Otemachi Building, 6-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8133, Japan
http://www.mec.co.jp/

Annual Report
2012
Fiscal Year Ended March 31, 2012

Printed in Japan

Join Us in 		a Refreshing 		Estate Group

Anticipating New Urban Development andand Exciting Future for the Mitsubishi

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Interview
with thePresident

In spring 2011, as the effects of the Great East Japan Earthquake were sending
shockwaves across the country, Hirotaka Sugiyama was appointed president andCEO of Mitsubishi Estate Co., Ltd., thereby inheriting the Company’s traditionof creating urban environments with lifetimes that extend for over a century.
Despite the Company’s renewed commitment to creating safe and secure urban
environments as well as its efforts to raise corporate value, the current management
environment continues to leave little room for optimism due to such factors as therisk of a recession, triggered by the European sovereign debt crisis that continues
to reverberate across the world. A year after his appointment, President and CEO
Sugiyama was again asked about the direction of the Mitsubishi Estate Group’s
medium- to long-term management strategies and for a general overview of fiscal
2012 (the fiscal year ended March 31, 2012).

Q

A

First, please give us an outline of the Mitsubishi
Estate Group, and tell us about your mediumto long-term management strategies.
A top-ranked comprehensive real-estate company in Japan,
Mitsubishi Estate’s history dates back to its establishment in1937. Mention of the Mitsubishi Estate Group conjures up images ofclusters of office buildings in Tokyo’s Marunouchi district, typified by
the Marunouchi Building. The corporate group, however, comprises ahost of widely varied but related companies. Their business domains
encompass office and commercial property development, leasing,the development of real estate for investment purposes, residential
development, marketing, hotel management, design supervision,
real estate brokerage, and real estate investment advisory services.
The Group fulfills its basic mission of “contributing to society throughurban development.”
The real estate industry is basically one that calls for a long-term
outlook in extended 10-year units. As this requires the Group to bothestablish business strategies and maintain a medium- to long-term
perspective, in the fiscal year ended March 31, 2012, we formulated“BREAKTHROUGH 2020: Orchestrating comfortable cities for the
future—we create ideal urban environments worldwide,” a new
medium- to long-term management plan that puts us on the path
Hirotaka Sugiyama, President & CEO

toward where we ideally see the Group in ten years’ time. In this plan,
we first lay out the values and the code of conduct that our employees
should abide by, specifically, five values and five actions.

1Please give a general overview of fiscal
2012, when the effects of Great East Japan
Earthquake caused so much concern.

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012Q

special-purpose company (SPC), a move that we can expect tolead to redevelopment, and selling the nearby Akasaka Park
Building to Japan Real Estate Investment Corporation.
Meanwhile, in the Residential Business segment, Mitsubishi

Although we achieved a year-on-year revenue increase

Estate Co., Ltd., Mitsubishi Real Estate Services Co., Ltd., andin fiscal 2012 due primarily to revenue from property

Towa Real Estate Development Co., Ltd., merged their residen-sales, we had to contend with the effects of the earthquake astial development and sales operations to form Mitsubishi Jisho

well as the continued downturn in the Japanese economy.

Residence Co., Ltd., in January 2011. In addition to strengthen-Unfortunately, this led to declines in operating income and net

ing its condominium residential development and sales underincome compared with the previous fiscal year.

its new brand, The Parkhouse, Mitsubishi Jisho Residence isA

On the other hand, although drawing up the initial fiscal

planning enhancements to its related services, including themes2012 budget was akin to finding our way in the dark giventhat come under the pursuit of lifelong customer value, logistics,

the extreme difficulty of calculating the earthquake’s effects,

leasing, management, and renovation.

I regard it as a point in our favor that we still achieved a level ofThen, roughly dividing the Group’s business domains into the• Investment & Development Business:

Fully leveraging these value chains, the Group’s medium- tolong-term aim is to cement its No. 1 position in the investment

strengthening our overseas business network. In addition to

partly due to many Japanese companies having recovered fromhaving acquired office buildings in fiscal 2012 through subsid-

the disaster relatively quickly. The earthquake was a tragedy ofiaries in the United Kingdom and the United States, we areunprecedented proportions, and I would like to once again

developing our operations globally. In booming Asian countries

extend my heartfelt sympathies to all those who were affected

these operations include involvement in the office buildings

by it. Despite this, many undaunted Japanese companies thatbusiness as well as the Residential Business segment’s construc-have been beset with difficulties—such as the successive powertion of a new condominium complex in Singapore, while inshortages in the immediate aftermath of the earthquake, theChina we are participating in multipurpose residential andEuropean sovereign debt crisis, the progressive appreciation of

shopping mall developments in the Suzhou Industrial Park in

the yen, and the floods in Thailand—are continuing to survive

Suzhou and in the residential development business in theand making dedicated efforts toward revitalization; these com-

Jiading district of Shanghai.

panies are worthy of close attention.

and development business fields. Without going into too much

Naturally, the Group has also been putting together mea-

development projects, and thedetail, we are setting as goals growth strategies that will enable

sures designed to secure future growth. Firstly, we are making• Management & Services Business:

us to target growth even in a harsh business environment bysteady progress with our key Marunouchi Redevelopment

The Business group where Mitsubishi Estate offers

maximizing the utilization of the Group’s collective strengths

Project, which is currently in its second stage (2008–2017),

customers added value through professional services,

through close cooperation and intermittent investment inadvancing from the first stage (1998–2007) when facilities inhigh-revenue properties.

the area around Tokyo Station were upgraded. The second

linking the two business domains.

Five “Values”“Innovative”“Eco-conscious”

2

performance with final figures slightly above budget. This isThe Business group where Mitsubishi Estate invests in

we set forth our aim to reinforce our value chains by closely

Five “Actions”
Continue to take on challenges as aninnovative urban developer
Aim for sustainable growth throughadvanced environmental initiatives“Customer-oriented”

Always think about customer value
from a customer perspective“Global”

Develop HR, structure and businesses
suitable for global operations“As One Team”

Unite as one team and strive torealize BREAKTHROUGH 2020

Investment & Development
Business
Commercial Property
Marunouchi
Development &Redevelopment
Investment BusinessResidential
Business

International
Business

Management & Services
Business

Synergies

PM & Leasing

Architectural
Design &Engineering

Shopping
Centers

HotelsInvestment
Management

In our medium- to long-term management plan we mention

Q

A

What issues are you confronting in fiscal
2013 and what are your management
strategies?
It is necessary to remain aware that the business environment surrounding the Group continues to give little

project of the second stage, the Marunouchi Eiraku Building,grounds for optimism. The reasons for this include ongoing

was completed in January 2012. We are currently aiming toconcerns with regard to the effects of the accident at thecomplete the third project, Otemachi Financial City, in October

Fukushima nuclear power plant soaring prices for crude oil, and2012 and are making headway with new construction. In addi-

the unpredictability of the economic environment, such as thetion, we are planning to make a start on the fourth projectrisk that the global economy will enter another slump due to(tentatively named the Otemachi 1-1 Project) in February 2013.

the direction of the European sovereign debt crisis.

From the standpoint of asset portfolio optimization, we are

In the real estate sector, demand in the condominium

acquiring Kokusai Shin-Akasaka Building through a related

market is forecast to remain steady due, for example, to the

Brokerage andOther Services

Based on New Growth Strategies, We Are
Targeting Major Growth Even in a Demanding
Business Environment
3

high-minded philosophy entailing undertaking tasks with aestate investment market requires close monitoring of suchsense of being in it together as one team. Human resource

factors as overseas economic and investment fund trends.

training and the creation of dynamic workplaces that provide

The office leasing market is turning a corner in the first half of

the infrastructure underpinning the management bedrock are

the current fiscal year with regard to the oversupply of new

the matters on which I place the greatest importance and thatbuildings—a factor that had for many years been of great

are universally instilled throughout the Group’s companies.

concern—with a bottoming out and subsequent reversal

Strengthening the corporate brand is indispensable for cre-expected. However, this market will need to be closely watchedating a unifying force for all stakeholders. “A Love for People, A

given the possible effects of changes in the global economy.

Love for the City—Forever taking on new challenges: Mitsubishi

Nevertheless, we still do not believe that this kind of busi-

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

continuation of government tax incentives. In contrast, the real

Estate Group” is promoted as our corporate slogan. Theseness environment warrants a fundamental review of thewords encapsulate our feelings and attitudes, such as honesty

assumptions underlying the medium- to long-term manage-and trust, our orientation toward our customers, commitment

ment plan. So, at present we are not thinking of making any

to value creation, and our willingness to confront challenges.

major changes to our management strategies. In terms of busi-

A corporate brand in which you can take pride is not some-ness performance, the numbers will be tough, taking into con-thing that is formed overnight; it is built up over a long period

sideration two consecutive budget periods that saw decreasesof steady, constant effort. The trajectory of these employee

reflecting the absence of proceeds from sales of property thatefforts is one that is being followed by the entire Group. With

had been recorded in the previous periods. On the assumption

the aim of increasing motivation, an award system that recog-

with high growth potential, it is important to distribute man-that we are in the final stages of market readjustment andnizes employees who have contributed to improving the corpo-

agement resources properly on a global basis. I would like tobusiness redevelopment following the Lehman Brothers shock,rate brand was created in March of this year. The awards foraim for a revenue base in which overseas business accounts for

I believe that we will be aiming for a significant profit rise inexcellence are not necessarily for something extravagant and

20% of the Group’s operating income.

fiscal 2014.

do not have to involve the creation of some innovative service;

It goes without saying that we will be further fine tuning

employees who have shown a little ingenuity in day-to-day

In the meantime, the standpoint of proactively incorporatingexternal demand into our business in Japan is also essential.

Q

Finally, please provide us with a message
for the Mitsubishi Estate Group’s
stakeholders.

A

I would just like to reiterate that we are making headway in creating those safe and secure urban environ-efforts aimed at “creating safe and secure urban environments”

operations or addressed a particular problem in depth accountand “creating ideal urban environments worldwide” that canfor the vast majority. I anticipate that closely evaluating andrepresents a business center that is typical of Tokyo. However,spaces and times. Most importantly, I believe the Group’s social

also be viewed as the Company’s basic mission. For example,

then sharing employees’ tasks and thoughts will improve theas international competition from Singapore, Hong Kong, andmission to be that of assisting in recovery and restoration efforts.

we plan to install large-capacity emergency generators, multiple

Group’s corporate brand.

Shanghai will become more intense in the years to come, theWe possess innovative ideas for responding to changes in theperspective of world-class global competition must be taken

management climate and market fluctuations even in a

into account in the Marunouchi Redevelopment Project.

demanding business environment, and we are targeting signifi-

flood control measures, and facilities for people deprived of themeans to return home in our latest project (tentatively named
the Otemachi 1-1 Project) to minimize the impact on customers

Qshould the Tokyo metropolitan area be struck by a major natural disaster, such as a high-magnitude earthquake.

Q
A

What do you regard as the key to growth
for the Mitsubishi Estate Group?

A

In your medium- to long-term management
plan you advocate enhancing your response
to globalization. What does globalization
mean for the Mitsubishi Estate Group?

For example, the Group’s Marunouchi district revenue base

We reviewed our urban environment brand strategy for thecant advances and growth as a Group by strengthening the

Marunouchi district in March of this year but made no changes

foundations of all of our business, enhancing management

to our basic global standard perspective concept of “the town

efficiency and bolstering earnings power. I would like to thankwith the liveliest interaction in the world.” Interaction involves

all our stakeholders for their support and cooperation.

The Group has a 40-year track record in the develop-

social exchange, and we are aiming for a town where “a variety

ment and management of offices in the United Statesof companies and people gather in Marunouchi and create newand the United Kingdom. In recent years, we been proactively

ideas through positive interaction, and companies and people

In order to raise corporate value and continuously

engaged on a rotational basis in development projects in Asia,

from across the world who hear what is going on there meet.”

improve stakeholder satisfaction, the Group’s senioras previously mentioned. From the standpoint of risk hedges and

It is important that we engage in the project top-class global

incorporating into the Group projects in emerging economies

companies and people who are active on the world’s front

management and employees first need to share the samements and providing many more people with comfortablelines, and for that reason it will be indispensable to provide
services that make international companies and cosmopolitan

I Want to Make the Marunouchi District a
Leading Business Center ahead of Singapore,
Hong Kong, and Shanghai
4people feel comfortable. The Group is already making progresswith a number of measures in this regard, including developing
the international St. Luke’s MediLocus medical mall, which canprovide medical attention in English. Our vision is for global
companies to be saying “If you want to start a new venture in
Asia, best you head for the Marunouchi district first.”

Interview conducted at the Shin-Marunouchi Buildingon May 14, 2012

Interviewer: Yuri Kinoshita,
Corporate Communications Department,
Mitsubishi Estate Co., Ltd.

5

Business Information

01

Building Business
Revenue from operations (left scale)Operating income (right scale)

Building Business

Consolidated Sales Breakdown

Building Business segment revenues are derived mainly from building
development and leasing in Japan. This segment is also engaged in building
management, as well as parking facilities, district heating and cooling, andother operations.

Architectural Design &Engineering

Hotel Business

Investment Management
Business

Real Estate Services

2.5%

480,000

International Business

Other

360,000

P7

Building Business

P9

Retail Property Group

Residential BusinessResidential Business segment revenues are derived
from the construction and sale of condominiums,
single-unit homes, and residential and commercial
lots. This segment is also engaged in the
management of condominiums and homes,
along with leisure and other-related businesses.

5.4%

billion yen

Building Business

510,850

160,000

146,007

0.3%

1,013

200,000

463,939

4.1%(Millions of yen)

600,000

141,823

0.6%

Commercial Property
Development &Investment Business(Millions of yen)

2.5%

1.9%

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

SEGMENT

120,000

240,000

80,000120,000

40,00049.5%

Residential Business

33.2%

0

2011/3

2012/30

P10

Commercial Property Development &Investment Business
Commercial Property Development & Investment
Business segment revenues are derived from thedevelopment of real estate for investment
purposes and related activities.

P12

A Love for People
A Love for the City

International Business
International Business segment revenues arederived from real estate development and leasing
activities as well as related operations in the
United States, the United Kingdom and Asia.

Our wish is to provide people who live in, work in and visit the city

P14

6with enriching and fulfilling lives,

Investment Management
Business

Architectural Design &Engineering

Investment Management Businesssegment revenues are derived fromthe management of real estate forinvestment purposes and othertypes of assets.

Architectural Design & Engineering
segment revenues are derived fromthe architectural design andengineering services provided toconstruction and civil engineering
projects and related activities.

P16

P17

Hotel Business

Real Estate Services

Hotel Business segment revenues arederived from the operation of Royal
Park Hotels and related activities.

Real Estate Services segment revenues are derived from real estate
brokerage and related services.

P18

P19

P20

—Forever Taking on New Challenges—The Mitsubishi Estate Group

Business Development, Consulting & Solutions Group

Mitsubishi Ichigokan
Mitsubishi Ichigokan has been completely restored toits former 1894 glory as—the first office building in
Marunouchi. Today, this building is functioning as a
key culture and arts complex for expanding the area’s
cultural horizons.

Marunouchi Eiraku Building
Through this project, three existing office buildings are being reconstructed into one large-scale building to engage more effective land use.
Construction was completed on this new building in January 2012,
which serves as an advanced business center that accommodates thewide-ranging needs encountered in today‘s world of business globalization and information saturation. Leveraging the extensive portfolio of its
business functions, Mitsubishi Estate will promote this project to create ahigh-quality urban environment and enhance urban infrastructure, while
giving due consideration to the environment-friendliness of the project.

full of stimulating opportunities to meet.
The Mitsubishi Estate Group
has always pursued the genuine value sought by people
in the environments and services it provides.
With an eye to the future,
we carefully listen to each and every customer,
and create the true value they seek.
We wish to share with our customers
the inspiration and passion we derive from our work.

iiyo!!
iiyo!! debuted as the commercial zone of the
Marunouchi Eiraku Building in March 2012.
Located in the hub that joins the Marunouchi
and Otemachi districts, iiyo!! is expected to further enhance both the “on” and “off” times ofindividuals and to attract considerable visitors
to the city as a whole.

Enhancing Urban Functions from an Area Management Perspective

We will constantly take on new challenges to achieve this vision,and through it, we will continuously evolve.
This aspiration will always drive our growth.

The Building Business primarily undertakes the development, leasing and property management of office buildings in Japan’s major
cities. It also handles the management of large-scale shopping centers, the operation of parking lots and the operation of district
heating and cooling services throughout Japan. In addition to ensuring advanced preparedness against disasters, the business placesconsiderable weight on environmentally friendly activities as a part of ongoing efforts to enhance urban functions from an area
management perspective.

7

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Retail Property Group
Active Expansion of the Retail Property Business throughout Japan

Promoting the Second Stage of Marunouchi Redevelopment

Mitsubishi Ichigokan in April 2009. In January 2012, we witnessed the comple-

Mitsubishi Estate is going beyond the role of developer to that of producer, as ittion of the second project, the Marunouchi Eiraku Building.

maximizes the full potential of the Marunouchi area and delivers new functions

Going forward, Mitsubishi Estate has begun a third project, breaking

that meet the business needs of today and tomorrow. In 1998, we commenced

ground on Otemachi Financial City, an Otemachi district linked urban develop-

the first stage, covering a period of 10 years, of Marunouchi Redevelopment.

ment initiative that falls within the Otemachi 1-chome Second Zone Urban

Beginning with the completion of the Marunouchi Building in 2002, a total of six

Area Redevelopment Project. Positioned as the fourth project of the second

new buildings have been completed, including the Shin-Marunouchi Building.

stage of the Marunouchi Redevelopment Program, Mitsubishi Estate will also

In its retail property business, Mitsubishi Estate is pushing ahead with the development of various types of retail properties
that match the unique features of each location and area. The Mitsubishi Estate Group continuously engages in facility
planning, development, tenant leasing and management operations through its comprehensive business structure.

From 2008, we have been pushing ahead with the second stage. The first

pursue the Otemachi 1-1 Project (tentative name) with construction commenc-

Offering New Value by Creating Ideal Urban Environments —for People and Cities

project of the second stage consisted of the Marunouchi Park Building anding on the Resona Maruha Building and The Bank of Tokyo-Mitsubishi UFJ

Creating new value through our retail property business, synchronizing people’surban centers and suburban areas, such as Aqua City Odaiba in Minato Ward,

Otemachi Building under an integrated development plan.

lifestyles with “urban heartbeats,” the Mitsubishi Estate Group orchestrates

Tokyo; and the Minamisunamachi Shopping Center “SUNAMO” in Koto Ward,ideal urban environments that maximize cities’ value and the quality of living,

Tokyo, and outlet shopping centers operated byfor everybody who lives, works and visits there.

Chelsea Japan Co., Ltd., which became a

Based on the achievements of Marunouchi Redevelopment to date, thesecond stage will encompass broader and more comprehensive plans to further
rejuvenate the Otemachi, Marunouchi, and Yurakucho districts, an area ofapproximately 120 hectares.

Mitsubishi Estate will continue to focus on three types of retail properties:
those in Marunouchi, centered on the Marunouchi Building; those situated inSince the 1989 opening of the Tenjin MM Building (IMS) in Fukuoka

Mitsubishi Estate consolidated subsidiary

Prefecture, retail property operations have become a full-blown business within March 2009. Maintaining this focus,

numerous projects completed, including the Yokohama Landmark Tower andthe Company will promote a variety of

the Marunouchi buildings.

projects across Japan with an eye to

In its efforts to create a more appealing city, Mitsubishi Estate has continued
to raise the value of retail facilities in the Marunouchi area, including Marunouchi

business development as it cultivates
global markets going forward.

Brick Square (commercial zone in the Marunouchi Park Building) in 2009, followed by iiyo!! (commercial zone in the Marunouchi Eiraku Building) in March
2012. Along with such infrastructure development, the Company is fervently
carrying out promotional activities. From an area management perspective,
Mitsubishi Estate is focusing on operations that realize intangible benefits.
In projects outside the Marunouchi area, we opened the SAIDAIJI GREENTERRACE in Higashi-ku, Saidaiji, Okayama City, Okayama Prefecture in

Daisuke Mitatezaka

November 2011. Also, the Company implemented the third stage of shop

Manager
Commercial Asset Development
Department
Mitsubishi Estate Co., Ltd.

floor expansion at the TOSU CHELSEA PREMIUM OUTLET in Tosu City, Saga
Prefecture in July 2011 and the second stage of shop floor expansion at theAmi Premium Outlet in Inashiki-gun, Ibaraki Prefecture in December 2011.

In addition to its outstanding eco-conscious and disaster prevention features, theMinatomirai Block 34 Project(tentative name)
Scheduled to open in spring 2013,
this facility will be comprised of six
floors above ground and four floors
below ground. Shop floor space will
come in at around 42,900m2 withtotal floor space approximately
116,000m2. The closest railway station is Minatomirai on the Yokohama
Minatomirai Line, with direct accessfrom the fourth underground floor.
The Minatomirai Block 34 is also
eight minutes on foot by moving
walkway to JR Sakuragicho Station.

Otemachi 1-1 Project (tentative name) is being developed with a host of attributes and distinctive characteristics that focus on its mainstay office function.
To give Tokyo an advantage over other major cities in Asia and further
enhance the city’s competitiveness as a business destination, the development
offers high-rise serviced apartments to accommodate medium to long-termstays. Making the most of the unique features of each location and its close
proximity to the Imperial Palace and surrounding moat, the facility will also boast
a common community and open area that will blend the calming ambiance ofwater and greenery. As a private and public sector joint initiative, purificationequipment will be installed within the development’s planned area to help
improve the water quality of the Imperial Moat. With a genuine concern for theenvironment, district heating and cooling facilities will be installed underneath
Encompassing high-rise, street level and underground aspects, theOtemachi 1-1 Project is both a large-scale and long-term undertaking. Working
management, Mitsubishi Estate is working diligently to ensure success.

8

Manager
Retail Property Development Department
Mitsubishi Estate Co., Ltd.

Positioned as a flagship commercial property of the Mitsubishi Estate Group, theMinatomirai Block 34 Project (tentative name) takes full advantage of its location
beside the Yokohama Museum of Art and Grand Mall Park. On completion, thisshopping center, dubbed “Life Entertainment Mall,” will serve as a focal point that
encapsulates the excitement and relaxing joyfulness of the Minato Mirai 21 district.
The Minatomirai Block 34 Project has attracted as its principal tenant Japan’s
first interactive “nature-based” theme and entertainment park operating under analliance between the SEGA SAMMY Group and BBC worldwide limited. The facility
boasts a wide and diverse tenant makeup, including fashion and general merchandise stores that put forward quality lifestyle proposals, elegant restaurants with terraces that offer outstanding views and a substantial food product area that caters toevery daily need. Construction and architectural plans incorporate concerns for theenvironment, most notably through an expansive rooftop garden and LED lighting

the development. This will help conserve energy across the entire district.

as a team that covers every feature from development, design, operation and

Yusuke Umezu

The Otemachi 1-1 Project (Tentative Name)
The project entails the reconstruction of two office buildings according to a single harmonized development plan. Every effort is being placed on ensuring an optimal urban environment while promoting distinctive business operations and support activities as well as eco-friendly and disaster prevention featurescommensurate with Otemachi as a leading international financial district.

Ami Premium Outlet
Ami Premium Outlet shopping centers are found ineight locations around Japan. The outlet located in
Inashiki-gun, Ibaraki Prefecture, which initially opened
in July 2009, was reopened with increased floor spacein December 2011. Up from a total shop floor spaceof approximately 22,110m2 to around 31,020m2, thefacility now houses about 150 stores, an increase
from the previous level of around 100 stores.

employed throughout common areas. Extending well beyond the pleasures of fashionand food, the Minatomirai Block 34 Project is designed to provide a host of refreshingexperiences that can be expected to attract large numbers of repeat visitors.
The ultimate appeal of Minato Mirai district is its impressive collection of commercial facilities that serve to enhance the shopping experience. By collaboratingwith Landmark Plaza, the goal is to further showcase the appeal of the area and toboost the enjoyment of shopping.

9

02

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

SEGMENT

Residential Business
Custom-Built Housing Business

Revenue from operations (left scale)Operating income (right scale)(Millions of yen)its zero-energy specification Smart Evarie smart house and the economical,

342,823

reinforced concrete RecoCube home. The company also has an extensive track
12,234369,145

16,000

4,792

8,000

100,000

2011/3

record in effective land use and the construction of houses built for sale.

12,000200,000

0

security, safety, eco-friendliness and comfort. The company recently announced(Millions of yen)

400,000

300,000

Mitsubishi Estate Home Co., Ltd. provides custom-built housing that features

2012/34,000

Condominium Renovation Business
Mitsubishi Estate Home Renovations, the new condominium

The Parkhouse Ikedayama
Referred to as “Jonan Gozan (five great mountains),” Ikeda-yama is an elevated area that extends
from Shinagawa to Meguro. The Parkhouse Ikedayama is a low-rise condominium complex of 26
residences that blend in perfectly with the elegance and sophistication of its surroundings.

renovation business brand, came into being in April 2012.
Bringing together the Mitsubishi Estate Group’s collective
strengths, the business offers consistently high-quality services
from renovation proposals to construction and after-sales service.

0
PARK HABIO Shinjuku Eastside Tower
This 761-unit large-scale lease condominium
building provides premium communal facilities
and hospitality features that go beyond those
expected in ordinary rental condominium buildings. A signature feature is the top floor swimming pool, which offers stunning views.

The Parkhouse Tsudanuma Kanade no Mori
The Parkhouse Tsudanuma is located in the Kanade no Mori large-scale multi-use development
project that is currently in progress. Offering a total of 721 seismic isolation condominiums, theParkhouse Tsudanuma will form part of an expansive development site of approximately
350,000m2 in front of JR Sobu Line Tsudanuma railway station.

Residential Sales Business
Under its flagship Parkhouse condominium brand, Mitsubishi Jisho ResidenceCo., Ltd. offers an extensive lineup that caters to a broad customer base. In its
first year of operations, the company became the top supplier of condominiums in Japan (Source: Real Estate Economic Institute Co., Ltd.).
Following the Great East Japan Earthquake, Mitsubishi Jisho Residence
took steps to reinforce its disaster countermeasure standards. In addition to
adopting a more detailed approach and increasing the number of review items,
the company put together a disaster countermeasure chart and disaster pre-Masato Kameda
Group Leader
Urban Development Department
Mitsubishi Jisho Residence Co., Ltd.

vention plan for each building in an effort to better visualize the status ofdisaster countermeasures. Furthermore Mitsubishi Jisho Residence will research
an extensive range of scenarios to provide residents with increased safety andpeace of mind.
With the overarching vision—“Always, new joy in daily life”— Mitsubishi
The Parkhouse Harumi Towers Krono Residence
A new oasis in the Harumi area of Chuo Ward, the Parkhouse Harumi Towers Krono Residence is located in close proximity to the heart of the city, a short 2.5km and 3.5km from Ginza and Marunouchi, respectively. Offering a total of
approximately 1,800 units on completion, the first tower of the twin tower condominium complex will be comprised ofa 49-story structure of around 883 units. Accredited as an outstanding long-term tower residence, the Parkhouse
Harumi Towers Krono Residence is the first urban project to employ seismic isolation construction.

Shakujii Home Gallery (Two-Family Home)
Distinguished by its appealing and warm design, Shakujii Home Gallery puts forward custombuild proposals that take into consideration the importance of family members spending time
together as well as the need for privacy.

10

ingenuity in all aspects as well as in its design.
Although situated in central Tokyo, this project features the Harumi Canal on

structure and system and lend a keen ear to the voices of its customers. By

the south side, making it a highly sought-after location where a freeing sense ofmaintaining lifelong ties with each and every customer, Mitsubishi Jisho
Residence will maintain its unwavering focus on addressing diverse needs andopenness can be enjoyed. Having secured the services of world-renowned architect
Richard Meier, the project was designed to contribute to the urban landscape as awaterfront landmark.
Along with its anti-seismic structure, other safety and security considerations
were incorporated into the design of the building, for which the Company has

Residential Leasing Business
Mitsubishi Estate is accelerating its residential leasing business through the PARK

Through the Residential Business segment, we aim to provide ideal living environments in concert with healthy and fulfilling lifestyles
by developing, marketing and leasing condominiums, single-unit homes and residential land while engaging in renovation activities aswell as condominium management and consulting services for the optimal use of real estate. At the same time, Mitsubishi Estate operates and manages golf courses.

Parkhouse Harumi Towers Krono Residence has been planned with originality andJisho Residence will continue to employ an integrated production and sales

work toward becoming the leading company in terms of its quality and service.

Mitsubishi Jisho Residence Co., Ltd. Becomes Japan’s Leading Supplier of Condominiums

As Mitsubishi Jisho Residence’s flagship property in its Parkhouse series, The

HABIO brand, focusing on the Tokyo Metropolitan area. To date, the Company
has completed 27 condominium complexes. We will continue to promote ouracquired long-term superior housing certification. A wide range of initiatives havebeen taken with regard to supporting the creation of a community among its residents, which will become necessary in years to come.
The Parkhouse Harumi Towers Krono Residence will remain our flagship condominium for posterity and we will make all-out efforts to promote its business.

residential leasing business by consistently providing high-quality condominiums.

11

03

Commercial Property Development& Investment Businessare favorable. In other words, the seller of a property can decide on the hold-

Revenue from operations (left scale)Operating income (right scale)(Millions of yen)acquisition costs and building construction costs). This is the true advantage of

55,8095,674
47,907

Mitsubishi Estate in this segment. The Company will continue to bolster the
5,000

20,0002,000

2011/3

1,609

3,000

10,000asset solutions capabilities required to maximize the value of real estate. In this

4,000

30,0000

between the selling price and all associated costs and expenses, including land

6,000

50,00040,000ing period for securing capital gains (profit after deducting the difference(Millions of yen)

60,000

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

SEGMENT

1,000

2012/30

way, we will strive to capture new business opportunities, thereby strategicallyNakano Shokai Tatsumi Centermeeting the socioeconomic needs for urban development.

Kojimachi Front Building
Located along Kojimachi’s main thoroughfare, the Kojimachi
Front Building is an eco-friendly, highly functional officebuilding (standard floor area approximately 660m2) offeringsuperior access, being just a minute walk from Kojimachi
Station on the Tokyo Metro Yurakucho Line and four minutes
from Hanzomon Station on the Hanzomon Line. Mitsui Bank
awarded the Company a gold assessment for its environmental initiatives, and the building received a gold environmental
rating from the Development Bank of Japan. The Kojimachi
Front Building is planned for completion in the spring of 2013.

Logiport Sagamihara

Actively Promoting Development Operations by Strengthening
Asset Solution Capabilities
Mitsubishi Estate’s Commercial Property Development & Investment Businessemploys a unique business model. Under this model, the business cycle starts
with the development of office buildings and other types of real estate for investment. The Mitsubishi Estate Group leverages its wide-ranging business functions
to maximize the value of the properties developed. These properties are sold at
the highest possible prices in the real estate investment market, and the proceeds collected through property sales are used for new development projects.
In addition to the completion of Shinjuku Front Tower in May 2011, theRyosuke Shimizu
Logistics Facilities Development
and Investment OfficeCommercial Property Development
and Investment Department
Mitsubishi Estate Co., Ltd.

Company completed Harumi Front in February 2012 and Shinjuku Eastside
Square in April 2012.
In the meantime, to respond to diversified real estate investment market

The Company’s first distribution facility development property, the Nakano Shokaineeds, the Company is active in distribution facility development projects as

Tatsumi Center was completed at the end of February 2012 following the “Build-

well as office buildings. In addition to having completed the Nakano Shokai
Tatsumi Center though a joint development project with Mitsui & Co., Ltd. in
Shinjuku Front Tower
Completed in May 2011, this multipurpose complex benefits from each floor concentrating on either offices,
retail spaces, clinics or serviced offices, which support new startups and young entrepreneurs. In addition togreenery on the rooftop and external walls, a number of tall trees are planted within the site, for a total
green area of approximately 2,700m2. Also, a water-retentive coating was applied to the building exterior,
contributing to the suppression of the urban “heat island” effect.

Shinjuku Eastside Square
Located within the large-scale, approximately 3.7-hectare Shinjuku Eastside development project and directly
connected to Higashi-Shinjuku Station on the Tokyo Metro Fukutoshin Line and Toei Oedo Line, the Shinjuku
Eastside project is an office building capable of accommodating more than 10,000 people. With a standard
effective floor area of 5,940m2, its floor plate is the largest in central Tokyo, and the building has an open-spacegreen area that covers approximately 1.3 hectares. Shinjuku Eastside Square was completed in April 2012.

Developing Market Needs-Oriented Real Estate for Investment Purposes
Through the Commercial Property Development & Investment Business, Mitsubishi Estate is promoting development operations.
Our basic strategy in this segment entails the development of prime real estate for investment purposes that effectively accommodates
the needs of both tenants in the leased real estate market and investors in the real estate investment market.

12

to-Suit” model on the premise of the loan of one building to Nakano Shokai. The
next property, the currently under development Logiport Sagamihara, offers advantages in its location due to its accessibility to the major arterial Route 16 and RouteFebruary 2012, the Company is currently making progress in developing

129 highways as well as the Metropolitan Inter City Expressway following the open-

Logiport Sagamihara, the largest distribution facility in Japan, in collaboration

ing of the Sagamihara (tentative name) interchange. These advantages will enablewith LaSalle Investment Management Inc.

Logiport Sagamihara to serve as the distribution base for the Tokyo metropolitan
area. The approximately 210,000m2 total floor area of the multitenant-type facility,

Maintaining Income Gains and Securing Capital Gains throughTimely Sales of Assets

the largest in Japan, will fully meet tenants’ integration and aggregation needs.
The Company established the Distribution Development Office as a dedicatedorganization in April 2012 and will be proactively engaged in properties, leveraging

In general, real estate for investment generates stable income gains (rental reve-its in-house development and management expertise while setting its sights on thenues) after completion. For this reason, such real estate does not have to be soldcountry as a whole. We intend to ensure that the Company’s “safe and secure”

immediately after completion. Instead, it can be sold when market conditions

brand image, earned through the development of office buildings, will carry over* W hile ensuring that a building retains its versatility in meeting the needs of future
replacement tenants, the “Build-to-Suit” business model follows a pattern by which theCompany decides on the tenants prior to the start of construction and carries out thedevelopment in a way that incorporates the tenant’s needs.

to its distribution facilities.
Mitsubishi Estate will continue to push ahead with development to enabledistribution facility development projects to grow as one of its mainstay businesses.

13

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

International Business

SEGMENT

04

Central St. Giles in London
A joint redevelopment projectwith Legal & General, a major
U.K. life insurance company,
this complex covers a total floorarea of 66,000m2 and comprises offices, retail shops and residences. Construction wascompleted in April 2010.

Singapore/Office Development(CapitaGreen)
A joint venture project with CapitaLand
Group, this project covers a site areaof approximately 5,500m2 and a total
floor area of approximately 82,000m2.
The project is scheduled for completionin 2014.

Revenue from operations (left scale)Operating income (right scale)(Millions of yen)In the United States, Mitsubishi Estate owns large-scale office buildings, includ-

20,000ing the McGraw-Hill Building and the Time-Life Building in Manhattan, New

16,00042,10845,091

York City. In 2011, the Company acquired two office buildings, 1101 K Street

8,020

10,000

0

8,000

4,000

2011/3

2012/30

Senior Manager
MEC UK Limited

undertaking approximately 30 development projects in 10 states, including
distribution facilities and homes.
The McGraw-Hill Building in New YorkWith 51 floors above ground and fivefloors below ground, the McGraw-Hill
Building boasts total floor space ofapproximately 237,000m 2. Located in
Manhattan, New York, this office building was completed in March 1972.
Mitsubishi Estate first acquired an interestin the building in April 1990.

Trilateral Global Development System: United States, United Kingdom, Asia
Until now, the Company’s overseas operations have entailed real estate leasing and development projects in the United States and in
London in the United Kingdom. Taking the opportunities afforded following the establishment of Mitsubishi Estate Pte. Ltd.
(Singapore) and the opening of its Shanghai Representative Office, the Company is proactively engaged in real estate development in
Asia and advancing global development through a trilateral system comprising the United States, the United Kingdom and Asia.

MEC UK Limited, Mitsubishi Estate’s local subsidiary in the United Kingdom, cele-

Mitsubishi Estate is also aggressively expanding its U.K. development busi-

brates its 26th anniversary since foundation this year. Beginning with its participa-

ness in London, which is centered on the Paternoster Square Redevelopmenttion in the Paternoster Square Project, MEC UK has established a solid track record

Project, the Bow Bells House Redevelopment Project and the Central St. Gilesin urban redevelopment. Looking forward, London is expected to continue playing

Redevelopment Project. In 2011, we acquired two office buildings, 150

an important role in the Mitsubishi Estate Group’s global expansion activities.

Leadenhall Street and 6-8 Bishopsgate.
In Asia, the Company established Mitsubishi Estate Pte. Ltd. (Singapore) in

However, real estate business globalization for a developer, whether in Japan oroverseas, depends heavily on the level of local expertise and the quality of local
personal contacts. In this regard, localization is critical to every market around the2008 and is taking the opportunity afforded by the opening of its Shanghai

world. As a resident officer, my focus is therefore on promoting increased localiza-

Representative Office in 2011 to accelerate its business development.

tion as opposed to globalization. Taking into consideration the differences in lan-Commencing its participation in a condominium development project inguage, legal systems, culture and customs while forging a solid local presence andVietnam in 2010, the Company has since the beginning of 2011 decided totake part in condominium and office development projects in Singapore, as

14Toru Ueno

and 1100 First Street, in Washington D.C. In addition, the Company is currently

12,00010,01530,00020,000Accelerating Leasing and Development Operations in the UnitedStates, the United Kingdom and Asia

(Millions of yen)

50,00040,000Shanghai/Condominium Development
A joint venture project with Marubeni Corporation, Mitsui Fudosan Residential Co., Ltd. and Shanghai House Property Development Co., Ltd., thisnew town project covers a site area of approximately 85,000m2, a total floor area of approximately 153,000m2 and around 1,600 residences. The
project is scheduled for completion in 2015.

standing is not as easy task. Thankfully, my predecessors have established a robust
local foothold and operating base. Building on this platform, MEC UK will continue
promote business deeply rooted in the local market.

well as multipurpose home and shopping center developments in China andlarge-scale residential development projects in Shanghai.
Leveraging its track record at home and overseas, the Company will develop its real estate business on a global basis in the years to come.

15

Investment Management Business

06

Providing a Variety of Specialized Services for Real Estate Investment Management

Garnering the Trust of Society through Superior Design and Engineering Capabilities

In its Investment Management Business, Mitsubishi Estate is offering wide-ranging services for both individual and institutional investors. For investors seeking the effective management of real estate assets, the Company’s services extend from the management of realestate investment trusts (REITs), to meet the needs of investors who desire security through real estate investment over the long term,
to the management of private funds to satisfy the specific needs of institutional investors.

(Millions of yen)

6,000

5,924

15,000

3,000

3,000

2,528

4,000

0

2011/3

2,000

1,500

10,000

1,000

2,000
5,000

1,464

1,000

(Millions of yen)

20,000

5,000

4,000

2,000

(Millions of yen)

1,000

2012/30Offering Industry-Leading Investment Management Services to
Meet Diversified Investor Needs
To meet the specific needs of institutional investors, Mitsubishi Jisho Investment

0

590

6,000
5,000

Revenue from operations (left scale)Operating income (right scale)

1,190(Millions of yen)

At the core of Mitsubishi Estate’s Architectural Design and Engineering Business are Mitsubishi Jisho Sekkei Inc. (MJS) and MEC Design
International Corporation. MJS engages in the design and administration of construction and civil engineering projects, building renovation work and projects related to urban and regional development as well as comprehensive consulting. MEC Design International isinvolved in interior design administration and construction projects.

19,932

Revenue from operations (left scale)Operating income (right scale)

5,220

Akasaka Park Building
The building has attracted large numbers of foreign companies since its completion. Recognized as a large-scale
A-class building, Akasaka Park Building
continues to benefit from the blossoming brand image of the Akasaka area,
which has continued to enjoy significant
development activity in recent years.

Architectural Design & Engineering Business

SEGMENT

18,58405

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

SEGMENT

2011/3500

2012/30Palace Hotel
The reputable Palace Hotel—located directly acrossfrom the Imperial Palace—is undergoing reconstruction. Plans comprise the construction of an office
tower and a hotel tower. Hotel guestrooms will offer
curved balconies. Other distinguishing features will
include a main banquet hall that accentuates the
harmony of water and greenery provided by the
Wadakura moat and a chapel.

Toyo Bunko
This project involves the reconstruction of a library and research institutededicated to the study of Asian history and culture. The facility will include an
exhibition room for the public display of treasured materials from every regionof Asia. An adjoining structure will be open to the general public and feature acafé area.

Advisors, Inc. (MJIA) has formed fixed-term private funds that invest in office

Bolstering International Business Activities while Promoting
Sure-Footed Business Development in Japan

Tower, Kabuki-za Theater and Meiji University Nakano Campus. Moving forward,

properties. Also, MJIA offers a broad range of investment products, including
open-ended, non-listed private REITs to satisfy the needs of investors who

In November 2011, Mitsubishi Jisho Sekkei Inc. established Mitsubishi Jisho

new construction and renovation projects, to address the growing need for highprioritize stability and long-term investments.

Sekkei Architectural Design & Engineering (Shanghai) Co., Ltd., a local subsid-

quality and eco-technologies, and to realize steady growth in all business fields,
including construction management and district heating and cooling facilities.

buildings as well as commercial (shopping centers) and leased residential

Meanwhile, Japan Real Estate Asset Management Co., Ltd. handles a listed

iary. Reflecting the dramatic progress of urban development in China, the

REIT that accommodates individual investors. This investment management

Group’s Shanghai Representative Office, opened in 2007, has continued tocompany manages the investments of Japan Real Estate Investment

report steady results on the back of growing demand for high-quality andCorporation, a Japanese REIT (J-REIT) specializing in office buildings. Japan Realappealing designs in the construction and urban architectural fields as well as

MEC Design International Corporation (MDI) Celebrating Its
40th Anniversary

Estate Asset Management has the longest history among listed J-REITs, and it

advanced environmental and energy conservation technologies. Looking ahead,

In March 2012, MDI celebrated its 40th anniversary. As a comprehensive interi-

has maintained steady performance over the past 11 years. Thus, the Mitsubishi

the Mitsubishi Estate Group will work to further expand consulting orders andor consulting office, MDI offers a “one-stop” full-line of services. In addition to

Estate Group is providing industry-leading investment management services.

increase its business throughout East Asia in the construction design, urban

consulting services covering design, project, facility and other management forplanning and eco-technology fields, areas of particular strength and expertise.

every possible structure including offices, residences, entertainment and com-

Looking to the future, we aim to offer prime investment opportunities,

16

every effort will be made to secure architectural design and engineering orders forincluding new asset-type investments to any and all investors in Japan and

Major architectural design and engineering projects completed in fiscal 2011

mercial facilities, meeting spaces, and environments, the company is active inoverseas and contribute to the further development of the real estate invest-

include the Palace Hotel, Toyo Bunko and Kagoshima Chuo Terminal Building. In

contracting, construction and furniture sales. MDI is dedicated to providing thement market.

fiscal 2012, plans are in place to complete such reconstruction projects as the JP

highest quality services.

17

08

Improving Our Brand Value and Expanding Our Hotel Chain
In the Hotel Business, the Mitsubishi Estate Group maintains a network of seven hotels in Japan located in Sendai,
Tokyo (Hakozaki and Shiodome), Yokohama, Chiba (Makuhari), Kyoto and Fukuoka under the Royal Park Hotels
brand name. Royal Park Hotels and Resorts Co., Ltd. coordinates the administration and management of each hotel
to enhance management efficiency and improve the quality of management.

Revenue from operations (left scale)Operating loss (right scale)

2,000

20,0000

2011/3

2012/3-1,000Royal Park Hotel The Kyoto
Opened on October 8, 2011, this 172-room hotel is only a three-minute walk from Kyoto Shiyakusho-mae Station on the Tozai
Line of the Kyoto Municipal Subway. It is the second hotel in this series and is located at Kawaramachi, Nakagyo Ward, Kyoto City.

1,000

500

Brokerage Information Website

0

A website to help conduct searcheson brokered real estate for residential,
business and investment use according
to preferred terms and conditions.

0

2011/3

2012/3-500

Parking Ecology Network “PEN”

PARK HABIO Shinjuku Eastside Tower
Developed by Mitsubishi Estate, construction of the PARK HABIO Shinjuku Eastside Tower lease condominium building located in Shinjuku Ward, Tokyo, wascompleted in December 2011. Leasing management was contracted to Mitsubishi Real Estate Services Co., Ltd.

To contribute to global environmental
efforts through parking operations,
Mitsubishi Real Estate Services donates
a portion of the proceeds from parking
charges to tree-planting programs.

Increasing the Brand Value of Royal Park Hotels through aManagement Focus on Customer Delight

New Brand “Royal Park Hotel The [City Name]” Debuts and Expands

Real Estate Brokerage Services

In the fiscal year ended March 31, 2012, the Royal Park Hotel The Fukuoka and

Mitsubishi Real Estate Services and Mitsubishi Jisho House Net engage in wide-

Advancing the Leased Condominium/Office Building Management
Support Business and Coin-Operated Parking Lot Operations

Based on the “Best for the Guest” philosophy of Royal Park Hotels, we go one

the Royal Park Hotel The Kyoto made their debut. Each hotel strives to make theranging operations relating to real estate owned by individuals and corpora-

Mitsubishi Real Estate Services and Mitsubishi Jisho House Net offer a variety ofstep beyond customer satisfaction by aiming to delight our guests. This

most of the unique features of its location and region. Offering sophisticatedtions. These operations include purchasing, sales, brokerage for leasinglease management support services relating to leased condominiums and office

approach has been well acknowledged, enabling us to win the leading rank indesign and excellent hospitality at a reasonable price, the two hotels haveservices, and consulting services for real estate utilization. Through brokeragebuildings, and their customer base ranges from individuals and corporate cli-the 2011 Japan Hotel Guest Satisfaction Index StudySM conducted by J.D.

already been widely acclaimed by a large number of patrons. A project sched-services for individuals, the two companies provide comprehensive support inents to asset managers of securitized real estate. We have a structure thatPower Asia Pacific, Inc.,* an organization specializing in research and consult-uled to open in the environs of Nagoya Station in 2013 is progressing smoothly

real estate purchasing and sales as well as in finding new housing. They meetenables comprehensive services covering everything from business plan formu-

ing relating to customer satisfaction. This marks the fifth consecutive year forwith the decision made to establish a hotel within the Haneda Airportthe diversified requirements of customers through a nationwide network.

lation and product planning to lease management after construction comple-

Royal Park Hotels to win the top position in the ¥15,000 to ¥35,000 per night

International Terminal (scheduled to open in autumn 2014).

In addition to providing various need-oriented investment proposals to indi-tion. Moreover, we provide our customers with information on leased

category. We will further promote customer-delight focused hotel manage-

vidual customers, they work to satisfy the wide-ranging needs of corporate cus-

properties according to their preferences, including those owned by Mitsubishi

ment and operations.

tomers in Japan and overseas through services ranging from real estate

Estate. In addition, we are promoting “PEN” automated, coin-operated parking

assessment, sales and purchase brokerage to consulting for effective utilization.

services, applying our extensive expertise in lease management services.

* Japan Hotel Guest Satisfaction Index StudySM conducted by J.D. Power Asia Pacific, Inc. between 2007 and 2011
	Royal Park Hotels ranked high in the segment of ¥15,000 to ¥35,000 per night hotels with the most common guestroom
space of 20m2 or larger. The study was based on 7,097 valid responses received from people who used applicable hotels
within the previous year. For more details, please see the press release of the J.D. Power and Associates Web site at:
http://www.jdpower.co.jp/press/pdf2011/2011Japan%20Hotel%20GSI.pdf (Japanese language only)

18

1,500

10,000-10,000

Royal Park Hotel The Fukuoka
Royal Park Hotel The Fukuoka
opened in Hakata Ekimae 2-chome,
Hakata Ward, Fukuoka City, Fukuoka
Prefecture, on July 30, 2011, as thefirst hotel under the new brand.
Only a five-minute walk from JR
Hakata Station, this hotel provides a
total of 174 guestrooms.

(Millions of yen)

(57)

Yokohama Royal Park Hotel
Utilizing the 70th floor banquet hallof the hotel situated in the Yokohama
Landmark Tower, the Sky Chapel
Celeste is Japan‘s closest chapel tothe heavens.

(278)

0

-10,000

30,000

1,000

(340)

10,000(Millions of yen)

3,000

26,08525,654

27,64320,000

Revenue from operations (left scale)Operating income (loss) (right scale)(Millions of yen)

30,000In the Real Estate Services Business, Mitsubishi Real Estate Services Co., Ltd. and Mitsubishi Jisho House Net Co., Ltd. closely collaborate
to meticulously respond to customers’ real estate needs. Leveraging its collective strengths and information capabilities, the Mitsubishi
Estate Group provides a wide array of optimal solutions for individual and corporate real estate utilization, brokerage and leasing.

430(Millions of yen)

Real Estate Services

Meticulously Responding to the Various Real Estate Needs of Customers

27,71907

SEGMENTMITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Hotel Business

SEGMENT

Furthermore, they have established the CRE@M system to offer integrated assistance to corporations in promoting their corporate real estate (CRE) strategies.

19

Leveraging the Resources of the Entire Group to Expand Business Opportunities in
Proposal-Based Marketing

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Business Development,
Consulting & Solutions GroupCSR Management / Operating Results

Standing in the heart of Mitsubishi Estate’s strategic marketing structure, the Business Development, Consulting & Solutions
Group works to foster deeper ties with clients through proposal-based marketing, which is conducted across the Company as awhole. Making full use of the company’s accumulated real estate development, planning and management expertise, the two
departments that comprise this group are active in efforts to realize maximum value for their clients.

Maximize asset
Risk
Funds
Real estate
Maximizeasset
Risk
Real estate
efficiency
management Funds
procurement
investment
efficiency
management procurement
investment

O SN US LU TL ITNI GN GC OC N

Customers
Customers

Real estate-related
Real estate-relatedplanning,
planning,
proposals and services
proposals and services

ConsiderConduct
Determine
ConsiderConduct
Determine
initiatives
researchcurrent
initiatives
researchcurrent
and proposals
and analysis
statusand proposals
and analysis
status22 CSR Management
22 The Mission of the Mitsubishi Estate Group
23 Corporate Governance / CSR Case Studies

Proposal determination
Proposal determination

24 Directors, Statutory Auditors and Executive Officers

Implementation
Implementation

25 Organization

Analysis and review
Analysis and review

26 Operating Results

S OS LO UL TU ITOI NO N

26 Financial Highlights—Five-Year Summary

Building operation andComprehensive building
operation andComprehensive
Real estate liquidity Building
Construction
Real estate development
Real estate investment
management
analysis building
Real estate liquidity
Construction
Real estate development
Real estate investment
management
analysis• Real estate-backed• Real estate investment• Development method• Real estate
investment• Development
methodfinancing support
strategy
formulation support• Real estate-backed
proposals
supportstrategy
formulation
supportproposals• Securitization• Marketresearch
and analysis financing• Business plan support• Securitization• Market• Due
research
and analysis• Businessplan support• Specified real estate
diligence• Projectmanagement• Specified
realventures
estate• Project• Effective
management
joint• Acquisition support
utilization/joint • Due diligencejoint ventures• Acquisition• Effectiveventuresutilization/joint• Sales and leaseback• Assetsupport
management(equivalent• Sales andleasebackventuresexchanges/term(equivalent leasehold • Asset management• Realestate brokerage• Real estate brokerageexchanges/termleaseholdinterest method)interest
method) use• Provisional• Provisionaluse• Reconstruction• Reconstruction• Operation and management• Earthquake resistance• Operation
management
resistanceplanandanalysisand proposals • Earthquake
analysisplan analysis
and maintenanceproposals
analysis• Long-term• Facility management• Long-term
maintenance•
Facility
management
plan consulting• Energy saving andplan consulting• Energy IT
savingand in buildings• Commissioned operation andutilization• Commissioned
operationandIT utilizationin buildings
managementof buildings,
and facilities
managementof buildings,
and facilities
retail facilities
and hotels• Interior and exterior
retail facilities
and hotels• Interior renovationand exterior• Subleasing• Subleasing
renovation• Tenant marketing• Barrier-free facility• Tenant• Operation
marketing and management• Barrier-freefacilityof
construction• Operationand managementofconstruction
residential
complex and• Anti-aging measures forresidential
complexand•Anti-aging
measurescorporate housingbuildings and forfacilities
corporate
housingbuildings
and facilities• Property
management• Conversion• Property management• Conversion

Design and supervision
CRE strategy support
Design and supervision
CRE strategy support• Single-unit homes• Environmental assessment• Organization of CRE• Single-unit• Environmental
assessment• Organizationof CREand homes
rental andand research
information
and rental
and housing
and research
information
corporate• Consulting for urban• CRE valuation
corporate
housing•
Consulting
for
urban
•
CRE
valuation• Residential anddevelopment and private• Support for strategy• Residential
anddevelopment
private (PFIs)• Supportformulation
for strategyand
officerenovation
financeand
initiatives
office renovation
financeinitiatives (PFIs)
formulation
and• Consulting,design andimplementation• Consulting,design for
andenvironmental implementation
supervision
supervisionforenvironmental
and civil-engineering solutions
and civil-engineeringsolutions• Construction management• Construction• Designmanagement
and supervision for• Design buildings
and supervisionforand structuresbuildings
and structures• Design
and supervision for• Design interiorand supervisionforand exterior
interior and exterior

27 Financial Review
30 Consolidated Balance Sheets
32 Consolidated Statements of Income
32 Consolidated Statements of Comprehensive Income
33 Consolidated Statements of Changes in Net Assets
35 Consolidated Statements of Cash Flows
36 Notes to Consolidated Financial Statements

A Wide Range of Solutions Covering Everything from IndividualReal Estate Needs to Corporate Real Estate Strategic Support

vices that address clients’ real estate needs, such as effective methods for prop-

The Business Development, Consulting & Solutions Group (comprising theerty utilization and acquisition, we create business proposals that draw on theBusiness Development, Consulting & Solutions Dept. 1, and Businessresources of the entire Group.

In an effort to consistently provide optimal consultation and solutions ser-

Development, Consulting & Solutions Dept. 2) are independent from Mitsubishi

The departments offer consultation for individual properties and multiple

Estate’s eight principal business segments (comprising the Building Business,

properties held and leased by corporate clients. We analyze the situation, tak-Residential Business, Commercial Property Development & Investment Business,

ing into consideration the comprehensive features of the real estate underInternational Business, Investment Management Business, Architectural Design

review, and provide solutions that match the financial and management strate-& Engineering, Hotel Business, and Real Estate Services).

gies of individual client companies. In this manner, Mitsubishi Estate endeavors

53 Independent Auditor’s Report
54 Principal Mitsubishi Estate Group Companies
56 Corporate History
57 Stock Information / Corporate Information

to realize the maximum value of corporate real estate (CRE).

20

21

The Mission of the Mitsubishi Estate Group

Corporate Governance

CSR Case Studies

The Mitsubishi Estate Group has adopted as its fundamental mission the goalbrand. All Group employees share the Mitsubishi Estate Group Code ofWorking to bring this mission to fruition, the Mitsubishi Estate Group endeav-Complianceof creating a truly meaningful society by building attractive, environmentally

Corporate Conduct as ethical guidelines to achieve the mission. With the aim

ors to promote management that is focused on the interests of shareholders

Mitsubishi Estate considers compliance as not simply the adherence to legalsound communities where people can live, work and relax contentedly. Puttingof promoting Groupwide CSR activities, the Company has established a CSR

while fully supporting its Statutory Auditor system and the introduction of an

standards, but as meeting the expectations of people in society at large, not tothis mission into practice itself underpins Mitsubishi Estate’s CSR activities, all ofCommittee, chaired by the president. With the CSR Committee serving as theexecutive officer system. To ensure greater transparency and objectivity, as wellmention the adherence to internal company rules and ethical corporate

which are aimed at helping realize the sustainable growth of the Company andcentral driver, we are proactively implementing a wide variety of CSR activities

as to improve the management and oversight of the Board of Directors, external

standards. Furthermore, because we recognize how essential compliance is tosociety as a whole. At the same time, Mitsubishi Estate believes that the pro-that draw on the Group’s distinctive features.

Directors are to be appointed while efforts are continuing to promote separa-

the profit base of the Company, we view the maintenance of a compliancetion and greater control of supervision and auditing, as well as to strengthen its

system as a priority task of management. Moreover, all Group employees arebusiness execution functions. At the same time, the Group’s management

deepening their awareness of compliance issues while proactively promoting

system is being restructured to focus on dynamism and flexibility in order tocompliance-focused activities.

motion of CSR activities will directly lead to the improvement of its corporate

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

CSR Management

ensure the more efficient and sound management of the Group. We view

The Mission of the Mitsubishi
Estate GroupWe contribute to society through urban development
By building attractive, environmentally sound communities where people can live, workand relax with contentment we contribute to the creation of a truly meaningful society.

The Mitsubishi Estate Group
Code of Corporate Conduct

corporate governance as one of our most important systems and, therefore,

Environmental Management

are constantly working toward the creation of a structure that is best suited for

The Mitsubishi Estate Group has clarified its commitment to proactively contrib-

the Group.

ute to social efforts aiming to reduce its environmental impact. Under its
Environmental Slogan, “For Sustainable Cities, For a Sustainable Earth,”
Reports Concerning Corporate Governance

Mitsubishi Estate is leading sustainable urban development that gives due consideration to such environmental aspects as biodiversity by aggressively imple-• Basic policy regarding corporate governance, and capital structure,corporate attributes and other basic information

menting initiatives toward realizing a low-carbon, recycling-oriented society inpartnership with its customers. Specifically, we are implementing various initia-• Overview of business management organization and other corporate

tives to reduce the environmental impact in general in the Otemachi,

governance systems related to managerial decision-making, business

Marunouchi and Yurakucho areas through public-private collaboration. Actual

execution and management supervision

initiatives are categorized into those with direct or indirect results. Initiatives• Status of implementation of measure related to shareholders andother stakeholders

with direct results include the introduction of high-efficiency air-conditioning
systems and “dry mist” generators as well as the arrangement of roof-top and• Basic policy and status of implementation of the internal control system

external-wall greenery on our properties. In fact, the Shin-Marunouchi Building• Others

has started the use of 100% renewable, “fresh green electricity.” Also, in the

In order to carry out the Group Mission, we pledge
to observe the following Code of Conduct:

Residential Business, we are actively promoting the development of the ecofriendly “soleco” system, which combines a solar power generation system anda central high-voltage power transmission system. Initiatives with indirect
results involve the staging of environment-related events and seminars, which

1. We will act with integrity

are aimed at promoting environmental awareness and the dissemination of

We will base our conduct on laws and ethics and always reflect with humility upon
our behavior, valuing our communication with society and placing priority in our
corporate activities on earning trust through fairness and transparency.

environmental information.

Social Contribution

2. We will strive to earn the trust of our clients

As a good corporate citizen, the Mitsubishi Estate Group engages in a wide
range of social contribution activities centered on promoting its harmonious

We will approach all objectives from our clients’ point of view, providing safe andreliable products and services, and make information available as appropriate.

coexistence with communities, its environmental preservation and social welfare
activities, and its support for culture and the arts. For example, during the fiscal

3. We will strive to create a vibrant workplaceyear under review, Mitsubishi Estate participated as a supporter in the La Folle

While aiming at personal growth, we will respect the human rights and diversity ofopinions of others and increase our creativity and professionalism, while displaying
our collective strengths as a team.

Journee au Japon “Days of Enthusiasm”
Music Festival 2011, held small concert
events in the Marunouchi and otherWEB
http://www.mec.co.jp/e/investor/irlibrary/corp/index.html

For details of the Mitsubishi Estate Group Guidelines for Conduct,
please visit our Web site at:
http://www.mec.co.jp/e/company/charter/index.html(Formulated December 1, 1997)(Revised August 1, 2002)(Revised January 1, 2006)

areas, implemented “Experience Nature”
projects nationwide to promote communication between urban and rural
people, and hosted the annual Dazzling
Art Competition—a drawing contest fordisabled children throughout Japan.
WEB
http://www.mec.co.jp/e/csr/index.html

2223

Organization (As of April 1, 2012)

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Directors, Statutory Auditors and Executive Officers (As of June 29, 2012)• Business Development, Consulting & Solutions Group

Business Development, Consulting & Solutions Dept. 1
Business Development, Consulting & Solutions Dept. 2• Property Management and Office Leasing Group
Property Management Dept.

Building Safety Management Office
Yokohama Renewal Office

Keiji Kimura

Hirotaka Sugiyama

Nobuyuki Iizuka

Masaaki Kono

Chairman

Chief Executive Officer

Deputy President

Executive Vice President

Commercial Property Advisory Dept.
Office Leasing and Tenant Relations Dept.

Relocation Management Office
Master Lease Planning and Management OfficeTenant Improvements Management Office• Commercial Asset Management and Development Group
Commercial Asset Management Dept.

Group Companies Management Office

Area Brand Management Dept.

Meeting of Shareholders

Museum Management Office

Takao Yagihashi

Hiroyoshi Ito

Yutaka Yanagisawa

Masao Ouchi

Board of Directors

Executive Vice President

Executive Vice President

Executive Vice President

Executive Vice President

Chairman of the Board

Commercial Asset Development Dept.
Area Planning Office
Strategic Planning
Committee• Retail Property Group

Retail Property Planning Dept.
Retail Property Development Dept.
Retail Property Leasing Dept.

President &Chief Executive Officer

Executive Committee
Strategic Investment
Committee

Retail Property Tenant Improvements Management Office• Commercial Property Development and Investment Group

Commercial Property Development and Investment Planning Dept.

Commercial Property Development and Investment Dept.

Logistics Facilities Development and Investment Office

Development Planning Dept.

Toshihiko Kazama

Masamichi Ono

Jo KatoNaoto Aiba

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Toyosu Development Project Office• Residential Development GroupInternal Audit Office

CSR Committee
Compliance
Subcommittee

Board of Statutory Auditors
Statutory Auditor

Soichiro Hayashi

Shiro Fujisawa

Takao Tojo

Koji Kiyosawa

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Office of Statutory Auditors

Environmental
Subcommittee

Residential Business Dept.

Recreational Facilities Office

Apartment Development Dept.

Development Solutions Office• International Business GroupInternational Business Dept.

Shanghai Representative Office• Investment Management Group

Investment Management Business Dept.

Risk Management
Committee
Risk Management
Subcommittee• Corporate Group

Corporate Planning Dept.

Affiliated Group Dept.

Human Resources Dept.

Human Resources Compliance OfficeFinance & Accounting Dept.

Masao Toyoizumi

Kazuyuki Yabu

Kenichi Iwata

Executive Officer

Executive Officer

Executive Officer

Directors and Statutory Auditors

Atsuo Kyono

Hirokazu Kano

Kazuhiko Arahata

Keiji Kimura

Hirotaka Sugiyama

Nobuyuki Iizuka

Masaaki Kono

Executive Officer

Executive Officer

Executive Officer

Representative Director
Chairman of the Board

Representative Director

Representative Director

Toru Okusa

Yutaka Tajima

Tetsuji Arimori

Representative Director
President & Chief
Executive Officer

Executive Officer

Executive Officer

Executive Officer

Hiroyoshi Ito
Representative Director

Masami Amano

Hidemi Waki

Junichi Tanizawa

Executive Officer

Executive Officer

Executive Officer

Shiro Fujisawa

Junichi Yoshida

Tetsuo Yuasa

Executive Officer

Executive Officer

Executive Officer

Isao Matsuhashi

Director

Hiroshi Danno

Akio Utsumi

Standing Statutory
AuditorSecretary Office

Legal & Compliance Dept.
CSR & Environmental Sustainability Dept.

Takao Yagihashi

Jo KatoTohoku Branch

Director

Director

Yokohama Branch

Fumikatsu Tokiwa

Yasumasa Gomi

Director

Director

Kazuhiko Hasegawa

Kenjiro Hata

Standing Statutory
Auditor

Statutory Auditor

Director

Shu Tomioka

Investor Relations Office

General Affairs Dept.

Sapporo Branch

Representative Director
Director

Hiroshi Katayama

Yutaka Yanagisawa

Corporate Communications Dept.

Nagoya Branch
Osaka Branch
Chugoku Branch
Kyushu Branch

Statutory Auditor
Notes:
1.	Among directors, Isao Matsuhashi, Fumikatsu Tokiwa, Yasumasa Gomi, and Shu Tomioka are external directors who
fulfill the qualifications set forth under Article 2-15 of the Corporation Law of Japan.
2.	Among statutory auditors, Kazuhiko Hasegawa, Kenjiro Hata, and Akio Utsumi are external auditors who fulfill thequalifications set forth under Article 2-16 of the Corporation Law of Japan.

24

25

2008/3

Financial Review

2009/3

2010/3

2011/3

2012/3Financial Results (Millions of yen)

Revenue from Operations/Operating Income

revenue from operations in the International Business segment as a

In the fiscal year ended March 31, 2012, consolidated revenue fromwhole contracted ¥2,983 million compared with the previous fiscal

operations increased ¥24,622 million, or 2.5%, from the previous fis-year to ¥42,108 million while operating income decreased ¥1,994

cal year to ¥1,013,069 million. Consolidated operating income, on the

million year on year to ¥8,020 million.

Revenue from Operations

787,652

942,626

1,013,415

988,447

1,013,069

other hand, decreased ¥11,958 million, or 7.6%, year on year toOperating Income

177,983

138,567

148,972

158,258

146,299¥146,299 million. Results for each business segment are as follows.

Ordinary Income

162,061

108,624

117,381130,830

120,665

In the Building Business segment, Mitsubishi Estate reported an

ed to funds. As a result, revenue from operations increased ¥704 million

56,512increase in revenue from operations compared with the previous fiscal

compared with the previous fiscal year to ¥5,924 million. Accounting

year. Despite a year-on-year decrease in rental revenue, this increase wasfor the substantial drop in distributions from a special-purpose company

attributable to the sale of the Akasaka Park Building. As of March 31,

in which Mitsubishi Estate and other companies have invested, operat-

2012, the vacancy rate stood at 3.58%, unchanged from the end ofing income dropped ¥1,064 million year on year to ¥1,464 million.

Net Income

86,96345,423

11,90064,219Financial Position (Millions of yen)
Total Assets

4,327,137

4,429,070

4,355,065

4,245,209

4,387,015

Total Equity*1

1,238,889

1,148,494

1,183,156

1,202,270

Interest-Bearing Debt

1,645,407

1,834,195

1,762,111

1,639,050

In the Architectural Design & Engineering Business segment,

1,256,791

tions climbed ¥46,910 million year on year to ¥510,850 million.

Mitsubishi Estate recorded revenue in connection with such projects as

1,716,890

Operating income increased ¥4,184 million to ¥146,007 million.

the Marunouchi Eiraku Buildings (Chiyoda Ward, Tokyo) as well as the

Net Income

62.99

32.90

8.58

46.27

40.72

Cash Dividends

16.00

16.00

12.00

12.00

12.00

Principal Financial Indicators
EBITDA (Millions of yen) *2

improved year on year. As a result, revenue from operations rose

profitability, operating income in this segment was ¥4,792 million, a¥1,348 million to ¥19,932 million. Operating income similarly increased

drop of ¥7,441 compared with the previous fiscal year.

¥600 million to ¥1,190 million.
Royal Park Hotels and Resorts Co., Ltd., serves as the core driver in

4.9%

3.3%

3.5%

3.8%

3.5%

segment, revenue from operations increased compared with the previous

strengthening Mitsubishi Estate’s operations in the Hotel Businessfiscal year on the back of the sale of certain properties. Specifically,

segment. This consolidated subsidiary operates Royal Park Hotels inrevenue from operations climbed ¥7,902 million year on year to

Japan. During the fiscal year under review, the “Royal Park Hotel THE¥55,809 million. Operating income, on the other hand, declined

Fukuoka” and the “Royal Park Hotel THE Kyoto” opened for business.

¥4,064 million to ¥1,609 million owing mainly to the downturn in

Moreover, the Sendai Royal Park Hotel, which had been closed due

earnings from real estate for investment purposes.

to the Great East Japan Earthquake, recommenced operations in

8.5 times

4.7 times

5.2 times

6.6 times

6.5 times

7.1%

3.8%

1.0%

5.4%

4.6%

1,102

1,382,518

1,530

1,382,518

1,390,397

Ordinary Income

Operating Income(Billions of yen)(Billions of yen)

1,476

1,407

1,390,397

1,390,397

Net Income(Billions of yen)(Billions of yen)

162.0

177.9

138.5

struction business increased. Accordingly, revenues in these operations

impact of such factors as write-downs that reflected a deterioration in

222,885

2,420

787.6

tions decreased ¥26,321 million to ¥342,823 million. Due to the237,109

Notes:
1.	Total equity is calculated by deducting minority interests and stock acquisition rights from total net assets.
2.	EBITDA is calculated as the sum total of operating income, interest and dividend income, equity in earnings of unconsolidated subsidiaries and affiliates, depreciation andamortization, and goodwill.
3.	The interest coverage ratio (ICR) is calculated by dividing the sum total of operating income, interest and dividend income, and equity in earnings of unconsolidated subsidiaries andaffiliates by the sum total of interest expenses and commercial paper interest.

942.6

tural design and engineering business and the interior design and con-230,730

Stock Price (Yen)

1,013.4 988.4 1,013.0

fiscal year under review, the number of projects in both the architec-

the number of condominiums sold. As a result, revenue from opera-

209,522

Stock Information

Revenue from Operations

Palace Hotel and Palace Building (Chiyoda Ward, Tokyo). During the245,911

ROE

Number of Shares Issued andOutstanding (Thousands of shares)

In the Residential Business segment, Mitsubishi Estate’s revenue inthe condominium business slipped year on year, due to a decline in

In the Commercial Property Development & Investment Business

ROA
Interest Coverage Ratio *3

In the Investment Management Business segment, results were
buoyed by such factors as sales revenue from the investments distribut-

the previous fiscal year. Reflecting these factors, revenue from opera-

Per Share Amounts (Yen)

148.9

158.2

In the International Business segment, properties located in major

September 2011. While two hotels opened, operations at Royal Park

U.S. cities and the City of London in the United Kingdom showed sta-

Inn Nagoya were terminated in February 2011. Accounting for eachble performance. In addition, results benefitted from contributionsof the aforementioned factors, revenue from operations in thefrom newly acquired properties in the United States and United

Hotel Business segment declined ¥1,988 million compared with theKingdom. In contrast, and taking into account the negative impacts ofprevious fiscal year to ¥25,654 million. Despite a year-on-year

a decline in proceeds from sales of properties in the United States andimprovement of ¥62 million, this segment still incurred an operating

United Kingdom as well as sharp appreciation in the value of the yen,loss of ¥278 million.

Total Assets

Interest-Bearing Debt

Total Equity(Billions of yen)

4,429.0
4,355.0
4,387.0
4,327.1
4,245.2

86.9

146.2

130.8
108.6

117.3

EBITDA(Billions of yen)(Billions of yen)

1,256.7
1,238.8
1,183.1 1,202.2
1,148.4

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Financial Highlights—Five-Year Summary

1,834.1
1,645.4

1,762.1
1,716.8
1,639.0(Billions of yen)

245.9

230.7 237.1
209.5

222.8

120.6
64.2
56.5
45.4

11.9
2008/3 2009/3 2010/3 2011/3 2012/3

26

2008/3 2009/3 2010/3 2011/3 2012/3

2008/3 2009/3 2010/3 2011/3 2012/3

2008/3 2009/3 2010/3 2011/3 2012/3

2008/3 2009/3 2010/3 2011/3 2012/3

2008/3 2009/3 2010/3 2011/3 2012/3

2008/3 2009/3 2010/3 2011/3 2012/3

2008/3 2009/3 2010/3 2011/3 2012/3

27

The following table shows the year-end amounts, changes in

2011/3

YoY Change

taxes and minority interests, long-term borrowings, and proceeds fromthese amounts during the period under review, and the fair values of

1,013,069

988,447

24,622

issuance of corporate bonds. Major cash outflows included purchases ofinvestment and rental properties and other real estate that includes

property and equipment and the repayment of long-term borrowings.

portions used as investment and rental properties.

Millions of yenCo., Ltd., transferred its housing sales consignment business inJanuary 2011 as a part of efforts to conduct integrated management.

Revenue from operations

Due to this transfer and the absence of associated revenue from the

Building Business

510,850

463,939

46,910previous fiscal year results declined. As a result, revenue from opera-

Residential Business

342,823

369,145(26,321)

Millions of yen

55,80947,907

7,902¥26,085 million. Earnings also deteriorated ¥488 million, resulting inan operating loss for the period of ¥57 million.

International Business

42,10845,091(2,983)down ¥56,020 million compared with the previous fiscal year. For the

5,924

5,220

704

fiscal year under review, income before income taxes and minority
interests amounted to ¥87,513 million, and depreciation and amorti-

Balance as of the beginning of the period

2,615,827

2,467,177

19,932

18,584

1,348

zation—a non-cash item—totaled ¥67,465 million. These and other

Increase (decrease) during the period(148,649)

155,563

25,654

27,643(1,988)cash inflows were adjusted to reflect movements in inventories andBalance as of the end of the period

2,467,177

2,622,741

equity investments as well as other items.

Market value as of the end of the period

4,316,530

4,469,512

Revenue from operations in the Other segment edged up ¥62 million to ¥3,506 million. Operating income decreased ¥229 million to¥181 million.

Investment Management
Business
Architectural Design &Engineering Business

Other Income (Expenses)

Real Estate Services

Other income increased ¥618 million year on year to ¥9,122 million.

Other

Despite decreases in interest income, the amortization of negative

Adjustments (see Note)

Cash Flows from Operating Activities
Net cash provided by operating activities stood at ¥203,243 million,

Hotel Business

26,08527,719(1,633)

3,506

3,443

62

(19,628)(20,248)

620

Cash Flows from Investing Activities

Investment and Rental Properties
Amounts recorded on consolidated balance sheets

Real Estate That Includes Portions
Used as Investment and Rental Properties

goodwill, and equity in earnings of unconsolidated subsidiaries andOperating Income

146,299

158,258(11,958)

Net cash used in investing activities totaled ¥272,009 million, up

Amounts recorded on consolidated balance sheets

affiliates, this increase was largely attributable to higher dividend

Building Business

146,007

141,823

4,184¥204,785 million year on year. This was largely due to purchases ofBalance as of the beginning of the period

234,910

233,688

Residential Business

4,792

12,234(7,441)(1,221)(1,269)Commercial Property
Development & Investment
Business

property and equipment.

Increase (decrease) during the period

1,609

5,674

(4,064)

Balance as of the end of the period

233,688

232,419

Market value as of the end of the period

323,700

330,100

dinary gains of ¥2,205 million, mainly from sales of fixed assets. At theInternational Business

8,020

same time, the Company posted an extraordinary loss totaling ¥35,357
of fixed assets, ¥18,133 million in impairment loss, ¥1,569 million in

Investment Management
Business
Architectural Design &Engineering Businessloss for soil decontamination, ¥3,011 million in loss on devaluation ofincome. Other expenses decreased ¥1,174 million to ¥34,756 million,
due to a drop in interest expenses, among other factors.
Turning to extraordinary items, Mitsubishi Estate recorded extraor-

Cash Flows from Financing Activities
10,015(1,994)

Net cash provided by financing activities amounted to ¥57,189 million,
a turnaround from net cash used in financing activities of ¥197,458

1,464

2,528

(1,064)

1,190

590

600

Hotel Business

(278)

(340)

62

equity investments, ¥3,618 million on loss related to the serviced apart-

Real Estate Services

(57)

430

(488)

(2) Consolidated Balance Sheets

ment business, and ¥1,296 million in loss related to the cost of termi-

Other

181

411

(229)

Compared with March 31, 2011, total assets as of March 31, 2012,

nating an employee clinic.

Adjustments (see Note)(16,632)(15,109)(1,523)

million, which consisted of ¥7,728 million in loss related to retirement

million year on year. This turnaround reflected long-term borrowings,

Note: From the fiscal year under review, the line item “Eliminations or Corporate” ispresented as “Adjustments.”

Net Income

the issuance of corporate bonds and other financing activities.

increased ¥141,806 million to ¥4,387,015 million.

Notes:
1.	The amount included in the consolidated balance sheets presented in the table
above is equal to the total acquisition price for applicable properties or real estateless the aggregate amounts of depreciation and impairment loss for these propertiesor real estate.
2.	Fair values as of the end of each consolidated fiscal year are as follows:(1) The fair values of domestic properties and real estate have been calculated by
Mitsubishi Estate, based mainly on the Japanese Real Estate Appraisal Standards.
(2) The fair values of overseas properties and real estate have been calculated mostly
by local appraisers.

Also, the following table shows profit and loss related to real

Total liabilities climbed ¥82,939 million to ¥3,013,100 million. The

estate, including the investment and rental properties and other realbalance of interest-bearing debt as of March 31, 2012, grew ¥77,840

estate that includes portions used as investment and rental properties
for each fiscal year.

Income before income taxes and minority interests declined ¥28,442

Analysis of Financial Position

million compared with the balance as of March 31, 2011, tomillion, or 24.5%, year on year to ¥87,513 million. Net income con-

(1) Consolidated Cash Flow

¥1,716,890 million. Deducting cash and cash equivalents, the net

Millions of yen

Fiscal Year Ended
Fiscal Year Ended
March 31, 2011 (April 1, March 31, 2012 (April 1,2010 to March 31, 2011) 2011 to March 31, 2012)

tracted ¥7,706 million, or 12.0%, to ¥56,512 million. Net income per

On a consolidated basis, cash and cash equivalents at the end of thebalance of interest-bearing debt as of March 31, 2012, increased

share stood at ¥40.72.

fiscal year under review decreased ¥13,290 million year on year to¥91,131 million year on year to ¥1,501,118 million.
Net assets increased ¥58,867 million year on year to ¥1,373,915

ROA

ROE

Interest Coverage Ratio

(%)

(%)

Net Income Per Share

Rental Revenue

341,761

345,288

ments and unrealized holding gain on securities were more than offset

Rental Costs

217,064

224,155

by increases in land revaluation reserve, retained earnings, minority

Difference

124,697

121,133

Other Income (Loss)(10,486)(20,984)

interests and other items.
• Matters related to Investment and Rental Properties

62.99
8.5

7.1

46.27
40.72

5.4
4.6

3.8
3.5

6.6

6.5

32.90

3.5

3.3

4.7

2008/3 2009/3 2010/3 2011/3 2012/3

2008/3 2009/3 2010/3 2011/3 2012/3

20,26819,052

office buildings and retail facilities in Tokyo and other major cities in

15,476

16,393

Japan as well as in the United States and the United Kingdom, withDifference

4,792

2,659

the aim of obtaining rental revenue from these buildings and facilities.

Other Income (Loss)

(373)

(444)

classified such buildings as real estate that includes portions used as
8.58

1.0
2008/3 2009/3 2010/3 2011/3 2012/3

Rental Revenue
Rental Costs

Company or some of its consolidated subsidiaries, the Company has

5.2

2008/3 2009/3 2010/3 2011/3 2012/3

Real Estate That Includes Portions
Used as Investment and Rental Properties

Mitsubishi Estate and some of its consolidated subsidiaries own certain

Because certain leased office buildings among these are used by the

3.8

Investment and Rental Properties

million. Decreases in such items as foreign currency translation adjust-(Yen)(Times)4.9

28

Fiscal Year Ended
Fiscal Year Ended
March 31, 2011 (April 1, March 31, 2012 (April 1,2010 to March 31, 2011) 2011 to March 31, 2012)

Commercial Property
Development & Investment
Businesstions in this segment decreased ¥1,633 million year on year to

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

¥215,771 million. Major cash inflows included income before income

2012/3In the Real Estate Services segment, Mitsubishi Real Estate Services

investment and rental properties.

Notes:
1.	Real estate that includes portions used as investment and rental properties has portions that are used by Mitsubishi Estate and some of its consolidated subsidiaries forthe purpose of providing related services and conducting operation management.
Accordingly, rental revenue associated with these portions has been excluded. Costs
associated with applicable properties and real estate, such as depreciation costs,
building management costs and taxes, have been included in rental costs.
2.	Other income (loss) includes loss on disposal of fixed assets, impairment loss andother items.

29

Financial Statements
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
March 31, 2012 and 2011

Thousands of
U.S. dollars (Note 3)

Millions of yen

2012

2012

AssetsLiabilities and net assets

Current assets:

Current liabilities:

Cash (Notes 6 and 16)¥

215,741¥

224,688

41,927

40,130Marketable securities (Note 15)866

Allowance for doubtful receivables(2,130)Inventories (Notes 4 and 6)$

2,624,914

Short-term borrowings and current portion of long-term debt (Note 6)

510,132

Notes and accounts payable – trade

5,094

10,548(502)(25,917)465,401

559,405

5,662,513

Equity investments (Note 15)

288,548

209,900

3,510,754

Total current liabilities

Deferred income taxes (Note 8)

15,14818,849184,308

Long-term liabilities:

Other current assets

58,19942,361

708,107

1,083,704

1,099,926

13,185,361

Notes and accounts receivable – trade

Total current assets

Investments:

¥

2012

2011

302,933¥

313,723$

3,685,773

77,86076,113

947,321

Accrued income taxes (Note 8)

15,45515,857

188,044

Advances and deposits

114,01780,584

1,387,239

Accrued expenses and other current liabilities

48,787

46,628593,591

559,053

532,906

6,801,970

Long-term debt (Note 6)

1,405,635

1,318,097

17,102,267

Lease deposits received

373,189374,719

4,540,575

Accrued employees’ retirement benefits (Note 7)

15,42015,322

187,619

Deferred income taxes (Note 8)

502,629546,241

6,115,460

Negative goodwill

82,99579,074

1,009,798

Other non-current liabilities

74,17563,798902,489

Total long-term liabilities

2,454,046

2,397,254

29,858,211

1,936,626

Total liabilities

3,013,100

2,930,161

36,660,182

143,430

1,738,478

Net assets:

326,749

3,856,029

			 Issued – 1,390,397,097 shares in 2012 and 2011

141,373

141,373

1,720,078

Investments in and advances to unconsolidated
subsidiaries and affiliates

14,87014,433

180,924

Investment securities (Notes 6 and 15)

159,171

168,885

Other investments (Note 5)

142,885
316,927

Total investments

Thousands of
U.S. dollars (Note 3)

Millions of yen

2012

2011

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Consolidated Balance Sheets

Shareholders’ equity (Note 9):
		 Common stock, without par value:
			 Authorized – 1,980,000,000 shares;

Property and equipment (Note 6):Land
Land in trust

1,672,379

1,613,702

20,347,721

		 Capital surplus

170,485

170,485

2,074,286

308,932

245,091

3,758,765

		 Retained earnings

471,087

449,889

5,731,693

1,969,910

1,882,691

23,967,758

		 Less treasury stock, at cost

(4,366)(4,390)(53,129)

Machinery and equipment and other123,301

117,8221,500,202

Total shareholders’ equity

778,580

757,358

9,472,928

Construction in progress

41,03735,516499,297

4,115,561

3,894,824

50,073,745

Unrealized holding gain on securities

47,251

48,021

574,905(1,233,325)(1,177,519)(15,005,785)

Deferred gains or losses on hedging instruments

(238)

(254)

(2,900)2,882,235

2,717,305

35,067,959

Land revaluation reserve

500,647

458,297

6,091,347

Foreign currency translation adjustments(69,449)(61,151)(844,984)

Total accumulated other comprehensive income

478,211444,912

5,818,368

451

381

5,490

116,672

112,395

1,419,544

1,373,915

1,315,047

16,716,333

Buildings and structures

Less accumulated depreciation
Property and equipment, net

104,148

Intangible and other assets

1,267,163

101,228

Accumulated other comprehensive income:Stock acquisition rights
Minority interests
Contingent liabilities (Note 12)
Total net assets

Total assets¥

4,387,015¥

4,245,209$

53,376,515

Total liabilities and net assets¥

4,387,015¥

4,245,209$

53,376,515

See accompanying notes to consolidated financial statements.

30

31

Consolidated Statements of Changes in Net Assets

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2012 and 2011

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2012 and 2011

Thousands of
U.S. dollars (Note 3)

Millions of yen

2012
Revenue from operations¥

1,013,069¥(790,233)

Cost of revenue from operations

988,447$

12,325,944(9,614,710)(751,953)

Selling, general and administrative expenses(76,536)(78,235)(931,218)

Operating income

146,299

158,258

1,780,015

Other income (expenses):
4,164

3,700

50,663(23,087)(24,777)(280,899)

515

661

6,277

(40,378)(21,887)(491,287)(58,785)(42,302)(715,245)

87,513

115,955

1,064,770

Current(28,715)(26,953)(349,373)

Deferred

10,070(21,687)

122,532(18,644)(48,641)(226,841)(12,356)(3,095)(150,345)

Interest and dividend income
Interest expenses
Equity in earnings of unconsolidated subsidiaries and affiliates
Other, net (Note 13)
Income before income taxes and minority interests
Income taxes (Note 8):

Minority interests
Net income¥

56,512¥Millions of yen
Shareholders’ equity

2012

2011

64,219$687,583

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Consolidated Statements of Income

Balance at April 1, 2010
Changes in the year:
New issue of stock
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than those in shareholders’ equity
Total of changes in the year
Balance at March 31, 2011
Changes in the year:
New issue of stock
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than those in shareholders’ equity
Total of changes in the year
Balance at March 31, 2012

Commonstock

CapitalsurplusRetainedearnings

Treasurystock¥141,373¥170,485¥402,792¥(3,926)¥710,724

(749)
285

(16,657)
64,219
(749)
214
18
(411)

(463)
(4,390)46,633757,358(74)
98(16,653)
56,512(74)
78(18,608)(32)

23¥(4,366)

21,221¥778,580

Minority
interests

Total
net assets¥122,760¥1,306,222(16,657)
64,219
(71)
18
(411)

141,373

170,485

47,097449,889(16,653)
56,512(19)(18,608)(32)¥141,373¥170,485

21,198¥471,087

Total shareholders’equityMillions of yen

See accompanying notes to consolidated financial statements.

Accumulated other comprehensive income

Consolidated Statements of Comprehensive Income
Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2012 and 2011

Thousands of
U.S. dollars (Note 3)

Millions of yen

2012
Income before minority interests

¥

2012

2011
68,869¥67,314$

837,929

Other comprehensive income (Note 22):
Unrealized holding gain (loss) on securities(770)(11,717)(9,379)Deferred gain (loss) from hedging instruments

(246)

113

(3,003)

Land revaluation reserve

23,717

0288,563

Foreign currency translation adjustments(8,299)(16,613)(100,983)

(134)

18

(1,636)

14,264(28,198)

173,561

Share of other comprehensive income of companies
accounted for by the equity method
Total other comprehensive income¥

83,134¥

39,115$

1,011,490

Shareholders of Mitsubishi Estate Co., Ltd.

¥71,203¥36,717$866,322

Minority interests¥

11,931

¥

2,398

$

145,167

Comprehensive income (Note 22)
Total comprehensive income attributable to:

See accompanying notes to consolidated financial statements.

Balance at April 1, 2010
Changes in the year:
New issue of stock
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than thosein shareholders’ equity
Total of changes in the year
Balance at March 31, 2011
Changes in the year:
New issue of stock
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than thosein shareholders’ equity
Total of changes in the year
Balance at March 31, 2012

Unrealized
holding
gain onsecurities

Deferred
gains or losses
on hedging
instruments

Land
revaluation
reserve

Foreigncurrencytranslation
adjustments¥ 59,729¥(376)¥458,303¥(45,223)

Total
accumulated
other
Stock
comprehensive acquisition
incomerights¥472,432¥305(16,657)
64,219
(749)
214
18
(411)
(11,708)(11,708)
48,021

122
122
(254)

(6)
(6)
458,297(15,927)(15,927)(61,151)(27,519)(27,519)444,91275
75
381(10,364)(10,364)
112,395(37,808)
8,825
1,315,047(16,653)
56,512(74)
78(18,608)
(32)
(770)
(770)
¥ 47,25116
16¥(238)

42,35042,350¥500,647(8,297)(8,297)¥(69,449)

33,29833,298¥478,211

70
70
¥451

4,276
4,276
¥116,672

37,64558,867¥1,373,915

See accompanying notes to consolidated financial statements.

32

33

Consolidated Statements of Cash Flows

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2012 and 2011

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2012 and 2011
Thousands of U.S. dollars (Note 3)

Balance at April 1, 2010
Changes in the year:
New issue of stock
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than those in shareholders’ equity
Total of changes in the year
Balance at March 31, 2011
Changes in the year:
New issue of stock
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than those in shareholders’ equity
Total of changes in the year
Balance at March 31, 2012

Commonstock

CapitalsurplusRetainedearnings$1,720,078$2,074,286$4,900,742

Treasurystock

1,720,078

2,074,286

573,034
5,473,776$8,647,332(9,119)3,476(202,670)
781,351(9,119)2,607
224(5,001)(5,642)(53,417)567,391
9,214,724

(911)
1,199

(202,623)
687,583(911)
957(226,407)
(394)

287
$(53,129)

258,204$9,472,928(202,623)
687,583(241)(226,407)(394)$1,720,078$2,074,286

257,916$5,731,693

Total shareholders’equity$(47,774)(202,670)
781,351(869)
224(5,001)Thousands of U.S. dollars (Note 3)
Accumulated other comprehensive income

Balance at April 1, 2010
Changes in the year:
New issue of stock
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than thosein shareholders’ equity
Total of changes in the year
Balance at March 31, 2011
Changes in the year:
New issue of stock
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Changes in the scope of consolidation
Net change in items other than thosein shareholders’ equity
Total of changes in the year
Balance at March 31, 2012

Unrealized
holdnig
gain onsecurities

Deferred
gains or losses
on hedging
instruments$ 726,728$(4,580)Land
revaluation
reserve

Foreigncurrencytranslation
adjustments

Total
accumulated
other
Stock
comprehensive acquisition
incomerights$5,576,142 $(550,234) $5,748,055

Minority
interests$3,716 $1,493,613

Total
net assets$15,892,717(202,670)
781,351(9,119)2,607
224(5,001)(142,453)(142,453)
584,275

1,485
1,485
(3,095)(74)(74)
5,576,067(193,791)(193,791)(744,025)(334,833)(334,833)
5,413,222

922
922
4,638

Thousands of
U.S. dollars (Note 3)

Millions of yen

Shareholders’ equity(126,102)(126,102)
1,367,511(460,013)
107,378
16,000,096(202,623)
687,583(911)
957(226,407)
(394)

2012
Cash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Loss on sales or disposal of property and equipment
Gain on sales of securities
Valuation loss on securities
Valuation loss on equity investments
Impairment loss
Equity in net income of affiliates
Increase (decrease) in allowancesInterest and dividend income
Interest expense(Increase) decrease in notes and accounts receivable(Increase) decrease in inventories(Increase) decrease in equity investments
Increase (decrease) in notes and accounts payable
Increase (decrease) in lease deposits received
Other
		 Subtotal
Interest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash 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 in change in scopeof consolidation
Other (Note 16)
Net cash used in investing activities
Cash flows from financing activities
Net increase and 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
Cash dividends paid
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase and 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 from consideration
Increase in cash and cash equivalents arising from merger
Cash and cash equivalents at end of year (Note 16)¥¥

87,51367,465
7,886
(229)
333
3,011
18,133(515)
3,193(4,164)23,087(6,416)
109,481(82,423)(3,146)(1,743)28,134
249,601
4,379(22,931)(27,805)
203,243

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Consolidated Statements of Changes in Net Assets (continued)

2012

2011
¥

115,955
70,628
4,388
(337)
3,286
3,587
2,788
(661)
(12)
(3,700)24,777(13,640)
71,6769,183(530)(7,929)12,979292,440
3,943(25,047)(12,073)259,263$

1,064,770
820,846
95,960(2,798)4,059
36,636
220,622(6,277)38,859(50,663)
280,900(78,069)
1,332,051(1,002,836)(38,278)(21,214)342,3113,036,881
53,280(279,003)(338,309)
2,472,848

1,179(1,000)10,592(282,109)
1,728
(922)

1,220
(1,000)157(76,239)
3,683(8,838)14,350(12,166)
128,875(3,432,403)
21,027(11,219)–(1,477)(272,009)(9,147)22,939(67,223)–(17,981)(3,309,518)

4,794
241,898(235,393)
105,270(35,630)(16,653)(7,097)57,189(2,262)(13,839)
229,0627(66)
607
215,771(22,786)
260,170(323,857)
17,074(38,861)(16,657)(15,351)(140,269)(2,096)49,674
177,825
1,563––
229,062

58,3372,943,164(2,864,011)
1,280,824(433,515)(202,623)(86,360)
695,816(27,530)(168,382)
2,786,984
95
(814)
7,394
2,625,278¥$

See accompanying notes to consolidated financial statements.

(9,369)195(9,369)195$ 574,905 $(2,900)

515,279 (100,959)
405,146515,279 (100,959)
405,146$6,091,347 $(844,984) $5,818,368

852
52,033852
52,033$5,490 $1,419,544

458,032
716,236$16,716,333

See accompanying notes to consolidated financial statements.

34

35

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2012 and 2011

1

Significant Accounting Policies

a. Basis of preparation
The accompanying consolidated financial statements of Mitsubishi Estate Co.,
Ltd. (the “Company”) and consolidated subsidiaries are prepared on the basisof accounting principles generally accepted in Japan, which are different incertain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards, and are compiled from theconsolidated 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 accepted inJapan 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, thetotals shown in the accompanying consolidated financial statements (both inyen 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 Company and its consolidated subsidiaries that it controls directly or
indirectly. Companies over which the Company exercises significant influencein terms of their operating and financial policies have been included in the
consolidated financial statements on an equity basis.
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 andassumptions that affect the amounts reported in the financial statements andaccompanying 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 Company and its consolidated subsidiaries consider 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 balance sheet and cash equivalents at March 31, 2012
and 2011 is presented in Note 16.
f. Marketable securities and investment securities
Securities other than those of subsidiaries and affiliates are classified into
three categories: trading, held-to-maturity or other securities. Trading
securities are carried at fair value and held-to-maturity securities are carried atamortized cost. Marketable securities classified as other securities are carriedat fair value with any changes in unrealized holding gain or loss, net of theapplicable income taxes, included directly in shareholders’ equity. Nonmarketable securities classified as other securities are carried at cost. Cost of
securities sold is determined 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.
h. Property and equipment, depreciation and impairment
Property and equipment, except for land as discussed below, is stated at costless accumulated depreciation. Depreciation is calculated principally by the36

declining-balance method, except for buildings acquired in Japan subsequent
to March 31, 1998 and property and equipment of foreign subsidiaries on
which depreciation is calculated by the straight-line method at rates
determined based on the estimated useful lives of the respective assets. The
Company and its consolidated subsidiaries have capitalized the costs incurred
for significant renewals and additions; however, costs for maintenance andrepairs 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 “Land revaluation
reserve” in net assets.
The Company and its consolidated subsidiaries review their property andequipment (including land) for impairment whenever events or changes in its
business circumstances indicate that the carrying amount of the assets may
not be fully recoverable. They perform cash flow analyses to determine if
impairment exits. 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
Machinery and equipment and other2 to 22 years
i. Intangible and other assets
Intangible and other assets 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 isrecognized if the fair value falls below the carrying amount. Land use rights
are stated on a cost basis.
j. Retirement benefits
The Company and most consolidated subsidiaries have noncontributory
funded and unfunded defined benefit plans covering most of their employees.
Employees of the Company and its consolidated subsidiaries are entitledunder most employment termination circumstances to annuity payments or
lump-sum payments, the amounts of which are determined principally byreference to their basic rates of pay, length of service, and the conditions
under which the termination occurs.
Accrued employees’ retirement benefits are provided mainly at an
amount calculated based on the retirement benefit obligation and the fairvalue of the pension plan assets as of the balance sheet date, as adjusted for
unrecognized actuarial gain or loss and unrecognized prior service cost. The
retirement benefit obligation is attributed to each period by the straight-line
method over the estimated years of service of the employees.
Actuarial gain and loss are amortized in the year following the year inwhich the gain or loss is recognized by the straight-line method over theperiod of the range from 1 year to 15 years which are shorter than the
average remaining years of service of the employees.
Prior service cost is being amortized as incurred by the straight-line
method over the period of 1 years or 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 toreverse. Deferred tax assets are also recognized for the estimated future 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 thesome 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 to adverse
fluctuations and changes in interest rates (interest rate swaps) and foreignexchange rates (currency swaps), but do not enter into such transactions 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 thosewhich meet the criteria for deferral hedge accounting under which unrealized
gain or loss is deferred as an asset or liability.
m. Revenue recognition
The consolidated statements of income reflect revenue from operations in thefollowing manner:(a) Revenue from the leasing of office space is recognized as rent accrued overthe leasing period.
(b) Revenue from sales of condominiums, residential houses and land isrecognized when the units are delivered and accepted by the customers.
Revenue from consignment commissions for residential sales earned by thereal estate service business segment is recognized at the time of contractconclusion for services provided up to the conclusion and at the time ofownership transfer for services provided up to the transfer.
(c) Revenue from real estate brokerage is recognized when an underlying leaseagreement goes into force or the underlying units are delivered.
(d) Revenue of construction contracts, of which the percentage of completion canbe reliably estimated, is recognized by the percentage-of-completion method.
The percentage-of-completion method is calculated at the cost incurred by theend of the consolidated fiscal year as a percentage of estimated total cost. The
completed-contract method continues to be applied for other contracts for

2

Changes in Accounting Policy(“Accounting Standard for Accounting Changes and Error Corrections”)
Effective April 1, 2011, the Company has adopted “Accounting Standard for
Accounting Changes and Error Corrections” (ASBJ Statement No. 24 issued

3

which the percentage of completion cannot be reliably estimated.
(e) Other operating revenue is recognized on an accrual basis.
n. Appropriation of retained earnings
Under the Companies Act of Japan, the appropriation of retained earnings
with respect to a given financial year is made by resolution of the shareholders
at a general meeting held subsequent to the close of such financial year. The
accounts for that year do not, therefore, reflect such appropriations. See Note
9 for more information.
o. Standards issued but not yet effective
On March 25, 2011, Accounting Standard Board of Japan (“ASBJ”) issued“Revised Accounting Standard for Consolidated Financial Statements” (ASBJ
Statement No. 22), “Revised Guidance on Disclosures about Certain Special
Purpose Entities” (ASBJ Guidance No. 15), “Revised Guidance on Determininga Subsidiary and an Affiliate” (ASBJ Guidance No. 22) and “Revised Practical
Solution on Application of the Control Criteria and Influence Criteria to
Investment Associations” (ASBJ PITF No. 20). These standards and related
implementation guidance and practical solution modify existing standards toaddress current treatment for consolidation of certain special purpose entities.
These standard and related implementation guidance and practical solution
are effective for fiscal year beginning on or after April 1, 2013. The Company
is currently evaluating what effect these modifications will have on its
consolidated results of operations and financial condition.

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Notes to Consolidated Financial Statements

on December 4, 2009) and “Guidance on Accounting Standards for
Accounting Change and Error Corrections” (ASBJ Guidance No. 24 issued on
December 4, 2009).

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 ¥82.19 =U.S.$1.00, the approximate rate of exchange prevailing on March 31, 2012. The inclusion of such amounts is not intended to imply that yen amounts have beenor could be readily converted, realized or settled in U.S. dollars at the above or any other rate.

4

Inventories

Inventories at March 31, 2012 and 2011 are summarized as follows:
Millions of yen

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

5

2012
¥120,573
328,127
8,632
8,068¥465,401

Thousands of U.S. dollars

2011¥217,420
324,7138,801
8,469¥559,405

2012$1,467,009
3,992,305
105,031
98,166$5,662,513

Other Investments

Other investments at March 31, 2012 and 2011 were as follows:
Millions of yen

Lease deposits
Long-term prepaid expenses and other
Total

6

2012
¥101,833
41,052¥142,885

Thousands of U.S. dollars

2011¥ 97,238
46,192¥143,430

2012$1,238,996
499,482$1,738,478

Short-Term Borrowings and Long-Term Debt

At March 31, 2012 and 2011, short-term borrowings and the current portion of long-term debt consisted of the following:
Millions of yen

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

2012
¥ 79,002
223,930¥302,933

Thousands of U.S. dollars

2011¥ 75,507
238,216¥313,723

2012$ 961,220
2,724,552$3,685,773

The weighted-average interest rates per annum on short-term borrowings outstanding at March 31, 2012 and 2011 were 0.63% and 0.60%, respectively. Shortterm borrowings are principally unsecured.

37

At March 31, 2012 and 2011, long-term debt consisted of the following:2012
1.44% unsecured bonds due 2011
1.16% unsecured bonds due 2011
1.47% unsecured bonds due 2012
1.58% unsecured bonds due 2012
3.275% unsecured bonds due 2012
2.77% unsecured bonds due 2012
1.395% unsecured bonds due 2012
1.2% unsecured bonds due 2012
1% unsecured bonds due 2013
0.785% unsecured bonds due 2013
1.675% unsecured bonds due 2014
1.349% unsecured bonds due 2014
1.65% unsecured bonds due 2014
1.75% unsecured bonds due 2014
1.655% unsecured bonds due 2014
1.409% unsecured bonds due 2015
1.295% unsecured bonds due 2015
1.572% unsecured bonds due 2015
1.443% unsecured bonds due 2016
1.985% unsecured bonds due 2016
1.88% unsecured bonds due 2016
0.553% unsecured bonds due 2016
0.459% unsecured bonds due 2016
1.79% unsecured bonds due 20172.045% unsecured bonds due 20171.825% unsecured bonds due 20173.125% unsecured bonds due 20171.77% unsecured bonds due 20171.65% unsecured bonds due 2018
2.005% unsecured bonds due 2018
3% unsecured bonds due 2018
1.84% unsecured bonds due 2018
1.72% unsecured bonds due 2018
0.811% unsecured bonds due 2018
1.87% unsecured bonds due 2019
1.62% unsecured bonds due 2019
1.53% unsecured bonds due 2019
1.975% unsecured bonds due 2019
1.805% unsecured bonds due 20192.5% unsecured bonds due 2020
1.165% unsecured bonds due 2020
1.262% unsecured bonds due 2021
1.103% unsecured bonds due 2021
1.095% unsecured bonds due 2021
2.42% unsecured bonds due 2022
1.50% unsecured bonds due 2022
1.178% unsecured bonds due 2022
2.075% unsecured bonds due 2023
2.28% unsecured bonds due 2024
2.305% unsecured bonds due 2027
2.385% unsecured bonds due 2027
2.52% unsecured bonds due 2027
2.425% unsecured bonds due 2027
2.555% unsecured bonds due 2028
2.9% unsecured bonds due 2032
2.615% unsecured bonds due 2032
2.04% unsecured bonds due 2032
1.72% unsecured bonds due 2033
Floating rate bonds due 2011 (payable in U.S. dollars)
Floating rate bonds due 2012 (payable in U.S. dollars)
Loans from banks and insurance companies:
SecuredUnsecuredLess current portion

38

Thousands of U.S. dollars–––
20,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,00010,00015,00010,00010,00010,00010,00010,00020,00010,00010,00010,00015,00010,00010,00015,00010,00010,00010,00010,00010,00010,00015,00020,00010,00010,00010,00020,00010,00010,00010,00010,00015,00010,00010,00010,00010,00020,00010,000
–
6,235

2011
¥ 10,000
10,00010,00020,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00010,00015,00010,00010,000––10,00010,00010,00010,00020,00010,00010,00010,00015,00010,000–15,00010,00010,00010,00010,00010,00010,000–––10,00010,000–10,00010,00010,00010,00015,00010,00010,00010,00010,00020,00010,0006,330–

213,687
779,643
1,629,566(223,930)¥1,405,635

258,665
731,318
1,556,314(238,216)¥1,318,097

¥

2012

$

–
–
–
243,338
121,669
121,669
121,669
121,669
121,669
121,669
121,669
121,669
121,669
121,669
121,669
121,669
121,669
121,669
182,503
121,669
121,669
182,503
121,669
121,669
121,669
121,669
121,669
243,338
121,669
121,669
121,669
182,503
121,669
121,669
182,503
121,669
121,669
121,669
121,669
121,669
121,669
182,503
243,338
121,669
121,669
121,669
243,338
121,669
121,669
121,669
121,669
182,503
121,669
121,669
121,669
121,669
243,338
121,669–
75,871

Year ending March 31,

Millions of yen

2013
2014
2015
2016
2017
2018 and thereafter
Total

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

The aggregate annual maturities of long-term debt subsequent to March 31, 2012 are summarized as follows:
Millions of yen

Thousands of U.S. dollars¥ 223,895
194,279
326,870
69,794
218,953595,738¥1,629,530$ 2,724,115
2,363,779
3,977,008
849,184
2,663,987
7,248,306$19,826,383

The assets pledged as collateral for short-term borrowings of ¥100 million ($1,216 thousand) and long-term debt of ¥213,687 million ($2,599,915 thousand) at
March 31, 2012 were as follows:
Millions of yen

Cash
Buildings and structures
Machinery and equipment
Land
Land in trust
Investment securities
Total
As is customary in Japan, collateral must be given if requested by lending
institutions under certain circumstances, and banks, in general, have the rightto offset cash deposited with them against any debt or obligations payable to7

Thousands of U.S. dollars

¥

1,908
156,412
3,881
197,119
243,94268¥603,333$

23,216
1,903,065
47,223
2,398,343
2,968,031
837$7,340,716

a bank which become due in cases of default or certain other specified
events. The Company has never received any such requests nor does it expectthat any such requests will be made.

Pension and Severance Plans

The following table sets forth the funded status of the plans, and the amounts recognized in the consolidated balance sheets at March 31, 2012 and 2011 for
the Company’s and its consolidated subsidiaries’ defined benefit pension plans:Millions of yen

Retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
The net retirement benefit obligation at transition of the accounting standards
Unrecognized actuarial loss
Unrecognized prior service cost
Net amounts recognized in the consolidated balance sheet
Prepaid pension expenses
Accrued employees’ retirement benefits

2012¥(100,512)
74,401(26,111)
6
18,330530(7,243)8,463¥ (15,707)

Thousands of U.S. dollars

2012$(1,222,934)
905,241(317,692)85
223,020
6,451(88,135)
102,977$ (191,112)

2011¥(97,352)
73,880(23,472)
17
16,097976(6,381)
9,229¥(15,610)* The accrued employees’ retirement benefits recognized by Rockefeller Group, Inc., a consolidated subsidiary, in the amount ¥287 million ($3,493 thousand) was presented in other current liabilities

The components of expenses related to the pension and severance plans for the years ended March 31, 2012 and 2011 were as follows:
Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of net retirement benefit obligation at transition
Amortization of actuarial loss
Other
Total

2012
¥ 4,3172,185(1,563)
8
2,195
280¥ 7,424

Thousands of U.S. dollars

2011¥ 4,425
2,231(1,515)
12
2,083
388
¥ 7,626

2012$ 52,535
26,595(19,017)101
26,707
3,413$ 90,336

The assumptions used in accounting for the pension and severance plans for the years ended March 31, 2012 and 2011 were as follows:
Discount rate
Expected rate of return on plan assets

2012
1.0 ~ 5.5%
0.5 ~ 7.5%2011
1.5 ~ 5.9%
0.5 ~ 7.5%

2,599,915
9,485,866
19,826,819(2,724,552)$17,102,267

39

Income Taxes

Income taxes in Japan applicable to the Company and its domestic
consolidated subsidiaries consist of corporation tax, inhabitants’ taxes andenterprise tax which, in the aggregate, resulted in statutory tax rates of

940.69% for the years ended March 31, 2012 and 2011. Income taxes of theforeign consolidated subsidiaries are based generally on the tax rates
applicable in their countries of incorporation.

The effective tax rates reflected in the consolidated statements of income for the two years ended March 31, 2012 differ from the statutory tax rate for thefollowing reasons:Statutory tax rate
Increase (decrease) in income taxes resulting from:
Change in valuation allowance
Different tax rates applied
Revenues deductible for income tax purposes
Expenses not deductible for income tax purposes
Undistributed earnings of affiliates
Equity income
Effect of enacted changes in tax laws and rates on Japanese tax
Other
Effective tax rates

201240.69%

2011
40.69%(3.50)
0.55(0.54)
0.62(0.08)(0.22)(18.35)
2.13
21.30%

1.18(0.44)(0.26)
0.48(0.15)(0.21)–
0.66
41.95%The significant components of deferred tax assets and liabilities as of March 31, 2012 and 2011 were as follows:
Millions of yen

2012
Deferred tax assets:
Net operating loss carry forwards
Accrued retirement allowances and pension costs
Valuation loss on inventories
Unrealized loss on property and equipment
Unrealized loss on property and equipment by consolidation
Land revaluation reserve
Loss on valuation of equity investments
Other
Total gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserves under Special Taxation Measures Law
Land revaluation reserve
Unrealized gain on property and equipment by consolidation
Unrealized gain on securities
Other
Total deferred tax liabilities
Net deferred tax liabilities
The “Act for Partial Revision of the Income Tax Act etc. for the Purpose of
Creating Taxation System Responding to Changes in Economic and Social
Structures” (Act No. 114 of 2011) and the “Act on Special Measures for
Securing Financial Resources Necessary to Implement Measures for
Reconstruction following the Great East Japan Earthquake” (Act No. 117 of
2011) were promulgated on December 2, 2011 and the staged reduction of
the national corporate tax rate and a special reconstruction corporate tax will
apply to corporate taxes effective fiscal years beginning on or after April 1,
2012.

40

¥

Thousands of U.S. dollars

2011

2012

6,269
13,511
16,24685,885
15,39029,791
2,952
28,958199,006(78,859)
120,146¥ 14,612
14,546
18,54967,617
17,34654,305
2,175
32,197221,351(69,747)
151,603$76,285
164,393
197,666
1,044,966
187,253
362,475
35,918352,337
2,421,297(959,483)
1,461,813(72,820)(322,650)(162,210)(25,486)(16,655)(599,824)¥(479,677)(64,748)(375,791)(177,806)(34,564)(20,239)(673,149)¥(521,546)(886,006)(3,925,672)(1,973,603)(310,096)(202,640)(7,298,019)$(5,836,205)

As a result, the effective statutory tax rate used to measure the Company’sdeferred tax assets and liabilities was changed from 40.69% to 38.01% for
the temporary differences expected to be realized or settled in the period from
April 1, 2012 to March 31, 2015 and from 40.69% to 35.64% for temporary
differences expected to be realized or settled from fiscal years beginning April
1, 2015. The effect of the announced reduction of the effective statutory tax
rate was to decrease deferred tax liabilities, net by ¥65,050 million ($791,465
thousand) and decrease deferred income taxes by ¥16,056 million ($195,360
thousand) as of and for the year ended March 31, 2012.

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 20128

Shareholders’ Equity

The Companies Act of Japan provides that an amount equal to 10% of theamount to be disbursed as distributions of capital surplus (other than thecapital reserve) and retained earnings (other than the legal reserve) betransferred to the capital reserve and the legal reserve, respectively, until thesum of the capital reserve and the legal reserve equals 25% of the capitalstock account. The capital reserve amounted to ¥170,485 million ($2,074,286

thousand), and the legal reserve amounted to ¥21,663 million ($263,581
thousand) at March 31, 2012. 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 legal reserve is available for
distributions.

10 Amounts per Share
Yen

Year ended March 31,
Net income:
Basic
DilutedCash dividends applicable to the year2012

As of March 31,
Net assets

2012¥905.60

U.S. dollars

2012

2011
¥40.72
40.71
12.00

$0.49
0.49
0.14

¥46.27
46.26
12.00
Yen

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

U.S. dollars

2012

2011
¥866.31$11.01

Amounts per share of net assets are computed based on net assets
available for distribution to the shareholders and the number of shares ofcommon 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 theinterim cash dividends paid.

11 Leases
The following pro forma amounts represent the acquisition costs,
accumulated depreciation, accumulated impairment loss and net book valueof the leased assets as of March 31, 2012 and 2011, which would have beenreflected in the consolidated balance sheets if finance lease accounting had
been applied to the finance leases currently accounted for as operating leases:

Millions of yen

Thousands of U.S. dollars

2012
Buildings and structures
Others
Total

Acquisition
costs

Accumulated
depreciation

Accumulated
impairment loss

¥7,205
1,068¥8,274¥6,098815¥6,914

¥134
0
¥134

Net book
value

¥ 971
253
¥1,225Acquisition
costs

Accumulated
depreciation

Accumulated
impairment loss

$ 87,665
13,006$100,671$74,205
9,920$84,125$1,635
4$1,639Net book
value$11,823
3,081$14,905

Millions of yen

2011
Buildings and structures
Others
Total

Acquisition
costs

Accumulated
depreciation

Accumulated
impairment loss

¥11,3292,226¥13,556¥7,795
1,676¥9,472

¥231
0
¥232

Net bookvalue¥3,301549¥3,851

Lease payments relating to finance leases accounted for as operating leases in the accompanying consolidated financial statements amounted to ¥1,105 million($13,455 thousand) and ¥1,838 million for the years ended March 31, 2012 and 2011, respectively.
Future minimum lease payments subsequent to March 31, 2012 on noncancelable operating leases and finance leases accounted for as operating leases are
summarized as follows:
Millions of yen

Thousands of U.S. dollars

Year ending March 31,

FinanceleasesOperatingleasesFinanceleasesOperatingleases

20132014 and thereafter
Total

¥ 818
541
¥1,359¥ 3,374
57,548¥60,923$ 9,952
6,592$16,545$ 41,058
700,192$741,251

41

Year ending March 31,

Millions of yen

2013
2014 and thereafter
Total¥180,100
626,787¥806,888

Thousands of U.S. dollars$2,191,276
7,626,085$9,817,361

12 Contingent Liabilities(1) Guarantee of loans
Millions of yen¥ 1,390
65,469129¥66,989

Guarantees of affiliates’ loans from banks
Guarantees of house purchasers’ loans from banks and others
Other
Total

Thousands of U.S. dollars$ 16,912
796,560
1,579$815,052(2) Guarantee for business undertakings
We provide business undertaking guarantees for the below borrowings from finance institutions.
Millions of yen¥7,380Business undertaking guarantees

Thousands of U.S. dollars$89,796

13 Other Income (Expenses)
The components of “Other, net” in “Other income (expenses)” for each of the years ended March 31, 2012 and 2011 were as follows:
Millions of yen

2012
¥

835
2,205
229
(6,586)(7,728)(18,133)(3,011)––(1,569)(3,618)(1,296)(1,706)¥(40,378)

Amortization of negative goodwill
Gain on sales of fixed assets
Gain on sales of investment securities
Loss on disposal of fixed assets
Loss related to retirement of fixed assets
Impairment loss (*1)
Loss on valuation of equity investments
Loss on valuation of investment securities
Loss on disaster
Loss for soil decontamination
Loss on serviced apartment business
Loss on clinic closing
Other, net(*1) Impairment loss
The Company recorded consolidated impairment losses for the following asset
groups for the fiscal year ended March 31, 2012:
Major Application

Category

Location

Buildings, Long-term
prepaid expenses, etc.

Yokohama, Kanagawa
Prefecture, etc.

Asset grouping for the Group was made based on a minimum unit thatgenerates cash flows, which is substantially independent from cash flows ofother assets or asset groups. Company condominiums are regarded as sharedassets. As a result, for the fiscal year ended March 31, 2012, the book values of
23 asset groups, consisting of those for which the market prices fell considerablycompared with the book values due to the decline of land prices and those forwhich profitability decreased considerably due to fallen rent levels or deteriorated
market conditions, etc., were reduced to the respective collectible amounts andsuch reduced amounts were recorded as impairment losses in the amount of¥18,133 million ($220,622 thousand).

42

such reduced amounts were recorded as impairment losses in the amount of¥2,788 million.
The breakdown of such impairment losses were ¥2,165 million in land, ¥622
million in buildings and structures, respectively.
The collectible amounts of asset groups are measured with net sale value or
use value, 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% areused to compute the use value.

14 Financial Instruments

At March 31, 2012, the Company and its consolidated subsidiaries had the following contingent liabilities:

Leased assets, etc.
(total 23 groups)

Asset grouping for the Group was made based on a minimum unit thatgenerates cash flows, which is substantially independent from cash flows ofother assets or asset groups. Company condominiums are regarded as sharedassets. As a result, for the fiscal year ended March 31, 2011, the book values of
10 asset groups, consisting of those for which the market prices fell considerablycompared with the book values due to the decline of land prices and those forwhich profitability decreased considerably due to fallen rent levels or deteriorated
market conditions, etc., were reduced to the respective collectible amounts and

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

The Company and its consolidated subsidiaries lease office buildings and commercial properties and earn income on these leases. Future minimum lease income
subsequent to March 31, 2012 from noncancelable operating leases is summarized as follows:

Thousands of U.S. dollars

2011
¥

943
–
337
(6,136)(3,052)(2,788)(3,587)(3,286)(2,159)–––(2,156)¥(21,887)2012$ 10,163
26,8402,798(80,132)(94,030)(220,622)(36,636)––(19,101)(44,024)(15,780)(20,759)$(491,287)

The breakdown of such impairment losses were ¥3,279 million ($39,906
thousand) in land and land in trust, ¥7,360 million ($89,560 thousand) inbuildings and structures, ¥7,492 million ($91,156 thousand) in buildings andlong-term prepaid expenses, respectively.
The collectible amounts of asset groups are measured with net sale value or
use value, 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% areused to compute the use value.

Overview(1) Policy for financial instruments
In consideration of plans for capital investment, the Company and its
consolidated subsidiaries (collectively, the “Group”) raise funds mainly
through bank borrowings and bond issues. In terms of fund management, theGroup makes every effort to avoid market risks by emphasizing liquidity andshortening the fund management period. The Group uses derivatives for the
purpose of hedging exposures to interest rates and reducing interest expenses
and do not enter into derivatives for speculative purpose.
(2) Types of financial instruments and related risk
Trade receivables – notes and accounts receivable- are exposed to credit risk inrelation to customers. Trade receivables denominated in foreign 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 Grouphas business relationships.
Equity investments are composed of mainly preferred equity investments inspecial purpose companies under the Law concerning Liquidation of Assets,
investments in investment unit of trust held in real estates and investments insilent partnership for special purpose companies. They are exposed to credit risks
of issuers, risks of fluctuations in interest rates and market prices, respectively.
Lease and guarantee deposit for leased assets are exposed to credit risks
of customers.
Substantially all trade payables – accounts and notes payable – havepayment 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 23 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 swap) as ahedging instrument.
Derivative transactions include interest rate swap and currency swap
transactions. 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 withthe same policies and purposes 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 theGroup arising from receivables and lease and guarantee deposits, eachrelated division in each business segment monitors credit worthiness of
their main customers periodically, and monitors due dates and outstandingbalances 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 foreignexchange 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 enter into interest
rate swap and currency swap transactions.
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 those classified 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 tomeet 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) S upplementary explanation of the estimated fair value of financial
instruments
The fair value of financial instruments is based on their quoted market price, if
available. When there is no quoted market price available, fair value isreasonably estimated. Since various assumptions and factors are reflected inestimating the fair value, different assumptions and factors could result indifferent fair value.

The Company recorded consolidated impairment losses for the following asset
groups for the fiscal year ended March 31, 2011:
Major Application
Leased assets, etc.
(total 10 groups)

Category
Buildings, land, etc.

Location
Chiyoda-ku, Tokyo, etc.

43

Millions of yen

Thousands of U.S. dollars

20121) Cash on hand and in banks2) Notes and accounts receivable – trade   Allowance for doubtful receivables (*1)3) Securities and Investment securities   (i) Held-to-maturity debt securities   (ii) Other securities
4) Equity investments
Total assets
1) Notes and accounts payable – trade2) Short-term borrowings
3) Current portion of long-term borrowings
4) Current portion of long-term bonds5) Long-term bonds6) Long-term borrowings
Total liabilities

Carrying
Value

Estimated
Fair Value¥ 215,741
41,927(833)
41,094¥ 215,741–

41,094–$ 2,624,914 $ 2,624,914
510,132(10,136)499,995
499,995

2,051
152,050
7,407¥ 418,345

2,072
152,187
7,407¥ 418,503

20
137
–
157

24,96025,2101,849,986
1,851,659
90,12590,125$ 5,089,983 $ 5,091,905¥¥

77,86079,002
147,695
76,235560,000
845,635¥1,786,429

77,86079,002
147,695
76,235590,073854,249¥1,825,116

Carrying
Value

Difference

¥

¥

–
–
–
–
¥30,073
8,613¥38,686

Estimated
Fair Value$

947,321961,220
1,796,995
927,557
6,813,480
10,288,786$21,735,362$

947,321961,220
1,796,995
927,557
7,179,377
10,393,590$22,206,063

Difference

–

–
$

$

249
1,672
–
1,921

–
–
–
–
$365,896
104,804$470,700

Note 3: Redemption schedule for receivables and marketable securities with maturities at March 31, 2012
Millions of yen
As of March 31, 2012
Cash on hand and in banks
Notes and accounts receivable – tradeMarketable securities and investment securities:
Held-to-maturity debt securities
National and local government bonds
Corporate bonds
Other
Other marketable securities with maturities:
Corporate bonds
Other
Total

1) Cash on hand and in banks2) Notes and accounts receivable – trade   Allowance for doubtful receivables (*1)3) Securities and Investment securities   (i) Held-to-maturity debt securities   (ii) Other securities
4) Equity investments
Total assets
1) Notes and accounts payable – trade2) Short-term borrowings
3) Current portion of long-term borrowings
4) Current portion of long-term bonds5) Long-term bonds6) Long-term borrowings
Total liabilities

Carrying
Value

Estimated
Fair Value¥ 224,688
40,130(502)
39,627¥ 224,688

As of March 31, 2011
Cash on hand and in banks
Notes and accounts receivable – tradeMarketable securities and investment securities:
Held-to-maturity debt securities
National and local government bonds
Corporate bonds
Other
Other marketable securities with maturities:
Corporate bonds
Other
Total

3,460
159,500
7,996¥ 435,273

3,483
159,6107,996¥ 435,406¥¥

76,11375,507
201,885
36,330530,000
788,097¥1,707,935–

Liabilities
Notes and accounts payable – trade   Since these items are settled in a short period of time, their carrying value approximates fair value.
Short-term borrowings   Since these items are settled in a short period of time, their carrying value approximates fair value.
Current portion of long-term borrowings   Since these items are settled in a short period of time, their carrying value approximates fair value.
Current portion of bonds   Since these items are settled in a short period of time, their carrying value approximates fair value.
Bonds   The fair value of bonds is based on the quoted market price.
Long-term borrowings   Since variable interest rates of certain long-term borrowings are determined based on current interest
rate in a short period of time, their carrying value approximates fair value. The fair value of long-term

44

Due in One Year Due after One Yearor Less
through Five Years

–
–

–
–

–
–

$2,622,492
510,132

¥

60
209
1,313

¥ 202
–
–

–
–
–

303
1,891
4,258

–
–
¥258,000––¥1,583

–
–
¥ 202

–
–
–

–
–
$3,139,078

Due in One Yearor Less

Due after One Yearthrough Five Years

Due after Five Years
through Ten Years

Due after
Ten Years

24
155
350

Due after Five Years
through Ten Years

Due after
Ten Years

–
–

–
–

–
–

$

730
2,553
15,984$2,457
–
–

–
–
–

–
–
$19,268––$2,457–––¥224,546
40,130

–
–

–
–

–
–

15
162
1,450

¥ 145
383
2,582

¥ 210
–
–

–
–
–

–
2,443
¥268,748––¥3,110

–
–
¥ 210

–
–
–

Millions of yen
Due inOne Yearor Less¥ 76,200
147,695¥223,895

Due after
One Yearthrough
Two Years¥ 30,000
164,279¥194,279

Due after
Two Years
throughThree Years¥ 40,000
286,870¥326,870

As of March 31, 2011

Due inOne Yearor Less

Due after
One Yearthrough
Two Years

Due after
Two Years
throughThree Years

Corporate bonds
Long-term borrowings
Total¥ 36,300
201,885¥238,185¥ 70,000
185,042¥255,042¥ 30,000
159,356¥189,356

Thousands of U.S. dollars
Due after
Four Years
throughFive Years¥ 70,000
148,953¥218,953

Due after
Five Years¥400,000
195,738¥595,738

Due afterThree Years
through
Four Years

Due after
Four Years
throughFive Years

Due after
Five Years¥ 40,000
265,817¥305,817¥20,000
45,539¥65,539¥370,000
132,342¥502,342

Due afterThree Years
through
Four Years¥20,000
49,794¥69,794

Due after
One Yearthrough
Two Years$ 365,007
1,998,771$2,363,779

Due inOne Yearor Less$ 927,120
1,796,995$2,724,115

Due after
Two Years
throughThree Years$ 486,677
3,490,331$3,977,008

Due after
Due afterThree Years Four Years
throughthroughFive YearsFour Years$243,338 $ 851,685
605,846
1,812,302$849,184 $2,663,987

Due after
Five Years$4,866,772
2,381,534$7,248,306

Millions of yen

39,627

76,11375,507
201,885
36,330547,683
795,698¥1,733,219

–
¥

¥

23
109
–
132

15 Marketable Securities and Investment Securities––––¥17,683
7,600¥25,284

Marketable and investment securities classified as other securities at March 31, 2012 and 2011 are summarized as follows:
Millions of yen

Thousands of U.S. dollars

2012
Cost

Fair
value

Unrealized
gain (loss)

Cost

Fair
value

Unrealized
gain (loss)

Securities whose fair value exceeds their cost:(*1) The value of notes and account receivable-trade is shown at net value, after deducting allowance for doubtful accounts.
Note 1: Methods to determine the estimated fair value of financial instruments and other matters related tosecurities and derivative transactions
AssetsCash on hand and in banks   Since these items are settled in a short period of time, their carrying value approximates fair value.
Notes and accounts receivable – trade   Since these items are settled in a short period of time, their carrying value approximates fair value.
Marketable securities and investment securities  The fair value of stocks is based on quoted market prices. The fair value of debt securities is mainly
based on prices provided by the financial institutions making markets in these securities. For information
on securities classified by holding purpose, please refer to Note 15. “Marketable Securities andInvestment Securities.”
Equity investments   The fair value of equity investments is based on quoted market prices.

Due after
Ten Years

Note 4: The redemption schedule for bonds and long-term borrowings

As of March 31, 2012
Corporate bonds
Long-term borrowings
Total

Difference¥215,542
41,927

Thousands of U.S. dollars

Due after Five Years
through Ten Years

Millions of yen

Millions of yen

2011

Due in One Year Due after One Yearor Less
through Five Years

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance sheet as of March 31, 2012 and unrealized gains (losses) are shown in the following table.
The following table does not include financial instruments for which it is extremely difficult to determine the fair value. (Please refer to Note 2 below).

¥43,528¥115,972¥72,443$ 529,610$1,411,026$881,416

Other

5,331

7,408

2,076

64,864

90,13525,270  Subtotal

48,859123,380

74,520594,475

1,501,161

906,686

Equity securities

38,15935,997(2,162)464,282

437,974(26,307)

Corporate bonds

10

10

–

121

121

–

Equity securities

borrowings with fixed interest rate is based on the present value of the total of principal and interest
discounted by the interest rate to be applied if similar new borrowings were entered into.
Derivatives Transactions   Please refer to Note 17. “Derivatives and Hedging Activities”.
Note 2: F inancial instruments for which it is extremely difficult to determine the fair value
Thousands of
U.S. dollars

Millions of yen
2012

2011

2012

Securities whose cost exceeds their fair value:(i) Unlisted stocks *1¥ 20,756¥ 25,451$ 252,543(ii) Equity investments *2

281,141

201,9033,420,628

Other

142

9

(133)

1,737

112

(1,625)(iii) Lease and guarantee deposit receivables *3

101,833

97,2381,238,996(iv) Lease and guarantee deposit payables *4

373,189374,719

4,540,575  Subtotal

38,31236,016(2,295)466,141

438,208(27,932)

Total¥87,172¥159,396¥72,224$1,060,617$1,939,370$878,753*1. Because no quoted market price is available and it is extremely difficult to determine the fair value,
unlisted stocks are not included in the above table.
*2. Because it is extremely difficult to determine the fair value for equity investments which are not listed
and have no quoted market price, they are not included in the above table.
*3. Because no quoted market price for lease and guarantee deposit receivables for rental properties isavailable and calculation of the actual period of duration from lease initiation to evacuation is difficult,it is extremely difficult to estimate a reasonable amount of cash flow and therefore they are notincluded in the above table.
*4. Because no quoted market price for lease and guarantee deposit payables for rental properties isavailable and calculation of the actual period of duration from lease initiation to evacuation is difficult,it is extremely difficult to estimate a reasonable amount of cash flow, and therefore they are notincluded in the above table.

45

17 Derivatives and Hedging Activities
1. Interest related transactions

2011
Fair
value

Cost

¥42,409¥124,735¥ 82,326

Other

5,331

7,997

2,666

  Subtotal

47,740132,733

84,992

38,63934,685(3,954)

Other

142

18

(124)

  Subtotal

38,782

34,703(4,078)

Total¥86,522¥167,436¥ 80,913

Millions of yen

Thousands of U.S. dollars

Fair
value

Unrealized
gain (loss)

Amortized
cost

Fair
value

Unrealized
gain (loss)

Government bonds

¥ 376

¥ 385

¥ 9

$ 4,579$ 4,694$115

Corporate bonds

371

382

11

4,520

4,654

134

747

768

20

9,099

9,349

249

Debt securities whose cost exceeds their fair value:
–

–

–

–

–

–

1,303

1,303

–

15,861

15,861–  Subtotal

1,303

1,303

–

15,861

15,861–

Total¥2,051¥2,072¥20$24,960$25,210$249

Millions of yen

2011

Government bonds

¥ 318

¥ 322

¥ 4

Corporate bonds

560

580

19

878

903

24

Government bonds

50

49

(0)

Corporate bonds

2,530

2,530

–

  Subtotal

2,581

2,580

(0)

Total

¥3,460¥3,483

¥23

Fair
Value

Short-term borrowings andLong-term borrowings¥ 84,046¥ 78,215¥(444)$1,022,585$ 951,646$(5,408)

Long-term borrowings andCorporate bonds

158,970

118,715(*)

1,934,178

1,444,402(*)¥196,931¥(444)$2,956,764$2,396,048$(5,408)¥243,016

Notional
AmountDue after
One Year

Fair
Value

Class of Transactions

Subject to hedged accounting

Interest rate swap contracts Fixed rate
payment and floating rate receipt

Short-term borrowings andLong-term borrowings¥ 94,132¥ 87,287¥(215)

Long-term borrowings andCorporate bonds

138,776

113,498(*)¥232,908¥200,785¥(215)(*) T he estimated fair value of interest rate swap contracts is included in the estimated fair value of long-term borrowings and corporate bonds since amounts in such derivative contracts accounted for short-cut method
are handled together with long-term borrowings and corporate bonds that are subject to hedged accounting.

Debt securities whose fair value exceeds their cost:

Fair
value

Due after
One YearCalculation method of fair value is based on the data obtained from financial institutions

Amortized
cost

Amortized
cost

Notional
AmountInterest 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

2012

Other

Fair
Value

2011

Marketable debt securities classified as held-to-maturity securities at March 31, 2012 and 2011 are summarized as follows:

Government bonds

Due after
One Year

Subject to hedged accounting

Millions of yen

Proceeds from sales of securities classified as other securities totaled ¥472 million ($5,745 thousand) in 2012 and ¥549 million in 2011, respectively. Grossrealized gain was ¥229 million ($2,793 thousand) in 2012 and ¥337 million in 2011, respectively. Gross realized loss was ¥13 million in 2011.

  Subtotal

Notional
AmountClass of Transactions

Interest rate swap contracts by
short-cut Method
Fixed rate payment and floating
rate receipt
Total

Securities whose cost exceeds their fair value:
Equity securities

Unrealized
gain (loss)

2. Interest and currency related transactions

Millions of yen

2012Class of Transactions

Subject to hedged accounting

Interest rate and currency swap contracts
Payment in GBP and receipt in JPY
Floating rate payment and fixed ratereceipt

Corporate bonds¥6,200–¥723

Loans to affiliatedcompanies

1,802

–

¥8,002–

Interest rate and currency swap contracts
Payment in GBP and receipt in USD
Floating rate payment and fixed ratereceipt
Total

Due after
One Year

Notional
AmountDue after
One Year

Fair
Value

$75,434–$ 8,808110

21,928

–

1,341

¥834

$97,363–$10,5102011
Due after
One Year

Subject to hedged accounting

Interest rate and currency swap contracts
Payment in GBP and receipt in JPY
Floating rate payment and fixed ratereceipt

Corporate bonds¥6,300

Fair
Value

–

¥569

18 Segment Information

The following table represents a reconciliation of cash and cash equivalents as of March 31, 2012 and 2011:
Millions of yen

2012¥215,741(655)
685¥215,771

Class of Transactions

Notional
AmountCalculation method of fair value is based on the data obtained from financial institutions

16 Supplemental Cash Flow Information

46

Fair
Value

Millions of yen

Debt securities whose cost exceeds their fair value:

CashTime deposits with maturities of more than three months
Marketable securities with maturities of three months or less
Cash and cash equivalents

Thousands of U.S. dollars

Notional
AmountDebt securities whose fair value exceeds their cost:  Subtotal

Thousands of U.S. dollars

2012

Unrealized
gain (loss)

Securities whose fair value exceeds their cost:
Equity securities

Millions of yen

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Millions of yen

Thousands of U.S. dollars

2011¥224,688
(705)
5,079
¥229,0622012$2,624,914(7,971)
8,335$2,625,278

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 and to assess performance. Business performances
are aggregated according to business areas that consist of multiple businessgroups and defined as organizational units having common businessobjectives and management responsibilities within the Group, and suchaggregated business areas are disclosed as reportable segments.
The Company and its consolidated subsidiaries are primarily engaged in
the real estate business. Their business segments are classified in terms of thenature of each operation or service and consist of eight segments: (1) Building
Business; (2) Residential Business; (3) Commercial Property Development andInvestment; (4) International Business; (5) Investment Management; (6)Architectural Design and Engineering; (7) Hotels Business; (8) Real Estate
Services; and (9) Other businesses.
Effective April 1, 2011, the Company realigned its reportable segments toreflect partial change of its organizational structure. Investment Management,
which had been a part of Urban Development and Investment Management
segment until the fiscal year ended March 31, 2011, was spun off into
Investment Management segment, and Urban Development and Investment
Management segment was renamed to Commercial Property Development
and Investment segment. Certain business, which had been classified as
Custom-Built Housing segment until the fiscal year ended March 31, 2011,
was consolidated into Residential Business. The amounts in this report for theyear ended March 31, 2011 were restated reflecting the changes of thesegment classification.

47

The reportable segment information of the Company and its consolidated subsidiaries for the years ended March 31, 2012 and 2011 is summarized as follows:
2012

Millions of yen

2012

Reportable Segments
Building
Business

Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

Reportable Segments
Real Estate
Services

Subtotal

Other

Total

Eliminations
or Corporate Consolidated

Revenue, operating income andassets by reportable segments
Revenue from:
External customers¥ 504,100¥341,040¥ 55,650

6,749

1,783

159

Intersegment or transfers¥ 42,108 ¥ 5,756 ¥13,502 ¥25,093 ¥24,817 ¥1,012,070 ¥
–

168

6,430

561

42,108

5,924

19,93225,654

1,268

998 ¥1,013,069

17,1202,507

26,085 1,029,191

3,506– ¥1,013,069

19,628 ¥ (19,628)

510,850

342,823

55,809¥ 146,007¥ 4,792¥ 1,609¥ 8,020 ¥ 1,464 ¥ 1,190 ¥ (278) ¥Segment assets¥2,915,905¥685,447¥230,467¥328,935 ¥28,147 ¥21,520 ¥23,462 ¥25,171 ¥4,259,057 ¥27,468 ¥4,286,526 ¥100,489 ¥4,387,015(57) ¥ 162,750 ¥Other items
Depreciation and amortization¥

55,948¥ 1,932¥ 1,766¥ 5,673 ¥40 ¥73 ¥ 1,174 ¥512 ¥Capital expenditures¥ 143,767¥ 8,511¥ 81,007¥ 57,330 ¥54 ¥26 ¥ 1,251 ¥734 ¥ 292,683 ¥

67,123 ¥1,032,697(19,628)–

Segment income (loss)

Total revenue

Building
Business

Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

Impairment loss

¥8,657¥9,111

¥54

¥269

–

Impairment loss

$105,336$110,859$664$3,282–86 ¥

1,013,069

67,210¥254 ¥119 ¥ 292,803¥(131) ¥ 292,671

Real Estate
Services

21,696

1,938–

6,215,482 4,171,115

679,032

512,333

19,587 $97,588 $ 17,816 $ 14,483 $ (3,386) $58,315 $¥18,133–¥18,133–¥18,133

–

$480

–

$220,622–$220,622–$220,622

Building
Business

Impairment loss

¥35

Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment¥130¥2,207–––

Real Estate
Services¥414

Subtotal–

Other¥2,788

Total–¥2,788Eliminations
or Corporate Consolidated–¥2,7882012
Subtotal

Other

Total

Reportable Segments

Eliminations
or corporate Consolidated$ 6,133,356 $4,149,419 $ 677,093 $ 512,333 $ 70,043 $164,285 $305,311 $301,951 $12,313,796 $ 12,148 $12,325,944

Total revenue

–

2011

Building
Business

78,236

Eliminations
or Corporate Consolidated

The following table presents the amortization and balance of goodwill as of and for the years ended March 31, 2012 and 2011 by reportable segment:

Revenue, operating income andassets by reportable segments
Revenue from:
2,044

Total

Millions of yen

Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

82,125

Other

Reportable Segments

Reportable Segments

Intersegment or transfers¥39

Subtotal

Millions of yen

67,4652012

External customers–

Real Estate
ServicesThousands of U.S. dollars

181 ¥ 162,932 ¥ (16,632) ¥ 146,299

Thousands of U.S. dollars

Building
Business

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Impairment losses of the Company and its consolidated subsidiaries on fixed assets by reportable segments for the years ended March 31, 2012 and 2011 aresummarized as follows:

Millions of yen

6,829

15,432

208,303

72,087 242,522 312,141 317,384 12,522,100

30,510– $12,325,944

238,814 $ (238,814)

42,658 12,564,759–(238,814) 12,325,944

Segment income (loss)$ 1,776,464 $Segment assets$35,477,615 $8,339,787 $2,804,081 $4,002,136 $342,471 $261,834 $285,466 $306,259 $51,819,653 $334,211 $52,153,865 $1,222,649 $53,376,515

Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

Real Estate
Services

Subtotal

Other

Total

Eliminations
or Corporate Consolidated

Amortization of goodwill¥489¥ 3,126

–

¥ 753

¥ 70

–

–

–

¥ 4,440¥0¥ 4,440–¥ 4,440

Balance of goodwill¥

113¥17,723–¥6,312

¥140

–

–

–

¥ 24,289¥0¥ 24,289–¥ 24,289

Amortization of negative goodwill

¥

835

–

–

–

–

–

–

–

¥

835

–

¥

835

–

¥

Balance of negative goodwill¥107,285

–

–

–

–

–

–

–

¥107,285–¥107,285–¥107,285(698) $ 1,980,171 $ 2,213 $ 1,982,385 $ (202,369) $ 1,780,015

835

Thousands of U.S. dollars

2012
Reportable Segments

Other items
Depreciation and amortization$

69,034 $496 $898 $ 14,290 $ 6,231 $Capital expenditures$ 1,749,203 $ 103,562 $ 985,617 $ 697,530 $667 $320 $ 15,229 $ 8,932 $ 3,561,063 $ 1,453 $ 3,562,517 $

680,722 $

23,517 $21,497 $816,687 $ 1,058 $

817,746 $3,099 $

820,846

Millions of yen

2011
Reportable Segments
Building
Business

Revenue, operating income andassets by reportable segments
Revenue from:
External customers¥ 457,784
Intersegment or transfers
Total revenue

Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

Building
Business(1,600) $ 3,560,916

Subtotal

Other

Total

Real Estate
Services

Subtotal

Other

Total

Amortization of goodwill

$

5,958

$ 38,034–$ 9,171

$ 856

–

–

– $

54,021$0$

Balance of goodwill

$

1,379

$215,643–$76,798$1,712––– $ 295,533$0$ 295,533

Amortization of negative goodwill $10,163

–

–

–

–

–

–

– $

10,163–$$1,305,332

–

–

–

–

–

–

– $1,305,332–$1,305,332

Balance of negative goodwill
Real Estate
Services

Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

Eliminations
or Corporate Consolidated

54,022
10,163Eliminations
or Corporate Consolidated– $54,022– $ 295,533– $10,163– $1,305,332

Millions of yen

2011
Reportable Segments¥367,508¥ 47,904¥ 45,091 ¥ 4,935 ¥12,904 ¥27,017 ¥24,174 ¥ 987,320 ¥ 1,126 ¥ 988,447

6,155

1,636

2

–

284

5,680

626

463,939

369,145

47,90745,091

5,220

18,584

27,643590 ¥ (340) ¥3,545– ¥ 988,447

17,931

2,316

20,849¥(20,248)–

27,719 1,005,252

3,443

1,008,695(20,248)

988,447

Segment income (loss)¥ 141,823¥ 12,234¥ 5,674¥ 10,015 ¥ 2,528 ¥411 ¥ 173,367¥(15,109) ¥ 158,258

Segment assets¥2,886,101¥683,265¥164,610¥292,808 ¥28,056 ¥24,333 ¥23,151 ¥25,265 ¥4,127,594 ¥27,609 ¥4,155,203

430 ¥ 172,956 ¥¥ 90,005 ¥4,245,209

Other items
Depreciation and amortization¥

59,501¥ 2,014¥ 1,401¥ 5,689 ¥33 ¥79 ¥ 1,153 ¥537 ¥70,410 ¥72 ¥70,483¥145 ¥

70,628

Capital expenditures¥

55,853¥ 8,644¥ 6,332¥ 7,594 ¥

326 ¥

60 ¥

461 ¥

79,804 ¥28 ¥79,832¥(482) ¥

79,350530 ¥Building
Business

Commercial
Architectural
Property
Residential Development International Investment Design and
HotelBusiness Management Engineering BusinessBusiness and Investment

Real Estate
Services

Subtotal

Other

Total

Eliminations
or Corporate Consolidated

Amortization of goodwill¥498¥ 3,124

–

¥ 164

¥ 70

–

–

– ¥

3,857

–

¥ 3,857–¥ 3,857

Balance of goodwill¥

283¥20,849–¥7,381¥211––– ¥ 28,726¥ 0¥ 28,726–¥ 28,726

Amortization of negative goodwill

¥

909

–

–

–

–

–

–

–

¥

909

¥33

Balance of negative goodwill¥107,801

–

–

–

–

–

–

–

¥107,801

–

943

–

¥

¥107,801¥–¥107,801

943

Products and Service Information
Refer to reportable segment information.
Geographic Area Information
Geographic area information has been omitted since revenue from external customers in Japan and property and equipment located in Japan accounted formore than 90% of revenue from operations on the consolidated income statement and property and equipment on the consolidated balance sheet, respectively.
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.

48

49

As part of its real estate business, the Company makes preferred investments
in 14 special purpose companies that are established under the Asset
Liquidation Law of Japan. The Company intends to recover such preferredinvestments through rental revenue and subsequent sale of real estate thathas been obtained by the special purpose companies from their customers or
sale of such real estate after construction of buildings on it. The following
tables represent the Company’s transactions with major special purpose
companies for the fiscal year ended March 31, 2012.

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) forthe purpose of obtaining revenue from leases.

Amounts of preferred investment as of March 31, 2012

Amounts of preferred investment as of March 31, 2011

The followings are the carrying value on the consolidated balance sheet as of March 31, 2012 and the fair values of these rental properties and real estateincluding space used as rental properties as of March 31, 2012;

Thousands of
U.S. dollars

Millions of yen

2012¥164,487$2,001,306

2011¥105,532

Millions of yen

Preferred investment securities(*1)

Preferred investment securities(*1)

Major revenue (cost) from transactions with special purpose companies

Major revenue (cost) from transactions with special purpose companies

Thousands of
U.S. dollars

Millions of yen$3,333228
23,607–38,922
11,4202011¥8,707
46
3,584
180
5,096
687

Millions of yen

2012
Preferred investment securities: revenue (*2)
Other income(*3)
Management business: revenue(*4)
Intermediate business: revenue(*5)
Real estate rent: cost(*6)
Design management business: revenue (*7)

¥274
18
1,940
–
3,199
938

(*1) Preferred investment securities are indicated as amount of investment andspecific bonds as at March 31, 2012. The Company considers that its exposure toloss that may arise in the future is limited to the amount of its preferredinvestments.
(*2) The Company records dividends from such investments as revenue fromoperations and related expense as cost of revenue from operations.
(*3) The Company records interest incomes from such specific bonds as other income.
(*4) The Company, Mitsubishi Estate Building Management Co., Ltd. and Mitsubishi
Jisho Property Management Co., Ltd. provide asset management business to
special purpose companies and record such service income as revenue fromoperations.
(*5) The Company and Mitsubishi Real Estate Services Co., Ltd. provide real estateintermediate business to special purpose companies and record such service
income as revenue from operations.
(*6) The Company enters into real estate rental agreements with special purpose
companies and records such rent expenses as cost of revenue from operations.
(*7) Mitsubishi Jisho Sekkei Inc. and MEC Design International Corporation provide
design management services and remodeling services to special purpose
companies and record such service incomes as revenue from operations.
	  The Company does not own investments with voting rights for any special
purpose companies and does not send directors and employees to any special
purpose companies. The following table sets forth major assets and liabilities ofthe special purpose companies as of their recent financial closing dates. Excluded
are special purpose companies whose financial closing dates are yet to comebecause their initial fiscal years have just started.

Major assets
Millions of yen¥562,718
29,893¥592,611

2012$6,846,558
363,706$7,210,264

(*8)
(*9)

2012
¥354,521$4,313,432
238,0902,896,834¥592,611$7,210,264(*8) Debt and other include specific bonds.
(*9) Preferred investments include contributions made by the Company.

Debt and otherPreferred investments
Total

Rental properties
Real estate including spaces used as rental properties(*8) Debt and other include specific bonds.
(*9) P referred investments include contributions made by the Company.

2011¥371,575
219,708¥591,283

2012

Fair
value (*2)

Carrying
value (*1)

Fairvalue (*2)

Carrying
value (*1)

Fairvalue (*2)¥2,622,741
232,419¥4,469,512
330,100¥2,467,177
233,688¥4,316,530
323,700$31,910,716
2,827,826$54,380,242
4,016,303(*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 year ended March 31, 2012 and 2011 were as follows:
Millions of yen

2012
Lease
income (*1)

Thousands of U.S. dollars

2012

2011
Lease
income, net

Other, net
(*2)

Lease
income (*1)

Rental properties¥345,288 ¥224,155 ¥121,133 ¥(20,984) ¥341,761 ¥217,064 ¥124,697
Real estate including space
19,052
16,3932,659(444) 20,268
15,476
4,792
used as rental properties¥(10,486)$4,201,107 $2,727,278 $1,473,828 $(255,312)

Lease cost

Lease
income, net

Other, net
(*2)

Lease
income (*1)

Lease cost(373)

231,815

Lease cost

199,455

Lease
income, net

32,360

Other, net(*2)(5,406)(*1) Lease income excludes the one 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.
(*2) Other, net includes loss on disposal of fixed assets and impairment loss.

21 Asset Retirement Obligations(1) Asset retirement obligations presented in the consolidated balancesheet
1. Outline of asset retirement obligations
Asset retirement obligations include obligations of restoration related toleasehold 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
0.3% and 2.4%.
3. Change in asset retirement obligations for the fiscal year is as follows:
Millions of yen

Thousands of
U.S. dollars

Asset Retirement Obligations

Millions of yen

(*8)
(*9)

Thousands of U.S. dollars

2011

Carrying
value (*1)(2) Asset retirement obligations not recognized in the consolidatedbalance sheet
As below stated, certain obligations are excluded from recognition of asset
retirement obligations.

Real estate
Other
Total

Thousands of
U.S. dollars

Millions of yen

2011¥544,191
47,092¥591,283

Millions of yen

Some office buildings for lease in Japan are regarded as real estateincluding space used as rental properties since they are used by the Company
and some of its consolidated subsidiaries.

2012

Balance at April 1, 2011
Increase due to the acquisition ofproperty and equipment
Adjustments due to the elapse of time
Decrease due to the fulfillment of asset
retirement obligations
Balance at March 31, 2012

Major liabilities and net assets
Millions of yen

50(*1) P referred investment securities are indicated as amount of investment andspecific bonds as at March 31, 2011. The Company considers that its exposure toloss that may arise in the future is limited to the amount of its preferredinvestments.
(*2) T he Company records dividends from such investments as revenue fromoperations and related expense as cost of revenue from operations.
(*3) T he Company records interest incomes from such specific bonds as other income.
(*4) T he Company, Mitsubishi Estate Building Management Co., Ltd. and Mitsubishi
Jisho Property Management Co., Ltd. provide asset management business to
special purpose companies and record such service income as revenue fromoperations.
(*5) T he Company and Mitsubishi Real Estate Services Co., Ltd. provide real estateintermediate business to special purpose companies and record such service
income as revenue from operations.
(*6) T he Company enters into real estate rental agreements with special purpose
companies and records such rent expenses as cost of revenue from operations.
(*7) M itsubishi Jisho Sekkei Inc. and MEC Design International Corporation provide
design management services and remodeling services to special purpose
companies and record such service incomes as revenue from operations.
The Company does not own investments with voting rights for any special
purpose companies and does not send directors and employees to any special
purpose companies. The following table sets forth major assets and liabilities ofthe special purpose companies as of their recent financial closing dates. Excluded
are special purpose companies whose financial closing dates are yet to comebecause their initial fiscal years have just started

Thousands of
U.S. dollars

Major liabilities and net assets

Debt and otherPreferred investments
Total

Preferred investment securities: revenue (*2)
Other income(*3)
Management business: revenue(*4)
Intermediate business: revenue(*5)
Real estate rent: cost(*6)
Design management business: revenue (*7)

Major assets

Real estate
Other
Total

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

20 Rental Properties

19 Transactions with Special Purpose Companies¥373$4,547

89
5

1,089
68

(67)
¥401

(823)
$4,883

1) Obligation to remove asbestos that is used for some properties andequipments in a particular way required by the Ordinance on Preventing
Asbestos Hazards

For such properties, the Company has an obligation to remove asbestos atdemolition of buildings. However, no demolition has taken place in the pastother than those related to redevelopment or other projects involving manyother business associates. It is therefore difficult to reasonably estimate thetiming to fulfill such obligation based on the physical useful life of theassets 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 ofprogress of such voluntary removal work based on the actual record of thetenancy termination and of the remaining amount of asbestos atdemolition. Moreover, it is difficult to distinguish costs of asbestos removalfrom total costs of demolition. Although the Company made the best
estimation taking into account all the evidence available as of March 31,
2012, these obligations are excluded from recognition of asset retirement
obligations since the probability of obligations in terms of scope andamount was not reasonably estimated.
2) Obligation of restoration based on some real estate rental agreements
For some commercial facilities, the Company has an obligation ofrestoration at the termination of leasehold rental agreements. However, thetiming to fulfill the obligation is uncertain since it is practically possible tocontinue to use those facilities by re-signing contracts and some contracts
set forth a special provision to reduce the possibility to fulfill the obligation.
Furthermore, given its business strategies and the current businessenvironment, the Company intends to continue its operation and not tofulfill the obligation. Although the Company made the best estimation
taking into account all the evidence available as of March 31, 2012, theseobligations are excluded from recognition of asset retirement obligations
since the probability of obligations in terms of scope and amount was notreasonably estimated.

51

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Independent Auditor’s Report

22 Other Comprehensive Income
The following table presents reclassification and tax effects allocated to each component of other comprehensive income for the year ended March 31, 2012:
Millions of yen

Thousands of U.S. dollars

2012
Unrealized holding gain (loss) on securities:
Amount arising during the year
Reclassification adjustments for gains and losses 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 and losses included in net income
Amount before tax effects
Tax effects
Deferred gain (loss) on hedging instruments
Revaluation reserve for Land:
Tax effects
Foreign currency translation adjustments:
Amount arising during the year
Amount before tax effects
Tax effects
Foreign currency translation adjustments
Share of other comprehensive income of companies accounted for by the equity method:Amount arising during the year
Total other comprehensive income52¥ (8,432)
41(8,391)
7,620
(770)

$(102,598)
499(102,099)
92,720(9,379)

(894)
665
(229)
(17)
(246)

(10,885)
8,095(2,790)(213)(3,003)23,717

288,563(8,315)(8,315)15(8,299)(101,177)(101,177)
193(100,983)(134)¥14,264(1,636)$ 173,561

53

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Principal Mitsubishi Estate Group Companies• Consolidated subsidiary

Share of Voting
Rights (%)

Building Business

Recreational Facilities

Building Leasing Business• Sunshine City Corporation

World Import Mart Building, Sunshine City, 1-1, HigashiIkebukuro 3-chome, Toshima Ward, Tokyo 170-8630

TEL +81-3-3989-3321

Management of Sunshine City and other buildings

59.6• Higashinihon Kaihatsu Co., Ltd.

1442-23, Yosawa Oyamacho, Sunto-gun,Shizuoka Prefecture 410-1326

TEL +81-550-78-3211

Management of the Higashi Fuji Country Club,
Fuji International Golf Club and other properties

100.0• Yokohama Sky Building Co., Ltd.

19-12, Takashima 2-chome, Nishi Ward, Yokohama,
Kanagawa Prefecture 220-0011

TEL +81-45-441-1221

Management of the Sky Building and the
Yokohama Shintoshi Building

54.4• MEC Urban Resort Tohoku Co., Ltd.

1-1, Akedori, Izumi Ward 1-chome, Sendai,
Miyagi Prefecture 981-3206

TEL +81-22-377-3136

Operation and management of Izumi Park Town
Golf Club and other properties

100.0• Tokyo Kotsu Kaikan Co., Ltd.

Tokyo Kotsu Kaikan, 10-1 Yurakucho 2-chome,
Chiyoda Ward, Tokyo 100-0006

TEL +81-3-3212-2931

Management of Tokyo Kotsu Kaikan andother buildings

50.0• Towa Nasu Resort Co.

3376, Takakuotsu, Nasu-machi, Nasu-gun,Tochigi Prefecture 325-0398

TEL +81-287-78-1150

Sale of land for cottages, operation of Nasu
Highland Park

100.0

• Chelsea Japan Co., Ltd.

2-3, Marunouchi 3-chome, Chiyoda Ward, Tokyo 100-0005 TEL +81-3-3214-7155

Management of outlet malls

60.0

670, Uchida, Sakura, Chiba Prefecture 285-0077

TEL +81-43-498-6630

Management of Asakura Golf Club

49.0

Sakura Golf Development Co., Ltd.
OthersBuilding Management Business•

Mitsubishi Estate Building
Management Co., Ltd.

Marunouchi 2-chome Building, 5-1, Marunouchi
2-chome, Chiyoda Ward, Tokyo 100-0005

TEL +81-3-3287-4111

Comprehensive building operation and management

100.0• MEC Eco LIFE Co., Ltd.

6-1, Otemachi 1-chome, Chiyoda Ward, Tokyo 100-0004

TEL +81-3-5222-9671

Research and creation of environmental design
proposals

100.0

•

Mitsubishi Jisho Retail Property
Management Co., Ltd.

7-1, Daiba 1-chome, Minato Ward, Tokyo 135-8707

TEL +81-3-3528-4151

Operation and management of commercial facilities

100.0• Ryoei Life Service Co., Ltd.

Royal Life Okusawa, 33-13, Okusawa 3-chome,
Setagaya Ward, Tokyo 158-0083

TEL +81-3-3748-2650

Management of commercial nursing homes

85.0

•

Mitsubishi Jisho Property
Management Co., Ltd.

Shin-Yurakucho Building, 12-1, Yurakucho 1-chome,
Chiyoda Ward, Tokyo 100-0006

TEL +81-3-3287-6263

Comprehensive building operation and management

100.0

TEL +81-3-4477-2000

Internet connection services for housing complexes

20.0• Hokuryo City Service Co., Ltd.

Hokkaido Building, 4-1 Kitanijonishi, Kita 2-jou Nishi,
Chuo Ward, Sapporo, Hokkaido 060-0002

TEL +81-11-242-7411

Management and operation of buildings,
residences and sporting facilities

100.0

8-4, Higashiazabu 1-chome, Minato Ward, Tokyo 106-0044 TEL +81-3-5575-5512

Management and operation of serviced apartments

40.0• IMS Co., Ltd.

Tenjin MM Building, 7-11, Tenjin 1-chome, Chuo Ward,
Fukuoka, Fukuoka Prefecture 810-0001

TEL +81-92-733-2006

Operation and management of the Tenjin MM
Building

92.0• Yuden Building Kanri Co., Ltd.

Yurakucho Denki Building, 7-1, Yurakucho 1-chome,
Chiyoda Ward, Tokyo 100-0006

TEL +81-3-3211-7833

Operation and management of the Yurakucho
Denki Building

62.5• Rockefeller Group, Inc. (RGI)

1221 Avenue of the Americas, New York, New York
10020-1095, U.S.A.

TEL +1-212-282-2000

Real estate operations

100.0• Sunshine BS Corporation

World Import Mart Building, Sunshine City, 1-1, HigashiIkebukuro 3-chome, Toshima Ward, Tokyo 170-8630

TEL +81-3-3989-3378

Operation and management services of theSunshine City Building

59.6• Mitsubishi Estate New York Inc.

1221 Avenue of the Americas, New York, New York
10020-1095, U.S.A.

TEL +1-212-698-2200

Real estate operations in the U.S.

100.0

• Sunshine Enterprise Corporation

World Import Mart Building, Sunshine City, 1-1, HigashiIkebukuro 3-chome, Toshima Ward, Tokyo 170-8630

TEL +81-3-3989-3460

Operation and management services of the Sunshine
City observation deck, aquarium and other facilities

59.6• MEC UK Limited

88 Wood Street, London EC2V 7DA, U.K.

TEL +44-20-7776-6900

Real estate operations in the U.K.

100.0

• Mitsubishi Estate Asia Pte. Ltd.

6 Battery Road, Singapore 049909

TEL +65-6576-5790

Real estate operations in the Asia

100.0

6-2, Otemachi 2-chome, Chiyoda Ward, Tokyo 100-0004

TEL +81-3-3270-5048

Management of the Japan Parking Center

97.0• Tokyo Garage Co., Ltd.

Sanno Grand Building, 14-2, Nagatacho 2-chome,
Chiyoda Ward, Tokyo 100-0014

TEL +81-3-3504-0610

Operation and management of building garages
and sale of various gasoline products

54.9• Marunouchi Heat Supply Co., Ltd.

Kishimoto Building, 2-1, Marunouchi 2-chome,
Chiyoda Ward, Tokyo 100-0005

TEL +81-3-3287-2288

Cooling and heating supply business in the
Marunouchi, Otemachi, Yurakucho and other districts

64.2

Ikebukuro District Heating and•Cooling Co., Ltd.

World Import Mart Building, Sunshine City, 1-1, HigashiIkebukuro 3-chome, Toshima Ward, Tokyo 170-8630

TEL +81-3-3988-6771

Cooling and heating supply business in the
Higashi-Ikebukuro district

49.0

District Heating and Cooling Business

Minato Mirai 21 D.H.C. Co., Ltd.

Ascott International
Management Japan Co., Ltd.

International Business

Investment Management Business• Grand Parking Center Co., Ltd.

O.A.P. D.H.C. Supply Co., Ltd.

Tsunagu Network Communications, Inc. 2-1, Otemachi 2-chome, Chiyoda Ward, Tokyo 100-0004

Commercial Property Development & Investment Business

Parking Business

OAP Tower, 8-30, Tenmabashi 1-chome, Kita Ward,
Osaka, Osaka Prefecture 530-6004
1-45, Sakuragicho 1-chome, Naka Ward, Yokohama,
Kanagawa Prefecture 231-0062

TEL +81-6-6881-5170
TEL +81-45-221-0321

Cooling and heating supply business in the OsakaOAP district
Cooling and heating supply business in the
Yokohama Minatomirai district•

Mitsubishi Jisho Investment
Advisors, Inc.

Fuji Building, 2-3, Marunouchi 3-chome, Chiyoda Ward,
Tokyo 100-0005

TEL +81-3-3218-0031

Specialist real estate investment management services(real estate investment advisory and other services)

100.0

•

Japan Real Estate AssetManagement Co., Ltd.

Shin-Tokyo Building, 3-1, Marunouchi 3-chome,
Chiyoda Ward, Tokyo 100-0005

TEL +81-3-3211-7921

Investment corporation asset management

63.0

Architectural Design & Engineering• Mitsubishi Jisho Sekkei Inc.

Fuji Building, 2-3, Marunouchi 3-chome,
Chiyoda Ward, Tokyo 100-0005

TEL +81-3-3287-5555

Construction and civil engineering design
administration

100.0• MEC Design International Corporation

Inui Building Kachidoki,13-1, Kachidoki 1-chome,
Chuo Ward, Tokyo 104-0054

TEL +81-3-6704-0100

Interior design administration and construction,
manufacture and sale of furniture and household
items

100.0

Royal Park Hotels and Resorts
Co., Ltd.

Otemachi Building, 6-1, Otemachi 1-chome,
Chiyoda Ward, Tokyo 100-0004

TEL +81-3-3211-6180

Comprehensive management and management
support of hotels

100.0• Tohoku Royal Park Hotel Co., Ltd.

2-1, Teraoka 1-chome, Izumi Ward, Sendai,
Miyagi Prefecture 981-3204

TEL +81-22-377-1111

Operation of Sendai Royal Park Hotel

100.0• Royal Park Shiodome Tower Co., Ltd.

6-3, Higashinihonbashi 1-chome, Minato Ward,
Tokyo 105-8333

TEL +81-3-6253-1111

Operation of Royal Park Shiodome Tower

100.0• Yokohama Royal Park Hotel Co., Ltd.

Yokohama Landmark Tower, 2-1, Minatomirai 2-chome,
Nishi Ward, Yokohama, Kanagawa Prefecture 220-8173

TEL +81-45-221-1111

Operation of Yokohama Royal Park Hotel

100.0• Royal Park Hotel Co., Ltd.

1-1, Kakigaracho 2-chome, Nihonbashi, Chuo Ward, Tokyo
TEL +81-3-3667-1111
103-8520

Management of Royal Park Hotel

51.0

Otemachi Building, 6-1, Otemachi 1-chome,
Chiyoda Ward, Tokyo 100-0004

TEL +81-3-5224-6200

Operation of the “THE” series of hotels

100.0

Shin-Otemachi Building, 2-1, Otemachi 2-chome,
Chiyoda Ward, Tokyo 100-8113

TEL +81-3-3510-8011

Real estate brokerage, leasing and leasing management

100.0

4-4, Hongo 2-chome, Bunkyo Ward, Tokyo 113-0033

TEL +81-3-3815-3101

Real estate brokerage, leasing and leasing management

100.0

Otemachi Building, 6-1, Otemachi 1-chome,
Chiyoda Ward, Tokyo 100-0004

TEL +81-3-3214-9300

Development and management of information
systems and software

100.0• MEC Human Resources, Inc.

Otemachi Building, 6-1, Otemachi 1-chome,
Chiyoda Ward, Tokyo 100-0004

TEL +81-3-3212-8674

Human resource-related services

100.0• Keiyo Tochi Kaihatsu Co., Ltd.

Shin-Tokyo Building, 3-1, Marunouchi 3-chome,
Chiyoda Ward, Tokyo 100-0005

TEL +81-3-3212-0555

Management of the PAT Inage commercial facility

55.6

35.0

Hotel Business
29.6•

Others• Marunouchi Direct Access Limited
Marunouchi Hotel Co., Ltd.

Shin-Tokyo Building, 3-1, Marunouchi 3-chome,
Chiyoda Ward, Tokyo 100-0005

TEL +81-3-3214-4881

6-3, Marunouchi 1-chome, Chiyoda Ward, Tokyo 100-0005 TEL +81-3-3548-0181

Construction and leasing of optical fibers in the
Marunouchi district
Management of the Marunouchi Hotel

51.0
31.4

Residential Business
Real Estate Sales• Mitsubishi Jisho Residence Co., Ltd.

Otemachi Building, 6-1, Otemachi 1-chome,
Chiyoda Ward, Tokyo 100-8189

TEL +81-3-3287-8800

Sale, brokerage, leasing, contract construction,
holding and management of real estate

100.0

•

Custom-Built Housing
TEL +81-3-3287-0010

Design and construction of single-unit homes andhousing complexes, renovation of homes and retail
shops

100.0

85.0
25.5

• Mitsubishi Estate Home Co., Ltd.

Fuji Building, 2-3, Marunouchi 3-chome, Chiyoda Ward,
Tokyo 100-0005

MITSUBISHI ESTATE HOUSING•COMPONENTS CO., LTD.

228-4, Shinminato, Mihama Ward, Chiba,
Chiba Prefecture, 261-0002

TEL +81-43-242-9031

Manufacture, processing and sale of construction
materials

15-12, Kiba 2-chome, Koto Ward, Tokyo 135-0042

TEL +81-3-3643-3310

Manufacture and sale of housing construction materials

Prime Truss Co., Ltd.

• Izumi Park Town Service Co., Ltd.
Mitsubishi Jisho Community•
Co., Ltd.

Mitsubishi Jisho Community Headquarters Building,
3-13, Yaesu 2-chome, Chuo Ward, Tokyo 104-0028• MT Community Staff Co., Ltd.

7-4, Hatchobori 3-chome, Chuo Ward, Tokyo 104-0032

TEL +81-22-378-0022

Comprehensive management of Izumi Park Town

TEL +81-3-6895-3800

Comprehensive management of condominiums andbuildings

100.0

TEL +81-3-6222-7127

Property management operations and associatedtraining operations for condominiums and otherproperties

100.0

Mitsubishi Real Estate Services
Co., Ltd.

• Mitsubishi Jisho House Net Co., Ltd.

Others•7-2, Takamori, Izumi Ward, Sendai City, Miyagi Prefecture981-3203

Royal Park Hotel Management
Co., Ltd.

Real Estate Services•

Residence Management Business

54

Share of Voting
Rights (%)

Residential Business

MEC Information Development
Co., Ltd.

100.0

Note: Percentage of voting rights held is as of March 31, 2012

55

1890

March

Stock Information (As of March 31, 2012)

September

The Marunouchi site (over 353,000m2)—a former military training ground
known as Kanda Misaki-cho—purchased by Mitsubishi Company from theJapanese government
Marunouchi Architectural Office established1893

December

Mitsubishi Goshi Kaisha (limited partnership) established

1894

June

Mitsubishi Ichigokan,
the first office building in
Marunouchi, completed

1993

September

July

1923

February

Real Estate Division established within Mitsubishi Goshi Kaisha
Marunouchi Building completed

1994

June

1995

April
NovemberSendai Royal Park Hotel opened
Reconstruction of Marunouchi Building announced

1996

January
November

Osaka Amenity Park (OAP) completed
Head Office relocated to Tokyo BuildingMay

November
1945

1950

April

January

1952

May
November

1953

April
May

Mitsubishi Estate Company, Limited established with paid-in capital
totaling ¥15 million, with the ownership of the Marunouchi Building andits site, as well as business rights for buildings and land within the
Marunouchi area, transferred from Mitsubishi Goshi Kaisha
Construction-related businesses of Mitsubishi Goshi Kaisha transferred to
Mitsubishi Estate
Ownership of Yaesu Building (completed in March 1928 and renamed
Marunouchi Yaesu Building in 1962) and its ownership transferred from
Mitsubishisha Co., Ltd. to Mitsubishi EstateBusiness rights for the Marunouchi site and other land and buildings,
excluding those for Marunouchi Building and Yaesu Building, werereturned to Mitsubishihonsha Co., Ltd., Mitsubishihonsha was dissolved
and its operations transferred to two newly established secondary
corporations, Yowa Fudosan Ltd. and Kaito Fudosan Ltd.

1999

April

Reconstruction of Marunouchi Building commenced

April

Aqua City Odaiba commercial complex opened under the management of
Mitsubishi Estate subsidiary Aqua City Co., Ltd. (renamed Mitsubishi Jisho
Retail Property Management Co., Ltd. in July 2007)
Royal Park Hotels and Resorts Co., Ltd. established

1959

July

1960

February

Marunouchi Parking Area completed

1962

December

Hokkaido Building completed

1969

1972

May

April
June

November
2001

Marunouchi Remodeling Plan formulated

Otokazu Nakata and Takejiro Watanabe appointed president andchairman, respectively
Akasaka Park House offered for sale in lots, marking the launch of theCondominium Business
Mitsubishi Estate New York Inc. establishedThe first phase of the Izumi Park Town
Project launched

September
2002

December

Mitsubishi Real Estate Services Co., Ltd. established

November

Branches established in Sapporo, Sendai, Nagoya and Osaka

1975

May

1978

October

1980

June

1981

October

1983

April
November

1984

July

1986

March
July
October

1987

June

1988

January

1989

April
June
July
July

1990

56

February
April
September

March

September

February
March
April
May
July

Marunouchi OAZO opened (completed in August)
Capital investment in Towa Real Estate Development Co., Ltd. initiated

2005

March
June
November

Construction of Shin-Marunouchi Building commenced
Keiji Kimura appointed president
Tokyo Building opened (completed in October)

2007

April
SeptemberShin-Marunouchi Building opened
The Peninsula Tokyo opened (completed in May)

Shin-Marunouchi Building
2008

January
March
October

2009

March

Shin Aoyama Building completed

April

Tatsuji Ito and Otokazu Nakata appointed president andchairman, respectively

September

Hibiya Kokusai Building completed
2010

March
April

2011

Jotaro Takagi appointed president

January

April

Yokohama Minato Mirai 21 Block-25 Development Plan announced

Participation in the City of London’s Paternoster Square Project announced
Capital investment in the Rockefeller Group, Inc. initiatedConstruction of Ryokuendai New Town commenced

Towa Real Estate Development becomes a Mitsubishi Estate consolidated subsidiary
Sunshine City Corporation becomes a Mitsubishi Estate consolidated subsidiary
Mitsubishi Estate Asia Pte. Ltd. commenced operations
Chelsea Japan Co., Ltd. turned into a Mitsubishi Estate
consolidated subsidiary
Towa Real Estate Development turned into a
Mitsubishi Estate wholly owned subsidiary
Marunouchi Park Building & Mitsubishi Ichigokancompleted
Marunouchi Brick Square opened
Marunouchi Park Building & Mitsubishi Ichigokan

Mitsubishi Estate Home Co., Ltd. established

Tenjin MM Building (IMS) opened in Fukuoka City
Royal Park Hotel in Hakozaki, Tokyo opened
Hiroshima Park Building completed
Hiroshima Branch (renamed Chugoku Branch in April 2000) andKyushu Branch established

Major Shareholders

April
2012

January

Construction under the Osaka Station North District Phase 1 Development
Project commenced
Mitsubishi Ichigokan Museum opened
Mitsubishi Jisho Residence Co., Ltd. established through company spin-offs
and the subsequent integration of residential development and sales
businesses of Mitsubishi Estate, Mitsubishi Real Estate Services Co., Ltd.
and Towa Real Estate Development Co., Ltd.
Keiji Kimura and Hirotaka Sugiyama appointed chairman and president,
respectively
Shanghai Representative Office establishedMarunouchi Eiraku Building completed

Number of Shares
Held (Thousandsof shares)

Percentage
Shareholding

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

96,652

6.95

Japan Trustee Service Bank, Ltd.
(Trust Account)

57,487

4.13

Meiji Yasuda Life Insurance Company

50,142

3.60

Tokio Marine & Nichido Fire Insurance Co., Ltd.

32,478

2.33

SSBT OD05 OMNIBUS ACCOUNT –TREATY CLIENTS

28,9322.08

State Street Bank and Trust Company

28,576

2.05

Mellon Bank, N.A. as Agent for its
Client Mellon Omnibus US Pension

26,3291.89

36.80%The Bank of Tokyo-Mitsubishi UFJ, Ltd.

25,963

1.86

Financial instruments
business operators

CBLDN STICHTING PGGM DEPOSITARY

24,497

1.76

Asahi Glass Co., Ltd.

22,714

1.63

Number of authorized shares:

1,980,000,000 shares

Number of shares issued andoutstanding:

1,390,397,097 (No change from the end of
previous fiscal year)

Number of shareholders:

70,238 (Decrease of 1,823 shareholders compared with the end of the previous fiscal year)

Shareholder Composition (Shareholding Percentage)
Government and local public authorities

0.00%

Individuals and other8.30%

Foreign individuals
and companies

41.05%

By type ofshareholder

Financial institutions

1.77%

Operating andother companies

12.08%

Mitsubishi Trust and Banking Building completed (renamed Mitsubishi UFJ
Trust and Banking Building in October 2005)
Head Office relocated to Otemachi Building
Introduction of an executive officer system
Paternoster Square completed in the City of London
Royal Park Shiodome Tower opened

September
December

April

MEC UK Limited establishedThe first consolidated financial statements announced
Yokohama Office established (reorganized as Yokohama Branch in April 2000)

Properties and equipment revaluated in accordancewith the Law Concerning Revaluation of Land andother relevant laws and regulations
Marunouchi Building opened (completed in August)

2004

Semiannual settlement of accounts changed to annual

Nagoya Dai-Ichi Hotel opened (Hotel Business launched)
MEC USA, Inc. established

Shigeru Takagi and Takeshi Fukuzawa appointed president and chairman,
respectively
Mitsubishi Jisho Sekkei Inc. established through a spin-off of thearchitectural design and engineering business
Mitsubishi Jisho Investment Advisors, Inc. established

Stock Details

Marunouchi Building
2003

Izumi Park Town

1973

April
June

Takejiro Watanabe appointed president
Shin-Marunouchi Building completed
Yowa Fudosan and Kaito Fudosan merged with Mitsubishi Estate
Mitsubishi Estate’s shares listed on the Tokyo Stock Exchange and the
Osaka Securities Exchange

Takeshi Fukuzawa and Jotaro Takagi appointed as president and chairman,
respectively

2000
Marunouchi Building
1937

Akasaka Park Building completed
Yokohama Landmark Tower completed
Yokohama Royal Park Hotel opened

Yokohama Landmark Tower

Mitsubishi Ichigokan
1906

July

Corporate Information
Company Name
Mitsubishi Estate Co., Ltd.

Date of Establishment
May 7, 1937
Paid-in Capital¥141,373 million (As of March 31, 2012)
Business Activities
Development, leasing and management of officebuildings, commercial and other facilities
Development of real estate for investment purposes
and asset management
Development and sale of land for housing, researchand other facility use
Management of leisure and other facilities
Sale and brokerage of real estate and related consulting
services
Number of Employees
Non-consolidated: 629 (Excluding temporary staff)
Consolidated: 7,904 (As of March 31, 2012)
URL

Construction of the Marunouchi Eiraku
Building completed

http://www.mec.co.jp/ index_e.html

Head Office
Otemachi Building, 6-1, Otemachi 1-chome, Chiyoda-ku, Tokyo, 100-8133
Tel +81-3-3287-5100
Sapporo Branch
Hokkaido Building, 4-1, Kitanijonishi, Chuo-ku, Sapporo City,
Hokkaido, 060-0002
Tel +81-11-221-6101
Tohoku Branch
Sendai Park Building, 6-1, Kokubun-cho 3-chome, Aoba-ku, Sendai City,
Miyagi Prefecture, 980-0803
Tel +81-22-261-1361
Yokohama Branch
Yokohama Landmark Tower, 2-1, Minato Mirai 2-chome, Nishi-ku,
Yokohama City, Kanagawa Prefecture, 220-8115
Tel +81-45-224-2211
Nagoya Branch
Dai Nagoya Building, 28-12, Meieki 3-chome, Nakamura-ku, Nagoya City,
Aichi Prefecture, 450-0002
Tel +81-52-565-7111
Osaka Branch
OAP Tower, 8-30, Tenmabashi 1-chome, Kita-ku, Osaka City,
Osaka Prefecture, 530-6033
Tel +81-6-6881-5160
Chugoku Branch
Hiroshima Park Building, 7-5, Otemachi 3-chome, Naka-ku, Hiroshima City,
Hiroshima Prefecture, 730-0051
Tel +81-82-245-1241
Kyushu Branch
Tenjin Twin Building, 6-8, Tenjin 1-chome, Chuo-ku, Fukuoka City,
Fukuoka Prefecture, 810-0001
Tel +81-92-731-2211
Shanghai Representative OfficeRaffles City, 268 Xizang Middle Road, Shanghai, China
Tel +86-21-6340-3000

MITSUBISHI ESTATE CO., LTD. ANNUAL REPORT 2012

Corporate History