimpact on the decision-making of investors.

minority interests of ¥34,994 million, depreciation and amortiza-

It should be noted that matters concerning the future in thistion of ¥13,514 million and an increase in notes and accounts

document have been determined based on information available

payable—trade.

to the Group as of March 31, 2013.

Cash flows from investing activities(1) Trends in the real estate market

Net cash used in investing activities amounted to ¥2,588 million,

The Group’s performance for the fiscal year under review

a change of ¥10,397 million from the net cash provided byresulted in increased revenues and profit compared to the previ-investing activities in the previous fiscal year. This mostly reflected

ous fiscal year. However, fears over the impact of the European

purchase of property, plant and equipment and intangible assets,

debt crisis and stagnation in overseas economies continue towhich was partly offset by proceeds from sales of property, plantcreate uncertainty.

and equipment and intangible assets and proceeds from collection of lease and guarantee deposits.

In the future, certain events could still cause a decline inpurchasing sentiment among customers of the Residential
Development Business, the Property Brokerage & CRE Business

Cash flows from financing activities

and other businesses. These events include the current economic

Net cash used in financing activities amounted to ¥94,666 mil-slowdown, an associated deterioration in corporate earnings, alion, an increase of ¥31,370 million from the previous fiscal year.

decline in consumer spending, a rise in interest rates, or an

This mostly reflected repayments of long-term loans payable.

excess supply in the real estate market. There may also be falls inselling prices or increases in inventories due to the decline in

Basic Policy Concerning Profit Distribution, andDividends for Fiscal 2012 and Fiscal 2013

purchasing sentiment, or losses on valuation of inventories. For

The Company’s basic policy regarding the distribution of profits

moreover, such events could also spark declines in office rents,

to shareholders is to aim at a payout ratio of approximately 30%

increases in vacancy rates, falls in asset values, or drops in profit

over the medium to long term, in accordance with annual busi-

ratios, and an accompanying valuation loss on assets owned byness performance, comprehensively considering the operating

the Group. In addition, declining investment unit price andenvironment, capital investment plans, retained earnings, andweakening demand for investment funds are possibilities in theother relevant factors. In fiscal 2012, we paid a year-end divi-

REIT market. Such events could have an adverse impact on thedend of ¥15 per share, as forecast. Combined with the interimGroup’s business performance.

the Leasing Business and the Investment Management Business,dividend paid previously, the total annual dividend was ¥30.00
per share.
For fiscal 2013, ending March 31, 2014, the Company(2) Changes to real estate-related legislation or the tax
systemintends to pay interim and year-end dividends of ¥15.00, for a

A number of laws and regulations apply to the various busi-

total annual dividend of ¥30.00.

nesses of the Nomura Real Estate Group, which will be subject to
new regulations as it expands its operational scope in the future.

Consolidated Performance Outlook for Fiscal 2013

Going forward, the Group may face new obligations andIn fiscal 2013, the Company projects ¥518,000 million in operat-

expense burdens if the Building Standards Law, the Building Lots

ing revenue, ¥60,000 million in operating income, ¥48,000

and Buildings Transaction Business Law, the Financial Instru-

million in ordinary income, and ¥21,000 million in net income.

ments and Exchange Law, or other real estate-related laws arerevised, or if new legislation is implemented. Such events could
adversely affect the Group’s business performance.

47

48

Nomura Real Estate Holdings, Inc. Annual Report 2013

Furthermore, if revisions to the tax system that impact the(6) Natural disasters

Real Estate Development Business are implemented, this could

Natural disasters, such as earthquakes and wind and flood

lead to an increase in expenses for holding, acquisition, and sales

damage, as well as sudden accidents, could lead to damage orof assets, or a decline in the purchasing sentiment of customers.

destruction of real estate owned or managed by the Group.

It could also prompt a change in the facility strategies of compa-

Such incidents could have a negative impact on the Group’s

nies and revisions of their investment plans. Such events could

business performance and financial condition.

have an adverse impact on the Group’s business performance.
(7) Personal information(3) Licenses and permits for major businesses

In the course of carrying out its operations, the various busi-

The Group obtains licenses and permits, such as real estatenesses of the Group handle large quantities of personal informa-brokerage and construction licenses, when carrying out busi-

tion. The Group endeavors to comply with various laws andness activities.

regulations pertaining to personal information, such as the Law

Currently, there are no reasons for any of these licenses orConcerning Protection of Personal Information, and also handle

permits to be cancelled. However, in the future, if such licenses

information in the proper manner. Moreover, Group companies

or permits are cancelled for whatever reason, this could adversely

have produced various documents, such as “Information Secu-

affect the Group’s business performance.

rity Provisions,” “Rules for Handling Personal Information” and“Guidelines for Entrusting the Handling of Personal Informa-(4) Impact of interest-bearing debt

tion.” In these ways, the Group strives to train and educate

The balance of interest-bearing debt at March 31, 2013 stood at

employees and protect the interests of customers.

¥669,269 million, down ¥89,293 million from a year earlier

In the event of external leakage of personal information due(equivalent to 48.9% of total assets, 5.2 percentage points lessto unforeseen circumstances, however, confidence in the Group

than at the end of the previous fiscal year). When raising funds

could be lost, leading to a decrease in sales and the incurrenceby borrowing, the Group attempts to deal with the risk of aof expenses to pay compensation for damages. This could haveshort-term rise in interest rates mainly by taking out long-term,

an adverse impact on the Group’s business performance.

fixed-rate loans. However, an increase in borrowing costs due toa rise in market interest rates could have a negative impact on(8) Soil pollution

the Group’s business performance and financial condition.

Under the Soil Contamination Countermeasures law, owners ofland are obliged to evaluate and report on the soil pollution(5) M&A

status of their properties with respect to the presence of specific

The Company has positioned M&A as an important strategy for

harmful substances, and also to take measures to remove suchlong-term growth, and aims at boosting Group enterprise value

polluting substances.

by implementing M&A that can be expected to generate syner-

When considering purchases of land for business use, thegies while making the most of the advantages offered by theGroup conducts historical and pollution assessments in advance.

holding company system.

If the presence of pollution is confirmed, the Group either can-However, in the event of changes in the operating environ-cels the acquisition or engages specialists to remove such pollu-

ment, the expected growth of the acquired company, or thetion. However, it is possible that the aforementioned assessmentssynergy expected from the acquisition, may not be realized.

fail to confirm the full extent of soil pollution, or that the seller isThis could have an adverse impact on the Group’s business

unable to fulfill his or her guarantee against defects even if soil

performance.

pollution is detected.
Detection of soil pollution on land purchased by the Group,
therefore, could lead to changes in the Group’s original businessschedules or to the incurrence of the additional expenses, which
could have a negative impact on its business performance or
financial condition.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

(9) Asbestos
Some of the buildings owned by the Group have been sprayedwith materials that include asbestos. The Group has engaged
third-party organizations to assess such buildings. According to
the results of those assessments, the said materials are showing
no signs of age-related degradation and are in stable condition.
In the future, however, it is possible that asbestos may be scattered if age-related degradation occurs. Such an event could
require removal or containment of the asbestos in question,
resulting in the incurrence of additional costs that could havean adverse effect on the Group’s business performance or
financial condition.
(10) Concentration of revenues in fourth quarterIn the Residential Development Business, which accounts formore than 50% of the group’s revenues, housing sales are registered as sales when properties are handed over to the customers. In many cases, however, the completion and handover occur
in February or March of each year, in accordance with therequirements of customers taking up residence. For this reason,a large proportion of the group’s revenues is concentrated in the
fourth quarter of each fiscal year.
(11) Capital relationship with other affiliates
The Company’s other affiliates are Nomura Land and Building
Co., Ltd. and its parent company Nomura Holdings, Inc. As of
March 31, 2013, Nomura Land and Building owned 34.0% of
the Company’s shares. This holding percentage could change inthe event of a sale of the Company’s shares by Nomura Land andBuilding or a capital increase of the Company.

49

50

Nomura Real Estate Holdings, Inc. Annual Report 2013

Consolidated Balance Sheet
Nomura Real Estate Holdings, Inc. and its subsidiaries
March 31, 2012 and 2013
(Thousands of
U.S. dollars)(Note 1)

(Millions of yen)
ASSETS

Current Assets:
Cash and deposits (Notes 2(3) and 3)
Notes and accounts receivable–trade
Short-term investment securities (Notes 2(3), 3 and 4)
Real estate for sale (Note 6)
Real estate for sale in process
Land held for development
Equity investments (Notes 3 and 4)
Deferred tax assets (Note 11)
Other
Allowance for doubtful accounts
Total current assets

Investments and Other Assets:
Investment securities (Notes 3 and 4)
Lease and guarantee deposits (Note 3)
Deferred tax assets (Note 11)
Other
Allowance for doubtful accounts
Total investments and other assets

Property, Plant and Equipment:
Land (Notes 6 and 16)
Buildings and structures (Notes 6 and 16)
Construction in progress (Note 6)
Machinery and equipment (Note 6)
Other
Accumulated depreciation
Net property, plant and equipment

Intangible Assets
Total Assets
See notes to consolidated financial statements.

2012

2013

2013

¥   45,458
13,18725,000124,840
197,638
74,131
41,89518,50544,868(190)
585,332¥   42,499
13,25920,00061,291
224,40983,60329,57816,29344,374(202)
535,104$   451,876
140,983
212,653
651,680
2,386,061
888,923
314,500
173,235
471,809(2,152)
5,689,568

45,94923,622
24,6983,468(19)97,71846,18517,70921,0313,116(1)88,040491,067
188,297
223,61233,136(15)
936,097

471,901
318,068
11,3698,453
1,607
811,398(101,682)
709,716

483,759
354,525
910
9,460
1,691
850,345(112,946)
737,399

5,143,640
3,769,535
9,671
100,581
17,986
9,041,413(1,200,911)
7,840,502

9,858¥1,402,624

9,406¥1,369,949

100,016$14,566,183

Annual Report 2013 Nomura Real Estate Holdings, Inc.

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

(Millions of yen)
LIABILITIES AND NET ASSETS

2012

2013

2013

Current Liabilities:
Notes and accounts payable–trade
Short-term loans payable (Notes 3, 5 and 6)
Income taxes payable (Note 11)
Deposits received
Provision for bonuses
Provision for directors’ bonuses
Provision for loss on business liquidation
Provision for loss on disasterAccounts payable–otherAccrued interest
Accrued consumption taxes
Advances received
Other
Total current liabilities¥   36,352
148,243
6,109
14,475
4,336
268
77
413
4,946
2,318
3,353
27,734
8,725
257,349¥   49,348
167,585
6,448
21,252
4,952
434
149
303
17,1472,010
1,438
35,976
7,813
314,855$   524,700
1,781,873
68,564225,961
52,648
4,620
1,589
3,224
182,321
21,372
15,288382,510
83,073
3,347,743

Noncurrent Liabilities:
Bonds payable
Long-term loans payable (Notes 3, 5 and 6)
Lease and guarantee deposits received (Note 6)
Deferred tax liabilities (Note 11)
Deferred tax liabilities for land revaluation
Provision for retirement benefits (Note 7)
Provision for loss on subleasing business
Other
Total noncurrent liabilities
Total Liabilities

33,000577,319
55,64372,3184,370
15,6191,583
8,937
768,789
1,026,138

33,000468,684
55,18970,6184,537
15,291
1,115
8,384
656,818
971,673

350,877
4,983,345
586,807750,852
48,242
162,588
11,85589,145
6,983,711
10,331,454

115,626
92,955
104,328(2)
312,907

115,728
93,057
117,848(2)
326,6311,230,496
989,449
1,253,044(25)
3,472,964(2,040)
405
6,625
(831)
4,159
713
58,707
376,486

2,116
238
7,224
9
9,587
952
61,106398,276

22,4982,531
76,812
88
101,929
10,117649,719
4,234,729¥1,402,624¥1,369,949$14,566,183

Net Assets:
Shareholders’ equity (Note 12):
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustments
Total accumulated other comprehensive income
Subscription rights to shares
Minority interests
Total Net Assets
Total Liabilities and Net Assets
See notes to consolidated financial statements.

51

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Nomura Real Estate Holdings, Inc. Annual Report 2013

Consolidated Statement of Income
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years Ended March 31, 2012 and 2013
(Thousands of
U.S. dollars)(Note 1)

(Millions of yen)
2012

2013

2013

Operating Revenue:¥450,807¥517,741$5,504,951

Operating revenue

450,807517,7415,504,951

Operating Expenses:

400,868

459,433

4,884,982

Operating cost

335,897

383,169

4,074,101

64,971

76,264810,881

Operating Income

49,93958,308619,969

Other Income and Expenses:(24,971)(23,314)(247,892)

Selling, general and administrative expenses

Interest income

63

82

870

Dividends income

1,093

3,461

36,8035

2

26

Gain on sales of property and equipment (Note 9)

218

336

3,569

Gain on reversal of asset retirement obligations

—

257

2,728

Equity in earnings of affiliates

300

—

—

(14,329)(12,542)(133,350)

Impairment loss (Note 10)(9,723)(11,405)(121,266)

Other, net(2,598)(3,505)(37,272)

24,96834,994372,077

Income taxes–current

10,918

11,546

122,767

Income taxes–deferred(10,091)

1,685

17,918

Reversal of provision for loss on disaster
Interest expenses

Income before Income Taxes and Minority Interests
Income Taxes (Note 11):

Total income taxes
Income before minority interests
Minority interests in income
Net Income
See notes to consolidated financial statements.

827

13,231

140,685

24,141

21,763

231,392

6,550

2,406

25,571¥ 17,591¥ 19,357$  205,821

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Consolidated Statement of Comprehensive Income
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years Ended March 31, 2012 and 2013
(Thousands of
U.S. dollars)(Note 1)

(Millions of yen)

Income before Minority Interests

2012

2013

2013

¥24,141¥21,762$231,392

Other Comprehensive Income (Note 19):
(961)

4,161

44,242

Deferred gains or losses on hedges

50

(167)

(1,779)Valuation difference on available-for-sale securities
Revaluation reserve for land

663

(0)

(1)

Share of other comprehensive income of affiliates accounted
for using the equity method

(154)

839

8,929

Total other comprehensive income

(402)

4,833

51,391

Comprehensive Income (Note 19)¥23,739¥26,595$282,783¥17,187¥24,185$257,159

6,552

2,410

25,624(Breakdown)Comprehensive income attributable to shareholders of the parent
Comprehensive income attributable to minority interests
See notes to consolidated financial statements.

53

54

Nomura Real Estate Holdings, Inc. Annual Report 2013

Consolidated Statement of Changes in Net Assets
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years Ended March 31, 2012 and 2013
Millions of yen
Valuation Deferred
Foreigndifference on gains or Revaluation currency Subscription
Treasury available-for- losses on reserve for translationrights tostock sale securities hedges
landsharesadjustments

Number ofshares issued

Capitalstock

CapitalsurplusRetainedearnings

Balance at April 1, 2011

190,387,000¥115,574¥92,904¥ 91,497¥(2)¥(1,076)¥355¥5,962¥(677)

Issuance of new shares

69,900

52

51

—

—

—

—

—

—

Dividends from surplus

—

—

—

(4,760)

—

—

—

—

Net income

—

—

—

17,591———

Purchases of treasury stock

—

—

—

—

(0)

—

—

Net changes of items other thanshareholders’ equity

Minority
interests

Total net
assets¥646¥52,183¥357,366

—

—

104

—

—

—

(4,760)

—

—

—

—

17,591

—

—

—

—

(0)

—

—

—

—

—

(964)

50

663

(154)

67

6,524

6,186

Balance at March 31, 2012

190,456,900¥115,626¥92,955¥104,328¥(2)¥(2,040)¥405¥6,625¥(831)¥713¥58,707¥376,486

Balance at April 1, 2012

190,456,900¥115,626¥92,955¥104,328¥(2)¥(2,040)¥405¥6,625¥(831)¥713¥58,707¥376,486

Issuance of new shares

138,600

102

102

—

—

—

—

—

—

—

—

204

Dividends from surplus

—

—

—

(5,238)

—

—

—

—

—

—

—

(5,238)Net income

—

—

—

19,357

—

—

—

—

—

—

—

19,357Purchases of treasury stock

—

—

—

—

(0)

—

—

—

—

—

—

(0)

Reversal of revaluation
reserve for land

—

—

—

(599)

—

—

—

—

—

—

—

(599)

Net changes of items other thanshareholders’ equity
Balance at March 31, 2013

—

—

—

—

—

4,156

(167)

599

840

239

2,399

8,066

190,595,500¥115,728¥93,057¥117,848¥(2)¥2,116¥238¥7,224¥9¥952¥61,106¥398,276

Valuation Deferred
Foreigndifference on gains or Revaluation currency Subscription
Treasury available-for- losses on reserve for translationrights tostock sale securities hedges
landsharesadjustments

Minority
interests

Total net
assets$624,208$4,003,050(Thousands of U.S. dollars) (Note 1)

Capitalstock

CapitalsurplusRetainedearnings

Balance at April 1, 2012

$1,229,409$988,362$1,109,290$(23)$(21,690) $4,310

Issuance of new shares

1,087

1,087

—

—

—

—

—

—

—

—

2,174

Dividends from surplus——(55,698)

—

—

—

—

—

—

—

(55,698)

Net income——

205,821

—

—

—

—

—

—

—

205,821

Purchases of treasury stock

—

—

—

(2)

—

—

—

—

—

—

(2)

Reversal of revaluation
reserve for land——

(6,369)

—

—

—

—

—

—

—

(6,369)44,188(1,779)

6,369

8,929

2,535

25,51185,753$22,498 $2,531$76,812$88$10,117$649,719$4,234,729

Net changes of items other thanshareholders’ equity
Balance at March 31, 2013

—

—

—

—

$1,230,496$989,449$1,253,044$(25)$70,443$(8,841) $ 7,582

See notes to consolidated financial statements.
Note: ‌The number of issued shares outstanding increased by 69,900 shares and 138,600 shares in the years ended March 31, 2012 and 2013, respectively, due to theexercise of stock options.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Consolidated Statement of Cash Flows
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years Ended March 31, 2012 and 2013
(Thousands of
U.S. dollars)(Note 1)

(Millions of yen)
2012

2013

2013

¥24,968
13,535
9,723
(218)
(5)
101
(230)
(37)
(419)
(2,195)(1,156)
14,3291,084
36,5296,700(6,730)(14,813)(9,002)
72,164
1,396(14,327)(15,356)
43,877¥34,994
13,514
11,405
(336)
(2)
(6)
(328)
72
(468)
(110)
(3,543)
12,542(72)(2,315)
12,317
12,996
6,776
13,592
111,028
2,557(12,837)(11,453)
89,295$372,077
143,687
121,266(3,569)(26)(59)(3,483)771(4,979)(1,170)(37,673)
133,350(770)(24,611)130,959
138,187
72,051
144,520
1,180,528
27,189(136,495)(121,775)
949,447

Cash Flows from Investing Activities:
Purchase of investment securities
Proceeds from sales and liquidation of investment securities
Purchase of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets
Payments for loans receivableCollection of loans receivable
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Repayments of lease and guarantee deposits received
Proceeds from lease and guarantee deposits received
Other, net
Net cash provided by (used in) investing activities

(81)
3,846
(14,098)
15,070(4)
18(1,995)
3,614(4,102)
2,515
3,026
7,809

(371)
393
(18,963)
7,832
(8)
25
(996)
6,830
(4,792)
3,893
3,569(2,588)(3,947)
4,179(201,631)
83,275(87)
262(10,588)
72,626(50,954)
41,39437,951(27,520)

Cash Flows from Financing Activities:
Net increase (decrease) in short-term loans payable
Decrease in commercial papers
Repayments of finance lease obligations
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of common stock
Proceeds from issuance of common stock to minority shareholders
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
Net cash used in financing activities(20,500)(20,000)(162)
98,392(116,240)0—(0)(4,760)(26)(63,296)

7,000
—
(196)
39,900(136,193)85
6
0(5,238)(30)(94,666)

74,428—(2,080)424,242(1,448,095)
902
63
(1)
(55,697)(318)(1,006,556)

Net Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of the Fiscal Year
Cash and Cash Equivalents at End of the Fiscal Year (Note 2(3))(11,610)82,066¥70,456(7,959)70,456¥62,497(84,629)
749,136$664,507

Cash Flows from Operating Activities:
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Gain on sales of property, plant and equipment
Equity in earnings of affiliates
Increase (decrease) in allowance for doubtful accounts
Decrease in provision for retirement benefits
Increase (decrease) in provision for loss on business liquidation
Decrease in provision for loss on subleasing business
Decrease in provision for loss on disaster
Interest and dividends income
Interest expenses
Decrease (increase) in notes and accounts receivable–trade
Decrease (increase) in inventories
Decrease in equity investments
Increase (decrease) in notes and accounts payable–trade
Increase (decrease) in deposits received
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities

See notes to consolidated financial statements.

55

56

Nomura Real Estate Holdings, Inc. Annual Report 2013

Notes to Consolidated Financial Statements
Nomura Real Estate Holdings, Inc. and its subsidiaries
March 31, 2012 and 2013

1.

Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated financial statements of Nomura Real Estate Holdings, Inc. (the “Company”) and its subsidiaries(collectively, the “Group”) have been prepared in accordance with the provisions set forth in the Financial Instruments andExchange Act of Japan and its related accounting regulations, and accounting principles generally accepted in Japan (“Japanese
GAAP”), which are different in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards.
The accompanying consolidated financial statements have been compiled from the consolidated financial statements of theCompany prepared in accordance with Japanese GAAP, and translated into English for the benefit of readers outside Japan. In
addition, the notes to the consolidated financial statements include information which may not be required under Japanese
GAAP but is presented herein as additional information.
The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers using theprevailing exchange rate at March 31, 2013 of ¥94.05=U.S.$1. The approximate rate of exchange prevailing at June 27, 2013was ¥97.64=U.S.$1. These translations should not be construed as representations that the Japanese 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.

Significant Accounting Policies(1) Principles of Consolidation and Accounting for Investments in Affiliates
The accompanying consolidated financial statements include the accounts of the Group that the Company controls directly or
indirectly. Investments in companies over which the Company exercises significant influence in terms of their operating andfinancial policies have been accounted for using the equity method.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit
included in the assets resulting from transactions among the consolidated companies has been eliminated.

(2) Foreign Currency Translation
All current and non-current accounts denominated in foreign currencies are translated into Japanese yen at the spot exchange
rates in effect at the consolidated balance sheet date. Differences arising from such translation are recognized as gain or loss.
The asset and liability accounts of the overseas subsidiaries and affiliates are translated into Japanese yen at the exchange
rates prevailing at the respective balance sheet dates of the subsidiaries and affiliates and the revenue and expense accounts aretranslated into Japanese yen at the average rates of exchange for the year. Differences arising from such translation are presented as “Foreign currency translation adjustments” in Net Assets.

(3) Cash and Cash Equivalents
In preparing the Consolidated Statement of Cash Flows, cash on hand, readily-available deposits and short-term, highly-liquid
investments with a maturity of three months or less at the time of purchase and with an insignificant risk of market value fluctuation are considered to be cash and cash equivalents.
A reconciliation between cash and deposits in the Consolidated Balance Sheet and cash and cash equivalents is presented in
Note 13.

(4) Recognition of Revenues and Related Costs
The percentage-of-completion method is applied when the outcome of the construction activity during the fiscal year is deemedcertain in the course of the activity (percentage of completion is calculated by dividing the related cost incurred by the estimatedtotal cost), otherwise the completed-contract method is applied.

(5) Inventories
Inventories are mainly stated at cost, determined by the specific identification cost method (the amounts of inventories in theaccompanying Consolidated Balance Sheet are computed based on the write-down method reflecting decreased profitability).
Write-downs of inventories as a result of a decrease in profitability for the years ended March 31, 2012 and 2013 were
¥8,382 million and ¥2,964 million ($31,515 thousand), respectively and recognized in operating cost.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

(6) Short-term Investments and Investment Securities
Held-to-maturity debt securities are stated at amortized cost by the straight-line method.
Available-for-sale securities with market value are stated at fair market value based on market quotations at the balance
sheet date.
Unrealized gains and losses are reported, net of the applicable taxes, as a separate component of Net Assets. Cost of securities sold is determined by the moving-average method. Available-for-sale securities without market value are stated at cost by
the moving-average method.

(7) Property and Equipment (except for leased assets)
Depreciation of property and equipment is computed mainly by the straight-line method.
Estimated useful lives used in the computation of depreciation are generally as follows:
Buildings and structures 2 to 65 years(8) Software (except for leased assets)
Costs of software for internal use are amortized using the straight-line method over an estimated useful life of five years.

(9) Leased Assets
Leased assets are depreciated using the straight-line method, assuming the lease period to be the useful life and the residual
value to be zero.
Finance leases, other than those that transfer ownership, that started on or before March 31, 2008, are accounted for as
operating leases.

(10) Amortization of Goodwill
Goodwill is amortized using the straight-line method over a period of 14 to 20 years.

(11) Allowance for Doubtful Accounts
In order to prepare for possible bad debt losses on notes and accounts receivable and loans, allowance for doubtful accounts isprovided at an amount calculated on the basis of a historical bad debt ratio for a certain reference period for normal claims, plus
an estimated uncollectible amount determined on the basis of individual assessments for specific claims with potential losses.

(12) Income Taxes
Current income taxes are stated at the estimated amount payable during each fiscal year for corporation, enterprise and inhabitants’ taxes in the Consolidated Statement of Income.
The tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting andincome tax purposes is recognized as deferred income taxes.

(13) Provision for Retirement Benefits
In order to provide for employees’ retirement benefits, the Group account for the liability for retirement benefits based on theestimated amounts of projected benefit obligation and plan assets at the end of the fiscal year.
Prior service cost is accounted for as an expense calculated using the straight-line method based on a certain number ofyears (i.e., 10 years), which is equal to or less than the average remaining service period of the employees in service during theperiod in which it arises.
Actuarial gain or loss is recognized in the Consolidated Statement of Income from the year following the fiscal year in which
it arises. The gain or loss recognized in each fiscal year is calculated using the straight-line method based on a certain number ofyears (i.e. 10 years), which is equal to or less than the average remaining service period of the eligible employees.

57

58

Nomura Real Estate Holdings, Inc. Annual Report 2013(14) Per Share Information
Basic net income per share is computed by dividing the net income available for distribution to shareholders of common stock by
the weighted-average number of shares of common stock outstanding during each fiscal year. Diluted net income per share iscomputed by dividing the net income available for distribution to the shareholders by the weighted-average number of shares ofcommon stock outstanding during each fiscal year assuming full conversion of convertible bonds and full execution of warrants.
Net assets per share for the years ended March 31, 2012 and 2013 were ¥1,664.78 and ¥1,764.05 ($18.76), respectively.
Net income per share for the years ended March 31, 2012 and 2013 was ¥92.38 and ¥101.61 ($1.08), respectively.
Diluted net income per share for the years ended March 31, 2012 and 2013 was ¥92.29 and ¥101.44 ($1.08), respectively.

(15) Land Revaluation
Under the “Law Concerning Revaluation Reserve for Land” promulgated on March 31, 1998, the Company revalued its land
held for business use. The tax amount for the difference between the appraisal value and the carrying amount is accounted for
as “Deferred tax liabilities for land revaluation” in Noncurrent Liabilities and the difference net of such tax amount is recorded as“Revaluation reserve for land” in Net Assets.
Method of revaluation:
The value of land is determined based on a reasonable adjustment to the assessed value of the fixed assets as stipulated in Item
3, Article 2 of the “Enforcement Ordinance Concerning Land Revaluation” (Ordinance No. 119 enacted on March 31, 1998).
Date of revaluation: March 31, 2002
At March 31, 2012 and 2013, market value was not less than book value after revaluation.

(16) Derivative Financial Instruments
Net assets and liabilities arising from derivative financial instruments are measured at fair value, with any changes in unrealized
gain or loss credited or charged to income. Hedging transactions are accounted for using deferral hedge accounting, which
requires the unrealized gains or losses to be deferred as assets or liabilities until the losses or gains on the underlying hedged
items are recognized.
For interest rate swaps that meet certain hedging criteria, the Group applies exceptional treatment where the Group does
not record these instruments at fair value but charges or credits the net cash flows from these instruments to the interest arisingfrom the hedged borrowings and corporate bonds. However, for currency swaps that meet certain hedging criteria, the currency
swap contracts (the “Contracts”) and the securities denominated in foreign currencies (the “Hedged items”) are accounted forin the following manner:(a) If the Contracts are executed to hedge an existing the Hedged items,(i) the difference, if any, between:• the Japanese yen amount of the Hedged items translated using the spot rate at the inception date of the Contracts and• the book value of the Hedged items
is recognized in the Consolidated Statement of Income in the period which includes the inception date, and(ii) the discount or premium on the Contracts (that is, the difference between:• the Japanese yen amount of the Contracts translated using the contracted swap rate and• the Japanese yen amount of the Contracts translated using the spot rate at the inception date of the Contracts)
is recognized over the term of the Contracts.
(b) If the Contracts are executed to hedge a future transaction denominated in a foreign currency, the swap transaction will be recorded using the contracted swap rate, and no gains or losses on the Contracts are recognized.

(17) Provision for Loss on DisasterIn order to provide for the expected expenditure for recovery costs, etc. related to the Great East Japan Earthquake, the Company recognized a provision for loss on disaster at an estimated amount as of the end of the fiscal year.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

(18) Accounting Standards Not Applied“Accounting Standard for Retirement Benefits” (Accounting Standards Board of Japan (ASBJ) Statement No. 26 issued on May
17, 2012) and “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25 issued on May 17, 2012)(a) Outline
Under the revised accounting standards, actuarial gains and losses and prior service costs shall be recognized within net assets
on the consolidated balance sheet net of tax effects, and the accumulated deficit or surplus shall be recognized as a liability orasset. Also, regarding the estimated amount of retirement benefits and the method of attributing them to accounting periods, inaddition to the straight-line method, the plan’s benefit formula may be used and the method of calculating the discount rate has
been revised.
(b) Scheduled date of adoption
These accounting standards will be adopted for the consolidated financial statements effective to the end of the fiscal year
ending March 31, 2014. However, the revision of the period attribution method of the projected amount of retirement benefits
will be applied from the beginning of the fiscal year ending March 31, 2015. As the transitional treatment is set forth in theaccounting standards, they will not be applied retroactively to consolidated financial statements of prior periods.
(c) Impact of adoption of the new accounting standards
The impact on the consolidated financial statements as a result of the adoption of these accounting standards is currently
under review.

3.

Financial Instruments(1) Policies on Financial Instruments
It is the policy of the Group to limit its fund management to safe and highly liquid deposits while raising funds primarily throughloans from financial institutions and the issuance of corporate bonds. Derivatives are utilized for hedging against the risks
described below not for speculative purposes.

(2) Details of Financial Instruments and Risks
Short-term investment securities comprise safe and highly liquid negotiable deposits held for the purpose of managing temporary surplus funds.
Equity investments and investment securities primarily consist of stocks, investment units, units in an investment trust, preferred investments and investments in silent partnerships held for the purpose of business promotion, all of which are exposed
to market price fluctuation and issuer credit risk. Currency swaps and forward exchange contracts are used to hedge risks fromexchange rate fluctuations on securities in foreign currencies. Interest rate swaps are used to hedge risks arising from fluctuations in interest rates on long-term borrowings.
Derivative transactions used by the Company are as follows:
Hedging instruments

Hedged items

Interest rate swap contracts

Borrowings

Currency swaps and foreign exchange forward contracts

Securities denominated in foreign currencies

The Group evaluate hedge effectiveness by comparing the cumulative changes in market fluctuations or in cash flows of theHedged items to the corresponding changes in the hedging derivative instruments. However, the Group does not evaluate hedge
effectiveness of interest rate swaps for which the Group applies the exceptional treatment.

(3) Policies and Systems for Risk Management
The Company regularly checks the market value of equity investments and investment securities, as well as the financial conditions of their issuers.
The Finance Department conducts execution of derivative transactions and risk management based on the risk management policies and operational plan determined by the Director in charge of Finance. The Finance Department also reports thestatus of transactions and risk information to the Director on a regular basis. The consolidated subsidiaries conduct executionof derivative transactions and risk management in accordance with internal policies. The Company considers there is no substantial credit risk associated with these transactions because of the transactions being conducted only with highly creditworthy
financial institutions.

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Nomura Real Estate Holdings, Inc. Annual Report 2013

Based on the reports from each division of the Group, the Finance Department of the Company creates and updates cash
flow plans in a timely manner, managing liquidity risk through such methods as ensuring that a specific amount of on-handliquidity is always available.

(4) Supplemental Information on Fair Values
The fair values of financial instruments are based on their market prices. The fair values of financial instruments with no available
market prices are determined by using prices calculated in a reasonable manner. However, as various factors are incorporated
into these calculations, the resulting values may vary if different assumptions are provided. The contract amount shown in Note
14. Derivative Financial Instruments does not represent the market risk regarding the derivative transactions.

(5) Fair Values of Financial Instruments
The book values, fair values and differences of financial instruments as of March 31, 2012 and 2013 are as follows. Items forwhich fair value is extremely difficult to determine have not been included.
Book value

Fair value

Difference

2012(Millions ofyen)(Millions ofyen)(Millions ofyen)(1) Cash and deposits¥ 45,458¥ 45,458¥—(2) Short-term investment securities

25,00025,000—(3) Investment securities 1

31,07531,09318
18

Total assets

101,533

101,551(1) Short-term loans payable 2

34,50034,500—(2) Bonds payable

33,00034,133

1,133(3) Long-term loans payable 2

691,062

705,713

14,650Total liabilities

758,562

774,346

15,783

Derivative transactions 3¥     11¥     11

¥—

2013

(Millions ofyen)(Thousands of
U.S. dollars)(Millions ofyen)(Thousands of
U.S. dollars)(Millions ofyen)(Thousands of
U.S. dollars)(1) Cash and deposits$—Book value

Fair value

Difference¥ 42,499$  451,876¥ 42,499$  451,876¥—(2) Short-term investment securities

20,000212,653

20,000212,653——(3) Investment securities 1

31,264332,419

31,294

332,734

30

315
315

Total assets

93,763996,948

93,793997,263

30(1) Short-term loans payable 2

41,500441,255

41,500441,255——(2) Bonds payable

33,000350,877

34,426

366,035

1,426

15,158(3) Long-term loans payable 2594,769

6,323,964

609,261

6,478,057

14,492

154,093

Total liabilities

669,269

7,116,096

685,187

7,285,347

15,918169,251

Derivative transactions 3¥      2$       20¥      2$       20

¥—

$—

Notes: 1. Includes government bonds, etc. presented as lease and guarantee deposits on the Consolidated Balance Sheet.
2. Current portion of long-term loans payable is included in (3) Long-term loans payable.
3.	‌For derivative transactions, stated values are the net amounts of receivables and payables arising from the transactions. Figures in parentheses
are liability amounts.

Notes:
1. Investments in non-consolidated subsidiaries and affiliates are as follows:
Investment securities (investments in silent partnership, etc.)¥23,339 million as of March 31, 2012
¥20,249 million ($215,300 thousand) as of March 31, 2013
2. Method of measuring the fair value of financial instruments
Assets(1) Cash and deposits
As these instruments are settled within a short term and their fair values and book values are nearly identical, their bookvalues are assumed as their fair values.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

(2) Short-term investment securities
As these instruments, primarily comprising negotiable deposits, are settled within a short term and their fair values and bookvalues are nearly identical, their book values are assumed as their fair values.
(3) Investment securities
For stocks and investment units, fair values are determined mainly at the price quoted on an exchange. For investment trusts,
fair values are determined at an amount reasonably calculated based on a reasonable estimate of the management. Please
see Note 4. Securities for information on those securities in (2) and (3).
Liabilities(1) Short-term loans payable
As these instruments are settled within a short term and their fair values and book values are nearly identical, their bookvalues are assumed as their fair values.
(2) Bonds payable
Market prices of the bonds issued by the Company.
(3) Long-term loans payable
For long-term loans payable, fair value is determined by discounting the total amount of principal and interest at the assumed
interest rate on new loans of the same type. Long-term loans with floating interest rates are hedged by interest rate swaps
subject to the exceptional treatment, and, therefore, the fair value is determined by discounting the total amount of interest
and principal together with cash flow generated by the interest rate swap at the interest rate assumed in a reasonable manner
for new loans of the same type.
Derivatives
Please see Note 14. Derivative Financial Instruments for information on derivative transactions.
3. Financial instruments for which fair value is extremely difficult to determineBook value
2012(Millions of yen)

Investment in silent partnership¥57,570
Book value

2013

Investment in silent partnership(Millions of yen)(Thousands of
U.S. dollars)¥45,419$482,921

Financial instruments for which there is no fair value and for which the fair value is extremely difficult to determine are
not included in (3) Investment securities.
4. Redemption schedule for financial assets with maturities
Within 1 year

1–5 years

5–10 years

Over 10 years

2012(Millions ofyen)(Millions ofyen)(Millions ofyen)(Millions ofyen)Cash and deposits¥45,367

¥—

¥—

¥—

—

—

—

—

Short-term investment
securities
Held-to-maturity debt
securities

—

—

—

—

Government andmunicipal bonds, etc.

5

297

498

—

Corporate bonds

—

—

—

—

—

—

—

—

—

—

—

—

Available-for-salesecurities with maturities
Debt securities
OthersTotal

25,000———¥70,372

¥297

¥498

¥—

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Nomura Real Estate Holdings, Inc. Annual Report 2013

Within 1 year

1–5 years

5–10 years

Over 10 years

2013(Millions ofyen)(Thousands of
U.S. dollars)(Millions ofyen)(Thousands of
U.S. dollars)(Millions ofyen)(Thousands of
U.S. dollars)(Millions ofyen)(Thousands of
U.S. dollars)

Cash and deposits¥42,416$450,990

¥—

$—

¥—

$—

¥—

$—

Short-term investment
securities and investment
securities

—

—

—

—

—

—

—

—

Held-to-maturity debt
securities

—

—

—

—

—

—

—

—

Government andmunicipal bonds, etc.

—

—

320

3,402

604

6,426

—

—

Corporate bonds

—

—

—

—

—

—

—

—

—

Available-for-salesecurities with maturities
Debt securities
Others
Total

—

—

—

—

—

—

—

20,000212,653

—

—

—

—

—

—

¥62,416$663,643¥320$3,402¥604$6,426¥—$—

5. Repayment schedule for bonds payable and long-term loans payable at March 31, 2012 and 2013
Within 1 year

1–2 years

2–3 years

3–4 years

2012(Millions ofyen)(Millions ofyen)(Millions ofyen)(Millions ofyen)

Short-term loans payable¥ 34,500

¥—

¥—

¥—

—

—

10,0003,000

Long-term loans payable

113,743

138,459

110,409112,878

Total¥148,243¥138,459¥120,409¥115,878

Bonds payable

4–5 years

Short-term loans payable
Bonds payable

Over 5 years(Millions ofyen)(Millions of
yen)

¥—

¥—

—

20,000Long-term loans payable

94,473

121,100

Total¥94,473¥141,100

2013(Millions ofyen)

Short-term loans payable¥ 41,500 $  441,254

Within 1 year

1–2 years(Thousands of
U.S. dollars)(Millions ofyen)(Thousands of
U.S. dollars)¥— $—2–3 years(Millions ofyen)

3–4 years(Thousands of
U.S. dollars)(Millions ofyen)(Thousands of
U.S. dollars)¥— $—

¥—

$—

—

—

10,000106,326

3,000

31,898——Long-term loans payable

126,085

1,340,619

106,135

1,128,498

115,748

1,230,711

88,700943,115

Total¥167,585 $1,781,873¥118,748 $1,262,609¥88,700$943,115

Bonds payable

4–5 years¥116,135 $1,234,824
Over 5 years(Millions ofyen)(Thousands of
U.S. dollars)(Millions ofyen)(Thousands of
U.S. dollars)

Short-term loans payable

¥—

$—

¥— $—Bonds payable

10,000106,326

10,000106,326

Long-term loans payable

59,300630,516

98,8001,050,505

Total¥69,300$736,842¥108,800 $1,156,831

Annual Report 2013 Nomura Real Estate Holdings, Inc.

4.

Securities
The following tables summarize the acquisition cost, book value and fair value of securities held by the Group as of March 31,
2012 and 2013.

(1) Held-to-maturity Debt Securities with Fair Value(Millions of yen)
2012

Book value

Fair value

Difference

Government and municipal bonds, etc.

¥729

¥747

¥18

Subtotal

729

747

18

Government and municipal bonds, etc.

76

76

0

Subtotal

76

76

0

¥805

¥823

¥18

Securities whose fair value exceeds book value:

Securities whose fair value does not exceed book value:

Total(Millions of yen)
2013

(Thousands of U.S. dollars)Book value

Fair value

DifferenceBook value

Fair value

Difference

Government and municipal bonds, etc.

¥720

¥752

¥32

$7,658$ 7,998$340

Subtotal

720

752

32

7,658

7,998

340

(24)

Securities whose fair value exceeds
book value:

Securities whose fair value does notexceed book value:
Government and municipal bonds, etc.

214

212

(2)

2,274

2,250

Subtotal

214

212

(2)

2,274

2,250

(24)

Total

¥934

¥964

¥30

$9,932$10,248$316(2) Available-for-sale Securities with Fair Value(Millions of yen)
Acquisition
cost

Book value

Difference

Stocks¥   136¥   482

¥346

Other

3,144

3,244

100

Subtotal

3,280

3,726

446

2012

Securities whose book value exceeds acquisition cost:

Securities whose book value does not exceed acquisition cost:
Stocks

507

376

(131)

Other

47,79043,992(3,798)Subtotal

48,29744,368(3,929)Total¥51,577¥48,094¥(3,483)(Millions of yen)2013

Acquisition
cost

Book value(Thousands of U.S. dollars)
Difference

Acquisition
cost

Book value

Difference$ 6,349

Securities whose book value exceeds
acquisition cost:
Stocks¥   637¥ 1,234¥  597$  6,773$ 13,122

Other

20,48023,686

3,206

217,751

251,842

34,091

Subtotal

21,11724,9203,803

224,524

264,964

40,440

Securities whose book value does notexceed acquisition cost:
Stocks

6

5

(1)

63

51

(12)

Other

20,46920,362(107)

217,640

216,504(1,136)

Subtotal

20,47520,367(108)

217,703

216,555(1,148)

Total¥41,592¥45,287¥3,695$442,227$481,519$39,292

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Nomura Real Estate Holdings, Inc. Annual Report 2013(3) Sales of Available-for-sale Securities
The table below presents sales of available-for-sale securities and corresponding aggregate gains and aggregate losses for theyear ended March 31, 2012. There were no sales of available-for-sale securities during the year ended March 31, 2013.
2012(Millions of yen)

5.

Aggregate
gains

Aggregate
losses¥   38

¥0

¥29

5,000

0

0

¥5,038

¥0

¥29

Type

Sales amount

Stocks
Other
Total

Short-term Loans Payable and Long-term Loans Payable
Short-term loans payable as of March 31, 2012 and 2013 mainly consisted of borrowings from banks with a weighted-averageinterest rate of 0.4% in 2012 and 2013.
Long-term loans payable and bonds payable as of March 31, 2012 and 2013 are summarized as follows:(Thousands of
U.S. dollars)(Millions of yen)
2012

2013

2013

Unsecured bonds (1.7%), due 2014

¥10,000¥10,000$106,327

Unsecured bonds (2.1%), due 2017

10,00010,000106,327

Unsecured bonds (2.0%), due 2020

10,00010,000106,327

Secured bonds (1.8%), due 2016

3,000

3,000

31,898Long-term loans payable

1

Secured

41,301

18,080192,241

Unsecured

649,761

576,689

6,131,722

1,385

1,278

13,586

Subtotal

725,447

629,047

6,688,428

Less amounts due within one year

(113,929)(126,252)(1,342,389)¥611,518¥502,795$5,346,039

Lease obligations 2

Notes: 1.	‌Long-term loans payable as of March 31, 2012 and 2013 mainly consisted of borrowings from domestic Japanese banks and life insurancecompanies with weighted-average interest rates of 1.1% in 2012 and 1.0% in 2013.
2.	‌The weighted-average interest rate for lease obligations is not shown because for some consolidated subsidiaries the lease obligations
recorded in the Consolidated Balance Sheet are the amounts before deducting the interest equivalents included in the total leasecommitments.

The following table shows the maturities of long-term loans payable subsequent to March 31, 2013.
(Millions of yen)(Thousands of
U.S. dollars)

2014¥126,085$1,340,619

2015

106,135

1,128,498

2016

115,748

1,230,711

Years ending March 31

2017

88,700943,1152018 and thereafter

158,100

1,681,021¥594,768$6,323,964

The following table shows the maturities of lease obligations subsequent to March 31, 2013.
(Millions of yen)(Thousands of
U.S. dollars)

2014¥  167$ 1,769

2015

117

1,249

2016

90

960

2017

59

626

2018 and thereafter

845

8,982

¥1,278$13,586

Years ending March 31

Annual Report 2013 Nomura Real Estate Holdings, Inc.

6.

Pledged Assets and Secured Liabilities
Pledged assets and secured liabilities at March 31, 2012 and 2013 are summarized as follows:(1) Pledged Assets and Secured Liabilities(Thousands of
U.S. dollars)(Millions of yen)
2012

2013

2013

¥ 8,758¥  8,612$ 91,571

7,455

7,455

79,265

37

28

302

¥16,250¥16,095$171,138¥   537¥293$  3,110

Pledged assets:
Buildings and structures
Land
Other property and equipment
Secured liabilities:
Short-term loans payable(Including the current portion of long-term loans payable)
Long-term loans payable(Repayment periods of more than one year)

350

57

606

Lease and guarantee deposits received

74

67

719

¥   961¥   417$  4,435

Total(2) Pledged Assets and Secured Liabilities for Non-recourse Loans(Thousands of
U.S. dollars)(Millions of yen)
2012

2013

2013

Pledged assets:
Real estate for sale

¥ 4,484¥—

Buildings and structures

10,346

5,893

62,660Land

61,377

21,376227,281

Other property and equipment
Total

$—

43

48

514

¥76,250¥27,317$290,455$ 46,350

Secured liabilities:
Short-term loans payable¥   233¥ 4,359

Long-term loans payable

40,181

13,372

142,175

Total¥40,414¥17,731$188,525

These liabilities have arisen in relation to Flagship Building Co., Ltd. and Metro Hongo, LLC, and the repayment obligationsof these liabilities are limited to the assets of said companies including the pledged assets stated above. TJ Properties Special
Purpose Company, Ltd. has, pursuant to the provisions of Article 128 of the Act on Securitization of Assets (Act No. 105 of1998), pledged its assets as general security for specified corporate bonds of ¥3,000 million ($31,898 thousand) and the repayment obligations of said company are limited to these pledged assets.

(3) ‌As of March 31, 2013, cash and deposits in the amount of ¥2 million ($21 thousand) and investment securities in the amount of ¥2 million ($21 thousand) are pledged as collateral for trade payables and a portionof liabilities of investee companies, respectively.

65

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Nomura Real Estate Holdings, Inc. Annual Report 20137.

Retirement Benefits(1) Outline of Retirement Benefit Plans
The Company does not have a retirement benefit plan. Among its consolidated subsidiaries that have adopted defined benefit
plans, two subsidiaries have a lump-sum pension plan and a defined benefit corporate pension plan and one of them has alsoestablished a retirement benefit trust. Six subsidiaries have adopted only a lump-sum pension plan. Also, one consolidated subsidiary has a defined benefit lump-sum pension plan as well as a defined contribution pension plan. In certain cases, additional
retirement benefit payments may be made. In order to provide for employees’ retirement benefits, the Group account for theliability for retirement benefits based on the estimated amounts of projected benefit obligation and plan assets at the end of the
fiscal year. The retirement benefit obligation is allocated to each period by using the straight-line method over the estimatedservice periods of the employees. Prior service cost is accounted for as an expense calculated by using the straight-line method
based on a certain number of years (i.e., 10 years), which is equal to or less than the average remaining service period of theemployees in service during the period in which it arises. Actuarial gains and losses are accounted for as an expense allocated toeach period by using the straight-line method based on a certain number of years (mainly 10 years), which is equal to or lessthan the average remaining service period of the employees in service during the fiscal year in which it arises, starting from thefollowing fiscal year.

(2) Details of Retirement Benefit Obligation(Thousands of
U.S. dollars)(Millions of yen)

(1) Projected benefit obligation(2) Plan assets at fair value(3) Unfunded retirement benefit obligation (1)+(2)(4) Unrecognized actuarial gain or loss(5) Unrecognized prior service cost(6) Provision for retirement benefits (3)+(4)+(5)

2012

2013

¥(21,822)¥(26,800)$(284,960)

2013

9,214

11,614

123,491(12,608)(15,186)(161,469)

352

2,862

30,430(3,363)(2,967)(31,549)¥(15,619)¥(15,291)$(162,588)

Note: Certain consolidated subsidiaries applied a simplified method to calculate their projected benefit obligation.

(3) Details of Retirement Benefit Expenses(Thousands of
U.S. dollars)(Millions of yen)

(1) Service cost

2012

2013

2013

¥1,307¥1,346$14,316(2) Interest cost

389

404

4,292

(3) Less: Expected return on plan assets

(157)

(183)

(1,949)(4) Amortization of actuarial gain or loss

635

344

3,656

(5) Amortization of prior service cost

(4,207)

(396)

(396)

(6) Additional retirement benefit payments

71

37

393

(7) Other

160

171

1,819

¥2,009¥1,723$18,320

Retirement benefit expenses

Notes: 1. Retirement benefit expenses of consolidated subsidiaries applying a simplified method are included in “(1) Service cost.”
2.	‌“(7) Other” shows the contributions paid to defined contribution pension plans. Certain consolidated subsidiaries use a simplified method
to calculate their projected benefit obligation.

Assumptions used in accounting for the retirement benefit plans are summarized as follows:
2012

8.

2013

Discount rate

2.00%

1.0~1.3%

Expected rate of return on plan assets

2.00%

2.00%

Reclassification of Assets
As a result of a review of asset classification during the fiscal year ended March 31, 2013, ¥29,504 million ($313,708 thousand)of inventories was reclassified as property, plant and equipment. There was no reclassification of assets in the fiscal year ended
March 31, 2012.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

9.

Gain on Sales of Property and Equipment
The breakdown of gain on sales of property and equipment for the fiscal years ended March 31, 2012 and 2013 is as follows:
Gain on sales(Thousands of
U.S. dollars)(Millions of yen)
2012

Land
Buildings
Total

2013

2013

¥1,029

¥158

(811)

178

$1,6771,892¥  218¥336$3,569

10. Impairment Loss
The Group recognized impairment loss on the following groups of assets for the fiscal years ended March 31, 2012 and 2013:2012

Primary use

Leased assets
Others(16 locations in total)

Type

Buildings
Land
Tangible fixed assets–others

Location

Fukuoka-shi, Fukuoka Prefecture and other locations

Assets of the Group are grouped into the smallest unit that generates identifiable cash flows that are largely independent ofcash flows from other assets or groups of assets. The headquarters building and certain other assets are considered to be sharedassets. As a result, with respect to sixteen groups of assets that the Group plans to sell or with negative operating profit forseveral consecutive periods, the carrying amount has been reduced to the recoverable amount and the amount of reduction has
been recognized as an impairment loss of ¥9,723 million in extraordinary loss for the fiscal year under review. The impairment
loss is broken down into an impairment loss of ¥6,640 million on land and an impairment loss of ¥3,083 million on buildings
and tangible fixed assets–others. The recoverable amount of these groups of assets is measured at the net realizable value orvalue in use and the net realizable value is, in turn, determined based on the expected sales price and the appraisal value provided by real estate appraisers. Value in use of the assets is calculated by discounting future cash flows at a rate of 4.8%.
2013

Primary use

Leased assets
Others(7 locations in total)

Type

Buildings
Land
Tangible fixed assets–others

Location

Osaka-shi, Osaka Prefecture and other locations

Assets of the Group are grouped into the smallest unit that generates identifiable cash flows that are largely independent ofcash flows from other assets or groups of assets. The headquarters building and certain other assets are considered to be sharedassets. As a result, with respect to seven groups of assets the profitability of which has dropped significantly due to the deterioration of the market conditions and the decline in rent level or that the Group plans to sell, the carrying amount has been
reduced to the recoverable amount and the amount of reduction has been recognized as an extraordinary loss of ¥11,405
million ($121,266 thousand) for the fiscal year ended March 31, 2013. The impairment loss is broken down into an impairment
loss of ¥10,407 million ($110,652 thousand) on land and an impairment loss of ¥998 million ($10,614 thousand) on buildings
and tangible fixed assets–others. The recoverable amount of these groups of assets is measured at the net realizable value andthe net realizable value is determined based on the expected sales price and the appraisal value provided by real estateappraisers.

67

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Nomura Real Estate Holdings, Inc. Annual Report 2013

11. Income Taxes
The statutory tax rate in Japan for the Company and its domestic subsidiaries was 40.7% for the year ended March 31, 2012,
and 38.0% for the year ended March 31, 2013.
The table below presents an itemized breakdown of factors generating differences between the statutory tax rate and theeffective tax rates of the Group for the years ended March 31, 2012 and 2013:
Significant differences between the statutory tax rate and the effective tax rate
Statutory tax rate
Adjustments:
Permanent differences including entertainment expenses
Effect of tax rate change
Valuation allowance
Other
Effective tax rate

2012

2013

40.7%

(Note)

1.7(32.6)
(7.6)
1.1
3.3%

Note: ‌Disclosure has been omitted because the difference between the statutory tax rate and the effective tax rate is less than 5% of the statutory tax rate.

The table below presents an itemized breakdown of deferred tax assets and liabilities as of March 31, 2012 and 2013:
Significant components of the Group’s deferred tax assets and liabilities(Thousands of
U.S. dollars)(Millions of yen)

Deferred tax assets:
Unrealized profits
Impairment loss
Loss on valuation of equity investments
Inventory write-downs
Provision for retirement benefits
Revaluation of assets on consolidation
Excess of depreciation
Provision for bonuses
Provision for loss on subleasing business
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Revaluation of assets on consolidation
Reserve for deferred income taxes
Other
Total deferred tax liabilities
Net deferred tax liabilities

2012

2013

2013

¥14,133
3,145
9,536
9,450
5,666
2,912
2,333
1,587
800
9,737
59,299(5,188)54,111¥14,182
8,224
7,974
5,928
5,529
2,452
1,963
1,795
620
6,513
55,180(5,286)49,894$150,795
87,44584,782
63,03358,785
26,06520,87319,0906,595
69,246
586,709(56,206)
530,503(57,366)(24,135)(1,725)(83,226)¥(29,115)(56,618)(23,874)(2,696)(83,188)(33,294)(602,003)(253,849)(28,656)(884,508)(354,005)

12. Shareholders’ Equity
Under the Companies Act of Japan (the “Act”), all funds obtained through the issuance of common stock must be treated ascommon stock and, by resolution of the board of directors, an amount equivalent to less than half of those funds may be appropriated to the capital reserve (a component of capital surplus).
The Act provides that an amount equal to 10% of the amount to be distributed as distributions of capital surplus (otherthan the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and the legal
reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the capital stock account.
As of March 31, 2013, the Group’s capital reserve amounted to ¥93,057 million ($989,449 thousand), and no legal reserve
was recorded.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

13. Supplementary Cash Flow Information
A reconciliation of cash and deposits in the Consolidated Balance Sheet and cash and cash equivalents in the Consolidated
Statement of Cash Flows is as follows:(Thousands of
U.S. dollars)(Millions of yen)
2012

2013

Cash and deposits¥45,458¥42,499$451,876

Short-term investment securities

25,00020,000212,653

(2)

(2)

(21)

¥70,456¥62,497$664,507

Time deposits with maturities of more than three months
Cash and cash equivalents

2013

14. Derivative Financial Instruments(1) Derivatives to which hedge accounting is not applied
There are no derivative transactions to which hedge accounting is not applied.

(2) Derivatives to which hedge accounting is applied(a) Currency-related derivatives
2012

Contract amount

Hedge accounting
methodType of derivatives

Contract amount due
after one year

Fair value

Major hedged
items(Millions ofyen)(Millions ofyen)(Millions ofyen)

Securities
denominatedin foreign
currencies¥1,779

¥—

¥11

Total

¥1,779

¥—

¥11

2013

Contract amountDeferral hedge
accounting

Currency
swaps

Hedge accounting
Type of derivatives
methodDeferral hedge
accounting

Currency
swaps

Contract amount due
after one year

Fair value

Major hedged
items(Millions ofyen)(Thousandsof U.S.
dollars)

Securities
denominatedin foreign
currencies¥1,610$17,121

¥—

$—

¥2

$20

¥1,610$17,121

¥—

$—

¥2

$20

Total

(Millions ofyen)(Thousandsof U.S.
dollars)(Millions ofyen)(Thousandsof U.S.
dollars)

Note: The fair value is determined based on the quoted price obtained from the counterparty financial institutions to the derivatives transactions.

(b) Interest rate-related derivatives
2012

Contract amount

Hedge accounting
methodType of derivatives

Exceptional
treatment forinterest rate
swaps
Total

Contract amount due
after one year

Fair value

Major hedged
items(Millions ofyen)(Millions ofyen)(Millions ofyen)Interest rateLong-term debt
swaps
Receivefloating rate/  Pay fixed rate¥546,443¥453,570(Note)¥546,443¥453,570

—

69

70

Nomura Real Estate Holdings, Inc. Annual Report 2013

2013
Hedge accounting
methodType of derivatives

Exceptional
treatment forinterest rate
swaps

Contract amount due
after one year

Contract amount
Major hedged
itemsInterest rateLong-term debt
swaps
Receivefloating rate/  Pay fixed rate

Total

Fair value(Thousandsof U.S.
dollars)(Millions ofyen)(Thousandsof U.S.
dollars)¥478,970 $5,092,715¥370,097 $3,935,105(Note)(Note)¥478,970 $5,092,715¥370,097 $3,935,105——(Millions ofyen)(Thousandsof U.S.
dollars)(Millions ofyen)

Note: ‌The fair value of the interest rate swaps which qualify for exceptional treatment for interest rate swaps is considered to be included in the fairvalue of the long-term debt.

15. Leases
Details of significant lease transactions are as follows:
The table below presents the future lease payments and receipts of operating leases subsequent to March 31, 2012 and 2013.
(Thousands of
U.S. dollars)(Millions of yen)
Operating leases

2012

2013

2013

$   37,839

Future lease payments:
Due within 1 year

¥ 4,842¥  3,559

Due after 1 year

14,59912,870136,850

Total¥19,441¥ 16,429$  174,689

Future lease receipts:
Due within 1 year

¥12,295¥ 13,652$  145,156

Due after 1 year

62,175

89,105

947,427

Total¥74,470¥102,757$1,092,583

Note: The note for finance leases has been omitted due to lack of materiality.

16. Real Estate for Rent
Some of the Company’s subsidiaries own rental office buildings and rental facilities (including land) in Tokyo and other regions.
The book values in the Consolidated Balance Sheet, changes during the fiscal year ended March 31, 2013, and fair values ofreal estate, of which some portions are used as rental property, are determined as follows:(1) Fair value of rental and other properties in the fiscal years ended March 31, 2012 and 2013
Book value
March 31, 2011

Fair value

Increase/Decrease

March 31, 2012

March 31, 2012

2012

(Millions ofyen)(Millions ofyen)(Millions ofyen)(Millions ofyen)

Rental properties¥691,968¥(21,956)¥670,012¥679,413

25,028(243)

24,78548,500

Other properties used asrental properties

Book value
March 31, 2012

Fair value

Increase/Decrease

March 31, 20132013

(Millions ofyen)(Thousandsof U.S.
dollars)(Millions ofyen)(Thousandsof U.S.
dollars)(Millions ofyen)

Rental properties¥670,012 $7,123,988¥28,621$304,320¥698,632 $7,428,308

84

897

Other properties used asrental properties

24,785263,525

24,869(Thousandsof U.S.
dollars)

264,421

March 31, 2013
(Millions ofyen)(Thousandsof U.S.
dollars)¥714,150 $7,593,304
46,600495,481

Notes: 1.	‌Book values in the Consolidated Balance Sheet are the amounts determined by deducting accumulated depreciation and accumulated
impairment losses from the acquisition cost.
2.	‌Fair values as of March 31, 2012 and 2013 are determined by the Group (including adjustments based on certain indexes) based primarilyon their values according to real estate appraisal standards. However, if there have been no fluctuations in appraisal values or indexes
considered to appropriately reflect market values, the Group uses the appraisal values or amounts derived from the indexes of the recent
appraisal or acquisition from third parties as the fair values at March 31, 2012 and 2013.
3.	‌In the above table, Other properties used as rental properties includes portions used by the Company and certain consolidated
subsidiaries.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

(2) Income and loss on rental properties in the fiscal years ended March 31, 2012 and 2013
Others (gains (losses) on
sale of property, etc.)

Operating income
2012

Rental properties
Other properties used as rental properties(Millions of yen)

(Millions of yen)

¥27,571¥(8,393)

1,112—
Others (gains (losses) on
sale of property, etc.)

Operating income
2013

Rental properties
Other properties used as rental properties(Millions of yen)(Thousands of
U.S. dollars)(Millions of yen)(Thousands of
U.S. dollars)¥26,060$277,089¥(10,739)$(114,185)

1,120

11,907——

Notes: 1.	‌As real estate of which some portions are used as rental property includes portions used by the Company and certain consolidated subsidiaries for providing services as well as management and administration, operating income for this type of real estate is not recorded.
2.	‌Others include gain on sales of noncurrent assets (¥218 million) and impairment loss (¥8,826 million) in the fiscal year ended March 31, 2012,and gain on sales of noncurrent assets (¥336 million ($3,569 thousand)) and impairment loss (¥11,331 million ($120,482 thousand)) in the fiscal
year ended March 31, 2013.

17. Segment Information(1) Segment summary
The reportable segments of the Group comprise those business units for which separate financial information is available, andwhich are subject to a regular review conducted by the Company’s Board of Directors in order to determine the allocation ofmanagement resources and evaluate their performance.
With the Company, as a pure holding company the Group consists of business companies and divisions, such as Nomura
Real Estate Development Co., Ltd. The business companies (or business divisions within Nomura Real Estate Development) formulate comprehensive strategies on respective products and services handled by them and conduct business activities based onsuch strategies.
Therefore, business segments of the Group are distinguished by products and services, primarily by business companies (orby business divisions within Nomura Real Estate Development).
Business segments have been changed following a revision of segmentation that was developed as part of the Mid- toLong-term Business Plan in the second quarter of the fiscal year ended March 31, 2013.
The Group mainly operate in six business segments: (1) Residential Development, (2) Leasing, (3) Investment Management,(4) Property Brokerage & CRE, (5) Property & Facility Management, and (6) Other.
The segment information for the fiscal year ended March 31, 2012 has been prepared based on business segmentation after
the change.

(2) Methods for calculating net sales, income (loss), assets, liabilities and other items by reportable segment
The accounting method for reportable segments is almost equivalent to that specified in “Significant Accounting Policies”.
Reportable segment income is presented based on operating income. Intersegment sales and transfer amounts are presented
based on market prices.

71

72

Nomura Real Estate Holdings, Inc. Annual Report 2013

Results by segment for the fiscal years ended March 31, 2012 and 2013 were as follows:
Results by segment as of and for the fiscal year ended March 31, 2012
(Millions of yen)

Operating revenue andoperating income
Operating revenue:
External customers
Inter-segment
Subtotal
Segment income (loss)
Segment assets
Other items
Depreciation
Amortization of goodwill
Investment in affiliates
accounted forusing equity method
Increase in property,
plant and equipment
and intangible assets

Residential
Development

Leasing

Property
Property &Investment Brokerage &Facility
Management
CRE
Management¥217,130448
217,578
20,939315,429¥121,293
2,125
123,418
19,690813,965¥ 12,664
300
12,964
6,552
114,499¥25,897
8,406
34,303
1,926
19,787¥59,243
8,128
67,371
4,488
28,008¥14,580
12
14,592418
37,769¥  450,807
19,419470,226
54,013
1,329,457¥—(19,419)(19,419)(4,074)
73,168¥  450,807—
450,80749,9391,402,625¥    139—¥ 11,063
236¥    509—¥   218—¥   31129¥ 1,094—¥   13,334
265

¥201
—

¥   13,535
265

12

3,409

—

20

—

—

3,441

—

3,441

244

11,536

456

254

260

2,195

14,945

193

15,138Other 1

Total

Eliminations or
corporate 2 Consolidated 3

Notes: 1.	‌The “Other” category, which represents operating segments that are not included in reportable segments, includes fitness club and otherbusinesses.
2. (1) ‌The deduction of ¥4,074 million shown in the eliminations or corporate column for segment income includes an addition of ¥1,425 million
for the elimination of inter-segment transactions and a deduction of ¥5,499 million for corporate expenses not allocated to reportablesegments. These corporate expenses mainly consist of general and administrative expenses not attributable to reportable segments.
		 (2) ‌The addition of ¥73,168 million shown in the eliminations or corporate column for segment assets includes a deduction of ¥32,442
million for the elimination of inter-segment transactions and an addition of ¥105,610 million for corporate assets not allocated toreportable segments.
3. The segment income is reconciled to the operating income stated in the consolidated financial statements.

Results by segment as of and for the fiscal year ended March 31, 2013
(Millions of yen)

Operating revenue andoperating income
Operating revenue:
External customers
Inter-segment
Subtotal
Segment income (loss)
Segment assets
Other items
Depreciation
Amortization of goodwill
Investment in affiliates
accounted forusing equity method
Increase in property,
plant and equipment
and intangible assets

Property
Property &Investment Brokerage &Facility
Management
CRE
Management

Residential
Development

Leasing¥305,125635
305,760
32,917
336,802¥103,827
2,839
106,666
23,336
790,735¥10,880
253
11,133(2,724)91,854¥23,842
2,252
26,094
6,176
26,904¥    149—¥ 11,216236¥   342
—

12

842

134

29,231Eliminations or
corporate 2 Consolidated 3

Other 1

Total

¥59,110
9,954
69,064
4,378
30,710¥14,957
6
14,963448
37,168¥  517,741
15,939533,680
64,531
1,314,173¥—(15,939)(15,939)(6,223)55,776¥  517,741—
517,741
58,3081,369,949¥   226—¥   26729¥ 1,094—¥   13,294
265

¥220
—

¥   13,514
265

—

—

—

—

854

—

854

146

459

221

944

31,135204

31,339Annual Report 2013 Nomura Real Estate Holdings, Inc.

(Thousands of U.S. dollars)
Property
Property &Investment Brokerage &Facility
Management
CRE
Management

Other 1

Total

Eliminations or
corporate 2 Consolidated 3$1,103,958
30,183
1,134,141
248,122
8,407,607$115,681 $253,501
2,693
23,943
118,374
277,444(28,970)
65,671
976,648
286,056$628,497
105,840
734,337
46,552
326,525$159,02467
159,091
4,760
395,199$ 5,504,951
169,474
5,674,425
686,131
13,973,132$— $ 5,504,951(169,474)—(169,474)
5,504,951(66,162)
619,969
593,051
14,566,183$  119,262
2,505$  3,632—$  2,406—$  2,839
311$ 11,631—$   141,349
2,816$2,338—$   143,687
2,816

8,952

—

—

—

—

9,079

—

9,079

310,807

1,557

4,874

2,346

10,035331,0422,171

332,213

Residential
Development

Operating revenue andoperating income
Operating revenue:
External customers$3,244,290
Inter-segment
6,748
Subtotal
3,251,038
Segment income (loss)
349,996
Segment assets
3,581,097
Other items
Depreciation$    1,579
Amortization of goodwill—
Investment in affiliates
accounted forusing equity method
127
Increase in property,
plant and equipment
and intangible assets
1,423

Leasing

Notes: 1.	‌The “Other” category, which represents operating segments that are not included in reportable segments, includes fitness club andother businesses.
2. (1) ‌The deduction of ¥6,223 million ($66,162 thousand) shown in the eliminations or corporate column for segment income includes anaddition of ¥508 million ($5,403 thousand) for the elimination of inter-segment transactions and a deduction of ¥6,731 million ($71,565
thousand) for corporate expenses not allocated to reportable segments. These corporate expenses mainly consist of general and administrative expenses not attributable to reportable segments.
		 (2) ‌The addition of ¥55,776 million ($593,051 thousand) shown in the eliminations or corporate column for segment assets includes a
deduction of ¥44,101 million ($468,905 thousand) for the elimination of inter-segment transactions and an addition of ¥99,877 million($1,061,956 thousand) for corporate assets not allocated to reportable segments.
3. The segment income is reconciled to the operating income stated in the consolidated financial statements.

Impairment loss on noncurrent assets by reportable segments for the years ended March 31, 2012 and 2013 is summarized
as follows:(Millions of yen)

2012

Impairment loss

Residential
Development¥—

Leasing

Investment
Management¥5,929¥2,897

Property
Brokerage &CREProperty &Facility
Management¥—¥—

Other (Note)

¥897

Total

¥9,723(Millions of yen)

2013

Impairment loss

Residential
Development¥—

Leasing

Investment
Management¥8,598¥2,733

Property
Brokerage &CREProperty &Facility
Management¥—¥—

Other (Note)

¥74

Total

¥11,405(Thousands of U.S. dollars)

2013

Impairment loss

Residential
Development$—

Leasing

Investment
Management$91,426$29,056

Note: The amount shown in the “Other” column relates to fitness club business.

Property
Brokerage &CRE$—Property &Facility
Management$—

Other (Note)

$784

Total

$121,26673

74

Nomura Real Estate Holdings, Inc. Annual Report 2013

The following table presents the amortization and balance of goodwill as of and for the years ended March 31, 2012 and2013 by reportable segments:(Millions of yen)

2012

Residential
Development

Leasing

Investment
Management

Property
Brokerage &CREProperty &Facility
Management

Total

Amortization—¥  236

¥—

¥—

¥ 29

¥  265

Balance at March 31,
2012

—

3,946

—

—

322

4,268

(Millions of yen)

2013

Residential
Development

Leasing

Investment
Management

Property
Brokerage &CREProperty &Facility
Management

Total

Amortization¥—¥  236

¥—

¥—

¥ 29

¥  265

Balance at March 31,
2013

¥—

¥3,710

¥—

¥—

¥293

¥4,003(Thousands of U.S. dollars)

2013

Residential
Development

Leasing

Investment
Management

Property
Brokerage &CREProperty &Facility
Management

Total

Amortization$—$ 2,505$—$—$  311$ 2,816

Balance at March 31,
2013

$—

$39,453$—$—$3,114$42,567

18. Contingent Liabilities
Contingent liabilities as of March 31, 2012 and 2013 were as follows:(Thousands of
U.S. dollars)(Millions of yen)

Guarantees for home loans of house purchasers from banks
and other
Guarantees for loans to business partners in the business ofcommercial buildings for rent

2012

2013

¥48,897¥67,720

2013$720,041

881

813

8,643

¥49,778¥68,533$728,684

Annual Report 2013 Nomura Real Estate Holdings, Inc.

19. Consolidated Statement of Comprehensive Income
The amount of recycling and amount of income tax effects associated with other comprehensive income for the years ended
March 31, 2012 and 2013 are as follows:(Thousands of
U.S. dollars)(Millions of yen)
2012

2013

2013

¥(2,346)¥7,472$79,446

998(1,019)(10,838)(1,348)6,453

68,608

Income tax effect387(2,292)(24,366)

Valuation difference on available-for-sale securities

(961)

4,161

44,242

Amount recognized during the year

145

(181)

(1,925)

Amount of recycling

(114)

(78)

(837)

Before income tax effect

31

(259)

(2,762)

Income tax effect

19

92

983

Deferred gains or losses on hedges

50

(167)

(1,779)

633

(0)

(1)

Valuation difference on available-for-sale securities:
Amount recognized during the year
Amount of recycling
Before income tax effect

Deferred gains or losses on hedges:

Revaluation reserve for land:
Income tax effect
Share of other comprehensive income of affiliates accounted forusing the equity method:Amount recognized during the year

(149)

8

90

—

1,291

13,728

(149)

1,299

13,818(5)(460)(4,889)Amount of recycling
Before income tax effect
Income tax effect
Share of other comprehensive income of affiliates accounted forusing the equity method
Total other comprehensive income

(154)

839

8,929

¥(402)¥4,833$51,391

20. Schedule of Asset Retirement Obligations
A presentation of this schedule is omitted pursuant to the provisions of Article 92-2 of the Consolidated Financial Statements
Regulations as the amount of asset retirement obligations is not more than 1% of the total amount of liabilities and net assets
as of March 31, 2012 and 2013.

21. Stock Options
In accordance with the Act on November 30, 2007, the Group granted certain stock options to certain directors, executive officers and employees of the Group.
Information regarding the Group’s stock option plans is summarized as follows:

1. Amount and account title of costs related to stock options(Thousands of U.S.
dollars)(Millions of yen)
2012

Selling, general and administrative expenses

¥195

2013

¥384

2013

$4,08775

76

Nomura Real Estate Holdings, Inc. Annual Report 2013

2. Description
Nomura Real Estate Holdings, Inc.
FY2007

2nd issue of stock options

3rd issue of stock options

Recipients

Directors of the Company’s
subsidiaries (43 persons)

Directors of the Company(5 persons)
Directors of the Company’s
subsidiaries (45 persons)
Employees of the Company’s
subsidiaries (116 persons)Type and number of sharessubject to the stockacquisition rights (see Note)

Common stock:52,300 shares

Common stock:180,400 shares

Grant dateNovember 30, 2007

November 30, 2007

Vesting conditions

No conditions attached

No conditions attachedService period

No period specified

No period specified

Exercisable period

November 30, 2008 –November 29, 2013

November 30, 2009 –November 29, 2014

Nomura Real Estate Holdings, Inc.
FY2008

2nd issue of stock options

3rd issue of stock options

Recipients

Directors and executive
officers of the Company’s
subsidiaries (51 persons)

Directors of the Company(5 persons)
Directors and executive
officers of the Company’s
subsidiaries (52 persons)
Employees of the Company’s
subsidiaries (122 persons)Type and number of sharessubject to the stockacquisition rights (see Note)

Common stock:61,300 shares

Common stock:
191,200 shares

Grant dateAugust 11, 2008

August 11, 2008

Vesting conditions

No conditions attached

No conditions attachedService period

No period specified

No period specified

Exercisable period

August 11, 2009 –August 10, 2014

August 11, 2010 –August 10, 2015

Nomura Real Estate Holdings, Inc.
FY20092nd issue of stock options

3rd issue of stock options

Recipients

Directors and executive
officers of the Company’s
subsidiaries (51 persons)

Directors of the Company(8 persons)
Directors and executive
officers of the Company’s
subsidiaries (51 persons)
Employees of the Company’s
subsidiaries (129 persons)Type and number of sharessubject to the stockacquisition rights (see Note)

Common stock:
59,500 shares

Common stock:
202,700 shares

Grant dateAugust 11, 2009

August 11, 2009

Vesting conditions

No conditions attached

No conditions attachedService period

No period specified

No period specified

Exercisable period

August 11, 2010 –August 10, 2015

August 11, 2011 –August 10, 2016

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Nomura Real Estate Holdings, Inc.
FY2010
1st issue of stock options

2nd issue of stock options

3rd issue of stock options

Recipients

Directors of the Company(7 persons)

Directors and executive
officers of the Company’s
subsidiaries (57 persons)

Directors of the Company(7 persons)
Directors and executive
officers of the Company’s
subsidiaries (57 persons)
Employees of the Company’s
subsidiaries (147 persons)Type and number of sharessubject to the stockacquisition rights (see Note)

Common stock:
20,000 shares

Common stock:
66,100 shares

Common stock:
226,400 shares

Grant dateAugust 23, 2010

August 23, 2010

August 23, 2010

Vesting conditions

No conditions attached

No conditions attached

No conditions attachedService period

No period specified

No period specified

No period specified

Exercisable period

August 23, 2011 –August 22, 2016

August 23, 2011 –August 22, 2016

August 23, 2012 –August 22, 2017

Nomura Real Estate Holdings, Inc.
FY2011
1st issue of stock options

2nd issue of stock options

3rd issue of stock options

Recipients

Directors of the Company(6 persons)

Directors and executive
officers of the Company’s
subsidiaries (57 persons)

Directors of the Company(6 persons)
Directors and executive
officers of the Company’s
subsidiaries (57 persons)
Employees of the Company’s
subsidiaries (152 persons)Type and number of sharessubject to the stockacquisition rights (see Note)

Common stock:
17,900 shares

Common stock:
66,700 shares

Common stock:
227,800 shares

Grant dateAugust 23, 2011

August 23, 2011

August 23, 2011

Vesting conditions

No conditions attached

No conditions attached

No conditions attachedService period

No period specified

No period specified

No period specified

Exercisable period

August 23, 2012 –August 22, 2017

August 23, 2012 –August 22, 2017

August 23, 2013 –August 22, 2018

Nomura Real Estate Holdings, Inc.
FY2012
1st issue of stock options

2nd issue of stock options

3rd issue of stock options

Recipients

Directors of the Company(5 persons)

Directors and executive
officers of the Company’s
subsidiaries (64 persons)

Directors of the Company(5 persons)
Directors and executive
officers of the Company’s
subsidiaries (64 persons)
Employees of the Company’s
subsidiaries (152 persons)Type and number of sharessubject to the stockacquisition rights (see Note)

Common stock:
31,500 shares

Common stock:
188,900 shares

Common stock:242,700 shares

Grant dateAugust 23, 2012

August 23, 2012

August 23, 2012

Vesting conditions

No conditions attached

No conditions attached

No conditions attachedService period

No period specified

No period specified

No period specified

Exercisable period

August 23, 2014 –August 22, 2019

August 23, 2014 –August 22, 2019

August 23, 2014 –August 22, 2019

77

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Nomura Real Estate Holdings, Inc. Annual Report 2013

MEGALOS CO., LTD.
FY2008

2nd issue of stock options

Recipients

Directors (3 persons)
Employees (14 persons)Type and number of sharessubject to the stockacquisition rights (see Note)

Common stock:
32,000 shares

Grant date

December 1, 2008

Vesting conditions

No conditions attachedService period

No period specified

Exercisable period

December 1, 2010 –November 30, 2015

MEGALOS CO., LTD.
FY20092nd issue of stock options

Recipients

Directors (3 persons)
Employees (12 persons)Type and number of sharessubject to the stockacquisition rights (see Note)

Common stock:27,000 shares

Grant dateAugust 3, 2009

Vesting conditions

No conditions attachedService period

No period specified

Exercisable period

August 3, 2011 –August 2, 2016

MEGALOS CO., LTD.
FY2010

1st issue of stock options

2nd issue of stock options

Recipients

Directors (3 persons)

Directors (3 persons)
Employees (12 persons)Type and number of sharessubject to the stockacquisition rights (see Note)

Common stock:7,900 shares

Common stock:
28,000 shares

Grant dateAugust 23, 2010

August 23, 2010

Vesting conditions

No conditions attached

No conditions attachedService period

No period specified

No period specified

Exercisable period

August 23, 2011 –August 22, 2016

August 23, 2012 –August 22, 2017

MEGALOS CO., LTD.
FY2011

1st issue of stock options

2nd issue of stock options

Recipients

Directors (3 persons)

Directors (3 persons)
Employees (11 persons)Type and number of sharessubject to the stockacquisition rights (see Note)

Common stock:7,900 shares

Common stock:
26,000 shares

Grant dateAugust 22, 2011

August 22, 2011

Vesting conditions

No conditions attached

No conditions attachedService period

No period specified

No period specified

Exercisable period

August 22, 2012 –August 21, 2017

August 22, 2013 –August 21, 2018

Annual Report 2013 Nomura Real Estate Holdings, Inc.

MEGALOS CO., LTD.
FY2012

1st issue of stock options

2nd issue of stock options

Recipients

Directors (3 persons)

Directors (3 persons)
Employees (13 persons)Type and number of sharessubject to the stockacquisition rights (see Note)

Common stock:7,900 shares

Common stock:
28,000 shares

Grant dateAugust 20, 2012

August 20, 2012

Vesting conditions

No conditions attached

No conditions attachedService period

No period specified

No period specified

Exercisable period

August 20, 2013 –August 19, 2018

August 20, 2014 –August 19, 2019

3. Scale of offer and status of changes(1) Number of stock options
Nomura Real Estate Holdings, Inc.
FY2007

2nd issue of stock options

3rd issue of stock options—

Non-vested: (shares)
Previous fiscal year end—

Granted——Forfeited——

Vested——End of the year

—

—

4,400

160,100——

Vested: (shares)
Previous fiscal year end
VestedExercised

2,600

—

Forfeited

—

3,500

1,800

156,600

2nd issue of stock options

3rd issue of stock options

Previous fiscal year end——

End of the year
Nomura Real Estate Holdings, Inc.
FY2008Non-vested: (shares)
Granted——Forfeited——

Vested——End of the year

—

—

9,200

173,400——

Vested: (shares)
Previous fiscal year end
VestedExercised

3,100

—

Forfeited

—

3,500

6,100

169,900

End of the year

79

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Nomura Real Estate Holdings, Inc. Annual Report 2013

Nomura Real Estate Holdings, Inc.
FY20092nd issue of stock options

3rd issue of stock options—

Non-vested: (shares)
Previous fiscal year end—

Granted——Forfeited——

Vested——End of the year——

22,500202,000——

Vested: (shares)
Previous fiscal year end
VestedExercised

7,900

10,500Forfeited—

15,90014,600175,600

2nd issue of stock options

3rd issue of stock options
215,300

End of the year
Nomura Real Estate Holdings, Inc.
FY2010
1st issue of stock options
Non-vested: (shares)
Previous fiscal year end——

Granted———Forfeited——

10,000

Vested——214,300

End of the year

—

—

—

Vested: (shares)
2,900

39,10010,400

VestedPrevious fiscal year end——

214,300

Exercised—

15,80056,400Forfeited

—

—

—

2,900

23,300168,300

Nomura Real Estate Holdings, Inc.
FY2011
1st issue of stock options

2nd issue of stock options

3rd issue of stock options
227,100

End of the year

Non-vested: (shares)
Previous fiscal year end——

Granted———Forfeited

—

—

1,000

Vested——11,600End of the year——

214,500

17,90066,700———11,600Exercised

13,20029,100—Forfeited

—

—

—

4,700

37,60011,600

Vested: (shares)
Previous fiscal year end
VestedEnd of the year

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Nomura Real Estate Holdings, Inc.
FY2012
1st issue of stock options

2nd issue of stock options

3rd issue of stock options

Non-vested: (shares)———

GrantedPrevious fiscal year end

31,500188,900

242,700

Forfeited———

31,500188,900500——

242,200

VestedEnd of the year
Vested: (shares)
Previous fiscal year end

—

—

—

31,500188,900

500

Exercised———

Forfeited———

31,500188,900

500

VestedEnd of the year
MEGALOS CO., LTD.
FY2008

2nd issue of stock options

Non-vested: (shares)
Previous fiscal year end—

Granted—Forfeited—

Vested—End of the year—

Vested: (shares)
Previous fiscal year end
VestedExercised
Forfeited
End of the year
MEGALOS CO., LTD.
FY200920,000—8,000—
12,000

2nd issue of stock options

Non-vested: (shares)
Previous fiscal year end—

Granted—Forfeited—

Vested—End of the year—

Vested: (shares)
Previous fiscal year end

22,000

Vested—Exercised—

Forfeited
End of the year—
22,00081

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Nomura Real Estate Holdings, Inc. Annual Report 2013

MEGALOS CO., LTD.
FY2010

1st issue of stock options

2nd issue of stock options

Non-vested: (shares)
Previous fiscal year end—

23,000Granted——Forfeited——

Vested—23,000End of the year——

Vested: (shares)
Previous fiscal year end

7,900

—

—

23,000Exercised

5,700

—

Forfeited

—

—

2,200

23,000

1st issue of stock options

2nd issue of stock options

VestedEnd of the year
MEGALOS CO., LTD.
FY2011
Non-vested: (shares)
Previous fiscal year end—

23,000Granted——Forfeited——

Vested——End of the year—

23,000

7,900

—

—

—

3,800

—

Vested: (shares)
Previous fiscal year end
VestedExercised
Forfeited
End of the year
MEGALOS CO., LTD.
FY2012

—

—

4,100

—

1st issue of stock options

2nd issue of stock options

Non-vested: (shares)
Previous fiscal year end
GrantedForfeited
VestedEnd of the year

—

—

7,900

28,000

—

—

7,900

—

—

28,000

Vested: (shares)
Previous fiscal year end

—

—

7,900

—

Exercised——

Forfeited

—

—

7,900

—

VestedEnd of the year

Annual Report 2013 Nomura Real Estate Holdings, Inc.

(2) Unit price data
Nomura Real Estate Holdings, Inc.
FY2007
Exercise price (¥)

2nd issue of stock options

3rd issue of stock options

1

3,380

Average price upon exercise (¥)

1,437

—

Fair value on grant date (¥)

2,903

714

2nd issue of stock options

3rd issue of stock options

1

2,255

Nomura Real Estate Holdings, Inc.
FY2008Exercise price (¥)
Average price upon exercise (¥)

1,423

—

Fair value on grant date (¥)

2,131

770

2nd issue of stock options

3rd issue of stock options

1

1,663

Average price upon exercise (¥)

1,465

2,064

Fair value on grant date (¥)

1,533

641

Nomura Real Estate Holdings, Inc.
FY2009Exercise price (¥)

Nomura Real Estate Holdings, Inc.
FY2010
1st issue of stock options

2nd issue of stock options

3rd issue of stock options

Exercise price (¥)

1

1

1,194

Average price upon exercise (¥)

—

1,531

1,645

1,119

1,119

437

Nomura Real Estate Holdings, Inc.
FY2011
1st issue of stock options

Fair value on grant date (¥)

2nd issue of stock options

3rd issue of stock options

1

1

1,457

Average price upon exercise (¥)

1,441

1,468

—

Fair value on grant date (¥)

1,045

1,045

315

Nomura Real Estate Holdings, Inc.
FY2012
1st issue of stock options

Exercise price (¥)

2nd issue of stock options

3rd issue of stock options

Exercise price (¥)

1

1

1,451

Average price upon exercise (¥)

—

—

—

1,283

1,283

454

Fair value on grant date (¥)
MEGALOS CO., LTD.
FY2008

2nd issue of stock options

Exercise price (¥)

740

Average price upon exercise (¥)

1,076

Fair value on grant date (¥)

184

MEGALOS CO., LTD.
FY20092nd issue of stock options

Exercise price (¥)

1,010

Average price upon exercise (¥)—

Fair value on grant date (¥)

259

MEGALOS CO., LTD.
FY2010Exercise price (¥)
Average price upon exercise (¥)
Fair value on grant date (¥)

1st issue of stock options

2nd issue of stock options

1

1,093

1,124

—

983

219

83

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Nomura Real Estate Holdings, Inc. Annual Report 2013

MEGALOS CO., LTD.
FY2011

1st issue of stock options

2nd issue of stock options

1

1,105

Exercise price (¥)
Average price upon exercise (¥)

1,114

—

Fair value on grant date (¥)

1,033

235

MEGALOS CO., LTD.
FY2012

1st issue of stock options

2nd issue of stock options

Exercise price (¥)

1

1,196

Average price upon exercise (¥)

—

—

1,096

192

Fair value on grant date (¥)

Note: ‌With respect to stock options outstanding at March 31, 2013, the number of stock options is calculated based on the number of shares ofcommon stock which would be required to be issued if all such stock options were to be exercised.

4. Method for estimating per share fair value of stock options
The per share fair value of the stock options granted during the fiscal year ended March 31, 2013 (FY2012) was estimated as follows:(1) Valuation technique used

Black-Scholes method(2) Main base data and estimation methods
a. Nomura Real Estate Holdings, Inc.
Nomura Real Estate Holdings, Inc.
1st issue of FY2012 stock options
Expected volatility of theshare price (Note 1)

47.6%

Nomura Real Estate Holdings, Inc.
2nd issue of FY2012 stock options
47.6%

Nomura Real Estate Holdings, Inc.
3rd issue of FY2012 stock options
47.6%

Expected remaining life of
the option (Note 2)

4.5 years

4.5 years

4.5 years

Expected dividend (Note 3)¥30 ($0.32) per share¥30 ($0.32) per share¥30 ($0.32) per share

0.32%

0.32%

0.32%

Risk-free interest rate (Note 4)

Notes: 1. Calculated based on the actual stock price for four years and six months (from February 2008 to August 2012).
2.	‌Calculated with an assumption that the stock option is exercised at the middle of the exercise period as the Company does not have sufficient data for a more precise estimation.
3. Based on the expected dividend for the fiscal year ended March 31, 2013 at the grant date.
4. Based on the yield of Japanese government bonds for the period equivalent to the expected remaining life of the option.

b. MEGALOS CO., LTD. (consolidated subsidiary)
MEGALOS CO., LTD.
1st issue of FY2012 stock options
Expected volatility of theshare price (Note 1)

18.3%

MEGALOS CO., LTD.
2nd issue of FY2012 stock options
25.0%

Expected remaining life of
the option (Note 2)

3.5 years

4.5 years

Expected dividend (Note 3)¥14 ($0.15) per share¥14 ($0.15) per share

0.22%

0.31%

Risk-free interest rate (Note 4)

Notes: 1.	‌Volatility of share price for the 1st issues of 2012 stock options were calculated based on the actual stock price for the past three years andsix months preceding the grant date; and for the 2nd issue, four years and six months preceding the grant date.
2.	‌Calculated with an assumption that the stock option is exercised at the middle of the exercise period as MEGALOS CO., LTD. does not havesufficient data for a more precise estimation.
3. Based on the expected dividend for the fiscal year ended March 31, 2013.
4. Based on the yield of Japanese government bonds for the period equivalent to the expected remaining life of the option.

5. Estimation of the number of vested options
The estimation of the number of vested options is made based on the actual number of forfeited options due to difficulty inreasonably estimating future forfeitures.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

22. Subsequent Events
Payment of Dividends
At the 9th Annual General Meeting of Shareholders held on June 27, 2013, a resolution for the payment of dividends of ¥15.0($0.16) per share, ¥2,859 million ($30,398 thousand) in total, to shareholders of record as of March 31, 2013 was approved.
Stock Acquisition Rights
The Company has resolved to issue stock acquisition rights as stock options at the meeting of its Board of Directors held on June27, 2013.
1. Stock acquisition rights with exercise price of ¥1 per share(1)	‌Recipients		

Directors of the Company: 4 persons

		

Directors and executive officers of the Company’s subsidiaries: 74 persons(2)	‌Type and number of shares subject to the stock acquisition rights
		Common stock: 163,500 shares		The number of shares issuable under each stock acquisition right shall be 100 shares.

(3) The amount per share to be paid at the time of the exercise
		¥1 per share(4) Allotment date		July 23, 2013

(5) Exercise period of the stock acquisition rights
		July 23, 2015 – July 22, 2020(6)	‌Conditions for assignment of the stock acquisition rights
		

Assignment of the stock acquisition rights to third parties requires the approval of the Company’s Board of Directors.

2. Stock acquisition rights with exercise price to be determined by reference the market price of the stock at the time of the exercise(1)	‌Recipients		

Directors of the Company: 4 persons

		

Directors and executive officers of the Company’s subsidiaries: 74 persons

		

Employees of its subsidiaries: 170 persons(2)	‌Type and number of shares subject to the stock acquisition rights
		Common stock: 333,300 shares		The number of shares issuable under each stock acquisition right shall be 100 shares.

(3)	‌The amount per share to be paid at the time of the exercise
		‌The amount to be paid per share shall be the higher of the average closing price of the Company’s common stock inregular trading on the Tokyo Stock Exchange in the month preceding the month of the allotment date multiplied by 1.05
(fractional amounts less than ¥1 are to be rounded up) or the closing price on the allotment date (if there is no closing
price, the most recent closing price prior to this date).
(4) Allotment date		July 23, 2013

(5) Exercise period of the stock acquisition rights
		July 23, 2015 – July 22, 2020(6)	‌Conditions for assignment of the stock acquisition rights
		

Assignment of the stock acquisition rights to third parties requires the approval of the Company’s Board of Directors.

85

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Nomura Real Estate Holdings, Inc. Annual Report 2013

Independent Auditors’ ReportAnnual Report 2013 Nomura Real Estate Holdings, Inc.

Group Company Profile
Nomura Real Estate
Development Co., Ltd.

Nomura Building Management
Co., Ltd.

http://www.nomura-re.co.jp/english/index.
html

http://www.nomura-bm.co.jp/(Japanese only)

Nomura Real Estate Development conducts a
range of businesses. The residential development business provides quality residential
accommodation under the PROUD and
OHANA brands. Meanwhile, the building
business, the commercial facility business,and the logistics facility business plan,develop and manage commercial, logistics
and other facilities, including office buildingssuch as PMO, and GEMS urban-type commercial facilities. In addition, the corporate
real estate (CRE) strategic support and corporate brokerage business helps maximize
the value of real estate.

Nomura Building Management handles facility
management and efficient property management, as well as the renewal of building interiors. The company provides expertise regarding
all aspects of management of buildings.

Nomura Real Estate AssetManagement Co., Ltd.

Nomura Living Support
Co., Ltd.

http://www.nre-am.co.jp/english/index.html

http://www.nomura-ls.co.jp/(Japanese only)

In October 2011, three investment management companies in the Nomura Real EstateGroup merged and became one of the largest
real estate investment management companies in Japan with more than ¥1 trillion in
assets under management. Nomura Real
Estate Asset Management provides one-stop
shopping for a broad variety of financial products and investment management services
that meet a wide range of real estate investment needs, including privately placed realestate funds, to listed real estate investment
trusts (REIT), debt investment in domestic realestate, overseas real estate fund of funds, anddiscretionary investment management contracts with institutional investors.

Nomura Living Support responds to a broad
range of customer needs, from managing condominiums to interior coordination and consultation. This company is responsible for the
management and maintenance aspects of the
Nomura Real Estate Group’s residential development, sales and management operations.

Nomura Real Estate Urban Net
Co., Ltd.

NREG TOSHIBA BUIlDING
Co., Ltd.

http://www.nomura-un.co.jp/(Japanese only)

http://www.toshiba-building.co.jp/building/index_j.htm(Japanese only)This company provides solutions for satisfying customers in the real estate services andconsulting fields. These include residential
real estate brokerage for helping customers
in changing their place of residence, andcommercial real estate brokerage, which
addresses the real estate needs of companies and investors. The company also operates a consignment sales business where it
sells condominium units and detachedhousing as a sales agent.

NREG TOSHIBA BUILDING offers services
spanning the development, leasing and management of office buildings, commercial
facilities, warehouses, condominiums andother properties, as well as property brokerage and consulting on corporate real estate(CRE) utilization.

87

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Nomura Real Estate Holdings, Inc. Annual Report 2013

YBP* Heating and Cooling
Supply Co., Ltd.
* YBP=Yokohama Business Park

Geo-Akamatsu Co., Ltd.
http://www.geo-akamatsu.co.jp/(Only in Japanese)

This company is responsible for the supply ofheating and cooling services to Yokohama
Business Park, a large-scale business facility,
through its district heating and cooling system.
Using a “best-mix” system that combines
gas and electricity, the company uses energy
efficiently to curtail costs and minimize environmental impact.

Geo-Akamatsu provides a full range of property consulting and other services that maximize its 40 years of accumulated expertise.
These services include surveys of commercial
facilities, project planning, leasing, commercial
space design and property management.

Nomura Real Estate ReformCo., Ltd.

PRIME X. Co., Ltd.

http://www.nomura-rf.co.jp/(Only in Japanese)

Nomura Real Estate Reform offers assistance inremodeling and repairing residential accommodation to provide people with comfortable
places to live. This includes reform plans thatmatch family growth and lifestyle changes.

MEGALOS Co., Ltd.
http://www.megalos.co.jp/(Only in Japanese)

Under the philosophy of “transforming
customer satisfaction into happiness,”
MEGALOS plans, develops and manages
fitness facilities offering top-of-the-line
service and equipment that are housed in
the best facilities in each area.

http://www.prime-x.co.jp/(Only in Japanese)

Based on the accumulated real estate expertiseof the Nomura Real Estate Group, Prime X
develops Internet advertising businesses thatspecialize in business in the real estate andhousing industries.
Prime X delivers proposals that maximize
customer benefits, ranging from the creationof corporate websites and project homepages
to creating and managing membership organizations, and handling project sales promotions.

Annual Report 2013 Nomura Real Estate Holdings, Inc.

Investor Information

The Next Growth StageThe Nomura Real Estate Group is aiming to provide
highly innovative products and services by constantly asking
how it can respond to diversifying social needs.

(As of March 31, 2013)

Corporate Data
Corporate Name:

Nomura Real Estate Holdings, Inc.

Date of Establishment:

June 1, 2004

Representative:

Kamezo Nakai, President

Number of Employees:

5,581 (on a consolidated basis)

Head Office:Shinjuku Nomura Building,
1-26-2 Nishi-Shinjuku, Shinjuku-ku,
Tokyo 163-0566, Japan

Fiscal Year:

From April 1 to March 31

General Meetingof Shareholders:

June

Stock Information
Common Stock:
Number of Authorized Shares:
Number of Shares Issued:
Market Listing:Minimum Trading Unit:
Number of Shareholders:

15.84%

21.77%¥115,728,103,400
450,000,000
190,595,500
First Section of Tokyo Stock Exchange
100 shares
59,123

2.09%
Composition by
Number of
Shareholdings(%)

Ten Largest Shareholders
Name of Shareholder

No. of shares

Shareholding (%)

Nomura Land and Building Co., Ltd.

64,777,500

33.98

The Master Trust Bank of Japan, Ltd. (Trust account)

7,775,400

4.07

Japan Trustee Services Bank, Ltd. (Trust account 9)5,880,300

3.08

35.48%

24.82%

Japan Trustee Services Bank, Ltd. (Trust account)

5,518,700

2.89

Nomura Real Estate Holdings Employee Shareholding Association

3,295,482

1.72

Composition by Number of
Shareholdings

RBC IST LONDON–CLIENTS ACCOUNT

2,180,800

1.14■ Financial Institutions

The Bank of New York Mellon as Agent BNYM. AS EA Dutch
Pension Omnibus 140016

2,152,183

1.12

SSBT OD05 Omnibus Account–Treaty Clients

2,092,700

1.09

Nomura Securities Co., Ltd.

2,058,940

1.08

The Bank of NY Treaty JASDEC Account1,935,194

1.01(15.84%)■ Financial Instruments Firms(2.09%)■ Other Japanese Firms(35.48%)■ Other Foreign Investors(24.82%)■ Individuals and Others(21.77%)

Stock Price and Trading Volume on the Tokyo Stock Exchange

Stock Price
(Yen)
2,500
2,000
1,500
1,000
500

Trading Volume(Thousandsof Shares)

0

80,00060,00040,00020,000

0
4
5
2010

6

7

8

9

10 11 12

1
2
2011

3

4

5

6

7

8

9

10 11 12

1
2
2012

3

4

5

6

7

8

9

10 11 12

1
2
2013

3

89

Nomura Real Estate Holdings Annual Report 2013 For the Year Ended March 31, 2013

Nomura Real Estate Holdings, Inc.
Shinjuku Nomura Building, 1-26-2
Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-0566, Japan

URL: http://www.nomura-re-hd.co.jp/english

Printed in Japan

Creating Value through Change
Annual Report 2013
For the Year Ended March 31, 2013