Trustin OurFutureAnnual Report 2011
year ended March 31, 2011

The Nomura Real Estate Group comprises
Nomura Real Estate Development and otherGroup companies, and operates in the
Residential Development Business, Building Business, Investment Management &Development Business, Property Brokerage& Consignment Sales Business, and Other
Business. Nomura Real Estate Holdings
strategically manages the overall Group as
its holding company, and works to improvethe corporate value of the overall Group by
providing products and services matched tomarkets in each area in which Group companies operate.

Residential
Development
Business

Other Business

Building Business

NomuraReal Estate Holdings

Investment
Management &Development
Business

Property
Brokerage &Consignment Sales
Business

Q
Contents
01
02
03
04
10
12
14
16
18
20
23
24
25
30
32
32
33
34
35
54
55

Snapshot of Nomura Real Estate holdings
Consolidated Financial highlights
Segment Information
Interview with the President
Major Topics in Fiscal 2010
Major Completed or Acquired Properties in Fiscal 2010
Segments at a glance
Outline of the Nomura Real Estate group
group Company Profile:
Nomura Real Estate Reform Co., ltd.
Corporate governance
Board of directors and Statutory Auditors
Corporate Social Responsibility
Management’s discussion and Analysis
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors
Investor Information

Forward-looking Statements:
This annual report contains forward-looking statements about the futureplans, strategies and performance of Nomura Real Estate holdings, Inc.
(“the Company”) and its consolidated subsidiaries (“the group”). These
forward-looking statements are not historical facts. They are estimates,
forecasts and projections based on information currently available to theCompany and are subject to a number of risks and uncertainties, which
include economic trends, intensification of competition in the real estateindustry, the legal and taxation systems, and other regulations. As such,actual results may differ from those projected.

See P. 16

Outline of the Nomura Real Estate groupSnapshot

Snapshot of Nomura Real Estate Holdings

1.

ousing Sales
Record high hgsince Our listintate Holdings’lNomura Real Es
reached a tota
housing sales in fiscal 2010,
itsof 5,077 un ure since ourthe highest fig kyo Stocklisting on the Toprovided a
Exchange and ost to theconsiderable bonue andincrease in reveg the period.
earnings durin
PIC 1)(R See P. 10 TOobukuro-honch

PROud CITy Ike

2.

Completion of Nihonbashi Muromachi
Nomura Building

Nihonbashi Muromachi Nomura Building
was completed in September 2010. Thisbuilding combines the functions of an officezone with a commercial and services zone.
The building began operations with all
floorspace fully occupied, and is contributing to increased revenue.
(R See P. 11 TOPIC 2)

NIhONBAShI MuROMAChI
NOMuRA BuIldINg

3.

launch of N

omura Real E

state Private

The Nomura
November 2 Real Estate Group launopen-ended 010 as Japan’s first unlisched in
Private REIT. private REIT, Nomura R ted,eal EstateThis is a newrealestate invest
the Nomuramendrawing on Real Estate Group devel t productit
oped by
s
ac
cu
m
u
la
estate fundmanagemen ted expertise in realt.
(R See P. 11
TOPIC 3)

REIT

Nomura Real Estate Holdings, Inc. Annual Report 20111

Consolidated Financial Highlights
Nomura Real Estate holdings, Inc. and its subsidiaries
years ended March 31(Thousands of U.S. dollars)(Note 1)

(Millions of yen)

For the Year:
Operating Results:
Operating revenue
gross profit
Operating income
Net income
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Per Share Data (yen/dollars):
Net income
Cash dividends
Balance Sheet Data (as of March 31):
Total assets
Total net assets
Interest-bearing debt
Ratios:Return on assets (Note 2)
Return on equity
Operating margin
dividend payout ratio
Equity ratio

2009

2010

2011

2011

¥ 448,656
100,764
34,013
13,770¥ 434,226
105,576
39,2754,660¥ 480,983
107,22242,083
5,472$ 5,784,523
1,289,505
506,11465,805(108,031)(141,789)
295,508

19,266(24,571)
13,09833,948(33,731)(7,486)408,270(405,660)(90,028)

¥

92.21
40.00

¥

25.69
25.00

¥

28.74
25.00

¥1,385,532
281,376
778,074¥1,405,424
349,437
759,637¥1,474,331
357,366
816,910

2.5%
5.9%
7.6%
43.4%
17.0%

2.8%
1.7%
9.0%
97.3%
21.4%

2.9%
1.8%
8.7%
87.0%
20.7%

$

0.35
0.30

$17,730,981
4,297,845
9,824,534

Notes: 1. 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 prevailing on theTokyo Foreign Exchange Market on March 31, 2011, which was ¥83.15 = u.S.$1.00.
2. Return on assets = (Operating income + Non-operating income) / Total assets at end of fiscal year

Operating revenue
and Operating margin

Operating income
and ROA(Millions of yen)
500,000

(%)
10

9.0

400,000

8.7

7.6(Millions of yen)
50,000Operatingmargin8

Operatingrevenue

6

200,000

4

20,000100,000

2

10,000

0

0

08

09

10 (FY)

2.9 3

(FY)

Annual Report 2011

(Millions of yen)
15,000
5.9

(%)
6

2.5
2

30,000Fy2010: year ended March 31, 2011

2 Nomura Real Estate Holdings, Inc.

(%)

2.8

ROA
40,000300,000

0

Net income
and ROE

1

410,000Operatingincome

ROE
5,000

1.7

08

09

10 (FY)

0

0

08

09

1.8

2

Net
income010 (FY)Segment Information
Nomura Real Estate holdings, Inc. and its subsidiaries
years ended March 31(Thousands of U.S. dollars)(Note 1)

(Millions of yen)2009
¥448,656
231,629
90,40078,07839,764
19,836(11,051)¥ 34,013
11,787
15,769
10,1171,554
1,101(6,315)
2.5%
3.7%
2.9%
2.8%
2.7%
3.9%
¥481,489
287,4103,215
138,364
46,371
6,132(3)

Operating Revenue:
Residential development Business
Building Business
Investment Management & development Business
Property Brokerage & Consignment Sales Business
Other BusinessEliminations or corporate
Operating Income:Residential development Business
Building Business
Investment Management & development Business
Property Brokerage & Consignment Sales Business
Other BusinessEliminations or corporate
Return on Assets of Each Segment (Note 2)
Residential development Business
Building Business
Investment Management & development Business (Note 2)
Property Brokerage & Consignment Sales Business (Note 2)
Other Business
Inventories
Residential development Business
Building Business
Investment Management & development Business (Note 2)
Property Brokerage & Consignment Sales Business (Note 2)
Other BusinessEliminations or corporate

2010¥434,226
259,070
95,23836,18933,964
19,657(9,892)¥ 39,275
10,735
21,587
8,498
2,690
432
(4,667)
2.8%
3.5%
4.0%
2.1%
6.0%
1.6%
¥458,921
276,399
5,921
138,341
32,676
6,059
(475)

2011
¥480,983
286,135
100,389
56,04728,95520,967(11,510)¥ 42,083
15,80322,644
6,773
1,220
652
(5,010)
2.9%
5.0%
3.6%
1.8%
3.1%
2.3%
¥433,386
280,211
7,287
114,948
25,280
6,265
(605)

2011
$5,784,523
3,441,195
1,207,324
674,044348,232
252,162(138,435)$ 506,114
190,062
272,329
81,456
14,6707,855(60,258)—$5,212,103
3,369,934
87,625
1,382,417
304,029
75,346(7,276)

Notes: 1. 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 prevailing on theTokyo Foreign Exchange Market on March 31, 2011, which was ¥83.15 = u.S.$1.00.
2. ROA of each segment = Segment operating income / Segment assets at end of fiscal year

Operating revenue*(Millions of yen)
500,000

Operating income*

Other Business

400,000

Property Brokerage& Consignment Sales Business

300,000

Investment Management &Development Business
Building Business

200,000

Residential Development
Business

100,000
0

08

09

10 (FY)

Inventories*(Millions of yen)
50,000

Other Business(Millions of yen)
500,000

Other Business

40,000Property Brokerage& Consignment Sales Business

400,000

Property Brokerage& Consignment Sales Business

30,000Investment Management &Development Business

300,000

Investment Management &Development Business

20,000

Building Business

200,000

Building Business

100,000

Residential Development
Business

10,0000

08

09

Residential Development
Business
10 (FY)

008

09

10 (FY)* “Eliminations or corporate” amounts are not reflected in graphs.

(FY)
Nomura Real Estate Holdings, Inc. Annual Report 20113

Interview
the PresidentInterview with the President

My name is Kamezo Nakai. I took office as the new president of
Nomura Real Estate Holdingson June 29, 2011.
We placed the Nomura Real EstateGroup (the Group) squarely on apath to earnings recovery in the year
ended March 31, 2011 as a result ofproactive growth initiatives in eachbusiness field.
In the Residential Development
Business in particular, we acquired
ample prime lands for development
while strengthening our PROUD
brand, and as a result expanded
housing sales to a total of
5,000 units annually.
Although we expect the businessenvironment to remain difficult,we will make a concerted effort
as a corporate group andstrengthen our earnings base.

President

4 Nomura Real Estate Holdings, Inc.

Annual Report 2011with

Q1: how would you characterize the real estate industry

in fiscal 2010?

A: The housing sales and real estate investment markets showed signs ofrecovery, but full-fledged recovery for the business environment is likely totake some time.
I would like to explain the businessenvironment by markets briefly. In the
housing sales market, the contract rate
steadily rose during fiscal 2010, the year
ended March 31, 2011, bolstered bygovernment policies such as low interest rates and an increase in the gift tax
exemption. Recovery in the market was
illustrated by the increase in new
home sales.
In the real estate investment market,
there were continued mergers andother types of restructuring amongsome J-REITs, and the financing
environment improved on the back ofgreater vitality in bond issuances byinvestment corporations, as well as inpublic offerings. The Bank of Japan’s
move to purchase investment unitsin J-REITs is expected to contribute tostable market growth. Real estate sales
also showed signs of recovery, with anincrease in transactions centered on realestate firms and ordinary corporations.
In the office market, although the risein vacancy rates is gradually leveling off,lease rates remain weak.

Q2: how was Nomura Real Estate holdings affected by

the great East Japan Earthquake?

A: We incurred no significant damage, including loss of life or collapsedbuildings. The impact on earnings for the subject fiscal year was minimal.

As a representative of the group, I would
like to offer prayers for those who losttheir lives in the disaster, and heartfelt
sympathies to all victims.
The Nomura Real Estate group suffered no human loss or collapse ofbuildings, but there was partial damage
to certain condominiums andleased assets.

We recorded an extraordinary loss in
our fiscal 2010 financial statement of¥2,612 million for projected restoration
expenses, and delayed the delivery ofsome condominiums to fiscal 2011, theyear ending March 31, 2012, but the
impact on earnings for the subject fiscal
year was minimal.

Nomura Real Estate Holdings, Inc. Annual Report 20115

Q3: What were the operating results for fiscal 2010?
A: We posted increases in both revenue and earnings, boosted by sales

growth in the Residential Development Business and the Building Business,along with Groupwide reductions in expenses.

Consolidated operating revenue rose
10.8% from the previous fiscal year, to¥480,983 million, in fiscal 2010. In the
Residential development Business, despite delays in recording some sales dueto the effects of the earthquake, prior
to the disaster we had concluded contracts at a steady pace to exceed 5,000
units, and posted a record high numberof housing sales totaling 5,077 units, up
966 units from the previous fiscal year.
In the Building Business, revenues wereboosted by completion of Nihonbashi
Muromachi Nomura Building, and theacquisition of joint ownership shares ofToshiba Building, which will house thehead office of Toshiba Corporation.
In the Investment Management &development Business, revenue roseon an increase in gains from theproperty sales.

6 Nomura Real Estate Holdings, Inc.

Annual Report 2011

Operating income rose 7.2%, to¥42,083 million. In the Residential development Business, we recorded in costof sales a ¥10,066 million valuation loss
on inventories as a result of revisions
to profitability, made in considerationof such factors as the delay in market
recovery for upscale urban areas. however, we achieved an earnings increase
through measures to boost sales, alongwith groupwide efforts to cut costs.
Net income rose 17.4%, to ¥5,472 million. This was due mainly to the recording of extraordinary gains on sales ofoffice buildings, offset by extraordinary
losses including a loss on valuation ofequity investments related to commercial-mortgage backed securities (CMBS),and the projected value of restoration
work related to the great East Japan
Earthquake.

Q4: What are your earnings forecasts for fiscal 2011?
A: We expect revenue to decline as a result of a decrease in housing

sales, but are projecting that earnings will increase as a result of an improved gross margin ratio for housing and other factors in the subject
fiscal year.

Consolidated operating revenue forfiscal 2011 is forecast to decline 18.9%
year on year, to ¥390 billion. In the
Residential development Business, weare concerned about delays in construction schedules in the aftermath of thegreat East Japan Earthquake stemmingfrom disruptions in delivery of building
materials and household equipment,along with power shortages in Tokyo
during the summer. Consequently,
delivery of some units will be recordedin the next fiscal year, and we anticipate
that housing sales will decline by 1,577
units compared to fiscal 2010 for a totalof 3,500 units, resulting in a considerable
year-on-year decrease in revenue.
however, even in the aftermath of theearthquake the majority of new houses

placed on the market continue to sell
immediately. demand for prime housing remains firm, and we expect this tocontinue in fiscal 2011.
Operating income is forecast to rise
4.6% year on year, to ¥44 billion. Thisis due mainly to improvement in the
gross margin ratio for housing, and thebenefits from a full year of operations for
Nihonbashi Muromachi Nomura Building and Toshiba Building.
Net income is projected to jump
137.6% year on year, to ¥13 billion. Thisis due mainly to the lack of extraordinary
losses recorded in fiscal 2010, including
the loss on valuation of equity investments related to CMBS, and losses stemming from the earthquake disaster.

PROud CITy Inagekaigan, Mihama-ku, Chiba,
267 units (first and second round in first period),
sold on the first day of sales in June 2011

Nomura Real Estate Holdings, Inc. Annual Report 20117

Q5: Explain your medium-term growth strategies.
A: We believe that the initiatives we took in the Residential Development
Business and the Building Business during fiscal 2010 have paved the way
for future growth. We will further enhance our strength in the Residential
Development Business, while drawing on the experience and expertise of
the Group to actively develop all our businesses.
Fiscal 2011 is the final year for the “Nomura Real Estate Group Medium-term
Business Plan (2009–2011) – Growth andDevelopment.”
The main focus of this plan is tofurther bolster the Residential Development Business in which Nomura Real
Estate Holdings is able to take advantage of its strengths. During fiscal 2010,
over and above building up our PROUD
brand, we expanded the scale of the
Residential Development Business toannual sales of just over 5,000 units as aresult of our acquisition of ample prime
lands for development.
We also completed construction of
Nihonbashi Muromachi Nomura Building, and acquired joint ownership sharesof Toshiba Building, augmenting theleased asset holdings that are our foundation for stable revenue. We believethat these measures, in combination
with strengthening the Residential
Development Business, put us squarely
on a path to earnings recovery.
We are also evolving our development function. In particular, we are

actively developing our rebuilding andredevelopment business, an area where
demand is expected to increase going
forward. Rebuilding and redevelopment
is a field with high barriers to entry, as
it requires sophisticated know-how, experience, and trust. Nomura Real Estate
Holdings has good brand recognition
and a well-regarded track record in thisfield, and we intend to build on this toexpand our business opportunities.
In the property development operations, one of the areas we have beendeveloping is the Premium Midsize
Office (PMO) brand. So far we havecompleted eight properties and havethree more under construction or in theplanning stage. The brand concept has
been highly regarded by tenants, andeach of the properties maintains a highoccupancy rate. NREG TOSHIBA BUILDING Co., Ltd. will also generate a wide
range of opportunities for the corporate
real estate (CRE) business.

Rebuilding project of Sakurajosui Housing Complex,
Setagaya-ku, Tokyo, is under construction

PMO Hacchobori II, Chuo-ku, Tokyo, completed
in June 2010

8 Nomura Real Estate Holdings, Inc.

Annual Report 2011

Q6: What is your policy on profit distribution?
A: Net income for the subject fiscal year fell below our initial forecasts.
However, this was due mainly to the recording of transient extraordinary

losses, and we will pay a full-year dividend at our initially forecast amount of¥25 per share.
Our basic policy is to provide profit
distribution at a payout ratio of around
30% over the medium- to long-termin proportion to earnings, taking into
account the operating environment,
capital investment plan, and otherfactors, and with due consideration tointernal reserves.

In fiscal 2010 we paid a year-end
dividend of ¥12.50 per share, which
combined with the interim dividendof ¥12.50 per share paid previously, is a
total annual dividend of ¥25 per share.

Q7: What other message do you have for shareholders

and investors?

A: The business environment is unpredictable, but we intend tostrengthen the management structure for the corporate group and seek
further growth.

Corporate production activity has
slowed and consumer spending has
been restrained in the aftermath of
the great East Japan Earthquake,and the outlook for the economy
is unpredictable.
under these circumstances, theNomura Real Estate group will utilize
the market adaptability of its various

businesses to the fullest extent, and asa corporate group realize high earning and growth potential as we pursue
greater corporate value.
I would like to offer my sincere appreciation to shareholders and investors fortheir continued support of Nomura Real
Estate holdings.

Nomura Real Estate Holdings, Inc. Annual Report 20119

Record high housing Sales since Our listing

To

p

1 ic

Major Topics in Fiscal 2010

Nomura Real Estate Holdings’ housing sales reacheda total of 5,077 units in fiscal 2010, the highest figure
since our listing on the Tokyo Stock Exchange and provided a considerable boost to the increase in revenue
and earnings during the period. Our sales performancerose steadily, with PROUD CITY Ikebukuro-honcho andother properties selling out instantly as we developed
sales activities taking advantage of our strength inintegrated development and sales, further underpinned
by government policies, including low interest rates andan increase in the gift tax exemption.

Number of Housing Sold
(Unit)
6,000

5,077

5,000
4,000

3,752

3,810

06

07

4,111
3,390

3,000
2,000
1,000
0

08

09

10 (FY)PROUD CITY Ikebukuro-honcho

10 Nomura Real Estate Holdings, Inc.

Annual Report 2011

Nihonbashi Muromachi Nomura Building,completed in September 2010, is a largescale building combining the functionsof an office zone with a commercial andservices zone called YUITO.
The building has a direct link to the Mitsukoshimae subway station, and is highly
regarded for its convenience and leadingedge facilities. The building began operations with all floorspace fully occupied,and contributes to increased revenue.

p

3 ic

To

p

2 ic

To

Completion of
Nihonbashi Muromachi
Nomura Building

launch of Nomura Real
Estate Private REITIn November of 2010, the Nomura Real
Estate Group commercialized and began
operation of a new type of real estate investment fund, completely different fromlisted REITs and traditional private placement real estate funds.
Through mechanisms to minimize theimpacts of financial market risk and equities market risk, the fund's management
emphasizes investment unit price stability
and income return.

P Features
Management of investment
unit price fluctuation risk

Non-listingManagement ofrefinancing risk

Low leverage(LTV around 30%)Management of exit risk
at the time of closing the fundInvestment corporation
with no set period

Nomura Real Estate Holdings, Inc. Annual Report 201111

Condominiums and Detached Houses Completed
in Fiscal 2010

Major Completed or Acquired Properties in Fiscal 2010

P PROUD CITY Ikebukuro-honcho

P PROUD Shinjuku Gyoen Empire

Location: Toshima-ku, Tokyo/Units: 785

Location: Shinjuku-ku, Tokyo/
Units: 93 (Our Company’s allotments 35)

P PROUD CITY Kanamachi Avenue

P PROUD SEASON Hanakoganei

P PROUD Motoazabu

P PROUD CITY Ibaraki

Location: Katsushika-ku, Tokyo/Units: 304

Location: Ibaraki-city, Osaka/Units: 279

Join
NR t pro
EG je
BU TO cts
ILD SH wi
ING IBA th

Location: Minato-ku, Tokyo/Units: 32

Location: Kodaira-city, Tokyo/Lots: 250

P PROUD SEASON Nakano Kamisaginomiya
Location: Nakano-ku, Tokyo/Lots: 29

12 Nomura Real Estate Holdings, Inc.

Annual Report 2011

P PROUD CITY Shin-senri Nishimachi

Location: Toyonaka-city, Osaka/Units: 55

Office Buildings and Commercial Facilities Completed or Acquiredin Fiscal 2010

P Nihonbashi Muromachi

Nomura Building

Location: Chuo-ku, Tokyo
Floor space: 44,947 m2
Completed: September 2010

P NRE Shiba Daimon Building
Location: Minato-ku, Tokyo
Floor space: 15,700 m2
Completed: April 2010

P Toshiba Building(in which we acquired joint ownership shares)

Location: Minato-ku, Tokyo/
Floor space: 158,732 m2/Completed: March 1984

P NREG Hongo Sanchome Building

Location: Bunkyo-ku, Tokyo/
Floor space: 5,083 m2 /Completed: February 2011

P Miraza Shinjuku

Location: Shinjuku-ku, Tokyo/
Floor space: 7,648 m2 /Completed: August 2010

The group is developing PMO(the Premium Midsize Office)brand, the new category of officebuildings. PMO series are midsized office buildings which offer
the same level of design, functionality and security found in large
office buildings.

P PMO AkihabaraⅡ

Location: Chiyoda-ku, Tokyo/
Floor space: 3,502 m2 /Completed: January 2011

P PMO HacchoboriⅡ

Location: Chuo-ku, Tokyo/
Floor space: 4,397 m2 /Completed: June 2010

Nomura Real Estate Holdings, Inc. Annual Report 201113

Segments at a Glance

5.9

Residential Development
Business

4.3

Strengths

Major subsidiaries

P Sales of housing

The Residential development Business supplies condominium anddetached housing, primarily in theTokyo metropolitan area under the
PROud brand. By leveraging its integration in development and sales,
the group seeks to further improve
its site selection, product planningand sales capabilities, as well as its
management quality. Through thesestrategic measures, the group seeks
to enhance the PROud brand.

P Nomura Real Estate

The group owns and leases officebuildings such as Shinjuku Nomura
Building, Toshiba Building andyokohama Business Park, as well as
commercial facilities such as lazona
Kawasaki Plaza. In december 2008,
NREg TOShIBA BuIldINg Co., ltd.,
joined the group, boosting rental
revenue. The group is also working
to expand its fee-based businesses,
including property management.

P Nomura Real Estate

P Management ofcondominiums

11.4

20.4

Main Business

Composition of
Operating Revenues* (%)
FY201058.1

Residential Development Business

Building Business

P Office leasing(owned)P Office leasing

Building Business(subleasing)

Investment Management & Development Business

P Commercial

facility leasing

Property Brokerage & Consignment Sales Business

P Property man-agement andfacility management

Other Business
1.4

P PRIME X Co., ltd.
P Nomura Real Estate

Reform Co., ltd.

development Co., ltd.

P Nomura Building

Management Co., ltd.

P NREg TOShIBA BuIldINg

Co., ltd.

P yBP heating and Cooling

Supply Co., ltd.

P NREg TOShIBA FudOSAN

FACIlITIES Co., ltd.
Co., ltd.

33.6

Investment Management &Development Business

Composition of
Operating Income (%)
FY2010

P Property devel-

opmentP Investment

management

48.1* Operatng revenues in each segment havebeen calculated including intersegment sales
and transfers.

Property Brokerage &Consignment Sales Business

P Property broker-

age

P Consignment

sales

Fy2010: year ended March 31, 2011

P Real property

sales

Other Business

P Fitness club

operation

P Architecturalplanning andmanagement

P Planning ofcommercial
facilities

14 Nomura Real Estate Holdings, Inc.

Co., ltd.

P Nomura Amenity Service

2.6
14.4

development Co., ltd.

P Nomura living Support

Annual Report 2011

The property development operaP Nomura Real Estatedevelopment Co., ltd.
tions, which seek to generate capitalgains by supplying products to the
P Nomura Real Estate
real estate investment market, are
Investment Management
aggressively deploying the PremiumCo., ltd.
Mid-size Office (PMO) brand. In
investment management operations, P Nomura Real Estate AssetManagement Co., ltd.
the group strives to meet diverse
investor needs through the operaP Nomura Real Estatetion of REITs and private funds.
Capital Management
Co., ltd.

The segment conducts real estate
brokerage targeting individuals andcorporations, and sells condominiums and detached housing underconsignment from operaters outside
the group. In its individual brokerage operations, we are focusing on
expanding sales office networks
primarily in the Tokyo metropolitan
area and on promoting an Internet
strategy. Our corporate real estate
brokerage operations employ direct
networking channels to more than
3,000 companies that we have cultivated over a long period of time.

P Nomura Real Estatedevelopment Co., ltd.

P Nomura Real Estate

urban Net Co., ltd.

In the fitness club operations MEgA- P Nomura Real Estatedevelopment Co., ltd.
lOS manages 24 facilities mainlyin the Tokyo metropolitan area. We
P MEgAlOS CO., lTd.
expect to realize synergies with thegroup for the maintenance andP geo-Akamatsu Co., ltd.
management of facilities as well as
the acquisition of land information
when opening facilities, achieving
growth through the expansion of the
facility network. geo-Akamatsu also
provides a wide range of services
related to commercial facilities,
including their planning, operationand management.

Fiscal 2010 topics
In the Residential development Business, the group aggressively developed
its operations to leverage the strengthof the PROud brand, leading to therecord-high sales of 5,077 units, including PROud CITy Ikebukuro-honcho andPROud Shin-urayasu Palm Court. In thearea of housing management operations, efforts to expand the number ofunits under management led to thistotal of 127,000 units, causing a steadyincrease in revenues.

Other
Management ofcondominiums

20,000(Units)6,000

Rentalcondominiums

15,0004,000

Sales of housing

100,000

Housing forHousehold

2,000
5,000

08

09

0

10 (FY)

08(Millions of yen)090

10 (FY)(Millions of yen)

75,00050,00025,000

08

09

Other
Property
management
and facility
management
Commercial
facility leasing
Office leasing(subleasing)
Office leasing(owned)10 (FY)

4.8
415,0004.0
2.6

10,000

2

5,000
0

08

09

10 (FY)(Millions of yen)

60,000(%)

20,000(Millions of yen)
90,00008
09
10 (FY)
Vacancy rate at fiscal year-end

6

25,000100,000

0

08
09
10 (FY)
Assets under management at fiscal year-end

12,00015,0008,000

10,000

4,000

5,000

(Billions of yen)

Private Funds,
etc

Investment
management
30,000Propertydevelopment

08

09

Listed REITs
0

10 (FY)

08(Millions of yen)09

10 (FY)(Millions of yen)
3,000

40,00030,000Other

20,000Real property
sales

10,000Consignment
sales

08

09

10 (FY)

08
09
10 (FY)
Number of transactions and total transaction value of
brokerage (Transactions/Millions of yen)
16,000

6,000

12,000

4,500

8,000

3,000

0

Number oftransaction(right axis)

Total transaction
value (left axis)

1,000

08

(Millions of yen)09

10 (FY)(Millions of yen)

25,0000

2,000Property
brokerage0

In the fitness club operations,
MEgAlOS ran renovations of existingclubs and various campaigns for an
increase in memberships and higher
member retention. We also opened
MEgAlOS Mitaka.

Housing sales

10,0000

In the property brokerage operations sales business, we enhanced thecontents on our nomu.com website toreinforce brokerage targeting individuals and expanded our network of sales
offices, resulting in an increase in thenumber of transactions and the transaction value. In the area of real estate
property sales operations, we concentrated on sales promotion of properties
in small and medium-sized development projects.

Operating-related indices(Millions of yen)

200,000

0

In the Investment Management Business, we started the management of
Nomura Real Estate Private REIT, Inc.,
as a comprehensive-type, unlisted
open-ended REIT. In the property
development operations, we strove toexpand sales, including selling products
to Nomura Real Estate Private REIT, Inc.
We completed the construction of PMO
hatchobori II and PMO Akihabara II in
the PMO series.

Operating income(Millions of yen)
300,000

0

In the Building Business, we strove toexpand marketing activities closely tailored to tenant needs, as well as to raise
fee income from property management
and facility management operations.
In this fiscal year, Toshiba Building (inwhich we acquired joint ownershipshares) and Nihonbashi Muromachi
Nomura Building (which has a full occupancy ratio) contributed to the increase
in revenues.

Operating revenue

4,000

1,500

0

0

08
09
10 (FY)
Number of MEGALOS Members at fiscal year-end

1,200

150,000

800

100,000

400

50,00020,000Other

15,00010,000Fitness
Club

5,000
0

08

09

10 (FY)

008

09

10 (FY)

008

09

10 (FY)

Nomura Real Estate Holdings, Inc. Annual Report 201115

Outline of the Nomura Real Estate Group

Residential Development Business

Building Businessdevelopment and sales of condominiums,
detached housing, residential lots and otherproperties, as well as housing management andmaintenance under contract from management
associations after the sale of condominiums

development, construction, leasing, operationand management of office buildings, commercial facilities and other properties, as well as
consulting on CRE utilization

Residential Development Company

NomuraReal Estate
Development
PPPPP
Nomura Real Estate Development
Co., Ltd.
http://www.nomura-re.co.jp/english/
Nomura Real Estate development
operates in three fields of business:
residential development, which includes condominium and detachedhousing development and sales
under the PROud brand; corporate
real estate, which involves real property development and brokerage
services for corporate clients; andinvestment management, whichtargets high-profit investment.

P Nomura Living Support Co., Ltd.

P Nomura Building Management Co., Ltd.

http://www.nomura-ls.co.jp/ (Only in Japanese)
Nomura living Support
responds to a broad
range of customer
needs, from managing
condominiums tointerior cordination andconsultation. This
company is responsible for the management
and maintenance aspects of the Nomura Real
Estate group’s residential development, sales
and management operations.

http://www.nomura-bm.co.jp/ (Only in Japanese)
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 ofmanagement of buildings.

P PRIME X Co., Ltd.

P NREG TOSHIBA BUILDING Co., Ltd.

http://www.prime-x.co.jp/ (Only in Japanese)
Based on its accumulated real estate expertise, Prime X develops
Internet advertisingbusinesses that specialize in business in thereal estate and housing
industries. Prime X delivers proposals thatmaximize customer benefits, ranging from thecreation of corporate websites and project
homepages to creating and managing membership organizations, and handling projectsales promotions.

http://www.toshiba-building.co.jp/ (Only in Japanese)
NREg TOShIBA BuIldINg offers services
spanning the development, leasing andmanagement of officebuildings, commercial
facilities, warehouses,
condominiums and other properties, as well as
property brokerage and consulting on corporate real estate (CRE) utilization.

P Nomura Real Estate Reform Co., Ltd.

P YBP Heating and Cooling Supply* Co., Ltd.

http://www.nomura-rf.co.jp/
Nomura Real Estate
Reform Co., ltd. meetsthe growing demand forrenovation by applying
the expertise in condominium renovation
accumulated by
Nomura living Support Co., ltd. The company
actively offers renovation proposals to customers living in housing sold by the Nomura Real
Estate group or purchased through Nomura
Real Estate urban Net Co., ltd.

* YBP = Yokohama Business Park

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

P NREG TOSHIBA FUDOSAN FACILITIES Co., Ltd.
P Nomura Amenity Service Co., Ltd.

16 Nomura Real Estate Holdings, Inc.

Annual Report 2011

Investment Management &Development Business

Property Brokerage &Consignment Sales Businessdevelopment and sales of profit-generating
property for the real estate investment market,
asset management under consignment frominvestment corporations, and asset management for real estate and real estate securitized
instruments private funds.

Brokerage of real estate, sales of condominiums
and detached housing for individual households consigned from outside the group, andother services

Other Business
Operation of fitness clubs; construction designand supervision; and planning, design andmanagement of commercial facilities

Corporate Real Estate Service Company
Investment Management &Advisory Company
P Nomura Real Estate Investment Management
Co., Ltd.
http://www.nreim.co.jp/english/
Nomura Real Estate
Investment Management structures andmanages private fundswith a wide range ofrisk–return preferences.
These funds precisely
meet the varying needs of investors regarding
real estate investment, including investments inoffices, commercial and logistics facilities.

P Nomura Real Estate Asset Management
Co., Ltd.
http://www.nre-am.co.jp/english/
In line with its basic
policy of stable medium- to long-term
asset management,
Nomura Real Estate
Asset Management
manages two listed
REITs: Nomura Real Estate Office Fund, andNomura Real Estate Residential Fund, as well as
the unlisted private REIT, Nomura Real Estate
Private REIT.

P Nomura Real Estate Urban Net Co., Ltd.

P MEGALOS Co., Ltd.

http://www.nomura-un.co.jp/ (Only in Japanese)
This company’s services
include residential realestate brokerage, whichassist residential
relocation, and commercial real estate
brokerage. The company also provides consignment sales business.

http://www.megalos.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.

P Geo-Akamatsu Co., Ltd.
http://www.geo-akamatsu.co.jp/foreign/geo-Akamatsu provides
a full range of property
consulting and otherservices that maximize
its 40 years of accumulated expertise. These
services include surveys
of commercial facilities, project planning,leasing, commercial space design and property
management.

P Nomura Real Estate Capital Management
Co., Ltd.
http://www.nrecm.com/english
Nomura Real Estate
Capital Management
specializes in managing
securitized real estate
funds varying fromfunds-of-funds to invetsment securities related
to real estate. It also handles investments onbehalf of pension funds and other institutional
investors.

Nomura Real Estate Holdings, Inc. Annual Report 201117

Group Company Profile

Nomura Real Estate Reform Co., Ltd.

Exercising Total group Strengths
to Expand the Condominium
Renovating Business
Nomura Real Estate Reform Co., ltd. began operations from April 1, 2011 as
the Nomura Real Estate group’s only dedicated renovation and renovating
works company.
The group’s renovating business has been developed by our housing
management firm Nomura living Support Co., ltd. This business was spun
off as a new separate company to more vigorously respond to growing
renovating demand.
Nomura Real Estate Reform is expanding businesses using the accumulated know-how of the Nomura Real Estate group to meet the growing
renovating demand from customers who purchased houses or condominiums that the group previously built and sold or brokered, or is presently
managing, by providing comprehensive customer support that only thegroup can offer. These include combined proposals to condominium associations for large-scale repairs to common areas together with renovating ofareas owned by individual condo owners, and fixed-price renovating packages to customers purchasing brokered properties.
Nomura Real Estate Reform will manifest the strengths of the entire
Nomura Real Estate group to expand our renovating business by providing
safe and reliable renovation services for quality housing maintenance andrepair, so our customers can be satisfied with their housing throughout
their lives.

Toshiaki Seki
President

P Corporate Profile

head Office:Chofu Shinjuku Building, 5-14-6 Shinjuku, Shinjuku-ku, Tokyo
160-8351, Japan
Representative:
Toshiaki Seki, President
Business Activities:
Remodeling, house cleaning, product sales, etc.
Shareholders:
Nomura living Support Co., ltd. (80%)
Nomura Real Estate urban Net Co., ltd. (20%)
Capital:¥100 million
Number of Employees: 40 (as of April 1, 2011)
Established:december 22, 2010
Website:http://www.nomura-rf.co.jp/

18 Nomura Real Estate Holdings, Inc.

Annual Report 2011

P Business Activities
Fixed-price Remodeling PICCA
The fixed-price remodeling PICCA makes use of our wealth of accumulated experience andperformance so our customers can easily enjoy high quality. We offer reform plans that match
family growth and lifestyle changes from a vast lineup of reform options.

Living Services

Condominium Association Services

We support comfortable living with a variety
of services ranging from house cleaning,small-scale repairs and termite removal towater filter cartridge sales.

Nomura Real Estate Reform provides remodeling services for the areas owned by individual condominium owners, for improved
asset value and the comfortable lifestyle ofcondominium residents.

Custom-made Reforms
and Renovation
We propose customized living-space plans
to meet individual customer needs forrealizing a richer lifestyle.

Earthquake-resistance Testing andRetrofitting (detached houses)
Nomura Real Estate Reform handles seismic
works ranging from general earthquake
resistance diagnosis to retrofitting together
with extensions and renovating.

P Renovation Example

Remodel of a 10-year-old Condo to Greatly Increase Storage Space
The family realized that they needed remodeling when they
moved in and saw that the beautiful rooms they had justbought were cluttered with their belongings.
The renovation provided a simple, bright and open spacewith a white-color tone for the kitchen and storage fixtures.
The storage space was greatly increased, so the family could
enjoy clean rooms without clutter.

After

BeforeThe kitchen wasdark, separated bya wall from the living room. The living room provided
almost no storage
space.

Nomura Real Estate Holdings, Inc. Annual Report 201119

Corporate Governance
Basic Viewpoints Regarding Corporate Governance
Profile of Nomura Real Estate GroupThe Company believes that the company must be governed in a
way that continuously maximizes corporate value over the longterm, while consideration is given to the interest of shareholders and all other stakeholders related to the Nomura Real Estategroup. Furthermore, we aim to enhance the earning power of theentire group, and while acting as a holding company in managing
and supervising the business activities of our subsidiaries, we will
strive to build a highly transparent management organization.

Corporate Governance System

P Group Philosophy
The group Philosophy is a commitment to both ourselves and to our customers and society. By showing
this commitment and continuously delivering a levelof customer satisfaction at least commensurate withit, we are determined to be a group that people cancount on even more than in the past.

P Group Message

The group Message crystallizes the philosophy of the
Nomura Real Estate group.

P Group Mission
We hold each and every meeting in high esteem andare grateful for the fruit it has born. Our enthusiasm
due to the dynamism of group effort and highly creative individuals enables us to produce the best quality service and product. 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 theshared mission, sense of identity and goals for which the
Nomura Real Estate group everlastingly works.

20 Nomura Real Estate Holdings, Inc.

Annual Report 2011

M Outline of Corporate Governance System
The Company’s Board of directors comprises six directors. It
decides important corporate matters and supervises the execution of business operations by directors. Statutory auditors attend
meetings of the Board of directors and provide their opinions as
the need arises.
The Board of Statutory Auditors comprises five statutory auditors, three of whom are external auditors. The Board formulates
such matters as audit policies and operational roles, and receives
reports and conducts discussions regarding important matters relating to audits carried out on the basis of those policies and roles.
The Company has adopted a statutory auditor system. The
Company believes that management supervision should be
conducted primarily by statutory auditors. The Company enhances
the effectiveness of its audit activities by assigning specialized staff
to assist statutory auditors. Furthermore, the majority of statutory
auditors are external statutory auditors, which preserves their
independence from management and creates a structure thatenables them to perform operational audits appropriately. The
Company also has established risk management, compliance andinternal audit systems, each of which report regularly to the Boardof directors. Such reports enable the board to effectively supervise
directors’ execution of duties.
As it is a holding company, the Company convenes group Management Meetings, members of which include the Company’s
directors and the presidents of major subsidiaries. The purpose of
these meetings is to unify intentions to promote group management and verify the progress of the budgets of each operatingcompany and the execution status of other business operations.

Internal Audit System andStatutory Auditor Audit System

M Risk Management and Compliance Framework
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 of promoting risk management activities within the group.
The Committee deliberates matters relating to risk management,compliance, and information security for the entire group, andalso cooperates and provides guidance with regard to countermeasures when risks occur.

M Internal Audit System
The Nomura Real Estate group has established an internal audit
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, which allows the department to maintain organizational
independence. In addition, we have established the Internal Audit
department in the Company that supervises the internal audit
functions of the entire group and performs monitoring, evaluation
and auditing in each division within the Company.

M Compliance Systems
The Nomura Real Estate group regards compliance, including theobservance of laws and regulations and corporate ethics, as oneof the most important management issues. As a set of relevant
guidelines, it has formulated the Nomura Real Estate group Codeof Action. To promote continuous educational and awarenessactivities for executives and employees, we have established a CSR
Promotion department in the Company. It provides advice, guidance, and support to group companies. Furthermore, based on
our priority of collecting information regarding risks, we have set
up the Nomura Real Estate group Risk hotline as a point of contact
for internal reporting by group employees.

M Statutory Auditor Audit System
The Company has appointed full-time staff in the Corporate
Planning department to support statutory auditor audits. Eachstatutory auditor attends meetings of the Board of directors andother important meetings and audits the execution of the duties
of directors while cooperating with the Internal Audit department
and the auditing firm as needed.

Corporate Governance System

General Meeting of Shareholders
Appointment/dismissal

Appointment/dismissal

Nomura Real Estate Holdings, Inc.

Board of Directors (6 directors)

Audit

Board of Statutory Auditors (5 statutory auditors)

Appointment

Appointment/dismissal

Representative Director

Audit

Group Management Meeting

The filingcompany

Certified Public
Accountant(Auditing Firm)

Risk Management Committee

Corporate Planning Department

Management guidance

CSR Promotion Department

Training & guidanceInternal Audit Department

Monitoring

Operating Companies

Nomura Real Estate Holdings, Inc. Annual Report 201121

M Accounting Audits
The Company has concluded an auditing contract with Ernst &young ShinNihon llC. In addition to performing regular audits,
Ernst & young ShinNihon llC discusses and verifies accounting
issues as needed and conducts appropriate accounting practices.
All of the certified public accountants that carry out work haveno more than seven years of continued experience in auditing
the Company, and the auditing firm has adopted autonomous
measures to ensure that its employees who carry out work do notparticipate for longer than a designated period in the Company’s
account auditing.
Assistants associated with audit operations comprise six
certified public accountants and seven assistant certified public
accountants and staff.

Compensation of Directors and Statutory Auditors
At the second annual general meeting of shareholders on June
26, 2006, it was resolved that the maximum annual compensation
limit for directors and statutory auditors would be ¥650 millionand ¥120 million, respectively. The Company paid the following
compensation for fiscal 2010 to directors and statutory auditors.
The Company’s compensation of directors and statutory auditors consists of fixed monthly compensation and variable compensation, comprising bonuses and stock-related compensation.
Bonuses are determined according to the Company’s businessperformance during the relevant fiscal year, as well as to individual
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 theright is exercised) is determined on the basis of market prices, orshare compensation stock options, which have exercise pricesof ¥1 per share. Stock-related compensation is not provided forstatutory auditors.
Seven directors
Two statutory auditors(excluding external auditors)
Four external directors
Total: Thirteen persons¥272 million¥56 million¥31 million¥360 million

Auditor Compensation
Compensation paid to the Company’s certified public accountants(auditing firm) for fiscal 2010 was as follows.
Compensation paid for Compensation paid foraudit certification activities
non-audit activities
The Company¥64 million

0Consolidated subsidiaries¥116 million¥26 million

Total¥181 million¥26 million

22 Nomura Real Estate Holdings, Inc.

Annual Report 2011

Matters Concerning Parent Company
The relations between the Company and its parent companies(Nomura land and Building Co., ltd., and Nomura holdings, Inc.)
are as follows.
1) Capital relationship with Nomura Land and Building
Co., Ltd.
As of March 31, 2011, the Company’s parent company, Nomura
land and Building Co., ltd., held 50.9% of its shares.
Nomura land and Building Co., ltd. is a subsidiary of Nomura
holdings Inc., and therefore Nomura holdings Inc., is also a parent
company of the Company. This holding percentage could change
in the event of a sale of the Company’s shares or an increase incapitalization.
2) Business transaction relationships
In fiscal 2010, business transactions between NlB and companies
in the Nomura Real Estate group amounted to ¥4 million in the
Building Business segment.
3) Personal relationships
Kamezo Nakai, the Company’s President is concurrently serving as
the President of NlB.
Moreover, Mitsuru Nakajima, the Company’s external statutory
auditor, is concurrently serving as a director of NlB. Apart fromthe persons mentioned above, no executives or employees of theCompany are concurrently serving at NlB or on secondment fromthat company.
The relationship between the Nomura Real Estate group and
NlB is as described above, but it does not exert any influence on
the Nomura Real Estate group’s free marketing activities or management decisions. The Company does not have any businesscompetition with its parent companies or with their subsidiaries
outside the Nomura Real Estate group.
The Company performs business management independently
from the parent companies based on the Company’s
own responsibility.

Board of Directors and Statutory Auditors(As of June 29, 2011)

ChairmanPresident

Director

hirohisa Suzuki

Kamezo Nakai

Seiji Matsumoto

Director

Director

Director

Toshiaki Takahashi

Takao Orihara

yukoh yoshida

Statutory Auditor

Statutory Auditor

Shigeaki yoshioka

Mitsuharu Sato

Statutory Auditor*

Statutory Auditor*

Statutory Auditor*

yasuaki Fukui

Shigeru Matsushima

Mitsuru Nakajima

Note: yasuaki Fukui, Shigeru Matsushima and Mitsuru Nakajima are external statutory auditors as provided for in Article 2, Item 16 of the Company law.

Nomura Real Estate Holdings, Inc. Annual Report 201123

Corporate Social Responsibility
The Nomura Real Estate Group strives, as a corporate citizen, to achieve the sustainable development of society,based on our Group message of “Bringing Tomorrow Today.” We advance our businesses based on the Nomura Real
Estate Group Environmental Philosophy, provide high-quality products and services that our customers trust, andalways remain aware of the impact our businesses have on the environment and society.
Environmental Efforts

The PROUD ECO Vision—

the environmental concept of the Residential Development Business

L PROUD Oi Jameszaka Embodies the PROUD ECO VISION
PROud Oi Jameszaka embodies the PROud ECO VISION of a comfortable residence in harmony with the environment. Based on
the concept of a house that breathes, this condominium complex
includes such design features as drawing breezes through theproperty leading into each residence.
L Fourth Firefly Habitat Exhibition 2011 to Enjoy Nature
Close at Hand
Nomura Real Estate held the Fourth Firefly habitat Exhibition at
the yokohama Business Park Bellini hill in June 2011. This environmental event featured observation of fireflies, rice planting
for local elementary school students and other opportunities toexperience nature close at hand and recognize the importance ofthe global environment.

Providing Reliable Services

Bolstering thermal insulation as a means to realize energy consumption cuts and adopting anarray of energy-saving equipment as a standard

ReduceUtilize
Realizing ecological improvements
through efforts to incorporate passive
design as a means for considerate,
creative energysaving design

Circle Aid for Customer Safety
Nomura Real Estate has launched the comprehensive Circle Aidprogram to protect customer safety at PROud brand properties.
Circle Aid supports self-help by residents themselves and mutual
aid with local neighborhoods when disasters strike. The programaims at smooth coordination with fire departments, police andother public assistance. We are working to protect customers
through both physical measures, such as earthquake-resistantconstruction and the installation of elevators with seismic sensors,and systems support including support for disaster drills that help
form disaster-response communities at condominiums.

PROud Oi Jameszaka

The comprehensive Circle Aid program to protect
customer safety at PROUD brand properties

Firefly habitat Exhibition 201124 Nomura Real Estate Holdings, Inc.

Annual Report 2011

CreateIntroducing equipment to harness
natural energy sources (such as solar
panels and wind power generators)

Management’s Discussion and Analysis
Trends in the Real Estate Industry
The condominium market in the Tokyo metropolitan area wasfavorable during calendar year 2010, with sales increasing 22.4%
year on year, to 44,535 units, and contract rates at average firstmonth up 8.7%, to 78.4%. The market was generally firm during fiscal 2010, ended March 31, 2011, with average sales prices
rising 4.0%, to ¥47.16 million. Sales improved as real demand wassparked by policy support, including low interest rates andexpanded exemptions from gift taxes.
In the real estate investment market, restructuring continued
with several mergers of J-REITs toward achieving expanded scaleand credit strength. There were signs of improvements in thefunds procurement environment, with the active issuance ofbonds and public offerings by investment corporations.

The Bank of Japan purchased some J-REIT investment units, andis expected to continue contributing to stable market growth in
the future. Brokerage operations also showed signs of recovery,
with increased transactions among realtors and regular businesscorporations.
In the office market, the rise in vacancy rates eased with such
positive signs as tenant moves to larger premises where rents havebeen decreased. Regardless, the office building vacancy rate in thefive wards of central Tokyo reached a new record high of 8.91% at
the end of december 2010, indicating that a full-scale recovery indemand has not yet emerged. Rent levels remained soft, although
the rate of decline in rents gradually contracted.

Average prices and contract rates for condominiums
in the Tokyo metropolitan area

Vacancy rates in the five wards of central Tokyo

J-REIT market capitalization(Millions of yen)
50

(%)
10

(Trillions of yen)

As of December 31

As of March 31

For the calendar years

(%)
100

78.4

40

78.3

30

69.7

80

8

60

6

20

40

4

10

20

2

0

0

6

8.1

Contract rate

69.7

62.7

8

8.9

4

Average price

0

06

07

08

09

10

Source: Real Estate Economic Institute Co., Ltd.

4.7
2.9

2.7

06

07

2

08

Source: Miki Shoji Co., Ltd.

09

10

0

07

08

09

10

11

Source: The Association for Real Estate Securitization

Analysis of Operating Results
In this environment, the Nomura Real Estate group achieved higher consolidated sales and profits. Operating revenue rose ¥46,756
million, or 10.8%, to ¥480,983 million, on increases in the numberof units sold in the Residential development Business segment
and greater gains from the sale of properties in the Investment
Management & development Business segment. In terms of
profits, operating income rose ¥2,808 million, or 7.2%, to ¥42,083
million, even though the group posted a ¥10,066 million valuation
loss on inventories as a result of improved profitability. Operating
income increased on the rise in unit sold in Residential

development Business, revenues from acquired joint ownershipof shares in Toshiba Building, and contributions from the recently
completed Nihonbashi Muromachi Nomura Building, combinedwith broad-ranging expense reduction efforts. Net income grew¥812 million, or 17.4%, to ¥5,472 million. The Company posted¥14,766 million in valuation losses on equity investments (CMBSs)and ¥2,612 million in extraordinary losses from estimated reconstruction costs following the great East Japan Earthquake. Those
were partially offset by ¥11,066 million in extraordinary profits on
gains from the sale of noncurrent assets.

Nomura Real Estate Holdings, Inc. Annual Report 201125

Operating Results by Segment
Residential Development BusinessIn the Residential Development Business segment, the Company
realized favorable sales performance. We implemented strategies to boost the value of the PROUD brand and strove to further
strengthen site selection, product planning, and sales capabilities
by leveraging the strengths from the integration of development
and sales. Sales increased with condominium sales at PROUD CITY
Ikebukuro-honcho (Toshima-ku, Tokyo), PROUD Shin-urayasu Palm
Court (Urayasu City, Chiba Prefecture), PROUD CITY Kanamachi
Avenue (Katsushika-ku, Tokyo), and PROUD CITY Ibaraki (Ibaraki
City, Osaka Prefecture), combined with sales of detached houses
at PROUD SEASON Hanakoganei (Kodaira City, Tokyo) and PROUDSEASON Fujisawa Shonan Terrace (Fujisawa City, Kanagawa Prefecture). The combined number of condominiums and detachedhouses sold rose 966 units year on year, to 5,077 units. The inventory of completed units at the end of the fiscal year declined 422
units, to 113 units, while concluded housing contracts not yet
posted as sold rose 1,225 units, to 2,238 units.
We worked to boost earnings from housing management
operations by actively soliciting external consignment orders,in addition to managing residences within the Group. We also
introduced the “Living Q Call” lifestyle-support service for PROUD
condominiums from April 2010 to further boost customer satisfaction. Nomura Real Estate Reform Co., Ltd. was established in
December 2010 to conduct remodeling and renovation works on
condominiums and detached homes.
As a result of these efforts, Residential Development Businesssegment operating revenue rose ¥27,065 million, or 10.4% year
on year, to ¥286,135 million, while operating income rose ¥5,068
million, or 47.2%, to ¥15,803 million. Segment sales and profits
both increased, mostly from the increase in the number of housing units sold.
Building BusinessIn the Building Business segment, Nomura Real Estate Development separated its building sales division from its building divisionin April 2010 and reinforced sales activities to meet tenant needs.
As a result of such efforts, the vacancy rate at the end of the fiscal
year declined 0.8 percentage point year on year, to 4.0%. Contributions from Nihonbashi Muromachi Nomura Building (Chuo-ku,
Tokyo), which began operations with full occupancy from October 2010, and from acquired joint ownership of shares in Toshiba
Building (Minato-ku, Tokyo) contributed to the increased profits. In
the property management and building management business,
the Company continued to earn commissions and receive tenantorders for interior works.
As a result of these efforts, Building Business segment operating revenue rose ¥5,151 million, or 5.4% year on year, to ¥100,389
million, while operating income rose ¥1,057 million, or 4.9%, to¥22,644 million.
Investment Management & Development Business
Investment management operations focused on the stable management of the various funds operated by the Nomura Real EstateGroup. Nomura Real Estate Asset Management launched the
Nomura Real Estate Private REIT in November 2010 as a comprehensive, unlisted, open-ended REIT.

26 Nomura Real Estate Holdings, Inc.

Annual Report 2011

In property development operations, the Company sold products to the Nomura Real Estate Private REIT and carried out otherefforts to promote sales. We also realized steady progress in vigorously developing the Premium Mid-Sized Office (PMO) brand of
mid-sized office buildings with the quality of large-scale buildings,
with the completion of the PMO Hatchobori II (Chuo-ku, Tokyo)
in June 2010 and the PMO Akihabara II (Chiyoda-ku, Tokyo) in
January 2011.
As a result of these efforts, Investment Management & Development Business segment operating revenue rose ¥19,858 million,
or 54.9% year on year, to ¥56,047 million, while operating income
declined ¥1,725 million, or 20.3%, to ¥6,773 million. This increasein sales with a decline in profits was mostly because while product sales increased in the property development operations, theCompany posted investment valuation losses.
Property Brokerage & Consignment Sales Business
The Company promoted strategic use of Internet media in its
property brokerage operations and actively promoted proposalbased businesses. We also developed our branch network closely
tied to local communities to further strengthen retail operations
by opening the new branches Mitaka Center (Musashino City, Tokyo) in May 2010, Kamata Center (Ota-ku, Tokyo) in October 2010,
and Kinshicho Center (Sumida-ku, Tokyo) and Eifukucho Center(Suginami-ku, Tokyo) in February 2011.
In the area of real property sales, we promoted product salesof small and medium-sized development projects using wideranging property brokerage data.
Despite these efforts, Property Brokerage & Consignment Sales
Business segment operating revenue declined ¥5,009 million, or
14.7% year on year, to ¥28,955 million, while operating income fell
¥1,470 million, or 54.7%, to ¥1,220 million. This decrease in sales
and profits was mostly because while the property brokerage
operations handled more properties with higher values, this wasoffset by a greater decline in property sales.
1.4%
2.6%
14.4%

Breakdown ofconsolidated operating
income by segment
FY201033.6%¥42,083(Millions of yen)

48.1%
Residential Development Business
Building BusinessMillions of yen¥15,803 (33.6%)¥22,644 (48.1%)

Investment Management & Development Business ¥6,773 (14.4%)
Property Brokerage & Consignment Sales Business ¥1,220 (2.6%)
Other Business¥652 (1.4%)

Note: Since operating income for each business does not include “eliminations
or corporate” in segment information, the sum of operating income of thebusinesses presented in the pie chart differs from the total amount shown inthe center of such pie chart. The shares of consolidated operating income bybusiness have been calculated based on operating income for each segment.

Other BusinessIn the fitness club business, the Company implemented renovations of existing clubs and various campaigns to recruit new members and improve membership retention. We also opened a new
club MEGALOS Mitaka (Musashino City, Tokyo) in May 2010.

As a result of these efforts, Other Business segment operating
revenue rose ¥1,310 million, or 6.7% year on year, to ¥20,967 million, while operating income rose ¥221 million, or 51.3%, to¥652 million.

Major operating-related indices for each business are shown in the table below:
Years ended March 31
2007
Residential Development Business:
Condominium sales (units)
3,245
Detached housing sales (units)
507
Gross margin ratio of housing sales (%)
22.2
Completed housing units held in inventories (units)
6
Rental condominium sales for investors (units)
248
Condominiums under management (units)
97,847
Building Business:
Vacancy rate at year-end (Offices, commercial facilities) (%)*
1.9
Investment Management & Development Business:
Assets under management (millions of yen)**771,211
Property Brokerage & Consignment Sales Business:
Brokerage (number of transactions)
3,949
Brokerage-total transaction value (millions of yen)
388,479
Other Business:
Members of MEGALOS
115,457

2008

2009

2010

2011

3,463
347
22.7
275
747
103,102

3,135
255
21.8
265
621
110,365

3,696
415
16.1
535
248
121,212

4,497
580
16.4
113
138
127,567

2.2

2.6

4.8

4.0

1,031,528

1,235,611

1,204,546

1,126,601

4,047
406,635

4,184
293,047

5,219
386,446

5,774
425,274

120,543

129,944

128,365

127,707

Notes: 1. Figures shown for fiscal 2007 and earlier were calculated by including the leased floor area of residential projects.
2. Methods for the calculation of REIT’s AUM (Assets Under Management) have been changed since fiscal 2006.

Analysis of Financial Position
As of March 31, 2011, total assets stood at ¥1,474,331 million, up¥68,906 million from a year earlier. This was mostly because while
equity investment (down ¥33,941 million), real estate for sale andother inventory assets declined (down ¥25,535 million), property,
plant and equipment (up ¥106,305 million) and investment securities (up ¥26,096 million) rose.
Total liabilities increased ¥60,978 million to ¥1,116,965 million.
This was mostly because while long-term loans payable decreased(down ¥27,856 million), short-term loans payable (up ¥52,310
million) commercial paper (up ¥20,000 million) and bonds payable(up ¥12,820 million) increased.
Net assets rose ¥7,928 million year-on-year to ¥357,365 million.
This was mostly because minority interests (up ¥4,679 million) andretained earnings (up ¥2,140 million) increased.

Nomura Real Estate Holdings, Inc. Annual Report 201127

Cash Flows
Cash flows from operating activities
Net cash provided by operating activities amounted to ¥33,948
million, an increase of ¥14,682 million from the previous fiscal year.
This was primarily due to the declines in property for sale andother inventory assets.

Cash flows from financing activities
Net cash used in financing activities totaled ¥7,486 million, adecrease of ¥20,584 million from the previous fiscal year. The main
inflows were from short-term loans payable and commercial paper, while outflows were led by repayment of long-term loans.

Cash flows from investing activities
Net cash used in investing activities amounted to ¥33,731 million, an increase of ¥9,160 million from the previous fiscal year.
This mostly reflected increased expenditures for the acquisition ofproperty and equipment and intangible fixed assets.

As a result of these cash flows, cash and cash equivalents stoodat ¥82,066 million at the end of the fiscal year, a decline of ¥7,269
million from the end of the previous fiscal year.

Basic Policy Concerning Profit Distribution, and Dividends for Fiscal 2010 and Fiscal 2011
The Company’s basic policy regarding the distribution of profits
to shareholders is to aim at a payout ratio of approximately 30%
over the middle to long term, in accordance with annual businessperformance, comprehensively considering the operating environment, capital investment plans, retained earnings, and otherrelevant factors.
The fiscal 2010, ended March 31, 2011, net income was below
the initial projections, but this was primarily due to the posting of

one-time extraordinary losses. Consequently, the Company declared a year-end dividend of ¥12.5 per share as initially planned.
Combined with the ¥12.5 interim dividend already paid, the annual dividend totaled ¥25 per share.
For fiscal 2011, ending March 31, 2012, the Company intends
to maintain interim and year-end dividends of ¥12.5 for an annual
dividend of ¥25 per share.

Consolidated Performance Outlook for Fiscal 2011
In fiscal 2011, the Company expects to realize ¥390,000 million
in operating revenue, ¥44,000 million in operating income, and¥13,000 million in net income.
Given the uncertainties regarding the procurement of many
types of construction materials and the supply of electricity to
projects under construction in our main residential development
business, the fiscal 2011 consolidated performance projections
were compiled incorporating delays in construction and periods

recognized operating revenues from the initial plans for someprojects based on certain assumptions.
The Nomura Real Estate Group did not suffer major losses (suchas loss of life or collapse of buildings) in the Great East Japan Earthquake of March 11, 2011. While there was minor damage to somestructures, the estimated reconstruction expenses were posted
as an extraordinary loss in fiscal 2010, so these should have only aminimal direct effect on the consolidated fiscal 2011 performance.

Risk Affecting the Business of Nomura Real Estate GroupWe believe that the following major risks have the potential tosignificantly impact the operating results and financial conditionof the group, as well as the stock prices. It should be noted thatmatters concerning the future in this document have been determined based on information available to the group on the scheduled submitting date of the fiscal 2010 annual securities report.
1) Trends in the real estate market
The Nomura Real Estate Group’s performance for the fiscal year
under review resulted in increased income and profit comparedto the previous fiscal year. However, fears over declining corporate
activity and restrained personal consumption due to the impactof the Great East Japan Earthquake have added to the prolonged
strong yen, deflation, and rise in oil prices as causes for concern,and the situation is not conducive to predictions for
economic outlook.
28 Nomura Real Estate Holdings, Inc.

Annual Report 2011

In the future, certain events could still cause a decline in purchasing sentiment among customers of the Residential Development Business and the Property Brokerage & Consignment Sales
Business, our core businesses. These events include the current
economic slowdown, an associated deterioration in corporate
earnings, a decline in consumer spending, a rise in interest rates,or an excess supply in the real estate market. There may also be
falls in selling prices or increases in inventories due to the decline
in purchasing sentiment, or losses on valuation of inventories. For
the Building Business and the Investment Management & Development Business, moreover, such events could also spark declines
in office rents, increases in vacancy rates, falls in asset values, ordrops in profit ratios. In addition, declining investment unit priceand weakening demand for investment funds are possibilities in
the REIT market. Such events could have an adverse impact on theGroup’s business performance.

2) Changes to real estate-related legislation or the tax system
A number of laws and regulations apply to the various businessesof the Nomura Real Estate group, which will be subject to new
regulations as it expands its operational scope in the future. going
forward, the group may face new obligations and expense burdens if the Building Standards law, the Building lots and Buildings
Transaction Business law, the Financial Instruments and Exchange
law, or other real estate-related laws are revised, or if new legislation is implemented. Such events could adversely affect thegroup’s business performance.
Furthermore, if the tax system related to real estate is revised,
this could lead to an increase in expenses for holding, acquisition,and sales of assets, or a decline in the purchasing sentiment ofcustomers. It could also prompt a change in the facility strategies
of companies and revisions of their investment plans. Such
events could have an adverse impact on the group’s businessperformance.

7) Personal information
In the course of carrying out its operations, the various businessesof the group handle large quantities of personal information. The
group endeavors to comply with various laws and regulations
pertaining to personal information, such as the law Concerning
Protection of Personal Information, and also handle information in
the proper manner. Moreover, group companies have produced
various documents, such as “Information Security Provisions,” “Rules
for handling Personal Information” and “guidelines for Entrusting
the handling of Personal Information.” In these ways, the groupstrives to train and educate employees and protect the interests ofcustomers.
In the event of external leakage of personal information due
to unforeseen circumstances, however, confidence in the group
could be lost, leading to a decrease in sales and the incurrence ofexpenses to pay compensation for damages. This could have an
adverse impact on the group’s business performance.

3) Licenses and permits for major businesses
The group obtains the licenses and permits, such as real estate
brokerage and construction licenses, when carrying out businessactivities.
Currently, there are no reasons for any of these licenses or permits to be cancelled or subject to penalties. however, in the future,
if such licenses or permits are cancelled or subject to penalties forwhatever reason, this could adversely affect the group’s businessperformance.

8) Soil pollution
under the Soil Contamination Countermeasures law, owners ofland are obliged to evaluate and report on the soil pollution statusof their properties with respect to the presence of specific harmful
substances, and also to take measures to remove such polluting
substances.
When considering purchases of land for business use, thegroup conducts historical and pollution assessments in advance.
If the presence of pollution is confirmed, the group either cancels
the acquisition or engages specialists to remove such pollution.
however, it is possible that the aforementioned assessments fail toconfirm the full extent of soil pollution, or that the seller is unable
to fulfill his or her guarantee against defects even if soil pollution
is detected. detection of soil pollution on land purchased by thegroup, therefore, could lead to changes in the group’s original
business schedules or to the incurrence of the additional expenses, which could have a negative impact on its business performance or financial condition.

4) Impact of interest-bearing debt
The group aims to increase earnings by aggressively advancing
its various businesses. To address these funding requirements, thegroup carried out issuances of corporate bonds and commercial
papers and took out loans from financial institutions. As a result,the balance of interest-bearing debt at fiscal year-end stood at¥816,910 million, up ¥57,273 million from a year earlier (equivalent
to 55.4% of total assets, 1.3 percentage points more than at theend of the previous fiscal year). Moreover, the equity ratio was
20.7%, down 0.7 percentage points. When raising funds by borrowing, the group attempts to deal with the risk of a short-termrise in interest rates mainly by taking out long-term, fixed-rateloans. however, an increase in borrowing costs due to a rise inmarket interest rates could have a negative impact on the group’sbusiness performance and financial condition.
5) M&AThe Company has positioned M&A as an important strategy forlong-term growth, and aims at boosting group enterprise value byimplementing M&A that can be expected to generate synergies
while making the most of the advantages offered by the holding
company system.
however, in the event of changes in the operating environment,
the expected growth of the acquired company, or the synergy expected from the acquisition, may not be realized. This could havean adverse impact on the group’s business performance.
6) Natural disasters
Natural disasters, such as earthquakes and wind and flood damage, as well as sudden accidents, could lead to damage or destruction of real estate owned or managed by the group. Suchincidents could have a negative impact on the group’s businessperformance and financial condition.

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 scatteredif 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 have an adverse effect on
the group’s business performance or financial condition.
10) Concentration of revenues in fourth quarterIn the Residential development Business, which accounts for morethan 50% of the group’s revenues, housing sales are registered as
sales when properties are handed over to the customers. In manycases, however, the completion and handover occur in Februaryor March of each year, in accordance with the requirements ofcustomers taking up residence. For this reason, a large proportionof the group’s revenues is concentrated in the fourth quarter of
each fiscal year.

Nomura Real Estate Holdings, Inc. Annual Report 201129

Consolidated Balance Sheets
Nomura Real Estate holdings, Inc. and its subsidiaries
March 31, 2010 and 2011

(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 (Note 8)
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 and Equipment:
land (Notes 6, 8 and 15)
Buildings and structures (Notes 6, 8 and 15)
Construction in progress (Note 6)
Machinery and equipment (Note 6)
Other
Accumulated depreciation
Net property and equipment

Intangible Assets
Total Assets
See notes to consolidated financial statements.

30 Nomura Real Estate Holdings, Inc.

Annual Report 2011

2011

2010
¥

39,337
15,76450,010247,927
139,01271,796
94,89022,82928,198(144)
709,619(Thousands of U.S. dollars)(Note 1)¥52,068
14,271
30,000210,565
122,781
99,76060,94821,19725,424(89)
636,925

2011$

626,193
171,628
360,7942,532,356
1,476,620
1,199,757
732,989
254,926
305,755(1,066)
7,659,952

17,044
26,036
14,3203,881(18)61,26343,14023,791
23,6014,251(19)
94,764

518,822
286,126
283,841
51,121(234)
1,139,676

412,477
274,354
10,3137,733
430
705,307(79,039)626,268

483,929
321,780
6,851
8,397
606
821,563(88,990)732,573

5,819,951
3,869,878
82,391
100,983
7,294
9,880,497(1,070,236)
8,810,261

8,274¥1,405,424

10,069¥1,474,331

121,092$17,730,981

(Millions of yen)

LIABILITIES AND NET ASSETS
Current Liabilities:
Notes and accounts payable–trade
Short-term loans payable (Notes 3, 5 and 6)
Commercial paper
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
Noncurrent Liabilities:
Bonds payable
long-term loans payable (Notes 3, 5 and 6)
lease and guarantees 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
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(Thousands of U.S. dollars)(Note 1)

2011

2010

2011

37,692
108,586—
7,597
54,841
4,321
97
159
—
7,316
2,362
890
11,358
12,114
247,333¥

43,081
160,896
20,00010,09929,288
4,135
176
113
2,608
5,840
2,357
2,056
19,485
10,975311,109$20,180630,871
49,983
83,112
4,996
15,445
1,937
2,130
808,654
1,055,987

33,000603,01455,36083,6405,034
15,8492,002
7,957
805,856
1,116,965

396,873
7,252,121
665,779
1,005,896
60,540190,608
24,082
95,692
9,691,591
13,433,136

115,528
92,85889,356(2)
297,740

115,574
92,90491,497(2)299,973

1,389,949
1,117,305
1,100,389(25)
3,607,618(2,181)
279
5,999
(425)
3,672
521
47,504349,437(1,076)
354
5,962
(677)
4,563
647
52,183357,366(12,946)
4,266
71,699(8,144)54,875
7,774
627,578
4,297,845¥1,405,424¥1,474,331$17,730,981¥

518,116
1,935,011
240,529
121,458
352,23149,7262,113
1,366
31,36370,23928,34324,726234,334
131,990
3,741,545

See notes to consolidated financial statements.

Nomura Real Estate Holdings, Inc. Annual Report 201131

Consolidated Statements of Income
Nomura Real Estate holdings, Inc. and its subsidiaries
years Ended March 31, 2010 and 2011

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

Operating Revenue:
Operating revenue

2010¥434,226
434,226

2011¥480,983
480,983

2011$5,784,523
5,784,523

Operating Expenses:
Operating cost
Selling, general and administrative expenses
Operating Income

394,951
328,650
66,301
39,275438,900
373,761
65,13942,083

5,278,409
4,495,018
783,391
506,114

Other Income and Expenses:
Interest income
dividends income
Equity in earnings of affiliates
gain on sales of property and equipment (Note 9)
litigation adjustment
Interest expenses
loss on valuation of equity investments
Impairment loss (Note 10)
loss on disasterloss on adjustment for changes of accounting standard
for asset retirement obligations
Other, net
Income before Income Taxes and Minority Interests(25,805)
152
28
7
364
120
(13,530)(10,486)(495)—(23,783)65455
17
11,066—(14,903)(14,767)(852)(2,612)(286,025)
782
5,476
208
133,087—(179,234)(177,593)(10,248)(31,418)—(1,965)
13,470(684)(1,568)18,300(8,222)(18,863)
220,089

11,624(5,278)
6,346
—
2,464
¥ 4,660

15,884(7,753)8,131
10,1694,697¥ 5,472

191,028(93,243)
97,785
122,304
56,499$ 65,805

Income Taxes (Note 11):
Income taxes–current
Income taxes–deferred
Total income taxes
Income before minority interests
Minority interests in income
Net Income
See notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income (Note 18)
Nomura Real Estate holdings, Inc. and its subsidiaries
years Ended March 31, 2010 and 2011

(Millions of yen)

Income before Minority Interests
Other Comprehensive Income:
Valuation difference on available-for-sale securities
deferred gains or losses on hedges
Revaluation difference for land
Share of other comprehensive income of associates accounted
for using the equity method
Total other comprehensive income
Comprehensive Income:(Breakdown)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests
See notes to consolidated financial statements.

32 Nomura Real Estate Holdings, Inc.

Annual Report 2011

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

2010
¥—

2011
¥10,1692011$122,305

—
—
—

1,104
75
(37)

13,275
902
(451)

—
—

(252)
890

(3,033)
10,693¥—¥11,059$132,998¥——¥ 6,362
4,697$ 76,510
56,488

Consolidated Statements of Changes in Net Assets
Nomura Real Estate holdings, Inc. and its subsidiaries
years Ended March 31, 2010 and 2011

Balance at March 31, 2009
Issuance of new shares
dividends from surplus
Net income
Purchases of treasury stock
Net changes of items otherthan shareholders’ equity
Balance at March 31, 2010
Issuance of new shares
dividends from surplus
Net income
Purchases of treasury stock
Net changes of items otherthan shareholders’ equity
Balance at March 31, 2011

Number ofshares issued

Capital stock

Capital surplus

Retained earnings

Treasury stock(Millions of yen)
Valuation difference on
available-for-sale securities

149,371,100
40,959,900———¥ 82,713
32,815———¥60,043
32,815———¥91,491—(6,794)
4,660
—

¥(1)
—
—
—
(0)

¥(3,922)—————
190,331,000
56,000————¥115,528
46
—
—
—

—
¥92,858
46————¥89,357—(3,332)
5,472
—

—
¥(2)
—
—
—
(0)

1,741
¥(2,181)—————
190,387,000—¥115,574—¥92,904—¥91,497

—
¥(2)

1,105
¥(1,076)

Deferred gains/losses on hedges

Revaluation
reserve for land

Foreign currencytranslation adjustments

Subscription rights
to shares

Minority interests

Total net assets

¥256
—
—
—
—

¥5,999————¥(638)
—
—
—
—

¥368
—
—
—
—

¥45,068————¥281,376
65,630(6,794)
4,660
0

24
¥280
—
—
—
—

—
¥5,999————213¥(425)
—
—
—
—

152
¥520
—
—
—
—

2,435
¥47,503
—
—
—
—

4,565
¥349,437
92(3,332)
5,472
(0)

75
¥355

(37)
¥5,962(252)¥(677)

126
¥646

4,680
¥52,183

5,697¥357,366(Millions of yen)

Balance at March 31, 2009
Issuance of new shares
dividends from surplus
Net income
Purchases of treasury stock
Net changes of items otherthan shareholders’ equity
Balance at March 31, 2010
Issuance of new shares
dividends from surplus
Net income
Purchases of treasury stock
Net changes of items otherthan shareholders’ equity
Balance at March 31, 2011

Balance at March 31, 2010
Issuance of new shares
dividends from surplus
Net income
Purchases of treasury stock
Other changes
Balance at March 31, 2011

Capital stock

Capital surplus

Retained earnings

Treasury stockThousands of U.S. dollars(Note 1)
Valuation difference on
available-for-sale securities$1,389,392
557
—
—
—
—
$1,389,949$1,116,748
557
—
—
—
—
$1,117,305$1,074,647—(40,063)
65,805——$1,100,389

$(24)
—
—
—
(1)
—
$(25)

$(26,233)————
13,287$(12,946)
Thousands of U.S. dollars(Note 1)

Balance at March 31, 2010
Issuance of new shares
dividends from surplus
Net income
Purchases of treasury stock
Other changes
Balance at March 31, 2011

Deferred gains/losses on hedges

Revaluation
reserve for land

Foreign currencytranslation adjustments

Subscription rights
to shares

Minority interests

Total net assets$3,364————902$4,266$72,150
—
—
—
—
(451)
$71,699$(5,111)————(3,033)$(8,144)$6,254
—
—
—
—
1,520
$7,774$571,304————
56,274$627,578$4,202,491
1,114(40,063)
65,805(1)
68,499$4,297,845

See notes to consolidated financial statements.
Note: The number of issued shares outstanding increased by 40,959,900 shares in the year ended March 31, 2010 due to a general offering and third party allotment, andincreased by 56,000 shares in the year ended March 31, 2011 due to the exercise of stock options.
Nomura Real Estate Holdings, Inc. Annual Report 201133

Consolidated Statements of Cash Flows
Nomura Real Estate holdings, Inc. and its subsidiaries
years Ended March 31, 2010 and 2011

(Millions of yen)

Cash Flows from Operating Activities:
Income before income taxes and minority interests
depreciation and amortization
Impairment loss
gain on sales of property and equipment
Equity in earnings of affiliates
decrease in allowance for doubtful accounts
Increase in provision for retirement benefits
decrease in provision for loss on business liquidation
Increase in provision for loss on subleasing business
Increase in provision for loss on disaster
Interest and dividends income
Interest expenses
Increase in notes and accounts receivable–trade
Increase in inventories
Increase (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(Thousands of U.S. dollars)(Note 1)

2010

2011

2011

¥ 13,470
10,758
495
(364)
(7)
(14)
1,162
(56)
127
(181)
13,53015,664
19,780(1,205)(31,886)
22,983(12,757)
51,499162(13,155)(19,240)
19,266¥ 18,300
12,836852(11,066)
(17)
(54)
404
(45)
65
2,608
(520)
14,903
1,525
26,117
10,001
5,315(25,553)
3,297
58,968265(15,059)(10,226)
33,948$ 220,089
154,371
10,249(133,088)
(208)
(650)
4,861
(540)
781
31,363(6,258)179,234
18,336
314,095
120,283
63,920(307,314)
39,652
709,176
3,186(181,111)(122,981)
408,270—

Cash Flows from Investing Activities:
Purchase of investment securities
Proceeds from sales and liquidation of investment securities
Payments for investments in subsidiaries resulting in change in scope of consolidation
Net proceeds from purchase of investments in subsidiaries resulting in change
in scope of consolidation
Purchases of property and equipment and intangible assets
Proceeds from sales of property and equipment and intangible assets
Payments of 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 guarantees deposits received
Other, net
Net cash used in investing activities(1,771)394—(6,226)75(13,664)(74,876)
902(164,330)—(26,796)
1,011
(3)
45
(652)
1,726
(3,101)
4,527
49(24,571)

2,169(37,571)
18,820—128(1,032)
3,580(5,497)
5,367
120(33,731)

26,092(451,846)
226,342—
1,537(12,413)43,050(66,113)64,552
1,443(405,660)

Cash Flows from Financing Activities:
Net increase (decrease) in short-term loans payable
Increase in commercial paper
Repayments of finance lease obligations
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
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 provided by (used in) financing activities(109,200)—(86)
147,300(83,197)174(300)
65,2510
0(6,794)(50)
13,09829,00020,000(116)
76,850(130,769)
12,928(12,010)04
0(3,331)(42)(7,486)

348,767
240,529(1,397)924,233(1,572,683)
155,478(144,436)1
53(1)(40,063)(509)(90,028)

7,793
78,474(7,269)89,335(87,418)
1,074,381

3,068¥ 89,335—¥ 82,066—$ 986,963

Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of the Fiscal Year
Increase in Cash and Cash Equivalents Resulting from Change of Scopeof Consolidation
Cash and Cash Equivalents at End of the Fiscal Year (Note 2 (3))
See notes to consolidated financial statements.

34 Nomura Real Estate Holdings, Inc.

Annual Report 2011

Notes to Consolidated Financial Statements
Nomura Real Estate holdings, Inc. and its subsidiaries
March 31, 2010 and 2011

1. Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated financial statements of Nomura Real Estate holdings, Inc. (the “Company”) and its consolidated subsidiaries (collectively, the “group”) have been prepared in accordance with the provisions set forth in the Financial Instruments and Exchange 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 the Company
prepared in accordance with Japanese gAAP, and translated into English for the benefit of readers outside Japan. In addition, the notes tothe 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 the prevailingexchange rate at March 31, 2011 of ¥83.15=u.S.$1.00. These translations should not be construed as representations that the Japanese yenamounts 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
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries that the Company controls
directly or indirectly. Companies over which the Company exercises significant influence in terms of their operating and financial policies
have been included in the accompanying consolidated financial statements on an equity basis.
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 respectivebalance sheet dates of the subsidiaries and affiliates and the revenue and expense accounts are translated into 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 Statements of Cash Flows, cash on hand, readily-available deposits and short-term, highly-liquid investmentswith maturities not exceeding three months at the time of purchase and with an insignificant risk of market value fluctuation are considered to be cash and cash equivalents.
As of March 31, 2011, the balance of “Cash and cash equivalents” differed from the total balance of “Cash and deposits” and “Short-term
investment securities” because it did not include time deposits with deposit terms exceeding three months of ¥2 million ($21 thousand).
As of March 31, 2010, the balance of “Cash and cash equivalents” differed from the total balance of “Cash and deposits” and “Short-term
investment securities” because it did not include time deposits with deposit terms exceeding three months of ¥2 million.
(4) Recognition of Revenues
Revenues from sales of housing and other real estate are recognized upon delivery and acceptance by customers.
(5) Inventories
Inventories are mainly stated at cost, determined by the specific identification cost method (the amounts of inventories in the accompanying Consolidated Balance Sheets 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, 2010 and 2011 were ¥5,623 million and¥10,066 million ($121,060 thousand), respectively.
(6) Short-term Investment 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 isdetermined by the moving-average method. Available-for-sale securities without market value are stated at cost by the movingaverage method.

Nomura Real Estate Holdings, Inc. Annual Report 201135

(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 tobe 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 is provided
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 Statements of Income.
The tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax
purposes is recognized as deferred income taxes.
(13) Provision for Retirement Benefits
In order to provide for employees’ retirement benefits, the Company and its subsidiaries account for the liability for retirement benefits
based on the estimated 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 of years (i.e., 10
years), which is equal to or less than the average remaining service period of the employees in service during the period in which it arises.
Actuarial gain or loss is included in the Consolidated Statements of Income from the year following the fiscal year in which the gainor loss is recognized on a straight-line basis over a 10-year period, which is shorter than the average remaining service period of theeligible employees.
(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 theweighted-average number of shares of common stock outstanding during each fiscal year. diluted net income per share is computed by
dividing the net income available for distribution to the shareholders by the weighted-average number of shares of common 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, 2010 and 2011 were ¥1,583.63 and ¥1,599.57 ($19.24), respectively.
Net income per share for the years ended March 31, 2010 and 2011 were ¥25.69 and ¥28.74 ($0.35), respectively.
diluted net income per share for the years ended March 31, 2010 and 2011 were ¥25.63 and ¥28.70 ($0.34), respectively.
(15) Land Revaluation
under the “law Concerning Revaluation Reserve for land” promulgated on March 31, 1998, the Company revalued its land held for businessuse. The tax amount for the difference between the appraisal value and the carrying amount is accounted for as “deferred tax liabilities forland 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:
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, 2010 and 2011, market value was not less than book value after revaluation.

36 Nomura Real Estate Holdings, Inc.

Annual Report 2011

(16) Derivative Financial Instruments
In principle, 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 theunrealized gains or losses to be deferred as assets or liabilities until the losses or gains on the underlying hedged items are recognized.
As to interest rate swaps that meet certain hedging criteria, the Company applies exceptional treatment where the Company does notrecord these instruments at fair value but charges or credits the net cash flows from these instruments to the interest arising from thehedged borrowings and corporate bonds. For currency swaps and foreign exchange forwards that meet certain hedging criteria, the Company records cash flows from securities and loans denominated in foreign currencies at an amount determined by the swaps and forwards,
and no gain or loss is recognized.
(17) Asset Retirement Obligations
Effective from the fiscal year under review, the Company adopted the “Accounting Standard for Asset Retirement Obligations” (ASBJ Statement No.18 issued on March 31, 2008) and the “guidance on Accounting Standard for Asset Retirement Obligations” (ASBJ guidance No.21
issued on March 31, 2008). As a result, both operating income and ordinary income decreased by ¥138 million ($1,662 thousand) andincome before income taxes and minority interests decreased by ¥822 million ($9,884 thousand).
(18) Accounting Standard for Business Combinations
Effective from the fiscal year under review, the Company adopted the “Accounting Standard for Business Combinations” (ASBJ Statement
No.21 issued on december 26, 2008), “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No.22 issued on december 26, 2008), “Partial Amendments to Accounting Standard for Research and development Costs” (ASBJ Statement No.23 issued on
december 26, 2008), “Accounting Standard for Business divestitures” (ASBJ Statement No.7 issued on december 26, 2008), “AccountingStandard for Equity Method of Accounting for Investments” (ASBJ Statement No.16 issued on december 26, 2008), and “Revised guidanceon Accounting Standard for Business Combinations and Accounting Standard for Business divestitures” (ASBJ guidance No.10 issued on
december 26, 2008).
(19) Consolidated Statements of Income
Effective from the fiscal year under review, the Company adopted the “Cabinet Office Ordinance Partially Revising Regulation on Terminology, Forms and Preparation of Financial Statements” (Cabinet Office Ordinance No.5 dated March 24, 2009) based on the “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No.22 dated december 26, 2008) and introduced the line item “Income before
minority interests” under the application of said Cabinet Office Ordinance.
(20) Partial Change in the Method for Calculating Fair Value of Available-for-sale Securities
Nomura Real Estate development Co., ltd., a consolidated subsidiary of the Company, had equity interest in private investment funds thatinvest in commercial mortgage-backed securities (CMBS). however, in view of, among others, the default events that occurred amongsome of the larger deals that have fallen due for redemption during the fiscal year under review, the consolidated subsidiary decided tofreeze the CMBS investment business and, on december 24, 2010, entered into an agreement to transfer said equity interest to Falcon
Investment, llC, another consolidated subsidiary of the Company established in december 2010, for the purpose of managing said equity
interest separately from the assets of the asset management business as an asset held for disposition to facilitate the recovery of invested
capital.
In the past, the fair value of said private investment funds was measured at net asset value (NAV) if the NAV information is available.
however, given the difficulty in trading these funds in the current CMBS market at NAV, the Company has established a system for calculating fair value internally and measured the fair value of these funds at an amount calculated using a reasonable method based on reasonable estimates by the management. The transfer price of the equity interest mentioned above is based on the fair value determined in thismanner.
As a result, the Company recognized a loss of ¥14,767 million ($177,593 thousand) on said transfer as “loss on valuation of operating
equity investments” in extraordinary loss in the consolidated statement of income for the year ended March, 2011 and recorded said equity interest as “investment securities” in investments and other assets in the consolidated balance sheet at its fair value of ¥15,976 million($192,134 thousand), which was calculated using a reasonable method based on reasonable estimates by the management.
(21) Accounting Standard for Presentation of Comprehensive Income
Effective from the fiscal year under review, the Company adopted the “Accounting Standard for Presentation of Comprehensive Income”(ASBJ Statement No. 25 issued on June 30, 2010).
(22) 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 under review.

Nomura Real Estate Holdings, Inc. Annual Report 201137

3. Financial Instruments(1) Policies on Financial Instruments
It is the policy of the Company and its consolidated subsidiaries to limit its fund management to safe and highly liquid deposits whileraising funds primarily through loans 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 from exchange 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
Currency swaps and foreign exchange forward contracts

Borrowings
Securities denominated in foreign currencies

The Company and its consolidated subsidiaries evaluate hedge effectiveness by comparing the cumulative changes in market fluctuations or in cash flows of the hedged items to the corresponding changes in the hedging derivative instruments.
(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 theirissuers.
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 the status of transactions andrisk information to the director on a regular basis. The consolidated subsidiaries conduct execution of 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.
Based on the reports from each division of the Company and the consolidated subsidiaries, 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 amountof on-hand liquidity 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 differ if different assumptions are provided.
(5) Fair value of financial instruments
The book values, fair values and differences of financial instruments as of March 31, 2011 are as follows. Items for which fair value is extremely difficult to determine have not been included.
2011(1) Cash and deposits(2) Short-term investment securities(3) Investment securities 1
Total assets(1) Short-term loans payable 2(2) Commercial paper(3) Bonds payable(4) long-term loans payable
Total liabilities
derivative transactions 3(Millions of yen)Book value(Thousands of
U.S. dollars)(Millions of yen)

¥ 52,068
30,00039,055
121,123
55,00020,00033,000708,910
816,910¥548$ 626,193
360,794
469,699
1,456,686
661,455
240,529
396,873
8,525,676
9,824,533$
6,590¥ 52,068
30,00039,451
121,51955,00020,00033,633
723,357
831,990¥548

Fair value(Thousands of
U.S. dollars)$

626,193360,793474,455
1,461,441
661,455
240,529
404,486
8,699,417
10,005,887$
6,590(Millions of yen)

¥

—
—
395
395
—
—
633
14,44715,080¥—Difference(Thousands of
U.S. dollars)

$

—
—
4,756
4,756
—
—
7,613
173,741
181,354$—

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 (4) 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.

38 Nomura Real Estate Holdings, Inc.

Annual Report 2011

Notes:
1. Investments in non-consolidated subsidiaries and affiliates are as follows:
Investment securities (investments in silent partnership, etc.)¥18,075 million ($217,388 thousand)
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 book values
are assumed as their fair values.
(2) Short-term investment securities
As these instruments, primarily comprising negotiable deposits and CRF, are settled within a short term and their fair values andbook values 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, fairvalues 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 from (2) through (3).
Liabilities(1) Short-term loans payable and (2) Commercial paper
As these instruments are settled within a short term and their fair values and book values are nearly identical, their book values
are assumed as their fair values.
(3) Bonds payable
Market prices of the bonds issued by the Company.
(4) 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 subject to interest rate swap exceptional procedures, and, therefore, the fair value is determined by discounting the total amount of interest and principal together
with the interest rate swap at the interest rate assumed in a reasonable manner for new loans of the same type.
Derivatives
Please see Note 13. derivative Financial Instruments for information on derivative transactions.
3. Financial instruments for which fair value is extremely difficult to determine
2011(Millions of yen)Book value(Thousands of U.S. dollars)¥65,755$790,802

Investment in silent partnership

Financial instruments for which there is no fair value and for which the fair value is extremely difficult to determine are notincluded in (3) Investment securities.
4. Redemption schedule for financial assets with maturities(Millions ofyen)Cash and deposits¥51,993
Short-term investment securi—ties and investment securities
held-to-maturity debt—
securities
government and3
˜municipal bonds, etc.
Corporate bonds—
Available-for-sale securities
with maturities
debt securities—
Others
30,000Total¥81,996

Within 1 year
(Thousands of
U.S. dollars)(Millions ofyen)

1–5 years(Thousands of
U.S. dollars)(Millions ofyen)

5–10 years(Thousands of
U.S. dollars)$625,297

¥ —

$

—

¥ —

$

—

—

—

—

—

36
—
—
360,794$986,127

2011(Millions ofyen)Over 10 years(Thousands of
U.S. dollars)

—

¥—

$—

—

—

—

—

—

—

—

—

—

297
—

3,572
—

433
—

5,208
—

—
—

—
—

—
—
¥297

—
—
$3,572

—
—
¥433

—
—
$5,208

—
—
¥—

—
—
$—

Nomura Real Estate Holdings, Inc. Annual Report 201139

5. Repayment schedule for bonds payable and long-term loans payable at March 31, 2011
(Millions of yen)

Within 1 year
(Thousands of
U.S. dollars)¥—
105,896¥105,896$—
1,273,556$1,273,556(Millions of yen)

3–4 years(Thousands of
U.S. dollars)(Millions of yen)

4–5 years(Thousands of
U.S. dollars)¥ 10,000
115,853¥125,853$ 120,264
1,393,299$1,513,563¥ 3,000
97,600¥100,600$ 36,080
1,173,782$1,209,862

Bonds payable
long-term loans payable
Total

Bonds payable
long-term loans payable
Total

1–2 years(Thousands of
U.S. dollars)(Millions of yen)

2–3 years(Thousands of
U.S. dollars)—
124,713¥124,713$—
1,499,853$1,499,853¥—
142,048¥142,048$—
1,708,337$1,708,337(Millions of yen)Over 5 years(Thousands of
U.S. dollars)¥ 20,000
122,800¥142,800$ 240,529
1,476,850$1,717,379(Millions of yen)¥

4. Securities
The following tables summarize the acquisition cost, book value and fair value of securities held by the Company as of March 31, 2010
and 2011.
(1) Held-to-maturity Debt Securities with Fair Value
2010

Book value

Fair value(Millions of yen)
Difference

¥293
293

¥294
294

¥1
1

279
279
¥572

277
277
¥571

(2)
(2)
¥(1)

Book value

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

¥307
307

¥313
313

¥6
6

$3,6893,689$3,761
3,761

$72
72

431
431
¥738

429
429
¥742

(2)
(2)
¥4

5,182
5,182
$8,871

5,163
5,163$8,924

(19)
(19)
$53

Book value(Millions of yen)
Difference

624
0
624

¥ 1,199
0
1,199

¥ 575
0
575

70
79,81779,887¥80,51160
76,08576,145¥77,344(10)(3,732)(3,742)¥(3,167)

Securities whose fair value exceeds book value:
government and municipal bonds, etc.
Subtotal
Securities whose fair value does not exceed book value:
government and municipal bonds, etc.
Subtotal
Total

Securities whose fair value exceeds book value:
government and municipal bonds, etc.
Subtotal
Securities whose fair value does not exceed book value:
government and municipal bonds, etc.
Subtotal
Total(2) Available-for-sale Securities with Fair Value2010

Acquisition cost

Securities whose book value exceeds acquisition cost:
StocksOther
Subtotal
Securities whose book value does not exceed acquisition cost:
StocksOther
Subtotal
Total

40 Nomura Real Estate Holdings, Inc.

Annual Report 2011

¥

2011

Acquisition cost

Securities whose book value exceeds acquisition cost:
StocksOther
Subtotal
Securities whose book value does not exceed acquisition cost:
StocksOther
Subtotal
Total¥

Acquisition cost

426
5,320
5,746

¥ 290
40
330

$ 1,632
63,49965,131$ 5,122
63,985
69,107$ 3,490
486
3,976

446
47,831
48,277¥54,023(61)(1,828)(1,889)¥(1,559)

6,098
597,217603,315$668,446

5,361
575,235
580,596$649,703(737)(21,982)(22,719)$(18,743)

Book value

136
5,280
5,416

¥

507
49,65950,166¥55,582

2011(Millions of yen)
Difference(3) Sales of Available-for-sale Securities
The table below describes sales of available-for-sale securities for the years ended March 31, 2010 and 2011:
2010
2011
Sales amount

Aggregate gains(Millions of yen)
Aggregate losses

¥88

¥—

¥53

Sales amount¥0(Thousands of U.S. dollars)Book value
Difference

2011

Aggregate gains(Millions of yen)
Aggregate losses

Sales amount

¥0

¥—

$0

(Thousands of U.S. dollars)
Aggregate gains
Aggregate losses$0$—(4) Impairment Losses on Equity Investments
during the fiscal year ended March 31, 2011, the Company incurred impairment losses of ¥14,767 million ($177,593 thousand) on
equity investments.

5. Short-term Loans Payable and Long-term Loans Payable
Short-term loans payable as of March 31, 2010 and 2011 mainly consisted of borrowings from banks with a weighted-average interest rateof 0.5% in 2010 and 2011.
long-term loans payable and bonds payable as of March 31, 2010 and 2011 are summarized as follows:
unsecured bonds (1.7%), due 2014
unsecured bonds (2.1%), due 2017
Secured bonds (2.0%), due 2020
Secured bonds (0.7%), due 2012
Secured bonds (1.8%), due 2016loans payable*
Securedunsecuredlease obligations**
Subtotalless amounts due within one year

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

2010¥ 10,000
10,000
—
180
—

2011
¥ 10,000
10,00010,000
—
3,000

2011
$ 120,265
120,265
120,265—
36,07852,512660,945346
733,983(82,680)¥651,303

52,619656,291415
742,325(106,027)¥636,298

632,823
7,892,853
4,996
8,927,547(1,275,133)$7,652,414* long-term loans payable as of March 31, 2010 and 2011 mainly consisted of borrowings from domestic Japanese banks and life insurance companies with a weighted-average interest rates of 1.3% in 2010 and 1.2% in 2011.
** The weighted-average interest rate for lease obligations is not shown because for some consolidated subsidiaries the lease obligations recorded in the consolidated balance
sheets are the amounts before deducting the interest equivalents included in the total lease commitments.

The following table shows the maturities of lease obligations subsequent to March 31, 2011.
Years ending March 31

2013
2014
2015
2016
2017 and thereafter(Millions of yen)(Thousands of U.S. dollars)

¥132
94
43
15
0
¥284

$1,592
1,128
518
181
0
$3,419Nomura Real Estate Holdings, Inc. Annual Report 201141

6. Pledged Assets and Secured Liabilities
Pledged assets and secured liabilities at March 31, 2010 and 2011 are summarized as follows:(1) Pledged Assets and Secured Liabilities
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)
lease and guarantee deposits received
Total(Millions of yen)(Thousands of U.S. dollars)

2010

2011

2011

¥ 8,9277,455
56¥16,438¥ 8,7517,455
44¥16,250$105,245
89,655
532$195,432

¥

¥

663
887
82
¥ 1,632$ 7,978
10,661983$ 19,622

731
1,550
89
¥ 2,370(2) Pledged Assets and Secured Liabilities for Non-recourse Loans
Pledged assets:
Real estate for sale
Buildings and structuresland
Construction in progress
Total
Secured liabilities:
Short-term loans payable
long-term loans payable
Total(Millions of yen)(Thousands of U.S. dollars)

2010

2011

2011

¥ 4,742
13,76968,088
1,914¥88,513¥ 4,609
16,61470,684
13¥91,920$

5,100
45,130¥50,230

6,203
44,866¥51,069

74,603
539,581$ 614,184

55,426
199,806
850,079
151$1,105,462

These liabilities have arisen in relation to ShINJuKu MIRAI dEVElOPMENT, llC, Metro hongo, llC, Metropolitan Seven, llC, FlAgShIP
BuIldINg, yK and three other companies, and the repayment obligations of 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 of 1998), pledged its assets as general security for specified corporate bonds of ¥3,000 million($36,079 thousand) and the repayment obligations of said company are limited to these pledged assets.

7. 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 also established 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 havebeen made.
In order to provide for employees’ retirement benefits, the Company and its subsidiaries account for the liability for retirement benefits
based on the estimated 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 by using the straight-line method based on a certain number of years (i.e., 10 years), which is equal to or lessthan the average remaining service period of the employees in service during the period in which it arises. Actuarial gains and losses areaccounted mainly for as an expense for an amount allocated to each period by using the straight-line method based on a certain numberof years (i.e., 10 years), which is equal to or less than the average remaining service period of the employees in service during the fiscal year
in which it arises, starting from the following fiscal year.

42 Nomura Real Estate Holdings, Inc.

Annual Report 2011

(2) Details of Retirement Benefit Obligation(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)2010¥(25,009)
7,290(17,719)
2,274—¥(15,445)(Millions of yen)(Thousands of U.S. dollars)

2011¥(21,181)
7,876(13,305)
1,214(3,758)¥(15,849)

2011$(254,731)
94,725(160,006)
14,599(45,201)$(190,608)(Millions of yen)(Thousands of U.S. dollars)

2011¥1,488
465
(146)
579
(298)
38
152
¥2,278

2011$17,894
5,591(1,753)6,961(3,588)458
1,826$27,389

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

(3) Details of Retirement Benefit Expenses(1) Service cost(2) Interest cost(3) less: Expected return on plan assets(4) Amortization of actuarial gain or loss
(5) Amortization of prior service cost(6) Additional retirement benefit payments(7) Other
Retirement benefit expenses

2010¥1,533
446
(120)
661
—
10
149
¥2,679Notes: 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:
2010
2.00%
2.00%

discount rate
Expected rate of return on plan assets

2011
2.00%
2.00%

8. Reclassification of Assets
As a result of a review of assets held to maturity during the fiscal year ended March 31, 2011, ¥584 million ($7,029 thousand) of property
and equipment was reclassified as real estate for sale in process.

9. Gain on Sales of Property and Equipment
The breakdown of gain on sales of property and equipment for the fiscal year ended March 31, 2011 is as follows:

land
Buildings
Total(Millions of yen)

Gain on sales(Thousands of
U.S. dollars)¥10,960
106¥11,066$131,807
1,280$133,087

Nomura Real Estate Holdings, Inc. Annual Report 201143

10. Impairment Loss
The group recognized impairment loss on the following groups of assets for the fiscal year ended March 31, 2011:
Primary useleased assets

Type

Buildings
land

location

Atsugi-shi, Kanagawa Prefecture and other locations(3 locations in total)
Assets of the group are grouped into the smallest unit that generates identifiable cash flows that are largely independent of cash flows
from other assets or groups of assets. The headquarters building and certain other assets are considered to be shared assets. As a result,with respect to three groups of assets that the group plans to sell or with negative operating profit for several consecutive periods, thecarrying amount has been reduced to the recoverable amount and the amount of reduction has been recognized as an impairment loss of¥852 million ($10,248 thousand) in extraordinary loss for the fiscal year under review. The impairment loss is broken down into an impairment loss of ¥571 million ($6,865 thousand) on land and an impairment loss of ¥281 million ($3,383 thousand) on buildings. The recoverable amount of these groups of assets is measured at the net realizable value and the net realizable value is, in turn, determined based on
the expected sales price and the appraisal value provided by real estate appraisers.

11. Income Taxes
The statutory tax rate in Japan for the Company and its domestic subsidiaries was 40.7% for the years ended March 31, 2010 and 2011.
The table below presents an itemized breakdown of factors generating differences between the statutory tax rate and the effective tax
rates of the Company and its consolidated subsidiaries for the years ended March 31, 2010 and 2011:
Significant differences between the statutory tax rate and the effective tax rate
Statutory tax rate
Adjustments:
Permanent differences including entertainment expenses
Retained earnings of affiliates
Valuation allowance
Other
Effective tax rates

2010
40.7%

2011
40.7%

2.4
2.9
—
1.1
47.1%

2.0
—
—
1.7
44.4%

The table below presents an itemized breakdown of deferred tax assets and liabilities as of March 31, 2010 and 2011:
Significant components of the Company’s deferred tax assets and liabilities
deferred tax assets:
unrealized profits
Inventory write-downs
Provision for retirement benefits
Provision for loss on subleasing business
Provision for loss on disaster
Provision for bonuses
loss on valuation of equity investments
Accrued enterprise taxes
Excess of depreciation
Revaluation of assets on consolidation
Valuation difference on available-for-sale securities
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

44 Nomura Real Estate Holdings, Inc.

Annual Report 2011

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

2010

2011

2011

¥ 14,273
13,169
6,296
1,013
—
1,760
4,536
648
1,786
2,527
1,503
5,566
53,077(6,438)46,639¥14,258
13,882
6,466
1,040
1,058
1,711
10,469
912
2,482
4,394
925
7,306
64,903(8,376)56,527$171,475
166,957
77,57812,505
12,722
20,580125,907
10,96429,853
52,843
11,122
87,863
780,549(100,732)
679,817(69,419)(22,552)(630)(92,601)¥(45,962)(65,932)(27,698)(1,737)(95,368)¥(38,842)(792,928)(333,109)(20,909)(1,146,946)$(467,129)

12. Shareholders’ Equity
Companies in Japan were previously subject to the Commercial Code of Japan (the “Code”); however, the Code was superseded by theCompanies Act of Japan (the “Act”) which went into effect on May 1, 2006.
under the Act, all funds obtained through the issuance of common stock must be treated as common stock and, by resolution of theboard 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 (other than the capitalreserve) 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, 2011, the Company’s capital reserve amounted to ¥92,904 million ($1,117,305 thousand), and no legal reserve was recorded.

13. 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
Hedge accounting
methoddeferralhedge
accounting

Type of derivatives

Major hedged items(Millions of yen)Contract amount(Thousands of
U.S. dollars)(Millions of yen)

Fair value(Thousands of
U.S. dollars)

Currency
swaps

Securities
denominatedin foreign
currencies¥2,769$33,306

¥—

$—

¥548

$6,590¥2,769$33,306

¥—

$—

¥548

$6,590(Millions of yen)

Fair value(Thousands of
U.S. dollars)(Note)(Note)

Total

Contract amount due after one year
(Thousands of(Millions of yen)
U.S. dollars)Note: The fair value is determined based on the quoted price obtained from the financial institutions which are counterparties to the transactions.

(b) Interest rate related derivatives
Hedge accounting
methodSpecifiedtreatment forinterest rate
swap

Type of derivatives

Major hedged
itemsInterest rate
long-term
swaps
debt
Receive floating rate/
Pay fixed rate

Total

(Millions of yen)Contract amount(Thousands of
U.S. dollars)

Contract amount due after one year
(Thousands of(Millions of yen)
U.S. dollars)¥548,365$6,594,894¥473,692$5,696,839¥548,365$ 594,894¥473,692$5,696,839

Note: The interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but the paid or received under theswap agreements is recognized and included in interest expenses of income of the long-term debt as hedged items. Accordingly, the fair value of the interest rate swaps isconsidered to be included in the fair value of the long-term debt.

14. 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, 2010 and 2011.
Operating leases
Future lease payments:
due within 1 year
due after 1 year
Total
Future lease receipts:
due within 1 year
due after 1 year
Total

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

2010

2011

2011

¥ 7,240
25,979¥33,219¥ 6,822
19,525¥26,347$¥ 9,957
49,453¥59,410¥14,314
77,528¥91,842$ 172,144
932,392$1,104,536

82,041
234,814$ 316,855

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

Nomura Real Estate Holdings, Inc. Annual Report 201145

15. 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 sheets, changes during the fiscal year under review, and fair values of real estate, of whichsome portions are used as rental property, are determined as follows.
(1) Fair value of rental and other properties in the fiscal year ended March 31, 2011

(Millions of yen)March 31, 2010
(Thousands of
U.S. dollars)¥582,023$6,999,681

25,267

303,870

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

Increase/Decrease(Thousands of
U.S. dollars)¥109,944$1,322,237(239)(2,877)(Millions of yen)Book value
March 31, 2011
(Thousands of
U.S. dollars)(Millions of yen)

Fair value
March 31, 2011
(Thousands of
U.S. dollars)¥691,968$8,321,918¥704,415$8,471,616

25,028300,993

49,521

595,563

Notes: 1. Book values in the consolidated balance sheets are the amounts determined by deducting accumulated depreciation and accumulated impairment losses from theacquisition cost.
2. The change during the fiscal year under review is mainly attributable to the acquisition of Toshiba Building (¥52,707 million ($633,883 thousand)).
3. Fair values as of March 31, 2011, are determined by the Company (including adjustments based on certain indexes) based primarily on their values according to realestate appraisal standards. however, if there have been no fluctuations in appraisal values or indexes considered to appropriately reflect market values since the recent
appraisal or acquisition from third parties, the Company uses the appraisal values or amounts derived from the indexes as the fair values at March 31, 2011.
4. In the above table, Other properties used as rental properties includes portions used by the Company and certain consolidated subsidiaries.

(2) Income and loss on rental properties in the fiscal year ended March 31, 2011

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

Operating income(Thousands of
U.S. dollars)¥25,400
1,183$305,471
14,2262011

Others (gains (losses) on sale of property, etc.)(Thousands of(Millions of yen)
U.S. dollars)¥9,031(3)$108,614(30)

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 (¥11,066 million ($133,087 thousand) ) and impairment loss (¥852 million ($10,248 thousand)).

16. Segment Information
The Company and its consolidated subsidiaries mainly operate in five business segments: (1) Residential development, (2) Building,(3) Investment Management & development, (4) Property Brokerage & Consignment Sales, and (5) Other.
Results by segment for the fiscal years ended March 31, 2010 and 2011 were as follows:
Results by segment for the fiscal year ended March 31, 2010
(Millions of yen)

Operating revenue andoperating income
Operating revenue:
External customers
Inter-segment
Subtotal
Operating expenses
Operating income
Total assets, depreciation,and capital expenditure
Total assets
depreciation
Impairment loss
Capital expenditure

Residential
Development

Building

Investment Management & Development

Property Brokerage &Consignment Sales

Other

Subtotal¥258,659
411
259,070(248,335)¥ 10,735¥ 88,401
6,837
95,238(73,651)¥ 21,587¥ 35,650
539
36,189(27,691)¥ 8,498¥ 32,511
1,453
33,964(31,274)¥ 2,690¥ 19,005
652
19,657(19,225)¥ 432¥ 434,226
9,892
444,118(400,176)¥ 43,942¥—(9,892)(9,892)5,225¥ (4,667)¥ 434,226—
434,226(394,951)¥ 39,275¥307,154287
0
580¥542,619
8,578
0
17,530¥403,393
538
0
8,686

¥ 45,003
175
0101¥ 27,531
950
495
696

¥1,325,700
10,528495
27,593¥79,724230
0(65)¥1,405,424
10,758495
27,528Notes: 1. Business segments are determined according to the business activities of each company in the consolidated group.
2. Principal products and services within each segment
Residential development Business
Sale of condominiums, detached housing and residential lots, overall management of condominiums
Building Businessleasing and overall management of office buildings, district heating and cooling services

46 Nomura Real Estate Holdings, Inc.

Annual Report 2011

Eliminations
or corporate

Total

Investment Management & development Businessdevelopment and sale of profit-generating property management of and investment in real estate funds
Property Brokerage & Consignment Sales Business
Real estate brokerage and consulting services, sales representation of condominiums and detached housing, insurance brokerage
Other Business
Fitness club management
3. Operating expenses for the fiscal year ended March 31, 2010 consisted of ¥5,321 million of unallocable operating expenses which were included in “Eliminations or
corporate.” The principal items were expenses related to general administration of the Company and its consolidated subsidiary, Nomura Real Estate development
Co., ltd.
4. Total assets at March 31, 2010 consisted of ¥111,441 million, of assets not allocated to a segment which were included in “Eliminations or corporate.” The principal items
were surplus funds (cash and deposits), long-term investment funds (investment securities), deferred tax assets, and assets related to general administration of theCompany and its consolidated subsidiary, Nomura Real Estate development Co., ltd.

Results by segment for the fiscal year ended March 31, 2011
(Millions of yen)

Operating revenue andoperating income
Operating revenue:
External customers
Inter-segment
Subtotal
Segment income
Segment assets
Other items
depreciation
Amortization of
goodwill
Investment in affiliates
accounted for using
equity method
Increase in property,
plant and equipment
and intangible assets

Residential
Development

Building

Investment Management & Development

Property Brokerage &Consignment Sales

Other

Subtotal¥285,494
641
286,135
15,803¥313,078¥ 93,027
7,362
100,389
22,644¥624,749¥ 55,488
559
56,047
6,773¥379,753¥27,293
1,662
28,955
1,220¥39,790¥19,681
1,286
20,967652¥28,604¥ 480,983
11,510492,493
47,094¥1,385,974¥— ¥ 480,983(11,510)0(11,510)
480,983(5,010)42,083¥88,357 ¥1,474,331¥

329¥ 10,088

¥

¥

179

¥ 1,026

¥

¥

29

236

—

—

—

265

0

265

12

754

8,526

90

—

9,381

—

9,381

342

49,104

17,905340

544

68,235(31,274)

36,961

Residential
Development

Operating revenue andoperating income
Operating revenue:
External customers $3,433,481
Inter-segment
7,714
Subtotal
3,441,195
Segment income
190,062
Segment assets$3,765,219
Other items
depreciation$
3,958
Amortization of352
goodwill
Investment in affiliates
accounted for using
140
equity method
Increase in property,
plant and equipment411
and intangible assets

989

12,610Eliminations
or corporate

225

Total

¥

12,836(Thousands of U.S. dollars)Eliminations
or corporate
Total

Building

Investment Management & Development

Property Brokerage &Consignment Sales$1,118,780
88,544
1,207,324
272,329$7,513,519$ 667,326
6,718
674,044
81,456$4,567,083$328,242
19,990348,232
14,670$478,531$236,694 $ 5,784,523 $— $ 5,784,523
15,469138,435(138,435)—
252,162
5,922,958(138,435) 5,784,523
7,855
566,372(60,258)
506,114$344,009 $16,668,361 $1,062,620 $17,730,981$ 121,317$

11,893$ 2,155$ 12,324 $

2,833

0

0

9,063

102,537

590,546

215,329

Other

Subtotal

151,646 $2,724 $

154,371

0

3,185

0

3,185

1,078

—

112,819—

112,819

4,086

6,545

820,623(376,110)444,513

Notes: 1. The “Other” category, which represents operating segments that are not included in reportable segments, includes fitness club and other businesses.
2. (1) The deduction of ¥5,010 million ($60,258 thousand) shown in the eliminations or corporate column for segment income includes a deduction of ¥84 million ($1,012
thousand) for the elimination of inter-segment transactions and a deduction of ¥4,926 million ($59,245 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 ¥88,357 million ($1,062,620 thousand) shown in the eliminations or corporate column for segment assets includes a deduction of ¥34,632 million($416,505 thousand) for the elimination of inter-segment transactions and an addition of ¥122,989 million ($1,479,125 thousand) for corporate assets not allocatedto reportable segments.
(3) The figure shown in the eliminations or corporate column for increase in property, plant and equipment and intangible assets is mainly attributable to reclassifications between segments.
3. The segment income by segment is reconciled to the operating income stated in the consolidated financial statements.
Nomura Real Estate Holdings, Inc. Annual Report 201147

(Supplementary information)
Beginning with the fiscal year ended March 31, 2011, the “Revised Accounting Standard for disclosures about Segments of an Enterpriseand Related Information” (ASBJ Statement No. 17, Revised March 27, 2009) and the “guidance on the Accounting Standard for disclosuresabout Segments of an Enterprise and Related Information” (ASBJ guidance No. 20, March 21, 2008) are applied.

17. Contingent Liabilities
Contingent liabilities as of March 31, 2010 and 2011 were as follows:
guarantees for home loans of house purchasers from banks and otherguarantees for loans to business partners in the business ofcommercial buildings for rent

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

2010¥67,305

2011¥80,0832011$963,120

1,014¥68,319948¥81,031

11,402$974,522

18. Consolidated Statement of Comprehensive Income
Information on comprehensive income for the fiscal year ended March 31, 2010
Comprehensive income for the year ended March 31, 2010:
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests
Total¥6,639 million¥2,464 million¥9,103 million

Other comprehensive income for the year ended March 31, 2010:
Valuation difference on available-for-sale securities
deferred gains or losses on hedges
Share of other comprehensive income of affiliates accounted for using the equity method
Total¥1,742 million¥24 million¥213 million¥1,979 million

19. 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 the end of the fiscal
year under review.

20. Subsequent Events

Payment of Dividends
At the 7th Annual general Meeting of Shareholders held on June 29, 2011, a resolution for the payment of dividends of ¥12.5 ($0.15) per
share, ¥2,380 million ($28,618 thousand) in total, to shareholders of record as of March 31, 2011 was approved.
Change of Parent Company
Nomura holdings, Inc. purchased additional shares of NOMuRA lANd ANd BuIldINg Co., ltd. from JAFCO Co., ltd., The Asahi Fire andMarine Insurance Company limited and Obayashi Corporation on May 24, 2011, and acquired the majority of the voting rights in NOMuRA
lANd ANd BuIldINg Co., ltd., which is the parent company of Nomura Real Estate holdings, Inc. With this stock acquisition, Nomura
holdings, Inc. became the parent company of NOMuRA lANd ANd BuIldINg Co., ltd. and thus also became the new parent company of
Nomura Real Estate holdings, Inc.

48 Nomura Real Estate Holdings, Inc.

Annual Report 2011

21. Stock Options
In accordance with the Companies Act of Japan, on November 30, 2007, the Company granted certain stock options to certain directors,
executive officers and employees of the Company and its consolidated subsidiaries.
Information regarding the Company’s stock option plans is summarized as follows:
1. Description
Nomura Real Estate holdings, Inc.
Fy2007
2nd issue of stock options
Recipients
directors of the Company’s
subsidiaries (43 persons)Type/number of shares reserved(see Note)
grant date
Vesting conditions
Service period
Exercisable period
Nomura Real Estate holdings, Inc.
Fy2008
Recipients

Type/number of shares reserved(see Note)
grant date
Vesting conditions
Service period
Exercisable period
Nomura Real Estate holdings, Inc.
Fy2009
1st issue of stock options
Recipients
directors of the Company(8 persons)Type/number of shares
reserved (see Note)
grant date
Vesting conditions
Service period
Exercisable period

Common stock:
21,200 shares
August 11, 2009
No conditions attached
No period specified
August 11, 2010 –August 10, 2015

Common stock: 52,300 shares

3rd issue of stock options
directors of the Company(5 persons)directors of the Company’s
subsidiaries (45 persons)
Employees of the Company’s
subsidiaries (116 persons)Common stock: 180,400 shares

November 30, 2007
No conditions attached
No period specified
November 30, 2008 –November 29, 2013

November 30, 2007
No conditions attached
No period specified
November 30, 2009 –November 29, 2014

2nd issue of stock options
directors and executive officersof the Company’s subsidiaries(51 persons)

3rd issue of stock options
directors of the Company(5 persons)Common stock: 61,300 shares

directors and executive officersof the Company’s subsidiaries(52 persons)
Employees of the Company’s
subsidiaries (122 persons)Common stock: 191,200 shares

August 11, 2008
No conditions attached
No period specified
August 11, 2009 –August 10, 2014

August 11, 2008
No conditions attached
No period specified
August 11, 2010 –August 10, 2015

2nd issue of stock options
directors and executive
officers of the Company’s
subsidiaries (51 persons)

3rd issue of stock options
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)Common stock:
202,700 shares
August 11, 2009
No conditions attached
No period specified
August 11, 2011 –August 10, 2016

Common stock:
59,500 shares
August 11, 2009
No conditions attached
No period specified
August 11, 2010 –August 10, 2015

Nomura Real Estate Holdings, Inc. Annual Report 201149

Nomura Real Estate holdings, Inc.
Fy2010
1st issue of stock options
Recipients
directors of the Company(7 persons)Type/number of shares
reserved (see Note)
grant date
Vesting conditions
Service period
Exercisable period

Common stock:
20,000 shares
August 23, 2010
No conditions attached
No period specified
August 23, 2011 –August 22, 2016

MEgAlOS CO., lTd.
Fy2008
Recipients

Type/number of shares
reserved (see Note)
grant date
Vesting conditions
Service period
Exercisable period
MEgAlOS CO., lTd.
Fy2010
Recipients

Type/number of shares
reserved (see Note)
grant date
Vesting conditions
Service period
Exercisable period

50 Nomura Real Estate Holdings, Inc.

Common stock:
66,100 shares
August 23, 2010
No conditions attached
No period specified
August 23, 2011 –August 22, 2016
2nd issue of stock options
directors of the Company(3 persons)
Employees of the Company(14 persons)Common stock:
32,000 shares
december 1, 2008
No conditions attached
No period specified
december 1, 2009 –November 30, 2015

Type/number of shares
reserved (see Note)
grant date
Vesting conditions
Service period
Exercisable period
MEgAlOS CO., lTd.
Fy2009Recipients

2nd issue of stock options
directors and executive
officers of the Company’s
subsidiaries (57 persons)

1st issue of stock options
directors of the Company(3 persons)Common stock:7,900 shares
August 3, 2009
No conditions attached
No period specified
August 3, 2010 – August 2, 2015
1st issue of stock options
directors of the Company(3 persons)Common stock:7,900 shares
August23, 2010
No conditions attached
No period specified
August 23, 2011 –August 22, 2016

Annual Report 2011

2nd issue of stock options
directors of the Company(3 persons)
Employees of the Company(12 persons)Common stock:27,000 shares
August 3, 2009
No conditions attached
No period specified
August 3, 2011 – August 2, 2016
2nd issue of stock options
directors of the Company(3 persons)
Employees of the Company(12 persons)Common stock:
28,000 shares
August323, 2010
No conditions attached
No period specified
August 3, 2012 –August 22, 2017

3rd issue of stock options
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)Common stock:
226,400 shares
August 23, 2010
No conditions attached
No period specified
August 23, 2012 –August 22, 2017

2. Scale of offer and status of changes(1) Number of stock options
Nomura Real Estate holdings, Inc.
Fy2007
Non-vested: (shares)
Previous fiscal year end
grantedForfeited
Vested:End of the year
Vested: (shares)
Previous fiscal year end
Vested:Exercised
Forfeited
End of the year

2nd issue of stock options

3rd issue of stock options

—
—
—
—
—

—
—
—
—
—

13,400—2,300—
11,100180,400——
6,500
173,900

2nd issue of stock options

3rd issue of stock options

—
—
—
—
—

184,100——
184,100—

23,800—6,100—
17,7007,100
184,100——
191,200

1st issue of stock options

2nd issue of stock options

3rd issue of stock options

—
—
—
—
—

—
—
—
—
—

199,200——
10,900188,300

21,200—17,700—3,500

59,500—29,900—29,6003,500
10,900——14,400Nomura Real Estate holdings, Inc.
Fy2008Non-vested: (shares)
Previous fiscal year end
grantedForfeited
Vested:End of the year
Vested: (shares)
Previous fiscal year end
Vested:Exercised
Forfeited
End of the year
Nomura Real Estate holdings, Inc.
Fy2009Non-vested: (shares)
Previous fiscal year end
grantedForfeited
Vested:End of the year
Vested: (shares)
Previous fiscal year end
Vested:Exercised
Forfeited
End of the year

Nomura Real Estate Holdings, Inc. Annual Report 201151

Nomura Real Estate holdings, Inc.
Fy2010Non-vested: (shares)
Previous fiscal year end
grantedForfeited
Vested:End of the year
Vested: (shares)
Previous fiscal year end
Vested:Exercised
Forfeited
End of the year

1st issue of stock options

2nd issue of stock options

3rd issue of stock options—
20,000—20,000——66,100—66,100——226,400—
3,400
223,000—
20,000——20,000—66,100——66,100

—
3,400
—
—
3,400

MEgAlOS CO., lTd.
Fy2008Non-vested: (shares)
Previous fiscal year end
grantedForfeited
Vested:End of the year
Vested: (shares)
Previous fiscal year end
Vested:Exercised
Forfeited
End of the year
MEgAlOS CO., lTd.
Fy2009Non-vested: (shares)
Previous fiscal year end
grantedForfeited
Vested:End of the year
Vested: (shares)
Previous fiscal year end
Vested:Exercised
Forfeited
End of the year
MEgAlOS CO., lTd.
Fy2010Non-vested: (shares)
Previous fiscal year end
grantedForfeited
Vested:End of the year
Vested: (shares)
Previous fiscal year end
Vested:Exercised
Forfeited
End of the year
52 Nomura Real Estate Holdings, Inc.

2nd issue of stock options
28,000——28,000——28,0006,000
2,000
20,000
1st issue of stock options

2nd issue of stock options

—
—
—
—
—

27,000—2,000—
25,000

7,900
—
7,900
—
—

—
—
—
—
—

1st issue of stock options

2nd issue of stock options

—
7,900
—
7,900
—

—
28,0002,000—
26,000

—
7,900
—
—
7,900

—
—
—
—
—

Annual Report 2011

(2) Unit price data
Nomura Real Estate holdings, Inc.
Fy2007
Exercise price (¥)
Average price upon
exercise (¥)
Fair value on grant date (¥)

2nd issue of stock options
1

3rd issue of stock options
3,380

1,581
2,903

—
714

2nd issue of stock options
1

3rd issue of stock options
2,255

1,432
2,131

—
770

1st issue of stock options
1

2nd issue of stock options
1

3rd issue of stock options
1,663

1,135
1,533

1,250
1,533

—
641

1st issue of stock options
1

2nd issue of stock options
1

3rd issue of stock options
1,194

—
1,119

—
1,119

—
437

Nomura Real Estate holdings, Inc.
Fy2008Exercise price (¥)
Average price upon
exercise (¥)
Fair value on grant date (¥)
Nomura Real Estate holdings, Inc.
Fy2009Exercise price (¥)
Average price upon
exercise (¥)
Fair value on grant date (¥)
Nomura Real Estate holdings, Inc.
Fy2010Exercise price (¥)
Average price upon
exercise (¥)
Fair value on grant date (¥)
MEgAlOS CO., lTd.
Fy2008Exercise price (¥)
Average price upon
exercise (¥)
Fair value on grant date (¥)
MEgAlOS CO., lTd.
Fy2009Exercise price (¥)
Average price upon
exercise (¥)
Fair value on grant date (¥)
MEgAlOS CO., lTd.
Fy2010Exercise price (¥)
Average price upon
exercise (¥)
Fair value on grant date (¥)

2nd issue of stock options
740
1,016
184
1st issue of stock options
1

2nd issue of stock options
1,010

1,042
883

—
259

1st issue of stock options
1

2nd issue of stock options
1,093

—
983

—
219

Note: With respect to stock options outstanding at March 31, 2011, the number of stock options is calculated based on the number of shares of common stock which would be
required to be issued if all such stock options were to be exercised.

Nomura Real Estate Holdings, Inc. Annual Report 2011

53

Report of Independent Auditors

54 Nomura Real Estate Holdings, Inc.

Annual Report 2011

Investor Information(As of March 31, 2011)

Corporate Data

IR site of Nomura Real Estate Holdings

Corporate Name:

Nomura Real Estate holdings, Inc.

Representative:

Kamezo Nakai (appointment on June 29, 2011)

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

Date of Establishment:

June 1, 2004

Number of Employees:

5,300 (on a consolidated basis)

Fiscal Year:

From April 1 to March 31

General Meeting of Shareholders: June

Stock Information
Common Stock:¥115,574,287,600

Number of Authorized Shares:

450,000,000

Number of Shares Issued:

190,387,000

Market Listing:First Section of Tokyo Stock Exchange

Minimum Trading Unit:

100 shares

Number of Shareholders:

51,592

http://www.nomura-re-hd.
co.jp/english/ir/index.html
14.13%

15.14%
0.42%

Ten Largest Shareholders:

18.63%Name of Shareholder

No. of shares Shareholding (%)

Nomura land and Building Co., ltd.

96,817,500

50.85Japan Trustee Services Bank, ltd. (Trust account)

7,867,200

4.13

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

7,837,600

4.11

The Chase Manhattan Bank NA london Sl Omnibus Account3,864,130

2.02

Nomura Real Estate holdings Employee Shareholding Association

3,012,282

1.58

Japan Trustee Services Bank, ltd. (Trust account 4)

1,966,100

1.03Japan Trustee Services Bank, ltd. (Trust account 9)

1,760,700

0.92

NIPPONVEST

1,600,000

0.84State Street Bank and Trust Company

1,489,334

0.78

The Bank of Ny Treaty JASdEC Account1,450,665

0.76

Composition by
Number of Shareholdings(%)

51.66%

Government(0.03%)

Financial Institutions(15.14%)

Financial Instruments Firms (0.42%)
Other Japanese Firms(51.66%)

Other Foreign Investors(18.63%)

Individuals and Others(14.13%)

Stock Price and Trading Volume on the Tokyo Stock Exchange

(Yen)
3,000
2,500
2,000
1,500
1,000
500
0

(Millions of Shares)
50,00040,00030,00020,00010,000
0

4 5
2008

6

7

8

9

10 11 12

1 2
2009

3

4

5

6

7

8

9

10 11 12

1 2
2010

3

4

5

6

7

8

9

10 11 12

1 2
2011

3

Nomura Real Estate Holdings, Inc. Annual Report 201155

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

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

This annual report is printed with vegetable based ink.

Printed in Japan