Financial
Report2016
For the Year Ended March 31, 2016

Management’s Discussion and Analysis

1

Consolidated Balance Sheet

9

Consolidated Statement of Income

11

Consolidated Statement of Comprehensive Income

12

Consolidated Statement of Changes in Net Assets

13

Consolidated Statement of Cash Flows14

Notes to Consolidated Financial Statements

15

Independent Auditors’ Report49Management’s Discussion and Analysis

Trends in the Real Estate Industry

metropolitan area gradually increased.

In the housing sales market, although the number of supplied

The office building vacancy rate in the five wards of central

housing units decreased due to an increase in sales prices broughtTokyo declined by 0.96 percentage points as of March 31, 2016,

on by high construction costs, demand for housing centering on the

improving to 4.34%. Average rent levels in the five wards of central

properties in and around the Tokyo metropolitan area remainedTokyo as of March 31, 2016 increased by ¥778 per tsubo (approx.

strong, showing steady growth with the help of low interest rates

3.3m2) to ¥17,973 compared to March 31, 2015.
In the real estate investment market, inflow of investment

and other favorable factors.
Condominium sales in the Tokyo region decreased by 9.9%

funds in J-REITs backed by the continuation of low interest rates

year-on-year to 40,449 units in the calendar year 2015. The average

supported real estate transactions, as did new listings on the market

contract rate for the first month on newly marketed condominiumand continuing large capital increases through public offerings. The

units in 2015 decreased by 0.6 percentage points year-on-year to

Tokyo Stock Exchange REIT Index remained at high levels. In addition,

74.5%; however, the 70% benchmark for good sales was maintained.

the expected yield on A-class office buildings in the Marunouchi/

In the office market, vacancy rates showed a clear downward

Otemachi area decreased by 0.1 percentage points year-on-year totrend supported by the expansion of demand through the recovery

3.7% as of April 1, 2016, which was the lowest level recorded.

of business performance and the transfer of offices to improveconditions associated with location; and the rent levels in the Tokyo

Analysis of Operating Results
In this market, the Nomura Real Estate Group (“the Group”) posted thefollowing consolidated performance for the fiscal year ended March

Condominium Supply and Contract Rates in the Tokyo Metropolitan
Area (calendar year)

31, 2016: operating revenue of ¥569,545 million, which represents an(units)60,000(%)
90

45,00080¥80,912 million, an increase of ¥9,017 million, or 12.5%; ordinary

70

income of ¥72,679 million, an increase of ¥8,998 million, or 14.1%;

15,00060

and profit attributable to owners of parent of ¥47,182 million, an

00increase of ¥8,740 million, or 22.7%; furthermore, operating revenue,

40,44974.5

30,0002011

2012

Condominium Supply (left axis)

2013

2014

2015

(Year)

Contract Rates (right axis)

increase of ¥2,386 million, or 0.4% year-on-year; operating income ofoperating income, ordinary income, and profit attributable to ownersof parent all recorded their highest figures.

Source: Real Estate Economic Institute Co., Ltd.

Operating revenue achieved growth year-on-year due to anincrease in the number of properties sold in the property development

Vacancy Rates and Rent Levels in the Five Wards of Tokyo(as of March 31)

business in the Leasing Unit.

(yen)
20,000(%)
10.0

18,000

8.0

improvement in the vacancy rate and an increase in the number of

6.0

properties sold in the Leasing Unit and an increase in the acquisition

4.0

fee related to the merger of the three REITs in the Investment

0

Management Unit. Profit attributable to owners of parent increased

17,97316,0004.34

14,0000

2012
Rent Levels (left axis)

2013

2014

2015

2016

(Year)

Vacancy Rates (right axis)

Operating income and ordinary income increased due todue to a rebound from the impairment loss related to Nomura
Fudosan Tennouzu Building reported in the fiscal year ended March

Source: Miki Shoji Co., Ltd.

31, 2015 in addition to the above.

Changes in TSE REIT Index (as of March 31) and Expected Yield*(as of April 1)(points)
2,000

(%)
5

Changes in Operating Income and ROA*

1,600

4.5

1,200

4

(millions of yen)
80,0001,896.4

3.5

60,000400

340,000

0

0

3.7

800

2012
TSE REIT Index (left axis)

2013

2014

2015

2016

(Year)

0

FY12/3Operating Income (left axis)

FY13/3

FY14/3

FY15/3

FY16/3

ROA (right axis)*ROA=(Operating Income + Non-operating Income)/End-period Total Assets

1

4
2

0

FY11/3

Nomura Real Estate Holdings, Inc.

(%)
8
6

5.6

20,000

Expected Yields (right axis)

Source: Changes in TSE REIT Index: Bloomberg
Changes in Expected Yield: Japan Real Estate Institute “The Japanese Real Estate Investor
Survey”*Expected yields for A-class office buildings in Marunouchi and Otemachi are shown

80,912Financial Report 2016

As a result, we achieved our target operating income of ¥65.0

Leasing Unit

billion stated in phase I (through March 2016) of our Mid- to Long-term

Operating revenue in this unit totaled ¥110,625 million, which

Management Plan in three consecutive periods. Furthermore, we

represents an increase of ¥17,746 million, or 19.1% year on year,

achieved an ROA of 5.6% and ROE of 11.2%, which we consider to be

and operating income totaled ¥32,099 million, an increase ofimportant management indicators.

¥7,651 million, or 31.3%.

Operating Results by Segment

Hamamatsu-cho Building (Minato-ku, Tokyo), which was steadily

An overview of segment achievements is given below:

occupied, and an increase in the number of properties sold in the

In the leasing business, the contribution of profit from theOperating revenue for each segment includes internal sales
and transfers among segments. Due to the rounding of fractions,

property development business resulted in increases in both income
and profit over the previous fiscal year.

total figures may not match.

In the leasing sector, because the leasing up of the Hamamatsu-

Nomura Real Estate Wellness Co., Ltd., which was establishedcho Building is improving, the vacancy rate as of the end of the fiscal

in April 2015, and MEGALOS Co., Ltd., which had been classified

year improved to 2.2% from 4.5% as of the end of the fiscal year

under the “Other Business Unit,” were both classified into theended March 31, 2015.

“Property & Facility Management Unit” from the first quarter. In

In the property development sector, we proactively promoted

addition, NF Power Service Co., Ltd., which was established indevelopment in each business area, including Premium Midsize

December 2015, and newly incorporated in the “Property & Facility

Office (PMO) in office development, GEMS urban-type commercial

Management Unit” from the third quarter to promote business infacilities, Landport series logistics facilities, and PROUD FLAT

conjunction with the property and facility management business.

residential leasing facilities. In the fiscal year ended March 31, 2016,

The results of the previous fiscal year are calculated in linewith the newly adopted unit classification.

we recorded the sale of PMO Tamachi (Minato-ku, Tokyo) and
Nomura Fudosan Kichijoji Building (Musashino-shi, Tokyo).

Residential Development Unit

Investment Management Unit>

Operating revenue in this unit totaled ¥334,515 million, which

Operating revenue in this unit totaled ¥10,973 million, which

represents a decrease of ¥24,882 million, or 6.9% year on year, andrepresents an increase of ¥1,806 million, or 19.7% year on year,

operating income was ¥31,910 million, a decrease of ¥1,902

and operating income totaled ¥7,377 million, an increase of ¥2,564

million, or 5.6%. In housing sales, while sales prices of recorded

million, or 53.3%.

housing units increased beyond those in the previous fiscal year, theThis was mainly due to an increase in the acquisition fee

number of housing units sold decreased, resulting in decreases inassociated with the merger of Nomura Real Estate Master Fund,both income and profit.

Inc., Nomura Real Estate Office Fund, Inc., and Nomura Real Estate

In regard to housing sales, and we posted sales of 6,006 units(a decrease of 1,015 units year on year), including Toshima Cross
Comfort

Tower(Shinjuku-ku,

Tokyo),

Sakurajosui

Residential Fund, Inc. in October 2015, and the dividend from SPC
on its property sales.

Gardens

The three J-REITs merged, forming the largest domestic(Setagaya-ku, Tokyo) OHANA Hachioji Oak-Court (Hachioji-shi,diversified listed J-REIT with AUM of more than ¥900 billion. Also,

Tokyo), PROUD CITY Seishin-chuo (Nishi-ku, Kobe, Hyougo) for

we launched investment advice service of “J-REIT Value Fund”,

condominiums, and PROUD SEASON Musashi-koganei Garden

which is a first for real estate management company in Japan.

Avenue (Kodaira-shi, Tokyo) for detached houses.
The gross margin ratio increased to 21.9% (0.8 percentage

Property Brokerage & CRE Unit

points year-on-year) due to large-scale houses sold in urban areas.

Operating revenue in this unit totaled ¥35,373 million, which

Further, we concluded contracts in the fiscal year ended

represents an increase of ¥5,141 million, or 17.0% year on year,

March 31, 2016 for 4,732 units (a decrease of 867 compared to theand operating income totaled ¥9,901 million, resulting an increasefiscal year ended March 31, 2015). We achieved contract rates ofof ¥1,423 million, or 16.8%.

47.4% as of the beginning of the fiscal year against our target of
5,750 units for fiscal year ending March 31, 2017.

Due to increases in the number and amount of property
brokerage transactions and property sales, the Property Brokerage &Calculations of the number of units, sales, and outstanding

CRE Unit recorded increases in both income and profit over thecontract amounts sold in joint ventures is based on the Company’s

previous fiscal year. Our property brokerage operations achieved

allotments.

record levels in transactions and amounts.

Nomura Real Estate Holdings, Inc.

2

Financial Report 2016

In wholesale operations, the Company provides services and advice

decrease in profit compared with the previous fiscal year.

to meet client companies’ needs for effective utilization of realThis was due mainly to an increase in retirement benefit

estate they hold.

expenses while the number of construction orders increased.

In retail operations, we opened the following six branch

In the elderly care business, the Company developed the area

stores: Kohoku New Town Center, Ibaraki Center, Oimachi Center,adjacent to PROUD Funabashi. Also, the Company decided to

Nakano Center, Kachidoki Center, and Hiroo Center. This resulted

participate in several projects.

in our branch network expanding to a total of 68 branches as ofIn the fitness club business, the Company acquired 100%

March 31, 2016. We also worked toward improving our ability toownership of MEGALOS Co., Ltd. MEGALOS Co., Ltd. has since

attract customers and expanding our customer base throughchanged its name to Nomura Real Estate Life & Sports Co., Ltd. as ofinitiatives that included enhancing our Internet portal site, nomu.

April 1, 2016.

com, and branch brand, Nomura no Chukai + (Plus).
Other Unit
Property & Facility Management Unit

Operating revenue in this unit totaled ¥1,353 million, which

Operating revenue in this unit totaled ¥90,295 million, which

represents a decrease of ¥1,655 million, or 55.0% year on year, andrepresents an increase of ¥4,457 million, or 5.2% year on year, andoperating loss totaled ¥153 million (operating loss in the previous

operating income totaled ¥5,315 million, a decrease of ¥443

year was ¥113 million).

million, or 7.7%. This unit showed an increase in income and a

Key Factors of Changes by Segment from FY15/3 (Actual) to FY16/3 (Actual)

Investment
Management
Leasing
Residential
Development

Property
Brokerage
& CRE

+1.4

+2.5

Property &Facility
Management

Other

Adjustments

-0.4

-0.0

-0.2

• Sales of inventories
+7.6

-1.9

71.8

(billions of yen)

• Increase in the acquisition
fee associated with themerger of the three REITs•Improvement in thevacancy rate Increase in
the number of properties sold

80.9

• Decrease in units sold

FY15/3
ActualFY16/3
ActualNomura Real Estate Holdings, Inc.

3

Financial Report 2016

Major operating-related indices for each business are shown in the table below.
Residential Development Unit:
Condominium sales (units) . . . . . . . . . . . . . . . . . . . . . . . . . 
Detached housing sales (units) . . . . . . . . . . . . . . . . . . . . . . 
Gross margin ratio of housing sales (%) . . . . . . . . . . . . . . . 
Completed housing units held in inventories (units). . . . . . . 
Leasing Unit:
Vacancy rate*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Investment Management Unit:
Outstanding assets under management (millions of yen). . . 
Property Brokerage & CRE Unit:
Brokerage: Number of transactions. . . . . . . . . . . . . . . . . . . 
Brokerage: Total transaction value (millions of yen). . . . . . . 
Property & Facility Management Unit:
Buildings under management. . . . . . . . . . . . . . . . . . . . . . . 
Condominiums under management (units). . . . . . . . . . . . . 
Other Unit:
Members of MEGALOS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 

2012/032013/03

2014/03

2015/03

2016/03    3,397      631     23.3
      114    5,111      638     22.5       42    5,491
      718     21.7       31    6,162      859     21.1
       89    5,363
      643     21.9      349

      2.3      2.2      2.9      4.5      2.2

1,153,898

1,127,495

1,132,246

1,123,188

1,074,481    5,762  452,950    6,494  540,698    7,437  672,774    7,174  710,980    7,710  713,574      696  130,987      723  137,745      703
147,516      729  155,706      705  163,036  133,033  132,196  141,564  140,395  144,263(*) In accordance with changes in segmentation, certain properties have been reclassified from the second quarter of the fiscal year ended March 31, 2012.

Changes in Interest-bearing Liabilities

Analysis of Financial Position
AssetsTotal assets were ¥1,485,450 million, which was an increase of¥116,223 million compared to March 31, 2015. Current assets
increased by ¥59,479 million compared to March 31, 2015 to¥608,779 million. Noncurrent assets were ¥876,671 million, which
was an increase of ¥56,744 million compared to March 31,(millions of yen)
800,000

721,900

600,000
400,000
200,000

2015. This was mainly due to an increase of ¥67,146 million in0

inventories, including real estate for sale, and an increase of‘11/03‘12/03‘13/03‘14/03‘15/03‘16/03¥37,261 million in land compared to March 31, 2015.
Liabilities

Net Assets

Total liabilities were ¥1,029,042 million, which was an increase of

Net assets decreased by ¥4,623 million compared to March 31,¥120,846 million compared with March 31, 2015. Current liabilities

2015 to ¥456,408 million. This was mainly due to factors including

decreased by ¥16,081 million compared with March 31, 2015 toincreases of ¥37,135 million in retained earnings, and ¥16,324¥289,108 million. Noncurrent liabilities were ¥739,934 million,

million in capital surplus offset by a decrease of ¥55,539 million inwhich was an increase of ¥136,927 million compared to March 31,

non-controlling interests.

2015. This was mainly due to an increase of ¥92,700 million in

As a result, shareholders’ equity increased by ¥50,795 million

long-term loans payable and an increase of ¥30,000 million incompared to March 31, 2015 to ¥444,854 million. The shareholders’bonds payable.

equity ratio increased from 28.8% as of March 31, 2015 to 29.9%.

As a result of these factors, interest-bearing liabilities were¥721,900 million, which was an increase of ¥105,200 million
compared to March 31, 2015. Further, our debt-to-equity ratio has
not changed from 1.6 times in March 31, 2015.

Nomura Real Estate Holdings, Inc.

4

Financial Report 2016

Changes in Net Asses and Shareholders’ Equity Ratios(millions of yen)
500,000

Business Unit (Millions of yen)(%)
50

456,408

400,000
300,000

29.9

FY15/3

Residential Development¥216

Leasing

47,039FY16/3¥

Change

686

¥

470

48,349

1,310
(64)

40

Investment Management

110

46

30

Property Brokerage and CRE

549

633

84

Property and Facility Management

987

872

(115)

200,000

20

Other

19

6

(13)

100,000

10

Subtotal

48,92050,592

1,672

Adjustments(15,024)

1,213

16,237

Total

33,89651,805

17,90900‘11/03
Net Assets (left axis)‘12/03‘13/03‘14/03‘15/03‘16/03

Shareholders’ Equity Ratio (right axis)

We acquired the following properties in the fiscal year ended
March 31, 2016:

Credit Rating Situation
Rating and Investment Information, Inc. (R&I) and Japan Credit
Rating Agency, Ltd. (JCR) assign the following ratings to the various
corporate bonds issued by Nomura Real Estate Holdings:
Rating Agency

Long-term

Short-term

Rating and Investment Information,
Inc. (R&I)

A-

a-1

Japan Credit Rating Agency, Ltd. (JCR)A

J-1

Cash Flows
Cash flows from operating activities
Net cash provided by operating activities was ¥13,258 million (adecrease of ¥10,579 million year-on-year). This mainly reflects thepurchase of inventories, while income before income taxes and noncontrolling interests of ¥70,975 million was recorded.
Cash flows from investing activities
Net cash used in investment activities amounted to ¥59,714 million( a year-on-year decrease of ¥27,239 million). This mainly reflected
the purchase of tangible and intangible assets, and the acquisitionof shares of subsidiaries resulting in changes in the scope of
consolidation.

Company Name

Property Name(location)

Business
Segment

Nomura Real
EstateDevelopment
Co., Ltd.

Nomura Fudosan
Ginza Building(Note1 and 2)(Chuo-ku, Tokyo)

Leasing

Officebuilding

Nomura Real
EstateDevelopment
Co., Ltd.

Toranomon Central(Minato-ku, Tokyo)

Leasing

Officebuilding

Nomura Real
EstateDevelopment
Co., Ltd.

Minami-GyotokuSC(note3)(Ichikawa-Shi,
Chiba)

Leasing

Commercial
building

Construction, Size, Details of
Facilities etc.

Use

Acquisition Price(Millions of yen)

Area (m2)

Steel-reinforced concrete
Building: 13,374(partially reinforced concrete Land: 1,592
and steel construction), 17
floors above ground / 5 floors
below¥12,262

Steel-reinforced concrete, 10 Building: 4,431
floors above ground /3 floors Land: 548
below

5,747

steel construction (partially
Building: 35,612
reinforced concrete), 2 floors Land: 16,503
above ground / 2 floors below

10,646

Net cash provided by financing activities totaled by ¥53,638 million

Note 1: Total building floor and land areas are after conversion for ownership share.
2: A dditional ownership acquisition of the same property in which
ownership was in the previous fiscal year.
3: Trust beneficiary right is included.

(a year-on-year increase of ¥62,622 million). The primary reason for

In addition, in the fiscal year ended March 31, 2016, in accordance

this was that long-term debt financing offset the impact of paymentswith an acquisition of the share of Toranomon Real Estate Ltd.,

from changes in ownership interests in subsidiaries that did not result

facilities listed below were added to the major facilities.

Cash flows from financing activities

in changes in the scope of consolidation.
Company Name

Facilities Situation
In the fiscal year ended March 31, 2016, we invested a total amount

Toranomon Real
Estate Co., Ltd.

of ¥51,805 million in facilities, including the Nomura Fudosan
Ginza Building (Chuo-ku, Tokyo).

Nomura Real Estate Holdings, Inc.

5

Property Name(location)

Business
Segment

Use

Three buildings in
the Toranomon
1-chome area
(Note)(Minato-ku,
Tokyo)

Leasing

Office building

Financial Report 2016

Construction, Size, Details of
Facilities etc.

Steel-reinforced concrete(partially Reinforced
concrete), 7 floors above
ground / 1 floors below,
other 2 Buildings

Changes in Dividend Payments

Acquisition Price(Millions of yen)

Area (m2)

Building: 6,686
Land: 1,009

(yen)
60.0

¥15,278

57.5

60.0

40.0

20.0

Note : Area and acquisition price are the total of the three facilities.

Basic Policy Concerning Profit Distribution and Dividends

0

for the fiscal year ended March 31, 2016 and 2017

FY11/3

FY12/3

FY13/3

FY14/3

FY15/3

FY16/3

The Company’s basic policy regarding the distribution of profits to

FY17/3(Forecast)shareholders is to aim at a payout ratio of approximately 30% over the
Mid - to long-term, in accordance with annual business performance,

Consolidated Performance Outlook for the fiscal year

comprehensively considering the operating environment, capitalending March 31, 2017 (announced on April 28, 2016)

investment plans, retained earnings, and other relevant factors. In the fiscal

In the fiscal year ending March 31, 2017, we are projecting operating

year ended March 31, 2016, we increased our full-year dividend fromrevenue of ¥589,000 million (an increase of ¥19,454 million year-on-

the initially planned ¥27.5 to ¥30, based on our projections for theyear), operating income of ¥76,000 million (a decrease of ¥4,912

operating environment and business performance going forward.

million), ordinary income of ¥67,000 million (a decrease of ¥5,679

Together with the already-paid interim dividend, our total annual

million), and profit attributable to owners of parent of ¥43,000 million

dividend was ¥57.5 per share as a result of this, which was an increase(a decrease of ¥4,182 million).

of ¥12.5 per share compared to FY2014. We intend to increase our

The projected decrease in profit is mainly due to an increase

dividend by a further ¥2.5 in the fiscal year ending March 31, 2017

in the acquisition fee associated with the merger of the three REITs

making our total forecast annual dividend ¥60 per share.

in the fiscal year ended March 31, 2016.

Key Factors of Changes by Segment from ‘FY16/3 (Actual) to ‘FY17/3 (Forecast)
Residential
Development-1.4

Leasing

Investment
Management

-1.2

-2.8

(billions of yen)

Property
Brokerage& CRE

Property &Facility
Management

-1.4

+0.3

Adjustments
Other

+0.1

+1.5

• FY16/3
Impact of sale of inventories
80.9• FY16/3
Due to an increase in the acquisition fee
related to the merger of the three REITs

76.0• Increases in personnel expenses, taxes, dues, etc.
(Including retirement benefit expenses)• Augmentation of accuracy in adjustments allocation• Increases in personnel expenses, taxes, dues, etc.
(Including retirement benefit expenses)• Augmentation of accuracy in adjustments allocation

FY16/3
ActualFY17/3
Forecast

Nomura Real Estate Holdings, Inc.

6

Financial Report 2016

Risks Affecting the Business of Nomura Real Estate Groupand revisions of their investment plans. Such events could have an

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

adverse impact on the Group’s business performance.

business, accounting and other conditions could have a material
impact on the decision-making of investors.

(3) Licenses and permits for major businesses

It should be noted that matters concerning the future in this

The Group obtains licenses and permits, such as real estate

document have been determined based on information available tobrokerage and construction licenses, when carrying out businessthe Group as of March 31, 2016.

activities. Currently, there are no reasons for any of these licenses
or permits to be cancelled. However, in the future, if such licenses(1) Trends in the real estate market

or permits are cancelled for whatever reason, this could adversely

The Group’s performance for the fiscal year ended March 31,

affect the Group’s business performance.

2016 resulted in increased revenue and income compared to theprevious fiscal year. However, economic prospects are still(4) Impact of interest-bearing debt

uncertain because of concerns about the downward economy in

The balance of interest-bearing debt at March 31, 2016 was

Asian emerging countries.

¥721,900 million, which represents an increase of ¥105,200 million

In the future, certain events could still cause a decline inyear on year (equivalent to 48.6% of total assets, increased by 3.6

purchasing sentiment among customers of the Residential

percentage points year on year). When raising funds by borrowing,

Development Business, the Property Brokerage & CRE Businessthe Group attempts to deal with the risk of a short-term rise in

and other businesses. These events include the current economic

interest rates mainly by taking out long-term, fixed-rate loans.

slowdown, an associated deterioration in corporate earnings, a

However, an increase in borrowing costs due to a rise in market

decline in consumer spending, a rise in interest rates, or aninterest rates could have a negative impact on the Group’s business

excess supply in the real estate market. There may also be falls

performance and financial condition.

in selling prices or increases in inventories due to the decline inpurchasing sentiment, or losses on valuation of inventories. For(5) M&A

the Leasing Business and the Investment Management Business,

The Company has positioned M&A as an important strategy formoreover, such events could also spark declines in office rents,

long-term growth, and aims at boosting Group enterprise value by

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

implementing M&A that can be expected to generate synergies

ratios, and an accompanying valuation loss on assets owned bywhile making the most of the advantages offered by the holding

the Group. In addition, declining investment unit price andcompany system. However, in the event of changes in the operating

weakening demand for investment funds are possibilities in theenvironment, the expected growth of the acquired company, or the

REIT market. Such events could have an adverse impact on thesynergy expected from the acquisition, may not be realized. This

Group’s business performance.

could have an adverse impact on the Group’s business performance.

(2) Changes to real estate-related legislation or the tax system(6) Natural disasters

A number of laws and regulations apply to the various businesses

Natural disasters, such as earthquakes and wind and flood damage,of the Group, which will be subject to new regulations as it expands

as well as sudden accidents, could lead to damage or destruction of

its operational scope in the future. Going forward, the Group may

real estate owned or managed by the Group. Such incidents could

face new obligations and expense burdens if the Building Standards

have a negative impact on the Group’s business performance andLaw, the Building Lots and Buildings Transaction Business Law, thefinancial condition.

Financial Instruments and Exchange Law, or other real estaterelated laws are revised, or if new legislation is implemented. Such
events could adversely affect the Group’s business performance.
Furthermore, if revisions to the tax system that impact theReal Estate Development Business are implemented, this could leadto an increase in expenses for holding, acquisition, and sales ofassets, or a decline in the purchasing sentiment of customers. It
could also prompt a change in the facility strategies of companies

Nomura Real Estate Holdings, Inc.

7

Financial Report 2016

(7) Personal information(10) Concentration of revenues in fourth quarterIn the course of carrying out its operations, the various businesses

In the Residential Development Unit, which accounts for more thanof the Group handle large quantities of personal information. The

50% of the group’s revenues, housing sales are registered as sales

Group endeavors to comply with various laws and regulations

when properties are handed over to the customers. In many cases,

pertaining to personal information, such as the Law Concerning

however, the completion and handover occur in February or March

Protection of Personal Information, and also handle information inof each year, in accordance with the requirements of customers

the proper manner. Moreover, Group companies have produced

taking up residence. For this reason, a large proportion of thevarious documents, such as “Information Security Provisions,”

group’s revenues is concentrated in the fourth quarter of each

“Rules for Handling Personal Information” and “Guidelines forfiscal year.

Entrusting the Handling of Personal Information.” In these ways,
the Group strives to train and educate employees and protect the(11) Capital relationship with other affiliates

interests of customers. In the event of external leakage of personal

The Company’s other affiliates are Nomura Land and Building Co.,

information due to unforeseen circumstances, however, confidence

Ltd. and its parent company Nomura Holdings, Inc. As of March 31,

in the Group could be lost, leading to a decrease in sales and the2015, Nomura Land and Building owned 33.8% of the Company’s

incurrence of expenses to pay compensation for damages. This

shares. This holding percentage could change in the event of a sale

could have an adverse impact on the Group’s business performance.

of the Company’s shares by Nomura Land and Building or a capitalincrease of the Company.

(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,
the Group 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 isdetected. 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.
(9) Asbestos
Some of the buildings owned by the Group have been sprayed withmaterials 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 agerelated degradation and are in stable condition. In the future,
however, it is possible that asbestos may be scattered if age-relateddegradation occurs. Such an event could require removal orcontainment of the asbestos in question, resulting in the incurrenceof additional costs that could have an adverse effect on the Group’sbusiness performance or financial condition.

Nomura Real Estate Holdings, Inc.

8

Financial Report 2016

Consolidated Balance Sheet
Nomura Real Estate Holdings, Inc. and its subsidiaries
March 31, 2015 and 2016

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

(Millions of yen)
ASSETS

Current Assets:
Cash and deposits (Notes 2(3) and 3)
Notes and accounts receivable-trade
Short-term investment securities (Notes 2(3), 3 and 4)
Real estate for sale (Note 6)
Real estate for sale in process
Land held for development
Equity investments (Notes 3 and 4)
Deferred tax assets (Note 10)
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 10)
Other
Allowance for doubtful accounts
Total investments and other assets

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

Intangible Assets
Total Assets

2015

2016

2016

¥   47,421
15,0303,000
61,583
237,501130,2216,317
5,688
42,587(48)   549,300¥   57,594
15,371—
78,133
269,547
148,730
819
5,286
33,338(39)
608,779$   511,129
136,417—
693,405
2,392,145
1,319,931
7,269
46,907295,867(343)
5,402,727

40,854
20,487
14,9793,253—
79,57345,511
21,38014,8405,168(1)86,898403,897
189,738
131,70245,861(7)771,191

486,436
364,364
328
11,632
1,861
864,621(134,544)
730,077

523,697374,378
13,20812,9062,050
926,239(147,147)
779,092

4,647,648
3,322,491
117,216
114,536
18,1978,220,088(1,305,892)
6,914,196

10,277¥1,369,227

10,681¥1,485,450

94,793$13,182,907

See notes to consolidated financial statements.

Nomura Real Estate Holdings, Inc.

9

Financial Report 2016

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

(Millions of yen)
LIABILITIES AND NET ASSETS

2015

2016

2016

¥   48,663
151,800
3,000
13,09825,096
125
6,219
606
84
8,529
1,201
4,967
36,0005,801
305,189¥   51,162
137,300—
13,23329,618
17
7,074
739
62
6,919
1,047
2,171
33,5006,266
289,108$   454,048
1,218,495—
117,436
262,850
155
62,7776,556
549
61,402
9,296
19,265297,306
55,6072,565,742

Noncurrent Liabilities:
Bonds payable (Notes 3, 5 and 6)
Long-term loans payable (Notes 3, 5 and 6)
Lease and guarantee deposits received (Note 6)
Deferred tax liabilities (Note 10)
Deferred tax liabilities for land revaluation
Net defined benefit liability (Note 7)
Provision for loss on subleasing business
Other
Total noncurrent liabilities
Total Liabilities

30,000431,900
60,74960,214
4,117
11,078466
4,483
603,007908,196

60,000524,600
63,76764,0703,900
18,018314
5,265
739,934
1,029,042

532,481
4,655,662
565,911568,605
34,612
159,908
2,783
46,721
6,566,683
9,132,425

Net Assets:
Shareholders’ equity (Note 11):
Capital stock
Capital surplus
Retained earnings
Treasury stock

116,189
93,518170,069(2)

116,599
109,842
207,204(3)

1,034,778
974,817
1,838,871(28)

379,774

433,6423,848,438

5,069
78
7,645
61
1,432
14,285
1,564
65,408461,031

6,665
156
7,861
43
(3,513)
11,212
1,685
9,869
456,408

59,1491,384
69,766384(31,179)
99,504
14,956
87,5844,050,482¥1,369,227¥1,485,450$13,182,907

Current Liabilities:
Notes and accounts payable-trade
Short-term loans payable (Notes 3, 5 and 6)
Current portion of bonds payable (Notes 3, 5 and 6)
Income taxes payable (Note 10)
Deposits received
Deferred tax liabilities (Note 10)
Provision for bonuses
Provision for directors’ bonuses
Provision for loss on business liquidation
Accounts payable-otherAccrued interests
Accrued consumption taxes
Advanced received
Other
Total current liabilities

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 adjustment
Remeasurements of defined benefit plans (Note 7)
Total accumulated other comprehensive income
Subscription rights to shares:
Non-controlling interests
Total Net Assets
Total Liabilities and Net Assets
See notes to consolidated financial statements.

Nomura Real Estate Holdings, Inc.

10

Financial Report 2016

Consolidated Statement of Income
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years Ended March 31, 2015 and 2016

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

(Millions of yen)
Operating Revenues and Expenses

2015

2016

2016

Operating Revenue:¥567,159¥569,545$5,054,536

Operating revenue

567,159

569,545

5,054,536

Operating Expenses:

495,264

488,633

4,336,464

Operating cost

405,107391,571

3,475,073

Selling, general and administrative expenses

90,157

97,062

861,391

Operating Income

71,89580,912

718,072

Other Income and Expenses(88,193)(13,836)(9,937)

Interest income

50

72

639

Dividends income

1,123

1,008

8,941

Equity in earnings of affiliates

17

16

146

Gain on sales of noncurrent assets (Note 8)

207

—

—

2,204
(8,852)—(7,817)—(69,375)

Dividends distribution from silent partnership associated with
impairment loss
Interest expenses
Loss on valuation of investment securities
Impairment loss (Note 9)
Other, net
Profit before income taxes

—

(279)

(2,476)(8,170)(1,426)(12,656)(415)(1,511)(13,412)58,05970,975

629,879

186,299

Income Taxes (Note 10):
Income taxes-current

18,07020,992

Income taxes-deferred(2,664)

825

7,320

Total Income Taxes

15,406

21,817

193,619

42,65349,158436,260

4,211

1,976

17,534¥ 38,442¥ 47,182$ 418,726

ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent
See notes to consolidated financial statements.

Nomura Real Estate Holdings, Inc.

11

Financial Report 2016

Consolidated Statement of Comprehensive Income
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years Ended March 31, 2015 and 2016

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

(Millions of yen)
2015

2016

2016

ProfitOther Comprehensive Income (Note 18):
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of affiliates accounted for using
the equity method
Total other comprehensive income¥42,653¥49,158$436,260

5,765
53
421
7
689

1,595
78
216
(10)
(4,944)

14,157
689
1,922
(92)
(43,881)

16
6,951

(8)
(3,073)(69)(27,274)

Comprehensive Income (Note 18)¥49,604¥46,085$408,986(Breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controliing interests¥45,387
4,217¥44,109
1,976$391,454
17,532

See notes to consolidated financial statements.

Nomura Real Estate Holdings, Inc.

12

Financial Report 2016

Consolidated Statement of Changes in Net Assets
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years Ended March 31, 2015 and 2016

(Millions of yen)

Number ofshares issued

Valuation Deferreddifference on gains /Treasury available-for- losses on
stock sale securities hedges

Foreign
Revaluation currency Remeasurements Subscription
Nonreserve for translation of definedrightscontrollinglandadjustments benefit plansto shares
interests

Total
net
assetsCapitalstock

CapitalsurplusRetainedearnings¥116,024
116,024¥93,353
93,353¥138,972
138,972¥(2)(2)¥ (690)
(690)

¥ 25
25

¥7,224
7,224

¥32
32

¥  742742¥1,274
1,274¥61,743
61,743¥418,697
418,697

212,900——
116,024165——
93,353
165—

1,571
140,543—(7,638)

—
(2)
—
—

—
(690)
—
—

—
25
—
—

—
7,224
—
—

—
32
—
—

—
742
—
—

—
1,274
—
—

—
61,743——

1,571
420,268
330(7,638)

—
—

—
—

—
—

38,442
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

38,442
—

—

—

—

16

—

—

—

—

—

—

—

—

16

—

—

—

(1,294)

—

—

—

—

—

—

—

—

(1,294)——
116,189—
93,518—170,069

—
(2)

5,759
5,069

53
78

421
7,645

29
61

690
1,432

290
1,564

3,665
65,408

10,907461,031559,901——
116,189410——
93,518410——
170,069—(10,047)

—
(2)
—
—

—
5,069
—
—

—
78
—
—

—
7,645
—
—

—
61
—
—

—
1,432
—
—

—
1,564
—
—

—
65,408———461,031820(10,047)

Increase by share exchanges

—
—
—

—
—
—

—
—
374

47,182
—
—

—
(1)
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

47,182(1)
374

Change in treasury shares of parent
arising from transactions with
non-controlling shareholders——

15,540

—

—

—

—

—

—

—

—

—

15,540Net changes of items otherthan shareholders’ equity——¥116,599—¥109,842—¥207,204

—
¥(3)

1,596
¥6,665

78
¥156

216
¥7,861(18)¥43(4,945)¥(3,513)

121¥1,685

Balance at March 31, 2014 190,906,800
Balance at April 1,2014 190,906,800
Cumulative effects of changes
in accounting policies—
Restated balance at April 1, 2014 190,906,800
Issuance of new shares
Dividends from surplus
Profit attributable toowners of parent
Purchases of treasury stock
Increase due to the increaseof consolidated subsidiaries
Decrease due to the increaseof consolidated subsidiaries
Net changes of items otherthan shareholders' equity

Balance at March 31, 2015 191,119,700
Cumulative effects of changes
in accounting policies—

Restated balance at April 1, 2015 191,119,700
Issuance of new shares
Dividends from surplus
Profit attributable toowners of parent
Purchases of treasury shares

Balance at March 31, 2016 191,679,601(55,539) (58,491)¥ 9,869 ¥456,408(Thousands of U.S. dollars) (Note 1)

Capitalstock

Capitalsurplus

Balance at March 31, 2015

$1,031,139$829,946 $1,509,313

Cumulative effects of changes
in accounting policies—

Restated balance at April 1, 2015

1,031,139
3,639—

Issuance of new shares
Dividends from surplus
Profit attributable toowners of parent
Purchases of treasury shares
Increase by share exchanges
Change in treasury shares of parent
arising from transactions with
non-controlling shareholders
Net changes of items otherthan shareholders’ equity
Balance at March 31, 2016

Retainedearnings

Valuation
ForeignNondifference on Deferred Revaluation currency Remeasurements Subscription
controlling
Treasury available-for- gains/losses reserve for translation of definedrightsinterests
stock sale securities on hedges
landadjustments benefit plans to shares$(22)$44,990$  695$67,844$544$12,702$13,877

—

—

—

—

—

—

—

—

829,946 1,509,313
3,639
—
—
(89,168)(22)——

44,990
—
—

695
—
—

67,844
—
—

544
—
—

12,702——

13,877
—
—

—

Total
net
assets$580,479 $4,091,507——

580,479 4,091,507
—
7,278
—
(89,168)

—
—
—

—
—
3,323

418,726
—
—

—
(6)
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

418,726
(6)
3,323

—

137,909

—

—

—

—

—

—

—

—

—

137,909——$974,817 $1,838,871

—
$(28)

14,159$59,149

689$1,384

1,922$69,766

(160)
$384

(43,881)$(31,179)

1,079$14,956—$1,034,778(492,895) (519,087)$ 87,584 $4,050,482

See notes to consolidated financial statements.
Note: The number of issued shares outstanding increased by 212,900 shares and 559,901 shares in the years ended March 31, 2015 and 2016, respectively, due to theexercise of stock options.

Nomura Real Estate Holdings, Inc.

13

Financial Report 2016

Consolidated Statement of Cash Flows
Nomura Real Estate Holdings, Inc. and its subsidiaries
Years Ended March 31, 2015 and 2016

2015

2016

(Thousands of
U.S. dollars)(Note 1)
2016

¥ 58,059
15,259
8,170
—
(207)
(18)
(132)
(29)
(8)
(391)
(1,174)
8,852(231)(77,797)812
11,034
15,9206,310
44,4291,643(9,255)(12,980)
23,837¥ 70,975
16,027
1,426
279
—
(16)
(14)
(22)
(152)
(282)
(1,080)7,817(623)(67,146)
5,498
2,497
4,522
1,953
41,6591,064(7,970)(21,495)
13,258$ 629,879
142,233
12,656
2,476
—
(146)
(122)
(194)
(1,349)(2,504)(9,580)69,375(5,532)(595,900)
48,78922,16040,134
17,334
369,709
9,445(70,733)(190,758)
117,663(1,066)
1,096—(38,871)
3,205
(632)
1,325
(3,232)
5,365
334(32,476)(3,990)2,907(9,693)(50,367)
308
(758)
1,502
(2,559)4,521(1,586)(59,715)(35,410)25,800(86,021)(446,997)
2,735(6,723)
13,333(22,707)
40,119(140,80)(529,951)

16,000(154)
102,500(119,384)
9,936(10,000)132
3—(7,638)(379)(3,300)(149)
184,000(102,500)
29,820(3,000)427
106(1)(10,047)(1,465)(29,286)(1,317)
1,632,943(909,656)
264,648(26,624)
3,784
937
(6)
(89,168)(13,002)—(8,984)(40,253)
53,638(357,233)
476,020

4(17,619)

(8)
7,173

(71)
63,661

67,98255¥ 50,418

50,419—¥ 57,592

447,450—$ 511,111(Millions of yen)
Cash Flows

Cash Flows from Operating Activities:
Profit before income taxes
Depreciation and amortization
Impairment loss
Loss (gain) on valuation of investment securities
Loss (gain) on sales of property, plant and equipment
Equity in (earnings) losses of affiliates
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for loss on business liquidation
Increase (decrease) in provision for loss on subleasing business
Increase (decrease) in net defined benefit liability
Interest and dividends income
Interest expenses
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Decrease (increase) 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
Cash Flows from Investment Activities:
Purchase of investment securities
Proceeds from sales and liquidation of investment securities
Purchase of investments in subsidiaries resulting in change in scope of consolidation
Purchase of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Repayments of lease and guarantee deposits received
Proceeds from lease and guarantee deposits received
Other, net
Net cash used in investing activities
Cash Flows from Financing Activities:
Net increase (decrease) in short-term loans payable
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 non-controliing shareholders
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controliing shareholders
Payments from changes in ownership interests in subsidiaries that do
not result in change in scope of consolidation
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the fiscal year
Increase (decrease) in cash and cash equivalents resulting from change of scope of consolidation
Cash and cash equivalents at end of the fiscal year (note 2(3))
See notes to consolidated financial statements.
Nomura Real Estate Holdings, Inc.

14

Financial Report 2016

Notes to Consolidated Financial Statements
Nomura Real Estate Holdings, Inc. and its subsidiaries
March 31, 2015 and 2016

1. Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated financial statements of Nomura Real Estate Holdings, Inc. (the “Company”) and its
subsidiaries (collectively, the “Group”) have been prepared in accordance with the provisions set forth in the Financial
Instruments 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 statementsof the Company prepared in accordance with Japanese GAAP, and translated into English for the benefit of readers outside
Japan. In addition, the notes to the consolidated financial statements include information which may not be required underJapanese 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 prevailing exchange rate at March 31, 2016 of ¥112.68=U.S.$1. The approximate rate of exchange
prevailing at June 29, 2016 was ¥102.45=U.S.$1. These translations should not be construed as representations that
the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or
any other rate of exchange.

2. Significant Accounting Policies(1) Principles of Consolidation and Accounting for Investments in Affiliates
The accompanying consolidated financial statements include the accounts of the Group that the Company controls directly
or indirectly. Investments in companies over which the Company exercises significant influence in terms of their operating
and financial policies have been accounted for using the equity method.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized
profit included in the assets resulting from transactions among the consolidated companies has also 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 theexchange rates prevailing at the respective balance sheet dates of the subsidiaries and affiliates and the revenue andexpense accounts are translated into Japanese yen at the average rates of exchange for the year. Differences arising fromsuch translation are presented as “Foreign currency translation adjustments” in Net Assets.
(3) Cash and Cash Equivalents
In preparing the Consolidated Statement of Cash Flows, cash on hand, readily-available deposits and short-term, highly
liquid investments with a maturity of three months or less at the time of purchase and with an insignificant risk of market
value fluctuation are considered to be cash and cash equivalents.
A reconciliation between cash and deposits in the Consolidated Balance Sheet and cash and cash equivalents ispresented in Note 12.
(4) Recognition of Revenues and Related Costs
The percentage-of-completion method is applied when the outcome of the construction activity during the fiscal year isdeemed certain in the course of the activity (percentage of completion is calculated by dividing the related cost incurred by
the estimated total cost), otherwise the completed-contract method is applied.
(5) Inventories
Inventories are mainly stated at cost, determined by the specific identification cost method (the amounts ofinventories in the accompanying Consolidated Balance Sheet are computed based on the write-down method
reflecting decreased profitability).
Write-downs of inventories as a result of a decrease in profitability for the years ended March 31, 2015 and 2016

Nomura Real Estate Holdings, Inc.

15

Financial Report 2016

were ¥172 million and ¥4 million ($35 thousand), respectively, and recognized in operating cost.
(6) Short-term Investments and Investment Securities
Held-to-maturity debt securities are stated at amortized cost by the straight-line method.
Available-for-sale securities with market value are stated at fair market value based on market quotations at thebalance sheet date.
Unrealized gains and losses are reported, net of the applicable taxes, as a separate component of Net Assets. Cost of
securities sold is determined by the moving-average method. Available-for-sale securities without market value are stated atcost by the moving-average method.
(7) Property and Equipment (except for leased assets)
Depreciation of property and equipment is computed mainly by the straight-line method.
Estimated useful lives used in the computation of depreciation are generally as follows:
Buildings and structures 2 to 65 years(8) Software (except for leased assets)
Costs of software for internal use are amortized using the straight-line method over an estimated useful life of five years.
(9) Leased Assets
Leased assets are depreciated using the straight-line method, assuming the lease period to be the useful life and theresidual value to be zero.
Finance leases, other than those that transfer ownership, that started on or before March 31, 2008, are accounted
for as operating leases.
(10) Amortization of Goodwill
Goodwill is amortized using the straight-line method over a period of 14 to 20 years.
(11) Allowance for Doubtful Accounts
In order to prepare for possible bad debt losses on notes and accounts receivable and loans, allowance for doubtful accounts isprovided at an amount calculated on the basis of a historical bad debt ratio for a certain reference period for normal claims, plus
an estimated uncollectible amount determined on the basis of individual assessments for specific claims with potential losses.
(12) Income Taxes
Current income taxes are stated at the estimated amount payable during each fiscal year for corporation, enterprise andinhabitants’ taxes in the Consolidated Statement of Income.
The tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reportingand income tax purposes is recognized as deferred income taxes.
(13) Provision for Retirement Benefits
To calculate retirement benefit obligations, the estimated amount of retirement benefits attributable to the fiscal year isdetermined based on the benefit formula method.
Prior service costs are amortized as incurred by the straight-line method over 10 years, which is within the average
number of remaining service years of the eligible employees.
Actuarial gains and losses are amortized in the following fiscal year in which the gain or loss is recognized by the straightline
method mainly over 10 years, which is within the average number of remaining service years of the eligible employees.
(14) Per Share Information
Basic profit attributable to owners of parent per share is computed by dividing the profit attributable to owners of parent
available for distribution to shareholders of common stock by the weighted-average number of shares of common stock
outstanding during each fiscal year. Diluted profit attributable to owners of parent per share is computed by dividing the

Nomura Real Estate Holdings, Inc.

16

Financial Report 2016

profit attributable to owners of parent available for distribution to the shareholders by the weighted-average number ofshares of common stock outstanding during each fiscal year assuming full conversion of convertible bonds and full
execution of warrants.
Net assets per share as of March 31, 2015 and 2016 were ¥2,061.86 and ¥2,320.84 ($20.60), respectively.
Profit attributable to owners of parent per share as of March 31, 2015 and 2016 was ¥201.28 and ¥246.42 ($2.19),
respectively.
Diluted profit attributable to owners of parent per share for the years ended March 31, 2015 and 2016 was ¥200.55
and ¥245.40 ($2.18), respectively.
(15) Land Revaluation
Under the “Law Concerning Revaluation Reserve for Land” promulgated on March 31, 1998, the Company revalued its
land held for business use. The tax amount for the difference between the appraisal value and the carrying amount isaccounted for as “Deferred tax liabilities for land revaluation” in Noncurrent Liabilities and the difference net of such tax
amount is recorded as “Revaluation reserve for land” in Net Assets.
Method of revaluation:
The value of land is determined based on a reasonable adjustment to the assessed value of the fixed assets as stipulated in
Item 3, Article 2 of the “Enforcement Ordinance Concerning Land Revaluation” (Ordinance No. 119 enacted on March 31,
1998).Date of revaluation: March 31, 2002
At March 31, 2015 and 2016, market value was not less than book value after revaluation.
(16) Derivative Financial Instruments
Net assets and liabilities arising from derivative financial instruments are measured at fair value, with any changes in
unrealized gain or loss credited or charged to income. Hedging transactions are accounted for using deferral hedge
accounting, which requires the unrealized gains or losses to be deferred as assets or liabilities until the losses or gains on
the underlying hedged items are recognized.
For interest rate swaps that meet certain hedging criteria, the Group applies exceptional treatment where the Group
does not record these instruments at fair value but charges or credits the net cash flows from these instruments to theinterest arising from the hedged borrowings and corporate bonds. However, for currency swaps that meet certain hedging
criteria, the currency swap contracts (the “Contracts”) and the securities denominated in foreign currencies (the “Hedged
items”) are accounted for in the following manner:(a) If the Contracts are executed to hedge an existing the Hedged items,(i) the difference, if any, between:• the Japanese yen amount of the Hedged items translated using the spot rate at the inception date of the Contracts and• the book value of the Hedged items
is recognized in the Consolidated Statement of Income in the period which includes the inception date, and(ii) the discount or premium on the Contracts (that is, the difference between:• the Japanese yen amount of the Contracts translated using the contracted swap rate and• the Japanese yen amount of the Contracts translated using the spot rate at the inception date of the Contracts)
is recognized over the term of the Contracts.
(b) If the Contracts are executed to hedge a future transaction denominated in a foreign currency, the swap
transaction will be recorded using the contracted swap rate, and no gains or losses on the Contracts are recognized.
(17) Changes in Accounting Policies(Application of the Accounting Standards for Business Combinations)
Effective the year ended March 31, 2016, the Company has applied the Revised Accounting Standard for Business Combinations(Accounting Standards Board of Japan “ASBJ” Statement No. 21, issued on September 13, 2013), the Revised AccountingStandard for Consolidated Financial Statements (ASBJ Statement No. 22, issued on September 13, 2013), and the Revised
Accounting Standard for Business Divestitures (ASBJ Statement No. 7, issued on September 13, 2013). In line with the application

Nomura Real Estate Holdings, Inc.

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Financial Report 2016

of these standards, the Company included the balance resulting from the changes in a parent’s ownership interest in a subsidiary,in which the parent retains control, as capital surplus, and included the costs related to the acquisition of additional ownershipinterests in the costs of the fiscal period in which the relevant costs were incurred. In regard to the business combinations
executed after the beginning of the fiscal year ended March 31, 2016, the Company has revised the allocation of acquisition
costs in response to the tentative decisions related to accounting processing, and to reflect this to the annual financial statements
for the fiscal year in which the relevant business combinations are executed. The Company has also changed the method of
disclosing annual net income, etc., and the method of reporting changes in minority interests to non-controlling interests. In
order to reflect these changes, the financial statements of the previous fiscal year have been reclassified.
The accounting standards for business combinations have been applied in accordance with the transitional treatment
provided in Paragraph 58-2(4) of the Accounting Standard for Business Combinations, Paragraph 44-5(4) of the AccountingStandard for Consolidated Financial Statements, and Paragraph 57-4(4) of the Accounting Standard for Business
Divestitures. These standards were applied prospectively from the beginning of the fiscal year ended March 31, 2016.
As a result, the profit before income taxes and non-controlling interests during the fiscal year ended March 31, 2016
decreased by ¥451 million ($4,000 thousand), and the capital surplus of the fiscal year ended March 31, 2016 increased by¥15,540 million ($137,909 thousand).
In the Consolidated Statement of Cash Flows of fiscal year ended March 31, 2016, the cash flow for the costs of theacquisition or sales of ownership interests in subsidiaries that do not result in change in scope of consolidation is stated in
the net cash provided by (used in) financing activities, and the cash flow for the costs of the acquisition of ownership interestsin subsidiaries resulting in change in scope of consolidation or the acquisition or sales of ownership interests in subsidiaries that
do not result in change in scope of consolidation is stated in the net cash provided by (used in) operating activities.
The closing balance of the capital surplus recorded in Consolidated Statement of Changes in Net Assets for the
consolidated fiscal year ended March 31, 2016 increased by ¥15,540 million ($137,909 thousand). The impact on net
assets per share, profit attributable to owners of parent per share, and diluted profit attributable to owners of parent per
share of the consolidated fiscal year ended March 31, 2016 is immaterial.
(18) Accounting standards to be applied“Revised Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No.26, issued on March 28, 2016)(a) Overview
When the accounting guidance on tax effect accounting and guidance on auditing (sections relating to accounting
treatment) were transferred from the Japanese Institute of Certified Public Accountants (JICPA) to the ASBJ, the ASBJ
revised, among the relevant guidance, a portion of the classification requirements as well as the accounting for amounts
recorded as deferred tax assets stipulated in the guidance on recoverability of deferred tax assets in “Audit Treatment of
Judgments with Regard to Recoverability of Deferred Tax Assets” (Report No. 66 issued by the Audit Committee of the
JICPA) in accordance with the stipulated framework, which required Japanese companies be classified into one of fivecategories and that the amounts recorded as deferred tax assets be estimated using the relevant classification. This revised
guidance stipulates application of the Operational Guidelines Concerning Tax Effect Accounting (Business Accounting
Council) to the recoverability of deferred tax assets.
(b) Date of Application
This guidance shall be implemented from the beginning of the fiscal year ending March 31, 2017.
(c) Impact of Applying New Accounting Standards
The company is currently evaluating the impact that applying the Revised Implementation Guidance on Recoverability ofDeferred Tax Assets will have on its consolidated financial statements.

Nomura Real Estate Holdings, Inc.

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Financial Report 2016

3. Financial Instruments(1) Policies on Financial Instruments
It is the policy of the Group to limit its fund management to safe and highly liquid deposits while raising funds primarily
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 areexposed to market price fluctuation and issuer credit risk. Currency swaps and forward exchange contracts are used tohedge 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
Interest rate swap contracts
Currency swaps and foreign exchange forward contracts

Hedged items
Borrowings
Securities denominated in foreign currencies

The Group evaluates 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. However, the Group does
not evaluate hedge effectiveness of interest rate swaps for which the Group applies the exceptional treatment.
(3) Policies and Systems for Risk Management
The Company regularly checks the market value of equity investments and investment securities, as well as the financial
conditions of their issuers.
The Finance Department conducts execution of derivative transactions and risk management based on the risk
management policies and operational plan determined by the Director in charge of Finance. The Finance Department also
reports the status of transactions and risk 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 Group, the Finance Department of the Company creates and updates
cash flow plans in a timely manner, managing liquidity risk through such methods as ensuring that a specific amount of
on-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 vary if different assumptions are provided. The contract amount shown in Note
13. Derivative Financial Instruments does not represent the market risk regarding the derivative transactions.
(5) Fair Values of Financial Instruments
The book values, fair values and differences of financial instruments as of March 31, 2015 and 2016 are as follows. Items
for which fair value is extremely difficult to determine have not been included.

Nomura Real Estate Holdings, Inc.

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Financial Report 2016

Book value

Fair value

Difference

2015(Millionsof yen)(Millionsof yen)(Millionsof yen)(1) Cash and deposits(2) Short-term investment securities(3) Investment securities 1
Total assets(1) Short-term loans payable 2(2) Bonds payable 3(3) Long-term loans payable 2
Total liabilities
Derivative transactions 4¥ 47,421
3,000
39,698
90,11949,30033,000534,400
616,700¥(3)¥ 47,421
3,000
39,73290,15349,30034,227546,647
630,174
¥
(3)

¥

2016

Book value(Millions(Thousands ofof yen)U.S. dollars)

Fair value(Millions(Thousands ofof yen)U.S. dollars)

Difference(Millions(Thousands ofof yen)U.S. dollars)(1) Cash and deposits(2) Investment securities 1
Total assets(1) Short-term loans payable 2(2) Bonds payable(3) Long-term loans payable 2
Total liabilities
Derivative transactions 3¥ 57,594
41,00098,59446,00060,000615,900
721,900¥
140¥ 57,594
41,06098,65446,00061,510636,057
743,567¥140¥$ 511,129
363,864
874,993408,236
532,4815,465,921
6,406,638
$
1,246

—
—
34
34
—
1,227
12,247
13,474¥—$ 511,129
364,391
875,520
408,236545,886
5,644,802
6,598,924
$
1,246

—
59
59
—
1,510
20,157
21,667
¥
—

$

—
527
527
—
13,404
178,881
192,285$—

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

Notes:
1. Investments in non-consolidated subsidiaries and affiliates are as follows:
Investment securities (investments in silent partnership, etc.)¥2,169 million as of March 31, 2015
¥2,177 million ($19,323 thousand) as of March 31, 2016
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 book values approximate fair values, their book values are
deemed as their fair values.
(2) Investment securities
For stocks and investment units, fair values are determined mainly at the price quoted on an exchange. For investment
trusts, fair values are determined at an amount reasonably calculated based on a reasonable estimate of the
management. Please see Note 4. Securities for information on those securities in (2) and (3).
Liabilities(1) Short-term loans payable
As these instruments are settled within a short term and their book values approximate fair values, their book values are
deemed as their fair values.
(2) Bonds payable
Market prices of the bonds issued by the Company.
(3) Long-term loans payable
For long-term loans payable, fair value is determined by discounting the total amount of principal and interest at theassumed interest rate on new loans of the same type. Long-term loans with floating interest rates are hedged by interest

Nomura Real Estate Holdings, Inc.

20

Financial Report 2016

rate swaps subject to the exceptional treatment, and, therefore, the fair value is determined by discounting the total
amount of interest and principal together with cash flow generated by the interest rate swap at the interest rate
assumed in a reasonable manner for new loans of the same type.
Derivatives
Please see Note 13. Derivative Financial Instruments for information on derivative transactions.
3. Financial instruments for which fair value is extremely difficult to determineBook value
2015(Millions of yen)

Unlisted stocks¥8,584
Book value

2016

Unlisted stocks(Millions of yen)(Thousands of U.S. dollars)¥6,612$58,680

Financial instruments for which there is no fair value and for which the fair value is extremely difficult to determine
are not included in (2) Investment securities.
4. Redemption schedule for financial assets with maturities
2015

Within 1 year
(Millionsof yen)

1–5 years(Millionsof yen)5–10 years(Millionsof yen)Over 10 years(Millionsof yen)Cash and deposits¥47,371

¥  —

¥  —

¥  —

Government andmunicipal bonds, etc.

215

358

590

—

Corporate bonds

—

—

—

—

—

—

—

—

¥50,586

¥358

¥590

¥  —

2016

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

1–5 years(Millions (Thousands ofof yen)U.S. dollars)

5–10 years(Millions (Thousands ofof yen)U.S. dollars)Over 10 years(Millions (Thousands ofof yen)U.S. dollars)

Cash and deposits¥57,594 $511,129

¥ —

$

—

¥ —

$

—

¥—

$—

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

Available-for-sale securities
with maturities
Debt securities
Others

3,000

Total

Short-term investment
securities and investment
securities
Held-to-maturity debt
securities
Government andmunicipal bonds, etc.

15

133

435

3,861

824

7,315

—

—

Corporate bonds

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

¥57,609 $511,262¥435$3,861¥824$7,315¥—$—

Available-for-sale securities
with maturities
Debt securities
Others
Total

Nomura Real Estate Holdings, Inc.

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Financial Report 2016

5. Repayment schedule for bonds payable and long-term loans payable at March 31, 2015 and 2016
2015

Within 1 year
(Millionsof yen)1-2 years(Millionsof yen)2-3 years(Millionsof yen)3-4 years(Millionsof yen)Short-term loans payable¥ 49,300¥¥¥

Bonds payable

3,000

—
—

—
10,000——Long-term loans payable

102,500

91,30059,30068,300Total¥154,800¥91,300¥69,300¥68,300

4-5 years(Millionsof yen)Over 5 years(Millionsof yen)1-2 years(Millions (Thousands ofof yen)U.S. dollars)

2-3 years(Millions (Thousands ofof yen)U.S. dollars)

3-4 years(Millions (Thousands ofof yen)U.S. dollars)

¥

¥

¥

Short-term loans payable

¥

—

¥

—

Bonds payable¥—

20,000Long-term loans payable

49,000

164,000

Total¥49,000¥184,000

2016

Within 1 year
(Millions (Thousands of
U.S. dollars)of yen)Short-term loans payable¥ 46,000 $ 408,236

Bonds payable
Long-term loans payable
Total

Short-term loans payable——

91,300810,259— $—10,00088,74760,800539,581¥137,300 $1,218,495¥70,800 $628,328

4-5 years(Millions (Thousands of
U.S. dollars)of yen)Over 5 years(Millions (Thousands ofof yen)U.S. dollars)

¥

— $

—

¥

— $

10,00088,74740,000Long-term loans payable

48,000425,985

294,000 2,609,159

Total¥58,000 $514,732¥334,000 $2,964,147

22

—
—

68,300606,141¥68,300 $606,141—

Bonds payable

Nomura Real Estate Holdings, Inc.

— $—354,988

Financial Report 2016

— $

—

—

—

53,500474,796¥53,500 $474,796

4. Securities
The following tables summarize the acquisition cost, book value and fair value of securities held by the Group as of March
31, 2015 and 2016.
(1) Held-to-maturity Debt Securities with Fair Value(Millions of yen)
2015

Book value

Fair value

Difference

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

¥1,095¥1,130

¥35

1,095

1,130

35

77

76

(1)

77

76

(1)

¥1,172¥1,206¥34

Subtotal
Securities whose fair value does not exceed book value:
Government and municipal bonds, etc.
Subtotal
Total(Millions of yen)(Thousands of U.S. dollars)

2016Book value

Fair value

DifferenceBook value

Fair value

Difference

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

¥1,287¥1,346¥59$11,423$11,950

$527

1,287

1,346

59

11,423

11,950527

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

—

—

—

—

—

—

Subtotal

—

—

—

—

—

—

¥1,287¥1,346¥59$11,423$11,950$527

Subtotal

Total(2) Available-for-sale Securities with Fair Value(Millions of yen)2015

Acquisition cost

Book value

Difference

Stocks¥ 1,007¥ 1,954

¥ 947

Other

20,08526,565

6,480

Subtotal

21,09228,519

7,427

Securities whose book value exceeds acquisition cost:

Securities whose book value does not exceed acquisition cost:
Stocks

—

—

—

Other

12,186

11,912(274)

Subtotal

12,186

11,912

(274)

Total

¥33,278¥40,431¥7,153(Thousands of U.S. dollars)

Acquisition cost

(Millions of yen)Book value

Difference

Stocks¥ 1,008¥ 1,615

¥ 607

$

Other

28,83338,094

9,261

Subtotal

29,841

39,709

9,868

2016

Acquisition cost

Book value

Difference

8,948$ 14,332$ 5,384

255,883

338,072

82,189264,831352,404

87,573(10)

Securities whose book value exceeds
acquisition cost:

Securities whose book value does notexceed acquisition cost:
Stocks

5

4

(1)

47

37

Other

—

—

—

—

—

—

Subtotal

5

4

(1)

47

37

(10)

¥29,846¥39,713¥9,867$264,878$352,441$87,563

Total

Nomura Real Estate Holdings, Inc.

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Financial Report 2016

(3) Sales of Available-for-sale Securities
The table below presents sales of available-for-sale securities and corresponding aggregate gains and aggregate losses forthe year ended March 31, 2015 and 2016.
2015
Sales
amountType(Millions of yen)
Aggregate
gains

Aggregate
lossesStocks

¥26

¥25

¥—

Total

¥26

¥25

¥—

Aggregate
losses

2016

Type

Sales
amount(Millions of yen)
Aggregate
gains

Aggregate
lossesSalesamount(Millions of yen)
Aggregate
gains

Stocks

¥1

¥0

¥4

$5

$0

$39

Total

¥1

¥0

¥4

$5

$0

$39

5. Short-term Loans Payable and Long-term Loans Payable
Short-term loans payable as of March 31, 2015 and 2016 mainly consisted of borrowings from banks with a weightedaverage interest rate of 0.4% in 2015 and 0.2% in 2016.
Long-term loans payable and bonds payable as of March 31, 2015 and 2016 are summarized as follows:(Thousands of
U.S. dollars)(Millions of yen)
2015

2016

Unsecured bonds (2.1%), due 2017

¥ 10,000¥ 10,000

Unsecured bonds (2.0%), due 2020

10,00010,00088,747

Unsecured bonds (0.8%), due 2024

10,00010,00088,747

Unsecured bonds (0.9%), due 2025—

10,00088,747

Unsecured bonds (0.4%), due 2021—

10,00088,747

Unsecured bonds (0.8%), due 2026—

10,00088,747

3,000

—

—

534,400

615,900

5,465,921

1,189

1,268

11,255568,589

677,168

6,009,658

Secured bonds (1.8%), due 2016

2016

$

88,747Long-term loans payable1
Unsecured
Lease obligations2
Subtotal(105,635)(137,434)(1,219,685)¥462,954¥539,734$4,789,973

Less amounts due within one year

Notes: 1. Long-term loans payable as of March 31, 2015 and 2016 mainly consisted of borrowings from domestic Japanese banks and life insurancecompanies with weighted-average interest rates of 0.8% in 2015 and 0.6% in 2016.
2. The weighted-average interest rate for lease obligations is not shown because for some consolidated subsidiaries the lease obligations recordedin the Consolidated Balance Sheet are the amounts before deducting the interest equivalents included in the total lease commitments

Nomura Real Estate Holdings, Inc.

24

Financial Report 2016

The following table shows the maturities of long-term loans payable subsequent to March 31, 2016
(Millions of yen)(Thousands of
U.S. dollars)

2017¥ 60,800$ 539,581

2018

68,300606,1412019

53,500474,7962020

48,000425,985

Years ending March 31

294,000

2,609,159¥524,600$4,655,662

2021 and thereafter

The following table shows the maturities of lease obligations subsequent to March 31, 2016.
Years ending March 31(Millions of yen)(Thousands of
U.S. dollars)

2017

¥ 108

2018

81

$

721

954

2019

67

597

2020

50

446

2021 and thereafter

828

7,347

¥1,134$10,065

6. Pledged Assets and Secured Liabilities
Pledged assets and secured liabilities at March 31, 2015 and 2016 are summarized as follows:(1) Pledged Assets and Secured Liabilities(Thousands of
U.S. dollars)(Millions of yen)
2015

2016

2016

¥211

¥201

$1,780¥211¥201$1,780Pledged assets:
Buildings and structures
Secured liabilities:
Lease and guarantee deposits received
Total

52

45

399

¥ 52

¥ 45

$ 399

(2) As of March 31, 2015, cash and deposits in the amount of ¥2 million and investment securities in the amount of ¥10
million are pledged as collateral for trade payables and a portion of liabilities of investee companies, respectively
As of March 31, 2016, cash and deposits in the amount of ¥2 million ($18 thousand) and investment securities in theamount of ¥10 million ($89 thousand) are pledged as collateral for trade payables and a portion of liabilities of investee
companies, respectively.

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Financial Report 2016

7. Retirement Benefits(1) Outline of Retirement Benefit Plans
The Company does not have a retirement benefit plan. As defined benefit plans, certain subsidiaries have the lump-sum
pension plan and the defined benefit corporate pension plan, and defined contribution pension plans. In certain cases,
additional retirement benefit payments may be made. For the lump-sum pension plan and the defined benefit corporate
pension plan used by certain subsidiaries, net defined benefit liability and retirement benefit expenses are calculated bysimplified method.
(2) Defined Benefit Plan
A reconciliation of the changes in retirement benefit obligations for the fiscal year ended March 31, 2015 and 2016(excluding plans applying a simplified method)(Thousands of
U.S. dollars)(Millions of yen)

Retirement benefit obligations at the beginning of the year

2015

2016

2016

¥25,815¥24,595$218,276

Cumulative effects of changes in accounting policies(2,445)——

Restated balance

23,37024,595

218,276

Service cost

1,195

1,230

10,912

Interest cost

366

385

3,417

Actuarial gain or loss

369

6,862

60,901Retirement benefit payments
Retirement benefit obligations at the end of the year

(705)

(652)

(5,788)¥24,595¥32,420$287,718

A reconciliation of the changes in balance of plan assets for the fiscal year ended March 31, 2015 and 2016 (excluding
plans applying a simplified method)(Thousands of
U.S. dollars)(Millions of yen)

Fair value of plan assets at the beginning of the year

2015

2016

2016

¥12,804¥15,518$137,714

205

248

2,203

Actuarial gain or loss

1,362

(413)

(3,661)

Employer contributions

1,486

1,532

13,599Retirement benefit payments

(339)

(344)

(3,058)¥15,518¥16,541$146,797

Expected return on plan assets

Fair value of plan assets at the end of the year

A reconciliation of the changes in balance of net defined benefit liability applying a simplified method for the fiscal year
ended March 31, 2015 and 2016
(Thousands of
U.S. dollars)(Millions of yen)

Net defined benefit liability at the beginning of the year

2015

2016

2016

¥1,890¥2,000$17,753

Increase by an acquisition of newly consolidated subsidiaries

—

21

185

Retirement benefit expenses

306

357

3,169

Retirement benefit payments

(175)

(217)

(1,928)Contributions to plan

(21)

(22)

(192)

¥2,000¥2,139$18,987

Net defined benefit liability at the end of the year

Nomura Real Estate Holdings, Inc.

26

Financial Report 2016

A reconciliation of retirement benefit obligations as well as plan assets at March 31, 2015 and 2016, and net defined
benefit liability on the Consolidated Balance Sheet(Thousands of
U.S. dollars)(Millions of yen)
2015

2016

2016

Funded retirement benefit obligations¥16,719¥22,681$201,286

Fair value of plan assets(147,765)(15,614)(16,650)

Subtotal

1,105

6,031

53,521

Unfunded retirement benefit obligations

9,973

11,987

106,387

Net liabilities on the Consolidated Balance Sheet¥11,078¥18,018$159,908

Net defined benefit liability¥11,078¥18,018$159,908

Net liabilities on the Consolidated Balance Sheet¥11,078¥18,018$159,908

Note: It includes the plans applying a simplified method.

Breakdown of retirement benefit expenses(Thousands of
U.S. dollars)(Millions of yen)
2015

2016

2016

Service cost

¥1,195¥1,230$10,913Interest cost

366

385

3,417

Expected return on plan assets

(205)

(248)

(2,203)

Amortization of actuarial gain or loss

390

469

4,161

Amortization of prior service cost

(396)

(396)

(3,511)Retirement benefit expenses calculated by a simplified
method

306

357

3,169

—

2

23

¥1,656¥1,799$15,969

Other
Retirement benefit expenses for defined benefit plan

Breakdown of items recorded in the Consolidated Statement of Comprehensive Income as remeasurements of defined
benefit plans, before tax(Thousands of
U.S. dollars)(Millions of yen)
2015

2016

2016

¥(396)$(3,511)

Prior service cost¥(396)

Actuarial gain or loss

1,383

(6,806)(60,401)

Total

¥987

¥(7,202)$(63,912)

Breakdown of items recorded in the Consolidated Balance Sheet as remeasurements of defined benefit plans, before tax(Thousands of
U.S. dollars)(Millions of yen)

Unrecognized prior service cost
Unrecognized actuarial gain or loss
Total

Nomura Real Estate Holdings, Inc.

27

2015

2016

2016

¥2,176¥1,780$15,800(37)(6,842)(60,726)¥2,139¥(5,062)$(44,926)

Financial Report 2016

Composition of plan assets by major classifications
2016

2015

Claims49%

47%

Equity

33%

25%

Other

18%

28%

Total

100%

100%

The expected long-term rate of return on plan assets has been estimated based on the current and projected allocation ofplan assets and the current and expected long-term rate of return on diverse assets which comprise plan assets.
Assumptions used in accounting for the retirement benefit plans are summarized as follows (represented by a weighted
average) :Discount rate

2015

2016

1.2~1.6%

0.2~0.5%

1.6%

1.6%

2.2~7.5%

2.2~7.5%

Expected rate of return on plan assets
Expected salary increase rate(3) Defined Contribution Plan
The required contributions to the defined contribution plans of consolidated subsidiaries for the fiscal years ended March
31, 2015 and 2016 are ¥259 million and ¥522 million ($4,635 thousand).

8. Gain on Sales of Property and Equipment
The breakdown of gain on sales of property and equipment for the fiscal years ended March 31, 2015 and 2016 is as follows:
Gain on sales(Thousands of U.S.
dollars)(Millions of yen)
2015

2016

2016

Land

¥ 18

¥—

$—

Buildings

189

—

—

Total

¥207

¥—

$—

Nomura Real Estate Holdings, Inc.

28

Financial Report 2016

9. Impairment Loss
The Group recognized impairment loss on the following groups of assets for the fiscal years ended March 31, 2015 and 2016:2015

Primary use

Type

Location

Leased assets

Buildings

Shinagawa-ku, Tokyo and other locations

OthersLand(4 locations in total)

Other tangible asset

Assets of the Group are grouped into the smallest unit that generates identifiable cash flows that are largely independentof 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 four groups of assets the profitability of which has dropped significantly due to thedeterioration of the market conditions and the decline in rent level or that the Group plans to sell, the carrying amount has
been reduced to the recoverable amount and the amount of reduction has been recognized as an extraordinary loss of¥8,170 million for the fiscal year ended March 31, 2015. The impairment loss is broken down into an impairment loss of¥7,592 million on land and an impairment loss of ¥578 million on buildings and others.
The recoverable amount of these groups of assets is measured at the net realizable value and the net realizable value
is determined based on the expected sales price and the appraisal value provided by real estate appraisers.
2016

Primary use

Stores, leased assets

Type

Location

Buildings

Shibuya-ku, Tokyo and other locations

Land(5 locations in total)

Other tangible asset

Assets of the Group are grouped into the smallest unit that generates identifiable cash flows that are largely independentof 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 five groups of assets the profitability of which has dropped significantly due to thechanges of usage, the deterioration of the market conditions and the decline in rent level or that the Group plans to sell,
the carrying amount has been reduced to the recoverable amount and the amount of reduction has been recognized as an
extraordinary loss of ¥1,426 million ($12,656 thousand) for the fiscal year ended March 31, 2016. The impairment loss isbroken down into an impairment loss of ¥561 million ($4,983 thousand) on buildings and an impairment loss of ¥865
million ($7,673 thousand) on land and others.
The recoverable amount of these groups of assets is measured at the net realizable value and the net realizable value
is determined based on the expected sales price and the appraisal value provided by real estate appraisers.

Nomura Real Estate Holdings, Inc.

29

Financial Report 2016

10.Income Taxes
The statutory tax rates in Japan for the Company and its domestic subsidiaries were 35.6% for the fiscal year ended March
31, 2015 and 33.1% for the fiscal year ended March 31, 2016.
Significant differences between the statutory tax rate and the effective tax rate
Statutory tax rate

2015

2016

35.6%

33.1%

Adjustments:
Permanent differences including entertainment expenses

1.1

1.0

Effect of tax rate change

(9.2)

(4.2)

Other

(1.0)

0.9

Effective tax rates

26.5%

30.7%

The table below presents an itemized breakdown of deferred tax assets and liabilities as of March 31, 2015 and 2016:
Significant components of the Company’s deferred tax assets and liabilities(Thousands of
U.S. dollars)(Millions of yen)
2015

2016

2016

Deferred tax assets:¥13,152¥12,992$115,301

Net Defined Benefit Liability

4,379

5,668

50,301

Impairment Loss

7,678

5,022

44,567

Provision for bonuses

1,968

2,119

18,804Inventory write-downs

1,856

1,276

11,328

Excess of depreciation

Unrealized profits

1,706

1,265

11,223

Revaluation of assets on consolidation

526

459

4,075

Loss on valuation of equity investments

915

264

2,341

Provision for loss on subleasing business

151

96

855

4,877

4,510

40,026Gross deferred tax assets

37,20833,671

298,821

Valuation allowance(2,686)(3,258)(28,914)

Total deferred tax assets

34,52230,413269,907

Other

Deferred tax liabilities:
Revaluation of assets on consolidation(48,139)(50,272)(446,148)

Reserve for deferred income taxes(21,438)(20,116)(178,521)

Other(4,616)(3,987)(35,388)

Total deferred tax liabilities(74,193)(74,375)(660,057)

Net deferred tax liabilities¥(39,671)¥(43,962)$(390,150)

Nomura Real Estate Holdings, Inc.

30

Financial Report 2016

Corporate income tax rate change and its effects on deferred tax assets and deferred tax liabilities
The Act on Partial Amendment of the Income Tax Act, etc. (Act No. 15, 2016) and the Act on Partial Amendment of the Local
Tax Act, etc. (Act No. 13, 2016) enacted by the Japanese Diet on March 29, 2016 resulted in a reduction of the rates ofcorporate and other taxes from the fiscal year beginning on April 1, 2016. In conjunction with these changes, the statutory
effective tax rate used to calculate deferred tax assets and liabilities will be changed from the current 32.3% to 30.9% for
temporary differences expected to be realized or settled from the fiscal years beginning on April 1, 2016 and 2017, and to
30.6% for temporary differences expected to be realized or settled from the fiscal year beginning on April 1, 2018.
As a result, deferred tax liabilities (the amount after offsetting deferred tax assets) and deferred income tax expensedecreased by ¥3,093 million ($27,449 thousand) and ¥3,010 million ($26,717 thousand), respectively, and valuationdifference on available-for-sale securities, etc. and profit attributable to owners of parent increased by ¥83 million ($732
thousand) and ¥2,855 million ($25,336 thousand), respectively, as of and for the fiscal year ended March 31, 2016.
Deferred tax liabilities for land revaluation decreased by ¥134 million ($1,193 thousand), and revaluation reserve for land
increased by the same amount as of March 31, 2016.

11.Shareholders’ Equity
Under the Companies Act of Japan (the “Act”), all funds obtained through the issuance of common stock must be treatedas common stock and, by resolution of the board of directors, an amount equivalent to less than half of those funds may
be appropriated to the capital reserve (a component of capital surplus).
The Act provides that an amount equal to 10% of the amount to be distributed as distributions of capital surplus(other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve andthe 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, 2016, the Group’s capital reserve amounted to ¥109,842 million ($974,817 thousand), and no legal
reserve was recorded.

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

Cash and deposits
Short-term investment securities
Time deposits with maturities of more than three months
Cash and cash equivalents

Nomura Real Estate Holdings, Inc.

31

2015

2016

2016

¥47,421¥57,594$511,129

3,000

—

—

(3)

(2)

(18)

¥50,418¥57,592$511,111

Financial Report 2016

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
2015
Hedge accounting
methodDeferral hedge
accounting

Contract amount
Major hedged
Type of derivatives

Currency
swaps

items
Securities
denominated inforeign currencies

Total

Deferral hedge
accounting(Millionsof yen)(Millionsof yen)¥1,030—¥(3)¥1,030—¥(3)

Contract amountContract amountdue after one year

Fair value

Major hedged
items(Millionsof yen)(Thousands of
U.S. dollars)(Millionsof yen)(Thousands of
U.S. dollars)(Millionsof yen)(Thousands of
U.S. dollars)

Securities
denominated inforeign currencies¥3,084$27,365

    —

    —

¥140

$1,246¥3,084$27,365

    —

    —

¥140

$1,246

Type of derivatives

Currency
swaps

Fair value(Millionsof yen)2016
Hedge accounting
methodContract amountdue after one year

Total

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

(b) Interest rate-related derivatives
2015
Hedge accounting
methodExceptional
treatment forinterest rate
swaps

Contract amount(Millionsof yen)(Millionsof yen)(Millionsof yen)Interest rateLong-term debt
swaps
Receivefloating rate/
Pay fixed rate¥391,500¥309,600(Note)¥391,500¥309,600—

Type of derivatives

2016

Exceptional
treatment forinterest rate
swaps
Total

Fair value

Major hedged
items

Total

Hedge accounting
methodContract amountdue after one year

Contract amountType of derivatives

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

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

Contract amountdue after one year
(Millionsof yen)Fair value(Thousands of
U.S. dollars)(Millionsof yen)(Thousands of
U.S. dollars)¥391,600 $3,475,328¥315,500 $2,799,965(Note)(Note)¥391,600 $3,475,328¥315,500 $2,799,965——

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

Nomura Real Estate Holdings, Inc.

32

Financial Report 2016

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, 2015
and 2016.
(Thousands of
U.S. dollars)(Millions of yen)
2016

2015

Operating leases

2016

Future lease payments:
¥

3,381

$

30,002

Due within 1 year

¥ 2,674

Due after 1 year

9,763

16,657

147,828¥12,437¥ 20,038$ 177,830

Due within 1 year

¥18,221¥ 24,528$ 217,681

Due after 1 year

78,700113,675

1,088,824

Total¥96,921¥138,203$1,226,505

Total
Future lease receipts:

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

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 Sheet, changes during the fiscal years ended March 31, 2015 and 2016, andfair values of real estate, of which some portions are used as rental property, are as follows:(1) Fair value of rental and other properties in the fiscal year ended March 31, 2015 and 2016
Book value 1

Fair value 2

2015

March 31, 2014
(Millionsof yen)Increase/Decrease(Millionsof yen)March 31, 2015
(Millionsof yen)March 31, 2015
(Millionsof yen)Rental properties¥676,475¥13,180¥689,655¥735,723

25,591(254)

25,33749,530

Other properties used
as rental properties 3Book value 1

Fair value 2

2016

March 31, 2015
(Millions (Thousands of
U.S. dollars)of yen)Increase/Decrease(Millions (Thousands ofof yen)U.S. dollars)

March 31, 2016
(Millions (Thousands ofof yen)U.S. dollars)

March 31, 2016
(Millions (Thousands ofof yen)U.S. dollars)

Rental properties¥689,655 $6,120,478¥48,348$429,072¥738,003 $6,549,550¥824,258 $7,315,032

663

5,883

Other properties used
as rental properties 325,337

224,856

26,000230,739

50,740450,302

Notes: 1. Book values in the Consolidated Balance Sheet are the amounts determined by deducting accumulated depreciation from the acquisition cost.
2.	Fair values as of March 31, 2015 and 2016 are determined by the Group (including adjustments based on certain indexes) based primarily on
their values according to real estate appraisal standards. However, if there have been no fluctuations in appraisal values or indexes considered
to appropriately reflect market values, the Group uses the appraisal values or amounts derived from the indexes of the recent appraisal or
acquisition from third parties as the fair values at March 31, 2015 and 2016.
3. In the above table, other properties used as rental properties includes portions used by the Company and certain consolidated subsidiaries.

Nomura Real Estate Holdings, Inc.

33

Financial Report 2016

(2) Operating income and other information on rental properties in the fiscal years ended March 31, 2015 and 2016
Operating income

Others (gains (losses) on sale of property, etc.)(Millions of yen)

2015

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

¥23,231¥ (5,760)

968      —

Operating income
2016

Rental properties
Other properties used as rental properties

Others (gains (losses) on sale of property, etc.)(Millions of yen)(Thousands of
U.S. dollars)¥26,090$231,536¥(187)$(1,656)

997

8,847

      —

      —

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

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 dividends distribution from silent partnership (¥2,204 million) and impairment loss (¥8,170 million) in the fiscal year ended
March 31, 2015, and impairment loss (¥187 million ($1,656 thousand) in the fiscal year ended March 31, 2016.

16.Segment Information(1) Segment summary
The reportable segments of the Group comprise those business units for which separate financial information is available,
and which are subject to a regular review conducted by the Company’s Board of Directors in order to determine theallocation of management resources and evaluate their performance.
With the Company as a pure holding company, the Group consists of business companies and divisions, such as
Nomura Real Estate Development Co., Ltd. The business companies (or business divisions within Nomura Real Estate
Development) formulate comprehensive strategies on respective products and services handled by them and conductbusiness activities based on such strategies.
Therefore, business segments of the Group are distinguished by products and services, primarily by businesscompanies (or by business divisions within Nomura Real Estate Development).
In addition, MEGALOS Co., Ltd., which had been classified into the “Other Unit”, was transferred to the “Property &Facility Management Unit” from the fiscal year ended March 31, 2016 to promote business in conjunction with theproperty and facility management business.
The results of the previous fiscal year are calculated in line with the newly adopted segment classification.
(2) Methods for calculating net sales, income (loss), assets, liabilities and other items by reportable segment
The accounting method for reportable segments is almost equivalent to that specified in “Significant Accounting Policies”.
Reportable segment income is presented based on operating income. Intersegment sales and transfer amounts arepresented based on market prices.

Nomura Real Estate Holdings, Inc.

34

Financial Report 2016

Results by segment for the fiscal years ended March 31, 2015 and 2016 were as follows:
Results by segment for the fiscal year ended March 31, 2015
Residential
Development

Leasing(Millions of yen)

Property
Property &Investment Brokerage &Facility
Management
CRE
Management

Total

Other 1Eliminations
or corporate 2 Consolidated

Operating revenue andoperating income
Operating revenue:
External customers ¥358,490¥90,643¥9,164¥27,934¥77,920¥3,008¥ 567,159

907

2,236

3

2,298

7,918

0

13,362(13,362)—359,397

92,8799,167

30,232

85,838

3,008

580,521(13,362)

567,159

Inter-segment
Subtotal
Segment income(loss)¥—¥ 567,159

33,812

24,448

4,813

8,478

5,758

(113)

77,196(5,301)

71,895382,586

849,886

40,556

22,606

49,6972,485

1,347,816

21,411

1,369,227¥

Segment assets
Other items

121¥13,222

¥ 130

304

¥ 1,271

Amortization of goodwill

—

236

—

—

29

—

265

—

265

Investment in affiliates
accounted for using
equity method

32

1,064

276

—

—

—

1,372

—

1,372

Increase in property,
plant and equipment
and intangible assets

216

47,039

110

549

987

19

48,920(15,024)

33,896

Depreciation

¥

¥

11

¥

15,059¥200¥

15,259Notes: 1.	The “Other” category, which represents operating segments that are not included in reportable segments, includes other businesses.
2.	(1) The deduction of ¥5,301 million shown in the eliminations or corporate column for segment income (loss) includes a deduction of ¥124
million for the elimination of inter-segment transactions and a deduction of ¥5,177 million for corporate expenses not allocated toreportable segments. These corporate expenses mainly consist of general and administrative expenses not attributable to reportablesegments.
		 (2) The addition of ¥21,411 million shown in the eliminations or corporate column for segment assets includes a deduction of ¥38,451 million for theelimination of inter-segment transactions and an addition of ¥59,862 million for corporate assets not allocated to reportable segments.
3. The segment income (loss) is reconciled to the operating income stated in the consolidated financial statements.

Results by segment for the fiscal year ended March 31, 2016
(Millions of yen)
Property
Property &Investment Brokerage &Facility
Management
CRE
Management

Residential
Development

Leasing¥333,875¥108,126¥10,973¥33,239

640

2,500

0

2,134

334,515

110,626

10,97335,373Eliminations
or corporate 2 Consolidated

Other 1

Total

¥81,979¥1,353¥ 569,545

8,316

0

13,590(13,590)—

90,295

1,353

583,135(13,590)569,545

Operating revenue andoperating income
Operating revenue:
External customers
Inter-segment
Subtotal
Segment income(loss)
Segment assets¥—¥ 569,545

31,91032,099

7,377

9,901

5,315

(153)

86,449(5,537)80,912414,812922,748

36,69332,04851,403

1,565

1,459,269

26,181

1,485,450

Other items
161¥ 13,793

337¥ 1,2626¥ 15,616

411¥16,027

Amortization of goodwill

—

236

—

—

29

—

265

—

265

Investment in affiliates
accounted for using
equity method

68

1,057

—

—

—

—

1,125

—

1,125

Increase in property,
plant and equipment
and intangible assets

686

48,349

46

633

872

6

50,592

1,213

51,805

Depreciation

¥

¥

57

Nomura Real Estate Holdings, Inc.

¥

35

Financial Report 2016¥¥

(Thousands of U.S. dollars)
Residential
Development

Property
Property &Investment Brokerage &Facility
Management
CRE
Management

Leasing

Total

Other 1Eliminations
or corporate 2 Consolidated 3

Operating revenue andoperating income
Operating revenue:
External customers $2,963,037 $ 959,584$ 97,384$294,985$727,535

5,679

22,1840

18,94273,803

2

120,610(120,610)—

2,968,716

981,768

97,384

313,927

801,338

12,013

5,175,146(120,610)

5,054,536

Inter-segment
Subtotal
Segment income(loss)
Segment assets$ 2,011 $ 5,054,536$— $ 5,054,536

283,188284,872

65,46787,867

47,167(1,353)

767,208(49,136)

718,072

3,681,329

8,189,105

325,638

284,413456,187

13,889 12,950,561

232,346

13,182,907

Other items
505$ 2,988$ 11,20351 $

138,590

Amortization of goodwill

—

2,091

—

—

260

—

2,351

—

2,351

Investment in affiliates
accounted for using
equity method

602

9,379

—

—

—

—

9,981

—

9,981

Increase in property,
plant and equipment
and intangible assets

6,083

429,081

408

5,621

7,739

54

448,986

10,771

459,757

Depreciation$

1,434 $ 122,409$$$ 3,643 $

142,233

Notes: 1.	The “Other” category, which represents operating segments that are not included in reportable segments, includes other businesses.
2.	(1) The deduction of ¥5,537 million ($49,136 thousand) shown in the eliminations or corporate column for segment income (loss) includes anaddition of ¥1,287 million ($11,427 thousand) for the elimination of inter-segment transactions and a deduction of ¥6,824 million ($60,563
thousand) for corporate expenses not allocated to reportable segments. These corporate expenses mainly consist of general andadministrative expenses not attributable to reportable segments.
		(2) The addition of ¥26,181 million ($232,346 thousand) shown in the eliminations or corporate column for segment assets includes a
deduction of ¥54,975 million ($487,884 thousand) for the elimination of inter-segment transactions and an addition of ¥81,156 million($720,230 thousand) for corporate assets not allocated to reportable segments.
3.	The segment income (loss) is reconciled to the operating income stated in the consolidated financial statements.

Impairment loss on noncurrent assets by reportable segments for the years ended March 31, 2015 and 2016 is summarized
as follows:(Millions of yen)

2015

Impairment loss

Residential
Development¥—

Leasing

Investment
Management

Property
Brokerage &CREProperty &Facility
Management

Other (Note)¥1,645¥6,100

¥425

¥—

¥—

Total

¥8,170(Millions of yen)

2016

Impairment loss

Residential
Development¥—

Leasing¥187

Investment
Management

Property
Brokerage &CREProperty &Facility
Management

Other (Note)¥—¥—¥1,239¥—Total¥1,426(Thousands of U.S. dollars)

2016

Impairment loss

Residential
Development$—

Leasing$1,656

Investment
Management

Property
Brokerage &CREProperty &Facility
Management

Other (Note)$—$—$11,000$—

Nomura Real Estate Holdings, Inc.

36

Financial Report 2016

Total

$12,656

The following table presents the amortization and balance of goodwill as of and for the years ended March 31, 2015 and2016 by reportable segments:(Millions of yen)

2015

Amortization
Balance at March
31, 2015

Residential
Development

Leasing

Investment
Management

Property
Brokerage &CREProperty &Facility
Management

Total

¥—

¥  236

¥—

¥—

¥ 29

¥  265¥—¥3,240

¥—

¥—

¥234

¥3,474

Investment
Management

Property
Brokerage &CREProperty &Facility
Management(Millions of yen)

2016

Residential
Development

Leasing

Total

Amortization¥—¥  236

¥—

¥—

¥ 29

¥  265

Balance at March
31, 2016¥—¥3,004

¥—

¥—

¥205

¥3,209(Thousands of U.S. dollars)

2016

Residential
Development

Leasing

Investment
Management

Property
Brokerage &CREProperty &Facility
Management

Total

Amortization$—$ 2,091$—$—$  260$ 2,351

Balance at March
31, 2016$—$26,657$—$—$1,820$28,477

17.Contingent Liabilities
Contingent liabilities as of March 31, 2015 and 2016 are as follows:(Thousands of
U.S. dollars)(Millions of yen)
2015

2016

2016

Guarantees for home loans of house purchasers from banks
and other¥56,902¥58,401$518,290

Guarantees for loans to business partners in the business ofcommercial buildings for rent

677

608

5,396

¥57,579¥59,009$523,686

Nomura Real Estate Holdings, Inc.

37

Financial Report 2016

18.Consolidated Statement of Comprehensive Income
The amount of recycling and amount of income tax effects associated with other comprehensive income for the years
ended March 31, 2015 and 2016 are as follows:(Thousands of U.S.
dollars)(Millions of yen)
2015

2016

2016

¥ 9,588¥ 2,878$ 25,539

(999)

(772)

(6,845)

Before income tax effect

8,589

2,106

18,694

Income tax effect(2,824)(511)(4,537)

Valuation difference on available-for-sale securities

5,765

1,595

14,157

Amount recognized during the year

88

149

1,319

Amount of recycling

(11)

(39)

(349)

Before income tax effect

77

110

970

Income tax effect

(24)

(32)

(281)

Deferred gains or losses on hedges

53

78

689

421

216

1,922

Amount recognized during the year

7

(10)

(92)

Amount of recycling

—

—

—

Before income tax effect

7

(10)

(92)

Income tax effect

—

—

—

7

(10)

(92)

Amount recognized during the year972

(6,850)(60,794)

Amount of recycling

15

(351)

(3,118)Before income tax effect987(7,201)(63,912)

Income tax effect

(298)

2,257

20,031689(4,944)(43,881)

Amount recognized during the year

21

(13)

(114)

Amount of recycling

—

—

—

Before income tax effect

21

(13)

(114)

Income tax effect

(5)

5

45

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

Deferred gains or losses on hedges:

Revaluation reserve for land:
Income tax effectForeign currency translation adjustment:

Foreign currency translation adjustment
Remeasurements of defined benefit plans:Remeasurements of defined benefit plans
Share of other comprehensive income of affiliates
accounted for using the equity method:

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

Nomura Real Estate Holdings, Inc.

38

16

(8)

(69)

¥ 6,951¥(3,073)$(27,274)

Financial Report 2016

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 March 31, 2015 and 2016.

20.Stock Options
In accordance with the Act on November 30, 2007, the Group granted certain stock options to certain directors, executive
officers and employees of the Group.
Information regarding the Group’s stock option plans is summarized as follows:
1. Amount and account title of costs related to stock options(Thousands of
U.S. dollars)(Millions of yen)

Selling, general and administrative expenses

2015

2016

2016

¥599

¥587

$5,207

2. Amount of profit by non-exercise of stock options(Thousands of
U.S. dollars)(Millions of yen)
2015

2016

2016

¥99

¥41

$368

3. Description
Nomura Real Estate Holdings, Inc.
FY2008

3rd issue of stock options

Recipients

Directors of the Company(5 persons)
Directors and executive
officers of the Company’s
subsidiaries (52 persons)
Employees of the Company’s
subsidiaries (122 persons)Type/number of shares reserved (Note)

Common stock:
191,200 shares

Grant dateAugust 11, 2008

Vesting conditions

No conditions attachedService period

No period specified

Exercisable period

August 11, 2010 –August 10, 2015

Nomura Real Estate Holdings, Inc.

39

Financial Report 2016

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

3rd issue of stock options

Recipients

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

Directors of the Company(8 persons)
Directors and executive
officers of the Company’s
subsidiaries (51 persons)
Employees of the Company’s
subsidiaries (129 persons)Type/number of shares reserved (Note)

Common stock:
59,500 shares

Common stock:
202,700 shares

Grant dateAugust 11, 2009

August 11, 2009

Vesting conditions

No conditions attached

No conditions attachedService period

No period specified

No period specified

Exercisable period

August 11, 2010 –August 10, 2015

August 11, 2011 –August 10, 2016

Nomura Real Estate Holdings, Inc.
FY2010

2nd issue of stock options

3rd issue of stock options

Recipients

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

Directors of the Company(7 persons)
Directors and executive
officers of the Company’s
subsidiaries (57 persons)
Employees of the Company’s
subsidiaries (147 persons)Type/number of shares reserved (Note)

Common stock:
66,100 shares

Common stock:
226,400 shares

Grant dateAugust 23, 2010

August 23, 2010

Vesting conditions

No conditions attached

No conditions attachedService period

No period specified

No period specified

Exercisable period

August 23, 2011 –August 22, 2016

August 23, 2012 –August 22, 2017

FY2011

2nd issue of stock options

3rd issue of stock options

Recipients

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

Directors of the Company(6 persons)
Directors and executive
officers of the Company’s
subsidiaries (57 persons)
Employees of the Company’s
subsidiaries (152 persons)Type/number of shares reserved (Note)

Common stock:
66,700 shares

Common stock:
227,800 shares

Grant dateAugust 23, 2011

August 23, 2011

Vesting conditions

No conditions attached

No conditions attachedService period

No period specified

No period specified

Exercisable period

August 23, 2012 –August 22, 2017

August 23, 2013 –August 22, 2018

Nomura Real Estate Holdings, Inc.

Nomura Real Estate Holdings, Inc.

40

Financial Report 2016

Nomura Real Estate Holdings, Inc.
FY2012

1st issue of stock options

2nd issue of stock options

3rd issue of stock options

Recipients

Directors of the Company(5 persons)

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

Directors of the Company(5 persons)
Directors and executive
officers of the Company’s
subsidiaries (64 persons)
Employees of the Company’s
subsidiaries (152 persons)Type/number of shares
reserved (Note)

Common stock:
31,500 shares

Common stock:
188,900 shares

Common stock:242,700 shares

Grant dateAugust 23, 2012

August 23, 2012

August 23, 2012

Vesting conditions

No conditions attached

No conditions attached

No conditions attachedService period

No period specified

No period specified

No period specified

Exercisable period

August 23, 2014 –August 22, 2019

August 23, 2014 –August 22, 2019

August 23, 2014 –August 22, 2019

Nomura Real Estate Holdings, Inc.
FY2013

1st issue of stock options

2nd issue of stock options

3rd issue of stock options

Recipients

Directors of the Company(4 persons)

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

Directors of the Company(4 persons)
Directors and executive
officers of the Company’s
subsidiaries (74 persons)
Employees of the Company’s
subsidiaries (170 persons)Type/number of shares
reserved (Note)

Common stock:
20,200 shares

Common stock:143,300 shares

Common stock:333,300 shares

Grant dateJuly 23, 2013

July 23, 2013

July 23, 2013

Vesting conditions

No conditions attached

No conditions attached

No conditions attachedService period

No period specified

No period specified

No period specified

Exercisable period

July 23, 2015 –July 22, 2020

July 23, 2015 –July 22, 2020

July 23, 2015 –July 22, 2020

Nomura Real Estate Holdings, Inc.
FY2014

1st issue of stock options

2nd issue of stock options

3rd issue of stock options

Recipients

Directors of the Company(6 persons)

Directors and executive
officers of the Company’s
subsidiaries (72 persons)

Directors of the Company(6 persons)
Directors and executive
officers of the Company’s
subsidiaries (72 persons)
Employees of the Company’s
subsidiaries (187 persons)Type/number of shares
reserved (Note)

Common stock:40,700 shares

Common stock:
194,400 shares

Common stock:352,300 shares

Grant dateJuly 23, 2014

July 23, 2014

July 23, 2014

Vesting conditions

No conditions attached

No conditions attached

No conditions attachedService period

No period specified

No period specified

No period specified

Exercisable period

July 23, 2016 –July 22, 2021

July 23, 2016 –July 22, 2021

July 23, 2016 –July 22, 2021

Nomura Real Estate Holdings, Inc.

41

Financial Report 2016

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

2nd issue of stock
options

3rd issue of stock
options

4th issue of stock
options

5th issue of stock
options

Recipients

Directors of theCompany(6 persons)

Directors andexecutive officersof the Company’s
subsidiaries(76 persons)

Directors of theCompany(6 persons)
Directors andexecutive officersof the Company’s
subsidiaries(76 persons)
Employees of theCompany’s
subsidiaries(199 persons)

Directors of theCompany’s
subsidiaries(3 persons)

Directors of theCompany’s
subsidiaries(3 persons)
Employees of theCompany’s
subsidiaries(20 persons)Type/number ofshares reserved(Note)

Common stock:35,700 shares

Common stock:
157,500 shares

Common stock:
380,900 shares

Common stock:
4,000 shares

Common stock:
24,000 shares

Grant dateJuly 23, 2015

July 23, 2015

July 23, 2015

October 14, 2015

October 14, 2015

Vesting conditions

No conditions
attached

No conditions
attached

No conditions
attached

No conditions
attached

No conditions
attached

Service period

No period specified

No period specified

No period specified

No period specified

No period specified

Exercisable period

July 23, 2018 –July 22, 2023

July 23, 2018 –July 22, 2023

July 23, 2018 –July 22, 2023

October 14, 2018 –October 13, 2023

October 14, 2018 –October 13, 2023

FY2015(Note) Described in terms of the number of shares.

4. Scale of offer and status of changes(1) Number of stock options
Nomura Real Estate Holdings, Inc.
FY2008

3rd issue of stock options

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

Granted—Forfeited—

Vested:—End of the year—

Vested: (shares)
Previous fiscal year end

139,000

Vested:—Exercised90,100Forfeited

48,900End of the year—

Nomura Real Estate Holdings, Inc.

42

Financial Report 2016

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

3rd issue of stock options

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

Granted——Forfeited——

Vested:——End of the year

—

—

6,800

79,000

Vested: (shares)
Previous fiscal year end
Vested:——Exercised

6,800

26,500Forfeited

—

2,000

End of the year—

50,500Nomura Real Estate Holdings, Inc.
FY2010

2nd issue of stock options

3rd issue of stock options

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

Granted——Forfeited——

Vested:——End of the year——

12,00056,500

Vested: (shares)
Previous fiscal year end
Vested:Exercised
Forfeited
End of the year

—

—

8,800

18,800

—

1,000

3,200

36,700Nomura Real Estate Holdings, Inc.
FY2011

2nd issue of stock options

3rd issue of stock options

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

Granted——Forfeited——

Vested:——End of the year——

16,500109,900

Vested: (shares)
Previous fiscal year end
Vested:Exercised
Forfeited
End of the year

Nomura Real Estate Holdings, Inc.

43

Financial Report 2016——

11,50027,300

—

1,000

5,000

81,600Nomura Real Estate Holdings, Inc.
FY2012

1st issue of stock options

2nd issue of stock options

3rd issue of stock options

Non-vested: (shares)
Previous fiscal year end

—

—

—

Granted———Forfeited———

Vested:———End of the year

—

—

—

19,200115,800

189,200

—

—

—

5,400

48,20063,000

Vested: (shares)
Previous fiscal year end
Vested:Exercised
Forfeited
End of the year

—

—

2,500

13,80067,600123,700

Nomura Real Estate Holdings, Inc.
FY2013

1st issue of stock options

2nd issue of stock options

3rd issue of stock options

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

Granted——307,500—

Forfeited

—

—

3,200

Vested:——304,300

End of the year

—

—

—

20,200143,300

23,600——304,300

Exercised

4,100

62,80010,500Forfeited

—

—

1,000

16,10080,500316,400

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

Nomura Real Estate Holdings, Inc.
FY2014

1st issue of stock options

2nd issue of stock options

3rd issue of stock options

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

Granted——350,700—

Forfeited

—

—

4,200

Vested:

—

—

7,800

End of the year——

338,700

Vested: (shares)
Previous fiscal year end

40,700

194,400

1,600

Vested:

—

—

7,800

Exercised———

Forfeited———

40,700

194,400

9,400

End of the year

Nomura Real Estate Holdings, Inc.

44

Financial Report 2016

Nomura Real Estate Holdings, Inc.
FY2015

1st issue ofstock options

2nd issue ofstock options

3rd issue ofstock options

4th issue ofstock options

5th issue ofstock options

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

—

—

—

—

—

35,700157,500

380,900

4,000

24,000—Forfeited

—

—

—

—

Vested:35,700157,500

1,000

4,000

—

—

—

379,900—

24,000End of the year
Vested: (shares)
Previous fiscal
year end

—

—

—

—

—

35,700157,500

1,000

4,000

—

Exercised

—

—

—

—

—

Forfeited

—

—

—

—

—

35,700157,500

1,000

4,000

—

Vested:End of the year

(2) Unit price data
Nomura Real Estate Holdings, Inc.
FY2008

3rd issue of stock options

Exercise price (¥)

2,255

Average price upon exercise (¥)

2,554

Fair value on grant date (¥)

770

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

Exercise price (¥)

3rd issue of stock options
1

1,663

Average price upon exercise (¥)

2,560

2,555

Fair value on grant date (¥)

1,533

641

Nomura Real Estate Holdings, Inc.
FY2010

2nd issue of stock options

Exercise price (¥)

3rd issue of stock options
1

1,194

Average price upon exercise (¥)

2,344

2,388

Fair value on grant date (¥)

1,119

437

Nomura Real Estate Holdings, Inc.
FY2011

2nd issue of stock options

Exercise price (¥)

3rd issue of stock options
1

1,457

Average price upon exercise (¥)

2,340

2,489

Fair value on grant date (¥)

1,045

315

Nomura Real Estate Holdings, Inc.
FY2012

1st issue of stock options

Exercise price (¥)

2nd issue of stock options

3rd issue of stock options

1

1

1,451

Average price upon exercise (¥)

2,278

2,417

2,487

Fair value on grant date (¥)

1,283

1,283

454

Nomura Real Estate Holdings, Inc.

45

Financial Report 2016

Nomura Real Estate Holdings, Inc.
FY2013

1st issue of stock options

Exercise price (¥)

2nd issue of stock options

3rd issue of stock options

1

1

2,429

Average price upon exercise (¥)

2,500

2,285

2,508

Fair value on grant date (¥)

2,297

2,297

675

Nomura Real Estate Holdings, Inc.
FY2014

1st issue of stock options

2nd issue of stock options

3rd issue of stock options

Exercise price (¥)

1

1

Average price upon exercise (¥)

—

—

—

1,718

1,718

371

Fair value on grant date (¥)

2,016

Nomura Real Estate Holdings, Inc.
FY2015

1st issue ofstock options

2nd issue ofstock options

3rd issue ofstock options

4th issue ofstock options

4th issue ofstock options

Exercise price (¥)

1

1

2,741

1

2,355

Average price upon
exercise (¥)

—

—

—

—

—

Fair value on grant
date (¥)

2,260

2,260

516

2,085

536

5. Method for estimating per share fair value of stock options
The per share fair value of the stock options granted during the fiscal year ended March 31, 2016 (FY2015) was estimatedas follows:(1) Valuation technique used Black-Scholes method(2) Main base data and estimation methods
Nomura Real Estate Holdings, Inc.
Nomura Real Estate
Holdings, Inc.
1st issue of FY2015
stock options
Expected volatility ofthe share price(Note 1)

31.7%

Nomura Real Estate
Holdings, Inc.
2nd issue of FY2015
stock options

31.7%

Nomura Real Estate
Holdings, Inc.
3rd issue of FY2015
stock options

31.7%

Nomura Real Estate
Holdings, Inc.
4th issue of FY2015
stock options

32.5%

Nomura Real Estate
Holdings, Inc.
5th issue of FY2015
stock options

32.5%

Expected remaining
life of the option(Note 2)

5.5 years

5.5 years

5.5 years

5.5 years

5.5 years

Expected dividend(Note 3)¥50 ($0.44)
per share¥50 ($0.44)
per share¥50 ($0.44)
per share¥50 ($0.44)
per share¥50 ($0.44)
per share

0.19%

0.19%

0.19%

0.14%

0.14%

Risk-free interest rate
(Note 4)

Notes: 1.	With respect to 1st, 2nd, and 3rd issues of FY 2015 stock options, figures are calculated based on the actual stock price for five years and six
months (from January 2010 to July 2015), and with respect to 4th and 5th issues of FY2015 stock options, figures are calculated based on theactual stock price for five years and six months (from April 2010 to October 2015).
2.	Calculated with an assumption that the stock option is exercised at the middle of the exercise period as the Company does not have sufficient
data for a more precise estimation.
3.	Based on the expected dividend for the fiscal year ended March 31, 2016 at the grant date.
4.	Based on the yield of Japanese government bonds for the period equivalent to the expected remaining life of the option.

Nomura Real Estate Holdings, Inc.

46

Financial Report 2016

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

21.Subsequent Events(a) Stock Acquisition Rights
The Company has resolved to issue stock acquisition rights as stock options at the meeting of its Board of Directors held on
June 29, 2016.
1. Stock acquisition rights with exercise price of ¥1 per share(1) Recipients
Directors of the Company: 6 persons
Directors and executive officers of the Company’s subsidiaries: 83 persons(2) Type and number of shares subject to the stock acquisition rights
Common stock: 307,000 shares
The number of shares issuable under each stock acquisition right shall be 100 shares.
(3) Amount per share to be paid at the time of the exercise¥1 per share(4) Allotment dateJuly 22, 2016(5) Exercise period of the stock acquisition rights
July 22, 2019 – July 21, 2024
(6) Conditions for assignment of the stock acquisition rights
Assignment of the stock acquisition rights to third parties requires the resolution approved by the Company’s Boardof Directors.

Nomura Real Estate Holdings, Inc.

47

Financial Report 2016

2. Stock acquisition rights with exercise price to be determined by reference the market price of the stock at thetime of the exercise(1) Recipients
Directors of the Company: 6 persons
Directors and executive officers of the Company’s subsidiaries: 83 persons
Employees of the Company’s subsidiaries: 226 persons(2) Type and number of shares subject to the stock acquisition rights
Common stock: 421,800 shares
The number of shares issuable under each stock acquisition right shall be 100 shares.
(3) Amount per share to be paid at the time of the exercise
The amount to be paid per share shall be the higher of the average closing price of the Company’s common stock inregular trading on the Tokyo Stock Exchange in the month preceding the month of the allotment date multiplied by 1.05
(fractional amounts less than ¥1 are to be rounded up) or the closing price on the allotment date (if there is no closing
price, the most recent closing price prior to this date).
(4) Allotment dateJuly 22, 2016(5) Exercise period of the stock acquisition rights
July 22, 2019 – July 21 2024
(6) Conditions for assignment of the stock acquisition rights
Assignment of the stock acquisition rights to third parties requires the resolution approved by the Company’s Boardof Directors.

Nomura Real Estate Holdings, Inc.

48

Financial Report 2016

Independent Auditors’ Report

Nomura Real Estate Holdings, Inc.

49

Financial Report 2016