Leveraging Potential to Generate Profit
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Leveraging Potential to Generate Profit Annual Report 2013 Who We Are... Our History 1949 Izumi Real Estate Co., Ltd. established Sumitomo Realty & Development Co., Ltd., a core as the successor to the holding company member of the Sumitomo Group, is one of Japan’s of the Sumitomo zaibatsu following the breakup of the conglomerate. leading real estate companies. 1957 Izumi Real Estate Co., Ltd. changed its The Company is well established as a compre- name to Sumitomo Realty & hensive developer and supplier of high-quality office Development Co., Ltd. buildings and condominiums in urban areas. 1963 Merged with the holding company of the With operations centered on four areas—leasing, former Sumitomo zaibatsu during sales, construction and brokerage—the Company has its liquidation. achieved a combination of growth potential and bal- 1964 Entered condominium sales business anced operations that will drive its success in the with Hama- Ashiya Mansion in Kobe, Hyogo Prefecture. challenging markets of the 21st century. Sumitomo 1970 Listed on the Tokyo Stock Exchange and Realty remains committed to the creation of comfort- Osaka Securities Exchange. able work and living environments that contribute to 1973 Established Sumitomo Fudosan a higher quality of life. Tatemono Service Co., Ltd., a consoli- dated subsidiary. 1974 Completed construction of 52-story Shinjuku Sumitomo Building in Shinjuku, Tokyo; moved Company headquarters there from Tokyo Sumitomo Building in Marunouchi, Tokyo. 1975 Established Sumitomo Real Estate Sales Co., Ltd., a consolidated subsidiary. 1980 Established Sumitomo Fudosan Syscon Co., Ltd., a consolidated subsidiary. 1949 1960 Global Events 1964 • Tokyo Olympic Games 1973 • First oil crisis 1978 • Second oil crisis Shinjuku NS Building (Head office) Our History 1982 Completed construction of 2001 The number of managed STEP 2011 Opened Grand Mansion Gallery. 30-story Shinjuku NS Building in brokerage offices exceeded 200. Completed Sumitomo Fudosan Shinjuku, Tokyo; moved Company Shinjuku Grand Tower (Shinjuku headquarters there from Shinjuku 2002 Completed construction of Izumi Ward, Tokyo). Sumitomo Building. Garden Tower (Roppongi 1-Chome Redevelopment Project). 2012 Completed construction of 1995 Commenced American Comfort Sumitomo Fudosan Shibuya custom home construction business. 2003 Commenced sales of J·URBAN fixed-price urban-style Garden Tower (Shibuya Ward, Tokyo). 1996 Commenced Shinchiku Sokkurisan housing series. Launched a Custom-order remodeling business. 2004 Commenced sales of World City Condominium service. 1997 Entered high-quality business Towers in Minato Ward, Tokyo. Please refer to page 11. hotel market. Opened Villa Commenced sales of Fontaine Nihonbashi and hotels at 2006 Established Sumitomo Fudosan J·RESIDENCE. two other locations. Reform Co., Ltd., a consolidated subsidiary. Please refer to page 22. 1998 Sumitomo Real Estate Sales Co., Ltd., a consolidated subsidiary, 2008 Established Sumitomo Fudosan 2013 Commenced construction of listed on the Tokyo Stock Exchange. Bellesalle Co., Ltd., a consolidated Nihonbashi 2-Chome Project subsidiary. (Chuo Ward, Tokyo). 1999 Commenced real estate joint Commenced sales at City Towers Please refer to page 8. investment trust fund. Launched Toyosu (Koto Ward, Tokyo). sales of Sumitomo Realty & Cumulative units contracted Development Fund (SURF) series. 2010 Completed construction of topped 80,000 in Shinchiku Sokkurisan remodeling operations. Implemented the Sumquest bond Shinjuku Central Park City issue, which was the first public (Shinjuku Ward, Tokyo). issue of real estate securities in Japan. 2000 Commenced luxury condominium leasing business. Completed con- struction of La Tour Shibakoen. World City Towers Sumitomo Fudosan Shinjuku Grand Tower 1970 1980 1990 2000 2010 Global Events 1985 • The Plaza Accord 2001 • September 11th terrorist attacks 2011 • The Great East Japan Earthquake 1987 • Black Monday 2008 • Lehman crisis • European sovereign debt crisis 1989 • Collapse of Berlin Wall • Record high yen against the U.S. dollar • Nikkei Stock Average all-time high 1999 • Introduction of euro Sumitomo Realty & Development Co., Ltd. 1 Key Figures Revenue from Operations during Sixth Management Plan 2,500 billion yen Please refer to page 6. Ordinary Profit during Sixth Management Plan 400 billion yen ROE Please refer to page 6. 10.1% Please refer to page 33. Condominium Units, Detached Houses and Land Lots Delivered 4,688 units Office Buildings for Leasing Please refer to page 18. Over 200buildings Please refer to page 14. Contents Annual Report 2013 3 Consolidated 14 Review of Operations 29 Financial Section Financial Highlights 14 Leasing 63 Corporate Data / 4 A Message from Investor Information 18 Sales the Management 20 Construction Cautionary Statement with Respect 7 Sixth Management Plan to Forward-looking Statements —Key Initiatives 23 Brokerage Statements made in this annual report with respect to 12 At a Glance 24 CSR plans, targets and future performance that are not historical fact are forward-looking statements. These statements are 26 Corporate Governance based on management’s assumptions and beliefs in light of the information currently available. Sumitomo Realty & 28 Board of Directors and Development Co., Ltd., cautions that a number of factors Statutory Auditors could cause actual results to differ materially from those discussed in the forward-looking statements. Such factors include but are not limited to macroeconomic conditions, supply and demand in the real estate market and interest rate trends. 2 Annual Report 2013 Consolidated Financial Highlights Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries Years ended March 31 Overview of March 2013 Fiscal Year We recorded revenue and profit growth, with increases from the previous year in revenue from operations, operating income, ordinary profit and net income. This was also the third consecutive year in which we recorded increases in both operating income and ordinary profit. Millions of yen Thousands of U.S. dollars*1 2013 2012 2011 2013 For the Year Revenue from operations ¥ 736,652 ¥ 688,662 ¥ 744,756 $ 7,835,890 Operating income 151,345 147,465 138,463 1,609,882 Ordinary profit*2 114,916 107,912 106,296 1,222,381 Net income 59,825 53,236 50,908 636,368 At Year-end Total assets ¥4,105,500 ¥3,859,698 ¥3,234,203 $43,670,886 Shareholders’ equity*3 627,012 553,844 526,227 6,669,631 Interest-bearing debt 2,650,707 2,554,115 2,021,599 28,196,012 Per Share Data (Yen and U.S. dollars) Net income ¥ 126.18 ¥ 112.28 ¥ 107.35 $ 1.34 Shareholders’ equity 1,322.52 1,168.11 1,109.78 14.07 Cash dividend applicable to the year 20.00 20.00 20.00 0.21 *1. U.S. dollar amounts in this report are translated, for convenience only, at the rate of ¥94.01 = U.S.$1, the prevailing exchange rate at March 31, 2013. *2. Ordinary profit, which equals operating income after adjustment for non-operating gains/losses, is a management index that is widely used in Japan. Due to differences in accounting standards, ordinary profit is not broken out in the Company’s English-language financial statements, but it is included here because it plays an important role in the calculation of incentive payments for directors. *3. Shareholders’ equity = Net assets – Minority interests Revenue from Operations Operating Income Ordinary Profit*2 Net Income ¥736.7 billion ¥151.3 billion ¥114.9 billion ¥59.8 billion in the March 2013 fiscal year in the March 2013 fiscal year in the March 2013 fiscal year in the March 2013 fiscal year Billions of Yen Billions of Yen Billions of Yen Billions of Yen 900 180 150 75 600 120 100 50 300 60 50 25 695.2 719.6 744.8 688.7 736.7 760.0 146.4 134.0 138.5 147.5 151.3 160.0 46.2 52.7 50.9 53.2 59.8 68.0 113.6 100.5 106.3 107.9 114.9 125.0 0 09 10 11 12 13 14 0 09 10 11 12 13 14 0 09 10 11 12 13 14 0 09 10 11 12 13 14 (Forecast) (Forecast) (Forecast) (Forecast) Sumitomo Realty & Development Co., Ltd. 3 A Message from the Management We will redouble our efforts to achieve the targets of the Sixth Management Plan in the pursuit of continued growth. Junji Takashima Kojun Nishima Chairman President Introducing our New President operations grew to ¥736.7 billion, operating income rose to First, we would like to report that Kojun Nishima has officially ¥151.3 billion and ordinary profit increased to ¥114.9 billion, for succeeded Kenichi Onodera as President of the Company. the third consecutive year of profit growth. With the conclusion of the Fifth Management Plan at the end In line with our emphasis on the continued payment of of the March 2013 fiscal year, we have embarked on a new stable dividends, we maintained annual dividends at ¥20 per Sixth Management Plan from April 2013, and to implement share, including an interim dividend of ¥10 per share. Further, this new management plan, we have decided to install a new in the March 2014 fiscal year we intend to maintain annual divi- president to strengthen the management structure and reju- dends of ¥20 per share, including an interim dividend of ¥10 venate the executive structure. per share. After serving as president for three 2-year terms, Mr. Onodera has taken the position of Vice Chairman, and Achievements under the Fifth Management Plan together with Chairman Junji Takashima he will add strong The Fifth Management Plan, launched in April 2010, was support to the new executive team. based on the twin aims of “Getting back on track toward With this new executive team led by the President increased revenue and profit” and “Targeting record-setting and Vice Presidents, we are dedicated to continuing and business results in the March 2013 fiscal year.” A challenging accelerating growth that has come to be expected as the Company’s strength.