Consolidated Financial StatementsofMitsubishi Estate Co., Ltd. andConsolidated Subsidiaries
Year ended March 31, 2022

Independent Auditor’s Report

The Board of Directors
Mitsubishi Estate Co., Ltd.

OpinionWe have audited the accompanying consolidated financial statements of Mitsubishi Estate Co.,
Ltd. and its consolidated subsidiaries (the Group), which comprise the consolidated balance
sheet as at March 31, 2022, and the consolidated statements of income, comprehensive income,changes in net assets, and cash flows for the year then ended, and notes to the consolidated
financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2022, and its
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significancein our audit of the consolidated financial statements of the current period. These matters wereaddressed in the context of the audit of the consolidated financial statements as a whole, and informing the auditor’s opinion thereon, and we do not provide a separate opinion on thesematters.
Revenue recognition for sales of real estate properties to real estate funds
Description of Key Audit Matter

Auditor’s Response

The Company and its consolidated
subsidiaries have recorded Revenue fromoperations of JPY 1,349,489 million in theConsolidated Statement of Income for theyear ended March 31, 2022, which includes
revenue from sales of real estate properties in

We performed the following procedures toassess the determination of whether
substantially all of the risks and rewards ofthe real estate property have been transferred
to real estate funds in all the sales
transactions exceeding the testing threshold

Ernst & Young ShinNihon LLC

Commercial property business of JPY
126,878 million as descried in the Note 22“Revenue recognition”.
Management recognizes revenue from salesof real estate properties when substantially allof the risks and rewards of the real estate
property have been transferred.
Generally, sales transactions of real estate
property have unique terms and conditions
and involve relatively large transaction
prices. Especially when the sales are made toreal estate funds, in order to take into
consideration individual needs of the parties
involved, transaction schemes for sales of thereal estate property may be more complex or
there may be continuing involvement such as
undertaking an asset management role,
having a repurchase option or retaining someequity interest in the sold property.
By granting individual terms to the purchaseand sales agreement or adjusting the relevantterms and conditions if there is a continuous
involvement in the sold property, the risk of
the real estate property such as reduction in
the land value and others remains with theseller, the Company and its consolidated
subsidiaries. Therefore, the determination ofwhether substantially all of the risks andrewards of the real estate property have beentransferred may be complex.
In case the determination is erroneously
made, a large amount of revenue would berecognized for the sales transactions where
substantially all of the risks and rewards ofthe real estate property have not beentransferred.
Accordingly, we identified as a key audit
matter the determination of whether
substantially all of the risks and rewards ofthe real estate property have been transferredin sales transactions to real estate funds.

Ernst & Young ShinNihon LLC

we had established based on our risk
assessment:･ We inspected the management approval
documents and inquired with the divisions
in-charge, when we determined necessary,
to understand the scheme of transaction
and assess whether there had been any
continuing involvement in the property
sold property.
･ We inspected the purchase and sales
agreement and, when we determined
necessary, inquired with the divisions incharge to understand the transaction terms
and conditions and evaluate the businessrationale.
･ We compared the transaction amount withreal estate valuation documents preparedby the Company and its consolidated
subsidiaries and market data of thismarketing area to examine the rationalityof the transaction amount.
･ We inspected the cash receipt evidence andcopies of the registration certificates toassess the fact of delivery.

Valuation of redevelopment-related property and equipment
Description of Key Audit Matter

Auditor’s Response

The Company and its consolidated
subsidiaries have recorded Property andequipment of JPY 4,345,989 million in theConsolidated Balance Sheet as of March 31,
2022, which includes Land and Constructionin progress held for redevelopment projects
aimed at making effective use of areas suchas urban development that contributes tointernational competitiveness and thestrengthening of disaster prevention in
response to the deregulation of the national
and local governments.

We performed the following procedures toassess the determination of whether
impairment indicators were present and thedetermination of whether the Company andits consolidated subsidiaries were required torecognize an impairment loss on theredevelopment-related property andequipment for the project which met certain
conditions we had established based on ourrisk assessment:

The Company and its consolidated
subsidiaries are carrying out multiple
redevelopment projects in major Japanbusiness districts, mainly in the Marunouchi
area. As described at p. “Significant
accounting estimates”, 1 “Valuation ofproperty and equipment” in the Note 1“Significant accounting Policies”,
management identified the assets or asset
groups with impairment indicators andassessed whether the sum of the undiscounted
future cash flows attributable to themexceeded their carrying amounts.
(1) Impairment indicators
Unlike simple reconstruction, redevelopment
projects require the coordination of interests
with neighboring landowners, the permission
to ease regulations, and the creation ofbusiness plans based on long-term forecastsof demand. Therefore, many redevelopment
projects take a long time from planning tocompletion.

(1) Impairment indicators･ In order to assess whether there have been
any material changes in the redevelopment
projects that would significantly lower therecoverable amount, we inspected
documents including the board of directors
meeting minutes and the management
approval documents, and inquired withdivisions in-charge to update ourunderstanding of the status ofredevelopment projects including the statusof negotiation with landlords in areasplanned for redevelopment, the status ofobtaining necessary governmental
permission for redevelopment, changes inmarket conditions for construction costs,
the progress of the construction and theprogress of finding tenants. We also
performed a physical observation of certain
project sites when we determined
necessary.
(2) Recognition of impairment losses･ In order to evaluate the effectiveness ofmanagement’s estimation process of future
In such a long-term project, there is acash flows, we compared the actual costs
potential risk of having lower profitability
incurred for redevelopment with thethan originally expected as a result of delay ininvestment budget.
redevelopment or subsequent modification of ･ For the redevelopment-related property anda redevelopment plan. Specifically, there are
equipment where impairment indicators
risks such as having disagreeing landlords inexisted, we obtained the estimatedareas planned for redevelopment, being
undiscounted future cash flows andErnst & Young ShinNihon LLC

unable to obtain a necessary governmental
permission for redevelopment, an increase inconstruction costs due to the rise of material
cost, delay in construction due to natural
disaster and difficulty of material
procurement, and a slower progress of finding
tenants. Therefore, management is required toevaluate those various risks and makecomplex determination on whether
impairment indicators are present.
(2) Recognition of impairment losses

evaluated the underlying significant
assumptions such as expected future rent tobe earned after completion ofredevelopment, construction costs, capital
expenditures necessary to maintain theexisting service potential and discount rates
used for computing the recoverable
amounts at a future point by comparing
with published relevant indicators andmarket reports obtained from externalsources.

The future cash flows attributable to theredevelopment projects with impairment
indicators are estimated based on the businessplan approved by the management or the
executive committee. The significant
assumptions include the expected future rent
to be earned after completion of aredevelopment, the capital expenditures
necessary to maintain the investment value
and the recoverable amount at the end of
estimation period of future cash flows. The
information to support the assessment ofrecoverability of the entire redevelopment
costs for each project involves uncertainty
due to long-term future projections.
Accordingly, since it is necessary to take into
account many potential risks when
determining whether impairment indicators
are present, this determination is complex. In
addition, the determination of whether an
impairment loss should be recognizedinvolves a high degree of uncertainty for theredevelopment-related property andequipment. Therefore, we identified suchdetermination as a key audit matter.

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

Auditor’s Response

The Company and its consolidated
subsidiaries have recorded the Land andhousing projects in progress of JPY 299,532
million which is included in Inventory on the

We performed the following procedures toassess the determination of whether theCompany and its consolidated subsidiaries
were required to record valuation losses on

Ernst & Young ShinNihon LLC

Consolidated Balance Sheet as of March 31,
2022. It is mainly a real estate underdevelopment acquired by Mitsubishi Estate
Residence Co., Ltd., the Company’s
consolidated subsidiary, for the development
and sale of residential property as
condominiums.
As described at p. “Significant accounting
estimates”, 2 “Valuation of inventories” in
the Note 1 “Significant accounting Policies”,
management valued the Land and housing
projects in progress at net realizable value
when it was lower than cost due to decline inprofitability as well as other types ofinventories.
The Land and housing projects in progress
can be divided into phases before and after
construction begins. Various negotiations andcoordination, such as obtaining necessary
governmental permission, concluding
construction contracts with the constructor,
and negotiations with existing residents inneighboring areas, before construction
begins.
As a result, the land held for future
development of residential condominiums is
associated with potential risk of having lower
profitability than originally expected becauseof delay in development or subsequent
modification of the development plan due tothe long development period until delivery.
Valuation of the land held for future
development is made based on a businessplan, however, the business itself involves
various risks such as a decline in sales pricein the future, excessive supply of residential
condominiums due to increases in supply
caused by competitors in neighboring areas,
being unable to obtain necessary
governmental permission, delay inconstruction due to continuing negotiation
with existing residents in neighboring areasand increases in construction costs due to therise of material cost.
In order to determine whether a valuation loss
Ernst & Young ShinNihon LLC

the land held for future development ofresidential condominiums for the project
which met certain conditions we had
established based on our risk assessment:･ In order to assess whether there had been
any material changes in the land held fordevelopment that would reduce its future
profitability, we inspected documents
including the management approval
documents and the executive committee
meeting minutes, and inquired withdivisions in-charge to update ourunderstanding of the market conditions forresidential condominiums, development
projects in neighboring areas, the status ofobtaining necessary governmental
permission for development, the status ofnegotiation with existing residents inneighboring areas and change in market
conditions for construction costs. We also
performed a physical observation of certain
project sites when we determined
necessary.
In addition, we determined whether there
were any projects with delayedcommencement date of construction, and we
performed following procedures for certain
projects.
･ We compared the sales price with market
report obtained from external sources
including sales transaction data inneighboring areas.
･ We also compared the construction costs
used in the calculation with the publishedrelevant indicators

should be recognized on the land held for
future development of residential
condominiums, it is necessary to evaluate
those risks and determine whether thedevelopment projects are expected to be
ultimately completed as originally planned.
However, the nature and reliability of theinformation available to support thedetermination varies widely.
Accordingly, we identified as a key audit
matter the determination of whether avaluation loss should be recognized on theland held for future development due to ahigh degree of uncertainty involved with suchdetermination.
Other Information
The other information comprises the information included in a disclosure document that
contains audited consolidated financial statements but does not include the consolidated
financial statements and our auditor’s report thereon.
We have concluded that the other information did not exist. Accordingly, we have not performed
any work related to the other information.
Responsibilities of Management, the Audit Committee for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with accounting principles generally accepted in Japan, andfor such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as required by accounting
principles generally accepted in Japan, matters related to going concern.
The Audit Committee is responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.

Ernst & Young ShinNihon LLC

As part of an audit in accordance with auditing standards generally accepted in Japan, we
exercise professional judgment and maintain professional skepticism throughout the audit. We
also:
・ Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of theGroup’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Group to cease tocontinue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentationin accordance with accounting principles generally accepted in Japan.
・ Obtain sufficient appropriate audit evidence regarding the financial information of theentities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance ofthe group audit. We remain solely responsible for our audit opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with the ethicalrequirements regarding independence that are relevant to our audit of the consolidated financial
statements in Japan, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Audit Committee, we determine those matters thatwere of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because theadverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Ernst & Young ShinNihon LLC

Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect tothe year ended March 31, 2022 are presented solely for convenience. Our audit also included thetranslation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made on the basis described in Note 2 to the consolidated financial
statements.
Ernst & Young ShinNihon LLC
Tokyo, Japan
July 11, 2022

/s/ Tatsuya China
Tatsuya Chiba
Designated Engagement Partner
Certified Public Accountant/s/ Chihiro Yasunaga
Chihiro Yasunaga
Designated Engagement Partner
Certified Public Accountant/s/ Teruyo Okubo
Teruyo Okubo
Designated Engagement Partner
Certified Public Accountant

Ernst & Young ShinNihon LLC

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31,
2021

2022

Thousands of
U.S. dollars (Note 2)

Millions of yen

AssetsCurrent assets:
Cash on hand and in banks (Notes 16 and 18)
Notes and accounts receivable – trade (Note 16)
Trade notes accounts receivable, andcontract assets(Notes 3 and 16)
Marketable securities (Notes 16 and 17)
Allowance for doubtful receivables
Inventories (Note 5)
Equity investments (Notes 16 and 17)
Other current assets
Total current assets¥

Investments and other assets:
Investments in and advances to unconsolidated
subsidiaries and affiliates (Note 16)
Investment securities (Notes 16 and 17)
Asset for retirement benefits (Note 8)
Deferred income taxes (Note 9)
Other investments (Notes 6 and 16)
Total investments and other assets

Property and equipment (Note 7) :Land
Land in trust
Buildings and structures
Machinery and equipment and otherConstruction in progress
Less accumulated depreciation
Property and equipment, net

Intangible
Total assets¥

233,117 ¥－2022

170,040 $52,031

1,904,707－

60,6454,280(422)
347,388624,521
87,2601,356,789

－
4,626
(553)
364,834
496,182
76,875
1,164,037

495,506
34,970(3,455)
2,838,369
5,102,717
712,970
11,085,787

41,832
258,435
45,99825,887
310,891
683,045

41,836
240,810
34,37016,536
293,938
627,493

341,800
2,111,570
375,838
211,5122,540,170
5,580,892

2,310,551
585,4702,919,944
161,253
169,700
6,146,919(1,800,930)
4,345,989

2,237,934
578,446
2,815,474
160,608
136,273
5,928,737(1,748,844)
4,179,893

18,878,595
4,783,649
23,857,702
1,317,539
1,386,551
50,224,037(14,714,687)
35,509,350

108,092

101,095

883,182

6,493,917 ¥

6,072,519 $

53,059,213

March 31,
2021

2022

Thousands of
U.S. dollars (Note 2)

Millions of yen

Liabilities and net assets
Current liabilities:
Short-term borrowings and current portion of
long-term debt (Notes 7 and 16)
Notes and accounts payable – trade (Note 16)
Accrued income taxes (Note 9)
Advances and deposits
Accrued expenses and other current liabilities(Note 4)
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 7 and 16)
Lease deposits received (Note 16)
Liability for retirement benefits (Note 8)
Deferred income taxes (Note 9)
Negative goodwill
Other non-current liabilities
Total long-term liabilities
Total liabilities
Net assets:
Shareholders’ equity (Note 10) :Common stock, without par value:
Authorized – 1,980,000,000 shares;
Issued – 1,391,478,706 shares in 2022 and
1,391,328,316 shares in 2021
Capital surplus
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income:Unrealized holding gain (loss) on securities
Deferred gain (loss) on hedging instruments
Land revaluation reserve
Foreign currency translation adjustments
Retirement benefits liability adjustments (Note 8)
Total accumulated other comprehensive income
Stock acquisition rights
Non-controlling interests
Contingent liabilities (Note 13)
Total net assets
Total liabilities and net assets¥¥

See accompanying notes to consolidated financial statements.

2022

351,980 ¥
60,51629,445
107,590

384,428 $
60,50724,457
121,996

2,875,894
494,459
240,590879,075

81,509631,043

71,046
662,437

665,984
5,156,004

2,384,897
451,749
27,402538,259
85,526
138,605
3,626,441
4,257,484

2,139,618
466,891
27,123507,901
83,604
123,494
3,348,634
4,011,071

19,486,050
3,691,065
223,897
4,397,906
698,803
1,132,487
29,630,211
34,786,215

142,414
159,749
1,165,344(132,483)
1,335,024

142,279
164,367
1,058,457(105,216)
1,259,887

1,163,610
1,305,252
9,521,566(1,082,471)
10,907,958

130,841103
526,4172,162
8,675
668,200
201
233,005

118,088(1,916)526,417(53,740)
3,163
592,011231
209,316

1,069,056
846
4,301,145
17,66570,886
5,459,600
1,643
1,903,795

2,236,432
6,493,917 ¥

2,061,447
6,072,519 $

18,272,997
53,059,213

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Income
Year ended March 31,
2021

2022

Thousands of
U.S. dollars (Note 2)

Millions of yen

Revenue from operations (Note 14)
Cost of revenue from operations (Note 5)
Selling, general and administrative expenses
Operating income¥

Other income (expenses):
Interest and dividend income
Interest expenses
Equity in earnings of affiliates
Other, net (Note 15)
Profit before income taxes
Income taxes (Note 9) :Current
DeferredProfitProfit attributable to:Non-controlling interests
Shareholders of Mitsubishi Estate Co., Ltd.

¥See accompanying notes to consolidated financial statements.

2022

1,349,489 ¥(974,724)(95,787)
278,977

1,207,594 $(889,830)(93,370)
224,394

11,026,142(7,964,086)(782,640)
2,279,416

7,997(20,742)332(12,786)(25,198)
253,779

16,966(21,623)307(18,779)(23,128)
201,265

65,346(169,478)
2,717(104,472)(205,887)
2,073,528(60,331)(10,558)(70,889)
182,889(44,647)(9,548)(54,195)
147,069(492,941)(86,268)(579,210)
1,494,318(27,718)
155,171 ¥(11,414)135,655 $(226,473)
1,267,844

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year ended March 31,
2021

2022

Thousands of
U.S. dollars (Note 2)

Millions of yen

Profit¥182,889 ¥147,069 $

12,754
1,508－
59,5885,519

38,566352(44)(26,143)
7,309
57
20,097167,166 $

2,817
651,327
2,145,645

157,093 $10,073 $1,890,356
255,289

Other comprehensive income (Note 25) :Unrealized holding gain (loss) on securities
Deferred gain (loss) on hedging instruments
Land revaluation reserve
Foreign currency translation adjustments
Retirement benefits liability adjustments
Share of other comprehensive income of affiliates
accounted for by the equity method
Total other comprehensive income (loss)
Comprehensive income (Note 25)¥

344
79,715
262,605 ¥Total comprehensive income attributable to:Shareholders of Mitsubishi Estate Co., Ltd.
Non-controlling interests¥¥

231,360 ¥
31,244 ¥See accompanying notes to consolidated financial statements.

2022

1,494,318
104,215
12,323－486,871
45,098

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

Accumulated othercomprehensive income
Unrealized
Deferredholding gain gain (loss) on
Total(loss) on
hedging
Retained
Treasuryshareholders’securities
instruments
earnings
stock
equity¥ 962,840 ¥ (105,282) ¥ 1,163,746 ¥
79,527 ¥(1,948)

Shareholders’ equity

Balance at April 1, 2020
Cumulative effects of changes inaccounting policies
Restated balance at April 1, 2020
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Change by share exchanges
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2021
Cumulative effects of changes inaccounting policies
Restated balance at April 1, 2021
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Change by share exchanges
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2022

Commonstock¥ 142,147

Capitalsurplus¥ 164,041

142,147

164,041131

130962,840(105,282)

1,163,746

(17)
83

195

195

131
142,279326
164,367

95,617
1,058,457

66(105,216)

96,141
1,259,887

38,56038,560118,08831
31(1,916)142,279

164,367(1,509)1,056,948(105,216)(1,509)1,258,378

118,088(1,916)135135(30,014)31

270(46,774)
155,171(30,014)
31

2,715

1,751

12,75312,753130,841

2,020
2,020
103

(46,774)
155,171(0)(964)(3,788)¥(1,948)262(40,155)
135,655
(17)
58
142

(40,155)
135,655(25)
142

79,527

135
142,414¥(4,617)
159,749(3,788)108,396¥ 1,165,344 ¥(27,267)(132,483)

76,646¥ 1,335,024¥¥

Millions of yen

Balance at April 1, 2020
Cumulative effects of changes inaccounting policies
Restated balance at April 1, 2020
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Change by share exchanges
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2021
Cumulative effects of changes inaccounting policies
Restated balance at April 1, 2021
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Change by share exchanges
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2022

Accumulated other comprehensive income
Retirement
Total
Foreign
benefits
accumulatedLand
currency
liability
other
Stock
Nonrevaluation translation adjustments comprehensive acquisition
controlling
reserveadjustments(Note 8)incomerightsinterests¥ 526,623 ¥ (29,321) ¥(4,163) ¥570,716 ¥288 ¥ 206,454
526,623(29,321)(4,163)570,716288

206,454

Total
net assets¥ 1,941,206
1,941,206
262(40,155)
135,655
(17)
58
142
－
195

(206)
(206)
526,417(24,418)(24,418)(53,740)

7,327
7,327
3,163

21,294
21,294592,011

(56)
(56)
231

2,861
2,861
209,316

24,099120,241
2,061,447

526,417(53,740)

3,163

592,011231

209,316(1,509)2,059,937
270(46,774)
155,171(30,014)31－
1,751(3,788)¥－526,417¥55,902
55,902
2,162

¥

5,512
5,512
8,675

¥

76,18976,189668,200

¥

(30)
(30)
201

¥

23,68923,689233,005

99,847
176,494¥ 2,236,432

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets (continued)
Thousands of U.S. dollars (Note 2)

Accumulated othercomprehensive income
Unrealized
Deferredholding gain gain (loss) on
Total(loss) on
hedging
Retained
Treasuryshareholders’securities
instruments
earnings
stock
equity$ 7,866,983 $ (860,225) $ 9,508,510 $ 649,788 $ (15,923)

Shareholders’ equity

Balance at April 1, 2020
Cumulative effects of changes inaccounting policies
Restated balance at April 1, 2020
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Change by share exchanges
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2021
Cumulative effects of changes inaccounting policies
Restated balance at April 1, 2021
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Change by share exchanges
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2022

Commonstock$ 1,161,434

Capitalsurplus$ 1,340,316

1,161,434

1,340,316

1,071

1,069

7,866,983(860,225)

9,508,510(15,923)2,141(328,097)
1,108,386
(139)
479
1,168

(328,097)
1,108,386
(139)
686

(206)
1,168

649,788

1,594

1,594

1,071
1,162,505

2,664
1,342,981

781,250
8,648,234

547(859,678)

785,533
10,294,043

315,065
315,065
964,854260
260(15,662)

1,162,505

1,342,981(12,332)
8,635,901(859,678)(12,332)
10,281,710

964,854(15,662)

1,104

1,104
(245,237)
258

2,209
(382,177)
1,267,844(245,237)
255

22,186

14,308104,202104,202$ 1,069,056

16,50816,508846(382,177)
1,267,844(3)(7,877)(30,954)
1,104$ 1,163,610(37,728)$ 1,305,252(30,954)885,664(222,793)$ 9,521,566 $ (1,082,471)

626,247$10,907,958$

Thousands of U.S. dollars (Note 2)

Balance at April 1, 2020
Cumulative effects of changes inaccounting policies
Restated balance at April 1, 2020
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Change by share exchanges
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at April 1, 2021
Cumulative effects of changes inaccounting policies
Restated balance at April 1, 2021
Changes in the year:
Issuance of new shares
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Land revaluation reserve (Note 1-h)Change by share exchanges
Changes in equity related to transactions with
non-controlling shareholders
Net change in items other than those inshareholders’ equity
Total of changes in the year
Balance at March 31, 2022

Accumulated other comprehensive income
Retirement
Total
Foreign
benefits
accumulatedLand
currency
liability
other
Stock
Nonrevaluation translation adjustments comprehensive acquisition
controlling
reserveadjustments(Note 8)incomerightsinterests$ 4,302,830 $ (239,577) $ (34,021) $ 4,663,097 $2,358 $ 1,686,857
4,302,830(239,577)(34,021)

4,663,097

2,358

1,686,857

Total
net assets$15,860,823
15,860,823
2,141(328,097)
1,108,386
(139)
479
1,168
－
1,594

(1,685)(1,685)4,301,145(199,516)(199,516)(439,093)

59,86659,86625,845

173,991
173,991
4,837,088

(464)
(464)
1,893

23,381
23,381
1,710,239

196,908
982,441
16,843,265

4,301,145(439,093)

25,845

4,837,088

1,893

1,710,239(12,332)
16,830,932
2,209(382,177)
1,267,844(245,237)
255－
14,308(30,954)456,759456,759－$

See accompanying notes to consolidated financial statements.

4,301,145$

17,66545,04145,041$

70,886

622,511622,511$5,459,600

(250)
(250)
$

1,643

$

193,556
193,556

815,817
1,442,064

1,903,795$ 18,272,997

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year ended March 31,
2021

2022

2022
Thousands of
U.S. dollars (Note 2)

Millions of yen

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

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
Proceeds from sales of investments in subsidiaries
resulting in change in scope of consolidation
Purchase of investments in subsidiaries resulting inchange in scope of consolidation
Other
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Net increase (decrease) in commercial paper
Increase in long-term borrowings
Repayment of long-term borrowings
Proceeds from issuance of corporate bonds
Repayment of corporate bonds
Purchase of investments in subsidiaries that do not
result in change in scope of consolidation
Net (increase) decrease in treasury stock
Cash dividends paid
Other
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 18)¥

See accompanying notes to consolidated financial statements.

253,779
91,581
12,557(7,987)(1,843)
3,866(332)(3,526)(3,855)(7,997)
20,742－(6,948)116,993(30,267)474(15,024)(76,965)
345,246
7,704(20,653)(52,206)
280,090¥

201,265
89,107(7,263)(3,021)
－
4,679
(307)
(322)
(1,553)(16,966)
21,602(3,157)－56,443(21,048)(3,821)
7,837(53,726)
269,747
16,673(21,605)(57,400)
207,414$2,073,528
748,278
102,605(65,265)(15,059)
31,589(2,717)(28,811)(31,503)(65,346)
169,478－(56,773)955,904(247,299)
3,878(122,759)(628,854)
2,820,872
62,950(168,753)(426,562)
2,288,507

1,461(1,514)
14,570(328,591)
9,562(7,488)2,688(3,294)30,403(315,784)
14,186(16,712)

11,942(12,376)
119,049(2,684,792)
78,128(61,187)

1,883－

15,388(455)(3,205)(313,778)－(8,789)(297,303)(3,721)(26,187)(2,563,757)

26,104(50,000)
261,114(118,951)
129,564(65,000)

27,400－252,874(163,891)
184,281(201,550)

213,291(408,530)
2,133,458(971,907)
1,058,616(531,089)(10,442)(29,861)(46,792)(4,762)
90,973(113)(23)(40,117)(8,434)50,425(85,319)(243,983)(382,318)(38,908)
743,309

4,651
61,937
172,307234,244(1,237)(40,701)
213,008
172,307

38,008506,068
1,407,852
1,913,920¥$

Mitsubishi Estate Co., Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Year ended March 31, 2022
1.

Significant Accounting Policiesa.

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

b.

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

c.

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

d.

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

e.

Cash equivalents
The Group considers all highly liquid investments that are readily convertible into cash and have an original maturity of three months or less to be
cash equivalents. Reconciliation between cash in the consolidated balance sheet and cash equivalents at March 31, 2022 and 2021 is presented in
Note 18.

f.

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

g.

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

1.

Significant Accounting Policies (continued)h.

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

i.

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

j.

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

k.

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

l.

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

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

3)

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

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

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

1.

Significant Accounting Policies (continued)

m. Important Hedge Accounting (continued)
4)

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

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

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

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

2)

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

1.

Significant Accounting Policies (continued)n.

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

o.

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

4)

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

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

6)

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

7)

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

Appropriation of retained earnings
Under the Companies Act of Japan, the appropriation of retained earnings with respect to a given fiscal year is made by resolution of theshareholders at a general meeting held subsequent to the close of such fiscal year. The accounts for that year do not, therefore, reflect suchappropriations. See Note 10 for more information.

1.

Significant Accounting Policies (continued)p.

Significant accounting estimates
1. Valuation of property and equipment(1) Amount recorded in the consolidated financial statements for the current fiscal year
2022

2021

2022

Millions of yen

Property and equipment, net
Impairment loss
(2)¥

4,345,989
3,866¥

Thousands of U.S. dollars

4,179,893
4,679$

35,509,350
31,589Other information
1) Calculation method for the amount recorded in the consolidated financial statements for the current fiscal year
The Group mainly owns real estate properties such as office buildings, commercial facilities, outlet malls, hotels and logistics facilities
as property and equipment. For assets or asset groups with indication that they may be impaired (impairment indicators), when the sumof undiscounted future cash flows attributable to them is lower than the carrying value, the Group values those assets and asset groups
to the recoverable amount, and such reduction is recognized as an impairment loss in accordance with the Accounting Standard for
Impairment of Fixed Assets.
Asset grouping in order to determine whether to recognize impairment or to measure impairment losses is a minimum unit thatgenerates cash flows, which is substantially independent from cash flows of other assets or asset groups.
The recoverable amount is the higher of net realizable value or value in use. While the net realizable value is calculated based on thereal estate appraised value or estimated sales price, the value in use is calculated by discounting future cash flows.
2) Major assumptions
In principle, the Group estimates rents, capital expenditures, and discount rates for each individual property. The estimation is madebased on major assumptions by each asset class, taking into account the condition of individual properties.
The major assumptions used in estimation in the current fiscal year are as follows.
 Offices
Average rents have recently been on a steady positive trend, which is expected to continue in the next fiscal year. The vacancy rate ishigher than before the spread of the novel coronavirus infection (COVID-19) because it is taking time to backfill vacancies, but theGroup expects that the time required to backfill vacancies will gradually improve to the normal level from the next fiscal year.
 Commercial facilities and outlet malls
Rents for commercial facilities and outlet malls are related to tenant sales at commercial facilities and outlet malls, as they include
variable rents linked to tenant sales. As in the previous fiscal year, the effects of COVID-19 remained in the fiscal year under review,and tenant sales decreased compared to before the impact of COVID-19. However, as it has been on an improving trend recently, theGroup expects the impact to be limited from the following next fiscal year onwards.
 Hotels
Occupancy rates have been at low level due to the impact of COVID-19 and it is expected to take a certain period of time foroccupancy rates to recover to the level the Group had before being affected by COVID-19. The Group assumed that hotel demand
would recover to the pre-COVID-19 levels in around 2024, the same timing as for the recovery in global air passenger demand.
 Logistics facilities
Logistics facilities have not been affected by COVID-19, and the market has been favorable. Therefore, the Group assumes that
performance of logistics facilities will continue to be steady in the next fiscal year and beyond as is expected for the market trend.
 Redevelopment projects
The Group is engaged in multiple redevelopment projects. Compared with other development projects, redevelopment projects areassociated with potential risk of having lower profitability than originally expected because of delay in development or subsequent
modification of a development plan. Potential risk includes risks such as being unable to obtain agreement from other landowners in thearea planned for redevelopment, and being unable to obtain necessary governmental permission.
The Group comprehensively assesses these various risks for redevelopment projects. However, the redevelopment projects currently
underway are not in any situation that would decrease their profitability from the initial estimates. The Group therefore assumes thatthese redevelopment projects will progress while maintaining their profitability.
3) Impact on the consolidated financial statements for the next fiscal year
Impairment losses are estimated based on the descriptions of 2) Major assumptions.
Therefore, if major assumptions used for estimating impairment losses worsen, additional impairment losses may be recognized in thenext fiscal year.

1.

Significant Accounting Policies (continued)p.

Significant accounting estimates (continued)
2. Valuation of inventories(1) Amount recorded in the consolidated financial statements for the current fiscal year
2022

2021

2022

Millions of yen

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

41,239299,532
380

Thousands of U.S. dollars¥

88,116
267,563561$

336,949
2,447,356
3,106

Other information
1) Calculation method for the amount recorded in the consolidated financial statements for the current fiscal year
The Group values inventories at net realizable value when it is lower than cost due to decline in profitability, and recognizes such
reduction as write-down of inventories in accordance with the Accounting Standard for Measurement of Inventories. The net realizablevalue is calculated by deducting the estimated additional construction costs and estimated sales expenses from the estimated sales
amount.
2) Major assumptions
The major assumptions used in the estimation of net realizable value for the fiscal year are as follows.
Considering factors such as the latest distribution of sales by agreement date, contract prices and number of model units visitors, the net
realizable values of projects that are generally progressing in line with or better the initial business plan are estimated based on theinitial business plan. Meanwhile, the net realizable values of projects that have deteriorated from the initial business plan are estimatedbased on a revised business plan, taking into consideration the conditions unique to each project such as the status of progress, market
prices in the neighboring areas and incurrence of additional costs. With regard to the impact of COVID-19, the Group assumes that the
impact will be limited because current market demand is steady, and inventory is decreasing.
In addition, the land held for future development of residential condominiums is associated with potential risk of having lower
profitability than originally expected because of delay in development or subsequent modification of a development plan which may
happen in a period before sales commence. Potential risk includes risks such as a decline in sales price in the future, excessive supplyof residential condominiums due to increases in supply caused by competitors in neighboring areas, being unable to obtain necessary
governmental permission, delay in construction due to continuing negotiation with existing residents in neighboring areas.
The Group comprehensively assesses these various risks for the land held for future development.
However, the development projects currently underway are not in any situation that would decrease their profitability from the initial
estimates. The Group therefore assumes that such development projects will progress while maintaining their profitability.
3) Impact on the consolidated financial statements for the next fiscal year
The valuation of inventories is estimated based on the descriptions of 2) Major Assumptions by the lower of cost or market (LCM)
method. Therefore, if there are changes in these major assumptions, it may result in additional write-down of inventories in the next
fiscal year.

3. Valuation of equity investments(1) Amount recorded in the consolidated financial statements for the current fiscal year
2022

2021

2022

Millions of yen

Equity investments(2)¥

624,521¥

Thousands of U.S. dollars

496,182$

5,102,717

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

1.

Significant Accounting Policies (continued)q.

Notes on Changes in Accounting Policies
Accounting Standard and Implementation Guidance on Revenue Recognition
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020; hereinafter“Revenue Recognition Standard”) and other standards from the beginning of the fiscal year ended March 31, 2022. The Company
recognizes revenue when control of a promised good or service is transferred to a customer in an amount that reflects the consideration towhich the Company expects to be entitled in exchange for those goods and services. However, the effect of the application of the Revenue
Recognition Standard on profit and loss, retained earnings at beginning, and per share information for the fiscal year under review was
immaterial.
Furthermore, “Accounts payable,” which was presented under “Current assets” in the consolidated balance sheet for the previous fiscal
year, has been included under “Accounts receivable and contract assets” from the current fiscal year. However, in accordance with thetransitional treatment set forth in “Revenue Recognition Standard”, no reclassifications have been made to the previous fiscal year under
the new presentation method. Furthermore, in accordance with the transitional treatment set forth in “Revenue Recognition Standard”,
information in Note 22 “Revenue Recognition” related to the previous fiscal year is not presented.
Application of Accounting Standard for Fair Value Measurement
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019; hereinafter “Fair
Value Measurement Standard”) and other standards from the beginning of the fiscal year ended March 31, 2022, and will prospectively
apply the new accounting policies stipulated by the Fair Value Measurement Standard in accordance with the transitional treatment
provided in Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of the “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10, July 4, 2019). Accordingly, for corporate bonds, which were previously considered to be financial
instruments whose fair value was extremely difficult to determine, the acquisition cost was the amount recognized in the consolidatedbalance sheet, however, even if observable inputs are not available, the fair value is calculated using unobservable inputs based on the best
available information in the consolidated balance sheet. In addition, the Company will include notes on fair value information by levelwithin the fair value hierarchy in the notes on financial instruments. However, in accordance with the transitional treatment set forth in “Fair
Value Measurement Standard”, related information for the previous fiscal year is not presented.

r.

Accounting standards issued but not yet effective• On June 17, 2021, the ASBJ issued “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance
No. 31)s.

(1)Overview
The revised "Implementation Guidance on Accounting Standard for Fair Value Measurement" (ASBJ Guidance No. 31) was issued on June17, 2021, approximately one year after issue of the "Accounting Standard for Fair Value Measurement" because a certain period of time
was considered necessary for discussions with related parties at the time of issue of the Standard on July 4, 2019 regarding consideration of"Calculation of Fair Value of Investment Trusts" and certain considerations were necessary for the notes on the fair value of "Investment in
partnerships, etc. for which the net amount equivalent to equity is recorded on the balance sheet".

(2)

Scheduled date of adoption
The Company expects to adopt the accounting standard and implementation guidance from the beginning of the fiscal year ending March
31, 2023.

(3)

Impact of the adoption of accounting standard and implementation guidanceImpact of the adoption of the implementation guidance on fair value measurement to consolidated financial statements is currently being
evaluated.

Change in presentation
Consolidated Statement of Cash Flows“Income taxes paid, net” under “Cash flows from operating activities” presented separately in the previous fiscal year, has been changed to“Income taxes refund (paid)” from the fiscal year under review due to provide a clearer presentation in line with actual conditions. The
consolidated financial statements for the previous fiscal year have been reclassified to reflect this change in presentation.
As a result, the amount of ¥(57,400) million, which had been presented as “Income taxes paid, net” under “Cash flows from operating
activities” in the consolidated statement of cash flows for the previous fiscal year, has been reclassified as “Income taxes refund (paid)”
respectively.

2.

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¥122.39 = U.S.$1.00, the approximate rate of exchange prevailing on March 31, 2022. The inclusion of such amounts is not intended to imply
that yen amounts have been or could be readily converted, realized or settled in U.S. dollars at the above or any other rate.

3. Amounts of receivables from contracts with customers and contract assets included in trade notes receivable, trade accounts
receivable and contract assets

Trade notes
Accounts receivable
Contract assets
Total

2022

2022

Millions of yen

Thousands of U.S. dollars¥

186
34,344
7,081
41,612¥$

1,525
280,61257,860339,998$

4. Amount of contract liabilities included in “other”
The amount of contract liabilities included in “other” is described in “(1) Disaggregation of revenue from contracts with customers” inNote 22 “Revenue Recognition”.
5. Inventories
Inventories at March 31, 2022 and 2021 are summarized as follows:
2022

2021

2022

Millions of yen

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

¥

41,239299,532
724
5,892
347,388¥

Thousands of U.S. dollars¥

88,116
267,563975
8,179
364,834¥$

336,949
2,447,356
5,922
48,141
2,838,369$

Write-downs of inventories as a result of a decrease in profitability for the years ended March 31, 2022 and 2021 were ¥380 million($3,106 thousand) and ¥561 million, respectively, and recognized in cost of revenue from operations.
6. Other Investments
Other investments at March 31, 2022 and 2021 were as follows:
2022

2021

2022

Millions of yen

Lease deposits
Long-term prepaid expenses
Other
Total

¥

¥

140,230
138,917
31,743
310,891¥¥

Thousands of U.S. dollars

136,478
122,798
34,661
293,938$$

1,145,768
1,135,036
259,365
2,540,170

7. Short-Term Borrowings and Long-Term Debt
At March 31, 2022 and 2021, short-term borrowings and the current portion of long-term debt consisted of the following:
2022

2021

2022

Millions of yen

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

¥

182,052－
169,928
351,980¥

Thousands of U.S. dollars¥

141,785
50,000
192,643
384,428¥$

1,487,474－
1,388,419
2,875,894$

The weighted-average interest rates per annum on short-term borrowings outstanding at March 31, 2022 and 2021 were 0.45% and 0.51%,
respectively. Short-term borrowings are principally unsecured.
At March 31, 2022 and 2021, long-term debt consisted of the following:
2022

2021

2022

Millions of yen

1.262% unsecured bonds due 2021
1.103% unsecured bonds due 2021
1.095% unsecured bonds due 2021
1.178% unsecured bonds due 2022
1.087% unsecured bonds due 2022
1.026% unsecured bonds due 2022
2.42% unsecured bonds due 2022
0.929% unsecured bonds due 2022
1.5% unsecured bonds due 2022
2.075% unsecured bonds due 2023
0.09% unsecured bonds due 2023
0.643% unsecured bonds due 2024
2.28% unsecured bonds due 2024
1.067% unsecured bonds due 2024
0.05% unsecured bonds due 2025
0.19% unsecured bonds due 2025
0.175% unsecured bonds due 2025
0.17% unsecured bonds due 2026
0.27% unsecured bonds due 2026
0.15% unsecured bonds due 2027
2.305% unsecured bonds due 2027
0.24% unsecured bonds due 2027
2.385% unsecured bonds due 2027
2.52% unsecured bonds due 2027
2.425% unsecured bonds due 2027

¥

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

15,00020,00010,00020,00020,00030,00010,00010,00010,00010,00020,00020,00010,00010,000－10,00010,00010,00010,000－10,00010,00010,00015,00010,000$－－－－163,412245,118
81,70681,70681,70681,706
163,412
163,41281,70681,706245,118
81,70681,70681,70681,706245,118
81,70681,70681,706
122,559
81,706

7. Short-Term Borrowings and Long-Term Debt (continued)
2022

2021

2022

Millions of yen

0.16% unsecured bonds due 2028
2.555% unsecured bonds due 2028
0.27% unsecured bonds due 2029
0.43% unsecured bonds due 2030
0.26% unsecured bonds due 2031
2.9% unsecured bonds due 2032
2.615% unsecured bonds due 2032
2.04% unsecured bonds due 2032
1.72% unsecured bonds due 2033
0.859% unsecured bonds due 2036
0.736% unsecured bonds due 2037
0.703% unsecured bonds due 2037
0.59% unsecured bonds due 2039
0.73% unsecured bonds due 2040
0.61% unsecured bonds due 2041
0.789% unsecured bonds due 2056
1.402% unsecured bonds due 2057
1.313% unsecured bonds due 2058
1.132% unsecured bonds due 2069
0.874% unsecured bonds under Euro MTN program due
2023
0.102% unsecured bonds under Euro MTN program due
2025
0.135% unsecured bonds under Euro MTN program due
2026
0.115% unsecured bonds under Euro MTN program due
2026
0.16% unsecured bonds under Euro MTN program due
2029
0.25% unsecured bonds under Euro MTN program due
2029
1.04% unsecured bonds under Euro MTN program due
2050
1.33% interest deferrable and early redeemable
subordinated unsecured bonds due 2076
1.48% interest deferrable and early redeemable
subordinated unsecured bonds due 2076
0.66% interest deferrable and early redeemable
subordinated unsecured bonds due 2081
0.97% interest deferrable and early redeemable
subordinated unsecured bonds due 2081
Loans from banks and insurance companies:
SecuredUnsecured¥Less current portion¥

20,00010,00040,00030,00030,00010,00010,00020,00010,00010,00010,00010,00020,00020,00020,00015,00015,00010,00015,000Thousands of U.S. dollars－
10,00040,00030,000－10,00010,00020,00010,00010,00010,00010,00020,00020,000－15,00015,00010,00015,000¥$163,41281,706
326,824
245,118
245,118
81,70681,706
163,41281,70681,70681,70681,706
163,412
163,412
163,412122,559
122,559
81,706
122,559

5,751

5,175

46,989

1,111

1,111

9,080

3,784

3,784

30,924

2,924

2,924

23,893

1,255

1,255

10,258

1,508

1,508

12,322

15,00015,000122,559

70,00070,000571,942

30,00030,000245,11880,00080,000653,648

35,00035,000285,971

89,281
1,589,209
2,554,826(169,928)
2,384,897

89,991
1,431,510
2,332,261(192,643)
2,139,618

729,480
12,984,801
20,874,469(1,388,419)
19,486,050¥$

The aggregate annual maturities of long-term debt subsequent to March 31, 2022 are summarized as follows:Year ending March 31,
2023
2024
2025
2026
2027
2028 and thereafter
Total

Millions of yen¥¥

169,928
265,531
176,821132,176
179,449
1,630,917
2,554,826

Thousands of U.S. dollars$$

1,388,419
2,169,555
1,444,740
1,079,958
1,466,214
13,325,581
20,874,469

7. Short-Term Borrowings and Long-Term Debt (continued)
The assets pledged as collateral for short-term borrowings of ¥ 100 million ($817 thousand) and long-term debt of ¥ 89,281 million($729,480 thousand) at March 31, 2022 were as follows:
Millions of yen

Buildings and structures
Machinery and equipment
Land
Investment securities (*)
Other (*)
Total¥

Thousands of U.S. dollars

199,896
1,443
235,552
15,716
850
453,459¥$

1,633,275
11,796
1,924,605
128,4126,950
3,705,039$(*) Investment securities of ¥15,716 million ($128,412 thousand) and other of ¥840 million ($6,868 thousand) are pledged as collateral forthe debts of the affiliated companies.
The following borrowings are non-recourse loans at March 31, 2022 and 2021, which are secured by collaterals as the sole source ofrecovery.
2022

2021

2022

Millions of yen

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

¥

11,73550,28762,023¥Thousands of U.S. dollars¥

10,93435,13046,064¥$

95,889410,879
506,769$

The assets pledged as collateral for the above non-recourse loans at March 31, 2022 and 2021 were as follows:
2022

2021

2022
Thousands of U.S. dollars

Millions of yen

Buildings and structures
Machinery and equipment
Land
Construction in progress
Total

¥

¥

113,51729
79,307－
192,854¥¥

32,562－
51,3593,288
87,209$$927,507239
647,987－
1,575,734

8. Retirement Benefit Plans
The Company and most of its domestic consolidated subsidiaries have either funded or unfunded defined benefit plans, defined
contribution plans and lump-sum payment plans in the form of a defined benefit plan. The Company has adopted a retirement benefit
trust for the lump-sum payment plan and defined benefit plan. Some U.S. consolidated subsidiaries have adopted defined benefit plans.
The simplified method, which assumes the retirement benefit obligation to be equal to the benefits payable if all eligible employees
voluntarily terminated their employment at the fiscal year end, has been adopted in accounting for defined benefit plans for someconsolidated subsidiaries and the Company’s executive officers.
The changes in the retirement benefit obligation during the years ended March 31, 2022 and 2021 are as follows:
2022

2021

2022

Millions of yen

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

143,454
5,906
647
466
(6,007)
2,322(114)
146,674¥

Thousands of U.S. dollars¥

140,885
5,605
750
3,510
(6,140)(1,186)28
143,454¥$

1,172,106
48,2595,294
3,810(49,088)
18,974(935)
1,198,421$

The changes in plan assets during the years ended March 31, 2022 and 2021 are as follows:
2022

2021

2022

Millions of yen

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

150,452
3,530
9,793
3,488
(3,931)
1,752(100)
164,985¥

Thousands of U.S. dollars¥

134,975
3,188
13,353
3,492(3,705)(869)
17150,452¥$

1,229,284
28,84480,01728,506(32,125)
14,318(818)
1,348,027$

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheet as of March
31, 2022 and 2021 for the Company’s and the consolidated subsidiaries’ defined benefit plans:
2022

2021

2022

Millions of yen

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

125,852(164,985)(39,133)
20,822¥Thousands of U.S. dollars

123,175(150,452)(27,276)
20,278$1,028,287(1,348,027)(319,740)
170,134(18,310)
27,402(45,998)
285(6,997)
27,123(34,370)248(149,605)
223,897(375,838)
2,334(18,310) ¥(6,997) $(149,605)(*) The accrued employees’ retirement benefits recognized by some U.S. consolidated subsidiaries were included in “Other current
liabilities.”

8. Retirement Benefit Plans (continued)
The components of retirement benefit expense for the years ended March 31, 2022 and 2021 are as follows:
2022

2021

2022

Millions of yen

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

¥

5,906
647
(3,530)
(874)
31
159
2,340

¥

Thousands of U.S. dollars

¥

5,605
750
(3,188)
430
16
188
3,802

¥

$

48,2595,294(28,844)(7,142)
255
1,304
19,126$(*) Retirement benefit expenses for consolidated subsidiaries adopting the simplified method, which assumes the retirement benefit
obligation to be equal to the benefits payable if all eligible employees voluntarily terminated their employment at the fiscal year end, areincluded in “Service cost.”
The components of retirement benefits liability adjustments included in other comprehensive income (before tax effect) for the years
ended March 31, 2022 and 2021 are as follows:
2022

2021

2022

Millions of yen

Prior service cost
Actuarial gain and loss
Total

¥

49
7,774
7,824

¥

Thousands of U.S. dollars¥

3
10,627
10,630¥$405
63,526
63,931$

The components of retirement benefits liability adjustments included in accumulated other comprehensive income (before tax effect) asof March 31, 2022 and 2021 are as follows:
2022

2021

2022

Millions of yen

Unrecognized prior service cost
Unrecognized actuarial gain and loss
Total

¥
¥

(36) ¥
11,32911,292 ¥Thousands of U.S. dollars(82) $
3,550
3,468 $

(301)
92,571
92,270The fair values of plan assets, by major category, as a percentage of total plan assets as of March 31, 2022 and 2021 are as follows:
2022
2021
15%
Bonds
54%
Stocks8%
General accounts
23%
Other
100%
Total
(*) Approximately 46% and 43% of total plan assets were held in the retirement benefit trust as of March 31, 2022 and 2021,
respectively.

14%
54%
9%
23%
100%

The expected return on plan assets has been estimated based on the anticipated allocation to each asset class and the expected long-term
returns on assets held in each category.
The assumptions used in accounting for the above plans were as follows:
Discount rates
Expected rates of return on plan assets
Rates of salary increase2022
0.0 ~ 2.75%
1.0 ~ 6.20%
0.4 ~ 4.0%2021
0.0 ~ 3.24%
0.92 ~ 6.50%
0.4 ~ 4.0%

The required contribution to defined contribution plans by the Company and its consolidated subsidiaries for the years ended March 31,
2022 and 2021 are ¥608 million ($4,972 thousand) and ¥567 million, respectively.

9. Income Taxes
The effective tax rates reflected in the consolidated statement of income for the years ended March 31, 2022 and 2021 differ from the effective
statutory tax rates for the following reasons:2022
Statutory tax rate
Increase (decrease) in income taxes resulting from:Different tax rates applied
Expenses not deductible for income tax purposes
Revenues deductible for income tax purposes
Change in valuation allowance
Undistributed earnings of affiliates
Equity income
Effect of enacted changes in tax laws and rates on Japanese tax
Other
Effective tax rate2021
30.62%

30.62%(1.38)
0.12(0.27)
0.38
0.78(0.16)(0.23)(1.93)
27.93%(1.03)
0.11(1.61)(0.28)
0.21
0.19
0.10
(1.37)
26.93%The significant components of deferred tax assets and liabilities as of March 31, 2022 and 2021 were as follows:
2022

2021

2022

Millions of yen

Deferred tax assets:
Net operating loss carry forwards¥
Liability for retirement benefits
Valuation loss on inventories
Unrealized loss on property and equipment
Unrealized loss on property and equipment by consolidation
Loss on valuation of investment securities
Loss on valuation of equity investments
Land revaluation reserve
Accrued bonuses
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 property and equipment
Unrealized gain on securities
Other
Total deferred tax liabilities
Net deferred tax liabilities
¥

4,637
5,649
672
57,601
10,805
1,575
1,785
23,903
3,538
90,463200,632(80,003)
120,629(68,222)(266,333)(113,960)(53,242)(57,167)(74,075)(633,001)(512,372)¥¥

Thousands of U.S. dollars

3,322
8,737
887
60,474
10,402
3,597
4,300
23,903
3,412
67,035
186,073(80,949)
105,124(68,226)(266,333)(110,595)(53,242)(50,812)(47,278)(596,489)(491,364)$$

37,891
46,161
5,493
470,641
88,283
12,873
14,587
195,30928,909739,138
1,639,290(653,678)
985,611(557,419)(2,176,107)(931,124)(435,020)(467,095)(605,238)(5,172,005)(4,186,393)

10. Shareholders’ Equity
The Companies Act of Japan provides that an amount equal to 10% of the amount to be disbursed as distributions of capital surplus (other than the capital reserve)
and retained earnings (other than the legal reserve) be transferred to the capital reserve and the legal reserve, respectively, until the sum of the capital reserve and thelegal reserve equals 25% of the capital stock account. The capital reserve amounted to ¥159,749 million ($1,305,252 thousand), and the legal reserve amounted to¥21,663 million ($177,006 thousand) at March 31, 2022. Such distributions can be made at any time by resolution 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.

11. Amounts per Share
Yen

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

U.S. dollars

2022
¥

2021
116.45116.44
36.00

2022

¥

101.34101.33
31.00

$

Yen

As of March 31,
Net assets

U.S. dollars

2022
¥

2021
1,514.58

0.95
0.95
0.29

¥

2022
1,383.47$

12.37

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

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

12. Leases
Future minimum lease payments subsequent to March 31, 2022 on noncancelable operating leases are summarized as follows:Year ending March 31,
2023
2024 and thereafter
Total

Millions of yen

¥
¥

7,797
254,588262,386

Thousands of U.S. dollars$$

63,7122,080,140
2,143,853

The Group leases office buildings and commercial properties, and earns income on these leases. Future minimum lease income subsequent to March 31, 2022 from
noncancelable operating leases is summarized as follows:Year ending March 31,
2023
2024 and thereafter
Total

Millions of yen¥¥

386,111
1,273,638
1,659,750

Thousands of U.S. dollars$$

3,154,764
10,406,395
13,561,159

13. Contingent Liabilities
At March 31, 2022, the Group had the following contingent liabilities:(1)

Guarantee of loans
Millions of yen

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

¥
¥

Thousands of U.S. dollars

1,500
57,71859,218$$79,343$

12,255471,596
483,852

Guarantee for business undertakings
Millions of yen

Business undertaking guarantees¥

Thousands of U.S. dollars

648,280

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

14. Revenue from Contracts with Customers
Revenue from operations includes revenues from contracts with customers and revenue from other sources. The amount of revenue
from contracts with customers is described in “(1) Disaggregation of revenue from contracts with customers” in Note 22 “Revenue
Recognition”.

15. Other Income (Expenses)
The components of “Other, net” in “Other income (expenses)” for the years ended March 31, 2022 and 2021 were as follows:
2021

2022

2022

Millions of yen

Gain on sale of fixed assets
Gain on sale of investment securities
Gain on disposition of stock in subsidiaries and affiliates
Reversal of environmental provision
Loss on disposal of fixed assets
Loss related to retirement of fixed assets
Impairment loss(*1)
Loss on liquidation of subsidiaries
Loss on infectious disease(*2)
Other, net

6,781 ¥
7,987
1,843
3,576
(12,404)(16,254)(3,866)－－(449)(12,786) ¥¥¥Thousands of U.S. dollars

13,582 $3,021－－(6,448)(2,099)(4,679)(13,826)(5,698)(2,630)(18,779) $55,40965,265
15,05929,223(101,354)(132,809)(31,589)－－(3,676)(104,472)(*1) Impairment loss
The Company recorded consolidated impairment losses for the following asset groups for the fiscal year ended March 31, 2022:
Major Application
Leased assets, etc.
(total 62 groups)

Category
Land, Buildings, etc.

Location
Setagaya-ku, Tokyo, etc.

Asset grouping for the Group was made based on a minimum unit that generates cash flows, which is substantially independent fromcash flows of other assets or asset groups. Company condominiums are regarded as shared assets. As a result, for the fiscal year ended
March 31, 2022, the book values of 62 asset groups, consisting of those for which the market prices fell considerably compared withthe book values due to the decline of land prices and those for which profitability decreased considerably due to fallen rent levels or
deteriorated market conditions, etc., were reduced to the respective recoverable amounts and such reductions were recorded as
impairment losses in the amount of ¥3,866 million ($31,589 thousand).
The breakdown of such impairment losses was ¥ 212 million ($1,734 thousand) in land and ¥ 3,653 million ($29,854 thousand) inbuildings and structures.
The recoverable amounts of asset groups are measured using net sale value or value in use, and the net sale value is principally
expressed as an appraised value by a real estate appraiser. Future cash flows mainly discounted at a rate of 5% are used to compute thevalue in use.
The Company recorded consolidated impairment losses for the following asset groups for the fiscal year ended March 31, 2021:
Major Application
Leased assets, etc.
(total 25 groups)

Category
Land, Buildings, etc.

Location
Nishinomiya, Hyogo Prefecture, etc.

Asset grouping for the Group was made based on a minimum unit that generates cash flows, which is substantially independent fromcash flows of other assets or asset groups. Company condominiums are regarded as shared assets. As a result, for the fiscal year ended
March 31, 2021, the book values of 25 asset groups, consisting of those for which the market prices fell considerably compared withthe book values due to the decline of land prices and those for which profitability decreased considerably due to fallen rent levels or
deteriorated market conditions, etc., were reduced to the respective recoverable amounts and such reductions were recorded as
impairment losses in the amount of ¥4,679 million.
The breakdown of such impairment losses was ¥3,105 million in land and trusted land, and ¥1,574 million in buildings and structures.
The recoverable amounts of asset groups are measured using net sale value or value in use, and the net sale value is principally
expressed as an appraised value by a real estate appraiser. Future cash flows mainly discounted at a rate of 5% are used to compute thevalue in use.
(*2) Loss on infectious disease
Details of losses on infectious disease for the fiscal year ended March 31, 2021 were as follows:
In response to the request to refrain from business and declaration of a state of emergency issued by the national and local
governments, the Group has taken measures such as closing commercial facilities and hotels to prevent the spread of COVID-19.
As a result, some expenses (depreciation, rents, etc.) incurred by commercial facilities and hotels during the closed period are recorded
as loss on infectious disease.

16. Financial Instruments
Overview(1) Policy for financial instruments
In consideration of plans for capital investment, the Group raises funds mainly through bank borrowings and bond issues. In terms of fundmanagement, the Group makes every effort to avoid market risks by emphasizing liquidity and shortening the fund management period. The
Group uses derivatives for the purpose of hedging exposure to interest rates, reducing interest expenses, and hedging the risk of fluctuations inforeign exchange rates and does not enter into derivatives for speculative purposes.
(2) Types of financial instruments and related risk
Trade receivables – notes and accounts receivable – are exposed to credit risk in relation to customers. Trade receivables denominated inforeign currencies, which arise from overseas operation, are exposed to foreign currency exchange risk.
Marketable securities and investment securities are exposed to market risk. Those securities are composed of mainly held-to-maturity debt
securities and the shares of common stock of other companies with which the Group has business relationships.
Equity investments are composed of mainly preferred equity investments in special purpose companies under the Law concerning Liquidationof Assets, investments in real estate investment trusts and investments in silent partnerships for special purpose companies. They are exposedto credit risks of issuers, risks of fluctuations in interest rates and market prices, respectively.
Lease and guarantee deposits for leased assets are exposed to credit risks of customers.
Substantially all trade payables – accounts and notes payable – have payment due dates within one year. Some of them denominated in foreign
currencies are exposed to foreign currency exchange risk.
Borrowings and bonds are taken out principally for the purpose of making capital investments and the repayment dates of the long-term debt
extend up to 59 years from the balance sheet date. Certain long-term debt with variable interest rates is exposed to interest rate fluctuation
risk. However, to reduce such risk for long-term debt bearing interest at variable rates, the Group utilizes derivative transactions (interest rate
swaps) as hedging instruments.
Derivative transactions include interest rate swaps, currency swaps and forward foreign exchange contracts. The Group also enters into
interest rate swap transactions to fix interest expense for long-term debt bearing interest at variable rates and to reduce interest rate fluctuation
risk. Some of the consolidated subsidiaries enter into interest swap and currency swap transactions in accordance with the same policies andpurposes adopted by the Company.
(3) Risk management for financial instruments(a) Monitoring of credit risk (the risk that customers or counterparties may default)
In accordance with the internal policies for managing credit risk of the Group arising from receivables and lease and guarantee deposits,
each related division in each business segment monitors credit worthiness of their main customers periodically, and monitors due dates
and outstanding balances by individual customer. In addition, the Group is making efforts to identify and mitigate risks of bad debts from
customers who are having financial difficulties.
(b) Monitoring of market risks (the risks arising from fluctuations in foreign exchange rates, interest rates and others)
In order to mitigate the interest rate risk for loans payable and bonds bearing interest at variable rates, the Group may also enters into
interest rate swap and currency swap transactions.
The Group also uses foreign currency borrowings to hedge the risk of fluctuations in foreign exchange rates on its net investments inforeign subsidiaries.
For marketable securities and investment securities, the Group periodically reviews the fair values of such financial instruments and thefinancial position of the issuers (business partners). In addition, the Group continuously evaluates whether securities other than thoseclassified as held-to-maturity should be maintained taking into account their fair values and relationships with the issuers (business
partners).
(c) Monitoring of liquidity risk (the risk that the Group may not be able to meet its obligations on scheduled due dates)
Based on the report from each division, the Group prepares and updates its cash flow plans on a timely basis and stabilizes liquidity to
manage liquidity risk.
(4) Supplementary explanation of the estimated fair value of financial instruments
Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could result in different fairvalue.

16. Financial Instruments (continued)
Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance sheet as of March 31, 2022 and unrealized gains (losses) are shown in thefollowing table.
2022
Millions of yen

Carrying
Value

Estimated
Fair Value¥¥

Thousands of U.S. dollars

Difference

Carrying
Value

Estimated
Fair Value

Difference

¥

$

$

$

(*2)

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

180
254,533
24,150¥ 278,864¥
79,92890,000786,335
1,598,562
451,749¥ 3,006,575
¥
(92)

184
254,533
24,150¥ 278,868¥
80,34690,426
797,3021,617,802
432,359¥ 3,018,237
¥
(92)

¥
¥

¥

4
－
－
4
418
426
10,967
19,239(19,389)
11,662－

1,473
2,079,690
197,328$ 2,278,492$ 653,065
735,354
6,424,833
13,061,216
3,691,065$24,565,535
$
(758)

1,507
2,079,690
197,328$ 2,278,526$ 656,482
738,834
6,514,443
13,218,419
3,532,640$24,660,821
$
(758)

34
－
－
$
34
$
3,417
3,480
89,610157,202(158,424)$
95,285－(*1)

Cash and items whose market value approximates their carrying amount due to their short maturities are omitted.

(*2)

Equity securities without market prices are not included in “1) Securities and Investment securities” and “2) Equity investments”.
The carrying value of such financial instruments in the consolidated balance sheet are as follows.
2022(i) Unlisted stocks(ii) Investments in capital(*3)

Millions of yen

Thousands of
U.S. dollars¥$

48,972
94

400,131773

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

(*4) Investments in partnerships, etc., which are recorded on the consolidated balance sheet at the net amount of the Company’s equity interest,
are not included in “2) Equity investments”.
The amount of such financial instruments recorded on the consolidated balance sheet is ¥1,389 million ($11,351 thousand).

16. Financial Instruments (continued)
Estimated Fair Value of Financial Instruments (continued)
2021
Millions of yen

Carrying
Value
1) Securities and Investment securities(i) Held-to-maturity debt securities(ii) Other securities(iii) Investments in subsidiaries and affiliates
2) Equity investments
Total assets(*2)1) Current portion of long-term borrowings(*2)2) Current portion of long-term bonds
3) Long-term bonds
3) Long-term borrowings
Total liabilities(*3)
Derivative transactions(*1)¥

Estimated
Fair Value

2,865 ¥
2,873
231,524
231,52460
594
18,11818,118¥ 252,570 ¥ 253,111¥ 127,643 ¥ 127,643
65,00065,000745,759
770,126
1,393,858
1,414,828¥ 2,332,261 ¥ 2,377,598¥(2,251) ¥(2,251)

Difference
¥

¥

¥

8
－
533
－
541
－
－
24,367
20,96945,336－

Cash and items whose market value approximates their carrying amount due to their short maturities are omitted.

(*2) Because current portion of long-term borrowings and current portion of long-term bonds are settled in a short period of time and their fairvalue approximates carrying value, fair value of these accounts are valued by carrying amount.
(*3)

Net receivables and payables arising from derivative transactions are shown as net amounts, and items that are net liabilities in total are
shown in “( ).”(*4)

Financial instruments for which it is extremely difficult to determine the fair value.
2021
Millions of yen(i) Unlisted stocks(ii) Equity investments(iii) Lease and guarantee deposits(iv) Lease deposits received¥

52,171
478,063
136,478
466,891(i) Because no quoted market price is available and it is extremely difficult to determine the fair value, unlisted stocks are not included in theabove table.
(ii) 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.
(iii) Because no quoted market price for lease and guarantee deposit receivables for rental properties is available 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 andtherefore they are not included in the above table.
(iv) Because no quoted market price for lease and guarantee deposit payables for rental properties is available 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, andtherefore they are not included in the above table.

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

As of March 31, 2022
Cash on hand and in banks
Trade notes
Accounts receivable
Marketable securities and investment securities:
Held-to-maturity debt securities
National bonds
Corporate bonds
Other
Other marketable securities with maturities:
National and local government bonds
Other
Total

Thousands of U.S. dollars

Due after Due after Five
Due after
Due after
One YearYears
One Year
Five Years
Due in One through Five through Ten Due after Ten Due in One through Five through Ten Due after Ten
Year or Less
Years
Years
Years
Year or Less
Years
Years
Years
¥ 233,117－－－ $ 1,904,707
－
－
－
186
－
－
－
1,525
－
－
－
53,376－－－436,120
－
－
－

20
－
－

¥

－
4,301
291,002

¥

¥

100
－
－
－
12
112

¥

¥

35
－
－
－
116
151

¥

¥

25
－
－

163
－
－

－
－
25

－
35,149$ 2,377,666

Millions of yen

As of March 31, 2021
Cash on hand and in banks
Notes and accounts receivable – tradeMarketable securities and investment securities:
Held-to-maturity debt securities
National bonds
Corporate bonds
Other
Other marketable securities with maturities:
National and local government bonds
Other
Total

Due after Due after FiveOne YearYears
Due in One through Five through Ten Due after Ten
Year or Less
Years
Years
Years
¥ 170,040－－－
52,031
－
－
－

24
－
2,527

¥

－
2,100
226,723

¥

¥

253
－
－
－
628
882

¥

¥

35
－
－
－
74
109

¥

¥

25
－
－
－
－
25

$

$

817
－
－
－
98
915

$

$

285
－
－
－
948
1,234

$

$

204
－
－
－
－
204

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

As of March 31, 2022
Corporate bonds
Long-term borrowings
Total

Due after
Due after
Due after
Due after
One Year
Two Years Three Years Four Years
Due in One through Two
throughthrough Four through Five
Year or Less
Years
Three Years
Years
Years
¥
90,000 ¥25,751 ¥81,111 ¥10,000 ¥66,70979,928
239,780
95,710122,176
112,740¥ 169,928 ¥ 265,531 ¥ 176,821 ¥ 132,176 ¥ 179,449

As of March 31, 2021
Corporate bonds
Long-term borrowings
Total

Due after
Due after
Due after
Due after
One Year
Two Years Three Years Four Years
Due in One through Two
throughthrough Four through Five
Year or Less
Years
Three Years
Years
Years
¥
65,000 ¥90,000 ¥25,175 ¥51,111 ¥10,000127,643
64,732
223,086
86,823
104,450¥ 192,643 ¥ 154,732 ¥ 248,261 ¥ 137,934 ¥ 114,450

Thousands of U.S. dollars

Due after
Due after
Due after
Due after
One Year
Two Years Three Years Four Years
Due after
Due in One through Two
throughthrough Four through Five
Five Years Year or Less
Years
Three Years
Years
Years
¥ 602,763 $ 735,354 $ 210,401 $ 662,728 $
81,706 $ 545,054
1,028,154
653,065
1,959,154
782,011998,252
921,159¥ 1,630,917 $ 1,388,419 $ 2,169,555 $ 1,444,740 $ 1,079,958 $ 1,466,214

Millions of yen

Due after
Five Years¥ 569,472
914,766¥ 1,484,239

Due after
Five Years$ 4,924,942
8,400,638$ 13,325,581

16. Financial Instruments (continued)
Matters concerning the breakdown of the market value of financial instruments by level, etc.
The fair value of financial instruments is classified into the following three levels based on the observability and materiality of the inputs used to calculate the market value.
Level 1 market value : Fair value calculated based on quoted prices in active markets for identical assets or liabilities.
Level 2 market value : Fair value calculated using observable inputs that are not included in Level 1 inputs.
Level 3 market value : Fair value calculated using unobservable inputs.
When multiple inputs that have a significant impact on the calculation of market value are used, the market value is classified to the level with the lowest priority in the calculation ofmarket value among the levels to which each of those inputs belongs.
(1) Financial instruments measured at fair value
2022
Millions of yen

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

Level 1¥¥Thousands of U.S. dollars

Market value
Level 2
Level 3－－－－－244,386－
4,280
19,629268,296
－ ¥
－ ¥

¥

¥

－
5,866
－
4,521
10,387(92)(92)

Level 1Market value
Level 2
Level 3

Total

$ 1,996,788－
34,970160,387$ 2,192,146

－
－
－
－
－

$ 1,996,788
47,931
34,970
197,328$ 2,277,018

Total

¥

¥

244,386
5,866
4,280
24,150278,684

－ ¥
－ ¥

(92)
(92)

－ $
－ $

$

$

－
47,931－
36,94084,872

(758)
(758)

－ $
－ $

(758)
(758)

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

(2) Financial instruments other than those measured at fair value
2022
Millions of yen

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

Level 1

¥
¥

184
184
－
－
－
－
－
－

Thousands of U.S. dollars

Market value
Level 2
Level 3－－¥80,34690,426
797,3021,617,802
432,359¥ 3,018,237

Total

－
－
－
－
－
－
－
－

¥
¥
¥

184
184
80,34690,426
797,3021,617,802
432,359¥ 3,018,237

Level 1

$
$

1,507
1,507
－
－
－
－
－
－

Market value
Level 2
Level 3－－$
656,482
738,834
6,514,443
13,218,419
3,532,640$ 24,660,821

Total

－
－
－
－
－
－
－
－

$
$
$

1,507
1,507
656,482
738,834
6,514,443
13,218,419
3,532,640$ 24,660,821

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

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

17. Marketable Securities and Investment Securities
Marketable and investment securities classified as other securities at March 31, 2022 and 2021 are summarized as follows:
2022
Millions of yen

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

60,527－
12,87473,401Thousands of U.S. dollars

Fair Value

Unrealized
Gain (Loss)¥¥

239,142－
24,150263,293

178,614－
11,276
189,891

Cost$

494,546－
105,190599,736

Fair Value

Unrealized
Gain (Loss)$$

1,953,936－
197,328
2,151,264

1,459,389－
92,137
1,551,527

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

Total

¥

7,231
－
6,845
4,344
18,42091,822

¥

5,244
－
5,866
4,280
15,391
278,684¥(1,986)
－
(978)
(64)
(3,029)186,861$

59,082－
55,92735,498150,508750,245$

42,852－47,931
34,970125,754
2,277,018$(16,229)－(7,996)(528)(24,754)
1,526,773

2021
Millions of yen

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

¥

¥

57,519－9,233
66,752

13,135－－
2,242
15,377
82,130Fair Value

Unrealized
Gain (Loss)

¥

¥

¥

218,474－
18,120236,595

10,940－－2,108
13,048249,643¥

160,955－
8,887
169,842(2,195)－－(133)(2,328)167,513

Proceeds from sales of securities classified as other securities totaled ¥8,867 million ($72,454 thousand) and ¥4,233 million for the years ended March
31, 2022 and 2021, respectively. Gross realized gains were ¥5,486 million ($44,830 thousand) and ¥3,021 million for the years ended March 31, 2022
and 2021, respectively.
In addition, there is ¥2,500 million ($20,434 thousand) of proceeds from sales of limited partnership for investment.
Disclosure for impaired marketable and investment securities as of March 31, 2022 and 2021 is not provided as the amount is immaterial.
Marketable debt securities classified as held-to-maturity securities at March 31, 2022 and 2021 are summarized as follows:
2022
Millions of yen

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

Amortized
Cost
¥

¥

180
－
180
－
－
－
－
180

Thousands of U.S. dollars

Fair Value

Unrealized
Gain (Loss)

Amortized
Cost

Fair Value

Unrealized
Gain (Loss)

¥

¥

$

$

$

184
－
184
－
－
－
－
184

¥

¥

4
－
4
－
－
－
－
4

2021
Millions of yen

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

Amortized
Cost

Fair Value

Unrealized
Gain (Loss)

¥

¥

¥

¥

338
－
338
－
－
2,527
2,527
2,865

¥

346
－
346
－
－
2,527
2,527
2,873

¥

8
－
8
－
－
－
－
8

$

1,473
－
1,473
－
－
－
－
1,473

$

1,507
－
1,507
－
－
－
－
1,507

$

34
－
34
－
－
－
－
34

18. Supplemental Cash Flow Information
The following table represents a reconciliation of cash and cash equivalents as of March 31, 2022 and 2021:
2022

2021

2022
Thousands of U.S. dollars

Millions of yen

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

233,117(688)
1,815
234,244¥¥

170,040(260)
2,527
172,307$$

1,904,707(5,624)
14,837
1,913,920

19. Derivatives and Hedging Activities(1)

Currency related transactions
2022
Millions of yen

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

Subject to hedge
accounting

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

Fair Value

Notional
AmountDue after
One Year$$$$

Fair Value

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

15,924
15,924(*)

130,111130,111(*)

130,111130,111(*)

2021
Millions of yen

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

Subject to hedge
accounting

Notional
AmountDue after
One Year¥¥¥¥

Fair Value

Corporate bonds andLong-term borrowings
19,38819,388(*)

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

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

(2)

Interest related transactions
2022
Millions of yen

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

Subject to hedge
accounting
Corporate bonds andLong-term borrowings

Notional
AmountDue after
One Year¥

40,676¥¥

128,397
169,073¥

Long-term borrowings

Thousands of U.S. dollars

Fair Value

Notional
AmountDue after
One Year

Fair Value

40,524

¥

(92)

$

$

331,108$(758)

96,580137,104¥(92)

789,118$ 1,120,227

$

(758)

(*)

332,350

1,049,084$ 1,381,434

(*)

2021
Millions of yen

Subject to hedge
accounting
Class of transactions
Interest rate swap contracts
Short-term borrowings and
Fixed rate payment and floating rate receipt
Long-term borrowings
Interest rate swap contracts by short-cut method
Long-term borrowings
Fixed rate payment and floating rate receipt
Total

Notional
AmountDue after
One Year

Fair Value¥

67,661¥64,045¥(2,251)¥

149,080
216,742¥

128,354
192,400¥(2,251)(*)(*)

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

(3)

Interest and currency related transactions
2022
Millions of yen

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

Subject to hedge
accounting

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

Fair Value

Notional
AmountDue after
One Year$$$$

Fair Value

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

43,40043,400(*)

354,607354,607354,607354,607

(*)
(*)

2021
Millions of yen

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

Subject to hedge
accounting

Notional
AmountDue after
One Year¥¥¥¥

Fair Value

Long-term borrowings
49,40049,40043,40043,400(*)(*)

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

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

The accounting policies of segments are almost the same as those described in Note 1 "Significant Accounting Policies". Segment operating income is based on revenue from operations, cost of revenue from operations and selling, general andadministrative expenses. Transactions and transfers between segments are made at amounts based on prevailing market prices.
As described in Note 1 "q.Notes on Changes in Accounting Policies," the Company applied “Revenue Recognition Standard” from the beginning of the fiscal year and changed the accounting method for revenue recognition.
As a result, the method of calculating income or loss for business segments has also been changed in the same manner. However, the impact of this change is immaterial.
The reportable segment information of the Group for the years ended March 31, 2022 and 2021 are summarized as follows:
Millions of yen

2022
Reportable Segments

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

755,066
5,592
760,658
189,909
4,273,287¥

73,315
169,453

Residential
Business¥¥

379,415
1,543
380,959
30,173666,928¥

4,570
53,410Investment
Management
Business

International
Business¥¥

121,397(163)
121,234
55,816
1,130,973¥

8,460
123,234¥¥

44,533
2,168
46,702
26,537
108,984

¥

1,681
978

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

47,59910,18057,7802,802
57,759

¥

894
1,112

Subtotal¥¥

1,348,013
19,321
1,367,334
305,239
6,237,934¥

88,923
348,190

Other¥

Eliminations
or Corporate

Total

¥

1,476
8,658
10,134(1,683)25,352¥

147
99

Consolidated¥

1,349,489
27,979 ¥1,377,469
303,555
6,263,287 ¥－(27,979)(27,979)(24,578)
230,630¥

1,349,489－
1,349,489
278,977
6,493,917¥

89,071
348,289 ¥

2,510
(595)

¥

91,581
347,694¥¥

Thousands of U.S. dollars

2022
Reportable Segments

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

6,169,345
45,6906,215,035
1,551,672
34,915,329$

599,033
1,384,540

Residential
Business$$

3,100,055
12,615
3,112,670
246,535
5,449,209$

37,345436,397

Investment
Management
Business

International
Business$$

991,893(1,338)990,554456,057
9,240,736$

69,1281,006,902$$

363,867
17,718381,585
216,828
890,472$

13,737
7,995

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

388,918
83,181
472,099
22,897
471,931

$

7,312
9,090

Subtotal$$

11,014,079
157,866
11,171,946
2,493,992
50,967,679$

726,558
2,844,927

Other

$

Eliminations
or Corporate

Total

$

Consolidated$－(228,612)(228,612)(200,818)
1,884,386$

11,026,142－
11,026,142
2,279,416
53,059,213

727,764
2,845,738 $

20,513(4,866)$748,2782,840,871$

12,06270,74582,808(13,757)
207,147$

11,026,142
228,612
11,254,755
2,480,235
51,174,826

$

1,206
810

$

$

$

20. Segment Information (continued)
Millions of yen

2021
Reportable Segments

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

665,257
7,184
672,441
180,775
4,167,287¥

71,713
196,728

Residential
Business¥

Investment
Management
Business

International
Business¥

361,335
1,419
362,755
24,068673,344¥

4,120
73,169¥¥114,39957
114,457
37,932929,869¥

8,599
71,341

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

20,505
1,694
22,1995,966
77,586

¥

1,359
114

¥

¥

44,746
11,31856,064959
56,067¥909
989

Subtotal

¥

Other

¥

1,206,243
21,674
1,227,917
249,7035,904,155¥

86,701
342,342¥

Eliminations
or Corporate

Total

¥

1,351
7,704
9,055
(1,089)25,367¥130349

Consolidated¥

1,207,594
29,378 ¥1,236,973
248,613
5,929,523 ¥－(29,378)(29,378)(24,219)
142,995¥

86,832
342,692

2,274
10,939¥¥¥¥1,207,594－
1,207,594
224,394
6,072,519¥

89,107
353,631

Impairment losses of the Group on fixed assets by reportable segments for the years ended March 31, 2022 and 2021 are summarized as follows:
Millions of yen

2022
Reportable Segments

Impairment loss

Commercial
Property
Business¥
1,227

Residential
Business¥
2,627International
Business¥
55

Impairment loss

$

$

$

Architectural Design& Engineering
Business and Real
Investment
Estate Services
Management
Business
Business
－ ¥
18

¥

3,929

－

¥

Eliminations
or Corporate
3,929 ¥
(63)$

32,104－$

32,104 $Subtotal

Other

Total

¥

Consolidated
3,866

Thousands of U.S. dollars

10,026

21,469

－

456

$

151

(514)

$

31,589Millions of yen

2021
Reportable Segments

Impairment loss

Commercial
Property
Business¥
2,513

Residential
Business¥

849

International
Business¥
1,035

Architectural Design& Engineering
Investment
Business and RealManagement
Estate Services
Business
Business－ ¥9

Subtotal
¥

Other
4,408

¥

Eliminations
or Corporate

Total
271

¥

4,679

－

¥

Consolidated
4,679

20. Segment Information (continued)
The following tables present the amortization and balance of goodwill as of and for the years ended March 31, 2022 and 2021 by reportable segment:
Millions of yen

2022
Reportable Segments

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

¥

¥

75
－
－
97,528Residential
Business
¥
¥

358
3,758
－
－

International
Business
¥
67
¥
222
－
－

Architectural Design& Engineering
Investment
Business and RealManagement
Estate Services
Business
Business¥
1,665 ¥
377¥
3,414 ¥
4,606
－
－
－
－

Subtotal
¥
¥
¥

Other
－
－
－
－

2,544
12,002－
97,528Eliminations
or Corporate

Total
¥
¥

－
－
－
－

2,544
12,002－
97,528¥

Consolidated
2,544
12,002－¥
97,528¥¥

Thousands of U.S. dollars

2022
Reportable Segments

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

$

$

616
－
－
796,869

Residential
Business$
2,930$
30,712－－

International
Business
$
549
$
1,817
－
－

Architectural Design& Engineering
Investment
Business and RealManagement
Estate Services
Business
Business$
13,611 $
3,083$
27,895 $37,639
－
－
－
－

$
$
$

Subtotal
20,792
98,065－
796,869

Other

Eliminations
or Corporate

Total
－
－
－
－

$
$
$

－
－
－
－

20,792
98,065－
796,869

Consolidated
20,792
98,065－$
796,869$$

Millions of yen

2021
Reportable Segments

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

¥

75
－
－
97,453

Residential
Business
¥
¥

358
4,117
－
－

International
Business
¥
64
¥
69
－
－

Architectural Design& Engineering
Investment
Business and RealManagement
Estate Services
Business
Business¥
2,146 ¥
377¥
4,678 ¥
4,984
－
－
－
－

Subtotal
¥
¥
¥

3,022
13,848－97,453

Other

Eliminations
or Corporate

Total
－
－
－
－

¥
¥
¥

3,022
13,848－97,453－－－－

Consolidated
3,022
13,848－¥97,453¥¥

Products and Service Information
Refer to reportable segment information.

Geographical Area Information
Geographical area information on net sales for the year ended March 31, 2022 and 2021 are as follows:
Millions of yen

Thousands of U.S.
dollars

2022
2021
2022
¥
1,192,802 ¥1,081,090 $9,745,913
Japan
125,898
87,867
1,028,669
United States
4,028
22,78532,911
Europe26,76015,852
218,647
Asia¥
1,349,489 ¥
1,207,594 $
11,026,142
Total(*) Net sales is classified into countries or regions based on the location of the Group companies.
Geographical area information on property, plant, and equipment for the year ended March 31, 2022 is as follows:
Millions of yen

Thousands of U.S.
dollars

2022
2022
Japan
¥
3,860,158 $
31,539,821
United States
218,157
1,782,474
Europe174,082
1,422,355
Asia
93,591
764,698
Total¥
4,345,989 $
35,509,350(*) Property, plant, and equipment are classified into countries or regions based on the location of the Group companies.
Geographical area information on property, plant, and equipment for the year ended March 31, 2021 is omitted since property and equipment located in Japan accounted for more than 90% of equipment on the consolidated balance sheet.

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.

21. Rental Properties
The Company and some of its consolidated subsidiaries own office buildings for lease, commercial facilities for lease and others in Tokyo and other areas including overseas countries (the United States and the United Kingdom, etc.) for the
purpose of obtaining revenue from leases.
Some office buildings for lease in Japan are regarded as real estate including space used as rental properties since they are used by the Company and some of its consolidated subsidiaries.
The carrying value on the consolidated balance sheet as of March 31, 2022 and the fair value of these rental properties and real estate including space used as rental properties are as follows:
2022
Millions of yen

Thousands of U.S. dollars

Carrying Value

Rental properties
Real estate including space used asrental properties

As ofApril 1, 2021¥
3,565,590¥

Net Change
160,214

As ofMarch 31, 2022¥
3,725,804

Fair Value
As ofMarch 31, 2022¥
7,924,196

As ofApril 1, 2021$
29,133,023(4,079)541,325

916,224

4,456,281

545,404

Carrying Value

1.

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

2.

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

$

Net Change
1,309,045

As ofMarch 31, 2022$
30,442,068

Fair Value
As ofMarch 31, 2022$
64,745,458(33,329)

4,422,952

7,486,102(2) The fair value of real estate in overseas countries is appraised principally by local real estate appraisers.
The carrying value on the consolidated balance sheet as of March 31, 2021 and the fair value of these rental properties and real estate including space used as rental properties are as follows:
2021
Millions of yen

Carrying Value

Rental properties
Real estate including space used asrental properties

As ofApril 1, 2020¥
3,502,759¥

Net Change
62,830As ofMarch 31, 2021¥
3,565,590

Fair Value
As ofMarch 31, 2021¥
7,441,369(176)

545,404

919,848545,580

1.

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

2.

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

The income or loss from rental properties and real estate including space used as rental properties for the years ended March 31, 2022 and 2021 are as follows:
2022

2021

2022

Millions of yen

Lease income
503,737

Lease cost¥
329,374

44,552

34,562(*)

Rental properties
Real estate including space used asrental properties¥

Thousands of U.S. dollars

Lease income
Lease income(*)(loss), net
Other, net
475,309¥174,363 ¥(17,577) ¥Lease cost¥
304,405

Lease income(loss), net¥
170,903

Other, net¥
5,622

43,63934,2899,349(2,026)

9,990

(777)

$ 4,115,841

Lease cost
$ 2,691,184

Lease income(loss), net$ 1,424,656

364,024

282,393

81,631

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

$

Other, net(143,617)(6,354)

22 Revenue Recognition(1) Disaggregation of revenue from contracts with customers
The Company disaggregates its operating revenues based on its business segments and in addition disaggregates its commercial property
business and residential business by goods or services.
2022
Millions of yen

Commercial property business
Real estate leasing business(*1)
Real estate sales business
Other
Subtotal
Residential businessCondominium sales businessResidential property management services
Homebuilding
Other
SubtotalInternational business (*1)
Investment management businessArchitectural design & engineering andreal estate services business
Other business
Total

¥

(*2)

Inter-segment transactions
Amount recorded in consolidated financial statements
Revenue from contracts with customers
Revenue from other sources (*1)

Thousands of U.S. dollars

546,186
126,878
87,593760,658$

4,462,670
1,036,675
715,689
6,215,035

212,335
56,66438,91073,049380,959
121,234
46,702

1,734,907
462,980
317,924
596,857
3,112,670
990,554
381,585¥

57,780
10,134
1,377,469$

472,099
82,808
11,254,755

¥
¥
¥
¥

(27,979) $1,349,489 $
716,005 $633,483 $(228,612)
11,026,142
5,850,199
5,175,942(*1) Operating revenues from real estate leasing in the commercial property business and from the international business are recognized
mainly by applying “Accounting Standard for Lease Transactions” (ASBJ Statement No.13) and other related standards. When financial
statements of overseas consolidated subsidiaries are prepared in accordance with International Financial Reporting Standards (IFRS) or
U.S. GAAP, such financial statements are used in accordance with PITF No. 18.
(*2) The above revenue disaggregation includes inter-segment revenues and transfers. Disaggregation of inter-segment revenues and transfers
is described in Note “ 20. Segment Information.”(2) The basis for understanding revenues from contracts with customers is as described in Note “n. Revenue recognition” in Note 1 "Significant
Accounting Policies."(3) Information on the relationship between satisfaction of performance obligations under contracts with customers and cash flows arising fromsuch contracts, and the amount and timing of revenue expected to be recognized from contracts with customers existing at the end of thecurrent fiscal year and thereafter(a) Receivables from contracts with customers, contract assets, and contract liabilities
The balances of receivables from contracts with customers, contract assets, and contract liabilities at the beginning and end of the fiscal
year under review are as follows. In the consolidated balance sheets, receivables from contracts with customers and contract assets areincluded in “Trade notes and accounts receivable, and contract assets,” and contract liabilities are included in “Other” under “Current
liabilities,” respectively.
2022
Millions of yen

As ofApril 1, 2021
Receivables from contracts
with customers
Contract assets
Contract liabilities¥

Thousands of U.S. dollars

As ofMarch 31, 2022
29,952
4,612
29,060¥34,5307,081
29,579

As ofApril 1, 2021$

244,726
37,685
237,441

As ofMarch 31, 2022$

282,137
57,860241,683

Contract assets consist mainly of the rights to the consideration based on the progress of the construction work at the end of the reporting
period for homebuilding, excluding receivables, which are transferred to receivables when the work is completed and the consideration is
invoiced to the customer.
Contract liabilities consist primarily of deposits received from customers under contracts for the sale of condominium units, andperformance obligations are satisfied upon delivery of condominium units to customers and contract liabilities are reclassified to revenue.
Of the contract liability balances at the beginning of the fiscal year under review, ¥18,090 million ($147,807 thousand) was related to
condominium sales, of which ¥15,929 million ($130,149) was recognized as revenue in the fiscal year under review. Almost all of thecontract liabilities other than those related to sales of condominiums were recognized as revenues during the fiscal year under review.
(b) Transaction price allocated to remaining performance obligations
The transaction value allocated to the remaining performance obligation was ¥83,935 million ($685,804 thousand) at the end of the fiscal
year, of which ¥12,409 million ($101,391 thousand) was allocated to the Commercial property business and ¥71,526 million ($584,412
thousand) to the Residential business.
As of the end of the fiscal year under review, the estimated timing of performance of outstanding performance obligations is generally
within two years for the Commercial property business and generally within three years for the Residential business. The disclosure
applies the practical expedient method and does not include contracts with initial expected contract periods of one year or less andcontracts for which revenue from satisfaction of performance obligations is recognized in accordance with ASBJ Guidance No. 19.

23. Asset Retirement Obligations(1) Asset retirement obligations presented in the consolidated balance sheet
1. Outline of asset retirement obligations
Asset retirement obligations include obligations of restoration related to leasehold and rental contracts.
2. Calculation method for asset retirement obligations
Asset retirement obligations are calculated based on the remaining contract years as an expected use period with a discount rate between
0.0% and 2.3%.
3. Changes in asset retirement obligations during the years ended March 31, 2022 and 2021 are as follows:
2022

2021

2022

Millions of yen

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

¥

¥

7,015

¥

Thousands of U.S. dollars

6,236

$

57,322

425
73

656
70

3,479
602

(9)
10
7,516

(20)
73
7,015

(75)
82
61,411¥$(2) Asset retirement obligations not recognized in the consolidated balance sheet
As stated below, certain obligations are excluded from recognition of asset retirement obligations.
1) Obligation to remove asbestos that is used for some properties and equipments in a particular way required by the Ordinance on
Preventing Asbestos Hazards
For such properties, the Company has an obligation to remove asbestos at demolition of buildings. However, no demolition has takenplace in the past other than those related to redevelopment or other projects involving many other business associates. It is therefore
difficult to reasonably estimate the timing to fulfill such obligation based on the physical useful life of the assets caused by aging and it is
impossible to estimate the timing without specific business plans. Although the Company has been voluntarily conducting asbestos
removal work when that is feasible due to such as termination of tenancy, it is impractical to make a reasonable estimation of progress ofsuch voluntary removal work based on the actual record of the tenancy termination and of the remaining amount of asbestos at demolition.
Moreover, it is difficult to distinguish costs of asbestos removal from total costs of demolition. Although the Company made the best
estimation taking into account all the evidence available as of March 31, 2022, these obligations are excluded from recognition of asset
retirement obligations since the probability of obligations in terms of scope and amount was not reasonably estimated.
2) Obligation of restoration based on some real estate rental agreements
For some commercial facilities, the Company has an obligation of restoration at the termination of leasehold rental agreements. However,
the timing to fulfill the obligation is uncertain since it is practically possible to continue to use those facilities by re-signing contracts andsome contracts set forth a special provision to reduce the possibility to fulfill the obligation. Furthermore, given its business strategies andthe current business environment, the Company intends to continue its operation and not to fulfill the obligation. Although the Company
made the best estimation taking into account all the evidence available as of March 31, 2022, these obligations are excluded fromrecognition of asset retirement obligations since the probability of the obligations in terms of scope and amount could not be reasonably
estimated.

24. Related Party Transactions
The Company has related party transactions with key management personnel of the Company and major individual shareholders.
The corresponding balances as of March 31, 2022 and 2021 and the amounts of these transactions for the years then ended are summarized as follows:
Millions of yen

Thousands of U.S. dollars

2022

Type

Director

Director

RelationshipOwnership ratio
withof voting shares the related party

Name

Occupation

Keiji Takano

Executive Officerof the Company

Ikuo Ono

Executive Officerof the Company

Nature oftransaction

Transaction
amountBalanceoutstandingat year end

Account

Transaction
amount0.00%

Construction of
housing

¥

63

－

－ $

516

－

－

0.00%

Contract for
construction of
housing and otherConstruction of
housing

¥

27

－

－ $

227

－

－

2. Transaction terms are determined in consideration with market prices, the same as general transactions.
Millions of yen

Name

Officer’s close
relatives

Noboru Nishigai’s
close relatives

2021
Relationshipwith
Ownership ratioof voting shares the related party

Occupation－

Account

Contract for
construction of
housing and other

1. Transaction amounts do not include consumption tax.

Type

Balanceoutstandingat year end

Contract for
construction of－ housing and other

Nature oftransaction

Construction of
housing

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

Transaction
amount¥Balanceoutstandingat year end

Account

20－－

25. Other Comprehensive Income
The following table presents reclassification and tax effects allocated to each component of other comprehensive income for the years
ended March 31, 2022 and 2021:
2022

2021

2022

Millions of yen

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

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

23,559¥Thousands of U.S. dollars

57,781$

192,491(5,024)
18,534(5,779)12,754(3,003)54,778(16,212)38,566(41,051)
151,440(47,224)
104,215

1,360

(60)

11,120

810
2,171
(662)
1,508

565
505
(153)
352

6,620
17,740(5,416)
12,323－(44)－

59,59759,597(9)59,588(26,143)(26,143)(0)(26,143)486,947
486,947(76)
486,871

8,667

10,18470,819(842)
7,824(2,304)
5,519

446
10,630(3,321)
7,309(6,887)63,931(18,833)
45,098344
79,715¥57
20,097$2,817
651,327