I would like to deeply thank all stakeholders for supporting the Nomura Real Estate Group.

Fiscal 2008 was an extremely tough year. The effects of the credit crunch that was triggered by the international financial uncertainty spread to the real economy through falling share prices, decreased production output, and a deteriorating employment picture, aggravating the economic downturn. In the real estate industry, the number of completed condominium inventory units remained at a high level in the Tokyo metropolitan area. The real estate investment market has become increasingly chaotic as investors have lost their appetite and as financial institutions have adopted stricter lending standards.

The Nomura Real Estate Group endeavored to strengthen operating companies' capabilities to adapt to changes in the market, but profitability was hurt by the drastic drop in property prices and we posted a write-down on inventory property within the operating cost. As a result, consolidated operating revenue increased, but consolidated operating income and consolidated net income decreased.

Under our previous Medium-Term Business Plan (2007-2009), the Nomura Real Estate Group conducted our business activities, but the business environment changed drastically as mentioned before and our business portfolio and the financial situation changed by taking NREG TOSHIBA BUILDING Co., Ltd. under our wing as a consolidated subsidiary. Therefore, although we were still in the midst of executing an existing medium-term business plan, we decided to draw up a new three-year plan that would start in fiscal 2009.
This new plan has two basic policies: "restructuring revenues balance and reviving profit growth" and "enhancing asset efficiency and financial soundness." It establishes the quantitative goals of achieving operating income of 60 billion yen and D/E ratio* of within 2.5 times by the final year of the plan. To achieve these goals, the company will continue to grow its already powerful residential development business and investment management business, further strengthen the expanded leasing business, further evolve our development function, and aggressively expand the Corporate Real Estate (CRE) business as a business strategy.
In June 2009, the company increased capital by a public offering. The objectives of this public offering are to restore our financial soundness, which was temporarily negatively affected by acquiring NREG TOSHIBA BUILDING as a consolidated subsidiary, and also to bolster the land acquisition for the Residential Development Business, which will be a source of earnings in the future. We aim to continue to grow the company by increasing our capital and following the new medium-term business plan.
* D/E ratio: (bonds + loans) / (net assets - (subscription rights to shares + minority interests))

As a good corporate citizen, we are taking up the challenge to increase corporate value by making additional efforts to enhance the society's trust and faith befitting the Nomura Real Estate Group's corporate brand. We look forward to your continued, unwavering support and encouragement in these endeavors.

President
Hirohisa Suzuki