Independent Auditor’s Report

The Board of Directors
Mitsubishi Estate Co., Ltd.

The Audit of the Consolidated Financial Statements
OpinionWe have audited the accompanying consolidated financial statements of Mitsubishi Estate Co.,
Ltd. (the Company) and its consolidated subsidiaries (the Group), which comprise theconsolidated balance sheet as at March 31, 2024, and the consolidated statements of income,comprehensive income, changes in net assets, and cash flows for the year then ended, and notes
to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2024, and its
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of theGroup in accordance with the ethical requirements that are relevant to our audit of the consolidated
financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordancewith these requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significancein our audit of the consolidated financial statements of the current period. These matters wereaddressed in the context of the audit of the consolidated financial statements as a whole, and informing the auditor’s opinion thereon, and we do not provide a separate opinion on these matters.
Revenue recognition for sales of real estate properties to real estate funds
Description of Key Audit Matter

Auditor’s Response

The Group has recorded Revenue fromoperations of JPY 1,504,687 million on theConsolidated Statement of Income for theyear ended March 31, 2024, which includes
revenue from sales of real estate properties in
Commercial Property Business of JPY

We performed the following procedures toassess the determination of whether
substantially all of the risks and rewards of thereal estate property have been transferred toreal estate funds in all the sales transactions

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135,419 million as described in the Note 23“Revenue Recognition”. In addition, Gain on
sales of fixed assets of JPY 10,381 million,
which is described in the Note 16 “Other
Income (Expenses)”, includes the gain on
sales of fixed assets to real estate funds.
Management recognizes revenue or gain/loss
on sales of fixed asset from sales of realestate properties when substantially all of therisks and rewards of the real estate property
have been transferred.
Generally, sales transactions of real estate
property have unique terms and conditions
and involve relatively large transaction
prices. Especially when the sales are made toreal estate funds, in order to take into
consideration individual needs of the parties
involved, transaction schemes for sales of thereal estate property may be more complex or
there may be continuing involvement such as
undertaking a property management role after
transfer, having a repurchase option orretaining some equity interest in the propertysold.
By granting individual terms to the purchaseand sales agreement or adjusting the relevantterms and conditions if there is a continuous
involvement in the sold property, the risk of
the real estate property such as reduction in
the land value and others remains with theseller, the Group. Therefore, thedetermination of whether substantially all of
the risks and rewards of the real estate
property have been transferred may involve
complexity.
If misjudged, a large amount of revenue
would be recognized for the sales transactions
where substantially all of the risks andrewards of the real estate property have notbeen transferred.
Accordingly, we identified the determination
about transfer of the risks and rewards arisingout of sales of properties to real estate funds
as a key audit matter.

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exceeding the testing threshold we had
established based on our risk assessment:
We inspected the management approval
documents to understand the scheme oftransaction and assess whether there had
been any continuing involvement in theproperty sold.
We inspected the purchase and sales
agreement to understand the transaction
terms and conditions and evaluate thebusiness rationale.
We compared the transaction amount withmarket data of the relevant area andbusiness plan prepared by the Company to
examine the rationality of the transaction
amount.
We inspected the cash receipt evidence
and certified copy of a registry to assess
the fact of delivery.

Valuation of property and equipment related to redevelopment projects
Description of Key Audit Matter

Auditor’s Response

The Group has recorded Property andequipment of JPY 4,597,114 million in theConsolidated Balance Sheet as of March 31,
2024, which includes Land and Constructionin progress held for redevelopment projects
aimed at making effective use of areas suchas urban development that contributes tointernational competitiveness and thestrengthening of disaster prevention in
response to the deregulation of the national
and local governments.

In order to assess the judgement on whether
there were impairment indicators for property
and equipment related to redevelopment
projects, we performed the following
procedures on the project, which met certain
conditions we established based on our risk
assessment. These procedures were designed
to assess whether there have been any
material changes in the redevelopment
projects that could significantly reduce
recoverable amounts:

The Group is carrying out multiple
redevelopment projects in major business
districts in Japan, mainly in the Marunouchi
area. As described at p. “Significant
accounting estimates”, 1 “Valuation ofproperty and equipment” in the Note 1“Significant accounting Policies”,
management identified the assets or asset
groups with impairment indicators andassessed whether the sum of the undiscounted
future cash flows attributable to themexceeded their carrying amounts.

We inspected documents including theboard of directors meeting minutes andthe management approval documents,
and we also inquired with management,
person responsible for the legal
department and divisions in-charge. Our
goal was to assess whether there wereany events that necessitated delays or
modifications to project plans.
Specifically, we looked into status ofnegotiations with landowners in
redevelopment areas and the acquisitionof necessary government permissions forredevelopment, as well as the impact ofnatural disasters, difficulty of material
procurement and discovery ofunderground objects that could cause
construction delays.

Unlike simple reconstruction, redevelopment
projects require the coordination of interests
with neighboring landowners, the permission
to ease regulations, and the creation ofbusiness plans based on long-term forecastsof demand. Therefore, many redevelopment
projects take a long time from planning tocompletion.
In such a long-term project, there is apotential risk of having lower profitability
than originally expected as a result of delay inredevelopment or subsequent modification ofredevelopment plans. Specifically, there arerisks such as having disagreeing landowners
in areas planned for redevelopment, failure toobtain necessary government permissions forredevelopment, an increase in construction
costs due to the rise of material cost, delay inconstruction due to discovery of underground
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To assess whether there has been any
material deterioration in market
conditions for construction costs and theprogress of the finding tenants, we
inspected documents including the boardof directors meeting minutes and the
management approval documents. We
also inquired with managements,
business unit leaders and divisions incharge, and obtained publicly available
indicators and market reports fromexternal sources.

objects, natural disaster and difficulty ofmaterial procurement, and a slower progressof finding tenants. Therefore, management isrequired to evaluate those various risks andmake complex judgement on whether
impairment indicators are present.
Accordingly, valuation of property andequipment related to redevelopment projects
requires judgement that takes into accountpotential risks, including complexity indetermining whether any indication of
impairment is identified. Therefore, we
identified valuation of property andequipment related to redevelopment projects
as a key audit matter.

We performed a physical observation ofcertain project sites to examine theconsistency of the progress on site with
our understanding based on our review ofboard of directors meeting minutes andthe management approval documents,
and inquiries with divisions in-charge.

Valuation of land held for future development of residential condominiums
Description of Key Audit Matter

Auditor’s Response

The Group has recorded the Land andhousing projects in progress of JPY 453,008
million which is included in Inventory on theConsolidated Balance Sheet as of March 31,
2024. It mainly includes a real estate underdevelopment acquired by Mitsubishi Estate
Residence Co., Ltd., the Company’s
consolidated subsidiary, for the development
and sale of residential property as
condominiums.

We performed the following procedures toassess the determination of whether theGroup was required to record valuation losseson the land held for future development ofresidential condominiums for the project
which met certain criteria we had establishedbased on our risk assessment:

As described at p. “Significant accounting
estimates”, 2 “Valuation of inventories” in
the Note 1 “Significant Accounting Policies”,
management valued the Land and housing
projects in progress at net realizable value
when it was lower than cost due to decline inprofitability as well as other types ofinventories.
The Land and housing projects in progress
can be divided into phases before and after
construction begins. Various negotiations andcoordination, such as obtaining necessary
government permissions, concluding
construction contracts with the constructor,
and negotiations with existing residents in
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In order to assess whether there had been
any material changes in the land held fordevelopment that would reduce its future
profitability, we inspected documents
including the management approval
documents and the executive committee
meeting minutes, and inquired withdivisions in-charge to update ourunderstanding of the market conditions
for residential condominiums,
development projects in neighboringareas, the status of obtaining necessary
governmental permission fordevelopment, the status of negotiation
with existing residents in neighboringareas and change in market conditions forconstruction costs. We also performed aphysical observation of certain projectneighboring areas, before construction
begins.
As a result, the land held for development
before construction starts may have apotential risk of having lower profitability
than originally expected in the event of delay
in project or subsequent modification of theplan, due to the long development period
until delivery.
Valuation of the land held for development ismade based on a business plan, however, thebusiness itself involves various risks
including a decline in sales price in the future,
excessive supply due to increasing supply bycompetitors than initially planned inneighboring areas, failure to obtain necessary
governmental permission, delay inconstruction due to continuing negotiation
with existing residents in neighboring areas
or discovery of underground objects andincreases in construction costs due to the riseof material cost.
In order to determine whether a valuation loss
should be recognized on the land held fordevelopment of residential condominiums, itis necessary to evaluate those risks anddetermine whether the development projects
are expected to be ultimately completed asoriginally planned. However, the nature andreliability of the information available tosupport the determination varies widely.

sites when we determined necessary.
In addition, we determined whether there
were any projects with delayedcommencement date of construction, and we
performed following procedures for certain
projects.
When we determined necessary, we
performed a physical observation ofcertain project site to understand thesurrounding business environment andthe situation of delay.
We compared the sales price with market
report obtained from external sources
including sales transaction data inneighboring areas.
We compared the construction costs usedin the calculation with the publishedrelevant indicators.
We also performed the sensitivity
analysis using the sales unit price andconstruction cost as significant
assumptions to understand the impact on
the valuation of land held fordevelopment of residential
condominiums.

In addition, changes in the businessenvironment have been explicitly observed,
as evidenced by rising construction costs.
Accordingly, given a high degree of
uncertainty involved with such determination,
we identified the determination of whether avaluation loss should be recognized on theland held for development as a key audit
matter.
Other Information
Other information comprises the information included in disclosure documents that contains
audited consolidated financial statements but does not include the consolidated financial
statements and our auditor’s report thereon.
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We have concluded that other information does not exist. Accordingly, we have not performed
any work related to other information.
Responsibilities of Management, the Audit Committee for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for suchinternal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Audit Committee is responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of theGroup’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the consolidated financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent theunderlying transactions and events in a manner that achieves fair presentation in accordancewith accounting principles generally accepted in Japan.
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Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the groupaudit. We remain solely responsible for our audit opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with the ethicalrequirements regarding independence that are relevant to our audit of the consolidated financial
statements in Japan, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken toeliminate threats or safeguards applied to reduce threats to an acceptable level.
From the matters communicated with the Audit Committee, we determine those matters thatwere of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because theadverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect tothe year ended March 31, 2024 are presented solely for convenience. Our audit also included thetranslation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made on the basis described in Note 3 to the consolidated financial
statements.

Fee-related Information
The fees for the audits of the financial statements of Mitsubishi Estate Co., Ltd. and its
subsidiaries and other services provided by us and other EY member firms for the year ended
March 31, 2024 are 840 million yen and 160 million yen, respectively.

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Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
Ernst & Young ShinNihon LLC
Tokyo, Japan
July 9, 2024

Kazunori Takenouchi
Kazunori Takenouchi
Designated Engagement Partner
Certified Public Accountant

Chihiro Yasunaga
Chihiro Yasunaga
Designated Engagement Partner
Certified Public Accountant

Teruyo Okubo
Teruyo Okubo
Designated Engagement Partner
Certified Public Accountant

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Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31,
2023

2024

Thousands of
U.S. dollars (Note 3)

Millions of yen

AssetsCurrent assets:
Cash on hand and in banks (Notes 17 and 19)
Trade notes accounts receivable, andcontract assets(Notes 4 and 17)
Marketable securities (Notes 17 and 18)
Allowance for doubtful receivables
Inventories (Note 6)
Equity investments (Notes 17 and 18)
Other current assets
Total current assets¥

Investments and other assets:
Investments in and advances to unconsolidated
subsidiaries and associates (Note 17)
Investment securities (Notes 17 and 18)
Asset for retirement benefits (Note 9)
Deferred income taxes (Note 10)
Other investments (Notes 7 and 17)
Total investments and other assets

Property and equipment (Note 8) :Land
Land in trust
Buildings and structures
Machinery and equipment and otherConstruction in progress
Less accumulated depreciation
Property and equipment, net

Intangible
Total assets¥

273,951 ¥2024

225,011 $1,809,337

89,174
4,752(785)
513,834
962,175
101,985
1,945,088

69,9873,578(659)
493,544716,416
108,723
1,616,602

588,958
31,386(5,185)
3,393,663
6,354,766
673,572
12,846,498

39,834
395,059
126,652
29,608345,646
936,80237,324
269,678
62,52825,943
332,478
727,954

263,092
2,609,203
836,488
195,549
2,282,853
6,187,187

2,403,359
540,882
3,111,415
174,584
297,382
6,527,624(1,930,509)
4,597,114

2,335,460
575,648
2,984,949
169,845
228,955
6,294,858(1,878,644)
4,416,214

15,873,188
3,572,303
20,549,601
1,153,058
1,964,086
43,112,238(12,750,212)
30,362,026

104,743

111,187

691,788

7,583,748 ¥

6,871,959 $

50,087,500

March 31,
2023

2024

Thousands of
U.S. dollars (Note 3)

Millions of yen

Liabilities and net assets
Current liabilities:
Short-term borrowings and current portion of
long-term debt (Notes 8 and 17)
Notes and accounts payable – trade (Note 17)
Accrued income taxes (Note 10)
Advances and deposits
Accrued expenses and other current liabilities(Note 5)
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 8 and 17)
Lease deposits received (Note 17)
Liability for retirement benefits (Note 9)
Deferred income taxes (Note 10)
Negative goodwill
Other non-current liabilities
Total long-term liabilities
Total liabilities
Net assets:
Shareholders’ equity (Note 11) :Common stock, without par value:
Authorized – 1,980,000,000 shares;
Issued – 1,324,288,306 shares in 2024 and
1,324,288,306 shares in 2023
Capital surplus
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income:Unrealized holding gain (loss) on securities
Deferred gain (loss) on hedging instruments
Land revaluation reserve
Foreign currency translation adjustments
Retirement benefits liability adjustments (Note 9)
Total accumulated other comprehensive income
Stock acquisition rights
Non-controlling interests
Contingent liabilities (Note 14)
Total net assets
Total liabilities and net assets¥¥

See accompanying notes to consolidated financial statements.

2024

405,751 ¥
87,09449,257
204,584

431,603 $66,407
23,574150,4112,679,819
575,221
325,324
1,351,194

124,760
871,447

183,340
855,337

823,990
5,755,550

2,730,873
450,325
27,424
621,549
58,533
199,000
4,087,707
4,959,155

2,438,603
448,442
27,644552,944
60,413
108,630
3,636,680
4,492,017

18,036,280
2,974,214
181,125
4,105,075
386,590
1,314,316
26,997,604
32,753,154

142,414
156,961
1,265,749(102,071)
1,463,054

142,414
157,914
1,147,425(48,454)
1,399,299

940,586
1,036,664
8,359,750(674,136)
9,662,865

225,396(226)
526,417
132,469
53,995
938,05271
223,414138,5522,106
526,417
77,48913,695758,261
193
222,187

1,488,649(1,494)
3,476,765
874,903356,619
6,195,444
472
1,475,562

2,624,593
7,583,748 ¥

2,379,941
6,871,959 $

17,334,345
50,087,500

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Income
Year ended March 31,
2023

2024

Thousands of
U.S. dollars (Note 3)

Millions of yen

Revenue from operations (Note 15)
Cost of revenue from operations (Note 6)
Selling, general and administrative expenses
Operating income¥

Other income (expenses):
Interest and dividend income
Interest expenses
Equity in earnings of affiliates
Other, net (Note 16)
Profit before income taxes
Income taxes (Note 10) :Current
DeferredProfitProfit attributable to:Non-controlling interests
Shareholders of Mitsubishi Estate Co., Ltd.

¥See accompanying notes to consolidated financial statements.

2024

1,504,687 ¥(1,112,413)(113,647)
278,627

1,377,827 $(980,792)(100,332)
296,702

9,937,835(7,347,024)(750,595)
1,840,215

10,676(35,996)
308
20,916(4,094)
274,532

8,628(25,001)260(27,687)(43,799)
252,90270,512(237,739)
2,035
138,147(27,044)
1,813,171(89,750)(8,380)(98,131)
176,401(65,855)(4,779)(70,634)
182,268(592,765)(55,349)(648,114)
1,165,057(7,968)
168,432 ¥(16,924)
165,343 $(52,629)
1,112,427

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year ended March 31,
2023

2024

Thousands of
U.S. dollars (Note 3)

Millions of yen

Profit¥176,401 ¥

182,268 $1,165,057

86,854(2,337)57,64240,301

7,726
912
82,727
5,045

573,638(15,439)
380,707
266,174

1,324
97,736
280,004 $32
1,205,113
2,370,170

255,404 $24,599 $2,299,870
70,300

Other comprehensive income (Note 26) :Unrealized holding gain (loss) on securities
Deferred gain (loss) on hedging instruments
Foreign currency translation adjustments
Retirement benefits liability adjustments
Share of other comprehensive income of affiliates
accounted for by the equity method
Total other comprehensive income (loss)
Comprehensive income (Note 26)¥4
182,466
358,867 ¥Total comprehensive income attributable to:Shareholders of Mitsubishi Estate Co., Ltd.
Non-controlling interests¥¥

348,223 ¥
10,644 ¥See accompanying notes to consolidated financial statements.

2024

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets
Millions of yen

Accumulated othercomprehensive income
Unrealized Deferred gain
Total
holding gain
(loss) on
Treasuryshareholders’(loss) on
hedgingstock
equitysecurities
instruments¥ (132,483) ¥ 1,335,024 ¥ 130,841 ¥103

Shareholders’ equity

Balance at April 1, 2022
Changes in the year:
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Changes in the scope of consolidation
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2023
Changes in the year:
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Changes in the scope of consolidation
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2024

Commonstock¥ 142,414

Capitalsurplus¥ 159,749

Retainedearnings¥ 1,165,344(51,587)
165,343(51,587)
165,343(45,822)555(45,822)565
129,285(10)(129,285)(2,379)(2,379)(1,835)(1,835)(1,835)
157,914

142,414(17,919)
1,147,425

84,029(48,454)

64,274
1,399,299(54,260)644(50,093)
168,432(54,260)
630(50,093)
168,432
(14)
(0)

¥

142,414

¥

2,002
2,002
2,106

86,844
86,844
225,396 ¥(2,332)(2,332)
(226)

(0)

(953)

(953)
156,961

7,710
7,710
138,552(953)

118,324¥ 1,265,749¥(53,616)(102,071)

63,754¥ 1,463,054¥

Millions of yen

Balance at April 1, 2022
Changes in the year:
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Changes in the scope of consolidation
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2023
Changes in the year:
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Changes in the scope of consolidation
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2024

Accumulated other comprehensive income
Retirement
Total
Foreign
benefits
accumulatedLand
currency
liability
other
Stock
Nonrevaluation translation adjustments comprehensive acquisition
controlling
reserveadjustments(Note 9)incomerightsinterests¥ 526,417 ¥
2,162 ¥
8,675 ¥
668,200 ¥201 ¥ 233,005

Total
net assets¥ 2,236,432(51,587)
165,343(45,822)555(2,379)(1,835)75,32775,327
77,489526,417

5,020
5,020
13,69590,061
90,061
758,261

(8)
(8)
193

(10,818)(10,818)
222,187

79,234
143,5092,379,941(50,093)
168,432(54,260)
630
(0)
(953)

¥

526,417¥54,97954,979132,469¥

40,29940,29953,995¥

179,790
179,790938,052

¥

(121)
(121)
71

¥

1,227
1,227
223,414

180,896244,651¥ 2,624,593

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets (continued)
Thousands of U.S. dollars (Note 3)

Accumulated othercomprehensive income
Unrealized Deferred gain
Total
holding gain
(loss) on
Treasuryshareholders’(loss) on
hedgingstock
equitysecurities
instruments$ (874,999) $ 8,817,284 $ 864,155 $683

Shareholders’ equity

Balance at April 1, 2022
Changes in the year:
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Changes in the scope of consolidation
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2023
Changes in the year:
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Changes in the scope of consolidation
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2024

Commonstock$ 940,586

Capitalsurplus$ 1,055,081

Retainedearnings$ 7,696,615(340,716)
1,092,025(340,716)
1,092,025(302,639)
3,671(302,639)
3,737
853,878(66)(853,878)(15,712)(15,712)(12,120)(12,120)(12,120)
1,042,960

940,586(118,348)
7,578,266

554,977(320,022)

424,5079,241,792(358,370)
4,256(330,843)
1,112,427(358,370)
4,161(330,843)
1,112,427
(94)
(5)

$

940,586

13,22813,22813,912

573,570
573,570$ 1,488,649 $(15,406)(15,406)(1,494)(5)(6,295)(6,295)$ 1,036,664

50,92350,923915,079(6,295)

781,484$ 8,359,750$(354,114)(674,136)

421,073$ 9,662,865

4
Thousands of U.S. dollars (Note 3)

Balance at April 1, 2022
Changes in the year:
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Changes in the scope of consolidation
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2023
Changes in the year:
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Changes in the scope of consolidation
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2024

Accumulated other comprehensive income
Retirement
Total
Foreign
benefits
accumulatedLand
currency
liability
other
Stock
Nonrevaluation translation adjustments comprehensive acquisition
controlling
reserveadjustments(Note 9)incomerightsinterests$ 3,476,765 $
14,279 $57,300 $ 4,413,185 $
1,328 $ 1,538,904

Total
net assets$14,770,703(340,716)
1,092,025(302,639)
3,671(15,712)(12,120)

497,508
497,508
511,7873,476,765

33,15533,15590,455594,816
594,816
5,008,002

(53)
(53)
1,275

(71,449)(71,449)
1,467,455

523,313947,821
15,718,524(330,843)
1,112,427(358,370)
4,161(5)(6,295)363,115363,115$

See accompanying notes to consolidated financial statements.

3,476,765$

874,903

266,163
266,163$356,619

1,187,442
1,187,442$

6,195,444

(802)
(802)
$

472

$

8,106
8,106

1,194,746
1,615,820

1,475,562$ 17,334,345

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year ended March 31,
2023

2024

2024
Thousands of
U.S. dollars (Note 3)

Millions of yen

Cash flows from operating activities
Profit before income taxes
Depreciation and amortization(Gain) loss on sales or disposal of property and equipment(Gain) loss on sales of securities
Loss on valuation of shares of subsidiaries and associates
Valuation loss on equity investments
Impairment loss
Equity in earnings of affiliates
Increase (decrease) in allowances
Increase (decrease) in liability for retirement benefits
Interest and dividend income
Interest expense(Increase) decrease in trade receivables and contract assets(Increase) decrease in inventories(Increase) decrease in equity investments
Increase (decrease) in notes and accounts payable
Increase (decrease) in lease deposits received
Other
SubtotalInterest and dividends received
Interest paid
Income taxes refund (paid)
Net cash provided by operating activities

¥

¥

(308)
85
(6,585)(10,676)
35,996(18,178)
130,702(184,048)
20,6681,882
80,899397,819
9,832(34,767)(65,634)
307,249

252,90293,459750(3,303)
2,599
7,264
3,535
(260)
(32)
(9,486)(8,628)25,001(6,084)
7,462(5,399)4,132(2,894)(12,620)
348,396
9,620(23,797)(64,305)
269,914

1,855(1,402)
68,040(451,402)
41,388(9,192)2,314(2,360)17,047(286,301)
7,717(5,453)

12,253(9,260)449,379(2,981,323)
273,355(60,715)(11,304)(362,017)(33,421)(11,588)(312,046)(74,663)(2,390,975)

14,760383,780(212,526)
59,790(27,033)

16,728249,592(85,040)
59,733(90,000)

97,4852,534,712(1,403,652)
394,891(178,545)(6,815)(54,260)(50,042)(7,218)100,433(6,346)(45,822)(51,579)(16,808)
30,457(45,014)(358,366)(330,512)(47,677)
663,321

4,589
50,255
225,772

5,244(6,430)234,244

30,313331,915
1,491,132

12,138Cash flows from investing activities
Proceeds from sales of marketable securities
Purchases of marketable securities
Proceeds from sales of property and equipment
Purchases of property and equipment
Proceeds from sales of investment securities
Purchases of investment securities
Purchase of investments in subsidiaries resulting inchange in scope of consolidation
Other
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Increase in long-term borrowings
Repayment of long-term borrowings
Proceeds from issuance of corporate bonds
Repayment of corporate bonds
Purchase of investments in subsidiaries that do not
result in change in scope of consolidation
Net (increase) decrease in treasury stock
Cash dividends paid
Other
Net cash provided by 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 year
Increase in cash and cash equivalents arising from newly
consolidated subsidiaries
Cash and cash equivalents of subsidiaries excluded fromconsolidation
Cash and cash equivalents at end of year (Note 19)274,532
98,301(7,309)(30,280)$

1,813,171
649,238(48,274)(199,993)
80,172(2,035)563(43,496)(70,512)
237,739(120,063)
863,238(1,215,562)
136,504
12,435534,304
2,627,429
64,936(229,622)(433,488)
2,029,255

762¥

See accompanying notes to consolidated financial statements.

(62)
275,965¥(2,804)
225,772$(412)
1,822,635

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Year ended March 31, 2024
1.

Significant Accounting Policiesa.

Basis of preparation
The accompanying consolidated financial statements of Mitsubishi Estate Co., Ltd. (the “ Company ” ) and its consolidated subsidiaries(collectively, the “Group”) are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects
as to the application and disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated financial
statements prepared by the Company as required by the Financial Instruments and Exchange Act of Japan.
The notes to the consolidated financial statements include information which may not be required under accounting principles generally acceptedin Japan but is presented herein as additional information.
As permitted by the Financial Instruments and Exchange Act of Japan, amounts of less than one million yen have been rounded off. As a result,
the totals shown in the accompanying consolidated financial statements (both in yen and U.S. dollars) do not necessarily agree with the sums of
the individual amounts.
Certain amounts in the prior year’s financial statements have been reclassified to conform to the current year’s presentation.

b.

Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Group that it controls directly or indirectly. Companies overwhich the Company exercises significant influence in terms of their operating and financial policies have been included in the consolidated
financial statements on an equity basis.
The Company applies the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial
Statements ” (Accounting Standards Board of Japan (ASBJ) Practical Issues Task Force (PITF) No. 18). In accordance with this PITF, theaccompanying consolidated financial statements have been prepared by using the accounts of foreign consolidated subsidiaries prepared inaccordance with either IFRS or accounting principles generally accepted in the United States as adjusted for certain items.
All significant intercompany balances and transactions have been eliminated in consolidation.

c.

Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain
estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The actual results could differ
from those estimates.

d.

Foreign currency translation
Current and non-current monetary accounts denominated in foreign currencies are translated into yen at the current rates.
The revenue and expense accounts of the foreign consolidated subsidiaries are translated using the average rate during the year. Except forshareholders’ equity, the balance sheet accounts are also translated into yen at the rates of exchange in effect at the balance sheet date. The
components of shareholders’ equity are translated at their historical exchange rates.

e.

Cash equivalents
The Group considers all highly liquid investments that are readily convertible into cash and have an original maturity of three months or less to be
cash equivalents. Reconciliation between cash in the consolidated balance sheet and cash equivalents at March 31, 2024 and 2023 is presented in
Note 19.

f.

Marketable securities and investment securities
Securities other than those of subsidiaries and associates are classified into four categories: trading, held-to-maturity, other securities or equity
investments. Trading securities are carried at fair value and held-to-maturity securities are carried at amortized cost. Marketable securities
classified as other securities are carried at fair value with any changes in unrealized holding gain or loss, net of the applicable income taxes,
included directly in shareholders ’ equity. For investments in limited partnership for investment and similar partnerships (deemed as securities
under Article 2, Paragraph 2 of the Financial Instruments and Exchange Act), the most recent financial statements available according to thefinancial reporting date stipulated in the partnership agreement are used as the basis for calculating the net amount equivalent to the Company’s
equity interest. Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving
average method. Securities other than shares, etc., that do not have a market price classified as equity investments are carried at fair value withany changes in unrealized holding gain or loss, net of the applicable income taxes, included directly in shareholders’ equity. And the cost of the
securities sold is determined mainly by the moving-average method. Investments in non-consolidated subsidiary and associates not accounted forby the equity method are stated at cost determined by the moving-average method. For investments in limited partnership for investment andsimilar partnerships (deemed as securities under Article 2, Paragraph 2 of the Financial Instruments and Exchange Act), the most recent financial
statements available according to the financial reporting date stipulated in the partnership agreement are used as the basis for calculating the net
amount equivalent to the Company’s equity interest. Shares, etc., that do not have a market price classified as equity investments are carried atcost determined mainly by the moving-average method.

g.

Inventories
Inventories are mainly stated at cost, determined by the identified cost method. Net book value of inventories in the consolidated balance sheet iswritten down when their net realizable values decline.

1.

Significant Accounting Policies (continued)h.

Property and equipment, depreciation and impairment
Property and equipment, except for land as discussed below, is stated at cost less accumulated depreciation. Depreciation of property, plant andequipment is calculated principally by the declining-balance method based on the estimated useful lives and the residual value determined by theCompany, except for certain buildings of the Company and domestic consolidated subsidiaries acquired on or after April 1, 1998, and facilities
attached to buildings and other non-building structures acquired on or after April 1, 2016, which are depreciated by the straight-line method.
Property and equipment of foreign subsidiaries on which depreciation is calculated by the straight-line method at rates determined based on theestimated useful lives of the respective assets. The Group has capitalized the costs incurred for significant renewals and additions; however, costs
for maintenance and repairs are charged to income.
As of March 31, 2002, the Company revalued its land at fair value, pursuant to Article 2 of the “Enforcement Ordinance for the Law Concerning
Revaluation Reserve for Land” and its amendments. The related unrealized gain, net of applicable income taxes, has been recorded as “ Landrevaluation reserve” in net assets.
The Group reviews their property and equipment (including land) for impairment whenever events or changes in its business circumstancesindicate that the carrying amount of the assets may not be fully recoverable. They perform cash flow analyses to determine if impairment exists. If
impairment is determined to exist, any related loss on impairment is calculated based on the cash flow analyses.
The useful lives of property and equipment are summarized as follows:
Buildings and structures
2 to 75 years

i.

Intangible
Intangible primarily consist of goodwill and land use rights. Goodwill is stated on the basis of cost and is being amortized over a period of 5
years or an estimated economical period on a straight-line basis. A loss is recognized if the fair value falls below the carrying amount. Land use
rights are stated on a cost basis.

j.

Retirement benefits
Accrued retirement benefits and prepaid pension cost for employees have been recorded mainly at the amount calculated based on the retirement
benefit obligation and the fair value of the pension plan assets as of balance sheet date.
The retirement benefit obligation for employees is attributed to each period by the benefit formula method.
Actuarial gain or loss is amortized in the year following the year in which the gain or loss is recognized primarily by the straight-line method overperiods (mainly 1 year through 15 years), which are shorter than the average remaining years of service of employees.
Certain foreign consolidated subsidiaries have adopted the corridor approach for the amortization of actuarial gain and loss.
Prior service cost is being amortized as incurred by the straight-line method over periods (mainly 1 year through 10 years), which are shorter than
the average remaining years of service of the employees.

k.

Income taxes
Deferred tax assets and liabilities are determined based on the financial statements and the tax bases of assets and liabilities, using the enacted tax
rates in effect for the year in which the temporary differences are expected to reverse. Deferred tax assets are also recognized for the estimatedfuture tax effects attributable to operating loss carry forwards. Valuation allowances are established to reduce deferred tax assets if it is more
likely than not that some portion or all of the deferred tax assets will not be realized.

l.

Derivative financial instruments
The Company and certain of its consolidated subsidiaries utilize derivative financial instruments for the purpose of hedging their exposure toadverse fluctuations and changes in interest rates (interest rate swaps) and foreign exchange rates (currency swaps), but do not enter into suchtransactions for speculative or trading purposes.
Derivative financial instruments are carried at fair value with any changes in unrealized gain or loss charged or credited to operations, except for
those which meet the criteria for deferred hedge accounting under which unrealized gain or loss is deferred as an asset or liability.

m. Important hedge accounting
1) Hedge Accounting
In principle, deferred hedge accounting is applied. For interest rate swaps, the short-cut method is applied to the swaps which satisfy therequirements of such short-cut method. For currency swaps, the allocation method is applied to the swaps which satisfy the requirements ofsuch allocation method.
2)

3)

Hedging Instruments and Hedged Items
Hedging instruments:
Interest rate swaps
Currency swaps
Borrowings

Hedged items:
Borrowings and corporate bonds
Borrowings and corporate bonds
Equity of the foreign subsidiaries

Hedging Policy
The risk hedging transactions are intended to hedge the exposure to fluctuation risks in interest rates and foreign currency exchange rates,in accordance with the internal regulations such as “Market Risk Management Rules” and “Management Guideline by Risk.”

1.

Significant Accounting Policies (continued)

m. Important hedge accounting (continued)
4)

Method of Assessing Hedge Effectiveness
The Company compares the cumulative amounts of fluctuations in the rates or in the cash flows of the hedged items with the cumulative
amounts of fluctuations in the rates or in the cash flows of the hedging instruments and assesses the effectiveness of hedging transactions
based on the ratio between the two amounts.
However, the assessment of hedge effectiveness is omitted for interest rate swaps to which short-cut method is applied.

(Hedge transactions to which “Treatment of Hedge Accounting for Financial Instruments Referring to LIBOR” is applied)
Among the above hedge transactions, all hedge transactions included in the scope of application of “Treatment of Hedge Accounting for
Financial Instruments that Reference LIBOR” (ASBJ Revised Practical Solution No.40, March 17, 2022) are subject to the exceptional
treatment prescribed in the Revised Practical Solution. The details of hedging transactions to which the Revised Practical Solution isapplied are as follows.
Hedge accounting method:
Deferred hedge accounting, exceptional accounting for interest rate swaps
Hedging instruments:
Interest rate swaps and currency swaps
Hedged items:
Borrowings and corporate bonds
Types of hedging transactions:Fixing cash flowsn.

Revenue recognition
The Company and its consolidated subsidiaries measure revenue from contracts with customers based on the consideration stipulated in thecontract with the customer. The main performance obligations in the main business relating to contracts with customers and the usual time atwhich such performance obligations are satisfied (the usual time at which revenue is recognized) are as follows. The promised consideration forcontracts with customers in our major businesses is usually paid within one year from the time the performance obligation is satisfied, and since
the amount of the promised consideration does not include a significant financial component, there are no contracts with customers for which theGroup has adjusted the consideration for this effect.
1)

Commercial Property Business Segment
Primarily engaged in the business of leasing office buildings and commercial facilities developed and owned, and in the business of selling
office buildings and commercial facilities developed and owned.
Real estate leasing business
Office buildings and commercial facilities developed and owned are leased, and revenue is recognized for lease transactions in accordancewith the “Accounting Standard for Lease Transactions” (ASBJ Statement No.13, March 30, 2007, hereinafter referred to as “Leaseaccounting standards”) and other standards.
Real estate sales business
Office buildings and commercial facilities developed and owned are sold, and revenue is recognized when the real estate is delivered to thecustomer.
OthersOther businesses include building operation and management, and hotel business.
In the building operation and management business, the Group operates office buildings and commercial facilities and provides real estate
management services. As the manager of the entire building, the Group assumes responsibility for overall management throughout the
management operations and provides building management services by performing various management tasks such as security, facility
management, cleaning, and planting services under contract terms. Since these services are consumed by the customer as the service isprovided in satisfaction of its performance obligation, revenue is recognized over the contractual period with the customer and is measured
by the amount billed to the customer based on the passage of time. In addition, the Company contracts with lessees for internal construction
work, etc. For construction contracts such as internal construction with customers in the building operation and management business, theCompany recognizes revenue based on the cost incurred and the degree of completion of the construction work over the contract periodwith the customer, since the customer controls the asset as the performance obligation is satisfied. In cases where the period of time overwhich the performance obligation is expected to be fully satisfied from the date of inception of the transaction in the contract is very short,revenue is not recognized over a certain period of time based on alternative treatment of materiality, etc., and revenue is recognized when
the performance obligation is satisfied.
In the hotel business, the Company and its consolidated subsidiaries operate hotels in buildings they own. Revenue related to the hotelbusiness is recognized over the period of use of the facility by the customer, as the customer consumes the service as it is provided insatisfaction of the performance obligation.

2)

Residential Business Segment
Mainly engaged in construction, sales, and leasing of developed condominiums and residential houses, as well as management ofcondominiums and houses on consignment and custom-built housing business, etc.
Condominium sales businessCondominiums for sale that have been conducted from the purchase of land to construction are sold to customers, and revenue isrecognized at the time the real estate is delivered to the customer.
Contracted residential property management services
Property management services for condominiums, residential houses, etc., are rendered. As the manager of the entire building, Company
assumes responsibility for general management throughout the management operations and provides building management services byperforming various management tasks such as security guard services, facility management, cleaning, and planting under contractual terms.
Since these services are consumed by the customer as the service is provided in satisfaction of its performance obligation, revenue isrecognized over the contractual period with the customer and is measured by the amount billed to the customer based on the passage oftime.
Design and contract construction of custom-built houses
Custom-built houses are sold on order, and the Company constructs and delivers houses on the customer’s land based on building
construction contracts with the customer.
In this service, the customer controls the asset as the performance obligation is satisfied, and revenue is recognized over the term of thecontract with the customer based on the percentage of completion of the construction at the cost incurred.
In cases where the period of time over which the performance obligation is expected to be fully satisfied from the date of commencement of
the transaction in the contract is very short, revenue is not recognized over a certain period of time based on alternative treatment ofmateriality, etc., and revenue is recognized when the real estate is delivered to the customer.

1.

Significant Accounting Policies (continued)n.

Revenue recognition (continued)
OthersOther activities include renovation and sales of condominiums, real estate brokerage, and leasing of rental condominiums. For sales ofrenovated condominiums, revenue is recognized at the time the property is delivered to the customer. Real estate brokerage services
provide services to conclude real estate sales contracts and real estate lease contracts and deliver real estate on behalf of customers basedon real estate brokerage contracts with customers. For this service, revenue is recognized upon completion of the delivery of the brokerage
property. For lease transactions related to rental condominiums, the Company recognizes revenue in accordance with Lease accounting
standards and other standards.

o.

3)International Business Segment
In overseas, it is engaged in the business of developing and leasing office buildings, residences, commercial facilities, and other properties.
In the real estate leasing business, the Company recognizes revenues in accordance with Lease accounting standards. When office buildings
developed and owned by the Company are sold to customers, revenue is recognized at the time the properties are delivered to thecustomers. When the financial statements of foreign consolidated subsidiaries are prepared in accordance with International Financial
Reporting Standards (IFRS) or U.S. GAAP, such financial statements are used in accordance with “Unification of Accounting Policies
Applied to Foreign Subsidiaries, etc. for Consolidated Financial Statements” (ASBJ Revised Practical Solution No.18, June 28, 2019,
hereinafter referred to as “PITF No.18”).

4)

Investment Management Business Segment
It provides comprehensive services related to real estate investment, mainly offering asset management services to investment corporations
and real estate funds. Revenue from asset management services includes asset management fees over the contract period as well as successfees for property acquisitions and property sales. Asset management fees include the amount of assets under management multiplied by acontractually defined rate and variable fees based on asset performance multiplied by a contractually defined rate. Because asset
management fees are consumed by customers as obligations in contracts with customers are performed and services are rendered, revenue
is recognized over the term of the contract with the customer only to the extent that it is probable that, upon subsequent resolution of theuncertainty based on the mode method, there will not be a significant reduction in the revenue recorded by the time the uncertainty is
resolved. For success fees at the time of property acquisition or sale, revenue is recognized when the performance obligation is satisfied.
When the financial statements of foreign consolidated subsidiaries are prepared in accordance with International Financial ReportingStandards (IFRS) or U.S. GAAP, such financial statements are used in accordance with PITF No.18.

5)Architectural Design & Engineering Business and Real Estate Services Business Segment
It is engaged in the design and engineering business and the real estate service business.
Architectural Design & Engineering Business
Building design and engineering services are provided until building construction is complete. For such services, the Company recognizes
revenue based on the percentage of completion at cost incurred over the term of the contract with the customer, since the customer controls
the asset as it satisfies its performance obligations. In cases where the period of time over which the performance obligation is expected to
be fully satisfied from the date of inception of the transaction in the contract is very short, revenue is not recognized over a certain period oftime based on alternative treatment of materiality, etc., and revenue is recognized when the performance obligation is satisfied.
Real Estate Services Business
Parking management services and real estate brokerage services are provided. In the parking management service, the Group assumes
overall management responsibility for customer-owned parking facilities as the manager of the entire facility and provide parking
management and operation services by performing various management tasks such as security, facility management, and cleaning undercontractual terms. Parking management and operation services are consumed by the customer as the services are provided in satisfaction of
its performance obligations, and revenue is recognized over the term of the contract with the customer and is measured by the amount billed
Real estate brokerage services are provided based on real estate brokerage contracts with customers to conclude real estate sales contracts
and real estate lease contracts on behalf of customers and to deliver real estate. The Company recognizes revenue from this service uponcompletion of the delivery of the brokerage property.

6)

Recognition of revenues from operating leases
Revenue is recognized based on the monthly lease payments to be received under the lease contracts over the elapsed term of the leases.

7)

Recognition of revenues from finance lease transactions
The Company recognizes net sales and cost of sales related to finance lease transactions at the time of receipt of the lease payments.

Appropriation of retained earnings
Under the Companies Act of Japan, the appropriation of retained earnings with respect to a given fiscal year is made by resolution of theshareholders at a general meeting held subsequent to the close of such fiscal year. The accounts for that year do not, therefore, reflect suchappropriations. See Note 11 for more information.

1.

Significant Accounting Policies (continued)p.

Significant accounting estimates
1. Valuation of property and equipment(1) Amount recorded in the consolidated financial statements for the current fiscal year
2024

2023

2024

Millions of yen

Property and equipment, net
Impairment loss
(2)¥

4,597,114-¥

Thousands of U.S. dollars

4,416,214
3,535$

30,362,026-

Other information
1) Calculation method for the amount recorded in the consolidated financial statements for the current fiscal year
The Group mainly owns real estate properties such as office buildings, commercial facilities, outlet malls, hotels and logistics facilities
as property and equipment. For assets or asset groups with indication that they may be impaired (impairment indicators), when the sumof undiscounted future cash flows attributable to them is lower than the carrying value, the Group values those assets and asset groups
to the recoverable amount, and such reduction is recognized as an impairment loss in accordance with the Accounting Standard for
Impairment of Fixed Assets.
Asset grouping in order to determine whether to recognize impairment or to measure impairment losses is a minimum unit thatgenerates cash flows, which is substantially independent from cash flows of other assets or asset groups.
The recoverable amount is the higher of net realizable value or value in use. While the net realizable value is calculated based on thereal estate appraised value or estimated sales price, the value in use is calculated by discounting future cash flows.
2) Major assumptions
In principle, the Group estimates rents, capital expenditures, and discount rates for each individual property. The estimation is madebased on major assumptions by each asset class, taking into account the condition of individual properties.
The major assumptions used in estimation in the current fiscal year are as follows.
Offices
Average rents have remained steadily high since the previous fiscal year, which is expected to continue in the next fiscal year. The
vacancy rate improved as leasing performed steadily in the current fiscal year. We assume that the vacancy rate will continue to staystable in the next fiscal year.
Commercial facilities and outlet malls
As commercial rents include variable rents that are linked to tenant sales, there is a correlation between rents and tenant sales at therelevant commercial facilities. Business performance for the current fiscal year recovered significantly as the economy normalized. We
assume that steady business performance will continue in the next fiscal year due to strong demand from inbound tourists.
HotelsBusiness performance for the current fiscal year recovered significantly as the economy normalized. We assume that steady businessperformance will continue in the next fiscal year due to strong demand from inbound tourists.
Logistics facilities
For logistics facilities, the market has been favorable. Therefore, we assume that performance of logistics facilities will continue to be
steady in the next fiscal year and beyond as is expected for the market trend.
Redevelopment projects
The Group is engaged in multiple redevelopment projects. Compared with other development projects, redevelopment projects areassociated with potential risk of having lower profitability than originally expected because of delay in development or subsequent
modification of a development plan. Potential risk includes risks such as being unable to obtain agreement from other landowners in thearea planned for redevelopment, and being unable to obtain necessary governmental permission.
The Group comprehensively assesses these various risks for redevelopment projects. However, for the redevelopment projects
currently underway, we expect to make progress with their development while securing a certain level of profitability by implementing
various measures to address the deterioration of the business environment, such as increased costs.
3) Impact on the consolidated financial statements for the next fiscal year
Impairment losses are estimated based on the descriptions of 2) Major assumptions.
Therefore, if major assumptions used for estimating impairment losses worsen, impairment losses may be recognized in the next fiscal
year.

1.

Significant Accounting Policies (continued)p.

Significant accounting estimates (continued)
2. Valuation of inventories(1) Amount recorded in the consolidated financial statements for the current fiscal year
2024

2023

2024

Millions of yen

Real estate for saleLand and housing projects in progress
Write-down of inventories(2)¥

53,792453,008
311

Thousands of U.S. dollars¥

65,252420,956218$

355,277
2,991,932
2,054

Other information
1) Calculation method for the amount recorded in the consolidated financial statements for the current fiscal year
The Group values inventories at net realizable value when it is lower than cost due to decline in profitability, and recognizes such
reduction as write-down of inventories in accordance with the Accounting Standard for Measurement of Inventories. The net realizablevalue is calculated by deducting the estimated additional construction costs and estimated sales expenses from the estimated sales
amount.
2) Major assumptions
The major assumptions used in the estimation of net realizable value for the fiscal year are as follows.
Considering factors such as the latest quarterly distribution of sales by agreement date, contract prices and number of model units
visitors, the net sale values of projects whose performance is generally in line with or better the initial business plan are estimated basedon the initial business plan. Meanwhile, the net sale values of projects whose performance has deteriorated from the initial businessplan are estimated based on a revised business plan, taking into consideration conditions unique to each project such as the status ofprogress, market prices in the neighborhood and incurrence of additional costs.
In addition, the land held for future development of residential condominiums is associated with potential risk of having lower
profitability than originally expected because of delay in development or subsequent modification of a development plan which may
happen in a period before sales commence. Potential risk includes risks such as a decline in sales price in the future, excessive supplyof residential condominiums due to increases in supply caused by competitors in neighboring areas, being unable to obtain necessary
governmental permission, delay in construction due to continuing negotiation with existing residents in neighboring areas.
The Group comprehensively assesses these various risks for the land held for development before construction starts.
However, for the pre-construction projects currently underway, we expect to make progress with their development while securing acertain level of profitability by implementing various measures to address the deterioration of the business environment, such as3) Impact on the consolidated financial statements for the next fiscal year
The valuation of inventories is estimated based on the descriptions of 2) Major assumptions by the lower of cost or market (LCM)
method. Therefore, if there are changes in these major assumptions, it may result in additional write-down of inventories in the next
fiscal year.

3. Valuation of equity investments(1) Amount recorded in the consolidated financial statements for the current fiscal year
2024

2023

2024

Millions of yen

Equity investments
Loss on valuation of equity investments(2)¥

962,175
12,138¥

Thousands of U.S. dollars

716,416
7,264$

6,354,766
80,172Other information
1) Calculation method for the amount recorded in the consolidated financial statements for the current fiscal year
The Group reduces the book value of equity investments without market price by a reasonable amount when the effective market valueof those equity investments declines significantly, and recognizes such reduction as an impairment loss on equity investments inaccordance with the Accounting Standard for Financial Instruments.
When calculating the effective market value, the Group values assets held by investees for each purpose of holding.
2) Major assumptions
The major assumptions are determined for assets held by investees according to the purpose of holding. For the details of assumptions
made for the relevant assets, please refer to 1. Valuation of property and equipment and 2. Valuation of inventories.
3) Impact on the consolidated financial statements for the next fiscal year
The estimation for impairment loss on equity investments is made based on assumptions described in 2) Major assumptions. Therefore,
if there are changes in these major assumptions, it may result in additional impairment losses on equity investments in the next fiscal
year.

1.

Significant Accounting Policies (continued)q.

Accounting standards issued but not yet effective
Accounting Standard for Current Income Taxes• On October 28, 2022, the ASBJ issued “Accounting Standard for Current Income Taxes” (ASBJ Statement No. 27)• On October 28, 2022, the ASBJ issued “Accounting Standard for Presentation of Comprehensive Income” (ASBJ Statement No. 25)• On October 28, 2022, the ASBJ issued “Guidance on Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No. 28)(1)

Overview
The ASBJ Statement No. 28 "Partial Amendments to Accounting Standard for Tax Effect Accounting", etc. (hereinafter "ASBJ
Statement No. 28, etc.") was issued on February 16, 2018, and completed the transfer of practical guidelines on tax effect accounting at
the Japanese Institute of Certified Public Accountants (JICPA) to the ASBJ. In the process of the deliberations, the following two
issues, which were to be considered again after the release of ASBJ Statement No. 28, etc., were discussed and released.
Classification of income taxes when taxes are imposed on other comprehensive income
Treatment of tax effect related to the sale of shares of subsidiaries and other securities (shares of subsidiaries or associates) whengroup tax system is applied(2)

Scheduled date of adoption
The Company expects to adopt the accounting standards and related implementation guidance from the beginning of the fiscal year
ending March 31, 2025.

(3)

Impact of the adoption of accounting standard and implementation guidance
The Company is currently evaluating the effect of the adoption of the accounting standards and related implementation guidance on its
consolidated financial statements.

Accounting for and Disclosure of Current Taxes Related to the Global Minimum Tax Rules• On March 22, 2024, the ASBJ issued “Practical Solution on the Accounting for and Disclosure of Current Taxes Related to the Global
Minimum Tax Rules" ASBJ PITF No. 46(1)Overview
At the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), the global minimum tax was agreed by eachparticipating country in the framework in October 2021.
In response to the agreement, the treatment of the Income Inclusion Rule (IIR), one of the internationally agreed global minimum tax
rules, was settled in the “Act for Partial Revision of the Income Tax Act, etc.” (Act No. 3 of 2023) enacted on March 28, 2023, inJapan. The IIR is applicable to fiscal years beginning on or after April 1, 2024.
The global minimum tax is a new tax system that aims to impose a minimum 15% corporate income tax on the profits by country ofmultinational groups of companies, etc. that meet certain requirements, and a new tax system in which there is a difference between thecompany that generates the net income (profit) that is the source of the tax and the company that is obligated to pay the tax.
“The Accounting for and Disclosure of Current Taxes Related to the Global Minimum Tax Rules“ presents the treatment of accounting
and disclosure of income taxes and local income taxes under the global minimum tax system.

(2)

Scheduled date of adoption
The Company expects to adopt the accounting standard from the beginning of the fiscal year ending March 31, 2025.

(3)

Impact of the adoption of accounting standard
The Company is currently evaluating the effect of the adoption of the accounting standard on its consolidated financial statements.

2.

Additional Information
Changes in Segments
At the Board of Directors held on February 15, 2024, the Company has decided to make the following organizational changes in light of changes to the business environment and results over the four years since the plan wasformulated, in order to accelerate initiatives aimed at achieving Long-Term Management Plan 2030.
Effective the fiscal year ending of March 31, 2025, the Company will make the following changes to its reportable segments.
Once the Marunouchi Property Business Group has been newly established, the organizations handling functions related to the Otemachi-Marunouchi-Yurakucho area will be transferred to it, and the current Commercial
Property Business Group will be split into a new iteration of the Commercial Property Business Group, and the Marunouchi Property Business Group.
As a result, “Commercial Property Business”, “Residential Business”, “International Business”, “Investment Management Business”, “Architectural Design & Engineering Business and Real Estate Services Business” are to
be reorganized into new reportable segments consisting of “Commercial Property Business”, “Marunouchi Property Business”, “Residential Business”, “International Business”, “Investment Management Business”,“Architectural Design & Engineering Business and Real Estate Services Business”.
Financial information for the fiscal year ended March 31, 2024 prepared based on the new segment classification is as follows:
Millions of yen

Revenue and operating income
by reportable segment
Revenue from:
External customers
Intersegment or transfers
Total revenue
Segment income (loss)

Commercial
Property
Business

Marunouchi
Property
Business

Residential
Business

International
Business

¥

¥

¥

¥

¥

491,667
7,470
499,138
114,730¥

351,693
29,334
381,027
97,082¥396,266
2,560
398,827
38,888¥2024
Reportable Segments
Architectural
Design &Engineering
Business andReal Estate
Investment
ServicesManagement
Business
SubtotalBusiness

174,288 ¥(518)
173,770
51,448 ¥28,701
2,261
30,962(1,619)¥¥61,292
11,97373,2659,021¥¥

1,503,910 ¥
53,081
1,556,992
309,551 ¥

Other

776
10,232
11,009(1,577)

Total

¥

¥

Eliminations
or Corporate

1,504,687
63,313 ¥1,568,001
307,973 ¥(63,313)(63,313)(29,346)

Consolidated¥

1,504,687¥

1,504,687
278,627

Thousands of U.S. dollars

Revenue and operating income
by reportable segment
Revenue from:
External customers
Intersegment or transfers
Total revenue
Segment income (loss)

Commercial
Property
Business

Marunouchi
Property
Business

Residential
Business

International
Business

$

$

$

$

$

3,247,259
49,342
3,296,602
757,748$

2,322,786
193,7422,516,529
641,190$2,617,176
16,913
2,634,090
256,844$2024
Reportable Segments
Architectural
Design &Engineering
Business andInvestment
Real Estate
ServicesManagement
Business
SubtotalBusiness

1,151,104 $(3,425)
1,147,678
339,793 $

189,562
14,933
204,495(10,697)$$404,81479,076
483,890
59,581$

9,932,704 $
350,581
10,283,286$ 2,044,460 $

Other

5,130
67,57972,710(10,421)

Total

Eliminations
or Corporate$

9,937,835
418,161 $
10,355,997$ 2,034,039 $(418,161)(418,161)(193,823)

Consolidated$

9,937,835$

9,937,835
1,840,215

3.

U.S. Dollar Amounts
Translation of yen amounts into U.S. dollar amounts is included solely for convenience, as a matter of arithmetic computation only, at the rate of¥151.41 = U.S.$1.00, the approximate rate of exchange prevailing on March 31, 2024. The inclusion of such amounts is not intended to imply
that yen amounts have been or could be readily converted, realized or settled in U.S. dollars at the above or any other rate.

4. Balances of receivables from contracts with customers and contract assets
2024

2023

2024

Millions of yen

Trade notes
Accounts receivable
Contract assets
Total

¥

171
49,92910,56560,666¥

Thousands of U.S. dollars¥

165
38,774
10,70549,645¥$

1,133
329,766
69,777400,677$

5. Contract Liabilities Included in "Other"
The amount of contract liabilities included in “other” is described in “(1) Disaggregation of revenue from contracts with customers” inNote 23 “Revenue Recognition”.
6. Inventories
Inventories at March 31, 2024 and 2023 are summarized as follows:
2024

2023

2024

Millions of yen

Real estate for saleLand and housing projects in progress
Land held for development
Other
Total

¥

53,792453,008
719
6,314
513,834¥

Thousands of U.S. dollars¥

65,252420,956
719
6,615
493,544¥$355,277
2,991,932
4,750
41,703
3,393,663$

Write-downs of inventories as a result of a decrease in profitability for the years ended March 31, 2024 and 2023 were ¥311 million($2,054 thousand) and ¥218 million, respectively, and recognized in cost of revenue from operations.
7. Other Investments
Other investments at March 31, 2024 and 2023 were as follows:
2024

2023

2024

Millions of yen

Lease deposits
Long-term prepaid expenses
Other
Total

¥

¥

151,033
159,283
35,329345,646¥¥

Thousands of U.S. dollars

144,070
148,571
39,836
332,478$$

997,515
1,052,001
233,335
2,282,853

8. Short-Term Borrowings and Long-Term Debt
At March 31, 2024 and 2023, short-term borrowings and the current portion of long-term debt consisted of the following:
2024

2023

2024

Millions of yen

Loans, principally from banks
Current portion of long-term debt
Total

¥

231,378
174,373405,751¥

Thousands of U.S. dollars¥

194,881236,722431,603¥$

1,528,157
1,151,662
2,679,819$

The weighted-average interest rates per annum on short-term borrowings outstanding at March 31, 2024 and 2023 were 1.83% and 1.02%,
respectively. Short-term borrowings are principally unsecured.
At March 31, 2024 and 2023, long-term debt consisted of the following:
2024

2023

2024

Millions of yen

0.09% unsecured bonds due 2023
0.643% unsecured bonds due 2024
2.28% unsecured bonds due 2024
1.067% unsecured bonds due 2024
0.05% unsecured bonds due 2025
0.19% unsecured bonds due 2025
0.175% unsecured bonds due 2025
0.17% unsecured bonds due 2026
0.27% unsecured bonds due 2026
0.15% unsecured bonds due 2027
2.305% unsecured bonds due 2027
0.24% unsecured bonds due 2027
0.36% unsecured bonds due 2027
2.385% unsecured bonds due 2027
2.52% unsecured bonds due 2027
2.425% unsecured bonds due 2027
0.43% unsecured bonds due 2028
0.16% unsecured bonds due 2028
2.555% unsecured bonds due 2028
0.27% unsecured bonds due 2029
0.43% unsecured bonds due 2030
0.26% unsecured bonds due 2031
2.9% unsecured bonds due 2032
0.644% unsecured bonds due 2032
2.615% unsecured bonds due 2032
2.04% unsecured bonds due 2032
1.72% unsecured bonds due 2033¥¥

20,00010,00010,00030,00010,00010,00010,00010,00030,00010,00010,00020,00010,00015,00010,00030,00020,00010,00040,00030,00030,00010,00020,00010,00020,00010,000Thousands of U.S. dollars

20,00020,00010,00010,00030,00010,00010,00010,00010,00030,00010,00010,00020,00010,00015,00010,00020,00010,00040,00030,00030,00010,00020,00010,00020,00010,000$132,091
66,04566,045
198,137
66,04566,04566,04566,045
198,137
66,04566,045132,091
66,04599,06866,045
198,137
132,091
66,045
264,183
198,137
198,137
66,045132,091
66,045132,091
66,045

8. Short-Term Borrowings and Long-Term Debt (continued)
2024

2023

2024

Millions of yen

0.9% unsecured bonds due 2033
0.859% unsecured bonds due 2036
0.736% unsecured bonds due 2037
0.703% unsecured bonds due 2037
0.59% unsecured bonds due 2039
0.73% unsecured bonds due 2040
0.61% unsecured bonds due 2041
1.543% unsecured bonds due 2052
0.789% unsecured bonds due 2056
1.402% unsecured bonds due 2057
1.313% unsecured bonds due 2058
1.132% unsecured bonds due 2069
0.874% unsecured bonds under Euro MTN program due
0.102% unsecured bonds under Euro MTN program due
0.135% unsecured bonds under Euro MTN program due
0.115% unsecured bonds under Euro MTN program due
0.16% unsecured bonds under Euro MTN program due
0.25% unsecured bonds under Euro MTN program due
1.04% unsecured bonds under Euro MTN program due
1.33% interest deferrable and early redeemable
subordinated unsecured bonds due 2076
1.48% interest deferrable and early redeemable
subordinated unsecured bonds due 2076
0.66% interest deferrable and early redeemable
subordinated unsecured bonds due 2081
0.97% interest deferrable and early redeemable
subordinated unsecured bonds due 2081
Loans from banks and insurance companies:
SecuredUnsecured¥Less current portion¥

30,00010,00010,00010,00020,00020,00020,00020,00015,00015,00010,00015,000
1,111
3,784
2,924
1,255
1,508
15,000Thousands of U.S. dollars

10,00010,00010,00020,00020,00020,00020,00015,00015,00010,00015,000
6,635
1,111
3,784
2,924
1,255
1,508
15,000¥$

198,137
66,04566,04566,045132,091
132,091
132,091
132,091
99,06899,06866,04599,0687,340
24,997
19,314
8,292
9,961
99,06870,00070,000462,32030,00030,000

198,137

80,00080,000528,366

35,00035,000231,160

61,081
1,963,580
2,905,246(174,373)
2,730,873

40,721
1,787,384
2,675,325(236,722)
2,438,603

403,418
12,968,631
19,187,942(1,151,662)
18,036,280¥$

The aggregate annual maturities of long-term debt subsequent to March 31, 2024 are summarized as follows:Year ending March 31,
2025
2026
2027
2028
2029
2030 and thereafter
Total

Millions of yen¥¥

174,373
247,717
267,604
284,140
284,519
1,646,891
2,905,246

Thousands of U.S. dollars$$

1,151,662
1,636,067
1,767,415
1,876,630
1,879,135
10,877,030
19,187,942

8. Short-Term Borrowings and Long-Term Debt (continued)
The assets pledged as collateral for long-term debt of ¥61,081 million ($403,418 thousand) at March 31, 2024 were as follows:
2024

2023

2024

Millions of yen

Cash on hand and in banks
Equity investments (*)
Buildings and structures
Land
Construction in progress
Investment securities (*)
Other (*)
Total

Thousands of U.S. dollars

¥

150
8,939
160,512163,235
52,92015,554
1,620

¥

150
10,773
159,594
189,750
8,751
16,037
1,230

$

990
59,0401,060,120
1,078,101
349,519
102,733
10,705¥402,933¥

386,287$

2,661,210(*) Equity Investment of ¥8,939 million ($59,040 thousand) (¥8,724 million in the previous fiscal year) , investment securities of ¥15,554
million ($102,733 thousand) (¥16,037 million in the previous fiscal year) and other of ¥1,620 million ($10,705 thousand) (¥1,230 million
in the previous fiscal year) are pledged as collateral for the debts of the affiliated companies.
The following borrowings are non-recourse loans at March 31, 2024 and 2023, which are secured by collaterals as the sole source ofrecovery.
2024

2023

2024
Thousands of U.S. dollars

Millions of yen

Current portion of long-term borrowings
Long-term borrowings
Total

¥

- ¥
11,913
11,913 ¥¥11,146
11,146$

78,68578,685$The assets pledged as collateral for the above non-recourse loans at March 31, 2024 and 2023 were as follows:
2024

2023

2024
Thousands of U.S. dollars

Millions of yen

Buildings and structures
Machinery and equipment
Land
Total

¥

¥

83,65826
25,500109,185¥¥

80,92630
25,085106,043$$552,529
174
168,418
721,122

9. Retirement Benefit Plans
The Company and most of its domestic consolidated subsidiaries have either funded or unfunded defined benefit plans, defined
contribution plans and lump-sum payment plans in the form of a defined benefit plan. The Company has adopted a retirement benefit
trust for the lump-sum payment plan and defined benefit plan. Some U.S. consolidated subsidiaries have adopted defined benefit plans.
The simplified method, which assumes the retirement benefit obligation to be equal to the benefits payable if all eligible employees
voluntarily terminated their employment at the fiscal year end, has been adopted in accounting for defined benefit plans for someconsolidated subsidiaries and the Company’s executive officers.
The changes in the retirement benefit obligation during the years ended March 31, 2024 and 2023 are as follows:
2024

2023

2024

Millions of yen

Retirement benefit obligation at the
beginning of the year
Service cost
Interest cost
Actuarial gain and loss
Retirement benefits paid
Past service cost generated
Translation adjustments
Other
Retirement benefit obligation at the end of the year¥

137,439
5,679
1,817
929
(6,643)91,283
31140,548¥

Thousands of U.S. dollars¥

146,674
5,995
838(12,910)(6,509)
178
3,403
(230)
137,439¥$907,733
37,51012,006
6,142(43,876)
64
8,477
209
928,267$

The changes in plan assets during the years ended March 31, 2024 and 2023 are as follows:
2024

2023

2024

Millions of yen

Plan assets at the beginning of the year
Expected return on plan assets
Actuarial gain and loss
Contributions by the Company
Retirement benefits paid
Translation adjustments
Other
Plan assets at the end of the year¥

172,059
3,962
62,5095,882(5,908)972
21239,500¥

Thousands of U.S. dollars¥

164,985
3,922(2,875)
8,012(4,426)2,631(189)
172,059¥$

1,136,382
26,171
412,847
38,854(39,020)6,420
1431,581,800$

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheet as of March
31, 2024 and 2023 for the Company’s and the consolidated subsidiaries’ defined benefit plans:
2024

2023

2024

Millions of yen

Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net liability for retirement benefits in the consolidatedbalance sheet
Liability for retirement benefits
Asset for retirement benefits
Other current liabilities
Net liability for retirement benefits in the consolidatedbalance sheet¥¥

118,965(239,500)(120,535)
21,583¥Thousands of U.S. dollars

116,424(172,059)(55,635)
21,015(98,951)
27,424(126,652)
277(34,619)
27,644(62,528)264(98,951) ¥(34,619)$785,716(1,581,800)(796,084)
142,551(653,533)
181,125(836,488)
1,829$(653,533)(*) The accrued employees’ retirement benefits recognized by some U.S. consolidated subsidiaries were included in “Other current
liabilities.”

9. Retirement Benefit Plans (continued)
The components of retirement benefit expense for the years ended March 31, 2024 and 2023 are as follows:
2024

2023

2024

Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service cost
Other
Retirement benefit expense

¥

5,679
1,817
(3,962)(3,148)
1
61
448

¥

Thousands of U.S. dollars

¥

5,995
838
(3,922)(1,980)
209
83
1,223

¥

$

37,51012,006(26,171)(20,796)
7
407
2,963

$

(*) Retirement benefit expenses for consolidated subsidiaries adopting the simplified method, which assumes the retirement benefit
obligation to be equal to the benefits payable if all eligible employees voluntarily terminated their employment at the fiscal year end, areincluded in “Service cost.”
The components of retirement benefits liability adjustments included in other comprehensive income (before tax effect) for the years
ended March 31, 2024 and 2023 are as follows:
2024

2023

2024

Millions of yen

Prior service cost
Actuarial gain and loss
Total

¥

(1)
57,98057,979¥Thousands of U.S. dollars

¥

49 $
7,098
7,147 $¥

(9)382,936
382,927

The components of retirement benefits liability adjustments included in accumulated other comprehensive income (before tax effect) asof March 31, 2024 and 2023 are as follows:
2024

2023

2024

Millions of yen

Unrecognized prior service cost
Unrecognized actuarial gain and loss
Total

¥
¥

14
76,40576,419¥¥Thousands of U.S. dollars

16
18,424
18,440$93
504,626
504,719$

The fair values of plan assets, by major category, as a percentage of total plan assets as of March 31, 2024 and 2023 are as follows:
2024
2023
12%
Bonds
66
Stocks6
General accounts
16
Other
100%
Total
(*) Approximately 59% and 49% of total plan assets were held in the retirement benefit trust as of March 31, 2024 and 2023,
respectively.

14%
55
6
25
100%

The expected return on plan assets has been estimated based on the anticipated allocation to each asset class and the expected long-term
returns on assets held in each category.
The assumptions used in accounting for the above plans were as follows:
Discount rates
Expected rates of return on plan assets
Rates of salary increase2024
0.0 ~ 4.98%
0.91 ~ 7.20%
0.4 ~ 4.2%2023
0.0 ~ 5.20%
0.90 ~ 6.30%
0.4 ~ 4.2%

The required contribution to defined contribution plans by the Company and its consolidated subsidiaries for the years ended March 31,
2024 and 2023 are ¥684 million ($4,517 thousand) and ¥649 million, respectively.

10. Income Taxes
The effective tax rates reflected in the consolidated statement of income for the years ended March 31, 2024 and 2023 differ from the effective
statutory tax rates for the following reasons:2024
Statutory tax rate
Increase (decrease) in income taxes resulting from:Different tax rates applied
Expenses not deductible for income tax purposes
Revenues deductible for income tax purposes
Change in valuation allowance
Undistributed earnings of affiliates
Equity income
Other
Effective tax rate2023
30.62%

30.62%

1.05
0.22(0.17)
0.15
2.79(0.03)
1.11
35.74%(1.42)
0.21(0.23)
1.66
0.40(0.03)(3.27)
27.93%The significant components of deferred tax assets and liabilities as of March 31, 2024 and 2023 were as follows:
2024

2023

2024

Millions of yen

Deferred tax assets:
Unrealized loss on property and equipment
Land revaluation reserve
Unrealized loss on property and equipment by consolidation
Loss on valuation of equity investments
Accrued bonuses
Loss on valuation of investment securities
Net operating loss carry forwards
Liability for retirement benefits
Valuation loss on inventories
Other
Total gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Land revaluation reserve
Unrealized gain on property and equipment by consolidation
Unrealized gain on securities
Reserves under Special Taxation Measures Law
Unrealized gain on property and equipment
Asset for retirement benefits
Other
Total deferred tax liabilities
Net deferred tax liabilities

¥

¥

385
88,289203,350(84,552)
118,797

64,23423,903
9,692
3,438
3,916
296
2,751
1,343
933
96,741
207,252(84,057)
123,195(266,333)(119,840)(96,843)(69,902)(53,231)(19,701)(84,885)(710,738)(591,941)(266,333)(116,487)(59,025)(68,532)(53,391)(86,426)(650,196)(527,001) $62,85923,903
10,123
6,540
4,681
3,770
2,796

¥

Thousands of U.S. dollars¥$

415,158
157,875
66,864
43,19530,91924,90018,472
2,544
583,112
1,343,042(558,436)
784,606(1,759,023)(791,497)(639,610)(461,676)(351,571)(130,121)(560,632)(4,694,132)(3,909,526)

11. Shareholders’ Equity
The Companies Act of Japan provides that an amount equal to 10% of the amount to be disbursed as distributions of capital surplus (other than the capital reserve)
and retained earnings (other than the retained earnings reserve) be transferred to the capital reserve and the retained earnings reserve, respectively, until the sum of
the capital reserve and the retained earnings reserve equals 25% of the capital stock account. The capital reserve amounted to ¥ 171,526 million ($1,132,858
thousand), and the retained earnings reserve amounted to ¥21,663 million ($143,080 thousand) at March 31, 2024. Such distributions can be made at any time byresolution of the shareholders or by the Board of Directors if certain conditions are met, but neither the capital reserve nor the retained earnings reserve is available
for distributions.

12. Amounts per Share
Yen

Year ended March 31,
Net income:
Basic
DilutedCash dividends applicable to the year

U.S. dollars

2024
¥

2023
131.96131.96
40.00

¥

2024
125.54125.53
38.00

$

Yen

As of March 31,
Net assets

U.S. dollars

2024
¥

2023
1,896.25

0.87
0.87
0.26

¥

2024
1,664.47$

12.52

Basic net income per share was computed based on the net income available for distribution to shareholders of common stock and the weighted average number ofshares of common stock outstanding during the year, and diluted net income per share was computed based on the net income available for distribution to theshareholders and the weighted average number of shares of common stock outstanding during each year after giving effect to the dilutive potential of shares ofcommon stock to be issued upon the exercise of warrants and stock subscription rights.

Amounts per share of net assets are computed based on net assets available for distribution to the shareholders and the number of shares of common stock
outstanding at the year end.
Cash dividends per share represent the cash dividends proposed by the Board of Directors as applicable to the respective years together with the interim cash
dividends paid.

13. Leases
Future minimum lease payments subsequent to March 31, 2024 and 2023 on noncancelable operating leases are summarized as follows:
Millions of yen

Year ending March 31,
Due within One YearDue after One Year
Total

2024
¥

15,125
303,487
318,613¥

Thousands of U.S. dollars

2023
¥

2024
14,618298,062
312,680¥$

99,8992,004,409
2,104,308$

Note : Since IFRS 16 and ASC 842 "Leases" are applied, lease transactions for which assets and liabilities are posted in the consolidated balance sheet are notincluded.
The Group leases office buildings and commercial properties, and earns income on these leases. Future minimum lease income subsequent to March 31, 2024 and2023 from noncancelable operating leases is summarized as follows:
Millions of yen

Year ending March 31,
Due within One YearDue after One Year
Total

2024
¥
¥

Thousands of U.S. dollars

2023
364,975
1,297,179
1,662,154

¥
¥

2024
364,336
1,238,808
1,603,144$$

2,410,512
8,567,327
10,977,840

14. Contingent Liabilities
The Group had the following contingent liabilities as of March 31, 2024 and 2023
(1)

Guarantee of loans
Millions of yen

2024
Guarantees of affiliates’ loans from banks
Guarantees of house purchasers’ loans from banks
Total
(2)

¥

1,500
60,761
62,261¥Thousands of U.S. dollars

2023
¥

2024
1,500
46,93048,430¥$9,906
401,304
411,210$

Guarantee for business undertakings
Millions of yen

2024
Business undertaking guarantees¥

Thousands of U.S. dollars

2023
63,227¥2024
58,822$

417,590

The Company, MEC Group International Inc. and Mitsubishi Estate Asia Pte. Ltd. provide business undertaking guarantees for property
development projects in proportion to their share.
Mitsubishi Estate Asia Pte. Ltd. and MEA Commercial Holdings Pte. Ltd. provide business undertaking guarantees for property
development projects. The amount exceeding the proportion of their share is collateralized or guaranteed by the joint venture.

15. Revenue from Contracts with Customers
Revenue from operations includes revenues from contracts with customers and revenue from other sources. The amount of revenue
from contracts with customers is described in “(1) Disaggregation of revenue from contracts with customers” in Note 23 “Revenue
Recognition”.

16. Other Income (Expenses)
The components of “Other, net” in “Other income (expenses)” for the years ended March 31, 2024 and 2023 were as follows:
2024

2023

2024

Millions of yen

Gain on sale of fixed assets
Gain on sale of investment securities
Amortization of negative goodwill
Loss on disposal of fixed assets
Loss related to retirement of fixed assets
Loss on valuation of shares of subsidiaries and associates
Impairment loss(*1)
Loss on valuation of equity investments
Other, net¥

10,38130,2804,850(5,817)¥(12,138)(6,639)20,916 ¥¥Thousands of U.S. dollars

8,921
3,303
(5,749)(17,741)(2,599)(3,535)(7,264)(3,020)(27,687)$$

68,564
199,993
32,037(38,422)(80,172)(43,852)
138,147(*1) Impairment loss
The Company recorded consolidated impairment losses for the following asset groups for the fiscal year ended March 31, 2024:
Disclosure for the year ended March 31, 2024 is omitted due to immateriality.
The Company recorded consolidated impairment losses for the following asset groups for the fiscal year ended March 31, 2023:
Major Application
Leased assets, etc.
(total 48 groups)

Category
Land, Buildings, etc.

Location
Jakarta, Republic of Indonesia, etc.

Asset grouping for the Group was made based on a minimum unit that generates cash flows, which is substantially independent fromcash flows of other assets or asset groups. Company condominiums are regarded as shared assets. As a result, for the fiscal year ended
March 31, 2023, the book values of 48 asset groups, consisting of those for which the market prices fell considerably compared withthe book values due to the decline of land prices and those for which profitability decreased considerably due to fallen rent levels or
deteriorated market conditions, etc., were reduced to the respective recoverable amounts and such reductions were recorded as
impairment losses in the amount of ¥3,535 million.
The breakdown of such impairment losses was ¥451 million in land and ¥3,083 million in buildings and structures.
The recoverable amounts of asset groups are measured using net sale value or value in use, and the net sale value is principally
expressed as an appraised value by a real estate appraiser. Future cash flows mainly discounted at a rate of 5% are used to compute thevalue in use.

17. Financial Instruments
Overview(1) Policy for financial instruments
In consideration of plans for capital investment, the Group raises funds mainly through bank borrowings and bond issues. In terms of fundmanagement, the Group makes every effort to avoid market risks by emphasizing liquidity and shortening the fund management period. The
Group uses derivatives for the purpose of hedging exposure to interest rates, reducing interest expenses, and hedging the risk of fluctuations inforeign exchange rates and does not enter into derivatives for speculative purposes.
(2) Types of financial instruments and related risk
Trade receivables – notes and accounts receivable – are exposed to credit risk in relation to customers. Trade receivables denominated inforeign currencies, which arise from overseas operation, are exposed to foreign currency exchange risk.
Marketable securities and investment securities are exposed to market risk. Those securities are composed of mainly held-to-maturity debt
securities and the shares of common stock of other companies with which the Group has business relationships.
Equity investments are composed of mainly preferred equity investments in special purpose companies under the Law concerning Liquidationof Assets, investments in real estate investment trusts and investments in silent partnerships for special purpose companies. They are exposedto credit risks of issuers, risks of fluctuations in interest rates and market prices, respectively.
Lease and guarantee deposits for leased assets are exposed to credit risks of customers.
Substantially all trade payables – accounts and notes payable – have payment due dates within one year. Some of them denominated in foreign
currencies are exposed to foreign currency exchange risk.
Borrowings and bonds are taken out principally for the purpose of making capital investments and the repayment dates of the long-term debt
extend up to 57 years from the balance sheet date. Certain long-term debt with variable interest rates is exposed to interest rate fluctuation
risk. However, to reduce such risk for long-term debt bearing interest at variable rates, the Group utilizes derivative transactions (interest rate
swaps) as hedging instruments.
Derivative transactions include interest rate swaps, currency swaps and forward foreign exchange contracts. The Group also enters into
interest rate swap transactions to fix interest expense for long-term debt bearing interest at variable rates and to reduce interest rate fluctuation
risk. Some of the consolidated subsidiaries enter into interest swap and currency swap transactions in accordance with the same policies andpurposes adopted by the Company.
(3) Risk management for financial instruments(a) Monitoring of credit risk (the risk that customers or counterparties may default)
In accordance with the internal policies for managing credit risk of the Group arising from receivables and lease and guarantee deposits,
each related division in each business segment monitors credit worthiness of their main customers periodically, and monitors due dates
and outstanding balances by individual customer. In addition, the Group is making efforts to identify and mitigate risks of bad debts from
customers who are having financial difficulties.
(b) Monitoring of market risks (the risks arising from fluctuations in foreign exchange rates, interest rates and others)
In order to mitigate the interest rate risk for loans payable and bonds bearing interest at variable rates, the Group may also enters into
interest rate swap and currency swap transactions.
The Group also uses foreign currency borrowings to hedge the risk of fluctuations in foreign exchange rates on its net investments inforeign subsidiaries.
For marketable securities and investment securities, the Group periodically reviews the fair values of such financial instruments and thefinancial position of the issuers (business partners). In addition, the Group continuously evaluates whether securities other than thoseclassified as held-to-maturity should be maintained taking into account their fair values and relationships with the issuers (business
partners).
(c) Monitoring of liquidity risk (the risk that the Group may not be able to meet its obligations on scheduled due dates)
Based on the report from each division, the Group prepares and updates its cash flow plans on a timely basis and stabilizes liquidity to
manage liquidity risk.
(4) Supplementary explanation of the estimated fair value of financial instruments
Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could result in different fairvalue.

17. Financial Instruments (continued)
Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance sheet as of March 31, 2024 and unrealized gains (losses) are shown in thefollowing table.
2024
Millions of yen

1) Securities and Investment securities (*2)(i) Held-to-maturity debt securities(ii) Other securities(*4)2) Equity investments (*2)(*4)
Total assets
1) Current portion of long-term borrowings
2) Current portion of long-term bonds
3) Long-term bonds4) Long-term borrowings
5) Lease deposits received
Total liabilities
Derivative transactions (*3)

Carrying
Value

Estimated
Fair Value

¥

¥

140
376,640
25,373¥ 402,153¥
93,261
81,111
799,472
1,931,400
450,325¥ 3,355,572¥
1,262

Thousands of U.S. dollars

Difference

141 ¥
376,640
25,373¥ 402,155 ¥¥
93,306 ¥81,222
765,321
1,906,648
425,744¥ 3,272,243 ¥
¥
1,262

1

1
44
111
(34,150)(24,751)(24,581)(83,328)

Carrying
Value

Estimated
Fair Value

$

$

925
2,487,553
167,578$ 2,656,056$ 615,955
535,7075,280,186
12,756,094
2,974,214$22,162,157$
8,340

Difference

936 $
10
2,487,553
167,578$ 2,656,067 $10$ 616,248 $
293
536,442735
5,054,632(225,553)
12,592,618(163,476)
2,811,865(162,348)$21,611,807 $ (550,349)$
8,340(*1) Cash and items whose market value approximates their carrying amount due to their short maturities are omitted.
(*2) Equity securities without market prices are not included in “1) Securities and Investment securities” and “2) Equity investments”.
The carrying value of such financial instruments in the consolidated balance sheet are as follows.
2024(i) Unlisted stocks(ii) Investments in capitalMillions of yen

Thousands of
U.S. dollars¥$

48,448
1,511

319,9829,983(*3) Net receivables and payables arising from derivative transactions are shown as net amounts, and items that are net liabilities in total are
shown in “( )”.
(*4) Investments in partnerships, etc., which are recorded on the consolidated balance sheet at the net amount of the Company’s equity interest,
are not included in “1) Securities and Investment securities (ii) Other securities” and “2) Equity investments”.
The amount of such financial instruments recorded on the consolidated balance sheet is ¥18,059 million ($119,277 thousand).

17. Financial Instruments (continued)
Estimated Fair Value of Financial Instruments (continued)
2023
Millions of yen

Carrying
Value

Estimated
Fair Value¥¥

Difference(*2)1) Securities and Investment securities(i) Held-to-maturity debt securities(ii) Other securities(*2)(*4)
2) Equity investments
Total assets
1) Current portion of long-term borrowings
2) Current portion of long-term bonds
3) Long-term bonds4) Long-term borrowings
5) Lease deposits received
Total liabilities(*3)
Derivative transactions

160
263,242
24,542¥ 287,945¥ 210,087
26,635820,584
1,618,019
448,442¥ 3,123,768
¥
1,377

163 ¥
263,242
24,542¥ 287,948 ¥¥ 209,820 ¥
26,567803,972
1,610,426
426,388¥ 3,077,173 ¥
¥
1,377

2

2
(267)
(68)
(16,612)(7,593)(22,054)(46,595)(*1) Cash and items whose market value approximates their carrying amount due to their short maturities are omitted.
(*2) Equity securities without market prices are not included in “1) Securities and Investment securities” and “2) Equity investments”.
The carrying value of such financial instruments in the consolidated balance sheet are as follows.
2023
Millions of yen(i) Unlisted stocks(ii) Investments in capital¥

46,312
100(*3) Net receivables and payables arising from derivative transactions are shown as net amounts, and items that are net liabilities in total are
shown in “( )”.
(*4) Investments in partnerships, etc., which are recorded on the consolidated balance sheet at the net amount of the Company’s equity interest,
are not included in “2) Equity investments”.
The amount of such financial instruments recorded on the consolidated balance sheet is ¥4,904 million.

17. Financial Instruments (continued)
Estimated Fair Value of Financial Instruments (continued)
Note A: Redemption schedule for receivables and marketable securities with maturities
Millions of yen

As of March 31, 2024
Cash on hand and in banks
Trade notes
Accounts receivable
Marketable securities and investment securities:
Held-to-maturity debt securities
National bonds
Corporate bonds
Other
Other marketable securities with maturities:
National and local government bonds
Other
Total

Due within
One Year¥ 273,951
171
78,437¥

Thousands of U.S. dollars

Due after Due after FiveOne YearYearsthrough Five through Ten Due after Ten
Years
Years
Years

45

¥

70

¥

25

297

$

462

$

165

1,558
354,164

¥

1,135
1,205

¥

58
83

10,292$ 2,339,108

$

7,500
7,963

$

385
550

Millions of yen

As of March 31, 2023
Cash on hand and in banks
Trade notes
Accounts receivable
Marketable securities and investment securities:
Held-to-maturity debt securities
National bonds
Corporate bonds
Other
Other marketable securities with maturities:
National and local government bonds
Other
Total

Due within
One Year¥ 225,011
165
59,116¥

Due within
One Year$ 1,809,337
1,133
518,047

Due after
Due after
One Year
Five Years
through Five through Ten Due after Ten
Years
Years
Years

Due after Due after FiveOne YearYearsthrough Five through Ten Due after Ten
Years
Years
Years

20

¥

115

3,600
287,914

¥

12
127

¥
¥

214
214

¥

25

¥

25

17. Financial Instruments (continued)
Estimated Fair Value of Financial Instruments (continued)
Note B: The redemption schedule for bonds and long-term borrowings
Millions of yen

As of March 31, 2024
Corporate bonds
Long-term borrowings
Total

Due after
Due after
Due after
Due after
One Year
Two Years Three Years Four Years
Due within through Two
throughthrough Four through FiveOne YearYears
Three Years
Years
Years
¥
81,111 ¥10,000 ¥66,709 ¥65,000 ¥61,25593,261
237,717200,895
219,140
223,264¥ 174,373 ¥ 247,717 ¥
267,604 ¥284,140 ¥
284,519

As of March 31, 2023
Corporate bonds
Long-term borrowings
Total

Due after
Due after
Due after
Due after
One Year
Two Years Three Years Four Years
Due within through Two
throughthrough Four through FiveOne YearYears
Three Years
Years
Years
¥
26,635 ¥81,111 ¥10,000 ¥66,709 ¥65,000210,087
87,623136,062
159,778
169,881¥ 236,722 ¥ 168,735 ¥ 146,062 ¥ 226,487 ¥ 234,881

Thousands of U.S. dollars

Due after
Five Years¥ 596,508
1,050,383¥ 1,646,891

Millions of yen

Due after
Five Years¥ 597,763
1,064,672¥ 1,662,436

Due after
Due after
Due after
Due after
One Year
Two Years Three Years Four Years
Due within through Two
throughthrough Four through FiveOne YearYears
Three Years
Years
Years
$
535,707 $66,045 $ 440,586 $ 429,297 $
404,567
615,955
1,570,022
1,326,828
1,447,332
1,474,568$ 1,151,662 $ 1,636,067 $ 1,767,415 $ 1,876,630 $ 1,879,135

Due after
Five Years$ 3,939,688
6,937,342$ 10,877,030

17. Financial Instruments (continued)
Matters concerning the breakdown of the market value of financial instruments by level, etc.
The fair value of financial instruments is classified into the following three levels based on the observability and materiality of the inputs used to calculate the market value.
Level 1 market value : Fair value calculated based on quoted prices in active markets for identical assets or liabilities.
Level 2 market value : Fair value calculated using observable inputs that are not included in Level 1 inputs.
Level 3 market value : Fair value calculated using unobservable inputs.
When multiple inputs that have a significant impact on the calculation of market value are used, the market value is classified to the level with the lowest priority in the calculation ofmarket value among the levels to which each of those inputs belongs.
(1) Financial instruments measured at fair value
2024
Millions of yen

Classification
Securities and Investment securities:
Other securities
StocksCorporate bonds
Other
Equity investments
Total assets
Derivative transactions: (*)
Interest-related
Total liabilities

Level 1¥¥Thousands of U.S. dollars

Market value
Level 2
Level 3

Total¥

366,663
4,752
17,082
388,497
¥
¥

¥

5,224

¥

8,290
13,515

1,262
1,262

¥

366,663
5,224
4,752
25,373402,013

¥
¥

1,262
1,262

Market value
Level 2
Level 3

Level 1

$ 2,421,658
31,386112,822$ 2,565,866$$$

34,508$54,75689,264

8,340
8,340

2023
Millions of yen

Classification
Securities and Investment securities:
Other securities
StocksCorporate bonds
Other
Equity investments
Total assets
Derivative transactions: (*)
Interest-related
Total liabilities(*)

Market value
Level 2
Level 3

Level 1¥¥

253,779

Total

¥

3,578
17,065
274,422
¥
¥

1,377
1,377

¥

5,885

¥

7,476
13,362¥

253,779
5,885
3,578
24,542287,784

¥
¥

1,377
1,377

Net receivables and payables arising from derivative transactions are shown as net amounts, and items that are net liabilities in total are shown in “( )”.

Total$ 2,421,658
34,50831,386
167,578$ 2,655,131
$
$

8,340
8,340

(2) Financial instruments other than those measured at fair value
2024
Millions of yen

Classification
Securities and Investment securities:
Held-to-maturity debt securities
National bonds
Total assets
Current portion of long-term borrowings
Current portion of long-term bonds
Long-term bonds
Long-term borrowings
Lease and guarantee deposit payables
Total liabilities

Level 1¥¥Thousands of U.S. dollars

Market value
Level 2
Level 3141
141¥

93,306
81,222
765,321
1,906,648
425,744¥ 3,272,243

Total

¥
¥
¥

141
141
93,306
81,222
765,321
1,906,648
425,744¥ 3,272,243

Market value
Level 2
Level 3

Level 1

$
$

936
936
$

616,248
536,4425,054,632
12,592,618
2,811,865$ 21,611,807

Total

$
$
$

936
936
616,248
536,4425,054,632
12,592,618
2,811,865$ 21,611,807

2023
Millions of yen

Classification
Securities and Investment securities:
Held-to-maturity debt securities
National bonds
Total assets
Current portion of long-term borrowings
Current portion of long-term bonds
Long-term bonds
Long-term borrowings
Lease and guarantee deposit payables
Total liabilities

Market value
Level 2
Level 3

Level 1

¥
¥

163
163
¥

209,820
26,567803,972
1,610,426
426,388¥ 3,077,173

Total

¥
¥
¥

163
163
209,820
26,567803,972
1,610,426
426,388¥ 3,077,173

Note : Explanation of valuation techniques used in the calculation of market value and inputs related to the calculation of market value
Securities and Investment securities
Listed stocks and national bonds with quoted market prices held by the Group are valued using quoted market prices and are classified as Level 1 market value. Nonmarketable corporate bonds are valued using the discounted present value method based on the total principal and interest based on the remaining period and interest ratetaking into account credit risk, and are classified as Level 3 market value because the effect of unobservable inputs on the market value is significant.

Equity investments
Equity investments with market value held by the Group are valued using quoted market prices and are classified as Level 1 market value. Non-marketable equity
investments are valued using the adjusted net worth method, whereby real estate owned by the investee is marked to market, and are classified as Level 3 market value dueto the significant impact of unobservable inputs on the market value.
Derivative transactions
The market values of interest rate swaps are calculated based on prices quoted by counterparty financial institutions, etc., and are classified as Level 2 market values.
Current portion of bonds payable and Bonds payable
The market value of bonds issued by the Group is based on the market price for bonds with market quotations and is classified as Level 2 market value. The market value ofbonds issued by the Group with no quoted market price is calculated using the discounted present value method based on the total amount of principal and interest (forbonds that qualify for special treatment as interest rate swaps, the total amount of principal and interest based on the interest rate swap rate) and an interest rate that takes
into account the remaining period of the bonds and credit risk, and is classified as Level 2 market value. (Certain bonds are subject to currency swaps, etc., and their market
values are calculated as if they were yen-denominated bonds.)
Current portion of long-term borrowings and Long-term borrowings
The market value of long-term borrowings is calculated using the discounted present value method based on the sum of the principal and interest (or the principal andinterest at the rate of the interest rate swap for loans that qualify for the special treatment of interest rate swaps), with interest rates taking into account the remaining term of
the debt and credit risk, and is classified as Level 2 market value. (Certain borrowings are subject to currency swaps, etc., and their market value are calculated as if it were ayen-denominated debt.)
Lease and guarantee deposit payables
The market value of lease and guarantee deposit payables is determined using the discounted present value method based on the amount of the obligation to return theguarantee money and deposits, the period until the due date, and an interest rate that takes into account credit risk, and is classified as Level 2 market value.

18. Marketable Securities and Investment Securities
Marketable and investment securities classified as other securities at March 31, 2024 and 2023 are summarized as follows:
2024
Millions of yen

Cost
Securities whose fair value exceeds their cost:
Equity securities
Government bonds
Other
Subtotal¥

52,194

Thousands of U.S. dollars

Fair Value

Unrealized
Gain (Loss)¥¥

364,809

Cost

312,615$

344,722

Fair Value

Unrealized
Gain (Loss)$$

2,409,416

2,064,693

17,014
69,20925,373
390,182

8,358
320,973

112,375
457,098

167,578
2,576,994

55,202
2,119,896

1,941

1,853

(88)

12,825

12,242

(583)

6,365
4,752
13,05982,268

5,224
4,752
11,830402,013(1,140)42,03831,38686,249543,348

34,50831,386
78,136
2,655,131(7,529)Securities whose cost exceeds their fair value:
Equity securities
Government bonds
Corporate bonds
Other
Subtotal

Total

¥

¥

¥

(1,228)319,745$$$(8,113)2,111,783

2023
Millions of yen

Cost
Securities whose fair value exceeds their cost:
Equity securities
Government bonds
Other
Subtotal
Securities whose cost exceeds their fair value:
Equity securities
Government bonds
Corporate bonds
Other
Subtotal
Total

¥

¥

60,070Fair Value

Unrealized
Gain (Loss)¥¥

249,903

189,833

5,436
65,506

7,327
257,231

1,891
191,725

4,828

3,875

(952)

6,536
23,35734,721
100,227

5,885
20,79230,553
287,784(650)(2,564)(4,167)
187,557¥¥

Proceeds from sales of securities classified as other securities totaled ¥40,910 million ($270,195 thousand) and ¥5,911 million for the years ended March
31, 2024 and 2023, respectively. Gross realized gains were ¥30,280 million ($199,993 thousand) and ¥3,303 million for the years ended March 31, 2024
and 2023, respectively.
Disclosure for impaired marketable and investment securities as of March 31, 2024 is omitted due to immateriality. The Group recognized impairment
losses of ¥2,599 million on investments in subsidiaries and associates for the year ended March 31, 2023.

Marketable debt securities classified as held-to-maturity securities at March 31, 2024 and 2023 are summarized as follows:
2024
Millions of yen

Debt securities whose fair value exceeds their cost:
Government bonds
Corporate bonds
Subtotal
Debt securities whose cost exceeds their fair value:
Government bonds
Corporate bonds
Other
Subtotal
Total

Thousands of U.S. dollars

Amortized
Cost

Fair Value

Unrealized
Gain (Loss)

¥

¥

¥

¥

105

106

1

Unrealized
Gain (Loss)

$

$

$

693

706

12

106

1

693

706

12

35

34

(0)

231

229

(1)

35
140

34
141

¥

¥

(0)
1

2023
Amortized
Cost

Fair Value

Unrealized
Gain (Loss)

¥

¥

¥

160
160

¥

Fair Value

105

Millions of yen

Debt securities whose fair value exceeds their cost:
Government bonds
Corporate bonds
Subtotal
Debt securities whose cost exceeds their fair value:
Government bonds
Corporate bonds
Other
Subtotal
Total

Amortized
Cost

160

163
163

¥

163

2
2

¥

2

$

231
925

$

229
936

$

(1)
10

19. Supplemental Cash Flow Information
The following table represents a reconciliation of cash and cash equivalents as of March 31, 2024 and 2023:
2024

2023

2024

Millions of yen

Cash on hand and in banks
Time deposits with maturities of more than three months
Marketable securities with maturities of three months or less
Cash and cash equivalents¥

273,951(204)
2,218
275,965¥

Thousands of U.S. dollars¥

225,011(201)
962
225,772¥$

1,809,337(1,351)
14,6501,822,635$

The major components of assets acquired and liabilities assumed of a consolidated subsidiary, which was acquired through a stock purchase,
as well as a reconciliation of the difference between the acquisition cost and the payment for the acquisition are as follows:
2024

2023

2024

Millions of yen

Current assets
Fixed assets
Goodwill
Current liabilities
Long-term liabilities
Acquisition cost
Cash and cash equivalents of subsidiary
Payment for acquisition¥¥

Thousands of U.S. dollars

4,810
15,87027,629(9,590)(3,922)
34,797(1,375)33,421

20. Derivatives and Hedging Activities(1)

Currency related transactions
2024
Millions of yen

Class of transactions
Currency swap contracts by allocation method
Payment in JPY and receipt in USD
Payment in JPY and receipt in EUR
Payment in JPY and receipt in AUD
Total

Subject to hedge
accounting

Notional
AmountDue after
One Year¥¥¥¥Thousands of U.S. dollars

Notional
AmountFair ValueDue after
One Year

Fair Value

Corporate bonds andLong-term borrowings
15,924
15,924

(*)

9,472
9,472

(*)

$
$

105,173
105,173$$(*)

62,56562,565(*)

2023
Millions of yen

Class of transactions
Currency swap contracts by allocation method
Payment in JPY and receipt in USD
Payment in JPY and receipt in EUR
Payment in JPY and receipt in AUD
Total

Subject to hedge
accounting

Notional
AmountDue after
One Year¥¥¥¥

Fair Value

Corporate bonds andLong-term borrowings
15,924
15,924(*)

15,924
15,924(*)(*)

The estimated fair value of currency swap contracts is included in the estimated fair value of corporate bonds and long-term borrowings since amounts in suchderivative contracts accounted for by the allocation method are handled together with corporate bonds and long-term borrowings that are subject to hedge accounting.

(2)

Interest related transactions
2024
Millions of yen

Class of transactions
Interest rate swap contracts
Fixed rate payment and floating rate receipt
Interest rate swap contracts by short-cut method
Fixed rate payment and floating rate receipt
Total

Subject to hedge
accounting
Corporate bonds andLong-term borrowings

Thousands of U.S. dollars

Notional
AmountDue after
One Year

Fair Value¥

46,977

¥

3,784

¥

1,262

¥

74,999
121,977¥

73,56977,354¥

1,262

Long-term borrowings

Notional
AmountDue after
One Year

Fair Value$

310,266$

24,997

$

8,340

$

495,343805,609$

485,898
510,896

$

8,340

(*)

(*)

2023
Millions of yen

Class of transactions
Interest rate swap contracts
Fixed rate payment and floating rate receipt
Interest rate swap contracts by short-cut method
Fixed rate payment and floating rate receipt
Total

Subject to hedge
accounting
Corporate bonds andLong-term borrowings

Notional
AmountDue after
One Year

Fair Value¥

43,309¥43,157

¥

1,377

¥

96,827140,137¥

74,979118,137¥1,377Long-term borrowings

(*)

(*)

The estimated fair value of interest rate swap contracts is included in the estimated fair value of long-term borrowings since amounts in such derivative contracts
accounted for by the short-cut method are handled together with long-term borrowings that are subject to hedge accounting.

(3)

Interest and currency related transactions
2024
Millions of yen

Class of transactions
Interest rate and currency swap contracts by
short-cut method and allocation method
Payment in JPY and receipt in USD
Fixed rate payment and floating rate receipt
Total

Subject to hedge
accounting

Notional
AmountDue after
One Year¥¥¥¥Thousands of U.S. dollars

Notional
AmountFair ValueDue after
One Year

Fair Value

Long-term borrowings
24,40024,400(*)

24,40024,400(*)$$

161,154
161,154$$

161,154
161,154

(*)
(*)

2023
Millions of yen

Class of transactions
Interest rate and currency swap contracts by
short-cut method and allocation method
Payment in JPY and receipt in USD
Fixed rate payment and floating rate receipt
Total
(*)

Subject to hedge
accounting

Notional
AmountDue after
One Year¥¥¥¥

Fair Value

Long-term borrowings
43,40043,40024,40024,400(*)(*)

The estimated fair value of interest rate and currency swap contracts is included in the estimated fair value of long-term borrowings since amounts in such derivative
contracts accounted for by the short-cut method and allocation method are handled together with long-term borrowings that are subject to hedge accounting.

21. Segment Information
The reportable segments of the Group are components for which discrete financial information is available and whose operating results are regularly reviewed by the board of directors and other committees to make decisions about resource allocation andto assess performance. Business performances are aggregated according to business areas that consist of multiple business groups and defined as organizational units having common business objectives and management responsibilities within the Group,and such aggregated business areas are disclosed as reportable segments.
The Group is primarily engaged in the real estate business. Their business segments are classified in terms of the nature of each operation or service and consist of following segments: (1) Commercial Property Business; (2) Residential Business; (3)International Business; (4) Investment Management Business; (5) Architectural Design & Engineering Business and Real Estate Services Business; (6) Other businesses.

The accounting policies of segments are almost the same as those described in Note 1 "Significant Accounting Policies". Segment operating income is based on revenue from operations, cost of revenue from operations and selling, general andadministrative expenses. Transactions and transfers between segments are made at amounts based on prevailing market prices.
The reportable segment information of the Group for the years ended March 31, 2024 and 2023 are summarized as follows:
Millions of yen

2024
Reportable Segments

Commercial
Property
Business
Revenue, operating income andassets by reportable segment
Revenue from:
External customers
Intersegment or transfers
Total revenue
Segment income (loss)
Segment assets
Other items
Depreciation and amortization
Capital expenditures¥¥

843,360
6,410
849,771
211,795
4,470,967¥

74,621
221,101

Residential
Business¥¥

396,266
2,560
398,827
38,888
908,475¥

5,842
73,687

Investment
Management
Business

International
Business¥¥

174,288(518)
173,770
51,4481,612,125¥

11,665
174,855¥¥

28,701
2,261
30,962(1,619)146,782

¥

1,872
341

Architectural Design& Engineering
Business and Real
Estate Services
Business¥

Subtotal¥

61,292
11,97373,265
9,021
69,031¥¥

1,503,910
22,686
1,526,597
309,533
7,207,382

¥

900
527

¥

94,902
470,512

Other¥

Eliminations
or Corporate

Total

¥

776
10,232
11,009(1,577)
18,841

¥

160
417

¥

Consolidated¥

1,504,687¥

1,504,687
32,918 ¥1,537,606
307,956
7,226,224 ¥(32,918)(32,918)(29,328)
357,524¥

1,504,687
278,627
7,583,748¥

95,062
470,930

3,238
3,330

¥

98,301
474,260¥

Thousands of U.S. dollars

2024
Reportable Segments

Commercial
Property
Business
Revenue, operating income andassets by reportable segment
Revenue from:
External customers
Intersegment or transfers
Total revenue
Segment income (loss)
Segment assets
Other items
Depreciation and amortization
Capital expenditures$$

5,570,046
42,3385,612,385
1,398,820
29,528,880$

492,844
1,460,280

Residential
Business$$

2,617,176
16,913
2,634,090
256,8446,000,100$

38,588486,677

Investment
Management
Business

International
Business$$

1,151,104(3,425)
1,147,678
339,793
10,647,415$

77,042
1,154,846$$

189,562
14,933
204,495(10,697)
969,439$

12,365
2,253

Architectural Design& Engineering
Business and Real
Estate Services
Business$$

404,81479,076
483,890
59,581455,927

$

5,948
3,481

Subtotal$$

9,932,704
149,835
10,082,540
2,044,343
47,601,762$

626,788
3,107,540

Other

$

Eliminations
or Corporate

Total

$

5,130
67,57972,710(10,421)
124,438

$

1,058
2,757

$

Consolidated$

9,937,835$

9,937,835
217,415 $10,155,250
2,033,921
47,726,200 $(217,415)(217,415)(193,705)
2,361,299$

9,937,835
1,840,215
50,087,500$

627,847
3,110,297

21,391
21,997$649,238
3,132,294$

21. Segment Information (continued)
Millions of yen

2023
Reportable Segments

Commercial
Property
Business
Revenue, operating income andassets by reportable segment
Revenue from:
External customers
Intersegment or transfers
Total revenue
Segment income (loss)
Segment assets
Other items
Depreciation and amortization
Capital expenditures¥

Residential
Business¥

771,671
5,752
777,424
188,852
4,434,331¥

72,181
136,938¥

Investment
Management
Business

International
Business¥

344,598
1,821
346,41935,037
834,751¥

4,993
60,284¥¥

176,517(386)
176,130
89,4001,270,849¥

10,41097,581¥¥

32,703
3,174
35,878
8,054
112,590

¥

1,837
364

Architectural Design& Engineering
Business and Real
Estate Services
Business¥¥

51,161
9,612
60,774
4,176
61,225¥981
676

Subtotal

¥

Other

¥

1,376,653
19,974
1,396,628
325,520
6,713,748¥

90,404
295,846¥

Eliminations
or Corporate

Total

¥

1,174
10,627
11,801(2,121)
27,599

¥

147
883

¥

Consolidated¥

1,377,827¥

1,377,827
30,602 ¥1,408,429
323,399
6,741,348 ¥(30,602)(30,602)(26,696)
130,610¥

1,377,827
296,7026,871,959¥

90,551
296,730

2,907
1,709

¥

93,459298,439¥

Impairment losses of the Group on fixed assets by reportable segments for the years ended March 31, 2023 is summarized as follows:
Disclosure for the year ended March 31, 2024 is omitted due to immateriality.
Millions of yen

2023
Reportable Segments

Commercial
Property
Business
Impairment loss¥

Residential
Business
121

¥

505

International
Business¥
2,142

Architectural Design& Engineering
Business and Real
Investment
Estate Services
Management
Business
Business
¥
728 ¥
36

Subtotal
¥

Other
3,535

¥

Eliminations
or Corporate

Total
0

¥

3,535

¥

Consolidated
3,535

21. Segment Information (continued)
The following tables present the amortization and balance of goodwill as of and for the years ended March 31, 2024 and 2023 by reportable segment:
Millions of yen

2024
Reportable Segments

Commercial
Property
Business
Amortization of goodwill
Balance of goodwill
Amortization of negative goodwill
Balance of negative goodwill

Residential
Business
¥
¥

¥
¥

358
3,041

International
Business¥
3

Architectural Design& Engineering
Investment
Business and RealManagement
Estate Services
Business
Business¥
1,014 ¥
377¥
1,033 ¥
3,851

2,891
66,460Subtotal
¥
¥
¥
¥

Other

1,753
7,926
2,891
66,460Eliminations
or Corporate

Total
¥
¥
¥
¥

1,753
7,926
2,891
66,460¥¥¥¥Consolidated
1,753
7,926
2,891
66,460Thousands of U.S. dollars

2024
Reportable Segments

Commercial
Property
Business
Amortization of goodwill
Balance of goodwill
Amortization of negative goodwill
Balance of negative goodwill$$

Residential
Business$
2,368$
20,088International
Business$
20

Architectural Design& Engineering
Investment
Business and RealManagement
Estate Services
Business
Business$
6,700 $
2,492$
6,824 $
25,44019,099438,944$$$$

Subtotal
11,582
52,35419,099438,944

Other

Eliminations
or Corporate

Total
$
$
$
$

11,582
52,35419,099438,944$$$$

Consolidated
11,582
52,35419,099438,944
Millions of yen

2023
Reportable Segments

Commercial
Property
Business
Amortization of goodwill
Balance of goodwill
Amortization of negative goodwill
Balance of negative goodwill

Residential
Business¥

75¥

69,975

¥
¥

358
3,400

International
Business¥
217¥
7

Architectural Design& Engineering
Investment
Business and RealManagement
Estate Services
Business
Business¥
2,140 ¥
377¥
1,923 ¥
4,229

Subtotal

Other

Eliminations
or Corporate

Total

¥
¥

3,170
9,561

¥
¥

3,170
9,561

¥
¥

Consolidated
3,170
9,561

¥

69,975¥69,975¥69,975

Products and Service Information
Refer to reportable segment information.

Geographical Area Information
Geographical area information on net sales for the years ended March 31, 2024 and 2023 are as follows:
Millions of yen

Thousands of U.S.
dollars

2024
2023
2024
¥
1,313,695 ¥
1,178,570 $
8,676,413
Japan
140,729
140,534
929,462
United States
36,94347,851
243,995
Europe13,318
10,87087,963
Asia¥
1,504,687 ¥
1,377,827 $
9,937,835
Total(*) Net sales is classified into countries or regions based on the location of the Group companies.
Geographical area information on property, plant, and equipment for the years ended March 31, 2024 and 2023 are as follows:
Millions of yen

Thousands of U.S.
dollars

2024
2023
2024
¥
3,926,089 ¥
3,921,843 $
25,930,187
Japan
363,235
263,300
2,399,015
United States
279,718
215,741
1,847,421
Europe28,071
15,328
185,401
Asia¥
4,597,114 ¥
4,416,214 $
30,362,026
Total(*) Property, plant, and equipment are classified into countries or regions based on the location of the Group companies.

Major Customer Information
The Company does not have any major customers whose share of revenue from operations accounted for more than 10% of revenue from operations shown on the consolidated income statement. Accordingly, major customer information has been omitted.

22. Rental Properties
The Company and some of its consolidated subsidiaries own office buildings for lease, commercial facilities for lease and others in Tokyo and other areas including overseas countries (the United States and the United Kingdom, etc.) for the
purpose of obtaining revenue from leases.
Some office buildings for lease in Japan are regarded as real estate including space used as rental properties since they are used by the Company and some of its consolidated subsidiaries.
The carrying value on the consolidated balance sheet as of March 31, 2024 and the fair value of these rental properties and real estate including space used as rental properties are as follows:
2024
Millions of yen

Thousands of U.S. dollars

Carrying Value

Rental properties
Real estate including space used asrental properties

As ofApril 1, 2023¥
3,794,330¥

Net Change
166,615

As ofMarch 31, 2024¥
3,960,946

Fair Value
As ofMarch 31, 2024¥
8,376,933

As ofApril 1, 2023$
25,059,974(4,017)532,279

966,267

3,542,018

536,297

Carrying Value

1.

The carrying value represents the acquisition cost less accumulated depreciation and accumulated impairment loss.

2.

The fair value is based on the following:(1) The fair value of real estate in Japan is calculated by the Company based mainly on the Real Estate Appraisal Standards.

$

Net Change
1,100,427

As ofMarch 31, 2024$
26,160,401

Fair Value
As ofMarch 31, 2024$
55,326,157(26,535)

3,515,482

6,381,794(2) The fair value of real estate in overseas countries is appraised principally by local real estate appraisers.
The carrying value on the consolidated balance sheet as of March 31, 2023 and the fair value of these rental properties and real estate including space used as rental properties are as follows:
2023
Millions of yen

Carrying Value

Rental properties
Real estate including space used asrental properties

As ofApril 1, 2022¥
3,725,804¥

Net Change
68,525

As ofMarch 31, 2023¥
3,794,330

Fair Value
As ofMarch 31, 2023¥
8,016,139(5,028)536,297

948,351

541,325

1.

The carrying value represents the acquisition cost less accumulated depreciation and accumulated impairment loss.

2.

The fair value is based on the following:(1) The fair value of real estate in Japan is calculated by the Company based mainly on the Real Estate Appraisal Standards.
(2) The fair value of real estate in overseas countries is appraised principally by local real estate appraisers.

The income or loss from rental properties and real estate including space used as rental properties for the years ended March 31, 2024 and 2023 are as follows:
2024

2023

2024

Millions of yen

535,952

Lease cost¥
360,902

Lease income(loss), net¥
175,049

Other, net¥
11,34746,017

37,693

8,324

(517)

Lease income(*)

Rental properties
Real estate including space used asrental properties¥

Thousands of U.S. dollars

Lease income
512,945

Lease cost¥
343,578

44,64036,497(*)¥

Lease income
Lease income(*)(loss), net
Other, net¥
169,367 ¥(15,468) $ 3,539,745
8,143

(466)

303,927

Lease cost
$ 2,383,613

Lease income(loss), net$ 1,156,131

248,950

54,977(*) Lease income excludes that from real estate including space used as rental properties that was used by the Company and some of its consolidated subsidiaries for leasing service and operating management.

$

Other, net
74,945(3,416)

23 Revenue Recognition(1) Disaggregation of revenue from contracts with customers
The Company disaggregates its operating revenues based on its business segments and in addition disaggregates its commercial property business andresidential business by goods or services.
2024

2023

2024

Millions of yen

Commercial property business
Real estate leasing business(*1)
Real estate sales business
Other
Subtotal
Residential businessCondominium sales businessResidential property management services
Homebuilding
Other
SubtotalInternational business (*1)
Investment management businessArchitectural design & engineering andreal estate services business
Other business
Total
Inter-segment transactions (*2)
Amount recorded in consolidated financial statements
Revenue from contracts with customers
Revenue from other sources (*1)¥

558,213
135,419
156,138
849,771

Thousands of U.S. dollars¥

548,954
105,228
123,240
777,424$

3,686,765
894,390
1,031,229
5,612,385

155,92960,05337,328145,515
398,827
173,770
30,962112,937
57,71338,252
137,517
346,419
176,130
35,8781,029,852
396,629
246,541
961,067
2,634,090
1,147,678
204,495¥

73,265
11,0091,537,606

60,774
11,801
1,408,429$

483,890
72,710
10,155,250

¥
¥
¥
¥

(32,918) ¥1,504,687 ¥
781,450 ¥723,236 ¥(30,602) $1,377,827 $
642,222 $735,604 $(217,415)
9,937,835
5,161,157
4,776,678¥(*1) Operating revenues from real estate leasing in the commercial property business and from the international business are recognized mainly by applying“Accounting Standard for Lease Transactions” (ASBJ Statement No.13) and other related standards. When financial statements of overseas consolidated
subsidiaries are prepared in accordance with International Financial Reporting Standards (IFRS) or U.S. GAAP, such financial statements are used inaccordance with PITF No. 18.
(*2) The above revenue disaggregation includes inter-segment revenues and transfers. Disaggregation of inter-segment revenues and transfers is described in
Note “ 21. Segment Information.”(2) The basis for understanding revenues from contracts with customers is as described in Note “n. Revenue recognition” in Note 1 "Significant Accounting
Policies."(3) Information on the relationship between satisfaction of performance obligations under contracts with customers and cash flows arising from such contracts,
and the amount and timing of revenue expected to be recognized from contracts with customers existing at the end of the current fiscal year and thereafter(a) Receivables from contracts with customers, contract assets, and contract liabilities
The balances of receivables from contracts with customers, contract assets, and contract liabilities at the beginning and end of the fiscal year are as follows.
In the consolidated balance sheets, receivables from contracts with customers and contract assets are included in “Trade notes and accounts receivable, andcontract assets,” and contract liabilities are included in “Other” under “Current liabilities,” respectively.
2024

2023

2024

Millions of yen

Receivables from contracts with customers (Balance at the
beginning of the year)
Receivables from contracts with customers (Balance at theend of the year)
Contract assets (Balance at the beginning of the year)
Contract assets (Balance at the end of the year)
Contract liabilities (Balance at the beginning of the year)
Contract liabilities (Balance at the end of the year)¥

38,94050,101
10,705
10,56564,486
93,532¥Thousands of U.S. dollars

34,53038,940
7,081
10,70529,57964,486$257,187
330,899
70,702
69,777425,907617,741

Contract assets consist mainly of the rights to the consideration based on the progress of the construction work at the end of the reporting period forhomebuilding, excluding receivables, which are transferred to receivables when the work is completed and the consideration is invoiced to the customer.
Contract liabilities consist primarily of deposits received, etc., from customers under contracts for the sale of condominium units, and performanceobligations are satisfied upon delivery of condominium units to customers and contract liabilities are reclassified to revenue.
Of the contract liability balances at the beginning of the current fiscal year, ¥51,558 million ($340,525 thousand) was related to condominium sales, etc., ofwhich ¥17,912 million ($118,307 thousand) was recognized as revenue in the current fiscal year. Almost all of the contract liabilities other than thoserelated to sales of condominiums, etc., were recognized as revenues during the current fiscal year.
Of the contract liability balances at the beginning of the previous fiscal year, ¥17,618 million was related to condominium sales, of which ¥10,710 million
was recognized as revenue in the previous fiscal year. Almost all of the contract liabilities other than those related to sales of condominiums wererecognized as revenues during the previous fiscal year.
(b) Transaction price allocated to remaining performance obligations
The transaction price allocated to the remaining performance obligation was ¥236,222 million ($1,560,151 thousand) at the end of the current fiscal year,of which ¥96,073 million ($634,523 thousand) was allocated to the Commercial property business and ¥140,149 million ($925,628 thousand) to the
Residential business.
As of the end of the current fiscal year, the estimated timing of performance of outstanding performance obligations is generally within two years for theCommercial property business and generally within three years for the Residential business.
The transaction price allocated to the remaining performance obligation was ¥ 205,816 million at the end of the previous fiscal year, of which ¥91,990
million was allocated to the Commercial property business and ¥113,826 million to the Residential business.
As of the end of the previous fiscal year, the estimated timing of performance of outstanding performance obligations is generally within two years for theCommercial property business and generally within three years for the Residential business.
The disclosure applies the practical expedient method and does not include contracts with initial expected contract periods of one year or less and contracts
for which revenue from satisfaction of performance obligations is recognized in accordance with ASBJ Guidance No. 19.

24. Asset Retirement Obligations(1) Asset retirement obligations presented in the consolidated balance sheet
1. Outline of asset retirement obligations
Asset retirement obligations include obligations of restoration related to leasehold and rental contracts.
2. Calculation method for asset retirement obligations
Asset retirement obligations are calculated based on the remaining contract years as an expected use period with a discount rate between
0.0% and 5.8%.
3. Changes in asset retirement obligations during the years ended March 31, 2024 and 2023 are as follows:
2024

2023

2024

Millions of yen

Balance at the beginning of the year
Increase due to the acquisition of property
and equipment
Adjustments due to the elapse of time
Decrease due to the fulfillment of asset
retirement obligations
Increase due to changes in the scope of consolidation
Other
Balance at the end of the year

¥

¥

9,350

¥

Thousands of U.S. dollars

7,516

$

61,758

235
82

357
76

1,552
543

(34)
34
9,668

(24)
1,425
(0)
9,350

(224)
228
63,857¥$(2) Asset retirement obligations not recognized in the consolidated balance sheet
As stated below, certain obligations are excluded from recognition of asset retirement obligations.
1) Obligation to remove asbestos that is used for some properties and equipments in a particular way required by the Ordinance on
Preventing Asbestos Hazards
For such properties, the Company has an obligation to remove asbestos at demolition of buildings. However, no demolition has takenplace in the past other than those related to redevelopment or other projects involving many other business associates. It is therefore
difficult to reasonably estimate the timing to fulfill such obligation based on the physical useful life of the assets caused by aging and it is
impossible to estimate the timing without specific business plans. Although the Company has been voluntarily conducting asbestos
removal work when that is feasible due to such as termination of tenancy, it is impractical to make a reasonable estimation of progress ofsuch voluntary removal work based on the actual record of the tenancy termination and of the remaining amount of asbestos at demolition.
Moreover, it is difficult to distinguish costs of asbestos removal from total costs of demolition. Although the Company made the best
estimation taking into account all the evidence available as of March 31, 2024, these obligations are excluded from recognition of asset
retirement obligations since the probability of obligations in terms of scope and amount was not reasonably estimated.
2) Obligation of restoration based on some real estate rental agreements
For some commercial facilities, the Company has an obligation of restoration at the termination of leasehold rental agreements. However,
the timing to fulfill the obligation is uncertain since it is practically possible to continue to use those facilities by re-signing contracts andsome contracts set forth a special provision to reduce the possibility to fulfill the obligation. Furthermore, given its business strategies andthe current business environment, the Company intends to continue its operation and not to fulfill the obligation. Although the Company
made the best estimation taking into account all the evidence available as of March 31, 2024, these obligations are excluded fromrecognition of asset retirement obligations since the probability of the obligations in terms of scope and amount could not be reasonably
estimated.

25. Related Party Transactions
The Company has related party transactions with key management personnel of the Company and major individual shareholders.
The corresponding balances as of March 31, 2024 and 2023 and the amounts of these transactions for the years then ended are summarized as follows:
Millions of yen

Thousands of U.S. dollars

2024

Type

Director

Name

Occupation

Naoki Umeda

Executive Officerof the Company

Relationshipwith
Ownership ratioof voting shares the related party

0.00%

Contract for
construction of
housing and other

Nature oftransaction

Construction of
housing

Transaction
amount¥Account

Balanceoutstandingat year end

56$

1. Transaction amounts do not include consumption tax.
2. Transaction terms are determined in consideration with market prices, the same as general transactions.
Millions of yen

Type

Name

Occupation

2023
Relationshipwith
Ownership ratioof voting shares the related party

Nature oftransaction

Transaction
amount¥Account-

Transaction
amountBalanceoutstandingat year end

371

Account

Balanceoutstandingat year end

26. Other Comprehensive Income
The following table presents reclassification and tax effects allocated to each component of other comprehensive income for the years
ended March 31, 2024 and 2023:
2024

2023

2024

Millions of yen

Unrealized holding gain (loss) on securities:
Amount arising during the year
Reclassification adjustments for gains andlosses included in net income
Amount before tax effects
Tax effects
Unrealized holding gain (loss) on securities¥

Deferred gain (loss) on hedging instruments:
Amount arising during the year
Reclassification adjustments for gains andlosses included in net income
Amount before tax effects
Tax effects
Deferred gain (loss) on hedging instruments
Foreign currency translation adjustments:
Amount arising during the year
Amount before tax effects
Tax effects
Foreign currency translation adjustments
Retirement benefits liability adjustments:
Amount arising during the year
Reclassification adjustments for gains andlosses included in net income
Amount before tax effects
Tax effects
Retirement benefits liability adjustments
Share of other comprehensive income ofcompanies accounted for by the equity method:Amount arising during the year
Share of other comprehensive income ofcompanies accounted for by the equity method
Total other comprehensive income (loss)¥

154,712¥

Thousands of U.S. dollars

12,846$

1,021,814(30,034)
124,678(37,824)
86,854(2,855)9,991(2,264)
7,726(198,362)
823,451(249,813)
573,638(1,179)2,248(7,791)(1,843)(3,023)685(2,337)

(913)
1,334
(422)
912

(12,174)(19,965)
4,526(15,439)

57,70057,700(57)
57,64282,78082,780(53)
82,727

381,086
381,086(379)
380,70761,126

8,918

403,716(3,147)
57,979(17,677)
40,301(1,770)7,147(2,102)
5,045(20,789)
382,927(116,752)
266,174

4

1,324

32

4
182,466¥

1,324
97,736$32
1,205,113

27. Subsequent Events
Purchase of treasury stock
The Company resolved at the meeting of its Board of Directors held on May 10, 2024 on matters regarding the purchase of treasury stock, basedon the provisions of Article 156 of the Companies Act which is applicable pursuant to the provisions of Article 165, paragraph 3 of the same Act,
as follows:(1) Reason for purchase of treasury stock
After reviewing the Long-Term Management Plan 2030, considering the upward growth prospects and financial conditions, the Company has
decided to purchase its own shares and change the dividend policy as part of the capital policy(2) Details of purchasei.

Type of shares subject to purchase
Common stockii.

Total number of shares to be purchased
32,000,000 shares (maximum) (2.53 % of outstanding shares (excluding treasury stock))iii. Total amount for purchase of shares¥50,000 million (maximum)
iv. Purchase period
From May 13, 2024 to November 11, 2024v.

Method of purchaseOpen-market purchase on the Tokyo Stock Exchange*The purchase will not be implemented from July 11, 2024 to July 17, 2024 within the period of purchase, as the Company may consider
granting restricted stock compensation under the remuneration system for corporate executive officers.
(3) Status of the purchase (up to May 31, 2024 (trade date basis))i.

Type of purchased shares
Common stockii.

Total number of purchased shares
2,560,000 sharesiii. Total amount for purchase of shares¥6,816 million
iv. Method of purchaseOpen-market purchase on the Tokyo Stock Exchange
Cancellation of treasury stock
As the President and Chief Executive Officer of the Company resolved on May 10, 2024, pursuant to the delegation of authority approved byresolutions of the Board of Directors of the Company, the Company has completed the cancellation of treasury stock in accordance with Article
178 of the Companies Act as of May 31, 2024.
(1) Details of Cancellationi.

Type of shares subject to cancellation
Common stockii.

Total number of shares to be cancelled
53,012,100 shares (maximum) (4.00 % of the total number of issued shares before cancellation)iii. Scheduled date of the cancellation
May 31, 2024
*The total number of shares to be cancelled is 53,012,100 shares excluding 4,000,000 shares that are expected to be used in the future for
disposal of treasury shares as restricted stock compensation and etc. of 57,012,100 shares that were purchased by resolutions of the Board of
Directors meetings on November 10, 2022. After the cancellation, the total number of issued shares of the Company will be 1,271,276,206
shares.